Operational Performance and Corporate Governance Structure

Since its establishment in 1983, Advantech has focused on the global IIoT field, providing corporate customers with a full range of services such as software and hardware system integration, customized design services, and global technical support. And the vision of the corporate brand of “Enabling an intelligent planet”.

Advantech is a Taiwan listed company and has been listed on the Taiwan Stock Exchange since 1999 (TWSE: 2395); Headquartered in Neihu Science Park, Taipei, Taiwan, our business base spans 27 countries in Europe, America, Asia, and other regions. Our three major manufacturing centers are located in Linkou (Taiwan), Kunshan (China), and Fukuoka (Japan). Furthermore, we have built four logistics management centers and 21 local service centers to provide global customers with real-time and comprehensive integrated services via a complete service system.

Advantech and its affiliates specialize in the manufacturing, assembly, sales, and after-sales service of industrial computer related products (details in Organization Chart). Its main business groups include: the four major business sectors: Embedded Sector, Intelligent System Sector, IoT Automation Sector, and Intelligent Services Sector. The Company focuses on five major key markets including Edge Intelligent Systems, Smart Manufacturing, Energy and Utilities, Intelligent Healthcare, and Intelligent Retail and Services, providing diverse application solutions to meet the needs of customers across various industries. Embracing the trend of Edge Computing and Artificial Intelligence (AI), Advantech will focus its strategy on Edge Computing and Edge AI to bolster its global presence and enhance core competitiveness. By integrating our Edge Computing hardware platform products and the industrial IoT software platform WISE-IoT, with industry Edge AI solutions and industry knowledge, we will shift towards a co-creation-centered business model for integrated industry applications, helping our partners and customers to connect within the industry chain. Furthermore, we work closely with partners across different industries to "co-create" industry ecosystems, aiming to accelerate the realization of industrial intelligence.

The industries that Advantech and its affiliated companies work on are mainly in the manufacture, assembly, sales and after-sales service of industrial computerrelated products. Some affiliated companies invest in related technologies and business activities connected to the aforementioned products to form their business scopes. The organization chart of the Company is shown in Figure.

An evaluation was conducted by Interbrand, an internationally renowned brand evaluation agency commissioned by the Industrial Development Bureau of the Ministry of Economic Affairs.

Please refer to the website: Internal Audit, Advantech Code of Ethics and Business Conduct , Guideline for Insider Trading revention Management、Article of Incorporation

Advantech is committed to enhancing the effectiveness of its Board of Directors and has implemented a comprehensive director selection system. Board member appointments adhere to a diversity policy,with evaluations encompassing industry background, professional expertise, age, and gender balance to foster a broad range of perspectives. In addition to considering international market outlook, professional and academic achievements, and risk management capabilities, Advantech also plans to incorporate sustainability expertise into the evaluation criteria for Board members. The selection of director candidates follows the candidate nomination system under "Article 192-1 of the Company Act", and are elected by the shareholders' meeting from the list of candidates; independent directors are recruited in accordance with the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies. In addition, according to the Company Act, the Board of Directors shall execute its duties in accordance with applicable laws and regulations, the Articles of Incorporation, and resolutions of the shareholders' meeting. Should any resolution result in damage to the company due to violation of such provisions, the directors participating in the resolution may be held liable for compensation. However, those who expressed dissent and had it recorded in the meeting minutes shall be exempt from such liability. Advantech also procures Directors and Officers Liability Insurance (D&O Insurance) for all board members annually. For further details regarding the D&O Insurance policy, please refer to page 49 of the 2024 annual report.

Advantech is currently in its 15th term of Board of Directors, consisting of nine members. The current board term spans from May 25, 2023, to May 24, 2026. The composition of the current Board of Directors and the developmental goals for the upcoming 16th term are illustrated in the figure below. One Board seat will be designated to the Advantech Cultural and Educational Foundation, ensuring representation of public welfare stakeholders in the Board's composition. Overall, the composition of Advantech's Board of Directors complies with the principle of diversity. The directors' diverse professional perspectives are constructive and beneficial to the Company's ability to cope with operational, industry, and sustainability impacts. The average tenure of the 15th Board of Directors as of the end of December 2024 was 9.8 years.

Advantech holds the Lita spirit, a concept of altruism within the company, and expects to give back to society while growing the business. Therefore, we take it as our responsibility to contribute reasonable taxes to societies and economies where we conduct our business. We seek to comply with relevant tax laws and regulations but do not seek to conduct aggressive tax planning. According to Advantech Tax Policy, headquarters and its subsidiaries should abide by the following principles:

1. Act at all times in compliance with the spirit and the letter of the relevant tax laws and regulations in the countries in which we operate.
2. Advantech complies with Organization for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines to prepare three-tier transfer pricing documentation.
3. Transfer pricing is set based on the “arm’s length principle.” Profits from each operating entity are reasonably remunerated for the risk and complexity of each entity’s activities.
4. Advantech’s major decisions are made mainly based on business purposes, and then supplemented by tax analysis to search for optimal solutions.
5. Do not engage in any arrangement that transfers value created to low tax jurisdictions or tax havens simply for reducing tax burden. Do not use tax havens or tax structures whose sole purpose is for tax avoidance.
6. Assess tax risk periodically and reduce it by negotiating Advance Pricing Agreement (APA) with local tax authorities in the countries Advantech generates high income.
7. Build mutually respectful relations with tax authorities based on mutual trust and communication, information transparency, and tax payment with integrity.

* Note：
1. The revenue, net profit before tax, and tax information are aggregated amounts from local entities' statutory financial statements and related party transactions are not excluded.
2. The net profit before tax includes investment gain (loss) accounted using the equity method.
3. For the names of all resident entities and their primary business activities, please refer to the appendix of Advantech Co., Ltd.'s 2024 Sustainability Report.

Source: pages 10 of the 2024 Advantech Co., Ltd. Consolidated Financial Statements; please refer to the "Consolidated Statements of Cash Flows" on page 13 for income tax payments.

Advantech is subject to tax laws and regulations in the various jurisdictions in which it operates or conducts business. Changes in tax laws and regulations will increase tax liabilities and compliance burdens, which will have an adverse impact on business operation. In order to effectively manage tax risks, Advantech complies with the tax laws and regulations; understands the tax liability and compliance status; identifies potential tax risks; prioritizes the issues and handles them on case-by-case basis. Technology tools are also been used for effective tax management. Aforementioned tasks and results are regularly reviewed by the management. The strategy development of global finance and tax is led by the management, who delegates day-to-day responsibility to headquarters finance manager. Local accounting teams execute the tax filings complying with tax laws and regulations. In addition, Advantech also engaged external tax consultants and CPA firms for tax reporting and compliance services. Advantech's Audit and Risks Committee is delegated by the Board to oversee the quality and integrity of the accounting, auditing, and financial control practices of Advantech through periodic review of certain major matters, including accounting policies and procedures, internal controls systems, legal compliance, and corporate risk management, etc. Advantech's Tax Policy is reviewed in the Audit and Risks Committee and approved by the Board.

Integrity Management: Compliance with Laws and Regulations, Anti-Corruption and Anti-Competition

Integrity management is an important part of the internal control mechanism of corporate governance. Advantech identifies various laws and regulations in advance, and then communicates with relevant internal units to evaluate the formulation and implementation of the Company's relevant rules, in order to ensure smooth compliance with laws and regulations and practical practices. The concepts of compliance with laws, anti-corruption, anti-competitive, and social responsibility in integrity management are closely related to the Company's goodwill, which is one of Advantech's sustainable operations.