Advantech — Interim / Quarterly Report 2021

Nov 5, 2021

Advantech Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2021 and 2020 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 financial statements of Advantech Co., Ltd. and its subsidiaries (collectively referred to as the “Group”) as of March 31, 2021 and 2020, the consolidated statements of comprehensive income, changes in equity and cash flows for the three months then ended, and the 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”. 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 March 31, 2021 and 2020, the combined total assets of these non-significant subsidiaries were NT$8,563,536 thousand and NT$7,827,426 thousand, respectively, representing 15.89% and 15.97%, respectively, of the consolidated total assets, and the combined total liabilities of these subsidiaries were NT$1,614,351 thousand NT$1,927,332 thousand, respectively, representing 7.34% and 9.46%, respectively, of the consolidated total liabilities; for the three months periods ended March 31, 2021 and 2020, the amounts of combined comprehensive income of these subsidiaries were NT$(9,309) thousand and NT$5,625 thousand, respectively, representing (0.40%) and 0.46%, 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$3,616,221 thousand and NT$3,157,270 thousand as of March 31, 2021 and 2020, respectively. The equities in profit and loss of the associates were NT$20,116 thousand and NT$(17,907) thousand of the consolidated net income for the three months ended March 31, 2021 and 2020, respectively, and these investment amounts as well as additional disclosures in Note 31 “Information on Investees” were based on the investees’ unreviewed financial statements for the same reporting periods as those of the Company.

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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 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 financial position of the Group as of March 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the three months then ended 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

April 29, 2021

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.

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Notes 7 and 27) Financial assets at amortized cost - current (Note 9) Notes receivable (Note 10) Trade receivables (Note 10) Trade receivables from related parties (Note 28) Other receivables Other receivables from related parties (Note 28) Inventories (Note 11) Other current assets (Note 28) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 7 and 27) Financial assets at fair value through other comprehensive income - non-current (Notes 8 and 27) Investments accounted for using the equity method (Note 13) Property, plant and equipment (Notes 14 and 29) 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 (Note 29) 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 27) Notes payable and trade payables (Note 28) Dividends payable Other payables (Notes 18 and 28) 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 29) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 17 and 29) 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 translation of the financial statements of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Other equity - employees' unearned shares Total other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		March 31, 2021 (Reviewed) Amount % $ 7,786,154 15 6,571,257 12 159,174 - 1,882,662 4 7,070,897 13 23,790 - 52,666 - 95 - 8,846,048 16 603,787 1 32,996,530 61 77,553 - 2,366,683 5 3,616,221 7 9,864,712 18 796,393 2 2,448,782 5 724,214 1 694,688 1 207,070 - 83,082 - 20,879,398 39 $ 53,875,928 100 $ 163,356 - 8,256 - 5,731,057 11 5,480,813 10 3,473,409 6 2,456,949 5 166,911 - 265,604 1 - - 952,651 2 18,699,006 35 - - 243,301 1 2,171,209 4 241,115 - 393,719 1 231,790 - 3,281,134 6 21,980,140 41 7,722,545 14 3,860 - 7,726,405 14 8,011,260 15 7,020,201 13 845,993 2 8,166,204 15 16,032,398 30 (1,197,954) (2) 801,563 1 1,477 - (394,914) (1) 31,375,149 58 520,639 1 31,895,788 59 $ 53,875,928 100		December 31, 2020 (Audited) Amount % $ 7,497,442 15 5,493,150 11 162,602 - 1,893,043 4 6,858,742 14 28,750 - 51,885 - 4,633 - 7,813,550 15 483,739 1 30,287,536 60 77,950 - 1,814,233 4 3,404,345 7 9,916,896 20 599,005 1 2,464,315 5 683,031 1 723,627 2 167,579 - 60,868 - 19,911,849 40 $ 50,199,385 100 $ 184,078 - 21,044 - 4,326,447 9 - - 3,928,365 8 2,315,461 5 164,086 - 221,250 - - - 935,477 2 12,096,208 24 - - 291,961 1 2,142,428 4 87,781 - 403,488 1 131,096 - 3,056,754 6 15,152,962 30 7,719,455 16 3,090 - 7,722,545 16 7,913,754 16 7,020,201 14 845,993 2 11,739,513 23 19,605,707 39 (1,006,635) (2) 173,308 - 1,477 - (831,850) (2) 34,410,156 69 636,267 1 35,046,423 70 $ 50,199,385 100		March 31, 2020 (Reviewed)
						Amount % $ 4,966,278 10 5,303,514 11 751,170 2 1,175,068 2 6,815,902 14 21,273 - 155,228 - 83 - 9,092,958 19 721,527 1 29,003,001 59 100,959 - 1,679,268 3 3,157,270 7 9,649,619 20 754,359 2 2,525,244 5 948,506 2 698,831 1 435,022 1 54,875 - 20,003,953 41 $ 49,006,954 100 $ 266,025 1 1,390 - 5,515,661 11 5,463,198 11 3,071,308 6 1,766,367 4 192,469 - 221,250 1 5,422 - 1,112,868 2 17,615,958 36 34,742 - - - 1,945,138 4 255,096 1 389,415 1 126,754 - 2,751,145 6 20,367,103 42 7,004,100 14 4,600 - 7,008,700 14 7,616,628 16 6,285,079 13 798,763 1 7,342,955 15 14,426,797 29 (969,806) (2) 73,929 - 1,372 - (894,505) (2) 28,157,620 57 482,231 1 28,639,851 58 $ 49,006,954 100

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

(With Deloitte & Touche auditors’ review report dated April 29, 2021)

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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 28) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 21 and 28) GROSS PROFIT OPERATING EXPENSES (Notes 21 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses OPERATING PROFIT NONOPERATING INCOME Share of the profit (loss) 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 losses, net (Notes 21 and 30) Dividend income Other income (Notes 25 and 28) Finance costs (Note 21) Other losses Total non-operating income (loss) PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 22) NET PROFIT FOR THE PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 Amount % $ 12,825,539 97 335,864 3 13,161,403 100 7,952,766 60 5,208,637 40 1,197,300 9 669,818 5 1,046,693 8 7,965 - 2,921,776 22 2,286,861 18 20,116 - 10,124 - 68,644 1 - - 53,909 - (45,142) - 343 - 26,597 - (3,834) - (928) - 129,829 1 2,416,690 19 (487,793) (4) 1,928,897 15		2020
				Amount % $ 10,963,830 97 308,359 3 11,272,189 100 6,876,954 61 4,395,235 39 1,153,329 11 656,930 6 925,097 8 6,257 - 2,741,613 25 1,653,622 14 (17,907) - 7,935 - (6,197) - (916) - (29,617) - (2,291) - - - 22,840 - (6,331) - (572) - (33,056) - 1,620,566 14 (340,159) (3) 1,280,407 11 (Continued)

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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 on investments in debt instruments at fair value through other comprehensive income (Note 20) Share of the other comprehensive income (loss) 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 the financial statements of foreign operations (Note 20) Share of the other comprehensive income (loss) of associates accounted for using the equity method (Notes 13 and 20) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 20 and 22) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 Amount % $ 598,213 5 27,900 - (230,277) (2) (23,366) - 47,830 - 420,300 3 $ 2,349,197 18 $ 1,913,047 15 15,850 - $ 1,928,897 15 $ 2,347,841 18 1,356 - $ 2,349,197 18		2020
				Amount % $ 41,557 1 (158) - (126,159) (1) 8,210 - 22,886 - (53,664) - $ 1,226,743 11 $ 1,294,665 11 (14,258) - $ 1,280,407 11 $ 1,244,519 11 (17,776) - $ 1,226,743 11 (Continued)

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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 March 31	For the Three Months Ended March 31
	2021 Amount % $ 2.48 $ 2.44	2020
		Amount % $ 1.68 $ 1.66

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ review report dated April 29, 2021) (Concluded)

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ADVANTECH CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars) (Reviewed after Restatement, Not Audited)

BALANCE AT JANUARY 1, 2020 Appropriation of 2019 earnings Cash dividends distributed by the Company Cash dividends distributed by subsidiaries Recognition of employee share options by the Company Compensation costs recognized for employee share options Changes in capital surplus from investments in associates accounted for by the equity method Differences between consideration paid and carrying amount of subsidiaries acquired or disposed of Changes in percentage of ownership interests in subsidiaries Net profit for the three months ended March 31, 2020 Other comprehensive income (loss) for the three months ended March 31, 2020 Total comprehensive income (loss) for the three months ended March 31, 2020 BALANCE AT MARCH 31, 2020 BALANCE AT JANUARY 1, 2021 Appropriation of 2020 earnings Cash dividends distributed by the Company Recognition of employee share options by the Company Compensation costs recognized for employee share options Changes in capital surplus from investments in associates accounted for by the equity method Differences between consideration paid and carrying amount of subsidiaries acquired or disposed of Net profit for the three months ended March 31, 2021 Other comprehensive income (loss) for three months ended March 31, 2021 Total comprehensive income for the three months ended March 31, 2021 Disposal of investments in equity instruments designated as at fair value through other comprehensive income by associates BALANCE AT MARCH 31, 2021					Equity Attributable to Owners of the Company				Non-controlling Total Interests (Notes 20 and 26) $ 32,235,638 $ 495,822 (5,463,198 ) - - (3,713 ) 37,242 - 61,789 - 35,434 - 5,975 7,865 221 33 1,294,665 (14,258 ) (50,146) (3,518) 1,244,519 (17,776) $ 28,157,620 $ 482,231 $ 34,410,156 $ 636,267 (5,480,813 ) - 28,525 - 109,322 - (36,481 ) - (3,401 ) (116,984 ) 1,913,047 15,850 434,794 (14,494) 2,347,841 1,356 - - $ 31,375,149 $ 520,639	Total Equity $ 32,731,460 (5,463,198 ) (3,713 ) 37,242 61,789 35,434 13,840 254 1,280,407 (53,664) 1,226,743 $ 28,639,851 $ 35,046,423 (5,480,813 ) 28,525 109,322 (36,481 ) (120,385 ) 1,928,897 420,300 2,349,197 - $ 31,895,788
		Issued Capital(Notes 20 and 24) Advance Receipts Share Capital for Ordinary Shares Total Capital Surplus (Note 20 ) $ 6,999,230 $ 4,870 $ 7,004,100 $ 7,478,568 - - - - - - - - 4,870 (270 ) 4,600 32,642 - - - 61,789 - - - 35,360 - - - 8,048 - - - 221 - - - - - - - - - - - - $ 7,004,100 $ 4,600 $ 7,008,700 $ 7,616,628 $ 7,719,455 $ 3,090 $ 7,722,545 $ 7,913,754 - - - - 3,090 770 3,860 24,665 - - - 109,322 - - - (36,481 ) - - - - - - - - - - - - - - - - - - - - $ 7,722,545 $ 3,860 $ 7,726,405 $ 8,011,260			Retained Earnings (Note 20)	Total $ 18,598,963 (5,463,198 ) - - - - (2,073 ) - 1,294,665 (1,560) 1,293,105 $ 14,426,797 $ 19,605,707 (5,480,813 ) - - - (3,401 ) 1,913,047 (158) 1,912,889 (1,984) $ 16,032,398	Other Equity (Note 20)
							Exchange Differences on Translation of the Unrealized Loss on Financial Assets at Fair Value through Financial Other U Statements of Foreign Operations Comprehensive Income B $ (878,261 ) $ 30,970 - - - - - - - - - - - - - - - - (91,545) 42,959 (91,545) 42,959 $ (969,806) $ 73,929 $ (1,006,635 ) $ 173,308 - - - - - - - - - - - - (191,319) 626,271 (191,319) 626,271 - 1,984 $ (1,197,954) $ 801,563	nearned Stock - ased Employee Compensation $ 1,298 - - - - 74 - - - - - $ 1,372 $ 1,477 - - - - - - - - - $ 1,477
		A Share Capital $ 6,999,230 - - 4,870 - - - - - - - $ 7,004,100 $ 7,719,455 - 3,090 - - - - - - - $ 7,722,545	dvance Receipts for Ordinary Shares $ 4,870 - - (270 ) - - - - - - - $ 4,600 $ 3,090 - 770 - - - - - - - $ 3,860
					Legal Reserve Special Reserve Unappropriated Earnings $ 6,285,079 $ 798,763 $ 11,515,121 - - (5,463,198 ) - - - - - - - - - - - - - - (2,073 ) - - - - - 1,294,665 - - (1,560) - - 1,293,105 $ 6,285,079 $ 798,763 $ 7,342,955 $ 7,020,201 $ 845,993 $ 11,739,513 - - (5,480,813 ) - - - - - - - - - - - (3,401 ) - - 1,913,047 - - (158) - - 1,912,889 - - (1,984) $ 7,020,201 $ 845,993 $ 8,166,204

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

(With Deloitte & Touche auditors’ review report dated April 29, 2021)

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

ADVANTECH CO., LTD. AND SUBSIDIARIES

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit loss on receivables Net loss (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 loss (profit) of associates accounted for using the equity method Net loss (gain) on disposal of property, plant and equipment Net loss 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 (used in) operations Interest received Dividend received Interest paid Income tax paid Net cash generated from (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at amortized cost Disposal of financial assets at amortized cost		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 2,416,690 196,687 55,090 7,965 (53,909) 109,322 3,834 (10,124) (343) (20,116) (68,644) - (1,036,589) 10,381 (218,300) 4,960 3,757 (1,032,498) (120,048) 1,404,610 (9,769) (454,979) 2,825 17,174 100,702 1,308,678 10,124 343 (236) (275,833) 1,043,076 (3,144) 136	2020 $ 1,620,566 216,705 48,414 6,257 29,617 61,789 6,331 (7,935) - 17,907 6,197 916 (1,684,102) 371,272 444,391 (1,099) (53,904) (1,310,134) (33,360) 716,465 4,501 (661,284) (16,142) 89,964 (7,901) (134,569) 7,935 - (975) (127,287) (254,896) (442,165) - (Continued)

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

ADVANTECH CO., LTD. AND SUBSIDIARIES

Disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using the equity method Net cash inflow on disposal of associates Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Payments for intangible assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loans Repayment of long-term borrowings Decrease in guarantee deposits received Repayments 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 generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 16 (178,997) - (236,445) 129,089 (22,214) (84,885) (396,444) (11,213) - (2) (62,824) 28,525 - (120,385) (165,899) (192,021) 288,712 7,497,442 $ 7,786,154	2020 $ - (130,000) 7,255 (213,134) 52,453 3,352 (7,500) (729,739) 16,150 (2,228) (7) (58,946) 37,242 (3,713) 14,094 2,592 (55,615) (1,037,658) 6,003,936 $ 4,966,278

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

(With Deloitte & Touche auditors’ review report dated April 29, 2021)

(Concluded)

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ADVANTECH CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (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 April 29, 2021.

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), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

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.

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

Effective Date New IFRSs Announced by IASB (Note 1) “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture”

(Continued)

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New IFRSs Amendment to IFRS 16 “Covid-19 - Related Rent Concessions beyond 30 June 2021” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 16 “Property, Plant and Equipment-Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

Effective Date Announced by IASB (Note 1)

April 1, 2021 (Note 8) January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 6) January 1, 2023 (Note 7) January 1, 2022 (Note 4) January 1, 2022 (Note 5) (Concluded)

• 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 annual reporting period beginning on or after January 1, 2022.

• Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

• Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

• Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

• Note 8: A lessee should apply the amendment for annual reporting periods beginning on or after April 1, 2021, recognizing the cumulative effect of initial application at the beginning of the annual reporting period.

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• 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 or joint venture, 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 or joint control, 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 or joint venture, 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 or joint venture, 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 or joint control over an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate or joint venture, 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 IFRS 3 “'Reference to the Conceptual Framework”

The amendments replace the references to the Conceptual Framework of IFRS 3 and specify that the acquirer shall apply IFRIC 21 “Levies” to determine whether the event that gives rise to a liability for a levy has occurred at the acquisition date.

• 4) 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.

• 12 -

• 5) Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Group should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

• Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;

• The Group may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and

• Not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

• a) The Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;

• b) The Group chose the accounting policy from options permitted by the standards;

• c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;

• d) The accounting policy relates to an area for which the Group is required to make significant judgements or assumptions in applying an accounting policy, and the Group discloses those judgements or assumptions; or

• e) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

• 6) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Group may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Group uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

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

• 13 -

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined 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 the asset or liability.

c. Basis of consolidation

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

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the 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.

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

• d. Other significant accounting policies

Except for the following, refer to significant accounting policies to the consolidated financial statements for the years ended December 31, 2020.

• 14 -

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.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The 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.

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 disposal. The estimation of net realizable value was 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

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Cash on hand	$	1,062	$	5,054	$	5,165
Checking accounts and demand deposits		6,519,987		5,718,855		4,122,407
Cash equivalents (time deposits with original
maturities less than three months)		1,265,105		1,773,533		838,706
	$	7,786,154	$	7,497,442	$	4,966,278

• 15 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

			December	December	31,
	March 31, 2021			2020		March 31, 2020
Financial assets at FVTPL-current
Financial assets mandatorily classified as at
FVTPL
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts	$	10,662	$		90	$	7,884
Non-derivative financial assets
Domestic quoted shares		299,000		272,860			145,439
Foreign quoted shares		164,275		118,172			51,509
Mutual funds		6,097,320		5,102,028			5,098,682
	$	6,571,257	$	5,493,150		$	5,303,514
Financial assets at FVTPL-non-current
Financial assets mandatorily classified as at
FVTPL
Non-derivative financial assets
Foreign unquoted shares	$	77,553	$	77,950		$	100,959
Financial liabilities at FVTPL-current
Financial assets mandatorily classified as at
FVTPL
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts	$	8,256	$	21,044		$	1,390

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

			Notional Amount
	Currency	Maturity Date	(In Thousands)
March 31, 2021
Sell	EUR/NTD	110.04-110.08	EUR13,300/NTD453,967
	JPY/NTD	110.04-110.07	JPY230,000/NTD61,247
	RMB/NTD	110.04-110.07	RMB83,000/NTD356,214
	USD/NTD	110.04-110.05	USD9,000/NTD252,969
December 31, 2020
Sell	EUR/NTD	2021.01-2021.05	EUR14,000/NTD479,531
	JPY/NTD	2021.01-2021.05	JPY280,000/NTD76,394
	RMB/NTD	2021.01-2021.04	RMB76,000/NTD324,732
	USD/NTD	2021.01-2021.02	USD6,000/NTD169,482
			(Continued)

• 16 -

					Notional Amount
			Currency	Maturity Date	(In Thousands)
March	31,	2020
Sell			EUR/NTD	2020.04-2020.07	EUR12,700/NTD426,382
			USD/NTD	2020.04-2020.05	USD7,500/NTD226,516
			JPY/NTD	2020.04-2020.08	JPY320,000/NTD89,222
			RMB/NTD	2020.04-2020.06	RMB50,000/NTD214,579
			EUR/USD	2020.05-2020.08	EUR900/USD1,012
					(Concluded)

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

		December	31,
	March 31, 2021	2020		March 31, 2020
Non-current
Investments in equity instruments at fair value
through other comprehensive income
(FVTOCI)	$ 2,366,683	$ 1,814,233		$	1,679,268
Investments in equity instruments at FVTOCI:
		December	31,
	March 31, 2021	2020		March 31, 2020
Non-current
Domestic investments
Listed shares and emerging market shares
Ordinary shares - ASUSTek Computer Inc.	$ 1,765,449	$ 1,187,235		$	969,220
Ordinary shares - Allied Circuit Co., Ltd.	464,476	447,821			562,552
Unlisted shares
Ordinary shares - BroadTec System Inc.	3,607	3,441			3,437
Ordinary shares - BiosenseTek Corp.	-		-		-
Ordinary shares - Juguar Technology	7,391	4,302			7,415
Ordinary shares - Taiwan DSC PV Ltd.	-		-		-
Ordinary shares - iSAP Solution Corp.	-		-		8,994
Ordinary shares - Feng Sang Enterprise Co.,
Ltd.	-	44,719			-
	2,240,923	1,687,518			1,551,618
					(Continued)

• 17 -

			December	December	31,
	March 31, 2021			2020		March 31, 2020
Foreign investments
Shanghai Shangchuang Xinwei Investment
Management Co., Ltd.	$	125,760	$	126,715		$	127,650
JamaPro Co., Ltd.		-			-		-
		125,760		126,715			127,650
	$	2,366,683	$	1,814,233		$	1,679,268
							(Concluded)

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

9. FINANCIAL ASSETS AT AMORTIZED COST

		December 31,
	March 31, 2021	2020	March 31, 2020
Current
Foreign investments
Time deposits with original maturity of more
than 3 months	$ 159,174	$ 162,602	$ 751,170

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

		December 31,
	March 31, 2021	2020	March 31, 2020
Notes receivable-operating	$ 1,882,662	$ 1,893,043	$ 1,175,068
Trade receivables
Amortized cost
Gross carrying amount	$ 7,151,3 64	$ 6,933,252	$ 6,907,967
Less: Allowance for impairment loss	(80,467)	(74,510)	(92,065)
	$ 7,070,897	$ 6,858,742	$ 6,815,902

Trade Receivables

The average credit period of the sales of goods was 30-90 days. No interest was charged on trade receivables. In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the 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.

• 18 -

The Group measures the loss allowance for trade receivables at an amount that equals to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix prepared by reference to the past default experience of the customer, the customer’s current financial position, economic condition of the industry in which the customer operates, as well as the economic growth rate forecasts and industry outlook. As the Group’s historical credit loss experience show different loss patterns for different customer geographical segments, the Group adopts respective 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 accounts 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.

March 31, 2021

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2020 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost March 31, 2020 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due - $ 6,453,749 - $ 6,453,749 Not Past Due - $ 6,130,711 - $ 6,130,711 Not Past Due - $ 5,805,889 - $ 5,805,889	Less than 90 Days 91 to 180 Days 3.06% 25.41% $ 607,559 $ 31,165 (18,604) (7,918) $ 588,955 $ 23,247 Less than 90 Days 90 to 180 Days 2.79% 15.53% $ 707,623 $ 43,446 (19,776) (6,749) $ 687,847 $ 36,697 Less than 90 Days 91 to 180 Days 0.68% 20% $ 943,392 $ 75,017 (6,444) (15,040) $ 936,948 $ 59,977	181 to 360 Days Over 360 Days 48.99% 100% $ 9,697 $ 49,194 (4,751) (49,194) $ 4,946 $ - 180 to 360 Days Over 360 Days 49.91% 100% $ 6,961 $ 44,511 (3,474) (44,511) $ 3,487 $ - 181 to 360 Days Over 360 Days 50.62% 100% $ 26,503 $ 57,166 (13,415) (57,166) $ 13,088 $ -	Total - $ 7,151,364 (80,467) $ 7,070,897 Total $ 6,933,252 (74,510) $ 6,858,742 Total - $ 6,907,967 (92,065) $ 6,815,902

• 19 -

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

Balance at January 1 Add: Amount of expected loss recognized on credit impairment Less: Amounts written off (Note) Foreign exchange gains and losses Balance at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 74,510 7,965 (205) (1,803) $ 80,467	2020 $ 87,301 6,257 (49) (1,444) $ 92,065

Note: The Group wrote off trade receivables and related loss allowance for the three months ended March 31, 2021 and 2020 of $205 thousand and $49 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

		December 31,
	March 31, 2021	2020	March 31, 2020
Raw materials	$ 4,641,996	$ 3,406,248	$ 4,671,515
Work in process	594,873	538,022	1,948,516
Finished goods	2,714,601	2,814,773	1,779,851
Inventories in transit	894,578	1,054,507	693,076
	$ 8,846,048	$ 7,813,550	$ 9,092,958

The nature of the cost of goods sold is as follows:

Cost of inventories sold Inventory write-downs Others		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 7,769,800 41,501 141,465 $ 7,952,766	2020 $ 6,737,863 5,743 133,348 $ 6,876,954

• 20 -

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. (AAC (BVI)) Investment and management service 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 Services Co., Ltd. (AiST) Design, develop and sale of intelligent service Advantech Kostec Co., Ltd. (AKST) Production and sale of intelligent medical displays Advantech Corporation (Thailand) Co., Ltd. (ATH) Production of computers Advantech Vietnam Technology Company Limited (AVN) Sale of industrial automation products Limited Liability Company Advantech Technology (ARU) Production and sale of industrial automation products Advantech Technologies Japan Corp. (ATJ) Production and sale of electronic and mechanical device Advantech Turkey Teknoloji A.S. (ATR) Wholesale of computers and peripheral devices ADVANTECH ISRAEL LTD. (AIL) Sale of industrial network communications systems Huan Yan Water Solution Co., Ltd. Service plan for combination of related technologies of water treatment and applications of Internet of Things Advantech KR Co., Ltd. (AKR) Advantech Kostec Co., Ltd. (AKST) Production and sale of intelligent medical displays Advantech Japan Co., Ltd. (AJP) Advantech Technologies Japan Corp. (ATJ) Production and sale of electronic and mechanical devices Advantech Corporate Investment Cermate Technologies Inc. (Cermate Taiwan) Manufacturing of electronic parts, computer, and peripheral devices Huan Yan, Jhih-Lian Co., Ltd. Service plan for combination of related technologies of water treatment and applications of Internet of Things Yun Yan, Wu-Lian Co., Ltd. Industrial equipment Networking in Greater China Advantech Corporate Investment Ltd. (ACISM) General investment ACI IOT Investment Fund-I Corporation Investment holding company Advantech Intelligent Health Co., Ltd. (AIH) Information software and data processing services

Proportion of Ownership (%) March 31, 2021 December 31, 2020 March 31, 2020 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 100.00 100.00 80.00 a, f 99.99 99.99 99.99 a 100.00 100.00 100.00 a 59.10 59.10 60.68 a, b 60.00 60.00 100.00 a, d 100.00 100.00 100.00 a - - 60.00 h 100.00 100.00 100.00 a - - 76.00 g 51.00 51.00 51.00 a 60.00 60.00 60.00 a 100.00 100.00 100.00 a 70.00 50.00 50.00 a, l 60.00 60.00 60.00 a 100.00 100.00 100.00 a 100.00 100.00 - a, i - - 24.00 g 28.61 28.61 28.61 a 55.00 55.00 55.00 a - - 50.00 j 50.00 50.00 50.00 a 100.00 100.00 100.00 a 79.33 79.33 79.33 a 100.00 - - a, c

(Continued)

• 21 -

Investor Investee Nature of Activities 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. (AAC (BVI)) Advantech Corp. (ANA) Sale and fabrication of industrial automation products Advantech Automation Corp. (HK) (AAC (HK)) Investment and management service Advantech Service - IoT Co., Ltd. (SIoT Cayman) Design, development and sale of IoT intelligent system service Advantech Technology DMCC (ADB) Sale of industrial network communications Advantech Corp. (ANA) B+B Smartworx Inc. (B+B) Sale of industrial network communications Advantech Technology Limited (AIE) (former BBIE) Sale of industrial network communications Advantech Automation Corp. (HK) (AAC (HK)) Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd. (ACN) Sale of industrial automation products Shanghai Advantech Intelligent Services Co., Ltd. (AiSC) Production and sale of industrial automation products Advantech Service - IoT Co., Ltd. (SIoT Cayman) Advantech Service-IoT (Shanghai) Co., Ltd. (SIoT (China)) Technology development consulting and services in the field of intelligent technology Advantech Service-IoT GmbH (A-SIoT) Design, R&D and sale of industrial automation vehicles and related products Advantech Intelligent Health Co., Ltd. (AIH) Information software and data 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. (AYL) Application and retail of intelligent technology Advantech Europe Holding Advantech Europe B.V. (AEU) Sale of industrial automation products B.V. (AEUH) 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 (AIE) (former BBIE) Sale of industrial network communications systems Advantech Technology Limited (AIE) (former BBIE) Advantech B+B SmartWorx s.r.o.CZ (ACZ) Manufacturing of cellular and automation solutions

Proportion of Ownership (%) March 31, 2021 December 31, 2020 March 31, 2020 Remark 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 100.00 100.00 100.00 a - - 40.00 h 100.00 100.00 - a, k 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 a, c 100.00 100.00 100.00 a 1.00 1.00 1.00 a 100.00 100.00 45.00 a, e 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 k 100.00 100.00 100.00 a

(Concluded)

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

Remark b: 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%.

• 22 -

• Remark c: 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%. In the first quarter of 2021, the Company adjusted its investment structure, hence, Advantech Corporate Investment directly held 100% of the equity of AIH.

• Remark d: 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 e: In the second quarter of 2020, the Group acquired 55% of the equity of AYL, which led its equity investment in Yanle to increase from 45% to 100%.

• Remark f: 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 g: 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 h: In the fourth quarter of 2020, after the Group sold 60% of the equity of B+B to AAC (BVI), AAC (BVI) then sold to ANA. ANA directly held 100% of the equity of B+B. ANA and B+B then merged. ANA is the surviving entity.

• Remark i: In the fourth quarter of 2020, the Group founded Huan Yan Water Solution Co., Ltd.

• Remark j: In the fourth quarter of 2020, Huan Yan, Jhih-Lian Co., Ltd. filed for liquidation.

• Remark k: In the fourth quarter of 2020, the Group adjusted its investment structure. ANA held 100% of the equity of AIE.

• Remark l: In the first quarter of 2021, the Group acquired 20% of the equity of ATJ, which led its equity investment in ATJ to increase from 50% to 70%.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Associates that are not individually material
Listed companies
Axiomtek Co., Ltd. (“Axiomtek”)	$	748,085	$	647,383	$	679,146
Winmate Inc. (“Winmate”)		571,545		557,027		562,035
AzureWare Technologies, Inc. (“AzureWare”)		544,080		551,457		486,272
Nippon RAD Inc. (Nippon RAD)		282,954		293,440		304,198
Mildex Optical Inc. (“Mildex”)		158,532		164,589		181,740
Hwacom Systems Inc. (“Hwacom”)		397,446		376,666		374,771
Information Technology Total Services Co.,
Ltd. (“ITTS”)		159,160		156,544		159,383
						(Continued)

• 23 -

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Unlisted companies
AIMobile Co., Ltd. (“AIMobile”)	$	41,416	$	45,217	$	57,510
Deneng Scientific Research Co., Ltd.
(“Deneng”)		13,533		12,788		13,643
CDIB Innovation Accelerator Co., Ltd.
(“CDIB”)		150,699		151,529		163,092
DotZero Co., Ltd. (“DotZero”)		3,390		4,507		6,127
iLink Co., Ltd. (“iLink”)		2,764		4,290		6,061
Shanghai Yanle Co., Ltd. (“Yanle”)		-		-		1,964
GSD Environmental Technology Co., Ltd.
(“GSD”)		8,999		9,904		12,794
Smasoft Technology Co., Ltd. (“Smasoft”)		10,472		11,033		14,037
Impelex Data Transfer Co., Ltd. (“Impelex”)		10,266		10,659		9,496
VSO Electronics Co., Ltd. (“VSO”)		133,572		130,940		122,449
International Integrated Systems, Inc. (“IISI”)		256,458		263,747		-
iSAP Solution Corp.		7,659		10,000		-
Tianjin Anjie IOT Science and Technology
Co., Ltd. (“GSD”)		2,605		2,625		2,552
Feng Sang Enterprise Co., Ltd. (“Feng Sang”)		109,762		-		-
Foshan Technology Co., Ltd. (“Foshan
Technology”)		2,824		-		-
	$	3,616,221	$	3,404,345	$	3,157,270
						(Concluded)

In the first quarter of 2020, the Group paid $10,000 thousand in cash 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 $120,000 thousand in cash 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 $243,086 thousand in cash for 20% of the equity of International Integrated Systems, Inc. The Group had significant influence over International Integrated Systems, Inc.

In the fourth quarter of 2020, the Group paid $10,000 thousand in cash for 34.83% of the equity of iSAP Solution Corp. The Group had significant influence over iSAP Solution Corp.

In the first quarter of 2021, the Group paid $64,500 thousand in cash for 21.24% of the equity of Feng Sang Enterprise Co., Ltd. which led its equity investment in Feng Sang Enterprise Co., Ltd. to increase from 15% to 36.24%. The Group had significant influence over Feng Sang Enterprise Co., Ltd.

In the first quarter of 2021, the Group paid $2,824 thousand in cash for 34.83% of the equity of Foshan Technology Co., Ltd. The Group had significant influence over Foshan Technology Co., Ltd.

In the first quarter of 2021, the Group paid $111,673 thousand in cash for 2.35% of the equity of Axiomtek Co., Ltd., which led its equity investment in Axiomtek Co., Ltd. to increase from 24.17% to 26.52%.

• 24 -

Aggregate information of associates that are not individually material

The Group’s share of Profit (loss) from continuing operations Other comprehensive income (loss) Total comprehensive income (loss) for the period	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 20,116 (4,534) $ 15,582	2020 $ (17,907) 8,052 $ (9,855)

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 believe that financial statements of those investee mentioned above had not been reviewed by independent CPAs would not contribute to significant effect on review results.

14. PROPERTY, PLANT AND EQUIPMENT

a. 2021

Cost Balance at January 1, 2021 Additions Disposals Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2021 Accumulated depreciation and impairment Balance at January 1, 2021 Disposals Depreciation expense Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2021 Carrying amount at March 31, 2021 2020 Cost Balance at January 1, 2020 Additions Disposals Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2020	Freehold Land $ 3,032,384 - (31,543 ) - (14,460) $ 2,986,381 $ - - - - - $ - $ 2,986,381 Freehold Land $ 3,067,589 - (232 ) - 394 $ 3,067,751	Buildings $ 8,052,436 47,131 (39,863 ) 292,663 (93,970) $ 8,258,397 $ 2,824,136 (16,284 ) 51,037 822 (68,706) $ 2,791,005 $ 5,467,392 Buildings $ 8,049,532 993 - (2,037 ) (18,707) $ 8,029,781	Equipment $ 1,929,938 40,774 (18,818 ) 7,404 (17,914) $ 1,941,384 $ 1,408,668 (14,473 ) 28,236 - (14,093) $ 1,408,338 $ 533,046 Equipment $ 1,866,463 14,013 (63,773 ) 25,698 (7,215) $ 1,835,186	Office Equipment $ 906,329 23,097 (5,202 ) (8,055 ) (8,564) $ 907,605 $ 712,689 (5,011 ) 19,558 (7,062 ) (6,969) $ 713,205 $ 194,400 Office Equipment $ 877,799 22,753 (5,680 ) (19,529 ) (5,053) $ 870,290	Other Facilities $ 1,901,434 35,405 (11,044 ) 28,803 (13,634) $ 1,940,964 $ 1,340,785 (10,257 ) 40,424 1,532 (9,405) $ 1,363,079 $ 577,885 Other Facilities $ 1,874,078 28,575 (11,368 ) (98,313 ) (9,969) $ 1,783,003	Construction in Progress Total $ 380,653 $ 16,203,174 90,038 236,445 - (106,470 ) (365,014 ) (44,199 ) (69) (148,611) $ 105,608 $ 16,140,339 $ - $ 6,286,278 - (46,025 ) - 139,255 - (4,708 ) - (99,173) $ - $ 6,275,627 $ 105,608 $ 9,864,712 Construction in Progress Total $ 8,792 $ 15,744,253 146,800 213,134 (50,863 ) (131,916 ) (90,729 ) (184,910 ) (5,027) (45,577) $ 8,973 $ 15,594,984 (Continued)

b. 2020

• 25 -

Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Depreciation expense Reclassifications Effect of foreign currency exchange differences Balance at March 31, 2020 Carrying amount at March 31, 2020	Freehold Land $ - - - - - $ - $ 3,067,751	Buildings $ 2,597,296 - 50,157 (153 ) (2,382) $ 2,644,918 $ 5,384,863	Equipment $ 1,378,129 (57,117 ) 51,913 (19,741 ) (4,195) $ 1,348,989 $ 486,197	Office Equipment $ 685,252 (5,349 ) 19,897 (15,591 ) (3,842) $ 680,367 $ 189,923	Other Facilities $ 1,351,086 (10,800 ) 40,743 (103,624 ) (6,314) $ 1,271,091 $ 511,912	Construction in Progress Total $ - $ 6,011,763 - (73,266 ) - 162,710 - (139,109 ) - (16,733) $ - $ 5,945,365 $ 8,973 $ 9,649,619 (Concluded)

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

Buildings Main buildings 20-51 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 29.

15. LEASE ARRANGEMENTS

• a. Right-of-use assets

		December 31,
	March 31, 2021	2020	March 31, 2020
Carrying amount
Land	$ 278,615	$ 282,854	$ 281,158
Buildings	435,325	283,248	410,144
Machinery	2,440	2,619	3,283
Office equipment	11,725	6,032	14,028
Transportation equipment	67,915	24,232	45,711
Other equipment	373	20	35
	$ 796,393	$ 599,005	$ 754,359

• 26 -

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 March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 176,009 2,122 44,542 190 2,146 8,394 38 $ 57,432	2020 $ 39,556 2,090 41,962 221 2,633 7,084 5 $ 53,995

Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the three months ended March 31, 2021 and 2020.

• b. Lease liabilities

		December 31,
	March 31, 2021	2020	March 31, 2020
Carrying amount
Current	$ 265,604	$ 221,250	$ 221,250
Non-current	$ 241,115	$ 87,781	$ 255,096
Range of discount rate for lease liabilities was as follows:
		December 31,
	March 31, 2021	2020	March 31, 2020
Buildings	0.15%-15%	0.25%-10.20%	0.25%-10.20%
Machinery	0.87%	0.87%-4.20%	0.87%-4.20%
Office equipment	0.22%-4.75%	0.87%-4.75%	0.87%-4.75%
Transportation equipment	0.15%-5.00%	0.25%-5.00%	0.25%-5.00%
Other equipment	1.60%-2.40%	2.05%	2.05%

c. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for lease	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 355 $ 348 $ 63,527	2020 $ 3,490 $ 3,045 $ 70,469

• 27 -

16. GOODWILL

Cost Balance at January 1 Effect of foreign currency exchange differences Balance at March 31 Accumulated impairment losses Balance at January 1 Effect of foreign currency exchange differences Balance at March 31 Carry amount at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 2,837,680 (15,533) $ 2,822,147 $ (373,365) - $ (373,365) $ 2,448,782	2020 $ 2,892,879 5,730 $ 2,898,609 $ (373,365) - $ (373,365) $ 2,525,244

17. BORROWINGS

a. Short-term borrowings

		December 31,
	March 31, 2021	2020	March 31, 2020
Unsecured borrowings
Line of credit borrowings	$ 163,356	$ 184,078	$ 266,025

The range of weighted average effective interest rates on bank loans was 0.22%-6.64%, 0.22%-3.05% and 0.23%-2.60% per annum as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

• b. Long-term borrowings

			December	December	31,
	March 31, 2021			2020		March 31, 2020
Secured borrowings
Other loans	$	-	$		-	$ 40,164
Less: Current portion		-			-	(5,422)
Long-term borrowings	$	-	$		-	$ 34,742

Other borrowings are loans from the government. As of March 31, 2020, the effective interest rate was 2.91%-3.16%.

With demand of borrowings, the Group pledged time deposits, freehold land and buildings, refer to Note 29. The Group had repaid the loan in advance in June 2020.

• 28 -

18. OTHER LIABILITIES

		December 31,
	March 31, 2021	2020	March 31, 2020
Other payables
Payables for salaries or bonuses	$ 2,252,382	$ 2,742,495	$ 1,919,294
Payables for employee benefits	202,263	185,523	172,696
Others (Note)	1,018,764	1,000,347	979,318
	$ 3,473,409	$ 3,928,365	$ 3,071,308

Note: Including marketing expenses and freight expenses, etc.

19. RETIREMENT BENEFIT PLANS

Employee benefit expenses in respect of the Group’s defined benefit retirement plans were $2,663 thousand and $2,510 thousand for the three months ended March 31, 2021 and 2020, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2020 and 2019.

20. EQUITY

• a. Share capital

Ordinary shares

March 31, 2021 Number of shares authorized (in thousands) 1,000,000 Shares authorized $ 10,000,000 Number of shares issued and fully paid (in thousands) 772,641 Shares issued $ 7,726,405	December 31, 2020 March 31, 2020 1,000,000 800,000 $ 10,000,000 $ 8,000,000 772,255 700,870 $ 7,722,545 $ 7,008,700

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.

• 29 -

b. Capital surplus

		December 31,
	March 31, 2021	2020	March 31, 2020
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	-	-	98,265
Share of changes in capital surplus of
associates	10,097	674	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)	-	-	4,858
Employee share options	2,366,050	2,297,403	1,992,259
Share of changes in capital surplus of
associates	8,978	54,882	-
Employee share options expired	87,266	87,266	47,721
Not note be used for any purpose
Employee share options	1,131,518	1,066,178	1,066,119
	$ 8,011,260	$ 7,913,754	$ 7,616,628

• 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 by using the equity method.

c. Retained earnings and dividend policy

The amended policies were approved in the shareholders’ meeting on May 28, 2020, and the Group authorized the board to resolve the distribution of dividends and bonuses in the form of cash and then reported to the stockholders.

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 after amendment, 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, its objective of enhancing the shareholders’ long-term interests, and the sustainability of the Company’s growth. The policy also requires that share dividends be less than 75% of total dividends to retain internally generated cash within the Company to finance future capital expenditures and working capital requirements.

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

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

The appropriations of earnings, for 2020 and 2019 which have been approved in the shareholders’ meetings on March 5, 2021 and on May 28, 2020, 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
		For the Year Ended December 31
		2020 $ 717,035 $ (14,143) $ 5,480,813 $ - $ 7.1 $ -	2019 $ 735,122 $ 47,230 $ 5,463,198 $ 700,410 $ 7.8 $ 1.0

The distribution of cash dividends was approved by the board of directors on March 5, 2021. The appropriation of earnings for 2020 are subject to the resolution in the shareholders’ meeting to be held on May 27, 2021.

• d. Special reserves

Beginning at January 1 Balance atMarch31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 845,993 $ 845,993	2020 $ 798,763 $ 798,763

• 31 -

e. Other equity items

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

Balance at January 1 Recognized during the period Exchange differences on translation of the financial statements of foreign operations Share of those of associates accounted for using the equity method Other comprehensive income recognized for the period Balance at March 31 Unrealized gain or loss on Financial Assets at FVTOCI Balance at January 1 Recognized for the period Unrealized gain - equity instruments Share of those of associates accounted for using the equity method Other comprehensive income recognized for the period Cumulative unrealized gain on equity instruments transferred to retained earnings due to disposal Balance at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 2020 $ (1,006,635) $ (878,261) (172,626) (98,113) (18,693) 6,568 (191,319) (91,545) $ (1,197,954) $ (969,806) For the Three Months Ended March 31
			2021 $ 173,308 598,213 28,058 626,271 1,984 $ 801,563	2020 $ 30,970 41,557 1,402 42,959 - $ 73,929

2) Unrealized gain or loss on Financial Assets at FVTOCI

• 3) Unearned employee benefits compensation

Balance at January 1 Share from associates accounted for using the equity method Balance at March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 1,477 - $ 1,477	2020 $ 1,298 74 $ 1,372

• 32 -

f. Non-controlling interests

Balance at January 1 Share in profit (loss) for the year Other comprehensive income during the year Exchange differences on translation of the financial statements of foreign operations Increase in non-controlling interests arising from decrease in investment in subsidiaries (Note 26) Decrease in non-controlling interests arising from increase in investment in subsidiaries (Note 26) Cash dividends distributed by subsidiaries Employees’ holding outstanding vest share option related non-controlling interests issued by subsidiaries Balance at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 636,267 15,850 (14,494) - (116,984) - - $ 520,639	2020 $ 495,822 (14,258) (3,518) 10,346 (2,481) (3,713) 33 $ 482,231

21. NET PROFIT FROM CONTINUING OPERATIONS

a. Finance costs

Interest on bank loans Interest on lease liabilities Others b. Depreciation and amortization An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 2020 $ 236 $ 616 3,575 4,988 23 727 $ 3,834 $ 6,331 For the Three Months Ended March 31
		2021 $ 45,116 151,571 $ 196,687 $ 414 54,676 $ 55,090	2020 $ 46,275 170,430 $ 216,705 $ 1,515 46,899 $ 48,414

• 33 -

c. Employee benefits expense

Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) Share-based payments Equity-settled Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 2,521,204 91,153 2,663 93,816 109,356 117,760 $ 2,842,136 $ 605,183 2,236,953 $ 2,842,136	2020 $ 2,257,264 66,608 2,510 69,118 61,789 168,356 $ 2,556,527 $ 532,534 2,023,993 $ 2,556,527

d. Employees’ compensation and remuneration of directors and supervisors

The Company accrued employees’ compensation at the rates of no less than 5% and remuneration of directors at the rates of no higher than 1%, of net profit before income tax, employees’ compensation, and remuneration of directors. For the three months ended March 31, 2021 and 2020, the employees’ compensation and the remuneration of directors were accrued of net profit after income tax.

Employees’ compensation Remuneration of directors	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 142,500 $ 3,000	2020 $ 150,000 $ 3,000

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

The appropriations of employees’ compensation and remuneration of directors and supervisors for 2020 and 2019 having been resolved by the board of directors on March 5, 2021 and March 6, 2020, respectively, were as below:

Employees’ compensation Remuneration of directors and supervisors		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 Cash $ 570,000 $ 11,700		2019
				Cash $ 600,000 $ 12,000

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, 2020 and 2019.

• 34 -

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2021 and 2020 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 March 31	For the Three Months Ended March 31
		2021 $ 186,123 (231,265) $ (45,142)	2020 $ 229,369 (231,660) $ (2,291)

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 Adjustment for prior years Deferred tax In respect of the current period Income tax expense recognized in profit or loss Income tax recognized in other comprehensive income Deferred tax In respect of current period Translation of the financial statements of foreign operations Income tax recognized in other comprehensive income		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 2020 $ 422,587 $ 339,255 (40,344) (16,312) 105,550 17,216 $ 487,793 $ 340,159 For the Three Months Ended March 31
		2021 $ (47,830) $ (47,830)	2020 $ (22,886) $ (22,886)

• b. Income tax recognized in other comprehensive income

• c. Income tax assessments

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

• 35 -

23. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 2.48 $ 2.44	2020 $ 1.68 $ 1.66

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 ended March 31, 2020 were as follows:

	Unit:	NT$ Per Share
	Before	After
	Retrospective	Retrospective
	Adjustment	Adjustment
Basic earnings per share Diluted earnings per share	$ 1.85 $ 1.82	$ 1.68 $ 1.66

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

For the Three Months Ended March 31 2021 2020 Earnings used in the computation of basic earnings per share $ 1,913,047 $ 1,294,665 Earnings used in the computation of diluted earnings per share $ 1,913,047 $ 1,294,665 Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares) For the Three Months Ended March 31 2021 2020 Weighted average number of ordinary shares in computation of basic earnings per share 772,380 770,630 Effect of potentially dilutive ordinary shares: Employee share options 9,580 7,763 Employees’ compensation 1,529 2,109 Weighted average number of ordinary shares used in the computation of diluted earnings per share 783,489 780,502		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
			2021 772,380 9,580 1,529 783,489	2020 770,630 7,763 2,109 780,502

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

• 36 -

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 6,000 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 options 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 options 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.

Information on employee share options was as follows:

Balance at January 1 Options exercised Balance at March 31 Options exercisable, end of the period Weighted-average fair value of options granted (NT$)	For the Three Months Ended March 31	For the Three Months Ended March 31
	2021 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 19,404 $ 175.66 (386) 73.90 19,018 177.73 7,518 142.32 $ -	2020
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 14,250 $ 149.88 (460) 80.96 13,790 152.19 5,790 82.68 $ -

The weighted-average share price at the date of exercise of share options for the three months ended March 31, 2021 and 2020 were from NT$359 to NT$363 and NT$257 to NT$304, respectively.

Information about outstanding options as of March 31, 2021 and 2020 was as follows:

Issuance in 2020 Issuance in 2018 Issuance in 2016 Issuance in 2014	For the Three Months Ended December 31	For the Three Months Ended December 31
	2021 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 200.00 5.33 202.50 3.33 73.90 1.20 - -	2020
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ - - 202.50 4.33 83.30 2.20 79.40 0.38

• 37 -

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$)	$307	$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)	4-4.5	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.

Compensation cost recognized was $109,322 thousand and $61,789 thousand for the three months ended March 31, 2021 and 2020, 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 March 31 Options exercisable, end of period Weighted-average fair value of options granted (NT$)	For the Three Months Ended March 31	For the Three Months Ended March 31
	2021 Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 676 $ 20 - - 676 20 502 20 $ -	2020
		Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) 740 $ 20 (24) 20 716 20 156 20 $ -

Information on outstanding options for the three months ended March 31, 2021 and 2020 was as follows:

Employee Share Options Issuance in 2018 Issuance in 2017	For the Three Months Ended March 31	For the Three Months Ended March 31
	2021 Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 20 1.28 20 0.17	2020
		Exercise Price (NT$) Weighted- average Remaining Contractual Life (Years) $ 20 2.28 20 1.17

• 38 -

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%

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 March 31, 2021 and 2020, the Group received government grants of $5,104 thousand and $5,189 thousand for its engagement in a government’s project. These amounts were recognized as other income. In addition, the amount of government grants for expenses or losses incurred was $1,229 thousand for the three months ended March 31, 2020, and was deducted from the recorded expenses paid for by the grant.

• 39 -

26. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

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

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

In the first quarter of 2021, the Group acquired 20% of the equity of ATJ which increased the Group’s equity investment in ATJ from 78.61% to 98.61%.

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

Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests Differences recognized from equity transactions Line items adjusted for equity transactions Unappropriated earnings March 31 2020 LNC AIH Cash consideration paid $ 18,394 $ (4,554) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests (10,346) 2,481 Differences recognized from equity transactions $ 8,048 $ (2,073) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 8,048 $ - Unappropriated earnings - (2,073) $ 8,048 $ (2,073)	Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests Differences recognized from equity transactions Line items adjusted for equity transactions Unappropriated earnings March 31 2020 LNC AIH Cash consideration paid $ 18,394 $ (4,554) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests (10,346) 2,481 Differences recognized from equity transactions $ 8,048 $ (2,073) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 8,048 $ - Unappropriated earnings - (2,073) $ 8,048 $ (2,073)	Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests Differences recognized from equity transactions Line items adjusted for equity transactions Unappropriated earnings March 31 2020 LNC AIH Cash consideration paid $ 18,394 $ (4,554) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests (10,346) 2,481 Differences recognized from equity transactions $ 8,048 $ (2,073) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 8,048 $ - Unappropriated earnings - (2,073) $ 8,048 $ (2,073)	Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests Differences recognized from equity transactions Line items adjusted for equity transactions Unappropriated earnings March 31 2020 LNC AIH Cash consideration paid $ 18,394 $ (4,554) The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests (10,346) 2,481 Differences recognized from equity transactions $ 8,048 $ (2,073) Line items adjusted for equity transactions Capital surplus - difference between consideration received or paid and carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 8,048 $ - Unappropriated earnings - (2,073) $ 8,048 $ (2,073)	March 31 2021	March 31 2021
					ATJ $ (120,385) 116,984 $ (3,401) $ (3,401)
		LNC $ 18,394 (10,346) $ 8,048 $ 8,048 - $ 8,048	AIH $ (4,554) 2,481 $ (2,073) $ - (2,073) $ (2,073)		Total $ 13,840 (7,865) $ 5,975 $ 8,048 (2,073) $ 5,975

• 40 -

27. FINANCIAL INSTRUMENTS

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

• 1) Fair value hierarchy

March 31, 2021 Financial assets at FVTPL Derivative financial assets Securities listed in ROC Securities listed in other countries Securities unlisted in other countries Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Securities listed in ROC Securities unlisted in ROC Securities unlisted in other countries Financial liabilities at FVTPL Derivative financial liabilities December 31, 2020 Financial assets at FVTPL Derivative financial assets Securities listed in ROC Securities listed in other countries Securities unlisted in other countries Mutual funds	Level 1 $ - 299,000 164,275 - 6,097,320 $ 6,560,595 $ 2,229,925 - - $ 2,229,925 $ - Level 1 $ - 272,860 118,172 - 5,102,028 $ 5,493,060	Level 2 $ 10,662 - - - - $ 10,662 $ - - - $ - $ 8,256 Level 2 $ 90 - - - - $ 90	Level 3 $ - - - 77,553 - $ 77,553 $ - 10,998 125,760 $ 136,758 $ - Level 3 $ - - - 77,950 - $ 77,950	Total $ 10,662 299,000 164,275 77,553 6,097,320 $ 6,648,810 $ 2,229,925 10,998 125,760 $ 2,366,683 $ 8,256 Total $ 90 272,860 118,172 77,950 5,102,028 $ 5,571,100 (Continued)

• 41 -

Financial assets at FVTOCI Investments in equity instruments at FVTOCI Securities listed in the ROC Unlisted securities - ROC Unlisted shares in other country Financial liabilities at FVTPL Derivative financial liabilities March 31, 2020 Financial assets at FVTPL Derivative financial assets Securities listed in ROC Securities listed in other countries Securities unlisted in other countries Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Securities listed in ROC Securities unlisted in ROC Securities unlisted in other countries Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ 1,635,056 - - $ 1,635,056 $ - Level 1 $ - 145,439 51,509 - 5,098,682 $ 5,295,630 $ 1,531,772 - - $ 1,531,772 $ -	Level 2 $ - - - $ - $ 21,044 Level 2 $ 7,884 - - - - $ 7,884 $ - - - $ - $ 1,390	Level 3 $ - 52,462 126,715 $ 179,177 $ - Level 3 $ - - - 100,959 - $ 100,959 $ - 19,846 127,650 $ 147,496 $ -	Total $ 1,635,056 52,462 126,715 $ 1,814,233 $ 21,044 (Concluded) Total $ 7,884 145,439 51,509 100,959 5,098,682 $ 5,404,473 $ 1,531,772 19,846 127,650 $ 1,679,268 $ 1,390

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

• 42 -

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

For the three months ended March 31, 2021

Financial Assets at Fair Value Through Profit of Loss Financial Assets at Fair Value Through Other Comprehensive Income Equity Instruments Equity Instruments Financial assets Balance at January 1, 2021 $ 77,950 $ 179,177 Disposal - (44,719) Recognized in profit or loss (397) - Recognized in other comprehensive income - (2,300) Balance at March 31, 2021 $ 77,553 $ 136,758 For the three months ended March 31, 2020

Total $ 257,127 (44,719) (397) 2,300 $ 214,311

Financial assets Balance at January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income Balance at March 31, 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 (197) - - (2,334) $ 100,959 $ 147,496	Total $ 250,986 (197) (2,334) $ 248,455

• 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 and other countries were determined using the income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees.

• 43 -

b. Categories of financial instruments

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Financial assets
Fair value through profit or loss (FVTPL)
Mandatorily at FVTPL	$	6,648,810	$	5,571,100	$	5,404,473
Financial assets at amortized cost (Note 1)		16,975,438		16,497,097		13,885,002
Financial assets at FVTOCI
Equity instruments		2,366,683		1,814,233		1,679,268
Financial liabilities
Fair value through profit or loss (FVTPL)
Mandatorily at FVTPL		8,256		21,044		1,390
Financial assets at amortized cost (Note 2)		14,848,635		8,438,890		14,356,356

• 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, dividends payable, current portion of long-term borrowings and long-term borrowings.

c. Financial risk management objectives and policies

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

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

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

1) Market risk

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

• 44 -

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

a) Foreign currency risk

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

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

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) are set out in Note 30. 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 Three Months Ended March 31 2021 2020 $ 84,259 (Note 1) $ 21,178 (Note 1)	Euro Impact For the Three Months Ended March 31 2021 2020 $ 66,553 (Note 2) $ 57,105 (Note 2)	Renminbi Impact
			For the Three Months Ended March 31
			2021 2020 $ 77,112 (Note 3) $ 90,945 (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.

• 45 -

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:

		December 31,
	March 31, 2021	2020	March 31, 2020
Fair value interest rate risk
Financial assets	$ 1,424,279	$ 1,936,135	$ 1,589,876
Financial liabilities	640,075	467,031	629,796
Cash flow interest rate risk
Financial assets	5,845,049	4,648,178	2,922,415
Financial liabilities	30,000	26,078	152,739

Sensitivity analysis

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

If interest rates had been 50 basis points higher and all other variables were held constant, the Group’s pre-tax profit for the three months ended March 31, 2021 and 2020 would have increased by $7,269 thousand and $3,462 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.

• 46 -

If equity prices had been 1% higher, pre-tax profit for the three months ended March 31, 2021 and 2020 would have increased by $5,408 thousand and $2,979 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 three months ended March 31, 2021 and 2020 would have increased by $23,667 thousand and $16,792 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI. Had equity prices been 1% lower for the same year, the pre-tax profit and other comprehensive income would have decreased by the same respective amounts.

The Group’s sensitivity to equity prices increased because stock prices rose in 2021.

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. 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.

• 47 -

March 31, 2021

	On Demand or	On Demand or	On Demand or			Over 3
		Less than				Months to
		1 Month		1-3	Months	1 Year	Over 1 Year
Non-derivative
financial liabilities
Non-interest bearing	$	5,154,299		$ 2,748,421		$ 6,782,559	$		-
Lease liabilities			25,668		44,128	200,076		298,830
Variable interest rate
liabilities			30,023		-	-			-
Fixed interest rate
liabilities			30,193		103,220	-			-
	$	5,240,183		$ 2,895,769		$ 6,982,635	$	298,830
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	$ 269,872		$ 288,901	$	9,929 $	- $	-	$	-
December 31, 2020
	On Demand or					Over 3
		Less than				Months to
		1 Month		1-3	Months	1 Year	Over 1 Year
Non-derivative
financial liabilities
Non-interest bearing
liabilities	$	5,025,633		$ 2,078,394		$ 1,150,785	$		-
Lease liabilities			66,367		41,515	110,795			94,839
Variable interest rate
liabilities			56		112	26,426			-
Fixed interest rate
liabilities			47,632		110,441	-			-
	$	5,139,688		$ 2,230,462		$ 1,288,006	$		94,839
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	$ 218,677		$ 80,571	$	14,268 $	- $	-	$	-

• 48 -

March 31, 2020

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 6,473,400 Lease liabilities 25,749 Variable interest rate liabilities 20,290 Fixed interest rate liabilities 29 $ 6,519,468	1-3 Months $ 1,001,830 31,020 31,546 153,495 $ 1,217,891	Over 3 Months to 1 Year $ 6,574,937 168,320 63,873 - $ 6,807,130	Over 1 Year $ - 278,914 48,068 - $ 326,982

Additional information about the maturity analysis for lease liabilities

Less than 1 Year Lease liabilities $ 225,089	1-5 Years 5-10 Years 10-15 Years 15-20 Years $ 240,794 $ 38,120 $ - $ -	20+ Years $ -

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

b) Liquidity and interest 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.

March 31, 2021

On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 395,054 Outflows 396,655 $ (1,601)	1-3 Months Over 3 Months to 1 Year $ 563,772 $ 165,571 561,416 163,920 $ 2,356 $ 1,651	Total $ 1,124,397 1,121,991 $ 2,406

• 49 -

December 31, 2020

c)

On Demand or Less than 1 Month 1-3 Months Over 3 Months to 1 Year Total Gross settled Foreign exchange forward contracts Inflows $ 352,690 $ 432,246 $ 265,203 $ 1,050,139 Outflows 357,623 443,024 270,446 1,071,093 $ (4,933) $ (10,778) $ (5,243) $ (20,954) March 31, 2020 On Demand or Less than 1 Month 1-3 Months Over 3 Months to 1 Year Total Gross settled Foreign exchange forward contracts Inflows $ 367,457 $ 506,139 $ 113,680 $ 987,276 Outflows 364,956 504,292 111,534 980,782 $ 2,501 $ 1,847 $ 2,146 $ 6,494 Financing facilities March 31, 2021 December 31, 2020 March 31, 2020 Unsecured bank overdraft facilities reviewed annually and payable at call: Amount used (Note) $ 170,249 $ 191,288 $ 266,025 Amount unused 5,508,266 6,666,617 6,821,825 $ 5,678,515 $ 6,857,905 $ 7,087,850 Secured bank overdraft facilities: Amount used $ - $ - $ 40,164

Note: The amounts used or drawn by the Group from the unsecured bank overdraft facilities were recorded as borrowings of $163,356 thousand and lease guarantees of $6,893 thousand.

• 50 -

28. TRANSACTIONS WITH RELATED PARTIES

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

• a. Names and categories of related parties

Name Axiomtek Co., Ltd. AIMobile Co., Ltd. Deneng Scientific Research Co., Ltd. Winmate Inc. AzureWave Technologies, Inc. i-Link Co., Ltd. DotZero Co., Ltd. Mildex Optical Inc. Nippon RAD Inc. Shanghai Yanle 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. International Integrated Systems, Inc. VSO Electronics (Jian) Co., Ltd. K&M Investment Co., Ltd. AIDC Investment Corp. Advantech Foundation Tran-Fei Development Co., Ltd.

Related Party Category

Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate (a second-tier subsidiary of the parent company from June 2020) Associate Associate Associate Associate Associate Associate Associate Associate Other related party Other related party Other related party Other related party

• b. Sales of goods

Related Party Categories/Name Associates Other related party	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 28,350 286 $ 28,636	2020 $ 28,580 - $ 28,580

• c. Purchases of goods

Related Party Categories/Name Associates	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 69,209	2020 $ 95,625

• 51 -

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

	Related Party	March 31,	December 31,	March 31,
Line Items	Categories/Name	2021	2020	2020
Trade receivables from	Associates	$ 23,790	$ 28,750	$ 21,273
related parties

The outstanding trade receivables from related parties are unsecured. For the three months ended March 31, 2021 and 2020, no impairment loss was recognized for trade receivables from related parties.

• e. Other receivables from related parties

	Related Party	March 31,	March 31,	December 31,	December 31,	March 31,	March 31,
Line Items	Categories/Name		2021		2020		2020
Other receivables	Associates	$	95	$	3,018	$	83
	Other related parties		-		1,615		-
		$	95	$	4,633	$	83
Payables to related parties (excluding loans from		related	parties)
	Related Party	March 31,		December 31,		March 31,
Line Items	Categories/Name		2021		2020		2020
Trade payables Other liabilities	Associates Other related parties	$ $	54,189 5,577	$ $	46,360 -	$ $	57,489 -

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

The outstanding trade payables to related parties are unsecured.

• g. Prepayments to related parties

	Related Party	March 31,	December 31,	March 31,
Line Items	Categories/Name	2021	2020	2020
Other current assets	Associates	$ 43,872	$ 36,286	$ 23,347

• h. Other transactions with related parties

Related Party Category/Name Selling and marketing expenses Associates Research and development expenses Associates	Operating Expenses	Operating Expenses	Operating Expenses
	For the Three Months Ended March 31
		2021 $ - $ 165	2020 $ 4 $ 360

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.

• 52 -

Rental income Associates Other related parties Others Associates Other related parties	Other Income	Other Income	Other Income
	For the Three Months Ended March 31
		2021 $ - 358 $ 358 $ 271 676 $ 947	2020 $ 120 15 $ 135 $ - 676 $ 676

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

• h. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Share-based payments	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 9,275 36 9,546 $ 18,857	2020 $ 11,336 40 8,523 $ 19,899

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

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for lease borrowings:

			December	December	31,
	March	31, 2021		2020		March 31, 2020
Pledged deposits (classified as financial assets at
amortized cost)	$	8,496	$	2,307		$	-
Demand deposits (classified as other non-current
assets)		1,303			-		-
Property, plant and equipment		-			-		62,100
	$	9,799	$	2,307		$	62,100

• 53 -

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

March 31, 2021

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 131,212 28.535 (USD:NTD) RMB 641,853 4.344 (RMB:NTD) USD 65,367 6.5688 (USD:RMB) EUR 26,753 33.48 (EUR:NTD) Financial liabilities Monetary items USD 95,298 28.535 (USD:NTD) RMB 205,771 4.344 (RMB:NTD) USD 35,244 6.5688 (USD:RMB)	Carrying Amount $ 3,744,125 2,788,210 895,678 1,865,240 $ 9,293,253 $ 2,719,330 893,870 1,005,102 $ 4,618,302

December 31, 2020

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 168,258 28.48 (USD:NTD) RMB 582,773 4.377 (RMB:NTD) USD 29,288 6.507 (USD:RMB) EUR 18,622 35.02 (EUR:NTD)	Carrying Amount $ 4,791,975 2,550,799 834,116 652,155 $ 8,829,045 (Continued)

• 54 -

Foreign Currencies Exchange Rate Financial liabilities Monetary items USD $ 88,499 28.48 (USD:NTD) RMB 220,322 4.377 (RMB:NTD) USD 23,588 6.507 (USD:RMB) March 31, 2020	Carrying Amount $ 2,520,439 964,347 671,786 $ 4,156,572 (Concluded)

Unit: In Thousands for Currencies, Except Exchange Rates

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 122,010 30.225 (USD:NTD) RMB 527,818 4.255 (RMB:NTD) EUR 24,055 33.240 (EUR:NTD) USD 15,881 7.1034 (USD:RMB) Financial liabilities Monetary items USD 83,891 30.225 (USD:NTD) USD 38,488 7.1034 (USD:RMB) RMB 150,863 4.255 (RMB:NTD)	Carrying Amount $ 3,687,752 2,245,866 799,588 480,002 $ 7,213,208 $ 2,535,605 1,163,300 641,922 $ 4,340,827

For the three months ended March 31, 2021 and 2020, realized and unrealized net foreign exchange losses were $45,142 thousand and $2,291 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the group entities.

31. 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)

• 55 -

• 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital. (Table 4)

• 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in

  • capital. (Table 6)

• 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital.

  • (None)

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the

  • paid-in capital. (Table 5)

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

  • capital. (Table 7)

• 9) Transactions of financial instruments. (Notes 7 and 27)

• 10) Significant transactions between the Company and subsidiaries. (Table 11)

• 11) Name, locations, and other information of investees. (Table 8)

• c. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment 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 9)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses. (Tables 1, 5 and 7)

• d. Information of major shareholders:

The following is the information of major shareholders: name of major shareholder, number of shares owned and percentage of ownership of shareholders whose percentage of ownership of shareholders is higher than 5%. (Table 10)

32. 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;

• 56 -

• 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.

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 three months ended March 31, 2021 Revenue from external customers $ 5,134,444 Inter-segment revenue - Segment revenue $ 5,134,444 Eliminations Consolidated revenue Segment income $ 1,528,267 Other revenue Other unamortized expense Other income and expense Finance costs Share of profits of associates accounted for using the equity method Profit before tax (continuing operations) For the three months ended March 31, 2020 Revenue from external customers $ 3,464,564 Inter-segment revenue - Segment revenue $ 3,464,564 Eliminations Consolidated revenue Segment income $ 953,472 Other revenue Other unamortized expense Other income and expense Finance costs Share of profits of associates accounted for using the equity method Profit before tax (continuing operations)	Embedded Boards and Design-in Services (EIoT) $ 3,013,490 - $ 3,013,490 $ 619,536 $ 2,986,439 - $ 2,986,439 $ 426,011	Allied Design Manufacture Services (Allied DMS) $ 2,286,201 - $ 2,286,201 $ 129,364 $ 2,588,186 - $ 2,588,186 $ 269,671	Intelligent Services (SIoT) $ 1,092,857 - $ 1,092,857 $ 93,013 $ 983,726 - $ 983,726 $ 88,631	Global Customer Services (AGS & APS) $ 1,613,004 - $ 1,613,004 $ 222,226 $ 1,244,690 - $ 1,244,690 $ 160,246	Others $ 21,407 - $ 21,407 $ (306) $ 4,584 - $ 4,584 $ (193)	Total $ 13,161,403 - 13,161,403 - 13,161,403 2,592,100 37,064 (305,239 ) 76,483 (3,834 ) 20,116 $ 2,416,690 $ 11,272,189 - 11,272,189 - 11,272,189 1,897,838 30,775 (244,216 ) (39,593 ) (6,331 ) (17,907) $ 1,620,566

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

• 57 -

TABLE 1

ADVANTECH CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE THREE MONTHS ENDED MARCH 31, 2021 (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	Trade receivables - related parties	Yes	$ 70,000	$ 30,000	$ -	-	Short-term financing	$ -	Financing need	$ -	None	None	$ 36,715 (Note B)	$ 146,858 (Note B)

Note A: Investee companies are numbered sequentially from 1.

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

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

• 58 -

TABLE 2

ADVANTECH CO., LTD. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED FOR THE THREE MONTHS ENDED MARCH 31, 2021 (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	AiSC AEU ANA AAC (BVI) Advantech Corporate Investment ATJ AKMC SIoT (Cayman) AJP Advantech Intelligent City Services Co., Ltd. AIH	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515	$ 570,700 (US$ 20,000 thousand) 285,350 (US$ 10,000 thousand) 851,700 (US$ 30,000 thousand) 285,350 (US$ 10,000 thousand) 285,350 (US$ 10,000 thousand) 272,000 (JPY1,000,000 thousand) 171,210 (US$ 6,000 thousand) 284,625 (US$ 10,000 thousand) 136,000 (JPY 500,000 thousand) 85,605 (US$ 3,000 thousand) 85,605 (US$ 3,000 thousand)	$ 570,700 (US$ 20,000 thousand) 285,350 (US$ 10,000 thousand) 285,350 (US$ 10,000 thousand) 285,350 (US$ 10,000 thousand) 285,350 (US$ 10,000 thousand) 258,000 (JPY1,000,000 thousand) 171,210 (US$ 6,000 thousand) 156,943 (US$ 5,500 thousand) 129,000 (JPY 500,000 thousand) 85,605 (US$ 3,000 thousand) 85,605 (US$ 3,000 thousand)	$ - - - - - 103,200 (JPY 400,000 thousand) - - 12,900 (JPY 50,000 thousand) - -	$ - - - - - - - - - - -	1.82 0.91 0.91 0.91 0.91 0.82 0.55 0.50 0.41 0.27 0.27	$ 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545	Y Y Y Y Y Y Y Y Y Y Y	N N N N N N N N N N N	Y N N N N N Y N N N N

(Continued)

• 59 -

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note A)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Maximum Collateral/ Guarantee Amounts Allowable (Note B)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
		ABR 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	$ 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515 3,137,515	$ 42,803 (US$ 1,500 thousand) 34,370 (EUR 1,000 thousand) 28,535 (US$ 1,000 thousand) 28,535 (US$ 1,000 thousand) 28,535 (US$ 1,000 thousand) 28,535 (US$ 1,000 thousand) 14,268 (US$ 500 thousand) 14,268 (US$ 500 thousand) 14,268 (US$ 500 thousand) 5,707 (US$ 200 thousand) 5,707 (US$ 200 thousand) 2,854 (US$ 100 thousand) 171,760 (US$ 6,050 thousand)	$ 42,803 (US$ 1,500 thousand) 33,480 (EUR 1,000 thousand) 28,535 (US$ 1,000 thousand) 28,535 (US$ 1,000 thousand) 28,535 (US$ 1,000 thousand) 28,535 (US$ 1,000 thousand) 14,268 (US$ 500 thousand) 14,268 (US$ 500 thousand) 14,268 (US$ 500 thousand) 5,707 (US$ 200 thousand) 5,707 (US$ 200 thousand) 2,854 (US$ 100 thousand) 1,427 (US$ 50 thousand)	$ - - - 2,256 (RUB 6,000 thousand) 15,000 - - - - - - - -	$ - - - - - - - - - - - - -	0.14 0.11 0.09 0.09 0.09 0.09 0.05 0.05 0.05 0.02 0.02 0.01 -	$ 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545 9,412,545	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 Y N N N N N N N

(Continued)

• 60 -

(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 March 31, 2021 were US$1= NT$28.535, EUR1= NT$33.48, and JPY1=NT$0.258.

Note D: The latest net equity is from the financial statements for the three months ended March 31, 2021.

• 61 -

TABLE 3

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD MARCH 31, 2021

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

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		March 31, 2021	March 31, 2021		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
The Company Advantech Corporate Investment	Share ASUSTek Computer Inc. Allied Circuit Co., Ltd. Fund Capital Money Market FSITC Money Market FSITC Taiwan Money Market Mega Diamond Money Market Share Contec GSD Technologies Co., Ltd. Allied Circuit Co., Ltd. BroadTec System Inc. BiosenseTek Corp. Juguar Technology Lanner Electronics Inc. Posiflex Technology Inc. Phison Electronics Corp. Innodisk Corp. GrandtechC. G. System Inc. Cypress Technology Co., Ltd. Chenbro Micom Co., Ltd. ISI TRMB LTRX MSI HOLI EQIX NSIT MSFT AVV China Mobile Ltd.	- - - - - - - - - - - - - - - - - - - - - - - - - - - - -	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 Same as above Financial assets at fair value through profit or loss - current 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 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	4,739,461 1,200,000 49,172,789 3,341,761 110,209,625 130,473,120 26,500 2,813,000 2,501,000 225,000 37,500 500,000 275,000 134,000 57,000 65,000 270,000 180,268 117,000 655 4,540 46,000 1,200 31,500 965 4,750 2,955 6,900 102,500	$ 1,765,449 150,600 800,287 601,400 1,702,188 1,651,659 11,691 196,347 313,876 3,607 - 7,391 18,644 10,760 27,845 11,050 14,499 9,933 9,922 13,811 10,078 5,999 6,439 11,254 18,713 12,933 19,880 9,263 19,166	0.64 2.41 - - - - 0.41 8.27 5.03 7.50 1.79 16.67 0.23 0.18 0.03 0.08 0.46 0.32 0.10 - - 0.16 - 0.05 - 0.01 - - -	$ 1,765,449 150,600 800,287 601,400 1,702,188 1,651,659 11,691 196,347 313,876 3,607 - 7,391 18,644 10,760 27,845 11,050 14,499 9,933 9,922 13,811 10,078 5,999 6,439 11,254 18,713 12,933 19,880 9,263 19,166	Note A Note A Note B Note B Note B Note B Note A Note A Note A Note C Note C Note C Note 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

(Continued)

• 62 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		March 31, 2021	March 31, 2021		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Advanixs Corporate Advantech Intelligent City Services Co., Ltd. AdvanPOS SioT (Cayman) Advantech Innovative Design Co., Ltd. AiSC Yun Yan, Wu-Lian Co., Ltd. Huan Yan, Jhih-Lian Co., Ltd.	Maxnerva Technology Services Ltd. Alibaba-SW Fund Taishin 1699 Money Market FSITC Taiwan Money Market Mega Diamond 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 Money Market FSITC Taiwan Money Market Taishin 1699 Money Market Fund Capital Money Market Mutual Fund Shanghai Shangchuang Xinwei Investment Management Co., Ltd. Fund FSITC Money Market Fund Jih Sun Money Market	- - - - - - - - - - - - - - - - -	Same as above Financial assets at fair value through profit or loss - current Same as above 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	3,812,000 18,200 24,544,570 3,240,735 504,597 - 6,466,890 5,054,793 387,142 1,189,398 361,931 14,473,571 32,246,377 625,517.30 2,895,000 27,092 1,638,306	$ 10,353 14,695 335,166 50,053 6,388 77,553 96,756 63,989 5,793 15,057 65,135 223,544 440,337 10,180 125,760 4,876 24,512	0.54 - - - - 0.04 - - - - - - - - 8.33 - -	$ 10,353 14,695 335,166 50,053 6,388 77,553 96,756 63,989 5,793 15,057 65,135 223,544 440,337 10,180 125,760 4,876 24,512	Note A Note A Note B Note B Note B Note C Note B Note B Note B Note B Note B Note B Note B Note B Note C Note B Note B

Note A: Market value was based on the closing price on March 31, 2021.

Note B: Market value was based on the net asset values of the open-ended mutual funds on March 31, 2021.

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

(Concluded)

• 63 -

TABLE 4

ADVANTECH CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE THREE MONTHS ENDED MARCH 31, 2021

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

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Shares	Amount (Cost)	Shares	Amount	Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Shares	Amount (Cost)
The Company	Fund Capital Money Market	Financial assets at fair value through profit or loss	-	-	9,226	$ 150,001	39,947	$ 650,003	-	$ -	$ -	$ -	49,173	$ 800,004

• 64 -

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 THREE MONTHS ENDED MARCH 31, 2021

(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 ANA ACN AEU AKR AJP Advanixs Corp A-SIoT AKMC LNC ACN LNC Dong Guan	ANA ACN AEU AKR AJP Advanixs Corp. A-SIoT AKMC The Company The Company The Company The Company The Company The Company The Company The Company ACN LNC Dong Guan AKMC LNC	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company Parent company Parent company Parent company Parent company Parent company Related enterprise Related enterprise Related enterprise Related enterprise	Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Sale Purchase Purchase	$ 2,221,182 2,195,794 1,098,281 288,940 194,514 126,071 186,086 (2,874,492) (2,221,182) (2,195,794) (1,098,281) (288,940) (194,514) (126,071) (186,086) 2,874,492 138,877 146,783 (138,877) (146,783)	25.47 25.18 12.60 3.31 2.23 1.45 2.13 39.10 72.89 78.06 78.99 66.82 95.60 100.00 64.34 91.97 4.44 85.57 4.94 99.69	30 days after month-end 30 days after month-end 45 days after month-end 30 days after month-end 30 days after month-end Usual trade terms 30 days after month-end Usual trade terms 30 days after month-end 30 days after month-end 45 days after month-end 30 days after month-end 30 days after invoice date Usual trade terms 30 days after invoice date Usual trade terms Usual trade terms Usual trade terms Usual trade terms Usual trade terms	Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price Contract price	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	$ 782,222 2,076,291 773,359 114,203 81,129 50,688 182,140 (2,430,472) (782,222) (2,076,291) (773,359) (114,203) (81,129) (50,688) (182,140) 2,430,472 77,636 266,804 (77,636) (266,804)	12.24 32.48 12.10 1.79 1.27 0.79 2.85 47.13 74.13 83.22 82.43 59.76 93.12 98.05 89.35 100.00 4.30 92.51 3.11 93.74	Note A

Note A: Unrealized gain for the period was $1,032 thousand.

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

• 65 -

TABLE 6

ADVANTECH CO., LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED MARCH 31, 2021

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

Buyer	Property	Event Date	Transaction Amount	Payment Status	Counterparty	Relationship	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Pricing Reference	Purpose of Acquisition	Other Terms
							Property Owner	Relationship	Transaction Date	Amount
The Company	Real estate	2020.10.30	$ 1,410,000	Under the contract, based on percentage of construction completed; accumulated payments of $78,280 thousand should be made by March 31, 2021 and $57,344 thousand was paid in the first quarter of 2021.	Chung-Lin General Contractors, Ltd.	None	-	-	-	$ -	Contract price	For the Company’s expansion	None

• 66 -

TABLE 7

ADVANTECH CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL MARCH 31, 2021

(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 A-SIoT AKR AKMC The Company LNC Dong Guan	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Related enterprise	$ 2,076,291 786,731 775,934 182,673 115,160 627,752 2,430,472 266,804	4.50 7.84 5.72 4.02 10.82 Note 1 5.53 2.35	$ - - - - - - - -	- - - - - - - -	$ 557,335 - 123,934 69,405 86,561 302,839 91,224 32,640	$ - - - - - - - -

Note 1: Sales revenue on materials delivered to subcontractors have been eliminated from consolidation.

Note 2: All intercompany gains and losses from investment have been eliminated from consolidation.

• 67 -

TABLE 8

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE THREE MONTHS ENDED MARCH 31, 2021 (In Thousands of New Taiwan Dollars/Foreign Currency)

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance as of March 31, 2021	Balance as of March 31, 2021	Balance as of March 31, 2021	Net Income (Loss) of the Investee for the Period	Investment Gain (Loss) for the Period	Note
				March 31, 2021	December 31, 2020	Shares	Percentage of Ownership	Carrying Value
The Company AJP Advantech Corporate Investment	AAC (BVI) ATC Advanixs Corporate Advantech Corporate Investment Axiomtek AdvanPOS LNC AMX AEUH ASG ATH AAU AJP AMY AKR ABR Advantech Innovative Design Co., Ltd. Advantech Intelligent City Services Co., Ltd. AIN AIMobile Co., Ltd. Winmate AVN Nippon RAD Inc. ARU ATJ ATR AIL Huan Yan Water Solution Co., Ltd. ATJ Cermate (Taiwan) Deneng CDIB Innovation Accelerator Co., Ltd. AzureWave Technologies, Inc. Yun Yan, Wu-Lian Co., Ltd. Nippon RAD Inc. i-Link Co., Ltd.	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 India Taipei, Taiwan Taipei, Taiwan Hanoi, Vietnam Tokoyo, Japan Moscow Nogatashi, Japan Turkey Israel Taipei, Taiwan Nogatashi, Japan Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Tokyo, Japan Taichung, Taiwan	Investment and management service Sale of industrial automation products Production and sale of industrial automation products Investment holding company Production and sale of industrial automation products Production and sale of POS system Production and sale of machines with computerized numerical control Sale of industrial automation products Investment and management service Sale of industrial automation products Production of computers Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Sale of industrial automation products Product design Design, develop and sale of intelligent services Sale of industrial automation products Design and manufacture of industrial mobile systems Embedded System Modules Sale of industrial automation products R&D of IoT intelligent system Production and sale of industrial automation products Production and sale of electronic and mechanical devices Wholesale of computers and peripheral devices Sale of industrial network communications systems Service plan for combination of related technologies of water treatment and applications of Internet of Things 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 Industrial equipment Networking in Greater China R&D of IoT intelligent system Intelligent medical integration	$ 3,875,214 998,788 100,000 2,900,000 360,732 266,192 277,946 61,909 1,219,124 27,134 47,701 40,600 15,472 35,140 156,668 103,146 10,000 81,837 39,747 180,000 540,000 76,092 251,915 44,676 443,515 58,482 8,653 27,000 184,649 71,500 18,095 150,000 578,563 5,000 49,733 9,091	$ 3,875,214 998,788 100,000 2,900,000 249,059 266,192 277,946 61,909 1,219,124 27,134 47,701 40,600 15,472 35,140 156,668 103,146 10,000 81,837 19,754 180,000 540,000 76,092 251,915 44,676 323,130 58,482 8,653 27,000 184,649 71,500 18,095 150,000 578,563 5,000 49,733 9,091	128,496,207 40,850,000 10,000,000 300,000,000 22,681,984 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 4,999,999 6,750,000 12,000,000 8,100 1,004,310 1 700,000 260,870 100 2,700,000 286,100 5,500,000 658,000 15,000,000 29,599,000 500,000 154,310 845,000	100.00 100.00 100.00 100.00 26.52 100.00 59.10 60.00 100.00 100.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 27.00 16.55 60.00 16.08 100.00 70.00 60.00 100.00 100.00 28.61 55.00 39.69 17.86 19.67 50.00 2.92 20.13	$ 9,269,399 4,228,181 241,373 3,460,685 748,085 298,274 358,190 36,995 923,232 116,784 54,536 34,366 414,168 67,939 371,475 87,214 10,125 81,615 36,087 41,416 571,545 61,327 237,653 8,422 485,620 37,230 8,539 24,906 218,117 130,637 13,533 150,699 544,080 2,594 45,301 2,764	$ 238,864 64,685 7,408 13,117 119,505 11 15,465 (1,957) 18,764 6,734 (382) 1,418 7,616 4,535 33,554 2,800 4 (13,087) 2,162 (14,078) 81,131 2,643 31,150 (4,044) 4,341 674 56 (2,094) 4,341 8,709 1,879 (4,969) (26,382) 3 - (7,584)	$ 240,142 53,360 7,408 14,006 29,645 11 9,134 (1,174) 18,514 6,705 (215) 1,372 7,035 4,529 33,515 2,800 4 (13,087) 2,118 (3,801) 13,516 1,575 5,919 (4,044) 1,158 (168) 56 (2,094) 1,242 5,629 746 (887) (5,190) 2 - (1,526)	Subsidiary Subsidiary Subsidiary Subsidiary Equity-method investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Equity-method investee Equity-method investee Subsidiary Equity-method investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Equity-method investee Equity-method investee Equity-method investee Subsidiary Equity-method investee Equity-method investee
											(Continued)

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Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance as of March 31, 2021	Balance as of March 31, 2021	Balance as of March 31, 2021	Net Income (Loss) of the Investee for the Period	Investment Gain (Loss) for the Period	Note
				March 31, 2021	December 31, 2020	Shares	Percentage of Ownership	Carrying Value
ATC AAC (BVI) ANA AIE SIoT (Cayman) AEUH ASG Cermate (Taiwan) LNC Better Auto	DotZero Co., Ltd Mildex Optical Inc. Information Technology Total Service Co., Ltd. ACI IOT Investment Fund-I Corporation ACISM Samsoft Technology Co., Ltd. Impelex Data Transfer Co., Ltd. VSO Electronics Co., Ltd. Hwacom Systems Inc. IISI Isap Solution Corp. AIH Feng Sang Enterprise Co., Ltd. ATC (HK) ANA AAC (HK) ADB SIoT (Cayman) AIE ACZ A-SIoT AEU APL ATH AID LandMark Better Auto Famous Now	Taichung, Taiwan Kaohsiung, Taiwan Taipei, Taiwan Taipei, Taiwan Samoa Taipei, Taiwan Taichung, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Hong Kong Sunnyvale, USA Hong Kong Dubai Cayman Ireland Czech Republic Munich, Germany Eindhoven, The Netherlands Warsaw, Poland Thailand Indonesia BVI BVI BVI	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 Service of software Service of software 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 Sale of industrial network communications systems Manufacturing automation Design, R&D and sale of industrial automation vehicles and related products Sale of industrial automation products Sale of industrial automation products Production of computers Sale of industrial automation products General investment General investment General investment	$ 8,100 202,948 147,444 238,000 18,214 15,000 10,000 120,000 357,119 243,086 10,000 12,254 109,219 1,212,730 504,179 539,146 - US$ 50,000 US$ 39,481 - 522,719 431,963 14,176 7,537 4,797 28,200 244,615 US$ 4,000	$ 8,100 202,948 147,444 238,000 18,214 15,000 10,000 120,000 357,119 243,086 10,000 12,254 - 1,212,730 504,179 539,146 - US$ 50,000 US$ 39,481 - 522,719 431,963 14,176 7,537 4,797 28,200 244,615 US$ 4,000	490,000 15,710,000 5,084,273 23,800,000 1 170,455 2,500,000 28,000,000 24,575,000 14,299,205 1,492,852 1,100,000 6,088,750 57,890,679 10,952,606 15,230,001 - 30,000,000 - - 1 32,315,215 7,030 49,000 300,000 972,284 7,425,000 1	27.00 15.37 18.61 79.33 100.00 20.00 20.00 14.29 20.73 19.61 34.83 100.00 36.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 49.00 100.00 100.00 100.00 100.00	$ 3,390 158,532 159,160 297,414 8,999 10,472 10,266 133,572 397,446 256,458 7,659 7,160 109,762 4,237,938 4,790,959 2,696,196 2,766 2,008,999 331,579 306,784 450,957 990,243 38,670 53,401 8,927 142,928 64,940 74,301	$ (4,135) (32,000) 14,104 22,315 (836) (2,965) (1,969) 25,763 (37,149) (36,999) (6,719) 4,045 8,862 64,756 114,688 124,923 73 (819) 15,937 15,299 (12,811) 17,932 1,172 (382) 796 5,506 9,733 9,733	$ (1,116) (4,919) 2,624 17,703 (836) (593) (394) 3,680 (7,701) (7,254) (2,340) 4,045 544 53,432 120,144 126,885 73 (887) 15,937 15,299 (13,173) 18,014 1,202 (187) 782 5,829 10,064 9,682	Equity-method investee Equity-method investee Equity-method investee Subsidiary Subsidiary Equity-method investee Equity-method investee Equity-method investee Equity-method investee Equity-method investee Equity-method investee Subsidiary Equity-method investee Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note A: The financial statements used as basis of net asset values had not been reviewed by independent CPAs, except AAC (BVI), AAC (HK), ANA, ATC, ATC (HK), AEUH, AEU and Advantech Corporate Investment.

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

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

(Concluded)

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TABLE 9

ADVANTECH CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA FOR THE THREE MONTHS ENDED MARCH 31, 2021 (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, 2021	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of March 31, 2021	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of March 31, 2021	Accumulated Inward Remittance of Earnings as of March 31, 2021
					Outflow	Inflow
Advantech Technology (China) Company Ltd. (“AKMC”) Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd. (“ACN”) Shanghai Advantech Intelligent Services Co., Ltd. (“AiSC”) Xi’an Advantech Software Ltd. (“AXA”) LNC Dong Guan Co., Ltd. Shenzhen Cermate Technologies Inc. Cermate Technologies (Shanghai) Inc.	Production and sale of components of industrial automation products Sale of industrial automation products Production and sale of industrial automation products Development and production of software products Production and sale of industrial automation products Production and sale of Human Machine Interface Sale of Human Machine Interface	US$ 43,750 thousand (Note E) US$ 4,230 thousand US$ 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	$ 1,064,356 (US$ 37,300 thousand) 152,149 (US$ 5,332 thousand) 228,280 (US$ 8,000 thousand) (Note C) 91,141 (US$ 3,194 thousand) 8,789 (US$ 308 thousand) 16,322 (US$ 572 thousand)	$ - - - - - - -	$ - - - - - - -	$ 1,064,356 (US$ 37,300 thousand) 152,149 (US$ 5,332 thousand) 228,280 (US$ 8,000 thousand) (Note C) 91,141 (US$ 3,194 thousand) 8,789 (US$ 308 thousand) 16,322 (US$ 572 thousand)	$ 64,756 126,706 (1,587) 13 9,733 4,104 1,813	100.00 100.00 100.00 100.00 100.00 90.00 100.00	$ 53,431 128,261 (1,178) 13 9,682 4,534 1,813	$ 4,237,937 2,044,810 625,141 29,136 74,301 103,561 44,220	$ - 320,505 (US$ 11,232 thousand) - - - 39,260 (US$ 717 thousand) (RMB 4,328 thousand) -

(Continued)

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Investee Company Name	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Investment Type (e.g., Direct or Indirect)	Investment Type (e.g., Direct or Indirect)	Accumulated Outflow of Investment from Taiwan as of January 1, 2021	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of March 31, 2021	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note A)	Carrying Value as of March 31, 2021	Accumulated Inward Remittance of Earnings as of March 31, 2021
							Outflow	Inflow
Advantech Service-IoT (Shanghai) Co., Ltd. (“SIoT (China)”) Shanghai Yanlo Co., Ltd. (“Yanlo”) Tianjin Anjie IOT Science and Technology Co., Ltd. (“Anjie”) GSD Environmental Technology Co., Ltd. (“GSD”) Foshan Technology Co., Ltd. (“Foshan”)	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 Operation and maintenance for intelligent general equipment, and consulting service for comprehensive energy issues		RMB 15,000 thousand RMB 2,200 thousand RMB 3,000 thousand RMB 10,000 thousand RMB 3,000 thousand	Indirect Other Other Indirect Other		(Note F) (Note G) (Note G) $ 16,636 (US$ 583 thousand) (Note G)	$ - - - - -	$ - - - - -	(Note F) (Note G) (Note G) $ 16,636 (US$ 583 thousand) (Note G)	$ 431 23 (1) (2,090) -	100.00 100.00 20.00 40.00 21.67	$ 431 23 - (836) -	$ 40,536 5,177 2,605 8,999 2,824	$ - - - - -
Accumulated Investment in		Investment Amounts
Mainland China as of March 31, 2021		Authorized by Investment Commission, MOEA			Allowable Limit on Investment
$1,583,379 (US$55,489 thousand) (Note D)		$2,259,401 (US$79,180 thousand)			$19,137,473 (Note I)

Note A: Except for the financial statement of AKMC and ACN, the respective entity is an immaterial subsidiary; its financial statements have not been reviewed, which does not result in a significant impact on the financial statements.

Note B: The significant events, prices, payment terms and unrealized gains or losses generated on trading between the Company and its investees in Mainland China are described in Table 7.

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.

(Continued)

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(Concluded)

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

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

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

• Note H: The exchange rate was US$1=NT$28.535 and RMB1=NT$4.344.

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

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

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TABLE 10

ADVANTECH CO., LTD. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS MARCH 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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	14.32 11.83 11.69

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

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TABLE 11

ADVANTECH CO., LTD. AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS BETWEEN ADVANTECH CO., LTD. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Number (Note A)	Company Name	Counterparty	Flow of Transaction (Note A)		Transaction	Details
				Financial Statement Account	Amount	Payment Terms	% to Consolidated Assets/Revenue (Note C)
0	Advantech Co., Ltd.	ACN ACN AEU AEU AJP AKR ANA ANA A-SIoT AKMC Advanixs Corp.	1 1 1 1 1 1 1 1 1 1 1	Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue Sales revenue Sales revenue Receivables from related parties Sales revenue Receivables from related parties Sales revenue	$ 2,195,794 2,076,291 1,098,281 773,359 194,514 288,940 2,221,182 782,222 186,086 627,752 126,071	Normal 30 days EOM Normal 45 days EOM Normal Normal Normal 30 days EOM Normal 45 days EOM Normal	17 4 8 1 1 2 17 1 1 1 1
1	AKMC	The Company The Company ACN	2 2 3	Sales revenue Receivables from related parties Sales revenue	2,874,492 2,430,472 138,877	Normal 30 days EOM Normal	22 4 1
2	LNC	LNC Dong Guan	3	Sales revenue	146,783	Normal	1
3	ACZ	AEU	3	Sales revenue	82,690	Normal	1

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

1. “0” for Advantech Co., Ltd.

2. Subsidiaries are numbered from “1”.

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

1. From the parent company to its subsidiary.

2. From the subsidiary to its parent company.

3. Between subsidiaries.

4. Note C: For assets and liabilities, amounts are shown as a percentage to consolidated total assets as of March 31, 2021, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the three months ended March 31, 2021.

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

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