CMC - Interim / Quarterly Report 2020

China Motor Corporation and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2020 and 2019 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders China Motor Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of China Motor Corporation and its subsidiaries (collectively, the “Group”) as of March 31, 2020 and 2019, the related consolidated statements of comprehensive income, the consolidated statements of changes in equity and cash flows for the three 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 were not reviewed. As of March 31, 2020 and 2019, the combined total assets of these non-significant subsidiaries were NT$9,115,891 thousand and NT$13,005,878 thousand, respectively, representing 18% and 20% of the consolidated total assets, and the combined total liabilities of these non-significant subsidiaries were NT$3,002,479 thousand and NT$3,746,168 thousand, respectively, representing 42% and 45%, respectively, of the consolidated total liabilities; for the three months ended March 31, 2020 and 2019, the amounts of combined comprehensive loss of these non-significant subsidiaries were NT$(133,770) thousand and NT$(62,310) thousand, respectively, representing (45%) and (5%), respectively, of the consolidated total comprehensive income. As disclosed in Note 16 to the consolidated financial statements, as of March 31, 2020 and 2019, some investments accounted for using the equity method were NT$14,220,189 thousand and NT$17,960,969 thousand, respectively, and for the three months ended March 31, 2020 and 2019, the comprehensive income (loss) of these equity-method investments were NT$(158,899) thousand and NT$621,653 thousand, respectively, which 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 March 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2020 and 2019 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 May 14, 2020

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to 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 (Note 6) Financial assets at fair value through profit or loss (Note 7) Financial assets at amortized cost (Notes 9 and 10) Financial assets for hedging (Note 11) Notes and accounts receivable, net (Note 12) Trade receivables from related parties (Note 30) Other receivables Inventories (Note 13) Prepayments (Note 30) Non-current assets held for sale (Note 15) Other current assets (Note 31) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss (Note 7) Financial assets at fair value through other comprehensive income (Note 8) Financial assets at amortized cost (Notes 9 and 10) Investments accounted for using the equity method (Note 16) Property, plant and equipment (Notes 17, 30 and 31) Right-of-use assets (Note 18) Investment properties (Notes 19 and 31) Intangible assets under development Deferred tax assets Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 20 and 31) Short-term bills payable Notes and accounts payable Trade payables to related parties (Note 30) Other payables (Note 21) Current tax liabilities (Note 4) Lease liabilities (Note 18) Current portion of long-term borrowings (Note 20) Other current liabilities (Notes 7, 11 and 30) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 20) Deferred tax liabilities Lease liabilities (Note 18) Net defined benefit liabilities (Note 4) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 23) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating the financial statements of foreign operations Unrealized valuation gain (loss) on financial assets at fair value through other comprehensive income Gain (loss) on hedging instruments (Note 11) Equity directly associated with non-current assets held for sale (Note 15) Total other equity Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS (Note 14) Total equity TOTAL		March 31, 2020 (Reviewed) Amount % $ 5,864,674 12 326,421 1 158,948 - 790,262 2 764,716 2 1,645,843 3 68,528 - 3,883,462 8 1,208,771 2 148,023 - 908,181 2 15,767,829 32 680,987 1 189,524 - 611,846 1 23,142,152 47 6,616,317 13 417,521 1 1,363,290 3 464,056 1 215,834 1 103,302 - 33,804,829 68 $ 49,572,658 100 $ 575,000 1 289,937 - 1,780,895 4 512,805 1 1,651,452 3 350,888 1 87,694 - 12,500 - 357,573 1 5,618,744 11 37,500 - 477,161 1 337,786 1 617,339 1 19,631 - 1,489,417 3 7,108,161 14 5,536,203 11 6,414,142 13 9,257,157 19 1,028,469 2 17,908,252 36 28,193,878 57 (1,049,236) (2) (18,043) - (5,095) - (7,538) - (1,079,912) (2) 39,064,311 79 3,400,186 7 42,464,497 86 $ 49,572,658 100		December 31, 2019 (Audited) Amount % $ 5,742,588 11 339,731 1 8,556 - 1,138,342 2 1,190,463 2 1,457,139 3 326,784 1 4,617,661 9 1,543,144 3 148,023 - 849,643 2 17,362,074 34 686,413 1 207,342 - 776,473 2 23,348,925 45 6,419,254 12 442,921 1 1,366,049 3 484,360 1 253,394 1 119,263 - 34,104,394 66 $ 51,466,468 100 $ 615,000 1 183,939 - 2,702,267 5 983,750 2 2,426,690 5 312,774 1 88,697 - 6,250 - 340,684 1 7,660,051 15 43,750 - 480,280 1 359,836 1 735,400 1 22,212 - 1,641,478 3 9,301,529 18 5,536,203 11 6,414,118 12 9,257,157 18 1,029,654 2 17,306,526 34 27,593,337 54 (990,653) (2) 216,562 - (19,968) - (7,538) - (801,597) (2) 38,742,061 75 3,422,878 7 42,164,939 82 $ 51,466,468 100		March 31, 2019 (Reviewed)
						Amount % $ 14,609,946 22 622,875 1 122,023 - 583,674 1 1,144,497 2 1,939,618 3 102,121 - 3,723,730 6 1,261,275 2 148,023 - 561,240 1 24,819,022 38 739,051 1 234,375 - 835,954 1 29,628,884 45 6,529,775 10 529,419 1 1,376,380 2 301,220 1 296,127 1 160,982 - 40,632,167 62 $ 65,451,189 100 $ 640,000 1 116,982 - 2,507,751 4 762,235 1 2,154,626 3 217,264 1 97,440 - - - 399,761 1 6,896,059 11 - - 334,358 - 434,519 1 734,372 1 17,694 - 1,520,943 2 8,417,002 13 13,840,508 21 6,400,831 10 8,897,857 13 1,046,596 2 23,250,082 35 33,194,535 50 (371,950) - 243,024 - 4,752 - (7,538) - (131,712) - 53,304,162 81 3,730,025 6 57,034,187 87 $ 65,451,189 100

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

(With Deloitte & Touche review report dated May 14, 2020)

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 24 and 30) Net sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 13, 22, 25 and 30) Cost of goods sold Other operating cost Total operating costs GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 22, 25 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Share of profit of associates and joint ventures (Note 16) Interest income Other income Net foreign exchange gain (loss) Net gain (loss) on financial instruments at fair value through profit or loss Interest expense Other expense Total non-operating income and expenses		For the Three Months	For the Three Months	Ended March 31
		2020 Amount % $ 7,352,774 96 309,445 4 7,662,219 100 6,270,669 82 31,031 - 6,301,700 82 1,360,519 18 (35,153) (1) 1,325,366 17 265,666 3 216,558 3 328,795 4 811,019 10 514,347 7 142,049 2 23,440 - 49,113 - (8,296) - (4,017) - (5,118) - (10,645) - 186,526 2		2019
				Amount % $ 8,287,852 95 438,607 5 8,726,459 100 7,070,129 81 33,897 1 7,104,026 82 1,622,433 18 (28,345) - 1,594,088 18 415,252 5 248,171 3 368,613 4 1,032,036 12 562,052 6 367,823 4 39,198 1 10,332 - 33,548 - 11,086 - (6,344) - (4,614) - 451,029 5 (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 26) NET PROFIT FOR THE PERIOD OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Unrealized gain (loss) on investment equity instruments designated as fair value through other comprehensive income (Note 23) Gain on hedging instruments (Notes 11 and 23) Share of other comprehensive income (loss) of associates accounted for using the equity method (Notes 16 and 23) Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 26) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 23) Share of the other comprehensive income (loss) of associates and joint ventures accounted for using the equity method (Notes 16 and 23) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD NET PROFIT ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests		For the Three Months	For the Three Months	Ended March 31
		2020 Amount % $ 700,873 9 87,049 1 613,824 8 (17,520) - 14,835 - (231,412) (3) (1,031) - (589) - (82,281) (1) (317,998) (4) $ 295,826 4 $ 608,965 8 4,859 - $ 613,824 8		2019
				Amount % $ 1,013,081 11 189,705 2 823,376 9 5,991 - 288 - 144,894 2 194 - 22,550 - 303,243 4 477,160 6 $ 1,300,536 15 $ 760,519 8 62,857 1 $ 823,376 9

(Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests EARNINGS PER SHARE (Note 27) Basic Diluted		For the Three Months	For the Three Months	Ended March 31
		2020 Amount % $ 318,518 4 (22,692) - $ 295,826 4 $ 1.12 $ 1.12		2019
				Amount % $ 1,184,325 14 116,211 1 $ 1,300,536 15 $ 0.56 $ 0.56
		$

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

(With Deloitte & Touche review report dated May 14, 2020)

(Concluded)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

	Equity Attributable toOwners of theCorporation	Equity Attributable toOwners of theCorporation
Ordinary Shares Shares (In Thousands) Amounts Capital Surplus 1,384,051 $ 13,840,508 $ 6,403,633 - - - 1,384,051 13,840,508 6,403,633 - - - - - (2,802 ) - - - - - - - - - - - - - - - - - - 1,384,051 $ 13,840,508 $ 6,400,831 553,620 $ 5,536,203 $ 6,414,118 - - - - - 24 - - - - - - - - - - - - - - - 553,620 $ 5,536,203 $ 6,414,142	Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 8,897,857 $ 1,046,967 $ 22,486,952 - - (19,503) 8,897,857 1,046,967 22,467,449 - (371 ) 371 - - (1,406 ) - - 760,519 - - 1,648 - - 762,167 - - 21,484 - - 17 - - - $ 8,897,857 $ 1,046,596 $ 23,250,082 $ 9,257,157 $ 1,029,654 $ 17,306,526 - (1,185 ) 1,185 - - - - - 608,965 - - 527 - - 609,492 - - (8,951 ) - - - $ 9,257,157 $ 1,028,469 $ 17,908,252	Other Equity Exchange Differences on Translating the Financial Unrealized Valuation Gain on Financial Assets at Fair Value Equity Directly Associated With Statements of Through Other Gain on Non-current Foreign Operations Comprehensive Income Hedging Instruments Assets Held for Sale $ (646,278 ) $ 117,177 $ 20,997 $ (7,538 ) - - - - (646,278 ) 117,177 20,997 (7,538 ) - - - - - - - - - - - - 274,328 147,348 482 - 274,328 147,348 482 - - (21,484 ) - - - (17 ) - - - - (16,727) - $ (371,950) $ 243,024 $ 4,752 $ (7,538) $ (990,653 ) $ 216,562 $ (19,968 ) $ (7,538 ) - - - - - - - - - - - - (58,583) (243,556) 11,165 - (58,583) (243,556) 11,165 - - 8,951 - - - - 3,708 - $ (1,049,236) $ (18,043) $ (5,095) $ (7,538)
		Exchange Differences on Translating the Financial Unrealized Valuation Gain on Financial Assets at Fair Value Statements of Through Other Foreign Operations Comprehensive Income $ (646,278 ) $ 117,177 - - (646,278 ) 117,177 - - - - - - 274,328 147,348 274,328 147,348 - (21,484 ) - (17 ) - - $ (371,950) $ 243,024 $ (990,653 ) $ 216,562 - - - - - - (58,583) (243,556) (58,583) (243,556) - 8,951 - - $ (1,049,236) $ (18,043)
Shares (In Thousands) 1,384,051 - 1,384,051 - - - - - - - - 1,384,051 553,620 - - - - - - - 553,620

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

(With Deloitte & Touche review report dated May 14, 2020)

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 Adjustments for: Depreciation expenses Amortization expenses Expected credit losses recognized (reversed) Net gain (loss) on fair value change of financial instruments at fair value through profit or loss Interest expenses Interest income Share of profit of associates and joint ventures (Gain) loss on disposal of property, plant and equipment Loss on disposal of investments Gain on reversal of impairment loss of non-financial assets Unrealized loss on transactions with associates Net unrealized loss (gain) on foreign currency exchange Changes in operating assets and liabilities Financial assets at fair value through profit or loss Notes and accounts receivable Trade receivables from related parties Other receivables Inventories Prepayments Other current assets Notes and accounts payable Trade payables to related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from (used in) operations Income tax paid Net cash generated from (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income Proceeds from refund of shares of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 700,873 183,790 31,104 (34,275) 4,017 5,118 (23,440) (142,049) (116) 10,332 (44,783) 35,153 7,528 14,960 428,271 (188,726) (33,649) 783,008 351,033 (63,282) (921,109) (470,727) (773,262) 18,425 (118,061) (239,867) (32,718) (272,585) - 404 (482,962)	2019 $ 1,013,081 292,050 28,342 1,806 (11,086) 6,344 (39,198) (367,823) 513 540 (43,729) 28,345 (31,283) (48,935) 32,946 14,290 27,034 393,305 (101,913) 39,544 (197,687) (181,718) (569,275) 101,863 (175,956) 211,400 (6,875) 204,525 17 - (170,421) (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

Proceeds from repayment of principal of financial assets at amortized cost Proceeds from disposal of investments accounted for using the equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Decrease in other non-current assets Interest received Dividends received Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings Increase in short-term bills payable Repayment of the principal portion of lease liabilities Decrease in other non-current liabilities Interest paid Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 531,851 - (355,923) 1,307 - 4,773 20,422 294,697 14,569 (40,000) 105,998 (22,813) (2,534) (5,100) 35,551 (5,769) (228,234) 6,880,490 $ 6,652,256	2019 $ 153,246 209,299 (402,808) 7,379 (9,360) 4,434 41,442 - (166,772) (5,000) 23,010 (23,592) (13,569) (6,319) (25,470) 8,574 20,857 15,172,763 $ 15,193,620

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at March 31, 2020 and 2019:

Cash and cash equivalents in the consolidated balance sheets Cash and cash equivalents included in financial assets for hedging Cash and cash equivalents in the consolidated statements of cash flows		March	31
		2020 $ 5,864,674 787,582 $ 6,652,256	2019 $ 14,609,946 583,674 $ 15,193,620

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

(With Deloitte & Touche review report dated May 14, 2020)

(Concluded)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements of the Corporation and its subsidiaries (collectively referred to as the “Group”) were approved by the Corporation’s board of directors on May 14, 2020.

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

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

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

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

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

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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 consolidated financial statements.

b. Basis of preparation

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

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

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

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

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

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

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

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

2) Subsidiaries included in the consolidated financial statements

Investor
Investee
Main Business
China-Motor Corporation
(parent)
Kian Shen Corporation (“Kian Shen”)
Production of frame of heavy duty
car and mold
Hwa Wei Holdings Corporation Ltd.
(“Hwa Wei”)
Overseas investment 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
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
Greentrans Investment
Jiangsu Greentrans Automotive Parts Co.,
Ltd. (“Jiangsu Greentrans”)
Production and sales of parts of
electronic motorcycle
GI
Gatetech (Suchou) Technology Co., Ltd
(“Gatetech Suchou Technology”)
Aluminum-magnesium alloy casting
industry
Hwa-Lin
Dongguan Huayi Motor Maintenance Co.,
Ltd. (“Dongguan Huayi”)
Sales and maintenance of vehicle
and parts
Tianjin Hwarui Maintenance Co., Ltd.
(“Tianjin Hwarui”)
Sales and maintenance of vehicle
and parts
Sichuan Huafeng Hanwei Cars Service and
Maintenance Co., Ltd. (“Sichuan
Huafeng Hanwei”)
Sales and maintenance of vehicle
and parts
Guangzhou Huayou Motor Maintenance
Co., Ltd. (“Guangzhou Huayou Motor
Maintenance”)
Sales and maintenance of vehicle
and parts
Dongguan Huayi
Dongguan Huashun Motor Sales Co., Ltd.
(“Dongguan Huashun”)
Sales and maintenance of vehicle
and parts
Tianjin Hwarui
Tianjin Hwahong Sales Co., Ltd. (“Tianjin
Hwahong”)
Sales of vehicle and parts
Sichuan Huafeng Hanwei Sichuan Lingwei Cars Service and
Maintenance Co., Ltd. (“Sichuan
Lingwei”)
Sales of vehicle and parts
Guangzhou Huayou
Motor Maintenance
Guangzhou Huayou Motor Sales Co., Ltd.
(“Guangzhou Huayou Motor Sales”)
Sales of vehicle and parts

Combined Shareholding Ratio
March 31,
2020
December 31,
2019
March 31,
2019
Note
43.87
43.87
43.87
a)
100.00
100.00
100.00
52.10
52.10
52.10
100.00
100.00
100.00
100.00
100.00
100.00
-
-
72.81
d)
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)
52.10
52.10
52.10
52.10
52.10
52.10
100.00
100.00
100.00
100.00
100.00
100.00
-
-
72.81
d)
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
d)
100.00
100.00
100.00
-
-
72.81
d)
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
c)
100.00
100.00
100.00
c)
100.00
100.00
100.00
100.00
100.00
100.00
-
-
100.00
c)
100.00
100.00
100.00
c)

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

For the relationship between the Corporation and its controlled entities as of March 31, 2020, refer to Table 10.

All the subsidiaries listed above are non-significant subsidiaries. Except for Kian Shen, their financial statements have not been reviewed.

d. Other significant accounting policies

Except for the following, please refer to the consolidated financial statements for the year ended December 31, 2019.

1) 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.

2) 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.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The Group considers the economic implications of the COVID-19 when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of revisions and future periods if the revisions affect both current and future periods.

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6. CASH AND CASH EQUIVALENTS

7.	Cash Cash on hand Checking accounts and demand deposits Cash equivalents Time deposits Repurchase agreements collateralized by bonds FINANCIAL INSTRUMENTS AT FAIR VALUE Financial assets-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Mutual funds Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Financial assets-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted shares Financial liabilities (included in other current liabilities) Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts	March 31, 2020 December 31, 2019 $ 2,716 $ 2,093 1,941,743 1,979,620 1,944,459 1,981,713 3,917,215 3,760,875 3,000 - 3,920,215 3,760,875 $ 5,864,674 $ 5,742,588 THROUGH PROFIT OR LOSS March 31, 2020 December 31, 2019 $ 323,837 $ 339,427 2,584 304 $ 326,421 $ 339,731 $ 680,987 $ 686,413 $ 2,724 $ 2,483	March 31, 2019 $ 3,892 2,663,372 2,667,264 8,853,675 3,089,007 11,942,682 $ 14,609,946 March 31, 2019 $ 622,313 562 $ 622,875 $ 739,051 $ -

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

March 31, 2020

			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2020.04.08-2020.06.05	USD7,500/$223,066
	JPY/NTD	2020.08.27-2020.09.25	JPY300,000/$82,570
Sell	RMB/USD	2020.04.07-2020.04.27	RMB31,344/USD4,500
December 31, 2019
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2020.01.06-2020.03.16	USD11,000/$330,810
	JPY/NTD	2020.02.25-2020.09.25	JPY600,000/$165,910
Sell	RMB/USD	2020.01.13	RMB14,022/USD2,000
March 31, 2019
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2019.04.10-2019.05.20	USD5,000/$153,388

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments at FVTOCI Domestic investments Listed shares Unlisted shares Foreign investments Unlisted shares	March 31, 2020 December 31, 2019 $ 18,586 $ 29,083 24,989 25,395 43,575 54,478 145,949 152,864 $ 189,524 $ 207,342	March 31, 2019 $ 21,669 23,221 44,890 189,485 $ 234,375

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

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9. FINANCIAL ASSETS AT AMORTIZED COST

Current Principal guaranteed notes Less: Allowance for impairment loss Non-current Bonds Preference shares Less: Allowance for impairment loss	March 31, 2020 December 31, 2019 $ 159,635 $ 8,610 (687) (54) $ 158,948 $ 8,556 $ 605,310 $ 801,389 9,900 9,900 615,210 811,289 (3,364) (34,816) $ 611,846 $ 776,473	March 31, 2019 $ 122,787 (764) $ 122,023 $ 831,273 9,900 841,173 (5,219) $ 835,954

a. The coupon rates of principal guaranteed notes were ranged from 1.60%-2.85%, 3.00% and 3.03%-3.05% per annum as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
b. The coupon rates of bonds were ranged from 0.86%-4.30%, 0.86%-4.34% and 0.86%-4.80% per annum as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
c. The coupon rate of preference shares was 1.50% per annum as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
d. Refer to Note 10 for information relating to the credit risk management and impairment.

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS

Investments in debt instruments were classified as at amortized cost.

Gross carrying amount Less: Allowance for impairment loss Amortized cost	March 31, 2020 December 31, 2019 $ 774,845 $ 819,899 (4,051) (34,870) $ 770,794 $ 785,029	March 31, 2019 $ 963,960 (5,983) $ 957,977

The Group only invests in debt instruments that have higher credit ratings and low credit risk after impairment assessment. The credit ratings are provided by independent rating agencies. The Group’s 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 has been a significant increase in the credit risk since initial recognition.

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

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

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

March 31, 2020

Credit Rating Expected Credit Loss Rate Performing 0.0700%-0.4300% No rating 20.6080% December 31, 2019 Credit Rating Expected Credit Loss Rate Performing 0.0769%-0.6221% No rating 20.6080% March 31, 2019 Credit Rating Expected Credit Loss Rate Performing 0.0769%-0.6221% No rating 32.4908%	Gross Carrying Amount
	At Amortized Cost $ 764,945 9,900 Gross Carrying Amount
	At Amortized Cost $ 659,999 159,900 Gross Carrying Amount
	At Amortized Cost $ 954,060 9,900

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

Balance at January 1, 2020 Financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance atMarch31, 2020 Balance at January 1, 2019 Financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance atMarch31, 2019	Credit Rating
	Performing (12-month ECLs) No rating (Lifetime ECLs - Not Credit- impaired) $ 1,918 $ 32,952 2,077 - (1,500) (30,912) (484) - $ 2,011 $ 2,040 $ 2,650 $ 3,216 1,060 - (953) - 10 - $ 2,767 $ 3,216

a. During the three months ended March 31, 2020 and 2019, the Group purchased principal guaranteed notes of $482,962 thousand and $170,421 thousand, respectively, and correspondingly increased the loss allowance for investments rated as performing of $2,077 thousand and $1,060 thousand, respectively.
b. Investments in principal guaranteed notes of $332,151 thousand and bonds of $199,700 thousand were expired and redeemed during the three months ended March 31, 2020, with consequential reduction in the loss allowance for investments rated as performing of $1,500 thousand and lifetime ECLs of $30,912 thousand; and investments in principle guaranteed notes of $153,246 thousand were expired and redeemed during the three months ended March 31, 2019, with consequential reduction in the loss allowance for investments rated as performing of $953 thousand.

11. FINANCIAL INSTRUMENTS FOR HEDGING

Financial assets Cash flow hedge - spot rate Cash flow hedge - foreign exchange forward contracts Financial liabilities (included in other current liabilities) Cash flow hedge - foreign exchange forward contracts	March 31, 2020 December 31, 2019 $ 787,582 $1,137,902 2,680 440 $ 790,262 $1,138,342 $ 5,148 $ 6,884	March 31, 2019 $ 583,674 - $ 583,674 $ -

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

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

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

Hedging instruments at fair value and transferred to initial carrying amount of hedged items during the three months ended March 31, 2020 and 2019, are detailed in Note 23(e).

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

March 31, 2020

Notional Amount Forward Rate Hedging Instruments Currency (In Thousands) Maturity (Note) Line Item Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY2,824,900/NTD790,025 2020.04.14- 2020.12.15 0.2758-0.2828 Financial assets for hedging Forecast purchases - foreign exchange forward contracts JPY/NTD JPY500,000/NTD136,990 2020.05.18- 2020.07.16 0.2729-0.2757 Financial assets for hedging Forecast purchases - foreign exchange forward contracts USD/NTD USD5,000/NTD149,014 2020.04.20- 2020.05.18 29.7680-29.8550 (USD:NTD) Financial assets for hedging Forecast purchases - foreign exchange forward contracts RMB/USD RMB41,821/USD6,000 2020.04.07- 2020.05.18 6.9490-7.0010 (USD:RMB) Other current liabilities Forecast purchases - foreign exchange forward contracts JPY/NTD JPY640,000/NTD177,694 2020.07.16- 2020.11.16 0.2752-0.2799 Other current liabilities		Carrying A	mount Liabilities I $ - - - (3,399 ) (1,749) $ (5,148)	Change in Value Used for Calculating Hedge neffectiveness $ 280 1,026 1,118 (2,719 ) (1,399) $ (1,694)
		Asset $ 787,582 1,282 1,398 - - $ 790,262

Note: JPY1:NTD, unless stated otherwise.

		Accumulated
		Gains or Losses
	Change in	on Hedging
	Value Used for	Instruments in
	Calculating	Other Equity
	Hedge	Continuing
Hedged Items	Ineffectiveness	Hedges
Cash flow hedge
Forecast purchases	$ 1,694	$ (1,694)

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December 31, 2019

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

Note: JPY1:NTD, unless stated otherwise.

		Accumulated
		Gains or Losses
	Change in	on Hedging
	Value Used for	Instruments in
	Calculating	Other Equity
	Hedge	Continuing
Hedged Items	Ineffectiveness	Hedges
Cash flow hedges
Forecast purchases	$ 19,206	$ (19,206)

March 31, 2019

								Change in Value Used for
			Notional Amount		Forward Rate		Carrying Amount	Calculating Hedge
Hedging Instruments	Currency		(In Thousands)	Maturity	(JPY1:NTD)	Line Item	Asset	Ineffectiveness
Cash flow hedge
Forecast purchases -	JPY/NTD	JPY2,097,283/NTD575,097		2019.5.13-	0.2680-0.2806	Financial assets	$583,674	$4,752
spot rate				2020.1.14		for hedging
								Accumulated
								Gains or Losses
							Change in	on Hedging
						Value Used for		Instruments in
							Calculating	Other Equity
							Hedge	Continuing
Hedged Items						Ineffectiveness		Hedges
Cash flow hedge
Forecast purchases							$ (4,752)	$ 4,752
For the three months ended			March 31, 2020
								Hedging Gains
								Recognized in
Comprehensive Income								OCI
Cash flow hedge
Forecast purchases								$ 14,835

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For the three months ended March 31, 2019

Hedging Gains Recognized in OCI

Comprehensive Income		OCI
Cash flow hedge
Forecast purchases	$	288

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

12. NOTES AND ACCOUNTS RECEIVABLE, NET

At amortized cost Notes and accounts receivable Less: Allowance for impairment loss	March 31, 2020 December 31, 2019 $ 777,544 $ 1,206,811 (12,828) (16,348) $ 764,716 $ 1,190,463	March 31, 2019 $ 1,166,048 (21,551) $ 1,144,497

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

The aging of receivables was as follows:

Not past due Less than 60 days 61 to 90 days Over 91 days Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	March 31, 2020 December 31, 2019 $ 727,783 $ 1,154,739 1,585 23,190 539 1,233 47,637 27,649 777,544 1,206,811 (12,828) (16,348) $ 764,716 $ 1,190,463	March 31, 2019 $ 1,034,057 39,408 50,598 41,985 1,166,048 (21,551) $ 1,144,497

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

Balance at January 1 Add: Net remeasurement of loss allowance Less: Net remeasurement of loss allowance Foreign exchange gains and losses Balance at March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 16,348 - (3,456) (64) $ 12,828	2019 $ 19,771 1,689 - 91 $ 21,551

13. INVENTORIES

Merchandise Finished goods Work in progress Raw materials Materials in transit	March 31, 2020 December 31, 2019 $ 245,154 $ 121,436 394,088 1,975,823 413,902 317,658 2,531,948 2,038,601 298,370 164,143 $ 3,883,462 $ 4,617,661	March 31, 2019 $ 238,094 881,098 460,449 1,700,846 443,243 $ 3,723,730

The costs of inventories recognized as cost of goods sold for the three months ended March 31, 2020 and 2019 were $6,270,669 thousand and $7,070,129 thousand, respectively.

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

The Group had a 43.87% interest in Kian Shen as of March 31, 2020, December 31, 2019 and March 31, 2019. The remaining 56.13% interest in Kian Shen is dispersed and held by shareholders unrelated to the Group.

Refer to Table 6 for the information on place of incorporation and principal place of business.

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

Current assets Non-current assets Current liabilities Non-current liabilities Equity	March 31, 2020 December 31, 2019 $ 925,751 $ 1,041,592 3,981,308 3,998,786 (519,260) (592,399) (312,999) (339,243) $ 4,074,800 $ 4,108,736	March 31, 2019 $ 931,862 4,299,332 (720,240) (197,811) $ 4,313,143 (Continued)

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Equity attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Revenue Profit for the period Other comprehensive income (loss) for the period Total comprehensive income (loss) for the period Profit attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Total comprehensive income attributable to: Owners of Kian Shen Non-controlling interests of Kian Shen Net cash inflow (outflow) from: Operating activities Investing activities Financing activities Foreign exchange adjustments Net cash inflow NON-CURRENT ASSETS HELD FOR SALE Investments accounted for using the equity method classified as held for sale Equity directly associated with non-current assets classified as held for sale	March 31, 2020 $ 1,787,615 2,287,185 $ 4,074,800 March 31, 2020 $ 148,023 $ (7,538)	December 31, 2019 March 31, 2019 $ 1,802,502 $ 1,892,176 2,306,234 2,420,967 $ 4,108,736 $ 4,313,143 (Concluded) For the Three Months Ended March 31	December 31, 2019 March 31, 2019 $ 1,802,502 $ 1,892,176 2,306,234 2,420,967 $ 4,108,736 $ 4,313,143 (Concluded) For the Three Months Ended March 31

		2020 $ 207,671 $ 15,148 (49,084) $ (33,936) $ 6,645 8,503 $ 15,148 $ (14,888) (19,048) $ (33,936) $ (68,272) 146,358 19,682 1,211 $ 98,979 December 31, 2019 $ 148,023 $ (7,538)	2019 $ 352,327 $ 104,951 95,054 $ 200,005 $ 46,042 58,909 $ 104,951 $ 87,742 112,263 $ 200,005 $ (100,346) 108,091 23,000 148 $ 30,893 March 31, 2019 $ 148,023 $ (7,538)

15. NON-CURRENT ASSETS HELD FOR SALE

In August 2018, the Group entered into a contract for the transfer of shares of Zhejiang Kanda with a non-related party, and collected the contract price in installment. As of the report date, RMB$23,000 thousand had been received.

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16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates Investments in joint ventures a. Investments in associates Material associates Yulon Associates that are not individually material	March 31, 2020 $ 15,480,539 7,661,613 $ 23,142,152 March 31, 2020 $ 7,081,037 8,399,502 $ 15,480,539	December 31, 2019 $ 15,586,288 7,762,637 $ 23,348,925 December 31, 2019 $ 7,110,438 8,475,850 $ 15,586,288	March 31, 2019 $ 21,196,858 8,432,026
			$ 29,628,884
			March 31, 2019 $ 11,667,915 9,528,943
			$ 21,196,858

1) Material associates

The Group held 16.80% interest in Yulon on March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

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

Refer to Table 6 for the nature of activities, principal place of businesses and countries of incorporation of the associates.

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

Name of Associate Yulon	March 31, 2020 December 31, 2019 $ 3,854,754 $ 5,126,561	March 31, 2019 $ 5,100,338

As Yulon adjusted the organizational structure of its Group by carrying out a business combination of entities under common control, the consolidated financial statements of Yulon and its subsidiaries for the three months ended March 31, 2019 were restated.

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

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Yulon and subsidiaries

Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to predecessors’ interests under common control Non-controlling interests Proportion of the Group’s ownership Equity attributable to the Group Cross-shareholding Unrealized gain on sidestream transactions Carrying amount Operating revenue Net profit for the period Other comprehensive income (loss) Total comprehensive income for the period	March 31, 2020 $ 229,623,407 81,081,046 (227,773,310) (25,577,387) 57,353,756 - (11,564,484) $ 45,789,272 16.80% $ 7,692,598 (611,561) - $ 7,081,037		December 31, 2019 March 31, 2019 (Restated) $ 231,944,241 $ 226,924,102 81,947,302 103,111,978 (230,603,249) (213,341,940) (26,207,143) (30,997,009) 57,081,151 85,697,131 - (558,263) (11,244,743) (12,391,432) $ 45,836,408 $ 72,747,436 16.80% 16.80% $ 7,700,516 $ 12,221,569 (590,078) (556,939) - 3,285 $ 7,110,438 $ 11,667,915 For the Three Months Ended March 31	December 31, 2019 March 31, 2019 (Restated) $ 231,944,241 $ 226,924,102 81,947,302 103,111,978 (230,603,249) (213,341,940) (26,207,143) (30,997,009) 57,081,151 85,697,131 - (558,263) (11,244,743) (12,391,432) $ 45,836,408 $ 72,747,436 16.80% 16.80% $ 7,700,516 $ 12,221,569 (590,078) (556,939) - 3,285 $ 7,110,438 $ 11,667,915 For the Three Months Ended March 31
			2020 $ 17,572,356 $ 547,251 (273,067) $ 274,184	2019 (Restated) $ 20,113,330 $ 719,338 877,346 $ 1,596,684

2) Aggregate information of associates that are not individually material

The Group’s share of: Net profit for the period Other comprehensive income (loss) Total comprehensive income (loss) for the period All the associates are accounted for using the equity method.	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 148,612 (189,807) $ (41,195)	2019 $ 198,362 86,488 $ 284,850

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In January 2019, the Group disposed of 20.01% interest in Sin Jang to Sin Gan and recognized a gain on disposal of investment amounting to $1,322 thousand (calculated as the disposal price of $103,475 thousand less the carrying amount of the disposed equity investments of $102,206 thousand and exchange differences on translating the financial statements of foreign operations of $53 thousand).

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

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

Except for Yulon, the 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 associate’s financial statements that have not been reviewed.

b. Investments in joint ventures

Joint ventures that are not individually material	March 31, 2020 December 31, 2019 $ 7,661,613 $ 7,762,637	March 31, 2019 $ 8,432,026

Aggregate information of joint ventures that are not individually material:

The Group’s share of: Net profit (loss) of the period Other comprehensive income (loss) Total comprehensive income (loss) for the period	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ (30,116) (70,908) $ (101,024)	2019 $ 137,637 199,166 $ 336,803

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

Except for Guangzhou NTN-Yulon Drivertrain Co., Ltd., the 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 associate’s financial statements that have not been reviewed for the three months ended March, 31, 2020.

26 -

17. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Group Land Land improvement Buildings Machinery Other equipment Construction in progress	March 31, 2020 December 31, 2019 $ 1,974,774 $ 1,974,774 12,963 13,446 847,372 861,847 2,572,772 2,263,515 412,533 408,332 795,903 897,340 $ 6,616,317 $ 6,419,254	March 31, 2019 $ 2,127,397 14,449 1,002,397 1,979,329 414,283 991,920 $ 6,529,775

Except for the depreciation recognized and the cost of acquisition of property, plant and equipment for increasing productivity, which totaled $355,923 thousand and $402,808 thousand during the three months ended March 31, 2020 and 2019, respectively, the Group had no other significant disposal or impairment loss of property, plant and equipment.

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 31.

18. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts Land Buildings Other equipment	March 31, 2020 December 31, 2019 $ 74,851 $ 82,312 334,945 352,877 7,725 7,732 $ 417,521 $ 442,921	March 31, 2019 $ 100,779 418,079 10,561 $ 529,419

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Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Other equipment	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 2,148 $ 7,462 16,052 1,713 $ 25,227	2019 $ 12,512 $ 7,468 17,077 1,581 $ 26,126

Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the three months ended March 31, 2020 and 2019.

b. Lease liabilities

Carrying amounts Current Non-current	March 31, 2020 December 31, 2019 $ 87,694 $ 88,697 $ 337,786 $ 359,836	March 31, 2019 $ 97,440 $ 434,519

Range of discount rate for lease liabilities was as follows:

	March 31,	December 31,	March 31,
	2020	2019	2019
Land	1.20%-1.94%	1.20%-1.94%	1.20%-1.94%
Buildings	1.20%-4.35%	1.20%-4.35%	1.20%-4.35%
Other equipment	0.98%-1.37%	0.98%-1.37%	0.98%-1.37%

c. Material lease-in activities and terms

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

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 3,637 $ 250 $ 29,414	2019 $ 6,026 $ 585 $ 33,590

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

28 -

19. INVESTMENT PROPERTIES

Investment properties	March 31, 2020 December 31, 2019 $ 1,363,290 $ 1,366,049	March 31, 2019 $ 1,376,380

Except for depreciation recognized, the Group did not have significant addition, disposal, or impairment of investment properties during the three months ended March 31, 2020 and 2019.

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

The fair values of investment properties of the Group were $2,388,593 thousand and $2,414,732 thousand as of December 31, 2019 and 2018, respectively. The management of the Group had assessed and determined that there were no significant changes in the fair values as of March 31, 2020 and 2019, as compared to that as of December 31, 2019 and 2018.

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

20. BORROWINGS

a. Short-term borrowings

Line of credit borrowings Bank loans	March 31, 2020 December 31, 2019 $ 475,000 $ 615,000 100,000 - $ 575,000 $ 615,000	March 31, 2019 $ 340,000 300,000 $ 640,000

1) The range of interest rates on credit borrowings were 0.95%-1.10%, 0.95%-1.00% and 0.95%-0.98%. per annum as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
2) The interest rates on bank loans were 1.20% and 1.18% per annum as of March 31, 2020 and 2019, respectively.
b. Long-term borrowings

	March 31,	December 31,	March 31,	March 31,
	2020	2019		2019
Unsecured borrowings
Line of credit borrowings	$ 50,000	$ 50,000	$	-
Less: Current portions	(12,500)	(6,250)		-
Long-term borrowings	$ 37,500	$ 43,750	$	-

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The aforementioned long-term borrowings are repayable in installments at varying amounts before July 15, 2022. The Group had signed medium-term loan contracts with banks with non-revolving credit facilities. As of March 31, 2020 and December 31, 2019, the annual interest rates were 0.725% and 0.975%, respectively.

21. OTHER PAYABLES

Payable for salaries or bonus Payable for taxes Payable for warranties Provisions for employee benefits Payable for advertisement Others	March 31, 2020 December 31, 2019 $ 488,849 $ 988,243 209,764 222,322 200,590 208,694 85,543 137,121 16,044 126,738 650,662 743,572 $ 1,651,452 $ 2,426,690	March 31, 2019 $ 597,167 319,870 246,098 94,662 207,780 689,049 $ 2,154,626

22. RETIREMENT BENEFIT PLANS

For the three months ended March 31, 2020 and 2019, the pension expenses of defined benefit plans were $9,588 thousand and $14,427 thousand, respectively, and these were calculated based on the pension cost rate determined by the actuarial calculation on December 31, 2019 and 2018, respectively.

23. EQUITY

a. Share capital

1) Ordinary shares

Numbers of shares authorized (in thousands) Amount of shares authorized Number of shares issued and fully paid (in thousands) Shares issued and fully paid	March 31, 2020 1,800,000 $ 18,000,000 553,620 $ 5,536,203	December 31, 2019 1,800,000 $ 18,000,000 553,620 $ 5,536,203	March 31, 2019 1,800,000
			$ 18,000,000
			1,384,051
			$ 13,840,508

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

30 -

2) Capital reduction

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

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note 1) Conversion of bonds Issuance of ordinary shares Others May be used to offset a deficit only Changes in percentage of ownership interest in subsidiaries (Note 2) Share of changes in capital surplus of associates	March 31, 2020 December 31, 2019 $ 5,183,923 $ 5,183,923 1,184,920 1,184,920 4,666 4,666 2,225 2,225 38,408 38,384 $ 6,414,142 $ 6,414,118	March 31, 2019 $ 5,183,923 1,184,920 4,666 2,225 25,097 $ 6,400,831

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 the equity method.

c. Retained earnings and dividend policy

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

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

An appropriation of earnings to a 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 Corporation proposed to not distribute any dividends due to the net loss incurred in 2019.

The appropriations of earnings for 2018 had approved in the shareholders’ meetings in June 2019. The appropriations and dividends per share were as follows:

	For the Years	For the Years
		Ended
	December 31,
		2018
Legal reserve	$	359,300
Cash dividends	$	2,352,886
Cash dividends per share (NT$)	$	1.7

The appropriations of earnings for 2019 are subject to the resolution in the shareholders’ meeting to be held in June 2020.

Information on the appropriation of earnings proposed by the Corporation’s board of directors and approved in the shareholders’ meetings is available on the Market Observation Post System website of the Taiwan Stock Exchange.

d. Special reserves

Balance at January 1 Reversals Disposal of subsidiaries and associates Disposal of property, plant and equipment Balance at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 1,029,654 (1,185) - $ 1,028,469	2019 $ 1,046,967 (366) (5) $ 1,046,596

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e. Other equity items

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

Balance at January 1 Recognized for the period Exchange differences on translating the financial statements of foreign operations Share from associates and join ventures accounted for using the equity method Reclassification adjustments Disposal of associates accounted for using the equity method Disposal of foreign operations Other comprehensive income (loss) recognized for the period Balance at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ (990,653) (8,876) (60,039) - 10,332 (58,583) $ (1,049,236)	2019 $ (646,278) 20,145 252,410 1,773 - 274,328 $ (371,950)

2) Unrealized valuation gain on financial assets at FVTOCI

Balance at January 1 Recognized for the period Unrealized gain - equity instruments Share from associates accounted for using the equity method Other comprehensive gain (loss) recognized for the period Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal by associates Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal Balance at March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 216,562 (14,256) (229,300) (243,556) 8,951 - $ (18,043)	2019 $ 117,177 4,102 143,246 147,348 (21,484) (17) $ 243,024

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3) Cash flow hedges

Balance at January 1 Recognized for the period Gain on changes in the fair value of hedging instruments Foreign currency risk - spot rate Foreign currency risk - foreign exchange forward contracts Unrealized loss from cash flow hedges for using the equity method Other comprehensive income recognized for the period Transferred to initial carrying amount of hedged items Balance at March 31 f. Non-controlling interests Balance at January 1 Attributable to non-controlling interests: Share of profit for the period Other comprehensive income (loss) recognized for the period Unrealized gain (loss) on financial assets at FVTOCI Exchange differences on translating the financial statements of foreign operations Share from associates and joint ventures accounted for using the equity method Other comprehensive income (loss) recognized for the period Balance at March 31		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 2019 $ (19,968) $ 20,997 10,623 482 3,181 - (2,639) - 11,165 482 3,708 (16,727) $ (5,095) $ 4,752 For the Three Months Ended March 31
		2020 $ 3,422,878 4,859 (3,264) (2,045) (22,242) (27,551) $ 3,400,186	2019 $ 3,613,814 62,857 1,889 2,405 49,060 53,354 $ 3,730,025

24. REVENUE

Revenue from contracts with customers Revenue from the sale of goods Revenue from sale of vehicles Revenue from sale of components Service revenue Rental income Other revenue		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 6,189,210 1,163,564 7,352,774 272,850 22,647 13,948 $ 7,662,219	2019 $ 6,858,256 1,429,596 8,287,852 405,529 16,836 16,242 $ 8,726,459

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25. NET PROFIT

Net profit concludes as follow:

a. Depreciation and amortization

For the Three Months Ended March 31 2020 2019 An analysis of depreciation by function Operating costs $ 125,546 $ 230,831 Operating expenses 58,244 61,219 $ 183,790 $ 292,050 An analysis of amortization by function Operating costs $ 1,368 $ 1,953 Operating expenses 9,432 14,086 $ 10,800 $ 16,039 An analysis of amortization in intangible assets by function Research and development expenses $ 20,304 $ 12,303 b. Rental income and operating expenses directly related to investment properties For the Three Months Ended March 31 2020 2019 Rental income from investment properties $ 17,399 $ 16,511 Direct operating expenses from investment properties that generated rental income $ 3,736 $ 4,942 c. Employee benefits expense For the Three Months Ended March 31 2020 2019 Post-employment benefits Defined contribution plans $ 19,113 $ 22,057 Defined benefit plans 9,588 14,427 28,701 36,484 Short-term benefits 790,078 908,619 $ 818,779 $ 945,103 An analysis of employee benefits expenses by function Operating costs $ 404,877 $ 506,782 Operating expenses 413,902 438,321 $ 818,779 $ 945,103	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
	2020 2019 $ 17,399 $ 16,511 $ 3,736 $ 4,942 For the Three Months Ended March 31
		2020 $ 19,113 9,588 28,701 790,078 $ 818,779 $ 404,877 413,902 $ 818,779	2019 $ 22,057 14,427 36,484 908,619 $ 945,103 $ 506,782 438,321 $ 945,103

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d. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Corporation, the Corporation accrued employees’ compensation and remuneration of directors 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 March 31, 2020 and 2019, the employees’ compensation and remuneration of directors are as follows:

Amount

Employees’ compensation Remuneration of directors	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 1,640 $ 3,526	2019 $ 5,109 $ 4,717

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

Due to the net loss before income tax for the year ended December 31, 2019, the Corporation did not accrue employees’ compensation and remuneration of directors. The employees’ compensation and remuneration of directors for the year ended December 31, 2018, which were approved by the Corporation’s board of directors in March 2019, are as follows:

Employees’ compensation Remuneration of directors	For the Years Ended December 31, 2018	For the Years Ended December 31, 2018
		Cash $ 33,511 $ 19,746

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

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

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26. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of tax expense were as follows:

Current tax In respect of the current period Adjustments for the prior periods Deferred tax In respect of the current period Income tax expense recognized in profit or loss	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 69,504 (15,351) 54,153 32,896 $ 87,049	2019 $ 103,387 (1,693) 101,694 88,011 $ 189,705

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

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

b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current period Cash flow hedges	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ (1,031)	2019 $ 194

c. Income tax assessments

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

27. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 1.12 $ 1.12	2019 $ 0.56 $ 0.56

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

Net Profit for the Period

For the Three Months Ended March 31 2020 2019 Profit of the Corporation $ 608,965 $ 760,519 Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares) For the Three Months Ended March 31 2020 2019 Weighted average number of ordinary shares used in the computation of basic earnings per share Weighted average number of ordinary shares 553,620 1,384,051 Adjustment for associates holding shares (8,239) (20,599) 545,381 1,363,452 Effect of potentially dilutive ordinary shares Employees’ compensation 66 1,564 Weight average number of ordinary shares used in the computation of diluted earnings per share 545,447 1,365,016	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 553,620 (8,239) 545,381 66 545,447	2019 1,384,051 (20,599) 1,363,452 1,564 1,365,016

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

If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed that 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.

28. CAPITAL MANAGEMENT

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

29. FINANCIAL INSTRUMENTS

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

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

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

March 31, 2020 Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Overseas unlisted shares Financial assets for hedging Non-derivative financial instruments Derivative financial instruments Financial liabilities Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities) Financial liabilities for hedging Derivative financial instruments (included in other current liabilities)	Level 1 $ 323,837 - - $ 323,837 $ 18,586 - - $ 18,586 $ 787,582 - $ 787,582 $ - $ -	Level 2 $ - - - $ - $ - - - $ - $ - - $ - $ - $ -	Level 3 $ - 680,987 2,584 $ 683,571 $ - 24,989 145,949 $ 170,938 $ - 2,680 $ 2,680 $ 2,724 $ 5,148	Total $ 323,837 680,987 2,584 $ 1,007,408 $ 18,586 24,989 145,949 $ 189,524 $ 787,582 2,680 $ 790,262 $ 2,724 $ 5,148

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December 31, 2019

Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Overseas unlisted shares Financial assets for hedging Non-derivative financial instruments Derivative financial instruments 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 $ 339,427 - - $ 339,427 $ 29,083 - - $ 29,083 $ 1,137,902 - $ 1,137,902 $ - $ -	Level 2 $ - - - $ - $ - - - $ - $ - - $ - $ - $ -	Level 3 $ - 686,413 304 $ 686,717 $ - 25,395 152,864 $ 178,259 $ - 440 $ 440 $ 2,483 $ 6,884	Total $ 339,427 686,413 304 $ 1,026,144 $ 29,083 25,395 152,864 $ 207,342 $ 1,137,902 440 $ 1,138,342 $ 2,483 $ 6,884

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March 31, 2019

Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Derivative financial instruments Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Overseas unlisted shares Financial assets for hedging Non-derivative financial instruments	Level 1 $ 622,313 - - $ 622,313 $ 21,669 - - $ 21,669 $ 583,674	Level 2 $ - - - $ - $ - - - $ - $ -	Level 3 $ - 739,051 562 $ 739,613 $ - 23,221 189,485 $ 212,706 $ -	Total $ 622,313 739,051 562 $ 1,361,926 $ 21,669 23,221 189,485 $ 234,375 $ 583,674

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 March 31, 2020

Financial Assets Equity Instruments at FVTPL Derivative Financial Instruments at FVTPL Equity Instruments at FVTOCI Derivative Financial Instruments for Hedging Balance at January 1 $ 686,413 $ 304 $ 178,259 $ 440 Recognized in profit or loss (5,426) 2,280 - - Recognized in other comprehensive income (loss) - - (7,321) 2,240 Balance at March 31 $ 680,987 $ 2,584 $ 170,938 $ 2,680 Financial Liabilities Derivative Financial Instruments at FVTPL Derivative Financial Instruments for Hedging Balance at January 1 $ 2,483 $ 6,884 Recognized in profit or loss 241 - Recognized in other comprehensive income - (1,736) Balance at March 31 $ 2,724 $ 5,148	$	Total $ 865,416 (3,146) (5,081) $ 857,189 Total 9,367 241 (1,736) 7,872
	$

41 -

For the three months ended March 31, 2019

						Derivative	Derivative
		Equity		Equity			Financial
	Instruments at		Instruments		at	Instruments at
Financial Assets		FVTPL		FVTOCI			FVTPL			Total
Balance at January 1	$	734,341	$	208,723		$	23	$		943,087
Recognized in profit		4,710			-		539			5,249
Recognized in other
comprehensive income		-		4,000			-			4,000
Sales		-		(17)			-			(17)
Balance at March 31	$	739,051	$	212,706		$	562	$		952,319
								Derivative
								Financial
								Instruments at
Financial Liabilities									FVTPL
Balance at January 1								$		79
Recognized in loss										(79)
Balance at March 31								$		-

3) Valuation techniques and inputs applied for Level 3 fair value measurement
a) Derivative financial instruments: The fair values of foreign exchange forward contracts of future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.
b) Domestic unlisted securities to which the market approach was applied: The fair values of domestic unlisted shares 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:

	March 31,	December 31,	March 31,
	2020	2019	2019
Operating income ratio	0.20-5.22 times	0.20-5.22 times	0.14-5.68 times
Gross profit ratio	2.23-17.18 times	2.23-17.18 times	0.32-13.64 times
EBIT ratio	-	-	2.44-23.21 times
EBITDA ratio	5.21-24.22 times	5.21-24.22 times	-
Post-tax profit ratio	13.24-71.17 times	13.24-71.17 times	11.99-85.49 times
P/B ratio	0.73-7.82 times	0.73-7.82 times	0.82-4.94 times
Discount rate for lack of	32.28%	32.28%	11.58%-32.28%
marketability

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

March 31,
2020
December 31,
2019
March 31,
2019
Operating income ratio
0.1 time increase
$ 36,532
$ 36,573
$ 54,965
0.1 time decrease
$ (36,532)
$ (36,573)
$ (54,965)
Gross profit ratio
1 time increase
$ 5,384
$ 5,384
$ 65,697
1 time decrease
$ (5,384)
$ (5,384)
$ (65,697)
EBIT ratio
1 time increase
$ -
$ -
$ 18,188
1 time decrease
$ -
$ -
$ (18,188)
EBITDA ratio
1 time increase
$ 3,874
$ 3,874
$ -
1 time decrease
$ (3,874)
$ (3,874)
$ -
Post-tax profit ratio
1 time increase
$ 10,660
$ 10,660
$ 11,020
1 time decrease
$ (10,660)
$ (10,660)
$ (11,020)
P/B ratio
0.1 time increase
$ 72,110
$ 72,633
$ 88,909
0.1 time decrease
$ (72,110)
$ (72,633)
$ (88,909)
Categories of financial instruments
March 31,
2020
December 31,
2019
March 31,
2019
Financial assets
FVTPL
Mandatorily at FVTPL
$ 1,007,408
$ 1,026,144
$ 1,361,926
Financial assets for hedging
790,262
1,138,342
583,674
Financial assets at amortized cost (Note 1)
9,713,913
9,973,131
19,091,969
Financial assets at FVTOCI
189,524
207,342
234,375
Financial liabilities
Amortized cost (Note 2)
4,874,770
6,978,997
6,193,334
FVTPL (included in other current liabilities)
Held for trading
2,724
2,483
-
Financial liabilities for hedging (included in
other current liabilities)
5,148
6,884
-

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

Note 2: The balances included financial liabilities measured at amortized cost which comprised short-term borrowings, short-term bills payable, notes payable, accounts payable (related parties included), other payables, long-term borrowing (current portion of long-term borrowing included) and deposits received (included in other non-current liabilities).
43 -

d. Financial risk management objectives and policies

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

1) Market risk

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

a) Foreign currency risk

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

Sensitivity analysis

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

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

USD Impact	USD Impact	USD Impact
For the Three Months Ended March 31
	2020 2019 $ (6,929) $ (8,436) JPY Impact
For the Three Months Ended March 31
	2020 2019 $ (262) $ 1,349 $ (11,054) $ (5,837) RMB Impact
For the Three Months Ended March 31
	2020 $ (10,465) $ (1,779)	2019 $ (9,989) $ -

44 -

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:

		March 31,	December 31,	December 31,	March 31,
		2020		2019	2019
Cash flow interest rate risk
Financial assets	$	6,832,304	$	7,060,429	$ 15,353,394
Financial liabilities		914,937		848,939	756,982
Fair value interest rate risk
Lease liabilities		425,480		448,533	531,959

Sensitivity analysis

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

If interest rates had been 0.25% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the three months ended March 31, 2020 and 2019 would increase/decrease by $3,698 thousand and $9,123 thousand, respectively.

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

c) Other price risk

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

Sensitivity analysis

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

If equity prices had been 5% higher/lower, pre-tax profit for the three months ended March 31, 2020 and 2019 would have increased/decreased by $16,192 thousand and $31,116 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the three months ended March 31, 2020 and 2019 would have increased/decreased by $929 thousand and $1,083 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

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

45 -

3) Liquidity risk

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

30. TRANSACTIONS WITH RELATED PARTIES

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

a. Names and categories of related parties

Related Party Name
Mitsubishi Motors Corporation (Mitsubishi Motors Corp.)

Mitsubishi Corporation (Mitsubishi Corp.)

Tai Yuen Textile Co., Ltd.

Le Wen Investment Co., Ltd.

Yulon Management Company Ltd.

Mitsubishi Corporation (Taiwan) Ltd.

Mitsubishi Motors Philippines Corporation

Mitsubishi Motors Thailand

Mitsubishi Motors Europe B.V.

Mitsubishi Motors Middle East and Africa

Mitsubishi Corporation Technos

Shye Shyang Mechanical Industrial Co., Ltd.

Fuzhou Samuel Mechanical and Electrical Co., Ltd.

Uni-Calsonic Corp.

Yulon Motor Co., Ltd. (Yulon)

Fortune Motors Co., Ltd. (Fortune Motors)

ROC Spicer Ltd. (ROC-Spicer)

Uni Auto Parts Manufacture Co., Ltd. (Uni Auto Parts
Manufacture)

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

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

Yulon IT Solutions Inc.

Sinjang Co., Ltd. (Sin Jang)

Related Party Category

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

(Continued)

46 -

Related Party Name
Sin Gan Co., Ltd. (Sin Gan)

Tokio Marine Newa Insurance Co., Ltd.

Hong Shuo Cultural Enterprises, Co., Ltd.

Hsiang Shuo Enterprises

Sinqual Technology Co., Ltd.

Yufong Property Management Co., Ltd.

Taiwan Acceptance Corporation

Yue Sheng Industrial Co., Ltd.

Luxgen Motor Co., Ltd. (Luxgen)

Yulon Nissan Motor Co., Ltd.

Y-Teks Co., Ltd.

Yulon Energy Service Co., Ltd.

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

Carplus Auto Leasing Corporation

eCBO Information Services Co., Ltd.

Fortune HS Leasing Co., Ltd.

Yu Rich Financial Services Company

ROC-Keeper Industrial Ltd.

Shanghai Hopeful Wheel Automobile Maintenance Co., Ltd.
Shanghai Chiashun Motor Sales Co., Ltd.

Fuzhou Lianhong Motor Parts Co., Ltd.

Guangzhou NTN-Yulon Drivertrain Co., Ltd.

Xiangyang NTN-Yulon Drivertrain Co., Ltd.

South East (Fujian) Motor Corporation Ltd.

Fujian Benz Automotive Co., Ltd.

Fuzhou Fushiang Motor Industrial Co., Ltd.

Xiamen King-Long Kian-Shen Frame

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

China Engine (Fujian)

Yuanchuang Industrial Investment Consulting Co., Ltd.

Related Party Category

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

b. Operating transactions
1) Sales of goods

Line Items Related Party Categories/Name Sales Associates Fortune Motors Shung Ye Motor Others Investors and subsidiaries of the investors that have significant influence over the Group Others		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 4,745,043 1,341,405 134,663 6,221,111 21,752 8,142 $ 6,251,005	2019 $ 5,138,117 1,615,761 190,241 6,944,119 48,392 9,539 $ 7,002,050

47 -

2) Purchases of goods

Line Items Related Party Categories/Name Purchases Investors and subsidiaries of the investors that have significant influence over the Group Mitsubishi Corp. Others Associates The Group is its major management authority Joint ventures 3) Technical services expense Line Items Related Party Categories/Name Cost of goods sold and selling and marketing expenses Investors that have significant influence over the Group 4) Development expense Line Items Related Party Categories/Name Research and development expense Investors that have significant influence over the Group Others 5) Other expense Line Items Related Party Categories/Name Selling and marketing expenses Investors and subsidiaries of the investors that have significant influence over the Group Others		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 2019 $ 341,229 $ 806,465 305,829 30,380 647,058 836,845 335,958 575,559 49,921 82,716 25,641 46,416 $ 1,058,578 $ 1,541,536 For the Three Months Ended March 31
		2020 2019 $ 60,237 $ 62,623 For the Three Months Ended March 31
		2020 2019 $ 12,378 $ 12,361 - 3 $ 12,378 $ 12,364 For the Three Months Ended March 31
		2020 $ 21,594 2,359 $ 23,953	2019 $ 30,926 4,207 $ 35,133

48 -

6) Receivables from related parties

Line Items Related Party Categories/Name Trade receivables Associates from related Fortune Motors parties Shung Ye Motor Others Joint ventures Investors and subsidiaries of the investors that have significant influence over the Group Others 7) Prepayments Line Items Related Party Categories/Name Prepayments Investors and subsidiaries of investors that have significant influence over the Group Mitsubishi Corp. Others Joint ventures Others	March 31, 2020 December 31, 2019 $ 1,233,922 $ 903,195 274,044 340,042 94,751 188,082 1,602,717 1,431,319 23,374 18,235 19,751 7,538 1 47 $ 1,645,843 $ 1,457,139 March 31, 2020 December 31, 2019 $ 474 $ 187,877 40,334 2,610 40,808 190,487 9,010 12,426 46 - $ 49,864 $ 202,913	March 31, 2019 $ 1,237,193 309,974 312,560 1,859,727 63,923 15,966 2 $ 1,939,618 March 31, 2019 $ 94,821 4,610 99,431 7,532 114 $ 107,077

8) Acquisitions of property, plant and equipment

Line Items Related Party Categories/Name Property, plant and Associates equipment Others		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 59,502 3,600 $ 63,102	2019 $ 16,496 - $ 16,496

49 -

9) Payables to related parties

Line Items Related Party Categories/Name Trade payables to Associates related parties Yulon Uni Auto Parts Manufacture Yue Ki Industrial Fortune Motors ROC-Spicer Others Investors and subsidiaries of the investors that have significant influence over the Group Mitsubishi Motors Corp. Mitsubishi Corp. Others The Group is its major management authority Others 10) Contract liabilities Line Items Related Party Categories/Name Other current Associates liabilities Luxgen Sin Jang Others Others	March 31, 2020 December 31, 2019 $ 73,955 $ 92,546 67,202 147,613 60,891 99,801 53,024 78,176 48,175 100,743 66,653 161,135 369,900 680,014 78,190 92,215 790 39,110 25,200 94,522 104,180 225,847 30,344 68,622 8,381 9,267 $ 512,805 $ 983,750 March 31, 2020 December 31, 2019 $ 19,356 $ 19,356 16,792 16,792 18,690 8,476 54,838 44,624 301 273 $ 55,139 $ 44,897	March 31, 2019 $ 105,478 71,338 85,321 29,181 79,331 143,827 514,476 65,607 86,216 32,585 184,408 54,516 8,835 $ 762,235 March 31, 2019 $ 48,041 - 4,243 52,284 273 $ 52,557

The outstanding payables to related parties were not guaranteed and would be paid in cash. The Group received guarantees from some of the receivables from related parties. For the three months ended March 31, 2020 and 2019, no loss allowance was recognized for trade receivables from related parties.

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

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

50 -

c. Compensation of key management personnel

The remunerations of directors and key executives for the three months ended March 31, 2020 and 2019, respectively, were as follows:

Short-term employee benefits Post-employment benefits	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 25,151 425 $ 25,576	2019 $ 30,051 592 $ 30,643

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

31. 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:

Property, plant and equipment Pledged deposits (included in other current assets) Investment properties	March 31, 2020 December 31, 2019 $ 509,957 $ 510,304 180,048 179,939 52,323 52,323 $ 742,328 $ 742,566	March 31, 2019 $ 742,770 159,774 52,323 $ 954,867

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant commitments and contingencies of the Group as of March 31, 2020 were as follows:

a. Guarantee notes amounted to $4,808,573 thousand, which had been issued to financial institutions and government grants as collateral; unused letters of credit amounted to $63,643 thousand.
b. The Group entered into agreements with Mitsubishi Motors Corp. as stated below:

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

c. The status of endorsements/guarantees is listed in Table 2.
51 -

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group’s 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:

March 31, 2020

		Foreign			Carrying
		Currency	Exchange Rate		Amount
Foreign currency assets
Monetary items
RMB	$	224,849	4.2550	$	956,732
JPY		3,060,939	0.2788		853,390
USD		20,840	30.2250		629,891
Non-monetary items
Investments accounted for using the equity
method
RMB		1,215,001	4.2550		5,169,829
EUR		86,431	33.2400		2,872,962
Foreign currency liabilities
Monetary items
JPY		442,049	0.2788		123,243
December 31, 2019
		Foreign			Carrying
		Currency	Exchange Rate		Amount
Foreign currency assets
Monetary items
JPY	$	4,178,677	0.2760	$	1,153,315
RMB		188,277	4.3050		810,532
USD		23,983	29.9800		718,997
Non-monetary items
Investments accounted for using the equity
method
RMB		1,234,368	4.3050		5,313,955
EUR		84,261	33.5900		2,830,313
Foreign currency liabilities
Monetary items
JPY		662,503	0.2760		182,851

52 -

March 31, 2019

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Foreign currency assets
Monetary items
RMB	$	233,556	4.5800	$ 1,069,688
USD		22,897	30.8200	705,686
JPY		2,202,595	0.2783	612,982
Non-monetary items
Investments accounted for using the equity
method
RMB		1,313,836	4.5800	6,017,370
EUR		80,800	34.6100	2,796,489
Foreign currency liabilities
Monetary items
JPY		589,906	0.2783	164,171

For the three months ended March 31, 2020 and 2019, net foreign exchange gains (losses) were $(8,296) thousand and $33,548 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.

34. SEPARATELY DISCLOSED ITEMS

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

35. SEGMENT INFORMATION

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

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

Vehicle manufacturing Channel Others Adjustment and eliminations Administration cost and remunerations to directors Other non-operating income and expenses, net Profit before income tax		Segment Revenues For the Three Months Ended March 31 2020 2019 $ 7,133,668 $ 7,890,024 614,278 900,286 9,398 11,385 (95,125) (75,236) $ 7,662,219 $ 8,726,459		Segment Income or Loss	Segment Income or Loss
				For the Three Months Ended March 31
		2020 $ 7,133,668 614,278 9,398 (95,125) $ 7,662,219		2020 $ 740,501 1,103 (5,935) (210) 735,459 (79,063) 44,477 $ 700,873	2019 $ 1,013,636 1,662 (6,813) (210) 1,008,275 (78,400) 83,206 $ 1,013,081

53 -

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, net foreign exchange gain (loss), gains (loss) on financial instruments at fair value through profit or loss, interest expense, other expense and income tax expense. This was the measure reported to the chief operating decision maker for resource allocation and assessment of segment performance.

54 -

TABLE 1

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE THREE MONTHS ENDED MARCH 31, 2020 (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	$ 600,000	$ 600,000	$ 600,000	1.00	Short-term financing	$ -	Working capital	$ -	-	$ -	$ 1,171,929	$ 7,812,862
1	Dongguan Huayi	Dongguan Huashun	Other receivables	Yes	85,100 (RMB 20,000 thousand)	85,100 (RMB 20,000 thousand)	-	-	Short-term financing	-	Working capital	-	-	-	1,171,929	7,812,862
2	Dongguan Huashun	Dongguan Huayi	Other receivables	Yes	85,100 (RMB 20,000 thousand)	85,100 (RMB 20,000 thousand)	42,550 (RMB 10,000 thousand)	3.915	Short-term financing	-	Working capital	-	-	-	1,171,929	7,812,862
3	Tianjin Hwarui	Tianjin Hwahong Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables	Yes Yes Yes	42,550 (RMB 10,000 thousand) 85,100 (RMB 20,000 thousand) 85,100 (RMB 20,000 thousand)	42,550 (RMB 10,000 thousand) 85,100 (RMB 20,000 thousand) 85,100 (RMB 20,000 thousand)	- - -	- - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,171,929 1,171,929 1,171,929	7,812,862 7,812,862 7,812,862
4	Tianjin Hwahong	Tianjin Hwarui Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables	Yes Yes Yes	85,100 (RMB 20,000 thousand) 85,100 (RMB 20,000 thousand) 85,100 (RMB 20,000 thousand)	85,100 (RMB 20,000 thousand) 85,100 (RMB 20,000 thousand) 85,100 (RMB 20,000 thousand)	- - -	- - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,171,929 1,171,929 1,171,929	7,812,862 7,812,862 7,812,862

Note 1: Translated at the exchange rates of RMB1:NT$4.255 as of March 31, 2020.

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

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

Note 4: Eliminated.

55 -

TABLE 2

CHINA MOTOR CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE THREE MONTHS ENDED MARCH 31, 2020 (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	Dongguan Huayi Tianjin Hwarui Guangzhou Huayou Motor Maintenance Sichuan Huafeng Hanwei	Subsidiary Subsidiary Subsidiary Subsidiary	20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand	$ 425,500 (RMB 100,000 thousand) 425,500 (RMB 100,000 thousand) - -	$ 425,500 (RMB 100,000 thousand) 425,500 (RMB 100,000 thousand) - -	$ - - - -	$ - - - -	1.1 1.1 - -	50% of the Corporation’s issued capital, $2,768,102 thousand 50% of the Corporation’s issued capital, $2,768,102 thousand 50% of the Corporation’s issued capital, $2,768,102 thousand 50% of the Corporation’s issued capital, $2,768,102 thousand	No No No No	No No No No	Yes Yes Yes Yes

Note: Translated at the exchange rates of RMB1:NT$4.255 as of March 31, 2020.

56 -

TABLE 3

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD MARCH 31, 2020

(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		March 31, 2020	March 31, 2020		Note
				Number of Shares (In Thousands)	Carrying Amount (Note 2)	Percentage of Ownership	Fair Value
China Motor Corporation	Beneficiary certificates Franklin Templeton SinoAm Money Market The RSIT Enhanced Money Market Fubon Chi Hsiang Money Market Fund Hua Nan Phoenix Money Market Fund Prudential Financial Money Market Fund Paradigm Pion Money Market SinoPac Money Market Fund Cathay Taiwan Money Market Fund UPAMC James Bond Money Market Fund CTBC Hua Win Money Market Fund Shares Shye Shyang Mechanical Industrial Myson Century, Inc. Taiwan Aerospace NORM Pacific Automation Corp. Carnival Com2B (Cayman) Corp. Corporate bonds Taiwan Acceptance Corp.	- - - - - - - - - - Corporate director Corporate director - - - - Associate	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Amortized cost financial assets - non-current	4,867 4,201 3,205 1,856 1,906 2,610 2,167 2,423 612 657 9,009 4,705 811 128 95 2,000 -	$ 50,587 50,538 50,529 30,330 30,317 30,315 30,315 30,287 10,283 7,277 612,496 17,878 11,728 1,785 708 - 248,927	- - - - - - - - - - 10.00 7.84 0.60 0.45 0.05 4.44 -	$ 50,587 50,538 50,529 30,330 30,317 30,315 30,315 30,287 10,283 7,277 612,496 17,878 11,728 1,785 708 - -

(Continued)

57 -

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		March 31, 2020	March 31, 2020		Note
				Number of Shares (In Thousands)	Carrying Amount (Note 2)	Percentage of Ownership	Fair Value
KSIHK Alliance Investment & Management Hwa Lin Brilliant Insight International	Evergreen Marine Corporation Crédit Agricole Corporate and Investment Bank SA Morgan Stanley Fonterra Co-operative Group Ltd. Deutsche Bank Aktiengesellschaft, Singapore Branch Principle guaranteed notes President Securities 100% Principle Guaranteed Note Shares Beijing NTN-SEOHAN Driveshaft Shares Samuel (Cayman) Co., Ltd. CARPLUS Auto Leasing Corporation T-Car Inc. Solidlite Corporation Site information service Phalanx Biotech Group Preference shares Rock Financial Risk Service Co., Ltd. Principle guaranteed notes President Securities 100% Principle Guaranteed Note Beneficiary certificates Taishin Ta-Chong Money Market	- - - - - - - - - - - - - - - -	Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Financial assets at fair value through profit or loss - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Fair value through other comprehensive income financial assets - non-current Amortized cost financial assets - non-current Amortized cost financial assets - current Financial assets at fair value through profit or loss - current	- - - - - - - 6,327 3,248 1,275 789 65 696 - - 214	$ 99,929 85,041 85,040 42,529 42,520 150,475 25,907 (RMB 6,089 thousand) 98,114 68,491 21,928 5,688 2,778 3,010 7,860 8,473 3,059	- - - - - - 9.00 15.07 3.45 4.05 3.60 0.54 0.85 - - -	$ - - - - - - 25,907 98,114 68,491 21,928 5,688 2,778 3,010 - - 3,059

Note 1: Refer to Tables 6 and 7 for the information on investments in subsidiaries and associates.

Note 2: Translated at the exchange rates of RMB1:NT$4.255 as of March 31, 2020.

(Concluded)

58 -

TABLE 4

CHINA MOTOR CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE THREE MONTHS ENDED MARCH 31, 2020

(In Thousands of New Taiwan Dollars)

Seller/Buyer	Related Party	Relationship			Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total (Note)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note)
China Motor Corporation (“CMC”) Sino Diamond Motors	Fortune Motors Shung Ye Motor Mitsubishi Motors Corp. Uni Auto Parts Manufacture Mitsubishi Corp. Shung Ye Motor Fortune Motors Mitsubishi Corp.	Equity-method investee Equity-method investee Director of CMC Equity-method investee Director of CMC Equity-method investee Equity-method investee Director of CMC	Sale Sale Purchase Purchase Purchase Sale Sale Purchase	$ (4,608,219) (986,202) 229,315 105,268 105,118 (355,184) (136,824) 236,111	(67) (14) 7 3 3 (66) (26) 50	Collect after 15-60 days of delivery Collect after 15-60 days of delivery Pay after 7 days of cargo ship out Pay after 45 days of the month of delivery Pay after 7 days of cargo ship out Collect after 7-45 days of delivery Collect after 15-45 days of delivery Pay before 10 days of cargo ship out	$ - - - - - - - -	- - - - - - - -	$ 1,227,856 215,502 (77,997) (67,202) (790) 55,572 6,066 -	64 11 (4) (4) - 78 9 -

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

59 -

TABLE 5

CHINA MOTOR CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL MARCH 31, 2020

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
China Motor Corporation	Fortune Motors Shung Ye Motor	Equity-method investee Equity-method investee	$ 1,227,856 215,502	17.32 16.70	$ - -	- -	$ 1,227,856 208,882	$ - -

60 -

TABLE 6

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE THREE MONTHS ENDED MARCH 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of March 31, 2020	As of March 31, 2020	As of March 31, 2020	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				March 31, 2020	December 31, 2019	Number of Shares (In Thousands)	%	Carrying Amount
China Motor Corporation Kian Shen Kian Shen Investment Alliance Investment & Management Sino Diamond Motors Hua-Yu China Engine CMI	Yulon Kian Shen (Note 1) Fortune Motors Sino Diamond Motors (Note 1) Tokio Marine Newa Insurance (Note 2) Alliance Investment & Management (Note 1) Daimler Vans Hong Kong Ltd. ROC-Spicer CMI (Note 1) COC (Note 1) Hwa Wei (Note 1) Hua-Chuang Automobile Information Technical Center Uni Auto Parts Manufacture Shung Ye Motor (Notes 3 and 5) China Engine (Note 1) Uni-Calsonic Yueki Industrial Co., Ltd. Tai-Ya Investment Hwa Chung Motors (Note 1) Kian Shen Investment (Note 1) KSIHK (Note 1) Hua-Chuang Automobile Information Technical Center Greentrans Investment (Note 1) Hua-Yu (Note 1) Hua-Chuang Automobile Information Technical Center China Engine (Note 1) Brilliant Insight International (Note 1) Shung Ye Motor (Note 4) Fortune Motors Hwa-Lin (Note 1) Advance Power Investment (Note 1) Advance Power Machinery (Note 1) Hwa Wei (Note 1)	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 Miaoli, Taiwan Hsinchu, Taiwan Hong Kong Taoyuan, Taiwan British Virgin Islands Hong Kong Taipei, Taiwan Samoa Samoa Taipei, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Taipei, Taiwan Taipei, Taiwan British Virgin Islands Mauritius Miaoli, Taiwan British Virgin Island	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 Manufacture of automobile engine and parts Manufacture and sale of automobile parts Manufacture and sales of car components Investment Manufacture and sale of vehicles Investment Investment Product design Investment Overseas investment on production and service industries Product design Manufacture of automobile engine and parts Consulting and service Sales and providing after sales service of vehicle Sales and providing after sales service of vehicle Overseas investment on production and service industries Reinvestment and sales Manufacture of vehicle and parts Overseas investment on production and service industries	$ 3,835,585 344,800 2,132,826 2,192,724 955,941 1,200,030 2,011,363 675,896 1,402 412,125 1,202 1,028,013 109,813 391,142 625,978 105,806 109,396 79,505 328,900 328,888 US$ 25,907 thousand 473,760 344,369 1,489,334 473,760 11,000 22,000 180 24 US$ 37,229 thousand 59,456 5,000 1,428,503	$ 3,835,585 344,800 2,132,826 2,192,724 955,941 1,200,030 2,011,363 675,896 1,402 412,125 1,202 1,028,013 109,813 391,142 625,978 105,806 109,396 79,505 328,900 328,888 US$ 25,907 thousand 473,760 344,369 1,489,334 473,760 11,000 22,000 180 24 US$ 37,229 thousand 59,456 5,000 1,428,503	262,228 32,201 132,117 151,067 61,511 183,000 46,566 145 40 33,565 40 56,600 13,032 29,668 87,999 6,084 2,936 2,242 8,790 10,296 25,907 26,715 11,200 36,943 26,715 1 2,200 12 1 33,393 3,750 500 60	16.80 43.87 41.93 100.00 20.57 100.00 32.45 29.00 100.00 49.76 40.00 17.25 15.00 39.98 52.10 31.20 15.08 29.00 100.00 100.00 100.00 8.14 100.00 100.00 8.14 - 100.00 0.02 - 100.00 100.00 100.00 60.00	$ 7,081,037 2,031,778 4,576,745 1,176,943 1,913,158 1,271,678 2,872,962 546,324 785,688 788,543 522,344 - 348,476 378,818 422,972 139,572 103,530 66,060 73,185 3,877,498 RMB 889,377 thousand - 215,797 687,460 - 5 15,228 209 18 600,285 94,821 10,842 783,516	$ 197,230 15,148 327,799 7,060 228,463 (2,125) 185,621 24,278 (77,680) 3,237 (129,511) (283,220) (189,455) (38,427) (11,864) 6,936 (15,332) (10,623) 1,506 36,882 RMB 7,605 thousand (283,220) (4,129) 6,827 (283,220) (11,864) (4,144) (38,427) 327,799 8,528 - 55 (129,511)	$ 23,554 6,658 137,446 6,477 46,995 (2,125) 60,234 7,127 (77,680) 1,751 (51,804) - (28,387) (15,363) (6,224) 2,179 (2,327) (3,081) 1,506 - - - - - - - - - - - - - -	Equity-method investee Subsidiary Equity-method investee Subsidiary Equity-method investee Subsidiary Equity-method investee Equity-method investee Subsidiary Subsidiary Subsidiary Equity-method investee Equity-method investee Equity-method investee Subsidiary Equity-method investee Equity-method investee Equity-method investee Subsidiary Subsidiary Subsidiary Equity-method investee Subsidiary Subsidiary Equity-method investee Subsidiary Subsidiary Equity-method investee Equity-method investee Subsidiary Subsidiary Subsidiary Subsidiary
											(Continued)

61 -

(Concluded)

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of March 31, 2020	As of March 31, 2020	As of March 31, 2020	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				March 31, 2020	December 31, 2019	Number of Shares (In Thousands)	%	Carrying Amount
Hwa Chung Motors COC	Ling Wei (Note 1) Greentrans (Note 1) Y. M. Hi-Tech (Note 1) Shye Shinn (Note 1)	Taipei, Taiwan Taipei, Taiwan Taoyuan, Taiwan British Virgin Islands	Sales of second-hand vehicle Sales of motorcycle and parts Steel cutting Investment	$ 31,000 10,000 46,250 US$ 968 thousand	$ 31,000 10,000 46,250 US$ 968 thousand	3,608 1,000 4,250 968	100.00 100.00 85.00 100.00	$ 34,435 10,573 68,775 40,127	$ 1,486 (15) 2,755 45	$ - - - -	Subsidiary Subsidiary Subsidiary Subsidiary

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

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

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

Note 4: During preparation of the consolidated financial statements, gain on disposal of $31 thousand from intra-group transaction had been eliminated.

Note 5: During preparation of the consolidated financial statements, side stream transaction of $1,639 thousand had been eliminated.

62 -

TABLE 7

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE THREE MONTHS ENDED MARCH 31, 2020 (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, 2020 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of March 31, 2020 (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 March 31, 2020 (Note 1)	Accumulated Repatriation of Investment Income as of March 31, 2020 (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 Spicer Shenyang Spicer	Manufacture and sales of industrial automation products Manufacture and sales of engines and engine parts Sales of industrial automation products Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components Sales and manufacture of vehicles’ components The assembling and extra work of transmission shafts and other parts Manufacture and sales of parts of electronic motorcycles Manufacture of vehicles’ key components, drive axle assembly and engine parts series products Manufacture and sale of automobile transmission, shafts, mechanical transmission, shafts and components	$ 4,171,050 (US$ 138,000 thousand) 453,375 (US$ 15,000 thousand) 9,539,880 (EUR 287,000 thousand) 377,813 (US$ 12,500 thousand) 537,401 (US$ 17,780 thousand) 1,027,650 (US$ 34,000 thousand) 408,480 (RMB 96,000 thousand) 181,350 (US$ 6,000 thousand) 338,520 (US$ 11,200 thousand) 871,450 (RMB 204,806 thousand) 365,619 (RMB 85,927 thousand)	The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region The Corporation indirectly owns these investees through investment company registered in a third region Go directly to the mainland China to invest The Corporation indirectly owns these investees through investment company registered in a third region	$ 1,042,763 (US$ 34,500 thousand) 226,688 (US$ 7,500 thousand) 1,547,854 (EUR 46,566 thousand) 151,125 (US$ 5,000 thousand) 85,688 (US$ 2,835 thousand) - 46,154 (US$ 1,527 thousand) 16,322 (US$ 540 thousand) 338,520 (US$ 11,200 thousand) 326,581 (US$ 10,805 thousand) 78,887 (US$ 2,610 thousand)	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ 1,042,763 (US$ 34,500 thousand) 226,688 (US$ 7,500 thousand) 1,547,854 (EUR 46,566 thousand) 151,125 (US$ 5,000 thousand) 85,688 (US$ 2,835 thousand) - 46,154 (US$ 1,527 thousand) 16,322 (US$ 540 thousand) 338,520 (US$ 11,200 thousand) 326,581 (US$ 10,805 thousand) 78,887 (US$ 2,610 thousand)	$ (497,160) - 185,799 (EUR 5,593 thousand) 95,892 (RMB 22,249 thousand) (24,829) (RMB -5,761 thousand) 19,025 (RMB 4,414 thousand) (6,673) (RMB -1,548 thousand) - (4,094) 13,899 (16,415) (US$ -545 thousand)	25.00 38.03 16.23 17.55 15.35 17.55 21.94 3.95 100.00 29.00 20.25	$ (124,290) - 60,294 (EUR 1,815 thousand) 38,357 (RMB 8,899 thousand) (8,690) (RMB -2,016 thousand) 7,610 (RMB 1,766 thousand) (3,337) (RMB -774 thousand) - (4,094) 4,031 (3,325) (US$ -110 thousand)	$ 1,175,206 188,848 2,871,105 (EUR 86,375 thousand) 1,840,926 (RMB 432,650 thousand) 522,412 (RMB 122,776 thousand) 851,851 (RMB 200,200 thousand) 209,408 (RMB 49,215 thousand) 25,907 (RMB 6,089 thousand) 215,783 381,178 67,677 (US$ 2,239 thousand)	$ 786,545 (US$ 26,023 thousand) - 393,661 (EUR 11,843 thousand) 595,538 (RMB 139,962 thousand) 151,206 (RMB 35,536 thousand) - - - - - -

(Continued)

63 -

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital (Note 1)	Method of Investment	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2020 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of March 31, 2020 (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 March 31, 2020 (Note 1)	Accumulated Repatriation of Investment Income as of March 31, 2020 (Note 1)
							Outward	Inward
Zhejiang Kangda Motor Industry And Trading (Note 7) Fujian Rui Hua (Note 5) Guangzhou Huayou Motor Maintenance (Notes 5 and 6) Sichuan Huafeng Hanwei (Notes 5 and 6) Tianjin Hwarui (Note 5) Dongguan Huayi (Note 5) Dongguan Huashun (Note 5) Tianjin Hwahong (Note 5) Guangzhou Huayou Motor Sales (Notes 5 and 6)	Sales of vehicle and parts Consultation and services 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		$ 170,200 (RMB 40,000 thousand) 102,765 (US$ 3,400 thousand) 387,182 (US$ 12,810 thousand) 402,899 (US$ 13,330 thousand) 242,405 (US$ 8,020 thousand) 134,501 (US$ 4,450 thousand) 106,375 (RMB 25,000 thousand) 127,650 (RMB 30,000 thousand) 182,965 (RMB 43,000 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		$ 36,512 (US$ 1,208 thousand) 102,765 (US$ 3,400 thousand) 338,490 (US$ 11,199 thousand) 402,899 (US$ 13,330 thousand) 234,576 (US$ 7,761 thousand) 127,459 (US$ 4,217 thousand) - - -	$ - - - - - - - - -	$ - - - - - - - - -	$ 36,512 (US$ 1,208 thousand) 102,765 (US$ 3,400 thousand) 338,490 (US$ 11,199 thousand) 402,899 (US$ 13,330 thousand) 234,576 (US$ 7,761 thousand) 127,459 (US$ 4,217 thousand) - - -	$ - (1,702) - 25,022 (899) (6,041) (7,879) (RMB -1,828 thousand) (621) (RMB -144 thousand) -	- 100.00 100.00 - 100.00 100.00 100.00 100.00 100.00	$ - (1,702) - 25,022 (899) (6,041) (7,879) (RMB -1,828 thousand) (621) (RMB -144 thousand) -	$ - 87,135 36,366 - 195,963 73,575 69,161 (RMB 16,254 thousand) 125,067 (RMB 29,393 thousand) 12,901 (RMB 3,032 thousand)	$ - - - - - - - - -

Accumulated Outward Remittance for Investment in Mainland China as of March 31, 2020 (Note 1)		Investment Amount Authorized by Investment Commission, MOEA (Note 1)			Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$5,893,514 (US$143,777 thousand and EUR46,566 thousand)		$7,042,587 (US$218,195 thousand and EUR13,467 thousand)			$23,438,587

(Continued)

64 -

Note 1: Translated at the exchange rates on March 31, 2020: US$1=NT$30.225, RMB1=NT$4.255, EUR1=NT$33.24.

Note 2: Translated at average exchange rates for the three months ended March 2020: US$1=NT$30.106, RMB1=NT$4.31, EUR1=NT$33.22.

Note 3: Except for Guangzhou NTN-YULON Drivertrain Co., Ltd., the 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 associate’s financial statements that have not been reviewed.

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

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

Note 6: In November 2018, Sichuan Huafeng Hanwei, Sichuan Lingwei, Guangzhou Huayou Motor Maintenance and Guangzhou Huayou Motor Sales resolved to dissolve their respective companies. As of March 31, 2020, except for the annulment of Sichuan Huafeng Hanwei and Sichuan Lingwei which had been completed in February 2020 and July 2019, respectively, the remaining companies had not completed their liquidation procedures.

Note 7: In August 2018, the Group reclassified the joint venture, Zhejiang Kangda, as non-current assets held for sale.

(Concluded)

65 -

TABLE 8

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE THREE MONTHS ENDED MARCH 31, 2020 (In Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Relationship			Transaction Details
				Financial Statement Account	Amount	Payment Terms	% to Total Sales or Assets
0	China Motor Corporation	Sino Diamond Motors	Subsidiary	Other receivables	$ 600,000	The prices and payment terms were based on agreements.	1.21

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

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

66 -

TABLE 9

CHINA MOTOR CORPORATION

INFORMATION OF MAJOR SHAREHOLDERS MARCH 31, 2020

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

Note: The table discloses shareholding information of shareholders whose shareholding percentage is 5% or above. The Taiwan Depository & Clearing Corporation (TDCC) calculates the total number of ordinary shares and special shares (including treasury shares) that have completed the dematerialized registration and delivery on the last business day of the quarter. The share capital reported in the consolidated financial statements and the actual number of shares that have completed the dematerialized registration and delivery may be different due to difference in the basis of calculation.

67 -

TABLE 10

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY INVESTMENT RELATIONSHIPS AND PERCENTAGE OF SHARE HELD FRAMEWORK MARCH 31, 2020

==> picture [998 x 509] intentionally omitted <==

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

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

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

68 -

AI assistant

CMC — Interim / Quarterly Report 2020

51979_rns_2020-12-30_eaa11347-3ca0-46be-add8-fd2eeb8e6996.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

(In Thousands of New Taiwan Dollars)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

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

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2) Subsidiaries included in the consolidated financial statements

1) Employee benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

March 31, 2020

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

9. FINANCIAL ASSETS AT AMORTIZED COST

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS

March 31, 2020

11. FINANCIAL INSTRUMENTS FOR HEDGING

March 31, 2020

December 31, 2019

March 31, 2019

For the three months ended March 31, 2019

Hedging Gains Recognized in OCI

12. NOTES AND ACCOUNTS RECEIVABLE, NET

13. INVENTORIES

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

1) Material associates

Yulon and subsidiaries

17. PROPERTY, PLANT AND EQUIPMENT

18. LEASE ARRANGEMENTS

b. Lease liabilities

c. Material lease-in activities and terms

d. Other lease information

19. INVESTMENT PROPERTIES

20. BORROWINGS

21. OTHER PAYABLES

22. RETIREMENT BENEFIT PLANS

23. EQUITY

1) Ordinary shares

2) Capital reduction

b. Capital surplus

c. Retained earnings and dividend policy

e. Other equity items

2) Unrealized valuation gain on financial assets at FVTOCI

3) Cash flow hedges

24. REVENUE

25. NET PROFIT

Amount

26. INCOME TAXES

a. Income tax recognized in profit or loss

c. Income tax assessments

27. EARNINGS PER SHARE

Net Profit for the Period

28. CAPITAL MANAGEMENT

29. FINANCIAL INSTRUMENTS

December 31, 2019

March 31, 2019

For the three months ended March 31, 2019

CMC Interim / Quarterly Report 2020