CMC - Audit Report / Information 2019

China Motor Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2019 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

CHINA MOTOR CORPORATION

By:

LI-LIEN CHEN YEN Chairman

March 26, 2020

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders China Motor Corporation

Opinion

We have audited the accompanying consolidated financial statements of China Motor Corporation and its subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to the Other Matter section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2019 is described as follows:

Revenue Recognition

Domestic sales of vehicles is material to the Group’s consolidated financial statements. Since the sale of vehicles is strongly affected by the economy, there is a possible risk in the accuracy of revenue recognition; therefore, revenue recognition has been identified as a key audit matter.

Our audit procedures performed in respect of revenue recognition included:

Discussing with management whether the accounting methods for revenue recognition were appropriate and consistently applied;
Testing the design of the revenue recognition internal controls and the operating effectiveness of such controls as well as verifying the authenticity of sales transaction-related documentary evidence;
Verifying whether the risks and rewards of the merchandise were transferred and whether the amount of sales revenue recognized was accurate.

Other Matter

We did not audit the financial statements as of and for the years ended December 31, 2019 and 2018 of some of the Group’s investees accounted for using the equity method, namely Daimler Vans Hong Kong Ltd., Guangzhou NTN-Yulon Drivertrain Co., Ltd., Xiangyang NTN-Yulon Drivertrain Co., Ltd., Shung Ye Motors Corporation, Uni Auto Parts Manufacture Co., Ltd. and Southeast-Motor Co., Ltd., but such financial statements were audited by other auditors whose reports have been furnished to us. Our opinion, insofar as it relates to the amounts included for these investees in the Group’s consolidated financial statements, is based solely on the reports of the other auditors. The aforementioned investments accounted for using the equity method constituted 14.8% (NT$7,614,490 thousand) and 12.1% (NT$7,814,960 thousand) of the Group’s total assets as of December 31, 2019 and 2018, respectively. The Group’s share of comprehensive income of the aforementioned investments accounted for using the equity-method amounted to NT$637,861 thousand and NT$$1,282,377 thousand for the years ended December 31, 2019 and 2018, respectively, which accounted for 24.5% and 36.4% of the Group’s consolidated total comprehensive income, respectively.

We have also audited the parent company only financial statements of China Motor Corporation as of and for the years ended December 31, 2019 and 2018 on which we have issued an unmodified opinion with an other matter section.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.
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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 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 audit resulting in this independent auditors’ report are Chih-Ming Shao and Ya-Ling Wong.

Deloitte & Touche Taipei, Taiwan Republic of China March 30, 2020

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (Notes 4 and 7) Financial assets at amortized cost (Notes 4, 9 and 10) Financial assets for hedging (Notes 4 and 11) Notes and accounts receivable, net (Notes 4 and 12) Trade receivables from related parties (Notes 4 and 31) Other receivables Inventories (Notes 4 and 13) Prepayments (Note 31) Non-current assets held for sale (Notes 4 and 15) Other current assets (Notes 4, 26 and 32) 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 16) Property, plant and equipment (Notes 4, 17, 31 and 32) Right-of-use assets (Notes 4 and 18) Investment properties (Notes 4, 19 and 32) Intangible assets under development (Note 4) Deferred tax assets (Notes 4 and 26) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 20 and 32) Short-term bills payable Notes and accounts payable Trade payables to related parties (Note 31) Other payables (Notes 4 and 21) Current tax liabilities (Notes 4 and 26) Lease liabilities (Notes 4 and 18) Current portion of long-term borrowings (Note 20) Other current liabilities (Notes 4, 7, 11 and 31) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 20) Deferred tax liabilities (Notes 4 and 26) Lease liabilities (Notes 4 and 18) Net defined benefit liabilities (Notes 4 and 22) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Notes 4, 8 and 23) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized gain on investments in financial assets at fair value through other comprehensive income Gain (loss) on the hedging instruments (Note 11) Equity directly associated with non-current assets held for sale (Note 15) Total other equity Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS (Note 14) Total equity TOTAL		2019 Amount % $ 5,742,588 11 339,731 1 8,556 - 1,138,342 2 1,190,463 2 1,457,139 3 326,784 1 4,617,661 9 1,543,144 3 148,023 - 849,643 2 17,362,074 34 686,413 1 207,342 - 776,473 2 23,348,925 45 6,419,254 12 442,921 1 1,366,049 3 484,360 1 253,394 1 119,263 - 34,104,394 66 $ 51,466,468 100 $ 615,000 1 183,939 - 2,702,267 5 983,750 2 2,426,690 5 312,774 1 88,697 - 6,250 - 340,684 1 7,660,051 15 43,750 - 480,280 1 359,836 1 735,400 1 22,212 - 1,641,478 3 9,301,529 18 5,536,203 11 6,414,118 12 9,257,157 18 1,029,654 2 17,306,526 34 27,593,337 54 (990,653) (2) 216,562 - (19,968) - (7,538) - (801,597) (2) 38,742,061 75 3,422,878 7 42,164,939 82 $ 51,466,468 100		2018
				Amount % $ 14,429,460 23 567,643 1 104,359 - 743,303 1 1,177,454 2 1,952,469 3 98,749 - 4,070,264 6 1,134,247 2 148,023 - 596,590 1 25,022,561 39 734,341 1 227,396 - 824,705 1 29,106,774 45 6,388,147 10 - - 1,380,002 2 304,163 1 336,711 1 179,616 - 39,481,855 61 $ 64,504,416 100 $ 645,000 1 93,972 - 2,705,317 4 944,954 2 2,717,065 4 117,081 - - - - - 297,523 1 7,520,912 12 - - 268,161 1 - - 910,328 1 30,926 - 1,209,415 2 8,730,327 14 13,840,508 22 6,403,633 10 8,897,857 14 1,046,967 1 22,486,952 35 32,431,776 50 (646,278) (1) 117,177 - 20,997 - (7,538) - (515,642) (1) 52,160,275 81 3,613,814 5 55,774,089 86 $ 64,504,416 100

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

(With Deloitte & Touche auditors’ report dated March 30, 2020)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

OPERATING REVENUE (Notes 4, 24 and 31) Net sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 13, 22, 25 and 31) 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, 25 and 31) 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 (loss) of associates and joint ventures accounted for using the equity method (Notes 4 and 16) Interest income Dividend income (Note 8) Other income Gain on disposal of investments (Notes 4, 16 and 28) Net foreign exchange gain (loss) Interest expense Other expense Loss on financial instruments at fair value through profit or loss Impairment loss (Notes 4 and 17) Total non-operating income and expenses		2019 Amount % $ 30,671,399 96 1,396,573 4 32,067,972 100 26,072,063 81 745,100 2 26,817,163 83 5,250,809 17 47,583 - 5,298,392 17 696,315 2 1,066,963 3 1,715,206 6 3,478,484 11 1,819,908 6 (3,690,617) (11) 152,023 - 20,171 - 142,754 - 91,702 - (40,154) - (21,257) - (47,556) - (55,407) - (51,830) - (3,500,171) (11)		2018
				Amount % $ 33,490,420 96 1,379,094 4 34,869,514 100 27,789,296 80 887,608 2 28,676,904 82 6,192,610 18 (2,053) - 6,190,557 18 914,786 3 1,284,988 4 2,092,742 6 4,292,516 13 1,898,041 5 2,407,876 7 195,251 1 29,755 - 112,747 - - - 12,498 - (14,639) - (53,721) - (49,059) - (228,036) (1) 2,412,672 7

(Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 26) NET PROFIT (LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Note 4) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 22) Unrealized loss on investments in equity instruments designated as fair value through other comprehensive income (Note 23) Gain on hedging instruments (Notes 11 and 23) Share of other comprehensive income (loss) of associates accounted for using the equity method (Notes 16 and 23) Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 26) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 23) Share of the other comprehensive loss of associates and joint ventures accounted for using the equity method (Notes 16 and 23) Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests		2019 Amount % $ (1,680,263) (5) (628,110) (2) (2,308,373) (7) (11,146) - (18,391) - 1,898 - 168,584 - 1,849 - (27,518) - (411,450) (1) (296,174) (1) $ (2,604,547) (8) $ (2,465,573) (8) 157,200 1 $ (2,308,373) (7)		2018
				Amount % $ 4,310,713 12 (418,671) (1) 3,892,042 11 3,913 - (74,082) - 40,663 - (120,566) - (1,168) - (38,618) - (177,764) (1) (367,622) (1) $ 3,524,420 10 $ 3,592,999 10 299,043 1 $ 3,892,042 11

(Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests EARNINGS (LOSS) PER SHARE (Note 27) Basic Diluted		2019 Amount % $ (2,674,645) (8) 70,098 - $ (2,604,547) (8) $ (2.38) $ (2.38)		2018
				Amount % $ 3,298,141 9 226,279 1 $ 3,524,420 10 $ 2.64 $ 2.63
				$

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

(With Deloitte & Touche auditors’ report dated March 30, 2020) (Concluded)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

	Equity Attrib	le to Owners of the Corporation
Share Capital Ordinary Shares Number of Shares (In Thousands) Amount Capital Surplus 1,384,051 $ 13,840,508 $ 6,407,340 - - - 1,384,051 13,840,508 6,407,340 - - - - - - - - - - - (3,707 ) - - - - - - - - - - - - - - - - - - - - - 1,384,051 13,840,508 6,403,633 - - - 1,384,051 13,840,508 6,403,633 - - - - - - - - - - - 10,485 - - - - - - - - - - - - (830,431 ) (8,304,305 ) - - - - - - - - - - - - - 553,620 $ 5,536,203 $ 6,414,118	Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 8,487,293 $ 1,051,658 $ 20,895,137 - - 888,982 8,487,293 1,051,658 21,784,119 410,564 - (410,564 ) - - (2,491,292 ) - (4,691 ) 4,691 - - 9,720 - - - - - 3,592,999 - - 2,244 - - 3,595,243 - - - - - (5,111 ) - - 146 8,897,857 1,046,967 22,486,952 - - (19,503) 8,897,857 1,046,967 22,467,449 359,300 - (359,300 ) - - (2,352,886 ) - (17,313 ) 17,313 - - (35,639 ) - - - - - (2,465,573 ) - - (46,865) - - (2,512,438) - - - - - - - - 82,010 - - 17 - - - $ 9,257,157 $ 1,029,654 $ 17,306,526		Other Equity		Equity Directly Associated with Loss on the Non-current Hedging Instruments Assets Held for Sale $ - $ - (12,253) - (12,253 ) - - - - - - - - - - - - - 33,250 - 33,250 - - (7,538 ) - - - - 20,997 (7,538 ) - - 20,997 (7,538 ) - - - - - - - - - - - - 756 - 756 - - - - - - - - - (41,721) - $ (19,968) $ (7,538)
		Exchange Differences on Unrealized Gain on Investments in Financial Assets at Fair Value Translating Through Other Foreign Operations Comprehensive Income A $ (485,118 ) $ - - 273,866 (485,118 ) 273,866 - - - - - - - - - - - (168,698) (161,654) (168,698) (161,654) 7,538 - - 5,111 - (146) (646,278 ) 117,177 - - (646,278 ) 117,177 - - - - - - - - - - - - (344,375) 181,412 (344,375) 181,412 - - - - - (82,010 ) - (17 ) - - $ (990,653) $ 216,562	Unrealized Gain (Loss) on vailable-for-sale Financial Assets $ 765,456 (765,456) - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ -	Gain (Loss) on Effective Portion of Cash Flow Hedges $ (12,253 ) 12,253 - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ -
Number of Shares (In Thousands) 1,384,051 - 1,384,051 - - - - - - - - - - - 1,384,051 - 1,384,051 - - - - - - - - (830,431 ) - - - - 553,620

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

(With Deloitte & Touche auditors’ report dated March 30, 2020)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax Adjustments for: Depreciation expenses Amortization expenses Gain on lease modification Expected credit loss Net loss on fair value change of financial instruments at fair value through profit or loss Interest expense Interest income Dividend income Share of loss (profit) of associates and joint ventures accounted for using the equity method Net loss on disposal of property, plant and equipment Loss on valuation of investments Impairment loss of financial assets Impairment loss of non-financial assets Unrealized (realized) gain on transactions with associates Unrealized gain on foreign currency exchange Changes in operating assets and liabilities Financial assets at fair value through profit or loss Notes and accounts receivable Trade receivables from related parties Other receivables Inventories Prepayments Other current assets Notes and accounts payable Trade payables to related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income 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	2019 $ (1,680,263) 1,037,274 114,837 (63) 25,877 55,407 21,257 (152,023) (20,171) 3,690,617 5,837 - (91,702) 85,506 (47,583) (1,323) 222,837 (237,888) 494,600 53,523 (763,480) (426,294) (239,050) 78,551 43,779 (233,925) 36,321 (175,186) 1,897,272 (193,869) 1,703,403 17 (2,349,473) 2,620,640 -	2018 $ 4,310,713 978,026 120,447 - 9,413 49,059 14,639 (195,251) (29,755) (2,407,876) 8,922 610 - 208,004 2,053 (4,321) (56,661) (9,158) (249,747) (29,949) 409,776 301,025 55,243 150,343 56,858 (148,332) 23,759 (226,456) 3,341,384 (465,503) 2,875,881 12,603 (1,210,257) 2,588,643 (553,113) (Continued)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Disposal of investments accounted for using the equity method Disposal of subsidiaries Proceeds from capital reduction of investments accounted for using the equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment 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 Increase (decrease) in short-term borrowings Increase (decrease) in short-term bills payable Proceeds from long-term borrowings Repayment of the principal portion of lease liabilities Increase (decrease) in other non-current liabilities Cash dividends paid Capital reduction by cash Interest paid Decrease in non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) 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	2019 $ 227,159 231,759 - (1,489,310) 27,875 (237,959) (17,963) 172,940 1,313,058 498,743 300,000 89,967 50,000 (97,564) (8,440) (2,352,886) (8,304,305) (24,029) (112,397) (10,459,654) (34,765) (8,292,273) 15,172,763 $ 6,880,490	2018 $ - - 127,737 (1,020,468) 47,714 (190,126) (50,683) 231,426 1,295,659 1,279,135 (100,000) (15,961) - - 1,593 (2,491,292) - (14,601) (163,237) (2,783,498) (14,796) 1,356,722 13,816,041 $ 15,172,763 (Continued)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at December 31, 2019 and 2018:

Cash and cash equivalents in the consolidated balance sheets Cash and cash equivalents included in financial assets for hedging Cash and cash equivalents in the consolidated statements of cash flows		December 31	December 31
		2019 $ 5,742,588 1,137,902 $ 6,880,490	2018 $ 14,429,460 743,303 $ 15,172,763

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

(With Deloitte & Touche auditors’ report dated March 30, 2020) (Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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 is listed on the Taiwan Stock Exchange.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements of the Corporation and its subsidiaries (collectively referred to as the “Group”) were approved by the Corporation’s board of directors on March 26, 2020.

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

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and 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)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Group’s accounting policies:

 IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

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The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities and cash payment for the interest portion are classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts, were recognized as expenses on a straight-line basis. Cash flow for operating lease were classified within operating activities on the consolidated statements of cash flows.

The Group elects to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized in retained earnings on January 1, 2019. Comparative information is not restated.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities. The Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

1) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
2) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
3) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
4) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 was 2.58%. The difference between (i) the lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption for short-term leases Less: Recognition exemption for leases of low-value assets Undiscounted amount on January 1, 2019 Discounted amount using the incremental borrowing rate and lease liabilities recognized on January 1, 2019 The Group as lessor	$ 595,598 (3,464) (594) $ 591,540 $ 538,229

The Group does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

15 -

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

As Originally Stated on January 1, 2019 Right-of-use assets $ - Investments accounted for using the equity method 29,106,774 Total effect on assets $ 29,106,774 Lease liabilities - current $ - Lease liabilities - non-current - Total effect on liabilities $ - Unappropriated earnings $ 22,486,952	Adjustments Arising from Initial Application Restated on January 1, 2019 $ 538,229 $ 538,229 (19,503) 29,087,271 $ 518,726 $ 29,625,500 $ 94,157 $ 94,157 444,072 444,072 $ 538,229 $ 538,229 $ (19,503) $ 22,467,449

b. The IFRSs endorsed by the FSC for application starting from 2020

Effective Date New IFRSs Announced by IASB Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 1) Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark January 1, 2020 (Note 2) Reform” Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 3)

Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Group shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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

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

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note)
	To be determined by IASB January 1, 2021 January 1, 2022

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Note: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

b. Basis of preparation

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

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

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

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d. Basis of consolidation
1) Principles for preparing the consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Corporation and the entities controlled by the Corporation (i.e., its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Corporation.

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

Total comprehensive income of subsidiaries is attributed to the owners of the Corporation and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Corporation.

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

2) Subsidiaries included in the consolidated financial statements

Investor
Investee
Main Business
China-Motor Corporation
(parent)
Kian Shen Corporation (“Kian Shen”)
Production of frame of
heavy-duty car and mold
Hwa Wei Holdings Corporation Ltd.
(“Hwa Wei”)
Overseas investment in
production and service
industries
China Engine Corporation (“China
Engine”)
Manufacture of automobile
engine and parts
Sino Diamond Motors Corporation (“Sino
Diamond Motors”)
Sales and providing after-sales
service of vehicle
Alliance Investment & Management Co.,
Ltd. (“Alliance Investment &
Management”)
Investment
Gatetech Technology Inc. (“Gatetech
Technology”)
Aluminum-magnesium alloy
casting industry
China Motor Investment Co., Ltd. (CMI) Investment
Hwa Chung Motors Corporation (“Hwa
Chung Motors”)
Sales of vehicle and parts
COC Tooling & Stamping Co., Ltd.
(COC)
Production of mold, fixture and
gauge of vehicle
Kian Shen
Kian Shen Investment Co., Ltd. (“Kian
Shen Investment”)
Overseas investment in
production and service
industries

Combined Shareholding
Ratio (%)
December 31
2019
2018
Note
43.87
43.87
a)
100.00
100.00
52.10
52.10
100.00
100.00
100.00
100.00
-
72.81
d)
100.00
100.00
100.00
100.00
49.76
49.76
b)
43.87
43.87
a)

(Continued)

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Investor
Investee
Main Business
China Engine
Advance Power Machinery Co., Ltd.
(“Advance Power Machinery”)
Manufacture of automobile
engine and parts
Advance Power Investment Co., Ltd.
(“Advance Power Investment”)
Investment and sales
Sino Diamond Motors
Hwa-Yu Corporation Ltd. (“Hwa-Yu”)
Overseas investment in
production and service
industries
Brilliant Insight International Consultancy
Service Co., Ltd. (“Brilliant Insight
International”)
Consulting and servicing business
Gatetech Technology
Gatetech Holding Co., Ltd. (GH)
Investment
Alliance Investment &
Management
Greentrans Investment Co., Ltd.
(“Greentrans Investment”)
Investment
Hwa Chung Motors
Greentrans Corporation (“Greentrans”)
Sales of motorcycle, bicycle and
parts
Ling Wei Motor Co., Ltd. (“Ling Wei”)
Sales of second-hand vehicle
COC
Y. M. Hi-Tech Industry Ltd. (“Y. M.
Hi-Tech”)
Steel cutting
Shye Shinn Corporation (“Shye Shinn”)
Investment
Kian Shen Investment
Kian Shen Investment Hong Kong Co.,
Limited (KSIHK)
Investment
Hwa-Yu
Hwa-Lin Investments Ltd. (“Hwa-Lin”)
Overseas investment in
production and service
industries
Fujian Rui Hua Consulting Co., Ltd.
(“Fujian Rui Hua”)
Consulting and servicing business
GH
Gatetech International Co., Ltd. (GI)
Investment
Greentrans Investment
Jiangsu Greentrans Automotive Parts Co.,
Ltd. (“Jiangsu Greentrans”)
Production and sales of parts of
electronic motorcycle
GI
Gatetech (Suchou) Technology Co., Ltd.
(“Gatetech Suchou Technology”)
Aluminum-magnesium alloy
casting industry
Hwa-Lin
Dongguan Huayi Motor Maintenance Co.,
Ltd. (“Dongguan Huayi”)
Sales and maintenance of vehicle
and parts
Tianjin Hwarui Maintenance Co., Ltd.
(“Tianjin Hwarui”)
Sales and maintenance of vehicle
and parts
Sichuan Huafeng Hanwei Cars Service
and Maintenance Co., Ltd. (“Sichuan
Huafeng Hanwei”)
Sales and maintenance of vehicle
and parts
Guangzhou Huayou Motor Maintenance
Co., Ltd. (“Guangzhou Huayou Motor
Maintenance”)
Sales and maintenance of vehicle
and parts
Dongguan Huayi
Dongguan Huashun Motor Sales Co., Ltd.
(“Dongguan Huashun”)
Sales and maintenance of vehicle
and parts
Tianjin Hwarui
Tianjin Hwahong Sales Co., Ltd.
(“Tianjin Hwahong”)
Sales of vehicle and parts
Sichuan Huafeng Hanwei
Sichuan Lingwei Cars Service and
Maintenance Co., Ltd. (“Sichuan
Lingwei”)
Sales of vehicle and parts
Guangzhou Huayou Motor
Maintenance
Guangzhou Huayou Motor Sales Co., Ltd.
(“Guangzhou Huayou Motor Sales”)
Sales of vehicle and parts

Combined Shareholding
Ratio (%)
December 31
2019
2018
Note
52.10
52.10
52.10
52.10
100.00
100.00
100.00
100.00
-
72.81
d)
100.00
100.00
100.00
100.00
100.00
100.00
42.30
42.30
b)
49.76
49.76
b)
43.87
43.87
a)
100.00
100.00
100.00
100.00
-
72.81
d)
100.00
100.00
-
72.81
d)
100.00
100.00
100.00
100.00
100.00
100.00
c)
100.00
100.00
c)
100.00
100.00
100.00
100.00
-
100.00
c)
100.00
100.00
c)

(Concluded)

a) The Group held 43.87% equity interest in Kian Shen. Kian Shen is a listed company and 56.13% of its shares were held by numerous shareholders unrelated to the Group. Owing to the Group’s substantial influence on Kian Shen, an absolute number of voting rights and the relative size of other shareholdings, Kian Shen was deemed a subsidiary.
b) The Group held 49.76% equity in COC. However, since the Corporation controls more than half of the board members and holds relative majority of shares, COC was considered a subsidiary.
c) In November 2018, Sichuan Huafeng Hanwei, Sichuan Lingwei, Guangzhou Huayou Motor Maintenance and Guangzhou Huayou Motor Sales resolved to dissolve their respective companies. As of December 31, 2019, except for the annulment of Sichuan Lingwei which had been completed in July 2019, the remaining companies had not completed their liquidation procedures. The liquidation of Sichuan Huafeng Hanwei had been completed in February 2020.
d) In order to strengthen the Corporation’s capital structure and focus on the development of its business, the Group fully disposed of 72.81% of its interest held in its subsidiary, Gatetech Technology, to a non-related party. The disposal was completed on November 30, 2019, on which date control of Gatetech Technology passed to the acquirer.
19 -

For the relationship between the Corporation and its controlled entities as of December 31, 2019, refer to Table 10.

e. Business combinations

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

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

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

f. Foreign currencies

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

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

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when fair value was 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 items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of transaction.

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

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

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

g. Inventories

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

h. Investment in associates and joint ventures

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

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

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

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

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

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

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

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

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

i. Property, plant and equipment

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

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

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

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

j. Investment properties

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

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

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

22 -
k. Intangible assets

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

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

1) The technical feasibility of completing the intangible asset so that it will be available for use or sale;
2) The intention to complete the intangible asset and use or sell it;
3) The ability to use or sell the intangible asset;
4) How the intangible asset will generate probable future economic benefits;
5) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
6) The ability to measure reliably the expenditure attributable to the intangible asset during its development.

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

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

l. Impairment of tangible and intangible assets

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

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

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

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (less amortization expenses or depreciation expenses) 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.

23 -

m. Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset is available for immediate sale in its present condition. To meet the criteria for the sale being highly probable, the appropriate level of management must be committed to the sale, and the sale should be expected to qualify for recognition as a completed sale within 1 year from the date of classification.

When a sale plan would result in a loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale, regardless of whether the Group will retain a non-controlling interest in that subsidiary after the sale. However, such investment is still accounted for using the equity method.

When the Group is committed to a sale plan involving the disposal of an investment or a portion of an investment in an associate or a joint venture, only the investment or the portion of the investment that will be disposed of is classified as held for sale when the classification criteria are met, and the Group discontinues the use of the equity method in relation to the portion that is classified as held for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. If the Group ceases to have significant influence or joint control over the investment after the disposal takes place, the Group accounts for any retained interest that has not been classified as held for sale in accordance with the accounting policies for financial instruments.

Non-current assets classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Recognition of depreciation of those assets would cease.

When a subsidiary, joint venture, associate, or a portion of an interest in a joint venture or an associate previously classified as held for sale no longer meets the criteria to be so classified, it is measured at the carrying amount that would have been recognized had such interests not been classified as held for sale. The consolidated financial statements for the periods since classification as held for sale are amended accordingly.

n. Financial instruments

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

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

1) Financial assets

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

a) Measurement categories

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

24 -
i. Financial assets at FVTPL

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

Financial assets at FVTPL are subsequently measured at fair value, and any dividends, interest earned and remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 30.

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

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

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

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

i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default; or
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization.
iii. Investments in equity instruments at FVTOCI

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

25 -

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

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

b) Impairment of financial assets

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

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

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

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

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset pasts the expiration date of contract unless the Group has reasonable and corroborative information to support a more lagged default criterion.

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

c) Derecognition of financial assets

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

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

2) Financial liabilities

a) Subsequent measurement

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

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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 30.

b) Derecognized financial liabilities

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

3) Derivative financial instruments

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

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

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

o. Hedge accounting

The Group designates certain hedging instruments as cash flow hedges.

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

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

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

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p. 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.

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

q. Revenue recognition

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

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

1) Revenue from sale of goods

Revenue from sale of goods is recognized when receiving control; that is to say, when the goods are delivered to the customer’s specific location and satisfy its performance, revenue and accounts receivable can be recognized.

2) Revenue from rendering of services

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

r. Leases

2019

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

1) The Group as lessor

All leases are classified as operating leases.

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

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

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2) The Group as lessee

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

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

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

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

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

2018

All leases are classified as operating leases.

1) The Group as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

3) Leasehold land for own use

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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.

s. Government grants

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

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

t. Employee benefits
1) Short-term employee benefits

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

2) Retirement benefits

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

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

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

u. Taxation

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

1) Current tax

According to the Income Tax Law, 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.

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

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

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

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

3) Current and deferred taxes

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

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6. CASH AND CASH EQUIVALENTS

Cash Cash on hand Checking accounts and demand deposits Cash equivalents Time deposits Repurchase agreements collateralized by bonds		December 31	December 31
		2019 $ 2,093 1,979,620 1,981,713 3,760,875 - 3,760,875 $ 5,742,588	2018 $ 4,439 1,870,223 1,874,662 11,104,232 1,450,566 12,554,798 $ 14,429,460

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

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

Checking accounts and demand deposits Time deposits Repurchase agreements collateralized by bonds	December 31
	2019 2018 0.00%-2.14% 0.00%-2.45% 0.60%-3.60% 0.50%-3.95% - 0.50%-0.60%

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 ordinary common 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
		2019 $ 339,427 304 $ 339,731 $ 686,413 $ 2,483	2018 $ 567,620 23 $ 567,643 $ 734,341 $ 79

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

December 31, 2019

			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2020.01.06-2020.03.16	USD11,000/$330,810
	JPY/NTD	2020.02.25-2020.09.25	JPY600,000/$165,910
Sell	RMB/USD	2020.01.13	RMB14,022/USD$2,000
December 31, 2018
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2019.01.04-2019.01.22	USD5,000/$153,480

The Group 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 investments Listed shares Unlisted shares Foreign investments Unlisted shares		December 31	December 31
		2019 $ 29,083 25,395 54,478 152,864 $ 207,342	2018 $ 18,673 24,045 42,718 184,678 $ 227,396

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

In June 2018, after the Group acquired an additional 15% interest in Yue Ki Industrial, the shareholding ratio increased to 15.08% and one of the seats in the board of directors was obtained by the Corporation. This transaction was deemed as the Group’s disposal of financial assets at fair value through other comprehensive income and acquisition of investments accounted for using the equity method at market value on the day the Group began exercising significant influence over Yue Ki Industrial. The Group reclassified a gain of $507 thousand from other equity to retained earnings when the Group began exercising significant influence over Yue Ki Industrial.

For the year ended December 31 2018, the Group disposed of part of its unlisted shares which had a fair value of $12,603 thousand and the Group transferred a gain of $361 thousand from other equity to retained earnings.

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Dividends of $675 thousand and $1,636 thousand were recognized during 2019 and 2018, respectively. Those dividends are all related to investments held at the end of the reporting period.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Principal guaranteed notes Less: Allowance for impairment loss Non-current Bonds Preference shares Less: Allowance for impairment loss		December 31	December 31
		2019 $ 8,610 (54) $ 8,556 $ 801,389 9,900 811,289 (34,816) $ 776,473	2018 $ 105,015 (656) $ 104,359 $ 820,015 9,900 829,915 (5,210) $ 824,705

a. The coupon rates of principal guaranteed notes were ranged from 3.00% and 3.03%-3.07% per annum as of December 31, 2019 and 2018, respectively.
b. The range of coupon rates of bonds were ranged from 0.86%-4.34% and 0.86%-4.80% per annum as of December 31, 2019 and 2018, respectively.
c. The coupon rate of the preference shares was 1.50% per annum as of December 31, 2019 and 2018, respectively.
d. Refer to Note 10 for information relating to their credit risk management and impairment.

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS - 2019

Investments in debt instruments were classified as at amortized cost.

Gross carrying amount Less: Allowance for impairment loss Amortized cost		December 31	December 31
		2019 $ 819,899 (34,870) $ 785,029	2018 $ 934,930 (5,866) $ 929,064

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

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The Group considers the historical default rates of each credit rating supplied by external rating agencies, the current financial condition of debtors, and industry forecast to estimate 12-month or lifetime expected credit losses. The Group’s current credit risk grading framework comprises the following categories:

		Basis for Recognizing Expected	Basis for Recognizing Expected
Credit Rating	Description	Credit Losses
Performing	The counterparty has a low risk of default and a	12-month ECL
	strong capacity to meet contractual cash flows
No rating	The preference shares and bonds do not have	Lifetime ECL - not credit-impaired
	credit rating
The gross carrying amounts of debt instrument investments by		credit category and	the corresponding
expected loss rates	were as follows:
December 31, 2019
			Gross Carrying
			Amount
			At Amortized
Credit Rating	Expected Credit Loss Rate		Cost
Performing	0.0769%-0.6221%		$ 659,999
No rating	20.6080%		159,900
December 31, 2018
			Gross Carrying
			Amount
			At Amortized
Credit Rating	Expected Credit Loss Rate		Cost
Performing	0.0769%-0.6221%		$ 925,030
No rating	32.4908%		9,900

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

Performing No rating

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

Balance at January 1, 2019 Financial assets purchased (a) Derecognition (b) Change in model or risk parameters (c) Change in exchange rates or others Balance at December 31, 2019 Balance at January 1, 2018 Financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance at December 31, 2018	Credit Rating
	Performing (12-month ECL) No Rating (Lifetime ECL - Not Credit- impaired) $ 2,650 $ 3,216 14,616 - (15,346) - - 30,912 (2) (1,176) $ 1,918 $ 32,952 $ 5,572 $ 3,932 6,984 - (10,063) - 157 (716) $ 2,650 $ 3,216

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a. During 2019, the Group purchased principal guaranteed notes of $2,349,473 thousand and correspondingly increased the loss allowance for investments rated as performing of $14,616 thousand. During 2018, the Group purchased principal guaranteed notes of $1,110,257 thousand and bonds of $100,000 thousand and correspondingly increased the loss allowance for investments as performing of $6,984 thousand.
b. Investments in principal guaranteed notes of $2,445,180 thousand and bonds of $175,460 thousand were expired and redeemed during 2019, with consequential reduction in the loss allowance for investments rated as performing of $15,346 thousand; and investments in negotiable certificates of deposit of $700,000 thousand, principle guaranteed notes of $1,579,440 thousand and bonds of $309,203 thousand were expired and redeemed during 2018, with consequential reduction in the loss allowance for investments rated as performing of $10,063 thousand.
c. As the Group disposed of its subsidiary, Gatetech Technology, in November 2019, the Group assessed the lifetime ECLs of its debt investments held in Gatetech Technology and correspondingly increased the expected credit losses by $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
		2019 $ 1,137,902 440 $ 1,138,342 $ 6,884	2018 $ 743,303 - $ 743,303 $ -

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

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

The source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Group’s own credit risk on the fair value of the foreign exchange forward contracts and foreign currency banknote, which is not reflected in the fair value of the hedged item attributable to changes in foreign exchange rates. No other sources of ineffectiveness is expected to emerge from these hedging relationships.

During 2019 and 2018, hedging instruments at fair value and transferred to initial carrying amount of hedged items are detailed in Note 23(e).

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

December 31, 2019

Notional Amount Forward Rate Hedging Instruments Currency (In Thousands) Maturity (Note) Line Item Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY4,122,832/NTD1,155,466 2020.02.25- 2020.12.15 0.2758-0.2828 Financial assets for hedging Forecast purchases - foreign exchange forward contracts JPY/NTD JPY1,664,000/NTD464,661 2020.01.15- 2020.11.16 0.2752-0.2815 Other current liabilities Forecast purchases - foreign exchange forward contracts USD/NTD USD4,000/NTD120,415 2020.01.13 30.1000-30.1050 (USD1:NTD) Other current liabilities Forecast purchases - foreign exchange forward contracts RMB/USD RMB28,005/USD4,000 2020.01.13 6.9980-7.0110 (USD1:RMB) Financial assets for hedging		Carrying A	mount Liabilities $ - (6333 ) (551 ) - $ (6,884)	Change in Value Used for Calculating Hedge Ineffectiveness $ (14,051 ) (5,066 ) (441 ) 352 $ (19,206)
		Asset $ 1,137,902 - - 440 $ 1,138,342

Note: JPY1:NTD, unless stated otherwise.

Hedged Item Cash flow hedges Forecast purchases December 31, 2018 Notional Amount Forward Rat Hedging Instruments Currency (In Thousands) Maturity (JPY1:NTD) Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY2,671,828/NTD717,056 2019.01.15- 2019.06.30 0.2679-0.2706 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 $ 19,206 $ (19,206) e Carrying Amount Change in Value Used for Calculating Hedge Line Item Asset Ineffectiveness Financial assets for hedging $ 743,303 $ 20,997 Change in Value Used for Calculating Balance in Other Equity Hedge Ineffectiveness Continuing Hedges $ (20,997) $ 20,997 Hedging Gains Recognized in OCI	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ 19,206 $ (19,206) e Carrying Amount Change in Value Used for Calculating Hedge Line Item Asset Ineffectiveness Financial assets for hedging $ 743,303 $ 20,997 Change in Value Used for Calculating Balance in Other Equity Hedge Ineffectiveness Continuing Hedges $ (20,997) $ 20,997 Hedging Gains Recognized in OCI	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ 19,206 $ (19,206) e Carrying Amount Change in Value Used for Calculating Hedge Line Item Asset Ineffectiveness Financial assets for hedging $ 743,303 $ 20,997 Change in Value Used for Calculating Balance in Other Equity Hedge Ineffectiveness Continuing Hedges $ (20,997) $ 20,997 Hedging Gains Recognized in OCI
	For the Year Ended December 31
		2019 $ 1,898	2018 $ 40,663

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

12. NOTES AND ACCOUNTS RECEIVABLE, NET

At amortized cost Notes and accounts receivable Less: Allowance for impairment loss		December 31	December 31
		2019 $ 1,206,811 (16,348) $ 1,190,463	2018 $ 1,197,225 (19,771) $ 1,177,454

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

The aging of receivables was as follows:

0 days 1-60 days 61-90 days More than 90 days Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost		December 31	December 31
		2019 $ 1,154,739 23,190 1,233 27,649 1,206,811 (16,348) $ 1,190,463	2018 $ 1,146,617 29,254 11,971 9,383 1,197,225 (19,771) $ 1,177,454

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

Balance at January 1 Add: Net remeasurement of loss allowance Less: Net reversal of loss allowance Disposal of subsidiaries Foreign exchange gains and losses Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 19,771 - (3,127) (86) (210) $ 16,348	2018 $ 6,788 13,051 - - (68) $ 19,771

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13. INVENTORIES

Merchandise Finished goods Work in progress Raw materials Materials in transit		December 31	December 31
		2019 $ 121,436 1,975,823 317,658 2,038,601 164,143 $ 4,617,661	2018 $ 196,059 1,453,757 374,472 1,759,515 286,461 $ 4,070,264

The costs of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018 were $26,072,063 thousand and $27,789,296 thousand, respectively. The costs of goods sold for the year ended December 31, 2019 included inventory write-downs of $33,676 thousand.

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

The Group had a 43.87% interest in Kian Shen as of December 31, 2019 and 2018. The remaining 56.13% interest in Kian Shen is dispersed and held by shareholders unrelated to the Group.

Refer to Table 7 for the information on the place of incorporation and principal place of business.

The summarized financial information below represents amounts before intragroup eliminations of Kian Shen and Kian Shen’s subsidiaries:

Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Revenue Profit for the year Other comprehensive loss for the year Total comprehensive income for the year		December 31	December 31
	2019 2018 $ 1,041,592 $ 836,938 3,998,786 4,140,669 (592,399) (685,896) (339,243) (178,573) $ 4,108,736 $ 4,113,138 $ 1,802,502 $ 1,804,434 2,306,234 2,308,704 $ 4,108,736 $ 4,113,138 For the Year Ended December 31
		2019 $ 1,242,120 $ 289,942 (162,224) $ 127,718	2018 $ 1,337,755 $ 453,196 (129,075) $ 324,121 (Continued)

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Profit attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Total comprehensive income attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Net cash outflow from: Operating activities Investing activities Financing activities Foreign exchange adjustments Net cash outflow Dividends paid to non-controlling interests	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 127,198 162,744 $ 289,942 $ 56,030 71,688 $ 127,718 $ (78,244) 36,807 (96,951) (71) $ (138,459) $ 74,158	2018 $ 198,817 254,379 $ 453,196 $ 142,192 181,929 $ 324,121 $ (53,507) 257,104 (212,160) (2,464) $ (11,027) $ 98,877 (Concluded)

15. NON-CURRENT ASSETS HELD FOR SALE

Investments accounted for using the equity method classified as held for sale Equity directly associated with non-current assets classified as held for sale		December 31	December 31
		2019 $ 148,023 $ (7,538)	2018 $ 148,023 $ (7,538)

In August 2018, the Group entered into a contract for the transfer of shares of Zhejiang Kanda with a non-related party, and collected the contract price in installment.

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates Investments in joint ventures		December 31	December 31
		2019 $ 15,586,288 7,762,637 $ 23,348,925	2018 $ 20,979,597 8,127,177 $ 29,106,774

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a. Investments in associates

Associate Material associates Yulon Associates that are not individually material		December 31	December 31
		2019 $ 7,110,438 8,475,850 $ 15,586,288	2018 $ 11,479,604 9,499,993 $ 20,979,597

1) Material associates

The Group held 16.80% interest in Yulon on December 31, 2019 and 2018, respectively.

The Group exercises significant influence over Yulon and applies the equity method of accounting because the Group and Yulon share the same president of the board even though the Group holds less than 20% interest in Yulon.

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

Refer to Table 7 for the nature of activities, principal places of business and countries of incorporation of the aforementioned associates.

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

Name of Associate Yulon		December 31	December 31
		2019 $ 5,126,561	2018 $ 4,772,553

As Yulon adjusted the organizational structure of its Group by carrying out a business combination of entities under common control, the consolidated financial statements of Yulon and its subsidiaries for the year ended December 31, 2018 were restated.

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

Yulon

Current assets Non-current assets Current liabilities Non-current liabilities Equity		December 31	December 31
		2019 $ 231,944,241 81,947,302 (230,116,188) (26,694,204) 57,081,151	2018 (Restated) $ 221,698,791 98,161,768 (207,661,949) (27,774,636) 84,423,974 (Continued)

41 -

Equity attributable to predecessors’ interests under common control Non-controlling interests Proportion of the Group’s ownership Equity attributable to the Group Cross-shareholdings Unrealized gain on sidestream transactions Carrying amount Operating revenue Net profit (loss) for the year Other comprehensive loss Total comprehensive income (loss) for the year Dividends received from Yulon		December 31	December 31
	2019 2018 (Restated) $ - $ (564,712) (11,244,743) (12,122,134) $ 45,836,408 $ 71,737,128 16.80% 16.80% $ 7,700,516 $ 12,051,837 (590,078) (575,518) - 3,285 $ 7,110,438 $ 11,479,604 (Concluded) For the Year Ended December 31
		2019 $ 85,800,574 $ (24,533,477) (304,732) $ (24,838,209) $ 175,693	2018 (Restated) $ 88,115,701 $ 3,847,036 (687,796) $ 3,159,240 $ 152,092

2) Aggregate information of associates that are not individually material

The Group’s share of: Net profit (loss) for the year Other comprehensive loss Total comprehensive income (loss) for the year	For the Year Ended	For the Year Ended	December 31
		2019 $ (358,800) 69,661 $ (289,139)	2018 $ 677,242 (40,318) $ 636,924

All the associates are accounted for using the equity method.

In June 2018, the Group injected capital of $35,178 thousand and acquired 8% interest of Uni-Calsonic Corporation, which led to an increase in its shareholding from 23.2% to 31.2%.

In June 2018, the Group acquired 29% of interests in Fujian Spicer and Tai-Ya Investment in the amounts of $329,134 thousand (RMB71,660 thousand) and $79,505 thousand (RMB17,310 thousand) from Taiguang Investment and ROC-Spicer Investment, which were the subsidiaries of ROC-Spicer, and thus the Group exercised significant influence over Fujian Spicer and Tai-Ya Investment.

42 -

In January 2019, the Group disposed of 20.01% interest in Sin Jang to Sin Gan and recognized a gain on disposal of the investment amounting to $1,347 thousand (calculated as the disposal price of $103,475 thousand less the carrying amount of the disposed of equity investments of $102,206 thousand and the exchange differences on translating the financial statements of foreign operations of $78 thousand).

In March 2019, the Group disposed of 24.67% interest in Sin Gan to Taiwan Acceptance and recognized a loss on disposal of the investment amounting to $1,862 thousand (calculated as the disposal price of $105,824 thousand less the carrying amount of the disposed of equity investments of $105,860 thousand and exchange differences on translating the financial statements of foreign operations of $(1,826) thousand).

In June 2019, the Group disposed of 43.85% interest in Yulon IT to Yulon and recognized a loss on disposal of the investment amounting to $1,100 thousand (calculated as the disposal price of $17,860 thousand less the carrying amount of the disposed of equity investments of $18,960 thousand).

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

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

b. Investments in joint ventures

Joint ventures that are not individually material		December 31	December 31
		2019 $ 7,762,637	2018 $ 8,127,177

Aggregate information of joint ventures that are not individually material:

The Group’s share of: Net profit of the year Other comprehensive 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
		2019 $ 803,549 (297,180) $ 506,369	2018 $ 1,410,901 (162,880) $ 1,248,021

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

Hangzhou King-Long Kian-Shen Co., Ltd., which was the subsidiary of the Group’s joint venture, Xiamen King-Long Kian-Shen Frame, had discontinued operations before June 30, 2018, after approval was obtained from its board of directors on May 22, 2018. The future operational transformation is under discussion. The board of directors of Hangzhou King-Long Kian-Shen Co., Ltd. approved to rent its plant and equipment to Xiamen King-Long Kian-Shen Frame on September 11, 2018.

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

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17. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2018 Additions Disposals Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Disposals Depreciation expenses Reclassifications Impairment losses Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018 Cost Balance at January 1, 2019 Additions Disposals Reclassifications Disposal of subsidiaries Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Depreciation expenses Reclassifications Impairment losses Disposal of subsidiaries Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019	Land $ 2,127,397 - - - - $ 2,127,397 $ 2,127,397 $ 2,127,397 - - - (152,623 ) - $ 1,974,774 $ 1,974,774	Land Improvements $ 114,673 - - 9,672 - $ 124,345 $ 101,992 - 3,389 5,346 - - $ 110,727 $ 13,618 $ 124,345 - - 2,083 - - $ 126,428 $ 110,727 - 2,255 - - - - $ 112,982 $ 13,446	Buildings $ 4,950,846 1,149 (448 ) 40,147 (8,468) $ 4,983,226 $ 3,840,607 (448 ) 139,620 (5,346 ) - (3,008) $ 3,971,425 $ 1,011,801 $ 4,983,226 1,105 (16,964 ) 151,760 (334,660 ) (15,205) $ 4,769,262 $ 3,971,425 (16,867 ) 117,362 (106 ) - (158,287 ) (6,112) $ 3,907,415 $ 861,847	Machinery $ 24,501,622 4,285 (375,018 ) 606,691 (7,947) $ 24,729,633 $ 22,189,274 (369,813 ) 737,192 - 148,360 (5,972) $ 22,699,041 $ 2,030,592 $ 24,729,633 109,015 (1,279,309 ) 996,820 (441,753 ) (14,640) $ 24,099,766 $ 22,699,041 (1,276,555 ) 712,984 2,810 51,740 (342,454 ) (11,315) $ 21,836,251 $ 2,263,515	Other Equipment $ 1,879,272 50,971 (228,854 ) 90,198 (1,007) $ 1,790,580 $ 1,478,554 (177,423 ) 82,339 - - (625) $ 1,382,845 $ 407,735 $ 1,790,580 51,180 (159,297 ) 70,384 (41,875 ) (1,381) $ 1,709,591 $ 1,382,845 (132,855 ) 87,179 (2,810 ) 90 (32,179 ) (1,011) $ 1,301,259 $ 408,332	Construction in Progress $ 579,660 964,063 - (746,708 ) (11) $ 797,004 $ - - - - - - $ - $ 797,004 $ 797,004 1,328,010 (4,419 ) (1,221,318 ) (1,900 ) (37) $ 897,340 $ - - - - - - - $ - $ 897,340	Total $ 34,153,470 1,020,468 (604,320 ) - (17,433) $ 34,552,185 $ 27,610,427 (547,684 ) 962,540 - 148,360 (9,605) $ 28,164,038 $ 6,388,147 $ 34,552,185 1,489,310 (1,459,989 ) (271 ) (972,811 ) (31,263) $ 33,577,161 $ 28,164,038 (1,426,277 ) 919,780 (106 ) 51,830 (532,920 ) (18,438) $ 27,157,907 $ 6,419,254

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

As a result of the declining sales in the market for several types of vehicles, the estimated future cash flows expected to arise from related equipment had decreased. Thus, the Group recognized impairment losses of $51,830 thousand and $148,360 thousand for the years ended December 31, 2019 and 2018, respectively. The Group determined the recoverable amount of the relevant assets on the basis of their value in use. The discount rates used in measuring value in use were 3.47%-4.44% and 6.047%-6.69% per annum, respectively.

44 -

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

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

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 32.

18. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	December 31,	December 31,
		2019
Carrying amounts
Land	$	82,312
Buildings		352,877
Other equipment		7,732
	$	442,921
	For the Year
		Ended
	December 31,
		2019
Additions to right-of-use assets	$	22,249
Depreciation charge for right-of-use assets
Land	$	29,853
Buildings		66,868
Other equipment		6,655
	$	103,376
Lease liabilities - 2019
	December 31,
		2019
Carrying amounts
Current	$	88,697
Non-current	$	359,836

b. Lease liabilities - 2019
45 -

Range of discount rate for lease liabilities was as follows:

	December 31,
	2019
Land	1.20%-1.94%
Buildings	1.20%-4.35%
Other equipment	0.98%-1.37%

c. Material lease-in activities and terms

The Group leases land and buildings for the use of plants, and offices with lease terms of 2 to 10 years. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

2019
	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	20,121
Expenses relating to low-value asset leases	$	2,688
Total cash outflow for leases	$	132,901

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

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

	December 31,
	2018
Not later than 1 year	$ 110,157
Later than 1 year and not later than 5 years	330,544
Later than 5 years	154,897
	$ 595,598

Lease arrangements under operating lease for the leasing out of investment properties are set out in Note 19.

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19. INVESTMENT PROPERTIES

Cost
Balance at January 1, 2018 and December 31, 2018

Accumulated depreciation and impairment
Balance at January 1, 2018

Depreciation expenses

Balance at December 31, 2018

Carrying amount at December 31, 2018

Cost
Balance at January 1, 2019

Reclassification

Balance at December 31, 2019

Accumulated depreciation and impairment
Balance at January 1, 2019

Reclassification
Depreciation expenses

Balance at December 31, 2019

Carrying amount at December 31, 2019

$ 1,820,887
$ 425,399

15,486
$ 440,885
$ 1,380,002
$ 1,820,887

271
$ 1,821,158
$ 440,885
106

14,118
$ 455,109
$ 1,366,049

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

The fair values of investment properties of the Group were $2,388,593 thousand and $2,414,732 thousand as of December 31, 2019 and 2018, respectively.

Investment properties as of December 31, 2019 were appraised by the Group’s management using the valuation model in which other market participants frequently used. The valuation from management was arrived at by reference to market evidence of transaction prices for similar properties. In 2018, except for some of the Group’s investment properties which were appraised by an independent valuer on the balance sheet date, the remaining investment properties were appraised by the Group’s management using the valuation model in which other market participants frequently used. The valuation from management was arrived at by reference to market evidence of transaction prices for similar properties. The independent valuer’s valuation was based on the weighted-average cost analysis and revenue method and the assumptions used in 2018 include a discount rate of 3.04% and a capitalization rate of 2.24%.

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

47 -

The maturity analysis of lease payments receivable from the leasing of investment properties under operating leases as of December 30, 2019 was as follows:

				December 31,	December 31,
					2019
Year	1			$	69,039
Year	2				59,481
Year	3				49,816
Year	4				17,979
Year	5				13,920
Later	than	5	years		13,920
				$	224,155

The future minimum lease payments of non-cancellable operating lease commitments as of December 31, 2018 are as follows:

	December 31,	December 31,
		2018
Not later than 1 year	$	62,568
Later than 1 year and not later than 5 years		125,360
Later than 5 years		-
	$	187,928

The Group has freehold interests in all of its investment properties. The investment properties pledged as deposits for certain projects are set out in Note 32.

20. BORROWINGS

a. Short-term borrowings

Line of credit borrowings Bank loans		December 31	December 31
		2019 $ 615,000 - $ 615,000	2018 $ 340,000 305,000 $ 645,000

1) The ranges of interest rate on credit borrowings were 0.95%-1.00% and 0.95%-0.98% per annum as of December 31, 2019 and 2018, respectively.
2) The interest rate on bank loans was 1.18% per annum as of December 31, 2018.
48 -

b. Long-term borrowings

	December 31,
	2019
Unsecured borrowings
Line of credit borrowings	$ 50,000
Less: Current portions	(6,250)
Long-term borrowings	$ 43,750

The aforementioned long-term borrowings are repayable in installments at varying amounts from October 15, 2020 to July 15, 2022. The Group had signed medium-term loan contracts with banks with non-revolving credit facilities. As of December 31, 2019, the annual interest rate was 0.975%; the maturity date of $20,000 thousand of the loan amount is July 31, 2022, while the maturity date of the remaining loan amount of $30,000 thousand is October 3, 2022.

21. OTHER PAYABLES

Payable for salaries or bonuses Payable for taxes Payable for warranties Provisions for employee benefits Payable for advertisement Others		December 31	December 31
		2019 $ 988,243 222,322 208,694 137,121 126,738 743,572 $ 2,426,690	2018 $ 1,149,478 191,369 263,952 153,296 197,919 761,051 $ 2,717,065

22. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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

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

49 -

b. Defined benefit plans

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

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

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December 31	December 31
		2019 $ 2,436,206 (1,700,806) $ 735,400	2018 $ 2,578,708 (1,668,380) $ 910,328

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, 2018
$ 2,532,411
$ (1,391,714)

Service cost
Current service cost
46,309
-
Past service cost
47,004
-
Net interest expense (income)

31,754

(17,673)

Recognized in profit or loss

125,067

(17,673)

Remeasurement
Return on plan assets
-
(37,943)
Actuarial (gain) loss
Changes in demographic assumptions
3,599
-
Changes in financial assumptions
34,615
-
Experience adjustments

(4,184)

-

Recognized in other comprehensive income
(loss)

34,030

(37,943)

Contributions from the employer
-
(293,274)
Benefits paid
(72,224)
72,224
Portion of benefits paid by the Corporation

(40,576)

-

Balance at December 31, 2018

2,578,708
(1,668,380)

Net Defined
Benefit
Liabilities
$ 1,140,697
46,309
47,004

14,081

107,394

(37,943)
3,599
34,615

(4,184)

(3,913)

(293,274)
-

(40,576)

910,328
(Continued)

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Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Service cost
Current service cost
$ 40,507
$ -

Past service cost
43,118
-
Net interest expense (income)

28,381

(18,522)

Recognized in profit or loss

112,006

(18,522)

Remeasurement
Return on plan assets
-
(55,335)
Actuarial (gain) loss
Changes in demographic assumptions
565
-
Changes in financial assumptions
86,335
-
Experience adjustments

(20,419)

-

Recognized in other comprehensive income
(loss)

66,481

(55,335)

Contributions from the employer
-
(184,023)
Benefits paid
(214,650)
214,650
Portion of benefits paid by the Corporation
(84,647)
-
Disposal of subsidiaries

(21,692)

10,804

Balance at December 31, 2019
$ 2,436,206
$ (1,700,806)

Net Defined
Benefit
Liabilities
$ 40,507
43,118

9,859

93,484

(55,335)
565
86,335

(20,419)

11,146

(184,023)
-
(84,647)

(10,888)
$ 735,400
(Concluded)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	For the Year Ended	For the Year Ended	December 31
		2019 $ 54,077 5,989 10,961 22,010 $ 93,037	2018 $ 61,847 3,491 13,088 28,388 $ 106,814

The disbursement amounts of defined benefit plans of associates were $447 thousand and $580 thousand in 2019 and 2018, respectively.

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

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
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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 were as follows:

Discount rate Expected rate of salary increase	December 31
	2019 2018 0.75%-1.1% 0.875%-1.2% 1.25%-2.5% 1%-2.5%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would 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
		2019 $ (61,242) $ 63,520 $ 62,062 $ (60,141)	2018 $ (66,703) $ 69,259 $ 67,910 $ (65,730)

The 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 would 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
	2019 2018 $ 124,423 $ 197,784 8.2-13 years 8.5-15.7 years

23. EQUITY

a. Share capital

1) Ordinary shares

Numbers of shares authorized (in thousands) Amount of shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 1,800,000 $ 18,000,000 553,620 $ 5,536,203	2018 1,800,000 $ 18,000,000 1,384,051 $ 13,840,508

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

2) Capital reduction in cash

For the purposes of adjusting its capital structure and enhancing the return on shareholders’ equity, the Corporation resolved in its board of directors’ meeting on March 27, 2019 and subsequently in the shareholders’ meeting in June 2019 to implement a capital reduction in cash through the return of share proceeds to shareholders. The total capital reduction amounted to $8,304,305 thousand, which represented the cancellation of 830,431 thousand shares (capital reduction ratio was 60%). After the capital reduction, the amount of paid-in capital was $5,536,203 thousand. The capital reduction was approved by the FSC on July 23, 2019. In addition, the record date of the capital reduction, which was set as August 8, 2019, had been approved by the board of directors in August 2019 and the change in registration was completed on August 19, 2019.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note 1) Conversion of bonds Issuance of ordinary shares Others May be used to offset a deficit only Changes in percentage of ownership interest in subsidiaries (Note 2) Share of changes in capital surplus of associates		December 31	December 31
		2019 $ 5,183,923 1,184,920 4,666 2,225 38,384 $ 6,414,118	2018 $ 5,183,923 1,184,920 4,666 2,225 27,899 $ 6,403,633

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 once a year).
Note 2: Such capital surplus arises from the effect of changes in ownership interest in a subsidiary resulting from equity transactions other than actual disposal or acquisition, or from changes in capital surplus subsidiaries accounted for using equity method.
c. Retained earnings and dividend policy

Under the dividend policy as set forth in the Articles, where the Corporation made a profit in a fiscal year, the profit shall be first utilized for offsetting losses of previous years and paying taxes, then for setting aside as legal reserve 10% of the remaining profit. If there is remaining profit, the profit shall be utilized for setting aside a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Corporation’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution. For the policies on distribution of employees’ compensation and remuneration of directors, refer to Note 25.

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The operating environment of the Corporation is considered as a mature and steady industry. In determining dividend amounts, 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.

An 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 deficits. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

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

The appropriations of earnings for 2018 and 2017 approved in the shareholders’ meetings in June 2019 and 2018, respectively, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For For Year 2018 Year 2017 $ 359,300 $ 410,564 2,352,886 2,491,292	Dividends Per Share (NT$)
		For For Year 2018 Year 2017 $ 1.7 $ 1.8

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

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

The appropriations of earnings for 2019, which were proposed in the board of directors’ meeting on March 26, 2020, are subject to the resolution of the shareholders in their meeting to be held in June 2020.

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
		2019 $ 1,046,967 (17,308) (5) $ 1,029,654	2018 $ 1,051,658 (4,691) - $ 1,046,967

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e. Other equity items

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

Balance at January 1 Recognized for the year Exchange differences on translating the financial statements of foreign operations Share from associates and join ventures accounted for using the equity method Reclassification adjustments Disposal of associates accounted for using equity method Disposal of foreign operations Other comprehensive loss recognized for the year Reclassified equity that related to non-current assets held for sale Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (646,278) (52,779) (336,745) 1,748 43,401 (344,375) - $ (990,653)	2018 $ (485,118) (33,720) (134,978) - - (168,698) 7,538 $ (646,278)

2) Unrealized gain on financial assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized loss - equity instruments Share from associates accounted for using the equity method Other comprehensive loss recognized for the year Cumulative unrealized loss (gain) of equity instruments transferred to retain earning due to disposal by associates Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 117,177 (13,972) 195,384 181,412 (82,010) (17) $ 216,562	2018 $ 273,866 (45,133) (116,521) (161,654) 5,111 (146) $ 117,177

55 -

3) Cash flow hedges

Balance at January 1 Effect of change in tax rate Recognized for the year Gain on changes in the fair value of hedging instruments Foreign currency risk - spot rate Foreign currency risk - foreign exchange forward contracts Share from joint ventures accounted for using the equity method Other comprehensive income recognized for the year Transferred to initial carrying amount of hedged items Balance at December 31 f. Non-controlling interests Balance at January 1 Share of profit for the year Other comprehensive loss recognized for the year Unrealized loss on financial assets at FVTOCI Exchange difference on translation the financial statements of foreign operations Remeasurement on defined benefit plans Share of other comprehensive income of associates and joint ventures accounted for using the equity method Other comprehensive loss recognized for the year Disposal of subsidiaries (Note 28) Cash dividend distributed by subsidiaries Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 20,997 $ (12,253) - 382 6,673 22,979 (5,155) 9,889 (762) - 756 33,250 (41,721) - $ (19,968) $ 20,997 For the Year Ended December 31
		2019 $ 3,613,814 157,200 (4,419) (18,140) 11,910 (76,453) (87,102) (148,637) (112,397) $ 3,422,878	2018 $ 3,550,772 299,043 (28,949) (4,898) 3,869 (42,786) (72,764) - (163,237) $ 3,613,814

24. REVENUE Revenue from contracts with customers Revenue from sale of goods Revenue from sale of vehicles Revenue from sale of components Service revenue Rental income Other revenue	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 24,114,164 6,557,235 30,671,399 1,243,630 70,218 82,725	2018 $ 26,262,721 7,227,699 33,490,420 1,221,406 67,065 90,623

$ 32,067,972 $ 34,869,514

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25. NET PROFIT (LOSS)

Net profits (loss) are concluded as follows:

a. Depreciation and amortization

For the Year Ended December 31 2019 2018 An analysis of depreciation by function Operating costs $ 831,601 $ 825,857 Operating expenses 205,673 152,169 $ 1,037,274 $ 978,026 An analysis of amortization by function Operating costs $ 9,847 $ 11,677 Operating expenses 47,228 68,179 $ 57,075 $ 79,856 An analysis of amortization of intangible assets by function Research and development expenses $ 57,762 $ 40,591 b. Rental income and operating expenses directly related to investment properties For the Year Ended December 31 2019 2018 Rental income from investment properties $ 67,467 $ 65,802 Direct operating expenses from investment properties that generated rental income $ 20,543 $ 22,666 c. Employee benefits expense For the Year Ended December 31 2019 2018 Post-employment benefits Defined contribution plans $ 88,643 $ 88,548 Defined benefit plans 93,037 106,814 181,680 195,362 Short-term benefits 3,558,956 3,794,655 $ 3,740,636 $ 3,990,017 An analysis of employee benefits expenses by function Operating costs $ 2,032,004 $ 2,121,078 Operating expenses 1,708,632 1,868,939 $ 3,740,636 $ 3,990,017	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 67,467 $ 65,802 $ 20,543 $ 22,666 For the Year Ended December 31
		2019 $ 88,643 93,037 181,680 3,558,956 $ 3,740,636 $ 2,032,004 1,708,632 $ 3,740,636	2018 $ 88,548 106,814 195,362 3,794,655 $ 3,990,017 $ 2,121,078 1,868,939 $ 3,990,017

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d. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Corporation, the Corporation accrued employees’ compensation and remuneration of directors of at rates of no less than 0.1% and no higher than 0.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. 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. The employees’ compensation and remuneration of directors for the year ended December 31, 2018, which were approved by the Corporation’s board of directors in March 2019, are as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Year Ended December 31, 2018 0.85% 0.50% For the Year Ended December 31, 2018
	Cash $ 33,511 19,746

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

There was no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2018 and 2017.

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.

58 -

26. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of tax expense were as follows:

Current tax In respect of the current year Adjustments for the prior years Deferred tax In respect of the current year Adjustments for the prior years Adjustments to deferred tax attributable to changes in tax rates and laws Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 401,312 (16,140) 385,172 199,951 42,987 - 242,938 $ 628,110	2018 $ 277,104 (90,799) 186,305 207,839 75,278 (50,751) 232,366 $ 418,671

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

Profit (loss) before tax from continuing operations Income tax expense calculated at the statutory rate (20%) Tax-exempt income Income tax on unappropriated earnings Unrecognized deductible temporary differences Investment credits Unrecognized loss carryforwards Effect of different tax rates of group entities operating in other jurisdictions Effect of change in tax rate Adjustments for prior years’ tax Others Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (1,680,263) $ (336,052) 1,015,899 12,012 (22,273) (84,239) 9,608 2,773 - 26,847 3,535 $ 628,110	2018 $ 4,310,713 $ 862,143 (520,374) 147,499 1,528 (67,833) 35,807 (3,513) (50,751) (15,521) 29,686 $ 418,671

The Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings was reduced from 10% to 5%.

The applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other group entities operating in other jurisdictions are based on the tax law in those jurisdictions.

In July 2019, the President of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Group has already deducted the amount of capital expenditure from the unappropriated earnings in 2018 that was reinvested when calculating the tax on unappropriated earnings for the year ended December 2019.

59 -

b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current year Cash flow hedges Remeasurement of defined benefit plans Effect of change in tax rate	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (380) 2,229 - $ 1,849	2018 $ (7,795) (908) 7,535 $ (1,168)

c. Current tax assets and liabilities

Current tax assets (included in other current assets) Tax refund receivable and prepaid income tax Current tax liabilities Income tax payable		December 31	December 31
		2019 $ 94,452 $ 312,774	2018 $ 70,110 $ 117,081

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2019

Deferred tax assets Temporary differences Defined benefit plans Other payables Inventories Others Loss carryforwards Deferred tax liabilities Temporary differences Investments accounted for using the equity method Reserve for land value increment tax Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 150,971 $ (35,027) $ 2,229 72,585 (11,911) - 36,133 1,595 - 26,471 4,980 (5,629) 286,160 (40,363) (3,400) 50,551 (1,055) - $ 336,711 $ (41,418) $ (3,400) $ 192,262 $ 202,371 $ - 69,799 - - 6,100 (851) (5,249) $ 268,161 $ 201,520 $ (5,249)	Others Closing Balance $ - $ 118,173 - 60,674 - 37,728 10,431 36,253 10,431 252,828 (48,930) 566 $ (38,499) $ 253,394 $ 15,848 $ 410,481 - 69,799 - - $ 15,848 $ 480,280

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For the year ended December 31, 2018

Deferred tax assets Temporary differences Defined benefit plans Other payables Inventories Others Loss carryforwards Deferred tax liabilities Temporary differences Investments accounted for using the equity method Reserve for land value increment tax Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 167,008 $ (22,282) $ 6,245 57,466 15,119 - 33,624 2,509 - 31,497 (2,862) (2,164) 289,595 (7,516) 4,081 127,406 (76,855) - $ 417,001 $ (84,371) $ 4,081 $ 44,543 $ 147,356 - 69,799 - - 212 639 5,249 $ 114,554 $ 147,995 $ 5,249	Others Closing Balance $ - $ 150,971 - 72,585 - 36,133 - 26,471 - 286,160 - 50,551 $ - $ 336,711 363 $ 192,262 - 69,799 - 6,100 $ 363 $ 268,161

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

Loss carryforwards Expiry in 2020 Expiry in 2021 Expiry in 2022 Expiry in 2023 Expiry in 2024 Expiry in 2025 Expiry in 2027 Expiry in 2028 Expiry in 2029 Deductible temporary differences		December 31	December 31
		2019 $ 146,845 263,312 42,929 12,368 7,016 9,644 20,785 370,200 180,862 $ 1,053,961 $ 1,630,359	2018 $ 165,643 340,931 152,803 91,783 51,449 32,313 20,785 448,332 - $ 1,304,039 $ 2,240,415

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f. Information about unused loss carryforwards

Loss carryforwards as of December 31, 2019 comprised:

Unused Amount	Unused Amount	Expiry Year
$	146,845	2020
	263,312	2021
	42,929	2022
	12,368	2023
	7,016	2024
	9,644	2025
	20,785	2027
	370,659	2028
	183,231	2029
$	1,056,789

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

As of December 31, 2019 and 2018, the taxable temporary differences associated with an investment in subsidiaries for which no deferred tax liabilities have been recognized were $509,579 thousand and $584,214 thousand, respectively.

h. Income tax assessments

The income tax returns of the Corporation through 2017 have been assessed by the tax authorities.

27. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share Diluted earnings (loss) 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
		2019 $ (2.38) $ (2.38)	2018 $ 2.64 $ 2.63

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

Net Profit (Loss) for the Year

Profit (loss) of the Corporation	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (2,465,573)	2018 $ 3,592,999

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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 associates holding shares Effect of potentially dilutive ordinary shares Employees’ compensation Weight average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2019 1,051,879 (15,655) 1,036,224 - 1,036,224	2018 1,384,051 (20,599) 1,363,452 1,801 1,365,253

When calculating earnings per share (EPS), the Group considers the shares which associates hold as the treasury shares to reduce the outstanding shares.

If the Corporation offered to settle compensation paid to employees in cash or shares, the Group assumed the entire amount of the compensation will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares was 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. Due to the net loss after tax for the year ended December 31, 2019, the Corporation did not compute the diluted loss per share with anti-dilutive effects by assuming that employees’ compensation would be distributed in the form of shares.

28. DISPOSAL OF SUBSIDIARY

In order to strengthen the Group’s capital structure and focus on the development of its business, the Group fully disposed of 72.81% interest in its subsidiary, Gatetech Technology, to a non-related party. The disposal was completed on November 30, 2019, on which date control of Gatetech Technology passed to the acquirer.

a. Consideration received from disposal

	For the Year
	Ended
	December 31,
	2019
Sales proceeds receivable	$ 534,600

63 -
b. Analysis of assets and liabilities on the date control was lost

	Gatetech	Gatetech
	Technology
Current assets
Cash and cash equivalents	$	302,841
Notes and accounts receivable, net		222,067
Other receivables		3,551
Inventories		114,124
Prepayments		15,819
Other current assets		102
Non-current assets
Property, plant and equipment		439,891
Deferred tax assets		48,930
Other non-current assets		18,732
Current liabilities
Short-term borrowings		(330,000)
Notes and accounts payable		(79,219)
Trade payable to related parties		(2,042)
Other payables		(44,991)
Other current liabilities		(2,256)
Non-current liabilities
Bonds payable		(150,000)
Net defined benefit liabilities		(10,888)
Net assets disposed of	$	546,661
Gain on disposal of subsidiaries
	Gatetech
	Technology
Consideration received	$	534,600
Net assets disposal of		(546,661)
Non-controlling interests		148,637
Reclassification of other comprehensive income in respect of
subsidiaries		(43,259)
Gain on disposals	$	93,317
Net cash inflow on disposal of subsidiary
	For the Year
		Ended
	December 31,
		2019
Proceeds of disposal	$	534,600
Less: Cash and cash equivalent balances disposal of		(302,841)
Net cash inflow on disposal of subsidiaries	$	231,759

c. Gain on disposal of subsidiaries
d. Net cash inflow on disposal of subsidiary
64 -

29. CAPITAL MANAGEMENT

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

30. FINANCIAL INSTRUMENTS

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

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

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

December 31, 2019 Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Overseas unlisted shares Financial assets for hedging Non-derivative financial instruments Derivative financial instruments	Level 1 $ 339,427 - - $ 339,427 $ 29,083 - - $ 29,083 $ 1,137,902 - $ 1,137,902	Level 2 $ - - - $ - $ - - - $ - $ - - $ -	Level 3 $ - 686,413 304 $ 686,717 $ - 25,395 152,864 $ 178,259 $ - 440 $ 440	Total $ 339,427 686,413 304 $ 1,026,144 $ 29,083 25,395 152,864 $ 207,342 $ 1,137,902 440 $ 1,138,342 (Continued)

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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, 2018 Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Derivative financial instrument Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Overseas unlisted shares Financial assets for hedging Non-derivative financial instruments Financial liabilities Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities)	Level 1 $ - $ - Level 1 $ 567,620 - - $ 567,620 $ 18,673 - - $ 18,673 $ 743,303 $ -	Level 2 $ - $ - Level 2 $ - - - $ - $ - - - $ - $ - $ -	Level 3 $ 2,483 $ 6,884 Level 3 $ - 734,341 23 $ 734,364 $ - 24,045 184,678 $ 208,723 $ - $ 79	Total $ 2,483 $ 6,884 (Concluded) Total $ 567,620 734,341 23 $ 1,301,984 $ 18,673 24,045 184,678 $ 227,396 $ 743,303 $ 79

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

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

For the year ended December 31, 2019

Financial Assets
Equity
Instruments at
FVTPL
Derivative
Financial
Instruments at
FVTPL
Equity
Instruments at
FVTOCI
Derivative
Financial
Instruments
for Hedging
Balance at January 1
$ 734,341 $ 23 $ 208,723 $ -
Recognized in profit or loss
(47,928)
281
-
-
Recognized in other
comprehensive income
(loss)
-
-
(30,447)
440
Sales

-

-

(17)

-
Balance at December 31
$ 686,413
$ 304
$ 178,259
$ 440
Financial Liabilities
Derivative
Financial
Instruments at
FVTPL
Derivative
Financial
Instruments for
Hedging
Balance at January 1
$ 79
$ -
Recognized in profit or loss
2,404
-
Recognized in other comprehensive loss

-

6,884
Balance at December 31
$ 2,483
$ 6,884
For the year ended December 31, 2018
Financial Assets
Equity
Instruments at
FVTPL
Derivative
Financial
Instruments at
FVTPL
Equity
Instruments at
FVTOCI
Balance at January 1
$ 767,761 $ - $ 293,111
Recognized in profit or loss
(33,420)
23
-
Recognized in other
comprehensive loss
-
-
(71,178)
Sales

-

-

(13,210)

Balance at December 31
$ 734,341
$ 23
$ 208,723

Financial Liabilities
Derivative
Financial
Instruments at
FVTPL
Derivative
Financial
Instruments for
Hedging
Balance at January 1
$ 2,954
$ 12,362
Recognized in profit or loss
(2,875)
-
Recognized in other comprehensive loss

-
(12,362)
Balance at December 31
$ 79
$ -

Total
$ 943,087

(47,647)

(30,007)

(17)
$ 865,416
Total
$ 79
2,404

6,884
$ 9,367
Total
$ 1,060,872

(33,397)

(71,178)

(13,210)
$ 943,087
Total
$ 15,316
(2,875)
(12,362)
$ 79

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3) Valuation techniques and inputs applied for the purpose of Level 3 fair value measurement
a) Derivative financial instruments: The fair values of foreign exchange forward contracts of future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.
b) Domestic unlisted securities to which the market approach was applied: The fair values of domestic unlisted shares were determined with reference to the share prices of listed companies with similar businesses as the Corporation. The material unobservable inputs were as follows:

Operating income ratio Gross profit ratio EBIT ratio EBITDA ratio Post-tax profit ratio P/B ratio Discount rate for lack of marketability	December 31
	2019 2018 0.20-5.22 times 0.14-5.68 times 2.23-17.18 times 0.32-14.44 times - 2.44-23.21 times 5.21-24.22 times - 13.24-71.17 times 11.99-85.49 times 0.73-7.82 times 0.82-5.09 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 Gross profit ratio 1 time increase 1 time decrease EBIT ratio 1 time increase 1 time decrease EBITDA ratio 1 time increase 1 time decrease Post-tax profit ratio 1 time increase 1 time decrease P/B ratio 0.1 time increase 0.1 time decrease		December	31
		2019 $ 36,573 $ (36,573) $ 5,384 $ (5,384) $ - $ - $ 3,874 $ (3,874) $ 10,660 $ (10,660) $ 72,633 $ (72,633)	2018 $ 36,301 $ (36,301) $ 65,961 $ (65,961) $ 18,188 $ (18,188) $ - $ - $ 11,020 $ (11,020) $ 88,737 $ (88,737)

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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
	2019 2018 $ 1,026,144 $ 1,301,984 1,138,342 743,303 9,973,131 19,052,314 207,342 227,396 6,978,997 7,132,785 2,483 79 6,884 -

Note 1: The balances included financial assets measured at amortized cost, which comprised cash and cash equivalents, debt investments, notes receivable, accounts receivable (including related parties), other receivables, other financial assets (included in other current assets) and guarantee deposits (included in other non-current assets).
Note 2: The balances included financial liabilities measured at amortized cost which comprised short-term borrowings, short-term bills payable, notes payable, accounts payable (related parties included), other payables, long-term borrowing (current portion of long-term borrowing included) and deposits received (included in other non-current liabilities).

d. Financial risk management objectives and policies

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

1) Market risk

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

a) Foreign currency risk

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

Sensitivity analysis

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

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

USD Impact	USD Impact	USD Impact
For the Year Ended December 31
	2019 2018 $ (9,649) $ (10,385) JPY Impact
For the Year Ended December 31
	2019 2018 $ 18 $ 1,287 $ (15,972) $ (7,433) RMB Impact
For the Year Ended December 31
	2019 $ (8,101) $ (1,206)	2018 $ (12,219) $ -

b) Interest rate risk

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

Cash flow interest rate risk Financial assets Financial liabilities Fair value interest rate risk Lease liabilities Financial liabilities	December 31
	2019 2018 $ 7,060,429 $ 15,330,348 635,189 554,972 448,533 - 213,750 184,000

Sensitivity analysis

The sensitivity analysis below were determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. The sensitivity rate of 0.25% is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

70 -

If interest rates had been 0.25% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2019 and 2018 would increase/decrease by $16,063 thousand and $36,938 thousand, respectively.

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

c) Other price risk

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

Sensitivity analysis

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

If equity prices had been 5% higher/lower, pre-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $16,971 thousand and $28,381 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2019 and 2018 would have increased/decreased by $1,454 thousand and $934 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

The amounts of financial assets will be potentially impacted if the counter-parties 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 Group believes the risk is low because the trading parties are creditworthy banks, brokers and dealers.

3) Liquidity risk

The Group has sufficient operating capital to meet cash requirements for settlement of derivative transactions. Thus, liquidity risk is low.

31. TRANSACTIONS WITH RELATED PARTIES

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

a. Names and categories of related parties

Related Party Name Mitsubishi Motors Corporation (Mitsubishi Motors Corp.) Mitsubishi Corporation (Mitsubishi Corp.) Tai Yuen Textile Co., Ltd.	Related Party Category
	Investors that have significant influence over the Group Investors that have significant influence over the Group Investors that have significant influence over the Group (Continued)

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Related Party Category

Related Party Name
Le Wen Investment Co., Ltd.

Yulon Management Company Ltd. (Yulon Management)

Mitsubishi Corporation (Taiwan) Ltd.

Mitsubishi Motors Philippines Corporation

Mitsubishi Motors Thailand

Mitsubishi Motors North America., Inc.

Mitsubishi Motors Europe B.V.

Mitsubishi Corporation Technos

Shye Shyang Mechanical Industrial Co., Ltd.

Fuzhou Samnel Mechanical and Electrical

Uni-Calsonic Corp.

Yulon Motor Co., Ltd. (Yulon)

Fortune Motors Co., Ltd. (Fortune Motors)

ROC Spicer Ltd. (ROC-Spicer)

Uni Auto Parts Manufacture Co., Ltd.

Shung Ye Motor Co., Ltd. (Shung Ye Motor)

Hua-Chuang Automobile Information Technical Center Co.,
Ltd.

Yulon IT Solutions Inc. (Yulon IT)

Sinjang Co., Ltd. (Sin Jang)

Sin Gan Co., Ltd. (Sin Gan)

Tokio Marine Newa Insurance Co., Ltd.

Hong Shuo Cultural Enterprises, Co., Ltd.

Hsiang Shuo Enterprises

Sinqual Technology Co., Ltd.

Yufong Property Management Co., Ltd.

Taiwan Acceptance Corporation (Taiwan Acceptance)

Yue Sheng Industrial Co., Ltd.

Luxgen Motor Co., Ltd. (Luxgen)

Yulon Nissan Motor Co., Ltd.

Y-Teks Co., Ltd.

Yulon Energy Service Co., Ltd.

Yue Ki Industrial Co., Ltd. (Yue Ki Industrial)

Carplus Auto Leasing Corporation

eCBO Information Services Co., Ltd.

Hsieh-Shin Motors Co., Ltd.

Yu Rich Financial Services Company

ROC-Keeper Industrial Ltd.

Taiguang Investment (HK) Co., Ltd. (Taiguang Investment)
ROC-Spicer Investment Co., Ltd. (BVI) (ROC-Spicer
Investment)

Related Party Category

Investors that have significant influence
over the Group
Subsidiary of investors that have
significant influence over the Group
Subsidiary of investors that have
significant influence over the Group
Subsidiary of investors that have
significant influence over the Group
Subsidiary of investors that have
significant influence over the Group
Subsidiary of investors that have
significant influence over the Group
Subsidiary of investors that have
significant influence over the Group
Subsidiary of investors that have
significant influence over the Group
The Group is its major management
authority
The Group is its major management
authority
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate

(Continued)

72 -

Related Party Name
Tai-Ya Investment (HK) Co., Ltd. (Tai-Ya Investment)

Fujian Spicer Drivetrain System Co., Ltd. (Fujian Spicer)

Shanghai Chiashun Motor Sales Co., Ltd.

Shanghai Hopeful Wheel Automobile Maintenance Co., Ltd.
Fuzhou Lianhong Motor Parts Co., Ltd.

Guangzhou NTN-Yulon Drivertrain Co., Ltd.

Xiangyang NTN-Yulon Drivertrain Co., Ltd.

South East (Fujian) Motor Corporation Ltd. (South East
(Fujian) Motor)

Fujian Benz Automotive Co., Ltd.

Fuzhou Fushiang Motor Industrial Co., Ltd.

Xiamen King-Long Kian-Shen Frame

Hangzhou King-Long Kian-Shen Co., Ltd.

China Engine (Fujian)

Zhejiang Kangda Motor Industry and Trade Co., Ltd.
(Zhejiang Kangda)

Yuanchuang Industrial Investment Consulting Co., Ltd.

Automotive Research & Testing Center

Related Party Category

Associate
Associate
Associate
Associate
Associate
Joint venture
Joint venture
Joint venture
Joint venture
Joint venture
Joint venture
Joint venture
Joint venture
Joint Venture (Note)
Substantive related party
Substantive related party (Note)
(Concluded)

Note: The Group became a non-related party in August 2018.

b. Operating transactions

1) Sales of goods

Line Items Related Party Category/Name Sales Associates Fortune Motors Shung Ye Motor Others Investors and subsidiaries of the investors that have significant influence over the Group Joint ventures	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 18,280,036 5,969,642 855,331 25,105,009 105,293 33,616 $ 25,243,918	2018 $ 18,020,746 7,181,616 1,375,902 26,578,264 127,786 59,162 $ 26,765,212

73 -

2) Purchases of goods

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2019 2018 $ 2,521,272 $ 3,166,731 136,961 136,758 2,658,233 3,303,489 2,200,736 1,967,217 331,044 329,152 237,309 1,196,398 $ 5,427,322 $ 6,796,256 For the Year Ended December 31
2019 2018 $ 214,652 $ 190,038 For the Year Ended December 31
	2019 $ 109,263 22,523 $ 131,786 $ 48,263 - 1,766 $ 50,029	2018 $ 91,718 12,600 $ 104,318 $ 53,493 56,211 689 $ 110,393

74 -

5) Receivables from related parties

	December 31	December 31
	2019 2018 $ 903,195 $ 870,216 340,042 536,279 2,456 199,992 185,626 285,034 1,431,319 1,891,521 18,235 44,905 7,538 16,043 47 - $ 1,457,139 $ 1,952,469 December 31
2019 2018 $ 187,877 $ 117,943 2,610 6,883 190,487 124,826 12,426 13,162 - 91 $ 202,913 $ 138,079 For the Year Ended December 31
	2019 $ 102,274 1,581 $ 103,855	2018 $ 31,279 7,349 $ 38,628

75 -

8) Payables to related parties

Line Items Related Party Category/Name Trade payables to Associates related parties Uni Auto Parts Manufacture ROC-Spicer Yue Ki Industrial Yulon Others Investors and subsidiaries of investors that have significant influence over the Group Yulon Management Others The Group is its major management authority Joint ventures		December 31	December 31
		2019 $ 147,613 100,743 99,801 92,546 239,311 680,014 94,522 131,325 225,847 68,622 9,267 $ 983,750	2018 $ 75,239 87,219 92,017 94,762 267,109 616,346 95,013 163,897 258,910 60,301 9,397 $ 944,954

9) Contract liabilities

Line Items Related Party Category/Name Other current liabilities Associates Luxgen Sin Jang Others Others		December 31	December 31
		2019 $ 19,356 16,792 8,476 44,624 273 $ 44,897	2018 $ 45,514 - 1,191 46,705 273 $ 46,978

The outstanding payables to related parties were not guaranteed and would be paid in cash. The Group received guarantees from some of the receivables from related parties. For the years ended December 31, 2019 and 2018, no loss allowance was recognized for trade receivables from related parties.

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

The Group signed a contract with Mitsubishi Motors Corporation, refer to Note 33 for the details.

76 -

c. Compensation of key management personnel

The remunerations of directors and key executives for the years ended December 31, 2019 and 2018, respectively, were as follows:

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2019 $ 97,595 2,356 $ 99,951	2018 $ 127,605 2,793 $ 130,398

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

32. ASSETS PLEDGED AS COLLATERAL

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

Property, plant and equipment Pledged deposits (included in other current assets) Investment properties		December 31	December 31
		2019 $ 510,304 179,939 52,323 $ 742,566	2018 $ 778,643 157,585 52,323 $ 988,551

33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant commitments and contingencies of the Group as of December 31, 2019 were as follows:

a. Guarantee notes amounted to $5,002,322 thousand, which had been issued to financial institutions as collateral for loans; unused letters of credit amounted to $57,646 thousand.
b. The Group entered into agreements with Mitsubishi Motors Corp. as stated below:

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

c. The status of endorsements/guarantees is listed in Table 2.
77 -

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2019

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Foreign currency assets
Monetary items
JPY	$	4,178,677	0.2760	$ 1,153,315
RMB		188,277	4.3050	810,532
USD		23,983	29.9800	718,997
Non-monetary items
Investments accounted for using the equity
method
RMB		1,234,368	4.3050	5,313,955
EUR		84,261	33.5900	2,830,313
Foreign currency liabilities
Monetary items
JPY		662,503	0.2760	182,851
December 31, 2018
		Foreign		Carrying
		Currency	Exchange Rate	Amount
Foreign currency assets
Monetary items
RMB	$	289,576	4.4720	$ 1,294,982
USD		29,859	30.7150	917,123
JPY		2,765,664	0.2782	769,408
Non-monetary items
Investments accounted for using the equity
method
RMB		1,326,111	4.4720	5,930,370
EUR		72,973	35.2000	2,568,646
Foreign currency liabilities
Monetary items
JPY		556,293	0.2782	154,761

For the years ended December 31, 2019 and 2018, net foreign exchange gains (losses) were $(40,154) thousand and $12,498 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.

78 -

35. SEPARATELY DISCLOSED ITEMS

Other than those disclosed in Notes 7, 11, and 30, and Tables 1 to 10, there are no other separately disclosed items.

36. SEGMENT INFORMATION

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

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

Vehicle manufacturing Channel Others Adjustment and eliminations Administration cost and remunerations to directors Other non-operating income and expenses, net Profit (loss) before income tax		Segment Revenues For the Year Ended December 31 2019 2018 $ 28,797,343 $ 29,639,511 3,538,825 5,422,462 83,451 87,057 (351,647) (279,516) $ 32,067,972 $ 34,869,514		Segment Income or Loss	Segment Income or Loss
				For the Year Ended December 31
		2019 $ 28,797,343 3,538,825 83,451 (351,647) $ 32,067,972		2019 $ (1,591,615) 10,256 (1,389) (839) (1,583,587) (287,122) 190,446 $ (1,680,263)	2018 $ 4,582,039 73,522 (2,420) - 4,653,141 (347,224) 4,796 $ 4,310,713

Intersegment transactions were accounted for according to market prices.

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs and remunerations to directors, interest income, dividend income, other income, gain on disposal of investments, net foreign exchange gain (loss), loss on financial instruments at fair value through profit or loss, interest expense, other expense, impairment loss and income tax expense. This was the measure reported to the chief operating decision maker for resource allocation and assessment of segment performance.

79 -

TABLE 1

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Year (Note 1)	Ending Balance (Note 1)	Actual Amount Borrowed (Notes 1 and 4)	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	$ 700,000	$ 600,000	$ 600,000	1	Short-term financing	$ -	Working capital	$ -	-	$ -	$ 1,162,262	$ 7,748,412
1	Hwa-Lin	Sichuan Huafeng Hanwei Guangzhou Huayou Motor Maintenance Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes	66,111 (US$ 1,200 thousand and RMB 7,000 thousand) 88,896 (US$ 1,960 thousand and RMB 7,000 thousand) 107,029 (US$ 3,570 thousand) 30,135 (RMB 7,000 thousand)	- - - -	- - - -	- - - -	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Working capital Working capital Working capital Working capital	- - - -	- - - -	- - - -	1,162,262 1,162,262 1,162,262 1,162,262	7,748,412 7,748,412 7,748,412 7,748,412
2	Guangzhou Huayou Motor Maintenance	Guangzhou Huayou Motor Sales Tianjin Hwahong Sichuan Huafeng Hanwei Dongguan Huashun Dongguan Huayi	Other receivables Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes Yes	430,500 (RMB 100,000 thousand) 43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand)	- - - - -	- - - - -	- - - - -	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	- - - - -	Working capital Working capital Working capital Working capital Working capital	- - - - -	- - - - -	- - - - -	1,162,262 1,162,262 1,162,262 1,162,262 1,162,262	7,748,412 7,748,412 7,748,412 7,748,412 7,748,412
3	Sichuan Huafeng Hanwei	Sichuan Lingwei Tianjin Hwahong Guangzhou Huayou Motor Maintenance	Other receivables Other receivables Other receivables	Yes Yes Yes	43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand)	- - -	- - -	- - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,162,262 1,162,262 1,162,262	7,748,412 7,748,412 7,748,412

(Continued)

80 -

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Year (Note 1)	Ending Balance (Note 1)	Actual Amount Borrowed (Notes 1 and 4)	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
		Dongguan Huashun Dongguan Huayi	Other receivables Other receivables	Yes Yes	$ 129,150 (RMB 30,000 thousand) 129,150 (RMB 30,000 thousand)	$ - -	$ - -	- -	Short-term financing Short-term financing	$ - -	Working capital Working capital	$ - -	- -	$ - -	$ 1,162,262 1,162,262	$ 7,748,412 7,748,412
4	Tianjin Hwarui	Tianjin Hwahong Guangzhou Huayou Motor Maintenance Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes	43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand) 129,150 (RMB 30,000 thousand) 129,150 (RMB 30,000 thousand)	43,050 (RMB 10,000 thousand) - 86,100 (RMB 20,000 thousand) 86,100 (RMB 20,000 thousand)	- - - -	- - - -	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Working capital Working capital Working capital Working capital	- - - -	- - - -	- - - -	1,162,262 1,162,262 1,162,262 1,162,262	7,748,412 7,748,412 7,748,412 7,748,412
5	Tianjin Hwahong	Tianjin Hwarui Sichuan Huafeng Hanwei Dongguan Huayi Dongguan Huashun Guangzhou Huayou Motor Maintenance	Other receivables Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes Yes	215,250 (RMB 50,000 thousand) 86,100 (RMB 20,000 thousand) 86,100 (RMB 20,000 thousand) 86,100 (RMB 20,000 thousand) 129,150 (RMB 30,000 thousand)	86,100 (RMB 20,000 thousand) - 86,100 (RMB 20,000 thousand) 86,100 (RMB 20,000 thousand) -	- - - - -	- - - - -	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	- - - - -	Working capital Working capital Working capital Working capital Working capital	- - - - -	- - - - -	- - - - -	1,162,262 1,162,262 1,162,262 1,162,262 1,162,262	7,748,412 7,748,412 7,748,412 7,748,412 7,748,412
6	Dongguan Huayi	Dongguan Huashun	Other receivables	Yes	215,250 (RMB 50,000 thousand)	86,100 (RMB 20,000 thousand)	-	-	Short-term financing	-	Working capital	-	-	-	1,162,262	7,748,412
7	Dongguan Huashun	Dongguan Huayi Sichuan Huafeng Hanwei Tianjin Hwahong Guangzhou Huayou Motor Maintenance	Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes	86,100 (RMB 20,000 thousand) 43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand) 43,050 (RMB 10,000 thousand)	86,100 (RMB 20,000 thousand) - - -	43,050 (RMB 10,000 thousand) - - -	3.915 - - -	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Working capital Working capital Working capital Working capital	- - - -	- - - -	- - - -	1,162,262 1,162,262 1,162,262 1,162,262	7,748,412 7,748,412 7,748,412 7,748,412

Note 1: Translated at the exchange rates of US$1:NT$29.98 and RMB1:NT$4.305 as of December 31, 2019.

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

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

Note 4: Eliminated.

(Concluded)

81 -

TABLE 2

CHINA MOTOR CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019 (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 Year (Note)	Outstanding Endorsement/ Guarantee at the End of the Year (Note)	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	Dongguan Huayi Tianjin Hwarui Guangzhou Huayou Motor Maintenance Sichuan Huafeng Hanwei	Subsidiary Subsidiary Subsidiary Subsidiary	20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand	$ 430,500 (RMB 100,000 thousand) 430,500 (RMB 100,000 thousand) 215,250 (RMB 50,000 thousand) 215,250 (RMB 50,000 thousand)	$ 430,500 (RMB 100,000 thousand) 430,500 (RMB 100,000 thousand) - -	$ - - - -	$ - - - -	1.1 1.1 - -	50% of the Corporation’s issued capital, $2,768,102 thousand 50% of the Corporation’s issued capital, $2,768,102 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	No No No No	Yes Yes Yes Yes

Note: Translated at the exchange rate of RMB1:NT$4.305 as of December 31, 2019.

82 -

TABLE 3

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2019

(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, 2019		Note
				Number of Shares (In Thousands)	Carrying Amount (Note 2)	Percentage of Ownership (%)	Fair Value
China Motor Corporation	Beneficiary certificates Franklin Templeton SinoAm Money Market Fubon Chi Hsiang Money Market Fund The RSIT Enhanced Money Market Hua Nan Phoenix Money Market Fund Sinopac Money Market Fund Paradigm Pion Money Market Prudential Financial Money Market Fund Cathay Taiwan Money Market Fund UPAMC James Bond Money Market Fund CTBC Hua Win Money Market Fund Shares Shye Shyang Machinery Industrial Myson Century, Inc. Taiwan Aerospace NORM Pacific Automation Corp. Carnival Com2B (Cayman) Corp.	- - - - - - - - - - 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 - 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 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 - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current	4,867 3,205 4,201 1,856 2,167 2,610 1,906 2,423 612 657 9,009 4,705 811 128 95 2,000	$ 50,518 50,468 50,467 30,292 30,280 30,280 30,275 30,250 10,270 7,267 617,612 28,134 11,847 1,738 949 -	- - - - - - - - - - 10.00 7.84 0.60 0.45 0.05 4.44	$ 50,518 50,468 50,467 30,292 30,280 30,280 30,275 30,250 10,270 7,267 617,612 28,134 11,847 1,738 949 -

(Continued)

83 -

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		December	31, 2019		Note
				Number of Shares (In Thousands)	Carrying Amount (Note 2)	Percentage of Ownership (%)	Fair Value
Kian Shen KSIHK Alliance Investment & Management Hwa Lin Brilliant Insight International	Corporate bonds Taiwan Acceptance Corp. Morgan Stanley Gatetech Technology Evergreen Marine Corporation Crédit Agricole Corporate and Investment Bank SA Fonterra Co-operative Group Ltd. Deutsche Bank Aktiengesellschaft, Singapore Branch Beneficiary certificates FSITC Money Market Fund Shares Beijing NTN-SEOHAN Driveshaft Shares Samuel (Cayman) Co., Ltd. Carplus Auto Leasing Corporation T-Car Inc. Solidlite Corporation Site information service Phalanx Biotech Group Preference shares Rock Financial Risk Service Co., Ltd. Principle guaranteed notes President Securities 100% Principle Guaranteed Note Beneficiary certificates Taishin Ta-Chong Money Market	Associate - - - - - - - - - - - - - - - - -	Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Financial assets at fair value through profit or loss-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Financial assets at fair value through profit or loss - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - current Financial assets at fair value through profit or loss - current	- - - - - - - 101 - 6,327 3,248 1,275 789 65 696 - - 74	$ 248,452 129,060 119,088 99,922 86,034 43,040 43,017 18,003 32,019 (RMB 7,438 thousand) 100,996 68,801 19,849 5,844 2,678 3,288 7,860 8,556 1,057	- - - - - - - - 9.00 15.07 3.45 4.05 3.60 0.54 0.85 - - -	$ - - - - - - - 18,003 32,019 100,996 68,801 19,849 5,844 2,678 3,288 - - 1,057

Note 1: Refer to Tables 7 and 8 for the information of investments in subsidiaries and associates.

Note 2: Translated at the exchange rate of RMB1:NT$4.305 as of December 31, 2019.

(Concluded)

84 -

TABLE 4

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition (Note 1)	Acquisition (Note 1)		Disposal	Disposal		Other Adjustment (Note 2)	Ending	Balance
					Number of Shares	Amount	Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain on Disposal		Number of Shares	Amount
China Motor Corporation	Ordinary Shares Gatetech Technology	Investments accounted for using the equity method	Syncmold Enterprise Corporation	-	29,278	$ 311,858	3,216	$ -	32,494	$ 415,097	$ 309,028	$ 71,314	$ (2,830)	-	$ -

Note 1: Share dividends distributed by the Company.

Note 2: Including profit or loss and adjustments in shareholders’ equity of the investee.

85 -

TABLE 5

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, 2019

(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)
			Purchase/ Sale	Amount	% to Total (Note)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note 2)
China Motor Corporation (“CMC”) Sino Diamond Motors Kiah Shen COC	Fortune Motors Shung Ye Motor Mitsubishi Corp. Uni Auto Parts Manufacture Kian Shen (Note 1) ROC-Spicer Shye Shyang Machinery Industrial COC (Note 1) Yueki Uni-Calsonic Taiwan Mitsubishi Corp. Fortune Motors Shung Ye Motor Mitsubishi Motor Corp. China Motor Corporation (Note 1) Yueki China Motor Corporation (Note 1) Yulon Yulon	Equity-method investee Equity-method investee Director of CMC Equity-method investee Subsidiary Equity-method investee Director of Shye Shyang Machinery Industrial Subsidiary Equity-method investee Equity-method investee Subsidiary of director of CMC Equity-method investee Equity-method investee Director of CMC Parent company Equity-method investee Parent company Equity-method investee Equity-method investee	Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Purchase Sale Purchase Sale Sale Purchase	$ (17,577,745) (3,956,366) 1,411,501 712,857 620,589 479,473 325,031 315,567 161,538 150,096 134,846 (1,995,300) (701,838) 1,109,771 (620,589) 163,915 (315,567) (234,143) 167,641	(67) (15) 8 4 4 3 2 2 1 1 1 (69) (24) 66 (50) 17 (26) (19) 26	Collect after 15-60 days of delivery Collect after 15-60 days of delivery Pay after 7 days of cargo ship out Pay after 45 days of the month of delivery Pay after 45 days of the month of delivery Pay after 45 days of the month of delivery Pay after 45 days of the month of delivery Pay after 45 days of the month of delivery Pay after 45 days of the month of delivery Pay after 45 days of the month of delivery Pay after 25 days of cargo ship out Collect after 15-45 days of delivery Collect after 7-45 days of delivery Pay after 10 days of cargo ship out Collect after 45 days of the month of delivery Net 105 days from the end of the month of when invoice is issued Collect after 45 days of the month of delivery Collect after 45 days of the month of delivery Net 75 days from the end of the month of when invoice is issued	$ - - - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - - -	$ 900,173 256,873 (39,110) (147,613) (130,142) (100,743) (68,017) (63,890) (38,073) (30,092) - 83,168 2,920 - 130,142 (61,728) 63,890 34,648 (29,122)	45 13 (1) (5) (4) (3) (2) (2) (1) (1) - 87 3 - 69 (23) 11 6 (12)
										(Continued)

86 -

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 2)
Y. M. Hi-Tech China Engine Donggun Huashun	Yulon Yulon Hua-Chuang Automobile Information Technical Center South Eastern (Fujian) Motor	Equity-method investee Equity-method investee Equity-method investee Equity-method investee	Sale Purchase Sale Purchase	$ (120,135) 117,485 (148,972) 101,197	(38) 39 (48) 95	Collect after 45 days of the month of delivery Net 75 days from the end of the month of when invoice is issued Net 90 days from the end of the month of when invoice is issued Cash before delivery	$ - - - -	- - - -	$ 13,682 (59,854) 2,019 (21)	29 (42) 4 (4)

Note 1: Eliminated.

Note 2: The proportion of the individual company’s total purchase (sale) or total receivable (payable).

(Concluded)

87 -

TABLE 6

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, 2019

(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 Kian Shen	Fortune Motors Shung Ye Motor China Motor Corporation	Equity-method investee Equity-method investee Parent company	$ 900,173 256,873 130,142	20.72 14.62 6.59	$ - - -	- - -	$ 900,173 256,873 130,142	$ - - -

88 -

TABLE 7

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (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, 2019	As of December 31, 2019	As of December 31, 2019	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2019	December 31, 2018	Number of Shares (In Thousands)	%	Carrying Amount
China Motor Corporation Kian Shen Kian Shen Investment Alliance Investment & Management Sino Diamond Motors	Yulon Kian Shen (Note 1) Fortune Motors Sino Diamond Motors (Note 1) Tokio Marine Newa Insurance (Note 2) Alliance Investment & Management (Note 1) Daimler Vans Hong Kong Ltd. ROC-Spicer CMI (Note 1) COC (Note 1) Hwa Wei (Note 1) Hua-Chuang Automobile Information Technical Center Uni Auto Parts Manufacture Shung Ye Motor (Notes 3 and 5) Gatetech Technology (Notes 1 and 7) China Engine (Note 1) Uni-Calsonic Yueki Industrial Co., Ltd. Sin Gan Sin Jiang Enterprises Tai-Ya Investment Hwa Chung Motors (Note 1) Yulon IT Solutions Kian Shen Investment (Note 1) KSIHK (Note 1) Hua-Chuang Automobile Information Technical Center Greentrans Investment (Note 1) Gatetech Technology (Note 1) Hua-Yu (Note 1) Hua-Chuang Automobile Information Technical Center China Engine (Note 1) Gatetech Technology (Notes 1 and 6) Brilliant Insight International (Note 1) Shung Ye Motors (Note 4) Fortune Motors	Miaoli, Taiwan Taoyuan, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Hong Kong Taoyuan, Taiwan Samoa Taoyuan, Taiwan British Virgin Islands Taipei, Taiwan Miaoli, Taiwan Taipei, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Miaoli, Taiwan Hsinchu, Taiwan Taipei, Taiwan Taipei, Taiwan Hong Kong Taoyuan, Taiwan Taipei, Taiwan British Virgin Islands Hong Kong Taipei, Taiwan Samoa Taoyuan, Taiwan Samoa Taipei, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Taipei, Taiwan Taipei, Taiwan	Manufacture and sale of vehicles The production of frame of heavy duty car and mold Sales and providing after sales service of vehicles Sales and providing after sales service of vehicles 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 Product design The production of mold, fixture and gauge of vehicles Sales and providing after sales service of vehicles Aluminum-magnesium alloy casting industry Manufacture of automobile engine and parts Manufacture and sales of automobile parts Manufacture and sales of car components Wholesale, repair and other service of vehicles Retail and wholesale of second-hand vehicles Investment Manufacture and sale of vehicles Information software wholesale services Investment Investment Product design Investment Aluminum-magnesium alloy casting industry Overseas investment on production and service industries Product design Manufacture of automobile engine and parts Aluminum-magnesium alloy casting industry Consulting and service Sales and providing after sales service of vehicles Sales and providing after sales service of vehicles	$ 3,835,585 344,800 2,132,826 2,192,724 955,941 1,200,030 2,011,363 675,896 1,402 412,125 1,202 1,028,013 109,813 391,142 - 625,978 105,806 109,396 - - 79,505 328,900 - 328,888 US$ 25,907 thousand 473,760 344,369 - 1,489,334 473,760 11,000 - 22,000 180 24	$ 3,835,585 344,800 2,132,826 3,463,724 955,941 1,200,030 2,011,363 675,896 1,402 412,125 1,202 1,028,013 109,813 391,142 474,941 320,000 105,806 109,396 71,316 85,893 79,505 328,900 83,320 328,888 US$ 25,907 thousand 473,760 344,369 145,123 1,758,773 473,760 616,000 149,369 22,000 180 24	262,228 32,201 132,117 151,067 61,511 183,000 46,566 145 40 33,565 40 56,600 13,032 29,668 - 87,999 6,084 2,936 - - 2,242 8,790 - 10,296 25,907 26,715 11,200 - 36,943 26,715 1 - 2,200 12 1	16.80 43.87 41.93 100.00 20.57 100.00 32.45 29.00 100.00 49.76 40.00 17.25 15.00 39.98 - 52.10 31.20 15.08 - - 29.00 100.00 - 100.00 100.00 8.14 100.00 - 100.00 8.14 - - 100.00 0.02 -	$ 7,110,438 2,046,653 4,473,144 1,155,029 2,052,069 1,277,471 2,830,313 539,198 871,654 786,792 579,673 - 375,791 394,906 - 429,196 137,393 105,857 - - 69,630 71,679 - 4,054,883 RMB 918,124 thousand - 222,457 - 674,934 - 5 - 19,372 217 18	$ (24,465,408) 289,942 1,229,380 (342,513) 967,571 (329,726) 2,532,931 155,470 (254,735) 124,391 (424,548) (13,237,822) 17,078 83,286 18,000 (155,080) 25,987 (125,045) 17,070 8,263 (15,906) 7,766 (4,366) 386,230 RMB 73,725 thousand (13,237,822) (35,237) 18,000 (22,897) (13,237,822) (155,080) 18,000 (1,865) 83,286 1,229,380	$ (4,132,080) 127,352 515,462 (291,753) 199,032 (333,011) 821,936 45,137 (254,735) 61,993 (169,819) (502,338) 2,536 33,299 10,270 (40,583) 8,127 (18,877) 4,211 1,654 (4,613) 7,766 (1,915) - - - - - - - - - - - -	Equity-method investee Subsidiary Equity-method investee Subsidiary Equity-method investee Subsidiary Equity-method investee Equity-method investee Subsidiary Subsidiary Subsidiary Equity-method investee Equity-method investee Equity-method investee Subsidiary Subsidiary Equity-method investee Equity-method investee Equity-method investee Equity-method investee Equity-method investee Subsidiary Equity-method investee Subsidiary Subsidiary Equity-method investee Subsidiary Subsidiary Subsidiary Equity-method investee Subsidiary Subsidiary Subsidiary Equity-method investee Equity-method investee

(Continued)

89 -

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of December 31, 2019	As of December 31, 2019	As of December 31, 2019	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2019	December 31, 2018	Number of Shares (In Thousands)	%	Carrying Amount
Hua-Yu Gatetech Technology GH China Engine CMI Hwa Chung Motors COC	Hwa-Lin (Note 1) GH (Notes 1 and 6) GI (Notes 1 and 6) Advance Power Investment (Note 1) Advance Power Machinery (Note 1) Hwa Wei holdings (Note 1) Ling Wei (Note 1) Greentrans (Note 1) Y. M. Hi-Tech (Note 1) Shye Shinn (Note 1)	British Virgin Islands Samoa Samoa Mauritius Miaoli, Taiwan British Virgin Islands Taipei, Taiwan Taipei, Taiwan Taoyuan, Taiwan British Virgin Islands	Overseas investment on production and service industries Investment Investment Reinvestment and sales Manufacture of vehicles and parts Overseas investment on production and service industries Sales of second-hand vehicles Sales of motorcycles and parts Steel cutting Investment	US$ 37,229 thousand 647,041 US$ 20,268 thousand 59,456 5,000 1,428,503 31,000 10,000 46,250 US$ 968 thousand	US$ 45,929 thousand 647,041 US$ 20,268 thousand 59,456 5,000 1,428,503 31,000 10,000 46,250 US$ 968 thousand	33,393 - - 3,750 500 60 3,608 1,000 4,250 968	100.00 - - 100.00 100.00 60.00 100.00 100.00 85.00 100.00	$ 585,036 - - 94,052 10,787 869,509 32,949 10,588 66,434 39,756	$ (24,446) 11,885 11,885 969 688 (424,548) 7,415 236 8,386 1,020	$ - - - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note 1: Eliminated during the preparation of the consolidated financial statements.

Note 2: Additional costs of $75,455 thousand between the parent company and its subsidiaries had been eliminated during the preparation of the consolidated financial statements

Note 3: A loss on disposal of $22,538 thousand between the parent company and its subsidiaries had been eliminated during the preparation of the consolidated financial statements.
Note 4: A gain on disposal of $31 thousand between the parent company and its subsidiaries had been eliminated during the preparation of the consolidated financial statements.

Note 5: Sidestream transactions of $1,056 thousand between the subsidiaries and investees accounted for using the equity method had been eliminated during the preparation of the consolidated financial statements.

Note 6: Gatetech Technology had been disposed of in November 2019.

(Concluded)

90 -

TABLE 8

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (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, 2019 (Note 1)	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019 (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, 2019 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2019 (Note 1)
					Outflow	Inflow
South Eastern (Fujian) Motor (Note 4) China Engine (Fujian) Fujian Benz Automotive Guangzhou NTN-YULON Drivertrain Fuzhou Fushiang Motor Industrial Xiangyang NTN-YULON Drivertrain Xiamen King-Long Kian-Shen Frame Beijing NTN-SEOHAN Driveshaft Jiangsu Greentrans Automotive Parts (Note 5) Fujian Spicer Shenyang 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 Manufacture and sales of automobile transmission, shafts, mechanical transmission, shafts and components	$ 4,137,240 (US$ 138,000 thousand) 449,700 (US$ 15,000 thousand) 9,640,330 (EUR 287,000 thousand) 374,750 (US$ 12,500 thousand) 533,044 (US$ 17,780 thousand) 1,019,320 (US$ 34,000 thousand) 413,280 (RMB 96,000 thousand) 179,880 (US$ 6,000 thousand) 335,776 (US$ 11,200 thousand) 881,690 (RMB 204,806 thousand) 369,916 (RMB 85,927 thousand)	The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region Go directly to the mainland to invest The Corporation indirectly owns these investees through investment company registered in a third region	$ 1,034,310 (US$ 34,500 thousand) 224,850 (US$ 7,500 thousand) 1,564,152 (EUR 46,566 thousand) 149,900 (US$ 5,000 thousand) 84,993 (US$ 2,835 thousand) - 45,779 (US$ 1,527 thousand) 16,189 (US$ 540 thousand) 335,776 (US$ 11,200 thousand) 323,934 (US$ 10,805 thousand) 78,248 (US$ 2,610 thousand)	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ 1,034,310 (US$ 34,500 thousand) 224,850 (US$ 7,500 thousand) 1,564,152 (EUR 46,566 thousand) 149,900 (US$ 5,000 thousand) 84,993 (US$ 2,835 thousand) - 45,779 (US$ 1,527 thousand) 16,189 (US$ 540 thousand) 335,776 (US$ 11,200 thousand) 323,934 (US$ 10,805 thousand) 78,248 (US$ 2,610 thousand)	$ (1,606,099) 3,876 5,065,866 (EUR 146,370 thousand) 710,250 (RMB 158,822 thousand) (152,727) (RMB -34,152 thousand) 441,774 (RMB 98,787 thousand) (52,312) (RMB -11,698 thousand) - (35,201) 84,764 (22,629) (US$ -732 thousand)	25.00 38.03 16.23 17.55 15.35 17.55 21.94 3.95 100.00 29.00 20.25	$ (401,525) 1,938 825,656 (EUR 23,856 thousand) 284,100 (RMB 63,529 thousand) (53,454) (RMB -11,953 thousand) 176,710 (RMB 39,515 thousand) (26,156) (RMB -5,849 thousand) - (35,201) 24,596 (4,583) (US$ -148 thousand)	$ 1,325,589 188,079 2,828,379 (EUR 84,203 thousand) 1,824,246 (RMB 423,751 thousand) 537,231 (RMB 124,792 thousand) 854,260 (RMB 198,434 thousand) 215,202 (RMB 49,989 thousand) 32,019 (RMB 7,438 thousand) 222,408 381,631 70,782 (US$ 2,361 thousand)	$ 780,170 (US$ 26,023 thousand) - 397,806 (EUR 11,843 thousand) 483,959 (RMB 112,418 thousand) 152,982 (RMB 35,536 thousand) - - - - - -
												(Continued)

91 -

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, 2019 (Note 1)	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019 (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, 2019 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2019 (Note 1)
							Outflow	Inflow
Zhejiang Kangda Motor Industry And Trading (Note 7) Fujian Rui Hua (Note 5) Guangzhou Huayou Motor Maintenance (Notes 5 and 6) Sichuan Huafeng Hanwei (Notes 5 and 6) Tianjin Hwarui (Note 5) Dongguan Huayi (Note 5) Sichuan Lingwei (Notes 5 and 6) Dongguan Huashun (Note 5) Tianjin Hwahong (Note 5) Guangzhou Huayou Motor Sales (Notes 5 and 6) Gatech Suzhou (Notes 5 and 8)	Sales of vehicles and parts Consultation and services Sales and maintenance of vehicles and parts Sales and maintenance of vehicles and parts Sales and maintenance of vehicles and parts Sales and maintenance of vehicles and parts Sales of vehicles and parts Sales of vehicles and parts Sales of vehicles and parts Sales of vehicles and parts Aluminum-magnesium alloy casting industry		$ 172,200 (RMB 40,000 thousand) 101,932 (US$ 3,400 thousand) 384,044 (US$ 12,810 thousand) 399,633 (US$ 13,330 thousand) 240,440 (US$ 8,020 thousand) 133,411 (US$ 4,450 thousand) - 107,625 (RMB 25,000 thousand) 129,150 (RMB 30,000 thousand) 185,115 (RMB 43,000 thousand) 728,514 (US$ 24,300 thousand)	The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region		$ 36,216 (US$ 1,208 thousand) 101,932 (US$ 3,400 thousand) 335,746 (US$ 11,199 thousand) 399,633 (US$ 13,330 thousand) 232,675 (US$ 7,761 thousand) 126,426 (US$ 4,217 thousand) - - - - 607,605 (US$ 20,267 thousand)	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ 36,216 (US$ 1,208 thousand) 101,932 (US$ 3,400 thousand) 335,746 (US$ 11,199 thousand) 399,633 (US$ 13,330 thousand) 232,675 (US$ 7,761 thousand) 126,426 (US$ 4,217 thousand) - - - - 607,605 (US$ 20,267 thousand)	$ - 1,550 8,824 (62) (4,289) (20,669) (40) (RMB -9 thousand) (11,846) (RMB -2,649 thousand) (3,627) (RMB -811 thousand) 7,652 (RMB 1,711 thousand) 11,868	- 100.00 100.00 100.00 100.00 100.00 - 100.00 100.00 100.00 -	$ - 1,550 8,824 (62) (4,289) (20,669) (40) (RMB -9 thousand) (11,846) (RMB -2,649 thousand) (3,627) (RMB -811 thousand) 7,652 (RMB 1,711 thousand) 11,868	$ - 89,859 36,793 56,220 199,164 80,474 - 77,843 (RMB 18,082 thousand) 127,152 (RMB 29,536 thousand) 13,053 (RMB 3,032 thousand) -	$ - - - - - - - - - - -

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019 (Note 1)		Investment Amount Authorized by Investment Commission, MOEA (Note 1)			Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$5,874,586 (US$143,777 thousand and EUR46,566 thousand)		$6,993,843 (US$218,195 thousand and EUR13,467 thousand)			$23,245,237

(Continued)

92 -

Note 1: Translated at the exchange rates on December 31, 2019:US$1:NT$29.98, RMB1:NT$4.305, EUR1:NT$33.59.

Note 2: Translated at the average exchange rates for the year ended December 31, 2019: US$1:NT$30.912, RMB1:NT$4.472, EUR1:NT$34.61.

Note 3: The carrying amount and related investment income of the equity investment were calculated based on the audited financial statements of the corresponding year.
Note 4: During the preparation of the consolidated financial statements, the unrealized profit of $12,283 thousand had been eliminated.
Note 5: Eliminated during the preparation of the consolidated financial statements.
Note 6: In November 2018, Sichuan Huafeng Hanwei, Sichuan Lingwei, Guangzhou Huayou Motor Maintenance and Guangzhou Huayou Motor Sales resolved to dissolve their respective companies. As of December 31, 2019, except for the annulment of Sichuan Lingwei which had been completed in July 2019, the remaining companies have not completed their respective liquidation procedures. The liquidation of Sichuan Huafeng Hanwei had been completed in February 2020.
Note 7: In August 2018, the Group reclassified the joint venture, Zhejiang Kanda, as non-current assets held for sale.
Note 8: Gatetech Suzhou had been disposed of in November 2019.

(Concluded)

93 -

TABLE 9

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Relationship			Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Total Sales or Assets
0	China Motor Corporation	Kian Shen COC Sino Diamond Motors	Subsidiary Subsidiary Subsidiary	Accounts payable Cost of goods sold Cost of goods sold Other receivables Other operating revenue	$ 130,142 620,589 315,567 600,000 173,880	The prices and payment terms were based on agreements. The prices and payment terms for related-party transactions were based on market price which is not significantly different from those to third parties. The prices and payment terms for related-party transactions were based on market price which is not significantly different from those to third parties. The prices and payment terms were based on agreements. The prices and payment terms for related-party transactions were based on market price which is not significantly different from those to third parties.	0.25 1.94 0.98 1.17 0.54

Note 1: Eliminated.

Note 2: This table includes transactions for amounts over one hundred million.

94 -

TABLE 10

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FRAMEWORK OF INTERCOMPANY INVESTMENT RELATIONSHIPS AND PERCENTAGE OF SHAREHOLDING DECEMBER 31, 2019

==> picture [1073 x 504] intentionally omitted <==

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

Parent Company
43.87% 52.10% 100.00% 100.00% 100.00% 100.00% 49.76%
Alliance CMI
Kian Shen China Engine Sino Diamond Investment & (Samoa) Hwa Chung COC
Motors Motors
Management
(Note)
60.00% 100.00% 100.00% 85.00%
100.00%
100.00%
100.00% 100.00% 100.00% 100.00%
Kian Shen Investment Advance Power Machinery Advance Power Investment Hua-Yu (Samoa) Brilliant Insight International Investment Greentrans 40.00% Greentrans Ling Wei Y.M.
(British Virgin (Mauritius) Consultancy (Samoa) Hi-Tech
Islands) Service 100.00%
100.00% 100.00% Co., Ltd. 100.00%
100.00%
KSIHK Hwa-Lin Hwa Wei Holdings Shye Shinn
Fujian Rui Jiangsu
(Hong Kong) Hua (British Virgin Greentrans (British Virgin (British Virgin
Islands) Islands) Islands)
100.00% 99.75%
100.00% 100.00%
0.25%
Sichuan Huafeng Guangzhou
Dongguan Huayi Tianjin Hwarui
Hanwei Huayou Motor
Maintenance
100.00% 100.00% 100.00%
Dongguan Tianjin Guangzhou
Huashun Hwahong Huayou Motor
Sales
----- End of picture text -----

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

95 -

AI assistant

CMC — Audit Report / Information 2019

51979_rns_2019-12-26_641d0dd9-9db2-47b1-b039-f29ae9c5705b.pdf

China Motor Corporation and Subsidiaries

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

 IFRS 16 “Leases”

Definition of a lease

The Group as lessee

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

e. Business combinations

f. Foreign currencies

g. Inventories

h. Investment in associates and joint ventures

j. Investment properties

m. Non-current assets held for sale

n. Financial instruments

1) Financial assets

a) Measurement categories

2) Financial liabilities

o. Hedge accounting

2) The Group as lessee

2018

1) The Group as lessor

2) Retirement benefits

u. Taxation

1) Current tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31, 2019

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

9. FINANCIAL ASSETS AT AMORTIZED COST

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS - 2019

11. FINANCIAL INSTRUMENTS FOR HEDGING

December 31, 2019

Note: JPY1:NTD, unless stated otherwise.

12. NOTES AND ACCOUNTS RECEIVABLE, NET

13. INVENTORIES

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

15. NON-CURRENT ASSETS HELD FOR SALE

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

a. Investments in associates

1) Material associates

Yulon

17. PROPERTY, PLANT AND EQUIPMENT

18. LEASE ARRANGEMENTS

c. Material lease-in activities and terms

2018

19. INVESTMENT PROPERTIES

20. BORROWINGS

b. Long-term borrowings

21. OTHER PAYABLES

22. RETIREMENT BENEFIT PLANS

CMC Audit Report / Information 2019