Advantech - Interim / Quarterly Report 2020

Advantech Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2020 and 2019 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, 2020 and 2019, the related consolidated statements of comprehensive income for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the consolidated statements of changes in equity and cash flows for the nine months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. 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, 2020 and 2019, the combined total assets of these non-significant subsidiaries were NT$8,141,040 thousand and NT$7,837,187 thousand, respectively, representing 17.04% and 17.23%, respectively, of the consolidated total assets, and the combined total liabilities of these subsidiaries were NT$1,807,521 thousand and NT$1,874,797 thousand, respectively, representing 12.26% and 12.93%, respectively, of the consolidated total liabilities; for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the amounts of combined comprehensive income (loss) of these subsidiaries were NT$154,296 thousand, NT$(3,731) thousand, NT$340,165 thousand, and NT$512,370 thousand, respectively, representing 7.53%, (0.21%), 6.25% and 9.08%, 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$3,347,632

thousand and NT$2,991,300 thousand as of September 30, 2020 and 2019, respectively. The equities in profit and loss of the associates were NT$57,794 thousand, NT$23,724 thousand, NT$110,794 thousand, and NT$66,320 thousand, respectively, for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, and these investment amounts as well as additional disclosures in Note 32 “Information on Investees” were based on the investees’ unreviewed financial statements for the same reporting periods as those of the Company.

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 investees that are 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, 2020 and 2019, its consolidated financial performance for the three months ended September 30, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors’ review report are Jr-Shian Ke and Kwan-Chung Lai.

Deloitte & Touche Taipei, Taiwan Republic of China

October 30, 2020

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 28) Financial assets at amortized cost - current (Note 9) Notes receivable (Note 10) Trade receivables (Note 10) Trade receivables from related parties (Note 29) Other receivables Other receivables from related parties (Note 29) Inventories (Note 11) Other current assets (Note 29) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 7 and 28) Financial assets at fair value through other comprehensive income - non-current (Notes 8 and 28) Investments accounted for using the equity method (Note 13) Property, plant and equipment (Notes 14 and 30) Right-of-use assets (Note 15) Goodwill (Note 16) Other intangible assets Deferred tax assets (Note 4) Prepayments for business facilities Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 17) Financial liabilities at fair value through profit or loss - current (Notes 7 and 28) Notes payable and trade payables (Note 29) Other payables (Notes 18 and 29) Current tax liabilities (Notes 4 and 22) Short-term warranty provisions Lease liabilities - current (Note 15) Current portion of long-term borrowings (Notes 17 and 30) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 17 and 30) Current tax liabilities - non-current (Notes 4 and 22) Deferred tax liabilities (Note 4) Lease liabilities - non-current (Note 15) Net defined benefit liabilities (Notes 4 and 19) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 20) 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 translating the financial statements of foreign operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income Other equity - unearned stock-based employees' compensation Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		September 30, 2020 (Reviewed) Amount % $ 6,379,737 13 2,470,209 5 946,597 2 1,630,468 4 7,073,971 15 29,138 - 154,875 - 3,084 - 8,522,551 18 534,718 1 27,745,348 58 83,284 - 1,760,888 4 3,347,632 7 9,877,138 21 646,332 1 2,482,499 5 947,430 2 621,119 1 208,994 1 54,342 - 20,029,658 42 $ 47,775,006 100 $ 293,225 1 7,582 - 3,737,111 8 3,881,704 8 2,065,092 4 124,277 - 221,250 - - - 1,298,547 3 11,628,788 24 - - 340,621 1 2,063,476 4 143,099 - 388,663 1 174,691 1 3,110,550 7 14,739,338 31 7,713,500 16 5,955 - 7,719,455 16 7,736,781 16 7,020,201 15 845,993 2 10,063,885 21 17,930,079 38 (1,116,798) (2) 152,613 - 1,477 - (962,708) (2) 32,423,607 68 612,061 1 33,035,668 69 $ 47,775,006 100	December 31, 2019 (Audited after Restatement) Amount % $ 6,003,936 13 3,647,963 8 316,994 1 1,546,340 3 7,265,106 15 20,174 - 101,378 - 29 - 7,782,824 17 688,167 1 27,372,911 58 101,156 - 1,639,321 4 3,009,860 6 9,732,490 21 723,106 2 2,519,514 5 980,061 2 690,212 1 389,221 1 58,227 - 19,843,168 42 $ 47,216,079 100 $ 250,678 1 521 - 4,799,196 10 3,732,224 8 1,522,874 3 208,611 1 199,493 - 7,957 - 1,022,904 2 11,744,458 25 36,132 - - - 1,942,189 4 242,263 1 384,914 1 134,663 - 2,740,161 6 14,484,619 31 6,999,230 15 4,870 - 7,004,100 15 7,397,029 16 6,285,079 13 798,763 2 11,515,121 24 18,598,963 39 (878,261) (2) 30,970 - 1,298 - (845,993) (2) 32,154,099 68 577,361 1 32,731,460 69 $ 47,216,079 100	September 30, 2019 (Reviewed after Restatement)	September 30, 2019 (Reviewed after Restatement)
					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 9,863,126 22 779,388 2 2,824,733 6 1,154,521 2 630,441 1 358,430 1 53,099 - 20,046,290 44 $ 45,494,511 100 $ 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 1 332,758 1 136,269 - 2,788,543 6 14,499,915 32 6,991,405 16 7,825 - 6,999,230 16 7,401,279 16 6,285,079 14 798,763 2 9,819,282 21 16,903,124 37 (618,752) (1) (207,381) (1) 957 - (825,176) (2) 30,478,457 67 516,139 1 30,994,596 68 $ 45,494,511 100

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

(With Deloitte & Touche review report dated October 30, 2020)

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 29) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 21 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 21 and 29) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss (reversal of impairment loss) Total operating expenses OPERATING PROFIT NON-OPERATING INCOME Share of profit of associates accounted for using the equity method (Note 13) Interest income Gains (losses) on disposal of property, plant and equipment Losses on disposal of investments Gains (losses) on financial instruments at fair value through profit or loss (Note 7) Foreign exchange gains (losses), net (Notes 21 and 31) Dividend income Other income (Note 29) Finance costs (Note 21) Other losses Total non-operating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSES (Note 4 and 22) 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
		2020		2019		2020		2019
		Amount % $ 12,699,222 97 350,629 3 13,049,851 100 7,857,368 60 5,192,483 40 1,232,726 10 686,321 5 1,013,203 8 (4,167) - 2,928,083 23 2,264,400 17 57,794 1 12,999 - (2,406 ) - - - (16,370 ) - 25,599 - 97,807 1 32,659 - (4,981 ) - (1,073) - 202,028 2 2,466,428 19 (511,214) (4) 1,955,214 15		Amount % $ 14,117,244 98 265,038 2 14,382,282 100 8,685,242 61 5,697,040 39 1,266,949 9 760,780 5 1,049,786 7 (7,768) - 3,069,747 21 2,627,293 18 23,724 - 8,454 - (1,018 ) - (24,917 ) - 46,408 - (75,968 ) - 99,180 1 19,590 - (7,752 ) - (1,997) - 85,704 1 2,712,997 19 (561,249) (4) 2,151,748 15		Amount % $ 37,319,173 97 1,021,036 3 38,340,209 100 22,986,606 60 15,353,603 40 3,557,196 9 2,037,616 6 2,990,758 8 8,785 - 8,594,355 23 6,759,248 17 110,794 1 28,391 - (21,751 ) - (918 ) - 15,659 - (9,885 ) - 98,588 - 83,305 - (15,338 ) - (1,754) - 287,091 1 7,046,339 18 (1,472,494) (4) 5,573,845 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 2,122,803 5 3,083,389 8 19,527 - 9,021,290 22 6,810,180 17 66,320 - 27,590 - 42,473 - (24,917 ) - 110,501 1 5,983 - 100,119 - 67,102 - (20,068 ) - (3,580) - 371,523 1 7,181,703 18 (1,505,602) (4) 5,676,101 14 (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: Unrealized gains (losses) on investments in equity instruments as at fair value through other comprehensive income (Note 20) Share of the other comprehensive income of associates accounted for using the equity method (Notes 13 and 20) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of foreign operations (Note 20) Share of the other comprehensive income of associates accounted for using the equity method (Notes 13 and 20) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 20 and 22) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD NET PROFIT 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
		2020		2019		2020		2019
		Amount % $ 57,564 1 544 - 58,108 1 47,671 - (1,835 ) - (9,369) - 36,467 - 94,575 1 $ 2,049,789 16 $ 1,941,395 15 13,819 - $ 1,955,214 15 $ 2,036,982 16 12,807 - $ 2,049,789 16		Amount % $ (36,796 ) - 705 - (36,091) - (431,307 ) (3 ) (3,044 ) - 73,489 - (360,862) (3) (396,953) (3) $ 1,754,795 12 $ 2,136,117 15 15,631 - $ 2,151,748 15 $ 1,806,073 12 (51,278) - $ 1,754,795 12		Amount % $ 122,727 - (2,577) - 120,150 - (306,560 ) - (8,684 ) - 59,635 - (255,609) - (135,459) - $ 5,438,386 14 $ 5,543,660 15 30,185 - $ 5,573,845 15 $ 5,425,273 14 13,113 - $ 5,438,386 14		Amount % $ 68,080 - 25,005 - 93,085 - (178,751 ) - 17,446 - 35,877 - (125,428) - (32,343) - $ 5,643,758 14 $ 5,641,542 14 34,559 - $ 5,676,101 14 $ 5,591,120 14 52,638 - $ 5,643,758 14 (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 23) Basic Diluted	For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months	Ended September 30
	2020	2019	2020	2019
	Amount % $ 2.52 $ 2.47	Amount % $ 2.78 $ 2.75	Amount % $ 7.19 $ 7.06	Amount % $ 7.34 $ 7.25

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

(With Deloitte & Touche review report dated October 30, 2020)

(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
Issued Capital (Notes 20 and 24)	Total Capital Surplus (Note 20) $ 6,986,955 $ 7,073,348 - - - - - - - - 12,275 88,636 - 233,638 - 5,096 - 913 - (352 ) - - - - - - - - $ 6,999,230 $ 7,401,279 $ 7,004,100 $ 7,397,029 - - - - - - 700,410 - - - 14,945 101,907 - 213,170 - 37,990 - (8,678 ) - (4,637 ) - - - - - - - - $ 7,719,455 $ 7,736,781	Retained Earnings (Note 20)	Total $ 16,036,499 - - (4,751,129 ) - - - - - - 5,641,542 (592) 5,640,950 (23,196) $ 16,903,124 $ 18,598,963 - - (5,463,198 ) (700,410 ) - - - - (34,762 ) (12,681 ) 5,543,660 (1,613) 5,542,047 120 $ 17,930,079	Other Equity (Note 20)	nearned Stock - Based Employee Compensation $ 736 - - - - - - 221 - - - - - - $ 957 $ 1,298 - - - - - - - 179 - - - - - - $ 1,477
				Exchange Differences on Unrealized Gain or Loss on Financial Assets at Fair Value through Other U Translating Foreign Operations Comprehensive Income $ (475,245 ) $ (324,254 ) - - - - - - - - - - - - - - - - - - - - (143,507) 93,677 (143,507) 93,677 - 23,196 $ (618,752) $ (207,381) $ (878,261 ) $ 30,970 - - - - - - - - - - - - - - - - - - - - - - (238,537) 121,763 (238,537) 121,763 - (120) $ (1,116,798) $ 152,613
Share Capital Advance Receipts for Ordinary Shares $ 6,982,275 $ 4,680 - - - - - - - - 9,130 3,145 - - - - - - - - - - - - - - - - $ 6,991,405 $ 7,825 $ 6,999,230 $ 4,870 - - - - - - 700,410 - - - 13,860 1,085 - - - - - - - - - - - - - - - - $ 7,713,500 $ 5,955		Legal Reserve Special Reserve Unappropriated Earnings $ 5,655,613 $ 369,655 $ 10,011,231 629,466 - (629,466 ) - 429,108 (429,108 ) - - (4,751,129 ) - - - - - - - - - - - - - - - - - - - - 5,641,542 - - (592) - - 5,640,950 - - (23,196) $ 6,285,079 $ 798,763 $ 9,819,282 $ 6,285,079 $ 798,763 $ 11,515,121 735,122 - (735,122 ) - 47,230 (47,230 ) - - (5,463,198 ) - - (700,410 ) - - - - - - - - - - - - - - (34,762 ) - - (12,681 ) - - 5,543,660 - - (1,613) - - 5,542,047 - - 120 $ 7,020,201 $ 845,993 $ 10,063,885

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

(With Deloitte & Touche review report dated October 30, 2020)

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 Expected credit loss Net gain on financial assets or liabilities at fair value through profit or loss Compensation costs of employee share options Finance costs Interest income Dividend income Share of profit of associates accounted for using the equity method Net loss (gain) on disposal of property, plant and equipment Net loss on disposal of subsidiaries Net loss (gain) on disposal of investments Changes in operating assets and liabilities Financial assets at fair value through profit or loss Notes receivable Trade receivables Trade receivables from related parties Other receivables Inventories Other current assets Notes payable and trade payables Net defined benefit liabilities Other payables Short-term warranty provisions Other current liabilities Other non-current liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost		For the Nine Months Ended September 30
		2020 (Reviewed) 2019 (Reviewed after Restatement) $ 7,046,339 $ 7,181,703 600,059 615,124 137,484 204,406 8,785 19,527 (15,659) (110,501) 213,170 233,638 15,338 20,068 (28,391) (27,590) (98,588) (100,119) (110,794) (66,320) 21,751 (42,473) - 25,901 918 (984) 1,218,346 638,596 (84,128) (4,887) 183,582 (553,731) (8,964) (27,997) (56,552) 23,275 (738,768) (90,854) 153,681 (169,805) (1,062,096) (1,258,885) 3,749 (44,977) 147,881 64,291 (84,334) (28,960) 275,640 166,080 40,032 (13,046) 7,778,481 6,651,480 28,391 27,590 98,588 100,119 (2,858) (5,112) (512,190) (1,661,366) 7,390,412 5,112,711 - (27,360) (627,650) - (Continued)

ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Proceeds from sale of financial assets at amortized cost Acquisition of associates Net cash outflow on the acquisition of subsidiaries (net of carrying amount of cash) Net cash outflow on disposal of subsidiaries Dividends received from associates Net cash inflow on disposal of associates Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment (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 borrowings 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 Changes 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
		2020 (Reviewed) 2019 (Reviewed after Restatement) $ - $ 69,722 (373,087) (476,438) (2,724) (542,156) - (81) 163,216 117,768 7,255 830 (789,488) (632,506) 47,380 79,161 3,885 (5,143) (78,318) (84,287) 284,938 169,286 (1,364,593) (1,331,204) 45,000 96,702 (42,393) (7,036) (6) (359) (5,463,198) (4,751,129) (176,837) (166,877) 116,852 100,911 (11,443) (14,039) (27,749) 71,545 (5,559,774) (4,670,282) (90,244) (185,582) 375,801 (1,074,357) 6,003,936 6,633,161 $ 6,379,737 $ 5,558,804

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

(With Deloitte & Touche review report dated October 30, 2020)

(Concluded)

ADVANTECH CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (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 October 30, 2020.

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

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

Except for the following, the initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies:

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

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

10 -
2) Amendments to IAS 1 and IAS 8 “Definition of Material”

The Group adopted the amendments starting from January 1, 2020. The threshold for materiality influencing users has been changed to “could reasonably be expected to influence” and, therefore, the disclosures in the consolidated financial report have been adjusted and immaterial information that may obscure material information has been deleted.

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

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB (Note 1)
	January 1, 2022 (Note 2) January 1, 2022 (Note 3) Effective immediately upon promulgation by the IASB January 1, 2021 To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 (Note 4) January 1, 2022 (Note 5)

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

Amendments to IFRS 3 “Reference to the Conceptual Framework”

Amendments to IFRS 4 “Extension of the Temporary Exemption from
Applying IFRS 9”

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

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

IFRS 17 “Insurance Contracts”

Amendments to IFRS 17

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

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

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

Effective Date
Announced by IASB (Note 1)

January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
Effective immediately upon
promulgation by the IASB
January 1, 2021
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management.
Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
11 -
1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

The amendments stipulate that, when the Group sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate, 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.

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

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

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

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

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

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

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

Several standards were amended in the amendments. The amendments to IFRS 9 and IFRS 16 provide specific practical expedient that the modification of financial assets, financial liabilities and lease liabilities as a result of interest rate benchmark reform shall be applied by revising the effective interest rate. Besides, the amendments to IFRS 9 introduce additional temporary exceptions for hedging relationships subject to interest rate benchmark reform.

12 -

The Group may not restate prior reporting periods when applying the aforementioned amendments, and recognize the cumulative effect in the retained earnings or other component of equity at the date of the initial application instead.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” 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 liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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

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

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 interests of the Group 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.

13 -

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

d. Other significant accounting policies

Except for the following, please refer to significant accounting policies to the consolidated financial statements for the years ended December 31, 2019 and 2018.

1) Retirement benefits

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

2) Taxation

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

3) Government grants

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

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.

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

The benefit of a government loan received at a below-market rate of interest is treated as a government grant measured as the difference between the proceeds received and the fair value of the loan based on prevailing market interest rates.

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, estimations, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

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

14 -

Key Sources of Estimation Uncertainty

Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. 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.

6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September	September	30,
		2020		2019		2019
Cash on hand	$	5,482	$	141,615	$	263,373
Checking accounts and demand deposits		5,867,017		4,744,550		3,904,048
Cash equivalents (time deposits with original
maturities of less than three months)		507,238		1,117,771		1,391,383
	$	6,379,737	$	6,003,936	$	5,558,804
FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH			PROFIT OR LOSS
	September 30,		December 31,		September		30,
		2020		2019		2019
Financial assets at FVTPL-current
Financial assets mandatorily classified as at
FVTPL
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts	$	4,944	$	9,320	$	20,042
Non-derivative financial assets
Domestic listed shares		272,181		118,392		126,454
Foreign listed shares		91,055		50,157		62,316
Mutual funds		2,102,029		3,470,094		1,265,588
	$	2,470,209	$	3,647,963	$	1,474,400
Financial assets FVTPL-non-current
Financial assets mandatorily classified as at
FVTPL
Non-derivative financial assets
Domestic unlisted shares	$	83,284	$	101,156	$		-
Financial liabilities at FVTPL-current
Financial liabilities held for trading
Derivative financial liabilities (not under hedge
accounting)
Foreign exchange forward contracts	$	7,582	$	521	$	1,421

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

15 -

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,	2020
Sell			EUR/NTD	2020.10-2021.02	EUR13,300/NTD455,132
			EUR/USD	2020.11-2020.12	EUR600/USD682
			JPY/NTD	2020.10-2020.12	JPY290,000/NTD80,320
			RMB/NTD	2020.10-2020.12	RMB66,000/NTD278,559
			USD/NTD	2020.10	USD1,000/NTD29,076
December	31,	2019
Sell			EUR/NTD	2020.01-2020.05	EUR12,000/NTD406,441
			EUR/USD	2020.01-2020.04	EUR700/USD789
			JPY/NTD	2020.01-2020.05	JPY380,000/NTD108,979
			RMB/NTD	2020.01-2020.03	RMB47,000/NTD201,967
			USD/NTD	2020.01-2020.02	USD4,000/NTD121,501
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

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2020		2019		2019
Non-current
Investments in equity instruments at fair value
through other comprehensive income
(FVTOCI)	$ 1,760,888		$ 1,639,321		$ 1,391,252

16 -

Investments in equity instruments at FVTOCI:

	September 30,	December 31,	September 30,	September 30,
	2020	2019		2019
Non-current
Domestic investments
Listed shares and emerging market shares
Ordinary shares - ASUSTek Computer Inc.	$ 1,201,453	$ 1,097,185	$	978,699
Ordinary shares - Allied Circuit Co., Ltd.	414,512	392,306		272,024
Unlisted shares
Ordinary shares - BroadTec System Inc.	3,149	3,917		3,922
Ordinary shares - BioSenseTek Corp.	-	-		4,308
Ordinary shares - Jaguar Technology	6,710	4,949		-
Ordinary shares - Taiwan DSC PV Ltd.	-	-		-
Ordinary shares - iSAP Solution Corp.	6,994	9,994		-
	1,632,818	1,508,351		1,258,953
Foreign investments
Shanghai Shangchuang Xinwei Investment
Management Co., Ltd.	128,070	129,150		130,501
JamaPro Co., Ltd.	-	1,820		1,798
	128,070	130,970		132,299
	$ 1,760,888	$ 1,639,321	$	1,391,252

These investments in equity instruments are held for medium- to long-term strategic purposes and are expected to earn profit from long-term investments. 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,	December 31,	September 30,	September 30,
	2020	2019		2019
Current
Foreign investments
Time deposits with original maturities of more
than 3 months	$ 946,597	$ 316,994	$	90,004

17 -

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

	September 30,	December 31,	September 30,
	2020	2019	2019
Notes receivable-operating	$ 1,630,468	$ 1,546,340	$ 1,466,291
Trade receivables
At amortized cost
Gross carrying amount	$ 7,168,107	$ 7,352,407	$ 8,108,808
Less: Allowance for impairment loss	(94,136)	(87,301)	(96,519)
	$ 7,073,971	$ 7,265,106	$ 8,012,289

Trade Receivables

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

The Group measures the loss allowance for 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 of the customer, the customer’s current financial position and economic condition of the industry in which the customer operates. As the Group’s historical credit loss experience shows different loss patterns for different customer geographical segments, the Group adopts different approaches to prepare the provision matrix for loss allowance based on past due status of the Group’s different geographical customer base, and sets out the expected credit loss rate for trade receivable that are overdue and based on geographical economic conditions.

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, these 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, 2020

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due - $ 6,480,557 - $ 6,480,557	Less than 90 Days 91 to 180 Days 0.52% 9% $ 475,682 $ 71,014 (2,487) (6,304) $ 473,195 $ 64,710	181 to 360 Days Over 360 Days 37% 100% $ 87,466 $ 53,388 (31,957) (53,388) $ 55,509 $ -	Total - $ 7,168,107 (94,136) $ 7,073,971

18 -

December 31, 2019

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost September 30, 2019 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due - $ 5,860,824 - $ 5,860,824 Not Past Due - $ 6,917,520 (9,248) $ 6,908,272	Less than 90 Days 91 to 180 Days 1% 21% $ 1,354,411 $ 82,778 (18,457) (17,028) $ 1,335,954 $ 65,750 Less than 90 Days 91 to 180 Days 0.5% 25% $ 1,043,873 $ 85,444 (5,655) (21,332) $ 1,038,218 $ 64,112	181 to 360 Days Over 360 Days 71% 100% $ 8,755 $ 45,639 (6,177) (45,639) $ 2,578 $ - 181 to 360 Days Over 360 Days 72% 100% $ 6,043 $ 55,928 (4,356) (55,928) $ 1,687 $ -	Total - $ 7,352,407 (87,301) $ 7,265,106 Total - $ 8,108,808 (96,519) $ 8,012,289

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

Balance at January 1 Add: Amount of expected credit loss Less: Amounts written off* Business combination Foreign exchange gains and losses Balance at September 30	For the Nine Months Ended September 30 2020 2019 $ 87,301 $ 87,491 8,785 19,527 (718) (8,847) - (35) (1,232) (1,617) $ 94,136 $ 96,519	For the Nine Months Ended September 30 2020 2019 $ 87,301 $ 87,491 8,785 19,527 (718) (8,847) - (35) (1,232) (1,617) $ 94,136 $ 96,519	For the Nine Months Ended September 30 2020 2019 $ 87,301 $ 87,491 8,785 19,527 (718) (8,847) - (35) (1,232) (1,617) $ 94,136 $ 96,519
		2020 $ 87,301 8,785 (718) - (1,232) $ 94,136	2019 $ 87,491 19,527 (8,847) (35) (1,617) $ 96,519

The Group wrote off trade receivables and related loss allowance for the nine months ended September 30, 2020 and 2019 of $718 thousand and $8,847 thousand, respectively, as the customers’ trade receivables have been aged more than 2 years and the legal attest letters were served without receivables collected.

11. INVENTORIES

	September 30,	December 31,	September 30,
	2020	2019	2019
Raw materials	$ 4,218,363	$ 3,235,906	$ 4,300,075
Work in process	1,647,012	1,803,484	1,782,288
Finished goods	1,883,422	1,987,600	1,491,792
Inventories in transit	773,754	755,834	514,620
	$ 8,522,551	$ 7,782,824	$ 8,088,775

The cost of inventories recognized as cost of goods sold for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019 was $7,718,970 thousand, $8,587,985 thousand, $22,557,521 thousand and $24,432,644 thousand, respectively.

19 -

The costs of inventories decreased by $866,183 thousand, $821,488 thousand and $843,969 thousand as of September 30, 2020, December 31, 2019 and September 30, 2019, 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 statements are listed below.

Investor
Investee
Nature of Activities
The Company
Advantech Automation
Corp. (BVI) (AAC (BVI))
Investment and management services
Advantech Technology Co.,
Ltd. (ATC)
Sale of industrial automation products
Advanixs Corporation
Production and sale of industrial
automation products
Advantech Corporate
Investment
Investment holding company
Advantech Europe Holding
B.V. (AEUH)
Investment and management services
Advantech Co., Singapore
Pte, Ltd. (ASG)
Sale of industrial automation products
Advantech Australia Pty Ltd.
(AAU)
Sale of industrial automation products
Advantech Japan Co., Ltd.
(AJP)
Sale of industrial automation products
Advantech Co. Malaysia
Sdn. Bhd (AMY)
Sale of industrial automation products
Advantech KR Co., Ltd.
(AKR)
Sale of industrial automation products
Advantech Brasil Ltd.
(ABR)
Sale of industrial automation products
Advantech Industrial
Computing India Private
Limited (AIN)
Sale of industrial automation products
AdvanPOS
Production and sale of POS systems
LNC Technology Co., Ltd.
(LNC)
Production and sale of machines with
computerized numerical controls
Advantech Electronics,
S. De R. L. De C. V.
(AMX)
Sale of industrial automation products
Advantech Innovative
Design Co., Ltd.
Product design
B+B Smartworx Inc. (B+B) Sale of industrial network
communications systems
Advantech Intelligent City
Services Co., Ltd.
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 ISRAEL
LTD. (AIL)
Sale of industrial network
communications systems
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

Proportion of Ownership (%)
September 30,
2020
December 31,
2019
September 30,
2019
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
100.00
80.00
80.00
a, l
99.99
99.99
99.99
a
100.00
100.00
100.00
a
59.10
64.10
64.10
a, i
60.00
100.00
100.00
a, j
100.00
100.00
100.00
a
60.00
60.00
60.00
100.00
100.00
100.00
a
-
76.00
76.00
m
51.00
51.00
51.00
a
60.00
60.00
60.00
a
100.00
100.00
100.00
a
50.00
50.00
50.00
a, b
60.00
60.00
60.00
a, c
100.00
100.00
-
a, h
-
24.00
24.00
m
28.61
28.61
28.61
a, b
55.00
55.00
55.00
a
50.00
50.00
50.00
a

(Continued)

20 -

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

Proportion of Ownership (%)
September 30,
2020
December 31,
2019
September 30,
2019
Remark
50.00
50.00
50.00
a
100.00
100.00
100.00
a, d
79.33
79.33
79.30
a, e
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
100.00
100.00
-
a, g
40.00
40.00
40.00
100.00
100.00
100.00
100.00
100.00
100.00
a
99.00
99.00
99.00
a
100.00
100.00
100.00
a
100.00
70.00
70.00
a, f
100.00
100.00
100.00
a
1.00
1.00
1.00
a
100.00
45.00
45.00
a, k
100.00
100.00
100.00
100.00
100.00
100.00
a
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
100.00
100.00
100.00
100.00
100.00
-
-
100.00
a, g
-
-
100.00
n
-
-
100.00
o
(Concluded)

21 -

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

Remark b: In the first quarter of 2019, the Group acquired 80% of the equity of ATJ. The Company and AJP held 50% and 30% of the equity of ATJ, respectively. In the third quarter of 2019, AJP sold 1.39% of the equity of ATJ, which led its equity investment in ATJ to decrease from 30% to 28.61%.
Remark c: In the first quarter of 2019, the Group acquired 60% of the equity of ATR.
Remark d: In the first quarter of 2019, Advantech Corporate Investment founded ACISM and acquired 100% of its equity.
Remark e: In the second quarter of 2019, Advantech Corporate Investment founded ACI IOT Investment Fund-I Corporation and acquired 79.33% of its equity.
Remark f: In the second quarter of 2019, SIoT (Cayman) founded AIH and acquired 100% of its equity. In the third quarter of 2019, AIH held its equity offering, which led SIoT (Cayman)’s equity investment in AIH to decrease from 100% to 70%. In the first quarter of 2020, SIoT (Cayman) acquired 30% of the equity of AIH, which led its equity investment in AIH to increase from 70% to 100%.
Remark g: In the fourth quarter of 2019, the Group adjusted its investment structure; hence, AAC (BVI) directly held 100% of the equity of ADB.
Remark h: In the fourth quarter of 2019, the Group founded AIL.
Remark i: In the first and second quarter of 2020, the Group sold 3.42% and 1.58% of the equity of LNC, respectively, which led its equity investment in LNC to decrease from 64.10% to 59.10%.
Remark j: In the second quarter of 2020, the Group had a non-proportional investment in the equity of AMX during its cash capital increase, which led its equity investment in AMX to decrease from 100% to 60%.
Remark k: In the second quarter of 2020, the Group acquired 55% of the equity of Yanle, which led its equity investment in Yanle to increase from 45% to 100%.
Remark l: In the third quarter of 2020, the Group acquired 20% of the equity of ABR, which led its equity investment in ABR to increase from 80% to 100%.
Remark m: In the third quarter of 2020, the Group adjusted its investment structure. Following capital reduction of AKST to offset deficit, AKR directly held 100% of the equity of AKST. AKR and AKST then merged. AKR is the surviving entity.
Remark n: In the third quarter of 2019, B&B Electronics filed for liquidation.
Remark o: In the third quarter of 2019, Conel Automation was disposed of.
22 -

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2020		2019		2019
Associates that are not individually material
Listed companies
Axiomtek Co., Ltd. (“Axiomtek”)	$	640,598	$	627,632	$	645,756
Winmate Inc. (“Winmate”)		546,113		553,145		544,335
AzureWave Technologies, Inc. (“AzureWave”)		542,454		506,867		511,724
Nippon RAD Inc. (“Nippon RAD”)		294,041		296,400		307,711
Mildex Optical Inc. (“Mildex”)		179,726		181,388		195,963
HwaCom Systems Inc. (“HwaCom”)		358,572		392,645		357,084
Information Technology Total Services Co.,
Ltd. (“ITTS”)		154,067		154,910		142,948
Unlisted companies
AIMobile Co., Ltd. (“AIMobile”)		41,676		66,133		76,160
Deneng Scientific Research Co., Ltd.
(“Deneng”)		13,060		14,013		14,014
Jen Hsiang Electronics Co., Ltd. (“Jen
Hsiang”)		-		8,114		8,135
CDIB Capital Innovation Accelerator Co., Ltd.
(“CDIB”)		154,133		161,043		158,502
DotZero Co., Ltd. (“DotZero”)		5,249		6,238		2,499
iLink Co., Ltd. (“iLink”)		4,148		7,050		7,331
Shanghai Yanle Co., Ltd. (“Yanle”)		-		3,092		3,642
GSD Environmental Technology Co., Ltd.
(“GSD”)		10,965		13,608		15,496
Smasoft Technology Co., Ltd. (“Smasoft”)		12,116		15,000		-
Impelex Data Transfer Co., Ltd. (“Impelex”)		8,515		-		-
VSO Electronics Co., Ltd. (“VSO”)		130,023		-		-
International Integrated Systems, Inc. (“IISI”)		249,616		-		-
Tianjin Anjie IoT Science And Technology
Co., Ltd. (“Anjie-IOT”)		2,560		2,582		-
	$	3,347,632	$	3,009,860	$	2,991,300

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

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

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

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

23 -

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

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

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

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

Aggregate information of associates that are not individually material

The Group’s share of Profit from continuing operations Other comprehensive income (loss) Total comprehensive income for the period	For the Three Months Ended September 30 2020 2019 $ 57,794 $ 23,724 (1,291) (2,339) $ 56,503 $ 21,385	For the Three Months Ended September 30 2020 2019 $ 57,794 $ 23,724 (1,291) (2,339) $ 56,503 $ 21,385	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 57,794 (1,291) $ 56,503		2020 $ 110,794 (11,261) $ 99,533	2019 $ 66,320 42,451 $ 108,771

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

Investments were accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements which have not been reviewed; the management believes that the financial statements of those investees mentioned above which had not been reviewed by independent auditors would not contribute to significant effect on review results.

14. PROPERTY, PLANT AND EQUIPMENT

a. 2020

Cost Balance at January 1, 2020 Additions Disposals Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at September 30, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Depreciation expenses Acquisitions through business combinations Reclassifications Effect of foreign currency exchange differences Balance at September 30, 2020 Carrying amounts at September 30, 2020	Freehold Land $ 3,067,589 77 (28,417 ) - - (4,779) $ 3,034,470 $ - - - - - - $ - $ 3,034,470	Buildings $ 8,049,532 1,165 (45,787 ) - (646 ) (26,212) $ 7,978,052 $ 2,597,296 (5,962 ) 149,375 - (652 ) (9,262) $ 2,730,795 $ 5,247,257	Equipment $ 1,866,463 121,900 (116,548 ) - 29,318 (6,812) $ 1,894,321 $ 1,378,129 (122,926 ) 103,729 - 23,962 (4,382) $ 1,378,512 $ 515,809	Office Equipment $ 877,799 66,519 (34,302 ) 121 (22,658 ) (5,547) $ 881,932 $ 685,252 (29,937 ) 61,147 28 (17,533 ) (4,097) $ 694,860 $ 187,072	Other Facilities $ 1,874,078 159,761 (42,011 ) - (109,209 ) (13,846) $ 1,868,773 $ 1,351,086 (39,109 ) 122,897 - (117,259 ) (8,364) $ 1,309,251 $ 559,522	Construction in Progress $ 8,792 440,066 - - (112,998 ) (2,852) $ 333,008 $ - - - - - - $ - $ 333,008	Total $ 15,744,253 789,488 (267,065 ) 121 (216,193 ) (60,048) $ 15,990,556 $ 6,011,763 (197,934 ) 437,148 28 (111,482 ) (26,105) $ 6,113,418 $ 9,877,138

24 -

b. 2019

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	Freehold Land $ 2,934,127 - (7,100 ) 148,160 - 5,061 $ 3,080,248 $ - - - - - - $ - $ 3,080,248	Buildings $ 7,195,732 23,220 (13,147 ) 942,802 28,962 (47,073) $ 8,130,496 $ 1,591,282 (5,673 ) 153,149 867,976 (584 ) (7,207) $ 2,598,943 $ 5,531,553	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	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 ) (11,150) $ 681,775 $ 196,718	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 (18,115) $ 1,421,362 $ 539,735	Construction in Progress $ 2,485 301,842 (2,403 ) 1 (287,936 ) (8,754) $ 5,235 $ - - - - - - $ - $ 5,235	Total $ 14,435,564 632,506 (122,990 ) 1,272,441 (177,279 ) (104,396) $ 15,935,846 $ 4,652,783 (86,198 ) 455,022 1,020,319 77,051 (46,257) $ 6,072,720 $ 9,863,126

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 30.

15. LEASE ARRANGEMENTS

a. Right-of-use assets

	September 30,	December 31,	September 30,
	2020	2019	2019
Carrying amounts
Land	$ 277,943	$ 286,549	$ 291,655
Buildings	325,462	396,887	439,108
Machinery	2,840	2,202	2,366
Office equipment	8,689	9,254	10,684
Transportation equipment	31,373	28,214	35,575
Other equipment	25	-	-
	$ 646,332	$ 723,106	$ 779,388

25 -

Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Machinery Office equipment Transportation equipment Other equipment	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	For the Nine months Ended September 30	For the Nine months Ended September 30
		2020 $ - $ 2,063 42,214 221 2,657 7,142 5 $ 54,302	2019 $ - $ 2,153 42,220 163 1,431 7,360 - $ 53,327		2020 $ 39,556 $ 6,195 126,643 664 7,971 21,423 15 $ 162,911	2019 $ - $ 6,575 126,662 491 4,292 22,082 - $ 160,102

Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the nine months ended September 30, 2020 and 2019.

b. Lease liabilities

	September 30,	December 31,	September 30,
	2020	2019	2019
Carrying amounts
Current	$ 221,250	$ 199,493	$ 199,493
Non-current	143,099	242,263	292,140
	$ 364,349	$ 441,756	$ 491,633

Range of discount rate for lease liabilities was as follows:

	September 30,	December 31,	September 30,
	2020	2019	2019
Buildings	0.25%-10.20%	0.25%-12.00%	0.25%-12.00%
Machinery	0.87%-4.20%	0.87%-5.46%	0.87%-5.46%
Office equipment	0.87%-4.75%	0.87%-4.75%	0.87%-4.75%
Transportation equipment	0.25%-5.00%	0.25%-5.90%	0.25%-5.90%
Other equipment	2.05%	-	-

c. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the 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	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 3,490 $ 3,046 $ 65,483	2019 $ 5,616 $ 9,698 $ 62,539		2020 $ 10,470 $ 9,135 $ 196,442	2019 $ 12,596 $ 15,787 $ 195,260

26 -

16. GOODWILL

Cost Balance at January 1 Additional amounts recognized from business combinations that occurred during the year (Note 26) Adjustments for goodwill after acquisition 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
		2020 $ 2,892,879 3,081 - (40,096) $ 2,855,864 $ (373,365) - $ (373,365) $ 2,482,499	2019 $ 2,934,254 124,029 (104,889) (30,873) $ 2,922,521 $ (97,788) - $ (97,788) $ 2,824,733

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.

Items on the consolidated balance sheets were adjusted by the following amounts:

		February 28,	February 28,
	September 30,		2019
	2019	(Acquisition
	(Restatement)		Date)
Goodwill adjustments	$ (12,494)	$	(12,494)
Intangible assets	$ 32,279	$	34,598
Non-controlling interests	$ 12,293	$	13,839
Retained earnings	$ (2,319)	$	-

On December 31, 2019, the Group obtained the fair value assessed at the acquisition date. Based on the results of the assessment, the fair value of ATJ’s property, plant and equipment and intangible assets at the acquisition date was $251,399 thousand and $65,649 thousand, respectively. The comparative figures have been restated as if the initial accounting was completed at the acquisition date.

27 -

Items on the consolidated balance sheets were adjusted by the following amounts:

			January 31,	January 31,
	September 30,			2019
		2019	(Acquisition
	(Restatement)			Date)
Goodwill adjustments	$	(92,395)	$	(92,395)
Property, plant and equipment	$	106,513	$	106,379
Intangible assets	$	56,528	$	61,223
Net defined benefit liabilities	$	77,979	$	74,932
Non-controlling interests	$	21,159	$	23,099
Retained earnings	$	(7,609)	$	-

17. BORROWINGS

a. Short-term borrowings

	September 30,	December 31,	September 30,
	2020	2019	2019
Unsecured borrowings
Line of credit borrowings	$ 293,225	$ 250,678	$ 297,878

The range of weighted average effective interest rates on bank loans was 0.22%-3.05%, 0.23%-3.00% and 0.23%-3.15% per annum as of September 30, 2020, December 31, 2019 and September 30, 2019, respectively.

b. Long-term borrowings

	September	30,	December 31,	September 30,
	2020		2019	2019
Secured borrowings
Other loans	$	-	$ 44,089	$ 46,406
Less: Current portions		-	(7,957)	(4,483)
Long-term borrowings	$	-	$ 36,132	$ 41,923

Other borrowings are loans from the government. As of December 31, 2019 and September 30, 2020, the effective interest rate was 2.91%-3.16%%.

The Group prepaid the balance of the borrowings in June 2020. With demand of borrowings, the Group pledged freehold land and buildings, refer to Note 30.

28 -

18. OTHER LIABILITIES

	September 30,	December 31,	September 30,
	2020	2019	2020
Other payables
Payables for salaries or bonuses	$ 2,575,723	$ 2,484,026	$ 2,379,590
Payables for employee benefits	188,374	188,988	185,900
Payables for royalties	119,266	86,822	146,077
Others (Note)	998,341	972,388	1,088,949
	$ 3,881,704	$ 3,732,224	$ 3,800,516

Note: Including marketing expenses and freight expenses, etc.

19. RETIREMENT BENEFIT PLANS

For the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the employee benefit expenses of the Group’s defined benefit plans were $2,484 thousand, $1,338 thousand, $7,457 thousand and $4,015 thousand, respectively, and these were calculated based on the pension cost rate determined by the actuarial calculation on December 31, 2019 and 2018, respectively.

20. EQUITY

a. Share capital

Ordinary shares

September 30, 2020 Number of shares authorized (in thousands) 1,000,000 Shares authorized $ 10,000,000 Number of shares issued and fully paid (in thousands) 771,946 Shares issued $ 7,719,455	December 31, 2019 September 30, 2019 800,000 800,000 $ 8,000,000 $ 8,000,000 700,310 699,923 $ 7,004,100 $ 6,999,230

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 and distribution of stock dividends.

29 -

b. Capital surplus

	September 30,	December 31,	September 30,
	2020	2019	2019
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 consideration
received or paid and the carrying amount of
subsidiaries’ net assets during actual
disposal or acquisition	-	8,678	89,473
Share of changes in capital surplus of
associates	675	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)	-	4,637	3,911
Employee share options	2,192,645	1,888,945	1,740,910
Share of changes in capital surplus of
associates	49,731	12,361	32,986
Employee share options expired	87,266	-	-
May not be used for any purpose
Employee share options	999,113	1,075,002	1,126,593
	$ 7,736,781	$ 7,397,029	$ 7,401,279

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

c. Retained earnings and dividend policy

Under the dividends policy, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of employees’ compensation and remuneration of directors, refer to employees’ compensation and remuneration of directors in Note 21, d.

30 -

The Company operates in an industry related to computers, and its business related to network servers is new but with significant potential for growth. Thus, in formulating its dividends policy, the Company takes into account the overall business and industry conditions and trends, the sustainability of the Company’s growth, its objective of enhancing the shareholders’ long-term interests, and stable operation in line with its performance goal. 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 2019 and 2018, which were approved in the shareholders’ meetings on May 28, 2020 and on May 28, 2019, respectively, were as follows:

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

d. Special reserves

Balance at January 1 Appropriations of special reserves 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
		2020 $ 798,763 47,230 $ 845,993	2019 $ 369,655 429,108 $ 798,763

31 -

e. Other equity items

1) Exchange differences on translating the financial statements of foreign operations

For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2020 2019 $ (878,261) $ (475,245) (231,590) (157,464) (6,947) 13,957 (238,537) (143,507) $ (1,116,798) $ (618,752) For the Nine Months Ended September 30

	2020 $ 30,970 122,727 (964) 121,763 (120) $ 152,613	2019 $ (324,254) 68,080 25,597 93,677 23,196 $ (207,381)

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	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 1,298 179 $ 1,477	2019 $ 736 221 $ 957

32 -

f. Non-controlling interests

Balance at January 1 Share of profit for the year Other comprehensive income during the year Exchange differences on translating the financial statements of foreign operations Increase in non-controlling interests arising from decrease in investment in subsidiaries (Note 27) Increase in non-controlling interests arising from increase in investment in subsidiaries (Note 27) 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, ACI IOT Investment Fund-I Corporation Cash dividends distributed by subsidiaries Non-current rights and interests related to vested outstanding share options granted by subsidiaries to its employees Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 577,361 30,185 (17,072) 53,634 (20,708) - - - (11,443) 104 $ 612,061	2019 $ 245,436 34,559 18,079 352 8,316 125,868 35,252 62,000 (14,039) 316 $ 516,139

21. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

Interest on bank loans Interest on lease liabilities Others Depreciation and amortization An analysis of depreciation by function Operating costs Operating expenses	For the Three Months Ended September 30 2020 2019 $ 892 $ 1,577 3,625 4,510 464 1,665 $ 4,981 $ 7,752 For the Three Months Ended September 30 2020 2019 $ 41,839 $ 45,772 169,063 149,194 $ 210,902 $ 194,966	For the Three Months Ended September 30 2020 2019 $ 892 $ 1,577 3,625 4,510 464 1,665 $ 4,981 $ 7,752 For the Three Months Ended September 30 2020 2019 $ 41,839 $ 45,772 169,063 149,194 $ 210,902 $ 194,966	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
			2020 2019 $ 2,574 $ 3,323 10,881 13,530 1,883 3,215 $ 15,338 $ 20,068 For the Nine Months Ended September 30
		2020 $ 41,839 169,063 $ 210,902		2020 $ 121,471 478,588 $ 600,059	2019 $ 132,117 483,007 $ 615,124 (Continued)

b. Depreciation and amortization
33 -

An analysis of amortization by function Operating costs Operating expenses c. Employee benefits expense	For the Three Months Ended September 30 2020 2019 $ 505 $ 951 42,186 92,942 $ 42,691 $ 93,893	For the Three Months Ended September 30 2020 2019 $ 505 $ 951 42,186 92,942 $ 42,691 $ 93,893	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 505 42,186 $ 42,691		2020 $ 1,800 135,684 $ 137,484	2019 $ 2,842 201,564 $ 204,406

Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) Share-based payments Equity-settled Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Months Ended September 30 2020 2019 $ 2,572,839 $ 2,472,255 74,668 93,146 2,484 1,338 77,152 94,484 89,607 64,291 248,987 128,638 $ 2,988,585 $ 2,759,668 $ 578,955 $ 613,746 2,409,630 2,145,922 $ 2,988,585 $ 2,759,668		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 2,572,839 74,668 2,484 77,152 89,607 248,987 $ 2,988,585 $ 578,955 2,409,630 $ 2,988,585		2020 $ 7,242,381 202,805 7,457 210,262 213,309 503,136 $ 8,169,088 $ 1,724,153 6,444,935 $ 8,169,088	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

d. Employees’ compensation and remuneration of directors and supervisors

According to the Company’s policies on distribution of employees’ compensation and remuneration of directors, 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 ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the employees’ compensation and the remuneration of directors were accrued from the aforementioned net profit before income tax at the amount determined from prior year experience.

Employees’ compensation Remuneration of directors	For the Three Months Ended September 30 2020 2019 $ 150,000 $ 149,143 $ 3,000 $ 2,650	For the Three Months Ended September 30 2020 2019 $ 150,000 $ 149,143 $ 3,000 $ 2,650	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 150,000 $ 3,000		2020 $ 450,000 $ 9,000	2019 $ 398,033 $ 7,950

34 -

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 and shall be adjusted in the following year.

The appropriations of employees’ compensation and remuneration of directors and supervisors for 2019 and 2018, which were resolved by the board of directors on March 6, 2020 and May 3, 2019, respectively, were as follows:

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2019 Cash $ 600,000 $ 12,000		2018
				Cash $ 452,355 $ 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, 2019 and 2018.

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

e. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net gain (loss)	For the Three Months Ended September 30 2020 2019 $ 303,338 $ 191,173 (277,739) (267,141) $ 25,599 $ (75,968)	For the Three Months Ended September 30 2020 2019 $ 303,338 $ 191,173 (277,739) (267,141) $ 25,599 $ (75,968)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 303,338 (277,739) $ 25,599		2020 $ 638,376 (648,261) $ (9,885)	2019 $ 585,869 (579,886) $ 5,983

22. 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 Income tax expense recognized in profit or loss		For the Three Months Ended September 30 2020 2019 $ 383,281 $ 531,182 - - (6,525) (27,770) 134,458 57,837 $ 511,214 $ 561,249		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 383,281 - (6,525) 134,458 $ 511,214		2020 $ 1,314,308 18,149 (109,978) 250,015 $ 1,472,494	2019 $ 1,495,622 21,176 (56,066) 44,870 $ 1,505,602

35 -

In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Group has already deducted the amount of capital expenditure from the unappropriated earnings in 2018 that was reinvested when calculating the tax on unappropriated earnings for the year ended December 31, 2019.

b. Income tax recognized in other comprehensive income

Deferred tax In respect of current period Translating the financial statements of foreign operations Income tax recognized in other comprehensive income (loss)	For the Three Months Ended September 30 2020 2019 $ (9,369) $ 73,489 $ (9,369) $ 73,489	For the Three Months Ended September 30 2020 2019 $ (9,369) $ 73,489 $ (9,369) $ 73,489	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ (9,369) $ (9,369)		2020 $ 59,635 $ 59,635	2019 $ 35,877 $ 35,877

c. Income tax assessments

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

23. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Three Months Ended September 30 2020 2019 $ 2.52 $ 2.78 $ 2.47 $ 2.75	For the Three Months Ended September 30 2020 2019 $ 2.52 $ 2.78 $ 2.47 $ 2.75	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 2.52 $ 2.47		2020 $ 7.19 $ 7.06	2019 $ 7.34 $ 7.25

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retroactively for the issuance of bonus shares (or share splits) on August 8, 2020. The basic and diluted earnings per share adjusted retrospectively for the three months and nine months ended September 30, 2020 are as follows:

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	Before Retrospective Adjustment For the Three Months Ended September 30, 2019 For the Nine Months Ended September 30, 2019 $ 3.06 $ 8.08 $ 3.03 $ 7.99	After Retrospective Adjustment
		For the Three Months Ended September 30, 2019 For the Nine Months Ended September 30, 2019 $ 2.78 $ 7.34 $ 2.75 $ 7.25

36 -

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

Net Profit for the Period

Earnings used in the computation of basic earnings per share Earnings used in the computation of diluted earnings per share		For the Three Months Ended September 30 2020 2019 $ 1,941,395 $ 2,136,117 $ 1,941,395 $ 2,136,117		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 1,941,395 $ 1,941,395		2020 $ 5,543,660 $ 5,543,660	2019 $ 5,641,542 $ 5,641,542

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

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee share options Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended September 30 2020 2019 771,537 769,212 12,637 6,918 515 546 784,689 776,676	For the Three Months Ended September 30 2020 2019 771,537 769,212 12,637 6,918 515 546 784,689 776,676	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 771,537 12,637 515 784,689		2020 771,018 12,203 2,047 785,268	2019 768,938 6,746 1,938 777,622

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

24. SHARE-BASED PAYMENT ARRANGEMENTS

Qualified employees of the Company and its subsidiaries were granted 7,500 options in 2020, 8,000 options in 2018 and 6,500 options in 2016. 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 2020, 2018 and 2016 are all valid for six years. All options are exercisable at certain percentages after the second anniversary year from the grant date. The exercise price of those granted in 2020 was NT$200 per share. The options issued in 2018 were granted at an exercise price equal to the share price at the grant date. The exercise price of those granted in 2016 was 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.

37 -

Information on employee share options was as follows:

Balance at January 1 Options granted Options exercised Options expired Balance at September 30 Options exercisable, end of the period Weighted average fair value of options granted (NT$)	For the Nine Months	Ended September 30
	2020 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 14,250 $ 149.88 7,500 200.00 (1,495) 78.19 (543) 70.50 19,712 174.07 8,212 136.54 $ 125.77	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 $ -

The weighted average share prices at the date of exercise of share options exercised during the nine months ended September 30, 2020 and 2019 ranged from NT$258 to NT$326 dollars and NT$223 to NT$271 dollars, respectively.

Information about outstanding options for the nine months ended September 30, 2020 and 2019 was as follows:

Issuance in 2020 Issuance in 2018 Issuance in 2016 Issuance in 2014	For the Nine Months	Ended September 30
	2020 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 200.00 5.83 202.50 3.83 73.90 1.70 - -	2019
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ - - 202.50 4.83 85.60 2.70 81.50 0.88

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

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

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

38 -

Compensation cost recognized was $213,170 thousand and $233,638 thousand for the nine months ended September 30, 2020 and 2019, respectively.

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

Information on employee share options was as follows:

Balance at January 1 Options expired Balance at September 30 Options exercisable, end of period Weighted average fair value of options granted (NT$)	For the Nine Months	Ended September 30
	2020 Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 740 $ 20 (32) 20 708 20 526 20 $ -	2019
		Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 814 $ 20 (64) 20 750 20 180 20 $ -

Information on outstanding options for the nine months ended September 30, 2020 and 2019 was as follows:

For the Nine Months Ended September 30 2020 2019 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) Issuance in 2018 $ 20 1.78 $ 20 2.78 Issuance in 2017 20 0.67 20 1.67 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% 25.60%-29.45% Expected life (in years) 2.5-4 2.5-4 Expected dividend yield 1.04% 0% Risk-free interest rate 0.60%-0.67% 0.64%-0.74%	For the Nine Months	Ended September 30
		2019

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

39 -

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%

25. GOVERNMENT GRANTS

For the three months ended September 30, 2020 and for the nine months ended September 30, 2020, the Group received government grants of $6,720 thousand and $21,029 thousand for its engagement in a government project. The amounts were recognized as other revenue. In addition, expenses or losses incurred of $26,082 thousand and $80,898 thousand for the three months ended September 30, 2020 and for the nine months ended September 30, 2020 were recognized as expenses for receiving government grants.

26. BUSINESS COMBINATIONS

a. Subsidiaries acquired

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

40 -

The Group acquired 80% of the shares of ATJ (former Omron Nohgata Co., Ltd.) 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 ATR (former Alitek Teknoloji Urunleri San. ve Tic. A.S.) in order to expand its sales of industrial PCs in the Turkey market. The Group increased capital; thus the Group’s equity investment in ATR increased to 60%.

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

b. Consideration transferred

Cash Ownership of Shanghai Yanle Co., Ltd. before combination	Yanle $ 5,071 1,627 $ 6,698	ATJ $ 517,008 - $ 517,008	ATR $ 58,482 - $ 58,482

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

Current assets Cash and cash equivalents Trade receivables and other receivables Inventories Other current assets Non-current assets Plant and equipment Intangible assets Deferred tax assets Other non-current assets Current liabilities Short-term borrowings Trade payables and other payables Current tax liabilities Other current liabilities Non-current liabilities Net defined benefit liabilities Other non-current liabilities	Yanle $ 2,347 - 959 232 93 - - - - (11) - (3) - - $ 3,617	ATJ $ - 600,640 437,154 7,220 251,399 65,649 96,606 - (157,819) (501,113) (32,436) (15,770) (122,190) - $ 629,340	ATR $ 33,334 15,759 9,966 353 723 34,783 - 238 (311) (2,206) (193) (4,230) - (86) $ 88,130

d. Non-controlling interests

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

41 -

e. Goodwill recognized on acquisitions

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

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

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

f. Net cash outflow on acquisitions of subsidiaries

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

g. Impact of acquisitions on the results of the Group

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

Operating revenue Profit or loss	For the Nine Months Ended September 30, 2020 Yanle $ - $ (398)		For the Nine Months Ended September 30, 2019	For the Nine Months Ended September 30, 2019
			ATJ $ 1,924,304 $ 131,221	ATR $ 81,212 $ 8,654

27. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

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

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

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

42 -

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

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

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

LNC Cash consideration received (paid) $ 26,919 The proportionate share of the carrying amount of the net assets of the subsidiary transferred to (from) non-controlling interests (26,583) Differences recognized from equity transactions $ 336 Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 336 Capital surplus - changes in percentage of ownership interests in subsidiaries - Unappropriated earnings - $ 336 Cash consideration received (paid) The proportionate share of the carrying amount of assets of the subsidiary transferred to (from) non-controlling interests Differences recognized from equity transactions			September 30, 2020 AIH AMX ABR Total $ (4,554) $ 9,816 $ (59,930) $ (27,749) 2,481 (27,051) 18,227 (32,926) $ (2,073) $ (17,235) $ (41,703) $ (60,675) $ - $ - $ (9,014) $ (8,678) - (4,554) - (4,554) (2,073) (12,681) (32,689) (47,443) $ (2,073) $ (17,235) $ (41,703) $ (60,675) September 30, 2019 ATJ AIH Total $ 9,229 $ - $ 9,229 the net (8,316) (352) (8,668) $ 913 $ (352) $ 561 (Continued)	September 30, 2020 AIH AMX ABR Total $ (4,554) $ 9,816 $ (59,930) $ (27,749) 2,481 (27,051) 18,227 (32,926) $ (2,073) $ (17,235) $ (41,703) $ (60,675) $ - $ - $ (9,014) $ (8,678) - (4,554) - (4,554) (2,073) (12,681) (32,689) (47,443) $ (2,073) $ (17,235) $ (41,703) $ (60,675) September 30, 2019 ATJ AIH Total $ 9,229 $ - $ 9,229 the net (8,316) (352) (8,668) $ 913 $ (352) $ 561 (Continued)	September 30, 2020 AIH AMX ABR Total $ (4,554) $ 9,816 $ (59,930) $ (27,749) 2,481 (27,051) 18,227 (32,926) $ (2,073) $ (17,235) $ (41,703) $ (60,675) $ - $ - $ (9,014) $ (8,678) - (4,554) - (4,554) (2,073) (12,681) (32,689) (47,443) $ (2,073) $ (17,235) $ (41,703) $ (60,675) September 30, 2019 ATJ AIH Total $ 9,229 $ - $ 9,229 the net (8,316) (352) (8,668) $ 913 $ (352) $ 561 (Continued)	September 30, 2020 AIH AMX ABR Total $ (4,554) $ 9,816 $ (59,930) $ (27,749) 2,481 (27,051) 18,227 (32,926) $ (2,073) $ (17,235) $ (41,703) $ (60,675) $ - $ - $ (9,014) $ (8,678) - (4,554) - (4,554) (2,073) (12,681) (32,689) (47,443) $ (2,073) $ (17,235) $ (41,703) $ (60,675) September 30, 2019 ATJ AIH Total $ 9,229 $ - $ 9,229 the net (8,316) (352) (8,668) $ 913 $ (352) $ 561 (Continued)
			AIH $ (4,554) 2,481 $ (2,073) $ - - (2,073) $ (2,073) the net					Total $ (27,749) (32,926) $ (60,675) $ (8,678) (4,554) (47,443) $ (60,675)
					ATJ $ 9,229 (8,316) $ 913	AIH Total $ - $ 9,229 (352) (8,668) $ (352) $ 561 (Continued)

43 -

Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition Capital surplus - changes in percentage of ownership interests in subsidiaries Unappropriated earnings		September 30, 2019	September 30, 2019
		ATJ $ 913 - - $ 913	AIH Total $ - $ 913 - - (352) (352) $ (352) $ 561 (Concluded)

28. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are measured at fair value on a recurring basis
1) Fair value hierarchy
September 30, 2020
Level 1
Level 2
Level 3
Financial assets at FVTPL
Derivative financial assets
$ - $ 4,944 $ -
Domestic listed shares and
emerging market shares
272,181
-
-
Foreign listed shares and
emerging market shares
91,055
-
-
Foreign unlisted shares and
emerging market shares
-
-
83,284
Mutual funds

2,102,029

-

-

$ 2,465,265
$ 4,944
$ 83,284

Financial assets at FVTOCI
Domestic listed shares and
emerging market shares
$ 1,615,965 $ - $ -
Domestic unlisted shares and
emerging market shares
-
-
16,853
Foreign unlisted shares and
emerging market shares

-

-

128,070

$ 1,615,965
$ -
$ 144,923

Financial liabilities at FVTPL
Derivative financial liabilities$ -
$ 7,582
$ -

Total
$ 4,944

272,181

91,055

83,284

2,102,029
$ 2,553,493
$ 1,615,965

16,853

128,070
$ 1,760,888
$ 7,582

44 -

December 31, 2019

Financial assets at FVTPL Derivative financial assets Domestic listed shares and emerging market shares Foreign listed shares and emerging market shares Foreign unlisted shares and emerging market shares Mutual funds Financial assets at FVTOCI Domestic listed shares and emerging market shares Domestic unlisted shares and emerging market shares Foreign unlisted shares and emerging market shares Financial liabilities at FVTPL Derivative financial liabilities September 30, 2019 Financial assets at FVTPL Derivative financial assets Domestic listed shares and emerging market shares Foreign listed shares and emerging market shares Mutual funds Financial assets at FVTOCI Domestic listed shares and emerging market shares Domestic unlisted shares and emerging market shares Foreign unlisted shares and emerging market shares Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 118,392 50,157 - 3,470,094 $ 3,638,643 $ 1,489,491 - - $ 1,489,491 $ - Level 1 $ - 126,454 62,316 1,265,588 $ 1,454,358 $ 1,250,723 - - $ 1,250,723 $ -	Level 2 $ 9,320 - - - - $ 9,320 $ - - - $ - $ 521 Level 2 $ 20,042 - - - $ 20,042 $ - - - $ - $ 1,421	Level 3 $ - - - 101,156 - $ 101,156 $ - 18,860 130,970 $ 149,830 $ - Level 3 $ - - - - $ - $ - 8,230 132,299 $ 140,529 $ -	Total $ 9,320 118,392 50,157 101,156 3,470,094 $ 3,749,119 $ 1,489,491 18,860 130,970 $ 1,639,321 $ 521 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

45 -

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

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

For the nine months ended September 30, 2020

Financial assets Balance at January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income (loss) Balance at September 30, 2020	Financial Assets at Fair Value Through Profit of Loss Financial Assets at Fair Value Through Other Comprehensive Income Equity Instruments Equity Instruments $ 101,156 $ 149,830 (17,872) - - (4,907) $ 83,284 $ 144,923	Total $ 250,986 (17,872) (4,907) $ 228,207

For the nine months ended September 30, 2019

Financial assets Balance at January 1, 2019 Recognized in other comprehensive income Balance at September 30, 2019	Financial Assets at Fair Value Through Other Comprehensive Income Equity Instruments $ 118,765 21,764 $ 140,529	Total $ 118,765 21,764 $ 140,529

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.

46 -

b. Categories of financial instruments

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2020		2019		2019
Financial assets
Fair value through profit or loss (FVTPL)
Mandatorily classified as at FVTPL	$	2,553,493	$	3,749,119	$	1,474,400
Financial assets at amortized cost (Note 1)		16,217,870		15,253,957		15,198,530
Financial assets at FVTOCI
Equity instruments		1,760,888		1,639,321		1,391,252
Financial liabilities
Fair value through profit or loss (FVTPL)
Mandatorily classified as at FVTPL		7,582		521		1,421
Financial liabilities at amortized cost (Note 2)		7,912,040		8,826,187		9,125,401

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

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.

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

47 -

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 31. As for the carrying amounts of derivatives exposing to foreign currency risk at the end of the reporting period, refer to Note 7.

Sensitivity analysis

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

The following table details the Group’s sensitivity to a 5% increase in New Taiwan dollars (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 2020 2019 $ 141,617 (Note 1) $ 39,879 (Note 1)	Euro Impact For the Nine Months Ended September 30 2020 2019 $ 55,848 (Note 2) $ 61,863 (Note 2)	Renminbi Impact
			For the Nine Months Ended September 30
			2020 2019 $ 39,679 (Note 3) $ 68,690 (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.
48 -

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

	September 30,	December 31,	September 30,
	2020	2019	2019
Fair value interest rate risk
Financial assets	$ 1,453,835	$ 1,434,765	$ 1,481,387
Financial liabilities	151,800	165,600	172,800
Cash flow interest rate risk
Financial assets	4,757,859	4,055,867	3,099,449
Financial liabilities	141,425	129,167	171,484

Sensitivity analysis

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

If interest rates had been 50 basis points higher and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2020 and 2019 would have increased by $17,312 thousand and $10,980 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 in the Taiwan Stock Exchange.

Sensitivity analysis

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

If equity prices had been 1% higher, pre-tax profit for the nine months ended September 30, 2020 and 2019 would have increased by $4,465 thousand and $1,888 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, 2020 and 2019 would have increased by $17,609 thousand and $13,913 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.

49 -

The Group’s sensitivity to equity prices increased mainly because of its increase in financial assets investment in 2020.

2) Credit risk

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

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

3) Liquidity risk

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

The Group relies on bank borrowings as a significant source of liquidity. As of September 30, 2020, December 31, 2019 and September 30, 2019, 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 maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on agreed repayment dates.

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

50 -

September 30, 2020

On Demand or
Less than
1 Month
1-3 Months
Over 3
Months to
1 Year

Non-derivative
financial liabilities
Non-interest bearing
liabilities
$ 4,244,546 $ 1,754,646 $ 1,619,623
Lease liabilities
102,706
176
39,294
Variable interest rate
liabilities
55,489
33,214
135,575
Fixed interest rate
liabilities

110,450

41,402

-

$ 4,513,191
$ 1,829,438
$ 1,794,492

Additional information about the maturity analysis for lease liabilities

Over 1 Year
$ -

-

153,286

-
$ 153,286

Less than 1
Year
1-5 Years
5-10 Years 10-15 Years 15-20 Years 20+ Years
Lease liabilities
$ 224,278
$ 138,393
$ 14,893
$ -
$ -
$ -
December 31, 2019
On Demand or
Less than
1 Month
1-3 Months
Over 3
Months to
1 Year
Over 1 Year
Non-derivative
financial liabilities
Non-interest bearing
$ 5,585,880 $ 2,277,916 $ 666,661 $ 963
Lease liabilities
33,111
51,455
117,915
270,158
Variable interest rate
liabilities
20,293
541
75,470
45,756
Fixed interest rate
liabilities

165,632

-

-

-
$ 5,804,916
$ 2,329,912
$ 860,046
$ 316,877
Additional information about the maturity analysis for lease liabilities
Less than 1
Year
1-5 Years
5-10 Years 10-15 Years 15-20 Years 20+ Years
Lease liabilities
$ 202,481
$ 206,664
$ 63,494
$ -
$ -
$ -

20+ Years
$ -

Less than 1
Year
Lease liabilities
$ 202,481

51 -

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 $ -

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

b) Liquidity and interest risk rate 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, 2020

On Demand or Less than 1 Month 1-3 Months Over 3 Months to 1 Year Gross settled Foreign exchange forward contracts Inflows $ 253,022 $ 488,647 $ 121,272 Outflows 257,336 488,718 119,525 $ (4,314) $ (71) $ 1,747	Total $ 862,941 865,579 $ (2,638)

52 -

December 31, 2019

On Demand or
Less than
1 Month
1-3 Months
Over 3 Months
to 1 Year
Total
Gross settled
Foreign exchange
forward contracts
Inflows
$ 330,202
$ 430,604
$ 101,721
$ 862,527
Outflows

325,163

427,666

100,899

853,728
$ 5,039
$ 2,938
$ 822
$ 8,799
September 30, 2019
On Demand or
Less than
1 Month
1-3 Months
Over 3 Months
to 1 Year
Total
Gross settled
Foreign exchange
forward contracts
Inflows
$ 320,475
$ 456,040
$ 50,501
$ 827,016
Outflows

312,180

446,740

49,475

808,395
$ 8,295
$ 9,300
$ 1,026
$ 18,621
Financing facilities
September 30,
2020
December 31,
2019
September 30,
2019
Unsecured bank overdraft facilities:
Amount used (Note)
$ 300,256
$ 250,678
$ 297,878
Amount unused

6,674,157

6,741,182

6,911,702
$ 6,974,413
$ 6,991,860
$ 7,209,580
Secured bank overdraft facilities:
Amount used
$ -
$ 44,089
$ 46,406

Note: The amounts used or drawn by the Group from the unsecured bank overdraft facilities were recorded as borrowings of $293,225 thousand and lease guarantees of $7,031 thousand.

53 -

29. 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.

Winmate Inc.

AzureWave Technologies, Inc.

Nippon RAD Inc.

Shanghai Yanle Co., Ltd.

iLink Co., Ltd.

DotZero Co., Ltd.

Mildex Optical Inc.

CDIB Capital Innovation Accelerator Co., Ltd.

Information Technology Total Services Co., Ltd.

HwaCom Systems Inc.

Smasoft Technology Co., Ltd.

Impelex Data Transfer Co., Ltd.

VSO Electronics Co., Ltd. (“VSO”)

VSO Electronics (Suzhou) Co., Ltd.

K&M Investment Co., Ltd.

AIDC Investment Corp.

Advantech Foundation

Related Party Category

Associate
Associate
Associate
Associate
Associate
Associate
Associate (became a second-tier subsidiary of the
parent company from June 2020)
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 Other related parties	For the Three Months Ended September 30 2020 2019 $ 23,523 $ 19,546 1,533 - $ 25,056 $ 19,546	For the Three Months Ended September 30 2020 2019 $ 23,523 $ 19,546 1,533 - $ 25,056 $ 19,546	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 23,523 1,533 $ 25,056		2020 $ 83,662 2,325 $ 85,987	2019 $ 66,469 - $ 66,469

c. Purchases of goods

Related Party Categories/Name Associates	For the Three Months Ended September 30 2020 2019 $ 57,152 $ 35,588	For the Three Months Ended September 30 2020 2019 $ 57,152 $ 35,588	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 57,152		2020 $ 230,995	2019 $ 128,354

54 -
d. Receivables from related parties (excluding loans to related parties)

	Related Party	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
Line Items	Categories/Name		2020		2019		2019
Trade receivables from	Associates	$	29,118	$	20,174	$	46,966
related parties	Other related parties		20		-		-
		$	29,138	$	20,174	$	46,966

The outstanding trade receivables from related parties are unsecured. For the nine months ended September 30, 2020 and 2019, no impairment loss was recognized for trade receivables from related parties.

e. Other receivables from related parties

	Related Party	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
Line Items	Categories/Name		2020		2019		2019
Other receivables from	Associates	$	3,084	$	-	$	-
related parties	Other related parties		-		29		1,135
		$	3,084	$	29	$	1,135

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

	Related Party	September	September	30,	December 31,	December 31,	September 30,	September 30,
Line Items	Categories/Name		2020			2019		2019
Trade payables	Associates	$	39,674		$	43,367	$	24,732
Other payables	Other related parties	$		-	$	7,965	$	4,270

The outstanding trade payables to related parties are unsecured.

g. Prepayments to related parties

	Related Party	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
Line Items	Categories/Name		2020		2019		2019
Other current assets	Associates	$	36,812	$	25,470	$	33,571

h. Other transactions with related parties

Related Party Categories/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 2020 2019 $ - $ 100 $ 5,768 $ 295		For the Nine Months Ended September 30
		2020 $ - $ 5,768		2020 $ 92 $ 6,608	2019 $ 134 $ 608

55 -

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.

Related Party Categories/Name Rental income Associates Other related parties Others Other related parties	Other Income	Other Income	Other Income	Other Income	Other Income
	For the Three Months Ended September 30 2020 2019 $ - $ - 15 15 $ 15 $ 15 $ 676 $ 676		For the Nine Months Ended September 30
		2020 $ - 15 $ 15 $ 676		2020 $ 243 45 $ 288 $ 2,027	2019 $ - 45 $ 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 Group 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 2020 2019 $ 11,398 $ 11,290 41 11 4,957 8,813 $ 16,396 $ 20,114	For the Three Months Ended September 30 2020 2019 $ 11,398 $ 11,290 41 11 4,957 8,813 $ 16,396 $ 20,114	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2020 $ 11,398 41 4,957 $ 16,396		2020 $ 34,070 121 22,003 $ 56,194	2019 $ 33,869 32 29,635 $ 63,536

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

30. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

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

			September	September	30,	December 31,	September 30,
				2020		2019	2019
Property,	plant	and equipment	$		-	$ 64,584	$ 64,584

56 -

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

September 30, 2020

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 169,393 29.100 (USD:NTD) RMB 395,274 4.269 (RMB:NTD) EUR 33,410 34.15 (EUR:NTD) USD 12,304 6.8166 (USD:RMB) Financial liabilities Monetary items USD 58,935 29.100 (USD:NTD) RMB 149,500 4.269 (RMB:NTD) USD 25,432 6.8166 (USD:RMB)	Carrying Amount $ 4,929,343 1,687,425 1,140,966 358,040 $ 8,115,774 $ 1,714,995 638,214 740,071 $ 3,093,280

December 31, 2019

Unit: In Thousands for Currencies, Except Exchange Rates

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

57 -

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

For the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, realized and unrealized net foreign exchange gains (losses) were $25,599 thousand, $(75,968) thousand, $(9,885) thousand and $5,983 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the entities in the Group.

32. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and b. information on investees:
1) Financing provided to others. (Table 1)
2) Endorsement/guarantee provided. (Table 2)
3) Marketable securities held. (Table 3)
4) Marketable securities acquired and disposed 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)
58 -
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 6)
9) Transactions of financial instruments. (Notes 7 and 28)
10) Significant transactions between the Company and subsidiaries. (Table 10)
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, 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)
d. Information of major shareholders

The following is the information of major shareholders: Name of major shareholders, number of shares owned and percentage of ownership of shareholders whose percentage of ownership is higher than 5%. (Table 9)

33. 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:

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

The CODM considers each service as 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.
59 -

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, 2020 Revenue from external customers $ 12,423,849 Inter-segment revenue - Segment revenue $ 12,423,849 Eliminations $ - Consolidated revenue - Segment income $ 3,737,254 Other revenue Other unamortized expense Other income and expense Finance costs Share of profits of associates for using the equity method Profit before tax (continuing operations) For the nine months ended September 30, 2019 Revenue from external customers $ 12,543,498 Inter-segment revenue - Segment revenue $ 12,543,498 Eliminations $ - Consolidated revenue - Segment income $ 3,462,383 Other revenue Other unamortized expense 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) $ 9,450,826 - $ 9,450,826 $ - - $ 1,817,513 $ 10,374,148 - $ 10,374,148 $ - - $ 1,635,468	Allied Design Manufacture Services (Allied DMS) $ 8,912,013 - $ 8,912,013 $ - - $ 1,618,696 $ 9,699,965 - $ 9,699,965 $ - - $ 1,617,553	Intelligent Services (SIoT) $ 3,175,689 - $ 3,175,689 $ - - $ 314,567 $ 3,398,612 - $ 3,398,612 $ - - $ 285,157	Global Customer Services (AGS & APS) $ 4,313,357 - $ 4,313,357 $ - - $ 582,057 $ 4,595,899 - $ 4,595,899 $ - - $ 645,106	Others $ 64,475 - $ 64,475 $ - - $ - $ 46,764 - $ 46,764 $ - - $ 407	Total $ 38,340,209 - 38,340,209 - - 8,070,087 139,538 (1,310,839 ) 52,097 (15,338 ) 110,794 $ 7,046,339 $ 40,658,886 - 40,658,886 - 40,658,886 7,646,054 194,811 (835,874 ) 130,460 (20,068 ) 66,320 $ 7,181,703

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs and remuneration of directors, 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, net foreign exchange gain or loss, valuation gain or loss on financial instruments, finance costs and income tax expense. This was the measure reported to the CODM 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, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note A)	Lender	Borrower	Financial Statement Account	Related Parties	Credit Line (Note F)	Credit Line (Note F)	Actual Borrowing	Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limits
					Highest Balance for the Period	Ending Balance	Ending Balance						Item	Value
1	LNC	LNC Dong Guan Co., Ltd.	Trade receivables - related parties	Yes	$ 70,000	$ 70,000	$ -	-	Short-term financing	$ -	Financing need	$ -	None	None	$ 31,956 (Note D)	$ 127,823 (Note D)
2	Advantech Corporate Investment	The Company	Trade receivables - related parties	Yes	1,000,000	-	-	1.00	Short-term financing	-	Financing need	-	None	None	1,340,091 (Note E)	1,340,091 (Note E)
3	AAC (BVI)	ATJ	Trade receivables - related parties	Yes	177,000 (JPY 600,00 thousand )	-	-	0.55	Short-term financing	-	Financing need	-	None	None	2,989,996 (Note C)	2,989,996 (Note C)

Note A: Investee companies are numbered sequentially from 1.

Note B: The exchange rate as of September 30, 2020 was JPY1=NT$0.276.

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

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

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

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

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

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TABLE 2

ADVANTECH CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note A)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Collateral/ Guarantee Amounts Allowable (Note B)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Company	ANA AAC (BVI) Advantech Corporate Investment ATJ AKST AKMC ACISM SIoT (Cayman) B+B AJP Advantech Intelligent City Services Co., Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361	$ 907,500 (US$ 30,000 thousand) 302,5000 (US$ 10,000 thousand) 302,5000 (US$ 10,000 thousand) 282,000 (JPY1,000,000 thousand) 181,5000 (US$ 6,000 thousand) 181,5000 (US$ 6,000 thousand) 151,250 (US$ 5,000 thousand) 302,5000 (US$ 10,000 thousand) 151,250 (US$ 5,000 thousand) 302,5000 (JPY 500,000 thousand) 90,675 (US$ 3,000 thousand)	$ 873,000 (US$ 30,000 thousand) 291,000 (US$ 10,000 thousand) 291,000 (US$ 10,000 thousand) 276,000 (JPY1,000,000 thousand) 174,600 (US$ 6,000 thousand) 174,600 (US$ 6,000 thousand) 145,500 (US$ 5,000 Thousand) 291,000 (US$ 10,000 thousand) 145,500 (US$ 5,000 thousand) 138,000 (JPY 500,000 thousand) 87,300 (US$ 3,000 thousand)	$ - - - 110,400 (JPY 400,000 thousand) 101,425 (US$ 3,845 thousand) - - - - 41,400 (JPY 150,000 thousand) -	$ - - - - - - - - - - -	2.69 0.90 0.90 0.85 0.54 0.54 0.45 0.90 0.45 0.43 0.27	$ 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082	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 Y N N N N N

(Continued)

62 -

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note A)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Collateral/ Guarantee Amounts Allowable (Note B)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
		AIH ABR A-SIoT AVN ARU Cermate (Taiwan) Cermate (Shenzhen) ACZ ATR Advanixs Corp. AAU ACI IOT Investment Fund-I Corporation AMY AKR	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361 3,242,361	$ 90,675 (US$ 3,000 thousand) 45,375 (US$ 1,500 thousand) 35,080 (EUR 1,000 thousand) 30,250 (US$ 1,000 thousand) 30,225 (US$ 1,000 thousand) 30,250 (US$ 1,000 thousand) 30,250 (US$ 1,000 thousand) 15,125 (US$ 500 thousand) 15,125 (US$ 500 thousand) 15,125 (US$ 500 thousand) 6,050 (US$ 200 thousand) 6,045 (US$ 200 thousand) 3,023 (US$ 100 thousand) 1,513 (US$ 50 thousand)	$ 87,300 (US$ 3,000 thousand) 43,650 (US$ 1,500 thousand) 34,150 (EUR 1,000 thousand) 29,100 (US$ 1,000 thousand) 29,100 (US$ 1,000 thousand) 29,100 (US$ 1,000 thousand) 29,100 (US$ 1,000 thousand) 14,550 (US$ 500 thousand) 14,550 (US$ 500 thousand) 14,550 (US$ 500 thousand) 5,820 (US$ 200 thousand) 5,820 (US$ 200 thousand) 2,910 (US$ 100 thousand) 1,455 (US$ 50 thousand)	$ - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - -	0.27 0.13 0.11 0.09 0.09 0.09 0.09 0.04 0.04 0.04 0.02 0.02 0.01 -	$ 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082 9,727,082	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 Y N N N N N N N

(Continued)

63 -

(Concluded)

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, 2020 were US$1=NT$29.10, EUR1=NT$34.15, and JPY1=NT$0.276.

Note D: The latest net equity is from the financial statements for the nine months ended September 30, 2020.

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TABLE 3

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2020

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

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		September 30, 2020	September 30, 2020		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
The Company Advantech Corporate Investment	Share ASUSTek Computer Inc. Allied Circuit Co., Ltd. Fund Capital Money Market FSITC Money Market FSITC Taiwan Money Market Share Contec GSD Technologies Co., Ltd. WT Microelectronics Co., Ltd. eGalax_eMPIA Technology Inc. Lanner Electronics Inc. Posiflex Technology Inc. Phison Electronics Corp. Innodisk Corp. GrandTech C.G. Systems Inc. Cypress Technology CO., LTD. ISI TRMB LTRX MSI HOLI EQIX NSIT China Mobile Ltd. Maxnerva Technology Services Ltd. Allied Circuit Co., Ltd. BroadTec System Inc. BioSenseTek Corp. Jaguar Technology Taiwan DSC PV Ltd. iSAP Solution Corp.	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	Financial assets at fair value through other comprehensive income or loss - non-current Same as above Financial assets at fair value through profit or loss - current Same as above Same as above Financial assets at fair value through profit or loss - 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 Same as above Same as above Same as above Same as above 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 Same as above	4,739,461 1,200,000 3,076,488 1,952,009 25,944,964 26,500 2,813,000 495,000 132,000 360,000 120,000 76,000 47,000 270,000 10,000 655 8,490 46,000 2,400 26,000 317 270 74,000 3,812,000 2,501,000 225,000 37,500 500,000 1,600 942,850	$ 1,201,453 134,400 50,000 350,784 400,056 12,258 178,343 18,637 6,970 20,880 9,528 20,102 7,450 9,666 605 13,524 12,032 6,439 10,952 8,360 7,012 445 13,737 6,296 280,112 3,149 - 6,710 - 6,994	0.64 2.41 - - - 0.41 8.27 0.06 0.22 0.31 0.16 0.04 0.06 0.46 0.02 - - 0.16 - 0.04 - - - 0.58 5.03 7.50 1.79 16.67 3.20 15.00	$ 1,201,453 134,400 50,000 350,784 400,056 12,258 178,343 18,637 6,970 20,880 9,528 20,102 7,450 9,666 605 13,524 12,032 6,439 10,952 8,360 7,012 445 13,737 6,296 280,112 3,149 - 6,710 - 6,994	Note A Note A Note B 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 A Note A Note A Note A Note A Note A Note A Note C Note C Note C Note C Note C

(Continued)

65 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		September 30, 2020	September 30, 2020		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Advanixs Corp. Advantech Intelligent City Services Co., Ltd. AdvanPOS SIoT (Cayman) Advantech Innovative Design Co., Ltd. AiSC Yun Yan, Wu-Lian Co., Ltd. Huan Yan, Jhih-Lian Co., Ltd.	Fund Mega Diamond Money Market Taishin 1699 Money Market FSITC Money Market Mutual Fund CBC Capital Fund Jih Sun Money Market Mega Diamond Money Market Fund Jih Sun Money Market Fund Mega Diamond Money Market Fund FSITC Taiwan Money Market Taishin 1699 Money Market FSITC Money Market Fund Capital Money Market Mutual Fund Shanghai Shangchuang Xinwei Investment Management Co., Ltd. Fund FSITC Money Market Fund FSITC Money Market	- - - - - - - - - - - - - - -	Financial assets at fair value through profit or loss - current Same as above Same as above Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current Same as above Same as above Same as above Same as above Same as above Same as above Same as above Financial assets at fair value through other comprehensive income or loss - non-current Financial assets at fair value through profit or loss - current Same as above	6,287,460 29,087,859 279,625 - 6,266,221 4,184,534 788,359 1,189,398 10,583,605 25,064,061 361,931 625,517 - 27,092 54,616	$ 86,288 396,575 50,250 83,284 93,585 52,886 11,774 15,032 163,193 341,716 65,041 10,166 128,070 4,869 9,814	- - - - - - - - - - - - 8.43 - -	$ 86,288 396,575 50,250 83,284 93,585 52,886 11,774 15,032 163,193 341,716 65,041 10,166 128,070 4,869 9,814	Note B Note B Note B Note C Note B Note B Note B Note B Note B Note B Note B Note B Note C Note B Note B

Note A: Market value was based on the closing price on September 30, 2020.

Note B: Market value was based on the net asset values of the open-ended mutual funds on September 30, 2020.

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

(Concluded)

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TABLE 4

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					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 FSITC Taiwan Money Market Capital Money Market Fund Mega Diamond Money Market FSITC Taiwan Money Market	Financial assets at fair value through profit or loss Same as above Same as above Same as above Same as above	- - - - -	- - - - -	74,093,066 32,562,860 - 24,633,086 18,910,187	$ 931,183 500,000 - 310,158 290,517	46,815,772 127,351,782 72,086,748 - 16,252,167	$ 590,000 1,960,004 1,170,002 - 250,000	120,908,838 133,969,678 69,010,260 24,633,086 35,162,354	$ 1,527,284 2,064,647 1,121,044 310,412 541,310	$ 1,521,183 2,060,002 1,120,002 310,158 540,517	$ 6,101 4,645 1,042 254 793	- 25,944,964 3,076,488 - -	$ - 400,002 50,000 - -

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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, 2020

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

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details		Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Company The Company AKMC ANA ACN AEU SIoT (Cayman) AKR AJP Advanixs Corp. B+B AAU ASG ABR	ANA ACN AEU SIoT (Cayman) AKR AJP Advanixs Corporate B+B AAU ASG ABR AMY A-SIoT AKMC The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company	Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Purchase Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase	$ 7,145,688 5,588,805 3,387,247 936,167 747,784 561,613 453,761 212,564 225,902 182,133 111,653 126,815 120,900 (8,264,857) 8,264,857 (7,145,688) (5,588,805) (3,387,247) (936,167) (747,784) (561,613) (453,761) (212,564) (225,902) (182,133) (111,653)	27.48 21.49 13.03 3.60 2.88 2.16 1.75 0.82 0.87 0.70 0.43 0.49 0.52 40.02 93.10 79.64 76.84 71.00 90.04 61.14 87.82 99.57 73.27 76.68 65.78 71.54	45 days after month-end 45 days after month-end 30 days after month-end 60 days after month-end 60 days after invoice date 60-90 days 30 days after month-end 45 days after month-end 60-90 days 60-90 days 90 days after month-end 45 days after month-end 30 days after invoice date Usual trade terms Usual trade terms 45 days after month-end 45 days after month-end 30 days after month-end 60 days after month-end 60 days after invoice date 60-90 days 30 days after month-end 45 days after month-end 60-90 days 60-90 days 90 days after month-end	Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price	No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties No significant difference in terms for related parties	$ 1,509,969 1,148,636 1,240,841 40,410 58,077 82,763 50,762 24,397 53,465 92,057 14,566 24,092 72,352 (902,708) 902,708 (1,509,969) (1,148,636) (1,240,841) (40,410) (58,077) (82,763) (50,762) (24,397) (53,465) (92,057) (14,566)	26.81 20.39 22.03 0.72 1.03 1.47 0.90 0.43 0.95 1.63 0.26 0.43 1.28 32.83 90.25 87.02 76.89 73.96 49.68 49.10 93.06 97.65 88.30 89.12 80.29 82.89	Note A

(Continued)

68 -

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
AMY A-SIoT AKMC ACZ SIoT (Cayman) LNC ACN SIoT (Cayman) AEU ANA AEU A-SIoT LNC Dong Guan Co., Ltd.	The Company The Company ACN SIoT (Cayman) AEU ANA AEU A-SIoT LNC Dong Guan Co., Ltd. AKMC AKMC ACZ SIoT (Cayman) SIoT (Cayman) SIoT (Cayman) LNC	Parent company Parent company Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Subsidiary Related enterprise Related enterprise Related enterprise Related enterprise Related enterprise Parent company Parent company	Purchase Purchase Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase	$ (126,815) (120,900) 293,746 105,927 175,929 515,983 279,640 314,853 255,981 (293,746) (105,927) (175,929) (515,983) (279,640) (314,853) (255,981)	85.98 21.41 3.31 1.19 79.86 34.56 18.73 24.29 78.57 4.04 10.19 3.69 5.75 5.86 57.65 78.86	45 days after month-end 30 days after invoice date Usual trade terms Usual trade terms 60 days after invoice date Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms 60 days after invoice date 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	$ (24,092) (72,352) 53,451 21,667 33,063 16,302 17,543 73,075 207,994 (53,451) (21,667) (33,063) (16,302) (17,543) (73,075) (207,994)	93.39 48.43 5.34 2.17 76.43 9.42 10.14 42.22 91.73 3.58 26.64 1.97 0.94 1.05 48.92 94.07

Note A: Unrealized gain for the period was $6,881 thousand.

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

(Concluded)

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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 SEPTEMBER 30, 2020

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

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
The Company AKMC LNC	ACN ANA AEU The Company LNC Dong Guan Co., Ltd.	Subsidiary Subsidiary Subsidiary Parent company Subsidiary	$ 1,148,636 1,515,205 1,242,808 902,708 207,994	5.13 6.87 4.01 7.57 1.59	$ - - - - -	- - - - -	$ 358,595 - 310,896 - 23,567	$ - - - - -

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

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TABLE 7

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (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, 2020	as of September 30, 2020	Net Income (Loss) of the Investee for the Period	Investment Gain (Loss) for the Period	Note
				September 30, 2020	December 31, 2019	Number of Shares	Percentage of Ownership (%)	Carrying Value
The Company AKR AJP Advantech Corporate Investment	AAC (BVI) ATC Advanixs Corp. Advantech Corporate Investment Axiomtek AdvanPOS LNC AMX AEUH ASG ATH AAU AJP AMY AKR ABR Advantech Innovative Design Co., Ltd. Advantech Intelligent City Services Co., Ltd. B+B AIN AIMobile Co., Ltd. AKST Winmate AVN Nippon RAD ARU ATJ ATR AIL AKST ATJ Cermate (Taiwan) Deneng CDIB AzureWave	BVI BVI Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taichung, Taiwan Mexico Helmond, the Netherlands Techplace, Singapore Thailand Sydney, Australia Tokyo, Japan Malaysia Seoul, Korea Sao Paulo, Brazil Taipei, Taiwan Taipei, Taiwan Delaware, USA India Taipei, Taiwan Gangwon-do, Korea Taipei, Taiwan Hanoi, Vietnam Tokyo, Japan Moscow Nogatashi, Japan Turkey Israel Gangwon-do, Korea Nogatashi, Japan Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan	Investment and management service Sale of industrial automation products Production and sale of industrial automation products Investment holding company Production and sale of industrial automation products Production and sale of POS system Production and sale of machines with computerized numerical control Sale of industrial automation products Investment and management service Sale of industrial automation products 15 Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Product design Design, develop and sale of intelligent services Sale of industrial network communications systems Sale of industrial automation products Design and manufacture of industrial mobile systems Production and sale of intelligent medical display Embedded System Modules Sale of industrial automation products R&D of IoT intelligent system Production and sale of industrial automation products Production and sale of electronic and mechanical devices Wholesale of computers and peripheral devices Sale of industrial network communications systems 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	$ 2,332,397 998,788 100,000 2,900,000 249,059 266,192 277,946 61,909 1,219,124 27,134 47,701 40,600 15,472 35,140 156,668 103,146 10,000 81,837 1,968,044 19,754 18,000 - 540,000 76,092 251,915 23,822 323,130 58,482 8,653 - 184,649 71,500 18,095 150,000 578,563	$ 2,332,397 998,788 100,000 2,900,000 249,059 266,192 304,865 4,922 1,219,124 27,134 47,701 40,600 15,472 35,140 73,355 43,216 10,000 81,837 1,968,044 19,754 180,000 83,313 540,000 76,092 251,915 23,822 323,130 58,482 8,653 55,579 184,649 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 17,730,000 10,000,002 25,961,250 1,450,000 51,000 500,204 1,200 2,000,000 600,000 12,723,038 1,000,000 1,000,000 230,467 3,999,999 18,000,000 - 12,000,000 8,100 850,000 1 500,000 260,870 100 - 286,100 5,500,000 658,000 15,000,000 29,599,000	100.00 100.00 100.00 100.00 24.77 100.00 59.10 60.00 100.00 100.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 60.00 99.99 45.00 - 16.51 60.00 16.08 100.00 50.00 60.00 100.00 - 28.61 55.00 39.69 17.86 19.67	$ 7,161,227 3,965,951 231,151 3,349,482 640,598 297,249 335,147 38,545 716,934 107,610 53,726 32,225 426,455 51,697 324,417 86,947 10,112 87,459 1,677,536 12,442 41,676 - 543,113 53,718 248,739 12,144 385,603 37,522 8,518 - 227,134 119,717 13,060 154,133 542,454	$ 877,937 90,143 32,746 70,985 238,676 18 26,066 (2,259) (222,041) 25,267 7,333 18,087 29,865 14,058 56,116 27,716 63 (8,422) 63,725 (653) (55,386) (15,281) 18,280 7,930 (3,545) (16,808) 17,497 6,991 90 (15,281) 17,497 11,199 (2,401) (23,063) 205,031	$ 890,395 81,728 32,746 71,109 59,029 18 14,664 (1,244) (217,764) 25,894 3,820 18,110 28,050 14,058 56,040 24,267 63 (8,422) 37,797 (851) (24,924) (11,614) 30,733 1,426 (674) (16,808) 5,611 1,786 90 (3,667) 5,006 6,282 (953) (4,118) 40,339	Subsidiary Subsidiary Subsidiary Subsidiary Equity-meth investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Equity-meth investee Subsidiary Equity-meth investee Subsidiary Equity-meth investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Equity-meth investee Equity-meth investee Equity-meth investee

(Continued)

71 -

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of September 30, 2020	as of September 30, 2020	Net Income (Loss) of the Investee for the Period	Investment Gain (Loss) for the Period	Note
				September 30, 2020	December 31, 2019	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 DotZero Mildex ITTS ACI IOT Investment Fund-I Corporation ACISM Samsoft Impelex VSO Hwacom IISI ATC (HK) ANA AAC (HK) ADB SIoT (Cayman) A-SIoT AIH B+B AEU APL ATH AID LandMark Better Auto Famous Now BBIE ACZ	Taipei, Taiwan Taipei, Taiwan Tokyo, Japan Taichung, Taiwan Taichung, Taiwan Kaohsiung, Taiwan Taipei, Taiwan Taipei, Taiwan Samoa Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Hong Kong Sunnyvale, USA Hong Kong Dubai Cayman Munich, Germany Taipei, Taiwan Delaware, USA Eindhoven, The Netherlands Warsaw, Poland Thailand Indonesia Samoa BVI Hong Kong Ireland Czech Republic	Service plan for combination of related technologies of water treatment and applications of Internet of Things Industrial equipment Networking in Greater China R&D of IoT intelligent system Intelligent medical integration Intelligent metal processing integration Manufacturing of electronic parts Service of electronic information Investment holding company General investment Production and sale of electronics equipment Production and sale of electronics equipment Production and sale of electronics equipment Computer systems service Computer systems service Investment and management service Sale and fabrication of industrial automation products Investment and management service Sale of industrial network communications systems Design, development and sale of IoT intelligent system services 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 Manufacturing automation	$ 5,000 5,000 49,733 9,126 8,100 202,948 147,444 238,000 18,214 15,000 10,000 120,000 357,119 243,086 1,212,930 504,179 539,146 - US$ 50,000 522,719 12,254 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 9,237 8,100 202,948 147,444 238,000 18,214 15,000 - - 357,119 - 1,212,730 504,179 539,146 - US$ 50,000 522,719 7,700 1,328,004 431,963 14,176 7,537 4,797 28,200 244,615 US$ 4,000 US$ 39,481 -	500,000 500,000 154,310 845,000 490,000 15,710,000 5,084,000 23,800,000 1 170,455 2,500,000 28,000,000 24,575,000 14,299,205 57,890,679 10,952,606 15,230,001 - 30,000,000 1 1,100,000 153,644 32,315,215 7,030 49,000 300,000 972,284 7,425,000 1 - -	50.00 50.00 2.92 21.13 27.00 15.24 18.61 79.30 100.00 20.00 20.00 14.29 20.73 19.68 100.00 100.00 100.00 100.00 100.00 100.00 100.00 40.00 100.00 100.00 49.00 100.00 100.00 100.00 100.00 100.00 100.00	$ 4,983 2,596 45,302 4,148 5,249 179,726 154,067 260,982 10,965 12,116 8,515 130,023 358,572 249,616 4,059,586 3,044,953 2,430,112 2,632 2,016,923 441,100 4,548 1,158,866 865,731 37,931 52,640 9,666 125,841 48,857 54,479 65,180 279,471	$ (9) 7 (3,545) (12,880) (3,665) (14,150) 52,334 24,539 (2,525) (14,418) (7,536) 100,014 (100,474) 92,101 90,216 311,601 352,361 296 213,679 (43,882) (5,164) 63,725 (226,322) 4,732 7,333 553 19,960 24,311 24,311 (2,184) 23,345	$ (4) 3 - (2,791) (989) (2,156) 9,738 19,468 (2,525) (2,884) (1,485) 14,288 (20,829) 22,393 81,800 311,313 356,569 296 222,217 (76,698) (4,731) 25,490 (224,085) 4,629 3,593 1,220 20,455 23,532 24,311 (2,149) 23,345	Subsidiary Subsidiary Equity-meth investee Equity-meth investee Equity-meth investee Equity-meth investee Equity-meth investee Subsidiary Subsidiary Equity-meth investee Equity-meth investee Equity-meth investee Equity-meth investee Equity-meth investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note A: The financial statements which were used as the basis of net asset values were not reviewed by independent auditors, except 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 investment were eliminated from 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, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company Name	Main Businesses and Products	Total Amount of Paid-in Capital	Investment Type (e.g., Direct or Indirect)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of September 30, 2020	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of September 30, 2020	Accumulated Inward Remittance of Earnings as of September 30, 2020
					Outflow	Inflow
Advantech Technology (China) Company Ltd. (“AKMC”) Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd. (“ACN”) Shanghai Advantech Intelligent Services Co., Ltd. (“AiSC”) Xi’an Advantech Software Ltd. (“AXA”) LNC Dong Guan Co., Ltd. Shenzhen Cermate Technologies Inc. Cermate Technologies (Shanghai) Inc. (Cermate Shanghai)	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$ 8,000 thousand US$ 1,000 thousand US$ 4,000 thousand RMB 2,000 thousand US$ 520 thousand	Indirect Indirect Indirect Indirect Indirect Indirect Indirect	$ 1,085,430 (US$ 37,300 thousand) 155,161 (US$ 5,332 thousand) 232,800 (US$ 8,000 thousand) (Note C) 92,945 (US$ 3,194 thousand) 8,963 (US$ 308 thousand) 16,645 (US$ 572 thousand)	$ - - - - - - -	$ - - - - - - -	$ 1,085,430 (US$ 37,300 thousand) 155,161 (US$ 5,332 thousand) 232,800 (US$ 8,000 thousand) (Note C) 92,945 (US$ 3,194 thousand) 8,963 (US$ 308 thousand) 16,645 (US$ 572 thousand)	$ 90,216 361,930 (11,487) 34 24,311 15,793 5,746	100 100 100 100 100 90 100	$ 81,801 366,138 (11,487) 34 24,311 14,337 5,476	$ 4,059,587 1,791,575 612,443 28,607 38,340 91,058 38,901	$ - 326,851 (US$ 11,232 thousand) - - - 39,341 (US$ 414 thousand) (RMB 4,328 thousand) -
												(Continued)

73 -

Investee Company Name	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Investment Type (e.g., Direct or Indirect)	Investment Type (e.g., Direct or Indirect)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of September 30, 2020	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of September 30, 2020	Accumulated Inward Remittance of Earnings as of September 30, 2020
							Outflow	Inflow
Advantech Service-IoT (Shanghai) Co., Ltd. (“SIoT (China)”) Shanghai Yanle Co., Ltd. (“Yanle”) Tianjin Anjie IoT Science And Technology Co., Ltd. (“Anjie-IOT”) GSD Environmental Technology Co., Ltd. (“GSD”)	Development, consulting and services in intelligent technology Retail of intelligent technology Operation and maintenance for intelligent general equipment, and consulting service for comprehensive energy issues Development, consulting and services in environmental technology		RMB 15,000 thousand RMB 2,200 thousand RMB 3,000 thousand RMB 10,000 thousand	Indirect Other Other Indirect		(Note F) (Note G) (Note G) $ 16,965 (US$ 583 thousand)	$ - - - -	$ - - - -	(Note F) (Note G) (Note G) $ 16,965 (US$ 583 thousand)	$ (6,080) (3,505) (4) (6,311)	100 100 20 40	$ (6,080) (1,796) (1) (2,525)	$ 30,428 6,426 2,560 10,965	$ - - - -

Accumulated Investment in		Investment Amounts
Mainland China as of September 30, 2020		Authorized by the Investment Commission, MOEA			Allowable Limit on Investment
$1,614,741 (US$55,489 thousand) (Note D)		$2,304,138 (US$79,180 thousand)			$19,821,400 (Note I)

Note A: The financial statements which were used as the basis of net asset values were not reviewed by independent auditors, except 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 6.

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 Guang Zhou. When this investee was liquidated in September 2005, the outward investment remittance ceased upon the approval of the Ministry of Economic Affairs (MOEA). For each future capital return, the Company will apply to the MOEA for the approval of the return as well as reduce the accumulated investment amount by the return amount.

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

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

Note G: Remittance by AiSC.

(Continued)

74 -

(Concluded)

Note H: The exchange rates as of September 30, 2020 were US$1=NT$29.1 and RMB1=NT$4.269.

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

Note J: All intercompany gains and losses from investment have been eliminated from consolidation.
75 -

TABLE 9

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
ASUSTek Computer Inc. K&M Investment Co., Ltd. AIDC Investment Corp.	110,677,983 91,369,108 90,295,663	14.34 11.84 11.70

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

76 -

TABLE 10

ADVANTECH CO., LTD. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS BETWEEN ADVANTECH CO., LTD. AND ITS SUBSIDIARIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Number (Note A)	Company Name	Counterparty	Flow of Transactions (Note B)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
0	Advantech Co., Ltd.	AAU ACN ACN AEU AEU AJP AKR ANA ANA B+B SIoT (Cayman) Advanixs Corp.	1 1 1 1 1 1 1 1 1 1 1 1	Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Sales revenue Receivables from related parties Sales revenue Sales revenue Sales revenue	$ 225,902 5,588,805 1,148,636 3,387,247 1,240,841 561,613 747,784 7,145,688 1,509,969 212,564 936,167 453,761	Normal Normal 45 days EOM Normal 60-90 days Normal Normal Normal 45 days EOM Normal Normal Normal	1 15 2 9 3 1 2 19 3 1 2 1
1	AKMC	The Company The Company ACN	2 2 3	Receivables from related parties Sales revenue Sales revenue	902,708 8,264,857 293,746	60 days EOM Normal Normal	2 22 1
2	SIoT (Cayman)	AEU ANA A-SIoT	3 3 3	Sales revenue Sales revenue Sales revenue	279,640 515,983 314,856	Normal Normal Normal	1 1 1
3	LNC	LNC Dong Guan Co., Ltd.	3	Sales revenue	255,981	Normal	1

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

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

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

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

Note C: For assets and liabilities, amounts are shown as a percentage to consolidated total assets as of September 30, 2020, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the nine months ended September 30, 2020.

Note D: All intercompany transactions have been eliminated from consolidation.
77 -

AI assistant

Advantech — Interim / Quarterly Report 2020

52053_rns_2020-11-06_cd7d7f0a-cd0a-4a34-a0c8-ed15d41aa0d3.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

(In Thousands of New Taiwan Dollars)

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) Amendments to IFRS 3 “Definition of a Business”

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

c. Basis of consolidation

1) Retirement benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Key Sources of Estimation Uncertainty

Write-down of inventories

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments at FVTOCI:

9. FINANCIAL ASSETS AT AMORTIZED COST

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

Trade Receivables

September 30, 2020

December 31, 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

a. 2020

b. 2019

15. LEASE ARRANGEMENTS

a. Right-of-use assets

c. Other lease information

16. GOODWILL

17. BORROWINGS

18. OTHER LIABILITIES

19. RETIREMENT BENEFIT PLANS

20. EQUITY

Ordinary shares

b. Capital surplus

c. Retained earnings and dividend policy

d. Special reserves

e. Other equity items

f. Non-controlling interests

21. NET PROFIT FROM CONTINUING OPERATIONS

22. INCOME TAXES

a. Income tax recognized in profit or loss

b. Income tax recognized in other comprehensive income

c. Income tax assessments

23. EARNINGS PER SHARE

Unit: NT$ Per Share

Unit: NT$ Per Share

Net Profit for the Period

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

24. SHARE-BASED PAYMENT ARRANGEMENTS

Issuance in 2018

25. GOVERNMENT GRANTS

26. BUSINESS COMBINATIONS

Advantech Interim / Quarterly Report 2020