Advantech - AGM Information 2016 | FinancialReports.eu

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I. Meeting Agenda.........................................................................................02 一 1.Discussion( )......................................................................................03 2. Management Presentation...................................................................04 3. Matters to be approved .......................................................................05 4. Discussion( 二 ).....................................................................................07 5. Motions................................................................................................08 II. Attachments 1.The 2015 Business Report…................................................................09 2. Supervisor’s Review Report.......................................................…….11 3. Independent Auditor’s Report and Financial Statements……………14 4. The 2015 Profit Distribution Table......................................................32 5. Corporate Charter (Articles of Incorporation) Article Amendments Table………………………………………….…………………...33 III. Appendix 1. Corporate Charter (Articles of Incorporation) (before amendment) amendment).......................................................................................36 2. Rules of Procedure for Shareholder Meetings………………………..40 3. Current Shareholding of Directors and Supervisors.............................43 4. Employee bonuses and remuneration to directors and supervisors......44

Advantech Co., Ltd.

Procedure for the 2016 General Shareholders’ Meeting

Call the Meeting to Order
Chairperson Remarks
一
3.Discussion ( )
Management Presentation
Matters to be approved
二
1. Discussion ( )
Motions
Adjournment
1 -

I. Agenda of Annual Meeting

Advantech Co., Ltd. Agenda of 2016 General Shareholders’ Meeting

Time: 9:00 a.m. on May 25 (Wednesday), 2016

Place: (Neihu Headquarters) B1, No. 1, Line 20, Lane 26, Rueiguang Road, Neihu District, Taipei City

1. Call the Meeting to Order

2. Chairperson Remarks

一 3. Discussion ( )

(1) Amendment to the Company’s Corporate Charter

4. Management Presentations

(1) The 2015 Business Report
(2) Supervisor’s Review Report on the 2015 Financial Statements
(3) To report 2015 employees’ profit sharing bonus and directors’ compensation
(4) The Status of Endorsement and Guarantee in 2015

5. Matters to be approved

(1) Adoption of the 2015 Business Report and Financial Statements
(2) Adoption of the Proposal for Distribution of 2015 Profits

6. Discussion( 二 )

(1)The Company plans to issue employee share options with price lower than fair market value

7. Motions

8. Adjournment

一 1. Discussion( )

P r o p o s a l : 1

(Proposed by the board of directors)

Cause of action

： Amendment to the Company ’ s Corporate Charter (Articles of Incorporation). Please proceed to discuss.
The Article of Association is amended according to Article 235.1 and Article 235 s of the Company Law regarding bonus to employees and remuneration to directors and supervisor in compliance with Hua.Chong.I.Yi.Tzi No. 10400058161 Order dated May 20, 2015.
In order to comply with law and regulations and conform to the needs of commercial practice, the Company hereby proposes to amend Article 13, Article 20, Article 20.2, and Article 22 of the Corporate Charter.
Corporate Charter (Articles of Incorporation) Article Amendments Table. Please refer to Attachment 5.
Please proceed to discuss.

Resolution ：

2. Management Presentations

Report No. 1

Cause of action ： The 2015 Business Reports

Explanation ： The 2015 Business Report is attached as Attachment I.

Report No. 2

Cause of action ： Supervisor’s Review Report on the 2015 Financial Statements

：[1. The Supervisor’s Review Report is attached as Attachment II.]
Explanation 2. Supervisors are urged to read out the review report.

Report No. 3

Cause of action ： The distribution of bonus to the company’s employees and remuneration to directors and supervisors in 2015.
It is processed in accordance with Article 235.1 of the Company Law, Jin.sun.tzi No. 10402413890 Letter of the MOEA dated June 11, 2015, and Jin.sun.tzi No. 10402427800 Letter of the MOEA dated October 15, 2015.
In consideration of the company’s overall business operations and the payment standard of the industry, it is recommended to appropriate an amount of NT$200,000,000 as bonus to employees and NT$12,000,000 as remuneration to directors and supervisors paid in cash from the net income of 2015.
The proposal is passed in the Remuneration Committee meeting.

Report No. 4

Cause of action ： The Status of Endorsement and Guarantee in 2015

：[1. In compliance with the Company’s “Procedure for Making of ]
Explanation Endorsements / Guarantees”
The Company issued a letter of guarantee to endorse and guarantee the subsidiary’s purchase of materials in response to the subsidiary’s business operation. The balance of endorsement and guarantee amounted to NT$131,300 thousand as of December 31, 2015, representing 2.08% of the Company’s paid-in capital.
Please review the statement of endorsement and guaranteed amount enclosed.

	enclosed.
Guarantor (Company)	Subsidiary of the guaranteed company	Category	Amount (original currency ___K)	NTD (NTD___K)	Remarks
Advantech (ACL)	ADVANSUS	Endorsement and guarantee for purchase of materials	USD4,000	131,300
Total				$131,300	Under the limit(Note)

Note: The amount of limit is calculated in accordance with the Company’s Rules for Making of Endorsements and Guarantees:

(1)Maximum endorsement and guarantee amounted to NT$6,992,250 thousand.

(2)Maximum endorsement and guarantee for one single enterprise amounted to NT$ 2,330,750 thousand.

(3)The amount of limit referred to above is calculated in accordance with the net value NT$23,307,501 thousand stated in the 2015 audited financial statements.

3. Matters to be approved

(Proposed by the board of directors)

Proposal 1: Cause of action[：][ Adoption of the 2015 Business Report and Financial Statements ]

Explanation ： 1. The 2015 business report and standalone financial statements
(including consolidated financial statements) were composed by the Board of Directors. The Company’s financial statements were audited by independent auditors, M.J. Chiou and C.S. Chen, of Deloitte & Touche and were reviewed by the supervisor along with the business report with a written audit report issued.
The Business Report, independent auditor’s report, and Financial Statements are enclosed as Attachment I and Attachment III.
Please acknowledge.
Resolution ：

(Proposed by the board of directors)

Proposal: 2 (Proposed by the board of directors) Cause of action ： Adoption of the Proposal for Distribution of 2015 Profits Explanation ： 1. Please refer to the 2015 prorofit distribution table in Attachment IV.

The company’s 2015 business operation is with net income of NT$5,104,346,793, plus the beginning unappropriated earnings of NT$2,080,287,842, net of the retained earnings adjustment for NT$62,905,864 due to long-term equity investments, defined benefit plans revaluation amount of NT$23,278,914 credited to the retained earnings, and the legal reserve of NT$510,434,679 appropriated that is with the distributable earnings of NT$6,588,015,178 resulted to be distributed as follows:
(1) An amount of NT$3,791,118,600 out of the 2015 earnings is appropriated for distribution as shareholder’s dividend (cash dividend). There were 631,853,100 shares of common stock outstanding on December 31, 2015 that are entitled to the distribution of shareholder’s dividend at NT$6 per share.
(2) The distribution of cash dividend is calculated to the dollar (round up to the dollar). The total amount of the odd shares with a distribution of less than NT$1 will be booked as the other income or other expense of the company.
(3) The current distribution of earnings is scheduled before the dividend benchmark date. If there is any change in the yield rate as a result of any change in the Company’s outstanding shares, a request is to be made in the shareholders’ meeting having the Board authorized to handle matters related to the changes.
(4) In addition, in line with the implementation of the income tax integration, while calculating the tax credit distributed to shareholders in accordance with Article 66.6 of the Income

Tax Act, the earnings of 1998 and thereafter should be distributed with priority; also, while calculating the distribution of unappropriated earnings with 10% business tax levied in accordance with Article 66.9 of the Income Tax Act, the earnings of the most recent years should be distributed with priority in accordance with Tai.Fin.Tax No. 871941343 Letter dated April 30, 1998 by the Ministry of Finance and by itemized recognition.

(5) Please acknowledge.

Resolution

3. Discussion( 二 )

P r o p o s a l : 1

(Proposed by the board of directors)

Cause of action

： The company’s plan of issuing employee stock warrants at a price below market price is hereby proposed for a resolution.
The company intends to have employee stock warrant issued at a price below market price in accordance with Article 28.3 of the Securities Exchange Act and the “ Regulations Governing the Offering and Issuance of Securities by Securities Issuers ” published by the Securities and Futures Bureau, Financial Supervisory Commission, R.O.C.
According to Article 56-1 of the “ Regulations Governing the Offering and Issuance of Securities by Securities Issuers: ”
- (1) Total number of employee stock warrants issued, the number of shares to be subscribed for each unit of stock warrant, and the total number of stock shares to be issued for the stock option exercised:
  - A total of 6,500 units of employee stock warrants are issued currently and each unit of stock warrant are entitled to the subscription of 1,000 stock shares. A total of 6,500,000 common stock shares are issued for the stock option exercised.
- (2) The reference and reasonability of stock price: Stock price is NT$100 per share.
- (3) Stock subscriber ’ s qualification and the number of ubscriber shares:
  - It is limited to the full-time employees in particular level or position or who have made a special contribution to the Company and the full-time employees of the domestic and overseas subsidiaries that are with over 50% (inclusive) shareholding held by the Company directly or indirectly. The stock subscription qualification base date is decided by the chairman. The employees who qualified for stock subscription and the number of stock shares to be subscribed by each qualified employee are determined according to their job performance, overall contributions, or special achievements with the approval of the chairman and the consent of the board of directors. According to Article 56-1 Paragraph 1 of the “ Regulations Governing the Offering and Issuance of Securities by Securities Issuers, ” the stock warrant issued by the company and subscribe by one single subscriber accumulatively plus the new shares with limited

rights accumulated by the subscriber together may not exceed 0.3% of the total outstanding stock shares; moreover, together with the stock warrant issued by the issuer in accordance with Article 56 Paragraph 1 and subscribe by one single subscriber accumulatively may not exceed 1% of the total outstanding stock shares.

(4) The reasons for issuing current employee stock warrant:

The Company aims to attract and retain talents that are needed by ’ the company and to motivate employees and enhance mployee s loyalty in order to create common interests of the Company and shareholders.

(5) The impacts on shareholders ’ equity:

’ I.The potential expense amount and its impact on the company s earnings per share dilution:

Input the common stock closing price on February 1, 2016 and the actuarial assumptions and estimates in the stock option evaluation model for calculations. The annual amortized expense amount in 2016~2021: NT$111,700,153 (estimate of six months), NT$268,080,367, NT$206,005,367, NT$98,123,422, NT$52,887,575, and NT$17,892,116 (estimate of six months), respectively, for a grand total of NT$754,689,000. According to the stock closing price on February 1, 2016 and the actuarial assumptions and estimates, the annual earnings per share dilution in 2016~2021: NT$0.18, NT$0.42, NT$0.32, NT$0.15, NT$0.08, and NT$0.03, respectively.

II.Please explain the Company ’ s financial burden resulted from those who have the contract performed with the outstanding stock shares: Not applicable.

III. Please resolve.

Resolution ：

4.Motions

5. Adjournment

II. Attachments

Business Report

D e a r s ha r e h ol d e rs :

2015 Summary of Results

In 2015, Advantech reported consolidated revenues of NT$ 38 billion, an increase of six percent over the NT$35 billion of 2014. Net income was NT$5.13 billion and diluted earnings per share were NT$8.08. Gross profit margin was 40.4 percent, compared with 40.3 percent in 2014, and operating profit margin was 15.6 percent compared with 15.4 percent a year earlier. Net profit margin was 13.49 percent, a decrease of 0.31 percentage points from the previous year’s 13.8 percent.

Our Vision for IoT

As the industrial PC and intelligent system leader, Advantech has experienced increasing demand from the Internet of Things (IoT) industry over the past few years, and envisions that IoT may drive the next 15 years growth for the industry. According to a report published by McKinsey Global Institute in June 2015, IoT may create a US$ 4~11 trillion economic impact in 2025. In addition, applications related to smart factories and smart cities may create a US$2~5 trillion economic impact in 2025. Although IoT is still in the early stage, Advantech believe its tremendous economic impact will change the direction of the Information Technology Industry over the next 20 years. At the same time, both startup companies and existing technology enterprises will invest and develop their business models and technology to catch up IoT tremendous business opportunities. Advantech, as the leading intelligent system platform provider, will play a major part in this ecosystem.

Opportunities always come with challenges. We aim to provide differentiated services to create greater customer value. Given this standpoint, we are developing a new software platform, WISE-PaaS, and we are cooperating with cross-sector partners to form a vertical market IoT ecosystem. Internal incubation and external investment are critical in the process to build the SRP (Solution Ready Platform) services and to strength our leadership in the IoT industry.

Advantech’s Key Strategies to Achieve 2020 Vision

SRP and Differentiated Value-added Services. Advantech designed the WISE-PaaS platform to fulfill the needs of the IoT industry. Especially, PaaS (Platform as a Service) will form the key element that accelerates the deployment of Smart City and IoT industry solutions in Taiwan; this will be Advantech’s investment focus. We will employ a PaaS “sharing economy” strategy to accelerate the development of the IoT industry, and we hope to deploy value-added software as a PaaS building block provider. Furthermore, SRP, a collection of IoT software API’s designed for system integrators, will be a key element for Advantech to provide differentiated value-added services to our customers.

Cross-sector Alliance to Form Vertical Market IoT Ecosystem. Advantech has positioned itself as the accelerator of the intelligent planet since 2010, and has consistently created great value for its customers for the past three decades. IoT applications provide tremendous business opportunities. At the same time, challenges also face system integrators. A common difficulty is that system integrators cannot find the right partner to consolidate all the intelligent systems into a total IoT solution. Given this, Advantech transformed its business model from product-oriented to vertical market solution-oriented. We now focus on selective vertical markets such as smart hospitals, smart retail, digital logistics & fleet management, and smart buildings—where Advantech is in good position and has great potential.
Internal Incubation and External Investment. Looking forward, incubation and investment will play important roles to facilitate the IoT penetration and strengthen Advantech’s leadership. Incubation combines internal technology development and external collaboration. Investment includes IoT accelerator and M&A. In November 2015, we announced the 100% acquisition stake of B+B SmartWorx, with a US$99.85mn transaction price. The deal was successfully closed in January, 2016 and we will fully consolidate B+B SmartWorx in 2016. Thanks to B+B SmartWorx, Advantech will have a stronger position in the industrial communication sector. At the same time, B+B SmartWorx will also help us to reach out to new customers, and thereby speed up global market expansion.

2016 Outlook

Advantech reported record high revenues and net income in 2015. However, the growth rate did not reach our original goal due to the weakening global macro situation and increasing currency risks in the second half of 2015. Looking forward in 2016, Advantech expects to achieve its profitable revenues growth target on the back of the increasing penetration of IoT adoption, our leadership in intelligent systems, and our differentiated value-added services, which should reduce the uncertainty from macro-economic impacts.

Strengthening Corporate Governance and Business Leadership

Advantech expects to strengthen its execution of good corporate governance and actively participate in corporate governance evaluation. Our goal is the pursuit of excellence and sustainable operation and Advantech has established its altruistic spirit at the core of its business culture, along with the pursuit of the best and balanced interests of society, shareholders, customers, and employees.

Advantech Co., Ltd. Chairman K.C. Liu President Chaney Ho

Chief Financial officer Rorie Kang

< Attachment 2>

Supervisor’s Review Report

The supervisors have reviewed the 2015 annual business reports, profit distribution proposals and individual financial statements and consolidated financial statements prepared and presented by the Company’s Board of Directors, and the independent auditor’s report issued by CPA Meng Chieh Chiu and CAP Chin Hsiang Chen of Deloitte & Touche with an independent auditor’s report issued.

The supervisor’s report is hereby issued in accordance with Article 219 of the Company Law after reviewing the annual business reports, financial statements, and profit distribution proposals without any nonconformity identified.

Sincerely yours,

The 2016 General Shareholders’ Meeting of Advantech Co., Ltd.

Supervisor: AIDC Investment Corp. Representative: Gary Tseng

March 04, 2016

Supervisor’s Review Report

Sincerely yours,

The 2016 General Shareholders’ Meeting of Advantech Co., Ltd.

Supervisor: Thomas Chen

March 04, 2016

Supervisor’s Review Report

Sincerely yours,

The 2016 General Shareholders’ Meeting of Advantech Co., Ltd.

Supervisor: James Wu

March 04, 2016

< Attachment 3>

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the Shareholders Advantech Co., Ltd.

We have audited the accompanying balance sheets of Advantech Co., Ltd. (the “Company”) as of December 31, 2015 and 2014, and the related statements of comprehensive income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. However, as stated in Note 11 to the financial statements, we did not audit the financial statements as of and for the years ended December 31, 2015 and 2014 of some companies in which the Company had investments accounted for by the equity method. The financial statements of these investees were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the investees’ amounts included herein, is based solely on the reports of the other auditors. The carrying amounts of these investments were 4.60% (NT$1,439,156 thousand) and 4.95% (NT$1,460,624 thousand) of the Company’s total assets as of December 31, 2015 and 2014, respectively. Also, the shares of profit and loss of subsidiaries and associates accounted for using the equity method were 3.17% (NT$186,253 thousand) and 3.13% (NT$176,571 thousand) of the Company’s profit before income tax in 2015 and 2014, respectively.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Advantech Co., Ltd. as of December 31, 2015 and 2014, and its financial performance and cash flows for the years ended December 31, 2015 and 2014, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC.

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The accompanying schedules of major accounting items of Advantech Co., Ltd. as of and for the year ended December 31, 2015 are presented for the purpose of additional analysis. Such schedules have been subjected to the auditing procedures described in the second paragraph. In our opinion, such schedules are consistent, in all material respects, with the financial statements referred to in the first paragraph.

March 4, 2016

Notice to Readers

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

For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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ADVANTECH CO., LTD.

BALANCE SHEETS DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4, 7 and 24) Available-for-sale financial assets - current (Notes 4, 8 and 24) Notes receivable (Notes 4, 9 and 25) Trade receivables (Notes 4 and 9) Trade receivables to related parties (Notes 4 and 25) Other receivables Other receivables from related parties (Note 25) Inventories (Notes 4 and 10) Other current financial assets (Note 26) Other current assets Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4, 8 and 24) Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 4 and 12) Goodwill (Notes 4 and 13) Other intangible assets (Note 4) Deferred tax assets (Notes 4 and 18) Prepayments for business facilities Prepayment for investments (Note 28) Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 24) Trade payables Trade payables to related parties (Note 25) Other payables (Notes 14 and 17) Current tax liabilities (Notes 4 and 18) Short-term warranty provision (Note 4) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 18) Net defined benefit liabilities (Notes 4, 15 and 17) Credit balance of investments accounted for using the equity method (Notes 4 and 11) Other noncurrent liabilities Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE EQUITY Share capital Ordinary shares Advance receipts for share capital Total share capital Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized gains (losses) on available-for-sale financial assets Total other equity Total equity TOTAL		2015		2014 (Restated)
		Amount % $ 815,293 3 7,391 - - - 55,480 - 1,135,240 4 3,977,999 13 113,056 - 15,596 - 1,673,156 5 - - 60,318 - 7,853,529 25 1,700,814 6 13,138,225 42 6,278,109 20 111,599 - 74,049 - 114,710 1 15,489 - 1,968,044 6 10,837 - 23,411,876 75 $ 31,265,405 100 $ 6,352 - 899,480 3 2,687,130 9 2,255,915 7 853,769 3 41,410 - 72,312 - 6,816,368 22 927,732 3 182,172 - - - 31,632 - 1,141,536 3 7,957,904 25 6,318,531 20 - - 6,318,531 20 5,587,555 18 3,962,842 13 7,098,449 23 11,061,291 36 271,859 1 68,265 - 340,124 1 23,307,501 75 $ 31,265,405 100		Amount % $ 1,049,397 4 14,879 - 1,717,756 6 45,319 - 993,742 3 4,014,411 14 86,064 - 15,641 - 1,404,202 5 18,650 - 51,648 - 9,411,709 32 2,385,937 8 12,020,741 41 5,354,959 18 111,599 1 86,240 - 81,941 - 14,972 - - - 11,024 - 20,067,413 68 $ 29,479,122 100 $ 8,698 - 777,932 3 2,433,936 8 2,070,485 7 650,399 2 36,119 - 61,224 - 6,038,793 20 889,049 3 164,249 1 7,286 - 33,726 - 1,094,310 4 7,133,103 24 6,301,031 22 11,060 - 6,312,091 22 5,306,958 18 3,472,064 12 6,353,273 21 9,825,337 33 338,356 1 563,277 2 901,633 3 22,346,019 76 $ 29,479,122 100

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

(With Deloitte & Touche audit report dated March 4, 2016)

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ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4 and 25) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 10, 17 and 25) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 17 and 25) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING PROFIT NONOPERATING INCOME Share of the profit of subsidiaries and associates accounted for using the equity method (Notes 4 and 11) Interest income (Note 4 ) Gains (losses) on disposal of property, plant and equipment (Note 4) Gains on disposal of investments (Notes 4 and 16) Foreign exchange gains (losses), net (Notes 4 , 17 and 29) Gains on financial instruments at fair value through profit or loss (Note 4) Dividend income (Note 4) Other income (Notes 8 and 25) Finance costs (Note 17)		2015 Amount % $ 28,673,906 99 321,746 1 28,995,652 100 20,758,574 72 8,237,078 28 (330,254) (1) 240,811 1 8,147,635 28 704,299 3 693,290 2 2,568,723 9 3,966,312 14 4,181,323 14 1,344,991 5 1,665 - (161) - 198,848 1 (88,859) - 83,798 - 105,445 - 112,567 - - -		2014 (Restated)
				Amount % $ 25,839,025 98 458,113 2 26,297,138 100 19,267,227 73 7,029,911 27 (240,811) (1) 246,869 1 7,035,969 27 634,611 2 709,880 3 2,375,816 9 3,720,307 14 3,315,662 13 1,493,406 6 20,510 - 59,702 - 43,163 - 53,744 - 60,072 - 124,466 1 528,395 2 (421) - (Continued)

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ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Losses on financial instruments at fair value through profit or loss (Note 4) Other losses Total nonoperating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 18) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 3 and 15) Share of the other comprehensive loss of subsidiaries and associates accounted for using the equity method (Notes 3 and 11) Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 3 and 18) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Notes 4 and 16) Unrealized gains (losses) on available-for-sale financial assets (Notes 4 and 16) Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method (Notes 4, 11 and 16) Income tax relating to item that may be reclassified subsequently to profit or loss (Notes 4, 16 and 18) Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		2015 Amount % $ (67,063) - (53) - 1,691,178 6 5,872,501 20 768,155 2 5,104,346 18 (18,736) - (2,683) - 3,185 - (18,234) - (82,566) - (557,594) (2) 65,031 - 13,620 - (561,509) (2) (579,743) (2) $ 4,524,603 16		2014 (Restated)
				Amount % $ (49,171) - (17) - 2,333,849 9 5,649,511 22 741,863 3 4,907,648 19 (4,989) - (62) - 848 - (4,203) - 246,470 1 659,064 2 (15,741) - (42,667) - 847,126 3 842,923 3 $ 5,750,571 22 (Continued)

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ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

EARNINGS PER SHARE (Note 19) Basic Diluted	2015 Amount % $8.08 $8.05	2014 (Restated)
		Amount % $7.80 $7.77

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

(With Deloitte & Touche audit report dated March 4, 2016)

(Concluded)

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				Total Equity	$ 19,258,299	(5,045 )	19,253,254		-	(3,017,820 )	-	214,085	111,393	8,966	15,986		11,457	(1,873 )	4,907,648	842,923	5,750,571	22,346,019		-	(3,787,255 )	30,878	261,877	2,172		(74,360 )	3,567	5,104,346	(579,743 )	4,524,603	$23,307,501
Other Equity (Notes 4 and 16)	Exchange Unrealized Gain	Differences on (Loss) on	Translating Available-for-sale	Foreign Operations Financial Assets	$ 130,041 $ (75,534 )	- -	130,041 (75,534 )		- -	- -	- -	- -	- -	- -	- -		- -	- -	- -	208,315 638,811	208,315 638,811	338,356 563,277		- -	- -	- -	- -	- -		- -	- -	- -	(66,497 ) (495,012 )	(66,497 ) (495,012 )	$ 271,859 $ 68,265
		Retained Earnings (Notes 4, 16 and 21)	Unappropriated	Legal Reserve Earnings Total	$ 3,061,424 $ 5,452,733 $ 8,514,157	- (5,045 ) (5,045 )	3,061,424 5,447,688 8,509,112		410,640 (410,640 ) -	- (3,017,820 ) (3,017,820 )	- (569,400 ) (569,400 )	- - -	- - -	- - -	- - -		- - -	- - -	- 4,907,648 4,907,648	- (4,203 ) (4,203 )	- 4,903,445 4,903,445	3,472,064 6,353,273 9,825,337		490,778 (490,778 ) -	- (3,787,255 ) (3,787,255 )	- - -	- - -	- - -		- (62,903 ) (62,903 )	- - -	- 5,104,346 5,104,346	- (18,234 ) (18,234 )	- 5,086,112 5,086,112	$ 3,962,842 $ 7,098,449 $11,061,291
			Capital Surplus	(Notes 4, 16 and 20)	$ 4,995,635	-	4,995,635		-	-	-	167,525	111,393	8,966	13,855		11,457	(1,873 )	-	-	-	5,306,958		-	-	24,438	261,877	2,172		(11,457 )	3,567	-	-	-	$ 5,587,555
				Total	5,694,000	-	5,694,000		-	-	569,400	46,560	-	-	2,131		-	-	-	-	-	6,312,091		-	-	6,440	-	-		-	-	-	-	-	6,318,531
		Issued Capital (Notes 16 and 20)	Advance Receipts	Share Capital for Share Capital	$ 5,669,249 $ 24,751 $	- -	5,669,249 24,751		- -	- -	569,400 -	51,410 (4,850 )	- -	- -	10,972 (8,841 )		- -	- -	- -	- -	- -	6,301,031 11,060		- -	- -	17,500 (11,060 )	- -	- -		- -	- -	- -	- -	- -	$ 6,318,531 $ - $
					BALANCE AT JANUARY 1, 2014	Effect of retrospective application and retrospective restatement	BALANCE AT JANUARY 1, 2014 AS RESTATED	Appropriation of the 2013 earrings	Legal reserve	Cash dividends distributed by the Company	Share dividends distributed by the Company	Issue of ordinary shares under employee share options	Compensation cost recognized for employee share options	Change in capital surplus from investments in associates	Convertible bonds converted to ordinary shares	Difference between considerations and carrying amounts of subsidiaries acquired or	disposed of	Changes in percentage of ownership interest in subsidiaries	Net profit for the year ended December 31, 2014	Other comprehensive income for the year ended December 31, 2014, net of income tax	Total comprehensive income for the year ended December 31, 2014	BALANCE AT DECEMBER 31, 2014	Appropriation of the 2014 earrings	Legal reserve	Cash dividends distributed by the Company	Issue of ordinary shares under employee share options	Compensation cost recognized for employee share options	Change in capital surplus from investments in associates	Difference between considerations and carrying amounts of subsidiaries acquired or	disposed of	Changes in percentage of ownership interest in subsidiaries	Net profit for the year ended December 31, 2015	Other comprehensive income for the year ended December 31, 2015, net of income tax	Total comprehensive income for the year ended December 31, 2015	BALANCE AT DECEMBER 31, 2015

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ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Impairment loss recognized (reversal of impairment loss) of trade receivables Net gain on financial assets or liabilities at fair value through profit or loss Finance costs Interest income Dividend income Compensation cost of employee share options Share of profit of subsidiaries and associates accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Loss on bond redemption Realized loss (gain) on the transactions with subsidiaries and associates Changes in operating assets and liabilities Financial assets held for trading Notes receivable Trade receivables Trade receivables to related parties Other receivables Other receivable due from related parties Inventories Other current assets Other financial assets Trade payables Trade payables to related parties Other payables Net defined benefit liabilities Other current liabilities Other noncurrent liabilities Cash generated from operations Interest received Dividend received Income tax paid Net cash generated from operating activities	2015 $ 5,872,501 242,916 74,874 (2,203) (16,735) - (1,665) (105,445) 261,877 (1,344,991) 161 (198,848) - 89,443 21,877 (10,161) (139,295) 36,412 (26,584) 45 (268,954) (8,670) 18,650 121,548 253,194 190,449 (813) 11,088 (1,975) 5,068,696 1,257 105,445 (542,066) 4,633,332	2014 (Restated) $ 5,649,511 202,173 61,530 8,703 (10,901) 421 (20,510) (124,466) 111,393 (1,493,406) (59,702) (43,163) 17 (6,058) (16,279) (10,454) (132,090) (909,350) 45,967 135,447 (127,130) (34,931) 90,460 201,512 333,229 201,004 (1,880) (5,225) 6,126 4,051,948 20,448 124,466 (464,022) 3,732,840 (Continued)

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ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of available-for-sale financial assets Proceeds on sale of available-for-sale financial assets Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using the equity method Prepayment for investments Proceeds of the capital reduction of investments accounted for using the equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Payments for intangible assets Proceeds from disposal of intangible assets Net cash outflows from business combination Decrease (increase) in prepayments for equipment Dividends received from subsidiaries and associates Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of bond payables Decrease (increase) in guarantee deposits received Cash dividends paid Exercise of employee share options Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2015 $ (3,710,080) 5,754,213 (688,577) - (1,968,044) 42,927 (1,181,375) 294 187 (62,714) 31 - 14,609 687,589 (1,110,940) - (119) (3,787,255) 30,878 (3,756,496) (234,104) 1,049,397 $ 815,293	2014 (Restated) $ (3,423,628) 3,284,544 (149,643) 51,175 - - (875,370) 127,362 15,009 (47,706) - (296,297) (87,760) 489,682 (912,632) (2,400) 119 (3,017,820) 214,085 (2,806,016) 14,192 1,035,205 $ 1,049,397

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

(With Deloitte & Touche audit report dated March 4, 2016)

(Concluded)

-22-

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Advantech Co., Ltd.

We have audited the accompanying consolidated balance sheets of Advantech Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2015 and 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. However, as stated in Note 12 to the consolidated financial statements, we did not audit the consolidated financial statements as of and for the years ended December 31, 2015 and 2014 of some subsidiaries. The consolidated financial statements of these subsidiaries were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the subsidiaries’ amounts included herein, is based solely on the reports of other auditors. The total assets of these subsidiaries were 4.17% (NT$1,418,592 thousand) and 4.77% (NT$1,505,128 thousand) of the consolidated assets as of December 31, 2015 and 2014, respectively. The operating revenues of these subsidiaries were 7.76% (NT$2,947,500 thousand) and 8.67% (NT$3,099,173 thousand) of the consolidated operating revenues for 2015 and 2014, respectively. Also, as stated in Note 13 to the consolidated financial statements, we did not audit the financial statements as of and for the years ended December 31, 2015 and 2014 of some companies in which the Company had investments accounted for using the equity method. The consolidated financial statements of these investees were audited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the investees’ amounts included herein, is based solely on the reports of the other auditors. Investments accounted for using the equity method were 1.41% (NT$477,984 thousand) and 1.42% (NT$447,663 thousand) of the consolidated assets as of and for the years ended December 31, 2015 and 2014. Also, the equity in the investees’ net gains was 1.75% (NT$110,226 thousand) and 1.66% (NT$100,264 thousand) of the consolidated pretax profits in 2015 and 2014, respectively.

We conducted our audits in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

-23-

In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2015 and 2014, and the results of its financial performance and its consolidated cash flows for the years then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed by the Financial Supervisory Commission (FSC) of the Republic of China.

We have also audited the financial statements of the parent company, Advantech Co., Ltd., as of and for the years ended December 31, 2015 and 2014 and have expressed a modified unqualified opinion on those financial statements.

March 4, 2016

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4, 5, 7 and 28) Available-for-sale financial assets - current (Notes 4, 8 and 28) Debt investments with no active market - current (Notes 4 and 9) Notes receivable (Notes 4, 5, 10 and 29) Accounts receivable (Notes 4, 5 and 10) Accounts receivable from related parties (Note 29) Other receivables Inventories (Notes 4, 5 and 11) Other current financial assets (Note 30) Other current assets (Note 16) Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent, net of current portion (Notes 4, 8 and 28) Investments accounted for using the equity method (Notes 4 and 13) Property, plant and equipment (Notes 4 and 14) Goodwill (Notes 4, 5 and 15) Other intangible assets Deferred tax assets (Notes 4 and 22) Prepayments for business facilities Prepayments for investments (Note 32) Long-term prepayments for lease (Note 16) Other noncurrent assets (Note 26) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 17 and 28) Financial liabilities at fair value through profit or loss - current (Notes 4, 5, 7 and 28) Trade payables (Note 29) Other payables (Notes 18 and 21) Current tax liabilities (Notes 4 and 22) Short-term warranty provision (Note 4) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 22) Long-term accounts payable Net defined benefit liabilities (Notes 4, 5 and 19) Other noncurrent liabilities Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital Ordinary shares Advance receipts for share capital Total share capital Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of foreign financial statements Unrealized gains on available-for-sale financial assets Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2015		2014(Restated)
		Amount % $ 4,358,259 13 176,389 1 1,755,843 5 3,171 - 970,722 3 5,428,574 16 26,775 - 40,811 - 4,868,860 14 - - 456,342 1 18,085,746 53 1,747,598 5 477,984 2 9,576,879 28 1,139,559 3 227,686 1 217,989 1 65,753 - 2,279,881 7 100,875 - 59,183 - 15,893,387 47 $ 33,979,133 100 $ 880,625 3 6,352 - 3,226,069 9 3,380,317 10 1,057,226 3 145,646 - 546,295 2 9,242,530 27 938,491 3 - - 183,540 1 160,795 - 1,282,826 4 10,525,356 31 6,318,531 19 - - 6,318,531 19 5,587,555 16 3,962,842 12 7,098,449 21 11,061,291 33 271,859 1 68,265 - 340,124 1 23,307,501 69 146,276 - 23,453,777 69 $ 33,979,133 100		Amount % $ 3,122,007 10 165,402 - 3,431,359 11 5,487 - 949,861 3 4,960,373 16 5,400 - 36,550 - 4,781,550 15 18,650 - 513,393 2 17,990,032 57 2,428,569 8 447,663 1 8,876,606 28 1,168,727 4 286,312 1 161,268 1 45,511 - - - 96,516 - 42,616 - 13,553,788 43 $ 31,543,820 100 $ 3,080 - 8,698 - 3,166,195 10 3,174,189 10 787,404 3 141,354 - 498,900 2 7,779,820 25 897,940 3 43,028 - 165,428 1 124,585 - 1,230,981 4 9,010,801 29 6,301,031 20 11,060 - 6,312,091 20 5,306,958 17 3,472,064 11 6,353,273 20 9,825,337 31 338,356 1 563,277 2 901,633 3 22,346,019 71 187,000 - 22,533,019 71 $ 31,543,820 100

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

(With Deloitte & Touche audit report dated March 4, 2016)

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Note 29) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 21 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 21 and 29) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING PROFIT NONOPERATING INCOME Share of the profit of associates accounted for using the equity method (Notes 4 and 13) Interest income Gains (losses) on disposal of property, plant and equipment (Note 4) Gains on disposal of investments (Note 4) Foreign exchange gains (losses), net (Notes 4, 21 and 33) Gains on financial instruments at fair value through profit or loss (Note 4) Dividend income Other income (Note 8) Finance costs (Note 21) Losses on financial instruments at fair value through profit or loss (Note 4) Other losses Total nonoperating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 22) NET PROFIT FOR THE YEAR		2015 Amount % $ 36,978,961 97 1,021,621 3 38,000,582 100 22,655,592 59 15,344,990 41 3,889,856 10 1,982,879 5 3,543,748 10 9,416,483 25 5,928,507 16 110,226 - 40,613 - (5,410) - 202,458 1 (186,889) - 83,798 - 139,725 - 121,329 - (10,041) - (130,409) - (4,372) - 361,028 1 6,289,535 17 1,162,560 3 5,126,975 14		2014 (Restated)
				Amount % $ 34,662,269 97 1,069,430 3 35,731,699 100 21,339,035 60 14,392,664 40 3,533,354 10 2,115,760 6 3,235,226 9 8,884,340 25 5,508,324 15 100,264 1 54,355 - 56,473 - 27,143 - 78,206 - 85,664 - 130,737 1 91,185 - (14,420) - (49,171) - (13,815) - 546,621 2 6,054,945 17 1,123,069 3 4,931,876 14 (Continued)

-26-

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 3, 19 and 20) Share of the other comprehensive income (loss) of associates accounted for using the equity method (Note 13) Income tax relating to items that will not be reclassified (Notes 3 and 22) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Notes 4 and 20) Unrealized gains (losses) on available-for-sale financial assets (Notes 4 and 20) Share of the other comprehensive income of associates (Notes 4, 13 and 20) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 4, 20 and 22) Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests		2015 Amount % $ (19,303) - (2,424) - 3,281 - (101,490) - (495,012) (2) 2,449 - 13,620 - (598,879) (2) $ 4,528,096 12 $ 5,104,346 13 22,629 - $ 5,126,975 13 $ 4,524,603 12 3,493 - $ 4,528,096 12		2014 (Restated)
				Amount % $ (5,562) - 199 - 945 - 243,904 - 638,811 2 4,512 - (42,667) - 840,142 2 $ 5,772,018 16 $ 4,907,648 14 24,228 - $ 4,931,876 14 $ 5,750,571 16 21,447 - $ 5,772,018 16 (Continued)

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 23) Basic Diluted	2015 Amount % $ 8.08 $ 8.05	2014 (Restated)
		Amount % $ 7.80 $ 7.77

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated March 4, 2016) (Concluded)

-28-

					Total Equity	$ 19,420,190	(5,045 )	19,415,145		-	(3,017,820 )	-	214,085	111,393		8,966	15,119	(1,873 )	15,986	4,931,876	840,142	5,772,018	22,533,019		-	(3,787,255 )	30,878	261,877		2,172	(118,577 )	3,567	5,126,975	(598,879 )	4,528,096	$ 23,453,777
			Non-controlling	Interests	(Notes 20 and 25)	$ 161,891	-	161,891		-	-	-	-	-		-	3,662	-	-	24,228	(2,781 )	21,447	187,000		-	-	-	-		-	(44,217 )	-	22,629	(19,136 )	3,493	$ 146,276
					Total	$ 19,258,299	(5,045 )	19,253,254		-	(3,017,820 )	-	214,085	111,393		8,966	11,457	(1,873 )	15,986	4,907,648	842,923	5,750,571	22,346,019		-	(3,787,255 )	30,878	261,877		2,172	(74,360 )	3,567	5,104,346	(579,743 )	4,524,603	$23,307,501
	Other Equity (Note 20)	Exchange Unrealized Gain	Differences on (Loss) on	Translating Available-for-sale	Foreign Operations Financial Assets	$ 130,041 $ (75,534 )	- -	130,041 (75,534 )		- -	- -	- -	- -	- -		- -	- -	- -	- -	- -	208,315 638,811	208,315 638,811	338,356 563,277		- -	- -	- -	- -		- -	- -	- -	- -	(66,497 ) (495,012 )	(66,497 ) (495,012 )	$ 271,859 $ 68,265
Equity Attributable to Owners of the Company			Retained Earnings (Notes 20 and 25)	Unappropriated	Legal Reserve Earnings Total	$ 3,061,424 $ 5,452,733 $ 8,514,157	- (5,045 ) (5,045 )	3,061,424 5,447,688 8,509,112		410,640 (410,640 ) -	- (3,017,820 ) (3,017,820 )	- (569,400 ) (569,400 )	- - -	- - -		- - -	- - -	- - -	- - -	- 4,907,648 4,907,648	- (4,203 ) (4,203 )	- 4,903,445 4,903,445	3,472,064 6,353,273 9,825,337		490,778 (490,778 ) -	- (3,787,255 ) (3,787,255 )	- - -	- - -		- - -	- (62,903 ) (62,903 )	- - -	- 5,104,346 5,104,346	- (18,234 ) (18,234 )	- 5,086,112 5,086,112	$3,962,842 $7,098,449 $11,061,291
			Capital Surplus	(Notes 20, 24	and 25)	$ 4,995,635	-	4,995,635		-	-	-	167,525	111,393		8,966	11,457	(1,873 )	13,855	-	-	-	5,306,958		-	-	24,438	261,877		2,172	(11,457 )	3,567	-	-	-	$5,587,555
		Issued Capital (Notes 20 and 24)	Advance Receipts	for Ordinary	Share Capital Shares Total	$ 5,669,249 $ 24,751 $ 5,694,000	- - -	5,669,249 24,751 5,694,000		- - -	- - -	569,400 - 569,400	51,410 (4,850 ) 46,560	- - -		- - -	- - -	- - -	10,972 (8,841 ) 2,131	- - -	- - -	- - -	6,301,031 11,060 6,312,091		- - -	- - -	17,500 (11,060 ) 6,440	- - -		- - -	- - -	- - -	- - -	- - -	- - -	$6,318,531 $ - $ 6,318,531
						BALANCE AT JANUARY 1, 2014	Effect of respective application and respective restatement	BALANCE AT JANUARY 1, 2014 AS RESTATED	Appropriation of the 2013 earrings	Legal reserve	Cash dividends on ordinary shares	Stock dividends on ordinary shares	Recognition of employee share options by the Company	Compensation cost recognized for employee share options	Change in capital surplus from investments in associates accounted for using equity	method	Difference between consideration paid and carrying amount of subsidiaries acquired	Changes in percentage of ownership interest in subsidiaries	Convertible bonds converted to ordinary shares	Net profit for the year ended December 31, 2014	Other comprehensive income for year ended December 31, 2014, net of income tax	Total comprehensive income for the year ended December 31, 2014	BALANCE AT DECEMBER 31, 2014 AS RESTATED	Appropriation of the 2014 earrings	Legal reserve	Cash dividends on ordinary shares	Recognition of employee share options by the Company	Compensation cost recognized for employee share options	Change in capital surplus from investments in associates accounted for using equity	method	Difference between consideration paid and carrying amount of subsidiaries acquired	Changes in percentage of ownership interest in subsidiaries	Net profit for the year ended December 31, 2015	Other comprehensive loss for the year ended December 31, 2015, net of income tax	Total comprehensive income for the year ended December 31, 2015	BALANCE AT DECEMBER 31, 2015	The accompanying notes are an integral part of the consolidated financial statements.	(With Deloitte & Touche audit report dated March 4, 2016)

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Amortization expenses for prepayments of lease obligation
Impairment loss recognized on trade receivables
Net loss (gain) on financial assets or liabilities at fair value through
profit or loss
Compensation cost of employee share options
Finance costs
Interest income
Dividend income
Share of profit of associates
Loss (gain) on disposal of property, plant and equipment
Gain on disposal of investments
Loss on bond redemption
Changes in operating assets and liabilities
Financial assets held for trading
Notes receivable
Accounts receivable
Account receivables from related parties
Other receivables
Inventories
Other current assets
Other financial assets
Trade payables
Net defined benefit liabilities
Other payables
Other current liabilities
Other noncurrent liabilities

Cash generated from operations
Interest received
Dividend received
Interest paid
Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets
Proceeds on sale of available-for-sale financial assets
Acquisition of investments with no active market
Acquisition of investments accounted for using the equity method

2015
2014 (Restated)
$ 6,289,535 $ 6,054,945
568,241
504,211
97,953
90,709
2,577
2,519
23,360
9,991
46,611
(36,493)
261,877
111,393
10,041
14,420
(40,613)
(54,355)
(139,725)
(130,737)
(110,226)
(100,264)
5,410
(56,473)
(202,458)
(27,143)
-
17
(59,944)
(141,210)
(20,861)
(200,332)
(495,148)
(366,727)
(21,375)
1,179
(1,724)
(383)
(87,310)
(750,893)
57,051
(141,365)
18,650
90,660
59,874
393,344
(1,191)
(1,785)
151,859
243,045
47,395
(40,587)
36,812

95,481
6,496,671
5,563,167
38,076
31,578
221,642
130,737
(1,467)
(5,233)
(850,763)

(809,008)
5,904,159

4,911,241
(9,713,717)
(5,847,515)
11,766,699
5,213,858
1,805
(643)
-
(18,095)
(Continued)

-30-

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of investments accounted for using equity
method

Increase in prepayments for investments
Net cash flow on the acquisition of subsidiaries
Dividends received from associates
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Acquisition of intangible assets
Increase in prepayments for business facilities
Decrease in long-term accounts payables

Net cash generated from investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans
Repayments of bonds
Increase (decrease) in guarantee deposits received
Payment of cash dividends
Exercise of employee share options
Increase (decrease) in non-controlling interests

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

2015
2014 (Restated)
$ - $ 1,407
(2,279,881)
-
-
(31,033)
-
54,774
(1,333,481)
(1,213,769)
22,867
151,867
(16,567)
17,265
(73,145)
(48,841)
(18,015)
(20,212)
-

(6,709)
(1,643,435)

(1,747,646)
877,545
(120,064)
-
(2,400)
(602)
1,515
(3,787,255)
(3,017,820)
30,878
214,085
(118,577)

15,119
(2,998,011)

(2,909,565)
(26,461)

35,619
1,236,252
289,649
3,122,007

2,832,358
$ 4,358,259
$ 3,122,007

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

(With Deloitte & Touche audit report dated March 4, 2016)

(Concluded)

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Advantech Co., Ltd. 2014 Profit Distribution Table

Item	Total
Unappropriated retained earnings - beginning	2,080,287,842
Less: Long-term equity investments	(62,905,864)
Less:Defined benefit plans revaluation	(23,278,914)
Add: Net income	5,104,346,793
Less: 10% legal reserve appropriated	(510,434,679)
Current earnings available for distribution	6,588,015,178
Distributions:
Common stock cash dividend (EPS $6)	(3,791,118,600)
Unappropriated retained earnings - ending	2,796,896,578

Chairman: K.C. Liu President: Chaney Ho Chief Financial officer: Rorie Kang

Remark	According to the actual practice	According to the governing law and regulations
Before amendment	The company has five ~seven directors and three supervisorswho are nominated for a term of three years and elected from the capable candidates in the shareholders’ meeting; also, they can be re-elected. There must be at least two independent directors (not less than one fifth of the total number of directors) out of the number of directors referred to above. The independent directors are to be elected from the candidates in the shareholders’ meeting. The professional qualifications of the independent directors, shareholdings, limitation of part-time job, the nomination and appointment method, and other matters to be complied with must be processed according to the relevant provisions of the competent authorities.	The company’s annual earnings, if any, are subject to paying taxes, making up losses of prior years, appropriating 10% legal reserve thereafter, and appropriating or reversing special reserve according to law and the regulations of the competent authorities, then the balance amount, if any, plus the accumulated unappropriated earnings, after reserving part of the earnings as necessary fund for business growth, should be allocated proportionally as follows: 1. Bonus to employees for 1~20% 2. Remuneration to directors and supervisors for less than 1% 3. The remaining amount is for shareholders’ dividend. The bonus to employees referred to above may include the employees of the subsidiaries that meet certain conditions, which are to be determined by the Board of Directors.
After amendment	The company has seven ~ nine directors and three supervisors nominated for a term of three years and they are elected from the capable candidates in the shareholders’ meeting; also, they can be re-elected. There must be at least two independent directors (not less than one fifth of the total number of directors) out of the number of directors referred to above. The independent directors are to be elected from the candidates in the shareholders’ meeting. The professional qualifications of the independent directors, shareholdings, limitation of part-time job, the nomination and appointment method, and other matters to be complied with must be processed according to the relevant provisions of the competent authorities.	The company’s annual profits, if any, should be with 1~20% appropriated as bonus to employees; also, it is to be resolved in the board meeting with stock dividend or cash distributed to employees, including employees of the subsidiaries that meet certain conditions. The Company’s Board of Directors may determine to appropriate an amount less than 1% of the profits referred to above as remuneration to directors and supervisors. The proposed bonus to employees and remuneration to directors and supervisors should be presented in the shareholders’ meeting for a resolution. If the company is with accumulated losses, an amount for making up the losses should be reserved in advance before appropriating bonus to employees and remuneration to directors and supervisors according to the ratio referred to above.
No.	Article 13	Article 20

Remark
Before amendment	New clause	The Corporate Charter (Article of Incorporation) was established on September 25, 1981 (the first time ~ Twentieth are omitted). The 21st amendment of the Corporate Charter (Article of Incorporation) was made on May 2, 2003. The 22nd amendment of the Corporate Charter (Article of Incorporation) was made on May 27, 2003. The 23rd amendment of the Corporate Charter (Article of Incorporation) was made on May 24, 2005. The 24th amendment of the Corporate Charter (Article of Incorporation) was made on November 18, 2005. The 25th amendment of the Corporate Charter (Article of Incorporation) was made on June 16, 2006. The 26th amendment of the Corporate Charter (Article of Incorporation) was made on June 15, 2007. The 27th amendment of the Corporate Charter (Article of Incorporation) was made on June 12, 2008. The 28th amendment of the Corporate Charter (Article of Incorporation) was made on May 15, 2009. The 29th amendment of the Corporate Charter (Article of Incorporation) was made on May 18, 2010. The 30th amendment of the Corporate Charter (Article of Incorporation) was made on May 25, 2011. The 31st amendment of the Corporate Charter (Article of
After amendment	The company’s annual earnings, if any, are subject to paying taxes, making up losses, appropriating 10% legal reserve thereafter or it can be exempted if the legal reserve amount is equivalent to the company’s paid-in capital amount. The remaining balance thereafter should be applied to have the special reserve appropriated or reversed lawfully. The board of directors should present a proposal for the distribution of the remaining amount, if any, plus the accumulated unappropriated earnings as shareholders’ dividend and bonus in the shareholders’ meeting.	The Corporate Charter (Article of Incorporation) was established on September 25, 1981 (the first time ~ Twentieth are omitted). The 21st amendment of the Corporate Charter (Article of Incorporation) was made on May 2, 2003. The 22nd amendment of the Corporate Charter (Article of Incorporation) was made on May 27, 2003. The 23rd amendment of the Corporate Charter (Article of Incorporation) was made on May 24, 2005. The 24th amendment of the Corporate Charter (Article of Incorporation) was made on November 18, 2005. The 25th amendment of the Corporate Charter (Article of Incorporation) was made on June 16, 2006. The 26th amendment of the Corporate Charter (Article of Incorporation) was made on June 15, 2007. The 27th amendment of the Corporate Charter (Article of Incorporation) was made on June 12, 2008. The 28th amendment of the Corporate Charter (Article of Incorporation) was made on May 15, 2009. The 29th amendment of the Corporate Charter (Article of Incorporation) was made on May 18, 2010. The 30th amendment of the Corporate Charter (Article of Incorporation) was made on May 25, 2011. The 31st amendment of the Corporate Charter (Article
No.	Article 20.2	Article 22

Remark
Before amendment	Incorporation) was made on June 13, 2012. The 32nd amendment of the Corporate Charter (Article of Incorporation) was made on June 18, 2014. The 33rd amendment of the Corporate Charter (Article of Incorporation) was made on May 28, 2015.
After amendment	of Incorporation) was made on June 13, 2012. The 32nd amendment of the Corporate Charter (Article of Incorporation) was made on June 18, 2014. The 33rd amendment of the Corporate Charter (Article of Incorporation) was made on May 28, 2015. The 34rd amendment of the Corporate Charter (Article of Incorporation) was made on May 25, 2016.
No.

III. Appendices

< Appendix 1> Corporate Charter (Articles of Incorporation) (Before Amendment)

C h a p t e r 1 General Rules A r t i c l e 1 ： The Company was organized in accordance with the provisions of the Company Law and was known as “Advantech Co., Ltd.”
A r t i c l e 2 ： The Company’s business operation is as follows:
CC01060 Wire communications machinery and equipment manufacturing
CC01070 Wireless communications machinery and equipment manufacturing
CC01080 Electronic Components Manufacturing
CC01110 Computer and peripheral equipment manufacturing
CE01010 General equipment manufacturing
E605010 Computer equipment installation industry
EZ05010 Instrument and meters installation engineering
I301010 IT software services industry
I301020 Data processing services
I301030 Electronic information supply services
CC01101 RF controlled telecommunications equipment manufacturing
F401021 RF controlled telecommunications equipment importing
IG03010 Energy and Technical Services
CC01030 Electrical appliances and audio-video electronic products manufacturing
F113020 Electrical appliances wholesale
F213010 Electrical appliances retail
ZZ99999 In addition to the licensed businesses, may conduct other businesses that are not prohibited or restricted.
A r t i c l e 2 . 1 ： The Company for business needs may conduct the making of endorsement and guarantee.
A r t i c l e 3 ： The Company’s headquarters is in Taipei and may setup offshore branches with the resolution of the board of directors.
A r t i c l e 4 ： The Company may have announcements made in accordance with Article 28 of the Company Law.
C h a p t e r 1 Shares
A r t i c l e 5 ： The Company’s total capital amounted to NT$8 billion with 800 million shares authorized at NT$10 par. The board of directors is authorized to have stock shares issue separately. For the total capital referred to above, NT$500 million is reserved for exercising stock option with warrant or bonds with attached warrants. The Company has stock shares transferred to employees at a price below the average repurchase price; also, the transaction prior to the transfer of shares should be presented in the most recent shareholders’ meeting that is attended by the shareholders with a majority shareholding and approved by the attending shareholders with two thirds of the shareholding.

A r t i c l e 5 . 1 ： When the Company issuing employee warrants at a price below the Company’s common stock closing price on the issuing date, the transaction of share issuance should be presented in the shareholders’ meeting that is attended by the shareholders with a majority shareholding and approved by the attending shareholders with two thirds of the shareholding.

A r t i c l e 6 ：

Deleted

A r t i c l e 6 . 1 ： The Company may be requested by Taiwan Depository and Clearing Corp. to issue large denomination stocks.

A r t i c l e 7 ： The Company’s stock shares are ordered with the signature or seal of three or more directors affixed and numbered; also, are issued after proper certification. The Company is exempted from having the stock shares printed out after issuance; however, the Company should contact the securities depository and clearing institution for registration.
A r t i c l e 8 ： The registration for any change made to the Shareholder Registry should be ceased 60 days prior to the general shareholders’ meeting, 30 days prior to the extraordinary shareholders’ meeting, or 5 days prior to the Company’s deciding to distribute dividends and bonuses or other benefits.
C h a p t e r 3 Shareholders’ meeting
A r t i c l e 9 ： Shareholders’ meeting includes general shareholders’ meeting and extraordinary shareholders’ meeting. General shareholders’ meeting is held annually and it is convened by the board of directors lawfully six months after the fiscal year. Extraordinary shareholders’ meeting is convened when it is necessary.
A r t i c l e 1 0 ： Shareholders who are unable to attend the shareholders’ meeting in person may have a representative appointed to attend the meeting by issuing the proxy that is printed by the Company with the scope of authorization specified and then signed or sealed. The proxy referred to above is regulated in accordance with the “Regulations for the Use of Proxies for Shareholders’ Meeting of Public Companies.”
A r t i c l e 1 1 ： It is one voting right per share for the shareholders of the Company, except for those subject to restrictions or those who have no voting right according to the Company Law.
A r t i c l e 1 2 ： The resolution reached in the shareholders’ meeting, unless otherwise provided by law, can be enforced after being presented in the shareholders’ meeting that is attended by a majority of shareholders in person or by proxy and approved by the attending shareholders with a majority shareholding.
C h a p t e r 4 Directors and supervisors
A r t i c l e 1 3 ： The Company has 5~7 directors and 3 supervisors who are candidates by nomination elected for a 3-year term in the shareholders’ meeting and can be elected for a second term.
The number of directors referred to above shall include at least two independent directors that is not less than one fifths of the board of directors. Independent directors are elected from the nominated candidates list in the shareholders’ meeting. The professional qualifications of the independent directors, shareholding, part-time restriction, nomination and election means, and other matters to be complied with are to be processed in accordance with the relevant provisions of the competent authorities.
Article 13.1 ： The exercise of power by the board of directors is as follows:
The elaboration of the Corporate Charter
The elaboration of the Company’s business plan
The elaboration of the Company’s profit distribution
The elaboration of the Company’s capital increase and decrease
The review and approval of the Company’s budget and the preparation of the Company’s final account
The elaboration of the acquisition and disposal of fixed assets by the Company and the investment in other businesses
The powers endowed in accordance with the law and regulations and in the shareholders’ meeting
Article 13.2 ： The exercise of power by the supervisors is as follows:
Reviewing the operations and financial condition of the Company
Auditing the accounting books and documents of the Company

Other responsibilities assigned in accordance with the law and regulations
Article 13.3 ： The total shares of the Company held by all directors and supervisors are to be processed in accordance with the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies” published by the competent authorities.

Article 13.4 ： The Company may purchase liability insurance for directors and supervisors throughout the tenure based on their scope of responsibility.

Article 13.5 ： The board of directors is authorized to deliberate and determine the remuneration of all directors and supervisors according to their participation in and contribution to the Company’s business operation and by referring to the remuneration standard of the domestic industry.
Article 13.6 The Company has an Audit Committee setup in accordance with Article 14.4 of the Securities Exchange Act, which is organized by all the independent directors. The exercise of power by the Audit Committee and its members and the related matters are to be processed in accordance with the provisions of the competent authorities. Supervisors will be discharged on the date the Audit Committee established, which will be in effect on the expiry date of the term of office in 2017.
A r t i c l e 1 4 ： The Board of Directors is formed by the directors. The Chairman is elected by a majority of the attending directors at the board meeting that is attended by two thirds of the directors.
Article 14.1 The Company may at any time in case of emergency convene a board meeting and with the directors and supervisors informed in writing or by E-mail or fax.
A r t i c l e 1 5 ： When the Chairman is unable to exercise powers due to a leave or for other reasons, the matter regarding the deputy of the Chairman should be handled in accordance with Article 208 of the Company Law.
Article 15.1 ： The resolutions of the board of directors, unless otherwise provided by the Company Law and the Corporate Charter, shall be exercised with the consent of a majority of the attending directors at the board meeting that is attended by a majority of the directors. Directors should attend board meetings in person. The director who is unable to attend board meetings in person may authorize another director in writing to attend the board meetings; however, a proxy should be issued each time with the scope of authorization detailed to have one and only deputy delegated.

A r t i c l e 1 6 ： Deleted

C h a p t e r 5 Managers A r t i c l e 1 7 ： The Company may have several managers appointed; also, the appointment, dismissal, and remuneration should be processed in accordance with Article 29 of the Company Law.

C h a p t e r 6

Accountant

A r t i c l e 1 8 ： The Company’s board of directors shall at the end of each fiscal year have the following composed (1) Business Report (2) Financial Reports (3) Profit Distribution Proposals for the audit of the supervisors 30 days prior to the shareholders’ meeting and for acknowledgement in the shareholders’ meeting.
A r t i c l e 1 9 ： Deleted
Article 19.1 ： The Company engages in high-tech computer and Internet-related industries and is in the growth stage of the business life cycle. In response to the overall business environment and industry growth characteristics and the pursuit of the Company’s sustainable development, the long-term interests of shareholders, the stable operating performance goal, and the stable growth of earnings per share in accordance with the Company’s future capital expenditure budget and fund needs, the Company’s stock dividend distribution is limited to 75% of the total dividend

planned for distribution.

A r t i c l e 2 0 ： The remaining balance of the Company’s earnings, if any, after being applied to pay tax and make up for losses in previous years, with 10% legal reserve appropriated thereafter, and special reserve appropriated or reversed in accordance with the law and the regulations of the competent authorities, along with the unappropriated retained earnings of prior periods will be distributed proportionally as follows after reserving certain percentage of the earnings needed for business growth:

The stock bonuses referred to above can be distributed to all employees of the subsidiaries who meet certain criteria and conditions that are to be determined by the Company’s board of directors.

Article 20.1 ： The Company’s reinvestment may exceed 40% of the paid-in capital and with the board of directors authorized to execute it.
C h a p t e r 7 Annexes
A r t i c l e 2 1 ： The matters that are not addressed in the Corporate Charter should be processed in accordance with the Company Law and the related regulations.
A r t i c l e 2 2 The Corporate Charter (Article of Incorporation) was established on September 25, 1981 (the first time ~ Twentieth are omitted).
The 21[st] amendment of the Corporate Charter (Article of Incorporation) was made on May 2, 2003.
The 22[nd] amendment of the Corporate Charter (Article of Incorporation) was made on May 27, 2003.
The 23[rd] amendment of the Corporate Charter (Article of Incorporation) was made on May 24, 2005.
The 24[th] amendment of the Corporate Charter (Article of Incorporation) was made on November 18, 2005.
The 25[th] amendment of the Corporate Charter (Article of Incorporation) was made on June 16, 2006.

The 26[th] amendment of the Corporate Charter (Article of Incorporation) was made on June 15, 2007.

The 27[th] amendment of the Corporate Charter (Article of Incorporation) was made on June 12, 2008.

The 28[th] amendment of the Corporate Charter (Article of Incorporation) was made on May 15, 2009.

The 29[th] amendment of the Corporate Charter (Article of Incorporation) was made on May 18, 2010.

The 30[th] amendment of the Corporate Charter (Article of Incorporation) was made on May 25, 2011.

The 31[st] amendment of the Corporate Charter (Article of Incorporation) was made on June 13, 2012

The 32[nd] amendment of the Corporate Charter (Article of Incorporation) was made on June 18, 2014.

The 33rd amendment of the Corporate Charter (Article of Incorporation) was made on May 28, 2015.

< Appendix 2>

Rules of Procedure for Shareholders’ Meetings

A r t i c l e 1 ： The process of the Company shareholders’ meeting is subject to the “Rules of Procedure for Shareholders’ Meetings.”
A r t i c l e 2 ： The Company shall include the information of shareholders reporting time, reporting place, and others on the written notice.

The shareholder’s reporting to meeting referred to above should be processed at least thirty minutes before the meeting in session; there should be clearly marked signs at the reporting place with sufficient and competent staff at the place to assist.

The shareholders or theshareholders’ commissioned representatives (hereinafter referred to as “the Shareholders”) shall attend the meeting with the attendance certificate, attendance cards, or other identification documents presented; the proxies shall attend the meeting with the identity documents presented for verification.

The shareholders or theshareholders’ commissioned representatives while attending the meeting should sign on the attendance registry or submit the attendance card instead; also, the number of attending shares is calculated in accordance with the number of shares documented on the attendance card.

Articl e 2.1 ： The attendance and resolution in the shareholders’ meeting shall be based on the shares.
Articl e 2.2 ： The Company may assign the commissioned lawyer, accountant, or the relevant personnel to attend the shareholders’ meeting.
Articl e 2.3 ： Shareholders’ meeting will be held at the Company’s premise or a suitable location for the convenience of the shareholders. The starting time of the shareholders’ meeting should not be before 9:00am or after 3:00pm.
Articl e 2.4 ： The Company should have the proceeding of the shareholders’ meeting from the shareholder’s reporting to meeting, meeting in session, to votes counting recorded in audio or video uninterruptedly.

The audio-visual materials referred to above shall be kept for at least one year; however, they should be reserved until the end of the legal proceeding that is filed by the shareholders in accordance with Article 189 of the Company Law.

A r t i c l e 3 ： The Chairman is to announce the meeting in session when the attending shareholders are with a majority shareholding. If the attending shareholders are without the statutory shareholding at the meeting time, the Chairman may announce to have the meeting postponed. If the attending shareholders are without the statutory shareholding but with one thirds of the total number of shares issued after two postpones (30 minutes per postpone), it can be processed in accordance with Article 175 of the Company Law and a pseudo resolution can be reached with the consent of a majority votes. For the proceeding referred to above, if the attending shareholders qualify the statutory shareholding, the Chairman may announce the meeting in session at any time and has the pseudo resolution submitted in the shareholders’ meeting for ratification.
A r t i c l e 4 ： The shareholders’ meeting should be conducted in accordance with the procedures

prescribed in the agenda and no change can be made without a resolution reached in the shareholders’ meeting. The agenda is drafted up in accordance with the following provisions:

General shareholders’ meeting: The agenda is to be drafted up by the Board of Directors.
Extraordinary shareholders’ meeting: The agenda is to be drafted up by the authorized convening department.

The Chairman may not announce to have the meeting adjourned before the proposals (including motions) in the two agenda referred to above resolved.

Once the meeting is adjourned, shareholders may not elect another Chairman to continue the meeting at the current meeting place or another location.

A r t i c l e 5 ： The Chairman may announce to have a recess during the meeting in session.
A r t i c l e 6 ： The attending shareholders who wish to speak at the meeting must first fill out the speech note with the gist, shareholders account number, and name detailed to the Chairman in advance and the Chairman shall prioritize the speaking order.

Attending shareholders who have submitted a speech note but failed to give a speech at the meeting is deemed as a non-speaker. If the speech made by the shareholder differs from the contents of the speech note submitted, the speech shall prevail.

The attending shareholders may not interrupt the speaking shareholder without the consent of the Chairman and the speaking shareholder. The Chairman must have the interfering shareholder restrained from interrupting the speaking shareholder’s speech.

A r t i c l e 7 ： The motions should be discussed in accordance with the prioritized agenda. For any violation against the planned procedures or agenda, the Chairman may immediately stop the speaking shareholder and announce ending the discussion in due course or ceasing the discussion when it is necessary.
A r t i c l e 8 ： The shareholder is to have the proposal explained in five minutes and the Chairman or the personnel designated by the Chairman are to answer the questions of the shareholders. The inquiry or reply of the shareholder is limited to three minutes unless it is otherwise permitted by the Chairman.
A r t i c l e 9
： Deleted
A r t i c l e 1 0 ： Each shareholder may not speak more than twice on the same proposal and five minutes each time. For any violation against the planned procedures or agenda referred to above, the Chairman may immediately stop the speaking shareholder.
Article 10.1 ： The legal person attending the shareholders’ meeting by proxy may have only one representative designated to attend the meeting.

For the two or more representatives designated by the legal person shareholder to attend the meeting, only one of them may speak on the same proposal.

A r t i c l e 11 ： The proposal that is announced by the Chairman ceased for discussion should be put to vote for a resolution. The voting right of each shareholder is calculated in accordance with the Corporate Charter.
A r t i c l e 1 2 ： The vote on the motion, unless otherwise provided by the Company Law, is approved by the attending shareholders with a majority shareholding. If there is no objection raised when the Chairman consulted the attending shareholders, it is deemed as approved and the effect is same as voting.
Article 12.1 ： The Chairman is to have the amendment or substitute of a motion consolidated and prioritized its voting order. When one of the motions is passed, the other motions

shall be deemed as vetoed without the need of further voting.

Article 12.2 The Chairman is to have ballot inspectors and tellers designated for the vote on motions. Ballot inspectors must be a shareholder of the Company. The results of the vote should be announced in the meeting and recorded.
A r t i c l e 1 3 ： For the shareholders attending the shareholders’ meeting by proxy, except for the agencies for trust businesses or stock services approved by the securities authorities, when one person delegated by more than two shareholders at the same time, the voting rights by proxy shall not exceed 3% of the total number of voting rights issued; also, the number of voting right exceeding the threshold will not be accounted for.
A r t i c l e 1 4 ： The shareholders who may have a conflict of interest regarding a motion to be resolved in the shareholders’ meeting may not vote on the said motion and may not exercise voting right on behalf of other shareholders by proxy.
Article 14.1 The election of directors and supervisors, if any, in the shareholders’ meeting should be handled in accordance with the relevant norms of the Company and the election result should be announced immediately in the meeting, including the name of the elected directors and supervisors and the respective number of voting rights.
The ballots casted in the election referred to above shall be sealed and signed by the ballot inspectors for safekeeping for at least one year; however, they should be reserved until the end of the legal proceeding that is filed by the shareholders in accordance with Article 189 of the Company Law.
A r t i c l e 1 5 ： The meeting in session should be suspended in case of air raid drill and the meeting should be resumed in one hour after the evacuation alert is lifted.
Article 15.1 ： The Chairman may direct pickets (or security guards) to assist maintaining the order at the meeting place. The pickets (or security guards) who are at the meeting place to assist maintaining order should wear the “picket” armband.
A r t i c l e 1 6 ： The resolutions reached in the shareholders’ meeting should be documented in the minutes of meeting for the signature or seal of the Chairman; also the minutes of meeting should be distributed to all shareholders within twenty days after the meeting. The Company’s minutes of meeting can be distributed to shareholders by an announcement after the public offering of the Company’s shares. The preparation and distribution of the minutes of meeting referred to above can be completed in an electronic form.
A r t i c l e 1 7 ： The matters that are not addressed in the “Rules of Procedure for Shareholders’ Meetings” should be processed in accordance with the Company Law and the related regulations.
A r t i c l e 1 8 ： The “Rules of Procedure for Shareholders’ Meetings” is in effect after it is passed in the shareholders’ meeting, same for the amendments made.
A r t i c l e 1 9 ： The “Rules of Procedure for Shareholders’ Meetings” was established on May 3, 1997.

The 1[st] amendment of the “Rules of Procedure for Shareholders’ Meetings” was made on April 24, 1999.

The 2[nd] amendment of the “Rules of Procedure for Shareholders’ Meetings” was made on May 30, 2002.

The 3[rd] amendment of the “Rules of Procedure for Shareholders’ Meetings” was made on June 16, 2006.

The 4[th] amendment of the “Rules of Procedure for Shareholders’ Meetings” was made on May 18, 2010.

The 5[th] amendment of the “Rules of Procedure for Shareholders’ Meetings” was made on June 13, 2012.

The 6[th] amendment of the “Rules of Procedure for Shareholders’ Meetings” was made on June 13, 2013.

< Appendix 3>

Current Shareholding of Directors and Supervisors

The total shares of the Company held by all directors and supervisors are to be processed in accordance with the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies:”
(1) As of March 27, 2016 (final day for stock transfer), the Company had issued 631,853,100 shares of stock. The board of directors should hold 4% of the stock shares issued by law, that was, 25,274,124 shares. All supervisors should hold 0.4% of the stock shares issued by law, that was, 2,527,412 shares.
(2) The Company has two independent directors elected. The board of directors other than independent directors and supervisors should hold 80% of the stock shares calculated in the preceding paragraph; therefore, the Company’s board of directors should hold 20,219,299 shares and supervisors should hold 2,021,929 shares.
As of March 27, 2016 (final day for stock transfer), the shareholding of the Company’s directors and supervisors on the shareholders’ registry was as follows:

Title	Title	Name	Representative	Shareholding on the shareholder’s registry	Shareholding on the shareholder’s registry
				Shares	% Ratio (%)
Chairman		K.C. Liu		23,292,484	3.69%
Director		Advantech Foundation.	Donald Chang	18,244,889	2.89%
Director		Ted Hsu		0	0
Independent Director		Jeff Chen		0	0
Independent Director		Joseph Yu		249	0
Total				41,537,622	6.58%
Supervisor	AIDC Investment Corp.		Gary Tseng	74,636,266	11.81%
Supervisor	Thomas Chen			561,963	0.09%
Supervisor	James Wu			0	0
Total				75,198,229	11.90%

< Appendix 4>

Employee Bonuses and Remuneration to Directors and Supervisors

On March 4, 2016, according to the revised charter based on the resolution, the company will disburse annual profit sharing:

1.Employee bonuses ： NT$200,000,000.
2.Remuneration to directors and supervisors ： NT$12,000,000.
3.Payments will be made in cash. The above amounts accurately reflect 2015 expenses already accounted for.

AI assistant

Advantech — AGM Information 2016

52053_rns_2016-06-06_e9f56082-d78e-43d3-b8d5-0ce54afedc06.pdf

Table of Contents

Advantech Co., Ltd.

I. Agenda of Annual Meeting

Advantech Co., Ltd. Agenda of 2016 General Shareholders’ Meeting

2. Chairperson Remarks

一 3. Discussion ( )

4. Management Presentations

5. Matters to be approved

6. Discussion( 二 )

7. Motions

8. Adjournment

一 1. Discussion( )

2. Management Presentations

Report No. 4

3. Matters to be approved

3. Discussion( 二 )

4.Motions

5. Adjournment

II. Attachments

Business Report

D e a r s ha r e h ol d e rs :

2015 Summary of Results

Our Vision for IoT

Advantech’s Key Strategies to Achieve 2020 Vision

2016 Outlook

Strengthening Corporate Governance and Business Leadership

Supervisor’s Review Report

Supervisor’s Review Report

Supervisor’s Review Report

INDEPENDENT AUDITORS’ REPORT

Notice to Readers

ADVANTECH CO., LTD.

BALANCE SHEETS DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

INDEPENDENT AUDITORS’ REPORT

Notice to Readers

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In Thousands of New Taiwan Dollars)

Advantech Co., Ltd. 2014 Profit Distribution Table

III. Appendices

< Appendix 1> Corporate Charter (Articles of Incorporation) (Before Amendment)

Accountant

Rules of Procedure for Shareholders’ Meetings

Current Shareholding of Directors and Supervisors

Employee Bonuses and Remuneration to Directors and Supervisors

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Advantech AGM Information 2016