Advantech — AGM Information 2016

Jun 6, 2016

Advantech Co.,Ltd. 2016 Annual Shareholders’ Meeting Meeting Minutes (Translation)

Time: 09:00 AM,May 25,2016

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

Neihu District, Taipei City

Quorum: 576,471,941 shares were represented by the shareholders and proxies

• present,which amounted to 91.24% of the Company’s 631,853,100 issued and outstanding shares.

Chairman: K.C Liu, the Chairman of the Board of Directors

Attendees: Joseph Yu (Independent Director), Jeff Chen (Independent Director)

Donald Chang (Director) ,Thomas Chen (Supervisor), James Wu (Supervisor),

Chaney Ho (President),Eric Chen (Vice President), Meng Chieh Chiu, CPA, Deloitte

The aggregate shareholding of the shareholders present in person or by proxy constituted a quorum. The Chairman called the meeting to order.

Chairman’s Address (omitted)

• I. Discussion( )

• Amendment to the Company’s Articles of Incorporation

• (Proposed by the board of directors)

• Explanation:

• (1) 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.

• (2) 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.

• (3) Corporate Charter (Articles of Incorporation) Article Amendments Table. Please refer to attachment V.

Voting Results:

576,468,895 shares were represented at the time of voting; 526,440,943 votes

were in favor of the proposal (including votes casted electronically: 206,697,899); 27 votes were cast against the proposal (including votes castedelectronically: 27);

50,027,925 votes were either invalidly cast or abstained

(including votes casted electronically: 49,992,884).

• II. Report Items

• 1.The 2015 Business Report (see appendix I )

• 2.Supervisor’s Review Report on the 2015 Financial Statements (see appendix II)

• 3.To report 2015 employees’ profit sharing bonus and directors’ compensation

• The Status of Endorsement and Guarantee in 2015 (see meeting agenda)

• III.Proposals

• Adoption of the 2015 Business Report and Financial Statements (Proposed by the board of directors )

• 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.

• (2) The Business Report, independent auditor’s report, and Financial Statements are enclosed as Attachment I and Attachment III.

• (3) Please acknowledge.

Voting Results:

576,471,941 shares were represented at the time of voting; 525,790,932 votes

were in favor of the proposal (including votes casted electronically: 206,044,849); 27 votes were cast against the proposal (including votes castedelectronically: 27); 50,680,982 votes were either invalidly cast or abstained

(including votes casted electronically: 50,645,934).

Approved , that the above proposal be and hereby were accepted as submitted.

1. Adoption of the Proposal for Distribution of 2015 Profits (Proposed by the board of directors ) Explanation:

2. �1�� Please refer to the 2015 profit distribution table in Attachment IV.

3. �2�� 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:

4. �3�� 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.

• �4� 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.

• �5� 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.

• �6�� 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.

• �7�� Please acknowledge

Voting Results:

576,471,941 shares were represented at the time of voting; 526,444,179 votes

were in favor of the proposal (including votes casted electronically: 206,698,096);

27 votes were cast against the proposal (including votes castedelectronically: 27);

50,027,735 votes were either invalidly cast or abstained

(including votes casted electronically: 49,992,687).

Approved, that the above proposal be and hereby were accepted as submitted.

IV.Discussions(�)

1. The company’s plan of issuing employee stock warrants at a price below market price is hereby proposed for a resolution.

(Proposed by the board of directors)

Explanation:

• (1) 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.

• (2) According to Article 56-1 of the “Regulations Governing the Offering and Issuance of

Securities by Securities Issuers:”

• i. 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.

• ii. The reference and reasonability of stock price: Stock price is NT$100 per share.

• iii. 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.

• iv. 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.

• v. 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.

Voting Results:

576,471,941 shares were represented at the time of voting; 394,585,769 votes

were in favor of the proposal (including votes casted electronically: 74,839,686);

126,398,032 votes were cast against the proposal (including votes castedelectronically:

126,398,032); 55,488,140 votes were either invalidly cast or abstained

(including votes casted electronically: 55,453,092).

Approved, that the above proposal be and hereby were accepted as submitted.

• V. Extemporary Motion: None.

• VI. Meeting Adjourned: There was no other business and extemporary motion,

the Chairman announced the meeting adjourned.

Business Report

Dear shareholders:

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 II>

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

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: Thomas Chen

March 04, 2016

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: James Wu

March 04, 2016

< Attachment III>

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.

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.

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)

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)

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)

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)

				Total Equity	$ 19,258,299	(5,045 )	(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	842,923	5,750,571	5,750,571	22,346,019		-	(3,787,255 )	30,878	261,877	2,172		(74,360 )	3,567	5,104,346	(579,743 )	(579,743 )	4,524,603	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

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)

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)

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.

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.

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)

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)

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)

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)

					Total Equity	$ 19,420,190	(5,045 )	(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 )	(598,879 )	4,528,096	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)

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)

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)

Advantech Co., Ltd.

2015 Profit Distribution Table

2015 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

Advantech Co., Ltd. Corporate Charter (Articles of Incorporation) Article Amendments Table	Remark	According to the actual practice	According to the governing law and regulations
	Before amendment	The company has five ~ seven directors and three supervisors who 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
	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
	No.	Article 13	Article 20

Remark
Before amendment	employees of the subsidiaries that meet certain conditions, which are to be determined by the Board of Directors.	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.
After amendment	remuneration to directors and supervisors according to the ratio referred to above.	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.
No.		Article 20.2	Article 22

Remark
Before amendment	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 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	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 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.