Advantech - Interim / Quarterly Report 2016

Advantech Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2016 and 2015 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

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

We have reviewed the accompanying consolidated balance sheets of Advantech Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of September 30, 2016 and 2015, the related consolidated statements of comprehensive income for the three months and nine months ended September 30, 2016 and 2015, and changes in equity and cash flows for the nine months ended September 30, 2016 and 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews. However, the financial statements of an associate, Axiomtek Co., Ltd., as of and for the nine months ended September 30, 2016 and 2015 were reviewed by other independent CPAs. This investee’s shares of the investments accounted for using the equity method were 1.26% (NT$430,456 thousand) and 1.33% (NT$423,688 thousand) of the Company’s total consolidated assets as of September 30, 2016 and 2015, respectively. The Company’s shares of its profits were 1.29% (NT$23,682 thousand), 2.60% (NT$39,503 thousand), 1.34% (NT$71,253 thousand) and 1.78% (NT$82,178 thousand) of the Company’s consolidated pretax profits for the three months and nine months ended September 30, 2016 and 2015, respectively.

Except as stated in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 36 “Review of Financial Statements” issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

As disclosed in Note 12, the financial statements of the Company’s subsidiaries included in the consolidation for the nine months ended September 30, 2016 and 2015 had not been reviewed, except those of significant subsidiaries. The total assets of the unreviewed subsidiaries were 15.64% (NT$5,361,022 thousand) and 15.55% (NT$4,956,378 thousand) of the Company’s consolidated total assets as of September 30, 2016 and 2015, respectively. The total liabilities of the unreviewed subsidiaries were 17.02% (NT$1,756,886 thousand) and 20.61% (NT$1,971,145 thousand) of the Company’s consolidated total liabilities as of September 30, 2016 and 2015, respectively. The comprehensive incomes of these subsidiaries were 12.56% (NT$160,478 thousand), 3.69% (NT$49,470 thousand), 20.48% (NT$805,127 thousand) and 12.30% (NT$423,562 thousand) of the Company’s consolidated comprehensive incomes in the three months and nine months ended September 30, 2016 and 2015, respectively. Also, as stated in Note 13 to the consolidated financial statements, the investments accounted for using the equity method were NT$146,437 thousand and NT$27,683 thousand as of September 30, 2016 and 2015. The equities in earnings of the associates were a loss of NT$10,904 thousand, a loss of NT$11 thousand, a loss of NT$16,055 thousand and a loss of NT$304 thousand of the Company’s consolidated net income in the three months and nine months ended September 30, 2016 and 2015, respectively, and these investment amounts as well as additional disclosures in Note 32 “Information on Investees” were based on the investees’ unreviewed financial statements for the same reporting periods as those of the Company.

Based on our reviews and the review reports of the other auditors, except for the effects of any adjustments as might have been determined to be necessary had the financial statements of the Company’s subsidiaries described in the preceding paragraph been reviewed, we are not aware of any material modifications that should be made to the consolidated financial statements of Advantech Co., Ltd. and subsidiaries referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission (FSC) of the Republic of China.

October 28, 2016

Notice to Readers

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

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

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (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 7 and 27) Available-for-sale financial assets - current (Notes 8 and 27) Debt investments with no active market - current (Note 9) Notes receivable (Notes 10 and 28) Accounts receivable (Note 10) Accounts receivable from related parties (Note 28) Other receivables Inventories (Note 11) Other current financial assets (Note 29) Other current assets (Note 16) Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 8 and 27) Investments accounted for using the equity method (Note 13) Property, plant and equipment (Note 14) Goodwill (Note 15) Other intangible assets Deferred tax assets (Notes 4 and 22) Prepayments for business facilities Prepayments for investments (Note 25) Long-term prepayments for lease (Note 16) Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 17) Financial liabilities at fair value through profit or loss - current (Notes 7 and 27) Trade payables (Note 28) Other payables (Note 18) Current tax liabilities (Notes 4 and 22) Short-term warranty provision Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 22) Long-term accounts payable Net defined benefit liabilities (Notes 4 and 19) Other noncurrent liabilities Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of foreign financial statements Unrealized gains on available-for-sale financial assets Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		September 30, 2016 (Reviewed) Amount % $ 3,402,188 10 106,824 - 1,426,081 4 7,884 - 909,471 3 5,799,449 17 4,781 - 20,452 - 5,289,140 16 78,282 - 474,549 1 17,519,101 51 1,839,350 5 576,893 2 9,868,278 29 3,325,999 10 426,924 1 246,409 1 81,078 - - - 332,855 1 60,360 - 16,758,146 49 $ 34,277,247 100 $ 470,400 1 3,545 - 3,468,282 10 3,422,174 10 957,012 3 172,823 1 630,969 2 9,125,205 27 908,268 3 - - 181,725 - 104,743 - 1,194,736 3 10,319,941 30 6,326,091 18 5,927,374 17 4,473,276 13 7,037,626 21 11,510,902 34 (155,194) - 181,724 - 26,530 - 23,790,897 69 166,409 1 23,957,306 70 $ 34,277,247 100		December 31, 2015 (Audited) Amount % $ 4,358,259 13 176,389 1 1,755,843 5 3,171 - 970,722 3 5,428,574 16 26,775 - 40,811 - 4,868,860 14 - - 456,342 1 18,085,746 53 1,747,598 5 477,984 2 9,576,879 28 1,139,559 3 227,686 1 217,989 1 65,753 - 2,279,881 7 100,875 - 59,183 - 15,893,387 47 $ 33,979,133 100 $ 880,625 3 6,352 - 3,226,069 9 3,380,317 10 1,057,226 3 145,646 - 546,295 2 9,242,530 27 938,491 3 - - 183,540 1 160,795 - 1,282,826 4 10,525,356 31 6,318,531 19 5,587,555 16 3,962,842 12 7,098,449 21 11,061,291 33 271,859 1 68,265 - 340,124 1 23,307,501 69 146,276 - 23,453,777 69 $ 33,979,133 100		September 30, 2015 (Reviewed)
						Amount % $ 3,660,537 12 154,654 - 2,288,337 7 1,274 - 965,013 3 5,414,151 17 4,164 - 19,992 - 5,174,659 16 18,650 - 555,184 2 18,256,615 57 1,848,037 6 451,371 1 9,518,836 30 1,150,313 4 239,024 1 185,462 1 60,024 - - - 96,120 - 58,190 - 13,607,377 43 $ 31,863,992 100 $ 84,000 - 48,727 - 3,436,106 11 3,277,833 10 763,772 2 146,989 1 535,782 2 8,293,209 26 996,053 3 41,842 - 163,614 1 68,307 - 1,269,816 4 9,563,025 30 6,318,531 20 5,519,914 17 3,962,842 13 5,774,939 18 9,737,781 31 442,539 1 144,411 1 586,950 2 22,163,176 70 137,791 - 22,300,967 70 $ 31,863,992 100

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

(With Deloitte & Touche review report dated October 28, 2016)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OPERATING REVENUE (Note 28) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 19, 21 and 28) GROSS PROFIT OPERATING EXPENSES (Notes 19, 21 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING PROFIT NONOPERATING INCOME Share of the profit of associates accounted for using the equity method (Note 13) Interest income Gains (losses) on disposal of property, plant and equipment Gains (losses) on disposal of investments Foreign exchange gains (losses), net (Notes 21 and 31) Gains on financial instruments at fair value through profit or loss (Note 7) Dividend income Other income (Notes 8 and 28) Finance costs (Note 21) Losses on financial instruments at fair value through profit or loss (Note 7) Other losses Total nonoperating income		For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30		For the Nine Months	EndedSeptember 30	EndedSeptember 30
		2016		2015		2016		2015
		Amount % $ 10,069,143 97 342,189 3 10,411,332 100 6,087,442 58 4,323,890 42 1,070,603 10 611,003 6 907,807 9 2,589,413 25 1,734,477 17 12,778 - 4,252 - (4,983 ) - 2,548 - (98,869 ) (1 ) 39,229 1 132,062 1 21,464 - (1,669 ) - (934 ) - (412) - 105,466 1		Amount % $ 9,197,608 97 240,144 3 9,437,752 100 5,691,445 60 3,746,307 40 997,954 11 495,075 5 929,194 10 2,422,223 26 1,324,084 14 39,492 - 12,282 - (1,456 ) - 8,460 - 69,531 1 2,426 - 138,334 2 34,418 - (1,736 ) - (106,734 ) (1 ) (502) - 194,515 2		Amount % $ 30,256,866 97 940,378 3 31,197,244 100 18,429,390 59 12,767,854 41 3,238,294 10 1,906,438 6 2,728,391 9 7,873,123 25 4,894,731 16 55,198 - 12,769 - 254,232 1 8,001 - (181,364 ) (1 ) 108,324 - 132,472 1 59,513 - (5,066 ) - (35,798 ) - (1,525) - 406,756 1		Amount % $ 27,531,015 97 718,351 3 28,249,366 100 16,931,817 60 11,317,549 40 2,879,458 10 1,483,292 5 2,647,322 10 7,010,072 25 4,307,477 15 81,874 - 35,659 - (3,555 ) - 169,614 1 (103,841 ) - 72,906 - 138,587 1 87,317 - (3,782 ) - (156,296 ) (1 ) (2,397) - 316,086 1 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Nine Months	EndedSeptember 30
2016	2015	2016	2015
Amount % $ 1,839,943 18 366,394 4 1,473,549 14 (317,696 ) (3 ) 72,416 1 (4,159 ) - 54,021 - (195,418) (2) $ 1,278,131 12 $ 1,468,232 14 5,317 - $ 1,473,549 14 $ 1,276,899 12 1,232 - $ 1,278,131 12 $ 2.32 $ 2.31	Amount % $ 1,518,599 16 282,681 3 1,235,918 13 446,873 5 (272,685 ) (3 ) 8,555 - (77,936) (1) 104,807 1 $ 1,340,725 14 $ 1,228,025 13 7,893 - $ 1,235,918 13 $ 1,335,846 14 4,879 - $ 1,340,725 14 $ 1.94 $ 1.94	Amount % $ 5,301,487 17 1,042,271 3 4,259,216 14 (523,158 ) (2 ) 113,459 1 (6,460 ) - 87,469 - (328,690) (1) $ 3,930,526 13 $ 4,244,420 14 14,796 - $ 4,259,216 14 $ 3,930,826 13 (300) - $ 3,930,526 13 $ 6.72 $ 6.67	Amount % $ 4,623,563 16 848,740 3 3,774,823 13 105,059 - (418,866 ) (1 ) 3,460 - (21,339) - (331,686) (1) $ 3,443,137 12 $ 3,762,812 13 12,011 - $ 3,774,823 13 $ 3,448,129 12 (4,992) - $ 3,443,137 12 $ 5.96 $ 5.93



$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$

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

(With Deloitte & Touche review report dated October 28, 2016)

(Concluded)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

	Equity Attributable toOwners of theCompany	Equity Attributable toOwners of theCompany
IssuedCapital(Note 20)	Capital Surplus (Notes 20, 21 Total and 24) $ 6,312,091 $ 5,306,958 - - 6,312,091 5,306,958 - - - - 6,440 24,438 - 196,408 - - - (11,457 ) - 3,567 - - - - - - $ 6,318,531 $ 5,519,914 $ 6,318,531 $ 5,587,555 - - - - 7,560 64,336 - 254,344 - 3,295 - 17,844 - - - - - - $ 6,326,091 $ 5,927,374	Retained Earnings (Notes 20 and 26) Unappropriated Legal Reserve Earnings Total $ 3,472,064 $ 6,358,318 $ 9,830,382 - (5,045) (5,045) 3,472,064 6,353,273 9,825,337 490,778 (490,778 ) - - (3,787,255 ) (3,787,255 ) - - - - - - - (210 ) (210 ) - (62,903 ) (62,903 ) - - - - 3,762,812 3,762,812 - - - - 3,762,812 3,762,812 $ 3,962,842 $ 5,774,939 $ 9,737,781 $ 3,962,842 $ 7,098,449 $ 11,061,291 510,434 (510,434 ) - - (3,791,118 ) (3,791,118 ) - - - - - - - - - - (3,691 ) (3,691 ) - 4,244,420 4,244,420 - - - - 4,244,420 4,244,420 $ 4,473,276 $ 7,037,626 $ 11,510,902	Other Equity (Note 20) Exchange Differences on Unrealized Gain Translating (Loss) on Foreign Available-for-sale Operations Financial Assets $ 338,356 $ 563,277 - - 338,356 563,277 - - - - - - - - - - - - - - - - 104,183 (418,866) 104,183 (418,866) $ 442,539 $ 144,411 $ 271,859 $ 68,265 - - - - - - - - - - - - - - (427,053) 113,459 (427,053) 113,459 $ (155,194) $ 181,724

Advance Receipts for Ordinary Share Capital Shares $ 6,301,031 $ 11,060 - - 6,301,031 11,060 - - - - 17,500 (11,060 ) - - - - - - - - - - - - - - $ 6,318,531 $ - $ 6,318,531 $ - - - - - 7,560 - - - - - - - - - - - - - $ 6,326,091 $ -
		Unappropriated Legal Reserve Earnings $ 3,472,064 $ 6,358,318 - (5,045) 3,472,064 6,353,273 490,778 (490,778 ) - (3,787,255 ) - - - - - (210 ) - (62,903 ) - - - 3,762,812 - - - 3,762,812 $ 3,962,842 $ 5,774,939 $ 3,962,842 $ 7,098,449 510,434 (510,434 ) - (3,791,118 ) - - - - - - - (3,691 ) - 4,244,420 - - - 4,244,420 $ 4,473,276 $ 7,037,626

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

(With Deloitte & Touche review report dated October 28, 2016)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Amortization expenses for prepayments of lease obligation Impairment loss recognized on trade receivable Net loss (gain) on financial assets or liabilities at fair value through profit or loss Compensation cost of employee share options Finance costs Interest income Dividend income Share of profit of associates accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Changes in operating assets and liabilities Financial assets held for trading Notes receivable Accounts receivable Account receivables from related parties Other receivables Inventories Other current assets Other financial assets Trade payables Other payables Other current liabilities Net defined benefit liabilities Other noncurrent liabilities Cash generated from operations Interest received Dividend received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of available-for-sale financial assets Proceeds on sale of available-for-sale financial assets Acquisition of investments with no active market		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 5,301,487 432,115 242,146 4,315 20,449 (72,526) 254,344 5,066 (12,769) (132,472) (55,198) (254,232) (8,001) 139,284 61,251 (174,785) 21,994 24,725 (118,342) 19,114 (45,272) 106,687 74,792 84,674 (1,815) (64,593) 5,852,438 12,769 220,785 (4,854) (968,218) 5,112,920 (4,886,467) 5,245,418 (4,725)	2015 $ 4,623,563 422,250 64,657 1,927 10,962 83,390 196,408 3,782 (35,659) (138,587) (81,874) 3,555 (169,614) (32,613) (15,152) (464,500) 1,236 19,410 (393,109) (41,791) - 269,911 23,686 36,882 (1,814) 18,067 4,404,973 32,807 220,504 (1,003) (772,042) 3,885,239 (8,243,443) 9,708,099 3,745 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

Acquisition of investments accounted for using the equity method Net cash outflow from acquisition of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Acquisition of intangible assets Increase in prepayments for business facilities Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Decrease in guarantee deposits received Payment of cash dividends Exercise of employee share options Increase (decrease) in non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ (135,000) (1,440,768) (934,738) 528,881 (1,177) (74,206) 15,546 (1,687,236) - (410,225) (2,189) (3,791,118) 71,896 34,586 (4,097,050) (284,705) (956,071) 4,358,259 $ 3,402,188	2015 $ - - (988,912) 21,720 (15,574) (43,618) (48,976) 393,041 80,920 - (266) (3,787,255) 30,878 (118,577) (3,794,300) 54,550 538,530 3,122,007 $ 3,660,537

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

(With Deloitte & Touche review report dated October 28, 2016)

(Concluded)

ADVANTECH CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Advantech Co., Ltd. (the “Company”) is a listed company established in September 1981. It manufactures and sells embedded computing boards, industrial automation products, applied computers 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 Advantech Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), the Company’s board of directors resolved on June 30, 2009 to have a short-form merger with Advantech Investment and Management Service (AIMS). The effective merger date was July 30, 2009. As the survivor 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 indirect 95.51%-owned subsidiary through a wholly-owned subsidiary, Advantech Corporate Investment. The effective merger date was July 27, 2014. As the survivor entity, the Company assumed all assets and liabilities of Netstar.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors October 28, 2016.

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

a. International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC for application starting from 2017.

Rule No. 1050026834 issued by the FSC endorsed the following IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) for application starting January 1, 2017.

Effective Date New, Amended or Revised Standards and Interpretations Announced by IASB (Note 1) Annual Improvements to IFRSs 2010-2012 Cycle July 1, 2014 (Note 2) Annual Improvements to IFRSs 2011-2013 Cycle July 1, 2014 Annual Improvements to IFRSs 2012-2014 Cycle January 1, 2016 (Note 3) Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment January 1, 2016 Entities: Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests January 1, 2016 in Joint Operations” IFRS 14 “Regulatory Deferral Accounts” January 1, 2016 (Continued)

New, Amended or Revised Standards and Interpretations Amendment to IAS 1 “Disclosure Initiative” Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” IFRIC 21 “Levies”	Effective Date Announced by IASB (Note 1)
	January 1, 2016 January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 (Concluded)

New, Amended or Revised Standards and Interpretations
Amendment to IAS 1 “Disclosure Initiative”

Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”

Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”

Amendment to IAS 36 “Impairment of Assets: Recoverable
Amount Disclosures for Non-financial Assets”

Amendment to IAS 39 “Novation of Derivatives and Continuation
of Hedge Accounting”

IFRIC 21 “Levies”

Effective Date
Announced by IASB (Note 1)

January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2014
January 1, 2014
January 1, 2014
(Concluded)

Note 1: Unless stated otherwise, the above New or amended IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Note 3: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

Except for the following, the initial application of the above New or amended IFRSs in 2017 would not have any material impact on the Group’s accounting policies:

1) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

The amendment clarifies that the recoverable amount of an asset or a cash-generating unit is disclosed only when an impairment loss on the asset has been recognized or reversed during the period. Furthermore, if the recoverable amount of an item of property, plant and equipment for which impairment loss has been recognized or reversed is fair value less costs of disposal, the Group is required to disclose the fair value hierarchy. If the fair value measurements are categorized within (Level 2/Level 3), the valuation technique and key assumptions used to measure the fair value are disclosed. The discount rate used is disclosed if such fair value less costs of disposal is measured by using present value technique. The aforementioned amendment will be applied retrospectively on January 1, 2017.

2) IFRIC 21 “Levies”

IFRIC 21 provides guidance on when to recognize a liability for a levy imposed by a government. It addresses the accounting for a liability whose timing and amount is certain and the accounting for a provision whose timing or amount is not certain. The Group accrues related liability when the transaction or activity that triggers the payment of the levy occurs. Therefore, if the obligating event occurs over a period of time (such as generation of revenue over a period of time), the liability is recognized progressively. If an obligation to pay a levy is triggered upon reaching a minimum threshold (such as a minimum amount of revenue or sales generated), the liability is recognized when that minimum threshold is reached.

10 -
3) Annual Improvements to IFRSs: 2010-2012 Cycle

Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments” were amended in this annual improvement.

The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and adds definitions for “performance condition” and “service condition”. The amendment clarifies that a performance target can be based on the operations (i.e. a non-market condition) of the Group or another entity in the same group or the market price of the equity instruments of the Group or another entity in the same group (i.e. a market condition); that a performance target can relate either to the performance of the Group as a whole or to some part of it (e.g. a division); and that the period for achieving a performance condition must not extend beyond the end of the related service period. In addition, a share market index target is not a performance condition because it not only reflects the performance of the Group, but also of other entities outside the Group. The share-based payment arrangements with market conditions, non-market conditions or non-vesting conditions will be accounted for differently, and the aforementioned amendment will be applied prospectively to those share-based payments granted on or after January 1, 2017.

IFRS 3 was amended to clarify that contingent consideration should be measured at fair value, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39. Changes in fair value should be recognized in profit or loss. The amendment will be applied prospectively to business combinations with acquisition date on or after January 1, 2017.

The amended IFRS 8 requires the Group to disclose the judgments made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have “similar economic characteristics”. The amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segments’ assets are regularly provided to the chief operating decision-maker. The judgements made in applying aggregation criteria should be disclosed retrospectively upon initial application of the amendment in 2017.

When the amended IFRS 13 becomes effective in 2017, the short-term receivables and payables with no stated interest rate will be measured at their invoice amounts without discounting, if the effect of not discounting is immaterial.

IAS 24 was amended to clarify that a management entity providing key management personnel services to the Group is a related party of the Group. Consequently, the Group is required to disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.

4) Annual Improvements to IFRSs: 2011-2013 Cycle

Several standards, including IFRS 3 and IFRS 13, were amended in this annual improvement.

IFRS 3 was amended to clarify that IFRS 3 does not apply to the accounting for the formation of all types of joint arrangements in the financial statements of the joint arrangement itself. The amendment will be applied prospectively starting from January 1, 2017.

The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.

11 -
5) Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization”

The entity should use appropriate depreciation and amortization method to reflect the pattern in which the future economic benefits of the property, plant and equipment and intangible asset are expected to be consumed by the entity.

The amended IAS 16 “Property, Plant and Equipment” stipulates that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. The amended standard does not provide any exception from this requirement.

The amended IAS 38 “Intangible Assets” clarifies that there is a rebuttable presumption that an amortization method that is based on revenue that is generated by an activity that includes the use of an intangible asset is not appropriate. This presumption can be overcome only in the following limited circumstances:

a) In which the intangible asset is expressed as a measure of revenue (for example, the contract that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue threshold); or
b) When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

As of the date the consolidated financial statements were authorized for issue, the Group continues assessing other possible impacts that application of the aforementioned amendments will have on the Group’s financial position and financial performance, and will disclose these other impacts when the assessment is completed.

b. New IFRSs in issue but not yet endorsed by the FSC

The Group has not applied the following IFRSs issued by the International Accounting Standards Board (IASB) but not yet endorsed by the FSC.

The FSC announced that IFRS 15 will take effect starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new IFRSs.

Effective Date New, Amended or Revised Standards and Interpretations Announced by IASB (Note) Amendment to IFRS 2 “Classification and Measurement of January 1, 2018 Share-based Payment Transactions” Amendments to IFRS 4“Applying IFRS 9 Financial Instruments January 1, 2018 with IFRS 4 Insurance Contracts” IFRS 9 “Financial Instruments” January 1, 2018 Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of January 1, 2018 IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of To be determined by IASB Assets between an Investor and its Associate or Joint Venture” IFRS 15 “Revenue from Contracts with Customers” January 1, 2018 Amendment to IFRS 15 “Clarifications to IFRS 15” January 1, 2018 IFRS 16 “Leases” January 1, 2019 Amendment to IAS 7 “Disclosure Initiative” January 1, 2017 Amendments to IAS 12 “Recognition of Deferred Tax Assets for January 1, 2017 Unrealized Losses”

12 -
Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

For the Group’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;
b) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Except for the above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

Impairment of financial assets

IFRS 9 requires impairment loss on financial assets to be recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

13 -
2) IFRS 15 “Revenue from Contracts with Customers” and related amendment

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations.

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

Identify the contract with the customer;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contract; and
Recognize revenue when the entity satisfies a performance obligation.

In identifying performance obligations, IFRS 15 and related amendment require that a good or service is distinct if it is capable of being distinct (for example, the Group regularly sells it separately) and the promise to transfer it is distinct within the context of the contract (i.e. the nature of the promise in the contract is to transfer each of those goods or services individually rather than to transfer combined items).

When IFRS 15 and related amendment are effective, an entity may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.

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

The amendments stipulated that, when an entity 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 an entity 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 an entity sells or contributes assets that do not constitute a business to an associate, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate, i.e. the entity’s share of the gain or loss is eliminated. Also, when an entity loses control of a subsidiary that does not contain a business but retains significant influence in an associate, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate, i.e. the entity’s share of the gain or loss is eliminated.

4) IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low-value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities.

14 -

The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as lessor.

When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application.

5) Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses”

In determining whether to recognize a deferred tax asset, the Group should assess a deductible temporary difference in combination with all of its other deductible temporary differences, unless the tax law restricts the utilization of losses as deduction against income of a specific type, in which case, a deductible temporary difference is assessed in combination only with other deductible temporary differences of the appropriate type. The amendment also stipulates that, when determining whether to recognize a deferred tax asset, the estimate of probable future taxable profit may include some of the Group’s assets for more than their carrying amount if there is sufficient evidence that it is probable that the Group will achieve the higher amount, and that the estimate for future taxable profit should exclude tax deductions resulting from the reversal of deductible temporary differences.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

b. Basis of consolidation

Refer to Note 12, Table 8 and Table 10 for detailed information of subsidiaries (included the percentage of ownership and main business).

c. Other significant accounting policies

Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2015. For the summary of other significant accounting policies, please refer to the consolidated financial statements for the year ended December 31, 2015.

1) Retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

15 -

2) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Refer to the Group’s consolidated financial statements for the year ended December 31, 2015 for significant accounting judgments and estimates and key sources of estimation uncertainty.

6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2016		2015		2015
Cash on hand	$	64,150	$	65,144	$	67,189
Checking accounts and demand deposits		3,109,685		4,144,007		2,764,910
Cash equivalents (investment with original
maturities less than three months)		228,353		149,108		828,438
	$	3,402,188	$	4,358,259	$	3,660,537
FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
	September 30,		December 31,		September 30,
		2016		2015		2015
Financial assets held for trading-current
Derivative financial assets
Forward exchange contracts	$	19,184	$	7,391	$	935
Nonderivative financial assets
Domestic quoted shares		87,640		67,554		66,878
Foreign quoted shares		-		101,444		86,841
	$	106,824	$	176,389	$	154,654
Financial liabilities held for trading-current
Derivative financial liabilities
Forward exchange contracts	$	3,545	$	6,352	$	48,727

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

16 -

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

					Notional Amount
			Currency	Maturity Date	(In Thousands)
September	30,	2016
Sell			EUR/NTD	2016.10-2017.02	EUR10,000/NTD359,952
			EUR/USD	2016.10-2017.02	EUR6,000/USD6,835
			USD/NTD	2016.10-2017.02	USD5,143/NTD164,919
			JPY/NTD	2016.10-2017.02	JPY430,000/NTD131,594
			RMB/NTD	2016.10-2016.12	RMB86,000/NTD404,739
December	31,	2015
Sell			EUR/NTD	2016.01-2016.04	EUR5,000/NTD179,073
			EUR/USD	2016.01-2016.04	EUR6,500/USD7,102
			USD/NTD	2016.01-2016.02	USD1,499/NTD49,190
			JPY/NTD	2016.01-2016.05	JPY200,000/NTD53,236
			JPY/USD	2016.01-2016.05	JPY70,000/USD582
			RMB/NTD	2016.01-2016.03	RMB64,000/NTD321,201
			RMB/USD	2016.01-2016.02	RMB15,000/USD2,323
September	30,	2015
Sell			EUR/NTD	2015.10-2016.01	EUR9,500/NTD332,422
			EUR/USD	2015.11-2016.01	EUR1,500/USD1,683
			USD/NTD	2015.10-2016.02	USD4,829/NTD152,464
			JPY/USD	2015.12-2016.02	JPY30,000/USD249
			JPY/NTD	2015.10-2016.01	JPY270,000/NTD68,492
			RMB/NTD	2015.10-2015.12	RMB93,000/NTD463,729

The Company entered into forward exchange contracts during the nine months ended September 30, 2016 and 2015 to manage exposures due to exchange rate fluctuations of foreign-currency denominated assets and liabilities. The Company’s financial hedging strategy is to minimize risks due to market price fluctuations and cash flows; however, because these contracts did not meet the criteria for hedge effectiveness, they were not subject to hedge accounting.

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

		September 30,	September 30,	December 31,	September 30,
			2016	2015	2015
Current
Domestic	investments
Mutual	funds	$	938,826	$ 1,271,302	$ 1,844,710
Quoted	shares		487,255	484,541	443,627
		$	1,426,081	$ 1,755,843	$ 2,288,337
					(Continued)

17 -

	September 30,	December 31,	September 30,
	2016	2015	2015
Noncurrent
Domestic investments
Quoted shares	$ 1,796,718	$ 1,704,966	$ 1,805,405
Unlisted shares	9,375	9,375	9,375
Foreign investments
Unlisted foreign shares	33,257	33,257	33,257
	$ 1,839,350	$ 1,747,598	$ 1,848,037
			(Concluded)

For its securities borrowing and lending transactions, the Group placed some of its quoted domestic stocks, recorded under available-for-sale assets - noncurrent, in a trust at Chinatrust Commercial Bank. As of September 30, 2016, December 31, 2015 and September 30, 2015, the stocks held in trust amounted to $1,325,155 thousand, $1,276,400 thousand and $1,497,185 thousand, respectively. Refer to Table 3 for more information. On the transactions, the Group recognized gains of $56 thousand and $118 thousand in the nine months ended September 30, 2016 and 2015, respectively. These gains were recorded under other nonoperating income.

9. DEBT INVESTMENTS WITH NO ACTIVE MARKET

	September 30,	September 30,	December 31,	December 31,	December 31,	September 30,	September 30,
		2016			2015		2015
Time deposits with original maturity more than
three months	$	7,884		$	3,171	$	1,274
NOTES AND ACCOUNTS RECEIVABLE
	September 30,		December 31,			September 30,
		2016			2015		2015
Notes receivable (include related parties)	$	909,471	$		970,722	$	965,013
Accounts receivable	$	5,939,382	$	5,577,733		$	5,571,906
Less: Allowance for impairment loss		(139,933)			(149,159)		(157,755)
	$	5,799,449	$	5,428,574		$	5,414,151

10. NOTES AND ACCOUNTS RECEIVABLE

Accounts Receivable

The average credit period on sales of goods was from 30 to 90 days. In determining the recoverability of an accounts receivable, the Group considered any change in the credit quality of the accounts receivable since the date credit was initially granted to the end of the reporting period. The Group recognized an allowance for impairment loss of 100% against all receivables over 1 year because historical experience had been that receivables that are past due beyond 1 year were not recoverable. Allowance for impairment loss were recognized against accounts receivable between 90 days and 1 year based on estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

18 -

For the accounts receivable balances that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss, because there was not a significant change in credit quality and the amounts were still considered recoverable. The Group did not hold any collateral or other credit enhancements for these balances.

The aging of receivables was as follows:

	September 30,	December 31,	September 30,
	2016	2015	2015
Not overdue	$ 5,116,336	$ 4,457,975	$ 4,437,607
Overdue
1 to 90 days	662,845	909,380	907,934
91 to 360 days	59,722	131,727	125,413
Over 360 days	100,479	78,651	100,952
	$ 5,939,382	$ 5,577,733	$ 5,571,906

The above aging schedule was based on the past due dates from end of credit term.

The aging of receivables that were past due date but not impaired were as follows:

	September 30,	December 31,	September 30,
	2016	2015	2015
1 to 30 days	$ 562,063	$ 714,634	$ 695,604
31 to 60 days	54,955	139,362	132,578
61 to 90 days	45,827	55,384	79,752
	$ 662,845	$ 909,380	$ 907,934
The above aging schedule was based on the past due dates from end of credit term.
The movements of the allowance for doubtful trade receivables were as follows:
	Individually	Collectively
	Assessed for	Assessed for
	Impairment	Impairment	Total
Balance at January 1, 2015	$ 19,802	$ 130,200	$ 150,002
Add: Impairment losses recognized on
receivables	1,463	9,499	10,962
Deduct: Amounts written off during the period
as uncollectible	(30)	(3,419)	(3,449)
Foreign exchange translation losses	-	240	240
Balance at September 30, 2015	$ 21,235	$ 136,520	$ 157,755
			(Continued)

19 -

Individually
Assessed for
Impairment
Collectively
Assessed for
Impairment
Balance at January 1, 2016
$ 17,569
$ 131,590

Deduct: Impairment losses recognized
(reversed) on receivables
(1,164)
21,613
Deduct: Amounts written off during the period
as uncollectible
(1,817)
(34,569)
Impairment losses recognized from business
combination
-
11,918
Foreign exchange translation losses

-

(5,207)

Balance at September 30, 2016
$ 14,588
$ 125,345

Total
$ 149,159
20,449
(36,386)
11,918
(5,207)
$ 139,933
(Concluded)

11. INVENTORIES

	September 30,	December 31,	September 30,
	2016	2015	2015
Raw materials	$ 1,940,882	$ 1,489,432	$ 1,800,268
Work in process	1,069,290	974,373	1,067,478
Finished goods	1,837,973	1,875,649	1,786,772
Inventories in transit	440,995	529,406	520,141
	$ 5,289,140	$ 4,868,860	$ 5,174,659

The costs of inventories recognized as costs of goods sold for the three months ended September 30, 2016 and 2015 were $5,993,517 thousand and $5,581,837 thousand, respectively, and for the nine months ended September 30, 2016 and 2015 were $18,149,738 thousand and $16,618,892 thousand, respectively.

The costs of inventories were decreased by $532,742 thousand, $443,926 thousand and $431,284 thousand as of September 30, 2016, December 31, 2015 and September 30, 2015, respectively when stated at the lower of cost or net realizable values.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements.

The entities include in the consolidated statements are listed below.

Investor
Investee
Nature of Activities
The Company
AAC (BVI)
Investment and management service
ATC
Sale of industrial automation products
Advanixs Corporation
(formerly Advansus
Corp.)
Production and sale of industrial
automation products
Advantech Corporate
Investment
Investment holding company
AEUH
Investment and management service
ASG
Sale of industrial automation products
AAU
Sale of industrial automation products

Proportion of Ownership
September 30,
2016
December 31,
2015
September 30,
2015
Remark
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
100.00
100.00
100.00
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
(Continued)

20 -

Investor
Investee
Nature of Activities
AJP
Sale of industrial automation products
AMY
Sale of industrial automation products
AKR
Sale of industrial automation products
ABR
Sale of industrial automation products
ACA
Production and sale of portable industrial
automation products
AIN
Sale of industrial automation products
AdvanPOS
Production and sale of POS system
ALNC
Production and sale of machines with
computerized numerical control
AMX
Sale of industrial automation products
Advantech Innovative
Design Co., Ltd.
Product design
Advantech iFactory Co., Ltd. Cybernation equipment manufacturing
BEMC
Sale of industrial network
communications systems
AiST
Design, develop and sale of intelligent
service
Advantech Corporate
Investment
AiST
Design, develop and sale of intelligent
service
Cermate
Manufacturing of electronic parts,
computer, and peripheral devices
ATC
ATC (HK)
Investment and management service
ATC (HK)
AKMC
Production and sale of components of
industrial automation products
Yeh-Chiang Technology
Kun Shan Co., Ltd.
Production and sale of industrial
automation products
AAC (BVI)
ANA
Sale and fabrication of industrial
automation products
AAC (HK)
Investment and management service
ANA
BEMC
Sale of industrial network
communications systems
AAC (HK)
ACN
Sale of industrial automation products
AiSC
Production and sale of industrial
automation products
AXA
Development and production of software
products
ACN
Hangzhou Advantofine
Automation Co., Ltd.
Processing and sale of industrial
automation products
AEUH
AEU
Sale of industrial automation products
APL
Sale of industrial automation products
AEU
A-DLoG
Design, R&D and sale of industrial
automation vehicles and related
products
ASG
ATH
Production of computers
AID
Sale of industrial automation products
Cermate
Land Mark
General investment
Land Mark
Cermate (Shanghai)
Sale of industrial electronic equipment
Cermate (Shenzhen)
Production of LCD touch panel, USB
cable, and industrial computer
AdvanPOS
Bright Mind Ltd.
General investment
Bright Mind Ltd.
AdvanPOS Shanghai
Production and sale of POS system
ALNC
Better Auto
General investment
Better Auto
Famous Now Limited
General investment
Famous Now Limited Dongguan Pou Yuen Digital
Technology Co., Ltd.
Production and sale of industrial
automation products
BEMC
Avtek
General investment
Avtek
B+B
General investment
B+B
BBI
Sale of industrial network
communications systems
Quatech
Sale of industrial network
communications systems
IMC
Sale of industrial network
communications systems
BBI
B&B Electronics
Sale of industrial network
communications systems
B+B (CZ) (formerly Conel) Manufacturing of cellular and
automation solution
Conel Automation (formerly
Softcon)
Sale of industrial network
communications systems
B&B DMCC
Manufacturing of cellular and
automation solution
B&B Electronics
B+B (CZ)
Manufacturing of cellular and
automation solution
B+B (CZ)
Conel Automation
Sale of industrial network
communications systems

Proportion of Ownership
September 30,
2016
December 31,
2015
September 30,
2015
Remark
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
80.00
80.00
80.00
a)
-
100.00
100.00
a), j)
99.99
99.99
99.99
a)
100.00
100.00
100.00
a), c)
81.17
89.93
89.93
a), d)
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
60.00
-
-
e)
100.00
-
-
a), i)
-
100.00
100.00
a), i)
55.00
55.00
55.00
a)
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
-
g)
100.00
100.00
100.00
100.00
100.00
100.00
40.00
-
-
e)
100.00
100.00
100.00
100.00
100.00
100.00
b)
100.00
100.00
100.00
100.00
60.00
60.00
f)
100.00
100.00
100.00
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
51.00
51.00
51.00
a)
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
90.00
90.00
90.00
a)
-
100.00
100.00
a), h)
-
100.00
100.00
a), h)
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
100.00
100.00
100.00
a)
100.00
-
-
e)
100.00
-
-
e)
100.00
-
-
e)
100.00
-
-
e)
100.00
-
-
e)
100.00
-
-
e)
99.99
-
-
e)
1.00
-
-
e)
100.00
-
-
e)
0.01
-
-
e)
99.00
-
-
e)

(Concluded)

Remark a: Not significant subsidiaries and their financial statements had not been reviewed.

21 -
Remark b: As of January 1, 2016, AiSC was no longer a significant subsidiary, and its financial statements for the nine months ended September 30, 2016 had not been reviewed.
Remark c: In the third quarter of 2015, the Company subscribed for an additional 3,268 thousand shares of AdvanPOS, and the Company’s equity increased from 84.01% to 100%.
Remark d: In the first and third quarter of 2016, the Group acquired 0.07% and sold 8.83% equity in ALNC, respectively, decreasing the Group’s equity interest from 89.93% to 81.17%.
Remark e: In the first quarter of 2016, the Group acquired 100% share equity of B+B with acquirement of 60% and 40% of B+B’s share equity by the Company and ANA, respectively.
Remark f: In the first quarter of 2016, ACN acquired 40% equity of Hangzhou Advantofine Automation Co., Ltd., which led ACN’s equity investment in the above subsidiary increased from 60% to 100%.
Remark g: In the second quarter of 2016, ATC in issuance of common stock for cash to ATC (HK) acquired 100% equity of Yeh-Chiang Technology Kun Shan Co., Ltd.
Remark h: In the second quarter of 2016, Bright Mind Ltd. and AdvanPOS Shanghai processed liquidation, which were not included in consolidated financial statement.
Remark i: In 2016, the Group has adjusted its investment structure and the Company directly acquired 100% share equity of AiST.
Remark j: In the third quarter of 2016, ACA and AdvanPOS merged and ACA ceased to exist.

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in Associates

	September 30,	December 31,	September 30,
	2016	2015	2015
Associates that are not individually material
Listed companies
Axiomtek Co., Ltd. (Axiomtek)	$ 430,456	$ 450,246	$ 423,688
Unlisted companies
AIMobile Co., Ltd. (AIMobile)	120,360	-	-
Deneng Scientific Research Co., Ltd. (Deneng)	16,897	18,228	18,265
Jan Hsiang Electronics Co., Ltd. (Jan Hsiang)	9,180	9,510	9,418
	$ 576,893	$ 477,984	$ 451,371

In the second quarter 2016, the Group paid cash $135,000 thousand to establishment of “AIMobile Co., Ltd.” by a joint investment with Inventec Corporation. The Group and Inventec Corporation held equity interests of 45% and 55%, respectively. The Group had significant influence over AIMobile.

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Fair value (Level 1) of investments in associates with available published price quotation are summarized follows:

	September 30,	December 31,	September 30,
Name of Associate	2016	2015	2015
Axiomtek	$ 1,248,709	$ 1,287,732	$ 1,339,077

The Group’s investment in the above associate was accounted for using equity method.

Except for Axiomtek, investments accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have been unreviewed.

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2015 Additions Disposals Reclassifications Effect of exchange differences Balance at September 30, 2015 Accumulated depreciation and impairment Balance at January 1, 2015 Depreciation expense Disposals Reclassifications Effect of exchange differences Balance at September 30, 2015 Carrying amounts at September 30, 2015 Cost Balance at January 1, 2016 Additions Disposals Acquisition through business combination Reclassifications Effect of exchange differences Balance at September 30, 2016 Accumulated depreciation and impairment Balance at January 1, 2016 Disposals Depreciation expense Acquisition through business combination Reclassifications Effect of exchange differences Balance at September 30, 2016 Carrying amounts at September 30, 2016	Freehold Land $ 3,065,315 - - - 3,991 $ 3,069,306 $ - - - - - $ - $ 3,069,306 $ 3,068,264 - (172,299 ) 12,644 - (7,572) $ 2,901,037 $ - - - - - - $ - $ 2,901,037	Buildings $ 5,320,186 82,549 - (5,438 ) 44,846 $ 5,442,143 $ 899,536 118,882 - (857 ) 9,571 $ 1,027,132 $ 4,415,011 $ 5,348,990 18,322 (94,908 ) 308,798 1,540 (176,621) $ 5,406,121 $ 1,046,061 (15,978 ) 120,686 88,296 186 (45,071) $ 1,194,180 $ 4,211,941	Equipment $ 1,554,609 33,418 (63,270 ) 33,031 8,241 $ 1,566,029 $ 1,044,178 99,580 (59,268 ) 1 4,753 $ 1,089,244 $ 476,785 $ 1,533,640 53,945 (61,147 ) 84,400 3,775 (38,268) $ 1,576,345 $ 1,063,028 (55,088 ) 95,213 61,837 (1,544 ) (23,123) $ 1,140,323 $ 436,022	Office Equipment $ 757,649 40,196 (10,758 ) (2,675 ) 4,294 $ 788,706 $ 490,419 71,360 (9,727 ) (5,061 ) 2,238 $ 549,229 $ 239,477 $ 770,295 39,957 (21,271 ) 89,771 1,006 (27,124) $ 852,634 $ 545,767 (18,122 ) 75,364 82,180 (1,179 ) (21,237) $ 662,773 $ 189,861	Other Facilities $ 1,364,432 166,165 (38,672 ) 29,868 12,622 $ 1,534,415 $ 792,338 132,428 (18,430 ) 2,435 6,453 $ 915,224 $ 619,191 $ 1,533,038 105,253 (60,045 ) 25,390 12,301 (51,904) $ 1,564,033 $ 937,620 (45,833 ) 140,852 4,771 1,441 (29,878) $ 1,008,973 $ 555,060	Construction in Progress $ 40,886 675,319 - (16,841 ) (298) $ 699,066 $ - - - - - $ - $ 699,066 $ 915,128 710,761 - - (50,589 ) (943) $ 1,574,357 $ - - - - - - $ - $ 1,574,357	Total $ 12,103,077 997,647 (112,700 ) 37,945 73,696 $ 13,099,665 $ 3,226,471 422,250 (87,425 ) (3,482 ) 23,015 $ 3,580,829 $ 9,518,836 $ 13,169,355 928,238 (409,670 ) 521,003 (31,967 ) (302,432) $ 13,874,527 $ 3,592,476 (135,021 ) 432,115 237,084 (1,096 ) (119,309) $ 4,006,249 $ 9,868,278

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

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

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15. GOODWILL

Cost Balance at January 1 Additional amounts recognized from business combinations during the period (Note 25) Effect of exchange differences Balance at September 30 PREPAYMENTS FOR LEASE OBLIGATION September 30, 2016 Current assets (included in other current assets) $ 9,102 Noncurrent assets 332,855 $ 341,957		For the Nine Months Ended September 30
	2016 2015 $ 1,139,559 $ 1,168,727 2,311,181 - (124,741) (18,414) $ 3,325,999 $ 1,150,313 December 31, 2015 September 30, 2015 $ 2,557 $ 2,650 100,875 96,120 $ 103,432 $ 98,770

16. PREPAYMENTS FOR LEASE OBLIGATION

Lease prepayments are for the Group’s land-use right in Mainland China.

17. BORROWINGS

Short-term Borrowings

	September 30,	December 31,	September 30,	September 30,
	2016	2015		2015
Unsecured borrowings
Line of credit borrowings	$ 470,400	$ 880,625	$	84,000
The weighted average effective interest rates on bank loans were 1.22%, 1.28%-1.84%			and 1.	29%-1.34%
per annum as of September 30, 2016, December 31, 2015 and September 30, 2015, respectively.
OTHER LIABILITIES
	September 30,	December 31,	September 30,
	2016	2015		2015
Other payables
Payable for salaries or bonuses	$ 2,160,462	$ 2,167,475	$ 2,043,321
Payable for employee benefits	137,190	138,206		136,859
Payable for royalties	160,566	105,186		110,641
Others (Note)	963,956	969,450		987,012
	$ 3,422,174	$ 3,380,317	$ 3,277,833

The weighted average effective interest rates on bank loans were 1.22%, 1.28%-1.84% and 1.29%-1.34% per annum as of September 30, 2016, December 31, 2015 and September 30, 2015, respectively.

18. OTHER LIABILITIES

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Note: Including accruals of litigation, marketing expenses, and freight expenses.

19. RETIREMENT BENEFIT PLANS

Employee benefit expenses in respect of the Group’s defined benefit retirement plans were $1,391 thousand, $1,347 thousand, $4,173 thousand and $4,100 thousand for the three months and nine months ended September 30, 2016 and 2015, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2015 and 2014.

20. EQUITY

a. Share capital

Ordinary shares

	September 30,	December 31,	September 30,
	2016	2015	2015
Number of shares authorized (in thousands)	800,000	800,000	800,000
Amount of shares authorized	$ 8,000,000	$ 8,000,000	$ 8,000,000
Number of shares issued and fully paid (in
thousands)	632,609	631,853	631,853
Amount of shares issued and fully paid	$ 6,326,091	$ 6,318,531	$ 6,318,531

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

For the nine months ended September 30, 2016, changes in shares are due to employees’ exercise of their employee share options.

b. Capital surplus

	September 30,	December	31,	September	30,
	2016	2015		2015
May be used to offset a deficit, distributed
as cash dividends, or transferred to
share capital (1)
Arising from issuance of common shares	$ 3,396,888	$ 3,396,888		$ 3,396,888
Arising from conversion of bonds	931,849	931,849		931,849
Arising from the difference between
consideration received or paid and the
carrying amount of the subsidiaries’ net
assets during actual disposal or acquisition	17,844		-		-
				(Continued)

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	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2016		2015		2015
May be used to offset a deficit only
Arising from changes in percentage of
ownership interest in subsidiaries (2)	$	4,246	$	4,246	$	4,246
Arising from employee share options		968,117		792,341		792,341
Arising from distribution of stock dividends		78,614		78,614		78,614
May not be used for any purpose
Arising from share of changes in capital
surplus of associates		15,993		12,698		10,526
Arising from employee share options		513,823		370,919		305,450
	$	5,927,374	$	5,587,555	$	5,519,914
						(Concluded)

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 once a year).
2) Such capital surplus arises from the effect of changes in ownership interest in a subsidiary resulted from equity transactions other than actual disposal or acquisition, or from changes in capital surplus of subsidiaries accounted for by using equity method.
c. Retained earnings and dividend policy

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The shareholders held their regular meeting on May 25, 2016 and, in that meeting, had resolved amendments to the Company’s Articles of Incorporation (the “Articles”), particularly the amendment to the policy on dividend distribution and the addition of the policy on distribution of employees’ compensation.

Under the dividend 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 bonus to shareholders. For the policies on distribution of employees’ compensation and remuneration to directors and supervisors before and after amendment, please refer to c Employee benefits expense in Note 21.

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 stock dividends be less than 75% of total dividends to retain internally generated cash within the Company to finance future capital expenditures and working capital requirements.

Any appropriations from earnings should be recorded in the year of shareholders’ approval, following the year the earnings were generated.

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Appropriation of earnings to legal reserve should be made until the legal reserve equals the Company’s paid-in capital. 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.

Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate or reverse to a special reserve.

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Company.

The appropriation of earnings, for 2015 and 2014 have been approved in the shareholders’ meetings on May 25, 2016 and May 28, 2015, respectively, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2015 2014 $ 510,434 $ 490,778 3,791,118 3,787,255	Dividends Per Share (NT$)
		For the Year Ended December 31
		2015 2014 $ - $ - 6.0 6.0

d. Other equity items
1) Exchange difference arising on translating the financial statements of foreign operations

Balance at January 1 Exchange differences on translating the net assets of foreign operations Related income tax Share of exchange difference of associates accounted for using the equity method Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 271,859 (508,062) 87,469 (6,460) $ (155,194)	2015 $ 338,356 122,062 (21,339) 3,460 $ 442,539

2) Unrealized gain or loss from available-for-sale financial assets

Balance at January 1 Unrealized gain on revaluation of available-for-sale financial assets Cumulative gain reclassified to profit on disposal of available-for-sale financial assets Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 68,265 121,217 (7,758) $ 181,724	2015 $ 563,277 (249,252) (169,614) $ 144,411

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e. Non-controlling interests

Balance at January 1 Attributable to non-controlling interests: Share of profit for the period Exchange difference arising on translation of foreign entities Non-controlling interests arising from acquisition or disposal of subsidiaries (Note 26) Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 146,276 14,796 (15,096) 20,433 $ 166,409	2015 $ 187,000 12,011 (17,003) (44,217) $ 137,791

21. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

Interest on bank loans b. Depreciation and amortization Property, plant and equipment Intangible assets An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	For the Three Months Ended September 30 2016 2015 $ 1,669 $ 1,736 For the Three Months Ended September 30 2016 2015 $ 140,298 $ 142,195 60,621 23,020 $ 200,919 $ 165,215 $ 32,749 $ 32,848 107,549 109,347 $ 140,298 $ 142,195 $ 37 $ 59 23 49 53,020 16,684 7,541 6,228 $ 60,621 $ 23,020	For the Three Months Ended September 30 2016 2015 $ 1,669 $ 1,736 For the Three Months Ended September 30 2016 2015 $ 140,298 $ 142,195 60,621 23,020 $ 200,919 $ 165,215 $ 32,749 $ 32,848 107,549 109,347 $ 140,298 $ 142,195 $ 37 $ 59 23 49 53,020 16,684 7,541 6,228 $ 60,621 $ 23,020	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
			2016 2015 $ 5,066 $ 3,782 For the Nine Months Ended September 30
		2016 $ 140,298 60,621 $ 200,919 $ 32,749 107,549 $ 140,298 $ 37 23 53,020 7,541 $ 60,621		2016 $ 432,115 242,146 $ 674,261 $ 102,373 329,742 $ 432,115 $ 111 71 219,782 22,182 $ 242,146	2015 $ 422,250 64,657 $ 486,907 $ 97,446 324,804 $ 422,250 $ 231 194 44,751 19,481 $ 64,657

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c. Employee benefit expense

Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) 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 Three Months Ended September 30 2016 2015 $ 1,935,747 $ 1,725,447 83,222 68,971 1,391 1,347 84,613 70,318 123,405 65,469 114,860 169,688 $ 2,258,625 $ 2,030,922 $ 522,771 $ 492,066 1,735,854 1,538,856 $ 2,258,625 $ 2,030,922		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 1,935,747 83,222 1,391 84,613 123,405 114,860 $ 2,258,625 $ 522,771 1,735,854 $ 2,258,625		2016 $ 5,793,620 231,608 4,173 235,781 254,344 394,418 $ 6,678,163 $ 1,433,874 5,244,289 $ 6,678,163	2015 $ 5,067,877 199,554 4,100 203,654 196,408 456,133 $ 5,924,072 $ 1,322,954 4,601,118 $ 5,924,072

In compliance with the Company Act as amended in May 2015, the shareholders held their meeting and resolved amendments to the Company’s Articles on May 25 2016; the amendments stipulate distribution of employees’ compensation at rates no less than 1% and no higher than 20%, and remuneration to directors and supervisors at the rates no higher than 1%, of net profit before income tax, employees’ compensation, and remuneration to directors and supervisors.

The Articles before the amendment stipulated to distribute bonus to employees at the rates no less than 1% and no higher than 20% and remuneration to directors and supervisors at the rates no higher than 1%, of net income. For the three months and nine months ended September 30, 2015, the bonus to employees and the remuneration to directors and supervisors were accrued of net profit after income tax.

Employees’ compensation Remuneration of directors and supervisors	For the Three Months Ended September 30 2016 2015 $ 50,000 $ 11,000 $ 3,000 $ 3,000	For the Three Months Ended September 30 2016 2015 $ 50,000 $ 11,000 $ 3,000 $ 3,000	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 50,000 $ 3,000		2016 $ 150,000 $ 9,000	2015 $ 55,000 $ 9,000

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

The appropriations of employees’ compensation and remuneration to directors and supervisors for 2015 were resolved by the board of directors on March 4, 2016, and the appropriations of bonus to employees and remuneration to directors and supervisors for 2014 were approved in the shareholders’ meeting on May 28, 2015. The amounts of the employees’ compensation/bonus and remuneration to directors and supervisors are disclosed on the table below. After the amendments to the Articles had been resolved in the shareholders’ meeting held on May 25, 2016, the appropriations of the employees’ compensation and remuneration to directors and supervisors for 2015 were reported in the shareholders’ meeting.

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Bonus to employees and employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2015 Cash $ 200,000 12,000	2014
		Cash Bonus $ 126,000 12,000

There was no difference between the amounts of the employees’ compensation and the remuneration to directors and supervisors resolved by the board of directors on March 4, 2016 and the amounts of the bonus to employees and the remuneration to directors and supervisors approved in the shareholders’ meetings on May 28, 2015, and the respective amounts recognized in the consolidated financial statements for the years ended December 31, 2015 and 2014.

Information on employees’ compensation and remuneration to directors and supervisors for 2015 resolved by the Company’s board of directors in 2016 and bonuses to employees and supervisors for 2014 resolved by the shareholders’ meetings in 2015 are available on the Market Observation Post System website of the Taiwan Stock Exchange.

d. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net gains (losses)	For the Three Months Ended September 30 2016 2015 $ 209,454 $ 391,673 (308,323) (322,142) $ (98,869) $ 69,531	For the Three Months Ended September 30 2016 2015 $ 209,454 $ 391,673 (308,323) (322,142) $ (98,869) $ 69,531	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 209,454 (308,323) $ (98,869)		2016 $ 662,439 (843,803) $ (181,364)	2015 $ 894,129 (997,970) $ (103,841)

22. INCOME TAX RELATING TO CONTINUING OPERATIONS

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Current tax In respect of current period Income tax expense on unappropriated earnings Adjustments for prior periods Deferred tax In respect of current periods Income tax expense recognized in loss	For the Three Months Ended September 30 2016 2015 $ 310,355 $ 291,503 - - (4,786) 9,861 60,825 (18,683) $ 366,394 $ 282,681	For the Three Months Ended September 30 2016 2015 $ 310,355 $ 291,503 - - (4,786) 9,861 60,825 (18,683) $ 366,394 $ 282,681	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 310,355 - (4,786) 60,825 $ 366,394		2016 $ 829,284 71,661 (4,786) 146,112 $1,042,271	2015 $ 735,233 62,541 (1,614) 52,580 $ 848,740

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b. Income tax recognized in other comprehensive income

c.	For the Three Months Ended September 30 2016 2015 Deferred tax In respect of current period Translation of foreign operations $ 54,021 $ (77,936) Integrated income tax September 30, 2016 Unappropriated earnings Generated on and after January 1, 1998 $ 7,037,626 Imputation credits accounts $ 770,487 Creditable ratio for distribution of earnings	For the Three Months Ended September 30	For the Nine Months Ended September 30 2016 2015 $ 87,469 $ (21,339) December 31, 2015 September 30, 2015 $ 7,098,449 $ 5,774,939 $ 608,917 $ 570,117 For the Year Ended December 31	For the Nine Months Ended September 30
			2015 2014 13.86% 13.14%

d. Income tax assessments

The Company’s tax returns through 2011 have been assessed by the tax authorities. The Company disagreed with the tax authorities’ assessment of its 2008 and 2009 tax returns and applied for reexamination. Nevertheless, to be conservative, the Company provided for the income tax assessed by the tax authorities.

23. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share Diluted earnings per share	For the Three Months Ended September 30 2016 2015 $ 2.32 $ 1.94 $ 2.31 $ 1.94		Unit: NT$ Per Share For the Nine Months Ended September 30
		2016 $ 2.32 $ 2.31		2016 $ 6.72 $ 6.67	2015 $ 5.96 $ 5.93

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

Net Profit for the Period

Earnings used in the computation of basic earnings per share Earnings used in the computation of diluted earnings per share		For the Three Months Ended September 30 2016 2015 $ 1,468,232 $ 1,228,025 $ 1,468,232 $ 1,228,025		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 1,468,232 $ 1,468,232		2016 $ 4,244,420 $ 4,244,420	2015 $ 3,762,812 $ 3,762,812

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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 Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended September 30 2016 2015 632,071 631,663 3,274 2,350 558 246 635,903 634,259	For the Three Months Ended September 30 2016 2015 632,071 631,663 3,274 2,350 558 246 635,903 634,259	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 632,071 3,274 558 635,903		2016 631,926 3,704 708 636,338	2015 631,559 2,536 552 634,647

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

24. SHARE-BASED PAYMENT ARRANGEMENTS

Qualified employees of the Company and its subsidiaries were granted 6,500 options in 2016, 5,000 options in 2014 and 3,000 options in 2010. Each option entitles the holder to subscribe for one thousand common shares of the Company. The holders of these shares include employees whom meet certain criteria set by the Company, from both domestic and overseas subsidiaries in which the Company directly or indirectly invests over 50%. Options issued in 2016, 2014 and 2010 are valid for six, six and five years, respectively. All are exercisable at certain percentages after the second anniversary year from the grant date. Options granted in 2010 had an exercise price equal to the closing price of the Company’s common shares listed on the grant date, and the exercise prices of those granted in 2016 and 2014 were both NT$100 per share. For any subsequent changes in the Company’s paid-in capital, the exercise price and the number of options will be adjusted accordingly.

Information on employee share options was as follows:

Employee Share Options Balance at January 1 Options granted Options exercised Balance at September 30	For the Nine Months	Ended September 30
	2016 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 5,000 $ 100.00 6,500 100.00 (756) 95.10 10,744 100.00	2015
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 5,644 $ 94.10 - - (644) 47.95 5,000 100.00 (Continued)

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Employee Share Options Options exercisable, end of the period Weighted-average fair value of options granted (NT$)	For the Nine Months	Ended September 30
	2016 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 4,244 $ 95.10 $140.97-144.36 -	2015
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) - $ - $ - - (Concluded)

The weighted-average share price at the date of exercise of share options exercised for the nine months ended September 30, 2016 and 2015 were from $194 to $289 and from $198 to $278, respectively.

Information about outstanding options for the nine months ended September 30, 2016 and 2015 was as follows:

Employee Share Options Issuance in 2016 Issuance in 2014	For the Nine Months	Ended September 30
	2016 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 100.00 5.70 95.10 3.88	2015
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) - - 100.00 4.88

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

	2016		2014	2010
Grant-date share price (NT$)		$235	$239.5	$67.4
Exercise price (NT$)		$100	$100	$67.4
Expected volatility	31.42%-32.48%		28.28%-29.19%	34.11%-35.15%
Expected life (years)	4-5.5	years	4-5.5 years	3.5-4.5 years
Expected dividend yield		0%	0%	0%
Risk-free interest rate	0.52%-0.65%		1.07%-1.30%	0.92%-1.10%

Expected volatility was based on the historical stock price volatility over the past five years.

Compensation costs recognized were $254,344 thousand and $196,408 thousand, respectively, for the nine months ended September 30, 2016 and 2015.

Qualified employees of AdvanPOS, a subsidiary of the Company, were granted 800 options in December 2010. Each option entitles the holder to subscribe for one thousand common shares of AdvanPOS. These option were valid for two years. All were exercisable at certain percentages after the first anniversary year from the grant date. For the exercise of options, AdvanPOS issued new shares to the employees at NT$10 per share.

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Information on employee share options was as follows:

Employee Share Options Balance at January 1 Options exercised Options expired Balance at September 30	For the Nine Months Ended September 30, 2015
	Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 446 $ 10.00 (423) 10.00 (23) - - -

Information on outstanding options for the nine months ended September 30, 2015 was as follows:

Employee Share Options Issuance in 2010	For the Nine Months Ended September 30, 2015
	Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 10.00 -

Options granted by AdvanPOS in 2014 were priced using the Black-Scholes model, and the inputs to the model were as follows:

	2010
Grant-date share price (NT$)	$12.39
Exercise price (NT$)	$10
Expected volatility	30.43%
Expected life (years)	2 years
Expected dividend yield	0%
Risk-free interest rate	1.345%

25. BUSINESS COMBINATION

a. Subsidiary acquired

			Proportion of
			Voting Equity
		Date of	Interests	Consideration
	Principal Activity	Acquisition	Acquired (%)	Transferred
B+B SmartWorx,	Sale of industrial network	January 4, 2016	100	$	3,296,048
Inc. (Note)	communications
Yeh-Chiang	Production and sale of	May 27, 2016	100	$	459,648
Technology Kun	industrial automation
Shan Co., Ltd.	products

34 -

Note: For more information of BEMC, Avtek and B+B and its subsidiaries IMC, Quatech, BBI, B&B Electronics, B&B DMCC, B+B (CZ) (formerly Conel) and Conel Automation (formerly Softcon), please refer to Note 12, Table 8 and Table 10.

To expand its global brand market in industrial network communications, the Company made arrangements to acquire 100% equity in B+B SmartWorx Inc. (B+B) from Graham Partners. The Group will expand its Industrial Connectivity product portfolio and increase its global market share by leveraging B+B SmartWorx’ branding and sales channels in the U.S., Europe, and the Middle East.

The Group acquired 100% share equity of Yeh-Chiang Technology Kun Shan Co., Ltd. (Yeh-Chiang Kun Shan) from Yeh-Chiang Technology (Cayman), the purpose of this acquisition was to arrange future product line, establish a machinery plant, and expand operations in China.

b. Considerations transferred

		Yeh-Chiang
	B+B	Kun Shan
Cash	$ 3,296,048	$ 459,648
	(US$ 99,850	(RMB 92,758
	thousand)	thousand)

On January 4, 2016, the Group acquired 100% share equity of B+B and its subsidiaries from Graham Partners. The Company and ANA obtained 60% and 40% share equity of B+B, respectively.

On May 27, 2016, ATC acquired 100% share equity of Yeh-Chiang Kun Shan from Yeh-Chiang Technology (Cayman) Corp. The cash of acquisition was provided by capital increase from ATC.

Acquisition-related costs amounting to $34,209 thousand were excluded from the consideration transferred and were recognized as current expenses under administrative expenses in the consolidated statement of comprehensive income.

c. Assets acquired and liabilities assumed at the date of acquisition

Current assets Trade receivables Inventories Other current financial assets Other receivables Other current assets Non-current assets Plant and equipment Intangible assets Deferred tax assets Long-term prepayments for lease Current liabilities Trade and other payables Non-current liabilities Other liabilities Deferred tax liabilities	B+B Yeh-Chiang Kun Shan $ 211,332 $ - 301,938 - 33,010 - - 4,366 30,446 19 133,033 150,886 416,365 - 35,125 7,648 - 262,212 (135,526) (530) (10,730) - (30,126) - $ 984,867 $ 424,601

35 -

The initial accounting for the acquisition of B+B Limited had only been provisionally determined at the end of the reporting period. The tax bases for B+B’s assets were required to be reset on the basis of the market values of the assets. At the date of finalization of these consolidated financial statements, the necessary market valuations and other calculations had not been completed and they were thus only provisionally determined on the basis of management’s best estimate of the likely tax values.

d. Goodwill arising on acquisition

Consideration transferred Less: Fair value of identifiable net assets acquired Goodwill arising on acquisition	B+B $ 3,296,048 (984,867) $ 2,311,181

Goodwill arose from the acquisition of B+B because the cost of the combination included a control premium. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of B+B. These benefits were not recognized separately from goodwill because they did not meet the recognition criteria for identifiable intangible assets.

Part amount of acquisition goodwill that was expected to be deductible for tax purposes would be amortized over 10 years.

e. Net cash outflow on acquisition of subsidiaries

Consideration paid in cash Less: Prepayments for investments Less: Cash and cash equivalent balance acquired	B+B $ 3,296,048 (2,279,881) - $ 1,016,167	Yeh-Chiang Kun Shan $ 459,648 - (35,047) $ 424,601

f. Impact of acquisitions on the results of the Group

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

Revenue Gain (Loss)	B+B $ 1,233,002 $ (18,045)	Yeh-Chiang Kun Shan $ 62,407 $ 7,594

26. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

a. In the first three quarters of 2015, the Group subscribed for an additional 6,533 thousand shares of AdvanPOS, increasing the Group’s equity interest from 84.01% to 100%.
b. In the first and third quarter of 2016, the Group acquired 0.07% and sold 8.83% equity in ALNC, respectively, decreasing the Group’s equity interest from 89.93% to 81.17%.
36 -
c. In the first quarter of 2016, the Group acquired 40% equity in Hanzhou Advantofine Automation Co., Ltd., increasing the Group’s equity interest from 60% to 100%.

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

	For the Nine Months Ended September 30, 2016	For the Nine Months Ended September 30, 2016	For the Nine Months Ended September 30, 2016	For the Nine Months Ended September 30, 2016	For the Nine Months Ended September 30, 2016	For the Nine Months Ended September 30, 2016
	Hangzhou
	Advantofine
	Automation
	Co., Ltd.		ALNC			Total
Cash consideration received (paid)	$	(12,749)	$ 47,335		$	34,586
The proportionate share of the carrying
amount of the net assets of the subsidiary
transferred to (from) non-controlling
interests		9,195	(29,628)			(20,433)
Differences arising from equity transaction	$	(3,554)	$ 17,707		$	14,153
Line items adjusted for equity transaction
Capital surplus - difference between
consideration received or paid and carrying
amounts of the subsidiaries’ net assets
during actual disposal or acquisition	$	-	$ 17,844		$	17,844
Unappropriated retained earnings		(3,554)		(137)		(3,691)
	$	(3,554)	$ 17,707		$	14,153
					For the Nine
					Months Ended
					September 30,
						2015
					AdvanPOS
Cash consideration paid					$ (118,577)
The proportionate share of the carrying amount of the		net assets of the subsidiary
transferred to non-controlling interests						44,217
Differences arising from equity transaction					$	(74,360)
Line items adjusted for equity transaction
Capital surplus - difference between consideration received or paid and carrying
amounts of the subsidiaries’ net assets during actual disposal or acquisition					$	(11,457)
Unappropriated retained earnings						(62,903)
					$	(74,360)
Capital surplus - changes in percentage of ownership interest in subsidiaries					$	3,567

37 -

27. FINANCIAL INSTRUMENTS

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

September 30, 2016 Financial assets at FVTPL Derivative financial assets Non-derivative financial asset held for trading Available-for-sale financial assets Securities listed in ROC Equity securities Unlisted securities - ROC Equity securities Unlisted securities - other countries Equity securities Mutual funds Financial liabilities at FVTPL Derivative financial liabilities December 31, 2015 Financial assets at FVTPL Derivative financial assets Non-derivative financial asset held for trading Available-for-sale financial assets Securities listed in ROC Equity securities Unlisted securities - ROC Equity securities Unlisted securities - other countries Equity securities Mutual funds Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 87,640 $ 87,640 $ 2,283,973 - - 938,826 $ 3,222,799 $ - Level 1 $ - 168,998 $ 168,998 $ 2,189,507 - - 1,271,302 $ 3,460,809 $ -	Level 2 $ 19,184 - $ 19,184 $ - - - - $ - $ 3,545 Level 2 $ 7,391 - $ 7,391 $ - - - - $ - $ 6,352	Level 3 $ - - $ - $ - 9,375 33,257 - $ 42,632 $ - Level 3 $ - - $ - $ - 9,375 33,257 - $ 42,632 $ -	Total $ 19,184 87,640 $ 106,824 $ 2,283,973 9,375 33,257 938,826 $ 3,265,431 $ 3,545 Total $ 7,391 168,998 $ 176,389 $ 2,189,507 9,375 33,257 1,271,302 $ 3,503,441 $ 6,352

38 -

September 30, 2015

Financial assets at FVTPL Derivative financial assets Non-derivative financial asset held for trading Available-for-sale financial assets Securities listed in ROC Equity securities Unlisted securities - ROC Equity securities Unlisted securities - other countries Equity securities Mutual funds Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 153,719 $ 153,719 $ 2,249,032 - - 1,844,710 $ 4,093,742 $ -	Level 2 $ 935 - $ 935 $ - - - - $ - $ 48,727	Level 3 $ - - $ - $ - 9,375 33,257 - $ 42,632 $ -	Total $ 935 153,719 $ 154,654 $ 2,249,032 9,375 33,257 1,844,710 $ 4,136,374 $ 48,727

As of September 30, 2016 and 2015, there were no transfers between Levels 1 and 2.

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

For the nine months ended September 30, 2016

Financial assets Balance at January 1, 2016 Balance at September 30, 2016	Available-for-sale Financial Assets Equity Instruments Investment Products $ 42,632 $ - $ 42,632 $ -	Total $ 42,632 $ 42,632

39 -

For the nine months ended September 30, 2015

Financial assets Balance at January 1, 2015 Purchases Disposal Effect of foreign exchange Balance at September 30, 2015		Available-for-sale Financial Assets Equity Instruments Investment Products $ 42,632 $ 947,116 - 2,685,162 - (3,618,695) - (13,583) $ 42,632 $ -	Total $ 989,748 2,685,162 (3,618,695) (13,583) $ 42,632
		Equity Instruments $ 42,632 - - - $ 42,632

3) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

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

4) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

The fair values of investment products denominated in RMB were using income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees. Had the inputs to the valuation model been changed to reflect reasonably possible alternative assumptions and had all the other variables been held constant, the fair value of the shares would have increased/decreased.

b. Categories of financial instruments

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2016		2015		2015
Financial assets
Fair value through profit or loss (FVTPL)
Held for trading (Note 1)	$	106,824	$	176,389	$	154,654
Loans and receivables (Note 2)		10,222,507		10,828,312		10,083,781
Available-for-sale financial assets		3,265,431		3,503,441		4,136,374
Financial liabilities
Fair value through profit or loss (FVTPL)
Held for trading		3,545		6,352		48,727
Measured at amortized cost (Note 3)		7,360,856		7,487,011		6,839,781

Note 1: The balance included the carrying amount of held-for-trading financial assets measured at cost.

40 -
Note 2: The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market - current, notes receivable, accounts receivable, accounts receivable - related parties, other receivables and other current financial assets.
Note 3: The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, trade and other payables, and long-term payables.
c. Financial risk management objectives and policies

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

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

The Corporate Treasury function reported quarterly to the board of directors on the Group’s current derivative instrument management.

1) Market risk

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

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

a) Foreign currency risk

The Group had foreign currency sales and purchases, which exposed it to foreign currency risk. The Group manages the risk that fluctuations in foreign currency could have on foreign-currency denominated assets and future cash flow by entering into a variety of derivative financial instruments, which allow the Group to mitigate but not fully eliminate the effect.

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

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) are set out in Note 31. As for the carrying amounts of derivatives exposing to foreign currency risk at the end of the reporting period, refer to Note 7.

41 -

Sensitivity analysis

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

The following table details the Group’s sensitivity to a 5% increase in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and foreign currency forward contracts designated as cash flow hedges, and adjusts their translation at the end of the reporting period for a 5% change in exchange foreign currency rates. A positive number below indicates an increase in pre-tax profit and other equity associated with New Taiwan dollars strengthen 5% against the relevant currency. For a 5% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss	U.S. Dollar Impact For the Nine Months Ended September 30 2016 2015 $ 91,030 (Note 1) $ 18,192 (Note 1)	Euro Impact For the Nine Months Ended September 30 2016 2015 $ 67,828 (Note 2) $ 37,415 (Note 2)	Renminbi Impact
			For the Nine Months Ended September 30
			2016 2015 $ 36,805 (Note 3) $ 61,759 (Note 3)

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

The Group’s floating-rate bank savings are exposed to risk of changes in interest rates. The Group’s management monitors fluctuations in market interest rates regularly to ensure that interest rate risks are minimized.

The Group’s fixed-term bank deposits are exposed to fair value interest rate risk; however, this expected risk is insignificant.

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

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2016		2015		2015
Fair value interest rate risk
Financial assets	$	314,519	$	152,279	$	848,362
Financial liabilities		-		60,000		84,000
Cash flow interest rate risk
Financial assets		2,666,650		2,817,236		2,273,505
Financial liabilities		470,400		820,625		-

42 -

Sensitivity analysis

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

If interest rates had been 50 basis points higher and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2016 and 2015 would have increased by $8,236 thousand and $8,526 thousand, respectively. Had interest rates been 50 basis points lower, the effects on the Group’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 Group was exposed to equity price risk through its investments in listed equity securities and open-end mutual funds. The Group manages this exposure by maintaining a portfolio of investments with different risks. The Group’s equity price risk was mainly concentrated on open-end mutual funds and equity instruments trading in the Taiwan Stock Exchange.

Sensitivity analysis

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

If equity prices had been 1% higher, pre-tax profits for the nine months ended September 30, 2016 and 2015 would have increased by $876 thousand and $1,537 thousand, respectively, as a result of the changes in fair value of held-for-trading investments and the pre-tax other comprehensive income for the nine months ended September 30, 2016 and 2015 would have increased by $32,654 thousand and $41,364 thousand, respectively, as a result of changes in fair value of available-for-sale investments. Had equity prices been 1% lower, the effects on pre-tax other comprehensive gains would have been of the same amounts but negative.

2) Credit risk

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

In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance are made for irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

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

43 -

3) Liquidity risk

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

The Group relies on bank borrowings as a significant source of liquidity. As of September 30, 2016, December 31, 2015 and September 30, 2015, the Group had available unutilized short-term bank loan facilities set out in (c) below.

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

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

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

For the liabilities with floating interests, the undiscounted amounts were derived from the interest rate curve at the end of the reporting period.

September 30, 2016

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 5,169,776 Variable interest rate liabilities 480 $ 5,170,256	1-3 Months $ 721,620 471,221 $ 1,192,841	Over 3 Months to 1 Year Over 1 Year- 5 Years $ 999,060 $ - - - $ 999,060 $ -

44 -

December 31, 2015

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 3,891,231 Variable interest rate liabilities 1,258 Fixed interest rate liabilities 64 $ 3,892,553 September 30, 2015 On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 4,125,473 Fixed interest rate liabilities 63,031 $ 4,188,504	1-3 Months $ 1,687,755 2,516 60,070 $ 1,750,341 1-3 Months $ 1,404,589 21,003 $ 1,425,592	Over 3 Months to 1 Year Over 1 Year- 5 Years $ 1,027,400 $ - 831,583 - - - $ 1,858,983 $ - Over 3 Months to 1 Year Over 1 Year- 5 Years $ 1,183,877 $ 41,842 - - $ 1,183,877 $ 41,842

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

b) The following tables show the Group’s liquidity analysis of its derivative financial instruments. The tables were based on the undiscounted gross cash inflows and outflows on those derivative instruments that require gross settlement.

September 30, 2016

On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 316,863 Outflows 310,216 $ 6,647	1-3 Months Over 3 Months to 1 Year $ 623,931 $ 334,743 618,450 331,232 $ 5,481 $ 3,511	Total $ 1,275,537 1,259,898 $ 15,639

45 -

December 31, 2015

On Demand or
Less than
1 Month
1-3 Months
Over 3 Months
to 1 Year
Total
Gross settled
Foreign exchange
forward contracts
Inflows
$ 314,246 $ 523,146 $ 93,795 $ 931,187
Outflows

310,013

526,535

93,600

930,148
$ 4,233
$ (3,389)
$ 195
$ 1,039
September 30, 2015
On Demand or
Less than
1 Month
1-3 Months
Over 3 Months
to 1 Year
Total
Gross settled
Foreign exchange
forward contracts
Inflows
$ 364,767 $ 652,139 $ 63,703 $ 1,080,609
Outflows

384,041

680,032

64,328

1,128,401
$ (19,274)
$ (27,893)
$ (625)
$ (47,792)
Financing facilities
September 30,
2016
December 31,
2015
September 30,
2015
Unsecured bank over draft facility,
reviewed annually and payable at
call:
Amount used
$ 470,400
$ 880,625
$ 84,000
Amount unused

4,753,360

3,603,268

3,423,523
$ 5,223,760
$ 4,483,893
$ 3,507,523

46 -

28. TRANSACTIONS WITH RELATED PARTIES

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

a. Sales of goods

Related Party Categories Associates	For the Three Months Ended September 30 2016 2015 $ 7,100 $ 4,592	For the Three Months Ended September 30 2016 2015 $ 7,100 $ 4,592	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 7,100		2016 $ 38,484	2015 $ 13,604

b. Purchases of goods

For the Three Months Ended September 30 Related Party Categories 2016 2015 Associates $ 16,995 $ 5,856 c. Receivables from related parties (excluding loans to related parties) Line Items Related Party Categories September 30, 2016 Accounts receivable from related parties Associates $ 4,781 Notes receivable Associates $ 6	For the Nine Months Ended September 30
	2016 2015 $ 23,783 $ 18,783 December 31, 2015 September 30, 2015 $ 26,775 $ 4,164 $ 183 $ 88

The outstanding trade receivables from related parties are unsecured. For the nine months ended September 30, 2016 and 2015, no impairment loss was recognized for trade receivables from related parties.

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

	Related Party	September 30,	December 31,	December 31,	September 30,	September 30,
Line Items	Categories	2016		2015		2015
Accounts payable	Associates	$ 14,012	$	1,171	$	1,971

The outstanding accounts payable from related parties are unsecured.

47 -

e. Other transactions with related parties

Rental income Other related parties Other Associates Other related parties	Other Income	Other Income	Other Income	Other Income	Other Income
	For the Three Months Ended September 30 2016 2015 $ 15 $ 15 $ - $ 787 676 676 $ 676 $ 1,463		For the Nine Months Ended September 30
		2016 $ 15 $ - 676 $ 676		2016 $ 45 $ - 2,027 $ 2,027	2015 $ 35 $ 787 2,037 $ 2,824

Lease contracts formed between the Company and its associates were based on market rental prices and had normal payment terms. There were no significant differences in the selling price and payment terms for related parties and those for unrelated parties. When normal payment terms with related parties were not stipulated, the payment terms were based on mutual agreement.

f. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Share-based payments	For the Three Months Ended September 30 2016 2015 $ 9,161 $ 10,274 28 29 4,117 6,547 $ 13,306 $ 16,850	For the Three Months Ended September 30 2016 2015 $ 9,161 $ 10,274 28 29 4,117 6,547 $ 13,306 $ 16,850	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2016 $ 9,161 28 4,117 $ 13,306		2016 $ 27,482 85 17,211 $ 44,778	2015 $ 30,823 88 19,641 $ 50,552

The remuneration of directors and key executives was determined by the remuneration committee having regarded to the performance of individuals and market trends.

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

a. As of September 30, 2015, the Company pledged time deposits of $18,650 thousand for bank guarantees for the Company’s purchases.
b. As of September 30, 2016, B+B had pledged time deposits of $78,282 thousand to get bank guarantees in line for the Company’s merger transaction.

30. SIGNIFICANT COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of September 30, 2016 were as follows.

Significant Commitments

As of September 30, 2016, December 31, 2015 and September 30, 2015, the Company had a construction contract amounting to $1,627,500 thousand for a newly constructed science park located in Linkou in Taoyuan City. The remaining payables were $93,113 thousand, $701,927 thousand and $927,699 thousand, respectively.

48 -

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Group entities and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

September 30, 2016

Unit: In Thousands of New Taiwan Dollars and Foreign Currencies, Except for Exchange Rate

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 160,625 31.360 (USD:NTD) RMB 323,884 4.6930 (RMB:NTD) EUR 23,804 35.080 (EUR:NTD) USD 9,715 6.6823 (USD:RMB) Financial liabilities Monetary items USD 91,840 31.360 (USD:NTD) USD 25,590 6.6823 (USD:RMB) RMB 141,283 4.6930 (RMB:NTD)	Carrying Amount $ 5,037,200 1,519,988 835,044 304,660 $ 7,696,892 $ 2,880,102 802,503 663,041 $ 4,345,646

December 31, 2015

Unit: In Thousands of New Taiwan Dollars and Foreign Currencies, Except for Exchange Rate

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 146,799 32.825 (USD:NTD) RMB 328,441 4.9950 (RMB:NTD) RMB 213,731 0.1522 (RMB:USD) EUR 24,409 35.880 (EUR:NTD) USD 5,064 6.5716 (USD:RMB) Nonmonetary items USD 3,763 32.825 (USD:NTD)	Carrying Amount $ 4,818,677 1,640,563 1,067,567 875,795 166,224 $ 8,568,826 $ 123,296 (Continued)

49 -

		Foreign			Carrying
	Currencies		Exchange Rate		Amount
Financial liabilities
Monetary items
USD	$	100,579	32.825 (USD:NTD)	$	3,301,506
RMB		207,665	4.9950 (RMB:NTD)		1,037,287
USD		25,988	6.5716 (USD:RMB)		853,056
RMB		62,341	0.1522 (RMB:USD)		311,378
				$	5,503,227
					(Concluded)
September 30, 2015
	Unit: In Thousands of New Taiwan Dollars and
		Foreign	Currencies, Except for Exchange Rate
		Foreign			Carrying
	Currencies		Exchange Rate		Amount
Financial assets
Monetary items
USD	$	120,500	32.870 (USD:NTD)	$	3,960,835
RMB		398,855	5.1760 (RMB:NTD)		2,064,473
RMB		257,493	0.1575 (RMB:USD)		1,332,776
EUR		29,257	36.920 (EUR:NTD)		1,080,168
USD		5,564	6.3505 (USD:RMB)		182,890
				$	8,621,142
Nonmonetary items
USD		2,632	32.870 (USD:NTD)	$	86,514
Financial liabilities
Monetary items
USD		80,489	32.870 (USD:NTD)	$	2,645,673
RMB		232,610	5.1760 (RMB:NTD)		1,203,989
USD		29,844	6.3505 (USD:RMB)		980,978
RMB		92,088	0.1575 (RMB:USD)		476,645
				$	5,307,285

For the three months and nine months ended September 30, 2016 and 2015, realized and unrealized net foreign exchange gains (losses) were $(98,869) thousand, $69,531 thousand, $(181,364) thousand and $(103,841) thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the Group entities.

50 -

32. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and b. information on investees:
1) Financing provided to others. (Table 1)
2) Endorsement/guarantee provided. (Table 2)
3) Marketable securities held. (Table 3)
4) Marketable securities acquired and disposed at costs or prices 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 5)
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 7)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 6)
9) Transactions of financial instruments. (Notes 7 and 27)
10) Intercompany relationships and significant intercompany transactions. (Table 11)
11) Information on investees. (Table 8)
12) Organization chart. (Table 10)
c. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or losses, carrying amount of the investment at the end of the period, repatriations of 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, and their prices, payment terms, and unrealized gains or losses. (Tables 1, 6 and 7)

33. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Groups segment information disclosed is as follows:

Industrial internet of thing services: Focus on industry-driven services;
Embedded board and design-in services: Services involving embedded boards, systems and peripheral hardware and software;
51 -
Smart city solution services: Referring to integrated intelligent applications that can be used in various areas;
Global customer services: Global repair, technical support and warranty services.

Segment Revenues and Results

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

Industrial Interest of Thing Services For the nine months ended September 30, 2016 Revenues from external customers $ 10,190,953 Inter-segment revenues - Segment revenues $ 10,190,953 Eliminations $ - Consolidated revenues - Segment income $ 2,263,118 Other revenues Central administration costs and directors’ salaries Other income and expense Finance costs Share of profits of associates for using the equity method Profit before tax For the nine months ended September 30, 2015 Revenues from external customers $ 8,469,379 Inter-segment revenues - Segment revenues $ 8,469,379 Eliminations $ - Consolidated revenues - Segment income (loss) $ 1,911,229 Other revenues Central administration costs and directors’ salaries Other income and expense Finance costs Share of profits of associates accounted for using the equity method Profit before tax (continuing operations)	Embedded Boards and Design-in Services $ 11,693,050 - $ 11,693,050 $ - - $ 2,229,263 $ 11,233,621 - $ 11,233,621 $ - - $ 1,885,005	Smart City Solution Services $ 5,385,545 - $ 5,385,545 $ - - $ 652,743 $ 5,145,465 - $ 5,145,465 $ - - $ 545,459	Global Customer Services $ 3,640,238 - $ 3,640,238 $ - - $ 406,096 $ 3,363,031 - $ 3,363,031 $ - - $ 409,588	Others $ 287,458 - $ 287,458 $ - - $ 69,115 $ 37,870 - $ 37,870 $ - - $ (45,615)	Total $ 31,197,244 - 31,197,244 - 31,197,244 5,620,335 204,754 (725,604 ) 151,870 (5,066 ) 55,198 $ 5,301,487 $ 28,249,366 - 28,249,366 - 28,249,366 4,705,666 261,563 (398,189 ) (23,569 ) (3,782 ) 81,874 $ 4,623,563

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

52 -

TABLE 1

ADVANTECH CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note A)	Lender	Borrower	Financial Statement Account	Related Parties	Credit Line(Note D)	Credit Line(Note D)	Actual Borrowing	Interest Rate (%)	Nature of Financing	Business Transaction Amounts	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	Better Auto	Dongguan Pou Yuen Digital Technology Co., Ltd. Dongguan Pou Yuen Digital Technology Co., Ltd.	Accounts receivable - related parties Accounts receivable - related parties	Yes Yes	$ 22,980 (RMB 4,520 thousand ) 16,725 (US$ 500 thousand )	$ 21,212 (RMB 4,520 thousand ) 15,680 (US$ 500 thousand )	$ 21,212 (RMB 4,520 thousand ) 12,544 (US$ 400 thousand )	- -	Short-term financing Short-term financing	$ - -	Financing need Financing need	$ - -	None None	None None	$ 2,379,090 (Note C) 2,379,090 (Note C)	$ 4,758,180 (Note C) 4,758,180 (Note C)
2	Advantech Corporate Investment	The Company	Accounts receivable - related parties	Yes	500,000	500,000	500,000	1	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)
3	AdvanPOS	The Company	Accounts receivable - related parties	Yes	100,000	100,000	-	1	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)
4	ANA	B+B	Accounts receivable - related parties	Yes	66,900 (US$ 2,000 thousand )	62,720 (US$ 2,000 thousand )	31,360 (US$ 1,000 thousand )	2	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)
5	B+B	B+B (CZ) (formerly Conel s.r.o.)	Accounts receivable - related parties	Yes	133,408 (CZK 31,756 thousand )	41,317 (CZK 31,756 thousand )	9,092 (CZK 6,988 thousand )	2	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)
6	Cermate Technologies (Shanghai) Inc.	Shenzhen Cermate Technologies Inc.	Prepayments of inventories	Yes	15,252 (RMB 3,000 thousand )	14,079 (RMB 3,000 thousand )	-	-	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)
7	ALNC	Dongguan Pou Yuen Digital Technology Co., Ltd.	Accounts receivable - related parties	Yes	150,000	150,000	76,395	-	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)
8	B+B (CZ) (formerly Conel s.r.o.)	Conel Automation (formerly Softcon)	Accounts receivable - related parties	Yes	16,111 (CZK 12,000 thousand )	15,613 (CZK 12,000 thousand )	15,613 (CZK 12,000 thousand )	1	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)
9	Advanixs Corp. (formerly Advansus Corp.)	The Company	Accounts receivable - related parties	Yes	200,000	200,000	200,000	1	Short-term financing	-	Financing need	-	None	None	2,379,090 (Note C)	4,758,180 (Note C)

Note A: Investee companies are numbered sequentially from 1.

Note B: The exchange rates as of September 30, 2016 were US$1=NT$31.360, RMB1=NT$4.6930 and CZK1=NT$1.301.

Note C: The financing limit for each borrower and for the aggregate financing were 10% and 20%, respectively, of the Company’s net asset values.

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

Note E: All intercompany financing has been eliminated from consolidation.

53 -

TABLE 2

ADVANTECH CO., LTD. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (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 Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	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	AKR AiST AAU AdvanPOS AdvanPOS A-DLoG ABR Cermate Advanixs Corp. (formerly Advansus Corp.) Advanixs Corp. (formerly Advansus Corp.) ALNC	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 2,379,090 2,379,090 2,379,090 2,379,090 2,379,090 2,379,090 2,379,090 2,379,090 2,379,090 2,379,090 2,379,090	$ 1,631 (US$ 50 thousand) 4,892 (US$ 150 thousand) 6,523 (US$ 200 thousand) 63,450 (US$ 2,000 thousand) 32,615 (US$ 1,000 thousand) 36,300 (EUR 1,000 thousand) 48,923 (US$ 1,500 thousand) 50,553 (US$ 1,550 thousand) 52,184 (US$ 1,600 thousand) 63,450 (US$ 2,000 thousand) 114,153 (US$ 3,500 thousand)	$ 1,568 (US$ 50 thousand) 4,704 (US$ 150 thousand) 6,272 (US$ 200 thousand) 62,720 (US$ 2,000 thousand) 31,360 (US$ 1,000 thousand) 35,080 (EUR 1,000 thousand) 47,040 (US$ 1,500 thousand) 48,608 (US$ 1,550 thousand) 50,176 (US$ 1,600 thousand) 62,720 (US$ 2,000 thousand) 109,760 (US$ 3,500 thousand)	$ - - - - - - - - - - -	$ - - - - - - - - - - -	0.01 0.02 0.03 0.28 0.14 0.16 0.21 0.22 0.23 0.28 0.49	$ 7,137,270 7,137,270 7,137,270 7,137,270 7,137,270 7,137,270 7,137,270 7,137,270 7,137,270 7,137,270 7,137,270	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

(Continued)

54 -

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 Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	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
		B+B ANA AKMC	Subsidiary Subsidiary Subsidiary	$ 2,379,090 2,379,090 2,379,090	$ 326,510 (US$ 10,000 thousand) 978,450 (US$ 30,000 thousand) 195,690 (US$ 6,000 thousand)	$ 313,600 (US$ 10,000 thousand) 940,800 (US$ 30,000 thousand) 188,160 (US$ 6,000 thousand)	$ - 470,400 (US$ 15,000 thousand) -	$ - - -	1.41 4.22 0.84	$ 7,137,270 7,137,270 7,137,270	Y Y Y	N N N	N N Y

Note A: 10% of the Company’s net equity value.

Note B: 30% of the Company’s net equity value.

Note C: The exchange rates as of September 30, 2016 were US$1=NT$31.360 and EUR1=NT$35.080.

Note D: The latest net equity is from the financial statements on ended June 30, 2016.

(Concluded)

55 -

TABLE 3

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (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		September 30, 2016	September 30, 2016		Note
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
The Company Advantech Corporate Investment Advanixs Corporate AiST ALNC	Stock ASUSTek Computer Inc. Pegatron Corp. Allied Circuit Co., Ltd. Fund Mega Diamond Money Market Stock Allied Circuit Co., Ltd. COBAN Research and Technologies, Inc. BroadTec System Inc. BiosenseTek Corp. Jaguar Technology Allied Circuit Co., Ltd. Phison Electronics Corporation Radiant Opto-Electronics Corporation Lelon Electronics Corporation Fund Mega Diamond Money Market Fund Jih Sun Money Market Fund Jih Sun Money Market Fund Mega Diamond Money Market Capital Money Market	- - - - - - - - - - - - - - - - - -	Available-for-sale financial assets - noncurrent `〃` `〃` Available-for-sale financial assets - current Financial assets at fair value through profit or loss - current Available-for-sale financial assets - noncurrent `〃` `〃` `〃` `〃` Available-for-sale financial assets - current `〃` `〃` `〃` `〃` `〃` `〃` `〃`	5,239,461 3,540,570 1,200,000 8,061,557 2,800,000 600,000 150,000 37,500 500,000 299,000 1,500,000 500,000 2,550,000 23,861,961 15,723,338 1,055,780 6,402,643 2,132,508	$ 1,464,429 285,370 37,560 100,042 87,640 33,257 1,500 375 7,500 9,359 357,000 25,450 104,805 296,120 230,503 15,478 79,454 34,060	0.71 0.14 2.41 - 5.63 6.85 7.50 1.79 16.67 0.60 0.76 0.11 1.94 - - - - -	$ 1,464,429 285,370 37,560 100,042 87,640 33,257 1,500 375 7,500 9,359 357,000 25,450 104,805 296,120 230,503 15,478 79,454 34,060	Notes A and C Notes A and D Note A Note B Note A - - - - Note A Note A Note A Note A Note B Notes B and E Note B Note B Note B

(Continued)

56 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		September 30, 2016	September 30, 2016		Note
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
AdvanPOS Advantech Innovative Design Co., Ltd. Advantech iFactory Co., Ltd. Cermate	Fund Mega Diamond Money Market Fund Capital Money Market Fund Capital Money Market Fund Mega Diamond Money Market	- - - -	`〃` `〃` `〃` Available-for-sale financial assets - current	8,412,882 281,756 3,708,709 1,211,321	$ 104,401 4,500 59,236 15,032	- - - -	$ 104,401 4,500 59,236 15,032	Note B Note B Note B Note B

Note A: Market value was based on the closing price on September 30, 2016.

Note B: Market value was based on the net asset values of the open-ended mutual funds on September 30, 2016.

Note C: The amount included $1,159,925 thousand, the carrying value of 4,150,000 shares held in trust with CTBC Bank. Please refer to Note 8 of the financial statements for more information.

Note D: The amount included $165,230 thousand, the carrying value of 2,505,000 shares held in trust with CTBC Bank. Please refer to Note 8 of the financial statements for more information.

Note E: Advansus Corp. changed its name to Advanixs Corporate.

(Concluded)

57 -

TABLE 4

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (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 (Note)	Acquisition (Note)		Disposal	Disposal		Ending	Balance
					Shares	Amount (Cost)	Shares	Amount	Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Shares	Amount (Cost)
The Company Advanixs Corporate (formerly Advansus Corp.) AdvanPOS ANA ATC (HK)	Fund Capital Money Market Mega Diamond Money Market FSITC Money Market Stock B+B Fund Jih Sun Money Market Fund Mega Diamond Money Market Fund B+B Stock Yeh-chiang Technology Kun Shan Co., Ltd.	Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Investments accounted for using the equity method Available-for-sale financial assets - current Available-for-sale financial assets - current Investments accounted for using the equity method Investments accounted for using the equity method	- - - - - - - -	- - - - - - - -	- - - - 19,537,275 242,410 - -	$ - - - - 285,055 3,000 - -	71,448,034 110,334,005 4,476,525 230,467 28,337,890 32,469,804 153,644 -	$ 1,140,000 1,368,000 790,000 1,968,044 (US$ 59,910) 415,002 402,021 1,328,004 (US$ 39,940) 459,648 (RMB 92,758)	71,448,034 102,272,448 4,476,525 - 32,151,827 24,299,332 - -	$ 1,140,484 1,268,601 790,207 - 471,000 301,358 - -	$ 1,140,000 1,267,979 790,000 - 469,941 300,824 - -	$ 484 622 207 - 1,059 534 - -	- 8,061,557 - 230,467 15,723,338 8,412,882 153,644 -	$ - 100,021 - 1,968,044 230,116 104,197 1,328,004 459,648

58 -

TABLE 5

ADVANTECH CO., LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

(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	2014.4.15	$ 1,627,500	Under the contract, based on percentage of construction completed; accumulated payments of $1,534,387 thousand were made as of September 30, 2016 and $66,433 thousand were made in the third quarter of 2016.	Chung-Lin General Contractors, Ltd.	None	-	-	-	$ -	Contract price	For the Company’s expansion	None

59 -

TABLE 6

ADVANTECH CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

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

Company Name	Related Party	Relationship	Ending Balance (Note)	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
The Company ATC Avantech Corporate Investment Advanixs Corporate (formerly Advansus Corp.) AdvanPOS AKMC Advanixs Corporate (formerly Advansus Corp.)	AAU ACN AEU AiSC AJP AKMC ANA The Company The Company The Company The Company The Company ACN AKMC	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company Parent company Parent company Related enterprise Related enterprise	$ 105,473 834,511 950,223 131,600 105,544 183,138 967,439 1,001,489 500,000 440,483 200,000 218,046 111,799 532,009	2.72 5.20 3.98 4.44 7.18 8.26 8.15 - (Note B) 3.16 (Note B) 0.18 4.20 5.67	$ - - - - - - - - - - - - -	- - - - - - - - - - - - -	$ 33,504 295,658 245,780 42,237 - 119,481 - - - 174,110 - 232 -	$ - - - - - - - - - - - - -

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

Note B: Transactions involved financing activities.

60 -

TABLE 7

ADVANTECH CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

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

Buyer	Related Party	Relationship		Transaction Details (Note D)	Transaction Details (Note D)	Transaction Details (Note D)		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 ACA AKMC Advanixs Corporate (formerly Advansus Corp.) AAU ACN AEU AiSC AJP AKMC	AAU ACN AEU AiSC AJP AKMC AKR ANA ASG Advanixs Corporate (formerly Advansus Corp.) A-DLoG ACA AKMC Advanixs Corporate (formerly Advansus Corp.) 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 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 Purchase Purchase Purchase Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase	$ (176,996) (4,013,432) (2,891,240) (383,288) (545,113) (1,088,599) (584,113) (6,227,239) (153,803) (435,728) (151,253) 1,903,339 7,169,827 1,771,062 (1,903,339) (7,169,827) (1,771,062) 176,996 4,013,432 2,891,240 383,288 545,113 1,088,599	0.78 17.78 12.81 1.70 2.42 4.82 2.59 27.59 0.68 1.93 0.67 11.97 45.09 11.14 100.00 93.73 38.32 83.94 73.82 82.27 49.83 98.96 15.66	60-90 days 45 days after month-end 30 days after month-end 45 days after month-end 60-90 days 45 days after month-end 60 days after invoice date 45 days after month-end 60-90 days 60-90 days 30 days after invoice date Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms 60-90 days 45 days after month-end 30 days after month-end 45 days after month-end 60-90 days 45 days after month-end	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	$ 103,714 834,511 948,210 131,600 104,482 183,129 85,660 965,929 40,620 47,079 36,025 - (77,624) (440,483) - 77,624 440,483 (103,714) (834,511) (948,210) (131,600) (104,482) (183,129)	2.14 17.24 19.59 2.72 2.16 3.78 1.77 19.95 0.84 0.97 0.74 - 2.13 12.08 - 7.00 34.41 100.00 72.15 84.04 67.25 100.00 9.90	Note A Note B Note C Note D Note D

(Continued)

61 -

Buyer	Related Party	Relationship		Transaction Details (Note D)	Transaction Details (Note D)	Transaction Details (Note D)		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
AKR ANA ASG Advanixs Corporate (formerly Advansus Corp.) A-DLoG AiSC AKMC Advanixs Corporate (formerly Advansus Corp.) ALNC AKMC ACN AiSC AKMC Dongguan Pou Yuen Digital Technology Co., Ltd.	The Company The Company The Company The Company The Company AKMC ACN AiSC AKMC Dongguan Pou Yuen Digital Technology Co., Ltd. AiSC AKMC AKMC Advanixs Corporate (formerly Advansus Corp.) ALNC	Parent company Parent company Parent company Parent company Parent company Related enterprise Related enterprise Related enterprise Related enterprise Subsidiary Related enterprise Related enterprise Related enterprise Related enterprise Parent company	Purchase Purchase Purchase Purchase Purchase Sale Sale Sale Sale Sale Purchase Purchase Purchase Purchase Purchase	$ 584,113 6,227,239 153,803 435,728 151,253 (125,032) (296,753) (124,284) (2,083,698) (141,858) 125,032 296,753 124,284 2,083,698 141,858	67.65 88.24 68.86 10.58 19.65 14.54 3.88 1.62 48.69 38.27 1.80 5.46 16.16 29.98 78.86	60 days after invoice date 45 days after month-end 60-90 days 60-90 days 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	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	$ (85,660) (965,929) (40,620) (47,079) (36,025) 10,484 111,734 32,212 532,009 74,758 (10,484) (111,734) (32,212) (532,009) (74,758)	59.59 91.69 80.78 6.40 50.18 3.55 10.07 91.06 41.56 72.22 0.57 9.66 16.46 28.77 55.74

Note A: Realized gain for the period was $10,618 thousand.

Note B: Unrealized gain for the period was $660 thousand.

Note C: Realized gain for the period was $1,942 thousand.

Note D: ACA and AdvanPOS merged in July 2016 and ACA ceased to exist.

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

(Concluded)

62 -

TABLE 8

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (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 September 30, 2016	as of September 30, 2016	Net Income (Loss) of the Investee	Investment Gain (Loss) (Note A)	Note
				September 30, 2016	December 31, 2015	Shares	Percentage of Ownership	Carrying Value
The Company Advantech Corporate Investment ATC AAC (BVI) ANA AEUH AEU ASG Cermate	AAC (BVI) ATC Advanixs Corporate (formerly Advansus Corp.) Advantech Corporate Investment Axiomtek AdvanPOS ALNC Jan Hsiang AMX AEUH ASG AAU AJP AMY AKR ABR ACA Advantech Innovative Design Co., Ltd. Advantech iFactory Co., Ltd. AiST BEMC AIN AIMobile Co. Ltd. AiST Cermate Deneng ATC (HK) ANA AAC (HK) BEMC AEU APL A-DLoG ATH AID LandMark	BVI BVI Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Mexico Helmond, The Netherlands Techplace, Singapore Sydney, Australia Tokyo, Japan Malaysia Seoul, Korea Sao Paulo, Brazil Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Delaware, USA India Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taichung, Taiwan Hong Kong Sunnyvale, USA Hong Kong Delaware, USA Eindhoven, The Netherlands Warsaw, Poland Munich, Germany Thailand Indonesia BVI	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 Electronic parts and components manufacturing Sale of industrial automation products Investment and management service 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 Sale of industrial automation products Production and sale of portable industrial automation products Product design Cybernation equipment manufacturing 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 Design, develop and sale of intelligent services Manufacturing of electronic parts, computer, and peripheral devices Installment and sale of electronic components and software Investment and management service Sale and fabrication of industrial automation products Investment and management service Sale of industrial network communications Sale of industrial automation products Sale of industrial automation products Design, R&D and sale of industrial automation vehicles and related products Production of computers Sale of industrial automation products General investment	$ 1,000,207 998,788 486,000 1,400,000 249,059 460,572 431,634 3,719 4,922 1,219,124 27,134 40,600 15,472 35,140 73,355 43,216 - 10,000 60,000 157,915 1,968,044 5,567 135,000 - 71,500 18,095 1,212,730 504,179 539,146 1,328,004 431,963 14,176 553,536 7,537 4,797 28,200	$ 1,000,207 1,231,118 486,000 1,400,000 249,059 460,572 478,825 3,719 4,922 1,219,124 27,134 40,600 15,472 35,140 73,355 43,216 146,440 10,000 60,000 - - 5,567 - 142,063 71,500 18,095 1,212,730 504,179 539,146 - 431,963 14,176 553,536 7,537 4,797 28,200	29,623,834 33,850,000 36,000,000 150,000,000 20,537,984 20,438,000 24,350,000 655,500 - 12,572,024 1,450,000 500,204 1,200 2,000,000 600,000 1,794,996 - 1,000,000 6,000,000 10,000,000 230,467 999,999 13,500,000 - 5,500,000 658,000 41,650,001 10,952,606 15,230,001 153,644 11,314,280 6,350 1 51,000 300,000 972,284	100.00 100.00 100.00 100.00 25.99 100.00 81.17 28.50 100.00 100.00 100.00 100.00 100.00 100.00 100.00 80.00 - 100.00 100.00 100.00 60.00 99.99 45.00 - 55.00 39.69 100.00 100.00 100.00 40.00 100.00 100.00 100.00 51.00 100.00 100.00	$ 3,825,660 3,235,627 867,018 1,632,862 430,456 544,108 496,090 9,180 449 830,347 69,324 39,077 219,981 42,326 231,828 64,530 - 6,331 60,230 150,605 1,834,139 11,477 120,360 - 112,926 16,897 3,109,107 2,155,989 1,823,868 1,277,309 835,912 23,022 524,447 17,364 2,251 79,718	$ 241,442 42,188 344,845 50,975 274,183 184,963 14,727 (1,117) (965) (56,924) 731 6,514 18,730 12,329 51,236 14,808 59,906 (2,245) 1 (33,669) (18,045) (2,020) (32,533) (33,669) 16,939 (2,734) 164,881 120,952 120,556 (18,045) (56,709) 371 (13,924) 3,206 (2,113) 10,224	$ 240,108 42,608 349,971 50,637 71,253 185,422 13,236 (330) (965) (57,591) 731 6,514 18,730 12,329 51,236 11,847 65,577 (2,245) 1 (7,298) (10,827) (2,020) (14,640) (26,371) 8,979 (1,085) 165,301 121,038 119,135 (7,218) (57,376) 371 (23,497) 1,635 (2,113) 9,518	Subsidiary Subsidiary Subsidiary Subsidiary Equity-method investee Subsidiary (Note E) Subsidiary Equity-method investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Note E) Subsidiary Subsidiary Subsidiary (Note F) Subsidiary (Note D) Subsidiary Equity-method investee Subsidiary (Note F) Subsidiary Equity-method investee Subsidiary Subsidiary Subsidiary Subsidiary (Note D) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

(Continued)

63 -

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of September 30, 2016	as of September 30, 2016	Net Income (Loss) of the Investee	Investment Gain (Loss) (Note A)	Note
				September 30, 2016	December 31, 2015	Shares	Percentage of Ownership	Carrying Value
ALNC Better Auto AdvanPOS BEMC Avtek B+B BBI B&B Electronics B+B (CZ)	Better Auto Famous Now Bright Mind Limited Avtek B+B BBI Quatech IMC B&B Electronics B+B (CZ) (formerly Conel) Conel Automation (formerly Softcon) B&B DMCC B+B (CZ) Conel Automation	BVI BVI Samoa Delaware, USA Delaware, USA Ireland Delaware, USA Delaware, USA Delaware, USA Czech Republic Czech Republic Dubai Czech Republic Czech Republic	General investment General investment General investment General investment General investment Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems Sale of industrial network communications systems	$ 264,445 US$ 4,000 - US$ 99,850 US$ 99,850 US$ 39,481 - - - US$ 1,314 - - - -	$ 264,445 US$ 4,000 US$ 200 - - - - - - - - - - -	8,556,096 1 - - - - - - - - - - - -	100.00 100.00 - 100.00 100.00 100.00 100.00 100.00 100.00 99.99 1.00 100.00 0.01 99.00	$ 83,098 55,007 - 3,111,448 3,111,448 136,452 - - - 188,773 618 - - 61,214	$ (8,807) (9,338) - (18,045) (18,045) (15,080) - - - 33,170 (3,930) - - (3,930)	$ (8,766) (9,338) - (18,045) (18,045) (15,080) - - - 33,170 (39) - - (3,890)	Subsidiary Subsidiary Subsidiary Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D) Subsidiary (Note D)

Note A: The financial statements used as basis of net asset values had not been reviewed by independent CPAs, except those of AAC (BVI), AAC (HK), ANA, ATC, ATC (HK), AKMC, AEUH, AEU, B+B, Yeh-chiang Technology Kun Shan Co., Ltd. and Axiomatek.

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

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

Note D: In the first quarter of 2016, the Group made arrangements to acquire 100% equity in BEMC for US$99,850 thousand.

Note E: In the third quarter of 2016, ACA and AdvanPOS merged and ACA ceased to exist.

Note F: In the third quarter of 2016, the Group has adjusted its investment structure and the Company directly acquired 100% share equity of AiST.

(Concluded)

64 -

ABLE 9

ADVANTECH CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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, 2016	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of September 30, 2016	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of September 30, 2016	Accumulated Inward Remittance of Earnings as of September 30, 2016
							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) Hangzhou Advantofine Automation Tech. Co., Ltd. Yeh-Chiang Technology Kun Shan Co., Ltd.	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 Processing and sale of industrial automation products Production and sale of industrial automation products		US$ 43,750 thousand (Note F) US$ 4,230 thousand US$ 8,000 thousand US$ 1,000 thousand RMB 3,000 thousand RMB 99,515 thousand	Indirect Indirect Indirect Indirect Indirect Indirect		$ 1,160,728 (US$ 37,300 thousand) 167,212 (US$ 5,332 thousand) 250,880 (US$ 8,000 thousand) (Note C) (Note D) (Note G)	$ - - - - - -	$ - - - - - -	$ 1,160,728 (US$ 37,300 thousand) 167,212 (US$ 5,332 thousand) 250,880 (US$ 8,000 thousand) (Note C) (Note D) (Note G)	$ 160,892 111,912 24,115 (16,880) (5,684) 7,593	100 100 100 100 100 100	$ 160,495 111,327 23,279 (16,880) (5,544) 3,988	$ 2,669,171 1,049,910 747,012 24,088 16,045 439,119	$ - 352,236 (US$ 11,232 thousand) - - - -

Accumulated Investment i	n	Investment Amounts
Mainland China as of September 30, 2016		Authorized by Investment Commission, MOEA			Allowable Limit on Investment
$1,594,092 (US$50,832 thousand) (Note E)		$2,684,416 (US$85,600 thousand)			$14,374,384 (Note I)

(Continued)

65 -
Note A: The financial statements used as basis of net asset values had been reviewed by independent CPAs, except these of AAC (BVI), AAC (HK), ANA, ATC, ATC (HK), AKMC, Yeh-Chiang Technology Kun Shan Co., Ltd. AEUH, AEU, B+B and Axiomtek.
Note B: The significant events, prices, payment terms and unrealized gains or losses generated on trading between the Company and its investees in Mainland China are described in Table 7.
Note C: Remittance by AAC (H.K.) Limited.

Note D: Remittance by ACN.

Note E: Included is the outflow of US$200 thousand on the investment in Yan Hua (Guang Zhou Bao Shui Qu) Co., Ltd. located in a free trade zone in Guang Zhou. 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 reduce the accumulated investment amount by the return amount.
Note F: For AKMC, there was a capital increase of US$6,450 thousand out of earnings.
Note G: ATC, parent company of ATC (HK), increased the share capital of ATC (HK) and ATC (HK) acquired 100% share equity of Yeh-Chiang Technology Kun Shan Co., Ltd from Yeh-Chiang Technology (Cayman).
Note H: The exchange rate was US$1=NT$31.36.
Note I: The maximum allowable limit on investment was at 60% of the consolidated net asset value of the Company.
Note J: All intercompany gains and losses from investment have been eliminated from consolidation.

(Concluded)

66 -

TABLE 10

ADVANTECH CO., LTD. AND SUBSIDIARIES

ORGANIZATION CHART SEPTEMBER 30, 2016 AND 2015

Intercompany relationships and percentages of ownership as of September 30, 2016 are shown below:

==> picture [487 x 572] intentionally omitted <==

----- Start of picture text -----

100% 100% Advantech Technology Co., Ltd. 100% Advantech Technology (China)
Advantech Technology Co., Ltd. (ATC)
ATC (HK) Company Ltd. (AKMC)
80% Advantech Brasil Ltd (ABR) Avtek Corporation (Avtek) 100% Yeh-Chiang Technology
Kun Shan Co., Ltd.
100% 100%
60% BEMC Holdings Corporation (BEMC) B+B SmartWorx Inc. (B+B) 1% Conel Automation s.r.o.
100% CZ (Conel Automation)
B&B IMC. LLC (IMC)
40% 100% 99.99% 99%
Advantech B+B SmartWorx
Quatech, LLC (Quatech)
s.r.o. CZ (B+B (CZ))
100% B+B SmartWorx Limited (BBI) 100% 0.01%
B&B Electronics Holdings
100% Advantech Automation Corp. (BVI) 100% Advantech Corp. (ANA) LLC (B&B Electronics)
(AAC (BVI)) 100% B&B Smartworx DMCC (B&B
DMCC)
100% 100% Beijing Yan Hua Xing Ye Electronic 100%
Advantech Automation Corp. (HK) Science & Technology Co., Ltd. (ACN) Hangzhou Advantofine
Limited (AAC (HK)) 100% Automation Tech. Co., Ltd.
Shanghai Advantech Intelligent Services
Co., Ltd. (AiSC)
100% Xi’an Advantech Software Ltd. (AXA)
Advantech 100% Advantech Electronics, S. De R.L. De C.V.
Co., Ltd. (AMX) 100% Advantech Europe B.V. (AEU) 100% DLOG Gesellschaft für
(the 100% elektronische Datentechnik mbH
Company) Advantech Europe Holding B.V. (AEUH) (A-DLoG)
100%
100% Advantech Poland Sp z o.o. (APL)
Advantech Innovative Design Co., Ltd.
100%
Advantech Intelligent Service (AiST)
100% 55% Cermate Technologies Inc. (Cermate) Landmark Co., Ltd. (Landmark)
Advantech Corporate Investment 100%
100% 90%
Advantech KR Co., Ltd. (AKR) 51% Advantech Corporation (Thailand) Shenzhen Cermate
100% Co., Ltd. (ATH) Technologies Inc.
Advantech Co., Singapore Pte, Ltd. (ASG) (Cermate (Shenzhen))
100% 100%
Advantech International, PT. (AID) Cermate Technologies
100% (Shanghai) Inc.
Advantech Japan Co., Ltd. (AJP)
(Cermate (Shanghai))
100%
Advantech Australia Pty Ltd. (AAU)
100% Advanixs Corp.
100%
Advantech Co. Malaysia Sdn. Bhd (AMY)
99.99%
Advantech Industrial Computing India
Private Limited (AIN)
100%
AdvanPOS Technology Co., Ltd.
(AdvanPOS)
81.17% 100% 100%
Advantech-LNC Technology Co., Ltd. Better Auto Holdings Limited Famous Now Limited
(ALNC) (Better Auto) (Famous Now)
100%
100%
Advantech iFactory Co., Ltd. Dongguan Pou Yuen Digital
Technology Co., Ltd.
----- End of picture text -----

(Continued)

67 -

Intercompany relationships and percentages of ownership as of September 30, 2015 are shown below:

	Advantech Electronics, S. De R.L. De C.V. (AMX) 100% 100% Advantech Technology Co., Ltd. (ATC) 80% Advantech Brasil Ltd (ABR) Advantech Automation Corp. (HK) Limited (AAC (HK)) 100% 100% 100% Advantech Europe Holding B.V. (AEUH) 100% Advantech KR Co., Ltd. (AKR) 100% Advantech Co., Singapore Pte, Ltd. (ASG) Advantech Automation Corp. (BVI) (AAC (BVI)) 100% Advantech Corporate Investment 100% Advantech Japan Co., Ltd. (AJP) 100% Advantech Australia Pty Ltd. (AAU) 89.93% 100% 100% Advansus Corp. 100% Advantech Co. Malaysia Sdn. Bhd (AMY) Advantech-LNC Technology Co., Ltd. (ALNC) AdvanPOS Technology Co., Ltd. (AdvanPOS) 100% ACA Digital Corporation (ACA) Advantech Industrial Computing India Private Limited (AIN) 99.99% Advantech Innovative Design Co., Ltd. 100% 100% Advantech iFactory Co., Ltd.	Advantech Technology Co., Ltd. (ATC)	100% 100% 100% 100% 100% 60% 100% Hangzhou Advantofine Automation Tech. Co., Ltd. Advantech Europe B.V. (AEU) DLOG Gesellschaft für elektronische Datentechnik mbH (A-DLoG) Advantech Poland Sp z o.o. (APL) 100% 100% 100% Advantech Technology Co., Ltd. ATC (HK) Advantech Corp. (ANA) 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) 100% Advantech Intelligent Service (AiST) 55% Cermate Technologies Inc. (Cermate) LandmarkCo., Ltd.(Landmark) 100% 100% 100% 100% Bright Mind Limited Better Auto Holdings Limited (Better Auto) AdvanPOS Technology Shanghai Co., Ltd. (AdvanPOS Shanghai) 100% 100% Famous Now Limited Dongguan Pou Yuen Digital Technology Co., Ltd. 51% Advantech Corporation (Thailand) Co., Ltd. (ATH) Advantech International, PT. (AID) 100% Cermate Technologies (Shanghai) Inc. (Cermate (Shanghai)) Shenzhen Cermate Technologies Inc. (Cermate (Shenzhen)) 100% 90%
Advantech Co., Ltd. (the Company)
		Advantech iFactory Co., Ltd.

(Concluded)

68 -

TABLE 11

ADVANTECH CO., LTD. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS BETWEEN ADVANTECH CO., LTD. AND SUBSIDIARIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
0	The Company	AAC (HK) AAC (HK) AAU AAU AAU AAU ABR ABR ABR ABR ACN ACN A-DLoG A-DLoG A-DLoG A-DLoG AEU AEU AEU AEU AID AID AID AID AIN AIN AIN AIN AiSC AiSC AJP AJP AJP AJP AKMC AKMC AKMC	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Other receivables from related parties Sales revenue Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties	$ 24 16 2,253 1,759 176,996 103,714 2,319 866 68,808 17,430 4,013,432 834,511 3,429 587 151,253 36,025 16,042 2,013 2,891,240 948,210 337 224 9,780 6,510 2,344 2,704 7,756 20,234 383,288 131,600 2,736 1,062 545,113 104,482 9 1,088,599 183,129	45 days EOM Normal Normal 60-90 days Normal 60-90 days Normal 90days WEOM Normal 90days EOM Normal 45 days EOM Normal 30 days after invoice date Normal 30 days after invoice date Normal 30 days EOM Normal 30 days EOM Normal 45 days after invoice date Normal 45 days after invoice date Normal 60 days EOM Normal 60 days EOM Normal 45 days EOM Normal 60-90 days Normal 60-90 days 45 days EOM Normal 45 days EOM	- - - - 1 - - - - - 13 2 - - - - - - 9 3 - - - - - - - - 1 - - - 2 - - 3 1

(Continued)

69 -

Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
		Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
AKR AKR AKR AKR AMY AMY AMY AMY ANA ANA ANA ANA APL APL APL ASG ASG ASG ASG ATH ATH ATH ATH B+B B+B Cermate Cermate ACA Advantech Corporate Investment Advantech Corporate Investment Advantech Innovative Design Co., Ltd. AiST AiST AiST AiST Advanixs Corporate (formerly Advansus Corp.) Advanixs Corporate (formerly Advansus Corp.) Advanixs Corporate (formerly Advansus Corp.) Advanixs Corporate (formerly Advansus Corp.) ALNC ALNC ALNC ALNC AdvanPOS AdvanPOS AdvanPOS	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Other revenue Other receivables from related parties Rental revenue Other receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Rental revenue Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue	$ 4,482 572 584,113 85,660 2,032 474 93,882 23,806 19,198 1,510 6,227,239 965,929 99 14,264 1,146 927 633 153,803 40,620 2,037 229 42,957 6,342 33,904 5,842 900 105 2,520 474 27 1 900 163 38,293 2,617 130 3,600 435,728 47,079 900 149 2,047 497 1,260 441 30,298	Normal 60 days after invoice date Normal 60 days after invoice date Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM 45 days EOM Normal 45 days EOM Normal 60-90 days Normal 60-90 days Normal 30 days after invoice date Normal 30 days after invoice date Normal 60 days EOM Normal 30 days EOM Normal 30 days EOM Normal 60 days EOM Normal 30 days EOM Normal 30 days EOM 60-90 days Normal Normal 60-90 days Normal 60-90 days EOM Normal 60-90 days EOM Normal 60 days EOM Normal	- - 2 - - - - - - - 20 3 - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - - - -
					(Continued)

70 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
1	AAC (HK)	The Company The Company	2 2	Other revenue Receivables from related parties	$ 5,351 690	Normal 30 days EOM	- -
2	AAU	ANA The Company The Company The Company	3 2 2 2	Sales revenue Other revenue Sales revenue Receivables from related parties	10 2,259 35 692	Normal Normal Normal 60-90 days	- - - -
3	ABR	The Company The Company	2 2	Other revenue Receivables from related parties	1,284 1,235	Normal 30 days after invoice date	- -
4	ACN	AAU AEU AEU AiSC AiSC AKMC AKMC AKR ANA AXA The Company The Company Hangzhou Advantofine Automatin Tech. Co., Ltd. Hangzhou Advantofine Automatin Tech. Co., Ltd.	3 3 3 3 3 3 3 3 3 3 2 2 3 3	Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	78 457 290 90,094 24,909 24,712 2,169 63 404 24,808 717 456 3,055 343	Normal Normal 45 days EOM Normal Immediate Payment Normal 60-90 days Normal Normal 60 days EOM Normal 30 days EOM Normal 60 days after invoice date	- - - - - - - - - - - - - -
5	A-DLoG	AAU AAU AEU AEU AKMC AKMC AKR ANA ANA The Company The Company	3 3 3 3 3 3 3 3 3 2 2	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties	309 1 1,026 228 29 28 323 461 212 77,577 13,968	Normal 30 days after invoice date Normal 30 days EOM Normal 60 days after invoice date Normal Normal 30 days EOM Normal 30 days after invoice date	- - - - - - - - - - -
6	AEU	ACN A-DLoG A-DLoG AKMC AKMC AKR AMY	3 3 3 3 3 3 3	Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	362 16,592 2,399 9 342 7 4	30 days after invoice date Normal 30 days upon delivery Normal 30 days EOM Normal 30 days after invoice date	- - - - - - -
							(Continued)

71 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		ANA ANA ANA APL APL ATC BBI The Company The Company	3 3 3 3 3 3 3 2 2	Sales revenue Receivables from related parties Royalty revenue Sales revenue Receivables from related parties Receivables from related parties Sales revenue Sales revenue Receivables from related parties	$ 14,180 1,285 937 2,801 263 13,761 325 8,505 548	Normal 30 days after invoice date Normal Normal 30 days after invoice date 30 days after invoice date Normal Normal 30 days EOM	- - - - - - - - -
7	AID	ASG ASG The Company	3 3 2	Other revenue Other receivables from related parties Receivables from related parties	1,123 406 23	Normal 30 days EOM 60 days EOM	- - -
8	AIN	The Company The Company The Company	2 2 2	Other revenue Sales revenue Receivables from related parties	87 10 35	Normal Normal 60 days EOM	- - -
9	AiSC	AAC (HK) ACN ACN ACN ACN AEU AEU AKMC AKMC AKMC ANA AXA The Company The Company Hangzhou Advantofine Automatin Tech. Co., Ltd.	3 3 3 3 3 3 3 3 3 3 3 3 2 2 3	Other receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Other receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties	4,709 4,468 28,882 20,449 1,268 120 115 7 125,032 10,484 211 3 1,549 81 183	90 days Normal Immediate Payment Normal Immediate Payment Normal Immediate Payment 30 days EOM Normal 30 days EOM Normal Immediate Payment Normal 45 days EOM 60 days after invoice date	- - - - - - - - - - - - - - -
10	AJP	ACN ACN AKMC AKMC ASG The Company The Company	3 3 3 3 3 2 2	Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Sales revenue Receivables from related parties	13 13 51 165 8 45 80	Normal 45 days EOM Normal 45 days EOM Normal Normal 60-90 days	- - - - - - -
11	AKMC	ACN ACN ACN ACN	3 3 3 3	Other receivables from related parties Rental revenue Sales revenue Receivables from related parties	65 3,215 296,753 111,734	60-90 days Normal Normal 60-90 days	- - 1 -

(Continued)

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Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		AEU AEU AiSC AiSC ANA ANA The Company The Company Dongguan Pou Yuen Digital Technology Co., Ltd. Dongguan Pou Yuen Digital Technology Co., Ltd. Hangzhou Advantofine Automatin Tech. Co., Ltd. Hangzhou Advantofine Automatin Tech. Co., Ltd. Advanixs Corporate (formerly Advansus Corp.) Advanixs Corporate (formerly Advansus Corp.) AdvanPOS AdvanPOS	3 3 3 3 3 3 2 2 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	$ 2,276 724 124,284 32,212 8,011 6,666 7,169,827 77,624 6 4 5 6 2,936 329 4,492 188	Normal 30 days after invoice date Normal Immediate Payment Normal 60-90 days Normal 60 days EOM Normal 60-90 days Normal 60 days EOM Normal Immediate Payment Normal 30 days EOM	- - - - - - 23 - - - - - - - - -
12	AKR	ANA ASG The Company The Company AdvanPOS AdvanPOS	3 3 2 2 3 3	Sales revenue Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties	49 447 14 4,140 60 60	Normal Normal Normal 90days EOM Normal 30 days EOM	- - - - - -
13	AMX	The Company	2	Other revenue	2,925	Normal	-
14	AMY	ASG ATH ATH ATH	3 3 3 3	Other revenue Other revenue Other receivables from related parties Sales revenue	115 285 111 147	Normal Normal 30 days EOM Normal	- - - -
15	ANA	AEU AEU AJP AKMC AKMC AMY ASG B+B B+B B+B The Company The Company ACA AdvanPOS AdvanPOS	3 3 3 3 3 3 3 3 3 3 2 2 3 3 3	Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Sales revenue Interest revenue Other receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties	58,727 24,095 443 26,292 546 78 398 845 31,595 2,656 28,067 4,582 14,302 44,197 42,741	Normal 60-90 days Normal Normal 30 days EOM Normal Normal Normal 60-90 days Normal Normal 45 days EOM Normal Normal 30 days after invoice date	- - - - - - - - - - - - - - -

(Continued)

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Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
16	APL	AEU AEU AEU ANA The Company	3 3 3 3 2	Commission revenue Sales revenue Receivables from related parties Receivables from related parties Receivables from related parties	$ 8,209 40,105 10,136 34 178	Normal Normal 30 days after invoice date 30 days after invoice date 30 days after invoice date	- - - - -
17	ASG	AID AKR AMY AMY ATH ATH ATH The Company The Company The Company	3 3 3 3 3 3 3 2 2 2	Sales revenue Sales revenue Sales revenue Receivables from related parties Other revenue Sales revenue Receivables from related parties Other revenue Sales revenue Receivables from related parties	4 902 5,634 664 2,493 237 294 536 423 101	Normal Normal Normal 30 days EOM Normal Normal 30 days EOM Normal Normal 60-90 days	- - - - - - - - - -
18	ATC	The Company	2	Receivables from related parties	1,001,489	60 days EOM	3
19	ATH	AKR AKR The Company	3 3 2	Sales revenue Receivables from related parties Receivables from related parties	11 5 46	Normal 30 days after invoice date 30 days after invoice date	- - -
20	AXA	ACN ACN	3 3	Other revenue Other receivables from related parties	41,311 385	Normal 30 days EOM	- -
21	B+B	The Company The Company ACN ACN B+B (CZ) (formerly Conel) B+B (CZ) (formerly Conel)	2 2 3 3 3 3	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Interest revenue Other revenue	3,183 800 3,882 932 808 3,797	Normal 90days EOM Normal 45 days EOM Normal Normal	- - - - - -
22	BBI	B+B (CZ) (formerly Conel) B+B (CZ) (formerly Conel) Conel Automation (formerly Softcon)	3 3 3	Other revenue Sales revenue Other receivables from related parties	413 5 979	Normal Normal 45 days EOM	- - -
23	B+B (CZ) (formerly Conel)	ACN ACN B+B B+B B+B BBI BBI Conel Automation (formerly Softcon) Conel Automation (formerly Softcon)	3 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	1,047 1,012 90 12,508 1,040 1,108 358 1,179 494	Normal 45 days EOM 45 days EOM Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM	- - - - - - - - -

(Continued)

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Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
24	Conel Automation (formerly Softcon)	B+B (CZ) (formerly Conel) B+B (CZ) (formerly Conel) B+B (CZ) (formerly Conel)	3 3 3	Interest revenue Other revenue Sales revenue	$ 108 1,970 31	Normal Normal Normal	- - -
25	Dongguan Pou Yuen Digital Technology Co., Ltd.	ACN ACN ALNC ALNC	3 3 3 3	Sales revenue Receivables from related parties Sales revenue Receivables from related parties	8,068 916 2,826 2,342	Normal 90days EOM Normal 90days EOM	- - - -
26	Cermate (Shanghai)	Cermate (Shenzhen)	3	Sales revenue	359	Normal	-
27	Cermate	The Company The Company Cermate (Shenzhen) Cermate (Shenzhen)	2 2 3 3	Sales revenue Receivables from related parties Sales revenue Receivables from related parties	3,793 168 64,742 24,597	Normal 30-60 days Normal 30 days EOM	- - - -
28	ACA	ACN The Company Advanixs Corporate (formerly Advansus Corp.)	3 2 3	Sales revenue Sales revenue Sales revenue	1,249 1,903,339 4,264	Normal Normal Normal	- 6 -
29	Advantech Corporate Investment	The Company The Company The Company	2 2 2	Interest revenue Other receivables from related parties Other receivables from related parties	2,874 500,000 1,058	Normal Financing 90days EOM	- 1 -
30	Advantech Innovative Design Co., Ltd.	The Company	2	Receivables from related parties	144	30 days EOM	-
31	AiST	The Company The Company AID	2 2 3	Sales revenue Receivables from related parties Other receivables from related parties	200 9 12,110	Normal 60 days EOM 30 days after invoice date	- -
32	Advanixs Corporate (formerly Advansus Corp.)	AKMC AKMC The Company The Company The Company The Company Cermate Cermate	3 3 2 2 2 2 3 3	Sales revenue Receivables from related parties Interest revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	2,083,698 532,009 323 200,000 1,771,062 440,483 1,541 137	Normal 60-90 days Normal Financing Normal 60-90 days Normal 30 days EOM	7 2 - 1 6 1 - -
33	ALNC	AKMC AKMC The Company The Company The Company Dongguan Pou Yuen Digital Technology Co., Ltd. Dongguan Pou Yuen Digital Technology Co., Ltd.	3 3 2 2 2 3 3	Sales revenue Receivables from related parties Rental revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties	430 160 1,104 6,797 1,570 141,858 74,758	Normal 90days EOM Normal Normal 60 days EOM Normal 90days EOM	- - - - - - -

(Continued)

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Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
34	Cermate (Shenzhen)	ACN ACN AKMC AKMC Cermate (Shanghai) Cermate (Shanghai) Cermate Cermate	3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	$ 14 3 22,242 1,442 19,224 6 15,413 3,473	Normal Immediate Payment Normal 60 days EOM Normal 30 days EOM Normal 30 days EOM	- - - - - - - -
35	AdvanPOS	The Company The Company Advanixs Corporate (formerly Advansus Corp.) Advanixs Corporate (formerly Advansus Corp.)	2 2 3 3	Sales revenue Receivables from related parties Sales revenue Receivables from related parties	14,925 218,046 622 653	Normal 60 days EOM Normal 30 days EOM	- 1 - -

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

1. “0” for Advantech Co., Ltd.

Subsidiaries are numbered from “1”.

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

From the parent company to its subsidiary.
From the subsidiary to its parent company.
Between subsidiaries.
Note C: For assets and liabilities, amounts are shown as a percentage to consolidated total assets as of September 30, 2016, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the nine months ended September 30, 2016.

Note D: All intercompany transactions have been eliminated from consolidation.

(Concluded)

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AI assistant

Advantech — Interim / Quarterly Report 2016

52053_rns_2016-11-02_1b4a78a3-ea7a-415c-a4fd-4b5ab1933156.pdf

Advantech Co., Ltd. and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Notice to Readers

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

ADVANTECH CO., LTD. AND SUBSIDIARIES

ADVANTECH CO., LTD. AND SUBSIDIARIES

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

ADVANTECH CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

1) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

2) IFRIC 21 “Levies”

Recognition and measurement of financial assets

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2) Taxation

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

9. DEBT INVESTMENTS WITH NO ACTIVE MARKET

10. NOTES AND ACCOUNTS RECEIVABLE

Accounts Receivable

11. INVENTORIES

12. SUBSIDIARIES

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in Associates

14. PROPERTY, PLANT AND EQUIPMENT

15. GOODWILL

16. PREPAYMENTS FOR LEASE OBLIGATION

17. BORROWINGS

Short-term Borrowings

18. OTHER LIABILITIES

19. RETIREMENT BENEFIT PLANS

20. EQUITY

Ordinary shares

b. Capital surplus

e. Non-controlling interests

21. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

c. Employee benefit expense

22. INCOME TAX RELATING TO CONTINUING OPERATIONS

b. Income tax recognized in other comprehensive income

d. Income tax assessments

23. EARNINGS PER SHARE

Net Profit for the Period

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

24. SHARE-BASED PAYMENT ARRANGEMENTS

25. BUSINESS COMBINATION

26. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

27. FINANCIAL INSTRUMENTS

September 30, 2015

For the nine months ended September 30, 2015

1) Market risk

a) Foreign currency risk

Sensitivity analysis

Sensitivity analysis

c) Other price risk

Sensitivity analysis

2) Credit risk

3) Liquidity risk

September 30, 2016

December 31, 2015

September 30, 2016

December 31, 2015

28. TRANSACTIONS WITH RELATED PARTIES

e. Other transactions with related parties

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

30. SIGNIFICANT COMMITMENTS

Significant Commitments

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

September 30, 2016

Advantech Interim / Quarterly Report 2016