INVENTEC CORPORATION Minutes of 2017 Annual … · Minutes of 2017 Annual General Shareholders' Meeting (Translation) ... and Financial Statements (2) ... for Independent Accountants’

INVENTEC CORPORATION

Minutes of 2017 Annual General Shareholders' Meeting

(Translation)

Time Friday, June 16, 2017. 9:00 a.m.

Place No.16, Sec. 4, Jhongshan N. Rd., Shilin District, Taipei City.

Chientan Youth Activity Center’s Ching-Kuo Memorial Hall.

Quorum 2,915,880,076 shares were represented by shareholders in person and by proxy

(including by exercising voting rights electronically 1,691,884,786 shares),

which are mounted to 81.28% of the Company's 3,587,475,066 issued and

outstanding shares.

Chairman Lee, Tsu-Chin Recorder Pan, Mascha Pai, Mina

Board Members Present

Director Lee, Tsu-Chin Yeh, Kuo-I Wen, Shih-Chih Chang, Ching-Sung

Huang, Kuo-Chun

Independent Director Chen, Ruey-Long Chang,Chang-Pang

Supervisor Cheng, Hsien-Ho Wang, Ping-Hui

Attendance Li, Nigel N. T, Attorney-at- Law Chen, Ying Ru, CPA

A. Meeting Agenda

1. Call the Meeting to Order: The Chairman announced that the aggregate shareholding

of the shareholders present in person or proxy constituted a quorum. The Chairman

called the meeting to order.

2. Chairman Remarks: (Omitted)

3. Report Items:

(1) 2016 Business Report

(2) 2016 Supervisors' Review Report

(3) The Status of Distribution Remuneration of Employees Directors and

Supervisors in 2016

(4) The Status of Endorsement and Guarantee

4. Ratification Items

(1) 2016 Business Report and Financial Statements

(2) Distribution of 2016 Profits

5. Discussion Items:

(1) To Amend the Company’s “Articles of Incorporation”

(2) To Amend the Company’s “Rules of Procedure for Shareholders Meetings”

(3) To Amend the Company’s “Procedures for Acquisition or Disposal of Assets”

(4) To Amend the Company’s “Regulations Making of Endorsements/Guarantees”

(5) To Amend the Company’s “Regulations Governing Loaning of Funds”

6. Election Matters: Proposes to elect new directors

7. Other Proposals: Proposal of release the prohibition on Directors and their

representatives from participation in competitive business

8. Extraordinary Motions

9. Adjournment

B. Report Items

1. 2016 Business Report (Please refer to Appendix 1 in the Meeting Agenda)

2. 2016 Supervisors' Review Report (Please refer to Appendix 2 in the Meeting Agenda)

3. The Status of Distribution Remuneration of Employees Directors and Supervisors in 2016.

Explanation: According to the article 26 of Articles of Incorporation, the board of directors and

remuneration committee resolved to distribute NT $ 348,606,659 to remuneration

of employees in cash and NT$ 97,609,865 to remuneration of directors and

supervisors. There is no difference between the amount of distribution and the

expense which is recognized in 2016.

4. The Status of Endorsement and Guarantee

The Company's aggregate amount of endorsements and guarantee on December 31, 2016 is as

follows:

Unit: NTD

Guarantor Guarantee Amounts

Inventec Corporation

TPV-INVENTA Holding Ltd., and TPV-INVENTA Technology Co., Ltd.

321,600,000

Inventec (Czech), s. r. o. 16,080,000

Total 337,680,000

C. Ratification Items

Item 1 Proposed by the Board

Proposal: Ratification of the 2016 Business Report and Financial Statements.

Explanation: The Company’s 2016 Individual Financial Statements and Consolidated Financial

Statements, including the balance sheet, comprehensive income statement,

statements of cash flows, and statement of changes in equity, were audited by

independent accountants, Chen, Ying-Ju and Yang, Liu-Fong of KPMG Certified

Public Accountants. Also Business Report and Financial Statements have been

approved by the Board and examined by the Supervisors of Inventec Corporation.

(Please refer to Appendix 1 for Business Report, Appendix 3 for Independent

Accountants’ Audit Report and Individual Finance Statements, and Appendix 4 for

Independent Accountants’ Audit Report and Consolidated Finance Statements.)

Resolution: Approved and acknowledged as proposed by voting (a total of 2,915,880,076 shares

with voting rights were present when votes were cast ; the number of voting rights for

approval is 2,564,942,302, among which 1,341,087,685 was exercised by electronic

transmission, or 87.96 % of the total voting rights when votes were cast the number

of votes against is 477,772, among which 477,772 was exercised by electronic

transmission the number of votes abstained is 350,640,002, among which

350,319,329 was exercised by electronic transmission)

Item2 Proposed by the Board

Proposal: Adoption of the Proposal for Distribution of 2016 Profits

Explanation: (1) With regard to earnings in 2016, an earnings distribution table has been

prepared in accordance with the Company’s Articles of Incorporation.

The distributable net profit for 2016 is NT$ 6,012,185,033 and the proposed

cash dividend to shareholders is NT$1.45 per share (NT$ 5,201,838,846).The

earnings distribution table was reviewed by the Supervisors and attached in

Appendix 5.

(2) In the event that, before the distribution record date, the proposed profit

distribution is affected by buyback of shares, it is proposed that the Board of

Directors be authorized to adjust the cash distribution ratio based on the

number of actual shares outstanding on the record date.

(3) Upon the approval of the Annual Meeting of Shareholders, it is proposed that

the Board of Directors is authorized to resolve the ex-dividend record date.

Resolution: Approved and acknowledged as proposed by voting (a total of 2,915,880,076 shares

with voting rights were present when votes were cast ; the number of voting rights for

approval is 2,575,424,088, among which 1,351,596,471 was exercised by electronic

transmission, or 88.32 % of the total voting rights when votes were cast the number

of votes against is 488,577, among which 488,577 was exercised by electronic



D. Discussion Items


Proposal: Discussion of Amendments to the “Articles of Incorporation”.

Explanation: (1) Inventec establishes Audit Committee according to the Financial Supervisory Commission’s official document NO. 10200531121 hereby propose to amend “Articles of Incorporation”.

(2) Revise the wording to conform to related Act. Please refer to the comparison chart of amendments to “Articles of Incorporation” below.

Comparison Chart of Amendments to “Articles of Incorporation”

Original Version Amendment Version Reason

Article 2 The business scope of the Company is as following: 1~23 (omitted) 24. F108031 Wholesale of Drugs, Medical Goods25. F208031 Retail sale of Medical Equipments26. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

Article 2 The business scope of the Company is as following: 1~23 (omitted) 24. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

Delete item24

and item 25

Chapter4

Article 16

DIRECTORS SUPERVISORS

AND AUDIT COMMITTEE

The Company shall have seven to eleven directors (including not less than two independent directors, and not less than one-fifth of the director seats.) and three supervisors. The term of their offices shall be three years. The Company will replace supervisors with Audit Committee in accordance with article 14-4 of Securities and Exchange Act in 2017. The Audit Committee shall be composed of the entire number of independent directors. It shall not be fewer than three persons. The relative regulations of supervisors of the Articles will be null and void from the date of the establishment of the Audit

Chapter4

Article 16

DIRECTORS AND AUDIT COMMITTEE

The Company shall have seven to eleven directors (including not less than three independent directors). The term of their offices shall be three years. The Company establishes audit committee and the Audit Committee shall be composed of the entire number of independent directors. The election shall adopt the candidate nomination system which is conformed to the Article 192-1 of the Company Act, and the shareholders shall elect the directors from the list of the nominated candidates and the directors may be re-elected for consecutive terms. Independent and non-independent directors

Conform to

establish audit

committee and

remove the

regulations of

supervisors.

Committee. The election shall adopt the candidate nomination system which is conformed to the Article 192-1 of the Company Act, and the shareholders shall elect the directors and supervisors from the list of the nominated candidates and the directors and supervisorsmay be re-elected for consecutive terms. Independent and non-independent directors shall be elected at the same time but on separate ballots. In case no election of new directors and supervisors is effected after expiration of the term of office of existing directors and supervisors, the term of office of out-going directors and supervisors shall be extended until the time new directors and supervisors have been elected and assumed their office. (The following content omitted.) Total registered shares owned by the directors and supervisors of the Company shall not be less than a specified percentage of the Rules (The following content omitted.) Except where the Competent Authority has granted approval, the following relationships may not exist among more than half of a company's directors: 1. A spousal relationship. 2. A familial relationship within

the second degree of kinship. Except where the Competent Authority has granted approval, a company shall have at least one or more supervisors, or one or more supervisors and directors, among whom no relationship under the preceding subparagraphs exists.

shall be elected at the same time but on separate ballots. In case no election of new directors is effected after expiration of the term of office of existing directors, the term of office of out-going directors shall be extended until the time new directors have been elected and assumed their office. (The following content omitted.) Total registered shares owned by the directors of the Company shall not be less than a specified percentage of the Rules (The following content omitted.) Except where the Competent Authority has granted approval, the following relationships may not exist among more than half of a company's directors: 1. A spousal relationship. 2. A familial relationship within

the second degree of kinship.

Article 17 When one-third of the directors or all supervisors are discharged, a special shareholders' meeting shall be convened by the Board of Directors within 60 days to elect new directors or supervisors to fill the vacancies. The term of office of the newly elected director shall be the same as the remaining term of the predecessor.

Article 17 When one-third of the directors are discharged, a special shareholders' meeting shall be convened by the Board of Directors within 60 days to elect new directors or supervisors to fill the vacancies. The term of office of the newly elected director shall be the same as the remaining term of the predecessor.

Conform to

establish audit

committee and

amend relative

regulations.

Article 19 Business policy of the Company and other important matters shall be decided by resolutions adopted by the Board of Directors. (The following content omitted.) The reasons for calling a board of

Article 19 Business policy of the Company and other important matters shall be decided by resolutions adopted by the Board of Directors. (The following content omitted.) The reasons for calling a board of

Conform to

establish audit

committee and

amend relative

regulations.

directors meeting shall be notified to each director and supervisor at least seven days in advance. (The following content omitted.)

directors meeting shall be notified to each director at least seven days in advance. (The following content omitted.)

Article 22 Except in performing his functional duties in accordance with the laws, supervisors can be present at the meeting of the board of directors with no right to vote.

Article 22 The authority of the audit committee and the other compliance issues shall be made according to the relevant laws and regulations, and be determined by the board of directors.

Conform to

establish audit

committee and

amend relative

regulations.

Article 23 No matter net income or loss, the Company shall pay remuneration for all directors and supervisorsconduct the business of the company. The remuneration of directors may be determined by taking into account their participation in the Company's business and their contribution value, and industry standards and the board meeting is authorized to resolve the amount of the remuneration During the term of their offices, the Company may purchase liability insurance for the directors to indemnify the potential liabilities, according to the relevant laws, to be borne by the directors when they perform their duties for the Company.

Article 23 No matter net income or loss, the Company shall pay remuneration for all directors conduct the business of the company. The remuneration of directors may be determined by taking into account their participation in the Company's business and their contribution value, and industry standards and the board meeting is authorized to resolve the amount of the remuneration During the term of their offices, the Company may purchase liability insurance for the directors to indemnify the potential liabilities, according to the relevant laws, to be borne by the directors when they perform their duties for the Company.

Conform to

establish audit

committee and

amend relative

regulations.

Article 25 At the close of each fiscal year, the board of directors shall prepare the following statements and records and shall forward the same to supervisors for their auditing not later than the 30th day prior to the meeting date of a general meeting of shareholders, and then submit the same to the shareholders' meeting for recognition: 1. Business Report, 2. Financial Statements, and 3. Proposal for distribution of

profit or appropriation of losses.

Article 25 At the close of each fiscal year, the board of directors shall prepare the following statements and records and then submit the same to the shareholders' meeting for recognition in accordance with legal procedures : 1. Business Report, 2. Financial Statements, and 3. Proposal for distribution of

profit or appropriation of losses.

Revise the

wording.

Article 26 If the Company has a profit of the year shall distribute not less than 3% of the balance as remuneration to Employees and not more than 3% to Directors and Supervisorsof the Corporation. However, require that earnings shall first be offset against any deficit. The Corporation may issue stock or distribute cash to employees and the qualification requirements including the employees of

Article 26 If the Company has a profit of the year shall distribute not less than 3% of the balance as remuneration to Employees and not more than 3% to Directors of the Corporation. However, require that earnings shall first be offset against any deficit. The Corporation may issue stock or distribute cash to employees and the qualification requirements including the employees of

Conform to

establish audit

committee and

amend relative

regulations.

subsidiaries of the company. The conditions and measures set by the Board of Directors.

subsidiaries of the company. The conditions and measures set by the Board of Directors. The remuneration of the supervisors prior to the establishment of the audit committee shall be distributed in accordance with preceding paragraph.

Article 29 This Articles of Incorporation was established on April 15, 1975. (contents omitted)The forty-eighth amendment was made on June 12, 2014. The forty-ninth amendment was made on June 20, 2016.

Article 29 This Articles of Incorporation was established on April 15, 1975. (contents omitted)The forty-eighth amendment was made on June 12, 2014. The forty-ninth amendment was made on June 20, 2016. The fiftieth amendment was made on June 16, 2017.

Add amendment

number and

date.

Resolution: Approved as proposed by voting (a total of 2,915,880,076 shares with voting rights

were present when votes were cast ; the number of voting rights for approval is

2,571,545,634, among which 1,347,691,017 was exercised by electronic transmission,

or 88.19 % of the total voting rights when votes were cast the number of votes

against is 4,340,914 among which 4,340,914 was exercised by electronic




Proposal: Discussion of Amendments to the “Rules of Procedure for Shareholders Meetings”.

Explanation: (1) Inventec establishes audit committee according to the Financial Supervisory Commission’s official document NO. 10200531121 hereby propose to amend “Rules of Procedure for Shareholders Meetings”.

(2) Revise the wording to conform to related rules. Please refer to the comparison chart of Amendments to “Rules of Procedure for Shareholders Meetings” below.

Comparison Chart of Amendments to “Rules of Procedure for Shareholders Meetings”


Article 2 The Company’s shareholders meeting shall be convened by the board of directors unless applicable laws and regulations provide otherwise. The notice to convene an ordinary shareholders’ meeting shall be given to each shareholder no later than 30 days prior to the scheduled meeting date. The notice of the

Article 2 The Company’s shareholders meeting shall be convened by the board of directors unless applicable laws and regulations provide otherwise. The notice to convene an ordinary shareholders’ meeting shall be given to each shareholder no later than 30 days prior to the scheduled meeting date. The notice of the

Conform to

establish audit

committee and

amend relative

regulations

shareholders meeting to be given by an issuer to shareholders who own less than 1,000 shares of nominal stocks may be given in the form on the MOPS no later than 30 days prior to the scheduled meeting date. The notice to convene an extraordinary shareholders’ meeting shall be given to each shareholder no later than 15 days prior to the scheduled meeting date. The notice of the shareholders meeting to be given by an issuer to shareholders who own less than 1,000 shares of nominal stocks may be given in the form on the MOPS no later than 15 days prior to the scheduled meeting date. The cause(s) or subject(s) of a meeting of shareholders to be convened shall be indicated in the individual notice and the public notice to be given to shareholders.The election or discharge of directors or supervisors, the amendment of this Company’s Articles of Incorporation, the dissolution, merger, or spin-off the Company, or the matters specified in Article 185, paragraph 1 of the Company Law, or Article 26-1 or Article 43-6 of the Securities and Exchange Law, or Article 56-1 or Article 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be listed among the reasons for the meeting, and may not be proposed as extraordinary motions.

shareholders meeting to be given by an issuer to shareholders who own less than 1,000 shares of nominal stocks may be given in the form on the MOPS no later than 30 days prior to the scheduled meeting date. The notice to convene a extraordinary shareholders’ meeting shall be given to each shareholder no later than 15 days prior to the scheduled meeting date. The notice of the shareholders meeting to be given by an issuer to shareholders who own less than 1,000 shares of nominal stocks may be given in the form on the MOPS no later than 15 days prior to the scheduled meeting date. The cause(s) or subject(s) of a meeting of shareholders to be convened shall be indicated in the individual notice and the public notice to be given to shareholders.The election or discharge of directors, the amendment of this Company’s Articles of Incorporation, the dissolution, merger, or spin-off the Company, or the matters specified in Article 185, paragraph 1 of the Company Law, or Article 26-1 or Article 43-6 of the Securities and Exchange Law, or Article 56-1 or Article 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be listed among the reasons for the meeting, and may not be proposed as extraordinary motions.

Article 5 This Corporation shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention. (The following content omitted.) Where there is an election of directors or supervisors, pre-printed ballots shall also be furnished.

Article 5 This Corporation shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention. (The following content omitted.) Where there is an election of directors, pre-printed ballots shall also be furnished.

Conform to

establish audit

committee and

amend relative

regulations.

Article 12 A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares. Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation, the passage of a

Article 12 A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares. Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation, the passage of a

Revise the

wording.

proposal shall require an affirmative vote of a majority of the voting rights represented by the attending. The resolution shall be deemed adopted and shall have the same effect as if it was voted by casting ballots if no objection is voiced after solicitation by the chair. If there is any objection, the agenda item shall be put to a vote by casting ballots in accordance with the foregoing paragraph.(The following content omitted.)

proposal shall require an affirmative vote of a majority of the voting rights represented by the attending. At the time of a vote, for each proposal, the chair or a person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS.(The following content omitted.)

Article 14 The election of directors or supervisors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by this Corporation, and the voting results shall be announced on-site immediately, including the names of those elected as directors and supervisors and the numbers of votes with which they were elected. (The following content omitted.)

Article 14 The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by this Corporation, and the voting results shall be announced on-site immediately, including the names of those elected as directors and the numbers of votes with which they were elected. (The following content omitted.)

Conform to

establish audit

committee and

amend relative

regulations.

Article 15 Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. (The following content omitted.) And shall be retained for the duration of the existence of this Corporation. “There is no objection from any shareholders after solicitation by the chair and the resolution is passed” shall be recorded in the minutes if no objection is voiced after solicitation by the chair before an agenda item is put to a vote, the number of approval votes cast and the percentage of the approval votes as to total votes shall be recorded in the minutes.

Article 15 Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. (The following content omitted.) And shall be retained for the duration of the existence of this Corporation.

Revise the

wording.





against is 497,824, among which 497,824 was exercised by electronic transmission

the number of votes abstained is 340,000,540, among which 339,859,867 was

exercised by electronic transmission)


Proposal: Discussion of Amendments to the “Procedures for Acquisition or Disposal of Assets”.

Explanation: (1) Inventec establishes audit committee according to the Financial Supervisory Commission’s official document NO. 10200531121 and to conform to the amendment of “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” of Financial Supervisory Commission’s official document NO. 1060001296 hereby propose to amend “Procedures for Acquisition or Disposal of Assets”.

(2) Revise the wording to conform to related procedures. Please refer to the comparison chart of Amendments to “Procedures for Acquisition or Disposal of Assets” below.

Comparison Chart of Amendments to “Procedures for Acquisition or Disposal of Assets”


Article 4 Procedures of Evaluation and Operation for the Acquisition or Disposal of Assets: 1. When the Company acquires or

disposes of assets. (The following content omitted.)

(2) Level of authority: (a) Acquisition or disposal of

long-term securities shall be evaluated by finance department and be approved by the board of directors.

(b) Acquire or dispose of real estate from related party shall prepare relevant information and be approved by the board of directors and be recognized by supervisors in accordance with article 8.

((c)~(d) omitted) (e) Acquisition or disposal of

assets which governed by Article 185 of the Company Act shall be approved by the board of directors and submit to shareholders’ meeting for approval. (The following content omitted.)

3. The Company acquires or disposes of real estate or equipment, except for transactions with governmental agencies, (The following content omitted.)

Article 4 Procedures of Evaluation and Operation for the Acquisition or Disposal of Assets: 1. When the Company acquires or

disposes of assets. (The following content omitted.)

(2) Level of authority: Transaction amount reaches 5% or more of the Company’s net worth of latest financial report shall be subject to the consent of audit committee and be submitted to board of director for a resolution.

(a) Acquisition or disposal of long-term securities shall be evaluated by finance department and be approved by the board of directors.

(b) Acquire or dispose of real estate from related party shall prepare relevant information and be approved by the board of directors in accordance with article 8.

((c)~(d) omitted) (e) Acquisition or disposal of

assets which governed by Article 185 of the Company Act shall be subject to the consent of audit committee and be submitted to board of director for a resolution andsubmit to shareholders’

Conform to

establish audit

committee and

amend relative

regulations.

meeting for approval. (The following content omitted.)

3. The Company acquires or disposes of real estate or equipment, except for transactions with governmental agencies, (The following content omitted.)

Article 6 Where the Company acquires or disposes of memberships or intangible assets and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a government organization, the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

Article 6 Where the Company acquires or disposes of memberships or intangible assets and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a government agency, the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

Revise the

wording.

Article 8 When the Company engages in any acquisition or disposal of assets from or to a related party (The following content omitted.) except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors. (The following content omitted.) The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with Article 27, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors and recognized by the supervisors in accordance with Regulations Governing the Acquisition and Disposal of Assets by Public Companies don’t need be counted toward the transaction amount. (The following content omitted.)

Article 8 When the Company engages in any acquisition or disposal of assets from or to a related party (The following content omitted.) except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of domestic money market funds which is published by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by audit committee and passed by the board of directors (The following content omitted.) The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with Article 27, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors in accordance with Regulations Governing the Acquisition and Disposal of Assets by Public Companies don’t need be counted toward the transaction amount. (The following content omitted.)

Conform to

establish audit

committee and

amend relative

regulations.

Article 11 Where the Company acquires real property from a related party and the results of appraisals conducted in accordance with Article 8 and Article 9 are uniformly lower than the transaction price, the following steps shall be taken: (The following content omitted.) 2. Supervisors shall comply with

Article 218 of Company Act. (The following content omitted.)

Article 11 Where the Company acquires real property from a related party and the results of appraisals conducted in accordance with Article 8 and Article 9 are uniformly lower than the transaction price, the following steps shall be taken: (The following content omitted.) 2. Audit committee shall comply

with Article 14-4 of Securities and Exchange Act.

Conform to

establish audit

committee and

amend relative

regulations.

Article 19 The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and approval.

Article 19 The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and approval. The requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by the company of a subsidiary in which it directly or indirectly holds 100% of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the company directly or indirectly holds 100% of the respective subsidiaries’ issued shares or authorized capital.

Conform to the amendment of

Regulations

Governing the

Acquisition and

Disposal of

Assets by

Public

Article 27 Procedures for Announcement: (The following content omitted.) The Company shall report related information to the website designated by FSC for announcement based on its nature in stipulated form and reporting within 2 days of the transaction date if the assets acquired or disposed of by the Company are as below: 1. Acquisition or disposal of real

property from or to a related party, (The following content omitted.) However, trading of bonds or bonds with repurchasing and reselling conditions, purchasing or redemption domestic money market funds, are not subject to this limit.�

2. Merger, demerger, acquisitions

Article 27 Procedures for Announcement: (The following content omitted.) The Company shall report related information to the website designated by FSC for announcement based on its nature in stipulated form and reporting within 2 days of the transaction date if the assets acquired or disposed of by the Company are as below. 1. Acquisition or disposal of real

property from or to a related party, (The following content omitted.) However, trading of bonds or bonds with repurchasing and reselling conditions, purchasing or repurchase of domestic money market funds which is published by domestic securities investment trust

Conform to the amendment of Regulations Governing the Acquisition and Disposal of Assets by Public

or transfer of shares. 3. Losses from derivatives trading

reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company.

4. Where an asset transaction other than any of those referred to in the preceding three subparagraphs, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances:

(1) Trading of government bonds. (2) Trading of bonds under

repurchase/resale agreements, or subscription or redemption of domestic money market funds.

(3) Where the type of asset acquired or disposed is equipment/machinery for business use, the trading counterparty is not a related party, and the transaction amount is less than NT$500 million.

(4) Where real estate is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million. (The following content omitted.)

If there are errors or omissions, shall declare and report all items again after making additions and corrections. (The following content omitted.)

enterprises, are not subject to this limit.

2. Merger, demerger, acquisitions or transfer of shares.

3. Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company.

4. Where the type of asset acquired or disposed is equipment/machinery for business use, the trading counterparty is not a related party, and the transaction amount reaches NT$1 billion or more..

5. Where real estate is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction reaches NT$500 million.

6. Where an asset transaction other than any of those referred to in the preceding fivesubparagraphs, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances:

(1) Trading of government bonds.(2) Trading of bonds under

repurchase/resale agreements, or subscription or repurchaseof domestic money market funds which is published by domestic securities investment trust enterprises, (The following content omitted.)

If there are errors or omissions, shall declare and report all items again within 2 days when the Company noted after making additions and corrections. (The following content omitted.)

Article 31 The Company's internal audit personnel shall quarterly audit the procedure for acquisition or disposal of assets and the situation of implementation, and prepare an audit report. If any material violation is discovered, all supervisors shall be notified in writing. In addition, internal audit personnel shall punish manager and in-charge personnel depend on the violation situation.

Article 31 The Company's internal audit personnel shall quarterly audit the procedure for acquisition or disposal of assets and the situation of implementation, and prepare an audit report. If any material violation is discovered, audit committee shall be notified in writing. In addition, internal audit personnel shall punish manager and in-charge personnel depend on the violation situation.

Conform to establish audit committee and amend relative regulations.

Article 32 The regulations shall be approved by the board of directors, then delivered to all supervisors andproposed to the shareholders’ meeting for approval. If any director expresses an objection on the record or by a written statement, the Company shall submit the objection to all supervisors and propose to the shareholders’ meeting for discussion. Any amendments shall also follow this procedure.

Article 32 The regulations shall be subject to the consent of audit committee,then be submitted to board of directors for a resolution and proposed to the shareholders’ meeting for approval. Any amendments shall also follow this procedure. If any director expresses an objection on the record or by a written statement, the Company shall submit the objection to the shareholders’ meeting for discussion.

Conform to establish audit committee and amend relative regulations.



2,575,223,300 among which 1,351,368,683 was exercised by electronic transmission,



the number of votes abstained is 339,997,695 among which 339,857,022 was



Proposal: Discussion of Amendments to the “Regulations Making of Endorsements/Guarantees”.

Explanation: (1) Inventec establishes audit committee according to the Financial Supervisory Commission’s official document NO.10200531121 hereby proposes to amend “Regulations Making of Endorsements/Guarantees”.

(2) Revise the wording to conform to related regulations. Please refer to the comparison chart of Amendments to “Regulations Making of Endorsements/Guarantees” below.

Comparison Chart of Amendments to “Procedures for Acquisition or Disposal of Assets”


Article 4 Total amount of endorsements/guarantees of the Company, (The following content

Article 4 Total amount of endorsements/guarantees of the Company, (The following content

Revise the

wording.

omitted.) The board of directors may authorize the Chairman to decide such matters when the transaction is within a specified amount and then submit to the board of directors for ratification. The details of the execution of the above matter and other related matters shall be submitted to the shareholders meeting for its record. (The following content omitted.)

omitted.) The board of directors may authorize the Chairman to decide such matters when the transaction is within a specified amount and then submit to the board of directors for ratification. The amount of endorsements/ guarantees reaches 5% or more than the company's net worth as stated in its latest financial statement, shall be subject to the consent of audit committee and be submitted to board of director for a resolution. (The following content omitted.)

Article 5 The company shall execute the following control activities when supervising its subsidiaries' audit management: (The following content omitted.) The company shall adopt rectification plans and submit the rectification plans to all the supervisors, and shall complete the rectification according to the timeframe set out in the plan.

Article 5 The company shall execute the following control activities when supervising its subsidiaries' audit management: (The following content omitted.) The company shall adopt rectification plans and submit the rectification plans to audit committee, and shall complete the rectification according to the timeframe set out in the plan.

Conform to

establish audit

committee and

amend relative

regulations.

Article 9 The company's internal auditors shall audit the Procedures for Making of Endorsements/Guarantees and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify all the supervisors in writing of any material violation found. (The following content omitted.)

Article 9 The company's internal auditors shall audit the Procedures for Making of Endorsements/Guarantees and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify audit committee in writing of any material violation found. (The following content omitted.)

Conform to

establish audit

committee and

amend relative

regulations.

Article 10 The regulations shall approve by the board of directors, submit to each supervisor and submit them for approval by the shareholders' meeting, where any director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the dissenting opinion to each supervisor and for discussion by the shareholders' meeting. The same shall apply to any amendments to the Procedures.

Article 10 The regulations shall approve by audit committee and thensubmitted to board of directors for a resolution and submit them for approval by the shareholders' meeting, the same shall apply to any amendments to the Procedures, where any director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the dissenting opinion for discussion by the shareholders 'meeting.

Conform to

establish audit

committee and

amend relative

regulations.



2,574,465,863 among which 1,350,611,246 was exercised by electronic transmission,






Proposal: Discussion of Amendments to the “Regulations Governing Loaning of Funds”.

Explanation: (1) Inventec establishes audit committee according to the Financial Supervisory Commission’s official document NO.10200531121 hereby proposes to amend “Regulations Governing Loaning of Funds”.

(2) Revise the wording to conform to related regulations. Please refer to the comparison chart of Amendments to “Regulations Governing Loaning of Funds” below.

Comparison Chart of Amendments to “Regulations Governing Loaning of Funds”


Article 4 Financing amount shall not exceed 50% of the lender's net worth on the most current financial statements. (The following content omitted.) The restriction in the preceding paragraph 1 shall not apply to loan made between foreign companies in which the company holds, directly or indirectly, 100% of the voting shares. Total financing amount shall not exceed 50% of the Company's net worth of latest financial report, individual financing amount shall not exceed 50% of loanable funds. The durations of loans means one year, or where the company's operating cycle exceeds one year, one operating cycle.

Article 4 Financing amount shall not exceed 50% of the Company’s net worth on the most current financial statements. (The following content omitted.) The restriction in the preceding paragraph 1 shall not apply to loan made between foreign companies in which the company holds, directly or indirectly, 100% of the voting shares. Total financing amount shall not exceed 50% of the Company's net worth of latest financial report, individual financing amount shall not exceed 50% of loanable funds. The durations of loans means one year, or where the company's operating cycle exceeds one year, one operating cycle.

Revise the

wording.

Article 8 When the borrower applies for a loan, the Company shall evaluate its business conditions, finance and solvency, borrow purpose etc and create credit information by detailed review procedure. After signing by chairman and approval of the board of directors, the Company can lend to the borrower. (The following content omitted.)

Article 8 When the borrower applies for a loan, the Company shall evaluate its business conditions, finance and solvency, borrow purpose etc and create credit information by detailed review procedure. After signing by chairman and approval of the board of directors, the Company can lend to the borrower. Total financing amount reaches 2% or more than the Company’s net worth as stated in its latest financial report shall be subject to the consent of audit

Conform to

establish audit

committee and

amend relative

regulations.

committee and be submitted to board of director for a resolution. (The following content omitted.)

Article 13 The company's internal auditors shall audit the Procedures for Loaning Funds to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify all the supervisors in writing of any material violation found. (The following content omitted.)

Article 13 The company's internal auditors shall audit the Procedures for Loaning Funds to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify audit committee in writing of any material violation found. . (The following content omitted.)

Conform to

establish audit

committee and

amend relative

regulations.

Article 14 If, as a result of a change in circumstances, an entity for which loan is made does not meet the requirements of these Regulations or the loan balance exceeds the limit, the company shall adopt rectification plans and submit the rectification plans to all the supervisors, and shall complete the rectification according to the timeframe set out in the plan. (The following content omitted.)

Article 14 If, as a result of a change in circumstances, an entity for which loan is made does not meet the requirements of these Regulations or the loan balance exceeds the limit, the company shall adopt rectification plans and submit the rectification plans to audit committee, and shall complete the rectification according to the timeframe set out in the plan. (The following content omitted.)

Conform to

establish audit

committee and

amend relative

regulations.

Article 15 The regulations shall approve by the board of directors, submit to each supervisor and submit them for approval by the shareholders' meeting, where any director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the dissenting opinion to each supervisor and for discussion by the shareholders' meeting. The same shall apply to any amendments to the Procedures.

Article 15 The regulations shall be subject to the consent of audit committee,and be submitted to board of directors for a resolution and submit them for approval by the shareholders' meeting. The same shall apply to any amendments to the Procedures, where any director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the dissenting opinion for discussion by the shareholders' meeting.

Conform to

establish audit

committee and

amend relative

regulations.





against is 720,277 among which 720,277 was exercised by electronic transmission



E. Election Matters Proposed by the Board

Proposal: Proposes to Elect New Directors.

Explanation: (1) The present directors and supervisors (14th) of the Company were elected at shareholders’ meeting on June 12, 2014 for a term of office of three years and the term of office will expire in June 11, 2017. In case no election of new directors is effected after expiration of the term of office of existing directors, the term of office of directors shall be extended until the time new directors have been elected in accordance with Article 195 of the Company Act.

(2) According to Article of Incorporation, The Company shall elect new directors at shareholders’ meeting of this year. The 15th nine directors (including three independent directors) shall be elected and their three-year term will start from June 16, 2017 and conclude on June 15, 2020. In addition, the entire number of independent directors shall compose audit committee to replace supervisors. The term of present directors and supervisors will end until the shareholders’ meeting is completed. The election adopts the candidate nomination system and the shareholders shall elect the directors from the list of the nominated candidates. For the “Procedures for Election of Directors” of the Company, please refer to appendix 11 in the Meeting Agenda.

(3) The list of candidates for directors and independent directors had been approved by the board of directors; please refer to related information below:

Type Name of

nominee

Educations Experiences Current Positions Concurrent position in

another company

Shareholdi

ng

(shares)

Director Yeh, Kuo-I

University of San Francisco

Chairman, Inventec Corporation

Chairman, Inventec Group Charity FoundationDirector, Inventec Corporation (Hong Kong), Ltd. Director, WK Technology FundDirector, WK Technology Fund VDirector, WK Technology Fund VIDirector, WK Technology Fund VIIIDirector, WK Technology Fund IV Director, PK Venture Capital Corp.,

Director, PK Venture

Capital Corp.,Director, Kuo Hsieh Investment Co. Ltd., Director, Fu Tai Investment Co. Ltd.,Director, Royal Base CorporationDirector, WK Technology Fund VII

Director, WK Technology Fund Director, WK Technology Fund VDirector, WK Technology Fund VIDirector, WK Technology Fund VIIIDirector, WK Technology Fund IV Director, PK Venture Capital Corp.,

Director, PK Venture

Capital Corp.,Director, Kuo Hsieh Investment Co. Ltd., Director, Fu Tai Investment Co. Ltd.,Director, Royal Base CorporationSupervisor, WK Technology Fund VII

244,361,330

Director Lee, Bachelor of Chairman, Chairman, Inventec Chairman, Esther 115,833,835

Tsu-Chin Economics, Tunghai University


CorporationChairman, Inventec Investments Co., Ltd.Chairman, Esther Investment Co., Ltd.Director, Inventec Group Charity FoundationDirector, Inventec Corporation (Hong Kong), Ltd. Director, Inventec (Cayman) Corp.Director, IEC (Cayman) Corporation Director, Inventec Holding (North America) Corp. Director, Inventec Electronics (USA) Corp. Director, Inventec Manufacturing (North America) Corp. Director, Inventec Distribution (North America) Corp. Director, Inventec Configuration (North America) Corp. Director, IEC Technologies, S.de R. L.de C.V. Chief Executive Officer,Inventec Development Japan Corporation

Investment Co., Ltd.

Director Wen, Shih-Chih

Xihu Vocational High School of Industry and Commerce

Chairman, Shyh Shiunn Investment Corp. Vice President, Inventec Corporation

Chairman, Shyh Shiunn Investment Corp. Director, Inventec Huan Hsin (Zhejiang) Technology Co., Ltd.

Chairman, Shyh Shiunn Investment Corp.

35,685,590

Director Chang, Ching-Sung

Master of Electrical Engineering, National Taiwan University

Chairman, Inventec Appliances Corporation

Chairman, Inventec Appliances CorporationChairman, Inventec Appliances (Shanghai) Co.Ltd Chairman, Inventec Appliances (Pudong) Corp. Chairman, Inventec Appliances (Jiangning) Corp. Chairman, Inventec Appliances (Nanjing) Corp.Chairman, Inventec Appliances (XI'AN) CorporationChairman, Inventec Appliances (Nanchang) CorporationChairman, Inventec

None 788,644

Appliances (Shanghai) Enterprise Co., Ltd. Director, Inventec Appliances (Cayman) Holding Corp. Director, Inventec Appliances (USA) Distribution Corp. Director, Inventec Appliances Corp. USA Inc. Director, Inventec Group Charity Foundation

Director Huang, Kuo-Chun

Bachelor of Electric Engineering, National Cheng Kung University

Chairman, TPV-INVENTA Technology Co, Ltd Qume Electronics, Taiwan

General Manager, Inventec CorporationChairman, Inventec Huan Hsin (Zhejiang) Technology Co., Ltd.Chairman, TPV-Inventa Holding Ltd.Chairman, TPV-INVENTATechnology Co, Ltd Chairman, TPV-INVENTATechnology(Fujian) Co, LtdDirector, Chairman, Inventec Investments Co., Ltd.Director, Inventec Holding (North America) Corp. Director, Inventec Electronics (USA) Corp. Director, Inventec Manufacturing (North America) Corp. Director, Inventec Distribution (North America) Corp. Director, Inventec Configuration (North America) Corp. Director, IEC Technologies, S.de R. L.de C.V.

Chairman, TPV-Inventa Holding Ltd.Chairman, TPV-INVENTATechnology Co, Ltd Chairman, TPV-INVENTATechnology(Fujian) Co, Ltd

1,461,985

Director Cho, Tom-Hwar

Electrical Engineering, National Taiwan University

Chairman, Inventec Solar Energy CorporationChairman, Inventec Multimedia & Telecom Corp. Chairman, Inventec Enterprise Systems CorporationGeneral Manager, Inventec

Chairman, Inventec Solar Energy CorporationDirector, Inventec Appliances Corporation

Chairman, Inventec Solar Energy Corporation

1,004,311

CorporationGeneral Manager, Inventec Multimedia & Telecom Corp.General Manager, Inventec Multimedia & Telecom (TIANJIN) Co., Ltd. Director, Simplo Technology Co., Ltd. Director, E28 LimitedDirector, Inventec Corporation(Scotland)

Co., Ltd.

KUO FENG CORP.

Independent Director

Chang, Chang-Pang

Master of Laws, National Cheng-chi University Bachelor of Law, Fu Jen Catholic University

Chief Executive Officer, Lien Chan Foundation for Peace and Development Chairman, Fuhwa Financial Holding Co., LTDDeputy Minister, Ministry of Economic Affairs Deputy Secretary-General, Executive Yuan Administrative Deputy Minister, Ministry of Finance Chairperson, Securities and Futures Commission, Ministry of

Chief Executive Officer, Lien Chan Foundation for Peace and Development Director, Inventec Group Charity FoundationIndependent Director, Formosa Petrochemical Corp.Independent Director, Silitech Technology Corporation.Independent Director, Powerchip Technology Corporation. Director, Maxigen Biotech Inc.Supervisor, Jintex Corporation Ltd.

Independent Director, Formosa Petrochemical Corp.Independent Director, Silitech Technology Corporation.Independent Director, Powerchip Technology Corporation. Director, Maxigen Biotech Inc.Supervisor, Jintex Corporation Ltd.

0

Finance


Chen, Ruey-Long

Bachelor of Economics, National Chung-Hsing University

Chairman, Sinocon Industrial Standards FoundationChairman, Institute for Information Industry Minister, Ministry of Economic Affairs

Chairman, Sinocon Industrial Standards Foundation Director, Inventec Group Charity FoundationIndependent Director, China Petrochemical Development

Corporation.

Independent Director, Formosa Chemicals & Fibre CorporationChairman, Powerchip Technology Corporation.Director, HannStar Board

Corporation.

Director, Asia Cement Corporation Director, Gintech Energy CorporationDirector, Bank of PanhsinDirector, Teknowledge Development Corp.Director, PowerGate Optical, Inc.

Independent Director, China Petrochemical Development

Corporation.

Independent Director, Formosa Chemicals & Fibre CorporationChairman, Powerchip Technology Corporation.Director, HannStar Board

Corporation.

Director, Asia Cement Corporation Director, Gintech Energy CorporationDirector, Bank of PanhsinDirector, Teknowledge Development Corp.Director, PowerGate Optical, Inc.

0


Shyu, Jyuo-Min

Doctor of Electrical Engineering and Computer Science, U. C. Berkeley Master of Electrical Engineering, National Taiwan University Bachelor of Electrical Engineering, National Taiwan University

Minister, Ministry of Science and TechnologyPresident, Industrial Technology Research Institute Dean, National Tsing Hua University, College of Electrical Engineering and Computer Science

President, Cloud Computing & IoT Association in Taiwan Professor, National Tsing Hua University,Department of Computer Science

None 0

Election Results:

(1) Directors (arranged in order of the number of votes obtained)

Shareholder Account No.

or ID No.

Name Votes Obtained

(shares)

00000009 Lee, Tsu-Chin 2,589,733,410

00000001 Yeh, Kuo-I 2,539,733,350

00000026 Wen, Shih-Chih 2,489,733,358

00000157 Cho, Tom-Hwar 2,439,733,375

00000037 Chang, Ching-Sung 2,389,731,007

00000307 Huang, Kuo-Chun 2,339,733,262

(2) Independent Directors (arranged in order of the number of votes obtained)

Shareholder Account No.

or ID No.

Name Votes Obtained

(shares)

N102640*** Chang, Chang-Pang 2,329,732,787

Q100765*** Chen, Ruey-Long 2,299,732,265

F102333*** Shyu, Jyuo-Min 2,269,732,798

F. Other Proposals Proposed by the Board

Proposal: Proposal for Release the Prohibition on Directors and Their Representatives from Participation in Competitive Business.

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

(2) Propose to the shareholders’ meeting to approved that the prohibition of business strife on current re-elected directors were lifted from the on board date. For the scope of the new directors to lift the competitive behavior restrictions, please refer to the concurrent position in another company of the list of candidates for directors and independent directors on p.18 of the meeting agenda.

Resolution: Approved as proposed by voting (deducted 339,135,695 shares due to the conflict of

interest, a total of 2,516,744,387 shares with voting rights were present when votes

were cast ; the number of voting rights for approval is 2,133,939,591, among which

1,273,535,079 was exercised by electronic transmission, or 84.79 % of the total

voting rights when votes were cast the number of votes against is 941,840, among

which 941,840 was exercised by electronic transmission the number of votes

abstained is 381,862,950 among which 381,722,277 was exercised by electronic

transmission)

G. Extraordinary Motions

None

H. Adjournment

Meeting adjourned: 9:47 am.

**In case of any discrepancy between the English and Chinese version of those minutes of 2017 Annual General Shareholders’ Meeting of Inventec Corporation, the Chinese version shall prevail.

Appendix 1 Business Report

Ladies and gentlemen, welcome to the Inventec Shareholders' Meeting. Looking back over 2016,

major economic recovery of the company was slow. The growth rate was not as good as the

previous year, yet in the face of the fast-changing industry environment, the Inventec Group still

managed to increase its overall operating income compared to 2015 by adhering to its principles of

innovative thinking, focusing on the industry and adjusting the product portfolio,. Despite the fact

that with the overall global economic indicators the company expected a faster growth rate than of

2015, there are still several variables such as the increase of global trade protection, and the future

development of the EU. Inventec will still actively seek to increase its profits, growth, and

strengthen its long-term competitiveness to face future challenges. I hereby describe the 2016

operation performance and the business plan of this year as follows:

Operation performance:

The individual revenue and consolidated revenue of Inventec in 2016 amounted to NT$Three

Hundred and Eight Billion Seven Hundred Million and NT$Four Hundred and Twenty-Eight

Billion Four Hundred Million respectively. The product portfolios still mainly consist of computer

products as they were in 2015 (in 2015, the individual revenue was NT$Two Hundred and

Eighty-Nine Billion Three Hundred Million, and the consolidated revenue totaled NT$Three

Hundred and Ninety-Five Billion Four Hundred Million). Individual revenue increased by 6.69%,

and consolidated revenue increased by 8.34%. With respect to product categories, the revenue of

the notebook computer increased by 0.03% year-on-year, mainly due to the increase in shipments

of commercial machines. The revenue of server products increased by 11% compared to the

previous year due to an improved product portfolio, as well as the active development of new

products and customer coverage. With respect to wireless devices and mobile communication

products, they contributed NT$Sixty-Three Billion Five Hundred Million to the operating income,

and increase of 35% compared to the previous year due to the active shipment and expansion of

production capacity. As for solar energy products, the overall revenue contribution of solar energy

of the Group is approximately NT$Thirteen Billion Five Hundred Million, an increase of 5%

year-on-year. As for profitability, the annual net profit attributable to parent company shareholders

reached NT$Five Billion Six Hundred Million. Earnings per share were NT$1.57, an increase of

NT$Seven Hundred and Thirty Million compared to the previous year, with profits increasing by

1.32%.

2017 business plan and future development strategy:

Despite the forecast of major international financial institutions that the global economy will

gradually recover, we subsequently still need to pay close attention to potential variables such as

the trend of the US policy on trade, the EU's political and economic situation, and economic

growth in mainland China, together with the frequent fluctuation of the international exchange rate,

all of which make the overall operating challenges more difficult. In the face of changes to the

operation environment of the information industry, Inventec will make timely adjustments to its

operating strategy, reduce the exchange-loss risk, continuously carry out research and

development for innovative products, and improve product-added value to seek new momentum

and expand its operational growth.

With respect to personal computer products, Inventec has accumulated knowledge of notebook

computer design and professional ODM experience over the years, and in response to the

changing trends in the notebook computer industry, we continue to serve customers and develop

light and portable products to meet the needs of the market according to the demands of major

international manufacturers, and offer advantages in research and development design and

production and manufacturing, Inventec had a great performance in 2016. In the future, we will

continue to stay ahead of the market in fields such as cloud computing applications and large data

centers, etc., to improve future operational potential by developing artificial intelligence products

and actively seeking new customers. Furthermore, with regards to smart handheld products and

wireless intelligent terminal products, stimulated by the growth in performance in 2016, we

actively expanded new product lines to march towards the fields of the smart home and smart

factory through spreading customer risks and combining products with the development of cloud

technology and services as well continuously improved our automated processes and reduced

production costs. As for the solar energy industry, we are still focusing on integrating solar cells,

wafer and modules manufacturing, and improving product conversion efficiency and yield rates in

response to future competition and challenges in the market.

Corporate governance and corporate social responsibility

Integrity has always been the highest governing philosophy of Inventec. We firmly believe that in

the pursuit of enterprise growth and creating enterprise value, we can only improve our enterprise

management quality and competitiveness by implementing good corporate governance structure

and effective internal control system. Inventec has passed the assessment of the "Corporate

Governance Best Practice Principles" and the "Corporate Social Responsibility Best Practice

Principles" to strengthen the purpose of the Board of Directors, safeguard the rights and interests

of shareholders and interested parties, and improve information transparency to actively

implement corporate governance and social commitment. Inventec has also continuously been

ranked in the top 5% corporate governance enterprises in the "Second and third session of

corporate governance evaluation", indicating that Inventec's Board of Directors attach great

importance to corporate governance.

With respect to social care, Inventec and the "Inventec Group Charity Foundation" rely on caring

volunteers to devote their time to relevant charity activities on a long-term bases by adhering to

the idea of giving back to society. The Group also continuously makes contributions to

disadvantaged groups and emergency relief funds for major disaster. Specific actions include the

donation to the Tainan City Government for the February 6th earthquake disaster, annual charity

donations as year-end gifts, long-term adoption of school children from Huei Ming School,

encourages colleagues to regularly raise funds to support the New Life Promotion Association,

and more, with the aim of helping disadvantaged groups achieve economic independence.

With regards to environmental protection, in order to reduce the impact of company operations on

the environment, Inventec Group hopes to march towards its sustainable corporate objective of

"Energy saving, waste reduction and health" through its environmental sustainability management

system, active promotion of the "green energy environmental protection" strategy, good

management of the green-energy industry and reduce its carbon footprint.

Future prospects

2017 is the year of leadership reform for Inventec. Following this Shareholders' Meeting, director

members will be adjusted to nine seats, three of whom will be independent directors who will

establish the Audit Committee with the goal of strengthening the internal supervision mechanism

through the independent directors' professional competence and detached position to assist the

Board of Directors in making operational decisions and help improve operational performance.

As well as the changes in the lineup of the Board of Directors as mentioned above, Inventec will

still adhere to professionalism and continue to challenge ourselves. In terms of operating

management, we will continuously strengthen inventory management, accelerate automated

processes, improve product technology capabilities, promote "Industry 4.0" to accelerate

transformation and upgrade, and achieve production intelligence and modularity in response to the

demand of end customers with innovative products and service content with the aim of further

expanding the Group's operating scale and room for profit. Once again, ladies and gentlemen, we

sincerely thank you for your support and encouragement to Inventec, and we wish you all the best.

Chairman: Lee, Tsu-Chin

President: Huang, Kuo-Chun

Accounting Officer: Yu, Chin-Pao

Appendix 2

Supervisors' Review Report

Date: Apr.26, 2017

The Board of Directors has prepared and submitted to us the Company’s 2016

financial statements which have been audited and certified by Ying-Ju Chen and

Liu-Fong Yang of KPMG Certified Public Accountants, along with Company's

business report and earnings distribution proposals. We, the Supervisors, have duly

examined the same as correct and accurate. We hereby report to the 2017 Annual

General Shareholders Meeting in accordance with Article 219 of the Company Act

for your review.

Inventec Corporation Supervisor: Wang, Ping-Hui

Supervisor: Cheng, Hsien-Ho

Supervisor: Shyh Shiunn Investment Corp.

(Representative: Yang, Cyong-Nan)

Appendix 3-Independent Auditors’ Report and Individual Financial Statements for Year 2016

Independent Auditors’ Report

To the Board of Directors of Inventec Corporation:

Opinion

We have audited the financial statements of Inventec Corporation (“the Company”), which comprise

the statement of financial position as of December 31, 2016 and 2015, and the statement of comprehensive income, changes in equity and cash flows for the year ended December 31, 2016 and 2015, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2016 and 2015, 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 audit in accordance with the “Regulations Governing Auditing and Certification of

Financial Statements by Certified Public Accountants” and the auditing standards generally accepted in

the Republic of China. 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 Certified Public Accountants Code of Professional Ethics in 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 of 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue Recognition

Please refer to Note 4(p) and Note 6(p) for accounting policies of revenue recognition and related disclosure of revenue, respectively.

Description of the key audit matter:

In order to satisfy the delivery requirement of some products, the Group set up multiple warehouses to meet the demand of picking up goods for clients. Revenue recognition is based on the information provided by warehouses.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain key audit procedures that included assessing the accounting policies and appropriateness of revenue recognition; assessing appropriateness of the internal control of revenue recognition; inspecting whether internal control have been appropriately executed; inspecting whether sales income have been appropriately recognized.

2. Allowance for Inventory Valuation and Obsolescence Losses

Please refer to Note 4(g) and Note 6(d) for accounting policies, and related disclosure information for inventory, respectively.


The Group’s materials may be obsolescence or slow-moving due to the risk of price decline in inventory, the Group prepared material for designing products and forecast orders may be canceled or changed, or changed on components and quantities. Therefore, the valuation of inventories has been identified as a key audit matter.


In relation to the key audit matter above, we have performed certain key audit procedures that included assessing the appropriateness of inventories valuation policies; ensuring the process of inventory valuation is in conformity with the accounting policies; inspecting the inventory aging report; recalculating allowance for inventory valuation based on the Group’s policies; and

performing retrospective test.

Responsibilities of Management and Those Charged with Governance for the Consolidated

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

Those charged with governance 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 the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

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

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. 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 and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. 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.

The engagement partners on the audit resulting in this independent auditors’ report are Ying-Ju Chen and Liu-Fong Yang.

KPMG

Taipei, Taiwan (Republic of China) March 28, 2017

Notes to Readers

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

The auditor’s report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditor’s report and financial statements, the Chinese version shall prevail.

(English Translation of Financial Statements and Report Originally Issued in Chinese)


BALANCE SHEETS

December 31, 2016 and 2015

(Expressed in Thousands of New Taiwan Dollars)

2016.12.31 2015.12.31

ASSETS Amount % Amount %

Current Assets

1100 Cash and cash equivalents $ 10,176,052 7 6,486,944 5

1110 Current financial assets at fair value through profit or loss 91,416 - 85,770 -

1125 Current available-for-sale financial assets, net 732,898 - 574,923 -

1170 Accounts receivable, net 26,342,053 18 28,243,138 21

1180 Accounts receivable due from related parties, net 33,491,604 23 20,960,140 16

1200 Other receivables, net 27,507,715 19 34,049,157 25

1310 Inventories 663,811 - 818,051 1

1479 Other current assets 125,648 - 413,371 -

99,131,197 67 91,631,494 68

Non-current assets

1523 Non-current available-for-sale financial assets, net 225,248 - 331,492 -

1543 Non-current financial assets at cost, net 355,491 - 220,121 -

1550 Investments accounted for using equity method, net 33,861,485 23 36,111,836 27

1600 Property, plant and equipment 12,310,646 9 5,739,243 4

1780 Intangible assets 73,653 - 56,851 -

1900 Other non-current assets 1,387,003 1 1,622,581 1

48,213,526 33 44,082,124 32

TOTAL ASSETS $ 147,344,723 100 135,713,618 100

2016.12.31 2015.12.31

LIABILITIES AND EQUITY Amount % Amount %

Current Liabilities

2100 Short-term borrowings $ 9,791,271 7 5,380,080 4

2160 Notes payable to related parties 12,132 - 12,132 -

2170 Accounts payable 27,285,270 19 26,274,818 19

2180 Accounts payable to related parties 32,882,858 22 22,571,175 17

2230 Current tax liabilities 572,348 - 622,025 -

2200 Other payables 5,180,560 3 5,210,014 4

2399 Other current liabilities 8,696,250 6 5,555,470 4

2313 Unearned revenue 2,967,671 2 2,577,507 2

87,388,360 59 68,203,221 50

Non-current Liabilities

2540 Long-term borrowings 3,600,000 2 9,189,600 7

2640 Net defined benefit liability, non-current 709,165 1 993,591 1

2670 Other non-current liabilities 854,325 1 846,502 -

5,163,490 4 11,029,693 8

Total Liabilities 92,551,850 63 79,232,914 58

Equity attributable to owners of parent

3110 Share capital 35,874,751 24 35,874,751 26

3200 Capital surplus 2,913,096 2 2,912,784 2

Retained earnings:

3310 Legal reserve 8,910,416 6 8,354,052 6

3350 Unappropriated retained earnings 6,575,897 5 6,529,767 6

3400 Other equity interest 518,713 - 2,809,350 2

Total Equity 54,792,873 37 56,480,704 42

TOTAL LIABILITIES AND EQUITY $ 147,344,723 100 135,713,618 100

Please refer to financial statements.



STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2016 and 2015


For the year ended December 31,

2016 2015

Amount % Amount %

4110 Sales revenue $ 308,709,688 100 289,354,169 100

5000 Operating costs 295,852,992 96 277,304,726 96

Gross profit from operations 12,856,696 4 12,049,443 4

5910 Less: Unrealized profit (loss) from sales 15,140 - 15,615 -

5920 Add: Realized profit (loss) on from sales 15,615 - 12,315 -


Operating expenses:

6100 Selling expenses 1,273,132 - 1,643,997 -

6200 Administrative expenses 1,848,541 1 1,954,999 1

6300 Research and development expenses 4,515,568 1 4,645,432 2

Total operating expenses 7,637,241 2 8,244,428 3

Net operating income 5,219,930 2 3,801,715 1

7010 Other income 41,556 - 22,553 -

7020 Other gains and losses, net (50,911) - 1,499,444 1

7050 Finance costs, net (378,289) - (183,330) -

7775 Share of loss of associates and joint ventures accounted for using equity method 1,693,631 - 1,442,902 -

Total non-operating income and expenses 1,305,987 - 2,781,569 1

7900 Profit (loss) from continuing operations before tax 6,525,917 2 6,583,284 2

7950 Less: Tax income (expense) 888,797 - 1,019,651 -

8200 Profit for the period 5,637,120 2 5,563,633 2

Other comprehensive income (loss):

8310 Components of other comprehensive income that will not be reclassified to profit or

loss

8311 Gains (losses) on remeasurements of defined benefit plans 15,665 - (51,776) -

8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss

(25,163) - (4,895) -

8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (2,663) - 8,802 -

Components of other comprehensive income that will not be reclassified to profit or loss (12,161) - (47,869) -

8360 Components of other comprehensive income that will be reclassified to profit or loss

8361 Exchange differences on translation (26,375) - 3,751 -

8362 Unrealised gains (losses) on valuation of available-for-sale financial assets 92,253 - 55,086 -

8380 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss

(2,356,515) (1) (258,721) -

8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss - - - -

Components of other comprehensive income that will be reclassified to profit or loss (2,290,637) (1) (199,884) -

Other comprehensive income, net (2,302,798) (1) (247,753) -

8500 Total comprehensive income $ 3,334,322 1 5,315,880 2

Earning per share attributable to stockholders of parent

9750 Basic earnings per share (NT dollars) $ 1.57 1.55

9850 Diluted earnings per share (NT dollars) $ 1.56 1.54




STATEMENTS OF CHANGES IN EQUITY



Other Equity Interest

Capital Stock Retained Earnings

Exchange

Differences on

Translation

Unrealized Gains

(Losses) on

Share Capital Capital Surplus Legal Reserve

Unappropriated

Retained Earnings

of Foreign Financial

Statements

Available for Sale

Financial Assets Total Equity

Balance as of January 1, 2015 $ 35,874,751 2,920,718 7,644,271 8,129,064 2,868,962 140,272 57,578,038

Net income (loss) for the period - - - 5,563,633 - - 5,563,633

Other comprehensive income (loss) for the period - - - (47,869) (264,790) 64,906 (247,753)

Total comprehensive income (loss) for the period - - - 5,515,764 (264,790) 64,906 5,315,880

Appropriation and distribution of retained earnings:

Legal reserve appropriated - - 709,781 (709,781) - - -

Cash dividends of ordinary share - - - (6,278,081) - - (6,278,081)

Others - (7,934) - (127,199) - - (135,133)

Balance as of December 31, 2015 35,874,751 2,912,784 8,354,052 6,529,767 2,604,172 205,178 56,480,704

Net income (loss) for the period - - - 5,637,120 - - 5,637,120

Other comprehensive income (loss) for the period - - - (12,161) (2,381,945) 91,308 (2,302,798)

Total comprehensive income (loss) for the period - - - 5,624,959 (2,381,945) 91,308 3,334,322


Legal reserve appropriated - - 556,364 (556,364) - - -

Cash dividends of ordinary share - - - (5,022,465) - - (5,022,465)

Others - 312 - - - - 312

Balance as of December 31, 2016 $ 35,874,751 2,913,096 8,910,416 6,575,897 222,227 296,486 54,792,873

Note: For the years ended December 31, 2016 and 2015, the remuneration to directors and supervisors amounted to $97,610 and $98,258, respectively and remuneration of employees amounted to $348,607 and $336,884, respectively, which had been deducted by calculating each period profit.




STATEMENTS OF CASH FLOWS



For the years ended December 31, 2016 2015

Cash flows from operating activities

Profit before income tax $ 6,525,917 6,583,284

Adjustments:

Adjustments to reconcile profit before income tax to net cash provided by operating

activities

Depreciation expenses 239,419 215,700

Amortization expenses 421,028 503,967

Provisions for bad debt expenses 3,215 3,766

Interest expenses 378,289 183,330

Interest income (41,556) (22,553)

Share of profit of associates and joint ventures accounted for using equity method (1,693,631) (1,442,902)

Gain on disposal of property, plant, and equipment (2,713) -

Gain on disopsal of intangible assets (58) -

Gain on disopsal of other assets (69) -

Gain on disposal of investments - (994)

Impairment loss on financial assets 25,400 -

Total adjustments to reconcile profit (670,676) (559,686)

Changes in operating assets and liabilities:

Changes in operating assets:

Increase in financial assets held for trading (5,646) (20,534)

(Increase) decrease in accounts receivable (10,633,594) 5,524,841

Decrease in other receivables 6,540,367 14,766,269

Decrease in inventories 154,240 40,704

Decrease (Increase) in other current assets 287,723 (323,136)

Total changes in operating assets (3,656,910) 19,988,144

Changes in operating liabilities:

Decrease in financial liabilities held for trading - (17,095)

Decrease in notes payable - (12,131)

Increase (decrease) in accounts payable 11,322,135 (13,234,310)

Decrease in other payables (70,310) (50,231)

Increase in other current liabilities 3,140,780 3,344,088

Decrease in net defined liabilities, non-current (268,761) (15,147)

Increase in unearned revenue 390,164 323,080

Total changes in operating liabilities 14,514,008 (9,661,746)

Total changes in operating assets and liabilities 10,857,098 10,326,398

Total adjustments 10,186,422 9,766,712

Cash inflow generated from operations 16,712,339 16,349,996

Interests received 42,631 21,849

Dividends received 1,507,000 1,268,000

Interests paid (380,317) (182,674)

Income taxes paid (1,187,910) (1,499,812)

Net cash flows from operating activities 16,693,743 15,957,359




STATEMENTS OF CASH FLOWS




Cash flows from investing activities:

Proceeds from capital reduction of available-for-sale financial assets 40,522 35,371

Acquisition of financial assets at cost (160,770) (15,235)

Proceeds from disposal of financial assets at cost - 88,354

Acquisition of investments accounted for using equity method (165,000) (1,074,394)

Proceeds from disposal of investments accounted for using equity method - 482,184

Proceeds from capital reduction of investments accounted for using equity method 194,243 -

Acquisition of property, plant and equipment (6,162,368) (131,683)

Proceeds from disposal of property, plant and equipment 3,143 -

Acquisition of intangible assets (285,035) (239,021)

Proceeds from disposal of intangible assets 113 -

Increase in other non-current assets (263,738) (780,940)

Net cash used in investing activities (6,798,890) (1,635,364)

Cash flows from financing activities:

Increase (decrease) in short-term borrowings 4,411,191 (674,419)

Proceeds from long-term borrowings 4,800,000 9,189,600

Repayments of long-term borrowings (10,389,600) (15,029,000)

Decrease in other non-current liabilities (4,871) (2,651)

Cash dividends paid (5,022,465) (6,278,081)

Net cash flows used in financing activities (6,205,745) (12,794,551)

Net decrease in cash and cash equivalents 3,689,108 1,527,444

Cash and cash equivalents at beginning of period 6,486,944 4,959,500

Cash and cash equivalents at end of period $ 10,176,052 6,486,944


Appendix 4-Independent Auditors’ Report and Consolidated Financial Statements for Year 2016

Independent Auditors’ Report

To the Board of Directors of Inventec Corporation:

Opinion

We have audited the consolidated financial statements of Inventec Corporation and its subsidiaries (“the Group”), which comprise the consolidated statement of financial position as of December 31,

2016 and 2015, and the consolidated statement of comprehensive income, changes in equity and cash flows for the years ended December 31, 2016 and 2015, 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, 2016 and 2015, 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 with the International Financial Reporting Standards (“IFRSs”), International Accounting

Standards (“IASs”), interpretation as well as related guidance endorsed by the Financial Supervisory

Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’

Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in 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 of 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, and we do not provide a separate opinion on these matters.

1. Revenue Recognition

Please refer to Note 4(r) and Note 6(s) for accounting policies of revenue recognition and related disclosure of revenue, respectively.


In order to meet the delivery requirement of some products, the Group set up multiple warehouses to meet the demand of picking up goods for oversea clients. Revenue recognition is based on the information provided by warehouses.

How the matter was addressed in our audit: In relation to the key audit matter above, we have performed certain key audit procedures that included assessing the accounting policies and appropriateness of revenue recognition; assessing appropriateness of the internal control of revenue recognition; inspecting whether the internal controls have been appropriately executed; inspecting whether the sales income have been appropriately recognized.

2. Allowance for Inventory Valuation and Obsolescence Losses

Please refer to Note 4(h) and Note 6(d) for accounting policies, and related disclosure information for inventory, respectively.


The Group’s materials may be obsolescence or slow-moving due to the risk of price decline in inventory, the material prepared for designing products and forecast orders may be canceled or changed, or changed on components and quantities. Therefore, the valuation of inventories has been identified as a key audit matter.


In relation to the key audit matter above, we have performed certain key audit procedures that included assessing the appropriateness of inventories valuation policies; ensuring the process of inventory valuation is in conformity with the accounting policies; inspecting the inventory aging report; recalculating allowance for inventory valuation based on the Group’s policies; and

performing retrospective test.

3. The offsetting agreements of financial assets and liabilities

Please refer to Note 4(g), 6(b) and 6(w) and 6(j) for accounting policy and detailed information on the agreements of financial assets and liabilities offsetting.


In order to use fund flexibly, the Group handled multiple kinds of financial instruments which IAS was endorsed by FSC to offset financial assets and liabilities and be reported in the balance sheet. The disclosure of financial instruments which are not expired on the balance sheet date would influence the judgment of report reader.


In relation to the key audit matter above, we have performed certain key audit procedures that included examining whether the amount of the signed contract were within the scope authorized by the board of directors; sampling transactions in 2016 to examine whether contracts were signed with banks; review the contracts to check if the regulation of offsetting criteria was met; and assessing whether the disclosure of financial assets and liabilities offsetting is appropriate.

Other Matter

Inventec Corporation has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2016 and 2015, on which we have issued an unqualified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated

Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including supervisors) 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 the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If

we conclude that a material uncertainty exists, we are required to draw attention in our auditors’

report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease

to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and 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 auditors’ report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Ying-Ju Chen and Liu-Fong Yang.

KPMG

Taipei, Taiwan (Republic of China) March 28, 2017

Notes to Readers

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

The auditor’s report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditor’s report and consolidated financial statements, the Chinese version shall prevail.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

INVENTEC CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2016 and 2015


2016.12.31 2015.12.31

ASSETS Amount % Amount %

Current Assets

1100 Cash and cash equivalents (Notes (4) and (6)(a)) $ 25,972,444 14 37,123,631 21

1110 Current financial assets at fair value through profit or loss (Notes (4) and (6)(b)) 190,544 - 221,615 -

1125 Current available-for-sale financial assets, net (Notes (4) and (6)(b)) 2,693,920 1 3,290,684 2

1170 Accounts receivable, net (Notes (4) and (6)(c)) 71,269,249 39 60,343,565 34

1180 Accounts receivable due from related parties, net (Notes (4), (6)(c) and (7)) 1,085 - 20,254 -

1200 Other receivables, net (Notes (4), (6)(c) and (7)) 980,596 1 1,004,386 1

1310 Inventories net (Notes (4) and (6)(d)) 31,935,038 18 28,959,904 16

1479 Other current assets (Notes (4), (6)(k) and (6)(n)) 3,750,245 2 2,613,620 2

136,793,121 75 133,577,659 76

Non-current assets

1523 Non-current available-for-sale financial assets, net (Notes (4) and (6)(b)) 225,248 - 331,492 -

1543 Non-current financial assets at cost, net (Notes (4) and (6)(b)) 434,143 - 502,173 -

1550 Investments accounted for using equity method, net (Notes (4) and (6)(e)) 380,091 - 532,888 -

1600 Property, plant and equipment (Notes (4) and (6)(h)) 38,666,219 21 34,660,330 20

1760 Investment property, net (Notes (4) and (6)(i)) 520,221 - 548,071 -

1780 Intangible assets (Notes (4) and (6)(j)) 890,024 1 872,905 1

1900 Other non-current assets (Notes (4), (6)(k) and (6)(o)) 4,464,150 3 4,720,955 3

45,580,096 25 42,168,814 24

TOTAL ASSETS $ 182,373,217 100 175,746,473 100

2016.12.31 2015.12.31

LIABILITIES AND EQUITY Amount % Amount %

Current Liabilities

2100 Short-term borrowings (Note (6)(l)) $ 14,580,403 8 7,744,025 4

2120 Current financial liabilities at fair value through profit or loss (Notes (4) and (6)(b)) 106 - 88,985 -

2160 Notes payable to related parties (Note (7)) 12,132 - 12,132 -

2170 Accounts payable 69,024,369 38 58,582,313 33

2180 Accounts payable to related parties (Note (7)) 8,167 - 27,239 -

2230 Current tax liabilities 2,025,353 1 2,446,103 2

2200 Other payables (Note (7)) 12,249,690 7 17,456,471 10

2322 Long-term borrowings, current portion (Note (1)) 411,211 - 266,800 -

2399 Other current liabilities 13,219,521 8 8,993,423 5

2313 Unearned revenue 3,552,004 2 3,154,378 2

115,082,956 64 98,771,869 56

Non-current Liabilities

2540 Long-term borrowings (Note (6)(l)) 4,063,889 2 11,293,260 6

2640 Net defined benefit liability, non-current (Notes (4) and (6)(n)) 747,274 - 1,030,424 1

2670 Other non-current liabilities (Notes (4) and (6)(o)) 1,971,836 1 1,752,071 1

6,782,999 3 14,075,755 8

Total Liabilities 121,865,955 67 112,847,624 64

Equity attributable to owners of parent

3110 Share capital (Note (6)(p)) 35,874,751 20 35,874,751 20

3200 Capital surplus (Note (6)(p)) 2,913,096 2 2,912,784 2

3300 Retained earnings (Note (6)(p)) 15,486,313 8 14,883,819 8

3400 Other equity (Note (6)(p)) 518,713 - 2,809,350 2

Total equity attributable to owners of parent 54,792,873 30 56,480,704 32

36XX Non-controlling interests 5,714,389 3 6,418,145 4

Total Equity 60,507,262 33 62,898,849 36

TOTAL LIABILITIES AND EQUITY $ 182,373,217 100 175,746,473 100

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



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



For the year ended December 31,

2016 2015

Amount % Amount %

4110 Sales revenue (Notes (4), (6)(s) and (7)) $ 428,466,015 100 395,470,221 100

5000 Operating costs (Notes (4) and (7)) 404,508,245 94 373,764,813 95


Operating expenses:

6100 Selling expenses 2,450,780 1 2,688,381 1

6200 Administrative expenses 4,625,422 1 4,792,827 1

6300 Research and development expenses 8,697,105 2 8,816,932 2

6400 Total operating expenses 15,773,307 4 16,298,140 4

Net operating income 8,184,463 2 5,407,268 1

Non-operating income and expenses:

7010 Other income (Note (6)(u)) 938,703 - 2,112,228 1

7020 Other gains and losses, net (Note (6)(u)) (1,407,751) - 676,152 -

7050 Finance costs, net (Note (6)(u)) (599,371) - (914,173) -

7060 Share of profit (loss) of associates and joint ventures accounted for using equity method, net (Notes (4) and (6)(e)) (26,135) - (97,605) -

Total non-operating income and expenses (1,094,554) - 1,776,602 1

7900 Profit from continuing operations before tax 7,089,909 2 7,183,870 2

7950 Less: Tax expense (Notes (4) and (6)(o)) 2,118,536 1 2,208,135 1

8200 Profit for the period 4,971,373 1 4,975,735 1

Other comprehensive income (loss):

8310 Components of other comprehensive income that will not be reclassified to profit or

loss

8311 Gains (losses) on remeasurements of defined benefit plans (10,240) - (58,068) -

8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss

(3,650) - 69 -

8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 1,747 - 9,781 -

Components of other comprehensive income that will not be reclassified to profit or loss (12,143) - (48,218) -

8360 Components of other comprehensive income that will be reclassified to profit or loss

8361 Exchange differences on translation (2,388,221) - (640,299) -

8362 Unrealised gains (losses) on valuation of available-for-sale financial assets 106,707 - 48,545 -

8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss

(21,653) - 12,423 -

8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss - - 381,929 -

Components of other comprehensive income that will be reclassified to profit or loss (2,303,167) - (197,402) -

Other comprehensive income, net (2,315,310) - (245,620) -

8500 Total comprehensive income $ 2,656,063 1 4,730,115 1

Profit (loss), attributable to:

8610 Profit (loss), attributable to owners of parent $ 5,637,120 1 5,563,633 1

8620 Profit (loss), attributable to non-controlling interests (665,747) - (587,898) -

$ 4,971,373 1 4,975,735 1

Comprehensive income attributable to:

8710 Comprehensive income, attributable to owners of parent $ 3,334,322 1 5,315,880 1

8720 Comprehensive income, attributable to non-controlling interests (678,259) - (585,765) -

$ 2,656,063 1 4,730,115 1

Earning per share attributable to stockholders of parent (Notes (4) and (6)(r))

9750 Basic earnings per share (NT dollars) $ 1.57 1.55

9850 Diluted earnings per share (NT dollars) $ 1.56 1.54




CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



Equity Attributable to Owners of Parent

Other Equity Interest

Capital Stock Retained Earnings Exchange

Differences on

Unrealized Gains

(Losses)

Share Capital Capital Surplus Legal Reserve

Unappropriated

Retained

Earnings

Translation of

Foreign Financial

Statements

on Available for

Sale Financial

Assets

Total Equity

Attributable to

Owners of Parent

Non Controlling

Interests Total Equity

Balance as of January 1, 2015 $ 35,874,751 2,920,718 7,644,271 8,129,064 2,868,962 140,272 57,578,038 6,844,752 64,422,790

Net income (loss) for the period - - - 5,563,633 - - 5,563,633 (587,898) 4,975,735

Other comprehensive income (loss) for the period - - - (47,869) (264,790) 64,906 (247,753) 2,133 (245,620)

Total comprehensive income (loss) for the period - - - 5,515,764 (264,790) 64,906 5,315,880 (585,765) 4,730,115


Legal reserve appropriated - - 709,781 (709,781) - - - - -

Cash dividends of ordinary share - - - (6,278,081) - - (6,278,081) - (6,278,081)

Changes in non-controlling interests - - - - - - - 16,943 16,943

Others - (7,934) - (127,199) - - (135,133) 142,215 7,082

Balance as of December 31, 2015 35,874,751 2,912,784 8,354,052 6,529,767 2,604,172 205,178 56,480,704 6,418,145 62,898,849

Net income (loss) for the period - - - 5,637,120 - - 5,637,120 (665,747) 4,971,373

Other comprehensive income (loss) for the period - - - (12,161) (2,381,945) 91,308 (2,302,798) (12,512) (2,315,310)

Total comprehensive income (loss) for the period - - - 5,624,959 (2,381,945) 91,308 3,334,322 (678,259) 2,656,063


Legal reserve appropriated - - 556,364 (556,364) - - - - -

Cash dividends of ordinary share - - - (5,022,465) - - (5,022,465) - (5,022,465)

Changes in non controlling interests - - - - - - - (25,497) (25,497)

Others - 312 - - - - 312 - 312

Balance as of December 31, 2016 $ 35,874,751 2,913,096 8,910,416 6,575,897 222,227 296,486 54,792,873 5,714,389 60,507,262




CONSOLIDATED STATEMENTS OF CASH FLOWS




Cash flows from operating activities

Profit before income tax $ 7,089,909 7,183,870

Adjustments:

Adjustments to reconcile profit before income tax to net cash provided by operating

activities

Depreciation expenses 3,979,496 3,976,246

Amortization expenses 826,049 964,995

Provisions for bad debt expenses 78,294 25,179

Interest expenses 599,371 914,173

Interest income (938,703) (2,112,228)

Share based payments - 8,533

Share of losses of associates and joint ventures accounted for using equity method 26,135 97,605

Losses (gains) on disposal of property, plant, equipment and investment property 107,408 (136,531)

Gain on disposal of investments (39,338) (331,861)

Impairment losses on non financial assets 560,738 140,379

Impairment loss on financial assets 236,893 -

Others 143,582 (772)

Total adjustments to reconcile profit 5,579,925 3,545,718

Changes in operating assets and liabilities:

Changes in operating assets:

Decrease in financial assets helding for trading 26,560 215,185

(Increase) decrease in accounts receivable (17,321,753) 11,810,327

(Increase) decrease in other receivables (361,890) 2,596,999

(Increase) decrease in inventories (4,779,063) 2,892,534

(Increase) decrease in other current assets (1,173,336) 1,610,970

Total changes in operating assets (23,609,482) 19,126,015

Changes in operating liabilities:

(Decrease) increase in financial liabilities held for trading (85,212) 48,343

Decrease in notes payable - (12,131)

Increase (decrease) in accounts payable 18,803,980 (20,374,773)

(Decrease) increase in other payables (4,260,195) 3,370,735

Increase in other current liabilities 4,310,556 4,276,868

Decrease in net defined benefit liabilities, non-current (289,065) (41,869)

Increase in unearned revenue 402,776 355,366

Total changes in operating liabilities 18,882,840 (12,377,461)

Total changes in operating assets and liabilities (4,726,642) 6,748,554

Total adjustments 853,283 10,294,272

Cash inflow generated from operations 7,943,192 17,478,142

Interests received 1,119,429 2,269,550

Interests paid (865,301) (864,916)

Income taxes paid (2,263,349) (1,861,137)

Net cash flows from operating activities 5,933,971 17,021,639




CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)




Cash flows from investing activities:

Acquisition of available-for-sale financial assets (5,882,296) (23,452,524)

Proceeds from disposal of available-for-sale financial assets 6,495,338 28,952,230

Proceeds from capital reduction of available-for-sale financial assets 40,522 35,371

Acquisition of financial assets at cost (168,762) (55,595)

Proceeds from capital reduction of financial assets at cost - 88,354

Acquisition of investments accounted for using equity method - (367,399)

Proceeds from capital reduction of investments accounted for using equity method 100,307 -

Acquisition of property, plant and equipment (10,692,904) (3,762,999)

Proceeds from disposal of property, plant, equipment and investment property 396,107 250,519

Acquisition of intangible assets (291,583) (239,988)

Net cash inflows from business combination - 1,305,370

Increase in other non-current assets (932,370) (145,720)

Net cash flows from (used in) investing activities (10,935,641) 2,607,619

Cash flows from financing activities:

Increase (decrease) in short-term borrowings 7,457,841 (8,351,998)

Proceeds from long-term debt 5,500,000 10,957,946

Repayments of long-term borrowings (12,506,543) (15,617,889)

Increase in other non-current liabilities 45,808 13,762

Cash dividends paid (5,022,465) (6,278,081)

Change in non-controlling interests (25,497) 249,395

Net cash flows used in financing activities (4,550,856) (19,026,865)

Effect of exchange rate changes on cash and cash equivalents (1,598,661) (1,210,503)

Net decrease in cash and cash equivalents (11,151,187) (608,110)

Cash and cash equivalents at beginning of period 37,123,631 37,731,741

Cash and cash equivalents at end of period $ 25,972,444 37,123,631


Appendix 5


Profit Distribution Table

Year 2016

Unit: NTD

Items: Total amount

Beginning retained earnings 950,937,666

Less: Defined benefit plans remeasurement (12,160,206)

Add: Net profit after tax 5,637,119,526

Less: 10% legal reserve (563,711,953)

Distributable net profit 6,012,185,033

Less: Distributable items:

Cash Dividend to shareholders (NT$1.45 per share) (5,201,838,846)

Unappropriated retained earnings 810,346,187

Documents

INVENTEC CORPORATION Minutes of 2017 Annual … · Minutes of 2017 Annual General Shareholders' Meeting (Translation) ... and Financial Statements (2) ... for Independent Accountants’