Advantech - Interim / Quarterly Report 2019

Advantech Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2019 and 2018 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Advantech Co., Ltd. and its subsidiaries (collectively referred to as the “Group”) as of September 30, 2019 and 2018, the related consolidated statements of comprehensive income for the three months and nine months ended September 30, 2019 and 2018, the consolidated statements of changes in equity and cash flows for the nine months then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As disclosed in Note 12 to the consolidated financial statements, the financial statements of some non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of September 30, 2019 and 2018, the combined total assets of these non-significant subsidiaries were NT$7,837,187 thousand and NT$6,507,425 thousand, respectively, representing 17.27% and 15.39%, respectively, of the consolidated total assets, and the combined total liabilities of these subsidiaries were NT$1,874,797 thousand and NT$1,069,349 thousand, respectively, representing 13.00% and 7.54%, respectively, of the consolidated total liabilities; for the three months and nine months ended September 30, 2019 and 2018, the amounts of combined comprehensive income of these subsidiaries were NT$(3,731) thousand, NT$(10,218) thousand, NT$512,370 thousand, and NT$297,103 thousand, respectively, representing (0.21%), (0.74%), 9.08% and 6.60%, respectively, of the consolidated total comprehensive income. Also, as stated in Note 13 to the consolidated financial statements, the investments accounted for using the equity method were NT$2,991,300 thousand and NT$2,128,651 thousand as of September 30, 2019 and 2018, respectively. The Group’s share of profit of associates accounted for using the equity method was NT$23,724 thousand, NT$24,925 thousand, NT$66,320 thousand, and NT$72,781 thousand for the three months and nine months ended September 30, 2019 and 2018,

respectively, and these investment amounts as well as 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.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries and the investees accounted for using the equity method as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not give a true and fair view of the consolidated financial position of the Group as of September 30, 2019 and 2018, its consolidated financial performance for the three months ended September 30, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting”.

The engagement partners on the reviews resulting in this independent auditors’ review report are Jr-Shian Ke and Meng-Chieh Chiu.

Deloitte & Touche Taipei, Taiwan Republic of China November 1, 2019

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 29) Financial assets at amortized cost - current (Notes 9 and 31) Notes receivable (Note 10) Trade receivables (Note 10) Trade receivables from related parties (Note 30) Other receivables (Note 30) Inventories (Note 11) Other current assets (Notes 5, 17 and 30) Total current assets NON-CURRENT ASSETS Financial asset at fair value through other comprehensive income - non-current (Notes 8 and 29) Investments accounted for using the equity method (Note 13) Property, plant and equipment (Notes 14 and 31) Right of use assets (Notes 3, 4 and 15) Goodwill (Note 16) Other intangible assets Deferred tax assets (Notes 4 and 23) Prepayments for business facilities Long-term prepayments for leases (Note 17) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 18) Financial liabilities at fair value through profit or loss - current (Notes 7 and 29) Notes payable and trade payables (Note 30) Other payables (Note 19) Current tax liabilities (Notes 4 and 23) Short-term warranty provisions Lease liabilities - current (Notes 3, 4 and 15) Current portion of long-term borrowings (Notes 18 and 31) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 18 and 31) Deferred tax liabilities (Notes 4 and 23) Lease liabilities - non-current (Notes 3, 4 and 15) Net defined benefit liabilities (Notes 4 and 20) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 21) Share capital Ordinary shares Advance receipts for share capital Total share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translation of financial statements of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Other equity - unearned stock based employee compensation Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		September 30, 2019 (Reviewed) Amount % $ 5,558,804 12 1,474,400 3 90,004 - 1,466,291 3 8,012,289 18 46,966 - 24,176 - 8,088,775 18 686,516 2 25,448,221 56 1,391,252 3 2,991,300 7 9,754,044 22 779,388 2 2,939,130 6 1,068,658 2 607,073 1 358,430 1 - - 53,099 - 19,942,374 44 $ 45,390,595 100 $ 297,878 1 1,421 - 4,980,601 11 3,800,516 8 1,314,801 3 167,822 - 199,493 1 4,483 - 944,357 2 11,711,372 26 41,923 - 1,985,453 4 292,140 1 252,192 1 136,269 - 2,707,977 6 14,419,349 32 6,991,405 16 7,825 - 6,999,230 16 7,401,279 16 6,285,079 14 798,763 2 9,829,190 21 16,913,032 37 (618,666) (1) (207,381) (1) 957 - (825,090) (2) 30,488,451 67 482,795 1 30,971,246 68 $ 45,390,595 100	December 31, 2018 (Audited after Restatement) Amount % $ 6,633,161 15 2,098,552 5 157,426 1 1,461,404 3 6,870,878 16 18,969 - 45,956 - 7,557,820 17 522,407 1 25,366,573 58 1,300,267 3 2,431,522 5 9,782,781 22 - - 2,824,007 6 1,114,782 3 501,260 1 273,386 1 297,665 1 47,718 - 18,573,388 42 $ 43,939,961 100 $ 87,581 - 6,139 - 5,810,904 13 3,662,199 8 1,611,886 4 196,782 1 - - 9,626 - 761,473 2 12,146,590 28 45,784 - 1,798,914 4 - - 255,545 1 149,653 - 2,249,896 5 14,396,486 33 6,982,275 16 4,680 - 6,986,955 16 7,073,348 16 5,655,613 13 369,655 1 10,011,231 23 16,036,499 37 (475,245) (1) (324,254) (1) 736 - (798,763) (2) 29,298,039 67 245,436 - 29,543,475 67 $ 43,939,961 100	September 30, 2018 (Reviewed after Restatement)	September 30, 2018 (Reviewed after Restatement)
					Amount % $ 5,256,586 12 1,925,054 5 33,553 - 1,489,453 4 6,835,337 16 21,232 - 39,987 - 7,599,889 18 616,185 1 23,817,276 56 1,634,228 4 2,128,651 5 9,789,585 23 - - 2,815,927 7 1,136,762 3 488,160 1 141,568 - 297,420 1 43,106 - 18,475,407 44 $ 42,292,683 100 $ 8,100 - 1,060 - 6,248,282 15 3,561,546 8 1,293,045 3 202,771 1 - - 10,284 - 737,575 2 12,062,663 29 80,924 - 1,657,095 4 - - 235,470 1 142,465 - 2,115,954 5 14,178,617 34 6,975,445 17 6,830 - 6,982,275 17 6,951,500 16 5,655,613 13 369,655 1 8,415,995 20 14,441,263 34 (527,916) (1) 24,519 - - - (503,397) (1) 27,871,641 66 242,425 - 28,114,066 66 $ 42,292,683 100

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

(With Deloitte & Touche review report dated November 1, 2019)

ADVANTECH CO., LTD. AND SUBSIDIARIES

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

OPERATING REVENUE (Note 30) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 22 and 30) GROSS PROFIT OPERATING EXPENSES (Notes 22 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING PROFIT NON-OPERATING INCOME Share of profit of associates accounted for using the equity method (Note 13) Interest income Gains (losses) on disposal of property, plant and equipment Gains (losses) on disposal of investments (Note 27) Foreign exchange gains (losses), net (Notes 22 and 32) Gains on financial instruments at fair value through profit or loss (Note 7) Dividend income Other income (Note 30) Finance costs (Note 22) Losses on financial instruments at fair value through profit or loss Other losses Total non-operating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSES (Note 23) NET PROFIT FOR THE PERIOD		For the Three Months Ended September 30	For the Three Months Ended September 30	For the Three Months Ended September 30		For the Nine Months	Ended September 30	Ended September 30
		2019		2018		2019		2018
		Amount % $ 14,117,244 98 265,038 2 14,382,282 100 8,685,242 61 5,697,040 39 1,266,949 9 747,716 5 1,049,786 7 3,064,451 21 2,632,589 18 23,724 - 8,454 - (1,018 ) - (24,917 ) - (75,968 ) - 42,867 - 99,180 1 19,590 - (7,752 ) - 3,541 - (1,997) - 85,704 1 2,718,293 19 (561,249) (4) 2,157,044 15		Amount % $ 12,055,439 98 304,216 2 12,359,655 100 7,599,309 61 4,760,346 39 1,186,265 10 627,710 5 1,044,405 8 2,858,380 23 1,901,966 16 24,925 - 14,355 - 87,021 1 - - (62,857 ) (1 ) 19,816 - 105,405 1 81,229 1 (635 ) - (676 ) - (3,918) - 264,665 2 2,166,631 18 (457,851) (4) 1,708,780 14		Amount % $ 39,711,209 98 947,677 2 40,658,886 100 24,827,416 61 15,831,470 39 3,795,571 9 2,128,917 5 3,083,389 8 9,007,877 22 6,823,593 17 66,320 - 27,590 - 42,473 - (24,917 ) - 5,983 - 135,668 1 100,119 - 67,102 - (20,068 ) - (25,167 ) - (3,580) - 371,523 1 7,195,116 18 (1,505,602) (4) 5,689,514 14		Amount % $ 35,455,991 98 904,303 2 36,360,294 100 22,469,245 62 13,891,049 38 3,551,711 10 1,845,821 5 3,007,507 8 8,405,039 23 5,486,010 15 72,781 - 32,972 - 82,858 - - - (19,942 ) - 83,391 - 106,258 - 133,991 1 (3,122 ) - (32,992 ) - (5,552) - 450,643 1 5,936,653 16 (1,265,296) (3) 4,671,357 13 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

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

OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss Share of the other comprehensive income of associates accounted for using the equity method (Notes 13 and 21) Unrealized gains (losses) on investments in equity instruments as at fair value through other comprehensive income (Note 21) Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 23) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of foreign operations (Note 21) Share of the other comprehensive income of associates accounted for using the equity method (Notes 13 and 21) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 21 and 23) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests		For the Three Months Ended September 30	For the Three Months Ended September 30	For the Three Months Ended September 30		For the Nine Months	Ended September 30	Ended September 30
		2019		2018		2019		2018
		Amount % $ 705 - (36,796 ) - - - (36,091) - (452,306 ) (3 ) (3,044 ) - 73,488 - (381,862) (3) (417,953) (3) $ 1,739,091 12 $ 2,139,974 15 17,070 - $ 2,157,044 15 $ 1,809,934 13 (70,843) (1) $ 1,739,091 12		Amount % $ 2,976 - (156,632 ) (1 ) - - (153,656) (1) (209,501 ) (2 ) (12,073 ) - 41,947 - (179,627) (2) (333,283) (3) $ 1,375,497 11 $ 1,710,482 14 (1,702) - $ 1,708,780 14 $ 1,389,038 11 (13,541) - $ 1,375,497 11		Amount % $ 25,005 - 68,080 - - - 93,085 - (192,395 ) - 17,446 - 35,856 - (139,093) - (46,008) - $ 5,643,506 14 $ 5,651,450 14 38,064 - $ 5,689,514 14 $ 5,601,114 14 42,392 - $ 5,643,506 14		Amount % $ 4,837 - (110,429 ) (1 ) 2,127 - (103,465) (1) (95,474 ) - (9,979 ) - 37,049 - (68,404) - (171,869) (1) $ 4,499,488 12 $ 4,657,347 13 14,010 - $ 4,671,357 13 $ 4,489,445 12 10,043 - $ 4,499,488 12 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed after Restatement, Not Audited)

EARNINGS PER SHARE (Note 24) Basic Diluted	For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months	Ended September 30
	2019	2018	2019	2018
	Amount % $ 3.06 $ 3.03	Amount % $ 2.45 $ 2.43	Amount % $ 8.08 $ 7.99	Amount % $ 6.68 $ 6.61

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

(With Deloitte & Touche review report dated November 1, 2019)

(Concluded)

ADVANTECH CO., LTD. AND SUBSIDIARIES

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

			Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company
Issued Capital (Notes 21and 25)		Total Capital Surplus (Notes 21 and 25) $ 6,972,825 $ 6,554,842 - - 6,972,825 6,554,842 - - - - - - 9,450 70,005 - 256,950 - (256 ) - 70,716 - (757 ) - - - - - - - - $ 6,982,275 $ 6,951,500 $ 6,986,955 $ 7,073,348 - - - - - - - - 12,275 88,636 - 233,638 - 5,096 - 913 - (352 ) - - - - - - - - $ 6,999,230 $ 7,401,279	Retained Earnings (Note 21)	Total $ 14,423,062 (34,002) 14,389,060 - - (4,600,414 ) - - - - - 4,657,347 2,247 4,659,594 (6,977) $ 14,441,263 $ 16,036,499 - - (4,751,129 ) - - - - - - 5,651,450 (592) 5,650,858 (23,196) $ 16,913,032		Other Equity (Note 21)	nearned Stock - Based Employee Compensation $ - - - - - - - - - - - - - - - $ - $ 736 - - - - - - 221 - - - - - - $ 957
					Exchange Differences on Translating Foreign Operations A $ (463,479 ) - (463,479 ) - - - - - - - - - (64,437) (64,437) - $ (527,916) $ (475,245 ) - - - - - - - - - - (143,421) (143,421) - $ (618,666)	Unrealized Gain Unrealized Gain or Loss on Financial Assets at Fair Value or Loss on through Other U vailable-for-sale Financial Assets Comprehensive Income $ 93,824 $ - (93,824) 123,254 - 123,254 - - - - - - - - - - - - - - - - - - - (105,712) - (105,712) - 6,977 $ - $ 24,519 $ - $ (324,254 ) - - - - - - - - - - - - - - - - - - - - - 93,677 - 93,677 - 23,196 $ - $ (207,381)
Share Capital A for $ 6,970,325 - 6,970,325 - - - 5,120 - - - - - - - - $ 6,975,445 $ 6,982,275 - - - - 9,130 - - - - - - - - $ 6,991,405	dvance Receipts Ordinary Shares $ 2,500 - 2,500 - - - 4,330 - - - - - - - - $ 6,830 $ 4,680 - - - - 3,145 - - - - - - - - $ 7,825		Legal Reserve Special Reserve Unappropriated Earnings $ 5,039,962 $ 85,204 $ 9,297,896 - - (34,002) 5,039,962 85,204 9,263,894 615,651 - (615,651 ) - 284,451 (284,451 ) - - (4,600,414 ) - - - - - - - - - - - - - - - - - 4,657,347 - - 2,247 - - 4,659,594 - - (6,977) $ 5,655,613 $ 369,655 $ 8,415,995 $ 5,655,613 $ 369,655 $ 10,011,231 629,466 - (629,466 ) - 429,108 (429,108 ) - - (4,751,129 ) - - - - - - - - - - - - - - - - - - - - 5,651,450 - - (592) - - 5,650,858 - - (23,196) $ 6,285,079 $ 798,763 $ 9,829,190

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

(With Deloitte & Touche review report dated November 1, 2019)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Amortization expenses for prepayments of lease obligations Expected loss on credit impairment Net gain on financial assets or liabilities at fair value through profit or loss Compensation costs of employee share options Finance costs Interest income Dividend income Share of (profit) loss of associates accounted for using the equity method Gain (loss) on disposal of property, plant and equipment Gain (loss) on disposal of subsidiaries Gain on disposal of investments Changes in operating assets and liabilities Financial assets held for trading Financial assets at fair value through profit or loss Notes receivable Trade receivables Trade receivables from related parties Other receivables Inventories Other current assets Notes payable and trade payables Net defined benefit liabilities Other payables Short-term warranty provisions Other current liabilities Other non-current liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities		For the Nine Months Ended September 30
		2019 (Reviewed) 2018 (Reviewed after Restatement) $ 7,195,116 $ 5,936,653 615,256 427,706 199,697 139,680 - 6,683 19,527 14,037 (110,501) (50,399) 233,638 256,950 20,068 3,122 (27,590) (32,972) (100,119) (106,258) (66,320) (72,781) (42,473) (82,858) 25,901 - (984) - - 1,158,836 638,596 - (4,887) (233,672) (552,583) (236,027) (27,997) (7,165) 23,276 35,311 (90,501) (1,353,001) (170,106) (169,779) (1,258,885) 947,736 (3,353) (1,755) 17,034 (64,835) (28,960) 21,796 166,032 60,245 (13,046) (4,248) 6,655,836 6,593,005 27,590 32,972 100,119 106,258 (5,112) (1,935) (1,661,366) (1,090,534) 5,117,067 5,639,766 (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income Proceeds from sale of financial assets at amortized cost Acquisition of associates accounted for using the equity method Net cash flow on the acquisition of subsidiaries Net cash outflow on disposal of subsidiaries Dividends received from associates Net cash inflow on disposal of associates Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase (decrease) in refundable deposits Payments for intangible assets Decrease in prepayments for business facilities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Repayments of long-term borrowings Decrease in guarantee deposits received Payment of cash dividends Repayment of the principal portion of lease liabilities Exercise of employee share options Dividends paid to non-controlling interests Decrease in non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (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 Nine Months Ended September 30
		2019 (Reviewed) 2018 (Reviewed after Restatement) $ (27,360) $ (39,924) 69,722 4,173 (476,438) (769,644) (542,156) (60,322) (81) - 117,768 146,250 830 - (632,506) (534,581) 79,161 166,213 (5,143) 2,461 (84,287) (100,940) 169,286 70,788 (1,331,204) (1,115,526) 96,702 - (7,036) (18,448) (416) - (4,751,129) (4,600,414) (166,877) - 100,911 79,455 (14,039) - 71,545 105,055 (4,670,339) (4,434,352) (189,881) (37,521) (1,074,357) 52,367 6,633,161 5,204,219 $ 5,558,804 $ 5,256,586

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

(With Deloitte & Touche review report dated November 1, 2019)

(Concluded)

ADVANTECH CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (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 the Company and its subsidiaries (collectively referred to as the “Group”), the Company’s board of directors resolved on June 30, 2009 to have a short-form merger with Advantech Investment and Management Service (AIMS). The effective merger date was July 30, 2009. As the surviving entity, the Company assumed all assets and liabilities of AIMS. On June 26, 2014, the Company’s board of directors resolved to have a whale-minnow merger with Netstar Technology Co., Ltd. (“Netstar”), an indirectly 95.51% owned subsidiary through a wholly-owned subsidiary, Advantech Corporate Investment. The effective merger date was July 27, 2014. As the surviving entity, the Company assumed all assets and liabilities of Netstar.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on November 1, 2019.

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

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by Financial Supervisory Commission (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) IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

10 -

Definition of a lease

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within operating activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Prepaid lease payments for land use rights in People’s Republic of China were recognized as prepayments for leases. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows.

The Group elects to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized in retained earnings on January 1, 2019. Comparative information is not restated.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. The Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

a) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
b) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
c) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
d) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.
11 -

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 2.99%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption for short-term leases Less: Recognition exemption for leases of low-value assets Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 Lease liabilities recognized on January 1, 2019	$ 716,950 12,596 15,787 $ 688,567 $ 644,980 $ 644,980

The Group as lessor

The Group does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

			Adjustments	Adjustments
	As	Originally	Arising from
	Stated on			Initial	Restated on
	January 1, 2019		Application		January 1, 2019
Prepayments for leases - current	$	8,673	$	(8,673)	$	-
Prepayments for leases - non-current		297,665		(297,665)		-
Right-of-use assets		-		951,318		951,318
Total effect on assets	$	306,338	$	644,980	$	951,318
Lease liabilities - current	$	-	$	201,344	$	201,344
Lease liabilities - non-current		-		443,636		443,636
Total effect on liabilities	$	-	$	644,980	$	644,980

2) IFRIC 23 “Uncertainty over Income Tax Treatments”

IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Group should assume that the taxation authority has full knowledge of all related information when making related examinations. If the Group concludes that it is probable that the taxation authority will accept an uncertain tax treatment, the Group should determine the taxable profit, tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatments used or planned to be used in its income tax filings. If it is not probable that the taxation authority will accept an uncertain tax treatment, the Group should make estimates using either the most likely amount or the expected value of the tax treatment, depending on which method the Group expects to better predict the resolution of the uncertainty.

12 -
3) Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures”

The amendments clarified that IFRS 9 “Financial Instruments” shall be applied to account for other financial instruments in an associate to which the equity method is not applied. These included long-term interests that, in substance, form part of the Group’s net investment in an associate.

4) Amendments to IFRS 9 “Prepayment Features with Negative Compensation”

IFRS 9 stipulates that if a contractual term of a financial asset permits the issuer (i.e., the debtor) to prepay a debt instrument or permits the holder (i.e., the creditor) to put a debt instrument back to the issuer before maturity and the prepayment amount substantially represents unpaid amounts of the principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination, the financial asset has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The amendments further explain that reasonable compensation may be paid or received by either of the parties, i.e., a party may receive reasonable compensation when it chooses to terminate the contract early.

5) Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”

The amendments stipulate that, if a plan amendment, curtailment or settlement occurs, the current service cost and the net interest for the remainder of the annual reporting period are determined using the actuarial assumptions used for the remeasurement of the net defined benefit liabilities (assets). In addition, the amendments clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

b. The IFRSs endorsed by the FSC for application starting from 2020

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2)

Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.
Amendments to IFRS 3 “Definition of a Business”

The amendments clarify that, to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process applied to the input that together significantly contribute to the ability to create outputs. The amendments narrow the definitions of outputs by focusing on goods and services provided to customers, and the reference to an ability to reduce costs is removed. Moreover, the amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether or not an acquired set of activities and assets is a business.

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.

13 -
c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note) Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark January 1, 2020 Reform” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021

Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

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

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

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

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 consolidated financial statements.

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.

14 -

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

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

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

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

See Note 12 and Tables 7 and 8 for the detailed information of subsidiaries (including the percentages of ownership and main businesses).

d. Other significant accounting policies

Except for the related accounting policies of leases and the following, please refer to the consolidated financial statements for the year ended December 31, 2018.

1) Leases

2019

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. For a contract that contains a lease component and non-lease components, the Group allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately. However, for the lease of offices in which the Group is a lessee and utility and management fee are included, the Group elects to account for the lease and non-lease components as a single lease component.

a) The Group as lessor

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

15 -

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

b) The Group as lessee

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

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

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

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

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in the amounts expected to be payable under a residual value guarantee, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

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

2018

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

a) The Group as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

b) The Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

16 -

2) 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.

3) 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. The effect of a change in tax rate resulting from a change in tax law is recognized consistently with the accounting for the transaction itself which gives rise to the tax consequence, and the effect of the change in tax rate relating to transactions recognized outside of profit or loss is recognized in full in the period in which the change in tax rate occurs. The effect of the change in tax rate relating to transactions recognized in profit or loss is included in the estimation of the average annual income tax rate, consequently spreading the effect throughout the interim period.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

a. Inventory write-downs

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

b. Significant influence over associates

As described in Note 13 ‘Investments accounted for using the equity method’, several companies are associates of the Group although the Group holds less than 20% of the voting power in each of these companies. The Group has significant influence over these companies by virtue of the right to appoint and remove directors from the board of directors of these companies.

17 -

6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Cash on hand	$	263,373	$	76,179	$	69,950
Checking accounts and demand deposits		3,904,048		5,350,844		4,925,005
Cash equivalents (time deposits with original
maturities of less than three months)		1,391,383		1,206,138		261,631
	$	5,558,804	$	6,633,161	$	5,256,586
FINANCIAL INSTRUMENTS AT FVTPL
	September 30,		December 31,		September 30,
		2019		2018		2018
Financial assets at FVTPL-current
Financial assets mandatorily designated as at
FVTPL
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts	$	20,042	$	5,198	$	7,824
Non-derivative financial assets
Domestic listed shares		126,454		202,622		205,673
Foreign listed shares		62,316		5,270		8,276
Mutual funds		1,265,588		1,885,462		1,703,281
	$	1,474,400	$	2,098,552	$	1,925,054
Financial liabilities at FVTPL-current
Financial liabilities held for trading
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts	$	1,421	$	6,139	$	1,060

7. FINANCIAL INSTRUMENTS AT FVTPL

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

Notional Amount Currency Maturity Date (In Thousands) September 30, 2019 Sell EUR/NTD 2019.10-2019.12 EUR10,000/NTD354,215 USD/NTD 2019.10-2019.11 USD4,000/NTD124,914 JPY/NTD 2019.10-2020.02 JPY430,000/NTD124,045 RMB/NTD 2019.10-2019.12 RMB50,000/NTD220,312 EUR/USD 2019.11 EUR100/USD114 (Continued)

18 -

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	2018
Sell			EUR/NTD	2019.01-2019.04	EUR12,600/NTD448,286
			EUR/USD	2019.01-2019.02	EUR400/USD459
			JPY/NTD	2019.01-2019.05	JPY380,000/NTD104,301
			RMB/NTD	2019.01-2019.04	RMB67,000/NTD295,236
September	30,	2018
Sell			EUR/NTD	2018.10-2019.02	EUR15,500/NTD553,118
			USD/NTD	2018.10	USD1,500/NTD46,041
			JPY/NTD	2018.10-2019.02	JPY380,000/NTD104,351
			RMB/NTD	2018.10-2018.12	RMB59,000/NTD262,926
					(Concluded)

The Group entered into foreign exchange forward contracts to manage exposures due to exchange rate fluctuations of foreign-currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and, therefore, were not accounted for using hedge accounting.

8. FINANCIAL ASSETS AT FVTOCI

	September 30,	September 30,	December 31,	December 31,	September 30,
		2019		2018	2018
Non-current
Investments in equity instruments at FVTOCI	$	1,391,252	$	1,300,267	$ 1,634,228
Investments in equity instruments at FVTOCI:
	September 30,		December 31,		September 30,
		2019		2018	2018
Non-current
Domestic investments
Listed shares and emerging market shares
Ordinary shares - ASUSTek Computer Inc.	$	978,699	$	955,001	$ 1,251,218
Ordinary shares - Allied Circuit Co., Ltd.		272,024		226,501	264,622
Unlisted shares
Ordinary shares - BroadTec System Inc.		3,922		3,879	3,546
Ordinary shares - Juguar Technology		4,308		4,743	5,155
Ordinary shares - BiosenseTek Corp.		-		-	-
Ordinary shares - Taiwan DSC PV Ltd.		-		-	267
		1,258,953		1,190,124	1,524,808
Foreign investments
Shanghai Shangchuang Xinwei Investment
Management Co., Ltd.		130,501		107,328	106,464
JamaPro Co., Ltd.		1,798		2,815	2,956
		132,299		110,143	109,420
	$	1,391,252	$	1,300,267	$ 1,634,228

19 -

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

9. FINANCIAL ASSETS AT AMORTIZED COST

	September 30,	September 30,	December 31,	September 30,	September 30,
		2019	2018		2018
Current
Foreign investments
Time deposits with original maturities of more
than 3 months	$	90,004	$ 157,426	$	33,553

Refer to Note 31 for information relating to investments in financial assets at amortized cost pledged as security.

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

	September 30,	December 31,	September 30,
	2019	2018	2018
Notes receivable - operating	$ 1,466,291	$ 1,461,404	$ 1,489,453
Trade receivables
Amortized cost
Gross carrying amount	$ 8,108,808	$ 6,958,369	$ 6,932,921
Less: Allowance for impairment loss	(96,519)	(87,491)	(97,584)
	$ 8,012,289	$ 6,870,878	$ 6,835,337

Trade Receivables

At amortized cost

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

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of conditions at the reporting date. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

20 -

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

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

September 30, 2019

Not Past Due Expected credit loss rate - Gross carrying amount $ 6,917,520 Loss allowance (Lifetime ECLs) (9,248) Amortized cost $ 6,908,272 December 31, 2018 Not Past Due Expected credit loss rate - Gross carrying amount $ 5,358,360 Loss allowance (Lifetime ECLs) (21,319) Amortized cost $ 5,337,041 September 30, 2018 Not Past Due Expected credit loss rate - Gross carrying amount $ 5,838,831 Loss allowance (Lifetime ECLs) (3,627) Amortized cost $ 5,835,204	Up to 90 Days 0.5% $ 1,043,873 (5,655) $ 1,038,218 Up to 90 Days - $ 1,488,386 (2,056) $ 1,486,330 Up to 90 Days 4% $ 991,379 (35,284) $ 956,095	91 to 180 Days 25% $ 85,444 (21,332) $ 64,112 91 to 180 Days 31% $ 53,879 (16,913) $ 36,966 91 to 180 Days 33% $ 40,365 (13,486) $ 26,879	181 to 360 Days 72% $ 6,043 (4,356) $ 1,687 181 to 360 Days 69% $ 34,029 (23,488) $ 10,541 181 to 360 Days 43% $ 30,352 (13,193) $ 17,159	Over 360 Days 100% $ 55,928 (55,928) $ - Over 360 Days 100% $ 23,715 (23,715) $ - Over 360 Days 100% $ 31,994 (31,994) $ -	Total - $ 8,108,808 (96,519) $ 8,012,289 Total - $ 6,958,369 (87,491) $ 6,870,878 Total - $ 6,932,921 (97,584) $ 6,835,337

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

Balance at January 1 Add: Net remeasurement of loss allowance (a) Less: Amounts written off (b) Business combinations Foreign exchange gains and losses Balance at September 30	For the Nine Months Ended September 30 2019 2018 $ 87,491 $ 90,455 19,527 14,037 (8,847) (5,556) (35) - (1,617) (1,352) $ 96,519 $ 97,584	For the Nine Months Ended September 30 2019 2018 $ 87,491 $ 90,455 19,527 14,037 (8,847) (5,556) (35) - (1,617) (1,352) $ 96,519 $ 97,584	For the Nine Months Ended September 30 2019 2018 $ 87,491 $ 90,455 19,527 14,037 (8,847) (5,556) (35) - (1,617) (1,352) $ 96,519 $ 97,584
		2019 $ 87,491 19,527 (8,847) (35) (1,617) $ 96,519	2018 $ 90,455 14,037 (5,556) - (1,352) $ 97,584

21 -
a. Compared to January 1, 2019 and 2018, the net increases in the carrying amount of trade receivables were $1,150,439 thousand and $246,436 thousand at September 30, 2019 and 2018, respectively, resulting in the increases in loss allowances of $19,527 thousand and $14,037 thousand, respectively.
b. The Group wrote off trade receivables and related loss allowance for the nine months ended September 30, 2019 and 2018 of $8,847 thousand and $5,556 thousand, respectively, as the customers’ trade receivables were overdue for more than 2 years and the legal attest letters were served without receivables collected.

11. INVENTORIES

	September 30,	December 31,	September 30,
	2019	2018	2018
Raw materials	$ 4,300,075	$ 3,773,265	$ 3,881,759
Work in process	1,782,288	1,533,978	1,419,525
Finished goods	1,491,792	1,531,644	1,457,235
Inventories in transit	514,620	718,933	841,370
	$ 8,088,775	$ 7,557,820	$ 7,599,889

The cost of inventories recognized as cost of goods sold for the three months and nine months ended September 30, 2019 and 2018 was $8,587,985 thousand, $7,482,721 thousand, $24,432,644 thousand and $22,157,816 thousand, respectively.

The costs of inventories decreased by $843,969 thousand, $630,341 thousand and $671,304 thousand as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively, when stated at the lower of cost or net realizable value.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements

The entities included in the consolidated financial statements are listed below.

Investor
Investee
Nature of Activities
The Company
Advantech Automation
Corp. (AAC (BVI))
Investment and management services
Advantech Technology Co.,
Ltd (ATC)
Sale of industrial automation products
Advanixs Corporation
Production and sale of industrial
automation products
Advantech Corporate
Investment
Investment holding company
Advantech Europe Holding
B.V. (AEUH)
Investment and management services
Advantech Co., Singapore
Pte, Ltd. (ASG)
Sale of industrial automation products
Advantech Australia Pty Ltd.
(AAU)
Sale of industrial automation products
Advantech Japan Co., Ltd.
(AJP)
Sale of industrial automation products
Advantech Co. Malaysia
Sdn. Bhd (AMY)
Sale of industrial automation products
Advantech KR Co., Ltd.
(AKR)
Sale of industrial automation products
Advantech Brasil Ltd (ABR) Sale of industrial automation products

Proportion of Ownership (%)
September 30,
2019
December 31,
2018
September 30,
2018
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
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
(Continued)

22 -

Investor
Investee
Nature of Activities
Advantech Industrial
Computing India Private
Limited (AIN)
Sale of industrial automation products
AdvanPOS
Production and sale of POS systems
LNC Technology Co., Ltd.
(LNC)
Production and sale of machines with
computerized numerical controls
Advantech Electronics,
S. De R. L. De C. V.
(AMX)
Sale of industrial automation products
Advantech Innovative
Design Co., Ltd.
Product design
BEMC Holdings
Corporation (BEMC)
Sale of industrial network
communications systems
B+B Smartworx Inc. (B+B) Sale of industrial network
communications systems
Advantech Intelligent
Services Co., Ltd. (AiST)
Design, develop and sale of intelligent
service
Advantech Kostec Co., Ltd.
(AKST)
Production and sale of intelligent
medical displays
Advantech Corporation
(Thailand) Co., Ltd.
(ATH)
Production of computers
Advantech Vietnam
Technology Company
Limited (AVN)
Sale of industrial automation products
Limited Liability Company
Advantech Technology
(ARU)
Production and sale of industrial
automation products
Advantech Technologies
Japan Corp. (ATJ)
Production and sale of electronic and
mechanical device
Advantech Turkey Teknoloji
A.S. (ATR)
Wholesale of computers and peripheral
devices
Advantech KR Co., Ltd.
(AKR)
Advantech Kostec Co., Ltd.
(AKST)
Production and sale of intelligent
medical displays
Advantech Japan Co.,
Ltd. (AJP)
Advantech Technologies
Japan Corp. (ATJ)
Production and sale of electronic and
mechanical devices
Advantech Corporate
Investment
Cermate Technologies Inc.
(Cermate Taiwan)
Manufacturing of electronic parts,
computer, and peripheral devices
Huan Yan, Jhih-Lian Co.,
Ltd.
Service plan for combination of related
technologies of water treatment and
applications of Internet of Things
Yun Yan, Wu-Lian Co., Ltd. Industrial equipment Networking in
Greater China
Advantech Corporate
Investment Ltd. (ACISM)
General investment
ACI IOT Investment Fund-I
Corporation
Investment holding company
Advantech Technology
Co., Ltd (ATC)
Advantech Automation
Corp. (HK) (ATC (HK))
Investment and management services
HK Advantech
Technology Co., Ltd.
ATC (HK)
Advantech Technology
(China) Company Ltd.
(AKMC)
Production and sale of components of
industrial automation products
Advantech Automation
Corp. (BVI) (AAC
Advantech Corp. (ANA)
Sale and fabrication of industrial
automation products
(BVI))
Advantech Automation
Corp. (HK) (AAC (HK))
Investment and management service
Advantech Service - IoT
Co., Ltd. (SIoT Cayman)
Design, development and sale of IoT
intelligent system service
Advantech Corp. (ANA) BEMC Holdings
Corporation (BEMC)
Sale of industrial network
communications
B+B Smartworx Inc. (B+B) Sale of industrial network
communications
Advantech Automation
Corp. (HK) (AAC
(HK))
Beijing Yan Hua Xing Ye
Electronic Science &
Technology Co., Ltd.
(ACN)
Sale of industrial automation products
Shanghai Advantech
Intelligent Services Co.,
Ltd. (AiSC)
Production and sale of industrial
automation products
Advantech Service - IoT
Co., Ltd. (SIoT
Cayman)
Advantech Service-IoT
(Shanghai) Co., Ltd.
(SIoT (China))
Technology development consulting
and services in the field of
intelligent technology
Advantech Service-IoT
GmbH (A-SIoT) (former
A-DLoG)
Design, R&D and sale of industrial
automation vehicles and related
products
Advantech Intelligent Health
Co., Ltd. (AIH)
Information software and data
processing service

Proportion of Ownership (%)
September 30,
2019
December 31,
2018
September 30,
2018
Remark
99.99
99.99
99.99
a
100.00
100.00
100.00
a
64.10
64.10
64.10
a, e
100.00
100.00
100.00
a
100.00
100.00
100.00
a
-
-
60.00
f
60.00
60.00
-
f
100.00
100.00
100.00
a
76.00
76.00
36.00
a, b
51.00
51.00
51.00
a
60.00
60.00
60.00
a
100.00
100.00
-
a, g
50.00
-
-
a, i
60.00
-
-
a, j
24.00
24.00
24.00
a
28.61
-
-
a, i
55.00
55.00
55.00
a
50.00
50.00
50.00
a,
50.00
50.00
50.00
a
100.00
-
-
a, k
79.30
-
-
n
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
a
-
-
40.00
f
40.00
40.00
-
f
100.00
100.00
100.00
100.00
100.00
100.00
a
99.00
99.00
99.00
a
100.00
100.00
-
a, c
70.00
-
-
a, l
(Continued)

23 -

Investor
Investee
Nature of Activities
Beijing Yan Hua Xing
Ye Electronic Science
& Technology Co.,
Ltd. (ACN)
Xi’an Advantech Software
Ltd. (AXA)
Development and production of
software products
Shanghai Advantech
Intelligent Services
Co., Ltd. (AiSC)
Advantech Service-IoT
(Shanghai) Co., Ltd.
(SIoT (China))
Technology development consulting
and services in the field of
intelligent technology
Advantech Europe
Holding B.V.
Advantech Europe B.V.
(AEU)
Sale of industrial automation products
(AEUH)
Advantech Poland Sp z o.o.
(APL)
Sale of industrial automation products
Advantech Europe B.V.
(AEU)
Advantech Service-IoT
GmbH (A-SIoT) (former
A-DLoG)
Design, R&D and sale of industrial
automation vehicles and related
products
Advantech Co.,
Singapore Pte, Ltd.
(ASG)
Advantech Corporation
(Thailand) Co., Ltd.
(ATH)
Production of computers
Advantech International. PT.
(AID)
Sale of industrial automation products
Cermate Technologies
Inc. (Cermate Taiwan)
LandMark Co., Ltd.
(LandMark)
General investment
LandMark Co., Ltd.
(LandMark)
Cermate Technologies
(Shanghai) Inc. (Cermate
Shanghai)
Sale of industrial electronic equipment
Shenzhen Cermate
Technologies Inc.
Production of LCD touch panel, USB
cable, and industrial computer
LNC Technology Co.,
Ltd. (LNC)
Better Auto Holdings
Limited (Better Auto)
General investment
Better Auto Holdings
Limited (Better Auto)
Famous Now Limited
(Famous Now)
General investment
Famous Now Limited
(Famous Now)
LNC Dong Guan Co., Ltd.
Production and sale of industrial
automation products
BEMC Holdings
Corporation (BEMC)
Avtek Corporation (Avtek)
General investment
Avtek Corporation
(Avtek)
B+B Smartworx Inc. (B+B) General investment
B+B Smartworx Inc.
(B+B)
B+B Smartworx Limited
(BBIE)
Sale of industrial network
communications systems
Quatech, LLC (Quatech)
Sale of industrial network
communications systems
B&B IMC. LLC (IMC)
Sale of industrial network
communications systems
B+B Smartworx Limited
(BBIE)
B&B Electronics Holdings
LLC (B&B Electronics)
Sale of industrial network
communications systems
Advantech B+B Smartworx
s.r.o.CZ (ACZ) (former
B+B (CZ))
Manufacturing of cellular and
automation solutions
Conel Automation s.r.o
(Conel Automation)
Application of industrial automation
Advantech Technology
DMCC (former B&B
DMCC)
Sale of industrial network
communications systems
B&B Electronics
Holdings LLC (B&B
Electronics)
Advantech B+B Smartworx
s.r.o.CZ (ACZ) (former
B+B (CZ))
Manufacturing of cellular and
automation solutions
Advantech B+B
Smartworx s.r.o.CZ
(ACZ) (former B+B
(CZ))
Conel Automation s.r.o
(Conel Automation)
Application of industrial automation

Proportion of Ownership (%)
September 30,
2019
December 31,
2018
September 30,
2018
Remark
100.00
100.00
100.00
a
1.00
1.00
1.00
a, d
100.00
100.00
100.00
100.00
100.00
100.00
a
-
-
-
a, c
49.00
49.00
49.00
a
100.00
100.00
100.00
a
100.00
100.00
100.00
a
100.00
100.00
100.00
a
90.00
90.00
90.00
a
100.00
100.00
100.00
a
100.00
100.00
100.00
a
100.00
100.00
100.00
a
-
-
100.00
f
-
-
100.00
f
100.00
100.00
100.00
-
-
100.00
h
100.00
100.00
100.00
-
100.00
100.00
o
100.00
99.99
99.99
m
-
1.00
1.00
p
100.00
100.00
100.00
-
0.01
0.01
o
-
99.00
99.00
p

(Concluded)

Remark a: Non-significant subsidiaries; their financial statements had not been reviewed.
Remark b: In the fourth quarter of 2018, the Group acquired 40% of the equity of AKST; thus, the Group’s equity investment in AKST increased from 36% to 76%.
Remark c: In the third quarter of 2018, the Group adjusted its investment structure; hence, SIoT (Cayman) directly held 100% of the equity of A-SIoT (former A-DLoG).
Remark d: In the third quarter of 2018, AiSC invested in SIoT (China) and held 1% of the equity of SIoT (China).
24 -
Remark e: In the third quarter of 2018, the Group sold 15.96% of the equity of LNC, which led the Group’s equity investment in LNC to decrease from 80.06% to 64.10%.
Remark f: In the fourth quarter of 2018, the Group adjusted its investment structure, and BEMC and Avetek were liquidated. The Company directly holds B+B at the moment.
Remark g: In the fourth quarter of 2018, the Group founded ARU.
Remark h: In the fourth quarter of 2018, Quatech was in the process of liquidation.
Remark i: In the first quarter of 2019, the Group acquired 80% of the equity of ATJ. The Group and AJP held 50% and 30% of the equity of ATJ, respectively. In the third quarter of 2019, AJP sold 1.39% of the equity of ATJ, which led its equity investment in ATJ to decrease from 30% to 28.61%.
Remark j: In the first quarter of 2019, the Group acquired 60% of the equity of ATR.
Remark k: In the first quarter of 2019, Advantech Corporate Investment founded ACISM and acquired 100% of its equity.
Remark l: In the second quarter of 2019, SIoT (Cayman) founded AIH and acquired 100% of its equity. In the third quarter of 2019, AIH held its seasoned equity offering, which led SIoT (Cayman)’s equity investment in AIH to decrease from 100% to 70%.
Remark m: In the second quarter of 2019, the Group adjusted its investment structure. The ownership of ACZ originally held by B&B Electronics was adjusted to be held by BBIE, which led BBIE’s equity investment in ACZ to increase from 99.99% to 100%. BBIE directly holds ACZ, and ACZ directly holds Conel Automation.
Remark n: In the second quarter of 2019, Advantech Corporate Investment founded ACI IOT Investment Fund-I Corporation and acquired 79.30% of its equity.
Remark o: In the third quarter of 2019, B&B Electronics was in the process of liquidation.
Remark p: In the third quarter of 2019, Conel Automation was disposed of.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Associates that are not individually material
Listed companies
Axiomtek Co., Ltd. (“Axiomtek”)	$	645,756	$	619,411	$	590,997
Winmate Inc. (“Winmate”)		544,335		542,761		532,387
AzureWare Technologies, Inc. (“AzureWare”)		511,724		534,780		533,804
Nippon RAD Inc. (Nippon RAD)		307,711		298,700		289,235
Mildex Optical Inc. (“Mildex”)		195,963		183,210		-
Hwacom Systems Inc. (“Hwacom”)		357,084		-		-
						(Continued)

25 -

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Unlisted companies
AIMobile Co., Ltd. (“AIMobile”)	$	76,160	$	65,012	$	68,923
Deneng Scientific Research Co., Ltd.
(“Deneng”)		14,014		14,100		14,733
Jan Hsiang Electronics Co., Ltd. (“Jan
Hsiang”)		8,135		8,010		8,087
CDIB Innovation Accelerator Co., Ltd.
(“CDIB”)		158,502		147,109		72,917
DotZero Co., Ltd. (“DotZero”)		2,499		4,629		4,723
iLink Co., Ltd. (“iLink”)		7,331		9,407		8,453
Shanghai Yanle Co., Ltd. (“Yanle”)		3,642		4,393		4,392
GSD Environmental Technology Co., Ltd.
(“GSD”)		15,496		-		-
Information Technology Total Services Co.,
Ltd. (ITTS)		142,948		-		-
	$	2,991,300	$	2,431,522	$	2,128,651
						(Concluded)

In the third quarter of 2018, the Group paid cash of $4,392 thousand for 45% equity of Shanghai Yanle Co., Ltd. The Group had significant influence over Shanghai Yanle Co., Ltd.

In the third quarter of 2018, the Group paid cash of $4,900 thousand for 49% equity of DotZero Co., Ltd. The Group had significant influence over DotZero Co., Ltd.

In the fourth quarter of 2018, the Group paid cash of $202,948 thousand for 15% equity of Mildex Optical Inc. The Group had significant influence over Mildex Optical Inc.

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

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

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

Aggregate Information of Associates That Are Not Individually Material

The Group’s share of Profit from continuing operations Other comprehensive income Total comprehensive income for the period	For the Three Months Ended September 30 2019 2018 $ 23,724 $ 24,925 (2,339) (9,097) $ 21,385 $ 15,828	For the Three Months Ended September 30 2019 2018 $ 23,724 $ 24,925 (2,339) (9,097) $ 21,385 $ 15,828	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 23,724 (2,339) $ 21,385		2019 $ 66,320 42,451 $ 108,771	2018 $ 72,781 (5,142) $ 67,639

26 -

Investments accounted for using the equity method and the Group’s share of profit or loss and other comprehensive income of those investments were calculated based on financial statements which have not been reviewed.

14. PROPERTY, PLANT AND EQUIPMENT

a. 2019

b.	Cost Balance at January 1, 2019 Additions Disposals Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at September 30, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Depreciation expenses Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at September 30, 2019 Carrying amounts at September 30, 2019 2018 Cost Balance at January 1, 2018 Additions Disposals Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at September 30, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Disposals Depreciation expenses Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at September 30, 2018 Carrying amounts at September 30, 2018	Freehold Land $ 2,934,127 - (7,100 ) 39,543 - 2,474 $ 2,969,044 $ - - - - - - $ - $ 2,969,044 Freehold Land $ 2,943,980 - (15,930 ) - - 3,473 $ 2,931,523 $ - - - - - - $ - $ 2,931,523	Buildings $ 7,195,732 23,220 (13,147 ) 945,040 28,962 (47,096) $ 8,132,711 $ 1,591,282 (5,673 ) 153,281 867,976 (584 ) (7,207) $ 2,599,075 $ 5,533,636 Buildings $ 7,274,546 13,655 (55,126 ) - - (63,041) $ 7,170,034 $ 1,414,696 (7,147 ) 150,106 - - (22,683) $ 1,534,972 $ 5,635,062	Equipment $ 1,709,936 79,651 (23,939 ) 130,912 1,376 (17,659) $ 1,880,277 $ 1,172,613 (22,697 ) 114,461 109,364 6,684 (9,785) $ 1,370,640 $ 509,637 Equipment $ 1,634,925 116,451 (61,140 ) 57 9,450 (17,838) $ 1,681,905 $ 1,186,494 (49,607 ) 82,623 5 (50,573 ) (11,075) $ 1,157,867 $ 524,038	Office Equipment $ 850,021 67,950 (38,712 ) 15,916 (7,198 ) (9,484) $ 878,493 $ 654,746 (23,962 ) 62,075 9,961 (9,895 ) (11,159) $ 681,766 $ 196,727 Office Equipment $ 830,623 64,570 (33,138 ) 524 (20,412 ) (4,887) $ 837,280 $ 651,244 (32,143 ) 56,694 151 (26,260 ) (2,505) $ 647,181 $ 190,099	Other Facilities $ 1,743,263 159,843 (37,689 ) 34,650 87,517 (26,487) $ 1,961,097 $ 1,234,142 (33,866 ) 125,337 33,018 80,846 (18,145) $ 1,421,332 $ 539,765 Other Facilities $ 1,729,582 116,681 (47,455 ) 1,483 4,579 (17,751) $ 1,787,119 $ 1,198,147 (40,543 ) 138,283 738 (2,457 ) (13,233) $ 1,280,935 $ 506,184	Construction in Progress $ 2,485 301,842 (2,403 ) 1 (287,936 ) (8,754) $ 5,235 $ - - - - - - $ - $ 5,235 Construction in Progress $ 4,257 223,224 (6 ) - (220,893 ) (3,903) $ 2,679 $ - - - - - - $ - $ 2,679	Total $ 14,435,564 632,506 (122,990 ) 1,166,062 (177,279 ) (107,006) $ 15,826,857 $ 4,652,783 (86,198 ) 455,154 1,020,319 77,051 (46,296) $ 6,072,813 $ 9,754,044 Total $ 14,417,913 534,581 (212,795 ) 2,064 (227,276 ) (103,947) $ 14,410,540 $ 4,450,581 (129,440 ) 427,706 894 (79,290 ) (49,496) $ 4,620,955 $ 9,789,585

27 -

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 are set out in Note 31.

15. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

			September 30,	September 30,
				2019
Carrying amounts
Land			$	291,655
Buildings				439,108
Machinery				2,366
Office equipment				10,684
Transportation equipment				35,575
			$	779,388
	For	the Three	For	the Nine
	Months Ended		Months Ended
	September 30,		September 30,
		2019		2019
Depreciation charge for right-of-use assets
Land	$	2,153	$	6,575
Building		42,220		126,662
Machinery		163		491
Office equipment		1,431		4,292
Transportation equipment		7,360		22,082
	$	53,327	$	160,102

Right-of-use land was classified as prepayments for leases under IAS 17. Refer to Notes 3 and 17 for information related to their reclassification and comparative information for 2018.

28 -

b. Lease liabilities - 2019

	September 30,
	2019
Carrying amounts
Current	$ 199,493
Non-current	292,140
	$ 491,633

Discounted rate ranges of lease liabilities were as follows:

	September 30,
	2019
Buildings	0.25%-12.00%
Machinery	0.87%-5.46%
Office equipment	0.87%-4.75%
Transportation equipment	0.25%-5.90%

16. GOODWILL

Cost Balance at January 1 Additional amounts recognized from business combinations occurring during the year (Note 26) Goodwill adjustment Effect of foreign currency exchange differences Balance at September 30 Accumulated impairment losses Balance at January 1 Effect of foreign currency exchange differences Balance at September 30 Carrying amount at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 2,921,795 124,028 (12,494) 3,589 $ 3,036,918 $ (97,788) - $ (97,788) $ 2,939,130	2018 $ 2,828,958 65,207 (15,994) 35,544 $ 2,913,715 $ (101,409) 3,621 $ (97,788) $ 2,815,927

On June 30, 2019, the Group obtained the fair value assessed at the acquisition date. Based on the results of the assessment, the fair value of AVN’s intangible assets at the acquisition date was $26,727 thousand. The comparative figures have been restated as if the initial accounting was completed at the acquisition date.

29 -

The adjustments in the consolidated balance sheets are as follows:

			June 30, 2018	June 30, 2018
	December 31,		(Acquisition
		2018		Date)
Goodwill adjustments	$	(15,994)	$	(15,994)
Intangible assets	$	18,883	$	26,657
Retained earnings	$	(4,664)	$	-
Non-controlling interests	$	7,553	$	10,663

On September 30, 2019, the Group obtained the fair value assessed at the acquisition date. Based on the results of the assessment, the fair value of ATR’s intangible assets at the acquisition date was $34,783 thousand. The comparative figures have been restated as if the initial accounting was completed at the acquisition date.

		February 28,
		2019
	September 30,	(Acquisition
	2019	Date)
Goodwill adjustments	$ (12,494)	$ (12,494)
Intangible assets	$ 32,168	$ 34,598
Non-controlling interests	$ 12,867	$ 13,839

17. PREPAYMENTS FOR LEASES

				December	December	31,	September	September	30,
					2018			2018
Current assets (included in other current assets)				$	8,673		$	8,604
Non-current assets					297,665			297,420
				$	306,338		$	306,024
Lease prepayments are for the Group’s land-use	rights in	mainland China.
BORROWINGS
a. Short-term borrowings
	September		30,	December		31,	September		30,
		2019			2018			2018
Secured borrowings
Bank loans	$		-	$		-	$	8,100
Unsecured borrowings
Line of credit borrowings		297,878			87,581				-
	$	297,878		$	87,581		$	8,100

18. BORROWINGS

The ranges of weighted average effective interest rates on bank loans were 0.23%-3.15%, 1.38%-3.15% and 2.87% per annum as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

30 -

b. Long-term borrowings

	September 30,	September 30,	December 31,	December 31,	September 30,
		2019		2018	2018
Secured borrowings
Bank loans	$	-	$	-	$ 33,389
Other loans		46,406		55,410	57,819
		46,406		55,410	91,208
Less: Current portions		(4,483)		(9,626)	(10,284)
Long-term borrowings	$	41,923	$	45,784	$ 80,924

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 September 30, 2018.

Other borrowings are loans from the government. As of September 30, 2019, December 31, 2018 and September 30, 2018, the effective interest rate was 2.91%-3.16%.

Refer to Note 31 for the Group’s land and buildings pledged as security for borrowings.

19. OTHER LIABILITIES

	September 30,	December 31,	September 30,
	2019	2018	2018
Other payables
Payables for salaries or bonuses	$ 2,379,590	$ 2,143,770	$ 2,259,749
Payables for employee benefits	185,900	207,175	186,678
Payables for royalties	146,077	107,409	129,774
Others (Note)	1,088,949	1,203,845	985,345
	$ 3,800,516	$ 3,662,199	$ 3,561,546

Note: Inclusive of marketing and freight expenses.

20. RETIREMENT BENEFIT PLANS

Employee benefit expenses in respect of the Group’s defined benefit retirement plans were $1,338 thousand and $1,412 thousand, $4,015 thousand and $4,237 thousand for the three months and nine months ended September 30, 2019 and 2018, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2018 and 2017.

31 -

21. EQUITY

a. Share capital

Ordinary shares

	September 30,	December 31,	September 30,
	2019	2018	2018
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)	699,923	698,696	698,228
Shares issued	$ 6,999,230	$ 6,986,955	$ 6,982,275

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

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

b. Capital surplus

	September 30,	December 31,	September 30,
	2019	2018	2018
May be used to offset a deficit, distributed as
cash dividends, or transferred to share
capital (1)
Issuance of ordinary shares	$ 2,692,238	$ 2,692,238	$ 2,692,238
Conversion of bonds	1,636,499	1,636,499	1,636,499
The difference between the consideration
received or paid and the carrying amount of
subsidiaries’ net assets during actual
disposal or acquisition	89,473	88,560	88,560
Share of changes in capital surplus of
associates	55	55	-
Employees’ share compensation	78,614	78,614	78,614
May be used to offset a deficit only
Changes in percentage of ownership interest
in subsidiaries (2)	3,911	4,263	4,246
Employee share options	1,740,910	1,519,818	1,387,035
Share of changes in capital surplus of
associates	32,986	27,890	25,029
May not be used for any purpose
Employee share options	1,126,593	1,025,411	1,039,279
	$ 7,401,279	$ 7,073,348	$ 6,951,500

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).
32 -
2) Such capital surplus arises from the effect of changes in ownership interests in a subsidiary resulting from equity transactions other than actual disposal or acquisition or from changes in capital surplus of subsidiaries accounted for by using the equity method.
c. Retained earnings and dividend policy

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

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

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

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

The appropriations of earnings for 2018 and 2017, which have been approved in the shareholders’ meetings on May 28, 2019 and May 24, 2018, respectively, were as follows:

Legal reserve Special reserve Cash dividends d. Special reserve	Appropriation of Earnings For the Year Ended December 31 2018 2017 $ 629,466 $ 615,651 429,108 284,451 4,751,129 4,600,414	Dividends Per Share (NT$)
		For the Year Ended December 31
		2018 2017 $ - $ - - - 6.8 6.6

Balance at January 1 Appropriations in respect of debits to other equity items Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 369,655 429,108 $ 798,763	2018 $ 85,204 284,451 $ 369,655

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e. Other equity items

1) Exchange differences on translation of financial statements of foreign operations

Balance at January 1 Effect of change in tax rate Recognized during the period Exchange differences arising on translating the financial statements of foreign operations Share of those of associates accounted for using the equity method Other comprehensive income recognized for the period Balance at September 30 2) Unrealized gain or loss on financial assets at FVTOCI		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ (475,245) - (157,378) 13,957 (143,421) $ (618,666)	2018 $ (463,479) 16,752 (73,206) (7,983) (64,437) $ (527,916)

Balance at January 1 Recognized for the period Unrealized gain/(loss) - equity instruments Share of associates accounted for using the equity method Other comprehensive income recognized for the period Cumulative unrealized gain/(loss) of equity instruments transferred to retained earnings due to disposal by related parties Balance at September 30 3) Unearned employee benefits compensation Balance at January 1 Share from associates accounted for using the equity method Balance at September 30		For the Nine Months Ended September 30
		2019 2018 $ (324,254) $ 123,254 68,080 (110,429) 25,597 4,717 93,677 (105,712) 23,196 6,977 $ (207,381) $ 24,519 For the Nine Months Ended September 30, 2019 $ 736 221 $ 957

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f. Non-controlling interests

Balance at January 1 Share of profit for the year Other comprehensive income during the year Exchange differences on translation of financial statements of foreign operations Increase in non-controlling interests arising from decrease in investment in subsidiaries (Note 28) Increase or decrease in non-controlling interests arising from increase in investment in subsidiaries (Note 28) Increase in non-controlling interests arising from the acquisition of subsidiary, ATJ (Note 26) Increase in non-controlling interests arising from the acquisition of subsidiary, ATR (Note 26) Increase in non-controlling interests arising from the acquisition of subsidiary, AVN (Note 26) Increase in non-controlling interests arising from the acquisition of subsidiary, ACI IOT Investment Fund-I Corporation Cash dividends distributed by subsidiaries Employees’ holding outstanding vest share option related non-controlling interests issued by subsidiaries Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 245,436 38,064 4,328 352 8,316 102,770 35,252 - 62,000 (14,039) 316 $ 482,795	2018 $ 179,366 14,010 (3,967) 56,829 (22,701) - 17,920 - - 968 $ 242,425

22. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

Interest on bank loans Interest on lease liabilities Others	For the Three Months Ended September 30 2019 2018 $ 1,577 $ 250 4,510 - 1,665 385 $ 7,752 $ 635	For the Three Months Ended September 30 2019 2018 $ 1,577 $ 250 4,510 - 1,665 385 $ 7,752 $ 635	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 1,577 4,510 1,665 $ 7,752		2019 $ 3,323 13,530 3,215 $ 20,068	2018 $ 750 - 2,372 $ 3,122

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b. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses	For the Three Months Ended September 30 2019 2018 $ 45,772 $ 35,123 149,243 105,080 $ 195,015 $ 140,203 $ 951 $ 189 91,183 62,881 $ 92,134 $ 63,070	For the Three Months Ended September 30 2019 2018 $ 45,772 $ 35,123 149,243 105,080 $ 195,015 $ 140,203 $ 951 $ 189 91,183 62,881 $ 92,134 $ 63,070	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 45,772 149,243 $ 195,015 $ 951 91,183 $ 92,134		2019 $ 132,117 483,139 $ 615,256 $ 2,842 196,855 $ 199,697	2018 $ 102,541 325,165 $ 427,706 $ 2,800 136,880 $ 139,680

c. Employee benefits expense

Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 20) Share-based payments Equity-settled Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Months Ended September 30 2019 2018 $ 2,472,255 $ 2,165,820 93,146 126,908 1,338 1,412 94,484 128,320 64,291 74,184 128,638 192,942 $ 2,759,668 $ 2,561,266 $ 613,746 $ 582,510 2,145,922 1,978,756 $ 2,759,668 $ 2,561,266		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 2,472,255 93,146 1,338 94,484 64,291 128,638 $ 2,759,668 $ 613,746 2,145,922 $ 2,759,668		2019 $ 7,103,864 275,288 4,015 279,303 233,638 481,834 $ 8,098,639 $ 1,790,012 6,308,627 $ 8,098,639	2018 $ 6,397,311 292,853 4,237 297,090 256,950 490,551 $ 7,441,902 $ 1,612,718 5,829,184 $ 7,441,902

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d. Employees’ compensation and remuneration of directors and supervisors

The Company accrued employees’ compensation at the rates of no less than 5% and remuneration of directors at the rates of no higher than 1%, of net profit before income tax, employees’ compensation, and remuneration of directors. For the three months and nine months ended September 30, 2019 and 2018, the employees’ compensation and the remuneration of directors were accrued of net profit after income tax.

Employees’ compensation Remuneration of directors	For the Three Months Ended September 30 2019 2018 $ 149,143 $ 68,250 $ 2,650 $ 2,650	For the Three Months Ended September 30 2019 2018 $ 149,143 $ 68,250 $ 2,650 $ 2,650	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 149,143 $ 2,650		2019 $ 398,033 $ 7,950	2018 $ 204,750 $ 7,950

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 2018 and 2017 resolved by the board of directors on May 3, 2019 and March 2, 2018, respectively, were as below:

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2018 Cash $ 452,355 10,600	2017
		Cash $ 273,000 10,600

There is no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2018 and 2017.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

e. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net gain (loss)	For the Three Months Ended September 30 2019 2018 $ 191,173 $ 221,251 (267,141) (284,108) $ (75,968) $ (62,587)	For the Three Months Ended September 30 2019 2018 $ 191,173 $ 221,251 (267,141) (284,108) $ (75,968) $ (62,587)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 191,173 (267,141) $ (75,968)		2019 $ 585,869 (579,886) $ 5,983	2018 $ 887,252 (907,194) $ (19,942)

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23. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of tax expense were as follows:

Current tax In respect of the current period Income tax on unappropriated earnings Adjustment for prior years Deferred tax In respect of the current period Change in tax rate Income tax expense recognized in profit or loss		For the Three Months Ended September 30 2019 2018 $ 531,182 $ 469,173 - - (27,770) (31,705) 57,837 (7,273) - 27,656 $ 561,249 $ 457,851		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 531,182 - (27,770) 57,837 - $ 561,249		2019 $ 1,495,622 21,176 (56,066) 44,870 - $ 1,505,602	2018 $ 1,207,777 63,493 (174,337) 53,817 114,546 $ 1,265,296

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20%. The effect of the change in tax rate on deferred tax expense to be recognized in profit or loss is $185,530 thousand, for which $70,984 thousand has not been recognized as of September 30, 2018. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings has been reduced from 10% to 5%.

According to the newly-added Article 23-3 of the Statute for Industrial Innovation in the ROC, which was amended in July 2019, if a company or limited partnership reinvests its retained earnings in specific assets or technology up to a certain amount, such investment amounts may be deducted from the retained earnings during the calculation of the income taxable under the additional profit-seeking enterprise income tax leviable on retained earnings from the year 2018 under Article 66-9 of the Income Tax Act. However, as the details of the related enforcement act are yet to be set by the Ministry of Finance, the effect of the Statute on the Group’s current income tax cannot be estimated.

b. Income tax recognized in other comprehensive income

Deferred tax Change in tax rate In respect of the current period Translation of foreign operations Income tax recognized in other comprehensive income	For the Three Months Ended September 30 2019 2018 $ - $ - (73,488) (41,947) $ (73,488) $ (41,947)	For the Three Months Ended September 30 2019 2018 $ - $ - (73,488) (41,947) $ (73,488) $ (41,947)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ - (73,488) $ (73,488)		2019 $ - (35,856) $ (35,856)	2018 $ (18,879) (20,297) $ (39,176)

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c. Income tax assessments

The Company’s tax returns through 2016 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Three Months Ended September 30 2019 2018 $ 3.06 $ 2.45 $ 3.03 $ 2.43	For the Three Months Ended September 30 2019 2018 $ 3.06 $ 2.45 $ 3.03 $ 2.43	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 3.06 $ 3.03		2019 $ 8.08 $ 7.99	2018 $ 6.68 $ 6.61

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

Net Profit for the Period

Earnings used in the computation of basic earnings per share Earnings used in the computation of diluted earnings per share		For the Three Months Ended September 30 2019 2018 $ 2,139,974 $ 1,710,482 $ 2,139,974 $ 1,710,482		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 2,139,974 $ 2,139,974		2019 $ 5,651,450 $ 5,651,450	2018 $ 4,657,347 $ 4,657,347

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

Weighted average number of ordinary shares used in the 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 September 30 2019 2018 699,284 697,955 6,918 5,788 546 300 706,748 704,043	For the Three Months Ended September 30 2019 2018 699,284 697,955 6,918 5,788 546 300 706,748 704,043	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 699,284 6,918 546 706,748		2019 699,034 6,746 1,938 707,718	2018 697,616 5,837 1,192 704,645

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

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25. SHARE-BASED PAYMENT ARRANGEMENTS

Qualified employees of the Company and its subsidiaries were granted 8,000 options in 2018, 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 2018, 2016 and 2014 are all valid for six years. All options are exercisable at certain percentages after the second anniversary year from the grant date. The options issued in 2018 were granted at an exercise price equal to the share price at 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.

Information on employee share options was as follows:

Balance at January 1 Options granted Options exercised Balance at September 30 Options exercisable, end of the period Weighted-average fair value of options granted (NT$)	For the Nine Months	Ended September 30
	2019 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 15,965 $ 143.64 - - (1,228) 82.21 14,737 147.61 6,738 82.44 $ -	2018
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 9,378 $ 95.15 8,000 202.50 (945) 84.08 16,433 141.92 8,433 84.46 $ 49.39

The weighted-average share price at the date of exercise of share options for the nine months ended September 30, 2019 and 2018 ranged from NT$223 to NT$271 and NT$196 to NT$226, respectively.

Information about outstanding options as of September 30, 2019 and 2018 was as follows:

Issuance in 2018 Issuance in 2016 Issuance in 2014	For the Nine Months	Ended December 31
	2019 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 202.5 4.83 85.6 2.70 81.5 0.88	2018
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 202.5 5.83 85.6 3.70 81.5 1.88

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

	2018	2016	2014
Grant-date share price (NT$)	$202.5	$235	$239.5
Exercise price (NT$)	$202.5	$100	$100
Expected volatility	28.42%-28.73%	31.42%-32.48%	28.28%-29.19%
Expected life (in years)	4-5.5	4-5.5	4-5.5
Expected dividend yield	0%	0%	0%
Risk-free interest rate	0.67%-0.69%	0.52%-0.65%	1.07%-1.30%

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

Compensation cost recognized was $233,638 thousand and $256,950 thousand for the nine months ended September 30, 2019 and 2018, respectively.

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

Information on employee share options was as follows:

Balance at January 1 Options granted Options forfeited Balance at September 30 Options exercisable, end of period Weighted-average fair value of options granted (NT$)	For the Nine Months	Ended September 30
	2019 Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 814 $ 20 - - (64) - 750 20 180 20 -	2018
		Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 980 $ 20 108 200 274 - 814 20 189 20 1.83

Information on outstanding options for the nine months ended September 30, 2019 and 2018 was as follows:

Employee Share Options Issuance in 2018 Issuance in 2017	September 30	September 30
	2019 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 20 2.78 20 1.67	2018
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 20 3.58 20 2.67

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

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

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

Issuance in 2018

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

Issuance in 2017

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

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26. BUSINESS COMBINATIONS

a. Subsidiaries acquired

Subsidiaries acquired
			Proportion of
			Voting Equity
		Date of	Interests	Consideration
	Principal Activity	Acquisition	Acquired (%)	Transferred
Advantech Vietnam	Sales of industrial	June 6, 2018	60	$	76,092
Technology Company	automation products
Limited (AVN)
Advantech Technologies	Production and sale of	January 31,	80	$	517,008
Japan Corp. (ATJ)	electronic and	2019
	mechanical devices
Advantech Turkey	Wholesale of computers	February 28,	60	$	58,482
Teknoloji A.S. (ATR)	and peripheral devices	2019

The Group acquired 60% of the shares of Advantech Vietnam Technology Company Limited (AVN) in order to expand the sales of industrial PCs in the Vietnam market.

The Group acquired 80% of the shares of Advantech Technologies Japan Corp. (ATJ) in order to expand its embedded systems and strengthen customization of design and production in the Japan market.

The Group acquired 42% of the shares of Advantech Turkey Teknoloji A.S. (ATR) in order to expand the sales of industrial PCs in the Turkey market. The Group increased capital; thus the Group’s equity investment in ATR increased to 60%.

b. Consideration transferred

Cash Assets acquired and liabilities assumed at the dates Current assets Cash and cash equivalents Trade receivables Inventories Other current assets Non-current assets Plant and equipment Intangible assets Deferred tax assets Other non-current assets Current liabilities Short-term borrowings Trade and other payables Current tax liabilities Other current liabilities Non-current liabilities Other non-current liabilities	ATJ $ 517,008 of acquisitions ATJ $ - 600,641 437,154 7,220 145,020 4,426 73,782 - (157,819) (548,370) (32,436) (15,770) - $ 513,848	ATR $ 58,482 ATR $ 33,334 15,759 9,966 353 723 34,783 - 238 (311) (2,206) (193) (4,230) (86) $ 88,130	AVN $ 76,092 AVN $ 15,770 16,701 4,637 615 1,170 26,727 - 354 - (20,302) - (873) - $ 44,799

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

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d. Non-controlling interests

The non-controlling interest (20%, 58%, and 40% ownership interest in ATJ, ATR, and AVN) recognized at the acquisition date was measured by reference to the identifiable net assets of the non-controlling interest and amounted to $102,770 thousand, $35,252 thousand, and $17,920 thousand for each.

e. Goodwill recognized on acquisitions

Consideration transferred Less: Fair value of identifiable net assets acquired Goodwill recognized on acquisitions	ATJ $ 517,008 (411,078) $ 105,930	ATR $ 58,482 (52,878) $ 5,604	AVN $ 76,092 (26,879) $ 49,213

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

The acquisitions of ATJ mainly represent the control premium included in the costs of the combinations. The accounting for the acquisition has been provisionally determined at the end of the reporting period. As of the date the consolidated financial statements were approved for issue, the market valuations and other calculations have not been finalized. Therefore, the amount was provisionally determined based on the best estimate made by the Group’s management.

f. Net cash outflow on acquisitions of subsidiaries

Consideration paid in cash Less: Cash and cash equivalent balances acquired	ATJ $ 517,008 - $ 517,008	ATR $ 58,482 (33,334) $ 25,148	AVN $ 76,092 (15,770) $ 60,322

g. Impact of acquisitions on the results of the Group

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

Revenue Profit		For the Nine Months Ended September 30, 2019 ATJ ATR $ 1,924,304 $ 81,212 $ 131,221 $ 8,654	For the Nine Months Ended September 30, 2018	For the Nine Months Ended September 30, 2018
		ATJ $ 1,924,304 $ 131,221		AVN $ 26,827 $ (3,863)

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27. DISPOSAL OF SUBSIDIARIES

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

a. Consideration received from disposal

		Conel
	Automation
Cash	$	311
Analysis of assets and liabilities on the date control was lost
		Conel
	Automation
Current assets
Cash and cash equivalents	$	392
Trade receivables		4,932
Inventories		6,666
Other current assets		4,897
Non-current assets
Property, plant and equipment		104
Other intangible assets		14,536
Current liabilities
Payables and other liabilities		(5,285)
Net assets disposed of	$	26,242
Loss on disposal of subsidiary
		Conel
	Automation
Consideration received	$	311
Net assets disposed of		(26,242)
Reclassification of other comprehensive income in respect of the subsidiary		30
Loss on disposals	$	(25,901)
Net cash inflow (outflow) on disposal of subsidiary
		Conel
	Automation
Consideration received in cash and cash equivalents	$	311
Less: Cash and cash equivalent balances disposed of		(392)
	$	(81)

b. Analysis of assets and liabilities on the date control was lost
c. Loss on disposal of subsidiary
d. Net cash inflow (outflow) on disposal of subsidiary
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28. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

In the first quarter of 2018, the Group sold 1.11% of the equity in LNC, which led the Group’s equity investment to decrease from 81.17% to 80.06%.

In the first quarter of 2018, the Group acquired 49% of the equity of ATH, which led the Group’s equity investment in ATH to increase from 51% to 100%.

In the third quarter of 2019, the Group sold 1.39% of the equity of ATJ, which led its equity investment in ATJ to decrease from 80% to 78.61%.

In the third quarter of 2019, the Group subscribed for shares of AIH during its capital increase at a percentage different from its existing ownership percentage, which led its equity investment in AIH to decrease from 100% to 70%.

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

Cash consideration received (paid) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests Differences recognized from equity transactions Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and carrying amount of the subsidiaries’ net assets during actual disposal or acquisition Capital surplus - changes in percentage of ownership interests in subsidiaries Cash consideration received (paid) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests Differences recognized from equity transactions Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and carrying amount of the subsidiaries’ net assets during actual disposal or acquisition	For the Nine Months Ended September 30, 2019	For the Nine Months Ended September 30, 2019	For the Nine Months Ended September 30, 2019	For the Nine Months Ended September 30, 2019
	ATJ AIH Total $ 9,229 $ - $ 9,229 (8,316) (352) (8,668) $ 913 $ (352) $ 561 $ 913 $ - $ 913 - (352) (352) $ 913 $ (352) $ 561 For the Nine Months Ended September 30, 2018
		ATH $ (21,926) 22,701 $ 775 $ 775	LNC $ 126,770 (56,829) $ 69,941 $ 69,941	Total $ 104,844 (34,128) $ 70,716 $ 70,716

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29. FINANCIAL INSTRUMENTS

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

September 30, 2019 Financial assets at FVTPL Derivative financial assets Securities listed in the ROC Securities listed in other countries Mutual funds Financial assets at FVTOCI Investments in equity instruments Securities listed in the ROC Unlisted securities in the ROC Unlisted securities in other countries Financial liabilities at FVTPL Derivative financial liabilities December 31, 2018 Financial assets at FVTPL Derivative financial assets Securities listed in the ROC Securities listed in other countries Mutual funds	Level 1 $ - 126,454 62,316 1,265,588 $ 1,454,358 $ 1,250,723 - - $ 1,250,723 $ - Level 1 $ - 202,622 5,270 1,885,462 $ 2,093,354	Level 2 $ 20,042 - - - $ 20,042 $ - - - $ - $ 1,421 Level 2 $ 5,198 - - - $ 5,198	Level 3 $ - - - - $ - $ - 8,230 132,299 $ 140,529 $ - Level 3 $ - - - - $ -	Total $ 20,042 126,454 62,316 1,265,588 $ 1,474,400 $ 1,250,723 8,230 132,299 $ 1,391,252 $ 1,421 Total $ 5,198 202,622 5,270 1,885,462 $ 2,098,552 (Continued)

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Financial assets at FVTOCI Investments in equity instruments Securities listed in the ROC Unlisted securities in the ROC Unlisted securities in other countries Financial liabilities at FVTPL Derivative financial liabilities September 30, 2018 Financial assets at FVTPL Derivative financial assets Securities listed in the ROC Securities listed in other countries Mutual funds Financial assets at FVTOCI Investments in equity instruments Securities listed in the ROC Unlisted securities in the ROC Unlisted securities in other countries Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ 1,181,502 - - $ 1,181,502 $ - Level 1 $ - 205,673 8,276 1,703,281 $ 1,917,230 $ 1,515,840 - - $ 1,515,840 $ -	Level 2 $ - - - $ - $ 6,139 Level 2 $ 7,824 - - - $ 7,824 $ - - - $ - $ 1,060	Level 3 $ - 8,622 110,143 $ 118,765 $ - Level 3 $ - - - - $ - $ - 8,968 109,420 $ 118,388 $ -	Total $ 1,181,502 8,622 110,143 $ 1,300,267 $ 6,139 (Concluded) Total $ 7,824 205,673 8,276 1,703,281 $ 1,925,054 $ 1,515,840 8,968 109,420 $ 1,634,228 $ 1,060

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

48 -
2) Reconciliation of Level 3 fair value measurements of financial instruments

Financial assets Balance at January 1, 2019 Reclassification Recognized in other comprehensive income Balance at September 30, 2019		Financial Assets at FVTOCI	Financial Assets at FVTOCI
		Investments in Equity Instruments
		For the Nine Months Ended September 30
		2019 $ 118,765 21,764 $ 140,529	2018 $ - 89,893 28,495 $ 118,388

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

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

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

The fair values of unlisted equity securities - ROC were under the asset approach. In this approach, the fair value of net assets was used to capture the present value of the expected future economic benefits.

b. Categories of financial instruments

	September 30,	September 30,	December 31,	December 31,	September 30,
		2019		2018	2018
Financial assets
FVTPL
Mandatorily at FVTPL	$	1,474,400	$	2,098,552	1,925,054
Financial assets at amortized cost (Note 1)		15,198,530		15,187,794	13,676,148
Financial assets at FVTOCI
Equity instruments		1,391,252		1,300,267	1,634,228
Financial liabilities
FVTPL
Mandatorily at FVTPL		1,421		6,139	1,060
Financial assets at amortized cost (Note 2)		9,125,401		9,616,094	9,909,136

Note 1: The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, financial assets at amortized cost - current, notes receivable, trade receivables, trade receivables from related parties, other receivables and other receivables from related parties.

49 -
Note 2: The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, notes payable and trade payables, other payables, dividends payable, 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, borrowings, and lease liabilities. The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, and liquidity risk.

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

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 exposed to foreign currency risk at the end of the reporting period, refer to Note 7.

Sensitivity analysis

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

50 -

The following table details the Group’s sensitivity to a 5% increase in New Taiwan dollars (i.e., the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 5%. The sensitivity analysis included only outstanding foreign currency denominated monetary items and foreign exchange forward contracts designated as cash flow hedges, and adjusts their translation at the end of the reporting period for a 5% change in exchange rates. The range of the sensitivity analysis included cash and cash equivalents, trade receivables and trade payables. A positive number below indicates an increase in pre-tax profit associated with 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 Nine Months Ended September 30 2019 2018 $ 39,879 (Note 1) $ 97,310 (Note 1)	Euro Impact For the Nine Months Ended September 30 2019 2018 $ 61,863 (Note 2) $ 88,042 (Note 2)	Renminbi Impact
			For the Nine Months Ended September 30
			2019 2018 $ 68,690 (Note 3) $ 48,916 (Note 3)

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

The Group is exposed to interest rate risk because entities in the Group maintain both floating and fixed interest rates of bank deposits and borrowings. 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 carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rate fluctuations at the end of the reporting period were as follows:

	September 30,	December 31,	September 30,	September 30,
	2019	2018		2018
Fair value interest rate risk
Financial assets	$ 1,481,387	$ 1,363,564	$	295,184
Financial liabilities	172,800	-		26,099
Cash flow interest rate risk
Financial assets	3,099,449	4,527,415		4,110,985
Financial liabilities	171,484	142,991		73,209

51 -

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 liabilities outstanding at the end of the reporting period was outstanding for the whole year. A 50-basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2019 and 2018 would have increased by $10,980 thousand and $15,142 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 and borrowings.

c) Other price risk

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

Sensitivity analysis

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

If equity prices had been 1% higher, pre-tax profit for the nine months ended September 30, 2019 and 2018 would have increased by $1,888 thousand and $2,139 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the nine months ended September 30, 2019 and 2018 would have increased by $13,913 thousand and $16,342 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI. Had equity prices been 1% lower for the same year, the pre-tax profit and other comprehensive income would have decreased by the same respective amounts.

The Group’s sensitivity toward equity prices is lower this period mainly because stock prices fell in the current period.

2) Credit risk

Credit risk refers to the risk that a 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.

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.

52 -

3) Liquidity risk

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

The Group relies on bank borrowings as a significant source of liquidity. As of September 30, 2019, December 31, 2018 and September 30, 2018, the Group had available unutilized short-term bank loan facilities set out in section (c) below.

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

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

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

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

September 30, 2019

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing liabilities $ 5,274,378 Lease liabilities 160 Variable interest rate liabilities 60,352 Fixed interest rate liabilities 44 $ 5,334,934	1-3 Months $ 2,184,044 3,277 569 172,889 $ 2,360,779	Over 3 Months to 1 Year $ 1,322,695 196,056 68,839 57,611 $ 1,645,201	Over 1 Year $ - 292,140 53,125 - $ 345,265

Additional information about the maturity analysis for lease liabilities

Lease liabilities	Less than 1 Year $ 199,493	1-5 Years $ 230,458	5-10 Years 10-15 Years 15-20 Years $ 61,682 $ - $ -	20+ Years $ -

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December 31, 2018

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing liabilities $ 7,036,567 Variable interest rate liabilities 337 $ 7,036,904 September 30, 2018 On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing liabilities $ 4,426,533 Variable interest rate liabilities 176 Fixed interest rate liabilities 43 $ 4,426,752	1-3 Months $ 1,601,148 20,649 $ 1,621,797 1-3 Months $ 4,011,039 352 85 $ 4,011,476	Over 3 Months to 1 Year $ 835,388 70,407 $ 905,795 Over 3 Months to 1 Year $ 1,372,256 9,683 8,656 $ 1,390,595	Over 1 Year $ - 67,039 $ 67,039 Over 1 Year $ - 66,953 19,523 $ 86,476

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

b) Liquidity and interest rate risk 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 contractual gross cash inflows and outflows on derivative instruments that require gross settlement.

September 30, 2019

On Demand or Less than 1 Month 1-3 Months Over 3 Months to 1 Year Gross settled Foreign exchange forward contracts Inflows $ 320,475 $ 456,040 $ 50,501 Outflows 312,180 446,740 49,475 $ 8,295 $ 9,300 $ 1,026	Total $ 827,016 808,395 $ 18,621

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December 31, 2018

On Demand or
Less than
1 Month
1-3 Months
Over 3 Months
to 1 Year
Total
Gross settled
Foreign exchange
forward contracts
Inflows
$ 245,998
$ 410,248
$ 205,677
$ 861,923
Outflows

245,440

410,296

207,128

862,864
$ 558
$ (48)
$ (1,451)
$ (941)
September 30, 2018
On Demand or
Less than
1 Month
1-3 Months
Over 3 Months
to 1 Year
Total
Gross settled
Foreign exchange
forward contracts
Inflows
$ 294,823
$ 423,533
$ 248,080
$ 966,436
Outflows

293,516

420,996

245,160

959,672
$ 1,307
$ 2,537
$ 2,920
$ 6,764
Financing facilities
September 30,
2019
December 31,
2018
September 30,
2018
Unsecured bank overdraft facilities
reviewed annually and payable at
call:
Amount used
$ 297,878
$ 67,581
$ -
Amount unused

6,911,702

3,955,919

4,007,300
$ 7,209,580
$ 4,023,500
$ 4,007,300
Secured bank overdraft facilities:
Amount used
$ 46,406
$ 55,410
$ 99,308

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30. TRANSACTIONS WITH RELATED PARTIES

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

a. Names and categories of related parties

Name Axiomtek Co., Ltd. AIMobile Co., Ltd. Deneng Scientific Research Co., Ltd. Jan Hsiang Electronics Co., Ltd. Winmate Inc. AzureWave Technologies, Inc. i-Link Co., Ltd. Mildex Optical Inc. Nippon RAD Inc. Shanghai Yanle Co., Ltd. Information Technology Total Services Co., Ltd. Hwacom Systems Inc. Advantech Foundation K&M Investment Co., Ltd. AIDC Investment Corp.	Related Party Category
	Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Other related party Other related party Other related party

b. Sales of goods

Related Party Categories/Name Associates	For the Three Months Ended September 30 2019 2018 $ 19,546 $ 26,070	For the Three Months Ended September 30 2019 2018 $ 19,546 $ 26,070	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 19,546		2019 $ 66,469	2018 $ 83,517

c. Purchases of goods

Related Party For the Three Months Ended September 30 Categories/Name 2019 2018 Associates $ 35,588 $ 53,906 Receivables from related parties (excluding loans to related parties) Line Items Related Party Categories/Name September 30, 2019 Trade receivables from related parties Associates $ 46,966	For the Nine Months Ended September 30
	2019 2018 $ 128,354 $ 106,230 December 31, 2018 September 30, 2018 $ 18,969 $ 21,232

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

The outstanding trade receivables from related parties are unsecured. For the nine months ended September 30, 2019 and 2018, no impairment loss was recognized for trade receivables from related parties.

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e. Other receivables from related parties

	Related Party	September 30,	September 30,	December	December	31,	September 30,	September 30,
Line Items	Categories/Name		2019		2018			2018
Other receivables from	Associates	$	-	$		-	$	98
related parties	Other related parties		1,135			-		-
		$	1,135	$		-	$	98

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

	Related Party	September 30,	September 30,	December	December	31,	September	September	30,
Line Items	Categories/Name		2019		2018			2018
Trade payables	Associates	$	24,732	$	27,653		$	39,676
Other liabilities	Other related parties	$	4,270	$		-	$		-

The outstanding trade payables to related parties are unsecured.

g. Prepayments to related parties

	Related Party	September 30,	December	December	31,	September	September	30,
Line Items	Categories/Name	2019		2018			2018
Prepayments to related	Associates	$ 33,571	$		-	$		-
parties

h. Other transactions with related parties

Related Party Category/Name Selling and marketing expenses Associates Research and development expenses Associates	Operating Expenses	Operating Expenses	Operating Expenses	Operating Expenses	Operating Expenses
	For the Three Months Ended September 30 2019 2018 $ 100 $ - $ 295 $ 806		For the Nine Months Ended September 30
		2019 $ 100 $ 295		2019 $ 134 $ 608	2018 $ - $ 3,178

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

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Rental income Other related parties Others Other related parties	Other Income	Other Income	Other Income	Other Income	Other Income
	For the Three Months Ended September 30 2019 2018 $ 15 $ 15 $ 676 $ 676		For the Nine Months Ended September 30
		2019 $ 15 $ 676		2019 $ 45 $ 2,027	2018 $ 45 $ 2,027

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.

i. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Share-based payments	For the Three Months Ended September 30 2019 2018 $ 11,290 $ 11,794 11 50 8,813 8,393 $ 20,114 $ 20,237	For the Three Months Ended September 30 2019 2018 $ 11,290 $ 11,794 11 50 8,813 8,393 $ 20,114 $ 20,237	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 11,290 11 8,813 $ 20,114		2019 $ 33,869 32 29,635 $ 63,536	2018 $ 35,381 150 22,157 $ 57,688

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

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

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

	September	September	30,	December	December	31,	September 30,
		2019			2018		2018
Pledged deposits (classified as financial assets at
amortized cost)	$		-	$		-	$ 28,912
Property, plant and equipment		64,584			67,068		67,068
	$	64,584		$	67,068		$ 95,980

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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 the respective functional currencies were as follows:

September 30, 2019

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 126,459 31.040 (USD:NTD) RMB 560,302 4.3500 (RMB:NTD) EUR 27,820 33.950 (EUR:NTD) USD 28,257 7.1356 (USD:RMB) Financial liabilities Monetary items USD 91,491 31.040 (USD:NTD) USD 38,528 7.1356 (USD:RMB) RMB 271,299 4.3500 (RMB:NTD)	Carrying Amount $ 3,925,287 2,437,314 944,489 877,095 $ 8,184,185 $ 2,839,881 1,195,902 1,180,151 $ 5,215,934

December 31, 2018

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 211,836 30.715 (USD:NTD) RMB 493,302 4.4720 (RMB:NTD) EUR 24,059 35.200 (EUR:NTD) USD 15,998 6.8683 (USD:RMB) Financial liabilities Monetary items USD 142,257 30.715 (USD:NTD) RMB 246,686 4.4720 (RMB:NTD) USD 29,534 6.8683 (USD:RMB)	Carrying Amount $ 6,506,543 2,206,044 846,877 491,378
	$ 10,050,842
	$ 4,369,424 1,103,178 907,135
	$ 6,379,737

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September 30, 2018

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 210,366 30.525 (USD:NTD) RMB 528,545 4.4360 (RMB:NTD) EUR 44,097 35.480 (EUR:NTD) USD 18,191 6.8812 (USD:RMB) Financial liabilities Monetary items USD 135,127 30.525 (USD:NTD) RMB 351,962 4.4360 (RMB:NTD) EUR 3,968 35.480 (EUR:NTD) USD 31,174 6.8812 (USD:RMB)	Carrying Amount $ 6,421,422 2,344,626 1,564,562 555,281 $ 10,885,891 $ 4,124,572 1,561,303 140,785 951,589 $ 6,778,249

For the three months and nine months ended September 30, 2019 and 2018, realized and unrealized net foreign exchange gains (losses) were $(75,968) thousand, $(62,587) thousand, $5,983 thousand and $(19,942) 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 or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (Table 4)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 5)
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8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 6)
9) Trading in derivative instruments (Notes 7 and 29)
10) Significant transactions between the Company and its subsidiaries (Table 9)
11) Name, locations, and other information of investees (Table 7)
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 (“CODM”) and for the assessment of segment performance, business analysis, and the resource deployment judgment. The Group’s segment information disclosed is as follows:

a. Industrial internet of things services (IIoT): Focused on the market of industrial internet-of-things;
b. Embedded board and design-in services (EIoT): Provision of services involving embedded boards, systems and peripheral hardware and software;
c. Allied design manufacture services (AlliedDMS): Including Networks and Communications, data acquisition and control, and provision of customized collaboration design and services;
d. Intelligent services (SIoT): Provision of services involving digital logistic, digital healthcare and intelligent retail;
e. Global customer services (AGS& APS): Provision of services involving global repair, technical support and warranty.

The 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; and
b. The nature of the products and production processes are similar.
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Segment Revenue and Results

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

Industrial Interest of Things Services (IIoT) For the nine months ended September 30, 2019 Revenue from external customers $ 12,284,993 Inter-segment revenue - Segment revenue $ 12,284,993 Eliminations $ - Consolidated revenue - Segment income $ 2,975,066 Other revenue Other unamortized expense Other income and expense Finance costs Share of profits of associates accounted for using the equity method Profit before tax (continuing operations) For the nine months ended September 30, 2018 Revenue from external customers $ 12,637,083 Inter-segment revenue - Segment revenue $ 12,637,083 Eliminations $ - Consolidated revenue - Segment income $ 2,827,027 Other revenue Unallocated amount Other income and expense Finance costs Share of profits of associates for using the equity method Profit before tax (continuing operations)	Embedded Boards and Design-in Services (EIoT) $ 10,374,148 - $ 10,374,148 $ - - $ 1,785,822 $ 9,853,642 - $ 9,853,642 $ - - $ 1,609,397	Allied Design Manufacture Services (Allied DMS) $ 9,700,959 - $ 9,700,959 $ - - $ 1,604,653 $ 5,855,891 - $ 5,855,891 $ - - $ 888,505	Intelligent Services (SIoT) $ 3,398,612 - $ 3,398,612 $ - - $ 323,427 $ 3,215,354 - $ 3,215,354 $ - - $ 195,824	Global Customer Services (AGS & APS) $ 4,855,417 - $ 4,855,417 $ - - $ 657,941 $ 4,731,805 - $ 4,731,805 $ - - $ 534,013	Others $ 44,757 - $ 44,757 $ - - $ - $ 66,519 - $ 66,519 $ - - $ (4,045)	Total $ 40,658,886 - 40,658,886 - 40,658,886 7,346,909 194,811 (523,316 ) 130,460 (20,068 ) 66,320 $ 7,195,116 $ 36,360,294 - 36,360,294 - 36,360,294 6,050,721 273,221 (564,711 ) 107,763 (3,122 ) 72,781 $ 5,936,653

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 NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note A)	Lender	Borrower	Financial Statement Account	Related Parties	Credit Line (Note H)	Credit Line (Note H)	Actual Amount Borrowed	Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limits
					Highest Balance for the Period	Ending Balance	Ending Balance						Item	Value
1	ACZ	Conel Automation (Note G)	Trade receivables - related parties	Yes	$ 16,668 (CZK 12,000 thousand )	$ -	$ -	2.00	Short-term financing	$ -	Financing need	$ -	None	None	$ 104,183 (Note C)	$ 104,183 (Note C)
2	ACZ	Conel Automation (Note G)	Trade receivables - related parties	Yes	13,196 (CZK 9,500 thousand )	-	-	2.00	Short-term financing	-	Financing need	-	None	None	104,183 (Note C)	104,183 (Note C)
3	ACZ	Conel Automation (Note G)	Trade receivables - related parties	Yes	4,119 (CZK 3,000 thousand )	-	-	2.00	Short-term financing	-	Financing need	-	None	None	104,183 (Note C)	104,183 (Note C)
4	AAC (BVI)	ATJ	Trade receivables - related parties	Yes	177,000 (JPY 600,000 thousand )	172,800 (JPY 600,000 thousand )	-	0.55	Short-term financing	-	Financing need	-	None	None	2,707,954 (Note D)	2,707,954 (Note D)
5	LNC	LNC Dong Guan	Trade receivables - related parties	Yes	30,000	30,000	-	-	Short-term financing	-	Financing need	-	None	None	32,308 (Note E)	129,232 (Note E)
6	Advantech Corporate Investment	The Company	Trade receivables - related parties	Yes	1,000,000	1,000,000	600,000	1	Short-term financing	-	Financing need	-	None	None	1,288,917 (Note F)	1,288,917 (Note F)

Note A: Investee companies are numbered sequentially from 1.

Note B: Translated based on the exchange rates as of September 30, 2019: CZK1=NT$1.312 and JPY1=NT$0.288.

Note C: The financing limit for each borrower and for the aggregate financing were both 40%, of ACZ’s net asset values, and were supervised by the Company.

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

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

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

Note G: Conel Automation was disposed of during the current period.

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

Note I: All intercompany financing has been eliminated on consolidation.

63 -

TABLE 2

ADVANTECH CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (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 Amount Borrowed	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Collateral/ Guarantee Amounts Allowable (Note B)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Company	ANA AAC (BVI) Advantech Corporate Investment AJP ATJ AKST AKMC ACISM SIoT (Cayman) B+B ABR A-SIoT AVN Cermate (Taiwan) Cermate (Shenzhen) ACZ	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085	$ 948,000 (US$ 30,000) 316,000 (US$ 10,000) 316,000 (US$ 10,000) 316,000 (US$ 10,000) 295,000 (JPY 1,000,000) 189,600 (US$ 6,000) 189,600 (US$ 6,000) 158,000 (US$ 5,000) 316,000 (US$ 10,000) 158,000 (US$ 5,000) 47,400 (US$ 1,500) 35,380 (EUR 1,000) 31,600 (US$ 1,000) 31,600 (US$ 1,000) 31,600 (US$ 1,000) 15,800 (US$ 500)	$ 931,200 (US$ 30,000) 310,400 (US$ 10,000) 310,400 (US$ 10,000) 310,400 (US$ 10,000) 288,000 (JPY 1,000,000) 186,240 (US$ 6,000) 186,240 (US$ 6,000) 155,200 (US$ 5,000) 310,400 (US$ 10,000) 155,200 (US$ 5,000) 46,560 (US$ 1,500) 33,950 (EUR 1,000) 31,040 (US$ 1,000) 31,040 (US$ 1,000) 31,040 (US$ 1,000) 15,520 (US$ 500)	$ - - - 57,600 (US$ 1,849) 115,200 (JPY 400,000) 65,078 (US$ 2,089) - - - - - - - - - -	$ - - - - - - - - - - - - - - - -	3.06 1.02 1.02 1.02 0.94 0.61 0.61 0.51 1.02 0.51 0.15 0.11 0.10 0.10 0.10 0.05	$ 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256	Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y	N N N N N N N N N N N N N N N N	N N N N N N Y N N N N N N N Y N

(Continued)

64 -

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 Amount Borrowed	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Collateral/ Guarantee Amounts Allowable (Note B)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
		ATR Advanixs Corp. AdvanPOS AAU Advantech Intelligent Service AKR	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085 3,048,085	$ 15,800 (US$ 500) 15,800 (US$ 500) 15,800 (US$ 500) 6,320 (US$ 200) 4,740 (US$ 150) 1,580 (US$ 50)	$ 15,520 (US$ 500) 15,520 (US$ 500) 15,520 (US$ 500) 6,208 (US$ 200) 4,656 (US$ 150) 1,552 (US$ 50)	$ - - - - - -	$ - - - - - -	0.05 0.05 0.05 0.02 0.02 0.01	$ 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256 9,144,256	Y Y Y Y Y Y	N N N N N N	N N N N N N

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

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

Note C: The exchange rates as of September 30, 2019 were US$1=NT$31.040, EUR1=NT$33.95, and JPY1=NT$0.288.

Note D: The latest net equity is from the financial statements for the nine months ended September 30, 2019.

(Concluded)

65 -

TABLE 3

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		September 30, 2019	September 30, 2019		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
The Company Advantech Corporate Investment Advanixs Corporate AiST AdvanPOS SIoT (Cayman) Advantech Innovative Design Co., Ltd.	Share ASUSTek Computer Inc. Allied Circuit Co., Ltd. Fund Mega Diamond Money Market Share Contec Allied Circuit Co., Ltd. BroadTec System Inc. BiosenseTek Corp. Juguar Technology Taiwan DSC PV Ltd., Fund Taishin 1699 Money Market FSITC Taiwan Money Market Fund Jih Sun Money Market Mega Diamond Money Market Fund Jih Sun Money Market Fund Mega Diamond Money Market Fund FSITC Taiwan Money Market Taishin 1699 Money Market Fund Capital Money Market	- - - - - - - - - - - - - - - - - -	Financial assets at fair value through other comprehensive income or loss - non-current Same as above Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at fair value through other comprehensive income or loss - non-current Same as above Same as above Same as above Same as above Financial assets at FVTPL - current Same as above Same as above Same as above Financial assets at FVTPL - current Same as above Same as above Same as above Same as above	4,739,461 1,200,000 26,412,587 15,500 2,501,000 225,000 37,500 500,000 1,600 14,344,359 13,042,401 6,266,221 2,954,549 1,311,144 1,110,468 6,267,324 10,548,368 625,517	$ 978,699 88,200 332,062 6,035 183,824 3,922 - 4,308 - 194,573 200,085 93,087 37,145 19,477 13,961 96,148 143,082 10,118	0.64 2.41 - 0.23 5.03 7.50 1.79 16.67 3.20 - - - - - - - - -	$ 978,699 88,200 332,062 6,035 183,824 3,922 - 4,308 - 194,573 200,085 93,087 37,145 19,477 13,961 96,148 143,082 10,118	Note A Note A Note B Note A Note A Note C Note C Note C Note C Note B Note B Note B Note B Note B Note B Note B Note B Note B

(Continued)

66 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		September 30, 2019	September 30, 2019		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Cermate (Taiwan) AiSC Yun Yan, Wu-Lian Co., Ltd. Huan Yan, Jhih-lian Co., ACI IOT Investment Fund-I Corporation AIH	Fund Mega Diamond Money Market Fund Shanghai Shangchuang Xinwei Investment Management Co., Ltd. Share Jama Pro Co., Ltd. Fund FSITC Money Market Fund FSITC Money Market Share GSD Technologies Co., Ltd. Amazing Microelectronic Corp. WT Microelectronics Co., Ltd. E Ink Holdings Inc. Lelon Electronics Corp. Yuan High-Tec Development Co., Ltd. eGalax_eMPIA Technology Inc. Nuvoton Technology Corp. ISI TRMB ALGN TPV Technology Ltd. China Mobile Ltd. Fund Mega Diamond Money Market Fund Capital Money Market	- - - - - - - - - - - - - - - - - - - -	Financial assets at FVTPL - current Financial assets at fair value through other comprehensive income or loss - non-current Same as above Financial assets at FVTPL - current Same as above Financial assets at FVTPL - 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 Same as above Same as above Same as above Same as above Same as above Same as above	1,446,076 - 583,300 27,649 54,616 310,000 75,142 495,000 500,000 250,000 236,000 293,000 395,000 640 5,700 455 1,164,000 74,000 7,157,110 185,571	$ 18,180 130,501 1,798 4,945 9,768 22,165 7,063 19,181 14,075 10,500 20,296 13,976 19,198 10,726 6,867 2,555 17,138 18,995 89,980 3,001	- 8.30 10.00 - - 0.09 0.09 0.01 0.04 0.19 0.70 0.49 0.19 - - - 0.05 - - -	$ 18,180 130,501 1,798 4,945 9,768 22,165 7,063 19,181 14,075 10,500 20,296 13,976 19,198 10,726 6,867 2,555 17,138 18,995 89,980 3,001	Note B Note C Note C Note B Note B Note A Note A Note A Note A Note A Note A Note A Note A Note A Note A Note A Note A Note A Note B Note B

Note A: Market value was based on the closing price on September 30, 2019

Note B: Market value was based on the net asset values of the open-ended mutual funds on September 30, 2019.

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

(Concluded)

67 -

TABLE 4

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED OR DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (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
					Number of Shares	Amount (Cost)	Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares	Amount (Cost)
The Company Advantech Corporate Investment	Fund Mega Diamond Money Market Capital Money Market FSITC Money Market FSITC Taiwan Money Market Share ATJ Fund FSITC Money Market Taishin 1699 Money Market	Financial assets at FVTPL Financial assets at FVTPL Financial assets at FVTPL Financial assets at FVTPL Investments accounted for using the equity method Financial assets at FVTPL Financial assets at FVTPL	- - - - - - -	- - - - Subsidiary - -	97,030,420 8,702,880 - - - - -	$ 1,212,819 140,000 - - - - -	23,917,913 30,942,241 3,639,593 120,769,847 500,000 4,596,707 64,666,435	$ 300,002 500,000 650,003 1,850,005 323,130 820,004 875,004	94,535,746 39,645,121 3,639,593 120,769,847 - 4,596,707 50,322,076	$ 1,185,000 640,756 650,595 1,851,498 - 821,330 682,000	$ 1,181,637 640,000 650,003 1,850,005 - 820,004 680,680	$ 3,363 756 592 1,493 - 1,326 1,320	26,412,587 - - - 500,000 - 14,344,359	$ 331,184 - - - 323,130 - 194,324

68 -

TABLE 5

ADVANTECH CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

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

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details		Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Company AKMC AAU B+B AEU AJP ACN AKR ANA ASG Advanixs Corp. A-SIoT	AAU B+B AEU AJP ACN AKR ANA ASG Advanixs Corporate A-SIoT SIoT (Cayman) AMY AKMC The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company	Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Purchase Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase	$ 182,015 195,715 3,920,513 713,390 6,022,307 744,061 7,449,519 217,523 502,498 203,421 918,075 107,992 (9,183,110) 9,183,110 (182,015) (195,715) (3,920,513) (713,390) (6,022,307) (744,061) (7,449,519) (217,523) (502,498) (203,421)	0.66 0.71 14.21 2.59 21.83 2.70 27.00 0.79 1.82 0.74 3.33 0.39 74.93 94.02 3.77 32.08 73.59 92.07 79.98 63.91 77.56 72.58 99.53 29.35	60-90 days 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 60-90 days 30 days after invoice date 30 days after invoice date 45 days after month-end Usual trade terms Usual trade terms 60-90 days 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 60-90 days 30 days after invoice date	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	$ 31,042 39,412 1,192,298 110,480 1,608,346 95,777 1,605,033 63,276 86,041 3,266 187,540 28,302 (1,943,604) 1,943,604 (31,042) (39,412) (1,192,298) (110,480) (1,608,346) (95,777) (1,605,033) (63,276) (86,041) (3,266)	0.44 0.56 16.80 1.56 22.66 1.35 22.62 0.89 1.21 0.05 2.64 0.40 38.97 94.06 64.10 61.52 77.03 82.06 82.88 52.66 81.79 73.71 99.33 6.17	Note A

(Continued)

69 -

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details		Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
SIoT (Cayman) AMY AKMC SIoT (Cayman) LNC ACZ SIoT (Cayman) ACN SIoT (Cayman) A-SIoT LNC Dong Guan Co., Ltd. AEU ANA	The Company The Company ACN SIoT (Cayman) A-SIoT LNC Dong Guan Co., Ltd. AEU AEU ANA AKMC AKMC SIoT (Cayman) LNC ACZ SIoT (Cayman) SIoT (Cayman)	Parent company Parent company Related enterprise Related enterprise Subsidiary Subsidiary Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Parent company Parent company Related enterprise Related enterprise Related enterprise	Purchase Purchase Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase	$ (918,075) (107,992) 292,702 178,723 169,438 262,838 176,673 353,097 726,209 (292,702) (178,723) (169,438) (262,838) (176,673) (353,097) (726,209)	54.11 10.74 3.00 1.83 11.33 76.46 69.57 23.60 48.54 3.89 10.53 27.47 1.10 0.04 0.07 0.08	Usual trade terms 45 days after month-end Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms	Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price	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	$ (187,540) (28,302) 58,878 52,894 31,683 228,381 40,972 57,607 85,550 (58,878) (52,894) (31,683) (228,381) (40,972) (57,607) (85,550)	68.98 90.86 20.33 18.27 423.74 93.98 78.47 24.82 36.86 3.03 19.46 59.88 0.95 0.03 0.04 0.04

Note A: Realized gain for the period was $221 thousand.

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

(Concluded)

70 -

TABLE 6

ADVANTECH CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

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

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
The Company AKMC LNC Advantech Corporate Investment	ACN AEU SIoT (Cayman) AJP AKMC ANA The Company LNC Dong Guan Co., Ltd. The Company	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company	$ 1,608,346 1,196,276 187,587 110,987 454,020 1,608,080 1,944,309 228,381 600,000	5.16 3.60 9.41 7.23 (Note B) 5.66 6.16 1.56 (Note C)	$ - - - - - - - - -	- - - - - - - - -	$ 469,799 154,842 - - 516,595 - 647,208 17,562 300,000	$ - - - - - - - - -

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

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

Note C: For financing purposes.

71 -

TABLE 7

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars/Foreign Currency)

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of September 30, 2019	as of September 30, 2019	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				September 30, 2019	December 31, 2018	Number of Shares	Percentage of Ownership (%)	Carrying Value
The Company AKR AJP Advantech Corporate Investment	AAC (BVI) ATC Advanixs Corporate Advantech Corporate Investment Axiomtek AdvanPOS LNC Jan Hsiang AMX AEUH ASG ATH AAU AJP AMY AKR ABR Advantech Innovative Design Co., Ltd. AiST B+B AIN AIMobile Co., Ltd. AKST Winmate AVN Nippon RAD ARU ATJ ATR AKST ATJ Cermate Taiwan Deneng CDIB Innovation Accelerator Co., Ltd. AzureWave Technologies, Inc.	BVI BVI Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Mexico Helmond, the Netherlands Techplace, Singapore Thailand Sydney, Australia Tokyo, Japan Malaysia Seoul, Korea Sao Paulo, Brazil Taipei, Taiwan Taipei, Taiwan Delaware, USA India Taipei, Taiwan Gangwon-do, Korea Taipei, Taiwan Hanoi, Vietnam Tokyo, Japan Moscow Nogatashi, Japan Turkey Gangwon-do, Korea Nogatashi, Japan Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan	Investment and management service Sale of industrial automation products Production and sale of industrial automation products Investment holding company Production and sale of industrial automation products Production and sale of POS system Production and sale of machines with computerized numerical control Electronic parts and components manufacturing Sale of industrial automation products Investment and management service Sale of industrial automation products Production of computers Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Product design Design, develop and sale of intelligent services Sale of industrial network communications systems Sale of industrial automation products Design and manufacture of industrial mobile systems Production and sale of intelligent medical display Embedded System Modules Sale of industrial automation products R&D of IoT intelligent system Production and sale of industrial automation products Production and sale of electronic and mechanical devices Wholesale of computers and peripheral devices Production and sale of intelligent medical display Production and sale of electronic and mechanical devices Manufacturing of electronic parts, computer, and peripheral devices Installment and sale of electronic components and software Investment holding company Wireless communication and digital image module manufacturing and trading	$ 2,332,397 998,788 226,000 2,900,000 249,059 266,192 304,865 3,719 4,922 1,219,124 27,134 47,701 40,600 15,472 35,140 73,355 43,216 10,000 81,837 1,968,044 19,754 180,000 83,313 540,000 76,092 251,915 23,822 323,130 58,482 55,579 184,649 71,500 18,095 150,000 578,563	$ 2,332,397 998,788 226,000 1,400,000 249,059 266,192 304,865 3,719 4,922 1,219,124 27,134 47,701 40,600 15,472 35,140 73,355 43,216 10,000 81,837 1,968,044 19,754 135,000 83,313 540,000 76,092 251,915 23,822 - - 55,579 - 71,500 18,095 150,000 578,563	74,623,834 33,850,000 10,000,000 300,000,000 20,537,984 1,000,000 19,230,000 655,500 - 25,961,250 1,450,000 51,000 500,204 1,200 2,000,000 600,000 1,794,996 1,000,000 1,000,000 230,467 3,999,999 18,000,000 69,740 12,000,000 8,100 850,000 500,000 500,000 260,870 22,023 286,100 5,500,000 658,000 15,000,000 29,599,000	100.00 100.00 100.00 100.00 25.77 100.00 64.10 28.50 100.00 100.00 100.00 51.00 100.00 100.00 100.00 100.00 80.00 100.00 100.00 60.00 99.99 45.00 76.00 16.62 60.00 16.08 100.00 50.00 60.00 24.00 28.61 55.00 39.69 17.86 19.65	$ 6,421,267 3,866,621 231,675 3,220,402 645,756 297,212 430,579 8,135 643 954,751 114,929 63,041 31,778 405,534 59,406 311,223 66,326 10,081 96,838 1,947,340 17,527 76,160 (37,335) 544,335 67,135 262,199 12,054 397,129 49,320 - 229,122 115,765 14,014 158,502 511,724	$ 538,970 282,566 38,547 72,711 388,194 (84) 1,543 440 429 108,983 30,865 15,624 (5,184) 68,291 15,560 51,074 12,663 36 1,066 (8,340) 2,186 (75,227) (11,218) 171,102 5,019 2,338 (11,100) 150,274 11,739 (11,218) 150,274 5,541 (216) 48,524 (138,662)	$ 534,106 270,031 41,841 72,485 100,055 (84) 971 125 429 111,866 30,865 7,968 (5,184) 68,291 15,560 51,074 10,130 36 1,066 (5,995) 2,186 (33,852) (11,254) 31,275 (2,986) 500 (11,100) 65,611 5,192 - 38,508 2,821 (86) 8,665 (27,253)	Subsidiary Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Subsidiary Subsidiary Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method

(Continued)

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Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of September 30, 2019	as of September 30, 2019	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				September 30, 2019	December 31, 2018	Number of Shares	Percentage of Ownership (%)	Carrying Value
ATC AAC (BVI) SIoT (Cayman) ANA AEUH ASG Cermate (Taiwan) LNC Better Auto B+B BBIE	Huan Yan, Jhih-Lian Co., Ltd. Yun Yan, Wu-Lian Co., Ltd. Nippon RAD i-Link Co., Ltd. DotZero Co., Ltd. Mildex Optiocal Inc. Information Technology Total Service Co., Ltd. ACI IOT Investment Fund-1 Corporation ACISM Hwacom Systems Inc. ATC (HK) ANA AAC (HK) SIoT (Cayman) A-SIoT AIH B+B AEU APL ATH AID LandMark Better Auto Famous Now BBIE IMC ACZ DMCC	Taipei, Taiwan Taipei, Taiwan Tokyo, Japan Taichung, Taiwan Taichung, Taiwan Kaohsiung, Taiwan Taipei, Taiwan Taipei, Taiwan Samoa Taipei, Taiwan Hong Kong Sunnyvale, USA Hong Kong Cayman Munich, Germany Taipei, Taiwan Delaware, USA Eindhoven, The Netherlands Warsaw, Poland Thailand Indonesia Samoa BVI Hong Kong Ireland Delaware, USA Czech Republic Dubai	Service plan for combination of related technologies of water treatment and applications of Internet of Things Industrial equipment Networking in Greater China R&D of IoT intelligent system Intelligent medical integration Intelligent metal processing integration Manufacturing of electronic parts Service of electronic information Investment holding company General investment Computer systems service Investment and management service Sale and fabrication of industrial automation products Investment and management service Design, development and sale of IoT intelligent system services Design, R&D and sale of industrial automation vehicles and related products Service of software Sale of industrial network communications systems Sale of industrial automation products Sale of industrial automation products Production of computers Sale of industrial automation products General investment General investment General investment Sale of industrial network communications systems Sale of industrial network communications systems Manufacturing automation Sale of industrial network communications systems	$ 5,000 5,000 49,733 9,237 4,900 202,948 147,444 238,000 18,214 357,119 1,212,730 504,179 539,146 US$ 50,000 522,719 7,700 1,328,004 431,963 14,176 7,537 4,797 28,200 244,615 US$ 4,000 US$ 39,481 - - -	$ 5,000 5,000 49,733 10,067 4,900 202,948 - - - - 1,212,730 504,179 539,146 US$ 50,000 522,719 - 1,328,004 431,963 14,176 7,537 4,797 28,200 244,615 US$ 4,000 US$ 39,481 - - -	500,000 500,000 154,310 917,000 490,000 15,710,000 5,084,273 23,800,000 1 19,400,000 57,890,679 10,952,606 15,230,001 30,000,000 1 770,000 153,644 32,315,215 6,350 49,000 300,000 972,284 7,900,000 1 - - - -	50.00 50.00 2.92 22.93 49.00 15.00 20.00 79.30 100.00 20.00 100.00 100.00 100.00 100.00 100.00 70.00 40.00 100.00 100.00 49.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	$ 4,991 2,599 45,512 7,331 2,499 195,963 142,948 250,699 15,496 357,084 3,933,971 2,914,480 2,055,477 1,804,134 532,391 6,476 1,311,439 1,102,979 33,016 61,718 12,440 107,530 19,639 27,651 88,399 - 260,442 2,343	$ 39 (933) 2,338 (8,848) (4,346) (64,139) 43,018 16,007 (1,979) (77,626) 282,662 168,231 219,202 162,164 (1,223) (1,576) (8,340) 106,314 3,100 15,624 3,853 13,599 (449) (454) (11,880) - 14,482 636	$ 20 (467) - (2,230) (2,130) (9,594) 3,523 12,699 (1,979) (35) 270,126 167,608 221,717 158,292 1,660 (1,576) (3,336) 106,314 3,100 7,656 3,853 12,998 (314) (454) (11,880) - 14,482 636	Subsidiary Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Subsidiary Subsidiary Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary 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), AKMC, AEUH, AEU, Advantech Corporate Investment, and B+B.

Note B: All intercompany gains and losses from investments have been eliminated on consolidation

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

(Concluded)

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TABLE 8

ADVANTECH CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company Name	Main Businesses and Products	Total Amount of Paid-in Capital	Investment Type (e.g., Direct or Indirect)	Accumulated Outflow of Investment from Taiwan as of January 1, 2019	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of September 30, 2019	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of September 30, 2019	Accumulated Inward Remittance of Earnings as of September 30, 2019
					Outflow	Inflow
Advantech Technology (China) Company Ltd. (“AKMC”) Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd. (“ACN”) Shanghai Advantech Intelligent Services Co., Ltd. (“AiSC”) Xi’an Advantech Software Ltd. (“AXA”) LNC Dong Guan Co., Ltd. Shenzhen Cermate Technologies Inc. Cermate Technologies (Shanghai) Inc.	Production and sale of components of industrial automation products Sale of industrial automation products Production and sale of industrial automation products Development and production of software products Production and sale of industrial automation products Production and sale of Human Machine Interface Sale of Human Machine Interface	US$ 43,750 thousand (Note E) US$ 4,230 thousand US$ 8000 thousand US$ 1,000 thousand US$ 4,000 thousand RMB 2,000 thousand US$ 520 thousand	Indirect Indirect Indirect Indirect Indirect Indirect Indirect	$ 1,157,792 (US$ 37,300 thousand) 165,505 (US$ 5,332 thousand) 248,320 (US$ 8,000 thousand) (Note C) 99,142 (US$ 3,194 thousand) 9,560 (US$ 308 thousand) 17,755 (US$ 572 thousand)	$ - - - - - - -	$ - - - - - - -	$ 1,157,792 (US$ 37,300 thousand) 165,505 (US$ 5,332 thousand) 248,320 (US$ 8,000 thousand) (Note C) 99,142 (US$ 3,194 thousand) 9,560 (US$ 308 thousand) 17,755 (US$ 572 thousand)	$ 290,117 236,224 (18,152) 29 (454) 12,213 2,607	100 100 100 100 100 90 100	$ 277,582 238,777 (18,189) 29 (319) 10,390 2,607	$ 3,933,971 1,401,062 627,130 29,100 19,209 75,886 32,566	$ - 348,641 (US$ 11,232 thousand) - - - 41,082 (US$ 717 thousand) (RMB 4,328 thousand) -

(Continued)

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Investee Company Name	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Investment Type (e.g., Direct or Indirect)	Investment Type (e.g., Direct or Indirect)	Accumulated Outflow of Investment from Taiwan as of January 1, 2019	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of September 30, 2019	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of September 30, 2019	Accumulated Inward Remittance of Earnings as of September 30, 2019
							Outflow	Inflow
Advantech Service-IoT (Shanghai) Co., Ltd. (“SIoT (China)”) Shanghai Yanlo Co., Ltd. (“Yanlo”) GSD Environmental Technology Co., Ltd. (“GSD”)	Development, consulting and services in intelligent technology Retail of intelligent technology Development, consulting and services in environmental technology		RMB 15,000 thousand RMB 2,200 thousand RMB 10,000 thousand	Indirect Other Indirect		(Note F) (Note G) 18,096 (US$ 583 thousand)	$ - - -	$ - - -	(Note F) (Note G) 18,096 (US$ 583 thousand)	$ (20,132) (1,477) (4,947)	100 45 40	$ (20,132) (664) (1,979)	$ 38,942 3,642 15,496	$ - - -

Accumulated Investment in		Investment Amounts
Mainland China as of September 30, 2019		Authorized by the Investment Commission, MOEA			Allowable Limit on Investment
$1,722,379 (US$55,489 thousand) (Note D)		$2,951,128 (US$95,075 thousand)			$18,578,188 (Note J)

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, AEU, Advantech Corporate Investment, and B+B.

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 5.

Note C: Remittance by ACN.

Note D: Included is the outflow of US$200 thousand on the investment in Yan Hua (Guang Zhou Bao Shui Qu) Co., Ltd. located in a free trade zone in Guangzhou. When this investee was liquidated in September 2005, the outward investment remittance ceased upon the approval of the Ministry of Economic Affairs (MOEA). For each future capital return, the Company will apply to the MOEA for the approval of the return as well as reduce the accumulated investment amount by the return amount.
Note E: AKMC’s paid-in capital, including capital increase via retained earnings, amounted to US$6,450 thousand.

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

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

Note H: Translated using the exchange rates of US$1=NT$31.040 and RMB1=NT$4.350.

Note I: The maximum allowable limit on investments was at 60% of the consolidated net asset value of the Company.

Note J: All intercompany gains and losses from investments have been eliminated on consolidation.

(Concluded)

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TABLE 9

ADVANTECH CO., LTD. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS BETWEEN ADVANTECH CO., LTD. AND ITS SUBSIDIARIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
0	Advantech Co., Ltd.	AAC (HK) AAU AAU AAU AAU ABR ABR ABR ABR ACN ACN ACZ ACZ ACZ ACZ AEU AEU AEU AEU AID AID AID AID AIN AIN AJP AJP AJP AJP AKMC AKMC AKR AKR AKR AKR	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Receivables from related parties Sales revenue Sales revenue Receivables from related parties Other revenue Other receivables from related parties	$ 24 182,015 31,042 1,659 416 93,757 13,216 2,945 2,133 6,022,307 1,608,346 1,828 412 125 18 3,920,513 1,192,298 18,349 3,978 22,385 10,494 1,033 425 65,799 16,678 713,390 110,480 4,565 507 454,020 3 744,061 95,777 5,645 633	45 days EOM Normal 60-90 days Normal 60-90 days Normal 90 days EOM Normal 90 days EOM Normal 45 days EOM Normal 60 days EOM Normal Normal Normal 30 days EOM Normal 30 days EOM Normal 45 days after invoice date Normal 45 days after invoice date Normal 60 days EOM Normal 60-90 days Normal 60-90 days 45 days EOM Normal Normal 60 days after invoice date Normal 60 days after invoice date	- - - - - - - - - 15 4 - - - - 10 3 - - - - - - - - 2 - - - 1 - 2 - - -
							(Continued)

76 -

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		AKST AKST AMY AMY AMY AMY ANA ANA ANA ANA APL APL ARU ARU ASG ASG ASG ASG A-SIoT A-SIoT A-SIoT A-SIoT ATH ATH ATH ATH ATJ ATJ ATJ ATR ATR AVN AVN B+B B+B B+B B+B BBIE BBIE SIoT (Cayman) SIoT (Cayman) SIoT (Cayman) Cermate (Taiwan) Cermate (Taiwan) Cermate (Taiwan) Advantech Corporate Investment Advanixs Corp. Advanixs Corp.	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue Other receivables from related parties Other revenue Other receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Rental revenue Sales revenue Receivables from related parties	$ 9,334 4,617 107,992 28,302 1,417 316 7,449,519 1,605,033 11,640 3,047 16,188 2,389 322 308 217,523 63,276 1,842 617 203,421 3,266 2,223 214 93,949 6,435 1,502 154 1,981 246 19 55,645 9,522 52,259 11,913 195,715 39,412 3,314 750 767 176 918,075 187,540 47 210 14 2 27 502,498 86,041	Normal 30 days EOM Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM Normal 60-90 days Normal 60-90 days Normal 30 days after invoice date Normal 30 days after invoice date Normal 30 days after invoice date Normal 30 days after invoice date Normal 30 days EOM 30 days EOM Normal 45 days EOM Normal 45 days EOM Normal 60 days EOM Normal 60 days EOM Normal 45 days after invoice date Normal 30 days EOM 30 days EOM 30 days EOM Normal 30 days EOM Normal Normal 60-90 days	- - - - - - 18 4 - - - - - - 1 - - - 1 - - - - - - - - - - - - - - - - - - - - 2 - - - - - - 1 -

(Continued)

77 -

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		Advanixs Corp. Advanixs Corp. LNC LNC LNC	1 1 1 1 1	Rental revenue Other receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties	$ 450 7 441 64 20	Normal 60-90 days 60-90 days EOM Normal 60-90 days EOM	- - - - -
1	AAC (HK)	Advantech Co., Ltd.	2	Other revenue	6,116	Normal	-
2	AAU	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. ANA ANA	2 2 2 3 3	Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties	213 41 1 10 7	Normal 60-90 days 60-90 days Normal 30 days after invoice date	- - - - -
3	ABR	Advantech Co., Ltd. Advantech Co., Ltd.	2 2	Receivables from related parties Sales revenue	90 2	30 days after invoice date Normal	- -
4	ACN	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. AEU AEU AiSC AiSC AiSC AKMC AKMC AKR AMY ANA AXA SIoT (China) SIoT (China)	2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Sales revenue Other receivables from related parties Sales revenue Receivables from related parties	4,305 341 39 13,599 1,009 26,407 4,107 8 29,286 7,582 41 2 305 59 64,755 9,247	Normal 30 days EOM 30 days EOM Normal 30 days EOM Normal Immediate payment 60 days EOM Normal 60-90 days Normal Normal Normal 60 days EOM Normal 30 days EOM	- - - - - - - - - - - - - - - -
5	ACZ	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. AEU AEU AEU AEU ANA ANA APL B+B B+B	2 2 2 2 3 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Other 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 Sales revenue Sales revenue Receivables from related parties	25,126 2,200 78 3,098 40,972 176,673 3,996 594 3,275 8,857 9 35,526 4,420	Normal 45 days EOM 45 days EOM Normal 45 days EOM Normal Normal 45 days EOM 45 days EOM Normal Normal Normal 45 days EOM	- - - - - - - - - - - - -

(Continued)

78 -

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		Conel Automation Conel Automation	3 3	Other revenue Interest revenue	$ 316 314	45 days EOM Normal	- -
6	AEU	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. ACN ACZ ACZ AID AID AJP AKR AKR ANA ANA APL APL A-SIoT A-SIoT BBIE	2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Other receivables from related parties Other revenue Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties Receivables from related parties	19,217 1,282 62,962 140 308 41 26 5 5 19 249 1 10,028 602 2,407 401 15,311 6,024 91	Normal 30 days EOM 30 days EOM Normal Normal Normal 45 days EOM Normal 30 days after invoice date Normal Normal 30 days after invoice date Normal 30 days after invoice date Normal 30 days after invoice date Normal 30 days after delivery of goods 30 days after invoice date	- - - - - - - - - - - - - - - - - - -
7	AID	ASG ASG	3 3	Other revenue Receivables from related parties	1,537 96	Normal 45 days after invoice date	- -
8	AIN	Advantech Co., Ltd. Advantech Co., Ltd.	2 2	Receivables from related parties Other revenue	155 9	60 days EOM Normal	- -
9	AiSC	ACN ACN ACN AKMC SIoT (China) SIoT (China)	3 3 3 3 3 3	Rental revenue Receivables from related parties Sales revenue Other receivables from related parties Other revenue Sales revenue	14,608 243 321 70 2,239 10,178	Normal Immediate payment Normal 30 days EOM Normal Normal	- - - - - -
10	AJP	Advantech Co., Ltd. ACN AKMC AKMC ATJ ATJ	2 3 3 3 3 3	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	1,941 64 9,874 2,759 9,159 3,098	Normal 45 days EOM Normal 45 days EOM Normal 45 days EOM	- - - - - -
							(Continued)

79 -

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
11	AKMC	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. ACN ACN ACN AEU AEU AiSC AiSC AKST AKST ANA ANA SIoT (Cayman) SIoT (Cayman) SIoT (China) SIoT (China) Cermate (Taiwan) Cermate (Shenzhen) Cermate (Shenzhen) Advanixs Corp. Advanixs Corp.	2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Other receivables from related parties Other revenue Sales revenue Receivables from related parties Other 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 Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Receivables from related parties Sales revenue	$ 9,183,110 1,943,604 705 108 292,702 58,878 2,915 3,652 735 99 25 3,633 2 4,446 329 178,723 52,894 3,135 204 26 31,310 13,631 635 2,276	Normal 60 days EOM 60 days EOM Normal Normal 60-90 days Normal Normal 30 days after invoice date Normal Immediate payment Normal 30 days EOM Normal 60-90 days Normal 30 days EOM Normal 30 days EOM Normal Normal 60 days EOM 30 days EOM Normal	23 4 - - 1 - - - - - - - - - - - - - - - - - - -
12	AKR	Advantech Co., Ltd. Advantech Co., Ltd. AVN	2 2 3	Other revenue Sales revenue Sales revenue	1,896 1 72	Normal Normal Normal	- - -
13	AKST	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. AKMC AKMC AKR	2 2 2 2 3 3 3	Sales revenue Other receivables from related parties Receivables from related parties Other revenue Sales revenue Receivables from related parties Sales revenue	2,383 803 612 42 1,352 761 174	Normal 30 days EOM 30 days EOM Normal Normal 30 days EOM Normal	- - - - - - -
14	AMX	Advantech Co., Ltd.	2	Other revenue	5,287	Normal	-
15	AMY	Advantech Co., Ltd. ASG ASG	2 3 3	Other revenue Other revenue Other receivables from related parties	27 13 13	Normal Normal 30 days EOM	- - -
16	ANA	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. AAU	2 2 2 2 3	Sales revenue Receivables from related parties Other revenue Other receivables from related parties Sales revenue	73,939 4,265 1,019 370 10	Normal 45 days EOM Normal 45 days EOM Normal	- - - - -

(Continued)

80 -

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
		ABR AEU AEU AID AID AKMC AKMC AKR A-SIoT A-SIoT B+B B+B	3 3 3 3 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties	$ 697 2,524 5,927 18 18 10 83 21 1,483 107 14,360 1,932	Normal 60-90 days Normal Normal Immediate payment Normal 30 days EOM Normal Normal 60-90 days Normal 60-90 days	- - - - - - - - - - - -
17	APL	Advantech Co., Ltd. AEU AEU A-SIoT	2 3 3 3	Other revenue Receivables from related parties Sales revenue Receivables from related parties	254 10,804 91,800 1,995	Normal 30 days after invoice date Normal 30 days after invoice date	- - - -
18	ASG	Advantech Co., Ltd. Advantech Co., Ltd. AID AKMC AMY AMY ANA ATH ATH ATH ATH	2 2 3 3 3 3 3 3 3 3 3	Other revenue Sales revenue Sales revenue Sales revenue Sales revenue Receivables from related parties Sales revenue Sales revenue Other revenue Receivables from related parties Other receivables from related parties	444 167 5 16 2,656 333 1,725 8,732 1,840 1,826 252	Normal Normal Normal Normal Normal 30 days EOM Normal Normal Normal 30 days EOM 30 days EOM	- - - - - - - - - - -
19	A-SIoT	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. AAU AEU AEU AKMC AKMC AKR AKR ANA ANA APL APL ATH	2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3	Sales revenue Other receivables from related parties Receivables from related parties Other revenue Receivables from related parties Sales revenue Receivables from related parties Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Advance receipts Sales revenue Receivables from related parties Sales revenue	27,149 13,756 4,420 67 6 986 123 24 2 2,842 8 1,485 (3,865) 19,013 43 52	Normal 60 days EOM 30 days after invoice date Normal 30 days after invoice date Normal 30 days after delivery of goods 60 days after invoice date Normal Normal 60 days EOM Normal 30 days EOM Normal 60 days after invoice date Normal	- - - - - - - - - - - - - - - -

(Continued)

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Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
20	ATR	Advantech Co., Ltd.	2	Other revenue	$ 313	Normal	-
21	AVN	AKR	3	Sales revenue	17	Normal	-
22	AXA	ACN ACN	3 3	Other receivables from related parties Other revenue	8,700 635	30 days EOM Normal	- -
23	B+B	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. AEU AEU AIN AIN AKR ANA ANA ANA APL BBIE BBIE	2 2 2 3 3 3 3 3 3 3 3 3 3 3	Sales revenue Receivables from related parties Other revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Other revenue Sales revenue Sales revenue Other revenue Receivables from related parties	38,109 7,006 141 5,758 31,041 4 4 26 7,372 2,454 22,631 5 820 34	Normal 90 days EOM Normal 90 days EOM Normal 30 days after invoice date Normal Normal 45 days EOM Normal Normal Normal Normal 45 days EOM	- - - - - - - - - - - - - -
24	BBIE	ACZ AEU AEU B+B B+B	3 3 3 3 3	Other revenue Receivables from related parties Sales revenue Receivables from related parties Other revenue	16,424 7,620 36,991 1,098 4,270	Normal 60 days after invoice date Normal 60 days after invoice date Normal	- - - - -
25	DMCC	Advantech Co., Ltd. Advantech Co., Ltd.	2 2	Other revenue Other receivables from related parties	13,994 954	Normal 60 days EOM	- -
26	SIoT (Cayman)	Advantech Co., Ltd. AAU AAU AEU AEU AJP AJP AJP AKMC AKR AKR ANA ANA ASG ASG A-SIoT A-SIoT	2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Receivables from related parties Receivables from related parties Sales revenue Sales revenue Receivables from related parties Receivables from related parties Sales revenue Other receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Receivables from related parties Sales revenue	616 10,352 14,113 353,097 57,607 5,490 11,301 21 150 9,551 15,398 726,209 85,550 16,176 4,462 31,683 169,438	30 days after invoice date 60 days EOM Normal Normal 45 days EOM 60 days EOM Normal 60 days EOM Normal 60 days EOM Normal Normal 30 days EOM Normal 60 days EOM 30 days EOM Normal	- - - 1 - - - - - - - 2 - - - - -

(Continued)

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Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
27	SioT (China)	ACN	3	Sales revenue	$ 100	Normal	-
28	LNC Dong Guan Co., Ltd.	LNC LNC	3 3	Sales revenue Receivables from related parties	3,609 857	Normal 90 days EOM	- -
29	Cermate (Shanghai)	Cermate (Shenzhen)	3	Sales revenue	583	Normal	-
30	Cermate (Taiwan)	Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. Advantech Co., Ltd. AKMC AKMC Cermate (Shenzhen) Cermate (Shenzhen)	2 2 2 2 3 3 3 3	Sales revenue Receivables from related parties Other receivables from related parties Other revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties	3,527 450 119 54 2,377 37 58,853 9,163	Normal 30-60 days 30-60 days Normal Normal 60 days EOM Normal 30 days EOM	- - - - - - - -
31	Cermate (Shenzhen)	ACN AKMC AKMC Cermate (Shanghai) Cermate (Shanghai) Cermate (Taiwan) Cermate (Taiwan)	3 3 3 3 3 3 3	Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Receivables from related parties	3 23,232 2,032 21,190 3,913 42,784 8,777	Normal Normal 40 days EOM Normal 30 days EOM Normal 60 days EOM	- - - - - - -
32	Advantech Corporate Investment	Advantech Co., Ltd.	2	Other receivables from related parties	600,000	Financing	1
33	Advanixs Corp.	Cermate (Taiwan) Cermate (Taiwan)	3 3	Sales revenue Receivables from related parties	899 76	Normal 30 days EOM	- -
34	LNC	Advantech Co., Ltd. Advantech Co., Ltd. LNC Dong Guan Co., Ltd. LNC Dong Guan Co., Ltd.	2 2 3 3	Receivables from related parties Sales revenue Sales revenue Receivables from related parties	914 871 262,838 228,381	60 days EOM Normal Normal 90 days EOM	- - 1 1

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

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

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

From the parent company to its subsidiary.
From the subsidiary to its parent company.
Between subsidiaries.
Note C: For assets and liabilities, amounts are shown as a percentage to consolidated total assets as of September 30, 2019, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the nine months ended September 30, 2019.

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

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AI assistant

Advantech — Interim / Quarterly Report 2019

52053_rns_2019-11-12_08e067e5-6d72-4dcb-bbb7-3ba63ee0d39c.pdf

Advantech Co., Ltd. and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Notice to Readers

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ADVANTECH CO., LTD. AND SUBSIDIARIES

ADVANTECH CO., LTD. AND SUBSIDIARIES

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

ADVANTECH CO., LTD. AND SUBSIDIARIES

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

ADVANTECH CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

1) IFRS 16 “Leases”

Definition of a lease

The Group as lessee

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

b. Basis of preparation

2019

b) The Group as lessee

2018

2) Retirement benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

a. Inventory write-downs

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FVTPL

8. FINANCIAL ASSETS AT FVTOCI

9. FINANCIAL ASSETS AT AMORTIZED COST

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

Trade Receivables

At amortized cost

September 30, 2019

11. INVENTORIES

12. SUBSIDIARIES

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

Aggregate Information of Associates That Are Not Individually Material

14. PROPERTY, PLANT AND EQUIPMENT

15. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

b. Lease liabilities - 2019

16. GOODWILL

17. PREPAYMENTS FOR LEASES

18. BORROWINGS

b. Long-term borrowings

19. OTHER LIABILITIES

20. RETIREMENT BENEFIT PLANS

21. EQUITY

a. Share capital

Ordinary shares

b. Capital surplus

e. Other equity items

f. Non-controlling interests

22. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

b. Depreciation and amortization

23. INCOME TAXES

c. Income tax assessments

24. EARNINGS PER SHARE

Unit: NT$ Per Share

Net Profit for the Period

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

25. SHARE-BASED PAYMENT ARRANGEMENTS

Issuance in 2018

Issuance in 2017

26. BUSINESS COMBINATIONS

Advantech Interim / Quarterly Report 2019