ARES — Investor Presentation 2017

Aug 25, 2017

2017 ARES INVESTOR CONFERENCE

TICKER SYMBOL：2471 DATE：2017/08/25

Disclaimer

This presentation and release contain "forward-looking statements” which may include projections of future results of operations, financial condition or business prospects based on our own information and other sources.

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Our actual results of operations, financial condition or business prospects may differ from those expressed or implied in these forward-looking statements for a variety of reasons, including but not limited to market demand, price fluctuations, competition, international economic conditions, supply chain issues, exchange rate fluctuations and other risks and factors beyond our control.

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The forward-looking statements in this release reflect the current belief of HTC as of the date of this release. Ares undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date.

SUMMARY

 Ares Profile

• Products and Services

• Operation Statistics

• Future Prospects

• Ｑ＆Ａ

Ares Profile

Established in 1980 Employees 317 personnel

Recognition of clients

Source: 2016 Ares Customer Satisfaction Survey

Organization

Information Access Lead to Success

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st Taiwan
Software products Taiwan
Only Taiwan ERP
software
and professional Mittelstand
company on TSE
company on TSE services Award
Leading software Oracle Taiwan MES
technology
year Taiwan provider professional solution
and in
enterprise of foreign distributor in acknowledged by
implementation
informatization
exchange system Taiwan Gartner
experience
Taiwan Banking
st government- Consulting and
SWIFT Microsoft Taiwan core
solution
acknowledged Partner banking solution outsourcing
acknowledged
IFRS ERP provider services
provider
by Gartner
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Ares Group

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Argo
APLUSOFT
(SUZHOU)
M-Power
BLITZ
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SUMMARY

• Ares Profile

• Products and Services

• Operation Statistics

• Future Prospects

• Ｑ＆Ａ

Products & Services

Products Services

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Ares
Ares uPKI
AFEIS eAresBank Privacy
Security ciMes
Protector
ARES Portfolio
System ARES Nuntio ArgoERP
Visual Pricing Banking/Treasure HCP
Tool
Treasury System
金融業務 System Integration Oracle ERP
China Core Local Template
GV/NM/GIB/ eGUI
Consulting
Banking
SWIFT
Solution Outsourcing
Packages E-Business Oracle ERP
Consultant
Legislative Yuan:
personnel accounting
integration, electronic Fortify PLM
document,
information
bulletin, administration
security
management
inspection tool CRM
Technology Government
development
program Project Large-scale government
GCRS
consulting
service systems: Personnel
services
Services Network, lifelong
learning network, food
Big Data BI
application/ Public inspection, drug permit
Cloud computing department business system
projects
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FINANCIAL SERVICES

• AFEIS - Advanced Foreign Exchange Information System

• eAresBank - International Finance Integration System

• ARES Nuntio Regulatory Reporting Platform

• ARES Smart Core Banking System

• ARES Treasury System ARES Portfolio System

• Visual Pricing Tool

Gartner Acknowledged Core Banking System

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ARES
Global 23
Taiwan NO.1
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ARES Nuntio System Structure ARES Nuntio Regulatory Reporting Platform follows the HKMA (Hong Kong Monetary Authority), can verify the customized reporting for bank’s side in a very short amount of time, through existing system or information linking and algorithm programming. Each set of information contains subsidiary ledger that can track sources of each item, it is the strongest back-up for reporting and information verification back up!

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Best Choice of FX Trade and Capital Market

ARES Treasury System Financial trading system that supports foreign exchange transactions, foreign exchange rate derivatives, bonds investment and others, functions cover interbank and customer STP transaction and risk management.

Mid-end Portfolio Front-end Trading System Back-end Management Traders Market Risk management executive Finance department accountant TMU Financial instruments executive Foreign exchange accountant

• Foreign currency transactions

• Interbank transaction • Centralized amount • Multinational, multicurrency investment control accounting • • • Branch exchange listed rate and Portfolio analysis High-efficiency closing account

• bargain • Market risk operations • • Real-time fund scheduling management Delivery process •

• configuration Laws and regulations • • Sales of derivative products SWIFT messages

• Sales of derivative products

• • Customer Relationship

• Management

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Support Market Risk Management Effectively

ARES Portfolio System Secure client′s transactions, strengthen sales management, and expose risks while planning derivative products.

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Systematize Equivalent to
financial hiring financial
products evaluation
Complex Difficult team
Product Operations
Evaluation
Validation
ExApensive Time Blimits
Reduce Increase
evaluation
manpower
for evaluation effectiveness
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E-BUSINESS

• ArgoERP - Argo Enterprise Resource Planning

• ciMes - Computer Integrated Manufacturing Execution System

• HCP - Ares Human Capital Planner

• GD-CRM - Customer Relationship Management

• Business Intelligence

• Analyzer

• BI KPI- Business Intelligence Key Performance Indicator

ArgoERP is not just ERP…

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Centralized Document Procurement/
Basic
Financial
Multi-company Approval Sale/Inventory
Management
Management
Management Management Management
Core
Applications
IFRS
Production Project Cost
Budget
Management Management Portal
Management
HR
RMA
Return e-Argo
Human Extension Cloud
Merchandise
Resource
Authorization Application Applications
s
TX GIB SQM SFC
Goods in Supplier Mobile
Tax Bond Quality Shop Floor APP
Control
Management
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e-Argo Mobile Application

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Bulletin Leave
Personal Approval
Board/ Management
Enquiry Management
Calendar
Personal Overtime
Signoff
Expense Management
Management
Application
Head towards trends mobile commerce, paperless trends
ArgoERP has prepared the best tool for you
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Core of Industry 4.0 Intelligent Production

Smart Factory

Smart networking of Cyber-Physical Integration

• Small-volume, larger-variety production

• Smart automation & inspection intelligence

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Customer
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• Key Intelligent Process

• Smart marketing services

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•
Instant information feedbacks
MES
Big Data
Management

Mobilization
Management Smart Energy & Environment Security
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Mobile Management Grasp Production Frontline

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timely
information
transparency
digitization
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Strategic management is available everywhere

No.1 Choice of Manufacture Management

 20+ LED factory experiences No. 1 LED  Top 30% market share of LED MES in China market share  Complete LED consultancy experience of upper, middle, lower stream

No. 1 complete  Yulon Motor (largest vehicle industry in Taiwan) vehicle industry  Taiwan Rolling (largest rail vehicle industry in market share in Taiwan) Taiwan  Complete mobile management of production

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No. 1 growth rate  Founding, forging, metal stamping forming
of metal  Complete solutions of automotive products
processing
and module applications
industry
1st Industry  Industry 4.0 application consultancy experience
 Complete solutions of textile commodity, yarn
4.0 of textile
twisting, weaving, dyeing and finishing
industry
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2016 Gartner Survey Report

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HCP- Ready for One Fixed Day Off and One Flexible Rest Day Regulation

Leave Overtime Different work-hour management management shift management

one fixed day off and one flexible rest day regulation takes effect, immediate system updates

Self define system parameter Flexible accommodation with regulation change

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Global HR information platform expands with your fingers

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Analyzer – Understand Report Easily, Explore Information Value

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「Reporting」X「Analytics」X「Scorecard & Dashboard」3 main needs of BI functions Timely operational feedback and strategic decision, multi-channel analysis, reveal core problems with mass information, drag-and-drop report design…and other comprehensive functions.

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LOCAL TEMPLATE

• eGUI: Electronic Government Uniform Invoice

• GV : Government Uniform Invoice/Value Added Tax System

• NM : Notes Management

• GIB : Goods in Bond

 Financial Accounting Standard No.10. Inventory Management System

INFORMATION SECURITY

• ARES uPKI - ARES Public Key Infrastructure

• ARES PP - ARES Privacy Protector

• Fortify - Enterprise Information Security Monitor Solution

ARES Privacy Protector

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Mobile
document
Internal External
protection protection
Auditing
Cloud
system
protection
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Seamless No change of user habits Convenient Convenient document circulation Support various authentication systems Mobile + Cloud Light and secure reading experience Auditing Improve corrective and preventive action

Fortify Security Solutions

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• Source Code Analysis

• HP Fortify Static Code Analyzer(SCA)

• Web Penetration Test

• WebInspect

• Application System Vulnerability Analysis

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• Fortify Software Security Center Server

• Fortify WebInspect Agent

• Web Application System Monitor

• App defender for cloud

• App defender on premise

Fortify Black & White-Box Testing Reduces 80% Security Vulnerability

5 23 Detect Support Support Define risks 700 + main programming types with 4 building language of security levels tools codes vulnerability

Fortify Static Code Analyzer

WebInspect

• Source code scan to detect the types of security vulnerability

• • Identify the cause of the vulnerability and the corresponding lines of codes

• Detect code security issues during develo ment hase to save re air costs p p p

• Comprehensive attack scene simulation to detect the running website

• • Verify if a specific vulnerability can be exploited

• Confirm the cause of problem to increase re airin s eed p g p

Protect millions loss from loopholes

Faster prevention of information security loopholes Search, repair loopholes Time 2 weeks -> 1 hour Develop, repair loopholes and satisfy the Cost regulations Saved average of 3.8 million USD annually Automatic application system security Productivity process Reached revenue37 million USD annually Product Launch Ensure no security loophole delays Repetition of 80％ loopholes -> near 0 Detection Efficiency Increase source code inspection quality 1000 times better than human inspection Blocks threats twice the result with half the effort

ORACLE CONSULTANCY

• Oracle EBS

• Oracle ERP Cloud

• Oracle Agile PLM

• AIMS

• Oracle Local Template（GV. NM. GIB）

• eGUI – Electronic Government Uniform Invoice

GOVERNMENT PROJECTS

• Project development（traditional、APP）

• BPO（system maintenance and operation）

• Internet Marketing Promotion

• Proposal subsidy（successfully assisted 10+ vendors）

• BIG DATA Application

IT Outsourcing Service

Professional Manpower System Planning & Software & Hardware System Integration Support Building Maintenance Development

v 10+ years of consultancy experience

v Professional certifications (SCJP、SCWCD、MCAD、MCSD、MCSP、PMP…etc.) v Single contact window, reduce management cost v Efficient work management, increase work accuracy v Establish close relationship of front & back-end personnel v Government, finance, semiconductor

SUMMARY

• Ares Profile

• Products and Services

• Operation Statistics

• Future Prospects

• Ｑ＆Ａ

Revenue Distribution by Product

2017Q2-Revenue by Product

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Project
26.37%
Commerci
al SI
47.47%
Financial
2016Q2-Revenue by Product
2016-Annual Revenue by Product
Product
26.16% Project
Project
18.35%
20.10%
Commerci
Commerci
al SI
al SI
43.88%
Financial 47.48% Financial
Product
Product
37.77%
32.42%
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Revenue Distribution by Region

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Consolidated Simplified Balance Sheet

Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand
Item	2017/06/30	%	2016/12/31	%	2016/06/30	%
Total Assets	1,070,760	100	1,087,251	100	1,020,841	100
Total Liabilities	388,643	36	368,709	34	365,878	36
Total Shareholder′s Equity	682,117	64	718,542	66	654,963	64

Unit: NTD Thousand

Item	2017 H1	%	2016 Annual	%	2016 H1	%
Revenue	302,728	100	692,410	100	316,274	100
Gross Profit	97,514	32	237,534	34	97,900	31
Operating Income	6,653	2	37,218	5	(4,071)	(1)
Net Income	(5,498)	(2)	81,444	12	4,686	2
EPS after tax (dollars)	(0.11)		1.79		0.11

SUMMARY

• Ares Profile

• Products and Services

• Operation Statistics

• Future Prospects

• Ｑ＆Ａ

Future Prospects

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• eAresbank he only core banking system in Taiwan acknowledged by Gartner

• • ciMes the only Taiwan MES solution acknowledged by international research institution Gartner

• Assist iBaby of Taiwan government win government Service Quality Award

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• BIG DATA intelligent hotel and medical care system application

• • ArgoERP enters Southeast Asian market

• ciMes realizes Industry 4.0 strategy and goal

• Bank 3.0 comprehensive integration

SUMMARY

• Ares Profile

• Products and Services

• Operation Statistics

• Future Prospects

• Ｑ＆Ａ

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Thank You
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Q&A