Advantech — Audit Report / Information 2020

Nov 6, 2020

Advantech Co., Ltd.

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

INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying financial statements of Advantech Co., Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters identified in the 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$3,697,499 thousand and accounted for 8% of the total assets in the Company’s financial statements, which represented a significant percentage of the total assets.

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Due to the rapid changes in technological environment and industrial characteristics, inventories of the Company 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 provisions for obsolete inventories was based on the number of days inventory were not moving. Therefore, the assessment of inventory write-downs has a significant impact on the Company’s 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:

1. We assessed and analyzed the Company’s policies for the provision of inventory write-downs and compared them with other competitors’ policies to affirm the reasonableness and consistency of application.

2. 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.

3. 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.

4. We verified the appropriateness of source data, parameters and logic used in the Company’s inventory aging analysis reports.

Sales Revenue

Since the Company 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. We obtained an understanding of the purchase and sales transactions of the customer and analyzed whether simultaneous increase in the Company’s sales revenue and cost of goods sold was due to the processing of imported materials. Therefore, we considered the Company’s sales revenue as a key audit matter.

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

1. 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.

2. 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.

3. We obtained the consumption calculation table of materials specified by the customers and verified its source data, logic and parameters used.

4. 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.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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7. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements 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 financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

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

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ADVANTECH CO., LTD.

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 26) Notes receivable (Notes 4 and 9) Notes receivable from related parties (Notes 4 and 27) Trade receivables (Notes 4 and 9) Trade receivables from related parties (Notes 4 and 27) Other receivables Other receivables from related parties (Note 27) Inventories (Notes 4, 5 and 10) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4, 8 and 26) Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 4 and 12) Right-of-use assets (Notes 4 and 13) Goodwill (Notes 4 and 14) Other intangible assets (Note 4) Deferred tax assets (Notes 4 and 19) Prepayments for equipment Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 26) Notes payable and trade payables Trade payables to related parties (Note 27) Other payables (Note 15) Other payables to related parties (Note 27) Current tax liabilities (Notes 4 and 19) Short-term warranty provisions (Note 4) Lease liabilities - current (Notes 4 and 13) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Current tax liabilities - non-current (Notes 4 and 19) Deferred tax liabilities (Notes 4 and 19) Lease liabilities - non-current (Notes 4 and 13) Net defined benefit liabilities (Notes 4 and 16) Other non-current liabilities (Note 11) Total non-current liabilities Total liabilities EQUITY (Notes 4 and 17) 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 foreign financial statements of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Other equity - unearned employee compensation Total other equity Total equity TOTAL		2020 Amount % $ 2,062,596 5 3,652,818 8 20,508 - 6,775 - 1,131,586 2 4,936,420 11 131,950 - 26,355 - 3,697,499 8 54,446 - 15,720,953 34 1,332,435 3 21,703,009 47 6,549,679 14 7,860 - 111,599 1 107,986 - 484,765 1 46,051 - 6,132 - 30,349,516 66 $ 46,070,469 100 $ 21,044 - 2,170,501 5 1,793,372 4 2,492,198 5 64,173 - 2,170,762 5 60,663 - 3,044 - 215,943 - 8,991,700 19 291,961 1 2,030,161 4 4,678 - 284,398 1 57,415 - 2,668,613 6 11,660,313 25 7,719,455 17 3,090 - 7,722,545 17 7,913,754 17 7,020,201 15 845,993 2 11,739,513 26 19,605,707 43 (1,006,635) (2) 173,308 - 1,477 - (831,850) (2) 34,410,156 75 $ 46,070,469 100		2019
				Amount % $ 1,816,875 4 1,641,753 4 34,180 - - - 1,312,920 3 5,217,377 12 138,222 - 17,080 - 3,617,906 9 58,377 - 13,854,690 32 1,224,385 3 20,365,258 48 6,597,256 16 11,833 - 111,599 - 106,637 - 455,149 1 32,228 - 8,429 - 28,912,774 68 $ 42,767,464 100 $ 521 - 2,319,108 5 2,087,930 5 2,411,864 6 63,884 - 1,329,258 3 63,223 - 5,446 - 192,551 1 8,473,785 20 - - 1,776,054 4 6,438 - 266,582 1 90,506 - 2,139,580 5 10,613,365 25 6,999,230 16 4,870 - 7,004,100 16 7,397,029 17 6,285,079 15 798,763 2 11,515,121 27 18,598,963 44 (878,261) (2) 30,970 - 1,298 - (845,993) (2) 32,154,099 75 $ 42,767,464 100

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

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ADVANTECH CO., LTD.

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 (Notes 4 and 27) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 10, 18 and 27) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 18 and 27) 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 subsidiaries and associates accounted for using the equity method (Notes 4 and 11) Interest income (Note 4) Gains (losses) on disposal of property, plant and equipment (Note 4) Foreign exchange losses, net (Notes 4, 18 and 28) Losses on disposal of investments Gains (losses) on financial instruments at fair value through profit or loss (Note 4) Dividend income (Note 4) Other income (Notes 22 and 27)		2020 Amount % $ 33,968,304 99 422,738 1 34,391,042 100 23,076,590 67 11,314,452 33 (612,224) (2) 695,422 2 11,397,650 33 654,808 2 862,047 3 2,916,152 8 (7,247) - 4,425,760 13 6,971,890 20 1,616,477 5 468 - (1,881) - (21,429) - (1,525) - (20,695) - 70,673 - 127,456 -		2019
				Amount % $ 36,246,058 99 385,989 1 36,632,047 100 24,903,412 68 11,728,635 32 (695,422) (2) 665,475 2 11,698,688 32 669,164 2 758,743 2 3,022,801 8 6,624 - 4,457,332 12 7,241,356 20 1,443,177 4 762 - 45,613 - (75,031) - - - 37,815 - 77,812 - 109,275 - (Continued)

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ADVANTECH CO., LTD.

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

Finance costs (Note 18) Other losses Total non-operating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 19) 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 16) Share of the other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method (Note 17) Unrealized gains (losses) on investment in equity instruments as at fair value through other comprehensive income (Note 17) Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 19) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations (Notes 4 and 17) Share of other comprehensive loss of subsidiaries and associates accounted for using the equity method (Notes 4 and 17) Income tax relating to item that may be reclassified subsequently to profit (Notes 4, 17 and 19) Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		2020 Amount % $ (710) - (84) - 1,768,750 5 8,740,640 25 1,492,685 4 7,247,955 21 (22,010) - 21,736 - 108,050 - 4,402 - (139,036) - (21,431) - 32,093 - (16,196) - $ 7,231,759 21		2019
				Amount % $ (2,293) - (69) - 1,637,061 4 8,878,417 24 1,527,197 4 7,351,220 20 (14,764) - 21,804 - 307,604 1 2,953 - (481,498) (1) (22,272) - 100,754 - (85,419) - $ 7,265,801 20 (Continued)

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ADVANTECH CO., LTD.

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

EARNINGS PER SHARE (Note 20) Basic Diluted	2020 Amount % $ 9.40 $ 9.27	2019
		Amount % $ 9.56 $ 9.44

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

(Concluded)

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

ADVANTECH CO., LTD.

BALANCE AT JANUARY 1, 2019 AS RESTATED Appropriation of the 2018 earnings Legal reserve Special reserve Cash dividends on ordinary shares Recognition of employee share options by the Company Compensation costs recognized for employee share options Changes in capital surplus from investments in associates accounted for using equity method Differences between consideration paid and carrying amounts of subsidiaries acquired or disposed of Changes in percentage of ownership interests in subsidiaries Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 Disposal of investments in equity instruments designated as at fair value through other comprehensive income by associates BALANCE AT DECEMBER 31, 2019 Appropriation of the 2019 earnings Legal reserve Special reserve Cash dividends distributed by the Company Share dividends distributed by the Company Recognition of employee share options by the Company Compensation costs recognized for employee share options Changes in capital surplus from investments in associates accounted for using equity method Differences between consideration paid and carrying amounts of subsidiaries acquired or disposed of Changes in percentage of ownership interests in subsidiaries Net profit for the year ended December 31, 2020 Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax Total comprehensive income (loss) for the year ended December 31, 2020 Disposal of investments in equity instruments designated as at fair value through other comprehensive income by associates BALANCE AT DECEMBER 31, 2020		Issued Capital(Notes 17 and 21)	Issued Capital(Notes 17 and 21)	Total Capital Surplus (Notes 17 and 21) $ 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 17)	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	Other Equity (Note 17) Exchange Differences on Translation of the Financial Unrealized Gain or Loss on Financial Assets at Fair Value Through Other Unearned Stock-Based Statements of Foreign Operations Comprehensive Income Employee Compensation $ (475,245 ) $ (324,254 ) $ 736 - - - - - - - - - - - - - - - - - 562 - - - - - - - - - (403,016) 330,855 - (403,016) 330,855 - - 24,369 - (878,261 ) 30,970 1,298 - - - - - - - - - - - - - - - - - - - - 179 - - - - - - - - - (128,374) 132,510 - (128,374) 132,510 - - 9,828 - $ (1,006,635) $ 173,308 $ 1,477	Total Equity $ 29,216,500 - - (4,751,129 ) 140,436 295,427 (14,967 ) 1,657 374 7,351,220 (85,419) 7,265,801 - 32,154,099 - - (5,463,198 ) - 139,687 365,248 43,319 (43,440 ) (17,318 ) 7,247,955 (16,196) 7,231,759 - $ 34,410,156
		Share Capital A for $ 6,982,275 - - - 16,955 - - - - - - - - 6,999,230 - - - 700,410 19,815 - - - - - - - - $ 7,719,455	dvance Receipts Ordinary Share $ 4,680 - - - 190 - - - - - - - - 4,870 - - - - (1,780 ) - - - - - - - - $ 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 financial statements.

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ADVANTECH CO., LTD.

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 Net loss on financial assets or liabilities at fair value through profit or loss Financial costs Interest income Dividend income Compensation costs of employee share options Share of profit of subsidiaries and associates accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Loss on disposal of investments Realized loss (gain) on the transactions with subsidiaries and associates Changes in operating assets and liabilities Financial assets held for trading Notes receivable Notes receivable from related parties Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other current assets Notes payable and trade payables Trade payables to related parties Other payables Other payables to related parties Short-term warranty provisions Net defined benefit liabilities Other current liabilities Other non-current liabilities Cash generated from operations Interest received Dividends received Interests paid Income tax paid Net cash generated from operating activities	2020 $ 8,740,640 240,113 93,810 (7,247) 20,695 710 (468) (70,673) 365,248 (1,616,477) 1,881 1,525 (83,198) (2,011,237) 13,672 (6,775) 188,581 280,957 6,272 (9,275) (79,593) 3,931 (148,607) (294,558) 80,334 289 (2,560) (4,194) 23,392 100 5,727,288 468 70,673 (710) (98,234) 5,699,485	2019 $ 8,878,417 245,332 100,070 6,624 37,815 2,293 (762) (77,812) 295,427 (1,443,177) (45,613) - 29,947 (324,794) 41,023 - 168,293 437,819 5,003 24,031 13,073 (15,660) (1,644,362) 392,331 (119,063) 9,301 5,548 (3,455) 53,476 2,637 7,073,762 762 77,812 (2,293) (1,411,725) 5,738,318

(Continued)

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ADVANTECH CO., LTD.

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

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investments accounted for using the equity method Proceeds from disposal of subsidiaries Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase (decrease) in refundable deposits Payments for intangible assets Proceeds from disposal of intangible assets Decrease (increase) in prepayments for equipment Dividends received from subsidiaries and associates Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in guarantee deposits received Repayment of principal portion of lease liabilities Cash dividends paid Exercise of employee share options Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2020 $ (164,771) 33,455 (180,986) 497 2,297 (86,782) - (27,964) 302,354 (121,900) - (8,353) (5,463,198) 139,687 (5,331,864) 245,721 1,816,875 $ 2,062,596	2019 $ (1,935,265) - (99,413) 61,811 (4,466) (111,079) 14,424 (11,935) 270,636 (1,815,287) (272) (5,149) (4,751,129) 140,436 (4,616,114) (693,083) 2,509,958 $ 1,816,875

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

(Concluded)

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

ADVANTECH CO., LTD.

1. GENERAL INFORMATION

Advantech Co., Ltd. (the “Company”) is a listed company that was established in September 1981. It designs, 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, 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 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 Company’s accounting policies:

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

The Company 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 Company 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

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

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 Company 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 Company 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 Company 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 Company’s interest as an unrelated investor in the associate or joint venture, i.e., the Company’s share of the gain or loss is eliminated. Also, when the Company 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 Company’s interest as an unrelated investor in the associate or joint venture, i.e., the Company’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 Company 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 Company will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Company 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 Company’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 Company’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 Company 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 Company 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 Company 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 Company 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 Company 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 Company 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 Company is required to make significant judgements or assumptions in applying an accounting policy, and the Company 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 Company may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Company 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 Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’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 parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and other regulations.

• b. Basis of preparation

The 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 an asset or liability.

When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates, the share of other comprehensive income of subsidiaries and associates and the related equity items, as appropriate, in these parent company only financial statements.

• 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, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

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• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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

• d. 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 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.

e. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than the Company’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 not translated using the exchange rate at the date of the transaction.

For the purpose of presenting financial statements, the functional currencies of the Company’s foreign operations (including subsidiaries and associates in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollars, 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.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is not recognized in 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 arising are recognized in other comprehensive income.

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f. 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. 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.

g. Investment in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity (including a structured entity) that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of the subsidiaries.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control of the subsidiaries are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (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 Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary 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 Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company’s financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

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• h. Investment in associates

An associate is an entity over which the Company has significant influence and that is not a subsidiary.

The Company uses the equity method to account for its investment in associates.

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

Any excess of the cost of acquisition over the Company’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 Company’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 Company subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company 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 Company’s ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate 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 by the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’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 Company’s net investment in the associate), the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

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 Company 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 Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required had that associate had directly disposed of the related assets or liabilities.

When the company entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the financial statements only to the extent that interests in the associate are not related to the Company.

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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 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 and is recognized in profit or loss.

• j. Goodwill

Goodwill arising from the acquisition of a business is measured 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 Company’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 based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An 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 deposed 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.

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2) 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 Company 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 an 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 Company 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 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.

m. Financial instruments

Financial assets and financial liabilities are recognized when the Company 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 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.

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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 26.

• 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

• 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 Company 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 Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

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• b) Impairment of financial assets

The Company 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 Company always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Company 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 Company 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 Company determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company):

• i. Internal or external information show that the debtor is unlikely to pay its creditors.

• ii. When a financial asset is more than 1 year past due unless the Company has reasonable and corroborative information to support a more lagged default criterion.

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 Company 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 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 the Company 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.

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Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Company’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 Company’s own equity instruments.

3) Financial liabilities

• a) Subsequent measurement

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

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as at fair value through profit or loss are either held for trading or are designated as at fair value through profit or loss.

Financial liabilities held for trading are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest or dividend paid on the financial liability. Fair value is determined in the manner described in Note 26.

• b) Derecognition of financial liabilities

The difference between the carrying amount of the 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 Company enters into forward contracts to manage its exposure to foreign exchange rate risks.

Derivatives are initially recognized at fair value at the date on which 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 hedge relationship. When the fair value of a derivative financial instruments 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 Company of the expenditure required to settle the Company’s obligations.

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o. Revenue recognition

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

• 2) Revenue from rendering services

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

• p. Leases

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

For a contract that contains a lease component and non-lease components, the Company 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 Company is a lessee and utility and management fee are included, the Company elects to account for the lease and non-lease components as a single lease component.

1) The Company 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 Company as lessee

The Company 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.

• 26 -

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 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 Company 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 a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company 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 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.

• q. Government grants

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

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended 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 Company 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 an expense when employees have rendered services entitling them to the contributions.

• 27 -

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 Company’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 Company’s best estimate 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 vesting 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 Company 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 expense reflects the revised estimate, with a corresponding adjustment to the capital surplus - employee share options.

t. Taxation

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

• 1) Current tax

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

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.

• 28 -

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company 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 and interests 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 asset 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 Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

• 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.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimations 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 Company 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. Inventory write-downs

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.

• 29 -

• b. Impairment of goodwill included in the investments in subsidiaries

Determining whether the goodwill included in the investments in subsidiaries is impaired requires an estimation of the value in use of the cash-generating units which are expected to benefit from the synergies of the related combination and to which the goodwill has been allocated since the acquisition date. 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		December 31	December 31
		2020 $ 215 2,062,381 $ 2,062,596	2019 $ 225 1,816,650 $ 1,816,875

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

Demand deposits	December 31
	2020 2019 0.0001%-0.15% 0.0001%-0.35%

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 Mutual funds Financial liabilities at FVTPL-current Financial liabilities designated as at FVTPL Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts		December 31	December 31
		2020 $ 90 3,652,728 $ 3,652,818 $ 21,044	2019 $ 8,468 1,633,285 $ 1,641,753 $ 521

• 30 -

At the end of the year, 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
			CNY/NTD	2021.01-2021.04	CNY76,000/NTD324,732
			USD/NTD	2021.01-2021.02	USD6,000/NTD169,482
December	31,	2019
Sell			EUR/NTD	2020.01-2020.04	EUR10,000/NTD338,535
			JPY/NTD	2020.01-2020.05	JPY380,000/NTD108,979
			CNY/NTD	2020.01-2020.03	CNY47,000/NTD201,967
			USD/NTD	2020.01-2020.02	USD4,000/NTD121,501

The Company entered into foreign exchange forward contracts during the years ended December 31, 2020 and 2019 to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. Because these contracts did not meet the criteria for hedge effectiveness, they were not subject to hedge accounting.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instrument at FVTOCI Investments in equity instruments at FVTOCI:		December 31	December 31
		2020 $ 1,332,435	2019 $ 1,224,385

Non-current Domestic investments Listed shares and emerging market shares Ordinary shares - ASUSTek Computer Inc. Ordinary shares - Allied Circuit Co., Ltd.		December 31	December 31
		2020 $ 1,187,235 145,200 $ 1,332,435	2019 $ 1,097,185 127,200 $ 1,224,385

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 Company’s strategy of holding these investments for long-term purposes.

• 31 -

9. 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 $ 20,508 $ 1,140,535 (8,949) $ 1,131,586	2019 $ 34,180 $ 1,331,306 (18,386) $ 1,312,920

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 Company 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 Company reviews the recoverable amount of each individual trade debt at the end of the year to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk was significantly reduced.

The Company measures the loss allowance for 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 Company’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 Company’s customer base.

The Company 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, 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 written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

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

December 31, 2020

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost	Not Past Due - $ 1,116,997 - $ 1,116,997	Less than 90 Days 90 to 180 Days 2% 20% $ 8,391 $ 7,136 (232) (1,427) $ 8,159 $ 5,709	180 to 360 Days Over 360 Days 40% 100% $ 1,202 $ 6,809 (481) (6,809) $ 721 $ -	Total - $ 1,140,535 (8,949) $ 1,131,586

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December 31, 2019

	Less than 90	Less than 90					180 to 360	180 to 360
	Not Past Due	Days	90 to 180		Days		Days		Over	360 Days	Total
Expected credit loss rate	-	2%			12%			40%		100%		-
Gross carrying amount	$ 1,302,751 $	7,237	$	2,800		$	1,045		$	17,473	$ 1,331,306
Loss allowance (Lifetime ECL)	-	(149)			(346)			(418)		(17,473)	(18,386)
Amortized cost	$ 1,302,751 $	7,088	$	2,454		$		627	$	-	$ 1,312,920
The movements of the loss allowance of trade		receivables were as follows:
								2020			2019
Balance at January 1							$	18,386			$ 11,762
Add: Net remeasurement of	loss allowance (gain on reversal of
impairment loss)								(7,247)			6,624
Less: Amounts written off*								(2,190)			-
Balance at December 31							$	8,949			$ 18,386

• The Company wrote off trade receivables and related loss allowance in the amount of $2,190 thousand for the year ended December 31, 2020, as the customers’ trade receivables were over 2 years past due and the Company continues to engage in enforcement activity to attempt to recover the past due receivables.

10. INVENTORIES

Finished goods Work in process Raw materials Inventories in transit		December 31	December 31
		2020 $ 1,299,638 234,403 2,035,245 128,213 $ 3,697,499	2019 $ 1,236,932 738,737 1,541,566 100,671 $ 3,617,906

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 2020 2019 $ 22,875,690 $ 24,754,633 67,799 10,145 133,101 138,634 $ 23,076,590 $ 24,903,412	For the Year Ended December 31 2020 2019 $ 22,875,690 $ 24,754,633 67,799 10,145 133,101 138,634 $ 23,076,590 $ 24,903,412	For the Year Ended December 31 2020 2019 $ 22,875,690 $ 24,754,633 67,799 10,145 133,101 138,634 $ 23,076,590 $ 24,903,412
		2020 $ 22,875,690 67,799 133,101 $ 23,076,590	2019 $ 24,754,633 10,145 138,634 $ 24,903,412

• 33 -

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2020 $ 20,205,244 1,497,765 $ 21,703,009	2019 $ 18,859,346 1,505,912 $ 20,365,258

a. Investments in subsidiaries

Unlisted companies Advantech Automation Corp. (BVI) (AAC (BVI)) Advantech Technology Co., Ltd. (ATC) Advantech Corporate Investment Advanixs Corp. Advantech Europe Holding B.V. (AEUH) LNC Technology Co., Ltd. (LNC) AdvanPOS Technology Co., Ltd. (AdvanPOS) Advantech KR Co., Ltd. (AKR) Advantech Japan Co., Ltd. (AJP) Advantech Co. Singapore Pte, Ltd. (ASG) Advantech Brasil Ltda. (ABR) Advantech Co. Malaysia Sdn. Bhd. (AMY) Advantech Australia Pty Ltd. (AAU) Advantech Industrial Computing India Private Limited (AIN) Advantech Innovative Design Co., Ltd. Advantech Electronics, S. De R. L. Dec. V. (AMX) B+B SmartWorx, Inc. (B+B) Advantech Intelligent Service (AiST) Kostec Co., Ltd. (AKST) Advantech Corporation (Thailand) Co., Ltd. (ATH) Advantech Vietnam Technology Company Limited (AVN) Advantech Technology Limited Liability Company (ARU) Advantech Turkey Teknoloji A.S. (ATR) Advantech Technologies Japan Corp. (ATJ) Advantech IoT Israel Ltd. (AIL) Huan Yan Water Solution Co., Ltd. Add: Credit balance of investments accounted for using the equity method		December 31	December 31
		2020 $ 8,958,093 4,171,160 3,408,682 233,965 904,466 349,243 298,263 382,645 434,082 111,484 92,968 66,207 33,504 14,669 10,120 38,870 - 94,701 - 56,943 60,087 12,493 43,750 393,161 8,688 27,000 20,205,244 - $ 20,205,244	2019 $ 6,334,406 3,943,772 3,335,232 244,917 931,448 348,849 297,231 321,633 406,507 117,554 78,110 68,506 19,264 14,805 10,095 671 1,710,653 96,851 (33,191) 63,060 63,468 12,531 51,104 380,012 8,667 - 18,826,155 33,191 $ 18,859,346

• 34 -

AAC (BVI) ATC Advantech Corporate Investment Advanixs Corporation AEUH LNC AdvanPOS AKR AJP ASG ABR AMY AAU AIN Advantech Innovative Design Co., Ltd. AMX B+B AiST AKST ATH AVN ARU ATJ ATR AIL Huan Yan Water Solution Co., Ltd.	December 31
	2020 2019 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 59.10% 64.10% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 80.00% 100.00% 100.00% 100.00% 100.00% 99.99% 99.99% 100.00% 100.00% 60.00% 100.00% - 60.00% 100.00% 100.00% - 76.00% 51.00% 51.00% 60.00% 60.00% 100.00% 100.00% 50.00% 50.00% 60.00% 60.00% 100.00% 100.00% 100.00% -

Refer to the Company’s consolidated financial statements of the year ended December 31, 2020 for the disclosures of the Company’s acquisitions of ATJ and ATR.

Refer to Table 8 for the details of the subsidiaries indirectly held by the Company.

Except for the financial statements of AJP, ASG, ABR, AMY, AAU, AIN, AMX, AVN, ATH, ARU, ATR, AIL, Advantech Innovative Design Co., Ltd., AiST, AdvanPOS and Huan Yan Water Solution Co., Ltd., investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements which have been audited. Management believes there will be no material impact on its equity method of accounting or its calculation of the share of profit or loss and other comprehensive income had the financial statements of the above subsidiaries been audited.

• 35 -

b. Investments in associates

Associates that are not individually material Listed companies Axiomtek Co., Ltd. (“Axiomtek”) Winmate Inc. (“Winmate”) Nippon RAD Inc. (Nippon RAD) Unlisted companies AIMobile Co., Ltd. (“AIMobile”) Jan Hsiang Electronics Co., Ltd. (“Jan Hsiang”)		December 31	December 31
		2020 $ 647,383 557,027 248,138 45,217 - $ 1,497,765	2019 $ 627,632 553,145 250,888 66,133 8,114 $ 1,505,912

Aggregate information of associates that are not individually material

The Company’s share of: Profit from continuing operations Other comprehensive loss Total comprehensive income for the year	For the Year Ended	For the Year Ended	December 31
		2020 $ 79,587 (39) $ 79,548	2019 $ 113,692 (822) $ 112,870

Except for the financial statements of Axiomtek Co., Ltd. and Nippon RAD 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 been not audited or reviewed. 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 above financial statements which have not been audited.

12. PROPERTY, PLANT, AND EQUIPMENT

Cost Balance at January 1, 2019 Additions Disposals Reclassifications Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Depreciation expenses Balance at December 31, 2019 Carrying amount at December 31, 2019	Freehold Land $ 2,658,543 - (7,100 ) - $ 2,651,443 $ - - - $ - $ 2,651,443	Buildings $ 4,215,359 1,938 (13,146 ) - $ 4,204,151 $ 572,133 (5,673 ) 82,001 $ 648,461 $ 3,555,690	Equipment $ 1,006,281 15,562 (17,035 ) 27,003 $ 1,031,811 $ 764,228 (17,035 ) 71,114 $ 818,307 $ 213,504	Office Equipment O $ 324,857 32,167 (21,744 ) - $ 335,280 $ 247,499 (20,120 ) 34,909 $ 262,288 $ 72,992	ther Facilities C $ 685,549 18,373 (12,487 ) 4,946 $ 696,381 $ 556,763 (12,486 ) 52,108 $ 596,385 $ 99,996	onstruction in Progress Total $ 2,676 $ 8,893,265 31,373 99,413 - (71,512 ) (30,418) 1,531 $ 3,631 $ 8,922,697 $ - $ 2,140,623 - (55,314 ) - 240,132 $ - $ 2,325,441 $ 3,631 $ 6,597,256 (Continued)

• 36 -

Cost Balance at January 1, 2020 Additions Disposals Reclassifications Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Depreciation expenses Balance at December 31, 2020 Carrying amount at December 31, 2020	Freehold Land $ 2,651,443 - - - $ 2,651,443 $ - - - $ - $ 2,651,443	Buildings $ 4,204,151 - (2,438 ) - $ 4,201,713 $ 648,461 (988 ) 81,969 $ 729,442 $ 3,472,271	Equipment $ 1,031,811 40,283 (24,392 ) 4,740 $ 1,052,442 $ 818,307 (23,601 ) 65,729 $ 860,435 $ 192,007	Office Equipment O $ 335,280 33,200 (9,533 ) - $ 358,947 $ 262,288 (9,436 ) 36,204 $ 289,056 $ 69,891	ther Facilities C $ 696,381 72,609 (10,766 ) 1,024 $ 759,248 $ 596,385 (10,726 ) 48,047 $ 633,706 $ 125,542	onstruction in Progress Total $ 3,631 $ 8,922,697 34,894 180,986 - (47,129 ) - 5,764 $ 38,525 $ 9,062,318 $ - $ 2,325,441 - (44,751 ) - 231,949 $ - $ 2,512,639 $ 38,525 $ 6,549,679 (Concluded)

The above items of property, plant and equipment are depreciated on a straight-line basis over their 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

13. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Buildings Machinery Office equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Building Machinery Office equipment		December	31
	2020 2019 $ 3,901 $ 5,397 2,619 2,202 1,340 4,234 $ 7,860 $ 11,833 For the Year Ended December 31
		2020 $ 5,597 $ 2,571 780 4,813 $ 8,164	2019 $ - $ 1,657 463 3,080 $ 5,200

• 37 -

b. Lease liabilities

Carrying amount Current Non-current The discount rates of lease liabilities were as follows: Buildings Machinery Office equipment		December	31
		2020 $ 3,044 $ 4,678 December	2019 $ 5,446 $ 6,438 31
		2020 0.87% 0.87% 0.87%	2019 0.87% 0.87% 0.87%

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 $ 3,384 $ - $ 11,876	2019 $ 2,583 $ 1,013 $ 8,893

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

14. GOODWILL

Cost Balance at January 1 Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2020 $ 111,599 $ 111,599	2019 $ 111,599 $ 111,599

• 38 -

15. OTHER LIABILITIES

Other payables Payables for salaries or bonuses Payables for annual leave Others (Note)		December 31	December 31
		2020 $ 2,086,763 36,207 369,228 $ 2,492,198	2019 $ 1,869,911 37,679 504,274 $ 2,411,864

Note: Included marketing expenses and freight expenses.

16. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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

b. Defined benefit plans

The defined benefit plan adopted by the Company 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 contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company 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 Company 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 Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’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 $ 409,674 (125,276) 284,398 $ 284,398	2019 $ 393,558 (126,976) 266,582 $ 266,582

• 39 -

Movements in net defined benefit liabilities were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liabilities
Balance at January 1, 2019	$ 389,837	$ (134,564)	$ 255,273
Service cost
Current service cost	2,532	-	2,532
Net interest expense (income)	4,386	(1,565)	2,821
Recognized in profit or loss	6,918	(1,565)	5,353
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(4,597)	(4,597)
Actuarial gain or loss
Changes in demographic assumptions	9,913	-	9,913
Changes in financial assumptions	16,690	-	16,690
Experience adjustments	(7,242)	-	(7,242)
Recognized in other comprehensive income	19,361	(4,597)	14,764
Contributions from the employer	-	(8,808)	(8,808)
Benefits paid	(22,558)	22,558	-
Balance at December 31, 2019	393,558	(126,976)	266,582
Service cost
Current service cost	2,310	-	2,310
Net interest expense (income)	2,945	(978)	1,967
Recognized in profit or loss	5,255	(978)	4,277
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(4,394)	(4,394)
Actuarial gain or loss
Changes in demographic assumptions	850	-	850
Changes in financial assumptions	11,640	-	11,640
Experience adjustments	13,914	-	13,914
Recognized in other comprehensive income	26,404	(4,394)	22,010
Contributions from the employer	-	(8,471)	(8,471)
Benefits paid	(15,543)	15,543	-
Balance at December 31, 2020	$ 409,674	$ (125,276)	$ 284,398

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 $ 1,570 535 888 1,284 $ 4,277	2019 $ 1,827 687 1,252 1,587 $ 5,353

• 40 -

Through the defined benefit plans under the Labor Standards Law, the Company 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 plans’ debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated using 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 0.500% 0.750% 3.250% 3.250%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation will 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 $ (11,644) $ 12,115 $ 11,560 $ (11,214)	2019 $ (11,395) $ 11,865 $ 11,389 $ (11,002)

The sensitivity analysis previously presented 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.

Expected contributions to the plans for the next year Average duration of the defined benefit obligation		December	31
		2020 $ 8,619 12.4 years	2019 $ 8,619 12.5 years

• 41 -

17. EQUITY

• a. Share capital

Ordinary shares

Number of shares authorized (in thousands) Amount of shares authorized Number of shares issued and fully paid (in thousands) Amount of shares issued and fully paid		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 the Company’s share capital are due to the exercise of 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 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 only be used to offset a deficit Changes in percentage of ownership interests 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

• 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 disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the equity method.

• 42 -

c. Retained earnings and dividends policy

Under the dividends policy as set forth in the amended Articles, where the Company made 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 bonuses 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 18, d.

The Company operates in an industry related to computers, and its business related to network servers is new but with significant potential for growth. Thus, in formulating its dividend 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 in order 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 in 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 $ -

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:

	For the Year	For the Year
		Ended
	December 31,
		2020
Legal reserve Reversal of special reserve Cash dividends	$ $ $	717,035 (14,143) 5,480,813
Cash dividends per share (NT$)	$	7.1

• 43 -

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 2) Unrealized gain or loss on financial assets at FVTOCI Balance at January 1 per IFRS 9 Recognized during the period Unrealized loss - equity instruments Share of associates accounted for using the equity method Other comprehensive income recognized for the period Cumulative unrealized gain on equity instruments transferred to retained earnings due to disposal Balance at December 31 3) Unearned employee benefits Balance at January 1 Share from associates accounted for using the equity method Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020 2019 $ (878,261) $ (475,245) (111,229) (385,198) (17,145) (17,818) (128,374) (403,016) $ (1,006,635) $ (878,261) For the Year Ended December 31
	2020 $ 30,970 108,050 24,460 132,510 9,828 $ 173,308 For the Year Ended		2019 $ (324,254) 307,604 23,251 330,855 24,369 $ 30,970 December 31
		2020 $ 1,298 179 $ 1,477	2019 $ 736 562 $ 1,298

• 44 -

18. NET PROFIT AND OTHER COMPREHENSIVE INCOME FROM CONTINUING OPERATIONS

a. Finance costs

Interest on lease liabilities Other finance costs b. Depreciation and amortization	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 139 571 $ 710	2019 $ 148 2,145 $ 2,293

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses Employee benefits expense Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 16) 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	For the Year Ended	For the Year Ended	December 31
	2020 $ 74,553 165,560 $ 240,113 $ 326 93,484 $ 93,810 For the Year Ended			2019 $ 73,962 171,370 $ 245,332 $ 1,241 98,829 $ 100,070 December 31
		2020 $ 3,532,319 138,643 4,277 142,920 365,248 148,999 $ 4,189,486 $ 874,035 3,315,451 $ 4,189,486	2019 $ 3,309,564 128,366 5,353 133,719 295,427 155,450 $ 3,894,160 $ 876,506 3,017,654 $ 3,894,160

c. Employee benefits expense

• 45 -

• 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	For the Year Ended December 31
	2020 Cash $ 570,000 11,700	2019
		Cash $ 600,000 12,000

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

There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the financial statements for the years ended December 31, 2019 and 2018.

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• e. Gains or losses on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net losses	For the Year Ended	For the Year Ended	December 31
		2020 $ 461,318 (482,747) $ (21,429)	2019 $ 471,452 (546,483) $ (75,031)

19. INCOME TAXES

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

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year 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 $ 1,235,929 18,148 (22,378) 1,231,699 260,986 $ 1,492,685	2019 $ 1,335,289 19,771 (27,211) 1,327,849 199,348 $ 1,527,197

• 46 -

A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax Income tax expense calculated at the statutory rate Tax-exempt income Unrecognized investment credits Income tax on unappropriated earnings Land value increment tax Adjustments for prior years’ tax Income tax expense recognized in profit or loss 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 Current tax liabilities Current tax liabilities Current Non-current	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020 2019 $ 8,740,640 $ 8,878,417 $ 1,748,128 $ 1,775,684 (71,213) (83,217) (180,000) (158,000) 18,148 19,771 - 170 (22,378) (27,211) $ 1,492,685 $ 1,527,197 For the Year Ended December 31
			2020 2019 $ (32,093) $ (100,754) (4,402) (2,953) $ (36,495) $ (103,707) December 31
		2020 $ 2,170,762 $ 291,961		2019 $ 1,329,258 $ -

• b. Income tax recognized in other comprehensive income

• c. Current tax liabilities

• 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

					Recognized in	Recognized in
						Other
		Opening	Recognized in		Comprehensive
		Balance	Profit or Loss			Income	Closing Balance
Deferred tax assets
Temporary differences
Unrealized gross profit	$	139,084	$	(16,639)	$	-	$	122,445
Unrealized loss on inventory
write-downs		39,025		13,560		-		52,585
Defined benefit obligation		17,026		(839)		-		16,187
								(Continued)

• 47 -

					Recognized	Recognized	in
						Other
		Opening	Recognized in		Comprehensive
		Balance	Profit or Loss			Income		Closing Balance
Unrealized warranty liabilities	$	12,645	$	(512)	$		-	$	12,133
Financial assets - FVTPL		420		(420)			-		-
Unrealized foreign exchange
losses		2,029		(2,029)			-		-
Exchange differences on
translation of the financial
statements of foreign
operations		219,566		-		32,093			251,659
Remeasurement of defined
benefit plans		25,354		-		4,402			29,756
	$	455,149	$	(6,879)	$	36,495		$	484,765
Deferred tax liabilities
Temporary differences
Unappropriated earnings of
subsidiaries	$	1,772,064	$	251,485	$		-	$	2,023,549
Remeasurement of defined
benefit plans		3,990		-			-		3,990
Financial assets - FVTPL		-		542			-		542
Unrealized exchange gains		-		2,080			-		2,080
	$	1,776,054	$	254,107	$		-	$	2,030,161
									(Concluded)
For the year ended December 31, 2019

Deferred tax assets Temporary differences Unrealized gross profit Unrealized loss on inventory write-downs Defined benefit obligation Unrealized warranty liabilities Financial assets - FVTPL Unrealized foreign exchange losses Sales allowance Exchange differences on translation of the financial statements of foreign operations Remeasurement of defined benefit plans	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 133,095 $ 5,989 $ - $ 139,084 36,996 2,029 - 39,025 17,717 (691) - 17,026 11,535 1,110 - 12,645 - 420 - 420 - 2,029 - 2,029 3,090 (3,090) - - 118,812 - 100,754 219,566 22,401 - 2,953 25,354 $ 343,646 $ 7,796 $ 103,707 $ 455,149 (Continued)

• 48 -

Deferred tax liabilities Temporary differences Unappropriated earnings of subsidiaries Remeasurement of defined benefit plans Financial assets - FVTPL Unrealized foreign exchange gains	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 1,562,279 $ 209,785 $ - $ 1,772,064 3,990 - - 3,990 87 (87) - - 2,554 (2,554) - - $ 1,568,910 $ 207,144 $ - $ 1,776,054 (Concluded)

• e. Income tax assessments

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

20. 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 are 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

• 49 -

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

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee share option 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 Company offered to settle compensation paid to employees in cash or shares, the Company 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.

21. SHARE-BASED PAYMENT ARRANGEMENTS

Qualified employees of the Company 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 exercise price granted in 2018 was the share price on the exercise 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:

Employee Share Options Balance at January 1 Options granted Options exercised Options expired Balance at December 31 Options exercisable, end of the 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 $ -

• 50 -

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:

Employee Share Options 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) $ 200.0 5.58 202.5 3.58 73.9 1.45 - -	2019
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ - - 202.5 4.58 83.3 2.45 79.4 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 costs recognized were $365,248 thousand and $295,427 thousand for the years ended December 31, 2020 and 2019, respectively.

22. GOVERNMENT GRANTS

In 2020 and 2019, the Company participated in a government’s project plan and received government grants of $10,159 thousand and $12,699 thousand, respectively. These amounts were recognized under other income. In addition, the amount of government grants for expenses or losses incurred was $1,236 thousand for the year ended December 31, 2020, and was deducted from the recorded expenses paid for by the grant.

• 51 -

23. ACQUISITION OF SUBSIDIARIES - WITH OBTAINED CONTROL

			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 device
Advantech Turkey Teknoloji A.S. (ATR)	Wholesale of computers and peripheral devices	February 28, 2019	60	$	58,482
Shanghai Yanle Co., Ltd. (Yanle)	Application and retail of intelligent technology	May 31, 2020	100	$	6,698

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 intelligent technology in the China market, which increased the Company’s equity investment in Yanle to 100%.

24. PARTIAL ACQUISITION OR DISPOSAL OF SUBSIDIARIES - WITHOUT LOSS OF CONTROL

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

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

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

In the second quarter of 2020, the Company 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%.

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

The above transactions were accounted for as equity transactions, since the Company did not cease to have control over these subsidiaries. For details about the above transactions, refer to Note 29 to the Company’s consolidated financial statements for the year ended December 31, 2020.

25. CAPITAL MANAGEMENT

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

• 52 -

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

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

Key management personnel of the Company 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 Company may adjust the amount of dividends paid to shareholders, the number of new shares issued, and the amount of new debt issued.

26. 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 Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Securities listed in the ROC Financial liabilities at FVTPL Derivative financial liabilities December 31, 2019 Financial assets at FVTPL Derivative financial assets Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Securities listed in the ROC Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 3,652,728 $ 3,652,728 $ 1,332,435 $ - Level 1 $ - 1,633,285 $ 1,633,285 $ 1,224,385 $ -	Level 2 $ 90 - $ 90 $ - $ 21,044 Level 2 $ 8,468 - $ 8,468 $ - $ 521	Level 3 $ - - $ - $ - $ - Level 3 $ - - $ - $ - $ -	Total $ 90 3,652,728 $ 3,652,818 $ 1,332,435 $ 21,044 Total $ 8,468 1,633,285 $ 1,641,753 $ 1,224,385 $ 521

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

• 53 -

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

Derivatives held by the Company were foreign exchange 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.

• b. Categories of financial instruments

Financial assets Fair value through profit or loss (FVTPL) Mandatorily classified as at FVTPL Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Equity instruments Financial liabilities Fair value through profit or loss (FVTPL) Mandatorily classified as at FVTPL Amortized cost (Note 2)	December 31
	2020 2019 $ 3,652,818 $ 1,641,753 8,316,190 8,536,654 1,332,435 1,224,385 21,044 521 6,520,244 6,882,786

• Note 1: The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, notes receivable from related parties, 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 notes payable and trade payables, trade payables to related parties, other payables, and other payables to related parties.

• c. Financial risk management objectives and policies

The Company’s major financial instruments include equity investments, trade receivables, trade payables, borrowings, and lease liabilities. The Company’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 Company through internal risk reports that 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 Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of directors, which provided written principles on foreign currency 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 Company did not enter into or trade financial instrument, including derivative financial instruments, for speculative purposes.

• 54 -

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

1) Market risk

The Company’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 Company entered into a variety of forward contract to manage its exposure to foreign currency risk.

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

a) Foreign currency risk

The Company undertook operating activities and investment of foreign operations denominated in foreign currencies, which exposed the Company to foreign currency risk. The Company 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 Company to mitigate but not fully eliminate the effect.

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

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities and of the derivatives exposed to foreign currency risk at the end of the reporting period are set out in Notes 28 and 7, respectively.

Sensitivity analysis

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

The following table details the Company’s sensitivity to a 5% increase in New Taiwan dollar (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 exchange forward contracts designated as cash flow hedges, and adjusts their translation at the end of the year for a 5% change in exchange rates. 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 2020 2019 $ 105,021 (Note 1) $ 111,117 (Note 1)	Euro Impact 2020 2019 $ 9,270 (Note 2) $ 51,170 (Note 2)	Renminbi Impact
			2020 2019 $ 50,079 (Note 3) $ 60,436 (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 year.

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 year.

• 55 -

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 year.

b) Interest rate risk

The Company’s floating-rate bank savings are exposed to risk of changes in interest rates. The Company does not operate hedging instruments for interest rates. The Company’s management monitors fluctuations in market interest rates regularly. If it is needed, the 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 Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Cash flow interest rate risk Financial assets Sensitivity analysis	December 31
	2020 2019 $ 2,059,397 $ 1,814,203

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for non-derivative instruments at the end of the year. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the year 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.

If interest rates had been 50 basis points higher and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would have increased by $10,297 thousand and $9,071 thousand, respectively. Had interest rates been 50 basis points lower, the effects on the Company’s pre-tax profit would have been of the same amounts but negative. The source of the negative effects would have been mainly the floating-interest rates on bank savings.

c) Other price risk

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

Sensitivity analysis

The sensitivity analysis below was determined based on the exposure to equity price risks at the end of the year.

If equity prices had been 1% higher, the pre-tax other comprehensive income for the year ended December 31, 2020 would have increased by $13,324 thousand, as a result of changes in fair value of financial assets. And the pre-tax other comprehensive income for the year ended December 31, 2019 would have increased by $12,244, as a result of the changes in fair value of financial assets at fair value through other comprehensive income. Had equity prices been 1% lower, the effects on pre-tax other comprehensive gains would have been of the same amounts but negative.

• 56 -

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the year, the Company’s maximum exposure to credit risk, which would cause a financial loss to the Company due to failure of counterparties to discharge an obligation provided by the Company 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. The Company did transactions with a large number of unrelated customers and, thus, no concentration of credit risk was observed.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’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.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves and continuously monitoring forecasted and actual cash flows as well as matching the maturity profiles of financial assets and liabilities. As of December 31, 2020 and 2019, the Company had available unutilized bank loan facilities as set out in (c) below.

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

The following table details the Company’s remaining contractual maturities for its non-derivative financial liabilities with agreed-upon repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The table includes both interests 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 the agreed upon repayment dates.

To the extent that interest flows are at floating rate, the undiscounted amount was derived from the interest rate curve at the end of the year.

December 31, 2020

Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities	On Demand or Less than 1 Month $ 3,020,106 - $ 3,020,106	1-3 Months $ 2,265,546 361 $ 2,265,907	Over 3 Months to 1 Year Over 1 Year - 5 Years $ 1,234,592 $ - 2,702 4,836 $ 1,237,294 $ 4,836

• 57 -

Additional information about the maturity analysis for lease liabilities:

	Less than 1	Less than 1
		Year	1-5	Years		5-10 Years
Lease liabilities	$	3,063	$	4,836		$	-
December 31, 2019
	On Demand			Over
	or Less than		3	Months to		Over 1 Year -
	1 Month	1-3 Months		1	Year		5 Years
Non-derivative financial
liabilities
Non-interest bearing
liabilities	$ 3,357,623	$ 2,867,569	$		657,594	$	-
Lease liabilities	630	2,305			2,531		6,675
	$ 3,358,253	$ 2,869,874	$		660,125	$	6,675
Additional information about	the maturity analysis for lease liabilities:
	Less than 1
		Year	1-5	Years		5-10 Years
Lease liabilities	$	5,466	$	5,237		$	1,438

The amounts included above for variable interest rate instruments for both 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 year.

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

The following tables details the Company’s liquidity analysis of its derivative financial instruments. The tables are based on the undiscounted gross cash inflows and outflows on derivative instruments that require gross settlement.

December 31, 2020

Gross settled Foreign exchange forward contracts Inflows Outflows	On Demand or Less than 1 Month $ 352,690 357,623 $ (4,933)	1-3 Months $ 432,246 443,024 $ (10,778)	Over 3 Months to 1 Year $ 265,203 270,446 $ (5,243)	Total $ 1,050,139 1,071,093 $ (20,954)

• 58 -

December 31, 2019

Gross settled Foreign exchange forward contracts Inflows Outflows	On Demand or Less than 1 Month $ 306,293 301,650 $ 4,643	1-3 Months $ 400,220 397,435 $ 2,785	Over 3 Months to 1 Year $ 64,469 63,950 $ 519	Total $ 770,982 763,035 $ 7,947

c) Financing facilities

Unsecured bank loan facilities Amount used Amount unused		December 31	December 31
		2020 $ 184,078 6,412,122 $ 6,596,200	2019 $ - 6,881,900 $ 6,881,900

28. TRANSACTIONS WITH RELATED PARTIES

Besides information disclosed elsewhere in the other notes, details of significant transactions between the Company and other related parties are disclosed below.

a. Names and categories of related parties

Name AAC (HK) AAU ABR ACN ACZ ADB AEU AID AIL AIN AiSC AJP AKMC AKR AMX AMY ANA APL	Related Party Category
	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

(Continued)

• 59 -

Name

Related Party Category

ASG Subsidiary A-SIoT Subsidiary ATH Subsidiary ATJ Subsidiary ATR Subsidiary AVN Subsidiary AXA Subsidiary B+B Subsidiary (dissolved after the merger with ANA from December 31, 2020) ARU Subsidiary SIoT (Cayman) Subsidiary SIoT (China) Subsidiary AIH Subsidiary Cermate Subsidiary Advantech Corporate Investment Subsidiary AiST Subsidiary LNC Subsidiary Advanixs Subsidiary Axiomtek Co., Ltd. Associate AIMobile Co., Ltd. Associate Deneng Scientific Research Co., Ltd. Associate Winmate Inc. Associate Azurewave Technology Inc. Associate DotZero Co., Ltd. Associate I-Link Co., Ltd. Associate Mildex Optical Inc. Associate 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 (Concluded)

• b. Sales of goods

Related Party Category/Name Subsidiaries ANA ACN AEU Others Associates Other related parties	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 9,841,226 7,835,620 4,142,031 5,107,483 99,963 4,527 $ 27,030,850	2019 $ 9,875,397 8,103,451 5,113,619 5,552,401 44,477 - $ 28,689,345

• 60 -

• c. Purchases of goods

Related Party Category/Name Subsidiaries AKMC Others Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 11,047,054 166,529 183,512 $ 11,397,095	2019 $ 12,512,596 242,444 204,041 $ 12,959,081

• d. Notes receivable from related parties

Related Party Category/Name Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 6,775	2019 $ -

• e. Receivables from related parties

Related Party Line Item Category/Name Trade receivables - related parties Subsidiaries ACN ANA AEU Others Associates Other related parties		December 31	December 31
		2020 $ 1,825,651 1,473,318 755,893 863,758 17,780 20 $ 4,936,420	2019 $ 1,757,991 1,251,888 1,006,415 1,190,461 10,622 - $ 5,217,377

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.

f. Other receivables from related parties

Related Party Category Subsidiaries ANA AEU Advanixs Others Associates Other related parties		December 31	December 31
		2020 $ 7,770 4,266 2,124 7,562 3,018 1,615 $ 26,355	2019 $ 5,046 4,065 2,098 5,871 - - $ 17,080

• 61 -

• g. Payables to related parties (excluding loans from related parties)

Related Party Category/Name Subsidiaries AKMC Others Associates		December 31	December 31
		2020 $ 1,751,018 22,206 20,148 $ 1,793,372	2019 $ 2,008,469 36,111 43,350 $ 2,087,930

The outstanding trade payables to related parties are unsecured.

• h. Other payables from related parties

Related Party Category Subsidiaries AEU Others Other related parties Acquisitions of property, plant and equipment Related Party Category Subsidiaries Disposals of property, plant and equipment Related Party Category/Name Subsidiaries Other transactions with related parties Administration expenses Subsidiaries Associates Other related parties		December 31	December 31
		2020 $ 44,485 10,869 8,819 $ 64,173 Purchase	2019 $ 52,679 3,240 7,965 $ 63,884 Price
	For the Year Ended December 31
		2020 2019 $ 3,759 $ 509 Selling Price
	For the Year Ended December 31
		2020 2019 $ 472 $ - Operating Expenses
	For the Year Ended December 31
		2020 $ 38,065 185 36 $ 38,286	2019 $ 36,647 237 - $ 36,884

• i. Acquisitions of property, plant and equipment

• j. Disposals of property, plant and equipment

• k. Other transactions with related parties

• 62 -

Research and development expenses Associates Subsidiaries	Operating Expenses	Operating Expenses	Operating Expenses
	For the Year Ended December 31
		2020 $ 9,805 88,933 $ 98,738	2019 $ 2,955 150,978 $ 153,933

Research and development expenses incurred between the Company 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.

Rental income Subsidiaries Other related parties Others Subsidiaries Other related parties	Other Income	Other Income	Other Income
	For the Year Ended December 31
		2020 $ 636 289 $ 925 $ 103,849 3,452 $ 107,301	2019 $ 636 60 $ 696 $ 85,083 2,702 $ 87,785

Lease contracts between the Company 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.

• l. 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 42 38,158 $ 84,145

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

• 63 -

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Company’s significant financial assets and liabilities 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

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 162,339 28.480 (USD:NTD) RMB 522,606 4.3770 (RMB:NTD) EUR 18,622 35.020 (EUR:NTD) Non-monetary items Subsidiaries and associates accounted for using the equity method USD 474,105 28.480 (USD:NTD) EUR 33,048 35.020 (EUR:NTD) JPY 4,005,091 0.2760 (JPY:NTD) KRW 15,813,870 0.0260 (KRW:NTD) SGD 5,602 21.560 (SGD:NTD) Financial liabilities Monetary items USD 85,588 28.480 (USD:NTD) RMB 217,779 4.3770 (RMB:NTD)	Carrying Amount $ 4,623,414 2,287,445 652,155
	$ 7,563,014
	$ 13,502,510 1,157,341 1,105,405 411,161 120,779
	$ 16,297,196
	$ 2,437,542 953,218
	$ 3,390,760

• 64 -

December 31, 2019

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 159,581 29.980 (USD:NTD) RMB 554,325 4.305 (RMB:NTD) EUR 21,623 33.590 (EUR:NTD) Non-monetary items Subsidiaries and associates accounted for using the equity method USD 415,025 29.980 (USD:NTD) EUR 36,213 33.590 (EUR:NTD) KRW 12,616,597 0.0260 (KRW:NTD) JPY 3,840,034 0.2760 (JPY:NTD) Financial liabilities Monetary items USD 89,453 29.980 (USD:NTD) RMB 260,550 4.305 (RMB:NTD)	Carrying Amount $ 4,784,226 2,386,370 726,308
	$ 7,896,904
	$ 12,442,450 1,216,395 328,032 1,059,849
	$ 15,046,726
	$ 2,681,793 1,121,669
	$ 3,803,462

For the years ended December 2020 and 2019, realized and unrealized net foreign exchange losses were $21,429 thousand and $75,031 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.

29. 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 (excluding investments in subsidiaries and associates). (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)

• 65 -

• 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)

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 7)

• 9) Transactions of financial instruments. (Notes 7 and 26)

• 10) 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 gains or losses, carrying amount of the investment at the end of the period, repatriations investment gains, 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, and payment terms, and unrealized gains or losses. Refer to Tables 1, 6 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)

• 66 -

TABLE 1

ADVANTECH CO., LTD.

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.

• 67 -

TABLE 2

ADVANTECH CO., LTD.

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)

• 68 -

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)

• 69 -

TABLE 3

ADVANTECH CO., LTD.

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)

• 70 -

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)

• 71 -

(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.

• 72 -

TABLE 4

ADVANTECH CO., LTD.

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

• 73 -

TABLE 5

ADVANTECH CO., LTD.

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)

• 74 -

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 ACZ ACN 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)

• 75 -

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

• 76 -

TABLE 7

ADVANTECH CO., LTD.

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 has been eliminated upon consolidation.

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

• 77 -

TABLE 8

ADVANTECH CO., LTD.

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 Advantech Corporate Investment	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 Cermate Taiwan Deneng CDIB Innovation Accelerator Co., Ltd. AzureWave Technologies, Inc.	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 Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan	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 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	$ 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 71,500 18,095 150,000 578,563	$ 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 71,500 18,095 150,000 578,563	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 5,500,000 658,000 15,000,000 29,599,000	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 55.00 39.69 17.86 19.67	$ 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 - - 232,055 125,754 12,788 151,529 551,457	$ 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 19,106 (3,087) (29,031) 304,098	$ 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 10,641 (1,225) (5,184) 59,830	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 Subsidiary Equity-method investee (Note A) Equity-method investee (Note A) Equity-method investee

(Continued)

• 78 -

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
ATC AAC (BVI) SIoT (Cayman) ANA AEUH ASG Cermate Taiwan LNC Better Auto B+B BBIE	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 Better Auto Famous Now BBIE ACZ	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 BVI Hong Kong Ireland Czech Republic	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 General investment General investment Sale of industrial network communications systems Manufacturing automation	$ - 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 28,200 244,615 US$ 4,000 - -	$ 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 28,200 244,615 US$ 4,000 US$ 39,481 -	- 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 7,425,000 1 - -	- 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 49.00 100.00 100.00 100.00 100.00 - 100.00	$ - 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 59,709 65,130 - 300,348	$ (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 33,515 33,515 (3,959) 30,553	$ (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 32,600 33,515 (3,965) 30,553	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 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)

• 79 -

TABLE 9

ADVANTECH CO., LTD.

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)

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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 statements 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 Table 5.

Note C: Remittance by ACN.

• Note D: Included 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)

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(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.

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TABLE 10

ADVANTECH CO., LTD.

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.

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