Advantech - AGM Information 2017 | FinancialReports.eu

Advantech Co.,Ltd. 2017 Annual Shareholders’ Meeting Meeting Minutes (Translation)

Time : 09:00 AM,May 26,2017

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

Neihu District, Taipei City

Total outstanding ACL shares : 633,254,100 shares

Total shares represented by shareholders present in person or by proxy : 574,350,035 shares

Percentage of outstanding share held by shareholders present in person or by proxy : 90.70%

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

Attendees: Joseph Yu (Independent Director), Donald Chang (Director) ,Thomas Chen (Supervisor), James Wu (Supervisor),Chaney Ho (President),Eric Chen (Vice President), Meng Chieh Chiu, CPA, Deloitte, Villis Yang (Director)

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. Management Presentations
1.The 2016 Business Report (see appendix I)
2.Supervisor’s Review Report on the 2016 Financial Statements (see appendix II)
Report of Employees’ compensation and Directors’ compensation of 2016.
The Status of Endorsement and Guarantee in 2016 (see meeting agenda)

II. Proposals

Adoption of the 2016 Business Report and Financial Statements
(Proposed by the board of directors ) Explanation:
(1) The 2016 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:

574,350,035 shares were represented at the time of voting; 525,513,680 votes were in favor of the proposal (including votes casted electronically: 207,577,803);

228,391 votes were cast against the proposal (including votes castedelectronically: 228,391); 0 votes wereinvalid; 48,607,964 votes were either invalidly cast or abstained (including votes casted electronically: 48,208,129).

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

Adoption of the Proposal for Distribution of 2016 Earnings. (Proposed by the board of directors ) Explanation:
(1) Please refer to the 2016 prorofit distribution table in Attachment IV.
(2) The net income of the company amounted to NT$5,666,862,329 for 2016. Added the beginning unappropriated earnings of NT$2,796,896,578 and deducted net of the retained earnings adjustment for NT$3,691,230 due to long-term equity investments, actuarial loss recognized in retained earnings of NT$24,282,918, the legal reserve of NT$566,686,233 and special reserve of NT$85,203,650, the distributable earnings for 2016 amounted to NT$7,783,894,876 resulted to be distributed as follows:
(3) The amounts of NT$3,988,366,830 and NT$633,074,100 out of the 2016 earnings are appropriated for distribution as cash dividends and share dividends to shareholders, respectively.
- There were 633,074,100 shares of common stock outstanding on December 31, 2016 that are entitled to the distribution of shareholder’s dividend at NT$7.3 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 Chairman authorized to handle matters related to the changes.
(6) Upon the approval of the Annual General Shareholder’s Meeting, it is proposed that the Chairman is authorized to resolve the ex-dividend date and other relevant issues.

Voting Results:

574,350,035 shares were represented at the time of voting; 525,740,680 votes were in favor of the proposal (including votes casted electronically: 256,014,323);

1,391 votes were cast against the proposal (including votes castedelectronically: 1,391);

0 votes wereinvalid; 48,607,964 votes were either invalidly cast or abstained (including votes casted electronically: 48,208,129).

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

III. Discussion and Election

Issuance of new shares from capital increase by earnings. Please proceed to resolve. (Proposed by the board of directors)
Explanation:
(1) In response to the business development, the Company plans to issue 63,307,410 shares from capital increase by the 2016 dividends distributed to shareholders at the amount of NT$633,074,100, with the par value per share of NT$10. Based on shareholders and their shareholding ratio listed in the shareholders' roster on the target date for distribution of dividends,100 shares per 1000 shares will be distributed free of charge; the fractional shares that is less than 1 share shall be put together by the stock agency appointed by the Company within 5 days after the date on which share transfer registration is suspended. The fractional share that is insufficient to make up the balance or put together by the deadline will be subscribed by a person designated by the chairman of the Board.
(2) When there is a change in the distribution rate due to change in the number of shares circulated outside, the shareholders’ meeting shall authorize the Board of Directors to solely handle such a change.
(3) Rights and obligations arising from the issuance of new shares are same as those arising from the issuance of original shares.
(4) After the issuance of new shares from capital increase is resolved by the annual shareholders’ meeting and reported to the competent authority, the Board of Directors will be authorized to set the ex-right date and announce it separately.
(5) Please proceed to discuss.

Voting Results:

574,350,035 shares were represented at the time of voting; 503,042,495 votes

were in favor of the proposal (including votes casted electronically: 185,106,618);

22,484,906 votes were cast against the proposal (including votes castedelectronically: 22,484,906); 0 votes wereinvalid; 48,822,634 votes were either invalidly cast or abstained

(including votes casted electronically: 48,422,799).

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

Amendment to the “ Articles of Incorporation ”

(Proposed by the board of directors)

Explanation:

(1) In order to comply with the law and relevant regulations and to conform to the needs of Commercial practice, the Company hereby proposes to amend the Articles of Incorporation. Please refer to Attachment V.
(2) Please proceed to discuss .

Voting Results:

574,350,035 shares were represented at the time of voting; 525,739,580 votes were in favor of the proposal (including votes casted electronically: 207,803,703);

1,391 votes were cast against the proposal (including votes castedelectronically: 1,391);

0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained

(including votes casted electronically: 48,209,229).

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

Amendment to the “Procedures For Acquisition or Disposal of Assets” (Proposed by the board of directors) Explanation:
(1) The proposal is handled according to Financial Supervisory Commission Order Gin-Guan-Zheng-Fa-Zi No. 1060001296 dated February 9, 2017.
(2) In order to comply with the law and relevant regulations and to conform to the needs of commercial practice, the Company hereby proposes to amend the Procedures For Acquisition or Disposal of Assets . Please refer to Attachment VI.
(3) Please proceed to discuss .

Voting Results:

574,350,035 shares were represented at the time of voting; 525,739,580 votes were in favor of the proposal (including votes casted electronically: 207,803,703);

1,391 votes were cast against the proposal (including votes castedelectronically: 1,391);

0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained

(including votes casted electronically: 48,209,229).

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

Amendment to the “Procedures for Lending Funds to Other Parties”. (Proposed by the board of directors) Explanation:

(1) In order to comply with the law and relevant regulations and to conform to the needs of commercial practice, the Company hereby proposes to amend the Procedures for Lending Funds to Other Parties . Please refer to Attachment VII.
(2) Please proceed to discuss .

Voting Results:

574,350,035 shares were represented at the time of voting; 525,739,580 votes

were in favor of the proposal (including votes casted electronically: 207,803,703);

1,391 votes were cast against the proposal (including votes castedelectronically: 1,391);

0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained

(including votes casted electronically: 48,209,229).

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

Amendment to the “Procedures for Endorsement & Guarantee”.
(1) In order to comply with the law and relevant regulations and to conform to the needs of commercial practice, the Company hereby proposes to amend the Procedures for Endorsement & Guarantee . Please refer to Attachment VIII.
(2) Please proceed to discuss .

Voting Results:

574,350,035 shares were represented at the time of voting; 525,739,580 votes

were in favor of the proposal (including votes casted electronically: 207,803,703);

1,391 votes were cast against the proposal (including votes castedelectronically: 1,391);

0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained

(including votes casted electronically: 48,209,229).

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

Amendment to the “ Procedures for Financial Derivatives Transactions”. (Proposed by the board of directors) Explanation:
(1) In order to comply with the law and relevant regulations and to conform to the needs of commercial practice, the Company hereby proposes to amend the Procedures for Financial Derivatives Transactions . Please refer to Attachment IX .
(2) Please proceed to discuss .

Voting Results:

574,350,035 shares were represented at the time of voting; 525,739,580 votes

were in favor of the proposal (including votes casted electronically: 207,803,703);

1,391 votes were cast against the proposal (including votes castedelectronically: 1,391);

0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained

(including votes casted electronically: 48,209,229).

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

Amendment to the “ Rules and Procedures of Shareholders’ Meeting ”.
(Proposed by the board of directors) Explanation:
(1) In order to comply with the law and relevant regulations and to conform to the needs of commercial practice, the Company hereby proposes to amend the Rules and Procedures of Shareholders’ Meeting . Please refer to Attachment X .
(2) Please proceed to discuss .

Voting Results:

574,350,035 shares were represented at the time of voting; 525,739,580 votes

were in favor of the proposal (including votes casted electronically: 207,803,703);

1,391 votes were cast against the proposal (including votes castedelectronically: 1,391);

0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained

(including votes casted electronically: 48,209,229).

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

Discuss the disposal of Advantech LNC Technology Co., Ltd. Shares. (Proposed by the board of directors)

Explanation:

(1) In response to the business development of the Company’s subsidiary, Advantech LNC Technology Co., Ltd. (hereinafter referred to as AdvantechLNC), and the recruitment and retention of professionals required by the Company, theCompany plans to first release 3,000,000 shares of Advantech LNC to thefounding executives of Advantech LNC at the price of NT$18 per share and at the totalamount of NT$54,000,000 in order to improve employees’ coherence and sense ofbelonging, further creating the interest of the Company and shareholders.
(2) Please proceed to discuss.

Voting Results:

574,350,035 shares were represented at the time of voting; 449,428,024 votes

were in favor of the proposal (including votes casted electronically: 131,492,147);

75,886,190 votes were cast against the proposal (including votes castedelectronically:

75,886,190);0 votes wereinvalid; 49,035,821 votes were either invalidly cast or abstained (including votes casted electronically: 48,635,986).

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

Re-election of all directors. Please Vote.

Explanation:

(1) As the term of the Company’s directors and supervisors is about to expire, the reelection of directors and supervisors shall be held in the shareholders’meeting this year according to Article 13 of the Company’s Articles of Incorporation.
(2) The Company plans to set up 7~9 directors (including 3 independent directors) according to Article 13 of the Company’s Articles of Incorporation. In the 13th reelection, 7 directors are planned to be set up (including 3 independent directors) with a term of 3 years and they may be eligible for reelection. The Company plans to establish the audit committee, which is composed of all independent directors, according to Article 13-6 of the Company’s Articles of Incorporation. In addition, supervisors are abolished.
(3) According to Article 13 of the Company’s Articles of Incorporation, the candidate nomination system is adopted for the election of directors. After the Board of Directors reviews the qualifications of nominees based on the roster of candidates for directors and independent directors, qualified nominees are enrolled in the final roster of candidates for directors and independent directors and elected by the Board of Directors.
(4) The 3-year term of newly elected directors starts from May 26, 2017 and ends on May 25, 2020.
(5) According to Company’s Article of Incorporation, the Company’s dissectors shall be elected from the nomination list.The qualification of the nominees has been reviewed by Board. Personal information of the nominees is as follows:

Category	Name	Education	Experience	Current position	Shares Held
Director	K.C. Liu	Department of Telecommunications Engineering, National Chiao Tung University	Founder of Advantech	Chairman of Advantech Corporate Investment、 Chairman of Advanixs Corp.、Chairman of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd.、 Chairman of Advantech Technology (China) Company Ltd.、Chairman of Shanghai Advantech Intelligent Services Co., Ltd、Chairman of Xi’an Advantech Software Ltd、 Chairman of Advantech Intelligent Service.、 Chairman of K and M Investment Co., Ltd.、 Chairman of AdvanPOS Technology Co.,Ltd.、	23,292,484

Chairman of Advantech-LNC 、 Technology Co., Ltd. Chairman of Advanixs Kun ShAN Corporaton 、Chairman of 、 Aimobile Co., Ltd. Chairman of Advantech Foundation、Chairman of Advantech Japan Co., Ltd.、Chairman of B+B Smartworx Inc.Director of AIDC Investment Corp.、 Director of Advantech Europe B.V.、Director of DLoG GmbH、 Director of ADVANTECH INTERNATIONAL PT.、Director of Advantech Electronics,S. De R. L. De C.V.Director of Advantech Technology Co., Ltd. Director of HK Advantech 、 Technology Co., Ltd. Director of Advantech 、 Automation Corp. Director of Advantech Automation Corp.(HK) Limited.、 Director of Advantech Brazil Ltd.、Director of Advantech Co. Singapore Pte, Ltd.、Director of Advantech Corp.、Director of Advantech Europe Holding B.V.、Director of Advantech Co., Malaysia Sdn.Bhd.、Director of Advantech Poland Sp z.o.o、Director of Advantech KR Co., Ltd.、Director of Advantech Corporation 、 (Thailand) Co., Ltd. Director of Advantech Industrial Computing India Private Limited.、 Director of Better Auto 、 Holdings Limited. Director of Famous Now Limited.

Director	Ted Hsu	EMBA，National Chiao Tung University	Chairman of Eeizprise Inc.、Director of ASUSTeK、Director of Asmedia Technology Inc.、Director of Eusol Biotech Co.,Ltd.	Chief Strategy Officer of ASUSTeK	0
Director	AIDC Investment Corp. Representative :Donald Chang	Bachelor Chemical Engineering, Chinese Culture University	President, 3M China Region、 Vice President, 3M Southeast Asia Region、 Managing Director, 3M Southeast Asia Region & 3M Singapore	Independent Director of Chung Hwapulp Corp.	74,636,266
Director	Advantech Foundation Representative :Chaney Ho	Tatung Institute of Technology,Taiwan	President of Le Wel Co.,Ltd.	Chairman of Advantech Innovative Design Co., Ltd.、Director of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd、 Director of Shanghai Advantech Intelligent Services Co., Ltd、 Director of Advantech Technology (China) Company Ltd、Director of Advantech Co., Malaysia Sdn.Bhd.Director of Advantech KR Co., Ltd.、Director of Advantech Industrial Computing India PrivateLimited.	18,244,889
Independent Director	Jeff Chen	EMBA， Northwestern University	Stanley Black & Decker Inc. VP & President of Asia、 Stanley Works HQ, VP Global Operations、 Stanley Works Asia, President Asia Operations	Independent Director of Advantech Co.,Ltd.	0
Independent Director	Benson Liu	Master, International Business Administration, University of Northrop, USA	Chairman and President of Bristol-Myers Squibb (Taiwan) Ltd.	Independent Director, Global Unichip Corp Independent Director, Polylite Taiwan Co.,Ltd. Vice Chairman, Chinese Corporate Governance Association、Director, MaywufaCompanyLtd.	0
Independent Director	Joseph Yu	PhD of Business Administration,	Associate Professor, Departmentof Business	Independent Director, YuantaSecurities Co.,	249

		University of Michigan	Administration, University of Illinois at Urbana–Champaign、 Member, Taiwan Ministry of Economic Research and Development Committee、Dean, National Chengchi University, Department of Business Administration; Represe ntative for National Chengchi University Schoolof Business	Ltd、Independent Director, Yuanta Bank Co., Ltd. Professor, Department of Business Administration, National Chengchi University

Voting Results: Declared elected by the Chairman of the list is as follows:

Title	Shareholders’ NO	Name	Elected voting number
Director	1	K.C. Liu	529,544,496 votes
Director	Q1202*	Ted Hsu	492,114,989 votes
Director	163	Advantech Foundation Representative : ChaneyHo	490,770,320 votes
Director	40	AIDC Investment Corp. Representative :Donald Chang	487,445,565 votes
Independent Director	P1002*	Benson Liu	510,738,762 votes
Independent Director	17301	Joseph Yu	509,033,352 votes
Independent Director	B1006*	Jeff Chen	507,790,289 votes

Exemption of the limitation of non-competition on the directors of the Company. (Proposed by the board of directors)

Explanation:

(1) According to Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
(2) To take good advantage of the specialties and experience of the Company’s directors, the release of the prohibition on new directors and their representatives, elected in the 2017 annual shareholders’ meeting, from participation in competitive business is proposed in the shareholders’ meeting for approval according to laws.

Newly appointed directors serve as other positions in other companies are as below:

Title	Name	Company’s English Name
Director	K.C. Liu	Chairman of Advantech Corporate Investment、 Chairman of Advanixs Corp.、Chairman of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd.、 Chairman of Advantech Technology (China) Company Ltd.、Chairman of Shanghai Advantech Intelligent Services Co., Ltd、Chairman of Xi’an Advantech Software Ltd、 Chairman of Advantech Intelligent Service.、Chairman of K and M Investment Co., Ltd.、 Chairman of AdvanPOS Technology Co., Ltd.、Chairman of Advantech-LNC Technology Co., Ltd.、Chairman of Advanixs Kun ShAN Corporaton、Chairman of Aimobile Co., Ltd.、Chairman of Advantech Foundation、Chairman of Advantech Japan Co., Ltd.、Chairman of B+B Smartworx Inc.Director of AIDC Investment Corp.、Director of Advantech Europe B.V.、Director of DLoG GmbH、 Director of ADVANTECH INTERNATIONAL PT.、 Director of Advantech Electronics,S. De R. L. De C.V.Director of Advantech Technology Co., Ltd. Director of HK Advantech Technology Co., Ltd.、Director of Advantech Automation Corp.、Director of Advantech Automation Corp.(HK) Limited.、 Director of Advantech Brazil Ltd.、Director of Advantech Co. Singapore Pte, Ltd.、Director of Advantech Corp.、 Director of Advantech Europe Holding B.V.、Director of Advantech Co., Malaysia Sdn.Bhd.、Director of Advantech Poland Sp z.o.o、Director of Advantech KR Co., Ltd.、 Director of Advantech Corporation (Thailand) Co., Ltd.、 Director of Advantech Industrial Computing India Private Limited.、Director of Better Auto Holdings Limited.、 Directorof Famous NowLimited.
Director	Ted Hsu	Chairman of Eeizprise Inc.、Director of ASUSTeK、Director of Asmedia Technology Inc.、Director of Eusol Biotech Co.,Ltd.
Director	AIDC Investment Corp. Representative :Donald Chang	Independent Director of Chung Hwapulp Corp.
Director	Advantech Foundation Representative : Chaney Ho	Chairman of Advantech Innovative Design Co., Ltd.、 Director of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd、Director of Shanghai Advantech Intelligent Services Co., Ltd、Director of Advantech Technology (China) Company Ltd、Director of Advantech Co., Malaysia Sdn.Bhd.Director of Advantech KR Co., Ltd.、Director of Advantech Industrial Computing IndiaPrivateLimited.
Independent Director	Joseph Yu	Independent Director, Yuanta Securities Co., Ltd、Independent Director, Yuanta Bank Co., Ltd.

Independent Director	Benson Liu	Independent Director, Global Unichip Corp Independent Director, Polylite Taiwan Co.,Ltd. Independent Director, Vanguard International Semiconductor Co. Director, MaywufaCompanyLtd.

Voting Results:

574,350,035 shares were represented at the time of voting; 423,000,595 votes

were in favor of the proposal (including votes casted electronically: 105,064,718);

95,180,712 votes were cast against the proposal (including votes castedelectronically:

95,180,712);0 votes wereinvalid; 56,168,728 votes were either invalidly cast or abstained (including votes casted electronically: 55,768,893).

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:

2016 Summary of Results

In 2016, Advantech reported consolidated revenues of NT$ 42 billion, an increase of ten percent over the NT$38 billion of 2015. Net income was NT$5.69 billion and diluted earnings per share were NT$8.96. Gross profit margin was 40.8 percent, compared with 40.4 percent in 2015; and operating profit margin was 15.8 percent, compared with 15.6 percent a year earlier. Net profit margin was 13.54 percent, an increase of 0.05 percentage points from the previous year’s 13.49 percent.

Our Vision for IoT

Advantech has been looking at Internet of Things (IoT) opportunities since 2010, in addition to our foundation in embedded systems and industrial PC segments. We position ourselves as “The Accelerator of the Intelligent Planet”. However, given the complexity of the IoT ecosystem, we believe the broad-based penetration of end-user demands and applications will happen in the next 10 to 15 years, but not today. Since 2016, Advantech has gradually experienced rising demand in industrial IoT and factory applications. Looking forward, in addition to more comprehensive internet infrastructure development, the support and acceleration from industrial companies (like GE, Schneider, Honeywell, Siemens, etc.) and service providers (like Microsoft, Amazon, and Google) are the essential catalysts of the IoT industry.

Advantech recognizes three waves of growth in the IoT industry. The first wave happened in 2010 and will gradually mature in 2020. The major beneficiaries are IoT device providers, such as fabless houses. The second wave began in 2015~2016 and is expected to yield results in 2019~2020. The second wave should mature in 2025, at which time a third wave of IoT growth will begin. Advantech foresees that companies with the capability to provide hardware and software integration services will be the major beneficiaries during the second wave of IoT growth. In the future, Advantech will strengthen its role as an accelerator of the intelligent planet, facilitating system integrators’ activities in each vertical market, providing differentiated customer service, and forming cross-sector alliance and vertical market ecosystems.

Advantech’s Key Strategies to Achieve Our 2020 Vision

 Develop the WISE-PaaS platform to form a sharing platform.

In 2015, Advantech’s WISE-PaaS was focused on internal software consolidation and architecture development. In 2016, WISE-PaaS successfully launched Edge Intelligence Server

(EIS) and Solution Ready Platform (SRP), and penetrated into several customer IoT projects in different vertical markets. In 2017, Advantech will focus on cloud services for the WISE-PaaS platform to provide a reliable and improved IoT cloud computing platform.

 Make cross-sector alliances to form a vertical market IoT ecosystem.

IoT is an expansion opportunity to Advantech’s current specialty in embedded systems and industrial PCs. However, the complexities of the IoT system and vertical markets will drive overall market diversity. Therefore, Advantech intends to form different alliances in focused areas, including “M2.COM” in the Wireless IoT Sensor Nodes Standard, and Embedded Linux & Android Alliance (ELAA) in the embedded OS area, to provide more comprehensive services to our system integrator partners.

 Invest, incubate, and cooperate to accelerate IoT development and penetration.

In our 2020 vision, Advantech also identified external cooperation and investment as another growing arm in the future to fulfill the natural complexity of the IoT market and strengthen our portfolio and service offerings. In January 2016, Advantech fully consolidated B+B SmartWorx into our operations. In January 2017, Advantech announced investment in Kostec, a specialized, Korea-based medical-monitor company. Both investments were in line with Advantech’s long term strategy in technology centric and vertical development. Also, Advantech initiated more interactions and sponsorship with industrial partners and academic institutes. In addition to talent recruitment and business engagement, Advantech intends to facilitate the development of Taiwan’s IoT supply chain.

2017 Outlook

Advantech reported record high revenues and net income in 2016. The 10.5% revenue growth was consistent overall with Advantech’s past 10 year CAGR growth. More importantly, Advantech intends to seek sustainable top-line growth in the long run to optimize investor value.

Looking forward in 2017, Advantech expects to achieve its profitable revenue growth target on the back of 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 has marketed itself as an industrial brand since the beginning and now Advantech has operations in 23 countries around the world. In 2016, Advantech was recognized as a Top 6 Taiwan International Brand, and the only B2B company among the Top 10 Taiwan International Brands. To enhance corporate governance and comply with international trends, Advantech will transform its board organization from supervisory systems to independent directors systems starting from 2017.

Our goal is the pursuit of excellence and sustainable operation. 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 2016 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 2017 General Shareholders’ Meeting of Advantech Co., Ltd.

Supervisor: AIDC Investment Corp. Representative: Gary Tseng

March 06, 2017

Supervisor’s Review Report

Sincerely yours,

The 2017 General Shareholders’ Meeting of Advantech Co., Ltd.

Supervisor: Thomas Chen

March 06, 2017

Supervisor’s Review Report

Sincerely yours,

The 2017 General Shareholders’ Meeting of Advantech Co., Ltd.

Supervisor: James Wu

March 06, 2017

INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying consolidated financial statements of Advantech Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters on the consolidated financial statements for the year ended December 31, 2016 were as follows:

Business acquisitions

Due to the operation plan of 2016, the Group acquired 100% of the shares of B+B SmartWorx, Inc. (B+B) for NT$3,296,048 thousand on January 4, 2016.

The evaluation on fair value of the assets, liabilities, and the amount of goodwill as of the date of acquisition of B+B was based on a specialists’ Purchase Price Allocation Report that involved several financial assumptions and inputs. The judgment of related accounting estimates will affect the presentation of accounts on the financial statements. Since the acquisition is considered to be a significant event and was transacted during the period of the financial statements and should have a material impact on the financial statements, the accuracy of the acquisition transaction of B+B conducted by the Group was deemed to be a key audit matter.

Our key audit procedures performed in respect of the above area included the following:

Tested the acquisition balance sheet prepared by management in accordance with the requirements of IFRS 3 Business Combinations by:
a. Checking that the record matched against the fair value of the assets and liabilities as of the date of acquisition.
b. Recalculating the value of goodwill recognized on the acquisition balance sheet.
Evaluated and tested the management’s judgments, through the engagement of valuation experts by:
a. Testing the completeness of the identification, recognition, and valuation of the potential intangible assets of B+B and the fixed assets of its subsidiaries.
b. Testing the valuation methodologies and assumptions used to value each identified intangible asset, fixed asset, and goodwill.

B+B obtained the specialists’ Purchase Price Allocation Report in December 2016. Through the above performed procedures, B+B recognized goodwill at NT$1,768,139 thousand and intangible assets, including client relationships, core techniques, trademarks and software, at NT$1,294,933 thousand in total.

Impairment loss recognized on goodwill

If an asset has an indefinite useful life or there is any indication that an asset is impaired, the management should assess if the carrying amount of the assets is impaired. We have expressed our concerns on the related risks since the impairment assessment of goodwill is based on the management’s significant judgment that involves assumptions of the future profitability and costs of equity and debts; the impairment of goodwill is hence recognized as a critical accounting estimate in Note 5 to the consolidated financial statements.

The consolidated balance of goodwill amounted to NT$2,845,831 thousand as of December 31, 2016. We are mainly concerned about the addition of cash-generating units from the acquisition of B+B, from which the goodwill from the cash-generating units amounted to NT$1,768,139 thousand. Since the actual operations condition of B+B was not to the level as was evaluated as of the date of acquisition, which might cause an impairment of goodwill, the assessment of impairment of goodwill was deemed to be a key audit matter.

Our key audit procedures performed in respect of the above area included the following:

When evaluating the impairment assessment, we tested management’s assumptions and inputs used for testing the impairment for goodwill, including cash flow projections and discount rates.

Other Matter

We have also audited the parent company only financial statements of Advantech Co., Ltd as of and for the years ended December 31, 2016 and 2015 on which we have issued an unmodified opinion.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Meng-Chieh Chiu and Chin-Hsiang Chen.

Deloitte & Touche Taipei, Taiwan Republic of China

March 6, 2017

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, 2016 AND 2015

(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 30) Available-for-sale financial assets - current (Notes 4, 8 and 30) Debt investments with no active market - current (Notes 4 and 9) Notes receivable (Notes 4, 10 and 31) Trade receivables (Notes 4 and 10) Trade receivables from related parties (Note 31) Other receivables Inventories (Notes 4 and 11) Other current assets (Note 17) Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4, 8 and 30) 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 (Notes 4, 5 and 16) Deferred tax assets (Notes 4 and 23) Prepayments for business facilities Prepayments for investments (Note 26) Long-term prepayments for leases (Note 17) Other noncurrent assets (Note 28) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 18 and 30) Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 30) Trade payables (Note 31) Other payables (Notes 19 and 22) Current tax liabilities (Notes 4 and 23) Short-term warranty provisions (Note 4) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 23) Net defined benefit liabilities (Notes 4 and 20) 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		2016		2015
		Amount % $ 4,637,577 12 113,028 - 2,956,586 8 10,007 - 965,081 3 6,384,834 17 13,957 - 13,775 - 5,597,236 15 489,630 1 21,181,711 56 1,712,578 4 598,454 2 10,089,836 26 2,845,831 7 1,317,440 3 369,156 1 47,578 - - - 325,224 1 51,145 - 17,357,242 44 $ 38,538,953 100 $ 483,750 1 10,231 - 4,983,381 13 3,902,499 10 1,229,400 3 167,122 - 659,228 2 11,435,611 29 1,362,687 4 212,360 1 141,398 - 1,716,445 5 13,152,056 34 6,330,741 16 100 - 6,330,841 16 6,058,884 16 4,473,276 12 8,435,785 22 12,909,061 34 (197,633) - 112,429 - (85,204) - 25,213,582 66 173,315 - 25,386,897 66 $ 38,538,953 100		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

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

(With Deloitte & Touche audit report dated March 6, 2017)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Note 31) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 22 and 31) GROSS PROFIT OPERATING EXPENSES (Notes 22 and 31) 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 (losses) on disposal of investments (Note 4) Foreign exchange gains (losses), net (Notes 4, 22 and 33) Gains on financial instruments at fair value through profit or loss (Note 4) Dividend income Other income (Note 8) Finance costs (Note 22) 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 23) NET PROFIT FOR THE YEAR		2016 Amount % $ 40,839,800 97 1,162,398 3 42,002,198 100 24,884,649 59 17,117,549 41 4,260,554 10 2,576,210 6 3,649,292 9 10,486,056 25 6,631,493 16 65,562 - 15,989 - 289,633 1 (4,873) - (205,812) - 150,982 - 132,472 - 78,855 - (11,556) - (43,324) - (2,056) - 465,872 1 7,097,365 17 1,408,411 3 5,688,954 14		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 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (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 (Notes 20, 21 and 23): Remeasurement of defined benefit plans Share of the other comprehensive income (loss) of associates accounted for using the equity method Income tax related to items that will not be reclassified Items that may be reclassified subsequently to profit or loss (Notes 4, 21 and 23): Exchange differences on translating foreign operations Unrealized gains (losses) on available-for-sale financial assets Share of the other comprehensive income of associates Income tax related to items that may be reclassified subsequently to profit or loss 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		2016 Amount % $ (31,247) - 1,574 - 5,312 - (576,926) (1) 44,164 - (4,135) - 96,161 - (465,097) (1) $ 5,223,857 12 $ 5,666,862 13 22,092 - $ 5,688,954 14 $ 5,217,251 12 6,606 - $ 5,223,857 12		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 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 24) Basic Diluted	2016 Amount % $ 8.96 $ 8.90	2015
		Amount % $ 8.08 $ 8.05

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated March 6, 2017) (Concluded)

					Total Equity	$ 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		-	(3,791,118)	117,068	338,194		10,533	34,586	5,688,954	(465,097)	5,223,857	$ 25,386,897
			Non-controlling	Interests	(Notes 21 and 27)	$ 187,000		-	-	-	-		-	(44,217)	-	22,629	(19,136)	3,493	146,276		-	-	-	-		-	20,433	22,092	(15,486)	6,606	$ 173,315
					Total	$ 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		-	(3,791,118)	117,068	338,194		10,533	14,153	5,666,862	(449,611)	5,217,251	$ 25,213,582
	Other Equity (Note 21)	Exchange Unrealized Gain	Differences on (Loss) on	Translating Available-for-sale	Foreign Operations Financial Assets	$ 338,356 $ 563,277		- -	- -	- -	- -		- -	- -	- -	- -	(66,497) (495,012)	(66,497) (495,012)	271,859 68,265		- -	- -	- -	- -		- -	- -	- -	(469,492) 44,164	(469,492) 44,164	$ (197,633) $ 112,429
Equity Attributable to Owners of the Company			Retained Earnings (Notes 21 and 27)	Unappropriated	Legal Reserve Earnings Total	$ 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		510,434 (510,434) -	- (3,791,118) (3,791,118)	- - -	- - -		- - -	- (3,691) (3,691)	- 5,666,862 5,666,862	- (24,283) (24,283)	- 5,642,579 5,642,579	$ 4,473,276 $ 8,435,785 $ 12,909,061
			Capital Surplus	(Notes 21, 25	and 27)	$ 5,306,958		-	-	24,438	261,877		2,172	(11,457)	3,567	-	-	-	5,587,555		-	-	104,758	338,194		10,533	17,844	-	-	-	$ 6,058,884
					Total	6,312,091		-	-	6,440	-		-	-	-	-	-	-	6,318,531		-	-	12,310	-		-	-	-	-	-	6,330,841
						$																									$
		Issued Capital (Notes 21 and 25)	Advance Receipts	for Ordinary	Shares	$ 11,060		-	-	(11,060)	-		-	-	-	-	-	-	-		-	-	100	-		-	-	-	-	-	$ 100
					Share Capital	$ 6,301,031		-	-	17,500	-		-	-	-	-	-	-	6,318,531		-	-	12,210	-		-	-	-	-	-	$ 6,330,741
						BALANCE AT JANUARY 1, 2015	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 the	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	Appropriation of the 2015 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 the	equity method	Difference between consideration paid and carrying amount of subsidiaries acquired	Net profit for the year ended December 31, 2016	Other comprehensive income for year ended December 31, 2016, net of income tax	Total comprehensive income for the year ended December 31, 2016	BALANCE AT DECEMBER 31, 2016

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (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 obligations Impairment loss recognized (reversal of impairment loss) 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 Loss (gain) on disposal of investments Changes in operating assets and liabilities Financial assets held for trading Notes receivable Trade receivables Trade receivables from related parties Other receivables Inventories Other current assets Other financial assets Trade payables Net defined benefit liabilities Other payables Short-term warranty provisions Other current liabilities Other noncurrent liabilities Cash generated from operations Interest received Dividends 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 from sale of available-for-sale financial assets Acquisition of investments with no active market Acquisition of investments accounted for using the equity method	2016 $ 7,097,365 582,040 238,048 6,606 (24,032) (107,658) 338,194 11,556 (15,989) (132,472) (65,562) (289,633) 4,873 174,898 5,641 (738,014) 12,807 31,402 (446,618) (8,478) - 1,569,097 (2,427) 600,572 21,476 112,933 (17,857) 8,958,768 15,989 132,472 (6,285) (1,086,369) 8,014,575 (6,491,968) 5,364,552 (6,945) (135,000)	2015 $ 6,289,535 568,241 97,953 2,577 23,360 46,611 261,877 10,041 (40,613) (139,725) (110,226) 5,410 (202,458) (59,944) (20,861) (495,148) (21,375) (1,724) (87,310) 57,051 18,650 59,874 (1,191) 147,567 4,292 47,395 36,812 6,496,671 38,076 139,725 (1,467) (850,763) 5,822,242 (9,713,717) 11,766,699 1,805 - (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

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 Net cash used from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loans 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	2016 $ - (1,369,432) 88,313 (1,448,423) 587,468 8,038 (73,435) 46,599 (3,430,233) (396,875) (1,540) (3,791,118) 117,068 34,586 (4,037,879) (267,145) 279,318 4,358,259 $ 4,637,577	2015 $ (2,279,881) - 81,917 (1,333,481) 22,867 (16,567) (73,145) (18,015) (1,561,518) 877,545 (602) (3,787,255) 30,878 (118,577) (2,998,011) (26,461) 1,236,252 3,122,007 $ 4,358,259

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

(With Deloitte & Touche audit report dated March 6, 2017)

(Concluded)

INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying financial statements of Advantech Co., Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2016 and 2015, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters on the financial statements for the year ended December 31, 2016 were as follows:

Investments accounted for using the equity method

The Company and its subsidiaries acquired 100% share of B+B SmartWorx, Inc. (B+B) for NT$3,296,048 thousand in January 4, 2016 and recognized the acquisition as investment accounted for using the equity method.

The evaluation on fair value of the assets, liabilities, and amount of goodwill as of the date of acquisition was based on the specialists’ Purchase Price Allocation Report that involved several financial assumptions and inputs. The judgment of related accounting estimates will affect the presentation of accounts on the financial statements. After considering that the acquisition was a significant event and was transacted during the period of financial statements with a material impact on the financial statements, accuracy of merger transaction of B+B conducted by the Company was deemed to be a key audit matter.

Our key audit procedures performed in respect of the assets and liabilities as of the date of acquisition included the following:

Tested the acquisition balance sheet prepared by the management and checked the record by matching against the fair value of the assets and liabilities as of the date of acquisition.
Recalculated the value of goodwill recognized in the acquisition balance sheet.

Impairment assessment of investments accounted for using the equity method

The excess of cost of acquisition of investments accounted for using the equity method over the fair value of investees’ identifiable assets and liability as of the dates of acquisition should be recognized as goodwill. If there is any indication that goodwill is impaired, the management should assess if the carrying amount of goodwill is impaired. We have expressed our concerns on the related risks of impairment assessment on goodwill arising from acquisition of B+B since the impairment assessment of goodwill is based on the management’s significant judgment that involved assumptions of the future profitability and costs of equity and debts; the impairment of goodwill is hence recognized as a critical accounting estimate in Note 5 to the financial statements.

Our key audit procedures performed in respect of the above area included the following:

When evaluating the impairment assessment, we tested the management’s assumptions and inputs used for testing the impairment for goodwill, including cash flow projections and discount rates.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Meng-Chieh Chiu and Chin-Hsiang Chen.

Deloitte & Touche Taipei, Taiwan Republic of China

March 6, 2017

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 applied in the Republic of China.

For the convenience of readers, the independent 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 independent auditors’ report and financial statements shall prevail.

ADVANTECH CO., LTD.

BALANCE SHEETS DECEMBER 31, 2016 AND 2015

(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 25) Available-for-sale financial assets - current (Notes 4, 8 and 25) Notes receivable (Notes 4, 9 and 26) Trade receivables (Notes 4 and 9) Trade receivables from related parties (Notes 4 and 26) Other receivables Other receivables from related parties (Note 26) Inventories (Notes 4 and 10) Other current assets Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4, 8 and 25) 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 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 25) Trade payables Trade payables to related parties (Note 26) 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) Other noncurrent liabilities Total noncurrent liabilities Total liabilities 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		2016		2015
		Amount % $ 2,008,247 6 34,348 - 700,269 2 67,223 - 1,543,604 5 3,908,448 11 105,929 - 19,002 - 1,935,873 6 38,361 - 10,361,304 30 1,694,801 5 15,208,839 44 6,938,084 20 111,599 - 78,321 - 136,130 1 22,676 - - - 5,661 - 24,196,111 70 $ 34,557,415 100 $ 8,845 - 1,550,969 4 2,610,642 8 2,699,374 8 1,036,650 3 49,155 - 153,992 - 8,109,627 23 988,099 3 211,170 1 34,937 - 1,234,206 4 9,343,833 27 6,330,741 18 100 - 6,330,841 18 6,058,884 18 4,473,276 13 8,435,785 24 12,909,061 37 (197,633) - 112,429 - (85,204) - 25,213,582 73 $ 34,557,415 100		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

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

(With Deloitte & Touche audit report dated March 6, 2017)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4 and 26) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 10, 17 and 26) GROSS PROFIT UNREALIZED LOSS 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 26) 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 losses, net (Notes 4, 17 and 28) Gains on financial instruments at fair value through profit or loss (Note 4) Dividend income (Note 4) Other income (Notes 8 and 26) Finance costs (Note 17)		2016 Amount % $ 30,173,747 99 327,352 1 30,501,099 100 21,604,247 70 8,896,852 30 (264,679) (1) 330,254 1 8,962,427 30 659,619 2 884,172 3 2,641,219 9 4,185,010 14 4,777,417 16 1,581,818 5 539 - 146,954 1 1,431 - (140,689) - 121,348 - 98,800 - 101,777 - (4,163) -		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 - - - (Continued)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (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 (Note 15) Share of the other comprehensive loss of subsidiaries and associates accounted for using the equity method (Note 11) Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 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		2016 Amount % $ (41,381) - (155) - 1,866,279 6 6,643,696 22 976,834 3 5,666,862 19 (31,039) - 1,479 - 5,277 - (24,283) - (561,518) (2) (5,765) - 45,794 - 96,161 - (425,328) (2) (449,611) (2) $ 5,217,251 17		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

(Continued)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2016 Amount % EARNINGS PER SHARE (Note 19) Basic $8.96 Diluted $8.90 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 6, 2017)	2015
	Amount % $8.08 $8.05 (Concluded)

					Total Equity	$ 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		-	(3,791,118)	117,068	338,194		10,533		14,153	5,666,862		(449,611)	5,217,251	$ 25,213,582
Other Equity (Notes 4 and 16)	Exchange	Differences on Unrealized Gain	Translating (Loss) on	Foreign Available-for-sale	Operations Financial Assets	$ 338,356 $ 563,277		- -	- -	- -	- -		- -		- -	- -	- -		(66,497) (495,012)	(66,497) (495,012)	271,859 68,265		- -	- -	- -	- -		- -		- -	- -		(469,492) 44,164	(469,492) 44,164	$ (197,633) $ 112,429
			Retained Earnings (Notes 4, 16 and 17)	Unappropriated	Legal Reserve Earnings Total	$ 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		510,434 (510,434) -	- (3,791,118) (3,791,118)	- - -	- - -		- - -		- (3,691) (3,691)	- 5,666,862 5,666,862		- (24,283) (24,283)	- 5,642,579 5,642,579	$ 4,473,276 $ 8,435,785 $ 12,909,061
			Capital Surplus	(Notes 4, 16	and 20)	$ 5,306,958		-	-	24,438	261,877		2,172		(11,457)	3,567	-		-	-	5,587,555		-	-	104,758	338,194		10,533		17,844	-		-	-	$ 6,058,884
					Total	6,312,091		-	-	6,440	-		-		-	-	-		-	-	6,318,531		-	-	12,310	-		-		-	-		-	-	6,330,841
			Issued Capital (Notes 16 and 20)	Advance Receipts	Share Capital for Share Capital	$ 6,301,031 $ 11,060 $		- -	- -	17,500 (11,060)	- -		- -		- -	- -	- -		- -	- -	6,318,531 -		- -	- -	12,210 100	- -		- -		- -	- -		- -	- -	$ 6,330,741 $ 100 $
						BALANCE AT JANUARY 1, 2015	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 accounted for using	equity method	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	Appropriation of the 2015 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 accounted for using	equity method	Difference between considerations and carrying amounts of subsidiaries acquired	or disposed of	Net profit for the year ended December 31, 2016	Other comprehensive income for the year ended December 31, 2016, net of	income tax	Total comprehensive income for the year ended December 31, 2016	BALANCE AT DECEMBER 31, 2016

ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (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 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 receivables to related parties Inventories Other current assets Other financial assets Trade payables Trade payables to related parties Other payables Short-term warranty provision Net defined benefit liabilities 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	2016 $ 6,643,696 239,135 78,294 96 (79,967) 4,163 (539) (98,800) 338,194 (1,581,818) (146,954) (1,431) (65,575) 55,503 (11,743) (408,460) 69,551 7,127 (3,406) (262,717) 21,957 - 651,489 (76,488) 357,649 7,745 (2,041) 81,680 3,305 5,819,645 539 98,800 (4,163) (653,568) 5,261,253	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 (26,992) 45 (268,954) (8,670) 18,650 121,548 253,194 185,158 5,291 (813) 11,088 (1,975) 5,068,288 1,665 105,445 - (542,066) 4,633,332 (Continued)

ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of available-for-sale financial assets Proceeds from 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 Decrease in prepayments for equipment Dividends received from subsidiaries and associates Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES 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	2016 (4,128,000) 3,429,410 (293,281) 336,958 - 232,330 (930,598) 239,507 5,176 (76,875) 58 11,809 779,257 (394,249) - (3,791,118) 117,068 (3,674,050) 1,192,954 815,293 $ 2,008,247	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

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 6, 2017) (Concluded)

Advantech Co., Ltd.

2016 Profit Distribution Table

Item	Total
Unappropriated retained earnings - beginning	2,796,896,578
Less: Long-term equity investments	(3,691,230)
Less: Actuarial loss recognized in retained earnings	(24,282,918)
Add: Net income	5,666,862,329
Less: 10% legal reserve appropriated	(566,686,233)
Less: Special reserve appropriated	(85,203,650)
Current earnings available for distribution	7,783,894,876
Distributions:
Common stock cash dividend ( Dividends Per Share $6.3)	(3,988,366,830)
Share dividends ( Dividends Per Share $1 )	(633,074,100)
Unappropriated retained earnings - ending	3,162,453,946

Chairman: K.C. Liu President: Chaney Ho

Chief Financial officer: Rorie Kang

Remark	Sep up the Audit Committee.	Sep up the Audit Committee.
Before amendment	The company has seven ~ nine 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 exercise of power by thesupervisors is as follows: 1. Reviewing the operations and financial condition of the Company. 2. Auditing the accounting books and documents of the Company. 3. Other responsibilities assigned in accordance with the law and regulations.
After amendment	The company has seven ~ nine directors.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 exercise of power by theaudit committee is as follows: 1. Reviewing the operations and financial condition of the Company. 2. Auditing the accounting books and documents of the Company. 3. Other responsibilities assigned in accordance with the law and regulations.
No.	Article 13	Article 13.2

Remark	Sep up the Audit Committee.	Sep up the Audit Committee.	Sep up the Audit Committee.	Sep up the Audit Committee.	Sep up the Audit Committee.	Sep up the Audit Committee.	Sep up the Audit Committee.	Sep up the Audit Committee.	Sep up the Audit Committee.
Before amendment	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.								The Company may at any time in case of emergency convene a board meeting and with the directors and
		an e nies	on	and d	an and by stic	in nge ors. its d in tent th	e	on	ncy d
			The Company may purchase liability insurance for directors and supervisors throughout the tenure based their scope of responsibility.	The board of directors is authorized to deliberate determine the remuneration of all directors supervisors according to their participation in contribution to the Company’s business operation and referring to the remuneration standard of the dome industry.		The Company has an Audit Committee setup accordance with Article 14.4 of the Securities Excha Act, which is organized by all the independent direct The exercise of power by the Audit Committee and members and the related matters are to be processe accordance with the provisions of the compe authorities. Supervisors will be discharged on the date Audit Committee established, which will be in effec the expiry date of the term of office in 2017.
After amendment	The total shares of the Company held by all directors 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.		The Company may purchase liability insurance for directors throughout the tenure based on their scope of responsibility.	The board of directors is authorized to deliberate and determine the remuneration of all directors according to their participation in and contribution to the Company’s business operation and by referring to the remuneration standard of the domestic industry.		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.			The Company may at any time in case of emergency convene a board meeting and with the directors
No.	Article 13.3		Article 13.4	Article 13.5		Article 13.6			Article 14.1

Remark		Sep up the Audit Committee.	Update the date of the amendment
Before amendment	supervisors informed in writing or by E-mail or fax.	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.	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.
After amendment	informed in writing or by E-mail or fax.	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 acknowledgement 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.
No.		Article 18	Article 22

Remark
Before amendment	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.
After amendment	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. The 35rd amendment of the Corporate Charter (Article of Incorporation) was made on May 26, 2017.
No.

Remark	According to the governing law and regulations	According to the actual practice
Before amendment	The term “assets” as used in these Procedures includes the following: 1. Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities. 2. Real property (including land, houses and buildings, investment property, rights to use land, and construction enterprise inventory) and equipment. 3. Memberships. 4. Patents, copyrights, trademarks, franchise rights, and other intangible assets. 5. Derivatives. 6. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law 7. Other major assets.	These Procedures are established in accordance with the Regulations Governing the Acquisition and Disposal of Assets by Public Companies promulgated by the FSC. After these Procedures have been approved by the Board
After amendment	The term “assets” as used in these Procedures includes the following: 1. Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities. 2. Real property (including land, houses and buildings, investment property, rights to use land, and construction enterprise inventory) and equipment. 3. Memberships. 4. Patents, copyrights, trademarks, franchise rights, and other intangible assets. 5. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables). 6. Derivatives. 7. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law 8. Other major assets.	After these Procedures have been approved by more than half of all Audit Committee members and the Board of Directors, they shall be submitted to the shareholders' meeting for approval; the same applies when these
No.	Article 3	Article 6

	According to the actual practice
of Directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval; the same applies when the procedures are amended.If any director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to each supervisor. When these Procedures are submitted to the Board of Directors for discussion pursuant to the preceding paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board meeting.	The Company's acquisition or disposal of assets that is subject to the approval of the Board of Directors under the Company's procedures or other laws or regulations, if a director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion toeach supervisor. When a transaction involving the acquisition or disposal
Procedures are amended. When these Procedures are reported to the Board of Directors for discussion, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. When these Procedures are adopted or amended, they shall be approved by more than half of all Audit Committee members and submitted to the Board of Directors for a resolution. If approval of more than half of all Audit Committee members as required in the preceding paragraph is not obtained, these Procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the Audit Committee shall be recorded in the minutes of the board meeting. The terms “all Audit Committee members” and “all directors” shall be counted as the actual number of persons currently holding those positions.	The Company’s acquisition or disposal of assets shall be approved by the Board of Directors under the Company’s procedures or other laws or regulations. If a director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to theAudit Committee.
	Article 8

	According to the governing law and regulations
of assets is submitted to the Board of Directors for discussion pursuant to the preceding paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.	Procedures for Acquisition or Disposal of Real Property or Equipment 1. Evaluation and Operating Procedures The transaction processes of real property and equipment shall be handled in accordance with the operating procedures for fixed asset circulation in the Company’s internal control system.
When a transaction involving the acquisition or disposal of assets is submitted to the Board of Directors for discussion pursuant to the preceding paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. Major assets or derivatives transactions shall be approved by more than half of all Audit Committee members and reported to the Board of Directors for resolution. If approval of more than half of all Audit Committee members is not obtained, these procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the Audit Committee shall be recorded in the minutes of the board meeting. The terms “all Audit Committee members” and “all directors” shall be counted as the actual number of persons currently holding those positions.	In acquiring or disposing of real property or equipment where the transaction amount reaches 20% of the Company’s paid-in capital or NT$300 million or more, the Company, unless transacting with a government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an
	Article 9

2. Procedures for Determining Trading Terms and	2. Procedures for Determining Trading Terms and	Conditions and Authorization Limit		(1) When acquiring or disposing of real property, the	(1) When acquiring or disposing of real property, the	Company shall determine the trading terms and	Company shall determine the trading terms and	conditions and trading prices based on the	conditions and trading prices based on the	current value, assessed value, and real trading	current value, assessed value, and real trading	price of nearby real property and have the	price of nearby real property and have the	analysis report submitted to the Board of	analysis report submitted to the Board of	Directors. If the amount of the transaction is less		than NT$300 million, this shall be approved by	than NT$300 million, this shall be approved by	the Chairman of the Board and reported to the	the Chairman of the Board and reported to the	latest board meeting afterward; if the amount of	latest board meeting afterward; if the amount of	the transaction is more than NT$300 million, this	the transaction is more than NT$300 million, this	shall be approved by the Board of Directors.	shall be approved by the Board of Directors.	(2) The acquisition or disposal of equipment shall be	(2) The acquisition or disposal of equipment shall be	performed through enquiry, comparison,	performed through enquiry, comparison,	bargaining, or bidding. If the amount of the	bargaining, or bidding. If the amount of the	transaction is less than NT$300 million		(inclusive), this shall be approved pursuant to the	(inclusive), this shall be approved pursuant to the	authorization limit; if the amount of the	authorization limit; if the amount of the	transaction is more than NT$300 million, this	transaction is more than NT$300 million, this	shall be approved by the President and the Board	shall be approved by the President and the Board	of Directors.		3. Units Responsible for Implementation	3. Units Responsible for Implementation	After the acquisition or disposal of real property or	After the acquisition or disposal of real property or	equipment is approved based on the authorization	equipment is approved based on the authorization	limit stipulated in the preceding paragraph, the	limit stipulated in the preceding paragraph, the	department using such real property or equipment and	department using such real property or equipment and	Administration Department is responsible for	Administration Department is responsible for	implementation.	implementation.	4. Appraisal Report on Real Property or Other Fixed	4. Appraisal Report on Real Property or Other Fixed	Assets			In acquiring or disposing of real property or	In acquiring or disposing of real property or	equipment where the transaction amount reaches	equipment where the transaction amount reaches

appraisal report prior to the date of occurrence of the		event from a professional appraiser and shall further		comply with the following provisions:		1. Where due to special circumstances it is necessary to		give a limited price, specified price, or special price as		areference basis for the transaction price, the		transaction shall be submitted for approval in advance		by the Board of Directors, and the same procedure		shall be followed for any future changes to the terms		and conditions of the transaction.		2. Where the transaction amount is NT$1 billion or more,		appraisals from two or more professional appraisers		shall be obtained.		3. Where any one of the following circumstances applies		with respect to the professional appraiser's appraisal		results, unless all the appraisal results for the assets to		be acquired are higher than the transaction amount, or		all the appraisal results for the assets to be disposed of		are lower than the transaction amount, a certified		public accountant shall be engaged to perform the		appraisal in accordance with the provisions of		Statement of Auditing Standards No. 20 and render a		specific opinion regarding the reason for the		discrepancy and the appropriateness of the transaction		price:		(1) The discrepancy between the appraisal result and		the transaction amount is 20 percent or more of		the transaction amount.		(2) The discrepancy between the appraisal results of		two or more professional appraisers is 10 percent		or more of the transaction amount.		4. No more than 3 months may elapse between the date			of the appraisal report issued by a professional appraiser

NT$300 million or more, the Company, unless		transacting with a government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal	transacting with a government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal	report prior to the date of occurrence of the event from a professional appraiser and shall further	report prior to the date of occurrence of the event from a professional appraiser and shall further	comply with the following provisions:	comply with the following provisions:	(1) Where due to special circumstances it is	(1) Where due to special circumstances it is	necessary to give a limited price, specified price,	necessary to give a limited price, specified price,	or special price as a reference basis for the	or special price as a reference basis for the	transaction price, the transaction shall be	transaction price, the transaction shall be	submitted for approval in advance by the Board	submitted for approval in advance by the Board	of Directors, and the same procedure shall be	of Directors, and the same procedure shall be	followed for any future changes to the terms and	followed for any future changes to the terms and	conditions of the transaction.	(2) Where the transaction amount is NT$1 billion or	(2) Where the transaction amount is NT$1 billion or	more, appraisals from two or more professional	more, appraisals from two or more professional	appraisers shall be obtained.	appraisers shall be obtained.	(3) Where any one of the following circumstances	(3) Where any one of the following circumstances	applies with respect to the professional	applies with respect to the professional	appraiser's appraisal results, unless all the	appraiser's appraisal results, unless all the	appraisal results for the assets to be acquired are	appraisal results for the assets to be acquired are	higher than the transaction amount, or all the	higher than the transaction amount, or all the	appraisal results for the assets to be disposed of	appraisal results for the assets to be disposed of	are lower than the transaction amount, a certified	are lower than the transaction amount, a certified	public accountant shall be engaged to perform	public accountant shall be engaged to perform	the appraisal in accordance with the provisions	the appraisal in accordance with the provisions	of Statement of Auditing Standards No. 20	of Statement of Auditing Standards No. 20	published by the ROC Accounting Research and	published by the ROC Accounting Research and	Development Foundation (ARDF) and render a	Development Foundation (ARDF) and render a	specific opinion regarding the reason for the	specific opinion regarding the reason for the	discrepancy and the appropriateness of the	discrepancy and the appropriateness of the	transaction price:	transaction price:
and the contract execution date; provided, where the		publicly announced current value for the same period is used and not more than 6 months have elapsed, an	opinion may still be issued by the original professional	appraiser.

	According to the governing law and regulations
A. The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount. B. The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount. (4) No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser. (5) Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.	Procedures for Acquisition or Disposal of Memberships or Intangible Assets 1. Evaluation and Operating Procedures The transaction processes of memberships or intangible assets shall be handled in accordance with the operating procedures for fixed asset circulation in the Company’s internal control system. 2. Procedures for Determining Trading Terms and
	Where the Company acquires or disposes of memberships or intangible assets and the transaction amount reaches 20% of the Company’s paid-in capital or NT$300 million or more, except in transactions with agovernment agency, the Company shall engage a certified public accountant prior to the date of
	Article 11


Conditions and Authorization Limit			(1) The trading terms and conditions and prices of		acquisition or disposal of memberships shall be			determined by the Company based on the market fair price, with the analysis report submitted to				the President for approval. The amount of each		transaction less than 1% of the Company’s		paid-in capital or NT$300 million shall be		reported to the Board of Directors for approval		and the soonest board meeting for future		reference; the amount of each transaction		exceeding NT$300 million shall be reported to		the Board of Directors for approval.		(2) The trading terms and conditions and prices of		acquisition or disposal of intangible assets shall		be determined by the Company based on the		appraisal report or market fair price, with the		analysis report submitted to the President for		approval. The amount of each transaction less		than 10% of the Company’s paid-in capital or		NT$300 million shall be reported to the		Chairman of the Board for approval and the		soonest board meeting for future reference; the		amount of each transaction exceeding NT$300		million shall be reported to the Board of		Directors for approval.		3. Units Responsible for Implementation		After the acquisition or disposal of memberships or		intangible assets is approved based on the		authorization limit stipulated in the preceding		paragraph, the department using such memberships		or intangible assets and Finance Department or		Administration Department are responsible for		implementation.
occurrence of the event to render an opinion on the			reasonableness of the transaction price; the CPA shall				comply with the provisions of Statement of Auditing			Standards No. 20.

	According to the governing law and regulations
4. Appraisal Report on Memberships or Intangible Assets Where the Company acquires or disposes of memberships or intangible assets and the transaction amount reaches NT$30 million or more, except in transactions with a government agency, the Company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.	When the Company intends to acquire or dispose of real property from or to a related party and when it intends to acquire or dispose of assets other than real property from or to a related party, regardless of the amount and except in trading of government bonds or bonds under repurchase and resale agreements, or subscription orredemption of domestic money market funds, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the Board of Directors and recognized by the supervisors: 1. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2. The reason for choosing the related party as a trading counterparty.
	When the Company intends to acquire or dispose of real property from or to a related party, regardless of the amount,or when it intends to acquire or dispose of assets other than real property from or to a related party at the amount reaching 20% of the Company’s paid-in capital, 10% of its total assets or NT$300 million, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of domestic money market funds issued by securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by more than half of all Audit Committee members and the Board of Directors: 1. The purpose, necessity and anticipated benefit of the
	Article 14


3. With respect to the acquisition of real property from a	related party, information regarding appraisal of the	reasonableness of the preliminary transaction terms in	accordance with Article 15 and Article 16.	4. The date and price at which the related party originally	acquired the real property, the original trading	counterparty, and that trading counterparty's	relationship to the company and the related party.	5. Monthly cash flow forecasts for the year commencing	from the anticipated month of signing of the contract,	and evaluation of the necessity of the transaction, and	reasonableness of the funds utilization.	6. An appraisal report from a professional appraiser or a	CPA's opinion obtained in compliance with the	preceding article.	7. Restrictive covenants and other important stipulations	associated with the transaction.	The calculation of the transaction amounts referred to in	the preceding paragraph shall be made in accordance with	Paragraph 2 of Article 27 herein, and “within the		preceding year” as used herein refers to the year preceding	the date of occurrence of the current transaction. Items		that have been approved by the Board of Directors and		recognized by the supervisors need not be counted toward		the transaction amount.	With respect to the acquisition or disposal of business-use
acquisition or disposal of assets.	2. The reason for choosing the related party as a trading	counterparty.	3. With respect to the acquisition of real property from a	related party, information regarding appraisal of the	reasonableness of the preliminary transaction terms in	accordance with Article 15 and Article 16.	4. The date and price at which the related party	originally acquired the real property, the original	trading counterparty, and that trading counterparty's	relationship to the company and the related party.	5. Monthly cash flow forecasts for the year commencing	from the anticipated month of signing of the contract,	and evaluation of the necessity of the transaction, and	reasonableness of the funds utilization.	6. An appraisal report from a professional appraiser or a	CPA's opinion obtained in compliance with the	preceding article.	7. Restrictive covenants and other important stipulations	associated with the transaction.		The calculation of the transaction amounts referred to in	the preceding paragraph shall be made in accordance		withArticle 30 herein, and “within the preceding year”		as used herein refers to the year preceding the date of		occurrence of the current transaction. Items that have	been announced in accordance with these Procedures

	According to the
equipment between the Company and its subsidiaries, the Company's Board of Directors may pursuant toParagraph 2of Article 9 delegate the Chairman of the Board to decide such matters when the transaction is within a certain amount and have the decisions subsequently submitted to and ratified by the next board of directors meeting. When a matter is submitted to the Board of Directors for discussion pursuant to the preceding paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.	Where the Company acquires real property from a related
need not be counted toward the transaction amount. With respect to the acquisition or disposal of business-use equipment between the Company and its parent company or subsidiaries, the Company’s Board of Directors may pursuant to Article 9 delegate the Chairman of the Board to decide such matters when the transaction is within a certain amount and have the decisions subsequently submitted to and ratified by the next board of directors meeting. When a matter is submitted to the Board of Directors for discussion pursuant to the preceding paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. If approval of more than half of all Audit Committee members as required in the preceding paragraph is not obtained, these procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the Audit Committee shall be recorded in the minutes of the board meeting. The terms “all Audit Committee members” and “all directors” shall be counted as the actual number of persons currently holding those positions.	Where the Company acquires real property from a
	Article 17

actual practice
party and the results of appraisals conducted in	accordance with Article 15 and Article 16 are uniformly	lower than the transaction price, the following steps shall	be taken:	1. A special reserve shall be set aside in accordance with	Paragraph 1, Article 41 of the Securities and Exchange	Act against the difference between the real property	transaction price and the appraised cost, and may not be	distributed or used for capital increase or issuance of	bonus shares. Where a public company uses the equity	method to account for its investment in another	company, then the special reserve called for under	Paragraph 1, Article 41 of the Securities and Exchange	Act shall be set aside pro rata in a proportion consistent	with the share of public company's equity stake in the	other company.	2. Supervisors shall comply with Article 218 of the		Company Act.	3. Actions taken pursuant to subparagraph 1 and	subparagraph 2 shall be reported to a shareholders	meeting, and the details of the transaction shall be	disclosed in the annual report and any investment	prospectus.	The Company that has set aside a special reserve under	the preceding paragraph may not utilize the special	reserve until it has recognized a loss on decline in market
related party and the results of appraisals conducted in	accordance with Article 15 and Article 16 are uniformly	lower than the transaction price, the following steps shall	be taken:	1. A special reserve shall be set aside in accordance with	Paragraph 1, Article 41 of the Securities and	Exchange Act against the difference between the real	property transaction price and the appraised cost, and	may not be distributed or used for capital increase or	issuance of bonus shares. Where a public company	uses the equity method to account for its investment in	another company, then the special reserve called for	under Paragraph 1, Article 41 of the Securities and	Exchange Act shall be set aside pro rata in a	proportion consistent with the share of public	company's equity stake in the other company.	2. The Audit Committee shall comply with Article 218		of the Company Act.	3. Actions taken pursuant to subparagraph 1 and	subparagraph 2 shall be reported to a shareholders	meeting, and the details of the transaction shall be	disclosed in the annual report and any investment	prospectus.	The Company that has set aside a special reserve under	the preceding paragraph may not utilize the special	reserve until it has recognized a loss on decline in

	According to the actual practice
value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the FSC has given its consent. When the Company obtains real property from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arm’s length transaction.	The Company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, Board of Directors’ approval dates, and the matters required to be carefully evaluated under Subparagraph 4 of Article 19 and Subparagraph 2 of Paragraph 1 and Subparagraph 1 of Paragraph 2 of Article 20 shall be recorded in detail in the log book. A public company's internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered, allsupervisors shall be notified in writing.
market value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the FSC has given its consent. When the Company obtains real property from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arm’s length transaction.	The Company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, Board of Directors’ approval dates, and the matters required to be carefully evaluated under Subparagraph 4 of Article 19 and Subparagraph 2 of Paragraph 1 and Subparagraph 1 of Paragraph 2 of Article 20 shall be recorded in detail in the log book. A public company's internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered, theAudit Committee shall be notified in writing.
	Article 21

According to the governing law and regulations	According to the governing law and regulations
The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the Board of Directors for deliberation and passage.	Procedures for Public Disclosure of Information Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in the appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event: 1. Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription
The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the Board of Directors for deliberation and passage. However, an opinion rendered by an expert on the reasonableness of amerger with subsidiaries whose 100% of shares issued or total capital are directly or indirectly held by the Company or a merger between subsidiaries whose 100% of shares issued or total capital are directly or indirectly held by the Company may be exempted.	Procedures for Public Disclosure of Information Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in the appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event: 1. Acquisition or disposal of real property from or to a related party, regardless of the amount, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under
Article 22	Article 30

or redemption of domestic money market funds.	2. Merger, demerger, acquisition, or transfer of shares.	3. Losses from derivatives trading reaching the limits on	aggregate losses or losses on individual contracts set	out in the procedures adopted by the Company.	4. Where an asset transaction other than any of those	referred to in the preceding three subparagraphs, a	disposal of receivables by a financial institution, or an	investment in the mainland China area reaches 20	percent or more of paid-in capital or NT$300 million;	provided, this shall not apply to the following	circumstances:		(1) Trading of government bonds.	(1) Trading of government bonds.	(2) Securities trading by investment professionals on		foreign or domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm, either in the primary market or in	accordance with relevant regulations.	(3) Trading of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds.	(4) Where the type of asset acquired or disposed is	equipment/machinery for business use, the trading	counterparty is not a related party, and the transaction amount is less than NT$500 million.	(5) Where land is acquired under an arrangement on	engaging others to build on the Company's own land,	engaging others to build on rented land, joint construction and allocation of housing units, joint	construction and allocation of ownership percentages,
repurchase and resale agreements, or subscriptionor	repurchase of domestic money market funds issued by	securities investment trust enterprises.	2. Merger, demerger, acquisition, or transfer of shares.	3. Losses from derivatives trading reaching the limits on	aggregate losses or losses on individual contracts set	out in the procedures adopted by the Company.	4. Where the type of asset acquired or disposed is	equipment for business use, the trading counterparty	is not a related party, and the transaction amount	meets one of the following requirements:	(1) The paid-in capital is less than NT$10 billion and		the transaction amount is more than NT$500 million.		(2) The paid-in capital is more than NT$10 billion and		the transaction amount is more than NT$1 billion. 5. Where land is acquired under an arrangement on	engaging others to build on the Company's own land,	engaging others to build on rented land, joint construction and allocation of housing units, joint	construction and allocation of ownership percentages,	or joint construction and separate sale, and the amount the Company expects to invest in the transaction is		less than NT$500 million.	6. Where an asset transaction other than any of those referred to in the preceding five subparagraphs, a		disposal of receivables by a financial institution, or an

investment in the mainland China area reaches 20 or joint construction and separate sale, and the amount	percent or more of paid-in capital or NT$300 million; the Company expects to invest in the transaction is less than NT$500 million.	provided, this shall not apply to the following The amount of transactions above shall be calculated as	circumstances: follows and “Within the preceding year” as used in the	(1) Trading of government bonds. (2)Securities trading by investment professionals on foreign or domestic securities exchanges or over-the-counter markets, or subscription of corporate bonds and general financial bonds not involving no equity in the domestic primary market or securities by a securities firm due to business needs or a securities firm recommended for listed companies at the emerging stock market in accordance with the regulations of Taipei Exchange. (3) Trading of bonds under repurchase/resale agreements, or subscription or repurchase of domestic money market funds issued by securities investment trust enterprises. The amount of transactions above shall be calculated as preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with the regulations need not be counted toward the transaction amount. 1. The amount of any individual transaction. 2. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year. 3. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year. 4. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding	follows and “Within the preceding year” as used in the preceding paragraph refers to the year preceding the date year. “Within the preceding year” as used in the preceding	of occurrence of the current transaction. Items duly paragraph refers to the year preceding the date of	announced in accordance with the regulations need not be counted toward the transaction amount. 1. The amount of any individual transaction. occurrence of the current transaction. Items duly announced in accordance with these Procedures need not	2. The cumulative transaction amount of acquisitions and be counted toward the transaction amount.	disposals of the same type of underlying asset with the The Company shall compile monthly reports on the status	same trading counterparty within the preceding year. 3. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and of derivatives trading engaged in up to the end of the preceding month by itself and any subsidiaries that are not	disposals, respectively) within the same development domestic public companies and enter the information in	project within the preceding year. the prescribed format into the information reporting


website designated by the FSC by the 10th day of each	month.		When the Company at the time of public announcement		makes an error or omission in an item required by		regulations to be publicly announced and so is required to	correct it, all the items shall be again publicly announced	and reported in their entirety.
4. The cumulative transaction amount of acquisitions and	disposals (cumulative acquisitions and disposals,	respectively) of the same security within the preceding		year.	“Within the preceding year” as used in the preceding		paragraph refers to the year preceding the date of	occurrence of the current transaction. Items duly	announced in accordance with these Procedures need not	be counted toward the transaction amount.	The Company shall compile monthly reports on the		status of derivatives trading engaged in up to the end of	the preceding month by itself and any subsidiaries that		are not domestic public companies and enter the		information in the prescribed format into the information	reporting website designated by the FSC by the 10th day	of each month.	When the Company at the time of public announcement	makes an error or omission in an item required by	regulations to be publicly announced and so is required	to correct it,all the items shall be again publicly		announced and reported in their entirety within 2 days		commencing immediately from the date of knowing of		the error or omission.	The Company acquiring or disposing of assets shall keep			all relevant contracts, meeting minutes, log books,		appraisal reports and CPA, attorney, and securities		underwriter opinions at the company headquarters,

	Update the date of the amendment
	These Procedures were established on May 3, 1997. The 1stamendment was made on November 29, 1999. The 2ndamendment was made on May 30, 2002. The 3rdamendment was made on May 2, 2003. The 4thamendment was made on May 27, 2004. The 5thamendment was made on June 16, 2006. The 6thamendment was made on June 15, 2007. The 7thamendment was made on June 13, 2012. The 8thamendment was made on June 18, 2014.
where they shall be retained for 5 years except where another act provides otherwise.	These Procedures were established on May 3, 1997. The 1stamendment was made on November 29, 1999. The 2ndamendment was made on May 30, 2002. The 3rdamendment was made on May 2, 2003. The 4thamendment was made on May 27, 2004. The 5thamendment was made on June 16, 2006. The 6thamendment was made on June 15, 2007. The 7thamendment was made on June 13, 2012. The 8thamendment was made on June 18, 2014. The 9thamendment was made on May 26, 2017.
	Article 30

Remark	According to the actual practice	According to the actual practice
Before amendment	Lending Counterparts Companies or firms in need of short-term financing. Lending counterparts in need of short-term financing shall be limited to a subsidiary in which the Company holds 50% of the voting shares or companies with the de facto control having the need of short-term financing due to business needs. The phrase “short-term” mentioned above shall mean within one year or a business cycle (whichever is longer). Foreign companies, of which the Company directly or indirectly holds 100% of the voting shares, if engaged in the lending business, will be exempt from the restrictions referred to in the first paragraph of Article 4.	Lending Amount and Financing Limit 1. The total amount lent to others (loanable funds) shall not exceed 20% of the net value of the Company. The total lending amount of an individual borrower shall not exceed 50% of the total amount of loanable funds. 2. In the case of lending funds to companies or firms who have a business relationship with the Company, the total lending amount of an individual borrower shall not exceed 50% of the total amount of loanable
After amendment	Lending Counterparts Lending counterparts in need of short-term financing shall be limited to a subsidiary in which the Company holds 50% of the voting shares or companies with the de facto control having the need of short-term financing due to business needs. The phrase “short-term” mentioned above shall mean within one year or a business cycle (whichever is longer). Foreign companies, of which the Company directly or indirectly holds 100% of the voting shares, if engaged in the lending business, will be exempt from the restrictions referred to in the first paragraph of Article 4.	Lending Amount and Financing Limit The total amount lent to others (loanable funds) shall not exceed 20% of the net value of the Company. The total lending amount of an individual borrower shall not exceed 50% of the total amount of loanable funds.
No.	Article 3	Article 4

	According to the actual practice
funds or the total amount of the business transactions between the Company and the borrower, whichever is lower, and the maximum amount stipulated in the preceding paragraph.	Procedures for Fund Lending and Detailed Review 1. Application: A. When applying for a loan with the Company, a borrower shall submit the application form or an official letter specifying the amount, term and purpose of the loan to the Company’s Finance Department. B. Where a loan is given due to needs arising from business dealings, the finance unit shall evaluate whether the amount of the loan is commensurate with the amount of transactions and in compliance with these Operational Procedures. C. Where a borrower in need of short-term financing applies for a loan, the Company shall evaluate the necessity of financing and investigate the borrower’s credit status. D. The loan, after being verified to be feasible upon analysis, shall be submitted to the Chairman of the Board and the board meeting for approval. 2. Credit Investigation and Risk Assessment A. For a first-time borrower, the borrower shall provide basic information and financial information to facilitate the credit investigation.
	Procedures for Fund Lending and Detailed Review 1. Application: A. When applying for a loan with the Company, a borrower shall submit the application form or an official letter specifying the amount, term and purpose of the loan to the Company’s Finance Department. B. Where a loan is given due to needs arising from business dealings, the finance unit shall evaluate whether the amount of the loan is commensurate with the amount of transactions and in compliance with these Operational Procedures. C. Where a borrower in need of short-term financing applies for a loan, the Company shall evaluate the necessity of financing and investigate the borrower’s credit status. D. The loan, after being verified to be feasible upon analysis, shall be submitted to the Chairman of the Board and the board meeting for approval. 2. Credit Investigation and Risk Assessment A. For a first-time borrower, the borrower shall provide basic information and financial information to facilitate the credit investigation.
	Article 8


B. For a subsequent borrower, the credit investigation	shall be carried out when the borrower applies for the	renewal. In case of a major or urgent event, the credit	investigation shall be carried out at any time depending	on the actual needs.	C. If the borrower is in good financial condition and has	had the annual financial statements audited by CPAs, the	investigation report made for less than a year and the	auditors’ report may be adopted as the reference.	D. When carrying out the credit investigation, the		Company shall make a detailed assessment of the impact	of the loan on the Company’s business operations,	financial conditions, and shareholders’ equity.	3. Contract Signing and Identity Verification	A. The person in charge of lending funds shall fill in the	loan contract based on the approved conditions to	proceed with the contract signing.	B. After the borrower and the joint guarantor sign the	loan contract, the person in charge shall perform the	procedures for verifying their identities.	4. Appraisal of Collateral Value and Setting of Rights	When applying for a loan, a borrower, after being	verified to provide collateral, shall provide a pledge on	equivalent real property or securities or the promissory	note, which matures on the expected date of repayment	and is signed by the joint guarantor, for the Company as
B. For a subsequent borrower, the credit investigation	shall be carried out when the borrower applies for the	renewal. In case of a major or urgent event, the credit	investigation shall be carried out at any time depending	on the actual needs.	C. If the borrower is in good financial condition and has	had the annual financial statements audited by CPAs,	the investigation report made for less than a year and	the auditors’ report may be adopted as the reference.	D. When carrying out the credit investigation, the		Company shall make a detailed assessment of the	impact of the loan on the Company’s business	operations, financial conditions, and shareholders’	equity.	3. Contract Signing and Identity Verification	A. The person in charge of lending funds shall fill in the	loan contract based on the approved conditions to	proceed with the contract signing.	B. After the borrower and the joint guarantor sign the	loan contract, the person in charge shall perform the	procedures for verifying their identities.	4. Appraisal of Collateral Value and Setting of Rights	When applying for a loan, a borrower, after being	verified to provide collateral, shall provide a pledge on	equivalent real property or securities or the promissory	note, which matures on the expected date of repayment


security. When the joint guarantor is a company or a	firm, the Company shall examine whether its articles of	incorporation and minutes of the board meeting permit	the guarantee.	5. Insurance	Except for land and securities, fire insurance and related	insurance shall be purchased for other collaterals at the	amount not less than the collateral in pledge. The	Company shall be specified as the beneficiary in the	insurance policy. The name, quantity, place of storage,	and insurance conditions and endorsements of the subject	specified in the insurance policy shall be consistent with	the loan conditions approved by the Company.	The person in charge shall notify the borrower of a	renewal before the term of the insurance expires.	6. Appropriation	The loan will be appropriated after a borrower sign the	contract, submit the promissory note, set the mortgage,	and purchase the insurance.	7. Account Keeping	When the Company completes the procedures for lending	each fund, Finance Department shall make an entry for	collateral or credit guarantee obtained.	8. The Company shall establish a log book for its loan	activities and record in detail the following information	for future reference: the entity to which the loan is given,
and is signed by the joint guarantor, for the Company as	security. When the joint guarantor is a company or a	firm, the Company shall examine whether its articles of	incorporation and minutes of the board meeting permit	the guarantee.	5. Insurance	Except for land and securities, fire insurance and	related insurance shall be purchased for other	collaterals at the amount not less than the collateral in	pledge. The Company shall be specified as the	beneficiary in the insurance policy. The name, quantity,	place of storage, and insurance conditions and	endorsements of the subject specified in the insurance	policy shall be consistent with the loan conditions	approved by the Company.	The person in charge shall notify the borrower of a	renewal before the term of the insurance expires.	6. Appropriation	The loan will be appropriated after a borrower sign the	contract, submit the promissory note, set the mortgage,	and purchase the insurance.	7. Account Keeping	When the Company completes the procedures for	lending each fund, Finance Department shall make an	entry for collateral or credit guarantee obtained.	8. The Company shall establish a log book for its loan

	According to the actual practice	According to the actual
the amount, the date of passage by the Board of Directors, the date the loan is appropriated, and matters to be evaluated in accordance with Article 7. 9. If, due to changes of circumstances, the party to whom the Company gives a loan no longer satisfies the criteria set forth herein, or the balance of a loan exceeds the limits, a corrective plan shall be provided to all supervisors and the proposed corrections shall be implemented within the period specified in the plan.	Implementation and Amendment These Operational Procedures shall be approved by the Board of Directors and then sent to allsupervisors and proposed at the shareholders’ meeting for approval. If any director expresses objection on the record or in a written statement, the Company shall submit the objection to the supervisors and the shareholders’ meeting for discussion any amendment hereto is subject to the same procedures. If the Company has established independent directors, when submitting these Operational Procedures to the Board of Directors for discussion pursuant to the preceding paragraph, it shall consider the dissenting opinions from all independent directors fully and list the consenting and objecting opinions and their reasons in the meeting minutes of the Board of Directors.	Procedures for Managing Funds Lent to Subsidiaries: For a subsidiary in which the Company directly or
activities and record in detail the following information for future reference: the entity to which the loan is given, the amount, the date of passage by the Board of Directors, the date the loan is appropriated, and matters to be evaluated in accordance with Article 7. 9. If, due to changes of circumstances, the party to whom the Company gives a loan no longer satisfies the criteria set forth herein, or the balance of a loan exceeds the limits, a corrective plan shall be provided to the Audit Committee and the proposed corrections shall be implemented within the period specified in the plan.	Implementation and Amendment These Operational Procedures shall be approved by the Board of Directors and then sent to the Audit Committee and proposed at the shareholders’ meeting for approval. If any director expresses objection on the record or in a written statement, the Company shall submit the objection to theAudit Committee and the shareholders’ meeting for discussion any amendment hereto is subject to the same procedures. If the Company has established independent directors, when submitting these Operational Procedures to the Board of Directors for discussion pursuant to the preceding paragraph, it shall consider the dissenting opinions from all independent directors fully and list the consenting and objecting opinions and their reasons in the meeting minutes of the Board of Directors.	Procedures for Managing Funds Lent to Subsidiaries: 1. For a subsidiary in which the Company directly or
	Article 13	Article 14

practice	Update the date of the amendment
indirectly holds more than 50% of the voting shares and which is not a public company of the Republic of China, these Operational Procedures shall be followed. The net value shall be calculated based on the Company’s net value. The Company shall submit the previous month's balance of its loaned funds to Finance Department by the 5th day of each month. Internal auditors of the Company shall perform the audit on the lending of funds of the subsidiaries based on the annual audit plan. In the case that a material violation is found, internal auditors shall continuously follow up the improvements and submit the follow-up report to the Board of Directors and all supervisors.	These Procedures were established on May 3, 1997. The 1st amendment was made on May 30, 2002. The 2nd amendment was made on May 2, 2003. The 3rd amendment was made on May 15, 2009. The 4th amendment was made on May 18, 2010. The 5th amendment was made on June 13, 2013.
indirectly holds more than 50% of the voting shares and which is not a public company of the Republic of China, these Operational Procedures shall be followed. The net value shall be calculated based on the Company’s net value. The Company shall submit the previous month's balance of its loaned funds to Finance Department by the 5th day of each month. 2. Internal auditors of the Company shall perform the audit on the lending of funds of the subsidiaries based on the annual audit plan. In the case that a material violation is found, internal auditors shall continuously follow up the improvements and submit the follow-up report to the Board of Directors and the Audit Committee.	These Procedures were established on May 3, 1997. The 1st amendment was made on May 30, 2002. The 2nd amendment was made on May 2, 2003. The 3rd amendment was made on May 15, 2009. The 4th amendment was made on May 18, 2010. The 5th amendment was made on June 13, 2013. The 6th amendment was made on May 26, 2017.
	Article 15

Procedures for Endorsement & Guarantee	Remark	According to the actual practice
	Before amendment	Level of Authorization Endorsements and/or guarantees made by the Company shall be conducted after receiving approval from the Chairman and the Board of Directors. A predetermined limit (5% of the Company’s net value) may be delegated to the Chairman by the Board of Directors to facilitate execution and such endorsement and/or guarantee shall be reported to the most upcoming board meeting for ratification and to the shareholders’ meeting for future reference. In case the above limits have to be exceeded to accommodate business needs, approval by a resolution of the Board of Directors shall be obtained and over half of all the directors shall jointly endorse the potential loss that may be brought about by exceeding the limits. The Board of Directors shall also revise these procedures and have them ratified at the shareholders’ meeting. If the revised procedures are not ratified at the shareholders’ meeting, the Board of Directors shall furnish a plan
	After amendment	Level of Authorization Endorsements and/or guarantees made by the Company shall be conducted after receiving approval from the Chairman and the Board of Directors. A predetermined limit (5% of the Company’s net value) may be delegated to the Chairman by the Board of Directors to facilitate execution and such endorsement and/or guarantee shall be reported to the most upcoming board meeting for ratification and to the shareholders’ meeting for future reference. In case the above limits have to be exceeded to accommodate business needs, approval by a resolution of the Board of Directors shall be obtained and over half of all the directors shall jointly endorse the potential loss that may be brought about by exceeding the limits. The Board of Directors shall also revise these procedures and have them ratified at the shareholders’ meeting. If the revised procedures are not ratified at the shareholders’ meeting, the Board of Directors shall
	No.	Article 5.1

Remark		According to the actual practice	According to the actual practice
Before amendment	containing a timetable to withdraw the excess portion. If, due to changes of circumstances, the party to whom the Company provides an endorsement and/or guarantee no longer satisfies the criteria set forth herein, or the amount of endorsement and/or guarantee exceeds the limits, a corrective plan shall be provided to all supervisors and the proposed corrections shall be implemented within the period specified in the plan.	Internal auditors of the Company shall perform the audit on the Company’s endorsement and/or guarantee profile at least once per quarter and produce written auditing reports. In the case that a material violation is found, internal audit shall immediately notify the supervisors in writing.	These Procedures shall be implemented upon approval of the Board of Directors, all supervisors and the shareholders’ meeting. If any director expresses objection on the record or in a written statement, the Company shall submit the objection to the supervisors and the shareholders’ meeting for discussion. Any amendment hereto is subject to the same procedures. If the Company has established independent directors, when submitting these Procedures to the Board of Directors for discussion pursuant to the preceding
After amendment	furnish a plan containing a timetable to withdraw the excess portion. If, due to changes of circumstances, the party to whom the Company provides an endorsement and/or guarantee no longer satisfies the criteria set forth herein, or the amount of endorsement and/or guarantee exceeds the limits, a corrective plan shall be provided to theAudit Committee and the proposed corrections shall be implemented within the period specified in the plan.	Internal auditors of the Company shall perform the audit on the Company’s endorsement and/or guarantee profile at least once per quarter and produce written auditing reports. In the case that a material violation is found, internal audit shall immediately notify the Audit Committee in writing.	These Procedures shall be implemented upon approval of the Board of Directors, theAudit Committee and the shareholders’ meeting. If any director expresses objection on the record or in a written statement, the Company shall submit the objection to theAudit Committee and the shareholders’ meeting for discussion. Any amendment hereto is subject to the same procedures If the Company has established independent directors, when submitting these Procedures to the Board of Directors for discussion pursuant to the preceding
No.		Article 11	Article 12

Remark		Update the date of the amendment
Before amendment	paragraph, it shall consider the dissenting opinions from all independent directors fully and list the consenting and objecting opinions and their reasons in the meeting minutes of the Board of Directors.	These Procedures were established on May 3, 1997. The 1st amendment was made on May 2, 2003. The 2nd amendment was made on June 16, 2006. The 3rd amendment was made on May 15, 2009. The 4th amendment was made on May 18, 2010.
After amendment	paragraph, it shall consider the dissenting opinions from all independent directors fully and list the consenting and objecting opinions and their reasons in the meeting minutes of the Board of Directors.	These Procedures were established on May 3, 1997. The 1st amendment was made on May 2, 2003. The 2nd amendment was made on June 16, 2006. The 3rd amendment was made on May 15, 2009. The 4th amendment was made on May 18, 2010. The 5th amendment was made on May 26, 2017.
No.		Article 13

Remark	According to the actual practice	Update the date of the amendment
Before amendment	Implementation and Amendment These Procedure shall be submitted to each supervisor and the shareholders’ meeting for approval after the resolution of the Board of Directors; the same procedure shall apply with any amendment. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor. Where the position of independent director has been created by the Company, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board meeting.	These Procedures were established on May 3, 1997. The 1st amendment was made on April 18, 1998. The 2nd amendment was made on May 2, 2003. The 3rd amendment was made on May 24, 2005.
After amendment	Implementation and Amendment These Procedure shall be submitted to the Audit Committee and the shareholders’ meeting for approval after the resolution of the Board of Directors; the same procedure shall apply with any amendment. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to the Audit Committee. Where the position of independent director has been created by the Company, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board meeting.	These Procedures were established on May 3, 1997. The 1st amendment was made on April 18, 1998. The 2nd amendment was made on May 2, 2003. The 3rd amendment was made on May 24, 2005.
No.	Article 8	Article 9

Remark	According to the actual practice	Update the date of the amendment
Before amendment	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.	These Procedures were established on May 3, 1997. The 1st amendment was made on April 24, 1999. The 2nd amendment was made on May 30, 2002. The 3rd amendment was made on June 16, 2006. The 4th amendment was made on May 18, 2010 The 5th amendment was made on June 13, 2012.
After amendment	The election of directors, 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.	These Procedures were established on May 3, 1997. The 1st amendment was made on April 24, 1999. The 2nd amendment was made on May 30, 2002. The 3rd amendment was made on June 16, 2006. The 4th amendment was made on May 18, 2010 The 5th amendment was made on June 13, 2012. The 6th amendment was made on May 26, 2017.
No.	Article 14.1	Article 19

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Advantech — AGM Information 2017

52053_rns_2017-06-12_a742e508-41ec-48bb-8019-7111c270a3b6.pdf

Advantech Co.,Ltd. 2017 Annual Shareholders’ Meeting Meeting Minutes (Translation)

II. Proposals

Voting Results:

III. Discussion and Election

Voting Results:

Voting Results:

Voting Results:

Voting Results:

Voting Results:

Voting Results: Declared elected by the Chairman of the list is as follows:

Voting Results:

Business Report

2016 Summary of Results

Our Vision for IoT

Advantech’s Key Strategies to Achieve Our 2020 Vision

 Develop the WISE-PaaS platform to form a sharing platform.

 Make cross-sector alliances to form a vertical market IoT ecosystem.

 Invest, incubate, and cooperate to accelerate IoT development and penetration.

2017 Outlook

Strengthening Corporate Governance and Business Leadership

Supervisor’s Review Report

Supervisor’s Review Report

Supervisor’s Review Report

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Business acquisitions

Impairment loss recognized on goodwill

Our key audit procedures performed in respect of the above area included the following:

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2016 AND 2015

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (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, 2016 AND 2015 (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, 2016 AND 2015 (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, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Investments accounted for using the equity method

Impairment assessment of investments accounted for using the equity method

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Notice to Readers

ADVANTECH CO., LTD.

BALANCE SHEETS DECEMBER 31, 2016 AND 2015

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

Advantech Co., Ltd.

2016 Profit Distribution Table

More from Advantech

Advantech AGM Information 2017