CMC — Annual Report 2021

Dec 29, 2021

China Motor Corporation

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

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders China Motor Corporation

Opinion

We have audited the accompanying financial statements of China Motor Corporation (the “Corporation”), which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, based on our audits and the reports of other auditors (refer to the Other Matter section), the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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 Financial Statements section of our report. We are independent of the Corporation 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 financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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

Revenue Recognition of Domestic Sales of Four-wheeled Vehicles

The revenue of the Company from domestic sales of four-wheeled vehicles are material to its 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.

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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 Corporation’s investments accounted for using the equity method, namely Daimler Vans Hong Kong Ltd., Shung Ye Motors Corporation, and Uni Auto Parts Manufacture 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 Corporation’s accompanying financial statements, is based solely on the reports of the other auditors. The aforementioned investments accounted for using the equity method constituted NT$4,292,241 thousand, representing 8.8%, and NT$3,782,477 thousand, representing 7.8%, of the Corporation’s total assets as of December 31, 2021 and 2020, respectively. The Corporation’s share of comprehensive income of the aforementioned investments accounted for using the equity method amounted to NT1,287,532 thousand and NT$802,862 thousand for the years ended December 31, 2021 and 2020, respectively, which accounted for 29.4% and 23.7% of the Corporation’s total comprehensive income, respectively.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Corporation’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 Corporation 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 Corporation’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 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 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 Corporation’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 Corporation’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 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 Corporation to cease to continue as a going concern.

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

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the 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.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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 financial statements are intended only to present the 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 financial statements are those generally applied in the Republic of China.

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

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CHINA MOTOR CORPORATION

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) Current financial assets at amortized cost (Notes 4, 9, 10 and 28) Financial assets for hedging (Notes 4 and 11) Notes and accounts receivable, net (Notes 4, 12 and 21) Trade receivables from related parties (Notes 4, 21 and 27) Other receivables (Notes 4 and 27) Inventories (Notes 4 and 13) Prepayments (Note 27) Other current assets (Notes 4 and 23) 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 14) Property, plant and equipment (Notes 4, 15, 22 and 27) Investment properties (Notes 4 and 17) Intangible assets under development (Notes 4 and 22) Deferred tax assets (Notes 4 and 23) Other non-current assets (Notes 4, 16 and 27) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable Trade payables to related parties (Note 27) Other payables (Note 18) Current tax liabilities (Notes 4 and 23) Other current liabilities (Notes 4, 7, 11, 16 and 27) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 23) Net defined benefit liabilities (Notes 4 and 19) Other non-current liabilities (Notes 4, 16 and 27) Total non-current liabilities Total liabilities EQUITY (Notes 4, 11 and 20) 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 Total other equity Total equity TOTAL		2021 Amount % $ 7,269,006 15 81,072 - 206,635 1 59,612 - 378,396 1 1,365,379 3 635,583 1 3,076,385 6 632,872 1 236,824 1 13,941,764 29 605,042 1 29,024 - 540,096 1 27,733,347 57 3,958,483 8 876,068 2 438,039 1 301,983 1 109,724 - 34,591,806 71 $ 48,533,570 100 $ 1,561,629 3 719,177 2 2,073,337 4 358,283 1 169,756 - 4,882,182 10 339,509 1 601,319 1 38,430 - 979,258 2 5,861,440 12 5,536,203 12 6,421,515 13 9,581,001 20 1,028,359 2 20,582,748 42 31,192,108 64 (826,741) (2) 377,436 1 (28,391) - (477,696) (1) 42,672,130 88 $ 48,533,570 100		2020
				Amount % $ 6,706,144 14 1,026,314 2 147,159 - 118,796 - 456,134 1 1,140,590 3 717,256 2 3,010,241 6 1,619,763 3 376,064 1 15,318,461 32 603,040 1 43,540 - 534,771 1 26,211,018 54 4,206,695 9 886,585 2 373,697 1 271,592 - 63,712 - 33,194,650 68 $ 48,513,111 100 $ 2,093,990 4 919,112 2 2,030,739 4 238,526 - 251,223 1 5,533,590 11 262,011 1 553,119 1 41,001 - 856,131 2 6,389,721 13 5,536,203 11 6,411,778 13 9,257,157 19 1,028,359 2 20,544,970 43 30,830,486 64 (926,661) (2) 264,666 1 6,918 - (655,077) (1) 42,123,390 87 $ 48,513,111 100

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

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

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CHINA MOTOR CORPORATION

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, 21 and 27) Net sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 13, 22 and 27) 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 22 and 27) 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 subsidiaries, associates and joint ventures (Notes 4 and 14) Interest income (Notes 4 and 27) Other income (Notes 4 and 27) Net foreign exchange gain Gain (loss) on financial instruments at fair value through profit or loss (Note 4) Expected credit gain (loss) (Notes 4 and 10) Other expense (Notes 4 and 27) Loss on disposal of investments (Notes 4 and 14) Impairment loss (Notes 4, 15 and 22) Total non-operating income and expenses		2021 Amount % $ 27,196,522 99 408,679 1 27,605,201 100 23,094,901 84 174,959 - 23,269,860 84 4,335,341 16 (640) - 4,334,701 16 365,701 1 704,172 3 1,390,782 5 2,460,655 9 1,874,046 7 2,884,019 10 53,272 - 75,167 - 18,787 - (4,750) - (188) - (4,395) - - - (147,123) - 2,874,789 10		2020
				Amount % $ 26,525,771 98 436,277 2 26,962,048 100 22,739,321 84 134,356 1 22,873,677 85 4,088,371 15 376 - 4,088,747 15 311,961 1 603,402 2 1,551,518 6 2,466,881 9 1,621,866 6 1,693,020 6 51,608 - 48,943 - 33,389 - 3,189 - 32,518 - (4,387) - (1,393) - (100,433) - 1,756,454 6 (Continued)

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CHINA MOTOR CORPORATION

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

PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (Note 4) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 19) Unrealized gain on investments in equity instruments at fair value through other comprehensive income (Note 20) Gain (loss) on the hedging instruments (Notes 11 and 20) Share of other comprehensive income of subsidiaries and associates (Notes 14 and 20) Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 23) Items that may be reclassified subsequently to profit or loss: Share of the other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method (Notes 14 and 20) Other comprehensive income for the year (net of income tax) TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 24) Basic Diluted		2021 Amount % $ 4,748,835 17 567,000 2 4,181,835 15 (51,163) - 3,852 - (29,000) - 161,883 1 16,033 - 99,920 - 201,525 1 $ 4,383,360 16 $ 7.67 $ 7.66		2020
				Amount % $ 3,378,320 12 101,000 - 3,277,320 12 (22,010) - 872 - 9,919 - 42,482 - 2,418 - 71,530 1 105,211 1 $ 3,382,531 13 $ 6.01 $ 6.00

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

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

(Concluded)

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CHINA MOTOR CORPORATION

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 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 as at fair value through other comprehensive income by associates Basic adjustment for 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 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 for the year ended December 31, 2021 Disposal of the investments in equity instruments as at fair value through other comprehensive income by associates Disposal of the investments in equity instruments as at fair value through other comprehensive income Basic adjustment for gain on hedging instruments BALANCE AT DECEMBER 31, 2021		ShareCapitalOrdinary Shares 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 - - 37,315 - - 36,212 - - - $ 9,581,001 $ 1,028,359 $ 20,582,748	Other Equity Exchange Differences on Translating the Unrealized Gain on Financial Assets at Fair Value Through Financial Statements of Foreign Operations Other Comprehensive Income Gain (Loss) on the Hedging Instruments $ (998,191 ) $ 216,562 $ (19,968 ) - - - - - - - - - 71,530 42,686 18,216 71,530 42,686 18,216 - 5,418 - - - 8,670 (926,661 ) 264,666 6,918 - - - - - - - - - - - - 99,920 186,297 (56,190) 99,920 186,297 (56,190) - (37,315 ) - - (36,212 ) - - - 20,881 $ (826,741) $ 377,436 $ (28,391)	Total Equity $ 38,742,061 - (9,872 ) 3,277,320 105,211 3,382,531 - 8,670 42,123,390 - (3,875,342 ) 19,841 4,181,835 201,525 4,383,360 - - 20,881 $ 42,672,130
		Shares (In Thousands) 553,620 - - - - - - - 553,620 - - - - - - - - - 553,620

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

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

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CHINA MOTOR CORPORATION

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 reversed 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 subsidiaries, associates and joint ventures Net loss on disposal of property, plant and equipment Loss on disposal of investments Impairment loss of non-financial assets Unrealized (realized) gain on the transactions with associates Unrealized gain on foreign currency exchange 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 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 Acquisition of financial assets at amortized cost Proceeds from repayment of principal of financial assets at amortized cost Acquisition of investments accounted for using the equity method Disposal of financial assets at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment	2021 $ 4,748,835 641,287 79,717 (1,811) 4,750 146 (53,272) (36,482) (2,884,019) 2,100 - 219,289 640 (17,791) 65,302 1,045,516 79,857 (224,824) 469 (118,356) 986,891 146,746 (531,560) (198,473) 68,654 (151,521) (2,963) 3,869,127 (395,600) 3,473,527 (1,246,778) 1,172,399 (1,500) 18,368 (585,004) 32,203	2020 $ 3,378,320 684,760 106,641 (35,180) (3,189) 110 (51,608) (9,653) (1,693,020) 1,741 1,393 137,832 (376) (45,917) - (796,416) 266,191 127,302 258 663,052 (332,086) (25,685) (119,025) 30,332 67,988 115,836 (95,559) 2,374,042 (119,417) 2,254,625 (1,414,652) 1,685,827 (7,136) - (751,525) 17,752 (Continued)

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CHINA MOTOR CORPORATION

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

Acquisition of investment properties Acquisition of intangible assets Increase in other non-current assets Interest received Dividends received Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of the principal portion of lease liabilities Increase (decrease) in other non-current liabilities Cash dividends paid Interest paid Net cash (used in) generated from financing activities 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 $ (724) (109,106) (76,689) 55,456 1,658,567 917,192 (3,667) (5,464) (3,875,342) (146) (3,884,619) 506,100 6,821,985 $ 7,328,085	2020 $ - (58,887) (37,485) 51,551 1,292,337 777,782 (2,100) 31,410 - (110) 29,200 3,061,607 3,760,378 $ 6,821,985

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

Cash and cash equivalents in the balance sheets Cash and cash equivalents included in financial assets for hedging Cash and cash equivalents in the statements of cash flows		December 31	December 31
		2021 $ 7,269,006 59,079 $ 7,328,085	2020 $ 6,706,144 115,841 $ 6,821,985

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

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

(Concluded)

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

CHINA MOTOR CORPORATION

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 accompanying financial statements 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 Corporation’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 financial statements were authorized for issue, the Corporation assessed that the application of the aforementioned standards and interpretations will not have a material impact on the Corporation’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 financial statements were authorized for issue, the Corporation is continuously assessing the possible impact of the application of the aforementioned standards and interpretations on the Corporation’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

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”).

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• b. Basis of preparation

The 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.

When preparing these parent company only financial statements, the Corporation used the equity method to account for its investment in subsidiaries, associates and joint ventures. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same as the amounts attributable to the owners of the Corporation in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries, associates and joint ventures, the share of other comprehensive income of subsidiaries, associates and joint ventures and the related equity items, as appropriate, in these parent company only financial statements.

• 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 Corporation 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. Foreign currencies

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

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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 financial statements, the financial statements of the Corporation’s foreign operations 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

On the disposal of a foreign operation (i.e., a disposal of the Corporation’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 are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Corporation losing control over the subsidiary, the proportionate share of accumulated exchange differences is included in the calculation of the equity transaction but 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.

e. Inventories

Inventories consist of 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 the weighted-average cost on the balance sheet date.

• f. Investments accounted for using the equity method

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

1) Investment in subsidiaries

A subsidiary is an entity that is controlled by the Corporation.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the subsidiary. The Corporation also recognizes the changes in the Corporation’s share of equity of subsidiaries attributable to the Corporation.

• 14 -

Changes in the Corporation’s ownership interest in a subsidiary that do not result in the Corporation losing control of the subsidiary are equity transactions. The Corporation recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Corporation’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary, the Corporation continues recognizing its share of further losses, if any.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business 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 Corporation’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business over the cost of acquisition is recognized immediately in profit or loss.

The Corporation assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Corporation recognizes reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Corporation loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Corporation accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Corporation directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company only financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company only financial statements and only to the extent of interests in the subsidiaries that are not related to the Corporation.

• 2) Investment in associates and joint ventures

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

The Corporation 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 Corporation’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Corporation also recognizes the changes in the Corporation’s share of the equity of associates and joint venture attributable to the Corporation. The Corporation’s equity in the investees’ net income or net loss is calculated using the treasury share method when investees also have investments in the Corporation (reciprocal holding).

• 15 -

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of an associate or 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.

When the Corporation 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 Corporation’s proportionate interest in the associate and joint venture. The Corporation records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the capital surplus from investments in associates and joint ventures accounted for using the equity method. If the Corporation’s ownership interest is reduced due to its additional subscription of the new shares of 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.

When the Corporation’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture, the Corporation discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Corporation 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 Corporation 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 the joint venture. The Corporation accounts for all amounts previously recognized in other comprehensive income in relation to that associate and the 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 Corporation continues to apply the equity method and does not remeasure the retained interest.

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

• g. Property, plant and equipment

Property, plant and equipment are initially measured at cost 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.

• 16 -

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.

• h. Investment properties

Investment properties are properties held to earn rentals 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.

• i. 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.

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

At the end of each reporting period, the Corporation 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 Corporation 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.

• k. Financial instruments

Financial assets and financial liabilities are recognized when the Corporation 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 or investments in equity instruments at FVTOCI.

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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 26.

• 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 and accounts receivable (including related parties), other receivables 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

• 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 Corporation 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.

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Dividends on these investments in equity instruments are recognized in profit or loss when the Corporation’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 Corporation recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Corporation always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Corporation 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 Corporation 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 Corporation determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Corporation):

• 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 Corporation has reasonable and corroborative information to support a more lagged default criterion.

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

• c) Derecognition of financial assets

The Corporation 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 a debt 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 the financial liabilities at FVTPL, all financial liabilities are measured at amortized cost using the effective interest method.

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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 26.

• b) Derecognition of 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 Corporation 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.

l. Hedge accounting

The Corporation 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 Corporation 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 in which 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.

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m. 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 Corporation’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 Corporation of the expenditures required to settle the Corporation’s obligations.

n. Revenue recognition

The Corporation 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 Corporation 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 Corporation 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.

2) Revenue from rendering of services

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

• o. Leases

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

• 1) The Corporation 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.

• 22 -

When a lease includes both land and building elements, the Corporation 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 lessee. 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 Corporation as lessee

The Corporation 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 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 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 Corporation uses the lessee’s incremental borrowing rate.

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 Corporation 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.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

p. Government grants

Government grants are not recognized until there is reasonable assurance that the Corporation 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.

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q. 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 Corporation’s defined benefit plans.

r. Taxation

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

1) Current tax

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 or 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 Corporation 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.

• 24 -

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 profit 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 Corporation 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 for the year

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.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Corporation’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 Corporation 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 $ 650 1,828,456 1,829,106 4,739,900 700,000 5,439,900 $ 7,269,006	2020 $ 650 2,177,762 2,178,412 4,527,732 - 4,527,732 $ 6,706,144

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.

• 25 -

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% 0.26%-0.82% 0.70%-1.065% 0.35% -

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 $ 80,459 613 $ 81,072 $ 605,042 $ 976	2020 $ 1,023,173 3,141 $ 1,026,314 $ 603,040 $ -

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

December 31, 2021

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

• 26 -

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments at FVTOCI Domestic listed shares Domestic unlisted shares		**December **	**31 **
		2021 $ 15,798 13,226 $ 29,024	2020 $ 30,370 13,170 $ 43,540

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 Corporation’s strategy of holding these investments for long-term purposes.

Dividends of $446 thousand and $644 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 28) Principal guaranteed notes Less: Allowance for impairment loss Non-current Segregated foreign exchange deposit account for offshore funds Bonds Less: Allowance for impairment loss		December 31	December 31
		2021 $ 163,321 43,440 206,761 (126) $ 206,635 $ 340,390 200,026 540,416 (320) $ 540,096	2020 $ 103,577 43,770 147,347 (188) $ 147,159 $ 434,841 100,000 534,841 (70) $ 534,771

• a. The rates of pledged deposits ranged from 0.78%-0.815% per annum as of December 31, 2021 and 2020.

• b. The coupon rates of principal guaranteed notes ranged from 2.50%-2.60% and 2.00% per annum as of December 31, 2021 and 2020, respectively.

• 27 -

• 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 June 2020. The funds after tax were deposited into the segregated foreign exchange deposit account (including demand deposits and time 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. Refer to Note 10 for information relating to the 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 $ 747,177 (446) $ 746,731	2020 $ 682,188 (258) $ 681,930

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

The Corporation 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 Corporation’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 bonds do not have credit rating	Basis for Recognizing Expected Credit Losses (ECLs)
		12-month ECLs Lifetime ECLs - not credit-impaired

• 28 -

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% December 31, 2020 Credit Rating Expected Credit Loss Rate Performing 0.00%-0.43%	Gross Carrying Amount
	At Amortized Cost $ 747,177 Gross Carrying Amount
	At Amortized Cost $ 682,188

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) $ 258 $ - 865 - (697) - 20 - $ 446 $ - $ 1,864 $ 30,912 3,768 - (5,404) (30,912) 30 - $ 258 $ -

a. The new investment in principal guaranteed notes of $219,065 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 $865 thousand; the new investment in principal guaranteed notes of $876,324 thousand during the year ended December 31, 2020, and correspondingly increased the loss allowance for investments rated as performing of $3,768 thousand.

• 29 -

• b. The investments in principal guaranteed notes of $219,180 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 $697 thousand; the investments in principal guaranteed notes of $832,464 thousand, and bonds of $750,224 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 $5,404 thousand and lifetime ECLs of $30,912 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 $ 59,079 533 $ 59,612 $ 2,532	2020 $ 115,841 2,955 $ 118,796 $ -

The Corporation’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 Corporation 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 Corporation’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 20(e).

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

December 31, 2021

Notional Amount Forward Rate Hedging Instrument Currency (In Thousands) Maturity (Note) Line Item Cash flow hedges Forecast purchases - spot rate JPY/NTD JPY245,651/NTD61,310 2022.02.17-2022.03.16 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 JPY610,000/NTD149,104 2022.01.14-2022.03.16 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 forward contracts RMB/USD RMB28,764/USD4,500 2022.02.14 6.3919 (USD1:RMB) Other current liabilities

Carrying Amount Change in Value Used for Calculating Hedge Assets Liabilities Ineffectiveness $ 59,079 $ - $ (1,785 ) 410 - 328 123 - 98 - (2,348 ) (1,878 ) - (164 ) (131 ) - (20) (16) $ 59,612 $ (2,532) $ (3,384)

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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	$ 3,384	$ (3,384)

December 31, 2020

Notional Amount Forward Rate Line Item in Hedging Instruments Currency (In Thousands) Maturity (Note) Balance Sheet Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY419,258/ NTD113,979 2021.02.15- 2021.03.14 0.27-0.2794 Financial assets for hedging Forecast purchases - foreign exchange forward contracts JPY/NTD JPY1,000,000/ NTD267,890 2021.01.15- 2021.03.15 0.2665-0.2692 Financial assets for hedging		Carrying Amount Change in Value Used for Calculating Hedge Asset Ineffectiveness $ 115,841 $ 1,489 2,955 2,364 $ 118,796 $ 3,853

Note: JPY1:NTD, unless stated otherwise.

Hedged Item Cash flow hedges Forecast purchases Comprehensive Income Impact Cash flow hedges Forecast purchases	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (3,853) $ 3,853 Hedging Gains (Losses) **Recognized inOCI **	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (3,853) $ 3,853 Hedging Gains (Losses) **Recognized inOCI **	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (3,853) $ 3,853 Hedging Gains (Losses) **Recognized inOCI **
	For the Year Ended December 31
		2021 $ (29,000)	2020 $ 9,919

The Corporation 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.

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12. NOTES AND ACCOUNTS RECEIVABLE, NET

At amortized cost Notes and accounts receivable Less: Allowance for impairment loss		December 31	December 31
		2021 $ 382,220 (3,824) $ 378,396	2020 $ 461,957 (5,823) $ 456,134

The Corporation 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 Corporation’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 Corporation’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 $ 380,377 1,843 - - 382,220 (3,824) $ 378,396	2020 $ 460,364 692 - 901 461,957 (5,823) $ 456,134

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

Balance at January 1 Less: Net reversal of loss allowance Balance at December 31	2021 $ 5,823 (1,999) $ 3,824	2020 $ 8,485 (2,662) $ 5,823

13. INVENTORIES

Finished goods Work in progress Raw materials Materials in transit		December 31	December 31
		2021 $ 1,088,770 9,197 1,914,092 64,326 $ 3,076,385	2020 $ 1,094,791 35,802 1,799,908 79,740 $ 3,010,241

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The costs of inventories recognized as cost of goods sold for the years ended December 31, 2021 and 2020 were $23,094,901 thousand and $22,739,321 thousand, respectively. The cost of goods sold for the years ended December 31, 2021 and 2020 included inventory write-downs of $72,166 thousand and $37,399 thousand, respectively.

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates Investments in joint ventures		**December 31 **	**December 31 **
		2021 $ 6,663,246 17,568,668 3,501,433 $ 27,733,347	2020 $ 6,794,586 16,388,690 3,027,742 $ 26,211,018

a. Investments in subsidiaries

Name of Subsidiaries Listed companies Kian Shen Unlisted companies Sino Diamond Motors Alliance Investment & Management COC Tooling & Stamping China Engine China Motor Investment Hwa Wei Holdings Hwa Chung Motors Name of Subsidiaries Listed company Kian Shen Unlisted companies Sino Diamond Motors Alliance Investment & Management COC Tooling & Stamping China Engine China Motor Investment Hwa Wei Holdings Hwa Chung Motors		December 31
		2021 2020 $ 2,191,603 $ 2,141,274 1,430,589 1,341,218 1,284,812 1,288,292 822,785 808,797 437,354 447,373 249,510 414,190 164,977 274,747 81,616 78,695 4,471,643 4,653,312 $ 6,663,246 $ 6,794,586 Proportion of Ownership and Voting Rights
		December 31
		2021 2020 43.87% 43.87% 100.00% 100.00% 100.00% 100.00% 49.76% 49.76% 52.10% 52.10% 100.00% 100.00% 40.00% 40.00% 100.00% 100.00%

Although the Corporation’s equity interests in Kian Shen and COC Tooling & Stamping each did not exceed 50%, the Corporation still retained control over these investees. Thus, Kian Shen and COC Tooling & Stamping were included in the Corporation’s consolidated financial statements.

• 33 -

Although the Corporation’s proportion of ownership of investments accounted for using the equity method in Hwa Wei Holdings was less than 50%, it was still considered a subsidiary of the Corporation since the combined shareholding proportion of the Corporation and its subsidiaries in Hwa Wei Holdings exceeded 50% of its outstanding ordinary shares.

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

b. Investments in associates

Associates Material associates Yulon Associates that are not individually material		**December 31 **	**December 31 **
		2021 $ 8,188,389 9,380,279 $ 17,568,668	2020 $ 7,561,633 8,827,057 $ 16,388,690

1) Material associates

Refer to Table 7 for the nature of activities, principal place of business and country of incorporation of the associates.

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

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

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

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

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

The above associate is accounted for using the equity method.

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

Yulon and Yulon’s subsidiaries

Current assets Non-current assets Current liabilities Non-current liabilities Equity Non-controlling interests Proportion of the Corporation’s ownership Equity attributable to the Corporation 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 $ 234,854,492 $ 215,186,668 89,008,287 86,136,078 (226,995,138) (201,009,483) (26,168,118) (35,437,943) 70,699,523 64,875,320 (18,047,660) (16,136,852) $ 52,651,863 $ 48,738,468 16.80% 16.80% $ 8,845,513 $ 8,188,063 (657,124) (626,430) $ 8,188,389 $ 7,561,633 **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 Corporation’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 $ 1,016,011 124,690 $ 1,140,701	2020 $ 818,075 25,674 $ 843,749

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 Corporation holds less than 20% interest since the Corporation exercises significant influence on their major transactions or has representations on their board of directors.

• 35 -

The Corporation is the single largest shareholder of several associates. The Corporation’s holding is less than 50% of the voting rights in the investees but the Corporation 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 Corporation considered the Corporation 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.

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 Corporation did not subscribe for additional new shares at the percentage of its existing ownership, which resulted in the Corporation’s 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 $1,393 thousand.

c. Investments in joint ventures

Joint ventures that are not individually material		**December 31 **	**December 31 **
		2021 $ 3,501,433	2020 $ 3,027,742

Aggregate information of joint ventures that are not individually material:

The Corporation’s share of: Net profit for 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 $ 1,232,861 18,598 $ 1,251,459	2020 $ 838,297 (19,474) $ 818,823

All 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 audit for the same years.

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

• 36 -

15. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2021 Additions Disposals Reclassifications Balance at December 31, 2021 Accumulated depreciation and impairment Balance at January 1, 2021 Disposals Impairment losses Depreciation expense Reclassifications Balance at December 31, 2021 Carrying amounts at December 31, 2021 Cost Balance at January 1, 2020 Additions Disposals Reclassifications Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Impairment losses Depreciation expense Reclassifications Balance at December 31, 2020 Carrying amounts at December 31, 2020	Land $ 665,075 - - - $ 665,075 $ 665,075 $ 665,075 - - - $ 665,075 $ 665,075	Land Improvements $ 97,351 - - 612 $ 97,963 $ 87,302 - - 1,803 - $ 89,105 $ 8,858 $ 96,431 - - 920 $ 97,351 $ 85,421 - - 1,881 - $ 87,302 $ 10,049	Buildings $ 3,188,539 1,645 (7,216 ) 14,912 $ 3,197,880 $ 2,895,840 (7,216 ) - 33,557 2 $ 2,922,183 $ 275,697 $ 3,143,466 - - 45,073 $ 3,188,539 $ 2,863,748 - - 31,938 154 $ 2,895,840 $ 292,699	Machinery $ 22,722,024 47,579 (2,803,824 ) 296,099 $ 20,261,878 $ 20,127,830 (2,802,755 ) 146,258 532,551 2,139 $ 18,006,023 $ 2,255,855 $ 21,546,561 67,585 (59,682 ) 1,167,560 $ 22,722,024 $ 19,595,616 (58,701 ) 5,936 581,847 3,132 $ 20,127,830 $ 2,594,194	Other Equipment $ 1,037,146 43,494 (104,804 ) 33,348 $ 1,009,184 $ 770,052 (71,570 ) 865 58,607 (235) $ 757,719 $ 251,465 $ 1,028,826 10,040 (50,432 ) 48,712 $ 1,037,146 $ 745,469 (31,920 ) - 56,503 - $ 770,052 $ 267,094	Construction in Progress $ 377,584 467,014 - (343,065) $ 501,533 $ - - - - - $ - $ 501,533 $ 823,356 814,004 - (1,259,776) $ 377,584 $ - - - - - $ - $ 377,584	Total $ 28,087,719 559,732 (2,915,844 ) 1,906 $ 25,733,513 $ 23,881,024 (2,881,541 ) 147,123 626,518 1,906 $ 21,775,030 $ 3,958,483 $ 27,303,715 891,629 (110,114 ) 2,489 $ 28,087,719 $ 23,290,254 (90,621 ) 5,936 672,169 3,286 $ 23,881,024 $ 4,206,695

All the property, plant and equipment of the Corporation 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 Corporation recognized an impairment loss of $147,123 thousand for the year ended December 31, 2021. The Corporation 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 Corporation had no future cash flow from the related equipment and recognized an impairment loss of $5,936 thousand for the year ended December 31, 2020.

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	Useful Life
Land improvements	3-20 years
Buildings	3-55 years
Machinery	3-15 years
Other equipment	3-15 years

• 37 -

Acquisition of property, plant and equipment includes the decrease in payables for equipment of $25,272 thousand and increase in payables for equipment of $140,104 thousand for the years ended December 31, 2021 and 2020, respectively, refer to Note 18 for the details.

16. 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		December	31
	2021 2020 $ 1,100 $ 742 975 2,277 5,697 477 $ 7,772 $ 3,496 For the Year Ended December 31
		2021 $ 7,804 $ 344 1,566 1,618 $ 3,528	2020 $ 3,952 $ 49 1,138 887 $ 2,074

b. Lease liabilities (included in other current liabilities and other non-current liabilities)

Carrying amount Current Non-current Range of discount rates for lease liabilities was as follows: Land Buildings Other equipment		**December **	**31 **
		2021 $ 3,356 $ 4,261 December	2020 $ 2,112 $ 1,368 31
		2021 1.37% 1.37% 1.37%	2020 1.37% 1.37% 1.37%

• 38 -

c. 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 December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 2,826 $ 2,880 $ 9,459	2020 $ 7,562 $ 1,078 $ 10,783

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

17. 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 Reclassification Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Reclassification Depreciation expense Balance at December 31, 2020 Carrying amount at December 31, 2020

$ 1,403,361 724 $ 1,404,085 $ 516,776 11,241 $ 528,017 $ 876,068 $ 1,402,561 800 $ 1,403,361 $ 506,256 3 10,517 $ 516,776 $ 886,585

The investment properties were leased out for 1 to 20 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.

• 39 -

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 $ 39,518 28,647 25,815 25,815 11,895 123,789 $ 255,479	2020 $ 43,773 35,746 26,033 23,201 23,201 120,655 $ 272,609

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

The fair values of investment properties of the Corporation were $1,496,594 thousand and $1,410,495 thousand as of December 31, 2021 and 2020, respectively. Investment properties as of December 31, 2021 and 2020 were appraised by the Corporation’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.

18. OTHER PAYABLES

Payables for salaries or bonuses Payables for warranties Payables for equipment Provisions for employee benefit Payables for development Payables for taxes Others		December 31	December 31
		2021 $ 1,025,292 220,895 189,110 131,452 115,411 76,147 315,030 $ 2,073,337	2020 $ 936,426 170,017 214,382 130,449 14,308 175,369 389,788 $ 2,030,739

19. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation 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.

• 40 -

b. Defined benefit plans

The defined benefit plan adopted by the Corporation 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 Corporation contribute 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 Corporation 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 Corporation 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 Corporation has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Corporation’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 $ 2,009,474 (1,408,155) $ 601,319	2020 $ 2,052,318 (1,499,199) $ 553,119

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 $ 2,052,318 $ (1,499,199) Service cost Past service cost 45,077 - Current service cost 24,157 - Net interest expense (income) 9,902 (7,261) Recognized in profit or loss 79,136 (7,261) Remeasurement Return on plan assets - (19,961) Actuarial loss Changes in demographic assumptions 59,194 - Experience adjustments 11,930 - Recognized in other comprehensive income 71,124 (19,961) Contributions from the employer - (25,955) Benefits paid (144,221) 144,221 Portion of benefits paid by the Corporation (48,883) - Balance at December 31, 2021 $ 2,009,474 $ (1,408,155)

Net Defined Benefit Liabilities $ 553,119 45,077 24,157 2,641 71,875 (19,961) 59,194 11,930 51,163 (25,955) - (48,883) $ 601,319 (Continued)

• 41 -

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2020 $ 2,086,713 $ (1,460,045) Service cost Past service cost 63,414 - Current service cost 27,380 - Net interest expense (income) 15,651 (11,014) Recognized in profit or loss 106,445 (11,014) Remeasurement Return on plan assets - (50,537) Actuarial loss Changes in demographic assumptions 197 - Changes in financial assumptions 51,768 - Experience adjustments 20,582 - Recognized in other comprehensive income 72,547 (50,537) Contributions from the employer - (103,129) Benefits paid (125,526) 125,526 Portion of benefits paid by the Corporation (87,861) - Balance at December 31, 2020 $ 2,052,318 $ (1,499,199)

Net Defined Benefit Liabilities $ 626,668 63,414 27,380 4,637 95,431 (50,537) 197 51,768 20,582 22,010 (103,129) - (87,861) $ 553,119 (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 Corporation 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.

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 are as follows:

Discount rate Expected rate of salary increase	December 31
	2021 2020 0.50% 0.50% 1.25% 1.25%

• 42 -

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 $ (48,201) $ 49,887 $ 48,596 $ (47,196)	2020 $ (51,768) $ 53,645 $ 52,244 $ (50,677)

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 **	**December 31 **
		2021 $ 228,354 10.1 years	2020 $ 26,324 10.4 years

20. 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.

• 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	December 31
	2021 2020 $ 5,183,923 $ 5,183,923 1,184,920 1,184,920 4,666 4,666 (Continued)

• 43 -

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 $ 2,225 45,781 $ 6,421,515	2020 $ 2,225 36,044 $ 6,411,778 (Concluded)

• 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 interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the 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 22.

The operating environment of the Corporation is considered 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.

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.

• 44 -

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 at 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

• 45 -

e. Other equity items

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

Balance at January 1 Share from subsidiaries, associates and joint ventures accounted for using the equity method Reclassification adjustments Share from the disposal of subsidiaries and associates accounted for using the equity method Balance at December 31 2) Unrealized gain on financial assets at FVTOCI Balance at January 1 Recognized for the year Unrealized gain - equity instruments Share from subsidiaries and associates accounted for using the equity method Other comprehensive income recognized for the year Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal by subsidiaries and 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 subsidiaries and 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) 99,920 - $ (826,741) **For the Year Ended **		2020 $ (998,191) 69,097 2,433 $ (926,661) **December 31 **
	2021 $ 264,666 3,852 182,445 186,297 (37,315) (36,212) $ 377,436 For the Year Ended		2020 $ 216,562 872 41,814 42,686 5,418 - $ 264,666 December 31
		2021 $ 6,918 (3,963) (19,237) (32,990) (56,190) 20,881 $ (28,391)	2020 $ (19,968) 7,519 416 10,281 18,216 8,670 $ 6,918

• 46 -

21. REVENUE

Revenue from contracts with customers Revenue from sale of goods Revenue from the sale of vehicles Revenue from the sale of components Services revenue Rental income Contract Balances December 31, 2021 Notes and accounts receivable (Note 12) $ 378,396 Trade receivables from related parties (Note 27) $ 1,365,379	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 23,050,952 4,145,570 27,196,522 328,101 80,578 $ 27,605,201 December 31, 2020 $ 456,134 $ 1,140,590	2020 $ 22,660,118 3,865,653 26,525,771 356,996 79,281 $ 26,962,048 January 1, 2020 $ 719,498 $ 1,267,862

22. NET PROFIT

Net profit includes the following:

a. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses An analysis of amortization in intangible assets by function Research and development expenses	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 543,354 97,933 $ 641,287 $ 759 34,194 $ 34,953 $ 44,764	2020 $ 582,896 101,864 $ 684,760 $ 179 31,409 $ 31,588 $ 75,053

b. Rental income and operating expenses directly related to investment properties

Rental income from investment properties Direct operating expenses of investment properties generating rental income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 55,556 $ 13,942	2020 $ 58,672 $ 13,224

• 47 -

c. Employee benefits expense

Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 2,463,197 56,094 71,586 $ 2,590,877 $ 1,229,221 1,361,656 $ 2,590,877	2020 $ 2,470,075 48,799 94,911 $ 2,613,785 $ 1,256,118 1,357,667 $ 2,613,785

• 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 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 year 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 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 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.

• 48 -

e. Impairment loss

Property, plant and equipment (Note 15) Intangible assets under development	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 147,123 - $ 147,123	2020 $ 5,936 94,497 $ 100,433

The Corporation 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 Corporation recognized an impairment loss of $94,497 thousand for the year ended December 31, 2020.

23. 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 prior years Deferred tax In respect of the current year Adjustments for prior years Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2021 $ 340,188 163,463 (6,681) 10,881 507,851 59,380 (231) 59,149 $ 567,000	2020 $ 1,492 114,087 - (5,965) 109,614 (8,614) - (8,614) $ 101,000

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 repatriate offshore funds Tax refund for offshore funds Investment credits Unrecognized deductible temporary differences Adjustments for prior years’ tax 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 $ 4,748,835 $ 949,767 6,018 (492,772) 163,463 (6,681) (60,000) (3,445) 10,650 $ 567,000	2020 $ 3,378,320 $ 675,664 2,092 (162,872) 114,087 - - (522,006) (5,965) $ 101,000

• 49 -

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 Corporation repatriated $781,583 thousand (RMB18,913 thousand and EUR20,691 thousand) after approval was obtained from the National Taxation Bureau, Ministry of Finance. Total income tax withholding was $163,463 thousand, comprising $86,843 thousand based on the source of income and $76,620 thousand based on the preferential tax rate at 10%.

For the year ended December 31, 2020, the Corporation repatriated $598,209 thousand (RMB142,805 thousand) after approval was obtained from the National Taxation Bureau, Ministry of Finance. Total income tax withholding was $114,087 thousand, comprising $66,468 thousand based on the source of income and $47,619 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

Deferred tax In respect of the current year Remeasurement of defined benefit plans Cash flow hedges Total income tax recognized in other comprehensive income	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 10,233 5,800 $ 16,033	2020 $ 4,402 (1,984) $ 2,418

c. Current tax assets and liabilities

Current tax assets Tax refund receivable (included in other current assets) Current tax liabilities Income tax payable		December 31	December 31
		2021 $ 74,115 $ 358,283	2020 $ 66,609 $ 238,526

• 50 -

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 Compre- hensive Income Deferred tax assets Temporary differences Defined benefit plans $ 86,396 $ (572) $ 10,233 Other payables 60,093 10,377 - Inventories 34,372 14,433 - Others 59,990 25,815 4,837 240,851 50,053 15,070 Loss carryforwards 30,741 (30,741) - $ 271,592 $ 19,312 $ 15,070 Deferred tax liabilities Temporary differences Investments accounted for using the equity method $ 257,960 $ 80,341 $ - Others 4,051 (1,880) (963) $ 262,011 $ 78,461 $ (963) For the year ended December 31, 2020 Opening Balance Recognized in Profit or Loss Recognized in Other Compre- hensive Income Deferred tax assets Temporary differences Defined benefit plans $ 101,097 $ (19,103) $ 4,402 Other payables 60,065 28 - Inventories 26,892 7,480 - Others 17,828 42,162 - 205,882 30,567 4,402 Loss carryforwards - 30,741 - $ 205,882 $ 61,308 $ 4,402 Deferred tax liabilities Temporary differences Investments accounted for using the equity method $ 205,642 $ 52,318 $ - Others - 376 1,984 $ 205,642 $ 52,694 $ 1,984	Other $ - - - (3,991) (3,991) - $ (3,991) $ - - $ - Other $ - - - - - - $ - $ - 1,691 $ 1,691	Closing Balance $ 96,057 70,470 48,805 86,651
		301,983 -
		$ 301,983
		$ 338,301 1,208
		$ 339,509
		Closing Balance $ 86,396 60,093 34,372 59,990
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 Others
		240,851 30,741
		$ 271,592
		$ 257,960 4,051
		$ 262,011

• 51 -

• e. Deductible temporary differences for which no deferred tax assets have been recognized in the balance sheets

Deductible temporary differences		December 31	December 31
		2021 $ 1,388,365	2020 $ 1,459,572

• f. Income tax assessments

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

24. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share 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 are as follows:

Net Profit for the Year

Profit of the Corporation	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 4,181,835	2020 $ 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 held by associates Effect of potentially dilutive ordinary shares Employees’ compensation Weighted 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 treasury shares to reduce the number of shares outstanding.

• 52 -

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.

25. CAPITAL MANAGEMENT

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

26. FINANCIAL INSTRUMENTS

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

The management believes the carrying amounts of financial assets and financial liabilities that are not measured at fair value recognized in the 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 Domestic unlisted shares Mutual funds Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Financial assets for hedging Non-derivative financial instruments Derivative financial instruments	Level 1 $ - 80,459 - $ 80,459 $ 15,798 - $ 15,798 $ 59,079 - $ 59,079	Level 2 $ - - - $ - $ - - $ - $ - - $ -	Level 3 $ 605,042 - 613 $ 605,655 $ - 13,226 $ 13,226 $ - 533 $ 533	Total $ 605,042 80,459 613 $ 686,114 $ 15,798 13,226 $ 29,024 $ 59,079 533 $ 59,612 (Continued)

• 53 -

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 Domestic unlisted shares Mutual funds Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Financial assets for hedging Non-derivative financial instruments Derivative financial instruments	Level 1 $ - $ - Level 1 $ - 1,023,173 - $ 1,023,173 $ 30,370 - $ 30,370 $ 115,841 - $ 115,841	Level 2 $ - $ - Level 2 $ - - - $ - $ - - $ - $ - - $ -	Level 3 $ 976 $ 2,532 Level 3 $ 603,040 - 3,141 $ 606,181 $ - 13,170 $ 13,170 $ - 2,955 $ 2,955	Total $ 976 $ 2,532 (Concluded) Total $ 603,040 1,023,173 3,141 $ 1,629,354 $ 30,370 13,170 $ 43,540 $ 115,841 2,955 $ 118,796

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

• 54 -

• 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 $ 603,040 $ 3,141 $ 13,170 $ 2,955 Recognized in profit or loss 2,002 (2,528) - - Recognized in other comprehensive income (loss) - - 56 (2,422) Balance at December 31 $ 605,042 $ 613 $ 13,226 $ 533 Financial Liabilities Derivative Financial Instruments at FVTPL Derivative Financial Instruments for Hedging Balance at January 1 $ - $ - Recognized in profit 976 - Recognized in other comprehensive loss - 2,532 Balance at December 31 $ 976 $ 2,532 For the year ended December 31, 2020	$	Total $ 622,306 (526) (2,366) $ 619,414 Total - 976 2,532 3,508
	$

Financial Assets Equity Instruments at FVTPL Derivative Financial Instruments at FVTPL Equity Instruments at FVTOCI Derivative Financial Instruments for Hedging Balance at January 1 $ 617,612 $ 304 $ 13,585 $ 440 Recognized in profit or loss (14,572) 2,837 - - Recognized in other comprehensive income (loss) - - (415) 2,515 Balance at December 31 $ 603,040 $ 3,141 $ 13,170 $ 2,955 Financial Liabilities Derivative Financial Instruments at FVTPL Derivative Financial Instruments for Hedging Balance at January 1 $ 2,483 $ 6,884 Recognized in profit or loss (2,483) - Recognized in other comprehensive income - (6,884) Balance at December 31 $ - $ -	$	Total $ 631,941 (11,735) 2,100 $ 622,306 Total 9,367 (2,483) (6,884) -
	$

• 55 -

• 3) Valuation techniques and inputs applied for 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 equity 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 are as follows:

Operating income ratio P/B ratio Discount rate for lack of marketability	December 31
	2021 2020 0.97-4.78 times 0.69-5.21 times 1.08-2.49 times 0.58-2.24 times 32.28% 32.28%

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 P/B ratio 0.1 time increase 0.1 time decrease		**December **	**31 **
		2021 $ 25,502 $ (25,502) $ 64,027 $ (64,027)	2020 $ 18,799 $ (18,799) $ 60,304 $ (60,304)

• 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 $ 686,114 $ 1,629,354 59,612 118,796 10,404,431 9,711,319 29,024 43,540 4,361,701 5,051,451 976 - 2,532 -

• 56 -

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

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

• d. Financial risk management objectives and policies

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

• 1) Market risk

The Corporation’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 Corporation to adverse fluctuations of cash flows and the reduction of foreign currency assets due to the changes in foreign currency rate. The Corporation avoids cash flow risk resulting from the changes in adverse foreign currency rate by using derivative contracts.

Sensitivity analysis

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

The following table details the Corporation’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 only 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	USD to NTD	USD to NTD	USD to NTD
	For the Year Ended December 31
		2021 2020 $ (907) $ (3,105) $ (830) $ - JPYto NTD
	For the Year Ended December 31
		2021 $ 79 $ (2,058)	2020 $ 188 $ (3,921)

• 57 -

Loss Equity	RMB to NTD	RMB to NTD	RMB to NTD
	**For the Year Ended December 31 **
		2021 $ (4,959) $ (1,805)	2020 $ (6,873) $ -

b) Interest rate risk

The carrying amount of the Corporation’s financial assets and financial liabilities with exposure to interest rate risk at the end of the reporting period were as follows.

Cash flows interest rate risk Financial assets Sensitivity analysis		December 31	December 31
		2021 $ 7,831,796	2020 $ 7,360,403

The sensitivity analysis below were determined based on the Corporation’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 Corporation’s pre-tax profit for the years ended December 31, 2021 and 2020 would increase/decrease by $19,579 thousand and $18,401 thousand, respectively.

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

• c) Other price risk

The Corporation 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% lower, pre-tax profit for the years ended December 31, 2021 and 2020 would have decreased by $4,023 thousand and $51,159 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income would have decreased by $790 thousand and $1,518 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

• 58 -

2) Credit risk

The amounts of financial assets will be potentially impacted if the counterparties of the Corporation 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 Corporation believes credit risk is low because the counterparties are creditworthy banks, brokers and dealers.

3) Liquidity risk

The Corporation 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 Corporation had available unutilized unsecured financing facilities of $4,928,361 thousand and $4,443,979 thousand, respectively.

27. TRANSACTIONS WITH RELATED PARTIES

Besides information disclosed elsewhere in the other notes, details of transactions between the Corporation 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. Mitsubishi Corporation (Taiwan) Ltd. Mitsubishi Motors Philippines Corporation Mitsubishi Motors Thailand Shye Shyang Mechanical Industrial Co., Ltd. Fuzhou Samuel Mechanical and Electrical Co., Ltd. Uni-Calsonic Corp. Yulon Motor Co., Ltd. Fortune Motors Co., Ltd. (Fortune Motors) ROC-Spicer Ltd. (ROC-Spicer)

Related Party Category

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

• 59 -

Related Party Category

Related Party Name

Uni-Auto Parts Manufacture Co., Ltd. (Uni-Auto Parts) Associate Shung Ye Motor Co., Ltd. (Shung Ye Motor) Associate Hua-Chuang Automobile Information Technical Center Co., Associate Ltd. (Hua-Chuang Automobile Information) Yulon IT Solutions Inc. (Yulon IT) Associate Sinjang Co., Ltd. Associate Sin Gan Co., Ltd. Associate Tokio Marine Newa Insurance Co., Ltd. Associate Hong Shuo Cultural Enterprises, Co., Ltd. Associate Hsiang Shuo Enterprises Associate Sinqual Technology Co., Ltd. Associate Yufong Property Management Co., Ltd. Associate Taiwan Acceptance Corporation Associate Yue Sheng Industrial Co., Ltd. Associate Luxgen Motor Co., Ltd. Associate Yulon Nissan Motor Co., Ltd. Associate Y-Teks Co., Ltd. Associate Yes-Energy Service Co., Ltd. Associate Yue Ki Industrial Co., Ltd. Associate Carplus Auto Leasing Corporation Associate Fortune HS Leasing Co., Ltd. Associate Yu Rich Financial Services Company Associate ROC-Keeper Industrial Ltd. Associate Fu-Lun Motors Co., Ltd. Associate Looplus Service Technology Inc. Became associate in April 2021 Tai-Ya (Hong Kong) Investment Ltd. Associate Kian Shen Corporation (Kian Shen) Subsidiary COC Tooling & Stamping Co., Ltd. (COC) Subsidiary Y. M. Hi-Tech Industry Ltd. Subsidiary China Engine Corporation (China Engine) Subsidiary Ling Wei Motor Co., Ltd. Subsidiary Brilliant Insight International Consultancy Service Co., Ltd. Subsidiary Greentrans Corporation Subsidiary Fujian Rui Hua Consulting Co., Ltd. Subsidiary Sino Diamond Motors Corporation (Sino Diamond Motors) Subsidiary Hwa-Lin Investments Ltd. Subsidiary Hwa-Wei Holdings Corporation Ltd. Subsidiary Jiangsu Greentrans Automotive Parts Co., Ltd. Subsidiary South East (Fujian) Motor Corporation Ltd. (South East Joint venture Corporation Ltd. by shares) Fujian Benz Automotive Co., Ltd. Joint venture China Engine (Fujian) Joint venture Yuanchuang Industrial Investment Consulting Co., Ltd. Substantive related party (Concluded)

• 60 -

b. Operating transactions

1) Sales of goods

Line Item Related Party Category/Name Sales Associates Fortune Motors Shung Ye Motor Others Subsidiaries Investors and subsidiaries of the investors that have significant influence over the Corporation Others Purchases of goods Line Item Related Party Category/Name Purchases Associates Subsidiaries Investors and subsidiaries of the investors that have significant influence over the Corporation The Corporation is its key management personnel Others 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 Corporation	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2021 2020 $ 18,193,402 $ 18,551,223 3,398,351 3,915,613 11,866 14,067 21,603,619 22,480,903 478,086 530,097 82,031 76,443 7,773 8,217 $ 22,171,509 $ 23,095,660 For the Year Ended December 31
	2021 2020 $ 1,768,785 $ 1,665,886 1,107,226 1,004,711 831,380 882,434 321,283 304,317 527 1,075 $ 4,029,201 $ 3,858,423 For the Year Ended December 31
		2021 $ 180,372	2020 $ 226,289

• 2) Purchases of goods

• 3) Technical services expense

• 61 -

4) Operating expenses

Line Item Related Party Category/Name Selling and marketing expenses, general and administrative expenses and research and development expenses Subsidiaries Associates Investors that have significant influence over the Corporation Others Contract liabilities Line Item Related Party Category/Name Other current liabilities Subsidiaries China Engine Investors that have significant influence over the Corporation Mitsubishi Motors Corp. Others Receivables from related parties Line Item Related Party Category/Name Trade receivables from Associates related parties Fortune Motors Shung Ye Motor Others Subsidiaries Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 2020 $ 8,677 $ 6,704 8,600 10,605 690 9,974 1,361 2,775 $ 19,328 $ 30,058 **December 31 **
		2021 2020 $ 10,200 $ 19,915 - 16,393 1,287 1,646 $ 11,487 $ 37,954 December 31
		2021 $ 988,259 249,137 994 1,238,390 121,182 5,807 $ 1,365,379	2020 $ 720,680 263,123 1,273 985,076 149,514 6,000 $ 1,140,590

5) Contract liabilities

• 6) Receivables from related parties

• 62 -

7) Payables to related parties

Line Item Related Party Category/Name Trade payables to Associates related parties Uni-Auto Parts ROC-Spicer Others Subsidiaries Kian Shen Others Investors that have significant influence over the Corporation Mitsubishi Motors Corp. Others The Corporation is its key management personnel Others		December 31	December 31
		2021 $ 121,057 101,305 170,821 393,183 95,108 77,004 172,112 79,706 11,104 90,810 56,226 6,846 $ 719,177	2020 $ 148,010 100,270 212,250 460,530 163,369 85,810 249,179 126,981 7,786 134,767 67,906 6,730 $ 919,112

8) Prepayments

Line Item Related Party Category/Name Prepayments Subsidiaries Others		**December 31 **	**December 31 **
		2021 $ 1,871 430 $ 2,301	2020 $ 5,029 334 $ 5,363

9) Acquisitions of property, plant and equipment

Line Item Related Party Category/Name Property, plant and Subsidiaries equipment COC Others Associates Others	Purchase Price	Purchase Price	Purchase Price
	**For the Year Ended December 31 **
		2021 $ 30,475 18,255 48,730 14,654 - $ 63,384	2020 $ 117,755 6,377 124,132 104,894 6,940 $ 235,966

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10) Disposals of property, plant and equipment

Related Party Category/Name Subsidiaries Associates		Proceeds	Proceeds	Gain (Loss) on Disposal (Included in other income and other expense) For the Year Ended December 31 2021 2020 $ 255 $ (849) - 596 $ 255 $ (253)	Gain (Loss) on Disposal (Included in other income and other expense) For the Year Ended December 31 2021 2020 $ 255 $ (849) - 596 $ 255 $ (253)	Gain (Loss) on Disposal (Included in other income and other expense) For the Year Ended December 31 2021 2020 $ 255 $ (849) - 596 $ 255 $ (253)
		For the Year Ended **December 31 **			For the Year Ended **December 31 **
		2021 $ 2,602 - $ 2,602	2020 $ 7,607 596 $ 8,203		2021 $ 255 - $ 255	2020 $ (849) 596 $ (253)

11) Lease arrangements

Line Item Related Party Category/Name Acquisitions of Associates right-of-use assets (included in other non-current assets) Yulon IT Line Item Related Party Category/Name Lease liabilities Associates (included in other current liabilities and other non-current liabilities) Yulon IT Line Item Related Party Category/Name Interest expense Associates (included in other expense) Yulon IT	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 2020 $ 6,512 $ - December 31
	2021 2020 $ 5,261 $ - For the Year Ended December 31
		2021 $ 41	2020 $ -

The Corporation leased right-of-use of cabinet racks from its associates in 2021. The lease term of the contract was 3 years, and the rental is based on similar asset’s market rental rate, and fixed lease payments are paid monthly.

12) Loans to related parties

Line Items Related Party Category/Name Other receivables Subsidiaries Sino Diamond Motors		**December 31 **	**December 31 **
		2021 $ 600,163	2020 $ 600,148

• 64 -

Line Items Related Party Category/Name Interest revenue Subsidiaries Sino Diamond Motors	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 5,415	2020 $ 5,111

The Corporation provided financing to its subsidiary, Sino Diamond Motors, at rates comparable to market interest rates. For the years ended December 31, 2021 and 2020, the financing provided to its subsidiary were all unsecured loans.

13) Collection

Line Items Related Party Category/Name Other current liabilities Subsidiaries Others		**December 31 **	**December 31 **
		2021 $ - - $ -	2020 $ 10,006 50 $ 10,056

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

Transactions with related parties have the same pricing and payment terms as of those for third parties. For lease contracts entered into with related parties, rental prices were determined by reference to market, and had general payment terms.

The Corporation signed a contract with Mitsubishi Motor Corp, refer to Note 29 for the details.

• c. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 88,733 291 $ 89,024	2020 $ 72,889 323 $ 73,212

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

28. ASSETS PLEDGED AS COLLATERAL

The following assets were provided as the tariff of importing vehicle parts and materials and escrows:

Pledged deposits (Note 9)		December 31	December 31
		2021 $ 163,321	2020 $ 103,577

• 65 -

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

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

• a. The Corporation issued guarantee notes amounting to $3,979,440 thousand which had been pledged as collateral for loans from banks and other financial institutions and for government grants; unused letters of credit amounted to $31,320 thousand.

• b. The Corporation entered into agreements with Mitsubishi Motor 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

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

30. OTHER ITEMS

Based on the information available as of the balance sheet date, the Corporation considered the economic implications of the pandemic when making its critical accounting estimates, refer to Note 5.

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Corporation’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than 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	$	94,681	4.344	$	411,295
Non-monetary items
Investments accounted for using the equity
method
EUR		111,795	31.32		3,501,433
RMB		87,786	4.344		381,341
Foreign currency liabilities
Monetary items
JPY		448,870	0.2405		107,953
RMB		23,342	4.344		101,399

• 66 -

December 31, 2020

		Foreign			Carrying
		Currency	Exchange Rate		Amount
Foreign currency assets
Monetary items
RMB	$	122,999	4.377	$	538,369
JPY		682,290	0.2763		188,517
Non-monetary items
Investments accounted for using the equity
method
EUR		86,458	35.02		3,027,742
RMB		95,697	4.377		418,864
Foreign currency liabilities
Monetary items
RMB		44,612	4.377		195,266
JPY		630,949	0.2763		174,331

For the years ended December 31, 2021 and 2020, net foreign exchange gains (realized and unrealized) were $18,787 thousand and $33,389 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.

32. SEPARATELY DISCLOSED ITEMS

Except for those disclosed in Notes 7, 11, 26 and Tables 1 to 8, there were no other separately disclosed items.

• 67 -

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	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.

• 68 -

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.

• 69 -

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)

• 70 -

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)

• 71 -

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)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note)
China Motor Corporation (“CMC”) Sino Diamond Motors Kian Shen	Fortune Motors Shung Ye Motor Mitsubishi Motors Corp. Kian Shen Uni Auto Parts Manufacture ROC-Spicer Shye Shyang Mechanical Industrial COC Yue Ki Industrial Uni-Calsonic Shung Ye Motor Fortune Motors Mitsubishi Motors Corp. China Motor Corporation 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)

• 72 -

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)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note)
COC China Engine	China Motor Corporation 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: The proportion of the individual company’s total purchases (sales) or total receivables (payables).

(Concluded)

• 73 -

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	$ - -

• 74 -

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 Fortune Motors Sino Diamond Motors Tokio Marine Newa Insurance Alliance Investment & Management Daimler Vans Hong Kong Ltd. ROC-Spicer CMI COC Hwa Wei Uni Auto Parts Manufacture Shung Ye Motor China Engine Uni-Calsonic Yue Ki Industrial Co., Ltd. Tai-Ya Investment Hwa Chung Motors (Note 3) Kian Shen Investment KSIHK Greentrans Investment Hua-Yu China Engine Brilliant Insight International Shung Ye Motor 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)

• 75 -

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 (Note 2) Greentrans (Note 2) Hwa-Lin Advance Power Investment (Note 1) Looplus Service Technology Inc. Hwa Wei Ling Wei (Note 2) Greentrans (Note 2) Y. M. Hi-Tech	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: China Engine’s board of directors resolved to dissolve Advance Power Investment on December 10, 2020 and the annulment was completed in December 2021.

Note 2: 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 3: Hwa Chung Motors had been resolved to dissolve in December 2021. As of December 31, 2021, the liquidation had not been completed.

(Concluded)

• 76 -

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 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 4) Jiangsu Greentrans Automotive Parts 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)

• 77 -

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 Tianjin Hwarui (Note 6) Dongguan Huayi (Note 5) Dongguan Huashun (Note 5) Tianjin Hwahong (Note 6)	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: 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 5: 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 6: 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.

(Concluded)

• 78 -

TABLE 8

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 financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• 79 -

CHINA MOTOR CORPORATION

SCHEDULE OF THE STATEMENTS OF IMPORTANT ACCOUNTING ITEMS

Statement Statement of Assets, Liabilities and Equity Statement of cash and cash equivalents Statement of inventories Statement of changes in property, plant and equipment Statement of changes in accumulated depreciation of property, plant and equipment Change of investments accounted for using the equity method Statement of accounts payable Statement of other payables Statement of Profit and Loss Statement of operating revenue Statement of operating costs Statement of operating expenses Statement of analysis of employee benefits expense, depreciation and amortization by function

Schedule Number/ Reference

1 2 Note 15 Note 15 3 4 Note 17 5 6 7 8

• 80 -

SCHEDULE 1

CHINA MOTOR CORPORATION

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Except Amounts Shown in the Notes)

Item Period Rate Cash Cash on hand Checking accounts and demand deposits Foreign currency demand deposits (Note) Cash equivalents Time deposits 2022.2.1-2022.11.11 0.26%-0.82% Repurchase agreements 2022.1.6 0.35%	Amount $ 650 1,727,605 100,851 1,829,106 4,739,900 700,000 5,439,900 $ 7,269,006

Note: Including JPY54,472 thousand, US$1,773 thousand, EUR8 thousand and RMB8,833 thousand, at exchange rates of JPY1=$0.2405, US$1=$27.68, EUR1=$31.32 and RMB1=$4.344.

• 81 -

SCHEDULE 2

CHINA MOTOR CORPORATION

STATEMENT OF INVENTORIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Finished goods Work in progress Vehicle body parts Raw materials Materials in transit		Amount
		Cost (Note) Net Realizable Value $ 1,088,770 $ 1,287,384 9,197 9,197 1,836,425 1,836,425 77,667 77,667 64,326 64,326 $ 3,076,385 $ 3,274,999

Note: Allowance for loss on inventory valuation included $42,233 thousand in finished goods and $201,795 thousand in vehicle body parts.

• 82 -

SCHEDULE 3

CHINA MOTOR CORPORATION

CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Except Unit Price)

Investees Listed shares Yulon Kian Shen Unlisted shares Fortune Motors Daimler Vans Hong Kong Ltd. (Note 4) Tokio Marine Newa Insurance Alliance Investment & Management Sino Diamond Motors China Motor Investment COC Tooling & Stamping Hwa Wei Holdings ROC-Spicer China Engine Shung Ye Motor Fujian Spicer Uni Auto Parts Manufacture Uni-Calsonic Yue Ki Industrial Co., Ltd. Hwa Chung Motors Tai-Ya Investment	Balance, January 1, 2021 Shares (In Thousands) Amount 166,714 $ 7,561,633 32,201 2,141,274 9,702,907 132,117 4,720,074 46,566 3,027,742 61,511 2,089,779 183,000 1,288,292 151,067 1,341,218 40 414,190 33,565 808,797 40 274,747 148 544,709 87,999 447,373 29,668 399,797 7,308 418,864 13,032 354,938 6,084 129,633 2,936 101,311 8,790 78,695 2,242 67,952 16,508,111 $ 26,211,018	Increase in 2021 Shares (In Thousands) Amount - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 46 1,500 1,500 $ 1,500	Decrease in 2021(Note 1) Share of Profit or Loss of Subsidiaries, Unrealized Gain on Shares (In Thousands) Amount Associates and Joint Ventures Transactions with Associates - $ (166,714 ) $ 750,473 $ - - (70,844) 134,484 - (237,558) 884,957 - - (303,869 ) 546,165 (640 ) - (777,768 ) 1,232,861 - - (93,243 ) 254,612 - - - 11,102 - - - 90,702 - - - (240,624 ) - - (44,911 ) 58,892 - - - (160,400 ) - - (35,518 ) 49,947 - - - (12,403 ) - - - 33,105 - - (151,378 ) 117,353 - - - 1,561 - - (4,867 ) 16,471 - - - (3,262 ) - - - 2,921 - - - 59 - (1,411,554) 1,999,062 (640) $ (1,649,112) $ 2,884,019 $ (640)	Share Equity Adjustments (Note 2) $ 42,997 (13,311) 29,686 5,076 18,598 130,996 (14,582 ) (1,331 ) 75,944 7 50,630 (5,846 ) 2,384 (576 ) (3,498 ) 1,983 (3,084 ) 583 - (408) 256,876 $ 286,562	Balance, December 31, 2021 Shares in Thousand Percentage of Ownership Amount 166,714 16.80 $ 8,188,389 32,201 43.87 2,191,603 - 10,379,992 132,117 41.93 4,966,806 46,566 32.45 3,501,433 61,511 20.57 2,382,144 183,000 100.00 1,284,812 151,067 100.00 1,430,589 40 100.00 249,510 33,565 49.76 822,785 40 40.00 164,977 148 29.60 553,292 87,999 52.10 437,354 29,668 39.98 432,326 7,308 29.00 381,341 13,032 15.00 358,482 6,084 31.20 138,153 2,936 15.08 98,632 8,790 100.00 81,616 2,288 29.60 69,103 17,353,355 $ 27,733,347	Market Price(Note 3)	Market Price(Note 3)
	Shares (In Thousands) 166,714 32,201 132,117 46,566 61,511 183,000 151,067 40 33,565 40 148 87,999 29,668 7,308 13,032 6,084 2,936 8,790 2,242	Shares (In Thousands) - - - - - - - - - - - - - - - - - - 46	Shares (In Thousands) - - - - - - - - - - - - - - - - - - -		Shares in Thousand Percentage of Ownership 166,714 16.80 32,201 43.87 - 132,117 41.93 46,566 32.45 61,511 20.57 183,000 100.00 151,067 100.00 40 100.00 33,565 49.76 40 40.00 148 29.60 87,999 52.10 29,668 39.98 7,308 29.00 13,032 15.00 6,084 31.20 2,936 15.08 8,790 100.00 2,288 29.60	Unit Price (NT$) 41.9 61.5	Total Amount $ 6,985,335 1,980,384 8,965,719

Note 1: It is the issuance of cash dividends.

Note 2: Including the capital surplus of investees, unappropriated earnings of investees, exchange differences on translating the financial statements of foreign operations, unrealized valuation gain (loss) on financial assets at fair value through other comprehensive income of investees and gains (losses) on hedging instruments.

Note 3: The unit price was calculated by the closing price as of December 31, 2021.

Note 4: In February 2022, Daimler Vans Hong Kong Ltd. changed its entity name, which is Mercedes-Benz Vans Hong Kong Ltd.

• 83 -

SCHEDULE 4

CHINA MOTOR CORPORATION

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Company Name Daimler Trucks Asia Taiwan Ltd. Wu Shiang Industrial Co., Ltd. Lioho Machine Works, Ltd. Tai Yue Electric Co., Ltd. Borgwarner Shanghai Automobile Fuel Systems Co., Ltd. Others (Note)	Amount $ 93,211 86,369 71,297 63,391 50,278 1,197,083 $ 1,561,629

Note: The amount of individual customer in others does not exceed $50,000 thousand of the account balance.

• 84 -

SCHEDULE 5

CHINA MOTOR CORPORATION

STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Number Net sales Domestic sales Four-wheel vehicles Commercial vehicles 33,983 Passenger cars 15,458 Two-wheel vehicles 5,365 Others Vehicle body parts Spring steel Equipment Foreign sales Four-wheel vehicles 1,028 Materials Royalties Equipment Other sales revenue Service revenue Lease revenue	Amount $ 15,201,994 7,360,831 22,562,825 198,493 3,570,595 326,487 70,767 3,967,849 26,729,167 289,634 145,559 7,773 24,389 467,355 27,196,522 328,101 80,578 408,679 $ 27,605,201

• 85 -

SCHEDULE 6

CHINA MOTOR CORPORATION

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Cost of goods sold Balance, beginning of year Add: Raw materials purchased Less: Usage of indirect materials Cost of goods sold of materials Transferred to other costs Raw materials and vehicle body parts, end of year Usage of direct materials Direct labor Manufacturing expenses Manufacturing costs Add: Work in progress, beginning of year Less: Work in progress, end of year Cost of finished goods Add: Finished goods, beginning of year Tax of goods Others Less: Finished goods, end of year Transferred to other expenses Original equipment manufacturer Cost of goods sold of finished goods Add: Cost of goods sold of vehicle body parts Losses of provision Inventories write-downs Less: Others Total cost of goods sold Other operating costs Total operating costs

Amount $ 2,019,485 17,694,131 94,581 2,484,543 2,865 2,180,213 14,951,414 672,178 1,306,893 16,930,485 35,802 9,197 16,957,090 1,126,816 3,466,049 217,326 1,131,003 3,588 120,066 20,512,624 2,484,543 65,302 72,166 39,734 23,094,901 174,959 $ 23,269,860

• 86 -

SCHEDULE 7

CHINA MOTOR CORPORATION

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Items Personnel expenses Development expenses After sales service expenses Depreciation Advertisement Labor service expense Welfare Export expense Others (Note)	Selling and Marketing Expenses General and Administrative Expenses Research and Development Expenses $ 114,031 $ 391,233 $ 856,392 5,917 - 252,623 98,009 - - 4,617 31,133 62,183 63,683 1,648 - 3,483 44,797 2,380 - 41,584 - 37,966 - - 37,995 193,777 217,204 $ 365,701 $ 704,172 $ 1,390,782	Total $ 1,361,656 258,540 98,009 97,933 65,331 50,660 41,584 37,966 448,976 $ 2,460,655

Note: The amount of each item in others does not exceed 5% of the account balance.

• 87 -

SCHEDULE 8

CHINA MOTOR CORPORATION

STATEMENT OF ANALYSIS OF EMPLOYEE BENEFITS EXPENSE, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Employee benefits expense Salary Labor and health insurance Pension Board compensation Other employee benefits Depreciation Amortization			2021	Total $ 2,209,895 167,202 127,680 26,559 59,541 $ 2,590,877 $ 641,287 $ 79,717			2020
		Amount of Operating Costs $ 1,053,166 86,017 59,441 - 30,597 $ 1,229,221 $ 543,354 $ 759	Amount of Operating Expenses $ 1,156,729 81,185 68,239 26,559 28,944 $ 1,361,656 $ 97,933 $ 78,958			Amount of Operating Costs $ 1,085,226 81,432 58,266 - 31,194 $ 1,256,118 $ 582,896 $ 179	Amount of Operating Expenses $ 1,147,913 75,616 85,444 20,880 27,814 $ 1,357,667 $ 101,864 $ 106,462	Total $ 2,233,139 157,048 143,710 20,880 59,008 $ 2,613,785 $ 684,760 $ 106,641

1. As of December 31, 2021 and 2020, the Corporation’s average number of employees was 1,982 and 2,004, respectively, which included 8 non-employee directors for both years.

2. The average amount of employee benefit expense for the years ended December 31, 2021 and 2020 was $1,299 thousand and $1,299 thousand, respectively.

3. The average employee salary expense for the years ended December 31, 2021 and 2020 was $1,120 thousand and $1,119 thousand, respectively.

4. The average employee salary expense increased by 0.09% year over year.

5. The Corporation did not have supervisor for the years ended December 31, 2021 and 2020.

6. The board of directors is authorized to determine the remuneration of directors with reference to industry standards. The compensation program of the executive officers and employees includes a monthly salary and bonuses. In order to remain competitive, the Corporation provides a monthly salary and bonuses that is above the median salary of the same industry based on the salary reports as provided by human resources firms. In addition, the Corporation determines the amount of variable bonuses and yearly raises based on business and individual performance. Based on the Corporation’s articles of incorporation (Note), employees’ compensation is given in order to motivate employees and create benefit for the Corporation and its shareholders.

7. Note: According to the Article 27 in Articles of Incorporation of the Corporation, the Corporation accrues employees’ compensation and remuneration of directors at the rates of no less than 0.1% and no higher than 0.5%, respectively.

8. 88 -