CMC — Annual Report 2021

Dec 29, 2021

China Motor Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2021 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard No. 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

CHINA MOTOR CORPORATION

By:

LI-LIEN CHEN YEN Chairman

March 15, 2022

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders China Motor Corporation

Opinion

We have audited the accompanying consolidated financial statements of China Motor Corporation and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years 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”).

In our opinion, based on our audits and the reports of other auditors (refer to the Other Matter section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion based on our audits and the reports of other auditors.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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The key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2021 is described as follows:

Revenue Recognition of Domestic Sales of Four-wheeled Vehicles

The revenue of the Group from domestic sales of four-wheeled vehicles are material to its consolidated financial statements. Since the sales of four-wheeled vehicles are strongly affected by the economy, we identified the occurrence of revenue recognition from domestic sales of four-wheeled vehicles as a key audit matter.

Our audit procedures performed in respect of revenue recognition included the followings:

• We discussed with management to obtain an understanding of the accounting policy for recognizing revenue coming from domestic sales of four-wheeled vehicles and determined that such policy was appropriate and consistently applied;

• We obtained an understanding of the internal controls on revenue recognition of domestic sales of four-wheeled vehicles, evaluated the design of the controls and tested the operating effectiveness of such controls. We also verified the authenticity of sales transaction-related documentary evidence;

• We selected samples, checked the relevant receipts and confirmed that revenue from the domestic sales of four-wheeled vehicles was recognized when the control of the goods has been transferred to the customer and the performance obligations have been satisfied.

Other Matter

We did not audit the financial statements as of and for the years ended December 31, 2021 and 2020 of some of the Group’s investments accounted for using the equity method, namely Daimler Vans Hong Kong Ltd., Shung Ye Motors Corporation, Uni Auto Parts Manufacture Co., Ltd., Southeast-Motor Co., Ltd., the financial statements as of and for the year ended December 31, 2021 of Looplus Service Technology, Inc. and the financial statements as of and for the year ended December 31, 2020 of Xianyang NTN-Yulon Drivertrain Co., Ltd., but such financial statements were audited by other auditors whose reports have been furnished to us. Our opinion, insofar as it relates to the amounts included for these investees in the Group’s consolidated financial statements, is based solely on the reports of the other auditors. The aforementioned investments accounted for using the equity method constituted NT$4,605,344 thousand, representing 8.4% and NT$5,349,384 thousand, representing 9.8%, of the Group’s total assets as of December 31, 2021 and 2020, respectively. The Group’s share of comprehensive income of the aforementioned investments accounted for using the equity-method amounted to NT$943,332 thousand and NT$247,158 thousand for the years ended December 31, 2021 and 2020, respectively, which accounted for 20.6% and 6.7% of the Group’s consolidated total comprehensive income, respectively.

We have also audited the parent company only financial statements of China Motor Corporation as of and for the years ended December 31, 2021 and 2020 on which we have issued an unmodified opinion with the other matter section.

Responsibilities of Management and Those Charged with Governance for 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 Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China,

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and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the audit committee) are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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7. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Ya-Ling Wong and Shiow-Ming Shue.

Deloitte & Touche Taipei, Taiwan Republic of China

March 30, 2022

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 audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ 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’ report and consolidated financial statements shall prevail.

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (Notes 4 and 7) Financial assets at amortized cost (Notes 4, 9, 10 and 31) Financial assets for hedging (Notes 4 and 11) Notes and accounts receivable, net (Notes 4 and 12) Trade receivables from related parties (Notes 4 and 30) Other receivables (Note 24) Inventories (Notes 4 and 13) Prepayments (Note 30) Other current assets (Notes 4 and 25) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss (Notes 4 and 7) Financial assets at fair value through other comprehensive income (Notes 4 and 8) Financial assets at amortized cost (Notes 4, 9 and 10) Investments accounted for using the equity method (Notes 4 and 15) Property, plant and equipment (Notes 4, 16, 24, 30 and 31) Right-of-use assets (Notes 4, 17 and 30) Investment properties (Notes 4, 18 and 31) Intangible assets under development (Notes 4 and 24) Deferred tax assets (Notes 4 and 25) Other non-current assets (Note 24) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 19) Short-term bills payable Notes and accounts payable Trade payables to related parties (Note 30) Other payables (Notes 4 and 20) Current tax liabilities (Notes 4 and 25) Lease liabilities (Notes 4, 17 and 30) Current portion of long-term borrowings (Note 19) Other current liabilities (Notes 4, 7, 11, 30 and 32) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 19) Deferred tax liabilities (Notes 4 and 25) Lease liabilities (Notes 4, 17 and 30) Net defined benefit liabilities (Notes 4 and 21) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Notes 4 and 22) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating the financial statements of foreign operations Unrealized gain on investments in financial assets at fair value through other comprehensive income Gain (loss) on hedging instruments (Note 11) Total other equity Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS (Notes 14 and 22) Total equity TOTAL		2021 Amount % $ 11,647,027 21 230,239 1 424,669 1 107,712 - 692,831 1 1,394,827 3 100,136 - 3,893,940 7 770,585 1 258,779 1 19,520,745 36 676,756 1 151,421 - 546,467 1 24,953,438 46 6,215,856 11 257,450 - 1,345,564 2 438,039 1 334,646 1 294,732 1 35,214,369 64 $ 54,735,114 100 $ 140,000 - 109,986 - 1,979,636 4 857,255 1 2,594,738 5 423,104 1 62,450 - - - 598,020 1 6,765,189 12 68,750 - 659,641 1 198,986 1 670,214 1 47,306 - 1,644,897 3 8,410,086 15 5,536,203 10 6,421,515 12 9,581,001 17 1,028,359 2 20,582,748 38 31,192,108 57 (826,741) (2) 377,436 1 (28,391) - (477,696) (1) 42,672,130 78 3,652,898 7 46,325,028 85 $ 54,735,114 100		2020
				Amount % $ 10,403,769 19 1,059,429 2 366,456 1 120,266 - 914,273 2 1,267,478 2 46,490 - 3,809,653 7 1,728,436 3 662,614 1 20,378,864 37 672,914 1 178,873 - 540,716 1 23,632,945 43 6,527,229 12 356,732 1 1,355,015 2 373,697 1 307,145 1 273,563 1 34,218,829 63 $ 54,597,693 100 $ 215,000 - 149,963 - 2,586,431 5 907,237 2 2,641,821 5 284,692 - 87,196 - 37,500 - 362,403 1 7,272,243 13 56,250 - 578,310 1 277,908 1 651,430 1 54,908 - 1,618,806 3 8,891,049 16 5,536,203 10 6,411,778 12 9,257,157 17 1,028,359 2 20,544,970 37 30,830,486 56 (926,661) (2) 264,666 1 6,918 - (655,077) (1) 42,123,390 77 3,583,254 7 45,706,644 84 $ 54,597,693 100

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

(With Deloitte & Touche auditors’ report dated March 30, 2022)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 23 and 30) Net sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 13, 24 and 30) Cost of goods sold Other operating costs Total operating costs GROSS PROFIT REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 24 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Share of profit of associates and joint ventures (Notes 4 and 15) Interest income Dividend income (Note 8) Other income (Note 30) Expected credit gain (loss) (Notes 10 and 24) Interest expense (Note 30) Other expense Gain (loss) on disposal of investments (Notes 4, 15, 24 and 27) Net foreign exchange gain (loss)		2021 Amount % $ 29,905,646 96 1,219,753 4 31,125,399 100 25,264,128 81 920,820 3 26,184,948 84 4,940,451 16 (1,851) - 4,938,600 16 592,029 2 879,588 3 1,427,381 5 2,898,998 10 2,039,602 6 3,020,705 10 99,285 - 44,407 - 138,385 - 47,171 - (10,314) - (23,732) - (116,764) - (10,043) -		2020
				Amount % $ 29,568,987 96 1,305,613 4 30,874,600 100 25,187,401 82 781,552 2 25,968,953 84 4,905,647 16 1,432 - 4,907,079 16 636,315 2 833,810 3 1,660,284 5 3,130,409 10 1,776,670 6 1,719,635 5 95,493 - 15,240 - 117,571 - (54,206) - (16,811) - (44,358) - 215,365 1 25,233 - (Continued)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Gain (loss) on financial instruments at fair value through profit or loss Impairment loss (Notes 4, 16 and 24) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Note 4) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 21) Unrealized loss on investments in equity instruments designated as fair value through other comprehensive income (Note 22) Gain (loss) on hedging instruments (Notes 11 and 22) Share of other comprehensive income of associates accounted for using the equity method (Notes 15 and 22) Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 25) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations (Note 22) Share of the other comprehensive income of associates and joint ventures accounted for using the equity method (Notes 15 and 22) Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		2021 Amount % $ (3,303) - (147,123) - 3,038,674 10 5,078,276 16 674,792 2 4,403,484 14 (49,947) - (9,084) - (39,598) - 178,298 1 23,121 - (5,420) - 89,323 - 186,693 1 $ 4,590,177 15		2020
				Amount % $ 4,359 - (101,725) - 1,975,796 6 3,752,466 12 211,918 - 3,540,548 12 (17,775) - (28,297) - 19,378 - 45,318 - (321) - 35,426 - 75,320 - 129,049 - $ 3,669,597 12 (Continued)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET PROFIT ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests EARNINGS PER SHARE (Note 26) Basic Diluted		2021 Amount % $ 4,181,835 13 221,649 1 $ 4,403,484 14 $ 4,383,360 14 206,817 1 $ 4,590,177 15 $ 7.67 $ 7.66		2020
				Amount % $ 3,277,320 11 263,228 1 $ 3,540,548 12 $ 3,382,531 11 287,066 1 $ 3,669,597 12 $ 6.01 $ 6.00
		$		$
		$		$
		$		$

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

(With Deloitte & Touche auditors’ report dated March 30, 2022)

(Concluded)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2020 Reversal of special reserve Change in capital surplus from investments in associates and joint ventures accounted for using the equity method Cash dividends distributed by subsidiaries Net profit for the year ended December 31, 2020 Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax Total comprehensive income for the year ended December 31, 2020 Disposal of the investments in equity instruments designated as at fair value through other comprehensive income by associates Basis adjustment to gain on hedging instruments BALANCE AT DECEMBER 31, 2020 Appropriation of the 2020 earnings Legal reserve Cash dividends distributed by the Corporation Change in capital surplus from investments in associates and joint ventures accounted for using the equity method Cash dividends distributed by subsidiaries Net profit for the year ended December 31, 2021 Other comprehensive income (loss) for the year ended December 31, 2021, net of income tax Total comprehensive income (loss) for the year ended December 31, 2021 Disposal of investments in equity instruments designated as at fair value through other comprehensive income by associates Disposal of the investments in equity instruments designated as at fair value through other comprehensive income Basis adjustment to gain on hedging instruments BALANCE AT DECEMBER 31, 2021		Equity Attributable toOwners of theCorporation	Equity Attributable toOwners of theCorporation	Total Non-controlling Interests $ 38,742,061 $ 3,422,878 - - (9,872 ) - - (126,690 ) 3,277,320 263,228 105,211 23,838 3,382,531 287,066 - - 8,670 - 42,123,390 3,583,254 - - (3,875,342 ) - 19,841 - - (137,173 ) 4,181,835 221,649 201,525 (14,832) 4,383,360 206,817 - - - - 20,881 - $ 42,672,130 $ 3,652,898	Total Equity $ 42,164,939 - (9,872 ) (126,690 ) 3,540,548 129,049 3,669,597 - 8,670 45,706,644 - (3,875,342 ) 19,841 (137,173 ) 4,403,484 186,693 4,590,177 - - 20,881 $ 46,325,028
	Ordinary Shares Number of Shares (In Thousands) Amount Capital Surplus 553,620 $ 5,536,203 $ 6,414,118 - - - - - (2,340 ) - - - - - - - - - - - - - - - - - - 553,620 5,536,203 6,411,778 - - - - - - - - 9,737 - - - - - - - - - - - - - - - - - - - - - 553,620 $ 5,536,203 $ 6,421,515	Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 9,257,157 $ 1,029,654 $ 17,306,526 - (1,295 ) 1,295 - - (7,532 ) - - - - - 3,277,320 - - (27,221) - - 3,250,099 - - (5,418 ) - - - 9,257,157 1,028,359 20,544,970 323,844 - (323,844 ) - - (3,875,342 ) - - 10,104 - - - - - 4,181,835 - - (28,502) - - 4,153,333 - - 43,109 - - 30,418 - - - $ 9,581,001 $ 1,028,359 $ 20,582,748	Other Equity Exchange Differences on Translating the Financial Unrealized Valuation Gain on Financial Assets at Fair Value Equity Directly Associated with Statements of Through Other Gain (Loss) on Non-current Foreign Operations Comprehensive Income Hedging Instruments Assets Held for Sale $ (990,653 ) $ 216,562 $ (19,968 ) $ (7,538 ) - - - - - - - - - - - - - - - 63,992 42,686 18,216 7,538 63,992 42,686 18,216 7,538 - 5,418 - - - - 8,670 - (926,661 ) 264,666 6,918 - - - - - - - - - - - - - - - - - - - - - 99,920 186,297 (56,190) - 99,920 186,297 (56,190) - - (43,109 ) - - - (30,418 ) - - - - 20,881 - $ (826,741) $ 377,436 $ (28,391) $ -
	Number of Shares (In Thousands) 553,620 - - - - - - - - 553,620 - - - - - - - - - - 553,620

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

(With Deloitte & Touche auditors’ report dated March 30, 2022)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for Depreciation expense Amortization expense Expected credit loss (gain) recognized Net loss (gain) on fair value change of financial instruments at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using the equity method Net loss on disposal of property, plant and equipment Loss (gain) on disposal of investment Impairment loss of non-financial assets Unrealized (realized) gain on transactions with associates Unrealized gain on foreign currency exchange Gain on lease modifications Losses on recognition of provisions Changes in operating assets and liabilities Financial instruments at fair value through profit or loss Notes and accounts receivable Trade receivables from related parties Other receivables Inventories Prepayments Other current assets Notes and accounts payable Trade payables to related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income Proceeds from refund of shares of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost	2021 $ 5,078,276 850,745 88,886 (49,158) 3,303 10,314 (99,285) (44,407) (3,020,705) 5,201 116,764 224,273 1,851 (26,033) (8,833) 65,302 929,071 223,458 (127,443) (128,370) (135,635) 975,203 401,881 (605,933) (48,512) (19,373) 165,495 (31,163) 4,795,173 (481,589) 4,313,584 18,368 - (1,930,926)	2020 $ 3,752,466 905,853 122,164 46,238 (4,359) 16,811 (95,493) (15,240) (1,719,635) 2,095 (215,365) 146,823 (1,432) (36,955) (1,835) - (810,374) 284,551 178,912 113,103 774,328 (135,040) 9,247 (116,743) (78,166) 85,362 135,073 (101,745) 3,240,644 (249,305) 2,991,339 - 404 (1,751,651) (Continued)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Proceeds from repayment of principal of financial assets at amortized cost Acquisition of investments accounted for using the equity method Disposal of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Acquisition of investment properties Increase in other non-current assets Interest received Dividends received Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings Decrease in short-term bills payable Proceeds from long-term borrowings Repayment of long-term borrowings Repayment of the principal portion of lease liabilities Increase (decrease) in other non-current liabilities Cash dividends paid Interest paid Non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2021 $ 1,858,298 (33,500) - (677,276) 39,185 (109,106) (2,199) (5,358) 100,848 1,919,939 1,178,273 (75,000) (39,977) - (25,000) (83,049) (7,540) (3,875,342) (10,286) (137,173) (4,253,367) (3,894) 1,234,596 10,519,610 $ 11,754,206	2020 $ 1,889,206 (7,136) (2,196) (795,507) 23,822 (58,887) - (24,328) 98,039 1,852,911 1,224,677 (400,000) (33,976) 43,750 - (93,450) 32,565 - (17,034) (126,690) (594,835) 17,939 3,639,120 6,880,490 $ 10,519,610 (Continued)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at December 31, 2021 and 2020:

Cash and cash equivalents in the consolidated balance sheets Cash and cash equivalents included in financial assets for hedging Cash and cash equivalents in the consolidated statements of cash flows		**December 31 **	**December 31 **
		2021 $ 11,647,027 107,179 $ 11,754,206	2020 $ 10,403,769 115,841 $ 10,519,610

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

(With Deloitte & Touche auditors’ report dated March 30, 2022) (Concluded)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

China Motor Corporation (the “Corporation”) is principally engaged in the manufacture and sale of automobiles and its related parts and components, and the Corporation has been listed on the Taiwan Stock Exchange.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements of the Corporation and its subsidiaries (collectively referred to as the “Group”) were approved by the Corporation’s board of directors on March 15, 2022.

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

• a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC) did not have any material impact on the Group’s accounting policies.

• b. The IFRSs endorsed by the FSC for application starting from 2022

Effective Date New IFRSs Announced by IASB “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 1) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 2) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 3) before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 4) Contract”

• Note 1: 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 2: 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 3: 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 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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As of the date the consolidated financial statements were authorized for issue, the Group assessed that the application of the aforementioned standards and interpretations will not have a material impact on the Group’s financial position and financial performance.

• c. New IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - Comparative Information” 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 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

Effective Date Announced by IASB (Note 1)

To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 2) January 1, 2023 (Note 3) January 1, 2023 (Note 4)

• 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 will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 3: 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 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs issued into effect by the FSC.

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• b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 months after the reporting period; and

• 3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

• d. Basis of consolidation

• 1) Principles for preparing the consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Corporation and the entities controlled by the Corporation (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 date of acquisition up to the effective date of disposal, 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 Corporation.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

• 16 -

Total comprehensive income of subsidiaries is attributed to the owners of the Corporation 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 Corporation.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Group directly disposed of the related assets or liabilities.

2) Subsidiaries included in the consolidated financial statements

Investor Investee Main Business China-Motor Corporation (parent) Kian Shen Corporation (“Kian Shen”) Production of frame of heavy-duty car and mold Hwa Wei Holdings Corporation Ltd. (“Hwa Wei”) Overseas investment in production and service industries China Engine Corporation (“China Engine”) Manufacture of automobile engine and parts Sino Diamond Motors Corporation (“Sino Diamond Motors”) Sales and providing after-sales service of vehicle Alliance Investment & Management Co., Ltd. (“Alliance Investment & Management”) Investment China Motor Investment Co., Ltd. (CMI) Investment Hwa Chung Motors Corporation (“Hwa Chung Motors”) Sales of vehicle and parts COC Tooling & Stamping Co., Ltd. (COC) Production of mold, fixture and gauge of vehicle Kian Shen Kian Shen Investment Co., Ltd. (“Kian Shen Investment”) Overseas investment in production and service industries China Engine Advance Power Machinery Co., Ltd. (“Advance Power Machinery”) Manufacture of automobile engine and parts Advance Power Investment Co., Ltd. (“Advance Power Investment”) Investment and sales Sino Diamond Motors Hwa-Yu Corporation Ltd. (“Hwa-Yu”) Overseas investment in production and service industries Brilliant Insight International Consultancy Service Co., Ltd. (“Brilliant Insight International”) Consulting and servicing business Greentrans Corporation (“Greentrans”) Sales of motorcycle, bicycle and parts Ling Wei Motor Co., Ltd. (“Ling Wei”) Sales of second-hand vehicle Alliance Investment & Management Greentrans Investment Co., Ltd. (“Greentrans Investment”) Investment Hwa Chung Motors Greentrans Corporation (“Greentrans”) Sales of motorcycle, bicycle and parts Ling Wei Motor Co., Ltd. (“Ling Wei”) Sales of second-hand vehicle COC Y. M. Hi-Tech Industry Ltd. (“Y. M. Hi-Tech”) Steel cutting Shye Shinn Corporation (“Shye Shinn”) Investment Kian Shen Investment Kian Shen Investment Hong Kong Co., Limited (KSIHK) Investment Hwa-Yu Hwa-Lin Investments Ltd. (“Hwa-Lin”) Overseas investment in production and service industries Fujian Rui Hua Consulting Co., Ltd. (“Fujian Rui Hua”) Consulting and servicing business

Combined Shareholding Ratio (%) December 31 2021 2020 Note 43.87 43.87 a) 100.00 100.00 52.10 52.10 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 j) 49.76 49.76 b) 43.87 43.87 a) - - e) - 52.10 g) 100.00 100.00 100.00 100.00 100.00 - i) 100.00 - i) 100.00 100.00 - 100.00 i) - 100.00 i) 42.30 42.30 b) - - b) and d) 43.87 43.87 a) 100.00 100.00 100.00 100.00

(Continued)

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Investor Investee Main Business Greentrans Investment Jiangsu Greentrans Automotive Parts Co., Ltd. (“Jiangsu Greentrans”) Production and sales of parts of electronic motorcycle Hwa-Lin Dongguan Huayi Motor Maintenance Co., Ltd. (“Dongguan Huayi”) Sales and maintenance of vehicle and parts Tianjin Hwarui Maintenance Co., Ltd. (“Tianjin Hwarui”) Sales and maintenance of vehicle and parts Sichuan Huafeng Hanwei Cars Service and Maintenance Co., Ltd. (“Sichuan Huafeng Hanwei”) Sales and maintenance of vehicle and parts Guangzhou Huayou Motor Maintenance Co., Ltd. (“Guangzhou Huayou Motor Maintenance”) Sales and maintenance of vehicle and parts Dongguan Huayi Dongguan Huashun Motor Sales Co., Ltd. (“Dongguan Huashun”) Sales and maintenance of vehicle and parts Tianjin Hwarui Tianjin Hwahong Sales Co., Ltd. (“Tianjin Hwahong”) Sales of vehicle and parts Guangzhou Huayou Motor Maintenance Guangzhou Huayou Motor Sales Co., Ltd. (“Guangzhou Huayou Motor Sales”) Sales of vehicle and parts

Combined Shareholding Ratio (%) December 31 2021 2020 Note 100.00 100.00 100.00 100.00 f) 100.00 100.00 h) - - c) - - c) 100.00 100.00 f) - 100.00 h) - - c) (Concluded)

• a) The Group held 43.87% equity interest in Kian Shen. Kian Shen is a listed company and 56.13% of its shares were held by numerous shareholders unrelated to the Group. Owing to the Group’s substantial influence on Kian Shen, an absolute number of voting rights and the relative size of other shareholdings, Kian Shen was deemed a subsidiary.

• b) The Group held 49.76% equity in COC. However, since the Corporation controls more than half of the board members and holds relative majority of shares, COC was considered a subsidiary.

• c) In November 2018, Sichuan Huafeng Hanwei, Guangzhou Huayou Motor Sales and Guangzhou Huayou Motor Maintenance resolved to dissolve their respective companies and the annulment was completed in February, June and December 2020, respectively.

• d) In May 2020, the board of directors of COC resolved to dissolve Shye Shinn. The annulment of Shye Shinn had been completed in December 2020.

• e) The Group’s board of directors approved to fully dispose of its interest held in its subsidiary, Advance Power Machinery, to Yulon on July 16, 2020. The disposal was completed on July 17, 2020, the date on which the control of Advance Power Machinery was transferred to the acquirer, refer to Note 27.

• f) In December 2020, Dongguan Huayi and Dongguan Huashun resolved to dissolve their respective companies. The annulment of Dongguan Huashun had been completed in February 2022. As of December 31, 2021, the liquidation of Dongguan Huayi had not been completed.

• g) The Group’s board of directors resolved to dissolve Advance Power Investment on December 10, 2020 and the annulment was completed in December 2021.

• h) In July 2021, Tianjin Hwarui and Tianjin Hwahong resolved to dissolve their respective companies. The annulment of Tianjin Hwahong had been completed in December 2021. As of December 31, 2021, the liquidation of Tianjin Hwarui had not been completed.

• i) In November 2021, Hwa Chung Motors fully disposed of its interest held in its subsidiaries, Greentrans and Ling Wei, to Sino Diamond Motors, and the shareholding ratio of Sino Diamond Motors in the aforementioned companies was changed due to the reorganization of entities under common control.

• j) In December 2021, Hwa Chung Motors resolved to dissolve its company. As of December 31, 2021, the liquidation had not been completed.

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For the relationship between the Corporation and its controlled entities as of December 31, 2021, refer to Table 10.

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interests in the acquiree, the excess are recognized immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets.

f. Foreign currencies

In preparing the financial statements of each individual entity, transactions in currencies other than the entity’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at the rates prevailing at the date when the fair value is determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

For the purpose of presenting the consolidated financial statements, the financial statements of the Corporation’s foreign operations (including subsidiaries, associates and joint ventures in other countries) that are prepared using functional currencies which are different from the currency of the Corporation are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting year; and income and expense items are translated at the average exchange rates for the year. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Corporation and non-controlling interests as appropriate).

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On the disposal of a foreign operation (i.e., a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of joint control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Corporation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

g. Inventories

Inventories consist of merchandise, raw materials, supplies, finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.

h. Investment in associates and joint ventures

An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The Group uses the equity method to account for its investments in associates and joint ventures.

Under the equity method, investments in an associate and a joint venture are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Group also recognizes the changes in the Group’s share of the equity of associates and joint venture attributable to the Group. The Group’s equity in the investees’ net income or net loss is calculated using the treasury share method when investees also have investments in the Group (reciprocal holding).

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate and a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Group subscribes for additional new shares of an associate and a joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate and joint venture. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates and joint ventures accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate and joint venture, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

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When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture, the Group discontinues recognizing its share of further loss, if any. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

The entire carrying amount of the investment is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and joint venture. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required had that associate directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and does not remeasure the retained interest.

When the Group transacts with its associate and joint venture, profits and losses resulting from the transactions with the associate and joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate and joint venture that are not related to the Group.

• i. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Depreciation of property, plant and equipment, except for tooling (included in machinery) which is amortized using the production unit method, is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

j. Investment properties

Investment properties are properties held to earn rental and/or for capital appreciation.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

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• k. Intangible assets

Expenditures on research activities are recognized as expenses in the period in which they are incurred.

An internally-generated intangible asset arising from the development phase of an internal project is recognized if, and only if, all of the following have been demonstrated:

• 1) The technical feasibility of completing the intangible asset so that it will be available for use or sale;

• 2) The intention to complete the intangible asset and use or sell it;

• 3) The ability to use or sell the intangible asset;

• 4) How the intangible asset will generate probable future economic benefits;

• 5) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• 6) The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the date when such an intangible asset first meets the recognition criteria listed above. Subsequent to initial recognition, such intangible assets are measured at cost less accumulated amortization and accumulated impairment loss.

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

• l. Impairment of property, plant and equipment, right-of-use assets, investment properties and intangible assets

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use assets, investment properties and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (less amortization expense or depreciation expense) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

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m. Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

• a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI.

• i. Financial assets at FVTPL

Financial assets at FVTPL are financial assets mandatorily designated as at FVTPL, and include investments in equity instruments that do not meet the criteria of financial assets at amortized cost and financial assets at FVTOCI.

Financial assets at FVTPL are subsequently measured at fair value, and any dividends, interest earned and remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 29.

• ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, debt instruments, notes receivable, trade receivables (including related parties), other receivables, other financial assets (included in other current assets) and guarantee deposits (included in other non-current assets) are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

• i) Purchased or originated credit impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and

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• ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

• i) Significant financial difficulty of the issuer or the borrower;

• ii) Breach of contract, such as a default; or

• iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization.

• iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

• b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

• i. Internal or external information shows that the debtor is unlikely to pay its creditors.

• ii. When a financial asset has reached beyond the expiration date of contract unless the Group has reasonable and corroborative information to support a more lagged default criterion.

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The impairment loss of all financial assets which are held by the Group is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

• c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

• 2) Financial liabilities

• a) Subsequent measurement

Except for financial liabilities at FVTPL, all financial liabilities are measured at amortized cost using the effective interest method.

Financial liabilities are classified as at FVTPL when such financial liabilities are held for trading. Financial liabilities held for trading are stated at fair value, and any remeasurement gains or losses on such financial liabilities are recognized in other gains or losses.

Fair value is determined in the manner described in Note 29.

• b) Derecognized financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

• 3) Derivative financial instruments

The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risks.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets that is within the scope of IFRS 9 (e.g. financial liabilities) are treated as separate derivatives when they meet the definition of a derivative; their risks and characteristics are not closely related to those of the host contracts; and the host contracts are not measured at FVTPL.

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n. Hedge accounting

The Group designates certain hedging instruments as cash flow hedges.

The effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gains or losses relating to the ineffective portion are recognized immediately in profit or loss.

The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the line item relating to the related hedged item in the same period in which the hedged item affects profit or loss. If the hedge of a forecasted transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were recognized in other comprehensive income are removed from equity and included in the initial cost of the non-financial asset or non-financial liability.

The Group discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. The cumulative gain or loss on the hedging instrument that was previously recognized in other comprehensive income (from the period when the hedge was effective) remains separately in equity until the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, the gains or losses accumulated in equity are recognized immediately in profit or loss.

o. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

1) Onerous contracts

Onerous contracts are those in which the Group’s unavoidable costs of meeting the contractual obligations exceed the economic benefits expected to be received from the contract. The present obligations arising under onerous contracts are recognized and measured as provisions.

2) Warranties

Provisions for the expected cost of warranty obligations are recognized at the date of sale of the relevant products at the best estimate by the management of the Group of the expenditures required to settle the Group’s obligations.

p. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

For contracts where the period between the date on which the Group transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Group does not adjust the promised amount of consideration for the effects of a significant financing component.

1) Revenue from sale of goods

Revenue from sale of goods is recognized when the goods are delivered to the customer’s specific location because it is the time when the customer has control over the goods and performance obligations are satisfied. Accounts receivable are recognized concurrently.

• 26 -

• 2) Revenue from rendering of services

Revenue from rendering of services is recognized when services are rendered.

q. Leases

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

• 1) The Group as lessor

All leases are classified as operating leases.

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

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

2) The Group as lessee

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

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

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

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

• 27 -

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

The Group negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 to change the lease payments originally due by June 30, 2022, that results in the revised consideration for the lease substantially the same as the consideration for the lease immediately preceding the change. There is no substantive change to other terms and conditions. The Group elects to apply the practical expedient to all of these rent concessions and, therefore, does not assess whether the rent concessions are lease modifications. Instead, the Group recognizes the reduction in lease payment in profit or loss as a deduction of expenses of variable lease payments, in the period in which the events or conditions that trigger the concession occur, and makes a corresponding adjustment to the lease liability.

• r. Government grants

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

Government grants related to income are recognized as a reduction of the related costs or in other income on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants intend to compensate.

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

• s. Employee benefits

• 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

• 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and past service cost) and net interest on the net defined benefit liabilities are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities represent the actual deficit in the Group’s defined benefit plans.

• 28 -

• t. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (refundable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profit against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

• 3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income, in which case, the current and deferred taxes are also recognized in other comprehensive income.

• 29 -

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 on 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 possible impact of the recent development of the COVID-19 in Taiwan and its economic environment implications 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 revision affects only that period or in the period of the revision and future periods if the revisions affect both current and future periods.

6. CASH AND CASH EQUIVALENTS

Cash Cash on hand Checking accounts and demand deposits Cash equivalents Time deposits Repurchase agreements		December 31	December 31
		2021 $ 1,115 2,696,964 2,698,079 8,165,908 783,040 8,948,948 $ 11,647,027	2020 $ 1,338 3,473,411 3,474,749 6,558,227 370,793 6,929,020 $ 10,403,769

Cash equivalents are held for the purpose of meeting short-term cash commitments and consist of highly liquid time deposits and repurchase agreements that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

The interest rate intervals of cash in banks and repurchase agreements at the end of the reporting period were as follows:

Checking accounts and demand deposits Time deposits Repurchase agreements	December 31
	2021 2020 0.00%-1.00% 0.00%-1.30% 0.23%-2.45% 0.34%-2.85% 0.35%-0.43% 0.27%-0.28%

• 30 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Mutual funds Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Financial assets-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted shares Financial liabilities (included in other current liabilities) Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts		December 31	December 31
		2021 $ 229,626 613 $ 230,239 $ 676,756 $ 976	2020 $ 1,056,288 3,141 $ 1,059,429 $ 672,914 $ -

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

December 31, 2021
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	JPY/NTD	2022.02.16-2022.03.28	JPY350,000/NTD84,860
Buy	USD/NTD	2022.01.06-2022.02.14	USD8,200/NTD226,714
Sell	RMB/USD	2022.01.06-2022.02.14	RMB42,813/USD6,700
December 31, 2020
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	JPY/NTD	2021.02.25-2021.03.26	JPY300,000/NTD79,900
Sell	RMB/USD	2021.01.04-2021.01.29	RMB78,635/USD12,000

The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

• 31 -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments at FVTOCI Domestic investments Listed shares Unlisted shares Foreign investments Unlisted shares		December 31	December 31
		2021 $ 15,798 24,954 40,752 110,669 $ 151,421	2020 $ 30,370 24,145 54,515 124,358 $ 178,873

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.

Dividends of $577 thousand and $710 thousand were recognized during 2021 and 2020, respectively. Those dividends are all related to investments held at the end of the reporting period.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Pledged deposits (Note 31) Principal guaranteed notes Segregated foreign exchange deposit account for offshore funds Less: Allowance for impairment loss Non-current Segregated foreign exchange deposit account for offshore funds Bonds Preference shares Less: Allowance for impairment loss		December 31	December 31
		2021 $ 240,318 176,138 8,724 425,180 (511) $ 424,669 $ 340,390 200,026 9,900 550,316 (3,849) $ 546,467	2020 $ 180,486 136,540 50,017 367,043 (587) $ 366,456 $ 434,841 100,000 9,900 544,741 (4,025) $ 540,716

• 32 -

• a. The rates of pledged deposits ranged from 0.65%-0.82% and 0.65%-1.03% per annum as of December 31, 2021 and 2020, respectively.

• b. The coupon rates of principal guaranteed notes ranged from 0.55%-2.60% and 0.52%-2.50% per annum as of December 31, 2021 and 2020, respectively.

• c. The National Taxation Bureau, Ministry of Finance had approved the repatriation of funds in accordance with “the Management, Utilization, and Taxation of Repatriated Offshore Funds Act” from February 2020. The funds after tax were deposited into the segregated foreign exchange deposit account (including time deposits and demand deposits). The deposit was restricted under the Act, except that a portion of the funds could be withdrawn and freely utilized or engaged in financial investments or substantive investments. The funds could be withdrawn over a period of three years and five years from the date of depositing them into the segregated foreign exchange deposit account. The rates of offshore funds ranged from 0.001%-2.50% and 0.10%-1.50% per annum as of December 31, 2021 and 2020, respectively.

• d. The coupon rates of bonds ranged from 0.47%-0.86% and 0.86% per annum as of December 31, 2021 and 2020, respectively.

• e. The coupon rate of the preference shares was 1.50% per annum as of December 31, 2021 and 2020, respectively.

• f. Refer to Note 10 for information relating to their credit risk management and impairment.

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS

Investments in debt instruments were classified as financial assets at amortized cost.

Gross carrying amount Less: Allowance for impairment loss Amortized cost		December 31	December 31
		2021 $ 975,496 (4,360) $ 971,136	2020 $ 911,784 (4,612) $ 907,172

The Group invests only in debt instruments that have higher credit ratings and low credit risk after impairment assessment. The credit ratings information is supplied by independent rating agencies. The Group’s exposures and the external credit ratings are continuously monitored. The Group reviews changes in bond yields and other publicly available information of debtors and makes an assessment whether there has been a significant increase in the credit risk since initial recognition.

The Group considers the historical probability of default and loss given default of each credit rating supplied by external rating agencies, the current financial condition of debtors, and the future prospects of the industries. The Group’s current credit risk grading mechanism is as follows:

Credit Rating Performing No rating	Description The counterparty has a low risk of default and a strong capacity to meet contractual cash flows The preference shares and bonds do not have credit rating	Basis for Recognizing Expected Credit Losses (ECLs)
		12-month ECLs Lifetime ECLs - not credit-impaired

• 33 -

The gross carrying amounts of debt instrument investments classified by credit category and the corresponding expected loss rates were as follows:

December 31, 2021

Credit Rating Expected Credit Loss Rate Performing 0.00%-0.29% No rating 35.6495% December 31, 2020 Credit Rating Expected Credit Loss Rate Performing 0.00%-0.43% No rating 39.9496%	Gross Carrying Amount
	At Amortized Cost $ 965,596 9,900 Gross Carrying Amount
	At Amortized Cost $ 901,884 9,900

The movements of the allowance for impairment loss of investments in debt instruments at amortized cost were as follows:

Balance at January 1, 2021 Financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance at December 31, 2021 Balance at January 1, 2020 Financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance at December 31, 2020	Credit Rating
	Performing (12-month ECLs) No Rating (Lifetime ECLs - Not Credit- impaired) $ 657 $ 3,955 2,684 - (2,532) - 22 (426) $ 831 $ 3,529 $ 1,918 $ 32,952 4,628 3,955 (5,916) (32,952) 27 - $ 657 $ 3,955

• a. The new investment in principal guaranteed notes of $846,116 thousand and bonds of $100,029 thousand, respectively during the year ended December 31, 2021, and correspondingly increased the loss allowance for investments rated as performing of $2,684 thousand; the new investment in principal guaranteed notes in the amount of $1,076,407 thousand, and preference shares in amount of $9,900 thousand during the year ended December 31, 2020, respectively, and correspondingly increased the loss allowance for investments rated as performing by $4,628 thousand and lifetime ECLs by $3,955 thousand.

• 34 -

• b. The investments in principal guaranteed notes of $806,777 thousand expired and were redeemed during the year ended December 31, 2021, with consequential reductions in the loss allowance for investments rated as performing of $2,532 thousand; and the investments in principal guaranteed notes of $947,583 thousand, bonds of $750,224 thousand and preference shares of 9,900 thousand, expired and were redeemed during the year ended December 31, 2020, with consequential reductions in the loss allowance for investments rated as performing of $5,916 thousand and lifetime ECLs of $32,952 thousand.

11. FINANCIAL INSTRUMENTS FOR HEDGING

Financial assets Cash flow hedges - spot rate Cash flow hedges - foreign exchange forward contracts Financial liabilities (included in other current liabilities) Cash flow hedges - foreign exchange forward contracts		**December 31 **	**December 31 **
		2021 $ 107,179 533 $ 107,712 $ 3,971	2020 $ 115,841 4,425 $ 120,266 $ 79

The Group’s hedging strategy is to enter into foreign exchange forward contracts and to buy foreign currency banknote at the spot rate to avoid exchange rate exposure from its foreign currency receipts and payments and to manage exchange rate exposure of its forecasted foreign currency denominated purchases. Those transactions are designated as cash flow hedges. Basis adjustments are made to the initial carrying amounts non-financial hedged items when the anticipated purchases take place.

For the hedges of highly probable forecasted purchases, the critical terms (i.e. the notional amount, period and subject) of the foreign exchange forward contracts are corresponded to their hedged items. The Group performs a qualitative assessment and expects that the value of the foreign exchange forward contracts and the value of the corresponding hedged items will be systematically changed in the opposite direction in respond to movements in the underlying exchange rate.

The source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Group’s own credit risk on the fair value of the foreign exchange forward contracts and foreign currency banknote, which is not reflected in the fair value of the hedged item attributable to changes in foreign exchange rates. No other sources of ineffectiveness is expected to emerge from these hedging relationships. During the years ended December 31, 2021 and 2020, hedging instruments at fair value and transferred to initial carrying amount of hedged items are detailed in Note 22(e).

• 35 -

The following tables summarize the information relating to the hedges of foreign currency risk.

December 31, 2021

Notional Amount Forward Rate Hedging Instruments Currency (In Thousands) Maturity (Note) Line Item Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY445,651/NTD111,030 2022.02.17- 2022.03.23 0.2483-0.2508 Financial assets for hedging Forecast purchases - foreign exchange forward contracts USD/NTD USD3,000/NTD82,788 2022.01.06- 2022.02.11 27.5520-27.6400 (USD1:NTD) Financial assets for hedging Forecast purchases - foreign exchange forward contracts RMB/USD RMB12,780/USD2,000 2022.01.06 6.3901 (USD1:RMB) Financial assets for hedging Forecast purchases - foreign exchange forward contracts JPY/NTD JPY1,010,000/NTD246,239 2022.01.14- 2022.06.27 0.2424- 0.2481 Other current liabilities Forecast purchases - foreign exchange forward contracts USD/NTD USD6,500/NTD179,635 2022.01.06- 2022.02.14 27.6100-27.6950 (USD1:NTD) Other current liabilities Forecast purchases - foreign exchange RMB/USD RMB28,764/USD4,500 2022.02.14 6.3919 (USD1:RMB) Other current liabilities forward contracts		Carrying Am	ount Change in Value Used for Calculating Hedge Liabilities Ineffectiveness $ - $ (3,081 ) - 328 - 98 (3,787 ) (3,030 ) (164 ) (131 ) (20) (16) $ (3,971) $ (5,832)
		Asset $ 107,179 410 123 - - - $ 107,712

Note: JPY1:NTD, unless stated otherwise.

		Accumulated
		Gains or Losses
	Change in	on Hedging
	Value Used for	Instruments in
	Calculating	Other Equity
	Hedge	Continuing
Hedged Item	Ineffectiveness	Hedges
Cash flow hedges
Forecast purchases	$ 5,832	$ (5,832)

December 31, 2020

Notional Amount Forward Rate Hedging Instruments Currency (In Thousands) Maturity (Note) Line Item Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY419,258/NTD113,979 2021.02.15- 2021.03.14 0.2700-0.2794 Financial assets for hedging Forecast purchases - foreign exchange forward contracts JPY/NTD JPY1,880,000/NTD503,630 2021.01.15- 2021.03.22 0.2665-0.2692 Financial assets for hedging Forecast purchases - foreign exchange JPY/NTD JPY225,000/NTD60,975 2021.01.27 0.2710 Other current liabilities forward contracts		Carrying Am	ount Change in Value Used for Calculating Hedge Liabilities Ineffectiveness $ - $ 1,489 - 3,540 (79) (63) $ (79) $ 4,966
		Asset $ 115,841 4,425 - $ 120,266

Note: JPY1:NTD, unless stated otherwise.

Accumulated Gains or Losses Change in on Hedging Value Used for Instruments in Calculating Other Equity Hedge Continuing Hedged Item Ineffectiveness Hedges Cash flow hedges Forecast purchases $ (4,966) $ 4,966

• 36 -

Comprehensive Income Impact Cash flow hedges Forecast purchases	Hedging Gains (Losses) Recognized in OCI	Hedging Gains (Losses) Recognized in OCI	Hedging Gains (Losses) Recognized in OCI
	**For the Year Ended December 31 **
		2021 $ (39,598)	2020 $ 19,378

The Group had signed component purchasing contracts with the suppliers in Japan and China, and also signed foreign exchange forward contracts with the banks and purchased foreign currency banknotes at the spot rate to avoid exchange rate risk associated with its forecasted purchases. When the forecasted purchases take place, the amount originally deferred and recognized in equity will be reclassified to the carrying amount of the materials purchased.

12. NOTES AND ACCOUNTS RECEIVABLE, NET

At amortized cost Notes and accounts receivable Less: Allowance for impairment loss		December 31	December 31
		2021 $ 699,194 (6,363) $ 692,831	2020 $ 922,742 (8,469) $ 914,273

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated by reference to the past default records of the customer and the customer’s current financial position. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

The aging of receivables was as follows:

0 days 1-60 days 61-90 days More than 90 days Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost		December 31	December 31
		2021 $ 691,929 7,181 1 83 699,194 (6,363) $ 692,831	2020 $ 917,086 3,260 433 1,963 922,742 (8,469) $ 914,273

• 37 -

The movements of the loss allowance of notes receivable and accounts receivable were as follows:

Balance at January 1 Less: Net reversal of loss allowance Foreign exchange gains and losses Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 8,469 (1,987) (119) $ 6,363	2020 $ 16,348 (7,968) 89 $ 8,469

13. INVENTORIES

Merchandise Finished goods Work in progress Raw materials Materials in transit		December 31	December 31
		2021 $ 81,031 1,234,947 276,244 2,237,392 64,326 $ 3,893,940	2020 $ 128,537 1,240,435 279,501 2,081,440 79,740 $ 3,809,653

The costs of inventories recognized as cost of goods sold for the years ended December 31, 2021 and 2020 were $25,264,128 thousand and $25,187,401 thousand, respectively. The costs of goods sold for the years ended December 31, 2021 and 2020 included inventory write-downs of $77,150 thousand and $45,098 thousand, respectively.

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

The remaining 56.13% interest in Kian Shen is dispersed and held by shareholders unrelated to the Group as of December 31, 2021 and 2020.

Refer to Tables 6 and 7 for the information on the place of incorporation and principal place of business of Kian Shen and its subsidiaries.

The summarized financial information below represents amounts before intragroup eliminations.

Kian Shen and its subsidiaries

Current assets Non-current assets Current liabilities Non-current liabilities Equity		December 31	December 31
		2021 $ 1,303,879 4,020,005 (486,118) (398,845) $ 4,438,921	2020 $ 1,242,835 4,041,897 (573,234) (387,522) $ 4,323,976 (Continued)

• 38 -

Equity attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Revenue Profit for the year Other comprehensive income (loss) for the year Total comprehensive income for the year Profit attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Total comprehensive income attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Net cash inflow (outflow) from: Operating activities Investing activities Financing activities Foreign exchange adjustments Net cash inflow Dividends paid to non-controlling interests		**December 31 **	**December 31 **
	2021 2020 $ 1,947,355 $ 1,896,928 2,491,566 2,427,048 $ 4,438,921 $ 4,323,976 (Concluded) **For the Year Ended December 31 **
		2021 $ 1,275,608 $ 306,767 (30,342) $ 276,425 $ 134,579 172,188 $ 306,767 $ 121,268 155,157 $ 276,425 $ (1,032) 617,090 (247,407) 101 $ 368,752 $ 90,639	2020 $ 1,052,991 $ 324,045 37,995 $ 362,040 $ 142,159 181,886 $ 324,045 $ 158,827 203,213 $ 362,040 $ (122,962) 593,505 (134,098) 8,915 $ 345,360 $ 82,399

15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates Investments in joint ventures		December 31	December 31
		2021 $ 17,545,961 7,407,477 $ 24,953,438	2020 $ 16,335,980 7,296,965 $ 23,632,945

• 39 -

• a. Investments in associates

Associate Material associates Yulon Associates that are not individually material		December 31	December 31
		2021 $ 8,188,389 9,357,572 $ 17,545,961	2020 $ 7,561,633 8,774,347 $ 16,335,980

1) Material associates

The Group’s proportion of shareholding and voting rights in Yulon was 16.80% on December 31, 2021 and 2020, respectively.

The Group exercises significant influence over Yulon and applies the equity method of accounting because the Group had a representation on the board of directors of Yulon even though the Group holds less than 20% interest in Yulon.

The share of profit or loss and other comprehensive income of the associates accounted for using the equity method were recognized based on the associates’ financial statements which have been audited for the same years.

Refer to Table 6 for the nature of activities, principal places of business and countries of incorporation of the aforementioned associates.

Fair values (Level 1) of investments in associates with available published price quotations are summarized as follows:

Name of Associate Yulon		**December 31 **	**December 31 **
		2021 $ 6,985,335	2020 $ 7,818,908

The summarized financial information below represents amounts shown in the associates’ consolidated financial statements prepared in accordance with IFRSs, and reflects the adjustments made when the equity method of accounting was applied.

Yulon

Current assets Non-current assets Current liabilities Non-current liabilities Equity Non-controlling interests Proportion of the Group’s ownership		December 31	December 31
		2021 $ 234,854,492 89,008,287 (226,995,138) (26,168,118) 70,699,523 (18,047,660) $ 52,651,863 16.80%	2020 $ 215,186,668 86,136,078 (201,009,483) (35,437,943) 64,875,320 (16,136,852) $ 48,738,468 16.80% (Continued)

• 40 -

Equity attributable to the Group Cross-shareholdings Carrying amount Operating revenue Net profit for the year Other comprehensive income Total comprehensive income for the year Dividends received from Yulon		**December 31 **	**December 31 **
	2021 2020 $ 8,845,513 $ 8,188,063 (657,124) (626,430) $ 8,188,389 $ 7,561,633 (Concluded) For the Year Ended December 31
		2021 $ 78,047,772 $ 7,742,315 149,839 $ 7,892,154 $ 166,714	2020 $ 82,597,514 $ 4,839,562 240,989 $ 5,080,551 $ -

2) Aggregate information of associates that are not individually material

The Group’s share of: Net profit for the year Other comprehensive income Total comprehensive income for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 1,014,030 124,690 $ 1,138,720	2020 $ 818,085 25,670 $ 843,755

All the associates are accounted for using the equity method.

Investments in associates that are not individually material are accounted for using the equity method although the Group holds less than 20% interest because the Group exercises significant influence on their major transactions or has representations on their board of directors.

The Group is the single largest shareholder of several associates. The Group’s holding is less than 50% of the voting rights in the investees but the Group considered its holding of voting rights relative to the size and dispersion of the other shareholdings, which are not widely dispersed, and concluded that it has neither the ability to direct the relevant activities of the investees nor the control over the investees. The management of the Group considered the Group as exercising significant influence over the investees and, therefore, classified them as associates accounted for using the equity method.

The share of profit or loss and other comprehensive income of these associates accounted for using the equity method were based on the associates’ financial statements which have been audited for the same years.

The Group acquired 42.79% interest in Looplus Service Technology Inc. in the amount of $32,000 thousand during the year ended December 31, 2021. The Group acquired one of the seats on the board of directors and one of the seats on the supervisory board in July 2021 and began exercising significant influence over Looplus Service Technology Inc.

• 41 -

Hua-Chuang Automobile Information Technical Center reduced its capital for offsetting accumulated deficit, and issued ordinary shares for cash in May and August 2020, respectively. The Group did not subscribe for additional new shares at the percentage of its existing ownership, which resulted in the Group’s combined shareholding to be less than 0.01%. In addition, in September 2020, the Corporation has resigned from its position as member of the board of directors of Hua-Chuang Automobile Information Technical Center and consequently ceased to have significant influence over Hua-Chuang Automobile Information Technical Center and recognized a loss on disposal of the investment amounting to $2,522 thousand.

b. Investments in joint ventures

Joint ventures that are not individually material		**December 31 **	**December 31 **
		2021 $ 7,407,477	2020 $ 7,296,965

Aggregate information of joint ventures that are not individually material:

The Group’s share of: Net profit of the year Other comprehensive income (loss) Total comprehensive income for the year	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 1,256,202 (13,929) $ 1,242,273	2020 $ 478,366 47,036 $ 525,402

All the joint ventures are accounted for using the equity method.

The share of profit or loss and other comprehensive income of these joint ventures accounted for using the equity method were based on the joint ventures’ financial statements which have been audited for the same years.

South East (Fujian) Motor Corporation Ltd. issued ordinary shares for cash in August 2021 and December 2021, respectively. In August 2021, South East (Fujian) Motor Corporation Ltd. changed its entity type and name to South East (Fujian) Motor Corporation Ltd., which is limited by shares. The Group did not subscribe for additional new shares of the aforementioned company in proportion to its existing ownership percentage, which resulted in a decrease of the Group’s combined shareholding from 25% to 5.525%. Accordingly, the Group recognized a loss on disposal of investment of $116,764 thousand, which is in proportion to the amount of the gains or losses previously recognized in other comprehensive income in relation to the joint venture that was reclassified to profit and loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. The Group is able to exercise significant influence over South East (Fujian) Motor that is not individually material even though it holds less than 20% of their voting rights. This is because the Group has representation on their board of directors.

In February 2022, Daimler Vans Hong Kong Ltd. changed its entity name to Mercedes-Benz Vans Hong Kong Ltd.

• 42 -

16. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2021 Additions Disposals Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2021 Accumulated depreciation and impairment Balance at January 1, 2021 Disposals Depreciation expense Reclassifications Impairment losses Effect of foreign currency exchange differences Balance at December 31, 2021 Carrying amounts at December 31, 2021 Cost Balance at January 1, 2020 Additions Disposals Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Depreciation expense Reclassifications Impairment losses Effect of foreign currency exchange differences Balance at December 31, 2020 Carrying amounts at December 31, 2020	Land $ 1,974,774 - - - - $ 1,974,774 $ 1,974,774 $ 1,974,774 - - - - $ 1,974,774 $ 1,974,774	Land Improvements $ 127,348 - - 612 - $ 127,960 $ 115,300 - 2,411 - - - $ 117,711 $ 10,249 $ 126,428 - - 920 - $ 127,348 $ 112,982 - 2,318 - - - $ 115,300 $ 12,048	Buildings $ 4,820,119 4,386 (7,216 ) 15,761 (1,337) $ 4,831,713 $ 3,980,133 (7,216 ) 72,994 2 - (350) $ 4,045,563 $ 786,150 $ 4,769,262 - - 47,940 2,917 $ 4,820,119 $ 3,907,415 - 71,740 158 - 820 $ 3,980,133 $ 839,986	Machinery $ 25,273,065 72,417 (2,884,319 ) 376,824 (340) $ 22,837,647 $ 22,400,678 (2,878,986 ) 591,257 2,139 146,258 (207) $ 20,261,139 $ 2,576,508 $ 24,099,766 68,022 (87,827 ) 1,192,382 722 $ 25,273,065 $ 21,836,251 (86,515 ) 641,138 3,132 6,213 459 $ 22,400,678 $ 2,872,387	Other Equipment $ 1,708,303 54,888 (147,126 ) 49,658 (182) $ 1,665,541 $ 1,333,276 (108,073 ) 84,895 (235 ) 865 (153) $ 1,310,575 $ 354,966 $ 1,709,591 11,404 (75,588 ) 62,543 353 $ 1,708,303 $ 1,301,259 (50,983 ) 81,669 - 1,015 316 $ 1,333,276 $ 375,027	Construction in Progress $ 453,007 520,313 - (460,111 ) - $ 513,209 $ - - - - - - $ - $ 513,209 $ 897,340 856,162 - (1,300,495 ) - $ 453,007 $ - - - - - - $ - $ 453,007	Total $ 34,356,616 652,004 (3,038,661 ) (17,256 ) (1,859) $ 31,950,844 $ 27,829,387 (2,994,275 ) 751,557 1,906 147,123 (710) $ 25,734,988 $ 6,215,856 $ 33,577,161 935,588 (163,415 ) 3,290 3,992 $ 34,356,616 $ 27,157,907 (137,498 ) 796,865 3,290 7,228 1,595 $ 27,829,387 $ 6,527,229

All the property, plant and equipment of the Group were for own use.

As a result of the decrease in sales for several types of vehicles in the market, the estimated future cash flows from the related equipment have decreased. Thus, the Group recognized an impairment loss of $147,123 thousand for the year ended December 31, 2021. The Group determined the recoverable amount of the relevant assets on the basis of their value in use. The discount rate used for measuring the value in use was 5.75%. The Group had no future cash flow from the related equipment and recognized an impairment loss of $7,228 thousand for the year ended December 31, 2020.

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Except for tooling (included in machinery), which is depreciated on an expected production quantity basis, the above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Category Land improvements Buildings Machinery Other equipment	Useful Life
	3-20 years 2-60 years 2-24 years 2-20 years

Acquisition of property, plant and equipment includes the decrease in payables for equipment of $25,272 thousand and the increase in payables for equipment of $140,081 thousands for the years ended December 31, 2021 and 2020, respectively, refer to Note 20 for the details.

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 31.

17. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amount Land Buildings Other equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Other equipment Lease liabilities Carrying amount Current Non-current		December 31	December 31
	2021 $ 117,972 125,549 13,929 $ 257,450 For the Year Ended		2020 $ 54,807 292,648 9,277 $ 356,732 December 31
		2021 2020 $ 106,051 $ 28,180 $ 27,723 $ 28,297 52,875 63,120 6,940 6,537 $ 87,538 $ 97,954 **December 31 **
		2021 $ 62,450 $ 198,986	2020 $ 87,196 $ 277,908

• b. Lease liabilities

Range of discount rates for lease liabilities was as follows:

• 44 -

Land Buildings Other equipment	**December 31 **
	2021 2020 1.20%-1.41% 1.20%-1.94% 1.20%-1.80% 1.20%-4.35% 0.95%-1.37% 0.95%-1.37%

• c. Material lease-in activities and terms

The Group leases land and buildings for the use of plants, and offices with lease terms of 2 to 20 years. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

• d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended	For the Year Ended	December 31
		2021 $ 12,822 $ 4,696 $ 108,146	2020 $ 18,436 $ 1,668 $ 123,575

The Group’s leases of certain equipment qualify as short-term leases and low-value asset leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

18. INVESTMENT PROPERTIES

Cost Balance at January 1, 2021 Additions Balance at December 31, 2021 Accumulated depreciation and impairment Balance at January 1, 2021 Depreciation expense Balance at December 31, 2021 Carrying amount at December 31, 2021 Cost Balance at January 1, 2020 and December 31, 2020	$ 1,821,158 2,199 $ 1,823,357 $ 466,143 11,650 $ 477,793 $ 1,345,564 $ 1,821,158 (Continued)

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Accumulated depreciation and impairment Balance at January 1, 2020 Depreciation expense Balance at December 31, 2020 Carrying amount at December 31, 2020	$ 455,109 11,034 $ 466,143 $ 1,355,015 (Concluded)

The investment properties were leased out for 2 to 10 years, with an option to extend the lease periods. The lease contracts contain market review clauses in the event that the lessees exercise their options to extend. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

The maturity analysis of lease payments receivable under operating leases of investment properties at December 31, 2021 and 2020 was as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Later than 5 years		December 31	December 31
		2021 $ 59,964 34,872 28,714 28,714 7,653 12,414 $ 172,331	2020 $ 58,895 47,270 22,178 16,020 16,020 - $ 160,383

The investment properties held by the Group are depreciated over their estimated 10 to 60 years of useful lives, using the straight-line method.

The fair values of investment properties of the Group were $2,294,334 thousand and $2,278,789 thousand as of December 31, 2021 and 2020, respectively.

Investment properties as of December 31, 2021 and 2020 were appraised by the Group’s management using the valuation model in which other market participants frequently used. The valuation from management was arrived at by reference to market evidence of transaction prices for similar properties.

The Group has freehold interests in all of its investment properties. The investment properties pledged as deposits for certain projects are set out in Note 31.

19. BORROWINGS

a. Short-term borrowings

Line of credit borrowings		**December 31 **	**December 31 **
		2021 $ 140,000	2020 $ 215,000

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The ranges of interest rate on credit borrowings were 0.90% and 0.36%-0.96% per annum as of December 31, 2021 and 2020, respectively.

b. Long-term borrowings

Unsecured borrowings Line of credit borrowings Less: Current portions Long-term borrowings		December	31
		2021 $ 68,750 - $ 68,750	2020 $ 93,750 (37,500) $ 56,250

The aforementioned long-term borrowings are repayable in installments at varying amounts before April 15, 2023. The Group had signed medium-term loan contracts with banks for non-revolving credit facilities. However, on September 1, 2021, the Group entered into a contract to extend the repayment date to July 31, 2024. As of December 31, 2021 and 2020, the annual interest rates were both 0.725%.

20. OTHER PAYABLES

Payables for salaries or bonuses Payables for warranties Payables for advertisement Payables for equipment Provisions for employee benefits Payables for development Payables for taxes Others		**December 31 **	**December 31 **
		2021 $ 1,166,206 258,401 209,167 189,110 139,090 115,411 82,752 434,601 $ 2,594,738	2020 $ 1,081,979 206,309 171,646 214,382 138,475 14,308 183,287 631,435 $ 2,641,821

21. RETIREMENT BENEFIT PLANS

• a. Defined contribution plans

The Corporation and Kian Shen, China Engine, Sino Diamond Motors, Brilliant Insight International, COC, Y.M. Hi-Tech, and Ling Wei of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The employees of the Group’s subsidiaries in China are members of a state-managed retirement benefit plan operated by the government of China. The subsidiary is required to contribute a specified percentage of payroll costs per month to the retirement benefit scheme to fund the benefits.

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b. Defined benefit plans

The defined benefit plan adopted by the Corporation and Kian Shen, China Engine, Sino Diamond Motors, COC and Y.M. Hi-Tech of the Group in accordance with the Labor Standards Act is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Group contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		**December 31 **	**December 31 **
		2021 $ 2,303,574 (1,633,360) $ 670,214	2020 $ 2,384,534 (1,733,104) $ 651,430

Movements in net defined benefit liabilities were as follows:

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2021 $ 2,384,534 $ (1,733,104) Service cost Current service cost 27,998 - Past service cost 47,006 - Net interest expense (income) 11,768 (8,626) Recognized in profit or loss 86,772 (8,626) Remeasurement Return on plan assets - (22,789) Actuarial loss Changes in demographic assumptions 62,442 - Changes in financial assumptions 1,131 - Experience adjustments 9,163 - Recognized in other comprehensive income (loss) 72,736 (22,789) Contributions from the employer - (33,662) Benefits paid (164,821) 164,821 Portion of benefits paid by the Corporation (75,647) - Balance at December 31, 2021 $ 2,303,574 $ (1,633,360)

Net Defined Benefit Liabilities $ 651,430 27,998 47,006 3,142 78,146 (22,789) 62,442 1,131 9,163 49,947 (33,662) - (75,647) $ 670,214 (Continued)

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Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2020 $ 2,436,206 $ (1,700,806) Service cost Current service cost 32,943 - Past service cost 65,263 - Net interest expense (income) 18,588 (13,078) Recognized in profit or loss 116,794 (13,078) Remeasurement Return on plan assets - (58,653) Actuarial loss Changes in demographic assumptions 328 - Changes in financial assumptions 57,463 - Experience adjustments 18,637 - Recognized in other comprehensive income (loss) 76,428 (58,653) Contributions from the employer - (115,957) Benefits paid (155,390) 155,390 Portion of benefits paid by the Corporation (89,504) - Balance at December 31, 2020 $ 2,384,534 $ (1,733,104)

Net Defined Benefit Liabilities $ 735,400 32,943 65,263 5,510 103,716 (58,653) 328 57,463 18,637 17,775 (115,957) - (89,504) $ 651,430

(Concluded)

The disbursement amounts of defined benefit plans of associates were $289 thousand and $520 thousand in 2021 and 2020, respectively.

Through the defined benefit plans under the Labor Standards Act, the Group is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

• 49 -

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	**December 31 **
	2021 2020 0.5%-1% 0.375%-1% 1.25%-2.5% 1.25%-2.5%

If possible reasonable changes in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2021 $ (53,787) $ 55,651 $ 54,254 $ (52,708)	2020 $ (58,234) $ 60,329 $ 58,787 $ (57,040)

The above sensitivity analysis may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that the changes in assumptions will occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plans for the next year Average duration of the defined benefit obligation		December 31
	2021 2020 $ 249,060 $ 36,253 7.5-10.6 years 7.6-11.6 years

22. EQUITY

• a. Ordinary shares

Number of shares authorized (in thousands) Amount of shares authorized Number of shares issued and fully paid (in thousands) Shares issued and fully paid		December 31	December 31
		2021 1,800,000 $ 18,000,000 553,620 $ 5,536,203	2020 1,800,000 $ 18,000,000 553,620 $ 5,536,203

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

• 50 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note 1) Conversion of bonds Issuance of ordinary shares Others May be used to offset a deficit only Changes in percentage of ownership interest in subsidiaries (Note 2) Share of changes in capital surplus of associates or joint ventures		December 31	December 31
		2021 $ 5,183,923 1,184,920 4,666 2,225 45,781 $ 6,421,515	2020 $ 5,183,923 1,184,920 4,666 2,225 36,044 $ 6,411,778

• Note 1: Such capital surplus may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Corporation’s capital surplus and to once a year).

• Note 2: Such capital surplus arises from the effect of changes in ownership interest in subsidiaries resulting from equity transactions other than actual disposal or acquisition, or from changes in capital surplus subsidiaries accounted for using equity method.

c. Retained earnings and dividend policy

Under the dividend policy as set forth in the Articles, where the Corporation made a profit in a fiscal year, the profit shall be first utilized for offsetting losses of previous years and paying taxes, then for setting aside as legal reserve 10% of the remaining profit. If there is remaining profit, the profit shall be utilized for setting aside a 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 Corporation’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution. For the policies on distribution of employees’ compensation and remuneration of directors, refer to Note 24.

The operating environment of the Corporation is considered as a mature and steady industry. In determining the amount of dividends to be distributed, the Corporation takes its future capital expenditures and related factors into account and also seeks to uphold the shareholders’ interests while realizing the Corporation’s long-term financial plan. Dividends are distributed at no less than 40% of profits after tax, but dividends cannot be distributed if the Corporation has deficit. Dividends are paid in the form of cash or stock. The Corporation’s policy is that cash dividends should be at least 20% of total dividends.

The shareholders of the Corporation held their regular meeting in June 2020 and in that meeting, resolved the amendments to the dividend policy of the Corporation’s Articles of Incorporation, where the regulation of “dividends cannot be distributed if the Corporation has a deficit” has been deleted.

• 51 -

Appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Corporation’s paid-in capital. The legal reserve may be used to offset deficit. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reserved from a special reserve by the Corporation.

The appropriation of earnings for 2020 that had been resolved by the shareholders in their meeting in July 2021 were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	323,844
Cash dividends		3,875,342	$7.0

The Corporation proposed to not distribute any dividends due to the net loss incurred in 2019.

Information on the appropriation of earnings in the shareholders’ meetings is available on the Market Observation Post System website of the Taiwan Stock Exchange.

The appropriation of earnings for 2021 had been proposed by the Corporation’s board of directors on March 15, 2022 were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	423,697
Cash dividends		3,044,912	$5.5

The appropriations of earnings for 2021 are subject to the resolution of the shareholders in their meeting to be held in June 2022.

• d. Special reserves

Balance at January 1 Reversals Disposal of subsidiaries and associates Disposal of property, plant and equipment Balance at December 31	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 1,028,359 - - $ 1,028,359	2020 $ 1,029,654 (1,185) (110) $ 1,028,359

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e. Other equity items

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

Balance at January 1 Recognized for the year Exchange differences on translating the financial statements of foreign operations Share from associates and joint ventures accounted for using the equity method Reclassification adjustments Disposal of associates accounted for using equity method Disposal of foreign operations Other comprehensive income recognized for the year Balance at December 31 2) Unrealized gain on financial assets at FVTOCI Balance at January 1 Recognized for the year Unrealized loss - equity instruments Share from associates accounted for using the equity method Other comprehensive income recognized for the year Cumulative unrealized loss (gain) of equity instruments transferred to retain earning due to disposal by associates Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal Balance at December 31 3) Gain (loss) on hedging instruments Balance at January 1 Recognized for the year Gain (loss) on changes in the fair value of hedging instruments Foreign currency risk - foreign exchange forward contracts Foreign currency risk - spot rate Share from joint ventures accounted for using the equity method Other comprehensive income (loss) recognized for the year Transferred to initial carrying amount of hedged items Balance at December 31	**For the Year Ended **	**For the Year Ended **	**December 31 **
	2021 $ (926,661) (4,577) (12,267) 116,764 - 99,920 $ (826,741) For the Year Ended		2020 $ (990,653) 12,993 30,165 4,470 16,364 63,992 $ (926,661) December 31
	2021 $ 264,666 (9,084) 195,381 186,297 (43,109) (30,418) $ 377,436 For the Year Ended		2020 $ 216,562 (10,421) 53,107 42,686 5,418 - $ 264,666 December 31
		2021 $ 6,918 (6,227) (25,451) (24,512) (56,190) 20,881 $ (28,391)	2020 $ (19,968) 8,632 6,870 2,714 18,216 8,670 $ 6,918

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f. Non-controlling interests

Balance at January 1 Share of profit for the year Other comprehensive income (loss) recognized for the year Unrealized loss on financial assets at FVTOCI Exchange difference on translation the financial statements of foreign operations Remeasurement on defined benefit plans Share of other comprehensive income (loss) of associates and joint ventures accounted for using the equity method Other comprehensive income (loss) recognized for the year Cash dividend distributed by subsidiaries Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 3,583,254 221,649 - (843) 1,185 (15,174) (14,832) (137,173) $ 3,652,898	2020 $ 3,422,878 263,228 (17,876) 6,069 2,498 33,147 23,838 (126,690) $ 3,583,254

23. REVENUE

Revenue from contracts with customers Revenue from sale of goods Revenue from sale of vehicles Revenue from sale of components Service revenue Rental income Other revenue Contract Balances December 31, 2021 Notes and accounts receivable (Note 12) $ 692,831 Trade receivables from related parties (Note 30) $ 1,394,827	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 23,791,349 6,114,297 29,905,646 1,098,324 111,874 9,555 $ 31,125,399 December 31, 2020 $ 914,273 $ 1,267,478	2020 $ 23,722,821 5,846,166 29,568,987 1,183,207 107,290 15,116 $ 30,874,600 January 1, 2020 $ 1,190,463 $ 1,457,139

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24. NET PROFIT

Net profit includes the following:

a. Depreciation and amortization

For the Year Ended December 31 2021 2020 An analysis of depreciation by function Operating costs $ 688,524 $ 726,088 Operating expenses 162,221 179,765 $ 850,745 $ 905,853 An analysis of amortization by function Operating costs $ 5,999 $ 5,469 Operating expenses 38,123 41,642 $ 44,122 $ 47,111 An analysis of amortization of intangible assets by function Research and development expenses $ 44,764 $ 75,053 b. Rental income and operating expenses directly related to investment properties For the Year Ended December 31 2021 2020 Rental income from investment properties $ 74,923 $ 73,658 Direct operating expenses from investment properties generating rental income $ 24,898 $ 24,364 c. Employee benefits expense For the Year Ended December 31 2021 2020 Post-employment benefits Defined contribution plans $ 74,410 $ 71,309 Defined benefit plans 77,857 103,196 152,267 174,505 Short-term benefits 3,127,873 3,236,995 $ 3,280,140 $ 3,411,500 An analysis of employee benefits expenses by function Operating costs $ 1,708,483 $ 1,777,269 Operating expenses 1,571,657 1,634,231 $ 3,280,140 $ 3,411,500	**For the Year Ended **	**For the Year Ended **	**For the Year Ended **	**December 31 **
				2020 $ 726,088 179,765 $ 905,853 $ 5,469 41,642 $ 47,111 $ 75,053 December 31
	2021 $ 74,923 $ 24,898 **For the Year Ended **			2020 $ 73,658 $ 24,364 **December 31 **
		2021 $ 74,410 77,857 152,267 3,127,873 $ 3,280,140 $ 1,708,483 1,571,657 $ 3,280,140	2020 $ 71,309 103,196 174,505 3,236,995 $ 3,411,500 $ 1,777,269 1,634,231 $ 3,411,500

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• d. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Corporation, the Corporation accrued employees’ compensation and remuneration of directors of at rates of no less than 0.1% and no higher than 0.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2021 and 2020, which were approved by the Corporation’s board of directors in March 2022 and 2021, respectively, are as follows:

Amount

Employees’ compensation Remuneration of directors	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2021 Cash $ 46,959 24,098	2020
		Cash $ 31,923 17,130

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

There was 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 year ended December 31, 2020.

Due to the net loss before income tax for the year ended December 31, 2019, the Corporation did not accrue employees’ compensation and remuneration of directors.

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

• e. Impairment loss

Property, plant and equipment (Note 16) Intangible assets under development	For the Year Ended	For the Year Ended	December 31
		2021 $ 147,123 - $ 147,123	2020 $ 7,228 94,497 $ 101,725

The Group intends to modify vehicle engines, and the future cash flows expected to arise from the related intangible assets of engines had decreased to zero. Therefore, the Group recognized impairment loss of $94,497 thousand for the year ended December 31, 2020.

• f. Gain on disposal of investments

In August 2018, the Group entered into a contract for the transfer of its shares in Zhejiang Kanda to a non-related party and collected the proceeds from the contract in installments (discounted price after tax was $390,514 thousand (RMB91,105 thousand)). The disposal was completed in May 2020, the date on which the Group recognized a gain on disposal of investments amounting to $234,953 thousand, and recognized an expected credit gain (loss) of $46,919 thousand and $(84,464) thousand for the years ended December 31, 2021 and 2020, respectively, after taking into consideration the debtor’s current financial position and the value of the assets pledged as collateral. As of December 31, 2021 and 2020, the balance of receivables was $194,074 thousand ($45,034 thousand and $149,040 thousand were

• 56 -

included in other receivables and other non-current assets, respectively) and $200,494 thousand ($36,291 thousand and $164,203 thousand were included in other receivables and other non-current assets, respectively).

25. INCOME TAXES

• a. Income tax recognized in profit or loss

Major components of tax expense are as follows:

Current tax In respect of the current year Taxation for repatriated offshore funds Tax refund for offshore funds Adjustments for the prior years Deferred tax In respect of the current year Adjustments for the prior years Income tax expense recognized in profit or loss	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 434,160 167,141 (6,681) 9,718 604,338 70,919 (465) 70,454 $ 674,792	2020 $ 77,192 121,108 - (26,714) 171,586 21,163 19,169 40,332 $ 211,918

A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax Income tax expense calculated at the statutory rate (20%) Non-deductible expense Tax-exempt income Taxation for repatriated offshore funds Tax refund for offshore funds Income tax on unappropriated earnings Unrecognized deductible temporary differences Investment credits Unrecognized loss carryforwards Effect of different tax rates of group entities operating in other jurisdictions Adjustments for prior years’ tax Others Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,078,276 $ 1,015,655 6,019 (397,293) 167,141 (6,681) 9,203 (20,373) (60,474) (48,299) (93) 9,253 734 $ 674,792	2020 $ 3,752,466 $ 750,494 2,392 (97,729) 121,108 - 1,239 (645,010) - 89,213 (24,450) (7,545) 22,206 $ 211,918

The corporate tax rate applicable to subsidiaries in China is 25%. Tax rates applicable to other entities of the Group operating in other jurisdictions are based on the tax laws in those jurisdictions.

• 57 -

In July 2019, the president of the ROC announced the regulations on the Management, Utilization, and Taxation of Repatriated Offshore Funds Act. Within two years from the date of enforcement of this Act, profit-seeking enterprises may be subject to taxation based on these regulations upon approval by the tax authorities. A tax rate of 8% applies to the first year’s repatriation of funds, while a tax rate of 10% applies to the second year’s repatriation of funds; the statutory rate of 20% is not applicable. If substantive investments are subsequently made, profit-seeking enterprises may apply for a refund of 50% of the tax paid for qualifying investment amounts.

For the year ended December 31, 2021, the Group repatriated $818,753 thousand (RMB27,513 thousand and EUR20,691 thousand) after approval was obtained from the National Taxation Bureau, Ministry of Finance. Total income tax withholdings was $167,141 thousand, comprising $86,843 thousand based on the source of income and $80,298 thousand based on the preferential tax rate at 10%.

For the year ended December 31, 2020, the Group repatriated $685,351 thousand (RMB161,076 thousand and US$367 thousand) after approval was obtained from the National Taxation Bureau, Ministry of Finance. The total amount of withholding tax on income was $121,108 thousand, comprising $66,468 thousand based on the source of income and $54,640 thousand based on the preferential tax rate at 8%. Subsequent substantive investments amounted to $158,190 thousand, and application for the refund of tax was $6,681 thousand.

b. Income tax recognized in other comprehensive income (loss)

Deferred tax In respect of the current year Remeasurement of defined benefit plans Cash flow hedges	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 15,202 7,919 $ 23,121	2020 $ 3,555 (3,876) $ (321)

c. Current tax assets and liabilities

Current tax assets (included in other current assets) Tax refund receivable and prepaid income tax Current tax liabilities Income tax payable		**December 31 **	**December 31 **
		2021 $ 162,140 $ 423,104	2020 $ 144,737 $ 284,692

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d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2021

Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Deferred tax assets Temporary differences Defined benefit plans $ 101,389 $ (11,424) $ 15,202 Other payables 60,269 10,366 - Inventories 45,749 15,604 - Others 67,588 25,738 6,678 274,995 40,284 21,880 Loss carryforwards 32,150 (29,443) - $ 307,145 $ 10,841 $ 21,880 Deferred tax liabilities Temporary differences Investments accounted for using the equity method $ 503,423 $ 83,934 $ - Reserve for land value increment tax 69,799 - - Others 5,088 (2,639) (1,241) $ 578,310 $ 81,295 $ (1,241) For the year ended December 31, 2020 Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Deferred tax assets Temporary differences Defined benefit plans $ 118,173 $ (20,339) $ 3,555 Other payables 60,674 (405) - Inventories 37,728 8,021 - Others 36,253 36,137 (4,802) 252,828 23,414 (1,247) Loss carryforwards 566 31,584 - $ 253,394 $ 54,998 $ (1,247) Deferred tax liabilities Temporary differences Investments accounted for using the equity method $ 410,481 $ 91,483 $ - Reserve for land value increment tax 69,799 - - Others - 3,847 (926) $ 480,280 $ 95,330 $ (926)

Others Closing Balance $ - $ 105,167 - 70,635 - 61,353 (5,220) 94,784 (5,220) 331,939 - 2,707 $ (5,220) $ 334,646 $ 1,277 $ 588,634 - 69,799 - 1,208 $ 1,277 $ 659,641 Others Closing Balance $ - $ 101,389 - 60,269 - 45,749 - 67,588 - 274,995 - 32,150 $ - $ 307,145 $ 1,459 $ 503,423 - 69,799 2,167 5,088 $ 3,626 $ 578,310

Deferred tax assets Temporary differences Defined benefit plans Other payables Inventories Others Loss carryforwards Deferred tax liabilities Temporary differences Investments accounted for using the equity method Reserve for land value increment tax Others

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• e. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets

Loss carryforwards Expiry in 2021 Expiry in 2022 Expiry in 2023 Expiry in 2024 Expiry in 2025 Expiry in 2027 Expiry in 2028 Expiry in 2029 Expiry in 2030 Deductible temporary differences		December 31	December 31
		2021 $ - 5,663 - - 8,836 - 299,373 82,676 495,620 $ 892,168 $ 1,497,992	2020 $ 263,312 42,929 12,368 7,016 8,836 20,785 367,500 180,862 495,623 $ 1,399,231 $ 1,569,668

• f. Information on unused loss carryforwards

Loss carryforwards as of December 31, 2021 comprised:

Unused Amount	Unused Amount	Expiry Year
$	5,663	2022
	8,836	2025
	299,832	2028
	85,051	2029
	501,058	2030
	5,263	2031
$	905,703

• g. The aggregate amount of temporary differences associated with investments for which deferred tax liabilities have not been recognized

As of December 31, 2021 and 2020, the taxable temporary differences associated with an investment in subsidiaries for which no deferred tax liabilities have been recognized were $523,203 thousand and $516,342 thousand, respectively.

• h. Income tax assessments

The income tax returns of the Corporation through 2019 have been assessed by the tax authorities.

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26. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 7.67 $ 7.66	2020 $ 6.01 $ 6.00

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

Net Profit for the Year

	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2021	2020
Profit of the Corporation	$ 4,181,835	$ 3,277,320
Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares)

Weighted average number of ordinary shares used in the computation of basic earnings per share Weighted average number of ordinary shares Adjustment for shares held by associates Effect of potentially dilutive ordinary shares Employees’ compensation Weight average number of ordinary shares used in the computation of diluted earnings per share	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 553,620 (8,239) 545,381 887 546,268	2020 553,620 (8,239) 545,381 631 546,012

When calculating earnings per share (EPS), the Corporation considers the shares held by associates as the treasury shares to reduce the outstanding shares.

The Corporation may settle the compensation of employees in cash or shares; therefore, the Corporation assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares will be included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

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27. DISPOSAL OF SUBSIDIARY

The Corporation’s board of directors approved to fully dispose of its interest held in its subsidiary, Advance Power Machinery, to Yulon on July 16, 2020. The disposal was completed on July 17, 2020, the date on which the control of Advance Power Machinery was transferred to the acquirer.

• a. Consideration received from disposal

	For the Year
	Ended
	December 31,
	2020
Sales proceeds received	$ 10,787

b. Analysis of assets and liabilities on the date control was lost

	For the Year
	Ended
	December 31,
	2020
Current assets
Cash and cash equivalents	$ 12,983
Notes and accounts receivable, net	10,844
Other receivables	1,579
Other current assets	30
Non-current assets
Other non-current assets	20
Current liabilities
Other payables	(14,311)
Current tax liabilities	(31)
Other current liabilities	(245)
Net assets disposed of	$ 10,869

c. Loss on disposal of subsidiary

	For the Year	For the Year
		Ended
	December 31,
		2020
Consideration received	$	10,787
Net assets disposal of		(10,869)
Loss on disposals	$	(82)

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• d. Net cash and cash equivalent outflow on disposal of subsidiary

	For the Year
	Ended
	December 31,
	2020
Proceeds of disposal	$ 10,787
Less: Cash and cash equivalent balances disposal of	(12,983)
Net cash outflow on disposal of subsidiary	$ (2,196)

28. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Group’s overall strategy remains unchanged in the future.

29. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments that are not measured at fair value

The Group’s management believes the carrying amounts of financial assets and financial liabilities that are not measured at fair value recognized in the consolidated financial statements approximate their fair values or their fair values cannot be reliably measured.

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

• 1) Fair value hierarchy

December 31, 2021

Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Foreign unlisted shares	Level 1 $ 229,626 - - $ 229,626 $ 15,798 - - $ 15,798	Level 2 $ - - - $ - $ - - - $ -	Level 3 $ - 676,756 613 $ 677,369 $ - 24,954 110,669 $ 135,623	Total $ 229,626 676,756 613 $ 906,995 $ 15,798 24,954 110,669 $ 151,421 (Continued)

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Financial assets for hedging Non-derivative financial instruments Derivative financial instruments Financial liabilities Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities) Financial liabilities for hedging Derivative financial instruments (included in other current liabilities) December 31, 2020 Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Foreign unlisted shares	Level 1 $ 107,179 - $ 107,179 $ - $ - Level 1 $ 1,056,288 - - $ 1,056,288 $ 30,370 - - $ 30,370	Level 2 $ - - $ - $ - $ - Level 2 $ - - - $ - $ - - - $ -	Level 3 $ - 533 $ 533 $ 976 $ 3,971 Level 3 $ - 672,914 3,141 $ 676,055 $ - 24,145 124,358 $ 148,504	Total $ 107,179 533 $ 107,712 $ 976 $ 3,971 (Concluded) Total $ 1,056,288 672,914 3,141 $ 1,732,343 $ 30,370 24,145 124,358 $ 178,873 (Continued)

• 64 -

Financial assets for hedging Non-derivative financial instruments Derivative financial instruments Financial liabilities Financial liabilities for hedging Derivative financial instruments (included in other current liabilities)	Level 1 $ 115,841 - $ 115,841 $ -	Level 2 $ - - $ - $ -	Level 3 $ - 4,425 $ 4,425 $ 79	Total $ 115,841 4,425 $ 120,266 $ 79 (Concluded)

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

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

For the year ended December 31, 2021

Financial Assets Equity Instruments at FVTPL Derivative Financial Instruments at FVTPL Equity Instruments at FVTOCI Derivative Financial Instruments for Hedging Balance at January 1 $ 672,914 $ 3,141 $ 148,504 $ 4,425 Recognized in profit or loss 3,842 (2,528) - - Recognized in other comprehensive loss - - (12,881) (3,892) Balance at December 31 $ 676,756 $ 613 $ 135,623 $ 533 Financial Liabilities Derivative Financial Instruments at FVTPL Derivative Financial Instruments for Hedging Balance at January 1 $ - $ 79 Recognized in profit or loss 976 - Recognized in other comprehensive income - 3,892 Balance at December 31 $ 976 $ 3,971

Total $ 828,984 1,314 (16,773) $ 813,525 Total $ 79 976 3,892 $ 4,947

• 65 -

For the year ended December 31, 2020

Financial Assets Equity Instruments at FVTPL Derivative Financial Instruments at FVTPL Equity Instruments at FVTOCI Derivative Financial Instruments for Hedging Balance at January 1 $ 686,413 $ 304 $ 178,259 $ 440 Recognized in profit or loss (13,499) 2,837 - - Recognized in other comprehensive income (loss) - - (29,755) 3,985 Balance at December 31 $ 672,914 $ 3,141 $ 148,504 $ 4,425 Financial Liabilities Derivative Financial Instruments at FVTPL Derivative Financial Instruments for Hedging Balance at January 1 $ 2,483 $ 6,884 Recognized in profit or income (2,483) - Recognized in other comprehensive income - (6,805) Balance at December 31 $ - $ 79

Total $ 865,416 (10,662) (25,770) $ 828,984 Total $ 9,367 (2,483) (6,805) $ 79

• 3) Valuation techniques and inputs applied for the purpose of Level 3 fair value measurement

• a) Derivative financial instruments: The fair values of foreign exchange forward contracts of 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.

• b) Domestic unlisted securities to which the market approach was applied: The fair values of domestic unlisted shares were determined with reference to the share prices of listed companies with similar businesses as the Corporation. The material unobservable inputs were as follows:

Operating income ratio Gross profit ratio EBITDA ratio Post-tax profit ratio P/B ratio Discount rate for lack of marketability	**December 31 **
	2021 2020 0.92-4.78 times 0.69-5.21 times 2.11-3.28 times - - 4.75-36.25 times 8.39-13.27 times - 0.73-3.23 times 0.43-3.86 times 32.28% 32.28%

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If the inputs to the valuation model were changed to reflect reasonably possible alternative assumptions while all the other variables were held constant, the fair values of the shares would have increased (decreased) as follows:

Operating income ratio 0.1 time increase 0.1 time decrease Gross profit ratio 1 time increase 1 time decrease EBITDA ratio 1 time increase 1 time decrease Post-tax profit ratio 1 time increase 1 time decrease P/B ratio 0.1 time increase 0.1 time decrease		**December **	**31 **
		2021 $ 31,752 $ (31,752) $ 42,416 $ (42,416) $ - $ - $ 9,716 $ (9,716) $ 82,299 $ (82,299)	2020 $ 25,129 $ (25,129) $ - $ - $ 8,984 $ (8,984) $ - $ - $ 79,510 $ (79,510)

c. Categories of financial instruments

Financial assets FVTPL Mandatorily at FVTPL Financial assets for hedging Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Financial liabilities Amortized cost (Note 2) FVTPL (included in other current liabilities) Held for trading Financial liabilities for hedging (included in other current liabilities)	**December 31 **
	2021 2020 $ 906,995 $ 1,732,343 107,712 120,266 14,977,623 13,989,558 151,421 178,873 5,766,306 6,612,332 976 - 3,971 79

Note 1: The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, debt investments, notes and accounts receivable (related parties included), other receivables, other financial assets (included in other current assets), guarantee deposits (included in other non-current assets) and long-term receivables (included in other non-current assets).

• Note 2: The balances included financial liabilities measured at amortized cost which comprised short-term borrowings, short-term bills payable, notes and accounts payable (related parties included), other payables, long-term borrowing (current portion of long-term borrowing included) and deposits received (included in other non-current liabilities).

• 67 -

d. Financial risk management objectives and policies

The Group’s major financial instruments include equity and debt investments, accounts receivable, accounts payable, borrowings and lease liabilities. Financial risks include market risk, credit risk, and liquidity risk.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and other price risk.

• a) Foreign currency risk

Holding foreign currency-denominated assets and liabilities exposes the Group to adverse fluctuations of cash flows and the reduction of foreign currency assets due to the changes in foreign currency rate. The Group avoids cash flow risk resulting from the changes in adverse foreign currency rate by using derivative contracts.

Sensitivity analysis

The Group is mainly exposed to the U.S. dollar (USD), Euro (EUR), Japanese Yen (JPY) and Renminbi (RMB).

The following table details the Group’s sensitivity to a 1% increase and decrease in the New Taiwan dollar 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 1%. The sensitivity analysis included outstanding foreign currency denominated monetary items and their translation at the end of the reporting period is adjusted for a 1% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit and equity associated with a 1% strengthening of the New Taiwan dollar against the relevant currency. For a 1% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit and equity, and the balances below would be negative.

Loss Equity Gain Equity Loss Equity	USD to NTD	USD to NTD	USD to NTD
	**For the Year Ended December 31 **
		2021 2020 $ (6,750) $ (8,111) $ (830) $ - JPY to NTD
	**For the Year Ended December 31 **
		2021 2020 $ 9 $ 134 $ (3,501) $ (6,974) RMB to NTD
	For the Year Ended December 31
		2021 $ (13,457) $ (1,805)	2020 $ (15,796) $ -

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b) Interest rate risk

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rate risk at the end of the reporting period were as follows:

Cash flow interest rate risk Financial assets Financial liabilities Fair value interest rate risk Lease liabilities	December 31
	2021 2020 $ 12,343,638 $ 11,184,954 318,736 458,713 261,436 365,104

Sensitivity analysis

The sensitivity analysis 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. The sensitivity rate of 0.25% is 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 0.25% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2021 and 2020 would increase/decrease by $30,062 thousand and $26,816 thousand, respectively.

The Group’s sensitivity to interest rates increased during the current year was mainly due to the increase in variable rate asset instruments.

c) Other price risk

The Group was exposed to equity price risk on its investments in listed securities and mutual funds.

Sensitivity analysis

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

If equity prices had been 5% higher/lower, pre-tax profit for the years ended December 31, 2021 and 2020 would have increased/decreased by $11,481 thousand and $52,814 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 years ended December 31, 2021 and 2020 would have increased/decreased by $790 thousand and $1,518 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

The amounts of financial assets will be potentially impacted if the counterparties of the Group or third parties fail to perform their obligations in financial instrument contracts. The impact includes the concentrated degrees, composition parts and contracts amounts of the financial instruments and other receivables. The Group believes credit risk is low because the counterparties are creditworthy banks, brokers and dealers.

• 69 -

3) Liquidity risk

The Group has sufficient operating capital to meet cash requirements for settlement of derivative transactions. Thus, liquidity risk is low. As of December 31, 2021 and 2020, the Group had available unutilized unsecured and secured financing facilities (including bills and letters) of $6,707,901 thousand and $6,448,979 thousand, respectively.

30. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the Corporation, have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed below.

• a. Names and categories of related parties

Related Party Name Mitsubishi Motors Corporation (Mitsubishi Motors Corp.) Mitsubishi Corporation Tai Yuen Textile Co., Ltd. Le Wen Investment Co., Ltd. Yulon Management Company Ltd. (Yulon Management) Mitsubishi Corporation (Taiwan) Ltd. Mitsubishi Motors Philippines Corporation Mitsubishi Motors Thailand Mitsubishi Motors Middle East and Africa Shye Shyang Mechanical Industrial Co., Ltd. Fuzhou Samnel Mechanical and Electrical Uni-Calsonic Corp. Yulon Motor Co., Ltd. (Yulon) Fortune Motors Co., Ltd. (Fortune Motors) ROC-Spicer Ltd. (ROC-Spicer) Uni Auto Parts Manufacture Co., Ltd. (Uni Auto Parts Manufacture) Shung Ye Motor Co., Ltd. (Shung Ye Motor) Hua-Chuang Automobile Information Technical Center Co., Ltd. (Hua-Chuang Automobile Information) Yulon IT Solutions Inc. Sinjang Co., Ltd. Sin Gan Co., Ltd.

Related Party Category

Investor with significant influence over the Group Investor with significant influence over the Group Investor with significant influence over the Group Investor with significant influence over the Group Subsidiary of investors that have significant influence over the Group Subsidiary of investors that have significant influence over the Group Subsidiary of investors that have significant influence over the Group Subsidiary of investors that have significant influence over the Group Subsidiary of investors that have significant influence over the Group The Group is its key management personnel. The Group is its key management personnel. Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate (Continued)

• 70 -

Related Party Name Tokio Marine Newa Insurance Co., Ltd. Hong Shuo Cultural Enterprises, Co., Ltd. Hsiang Shuo Enterprises Sinqual Technology Co., Ltd. Yufong Property Management Co., Ltd. Taiwan Acceptance Corporation Yue Sheng Industrial Co., Ltd. Luxgen Motor Co., Ltd. (Luxgen) Yulon Nissan Motor Co., Ltd. Y-Teks Co., Ltd. Yes-Energy Service Co., Ltd. Yue Ki Industrial Co., Ltd. (Yue Ki Industrial) Carplus Auto Leasing Corporation Fortune HS Leasing Co., Ltd. Yu Rich Financial Services Company ROC-Keeper Industrial Ltd. Fuzhou Lianhong Motor Parts Co., Ltd. Tai Ya Investment (Hong Kong) Co., Ltd. Advance Power Machinery Co. Fu-Lun Motors Co., Ltd. Looplus Service Technology Inc. (Looplus Service) Guangzhou NTN-Yulon Drivertrain Co., Ltd. Xiangyang NTN-Yulon Drivertrain Co., Ltd. South East (Fujian) Motor Corporation Ltd. (South East Corporation Ltd. by shares) (South East (Fujian) Motor) Fujian Benz Automotive Co., Ltd. Fuzhou Fushiang Motor Industrial Co., Ltd. Xiamen King-Long Kian-Shen Frame Hangzhou King-Long Kian-Shen Co., Ltd. China Engine (Fujian) Yuanchuang Industrial Investment Consulting Co., Ltd. Vivianwu Journalism Award Foundation

Related Party Category

Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Formerly a subsidiary; became an associate on July 17, 2020 Associate Became an associate in April 2021 Joint venture Joint venture Joint venture Joint venture Joint venture Joint venture Joint venture Joint venture Substantive related party Substantive related party (Concluded)

b. Operating transactions

1) Sales of goods

Line Item Related Party Category/Name Sales Associates Fortune Motors Shung Ye Motor Others Investors and subsidiaries of the investors that have significant influence over the Group Joint ventures	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 18,839,506 4,348,180 683,650 23,871,336 82,031 19,026 $ 23,972,393	2020 $ 19,179,923 5,259,792 858,480 25,298,195 76,595 22,853 $ 25,397,643

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2) Purchases of goods

Line Item Related Party Category/Name Purchases Associates Investors and subsidiaries of the investors that have significant influence over the Group The Group is its key management personnel Joint ventures 3) Technical services expense Line Item Related Party Category/Name Cost of goods sold and selling and marketing expenses Investors that have significant influence over the Group 4) Operating expenses Line Item Related Party Category/Name Selling and marketing expenses, general and administrative expenses and research and development expenses Investors and subsidiaries of investors that have significant influence over the Group Associates Others 5) Contract liabilities Line Item Related Party Category/Name Other current Associates liabilities Luxgen Others Investors that have significant influence over the Group Mitsubishi Motors Corp.	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2021 2020 $ 2,211,853 $ 2,031,488 1,240,799 1,513,396 321,310 304,317 15,552 111,511 $ 3,789,514 $ 3,960,712 For the Year Ended December 31
	2021 2020 $ 180,372 $ 226,289 For the Year Ended December 31
		2021 2020 $ 78,754 $ 102,119 19,080 20,329 2,661 2,735 $ 100,495 $ 125,183 **December 31 **
		2021 $ 56,058 9,388 65,446 - $ 65,446	2020 $ 58,585 6,902 65,487 16,393 $ 81,880

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6) Receivables from related parties

Line Item Related Party Category/Name Trade receivables from Associates related parties Fortune Motors Shung Ye Motor Others Joint ventures Others		December 31	December 31
		2021 $ 992,093 266,478 124,663 1,383,234 7,248 4,345 $ 1,394,827	2020 $ 724,638 338,521 189,089 1,252,248 11,270 3,960 $ 1,267,478

7) Payables to related parties

Line Item Related Party Category/Name Trade payables to Associates related parties Uni Auto Parts Manufacture Fortune Motors ROC-Spicer Yue Ki Industrial Others Investors and subsidiaries of investors that have significant influence over the Group Yulon Management Mitsubishi Motors Corp. Others The Group is its key management personnel Joint ventures 8) Prepayments Line Item Related Party Category/Name Prepayments Joint ventures Others		December 31	December 31
		2021 2020 $ 121,057 $ 148,010 107,730 65,266 101,305 100,270 97,387 113,048 188,106 175,548 615,585 602,142 86,239 93,243 80,026 127,147 10,954 7,786 177,219 228,176 56,226 67,906 8,225 9,013 $ 857,255 $ 907,237 **December 31 **
		2021 $ 2,712 770 $ 3,482	2020 $ 3,681 194 $ 3,875

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9) Acquisitions of property, plant and equipment

Line Item Related Party Category/Name Property, plant and Associates equipment Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 16,059 - $ 16,059	2020 $ 104,894 6,940 $ 111,834

10) Disposal of property, plant and equipment

Related Party Category/Name Others 11) Lease arrangements Line Item Acquisitions of right-of-use assets Line Item Lease liabilities Line Item Interest expense	Proceeds For the Year Ended December 31 2021 2020 $ - $ 596 Related Party Category/Name Associates Related Party Category/Name Associates Related Party Category/Name Associates	Gain of Disposal (Included in Other Income)	Gain of Disposal (Included in Other Income)	Gain of Disposal (Included in Other Income)
		For the Year Ended December 31
		2021 2020 $ - $ 596 For the Year Ended December 31
			2021 2020 $ 8,989 $ 1,917 December 31
		2021 2020 $ 8,166 $ 1,373 For the Year Ended December 31
			2021 $ 59	2020 $ 12

The outstanding payables to related parties were not guaranteed and would be paid in cash. The Group received from some related parties were guaranteed. For the years ended December 31, 2021 and 2020, no loss allowance was recognized for trade receivables from related parties.

The prices and payment terms for the Group’s transactions with related parties are the same as that for third parties. For lease contracts entered into with related parties, rental prices were determined by reference to the market, and had general payment terms.

The Group leased right-of-use of cabinet racks and company vehicles from its associates in 2021 and 2020. The lease term of the two contracts was 1 to 3 years; the rental is based on similar asset’s market rental rate, and fixed lease payments are paid monthly.

The Group signed a contract with Mitsubishi Motors Corporation, refer to Note 32 for the details.

• 74 -

c. Remuneration of key management personnel

The remuneration of directors and key executives for the years ended December 31, 2021 and 2020 was as follows:

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2021 $ 121,983 1,188 $ 123,171	2020 $ 103,818 1,700 $ 105,518

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

31. ASSETS PLEDGED AS COLLATERAL

The following assets were provided as collateral for borrowings, tariff of importing vehicle and materials, escrows and government tenders:

Property, plant and equipment Pledged deposits (Note 9) Investment properties		December 31	December 31
		2021 $ 507,522 240,318 - $ 747,840	2020 $ 508,913 180,486 52,323 $ 741,722

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant commitments and contingencies of the Group as of December 31, 2021 were as follows:

• a. The Group issued guarantee notes amounting to $4,409,440 thousand which had been pledged as collateral for loans from banks and other financial institutions; unused letters of credit amounted to $34,692 thousand.

• b. The Group entered into an agreement with Mitsubishi Motors Corp. as stated below:

Project Technical royalty Technical royalty	Content Technical cooperation and manufacture of Delica and other car models Technical cooperation and manufacture of Outlander and other car models	Date of Agreement/ Expiry Date 2006.3.1-2025.4.8 2005.7.1-2025.9.7	Agreement Price Royalty was agreed to be the basis of the FOB price of automobiles sold and manufactured parts repaired Royalty was agreed to be the fixed amount of automobiles sold per unit and the basis of the FOB price of manufactured parts repaired	Payment Method
				Paid every 6 months within 90 days Paid every 6 months within 60-90 days

• 75 -

• c. According to Rule No. 1090261416 issued by the Land Administration Department of the Taoyuan City Government on October 19, 2020, the Group’s land in Dayuan which was recognized under property, plant and equipment is within the scope of the “Taoyuan Aerotropolis Urban Plan First Stage in Expropriated Zone”. The land will be expropriated, and the Group will obtain approval offset land compensation. The related compensation and relief fund the Group received as a result of the aforementioned land expropriation case amounted to $254,212 thousand in September 2021. The Group has not completed its obligation to move out from the existing buildings and land and has not completed the related handover procedures with the Taoyuan City Government. As a result, the related compensation and relief payments should be recognized in advance receipts (included in other current liabilities).

• d. The status of endorsements/guarantees was listed in Table 2.

33. OTHER ITEMS

The Group’s operating revenue was affected by the impact of the COVID-19 pandemic which has evolved globally and is currently impacting Taiwan. Based on the information available as of the balance sheet date, the Group considered the economic implications of the pandemic when making its critical accounting estimates; refer to Note 5.

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2021

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Foreign currency assets
Monetary items
RMB	$	290,318	4.344	$ 1,261,141
USD		23,969	27.68	663,468
JPY		542,187	0.2405	130,396
Non-monetary items
Investments accounted for using the equity
method
RMB		986,967	4.344	4,287,385
EUR		111,795	31.32	3,501,433
Foreign currency liabilities
Monetary items
JPY		450,201	0.2405	108,273
RMB		23,342	4.344	101,399

• 76 -

December 31, 2020

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Foreign currency assets
Monetary items
RMB	$	327,164	4.377	$ 1,431,995
USD		19,214	28.48	547,208
JPY		717,026	0.2763	198,114
Non-monetary items
Investments accounted for using the equity
method
RMB		1,071,073	4.377	4,688,087
EUR		86,458	35.02	3,027,742
Foreign currency liabilities
Monetary items
RMB		44,915	4.377	196,592
JPY		646,121	0.2763	178,523

For the years ended December 31, 2021 and 2020, net foreign exchange gains (losses) were $(10,043) thousand and $25,233 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.

35. SEPARATELY DISCLOSED ITEMS

Except for those listed in Notes 7, 11 and 29, and Tables 1 to 10, there were no other separately disclosed items.

36. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments were vehicle manufacturing, channel and others.

The following was an analysis of the Group’s revenue and results by reportable segment.

Vehicle manufacturing Channel Others Adjustment and eliminations Administration cost and remunerations to directors Other non-operating income and expenses, net Profit before income tax		Segment Revenues For the Year Ended December 31 2021 2020 $ 29,363,550 $ 28,738,848 2,115,411 2,530,190 45,646 53,825 (399,208) (448,263) $ 31,125,399 $ 30,874,600		Segment Income or Loss	Segment Income or Loss
				For the Year Ended **December 31 **
		2021 $ 29,363,550 2,115,411 45,646 (399,208) $ 31,125,399		2021 $ 5,415,531 39,684 (7,844) (1,040) 5,446,331 (386,024) 17,969 $ 5,078,276	2020 $ 3,805,640 20,012 (7,109) (828) 3,817,715 (321,410) 256,161 $ 3,752,466

• 77 -

Intersegment transactions are determined by reference to market prices.

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs and remunerations to directors, interest income, dividend income, other income, expected credit gain (loss), interest expense, other expense, gain (loss) on disposal of investments, net foreign exchange gain (loss), gain (loss) on financial instruments at fair value through profit or loss, impairment loss 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.

• 78 -

TABLE 1

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period (Note 1)	Ending Balance	Actual Amount Borrowed (Note 5)	Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reason for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 2)	Aggregate Financing Limit (Note 3)
													Item	Value
0	China Motor Corporation	Sino Diamond Motors	Other receivables	Yes	$ 600,000	$ 600,000	$ 600,000	0.9	Short-term financing	$ -	Working capital	$ -	-	$ -	$ 1,280,164	$ 8,534,426
1	Dongguan Huayi (Note 4)	Dongguan Huashun	Other receivables	Yes	86,880 (RMB 20,000 thousand)	-	-	-	Short-term financing	-	Working capital	-	-	-	1,280,164	8,534,426
2	Dongguan Huashun (Note 4)	Dongguan Huayi	Other receivables	Yes	86,880 (RMB 20,000 thousand)	-	-	-	Short-term financing	-	Working capital	-	-	-	1,280,164	8,534,426
3	Tianjin Hwarui (Note 4)	Tianjin Hwahong Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables	Yes Yes Yes	43,440 (RMB 10,000 thousand) 86,880 (RMB 20,000 thousand) 86,880 (RMB 20,000 thousand)	- - -	- - -	- - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,280,164 1,280,164 1,280,164	8,534,426 8,534,426 8,534,426
4	Tianjin Hwahong (Note 4)	Tianjin Hwarui Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables	Yes Yes Yes	86,880 (RMB 20,000 thousand) 86,880 (RMB 20,000 thousand) 86,880 (RMB 20,000 thousand)	- - -	- - -	- - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,280,164 1,280,164 1,280,164	8,534,426 8,534,426 8,534,426

Note 1: Converted at the exchange rate of RMB1:NT$4.344 as of December 31, 2021.

Note 2: The amount is 3% of the total shareholders’ equity of the latest financial statements of China Motor Corporation.

Note 3: The amount is 20% of the total shareholders’ equity of the latest financial statements of China Motor Corporation.

Note 4: Dongguan Huayi, Dongguan Huashun, Tianjin Hwarui and Tianjin Hwahong resolved to terminate the credit line to subsidiaries on June 30, 2021.

Note 5: Eliminated during the preparation of the consolidated financial statements.

• 79 -

TABLE 2

CHINA MOTOR CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsee/Guarantee Receiver	Endorsee/Guarantee Receiver	Limit on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period (Note 1)	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Amount Borrowed	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiary	Endorsement/ Guarantee Given by Subsidiary on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Company in Mainland China
		Name	Relationship
1	Sino Diamond Motors (Note 2)	Dongguan Huayi Tianjin Hwarui	Subsidiary Subsidiary	20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand	$ 86,880 (RMB 20,000 thousand) 86,880 (RMB 20,000 thousand)	$ - -	$ - -	$ - -	- -	50% of the Corporation’s issued capital, $2,768,102 thousand 50% of the Corporation’s issued capital, $2,768,102 thousand	No No	No No	Yes Yes

Note 1: Converted at the exchange rate of RMB1:NT$4.344 as of December 31, 2021.

Note 2: Sino Diamond Motors resolved to waive the endorsements/guarantee limit to its subsidiaries on June 30, 2021.

• 80 -

TABLE 3

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2021

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

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		December 31, 2021	December 31, 2021		Note
				Number of Shares (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
China Motor Corporation Alliance Investment & Management	Beneficiary certificates Fubon Chi Hsiang Money Market Fund Fuh Hwa Smart Energy Bond Fund II Shares Shye Shyang Mechanical Industrial Myson Century, Inc. Taiwan Aerospace NORM Pacific Automation Corp. Carnival Com2B (Cayman) Corp. Principal guaranteed notes President Securities 100% Principal Guaranteed Note Corporate bonds Evergreen Marine Corporation YAGEO Corporation Shares Samuel (Cayman) Co., Ltd. CARPLUS Auto Leasing Corporation T-Car Inc.	- - Corporate director Corporate director - - - - - - - - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at amortized cost - current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current	3,160 2,703 9,009 2,352 811 128 95 2,000 - - - 6,327 3,248 1,275	$ 50,016 30,443 605,042 14,397 11,554 1,672 1,401 - 43,314 99,910 99,796 86,623 71,714 24,046	- - 10.00 3.92 0.60 0.45 0.05 4.44 - - - 15.07 3.45 4.05	$ 50,016 30,443 605,042 14,397 11,554 1,672 1,401 - - - - 86,623 71,714 24,046

(Continued)

• 81 -

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		December 31, 2021	December 31, 2021		Note
				Number of Shares (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
Hwa Lin China Engine Ling Wei Kian Shen Brilliant Insight International	Solidlite Corporation Site information service Phalanx Biotech Group Preference shares Rock Financial Risk Service Co., Ltd. Principal guaranteed notes President Securities 100% Principal Guaranteed Note Beneficiary certificates Hua Nan Phoenix Money Market Fund Beneficiary certificates Prudential Financial Money Market Fund Beneficiary certificates FSITC Taiwan Money Market Beneficiary certificates Taishin 1699 Money Market Fund	- - - - - - - - -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	789 65 216 - - 4,880 2,441 1,293 731	$ 6,810 2,879 2,039 6,371 132,313 80,135 39,029 20,002 10,001	3.60 0.54 0.33 - - - - - -	$ 6,810 2,879 2,039 - - 80,135 39,029 20,002 10,001

Note: Refer to Tables 6 and 7 for the information of investments in subsidiaries and associates.

(Concluded)

• 82 -

TABLE 4

CHINA MOTOR CORPORATION 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 YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Seller/Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total (Note 1)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note 1)
China Motor Corporation (“CMC”) Sino Diamond Motors Kian Shen	Fortune Motors Shung Ye Motor Mitsubishi Motors Corp. Kian Shen (Note 2) Uni Auto Parts Manufacture ROC-Spicer Shye Shyang Mechanical Industrial COC (Note 2) Yue Ki Industrial Uni-Calsonic Shung Ye Motor Fortune Motors Mitsubishi Motors Corp. China Motor Corporation (Note 2) Yue Ki Industrial	Investee accounted for using the equity method Investee accounted for using the equity method Director of CMC Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Director of Shye Shyang Mechanical Industrial Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Director of CMC Parent company Investee accounted for using the equity method	Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Purchase Sale Purchase	$ (18,193,402) (3,398,351) 831,380 676,103 671,633 517,583 315,838 307,855 184,603 148,123 (949,666) (645,921) 409,419 (676,103) 175,748	(66) (12) 5 4 4 3 2 2 1 1 (52) (36) 56 (53) 17	Payment collected 15-90 working days after the goods have been delivered Payment collected 15-75 working days after the goods have been delivered Payment made 7 working days after the goods are shipped Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment collected 7-45 days after goods have been delivered Payment collected 15-45 days after goods have been delivered Payment made 7 working days after the goods are shipped Payment collected within 45 days after the month of delivery Net 95 days from the end of the month of when invoice is issued	$ - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - -	$ 988,259 249,137 (79,706) (95,108) (121,057) (101,305) (56,226) (67,528) (29,395) (25,608) 15,963 3,765 (320) 95,108 (67,992)	57 14 (3) (4) (5) (4) (2) (3) (1) (1) 54 13 - 51 (26)

(Continued)

• 83 -

Seller/Buyer	Related Party	Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total (Note 1)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note 1)
COC China Engine	China Motor Corporation (Note 2) Yulon Yulon	Parent company Investee accounted for using the equity method Investee accounted for using the equity method	Sale Sale Sale	$ (307,855) (255,416) (168,429)	(26) (22) (77)	Payment collected within 45 days after the month of delivery Payment collected within 45 days after the month of delivery Payment collected within 45 days after the month of delivery	$ - - -	- - -	$ 67,528 43,989 28,125	25 16 95

Note 1: The proportion of the individual company’s total purchases (sales) or total receivables (payables).

Note 2: Eliminated during the preparation of the consolidated financial statements.

(Concluded)

• 84 -

TABLE 5

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
China Motor Corporation	Fortune Motors Shung Ye Motor	Investee accounted for using the equity method Investee accounted for using the equity method	$ 988,259 249,137	21.29 13.27	$ - -	- -	$ 988,259 249,137	$ - -

• 85 -

TABLE 6

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of December 31, 2021	As of December 31, 2021	As of December 31, 2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2021	December 31, 2020	Number of Shares	%	Carrying Amount
China Motor Corporation Kian Shen Kian Shen Investment Alliance Investment & Management Sino Diamond Motors	Yulon Kian Shen (Note 8) Fortune Motors Sino Diamond Motors (Note 8) Tokio Marine Newa Insurance (Note 1) Alliance Investment & Management (Note 8) Daimler Vans Hong Kong Ltd. ROC-Spicer CMI (Note 8) COC (Note 8) Hwa Wei (Note 8) Uni Auto Parts Manufacture Shung Ye Motor (Notes 2 and 4) China Engine (Note 8) Uni-Calsonic Yue Ki Industrial Co., Ltd. Tai-Ya Investment Hwa Chung Motors (Notes 7 and 8) Kian Shen Investment (Note 8) KSIHK (Note 8) Greentrans Investment (Note 8) Hua-Yu (Note 8) China Engine (Note 8) Brilliant Insight International (Note 8) Shung Ye Motor (Note 3) Fortune Motors Looplus Service Technology Inc.	Miaoli, Taiwan Taoyuan, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Hong Kong Taoyuan, Taiwan Samoa Taoyuan, Taiwan British Virgin Islands Miaoli, Taiwan Taipei, Taiwan Taoyuan, Taiwan Miaoli, Taiwan Hsinchu, Taiwan Hong Kong Taoyuan, Taiwan British Virgin Islands Hong Kong Samoa Samoa Taoyuan, Taiwan Taoyuan, Taiwan Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan	Manufacture and sale of vehicles The production of frame of heavy duty car and mold Sales and provision of after-sales service of vehicle Sales and provision of after-sales service of vehicle Property insurance Investment Investment Manufacture and sales of automobile parts Investment The production of mold, fixture and gauge of vehicle Overseas investment on production and service industries The production of mold, fixture and gauge of vehicle Sales and provision of after-sales service of vehicle Manufacture of automobile engine and parts Manufacture and sale of automobile parts Manufacture and sales of car components Investment Manufacture and sale of vehicles Investment Investment Investment Overseas investment on production and service industries Manufacture of automobile engine and parts Consulting and service Sales and provision of after-sales service of vehicle Sales and provision of after-sales service of vehicle Information software service industry and leasing	$ 3,835,585 344,800 2,132,826 2,192,724 955,941 1,200,030 2,011,363 683,032 1,402 412,125 1,202 109,813 391,142 625,978 105,806 109,396 81,005 328,900 328,888 US$ 25,907 thousand 344,369 1,489,334 11,000 22,000 180 24 31,984	$ 3,835,585 344,800 2,132,826 2,192,724 955,941 1,200,030 2,011,363 683,032 1,402 412,125 1,202 109,813 391,142 625,978 105,806 109,396 79,505 328,900 328,888 US$ 25,907 thousand 344,369 1,489,334 11,000 22,000 180 24 -	166,714,441 32,201,367 132,116,729 151,067,030 61,510,524 183,000,000 46,565,750 147,990 40,000 33,564,678 40,000 13,032,137 29,667,632 87,999,000 6,083,525 2,936,222 2,288,459 8,790,000 10,296,105 25,907,000 11,200,000 36,942,942 1,000 2,200,000 12,368 1,000 2,056,143	16.80 43.87 41.93 100.00 20.57 100.00 32.45 29.60 100.00 49.76 40.00 15.00 39.98 52.10 31.20 15.08 29.60 100.00 100.00 100.00 100.00 100.00 - 100.00 0.02 - 42.77	$ 8,188,389 2,191,603 4,966,806 1,430,589 2,382,144 1,284,812 3,501,433 553,292 249,510 822,785 164,977 358,482 432,326 437,354 138,153 98,632 69,103 81,616 4,266,538 RMB 952,886 thousand 211,089 867,762 5 22,680 235 22 31,180	$ 4,715,516 306,767 1,302,632 92,079 1,237,752 11,102 3,799,262 167,283 (240,624) 118,592 (400,999) 10,482 82,805 (25,601) 52,860 (21,574) 233 2,921 367,248 RMB 77,138 thousand (5,091) 56,473 (25,601) (3,365) 82,805 1,302,632 (8,009)	$ 750,473 134,484 546,165 90,702 254,612 11,102 1,232,861 49,947 (240,624) 58,892 (160,400) 1,561 33,105 (12,403) 16,471 (3,262) 59 2,921 - - - - - - - - -	Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method

(Continued)

• 86 -

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of December 31, 2021	As of December 31, 2021	As of December 31, 2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2021	December 31, 2020	Number of Shares	%	Carrying Amount
Sino Diamond Motors Hua-Yu China Engine Brilliant Insight International CMI Hwa Chung Motors COC	Ling Wei (Notes 6 and 8) Greentrans (Notes 6 and 8) Hwa-Lin (Note 8) Advance Power Investment (Notes 5 and 8) Looplus Service Technology Inc. Hwa Wei (Note 8) Ling Wei (Notes 6 and 8) Greentrans (Notes 6 and 8) Y. M. Hi-Tech (Note 8)	Taipei, Taiwan Taipei, Taiwan British Virgin Islands Mauritius Hsinchu, Taiwan British Virgin Island Taipei, Taiwan Taipei, Taiwan Taoyuan, Taiwan	Sales of second-hand vehicle Sales of motorcycle and parts Overseas investment on production and service industries Reinvestment and sales Information software service industry and leasing Overseas investment on production and service industries Sales of second-hand vehicle Sales of motorcycle and parts Steel cutting	$ 68,780 8,561 US$ 37,229 thousand - 16 1,428,503 - - 46,250	$ - - US$ 37,229 thousand 59,456 - 1,428,503 31,000 10,000 46,250	6,308,397 1,000,000 33,392,942 - 1,000 60,000 - - 4,250,000	100.00 100.00 100.00 - 0.02 60.00 - - 85.00	$ 66,883 10,460 781,115 - 14 247,465 - - 78,057	$ 2,935 43 58,251 - (8,009) (400,999) 2,935 43 14,323	$ - - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Subsidiary

• Note 1: During preparation of the consolidated financial statements, price making of $75,455 thousand from intra-group transaction had been eliminated.

• Note 2: During preparation of the consolidated financial statements, loss on disposal of $22,538 thousand from intra-group transaction had been eliminated.

• Note 3: During preparation of the consolidated financial statements, gain on disposal of $31 thousand from intra-group transaction had been eliminated.

• Note 4: During preparation of the consolidated financial statements, sidestream transaction of $1,210 thousand had been eliminated.

• Note 5: The Group’s board of directors resolved to dissolve Advance Power Investment on December 10, 2020 and the annulment was completed in December 2021.

• Note 6: In November 2021, Hwa Chung Motors fully disposed of its interest held in its subsidiaries, Greentrans and Ling Wei, to Sino Diamond Motors, and the shareholding ratio of Sino Diamond Motors’ in the aforementioned companies was changed due to the reorganization of entities under common control.

• Note 7: Hwa Chung Motors had been resolved to dissolve in December 2021. As of December 31, 2021, the liquidation had not been completed.

• Note 8: Eliminated during the preparation of the consolidated financial statements.

(Concluded)

• 87 -

TABLE 7

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Paid-in Capital (Note 1)	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2021(Note 1)	Net Income (Loss) of the Investee (Notes 2 and 3)	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Notes 2 and 3)	Carrying Amount as of December 31, 2021 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2021 (Note 1)
					Outward	Inward
South East (Fujian) Motor (Note 4) China Engine (Fujian) Fujian Benz Automotive Guangzhou NTN-YULON Drivetrain Fuzhou Fushiang Motor Industrial Xiangyang NTN-YULON Drivetrain Xiamen King-Long Kian-Shen Frame Beijing NTN-SEOHAN Driveshaft (Note 5) Jiangsu Greentrans Automotive Parts (Note 8) Fujian Spicer	Manufacture and sales of industrial automation products Manufacture and sales of engines and engine parts Sales of industrial automation products Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components The assembling and extra work of transmission shafts and other parts Manufacture and sales of parts of electronic motorcycles Manufacture of vehicles’ key components, drive axle assembly and engine parts series products	$ 8,163,840 (US$ 138,000 thousand) and (RMB 1,000,000 thousand) 415,200 (US$ 15,000 thousand) 8,988,840 (EUR 287,000 thousand) 346,000 (US$ 12,500 thousand) 492,150 (US$ 17,780 thousand) 941,120 (US$ 34,000 thousand) 417,024 (RMB 96,000 thousand) 166,080 (US$ 6,000 thousand) 310,016 (US$ 11,200 thousand) 889,677 (RMB 204,806 thousand)	Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Direct investment in mainland China	$ 954,960 (US$ 34,500 thousand) 207,600 (US$ 7,500 thousand) 1,458,447 (EUR 46,566 thousand) 138,400 (US$ 5,000 thousand) 78,473 (US$ 2,835 thousand) - 42,267 (US$ 1,527 thousand) 14,947 (US$ 540 thousand) 310,016 (US$ 11,200 thousand) 299,082 (US$ 10,805 thousand)	$ - - - - - - - - - -	$ - - - - - - - - - -	$ 954,960 (US$ 34,500 thousand) 207,600 (US$ 7,500 thousand) 1,458,447 (EUR 46,566 thousand) 138,400 (US$ 5,000 thousand) 78,473 (US$ 2,835 thousand) - 42,267 (US$ 1,527 thousand) 14,947 (US$ 540 thousand) 310,016 (US$ 11,200 thousand) 299,082 (US$ 10,805 thousand)	$ (1,787,424) (1,630) 7,557,562 (EUR 227,912 thousand) 595,170 (RMB 137,104 thousand) 25,540 (RMB 5,883 thousand) 325,764 (RMB 75,044 thousand) (31,409) (RMB -7,235 thousand) - (5,090) 404,665	5.525 38.03 16.23 17.55 15.35 17.55 21.94 - 100.00 29.00	$ (337,452) (815) 1,226,224 (EUR 36,979 thousand) 238,068 (RMB 54,842 thousand) 8,939 (RMB 2,059 thousand) 130,306 (RMB 30,017 thousand) (15,705) (RMB -3,618 thousand) - (5,090) 117,353	$ 272,661 166,584 3,500,073 (EUR 111,752 thousand) 1,803,040 (RMB 415,064 thousand) 481,849 (RMB 110,922 thousand) 1,001,858 (RMB 230,630 thousand) 192,336 (RMB 44,276 thousand) - 211,076 381,341	$ 720,317 (US$ 26,023 thousand) - 1,739,889 (EUR 55,552 thousand) 909,112 (RMB 209,280 thousand) 215,263 (RMB 49,554 thousand) 37,358 (RMB 8,600 thousand) - - - 196,683 (RMB 45,277 thousand)

(Continued)

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Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital (Note 1)	Method of Investment	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2021 (Note 1)	Net Income (Loss) of the Investee (Notes 2 and 3)	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Notes 2 and 3)	Carrying Amount as of December 31, 2021 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2021 (Note 1)
							Outward	Inward
Shenyang Spicer Fujian Rui Hua (Note 8) Tianjin Hwarui (Notes 7 and 8) Dongguan Huayi (Notes 6 and 8) Dongguan Huashun (Notes 6 and 8) Tianjin Hwahong (Notes 7 and 8)	Manufacture and sale of automobile transmission, mechanical transmission, shafts and components Consultation and services Sales and maintenance of vehicle and parts Sales and maintenance of vehicle and parts Sales of vehicle and parts Sales of vehicle and parts		$ 373,267 (RMB 85,927 thousand) 94,112 (US$ 3,400 thousand) 221,994 (US$ 8,020 thousand) 123,176 (US$ 4,450 thousand) 108,600 (RMB 25,000 thousand) -	Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region		$ 72,245 (US$ 2,610 thousand) 94,112 (US$ 3,400 thousand) 214,824 (US$ 7,761 thousand) 116,727 (US$ 4,217 thousand) - -	$ 1,495 (US$ 54 thousand) - - - - -	$ - - - - - -	$ 73,740 (US$ 2,664 thousand) 94,112 (US$ 3,400 thousand) 214,824 (US$ 7,761 thousand) 116,727 (US$ 4,217 thousand) - -	$ 2,354 (US$ 84 thousand) (1,777) (25,409) 27,771 27,778 (RMB 6,399 thousand) (1,150) (RMB -265 thousand)	20.67 100.00 100.00 100.00 100.00 100.00	$ 487 (US$ 17 thousand) (1,777) (25,409) 27,771 27,778 (RMB 6,399 thousand) (1,150) (RMB -265 thousand)	$ 70,871 (US$ 2,560 thousand) 86,610 171,727 42,028 40,986 (RMB 9,435 thousand) -	$ - - - - - -
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2021 (Note 1)		Investment Amount Authorized by Investment Commission, MOEA (Note 1)			Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$4,851,904 (US$122,596 thousand and EUR46,566 thousand)		$5,775,348 (US$193,409 thousand and EUR13,467 thousand)			$25,603,278

Note 1: Converted at the exchange rates on December 31, 2021: US$1=NT$27.68, RMB1=NT$4.344, EUR1=NT$31.32.

• Note 2: Converted at the average exchange rates of the year ended December 31, 2021: US$1=NT$28.009, RMB1=NT$4.341, EUR1=NT$33.16.

• Note 3: The carrying amount and related investment income of the equity investment were calculated based on the audited financial statements of the corresponding year.

• Note 4: During preparation of the consolidated financial statements, the unrealized profit of $12,283 thousand had been eliminated.

Note 5: Beijing NTN-SEOHAN Driveshaft was disposed of in February 2021. The Group had applied to the Investment Commission, MOEA for a decrease in the amount of investments in mainland China on March 30, 2021 and received authorization letter of MOEAIC-Second No. 11000085360 on April 15, 2021.

• Note 6:

In December 2020, Dongguan Huayi and Dongguan Huashun resolved to dissolve their respective companies. The liquidation of Dongguan Huashun had been completed in February 2022. As of December 31, 2021, the liquidation of Dongguan Huayi had not been completed.

• Note 7: In July 2021, Tianjin Hwarui and Tianjin Hwahoug resolved to dissolve their respective companies. The liquidation of Tianjin Hwahoug had been completed in December 2021. As of December 31, 2021, the liquidation of Tianjin Hwarui had not been completed.

• Note 8: Eliminated during the preparation of the consolidated financial statements.

(Concluded)

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TABLE 8

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Relationship			Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Total Sales or Assets
0	China Motor Corporation	Sino Diamond Motors Kian Shen COC	Subsidiary Subsidiary Subsidiary	Other receivables Other operating revenue Cost of goods sold Cost of goods sold	$ 600,000 174,038 676,103 307,855	The prices and payment terms were based on agreements. Transaction price was determined based on the market price, and the transaction terms are similar to that for transactions with non-related parties Transaction price was determined based on the market price, and the transaction terms are similar to that for transactions with non-related parties Transaction price was determined based on the market price, and the transaction terms are similar to that for transactions with non-related parties	1.10 0.56 2.17 0.99

Note 1: This table includes transactions for amounts over one hundred million.

Note 2: Eliminated during the preparation of the consolidated financial statements.

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TABLE 9

CHINA MOTOR CORPORATION

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Ownership Percentage (%)
Tai Yuen Textile., Ltd. Mitsubishi Motors Corp. Yulon Motor Co., Ltd. Diamond Hosiery & Thread Co., Ltd.	139,435,815 77,507,309 44,592,177 37,438,652	25.19 14.00 8.05 6.76

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preference shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current year. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

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TABLE 10

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FRAMEWORK OF INTERCOMPANY INVESTMENT RELATIONSHIPS AND PERCENTAGE OF SHARES HELD DECEMBER 31, 2021

==> picture [996 x 504] intentionally omitted <==

----- Start of picture text -----

Parent Corporation
43.87% 52.10% 100.00% 100.00% 100.00% 100.00% 49.76%
Kian Shen China Engine Sino Diamond Alliance CMI Hwa Chung COC
Motors Investment & (Samoa) Motors
Management
(Note)
100.00% 40.00% 60.00%
85.00%
100.00%
100.00% 100.00% 100.00% 100.00%
Hua-Yu Brilliant Insight
Greentrans Ling Wei Greentrans Hwa Wei Holdings
Kian Shen (Samoa) International Y.M. Hi-Tech
Investment (British Virgin
Investment
(Samoa) Islands)
(British Virgin
100.00% 100.00%
100.00% 100.00%
Fujian Rui Hwa-Lin
KSIHK
Hua (British Virgin
(Hong Kong) Jiangsu
Islands) Greentrans
100.00% 100.00%
Dongguan Huayi Tianjin Hwarui
100.00%
Dongguan
Huashun
----- End of picture text -----

Note: Since Sino Diamond Motors only holds 1 thousand shares of China Engine, the percentage of ownership is not disclosed.

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