CMC - Interim / Quarterly Report 2020

China Motor Corporation and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 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 June 30, 2020 and 2019, the related consolidated statements of comprehensive income for the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019, the consolidated statements of changes in equity and cash flows for the six 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 June 30, 2020 and 2019, the combined total assets of these non-significant subsidiaries were NT$8,875,570 thousand and NT$12,489,517 thousand, respectively, representing 18% and 19% of the consolidated total assets, and the combined total liabilities of these non-significant subsidiaries were NT$2,792,156 thousand and NT$4,023,099 thousand, respectively, representing 39% and 37%, respectively, of the consolidated total liabilities; for the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019, the amounts of combined comprehensive income (loss) of these non-significant subsidiaries were NT$42,605 thousand, NT$(704,648) thousand, NT$(91,165) thousand and NT$(766,958) thousand, respectively, representing 4%, 88%, 7% and 154%, respectively, of the consolidated total comprehensive income. As disclosed in Note 16 to the consolidated financial statements, as of June 30, 2020 and 2019, some investments accounted for using the equity method were NT$9,130,065 thousand and NT$11,525,403 thousand, respectively, and for the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019, the comprehensive income (loss)

of these equity-method investments were NT$370,480 thousand, NT$(1,018,815) thousand, NT$74,135 thousand and NT$(531,596) 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 June 30, 2020 and 2019, its consolidated financial performance for the three months ended June 30, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 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 August 10, 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) Dividends payable Other payables (Note 21) Current tax liabilities (Note 4) Lease liabilities (Notes 4 and 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 (Notes 4 and 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 gain on investments in financial assets at fair value through other comprehensive income Gain on the hedging instruments (Note 11) Equity directly associated with non-current assets held for sale (Note 15) Total other equity Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS (Note 14) Total equity TOTAL		June 30, 2020 (Reviewed) Amount % $ 7,676,382 15 794,828 2 58,372 - 371,182 1 556,780 1 1,750,596 4 465,722 1 3,622,170 7 1,184,909 2 - - 669,782 1 17,150,723 34 666,751 1 201,307 - 839,904 2 22,507,417 45 6,524,801 13 394,159 1 1,360,532 3 356,850 1 211,108 - 266,006 - 33,328,835 66 $ 50,479,558 100 $ 340,000 1 149,997 - 1,853,995 4 676,401 1 140,601 - 1,907,701 4 289,896 1 88,810 - 18,750 - 273,819 - 5,739,970 11 81,250 - 413,114 1 311,623 1 613,823 1 34,174 - 1,453,984 3 7,193,954 14 5,536,203 11 6,413,737 13 9,257,157 18 1,028,359 2 18,814,902 37 29,100,418 57 (1,238,611) (2) 158,927 - 226 - - - (1,079,458) (2) 39,970,900 79 3,314,704 7 43,285,604 86 $ 50,479,558 100		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 14,706 - 2,426,690 5 312,774 1 88,697 - 6,250 - 325,978 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		June 30, 2019 (Reviewed)
						Amount % $ 15,298,026 24 579,644 1 68,030 - 733,205 1 991,469 2 2,104,799 3 1,418,728 2 3,500,966 6 1,410,527 2 148,023 - 599,136 1 26,852,553 42 711,829 1 213,687 - 671,390 1 26,984,132 42 6,566,292 10 502,974 1 1,372,594 2 303,727 1 286,115 - 144,981 - 37,757,721 58 $ 64,610,274 100 $ 630,000 1 59,994 - 2,298,755 4 712,121 1 2,479,292 4 2,406,573 4 340,230 - 93,706 - - - 342,453 1 9,363,124 15 - - 351,286 - 411,752 1 727,229 1 17,700 - 1,507,967 2 10,871,091 17 13,840,508 21 6,392,892 10 9,257,157 14 1,046,585 2 19,858,392 31 30,162,134 47 (476,107) (1) 193,014 - 23,867 - (7,538) - (266,764) (1) 50,128,770 77 3,610,413 6 53,739,183 83 $ 64,610,274 100

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

(With Deloitte & Touche review report dated August 10, 2020)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings (Loss) 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 costs Total operating costs GROSS PROFIT REALIZED (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 Expected credit gain (loss) (Notes 10 and 15) Share of profit (loss) of associates and joint ventures (Note 16) Interest income Other income Gain (loss) on disposal of investments (Notes 15 and 16) Net foreign exchange gain (loss) Interest expense Other expense Net loss on financial instruments at fair value through profit or loss Impairment loss (Note 17) Total non-operating income and expenses		For the Three Months EndedJune 30	For the Three Months EndedJune 30	For the Three Months EndedJune 30		For theSix Months	For theSix Months	EndedJune 30
		2020		2019		2020		2019
		Amount % $ 6,778,673 95 337,161 5 7,115,834 100 5,787,909 81 35,650 1 5,823,559 82 1,292,275 18 4,505 - 1,296,780 18 306,021 4 187,240 3 424,328 6 917,589 13 379,191 5 (92,441 ) (1 ) 577,506 8 19,966 - 39,385 - 234,953 3 (30,242 ) - (4,474 ) - (6,210 ) - (15,196 ) - (94,529) (1) 628,718 9		Amount % $ 7,844,904 95 437,311 5 8,282,215 100 6,629,844 80 44,285 1 6,674,129 81 1,608,086 19 (7,078) - 1,601,008 19 389,915 5 278,627 3 406,414 5 1,074,956 13 526,052 6 465 - (1,035,626 ) (13 ) 44,906 1 31,977 - (1,100 ) - (8,217 ) - (4,998 ) - (4,361 ) - (41,428 ) (1 ) (36,637) - (1,055,019) (13)		Amount % $ 14,131,447 96 646,606 4 14,778,053 100 12,058,578 82 66,681 - 12,125,259 82 2,652,794 18 (30,648) - 2,622,146 18 571,687 4 403,798 3 753,123 5 1,728,608 12 893,538 6 (61,622 ) - 719,555 5 43,406 - 57,679 - 224,621 2 (38,538 ) - (9,592 ) - (6,523 ) - (19,213 ) - (94,529) (1) 815,244 6		Amount % $ 16,132,756 95 875,918 5 17,008,674 100 13,699,973 81 78,182 - 13,778,155 81 3,230,519 19 (35,423) - 3,195,096 19 805,167 5 526,798 3 775,027 5 2,106,992 13 1,088,104 6 348 - (667,803 ) (4 ) 84,104 1 42,309 - (1,640 ) - 25,331 - (11,342 ) - (8,318 ) - (30,342 ) - (36,637) - (603,990) (3) (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 26) NET PROFIT (LOSS) 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 (LOSS) FOR THE PERIOD NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests		For the Three Months EndedJune 30	For the Three Months EndedJune 30	For the Three Months EndedJune 30		For theSix Months	For theSix Months	EndedJune 30
		2020		2019		2020		2019
		Amount % $ 1,007,909 14 23,053 - 984,856 14 12,279 - (9,550 ) - 175,740 2 1,055 - (12,682 ) - (201,805) (3) (34,963) (1) $ 949,893 13 $ 913,207 13 71,649 1 $ 984,856 14		Amount % $ (528,967 ) (7 ) 196,384 2 (725,351) (9) (20,169 ) - 40,309 1 39,698 - (4,117 ) - (15,186 ) - (117,841) (2) (77,306) (1) $ (802,657) (10) $ (751,153 ) (9 ) 25,802 - $ (725,351) (9)		Amount % $ 1,708,782 12 110,102 1 1,598,680 11 (5,241 ) - 5,285 - (55,672 ) (1 ) 24 - (13,271 ) - (284,086) (2) (352,961) (3) $ 1,245,719 8 $ 1,522,172 10 76,508 1 $ 1,598,680 11		Amount % $ 484,114 3 386,089 2 98,025 1 (14,178 ) - 40,597 - 184,592 1 (3,923 ) - 7,364 - 185,402 1 399,854 2 $ 497,879 3 $ 9,366 - 88,659 1 $ 98,025 1 (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

For the Three Months EndedJune 30	For the Three Months EndedJune 30	For theSix Months	EndedJune 30
2020	2019	2020	2019
Amount % $ 909,478 13 40,415 - $ 949,893 13 $ 1.67 $ 1.67	Amount % $ (795,442 ) (10 ) (7,215) - $ (802,657) (10) $(0.55) $(0.55)	Amount % $ 1,227,996 8 17,723 - $ 1,245,719 8 $ 2.79 $ 2.79	Amount % $ 388,883 2 108,996 1 $ 497,879 3 $ 0.01 $ 0.01

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

(With Deloitte & Touche review report dated August 10, 2020)

(Concluded)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

		Equity Attributable to Owners of the	Corporation
Ordinary Sh	ares Amount Capital Surplus $ 13,840,508 $ 6,403,633 - - 13,840,508 6,403,633 - - - - - - - (10,741 ) - - - - - - - - - - - - - - $ 13,840,508 $ 6,392,892 $ 5,536,203 $ 6,414,118 - - - (381 ) - - - - - - - - - - - - $ 5,536,203 $ 6,413,737	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 22,467,449 359,300 - (359,300 ) - - (2,352,886 ) - (382 ) 382 - - (2,763 ) - - - - - 9,366 - - 11,010 - - 20,376 - - 85,117 - - 17 - - - $ 9,257,157 $ 1,046,585 $ 19,858,392 $ 9,257,157 $ 1,029,654 $ 17,306,526 - (1,295 ) 1,295 - - (7,532 ) - - - - - 1,522,172 - - 368 - - 1,522,540 - - (7,927 ) - - - $ 9,257,157 $ 1,028,359 $ 18,814,902	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 ) - - - - - - - - - - - - - - - - - - - - - - - - 170,171 160,971 37,365 - 170,171 160,971 37,365 - - (85,117 ) - - - (17 ) - - - - (34,495) - $ (476,107) $ 193,014 $ 23,867 $ (7,538) $ (990,653 ) $ 216,562 $ (19,968 ) $ (7,538 ) - - - - - - - - - - - - - - - - (247,958) (65,562) 11,438 7,538 (247,958) (65,562) 11,438 7,538 - 7,927 - - - - 8,756 - $ (1,238,611) $ 158,927 $ 226 $ -
			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 - - - - - - - - - - - - 170,171 160,971 170,171 160,971 - (85,117 ) - (17 ) - - $ (476,107) $ 193,014 $ (990,653 ) $ 216,562 - - - - - - - - (247,958) (65,562) (247,958) (65,562) - 7,927 - - $ (1,238,611) $ 158,927
Number of 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 August 10, 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 loss on fair value change of financial instruments at fair value through loss Interest expenses Interest income Dividend income Share of loss (profit) of associates and joint ventures Loss on disposal of property, plant and equipment (Gain) loss on disposal of investments Impairment loss of non-financial assets Unrealized gain on transactions with associates Net unrealized gain on foreign currency exchange Gain on lease modifications Changes in operating assets and liabilities Financial instruments at fair value through profit or loss Notes and accounts receivable Trade receivables from related parties Other receivables Inventories Prepayments Other current assets Notes and accounts payable Trade payables to related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 1,708,782 408,532 64,601 56,025 19,213 9,592 (43,406) (405) (719,555) 2,229 (224,621) 53,626 30,648 (11,399) (1,826) (452,203) 639,232 (293,639) 222,134 1,045,800 375,344 172,746 (847,903) (308,363) (514,034) 52,177 (121,577) 1,321,750 (175,215) 1,146,535	2019 $ 484,114 556,380 55,613 (5,157) 30,342 11,342 (84,104) - 667,803 1,566 1,640 36,637 35,423 (26,156) (56) (2,674) 191,156 (154,335) (31,992) 571,198 (205,181) (542) (406,588) (235,157) (313,790) 41,491 (183,099) 1,035,874 (56,426) 979,448 (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income Proceeds from refund of shares of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost Proceeds from repayment of principal of financial assets at amortized cost 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 (increase) 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 Decrease in short-term bills payable Proceeds from long-term borrowings Repayment of the principal portion of lease liabilities Increase (decrease) in other non-current liabilities Interest paid Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ - 404 (1,111,258) 1,045,065 - (485,482) 20,034 (7,595) (257,425) 41,700 1,091,131 336,574 (275,000) (33,942) 50,000 (47,034) 12,034 (9,664) (303,606) (12,429) 1,167,074 6,880,490 $ 8,047,564	2019 $ 17 - (316,167) 528,905 227,159 (726,907) 17,768 (24,274) 4,820 92,713 195,370 (596) (15,000) (33,978) - (49,369) (13,547) (11,267) (123,161) 2,777 858,468 15,172,763 $ 16,031,231 (Continued)

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at June 30, 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		June 30	June 30
		2020 $ 7,676,382 371,182 $ 8,047,564	2019 $ 15,298,026 733,205 $ 16,031,231

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

(With Deloitte & Touche review report dated August 10, 2020) (Concluded)

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CHINA MOTOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 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 August 6, 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 any material impact on the Group’s accounting policies
b. New IFRSs issued by the IASB but not yet endorsed and issued into effect by the FSC

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 16 “Property, Plant and Equipment-Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by the IASB (Note 1)
	January 1, 2022 (Note 2) January 1, 2022 (Note 3) Effective immediately upon promulgation by the IASB To be determined by the IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 (Note 4) January 1, 2022 (Note 5)

New IFRSs
“Annual Improvements to IFRS Standards 2018-2020”

Amendments to IFRS 3 “Reference to the Conceptual Framework”

Amendments to IFRS 4 “Extension of the Temporary Exemption from
Applying IFRS 9”

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”

IFRS 17 “Insurance Contracts”

Amendments to IFRS 17

Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”

Amendments to IAS 16 “Property, Plant and Equipment-Proceeds
before Intended Use”

Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a
Contract”

Effective Date
Announced by the IASB
(Note 1)

January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
Effective immediately upon
promulgation by the IASB
To be determined by the IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
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Note 2: The amendments to IFRS 9 are applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” are applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” are applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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.

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 those required in a complete set of annual financial statements.

b. Basis of preparation

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

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
12 -
c. Basis of consolidation
1) Principles for preparing the consolidated financial statements

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

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

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

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

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

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

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

2) Subsidiaries included in the consolidated financial statements

Investor
Investee
Main Business
China-Motor Corporation
(parent)
Kian Shen Corporation (“Kian Shen”)
Production of frame of heavy duty
car and mold
Hwa Wei Holdings Corporation Ltd.
(“Hwa Wei”)
Overseas investment 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

Combined Shareholding Ratio (%)
June 30,
2020
December 31,
2019
June 30,
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
e)
52.10
52.10
52.10
(Continued)

13 -

Investor
Investee
Main Business
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(%)
June 30,
2020
December 31,
2019
June 30,
2019
Note
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
c)
(Concluded)

a) The Group held 43.87% equity interest in Kian Shen. Kian Shen is a listed company and 56.13% of its shares were held by numerous shareholders unrelated to the Group. 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.
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) In November 2018, Sichuan Huafeng Hanwei, Sichuan Lingwei, Guangzhou Huayou Motor Maintenance and Guangzhou Huayou Motor Sales resolved to dissolve their companies. As of June 30, 2020, except for the annulment of Guangzhou Huayou Motor Sales, Sichuan Huafeng Hanwei and Sichuan Lingwei which had been completed in June 2020, February 2020 and July 2019, respectively, Guangzhou Huayou Motor Maintenance has 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.
e) The Group’s board of directors approved to fully disposed of its interest held in its subsidiary, Advance Power Machinery, to Yulon on July 16, 2020. The disposal was completed on July 17, 2020, on which date the control of Advance Power Machinery was passed to the acquirer.

For the relationships between the Corporation and its controlled entities as of June 30, 2020, refer to Table 11.

14 -

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.

3) Leases

The Group negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 to change the lease payments originally due by June 30, 2021, that results in the revised consideration for the lease less than the consideration for the lease immediately preceding the change. There is no substantive change to other terms and conditions. The Group elects to apply the practical expedient to all of these rent concessions, and therefore, does not assess whether the rent concessions are lease modifications. Instead, the Group recognizes the reduction in lease payments in profit or loss (included in reduction of variable lease payments) in the period in which the events or conditions that trigger the concession occurs, and makes a corresponding adjustment to the lease liability.

4) Government grants

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

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.

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

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.

15 -

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.

6. CASH AND CASH EQUIVALENTS

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 instruments (not under hedge accounting) Foreign exchange forward contracts	June 30, 2020 December 31, 2019 $ 2,868 $ 2,093 2,560,217 1,979,620 2,563,085 1,981,713 5,058,326 3,760,875 54,971 - 5,113,297 3,760,875 $ 7,676,382 $ 5,742,588 THROUGH PROFIT OR LOSS June 30, 2020 December 31, 2019 $ 794,333 $ 339,427 495 304 $ 794,828 $ 339,731 $ 666,751 $ 686,413 $ 4,928 $ 2,483	June 30, 2019 $ 3,606 2,225,287 2,228,893 10,343,999 2,725,134 13,069,133 $ 15,298,026 June 30, 2019 $ 579,644 - $ 579,644 $ 711,829 $ 17,237

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

16 -

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

June 30, 2020

			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2020.07.06-2020.08.14	USD9,500/$282,247
	JPY/NTD	2020.08.27-2020.09.25	JPY300,000/$82,570
Sale	RMB/USD	2020.07.06-2020.07.17	RMB17,804/USD2,500
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
Sale	RMB/USD	2020.01.13	RMB14,022/USD2,000
June 30, 2019
			Notional Amount
Transaction	Currency	Maturity Date	(In Thousands)
Buy	USD/NTD	2019.07.05-2019.08.23	USD10,000/$313,977
Buy	RMB/EUR	2019.07.02	RMB89,745/EUR11,842

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	June 30, 2020 December 31, 2019 $ 31,512 $ 29,083 24,686 25,395 56,198 54,478 145,109 152,864 $ 201,307 $ 207,342	June 30, 2019 $ 24,391 24,047 48,438 165,249 $ 213,687

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.

17 -

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Principal guaranteed notes Segregated foreign exchange deposit account for offshore funds Less: Allowance for impairment loss Non-current Segregated foreign exchange deposit account for offshore funds Bonds Preference shares Less: Allowance for impairment loss	June 30, 2020 December 31, 2019 $ 50,292 $ 8,610 8,296 - 58,588 8,610 (216) (54) $ 58,372 $ 8,556 $ 514,807 $ - 317,640 801,389 9,900 9,900 842,347 811,289 (2,443) (34,816) $ 839,904 $ 776,473	June 30, 2019 $ 68,456 - 68,456 (426) $ 68,030 $ - 666,582 9,900 676,482 (5,092) $ 671,390

a. The coupon rates of principal guaranteed notes ranged from 1.90%-2.30%, 3.00% and 2.98%-3.03% per annum as of June 30, 2020, December 31, 2019 and June 30, 2019, respectively.
b. The National Taxation Bureau, Ministry of Finance had approved the repatriation of funds in accordance with “the Management, Utilization, and Taxation of Repatriated Offshore Funds Act” in February and June 2020. The funds after tax were deposited into the segregated foreign exchange deposit account. The deposit was restricted under the Act, except that part of the funds could be withdrawn and freely utilized or engaged in financial investments or substantive investments. The funds could be withdrawn over a period of three years, five years after the date of depositing them into the segregated foreign exchange deposit account. The rates of offshore funds ranged from 0.30% to 1.50% per annum as of June 30, 2020.
c. The coupon rates of bonds ranged from 0.86%-4.20%, 0.86%-4.34% and 0.86%-4.34% as of June 30, 2020, December 31, 2019 and June 30, 2019, respectively.
d. The coupon rate of preference shares was 1.50% as of June 30, 2020, December 31, 2019 and June 30, 2019.
e. Refer to Note 10 for information relating to the credit risk management and impairment.
18 -

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS

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

Gross carrying amount Less: Allowance for impairment loss Amortized cost	June 30, 2020 December 31, 2019 $ 900,935 $ 819,899 (2,659) (34,870) $ 898,276 $ 785,029	June 30, 2019 $ 744,938 (5,518) $ 739,420

The Group invests only 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.

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

June 30, 2020

Credit Rating Expected Credit Loss Rate Performing 0.0000%-0.4300% No rating 20.6080% December 31, 2019 Credit Rating Expected Credit Loss Rate Performing 0.0769%-0.6221% No rating 20.6080%	Gross Carrying Amount
	At Amortized Cost $ 891,035 9,900 Gross Carrying Amount
	At Amortized Cost $ 659,999 159,900

19 -

June 30, 2019

Credit Rating Expected Credit Loss Rate Performing 0.0769%-0.6221% No rating 32.4908%	Gross Carrying Amount
	At Amortized Cost $ 735,038 9,900

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

Balance at January 1, 2020 Financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance at June 30, 2020 Balance at January 1, 2019 Financial assets purchased (a) Derecognition (b) Change in exchange rates or others Balance at June 30, 2019	Credit Rating
	Performing (12-month ECLs) No rating (Lifetime ECLs - Not Credit- impaired) $ 1,918 $ 32,952 2,529 - (3,725) (30,912) (103) - $ 619 $ 2,040 $ 2,650 $ 3,216 1,967 - (2,334) - 19 - $ 2,302 $ 3,216

a. During the six months ended June 30, 2020 and 2019, the Group purchased principal guaranteed notes of $588,155 thousand and $316,167 thousand, respectively, and correspondingly increased the loss allowance for investments rated as performing of $2,529 thousand and $1,967 thousand, respectively.
b. Investments in principal guaranteed notes of $546,395 thousand and bonds of $498,670 thousand expired and were redeemed during the six months ended June 30, 2020, with consequential reductions in the loss allowance for investments rated as performing of $3,725 thousand and lifetime ECLs of $30,912 thousand; and investments in principal guaranteed notes of $353,446 thousand and bonds of $175,459 thousand expired and were redeemed during the six months ended June 30, 2019, with a consequential reduction in the loss allowance for investments rated as performing of $2,334 thousand.
20 -

11. FINANCIAL INSTRUMENTS FOR HEDGING

Financial assets Cash flow hedges - spot rate Cash flow hedges - foreign exchange forward contracts Financial liabilities (included in other current liabilities) Cash flow hedges - foreign exchange forward contracts	June 30, 2020 December 31, 2019 $ 371,182 $ 1,137,902 - 440 $ 371,182 $ 1,138,342 $ 4,105 $ 6,884	June 30, 2019 $ 733,205 - $ 733,205 $ -

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 six months ended June 30, 2020 and 2019, are detailed in Note 23(e).

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

June 30, 2020

Notional Amount Forward Rate Hedging Instrument Currency (In Thousands) Maturity (JPY1:NTD) Line Item Cash flow hedges Forecast purchases - spot rate JPY/NTD JPY1,349,263/$375,243 2020.08.17- 2020.12.15 0.2729-0.2800 Financial assets for hedging Forecast purchases - foreign exchange forward contracts JPY/NTD JPY740,000/$205,244 2020.07.16- 2020.11.16 0.2752-0.2799 Other current liabilities		Carrying A	mount Liabilities I $ - (4,105) $ (4,105)	Change in Value Used for Calculating Hedge neffectiveness $ (1,857 ) (3,284) $ (5,141)
		Assets $ 371,182 - $ 371,182

21 -

		Accumulated
		Gains or Losses
	Change in	on Hedging
	Value Used for	Instruments in
	Calculating	Other Equity
	Hedge	Continuing
Hedged Item	Ineffectiveness	Hedges
Cash flow hedges
Forecast purchases	$ 5,141	$ (5,141)
December 31, 2019

Notional Amount Forward Rate Hedging Instrument Currency (In Thousands) Maturity (Note) Line Item Cash flow hedges Forecast purchases - spot rate JPY/NTD JPY4,122,832/$1,155,466 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/$464,661 2020.01.15- 2020.11.16 0.2752-0.2815 Other current liabilities Forecast purchases - foreign exchange forward contracts USD/NTD USD4,000/$120,415 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 $ - (6,333 ) (551 ) - $ (6,884)	Change in Value Used for Calculating Hedge Ineffectiveness $ (14,051 ) (5,066 ) (441 ) 352 $ (19,206)
		Assets $ 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 Item	Ineffectiveness	Hedges
Cash flow hedges
Forecast purchases	$ 19,206	$ (19,206)
June 30, 2019

Notional Amount Forward Rate Line Item Hedging Instrument Currency (In Thousands) Maturity (JPY1:NTD) Cash flow hedges Forecast purchases - spot rate JPY/NTD JPY2,540,559/ NTD703,088 2019.7.11- 2020.1.14 0.2754-0.2780 Financial assets for hedging		Carrying Amount V Assets In $ 733,205	Change in alue Used for Calculating Hedge effectiveness $ 23,176

22 -

Hedged Item Cash flow hedges Forecast purchases Comprehensive Income Cash flow hedges Forecast purchases	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (23,176) $ 23,176 Hedging Gains (Losses) Recognized in OCI	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (23,176) $ 23,176 Hedging Gains (Losses) Recognized in OCI	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (23,176) $ 23,176 Hedging Gains (Losses) Recognized in OCI	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (23,176) $ 23,176 Hedging Gains (Losses) Recognized in OCI	Change in Value Used for Calculating Accumulated Gains or Losses on Hedging Instruments in Other Equity Hedge Ineffectiveness Continuing Hedges $ (23,176) $ 23,176 Hedging Gains (Losses) Recognized in OCI
	For the Three Months Ended June 30 2020 2019 $ (9,550) $ 40,309			For the Six Months Ended June 30
		2020 $ (9,550)		2020 $ 5,285	2019 $ 40,597

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	June 30, 2020 December 31, 2019 $ 567,390 $ 1,206,811 (10,610) (16,348) $ 556,780 $ 1,190,463	June 30, 2019 $ 1,006,453 (14,984) $ 991,469

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.

23 -

The aging of receivables was as follows:

Not past due Up to 60 days 61-90 days Over 90 days Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	June 30, 2020 December 31, 2019 $ 520,562 $1,154,739 3,389 23,190 219 1,233 43,220 27,649 567,390 1,206,811 (10,610) (16,348) $ 556,780 $1,190,463	June 30, 2019 $ 944,257 24,396 519 37,281 1,006,453 (14,984) $ 991,469

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

Balance at January 1 Less: Net reversal of loss allowance Foreign exchange gains and losses Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 16,348 (5,597) (141) $ 10,610	2019 $ 19,771 (4,809) 22 $ 14,984

13. INVENTORIES

Merchandise Finished goods Work in progress Raw materials Materials in transit	June 30, 2020 December 31, 2019 $ 193,251 $ 121,436 384,772 1,975,823 463,043 317,658 2,333,749 2,038,601 247,355 164,143 $ 3,622,170 $ 4,617,661	June 30, 2019 $ 310,820 747,360 499,650 1,648,071 295,065
		$ 3,500,966

The costs of inventories recognized as cost of goods sold for the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019 were $5,787,909 thousand, $6,629,844 thousand, $12,058,578 thousand and $13,699,973 thousand, respectively.

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

The Group had a 43.87% interest in Kian Shen as of June 30, 2020, December 31, 2019 and June 30, 2019. The remaining 56.13% interest in Kian Shen is dispersed and held by shareholders unrelated to the Group.

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

24 -

The summarized financial information below represents amounts before intragroup eliminations.

Kian Shen and Kian Shen’s subsidiaries

June 30, 2020 December 31, 2019 June 30, 2019 Current assets $ 935,733 $ 1,041,592 $ 1,192,814 Non-current assets 4,023,382 3,998,786 3,958,056 Current liabilities (626,219) (592,399) (749,131) Non-current liabilities (368,472) (339,243) (263,948) Equity $ 3,964,424 $ 4,108,736 $ 4,137,791 Equity attributable to: Owners of Kian Shen $ 1,739,193 $ 1,802,502 $ 1,815,249 Non-controlling interests of Kian Shen 2,225,231 2,306,234 2,322,542 $ 3,964,424 $ 4,108,736 $ 4,137,791 For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 Revenue $ 251,134 $ 331,612 $ 458,805 $ 683,939 Profit for the period $ 92,070 $ 15,589 $ 107,218 $ 120,540 Other comprehensive income (loss) for the period (55,646) (58,821) (104,730) 36,233 Total comprehensive income (loss) for the period $ 36,424 $ (43,232) $ 2,488 $ 156,773 Profit attributable to: Owners of Kian Shen $ 40,392 $ 6,839 $ 47,037 $ 52,881 Non-controlling interests of Kian Shen 51,678 8,750 60,181 67,659 $ 92,070 $ 15,589 $ 107,218 $ 120,540 Total comprehensive income (loss) attributable to: Owners of Kian Shen $ 15,979 $ (18,966) $ 1,091 $ 68,776 Non-controlling interests of Kian Shen 20,445 (24,266) 1,397 87,997 $ 36,424 $ (43,232) $ 2,488 $ 156,773	June 30, 2020 December 31, 2019 June 30, 2019 Current assets $ 935,733 $ 1,041,592 $ 1,192,814 Non-current assets 4,023,382 3,998,786 3,958,056 Current liabilities (626,219) (592,399) (749,131) Non-current liabilities (368,472) (339,243) (263,948) Equity $ 3,964,424 $ 4,108,736 $ 4,137,791 Equity attributable to: Owners of Kian Shen $ 1,739,193 $ 1,802,502 $ 1,815,249 Non-controlling interests of Kian Shen 2,225,231 2,306,234 2,322,542 $ 3,964,424 $ 4,108,736 $ 4,137,791 For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 Revenue $ 251,134 $ 331,612 $ 458,805 $ 683,939 Profit for the period $ 92,070 $ 15,589 $ 107,218 $ 120,540 Other comprehensive income (loss) for the period (55,646) (58,821) (104,730) 36,233 Total comprehensive income (loss) for the period $ 36,424 $ (43,232) $ 2,488 $ 156,773 Profit attributable to: Owners of Kian Shen $ 40,392 $ 6,839 $ 47,037 $ 52,881 Non-controlling interests of Kian Shen 51,678 8,750 60,181 67,659 $ 92,070 $ 15,589 $ 107,218 $ 120,540 Total comprehensive income (loss) attributable to: Owners of Kian Shen $ 15,979 $ (18,966) $ 1,091 $ 68,776 Non-controlling interests of Kian Shen 20,445 (24,266) 1,397 87,997 $ 36,424 $ (43,232) $ 2,488 $ 156,773	June 30, 2020 December 31, 2019 June 30, 2019 Current assets $ 935,733 $ 1,041,592 $ 1,192,814 Non-current assets 4,023,382 3,998,786 3,958,056 Current liabilities (626,219) (592,399) (749,131) Non-current liabilities (368,472) (339,243) (263,948) Equity $ 3,964,424 $ 4,108,736 $ 4,137,791 Equity attributable to: Owners of Kian Shen $ 1,739,193 $ 1,802,502 $ 1,815,249 Non-controlling interests of Kian Shen 2,225,231 2,306,234 2,322,542 $ 3,964,424 $ 4,108,736 $ 4,137,791 For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 Revenue $ 251,134 $ 331,612 $ 458,805 $ 683,939 Profit for the period $ 92,070 $ 15,589 $ 107,218 $ 120,540 Other comprehensive income (loss) for the period (55,646) (58,821) (104,730) 36,233 Total comprehensive income (loss) for the period $ 36,424 $ (43,232) $ 2,488 $ 156,773 Profit attributable to: Owners of Kian Shen $ 40,392 $ 6,839 $ 47,037 $ 52,881 Non-controlling interests of Kian Shen 51,678 8,750 60,181 67,659 $ 92,070 $ 15,589 $ 107,218 $ 120,540 Total comprehensive income (loss) attributable to: Owners of Kian Shen $ 15,979 $ (18,966) $ 1,091 $ 68,776 Non-controlling interests of Kian Shen 20,445 (24,266) 1,397 87,997 $ 36,424 $ (43,232) $ 2,488 $ 156,773
$
$
$

	2020 $ 458,805 $ 107,218 (104,730) $ 2,488 $ 47,037 60,181 $ 107,218 $ 1,091 1,397 $ 2,488	2019 $ 683,939 $ 120,540 36,233 $ 156,773 $ 52,881 67,659 $ 120,540 $ 68,776 87,997 $ 156,773

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Net cash inflow (outflow) from: Operating activities Investing activities Financing activities Foreign exchange adjustments Net cash inflow (outflow)		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ (138,186) 244,704 19,331 302 $ 126,151	2019 $ (118,930) 59,014 (34,236) 11 $ (94,141)

As of June 30, 2020 and 2019, Kian Shen had declared dividends amounting to $146,800 thousand and $132,120 thousand, respectively. As of the issuance date of the Group’s consolidated financial statements, the Corporation and non-controlling interests of Kian Shen have not received the dividends.

15. NON-CURRENT ASSETS HELD FOR SALE

Investments accounted for using the equity method classified as held for sale Equity directly associated with non-current assets classified as held for sale	June 30, 2020 December 31, 2019 $ - $ 148,023 $ - $ (7,538)	June 30, 2019 $ 148,023 $ (7,538)

In August 2018, the Group entered into a contract for the transfer of shares of Zhejiang Kanda with a non-related party and collected the contract price in installments (discounted price after tax was $390,514 (RMB91,105 thousand)). The disposal was completed in May 2020, on which date the Group recognized a gain on disposal of investments amounting to $234,953 thousand, and recognized expected credit losses of $93,833 thousand, considering the debtor’s current financial position and the value of assets pledged as collateral.

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	June 30, 2020 $ 15,290,896 7,216,521 $ 22,507,417 June 30, 2020 $ 7,134,450 8,156,446 $ 15,290,896	December 31, 2019 $ 15,586,288 7,762,637 $ 23,348,925 December 31, 2019 $ 7,110,438 8,475,850 $ 15,586,288	June 30, 2019 $ 19,397,005 7,587,127 $ 26,984,132 June 30, 2019 $ 11,266,929 8,130,076 $ 19,397,005

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1) Material associates

The Group’s proportion of shareholding and voting rights in Yulon was 16.80% on June 30, 2020, December 31, 2019 and June 30, 2019.

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

Refer to Table 7 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 quotations are summarized as follows:

Name of Associate Yulon	June 30, 2020 December 31, 2019 $ 5,651,017 $ 5,126,561	June 30, 2019 $ 5,978,802

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

Yulon and Yulon’s 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 shareholdings Unrealized gain on sidestream transactions Carrying amount	June 30, 2020 $ 222,920,040 79,817,191 (220,199,111) (25,530,950) 57,007,170 - (10,877,618) $ 46,129,552 16.80% $ 7,749,765 (615,315) - $ 7,134,450	December 31, 2019 $ 231,944,241 81,947,302 (230,603,249) (26,207,143) 57,081,151 - (11,244,743) $ 45,836,408 16.80% $ 7,700,516 (590,078) - $ 7,110,438	June 30, 2019 (Restated) $ 242,877,131 91,798,999 (221,089,612) (32,843,448) 80,743,070 (101,120) (10,213,909) $ 70,428,041 16.80% $ 11,831,911 (568,267) 3,285 $ 11,266,929

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Operating revenue Net profit (loss) for the period Other comprehensive income (loss) Total comprehensive income (loss) for the period		For the Three Months Ended June 30 2020 2019 (Restated) $ 19,813,005 $ 20,895,545 $ 1,103,034 $ (2,808,253) (227,088) (76,237) $ 875,946 $ (2,884,490)		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 19,813,005 $ 1,103,034 (227,088) $ 875,946		2020 $ 37,374,411 $ 1,650,285 (500,155) $ 1,150,130	2019 (Restated) $ 41,008,875 $ (2,088,413) 801,109 $ (1,287,304)

As of June 30, 2019, Yulon had declared dividends amounting to $1,053,857 thousand which remain unpaid as of the issuance date of the consolidated financial statements for the six months ended June 30, 2019.

2) Aggregate information of associates that are not individually material

The Group’s share of: Net profit (loss) for the period Other comprehensive income (loss) Total comprehensive income (loss) for the period	For the Three Months Ended June 30 2020 2019 $ 199,241 $ (953,799) 107,009 53,785 $ 306,250 $ (900,014)	For the Three Months Ended June 30 2020 2019 $ 199,241 $ (953,799) 107,009 53,785 $ 306,250 $ (900,014)		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 199,241 107,009 $ 306,250		2020 $ 347,853 (82,798) $ 265,055	2019 $ (755,437) 140,273 $ (615,164)

All the associates are accounted for using the equity method.

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).

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

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

Except for Yulon and Fortune Motors, 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 associates’ financial statements that have not been reviewed.

b. Investments in joint ventures

Joint ventures that are not individually material	June 30, 2020 December 31, 2019 $ 7,216,521 $ 7,762,637	June 30, 2019 $ 7,587,127

Aggregate information of joint ventures that are not individually material:

The Group’s share of: Net profit of the period Other comprehensive income (loss) Total comprehensive income for the period	For the Three Months Ended June 30 2020 2019 $ 294,834 $ 106,539 (118,531) (104,296) $ 176,303 $ 2,243	For the Three Months Ended June 30 2020 2019 $ 294,834 $ 106,539 (118,531) (104,296) $ 176,303 $ 2,243		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 294,834 (118,531) $ 176,303		2020 $ 264,718 (189,439) $ 75,279	2019 $ 244,176 94,870 $ 339,046

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 associates’ financial statements that have not been reviewed for the six months ended June 30, 2020.

17. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Group Land Land improvements Buildings Machinery Other equipment Construction in progress	June 30, 2020 December 31, 2019 $ 1,974,774 $ 1,974,774 12,495 13,446 832,004 861,847 2,642,871 2,263,515 377,269 408,332 685,388 897,340 $ 6,524,801 $ 6,419,254	June 30, 2019 $ 2,127,397 13,873 981,868 1,957,707 407,685 1,077,762 $ 6,566,292

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Except for the depreciation recognized and the cost of acquisition of property, plant and equipment for increasing productivity, which totaled $485,482 thousand and $726,907 thousand during the six months ended June 30, 2020 and 2019, respectively, the Group had no other significant disposal of property, plant and equipment.

As a result of the declining sales in the market for several types of vehicles, the estimated future cash flows expected to arise from the related equipment decreased. Thus, the Group recognized impairment losses of both $36,637 thousand for the three months ended June 30, 2019 and for the six months ended June 30, 2019. The Group determined the recoverable amount of the relevant assets on the basis of their value in use. The discount rate used for measuring the value in use for the six months ended June 30, 2019 was 4.44%.

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

Category Land improvements Buildings Machinery Other equipment	Useful Life 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

June 30, 2020 December 31, 2019 June 30, 2019 $ 67,922 $ 82,312 $ 97,236 317,652 352,877 395,923 8,585 7,732 9,815 $ 394,159 $ 442,921 $ 502,974 For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 $ 23,222 $ 17,311 $ 6,928 $ 7,462 $ 14,390 $ 14,930 15,734 16,646 31,786 33,723 1,728 1,686 3,441 3,267 $ 24,390 $ 25,794 $ 49,617 $ 51,920	June 30, 2020 December 31, 2019 June 30, 2019 $ 67,922 $ 82,312 $ 97,236 317,652 352,877 395,923 8,585 7,732 9,815 $ 394,159 $ 442,921 $ 502,974 For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 $ 23,222 $ 17,311 $ 6,928 $ 7,462 $ 14,390 $ 14,930 15,734 16,646 31,786 33,723 1,728 1,686 3,441 3,267 $ 24,390 $ 25,794 $ 49,617 $ 51,920	June 30, 2020 December 31, 2019 June 30, 2019 $ 67,922 $ 82,312 $ 97,236 317,652 352,877 395,923 8,585 7,732 9,815 $ 394,159 $ 442,921 $ 502,974 For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 $ 23,222 $ 17,311 $ 6,928 $ 7,462 $ 14,390 $ 14,930 15,734 16,646 31,786 33,723 1,728 1,686 3,441 3,267 $ 24,390 $ 25,794 $ 49,617 $ 51,920	June 30, 2020 December 31, 2019 June 30, 2019 $ 67,922 $ 82,312 $ 97,236 317,652 352,877 395,923 8,585 7,732 9,815 $ 394,159 $ 442,921 $ 502,974 For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 $ 23,222 $ 17,311 $ 6,928 $ 7,462 $ 14,390 $ 14,930 15,734 16,646 31,786 33,723 1,728 1,686 3,441 3,267 $ 24,390 $ 25,794 $ 49,617 $ 51,920
	$

2020 $ 6,928 15,734 1,728 $ 24,390		2020 $ 23,222 $ 14,390 31,786 3,441 $ 49,617	2019 $ 17,311 $ 14,930 33,723 3,267 $ 51,920

Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the six months ended June 30, 2020 and 2019.

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b. Lease liabilities

	June 30,	December 31,	June 30,
	2020	2019	2019
Carrying amounts
Current	$ 88,810	$ 88,697	$ 93,706
Non-current	$ 311,623	$ 359,836	$ 411,752
Range of discount rate for lease liabilities was as follows:
	June 30,	December 31,	June 30,
	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	0.95%-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 INVESTMENT PROPERTIES Investment properties	For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 $ 5,342 $ 6,016 $ 8,979 $ 12,042 $ 386 $ 825 $ 636 $ 1,410 $ 61,894 $ 69,430 June 30, 2020 December 31, 2019 June 30, 2019 $ 1,360,532 $ 1,366,049 $ 1,372,594	For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 $ 5,342 $ 6,016 $ 8,979 $ 12,042 $ 386 $ 825 $ 636 $ 1,410 $ 61,894 $ 69,430 June 30, 2020 December 31, 2019 June 30, 2019 $ 1,360,532 $ 1,366,049 $ 1,372,594		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 5,342 $ 386			$	2019 $ 12,042 $ 1,410 $ 69,430 June 30, 2019 1,372,594

19. INVESTMENT PROPERTIES

Except for the depreciation recognized, the Group did not have any significant addition, disposal, or impairment of investment properties for the six months ended June 30, 2020 and 2019.

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

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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 June 30, 2020 and 2019, as compared to that as of December 31, 2019 and 2018, respectively.

The Group held 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	June 30, 2020 December 31, 2019 $ 240,000 $ 615,000 100,000 - $ 340,000 $ 615,000	June 30, 2019 $ 340,000 290,000 $ 630,000

1) The ranges of interest rates on credit borrowings were 0.95%-0.98%, 0.95%-1.00% and 0.95%-0.98% per annum as of June 30, 2020, December 31, 2019 and June 30, 2019, respectively.
2) The interest rates on bank loans were 1.10% and 1.18% per annum as of June 30, 2020 and 2019, respectively.
b. Long-term borrowings

Unsecured borrowings Line of credit borrowings Less: Current portions Long-term borrowings	June 30, 2020 December 31, 2019 $ 100,000 $ 50,000 (18,750) (6,250) $ 81,250 $ 43,750	June 30, 2019 $ - - $ -

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 June 30, 2020 and December 31, 2019, the annual interest rates were 0.725% and 0.975%, respectively.

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21. OTHER PAYABLES

Payables for salaries or bonuses Payables for taxes Payables for warranties Payables for advertisement Provisions for employee benefits Others	June 30, 2020 December 31, 2019 $ 560,308 $ 988,243 308,616 222,322 195,797 208,694 162,768 126,738 89,509 137,121 590,703 743,572 $ 1,907,701 $ 2,426,690	June 30, 2019 $ 639,331 292,231 247,604 350,634 98,675 778,098 $ 2,406,573

22. RETIREMENT BENEFIT PLANS

For the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019, the pension expenses of defined benefit plans were $9,599 thousand, $14,256 thousand, $19,187 thousand and $28,683 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	June 30, 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	June 30, 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.

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.

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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	June 30, 2020 December 31, 2019 $ 5,183,923 $ 5,183,923 1,184,920 1,184,920 4,666 4,666 2,225 2,225 38,003 38,384 $ 6,413,737 $ 6,414,118	June 30, 2019 $ 5,183,923 1,184,920 4,666 2,225 17,158 $ 6,392,892

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

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.

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

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.

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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.

Due to the net loss incurred in 2019, the Corporation’s resolution to not distribute dividends was approved in the shareholders’ meeting.

The appropriation of earnings for 2018 had been approved in the shareholders’ meeting 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

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

d. Special reserve

Balance at January 1 Reversals Disposal of subsidiaries and associates Disposal of property, plant and equipment Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 1,029,654 (1,185) (110) $ 1,028,359	2019 $ 1,046,967 (377) (5) $ 1,046,585

e. Other equity items
1) Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Recognized during the period Share from associates and join ventures accounted for using the equity method Exchange differences on translating the financial statements of foreign operations		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ (990,653) (238,899) (19,391)	2019 $ (646,278) 159,802 8,596 (Continued)

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Reclassification adjustments Disposal of foreign operations Disposal of associates accounted for using the equity method Other comprehensive income (loss) recognized for the period Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 10,332 - (247,958) $ (1,238,611)	2019 $ - 1,773 170,171 $ (476,107) (Concluded)

2) Unrealized valuation gain on financial assets at FVTOCI

Balance at January 1 Recognized for the period Unrealized loss - equity instruments Share from associates accounted for using the equity method Other comprehensive gain (loss) recognized for the period Cumulative unrealized loss (gain) of equity instruments transferred to retained earnings due to disposal by associates Cumulative unrealized loss of equity instruments transferred to retained earnings due to disposal Balance at June 30 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 gain 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 June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 2019 $ 216,562 $ 117,177 (3,393) (11,920) (62,169) 172,891 (65,562) 160,971 7,927 (85,117) - (17) $ 158,927 $ 193,014 For the Six Months Ended June 30
		2020 $ (19,968) 3,438 1,871 6,129 11,438 8,756 $ 226	2019 $ 20,997 36,674 - 691 37,365 (34,495) $ 23,867

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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 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 Cash dividends distributed by subsidiaries Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 3,422,878 76,508 (1,848) (4,212) (52,725) (58,785) (125,897) $ 3,314,704	2019 $ 3,613,814 88,659 (2,258) (1,232) 23,827 20,337 (112,397) $ 3,610,413

24. REVENUE

Revenue from contracts with customers Revenue from the sale of goods Revenue from the sale of vehicles Revenue from the sale of components Service revenue Rental income Other revenue		For the Three Months Ended June 30 2020 2019 $ 5,500,347 $ 6,227,957 1,278,326 1,616,947 6,778,673 7,844,904 301,632 402,335 21,417 15,241 14,112 19,735 $ 7,115,834 $ 8,282,215		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 5,500,347 1,278,326 6,778,673 301,632 21,417 14,112 $ 7,115,834		2020 $ 11,689,557 2,441,890 14,131,447 574,482 44,064 28,060 $ 14,778,053	2019 $ 13,086,213 3,046,543 16,132,756 807,864 32,077 35,977 $ 17,008,674

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25. NET PROFIT (LOSS)

Net profit (loss) includes the following:

a. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses An analysis of amortization of intangible assets by function Research and development expenses	For the Three Months Ended June 30 2020 2019 $ 171,990 $ 202,533 52,752 61,797 $ 224,742 $ 264,330 $ 1,329 $ 2,136 11,864 12,729 $ 13,193 $ 14,865 $ 20,304 $ 12,406	For the Three Months Ended June 30 2020 2019 $ 171,990 $ 202,533 52,752 61,797 $ 224,742 $ 264,330 $ 1,329 $ 2,136 11,864 12,729 $ 13,193 $ 14,865 $ 20,304 $ 12,406		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 171,990 52,752 $ 224,742 $ 1,329 11,864 $ 13,193 $ 20,304		2020 $ 297,536 110,996 $ 408,532 $ 2,697 21,296 $ 23,993 $ 40,608	2019 $ 433,364 123,016 $ 556,380 $ 4,089 26,815 $ 30,904 $ 24,709

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

Rental income from investment properties Direct operating expenses from investment properties that generate rental income	For the Three Months Ended June 30 2020 2019 $ 16,834 $ 16,648 $ 4,752 $ 5,772	For the Three Months Ended June 30 2020 2019 $ 16,834 $ 16,648 $ 4,752 $ 5,772		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 16,834 $ 4,752		2020 $ 34,233 $ 8,488	2019 $ 33,159 $ 10,714

c. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans Short-term benefits		For the Three Months Ended June 30 2020 2019 $ 18,199 $ 21,663 9,599 14,256 27,798 35,919 731,595 843,160 $ 759,393 $ 879,079		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 18,199 9,599 27,798 731,595 $ 759,393		2020 $ 37,312 19,187 56,499 1,521,673 $ 1,578,172	2019 $ 43,720 28,683 72,403 1,751,779 $ 1,824,182 (Continued)

38 -

An analysis of employee benefits expenses by function Operating costs Operating expenses		For the Three Months Ended June 30 2020 2019 $ 393,572 $ 485,250 365,821 393,829 $ 759,393 $ 879,079		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 393,572 365,821 $ 759,393		2020 $ 798,449 779,723 $ 1,578,172	2019 $ 992,032 832,150 $ 1,824,182 (Concluded)

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 the 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 June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019, the employees’ compensation and remuneration of directors are as follows:

Amount

Employees’ compensation Remuneration of directors	For the Three Months Ended June 30 2020 2019 $ 4,775 $ (4,815) $ 4,357 $ (4,717)	For the Three Months Ended June 30 2020 2019 $ 4,775 $ (4,815) $ 4,357 $ (4,717)		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 4,775 $ 4,357		2020 $ 6,415 $ 7,883	2019 $ 294 $ -

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 Year Ended December 31, 2018	For the Year 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 year 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.

39 -

26. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of tax expense are as follows:

Current tax In respect of the current period Taxation for repatriated offshore funds Adjustments for the prior periods Deferred tax In respect of the current period Adjustments for the prior periods Income tax expense recognized in profit or loss	For the Three Months Ended June 30 2020 2019 $ (33,276) $ 192,579 114,087 - 296 (20,933) 81,107 171,646 (58,054) (19,637) - 44,375 (58,054) 24,738 $ 23,053 $ 196,384	For the Three Months Ended June 30 2020 2019 $ (33,276) $ 192,579 114,087 - 296 (20,933) 81,107 171,646 (58,054) (19,637) - 44,375 (58,054) 24,738 $ 23,053 $ 196,384		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ (33,276) 114,087 296 81,107 (58,054) - (58,054) $ 23,053		2020 $ 35,042 115,273 (15,055) 135,260 (25,158) - (25,158) $ 110,102	2019 $ 295,966 - (22,626) 273,340 68,374 44,375 112,749 $ 386,089

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

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

In February, June and July 2020, the Group repatriaed $613,208 thousand (RMB 146,261 thousand) after approval was obtained from the National Taxation Bureau, Ministry of Finance. Total income tax withholdings was $115,273 thousand, comprising $66,468 thousand based on the source of income and $48,805 thousand based on the preferential tax rate at 8%.

40 -

b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current period Cash flow hedges	For the Three Months Ended June 30 2020 2019 $ 1,055 $ (4,117)	For the Three Months Ended June 30 2020 2019 $ 1,055 $ (4,117)		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 1,055		2020 $ 24	2019 $ (3,923)

c. Income tax assessments

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

27. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share Diluted earnings (loss) per share	For the Three Months Ended June 30 2020 2019 $ 1.67 $ (0.55) $ 1.67 $ (0.55)	For the Three Months Ended June 30 2020 2019 $ 1.67 $ (0.55) $ 1.67 $ (0.55)	Unit: NT$ Per Share For the Six Months Ended June 30	Unit: NT$ Per Share For the Six Months Ended June 30	Unit: NT$ Per Share For the Six Months Ended June 30
		2020 $ 1.67 $ 1.67		2020 $ 2.79 $ 2.79	2019 $ 0.01 $ 0.01

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

Net Profit (Loss) for the Period

For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 2020 2019 Profit (loss) used in the computation of basic earnings (loss) per share $ 913,207 $ (751,153) $ 1,522,172 $ 9,366 Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares) For the Three Months Ended June 30 For the Six Months Ended June 30 2020 2019 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 1,384,051 553,620 1,384,051 Adjustment for shares held by associates (8,239) (20,599) (8,239) (20,599) 545,381 1,363,452 545,381 1,363,452 (Continued)		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
			2020 553,620 (8,239) 545,381	2019 1,384,051 (20,599) 1,363,452 (Continued)

41 -

Effect of potentially dilutive ordinary shares Employees’ compensation Weight average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended June 30 2020 2019 175 11 545,556 1,363,463	For the Three Months Ended June 30 2020 2019 175 11 545,556 1,363,463		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 175 545,556		2020 175 545,556	2019 703 1,364,155 (Concluded)

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

June 30, 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 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 $ 794,333 - - $ 794,333 $ 31,512 - - $ 31,512 $ 371,182 $ - $ -	Level 2 $ - - - $ - $ - - - $ - $ - $ - $ -	Level 3 $ - 666,751 495 $ 667,246 $ - 24,686 145,109 $ 169,795 $ - $ 4,928 $ 4,105	Total $ 794,333 666,751 495 $ 1,461,579 $ 31,512 24,686 145,109 $ 201,307 $ 371,182 $ 4,928 $ 4,105

43 -

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

44 -

June 30, 2019

Financial assets Financial assets at FVTPL Mutual funds Domestic unlisted shares Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Overseas unlisted shares Financial assets for hedging Non-derivative financial instruments Financial liabilities Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities)	Level 1 $ 579,644 - $ 579,644 $ 24,391 - - $ 24,391 $ 733,205 $ -	Level 2 $ - - $ - $ - - - $ - $ - $ -	Level 3 $ - 711,829 $ 711,829 $ - 24,047 165,249 $ 189,296 $ - $ 17,237	Total $ 579,644 711,829 $ 1,291,473 $ 24,391 24,047 165,249 $ 213,687 $ 733,205 $ 17,237

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 six months ended June 30, 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
(19,662)
191
-
-
Recognized in other
comprehensive loss

-

-

(8,464)

(440)

Balance at June 30
$ 666,751
$ 495
$ 169,795
$ -

Total
$ 865,416
(19,471)

(8,904)
$ 837,041

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		Derivative	Derivative		Derivative	Derivative
		Financial			Financial
	Instruments at			Instruments for
Financial Liabilities		FVTPL			Hedging				Total
Balance at January 1		$	2,483		$	6,884		$	9,367
Recognized in loss			2,445			-			2,445
Recognized in other comprehensive
income			-			(2,779)			(2,779)
Balance at June 30		$	4,928		$	4,105		$	9,033
For the six months ended June 30, 2019
		Derivative
	Equity	Financial				Equity
	Instruments at	Instruments at			Instruments at
Financial Assets	FVTPL		FVTPL			FVTOCI			Total
Balance at January 1	$ 734,341	$	23			$ 208,723		$	943,087
Recognized in loss	(22,512)		(23)				-		(22,535)
Recognized in other
comprehensive loss	-		-			(19,410)			(19,410)
Sales	-		-			(17)			(17)
Balance at June 30	$ 711,829	$	-			$ 189,296		$	901,125
								Derivative
								Financial
								Instruments at
Financial Liabilities								FVTPL
Balance at January 1								$	79
Recognized in loss									17,158
Balance at June 30								$	17,237

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.
46 -
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:

	June 30,	December 31,	June 30,
	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	8.52-11.84 times
Post-tax profit ratio	13.24-71.17 times	13.24-71.17 times	11.99-85.49 times
P/B ratio	0.45-7.82 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

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

Operating income ratio 0.1 time increase 0.1 time decrease Gross profit ratio 1 time increase 1 time decrease EBIT ratio 1 time increase 1 time decrease EBITDA ratio 1 time increase 1 time decrease Post-tax profit ratio 1 time increase 1 time decrease P/B ratio 0.1 time increase 0.1 time decrease	June 30, 2020 December 31, 2019 $ 36,535 $ 36,573 $ (36,535) $ (36,573) $ 5,384 $ 5,384 $ (5,384) $ (5,384) $ - $ - $ - $ - $ 3,874 $ 3,874 $ (3,874) $ (3,874) $ 10,660 $ 10,660 $ (10,660) $ (10,660) $ 70,467 $ 72,633 $ (70,467) $ (72,633)	June 30, 2019 $ 58,178 $ (58,178) $ 65,697 $ (65,697) $ 18,188 $ (18,188) $ 8 $ (8) $ 11,020 $ (11,020) $ 85,874 $ (85,874)

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c. Categories of financial instruments

		June 30,	December 31,	December 31,	June 30,
		2020		2019	2019
Financial assets
FVTPL
Mandatorily at FVTPL	$	1,461,579	$	1,026,144 $	1,291,473
Financial assets for hedging		371,182		1,138,342	733,205
Financial assets at amortized cost (Note 1)		12,004,429		9,973,131	20,970,778
Financial assets at FVTOCI		201,307		207,342	213,687
Financial liabilities
Amortized cost (Note 2)		5,038,537		6,978,997	6,119,188
FVTPL (included in other current liabilities)
Held for trading		4,928		2,483	17,237
Financial liabilities for hedging (included in
other current liabilities)		4,105		6,884	-

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

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

1) Market risk

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

a) Foreign currency risk

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

Sensitivity analysis

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

48 -

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, adjusted for a 1% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit and equity associated with a 1% strengthening of the New Taiwan dollar against the relevant currency. For a 1% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit and equity, and the balances below would be negative.

Loss Gain (loss) Gain (loss) Equity Loss		USD Impact	USD Impact
		For the Six Months Ended June 30
		2020 2019 $ (5,884) $ (9,637) EUR Impact
		For the Six Months Ended June 30
		2020 2019 $ 42 $ (4,043) JPY Impact
		For the Six Months Ended June 30
		2020 2019 $ (943) $ 1,376 $ (5,748) $ (7,332) RMB Impact
		For the Six Months Ended June 30
		2020 $ (17,168)	2019 $ (9,354)

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:

		June 30,	December 31,	December 31,	June 30,
		2020		2019	2019
Cash flow interest rate risk
Financial assets	$	8,751,153	$	7,060,429	$ 16,253,047
Financial liabilities		589,997		848,939	689,994
Fair value interest rate risk
Lease liabilities		400,433		448,533	505,458

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Sensitivity analysis

The sensitivity analysis below was 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 liabilities 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 six months ended June 30, 2020 and 2019 would increase/decrease by $10,201 thousand and $19,454 thousand, respectively.

The Group’s decrease in sensitivity to interest rates 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 six months ended June 30, 2020 and 2019 would have increased/decreased by $39,717 thousand and $28,982 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 six months ended June 30, 2020 and 2019 would have increased/decreased by $1,576 thousand and $1,220 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

Financial assets are subject to the potential impact of the failure of the Group's counterparties to satisfy their performance obligations; the impact includes the concentration of credit risk, contract amounts and other receivables of the financial products engaged in by the Group. As the counterparties are banks, securities firms and dealers with good credit ratings, no significant credit risk is expected.

3) Liquidity risk

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

50 -

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 Samnel 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. (Yulon IT)

Sinjang Co., Ltd. (Sin Jang)

Sin Gan Co., Ltd. (Sin Gan)

Tokio Marine Newa Insurance Co., Ltd.

Hong Shuo Cultural Enterprises, Co., Ltd.

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 key management
personnel
The Group is its key management
personnel
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate
(Continued)

51 -

Related Party Name
Hsiang Shuo Enterprises

Sinqual Technology Co., Ltd.

Taiwan Acceptance Corporation (Taiwan Acceptance)

Yue Sheng Industrial Co., Ltd.

Luxgen Motor Co., Ltd. (Luxgen)

Yulon Nissan Motor Co., Ltd.

Y-Teks Co., Ltd.

YES-Energy Service Co., Ltd. (Yulon Energy Service Co.,
Ltd.)

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

Carplus Auto Leasing Corporation

Fortune HS Leasing Co., Ltd. (Hsieh-Shin Motors Co., Ltd.)
Yu Rich Financial Services Company

ROC-Keeper Industrial Ltd.

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

Guangzhou NTN-Yulon Drivertrain Co., Ltd.

Xiangyang NTN-Yulon Drivertrain Co., Ltd.

South East (Fujian) Motor Corporation Ltd.

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
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

Related Party Line Item Category/Name Sales Associates Fortune Motors Shung Ye Motor Others Investors and subsidiaries of the investors that have significant influence over the Group Joint ventures		For the Three Months Ended June 30 2020 2019 $ 4,701,796 $ 4,805,079 1,232,116 1,504,466 183,212 259,252 6,117,124 6,568,797 28,503 16,407 6,800 4,498 $ 6,152,427 $ 6,589,702		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 4,701,796 1,232,116 183,212 6,117,124 28,503 6,800 $ 6,152,427		2020 $ 9,446,839 2,573,521 317,875 12,338,235 50,255 14,942 $ 12,403,432	2019 $ 9,943,196 3,120,227 449,493 13,512,916 64,799 14,037 $ 13,591,752

52 -

2) Purchases of goods

Related Party Line Item Category/Name Purchases Investors and subsidiaries of the investors that have significant influence over the Group Mitsubishi Motors Corp. Mitsubishi Corp. Others Associates The Group is its major management Joint ventures		For the Three Months Ended June 30 2020 2019 $ 278,928 $ 246 1 545,484 326 45,720 279,255 591,450 492,963 515,650 72,502 84,361 31,141 52,348 $ 875,861 $ 1,243,809		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 278,928 1 326 279,255 492,963 72,502 31,141 $ 875,861		2020 $ 574,702 341,230 10,381 926,313 828,921 122,423 56,782 $ 1,934,439	2019 $ 246 1,351,949 76,100 1,428,295 1,091,209 167,077 98,764 $ 2,785,345

3) Technical services expense

Related Party Line Item Category/Name Cost of goods sold and selling and marketing expenses Investors that have significant influence over the Group		For the Three Months Ended June 30 2020 2019 $ 59,729 $ 57,625		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 59,729		2020 $ 119,966	2019 $ 120,248

4) Development expense

Related Party Line Item Category/Name Research and development expense Investors that have significant influence over the Group Others		For the Three Months Ended June 30 2020 2019 $ 13,362 $ 12,556 - - $ 13,362 $ 12,556		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 13,362 - $ 13,362		2020 $ 25,740 - $ 25,740	2019 $ 24,917 3 $ 24,920

5) Other expense

Related Party Line Item Category/Name Selling and marketing expenses and general and administrative Investors and subsidiaries of the investors that have significant influence over the Group expenses Others		For the Three Months Ended June 30 2020 2019 $ 23,208 $ 23,727 5,025 2,157 $ 28,233 $ 25,884		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 23,208 5,025 $ 28,233		2020 $ 44,802 7,384 $ 52,186	2019 $ 54,653 6,364 $ 61,017

53 -

6) Contract liabilities

Line Item Related Party Category/Name Other current Associates liabilities Luxgen Sin Jang Others Others	June 30, 2020 December 31, 2019 $ 58,585 $ 19,356 16,792 16,792 18,944 8,476 94,321 44,624 301 273 $ 94,622 $ 44,897	June 30, 2019 $ 19,356 - 5,708 25,064 821 $ 25,885

7) Receivables from related parties

Line Item Related Party Category/Name Trade receivables Associates from related Fortune Motors parties Shung Ye Motor Others Joint ventures Others Payables to related parties Line Item Related Party Category/Name Trade payables to Associates related parties Uni Auto Parts Manufacture ROC-Spicer Yulon Yue Ki Industrial Others Investors and subsidiaries of the investors that have significant influence over the Group Mitsubishi Motors Corp. Others The Group is its major management Others	June 30, 2020 December 31, 2019 $ 1,281,476 $ 903,195 281,053 340,042 174,568 188,082 1,737,097 1,431,319 12,209 18,235 1,290 7,585 $ 1,750,596 $ 1,457,139 June 30, 2020 December 31, 2019 $ 102,705 $ 147,613 78,992 100,743 78,703 92,546 69,626 99,801 115,293 239,311 445,319 680,014 124,337 92,215 50,609 133,632 174,946 225,847 47,486 68,622 8,650 9,267 $ 676,401 $ 983,750	June 30, 2019 $ 1,436,947 310,870 310,975 2,058,792 43,886 2,121 $ 2,104,799 June 30, 2019 $ 52,711 90,347 77,116 89,094 144,080 453,348 124,521 64,988 189,509 59,567 9,697 $ 712,121

8) Payables to related parties
54 -

9) Prepayments

Line Item Related Party Category/Name Prepayments Joint ventures Investors and subsidiaries of investors that have significant influence over the Group Mitsubishi Corp. Others Others	June 30, 2020 December 31, 2019 $ 9,406 $ 12,426 - 187,877 994 2,610 994 190,487 152 - $ 10,552 $ 202,913	June 30, 2019 $ 17,758 5,488 5,763 11,251 142 $ 29,151

10) Acquisition of property, plant and equipment

Related Party Line Item Category/Name Property, plant and equipment Associates Others		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 68,357 6,940 $ 75,297	2019 $ 37,348 - $ 37,348

The outstanding payables to related parties had no guarantees and would be paid in cash. The Group receives guarantees of the receivables from part of the related parties. For the six months ended June 30, 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.

c. Remuneration of key management personnel

The remunerations of directors and key executives for the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019, respectively, were as follows:

Short-term employee benefits Post-employment benefits	For the Three Months Ended June 30 2020 2019 $ 26,409 $ 19,912 427 594 $ 26,836 $ 20,506	For the Three Months Ended June 30 2020 2019 $ 26,409 $ 19,912 427 594 $ 26,836 $ 20,506		For the Six Months Ended June 30	For the Six Months Ended June 30
		2020 $ 26,409 427 $ 26,836		2020 $ 51,560 852 $ 52,412	2019 $ 49,963 1,186 $ 51,149

55 -

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	June 30, 2020 December 31, 2019 $ 509,609 $ 510,304 180,486 179,939 52,323 52,323 $ 742,418 $ 742,566	June 30, 2019 $ 741,741 221,816 52,323 $ 1,015,880

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant commitments and contingencies of the Group as of June 30, 2020 were as follows:

a. Guarantee notes amounted to $4,782,988 thousand, which had been issued to financial institutions as collaterals for loans; unused letters of credit amounted to $54,567 thousand.
b. The Group entered into an agreement with Mitsubishi Motors Corporation 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 2006.03.01-2025.04.08 2005.07.01-2025.09.07	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 was listed in Table 2.

33. OTHER ITEMS

Due to the impact of the COVID-19 pandemic, the Group’s operating revenue for the six months ended June 30, 2020 declined. As the epidemic eases and policy restrictions are loosened, the Group expects that operations will gradually return to normal.

In response to the impact of the epidemic, the Group took the following actions:

Government relief measures

Subsidiaries have successively applied to the government of Taiwan and mainland China for various subsidies such as salary and working capital subsidies. As of June 30, 2020, funds of $8,625 thousand had been received.

56 -

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

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

June 30, 2020

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Foreign currency assets
Monetary items
RMB	$	398,350	4.1910	$ 1,669,484
JPY		2,000,551	0.2751	550,352
USD		13,249	29.6300	392,574
Non-monetary items
Investments accounted for using the equity
method
RMB		1,211,468	4.1910	5,077,262
EUR		74,785	33.2700	2,488,105
Foreign currency liabilities
Monetary items
JPY		608,464	0.2751	167,388
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

57 -

June 30, 2019

		Foreign			Carrying
		Currency	Exchange Rate		Amount
Foreign currency assets
Monetary items
RMB	$	217,818	4.5210	$	984,757
JPY		2,613,765	0.2886		754,333
USD		21,386	31.0600		664,236
EUR		11,868	35.3800		419,887
Non-monetary items
Investments accounted for using the equity
method
RMB		1,207,526	4.5210		5,459,227
EUR		70,901	35.3800		2,508,465
Foreign currency liabilities
Monetary items
JPY		550,127	0.2886		158,767

For the three months ended June 30, 2020 and 2019 and for the six months ended June 30, 2020 and 2019, net foreign exchange gains (losses) were $(30,242) thousand, $(8,217) thousand, $(38,538) thousand and $25,331 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions.

35. SEPARATELY DISCLOSED ITEMS

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

36. SEGMENT INFORMATION

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

58 -

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 of directors Other non-operating income and expenses, net Profit before income tax		Segment Revenues For the Six Months Ended June 30 2020 2019 $ 13,694,241 $ 15,272,878 1,239,372 1,871,840 19,431 32,687 (174,991) (168,731) $ 14,778,053 $ 17,008,674		Segment Income or Loss	Segment Income or Loss
				For the Six Months Ended June 30
		2020 $ 13,694,241 1,239,372 19,431 (174,991) $ 14,778,053		2020 $ 1,765,109 4,086 (9,081) (419) 1,759,695 (146,602) 95,689 $ 1,708,782	2019 $ 563,286 6,691 (8,064) (419) 561,494 (141,193) 63,813 $ 484,114

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

59 -

TABLE 1

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE SIX MONTHS ENDED JUNE 30, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period (Note 1)	Ending Balance (Note 1)	Actual Amount Borrowed (Notes 1 and 4)	Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reason for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 2)	Aggregate Financing Limit (Note 3)
													Item	Value
0	China Motor Corporation	Sino Diamond Motors	Other receivables	Yes	$ 600,000	$ 570,000	$ 570,000	1.00	Short-term financing	$ -	Working capital	$ -	-	$ -	$ 1,199,127	$ 7,994,180
1	Dongguan Huayi	Dongguan Huashun	Other receivables	Yes	83,820 (RMB 20,000 thousand)	83,820 (RMB 20,000 thousand)	-	-	Short-term financing	-	Working capital	-	-	-	1,199,127	7,994,180
2	Dongguan Huashun	Dongguan Huayi	Other receivables	Yes	83,820 (RMB 20,000 thousand)	83,820 (RMB 20,000 thousand)	-	-	Short-term financing	-	Working capital	-	-	-	1,199,127	7,994,180
3	Tianjin Hwarui	Tianjin Hwahong Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables	Yes Yes Yes	41,910 (RMB 10,000 thousand) 83,820 (RMB 20,000 thousand) 83,820 (RMB 20,000 thousand)	41,910 (RMB 10,000 thousand) 83,820 (RMB 20,000 thousand) 83,820 (RMB 20,000 thousand)	- - -	- - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,199,127 1,199,127 1,199,127	7,994,180 7,994,180 7,994,180
4	Tianjin Hwahong	Tianjin Hwarui Dongguan Huayi Dongguan Huashun	Other receivables Other receivables Other receivables	Yes Yes Yes	83,820 (RMB 20,000 thousand) 83,820 (RMB 20,000 thousand) 83,820 (RMB 20,000 thousand)	83,820 (RMB 20,000 thousand) 83,820 (RMB 20,000 thousand) 83,820 (RMB 20,000 thousand)	- - -	- - -	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	- - -	- - -	1,199,127 1,199,127 1,199,127	7,994,180 7,994,180 7,994,180

Note 1: Translated at the exchange rate of RMB1:NT$4.191 as of June 30, 2020.

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

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

Note 4: Eliminated during the preparation of the consolidated financial statements.

60 -

TABLE 2

CHINA MOTOR CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE SIX MONTHS ENDED JUNE 30, 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 Amount Borrowed	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiary	Endorsement/ Guarantee Given by Subsidiary on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Company in Mainland China
		Name	Relationship
1	Sino Diamond Motors	Dongguan Huayi Tianjin Hwarui	Subsidiary Subsidiary	20% of the Corporation’s issued capital, $1,107,241 thousand 20% of the Corporation’s issued capital, $1,107,241 thousand	$ 419,100 (RMB 100,000 thousand) 419,100 (RMB 100,000 thousand)	$ 83,820 (RMB 20,000 thousand) 83,820 (RMB 20,000 thousand)	$ - -	$ - -	0.21 0.21	50% of the Corporation’s issued capital, $2,768,102 thousand 50% of the Corporation’s issued capital, $2,768,102 thousand	No No	No No	Yes Yes

Note: Translated at the exchange rate of RMB1:NT$4.191 as of June 30, 2020.

61 -

TABLE 3

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD JUNE 30, 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		June 30, 2020	June 30, 2020		Note
				Number of Shares (In Thousands)	Carrying Amount (Note 2)	Percentage of Ownership (%)	Fair Value
China Motor Corporation	Beneficiary certificates Fubon Chi Hsiang Money Market Fund The RSIT Enhanced Money Market Fund Cathay Taiwan Money Market Fund Franklin Templeton SinoAm Money Market Prudential Financial Money Market Fund Allianz Global Investors Taiwan Money Market Fund Hua Nan Phoenix Money Market Fund Sinopac Money Market Fund Paradigm Pion Money Market 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 director Corporate director - - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current	8,277 10,849 8,818 9,674 5,048 6,346 1,856 2,167 2,610 612 657 9,009 4,705 811 128 95 2,000	$ 130,608 130,602 110,346 100,668 80,375 80,032 30,364 30,343 30,343 10,293 7,285 595,884 30,580 11,916 1,630 932 -	- - - - - - - - - - - 10.00 7.84 0.60 0.45 0.05 4.44	$ 130,608 130,602 110,346 100,668 80,375 80,032 30,364 30,343 30,343 10,293 7,285 595,884 30,580 11,916 1,630 932 -

(Continued)

62 -

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		June 30, 2020	June 30, 2020		Note
				Number of Shares (In Thousands)	Carrying Amount (Note 2)	Percentage of Ownership (%)	Fair Value
Kian Shen KSIHK Alliance Investment & Management Hwa Lin Brilliant Insight International	Corporate bonds Evergreen Marine Corporation Crédit Agricole Corporate and Investment Bank SA Morgan Stanley Taiwan Acceptance Corp. Principal guaranteed notes President Securities 100% Principal Guaranteed Note Beneficiary certificates FSITC Money Market Yuanta Wan Tai Money Market Fund Shares Beijing NTN-SEOHAN Driveshaft Shares Samuel (Cayman) Co., Ltd. CARPLUS Auto Leasing Corporation T-Car Inc. Solidlite Corporation Site information service Phalanx Biotech Group Preference shares Rock Financial Risk Service Co., Ltd. Principal guaranteed notes President Securities 100% Principal Guaranteed Note Beneficiary certificates Taishin Ta-Chong Money Market	- - - Associate - - - - - - - - - - - - -	Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at amortized cost - non-current Financial assets at amortized cost - current Financial assets at fair value through profit or loss - current	- - - - - 139 656 - 6,327 3,248 1,275 789 65 696 - - 354	$ 99,930 83,761 83,761 49,785 41,730 25,008 10,001 27,931 (RMB 6,665 thousand) 95,026 70,867 22,152 5,610 2,779 2,751 7,860 8,346 5,062	- - - - - - - 9.00 15.07 3.45 4.05 3.60 0.54 0.85 - - -	$ - - - - - 25,008 10,001 27,931 95,026 70,867 22,152 5,610 2,779 2,751 - - 5,062

(Continued)

63 -

Holding Company Name	Type and Name/Issuer of Marketable Security	Relationship with the Holding Company	Financial Statement Account		June 30, 2020	June 30, 2020		Note
				Number of Shares (In Thousands)	Carrying Amount (Note 2)	Percentage of Ownership (%)	Fair Value
Ling Wei	Beneficiary certificates Prudential Financial Money Market Fund CTBC Hua Win Money Market Fund	- -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	440 541	$ 7,002 6,001	- -	$ 7,002 6,001

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

Note 2: Translated at the exchange rate of RMB1=NT$4.191 as of June 30, 2020.

(Concluded)

64 -

TABLE 4

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2020

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

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Number of Shares	Amount	Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain on Disposal	Number of Shares	Amount
Hwa-Lin	Shares Zhejiang Kangda Motor Industry And Trading	Non-current assets held for sale	Zhejiang Kangqiao Auto Industry And Trade Group	-	9,800	$ 148,023	-	$ -	9,800	$ 390,514 (RMB 91,105 thousand)	$ 155,561 (Note)	$ 234,953	$ -	$ -

Note: Comprises investments accounted for using the equity method classified as held for sale of $148,023 thousand and equity directly associated with non-current assets classified as held for sale of $7,538 thousand.

65 -

TABLE 5

CHINA MOTOR CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2020

(In Thousands of New Taiwan Dollars)

Seller/Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total (Note 2)	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total (Note 2)
China Motor Corporation (“CMC”) Sino Diamond Motors Kian Shen COC	Fortune Motors Shung Ye Motor Mitsubishi Motors Corp. Uni Auto Parts Manufacture Kian Shen (Note 1) ROC-Spicer COC (Note 1) Shye Shyang Mechanical Industrial Mitsubishi Corp. Shung Ye Motor Fortune Motors Mitsubishi Corp. Mitsubishi Motors Corp. China Motor Corporation (Note 1) Yulon China Motor Corporation (Note 1)	Investee accounted for using the equity method Investee accounted for using the equity method Director of CMC Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Subsidiary Director of Shye Shyang Mechanical Industrial Director of CMC Investee accounted for using the equity method Investee accounted for using the equity method Director of CMC Director of CMC Parent company Investee accounted for using the equity method Parent company	Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Purchase Purchase Sale Sale Sale	$ (9,148,461) (1,878,380) 390,342 266,455 215,113 191,266 123,458 120,724 105,119 (695,113) (298,379) 236,111 184,360 (215,113) (124,093) (123,458)	(70) (14) 5 4 3 3 2 2 1 (65) (28) 35 27 (47) (31) (30)	Payment collected 15-60 working days after the goods have been delivered Payment collected 15-60 working days after the goods have been delivered Payment made 7 working days after the goods are shipped Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made within 45 days after the month of delivery Payment made 7 working days after the goods are shipped Payment collected 7-45 days after goods have been delivered Payment collected 15 - 45 days after goods have been delivered Payment made 10 days before the goods are shipped Payment made 7 working days after the goods are shipped Payment collected within 45 days after the month of delivery Payment collected within 45 days after the month of delivery Payment collected within 45 days after the month of delivery	$ - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - -	$ 1,278,388 257,945 (124,269) (102,705) (76,717) (78,992) (49,873) (47,485) (717) 23,106 3,059 - (68) 76,717 45,246 49,873	65 13 (6) (5) (4) (4) (2) (2) - 62 8 - - 48 16 18

(Continued)

66 -

(Concluded)

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

Note 2: The proportion of the individual company’s total purchases (sales) or total receivables (payables).

67 -

TABLE 6

CHINA MOTOR CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL JUNE 30, 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	Investee accounted for using the equity method Investee accounted for using the equity method	$ 1,278,388 257,945	16.80 14.59	$ - -	- -	$ 1,269,828 252,795	$ - -

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TABLE 7

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE SIX MONTHS ENDED JUNE 30, 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 June 30, 2020	As of June 30, 2020	As of June 30, 2020	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				June 30, 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	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	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	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	$ 3,835,585 344,800 2,132,826 2,192,724 955,941 1,200,030 2,011,363 675,896 1,402 412,125 1,202 1,028,013 109,813 391,142 625,978 105,806 109,396 79,505 328,900 328,888 US$ 25,907 thousand 473,760 344,369 1,489,334 473,760 11,000 22,000 180 24	$ 3,835,585 344,800 2,132,826 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	262,228 32,201 132,117 151,067 61,511 183,000 46,566 145 40 33,565 40 - 13,032 29,668 87,999 6,084 2,936 2,242 8,790 10,296 25,907 - 11,200 36,943 - 1 2,200 12 1	16.80 43.87 41.95 100.00 20.57 100.00 32.45 29.00 100.00 49.76 40.00 16.67 15.00 39.98 52.10 31.20 15.08 29.00 100.00 100.00 100.00 7.50 100.00 100.00 7.50 - 100.00 0.02 -	$ 7,134,450 1,983,521 4,381,297 1,295,070 1,933,594 1,266,107 2,488,105 505,298 720,344 755,945 478,805 - 349,828 391,120 432,962 134,797 101,884 63,482 74,331 3,920,671 RMB 911,681 thousand - 208,919 810,251 - 5 11,974 215 18	$ 764,547 107,218 601,346 125,637 478,278 (1,263) 1,056,560 39,097 (132,304) 24,522 (220,493) (541,037) (180,372) (7,795) 6,788 11,165 (26,246) (15,176) 2,652 135,701 RMB 29,333 thousand (541,037) (7,776) 127,944 (541,037) 6,788 (7,397) (7,795) 601,346	$ 106,985 47,216 252,204 125,707 98,382 (1,263) 342,854 11,337 (132,304) 12,229 (88,197) - (27,034) (3,116) 3,766 3,488 (3,974) (4,401) 2,652 - - - - - - - - - -	Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method Investee accounted for using the equity method Subsidiary Subsidiary Subsidiary Investee accounted for using the equity method Subsidiary Subsidiary Investee accounted for using the equity method Subsidiary Subsidiary Investee accounted for using the equity method Investee accounted for using the equity method

(Continued)

69 -

Investor Company	Investee Company	Location	Main Business and Product	Investment Amount	Investment Amount	As of June 30, 2020	As of June 30, 2020	As of June 30, 2020	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				June 30, 2020	December 31, 2019	Number of Shares (In Thousands)	%	Carrying Amount
Hua-Yu China Engine CMI Hwa Chung Motors COC	Hwa-Lin (Note 1) Advance Power Investment (Note 1) Advance Power Machinery (Note 1) Hwa Wei (Note 1) Ling Wei (Note 1) Greentrans (Note 1) Y. M. Hi-Tech (Note 1) Shye Shinn (Note 1)	British Virgin Islands Mauritius Miaoli, Taiwan British Virgin Island Taipei, Taiwan Taipei, Taiwan Taoyuan, Taiwan British Virgin Islands	Overseas investment on production and service industries Reinvestment and sales Manufacture of vehicle and parts Overseas investment on production and service industries Sales of second-hand vehicle Sales of motorcycle and parts Steel cutting Investment	US$ 37,229 thousand 59,456 5,000 1,428,503 31,000 10,000 46,250 US$ 968 thousand	US$ 37,229 thousand 59,456 5,000 1,428,503 31,000 10,000 46,250 US$ 968 thousand	33,393 3,750 500 60 3,608 1,000 4,250 968	100.00 100.00 100.00 60.00 100.00 100.00 85.00 100.00	$ 724,249 92,954 10,869 718,207 35,004 11,156 70,716 39,551	$ 129,486 - 83 (220,493) 2,056 568 5,037 263	$ - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary 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, sidestream transaction of $985 thousand had been eliminated.

(Concluded)

70 -

TABLE 8

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 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 June 30, 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 June 30, 2020 (Note 1)	Accumulated Repatriation of Investment Income as of June 30, 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	$ 4,088,940 (US$ 138,000 thousand) 444,450 (US$ 15,000 thousand) 9,548,490 (EUR 287,000 thousand) 370,375 (US$ 12,500 thousand) 526,821 (US$ 17,780 thousand) 1,007,420 (US$ 34,000 thousand) 402,336 (RMB 96,000 thousand) 177,780 (US$ 6,000 thousand) 331,856 (US$ 11,200 thousand) 858,342 (RMB 204,806 thousand) 360,120 (RMB 85,927 thousand)	Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Direct investment in mainland China Indirect investment in mainland China through a company registered in a third region	$ 1,022,235 (US$ 34,500 thousand) 222,225 (US$ 7,500 thousand) 1,549,251 (EUR 46,566 thousand) 148,150 (US$ 5,000 thousand) 84,001 (US$ 2,835 thousand) - 45,245 (US$ 1,527 thousand) 16,000 (US$ 540 thousand) 331,856 (US$ 11,200 thousand) 320,152 (US$ 10,805 thousand) 77,334 (US$ 2,610 thousand)	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ 1,022,235 (US$ 34,500 thousand) 222,225 (US$ 7,500 thousand) 1,549,251 (EUR 46,566 thousand) 148,150 (US$ 5,000 thousand) 84,001 (US$ 2,835 thousand) - 45,245 (US$ 1,527 thousand) 16,000 (US$ 540 thousand) 331,856 (US$ 11,200 thousand) 320,152 (US$ 10,805 thousand) 77,334 (US$ 2,610 thousand)	$ (833,994) - 2,113,989 (EUR 63,944 thousand) 217,698 (RMB 51,091 thousand) (31,741) (RMB -7,449 thousand) 142,643 (RMB 33,477 thousand) (5,329) (RMB -1,251 thousand) - (7,741) 72,305 (22,616) (US$ -754 thousand)	25.00 38.03 16.23 17.55 15.35 17.55 21.94 3.95 100.00 29.00 20.25	$ (208,499) - 342,998 (EUR 10,375 thousand) 87,079 RMB( 20,436 thousand) (11,110) (RMB -2,607 thousand) 57,057 (RMB 13,391 thousand) (2,665) (RMB -625 thousand) - (7,741) 20,968 (4,581) (US$ -153 thousand)	$ 1,085,413 186,981 2,488,097 (EUR 74,785 thousand) 1,861,587 (RMB 444,187 thousand) 512,077 (RMB 122,185 thousand) 887,759 (RMB 211,825 thousand) 206,882 (RMB 49,363 thousand) 27,931 (RMB 6,665 thousand) 208,905 348,846 64,400 (US$ 2,173 thousand)	$ 771,061 (US$ 26,023 thousand) - 974,977 (EUR 29,305 thousand) 586,581 (RMB 139,962 thousand) 148,931 (RMB 35,536 thousand) - - - - - -

(Continued)

71 -

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 June 30, 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 June 30, 2020 (Note 1)	Accumulated Repatriation of Investment Income as of June 30, 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		$ 167,640 (RMB 40,000 thousand) 100,742 (US$ 3,400 thousand) 379,560 (US$ 12,810 thousand) 394,968 (US$ 13,330 thousand) 237,633 (US$ 8,020 thousand) 131,854 (US$ 4,450 thousand) 104,775 (RMB 25,000 thousand) 125,730 (RMB 30,000 thousand) 180,213 (RMB 43,000 thousand)	Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region Indirect investment in mainland China through a company registered in a third region		$ 35,793 (US$ 1,208 thousand) 100,742 (US$ 3,400 thousand) 331,826 (US$ 11,199 thousand) 394,968 (US$ 13,330 thousand) 229,958 (US$ 7,761 thousand) 124,950 (US$ 4,217 thousand) - - -	$ - - - - - - - - -	$ - - - - - - - - -	$ 35,793 (US$ 1,208 thousand) 100,742 (US$ 3,400 thousand) 331,826 (US$ 11,199 thousand) 394,968 (US$ 13,330 thousand) 229,958 (US$ 7,761 thousand) 124,950 (US$ 4,217 thousand) - - -	$ - (1,542) - 25,022 (1,684) (13,740) (15,199) (RMB -3,567 thousand) (520) (RMB -122 thousand) -	- 100.00 100.00 - 100.00 100.00 100.00 100.00 -	$ - (1,542) - 25,022 (1,684) (13,740) (15,199) (RMB -3,567 thousand) (520) (RMB -122 thousand) -	$ - 85,963 35,819 - 192,233 64,828 60,832 (RMB 14,515 thousand) 123,274 (RMB 29,414 thousand) -	$ - - - - - - - - -

Accumulated Outward Remittance for Investment in Mainland China as of June 30, 2020 (Note 1)		Investment Amount Authorized by Investment Commission, MOEA (Note 1)			Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$5,809,363 (US$143,777 thousand and EUR46,566 thousand)		$6,913,165 (US$218,195 thousand and EUR13,467 thousand)			$23,982,540

Note 1: Translated at the exchange rates on June 30, 2020:US$1= NT$29.63, RMB1= NT$4.191, EUR1= NT$33.27.

Note 2: Translated at the average exchange rates of the six months ended June 30, 2020:US$1= NT$30.001, RMB1= NT$4.261, EUR1= NT$33.06.

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.

(Continued)

72 -
Note 6: In November 2018, Sichuan Huafeng Hanwei, Sichuan Lingwei, Guangzhou Huayou Motor Maintenance and Guangzhou Huayou Motor Sales resolved to dissolve their companies. As of June 30, 2020, expect for the annulment of Guangzhou Huayou Motor Sales, Sichuan Huafeng Hanwei and Sichuan Lingwei which had been completed in June 2020, February 2020 and July 2019, respectively, Guangzhou Huayou Motor Maintenance has not completed their liquidation procedures.
Note 7: 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 installments (discounted price after tax was $390,514 (RMB91,105 thousand)), The disposal was completed in May 2020, on which date the Group recognized a gain on disposal of investment amounting to $234,953 thousand, and recognized expected credit losses of $93,833 thousand, considering the debtor’s current financial position and the value of assets pledged as collateral.

(Concluded)

73 -

TABLE 9

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 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 Kian Shen COC	Subsidiary Subsidiary Subsidiary	Other receivables Cost of goods sold Cost of goods sold	$ 570,000 215,113 123,458	The prices and payment terms were based on agreements. Transaction price determined based on the market price, and the transaction terms are similar to that for transactions with non-related parties Transaction price determined based on the market price, and the transaction terms are similar to that for transactions with non-related parties	1.13 1.46 0.84

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

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

74 -

TABLE 10

CHINA MOTOR CORPORATION

INFORMATION OF MAJOR SHAREHOLDERS JUNE 30, 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 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.

75 -

TABLE 11

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FRAMEWORK OF INTERCOMPANY INVESTMENT RELATIONSHIPS AND PERCENTAGE OF SHARES HELD JUNE 30, 2020

==> picture [998 x 506] 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%
Tianjin
Dongguan
Huashun Hwahong
----- End of picture text -----

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

76 -

AI assistant

CMC — Interim / Quarterly Report 2020

51979_rns_2020-12-30_753aac6f-8ec8-4233-b70a-6568808c3094.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

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

CHINA MOTOR CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

d. Other significant accounting policies

1) Employee benefits

3) Leases

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

June 30, 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

June 30, 2020

June 30, 2019

11. FINANCIAL INSTRUMENTS FOR HEDGING

June 30, 2020

12. NOTES AND ACCOUNTS RECEIVABLE, NET

13. INVENTORIES

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

Kian Shen and Kian Shen’s subsidiaries

15. NON-CURRENT ASSETS HELD FOR SALE

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

1) Material associates

17. PROPERTY, PLANT AND EQUIPMENT

18. LEASE ARRANGEMENTS

b. Lease liabilities

d. Other lease information

19. INVESTMENT PROPERTIES

20. BORROWINGS

21. OTHER PAYABLES

22. RETIREMENT BENEFIT PLANS

23. EQUITY

a. Share capital

2) Capital reduction

b. Capital surplus

c. Retained earnings and dividend policy

2) Unrealized valuation gain on financial assets at FVTOCI

f. Non-controlling interests

24. REVENUE

25. NET PROFIT (LOSS)

a. Depreciation and amortization

Amount

26. INCOME TAXES

b. Income tax recognized in other comprehensive income

27. EARNINGS (LOSS) PER SHARE

Net Profit (Loss) for the Period

28. CAPITAL MANAGEMENT

29. FINANCIAL INSTRUMENTS

December 31, 2019

June 30, 2019

c. Categories of financial instruments

1) Market risk

Sensitivity analysis

Sensitivity analysis

CMC Interim / Quarterly Report 2020