CMC - Interim / Quarterly Report 2018

China Motor Corporation and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2018 and 2017 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders China Motor Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of China Motor Corporation and its subsidiaries (collectively, the “Group”) as of September 30, 2018 and 2017, and the consolidated statements of comprehensive income for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017, the consolidated statements of changes in equity and cash flows for the nine months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as 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 Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

The financial statements of some non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of September 30, 2018 and 2017, the combined total assets of these non-significant subsidiaries were NT$12,621,724 thousand and NT$11,989,165 thousand, respectively, representing 20% and 19%, respectively of the consolidated total assets, and the combined total liabilities of these non-significant subsidiaries were NT$3,115,382 thousand and NT$2,857,724 thousand, respectively, representing 39% and 32%, respectively, of the consolidated total liabilities; for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017, the amounts of combined net comprehensive income (loss) of these non-significant subsidiaries were NT$49,106 thousand and NT$22,744 thousand, NT$136,102 thousand and NT$199,802 thousand, respectively, representing 11% and 2%, 5% and 6%, respectively, of the consolidated total comprehensive income. As disclosed in Note 19 to the consolidated financial statements, as of September 30, 2018 and 2017, some other investments accounted for using the equity method were NT$17,510,280 thousand and NT$16,092,794 thousand, respectively, and for the three months

ended September 30, 2018 and 2017 and nine months ended September 30, 2018 and 2017, the amount of combined net comprehensive income of these equity-method investments were NT$45,825 thousand and NT$422,911 thousand, NT$1,056,810 thousand and NT$1,130,133 thousand, respectively; the amounts were calculated on the basis of financial statements that have not been reviewed.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the aforementioned non-significant subsidiaries, the investments accounted for using the equity method and the relevant information disclosed been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of September 30, 2018 and 2017, its consolidated financial performance for the three months ended September 30, 2018 and 2017 and its financial performance and its consolidated cash flows for the nine months ended September 30, 2018 and 2017 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors’ review report are Chih-Ming Shao and Ya-Ling Wong.

Deloitte & Touche Taipei, Taiwan Republic of China November 9, 2018

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

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

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(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) Available-for-sale financial assets (Notes 4 and 12) Financial assets at amortized cost (Notes 4, 9 and 10) Financial assets for hedging (Notes 4 and 11) Debt investments with no active market (Notes 4 and 18) Notes receivable, net (Notes 4 and 13) Accounts receivable, net (Notes 4 and 13) Trade receivables from related parties (Notes 4 and 32) Other receivables (Notes 4 and 29) Inventories (Note 15) Prepayments (Note 32) Other current assets (Notes 4, 11 and 33) 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) Available-for-sale financial assets (Notes 4 and 12) Financial assets at amortized cost (Notes 4, 9 and 10) Financial assets measured at cost (Notes 4 and 17) Debt investments with no active market (Notes 4, 18 and 32) Investments accounted for using the equity method (Notes 8 and 19) Property, plant and equipment (Notes 20, 32 and 33) Investment properties (Notes 21 and 33) Intangible assets under development Deferred tax assets (Note 27) Other non-current assets (Note 4) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 22 and 33) Short-term bills payable Notes and accounts payables Trade payables to related parties (Note 32) Other payables (Note 23) Current tax liabilities (Notes 4 and 27) Other current liabilities (Notes 4, 7, 11 and 32) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Note 27) Net defined benefit liabilities (Notes 4 and 24) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Notes 4 and 25) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings (Note 8) Total retained earnings Other equity (Notes 6, 8 and 11) Exchange differences on translating foreign operations Unrealized gain on investments in financial assets at fair value through other comprehensive income Unrealized gain on available-for-sale financial assets Loss on effective portion of cash flow hedges Loss on the hedging instruments Total other equity Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS (Notes 14 and 25) Total equity TOTAL		September 30, 2018 (Reviewed) Amount % $ 13,549,632 21 692,748 1 - - 301,467 - 432,681 1 - - 11,602 - 1,283,460 2 1,763,067 3 525,593 1 3,592,668 6 1,029,649 2 396,488 - 23,579,055 37 724,592 1 252,699 - - - 875,430 1 - - - - 28,938,721 46 6,337,148 10 1,383,783 2 282,402 1 317,591 1 263,889 1 39,376,255 63 $ 62,955,310 100 $ 640,000 1 167,887 - 2,135,317 3 640,463 1 2,786,881 5 156,406 - 382,032 1 6,908,986 11 149,386 - 875,369 2 11,968 - 1,036,723 2 7,945,709 13 13,840,508 22 6,413,249 10 8,897,857 14 1,046,967 2 21,830,835 35 31,775,659 51 (763,746) (1) 231,045 - - - - - (4,892) - (537,593) (1) 51,491,823 82 3,517,778 5 55,009,601 87 $ 62,955,310 100		December 31, 2017 (Audited) Amount % $ 13,816,041 22 529,496 1 - - - - - - 744,052 1 23,799 - 1,161,493 2 1,703,903 3 105,184 - 4,464,469 7 1,436,696 2 586,784 1 24,571,917 39 - - - - 726,472 1 - - 194,860 - 1,534,751 2 27,700,662 44 6,543,043 10 1,395,488 2 154,628 - 417,001 1 290,104 1 38,957,009 61 $ 63,528,926 100 $ 745,000 1 109,933 - 2,555,888 4 886,390 1 2,871,988 5 328,393 1 289,470 - 7,787,062 12 114,554 - 1,140,697 2 29,651 - 1,284,902 2 9,071,964 14 13,840,508 22 6,407,340 10 8,487,293 13 1,051,658 2 20,895,137 33 30,434,088 48 (485,118) (1) - - 765,456 1 (12,253) - - - 268,085 - 50,950,021 80 3,506,941 6 54,456,962 86 $ 63,528,926 100		September 30, 2017 (Reviewed)
						Amount % $ 13,929,581 22 65,775 - 607,852 1 - - - - 744,792 1 11,940 - 1,226,695 2 1,888,309 3 182,507 - 3,441,288 6 921,483 2 598,232 1 23,618,454 38 - - - - 780,850 1 - - 196,205 - 1,830,506 3 27,456,477 44 6,597,983 11 1,399,405 2 114,215 - 337,611 1 260,845 - 38,974,097 62 $ 62,592,551 100 $ 865,000 1 89,993 - 2,462,065 4 702,370 1 2,851,826 5 258,426 - 377,897 1 7,607,577 12 160,270 - 1,105,884 2 11,994 - 1,278,148 2 8,885,725 14 13,840,508 22 6,408,273 10 8,487,293 14 1,051,658 2 20,135,756 32 29,674,707 48 (426,407) (1) - - 837,684 2 (1,955) - - - 409,322 1 50,332,810 81 3,374,016 5 53,706,826 86 $ 62,592,551 100

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

(With Deloitte & Touche review report dated November 9, 2018)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OPERATING REVENUE (Notes 4 and 32) Net sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 11, 15, 24, 26 and 32) Cost of goods sold Other operating cost Total operating costs GROSS PROFIT REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 24, 26 and 32) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME Share of profit of associates and joint ventures accounted for using the equity method (Note 19) Interest income Other income Gain on disposal of investments (Notes 17, 19 and 29) Foreign exchange gain (loss) Gain (loss) on financial instruments at fair value through profit or loss Interest expense Other expense Impairment loss (Notes 17 and 20) Total non-operating income and expenses		For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30		For the Nine Months	EndedSeptember 30	EndedSeptember 30
		2018		2017		2018		2017
		Amount % $ 7,843,634 96 325,203 4 8,168,837 100 6,592,400 81 57,263 - 6,649,663 81 1,519,174 19 16,217 - 1,535,391 19 453,944 6 320,582 4 437,184 5 1,211,710 15 323,681 4 354,630 4 52,828 1 34,282 - 292,693 4 (49,977 ) (1 ) (20,193 ) - (4,532 ) - (1,024 ) - (11,578) - 647,129 8		Amount % $ 8,598,301 97 287,157 3 8,885,458 100 7,096,307 80 56,920 - 7,153,227 80 1,732,231 20 7,927 - 1,740,158 20 392,852 5 288,064 3 512,938 6 1,193,854 14 546,304 6 489,002 6 55,413 1 42,577 - 2,385 - 17,687 - 4,579 - (3,681 ) - (2,587 ) - - - 605,375 7		Amount % $ 26,001,994 96 1,119,118 4 27,121,112 100 21,605,437 80 148,098 - 21,753,535 80 5,367,577 20 (48,136) - 5,319,441 20 1,359,138 5 951,852 4 1,422,106 5 3,733,096 14 1,586,345 6 1,533,937 6 149,216 - 70,412 - 292,693 1 (7,833 ) - (60,016 ) - (9,975 ) - (9,673 ) - (21,924) - 1,936,837 7		Amount % $ 29,763,778 96 1,176,801 4 30,940,579 100 25,016,647 81 195,793 1 25,212,440 82 5,728,139 18 (27,989) - 5,700,150 18 1,210,437 4 850,664 2 1,475,858 5 3,536,959 11 2,163,191 7 1,512,717 5 149,498 - 75,503 - 156,481 1 (101,377 ) - (1,402 ) - (9,671 ) - (6,523 ) - (20,224) - 1,755,002 6 (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 27) NET PROFIT FROM CONTINUING OPERATIONS NET PROFIT FROM DISCONTINUED OPERATIONS (Note 16) NET PROFIT FOR THE PERIOD OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Unrealized loss on investment equity instruments designated as fair value through other comprehensive income (Note 25) Share of other comprehensive loss of associates accounted for using the equity method (Notes 19 and 25) Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 27) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 25) Unrealized gain (loss) on available-for-sale financial assets (Note 25) Total gain (loss) on effective portion of cash flow hedges (Note 25) Gain (loss) on the hedging instruments (Notes 11 and 25)		For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30		For the Nine Months	EndedSeptember 30	EndedSeptember 30
		2018		2017		2018		2017
		Amount % $ 970,810 12 51,797 1 919,013 11 - - 919,013 11 (31,283 ) - (4,257 ) - - - (31,326 ) - - - - - (14,727 ) -		Amount % $ 1,151,679 13 72,437 1 1,079,242 12 - - 1,079,242 12 - - (31 ) - - - 20,773 - 36,108 1 (5,308 ) - - -		Amount % $ 3,523,182 13 392,577 2 3,130,605 11 - - 3,130,605 11 (48,543 ) - (8,257 ) - 5,091 - (27,597 ) - - - - - 8,301 -		Amount % $ 3,918,193 13 350,422 1 3,567,771 12 2,839 - 3,570,610 12 - - (389 ) - - - (14,130 ) - (53,893 ) - 32,418 - - - (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Nine Months	EndedSeptember 30
2018	2017	2018	2017
Amount % $ (389,969 ) (5 ) 2,653 - (468,909) (5) $ 450,104 6 $ 859,701 10 59,312 1 $ 919,013 11 $ 473,459 6 (23,355) - $ 450,104 6 $ 0.63 $ 0.63 $ 0.63 $ 0.63	Amount % $ 106,724 1 675 - 158,941 2 $ 1,238,183 14 $ 992,224 11 87,018 1 $ 1,079,242 12 $ 1,120,908 13 117,275 1 $ 1,238,183 14 $ 0.73 $ 0.73 $ 0.73 $ 0.73	Amount % $ (311,254 ) (1 ) (940) - (383,199) (1) $ 2,747,406 10 $ 2,919,706 10 210,899 1 $ 3,130,605 11 $ 2,617,163 10 130,243 - $ 2,747,406 10 $ 2.14 $ 2.14 $ 2.14 $ 2.14	Amount % $ (129,856 ) (1 ) (5,738) - (171,588) (1) $ 3,399,022 11 $ 3,270,060 11 300,550 1 $ 3,570,610 12 $ 3,124,702 10 274,320 1 $ 3,399,022 11 $ 2.40 $ 2.40 $ 2.40 $ 2.40

$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$

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

(With Deloitte & Touche review report dated November 9, 2018)

(Concluded)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

		Equity Attributable to O	wners of the Corporation
Ordinary Sh	ares Amounts Capital Surplus $ 13,840,508 $ 6,407,220 - - - - - 1,053 - - - - - - - - - - $ 13,840,508 $ 6,408,273 $ 13,840,508 $ 6,407,340 - - 13,840,508 6,407,340 - - - - - - - 5,909 - - - - - - - - - - - - $ 13,840,508 $ 6,413,249	Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 8,168,383 $ 1,051,658 $ 19,399,595 318,910 - (318,910 ) - - (2,214,481 ) - - (119 ) - - - - - - - - 3,270,060 - - (389) - - 3,269,671 $ 8,487,293 $ 1,051,658 $ 20,135,756 $ 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 - - 12,630 - - - - - 2,919,706 - - 16,713 - - 2,936,419 - - (5,696 ) - - 528 $ 8,897,857 $ 1,046,967 $ 21,830,835		Other Equity		Loss on the Hedging Instruments $ - - - - - - - - - $ - $ - (12,253) (12,253 ) - - - - - - 7,361 7,361 - - $ (4,892)
			Exchange Differences on Unrealized Gain on Investments in Financial Assets at Fair Value Through Other U Translating Foreign Operations Comprehensive Income A F $ (268,058 ) $ - - - - - - - - - - - - - (158,349) - (158,349) - $ (426,407) $ - $ (485,118 ) $ - - 273,866 (485,118 ) 273,866 - - - - - - - - - - - - (278,628) (47,989) (278,628) (47,989) - 5,696 - (528) $ (763,746) $ 231,045	nrealized Gain (Loss) on G vailable-for-sale inancial Assets $ 850,984 - - - - - - (13,300) (13,300) $ 837,684 $ 765,456 (765,456) - - - - - - - - - - - $ -	ains (Losses) on Effective Portion of Cash Flow Hedges $ (28,635 ) - - - - - - 26,680 26,680 $ (1,955) $ (12,253 ) 12,253 - - - - - - - - - - - $ -
Shares (In Thousands) 1,384,051 - - - - - - - - 1,384,051 1,384,051 - 1,384,051 - - - - - - - - - - 1,384,051

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

(With Deloitte & Touche review report dated November 9, 2018)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax from continuing operations Income before income tax from discontinued operations Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss Impairment gain recognized on trade receivables Net loss on fair value change of financial instruments at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using the equity method Net loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Impairment loss of financial assets Impairment loss of non-financial assets Unrealized gain on transactions with associates Unrealized loss (gain) on foreign currency exchange Loss on disposal of subsidiaries Changes in operating assets and liabilities Financial assets held for trading Financial assets mandatorily classified as at fair value through profit or loss Notes receivable 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		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 3,523,182 - 3,523,182 726,364 87,619 2,915 - 60,016 9,975 (149,216) (28,862) (1,533,937) 3,508 (292,693) - 21,924 48,136 (20,424) - - (182,250) 12,016 (134,283) (58,511) (40,779) 863,512 425,317 190,243 (418,373) (246,543) (68,354) 107,563 (265,328) 2,642,737 (445,592) 2,197,145	2017 $ 3,918,193 2,662 3,920,855 676,971 89,196 - (611) 1,402 9,671 (149,710) (40,525) (1,512,717) (692) (115,548) 20,224 - 27,989 33,369 2,179 (51,324) - 92,254 (110,278) (311,602) (22,774) 1,604,625 (398,661) (169,405) (15,610) (113,749) (254,286) 4,892 (266,042) 2,950,093 (271,861) 2,678,232 (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

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 Decrease in available-for-sale financial assets Acquisition of debt investments with no active market Proceeds from repayments of principal of debt investments with no active market Purchase of financial assets measured at cost Proceeds from disposal of financial assets measured at cost Acquisition of investments accounted for using the equity method Disposal of investments accounted for using the equity method Disposal of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in other non-current assets Interest received Dividends received Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Increase in short-term bills payable Decrease in other non-current liabilities Cash dividends paid 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		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 12,358 (630,254) 1,741,426 - - - - - (553,113) 27,077 - (580,968) 35,162 (156,394) (34,686) 190,722 662,489 713,819 (105,000) 57,954 (17,683) (2,491,292) (9,962) (163,237) (2,729,220) (15,539)	2017 $ - - - 133,352 (1,809,732) 1,143,151 (1,137) 86,344 (21,898) - (33,091) (873,769) 36,438 - (58,809) 135,680 612,403 (651,068) 97,000 - (14,574) (2,214,481) (9,697) (174,259) (2,316,011) (13,331) (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 166,205 13,816,041 $ 13,982,246	2017 $ (302,178) 14,231,759 $ 13,929,581

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at September 30, 2018 and 2017:

Cash and cash equivalents in consolidated balance sheets Other items that meet the requirement of IAS 7 cash and cash equivalents definitions Cash and cash equivalents in consolidated statements of cash flows		September 30	September 30
		2018 $ 13,549,632 432,614 $ 13,982,246	2017 $ 13,929,581 - $ 13,929,581

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

(With Deloitte & Touche review report dated November 9, 2018) (Concluded)

10 -

CHINA MOTOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

China Motor Corporation (the Corporation) manufactures and sells cars and related parts. Its stock 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 November 9, 2018.

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), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, whenever applied, 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:

1) IFRS 9 “Financial Instruments” and related amendment

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting. Refer to Note 4 for information relating to the relevant accounting policies.

The requirements for classification, measurement and impairment of financial assets have been applied retrospectively starting from January 1, 2018, and the requirements for hedge accounting have been applied prospectively. IFRS 9 is not applicable to items that have already been derecognized as of December 31, 2017.

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as of January 1, 2018, the Group has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods.

11 -

The following table shows the original measurement categories and carrying amount under IAS 39 and the new measurement categories and carrying amount under IFRS 9 for each class of the Group’s financial assets as of January 1, 2018.

Financial Assets
Cash and cash equivalents

Derivatives

Equity securities

Mutual funds

Debt securities

Notes receivable, accounts
receivable (related
parties included) and
other receivables

Other financial assets
(included in other current
assets) and guarantee
deposits (included in
other non-current assets)

Financial Assets
Amortized cost
Add: Reclassification from loans and
receivables (IAS 39)
Less: Reclassification to hedging
instruments (IFRS 9)
Hedging instruments
Add: Reclassification from loans and
receivables (IAS 39)
FVTPL
Add: Reclassification from
available-for-sale (IAS 39)
Required reclassification
Add: Reclassification from
available-for-sale (financial assets
measured at cost) (IAS 39)
FVTOCI
Equity instruments
Add: Reclassification from
available-for-sale (financial assets
measured at cost) (IAS 39)
Add: Reclassification from
available-for-sale (IAS 39)
Financial Assets
Investments accounted for
using the equity method MeasurementCategory
Carrying Amount
IAS 39
IFRS 9
IAS 39
IFRS 9
Remark
Loans and receivables
Amortized cost
$ 13,816,041 $ 13,348,114
Loans and receivables
Hedging instruments
-
467,927
Held‑for‑trading
Held‑for‑trading
2,954
2,954
Available‑for‑sale
Mandatorily at fair value
through profit or loss
(i.e. FVTPL)
703,983
703,983
a)
Available‑for‑sale
Fair value through other
comprehensive income
(i.e. FVTOCI) - equity
instruments
22,489
22,489
b)
Available-for-sale
(Financial assets
measured at cost)
Mandatorily at FVTPL
21,531
63,778
c)
Available-for-sale
(Financial assets
measured at cost)
FVTOCI - equity
instruments
173,329
293,111
d)
Held‑for‑trading
Mandatorily at FVTPL
529,496
529,496
Loans and receivables
(Debt investment with
no active market)
Amortized cost
2,278,803
2,269,299
e)
Loans and receivables
Amortized cost
2,994,379
2,994,379
Loans and receivables
Amortized cost
556,367
556,367
IAS 39
Carrying
Amount as of
January 1, 2018 Reclassifications
Remea-
surements
IFRS 9
Carrying
Amount as of
January 1, 2018
Retained
Earnings Effect
on January 1,
2018
Other Equity
Effect on
January 1, 2018
Remark
$ -
$ -
$ -
$ -
$ -
$ -
-
19,645,590
(9,504 )
19,636,086
(9,504 )
-
e)

-

(467,927)

-

(467,927)

-

-

-

19,177,663

(9,504)

19,168,159

(9,504)

-
-
-
-
-
-
-

-

467,927

-

467,927

-

-

-

467,927

-

467,927

-

-
529,496
-
-
529,496
-
-
-
703,983
-
703,983
672,983
(672,983 )
a)

-

21,531

42,247

63,778

42,247

-
c)

529,496

725,514

42,247

1,297,257

715,230

(672,983)
-
-
-
-
-
-
-
173,329
119,782
293,111
23,820
52,131
d)

-

22,489

-

22,489

-

-
b)

-

195,818

119,782

315,600

23,820

52,131
$ 529,496
$ 20,566,922
$ 152,525
$ 21,248,943
$ 729,546
$ (620,852)
IAS 39
Carrying
Amount as of
January 1,
2018
Adjustments
Arising from
Initial
Application
IFRS 9
Carrying
Amount as of
January 1,
2018
Retained
Earnings Effect
on January 1,
2018
Other Equity
Effect on
January 1,
2018
Remark
$ 27,700,662
$ 288,698
$ 27,989,360
$ 159,436
$ 129,262
f)

12 -
a) The Group elected to classify its investments in equity securities previously classified as available-for-sale under IAS 39 as at FVTPL under IFRS 9. As a result, the related other equity - unrealized gain on available-for-sale financial assets of $672,983 thousand was reclassified to retained earnings.
b) The Group elected to designated its investments in equity securities previously classified as available-for-sale under IAS 39 as at FVTOCI under IFRS 9, because these investments are not held for trading. As a result, the related other equity - unrealized gain on available-for-sale financial assets was reclassified to other equity - unrealized gain on financial assets at FVTOCI.
c) Investments in unlisted shares previously measured at cost under IAS 39 have been classified at FVTPL under IFRS 9 and were remeasured at fair value. Consequently, an increase of $63,778 thousand and $42,247 thousand was recognized in financial assets at FVTPL and retained earnings separately on January 1, 2018.
d) Investments in unlisted shares previously measured at cost under IAS 39 have been designated as at FVTOCI under IFRS 9 and were remeasured at fair value. Consequently, an increase in financial assets at FVTOCI of $293,111 thousand, an increase in other equity - unrealized gain on financial assets at FVTOCI of $75,951 thousand and an increase in non-controlling interests of $43,831 thousand on January 1, 2018.

The Group recognized under IAS 39 impairment loss on certain investments in equity securities previously measured at cost and the loss was accumulated in retained earnings. Since those investments were designated as at FVTOCI under IFRS 9 and no impairment assessment is required, an adjustment was made that resulted in a decrease of $23,820 thousand in other equity - unrealized gain on financial assets at FVTOCI and an increase of $23,820 thousand in retained earnings on January 1, 2018.

e) Debt investments previously classified as debt investments with no active market and measured at amortized cost under IAS 39 were classified as measured at amortized cost with an assessment of expected credit losses under IFRS 9, because on January 1, 2018, the contractual cash flows were solely payments of principal and interest on the principal outstanding and these investments were held within a business model whose objective is to collect contractual cash flows. As a result of retrospective application, the related adjustments comprised an increase in the loss allowance of $9,504 thousand and a decrease in retained earnings of 9,504 thousand on January 1, 2018.
f) As a result of retrospective application of IFRS 9 by associates, there was an increase in investments accounted for using the equity method of $288,698 thousand, a decrease in other equity - unrealized gain on available-for-sale financial assets of $133,781 thousand, an increase in other equity - unrealized gain on financial assets at FVTOCI of $263,043 thousand and an increase in retained earnings of $159,436 thousand on January 1, 2018.

Hedge accounting

On adoption of IFRS 9, the Group elected not to apply the treatment of hedging cost for forward contracts retrospectively. Furthermore, due to the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, all derivative and non-derivative financial assets and financial liabilities which are designated as hedging instruments are presented as financial assets and financial liabilities for hedging starting from January 1, 2018.

13 -
2) IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

IAS 21 stipulated that a foreign currency transaction shall be recorded on initial recognition in the functional currency by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. IFRIC 22 further explains that the date of the transaction is the date on which an entity recognizes a non-monetary asset or non-monetary liability from payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine the date of the transaction for each payment or receipt of advance consideration.

The Group applied IFRIC 22 prospectively to all assets, expenses and income recognized on or after January 1, 2018 within the scope of the Interpretation.

b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC for application starting from 2019

New, Amended or Revised Standards and Interpretations (the“New IFRSs”) Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” IFRS 16 “Leases” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty Over Income Tax Treatments”	Effective Date Announced by IASB (Note 1)
	January 1, 2019 January 1, 2019 (Note 2) January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

New, Amended or Revised Standards and Interpretations
(the“New IFRSs”)
Annual Improvements to IFRSs 2015-2017 Cycle

Amendments to IFRS 9 “Prepayment Features with Negative
Compensation”

IFRS 16 “Leases”

Amendments to IAS 19 “Plan Amendment, Curtailment or
Settlement”

Amendments to IAS 28 “Long-term Interests in Associates and Joint
Ventures”

IFRIC 23 “Uncertainty Over Income Tax Treatments”

Effective Date
Announced by IASB (Note 1)

January 1, 2019
January 1, 2019 (Note 2)
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The FSC permits the election for early adoption of the amendments starting from January 1, 2018.

The initial application of the above New IFRSs, whenever applied, would not have any material impact on the Group’s accounting policies, except for the following:

IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

Definition of a lease

Upon initial application of IFRS 16, the Group will elect 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 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

14 -

The Group as lessee

Upon initial application of IFRS 16, the Group will recognize right-of-use assets, and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value and short-term leases will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group will present 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 and the interest portion of lease liabilities will be classified within financing activities. Currently, payments under operating lease contracts, are recognized as expenses on a straight-line basis. Cash flows for operating leases are classified within operating activities on the consolidated statements of cash flows.

The Group anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

Lease liabilities will be recognized on January 1, 2019 for leases currently classified as operating leases with the application of IAS 17. Lease liabilities will be 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 will be measured at an amount equal to the lease liabilities. The Group will apply IAS 36 to all right-of-use assets.

The Group expects to apply the following practical expedients:

a) The Group will apply a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
b) The Group will account for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
c) The Group will exclude initial direct costs from the measurement of right-of-use assets on January 1, 2019.
d) The Group will use hindsight, such as in determining lease terms, to measure lease liabilities.

The Group as lessor

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

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other 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.

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

New IFRSs Amendments to IFRS 3 “Definition of A Business” 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 and IAS 8 “Definition of Material”	Effective Date Announced by IASB (Note 1)
	January 1, 2020 (Note 2) To be determined by IASB January 1, 2021 January 1, 2020 (Note 3)

15 -
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: 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 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 is continuously assessing the possible impact that the application of other 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 interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for the 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 the 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 the asset or liability.
c. Basis of consolidation
1) Principles for preparing 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.

16 -

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 interest 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 if the Group had directly disposed of the related assets or liabilities.

2) Entities included in 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 of 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
Hwa Hann Corporation (“Hwa Hann”)
Sales of automobile parts
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 of production
and service industries
China Engine
Advance Power Machinery Co., Ltd.
(“Advance Power Machinery”)
Manufacture of automobile engine
and parts
Advance Power Investment Co., Ltd.
(“Advance Power Investment”)
Investment and sales
Sino Diamond Motors
Hwa-Yu Corporation Ltd. (“Hwa-Yu”)
Overseas investment of production
and service industries
Brilliant Insight International Consultancy
Service Co., Ltd. (“Brilliant Insight
International”)
Consulting and service
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 of production
and service industries
Fujian Rui Hua Consulting Co., Ltd.
(“Fujian Rui Hua”)
Consulting and services
GH
Gatetech International Co., Ltd. (GI)
Investment

Combined Shareholding Ratio
September 30,
2018
December 31,
2017
September 30,
2017
Note
43.87
43.87
43.87
a)
100.00
100.00
100.00
52.11
52.11
52.11
100.00
100.00
100.00
-
99.99
99.99
c)
100.00
100.00
100.00
72.81
72.81
72.81
100.00
100.00
100.00
100.00
100.00
100.00
49.76
49.76
49.76
b)
43.87
43.87
43.87
a)
52.11
52.11
52.11
52.11
52.11
52.11
100.00
100.00
100.00
100.00
100.00
100.00
72.81
72.81
72.81
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
42.30
42.30
42.30
b)
49.76
49.76
49.76
b)
43.87
43.87
43.87
a)
100.00
100.00
100.00
100.00
100.00
100.00
72.81
72.81
72.81
(Continued)

17 -

Investor
Investee
Main Business
Greentrans Investment
Jiangsu Greentrans Automotive Parts Co.,
Ltd. (“Jiangsu Greentrans”)
Production and sales of parts of
electronic motorcycle
Shye Shinn
Zhengzhou Tooling & Stamping Co., Ltd.
(“Zhengzhou Tooling & Stamping”)
Design, production, sales and
technical service of mold, fixture
and gauge of vehicle
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 Houwei Cars Service and
Maintenance Co., Ltd. (“Sichuan
Houwei”)
Sales of vehicle and parts
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
September 30,
2018
December 31,
2017
September 30,
2017
Note
100.00
100.00
100.00
-
-
-
b) and d)
72.81
72.81
72.81
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
e)
100.00
100.00
100.00
100.00
100.00
100.00

(Concluded)

a) The Group’s equity in Kian Shen was 43.87%. Kian Shen is a listed company, and 56.13% of Kian Shen’s shares were held by numerous shareholders unrelated to the Group. Considering the Group’s substantial influence on Kian Shen, having an absolute number of voting rights and the relative size of the other shareholdings, Kian Shen was deemed a subsidiary.
b) The Group’s equity in COC was 49.76%. However, the Corporation controls more than half of the members of the board and holds relatively major shares of COC; thus, COC was considered a subsidiary.
c) In April 2009, the board of Hwa Hann resolved to dissolve the company; as of August 31, 2018, the liquidation had been completed.
d) All of the interest of Zhengzhou Tooling & Stamping has been disposed on September 15, 2017, refer to Note 16.
e) In October 2017, Sichuan Houwei has proceeded to annul its registration. As of September 30, 2018, the annulment was not completed.

For the relationship between the Corporation and its controlled entities as of September 30, 2018, please refer to Table 10.

d. Other significant accounting policies

Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2017. For the summary of other significant accounting policies, please refer to the consolidated financial statements for the year ended December 31, 2017.

1) Financial instruments

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

18 -

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue 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.

a) Financial assets

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

i. Measurement category

2018

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

i) Financial asset at FVTPL

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. Fair value is determined in the manner described in Note 31.

ii) Financial assets at amortized cost

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

The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
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, financial assets at amortized cost, notes receivable, accounts receivable (including related parties), other receivables, other financial assets (included in other current assets) and guarantee deposits paid (included in other non-current assets), are measured at amortized cost, which equals to gross carrying amount determined by 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 a financial asset, except for:

Purchased or originated credit-impaired financial asset, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset; and
19 -
Financial asset that has subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset.

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 at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

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

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

2017

Financial assets are classified into the following categories: Financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables.

i) Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when such financial assets are financial assets held for trading.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. Fair value is determined in the manner described in Note 31.

ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Available-for-sale financial assets are measured at fair value. Dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when such investments are disposed of or are determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.

20 -

Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and presented in a separate line item as financial assets measured at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between the carrying amount and the fair value is recognized in other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.

iii) Loans and receivables

Loans and receivables (including cash and cash equivalents, debt investments with no active market, notes receivable, accounts receivable (including related parties), other receivables, other financial assets (included in other current assets) and guarantee deposits paid (included in other non-current assets) are measured using the effective interest method at amortized cost less any impairment, except for short-term receivables when the effect of discounting is immaterial.

ii. Impairment of financial assets

2018

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

The Group always recognizes lifetime Expected Credit Loss (i.e. ECL) for accounts receivable. For all other financial instruments, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the 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 ECL.

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

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.

2017

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence, as a result of one or more events that occurred after the initial recognition of the financial assets, that the estimated future cash flows of the investment have been affected.

21 -

For financial assets carried at amortized cost, such as accounts receivable, such assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, as well as observable changes in national or local economic conditions that correlate with defaults on receivables.

For a financial asset carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment (at the date the impairment is reversed) does not exceed what the amortized cost would have been had the impairment not been recognized.

For any available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract, it becoming probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for those financial assets because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss is not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

For financial assets that are measured at cost, the amount of the impairment loss is measured as the difference between such an asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets, with the exception of accounts receivable, where the carrying amount is reduced through the use of an allowance account. When accounts receivable are considered uncollectible, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible accounts receivable that are written off against the allowance account.

iii. 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.

22 -

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. From 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

b) Financial liabilities
i. Subsequent measurement

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

Financial liabilities are classified as at FVTPL when the financial liability is held for trading. Financial liabilities held for trading are stated at fair value, the net gain or loss is recognized in profit or loss.

Fair value is determined in the manner described in Note 31.

ii. Derecognition of financial liabilities

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

c) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and convertible preference shares.

Derivatives are initially recognized at fair value at the date 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 instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability.

23 -

Before 2018, derivatives embedded in non-derivative host contracts were treated as separate derivatives when they met the definition of a derivative; their risks and characteristics were not closely related to those of the host contracts; and the contracts were not measured at FVTPL. From 2018, derivatives embedded in hybrid contracts that contain financial asset hosts 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 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.

2) 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 gain or loss relating to the ineffective portion is 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 hedged item in the same period when the hedged item affects profit or loss. If a hedge of a forecast 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.

Before 2018, hedge accounting was discontinued prospectively when the Group revoked the designated hedging relationship; when the hedging instrument expired or was sold, terminated, or exercised; or when the hedging instrument no longer met the criteria for hedge accounting. From 2018, 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 has been previously recognized in other comprehensive income from the period when the hedge was effective remains separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

3) Revenue recognition

2018

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

For contract where the period between the date the Group transfers a promised good or service to a customer and the date 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.

a) 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 satisfies its performance, revenue and accounts receivable can be recognized.

24 -

b) Revenue from rendering of services

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

2017

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Allowances for sales returns and liabilities for returns are recognized at the time of sale based on the seller’s reliable estimate of future returns and based on past experience and other relevant factors.

a) Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

i. The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
ii. The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
iii. The amount of revenue can be measured reliably;
iv. It is probable that the economic benefits associated with the transaction will flow to the Group; and
v. The costs incurred or to be incurred in respect of the transaction can be measured reliably.
b) Rendering of services

Service income including that from operating services provided under service concession arrangements is recognized when services are provided.

c) Royalties

Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement and provided that it is probable that the economic benefits will flow to the Group and that the amount of revenue can be measured reliably. Royalties determined on a time basis are recognized on a straight-line basis over the period of the agreement. Royalty arrangements that are based on production, sales and other measures are recognized by reference to the underlying arrangement.

d) Dividend and interest income

Dividend income from investments is recognized when a shareholder’s right to receive payment has been established and provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate.

25 -

4) Employee benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

5) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings. The effect of a change in tax rate resulting from a change in tax law is recognized consistently with the accounting for the transaction itself which gives rise to the tax consequence, and is recognized in profit or loss, other comprehensive income or directly in equity in full in the period in which the change in tax rate occurs.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

For the summary of critical accounting judgments and key sources of estimation uncertainty, please refer to the consolidated financial statements for the year ended December 31, 2017.

6. CASH AND CASH EQUIVALENTS

September 30, 2018 Cash Cash on hand $ 4,348 Checking accounts and demand deposits 2,151,006 2,155,354 Cash equivalents Time deposits 10,082,592 Repurchase agreements collateralized by bonds 1,311,686 11,394,278 $ 13,549,632	December 31, 2017 September 30, 2017 $ 5,272 $ 4,156 2,781,356 2,762,742 2,786,628 2,766,898 10,056,737 10,182,664 972,676 980,019 11,029,413 11,162,683 $ 13,816,041 $ 13,929,581

The Group’s hedging strategy is to buy Japanese yen (JPY) at the spot rate on December 31 and September 30, 2017 so as to avoid foreign currency exposure in relation to Japanese yen (JPY) forecasted purchases. When the forecasted purchases actually take place, the carrying amounts of the non-financial hedged items will be adjusted accordingly.

At the end of the reporting period, Japanese yen (JPY) bought at spot rate, which was not offset, was as follows:

December 31, 2017

		Notional Amount
Currency	Due Date	(In Thousands)
JPY/NTD	2018.1.18-2018.3.31	JPY1,771,108/NTD467,927

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September 30, 2017

Notional Amount Currency Due Date (In Thousands) JPY/NTD 2017.12.12 - 2018.1.31

JPY2,603,297/NTD700,547

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	September	September	30,	December	December	31,	September	September	30,
		2018			2017			2017
Financial assets-current
Financial assets held for trading
Non-derivative financial assets
Mutual funds	$		-	$	529,496		$	61,513
Derivative financial assets
Foreign exchange forward contracts			-			-		4,262
			-		529,496			65,775
Financial assets mandatorily classified as at
FVTPL
Non-derivative financial assets
Mutual funds		692,748				-			-
	$	692,748		$	529,496		$	65,775
Financial liabilities (included in other current
liabilities)
Financial liabilities held for trading
Derivative financial liabilities (not under hedge
accounting)
Foreign exchange forward contracts	$	803		$	2,954		$		-
Financial assets-non-current
Financial assets mandatorily classified as at
FVTPL
Non-derivative financial assets
Domestic unlisted common shares	$	724,592		$		-	$		-

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

September 30, 2018
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2018.10.15-2018.11.20	USD7,000/NTD213,895

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December 31, 2017

			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2018.1.31-2018.3.29	USD14,000/NTD416,839
September 30, 2017
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2017.10.31 - 2017.12.29	USD12,000/NTD358,757

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 - 2018

	September 30,	September 30,
		2018
Non-current
Investments in equity instruments at FVTOCI
Domestic investments
Listed shares	$	25,902
Unlisted shares		23,882
		49,784
Foreign investments
Unlisted shares		202,915
	$	252,699

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. These investments in equity instruments were classified as available-for-sale and financial assets measured at cost under IAS 39. Refer to Note 3, Note 12 and Note 17 for information relating to their reclassification and comparative information for 2017.

After the Group acquired an additional 15% interest of Yue Ki Industrial, the shareholding ratio became 15.08% and acquired one of the seats in the board of directors in June 2018. 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 on which 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.

During the nine months ended September 30 2018, the Group disposed of part of its unlisted shares which had a fair value of $12,358 thousand and the Group transferred a gain of $21 thousand from other equity to retained earnings.

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Dividends of $743 thousand were recognized during the three months and the nine months ended September 30 2018. Those dividends all related to investments held at the end of the reporting period.

9. FINANCIAL ASSETS AT AMORTIZED COST - 2018

	September 30,
	2018
Current
Principal guaranteed notes	$ 303,354
Less: Allowance for impairment loss	(1,887)
	$ 301,467
Non-current
Bonds	$ 849,436
Principal guaranteed notes	22,180
Preference shares	9,900
	881,516
Less: Allowance for impairment loss	(6,086)
	$ 875,430

a. The principal guaranteed notes, preference shares and bonds were classified as debt investments with no active market under IAS 39. Refer to Note 3 and Note 18 for information relating to their reclassification and comparative information for 2017.
b. The range of coupon rates of principal guaranteed notes was 3.03%-4.50% per annum as of September 30, 2018.
c. The range of coupon rates of bonds was 1.02%-4.80% per annum as of September 30, 2018.
d. The coupon rate of the preference shares was 1.50% per annum as of September 30, 2018.
e. Refer to Note 10 for information relating to their credit risk management and impairment.

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS - 2018

Investments in debt instruments were classified as at amortized cost.

September 30, 2018

	Financial Assets
	At Amortized
	Cost
Gross carrying amount	$ 1,184,870
Less: Allowance for impairment loss	(7,973)
Amortized cost	$ 1,176,897

29 -

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

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:

				Gross
		Basis for		Carrying
		Recognizing		Amount at
		Expected Credit	Expected	September 30,
Category	Description	Losses	Loss Rate	2018
Performing	The counterparty has a low risk	12-month ECL	0.0769%-	$ 1,174,970
	of default and a strong		0.6221%
	capacity to meet contractual
	cash flows
No rating	The preference shares do not	Lifetime ECL - not	14.9383%-	9,900
	have credit rating	credit-impaired	20.6080%

The allowance for impairment loss of investments in debt instruments at amortized cost as at January 1, 2018 and September 30, 2018 grouped by credit rating is reconciled as follows:

Allowance for Impairment Loss Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 New financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance at September 30, 2018	Credit Rating
	Performing (12-month ECL) No Rating (Lifetime ECL - Not Credit- impaired) $ - $ - 5,572 3,932 5,572 3,932 3,921 - (5,583) - 131 - $ 4,041 $ 3,932

a. The increase in the loss allowance for performing of $3,921 thousand is due to new investments in principal guaranteed notes of $630,254 thousand during the period.
b. Investments in negotiable certificates of deposit of $700,000 thousand, principle guaranteed notes of $877,193 thousand and a bonds of $164,233 thousand were expired and redeemed during the period, with consequential decrease in the loss allowance for performing of $5,583 thousand.
30 -

11. HEDGING FINANCIAL INSTRUMENTS

2018

	September 30,	September 30,
		2018
Financial assets
Cash flow hedge - spot rate	$	432,614
Cash flow hedge - foreign exchange forward contracts		67
	$	432,681
Financial liabilities (included in other current liabilities)
Cash flow hedge - foreign exchange forward contracts	$	388

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 of 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, 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.

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

September 30, 2018

Notional Amount Forward Rate Hedging Instruments Currency (In Thousands) Maturity (Note) Line Item Cash flow hedge Forecast purchases - foreign exchange forward contracts JPY/NTD JPY400,000/NTD108,020 2018.10.16- 2019.1.4 0.2695- 0.2706 Other current liabilities Forecast purchases - foreign exchange forward contracts JPY/NTD JPY500,000/NTD134,500 2019.1.4 0.2690 Financial assets for hedging Forecast purchases - spot rate JPY JPY1,406,655/NTD382,699 2018.12.13- 2018.12.27 0.2695- 0.2750 Financial assets for hedging Forecast purchases - spot rate RMB CNY12,160/NTD55,170 2018.12.20 NTD4.5813: CNY1 Financial assets for hedging		Carrying Am	ount Change in Value Used for Calculating Hedge Liability Ineffectiveness $ (388 ) $ (310 ) - 54 - (3,222 ) - (1,414 ) $ (388) $ (4,892)
		Asset $ - 67 378,671 53,943 $ 432,681

Note: NTD:JPY, unless stated otherwise.

31 -

	Change in	Change in
	Value Used for		Balance in
	Calculating		Other Equity
		Hedge	Continuing
Hedged Items	Ineffectiveness		Hedges
Cash flow hedge
Forecast purchases	$	4,892	$ (4,892)
For the three months ended September 30, 2018
			Hedging Gains
			Recognized in
Comprehensive Income			OCI
Cash flow hedge
Forecast purchases			$ (14,727)
For the nine months ended September 30, 2018
			Hedging Gains
			Recognized in
Comprehensive Income			OCI
Cash flow hedge
Forecast purchases			$ 8,301

Gains and losses of hedging instruments reclassified from equity to cost of goods sold were $8,567 thousand and $17,953 thousand for the three months ended September 30, 2018 and nine months ended September 30, 2018, respectively.

The Group has signed component purchasing contracts with the suppliers in Japan and China, and signed foreign exchange forward contracts with the banks and purchased foreign currency banknote at the spot rate to avoid exchange rate risk of its forecasted purchases. When the forecasted purchases take place, the amount originally deferred and recognized in equity will be reclassified to cost of goods sold.

2017

The hedging policy for foreign currency risk is the same in 2018 and 2017 which used the following hedging instruments.

	December	December	31,	September	September	30,
		2017			2017
Derivative financial assets under hedge accounting
(included in other current assets)
Cash flow hedges - foreign exchange forward contracts	$		-	$	1,104
Derivative financial liabilities under hedge accounting
(included in other current liabilities)
Cash flow hedges - foreign exchange forward contracts	$	12,362		$		-

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The Group’s hedging strategy is to enter into foreign exchange forward contracts to avoid exchange rate exposure in relation to Japanese yen (JPY) forecasted purchases. When the forecasted purchases actually take place, the carrying amounts of the non-financial hedged items will be adjusted accordingly.

The Group’s outstanding foreign exchange forward contracts at the end of the reporting period were as follows:

December 31, 2017

					Notional Amount
			Currency	Maturity Date	(In Thousands)
Buy			JPY/NTD	2018.01.31-2018.07.31	JPY2,002,019/NTD538,393
September	30,	2017
					Notional Amount
			Currency	Maturity Date	(In Thousands)
Buy			JPY/NTD	2017.10.31-2018.3.30	JPY1,077,834/NTD289,937

Gains and losses of hedging instruments reclassified from equity to cost of goods sold were $(2,505) thousand and $36,841 thousand for the three months ended September 30, 2017 and nine months ended September 30, 2017, respectively.

12. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

	December	December	31,	September 30,
		2017		2017
Current
Domestic investments
Mutual funds	$		-	$ 607,852
Non-current
Domestic investments
Unlisted shares	$	703,983		$ 730,487
Listed shares		22,489		50,363
	$	726,472		$ 780,850

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13. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Notes receivable
Notes receivable - operating	$	11,602	$	23,886	$	12,041
Less: Allowance for impairment loss		-		(87)		(101)
	$	11,602	$	23,799	$	11,940
Accounts receivable
At amortized cost
Gross carrying amount	$	1,294,562	$	1,168,194	$	1,235,789
Less: Allowance for impairment loss		(11,102)		(6,701)		(9,094)
	$	1,283,460	$	1,161,493	$	1,226,695
For the nine months ended September 30, 2018

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all accounts receivable. The expected credit losses on accounts receivable are estimated by reference to 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:

September 30, 2018

	September 30,
	2018
0 days	$ 1,272,157
1-60 days	15,931
61-90 days	4,278
More than 90 days	13,798
Gross carrying amount	1,306,164
Loss allowance (Lifetime ECL)	(11,102)
Amortized cost	$ 1,295,062

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

Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 Add: Net remeasurement of loss allowance Foreign exchange gains and losses Balance at September 30, 2018 For the nine months ended September 30, 2017	2018 $ 6,788 - 6,788 4,446 (132) $ 11,102

The Group applied the same credit policy in 2018 and 2017. Due to insignificant risks on the recoverability of the Group’s notes receivable and accounts receivable historically, allowance for impairment loss was recognized based on the estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

For some accounts receivable balances that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss because there was no significant change in credit quality and the amounts were still considered recoverable. The Group did not hold any collateral or other credit enhancements for these balances.

The aging of receivables was as follows:

	December 31,	September 30,
	2017	2017
0 days	$ 1,146,395	$ 1,228,622
1-60 days	37,367	13,444
61-90 days	6,405	3,880
More than 90 days	1,913	1,884
	$ 1,192,080	$ 1,247,830

The above aging schedule was based on the number of past due days from the end of the credit term.

The aging of receivables that were past due but not impaired was as follows:

	December 31,	December 31,	September 30,	September 30,
		2017		2017
1-60 days	$	1,295	$	754
61-90 days		404		-
More than 90 days		8		8
	$	1,707	$	762

35 -

The above aging schedule was based on the number of past due days from the end of the credit term.

Individually Assessed for Impairment Collectively Assessed for Impairment Balance at January 1, 2017 $ 2,528 $ 7,288 Add: Impairment losses recognized on receivables - 342 Less: Impairment losses reversed - (953) Foreign exchange translation gains and losses - (10) Balance at September 30, 2017 $ 2,528 $ 6,667	Total $ 9,816 342 (953) (10) $ 9,195

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

The Group had a 43.87% interest in Kian Shen as of September 30, 2018, December 31, 2017 and September 30, 2017. The remaining 56.13% interest in Kian Shen is dispersed and held by shareholders unrelated to the Group.

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

The summarized financial information below represents amounts before intragroup eliminations.

Kian Shen and Kian Shen’s subsidiaries:

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Current assets	$	700,740	$	893,851	$	716,730
Non-current assets		4,124,222		3,904,197		3,911,609
Current liabilities		(700,801)		(746,612)		(665,606)
Non-current liabilities		(181,494)		(164,347)		(210,251)
Equity	$	3,942,667	$	3,887,089	$	3,752,482
Equity attributable to:
Owners of Kian Shen	$	1,729,648	$	1,705,266	$	1,646,214
Non-controlling interests of Kian Shen		2,213,019		2,181,823		2,106,268
	$	3,942,667	$	3,887,089	$	3,752,482

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For the Three Months Ended September 30 2018 2017 Revenue $ 302,450 $ 271,944 Profit for the period $ 95,546 $ 144,365 Other comprehensive income (loss) for the period (147,277) 51,442 Total comprehensive income (loss) for the period $ (51,731) $ 195,807 Profit attributable to: Owners of Kian Shen $ 41,916 $ 63,332 Non-controlling interests of Kian Shen 53,630 81,033 $ 95,546 $ 144,365 Total comprehensive income (loss) attributable to: Owners of Kian Shen $ (22,695) $ 85,900 Non-controlling interests of Kian Shen (29,036) 109,907 $ (51,731) $ 195,807 Net cash inflow (outflow) from: Operating activities Investing activities Financing activities Foreign exchange adjustments Net cash outflow Dividends paid to non-controlling interests INVENTORIES September 30, 2018 Merchandise $ 704,324 Finished goods 413,000 Work in progress 429,415 Raw materials 1,885,437 Materials in transit 160,492 $ 3,592,668	For the Three Months Ended September 30			For the Nine Months Ended September 30
				2018 2017 $ 930,601 $ 867,599 $ 297,344 $ 415,882 (143,694) (46,770) $ 153,650 $ 369,112 $ 130,445 $ 182,447 166,899 233,435 $ 297,344 $ 415,882 $ 67,406 $ 161,929 86,244 207,183 $ 153,650 $ 369,112 For the Nine Months Ended September 30
		2018 2017 $ (85,551) $ (25,835) 255,872 (153,755) (168,160) (118,820) (4,164) (9,139) $ (2,003) $ (307,549) $ 98,877 $ 94,757 December 31, 2017 September 30, 2017 $ 350,679 $ 297,080 1,821,266 714,644 331,154 397,608 1,785,137 1,902,181 176,233 129,775 $ 4,464,469 $ 3,441,288

15. INVENTORIES

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The costs of inventories recognized as cost of goods sold for the three months ended September 30, 2018 and 2017, and nine months ended September 30, 2018 and 2017 were $6,592,400 thousand, $7,096,307 thousand, $21,605,437 thousand and $25,016,647 thousand, respectively. The costs of inventories recognized as cost of goods sold during the three months ended September 30, 2017 and nine months ended September 30, 2017 included inventory write-downs of $155 thousand and $17,758 thousand, respectively.

16. DISCONTINUED OPERATIONS

On October 14, 2016, the Group’s approved to dispose of, Zhengzhou Tooling & Stamping Co., Ltd., which is the Corporation’s subsidiary, in the shareholders’ meetings. The Group entered into a memorandum with Zhengzhou Nissan Automobile Co., Ltd. The base date for the measurement of price was on May 31, 2017, and the transaction was completed on September 15, 2017. Therefore, the income and expenses related to the subsidiary were classified as discontinued operations.

The details of the profit (loss) from discontinued operations and the related cash flows information were as follows:

	For the Nine	For the Nine
	Months Ended
	September 30,
		2017
Operating revenue	$	60,596
Operating costs		(51,342)
Gross profit		9,254
Operating expenses		(6,795)
Profit from operations		2,459
Non-operating income and expenses		203
Profit before tax		2,662
Income tax benefit		177
Net profit for the period	$	2,839
Profit from discontinued operations attributable to:
Owners of Zhengzhou Tooling & Stamping	$	847
Non-controlling interests		1,992
	$	2,839
Net cash used in operating activities	$	(16,089)
Net cash used in financing activities		(5,045)
Foreign exchange adjustments		(1,841)
Net cash outflows	$	(22,975)

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17. FINANCIAL ASSETS MEASURED AT COST - 2017

	December 31,	September 30,
	2017	2017
Overseas unlisted ordinary shares	$ 146,734	$ 146,687
Domestic unlisted ordinary shares	48,126	49,518
	$ 194,860	$ 196,205
Classified according to financial asset measurement categories
Available-for-sale financial assets	$ 194,860	$ 196,205

Management believed that the above unlisted equity investments held by the Group had fair values which could not be reliably measured, because the range of reasonable fair value estimates was so significant. Therefore, they were measured at cost less impairment at the end of the reporting period.

The Group evaluated the invested corporations by future cash flow and market rate of return and recognized impairment loss $20,224 thousand for the nine months ended September 30, 2017.

The Group disposed of certain financial assets measured at cost with carrying amount of $0 thousand and $2,801 thousand for the three months and nine months ended September 30, 2017, respectively, recognizing disposal benefit of $488 thousand and $84,031 thousand, respectively (included in gain on disposal of investments).

The Group acquired 5% interests of Uni-Calsonic Corporation in March 2017 and increased its shareholding from 18.2% to 23.2%. Thus, at the day the Group gained significant influence over Uni-Calsonic Corporation, it is deemed that the Group disposed of the financial asset measured at cost and recognized an investment accounted for using the equity method by its market value. The Group recognized gain on disposal of investments of $31,517 thousand for the nine months ended September 30, 2017 in accordance with the market value of the day the Group gained significant influence.

18. DEBT INVESTMENT WITH NO ACTIVE MARKET - 2017

	December 31,	December 31,	September 30,	September 30,
		2017		2017
Current
Negotiable certificates of deposit	$	700,000	$	700,000
Principal guaranteed notes		44,052		44,792
	$	744,052	$	744,792
Non-current
Bonds	$	1,018,136	$	1,016,007
Principal guaranteed notes		506,715		505,161
Preferred shares		9,900		309,338
	$	1,534,751	$	1,830,506

a. The coupon rates of negotiable certificates of deposit was both 0.83% per annum as of December 31, 2017 and September 30, 2017.

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b. The range of coupon rates of principal guaranteed notes was both 2.05%-3.85% per annum as of December 31, 2017 and September 30, 2017.
c. The range of coupon rates of bonds was both 1.02%-4.80% per annum as of December 31, 2017 and September 30, 2017.
d. The coupon rate and range of coupon rate for the Group’s preference shares was 1.50% and 1.50%-3.70% per annum as of December 31, 2017 and September 30, 2017, respectively.

19. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

September 30, 2018 Investments in associates $ 21,120,901 Investments in joint ventures 7,817,820 $ 28,938,721 a. Investments in associates Associate September 30, 2018 Material associates Yulon $ 11,428,441 Associates that are not individually material 9,692,460 $ 21,120,901	December 31, 2017 September 30, 2017 $ 20,465,081 $ 20,451,806 7,235,581 7,004,671 $ 27,700,662 $ 27,456,477 December 31, 2017 September 30, 2017 $ 11,283,338 $ 11,363,683 9,181,743 9,088,123 $ 20,465,081 $ 20,451,806

1) Material associates

The Group holds 16.80% interest in Yulon on September 30, 2018, December 31, 2017 and September 30, 2017, 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% of interest in Yulon.

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

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

	September 30,	December 31,	September 30,
Name of Associate	2018	2017	2017
Yulon	$ 5,690,351	$ 6,332,810	$ 6,791,709

The summarized financial information below represents amounts shown in the associates’ consolidated financial statements prepared in accordance with IFRSs adjusted by the Group for equity accounting purposes.

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Yulon

September 30, 2018 Current assets $ 194,931,036 Non-current assets 88,440,927 Current liabilities (181,814,815) Non-current liabilities (21,535,091) Equity 80,022,057 Non-controlling interests (8,555,759) $ 71,466,298 Proportion of the Group’s ownership 16.80% Equity attributable to the Group $ 12,006,338 Cross shareholdings (581,182) Unrealized gain on sidestream transactions 3,285 Carrying amount $ 11,428,441 For the Three Months Ended September 30 2018 2017 Operating revenue $ 20,223,757 $ 21,380,562 Net profit for the period $ 635,524 $ 1,169,913 Other comprehensive income (loss) (717,466) 167,295 Total comprehensive income (loss) for the period $ (81,942) $ 1,337,208 Dividends received from Yulon	September 30, 2018 Current assets $ 194,931,036 Non-current assets 88,440,927 Current liabilities (181,814,815) Non-current liabilities (21,535,091) Equity 80,022,057 Non-controlling interests (8,555,759) $ 71,466,298 Proportion of the Group’s ownership 16.80% Equity attributable to the Group $ 12,006,338 Cross shareholdings (581,182) Unrealized gain on sidestream transactions 3,285 Carrying amount $ 11,428,441 For the Three Months Ended September 30 2018 2017 Operating revenue $ 20,223,757 $ 21,380,562 Net profit for the period $ 635,524 $ 1,169,913 Other comprehensive income (loss) (717,466) 167,295 Total comprehensive income (loss) for the period $ (81,942) $ 1,337,208 Dividends received from Yulon	December 31, 2017 September 30, 2017 $ 169,428,441 $ 155,656,933 88,988,066 86,041,099 (158,832,963) (152,672,645) (20,462,405) (9,943,509) 79,121,139 79,081,878 (8,688,986) (8,406,889) $ 70,432,153 $ 70,674,989 16.80% 16.80% $ 11,832,602 $ 11,873,398 (552,549) (513,000) 3,285 3,285 $ 11,283,338 $ 11,363,683 For the Nine Months Ended September 30 2018 2017 $ 65,658,693 $ 69,284,634 $ 2,947,052 $ 2,473,562 (541,066) (431,754) $ 2,405,986 $ 2,041,808 $ 152,092 $ 131,114	December 31, 2017 September 30, 2017 $ 169,428,441 $ 155,656,933 88,988,066 86,041,099 (158,832,963) (152,672,645) (20,462,405) (9,943,509) 79,121,139 79,081,878 (8,688,986) (8,406,889) $ 70,432,153 $ 70,674,989 16.80% 16.80% $ 11,832,602 $ 11,873,398 (552,549) (513,000) 3,285 3,285 $ 11,283,338 $ 11,363,683 For the Nine Months Ended September 30 2018 2017 $ 65,658,693 $ 69,284,634 $ 2,947,052 $ 2,473,562 (541,066) (431,754) $ 2,405,986 $ 2,041,808 $ 152,092 $ 131,114	December 31, 2017 September 30, 2017 $ 169,428,441 $ 155,656,933 88,988,066 86,041,099 (158,832,963) (152,672,645) (20,462,405) (9,943,509) 79,121,139 79,081,878 (8,688,986) (8,406,889) $ 70,432,153 $ 70,674,989 16.80% 16.80% $ 11,832,602 $ 11,873,398 (552,549) (513,000) 3,285 3,285 $ 11,283,338 $ 11,363,683 For the Nine Months Ended September 30 2018 2017 $ 65,658,693 $ 69,284,634 $ 2,947,052 $ 2,473,562 (541,066) (431,754) $ 2,405,986 $ 2,041,808 $ 152,092 $ 131,114

		$
		$
		$

2018 $ 20,223,757 $ 635,524 (717,466) $ (81,942)	2017 $ 21,380,562 $ 1,169,913 167,295 $ 1,337,208		2018 $ 65,658,693 $ 2,947,052 (541,066) $ 2,405,986 $ 152,092	2017 $ 69,284,634 $ 2,473,562 (431,754) $ 2,041,808 $ 131,114

2) Aggregate information of associates that are not individually material

The Group’s share of: Net profit (loss) for the period Other comprehensive income (loss) Total comprehensive income (loss) for the period	For the Three Months Ended September 30 2018 2017 $ 54,527 $ (1,720) (31,143) (6,525) $ 23,384 $ (8,245)	For the Three Months Ended September 30 2018 2017 $ 54,527 $ (1,720) (31,143) (6,525) $ 23,384 $ (8,245)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 54,527 (31,143) $ 23,384		2018 $ 277,685 (9,441) $ 268,244	2017 $ 223,662 7,596 $ 231,258

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All the associates are accounted for using the equity method.

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

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

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

Except for Yulon, investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were based on the associates’ financial statements that have not been reviewed.

b. Investments in joint ventures

	September 30,	December 31,	September 30,
	2018	2017	2017
Joint ventures that are not individually
material	$ 7,817,820	$ 7,235,581	$ 7,004,671

Aggregate information of joint ventures that are not individually material:

The Group’s share of: Net profit of the period Other comprehensive income (loss) Total comprehensive income for the period	For the Three Months Ended September 30 2018 2017 $ 269,759 $ 338,392 (247,318) 92,765 $ 22,441 $ 431,157	For the Three Months Ended September 30 2018 2017 $ 269,759 $ 338,392 (247,318) 92,765 $ 22,441 $ 431,157	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 269,759 (247,318) $ 22,441		2018 $ 997,622 (209,057) $ 788,565	2017 $ 980,875 (81,999) $ 898,876

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

The operation of Hangzhou King-Long Kian-Shen Co., Ltd., the subsidiary of the Group’s joint venture, Xiamen King-Long Kian-Shen Frame, has already been discontinued before June 30, 2018, which was approved by it’s board of directors on May 22, 2018. The transformation of operation in the future 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.

In August 2018, the Group disposed of 24.5% interests in the joint venture, Zhejiang Kangda, in post-tax amount of $448,253 thousand (RMB 99,945 thousand), and recognized gain on disposal of investments of $292,693 thousand.

Investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments are based on the joint ventures’ financial statements that have not been reviewed.

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20. PROPERTY, PLANT AND EQUIPMENT

	September 30,	December 31,	September 30,
	2018	2017	2017
Land	$ 2,127,397	$ 2,127,397	$ 2,127,397
Land improvement	14,374	12,681	13,138
Buildings	1,022,420	1,110,239	1,120,554
Machinery	2,117,099	2,312,348	2,412,958
Other equipment	404,120	400,718	377,491
Construction in progress	651,738	579,660	546,445
	$ 6,337,148	$ 6,543,043	$ 6,597,983

Except for the depreciation recognized and the cost of acquisition of property, plant and equipment for increasing productivity, which totaled $255,926 thousand, $333,875 thousand, $580,968 thousand and $873,769 thousand during the three months ended September 30, 2018 and 2017 and during the nine months ended September 30, 2018 and 2017, respectively, the Group had no other significant disposal of property, plant and equipment.

Because the sales volume of certain car models is lower than the Group expected, the estimated future cash flows arising from the related machinery were expected to decrease, which led to the carrying amount exceeding the recoverable amount. Therefore, the Group recognized an impairment loss of $11,578 thousand and $21,924 thousands for the three months ended September 30, 2018 and nine months ended September 30, 2018. The Group determined the recoverable amount of the related machinery on the basis of its value in use. The discount rate used in measuring the value in use was 6.69%.

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 33.

21. INVESTMENT PROPERTIES

	September 30,	December 31,	September 30,
	2018	2017	2017
Investment properties	$ 1,383,783	$ 1,395,488	$ 1,399,405

Except for depreciation recognized, the Group did not have significant addition, disposal, or impairment of investment properties during the three months ended September 30, 2018 and 2017 and nine months ended September 30, 2018 and 2017.

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

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The fair values of investment properties of the Group were $2,312,470 thousand and $2,288,404 thousand as of December 31, 2017 and 2016, respectively. The management of the Group had assessed and determined that there were no significant changes in the fair values as of September 30, 2018 and 2017, as compared to that as of December 31, 2017 and 2016.

For the amount of investment properties pledged as deposits for certain projects, refer to Note 33.

22. SHORT-TERM BORROWINGS

	September 30,	December 31,	September 30,
	2018	2017	2017
Line of credit borrowings	$ 320,000	$ 415,000	$ 495,000
Bank loans	320,000	330,000	370,000
	$ 640,000	$ 745,000	$ 865,000

a. The range of interest rate on credit borrowings was 0.95%-1.25%, 0.95%-1.54% and 0.90%-1.54% per annum as of September 30, 2018, December 31, 2017 and September 30, 2017, respectively.
b. The interest rate on bank loans were 1.18%, 1.25% and 1.20%-1.42% per annum as of September 30, 2018, December 31, 2017 and September 30, 2017, respectively.

23. OTHER PAYABLES

	September 30,	September 30,	December 31,	September 30,
		2018	2017	2017
Payable for salaries or bonus	$	884,961	$ 1,265,640	$ 1,072,485
Payable for advertisement		398,437	233,386	267,816
Payable for warranties		273,110	269,322	217,110
Payable for taxes		214,294	151,991	247,796
Provisions for employee benefits		114,898	115,788	93,811
Others		901,181	835,861	952,808
	$	2,786,881	$ 2,871,988	$ 2,851,826

24. RETIREMENT BENEFIT PLANS

Employee benefit expenses in respect of the Group’s defined benefit retirement plans were $16,661 thousand, $15,510 thousand, $50,091 thousand and $49,106 thousand during the three months and the nine months ended September 30, 2018 and 2017, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2017 and 2016.

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25. EQUITY

a. Ordinary shares

	September 30,	December 31,	September 30,
	2018	2017	2017
Numbers of shares authorized (in thousands)	1,800,000	1,800,000	1,800,000
Amount of shares authorized	$ 18,000,000	$ 18,000,000	$ 18,000,000
Number of shares issued and fully paid (in
thousands)	1,384,051	1,384,051	1,384,051
Shares issued	$ 13,840,508	$ 13,840,508	$ 13,840,508
Fully paid ordinary shares, which have a par	value of $10, carry	one vote per share	and carry a right to
dividends.

b. Capital surplus

	September 30,	December 31,	September 30,
	2018	2017	2017
May be used to offset a deficit, distributed as
cash dividends, or transferred to share
capital (Note 1)
Conversion of bonds	$ 5,183,923	$ 5,183,923	$ 5,183,923
Issuance of ordinary shares	1,184,920	1,184,920	1,184,920
Others	4,666	4,666	4,666
May be used to offset a deficit only
Changes in percentage of ownership interest
in subsidiaries (Note 2)	2,225	2,225	2,225
Share of changes in capital surplus of
associates	37,515	31,606	32,539
	$ 6,413,249	$ 6,407,340	$ 6,408,273

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 amended 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 after amendment, refer to Note 26.

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The operating 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 and realize the Corporation’s long-term financial plan. Dividends are distributed no less than 40% of profits after tax, yet dividends cannot be distributed if the Corporation has deficit. Dividends are in the form of cash or stock. The Corporation’s policy is that cash dividends should be at least 20% of total dividends.

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 2017 and 2016 approved in the shareholders’ meetings in June 2018 and 2017, respectively, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For For Year 2017 Year 2016 $ 410,564 $ 318,910 2,491,292 2,214,481	Dividends Per Share (NT$)
		For For Year 2017 Year 2016 $ 1.80 $ 1.60

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

d. Special reserves

Beginning at January 1 Reversals Disposal of subsidiaries and associates Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 1,051,658 (4,691) $ 1,046,967	2017 $ 1,051,658 - $ 1,051,658

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e. Other equity items

1) Exchange differences on translating foreign operations

For the Nine Months Ended September 30 2018 2017 Balance at January 1 $ (485,118) $ (268,058) Recognized during the period Exchange differences on translating the financial statements of foreign operations 32,626 12,100 Share from associates and join ventures accounted for using the equity method (318,792) (170,449) Reclassification adjustment Disposal of joint ventures accounted for using the equity method 7,538 - Other comprehensive loss recognized in the period (278,628) (158,349) Balance at September 30 $ (763,746) $ (426,407) 2) Unrealized gain (loss) on available-for-sale financial assets Balance at January 1, 2017 $ 850,984 Recognized during the period Unrealized loss on revaluation of available-for-sale financial assets (53,893) Share from associates accounted for using the equity method 40,593 Other comprehensive loss recognized in the period (13,300) Balance at September 30, 2017 $ 837,684 Balance at January 1, 2018 per IAS 39 $ 765,456 Adjustment on initial application of IFRS 9 (765,456) Balance at January 1, 2018 per IFRS 9 $ - 3) Unrealized gain on financial assets at FVTOCI For the Nine Months Ended September 30, 2018 Balance at January 1 per IAS 39 $ - Adjustment on initial application of IFRS 9 273,866 Balance at January 1 per IFRS 9 273,866 Recognized during the period Unrealized loss - equity instruments (28,110) Share from associates accounted for using the equity method (19,879) Other comprehensive loss recognized in the period (47,989) Cumulative unrealized gain of equity instruments transferred to retained earning due to disposal 5,168 Balance at September 30 $ 231,045		For the Nine Months Ended September 30

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4) Cash flow hedges

Balance at January 1 Effect of change in tax rate Recognized during the period Gain on changes in the fair value of hedging instruments Foreign currency risk - foreign exchange forward contracts Foreign currency risk - spot rate Other comprehensive income recognized in the period Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ (12,253) 382 9,633 (2,654) 7,361 $ (4,892)	2017 $ (28,635) - 13,512 13,168 26,680 $ (1,955)

f. Non-controlling interests

Balance at January 1 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1 per IFRS 9 Share of profit for the year Other comprehensive loss recognized in the period Exchange difference on translation the financial statements of foreign operations Unrealized loss on financial assets at FVTOCI Disposal of subsidiaries Cash dividend distributed by subsidiaries Balance at September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 3,506,941 43,831 3,550,772 210,899 (60,223) (20,433) - (163,237) $ 3,517,778	2017 $ 3,299,707 - 3,299,707 300,550 (26,230) - (25,752) (174,259) $ 3,374,016

26. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations concludes as follow:

a. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses	For the Three Months Ended September 30 2018 2017 $ 192,304 $ 198,549 38,783 34,420 $ 231,087 $ 232,969	For the Three Months Ended September 30 2018 2017 $ 192,304 $ 198,549 38,783 34,420 $ 231,087 $ 232,969	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 192,304 38,783 $ 231,087		2018 $ 612,139 114,225 $ 726,364	2017 $ 573,710 103,187 $ 676,897 (Continued)

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An analysis of amortization by function Operating costs Operating expenses An analysis of amortization in intangible assets by function Research and development expenses	For the Three Months Ended September 30 2018 2017 $ 2,070 $ 2,423 20,367 18,324 $ 22,437 $ 20,747 $ 10,132 $ 9,452	For the Three Months Ended September 30 2018 2017 $ 2,070 $ 2,423 20,367 18,324 $ 22,437 $ 20,747 $ 10,132 $ 9,452	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 2,070 20,367 $ 22,437 $ 10,132		2018 $ 6,389 52,610 $ 58,999 $ 28,620	2017 $ 6,711 54,126 $ 60,837 $ 28,356

(Concluded)

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

Rental income from investment properties Direct operating expenses from investment properties that generated rental income c. Employee benefits expense Post-employment benefits Defined contribution plans Defined benefit plans Short-term benefits An analysis of employee benefits expenses by function Operating costs Operating expenses		For the Three Months Ended September 30 2018 2017 $ 16,837 $ 15,466 $ 5,424 $ 5,469 For the Three Months Ended September 30 2018 2017 $ 19,586 $ 21,988 16,661 15,510 36,247 37,498 897,900 963,491 $ 934,147 $ 1,000,989 $ 480,519 $ 515,778 453,628 485,211 $ 934,147 $ 1,000,989		For the Nine Months Ended September 30	For the Nine Months Ended September 30
				2018 2017 $ 48,874 $ 47,308 $ 16,833 $ 16,553 For the Nine Months Ended September 30
		2018 $ 19,586 16,661 36,247 897,900 $ 934,147 $ 480,519 453,628 $ 934,147		2018 $ 58,909 50,091 109,000 2,854,685 $ 2,963,685 $ 1,550,302 1,413,383 $ 2,963,685	2017 $ 66,436 49,106 115,542 2,943,176 $ 3,058,718 $ 1,610,983 1,447,735 $ 3,058,718

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d. Employees’ compensation and remuneration of directors and supervisors

According to the Articles of Incorporation of the Corporation, the Corporation accrued employees’ compensation and remuneration 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. For the three months ended September 30, 2018 and 2017 and nine months ended September 30, 2018 and 2017, the employees’ compensation and the remuneration of directors were as follows:

Amount

Employees’ compensation Remuneration of directors	For the Three Months Ended September 30 2018 2017 $ 8,043 $ 7,322 $ 4,725 $ 5,243	For the Three Months Ended September 30 2018 2017 $ 8,043 $ 7,322 $ 4,725 $ 5,243	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 8,043 $ 4,725		2018 $ 27,371 $ 16,323	2017 $ 26,337 $ 17,806

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

The appropriations of employees’ compensation and remuneration of directors and supervisors for 2017 and 2016 having been resolved by the board of directors in March 2018 and 2017, respectively, were as below:

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2017 Cash $ 45,459 22,036	2016
		Cash $ 18,426 17,822

There was no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the year ended December 31, 2017 and 2016.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Corporation’s board of directors in 2018 and 2017 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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27. INCOME TAXES FROM CONTINUING OPERATIONS

a. Income tax recognized in profit or loss

Major components of tax expense were as follows:

Current tax In respect of the current period Adjustments for the prior periods Deferred tax Adjustments to deferred tax attributable to changes in tax rates and laws In respect of the current period Adjustments for the prior periods Income tax expense recognized in profit or loss	For the Three Months Ended September 30 2018 2017 $ 49,861 $ 76,694 (13,010) (15,659) 36,851 61,035 - - 16,639 11,402 (1,693) - 14,946 11,402 $ 51,797 $ 72,437	For the Three Months Ended September 30 2018 2017 $ 49,861 $ 76,694 (13,010) (15,659) 36,851 61,035 - - 16,639 11,402 (1,693) - 14,946 11,402 $ 51,797 $ 72,437	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 49,861 (13,010) 36,851 - 16,639 (1,693) 14,946 $ 51,797		2018 $ 271,427 (21,891) 249,536 (44,585) 188,366 (740) 143,041 $ 392,577	2017 $ 330,207 (14,142) 316,065 - 34,357 - 34,357 $ 350,422

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20% effective in 2018. The effect of the change in tax rate on deferred tax income to be recognized in profit or loss. In addition, the rate of the corporate surtax applicable to 2018 unappropriated earnings will be reduced from 10% to 5%.

b. Income tax recognized in other comprehensive income

Deferred tax Effect of change in tax rate In respect of the current period Total gain on effective portion of cash flow hedges	For the Three Months Ended September 30 2018 2017 $ - $ - 2,653 675 $ 2,653 $ 675	For the Three Months Ended September 30 2018 2017 $ - $ - 2,653 675 $ 2,653 $ 675	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ - 2,653 $ 2,653		2018 $ 5,473 (1,322) $ 4,151	2017 $ - (5,738) $ (5,738)

c. Income tax assessments

The tax returns of the Corporation through 2016 have been assessed by the tax authorities.

51 -

28. EARNINGS PER SHARE

Basic earnings per share From continuing operations From discontinued operations Total basic earnings per share Diluted earnings per share From continuing operations From discontinued operations Total diluted earnings per share	For the Three Months Ended September 30 2018 2017 $ 0.63 $ 0.73 - - $ 0.63 $ 0.73 $ 0.63 $ 0.73 - - $ 0.63 $ 0.73	For the Three Months Ended September 30 2018 2017 $ 0.63 $ 0.73 - - $ 0.63 $ 0.73 $ 0.63 $ 0.73 - - $ 0.63 $ 0.73	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 0.63 - $ 0.63 $ 0.63 - $ 0.63		2018 $ 2.14 - $ 2.14 $ 2.14 - $ 2.14	2017 $ 2.40 - $ 2.40 $ 2.40 - $ 2.40

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

Net Profit for the Year

Earnings used in the computation of basic earnings per share Less: Profit for the period from discontinued operations used in the computation of basic earnings per share from discontinued operations Earnings used in the computation of basic earnings per share from continuing operations		For the Three Months Ended September 30 2018 2017 $ 859,701 $ 992,224 - - $ 859,701 $ 992,224		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 859,701 - $ 859,701		2018 $ 2,919,706 - $ 2,919,706	2017 $ 3,270,060 847 $ 3,269,213

52 -

Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares)

Weighted average number of ordinary shares in 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 Three Months Ended September 30 2018 2017 1,384,051 1,384,051 (20,599) (20,599) 1,363,452 1,363,452 1,067 981 1,364,519 1,364,433	For the Three Months Ended September 30 2018 2017 1,384,051 1,384,051 (20,599) (20,599) 1,363,452 1,363,452 1,067 981 1,364,519 1,364,433	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 1,384,051 (20,599) 1,363,452 1,067 1,364,519		2018 1,384,051 (20,599) 1,363,452 1,630 1,365,082	2017 1,384,051 (20,599) 1,363,452 1,198 1,364,650

When calculating EPS, the Group considers the shares which associates hold as the treasury shares to reduce the outstanding shares.

If the Group 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.

29. DISPOSAL OF SUBSIDIARIES

The Group entered into a memorandum with Zhenzhou Nissan Automobile Co., Ltd. on May 23, 2017, and the disposal was completed on September 15, 2017.

a. Consideration received from disposal

Sales proceeds receivable (US$1,303 thousand, included in other receivables) $ 39,419

53 -
b. Analysis of assets and liabilities on the date control was lost

	Zhengzhou
	Tooling &
	Stamping Co.,
	Ltd.
Current assets
Cash and cash equivalents	$ 33,091
Trade receivables	47,350
Other receivables	12
Non-current assets
Property, plant and equipment	461
Other non-current assets	6
Current liabilities
Other payables	(16,538)
Net assets disposed of	$ 64,382

c. Loss on disposal of subsidiaries

On the date of the loss of control, the Group reclassified Zhengzhou Tooling & Stamping Co., Ltd. as a disposal group held for sale measured at the fair value of its investments. The differences between the fair value and the book value of the investments on the date of loss of control were recognized in profit or loss. In addition, for all of amounts related to the subsidiaries that were recognized in other comprehensive income, the accounting treatments were consistent with those of the subsidiaries as if the related assets and liabilities were directly sold by these subsidiaries. As a result, the loss on disposal of Zhengzhou Tooling & Stamping Co., Ltd. recognized was $2,179 thousand (accounted for as the debit to gain on disposal of investments).

d. Net cash outflow on disposal of subsidiary

	For the Nine
	Months Ended
	September 30,
	2017
Proceeds of disposal	$ 39,419
Less: Cash and cash equivalent balances disposal of	(33,091)
Less: Remaining receivable proceeds	(39,419)
Net cash outflow on disposal of subsidiaries	$ (33,091)

30. 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.

54 -

31. 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

September 30, 2018 Financial assets Financial assets at FVTPL Unlisted share-ROC Mutual funds Financial assets at FVTOCI Listed shares - ROC Unlisted shares - ROC Overseas unlisted shares Financial assets for hedging Derivative financial instruments Non-derivative financial instruments Financial liabilities Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities) Financial liabilities for hedging Derivative financial instruments (included in other current liabilities)	Level 1 $ - 692,748 $ 692,748 $ 25,902 - - $ 25,902 $ - 432,614 $ 432,614 $ - $ -	Level 2 $ - - $ - $ - - - $ - $ - - $ - $ - $ -	Level 3 $ 724,592 - $ 724,592 $ - 23,882 202,915 $ 226,797 $ 67 - $ 67 $ 803 $ 388	Total $ 724,592 692,748 $ 1,417,340 $ 25,902 23,882 202,915 $ 252,699 $ 67 432,614 $ 432,681 $ 803 $ 388

55 -

December 31, 2017

Financial assets Financial assets at FVTPL Mutual funds Available-for-sale financial assets Listed securities - ROC Unlisted securities - ROC Financial liabilities Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities) Derivative financial liabilities for hedging Derivative financial instruments (included in other current liabilities) September 30, 2017 Financial assets Financial assets at FVTPL Derivative financial instruments Non-derivative financial assets held for trading Available-for-sale financial assets Listed securities - ROC Unlisted securities - ROC Mutual funds Derivative financial assets for hedging Derivative financial instruments (included in other current assets)	Level 1 $ 529,496 $ 22,489 - $ 22,489 $ - $ - Level 1 $ - 61,513 $ 61,513 $ 50,363 - 607,852 $ 658,215 $ -	Level 2 $ - $ - - $ - $ - $ - Level 2 $ - - $ - $ - - - $ - $ -	Level 3 $ - $ - 703,983 $ 703,983 $ 2,954 $ 12,362 Level 3 $ 4,262 - $ 4,262 $ - 730,487 - $ 730,487 $ 1,104	Total $ 529,496 $ 22,489 703,983 $ 726,472 $ 2,954 $ 12,362 Total $ 4,262 61,513 $ 65,775 $ 50,363 730,487 607,852 $ 1,388,702 $ 1,104

56 -

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

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

For the three months ended September 30, 2018

Financial Assets Equity Instruments at FVTPL Balance at July 1 $ 739,392 Recognized in loss (14,800) Recognized in other comprehensive income (loss) - Sales - Balance at September 30 $ 724,592 Financial Liabilities Balance at July 1 Recognized in loss Recognized in other comprehensive income Balance at September 30	Derivative Financial Instruments at FVTPL Equity Instruments at FVTOCI Derivative Financial Instruments for Hedging $ 10,605 $ 273,650 $ 4,224 (10,605) - (4,224) - (34,495) 67 - (12,358) - $ - $ 226,797 $ 67 Equity Instruments at FVTPL Derivative Financial Instruments for Hedging $ 12,822 $ 409 (12,019) (409) - 388 $ 803 $ 388	Total $ 1,027,871 (29,629) (34,428) (12,358) $ 951,456 Total $ 13,231 (12,428) 388 $ 1,191

For the nine months ended September 30, 2018

Financial Assets Equity Instruments at FVTPL Equity Instruments at FVTOCI Balance at January 1 $ 767,761 $ 293,111 Recognized in profit or loss (43,169) - Recognized in other comprehensive income or loss - (53,349) Sales - (12,965) Balance at September 30 $ 724,592 $ 226,797	Derivative Financial Instruments for Hedging $ - - 67 - $ 67	Total $ 1,060,872 (43,169) (53,282) (12,965) $ 951,456

57 -

Financial Liabilities Equity Instruments at FVTPL Derivative Financial Instruments for Hedging Balance at January 1 $ - $ 12,362 Recognized in profit or loss 803 (12,362) Recognized in other comprehensive income - 388 Balance at September 30 $ 803 $ 388 For the three months ended September 30, 2017	Total $ 12,362 (11,559) 388 $ 1,191

Financial Assets Derivative Financial Instruments at FVTPL Balance at July 1 $ 1,640 Recognized in profit or loss 2,622 Recognized in other comprehensive income - Balance at September 30 $ 4,262 Financial Liabilities Balance at July 1 Recognized in loss Balance at September 30 For the nine months ended September 30, 2017	Available- for-sale Financial Assets Derivative Financial Instruments for Hedging Total $ 695,163 $ 3,226 $ 700,029 - (3,226) (604) 35,324 1,104 36,428 $ 730,487 $ 1,104 $ 735,853 Derivative Financial Instruments at FVTPL $ 953 (953) $ -

Financial Assets Derivative Financial Instruments at FVTPL Balance at January 1 $ 812 Recognized in profit or loss 3,450 Recognized in other comprehensive income or loss - Balance at September 30 $ 4,262	Available- for-sale Financial Assets Derivative Financial Instruments for Hedging $ 732,680 $ 1,371 - (1,371) (2,193) 1,104 $ 730,487 $ 1,104	Total $ 734,863 2,079 (1,089) $ 735,853

58 -

	Derivative
	Financial
	Instruments at
Financial Liabilities	FVTPL
Balance at January 1	$ 16,546
Recognized in loss	(16,546)
Balance at September 30	$ -

3) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement
a) Derivative financial instruments: The fair values of warrants are determined using option pricing models where the significant unobservable inputs are historical volatility. An increase in the historical volatility used in isolation would result in an increase in the fair value.
b) 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.
c) Domestic unlisted securities to which the market approach was applied: The fair values of domestic unlisted shares were referred to stock prices of listed companies with operating activities that were similar to those of the Corporation. The material unobservable inputs were as follows:

	September 30,	December 31,
	2018	2017
Operating income ratio	0.15-5.28 times	-
Gross profit ratio	0.71-16.52 times	-
EBIT ratio	8.25-16.85 times	8.96 times
EBITDA ratio	0.76-25.47 times	7.23-31.73 times
Post-tax profit ratio	1.70-72.94 times	-
P/B ratio	0.91-6.92 times	1.66-3.11 times
Discount rate for lack of marketability	11.36%-32.28%	32.28%
		September 30,
		2017
P/E ratio		10.32-23.41 times
P/B ratio		1.17-3.43 times
Discount rate for lack of marketability		20%

59 -

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:

			September 30,	September 30,	December	December	December	31,	31,
				2018			2017
Operating income ratio
0.1 time increase				$ 25,483	$			-
0.1 time decrease				$ (25,483)	$			-
Gross profit ratio
1 time increase				$ 23,017	$			-
1 time decrease				$ (23,017)	$			-
EBIT ratio
1 time increase				$ 21,581	$		63,057
1 time decrease				$ (21,581)	$		(63,057)
EBITDA ratio
1 time increase				$ 69,565	$		75,149
1 time decrease				$ (69,565)	$		(75,149)
Post-tax profit ratio
1 time increase				$ 19,283	$			-
1 time decrease				$ (19,283)	$			-
P/B ratio
0.1 time increase				$ 76,072	$		70,398
0.1 time decrease				$ (76,072)	$		(70,398)
					September			30,
							2017
P/E ratio
1 time increase					$		125,858
1 time decrease					$		(125,858)
P/B ratio
0.1 time increase					$		77,244
0.1 time decrease					$		(77,244)
Categories of financial instruments
	September	30,	December 31,		September			30,
	2018			2017			2017
Financial assets
FVTPL
Held for trading	$	-	$	529,496	$		65,775
Mandatorily at FVTPL	1,417,340			-					-
Financial assets for hedging	432,681			-					-
Derivative instruments in designated hedge
accounting relationships (included in other
current assets)		-		-			1,104
Loans and receivables (Note 1)		-		19,645,590		20,332,488
Available-for-sale financial assets (Note 2)		-		921,332			1,584,907
Financial assets at amortized cost (Note 3)	18,624,396			-					-
Financial assets at FVTOCI	252,699			-					-
							(Continued)

c. Categories of financial instruments

60 -

	September 30,	September 30,	December	December	31,	September	September	30,
		2018		2017			2017
Financial liabilities
Amortized cost (Note 4)	$	6,380,861	$	7,197,353		$	6,981,437
FVTPL (included in other current liabilities)
Held for trading		803		2,954				-
Financial liabilities for hedging (included in
other current liabilities)		388			-			-
Derivative instruments in designated hedge
accounting relationships (included in other
current liabilities)		-		12,362				-
							(Concluded)

Note 1: The balances included cash and cash equivalents, debt investments with no active market, notes receivable, accounts receivable (related parties included), other receivables, other financial assets (included in other current assets) and guarantee deposits (included in other non-current assets).
Note 2: The balances included the carrying amounts of available-for-sale financial assets and available-for-sale financial assets measured at cost.
Note 3: The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, debt investments, notes receivable, accounts receivable (related parties included), other receivables, other financial assets (included in other current assets) and guarantee deposits (included in other non-current assets).
Note 4: The balances included financial liabilities measured at amortized cost which comprise short-term borrowings, short-term bills payable, notes payable, accounts payable (related parties included), other payables 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 and borrowings. 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 price.

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 foreign currency rate changes. The Group avoids cash flow risk resulting from the adverse foreign currency rate changes by using derivative contracts.

Sensitivity analysis

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

61 -

The following table details the Group’s sensitivity to a 1% increase and decrease in New Taiwan dollars 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. The following table indicates an increase (a decrease) in pre-tax profit and equity due to a 1% strengthening of the functional currency 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 to NTD	USD to NTD	USD to NTD
For the Nine Months Ended September 30
	2018 2017 $ (8,428) $ (13,891) USD to RMB
For the Nine Months Ended September 30
	2018 2017 $ 1,094 $ 290 JPYto NTD
For the Nine Months Ended September 30
	2018 2017 $ (67) $ (1,790) $ (6,210) $ (9,906) RMB to NTD
For the Nine Months Ended September 30
	2018 $ (19,816) $ (539)	2017 $ (17,395) $ (425)

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:

	September 30,	December 31,	September 30,
	2018	2017	2017
Cash flow interest rate risk
Financial assets	$ 14,140,752	$ 13,974,008	$ 14,047,465
Financial liabilities	807,887	854,933	954,993

62 -

Sensitivity analysis

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

If interest rates had been 0.25% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2018 and 2017 would increase/decrease by $24,999 thousand and $24,548 thousand.

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

c) Other price risk

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

Sensitivity analysis

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

If equity prices had been 5% lower, pre-tax profit for the nine months ended September 30, 2018 would have decreased by $34,637 thousand, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the nine months ended September 30, 2018 would have decreased by $1,295 thousand, as a result of the changes in fair value of financial assets at FVTOCI.

If equity prices had been 5% lower, pre-tax profit for the nine months ended September 30, 2017 would have decreased by $3,076 thousand, as a result of the changes in fair value of held-for-trading investments, and the pre-tax other comprehensive income for the nine months ended September 30, 2017 would decrease by $32,911 thousand, as a result of the changes in fair value of available-for-sale shares.

2) Credit risk

The amounts of financial assets were potentially affected by the Group if the counter-parties or third parties breach financial instrument contracts. The affection 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 were creditworthy banks, brokers and dealers.

3) Liquidity risk

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

63 -

32. 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. Details of transactions between the Group and other related parties are disclosed below.

a. Names and categories of related parties

Name
Mitsubishi Motors Corporation (Mitsubishi Motors Corp.)

Mitsubishi Corporation (Mitsubishi Corp.)

Tai Yuen Textile Co., Ltd.

Le Wen Investment Co., Ltd.

Yulon Management Company Ltd. (Yulon Management)

Mitsubishi Corporation (Taiwan) Ltd.

Mitsubishi Motors Philippines Corporation

Mitsubishi Motors Thailand

Mitsubishi Motors North America., Inc.

Mitsubishi Motors Europe B.V.

Mitsubishi Corporation Technos

Shye Shyang Mechanical Industrial Co., Ltd.

Uni-Calsonic Corp. (Uni-Calsonic)

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. (Hua-Chuang Automobile Information Technical
Center)

Yulon IT Solutions Inc.

Sinjang Co., Ltd. (Sin Jang Enterprises)

Tokio Marine Newa Insurance Co., Ltd.

Hong Shuo Cultural Enterprises, Co., Ltd.

Hsiang Shuo Enterprises

Sinqual Technology Co., Ltd.

Taiwan Acceptance Corporation (Taiwan Acceptance)

Yue Sheng Industrial Co., Ltd.

Luxgen Motor Co., Ltd. (Luxgen)

Yulon Nissan Motor Co., Ltd.

Related-party Categories

Investors that have significant influence
over the Group
Investors that have significant influence
over the Group
Investors that have significant influence
over the Group
Investors that have significant influence
over the Group
Subsidiary of investor that have
significant influence over the Group
Subsidiary of investor that have
significant influence over the Group
Subsidiary of investor that have
significant influence over the Group
Subsidiary of investor that have
significant influence over the Group
Subsidiary of investor that have
significant influence over the Group
Subsidiary of investor that have
significant influence over the Group
Subsidiary of investor that have
significant influence over the Group
The Group is its major management
authority
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
(Continued)

64 -

Name
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

Visionary International Consulting Co., Ltd.

ROC-Keeper Industrial Ltd.

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

Tai-Ya Investment (HK) Co., Ltd. (Tai-Ya Investment)

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

Shanghai Hopeful Wheel Automobile Maintenance 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)

Automotive Research & Testing Center

China Motor Indigenous Foundation

Related-party Categories

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

Note: The relationship ended in August 2018.

b. Operating transactions

1) Sales of goods

Related Party Line Items Categories/Name Sales Associates Fortune Motors Shung Ye Motor Others Investors and subsidiaries of the investors that have significant influence over the Group Others Joint ventures Others Others		For the Three Months Ended September 30 2018 2017 $ 4,240,952 $ 4,553,676 1,435,062 1,322,697 298,974 338,512 5,974,988 6,214,885 32,621 157,653 13,750 18,641 - 8 $ 6,021,359 $ 6,391,187		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 4,240,952 1,435,062 298,974 5,974,988 32,621 13,750 - $ 6,021,359		2018 $ 14,441,739 5,399,982 873,586 20,715,307 92,324 45,580 - $ 20,853,211	2017 $ 15,192,047 4,092,631 1,166,001 20,450,679 773,160 65,906 1,328 $ 21,291,073

65 -

2) Purchases of goods

Related Party Line Items Categories/Name Purchases Investors and subsidiaries of the investors that have significant influence over the Group Mitsubishi Corp. Others Joint ventures South East (Fujian) Motor Others Associates Others The Group is its major management Others		For the Three Months Ended September 30 2018 2017 $ 638,789 $ 245,001 21,166 26,855 659,955 271,856 205,354 910,566 1,062 1,062 206,416 911,628 412,154 528,800 68,883 87,037 $ 1,347,408 $ 1,799,321		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 638,789 21,166 659,955 205,354 1,062 206,416 412,154 68,883 $ 1,347,408		2018 $ 2,526,706 95,399 2,622,105 1,046,020 3,492 1,049,512 1,427,837 242,486 $ 5,341,940	2017 $ 1,507,769 67,939 1,575,708 2,408,181 4,287 2,412,468 1,630,043 283,158 $ 5,901,377

3) Technical services expense

Related Party Line Items Categories/Name Cost of goods sold and selling and marketing Investors that have significant influence over the Group expenses Others		For the Three Months Ended September 30 2018 2017 $ 46,237 $ 51,160		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 46,237		2018 $ 147,189	2017 $ 157,491

4) Development expense

Related Party Line Items Categories/Name Research and development expenses Investors that have significant influence over the Group Others Others		For the Three Months Ended September 30 2018 2017 $ 14,202 $ 10,703 14 - $ 14,216 $ 10,703		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 14,202 14 $ 14,216		2018 $ 41,054 185 $ 41,239	2017 $ 39,798 32 $ 39,830

66 -

5) Other expense

Related Party Line Items Categories/Name Selling and marketing expenses Investors and subsidiaries of investors that have significant influence over the Group Others Others Research and development Substantive related parties expenses Others Others		For the Three Months Ended September 30 2018 2017 $ 22,028 $ 19,288 108 1,305 $ 22,136 $ 20,593 $ 9,119 $ 4,748 82 255 $ 9,201 $ 5,003		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 22,028 108 $ 22,136 $ 9,119 82 $ 9,201		2018 $ 69,868 291 $ 70,159 $ 56,026 533 $ 56,559	2017 $ 55,162 9,933 $ 65,095 $ 39,207 740 $ 39,947

6) Receivables from related parties

Line Items
Related Party
Categories/Name
September 30,
2018
Trade receivables
Associates
from related
Fortune Motors
$ 1,132,737
parties, net
Shung Ye Motor
302,716
Hua-Chuang
Automobile
Information Technical
Center
122,559
Yulon
75,161
Others

68,344

1,701,517
Joint ventures
Others
51,483
Investors and subsidiaries
of the investors that have
significant influence
over the Group
Others

10,067

$ 1,763,067

December 31,
2017
September 30,
2017
$ 944,038 $ 1,127,961

238,467
279,583

189,314
169,575

203,263
98,818

13,473

95,106

1,588,555
1,771,043

99,142
90,232

16,206

27,034
$ 1,703,903
$ 1,888,309

67 -

7) Prepayments

Line Items Related Party Categories/Name September 30, 2018 Prepayments Investors and subsidiaries of investors that have significant influence over the Group Mitsubishi Corp. $ 122,007 Others 7,550 129,557 Joint ventures South East (Fujian) Motor 34,122 Others 363 $ 164,042	December 31, 2017 September 30, 2017 $ 416,905 $ 17,931 28,155 5,104 445,060 23,035 91,367 171,855 232 255 $ 536,659 $ 195,145

8) Acquisitions of property, plant and equipment

Related Party For the Three Months Ended September 30 For the Nine Months Ended September 30 Line Items Categories/Name 2018 2017 2018 2017 Property, plant and Associates equipment Others $ 220 $ 3,742 $ 24,001 $ 6,374 The Group is its major management Others - - 7,500 4,500 Others - - - 300 $ 220 $ 3,742 $ 31,501 $ 11,174 Payables to related parties Line Items Related Party Categories/Name September 30, 2018 December 31, 2017 September 30, 2017 Trade payables to Associates related parties Yulon $ 78,564 $ 86,995 $ 95,484 Yue Ki Industrial 72,481 83,821 82,303 ROC-Spicer 62,470 93,771 80,474 Others 248,419 276,956 175,413 461,934 541,543 433,674 Investors and subsidiaries of investors that have significant influence over the Group Yulon Management 66,169 92,216 53,761 Mitsubishi Motors Corp. 47,756 114,418 68,948 Others 7,801 51,066 27,185 121,726 257,700 149,894 The Group is its major management Others 44,723 63,643 57,584 Joint ventures Others 12,080 12,498 59,286 Substantive related parties Others - 11,006 1,932 $ 640,463 $ 886,390 $ 702,370		For the Nine Months Ended September 30

9) Payables to related parties

68 -

10) Contract liabilities - 2018 (Deposit in advance - 2017)

Line Items Related Party Categories/Name September 30, 2018 Other current Associates liabilities Luxgen $ 41,135 Sin Jang Enterprises 11,900 Others 1,913 54,948 Investors and subsidiaries of investors that have significant influence over the Group Others 10,487 Others - $ 65,435	December 31, 2017 September 30, 2017 $ 1,030 $ 7,787 20,492 5,200 98 18,845 21,620 31,832 - 2,002 2,769 1,419 $ 24,389 $ 35,253

11) Acquisitions of financial assets

For the three months ended September 30, 2017

Related Party
Categories/Name	Line Items	Underlying Assets	Purchase Price
Associates
Taiwan Acceptance	Debt investments with no active	3-year unsecured	$	50,000
	market - non-current	corporate bond
For the nine months ended	September 30, 2017
Related Party
Categories/Name	Line Items	Underlying Assets	Purchase Price
Associates
Taiwan Acceptance	Debt investments with no active	3-year unsecured	$	250,059
	market - non-current	corporate bond

The outstanding payables to related parties had no guarantees and would be paid in cash. The Group receives guarantees of the receivables from part of the related parties. In addition, the Group did not recognize allowance for doubtful accounts during the nine months ended September 30, 2018 and 2017.

Transactions with related parties have the same terms for pricing, receipts and payments as of those for the third parties. Lease contracts with related parties are based on market conditions, and the terms of receipts or payments were the same as those for the third parties.

The Group signed contract with Mitsubishi Motors Corporation. Refer to Note 34.

69 -

c. Compensation of key management personnel

The remuneration of directors and key executives during the three months ended September 30, 2018 and 2017 and the nine months ended September 30, 2018 and 2017 were as follows:

Short-term employee benefits Post-employment benefits	For the Three Months Ended September 30 2018 2017 $ 24,714 $ 37,136 $ 471 $ 640	For the Three Months Ended September 30 2018 2017 $ 24,714 $ 37,136 $ 471 $ 640	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 24,714 $ 471		2018 $ 81,665 $ 1,760	2017 $ 116,165 $ 2,118

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

33. ASSETS PLEDGED AS COLLATERAL

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

	September 30,	December 31,	September 30,
	2018	2017	2017
Property, plant and equipment	$ 781,604	$ 786,435	$ 788,252
Pledge deposits (included in other current assets)	158,506	157,967	117,884
Investment properties	52,323	52,323	52,323
	$ 992,433	$ 996,725	$ 958,459

34. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant commitments and contingencies of the Group as of September 30, 2018 were as follows:

a. Guarantee notes amounted to $5,670,937 thousand, which had been issued to financial institutions as collaterals for loans; unused letters of credit amounted to $27,190 thousand.
b. The Group entered into an agreement with Mitsubishi Motors Corporation as stated below:

Project Technical royalty Technical royalty	Content	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
	Technical cooperation and manufacture of Delica and other car models Technical cooperation and manufacture of Outlander and other car models			Paid every 6 months within 90 days Paid every 6 months within 90 days

c. The status of endorsements/guarantees was listed in Table 2.
70 -

35. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

September 30, 2018

		Foreign	Exchange Rate	Carrying
	Currencies		(Note)	Amount
Foreign currency assets
Monetary items
RMB	$	462,793	4.4360	$ 2,052,949
USD		21,325	30.5250	650,938
JPY		1,668,554	0.2692	449,175
Non-monetary items
Investments accounted for using the equity
method
RMB		1,311,665	4.4360	5,818,545
EUR		66,518	35.4800	2,360,064
Foreign currency liabilities
Monetary items
USD		6,677	6.8812	203,816
			(USD:RMB)
December 31, 2017
		Foreign	Exchange Rate	Carrying
	Currencies		(Note)	Amount
Foreign currency assets
Monetary items
RMB	$	485,634	4.5650	$ 2,216,921
USD		39,835	29.7600	1,185,494
USD		8,511	6.5192	253,279
			(USD:RMB)
JPY		2,643,053	0.2642	698,295
Non-monetary items
Investments accounted for using the equity
method
RMB		1,199,135	4.5650	5,474,050
EUR		49,523	35.5700	1,761,531
Foreign currency liabilities
Monetary items
USD		10,331	6.5192	307,464
			(USD:RMB)
JPY		608,986	0.2642	160,894

71 -

September 30, 2017

		Foreign	Exchange Rate	Carrying
	Currencies		(Note)	Amount
Foreign currency assets
Monetary items
USD	$	35,957	30.2600	$ 1,088,051
RMB		387,631	4.5510	1,764,110
JPY		3,589,083	0.2691	965,822
Non-monetary items
Investments accounted for using the equity
method
EUR		45,469	35.7500	1,625,529
RMB		1,181,969	4.5510	5,379,142

Note: Exchange rate represents the number of N.T. dollars for which one foreign currency could be exchanged, unless stated otherwise.

For the three months ended September 30, 2018 and 2017 and the nine months ended September 30, 2018 and 2017, net foreign exchange gains (losses) were $(49,977) thousand, $17,687 thousand, $(7,833) thousand and $(101,377) 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.

36. SEPARATELY DISCLOSED ITEMS

Excluded in Notes 7, 11 and 31 and Tables 1 to 10, there were no other separately disclosed items.

37. 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 and supervisors Other non-operating income and expenses, net Profit before income tax		Segment Revenues For the Nine Months Ended September 30 2018 2017 $ 23,118,668 $ 27,190,957 4,123,002 3,889,697 61,683 63,351 (182,241) (203,426) $ 27,121,112 $ 30,940,579		Segment Income or Loss	Segment Income or Loss
				For the Nine Months Ended September 30
		2018 $ 23,118,668 4,123,002 61,683 (182,241) $ 27,121,112		2018 $ 3,376,943 16,673 (6,125) - 3,387,491 (267,209) 402,900 $ 3,523,182	2017 $ 3,777,315 128,761 (3,021) - 3,903,055 (227,147) 242,285 $ 3,918,193

72 -

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, other income, gain on disposal of investments, net foreign exchange gain (loss), gains (losses) 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.

73 -

TABLE 1

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period (Note 1)	Ending Balance (Note 1)	Actual Borrowing Amount (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	$ 500,000	$ 500,000	$ 500,000	1.10	Short-term financing	$ -	Working capital	$ -	-	$ -	$ 1,544,755	$ 10,298,365
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	67,682 (US$ 1,200 thousand and RMB 7,000 thousand) 90,881 (US$ 1,960 thousand and RMB 7,000 thousand) 108,974 (US$ 3,570 thousand) 31,052 (RMB 7,000 thousand)	67,682 (US$ 1,200 thousand and RMB 7,000 thousand) 90,881 (US$ 1,960 thousand and RMB 7,000 thousand) 108,974 (US$ 3,570 thousand) 31,052 (RMB 7,000 thousand)	36,630 (US$ 1,200 thousand) 59,829 (US$ 1,960 thousand) 107,302 (US$ 3,515 thousand) -	2.00 2.00 2.00 -	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Working capital Working capital Working capital Working capital	- - - -	- - - -	- - - -	1,544,755 1,544,755 1,544,755 1,544,755	10,298,365 10,298,365 10,298,365 10,298,365
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	443,600 (RMB 100,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand)	443,600 (RMB 100,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (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	- - - - -	- - - - -	- - - - -	1,544,755 1,544,755 1,544,755 1,544,755 1,544,755	10,298,365 10,298,365 10,298,365 10,298,365 10,298,365
3	Sichuan Huafeng Hanwei	Sichuan Lingwei Sichuan Hauwei Tianjin Hwahong	Other receivables Other receivables Other receivables	Yes Yes Yes	44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand)	44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand)	6,521 (RMB 1,470 thousand) - -	4.35 - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,544,755 1,544,755 1,544,755	10,298,365 10,298,365 10,298,365

(Continued)

74 -

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period (Note 1)	Ending Balance (Note 1)	Actual Borrowing Amount (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
		Guangzhou Huayou Motor Maintenance Dongguan Huashun Dongguan Huayi	Other receivables Other receivables Other receivables	Yes Yes Yes	$ 44,360 (RMB 10,000 thousand) 133,080 (RMB 30,000 thousand) 133,080 (RMB 30,000 thousand)	$ 44,360 (RMB 10,000 thousand) 133,080 (RMB 30,000 thousand) 133,080 (RMB 30,000 thousand)	$ - - -	- - -	Short-term financing Short-term financing Short-term financing	$ - - -	Working capital Working capital Working capital	$ - - -	- - -	$ - - -	$ 1,544,755 1,544,755 1,544,755	$ 10,298,365 10,298,365 10,298,365
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	44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 133,080 (RMB 30,000 thousand) 133,080 (RMB 30,000 thousand)	44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 133,080 (RMB 30,000 thousand) 133,080 (RMB 30,000 thousand)	- - - -	- - - -	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Working capital Working capital Working capital Working capital	- - - -	- - - -	- - - -	1,544,755 1,544,755 1,544,755 1,544,755	10,298,365 10,298,365 10,298,365 10,298,365
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	221,800 (RMB 50,000 thousand) 88,720 (RMB 20,000 thousand) 66,540 (RMB 15,000 thousand) 66,540 (RMB 15,000 thousand) 133,080 (RMB 30,000 thousand)	221,800 (RMB 50,000 thousand) 88,720 (RMB 20,000 thousand) 66,540 (RMB 15,000 thousand) 66,540 (RMB 15,000 thousand) 133,080 (RMB 30,000 thousand)	73,194 (RMB 16,500 thousand) - - - -	4.35 - - - -	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	- - - - -	- - - - -	- - - - -	1,544,755 1,544,755 1,544,755 1,544,755 1,544,755	10,298,365 10,298,365 10,298,365 10,298,365 10,298,365
6	Dongguan Huayi	Dongguan Huashun	Other receivables	Yes	221,800 (RMB 50,000 thousand)	221,800 (RMB 50,000 thousand)	44,360 (RMB 10,000 thousand)	4.35	Short-term financing	-	Working capital	-	-	-	1,544,755	10,298,365
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	44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand)	44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand) 44,360 (RMB 10,000 thousand)	- - - -	- - - -	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Working capital Working capital Working capital Working capital	- - - -	- - - -	- - - -	1,544,755 1,544,755 1,544,755 1,544,755	10,298,365 10,298,365 10,298,365 10,298,365
8	Gatech Holding LTD.	Gatech Suzhou	Other receivables	Yes	45,788 (US$ 1,500 thousand)	45,788 (US$ 1,500 thousand)	-	-	Short-term financing	-	Working capital	-	-	-	1,544,755	10,298,365

(Continued)

75 -

(Concluded)

Note 1: At exchange rate on September 30, 2018, US$1=NT$30.525, RMB1=NT$4.436.

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

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

Note 4:

Eliminated.

76 -

TABLE 2

CHINA MOTOR CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsee/Guarantee Receiver	Endorsee/Guarantee Receiver	Limit on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period (Note)	Outstanding Endorsement/ Guarantee at the End of the Period (Note)	Actual Borrowing Amount	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	Guangzhou Huayou Motor Maintenance Tianjin Hwarui Sichuan Huafeng Hanwei Dongguan Huayi	Subsidiary Subsidiary Subsidiary Subsidiary	20% of the Corporation’s issued capital, $2,768,102 thousand 20% of the Corporation’s issued capital, $2,768,102 thousand 20% of the Corporation’s issued capital, $2,768,102 thousand 20% of the Corporation’s issued capital, $2,768,102 thousand	$ 221,800 (RMB 50,000 thousand) 221,800 (RMB 50,000 thousand) 221,800 (RMB 50,000 thousand) 221,800 (RMB 50,000 thousand)	$ 221,800 (RMB 50,000 thousand) 221,800 (RMB 50,000 thousand) 221,800 (RMB 50,000 thousand) 221,800 (RMB 50,000 thousand)	$ - - - -	$ - - - -	0.43 0.43 0.43 0.43	50% of the Corporation’s issued capital, $6,920,254 thousand 50% of the Corporation’s issued capital, $6,920,254 thousand 50% of the Corporation’s issued capital, $6,920,254 thousand 50% of the Corporation’s issued capital, $6,920,254 thousand	No No No No	No No No No	Yes Yes Yes Yes

Note: At exchange rate on September 30, 2018, RMB1=NT$4.436.

77 -

TABLE 3

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2018

(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		September	30, 2018		Note
				Shares (In Thousands)	Carrying Amount (Note 3)	Percentage of Ownership	Fair Value
China Motor Corporation	Beneficiary certificates Allianz Global Investors All Seasons Harvest Fund of Bond Funds Fidelity (Taiwan) Asian Total Return Bond Fund Franklin Templeton SinoAm Money Market Fubon Chi Hsiang Money Market Fund The RSIT Enchanced Money Market CTBC Hua Win Money Market Fund UPAMC James Bond Money Market Fund Sinopac Money Market Fund Hua Nan Phoenix Money Market Fund Paradigm Pion Money Market Cathay Taiwan Money Market Fund Prudential Financial Money Market Fund Fubon China Policy Bank Bond ETF PineBridge Global Multi-Strategy High Yield Bond Fund Nomura Global Short Duration Bond Fund Nomura Asia Pacific High Yield Bond Fund	- - - - - - - - - - - - - - - -	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 - 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	4,785 6,001 4,867 3,205 4,201 2,738 1,806 2,167 1,856 2,610 2,423 1,906 1,500 2,192 2,844 2,186	$ 58,640 57,576 50,173 50,154 50,153 30,098 30,093 30,093 30,093 30,083 30,078 30,072 30,045 29,654 29,442 28,563	- - - - - - - - - - - - - - - -	$ 58,640 57,576 50,173 50,154 50,153 30,098 30,093 30,093 30,093 30,083 30,078 30,072 30,045 29,654 29,442 28,563

(Continued)

78 -

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		September	30, 2018		Note
				Shares (In Thousands)	Carrying Amount (Note 3)	Percentage of Ownership	Fair Value
KSIHK Alliance Investment & Management	Shares Shye Shyang Mechanical Industrial Myson Century, Inc. Taiwan Aerospace Com2B (Cayman) Corp. NORM Pacific Automation Corp. Carnival Corporate bonds Taiwan Acceptance Corp. Gatetech Technology Morgan Stanley Value Success International Deutsche Bank Aktiengesellschaft, Singapore Branch Crédit Agricole Corporate and Investment Bank SA Société Générale Fonterra Co-operative Group Ltd. Principle guaranteed notes President Securities 100% Principle Guaranteed Note President Securities 100% Principle Guaranteed Note Shares Beijing NTN-SEOHAN Driveshaft Beneficiary certificates Capital Money Market Fund Shares Samuel (Cayman) Co., Ltd. CARPLUS Auto Leasing Corporation T-Car Inc. Solidlite Corporation	Corporate director Corporate director - - - - Associate Subsidiary - - - - - - - - - - - - - -	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - current Financial assets at amortized cost - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current	9,009 4,705 811 2,000 128 190 - - - - - - - - - - - 94 6,327 2,590 1,275 789	$ 664,498 24,935 10,232 3,628 1,514 967 248,475 150,000 133,070 133,011 132,978 88,652 66,813 44,421 243,405 22,042 55,825 (RMB 12,584 thousand) 1,510 107,334 60,094 36,128 5,306	10.00 7.84 0.60 4.44 0.45 0.05 - - - - - - - - - - 9.00 - 15.07 3.45 4.05 3.60	$ 664,498 24,935 10,232 3,628 1,514 967 - - - - - - - - - - 55,825 1,510 107,334 60,094 36,128 5,306	Note 1

(Continued)

79 -

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		September	30, 2018		Note
				Shares (In Thousands)	Carrying Amount (Note 3)	Percentage of Ownership	Fair Value
Sino Diamond Motors Hwa-Lin Brilliant Insight International	Site information service Phalanx Biotech Group Jouge Technology Co., Ltd. Preference shares Rock Financial Risk Service Co., Ltd. Beneficiary certificates CTBC Hwa-win Money Market Fund Prudential Financial Money Market Fund Principle guaranteed notes President Securities 100% Principle Guaranteed Note Beneficiary certificates Taishin Ta-Chong Money Market	- - - - - - - -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at amortized cost - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at amortized cost - current Financial assets at fair value through profit or loss - current	65 696 123 - 8,387 190 - 74	$ 4,189 2,369 272 5,968 92,175 3,003 58,062 1,050	0.54 1.13 0.76 - - - - -	$ 4,189 2,369 272 - 92,175 3,003 - 1,050

Note 1: Eliminated.

Note 2: See Tables 7 and 8 for the information of investments in subsidiaries and associates.

Note 3: At exchange rate on September 30, 2018, RMB1=NT$4.436.

(Concluded)

80 -

TABLE 4

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

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

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending Balance (Note)	Ending Balance (Note)
					Number of Shares	Amount	Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Shares	Amount
China Motor Corporation Hwa-Lin	Shares Fujian Spicer Shares Zhejiang Kangda Motor Industry And Trading	Investments accounted for using the equity method Investments accounted for using the equity method	Taiguang Investment Zhejiang Kangqiao Auto Industry And Trade Group	Associate -	- 9,800	$ - 138,122	7,308 -	$ 329,134 -	- 9,800	$ - 448,253 (RMB 99,945 thousand)	$ - 155,560	$ - 292,693	7,308 -	$ 360,790 -

Note: The ending amount includes profit and loss of associates and joint ventures accounted for using the equity method and related adjustment items.

81 -

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 NINE MONTHS ENDED SEPTEMBER 30, 2018

(In Thousands of New Taiwan Dollars)

Seller/Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total (Note 2)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note 2)
China Motor Corporation (“CMC”) Sino Diamond Motors Kian Shen COC China Engine Sichuan Hwafeng Hanwei Guangzhou Huayou Motor Maintenance	Fortune Motors Shung Ye Motor Mitsubishi Corp. Kian Shen (Note 1) Uni Auto Parts Manufacture ROC-Spicer Shye Shyang Mechanical Industrial COC (Note 1) Uni-Calsonic Shung Ye Motor Fortune Motors Mitsubishi Corp. China Motor Corporation (Note 1) Yueki China Motor Corporation (Note 1) Yulon Hua-Chuang Automobile Information Technical Center South East (Fujian) Motor South East (Fujian) Motor Guangzhou Huayou Motor Sales (Note 1)	Equity-method investee Equity-method investee Director of CMC Subsidiary Equity-method investee Equity-method investee Director of Shye Shyang Mechanical Industrial Subsidiary Director of Uni-Calsonic Equity-method investee Equity-method investee Director of CMC Parent company Equity-method investee Parent company Equity-method investee Equity-method investee Equity-method investee Equity-method investee Subsidiary	Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Purchase Sale Purchase Sale Sale Sale Purchase Purchase Sale	$ (13,953,629) (3,450,968) 1,202,616 442,789 432,764 346,735 241,835 216,953 104,125 (1,937,000) (487,969) 1,324,090 (442,789) 119,016 (216,953) (180,614) (311,171) 269,107 156,653 (117,748)	(66) (16) 10 4 4 3 2 2 1 (74) (19) 64 (48) 15 (27) (22) (68) 98 97 (73)	Collect after 16-60 days of delivery Collect after 16-60 days of delivery Pay after 7 days of cargo ship out Pay after 15 days of the month of delivery Pay after 15 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 Collect after 7-45 days of delivery Collect after 16-45 days of delivery Pay before 10 days of cargo ship out Collect after 15 days of the month of delivery Pay after 45 days of the month of delivery Collect after 45 days of the month of delivery Collect after 45 days of the month of delivery Monthly collection in 90 days Cash before delivery Cash before delivery Collect after 45 days of the month of delivery	$ - - - - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - - - -	$ 1,130,211 222,165 (1,739) (48,893) (39,923) (62,470) (44,411) (39,520) (19,396) 74,862 2,513 (87) 48,893 (52,645) 39,520 27,044 120,471 - (1,495) 43,832	59 12 - (2) (2) (3) (2) (2) (1) 77 3 - 32 (18) 8 5 86 - (83) 67

(Continued)

82 -

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 2)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note 2)
Guangzhou Huayou Motor Sales Tianjin Huahong Donggun Huashun	Guangzhou Huayou Motor Maintenance (Note 1) South East (Fujian) Motor South East (Fujian) Motor	Parent company Equity-method investee Equity-method investee	Purchas Purchase Purchase	$ 117,748 242,878 328,027	78 90 99	Pay after 45 days of the month of delivery Cash before delivery Cash before delivery	$ - - -	- - -	$ (43,832) (133) (144)	(94) (21) (6)

Note 1: Eliminated.

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

(Concluded)

83 -

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 SEPTEMBER 30, 2018

(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 China Engine	Fortune Motors Shung Ye Motor Hua-Chuang Automobile Information Technical Center	Equity-method investee Equity-method investee Equity-method investee	$ 1,130,211 222,165 120,471	18.63 20.69 2.69	$ - - -	- - -	$ 1,130,211 219,220 60,540	$ - - -

84 -

TABLE 7

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of September 30, 2018	As of September 30, 2018	As of September 30, 2018	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				September 30, 2018	December 31, 2017	Shares (In Thousands)	%	Carrying Amount
China Motor Corporation Kian Shen Kian Shen Investment Alliance Investment & Management Sino Diamond Motors	Yulon (Note 6) 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 (Note 4) Uni Auto Parts Manufacture Shung Ye Motor (Notes 3 and 7) Gatetech Technology (Note 1) China Engine (Note 1) Uni-Calsonic Yueki Industrial Co., Ltd. Sin Gan Sin Jang Enterprises Tai-Ya Investment Hwa Chung Motors (Note 1) Yulon IT Solutions Hwa Hann (Note 1) 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 (Note 1) Brilliant Insight International (Note 1) Hwa Hann (Note 1) Shung Ye Motor (Note 5) 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 Philippines British Virgin Islands Hong Kong Taipei, Taiwan Samoa Taoyuan, Taiwan Samoa Taipei, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Philippines 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 vehicle Sales and providing after sales service of vehicle Property insurance Investment Investment Manufacture and sales of automobile parts Investment The production of mold, fixture and gauge of vehicle Overseas investment on production and service industries Product design The production of mold, fixture and gauge of vehicle Sales and providing after sales service of vehicle Aluminum-magnesium alloy casting industry Manufacture of automobile engine and parts Manufacture and sale of automobile parts Manufacture and sale of car components Wholesale, repair and other service of vehicles Retail and wholesale of second-hand vehicle Investment Manufacture and sale of vehicles Information software wholesale services Buy and sell of automobile parts 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 Buy and sell of automobile parts Sales and providing after sales service of vehicle Sales and providing after sales service of vehicle	$ 3,835,585 344,800 2,132,826 3,463,724 955,941 1,200,030 2,011,363 803,633 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	$ 3,835,585 344,800 2,132,826 3,463,724 955,941 1,200,030 2,011,363 803,633 1,402 412,125 1,202 1,028,013 109,813 391,142 474,941 320,000 70,628 - 71,316 85,893 - 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 32,201 132,117 325,786 61,511 183,000 46,566 1,422 40 33,565 40 100,000 13,032 28,228 29,278 32,000 6,084 2,936 7,074 8,568 2,242 8,790 8,332 - 10,296 25,907 47,200 11,200 3,757 45,643 47,200 56,000 4,672 2,200 - 11 1	16.80 43.87 41.93 100.00 20.57 100.00 32.45 29.00 100.00 49.76 40.00 20.00 15.00 39.98 56.53 18.95 31.20 15.08 24.67 20.01 29.00 100.00 43.85 - 100.00 100.00 9.44 100.00 7.26 100.00 9.44 33.16 9.02 100.00 - 0.02 -	$ 11,425,157 1,973,849 4,083,717 3,060,414 1,773,181 1,584,672 2,360,064 1,273,485 1,119,141 732,483 744,675 436,264 383,091 379,887 312,855 157,117 134,539 107,750 96,918 98,400 75,130 66,169 20,805 - 3,666,951 RMB 817,620 thousand 280,176 269,363 40,194 1,337,490 280,176 337,003 49,981 19,792 - 211 12	$ 1,617,175 297,345 811,308 227,274 640,797 (73,908) 2,033,192 243,849 (28,075) 51,695 (46,928) (850,608) 41,876 56,264 52,452 7,015 18,658 (13,428) 52,694 34,822 (953) (56) (1,429) - 326,819 RMB 71,141 thousand (850,608) (17,999) 52,452 273,784 (850,608) 7,015 52,452 (1,713) - 56,264 811,308	$ 258,630 130,310 340,181 222,780 131,812 (73,908) 659,771 70,635 (28,075) 25,997 (18,771) (166,173) 6,292 22,494 29,633 3,753 5,699 (2,152) 13,000 6,968 1,677 (56) (626) - - - - - - - - - - - - - -	Equity-method investees Subsidiary Equity-method investees Subsidiary Equity-method investees Subsidiary Equity-method investees Equity-method investees Subsidiary Subsidiary Subsidiary Equity-method investees Equity-method investees Equity-method investees Subsidiary Subsidiary Equity-method investees Equity-method investees Equity-method investees Equity-method investees Equity-method investees Subsidiary Equity-method investees Subsidiary (liquidated) Subsidiary Subsidiary Equity-method investees Subsidiary Subsidiary Subsidiary Equity-method investees Subsidiary Subsidiary Subsidiary Subsidiary (liquidated) Equity-method investees Equity-method investees
											(Continued)

85 -

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of September 30, 2018	As of September 30, 2018	As of September 30, 2018	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				September 30, 2018	December 31, 2017	Shares (In Thousands)	%	Carrying Amount
Hua-Yu Gatetech Technology GH China Engine CMI Hwa Chung Motors COC	Hwa-Lin (Note 1) GH (Note 1) GI (Note 1) Advance Power Investment (Note 1) Advance Power Machinery (Note 1) Hwa Wei (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 Island Taipei, Taiwan Taipei, Taiwan Taoyuan, Taiwan British Virgin Islands	Overseas investment on production and service industries Investment Investment Reinvestment and sales Manufacture of vehicle and parts Overseas investment on production and service industries Sales of second-hand vehicle Sales of motorcycle and parts Steel cutting Investment	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	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	42,093 20,130 20,268 3,750 500 60 3,608 1,000 4,250 968	100.00 100.00 100.00 100.00 100.00 60.00 100.00 100.00 85.00 100.00	$ 1,248,741 613,999 613,973 98,469 12,550 1,117,012 26,532 11,778 61,189 39,229	$ 277,708 17,399 17,398 - 640 (46,928) (1,533) 1,441 2,714 59	$ - - - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note 1: Eliminated.

Note 2: During the preparation of consolidated financial statement, price making $75,455 thousand of intra-group deferred transaction had been eliminated.

Note 3: During the preparation of consolidated financial statement, loss on disposal $22,538 thousand of intra-group deferred transaction had been eliminated.

Note 4: During the preparation of consolidated financial statement, side stream transaction $34,630 thousand had been eliminated.
Note 5: During the preparation of consolidated financial statement, gain on disposal $31 thousand of intra-group deferred transaction had been eliminated.
Note 6: During the preparation of consolidated financial statement, side stream transaction $3,285 thousand had been eliminated.
Note 7: During the preparation of consolidated financial statement, side stream transaction $4,494 thousand had been eliminated.

(Concluded)

86 -

TABLE 8

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (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, 2018 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of September 30, 2018 (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 September 30, 2018 (Note 1)	Accumulated Repatriation of Investment Income as of September 30, 2018 (Note 1)
					Outward	Inward
South East (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 Rui Hua (Note 5) Fujian Spicer	Manufacture and sales of industrial automation products Manufacture and sales of engines and engine parts Sales of industrial automation products Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components The assembling and extra work of transmission shafts and other parts Manufacture and sales of parts of electronic motorcycles Consultation and services Manufacture of vehicles’ key components, drive axle assembly and engine parts series products	$ 4,212,450 (US$ 138,000 thousand ) 457,875 (US$ 15,000 thousand ) 10,182,760 (EUR 287,000 thousand 381,563 (US$ 12,500 thousand ) 542,735 (US$ 17,780 thousand ) 1,037,850 (US$ 34,000 thousand ) 425,856 (RMB 96,000 thousand ) 183,150 (US$ 6,000 thousand ) 341,880 (US$ 11,200 thousand ) 103,785 (US$ 3,400 thousand ) 908,519 (RMB 204,806 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 Direct investment in mainland China	$ 1,053,113 (US$ 34,500 thousand ) 228,938 (US$ 7,500 thousand ) 1,652,162 (EUR 46,566 thousand 152,625 (US$ 5,000 thousand ) 86,538 (US$ 2,835 thousand ) - 46,612 (US$ 1,527 thousand ) 16,484 (US$ 540 thousand ) 341,880 (US$ 11,200 thousand ) 103,785 (US$ 3,400 thousand ) -	$ - - - - - - - - - - 329,823 (US$ 10,805 thousand )	$ - - - - - - - - - - -	$ 1,053,113 (US$ 34,500 thousand ) 228,938 (US$ 7,500 thousand ) 1,652,162 (EUR 46,566 thousand 152,625 (US$ 5,000 thousand ) 86,538 (US$ 2,835 thousand ) - 46,612 (US$ 1,527 thousand ) 16,484 (US$ 540 thousand ) 341,880 (US$ 11,200 thousand ) 103,785 (US$ 3,400 thousand ) 329,823 (US$ 10,805 thousand )	$ (106,955 ) - 4,067,400 (EUR 113,818 thousand ) 581,095 (RMB 126,490 thousand ) 43,333 (RMB 9,432 thousand ) 334,086 (RMB 72,722 thousand ) (81,195 ) (RMB -17,674 thousand ) (132,057 ) (RMB -28,746 thousand ) (17,967 ) (3,926 ) 152,534	25.00 38.03 16.23 17.55 15.35 17.55 21.94 3.95 100.00 100.00 29.00	$ (26,739 ) - 659,937 (EUR 18,467 thousand 232,437 (RMB 50,596 thousand ) 15,167 (RMB 3,301 thousand ) 133,635 (RMB 29,089 thousand ) (40,598 ) (RMB -8,837 thousand ) - (17,967 ) (3,926 ) 8,463	$ 1,706,189 194,445 2,360,236 (EUR 66,523 thousand 1,968,688 (RMB 443,798 thousand ) 639,888 (RMB 144,249 thousand ) 716,565 (RMB 161,534 thousand ) 244,264 (RMB 55,064 thousand ) 55,825 (RMB 12,584 thousand ) 269,279 88,709 360,790	$ 794,352 (US$ 26,023 thousand ) - - 498,686 (RMB 112,418 thousand ) 157,638 (RMB 35,536 thousand ) - - - - - -
												(Continued)

87 -

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, 2018 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of September 30, 2018 (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 September 30, 2018 (Note 1)	Accumulated Repatriation of Investment Income as of September 30, 2018 (Note 1)
					Outward	Inward
Shenyang Spicer Zhejiang Kangda Motor Industry And Trading (Note 7) Guangzhou Huayou Motor Maintenance (Note 5) Sichuan Huafeng Hanwei (Note 5) Tianjin Hwarui (Note 5) Dongguan Huayi (Note 5) Sichuan Hauwei (Notes 5 and 6) Sichuan Lingwei (Note 5) Dongguan Huashun (Note 5) Tianjin Hwahong (Note 5) Guangzhou Huayou Motor Sales (Note 5) Gatech Suzhou (Note 5)	Manufacture and sale of automobile transmission shafts, mechanical transmission shafts and components Sales of vehicle and parts Sales and maintenance of vehicle and parts Sales and maintenance of vehicle and parts Sales and maintenance of vehicle and parts Sales and maintenance of vehicle and parts Sales of vehicle and parts Sales of vehicle and parts Sales of vehicle and parts Sales of vehicle and parts Sales of vehicle and parts Aluminum-magnesium alloy casting industry	$ 381,172 (RMB 85,927 thousand ) 177,440 (RMB 40,000 thousand ) 391,025 (US$ 12,810 thousand ) 406,898 (US$ 13,330 thousand ) 244,811 (US$ 8,020 thousand ) 135,836 (US$ 4,450 thousand ) 13,308 (RMB 3,000 thousand ) 8,872 (RMB 2,000 thousand ) 110,900 (RMB 25,000 thousand ) 266,160 (RMB 60,000 thousand ) 190,748 (RMB 43,000 thousand ) 741,758 (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 The Corporation indirectly owns these investees through investment company registered in a third region	$ - 36,874 (US$ 1,208 thousand ) 341,849 (US$ 11,199 thousand ) 406,898 (US$ 13,330 thousand ) 236,905 (US$ 7,761 thousand ) 128,724 (US$ 4,217 thousand ) - - - - - 618,650 (US$ 20,267 thousand )	79,670 (US$ 2,610 thousand ) - - - - - - - - - - -	$ - - - - - - - - - - - -	$ 79,670 (US$ 2,610 thousand ) 36,874 (US$ 1,208 thousand ) 341,849 (US$ 11,199 thousand ) 406,898 (US$ 13,330 thousand ) 236,905 (US$ 7,761 thousand ) 128,724 (US$ 4,217 thousand ) - - - - - 618,650 (US$ 20,267 thousand )	$ (4,278 ) (US$ -143 thousand ) - (17,368 ) (45,869 ) 5,494 12,954 1,103 (RMB 240 thousand ) 2,113 (RMB 460 thousand ) 11,655 (RMB 2,537 thousand ) 7,153 (RMB 1,557 thousand ) (13,952 ) (RMB -3,037 thousand ) 17,143	20.25 - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 72.81	$ 1,712 (US$ 58 thousand ) 23,949 (17,368 ) (45,869 ) 5,494 12,954 1,103 (RMB 240 thousand ) 2,113 (RMB 460 thousand ) 11,655 (RMB 2,537 thousand ) 7,153 (RMB 1,557 thousand ) (13,952 ) (RMB -3,037 thousand ) 17,143	$ 75,824 (US$ 2,484 thousand ) - 89,951 70,966 165,867 139,522 - (355 ) (RMB -80 thousand ) 91,701 (RMB 20,672 thousand ) 274,052 RMB 61,779 thousand ) (15,105 ) (RMB -3,405 thousand ) 594,963	$ - - - - - - - - - - - -

Accumulated Outward Remittance for Investment in Mainland China as of September 30, 2018 (Note 1)	Investment Amount Authorized by Investment Commission, MOEA (Note 1)	Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$6,040,955 (US$143,777 thousand and EUR46,566 thousand)	$7,138,212 (US$218,195 thousand and EUR13,467 thousand)	$30,895,094

Note 1: At exchange rate on September 30, 2018, US$1= NT$30.525, RMB1= NT$4.436, EUR1= NT$35.48.

Note 2: At exchange rate of average rate of the nine months ended September 30, 2018, US$1= NT$29.915, RMB1= NT$4.594, EUR1= NT$35.736

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

(Continued)

88 -

(Concluded)

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

Note 5: Eliminated.

Note 6: The annulment the registration of Sichuan Houwei are in process. Note 7: In August 2018, the Group disposed of interests in Zhejiang Kangda.

89 -

TABLE 9

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

(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 Sino Diamond Motors COC Gatetech Technology	Subsidiary Subsidiary Subsidiary Subsidiary	Cost of goods sold Other receivables Other operating revenue Cost of goods sold Financial assets at amortized cost - non-current	$ 442,789 500,000 114,210 216,953 150,000	The prices and payment terms for related-party transactions were based on market price which are 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 are not significantly different from those to third parties. The prices and payment terms for related-party transactions were based on market price which are not significantly different from those to third parties. The prices and payment terms were based on agreements.	1.63 0.79 0.42 0.80 0.24
1	Hwa-Lin	Dongguan Huayi	Subsidiary	Other receivables	107,302	The prices and payment terms were based on agreements.	0.17
2	Guangzhou Huayou Motor Maintenance	Guangzhou Huayou Motor Sales	Subsidiary	Sales	117,748	The prices and payment terms for related-party transactions were based on market price which are not significantly different from those to third parties.	0.43

Note 1: Eliminated.

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

90 -

TABLE 10

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY INVESTMENT RELATIONSHIPS AND RATE OF SHARE HELD FRAMEWORK SEPTEMBER 30, 2018

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Parent Corporation
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43.87% 18.95% 100.00% 100.00% 56.53% 100.00% 100.00% 49.76%
Alliance Gatetech CMI
Kian Shen China Engine Sino Diamond Hwa Chung COC
Motors Investment & Technology (Samoa) Motors
Management
33.16% 7.26%
60.00% 100.00% 100.00% 85.00%
100.00% 9.02% 100.00%
100.00%
100.00% 100.00% 100.00% 100.00%
GH
Kian Shen Investment Advance Power Machinery Advance Power Investment Hua-Yu (Samoa) Brilliant Insight International Investment Greentrans (Samoa) 40.00% Greentrans Ling Wei Y.M.
(British Virgin Hi-Tech
(Mauritius) Consultancy (Samoa)
Islands) Service Co., 100.00%
Ltd. 100.00%
100.00% 100.00% 100.00%
100.00%
(Hong Kong) KSIHK Fujian Rui Hua (British Virgin Hwa-Lin Greentrans Jiangsu (Samoa) GI (British Virgin Hwa Wei (British Virgin Shye Shinn
Islands) Islands) Islands)
100.00%
100.00% 99.75%
100.00% 100.00% Gatech
0.25%
(Suzhou)
Sichuan Huafeng Guangzhou
Dongguan Huayi Tianjin Hwarui Technology
Hanwei Huayou Motor
Maintenance
100.00% 100.00% 100.00%
100.00% 100.00%
Dongguan Tianjin Sichuan Sichuan Guangzhou
Huashun Hwahong Hauwei Lingwei Huayou Motor
Sales
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CMC — Interim / Quarterly Report 2018

51979_rns_2018-12-27_d9f11a67-9352-449a-874d-5676c08d932f.pdf

China Motor Corporation and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Notice to Readers

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

1) IFRS 9 “Financial Instruments” and related amendment

Hedge accounting

Definition of a lease

The Group as lessee

The Group as lessor

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2) Entities included in consolidated financial statements

2018

2017

iii) Loans and receivables

ii. Impairment of financial assets

2018

2017

iii. Derecognition of financial assets

2) Hedge accounting

3) Revenue recognition

2018

b) Revenue from rendering of services

2017

d) Dividend and interest income

4) Employee benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

September 30, 2017

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31, 2017

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

9. FINANCIAL ASSETS AT AMORTIZED COST - 2018

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS - 2018

September 30, 2018

11. HEDGING FINANCIAL INSTRUMENTS

2018

September 30, 2018

2017

December 31, 2017

12. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

13. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

September 30, 2018

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

15. INVENTORIES

16. DISCONTINUED OPERATIONS

17. FINANCIAL ASSETS MEASURED AT COST - 2017

18. DEBT INVESTMENT WITH NO ACTIVE MARKET - 2017

19. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Yulon

20. PROPERTY, PLANT AND EQUIPMENT

21. INVESTMENT PROPERTIES

22. SHORT-TERM BORROWINGS

23. OTHER PAYABLES

24. RETIREMENT BENEFIT PLANS

25. EQUITY

a. Ordinary shares

b. Capital surplus

e. Other equity items

CMC Interim / Quarterly Report 2018