Advantech - Interim / Quarterly Report 2017

Advantech Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2017 and 2016 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 March 31, 2017, December 31, 2016 and March 31, 2016, and the related consolidated statements of comprehensive income, changes in equity, and cash flows for the three months ended March 31, 2017 and 2016. 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.

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 three months ended March 31, 2017 and 2016 had not been reviewed, except those of significant subsidiaries. The total assets of the unreviewed subsidiaries were 17.52% (NT$6,539,328 thousand) and 17.24% (NT$6,166,395 thousand) of the Company’s consolidated total assets as of March 31, 2017 and 2016, respectively. The total liabilities of the unreviewed subsidiaries were 17.25% (NT$1,880,510 thousand) and 19.12% (NT$2,064,265 thousand) of the Company’s consolidated total liabilities as of March 31, 2017 and 2016, respectively. The comprehensive incomes of these subsidiaries were 23.99% (NT$216,873 thousand) and 24.23% (NT$354,385 thousand) of the Company’s consolidated comprehensive incomes in the three months ended March 31, 2017 and 2016, respectively. Additional disclosures in Note 33 “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 and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Deloitte & Touche Taipei, Taiwan Republic of China April 28, 2017

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to 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 (Notes 9 and 29) Notes receivable (Note 10) Trade receivables (Note 10) Trade receivables from related parties (Note 28) Other receivables Inventories (Note 11) 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 (Notes 14 and 29) Goodwill (Note 15) Other intangible assets Deferred tax assets (Notes 4 and 22) Prepayments for business facilities (Note 31) Prepayments for investments Long-term prepayments for leases (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 (Notes 18 and 28) Current tax liabilities (Notes 4 and 22) Short-term warranty provision Current portion of long-term borrowings (Note 17) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Long-term borrowings (Notes 17 and 29) Deferred tax liabilities (Notes 4 and 22) Net defined benefit liabilities (Note 19) Other noncurrent liabilities Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital Ordinary shares Advance receipts for share capital Total share capital Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of foreign financial statements Unrealized gains on available-for-sale financial assets Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		March 31, 2017 (Reviewed) Amount % $ 3,678,094 10 112,527 - 3,256,045 9 56,547 - 1,080,630 3 5,621,205 15 17,658 - 12,022 - 5,798,701 16 521,509 1 20,154,938 54 1,771,420 5 590,450 2 9,966,137 27 2,805,585 7 1,244,497 3 335,198 1 45,842 - 75,000 - 308,298 1 35,806 - 17,178,233 46 $ 37,333,171 100 $ 476,600 1 1,207 - 3,497,600 9 2,994,888 8 1,426,430 4 168,346 1 18,459 - 670,283 2 9,253,813 25 109,656 - 1,223,931 3 211,605 1 99,629 - 1,644,821 4 10,898,634 29 6,332,541 17 - - 6,332,541 17 6,185,680 16 4,473,276 12 9,640,825 26 14,114,101 38 (659,151) (2) 275,830 1 (383,321) (1) 26,249,001 70 185,536 1 26,434,537 71 $ 37,333,171 100		December 31, 2016 (Audited) Amount % $ 4,637,577 12 113,028 - 2,956,586 8 10,007 - 965,081 3 6,384,834 17 13,957 - 13,775 - 5,597,236 15 489,630 1 21,181,711 56 1,712,578 4 598,454 2 10,089,836 26 2,845,831 7 1,317,440 3 369,156 1 47,578 - - - 325,224 1 51,145 - 17,357,242 44 $ 38,538,953 100 $ 483,750 1 10,231 - 4,983,381 13 3,902,499 10 1,229,400 3 167,122 - - - 659,228 2 11,435,611 29 - - 1,362,687 4 212,360 1 141,398 - 1,716,445 5 13,152,056 34 6,330,741 16 100 - 6,330,841 16 6,058,884 16 4,473,276 12 8,435,785 22 12,909,061 34 (197,633) - 112,429 - (85,204) - 25,213,582 66 173,315 - 25,386,897 66 $ 38,538,953 100		March 31, 2016 (Reviewed)
						Amount % $ 4,771,649 14 185,610 1 1,841,079 5 83,853 - 823,366 2 5,424,604 15 5,787 - 44,400 - 5,212,295 15 472,740 1 18,865,383 53 1,857,435 5 504,163 2 9,652,479 27 2,856,794 8 1,424,234 4 374,009 1 73,889 - - - 99,774 - 59,084 - 16,901,861 47 $ 35,767,244 100 $ 482,775 1 13,108 - 3,564,771 10 2,968,415 8 1,293,935 4 156,684 - - - 672,938 2 9,152,626 25 - - 1,321,379 4 183,403 1 139,892 - 1,644,674 5 10,797,300 30 6,318,531 18 - - 6,318,531 18 5,654,091 16 3,962,842 11 8,452,162 24 12,415,004 35 208,604 - 231,346 1 439,950 1 24,827,576 70 142,368 - 24,969,944 70 $ 35,767,244 100

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

(With Deloitte & Touche review report dated April 28, 2017)

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, 21 and 28) GROSS PROFIT OPERATING EXPENSES (Notes 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 on disposal of investments (Note 20) Foreign exchange losses, net (Note 21) Gains on financial instruments at fair value through profit or loss Dividends income Other income (Notes 8 and 28) Finance costs (Note 21) Losses on financial instruments at fair value through profit or loss Other losses Total nonoperating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 22) NET PROFIT FOR THE PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 Amount % $ 9,824,662 98 181,577 2 10,006,239 100 5,954,901 60 4,051,338 40 1,056,007 10 620,961 6 871,071 9 2,548,039 25 1,503,299 15 (609) - 3,874 - (762) - 96,322 1 (202,444) (2) 87,007 1 750 - 23,723 - (2,717) - (1,207) - (8,317) - (4,380) - 1,498,919 15 (293,406) (3) 1,205,513 12		2016
				Amount % $ 9,849,716 98 223,684 2 10,073,400 100 5,936,535 59 4,136,865 41 1,089,026 11 610,335 6 897,789 9 2,597,150 26 1,539,715 15 26,835 - 5,841 - 146,054 2 1,652 - (48,491) - 34,668 - 214 - 17,360 - (2,082) - (30,088) - (832) - 151,131 2 1,690,846 17 (328,896) (3) 1,361,950 14

(Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

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

OTHER COMPREHENSIVE INCOME (LOSS) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements (Note 20) Unrealized gains (losses) on available-for-sale financial assets (Note 20) Share of the other comprehensive income of associates accounted for using the equity method (Notes 13 and 20) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 20 and 22) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 23) Basic Diluted		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 Amount % $ (551,131) (6) 163,401 2 (8,370) - 94,528 1 (301,572) (3) $ 903,941 9 $ 1,205,040 12 473 - $ 1,205,513 12 $ 906,923 9 (2,982) - $ 903,941 9 $ 1.90 $ 1.90		2016
				Amount % $ (73,316) (1) 163,081 2 (1,927) - 12,956 - 100,794 1 $ 1,462,744 15 $ 1,357,404 14 4,546 - $ 1,361,950 14 $ 1,457,230 15 5,514 - $ 1,462,744 15 $ 2.15 $ 2.15
		$
		$

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

(With Deloitte & Touche review report dated April 28, 2017)

(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(Notes 20 and 24) Advance Receipts for Ordinary Capital Surplus Share Capital Shares Total (Notes 20 and 24) $ 6,318,531 $ - $ 6,318,531 $ 5,587,555 - - - 65,469 - - - 1,067 - - - - - - - - - - - - - - - - $ 6,318,531 $ - $ 6,318,531 $ 5,654,091 6,330,741 100 6,330,841 6,058,884 1,800 (100 ) 1,700 14,467 - - - 111,259 - - - 1,070 - - - - - - - - - - - - - - - - $ 6,332,541 $ - $ 6,332,541 $ 6,185,680	Retained Earnings (Notes 20 and 26) Unappropriated Legal Reserve Earnings Total $ 3,962,842 $ 7,098,449 $ 11,061,291 - - - - - - - (3,691 ) (3,691 ) - 1,357,404 1,357,404 - - - - 1,357,404 1,357,404 $ 3,962,842 $ 8,452,162 $ 12,415,004 4,473,276 8,435,785 12,909,061 - - - - - - - - - - - - - 1,205,040 1,205,040 - - - - 1,205,040 1,205,040 $ 4,473,276 $ 9,640,825 $ 14,114,101	Other Equity (Note 20) Exchange Differences on Unrealized Gain Translation of (Loss) on Foreign Financial Available-for-sale Statements Financial Assets $ 271,859 $ 68,265 - - - - - - - - (63,255) 163,081 (63,255) 163,081 $ 208,604 $ 231,346 (197,633 ) 112,429 - - - - - - - - - - (461,518) 163,401 (461,518) 163,401 $ (659,151) $ 275,830
Advance Receipts for Ordinary Share Capital Shares $ 6,318,531 $ - - - - - - - - - - - - - $ 6,318,531 $ - 6,330,741 100 1,800 (100 ) - - - - - - - - - - - - $ 6,332,541 $ -
	Unappropriated Legal Reserve Earnings $ 3,962,842 $ 7,098,449 - - - - - (3,691 ) - 1,357,404 - - - 1,357,404 $ 3,962,842 $ 8,452,162 4,473,276 8,435,785 - - - - - - - - - 1,205,040 - - - 1,205,040 $ 4,473,276 $ 9,640,825

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

(With Deloitte & Touche review report dated April 28, 2017)

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 for prepayments of lease Impairment loss recognized (reversal of impairment loss) on trade receivables Net loss (gain) on fair value changes of financial assets or liabilities designated as at fair value through profit or loss Compensation cost of employee share options Finance costs Interest income Dividends income Share of profit of associates 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 Trade receivables Trade receivables from related parties Other receivables Inventories Other current assets Trade payables Net defined benefit liabilities Other payables Short-term warranty provisions Other current liabilities Other noncurrent liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash (used in) generated from operating activities		For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 1,498,919 149,642 51,263 2,196 (4,683) (85,800) 111,259 2,717 (3,874) (750) 609 762 (96,322) 77,277 (115,549) 792,139 (3,690) 1,753 (171,008) (29,002) (1,512,529) (755) (963,429) 1,224 9,409 (41,769) (329,991) 3,874 750 (2,636) (92,823) (420,826)	2016 $ 1,690,846 148,727 62,000 700 2,770 (4,580) 65,469 2,082 (5,841) (214) (26,835) (146,054) (1,652) 2,115 147,356 189,820 20,988 (3,398) (61,677) 1,537 150,487 (137) (416,357) 11,038 126,643 (20,018) 1,935,815 5,650 214 (1,840) (91,643) 1,848,196 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Proceeds from sale (purchase) of debt investments with no active market Increase in prepayments for investments Net cash outflow on acquisition of subsidiaries Dividends received from associates Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in other noncurrent assets Payments for intangible assets Decrease (increase) in prepayments for business facilities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loans Repayments of long-term borrowings Decrease in guarantee deposits received Exercise of employee share options Decrease in non-controlling interests Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ (902,500) 803,911 7,705 (75,000) (100,772) 62 (38,795) 1,074 16,265 (37,715) 9,498 (316,267) 13,550 (4,274) - 16,167 - 25,443 (247,833) (959,483) 4,637,577 $ 3,678,094	2016 $ (741,886) 710,586 (80,644) - (944,831) - (302,863) 335,754 99 (27,833) (971) (1,052,589) (397,850) - (885) - (13,113) (411,848) 29,631 413,390 4,358,259 $ 4,771,649

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

(With Deloitte & Touche review report dated April 28, 2017)

(Concluded)

ADVANTECH CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

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

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

To improve the entire operating efficiency of 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 surviving entity, the Company assumed all assets and liabilities of AIMS. On June 26, 2014, the Company’s board of directors resolved to have a whale-minnow merger with Netstar Technology Co., Ltd. (Netstar), an 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 Company’s board of directors April 28, 2017.

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

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

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

1) Amendment to IFRS 3 “Business Combinations”

IFRS 3 was amended by the Annual Improvements to IFRSs: 2010-2012 Cycle 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 should be applied prospectively to business combination with acquisition date on or after January 1, 2017. Refer to Note 25 for the information on business combination that occurred in 2017.

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2) Amendment to IFRS 8 “Operating Segments”

IFRS 8 was amended by the Annual Improvements to IFRSs: 2010-2012 Cycle to require disclosure of 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 judgments made in applying aggregation criteria should be disclosed retrospectively upon initial application of the amendment in 2017 (refer to Note 34).

3) Amendments to IFRS 13 “Fair Value Measurement”

The basis for conclusions of IFRS 13 was amended by the Annual Improvements to IFRSs: 2010-2012 Cycle to clarify that when the amendment becomes effective in 2017, the short-term receivables and payables with no stated interest rate is measured at their invoice amounts without discounting, if the effect of not discounting is immaterial.

4) Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers

The amendments include additions of several accounting items and requirements for disclosures of impairment of non-financial assets as a consequence of the IFRSs endorsed and issued into effect by the FSC. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments also include emphasis on certain recognition and measurement considerations and add requirements for disclosures of related party transactions.

The amendments stipulate that other companies or institutions of which the chairman of the board of directors or president serves as the chairman of the board of directors or the president, or is the spouse or second immediate family of the chairman of the board of directors or president of the Group are deemed to have a substantive related party relationship, unless it can be demonstrated that no control or significant influence exists. Furthermore, the amendments require the disclosure of the names of the related parties and the relationship with whom the Group has transaction. If the transaction or balance with a specific related party is 10% or more of the Group’s respective total transaction or balance, such transaction should be separately disclosed by the name of each related party.

The amendments also require additional disclosure if there is a significant difference between the actual operation after business combination and the expected benefit on acquisition date.

When the amendments are applied retrospectively from January 1, 2017, the disclosures of related party transactions and impairment of goodwill are enhanced. Refer to Note 28 for related disclosures.

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

The Group has not applied the following IFRSs issued by the IASB but not yet endorsed and issued into effect by the FSC.

The FSC announced that amendments to IFRS 9 and 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.

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New IFRSs Annual Improvements to IFRSs 2014-2016 Cycle Amendment to IFRS 2 “Classification and Measurement of Share-based Payment Transactions” Amendments to IFRS 4“Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts” IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 15 “Revenue from Contracts with Customers” Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from Contracts with Customers” IFRS 16 “Leases” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” Amendments to IAS 40 “Transfers of Investment Property” IFRIC 22 “Foreign Currency Transactions and Advance Consideration”	Effective Date Announced by IASB (Note 1)
	Note 2 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 To be determined by IASB January 1, 2018 January 1, 2018 January 1, 2019 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018

New IFRSs
Annual Improvements to IFRSs 2014-2016 Cycle

Amendment to IFRS 2 “Classification and Measurement of
Share-based Payment Transactions”

Amendments to IFRS 4“Applying IFRS 9 Financial Instruments with
IFRS 4 Insurance Contracts”

IFRS 9 “Financial Instruments”

Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”

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

IFRS 15 “Revenue from Contracts with Customers”

Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from
Contracts with Customers”

IFRS 16 “Leases”

Amendment to IAS 7 “Disclosure Initiative”

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

Amendments to IAS 40 “Transfers of Investment Property”

IFRIC 22 “Foreign Currency Transactions and Advance
Consideration”

Effective Date
Announced by IASB (Note 1)

Note 2
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
To be determined by IASB
January 1, 2018
January 1, 2018
January 1, 2019
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after January 1, 2018.
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;
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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.

Transition

Financial instruments that have been derecognized prior to the effective date of IFRS 9 cannot be reversed to apply IFRS 9 when it becomes effective. Under IFRS 9, the requirements for classification, measurement and impairment of financial assets are applied retrospectively with the difference between the previous carrying amount and the carrying amount at the date of initial application recognized in the current period and restatement of prior periods is not required. The requirements for general hedge accounting shall be applied prospectively and the accounting for hedging options shall be applied retrospectively.

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 from January 1, 2018.

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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, 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, 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.

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.

13 -
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.

6) Annual Improvements to IFRSs 2014-2016 Cycle

Several standards, including IFRS 12 “Disclosure of Interests in Other Entities” and IAS 28 “Investments in Associates and Joint Ventures,” were amended in this annual improvement.

The amendment to IAS 28 clarified that when the Group (non-investment entity) applies the equity method to account for investment in an associate that is an investment entity, the Group may elect to retain the fair value of the investment in subsidiaries of the investment entity associate. The election should be made separately for each investment entity associate, at the later of the date (a) the investment entity associate is initially recognized, (b) the associate becomes an investment entity, or (c) the investment entity associate first becomes a parent.

7) IFRIC 22“Foreign Currency Transactions and Advance Consideration”

IAS 21 stipulated that a foreign currency transaction shall be recorded on initial recognition in the functional currency by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. IFRIC 22 further explains that the date of the transaction is the date on which an entity recognizes a non-monetary asset or non-monetary liability from payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine the date of the transaction for each payment or receipt of advance consideration.

The Group shall apply IFRIC 22 either retrospectively or prospectively to all assets, expenses and income in the scope of the Interpretation initially recognized on or after (a) the beginning of the reporting period in which the entity first applies IFRIC 22, or (b) the beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies IFRIC 22.

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 and issued into effect 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.

14 -

b. Basis of preparation

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

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

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

See Note 12, Table 7 and Table 9 for the detailed information of subsidiaries (including the percentage of ownership and main business).

d. 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, 2016. For the summary of other significant accounting policies, please refer to the consolidated financial statements for the year ended December 31, 2016.

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

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.

3) Business combinations

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

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

15 -

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets.

Where the consideration the Group transfers in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments being made against goodwill or gain on bargain purchase. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. The measurement period does not exceed 1 year from the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Other contingent consideration is remeasured at fair value at the end of subsequent reporting period with any gain or loss recognized in profit or loss.

During the measurement period, the acquirer shall recognize adjustments to the provisional amounts as if the accounting for the business combination had been completed at the acquisition date. Thus, the acquirer shall revise comparative information for prior periods presented in financial statements as needed, including making any change in depreciation, amortization or other income effects recognized in completing the initial accounting.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Refer to the Group’s consolidated financial statements for the year ended December 31, 2016 for significant accounting judgments and estimates and key sources of estimation uncertainty.

6. CASH AND CASH EQUIVALENTS

			December 31,	December 31,
	March 31, 2017			2016	March 31, 2016
Cash on hand	$	59,014	$	61,640	$	66,197
Checking accounts and demand deposits		3,282,748		4,350,538		4,557,364
Cash equivalents (time deposits with original
maturities less than three months)		336,332		225,399		148,088
	$	3,678,094	$	4,637,577	$	4,771,649

16 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

			December	December	31,
	March 31, 2017			2016		March 31, 2016
Financial assets held for trading-current
Derivative financial assets
Foreign exchange forward contracts	$	20,990	$	34,348		$	6,324
Nonderivative financial assets
Domestic quoted shares		91,537		78,680			112,166
Foreign quoted shares		-			-		67,120
	$	112,527	$	113,028		$	185,610
Financial liabilities held for trading-current
Derivative financial liabilities
Foreign exchange forward contracts	$	1,207	$	10,231		$	13,108

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) March 31, 2017 Sell EUR/NTD 2017.04-2017.08 EUR4,000/NTD133,455 EUR/USD 2017.04-2017.08 EUR11,000/USD11,845 USD/NTD 2017.04-2017.06 USD5,992/NTD187,847 JPY/NTD 2017.04-2017.09 JPY450,000/NTD126,107 RMB/NTD 2017.04-2017.06 RMB75,000/NTD333,944 RMB/USD 2017.04 RMB3,000/USD430 December 31, 2016 Sell EUR/NTD 2017.01-2017.05 EUR5,500/NTD192,863 EUR/USD 2017.01-2017.05 EUR8,500/USD9,451 USD/NTD 2017.01-2017.04 USD11,414/NTD362,143 JPY/NTD 2017.01-2017.06 JPY430,000/NTD128,601 RMB/NTD 2017.01-2017.03 RMB83,000/NTD380,318 March 31, 2016 Sell EUR/NTD 2016.04-2016.07 EUR4,000/NTD145,610 EUR/USD 2016.04-2016.08 EUR10,500/USD11,678 USD/NTD 2016.04-2016.05 USD3,627/NTD120,331 JPY/NTD 2016.04-2016.07 JPY220,000/NTD61,368 JPY/USD 2016.04-2016.08 JPY160,000/USD1,398 RMB/NTD 2016.04-2016.06 RMB54,000/NTD269,696 RMB/USD 2016.05-2016.06 RMB30,000/USD4,592

17 -

The Company entered into foreign exchange forward contracts during the three months ended March 31, 2017 and 2016 to manage exposures due to exchange rate fluctuations of foreign-currency denominated assets and liabilities. The Group’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

		December 31,
	March 31, 2017	2016	March 31, 2016
Current
Domestic investments
Mutual funds	$ 2,769,752	$ 2,450,232	$ 1,301,943
Quoted shares	486,293	506,354	539,136
	$ 3,256,045	$ 2,956,586	$ 1,841,079
Noncurrent
Domestic investments
Quoted shares	$ 1,762,045	$ 1,703,203	$ 1,814,803
Unlisted shares	9,375	9,375	9,375
Foreign investments
Unlisted shares	-	-	33,257
	$ 1,771,420	$ 1,712,578	$ 1,857,435

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 during two months ended February 28, 2017 and three months ended March 31, 2016. The Group ended the trust of quoted domestic stock in March 31, 2017. As of December 31 and March 31, 2016, the stocks held in trust amounted to $1,257,600 thousand and $1,353,305 thousand, respectively. On the transactions, the Group recognized gains of $61 thousand in the three months ended March 31, 2016. These gains were recorded under other nonoperating income.

9. DEBT INVESTMENTS WITH NO ACTIVE MARKET

		December	31,
	March 31, 2017	2016		March 31, 2016
Time deposits with original maturities of more
than 3 months	$ 22,257	$ 10,007		$ 83,853
Pledged time deposits	34,290		-	-
	$ 56,547	$ 10,007		$ 83,853

The market interest rates of the time deposits with original maturity more than three months were 1.00%-2.50%, 1.00%-2.50% and 1.00%-2.55% as of March 31, 2017, December 31, 2016 and March 31, 2016.

For information on pledged debt investments with no active market, refer to Note 29.

18 -

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

			December 31,	December 31,
		March 31, 2017		2016	March 31, 2016
Notes	receivable	$ 1,080,630	$	965,081	$	823,366
Trade	receivables	$ 5,714,108	$	6,486,188	$	5,580,064
Less:	Allowance for impairment loss	(92,903)		(101,354)		(155,460)
		$ 5,621,205	$	6,384,834	$	5,424,604

Trade Receivables

The average credit period on sales of goods was from 30 to 90 days. In determining the recoverability of a trade receivable, the Group considered any change in the credit quality of the trade receivables 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 was recognized against trade receivables 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.

For the trade receivables 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 no 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:

		December 31,
	March 31, 2017	2016	March 31, 2016
Not overdue	$ 5,147,518	$ 5,524,036	$ 4,634,261
Overdue
1 to 90 days	489,279	839,609	697,974
91 to 360 days	33,537	63,558	169,837
Over 360 days	43,774	58,985	77,992
	$ 5,714,108	$ 6,486,188	$ 5,580,064

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

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

		December 31,
	March 31, 2017	2016	March 31, 2016
1 to 30 days	$ 400,635	$ 693,983	$ 507,739
31 to 60 days	67,725	93,924	93,827
61 to 90 days	20,919	51,702	96,408
	$ 489,279	$ 839,609	$ 697,974

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

19 -

The movements of the allowance for doubtful trade receivables were as follows:

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

Plus: Impairment losses recognized on
receivables
-
2,770
Less: Amounts written off during the period as
uncollectible
(1,651)
(6,943)
Business combinations
-
11,918
Foreign exchange translation gains and losses

-

207

Balance at March 31, 2016
$ 15,918
$ 139,542

Balance at January 1, 2017
$ 13,686
$ 87,668

Less: Impairment losses reversed
-
(4,683)
Less: Amounts written off during the period as
uncollectible
-
(393)
Business combinations
-
37
Foreign exchange translation gains and losses

-

(3,412)

Balance at March 31, 2017
$ 13,686
$ 79,217

Total
$ 149,159
2,770
(8,594)
11,918
207
$ 155,460
$ 101,354
(4,683)
(393)
37
(3,412)
$ 92,903

11. INVENTORIES

		December 31,
	March 31, 2017	2016	March 31, 2016
Raw materials	$ 2,085,894	$ 1,991,477	$ 1,654,047
Work in process	1,241,147	1,033,831	1,165,991
Finished goods	1,843,632	1,922,816	1,791,917
Inventories in transit	628,028	649,112	600,340
	$ 5,798,701	$ 5,597,236	$ 5,212,295

The cost of inventories recognized as cost of goods sold for the three months ended March 31, 2017 and 2016 was $5,902,455 thousand and $5,818,024 thousand, respectively.

The cost of inventories decreased by $546,317 thousand and $572,688 thousand as of March 31, 2017 and 2016, respectively, when stated at the lower of cost or net realizable value.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements.

20 -

The entities included 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
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
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
AKST
Production and sale of intelligent
medical display
AKR
AKST
Production and sale of intelligent
medical display
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
Advanixs Kun Shan Corp.
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
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 Advantech LNC Dong Guan
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

Proportion of Ownership
March 31,
2017
December 31,
2016
March 31,
2016
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
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
b
99.99
99.99
99.99
a
100.00
100.00
100.00
a
81.17
81.17
90.00
a, d
100.00
100.00
100.00
a
100.00
100.00
100.00
a
-
-
100.00
c
60.00
60.00
60.00
e
100.00
100.00
-
a, h
36.00
-
-
a, i
24.00
-
-
a, i
-
-
100.00
a, h
55.00
55.00
55.00
a
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
j
100.00
100.00
100.00
100.00
100.00
100.00
40.00
40.00
40.00
e
100.00
100.00
100.00
100.00
100.00
100.00
a
100.00
100.00
100.00
100.00
100.00
100.00
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
a, g
-
-
100.00
a, g
100.00
100.00
100.00
a
100.00
100.00
100.00
a
100.00
100.00
100.00
a
100.00
100.00
100.00
e
100.00
100.00
100.00
e
100.00
100.00
100.00
e
100.00
100.00
100.00
e
100.00
100.00
100.00
e
100.00
100.00
100.00
e
(Continued)

21 -

Investor Investee Nature of Activities B+B (CZ) Manufacturing of cellular and automation solution Conel Automation Sale of industrial network communications systems B&B DMCC Sale of industrial network communications systems 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 March 31, 2017 December 31, 2016 March 31, 2016 Remark 99.99 99.99 99.99 e 1.00 1.00 1.00 e 100.00 100.00 100.00 e 0.01 0.01 0.01 e 99.00 99.00 99.00 e

(Concluded)

Remark a: Not significant subsidiaries and their financial statements had not been reviewed.
Remark b: In the third quarter of 2016, ACA was merged by AdvanPOS and ACA ceased to exist.
Remark c: In the fourth quarter of 2016, Advantech iFactory Co., Ltd. was in the process of liquidation.
Remark d: In the first and third quarter of 2016, the Company acquired 0.07% and sold 8.83% equity in ALNC, respectively, decreasing the Company’s equity interest from 89.93% to 81.17%.
Remark e: In the first quarter of 2016, the Group acquired 100% share equity of BEMC with an acquisition 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 Tech. 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, Bright Mind Ltd. and AdvanPOS Shanghai processed theirs liquidations.
Remark h: In 2016, the Group adjusted its investment structure and the Company directly held 100% share equity of AiST.
Remark i: In the first quarter of 2017, the Group acquired 60% share equity of AKST with an acquisition of 36% and 24% of AKST’s share equity by the Company and AKR, respectively.
Remark j: In the second quarter of 2016, ATC, in an issuance of ordinary shares for cash to ATC (HK), acquired 100% equity of Advanixs Kun Shan Corp.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

		December 31,
	March 31, 2017	2016	March 31, 2016
Associates that are not individually material
Listed companies
Axiomtek Co., Ltd. (Axiomtek)	$ 464,091	$ 464,155	$ 477,403
Unlisted companies
AIMobile Co., Ltd. (AIMobile)	100,761	109,241	-
Deneng Scientific Research Co., Ltd. (Deneng)	16,102	16,154	17,737
Jan Hsiang Electronics Co., Ltd. (Jan Hsiang)	9,496	8,904	9,023
	$ 590,450	$ 598,454	$ 504,163

22 -

In the second quarter 2016, the Group paid cash at $135,000 thousand toward the 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.

Aggregate Information of Associates That Are Not Individually Material

The Group’s share of Profit (loss) from continuing operations Other comprehensive income Total comprehensive income (loss) for the period	For the Three Month Ended March 31	For the Three Month Ended March 31	For the Three Month Ended March 31
		2017 $ (609) (8,370) $ (8,979)	2016 $ 26,835 (1,927) $ 24,908

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

The financial statements used in the calculation of the Group’s share of the profit or loss and other comprehensive income of equity-method investees have not been reviewed by independent CPAs, except those of Axiomtek.

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2016 Additions Disposals Acquisition through business combinations Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2016 Accumulated depreciation and impairment Balance at January 1, 2016 Disposals Depreciation expenses Acquisition through business combinations Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2016 Carrying amounts at March 31, 2016 Cost Balance at January 1, 2017 Additions Disposals Acquisition through business combinations Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2017	Freehold Land $ 3,068,264 - (109,686 ) 12,644 - (2,523) $ 2,968,699 $ - - - - - - $ - $ 2,968,699 $ 2,948,580 - - 29,007 - (11,271) $ 2,966,316	Buildings $ 5,348,990 576 (85,723 ) 98,910 3,079 (15,650) $ 5,350,182 $ 1,046,061 (12,076 ) 40,301 24,266 187 (3,271) $ 1,095,468 $ 4,254,714 $ 7,080,989 15,603 - 44,460 (1,046 ) (134,910) $ 7,005,096	Equipment $ 1,533,640 13,105 (1,697 ) 60,760 1,363 (3,184) $ 1,603,987 $ 1,063,028 (1,636 ) 33,747 43,220 - (2,094) $ 1,136,265 $ 467,722 $ 1,631,738 18,385 (6,893 ) 24,903 4,178 (29,562) $ 1,642,749	Office Equipment $ 770,295 8,066 (10,089 ) 89,771 (1,772 ) (2,554) $ 853,717 $ 545,767 (8,549 ) 25,964 82,180 (1,902 ) (2,526) $ 640,934 $ 212,783 $ 862,409 10,453 (5,650 ) 6,163 (9,379 ) (26,662) $ 837,334	Other Facilities $ 1,533,038 19,745 (15,469 ) 25,371 5,172 (4,420) $ 1,563,437 $ 937,620 (10,703 ) 48,715 4,757 (307 ) (1,356) $ 978,726 $ 584,711 $ 1,605,230 30,892 (11,434 ) 4,952 40,484 (45,864) $ 1,624,260	Construction in Progress Total $ 915,128 $ 13,169,355 265,584 307,076 - (222,664 ) - 287,456 (17,029 ) (9,187 ) 167 (28,164) $ 1,163,850 $ 13,503,872 $ - $ 3,592,476 - (32,964 ) - 148,727 - 154,423 - (2,022 ) - (9,247) $ - $ 3,851,393 $ 1,163,850 $ 9,652,479 $ 43,289 $ 14,172,235 19,199 94,532 - (23,977 ) - 109,485 (48,751 ) (14,514 ) (346) (248,615) $ 13,391 $ 14,089,146 (Continued)

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Accumulated depreciation and impairment Balance at January 1, 2017 Depreciation expenses Disposals Acquisition through business combinations Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2017 Carrying amounts at March 31, 2017	Freehold Land $ - - - - - - $ - $ 2,966,316	Buildings $ 1,228,673 47,916 - 741 3 (37,795) $ 1,239,538 $ 5,765,558	Equipment $ 1,155,669 29,729 (6,899 ) 15,453 9 (18,312) $ 1,175,649 $ 467,100	Office Equipment $ 644,435 24,254 (4,959 ) 4,671 (6,916 ) (20,688) $ 640,797 $ 196,537	Other Facilities $ 1,053,622 47,743 (10,283 ) 3,948 152 (28,157) $ 1,067,025 $ 557,235	Construction in Progress Total $ - $ 4,082,399 - 149,642 - (22,141 ) - 24,813 - (6,752 ) - (104,952) $ - $ 4,123,009 $ 13,391 $ 9,966,137 (Concluded)

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

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

Property, plant and equipment pledged as collateral for borrowings were set out in Note 29.

15. GOODWILL

Cost Balance at January 1 Additional amounts recognized from business combinations occurring during the period (Note 25) Adjustments for goodwill after acquisition Effect of foreign currency exchange differences Balance at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 2,845,831 79,713 - (119,959) $ 2,805,585	2016 $ 1,139,559 2,311,181 (543,042) (50,904) $ 2,856,794

In the fourth quarter of 2016, the Group obtained an evaluation report which stated that the total fair value of the cash and cash equivalents, trade receivables, inventories, other current financial assets, other current assets, intangible assets, deferred tax assets, trade payables, other payables, other liabilities, and deferred tax liabilities was $1,394,876 thousand as of the date of acquisition. Thus, the Group made adjustments on the accounting treatment and the fair value of assets as of the date of acquisition and re-presented the comparative information.

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Adjusted items on the balance sheet of B+B were as follows:

	Acquisition
	Date	Acquisition
	(Provisional	Date (Fair
	Amount)	Value)
Goodwill	$ 2,311,181	$ 1,768,139
Cash and cash equivalents	-	71,336
Trade receivables	211,332	188,827
Inventories	301,938	281,758
Other current financial assets	33,010	-
Other current assets	30,446	17,935
Intangible assets	416,365	1,294,933
Deferred tax assets	35,125	153,651
Trade payables and other payables	(135,526)	(188,215)
Other liabilities	(10,730)	-
Deferred tax liabilities	(30,126)	(425,349)

16. PREPAYMENTS FOR LEASE

			December 31,	December 31,
	March 31, 2017			2016	March 31, 2016
Current assets (included in other current assets)	$	8,547	$	8,955	$	2,755
Non-current assets		308,298		325,224		99,774
	$	316,845	$	334,179	$	102,529

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

17. BORROWINGS

a. Short-term borrowings

		December 31,
	March 31, 2017	2016	March 31, 2016
Unsecured borrowings
Line of credit borrowings	$ 476,600	$ 483,750	$ 482,775

The range of weighted average effective interest rates on bank loans was 0.28%-2.87%, 1.324% and 1.14% per annum as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively.

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b. Long-term borrowings

March 31, 2017

Secured borrowings Bank loans Other borrowings Unsecured borrowings Line of credit borrowings Less: Current portions Long-term borrowings	$ 38,475 63,450 26,190 128,115 (18,459) $ 109,656

The long-term borrowings are borrowings of the subsidiary AKST. The effective interest rate of line of credit and secured borrowings was 1.60%-2.75% per annum as of March 31, 2017.

Other borrowings are loans from the government. As of March 31, 2017, the effective interest rate was 3.08%-3.30% per annum.

With demand of borrowings, the Group pledged time deposits, freehold land and building and payment guarantee (refer to Note 29).

18. OTHER LIABILITIES

		December 31,
	March 31, 2017	2016	March 31, 2016
Other payables
Payables for salaries or bonuses	$ 1,819,613	$ 2,248,870	$ 1,829,400
Payables for employee benefits	165,595	151,115	143,705
Payables for royalties	130,386	179,207	125,854
Others (Note)	879,294	1,323,307	869,456
	$ 2,994,888	$ 3,902,499	$ 2,968,415

Note: Including construction payables, 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 $1,250 thousand and $1,391 thousand for the three months ended March 31, 2017 and 2016, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2016 and 2015.

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20. EQUITY

a. Share capital

Ordinary shares

		December 31,
	March 31, 2017	2016	March 31, 2016
Number of shares authorized (in thousands)	800,000	800,000	800,000
Shares authorized	$ 8,000,000	$ 8,000,000	$ 8,000,000
Number of shares issued and fully paid (in
thousands)	633,254	633,084	631,853
Shares issued and fully paid	$ 6,332,541	$ 6,330,841	$ 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.
The changes in shares are due to employees’ exercise of their employee share options.
Capital surplus
		December 31,
	March 31, 2017	2016	March 31, 2016
Used to offset a deficit, distributed as cash
dividends, or transferred to share capital (1)
Issuance of ordinary shares	$ 3,396,888	$ 3,396,888	$ 3,396,888
Conversion of bonds	931,849	931,849	931,849
The difference between consideration
received or paid and the carrying amount of
the subsidiaries’ net assets during actual
disposal or acquisition	17,844	17,844	-
May be used to offset a deficit only
Changes in percentage of ownership interest
in subsidiaries (2)	4,246	4,246	4,246
Employee share options	1,118,084	1,077,084	792,341
Employees’ share compensation	78,614	78,614	78,614
Not be used for any purpose
Share of changes in capital surplus of
associates	24,301	23,231	13,765
Employee share options	613,854	529,128	436,388
	$ 6,185,680	$ 6,058,884	$ 5,654,091

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

b. Capital surplus

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).
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2) Such capital surplus arises from the effects of changes in ownership interests in a subsidiary resulting from equity transactions other than an actual disposal or acquisition or from changes in capital surplus of subsidiaries accounted for by using the 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, 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 dividends policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of employees’ compensation and remuneration of directors and supervisors after amendment, 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 dividends policy, the Company takes into account the overall business and industry conditions and trends, its objective of enhancing the shareholders’ long-term interests, and the sustainability of the Company’s growth. The policy also requires that share dividends be less than 75% of total dividends to retain internally generated cash within the Company to finance future capital expenditures and working capital requirements.

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

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

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 appropriations of earnings, for 2016 and 2015 which have been proposed by the Company’s board of directors on March 6, 2017 and approved in the shareholders’ meetings on May 25, 2016, respectively, were as follows:

Legal reserve Special reserve Cash dividends Share dividends	Appropriation of Earnings For the Year Ended December 31 2016 2015 $ 566,686 $ 510,434 85,204 - 3,988,367 3,791,118 633,074 -	Dividends Per Share (NT$)
		For the Year Ended December 31
		2016 2015 $ - $ - - - 6.3 6.0 1.0 -

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The appropriations of earnings for 2016 are subject to the resolution in the shareholders’ meeting to be held on May 26, 2017.

d. Other equity items
1) Exchange differences on translation of foreign financial statements

Balance at January 1 Exchange differences arising on translation of foreign financial statements Related income tax Share of exchange difference of associates accounted for using the equity method Balance at March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ (197,633) (547,676) 94,528 (8,370) $ (659,151)	2016 $ 271,859 (74,284) 12,956 (1,927) $ 208,604

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

Balance at January 1 Unrealized gain arising on revaluation of available-for-sale financial assets Cumulative loss (gain) reclassified to profit or loss on sale of available-for-sale financial assets Balance at March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 112,429 67,079 96,322 $ 275,830	2016 $ 68,265 164,733 (1,652) $ 231,346

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 financial statements Non-controlling interests arising from acquisition of subsidiaries (Note 26) Additional non-controlling interests arising from acquisition of subsidiary AKST (Note 25) Balance at March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 173,315 473 (3,455) - 15,203 $ 185,536	2016 $ 146,276 4,546 968 (9,422) - $ 142,368

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21. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

Interest on bank loans Others	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 2,561 156 $ 2,717	2016 $ 2,082 - $ 2,082

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 March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 149,642 51,263 $ 200,905 $ 36,971 112,671 $ 149,642 $ 1,244 30 42,362 7,627 $ 51,263	2016 $ 148,727 62,000 $ 210,727 $ 35,262 113,465 $ 148,727 $ 37 24 54,879 7,060 $ 62,000

c. Employee benefits 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		For the Three Month Ended March 31	For the Three Month Ended March 31
		2017 $ 1,863,796 77,438 1,250 78,688 111,259 149,354 $ 2,203,097	2016 $ 1,946,464 77,969 1,391 79,360 65,469 159,989 $ 2,251,282 (Continued)

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An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Month Ended March 31	For the Three Month Ended March 31
		2017 $ 474,151 1,728,946 $ 2,203,097	2016 $ 464,885 1,786,397 $ 2,251,282 (Concluded)

d. Employees’ compensation and remuneration of directors and supervisors

In compliance with the Company Act as amended in May 2015 and the amended Articles of Incorporation of the Company approved by the shareholders in their meeting on May 25, 2016, the Company accrued employees’ compensation at the rates of no less than 1% and no higher than 20% and remuneration of directors and supervisors at the rates of no higher than 1%, of net profit before income tax, employees’ compensation, and remuneration of directors and supervisors. For the three month ended March 31, 2017 and 2016, the employees’ compensation and the remuneration of directors and supervisors were accrued of net profit after income tax.

Employees’ compensation Remuneration of directors and supervisors	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 60,750 $ 3,075	2016 $ 50,000 $ 3,000

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

The appropriations of employees’ compensation and remuneration of directors and supervisors for 2016 and 2015 having been resolved by the board of directors on March 6, 2017 and March 4, 2016, respectively, were as below:

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2016 Cash $ 243,000 12,300	2015
		Cash $ 200,000 12,000

There was no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2016 and 2015.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2017 and 2016 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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e. Gains or losses on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net losses	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 253,987 (456,431) $ (202,444)	2016 $ 342,474 (390,965) $ (48,491)

22. INCOME TAX

a. Income tax recognized in profit or loss

Major components of tax expense were as follows:

b. c.	Current tax In respect of the current period Deferred tax In respect of the current period Income tax expense recognized in profit or loss Income tax recognized in other comprehensive income Deferred tax In respect of current period Translation of foreign operations Integrated income tax March 31, 2017 Unappropriated earnings Generated on and after January 1, 1998 $ 9,640,825 Shareholder-imputed credits accounts $ 777,620 Creditable ratio for distribution of earnings	For the Three Months Ended March 31
		2017 2016 $ 293,309 $ 303,680 97 25,216 $ 293,406 $ 328,896 For the Three Months Ended March 31
		2017 2016 $ (94,528) $ (12,956) December 31, 2016 March 31, 2016 $ 8,435,785 $ 8,452,162 $ 777,620 $ 608,917 For the Years Ended December 31
		2016 (Expected) 2015 18.69% 13.86%

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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 tax return and applied for re-examination. Nevertheless, to be conservative, the Company provided for the income tax assessed by the tax authorities.

23. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 1.90 $ 1.90	2016 $ 2.15 $ 2.15

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 March 31	For the Three Months Ended March 31
		2017 $ 1,205,040 $ 1,205,040	2016 $ 1,357,404 $ 1,357,404

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 options Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 633,144 780 942 634,866	2016 631,853 - 808 632,661

Since the Group offered to settle compensation paid to employees in cash or shares, the Group assumed the entire amount of the compensation would 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.

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24. SHARE-BASED PAYMENT ARRANGEMENTS

Qualified employees of the Company and its subsidiaries were granted 6,500 options in 2016 and 5,000 options in 2014. Each option entitles the holder to subscribe for one thousand ordinary 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 and 2014 are both valid for six years. All are exercisable at certain percentages after the second anniversary year from the grant date. The exercise price of those granted in 2016 and 2014 was both NT$100 per share. For any subsequent changes in the Company’s capital surplus, the exercise price and the number of options will be adjusted accordingly.

No share options were issued granted during the three months ended March 31, 2017 and 2016. Information on employee share options was as follows:

Employee Share Options Balance at January 1 Options exercised Balance at March 31 Options exercisable, end of the period Weighted-average fair value of options granted (NT$)	For the Three Months Ended March 31	For the Three Months Ended March 31
	2017 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 10,269 $ 100.00 (170) 95.10 10,099 - 10,099 95.10 95.10	2016
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 5,000 $ 100.00 - - 5,000 100.00 - - -

The weighted-average share price at the date of exercise of share options for the three months ended March 31, 2017 was from NT$255 to NT$266.

Information about outstanding options as of March 31, 2017 and 2016 was as follows:

Issuance in 2016 Issuance in 2014	For the Three Months Ended December 31	For the Three Months Ended December 31
	2017 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 100.00 5.20 95.10 3.38	2016
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ - - 100.00 4.38

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

	2016		2014
Grant-date share price (NT$)		$235	$239.5
Exercise price (NT$)		$100	$100
Expected volatility	31.42%-32.48%		28.28%-29.19%
Expected life (in years)	4-5.5	years	4-5.5 years
Expected dividends yield		0%	0%
Risk-free interest rate	0.52%-0.65%		1.07%-1.30%

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

Compensation cost recognized was $111,259 thousand and $65,469 thousand for the three months ended March 31, 2017 and 2016, respectively.

25. BUSINESS COMBINATION

a. Subsidiary acquired

			Proportion of
			Voting Equity
		Date of	Interests	Consideration
	Principal Activity	Acquisition	Acquired (%)	Transferred
Kostec Co., Ltd.	Production and sale of	January 20, 2017	60	$	102,517
	intelligent medical display
B+B (Note)	Sale of industrial network	January 4, 2016	100	$	3,296,048
	communications

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) and Conel Automation, refer to Note 12, Table 7 and Table 9.

To expand the Group’s 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’s market strategy is to develop R&D technology of global medical display. The Group acquired 60% share equity of Kostec Co., Ltd. (AKST) to expand global intelligent medical market.

b. Considerations transferred

						AKST	B+B
Cash					$	102,517	$ 3,296,048
Contingent	consideration arrangements	(1	and	2)		48,528	-
					$	151,045	$ 3,296,048
					(US$ 4,800		(US$ 99,850
						thousand)	thousand)

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1) The Group acquired 60% equity in AKST with the provisional amount of $102,517 thousand. The Group expected to pay the full of amount which will not exceed US$600 thousand, after obtaining independent auditors’ report for 2016 during the first half of 2017. In addition, the Group will adjust the goodwill based on the identifiable net assets and liabilities on the report.
2) Under the contingent consideration arrangements, the Group is required to pay the seller an additional US$500 thousand in 2017 and 2018, respectively, if AKST’s revenue exceeds the agreed amount.
3) On January 4, 2016, the Group acquired 100% share equity of B+B and its subsidiaries from Graham Partners. The Company and ANA obtained share equity of B+B mutually.
4) Acquisition-related costs amounting to $33,476 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 Cash and cash equivalents Trade receivables Inventories Debt investments with no active market - current Other current assets Non-current assets Plant and equipment Intangible assets Deferred tax assets Other non-current assets Current liabilities Short-term borrowings Trade and other payables Current portion of long-term borrowings Other current liabilities Non-current liabilities Long-term borrowings Deferred tax liabilities	AKST $ 1,745 20,426 30,457 54,324 2,877 84,672 9,921 4,207 926 (8,100) (26,748) (22,733) (1,646) (109,656) (2,665) $ 38,007	B+B $ 71,336 188,827 281,758 - 17,935 133,033 1,294,933 153,651 - - (188,215) - - - (425,349) $ 1,527,909

d. Non-controlling interests

The non-controlling interest (40% ownership interest in AKST) recognized at the acquisition date was measured by reference to the identifiable net assets of the non-controlling interest and amounted to $15,203 thousand.

e. Goodwill recognized on acquisitions

Consideration transferred Less: Fair value of identifiable net assets acquired Goodwill recognized on acquisition	AKST $ 102,517 (22,804) $ 79,713	B+B $ 3,296,048 (1,527,909) $ 1,768,139

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The goodwill recognized in the acquisitions of AKST and B+B mainly represents the control premium included in the cost of the combination. In addition, the consideration paid for the combination effectively included amounts attributed to the benefits of expected synergies, revenue growth, future market development and the assembled workforce of AKST and B+B. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

f. Net cash outflow on acquisition of subsidiaries

Consideration paid in cash Less: Prepayments for investments Less: Cash and cash equivalent balance acquired	AKST $ 102,517 - (1,745) $ 100,772	B+B $ 3,296,048 (2,279,881) (71,336) $ 944,831

g. 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 Loss	For the Three Months Ended March 2017 AKST $ 36,598 $ (9,063)	For the Three Months Ended March 2016	For the Three Months Ended March 2016
			B+B $ 413,819 $ (43,063)

26. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

a. In the first of 2016, the Group acquired 0.07% equity in ALNC, increasing the Group’s equity interest from 89.93% to 90%.
b. In the first quarter of 2016, the Group acquired 40% equity in Hangzhou Advantofine Automation Tech. 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.

Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiaries transferred to non-controlling interests Differences recognized from equity transactions	For the Three Months Ended March 31, 2016	For the Three Months Ended March 31, 2016	For the Three Months Ended March 31, 2016
	Hangzhou Advantofine Automation Co., Ltd. $ (12,749) 9,195 $ (3,554)	ALNC $ (364) 227 $ (137)	Total $ (13,113) 9,422 $ (3,691) (Continued)

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Line items adjusted for equity transactions Retained earnings	For the Three Months Ended March 31, 2016	For the Three Months Ended March 31, 2016	For the Three Months Ended March 31, 2016
	Hangzhou Advantofine Automation Co., Ltd. $ (3,554)	ALNC $ (137)	Total $ (3,691) (Concluded)

27. FINANCIAL INSTRUMENTS

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

1) Fair value hierarchy

March 31, 2017 Financial assets at FVTPL Derivative financial assets Non-derivative financial assets held for trading Available-for-sale financial assets Securities listed in ROC Equity securities Unlisted securities - ROC Equity securities Mutual funds Financial liabilities at FVTPL Derivative financial liabilities December 31, 2016 Financial assets at FVTPL Derivative financial assets Non-derivative financial asset held for trading	Level 1 $ - 91,537 $ 91,537 $ 2,248,338 - 2,769,752 $ 5,018,090 $ - Level 1 $ - 78,680 $ 78,680	Level 2 $ 20,990 - $ 20,990 $ - - - $ - $ 1,207 Level 2 $ 34,348 - $ 34,348	Level 3 $ - - $ - $ - 9,375 - $ 9,375 $ - Level 3 $ - - $ -	Total $ 20,990 91,537 $ 112,527 $ 2,248,338 9,375 2,769,752 $ 5,027,465 $ 1,207 Total $ 34,348 78,680 $ 113,028 (Continued)

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Available-for-sale financial assets Securities listed in ROC Equity securities Unlisted securities - ROC Equity securities Mutual funds Financial liabilities at FVTPL Derivative financial liabilities March 31, 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	Level 1 $ 2,209,557 - 2,450,232 $ 4,659,789 $ - Level 1 $ - 179,286 $ 179,286 $ 2,353,939 - - 1,301,943 $ 3,655,882 $ -	Level 2 $ - - - $ - $ 10,231 Level 2 $ 6,324 - $ 6,324 $ - - - - $ - $ 13,108	Level 3 $ - 9,375 - $ 9,375 $ - Level 3 $ - - $ - $ - 9,375 33,257 - $ 42,632 $ -	Total $ 2,209,557 9,375 2,450,232 $ 4,669,164 $ 10,231 (Concluded) Total $ 6,324 179,286 $ 185,610 $ 2,353,939 9,375 33,257 1,301,943 $ 3,698,514 $ 13,108

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

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

For the three months ended March 31, 2017

Financial assets Balance at January 1, 2017 Balance at March 31, 2017 For the three months ended March 31, 2016	Available- for-sale Financial Assets Equity Instruments $ 9,375 $ 9,375	Total $ 9,375
		$ 9,375

Financial assets Balance at January 1, 2016 Balance at March 31, 2016	Available-for-sa le Financial Assets Equity Instruments $ 42,632 $ 42,632	Total $ 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 unlisted equity securities - ROC 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.

b. Categories of financial instruments

			December 31,	December 31,
	March 31, 2017			2016	March 31, 2016
Financial assets
Fair value through profit or loss (FVTPL)
Held for trading (Note 1)	$	112,527	$	113,028	$	185,610
Loans and receivables (Note 2)		10,466,156		12,025,231		11,153,659
Available-for-sale financial assets		5,027,465		4,669,164		3,698,514
						(Continued)

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			December 31,	December 31,
	March 31, 2017			2016	March 31, 2016
Financial liabilities
Fair value through profit or loss (FVTPL)
Held for trading	$	1,207	$	10,231	$	13,108
Measured at amortized cost (Note 3)		7,097,203		9,369,630		7,015,961
						(Concluded)

Note 1: The balance included the carrying amount of held-for-trading financial assets measured at cost.
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, trade receivables, trade receivables from related parties and other receivables.
Note 3: The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, trade and other payables current portion of long-term borrowings and long-term borrowings.

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 financial instruments, for speculative purposes.

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

1) Market risk

The Group’s activities exposed it primarily to the 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.

41 -

a) Foreign currency risk

The Group undertook operating activities and investment of foreign operations denominated in foreign currencies, which exposed it to foreign currency risk. The Group manages the risk that fluctuations in foreign currency could have on foreign-currency denominated assets and future cash flow by 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 32. As for the carrying amounts of derivatives exposing to foreign currency risk at the end of the reporting period, refer to Note 7.

Sensitivity analysis

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

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

Profit or loss	U.S. Dollar Impact For the Three Months Ended March 31 2017 2016 $ 105,676 (Note 1) $ 120,688 (Note 1)	Euro Impact For the Three Months Ended March 31 2017 2016 $ 58,255 (Note 2) $ 28,409 (Note 2)	Renminbi Impact
			For the Three Months Ended March 31
			2017 2016 $ 56,630 (Note 3) $ 40,228 (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.
42 -

b) Interest rate risk

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

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

			December 31,	December 31,
	March 31, 2017			2016	March 31, 2016
Fair value interest rate risk
Financial assets	$	427,169	$	235,400	$	231,943
Cash flow interest rate risk
Financial assets		2,621,410		3,923,166		3,696,531
Financial liabilities		604,715		483,750		482,775

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 three months ended March 31, 2017 and 2016 would have increased by $2,521 thousand and $4,017 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.

43 -

If equity prices had been 1% higher, pre-tax profits for the three months ended March 31, 2017 and 2016 would have increased by $915 thousand and $1,793 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 three months ended March 31, 2017 and 2016 would have increased by $50,275 thousand and $36,985 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 of counterparties to discharge an obligation provided by the Group could arise from the carrying amount of the respective recognized financial assets, as stated in the balance sheets.

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.

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 March 31, 2017, December 31, 2016 and March 31, 2016, 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.

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

March 31, 2017

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 4,723,650 Variable interest rate liabilities 14,397 $ 4,738,047 December 31, 2016 On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 7,013,061 Variable interest rate liabilities 534 $ 7,013,595 March 31, 2016 On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 4,077,597 Variable interest rate liabilities 459 $ 4,078,056	1-3 Months $ 749,325 1,693 $ 751,018 1-3 Months $ 855,392 1,067 $ 856,459 1-3 Months $ 1,447,862 917 $ 1,448,779	Over 3 Months to 1 Year $ 1,019,513 470,667 $ 1,490,180 Over 3 Months to 1 Year $ 1,017,427 488,554 $ 1,505,981 Over 3 Months to 1 Year $ 1,007,727 485,394 $ 1,493,121	Over 1 Year $ - 133,270 $ 133,270 Over 1 Year $ - - $ - Over 1 Year $ - - $ -

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

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

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

March 31, 2017

On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 359,537 Outflows 347,662 $ 11,875 December 31, 2016 On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 325,858 Outflows 316,886 $ 8,972 March 31, 2016 On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 382,755 Outflows 384,836 $ (2,081)	1-3 Months Over 3 Months to 1 Year $ 538,031 $ 256,087 532,010 254,200 $ 6,021 $ 1,887 1-3 Months Over 3 Months to 1 Year $ 753,831 $ 289,030 743,308 284,408 $ 10,523 $ 4,622 1-3 Months Over 3 Months to 1 Year $ 558,609 $ 224,306 562,168 225,450 $ (3,559) $ (1,144)	Total $ 1,153,655 1,133,872 $ 19,783 Total $ 1,368,719 1,344,602 $ 24,117 Total $ 1,165,670 1,172,454 $ (6,784)

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c) Financing facilities

			December	December	31,
	March 31, 2017			2016		March 31, 2016
Unsecured bank overdraft facilities
reviewed annually and payable at
call:
Amount used	$	502,790	$	483,750		$	482,775
Amount unused		3,599,050		3,757,750			4,857,173
	$	4,101,840	$	4,241,500		$	5,339,948
Secured bank overdraft facilities:
Amount used	$	101,925	$		-	$	-

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. Names and categories of related parties

Names Axiomtek Co., Ltd. AIMobile Co., Ltd. Deneng Scientific Research Co., Ltd. Jan Hsiang Electronics Co., Ltd. K&M Investment Co., Ltd. AIDC Investment Corp. Advantech Foundation	Related Party Categories
	Associate Associate Associate Associate Other related party Other related party Other related party

b. Sales of goods

Related Party Categories Associates c. Purchases of goods	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 23,080	2016 $ 20,683

Related Party Categories Associates	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 21,780	2016 $ 3,006

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

	Related Party	March 31,	December 31,	March 31,	March 31,
Line Items	Categories	2017	2016		2016
Trade receivables from	Associates	$ 17,658	$ 13,957	$	5,787
related parties

The outstanding trade receivables from related parties are unsecured. For the three months ended March 31, 2017 and 2016, no impairment loss was recognized for trade receivables from related parties.

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

	Related Party	March 31,	March 31,	December	December	31,	March 31,	March 31,
Line Items	Categories		2017		2016			2016
Trade payables	Associates	$	11,863	$	29,453		$	1,299
Other payables	Other related parties	$	931	$		-	$	-

The outstanding trade payables from related parties are unsecured.

f. Other transactions with related parties

Operating Expenses	Operating Expenses	Operating Expenses
For the Three Months Ended March 31
	2017 2016 $ 997 $ - Other Income
For the Three Months Ended March 31
	2017 $ 15 $ 676	2016 $ 15 $ 676

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

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g. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Share-based payments	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2017 $ 8,587 24 2,903 $ 11,514	2016 $ 9,161 28 6,547 $ 15,736

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

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets of subsidiary AKST were provided as collateral for bank borrowings:

	March 31, 2017	March 31, 2017
Pledge deposits (recognized as debt investments with no active market)	$	34,290
Property, plant and equipment		67,068
	$	101,358

30. SIGNIFICANT COMMITMENTS

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

Significant Commitments

As of March 31, 2016, 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 $450,131 thousand.

31. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

The Company planned to invest in four main fields, which include Internet Cloud, Internet of Things, Mobile Internet and Next Generation of E-commerce and aggressively seeks new partnership for interrelated innovation. CDIB Capital Group expects to establish funds for development and innovation. The Company has acquired 20% equity for $150,000 thousand. As of March 31, 2017, the prepayment for investment amounted to $75,000 thousand.

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32. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

March 31, 2017

	Unit: In Thousands of New Taiwan Dollars and	Unit: In Thousands of New Taiwan Dollars and	Unit: In Thousands of New Taiwan Dollars and	Unit: In Thousands of New Taiwan Dollars and	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	$	186,929	30.330 (USD:NTD)	$ 5,669,557
RMB		428,035	4.4070 (RMB:NTD)		1,886,350
EUR		27,649	32.430 (EUR:NTD)		896,657
USD		8,145	6.8822 (USD:RMB)		247,039
				$ 8,699,603
Financial liabilities
Monetary items
USD		105,194	30.330 (USD:NTD)		3,190,534
USD		26,187	6.8822 (USD:RMB)		794,252
RMB		194,940	4.4070 (RMB:NTD)		859,101
				$ 4,843,887

December 31, 2016

	Unit: In Thousands of New Taiwan Dollars and	Unit: In Thousands of New Taiwan Dollars and	Unit: In Thousands of New Taiwan Dollars and	Unit: In Thousands of New Taiwan Dollars and	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	$	198,736	32.250 (USD:NTD)	$ 6,409,236
RMB		349,617	4.6170 (RMB:NTD)		1,614,182
EUR		23,502	33.900 (EUR:NTD)		796,718
USD		9,734	6.9851 (USD:RMB)		313,924
				$ 9,134,060
Financial liabilities
Monetary items
USD		140,430	32.250 (USD:NTD)	$ 4,528,868
USD		30,933	6.9851 (USD:RMB)		997,591
RMB		200,658	4.6170 (RMB:NTD)		926,438
				$ 6,452,897

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March 31, 2016

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

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 177,741 32.185 (USD:NTD) RMB 257,075 4.9720 (RMB:NTD) EUR 25,220 36.510 (EUR:NTD) USD 3,321 6.4733 (USD:RMB) Nonmonetary items USD 1,879 32.185 (USD:NTD) Financial liabilities Monetary items USD 78,729 32.185 (USD:NTD) USD 30,962 6.4733 (USD:RMB) RMB 91,786 4.9720 (RMB:NTD)	Carrying Amount $ 5,720,594 1,278,177 920,782 106,888 $ 8,026,441 $ 60,476 $ 2,533,893 996,518 456,360 $ 3,986,771

For the three months ended March 31, 2017 and 2016, realized and unrealized net foreign exchange losses were $202,444 thousand and $48,491 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.

33. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and b. information on investees:
1) Financing provided to others. (Table 1)
2) Endorsements/guarantees 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. (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)
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7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 6)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)
9) Trading in derivative instruments. (Notes 7 and 27)
10) Significant transactions between the Company and subsidiaries. (Table 10)
11) Name, locations, and other information of investees. (Table 7)
12) Organization chart. (Table 9)
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 income, and limit on the amount of investment in the mainland China area. (Table 8)
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, 5 and 6)

34. 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: Provide services involving embedded boards, systems and peripheral hardware and software and customizes designs and services to meet customers’ demands;
Allied design manufacture services: Provide services involving digital logistic, digital healthcare and intelligent retail;
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.

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

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

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

For the three months ended March 31, 2017 Revenues from external customers Inter-segment revenues Segment revenues Eliminations Consolidated revenues Segment income Central administration costs and directors’ salaries Other revenues Other income and expense Finance costs Share of profits of associates for using the equity method Profit before tax For the three months ended March 31, 2016 Revenues from external customers Inter-segment revenues Segment revenues Eliminations Consolidated revenues Segment income Central administration costs and directors’ salaries Other revenues Other income and expense Finance costs Share of profits of associates for using the equity method Profit before tax	Industrial Interest of Thing Services $ 3,318,147 - $ 3,318,147 - - $ 771,249 $ 3,156,937 - $ 3,156,937 - - $ 654,143	Embedded Boards and Design-in Services $ 2,707,255 - $ 2,707,255 - - $ 440,709 $ 2,672,287 - $ 2,672,287 - - $ 514,976	Allied Design Manufacture Services $ 2,036,412 - $ 2,036,412 - - $ 308,742 $ 2,247,361 - $ 2,247,361 - - $ 368,683	Smart City Solution Services $ 650,414 - $ 650,414 - - $ (2,861) $ 764,079 - $ 764,079 - - $ 87,067	Global Customer Services $ 1,258,632 - $ 1,258,632 - - $ 162,036 $ 1,130,872 - $ 1,130,872 - - $ 131,511	Others $ 35,379 - $ 35,379 - - $ 1,383 $ 101,864 - $ 101,864 - - $ (11,642)	Total $ 10,006,239 - 10,006,239 - 10,006,239 1,681,258 (177,959 ) 28,347 (29,401 ) (2,717 ) (609) $ 1,498,919 $ 10,073,400 - 10,073,400 - 10,073,400 1,744,738 (205,023 ) 23,415 102,963 (2,082 ) 26,835 $ 1,690,846

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.

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TABLE 1

ADVANTECH CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE THREE MONTHS ENDED MARCH 31, 2017 (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 Amount	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limits
					Highest Balance for the Period	Ending Balance	Ending Balance						Item	Value
1	Better Auto	Advantech LNC Dong Guan Co., Ltd. Advantech LNC Dong Guan Co., Ltd.	Trade receivables - related parties Trade receivables - related parties	Yes Yes	$ 20,729 (RMB 4,520 thousand ) 15,673 (US$ 500 thousand )	$ 19,920 (RMB 4,520 thousand ) 15,165 ( US$ 500 thousand )	$ 19,920 (RMB 4,520 thousand ) 12,132 (US$ 400 thousand )	1 1	Short-term financing Short-term financing	$ - -	Financing need Financing need	$ - -	None None	None None	$ 2,624,900 (Note C) 2,624,900 (Note C)	$ 5,249,800 (Note C) 5,249,800 (Note C)
2	ANA	B+B (CZ)	Trade receivables - related parties	Yes	23,509 (US$ 750 thousand )	22,748 ( US$ 750 thousand )	15,165 (US$ 500 thousand )	2	Short-term financing	-	Financing need	-	None	None	2,624,900 (Note C)	5,249,800 (Note C)
3	B+B	B+B (CZ)	Trade receivables - related parties	Yes	39,505 (CZK 31,756 thousand )	38,202 (CZK 31,756 thousand )	-	2	Short-term financing	-	Financing need	-	None	None	2,624,900 (Note C)	5,249,800 (Note C)
4	B+B (CZ)	Conel Automation	Trade receivables - related parties	Yes	14,928 (CZK 12,000 thousand )	14,436 (CZK 12,000 thousand )	14,436 (CZK 12,000 thousand )	2	Short-term financing	-	Financing need	-	None	None	2,624,900 (Note C)	5,249,800 (Note C)
5	Cermate Technologies (Shanghai) Inc.	Shenzhen Cermate Technologies Inc.	Prepayments of inventories	Yes	13,758 (RMB 3,000 thousand )	13,221 (RMB 3,000 thousand )	-	-	Short-term financing	-	Financing need	-	None	None	2,624,900 (Note C)	5,249,800 (Note C)

Note A: Investee companies are numbered sequentially from 1.

Note B: The exchange rates as of March 31, 2017 were US$1=NT$30.33, RMB1=NT$4.407 and CZK1=NT$1.203.

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.

54 -

TABLE 2

ADVANTECH CO., LTD. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED FOR THE THREE MONTHS ENDED MARCH 31, 2017 (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	Advanixs Corp. AdvanPOS ANA B+B AKMC ALNC Advanixs Corp. Cermate AiST AdvanPOS A-DLog	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900	$ 62,690 (US$ 2,000 thousand) 62,690 (US$ 2,000 thousand) 940,350 (US$ 30,000 thousand) 313,450 (US$ 10,000 thousand) 188,070 (US$ 6,000 thousand) 109,708 (US$ 1,500 thousand) 50,152 (US$ 1,600 thousand) 48,585 (US$ 1,000 thousand) 4,702 (US$ 150 thousand) 31,345 (US$ 1,000 thousand) 33,640 (EUR 1,000 thousand)	$ 60,660 (US$ 2,000 thousand) 60,660 (US$ 2,000 thousand) 909,900 (US$ 30,000 thousand) 303,300 (US$ 10,000 thousand) 181,980 (US$ 6,000 thousand) 45,495 (US$ 1,500 thousand) 48,528 (US$ 1,600 thousand) 30,330 (US$ 1,000 thousand) 4,550 (US$ 150 thousand) 30,330 (US$ 1,000 thousand) 32,430 (EUR 1,000 thousand)	$ - - 454,950 (US$ 15,000 thousand) - - - - - - - -	$ - - - - - - - - - - -	0.24 0.24 3.61 1.20 0.72 0.18 0.19 0.12 0.02 0.12 0.13	$ 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700	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 Y N N N N N N
													(Continued)

55 -

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
		ABR AAU AKR Shenzhen Cermate Technologies Inc. Advantech LNC Dong Guan Co., Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 2,624,900 2,624,900 2,624,900 2,624,900 2,624,900	$ 47,018 (US$ 1,500 thousand) 6,269 (US$ 200 thousand) 1,567 (US$ 50 thousand) 16,682 (US$ 550 thousand) 60,660 (US$ 2,000 thousand)	$ 45,495 (US$ 1,500 thousand) 6,066 (US$ 200 thousand) 1,517 (US$ 50 thousand) 16,682 (US$ 550 thousand) 60,660 (US$ 2,000 thousand)	$ - - - - -	$ - - - - -	0.18 0.02 0.01 0.07 0.24	$ 7,874,700 7,874,700 7,874,700 7,874,700 7,874,700	Y Y Y Y Y	N N N N N	N N N Y 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 March 31, 2017 were US$1=NT$30.33 and EUR1=NT$32.43.

Note D: The latest net equity is from the financial statements year ended December 31, 2016.

(Concluded)

56 -

TABLE 3

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD FOR THE THREE MONTHS ENDED MARCH 31, 2017 (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		March 31, 2017	March 31, 2017		Note
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
The Company Advantech Corporate Investment Advanixs Corporate	Stock ASUSTek Computer Inc. Pegatron Corp. Allied Circuit Co., Ltd. Fund Capital Money Market Mega Diamond Money Market FSITC Money Market Stock Allied Circuit Co., Ltd. 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 FSITC Money Market Taishin 1699 Money Market Fund Jih Sun Money Market CTBC Hwa-win Money Market Fund Mega Diamond Money Market	- - - - - - - - - - - - - - - - - - - -	Available for sale financial assets - noncurrent Same as above Same as above Available for sale financial assets - current Same as above Same as above Financial assets at fair value through profit or loss - current Available for sale financial assets - noncurrent Same as above Same as above Same as above Available for sale financial assets - current Same as above Same as above Same as above Same as above Same as above Same as above Same as above Same as above	5,229,461 1,540,570 1,200,000 3,126,524 38,651,893 2,092,804 2,501,000 182,700 37,500 500,000 299,000 1,500,000 446,000 1,275,000 27,404,353 2,349,453 9,710,550 41,223,306 2,290,363 4,911,432	$ 1,568,838 138,343 43,920 50,007 480,370 370,133 91,537 1,500 375 7,500 10,944 408,750 28,455 49,088 340,584 415,524 130,206 605,265 25,021 61,040	0.01 - 0.02 - - - 5.03 7.50 1.79 16.67 0.60 0.76 0.10 0.97 - - - - - -	$ 1,568,838 138,343 43,920 50,007 480,370 370,133 91,537 1,500 375 7,500 10,944 408,750 28,455 49,088 340,584 415,524 130,206 605,265 25,021 61,040	Note A Note A Note A Note B Note B Note B Note A - - - Note A Note A Note A Note A Note B Note B Note B Note B Note B Note B

(Continued)

57 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		March 31, 2017	March 31, 2017		Note
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
AiST ALNC AdvanPOS Advantech Innovative Design Co., Ltd. Cermate	Fund Jih Sun Money Market Fund Mega Diamond Money Market Fund Mega Diamond Money Market Fund Capital Money Market Fund Mega Diamond Money Market	- - - - -	Available for sale financial assets - current Same as above Same as above Same as above Same as above	4,003,401 4,470,587 11,835,929 319,290 2,016,087	$ 58,780 55,561 147,098 5,107 25,056	- - - - -	$ 58,780 55,561 147,098 5,107 25,056	Note B Note B Note B Note B Note B

Note A: Market value was based on the closing price on March 31, 2017.

Note B: Market value was based on the net asset values of the open-ended mutual funds on March 31, 2017.

(Concluded)

58 -

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 THREE MONTHS ENDED MARCH 31, 2017

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

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Shares	Amount (Cost)	Shares	Amount	Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Shares	Amount (Cost)
The Company	Fund FSITC Money Market	Available for sale financial assets - current	-	-	1,698,386	$ 300,000	2,092,804	$ 370,000	1,698,386	$ 300,178	$ 300,000	$ 178	2,092,805	$ 370,000

59 -

TABLE 5

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 THREE MONTHS ENDED MARCH 31, 2017

(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 AKMC Advanixs Kun Shan Corp. Advanixs Corporate Advan POS	ACN AEU AJP AKMC AKR ANA The Company AKMC AKMC The Company The Company	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Related enterprise Related enterprise Parent company Parent company	$ 1,063,897 1,046,624 171,160 112,335 104,953 786,923 914,902 113,327 560,147 398,006 422,678	5.41 3.90 3.52 7.65 9.15 7.25 8.96 2.48 5.08 4.21 6.38	$ - - - - - - - - - - -	- - - - - - - - - - -	$ 564,096 239,665 - 134,736 33,360 632,227 379,703 - - - -	$ - - - - - - - - - - -

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

60 -

TABLE 6

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 THREE MONTHS ENDED MARCH 31, 2017

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

Buyer	Related Party	Relationship		Transaction Details (Note C)	Transaction Details (Note C)	Transaction Details (Note C)		Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Company AKMC Advanixs Corporate AdvanPOS ACN AEU AJP AKMC AKR ANA Advanixs Corporate AKMC Advanixs Corporate ACN AKMC	ACN AEU AJP AKMC AKR ANA Advanixs Corporate AKMC Advanixs Corporate AdvanPOS The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company ACN AKMC AKMC Advanixs Corporate	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Related enterprise Related enterprise Related enterprise Related enterprise	Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Purchase Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Purchase Purchase	$ (1,275,311) (974,882) (169,667) (325,365) (231,815) (1,724,830) (103,934) 2,382,115 539,267 616,176 (2,382,115) (539,267) (616,176) 1,275,311 974,882 169,667 325,365 231,815 1,724,830 103,934 (117,268) (760,867) 117,268 760,867	17.82 13.62 2.37 4.55 3.24 24.11 1.45 47.64 10.78 12.32 94.74 35.37 99.65 70.87 81.32 89.75 13.85 68.12 88.91 7.67 4.66 1.60 6.52 32.39	45 days after month-end 30 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 Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms 45 days after month-end 30 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 Usual trade terms Usual trade terms Usual trade terms Usual trade terms	Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price	No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties	$ 1,063,897 1,043,646 170,421 112,326 104,429 785,199 27,154 (914,902) (398,006) (422,678) 914,902 398,006 422,678 (1,063,897) (1,043,646) (170,421) (112,326) (104,429) (785,199) (27,154) 52,687 560,147 (52,687) (560,147)	20.52 20.13 3.29 2.17 2.01 15.14 0.52 31.69 13.79 14.64 92.22 38.52 99.91 78.72 89.47 96.76 6.23 60.83 91.82 3.74 5.31 54.21 3.90 31.08	Note A Note B

(Continued)

61 -

(Concluded)

Note A: Unrealized gain for the period was $525 thousand.

Note B: Realized gain for the period was $1,951 thousand.

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

62 -

TABLE 7

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE THREE MONTHS ENDED MARCH 31, 2017 (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 March 31, 2017	Balance as of March 31, 2017	Balance as of March 31, 2017	Net Income (Loss) of the Investee	Investment Gain (Loss) (Note A)	Note
				March 31, 2017	December 31, 2016	Shares	Percentage of Ownership	Carrying Value
The Company AKR Advantech Corporate Investment ATC AAC (BVI) ANA AEUH AEU ASG Cermate	AAC (BVI) ATC Advanixs Corporate Advantech Corporate Investment Axiomtek AdvanPOS ALNC Jan Hsiang AMX AEUH ASG AAU AJP AMY AKR ABR Advantech Innovative Design Co., Ltd. AiST BEMC AIN AIMobile Co., Ltd. AKST AKST 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 Delaware, USA India Taipei, Taiwan Gangwon-do, Korea Gangwon-do, Korea 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 Product design Design, develop and sale of intelligent services Sale of industrial network communications systems Sale of industrial automation products Design and manufacture of industrial mobile system Production and sale of intelligent medical display Production and sale of intelligent medical display 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 10,000 157,915 1,968,044 5,567 135,000 61,632 40,885 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	$ 1,000,207 998,788 486,000 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 10,000 157,915 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	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 10,000,000 6 999,999 13,500,000 17,280 11,520 5,500,000 658,000 41,650,001 10,952,606 15,230,001 4 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 60.00 99.99 45.00 36.00 24.00 55.00 39.69 100.00 100.00 100.00 40.00 100.00 100.00 100.00 51.00 100.00 100.00	$ 3,867,084 3,101,412 1,086,222 1,698,783 464,091 601,092 487,710 9,496 462 812,675 76,247 37,339 221,353 48,482 250,938 76,975 10,406 165,341 1,839,005 66 100,761 58,369 38,710 119,308 16,102 3,023,558 2,178,403 1,825,070 1,234,471 841,369 16,922 463,014 18,855 2,472 77,110	$ 55,308 6,582 115,528 29,096 27,971 26,831 1,628 2,010 (142) 154 4,184 (726) 5,021 5,367 22,527 3,572 773 4,886 11,202 59 (18,843) (9,063) (9,063) 3,825 25 21,311 19,307 36,002 11,202 5,545 (5,170) (1,151) 1,626 156 5,456	$ 55,718 8,965 106,114 29,486 7,269 23,725 1,328 591 (142) (520) 4,184 (726) 5,021 5,367 22,527 2,858 773 4,886 6,721 59 (8,479) (3,263) (2,175) 2,494 10 23,694 19,370 36,348 4,481 4,871 (5,170) (1,825) 830 156 5,456	Subsidiary Subsidiary Subsidiary Subsidiary Equity-meth investee Subsidiary Subsidiary Equity-meth investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Equity-meth investee Subsidiary (Note B) Subsidiary (Note B) Subsidiary Equity-meth investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

(Continued)

63 -

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance as of March 31, 2017	Balance as of March 31, 2017	Balance as of March 31, 2017	Net Income (Loss) of the Investee	Investment Gain (Loss) (Note A)	Note
				March 31, 2017	December 31, 2016	Shares	Percentage of Ownership	Carrying Value
ALNC Better Auto BEMC Avtek B+B BBI B&B Electronics B+B (CZ)	Better Auto Famous Now Avtek B+B BBI Quatech IMC B&B Electronics B+B (CZ) Conel Automation B&B DMCC B+B (CZ) Conel Automation	BVI BVI Delaware, USA Delaware, USA Ireland Delaware, USA Delaware, USA Delaware, USA Czech Republic Czech Republic Dubai Czech Republic Czech Republic	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 Manufacturing of cellular and automation solution 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$ 99,850 US$ 99,850 US$ 39,481 - - US$ 1,314 - - - - -	8,556,096 1 - 384,111 - - - - - - - - -	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	$ 79,226 53,337 3,073,476 3,073,476 120,700 - - - 159,616 87 - - 8,609	$ 4,215 4,018 11,202 11,202 (7,946) - - - 24,356 (2,084) - - (2,084)	$ 4,206 4,018 11,202 11,202 (7,946) - - - 24,356 (21) - - (2,063)	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

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), Advanixs Kun Shan Corp., AKMC, AEUH, AEU, B+B and Axiomatek.

Note B: In the first quarter of 2017, the Group made arrangement to acquire equity in AKST for US$3,200 thousand.

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

Note D: Refer to Table 8 for investments in mainland China.

(Concluded)

64 -

TABLE 8

ADVANTECH CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA FOR THE THREE MONTHS ENDED MARCH 31, 2017 (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, 2017	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of March 31, 2017	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of March 31, 2017	Accumulated Inward Remittance of Earnings as of March 31, 2017
							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. Advanixs Kun Shan Corp.	Production and sale of components of industrial automation products Sale of industrial automation products 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		$ 1,131,309 (US$ 37,300 thousand) 161,720 (US$ 5,332 thousand) 242,640 (US$ 8,000 thousand) (Note C) (Note D)	$ - - - - - -	$ - - - - - -	$ 1,131,309 (US$ 37,300 thousand) 161,720 (US$ 5,332 thousand) 242,640 (US$ 8,000 thousand) (Note C) (Note D) -	$ 15,647 56,165 (4,027) (16,560) 84 8,154	100 100 100 100 100 100	$ 18,030 56,145 (3,661) (16,560) 84 5,664	$ 2,594,361 1,127,898 703,202 (8,697) 14,356 429,198	$ - 340,667 (US$ 11,232 thousand) - - - -

Accumulated Investment i	n	Investment Amounts
Mainland China as of March 31, 2017		Authorized by Investment Commission, MOEA			Allowable Limit on Investment
$1,541,735 (US$50,832 thousand) (Note E)		$2,596,278 (US$85,600 thousand)			$15,860,722 (Note H)

(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, AEUH, Advanixs Kun Shan Corp., 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 6.
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: The exchange rate was US$1=NT$30.33.
Note H: The maximum allowable limit on investment was at 60% of the consolidated net asset value of the Company.
Note I: All intercompany gains and losses from investment have been eliminated from consolidation.

(Concluded)

66 -

TABLE 10

ADVANTECH CO., LTD. AND SUBSIDIARIES

ORGANIZATION CHART MARCH 31, 2017 AND 2016

Intercompany relationships and percentages of ownership as of March 31, 2017 are shown below:

==> picture [488 x 562] intentionally omitted <==

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

100% 100% HK 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% Advanixs Kun Shan Corp.
100% 100% (formerly Yeh-Chiang
60% Technology Kun Shan Co., Ltd.)
BEMC Holdings Corporation (BEMC) B+B SmartWorx Inc. (B+B) 1% Conel Automation s.r.o.
100% B&B IMC. LLC (IMC) CZ (Conel Automation)
40% 100% 99.99% 99%
Quatech, LLC (Quatech) Advantech B+B SmartWorx
s.r.o. CZ (B+B (CZ))
100%
B+B SmartWorx Limited (BBI) 100% 0.01%
100% B&B Electronics Holdings LLC
Advantech Automation Corp. (BVI) 100% Advantech Corp. (ANA) (B&B Electronics)
(AAC (BVI)) 100%
B&B SmartWorx DMCC (B&B
100% 100% Beijing Yan Hua Xing Ye Electronic 100% DMCC)
Advantech Automation Corp. (HK) Hangzhou Advantofine
Science & Technology Co., Ltd. (ACN)
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
Company) (the 100% Advantech Europe Holding B.V. (AEUH) elektronische Datentechnik mbH (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%
36%
Kostec Co., Ltd.
(AKST)
100% 24% 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%
Advantech LNC Dong Guan Co., Ltd.
----- End of picture text -----

(Continued)

67 -

Intercompany relationships and percentages of ownership as of March 31, 2016 are shown below:

==> picture [497 x 570] intentionally omitted <==

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

100% 100% 100% Advantech Technology (China)
Advantech Technology Co., Ltd. (ATC) HK Advantech Technology Co., Ltd.
Company Ltd. (AKMC)
ATC (HK)
80% 100% 1% SOFTCON spol. S.R.O.
Advantech Brasil Ltda (ABR) B&B IMC. LLC (IMC)
(Softcon)
99.99% 99%
60% B+B SmartWorx Inc. (B+B) 100% Quatech, LLC (Quatech) Conel s.r.o. (Conel)
100% 100% 0.01%
40% B+B SmartWorx Limited (BBI)
B&B Electronics Holdings
100% LLC (BBE)
Advantech Automation Corp. (BVI) 100% Advantech Corp. (ANA)
(AAC (BVI))
100% 100% Beijing Yan Hua Xing Ye Electronic 100% Hangzhou Advantofine
Advantech Automation Corp. (HK) Science & Technology Co., Ltd. (ACN) Automation Tech. Co., Ltd.
Limited (AAC (HK))
100% Shanghai Advantech Intelligent Services
100% Co., Ltd. (AiSC)
Advantech Electronics, S. De R.L. De C.V.
(AMX) 100% Xi’an Advantech Software Ltd. (AXA)
Advantech
Co., Ltd. 100% 100% Advantech Europe B.V. (AEU) 100% DLOG Gesellschaft für
(the Advantech Europe Holding B.V. (AEUH) elektronische Datentechnik mbH
Company) (A-DLoG)
100% Advantech Innovative Design Co., Ltd. 100% Advantech Poland Sp z o.o. (APL)
100% 100% Advantech Intelligent Service (AiST)
Advantech Corporate Investment
100%
55%
Landmark Co., Ltd. (Landmark)
Cermate Technologies Inc. (Cermate)
100% Advantech KR Co., Ltd. (AKR) 90% Shenzhen Cermate
Technologies Inc.
100% (Cermate (Shenzhen))
Advantech Co., Singapore Pte, Ltd. (ASG)
100%
51% Advantech Corporation (Thailand) Co., Cermate Technologies
100% Ltd. (ATH) (Shanghai) Inc.
Advantech Japan Co., Ltd. (AJP)
(Cermate (Shanghai))
100%
100% Advantech International, PT (AID)
Advantech Australia Pty Ltd. (AAU)
100% Advansus Corp.
100%
Advantech Co. Malaysia Sdn. Bhd (AMY)
100% ACA Digital Corporation (ACA)
99.99%
Advantech Industrial Computing India
Private Limited (AIN)
100% AdvanPOS Technology Co., Ltd. 100% Bright Mind Limited 100% AdvanPOS Technology Shanghai Co., Ltd. (AdvanPOS Shanghai)
(AdvanPOS)
90.00% 100% 100% Famous Now Limited
Advantech-LNC Technology Co., Ltd. Better Auto Holdings Limited (Famous Now)
(ALNC) (Better Auto)
100%
100%
Advantech iFactory Co., Ltd. Advantech LNC Dong Guan Co., Ltd.
----- End of picture text -----

(Concluded)

68 -

TABLE 10

ADVANTECH CO., LTD. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS BETWEEN ADVANTECH CO., LTD. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
0	The Company	AAC (HK) AAU AAU AAU AAU ABR ABR ABR ABR ACN ACN A-DLoG A-DLoG A-DLoG A-DLoG AEU AEU AEU AEU ADL 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	Other receivables from related parties Other revenue Other receivables from related parties Receivables from related parties Sales revenue Other revenue Other receivables from related parties Receivables from related parties Sales revenue Receivables from related parties Sales revenue Other revenue Other receivables from related parties Receivables from related parties Sales revenue Sales revenue Other revenue Other receivables from related parties Receivables from related parties Other receivables from related parties Other receivables from related parties Receivables from related parties Sales revenue Sales revenue Other receivables from related parties Receivables from related parties Other revenue Receivables from related parties Sales revenue Other revenue Other receivables from related parties Receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Sales revenue	$ 35 241 624 35,530 33,932 256 1,098 8,026 23,934 1,063,897 1,275,311 664 344 14,686 35,890 974,882 2,721 2,978 1,043,646 3 3 4,017 3,251 6,738 3,266 23,789 11 98,719 59,110 815 739 170,421 169,667 112,326 9 325,365	45 days EOM Normal 60-90 days 60-90 days Normal Normal 90 days EOM 90 days EOM Normal 45 days EOM Normal Normal 30 days after invoice date 30 days after invoice date Normal Normal Normal 30 days EOM 30 days EOM 30 days EOM 45 days after invoice date 45 days after invoice date Normal Normal 60 days EOM 60 days EOM Normal 45 days EOM Normal Normal 60-90 days 60-90 days Normal 45 days EOM 45 days EOM Normal	- - - - - - - - - 3 13 - - - - 10 - - 3 - - - - - - - - - 1 - - - 2 - - 3
							(Continued)

69 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		AKR AKR AKR AKR AKST AMY AMY AMY AMY ANA ANA ANA ANA APL APL ASG ASG ASG ASG ATH B+B ATH ATH ATH Cermate Advantech Corporate Investment AiST AiST ALNC ALNC ALNC ALNC Advanixs Corporate Advanixs Corporate Advanixs Corporate Advanixs Corporate AdvanPOS AdvanPOS AKST B+B B+B (CZ) B+B	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 Receivables from related parties Sales revenue Sales revenue Other revenue Other receivables from related parties Receivables from related parties Sales revenue Other revenue Other receivables from related parties Receivables from related parties Sales revenue Receivables from related parties Sales revenue Other revenue Other receivables from related parties Receivables from related parties Sales revenue Other revenue Other receivables from related parties Other receivables from related parties Receivables from related parties Sales revenue Other revenue Rental revenue Receivables from related parties Sales revenue Other revenue Sales revenue Other receivables from related parties Receivables from related parties Rental revenue Other receivables from related parties Receivables from related parties Sales revenue Other revenue Other receivables from related parties Receivables from related parties Receivables from related parties Sales revenue Sales revenue	$ 946 524 104,429 231,815 880 485 473 30,272 40,397 4,224 1,724 785,199 1,724,830 2,155 2,937 656 686 52,713 67,686 500 13 258 4,802 14,309 300 9 1,027 909 300 1,241 253 608 1,200 5,051 27,154 103,934 1,260 441 883 5,788 699 10,368	Normal 60 days after invoice date 60 days after invoice date Normal Normal Normal 45 days EOM 45 days EOM Normal Normal 45 days EOM 45 days EOM Normal 45 days EOM Normal Normal 60-90 days 60-90 days Normal Normal 60 days EOM 30 days after invoice date 30 days after invoice date Normal Normal Normal 30 days EOM Normal Normal Normal 60-90 days EOM 60-90 days EOM Normal 60-90 days 60-90 days Normal Normal 60 days EOM 30 days EOM 60 days EOM Normal Normal	- - - 2 - - - - - - - 2 17 - - - - - 1 - - - - - - - - - - - - - - - - 1 - - - - - -
1	AAC (HK)	The Company	2	Other receivables from related parties	1,353	45 days EOM	-
							(Continued)

70 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
2	AAU	AEU The Company The Company	3 2 2	Receivables from related parties Receivables from related parties Sales revenue	$ 223 32 32	30 days after invoice date 60-90 days Normal	- - -
3	ABR	The Company The Company	2 2	Sales revenue Receivables from related parties	13 1,225	Normal 30 days after invoice date	- -
4	ACN	AEU AEU AiSC AiSC AKMC AKMC AKR AKR ANA ANA AXA The Company	3 3 3 3 3 3 3 3 3 3 3 2	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Other receivables from related parties Sales revenue	2,535 2,886 22,748 11,171 7,618 7,917 478 430 35 39 33,266 269	Normal 30 days EOM Normal Immediate payment 60-90 days Normal 45 days EOM Normal Normal 30 days EOM 60 days EOM Normal	- - - - - - - - - - - -
5	A-DLoG	AAU AAU ADL ADL ADL AKMC AKMC AKR ANA ANA ASG ASG The Company The Company	3 3 3 3 3 3 3 3 3 3 3 3 2 2	Receivables from related parties Sales revenue Other receivables from related parties Rental revenue Other revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Receivables from related parties Sales revenue	323 815 6 553 546 273 268 520 524 470 11 11 3,386 14,363	30 days after invoice date Normal 30 days EOM Normal Normal Normal 60 days after invoice date Normal 30 days EOM Normal Normal 30 days upon delivery 30 days after invoice date Normal	- - - - - - - - - - - - - -
6	AEU	The Company AAU ACN A-DLoG AJP AKMC A-DLoG APL ANA AJP	2 3 3 3 3 3 3 3 3 3	Other receivables from related parties Sales revenue Receivables from related parties Receivables from related parties Receivables from related parties Receivables from related parties Sales revenue Receivables from related parties Receivables from related parties Sales revenue	32,420 35 95 930 9 117 5,188 406 3,059 4	60 days after invoice date Normal 30 days after invoice date 30 days upon delivery 90 days EOM 30 days EOM Normal 30 days after invoice date 30 days after invoice date Normal	- - - - - - - - - -

(Continued)

71 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		ANA BBI The Company The Company APL BBI	3 3 2 2 3 3	Sales revenue Receivables from related parties Receivables from related parties Sales revenue Sales revenue Sales revenue	$ 3,337 416 2,361 2,587 667 1,419	Normal 30 days after invoice date 30 days EOM Normal Normal Normal	- - - - - -
7	AID	ASG ASG AKMC ACN	3 3 3 3	Other revenue Other receivables from related parties Other receivables from related parties Other revenue	1,079 1,009 26 27	Normal 30 days EOM 45 days after invoice date Normal	- - - -
8	AIN	The Company	2	Receivables from related parties	174	60 days EOM	-
9	AiSC	AAC (HK) ACN ACN ACN ACN AEU AEU AKMC AKMC The Company The Company	3 3 3 3 3 3 3 3 3 2 2	Other receivables from related parties Sales revenue Other receivables from related parties Receivables from related parties Rental revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Receivables from related parties Sales revenue	4,422 4,056 29,241 2,995 1,342 852 829 57 1,078 71 72	90 days Normal Immediate payment Immediate payment Normal Normal Immediate payment Normal 30 days EOM 45 days EOM Normal	- - - - - - - - - - -
10	AJP	ACN AKMC AKMC AKMC The Company The Company	3 3 3 3 2 2	Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Sales revenue	21 1,493 24 1,504 1 3	Normal 45 days EOM 45 days EOM Normal 60-90 days Normal	- - - - - -
11	AKMC	ACN ACN ACN ACN AEU AEU AiSC AiSC ANA ANA The Company The Company	3 3 3 3 3 3 3 3 3 3 2 2	Other receivables from related parties Rental revenue 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	216 974 117,268 52,687 4,288 3,743 23,135 17,859 319 182 2,382,115 914,902	60 days EOM Normal Normal 60-90 days Normal 30 days after invoice date Normal Immediate payment Normal 60-90 days Normal 60 days EOM	- - 1 - - - - - - - 24 3

(Continued)

72 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		Advanixs Corporate Advanixs Corporate Advanixs Kun Shan Corp. Advanixs Kun Shan Corp. AdvanPOS AdvanPOS	3 3 3 3 3 3	Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties	$ 305 889 266 303 1,769 1,245	Immediate payment Normal Normal 30 days EOM Normal 30 days EOM	- - - - - -
12	AKR	AdvanPOS The Company The Company	3 2 2	Receivables from related parties Receivables from related parties Sales revenue	76 2 3	30 days EOM 90 days EOM Normal	- - -
13	AKST	The Company AKMC The Company AKMC	2 3 2 3	Receivables from related parties Receivables from related parties Sales revenue Sales revenue	283 23 59 23	30 days EOM 30 days EOM Normal Normal	- - - -
14	AMY	ASG ASG ATH AID ATH	3 3 3 3 3	Sales revenue Other receivables from related parties Other revenue Other receivables from related parties Other receivables from related parties	30 29 85 19 28	Normal 30 days EOM Normal 30 days EOM 30 days EOM	- - - - -
15	ANA	AEU AEU B+B B+B AKMC B+B AKMC AKR AdvanPOS The Company The Company Advanixs Corporate Advanixs Corporate AdvanPOS	3 3 3 3 3 3 3 3 3 2 2 3 3 3	Sales revenue Receivables from related parties Rental revenue Other receivables from related parties Receivables from related parties Interest revenue Sales revenue Sales revenue Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Receivables from related parties	2,242 859 361 15,165 3,892 114 4,011 370 44,236 9,401 13,114 1,838 1,869 28,873	Normal 60-90 days Normal Financing 30 days EOM Normal Normal Normal Normal 45 days EOM Normal Normal 90 days after invoice date 30 days after invoice date	- - - - - - - - - - - - - -
16	APL	AEU AEU AEU AJP AAU ANA The Company The Company	3 3 3 3 3 3 2 2	Receivables from related parties Sales revenue Commission revenue Receivables from related parties Receivables from related parties Receivables from related parties Receivables from related parties Sales revenue	5,625 12,179 2,084 6 4 4 43 4	30 days after invoice date Normal Normal 60 days EOM 30 days after invoice date 30 days after invoice date 30 days after invoice date Normal	- - - - - - - -
							(Continued)

73 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
17	ASG	AMY AMY ATH ATH ATH The Company	3 3 3 3 3 2	Receivables from related parties Sales revenue Sales revenue Other revenue Receivables from related parties Sales revenue	$ 520 2,007 113 702 112 132	30 days EOM Normal Normal Normal 30 days EOM Normal	- - - - - -
18	ATC	The Company	2	Receivables from related parties	64,222	60 days EOM	-
19	AXA	ACN	3	Other receivables from related parties	1,732	30 days EOM	-
20	B+B	The Company The Company	2 2	Receivables from related parties Sales revenue	3,284 4,130	90 days EOM Normal	- -
21	B+B (CZ)	Conel Automation BBI B+B Conel Automation BBI B+B Conel Automation The Company Conel Automation The Company Conel Automation	3 3 3 3 3 3 3 2 3 2 3	Receivables from related parties Receivables from related parties Receivables from related parties Other receivables from related parties Sales revenue Sales revenue Other revenue Receivables from related parties Sales revenue Sales revenue Interest revenue	65 295 6,156 970 417 9,851 748 1,392 67 1,626 73	45 days EOM 45 days EOM 45 days EOM 45 days EOM Normal Normal 45 days EOM 45 days EOM Normal Normal Normal	- - - - - - - - - - -
22	BBI	B+B (CZ)	3	Other receivables from related parties	65	45 days EOM	-
23	Better Auto	Advantech LNC Dong Guan Co., Ltd.	3	Other receivables from related parties	32,441	Financing	-
24	Conel Automation	B+B (CZ) B+B(CZ)	3 3	Receivables from related parties Sales revenue	29 25	45 days EOM Normal	- -
25	Advanixs Kun Shan Corp.	AKMC AKMC	3 3	Receivables from related parties Sales revenue	113,327 79,737	30 days EOM Normal	- 1
26	Advantech LNC Dong Guan Co., Ltd.	ACN ALNC ACN ALNC	3 3 3 3	Sales revenue Sales revenue Receivables from related parties Receivables from related parties	1,547 491 595 547	Normal Normal 90 days EOM 90 days EOM	- - - -
27	Cermate	The Company The Company Cermate (Shenzhen) Cermate (Shenzhen)	2 2 3 3	Receivables from related parties Sales revenue Sales revenue Receivables from related parties	5 1,099 27,168 24,546	30-60 days Normal Normal 30 days EOM	- - - -
							(Continued)

74 -

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Notes B and D)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
28	Cermate (Shenzhen)	AKMC AKMC Cermate (Shanghai) Cermate Cermate (Shanghai) Cermate	3 3 3 3 3 3	Receivables from related parties Sales revenue Sales revenue Sales revenue Receivables from related parties Receivables from related parties	$ 4,409 8,870 6,994 3,914 911 2,168	40 days EOM Normal Normal Normal 30 days EOM 30 days EOM	- - - - - -
29	Hangzhou Advantofine Automation Tech. Co., Ltd.	ACN	3	Sales revenue	4,257	Normal	-
30	Advantech Innovative Design Co., Ltd.	The Company	2	Receivables from related parties	570	30 days EOM	-
31	Advanixs Corporate	AKMC AKMC The Company The Company Cermate Cermate	3 3 2 2 3 3	Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties	560,147 760,867 398,006 539,267 202 212	60-90 days Normal 60-90 days Normal Normal 30 days EOM	1 8 1 5 - -
32	ALNC	The Company The Company The Company The Company Advantech LNC Dong Guan Co., Ltd. Advantech LNC Dong Guan Co., Ltd.	2 2 2 2 3 3	Receivables from related parties Other receivables from related parties Rental revenue Sales revenue Sales revenue Receivables from related parties	945 138 414 900 59,479 98,949	60 days EOM 60 days EOM Normal Normal Normal 90 days EOM	- - - - 1 -
33	AdvanPOS	The Company The Company Advanixs Corporate	2 2 3	Receivables from related parties Sales revenue Sales revenue	422,678 616,176 2,033	60 days EOM Normal Normal	1 6 -

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

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

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

From the parent company to its subsidiary.
From the subsidiary to its parent company.
Between subsidiaries.
Note C: For assets and liabilities, amounts are shown as a percentage to consolidated total assets as of March 31, 2017, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the three months ended March 31, 2017.

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

(Concluded)

75 -

AI assistant

Advantech — Interim / Quarterly Report 2017

52053_rns_2017-11-02_9bdcded6-f8ea-430a-93ae-ffa3e5e14a82.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

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

ADVANTECH CO., LTD. AND SUBSIDIARIES

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

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, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

1) Amendment to IFRS 3 “Business Combinations”

Impairment of financial assets

Transition

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

b. Basis of preparation

1) Retirement benefits

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 RECEIVABLE AND TRADE RECEIVABLES

Trade Receivables

11. INVENTORIES

12. SUBSIDIARIES

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

Aggregate Information of Associates That Are Not Individually Material

14. PROPERTY, PLANT AND EQUIPMENT

15. GOODWILL

16. PREPAYMENTS FOR LEASE

17. BORROWINGS

18. OTHER LIABILITIES

19. RETIREMENT BENEFIT PLANS

20. EQUITY

a. Share capital

Ordinary shares

b. Capital surplus

21. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

c. Employee benefits expense

d. Employees’ compensation and remuneration of directors and supervisors

22. INCOME TAX

a. Income tax recognized in profit or loss

23. EARNINGS PER SHARE

Unit: NT$ 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

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

d. Non-controlling interests

e. Goodwill recognized on acquisitions

26. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

27. FINANCIAL INSTRUMENTS

c. Financial risk management objectives and policies

1) Market risk

a) Foreign currency risk

Sensitivity analysis

b) Interest rate risk

Sensitivity analysis

c) Other price risk

Sensitivity analysis

2) Credit risk

3) Liquidity risk

28. TRANSACTIONS WITH RELATED PARTIES

g. Compensation of key management personnel

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

30. SIGNIFICANT COMMITMENTS

Advantech Interim / Quarterly Report 2017