Advantech - Audit Report / Information 2020

Advantech Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2020 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we did not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours, ADVANTECH CO., LTD.

By:

K. C. LIU Chairman March 5, 2021

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, 2020 and 2019, 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 (collectively referred to as the “consolidated financial statements”).

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, 2020 and 2019, 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, 2020. 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.

The key audit matters identified in the consolidated financial statements for the year ended December 31, 2020 are as follows:

Assessment of Provision for Inventory Write-downs

As of December 31, 2020, inventories amounted to NT$7,813,550 thousand and accounted for 15% of the total assets in the Group’s consolidated financial statements, which represented a significant percentage of the total assets.

Due to the rapid changes in technological environment and industrial characteristics, inventories of the Group are available in different sizes and types. They are measured at the lower of cost or net realizable value and calculated according to the proportion of potential impairment for aged inventories. After analyzing the method of inventory valuation, we noticed that the provision for obsolete inventories was recognized based on the number of days inventory were not moving. Therefore, the assessment of inventory write-downs has a significant impact on the Group’s consolidated financial statements and the provision for inventory write-downs was deemed to be a key audit matter.

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

We assessed and analyzed the Group’s policies for the provision of inventory write-downs and compared them with other competitors’ policies to affirm the reasonableness and consistency of application.
We obtained an understanding of the internal controls, evaluated and tested the design and operating effectiveness of these controls over the provision for inventory write-downs.
We reviewed the historical inventory aging reports together with the list of any subsequently scrapped items and assessed the reasonableness of ratios for recognizing loss provision for aged inventories.
We verified the appropriateness of source data, parameters and logic used in the Group’s inventory aging analysis reports.

Sales Revenue from Significant Product Lines and Customers

Since the Group operates in a highly competitive industry, there is a risk of revenue recognition due to the strong sales demand and the need to remain competitive. Hence, the Group’s revenue from several product lines and customers whose sales increased materially in numbers was considered as a key audit matter.

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

We analyzed the trend of the industry, categories of revenue, product lines and customer categories for two consecutive years and confirmed that there were no abnormal situations or centralized trading which put revenue recognition at risk.
We interviewed personnel who carried out the control activities and reviewed the related internal vouchers, obtained an understanding of the internal controls related to revenue recognition and evaluated the design, implementation, and operating effectiveness of these controls over revenue recognition. We tested such internal controls to obtain sufficient and appropriate audit evidence regarding the effectiveness of key controls.
We obtained details of accounts, analyzed their balances and reconciled them with general ledgers; we traced source documents to general ledgers.
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We determined the appropriate methods of sampling and sample sizes and audited sales orders, packing lists and export declarations and verified the accuracy of amount recognized as revenue in accordance with the regulations for the preparation of financial reports.
We checked the cash receipt records and vouchers and verified the accuracy of their amounts, and confirmed that the remitter was the customer who received the goods; thus, the sales were valid.

Sales Revenue from Processing of Imported Materials

Since the Group operates in a highly competitive industry, there is a risk of revenue recognition due to the strong sales demand. We obtained an understanding of the purchase and sales transactions of the customers and analyzed whether the simultaneous increase in the Group’s sales revenue and cost of goods sold was due to the processing of imported materials. Therefore, we considered the Group’s sales revenue as a key audit matter.

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

We compared the details and assessed for any simultaneous purchase and sales transactions, obtained an understanding of the transaction pattern, checked relevant evidence to confirm the processing of imported materials, and identified the potential risks.
We interviewed personnel who carried out the control activities and reviewed the related internal vouchers, obtained an understanding of the internal controls related to revenue recognition and evaluated the design, implementation, and operating effectiveness of these controls over revenue recognition.
We obtained the consumption calculation table of materials specified by the customers and verified its source data, logic and parameters used.
We confirmed that sales revenue and cost of goods sold had been deducted based on the consumption calculation table in accordance with the applicable accounting policies for revenue recognition.

Other Matter

We have also audited the parent company only financial statements of the Company as of and for the years ended December 31, 2020 and 2019 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 IFRS, IAS, IFRIC, and 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 the audit committee, 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, 2020 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 audits resulting in this independent auditors’ report are Jr-Shian Ke and Kwan-Chung Lai.

Deloitte & Touche Taipei, Taiwan Republic of China

March 5, 2021

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, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Notes 4, 7 and 31) Financial assets at amortized cost - current (Notes 4, 9 and 33) Notes receivable (Notes 4 and 10) Trade receivables (Notes 4 and 10) Trade receivables from related parties (Notes 4 and 32) Other receivables Other receivables from related parties (Note 32) Inventories (Notes 4 and 11) Other current assets (Note 32) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4, 7 and 31) Financial assets at fair value through other comprehensive income - non-current (Notes 4, 8 and 31) Investments accounted for using the equity method (Notes 4 and 13) Property, plant and equipment (Notes 4, 14 and 33) Right-of-use assets (Notes 4 and 15) Goodwill (Notes 4 and 16) Other intangible assets (Notes 4 and 17) Deferred tax assets (Notes 4 and 23) Prepayments for business facilities Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 18) Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 31) Notes payable and trade payables (Notes 4 and 32) Other payables (Note 19) Current tax liabilities (Notes 4 and 23) Short-term warranty provisions (Note 4) Lease liabilities - current (Notes 4 and 15) Current portion of long-term borrowings (Notes 18 and 33) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 18 and 33) Current tax liabilities - non-current (Notes 4 and 23) Deferred tax liabilities (Notes 4 and 23) Lease liabilities - non-current (Notes 4 and 15) Net defined benefit liabilities (Notes 4 and 20) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 and 21) Share capital Ordinary shares Advance receipts for share capital Total share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of the financial statements of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Other equity - unearned stock-based employee compensation Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2020 Amount % $ 7,497,442 15 5,493,150 11 162,602 - 1,893,043 4 6,858,742 14 28,750 - 51,885 - 4,633 - 7,813,550 15 483,739 1 30,287,536 60 77,950 - 1,814,233 4 3,404,345 7 9,916,896 20 599,005 1 2,464,315 5 683,031 1 723,627 2 167,579 - 60,868 - 19,911,849 40 $ 50,199,385 100 $ 184,078 - 21,044 - 4,326,447 9 3,928,365 8 2,315,461 5 164,086 - 221,250 - - - 935,477 2 12,096,208 24 - - 291,961 1 2,142,428 4 87,781 - 403,488 1 131,096 - 3,056,754 6 15,152,962 30 7,719,455 16 3,090 - 7,722,545 16 7,913,754 16 7,020,201 14 845,993 2 11,739,513 23 19,605,707 39 (1,006,635) (2) 173,308 - 1,477 - (831,850) (2) 34,410,156 69 636,267 1 35,046,423 70 $ 50,199,385 100		2019
				Amount % $ 6,003,936 13 3,647,963 8 316,994 1 1,546,340 3 7,265,106 15 20,174 - 101,378 - 29 - 7,782,824 17 688,167 1 27,372,911 58 101,156 - 1,639,321 4 3,009,860 6 9,732,490 21 723,106 2 2,519,514 5 980,061 2 690,212 1 389,221 1 58,227 - 19,843,168 42 $ 47,216,079 100 $ 250,678 1 521 - 4,886,018 10 3,645,402 8 1,522,874 3 208,611 1 199,493 - 7,957 - 1,022,904 2 11,744,458 25 36,132 - - - 1,942,189 4 242,263 1 384,914 1 134,663 - 2,740,161 6 14,484,619 31 6,999,230 15 4,870 - 7,004,100 15 7,397,029 16 6,285,079 13 798,763 2 11,515,121 24 18,598,963 39 (878,261) (2) 30,970 - 1,298 - (845,993) (2) 32,154,099 68 577,361 1 32,731,460 69 $ 47,216,079 100

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

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Note 32) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 22 and 32) GROSS PROFIT OPERATING EXPENSES (Notes 10, 22 and 32) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss (reversal of impairment loss) Total operating expenses OPERATING PROFIT NON-OPERATING INCOME Share of the profit of associates accounted for using the equity method (Note 13) Interest income Gains (losses) on disposal of property, plant and equipment Gains (losses) on disposal of investments Gains (losses) on financial instruments at fair value through profit or loss (Note 7) Impairment losses (Notes 16 and 17) Foreign exchange gains (losses), net (Notes 22 and 34) Dividend income Other income (Notes 26 and 32) Finance costs (Note 22) Other losses Total non-operating income		2020 Amount % $ 49,675,234 97 1,444,174 3 51,119,408 100 30,723,147 60 20,396,261 40 4,762,890 9 2,551,504 5 4,055,922 8 (10,608) - 11,359,708 22 9,036,553 18 166,036 - 39,632 - (25,293) - (574) - 8,571 - (245,917) - (37,298) - 99,326 - 113,504 - (20,176) - (6,003) - 91,808 -		2019
				Amount % $ 52,920,615 98 1,224,047 2 54,144,662 100 33,045,300 61 21,099,362 39 5,088,059 9 2,542,918 5 4,223,422 8 11,461 - 11,865,860 22 9,233,502 17 122,820 - 45,498 - 38,558 - (20,934) - 143,852 - (386,153) (1) (94,600) - 100,197 - 156,188 1 (25,041) - (6,007) - 74,378 - (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 20) Share of the other comprehensive income (loss) of associates accounted for using the equity method (Notes 13 and 21) Unrealized gain (loss) on investments in equity instruments as at fair value through other comprehensive income (Note 21) Income tax relating to items that will not be reclassified (Note 23) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations (Note 21) Share of other comprehensive losses of associates (Notes 13 and 21) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 21 and 23) Other comprehensive 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		2020 Amount % $ 9,128,361 18 (1,825,374) (4) 7,302,987 14 (21,879) - (2,733) - 132,470 - 4,385 - (151,818) - (21,431) - 32,093 - (28,913) - $ 7,274,074 14 $ 7,247,955 14 55,032 - $ 7,302,987 14		2019
				Amount % $ 9,307,880 17 (1,915,025) (4) 7,392,855 13 (15,057) - 21,934 - 307,604 1 3,012 - (489,250) (1) (22,272) - 100,754 - (93,275) - $ 7,299,580 13 $ 7,351,220 14 41,635 - $ 7,392,855 14 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 24) Basic Diluted		2020 Amount % $ 7,231,759 14 42,315 - $ 7,274,074 14 $ 9.40 $ 9.27		2019
				Amount % $ 7,265,801 13 33,779 - $ 7,299,580 13 $ 9.56 $ 9.44
		$		$

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

(Concluded)

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

		Equity Attributable toOwners of theCompany
IssuedCapital(Notes 21 and 25)	Total Capital Surplus (Notes 21 and 25) $ 6,986,955 $ 6,991,809 - - - - - - - - 17,145 123,291 - 295,427 - (15,529 ) - 1,657 - 374 - - - - - - - - 7,004,100 7,397,029 - - - - - - 700,410 - - - 18,035 121,652 - 365,248 - 43,140 - (8,678 ) - (4,637 ) - - - - - - - - $ 7,722,545 $ 7,913,754	Retained Earnings (Note 21)	Total $ 16,036,499 - - (4,751,129 ) - - - - - - 7,351,220 (13,258) 7,337,962 (24,369) 18,598,963 - - (5,463,198 ) (700,410 ) - - - - (34,762 ) (12,681 ) 7,247,955 (20,332) 7,227,623 (9,828) $ 19,605,707	Oth	er Equity (Note 21)	arned Stock-based Employee Compensation $ 736 - - - - - - 562 - - - - - - 1,298 - - - - - - - 179 - - - - - - $ 1,477
				Exchange Differences on Translation of the Financial Un Fi Fa Statements of Foreign Operations Oth $ (475,245 ) - - - - - - - - - - (403,016) (403,016) - (878,261 ) - - - - - - - - - - - (128,374) (128,374) - $ (1,006,635)	realized Gain on nancial Assets at ir Value Through Une er Comprehensive Income $ (324,254 ) - - - - - - - - - - 330,855 330,855 24,369 30,970 - - - - - - - - - - - 132,510 132,510 9,828 $ 173,308
Share Capital Advance Receipts for Ordinary Shares $ 6,982,275 $ 4,680 - - - - - - - - 16,955 190 - - - - - - - - - - - - - - - - 6,999,230 4,870 - - - - - - 700,410 - - - 19,815 (1,780 ) - - - - - - - - - - - - - - - - $ 7,719,455 $ 3,090		Legal Reserve Special Reserve Unappropriated Earnings $ 5,655,613 $ 369,655 $ 10,011,231 629,466 - (629,466 ) - 429,108 (429,108 ) - - (4,751,129 ) - - - - - - - - - - - - - - - - - - - - 7,351,220 - - (13,258) - - 7,337,962 - - (24,369) 6,285,079 798,763 11,515,121 735,122 - (735,122 ) - 47,230 (47,230 ) - - (5,463,198 ) - - (700,410 ) - - - - - - - - - - - - - - (34,762 ) - - (12,681 ) - - 7,247,955 - - (20,332) - - 7,227,623 - - (9,828) $ 7,020,201 $ 845,993 $ 11,739,513

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

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit loss recognized (reversal of impairment loss) Net gain on financial assets or liabilities at fair value through profit or loss Compensation costs of employee share options Finance costs Interest income Dividend income Share of profit of associates accounted for using the equity method Net loss (gain) on disposal of property, plant and equipment Impairment loss Net loss on disposal of subsidiaries Net loss (gain) on disposal of investments Changes in operating assets and liabilities Financial assets at fair value through profit or loss Notes receivable Trade receivables Trade receivables from related parties Other receivables Inventories Other current assets Notes payable and trade payables Net defined benefit liabilities Other payables Short-term warranty provisions Other current liabilities Other non-current 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 financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost Disposal of financial assets at amortized cost	2020 $ 9,128,361 792,808 175,394 (10,608) (8,571) 365,248 20,176 (39,632) (99,326) (166,036) 25,293 245,917 - 574 (1,792,887) (346,703) 416,710 (8,576) 44,889 (29,767) 204,660 (559,582) (3,305) 284,784 (44,525) (87,430) (3,600) 8,504,266 39,632 99,326 (3,957) (560,701) 8,078,566 (44,719) (651,249) 790,975	2019 $ 9,307,880 807,586 210,206 11,461 (143,852) 295,427 25,041 (45,498) (100,197) (122,820) (38,558) 386,153 21,619 (685) (1,603,672) (84,936) 201,893 (1,205) (53,956) 215,450 (171,757) (1,353,468) (7,878) (54,237) 11,829 244,579 (14,508) 7,941,897 45,498 100,197 (6,865) (1,885,258) 6,195,469 (37,354) - (165,161) (Continued)

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Acquisition of investments accounted for using the equity method Net cash outflow on the acquisition of subsidiaries (net carrying amount of cash) Net cash outflow on disposal of subsidiaries Dividends received from associates Net cash inflow on disposal of associates Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Payments for intangible assets Decrease (increase) in prepayments for equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loans Repayments of long-term borrowings Increase (decrease) in guarantee deposits received Payments of cash dividends Payment of the principal portion of lease liabilities Exercise of employee share options Dividends paid to non-controlling interests Increase 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 (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	2020 $ (383,086) (2,724) - 163,216 7,656 (619,025) 46,086 (2,641) (136,448) 23,075 (808,884) (65,200) (42,393) 28 (5,463,198) (239,314) 139,687 (11,443) (32,724) (5,714,557) (61,619) 1,493,506 6,003,936 $ 7,497,442	2019 $ (497,232) (542,156) (81) 117,774 830 (938,035) 443,132 (10,271) (153,608) (23,652) (1,805,814) 56,506 (9,270) (561) (4,751,129) (221,264) 140,436 (14,039) 71,557 (4,727,764) (291,116) (629,225) 6,633,161 $ 6,003,936

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

(Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ADVANTECH CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

Advantech Co., Ltd. (the “Company”) is a listed company that was established in September 1981. It manufactures and sells embedded computing boards, industrial automation products and applied and industrial computers.

The Company’s shares have been listed on the Taiwan Stock Exchange since December 1999.

To improve the entire operating efficiency of the Company and its subsidiaries (collectively referred to as the “Group”), the Company’s board of directors resolved on June 30, 2009 to have a short-form merger with Advantech Investment and Management Service (AIMS). The effective merger date was July 30, 2009. As the surviving entity, the Company assumed all assets and liabilities of AIMS. On June 26, 2014, the Company’s board of directors resolved to have a whale-minnow merger with Netstar Technology Co., Ltd. (“Netstar”), an indirectly 95.51%-owned subsidiary through a wholly-owned subsidiary, Advantech Corporate Investment. The effective merger date was July 27, 2014. As the surviving entity, the Company assumed all assets and liabilities of Netstar.

The functional currency of the Company is the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 5, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies:

1) Amendments to IFRS 3 “Definition of a Business”

The Group applies the amendments to IFRS 3 to transactions that occur on or after January 1, 2020. The amendments clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. To determine whether an acquired process is substantive, different criteria apply, depending on whether there are outputs at the acquisition date. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether or not an acquired set of activities and assets is a business.

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2) Amendments to IAS 1 and IAS 8 “Definition of Material”

The Group adopted the amendments starting from January 1, 2020. The threshold of materiality that could influence users has been changed to “could reasonably be expected to influence”. Accordingly, disclosures in the consolidated financial statements do not include immaterial information that may obscure material information.

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2021

Effective Date New IFRSs Announced by IASB Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon Applying IFRS 9” promulgation by the IASB Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 January 1, 2021 “Interest Rate Benchmark Reform - Phase 2” Amendment to IFRS 16 “Covid-19-Related Rent Concessions” June 1, 2020

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2”

“Interest Rate Benchmark Reform - Phase 2” primarily amends IFRS 9, IFRS 7 and IFRS 16 to provide practical relief from the impact of the interest rate benchmark reform.

Changes in the basis for determining contractual cash flows as a result of interest rate benchmark reform

The changes in the basis for determining contractual cash flows of financial assets, financial liabilities or lease liabilities are accounted for by updating the effective interest rate at the time the basis is changed, provided the changes are necessary as a direct consequence of the reform and the new basis is economically equivalent to the previous basis.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB (Note 1)
	January 1, 2022 (Note 2) January 1, 2022 (Note 3) To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 6) January 1, 2023 (Note 7) January 1, 2022 (Note 4) January 1, 2022 (Note 5)

New IFRSs
“Annual Improvements to IFRS Standards 2018-2020”

Amendments to IFRS 3 “Reference to the Conceptual Framework”

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”

IFRS 17 “Insurance Contracts”

Amendments to IFRS 17

Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”

Amendments to IAS 1 “Disclosure of Accounting Policies”

Amendments to IAS 8 “Definition of Accounting Estimates”

Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
before Intended Use”

Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a
Contract”

Effective Date
Announced by IASB (Note 1)

January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (Note 6)
January 1, 2023 (Note 7)
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
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Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

The amendments stipulate that, when the Group sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Group loses control of a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full.

Conversely, when the Group sells or contributes assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate or joint venture, i.e., the Group’s share of the gain or loss is eliminated. Also, when the Group loses control of a subsidiary that does not contain a business but retains significant influence or joint control over an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate or joint venture, i.e., the Group’s share of the gain or loss is eliminated.

2) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that for a liability to be classified as non-current, the Group shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Group will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Group must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date.

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The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Group’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Group’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32 Financial Instruments: Presentation, the aforementioned terms would not affect the classification of the liability.

3) Annual Improvements to IFRS Standards 2018-2020

Several standards, including IFRS 9 “Financial Instruments”, were amended in the annual improvements. IFRS 9 requires the comparison of the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received, with that of the cash flows under the original financial liability when there is an exchange or modification of debt instruments. The new terms and the original terms are substantially different if the difference between those discounted present values is at least 10%. The amendments to IFRS 9 clarify that the only fees that should be included in the above assessment are those fees paid or received between the borrower and the lender.

4) Amendments to IFRS 3 “‘Reference to the Conceptual Framework”

The amendments replace the references to the Conceptual Framework of IFRS 3 and specify that the acquirer shall apply IFRIC 21 “Levies” to determine whether the event that gives rise to a liability for a levy has occurred at the acquisition date.

5) Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of those items is measured in accordance with IAS 2 “Inventories”. Any proceeds from selling those items and the cost of those items are recognized in profit or loss in accordance with applicable standards.

The amendments are applicable only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021. The Group will restate its comparative information when it initially applies the aforementioned amendments.

6) Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

The amendments specify that when assessing whether a contract is onerous, the “cost of fulfilling a contract” includes both the incremental costs of fulfilling that contract (for example, direct labor and materials) and an allocation of other costs that relate directly to fulfilling contracts (for example, an allocation of depreciation for an item of property, plant and equipment used in fulfilling the contract).

The Group will recognize the cumulative effect of the initial application of the amendments in the retained earnings at the date of the initial application.

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7) Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Group should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
The Group may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and
Not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

a) The Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;
b) The Group chose the accounting policy from options permitted by the standards;
c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;
d) The accounting policy relates to an area for which the Group is required to make significant judgements or assumptions in applying an accounting policy, and the Group discloses those judgements or assumptions; or
e) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.
8) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Group may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Group uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e., its subsidiaries). Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income

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of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

See Note 12, Table 8 and Table 9 for the detailed information of subsidiaries (including the percentage of ownership and main businesses).

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interests in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of the measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value.

f. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purpose of presenting consolidated financial statements, the functional currencies of the entities in the Group (including subsidiaries and associates that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests as appropriate).

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In a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences are recognized in other comprehensive income.

g. Inventories

Inventories consist of raw materials, supplies, finished goods and work in process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

h. Investments in associates

An associate is an entity over which the Group has significant influence.

The Group uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of the equity of associates.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Group subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

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The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’ consolidated financial statements only to the extent that interests in the associate are not related to the Group.

i. Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Freehold land is not depreciated.

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

j. Goodwill

Goodwill arising from the acquisition of a business is measured at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit

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based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. Any impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

k. Intangible assets
1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

2) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

3) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

l. Impairment of property, plant and equipment, right-of-use asset and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

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m. Financial instruments

Financial assets and financial liabilities are recognized when an entity in the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to an acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in debt instruments and equity instruments at FVTOCI.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 31.

ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, and trade receivables at amortized cost, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i) Purchased or originated credit impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and
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ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), investments in debt instruments that are measured at FVTOCI, lease receivables, as well as contract assets.

The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset is more than one year past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.
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The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by an entity in the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by an entity in the Group are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Group’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Group’s own equity instruments.

3) Financial liabilities

a) Subsequent measurement

Except the following situations, all financial liabilities are measured at amortized cost using the effective interest method:

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when such financial liabilities are either held for trading or are designated as at FVTPL.

Financial liabilities held for trading are stated at fair value, and any remeasurement gains or losses on such financial liabilities are recognized in profit or loss (including any interest or dividend paid on such financial liabilities). Fair value is determined in the manner described in Note 31.

26 -

b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

4) Derivative financial instruments

The Group enters into forward contracts to manage its exposure to foreign exchange rate risks.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

n. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Provisions for the expected cost of warranty obligations are recognized at the date of sale of the relevant products at the best estimate by the management of the Group of the expenditures required to settle the Group’s obligations.

o. Revenue recognition

The Group identifies contracts with the customers, allocates transaction price to the performance obligations and recognizes revenue when the performance obligations are satisfied.

For contracts where the period between the date when the Group transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Group does not adjust the promised amount of consideration for the effects of a significant financing component.

1) Revenue from sale of goods

Revenue from sale of goods comes from sales of embedded computing boards, industrial automation products and applied and industrial computers.

Sales of the above products are majorly recognized as revenue under contracts when the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and the price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently.

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

2) Revenue from rendering of services

Revenue from rendering services comes from developing products and extended warranty services. Such revenue is recognized when services are provided.

27 -

p. Leasing

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

For a contract that contains a lease component and non-lease components, the Group allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately. However, for the lease of office asset in which the Group is a lessee and utility bill and administrative expenses are included in the lease agreement, the Group elects to account for the lease and non-lease components as a single lease component.

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments and in-substance fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

28 -

q. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants related to income are recognized as a reduction of the related costs on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants intend to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

r. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and past service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur or when the plan amendment or curtailment occurs. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

s. Employee share options

Employee share options granted to employee and others providing similar services.

The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. It is recognized as an expense in full at the grant date if vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees is the date on which the board of directors approves the transaction.

At the end of each reporting period, the Group revises its estimate of the number of employee share options expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus - employee share options.

29 -

t. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. If a temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, the resulting deferred tax asset or liability is not recognized. In addition, a deferred tax liability is not recognized on taxable temporary differences arising from the initial recognition of goodwill.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards and unused tax credits for purchases of machinery, equipment and technology, research and development expenditures, and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

30 -
3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Group considers the economic implications of the COVID-19 when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Key Sources of Estimation Uncertainty

a. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

b. Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The calculation of the value in use requires management to estimate the future cash flows expected to arise from the cash-generating units and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents (time deposits with original maturities less than three months)		December 31	December 31
		2020 $ 5,054 5,718,855 1,773,533 $ 7,497,442	2019 $ 141,615 4,744,550 1,117,771 $ 6,003,936

31 -

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Demand deposits Time deposits with original maturities of less than three months	December 31
	2020 2019 0.001%-3.00% 0.0001%-4.5% 0.12%-3.75% 0.93%-5.2%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Non-derivative financial assets Domestic quoted shares Foreign quoted shares Mutual funds Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Foreign unquoted shares Financial liabilities at FVTPL-current Financial liabilities mandatorily classified as at FVTPL Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts		December 31	December 31
		2020 $ 90 272,860 118,172 5,102,028 $ 5,493,150 $ 77,950 $ 21,044	2019 $ 9,320 118,392 50,157 3,470,094 $ 3,647,963 $ 101,156 $ 521

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting were as follows:

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	2020
Sell			EUR/NTD	2021.01-2021.05	EUR14,000/NTD479,531
			JPY/NTD	2021.01-2021.05	JPY280,000/NTD76,394
			RMB/NTD	2021.01-2021.04	RMB76,000/NTD324,732
			USD/NTD	2021.01-2021.02	USD6,000/NTD169,482
December	31,	2019
Sell			EUR/NTD	2020.01-2020.05	EUR12,000/NTD406,441
			EUR/USD	2020.01-2020.04	EUR700/USD789
			JPY/NTD	2020.01-2020.05	JPY380,000/NTD108,979
			RMB/NTD	2020.01-2020.03	RMB47,000/NTD201,967
			USD/NTD	2020.01-2020.02	USD4,000/NTD121,501

32 -

The Group entered into foreign exchange forward contracts to manage exposures due to exchange rate fluctuations of foreign-currency denominated assets and liabilities.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments at fair value through other comprehensive income (FVTOCI) Investments in equity instruments at FVTOCI: Non-current Domestic investments Listed shares and emerging market shares Ordinary shares - ASUSTek Computer Inc. Ordinary shares - Allied Circuit Co., Ltd. Unlisted shares Ordinary shares - BoardTec System Inc. Ordinary shares - BiosenseTek Corp. Ordinary shares - Juguar Technology Ordinary shares - Taiwan DSC PV Ltd. Ordinary shares - iSAP Solution Corp. Ordinary shares - Feng Sang Enterprise Co., Ltd. Foreign investments Shanghai Sangchuang Xinwei Investment Management Co., Ltd. JamaPro Co., Ltd.		December 31	December 31
		2020 2019 $ 1,814,233 $ 1,639,321 December 31
		2020 $ 1,187,235 447,821 3,441 - 4,302 - - 44,719 1,687,518 126,715 - 126,715 $ 1,814,233	2019 $ 1,097,185 392,306 3,917 - 4,949 - 9,994 - 1,508,351 129,150 1,820 130,970 $ 1,639,321

These investments in equity instruments are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Domestic investments Time deposits with original maturities of more than 3 months		December 31	December 31
		2020 $ 162,602	2019 $ 316,994

33 -

The range of interest rates for time deposits with original maturities of more than 3 months was approximately 0.01%-3.90% and 0.2%-5.2% per annum as of December 31, 2020 and 2019, respectively.

Refer to Note 33 for information relating to investments in financial assets at amortized cost pledged as security.

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

Notes receivable-operating Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss		December 31	December 31
		2020 $ 1,893,043 $ 6,933,252 (74,510) $ 6,858,742	2019 $ 1,546,340 $ 7,352,407 (87,301) $ 7,265,106

Trade Receivables

The average credit period of the sales of goods was 30-90 days. No interest was charged on trade receivables. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group measures the loss allowance for all trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix prepared by reference to the past default experience of the customer, the customer’s current financial position, economic condition of the industry in which the customer operates, as well as the GDP forecasts and industry outlook. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery of the receivable, e.g. when the debtor has been placed under liquidation, or when the trade receivables are over 1 year past due, whichever occurs earlier. For trade receivables that have been proposed a full amount of impairment loss, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

34 -

The following table details the loss allowance of trade receivables based on the Group’s provision matrix.

December 31, 2020

Not Past Due Less than 90 Days Expected credit loss rate - 2.79% Gross carrying amount $ 6,130,711 $ 707,623 Loss allowance (Lifetime ECLs) - (19,776) Amortized cost $ 6,130,711 $ 687,847 December 31, 2019 Not Past Due Less than 90 Days Expected credit loss rate - 1.36% Gross carrying amount $ 5,860,824 $ 1,354,411 Loss allowance (Lifetime ECLs) - (18,457) Amortized cost $ 5,860,824 $ 1,335,954	90 to 180 Days 15.53% $ 43,446 (6,749) $ 36,697 90 to 180 Days 20.57% $ 82,778 (17,028) $ 65,750	180 to 360 Days 49.91% $ 6,961 (3,474) $ 3,487 180 to 360 Days 70.55% $ 8,755 (6,177) $ 2,578	Over 360 Days 100% $ 44,511 (44,511) $ - Over 360 Days 100% $ 45,639 (45,639) $ -	Total $ 6,933,252 (74,510) $ 6,858,742 Total $ 7,352,407 (87,301) $ 7,265,106

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Add: Amount of expected loss recognized on credit impairment (gain on reversal of impairment loss) (a) Less: Amounts written off (b) Business combinations Foreign exchange gains and losses Balance at December 31	For the Year Ended December 31 2020 2019 $ 87,301 $ 87,491 (10,608) 11,461 (2,445) (9,227) - (35) 262 (2,389) $ 74,510 $ 87,301	For the Year Ended December 31 2020 2019 $ 87,301 $ 87,491 (10,608) 11,461 (2,445) (9,227) - (35) 262 (2,389) $ 74,510 $ 87,301	For the Year Ended December 31 2020 2019 $ 87,301 $ 87,491 (10,608) 11,461 (2,445) (9,227) - (35) 262 (2,389) $ 74,510 $ 87,301
		2020 $ 87,301 (10,608) (2,445) - 262 $ 74,510	2019 $ 87,491 11,461 (9,227) (35) (2,389) $ 87,301

a. Compared to January 1, 2020 and 2019, the increase (decrease) in loss allowance was $(10,608) thousand and $11,461 thousand as of December 31, 2020 and 2019, respectively, which resulted from the increase (decrease) in new net settlement of trade receivables amounted to $(419,155) thousand and $394,038 thousand, respectively.
b. During the years ended December 31, 2020 and 2019, the Group wrote off trade receivables and related loss allowance in the amounts of $2,445 and $9,227, respectively, due to the fact that some customers’ trade receivables were over 2 years past due, and the Group continues to engage in enforcement activity to attempt to recover the past due receivable.
35 -

11. INVENTORIES

Raw materials Work in process Finished goods Inventories in transit		December 31	December 31
		2020 $ 3,406,248 538,022 2,814,773 1,054,507 $ 7,813,550	2019 $ 3,235,906 1,803,484 1,987,600 755,834 $ 7,782,824

The nature of the cost of goods sold is as follows:

Cost of inventories sold Inventory write-downs Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 30,135,227 7,980 579,940 $ 30,723,147	2019 $ 32,278,749 121,507 645,044 $ 33,045,300

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements.

The entities included in the consolidated statements are listed below.

Investor
Investee
Nature of Activities
The Company
Advantech Automation Corp. (AAC (BVI))
Investment and management services
Advantech Technology Co., Ltd (ATC)
Sale of industrial automation products
Advanixs Corporation
Production and sale of industrial automation products
Advantech Corporate Investment
Investment holding company
Advantech Europe Holding B.V. (AEUH)
Investment and management services
Advantech Co., Singapore Pte, Ltd. (ASG)
Sale of industrial automation products
Advantech Australia Pty Ltd. (AAU)
Sale of industrial automation products
Advantech Japan Co., Ltd. (AJP)
Sale of industrial automation products
Advantech Co. Malaysia Sdn. Bhd (AMY)
Sale of industrial automation products
Advantech KR Co., Ltd. (AKR)
Sale of industrial automation products
Advantech Brasil Ltd (ABR)
Sale of industrial automation products
Advantech Industrial Computing India Private
Limited (AIN)
Sale of industrial automation products
AdvanPOS
Production and sale of POS systems
LNC Technology Co., Ltd. (LNC)
Production and sale of machines with computerized
numerical controls
Advantech Electronics, S. De R. L. De C. V.
(AMX)
Sale of industrial automation products
Advantech Innovative Design Co., Ltd.
Product design
B+B Smartworx Inc. (B+B)
Sale of industrial network communications systems
Advantech Intelligent Services Co., Ltd. (AiST)
Design, develop and sale of intelligent service
Advantech Kostec Co., Ltd. (AKST)
Production and sale of intelligent medical displays
Advantech Corporation (Thailand) Co., Ltd.
(ATH)
Production of computers
Advantech Vietnam Technology Company
Limited (AVN)
Sale of industrial automation products
Limited Liability Company Advantech
Technology (ARU)
Production and sale of industrial automation products
Advantech Technologies Japan Corp. (ATJ)
Production and sale of electronic and mechanical device
Advantech Turkey Teknoloji A.S. (ATR)
Wholesale of computers and peripheral devices
ADVANTECH IOT ISRAEL LTD. (AIL)
Sale of industrial network communications systems
Huan Yan Water Solution Co., Ltd.
Service plan for combination of related technologies of
water treatment and applications of Internet of Things
Advantech KR Co., Ltd. (AKR)
Advantech Kostec Co., Ltd. (AKST)
Production and sale of intelligent medical displays
Advantech Japan Co., Ltd. (AJP)
Advantech Technologies Japan Corp. (ATJ)
Production and sale of electronic and mechanical devices

Proportion of Ownership
(%)
December 31
2020
2019
Remark
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a
100.00
100.00
100.00
80.00
a, l
99.99
99.99
a
100.00
100.00
a
59.10
64.10
i
60.00
100.00
a, j
100.00
100.00
a
-
60.00
p
100.00
100.00
a
-
76.00
m
51.00
51.00
a
60.00
60.00
a
100.00
100.00
a, f
50.00
50.00
b
60.00
60.00
a, c
100.00
100.00
a, h
100.00
-
a, q
-
24.00
m
28.61
28.61
b
(Continued)

36 -

Investor
Investee
Nature of Activities
Advantech Corporate Investment
Cermate Technologies Inc. (Cermate Taiwan)
Manufacturing of electronic parts, computer, and
peripheral devices
Huan Yan, Jhih-Lian Co., Ltd.
Service plan for combination of related technologies of
water treatment and applications of Internet of Things
Yun Yan, Wu-Lian Co., Ltd.
Industrial equipment Networking in Greater China
Advantech Corporate Investment Ltd. (ACISM)
General investment
ACI IOT Investment Fund-I Corporation
Investment holding company
Advantech Technology Co., Ltd
(ATC)
Advantech Automation Corp. (HK) (ATC (HK))
Investment and management services
HK Advantech Technology Co., Ltd.
ATC (HK)
Advantech Technology (China) Company Ltd.
(AKMC)
Production and sale of components of industrial
automation products
Advantech Automation Corp. (BVI) Advantech Corp. (ANA)
Sale and fabrication of industrial automation products
(AAC (BVI))
Advantech Automation Corp. (HK) (AAC (HK))
Investment and management service
Advantech Service - IoT Co., Ltd. (SIoT Cayman) Design, development and sale of IoT intelligent system
service
Advantech Technology DMCC (ADB) (former
B&B DMCC)
Sale of industrial network communications
Advantech Corp. (ANA)
B+B Smartworx Inc. (B+B)
Sale of industrial network communications
Advantech Technology Limited (BBIE)
Sale of industrial network communications
Advantech Automation Corp. (HK)
(AAC (HK))
Beijing Yan Hua Xing Ye Electronic Science &
Technology Co., Ltd. (ACN)
Sale of industrial automation products
Shanghai Advantech Intelligent Services Co., Ltd.
(AiSC)
Production and sale of industrial automation products
Advantech Service - IoT Co., Ltd.
(SIoT Cayman)
Advantech Service-IoT (Shanghai) Co., Ltd.
(SIoT (China))
Technology development consulting and services in the
field of intelligent technology
Advantech Service-IoT GmbH (A-SIoT)
Design, R&D and sale of industrial automation vehicles
and related products
Advantech Intelligent Health Co., Ltd. (AIH)
Information software and data processing service
Beijing Yan Hua Xing Ye Electronic
Science & Technology Co., Ltd.
(ACN)
Xi’an Advantech Software Ltd. (AXA)
Development and production of software products
Shanghai Advantech Intelligent
Services Co., Ltd. (AiSC)
Advantech Service-IoT (Shanghai) Co., Ltd.
(SIoT (China))
Technology development consulting and services in the
field of intelligent technology
Shanghai Yanle Co., Ltd. (AYL)
Application and retail of intelligent technology
Advantech Europe Holding B.V.
Advantech Europe B.V. (AEU)
Sale of industrial automation products
(AEUH)
Advantech Poland Sp z o.o. (APL)
Sale of industrial automation products
Advantech Co., Singapore Pte, Ltd.
(ASG)
Advantech Corporation (Thailand) Co., Ltd.
(ATH)
Production of computers
Advantech International. PT. (AID)
Sale of industrial automation products
Cermate Technologies Inc. (Cermate
Taiwan)
LandMark Co., Ltd. (LandMark)
General investment
LandMark Co., Ltd. (LandMark)
Cermate Technologies (Shanghai) Inc. (Cermate
Shanghai)
Sale of industrial electronic equipment
Shenzhen Cermate Technologies Inc.
Production of LCD touch panel, USB cable, and
industrial computer
LNC Technology Co., Ltd. (LNC)
Better Auto Holdings Limited (Better Auto)
General investment
Better Auto Holdings Limited (Better
Auto)
Famous Now Limited (Famous Now)
General investment
Famous Now Limited (Famous Now) LNC Dong Guan Co., Ltd.
Production and sale of industrial automation products
B+B Smartworx Inc. (B+B)
B+B Smartworx Limited (BBIE)
Sale of industrial network communications systems
B+B Smartworx Limited (BBIE)
Advantech B+B Smartworx s.r.o.CZ (ACZ)
(former B+B (CZ))
Manufacturing of cellular and automation solutions
Advantech Technology DMCC (ADB) (former
B&B DMCC)
Sale of industrial network communications systems
B&B Electronics Holdings
LLC (B&B Electronics)
Sale of industrial network communications systems
Conel Automation s.r.o (Conel Automation)
Application of industrial automation

Proportion of Ownership
(%)
December 31
2020
2019
Remark
55.00
55.00
-
50.00
r
50.00
50.00
a
100.00
100.00
a, d
79.33
79.33
a, f
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
a
100.00
100.00
a, g
-
40.00
p
100.00
-
a, s
100.00
100.00
100.00
100.00
a
99.00
99.00
a
100.00
100.00
a
100.00
70.00
a, e
100.00
100.00
a
1.00
1.00
a
100.00
45.00
a, k
100.00
100.00
100.00
100.00
a
49.00
49.00
a
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a
90.00
90.00
a
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
s
100.00
100.00
-
-
g
-
-
n
-
-
o
(Concluded)

Remark a: Not significant subsidiaries and their financial statements were not reviewed.
Remark b: In the first quarter of 2019, the Group acquired 80% of the equity of ATJ. The Company and AJP held 50% and 30% of the equity of ATJ, respectively. In the third quarter of 2019, AJP sold 1.39% of the equity of ATJ, which led its equity investment in ATJ to decrease from 30% to 28.61%.
Remark c: In the first quarter of 2019, the Group acquired 60% of the equity of ATR.
Remark d: In the first quarter of 2019, Advantech Corporate Investment founded ACISM and acquired 100% of its equity.
Remark e: In the second quarter of 2019, SIoT (Cayman) founded AIH and acquired 100% of its equity. In the third quarter of 2019, AIH held its equity offering, which led SIoT (Cayman)’s equity investment in AIH to decrease from 100% to 70%. In the first quarter of 2020, SIoT (Cayman) acquired 30% of the equity of AIH, which led its equity investment in AIH to increase from 70% to 100%.
37 -
Remark f: In the second quarter of 2019, Advantech Corporate Investment founded ACI IOT Investment Fund-I Corporation and acquired 79.33% of its equity.
Remark g: In the fourth quarter of 2019, the Group adjusted its investment structure; hence, AAC (BVI) directly held 100% of the equity of ADB.
Remark h: In the fourth quarter of 2019, the Group founded AIL.
Remark i: In the first and second quarter of 2020, the Group sold 3.42% and 1.58% of the equity of LNC, respectively, which led its equity investment in LNC to decrease from 64.10% to 59.10%.
Remark j: In the second quarter of 2020, the Group had a non-proportional investment in the equity of AMX during its cash capital increase, which led its equity investment in AMX to decrease from 100% to 60%.
Remark k: In the second quarter of 2020, the Group acquired 55% of the equity of AYL, which led its equity investment in Yanle to increase from 45% to 100%.
Remark l: In the third quarter of 2020, the Group acquired 20% of the equity of ABR, which led its equity investment in ABR to increase from 80% to 100%.
Remark m: In the third quarter of 2020, the Group adjusted its investment structure. Following capital reduction of AKST to offset deficit, AKR directly held 100% of the equity of AKST. AKR and AKST then merged. AKR is the surviving entity.
Remark n: In the third quarter of 2019, B&B Electronics filed for liquidation.
Remark o: In the third quarter of 2019, Conel Automation was disposed of.
Remark p: In the fourth quarter of 2020, after the Group sold 60% of the equity of B+B to AAC (BVI), AAC (BVI) then sold to ANA. ANA directly held 100% of the equity of B+B. ANA and B+B then merged. ANA is the surviving entity.
Remark q: In the fourth quarter of 2020, the Group founded Huan Yan Water Solution Co., Ltd.
Remark r: In the fourth quarter of 2020, Huan Yan, Jhih-Lian Co., Ltd. filed for liquidation.
Remark s: In the fourth quarter of 2020, the Group adjusted its investment structure. ANA held 100% of the equity of BBIE.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

Associates that are not individually material Listed companies Axiomtek Co., Ltd. (“Axiomtek”) Winmate Inc. (“Winmate”) AzureWare Technologies, Inc. (“AzureWare”) Nippon RAD Inc. (“Nippon RAD”) Mildex Optical Inc. (“Mildex”)	December 31
	2020 2019 $ 647,383 $ 627,632 557,027 553,145 551,457 506,867 293,440 296,400 164,589 181,388 (Continued)

38 -

Hwacom Systems Inc. (“Hwacom”) Information Technology Total Services Co., Ltd. (“ITTS”) Unlisted companies AIMobile Co., Ltd. (“AIMobile”) Deneng Scientific Research Co., Ltd. (“Deneng”) Jan Hsiang Electronics Co., Ltd. (“Jan Hsiang”) CDIB Innovation Accelerator Co., Ltd. (“CDIB”) DotZero Co., Ltd. (“DotZero”) iLink Co., Ltd. (“iLink”) Shanghai Yanle Co., Ltd. (“Yanle”) GSD Environmental Technology Co., Ltd. (“GSD”) Smasoft Technology Co., Ltd. (“Smasoft”) Impelex Data Transfer Co., Ltd. (“Impelex”) VSO Electronics Co., Ltd. (“VSO”) International Integrated Systems, Inc. (“IISI”) iSAP Solution Corp. Tianjin Anjie IOT Science And Technology Co., Ltd. (“Anjie”)		December 31	December 31
		2020 $ 376,666 156,544 45,217 12,788 - 151,529 4,507 4,290 - 9,904 11,033 10,659 130,940 263,747 10,000 2,625 $ 3,404,345	2019 $ 392,645 154,910 66,133 14,013 8,114 161,043 6,238 7,050 3,092 13,608 15,000 - - - - 2,582 $ 3,009,860 (Concluded)

In the first quarter of 2019, the Group paid $18,214 thousand in cash for 40% of the equity of GSD Environmental Technology Co., Ltd. The Group had significant influence over GSD Environmental Technology Co., Ltd.

In the second quarter of 2019, the Group paid $147,444 thousand in cash for 20% of the equity of Information Technology Total Services Co., Ltd. The Group had significant influence over Information Technology Total Services Co., Ltd.

In the third quarter of 2019, the Group subscribed for shares of HwaCom Systems Inc. through a private placement; after the subscription, the Group’s percentage of ownership in HwaCom Systems Inc. was 19.99% and had significant influence over HwaCom Systems Inc.

In the fourth quarter of 2019, the Group established Tianjin Anjie IoT Science And Technology Co., Ltd. by cash investment of $2,594 thousand and acquired 20% of its equity. The Group had significant influence over Tianjin Anjie IoT Science And Technology Co., Ltd.

In the fourth quarter of 2019, the Group paid $15,000 thousand in cash for 20% of the equity of Smasoft Technology Co., Ltd. The Group had significant influence over Smasoft Technology Co., Ltd.

In the first quarter of 2020, the Group paid $10,000 thousand in cash for 20% of the equity of Impelex Data Transfer Co., Ltd. The Group had significant influence over Impelex Data Transfer Co., Ltd.

In the first quarter of 2020, the Group paid $120,000 thousand in cash for 14.29% of the equity of VSO Electronics Co., Ltd. The Group had significant influence over VSO Electronics Co., Ltd.

In the second quarter of 2020, the Group paid $243,086 thousand in cash for 20% of the equity of International Integrated Systems, Inc. The Group had significant influence over International Integrated Systems, Inc.

In the fourth quarter of 2020, the Group paid $10,000 thousand in cash for 34.83% of the equity of iSAP Solution Corp. The Group had significant influence over iSAP Solution Corp.

39 -

Aggregate information of associates that are not individually material

The Group’s share of: Profit from continuing operations Other comprehensive loss Total comprehensive income for the year	For the Year Ended 2020 $ 166,036 (24,164) $ 141,872	For the Year Ended 2020 $ 166,036 (24,164) $ 141,872	December 31
		2020 $ 166,036 (24,164) $ 141,872	2019 $ 122,820 (338) $ 122,482

Except for the financial statements of Axiomtek, Nippon RAD and AzureWare, which have been audited or reviewed, investments were accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements which have not been audited. Management believes there is no material impact on the equity method of accounting or the calculation of the share of profit or loss and other comprehensive income from the financial statements of above companies which have not been audited.

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2020 Additions Disposals Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Depreciation expenses Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2020 Carrying amount at December 31, 2020 Cost Balance at January 1, 2019 Additions Disposals Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Depreciation expenses Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amount at December 31, 2019	Freehold Land $ 3,067,589 77 (28,417 ) - - (6,865) $ 3,032,384 $ - - - - - - $ - $ 3,032,384 $ 2,934,127 1,481 (7,100 ) 148,160 - (9,079) $ 3,067,589 $ - - - - - - $ - $ 3,067,589	Buildings $ 8,049,532 1,799 (45,264 ) - 15,978 30,391 $ 8,052,436 $ 2,597,296 (6,935 ) 199,820 - 18,547 15,408 $ 2,824,136 $ 5,228,300 $ 7,195,732 24,203 (15,806 ) 942,802 27,658 (125,057) $ 8,049,532 $ 1,591,282 (8,069 ) 204,079 867,976 (424 ) (57,548) $ 2,597,296 $ 5,452,236	Equipment $ 1,866,463 148,879 (125,034 ) - 29,318 10,312 $ 1,929,938 $ 1,378,129 (130,730 ) 132,035 - 23,962 5,272 $ 1,408,668 $ 521,270 $ 1,709,936 92,497 (43,912 ) 130,912 6,956 (29,926) $ 1,866,463 $ 1,172,613 (39,949 ) 145,931 109,364 8,971 (18,801) $ 1,378,129 $ 488,334	Office Equipment $ 877,799 92,879 (43,351 ) 121 (22,777 ) 1,658 $ 906,329 $ 685,252 (37,744 ) 80,707 28 (17,442 ) 1,888 $ 712,689 $ 193,640 $ 850,021 88,968 (52,817 ) 15,916 (5,842 ) (18,447) $ 877,799 $ 654,746 (37,119 ) 82,847 9,961 (6,489 ) (18,694) $ 685,252 $ 192,547	Other Facilities $ 1,874,078 195,725 (66,861 ) - (105,508 ) 4,000 $ 1,901,434 $ 1,351,086 (62,139 ) 162,987 - (114,321 ) 3,172 $ 1,340,785 $ 560,649 $ 1,743,263 347,616 (212,597 ) 34,650 1,799 (40,653) $ 1,874,078 $ 1,234,142 (50,730 ) 161,352 33,018 (611 ) (26,085) $ 1,351,086 $ 522,992	Construction in Progress $ 8,792 179,666 - - 186,608 5,587 $ 380,653 $ - - - - - - $ - $ 380,653 $ 2,485 347,974 (208,313 ) 1 (121,307 ) (12,048) $ 8,792 $ - - - - - - $ - $ 8,792	Total $ 15,744,253 619,025 (308,927 ) 121 103,619 45,083 $ 16,203,174 $ 6,011,763 (237,548 ) 575,549 28 (89,254 ) 25,740 $ 6,286,278 $ 9,916,896 $ 14,435,564 902,739 (540,545 ) 1,272,441 (90,736 ) (235,210) $ 15,744,253 $ 4,652,783 (135,867 ) 594,209 1,020,319 1,447 (121,128) $ 6,011,763 $ 9,732,490

40 -

The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives as follows:

Buildings Main buildings 20-60 years Electronic equipment 5 years Engineering systems 5 years Equipment 2-8 years Office equipment 2-8 years Other facilities 2-10 years

Property, plant and equipment pledged as collateral for borrowings are set out in Note 33.

15. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Buildings Machinery Office equipment Transportation equipment Other equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Machinery Office equipment Transportation equipment Other equipment		December 31	December 31
	2020 2019 $ 282,854 $ 286,549 283,248 396,887 2,619 2,202 6,032 9,254 24,232 28,214 20 - $ 599,005 $ 723,106 For the Year Ended December 31,
		2020 $ 39,556 $ 8,305 168,858 885 10,629 28,562 20 $ 217,259	2019 $ - $ 8,673 168,883 655 5,723 29,443 - $ 213,377

b. Lease liabilities

Carrying amount Current Non-current		December 31	December 31
		2020 $ 221,250 $ 87,781	2019 $ 199,493 $ 242,263

41 -

The discount rates of lease liabilities were as follows:

Buildings Machinery Office equipment Transportation equipment Other equipment	December 31
	2020 2019 0.25%-10.20% 0.25%-12.00% 0.87%-4.20% 0.87%-5.46% 0.87%-4.75% 0.87%-4.75% 0.25%-5.00% 0.25%-5.90% 2.05% -

c. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended December 31,	For the Year Ended December 31,	For the Year Ended December 31,
		2020 $ 13,960 $ 12,180 $ 279,962	2019 $ 13,959 $ 12,178 $ 265,441

The Group’s leases of certain office equipment and buildings qualify as low-value asset leases. The Group has elected to apply the recognition exemption and, thus, did not recognize right-of-use assets and lease liabilities for these leases.

16. GOODWILL

Cost Balance at January 1 Additional amounts recognized from business combinations occurred during the year (Note 27) Adjustments for goodwill after acquisition Effect of foreign currency exchange differences Balance at December 31 Accumulated impairment losses Balance at January 1 Impairment losses recognized during the year Effect of foreign currency exchange differences Balance at December 31 Carrying amount at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,892,879 3,081 - (58,280) $ 2,837,680 $ (373,365) - - $ (373,365) $ 2,464,315	2019 $ 2,934,254 124,029 (104,889) (60,515) $ 2,892,879 $ (97,788) (284,143) 8,566 $ (373,365) $ 2,519,514

The Group performed impairment assessment on the recoverable amount of goodwill and calculated the recoverable amount based on its value in use.

42 -

In 2019, the recoverable amount of subsidiary B+B was determined based on a value in use calculation that used the cash flow projections in the financial budgets approved by management, and discount rate of 16.38% per annum was used for the year ended December 31, 2019 to reflect the risks of the cash-generating unit. Because the performance of operating revenue did not turn out as expected, the recoverable amount was lower than the sum of carrying amount of cash-generating unit’s identified assets and the amount of goodwill; therefore, an impairment loss of $272,025 thousand for goodwill was recognized for the year ended December 31, 2019.

In 2019, subsidiary ANA determined that the estimated future cash flows are not expected to arise from the business combination in the past; therefore, an impairment loss of $12,118 thousand was recognized for the year ended December 31, 2019.

17. OTHER INTANGIBLE ASSETS

Cost Balance at January 1, 2020 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance at December 31, 2020 Accumulated amortization and impairment Balance at January 1, 2020 Amortization expenses Disposals Reclassification Impairment loss Effect of foreign currency exchange differences Balance at December 31, 2020 Carrying amount at December 31, 2020 Cost Balance at January 1, 2019 Additions Disposals Acquisitions through business combinations Reclassification Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated amortization and impairment Balance at January 1, 2019 Amortization expenses Disposals Acquisitions through business combinations	Trademarks Client Relationships $ 493,225 $ 593,770 - - - - - - (17,835) (20,965) $ 475,390 $ 572,805 $ 98,934 $ 239,688 - 46,739 - - - - 245,917 - (14,483) (2,544) $ 330,368 $ 283,883 $ 145,022 $ 288,922 $ 507,047 $ 534,120 - - - (16,480) - 95,820 - - (13,822) (19,690) $ 493,225 $ 593,770 $ - $ 195,112 - 56,803 - (3,937) - -	Technology Licenses $ 413,853 - - - (11,102) $ 402,751 $ 315,238 24,743 - - - (7,057) $ 332,924 $ 69,827 $ 423,599 2,831 - - - (12,577) $ 413,853 $ 290,012 35,571 - -	Others Total $ 625,449 $ 2,126,297 137,619 137,619 (212,148) (212,148) 10,188 10,188 (12,584) (62,486) $ 548,524 $ 1,999,470 $ 492,376 $ 1,146,236 103,912 175,394 (210,977) (210,977) 4,494 4,494 - 245,917 (20,541) (44,625) $ 369,264 $ 1,316,439 $ 179,260 $ 683,031 $ 674,442 $ 2,139,208 136,241 139,072 (195,140) (211,620) 12,885 108,705 (114) (114) (2,865) (48,954) $ 625,449 $ 2,126,297 $ 551,761 $ 1,036,885 117,832 210,206 (180,243) (184,180) 8,273 8,273 (Continued)

43 -

Impairment loss Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amount at December 31, 2019	Trademarks Client Relationships $ 102,010 $ - (3,076) (8,290) $ 98,934 $ 239,688 $ 394,291 $ 354,082	Technology Licenses $ - (10,345) $ 315,238 $ 98,615	Others Total $ - $ 102,010 (5,247) (26,958) $ 492,376 $ 1,146,236 $ 133,073 $ 980,061 (Concluded)

The Group acquired B+B on January 4, 2016 and recognized intangible assets of $1,294,933 thousand according to the assessment report, and a portion of trademark right was expected to generate net cash inflows over a foreseeable unlimited period. Therefore, the service life of trademark is considered to have an indefinite useful life. The trademark will not be amortized until its useful life is determined to be finite. However, it will be tested for impairment annually regardless of whether there is any indication that it may be impaired. Because the recoverable amount of the trademark was lower than its carrying amount, B+B recognized impairment loss of $245,917 thousand and $102,010 thousand for the years ended December 31, 2020 and 2019, respectively.

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Customers relationships 2-15 years Technology licenses 5-8 years Others 1-5 years

18. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Line of credit borrowings		December 31	December 31
		2020 $ 184,078	2019 $ 250,678

The weighted average effective interest rates on bank loans was 0.22%-3.05% and 0.23%-3.00% per annum as of December 31, 2020 and 2019, respectively.

b. Long-term borrowings

Secured borrowings Other loans Less: Current portion of long-term borrowings Long-term borrowings		December	31
		2020 $ - - $ -	2019 $ 44,089 (7,957) $ 36,132

Other borrowings are loans from the government. As of December 31, 2019, the effective interest rate was 2.91%-3.16% per annum.

44 -

The Group had repaid the loan in advance in June 2020. The Group pledged time deposits, freehold land and buildings as collateral for the borrowings; refer to Note 33.

19. OTHER LIABILITIES

Other payables Payables for salaries or bonuses Payables for employee benefits Others (Note)		December 31	December 31
		2020 $ 2,742,495 185,523 1,000,347 $ 3,928,365	2019 $ 2,484,026 188,988 972,388 $ 3,645,402

Note: Included marketing expenses and freight expenses.

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and its domestic subsidiaries of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

For certain subsidiaries with a few or no employees, they have not established a set of policies for employee retirement and therefore not recognized related retirement expenses.

Except for those aforementioned subsidiaries, the rest of overseas subsidiaries recognized retirement expenses when making contribution to the retirement plan in accordance with local laws.

b. Defined benefit plans

The defined benefit plan adopted by the Company and Cermate in accordance with the Labor Standards Law, is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company and Cermate Technologies Inc. each contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by pension fund monitoring committees. Pension contributions are deposited in the Bank of Taiwan in the committees’ name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

Subsidiary ATJ, according to local regulations, shall calculate pension benefits on the basis of the length of service and the hourly wages at the time of resignation or retirement date when employees in participation of the defined benefit plans meet the requirements such as reaching the pension age or loss of capability to work, etc.

45 -

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Deficit Net defined benefit liabilities		December 31	December 31
		2020 $ 534,734 (131,246) 403,488 $ 403,488	2019 $ 517,092 (132,178) 384,914 $ 384,914

Movements in net defined benefit liabilities were as follows:

	Present Value		Net Defined
	of the Defined		Benefit
	Benefit	Fair Value of	Liabilities
	Obligation	the Plan Assets	(Assets)
Balance at January 1, 2019	$ 394,616	$ (139,071)	$ 255,545
Service cost
Current service cost	6,929	-	6,929
Net interest expense (income)	4,667	(1,630)	3,037
Recognized in profit or loss	11,596	(1,630)	9,966
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(4,730)	(4,730)
Actuarial gain or loss
Changes in demographic assumptions	9,924	-	9,924
Changes in financial assumptions	16,975	-	16,975
Experience adjustments	(7,112)	-	(7,112)
Recognized in other comprehensive income	19,787	(4,730)	15,057
Contributions from the employer	-	(9,304)	(9,304)
Benefits paid	(28,795)	22,557	(6,238)
Business combinations	122,190	-	122,190
Exchange differences on foreign plans	(2,302)	-	(2,302)
Balance at December 31, 2019	517,092	(132,178)	384,914
Service cost
Current service cost	7,221	-	7,221
Net interest expense (income)	3,161	(1,033)	2,128
Recognized in profit or loss	10,382	(1,033)	9,349
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(4,540)	(4,540)
Actuarial gain or loss
Changes in demographic assumptions	893	-	893
Changes in financial assumptions	10,833	-	10,833
Experience adjustments	14,693	-	14,693
Recognized in other comprehensive income	26,419	(4,540)	21,879
Contributions from the employer		(9,038)	(9,038)
Benefits paid	(19,159)	15,543	(3,616)
Balance at December 31, 2020	$ 534,734	$ (131,246)	$ 403,488

46 -

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,742 1,570 2,265 1,772 $ 9,349	2019 $ 1,827 687 5,864 1,588 $ 9,966

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase	December 31
	2020 2019 0.220%-0.500% 0.140%-1.000% 3.000%-3.250% 3.000%-3.250%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		December	31
		2020 $ (15,370) $ 16,004 $ 11,784 $ (11,392)	2019 $ (15,228) $ 15,867 $ 11,583 $ (11,188)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

47 -

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		December	31
	2020 2019 $ 9,196 $ 9,228 12.4-14.2 years 12.5-14.9 years

21. EQUITY

a. Share capital

Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2020 1,000,000 $ 10,000,000 772,255 $ 7,722,545	2019 800,000 $ 8,000,000 700,410 $ 7,004,100

Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends.

The changes in shares are due to employees’ exercise of their employee share options.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of ordinary shares Conversion of bonds The difference between the consideration received or paid and the carrying amount of subsidiaries’ net assets during actual disposal or acquisition Share of changes in capital surplus of associates Employees’ share compensation May be used to offset a deficit only Changes in percentage of ownership interest in subsidiaries (2) Employee share options Share of changes in capital surplus of associates Employee share options expired May not be used for any purpose Employee share options		December 31	December 31
		2020 $ 2,692,238 1,636,499 - 674 78,614 - 2,297,403 54,882 87,266 1,066,178 $ 7,913,754	2019 $ 2,692,238 1,636,499 8,678 55 78,614 4,637 1,888,945 12,361 - 1,075,002 $ 7,397,029

48 -
1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).
2) Such capital surplus arises from the effect of changes in ownership interest in a subsidiary resulting from equity transactions other than actual disposal or acquisition, or from changes in capital surplus of subsidiaries accounted for by using the equity method.
c. Retained earnings and dividends policy

Under the dividends policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of compensation of employees and remuneration of directors after amendment, refer to compensation of employees and remuneration of directors in Note 22, d.

The Company operates in an industry related to computers, and its business related to network servers is new but has significant potential for growth. Thus, in formulating its dividends policy, the Company takes into account the overall business and industry conditions and trends, its objective of enhancing the shareholders’ long-term interests, and the sustainability of the Company’s growth. The policy also requires that share dividends be less than 75% of total dividends to retain internally generated cash within the Company to finance future capital expenditures and working capital requirements.

An appropriation of earnings to a legal reserve should be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2019 and 2018, which had been approved in the shareholders’ meetings on May 28, 2020 and May 28, 2019, respectively, were as follows:

Legal reserve Special reserve Cash dividends Share dividends Cash dividends per share (NT$) Share dividends per share (NT$)	Appropriation of Earnings	Appropriation of Earnings	Appropriation of Earnings
	For the Year Ended December 31
		2019 $ 735,122 $ 47,230 $ 5,463,198 $ 700,410 $ 7.8 $ 1.0	2018 $ 629,466 $ 429,108 $ 4,751,129 $ - $ 6.8 $ -

49 -

The appropriations of earnings for 2020 had been proposed by the Company’s board of directors on March 5, 2021. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation
	of	Earnings
Legal reserve Reversal of special reserve Cash dividends	$ $ $	717,035 (14,143) 5,480,813
Cash dividends per share (NT$)	$	7.1

The appropriation of earnings for 2020 is subject to the resolution of the shareholders in their meeting to be held on May 27, 2021.

d. Special reserves

Beginning at January 1 Appropriations in respect of debits to other equity items Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2020 $ 798,763 47,230 $ 845,993	2019 $ 369,655 429,108 $ 798,763

e. Other equity items
1) Exchange differences on translation of the financial statements of foreign operations

Balance at January 1 Recognized during the period Exchange differences on translation of the financial statements of foreign entities Share of associates accounted for using the equity method Other comprehensive loss recognized for the period Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (878,261) (111,229) (17,145) (128,374) $ (1,006,635)	2019 $ (475,245) (385,198) (17,818) (403,016) $ (878,261)

2) Unrealized gain or loss on Financial Assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized gain (loss) - equity instruments Share of associates accounted for using the equity method Other comprehensive income recognized for the year Cumulative unrealized gain on equity instruments transferred to retained earnings due to disposal Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2020 $ 30,970 132,470 40 132,510 9,828 $ 173,308	2019 $ (324,254) 307,604 23,251 330,855 24,369 $ 30,970

50 -

3) Unearned employee benefits compensation

Balance at January 1 Share from associates accounted for using the equity method Balance at December 31 Non-controlling interests Balance at January 1 Share of profit for the year Other comprehensive income during the year Exchange differences on translation of the financial statements of foreign operations Remeasurement of defined benefit plans Increase in non-controlling interests from decrease in investment in subsidiaries (Note 29) Increase or decrease in non-controlling interests from increase in investment in subsidiaries (Note 29) Increase in non-controlling interests from the acquisition of subsidiary, ATJ (Note 27) Increase in non-controlling interests from the acquisition of subsidiary, ATR (Note 27) Increase in non-controlling interests from the acquisition of subsidiary, ACI IOT Investment Fund-I Corporation Cash dividends distributed by subsidiaries Non-controlling interests from employees’ outstanding vested share options issued by subsidiaries Liquidation of subsidiary Balance at December 31	For the Year Ended	For the Year Ended	December 31
	2020 $ 1,298 179 $ 1,477 For the Year Ended		2019 $ 736 562 $ 1,298 December 31
		2020 $ 577,361 55,032 (12,782) 65 53,634 (20,708) - - - (11,443) 93 (4,985) $ 636,267	2019 $ 326,975 41,635 (7,752) (104) (340) 7,573 125,868 35,252 62,000 (14,039) 293 - $ 577,361

f. Non-controlling interests

22. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

Interest on bank loans Interest on lease liabilities Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,102 14,508 2,566 $ 20,176	2019 $ 2,578 18,040 4,423 $ 25,041

51 -

b. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2020 $ 163,859 628,949 $ 792,808 $ 2,173 173,221 $ 175,394	2019 $ 194,053 613,533 $ 807,586 $ 3,423 206,783 $ 210,206

c. Employee benefits expense

Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 20) Share-based payments Equity-settled Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 9,623,485 261,640 9,349 270,989 365,418 583,428 $ 10,843,320 $ 2,324,796 8,518,524 $ 10,843,320	2019 $ 9,307,290 419,668 9,966 429,634 295,427 732,743 $ 10,765,094 $ 2,467,959 8,297,135 $ 10,765,094

d. Compensation of employees and remuneration of directors

According to the Articles of Incorporation of the Company, the Company accrues compensation of employees at the rates of no less than 5% and remuneration of directors at the rates of no higher than 1%, of net profit before income tax, compensation of employees, and remuneration of directors. The compensations of employees and remuneration of directors for the years ended December 31, 2020 and 2019, which had been approved by the Company’s board of directors on March 5, 2021 and March 6, 2020, respectively, were as follows:

Compensation of employees Remuneration of directors	For the Year Ended December 31
	2020 2019 $ 570,000 $ 600,000 11,700 12,000

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

52 -

There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2020 and 2019.

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors in 2021 and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

e. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net losses	For the Year Ended	For the Year Ended	December 31
		2020 $ 873,452 (910,750) $ (37,298)	2019 $ 732,848 (827,448) $ (94,600)

23. INCOME TAXES

a. Major components of tax expense recognized in profit or loss

	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020		2019
Current tax
In respect of the current year	$ 1,667,102	$	1,824,480
Income tax on unappropriated earnings	18,219		20,024
Adjustments for prior year	(63,249)		(84,174)
Deferred tax
In respect of the current year	203,302		154,695
Income tax expense recognized in profit or loss	$ 1,825,374	$	1,915,025
A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Land value increment tax Investment credits in the current year Unrecognized deductible temporary differences Unrecognized loss carryforwards Difference between basic and regular income tax Adjustments for prior years’ tax Others Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 9,128,361 $ 2,148,955 709 (91,759) 18,219 - (182,882) 517 1,704 - (63,249) (6,840) $ 1,825,374	2019 $ 9,307,880 $ 2,249,657 2,972 (109,002) 20,024 170 (162,569) (671) 1,019 3,763 (84,174) (6,164) $ 1,915,025

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b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current year Translation of the financial statements of foreign operations Remeasurement of defined benefit plans	For the Year Ended	For the Year Ended	December 31
		2020 $ (32,093) (4,385) $ (36,478)	2019 $ (100,754) (3,012) $ (103,766)

c. Current tax liabilities

Current tax liabilities Current Non-current		December 31	December 31
		2020 $ 2,315,461 $ 291,961	2019 $ 1,522,874 $ -

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2020

Deferred tax assets
Temporary differences
Unrealized gross profit

Unrealized loss on inventory write-downs
Exchange differences on translation of the
financial statements of foreign operations
Loss carryforwards
Defined benefit obligations
Unrealized foreign exchange losses (gains)
Unrealized warranty liabilities
Remeasurement of defined benefit plans
Allowance for impaired receivables
Financial assets at fair value through profit or
loss
Others

Deferred tax liabilities
Temporary differences
Undistributed earnings of subsidiaries

Remeasurement of defined benefit plans
Exchange differences on translation of the
financial statements of foreign operations
Unrealized foreign exchange losses (gains)
Property, plant and equipment
Intangible assets and goodwill
Others

Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance
$ 139,085
$ (16,640) $ -
$ 122,445
89,225
(4,586)
-
84,639
219,717
-
32,093
251,810
35,130
(6,609)
-
28,521
17,026
12,730
-
29,756
3,533
(3,236)
-
297
35,018
(3,982)
-
31,036
48,295
-
4,385
52,680
291
150
-
441
420
(420)
-
-

102,472

19,530

-

122,002
$ 690,212
$ (3,063)
$ 36,478
$ 723,627
$ 1,788,569
$ 257,460
$ -
$ 2,046,029
3,990
-
-
3,990
3,865
(168)
-
3,697
2
3,179
-
3,181
4,077
77
-
4,154
141,095
(67,533)
-
73,562

591

7,224

-

7,815
$ 1,942,189
$ 200,239
$ -
$ 2,142,428

54 -

For the year ended December 31, 2019

Deferred tax assets Temporary differences Unrealized gross profit Unrealized loss on inventory write-downs Exchange differences on translation of the financial statements of foreign operations Loss carryforwards Defined benefit obligations Unrealized foreign exchange losses (gains) Unrealized warranty liabilities Remeasurement of defined benefit plans Allowance for impaired receivables Sales allowance Financial assets at fair value through profit or loss Others Deferred tax liabilities Temporary differences Undistributed earnings of subsidiaries Remeasurement of defined benefit plans Financial assets at fair value through profit or loss Exchange differences on translation of the financial statements of foreign operations Unrealized foreign exchange losses (gains) Property, plant and equipment Intangible assets and goodwill Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 136,026 $ 3,059 $ - 74,115 15,110 - 118,963 - 100,754 45,525 (10,395 ) - 17,717 (691 ) - 560 2,973 - 25,293 9,725 - 22,459 - 3,012 3,814 (3,523 ) - 3,090 (3,090 ) - - 420 - 53,698 (25,008) - $ 501,260 $ (11,420) $ 103,766 $ 1,588,655 $ 199,914 $ - 3,990 - - 87 (87 ) - 3,676 189 - 2,580 (2,578 ) - 5,153 (1,076 ) - 193,822 (52,727 ) - 951 (360) - $ 1,798,914 $ 143,275 $ -	Business Combination Closing Balance $ - $ 139,085 - 89,225 - 219,717 - 35,130 - 17,026 - 3,533 - 35,018 22,824 48,295 - 291 - - - 420 73,782 102,472 $ 96,606 $ 690,212 $ - $ 1,788,569 - 3,990 - - - 3,865 - 2 - 4,077 - 141,095 - 591 $ - $ 1,942,189

e. Unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets

Loss carryforwards Expiry in 2021 Expiry in 2028 Expiry in 2029 Expiry in 2030 Expiry in 2033-2039 Infinite		December	31
		2020 $ 11,377 - - 8,521 21,098 - $ 40,996	2019 $ 684 33,410 5,095 - 35,087 819 $ 75,095

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f. Information about unused investment credits

As of December 31, 2020, investment tax credits comprised:

		Remaining
		Creditable	Expiry
Laws and Statutes	Tax Credit Source	Amount	Year
Statute for Upgrading Industries	Research and development expenditures	$ 8,405	2020-2021

g. Income tax assessments

The Company’s tax returns through 2018 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31
		2020 $ 9.40 $ 9.27	2019 $ 9.56 $ 9.44

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retroactively for the issuance of bonus shares or share splits on August 8, 2020. The basic and diluted earnings per share adjusted retrospectively for the year ended December 31, 2019 were as follows:

Unit: NT$ Per Share

	Before	After
	Retrospective	Retrospective
	Adjustment	Adjustment
Basic earnings per share Diluted earnings per share	$ 10.51 $ 10.37	$ 9.56 $ 9.44

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net Profit for the Year

Earnings used in the computation of basic earnings per share Earnings used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 7,247,955 $ 7,247,955	2019 $ 7,351,220 $ 7,351,220

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Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares)

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee share options Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 771,264 8,268 2,003 781,535	2019 769,237 7,027 2,346 778,610

If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed the entire amount of the compensation will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

25. SHARE-BASED PAYMENT ARRANGEMENTS

Qualified employees of the Company and its subsidiaries were granted 7,500 options in 2020, 8,000 options in 2018 and 6,000 options in 2016. Each option entitles the holder with the right to subscribe for one thousand ordinary shares of the Company. The holders of these options include employees of the Company and employees of domestic and foreign subsidiaries who are owned directly or indirectly over 50% by the Company that meet certain criteria. Options issued in 2020, 2018 and 2016 are all valid for six years. They are exercisable at certain percentages after the second year of the grant date. The exercise price granted in 2020 was NT$200 per share. The options issued in 2018 were granted at an exercise price equal to the share price at the grant date. The exercise price granted in 2016 was NT$100 per share. If there are subsequent changes to the Company’s capital surplus, the exercise price and the number of options shall be adjusted accordingly.

Information on employee share options was as follows:

Balance at January 1 Options granted Options exercised Options expired Balance at December 31 Options exercisable, end of year Weighted-average fair value of options granted (NT$)	For the Year Ended December 31	For the Year Ended December 31
	2020 Number of Options Weighted- average Exercise Price (NT$) 14,250 $ 149.88 7,500 200.00 (1,803) 77.45 (543) 70.50 19,404 175.66 7,904 138.98 $ 125.77	2019
		Number of Options Weighted- average Exercise Price (NT$) 15,965 $ 143.64 - - (1,715) 81.91 - - 14,250 149.88 6,250 82.54 $ -

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The weighted-average share price at the date of exercise of share options for the years ended December 31, 2020 and 2019 was ranging from NT$258 to NT$328 and from NT$223 to NT$310, respectively.

Information about outstanding options as of December 31, 2020 and 2019 was as follows:

Issuance in 2020 Issuance in 2018 Issuance in 2016 Issuance in 2014	For the Year Ended December 31	For the Year Ended December 31
	2020 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 200.00 5.58 202.50 3.58 73.90 1.45 - -	2019
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ - - 202.50 4.58 83.30 2.45 79.40 0.63

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

	2020	2018	2016
Grant-date share price (NT$)	$309	$202.5	$235
Exercise price (NT$)	$200	$202.5	$100
Expected volatility	23.28%-26.55%	28.42%-28.73%	31.42%-32.48%
Expected life (in years)	4-5.5	4-4.5	4-5.5
Expected dividend yield	0%	0%	0%
Risk-free interest rate	0.31%-0.35%	0.67%-0.69%	0.52%-0.65%

Expected volatility was based on the historical share price volatility over the past 5 years.

Compensation cost recognized was $365,248 thousand and $295,427 thousand for the years ended December 31, 2020 and 2019, respectively.

Qualified employees of LNC, a subsidiary of the Company, were granted 108 options in May 2018 and 1,092 options in June 2017. Each option entitles the holder to subscribe for one thousand common shares of LNC. These options are valid for five years. All are exercisable at certain percentages after the first year of the grant date.

58 -

Information on employee share options was as follows:

Balance at January 1 Options forfeited Balance at December 31 Options exercisable, end of period Weighted-average fair value of options granted (NT$)	For the Year Ended December 31	For the Year Ended December 31
	2020 Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 740 $ 20 (64) 20 676 20 502 20 $ -	2019
		Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 814 $ 20 (74) 20 740 20 180 20 $ -

Information about outstanding options as of December 31, 2020 and 2019 was as follows:

Employee Share Options Issuance in 2018 Issuance in 2017	December 31	December 31
	2020 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 20 1.53 20 0.42	2019
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 20 2.53 20 1.42

Options granted were priced using the Black-Scholes pricing model, and the inputs to the model were as follows:

	2018	2017
Grant-date valuation (NT$)	$17.29	$16.11
Exercise price (NT$)	$20	$20
Expected volatility	21.36%-25.43%	25.6%-29.45%
Expected life (in years)	2.5-4	2.5-4
Expected dividend yield	1.04%	0%
Risk-free interest rate	0.60%-0.67%	0.64%-0.74%

In August 2018, the Company modified all of its outstanding options. The valid lifetime was adjusted from 4 to 5 years. The incremental fair values of NT$0.38 in June 2017 and NT$0.34 in May 2018 are recognized as expenses for the rest of their vesting period within 2.42 and 3.33 years, respectively. LNC used the inputs above to measure the fair value of the old and new options.

59 -

Issuance in 2018

	Before	After
	Adjustment	Adjustment
Grant-date share valuation (NT$)	$17.86	$17.86
Exercise price (NT$)	$20	$20
Expected volatility	20.04%-23.67%	21.57%-24.70%
Expected life (in years)	2.17-3.67	2.67-4.17
Expected dividend yield	1.01%	1.01%
Risk-free interest rate	0.57%-0.65%	0.61%-0.67%
Issuance in 2017

	Before	After
	Adjustment	Adjustment
Grant-date share valuation (NT$)	$17.86	$17.86
Exercise price (NT$)	$20	$20
Expected volatility	19.35%-21.61%	19.89%-23.34%
Expected life (in years)	1.38-2.76	1.88-3.26
Expected dividend yield	-	-
Risk-free interest rate	0.49%-0.61%	0.54%-0.64%

26. GOVERNMENT GRANTS

For the years ended December 31, 2020 and 2019, the Group received government grants of $26,699 thousand and $71,182 thousand for its engagement in a government’s project. These amounts were recognized as other income. In addition, the amount of government grants for expenses or losses incurred was $128,549 thousand for the year ended December 31, 2020, and was deducted from the recorded expenses paid for by the grant.

27. BUSINESS COMBINATIONS

a. Subsidiaries acquired

			Proportion of
			Voting Equity
		Date of	Interests	Consideration
	Principal Activity	Acquisition	Acquired (%)	Transferred
Advantech Technologies Japan Corp. (ATJ)	Production and sale of electronic and	January 31, 2019	80	$	517,008
	mechanical devices
Advantech Turkey Teknoloji A.S. (ATR)	Wholesale of computers and	February 28, 2019	60	$	58,482
	peripheral devices
Shanghai Yanle Co., Ltd. (Yanle)	Application and retail of intelligent	May 31, 2020	100	$	6,698
	technology

60 -

The Company acquired 80% of the shares of ATJ (formerly Omron Nohgata Co., Ltd.) in order to expand its embedded systems and strengthen the customization of design and production in the Japan market.

The Company acquired 42% of the shares of ATR (formerly Alitek Teknoloji Urunleri San. ve Tic. A.S.) in order to expand its sales of industrial PCs in the Turkey market. The Company increased its capital; thus the Company’s equity investment in ATR was increased to 60%.

The Company acquired Yanle (Shanghai Yanle Co., Ltd.) of which the Company originally acquired 45% of its shares in order to expand its retail sales of retail of intelligent technology in the China market, which increased the Company’s equity investment in Yanle to 100%.

b. Consideration transferred

Cash Ownership of Shanghai Yanle Co., Ltd. before business combination Assets acquired and liabilities assumed at the dates Current assets Cash and cash equivalents Trade receivables and other receivables Inventories Other current assets Non-current assets Plant and equipment Intangible assets Deferred tax assets Other non-current assets Current liabilities Short-term borrowings Trade payables and other payables Current tax liabilities Other current liabilities Non-current liabilities Net defined benefit liabilities Other non-current liabilities	Yanle $ 5,071 1,627 $ 6,698 of acquisitions Yanle $ 2,347 - 959 232 93 - - - - (11) - (3) - - $ 3,617	ATJ $ 517,008 - $ 517,008 ATJ $ - 600,640 437,154 7,220 251,399 65,649 96,606 - (157,819) (501,113) (32,436) (15,770) (122,190) - $ 629,340	ATR $ 58,482 - $ 58,482 ATR $ 33,334 15,759 9,966 353 723 34,783 - 238 (311) (2,206) (193) (4,230) - (86) $ 88,130

c. Assets acquired and liabilities assumed at the dates of acquisitions

d. Non-controlling interests

The non-controlling interest (20% and 40% ownership interests in ATJ and ATR) recognized at the acquisition date was measured by reference to the identifiable net assets of the non-controlling interest and amounted to $125,868 thousand and $35,252 thousand, respectively.

61 -

e. Goodwill recognized on acquisitions

Consideration transferred Less: Fair value of identifiable net assets acquired Goodwill recognized on acquisitions	Yanle ATJ (Restatement) ATR (Restatement) $ 6,698 $ 517,008 $ 58,482 (3,617) (503,472) (52,878) $ 3,081 $ 13,536 $ 5,604

In the acquisition of ATR, the adjustment of the fair value of the intangible assets and goodwill was based on the intangible asset - fair value valuation on client relationship. Refer to Note 16 for information related to goodwill adjustments.

In the acquisition of ATJ, the adjustment of the fair value of intangible assets, property, plant and equipment, and goodwill was based on the intangible asset - fair value valuation on client relationship and the appraisal report of property, plant and equipment. Refer to Note 16 for goodwill adjustments.

f. Net cash outflow on acquisitions of subsidiaries

Consideration paid in cash Less: Cash and cash equivalent balances acquired	Yanle $ 5,071 (2,347) $ 2,724	ATJ $ 517,008 - $ 517,008	ATR $ 58,482 (33,334) $ 25,148

g. Impact of acquisitions on the results of the Group

The results of the acquirees since the acquisition dates included in the consolidated statements of comprehensive income were as follows:

Operating revenue Profit or loss		2020 Yanle $ 1 $ (1,832)		2019
				ATJ $ 2,563,061 $ 137,452	ATR $ 128,870 $ 12,955

28. DISPOSAL OF SUBSIDIARIES

On July 31, 2019, the Group entered into an agreement to dispose of Conel Automation, which carried out system integration services in the Czech Republic. The disposal was completed on July 31, 2019, on which the date the control of Conel Automation was passed to the acquirer.

a. Consideration received from disposal

		Conel
	Automation
Cash	$	311

62 -

b. Analysis of assets and liabilities on the date control was lost

		Conel
	Automation
Current assets
Cash and cash equivalents	$	392
Trade receivables		4,932
Inventories		6,666
Other current assets		4,897
Non-current assets
Property, plant and equipment		104
Other intangible assets		14,536
Current liabilities
Payables and other liabilities		(5,285)
Net assets disposed of	$	26,242

c. Loss on disposal of subsidiary

		Conel
	Automation
Consideration received	$	311
Net assets disposed of		(26,242)
Cumulative exchange differences reclassified from equity to profit or loss in respect
of the subsidiary		4,312
Loss on disposals	$	(21,619)

d. Net cash inflow (outflow) on disposal of subsidiary

		Conel
	Automation
Consideration received in cash and cash equivalents	$	311
Less: Cash and cash equivalent balances disposed of		(392)
	$	(81)

29. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

In the first quarter of 2019, the Group subscribed for 18% of the equity of ATR during its capital increase, which increased the Group’s equity investment in ATR from 42% to 60%.

In the first quarter of 2020, the Group acquired 30% of the equity of AIH, which increased the Group’s equity investment in AIH from 70% to 100%.

In the first and second quarters of 2020, the Group sold 3.42% and 1.58% of the equity of LNC, which decreased the Group’s equity investment in LNC from 64.10% to 59.10%.

In the second quarter of 2020, the Group had a non-proportional investment in the equity of AMX during its cash capital increase, which decreased its equity investment in AMX from 100% to 60%.

63 -

In the third quarter of 2020, the Group acquired 20% of the equity of ABR, which increased the Group’s equity investment in ABR from 80% to 100%.

The above transactions were accounted for as equity transactions, since the Group did not cease to have control over these subsidiaries.

For the Year Ended December 31, 2020 LNC AIH AMX ABR Cash consideration received (paid) $ 26,919 $ (4,554) $ 9,816 $ (59,930) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (26,583) 2,481 (27,051) 18,227 Differences recognized from equity transactions $ 336 $ (2,073) $ (17,235) $ (41,703) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 336 $ - $ - $ (9,014) Capital surplus - changes in percentage of ownership interests in subsidiaries - - (4,554) - Unappropriated earnings - (2,073) (12,681) (32,689) $ 336 $ (2,073) $ (17,235) $ (41,703) December 31, 2019 ATJ AIH Cash consideration received (paid) $ 9,230 $ - The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (7,573) 340 Differences recognized from equity transactions $ 1,657 $ 340 Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 1,657 $ - Capital surplus - changes in percentage of ownership interests in subsidiaries - 340 $ 1,657 $ 340	For the Year Ended December 31, 2020 LNC AIH AMX ABR Cash consideration received (paid) $ 26,919 $ (4,554) $ 9,816 $ (59,930) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (26,583) 2,481 (27,051) 18,227 Differences recognized from equity transactions $ 336 $ (2,073) $ (17,235) $ (41,703) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 336 $ - $ - $ (9,014) Capital surplus - changes in percentage of ownership interests in subsidiaries - - (4,554) - Unappropriated earnings - (2,073) (12,681) (32,689) $ 336 $ (2,073) $ (17,235) $ (41,703) December 31, 2019 ATJ AIH Cash consideration received (paid) $ 9,230 $ - The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (7,573) 340 Differences recognized from equity transactions $ 1,657 $ 340 Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 1,657 $ - Capital surplus - changes in percentage of ownership interests in subsidiaries - 340 $ 1,657 $ 340	For the Year Ended December 31, 2020 LNC AIH AMX ABR Cash consideration received (paid) $ 26,919 $ (4,554) $ 9,816 $ (59,930) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (26,583) 2,481 (27,051) 18,227 Differences recognized from equity transactions $ 336 $ (2,073) $ (17,235) $ (41,703) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 336 $ - $ - $ (9,014) Capital surplus - changes in percentage of ownership interests in subsidiaries - - (4,554) - Unappropriated earnings - (2,073) (12,681) (32,689) $ 336 $ (2,073) $ (17,235) $ (41,703) December 31, 2019 ATJ AIH Cash consideration received (paid) $ 9,230 $ - The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (7,573) 340 Differences recognized from equity transactions $ 1,657 $ 340 Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 1,657 $ - Capital surplus - changes in percentage of ownership interests in subsidiaries - 340 $ 1,657 $ 340	For the Year Ended December 31, 2020 LNC AIH AMX ABR Cash consideration received (paid) $ 26,919 $ (4,554) $ 9,816 $ (59,930) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (26,583) 2,481 (27,051) 18,227 Differences recognized from equity transactions $ 336 $ (2,073) $ (17,235) $ (41,703) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 336 $ - $ - $ (9,014) Capital surplus - changes in percentage of ownership interests in subsidiaries - - (4,554) - Unappropriated earnings - (2,073) (12,681) (32,689) $ 336 $ (2,073) $ (17,235) $ (41,703) December 31, 2019 ATJ AIH Cash consideration received (paid) $ 9,230 $ - The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (7,573) 340 Differences recognized from equity transactions $ 1,657 $ 340 Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 1,657 $ - Capital surplus - changes in percentage of ownership interests in subsidiaries - 340 $ 1,657 $ 340
					Total $ (27,749) (32,926) $ (60,675) $ (8,678) (4,554) (47,443) $ (60,675)
		ATJ $ 9,230 (7,573) $ 1,657 $ 1,657 - $ 1,657	AIH $ - 340 $ 340 $ - 340 $ 340		Total $ 9,230 (7,233) $ 1,997 $ 1,657 340 $ 1,997

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30. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Group’s overall strategy remains unchanged in both 2020 and 2019.

The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Group (comprising issued capital, reserves, retained earnings, other equity, and non-controlling interests).

The Group is not subject to any externally imposed capital requirements.

Key management personnel of the Group review the capital structure on a quarterly basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Group may adjust the amount of dividends paid to shareholders, the number of new shares issued, and the amount of new debt issued.

31. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2020 Financial assets at FVTPL Derivative financial assets Securities listed in ROC Securities listed in other countries Securities unlisted in other countries Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Securities listed in the ROC Unlisted securities - ROC Unlisted shares in other country Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 272,860 118,172 - 5,102,028 $ 5,493,060 $ 1,635,056 - - $ 1,635,056 $ -	Level 2 $ 90 - - - - $ 90 $ - - - $ - $ 21,044	Level 3 $ - - - 77,950 - $ 77,950 $ - 52,462 126,715 $ 179,177 $ -	Total $ 90 272,860 118,172 77,950 5,102,028 $ 5,571,100 $ 1,635,056 52,462 126,715 $ 1,814,233 $ 21,044

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December 31, 2019

Financial assets at FVTPL Derivative financial assets Securities listed in the ROC Securities listed in other countries Securities unlisted in other countries Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Securities listed in the ROC Unlisted securities - ROC Unlisted shares in other country Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 118,392 50,157 - 3,470,094 $ 3,638,643 $ 1,489,491 - - $ 1,489,491 $ -	Level 2 $ 9,320 - - - - $ 9,320 $ - - - $ - $ 521	Level 3 $ - - - 101,156 - $ 101,156 $ - 18,860 130,970 $ 149,830 $ -	Total $ 9,320 118,392 50,157 101,156 3,470,094 $ 3,749,119 $ 1,489,491 18,860 130,970 $ 1,639,321 $ 521

There were no transfers between Levels 1 and 2 in the current and prior periods.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2020

Financial assets Balance at January 1, 2020 Purchases Disposal Recognized in profit or loss Recognized in other comprehensive income Balance	Financial Assets at FVTPL Equity Instruments $ 101,156 3,679 (6,782) (20,103) - $ 77,950	Financial Assets at FVTOCI Equity Instruments $ 149,830 44,719 (4,597) - (10,775) $ 179,177	Total $ 250,986 48,398 (11,379) (20,103) (10,775) $ 257,127

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For the year ended December 31, 2019

Financial assets Balance at January 1, 2019 Purchases Recognized in other comprehensive income Balance	Financial Assets at FVTPL Equity Instruments $ - 101,156 - $ 101,156	Financial Assets at FVTOCI Equity Instruments $ 118,765 - 31,065 $ 149,830	Total $ 118,765 101,156 31,065 $ 250,986

3) Valuation techniques and inputs applied for Level 2 fair value measurement

Derivatives held by the Group were foreign currency forward contracts, whose fair values were calculated using discounted cash flow. Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

4) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair values of unlisted equity securities - ROC and other countries were determined using the income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees.

b. Categories of financial instruments

Financial assets Fair value through profit or loss (FVTPL) Mandatorily at FVTPL Financial assets at amortized cost (Note 1) Financial assets at FVTOCI equity instrument Financial liabilities Fair value through profit or loss (FVTPL) Mandatorily at FVTPL Measured at amortized cost (Note 2)	December 31
	2020 2019 $ 5,571,100 $ 3,749,119 16,497,097 15,253,957 1,814,233 1,639,321 21,044 521 8,438,890 8,826,187

Note 1: The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, financial assets at amortized cost - current, notes receivable, trade receivables, trade receivables from related parties, other receivables and other receivables from related parties.
Note 2: The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, notes payable and trade payables, other payables, current portion of long-term borrowings and long-term borrowings.
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c. Financial risk management objectives and policies

The Group’s major financial instruments included equity investments, trade receivables, trade payables, borrowings and lease liabilities. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, and liquidity risk.

The Group sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Group’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The corporate treasury function reports quarterly to the board of directors on the Group’s current derivative instrument management.

1) Market risk

The Group’s activities exposed it primarily to financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below). The Group entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk.

There had been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Group undertook operating activities and investment of foreign operations denominated in foreign currencies, which exposed it to foreign currency risk. The Group manages the risk that fluctuations in foreign currency could have on foreign-currency denominated assets and future cash flow by using forward exchange contracts, which allow the Group to mitigate but not fully eliminate the effect.

The maturities of the Company’s forward exchange contracts were less than six months and these contracts did not meet the criteria for hedge accounting.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) are set out in Note 34. As for the carrying amounts of derivatives exposed to foreign currency risk at the end of the reporting period, refer to Note 7.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar, Euro and Renminbi.

The following table details the Group’s sensitivity to a 5% increase in the New Taiwan dollar (i.e., the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 5%. The sensitivity analysis included only outstanding foreign currency denominated monetary items and foreign currency exchange forward contracts designated as cash flow hedges, and adjusts their translation at the end of the reporting period for a 5% change in exchange rates.

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The range of the sensitivity analysis included cash and cash equivalents, trade receivables and trade payables. A positive number below indicates an increase in pre-tax profit associated with the New Taiwan dollar weakening 5% against the relevant currency.

Profit or loss	U.S. Dollar Impact For the Year Ended December 31 2020 2019 $ 117,418 $ 101,361 (Note 1) (Note 1)	Euro Impact For the Year Ended December 31 2020 2019 $ 8,864 $ 53,804 (Note 2) (Note 2)	Renminbi Impact
			For the Year Ended December 31
			2020 2019 $ 421,604 $ 69,773 (Note 3) (Note 3)

Note 1: This was mainly attributable to the exposure outstanding on U.S. dollar-denominated cash, trade receivables, and trade payables, which were not hedged at the end of the reporting period.
Note 2: This was mainly attributable to the exposure outstanding on Euro-denominated cash, trade receivables, and trade payables, which were not hedged at the end of the reporting period.
Note 3: This was mainly attributable to the exposure outstanding on Renminbi-denominated cash, trade receivables and trade payables, which were not hedged at the end of the reporting period.

b) Interest rate risk

The Group’s floating-rate bank savings and borrowings are exposed to risk of changes in interest rates. The Group does not operate hedging instruments for interest rates. The Group’s management monitors fluctuations in market interest rates regularly. If it is needed, management might perform necessary procedures for significant interest rate risks to control the risks from fluctuations in market interest rates.

The carrying amount of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2020 2019 $ 1,936,135 $ 1,434,765 158,000 165,600 4,648,178 4,055,867 26,078 129,167

Sensitivity analysis

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50-basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

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If interest rates had been 50 basis points higher and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2020 and 2019 would have increased by $23,111 thousand and $19,634 thousand, respectively. Had interest rates been 50 basis points lower for the same years, the Group’s pre-tax profit would have decreased by the same respective amounts. The source of the negative effects would have been mainly the floating-interest rates on bank savings and borrowings.

c) Other price risk

The Group was exposed to equity price risk through its investments in listed equity securities. The Group manages this exposure by maintaining a portfolio of investments with different risks. The Group’s equity price risk was mainly concentrated on equity instruments trading in the Taiwan Stock Exchange.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 1% higher/lower, pre-tax profit for the years ended December 31, 2020 and 2019 would have increased by $4,690 thousand and $2,679 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2020 and 2019 would have increased by $18,142 thousand and $16,393 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

The Group’s sensitivity to equity prices increased because stock prices rose in 2019.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which would cause a financial loss to the Group due to failure of counterparties to discharge an obligation provided by the Group could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

Trade receivables consisted of a large number of customers, spread across diverse industries and geographical areas and, thus, no concentration of credit risk was observed.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. The Group had available unutilized short-term bank loan facilities set out in section (c) below.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and continuously monitoring forecast and actual cash flows as well as matching the maturity profiles of financial assets and liabilities.

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a) Liquidity and interest risk rate tables for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on agreed repayment dates.

To the extent that interest flows are at floating rate, the undiscounted amounts was derived from the interest rate curve at the end of the reporting period.

December 31, 2020

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing liabilities $ 5,025,633 Lease liabilities 66,367 Variable interest rate liabilities 56 Fixed interest rate liabilities 47,632 $ 5,139,688	1-3 Months $ 2,078,394 41,515 112 110,441 $ 2,230,462	Over 3 Months to 1 Year $ 1,150,785 110,795 26,426 - $ 1,288,006	Over 1 Year $ - 94,839 - - $ 94,839

Additional information about the maturity analysis for lease liabilities

Less than 1 Year 1-5 Years Lease liabilities$ 218,677 $ 80,571 December 31, 2019 On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing liabilities $ 5,585,880 Lease liabilities 33,111 Variable interest rate liabilities 20,293 Fixed interest rate liabilities 165,632 $ 5,804,916	5-10 Years 10-15 $ 14,268 $ 1-3 Months $ 2,277,916 51,455 541 - $ 2,329,912	Years 15-20 Years 20+ Years - $ - $ - Over 3 Months to 1 Year Over 1 Year $ 666,661 $ 963 117,915 270,158 75,470 45,756 - - $ 860,046 $ 316,877	20+ Years $ -

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Additional information about the maturity analysis for lease liabilities

Less than 1 Year Lease liabilities$ 202,481	1-5 Years $ 206,664	5-10 Years 10-15 Years 15-20 Years $ 63,494 $ - $ -	20+ Years $ -

The amounts included above for variable interest rate instruments for non-derivative financial assets and liabilities were subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Liquidity and interest risk rate table for derivative financial liabilities

The following tables detailed the Group’s liquidity analysis for its derivative financial instruments. The tables were based on the undiscounted contractual net cash inflows and outflows on derivative instruments that require gross settlement.

December 31, 2020

On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 352,690 Outflows 357,623 $ (4,933) December 31, 2019 On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 330,202 Outflows 325,163 $ 5,039	1-3 Months Over 3 Months to 1 Year $ 432,246 $ 265,203 443,024 270,446 $ (10,778) $ (5,243) 1-3 Months Over 3 Months to 1 Year $ 430,604 $ 101,721 427,666 100,899 $ 2,938 $ 822	Total $ 1,050,139 1,071,093 $ (20,954) Total $ 862,527 853,728 $ 8,799

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c) Financing facilities

Unsecured bank overdraft facilities, reviewed annually and payable on demand Amount used (Note) Amount unused Secured bank overdraft facilities Amount used		December 31	December 31
		2020 $ 191,288 6,666,617 $ 6,857,905 $ -	2019 $ 250,678 6,741,182 $ 6,991,860 $ 44,089

Note: The amounts used or drawn by the Group from the unsecured bank overdraft facilities were recorded as borrowings of $184,078 thousand and lease guarantees of $7,210 thousand.

32. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

a. Names and categories of related parties

Name Related Party Category Axiomtek Co., Ltd. Associate AIMobile Co., Ltd. Associate Deneng Scientific Research Co., Ltd. Associate Winmate Inc. Associate AzureWave Technologies, Inc. Associate i-Link Co., Ltd. Associate DotZero Co., Ltd. Associate Mildex Optical Inc. Associate Shanghai Yanle Co., Ltd. Associate (a second-tier subsidiary of the parent company from June 2020) Information Technology Total Services Co., Ltd. Associate Hwacom Systems Inc. Associate Smasoft technology Co., Ltd. Associate Impelex Data Transfer Co., Ltd. Associate VSO Electronics Co., Ltd. Associate International Integrated Systems, Inc. Associate K&M Investment Co., Ltd. Other related party AIDC Investment Corp. Other related party Advantech Foundation Other related party Tran-Fei Development Co., Ltd. Other related party

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b. Sales of goods

Related Party Category/Name Associates Other related parties	For the Year Ended	For the Year Ended	December 31
		2020 $ 116,275 4,527 $ 120,802	2019 $ 83,691 - $ 83,691

c. Purchases of goods

Related Party Category/Name Associates	For the Year Ended	For the Year Ended	December 31
		2020 $ 288,228	2019 $ 206,331

d. Receivables from related parties (excluding loans to related parties)

Related Party Line Item Category/Name Trade receivables from related parties Associates		December	31
		2020 $ 28,750	2019 $ 20,174

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2020 and 2019, no impairment loss was recognized for trade receivables from related parties.

e. Other receivables from related parties

Related Party Line Item Category/Name Other receivables Associates Other related parties		December	31
		2020 $ 3,018 1,615 $ 4,633	2019 $ 29 - $ 29

f. Payables to related parties (excluding loans from related parties)

Related Party Line Item Category/Name Trade payables Associates Other liabilities Other related parties		December	31
		2020 $ 46,360 $ -	2019 $ 43,367 $ 7,965

The outstanding trade payables to related parties are unsecured.

g. Prepayments to related parties

Related Party Line Item Category/Name Prepayments - related parties Associates		December	31
		2020 $ 36,286	2019 $ 25,470

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h. Other transactions with related parties

Related Party Category/Name Selling and marketing expenses Associates Research and development expenses Associates	Operating Expenses	Operating Expenses	Operating Expenses
	For the Year Ended December 31
		2020 $ 185 $ 9,805	2019 $ 237 $ 2,955

Research and development expenses incurred between the Group and its associates were charged according to the agreed remuneration and payment terms on the contracts. For the rest of transactions with related parties, since normal payment terms with related parties were not stipulated, the payment terms were based on mutual agreement.

Related Party Category/Name Rental income Associates Other related parties Other Other related parties	Other Income	Other Income	Other Income
	For the Year Ended December 31
		2020 $ 244 289 $ 533 $ 3,452	2019 $ - 60 $ 60 $ 2,702

Lease contracts between the Group and its associates were based on market rental prices and had normal payment terms. Revenue contracts for technical services between the Company and its associates were based on market prices and had payment terms on the contracts. For the rest of transactions with related parties, since normal payment terms with related parties were not stipulated, the payment terms were based on mutual agreement.

i. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Share-based payments	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 44,078 162 26,123 $ 70,363	2019 $ 45,945 158 38,158 $ 84,261

The remuneration of directors and key executives was determined by the remuneration committee based on the performance of individuals and market trends.

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33. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

Pledged deposits (classified as financial assets at amortized cost) Property, plant and equipment		December	31
		2020 $ 2,307 - $ 2,307	2019 $ - 64,584 $ 64,584

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant financial assets and liabilities of the entities in the Group denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

December 31, 2020

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 168,258 28.48 (USD:NTD) RMB 582,773 4.377 (RMB:NTD) USD 29,288 6.507 (USD:RMB) EUR 18,622 35.02 (EUR:NTD) Financial liabilities Monetary items USD 88,499 28.48 (USD:NTD) RMB 220,322 4.377 (RMB:NTD) USD 23,588 6.507 (USD:RMB)	Carrying Amount $ 4,791,975 2,550,799 834,116 652,155 $ 8,829,045 $ 2,520,439 964,347 671,786 $ 4,156,572

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December 31, 2019

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 169,388 29.980 (USD:NTD) RMB 608,066 4.3050 (RMB:NTD) USD 30,704 6.9640 (USD:RMB) EUR 23,196 33.590 (EUR:NTD) Financial liabilities Monetary items USD 99,339 29.980 (USD:NTD) RMB 271,690 4.3050 (RMB:NTD) USD 37,132 6.9640 (USD:RMB)	Carrying Amount $ 5,078,252 2,617,724 920,508 779,154
	$ 9,395,638
	$ 2,978,183 1,169,625 1,113,217
	$ 5,261,025

For the years ended December 31, 2020 and 2019, realized and unrealized net foreign exchange losses were $37,298 thousand and $94,600 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the entities in the Group.

35. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and b. information on investees:
1) Financing provided to others. (Table 1)
2) Endorsement/guarantee provided. (Table 2)
3) Marketable securities held. (Table 3)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital. (Table 4)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (Table 6)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)
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8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 7)
9) Trading in derivative instruments. (Notes 7 and 34)
10) Significant transactions between the Company and subsidiaries. (Table 11)
11) Name, locations, and other information of investees. (Table 8)
c. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 9)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, their prices, payment terms, and unrealized gains or losses. (Tables 1, 5 and 7)
d. Information of major shareholders

The following is the information of major shareholders: Name of major shareholders, number of shares owned and percentage of ownership of shareholders whose percentage of ownership is higher than 5%. (Table 10)

36. SEGMENT INFORMATION

Information reported to the chief operating decision maker (“CODM”) for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Group’s segment information is disclosed as follows:

Industrial internet of things services (IIoT): Focus on the market of industrial internet of things;
Embedded board and design-in services (EIoT): Provide services involving embedded boards, systems and peripheral hardware and software;
Allied design & manufacturing services (Allied DMS): Including networks and communications, data acquisition and control, and provision of the customized collaboration designs and services;
Intelligent services (SIoT): Provide services involving digital logistic, digital healthcare and intelligent retail;
Global customer services (AGS &APS): Global repair, technical support and warranty services.

The CODM considers each service as a separate operating segment. But for financial statements presentation purposes, these individual operating segments have been aggregated into a single operating segment, taking into account the following factors:

a. These operating segments have similar long-term gross profit margins; and
b. The nature of the products and production processes are similar.
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Segment Revenue and Results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segment:

Industrial Interest of Things Services (IIoT) For the year ended December 31, 2020 Revenue from external customers $ 17,135,347 Inter-segment revenue - Segment revenue $ 17,135,347 Eliminations Consolidated revenue Segment income $ 5,005,129 Other revenue Other unamortized expense Other income and expense Finance costs Share of profits of associates accounted for using the equity method Profit before tax (continuing operations) For the year ended December 31, 2019 Revenue from external customers $ 16,889,044 Inter-segment revenue - Segment revenue $ 16,889,044 Eliminations Consolidated revenue Segment income $ 5,503,397 Other revenue Other unamortized expense Other income and expense Finance costs Share of profits of associates accounted for using the equity method Profit before tax (continuing operations)	Embedded Boards and Design-in Services (EIoT) $ 12,198,446 - $ 12,198,446 $ 2,321,330 $ 13,651,265 - $ 13,651,265 $ 2,667,493	Allied Design Manufacture Services (Allied DMS) $ 11,574,552 - $ 11,574,552 $ 2,053,741 $ 12,870,217 - $ 12,870,217 $ 2,401,264	Intelligent Services (SIoT) $ 4,326,180 - $ 4,326,180 $ 436,961 $ 4,561,529 - $ 4,561,529 $ 428,432	Global Customer Services (AGS & APS) $ 5,780,346 - $ 5,780,346 $ 773,883 $ 6,091,982 - $ 6,091,982 $ 911,720	Others $ 104,537 - $ 104,537 $ (437,163) $ 80,625 - $ 80,625 $ (28,588)	Total $ 51,119,408 - 51,119,408 - 51,119,408 10,153,881 252,462 (1,117,328 ) (306,514 ) (20,176 ) 166,036 $ 9,128,361 $ 54,144,662 - 54,144,662 - 54,144,662 11,883,718 301,883 (2,650,216 ) (325,284 ) (25,041 ) 122,820 $ 9,307,880

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs and directors’ and supervisors’ salaries, share of profits of associates, gain recognized on the disposal of interest in former associates, rental revenue, interest income, gain or loss on disposal of property, plant and equipment, gains or losses on disposal of financial instruments, exchange gains or losses, valuation gains or losses on financial instruments, finance costs and income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

Revenue from Major Products and Services

The following is an analysis of the Group’s revenue from continuing operations from its major products and services.

Embedded boards and chassis Industrial computer and industrial control After-sales service and others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 23,887,240 21,424,703 5,807,465 $ 51,119,408	2019 $ 26,275,929 21,776,158 6,092,575 $ 54,144,662

79 -

Geographical Information

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below.

Taiwan Asia USA Europe Others	Revenue from External Customers For the Year Ended December 31 2020 2019 $ 3,382,825 $ 3,306,319 23,445,228 24,153,764 13,210,673 15,105,993 8,466,292 8,937,030 2,614,390 2,641,556 $ 51,119,408 $ 54,144,662	Revenue from External Customers For the Year Ended December 31 2020 2019 $ 3,382,825 $ 3,306,319 23,445,228 24,153,764 13,210,673 15,105,993 8,466,292 8,937,030 2,614,390 2,641,556 $ 51,119,408 $ 54,144,662	Non-current Assets	Non-current Assets	Non-current Assets
			For the Year Ended December 31
		2020 $ 3,382,825 23,445,228 13,210,673 8,466,292 2,614,390 $ 51,119,408		2020 $ 7,617,422 3,331,160 2,150,279 779,631 13,202 $ 13,891,694	2019 $ 7,651,703 3,614,074 2,490,511 620,559 25,772 $ 14,402,619

Non-current assets exclude investments accounted for using the equity method, financial instruments and deferred tax assets.

Information about Major Customers

No customers contributed 10% or more to the Group’s revenue for both years ended December 31, 2020 and 2019.

80 -

TABLE 1

ADVANTECH CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note A)	Lender	Borrower	Financial Statement Account	Related Parties	Credit Line (Note H)	Credit Line (Note H)	Actual Amount Borrowed	Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limits
					Highest Balance for the Period	Ending Balance	Ending Balance						Item	Value
1	LNC	LNC Dong Guan	Trade receivables - related parties	Yes	$ 70,000	$ 70,000	$ -	-	Short-term financing	$ -	Financing need	$ -	None	None	$ 36,715 (Note D)	$ 146,858 (Note D)
2	Advantech Corporate Investment	The Company	Trade receivables - related parties	Yes	1,000,000	-	-	1.00	Short-term financing	-	Financing need	-	None	None	1,363,767 (Note E)	1,363,767 (Note E)
3	AAC (BVI)	ATJ	Trade receivables - related parties	Yes	177,000 (JPY 600,000 thousand )	-	-	0.55	Short-term financing	-	Financing need	-	None	None	3,713,650 (Note C)	3,713,650 (Note C)

Note A: Investee companies are numbered sequentially from 1.

Note B: Translated based on the exchange rates as of December 31, 2020: JPY1=NT$0.276.

Note C: The financing limit for each borrower and the aggregate financing were both 40%, of AAC (BVI)’s net asset value, and were supervised by the Company.

Note D: The financing limit for each borrower and the aggregate financing were 10% and 40%, respectively, of LNC’s net asset value.

Note E: The financing limit for each borrower and the aggregate financing were both 40%, of Advantech Corporate Investment’s net asset value, and were supervised by the Company.

Note F: The maximum balance for the year and its ending balance are approved by the board of directors of financiers.

81 -

TABLE 2

ADVANTECH CO., LTD. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note A)	Maximum Amount Endorsed/ Guaranteed During the Year	Outstanding Endorsement/ Guarantee at the End of the Year	Actual Amount Borrowed	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Collateral/ Guarantee Amounts Allowable (Note B)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Company	ANA AAC (BVI) Advantech Corporate Investment ATJ AKMC ACISM SIoT (Cayman) B+B AJP Advantech Intelligent City Services Co., Ltd. (formerly known as AiST) AIH ABR A-SIoT AVN ARU Cermate (Taiwan) Cermate (Shenzhen) ACZ ATR Advanixs Corp. AAU ACI IOT Investment Fund-1 Corporation	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016 3,441,016	$ 907,500 (US$ 30,000) 302,500 (US$ 10,000) 302,500 (US$ 10,000) 282,000 (JPY 1,000,000) 181,500 (US$ 6,000) 151,250 (US$ 5,000) 302,500 (US$ 10,000) 151,250 (US$ 5,000) 302,500 (JPY 500,000) 90,675 (US$ 3,000) 90,675 (US$ 3,000) 45,375 (US$ 1,500) 35,080 (EUR 1,000) 30,250 (US$ 1,000) 30,225 (US$ 1,000) 30,250 (US$ 1,000) 30,250 (US$ 1,000) 15,250 (US$ 500) 15,125 (US$ 500) 15,125 (US$ 500) 6,050 (US$ 200) 6,045 (US$ 200)	$ 854,400 (US$ 30,000) 284,800 (US$ 10,000) 284,800 (US$ 10,000) 276,000 (JPY 1,000,000) 170,880 (US$ 6,000) 142,400 (US$ 5,000) 284,800 (US$ 10,000) 142,400 (US$ 5,000) 138,000 (JPY 500,000) 85,440 (US$ 3,000) 85,440 (US$ 3,000) 42,720 (US$ 1,500) 35,020 (EUR 1,000) 28,480 (US$ 1,000) 28,480 (US$ 1,000) 28,480 (US$ 1,000) 28,480 (US$ 1,000) 14,240 (US$ 500) 14,240 (US$ 500) 14,240 (US$ 500) 5,696 (US$ 200) 5,696 (US$ 200)	$ - - - 110,400 (JPY 400,000) - - - - 27,600 (JPY 100,000) - - - - - - 20,000 (NT$ 20,000) - - - - - -	$ - - - - - - - - - - - - - - - - - - - - - -	2.48 0.83 0.83 0.80 0.50 0.41 0.83 0.41 0.40 0.25 0.25 0.12 0.10 0.08 0.08 0.08 0.08 0.04 0.04 0.04 0.02 0.02	$ 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047 10,323,047	Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y	N N N N N N N N N N N N N N N N N N N N N N	N N N N Y N N N N N N N N N N N Y N N N N N

(Continued)

82 -

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note A)	Maximum Amount Endorsed/ Guaranteed During the Year	Outstanding Endorsement/ Guarantee at the End of the Year	Actual Amount Borrowed	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Collateral/ Guarantee Amounts Allowable (Note B)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
		AMY AKR	Subsidiary Subsidiary	$ 3,441,016 3,441,016	$ 3,023 (US$ 100) 174,785 (US$ 6,050)	$ 2,848 (US$ 100) 172,304 (US$ 6,050)	$ - 26,078 (KRW 1,003,000)	$ - -	0.01 0.50	$ 10,323,047 10,323,047	Y Y	N N	N N

Note A: The limit on endorsements or guarantees provided on behalf of the respective party is 10% of the Company’s net asset value.

Note B: The maximum collateral or guarantee amount allowable is 30% of the Company’s net asset value.

Note C: The exchange rates as of December 31, 2020 were US$1=NT$28.48, EUR1=NT$35.02 and JPY1=NT$0.276.

Note D: The latest net equity is from the Group’s consolidated financial statements for the year ended December 31, 2020.

(Concluded)

83 -

TABLE 3

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
The Company Advantech Corporate Investment	Share ASUSTek Computer Inc. Allied Circuit Co., Ltd. Fund Capital Money Market FSITC Money Market FSITC Taiwan Money Market Mega Diamond Money Market Share Contec GSD Technologies Co., Ltd. Allied Circuit Co., Ltd. BoardTec System Inc. BiosenseTek Corp. Juguar Technology Taiwan DSC PV Ltd. Feng Sang Enterprise Co., Ltd. Lanner Electronics Inc. Posiflex Technology Inc. Phison Electronics Corp. Innodisk Corp. Grandtech C.G. System Inc. Cypress Technology Co., Ltd. Chenbro Micom Co., Ltd. ISI TRMB LTRX	- - - - - - - - - - - - - - - - - - - - - - -	Financial assets at fair value through other comprehensive income - non-current `〃` Financial assets at fair value through profit or loss - current `〃` `〃` `〃` Financial assets at fair value through profit or loss - current `〃` Financial assets at fair value through other comprehensive income - non-current `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	4,739,461 1,200,000 9,225,566 2,508,127 103,735,038 114,671,962 26,500 2,813,000 2,501,000 225,000 37,500 500,000 1,600 1,788,750 275,000 134,000 64,000 65,000 270,000 180,268 117,000 655 8,490 46,000	$ 1,187,235 145,200 150,057 451,087 1,600,995 1,450,589 12,741 180,313 302,621 3,441 - 4,302 - 44,719 18,975 10,680 21,280 10,790 10,827 10,401 9,594 15,261 16,144 5,817	0.64 2.41 - - - - 0.41 8.27 5.03 7.50 1.79 11.54 3.20 15.00 0.23 0.18 0.03 0.08 0.46 0.35 0.91 - - 0.16	$ 1,187,235 145,200 150,057 451,087 1,600,995 1,450,589 12,741 180,313 302,621 3,441 - 4,302 - 44,719 18,975 10,680 21,280 10,790 10,827 10,401 9,594 15,261 16,144 5,817	Note A Note A Note B Note B Note B Note B Note A Note A Note A Note C Note C Note C Note C Note C Note A Note A Note A Note A Note A Note A Note A Note A Note A Note A

(Continued)

84 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Advanixs Corporate Advantech Intelligent City Services Co., Ltd. AdvanPOS SIoT (Cayman) Advantech Innovative Design Co., Ltd. AiSC Yun Yan, Wu-Lian Co., Ltd.	MSI HOLI EQIX NSIT China Mobile Ltd. Maxnerva Technology Services Inc. Fund Taishin 1699 Money Market FSITC Taiwan Money Market Mega Diamond Money Market Fund CBC Capital Fund Jih Sun Money Market Mega Diamond Money Market Fund Jih Sun Money Market Fund Mega Diamond Money Market Fund FSITC Taiwan Money Market Taishin 1699 Money Market FSITC Money Market Fund Capital Money Market Fund Shanghai Shangchuang Xinwei Investment Management Co., Ltd. Share Jama Pro Co., Ltd. Fund FSITC Money Market	- - - - - - - - - - - - - - - - - - -	Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through other comprehensive income - non-current `〃` Financial assets at fair value through profit or loss - current	2,400 31,500 700 4,750 74,000 3,812,000 29,087,859 3,240,735 5,245,488 - 6,466,890 5,370,924 855,044 1,189,398 14,473,571 32,246,377 361,931 625,517 - 583,300 27,092	$ 11,624 13,179 14,238 10,293 12,014 6,861 396,930 50,016 66,355 77,950 96,680 67,942 12,783 15,046 223,378 440,031 65,093 10,174 126,715 - 4,872	- 0.05 - 0.01 - 0.58 - - - 0.04 - - - - - - - - 8.43 10.00 -	$ 11,624 13,179 14,238 10,293 12,014 6,861 396,930 50,016 66,355 77,950 96,680 67,942 12,783 15,046 223,378 440,031 65,093 10,174 126,715 - 4,872	Note A Note A Note A Note A Note A Note A Note B Note B Note B Note C Note B Note B Note B Note B Note B Note B Note B Note C Note C Note B

(Continued)

85 -

(Concluded)

Note A: Market value was based on the closing price on December 31, 2020.

Note B: Market value was based on the net asset value of the open-ended mutual funds on December 31, 2020.

Note C: The fair values are estimated from the latest net equity in the financial statements.

86 -

TABLE 4

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED OR DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Shares	Amount (Cost)	Shares	Amount	Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Shares	Amount (Cost)
The Company Advantech Corporate Investment	Fund Mega Diamond Money Market FSITC Taiwan Money Market Capital Money Market Fund Mega Diamond Money Market FSITC Taiwan Money Market	Financial assets at fair value through profit or loss Same as above Same as above Financial assets at fair value through profit or loss Same as above	- - - - -	- - - - -	74,093,066 32,562,860 - 24,633,086 18,910,187	$ 931,183 500,000 - 310,158 290,517	161,487,734 205,141,856 78,235,826 - 19,492,902	$ 2,040,007 3,160,010 1,270,003 - 300,000	120,908,838 133,969,678 69,010,260 24,633,086 35,162,354	$ 1,527,284 2,064,647 1,121,044 310,412 541,310	$ 1,521,183 2,060,002 1,120,002 310,158 540,517	$ 6,101 4,645 1,042 254 793	114,671,962 103,735,038 9,225,566 - 3,240,735	$ 1,450,007 1,600,008 150,001 - 50,000

87 -

TABLE 5

ADVANTECH CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details		Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Company AKMC ANA ACN AEU SIoT (Cayman) AKR AJP Advanixs Corp. B+B AAU	ANA ACN AEU SIoT (Cayman) AKR AJP Advanixs Corp. B+B AAU ASG ATR AVN ABR AMY A-SIoT AKMC The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company	Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Purchase Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase	$ 9,841,226 7,835,620 4,142,031 945,755 989,056 713,830 592,897 276,204 285,049 228,118 107,897 120,333 129,392 157,810 301,122 (11,047,054) 11,047,054 (9,841,226) (7,835,620) (4,142,031) (945,755) (989,056) (713,830) (592,897) (276,204) (285,049)	28.62 22.78 12.04 2.75 2.88 2.08 1.72 0.80 0.83 0.66 0.31 0.35 0.38 0.46 0.88 41.15 93.13 83.00 76.88 62.47 89.58 61.22 86.94 99.67 49.87 77.99	45 days after month-end 45 days after month-end 30 days after month-end 60 days after month-end 60 days after invoice date 60-90 days 30 days after month-end 45 days after month-end 60-90 days 60-90 days 45 days after month-end 45 days after month-end 90 days after month-end 45 days after month-end 30 days after invoice date Usual trade terms Usual trade terms 45 days after month-end 45 days after month-end 30 days after month-end 60 days after month-end 60 days after invoice date 60-90 days 30 days after month-end 45 days after month-end 60-90 days	Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price	No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties	$ 1,473,318 1,825,651 755,893 8,369 97,724 68,423 66,824 - 32,030 66,355 3,791 31,659 1,823 14,440 186,523 (1,751,018) 1,751,018 (1,473,318) (1,825,651) (755,893) (8,369) (97,724) (68,423) (66,824) - (32,030)	24.17 29.95 12.40 0.14 1.60 1.12 1.10 - 0.53 1.09 0.06 0.52 0.03 0.24 3.06 43.47 95.52 88.70 83.48 82.76 50.68 57.61 91.44 96.31 - 77.53	Note A
										(Continued)

88 -

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details		Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
ASG ATR AVN ABR AMY A-SIoT AKMC AKMC ACZ ACN SIoT (Cayman) SIoT (Cayman) SIoT (Cayman) LNC ACN SIoT (Cayman) AEU SIoT (China) ANA AEU A-SIoT LNC Dong Guan	The Company The Company The Company The Company The Company The Company ACN SIoT (Cayman) AEU SIoT (China) ANA AEU A-SIoT LNC Dong Guan AKMC AKMC ACZ ACN SIoT (Cayman) SIoT (Cayman) SIoT (Cayman) LNC	Parent company Parent company Parent company Parent company Parent company Parent company Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Subsidiary Subsidiary Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Parent company Parent company	Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase	$ (228,118) (107,897) (120,333) (129,392) (157,810) (301,122) 419,091 107,691 244,148 127,583 515,983 283,159 365,111 375,439 (419,091) (107,691) (244,148) (127,583) (515,983) (283,159) (365,111) (375,439)	64.86 82.07 89.74 70.96 81.63 32.61 3.53 0.91 77.88 1.07 34.07 18.70 24.11 79.33 4.11 10.20 3.68 91.84 4.35 4.27 39.53 78.67	60-90 days 45 days after month-end 45 days after month-end 90 days after month-end 45 days after month-end 30 days after invoice date Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms	Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price	No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties	$ (66,355) (3,791) (31,659) (1,823) (14,440) (186,523) 61,363 - 49,842 32,337 - - - 231,844 (61,363) - (49,842) (32,337) - - - (231,844)	78.91 96.86 100.00 45.58 80.70 84.41 3.35 - 93.03 1.08 - - - 89.77 2.81 - 5.46 95.01 - - - 94.89

Note A: Realized gain for the period was $7,701 thousand.

Note B: All intercompany gains and losses from investment have been eliminated upon consolidation.

(Concluded)

89 -

TABLE 6

ADVANTECH CO., LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Property	Event Date	Transaction Amount	Payment Status	Counterparty	Relationship	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Pricing Reference	Purpose of Acquisition	Other Terms
							Property Owner	Relationship	Transaction Date	Amount
The Company	Real estate	2020.10.30	$ 1,410,000	Under the contract, based on percentage of construction completed; accumulated payments of $20,937 thousand were made as of December 31, 2020 and $20,937 thousand were made in the fourth quarter of 2020.	Chung-Lin General Contractors, Ltd.	None	-	-	-	$ -	Contract price	For the Company’s expansion	None

90 -

TABLE 7

ADVANTECH CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
The Company AKMC LNC	ACN ANA AEU AKMC A-SIOT The Company LNC Dong Guan	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Subsidiary	$ 1,825,651 1,481,088 760,148 246,596 187,458 1,751,018 231,844	4.37 7.19 4.68 Note A 2.93 5.88 1.65	$ - - - - - - -	- - - - - - -	$ 411,438 - 205,805 227,866 - 1,474,533 64,431	$ - - - - - - -

Note A: Sales revenue on materials delivered to subcontractors have been eliminated upon consolidation.

Note B: All intercompany gains and losses from investment have been eliminated upon consolidation.

91 -

TABLE 8

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars/Foreign Currency, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of December 31, 2020	as of December 31, 2020	Net Income (Loss) of the Investee	Investment Gain (Loss) (Note A)	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of Ownership	Carrying Value
The Company AKR AJP	AAC (BVI) ATC Advanixs Corporate Advantech Corporate Investment Axiomtek AdvanPOS LNC AMX AEUH ASG ATH AAU AJP AMY AKR ABR Advantech Innovative Design Co., Ltd. Advantech Intelligent City Services Co., Ltd. (formerly known as AiST) B+B AIN AIMobile Co., Ltd. AKST Winmate AVN Nippon RAD ARU ATJ ATR AIL Huan Yan Water Solution Co., Ltd. Jan Hsiang AKST ATJ	BVI BVI Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taichung, Taiwan Mexico Helmond, The Netherlands Techplace, Singapore Thailand Sydney, Australia Tokyo, Japan Malaysia Seoul, Korea Sao Paulo, Brazil Taipei, Taiwan Taipei, Taiwan Delaware, USA India Taipei, Taiwan Gangwon-do, Korea Taipei, Taiwan Hanoi, Vietnam Tokyo, Japan Moscow Nogatashi, Japan Turkey Israel Taipei, Taiwan Taipei, Taiwan Gangwon-do, Korea Nogatashi, Japan	Investment and management service Sale of industrial automation products Production and sale of industrial automation products Investment holding company Production and sale of industrial automation products Production and sale of POS system Production and sale of machines with computerized numerical control Sale of industrial automation products Investment and management service Sale of industrial automation products Production of computers Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Product design Design, develop and sale of intelligent services Sale of industrial network communications systems Sale of industrial automation products Design and manufacture of industrial mobile systems Production and sale of intelligent medical display Embedded System Modules Sale of industrial automation products R&D of IoT intelligent system Production and sale of industrial automation products Production and sale of electronic and mechanical devices Wholesale of computers and peripheral devices Sale of industrial network communications systems Service plan for combination of related technologies of water treatment and applications of Internet of Things Electronic parts and components manufacturing Production and sale of intelligent medical display Production and sale of electronic and mechanical devices	$ 3,875,214 998,788 100,000 2,900,000 249,059 266,192 277,946 61,909 1,219,124 27,134 47,701 40,600 15,472 35,140 156,668 103,146 10,000 81,837 - 19,754 180,000 - 540,000 76,092 251,915 44,676 323,130 58,482 8,653 27,000 - - 184,649	$ 2,332,397 998,788 100,000 2,900,000 249,059 266,192 304,865 4,922 1,219,124 27,134 47,701 40,600 15,472 35,140 73,355 43,216 10,000 81,837 1,968,044 19,754 180,000 83,313 540,000 76,092 251,915 23,822 323,130 58,482 8,653 - 3,719 55,579 184,649	128,496,207 40,850,000 10,000,000 300,000,000 20,537,984 1,000,000 17,730,000 10,000,002 25,961,250 1,450,000 51,000 500,204 1,200 2,000,000 600,000 12,723,038 1,000,000 1,000,000 - 3,999,999 6,750,000 - 12,000,000 8,100 1,004,310 1 500,000 260,870 100 2,700,000 - - 286,100	100.00 100.00 100.00 100.00 24.17 100.00 59.10 60.00 100.00 100.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - 99.99 27.00 - 16.62 60.00 16.08 100.00 50.00 60.00 100.00 100.00 - - 28.61	$ 8,958,093 4,171,160 233,965 3,408,682 647,383 298,263 349,243 38,870 904,466 111,484 56,943 33,504 434,082 66,207 382,645 92,968 10,120 94,701 - 14,669 45,217 - 557,027 60,087 248,138 12,493 393,161 43,750 8,688 27,000 - - 232,055	$ 1,137,930 135,420 35,559 128,860 306,598 1,032 48,536 (7,090) (100,653) 25,998 9,577 18,249 31,118 25,102 95,213 26,030 70 (1,178) (117,357) 1,725 (81,766) (15,281) 255,275 15,690 (8,426) (17,642) 34,819 13,525 (52) - - (15,281) 34,819	$ 1,179,150 133,241 35,559 128,993 75,703 1,032 27,938 (4,142) (95,283) 26,835 4,991 18,281 28,699 25,102 95,112 22,884 70 (1,178) (83,241) 1,461 (36,795) (15,281) 42,280 6,082 (1,601) (17,642) 13,225 5,054 (52) - - - 9,962	Subsidiary Subsidiary Subsidiary Subsidiary Equity-method investee Subsidiary (Note A) Subsidiary Subsidiary (Note A) Subsidiary Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary Subsidiary (Note A) Equity-method investee (Note A) Subsidiary (Note A) Equity-method investee (Note A) Subsidiary (Note A) Equity-method investee Subsidiary (Note A) Subsidiary Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Equity-method investee (Note A) Subsidiary (Note A) Subsidiary

(Continued)

92 -

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of December 31, 2020	as of December 31, 2020	Net Income (Loss) of the Investee	Investment Gain (Loss) (Note A)	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of Ownership	Carrying Value
Advantech Corporate Investment ATC AAC (BVI) SIoT (Cayman) ANA AEUH ASG Cermate Taiwan	Cermate Taiwan Deneng CDIB Innovation Accelerator Co., Ltd. AzureWave Technologies, Inc. Huan Yan, Jhih-Lian Co., Ltd. Yun Yan, Wu-Lian Co., Ltd. Nippon RAD i-Link Co., Ltd. DotZero Co., Ltd. Mildex Optical Inc. Information Technology Total Service Co., Ltd. ACI IOT Investment Fund-1 Corporation ACISM Smasoft Technology Co., Ltd. Impelex Data Transfer Co., Ltd. VSO Hwacom Systems Inc. IISI Isap Solution Corp. ATC (HK) ANA AAC (HK) ADB SIoT (Cayman) B+B A-SIoT AIH B+B BBIE AEU APL ATH AID LandMark	Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Tokyo, Japan Taichung, Taiwan Taichung, Taiwan Kaohsiung, Taiwan Taipei, Taiwan Taipei, Taiwan Samoa Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Hong Kong Sunnyvale, USA Hong Kong Dubai Cayman Delaware, USA Munich, Germany Taipei, Taiwan Delaware, USA Ireland Eindhoven, The Netherlands Warsaw, Poland Thailand Indonesia Samoa	Manufacturing of electronic parts, computer, and peripheral devices Installment and sale of electronic components and software Investment holding company Wireless communication and digital image module manufacturing and trading Service plan for combination of related technologies of water treatment and applications of Internet of Things Industrial equipment networking in Greater China R&D of IoT intelligent system Intelligent medical integration Intelligent metal processing integration Manufacturing of electronic parts Service of electronic information Investment holding company General investment Manufacture and sale of electronics equipment Manufacture and sale of electronics equipment Manufacture and sale of electronics equipment Computer systems service Service of software Service of software Investment and management service Sale and fabrication of industrial automation products Investment and management service Sale of industrial network communications systems Design, development and sale of IoT intelligent system services Sale of industrial network communications systems Design, R&D and sale of industrial automation vehicles and related products Service of software Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial automation products Sale of industrial automation products Production of computers Sale of industrial automation products General investment	$ 71,500 18,095 150,000 578,563 - 5,000 49,733 9,091 8,100 202,948 147,444 238,000 18,214 15,000 10,000 120,000 10,000 357,119 243,086 1,212,730 504,179 539,146 - US$ 50,000 - 522,719 12,254 - US$ 39,481 431,963 14,176 7,537 4,797 28,200	$ 71,500 18,095 150,000 578,563 5,000 5,000 49,733 9,237 8,100 202,948 147,444 238,000 18,214 15,000 - - - 357,119 - 1,212,730 504,179 539,146 - US$ 50,000 - 522,719 7,700 1,328,004 - 431,963 14,176 7,537 4,797 28,200	5,500,000 658,000 15,000,000 29,599,000 - 500,000 154,310 845,000 490,000 15,710,000 5,084,273 23,800,000 1 170,455 2,500,000 28,000,000 1,492,852 24,575,000 14,299,205 57,890,679 10,952,606 15,230,001 - 30,000,000 - 1 1,100,000 - - 32,315,215 7,030 49,000 300,000 972,284	55.00 39.69 17.86 19.67 - 50.00 2.92 20.13 27.00 15.37 18.61 79.33 100.00 20.00 20.00 14.29 34.83 20.73 19.68 100.00 100.00 100.00 100.00 100.00 - 100.00 100.00 100.00 100.00 100.00 100.00 49.00 100.00 100.00	$ 125,754 12,788 151,529 551,457 - 2,593 45,302 4,290 4,507 164,589 156,544 279,711 9,904 11,033 10,659 130,940 10,000 376,666 263,747 4,214,597 4,672,783 2,595,995 2,687 2,073,239 - 500,910 3,115 1,053,978 62,275 1,016,133 39,769 55,735 9,172 138,684	$ 19,106 (3,087) (29,031) 304,098 (6) 1 (8,426) (11,858) (6,414) (117,945) 66,307 48,147 (3,847) (20,042) 3,184 101,476 (3,346) (13,476) 169,947 135,534 435,735 455,444 409 239,337 (117,357) (32,262) (6,597) (117,357) - (106,114) 5,961 9,577 (285) 29,289	$ 10,641 (1,225) (5,184) 59,830 (3) - - (2,614) (1,732) (15,793) 12,338 38,196 (3,847) (4,008) 659 14,497 - (2,794) 37,707 133,355 435,456 461,942 409 281,732 12,563 (28,755) (6,164) (46,679) - (103,131) 5,824 4,693 604 29,879	Subsidiary Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee Subsidiary (Note A) Subsidiary (Note A) Equity-method investee Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee (Note A) Subsidiary (Note A) Subsidiary (Note A) Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee (Note A) Subsidiary Subsidiary Subsidiary Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary Subsidiary Subsidiary Subsidiary (Note A) Subsidiary (Note A) Subsidiary (Note A) Subsidiary
											(Continued)

93 -

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of December 31, 2020	as of December 31, 2020	Net Income (Loss) of the Investee	Investment Gain (Loss) (Note A)	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of Ownership	Carrying Value
LNC Better Auto B+B BBIE	Better Auto Famous Now BBIE ACZ	BVI Hong Kong Ireland Czech Republic	General investment General investment Sale of industrial network communications systems Manufacturing automation	$ 244,615 US$ 4,000 - -	$ 244,615 US$ 4,000 US$ 39,481 -	7,425,000 1 - -	100.00 100.00 - 100.00	$ 59,709 65,130 - 300,348	$ 33,515 33,515 (3,959) 30,553	$ 32,600 33,515 (3,965) 30,553	Subsidiary Subsidiary Subsidiary Subsidiary

Note A: The respective entity is an immaterial subsidiary; its financial statements have not been audited, which does not result in a significant impact on the Group’s consolidated financial statements.

Note B: Refer to Table 9 for investments in mainland China.

Note C: All intercompany gains and losses from investment have been eliminated upon consolidation.

(Concluded)

94 -

TABLE 9

ADVANTECH CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company Name	Main Businesses and Products	Total Amount of Paid-in Capital	Investment Type (E.g., Direct or Indirect)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2020	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
					Outflow	Inflow
Advantech Technology (China) Company Ltd. (“AKMC”) Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd. (“ACN”) Shanghai Advantech Intelligent Services Co., Ltd. (“AiSC”) Xi’an Advantech Software Ltd. (“AXA”) LNC Dong Guan Co., Ltd. Shenzhen Cermate Technologies Inc.	Production and sale of components of industrial automation products Sale of industrial automation products Production and sale of industrial automation products Development and production of software products Production and sale of industrial automation products Production and sale of human machine interface	US$ 43,750 thousand (Note F) US$ 4,230 thousand US$ 8,000 thousand US$ 1,000 thousand US$ 4,000 thousand RMB 2,000 thousand	Indirect Indirect Indirect Indirect Indirect Indirect	$ 1,062,304 (US$ 37,300 thousand) 151,855 (US$ 5,332 thousand) 227,840 (US$ 8,000 thousand) (Note C) 90,965 (US$ 3,194 thousand) 8,772 (US$ 308 thousand)	$ - - - - - -	$ - - - - - -	$ 1,062,304 (US$ 37,300 thousand) 151,855 (US$ 5,332 thousand) 227,840 (US$ 8,000 thousand) (Note C) 90,965 (US$ 3,194 thousand) 8,772 (US$ 308 thousand)	$ 144,951 461,170 (8,514) 48 33,515 23,020	100 100 100 100 100 90	$ 133,356 467,667 (8,515) 48 33,351 20,851	$ 4,214,599 1,938,541 631,059 29,344 64,966 99,939	$ - 319,887 (US$ 11,232 thousand - - - 39,364 (US$ 717 thousand) (RMB 4,328 thousand)

(Continued)

95 -

Investee Company Name	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Investment Type (E.g., Direct or Indirect)	Investment Type (E.g., Direct or Indirect)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2020	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
							Outflow	Inflow
Cermate Technologies (Shanghai) Inc. Advantech Service-IoT (Shanghai) Co., Ltd. Shanghai Yanlo Co., Ltd. Tianjin Anjie IOT Science And Technology Co., Ltd. (“Anjie”) GSD Environmental Technology Co., Ltd. (“GSD”)	Sale of human machine interface Development, consulting and services in intelligent technology Retail of intelligent technology Operation and maintenance for intelligent general equipment`、` consulting services for comprehensive energy issues Development consulting, and services in the field of environmental technology		US$ 520 thousand RMB 15,000 thousand RMB 2,200 thousand RMB 3,000 thousand RMB 10,000 thousand	Indirect Indirect Other Other Indirect		$ 16,291 (US$ 572 thousand) (Note F) (Note G) (Note G) 16,604 (US$ 583 thousand)	$ - - - - -	$ - - - - -	$ 16,291 (US$ 572 thousand) (Note F) (Note G) (Note G) 16,604 (US$ 583 thousand)	$ 8,571 2,902 (4,092) (1) (9,618)	100 100 100 20 40	$ 8,571 2,902 (3,176) - (3,847)	$ 42,742 39,756 5,193 2,625 9,904	$ - - - - -

Accumulated Investment in		Investment Amounts
Mainland China as of December 31, 2020		Authorized by Investment Commission, MOEA			Allowable Limit on Investment
$1,580,326 (US$55,489 thousand) (Note D)		$2,255,046 (US$79,180 thousand)			$21,027,854 (Note I)

Note A: Except for the financial statement of AKMC and ACN, the respective entity is an immaterial subsidiary; its financial statements have not been audited, which does not result in a significant impact on the financial statements.

Note B: The significant events, prices, payment terms and unrealized gains or losses generated from trading between the Company and its investees in mainland China are described in Tables 5.

Note C: Remittance by ACN.

Note D: Included is the outflow of US$200 thousand on the investment in Yan Hua (Guang Zhou Bao Shui Qu) Co., Ltd. located in a free trade zone in Guangzhou. When this investee was liquidated in September 2005, the outward investment remittance ceased upon the approval of the Ministry of Economic Affairs (MOEA). For each future capital return, the Company will apply to the MOEA for the approval of the return as well as reduction in the accumulated investment amount by the return amount.

(Continued)

96 -

(Concluded)

Note E: For AKMC, there was a capital increase of US$6,450 thousand out of earnings.

Note F: Remittance by AAC (BVI) and AiSC.

Note G: Remittance by AiSC; AiSC’s investments in associate were accounted for using the equity method.

Note H: The exchange rate was US$1=NT$28.48 and RMB1=NT$4.377.
Note I: The maximum allowable limit on investment was 60% of the consolidated net asset value of the Company.

Note J: All intercompany gains and losses from investment have been eliminated upon consolidation.

97 -

TABLE 10

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2020

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
ASUSTek Computer Inc. K&M Investment Co., Ltd. AIDC Investment Corp.	110,677,983 91,369,108 90,295,663	14.33 11.83 11.69

Note: The percentage of ownership of major shareholders included in the table should be more than 5%, which was calculated based on the total number of ordinary shares, preference shares and treasury shares owned in the last trading day of the quarter that were traded in and registered electronically and was prepared by the Taiwan Depository & Clearing Corporation. In addition, the share capital and the actual number of traded shares stated in the consolidated financial statements that have completed the dematerialized registration might vary due to different calculation basis.

98 -

TABLE 11

ADVANTECH CO., LTD. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS BETWEEN ADVANTECH CO., LTD. AND ITS SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
0	Advantech Co., Ltd.	AAU ACN ACN AEU AEU AJP AKR ANA ANA B+B SIoT (Cayman) Advanixs Corp.	1 1 1 1 1 1 1 1 1 1 1 1	Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Sales revenue Receivables from related parties Sales revenue Sales revenue Sales revenue	$ 285,049 7,835,620 1,825,651 4,142,031 755,893 713,830 989,056 9,841,226 1,473,318 276,204 945,755 592,897	Normal Normal 45 days EOM Normal 60-90 days Normal Normal Normal 45 days EOM Normal Normal Normal	1 15 4 8 2 1 2 19 3 1 2 1
1	AKMC	The Company The Company ACN	2 2 3	Receivables from related parties Sales revenue Sales revenue	1,751,018 11,047,054 419,091	60 days EOM Normal Normal	3 22 1
2	SIoT (Cayman)	AEU ANA A-SIoT	3 3 3	Sales revenue Sales revenue Sales revenue	283,159 515,983 317,234	Normal Normal Normal	1 1 1
3	LNC	LNC Dong Guan	3	Sales revenue	375,439	Normal	1

Note A: The parent company and its subsidiaries are numbered as follows:

“0” for Advantech Co., Ltd.
Subsidiaries are numbered from “1”.

Note B: The flow of related-party transactions is as follows:

From the parent company to its subsidiary.
From the subsidiary to its parent company.
Between subsidiaries.

Note C: For assets and liabilities, amounts are shown as a percentage to consolidated total assets as of December 31, 2020, while revenue, costs and expenses are shown as a percentage to consolidated total operating revenue for the year ended December 31, 2020.

Note D: All intercompany transactions have been eliminated on consolidation.
99 -

AI assistant

Advantech — Audit Report / Information 2020

52053_rns_2020-11-06_12ea0c50-88b6-490d-98b1-1eba660017e7.pdf

Advantech Co., Ltd. and Subsidiaries

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Sales Revenue from Significant Product Lines and Customers

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, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (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, 2020 AND 2019 (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, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

1) Amendments to IFRS 3 “Definition of a Business”

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

e. Business combinations

f. Foreign currencies

g. Inventories

h. Investments in associates

i. Property, plant and equipment

j. Goodwill

m. Financial instruments

1) Financial assets

i. Financial assets at FVTPL

2) Equity instruments

3) Financial liabilities

Financial liabilities at FVTPL

b) Derecognition of financial liabilities

n. Provisions

o. Revenue recognition

p. Leasing

1) The Group as lessor

2) The Group as lessee

q. Government grants

r. Employee benefits

2) Retirement benefits

s. Employee share options

t. Taxation

1) Current tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Key Sources of Estimation Uncertainty

a. Write-down of inventories

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

9. FINANCIAL ASSETS AT AMORTIZED COST

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

Trade Receivables

December 31, 2020

11. INVENTORIES

12. SUBSIDIARIES

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

Aggregate information of associates that are not individually material

14. PROPERTY, PLANT AND EQUIPMENT

15. LEASE ARRANGEMENTS

a. Right-of-use assets

b. Lease liabilities

c. Other lease information

16. GOODWILL

17. OTHER INTANGIBLE ASSETS

Advantech Audit Report / Information 2020