Annual Report 2019

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Hotai Motor annual report is available at: Company website: http://pressroom.hotaimotor.tw/zh/ Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw Stock code: 2207 Published on May 31, 2020 HOTAI MOTOR CO., LTD. Annual Report 2019 (For the convenience of readers and for information purposes only, the annual report has been translated into English from the original Chinese-language version prepared and used in the Republic of China. In the event of any discrepancy between the English and Chinese versions, or if there are any differences in interpretation between the two versions, the original Chinese version shall prevail.)

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8-14F, No. 121, Sung Chiang Rd., Taipei, Taiwan, R.O.C. TEL:(02)2506-2121 / FAX:(02)2504-1749 www.hotaimotor.com.tw TABLE OF CONTENTS I. Letter to Shareholders 002 1. Operating Performance in 2019 005 2. Outline of 2020 Business Plan 006 3. Future Development Strategies 008 4. Impact of External Competition, Regulatory Environment and Overall Operational 009 Environment II. Corporate Overview 011 1. Incorporation 012 2. Company Timeline 012 III. Corporate Governance 019 1. Organization Structure 020 2. Directors, President, Vice Presidents, Chief Officer and Department and Divisional 023 Executive Officers 3. Corporate Governance 048 4. Audit Fees 091 5. Disclosure of Change of Auditors 092 6. Disclosure of the Company’s chairman, president, chief financial officer or chief 092 accounting officer who has held a position at the Company’s independent certified public accounting firm or its affiliates within the last year 7. Changes in Shareholding of Directors, Executive Officers, and Major Shareholders 093 8. Relationship among Top 10 Shareholders 095 9. Share Ownership in Affiliates 096 IV. Capital Overview 097 1. Capital and Shares 098 2. Corporate Bonds 105 3. Preferred Stocks 105 4. Global Depository Receipts 105 5. Employee Stock Options 105 6. Employee Restricted Stocks 105 7. Issuance of New Shares in Connection with Mergers and Acquisitions or in 105 Exchange for the Shares of another Company 8. Financing Plans and Implementation 106 V. Operational Highlights 107 1. Business Activities 108 2. Market and Sales Overview 112 3. Key Statistics of Group Employees for the last Two Years and as of the Date of the 120 Annual Report 4. Environmental Costs 121 5. Labor Relations 121 6. Material Agreements 125

TABLE OF CONTENTS VI. Financial Information 126 1. Condensed Balance Sheet and Statement of Comprehensive Income for the Last 127 Five Years 2. Financial Analysis for the Last Five Years 132 3. The Audit Committee report regarding the most recent annual financial report 135 4. Consolidated financial statements and report of independent accountants 137 5. Parent company only financial statements and report of independent 272 accountants 6. Any cash flow difficulties with the Company and its affiliates during the most 359 recent year and as of the date of the Annual Report VII. Financial Status, Operating Results and Risk Management 360 1. Financial Condition 361 2. Financial Performance 362 3. Cash Flows 363 4. Major Capital Expenditures and Impact on Financial Condition 364 5. Investment Policy of the Latest Fiscal Year, Reasons for Gains or Losses, 366 Improvements and Investment Plan for the Coming Year 6. Risk Factors Provide Evaluations and Analysis of the Following Items over the Latest 367 Fiscal Year and as of the Date of the Annual Report 7. Other Material Disclosures 369 VIII. Specific Notes 370 1. Subsidiaries 371 2. Private placement of securities in the most recent fiscal year and as of the date 384 of the Annual Report 3. Shareholding or disposition of shares of the Company by any subsidiaries in the 384 most recent fiscal year and as of the date of the Annual Report 4. Other required disclosures 384

⣠˚凛傈㝘⠘␱㛟

Letter to Shareholders

I. Letter to Shareholders 2019 Operational Highlights

In 2019, Taiwan’s investment, exports, and consumption were all better than expected, and the domestic economy benefited from the trend of homecoming Taiwanese enterprises and the rooting of the high-level semiconductor manufacturing processes in Taiwan; the domestic economy showed a “steady growth”. The annual growth rate last year was at 2.71%, up by 0.08 percentage points compared to 2.63% in 2018, and the total sales in the automotive market reached 439,834 units, an increase from the previous year, mainly attributed to factors such as the sunset of the subsidy policy by giving trade-ins in excise taxes, the successive launch of new automobile models by various brands and increased sales promotion, and the early lunar new year, all of which fueled the sales number of cars throughout the year. From a market structure perspective, the number of new model imported cars increased in 2019 compared to 2018, hitting 49.6% of the market share and continued to cause pressure on domestic vehicles.

As imported vehicles market and luxury brands continued to dominate and consumer preference shifted, Hotai introduced all new car models in 2019, TOYOTA HILUX, SUPRA, YARIS Crossover, and LEXUS UX250h, LM, and redesigned models, including TOYOTA PRIUS, RAV4, ALTIS, PRIUS PHV, SIENTA, C-HR and, LEXUS RC, RC F, RX with the support of Toyota Motor Corporation, the parent company. Our annual sales performance was far better than expected. By the joint effort of our passenger car and commercial vehicle dealers, the total number of registered vehicles in 2019 was 149,297 units,, which accounted for 33.9% of the market share, putting us at the top among automakers in Taiwan in 18 consecutive years. In addition, TOYOTA ALTIS and RAV4 continue to be the winners in domestic-made and imported vehicles respectively. LEXUS had 22,295 units of registered vehicles which created a new record, and HINO’s full-size commercial vehicle sales ranked top of the market for 10 consecutive years, both were a startling record in automotive sales.

Since the establishment of the Company, it has accumulated extensive experience in product planning, marketing and customer service, and has continued to grow steadily and invested in diversified operations. In addition to our core business – vehicle sales and services, the Company has proactively expanded the value chain to involve other automobile-related business, and is well- positioned to drive continuous innovation and growth. For example, “Hotai Finance Co., Ltd.”, a company with growing revenues and profits that offers a broad range of financing services across the Taiwan Strait, remained the top-ranked company in the automotive installment market last year. It was successfully listed on the stock market in the fourth quarter of 2019. Since then, it has proactively expanded the two billion-markets of commercial vehicles and scooters, and the equipment financing leasing business, pursued the continuous growth of the overall business of installment and leasing across the Taiwan Strait. Hotai Leasing Co. rides along with the rise and development of sharing economy, and actively promotes “Mobility-as-a-Service” and “Resource Sharing”, and its subsidiary, Hoing Mobility Service Co., Ltd., specializes in short-term rentals with the goal to become the top brand that provides real-time integrated mobility services. CarMax Co., Ltd., a professional car accessories provider, was joined by TCD (formerly known as J-TACS) to develop businesses in mainland China, expanded offices around the world, and continued to impress with high profits while competing for a spot in the global supply chain of automakers. “Hotai Cyber Connection” tapped into e-commerce and continues to grow. “Hotai Insurance Co., Ltd.” realizes the

I. Letter to Shareholders industry vertical integration, provides the one-stop premium car insurance service to the customers, and strides to the goal of becoming a billion-premium-income enterprise by adhering to the innovative spirit. Apart from the above businesses, the Company invests in the transport and logistics sector as well, integrating and optimizing Group logistics and expanding business operations.

The Group began investing in Toyota China since 1997 and it has been more than 20 years now. The Company’s China operation headquarters, Hotong Motor Investment Co., Ltd., has established the operation system that integrates resources, reduced the Group’s operating costs, increased the overall competitive advantage of the Group, and continued to expand the business scope in China. Although the China automotive market in 2019 was affected by factors such as the China-US trade war, the change of vehicle emission standards, and the gradual withdrawal of new energy vehicle subsidies, and thus the total market sales decreased by 8.2% to 25.77 million units from the previous year, Hotai’s recognized revenue in mainland China has reached a record high of NT$ 878 million, benefited from the growth of the Japanese car sales.

2020 Business Outlook

Due to the alleviation of the US-China trade tensions and the increase of private consumption momentum, even though influenced by the outbreak of coronavirus at the beginning of this year, the growth of the automotive market is expected to increase up to around 450,000 units than which in last year as the policy which gives new car buyers with trade-ins in excise taxes ends in this year. The Company continues to pursue the diversification of products, trendization of the brand, integritization of the organization, intelligization of the sales, and customization of the service. Through the five evolutions, the Company can provide products and services far beyond the customers’ expectations and reinforce the Group value in order to achieve new sales records in the passenger car for the 19th consecutive year and become the new top-notch in commercial vehicle segments.

While pursuing sales growth, we also work towards enhancing the “Happiness at TOYOTA” experience and offers a healthy and energetic workplace for our employees. In addition the fulfillment of corporate social responsibility (CSR), Hotai strives to give back to society and the environment in the aspects of environmental sustainability, traffic safety, social care, and human resource development. With the integration of the Group’s public welfare resources and the expansion of influence, we are inviting the younger generations to join us on our commitment to create a sustainable business, and become the benchmarking enterprise of the CSR in the automotive industry.

In response to the tides of Mobility as a Service (MaaS) and the major once-in-a-century transformation of the auto industry, our business strategies will involve the continuous pursuit of innovation, breaking through the existing business scope, daring to try out new business opportunities, and the continuous partnership with TMC and our affiliates to monitor future industry trends and create group synergy. With our ability to effect changes and innovate, we can stand up to the challenges of the industry environment and become the top-tier mobility service provider, securing the Group's unwavering leading position in the industry.

I. Letter to Shareholders

We are sincerely grateful to our shareholders for your continued support and encouragement.

Chairman

I. Letter to Shareholders 1. Operating Performance in 2019

(1) Operating Performance Unit: In NT$ Thousands Item 2019 2018 Revenues 213,745,071 187,027,586 Income Before Tax 17,372,986 15,195,274 Net Income 13,584,899 11,599,830 Net Income Parent 11,768,815 10,025,535 Attributable to: Non-controlling interest 1,816,084 1,574,295 Earnings Per Share Attributable to the Parent 21.55 18.36

(2) Profitability Analysis Item 2019 2018 Net Profit Ratio (%) 7.50% 7.33% Return on Assets (%) 5.65% 5.35% Return on Equity (%) 20.30% 20.51%

(3) Comparison of Annual Number of Registered Vehicles of Hotai and its Main Competitors (the figures of Hotai’s registered vehicles include TOYOTA, LEXUS, and HINO):

Ranking Company Brands 2019 Market Share 2018 Market Share

Hotai Motor TOYOTA, LEXUS & 1 149,297 33.9% 127,647 29.3% Co., Ltd. HINO China Motor MITSUBISHI & 2 50,990 11.6% 52,058 12.0% Corporation CMC NISSAN & 3 Yulon Motors Co, Ltd. 37,821 8.6% 36,708 8.4% INFINITI Honda Taiwan 4 HONDA 33,052 7.5% 38,822 8.9% Co., Ltd. Mercedes-Benz 5 MERCEDES BENZ 29,965 6.8% 29,676 6.8% Taiwan Ford Lio Ho 6 FORD 20,788 4.7% 16,698 3.8% Motor

7 BMW Taiwan BMW 16,907 3.8% 16,282 3.7%

Mazda Motor 8 MAZDA 15,368 3.5% 23,724 5.5% Taiwan

9 Volkswagen Taiwan VW 14,999 3.4% 16,254 3.7%

Hyundai 10 HYUNDAI 11,276 2.6% 11,776 2.7% Taiwan

Total - 439,834 100% 435,131 100%

I. Letter to Shareholders 2. Outline of 2020 Business Plan (1) Business Objectives—BREAKTHROUGH 1. Breakthrough in Sales Services

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2. Thriving and Peaking Affiliates x Hotai finance: Become the top 100 listed companies in Taiwan market value, and keep growing x Hotai Leasing: Grasp the trend of mobile services in Taiwan and lead the trend of new market rules x CarMax: cultivate the products and innovate services; set up flags in the global vehicle market x Chang Yuan Motor: Breakthrough the sales framework and become a double-number- one in large vehicles and 3.49T x Toyota Material Handling Taiwan: explore business opportunities and provide customers with total solutions x Hotong: Establish and improve the management system, firmly rooted in the Chinese market x Hotai Insurance: Provide customers with complete commodity services and become the top seven general insurance companies x Hotai Cyber Connection: Carefully evaluate and clearly plan to develop profitable business models x Hotai Innovation Marketing: Develop high-quality products and develop non-group channels 3. Innovation, Breakthrough and New Ideas x Grasp the MaaS wave, find out the profit model, and improve the growth momentum x The rooting of new digital technology, from concept to implementation, from implementation to profit x Break through the traditional business scope and boldly try new business opportunities 4. New Business Opportunities with Unity and Cooperation x Strengthen cooperation between affiliates, use the advantages of the value chain and utilize the advantage of the comprehensive effect of the Group x Establish the system of abiding by the law, implement the automatic management and strengthen the corporate governance 5. Fulfill Social Responsibility x Create a healthy and dynamic workplace, deeply cultivate the society, and fulfill

I. Letter to Shareholders corporate social responsibility x Spreading love and care, strengthening the image of social cares x Continue environmental protection actions and become No.1 in environmental protection of the global Toyota group

(2) Expected business objectives

1. Passenger Car Market Looking forward to 2020, in terms of global prosperity, due to the severe impact of the new coronavirus (COVID-19) pandemic, the global economy sustained a great loss. In addition, trade frictions between China and the United States, the U.S. presidential election, Brexit, geopolitical conflicts, financial risks and other impacts add to the uncertainty of the global economy. Domestically, in response to the pandemic, the government passed 2-stage budgetary bills in total amount of NTD 10,500 billion rescue plan. However, the overall consumption is still likely to be affected by the uncertainty by the global economic, trade and of financial markets. As a result, the economic growth forecast for 2020 published by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan of Taiwan is also revised down to 2.37%. Hotai will continue to carefully evaluate the market dynamics.

In terms of the industrial environment, major car manufacturers are still actively planning the launching and remodeling of new car models in an attempt to seize the market. The five- year scrappage program of replacing old cars with new ones, implemented since 2016, will expire on January 7, 2021, and is expected to continuously stimulate the demand of car purchase this year (as of January 7, 2021, those who have scrapped used vehicles and completed the licensing of new vehicles within six months, would meet the application qualification within six months of licensing). In addition, the policy of eliminating the old and replacing the new taxis has injected stable demand for replacing the old with the new taxis into the business vehicle market. According to the comprehensive evaluation, the scale of Taiwan's automobile market this year is estimated to be 450,000 units.

In order to meet the needs of customers with more complete product lines, the company will continue to introduce diversified energy-saving car models that meet the needs, and will face severe market challenges with a more complete product portfolio, dynamic and young image, and expand the application of intelligent sales and service to improve service and sales quality. Hotai is confident that this year's Toyota sales target will achieve 124,000 units, the sales target of Lexus is 22,000 units, and the total sales target of passenger cars is 146,000 units, with a market share of 32.4%.

2. Commercial Vehicles Market It is estimated that in 2020, the demand for commercial vehicle market and tour bus will be reduced due to the impact of the coronavirus epidemic. The subsidy for the first phase replacement of old diesel vehicles will be cut off by the end of this year. The acceleration of the replacement of diesel vehicles in the first, second and third phases, together with the increase in the return of Taiwanese businesses and the planned addition of C trucks from July, all of which will drive the growth of the large truck market. The commercial vehicle

I. Letter to Shareholders market is estimated at 15,500 units in 2020, compared with 118% the previous year. For 3.49-ton trucks, the current 3.49-ton truck can only be manufactured to the end of January as required by the government, and it is scheduled to open the car driver's license to drive C trucks from July, driving customers to move. The market for 3.49-ton trucks is estimated to be reduced to 6500 units, which equals to 64% as of the year before last year.

Our sales target for 2019 is to ensure that we maintain the leading position in the commercial vehicles market for the 11th consecutive year and expand Toyota’s small commercial vehicle sales, striving to become No.1 of the whole commercial vehicle. The sales goal of commercial vehicles in 2020 is 7,500 units, and the market share is 29.2%, an increase of 0.6% compared with 2019.

3. Leasing and Installment Market Despite the fact that the COVID-19 pandemic and the US-China trade war have severe negative impacts on the global economy, various types of vehicle models are constantly being introduced, stimulating demand for domestic automobiles. As a result, a promising outlook has been projected for the car leasing and installment sector for this year, and the company, with its already high market share, will continue to lead the market.

4. General Insurance Market Although at the beginning of 2020, the global economy was affected by the coronavirus pandemic, the supply chains of various industries were interrupted, the stock market was shaken, and the premium income and investment benefits of the general insurance industry can be expected to be impacted. However, with the improvement of the awareness of the general public’s health safety, the insurance industry will have a significant role in promoting the sales of insurance products. After the pandemic, the general insurance industry will focus on the development of personal insurance in 2020 and respond to financial technology development. The progress of the new mode of insurance - online insurance and mobile insurance - will be the growth focus of this year. The demand of domestic enterprises for information security insurance will continue to grow due to the improvement of the awareness of information security, while the business opportunities of commercial insurance brought by public constructions and offshore wind power are expected.

It is estimated that with the growth of the direct premium, the company will further expand its market share, deepen its influence on the overall property insurance market, and strengthen its business constitution, so as to become an excellent property insurance company. It is estimated that the company's direct premium income in 2020 will reach 9 billion New Taiwan dollars, with a growth rate of 7.9%.

3. Future Development Strategies (1) Unlimited sales thinking; breakthrough the sales limit (2) Innovate customer service to create the most trusted brand (3) Utilize the advantages of Group synergy and enhance value chain effectiveness (4) Expand Group operations and implement Group management

I. Letter to Shareholders

4. Impact of External Competition, Regulatory Environment and Overall Operational Environment

As imported vehicles market and luxury brands continued to dominate and consumer preference shifted, Hotai introduced all new car models in 2019, TOYOTA HILUX, SUPRA, YARIS Crossover, and LEXUS UX250h, LM, and redesigned models, including TOYOTA PRIUS, RAV4, ALTIS, PRIUS PHV, SIENTA, C-HR and, LEXUS RC, RC F, RX with the support of Toyota Motor Corporation, the parent company. Our annual sales performance was far better than expected. By the joint effort of our passenger car and commercial vehicle dealers, the total number of registered vehicles in 2019 was 149,000 units, which accounted for 33.9% of the market share, putting us at the top among automakers in Taiwan in 18 consecutive years. In addition, TOYOTA ALTIS and RAV4 continue to be the winners in domestic-made and imported vehicles respectively. LEXUS had 22,295 units of registered vehicles which created a new record, and HINO’s full-size commercial vehicle sales ranked top of the market for 10 consecutive years, both were a startling record in automotive sales.

I. Letter to Shareholders resource development. With the integration of the Group’s public welfare resources and the expansion of influence, we are inviting the younger generations to join us on our commitment to create a sustainable business, and become the benchmarking enterprise of the CSR in the automotive industry.

岚˚⅓⏟䰈Ẳ Campany Prafile

II. Corporate Overview 1. Incorporation Date of Incorporation: September 1, 1947.

2. Company Timeline 1947 September Hotai Automobile Co. is founded by Mr. Huang, Lieh-Huo, along with a few others, having NT$810 thousand registered capital and 10 employees. 1949 Hotai becomes a distributor for TOYOTA vehicle and Yokohama Tire. 1952 Hotai becomes a distributor for Hino Motors Ltd. 1955 April Restructures as Hotai Trading Co., Ltd., having 30 employees. 1968 January Restructures as Hotai Motor Co., Ltd. 1970 Early 1970 Hotai becomes a distributor for Ford Lio Ho Motor Company. 1971 July Hotai begins implementing Management by Objectives 1973 February Hotai discontinues as a distributor for Ford Lio Ho Motor Company. 1979 May Hotai becomes a distributor for Morita Corporation selling fire engine, fire apparatus and equipment. 1982 January Hotai becomes a dealer for Sanfu Motor Co., Ltd. 1984 July Hotai becomes a dealer for Kuozui Motors Ltd. selling all vehicles manufactured by Kuozui Motors Ltd. 1985 April Hotai discontinues as a dealer for Sanfu Motor Co. Ltd. 1986 November Due to the demolition of the office building of its original headquarters at No. 127, Songjiang Road, the company relocates to the 11th to 14th floor of the office building at No. 121, Songjiang Road. 1988 May Hotai signs contract with the top 8 convertible dealers in Taiwan. September Hotai begins selling domestic TOYOTA ZACE, a multi-purpose vehicle, in Taiwan December Hotai signs sales contracts with TMC and Toyota Motor Sales, USA 1989 May Domestically made TOYOTA CORONA launched in Taiwan. 1990 October Hotai becomes a public company approved by the Ministry of Finance. 1995 November Domestically made TOYOTA TERCEL launched in Taiwan 1996 September Hotai becomes a listed company on the Taiwan Stock Exchange 1997 February Hotai begins trading its shares on the Taiwan Stock Exchange April As part of the conditions to join the World Trade Organization (WTO), the government signs contract with the Japanese government to permit limited imports of small vehicles from Japan. Hotai introduces Japanese imported small vehicles, TOYOTA RAV4 and TOYOTA CELICA, which are officially launched in Taiwan. September Domestically made TOYOTA HIACE Solemio 2.4L and Japanese imported luxury car series, Lexus LS and GS, launched in Taiwan. 1998 October TOYOTA 7-Series forklift debuts. 1999 February The new LEXUS IS launched. September The new LEXUS RX launched. 2000 March Yangmei Logistic Center begins operations. 2001 March Domestically made COROLLA ALTIS launched. October Japanese imported multi-purpose vehicle, TOYOTA PREVIA, launched. The new Lexus ES debuts. 2002 March Hotai completes production of domestic Toyota CAMRY, launched in April.

II. Corporate Overview July Hotai Yangmei Logistic Center receives ISO 14001 certification. November Rated one of the outstanding manufacturers under the Assist Industries Establishing Self-Regulation Project by the Taiwan Fair Trade Commission 2003 January Chang Yuan Motor Co., Ltd./Toyota Material Handling Taiwan Ltd. established. March Domestically made TOYOTA VIOS debuts. October Receives the 14th National Quality Award. November Kuozui Motors Ltd. reports production of its one millionth vehicle. 2004 February Top 8 TOYOTA dealers receive ISO 14001 joint certification. April Shanghai Heling Lexus Motor Sales & Service Co., Ltd. groundbreaking ceremony. Tianjin Ho-Yu Motor Sales and Service Co., Ltd. groundbreaking ceremony. June Introduces HINO 700 Series. September Introduces domestically made TOYOTA WISH. December Opening ceremony for Songjiang sales office of Hozhi Motor Co., Ltd, as a LEXUS CPO dealer. 2005 February Hotai listed by the Taiwan Stock Exchange among the Taiwan Mid-Cap 100 Index stocks. October Sponsors the 2005 TOYOTA Love Life Walk event. Receives the 4th CommonWealth Magazine Service Excellence Award. November The Parts Business Division passes the Quality Logistics Operating System Assessment by the Department of Commerce of the Ministry of Economics. 2006 March The new TOYOTA PRIUS hybrid debuts. August LEXUS, in collaboration with ABN AMRO Bank, introduces the first Lexus credit card in Asia. September The new TOYOTA X888 forklift launched. November The new domestically made Toyota YARIS debuts. 2007 January Ranks highest in the J.D. Power Asia Pacific 2006 IQS and APEAL Study. February Chongqing Heling Lexus Motor Sales & Service Co., Ltd. begins operations. October Ranks No.1 in the auto sales industry in Taiwan and named the Most Admired Company in the service industry according to the 2007 Corporate Reputation Survey conducted by CommonWealth Magazine. December The new LEXUS LX debuts. 2008 April Increases its shareholding in Kuozui Motors Ltd. from 14.22% to 30%. Receives the 4th CSR Award by Global Views Monthly. October Honored with the National Human Resources Development Innovation Award. December Hotai receives the 6th Annual Service Excellence Award by Global Vision Monthly. 2009 March Introduces the new Hino 300 Series 3.49 tons diesel trucks. August Hotai Group makes donation to Typhoon Morakot Relief. 2010 March Founder Huang, Lieh-Huo passed away. June Hotai’s management team changes, naming Huang, Nan-Kuang as the Chairman, Hirako Hirokazu as the Vice Chairman, Su, Chwen-Shing as the President of Hotai Motor Co., Ltd. and Su, Yann-Huei as the Group Chairman. 2011 January CarMax enters China’s auto accessory market. February The new LEXUS CT debuts. March Hotai and its top 8 dealers, affiliates and foundation jointly donate NT$30

II. Corporate Overview million aiding the Tohoku Earthquake & Tsunami Relief. April CarMax Autotech (Shanghai) Co., Ltd. grand opening. September TOYOTA sales in Taiwan reaches two million vehicles. November TOYOTA INNOVA compact MPV debuts. Hotai donates the first Hotai mobile blood bus. December Horung Motors Co., Ltd. incorporated. 2012 February Debuts the first domestically made TOYOTA CAMRY Hybrid. March Introduces TOYOTA PRIUS c, the only import hybrid under NT$1 million in Taiwan. May Production of Kuozui Motors Ltd. reaches two million vehicles. June TOYOTA 86 sports car launched. August Hotai donates a second mobile blood bus and hosts the first Hotai Blood Donor Month. September Hotai donates 8,000 sets of school zone crossing guard equipment to public elementary schools in New Taipei City. October The New HINO 300 Series debuts. November J-TACS invests in the equities of CarMax Co. Ltd. 2013 March TOYOTA introduces its all-in-one navigation app, City Driver, the first mobile app for drivers in Taiwan auto industry. June Hotai recognized by the Environmental Protection Administration as one of the companies with prominent effects as a result of implementing voluntary CO2 emission reduction in the Taiwan auto industry Hotai Group incorporates Hojung Motors Co., Ltd., consolidating the CPO market in the Taichung, Changhua and Nantou area. August Hotai donates a 3rd mobile blood bus and sponsors Hotai’s National Blood Donor Month. September Hotai donates 15,000 sets of school zone crossing guard equipment to public elementary schools in Taichung City, Tainan City and Kaohsiung City. October LEXUS launches the Lexus+ app exclusively for Lexus owners. November Hotai receives the Annual ROC Enterprise Environment Protection Award from the Environmental Protection Administration for two years in a row. TOYOTA LAND CRUISER PRADO debuts. 2014 January Hotai participates in the guide dog training program, donating 5 training vehicles and NT$1 million trainer education funds to the Taiwan Guide Dog Association. March Hotai ranks premium in Business Next Magazine’s Top Green Brand Survey and highest in the auto industry. April Kuozui Motors Ltd. celebrates its 30th anniversary. June Hotai Leasing Co., Ltd. is the first one to provide 24hr self car rental service in Taiwan. July Kuozui Motors Ltd. production of Hino heavy-duty trucks reaches 100 thousand vehicles. August Hotai and Kuozui Group make NT$10 million donation to the Kaohsiung Gas Explosion Relief. Hotai donates a 4th and 5th mobile blood bus and sponsors Hotai’s National Blood Donor Month.

II. Corporate Overview The new Lexus NX debuts. September Hotai donates 8,968 sets of school zone crossing guard equipment to public elementary schools in Keelung City Hsinchu City and County, Yilan County, Miaoli County, Pingtung and Hualien County. Hotai provides AED at all TOYOTA, LEXUS and HINO locations around the island. The new HINO 300 Series hybrid launched. October Hotai named the Most Admired Company in the auto sales industry in Taiwan by CommonWealth Magazine in 8 consecutive years. 10th anniversary of Toyota Walk ”TOYOTA Family Day”. November All new LEXUS RC/RC F debuts. December Ȩabcȩ- certified Pre-owned cars website is officially online. Annual production of Kuozui Motors Ltd. reaches 200 thousand vehicles. 2015 March Hotai donates one ambulance bus to Children Are Us Foundation and purchases Children Are Us baked goods at all locations around Taiwan. April 10th anniversary of the Hotai Road Safety & Awareness Tour. LEXUS awarded the CommonWealth Magazine Gold Service Medal in the customer service category in 3 consecutive years. July Hotai sponsors the fundraising event held by Child Welfare League Organization for Nutrition Aid Project for Children in the Disadvantaged Groups in 3 consecutive years. TOYOTA RAV4’s monthly sales hits record high (2,752 vehicles). August Hotai donates a 6th mobile blood bus and 50 thousand new blood bags and sponsors Hotai’s National Blood Donor Month. September LEXUS ranks highest in the J.D. Power Taiwan New Vehicle Sales Satisfaction Index Study for the 15th time. October Hotai donates 9,194 sets of school zone crossing guard equipment to public elementary schools in Nantou County, Changhua County, Taitung County, Chiayi City and County, Kinmen County, Yunlin County and Penghu County, therefore completes the first round donation to all public elementary schools in Taiwan. November Introduces the first Hino low-floor bus. LEXUS receives first place in the auto category in the Business Today Best Brand Awards. December All new TOYOTA PRIUS α debuts. 2016 January TOYOTA short films “Family Trip” and “Mom’s Chariot” voted the most successful films on YouTube in the 1st and 4th place. February Hotai and Kuozui Group make NT$10 million donation to the Southern Taiwan Earthquake Relief. May TOYOTA global hybrids sales surpass nine million vehicles. June LEXUS named the exclusive auto-brand sponsor for the 27th Annual Golden Melody Awards. July Hotai honored with the gold award by Commercial Times in the 2016 Best Service in Taiwan in 3 consecutive years. Hotai officially introduces TOYOTA SIENNA. Hotai raises NT$20 million in the “Let Love Begin” charity event, which is

II. Corporate Overview donated to five social welfare groups, including the Child Welfare League, Children Are Us Foundation, Eden Social Welfare Foundation, Sunshine Social Welfare Foundation, and Taiwan Blood Services Foundation. Hotai donates a 7th mobile blood bus and sponsors Hotai’s National Blood Donor Month. August Hotai's Customer Service Center honored with˥Quality management -- Customer satisfaction -- Guidelines for complaints handling in organizations˦ Certification, first awarded in the motor industry. September Hotai donates 8,000 sets of school zone crossing guard equipment to public elementary schools in Taipei City and New Taipei City; a cumulative of over 52,000 sets have been donated to schools in Taiwan. October LEXUS named the exclusive auto-brand sponsor for the 51st Annual Golden Bell Awards. LEXUS ranks highest in the J.D. Power Taiwan Customer Service Index Study for the 17th time. November Hotai honored with the service industry gold award and social inclusion award in the 2016 Taiwan Corporate Sustainability Awards. All new Toyota SIENTA debuts. LEXUS named the exclusive auto-brand sponsor for the 53rd Golden Horse Awards. December LEXUS and Hotai Leasing Co., Ltd. receive first place in the auto category and car rental category in the Business Today Best Brand Awards. ȨTOYOTA City DriverȩApp hits 200 million downloads. Hino continues to be the leading auto brand in the full-size commercial vehicles market in 7 consecutive years. 2017 February TOYOTA global hybrids sales surpass 10 million vehicles. March All new TOYOTA C-HR debuts. Acquired Zurich Insurance (Taiwan) Ltd., and renamed as HOTAI INSURANCE CO., LTD. Hotai’s largest sales location in Northern Taiwan, Taoyuan Store, opens for business. April TOYOTA launches its charity campaign: One Tree for Every Toyota. All new TOYOTA PRIUS PHV debuts. TOYOTA ranked No.1 in the vehicles category in the Top 100 Most Influential Brands Survey in Taiwan by Business Weekly Magazine in 3 consecutive years. Hotai Motor ranked in the top 5% among TWSE listed companies in the May Corporate Governance Evaluation results released. Hotai Motor 70th Anniversary. Hotai donates 11,000 sets of school zone crossing guard equipment to public September elementary schools in New Taipei City, Taoyuan City and Kaohsiung City; a cumulative of over 63,000 sets have been donated to schools in Taiwan. Hotai ranks No. 1 in Next Magazine’s Top Service Awards for the 9th time. October

II. Corporate Overview Hotai honored with the social inclusion award for the second consecutive year, and the Corporate Sustainability Award and a gold award in the Corporate November Sustainability Report category for the first time in the 2017 Taiwan Corporate Sustainability Awards.

Kuozui Motors Ltd. receives the highest honor in the 2017 National Occupational Safety and Health Awards. TOYOTA remains the top auto brand in Taiwan in 16 consecutive years. TOYOTA ALTIS, RAV4 and SIENTA continue to be the top 3 best-selling car models; LEXUS RX remains the best-selling luxury SUV; HINO ranks top in the full-size commercial vehicle category in 8 consecutive years. Hotai Motor is the biggest winner among the Top YouTube Videos in Taiwan in December 2017! Three out of the top five are short films produced by Hotai, including: LEXUSˣ⽘営ˤat No. 1, TOYOTAˣㇸ䙫⹟䥶憳䧲㨠ˤat No. 3, and TOYOTAˣạ 䔆弰怲䫀ˤat No. 5. In addition, the LEXUS short film,ˣ⽘営ˤ, also ranks No. 1 on the Asia-Pacific YouTube Ads Leaderboard in October. Hotai donates the ninth Hotai mobile blood bus, reaching the goal of having at least one mobile blood bus at each of the top five blood donor centers in Taiwan, serving numerous communities. 2018 TMC, Hino Motors Ltd., Hotai and Kuozui Group make a donation to the February Hualien Earthquake Relief. TOYOTA’s One Tree for Every Toyota Campaign participates in the Zhoushui River Dust Control Project run by the Executive Yuan, contributing to the April planting of over 110,000 trees to date. Hotai Leasing Co., Ltd. receives the Gold Award for Best Business Model in the 2018 Future Commerce Awards. Hotai Motor once again ranks in the top 5% among TWSE listed companies in the Corporate Governance Evaluation results released. May Toyota Corolla named Best Small Sedan at the 2018 Middle East Car of the Year Awards. Hotai Yangmei Logistic Center installs over 33,000 square meters of solar June panels. Hotai invests NT$6 billion in the shares of TMC. Hotai Leasing Co., Ltd. receives the Best Business Award and Best Innovation Award at the Golden Torch Awards. July Hotai honored with the gold award by Commercial Times in the 2018 Best Service in Taiwan. Hotai ranks No. 1 in Next Magazine’s Top Service Awards for the 10th time. October Hotai Finance Co., Ltd. becomes a listed company on the Taipei Exchange Hotai receives the 2018 National Talent Development Award, Taiwan November Corporate Sustainability Award, and BSI Sustainability Excellence Award. Kuozui Motors Ltd. receives the Gold Medal and Honorable Mention at the 27th Enterprise Environmental Protection Awards. December TOYOTA remains the top auto brand in Taiwan in 17 consecutive years, recording a total of 120,766 TOYOTA and LEXUS vehicle sales in 2018; Lexus ranks No. 2 in luxury car brands; HINO ranks top in the full-size commercial

II. Corporate Overview vehicle category for the 9th consecutive year. 2019 March All-new TOYOTA RAV 4 and COROLLA ALTIS hit the sales floor. April TOYOTA One Tree for Every Toyota program accomplishes its goal of 200,000 trees planted. May All new TOYOTA GRANVIA debuts. May Hotai Motor ranks in the top 5% among TWSE listed companies in the Corporate Governance Evaluation results released for the 3rd times, and received the “Labor Safety Award” from Taipei City. June For the sixth consecutive year, Hotai Motor receives the Gold Medal of "Taiwan Service Industry Evaluation" from the Commercial Times. July All new TOYOTA HILUX debuts. August Receives the “CommonWealth Magazine CSR Corporate Citizenship Award” for the 5th consecutive year. September All new TOYOTA GR SUPRA debuts. September HOTAI TOYOTA GROUP Thousands of People Beach Cleanup and Plastic Reduction September Donates 12,000 sets of equipment for the guides and volunteers to New Taipei City, Keelung City, Yilan County, Hsinchu City, Hsinchu County, Miaoli County, Hualien County, and Pingtung County. A total of 85,000 sets are donated to Taiwan. October Kuozui receives the “Outstanding Foreign Corporation Contribution Award” from the Ministry of Economic Affairs. November Hotai Motor receives the "Taiwan Enterprise Sustainability Award" from the Taiwan Enterprise Sustainability Training Center (TCSA) for 4 consecutive years. November Receives the "Sustainability Award" from the British Standards Institute (BSI) for 2 consecutive years. December Hotai Motor donates the "Hotai 荤" blood donation bus, reaching a total of 10 blood donation buses across Taiwan, the enterprise that donated the most blood donation buses in Taiwan. December Hotai Finance becomes a listed public company on the Taiwan Stock Exchange. December All new LEXUS LM debuts. December TOYOTA and Lexus remain the top auto brand in Taiwan in 19 consecutive years, recording a total of 141,891 vehicles. COROLLA ALTIS has been the champion of single vehicle sales for 19 consecutive years, and RAV4 has been the No.1 of Taiwan's SUV market. HINO has been the No.1 of full-size commercial vehicles for 10 consecutive years. 2020 January TOYOTA One Tree for Every Toyota reaches 300,000 trees. February All new TOYOTA ALPHARD debuts.

⎪˚⅓⏟㲢䏭⠘␱ Corporate Governance Report

III. Corporate Governance 1. Organization Structure (1) Organization Chart (As of April 30, 2020)

Shareholders

Meeting

Remuneration Committee Board of Directors Auditing Division

Audit Chairman Committee Information Safety Committee

CS Committee President CSR Committee Executive Vice President Occupational Safety and Health Committee

Environmental Management Committee

TOYOTA After TOYOTA Commercial LEXUS Administration Corporate Sales Service Vehicles Vehicles Operations Operations Planning Operations Operations Operations Group Group Group Group Group Group

TOYOTA TOYOTA Commecial LEXUS Financial & MaaS Customers Administration Dealers Vehicles Vehicles Accounting Promotion Service Division Division Division Division Division Division Division

TOYOTA TOYOTA Commercial LEXUS Information Corporate Service Vehicles Vehicles Service Planning Marketing Service System Division Division Division Division Division Division

TOYOTA TOYOTA Regional External Education Products TS Projects Affairs & Legal Support Planning Operations Department Division Division Division Department

Regional Parts Business Operations Division Department

Regional Operations Department

Occupational Safety and Health Department

III. Corporate Governance (2) Primary Business Functions Auditing Division Ǹġ Establish, implement and review internal control and audit systems. Ǹġ Manage the audit operation, finance, engineering and purchasing of the Company. Information Safety Ǹġ Establish, promote and implement information safety policy. Committee Ǹġ Review and discuss information safety issues and solutions, resources allocation and implementation results.

CS Committee ǸġPlan, implement and review customer service system. ǸġManage and maintain customer relationships. Occupational Safety and Ǹġ Provide suggestions on draft safety and health policy. Health Committee Ǹġ Review, discuss, coordinate and provide suggestions on relevant matters. Environmental Ǹġ Conduct environmental management operations, regularly hold environmental Management Committee management meetings, implement environmental management guidelines of TMC/TMAP and promote environmental protection practices of Hotai and its dealers. Corporate Social Ǹġ Promote the Company’s corporate social responsibility policies, systems, or related Responsibility Committee management policies and promote specific plans. (CSR Committee)

Occupational Safety and Ǹġ Draft, plan, oversee and promote matters relating to occupational safety and health, Health Department and direct the implementation by relevant departments. Corporate Planning Ǹġ Manage financial and accounting affairs, provide tax planning, and handle customs Group declarations. Ǹġ Manage reorganization and project improvement planning, execution and follow- aaS motion up. sion Ǹġ Draft mid and long-term business plans. Ǹġ Analyze operational performances. Ǹġ Adopt annual business objectives and monitor implementation. Ǹġ Manage investments in Hotai’s affiliates. Ǹġ Develop the Group's new business models and integrate the Group's strategies and value chain developments. Administration Ǹġ Plan, implement and review matters relating to allocation and management of Operations Group human resources, personnel training and career development, and general administration. Ǹġ Manage public relations and media affairs, investor relations, and legal affairs. Ǹġ Analyze, develop, maintain and make suggestions on the computerized system of Hotai and dealers; analyze, compare and purchase computer hardware. TOYOTA Vehicles Ǹġ Manage the order, delivery, demand and supply analysis, marketing and execution Operations Group of TOYOTA vehicles business. Ǹġ Establish, manage and direct the dealers. Ǹġ Prepare new media marketing proposals. Ǹġ Conduct market research, product planning, and obtain product certification. Ǹġ Prepare a comprehensive plan for brand development, pre-sales customer relations, and CPO related business.

III. Corporate Governance TOYOTA After Sales Ǹġ Plan and execute TOYOTA’s service system and service activities. Service Operations Group Ǹġ Provide solutions on technical problems and guarantee replacement. Ǹġ Conduct technical training of TOYOTA and HINO vehicles. Ǹġ Manage the planning and operations of post-sales marketing. Ǹġ Conduct the purchase, sales, and inventory management of auto parts, and other matters related to auto parts management. Ǹġ Manage TOYOTA Customer Service Center. Ǹġ Mange the environment and ISO certification business promotion. Ǹġ Manage the overall facilities of the Park. LEXUS Operations Group Ǹġ Manage the order, delivery, demand and supply analysis, marketing and execution of LEXUS vehicles business. Ǹġ Conduct market research and product planning. Ǹġ Plan and execute LEXUS service system and service activities. Ǹġ Provide the solutions on technical problems and guarantee replacement. Ǹġ Purchase LEXUS parts. Ǹġ Manage LEXUS Customer Service Center.

Commercial Vehicles Ǹġ Manage the order, delivery, demand and supply analysis, marketing and execution Operations Group of TOYOTA commercial vehicles and HINO vehicles business. Ǹġ Establish, manage and direct the dealers. Ǹġ Conduct market research and product planning. Ǹġ Plan and execute service system and service activities for TOYOTA commercial vehicles and HINO vehicles. Ǹġ Provide the solution on technical problems and guarantee replacement. Ǹġ Purchase parts for TOYOTA commercial vehicles and HINO vehicles. Ǹġ Oversee and support the customer service of commercial vehicle dealers. Ǹġ Plan new business models for commercial vehicles, and make improvement plans for the new generation operation systems and the CS activities. MaaS Promotion Division Ǹġ Integrate the data and information of the Group's Internet of vehicles and value chain, seize the technology trend and data analysis know how, explore the new business opportunities of the Group's MaaS, and plan the Group's relevant development strategies.

III C t G

N/A N/A N/A (Note) Remarks Remarks law Son ship ship in-law Relation Brother- Sister-in-

Soo Soo Nan- Nan- Name Kuang Kuang Huang, Huang, Mr. Leon Leon Mr. Lin, Li-Hua Li-Hua Lin, Supervisory Positions April 21, 2020 Consanguinity also holding holding also Consanguinity within the Second Degree of of Degree Second the within or Directorial, Management, N/A N/A N/A N/A Title Spouse or Familial Relationship Relationship Familial or Spouse Director Director Chairman ssity and corresponding measures (such as (such measures corresponding and ssity Current Positions Held in other Companies Companies other in Held Positions Current Chairman, Kuotu Motor Co., Ltd. Ltd. Co., Motor Kuotu Chairman, Ltd. Co., Investment Motor Hotong Chairman, Ltd. Co., Taiwan Tire Yokohama Chairman, Vice Ltd. Co., Investment Hoyu Director, Managing Ltd. Co., Investment Hozan Director, Ltd. Co., Motors Kuozui Director, Ltd. Co., Motor Yuan Chang Director, Ltd. Co., Motor Toyota Taipei Director, Ltd. Co., Motor Taumiau Director, Ltd. Co., Motor Central Director, Ltd. Leasing Co., Hotai Director, Ltd. Co., Service, Mobility Hoing Director, Corp. Denso Taiwan Director, Ltd. Co., Carmax Supervisor, Ltd. Co., Motors Kuozui Director, Ltd. Co., CarMax Director, Ltd. Co., Motor Kuotu Director, Ltd. Co., Investment Motor Hotong Director, Ltd. Co., Leasing Hotai Supervisor, Ltd. Co., Service, Mobility Hoing Supervisor, Ltd. Co., Development Chairman, Tai Ho Chairman,Ltd. Co., Agency Ho-An Insurance Chairman, Ho-Chuang Insurance Agency Ltd. Co., Ltd. Co., Motors Kuozui Vice Chairman, Co., Ltd. ViceInvestment Chairman, Hoyu Ltd. Co., Enterprise Hozao Director, Ltd. Co., Marketing Service Hotai Director, Ltd. Co., Trading Sun Cheng Director, Ltd. Co., Investment Shan Yuan Jin Director, Co., Ltd. Investment Chairman, Hoyu Experience Experience Education and Department of of Department Chemistry, Fu Jen University School of Commerce, Waseda University Mary’s St. MBA, University of Department and Money Banking, National Chengchi University

% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0 0 0 0 0 0 0 0 pouse orrelative theof each other, reasons, rationality, nece employees or managers) shall be explained. explained. be shall managers) or employees under under Nominee Accounts Shares Held Number Number

% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0 0 0 0 0 0 0 0 Minors that are that are of Spouses and Children and Children Shareholding Shareholding Number Number

% %

0.0% 0.0% 0.0% 0.03% 0.03% 8.13% 0.02% 0.002%

0 0 0 Current Current 10,000 83,740

174,000 174,000 Shareholding Shareholding Number Number 44,406,112

0.0% % % 0.0% 0.0% 0.002 0.03% 0.03% ment and Divisional Executive Officers 8.13% 0.02%

0 0 0 Elected 10,000 83,740 174,000 174,000 Number Number 44,406,112 Shareholding When When Shareholding t moret than half of the directors do not concurrently serve as manager or equivalent (the top manager) are the same person, s person, same the are manager) top (the equivalent or manager First Date 2001 1992 1981 Elected 2019 July 17, Janu- May May 22, May 10, ary 1, 3 3 3 3 Term years years years years 20, 20, 20, 20, 20, June June June June June Date 2019 2019 2019 2019 Elected

Male Male Male Male Gender Female by Ltd., Ltd., Name Kuang Kuang KAZUO Co., Ltd. Yong Hui Yong Lin, Li-Hua Li-Hua Lin, Chun Yung Chun Yung Chun Yung Su, Yi-Chung Yi-Chung Su, Huang, Nan- Corporation, Corporation, NAGANUMA represented Development Development Toyota Motor Motor Toyota Investment Co, Co, Investment represented by by represented represented by by represented represented by by represented Investment Co., Co., Investment

Japan Japan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan or Place of of Place or Nationality Nationality Registration Directors Directors

Directors, President, Vice Presidents, Chief Officer and Chief Depart Vice Officer Presidents, President, Directors, Title (1)

Director Director Director Chairman III. Corporate Governance III. Corporate 2. Note: if the chairman of the board of directors and the general increasingnumberthe and tha independentof the directors, way

(Note) Remarks Remarks

ship Relation Name Second Degree ofSecond Degree Familial or Spouse Supervisory Positions Supervisory Positions Relationship within the within Relationship N/A N/A N/A N/A Title Consanguinity also holding holding also Consanguinity Management, Directorial, or or Directorial, Management, ssity and corresponding measures (such as (such measures and corresponding ssity Beijing Ho-Yu Toyota Motor Sales & Service Co., Co., Service & Sales Motor Toyota Ho-Yu Beijing

Current Positions Held in other Companies other in Companies Held Positions Current Chairman, Toyota Material Handling Taiwan Ltd. Ltd. Taiwan Handling Material Toyota Chairman, Corp. Packaging Flexible Formosa Chairman, Equipment Logistics Ho-Qian Shanghai Chairman, Ltd. Co., Trading Ltd. Co., Information Taicheng Chairman, Ltd. Co., Investment Hoyu Director, Managing Ltd. Co., Motors Kuozui Director, Ltd. Co., Development Tai Ho Director, Ltd. Co., (Shanghai) Autotech Carmax Director, Ltd. Co., Investment Motor Hotong Director, Ltd. Co., Service Motor Hoyu Shanghai Director, Service Ltd. Motor Co., Hozhan Shanghai Director, Ltd. Co., Service Motor Heling Shanghai Director, & Sales Motor Heling Lexus Yangpu Shanghai Director, Service Co., Ltd. Service Motor Lexus Heling Jiading Shanghai Director, Co., Ltd. & Service Sales Motor Lexus Heling Chongqing Director, Co., Ltd. Service & Sales Motor Lexus Heling Tangshan Director, Co., Ltd. Service & Sales Motor Lexus Heling Nanchang Director, Co., Ltd. and Sales Motor Toyota Ho-Yu Zaozhuang Director, Service Co., Ltd. Co., & Service Sales Motor Lexus Heling Tianjin Director, Ltd. Ltd. Co., Service Motor Hozhan Tianjin Director, Ltd. Co., Service & Sales Motor Hoyu Tianjin Director, Motor Lexus Heling Area New Binhai Tianjin Director, Service Co., Ltd. Ltd. Co., Service & Sales Motor Ho-Yu Linyi Director, Director, Ltd. Co., Service & Sales Motor Lexus Heling Linyi Director, Ltd. Co., & Service Sales Motor Lexus Heling Beijing Director, Ltd. Service & Sales Motor Lexus Du Zhong Taizhou Director, Co., Ltd. NanjingDirector, Hozhan Motor Sales Services & Co., Ltd. Co., (Zhejiang) Industrial Screw Precision Nitto Director, Ltd. Ltd. Co., Motor Kuotu Supervisor, Experience Experience Education and Education School of Management, of University California

% 0.0% 0.0%

0 0 under Nominee Accounts Shares Held Number

pouse orrelative theof each other, reasons, rationality, nece employees or managers) shall be explained. explained. be shall managers) or employees % 0.0% 0.0%

0 0 Minors Spouses and Spouses Shareholding of Shareholding Number Children that are are that Children

% % 0.03% 0.02%

174,000 121,165 Number Number

Current Shareholding Shareholding Current

% % 0.03% 0.02%

Elected 174,000 121,165 Number Number Shareholding When Shareholding t moret than half of the directors do not concurrently serve as First Date 2000 manager or equivalent (the top manager) are the same person, s person, same the are manager) top (the equivalent or manager Elected April 28, 3 Term years 20, 20, June June Date 2019 Elected Male Male Gender Gender Ltd., Name Cheng Cheng Chun Yung Chun Yung Huang, Huang, Chih- represented by by represented Investment Co., Co., Investment

Taiwan Taiwan Taiwan or Place of of Place or Nationality Nationality Registration (Continued) (Continued) Title Director III. Corporate Governance III. Corporate Note: if the chairman of the board of directors and the general increasingandnumberthe tha independentof the directors, way III C t G

N/A (Note) Remarks Remarks

ship Father Relation Huei Name Su, Yann- Yann- Su, Second Degree of Familial or Spouse

Supervisory Positions Supervisory Positions Relationship within the the within Relationship Title Consanguinity also holding holding also Consanguinity Management, Directorial, or or Directorial, Management, Director ssity and corresponding measures (such as (such measures and corresponding ssity Beijing Ho-Yu Toyota Motor Sales & Service Co., Co., Service & Sales Motor Toyota Ho-Yu Beijing

Current Positions Held in other Companies other in Companies Held Positions Current President, Hotai Motor Co., Ltd. Ltd. Co., Motor Hotai President, Ltd. Co., Investment Hozhan Chairman, Ltd. Co., CarMax Chairman, Ltd. Co., Motor Eastern Chairman, Chairman, Cyber Connection Hotai Ltd. Co., Marketing Innovation Hoati Chairman, Ltd. Co., Investment Motor Hotong Chairman, Vice Ltd. Co., Motors Kuozui Director, Director, Kuotu Motor Co., Ltd. Ltd. Co., Motor Yuan Chang Director, Ltd. Co., Motor Du Nan Director, Director, Kau Du Automobile Co., Ltd. Ltd. Co., Investment Hoyu Director, Co., Finance Ltd. Hotai Director, Ltd. Co., Leasing Hotai Director, Ltd. Co., Enterprise Hozao Director, Ltd. Co., Service, Mobility Hoing Director, Ltd. Co., Lease International Hoyun Director, Ltd. Co., (Shanghai) Tech Auto Carmax Director, Ltd. Co., Service Motor Hoyu Shanghai Director, Service Ltd. Motor Co., Hozhan Shanghai Director, Ltd. Co., Service Motor Heling Shanghai Director, & Sales Motor Lexus Heling Yangpu Shanghai Director, Service Co., Ltd. Service Motor Lexus Heling Jiading Shanghai Director, Co., Ltd. & Service Sales Motor Lexus Heling Chongqing Director, Co., Ltd. Service & Sales Motor Lexus Heling Tangshan Director, Co., Ltd. Service & Sales Motor Lexus Heling Nanchang Director, Ltd. Co., and Sales Motor Toyota Ho-Yu Zaozhuang Director, Service Co., Ltd. Co., & Service Sales Motor Lexus Heling Tianjin Director, Ltd. Ltd. Co., Service Motor Hozhan Tianjin Director, Co., Service & Sales Motor Toyota Ho-Yu Tianjin Director, Ltd. Motor Lexus Heling Area New Binhai Tianjin Director, Service Co., Ltd. Trading Equipment Logistics Ho-Qian Shanghai Director, Co., Ltd. Ltd. Co., Service & Sales Motor Ho-Yu Linyi Director, Director, Ltd Co., & Service Sales Motor Lexus Heling Beijing Director, Ltd. Co., Service & Sales Motor Lexus Heling Linyi Director, Ltd. Experience Experience Education and MBA, Massachusett of s Institute Technology

% 0.0% 0.0%

0 0 under under Nominee Accounts Shares Held Number

pouse orrelative theof each other, reasons, rationality, nece employees or managers) shall be explained. explained. be shall managers) or employees % 0.0% 0.02%

0 Minors Spouses and Spouses 100,000 Shareholding of Shareholding Number Children that are are that Children

0% % % 7.43%

0 Number Number

40,569,353 Current Shareholding Shareholding Current

0% % % 7.43%

0 Elected Number Number 40,569,353 Shareholding When When Shareholding t moret than half of the directors do not concurrently serve as First Date 1995 manager or equivalent (the top manager) are the same person, s person, same the are manager) top (the equivalent or manager Elected June 13, 3 Term years 20, 20, June June Date 2019 Elected Male Male Gender Gender Shing Shing Name Li Gang Gang Li Su, Chwen- Su, Enterprise Co., Co., Enterprise represented by represented

N/A (Note) Remarks Remarks

Son ship Relation Su, Shing Name Chwen Chwen Second Degree of Familial or Spouse Supervisory Positions Supervisory Positions Relationship within the the within Relationship N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Title Consanguinity also holding holding also Consanguinity Management, Directorial, or or Directorial, Management, Director

ssity and corresponding measures (such as (such measures and corresponding ssity Current Positions Held in other Companies other in Companies Held Positions Current Director, Chongqing Yudu Toyota Sales Co., Ltd. Co., Ltd. Sales Toyota Yudu Chongqing Director, Service & Sales Automobile Yurun Chongqing Director, Co., Ltd. Co. Accessory Automobile Yuguo Chongqing Director, Ltd. Ltd. Co., Service & Sales Motor Hozhan Nanjing Director, Director, Kuotu Motor Co., Ltd. Corp. Denso Taiwan Supervisor, Ltd. Co., Trading Sun Cheng Director, Ltd. Co., Investment Shan Yuan Jin Director, Ltd. Co., Enterprise Gang Li Director, Ltd. Co., Trading Sun Cheng Chairman, Ltd. Co., Investment Shan Yuan Jin Chairman, Ltd. Co., Enterprise Gang Li Director, Ltd. Co., Investment Hoyu Director, Ltd. Co., Industrial Screw Director,Shiho Corp. Packaging Flexible Formosa Director, Ltd. Co., Motor Yuan Chang Chairman, Ltd. Co., Investment Hoyu Director, Managing Ltd. Co., Motor Toyota Yang Lang Director, Ltd. Co., Trading Union Sun Chairman, Ltd. Co., Industrial Kitahara Director, Ltd. Co., Trading Chi Yong Supervisor, Ltd. Co., Investment Hoyu Director, Managing Ltd. Co., Agency Insurance Ho-An Director, Ltd. Co., Agency Insurance Ho-Chuang Director, Ltd. Co., Investment (BVI) Ho-Yu Shanghai Director, Ltd. Co., Investment Ho Yu jin Tien Director, Limited International Hoyun Director, Corp. Packaging Flexible Formosa Director, Experience Experience Education and Master’s in in Master’s finance ,Unive rsity of Southern California The Affiliated Industrial Vocational High School of National Changhua of University Education School of Economics, Konan University Department Electrical of Engineering, National Central University in Master’s Business Intelligence,

0% 0% 0% 0% 0% 0% 0% 0% %

0 0 0 0 0 0 0 0 under under Nominee Accounts Shares Held Number

pouse orrelative theof each other, reasons, rationality, nece 0% 0% 0% 0% 0% 0% employees or managers) shall be explained. explained. be shall managers) or employees % 0.2% 0.02%

0 0 0 0 0 0 Minors 90,217 Spouses and Spouses Shareholding of Shareholding Number Children that are are that Children 1,070,930

0% 0% % % 0.03% 7.43% 2.55% 0.11% 0.94% 0.17%

0 0 600,000 174,000 954,408 5,126,000 Number Number

40,569,353 13,922,894 Current Shareholding Shareholding Current

0% % % 0.03% 7.43% 2.55% 0.11% 0.94% 0.18% 0.007%

0 Elected 40,000 600,000 174,000 966,315 5,126,000 Number Number 40,569,353 13,922,894 Shareholding When When Shareholding t moret than half of the directors do not concurrently serve as First Date 2000 2004 2010 2011 manager or equivalent (the top manager) are the same person, s person, same the are manager) top (the equivalent or manager Elected May May 23, June 22, June 18, June 22, 3 3 3 3 Term years years years years 20, 20, 20, 20, 20, June June June June June Date 2019 2019 2019 2019 Elected Male Male Male Male Female Gender Gender Ltd. Ltd., Ltd., Ltd., Yieng Name Li Gang Gang Li Su, Jean Gui Long Long Gui Yuan Tuo Tuo Yuan Chun Yung Chun Yung Chang, Shih-Chang, Ko, Junn-Yuan Junn-Yuan Ko, Enterprise Co., Co., Enterprise represented by by represented represented by by represented represented by by represented represented by represented Investment Co., Co., Investment Huang, Wen-Jui Huang, Wen-Jui Investment Co., Co., Investment Investment Co., Co., Investment

Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan or Place of of Place or Nationality Nationality Registration (Continued) (Continued) Title Director Director Director Director III. Corporate Governance III. Corporate Note: if the chairman of the board of directors and the general increasingandnumberthe tha independentof the directors, way III C t G

N/A (Note) Remarks Remarks

ship Father Relation Name Su, Yi- Chung Chung Second Degree of Familial or Spouse Supervisory Positions Supervisory Positions Relationship within the the within Relationship Title Consanguinity also holding holding also Consanguinity Management, Directorial, or or Directorial, Management, Director ssity and corresponding measures (such as (such measures and corresponding ssity and President, Hotong Motor Investment Co., Co., Investment Motor Hotong President, and

Current Positions Held in other Companies other in Companies Held Positions Current Director, Formosa Flexible Packaging Corp. Corp. Packaging Flexible Formosa Director, Director, Hotai Ltd. Leasing Co., Ltd. Co., Service, Mobility Hoing Director, Ltd. Co., Development Tai Director,Ho Ltd. Co., Motor Yuan Chang Supervisor, Director, Hoyun International Lease Ltd. Co., Ltd. Co., (Shanghai) Tech Auto Carmax Director, Changhe Commercial Guangqi Guangzhou Director, Ltd. Co., Technology Automobile Director Ltd. Ltd. Co., Service Motor Hoyu Shanghai Director, Ltd. Co., Service Motor Hozhan Shanghai Director, Ltd. Co., Service Motor Helin Shanghai Director, Ltd. Co., Operation Cars Used Hede Shanghai Director, & Sales Motor Lexus Heling Yangpu Shanghai Director, Ltd. Co., Service manager, Shanghai general and director Executive Ltd. Media Co., Guangxin Culture manager, Shanghai general and director Executive Hemian Ltd. Technology Co., Automotive Service Automobile Hexin Shanghai director, Executive Ltd. Co., Consulting manager, Shanghai general and director Executive Ltd. Co., Technology Automotive Hechen Service Motor Lexus Heling Jiading Shanghai Director, Co., Ltd. Service & Sales Motor Lexus Heling Chongqing Director, Co., Ltd. Helingv Tangshan Director, Service & Sales Motor Lexus Heling Nanchang Director, Co., Ltd. and Sales Motor Toyota Ho-Yu Zaozhuang Director, Ltd. Co., Service Service Sales Automobile Hewan Zaozhuang Director, Co., Ltd. Co., & Service Sales Motor Lexus Heling Tianjin Director, Ltd. Ltd. Co., Service Motor Hozhan Tianjin Director, Experience Experience Education and Tokyo Tokyo of University Information Sciences The Wharton School of the of University Pennsylvania

0% 0% %

0 0 under under Nominee Accounts Shares Held Number

pouse orrelative theof each other, reasons, rationality, nece 0% 0% employees or managers) shall be explained. explained. be shall managers) or employees %

0 0 Minors Spouses and Spouses Shareholding of Shareholding Number Children that are are that Children

% % 0.0% 0.002%

0 10,000 Number Number

Current Shareholding Shareholding Current

% % 0.0% 0.002%

0 Elected 10,000 Number Number Shareholding When When Shareholding t moret than half of the directors do not concurrently serve as First Date 2000 manager or equivalent (the top manager) are the same person, s person, same the are manager) top (the equivalent or manager Elected June 22, 3 Term years 20, 20, June June Date 2019 Elected Male Male Gender Gender Name Co., Ltd. Ltd. Co., Yong Hui Yong Mr. Leon Soo Soo Leon Mr. Development Development represented by represented

(Note) Remarks Remarks

ship Relation Name Second Degree of Familial or Spouse Supervisory Positions Supervisory Positions Relationship within the the within Relationship N/A N/A N/A N/A N/A N/A N/A N/A Title Consanguinity also holding holding also Consanguinity Management, Directorial, or or Directorial, Management, ssity and corresponding measures (such as (such measures and corresponding ssity Beijing Ho-Yu Toyota Motor Sales & Service Co., Co., Service & Sales Motor Toyota Ho-Yu Beijing

Current Positions Held in other Companies other in Companies Held Positions Current

Director, Tianjin Hoyu Motor Sales & Service Co., Ltd. Ltd. Co., Service & Sales Motor Hoyu Tianjin Director, Ltd. Co., Trade International Heyi Tianjin Chairman, Motor Lexus Heling Area New Binhai Tianjin Director, Ltd. Co., Service Trading Equipment Logistics Ho-Qian Shanghai Director, Co., Ltd. Ltd. Co., Service & Sales Motor Ho-Yu Linyi Director, Co., & Service Sales Motor Lexus Heling Beijing Director, Ltd. Co., Service & Sales Motor Lexus Heling Linyi Director, Ltd. Director, Motor Hotai Committee, Remuneration the of Member Co., Ltd. Ltd. Co., Motor Hotai Committee, Audit the of Member Co., Technology Intelligent Alfa Director, Independent Ltd. Motor Hotai Committee, Remuneration the of Member Co., Ltd. Ltd. Co., Motor Hotai Committee, Audit the of Member Ltd Lexus Du Zhong Taizhou Director, Sales Automobile Toyota central Jinzhong Director, Ltd. Co., Service Automobile Lexus and Taikang Chongqing Director, Sales Service Co., Ltd. Ltd. Co., Sales Toyota Yudu Chongqing Director, Service & Sales Automobile Yurun Chongqing Director, Co., Ltd. Ltd. Co., Service & Sales Motor Hozhan Nanjing Director, Communication Yongda Tianjin director, Executive Ltd Co., Technology Experience Experience Education and Department Department of Law, National Chung Hsing University in Masters Industrial Systems Engineering and Management, Institute Asian of Technology % 0.0% 0.0% 0 0 under under Nominee Accounts Shares Held Number pouse orrelative theof each other, reasons, rationality, nece employees or managers) shall be explained. explained. be shall managers) or employees % 0.0% 0.0% 0 Minors Spouses and Spouses Shareholding of Shareholding Number Children that are are that Children

% % 0.0005% 0 Number Number

Current Shareholding Shareholding Current

% % 0.0005% 0 0% 0 0% 0 3,000 Elected Number Number Shareholding When When Shareholding t moret than half of the directors do not concurrently serve as First Date 2019 2016 manager or equivalent (the top manager) are the same person, s person, same the are manager) top (the equivalent or manager Elected June 20, June 21, 3 3 Term years years 20, 20, 20, June June June Date 2019 2019 Elected Male Male Male Gender Gender Name Su, Chin-Huo Chin-Huo Su, Shih, Hsien-Fu

Taiwan Taiwan Taiwan or Place of of Place or Nationality Nationality Registration (Continued) (Continued) Title Director Director III. Corporate Governance III. Corporate Note: if the chairman of the board of directors and the general increasingandnumberthe tha independentof the directors, way III C t G Independent Independent

(Note) Remarks Remarks

ship Relation Name Second Degree of Familial or Spouse Supervisory Positions Supervisory Positions Relationship within the the within Relationship N/A N/A N/A N/A Title Consanguinity also holding holding also Consanguinity Management, Directorial, or or Directorial, Management, ssity and corresponding measures (such as (such measures and corresponding ssity Current Positions Held in other Companies other in Companies Held Positions Current Member of the Remuneration Committee, Hotai Motor Motor Hotai Committee, Remuneration the of Member Co., Ltd. Ltd. Co., Motor Hotai Committee, Audit the of Member Liquor and Tobacco Taiwan Director, Independent Corporation Experience Experience Education and PhD in in PhD Business Administratio n, National Taipei University % 0.0% 0 under under Nominee Accounts Shares Held Number pouse orrelative theof each other, reasons, rationality, nece employees or managers) shall be explained. explained. be shall managers) or employees % 0.0% Minors Spouses and Spouses Shareholding of Shareholding Number Children that are are that Children % % Number Number

Current Shareholding Shareholding Current % % 0 0% 0 0% 0 Elected Number Number Shareholding When When Shareholding t moret than half of the directors do not concurrently serve as First Date 2016 manager or equivalent (the top manager) are the same person, s person, same the are manager) top (the equivalent or manager Elected June 21, 3 Term years 20, 20, June June Date 2019 Elected Male Male Gender Gender Name Wu, Shih-Hao Shih-Hao Wu,

Taiwan Taiwan or Place of of Place or Nationality Nationality Registration (Continued) (Continued) Title Director III. Corporate Governance III. Corporate Note: if the chairman of the board of directors and the general increasingandnumberthe tha independentof the directors, way Independent

III. Corporate Governance (2) Professional qualifications and independence analysis of directors As of April 21, 2020 Meet One of the Following Professional Qualification Requirements, Together Independence (Note 1) Condition with at Least Five Years Work Experience A lecturer (or A judge, Work higher prosecutor, experience position) at a lawyer, in business, Number public or accountant, law, of private or other finance, serving college or professional accounting university in or technical or as an the specialist as otherwise independ department required by as required ent of business, the by the director law, finance, company’s company’s 1 2 3 4 5 6 7 8 9 10 11 12 of other Name accounting or operations operations public other who has compani academic obtained a es departments certificate relevant and through required by passing a the national company’s examination operations Huang, Nan- 9 9 9 9 9 9 9 0 Kuang KAZUO 9 9 9 9 9 9 9 9 0 NAGANUMA Su, Yi-Chung 9 9 9 9 9 9 9 9 0 Lin, Li-Hua 9 9 9 9 9 9 9 9 9 0 Huang, Chih- 9 9 9 9 9 9 9 9 9 0 Cheng Su, Chwen- 9 9 9 9 9 9 0 Shing Su, Jean 9 9 9 9 9 9 9 0 Soo, Leon 9 9 9 9 9 9 9 0 Chang, Shih- 9 9 9 9 9 9 9 9 9 9 9 0 Yieng Huang, Wen- 9 9 9 9 9 9 9 9 9 0 Jui Ko, Junn-Yuan 9 9 9 9 9 9 9 9 9 0 Shih, Hsien- 9 9 9 9 9 9 9 9 9 9 9 9 9 0 Fu Wu, Shih-Hao 9 9 9 9 9 9 9 9 9 9 9 9 9 1 Su, Chin-Huo 9 9 9 9 9 9 9 9 9 9 9 9 9 0 Note 1: Please tick the corresponding boxes that apply to each of the directors during the two years prior to being elected or during the term of office. (1) Not an employee of the Company or any of its affiliates. (2) Not a director or supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an independent director of the Company, its parent company or any subsidiary appointed in accordance with local laws and regulations.) (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the five degree of kinship, of any of the persons in the preceding three subparagraphs. (5) Not directly holding more than 5% of the total issued shares of the company, holding the top five shares, or in accordance with Article 27, item 1 or 2 of the Company Act of Taiwan as a director, supervisor or employee appointed as a representative to act as the corporate shareholder of the company's director or supervisor (Not applicable in cases where the person is an independent director of the Company, its parent company or any subsidiary appointed in accordance with local laws and regulations.) (6) Not a director, supervisor or employee of another company who is a director or more than half of the shares with voting rights of the company are controlled by the same person. (Not applicable in cases where the person is an independent director of the Company, its parent company or any subsidiary appointed in accordance with local laws and regulations.) (7) Not a director, supervisor or employee of other companies or entities who is the same person or spouse as the chairman, general manager or equivalent of the company (Not applicable in cases where the person is an independent director of the Company, its parent company or any subsidiary appointed in accordance with local laws and regulations.)

III. Corporate Governance (8) Not a Director, supervisors, managers or shareholder holding more than 5% of the company's shares (However, this restriction shall not apply if a specific company or institution holds more than 20% of the total issued shares of the company, but less than 50%, and is an independent director established by the company and its parent company, subsidiary or subsidiary of the same parent company in accordance with this law or local laws and regulations.) (9) Not a person who proved audit to the company or an affiliated enterprise, or professional, sole proprietorship, partnership, business owner, partner, director (director), supervisor (supervisor), manager and spouse of the company or institution who has obtained business, legal, financial, accounting and other related services with the cumulative amount of remuneration not exceeding NT $500,000 in the past two years. (10) Not a spouse or second degree relative with other directors. (11) Not an event under Article 30 of the Company Act of Taiwan. (12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act of Taiwan.

III. Corporate Governance (3) In cases where directors are the representatives of institutional shareholders, the major shareholders of such institutional shareholders (including % of stocks held) are as follows: As of April 21, 2020 Company Name of Major Shareholders Corporate Shareholder Tuo De Investment Co., Ltd. (18.87%), Zhong Yi Investment Co., Ltd. (14.07%), IRT Corporation (12.4%), Hong Yuan Investment Co., Ltd. (10.02%), Chang Hong Bai Sheng Investment Co., Ltd. Chun Yung Investment (9.7%), Hui Min Investment Co., Ltd. (5.89%), Sheng Gao Enterprise Co., Ltd. (5.83%), Yi Hong Co., Ltd. Investment Co., Ltd. (5.83%), Hotai Capital Ltd. (5.82%), and Shang Yao Investment Co., Ltd. (5.48%).

Japan Trustee Service Bank, Ltd. (11.37%), Toyota Industries Corporation (7.2%), The Master Trust Bank of Japan, Ltd. (5.52%), Nippon Life Insurance Company (3.36%), JP Morgan Chase Toyota Motor Bank, N.A. (3.05%), DENSO CORPORATION (2.72%), State Street Bank and Trust Company Corporation (2.60%), Trust & Custody Services Bank, Ltd. (1.74%), Mitsui Sumitomo Insurance Company, Limited (1.72%), and Tokio Marine & Nichido Fire Insurance Co., Ltd. (1.54%)

Li Gang Enterprise Co., Lin, Chih-Han (34%), Su, Yin (20%), Su, Se-I (20%), Li, Chun-Jen (17%), Su, Jean (3%), Su, Ltd. Chwen-Shing (6%),

Yong Hui Development Soo, Leon (100%) Co., Ltd.

Gui Long Investment SK Harvest Holdings Ltd. (79.01%), Chen, Li-Chun (10.99%), and Wangfu Investment Co., Ltd. Co., Ltd. (10%). Ko, Wen-Hsiang (10%), Ko, Wen-Ping (10%), Ko Wang, Wen-Liang (9.5%), Ko, Ying-Cheng (7%), Yuan Tuo Investment Ko, Ying-Ho (6%), Ko, Ying-Hsin (6%), Ko, Su-Hui (5.3%), Ko, Su-Min (5.3%), Kang Yu Investment Co., Ltd. Co., Ltd. (5%), Ko, Wen-Sheng (4.6%), Ko, Wang-Chung (4.6%), and Ko, Wang-Cheng (4.6%)

(4) Below is a list of the major shareholders (including % of stocks held) of the top shareholders of Hotai institutional shareholders listed above who are themselves institutional shareholders As of April 21, 2020 Company Name Major Shareholders Tsai, Yueh-Chuan (8%), Tsai, Yueh-Lin (8%), Chen, Yu-Ting (8%), Jiayi Progressive Tuo De Investment Enterprises Ltd. (10.16%), Chuang Ying Investment Co., Ltd. (6.4%), Jiayi Social Welfare Co, Ltd. Foundation (19.84%), Sunrise Education Foundation (19.68%), and Haiken Social Welfare Foundation (19.92%). Zhong Yi Investment Huang, Wen-Jui (50%) and Huang, Tao-Tien (50%) Co., Ltd.

III. Corporate Governance Company Name Major Shareholders

Eagle Sharp Global Limited (50%), Chang, Pei-Yao (24%), Chang, Feng-Wen (1%), and IRT Corporation Huang, Chih-Lin (25%)

Hong Yuan Wang, Yueh (40%), Chang, Nai-Liang (24%), Tsai, Sung-Po (20%), and Tsai Min, Chia-Chin Investment Co., Ltd. (16%) Chang Hong Bai Sheng Investment Huang Hsu, Cheng-Pao (99.8%) and Chang, Wen-Yu (0.2%) Co., Ltd. Hui Min Investment Huang, Shu-Hui (95%) and Tsai, Sung-Po (5%) Co., Ltd.

Sheng Gao Good Sense Limited (94.54%), Huang Shih, Hsuan-Chi (5.41%), and Huang, Chih-Cheng Enterprise Co., Ltd. (0.05%)

Yi Hong Investment Cheng Hsuan Social Welfare Foundation (59.44%), G&R Brothers' Investment Co., Ltd. Co., Ltd. (33.33%), Huang, Si-Chia (6.67%), and Hotai Capital Ltd. (0.56%)

Huang, Si-Yuan (45%), Huang, Si-Bo (45%), Chen, Wen-Kui (5%), and Chang, Chih-Hao Hotai Capital Ltd. (5%)

Li, Ching-Fen (25.98%), Li, Ching-Chao (21.20%), Sheng Jie Investment Co., Ltd. (19.57%), Shang Yao Ming Light Co., Ltd (14.57%), Huang, Chuan-Chuan(13.90%), Wang, Chuan-Bo (2.39%), Investment Co., Ltd. and Wang, Chuan-Fu (2.39%)

SK Harvest Holdings Jennifer Chen (100%) Ltd.

Wangfu Investment Yu, Shao Shian (20.83%), Chang, Hung Ying (79.04%), and Gui Long Investment Co., Ltd. Co., Ltd. (0.13%).

Kang Yu Investment Ko, Wen-Hui (25%), Ko, Wen-Hua (25%), Ko, Wang-Jen (25%), and Ko, Wang-Te (25%) Co., Ltd.

Note: Disclosure for shareholders of major institutional shareholders of Toyota Motor Corporation is not available subject to local restrictions.

N/A , , 2020 (Note2) Remarks Remarks ship Relation Relation N/A N/A Name Positions Familial or Spouse holding Management, Management, holding N/A Title Title Directorial, or Supervisory Supervisory or Directorial, Degree of Consanguinity also also Consanguinity of Degree Relationship within the Second Second the within Relationship . .

td. .,

Current Positions Held at other Companies Companies at other Held Positions Current

Director, Shanghai Ho-Qian Logistics Equipment Trading Co., Ltd Co., Trading Equipment Logistics Ho-Qian Shanghai Director, Ltd. Co., & Service Sales Motor Ho-Yu Linyi Director, Co., & Service Sales Motor Toyota Ho-Yu Beijing Director, L Co., & Service Sales Motor Lexus Heling Beijing Ltd.Director, Ltd. Co., & Service Sales Motor Lexus Heling Linyi Director, Ltd. Co., Sales Toyota Yudu Chongqing Director, Ltd. Co., & Service Sales Automobile Yurun Chongqing Director, Co. Ltd. Accessory Automobile Yuguo Chongqing Director, Ltd. Co., & Service Sales Motor Hozhan Nanjing Director, Corp. Denso Taiwan Supervisor, Co. Marketing Innovation Hotai Chairman, Ltd. Co., Service, Mobility Hoing Director, Ltd. Co., Gang Enterprise Li Director, Chairman, Hozan Investment Co., Ltd. Ltd. Co., Investment Hozan Chairman, Ltd. Co., Carmax Chairman, Ltd. Co., Motor Eastern Chairman, Connection Cyber Hotai Chairman, Ltd. Co., Investment Motor Hotong Vice Chairman, Motors Co., Ltd. Kuozui Director, Director, Kuotu Motor Co., Ltd. Co., Motor Ltd. Chang Yuan Director, Co., Ltd. Motor, Kuotu Director, Ltd. Co., Du Motor Nan Director, Ltd. Co. Du Motor Kao Director, Ltd. Co., Investment Hoyu Director, Ltd. Co., Finance Hotai Director, Ltd. Leasing Co., Hotai Director, Ltd. Co., Enterprise Hozao Director, Ltd. Co., Lease International Hoyun Director, Ltd. Co., (Shanghai) Tech Auto Carmax Director, Shanghai ServiceMotor Hoyu Co., Ltd. Director, Ltd. Service Co., Motor Hozhan Shanghai Director, Ltd. Service Co., Motor Heling Shanghai Director, & Service Sales Motor Lexus Heling Yangpu Shanghai Director, Ltd. Co., Ltd. Co., Service Motor Lexus Heling Jiading Shanghai Director, Ltd Co., & Service Sales Motor Lexus Heling Chongqing Director, Ltd. Co., & Service Sales Motor Lexus Heling Tangshan Director, Ltd. Co., & Service Sales Motor Lexus Heling Nanchang Director, Co., Service and Sales Motor Toyota Ho-Yu Zaozhuang Director, Ltd. Ltd. & Service Co., Sales Motor Lexus Heling Tianjin Director, Ltd. Co., Service Motor Hozhan Tianjin Director, Ltd. Co., & Service Sales Motor Toyota Ho-Yu Tianjin Director, Co Service Motor Lexus Heling Area New Binhai Tianjin Director, Ltd. employees or managers) shall be explained. explained. be shall managers) or employees Experience Experience and Education MBA, Massachusetts Massachusetts MBA, Institute of Technology

0.0% %

0 Shares Held under under Held Shares Number Nominee Accounts

% 0.02% ivisional Executive Officers Officers Executive ivisional

Minors Spouses and and Spouses April 21 April Shareholding of 100,000 Children that are that are Children Number Number

0.0% %

0 t moret than half of the directors do not concurrently serve as lidated financial report and to companies invested by Hotai.by invested companies to and report financial lidated nd the chairman of the board of directors and are the same person, spouse orrelative as (such the ofmeasures each reasons, other, corresponding and rationality,necessity Shareholding Number Number Date 2010 June 22, 22, June

Appointed Male Gender Gender Shing Name Su, Chwen- Su, Taiwan Taiwan Nationality Nationality President, Vice Presidents, Chief Officer, and Department and D Vice Presidents, ChiefPresident, Officer,

Title Title

(5) President President

III. Corporate Governance Governance Corporate III. conso the in stated companies to transferred Temporarily Note1: manager) a top (the equivalent or manager general the if Note2: increasingnumberthe and tha independentof the directors, way III Corporate Governance

(Note2) Remarks Remarks

ship Relation Relation Name Supervisory Positions Consanguinity also holding holding also Consanguinity N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Title Title within the Second Degree of of Degree the Second within or Directorial, Management, Spouse or Familial Relationship Relationship Familial or Spouse Current Positions Held at other Companies Companies at other Held Positions Current Chairman, Kuozui Motor Co., Ltd. Ltd. Co., Motor Kuozui Chairman, Ltd. Co., Carmax Director, Co., Ltd. Motor, Kuotu Director, Co.,Hotong Motor Investment Ltd. Director, Ltd. Leasing Co., Hotai Supervisor, Hoing Mobility Supervisor, Service Co., Ltd. Ltd. Co., Insurance Hotai Vice Chairman, Ltd. Co., Motor Miau Tau Director, Ltd. Co., Motor Central Director, Motor Co., Ltd. Toyota Taipei Supervisor, Director, Hotai InsuranceLtd. Co., Ltd. Co., Mobility Service Hotai Chairman, Supervisor, Eastern Motor Co., Ltd. Co., Ltd. Transport Tai Yi Supervisor, Ltd. Co., Transport and Storage Shun Kuai Supervisor, Ltd. Co, Design Technology Smart Chairman, Ltd. Co., Carmax President, and Director Business Changhe Automobile GAC Guangzhou Vice Chairman, Ltd. Technology Co., Ltd. Co., (Shanghai) Autotech CarMax Chairman, Ltd. Co., & Service Sales Motor Lexus Beijing Heling Chairman, Ltd. Co., & Service Sales Motor Lexus Heling Linyi Chairman, Ltd. Co., & Service Sales Motor Ho-Yu Linyi Chairman, Ltd. Co., & Service Sales Motor Toyota Beijing Ho-Yu Chairman, Service Motor Lexus Heling Area New Binhai Tianjin Chairman, Ltd. Co., Ltd. Co., Parts Auto Innovation Chairman, Ltd. Co., Motor Kuotu President, and Director Ho-An Insurance Agency Ltd. Supervisor, Co., Ltd. Leasing Co., Hotai President, and Director Ltd. Co., Service, Mobility Hoing President, and Director employees or managers) shall be explained. explained. be shall managers) or employees Experience Education and and Education School Commerce, of University Waseda in Master’s Studies, Development Chengchi National University of Department Jen Fu Economics, University Catholic Vehicle in Master’s National Engineering, of University Taipei Technology EMBA, Soochow University Taiwan National MBA, University

0.0% 0.0% 0.0% 0.0% %

0 0 0 0 Shares Held under under Held Shares Number Number Nominee Accounts

0.0% 0.0% 0.0% 0.0% %

0 0 0 0 Minors Spouses and and Spouses Shareholding of Children that are that are Children

Number Number

0.0% 0.0% 0.0% 0.0% %

t moret than half of the directors do not concurrently serve as 0 0 0 0 lidated financial report and to companies invested by Hotai.by invested companies to and report financial lidated nd the chairman of the board of directors and are the same person, spouse orrelative as (such the ofmeasures each reasons, other, corresponding and rationality,necessity Shareholding Number Number Date 2019

January 1, 1, January Appointed July 1, 2017 July 1, 2017 July 1, 2017 July 1, 2019 July 1, 2010 Male Male Male Male Male Male Gender Gender Chou Hsien Name Note1) Note1) Note1) Note1) KAZUO Fred Hsieh Fred Lai, Hung-Ta Lai, Hung-Ta NAGANUMA Chen, Chien- Chen, Liu, Yuan-Sen Liu,Yuan-Sen Huang, Ming-Huang, (Please refer to to refer (Please (Please refer to to refer (Please (Please refer to to refer (Please (Please refer to to refer (Please lity lity Japan Japan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Nationa (Continued) Vice Vice Vice Vice Vice Title Title Director President President President President President President President Executive Executive Executive

(Note2) Remarks

ship Relation Supervisory Positions Positions Supervisory Consanguinity also holding holding also Consanguinity N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Title Name within the Second Degree of of Degree Second the within or Directorial, Management, Spouse or Familial Relationship Relationship Familial or Spouse

Taiwan Ltd. Taiwan

Chuang Insurance Agency Co., Ltd. Co., Agency Insurance Chuang - Current Positions Held at other Companies Companies other Held at Positions Current Toyota Material Handling Taiwan Ltd. Taiwan Handling Material Toyota

Director, Eastern Motor Co., Ltd. Co., Motor Eastern Director, Ltd. Co., Taiwan Tire Yokohama Director, Ltd. Co., Agency Insurance Ho-An Director, Ltd. Co., Transport and Storage Shun Kuai Director, Director, Ltd. Co., Motor Eastern Director, Ltd. Co, Technology Design Smart Director, Ltd. Co., Investment Yun Heng Director, Ltd. Co., Transport Freight Tai Fan Director, Ltd. Co., Transport Tai Hua Director, Ltd. Co., Machinery Guangquan Director, Ltd. Co., Management Asset Tongtai Director, Ltd. Co., Material Automotive Tongyou Director, Ltd. Co., Service, Mobility Hotai Director, Handling Material Toyota President, and Director Ltd. Co., Trading Equipment Logistics Ho-Qian Shanghai Director, Ho Supervisor, Ltd. Co., Investment Yun Heng Supervisor, Ltd. Co., Transport Tai Freight Fan Supervisor, Ltd. Co., Tai Transport Hua Supervisor, Co. Marketing Innovation Hotai Director, Ltd. Co., Connection Cyber Hotai Director, Ltd Co., Agent Insurance Hochuan Director, Ltd. Co., Service, Mobility Hotai Director, s in Vehicle in s Public in s Industrial in s ’ ’ ’ ’ Experience Experience Education Education and Master Automotive Engineering Indiana Technology, University State Taipei National EMBA, University Master National Engineering, of University Taipei Technology Master Chung National Policy, University Hsing Master Management, Kung Cheng National University

0.0% 0.0% 0.0% %

0 0 0 Shares Held under under Held Shares Nominee Accounts Nominee

0.0% 0.0% 0.0% % Number

0 0 0 Minors Minors Spouses and and Spouses Shareholding of of Shareholding Children that are are that Children

0.0% 0.0% 0.0% % Number

0 0 0 Shareholding Shareholding Number

Date

Appointed

Male Male 2014 1, July Male Male 2010 1, July Male 2015 1, July Male 2016 1, July Male Male 2014 1, July

Shan Shan Hung Name Name Gender Chien, Chien, Note1) Note1) Liu, Chuan- Hsiao, Hsing- Hsiao, Wu, Chia-Yen Wu, Wu, Pin-Tsung Wu, Liu, Sung- Liu, (Please refer to to refer (Please

lity Taiwan Taiwan Taiwan Taiwan Taiwan Nationa

Title Title Director Director Director Director Director III. Corporate Governance Governance Corporate III. Hotai. by invested companies to and report financial consolidated the in stated companies to transferred Temporarily Note1: as (such measures corresponding and necessity rationality, reasons, the other, of each or relative spouse same person, the are and directors of board of the chairman the and manager) top (the orequivalent manager general the if Note2: explained. be shall managers) or employees as serve do concurrently not of directors the half than more that way the and directors, independent of number the increasing III Corporate Governance (Continued)

(Note2) Remarks Remarks

Current Positions Held at other Companies Companies at other Held Positions Current Director, Formosa Flexible Packaging Corp. Corp. Packaging Flexible Formosa Director, Ltd. Leasing Co., Hotai Director, Ltd. Co., Lease International Hoyun Director, Ltd. Co., (Shanghai) Autotech Carmax Director, Automobile Business Changhe GAC Guangzhou Director, Ltd. Technology Co., Ltd. Co., Investment Motor Hotong President, and Director Ltd. Co., Service Motor Hoyu Shanghai Director, Ltd. Service Co., Motor Hozhan Shanghai Director, Ltd. Service Co., Motor Heling Shanghai Director, Ltd. Co., Vehicle Used Shanghai Hede Chairman, & Service Sales Motor Lexus Heling Yangpu Shanghai Director, Ltd. Co., & Culture Guangxin Shanghai and President, Director Managing Media Ltd. Co., Auto Ho-Mian Shanghai President, and Director Managing Ltd. Co., Technology Ltd. Co., Service Motor Lexus Heling Jiading Shanghai Director, Service and Motor Hoxin Shanghai Director, Managing Ltd. Co., Consulting Auto Hochen Shanghai President, and Director Managing Ltd. Co., Technology Ltd Co., & Service Sales Motor Lexus Heling Chongqing Director, Ltd Co., & Services Sales Motor Lexus Heling Tangshan Director, Ltd Co., & Service Sales Motor Lexus Heling Nanchang Director, Co., Service and Sales Motor Toyota Ho-Yu Zaozhuang Director, Ltd. Ltd. Service Co., and Sales Motor Ho-Wan Zaozhuang Director, Ltd. Co., & Service Sales Motor Lexus Heling Tianjin Director, Ltd. Co., Service Motor Hozhan Tianjin Director, Ltd. Co., & Service Sales Motor Toyota Ho-Yu Tianjin Director, Ltd. Co., Trading International Ho-Yi Tianjin Chairman, Service Motor Lexus Heling Area New Binhai Tianjin Director, Ltd. Co., Ltd Co., Trading Equipment Logistics Ho-Qian Shanghai Director, Ltd. Co., & Service Sales Motor Ho-Yu Linyi Director, Ltd. Co., & Service Sales Motor Lexus Heling Beijing Director, Ltd. Co., & Service Sales Motor Lexus Heling Linyi Director, Ltd. Co., & Service Sales Motor Toyota Ho-Yu Beijing Director, Ltd Co., & Service Sales Motor Lexus Du Zhong Taizhou Director, Lt Co., & Service Sales Motor Toyota Central Jinzhong Director, & Service Sales Motor Lexus Heling Taikang Chongqing Director, Ltd. Co., Ltd. Motor Co., Yuan Chang Supervisor, Ltd. Co., Service, Mobility Hoing Director, Ltd. Co., & Services Sales Motor Hozhan Nanjing Director, Ltd. Co., Technology Xintong Yungda Tianjin Director, Ltd. Co., Development Tai Ho Director, Ltd Co., Sales Toyota Yudu Chongqing Director, Ltd. Co., & Service Sales Automobile Yurun Chongqing Director, employees or managers) shall be explained. explained. be shall managers) or employees Experience Education and and Education MBA, Wharton School School MBA, Wharton of the University of Pennsylvania 0.0% % 0 Shares Held under under Held Shares Number Number Nominee Accounts

% Minors Spouses and and Spouses Shareholding of Children that are that are Children

Number Number % t moret than half of the directors do not concurrently serve as 0 0.0% 0 0.0% lidated financial report and to companies invested by Hotai.by invested companies to and report financial lidated nd the chairman of the board of directors and are the same person, spouse orrelative as (such the ofmeasures each reasons, other, corresponding and rationality,necessity Shareholding Number Number Date

Appointed July 1, 2016 Male Gender Gender Name Note 1) Leon, Soo Soo Leon, (Please refer to to refer (Please lity lity Taiwan Taiwan Nationa (Continued) Title Title Director

(Note2) Remarks Remarks

ship Relation Relation Name Supervisory Positions Consanguinity also holding holding also Consanguinity N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Title Title within the Second Degree of of Degree the Second within or Directorial, Management, Spouse or Familial Relationship Relationship Familial or Spouse

, , Current Positions Held at other Companies Companies at other Held Positions Current N/A Ltd. Co., Motor Eastern Director, Co., Motor Ltd. Chang Yuan Director, Ltd. Co., Yun Tong Tai Yi Director, Co.,Hotong Motor Investment Ltd. Director, Ltd. Service Co., Motor Hoyu Shanghai Chairman, Ltd. Service Co., Motor Hozhan Shanghai Chairman, Ltd. Service Co., Motor Heling Shanghai Chairman, Ltd. Co., Vehicle Used Hede Shanghai Director, & Service Sales Motor Lexus Heling Yangpu Shanghai Chairman, Ltd. Co., Ltd. Media Co., & GuangxinShanghai Culture Supervisor, Ltd. Co., Technology Auto Shanghai Ho-Mian Supervisor, Co., Consulting and Service Motor Hoxin Shanghai Supervisor, Ltd. Ltd. Co., Technology Auto Hochen Shanghai Supervisor, Ltd. Co., Service Motor Lexus Heling Jiading Shanghai Director, Co., & Service Sales Motor Lexus Heling Chongqing Chairman, Ltd. Co., & Services Sales Motor Lexus Heling Tangshan Chairman, Ltd. Co., & Service Sales Motor Lexus Heling Nanchang Chairman, Ltd Service Co., and Sales Motor Toyota Ho-Yu Zaozhuang Chairman, Ltd. Ltd. Service Co., and Sales Motor Ho-Wan Zaozhuang Director, Ltd. Co., & Service Sales Motor Lexus Heling Tianjin Chairman, Ltd. Service Co., Motor Hozhan Tianjin Chairman, Ltd. Co., & Service Sales Motor Toyota Ho-Yu Tianjin Chairman, Co. Trading International Ho-Yi Tianjin President, and Director Ltd. Service Motor Lexus Heling Area New Binhai Tianjin Director, Co., Ltd & Sales Motor Lexus Heling Taikang Chongqing Chairman, Ltd. Co., Service Ltd. Co., & Service Sales Motor Hozhan Nanjing Chairman, Ltd. Co., Technology Xintong Yungda Tianjin Supervisor, Ltd. Co., CarMax Vice President, Ltd. Co., Design Technology Smart Supervisor, employees or managers) shall be explained. explained. be shall managers) or employees Experience Education and and Education Comprehensive Comprehensive Program, Commerce Commercial Yilan High Vocational School of Department Aerospace Tamkang Engineering, University Human in Master’s University Resources, Losof California, Angeles of division Graduate School, Business University of New South Wales

0.0% 0.0% %

0 0 Shares Held under under Held Shares Number Number Nominee Accounts

0.0% 0.0% %

0 0 Minors Spouses and and Spouses Shareholding of Children that are that are Children

Number Number

0.0% 0.0% % 0.0001%

t moret than half of the directors do not concurrently serve as 0 0 lidated financial report and to companies invested by Hotai.by invested companies to and report financial lidated nd the chairman of the board of directors and are the same person, spouse orrelative as (such the ofmeasures each reasons, other, corresponding and rationality,necessity 750 Shareholding Number Number Date

Appointed July 1 2019 July 1, 2016 July 1, 2017 July 1, 2018 Male Male Male Male Gender Gender

Shan Shan Name Note 1) Note 1) Note 1) Chen, Chun- Chen, Lai, Chih-Wei Chih-Wei Lai, Yeh, Chia-Han Chia-Han Yeh, (Please refer to to refer (Please to refer (Please (Please refer to to refer (Please Wang, Shih-Hao lity lity Taiwan Taiwan Taiwan Taiwan Taiwan Nationa (Continued) Title Title Director Director Director Director

(Note2) Remarks Remarks

ship Relation Relation Name Supervisory Positions Consanguinity also holding holding also Consanguinity N/A N/A N/A N/A Title Title within the Second Degree of of Degree the Second within or Directorial, Management, Spouse or Familial Relationship Relationship Familial or Spouse Current Positions Held at other Companies Companies at other Held Positions Current Vice President, Kuotu Motor Co., Ltd. Ltd. Co., Motor Kuotu Vice President, employees or managers) shall be explained. explained. be shall managers) or employees Experience Education and and Education Graduate institute Graduate of Engineering, Vehicle Taipei National University of Technology,

Shares Held under under Held Shares Number Number Nominee Accounts

Minors Spouses and and Spouses Shareholding of Children that are that are Children

Number Number % 0.0005 t moret than half of the directors do not concurrently serve as lidated financial report and to companies invested by Hotai.by invested companies to and report financial lidated nd the chairman of the board of directors and are the same person, spouse orrelative as (such the ofmeasures each reasons, other, corresponding and rationality,necessity 2,600 Shareholding Number Number Date

Appointed July 1 2019 Male Gender Gender

Name Hsiung Hsiung Note 1) Lai, Kuang Kuang Lai, (Please refer to to refer (Please lity lity Taiwan Taiwan Nationa (Continued) Title Title Director

0 0 0 0 0 0 0 Non- 8,750 parent Paid to Paid company company (Note 8) Affiliates or or Affiliates consolidated Compensation Directors from from Directors

Entities Entities 3.01% (Note 6) From All All From Consolidated Unit: NT$ thousands Total

G) as % of Net Net of % as G) Compensation From Hotai (A+B+C+D+E+F+ Income (Note 6) 6) (Note Income 2.87%

0 0 0 0 0 0 0 Stock

Entities Entities 0 0 0 0 0 0 (Note 6) From All All From Cash 4,775 Consolidated

0 0 0 0 0 0 0 (Note 5) Stock Employee

Profit Sharing- Sharing- Profit Remuneration (G) Remuneration 0 0 0 0 0 0 Cash From Hotai 4,775

0 0 0 0 0 0 0 Entities Entities From All All From (Note 6) Consolidated (F) Pensions Pensions

0 0 0 0 0 0 0 From Hotai Severance Pay and Pay Severance

0 0 0 0 0 0 Entities Entities 30,561 Company and/or any Consolidated Entities Entities Consolidated any and/or Company (Note 6) From All All From Consolidated except as otherwise disclosed herein: none none herein: disclosed otherwise as except

(E)(Note 4) 4) (E)(Note 0 0 0 0 0 0 0 0 0 0 0 0 0 0 and Allowances Salary, Bonuses, From Hotai 29,896 Compensation Received by a Director Who is an Employee of the of Employee is an Who Director a by Received Compensation

Entities Entities 2.71% (Note 6) From All All From Consolidated Total (Note 7)

of Net Income Income of Net Remuneration Remuneration From Hotai (A+B+C+D) as a % a as (A+B+C+D) 2.57%

0 0 0 0 90 15 218 2,224 Entities Entities From All All From (Note 6) Consolidated (Note 3) 0 0 0 0 90 15 Allowances (D) 135 From Hotai 1,530

Entities Entities From All All From (Note 6) 20,232 20,232 40,463 40,463 20,232 141,622 Consolidated Chen, Chi-Jhen dismissed after re-election on June 20, 2019. 2019. 20, June on re-election after dismissed Chi-Jhen Chen, o any consolidated entities in Hotai’s latest financial report report financial latest in Hotai’s entities consolidated o any (Note 2) Directors (C) (C) Directors 0 0 From Hotai Compensation to 20,232 20,232 40,463 40,463 20,232 141,622

0 0 0 0 0 0 900 0 0 1,800 Entities Entities (Note 6) From All All From

(B) Consolidated sidents over the past year: Remuneration Remuneration ofDirectors 0 0 0 0 0 0 and Pensions and Pensions Severance Pay Severance 900 From Hotai 1,800

0 0 0 0

720 7,920 4,060 Entities Entities (Note 6) From All All From 18,292 Consolidated Base 1) (A)(Note 0 0 0 0 Compensation 720 From Hotai 7,920 4,320 2,160

) mber 2019. ependent directors ’remuneration payment, and describe the relevance to the amount of remuneration according to the responsibilities, risks and time invested: The remuneration paid by Hotai to independent independent to by Hotai paid invested: remuneration and The time risks responsibilities, the to according remuneration of amount the to and relevance the describe payment, ’remuneration directors ependent ces provided in a non-employee capacity (e.g., as an advisor) t advisor) an as (e.g., capacity a innon-employee provided ces re-election on June 20, 2019, and Su, Yann-Hui, Su, Maick and Maick Su, Yann-Hui, Su, and 2019, June 20, on re-election association. Name Lin, Li-Hua Li-Hua Lin, Su, Yi-Chung Yi-Chung Su, Su, Chin-Huo Chin-Huo Su, Wu, Shih-Hao Shih-Hao Wu, Ko, Junn-Yuan Junn-Yuan Ko, Huang, Wen-Jui Huang, Wen-Jui Su, Chwen-Shing Chwen-Shing Su, Chang, Shih-Yieng Shih-Yieng Chang, Naganuma, Kazuo Kazuo Naganuma, Huang, Nan-Kuang Huang, Nan-Kuang Huang, Chih-Cheng Huang, Chih-Cheng Toyota Motor Corporation Corporation Motor Toyota Ltd. co., Enterprise Li Gang Gui Long Investment Co., Ltd. Ltd. Co., Investment Long Gui Yuan Tuo Investment Co., Ltd. Ltd. Co., Investment Tuo Yuan Chun Yung Investment Co, Ltd. Ltd. Co, Investment Chun Yung Su, Jean (Please refer to Note 1) 1) Note to refer Jean (Please Su, YongDevelopment Ltd. Co., Hui Su, Maick (Please refer to Note 1) 1) Note to refer Maick (Please Su, Soo, Leon (Please refer to Note 1) 1) Note to refer (Please Leon Soo, Su, Yann-Hui (Please refer to Note 1) 1) Note to refer (Please Yann-Hui Su, Shih, Hsien-Fu (Please refer to Note 1) 1) Note to refer (Please Hsien-Fu Shih, Chen, Chi-Jhen (Please refer to Note 1) 1) to Note refer (Please Chi-Jhen Chen, Authorizedrepresentative of Li Kung Enterpriseco., Ltd. (Authorizedrepresentative ofMotor Toyota Corporation) (Authorizedrepresentative of Li GangEnterprise co., Ltd.) ( (Authorizedrepresentative of Hui Yong DevelopmentCo., Ltd.) (Authorizedrepresentative ofGui Long Investment Co., Ltd.) (Authorizedrepresentative ofYuan Tuo Investment Co., Ltd.) (Authorizedrepresentative ofChun Yung InvestmentCo., Ltd.) (Authorizedrepresentative ofChun Yung InvestmentCo., Ltd.) (Authorizedrepresentative ofChun Yung InvestmentCo., Ltd.) (Authorizedrepresentative ofChun Yung InvestmentCo., Ltd.) (Authorizedrepresentative of Hui Yong DevelopmentCo., Ltd.) (Authorized representative ofJin Yuan ShanInvestment Co., Ltd (Authorized representative ofJin Yuan ShanInvestment Co., Ltd.) Remuneration Paid to Directors: Remuneration paid to Company directors, president, and vice pre

1. Title Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director (6) Manager Manager Chairman III. Corporate Governance III. Corporate Vice President President Vice Director/Senior Director/Senior Please state the policy, system, standards and structure of ind of structure and standards system, policy, the state Please III C t G Director/President Director/President Chairman/Director Director/Executive

Independent Director Director Independent Note2: Mr. Su, Maick changed his name to Su, Shang-Yong in Dece in Su, Shang-Yong name to his changed Maick Su, Note2: Mr. 1. of articles with Hotai's accordance in is determined directors servi the for Hotai of director by any received 2. Remuneration Note1: Su, Leon Jean, Shih, and Soo, office took Hsien-Fu after ─ ─ ─ ─ ─ 17 (Note 10) ;Su, Chin-Huo Chin-Huo ;Su, Su, Chwen-Shing Chwen-Shing Su, Su, Maick; Ko, Junn-Yuan Ko, Maick; Junn-Yuan Su, From All Consolidated Entities Consolidated All From Huang, Nan-Kuang; Chen, Chi-Jhen; Huang, Chih-Cheng Huang, Chih-Cheng Chi-Jhen; Chen, Huang, Nan-Kuang; Su, Yann -Hui ; Naganuma Kazuo; Su, Yi-Chung; Soo, Leon Soo, Yi-Chung; Su, Kazuo; Naganuma Yann ; -Hui Su, Lin, Li-Hua; Su, Jean; Chang, Shih-Yieng; Huang, Wen-Jui; Shi, Shi, Huang, Wen-Jui; Shih-Yieng; Chang, Jean; Li-Hua; Su, Lin, Shih-Hao Wu, Xian-Fu; ectors in the latest year. year. latest the in ectors 61,000 paid to the company drivers as compensation that’s not that’s compensation as drivers company paidthe to 61,000 idated entities in 2019, which includes salary, allowance, allowance, salary, includes which 2019, in entities idated Total Compensation (A+B+C+D+E+F+G) (A+B+C+D+E+F+G) Compensation Total ─ ─ ─ ─ 17 (Note 9) Soo, Soo, Leon From Hotai Su, Chwen-Shing Chwen-Shing Su, Naganuma Kazuo Kazuo Naganuma Su, Maick; Su, Yann-Hui Huang, Nan-Kuang; Chen, Chi-Jhen Chi-Jhen Chen, Huang, Nan-Kuang; Lin, Li-Hua; Su, Yi-Chung; Huang, Chih-Cheng; Su, Jean; Ko, Jean; Su, Huang, Chih-Cheng; Yi-Chung; Li-Hua; Lin,Su, Xian-Fu; Shi, Wen-Jui; Huang, Shih-Yieng; Chang, Junn-Yuan; Shih-Hao Wu, Chin-Huo; Su, ringe benefits such as company cars. There is a total of NT$3,1 of total a is There cars. company as such benefits ringe ent, executive officer, or employee) of Hotai and/or any consol any and/or of Hotai or employee) officer, executive ent, Names of Directors Directors Names of ther allowance, accommodation, and fringe benefits such as company cars. There is a total of NT$712,000 paid to the company company the to paid NT$712,000 of total a is There cars. company as such benefits fringe and accommodation, allowance, ther Remuneration Paid to Directors by Range ─ ─ ─ ─ ─ ─ 17 (Note 10) Su, Yi-Chung; Yi-Chung; Su,

From All Consolidated Entities Consolidated All From Chen, Chi-Jhen; Su, Chin-Huo Chin-Huo Su, Chi-Jhen; Chen, Su, Maick; Su, Yann-Hui; Ko, Junn-Yuan

Huang, Nan-Kuang; Huang, Chih-Cheng; Su, Chwen-Shing; Chwen-Shing; Su, Chih-Cheng; Huang, Huang, Nan-Kuang; Lin, Li-Hua; Su, Jean; Soo, Leon; Chang, Shih-Yieng; Naganuma Naganuma Shih-Yieng; Leon; Chang, Soo, Jean; Li-Hua; Su, Lin, Shih-Hao Wu, Xian-Fu; Shi, Huang, Wen-Jui; Kazuo; serving concurrently in the position of president, vice presid vice president, of position the in concurrently serving Directors. entities that received employee remuneration shall disclose the amount of employee profit-sharing approved by the Board of Dir of Board the by approved profit-sharing employee of amount the shall disclose remuneration employee received that entities lowances shown herein. herein. shown lowances wance, special allowance, other allowance, accommodation, and f accommodation, allowance, other allowance, special wance, all consolidated entities. entities. consolidated all ance, severance, all types of bonuses, and performance bonus. bonus. performance and bonuses, of all types severance, ance, uties in 2019, including travel allowance, special allowance, o allowance, special allowance, travel including 2019, in uties Total Remuneration (A+B+C+D) (A+B+C+D) Remuneration Total ─ ─ ─ ─ ─ ─ ─ 17 (Note 9) Su, Maick Maick Su, From Hotai Huang, Nan-Kuang; Chen, Chi-Jhen Chi-Jhen Chen, Huang, Nan-Kuang; Lin, Li-Hua; Su, Yi-Chung; Huang, Chih-Cheng; Su, Yann-Hui; Yann-Hui; Su, Huang, Chih-Cheng; Yi-Chung; Li-Hua; Su, Lin, Ko, Junn-Yuan; Leon; Soo, Jean; Su, Chwen-Shing; Su, Shi, Wen-Jui; Huang, Kazuo; Naganuma Shih-Yieng; Chang, Shih-Hao Wu, Chin-Huo; Su, Xian-Fu; drivers as compensation that’s not included in the amount of al of amount the in included not that’s compensation as drivers herein. shown allowances of amount the in included severance, all types of bonuses, performance bonus, travel allo travel bonus, performance bonuses, of types all severance, Compensation paid to directors in 2020 approved by the Board of Board the by approved 2020 in directors to paid Compensation d out their carrying in directors by incurred expenses Business (whether employee is an who director a by received Compensation consolidated any and/or Hotai of employee an is who director A and Hotai by directors to paid remuneration total of Disclosure Remuneration paid to directors in 2019, including salary, allow salary, including 2019, in directors to paid Remuneration Ǻ Ǻ Ǻ Ǻ Ǻ Ǻ Over Over Total 1,000,000

NT$ 0 ─ NT$ NT$1,000,000 NT$2,000,000 NT$3,500,000 Remuneration Remuneration NT$10,000,000 ─NT$2,000,000 ─NT$3,500,000 ─NT$5,000,000 NT$30,000,000 NT$50,000,000 NT$10,000,000 NT$5,000,000 ─ Note 2 Note 5 III. Corporate Governance III. Corporate Note 1 Note 4 Note 6 Note 3 NT$100,000,000 NT$100,000,000 ─NT$15,000,000 Paid to Directors Directors to Paid NT$15,000,000 ─ NT$30,000,000 ─ NT$50,000,000 ─

Ti onsolidated entities. entities. onsolidated

Pres Exec V Pres Exec V Pres V Pres V Pres

ector by Hotai. by ector V

s ofDecembers 31, 2019wasNT$11,768,815,000. Pres

ates or parent company. company. or ates parent tion range according to the total remuneration paid to each dir each to paid remuneration total the to according range tion ncial statements of the last fiscal year; net profit of Hotai a Hotai of profit net year; fiscal last the of statements ncial re disclosed in the applicable remuneration range according to the total remuneration paid to each director by Hotai and all c all and by Hotai director each to paid remuneration total the to according range remuneration applicable the in disclosed re The names of directors of Hotai and all consolidated entities a entities consolidated all and Hotai of directors of The names Net profit provided in the parent company only or separate fina separate or only company parent the in provided profit Net affili non-consolidated from by directors received Remuneration remunera applicable the in disclosed are directors of The names Ǻ Ǻ Ǻ Ǻ III. Corporate Governance III. Corporate Note 7 Note 8 Note 10 Note 9

III. Corporate Governance 2. Compensation Paid to President and Vice President NT$ in Thousands Compensa tion Received Total from Non- Severance Pay Bonuses and Compensation Salary (A) Employee Profit Sharing (D) consolidat and Pensions Allowances (C) (A+B+C+D) in % of (Note 1) (Note 3) ed (B) (Note 2) Net Profit Affiliates (Note 5) Title Name or parent company (Note 6) From All From All From All From All From All Consolida Consolida Consolida Consolidated Consolida From From From From Hotai From ted ted ted Entities ted Hotai Hotai Hotai Hotai Entities Entities Entities (Note 4) Entities (Note 4) (Note 4) (Note 4) Cash Stock Cash Stock (Note 4) President Su, Chwen- Shing Executive Kazuo Vice Naganuma President Executive Liu, Yuan- Vice Sen President (Note 9) Vice Chen, President Chien-Chou Lai, Hung- Vice Ta President (Note 9) Huang, Vice Ming-Hsien President (Note 9)

Compensation Paid to President and Vice President by Range President and Vice Presidents Compensation Paid to President and Vice President From Hotai From All Consolidated Entities (Note 7) (Note 8) NT$0 ─ NT$ 1,000,000 — — NT$1,000,000 ᴹ NT$2,000,000 — —

NT$2,000,000 ─ NT$3,500,000 — — NT$3,500,000 ᴹ NT$5,000,000 Kazuo Naganuma — NT$5,000,000 ─ NT$10,000,000 — Kazuo Naganuma Liu, Yuan-Sen; Lai, Hung-Ta; Chen, Liu, Yuan-Sen; Lai, Hung-Ta; Chen, Chien- NT$10,000,000 ─ NT$15,000,000 Chien-Chou; Huang, Ming-Hsien Chou; Huang, Ming-Hsien NT$15,000,000 ─ NT$30,000,000 Su, Chwen-Shing Su, Chwen-Shing NT$30,000,000 ─ NT$50,000,000 — — NT$50,000,000 ─ NT$100,000,000 — — NT$100,000,000 and above — — Total 6 6 Note 1: Salary, allowance and severance paid to President and Vice President in 2019. Note 2: All types of bonuses, performance bonus, travel allowance, special allowance, other allowance, accommodation, and fringe benefits such as company cars paid or provided to President and Vice President in 2019. There is a total of NT$1,807,000 paid to the company drivers as compensation that’s not included in the amount of allowances shown herein. Note 3: Compensation paid to President and Vice President in 2019 approved by the Board of Directors. Note 4: Compensation paid to President and Vice President by Hotai and all consolidated entities.

III. Corporate Governance Note 5: Net profit provided in the parent company only or separate financial statements in the last fiscal year; net profit of Hotai as of December 31, 2019 was NT$11,768,815. Note 6: Compensation received by President and Vice President from non-consolidated affiliates or parent company. Note 7: The names of President and Vice Presidents are disclosed in the applicable compensation range according to the total compensation paid to the President and each Vice President by Hotai. Note 8: The names of President and Vice Presidents are disclosed in the applicable compensation range according to the total compensation paid to President and each Vice President by Hotai and all consolidated entities. Note 9: Personnel of Hotai temporarily transferred to a consolidated entity or affiliate.

III. Corporate Governance 3. Employee Profit Sharing Granted to Management Team April 22, 2019 Cash (NT$) Total Amount in % Title Name Total (NT$) (Note 1) of Net Profit President Su, Chwen-Shing Executive Vice Kazuo Naganuma President Executive Vice Liu, Yuan-Sen President Vice President Chen, Chien-Chou

Vice President Lai, Hung-Ta Vice President Huang, Ming-Hsien Chief Officer Fred Hsieh

Chief Officer Chen, Chun-Shan

Chief Officer Wu, Chia-Yen Chief Officer Hsiao, Hsing-Chien Executive Hsiao, Chin-Chuan Officers Chief Officer (Note 2) (Note 3) Chief Officer Liu, Chuan-Hung

Chief Officer Liu, Sung-Shan Chief Officer Wu, Pin-Tsung

Chief Officer Leon, Soo

Chief Officer Wang, Shih-Hao Chief Officer Yeh, Chia-Han Chief Officer Lai, Chih-Wei Chief Officer Lai, Kuang-Hsiung Financial Officer Yu, Chun-Chien Accounting Officer Chen, Ting-Ju Note 1: Employee profit sharing granted to the management team approved by the Board of Director in 2019. Note 2: According to Tai Cai Zheng San Zi letter No. 0920001301 issued by the FSC on March 27, 2003, executive officers eligible to participate in profit sharing are as follows: (1) President and equivalent job grade; (2) Vice president and equivalent job grade; (3) Director and equivalent job grade; (4) Chief financial officer; (5) Chief accounting officer; and (6) Any other individual who is in a management position or authorized to sign on behalf of the Company. Note 3: Hsiao, Chin-Chuan retired in September 2019.

III. Corporate Governance (7) Analysis of Total Remuneration Received by Directors, Presidents and Vice Presidents from Hotai and all Consolidated Entities in Percentage of Net Profit of Parent Company Only and Separate Financial Statements in the Most Recent Two Fiscal Years, and Remuneration Policy for Directors, President and Vice Presidents. 1. Analysis of Total Remuneration Received by Directors, Supervisors, Presidents and Vice Presidents from Hotai and all Consolidated Entities in Percentage of Net Profit Hotai Consolidated Percentage Changes (Parent Company Only) Entities Total Remuneration in % of Total Remuneration in % of Consolidated Net Profit Net Profit (%) Hotai Entities 2019 2018 2019 2018

Director 2.87% 2.95% 3.01% 3.07% -0.08% -0.06%

President and 0.64% 0.67% 0.67% 0.69% -0.03% -0.02% Vice President Description: x The net profit of Hotai was NT$11,768,815,000 as of December 31, 2019 and NT$10,025,535,000 as of December 31, 2018.

2. Remuneration Policy, Standard and Package, as well as Procedures for Determining Remuneration and Relevance to Business Performance and Future Risks (1) Remuneration Committee regularly reviews the annual and long-term performance goals of directors and managerial officers, as well as the policies, systems, standards and structure of remuneration, and regularly assess the achievement of the goals of directors and managerial officers. (2) Remuneration paid to the directors includes base compensation regulated in Article 28 of the Articles of Incorporation of the Company, compensation from profit sharing, and allowance. The regulation of compensation from profit sharing is based on Article 34 of the Articles of Incorporation of the Company that no more than two percent of profit of the current year shall distribute to directors’ remuneration; travel allowance is only paid to those who attend the Board meetings. (3) The Company conducts performance evaluation on the board of directors and individual directors on a regular basis each year in accordance with the “Regulations Governing the Board Performance Evaluation”. The results of performance evaluation on the board of directors and individual directors in 2019 are excellent, indicating that the directors are operating the Company well. In addition to the efforts of the management, the Company's operating performance also shows the contribution of the directors in performing the business. Therefore, the directors' remuneration in 2019 mainly considers the overall performance, including factors such as revenue, profit, and market share. Thereafter, certain proportion of the directors’ remuneration, in accordance with the provisions of the articles of incorporation, shall be paid to each director. (4) Remuneration paid to the managerial officers includes salary, bonuses and employee profit sharing, of which salary is paid in accordance with Hotai’s regulations of wages, payments of bonuses and employee profit sharing are subject to the regulations of employees’ performance evaluation and achievement rate of individual performance, and further refer to Hotai’s comprehensive business performance, future operation risks in the industry, and !

III. Corporate Governance development trend that will influence managerial officers’ performance evaluation ranking, payments of bonuses, and employee profit sharing received. The remuneration, relevant performance evaluation and the reasonableness of the remuneration are reviewed by the Remuneration Committee and the Board of Directors, and the remuneration system is reviewed at any time according to the actual operational conditions and relevant laws, so as to balance the sustainable operation and risk control of the Company.

III. Corporate Governance 3. Corporate Governance (1) Board of Directors 1. Board of Directors Meetings: Nine (A) meetings were convened in 2019. The attendance of directors is as follows: Number of Number of Rate of Meetings Meetings Attendance in Title Name (Note 1) Attended in Attended Person (%) Remarks Person (B) by Proxy (B/A)(Note 2) Chairman Chun Yong Investment Co, Ltd., 3 0 100% represented by Huang, Nan-Kuang 3 0 100% Director Chun Yong Investment Co, Ltd., represented by Lin, Li-Hua Chun Yong Investment Co, Ltd., 3 0 100% Director represented by Huang, Chih-Cheng 3 0 100% Director Chun Yong Investment Co, Ltd., represented by Huang, Wen-Jui 3 0 100% Director Jin Yuan Shan Investment Co., Ltd., represented by Su, Yi-Chung Director representatives of the 2 1 67% th Director Jin Yuan Shan Investment Co., Ltd., 19 Board; term of office ended represented by Su, Chwen-Shing on June 20, 2019 before re- Jin Yuan Shan Investment Co., Ltd., 0 3 0% election Director represented by Su, Yann-Huei Jin Yuan Shan Investment Co., Ltd., 3 0 100% Director represented by Su, Maick(Note3) Yuan Tuo Investment Co., Ltd., 3 0 100% Director represented by Ko, Junn-Yuan Gui Long Investment Co., Ltd., 3 0 100% Director represented by Chang, Shih-Yieng Toyota Motor Corporation, 3 0 100% Director represented by Kazuo Naganuma 3 0 100% Chen, Chi-Jhen th Independent 3 0 100% Independent directors of the 19 Director Su, Chin-Huo Board; term of office ended on June 20, 2019 before re-election 3 0 100% Wu, Shih-Hao 5 1 83% Chairman Chun Yong Investment Co, Ltd., represented by Huang, Nan-Kuang Chun Yong Investment Co, Ltd., 5 1 83% Director represented by Lin, Li-Hua Chun Yong Investment Co, Ltd., 5 1 83% Director represented by Huang, Chih-Cheng Chun Yong Investment Co, Ltd., 6 0 100% Director represented by Huang, Wen-Jui Yong Hui Development Co., Ltd., 6 0 100% Director represented by Su, Yi-Chung Director representatives of the Li Kung Enterprise Co., Ltd., 6 0 100% th Director represented by Su, Chwen-Shing 20 Board; term of office began on June 20, 2019 after re-election Li Kung Enterprise Co., Ltd., 6 0 100% Director represented by Su, Jean Yong Hui Development Co., Ltd., 4 2 67% Director represented by Leon, Soo Yuan Tuo Investment Co., Ltd., 6 0 100% Director represented by Ko, Junn-Yuan Gui Long Investment Co., Ltd., 6 0 100% Director represented by Chang, Shih-Yieng Toyota Motor Corporation, 6 0 100% Director represented by Kazuo Naganuma 6 0 100% Independent directors of the 20th Shih, Hsien-Fu Independent Board; term of office began on Director 6 0 100% June 20, 2019 after re-election Su, Chin-Huo

III. Corporate Governance Number of Number of Rate of Title Name (Note 1) Meetings Meetings Attendance in Remarks Attended in Attended Person (%) Person (B) by Proxy (B/A)(Note 2) 6 0 100% Wu, Shih-Hao Annotations: 1. If any of the following events occurs, specify the date and session number of the Board meeting, summary of the proposal, the opinions of the independent directors, and the actions taken by the Company in response to the opinions of independent directors: (1) Any matters stipulated in Article 14-3 of the Securities and Exchange Act: As the Company has already set up the Audit Committee, Article 14-3 of the Securities and Exchange Act does not apply. (2) In addition to the foregoing, any other resolution on record or in writing which contains the independent directors dissenting or qualified opinion: None. 2. Recusal of directors due to conflicts of interest: (1) The 25th Meeting of the 19th Board was held on May 8, 2019 to discuss the 19th Board director's dismissal and consolation. As the matter concerns dismissal of Director Su, Maick and Independent Director Chen, Chi-Jhen, both of them have recused themselves from the discussion and voting on the matter. (2) The 2nd Meeting of the 20th Board was held on June 28, 2019 to discuss the appointment of Remuneration Committee members. As independent directors are also the members of Remuneration Committee, three of them have recused themselves from the discussion and voting on the matter. (3) The 2nd Meeting of the 20th Board was held on June 28, 2019 to discuss the appointment of Corporate Social Responsibility Committee members. As Director Huang, Wen-Jui, Director Su, Jean, Independent Director Su, Chin- Huo and Independent Director Wu, Shih-Hao are also members of Corporate Social Responsibility Committee, four of them have recused themselves from the discussion and voting on the matter. (4) The 8th Meeting of the 20th Board was held on March 26, 2020 to discuss director’s remuneration for 2019. As the matter concerns all directors, the representative of each director that is a juristic person has recused himself/herself during voting when it was relevant. 3. Objectives of the Company to strengthen the functions of the Board of Directors (e.g., establishing an audit committee and enhancing information transparency) in 2018 and 2019, and assessment of implementation: (1) The Board passed a resolution to set up a corporate social responsibility committee on December 27, 2018, delegated by the Board to coordinate the corporate social responsibility practices of the Company. (2) Hotai conducts a self-evaluation of Board performance evaluation in Q4 of every year and the recent self-evaluation of Board performance was in Q4 of 2019 for assessing Board performance. Based on the results of the evaluation, the Board functions well from a comprehensive viewpoint. Every three years, the evaluation is performed by an external professional independent institution or a team of external experts and scholars. In the latest external evaluation in Q4 2018, we engaged the Taiwan Institute of Ethical Business and Forensics to conduct an evaluation on the performance of the Board of Directors in 2018. Based on the results of the evaluation, the Board is effective from a comprehensive viewpoint. Note 1: The name of a corporate shareholder and its representative shall be disclosed where the director or supervisor is a juristic person. Note 2: (1) If a director or supervisor resigns before the end of a fiscal year, the date of resignation shall be included in the remarks column. Rate of attendance in person (%) is calculated based on the total number of Board meetings held and the total number of Board meetings attended by a director or supervisor in person during his or her term. (2) If a director or supervisor is re-elected before the end of a fiscal year, the names of the current and former directors or supervisors shall be included, and their appointment status and re-election date shall be noted in the remarks column. Rate of attendance in person (%) is calculated based on the total number of Board meetings held and the total number of Board meetings attended by a director or supervisor in person during his or her term. Note 3: Mr. Su, Maick changed his name to Su, Shang-Yong in December 2019.

(2) the Implementation of evaluation on Board

Period of Term of Scope of Methods of Contents of assessment assessment assessment assessment assessment

Once every year The assessment is Performance 1. self-evaluation 1. The five items for conducted toward evaluation toward from Board and measurement on Board and Board and members of the Board performance members of Board members of Board Board evaluation: !

III. Corporate Governance

Period of Term of Scope of Methods of Contents of assessment assessment assessment assessment assessment from January 1, 2019 to December 31, 2019 2. the evaluation is (1) the level of carried out every participation in the three years by Company’s external operation; professional independent institutions or (2) the external experts improvement for and scholar teams the quality of decision-making Board;

(3) the composition and structure of Board;

(4) the selection of directors and their training efforts;

(5) the internal control.

2. The six items for measurement on members of Board performance evaluation:

(1) the understanding of the Company’s target and tasks;

(2) the recognition of directors’ responsibilities;

(3) the level of participation in the Company’s operation

(4) the internal relationship management and communication

(5) the professional and continuing education of directors

(6) the internal control

III. Corporate Governance (3) Audit Committee Meetings Hotai has established an audit committee on June 21, 2016. Items that require the review and approval of the Audit Committee include: 1. Adoption or amendment of the internal control system according to Article 14-1 of the Securities and Exchange Act 2. Review of the effectiveness of the internal control system 3. Procedures governing important financial or business decisions, including acquisition or disposal of assets according to Article 36-1 of the Securities and Exchange Act, financial derivatives transactions, lending activities, and endorsement or guarantee of obligations for a third party 4. Matters that involve the interests of the directors 5. Transactions of major assets or financial derivatives 6. Major lending activities and endorsement or guarantee of obligations 7. Offer, issuance and private placement of equity securities 8. Appointment, removal and compensation of external auditors 9. Appointment and removal of chief financial officer, chief accounting officer, and chief internal audit officer 10. Annual and biannual financial reports 11. Mergers and acquisitions under the Business Mergers and Acquisitions Act, which should comply with Article 6 of the said Act and Regulations Governing the Establishment and Related Matters of Special Committees of Public Companies in Mergers and Acquisitions 12. Other important matters as may be provided by the Company’s internal rules or prescribed by regulatory authorities

Four (A) audit committee meetings were held in 2019. The attendance of independent directors is as follows: Number of Number of Rate of Meetings Meetings Attendance in Title Name Attended in Attended by Person (%)(B/A) Remarks Person (B) Proxy (Note) 2 0 100% term of office began on June 21, 2016 Independent Chen, Chi-Jhen and ended on June 20, 2019 after re- Director election 4 0 100% Current independent director; term of Independent Su, Chin-Huo office began on June 20, 2019 after re- Director election 4 0 100% Current independent director; term of Independent Wu, Shih-Hao office began on June 20, 2019 after re- Director election 2 0 100% Current independent director; term of Independent Shih, Hsien-Fu office began on June 20, 2019 after re- Director election

III. Corporate Governance Annotations: 1. If any of the following events occurs, specify the date and session number of the Audit Committee meeting, summary of the proposal, resolution of the Audit Committee, and the actions taken by the Company in response to the opinions of the Audit Committee if any of the following occurs: (1) Matters stipulated in Article 14-5 of the Securities and Exchange Act: Date/Session Summary of Proposals Audit Committee Resolution Actions No. Taken 1. Statement of Internal Control in The proposals were approved Approved March 26, FY2018 without objection by all members of by the 2019 2. FY2018 Business Report and the Committee upon inquiry by the Board 24th Meeting Financial Statements of the chairman of the meeting, and of the 19th Company subsequently submitted to the Board Board 3. FY2018 profit distribution plan for resolution 4. The proposal to cause the Company’s subsidiary, Hozan Investment Co., Ltd., waives the preemptive right to newly issued share of Hotai Finance Co., Ltd. through cash capital increase. 5. The proposal of that Hotai increases USD 50,000,000 investment in Shanghai Hoyu BVI and reinvest in Hotong Motor Investment Co., Ltd. 6. Amendments to the Procedures for the Acquisition and Disposition of Assets 7. Amendments to the Procedures for Financial Derivatives Transactions

May 8, 2019 1. Proposal on Hotai’s adjustment of The proposals were approved Approved 25th Meeting the amount of endorsements and without objection by all members of by the of the 19th guarantees for Mainland China the Committee upon inquiry by the Board Board business in 2019 chairman of the meeting, and 2. Amendments to the Procedures for subsequently submitted to the Board Management of Loans to Others for resolution 3. Amendments to the Procedures for Management of Endorsement and Guarantees August 12, 1. FY2019 Q2 Consolidated Financial The proposals were approved Approved 2019 Statements without objection by all members of by the 3rd Meeting of the Committee upon inquiry by the Board the 20th chairman of the meeting, and Board subsequently submitted to the Board for resolution November 12, 1. FY2020 Annual Audit Plan The proposals were approved Approved 2019 2. Assessment of the independence without objection by all members of by the 5th Meeting of of the Company’s external the Committee upon inquiry by the Board the 20th auditor chairman of the meeting, and Board 3. Review of audit fees for the subsequently submitted to the Board engagement of for resolution. PricewaterhouseCoopers Taiwan to provide services in FY2020 4. The case of that Hozan Investment Co., Ltd., the subsidiary, exercises the over- allotment option with its shares of Hotai Finance Co., Ltd., and the assessment of Hotai decrease on the indirect shareholding proportion

(2) In addition to the foregoing, any other proposal that was not approved by the Audit Committee, but was passed by

III. Corporate Governance resolution of more than two thirds of all Board members: Not Applicable

2. If any independent director is required to recuse himself/herself due to conflicts of interest, please specify the name of the independent director, summary of the proposal, reason for recusal, and whether such independent director has participated in the voting: Not Applicable

3. Communication between independent directors and auditors/Chief Internal Audit Officer: (1) Summary of communication between independent directors and auditors: Date Discussion Points March 22, 2019 x The Company’s external auditor provided explanations to the independent directors regarding the audit of the Company’s FY2018 Parent-Only Financial Statements and Consolidated Financial Statements and discussed with the independent directors on the results of key areas audited. x Discussion and communication between the external auditor and independent directors on the issues raised. August 1, 2019 x The Company’s external auditor provided explanations to the independent directors regarding the audit of Hotai Group’s FY2019 Consolidated Financial Statements and the Company’s FY2019 Parent-Only Financial Statements. x Discussion and communication between the external auditor and independent directors on the issues raised. (2) Summary of communication between independent directors and chief internal control officer: Date Discussion Points March 26, 2019 FY2018 4Q internal audit execution report May 8, 2019 FY2019 1Q internal audit execution report August 12, 2019 FY2019 2Q internal audit execution report November 12, 2019 FY2019 3Q internal audit execution report

III. Corporate Governance (4) Corporate Governance Implementation Status Deviation from Corporate Governance Best Evaluation Item Practice Principles Y N Summary for TWSE/TPEx Listed Companies and Reasons for Deviation 1. Has the Company adopted and V We have adopted Corporate Governance Best Practice Compliant disclosed its corporate governance Principles in compliance with Corporate Governance Best principles in accordance with Practice Principles for TWSE/TPEx Listed Companies and Corporate Governance Best Practice disclosed on the Market Observation Post System and our Principles for TWSE/TPEx Listed corporate website. Companies? 2. Shareholders structure and Compliant shareholders’ rights (1) Has the Company set up internal V We have a spokesperson, a dedicated department, and a operating procedures for handling stock transfer agent to handle shareholder affairs, besides, shareholder suggestions, inquiries, we have also set up “Shareholder Service” and disputes, and litigation matters? If so, “Stakeholders Section” on our corporate website for have these procedures been shareholder inquiries and comments, which are processed implemented accordingly? and responded in accordance with relevant procedures. (2) Does the Company keep track of V The structure of our major shareholders is solid. We the list of major shareholders having constantly monitor shareholder ownership by reviewing actual control of the Company, as well the shareholder list provided by our stock transfer agent, as the beneficial owners of such and regularly reporting the shareholding changes of shareholders? directors and management team. (3) Has the Company built and V We have established “Regulations for the Operation of implemented a risk management Affiliates Companies”, “Enforcement Rules of Regulations system and firewalls between the for the Operation of Affiliates Companies” and regularly Company and its affiliates? monitor subsidiaries in accordance with internal control and audit systems in order to duly implement risk management of our subsidiaries. (4) Has the Company established V We have established Procedures for Processing Material internal rules prohibiting insider Nonpublic Information. We have also adopted trading on nonpublic information? Management of Insider Trading Prevention as part of the management procedures of our internal control which stipulates prohibitions on insider trading. 3. Composition and responsibilities of the Board of Directors (1) Has the Board of Directors adopted V The Corporate Governance Best Practice Principles Compliant a diversity policy for its Board adopted by the Company requires us to consider Board composition, and has the policy been diversity. The number of directors who serve concurrently implemented accordingly? as executive officers of the Company shall not exceed one third of the Board seats. In addition, the Principles also provide some guidelines on diversity based on the operation, nature of business activities and development needs of the Company. Hotai elected directors in June 20, 2019. Currently, we have a total of 14 directors, three of them are independent directors, which account for 21% of the Board; the two independent directors have less than four years of seniority and one independent director has less than one year of seniority. Three of the directors are also employees, account for 21% of the Board. Two of the directors are females, which account for 14%. In terms of age demographics, two of the directors are under the age of 50, six are in between the age of 50 to 65, and six are older than 65. Our directors have expertise in various areas, such as management, business administration, and finance. Especially, two female directors specialize in finance and accounting field. Not only do we consider professional skills and experience, we also place great emphasis on personal reputation in respect of ethics and leadership skills in the selection process. See Note 1 for the Company’s implementation of diversity policies.

III. Corporate Governance Implementation Status Deviation from Corporate Governance Best Evaluation Item Practice Principles Y N Summary for TWSE/TPEx Listed Companies and Reasons for Deviation (2) Other than the remuneration and V I In addition to the establishment of an audit and Compliant audit committees which are required remuneration committee according to law, Hotai also by law, has the Company set up other established the Corporate Social Responsibility Committee functional committees? (hereinafter as the CSR committee). On December 27, 2018, the Board passed the resolution to set up a corporate social responsibility committee to coordinate and implement CSR practices of the Company; the committee is delegated by the Board. On the same day, Hotai passed "Organizational Regulations of the Corporate Social Responsibility Committee". There are 4 members of the CSR Committee – Independent Director Su, Chin-Huo, Wu, Shih-Hao, Director Huang, Wen-Jui and Su, Jean. Wu, Shih-Hao is professor and former vice president of Department of Marketing and Distribution Management in National Kaohsiung University of Science and Technology, and has a lot of experience in public welfare marketing. Independent Director Su, Chin- Huo used to be the president of Corporate Synergy Development Center and he is committed to counseling the development and transformation of the industry. Both independent directors have professional capabilities in CSR. Three work groups are set up under the CSR committee for coping with the issues concerned by different stakeholders and coordinating the company's relevant departments on the promotion and execution of related businesses, and regularly report to the board.

The operation of the CSR Committee in 2019 is as follows: (1) Three meetings were held this year, and the attendance rate of each member is 100%

Date of the Session Content meeting 1. Operational report 1st meeting of January 31, of the the 1st term 2019 Environmental Protection Group 2. Operational report 1st meeting of July 18, of the Social the 2nd term 2019 Welfare Group 2nd meeting 3. Operational report December of the 2nd of the Corporate 9, 2019 term Governance Group (2) Report the operation of the CSR Committee to the Board of Directors on December 24, 2019. In addition, we also have an Occupational Health and Safety Committee, Information Safety Committee, Environmental Management Committee, and CS Committee in place.

III. Corporate Governance Implementation Status Deviation from Corporate Governance Best Evaluation Item Practice Principles Y N Summary for TWSE/TPEx Listed Companies and Reasons for Deviation (3) Has the Company established rules V We have adopted Hotai Motor Rules for Performance Compliant and methods for evaluating the Evaluation of the Board of Directors in the Board meeting performance of the Board of Directors held on December 29, 2016. Every year in December, the on an annual basis and report the performance of the Board for the fiscal year will be results of the performance evaluation reviewed and evaluated; evaluation items include the to the Board then apply the results as overall function of the Board and individual director self- the reference for deciding individual evaluation. directors ’remuneration and nomination renewal? Evaluation of the overall Board performance shall address these five areas: 1. Participation in the operations of the Company 2. Enhancement of Board decision quality 3. Board composition and structure 4. Selection of Board members and continuing education of directors 5. Internal control

Evaluation of individual directors shall address these six areas: 1. Alignment with the objectives and mission of the Company 2. Competencies of the directors 3. Participation in the operations of the Company 4. Relationships and communication with other personnel within the Company 5. Director expertise and continuing education 6. Internal control

The Company conducts performance evaluation on the Board of Directors and individual directors on a regular basis each year in accordance with the “Regulations Governing the Board Performance Evaluation”. In the fourth quarter of 2019, the performance evaluation of the Board of Directors was conducted, and the evaluation results and improvement measures were reported to the Board of Directors on January 17, 2020. According to the 2019 evaluation results, the performance evaluation results of the board of directors and individual directors are excellent, indicating that the Board of Directors operated well. The evaluation result will serve as a reference for the election of each term of the Board of Directors. (4) Does the Company regularly V Once a year, the independence of our external auditor is Compliant evaluate its external auditor’s evaluated by the Audit Committee and the Board of independence? Directors. On November 12, 2019, the Audit Committee and the Board of Directors met and reviewed the independence of our external auditors, Hsiao, Chin-Mu and Wang, Fang-Yu of PricewaterhouseCoopers Taiwan. It was confirmed that there is no conflict of interest or business relationship existing between the auditors and the Company other than the audit fees paid for the services provided, and no other circumstances were found involving the family members of the auditors or their audit team that could impair independence. (See Note 2)

III. Corporate Governance Implementation Status Deviation from Corporate Governance Best Evaluation Item Practice Principles Y N Summary for TWSE/TPEx Listed Companies and Reasons for Deviation 4. Has the Company established a V It has been over ten years since we established the Compliant department or position and appoint Investor Relations Office under the External Affairs & Legal the supervisor to be responsible for Division as the corporate governance responsible unit, the corporate governance that is which oversees matters relating to shares, legal affairs, tasked with corporate governance shareholders meetings and Board functions of the related matters(including but not Company. Director of the Operations Group, Liu, Sung- limited to, providing directors and Shan, who is also an executive officer and corporate supervisors with information governance officer of the Company and has been necessary to carry out their duties, managing the operations of the External Affairs & Legal assisting directors and supervisors to Division for over three years, is the most senior executive abide by laws, coordinating Board officer overseeing the operations of this unit. The primary meetings and shareholders’ meetings function of the unit is to provide information required for pursuant to proper legal procedures, the Board of Directors to carry out their duties, keep the company registration and request for Company informed of the latest regulatory development change of registration information, related to its operations, and facilitate matters pertaining preparing minutes of the Board to Board meetings and shareholders meetings. meetings and shareholders’ meetings)? Our key development in 2019 are as follows, each of which was reported to and approved by the Board of Directors:

1. Arranged 6 hours of onsite training for the members of the Board, and plan 12-hour self-study program for the new directors in 2019. In addition, we also offered elective courses related to various corporate governance topics monthly for directors. The average training hours of each director in 2019 were 8.8 hours, which is more than 6 hours of director’s training hours as required. 2. For the Company's business field and corporate governance related to the latest laws and regulations revisions and development, provide board members when taking office, and regularly updated. 3. Review the relevant information confidentiality level and provide Company information required by directors to maintain smooth communication and communication between directors and business executives. 4. Evaluated and purchased directors and officer’s liability insurance, and presented important information such as the insured value, coverage, and premium rates at the Board meeting. 5. Conducted external Board performance evaluation pursuant to the Company’s Rules for Board Performance Evaluation in December 2019 and presented the results of evaluation at the first Board meeting in 2020. 6. Registered the date of the annual general meeting of the shareholders each year as required by the law, prepared and filed meeting notice, handbook and minutes within the prescribed period, and filed for change of information when the Articles of Incorporation was amended or after a re-election of directors. 7. Handle matters related to Board meetings in accordance with the law, and produced and sent minutes. 8. Implemented internal audit and control system and convened meetings with external auditors, independent directors, internal auditor, and chief financial officer at regular intervals.

III. Corporate Governance Implementation Status Deviation from Corporate Governance Best Evaluation Item Practice Principles Y N Summary for TWSE/TPEx Listed Companies and Reasons for Deviation 5. Has the Company established V We have a 0800 toll-free number, a “Stakeholders” section Compliant communication channels for its on our corporate website and a social media site to stakeholders (including but not limited provide timely response to stakeholders. We also maintain to shareholders, employees, an open communication channel for our employees, customers and suppliers) or created a consumers, suppliers and creditors. Hotai also makes a stakeholders’ section on its corporate plan and discuss economic, social and environmental website? Does the Company promptly issues raised by stakeholders, and report to the Board respond to the concerns of once a year. stakeholders regarding important corporate social responsibility issues? 6. Has the Company appointed a V We have appointed President Securities Corporation to Compliant professional stock transfer agent for handle matters relating to our shareholders’ meetings. its shareholders’ meetings? 7. Information disclosure Compliant (1) Has the Company established a V We have set up and regularly updated an “Investor corporate website to disclose Relations” section on our corporate website information regarding its financials, (www.hotaimotor.com.tw) for the purpose of disclosing business, and corporate governance? financial and business information.

(2) Does the Company use other V We maintain a Chinese-language and English-language disclosure channels (e.g., maintaining website. Our External Affairs & Legal Division is responsible an English-language website, for collecting and disclosing the Company’s information designated personnel to collect and and regularly updating the information on our website. We disclose the Company’s information, have also appointed Chief Officer Mr. Liu, Sung-Shan as the appointed spokesperson, investor spokesperson and manager Mr. Li, Chien-Hsing as the conference webcast)? acting spokesperson in compliance with the law. In 2019, four road shows were held, and relevant content of the presentations were published on the Company’s website.

(3) Does the Company publicly V Hotai has performed public announcement and announce and register the annual registration with the Competent Authority as follows: financial report within two months 1. Within three months after the close of each fiscal after the end of the fiscal year, and year, publicly announce and register with the publicly announce and register the Competent Authority the financial reports. Q1, Q2, and Q3 financial reports and 2. Within the first ten days of each calendar month the monthly operating status early publicly announce and register the operating status within the prescribed time limit? for the preceding month. 8. Has the Company disclosed other V (1) Employee rights: we regularly hold labor-management Compliant information which may facilitate a meetings and have an employee suggestion box in better understanding of its corporate accordance with the Labor Standards Act and pursuant governance practices (including but to our human resources regulations to protect not limited to employee rights, employee rights. employee wellness, investor relations, (2) Employee wellness: we engage specialists or institutions supplier relations, stakeholder rights, to provide employee assistance programs, including director and supervisor training, risk healthcare consultation, fitness courses, and on-job- management policy and risk development training. assessment measures, the (3) Investor relations: protecting shareholder interests is implementation of customer relations our top priority, and we treat all shareholders equally. policy, and the Company purchasing We also promptly disclose important information liability insurance for its directors and regarding the Company’s finances, operations, and supervisors? changes in shareholding of insiders on the Market Observation Post System as required by law. (4) Supplier relations: we maintain close working relationships and open communication channels with our suppliers and respect and protect their lawful rights. Together with our suppliers, we strive to provide better products and services to our consumers and establish a value chain with sustainable development capabilities. (5) Stakeholder rights: we value the opinions and suggestions of our stakeholders, whether they are customers, partners, employees, shareholders, investors, or the local community. It is our stakeholders !

III. Corporate Governance Implementation Status Deviation from Corporate Governance Best Evaluation Item Practice Principles Y N Summary for TWSE/TPEx Listed Companies and Reasons for Deviation that propel us to continue to improve and excel, thereby creating a virtuous cycle that benefits the society as a whole. (6) Director and supervisor training: we provide director and supervisor training in accordance with the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE/TPEX Listed Companies. Please refer to the appendix in this chapter for “Training and Continuing Education of Directors and Supervisors”. (7) Risk management policy and risk assessment measures: all the important resolutions of the Company, such as major operation policies, investments, endorsements and guarantees, fund lending, bank financing, are assessed and analyzed by responsible departments and implemented in accordance with the decisions of the Board of Directors. The Auditing Division also adopts annual audit plan based on the results of risk assessment in order to implement supervisory mechanism and monitor the execution of risk management. (8) Implementation of customer relations policies: our objective is to create services that exceed customer expectations. We provide comprehensive customer services through our customer hotline, customer care, vehicle sales, maintenance services, logistics system, information integration system, as well as implementation of the “Toyota Way”, i.e., continuous improvement and respect for people. (9) Directors and Officers liability insurance purchased by the Company: We have purchased liability insurance for our directors and key officers. (10) Information security risk management framework and the implementation of policies and management programs: In order to achieve superb quality service with zero defects in information security, we established the Information Security Committee in 2007 to function as the information security oversight of the Group, with the president of the Company as the chair of the Committee. Once a year, the Committee members come together and review the information security governance policy and oversee the operations of the management system. At the same time, we added a new unit, Information Security Office, with the head of Information System Division as the director of the Office. The Office meets once a month to evaluate the scope of applicability of the information security policies and completeness based on the needs of the internal and external environment and regulatory requirements and revise the policies as they see appropriate. The Office also examines policy implementation progress and results within the Group to determine whether they meet the information security requirements of the Group. In the event of a major violation of information security or personal information, the Office should address the issue and report to the chair of the Information Security Committee. These measures are taken so that we may have the information security capabilities to provide the highest protection.

In formulating information security policies, we considered three main areas: information security

III. Corporate Governance Implementation Status Deviation from Corporate Governance Best Evaluation Item Practice Principles Y N Summary for TWSE/TPEx Listed Companies and Reasons for Deviation protection, compliance and technologies. From the angle of corporate strategies, we develop organizational management and functions to ensure that all the information and assets within the management system are properly safeguarded. Furthermore, Hotai has been working with eight dealers to promote ISO 27001 (Information Security Management) standards and became the first automaker in Taiwan to have a distribution network (i.e., suppliers, dealers and distributors) of all ISO 27001 certified companies.

In light of new hacking techniques and repeated network security threats, the Group established an information security incident response system in 2017. Whenever there is a reported threat or information security breach, the information security response team will issue a warning to all the entities within the Group to contain the incident. We have also adopted new generation threat analysis techniques that sends out alerts to management whenever a breach is detected so that a prompt response can be taken to address the threats and mitigate information security risks. In addition, corporate data leaks due to malicious emails are not unheard of. Since 2017, we have established response mechanism for malicious email and performed a malicious email attack simulation to educate employees regularly in order to enhance their awareness. In 2019, we started to use malicious email automatic blocking system. With the system's global threat intelligence and AI analysis technology, we may automatically and accurately block malicious email attacks Since cyber insurance is a relatively new field, insurers have found it difficult to define coverage and policy conditions. When the market has matured, we will assess whether it is to the Company’s benefit to purchase cyber insurance. At this stage, our goal is to implement internal information security protection and subsequently enhance data protection using the latest technologies and techniques in order to effectively combat new threats. 9. Based on the most recent Corporate Governance Evaluation Results released by the Taiwan Stock Exchange Corporate Governance Center, please provide a description of the areas improved, and priorities and measures to be taken on areas identified for improvement:

We have made considerable progress on the scores received in the 6th Corporate Governance Evaluation compared to the previous year. We will continue to strengthen corporate governance in the future. The areas of improvements are as follows: (1) We expected to disclose the average adjustment of employees’ salary in 2020. (2) We will formulate an intellectual property management plan linked to the operation objectives and report to the Board. (3) We will set appointment, dismissal, evaluation, salary and remuneration of employed auditors and the auditing executive will sign and report to the chairman.

III. Corporate Governance

Note 1: Implement of diversity policy Ability to Ability to perform Ability to Ability to Knowledge An Ability to make conduct conduct Item of the international Ability make operational accounting management crisis market to lead policy and financial industry judgments analysis administration management perspective decisions Huang, Nan-Kuang ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Su, Chwen-Shing ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Kazuo Naganuma ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Lin, Li-Hua ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Su, Jean ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Huang, Chih-Cheng ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Su, Yi-Chung ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Ko, Junn-Yuan ÷ ÷ ÷ ÷ ÷ ÷ ÷ Chang, Shih-Yieng ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Huang, Wen-Jui ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Leon, Soo ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Shih, Hsien-Fu ÷ ÷ ÷ ÷ ÷ ÷ ÷ ÷ Su, Chin-Huo ÷ ÷ ÷ ÷ ÷ ÷ ÷ Wu, Shih-Hao ÷ ÷ ÷ ÷ ÷ ÷ ÷

Note 2: Evaluation of External Auditor’s Independence Item Standards of Evaluation Evaluation Independence Results Does the auditor, his/her spouse or children that are minors have any investment No Yes 1 or financial interests in the Company? Except in the case that the Company is a financial institution and the loan is obtained under its normal lending procedures, terms, and requirements, does the 2 auditor, his/her spouse or children that are minors have any loan to or from the No Yes Company? Does the auditor or any person on the audit engagement team currently serve or 3 has served within the last two years as a director, officer, or other position at the No Yes Company that has significant influence on the audit of the Company? Has the auditor or any person on the audit engagement team promoted or acted 4 as an intermediary for the shares or securities issued by the Company? No Yes Has the auditor or any person on the audit engagement team acted as an advocate 5 for the Company in a legal proceeding or dispute against a third party in providing No Yes non-audit services other than as permitted by the law? Does the auditor or any person on the audit engagement team has a familial relationship with a director, officer, or any person holding a position at the 6 Company that has significant influence on the audit of the Company, including No Yes spouse, lineal ascendant or descendant, spouse’s lineal ascendant or descendant, or blood relative within the second degree of kinship? Has any individual formerly employed by the auditor within the last year been 7 employed by the Company to serve as a director, officer, or other position at the No Yes Company that has significant influence on the audit of the Company? Has the auditor or any person on the audit engagement team accepted any gift of 8 significant value or preferential treatment from the Company or any of its No Yes directors, officers or major shareholders? Is the auditor currently employed by the Company to regularly perform services 9 and receive fixed payment, or serving as a director or supervisor of the Company? No Yes

III. Corporate Governance Appendix: Training and Continuing Education of Directors and Supervisors Dates Title Name Sponsoring Organization Course Title Hours From To June 28, June 28, Taiwan Institute of Blockchain: A New Technological 2019 2019 Directors Power that Disrupts Industry and Huang, Nan- Corporate Governance Chairman Kuang September September Taiwan Institute of Impact of U.S.-China Trade War on 26, 2019 26, 2019 Directors Taiwanese Enterprises and Their Countermeasures June 28, June 28, Taiwan Institute of Blockchain: A New Technological 2019 2019 Directors Power that Disrupts Industry and Su, Chwen- Corporate Governance Director Shing September September Taiwan Institute of Impact of U.S.-China Trade War on 26, 2019 26, 2019 Directors Taiwanese Enterprises and Their Countermeasures June 28, June 28, Taiwan Institute of Blockchain: A New Technological 2019 2019 Directors Power that Disrupts Industry and Corporate Governance Impact of U.S.-China Trade War on September September Taiwan Institute of Taiwanese Enterprises and Their 26, 2019 26, 2019 Directors Countermeasures Director Kazuo Naganuma Discussion on Legal Risks and October 1, October 1, Securities & Futures Countermeasures of Directors and 2019 2019 Institute Supervisors in the Case of Major Corporate Malpractice October 24, October 24, Securities & Futures Discussion on intellectual property 2019 2019 Institute rights: from Trade Secrets Blockchain: A New Technological June 28, June 28, Taiwan Institute of Power that Disrupts Industry and 2019 2019 Directors Corporate Governance Director Su, Yi-Chung Impact of U.S.-China Trade War on September September Taiwan Institute of Taiwanese Enterprises and Their 26, 2019 26, 2019 Directors Countermeasures

June 28, June 28, Taiwan Institute of Blockchain: A New Technological Power that Disrupts Industry and 2019 2019 Directors Corporate Governance Director Lin, Li-Hua Impact of U.S.-China Trade War on September September Taiwan Institute of Taiwanese Enterprises and Their 26, 2019 26, 2019 Directors Countermeasures June 28, June 28, Taiwan Institute of Blockchain: A New Technological 2019 2019 Directors Power that Disrupts Industry and Huang, Chih- Corporate Governance Director Cheng September September Taiwan Institute of Impact of U.S.-China Trade War on 26, 2019 26, 2019 Directors Taiwanese Enterprises and Their Countermeasures June 28, June 28, Taiwan Institute of Blockchain: A New Technological 2019 2019 Directors Power that Disrupts Industry and Corporate Governance Ko, Junn- Director Yuan September September Taiwan Institute of Impact of U.S.-China Trade War on 26, 2019 26, 2019 Directors Taiwanese Enterprises and Their Countermeasures

June 28, June 28, Taiwan Institute of Blockchain: A New Technological 2019 2019 Directors Power that Disrupts Industry and Corporate Governance Director Su, Jean Impact of U.S.-China Trade War on September September Taiwan Institute of Taiwanese Enterprises and Their 26, 2019 26, 2019 Directors Countermeasures CSR and ESG investment: the January January 29, Taiwan Insurance Sustainable Business strategies of the 29, 2019 2019 Institute Insurance Business as an example Huang, Wen- February February Taiwan Corporate Discussion on Sustainable Corporate Director Jui Governance to Increase the 22, 2019 22, 2019 Governance Association Company's Long-term Value May 7, May 7, Taiwan Stock Exchange ESG Investment Promotion Forum 2019 2019 Corporation

III. Corporate Governance Dates Title Name Sponsoring Organization Course Title Hours From To May 7, May 7, Taiwan Stock Exchange Climate Related Financial Disclosure 2019 2019 Corporation (TCFD) Promotion Forum June 28, June 28, Taiwan Institute of Blockchain: A New Technological Power that Disrupts Industry and 2019 2019 Directors Corporate Governance September September Taiwan Stock Exchange Impact of U.S.-China Trade War on Taiwanese Enterprises and Their 26, 2019 26, 2019 Corporation Countermeasures Blockchain: A New Technological June 28, June 28, Taiwan Stock Exchange 2019 2019 Corporation Power that Disrupts Industry and Chang, Shih- Corporate Governance Director Yieng Impact of U.S.-China Trade War on September September Taiwan Institute of Taiwanese Enterprises and Their 26, 2019 26, 2019 Directors Countermeasures Impact of U.S.-China Trade War on September September Taiwan Stock Exchange 26, 2019 26, 2019 Corporation Taiwanese Enterprises and Their Countermeasures Director Leon, Su November November Securities & Futures Analysis and Decision-making Application of Corporate Financial 14, 2019 14, 2019 Institute Information June 26, June 26, Taiwan Institute of 2019 Annual Meeting of Taiwan Institute of Directors: A+ Enterprises 2019 2019 Directors and shareholders’ value Blockchain: A New Technological June 28, June 28, Taiwan Institute of 2019 2019 Directors Power that Disrupts Industry and Corporate Governance Independent Shih, Hsien- Director Fu Briefing Session on the July 17, July 17, Securities & Futures Announcement on the Legal 2019 2019 Institute Compliance of the Insider of Listed Company September September Taiwan Institute of Impact of U.S.-China Trade War on Taiwanese Enterprises and Their 26, 2019 26, 2019 Directors Countermeasures February February Taiwan Corporate 2019 global trend analysis: Risks and 19, 2019 19, 2019 Governance Association Opportunities February February Taiwan Corporate Discussion on Sustainable Corporate Governance to Increase the 22, 2019 22, 2019 Governance Association Company's Long-term Value Blockchain: A New Technological Independent June 28, June 28, Taiwan Institute of Power that Disrupts Industry and Su, Chin-Huo 2019 2019 Directors Director Corporate Governance Taiwan’s Artificial Intelligence: August 27, August 27, Taiwan Corporate Opportunities and challenges of 2019 2019 Governance Association industrial transformation Impact of U.S.-China Trade War on September September Taiwan Institute of 26, 2019 26, 2019 Directors Taiwanese Enterprises and Their Countermeasures June 28, June 28, Taiwan Institute of Blockchain: A New Technological Power that Disrupts Industry and 2019 2019 Directors Independent Corporate Governance Wu, Shih-Hao Director September September Taiwan Institute of Impact of U.S.-China Trade War on Taiwanese Enterprises and Their 26, 2019 26, 2019 Directors Countermeasures

III. Corporate Governance Appendix: Training and Continuing Education of Executive Officers and Director and Supervisor Representatives of Affiliates Dates Title Name Sponsoring Organization Course Title Hours From To Executive Blockchain: A New Technological Vice June 28, June 28, Taiwan Institute of Power that Disrupts Industry and 3 President of 2019 2019 Directors Hotai Corporate Governance Liu, Yuan-

Sen Vice Impact of U.S.-China Trade War on September Taiwan Institute of Chairman of September Taiwanese Enterprises and Their 3 26, 2019 Directors Hotai 26, 2019 Countermeasures Insurance Vice Blockchain: A New Technological June 28, June 28, Taiwan Institute of President of Power that Disrupts Industry and 3 Hotai 2019 2019 Directors Chen, Corporate Governance

Chien-Chou Impact of U.S.-China Trade War on Supervisor September September Taiwan Institute of Taiwanese Enterprises and Their 3 of Eastern 26, 2019 26, 2019 Directors Motor Countermeasures Vice Blockchain: A New Technological June 28, June 28, Taiwan Institute of President of Power that Disrupts Industry and 3 2019 2019 Directors Hotai Corporate Governance Huang,

Ming-Hsien Impact of U.S.-China Trade War on Director of September September Taiwan Institute of Taiwanese Enterprises and Their 3 Kuotu 26, 2019 26, 2019 Directors Countermeasures Motor Vice Blockchain: A New Technological June 28, June 28, Taiwan Institute of President of Power that Disrupts Industry and 3 2019 2019 Directors Hotai Corporate Governance Lai, Hung-Ta Impact of U.S.-China Trade War on Director of September September Taiwan Institute of Taiwanese Enterprises and Their 3 CarMax Co., 26, 2019 26, 2019 Directors Countermeasures Ltd. Chief Blockchain: A New Technological June 28, June 28, Taiwan Institute of Officer of Power that Disrupts Industry and 3 2019 2019 Directors Hotai Corporate Governance Wu, Chia-Yen Impact of U.S.-China Trade War on Director of September September Taiwan Institute of Taiwanese Enterprises and Their 3 Eastern 26, 2019 26, 2019 Directors Countermeasures Motor

Blockchain: A New Technological June 28, June 28, Taiwan Institute of Vice Power that Disrupts Industry and 3 2019 2019 Directors President of Corporate Governance Hotai

Hsiao, Hsing- Director of Chien Toyota Material Handling Impact of U.S.-China Trade War on September September Taiwan Institute of Taiwan Ltd. Taiwanese Enterprises and Their 3 26, 2019 26, 2019 Directors Countermeasures

III. Corporate Governance Dates Title Name Sponsoring Organization Course Title Hours From To

Blockchain: A New Technological Chief June 28, June 28, Taiwan Institute of Power that Disrupts Industry and 3 Officer of 2019 2019 Directors Corporate Governance Hotai Liu, Sung-

Shan Supervisor of Heng Yun Investment Impact of U.S.-China Trade War on September September Taiwan Institute of Taiwanese Enterprises and Their 3 26, 2019 26, 2019 Directors Countermeasures

Chief Officer of Hotai Impact of U.S.-China Trade War on

Director of September September Taiwanese Enterprises and Their Fred Hsieh Taiwan Institute of Hotai 26, 2019 26, 2019 Countermeasures 3 Directors Leasing Co., Ltd.

Chief Officer of Hotai

Impact of U.S.-China Trade War on Director of Liu, Chuan- September September 3 Taiwan Institute of Taiwanese Enterprises and Their Toyota Hung 26, 2019 26, 2019 Directors Countermeasures Material Handling Taiwan Ltd.

Blockchain: A New Technological Chief June 28, June 28, Taiwan Institute of Power that Disrupts Industry and 3 Officer of 2019 2019 Directors Hotai Corporate Governance

Wu, Pin- Director of Tsung Hotai Impact of U.S.-China Trade War on September September Taiwan Institute of Innovation Taiwanese Enterprises and Their 3 26, 2019 26, 2019 Directors Marketing Countermeasures Co., Ltd.

III. Corporate Governance Dates Title Name Sponsoring Organization Course Title Hours From To

Chief Officer of Hotai

Blockchain: A New Technological Supervisor June 28, June 28, Lai, Chih-Wei Taiwan Institute of Power that Disrupts Industry and of Smart 2019 2019 3 Directors Corporate Governance Design Technology Co., Ltd.

III. Corporate Governance (5) Composition, Functions and Operations of Remuneration Committee 1. Remuneration Committee Members Meet the Following Professional Independence Criteria Serving as Member of the Qualifications, Together with at Least Remuneration Committee on (Note) Five Years of Work Experience Other Public Company Boards An Instructor or A Judge, Work Higher Position Prosecutor, Experience in the Lawyer, in the Areas Department of Certified Public of Business, Business, Law, Accountant, or Law, Finance, Other Professional Finance, Title Name Accounting or or Technician Accounting, Other Certified through a or Otherwise 1 2 3 4 5 6 7 8 9 10 Academics National Required for Related to Examination in an the Business Business of the Area of Expertise of the Company at a Required for the Company Public or Private Business of the College or Company University Independ Shih, ent Hsien- 9 9 9 9 9 9 9 9 9 9 9 0 Director Fu Independ Wu, ent Shih- 9 9 9 9 9 9 9 9 9 9 9 0 Director Hao Independ Su, ent Chin- 9 9 9 9 9 9 9 9 9 9 9 0 Director Huo Note: Please check the corresponding boxes of the following criteria that apply to the members during the two years prior to being elected and during the term(s) of office. (1) Not an employee of the Company or any of its affiliates. (2) Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, any subsidiary or brother-sister corporation appointed in the same time in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations. (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under nominee accounts, in an aggregate amount of 1% or more of the total number of issued and outstanding shares of the Company, or ranks as one of the top 10 largest shareholders. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any officers in the preceding (1) subparagraph or any of the persons in (2) or (3) subparagraphs. (5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of issued and outstanding shares of the Company, ranks as one of its top five largest shareholders or appoints representatives as directors or supervisors according to Paragraph 1 and 2 of Article 27 of Company Act. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, any subsidiary or brother-sister corporation appointed in the same time in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations. (6) Not a director, supervisor, or employee of other companies which are controlled by the same person or more than half of the shares of the company are controlled by the same person with the Company. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, any subsidiary or brother- sister corporation appointed in the same time in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations. (7) Not a director, supervisor, or employee of other companies or institutes which are controlled by the same chairman, president or a person with fair position of the Company or a spouse thereof. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, any subsidiary or brother- sister corporation appointed in the same time in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations. (8) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company. The same does not apply, however, in cases where the specific company or institution holding more than 20% of the Company’s total issued shares, not exceeding 50%, and the person is an independent director of the Company, its parent company, any subsidiary or brother-sister corporation appointed in the same time in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations. (9) Not a professional individual, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides auditing services or business, legal, financial, accounting services or consultation, with cumulative amount of remuneration received in the past two years less than NT $ 500,000,to the Company or its affiliates, or a spouse thereof. The same does not apply, however, in cases where the specific company or institution holding more than 20% of the Company’s total issued shares, not exceeding 50%, and the person is an independent director of the Company, its parent company, any subsidiary or brother-sister corporation appointed in the same time in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations. (10) Not a person of any conditions defined in Article 30 of the Company Act.

III. Corporate Governance 2. Attendance of Remuneration Committee Members (1) The Remuneration Committee consists of three members. (2) The Remuneration Committee regularly reviews the annual and long-term performance goals of the directors and executive officers, as well as the remuneration policy, system, standard and structure of the Company, and measure the progress of those performance goals. (3) The term of the current members is from June 28, 2019 to June 27, 2022. In 2019, three (A) Remuneration Committee meetings were convened. The attendance of the Remuneration Committee members is as follows: Attendance Attendance Attendance Rate Title Name Remarks in Person(B) By Proxy (%)(B/A) (Note) Convener Chen, Chi-Jhen 2 0 100% Discharged on June 28, 2019 Elected and assumed his Convener Shih, Hsien-Fu 1 0 100% office on June 28, 2019 Member Wu, Shih-Hao 3 0 100% Re-elected on June 28, 2019 Member Su, Chin-Huo 3 0 100% Re-elected on June 28, 2019 Summary of business transacted by the Remuneration Committee:

Date Summary of Proposals Remuneration Actions Taken Committee Resolution March 26, 2019 1.FY2018 director remuneration The proposals were Presented to the 8th Meeting of the 3rd 2.FY2018 employee remuneration approved by all Board and approved Board members of the by all the directors in Committee attendance May 8, 2019 1. FY2018 executive officer performance- The proposal was Presented to the 9th Meeting of the 3rd based bonus and employee approved by all Board and approved Board remuneration members of the by all the directors in Committee attendance August 12, 2019 1. FY2019 executive officer merit increase The proposal was Presented to the 1st Meeting of the 4th approved by all Board and approved Board members of the by all the directors in Committee attendance

Annotations: 1. If the Board of Directors declines or revises the recommendations of the Remuneration Committee, it shall note the date and session number of the meeting, summary of the proposal and resolution by the Board of Directors, and the Company’s response to the Remuneration Committee’s opinion (e.g., the circumstances and reasons for the difference shall be specified if the remuneration adopted by the Board of Directors is more preferential than the Remuneration Committee’s recommendation): not applicable. 2. If there is any dissenting or qualified opinion by a member on the Remuneration Committee’s resolutions on record or in writing, the date and session number of the meeting, summary of the proposal, and all members’ opinions and responses should be specified: not applicable. Note: (1) If a member of the Remuneration Committee resigns before the end of the fiscal year, the resignation date shall be noted in the remarks column. The rate of attendance in person (%) will be calculated based on the number of meetings convened and the number of meetings attended by the member in person during his or her term. (2) If a Remuneration Committee member is re-elected before the end of the fiscal year, the name of current and previous members shall be included and their appointment status and re-election date shall be disclosed in the remarks column. The rate of attendance in person (%) will be calculated based on the number of meetings convened and the number of meetings attended by the member in person during his or her term.

III. Corporate Governance (6) Corporate Social Responsibility & Deviation from Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons for Deviation

Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation 1. Has the Company V We have committed to ensure that all efforts made in conducted risk assessments on the future for sustainable development can focus on the Compliant environmental, social and right direction and produce positive results. We try to corporate governance issues combine various aspects with long-term organizational related to the Company's strategies, risks and opportunities to create value for the operations in accordance with main stakeholders. When collecting sustainability issues the principle of materiality, for the preparation of the report, we follow the and formulated relevant risk sustainability context recommended by the GRI management policies or Standards. Therefore, in addition to referring to the strategies? relevant international corporate social responsibility standards and report compilation standards, including GRI, SDGs and ISO 26000, we also break through the existing normative framework and simultaneously consider the issues of global sustainable development risks/opportunities, feedback from stakeholders, unique trends in the automotive industry, and recommendations from external consultants and experts. 2. Has the Company V In 2018, the Board passed a resolution to set up a Compliant established a dedicated CSR Corporate Social Responsibility (CSR) Committee, made unit with the Board of up by the directors and independent directors of the Directors authorized for senior Company. The Committee is delegated by the Board to management, which reports to adopt development strategies, implement and oversee the Board of Directors? CSR activities of the Company. The CSR Committee meets twice a year. Through regular meetings, the Committee adopts the Company’s annual CSR policies and assesses the status of guideline implementation on various issues, such as environmental practices, social contribution, and corporate governance. The Committee reports to the Board once a year on the results of implementation.

3. Sustainable Environment Development

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation (1) Has the Company V Compliant established a proper 1. We use the Toyota Earth Charter as the guiding environmental management principles in promoting and implementing system based on the industry environmental principles and initiatives. The Charter characteristics? outlines four principles and guidelines in order to achieve the six challenges under the TOYOTA Environmental Challenge 2050: (1) New vehicle zero CO2 emissions challenge (2) Life cycle zero CO2 emissions challenge (3) Plant zero CO2 emissions challenge (4) Challenge of minimizing and optimizing water usage (5) Challenge of establishing a recycling- based society and systems (6) Challenge of establishing a future society in harmony with nature 2. In 2001, we established the Environmental Management Committee, and together with our dealers, set up the Office of Environmental Committees. The Office holds an internal environmental management meeting and a meeting with dealers every six months. Through the implementation of environmental protection plans and programs, we work together towards achieving our commitments and goals for the environment. In order to mitigate the potential negative impact from our sales and vehicle maintenance services, and to fulfill our commitment of environmental protection and sustainable business operations, we have adopted the ISO 14001 standards in implementing and maintaining the environmental management systems. We conduct internal audit and external review to ensure that the environmental management operations are functioning effectively. Furthermore, we adopt the PDCA cycle to improve and mitigate the environmental impact from our operations. It is our commitment to continue supporting our partners’ environmental initiatives to ensure that all areas of our operations are being considered for environmental risks. In the meantime, we also fully cooperate with TMC’s requirements on environmental protection and based on the implementation results of the Group policies, we will make disclosures to the public and communicate with stakeholders. Note: The validity of the ISO14001 certificate starts from January 18, 2019 to January 17, 2022. (2) Does the Company V 1. In order to minimize the environmental impact of Compliant endeavor to improve resource vehicle maintenance activities, we have acquired and efficiency and use renewable adopted various pollution prevention equipment and materials that have low process, starting from smaller environmental environmental impact? improvements and energy saving activities. At present, we have come up with solutions to address issues regarding centralized lubrication systems, volatile organic compounds, rebuilt parts and environmentally hazardous substances, which are also implemented by our dealers and suppliers.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation 2. To prevent refrigerant from emitting to the atmosphere causing ozone depletion and increasing greenhouse gas level, we became the first in the industry in 1991 to invest approximately NT$50 million to install R12 and R134a refrigerant recovery machines at the service workshops of our dealers in Taiwan. The machines are able to effectively recycle, and store residual refrigerant. Recovered refrigerant can be purified and reclaimed, then be reused on vehicles after repairing or servicing. In 2019, the R134a machines recovered 32 tons of refrigerant, which prevents approximately 41,600 tons of CO2 emissions if measured by GWP 1,300 . 3. Since 2003, we have been working with our dealers to install centralized lubrication systems to reduce plastic bottle waste. And we continue to implement waste reduction measures. On average, we reduce millions of lubrications bottles each year. As of the end of 2019, we have reduced an accumulation of 46.6 million bottle waste, which greatly reduce carbon emissions to mitigate environmental impact. 4. As we move towards a more circular economy, auto parts recycling has become important to us. Once we collect the original manufactured parts from the vehicles, we replace or repair the damage with auto parts from the original manufacturer; we also encourage consumers to use rebuilt parts by offering a lower price. Currently, we have automatic transmissions, A/C compressors, power steering systems/pumps and hybrid battery etc.

(3) Does the Company assess V Compliant the potential risks and 1. We have identified major risks and formulated opportunities of climate countermeasures for "Regulations", "Market", change for the Company now "Goodwill", and "Extreme Climate Events" items. and in the future, as well as 2. For the “Extreme Climate Events” item, the main risk, take measures to address such as tropical cyclones, heavy rainfall or ice and climate-related issues? snow, caused by climate change, might cause delays in the delivery of products and parts or affect operating efficiency and on-time delivery rates, and impact market sales performance. We had established a complete stock distribution and notification management system to cope with any emergency situation and to minimize the impact of the extreme climate events. (4) Does the company count V 1. We have established an environmental management Compliant the amount of greenhouse gas information system since 2018 to register, check and emissions, water consumption track environmental performance data, including the and total weight of waste in amount of carbon emissions, water consumption and the past two years, and total waste, etc. formulate policies for energy saving and carbon reduction, greenhouse gas reduction, water use reduction or other waste management measures?

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation 2. In addition to knowing the environmental performance data, we also set a target for reduction. We set a target of reducing carbon emissions, water consumption and general waste by 1% in 2019, which is compared to the same period in 2018. With the establishment of solar energy equipment, the implementation of electricity/water reduction measures and the strengthening of separating waste, we have achieved the target for deduction by 1% in 2019 – the reduction of approximately 2,305 tons of carbon emissions by solar power generation; reduction of water consumption by 4%; reduction of general waste by 15%. 4. Promotion of Social Welfare (1) Has the Company V In order to fulfill corporate social responsibility and Compliant formulated appropriate protect the basic human rights of employees and management policies and stakeholders, we support and voluntarily follow procedures according to international human rights convention, The Universal relevant regulations and the Declaration of Human Rights, to show our respect to International Bill of Human human rights recognized by international society. We Rights? also follow the International Labor Organization to protect the legitimate rights and interests of employees, fully embody the responsibility to respect and protect human rights, treat with dignity and respect all employees, including salaried personnel, interns and etc. The human rights issues concerned by us and our management policies are as follows: 1. Fair Working Environment & Employee Code of Conduct. We ensure full compliance with applicable labor laws and regulations, encourage and support the personal development of employees, and create a safe and harmonious working environment by offering equal opportunities to our employees and maintaining fair and stable working conditions. Each employee is expected to respect and support human rights without any discrimination against gender, age, nationality, race, ethnicity, religion, denomination, physical or mental disability, marital status, or family background. We ensure that there are no violations of human rights, such as forced labor, child labor and harassment. We have a zero-tolerance policy for discrimination and infringement of the rights of another. 2. We provide effective protection of labor rights and friendly and harmonious labor relations. We implement fair benefits, training, evaluation and promotion opportunities and provide an effective and appropriate grievance mechanism to avoid matters that jeopardize employees ’rights and interests.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation 3. We have adopted the Guide on Workplace Sexual Harassment Prevention pursuant to the Act of Gender Equality in Employment and Regulations for Establishing Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment at Workplace promulgated according to Article 13, Paragraph 3 of the same Act, which provides a rigorous reporting system for sexual harassment. We regularly promote sexual harassment awareness and incorporate Workplace Sexual Harassment Prevention courses into the onboarding training. Our group companies also implement relevant measures according to the Guide on Workplace Sexual Harassment Prevention. 4. Safe working environment: We attache great importance to the safe and healthy working environment of employees, set up occupational safety and health management organizations, continuously improve the working environment and sanitary conditions, and strive to reduce the risk of occupational disasters and protect the physical and mental health of employees 5. Information Security: In order to respect the privacy rights of various stakeholders and protect the collection and legal use of personal data, we have established a complete information security management mechanism to control data access and prevent data leakage. We expect all partners to improve the management of human rights related issues and international human rights awareness, in line with the spirit and basic principles of this policy.

(2) Does the Company V We adopt our internal rules and policies in compliance Compliant formulate and implement with applicable labor laws and regulations. Our efforts in reasonable employee welfare employee development and benefits are as follows: measures, including 1. Employee Retention. We strengthen employee compensation, vacations and retention by offering career development other benefits, and opportunities, promoting work-life balance, and appropriately reflect operating developing leadership skills. The average turnover performance or results in rate in the past three years is below 10%. employee compensation? 2. Our employees’ salaries are paid in accordance with the "Regulations for Employee Compensation Payment” and we will make adjustments with reference to the salary survey report to ensure that employees' salaries meet market standards.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation 3. Performance Management and Development. The purpose of our performance management and development system is to integrate and increase individual and the performance of the organization. The principles include the following: each employee shall be responsible for its individual performance, department heads and subordinates shall work together and constantly interact and communicate with one another, and performance and development shall be equally important. Also, according to Article 34 of article of association, if the Company make a profit, we should allocate 1% for employees’ compensation. Besides, employee performance bonuses are allocated annually based on the Company's operating performance, and bonuses are issued in June each year based on the employee's individual evaluation. 4. Employee Development. The cornerstone of our employee development is continuously educating and learning. Our ongoing efforts in talent development enable us to strengthen our competitiveness. 5. New Employee Training. In order to equip new employees with a comprehensive understanding of their job duties, colleagues, objectives and future development, we provide onboarding training, mentoring program, and department orientation. 6. KSAOs (Knowledge, Skills, Abilities, and other Characteristics) Training. Provide KSAOs training to employees according to their job grades. 7. Training of Department Heads. We provide management skills training to department heads in accordance with their functions and equip them with the abilities to become future leaders. 8. Diversified Development and Learning Channels. Most of the employees are able to access a wide selection of learning resources through various channels, including on-job-development training, job rotation, external training and seminars. 9. Defined Benefit Pension Plan. The employee retirement regulations formulated pursuant to the Labor Standards Act is categorized as a defined benefit pension plan. 10. Defined Contribution Pension Plan. The employee retirement regulations formulated pursuant to the Labor Pension Act is categorized as a defined contribution pension plan.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation (3) Does the Company provide V 1. Our Office of Occupational Safety and Health (the Compliant a safe and healthy working “Office”) has been established to prevent environment and offer regular occupational diseases and injuries, ensure workplace training on workplace health safety and health and employee well-being. The Office and safety for employees? is responsible for managing and improving the working environment and promoting health activities. Senior management shall set an example for our employees by actively and regularly attending meetings of the Occupational Safety and Health Committee and oversee the implementation of relevant matters. 2. To maintain workplace safety and health, the Office routinely inspects the working environment in each service workshop accompanied by physicians specialized in occupational medicine in order to identify potential hazards and make improvements, and subsequently revisits to ensure workplace safety. 3. We have assigned personnel to regularly inspect the machinery and equipment commonly used in our operations to ensure proper function. Personal protective gears (e.g., helmets, safety shoes) are also provided to operators to ensure their safety. 4. We routinely conduct air quality assessment in the workplace in order to provide employees with a clean working environment. 5. The Ministry of Labor, in order to publicly praise the businesses that have achieved good results in the implementation of occupational safety and health, encourages corporations to use the systematic occupational safety and health management system, continuously improve the working environment, improve the level of workplace safety and health, and promote labor safety and health. After half a month of preliminary review, on-the-spot inspections and evaluation meetings, the Ministry of Labor awarded the Company the Labor Safety Award in 2019. 6. In order to provide breastfeeding mothers with a clean and healthy nursing environment, not only did we set up lactation rooms at the office in accordance with the laws and regulations, we also took a step further to install UV sterilizer and air purifier in the rooms, so as to provide a better breastfeeding environment. 7. New employees are required to receive occupational health and safety training regarding the working environment and hazards prevention during their orientations, which is aimed to help employees understand the potential hazards in the workplace. We also provide workplace health and safety trainings to current employees on a regular basis to enhance their health and safety awareness. 8. We regularly hold emergency drills to familiarize our employees with the standard procedures in case of emergency to mitigate personal injuries and property damages. 9. Each year, we offer health checkups to our employees. The packages we provide are tailored to the health condition, age, gender of our employees and based on other common health problems of Taiwanese people published by the authorities.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation 10. We also design activities and talks that are aimed to promote employees’ physical and mental health based on their health checkup results, nature of duties and other factors. We’ve taken these steps to help improve the overall health of our employees. 11. We go beyond compliance to offer onsite clinics three times a month and hire occupational health physicians to provide consultation to our employees. 12. To encourage employees to increase water intake, we have installed water dispensers at the office and conduct water quality testing monthly to ensure safe drinking water. 13. Prior to flu season, we host information sessions on flu vaccination. During flu seasons, we recommend employees who show flu symptoms to see a physician and stay home; if sick employees decide to come to work, we will provide a separate conference room to keep them from infecting other employees. 14. To prevent health and safety related incidents, we adopted ISO 45001:2018, the internationally applied standards for occupational health and safety systems in our 5 locations. With the management system, our goal is to effectively mitigate, eliminate and prevent workplace hazards and maintain a safe workplace for our employees.

(4) Does the Company provide V Every year, we set up our annual education and training Compliant effective career development programs that include career development courses trainings for its employees? designed for various job functions, professional and career skills. Our Career Development Center also regularly performs evaluation on employee job functions. (5) Has the Company follow V 1. Consumer protection policy: Compliant relevant regulations and Our commitment in servicing customers is reflected in international standards and our principle of “Putting the Customer First.” In recent established a consumer years, we launched the “+DSSLQHVV,Q72<27$Ɍ protection policy and appeal campaign, continuously requiring our top 8 dealers to procedures regarding listen to the opinions of customers and provide customer health and safety, customer services to ensure the rights of consumers. customer privacy, marketing 2. We provide a transparent and effective consumer and labeling of products and appeals process for products and services sold: services? (1) Customer Service Team

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation We value the opinions of our customers. In order to provide a proper channel for customer feedbacks and responses, we established a 0800 customer service line in 1990 and had our 8 dealers implemented the same since 1991 to provide multiple channels for customer service. Since January 2000, we cancelled all of the 0800 customer service line of our 8 dealers. Customer inquiries and complaints are now directed to our Customer Service Center for the purpose of enhancing convenience and consistency of customer service quality. (2) Each dealer also has a Customer Care Department dedicated to assisting and promoting customer satisfaction activities. (3) In order to provide quicker and more convenient services, we were the first in the industry to develop a professional customer service information system, an interactive platform between Hotai and its dealers which enables us to provide real-time customer service by tracking complaints and feedbacks and to ensure the rights of customers. (4) In July 2016, we were the first automaker to be ISO 10002 certified in customer satisfaction and complaints handling. (5) In 2017, we introduced several mechanisms to improve overall customer service quality through total process management, including 0800 Post- Call Customer Satisfaction Survey, VOC (Voice of Customer) information sharing program, and complaint receipt and resolution SMS notification to customers. (6) In 2018, we established FAQ website and launched automatic voice reply system in customer service line, to enhance more friendly functions to our customers. (7) In 2019, we lead the industry to build an AI online customer center – Chatbot, with instant response to satisfy customers. 3. Consumer appeal procedures: (1) The Customer Service Center receives and handles customer inquiries and complaints from the 0800- customer service line, live chat, e-mails, letters, surveys, City Driver app, etc. (2) A customer service representative shall record customers’ inquiries on the service system and notify the service site involved. The dealer is required to contact the customer within 1.5 hours to provide necessary assistance. (3) A dealer shall complete processing a case within 1.5 or 5 business days and put it on record (1.5 business days for inquiries and 5 business days for complaints). The case can only be seen as closed after it’s been reviewed and confirmed by Hotai.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation (4) If the customer directly submits the complaint to a local government Consumer Protection Officer or Consumer Protection Organization, the customer representative of our dealer shall attend the dispute resolution held by the government and offer solution in order to resolve complaints properly. (6) Does the Company V Compliant formulate supplier We and the main supplier Toyota Motor Corporation management policies that have agreed to comply with local, national and require suppliers to follow international laws and social regulations, to practice relevant standards in corporate social responsibility, and enhance the brand environmental protection, image. Both of us constantly committed to creating good occupational safety and partnerships. As a leading brand in the automotive health, or labor human rights, industry in Taiwan, we hope to work with suppliers and and how is the distributors to build sustainable service value chain. Our implementation of the supply chain management system takes value creation preceding policies? as the starting point to enhance the sustainability of the value chain, through standardized management (please refer to Note), information sharing, supplier evaluation, supplier audit, and supplier capacity building. Note: We require suppliers to obtain international certification, such as ISO 14001 and OHSAS 18001, if possible. Also, supplier portal must also contain detailed information on corporate ethics, environmental protection, etc. We require our suppliers to meet the relevant requirements of Hotai’s corporate social responsibility in the contract for the pursuit of accomplishing corporate social responsibility and corporate governance. 5. Does the Company refer to V We have prepared CSR reports since 2013, and compiled Compliant the international reporting on the basis of the core options of the Global Reporting standards or guidelines for Initiative (GRI) Standards. In order to ensure the compiling the reports that credibility of the quality of data and materials, we disclose the Company's non- mandate British Standards Institution Taiwan to verify financial information such as the report and the financial data was the information corporate social responsibility from the annual report audited by PwC Taiwan. reports etc.? Does the aforementioned reports have been assured of guaranteed by a third-party verification? 6. If the Company has established the corporate social responsibility principles based on the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies, please describe any deviation between the Principles and its practices: Hotai’s corporate social responsibility practices follow the Principles, and there’s no deviation.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation 7. Other important information to facilitate a better understanding of the Company’s corporate social responsibility practices: Since the Company was founded, we have been engaging in activities that benefit the public interest based on the concept of “Giving Back to the Community”. For over decades, we actively host and sponsor various public welfare activities. Not only do we work in the public interest issue areas of transportation, environmental protection, and other industry specific issues, we also endeavor to reach out to the underprivileged in recent years, thereby fulfilling our social responsibility as corporate citizen and giving back to the community. Our corporate social responsibility activities are widely recognized and commended by the general public. The Company’s public welfare programs are as follows:

1. Road Safety (1) Donation of crossing guard uniforms for elementary schools nationwide Hotai has been donating crossing guard equipment to various public elementary schools in Taiwan since 2011, including police-grade public safety vests and handheld flags. We completed our first round of donation throughout Taiwan in 2015, maintaining road safety for millions of elementary school students in the country. In 2016, we began the second round of donation. So far, we have given a total of 85,000 sets crossing guard equipment as of 2019, improving road safety for school children through actions.

(2) Traffic Safety Theatre Since 2006, Hotai has been working with famous children’s theatre to promote a correct view of road safety to elementary school students through storytelling. This program runs for several months every year and was renamed “Hotai Road Safety Campus Storytelling Benefit Tour” in 2010. In recent years, we have the tours performed by theater groups, visiting 120 elementary schools each year, providing a fun learning experience to school children while equipping them with road safety knowledge. As of 2019, we have held 1,289 performances with the participation of over 320,000 students. This event is widely celebrated by elementary teachers and students around Taiwan.

(3) National Road Safety Children’s Drawing Contest We firmly believe that starting road safety education from a young age is beneficial to the overall road safety in Taiwan in the long run. Since 2001, we have been working with Chun Ching Social Welfare Foundation to promote road traffic safety in our sponsored National Road Safety Children’s Drawing Contest. Every year, we take “Road Safety”, an issue area concerns all citizens, as the theme for the contest and encourage kids to use their imaginations. It is our hope that through drawing, “Road Safety” will be instilled in children’s minds and be put into practice in their everyday life. Each contestant was asked to pay NT$2 per drawing paper, and Hotai doubled the amount of fees charged and donated to school-age children who are underprivileged or live in remote areas. Although the amount of donation was small, these young contestants were given the opportunity to take part in public interest activities, which made the contest more personal and meaningful. We have been sponsoring the contest for 19 years now, and over 820,000 children participated. It is our hope that through drawing, “Road Safety” will be instilled in children’s minds to bring profound influence over time and be put into practice in their everyday life.

2. Caring for the Underprivileged (1) National Blood Donation Month and the donation of bloodmobiles Hotai is committed to blood donation programs. We have been donating full size mobile blood bus to blood donation centers every year since 2011. As of 2019, Hotai has donated 10 mobile blood bus, which serves various communities in every region in Taiwan and we are the enterprise who donated the most mobile blood bus. To date, we have supported the medical demand for blood in Taiwan and helped patients to regain their health. The Company has been hosting “Hotai National Blood Donor Month” every year since 2012, which is joined by its employees, affiliates, dealers, and the top 6 blood donation centers nationwide to sponsor blood drives at various TOYOTA locations and local blood donation centers. Hotai mobilizes its employees and affiliates to encourage the general public to donate blood through this event. In 2019, in order to increase the blood donation rate of young people, Hotai not only filmed creative blood donation videos to attract the young generation’s attention, as the first enterprise that cooperates with Taiwan Blood services foundation and schools, but also subsidized many blood donation activities held in schools and drove the blood bus into campus for promoting blood donation with some fun activities.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation (2) Caring for mentally challenged kids In 2015, we partnered with Children Are US Foundation to launch the program; a total of 122 TOYOTA sales locations in Taiwan purchase their baked goods. By signing a long-term purchasing contract, our goal is to provide a consistent, long- term support and care to these children and encourage the public to join us in helping the sheltered workshop to attain sustainable revenues. As of 2019, we have made over NT$35.29 million purchase from the Children Are US Foundation bakery.

3. Environmental Initiatives (1) TOYOTA - One Tree for Every Toyota TMC’s vision to achieve harmony between people, cars and the planet has been the goal of our environmental initiatives. We take various measures to protect our beautiful island, including implementing environmental policies and hosting benefits events. In 2017, we took the initiative to partner with government agencies and professionals in the private sector to plant trees, committing to planting a tree along the Taiwan coast for TOYOTA car owner for each new vehicle purchased as of April 2017. The purpose of the initiative is to promote awareness of environmental issues to the general public and to connect car owners with the environment that they live in. Through the collaborative efforts of business corporations, the government, and businesses in the private sector, it is our mission to inspire more people to join us in the efforts to making our planet a better place. As at the end of 2019, 300,000 trees have been planted.

(2) TOYOTA - Environment Month This is the 14th year since we started the Environment Month initiative in 2005. As of 2009, eight of our distributors from around Taiwan joined in on the initiative as well as the good neighbors, participation continues to grow. These eight distributors have come together to promote the community green redevelopment projects since 2013. Through the Toyota Environment Month initiative, we hope to inspire local communities to support the government’s policy of revitalizing abandoned urban space and improve quality of life.

In 2018, we began working with non-profit organizations and government agencies. For a period of three years, we are committed to making use of local resources to give the communities a green makeover. In 2019, we hosted 88 rounds of Toyota Environment Month activities and 117 sessions of environmental education with 34,000 volunteers, which covered 202,000 square meters, equal with 481 standard basketball courts, and included near 20,000 plants planted. Based on the questionnaires we collected, we scored 9.5 in both activities offered and brand preference.

(3) TOYOTA – Toy Sharing Since 2016, we have been partnering with Taiwan Toy Library Association to accept old toys at 122 of our service locations around the island. It is our mission to encourage the general public to join on toy recycling. The used toys we collect are delivered to Taiwan Toy Library Association for cleaning and regeneration. The recycled and regenerated toys will then be delivered by college volunteers who join our winter and summer volunteer programs to remote areas in Taiwan and benefit local children. We also hosted a series of family events that incorporated environmental awareness, education, and public interest activities. As at the end of 2019, there was an accumulated total of 150 tons of toys recycled through the program, which was equal to the carbon absorption of 38,625 trees in one year and more than 120,000 people participated in the activity.

(4) Beach Clean-ups held by Hotai Toyota Group for reducing plastics We held “Beach Clean-ups with Hotai Toyota Group in Taiwan” activity, connected related enterprises and local distributors on 16 beaches in Taiwan in series. This Clean-ups activity was a pioneering initiative for the automotive industry in Taiwan. It attracted the more than 10,000 participants in Taiwan at the same time including group employees, employees’ family, car owners, local people, public unit, and Non-Government Organization. In the activity, we collected trash up to 9,033 kilograms and 43,973 waste plastic bottles, equivalent to the height of 17 Taipei 101. Hotai donated 439,730 public welfare fund to the Taiwan Environmental Information Association with 10 dollars for every waste plastic bottle.

4. Education and Art (1) Public welfare dreamer In 2019, the first public welfare dreamer CSR X USR college public welfare proposal competition was held, giving college students public welfare subsidies and subsidies to support students to share love to Taiwan, and to start a beautiful change and positive cycle in Taiwan! In the first session, a total of 304 teams signed up for the competition. Professor Feng, Yan from the Department of Social Engineering of NTU, Yah, Bing-Cheng from the Department of Electrical Engineering of NTU, Professor Hu, Zhe-Sheng from the Department of Enterprise Management of Fu Jen Catholic University, Professor Zeng Min- Jie from the Department of Social Work of National Taipei University, Xiong Yi-xi, Director of the World Magazine, Shen Xin- ling, a charity youth, and Huang Wen-Jui, member of the CSR Committee of Hotai, served as the jury, carefully selected the most influential, unique and executive dream proposals. After the paper review and preliminary competition selection, ten excellent teams entered the final selection, which included public welfare proposals such as rural medical service team, care for migrant workers, lesson counseling for disadvantaged students, care for single-parent families, and voluntary shears for vulnerable institutions. Hotai subsidizes the top ten teams with a 100,000 NTD public welfare subsidy per group to assist students in implementing public welfare activities. The total subsidy amount is up to 1 million NTD. Charity dreamers combine the power of enterprises and the enthusiasm of college students to drive young generations to participate in social activities, so that Z generations can give back to society. And in the process of practice, it grows as a result, and the people be cared also benefit from the efforts of the students, creating a positive cycle and creating a better Taiwanese society.

(2) TOYOTA Way Elite Training Camp Since 2019, we have organized the "TOYOTA Way Elite Training Camp" for college students. It carefully designed and trained employees within Hotai to be a two-day training course with theory and practice, so that students can efficiently learn corporate practice management practices within a period, and quickly improve their thinking and planning capabilities. The total number of participants is 100. We have 574 registrations in the first event. The students were highly satisfied with the event and we will continue to hold it every year in the future.

(3)TOYOTA Global Dream Car Art Contest Our desire to help children recognize the importance and joy of having dreams led us to holding the Toyota Dream Car Art Contest. Children are encouraged to use their imagination to create their dream cars, and sometimes their passion for cars are inspired in the process of creative drawings. In 2019, we hosted the contest for the 13th time. Over 450,000 artworks have been submitted since the first contest in 2004. The Toyota Dream Car Contest is by far the only children’s drawing contest in Taiwan that is held on a global scale. Our commitment to investing in the development of art and creativity in children will continue. With the “Dream Car” theme, we invite and inspire children’s imaginations to create their dream cars. We hope to instill the knowledge of environmental protection and road safety in children’s minds and provide a better and safer environment for the next generation.

(4) Donate High-tech Educational Materials from TMC Hotai has introduced the Toyota Technical Education Program, T-TEP, in Taiwan to assist technical and vocational schools to develop students specializing in automotive repair and maintenance since 1991. We have also cooperated with many technical and vocational schools and donated various Toyota high-tech teaching devices and materials for the teachers and students to practice on. The accumulated value of the teaching materials and vehicles donated for practice is now over NT$ 27.34 million, which evidences our emphasis on and long-term investment in developing a new generation of skilled automotive technicians.

(5) LEXUS Film Awards This event was sponsored by Hotai and the Pure Youth Social Welfare Foundation and the host cooperated with Taipei Golden Horse Film Festival Executive Committee, the honorable host of Taipei Golden Horse Film Festival. This film award is the only professional film festival designated by the Golden Horse Film Festival. It has been held since 2015 and we hope to discover and cultivate more young film talents, encourage students to create wonderful works, and inject new energy into the film art. The 5th theme continues the core spirit of LEXUS with the theme of "Experience Amazing". The clips create a stage for students to show their creativity and imagination so that to test the teamwork and appeal of students. There have been more than 5,000 works accumulated in five submissions.

III. Corporate Governance Implementation Status Deviation from Corporate Social Responsibility Best- Evaluation Item Practice Principles for Y N Summary TWSE/TPEx Listed Companies and Reasons for Deviation (6) LEXUS Design Award Lexus Design Awards was first launched in 2013. It is a global design competition aimed at cultivating a new generation of creative designers and has become the best stage for creative designers to show their creativity. In 2019, the number of works was as high as 1,548 pieces. A total of 65 countries ’cutting-edge designers were participating to compete for the perfect opportunity to shine on the world stage. Lexus also organized workshop activities, invited well-known designers to guide the work, assisted the contestants to improve the quality of the work, and let the world see Taiwan with outstanding innovative design.

(7) Donation to sports/entertainment activities In order to promote the development of diversified sports, music and exhibition activities in Taiwan, and bring a richer life experience to most car owners, Hotai’s agency brands TOYOTA and LEXUS actively promote sports arts and cultural activities every year through sponsorship, co-organization, etc. We try to promote high-quality and diverse culture and art feast. In 2019, TOYOTA sponsored SBL basketball and other sports events in addition to be a partner of “Legend Duel'' in 2019 GCS Spring Professional League. Also, we continued to support for Taiwan's music industry, such as sponsoring a concert in Kaohsiung Da-Gang, Hito Pop Music Awards with TOYOTA brand name, showing our support and emphasis on creative culture. As the leading brand of Japanese luxury cars, LEXUS is committed to embodying the brand spirit of "Experience Amazing" in diverse sponsorship activities and vehicle owner services. The 2019 event sponsorship includes the internationally renowned classic Broadway musical "Lion King", the international fashion event "Taipei Fashion Week x VOUGE Global Shopping Festival", and the most outdoor camping style "GQ City Camping Carnival". In addition, with the trend of sports, we held not only international triathlon events with IRONMAN Taiwan in the first time, but also sponsored a series of golf activities, including Lexus cup, children ’s golf, LPGA and CITIC skirt swings. We also organized "Fine Fitness LEXUS DAY "and" RIDE WIITH LEXUS honor equestrian experience "and other activities for car owners. We hope our brand could be fully integrated into the life of the owners, and continue to bring the ultimate experience of all-round “Experience Amazing” to the public.

III. Corporate Governance (7) Performance of Ethical Corporate Management & Deviation from Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons for Deviation

Implementation Status Deviation from the Ethical Corporate Management Best Evaluation Item Y N Practice Principles for Summary TWSE/TPEx Listed Companies and Reasons for Deviation 1. Establish ethical corporate management policies and programs (1) Has the Company V Our Anti-Corruption Ethnical Management Principles Compliant stipulated its ethical corporate and Anti-Corruption Ethical Management Operating management policies and Procedures and Guidelines were respectively adopted procedures approved by the and approved by the Board of Directors in March 2014 board of directors in its and January 2018, which stipulate the prohibition of guidelines and external corruption, types of benefits, ethical business practices, documents, as well as the prohibition of illegal political contributions and unlawful commitment from its Board of donation or sponsorship, effective accounting and directors and senior internal control systems, regular trainings and management to actively campaigns, and establishment of reporting and implement the policies? disciplinary mechanisms. These policies can be found on our corporate website. (2) Has the Company V Our Employee Code of Conduct, compliance guidelines established an evaluation and Anti-Corruption Ethical Management Operating mechanism for the risk of Procedures and Guidelines stipulate that employees unethical conduct, regularly shall perform duties with integrity and comply with the analyze and evaluate the law and social moral principles. The employees shall not business activities with high engage in any unethical business practices such as risk of unethical conduct infringement of intellectual property and unfair within its business scope, and competition. We also promote business ethics during formulate a plan to prevent orientation for new employees and require them to sign unethical conduct, which shall an Employee Statement of Compliance. In 2019, the at least cover the preventive Company also offered a one-hour anti-corruption measures for the behaviors in training to new employees, which was attended by 18 Article 7, paragraph 2 of the employees. "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies?" (3) Has the Company V We have adopted Workplace Rules and Anti-Corruption established policies to prevent Ethical Management Operating Procedures and unethical conduct with clear Guidelines which prohibit employees from using their statements regarding relevant positions for personal gains, or accepting hospitality, procedures, guidelines of gifts, kickbacks, or misappropriating public funds, or conduct, punishment for other unlawful interests, thereby preventing the impact violation, rules of appeals, and of unethical behaviors on business relationships or the commitment to transactions. implement the policies?

2. Ethical corporate management practices

III. Corporate Governance Implementation Status Deviation from the Ethical Corporate Management Best Evaluation Item Y N Practice Principles for Summary TWSE/TPEx Listed Companies and Reasons for Deviation (1) Does the Company V Our business contracts contain clauses stipulating Compliant evaluate business partners’ ethical conducts to ensure compliance of our business ethical records and specify partners. ethics-related clauses in business contracts?

(2) Has the Company V To implement ethical business practice, the Legal Compliant established a business unit Division is assigned as a dedicated unit to oversee the exclusively or concurrently following, and the Auditing Division shall report to the dedicated to business ethics Board once a year on the implementation status: and integrity, and regularly (at (1) Incorporate business ethics and moral values into least once a year) report to the Company’s operational strategies and adopt the board of directors on its relevant preventive measures according to integrity management policy, applicable laws and regulations; prevention of unethical (2) Prepare plans to prevent unethical behaviors and behavior program and adopt standard operating procedures and code of supervision of conduct related to job functions under each plan; implementations? (3) Design the internal organization, system and management, having a mutual accountability mechanism for business activities that are more susceptible to unethical behaviors; (4) Promote and coordinate ethical policy education and training; (5) Adopt whistleblowing system to ensure effectiveness; and (6) Support the Board and management in reviewing and evaluating whether the preventive measures established for implementing ethical business management is effective, conduct an evaluation on the compliance of relevant operating procedures and prepare a report accordingly.

Our External Affairs and Legal Division is responsible for promoting compliance of business ethics to prevent violation of ethical corporate management and unlawful conduct by the employees.

In 2018, we adopted the Anti-Corruption Ethical Management Operating Procedures and Guidelines.

Our Auditing Division under the Board of Directors will regularly and from time to time inspect our accounting and internal control systems. Any violation discovered will be recorded in the audit report and submitted to the Board of Directors.

III. Corporate Governance Implementation Status Deviation from the Ethical Corporate Management Best Evaluation Item Y N Practice Principles for Summary TWSE/TPEx Listed Companies and Reasons for Deviation (3) Has the Company V The Rules and Procedures of Board Meetings set forth Compliant established policies to prevent director recusals in case of conflicts of interest, and the conflicts of interest, provided Employee Code of Conduct and Anti-Corruption Ethical and implemented appropriate Management Operating Procedures and Guidelines communication channels? stipulate that employees and directors shall not use their position to achieve personal gains or benefit others, or have any conflicts of interest. We also have a grievance system in place. The Code of Conduct and Ethics for Representatives of Affiliates also provides rules preventing conflicts of interest. (4) Has the Company V 1. Unless otherwise specified in the laws or regulations, Compliant established effective our accounting practices are conducted according to accounting and internal our accounting system. We ensure that all operating control systems to facilitate activities are preceded in compliance with strict ethical corporate operation standards by implementing relevant management according to the accounting system operating procedures so as to risk assessment results of achieve checks and balances between each operation unethical behavior, formulate and prevent corruptions. relevant audit plan, and check 2. Our internal control system takes into account the the compliance of the plan to operating activities. The internal auditors conduct prevent unethical behavior, or auditing in accordance with the audit plan and may engage certified public request each department to produce relevant accountants to carry out the documents, accounts, certificates, etc. The auditor audit? may create a project for a specific audit if necessary, and prepare an audit report and submit to the Board of Directors along with relevant documents in order to ensure that the day-to-day operation is consistent with our ethnical management principles. (5) Does the Company V We regularly provide trainings and promote campaigns Compliant regularly hold internal and to our employees to help them better understand our external educational trainings commitment and policy on ethnical corporate on ethical business management. management? (1) We provided a anti-corruption training to new employees, which was attended by 18 employees. (2)We held an Annual Compliance Guideline Online Test; 551 employees participated in the test.

3. Operation of the integrity channel (1) Has the Company V 1. We are able to effectively prevent unethical conduct Compliant established a and facilitate a sustainable business by following the reward/punishment system Anti-Corruption Ethnical Management Principles and and an integrity hotline? Can Anti-Corruption Ethical Management Operating the employee with alleged Procedures and Guidelines and improving internal violations be reached by an regulations and risk management mechanisms. appropriate contact person for 2. According to the Anti-Corruption Ethnical follow-up? Management Principles and Anti-Corruption Ethical Management Operating Procedures and Guidelines, an employee or contractor shall report concerns to the Auditing Division via mail or e-mail stating his or her real name and address to the Chief of Auditing Division in case of discovery of any unlawful conduct.

4. Enhancing information Compliant disclosure Has the Company disclosed its V We have disclosed our ethnical corporate management stipulated ethical corporate practices and implementation on our corporate website management policies and (www.hotaimotor.com.tw) and in the annual report. results of implementation on the Company’s website and the Market Observation Post System? 5. If the Company has established the ethical corporate management policies based on the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and its practices: The Board of Director approved the Anti-Corruption Ethnical Management Principles on March 25, 2014, a guideline for implementing ethnical corporate management. In June 2016, the Company amended the Anti-Corruption Ethnical Management Principles based on the amendments of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the Company’s Articles of Incorporation to properly reflect the Company’s current status and comply with corporate governance practices. There is no significant difference between our Anti-Corruption Ethnical Management Principle and the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies. In January 2018, we completed our anti-corruption reporting procedure and adopted the Anti-Corruption Ethical Management Operating Procedures and Guidelines as compliance guidelines for our employees. 6. Other important information to facilitate a better understanding of the Company’s ethical corporate management policies (e.g., if the Company has reviewed its policies): We have always upheld the highest standards of governance by actively promoting operating transparency and requesting business partners (including dealers and suppliers) to make available policies in respect of business ethics on the home page of their websites in order to maintain our business reputation. Through our long-term business relationships, we have a consensus to work together to achieve corporate sustainability in the value chain. (8) Corporate Governance Guidance and Regulations 1. Corporate governance regulations: according to the regulations promulgated by the FSC and TWSE, the Company adopted the following regulations: (1) Articles of Incorporation (2) Procedures for Acquisition and Disposition of Assets (3) Procedures for Engaging in Derivative Products Transaction (4) Anti-Corruption Ethnical Management Principles (5) Operating Procedures for Fund Lending (6) Procedures for Providing Endorsement and Guarantee of Obligations (7) Rules and Procedures of Board Meetings

III. Corporate Governance (8) Rules and Procedures of Shareholders’ Meetings (9) Corporate Social Responsibility Principles (10) Corporate Governance Best Practice Principles (11) Procedures for Processing Material Nonpublic Information (12) Procedures for Suspending and Resuming Transactions (13) Audit Committee Charter (14) Remuneration Committee Charter 2. Websites (1) Our corporate website (http://www.hotaimotor.com.tw/): “Articles of Incorporation and other Corporate Governance Regulations” under “Investor Relations” (2) The Market Observation Post System (http://mops.twse.com.tw/mops/web/index) (9) Other important information to facilitate better understanding of the Company’s corporate governance practices: None.

III. Corporate Governance (10) Status of Internal Control 1. Internal Control Statement: Hotai Motor Co., Ltd. Statement of Internal Control

Based on an evaluation of our internal control system as of March 26, 2020, we hereby state that: 1. The board and management of Hotai Motor Co., Ltd. (the “Company”) are responsible for establishing, implementing, and maintaining adequate internal control over financial reporting. The Company has established an effective internal control system which aims to provide reasonable assurance regarding operational results and effectiveness (e.g., profitability, performance, safeguarding of assets), reliability, timeliness and transparency of its financial reporting, and compliance with applicable laws and regulations. 2. Due to its inherent limitations, internal control over financial reporting can only provide reasonable assurance on the achievement of the three objectives above. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in environment or conditions. However, the internal control system of the Company has a self-monitoring mechanism which allows the Company to take corrective actions as soon as any inadequacy is identified. 3. The Company has assessed the design and operating effectiveness of the internal control system based on the criteria established in the Framework for the Establishment of Internal Control System by Public Companies (the “Framework”). The Framework defines internal control as a process effected by management, consisting of five components: a) Control environment, b) Risk assessment, c) Control activities, d) Information and communication, and e) Monitoring, each comprising of several elements. For more information, please refer to the Framework. 4. We have reviewed the design and operating effectiveness of the Company’s internal control system based on the criteria established in the Framework. 5. Based on the evaluation, we conclude that the Company maintained an effective design and operation of its internal control system (including oversight and management of subsidiaries) as of December 31, 2019, providing reasonable assurance regarding the achievement of the following objectives: effectiveness and efficiency of operations, reliability, timeliness and transparency of financial reporting, and compliance with applicable laws and regulations. 6. This statement shall be included as part of the Annual Report and future prospectus of the Company and disclosed to the public. Any false or fraudulent representations and concealment of information in this statement shall be subject to the legal liabilities prescribed by Article 20, Article 32, Article 171, and Article 174 of the Securities and Exchange Act. 7. This statement was unanimously approved by the board of directors on March 26, 2020, with 14 directors present at the meeting.

Hotai Motor Co., Ltd.

March 26, 2020

2. A separate audit report shall be included where an independent registered public accounting firm has reviewed the Company’s internal control system: Not applicable.

III. Corporate Governance (11) Sanctions imposed on the Company or its personnel pursuant to the laws, or disciplinary actions taken by the Company against its personnel for any violation of internal control rules within the latest fiscal year and as of the date of this Annual Report; if the disciplinary result may have a material impact on shareholders’ rights or the price of securities, then details of the sanctions and/or violations and subsequent improvements shall be listed: The Company’s insider was not familiar with the laws and regulations and failed to report the transfer of shares held by the insider in accordance with Article 22-2 of the Securities and Exchange Act of Taiwan, and the competent authority thus imposed a fine. The fine is a personal case against the individual insider and the operation of the Company is not impacted. In the future, the Company will improve the educational trainings on the compliance of insider securities transaction laws and regulations.

(12) Major Resolutions of the Shareholders’ Meeting and Board Meetings 1. Major Resolutions of the 2019 Annual General Meeting of the Shareholders Date Ratification and Discussion Implementation Status

Ratification of the FY2018 Business Report ʇ and Financial Statements of the Company Cash dividends declared and paid at NT$12 per share. Ratification of the proposed FY2018 profit Ex-dividend date: July 22, 2019 distribution plan Payment date: August 8, 2019 The Company's subsidiary, Hozan Investment Co., Ltd., waives the preemptive right to the newly issued Implemented according to the resolution shares of Hotai Finance Co., Ltd. through cash capital increase. Amendments to the Articles of Approved by the Taiwan Ministry of Economic Affairs on Incorporation July 8, 2019, and published on the Company’s website June 20, Amendments to the Procedures for the 2019 Acquisition and Disposition of Assets Processed according to the amended provisions Amendments to the Procedures for Financial Derivatives Transactions Processed according to the amended provisions Amendments to the Operating Procedures Handled in accordance with the amended procedure for Fund Lending Amendments to the Procedures for Providing Endorsement and Guarantee of Handled in accordance with the amended procedure Obligations The term of office of the new directors (20th session) is Election of directors of the Company from June 20, 2019 to June 19, 2022 Proposal to release directors from ʇ participation in a competing business

2. Major Resolutions of the Board Meetings in 2019 and as of the Date of the Annual Report: (the board of directors has not been updated in May) Date Session and Discussion and Approval Term June 20, 1st Meeting of 1. Election of Chairman 2019 the 20th Board

June 28, 2nd Meeting of 11. Organizational and personnel changes of the Company 2019 the 20th Board 12. Amendment to the Articles of Incorporation regarding the organization 13. Employee job grade promotion 14. Appointment of executive advisor

III. Corporate Governance Date Session and Discussion and Approval Term 15. Appointment of chief advisor 16. Appointment of the Remuneration Committee 17. Appointment of Corporate Social Responsibility Committee 18. Proposal on the "Standard procedures for handling directors' requests" 19. Deliberation on the revision of the budget in the second half of 2019 August 12, 3rd Meeting of 1. Salary adjustment of managers and employees of the company in 2019 2019 the 20th Board 2. Appointment of non-regular consultants

September 4th Meeting of 1. Organizational changes of the Company 26, 2019 the 20th Board 2. Amendment to the Articles of Incorporation regarding the organization

November 5th Meeting of 1. FY2020 Annual Audit Plan 12, 2019 the 20th Board 2. Assessment of the independence of the Company’s external auditor 3. Review of audit fees for the engagement of PricewaterhouseCoopers Taiwan to provide services in FY2020 4. Proposal on the distribution of the over-allotment of Hotai Finance’s shares by the Company’s subsidiary, Hozan Investment; and the evaluation on the decrease of the indirect shareholding ratio of the company in Hotai Finance December 6th Meeting of 1. Organizational changes of the Company 24, 2019 the 20th Board 2. Amendment to the Articles of Incorporation regarding the organization 3. Amendments to the Company's "Board Performance Evaluation Measures" 4. Proposal on the Annual Budget in FY2020 January 17, 7st Meeting of 1. Bank credit line of the Company in 2020 2020 the 20th Board March 26, 8th Meeting of 1. FY 2019 Statement of Internal Control 2020 the 20th Board 2. Amendment to the internal control 3. The Company’s subsidiary, Hozan Investment, participates in the investment in the cash capital increase of Hotai Cyber Connection Co., Ltd. 4. FY2019 Business Report and Financial Statements of the Company 5. FY2019 profit distribution plan 6. Change of accountant for the 2020 Financial Statements 7. FY2019 director remuneration approved by the Remuneration Committee 8. FY2019 employee remuneration approved by the Remuneration Committee 9. Amendment to the Articles of Incorporation of the Company 10. Amendment to the Company’s “Board of Directors Meeting Rules” 11. Proposal to release directors from participation in a competing business 12. 2020 Annual General Meeting of Shareholders May 13, 9th Meeting of 1. Organizational changes of the Company 2020 the 20th Board 2. Amendment to the Articles of Incorporation regarding the organization 3. Amendment to the organizational rules of the Remuneration Committee of the Company 4. FY2019 performance bonus and dividends paid to the executive officers and employee remuneration approved by the Remuneration Committee 5. Amendment to the organizational procedures of the Audit Committee of the Company 6. Proposal on Hotai Motor’s investment in shares of listed company. (13) Major issues of record or written statements made by any director dissenting to important resolutions passed by the Board of Directors during the latest fiscal year and as of the date of this Annual Report: none. (14) Summary of resignation and removal of the Company's chairman, president, chief accounting, finance, internal auditing manager, Company secretary, or R&D officers within the latest fiscal year and as of the date of this Annual Report: none.

III. Corporate Governance 4. Audit Fees (1) Audit Fees Accounting Firm Name of CPA Audit Period Comments

PricewaterhouseCoopers Hsiao, Chin-Mu Wang, Fang-Yu January 1, 2019 to December - Taiwan 31, 2019

Fee Items Audit Fees Non-audit Fees Total Fees Fee Range

1 Under NT$2,000,000 2 NT$2,000,000 - NT$3,999,999 V 3 NT$4,000,000 - NT$5,999,999 4 NT$6,000,000 - NT$7,999,999 5 NT$8,000,000 - NT$9,999,999 6 NT$10,000,000 and above V V

(2) Disclosure of audit and non-audit fees as well as details of the non-audit services where the non-audit fees paid to the certified public accountants, the independent certified public accounting firm and/or its affiliates are 25% or more of the audit fees NT$ in Thousands Non-audit Fees Audit Audit Accounting Firm Name of CPA Systems Company Human Other Remarks Fees of Services Subtotal Period Design Registration Resources (Note 1) “Other Services” under non-audit Hsiao, Chin- January 1, fees shall refer to Pricewaterhouse ɡ ɡ 2019 to Coopers Taiwan Mu; Wang, 10,570 280 2,030 2,310 December transfer pricing Fang-Yu report and 31, 2019 project consultation Note 1: Non-audit fees shall be listed by service. If the non-audit fees under “Other Services” account for 25% or more of the total non-audit fees, the services provided shall be noted in the “Remarks” column.

(3)Disclosure of any change of auditors and where the audit fees are lower than the previous fiscal year, the amount, percentage and reasons of decrease: not applicable.

(4)Disclosure of decrease, including the amount, percentage and reasons, where the audit fees are lower than the previous fiscal year by 10% or more: not applicable.

III. Corporate Governance 5. Disclosure of Change of Auditors (1) Predecessor Auditor Date of change March 26, 2020 Due to Internal business rotation, Hsiao, Chin-Mu and Wang, Fang-Yu has been Reasons for the change of auditors replaced by Wu Yu-Lung and Wang, Fang- Yu Has the auditor resigned, declined to stand for reappointment, or been notified that their services have N/A been terminated?

If the auditor has issued an audit report expressing an opinion other than unqualified opinion within the last two N/A years, please state the opinion and reason Disagreement with the Company as to accounting treatment, accounting principles, auditing procedures, or other similarly N/A significant matters Other disclosures pursuant to Article 10, Paragraph 5, Subparagraph 1, Item 4 of the Regulations Governing N/A Information to be Published in the Annual Reports of Public Companies (the “Regulations”)

(2) Successor Auditor Accounting firm PricewaterhouseCoopers Taiwan Name of CPA Wu Yu-Lung and Wang, Fang-Yu Date of appointment March 26, 2020

Inquiry of and information obtained from the predecessor auditor regarding the accounting treatment of, or accounting principles applied to a transaction, or opinion expressed on N/A the financial statements audited prior to the acceptance of engagement

Written opinion of successor auditor on disagreements with N/A predecessor auditor

(3) Written communication from the predecessor auditor in response to disclosure under Article 10, Paragraph 5, Subparagraph 1 and Article 10, Paragraph 5, Subparagraph 2, Item 3 of the Regulations: not applicable.

6.Disclosure of the Company’s chairman, president, chief financial officer or chief accounting officer who has held a position at the Company’s independent certified public accounting firm or its affiliates within the last year: none.

III. Corporate Governance 7. Changes in Shareholding of Directors, Executive Officers, and Major Shareholders 2018 Year to April 30, 2019 Title Company Name/Name Number of Shares Number of Shares Shares Held Pledged Shares Held Pledged +(-) +(-) +(-) +(-) Director 0 (Corporate Shareholder) Chun Yung Investment Co., Ltd. 0 0 0 Director Li Gang Enterprise Co., Ltd. 0 (Corporate Shareholder) (Note 2) 0 0 0 Supervisor/Director Yong Hui Development Co., Ltd. 0 (Corporate Shareholder) (Note 2) 0 0 0 Director Yuan Tuo Investment Co., Ltd. 0 (Corporate Shareholder) 0 30,000 0 Director 0 (Corporate Shareholder) Gui Long Investment Co., Ltd. 0 0 0 Director 0 (Corporate Shareholder) Toyota Motor Corporation 0 0 0 Director Jin Yuan Shan Investment Co., Ltd. 0 (Corporate Shareholder) (Note 1) 0 0 0 Director Huang, Nan-Kuang 0 0 0 0 Director Lin, Li-Hua 0 0 0 0 Director Huang, Chih-Cheng 0 0 0 0 Director Huang Wen-Jui (5,350) 0 0 0 Director Su, Jean (Note 2) 0 0 0 0 Director Su, Yi-Chung 0 0 0 0 Director/President Su, Chwen-Shing 0 0 0 0 Director/Chief Officer Leon Soo (Note 2) 0 0 0 0 Director Ko, Junn-Yuan 0 0 0 0 Director Chang, Shih-Yieng 0 0 0 0 Director/ Executive Vice 0 President KAZUO NAGANUMA (Note 3) 0 0 0 Director Su, Yann-Huei (Note 1)(Note 5) 0 0 0 0 Director Su, Maick (Note 1) 0 0 0 0 independent Director Shih, Hsien-Fu (Note 2) 0 0 0 0 independent Director Su, Chin-Huo 0 0 0 0 independent Director Wu, Shih-Hao 0 0 0 0 independent Director Chen, Chih Chen 0 0 0 0 Executive Vice President Liu, Yuan-Sen (7,000) 0 0 0 Vice President Chen, Chien-Chou 0 0 0 0 Vice President Lai, Hung-Ta 0 0 0 0 Vice President Huang, Ming-Hsien 0 0 0 0 Chief Officer Fred Hsieh 0 0 0 0 Chief Officer Wu, Chia-Yen 0 0 0 0 Chief Officer Lai, Hung-Ta 0 0 0 0 Chief Officer Liu, Chuan-Hung (4,000) 0 0 0 Chief Officer Hsiao, Hsing-Chien 0 0 0 0 Chief Officer Liu, Sung-Shan (11,000) 0 0 0 Chief Officer Wu, Pin-Tsung 0 0 0 0 Chief Officer Chen, Chun-Shan 0 0 0 0 Chief Officer Yeh, Chia-Han 0 0 0 0 Chief Officer Wang, Shih-Hao 0 0 0 0

III. Corporate Governance 2018 Year to April 30, 2019 Title Company Name/Name Number of Shares Number of Shares Shares Held Pledged Shares Held Pledged +(-) +(-) +(-) +(-) Chief Officer Lai, Kuang-Hsiung 0 0 0 0 Chief Officer Lai, Chih-Wei 0 0 0 0 Chief Officer Hsiao, Chin-Chuan 0 0 0 0 Financial Officer Yu, Chun-Chien 0 0 0 0 Accounting Officer Chen, Ting-Ju 0 0 0 0 The directors, supervisors, executive officers, and major shareholders holding more than 10% of the shares of the Company have not transferred or pledged their shares to any related parties. Note 1: The Company held the election on June 20, 2019 due to the expiration of the term of office of directors. Note 2: The Company held the election on June 20, 2019 due to the expiration of the term of office of directors. Note 3: Kazuo Naganuma was appointed as the legal representative of Toyota Motor Corporation and replaced Katsuhito Ohno. Note 4: Sue to the internal job adjustment of the company, Chief Officer Lai, Kuang-Hsiung and Chief Officer Lai, Chih-Wei took office in July 2019, and Chief Officer Hsiao, Chin-Chuan retired in September 2019. Note 5: Mr. Su, Maick changed his name to Su, Shang-Yong in December 2019.

III. Corporate Governance 8. Relationship among Top 10 Shareholders As of April 21, 2020 Share Related Party or Spousal or Ownership Shares Held under Familial Relationship within Share Ownership of Spouses the Second Degree of Remarks and Children Nominee Kinship among Top 10 that are Accounts Shareholders Name Minors

Company Number % Number % Number % Name/Name Relationship

Hoyu Investment Co., Ltd., 48,267,625 8.837% 0 0 0 0 ɡ N/A represented by Lin, Li-Hua Toyota Motor Corporation, 44,406,112 8.130% 0 0 0 0 ɡ N/A represented by Akio Toyoda Li Gang Enterprise Co., Ltd., ɡ represented by 40,569,353 7.427% 0 0 0 0 N/A Lin, Chih-Han Half of the Jin Yuan Shan directors Investment Co., Cheng Sun Related serve 36,071,520 6.604% 0 0 0 0 Trading Co., Ltd., represented parties concurrently by Su, Jean Ltd. on both boards Half of the Cheng Sun Jin Yuan directors Trading Co., Ltd., Shan Related serve 24,572,088 4.498% represented by 0 0 0 0 Investment parties concurrently Su, Jean Co., Ltd. on both boards Shen Rong Investment Co., ɡ Ltd., represented 17,007,066 3.113% 0 0 0 0 N/A by Chang, Chih-Fu Zhi Geng Development Co, Ltd., represented 13,979,682 2.559% 0 0 0 0 ɡ N/A by Huang, Chih- Cheng Yuan Tuo Investment Co., 13,952,894 2.554% 0 0 0 0 ɡ N/A Ltd., represented by Ko, Junn-Yuan Jin Ju Investment Enterprise Co., Ltd., represented 13,647,776 2.498% 0 0 0 0 ɡ N/A by Lin, Shuai- Hung Tai Chang Investment Co., Ltd., represented 12,495,459 2.287% 0 0 0 0 ɡ N/A by Huang, Tao- Tien

III. Corporate Governance 9. Share Ownership in Affiliates As of April 21, 2020 Units: NT$/US$/Shares/% Share Ownership by Directors, Share Ownership by the Supervisors, Managing Officers, Company or Entities Directly or Indirectly Total Share Ownership Affiliates Controlled by the Company Number of Number of Number of Shares/Amount % Shares/Amount % Shares/Amount % Hozan Investment Co., Ltd. NT$13,956,680,729 100.00% 0 0 NT$13,956,680,729 100.00%

Shanghai Ho-Yu (BVI) US$79,397,360 100.00% 0 0 US$79,397,360 100.00% Investment Co., Ltd. Chang Yuan Motor Co., Ltd. 313,500,000 100.00% 0 0 313,500,000 100.00% Kuozui Motors, Ltd. 103,800,000 30.00% 224,900,000 65.00% 328,700,000 95.00% Toyota Material Handling Taiwan Ltd. 70,597,690 100.00% 0 0 70,597,690 100.00% Taipei Toyota Motor Co., Ltd. 25,438,987 34.81% 2,000 0.003% 25,440,987 34.81% Ho Tai Development Co., Ltd. 24,710,856 45.01% 0 0 24,710,856 45.01% Kao Du Automobile Co., 22,161,150 20.00% 0 0 22,161,150 20.00% Ltd. Eastern Motor Co., Ltd. 33,765,670 100.00% 0 0 33,765,670 100.00%

Kuotu Motor Co., Ltd. 17,553,761 20.05% 0 0 17,553,761 20.05%

Tau Miau Motor Co., Ltd. 15,153,573 20.00% 0 0 15,153,573 20.00%

Central Motor Co., Ltd. 15,000,000 20.00% 0 0 15,000,000 20.00%

Nan Du Motor Co., Ltd. 14,806,073 23.67% 0 0 14,806,073 23.67%

Carmax Co., Ltd. 22,950,000 51.00% 0 0 22,950,000 51.00% Lang Yang Toyota Motor 2,000,000 20.00% 0 0 2,000,000 20.00% Co., Ltd. Formosa Flexible Packaging Corp. 1,295,108 44.44% 0 0 1,295,108 44.44% Shi-Ho Screw Industrial Co., Ltd. 211,433 21.14% 0 0 211,433 21.14% Yokohama Tire Taiwan Co., Ltd. 3,000 25.00% 0 0 3,000 25.00% Smart Design Technology Co., Ltd. 960,961 20.00% 2,968,016 61.77% 3,928,977 81.77% Note: Affiliates accounted for using the equity method

偭˚⋆岮ガ⽉

Capital Overview

IV. Capital Overview 1. Capital and Shares (1) Sources of Capital 1. Capitalization

Authorized Capital Paid-in Capital Remarks Par Month/ Capital Value Year Amount Amount Sources of increased by (NT$) Shares Shares Other (NT$) (NT$) Capital Assets Other than Cash Approved by FSC letter (80) Capital increased August Tai Cai Zheng I 10 94,011,840 940,118,400 94,011,840 940,118,400 by Earnings: N/A 1991 No.01537 NT$156,686,400 dated July 16, 1991 Capital increased Approved by by Earnings: FSC letter (81) NT$216,227,230; August Tai Cai Zheng I 10 122,215,391 1,222,153,910 122,215,391 1,222,153,910 Capital Surplus N/A 1992 No.01669 Transferred to dated July 20, Share Capital: 1992 NT$65,808,280 Capital increased Approved by by Earnings: FSC letter (82) NT$158,880,010; August Tai Cai Zheng I 10 146,658,469 1,466,584,690 146,658,469 1,466,584,690 Capital Surplus N/A 1993 No.30058 Transferred to dated July 14, Share Capital: 1993 NT$85,550,770 Capital increased by Earnings: Approved by NT$234,653,550; FSC letter (83) Capital Surplus November Tai Cai Zheng I 10 197,990,163 1,979,901,630 197,990,163 1,979,901,630 Transferred to N/A 1994 No.31768 Share Capital dated August NT$58,663,390; 5, 1994 Issuance of Common Stocks:

IV. Capital Overview

Authorized Capital Paid-in Capital Remarks Par Month/ Capital Value Year Amount Amount Sources of increased by (NT$) Shares Shares Other (NT$) (NT$) Capital Assets Other than Cash NT$220,000,000

Capital increased Approved by by Earnings: FSC letter (84) NT$395,980,330; August Tai Cai Zheng I 10 330,000,000 3,300,000,000 277,186,229 2,771,862,290 Capital Surplus N/A 1995 No.37776 Transferred to dated June Share Capital: 29, 1995 NT$395,980,330 Approved by FSC letter (84) Issuance of Tai Cai Zheng I October 10 330,000,000 3,300,000,000 321,780,129 3,217,801,290 Common Stocks: N/A No.49820 1995 NT$445,939,000 dated September 16, 1995

Capital increased Approved by by Earnings: FSC letter (85) NT$241,335,100; October Tai Cai Zheng I 10 420,000,000 4,200,000,000 410,269,665 4,102,696,650 Capital Surplus N/A 1996 No.53446 Transferred to dated August Share Capital: NT$643,560,260 30, 1996 Approved by

Capital Surplus FSC letter (86) August Transferred to Tai Cai Zheng I 10 440,000,000 4,400,000,000 430,783,148 4,307,831,480 N/A 1997 Share Capital: No.46559 NT$205,134,830 dated June 10, 1997

IV. Capital Overview

Authorized Capital Paid-in Capital Remarks Par Month/ Capital Value Year Amount Amount Sources of increased by (NT$) Shares Shares Other (NT$) (NT$) Capital Assets Other than Cash Capital increased Approved by by Earnings: FSC letter (85) NT$215,391,570; August Tai Cai Zheng I 10 600,000,000 6,000,000,000 495,400,620 4,954,006,200 Capital Surplus N/A 1998 No.50882 Transferred to dated June Share Capital: NT$430,783,150 10, 1998 Approved by

Capital Surplus FSC letter (88) September Transferred to Tai Cai Zheng I 10 600,000,000 6,000,000,000 520,170,651 5,201,706,510 N/A 2000 Share Capital: No.61520 NT$247,700,310 dated July 6, 1999 Approved by

Capital Surplus FSC letter (89) September Transferred to Tai Cai Zheng I 10 600,000,000 6,000,000,000 546,179,184 5,461,791,840 N/A 2000 Share Capital: No.60392 NT$260,085,330 dated July 12, 2000

2. Type of Stock

Authorized Capital Type of Stock Remarks Issued Shares Unissued Shares Total Shares

Shares Listed on the Common 546,179,184 53,820,816 600,000,000 Taiwan Stock Exchange Stock (“TWSE”)

3. Shelf Registration: None

IV. Capital Overview (2) Shareholders Structure

As of April 21, 2020 Foreign Chinese Shareholders Other Domestic Government Financial Institutions & Institutional structure Juridical Natural Total Agencies Institutions Natural Investors Numbers Persons Persons Persons Number of 1 0 145 6,350 594 0 7,090 Shareholders Share Ownership 65,000 0 362,533,107 51,970,124 131,610,953 0 546,179,184

Percentage 0.012% 0% 66.377% 9.515% 24.097% 0% 100%

(3) Distribution of Share Ownership As of April 21, 2020 Share Ownership by Range Number of Shareholders Share Ownership Percentage (Unit: Shares)

1 - 999 4,051 422,369 0.077%

1,000 - 5,000 2,135 3,461,222 0.634%

5,001 - 10,000 196 1,509,884 0.276%

10,001 - 15,000 83 1,070,699 0.196%

15,001 - 20,000 60 1,085,525 0.199%

20,001 - 30,000 70 1,775,814 0.325%

30,001 - 40,000 64 2,264,805 0.415%

40,001 - 50,000 43 1,937,553 0.355%

50,001 - 100,000 120 8,365,381 1.532%

100,001 - 200,000 70 9,925,053 1.817%

200,001 - 400,000 56 15,937,082 2.918%

400,001 - 600,000 52 26,092,934 4.777%

600,001 - 800,000 16 11,179,845 2.047%

800,001 - 1,000,000 12 11,051,188 2.023%

1,000,001 or above 62 450,099,830 82.409%

Total 7,090 546,179,184 100.00%

IV. Capital Overview (4) Major Shareholders As of April 21, 2020

Shareholders Share Ownership Percentage

Hoyu Investment Co., Ltd. 48,267,625 8.837%

Toyota Motor Corporation 44,406,112 8.130%

Li Gang Enterprise Co., Ltd. 40,569,353 7.427%

Jin Yuan Shan Investment Co., Ltd. 36,071,520 6.604%

Cheng Sun Trading Co., Ltd. 24,572,088 4.498%

Shen Rong Investment Co., Ltd. 17,007,066 3.113%

Zhi Geng Development Co., Ltd. 13,979,682 2.559%

Yuan Tuo Investment Co., Ltd. 13,952,894 2.554%

Jin Ji Investment Enterprise Co., Ltd. 13,647,776 2.498%

Tai Chang Investment Co., Ltd. 12,495,459 2.287%

(5) Market Price, Net Worth, Earnings, and Dividends per Share: Not yet updated, April 30 As of April 30, 2020 Item 2018 2019 (Note 8)

Market Highest Market Price 388.00 719.00 704.00 Price per Lowest Market Price 200.50 244.50 335.50 Share 277.61 (Note 1) Average Market Price 456.02 524.25

Net Worth Before Distribution 90.33 107.27 110.87 per Share After Distribution 78.33 Not yet distributed Not yet distributed (Note 2)

Earnings Weighted Average Shares 546,179,184 546,179,184 546,179,184 per Share Earnings per Share (Note 3) 18.36 21.55 6.35

Cash Dividends 12 per share 14 per share ─

£ £ Stock From Retained Earnings ─ Dividends Dividends £ £ per Share From Capital Surplus ─ Accumulated Undistributed £ £ ─ Dividends (Note 4)

IV. Capital Overview As of April 30, 2020 Item 2018 2019 (Note 8)

Price/Earnings Ratio (Note 5) 15.12 21.16 ─ Return on Price/Dividend Ratio (Note 6) 23.13 32.57 ─ Investment Cash Dividend Yield (Note 7) 4.32% 3.07% ─

ɀġIf the profits and capital surplus are transferred to share capital for share issuance, the Company shall disclose the fair value and cash dividends adjusted retrospectively based on the number of shares issued. Note 1: List the highest and lowest market price of common shares each year, and the average market price calculated based on annual trading value and volume. Note 2: Based on the number of issued and outstanding shares at the end of the year and in accordance with the distribution approved by the annual shareholders’ meeting. Note 3: If retrospective adjustment is necessary due to stock dividend distribution, the earnings per share before and after the adjustment shall also be included. Note 4: If the terms of issue of equity securities provide that any undistributed dividends may be carried forward until the Company has profits, the accumulated undistributed dividends as of the end of such fiscal year shall be disclosed respectively. Note 5: Price/Earnings Ratio = Average Market Price/ Earnings per Share Note 6: Price/Dividend Ratio = Average Market Price/ Cash Dividends per Share Note 7: Cash Dividend Yield = Cash Dividends per Share/ Average Market Price Note 8: Figures of net worth per share and earnings per share are data from the financial statements as of the most recent quarter audited or reviewed by the auditor; other figures reflect data from the current fiscal year and as of the date of this Annual Report.

IV. Capital Overview (6) Dividend Policy and Implementation Status

1. Dividend Policy: Article 35 of the Company’s Articles of Incorporation As a mature company in the constantly changing automotive industry, our dividend policy considers the following factors: our future working capital needs, long-term financial planning, and cash inflow to deliver value to our shareholders. If the Company has any pre- tax profit at the end of a fiscal year, it shall first set aside an amount to pay business income tax and offset losses from previous years, appropriate 10% from the balance as legal reserve, and shall, pursuant to applicable laws and regulation, set aside a portion of the after-tax profits as special reserve. To the extent that there is any balance of the after-tax profits remaining, the shareholder dividends declared shall be no less than 50% of the distributable profits, from which the cash dividends shall be no lower than 10% of the total dividends declared.

The Board of Directors shall propose a profit distribution plan, including the percentage and form of payment, based on the profitability and available funds of the Company each year, and submit to the shareholders’ meeting for approval.

The decision to distribute all or part of the dividends and/or bonuses in cash shall be adopted by a resolution of the majority of the Board of Directors in a meeting attended by over two-thirds of the directors and reported to the shareholders’ meeting; the requirement to obtain shareholders’ approval in the preceding paragraph does not apply.

2. Proposed Distribution of Profit On March 26, 2020, the Company’s 20th Board of Directors in the 8th meeting resolved to allocate NT$7,646,508,576 as cash dividends as the Company’s 2019 Profit, with NT$14 per share as shareholder dividends, and shall be reported to the shareholders’ annual meeting on June 19, 2020.

(7) Impact of the Proposed Stock Dividends Distribution on the Business Performance and Earnings per Share of the Company: No stock dividends were declared under the proposed profit distribution plan.

(8) Employee Remuneration and Directors' Remuneration

1. Employee Remuneration and Directors’ Remuneration under the Articles of the Incorporation: According to Article 34 of the Articles of Incorporation of the Company, if the Company has any profits, 1% of which shall be set aside for employee remuneration and no more than 2% for directors’ remuneration (directors’ and supervisors’ remuneration in FY2015 shall not exceed 3%); provided, however, independent directors are not eligible to participate in the profit distribution of the Company. Any accumulated losses of the Company shall first be offset. Employee remuneration may be paid in the form of stocks or cash and shall be

IV. Capital Overview approved by over half of the directors present at the Board meeting attended by at least two-thirds of the directors, and shall be reported at the shareholders’ meeting.

2. The Basis of Estimate of Accrued Employee Remuneration and Directors’ Remuneration, and the Basis for Calculating the Number of Shares where Stock Dividends are Distributed: The accrued amounts for our FY2019 employee remuneration and directors’ remuneration are estimated at 1% and 2% respectively based on the annual profits of the Company.

3. Proposed Distribution of Employee Remuneration by the Board of Directors (1) Distribution of employee remuneration in the form of cash or stocks and directors’ remuneration: On March 26, 2020, the 8th meeting of the 20th Board of Directors resolved to actually distribute NT$141,621,809 of employee remuneration and NT$283,243,617 of director remuneration in 2019, among which the employee remuneration will be paid in cash. (2) Distribution of employee remuneration in the form of stocks, and the distribution in percentage of total pre-tax profits in the parent company only or separate financial statements and total employee remuneration: Employee remuneration will be paid in the form of cash.

4. Distribution of Employee Remuneration and Directors’ Remuneration in the Previous Year (including Number of Shares, Amount and Share Price), and the Difference in Value as well as Reason for Deviation and Accounting Treatment where the Actual Distributed Amount for Employee Remuneration and Directors’ Remuneration is Different from the Accrued Amount: In FY2019, the actual amounts distributed as employee remuneration and directors’ remuneration of FY2018 were NT$123,016,455 and NT$246,032,909 respectively, which were consistent with the proposed amount of distribution approved by the Board of Directors.

(9) Repurchase of Shares: Hotai did not buy back any of its own shares.

2. Corporate Bonds: Hotai did not issue any corporate bonds.

3. Preferred Stocks: Hotai did not issue any preferred stocks.

4. Global Depository Receipts: Hotai did not issue any global depository receipts.

5. Employee Stock Options: Hotai did not issue any employee stock options.

6. Employee Restricted Stocks: Hotai did not issue any employee restricted stocks.

7. Issuance of New Shares in Connection with Mergers and Acquisitions or in Exchange for the Shares of another Company: none.

IV. Capital Overview 8. Financing Plans and Implementation: Hotai has not acquired any funds by means of issuing securities or through a private placement; therefore, we do not have any relevant financing plans.

Ỵ˚䇆怲㥩㲨 Operational Highlights

V. Operational Highlights 1. Business Activities (1) Business Scope 1. Main areas of business operations: (1) Manufacturing, assembling and sales of all types of vehicles (including chassis and car body) and parts, as well as import business (2) Manufacturing and maintenance of special vehicles (e.g., trailers, garbage trucks, cranes, concrete mixing transport trucks, tanker trucks) (3) Manufacturing, assembling and sales of all types of industrial vehicles (e.g., tractors, loaders and forklifts) and parts, as well as import business (4) Car repair and maintenance (5) Leasing business

2. Revenues by Product Category Product Category Amount (NT$ Thousands) In % of Total Revenues Toyota and Hino Distribution 121,411,772 56.81% Installment Business 8,558,651 4.00% Leasing Business 20,123,244 9.41% Other 63,651,404 29.78% Total 213,745,071 100.00%

3. Main Products and New Products Development (1) Main Products Product Category Models

LEXUS Luxury Vehicles Imported: LS, GS, ES, IS, CT, LX, RX, NX, UX, LC, RC

Imported: PRADO, RAV4(include HV), C-HR, SIENNA, ALPHARD, PREVIA, PRIUS, PRIUS α, PRIUS c, PRIUS PHV, 86, AURIS, General Small TOYOTA Passenger Cars CAMRY(include HV), HILUXǵSUPRA Vehicles Vehicles Domestically made: CAMRY (2.0), ALTIS(include HV), VIOS, YARIS, SIENTA TOYOTA Imported: diesel minibus COASTER, Granvia, Hiace Commercial Vehicles HINO Domestically made: diesel buses, heavy trucks and minivans Commercial Vehicles Leasing Business Leasing of Toyota, Lexus, Hino and other car brands Installment Business Installment sales of Toyota, Hino Lexus and other car brands Fire insurance, motor insurance, marine cargo insurance, General Insurance Business engineering insurance, liability insurance, personal accident insurance, health insurance Air Conditioning Air conditioning made by DENSO for passenger cars and trucks Parts and Accessories Components and accessories for the above models and series (2) New Products Development ǸġTOYOTA: introduction of the new ALTIS GR SPORT(include HV) as well as redesigned ALPHARD.

V. Operational Highlights ǸġLEXUS: introduction of the new LM and LC Convertible. ǸġHINO: introduction of the new 300 Series 5-ton truck, RM high horsepower tour bus, concrete mixer truck.

(2) Industry Overview 1. Current Status and Future Development In 2019, Taiwan’s investment, exports, and consumption were all better than expected, and the domestic economy benefited from the trend of homecoming Taiwanese enterprises and the rooting of high-level semiconductor manufacturing process in Taiwan; the domestic economy showed a “steady growth”. The annual growth rate last year was at 2.71%, up by 0.08 percentage points compared to 2.63% in 2018, and the total sales in the automotive market reached 439,834 units, an increase from the previous year, mainly attributed to factors such as the sunset of the subsidy policy by giving trade-ins in excise taxes, the successive launch of new automobile models by various brands and increased sales promotion, and the early lunar new year, all of which fueled the sales number of cars throughout the year. From a market structure perspective, the number of new model imported cars increased in 2019 compared to 2018, hitting 49.6% of the market share and continued to cause pressure on domestic vehicles.

As for sales by brands, TOYOTA/LEXUS/HINO are ranked No.1 in market share. The top 4 players in the automotive industry are all Japanese car brands, accounted for 61.6% of the total market share.

Ranking 1 2 3 4 5 6 TOYOTA MITSUBISHI NISSAN Brands LEXUS HONDA MERCEDES-BENZ FORD CMC INFINITI HINO Sales 149,297 50,990 37, 821 33,052 29,965 20,788 Market 33.9% 11.6% 8.6% 7.5% 6.8% 4.7% Share

2. Relationship with Upstream, Midstream and Downstream Companies: The product sources of the automotive industry in Taiwan are authorized by international automobile companies (parent company of the brand) which provide parts and production technology for their assembly line in Taiwan or import whole vehicles. The Taiwanese distributors then sell and provide presale and after-sales services and vehicle repair and maintenance via its dealerships.

In addition to Kuozui Motors, Ltd. (“Kuozui Motors”) (TOYOTA small vehicles and HINO large vehicles), other main domestic car manufacturers include China-Motor (MITSUBISHI small vehicles and FUSO large vehicles), Yulon Motors (NISSAN and LUXGEN small vehicles), Ford Lio Ho (FORD small vehicles), Sanyang Motor Co., Ltd (HYUNDAI small vehicles), and Taiwan Honda (HONDA small vehicles).

We distribute vehicles from brands in the industry that are known for their excellent quality, attentive after-sales service, and outstanding marketing and planning ability. Our competitive advantages are continuously strengthened and we have been sitting at the top

V. Operational Highlights in market share in the automotive industry for many years.

3. Product Development Trends and Competition In recent years, an increasing number of international automakers terminated distribution rights and set up subsidiaries in Taiwan. These subsidiaries actively introduce new products and offer more competitive pricing, which continue to drive growth in the imported car market. Last year, imported cars accounted for more than 49.6% in the automotive market. In terms of vehicle sales volume, SUVs remain a hit among consumers. As multiple automakers began to offer different models of crossover SUVs, SUV sales climbed in 2019, accounted for 38.7% of total vehicle sales. Furthermore, TOYOTA RAV4 continues to be a bestseller among SUVs and imported cars.

(3) Technology and R&D 1. Our Product Planning Department works closely with Kuozui Motors and TMC in continuously analyzing consumer needs and preferences in the Taiwan in order to launch new models to respond to market demands. Currently, the models available include CAMRY, ALTIS, VIOS, YARIS, SIENTA, and RAV4, which are all best-selling vehicles on the market. In addition, ALTIS has been selected the No.1 best-selling domestic single car model for 19 consecutive years. In the future, we will also continue to introduce eco-friendly and fuel- efficient models to meet consumer demands, which is expected to bring positive impact on our sales revenue. 2. As a vehicle distributor, we are in charge of product planning and sales, while the manufacturing, research and development are the responsibilities of TMC and Kuozui Motors.

(4) Short-term and Long-term Development Plans Long-term Business Development Plans 1. Corporate Vision “Think Amazing” 2. Mid to Long-term Strategies (1) Think outside the box and push the limits (2) Innovate customer service to create the most-trusted brand (3) Utilize the advantages of Group synergy and enhance value chain effectiveness (4) Expand Group operations and implement Group management

V. Operational Highlights Short-term Business Development Plans—BREAKTHROUGH 1. Breakthrough in Sales Services 9HKLFOH ʿ PDNHFXVWRPHUV 6HUYLFH ʿ PDNHFXVWRPHUV ZDQWWRGULYH ORYHWRYLVLW 7KHILUVWLGHDOEUDQGIRU ([SDQGVHUYLFHPDUNHWDQG 72<27$ FXVWRPHUVLQDOODJHV LPSURYHFXVWRPHUVWLFNLQHVV &UHDWHDVWXQQLQJPRPHQW /(;86 8QLTXHKRVSLWDOLW\ IRUFXVWRPHUV &RPPHUFLDO %UHDNWKURXJKWKHIUDPHZRUN (QWKXVLDVWLFSURIHVVLRQDODQG YHKLFOH RIPDUNHWVDOHV IDVW

2. Thriving and Peaking Affiliates x Hotai Finance: Become the top 100 listed companies in Taiwan market value, and keep growing x Hotai Leasing: Grasp the trend of mobile services in Taiwan and lead the trend of new market rules x CarMax: cultivate the products and innovate services; set up flags in the global vehicle market x Chang Yuan Motor: Breakthrough the sales framework and become a double-number-one in large vehicles and 3.49T x Toyota Material Handling Taiwan: explore business opportunities and provide customers with total solutions x Hotong: Establish and improve the management system, firmly rooted in the Chinese market x Hotai Insurance: Provide customers with complete commodity services and become the top seven general insurance companies x Hotai Cyber Connection: Carefully evaluate and clearly plan to develop profitable business models x Hotai Innovation Marketing: Develop high-quality products and develop non-group channels 3. Innovation, Breakthrough and New Ideas x Grasp the MaaS wave, find out the profit model, and improve the growth momentum x The rooting of new digital technology, from concept to implementation, from implementation to profit x Break through the traditional business scope and boldly try new business opportunities 4. New Business Opportunities with Unity and Cooperation x Strengthen cooperation between affiliates, use the advantages of the value chain and utilize the advantage of the comprehensive effect of the Group x Establish the system of abiding by the law, implement the automatic management and strengthen the corporate governance 5. Fulfill Social Responsibility x Create a healthy and dynamic workplace, deeply cultivate the society, and fulfill corporate social responsibility x Spreading love and care, strengthening the image of social cares x Continue environmental protection actions and become No.1 in environmental protection of the global Toyota group

V. Operational Highlights 2. Market and Sales Overview As a professional distributor for automotive sales and services, we strive to deliver the best services whether in pre-sales and after-sales services that exceed customer expectation. In addition, we continuously provide customers with the best products and services by innovative practices to ensure product quality and enhance customer satisfaction.

(1) Market Analysis 1. TOYOTA Vehicles (1) Sales Region Our main products include domestically made CAMRY(2.0L), ALTIS, VIOS, YARIS and SIENTA, and imported models from Japan, including PRADO, ALPHARD, RAV4 (including HV), PRIUS, PRIUS α, PRIUS c, PRIUS PHV, 86, AURIS and CAMRY, SUPRA sports car, as well as US-made SIENNA, Turkish made C-HR, and the new pickup truck HILUX imported from Thailand since 2019. We have developed a complete sales network via our top 8 dealers and 108 sales locations. (2) Market Share (as of December 31, 2019) In 2019, the automotive market, under the stimulus of the new trade-ins on the excise tax through the scrappage program, the number of registered vehicles for the whole year was 439,834 units, up by 1% compared to 2018. As for TOYOTA, we continue to introduce new and redesigned models, and strengthen product portfolio and safety features. Together with quick adjustment of promotional and marketing strategies, the number of registered passenger vehicles (excluding LEXUS and HINO) was 119,595 units, accounted for 27.2% of the market share. (3) Future Supply and Demand, Market Growth, Competitive Advantages, Favorable and Unfavorable Factors of Development Prospect Favorable Factors ǸġThe government’s commodity tax rebate policy under the scrappage program will continue for five years (until early 2021) and therefore future demand of new car purchasing could be expected. ǸġFrom May 2019 (last year) to February 2020 (this year), the government provided old taxis in two stages the option to apply for the replacement subsidies, ranging from NT$150,000 to NT$350,000, which helped to stimulate the demand for taxi replacements in the first quarter of this year. Unfavorable Factors ǸġCOVID-19 pandemic has negatively impacted the global economy; the domestic GDP has been revised down from 2.72% to 2.37% (Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan) ǸġAs political uncertainty around the world continues to rise, subsequent development is expected to impact the global economy. ǸġThe public transportation networks of major metropolitan areas are gradually completed, resulting in reduction of vehicle use and mileage, causing extended purchasing demand period. ǸġMobility-as-a-Service (MaaS), car sharing and autonomous driving are on the rise, which will challenge the competitions among traditional automotive industry. (4) Countermeasures ǸġDiversification of products – build a meticulous product strategy and continue to strengthen the competitiveness of products; promote major legislative amendments to

V. Operational Highlights effectively activate the automotive industry, such as automobile industry development plan/T-NCAP countermeasures (T-NCAP: Taiwan New Car Assessment Program); to introduce Sienta Welcab and seize the opportunity of long-term care mobile service, and strengthen the brand’s CSR positive public image; strive for the introduction of more potential product, gain insight into small commercial vehicle industry and the needs of car owners in order to establish mid and long term strategies and related new business, and create new value chain; (2) expand sales of domestic vehicles (by cooperating with Kuozui Motors to develop locally, strengthen the competitiveness of the products, and develop young customers); strengthen the competitiveness of supplies and the Internet of Vehicles (together with CarMax, improve the installation rate of the Internet of Vehicles host); set up quality assurance team; promote the quality consistency inspection mechanism; plan the price inspection mechanism of supplies to ensure the price competitiveness of supplies. ǸġTrendization of the brand – create topics on the market with creative marketing (continue to raise the online media budget, increase the proportion of digital marketing, cooperate with celebrities and internet celebrities, and seamlessly convey car models and the advantage of the brand); deepen community management and enhance brand recognition (expand the number of members of major social media to reach 1.1 million members (vs. increase 100,000 in 2019); combine fun and creativity, and deeply communicate the Company’s new face in safety, fun driving, technological innovation, and environmental protection. Through cooperation with different fields of industries, conduct multi-platform diversion, create hot topics on the social media. ǸġIntegritization of the organization – (1) improve DLR self-improvement capability; (2) build the strongest sales team; (3) increase the value of used car channels (brand value enhancement and operation process improvement, and optimize the customers’ online car-buying experience). ǸġIntelligization of the sales – upgrade precise marketing to creative marketing (expand data collection channels, improving the online behavior tracking number of CR owners; expand inter-industry cooperation). ǸġCustomization of the service – (1) car viewing and car purchasing with feelings (optimization of online experience; high-quality five-star certification system; customer experience upgrade, including the use of VR; test ride experience diversification); (2) driving with feelings (the comprehensive evolution of the Internet of Vehicles: the introduction of navigation tossing and notification (usage reporting/ energy-saving driving suggestions, etc.), so that car owners can fully grasp the status of their cars); CR feedback; customer data construction project.

ȜTOYOTA Key Performance Indicatorsȝ Industry Assessment TOYOTA Data Source Final Figures Index Number of Registered Ministry of 119,595 units Sales Vehicles Transportation and Market Share Communications 27.2% Explanat No.1 in the automobile market for 18 consecutive years (up 3.5% from 2018) ion

V. Operational Highlights 2. LEXUS Vehicles (1) Sales Region The main products are imported from Japan, including sedan models, LS, GS, ES, IS, and CT, SUV models, LX, RX, NX, and UX, and coupe model, LC and RC. We create a full coverage sales network through our 8 dealers and 24 sales branches. (2) Market Share (as of December 31, 2019) In 2019, the number of luxury vehicles registered was 89,113 units, increased by 9.7% compared to 2018. The number of LEXUS vehicles registered was 22,295 units, accounted for 25.0% of the market share and ranked No. 2 in the luxury vehicle market. (3) Future Supply and Demand, Market Growth, Competitive Advantages, Favorable and Unfavorable Factors of Development Prospect Favorable Factors ǸġThe domestic luxury SUV market continues to grow at a steady rate, and the sales performance of the main models RX, NX and UX have reached new highs. Unfavorable Factors ǸġOur competitors are actively expanding towards high-end products, pioneering among high-end customers. ǸġTaiwan 6 environmental protection regulations are implemented, making emission standards more stringent. ǸġCompeting brands continue to develop C.A.S.E, invest in the competitive trend of new technologies including the Internet of Vehicles (Connected), autopilot (Autonomous), sharing services (Shared), and electrification (Electric), and lead the automotive market. (4) Countermeasures ǸġFully improve the luxury appeal (1) introduce the brand-new LM flagship model to enhance the brand’s luxuriousness; (2) introduce the brand-new flagship LC Convertible sports car to amplify Lexus’ voice together with LC and RCF. ǸġIncrease the sales proportion of HV and review the introduction of other new energy vehicles, such as PHEV and EV. ǸġContinue to strengthen the application of new technologies such as autopilot assistance. ǸġNew sales model - continue to launch L-Finesse smart low monthly payment option, subscription lease and other projects, and strengthen the comprehensive effect of the value chain.

ȜLEXUS Key Performance Indicatorsȝ Industry LEXUS Assessment Data Source Final Figures Remarks Index Ministry of Number of Transportation Currently ranks 2nd in the luxury Sales Registered 22,295 units and vehicle market Vehicles Communications 3. Commercial Vehicles (1) Main Sales and Supply Region ǸġMain sales region: Taiwan ǸġMain supply region: Japan and Taiwan (2) Market Share (as of December 31, 2019)

V. Operational Highlights Due to the government's expansion of subsidies and targets for the replacement of old diesel vehicles, acceleration of the replacement of old diesel vehicles in Class 1, Class 2 and Class 3, and vigorous promotion of the "forward-looking infrastructure plan", the project has entered the peak period of implementation, driving the growth of demand for large trucks. The growth, coupled with the implementation of the 3.49-ton load-lifting regulations from November which state that the current 3.49 tons can only be manufactured until January 2019, triggering a wave of customers buying cars in advance. In 2020, the commercial vehicle market of 3.49 tons or more will be 23,300 units, compared with 106% in the previous year. The Company's distribution sales record of Hino and Toyota's large vehicles hit 3,685 units in the whole year, with a market share of 28%. The Company has been No. 1 in the market of large commercial vehicles for ten consecutive years. In addition, the sales of Hino's 3.49 tons increased year by year. In 2019, the sales increased to 3,722 units, 8% higher than that in 2018, with a market share of 36.7%, a new record high. (3) Favorable and Unfavorable Factors of Future Market Development Favorable Factors ǸġThe growing e-commerce market drives the demand for home delivery and logistics transport vehicles. ǸġThe Executive Yuan implemented the “Forward-Looking Infrastructure Plan” at a 4-year budget of NT$420 billion since 2017 to promote railway and hydraulic infrastructure constructions, which will increase demand in heavy duty vehicles for constructions. ǸġThe Environmental Protection Administration has increased the subsidies for the replacement of old diesel trucks and offers a commodity tax rebate up to NT$400,000, which will encourage the replacement of 80,000 Class 1, Class 2 and Class 3 diesel trucks. ǸġLower oil prices reduce the operating costs for commercial vehicle customers and increase purchase willingness. ǸġThe return of mainland Taiwanese businessmen and the increase in import and export cargo transportation have increased the demand for container traction vehicles.

Unfavorable Factors ǸġThe government extend the manufacturing of Class 5 trucks by two years until August 2021, which delays demand of Class 5 trucks. ǸġChina further restricts the number of tourists to Taiwan, which causes an excess amount in tour buses, thus reduces the demand for tour buses. ǸġIn response to the emission and safety regulations to be implemented in 2021, manufacturer correspondingly raise the price to reflect the increasing cost. ǸġCOVID-19 has an impact on the foreign tourists to Taiwan and domestic tourist group tourism, and the demand for tour buses has shrunk. . (4) Countermeasures ǸġIn response to the sales opportunities of the commercial vehicle market and customer needs, we continue to introduce new products, create a complete product lineup, make good use of the advantage of the after-sale service system, and enhance sales competitiveness to improve the market share. ǸġPromote service process 2.0, establish new generation of commercial vehicle sale location rules, promote the establishment of new demonstration sale locations, and comprehensively improve service quality and quantity.

V. Operational Highlights ǸġMake good use of the technical support of the original factory, promote the new business of vehicle communication, accelerate the introduction of large-scale logistics management framework, integrate the group's resources, establish innovative sales and service mode of EV vehicles, and create the most appropriate supply chain. ǸġHino No.1 brand upgrade, create the most trustworthy brand spirit, and strengthen brand publicity. Make full use of the advantages of TOYOTA Hiace / Granvia, and cut into the special-purpose vehicle market, and expand sales opportunities.

4. Leasing and Installment (1) Service Areas We have 7 business locations across the country to provide services for long-term leasing and installment of vehicles. There are currently over 1,050 short-term rental and leasing locations (including 1,000 iRent locations) in Taiwan to provide daily rental service. (2) Market Share (as of December 31, 2019) ǸġThere was a total of 45,916 units in the car leasing market (accounted for 10.4% of the new car sales); we were ranked No.1 with 11,131 units of rental cars (market share of 24.2%). ǸġThe total amount of car installments was NT$73.4 billion, which outperforms competitors and ranks top in the industry. (3) Supply and Demand and Future Market Growth Looking forward to 2020, although the global economy is affected by the trade war and the COVID-19 pandemic, various types of vehicle products are being introduced, stimulating consumers' overall car demand, and the complete product line of this brand can promote more purchases or the demand of enterprises or consumers for additional or replacement purchase. Through multiple project commodity design, the demand for leasing and installment is expected to be better than the previous year. (4) Favorable and Unfavorable Factors of Future Market Development Prospect Favorable Factors ǸġThe market share of this brand continues to increase, which is conducive to the sustainable growth of leasing and installment business. ǸġThe advancement of automotive technologies will encourage consumer purchasing. Unfavorable Factors ǸġThe rise of sharing economy may affect the young car buyers’ willingness to buy. ǸġBanks and other leasing competitors are competing with low prices. (5) Countermeasures ǸġCater to the needs of different customers through tailor-made leasing and installment products ǸġImprove management efficiency and enhance business relationships with Lexus /TOYOTA/HINO and other brands. ǸġImprove customer satisfaction and retention, therefore getting more customer referrals in the future. 5. General Insurance (1) Supply Region: Sales are made through 5 subsidiaries and 27 service locations in Taiwan. (2) Market Forecast At the beginning of 2020, the global economy was affected by the coronavirus pandemic, the supply chains of various industries were interrupted, the stock market

V. Operational Highlights was shaken, and the premium income and investment benefits of the general insurance industry can be expected to be impacted. However, with the improvement of the awareness of the general public’s health safety, the insurance industry will have a significant role in promoting the sales of insurance products. After the pandemic, the general insurance industry will focus on the development of personal insurance in 2020 and respond to financial technology development. The progress of the new mode of insurance - online insurance and mobile insurance - will be the growth focus of this year. The demand of domestic enterprises for information security insurance will continue to grow due to the improvement of the awareness of information security, while the business opportunities of commercial insurance brought by public constructions and offshore wind power are expected. (3) The Company's Business Target: It is estimated that with the growth of the direct premium, the company will further expand its market share, deepen its influence on the overall property insurance market, and strengthen its business constitution, so as to become an excellent property insurance company. It is estimated that the company's direct premium income in 2020 will reach NT$ 9 billion, with a growth rate of 7.9%. (4) Key Policies ǸġContinue to improve the penetration of insurance products through existing channels, and adopt multiple sales of other personal insurance types. ǸġSystem / process re-evolution: - Automatically sign and issue orders to improve work efficiency. - Full paperless operation. - Strengthen the self-service policy inquiry, claim settlement and related questions reply function of customer service system, and give customers immediate reply. ǸġActively strengthen the managemen, implement the talent cultivation plan, and improve the productivity of employees.. ǸġCooperate with government policies and laws and regulations to focus on the development of relevant insurance types. ǸġUse technology to provide innovative services and build differentiated service brands. ǸġContinuously inspect the competitiveness of insurance products and premiums, and develop innovative products to meet the needs of customers.

(2) Production Procedures of Main Products 1. Major products and Their Main Uses Product Category Main Uses

Means of transportation instead of walking, or used for leisure, Passenger Car commuting, business travel or for business use of companies, and for rental and taxi industries to carry passengers. TOYOTA For companies to carry passengers or commodities, or for passenger Commercial transportation and sightseeing bus industries, organizations, schools Vehicle and groups to carry passengers.

HINO 3.49 tons Truck For companies or logistic companies to transport commodities.

V. Operational Highlights Product Category Main Uses

Truck For companies or logistic companies to transport commodities.

For passenger transportation and sightseeing bus industries, Bus organizations, schools and groups to carry passengers. 2. Production Procedures of Main Products: we do not operate production business, thus there is no production procedure.

(3) Supply of Main Raw Materials Product Category Main Suppliers Passenger Car, Commercial Imported: TMC and TMAP TOYOTA Vehicle and Parts Domestically made: Kuozui Motors Imported: Hino Motors, Ltd. HINO Truck and Bus Domestically made: Kuozui Motors

(4) Suppliers (Customers) Accounted for More than 10% of the Total Purchase (Sales) in any Given Year for the Last Two Years 1. Customers Accounted for Over 10% of the Total Sales for the Last Two Years. 2018 2019 As of Q1 2020 Customer Net Sales Net Sales Name Net Sales (NT$ Percentage Relation (NT$ Percentage Relation (NT$ Percentage Relation Thousands) (%) with Hotai Thousands) (%) with Hotai Thousands) (%) with Hotai Investee Investee Investee Central Company Company Company Motor 21,866,118 14 Accounted 24,759,682 14 Accounted 7,488,814 15 Accounted Co., Ltd. for Using for Using for Using Equity Equity Equity Method Method Method Investee Investee Investee Company Company Company Tau Miau Accounted Accounted Accounted Motor 19,982,922 13 22,596,968 12 6,764,026 14 Co., Ltd. for Using for Using for Using Equity Equity Equity Method Method Method Investee Investee Investee Kuotu Company Company Company Motor 15,072,330 10 Accounted 19,629,150 11 Accounted 5,508,392 11 Accounted Co., Ltd. for Using for Using for Using Equity Equity Equity Method Method Method Investee Investee Investee Taipei Company Company Company Toyota 16,570,774 10 Accounted Accounted Accounted Motor for Using 18,441,045 10 for Using 5,456,951 11 for Using Co., Ltd. Equity Equity Equity Method Method Method

V. Operational Highlights

2. Suppliers Accounted for Over 10% of the Total Purchase for the Last Two Years 2018 2019 As of Q1 2019 Company Net Net Net Name Purchase Percentage Relation Purchase Percentage Relation Purchase Percentage Relation (NT$ (%) with Hotai (NT$ (%) with Hotai (NT$ (%) with Hotai Thousands) Thousands) Thousands) Investee Investee Investee Company Company Company Kuozui Accounted Accounted Accounted Motors, 44,220,103 21 42,625,684 19 10,702,859 20 for Using for Using for Using Ltd. Equity Equity Equity Method Method Method Toyota Director Director Director Motor 35,713,057 17 50,513,418 23 12,114,583 22 of Hotai of Hotai of Hotai Corporation

(5) Production Volume and Amount for the Last Two Years: None.

V. Operational Highlights

2018 2019

Domestic Sales Export Sales Domestic Sales Export Sales Sales Division Sales Sales Sales Sales Amount Sales Sales Sales Amount Amount Volume Volume Volume (NT$ Volume Amount (NT$ (NT$ (Units) (Units) (Units) Thousands) (Units) (NT$ Thousands) Thousands) (Note 1) (Note 1) (Note 1) (Note 1) Thousands)

Toyota and 109,335 105,195,659 119,342 121,411,772 - - Hino Installment - 7,724,486 - - - 8,558,651 - - Business Leasing - - 15,356,373 - 3,324,717 - 16,663,244 3,459,519 Business

Other 10,409 36,084,381 14,123 19,341,970 11,822 41,214,703 16,709 22,436,701

Total 119,744 164,360,899 14,123 22,666,687 131,164 187,848,851 16,709 25,896,220

(6) Sales Volume and Amount for the Last Two Years Note 1: Sales volume means the number of new vehicles sold.

3. Key Statistics of Group Employees for the last Two Years and as of the Date of the Annual Report Year 2018 2019 As of March 31, 2020 Direct Personnel 3,010 3,235 3,252 (Sales representatives) Number of In-Direct Personnel Employees (Support / management 3,032 3,339 3,344 department) Total 6,042 6,574 6,596 Average Age 38.14 41.29 38.16 Average Length of Service 6.62 6.92 6.96 Ph.D. 0.08% 0.09% 0.09%

Master’s Degree 12.58% 11.76% 11.73% Highest Level of Bachelor’s Degree 60.20% 62.03% 62.16% Education Senior High School (%) 19.50% 19.55% 19.30% Diploma Below Senior High 7.65% 6.57% 6.72% School Total 100% 100% 100%

V. Operational Highlights 4. Environmental Costs For the most recent year and up to the date of publication of the annual report, the losses caused by environmental pollution (including compensation and environmental protection audit results in violation of environmental protection laws and regulations, the date of punishment, punishment number, violation of laws and regulations, content of punishment, and others, shall be listed), and the estimated amount and corresponding measures that may occur in the present and future shall be disclosed. If it cannot be reasonably estimated, then the facts that make it cannot be reasonably estimated shall be explained: None 5. Labor Relations (1) Our employee welfare, education, training, retirement system and its implementation, as well as Labor-Management agreement and measures for employee rights protection: 1. Employee Welfare (1) Annual family day event, year-end banquet and raffles (2) Holiday gifts (i.e., Chinese New Year, Dragon Boat Festival and Mid-Autumn Festival), as well as birthday, wedding, child birth, and retirement gifts (3) A fixed amount of travel allowance for employees and their spouses and children (4) Subsidy and consolation payment for hospitalized employees, consolation payment and support for employees who have lost family members (also available to spouses and children of the employees) (5) Group term life insurance and injury insurance coverage (6) Scholarship, loan and financial aid for employees and their children (7) Partnership with authorized stores under a contract to provide employee discount (8) Paid physical examination once a year (9) Club activities sponsored (10) Employee discount for car purchases 2. Retirement System The retirement system of the Company is in compliance with relevant laws. We have also adopted the employee retirement regulations as follows: (1) Employees who came onboard on or after July 1, 2005 shall be subject to the Labor Pension Act. (2) All the employees who came onboard before July 1, 2005 have received compensation for their prior seniority under the old pension system as of November 1, 2009 and opted for the new labor pension system, which is governed by the rules under the Labor Pension Act. (3) Employees who meet any of the following conditions may request for retirement: i. Continuous service of 15 years or more and reaching age 55. ii. Continuous service of 25 years or more. iii. Continuous service of 10 years or more and reaching age 60. 3. Training Programs At Hotai, we see employees as our greatest asset. As a result, we have invested considerable efforts in the development and training of talents. In 2018, we received recognition from the Ministry of Labor and was honored with the National Talent Development Award, and also received the Talent Development Award from the Taiwan Corporate Sustainable Energy

V. Operational Highlights Foundation (TCSA). Each year, we design education and training programs which include a variety of training courses on competency, professional skills, and employability tailored to employees at different ranks. The programs are aimed to increase employee competitiveness in the business environment and promote sustainable operations by improving the competency and quality of the employees. Our employee training programs consist of the following two categories: ɄInternal training courses: The education and training is responsible for preparing the annual budget and educational goals, and invite guest lecturers, management personnel or employees who have been trained to be lecturers to teach the courses. The trainings are aimed to cultivate positive work attitudes and personal values, enhance work skills, competency and technical skills of employees, and promote the latest industry trends and knowledge-sharing. ɄExternal training courses: the courses are designed mainly to supplement the internal training. Costs are borne by Hotai Motor, our employees can participate language education (English/Japanese) in professional institutions, or any other training in consultancy firms and Toyota Motor Corporation(TMC) oversea training programs for business needs. ɄEducation and Training Statistics in 2019 Course Type Attendance Expenses Total Expenses

Internal 3,676 8,552,343 NT$8,921,736 External 54 369,393

4. Labor-Management Agreements and Measures for the Protection of Employee Rights We strive to adhere to the management principles that respect employees and foster harmonious labor relations. Employees are encouraged to freely express their opinions and concerns through a quarterly labor-management meeting or a less formal channel (such as employee suggestion box), and to which we will provide responses or reasonable solutions. The information in relation to our measures to enhance effective communication is as follows: Companies Commentary on the Measures Quarterly organize labor-management meeting and set up employee Hotai Motor Co., Ltd. suggestion box Hoton Motor Investment Co., Ltd Management personnel shall be the point of contact to receive and its 4S Store employee suggestions

Chang Yuan Motor Co., Ltd. Employee can make suggestions through HR personnel

Toyota Material Handling Taiwan Set up an e-mail account to exclusively receive employee feedbacks Ltd. and suggestions The head of the customer relations department shall collect employees Eastern Motor Co., Ltd. suggestions during store inspection and raises them at the weekly management meetings. Hold quarterly labor-management meetings and appoint dedicated Formosa Flexible Packaging Corp. staff from the general administration department to be responsible for collecting employee suggestions and providing responses. CarMax Co., Ltd./ CarMax Employee can make suggestions through HR personnel Autotech (Shanghai) Co., Ltd. Hotai Finance Co., Ltd./Hotai Employee can make suggestions through HR personnel Leasing Co., Ltd. and Affiliates

V. Operational Highlights Companies Commentary on the Measures (1) Management personnel shall be the point of contact to receive employee suggestions and feedbacks and raise them at the weekly Ho Tai Development Co., Ltd. management meetings. (2) Employees can submit feedbacks and suggestions through the electronic reporting system

(2) List the loss incurred due to labor disputes in the current year and as of the date of this annual report (including any violation to the Labor Standards Act in any labor inspection results, the date of penalty, serial number of such penalty, articles that are violated, content of the articles that are violated, and content of the penalty shall be listed), and disclosure of the estimated amount of current and potential loss and countermeasures. If it cannot be reasonably estimated, then the facts that make it cannot be reasonably estimated shall be explained: 1. Due to our complete system and the spirit of humane management, we have been able to maintain a harmonious relationship with our employees and work together to achieve a sustainable business. There has never been any significant labor dispute since Hotai was founded. Going forward, we believe that the possibility of losses incurred due to labor disputes in the future is extremely low given our vision of respect for people and the harmonious interaction between Hotai and our employees. 2. Employee Code of Conduct or Ethics In August 2009, we adopted and promulgated Hotai’s Employee Code of Conduct. The main purposes are as follows: (1) To establish consistent ethical standards and enhance employee self-discipline in order to improve Hotai’s corporate governance practices and internal control. (2) To strengthen our corporate culture of promoting public welfare and environmental protection and make efforts in social contributions together with our employees, so as to enhance corporate image. The rules under the Employee Code of Conduct which employees are subject to can be divided into the following three categories depending on the parties involved: (1) Company Related ġ Employees shall follow the Employee Code of Conduct and perform their duties with integrity. ġ The Company shall work together with the employees and utilize their skills to continuously improve business performance of the Company. (2) Business Activity Related ġ Employees shall comply with the law, be conscientious and have a sense of responsibility. ġ Employees are encouraged to solve problems arising from the various needs of customer and the Company's continuous expansion. For example, to establish appropriate purchase and supply network, meet environmental and safety standards, and improve customer satisfaction. (3) Society Related ġ Employees are expected to support the Company in becoming a trusted corporate citizen, communicate with stakeholders in an open manner, participate in activities promoting sustainable development of the society, and maintain humility, honesty and integrity. ġ Employees should have a basic understanding of legal knowledge and social norms, and be able to identify behaviors that are against the law or social norms and take prompt

V. Operational Highlights and proper countermeasures. The implementation of employee conducts and business ethics of our group companies are as follows: The human resources regulations of Eastern Motor Co., Ltd. contain service disciplines, and require employees to sign an affidavit on their onboard dates, which contain all the company rules and regulation the employees, shall comply with; CarMax Co., Ltd. also provides employees code of conduct in their human resources regulations; other group companies also promote business ethics through oral campaigns. Our group places great emphasis on discipline and regulatory compliance, and therefore adopts a set of general human resources management regulations as guidelines for proper attitude and behaviors of employees in the workplace. In addition, our respect for gender equality, we also set up a Gender Equality Committee, the details of which are described as below: ġ Name: Hotai Motor Co., Ltd. Employee Sexual Harassment Prevention and Complaints Committee ġ The Committee charter was adopted in compliance with the principles under the Regulations for Establishing Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment at Workplace, which is promulgated based on Article 13, Paragraph 3 of the Act of Gender Equality in Employment. ġ It is participated by the representatives of employees and management. ġ Establish a dedicated webpage on our intranet for the purpose of providing information and promotion. ġ The webpage includes information on preventive measures, relevant information of the Committee, case illustration, and amendments to the management practices, etc. Other group companies also promote and announce their workplace sexual harassment preventive measures.

V. Operational Highlights 6. Material Agreements As of December 31, 2019 Type of Restrictive Party Involved Term Main Contents Agreement Clauses Hotai Distributor Toyota Motor January 1, 2019 to December 31, Sales of imported or None Agreement Corporation 2021 (for Toyota and Lexus) domestic models, parts and accessories of Toyota and Hino in Taiwan.

Hino Motors, Ltd. April 1, 2016 to March 31, 2021 (for Hino) Agreement on Kuozui Motors, Ltd. Except for execution of termination Kuozui Motors, Ltd. agrees None Sale and clause, contract terms remain to provide vehicles, parts Purchase of effective from July 1, 1995 (Hino) and accessories, which are Kuozui and January 1, 1998 (Toyota). manufactured under Products authorization, to the Company for sale purpose in Taiwan. Product Kuotu Motor Co., May 15, 2018 Authorized dealers sell None Dealership Ltd. and other to May 14, 2021 vehicles, parts and Agreement dealers automobile products provided by the Company.

Contracted ɄKuotu Motor Co., ɄStarting from July 1, 2009 The Company was None Operating Ltd. ɄStarting from June 1, 2002 designated to conduct Contracts ɄKuozui Motors, ɄStarting from January 1, 2003 affairs such as sales, Ltd. Except for termination signed by supply chain management, ɄChang Yuan both parties, contracts remain pre-sale services, after- Motor Co., Ltd. effective. sale services and promotion management.

Chang Yuan Motor Co., Ltd. Trading Kuozui Motors, Ltd. Starting from January 1, 2003, Kuozui Motors, Ltd. agrees None Contracts except for termination signed by to provide vehicles and both parties or breach of contract, parts, which are contracts remain effective. manufactured under authorization, to the Company for sale purpose in Taiwan. Toyota Material Handling Taiwan Ltd. Distributor Toyota Industries From April 1, 2017 to March 31, Sales of imported TOYOTA None Agreement Corporation 2020 vehicles and parts for (The contract has been renewed in industrial and industry use February 2020, the contract term: in Taiwan. April 1, 2020 to March 31, 2023)

晟˚岈⋀㥩㲨 Financial Information

VI. Financial Information 1. Condensed Balance Sheet and Statement of Comprehensive Income for the Last Five Years

(1) Condensed Balance Sheet (Consolidated) - Based on IFRS Unit: in thousand NT$

Financial Data for The Last Five Years (Note 1) As of March Year 31, 2020

2015 2016 2017 2018 2019 (Note 3) Item Current Assets 110,659,017 127,756,095 143,483,580 156,256,037 172,608,940 176,848,632 Property, Plant and 35,464,467 33,706,177 34,993,759 41,852,407 45,743,695 45,932,873 Equipment Intangible Assets Ɛ Ɛ 1,208,992 1,224,857 1,232,870 1,231,515

Other Assets 17,508,830 17,454,304 26,907,155 30,052,404 35,948,550 35,267,623

Total Assets 163,632,314 178,916,576 206,593,486 229,385,705 255,534,055 259,280,643 Before 98,628,113 108,898,823 131,482,673 150,298,633 159,822,615 161,262,574 Distribution Current Not yet Not yet Liabilities After 105,182,263 115,452,973 138,036,823 156,852,783 distributed distributed Distribution (Note 2) (Note 2) Non-Current Liabilities 19,227,239 19,438,664 20,234,665 20,851,114 20,102,813 19,837,958 Before 117,855,352 128,337,487 151,717,338 171,149,747 179,925,428 181,100,532 Distribution Total Not yet Not yet Liabilities After 124,409,502 134,891,637 158,271,488 177,703,897 distributed distributed Distribution (Note 2) (Note 2) Equity Attributable to Shareholders of the 39,364,139 43,106,242 46,655,301 49,335,726 58,586,436 60,556,610 Parent Share Capital 5,461,792 5,461,792 5,461,792 5,461,792 5,461,792 5,461,792

Capital Surplus 263,060 263,060 263,060 292,159 2,816,734 2,818,004 Before 32,530,119 36,718,917 40,236,347 43,713,877 49,094,707 52,561,630 Distribution Retained Not yet Not yet Earnings After 25,975,969 30,164,767 33,682,197 37,159,727 distributed distributed Distribution (Note 2) (Note 2) Other Equity Interest 1,109,168 662,473 694,102 (132,102) 1,213,203 (284,816)

Treasury Stock Ɛ Ɛ Ɛ Ɛ Ɛ Ɛ

Non-Controlling Interest 6,412,823 7,472,847 8,220,847 8,900,232 17,022,191 17,623,501 Before 45,776,962 50,579,089 54,876,148 58,235,958 75,608,627 78,180,111 Distribution Total Equity Not yet Not yet After 39,222,812 44,024,939 48,321,998 51,681,808 distributed distributed Distribution (Note 2) (Note 2) Note 1: The financial data from 2015 to 2019 has been audited and certified by CPAs. Note 2: The annual general meeting of shareholders has not been convened to resolve the 2019 earnings distribution proposal. Note 3: The financial data for the first quarter of 2020 has been reviewed by CPAs.

VI. Financial Information (2) Condensed Statement of Comprehensive Income (Consolidated) – Based on IFRS Unit: in thousand NT$ Year As of Financial Data for the Last Five Years (Note 1) March 31, 2020

(Note 2/Note 3) Item 2015 2016 2017 (Note 2) 2018 (Note 2) 2019 (Note 2)

Operating Revenue 160,607,628 172,531,900 180,774,590 187,027,586 213,745,071 57,437,924

Gross Profit 21,176,935 22,997,971 - - -

Operating Profit 9,120,540 10,196,844 - -

Non-Operating Income and 4,100,226 4,350,541 - - Expenses Profit Before Income 13,220,766 14,547,385 14,284,042 15,195,274 17,372,986 5,178,433 Tax

Income Tax Expense (2,338,273) (2,488,486) (2,719,447) (3,595,444) (3,788,087) (1,101,018)

Profit for the Year 10,882,493 12,058,899 11,564,595 11,599,830 13,584,899 4,077,415

Other Comprehensive (70,023) (512,966) (24,571) (853,915) 1,464,276 (1,518,871) Income (Loss) for the Year, Net of Tax Total Comprehensive 10,812,470 11,545,933 11,540,024 10,745,915 15,049,175 2,558,544 Income for the Year Profit Attributable to 9,776,591 10,740,039 10,115,607 10,025,535 11,768,815 3,466,923 Owners of Parent Profit Attributable to Non-Controlling 1,105,902 1,318,860 1,448,988 1,574,295 1,816,084 610,492 Interests Comprehensive Income Attributable 9,706,323 10,301,281 10,103,209 9,205,476 13,280,285 1,968,904 to Owners of Parent Comprehensive Income Attributable 1,106,147 1,244,652 1,436,815 1,540,439 1,768,890 589,640 to Non-Controlling Interests Earnings Per Share (in New Taiwan 17.90 19.66 18.52 18.36 21.55 6.35 dollars) Note 1: The financial data from 2015 to 2019 has been audited and certified by CPAs. Note 2: On January 17, 2017, we acquired 99.80% of the equities in Zurich Insurance (Taiwan) Ltd. (which was renamed as Hotai Insurance Co., Ltd.). Since Hotai Insurance Co., Ltd. is considered a consolidated business from a different industry, the 2017 to 2020 Q1 comprehensive income statements are issued in a single-step format. Therefore, there are no figures available on gross profit, operating profit, and non-operating income and expenses. Note 3: The financial report for the first quarter of 2020 has been reviewed by CPAs.

VI. Financial Information (3) Condensed Balance Sheet (Individual) – Based on IFRS Unit: in thousand NT$ Year Financial Data for the Last Five Years (Note 1)

Item 2015 2016 2017 2018 2019

Current Assets 13,097,959 17,813,953 11,790,373 9,159,173 11,474,768

Property, Plant and 3,696,383 3,720,240 3,709,471 3,758,640 4,023,217 Equipment

Intangible Assets ɡ ɡ ɡ ɡ ɡ

Other Assets 34,073,296 35,788,978 45,574,301 53,214,496 60,971,973

Total Assets 50,867,638 57,323,171 61,074,145 66,132,309 76,469,958

Before 10,092,858 12,637,792 12,837,452 14,660,107 14,922,066 Distribution Current Not yet Liabilities After 16,647,008 19,191,942 19,391,602 21,214,257 distributed Distribution (Note 2)

Non-Current Liabilities 1,410,641 1,579,137 1,581,392 2,136,476 2,961,456

Before 11,503,499 14,216,929 14,418,844 16,796,583 17,883,522 Distribution Total Not yet Liabilities After 18,057,649 20,771,079 20,972,994 23,350,733 distributed Distribution (Note 2)

Share Capital 5,461,792 5,461,792 5,461,792 5,461,792 5,461,792

Capital Surplus 263,060 263,060 263,060 292,159 2,816,734

Before 32,530,119 36,718,917 40,236,347 43,713,877 49,094,707 Distribution Retained Not yet Earnings After 25,975,969 30,164,767 33,682,197 37,159,727 distributed Distribution (Note 2)

Other Equity Interest 1,109,168 662,473 694,102 (132,102) 1,213,203

Treasury Stock ɡ ɡ ɡ ɡ ɡ

Before 39,364,139 43,106,242 46,655,301 49,335,726 58,586,436 Distribution Total Equity Not yet After 32,809,989 36,552,092 40,101,151 42,781,576 distributed Distribution (Note 2) Note 1: The financial data from 2015 to 2019 has been audited and certified by CPAs. Note 2: The annual general meeting of shareholders has not been convened to resolve the 2019 earnings distribution proposal.

VI. Financial Information (4) Condensed Statement of Comprehensive Income (Individual) – Based on IFRS Unit: in thousand NT$ Year Financial Data for The Last Five Years (Note 1) Item 2015 2016 2017 2018 2019

Operating Revenue 101,971,202 110,353,594 112,264,170 109,034,011 126,892,633

Gross Profit 8,705,717 9,559,420 9,753,770 9,571,323 10,737,805

Operating Profit 5,551,847 6,279,392 6,409,383 6,124,435 6,889,079

Non-Operating Income 5,581,820 5,958,981 5,352,555 5,808,161 6,848,237 and Expenses Profit Before Income 11,133,667 12,238,373 11,761,938 11,932,596 13,737,316 Tax

Income Tax Expense (1,357,076) (1,498,334) (1,646,331) (1,907,061) (1,968,501)

Profit for the Year 9,776,591 10,740,039 10,115,607 10,025,535 11,768,815

Other Comprehensive (70,268) (438,758) (12,398) (820,059) 1,511,470 Income (Loss), Net Total Comprehensive 9,706,323 10,301,281 10,103,209 9,205,476 13,280,285 Income for the Year Earnings Per Share (in 17.90 19.66 18.52 18.36 21.55 New Taiwan dollars) Note 1: The financial data from 2015 to 2019 has been audited and certified by CPAs.

VI. Financial Information

(5) Names and Opinions of Auditors for the Last Five Years Year CPA Audit Opinion Wu Yu-Lung 2015 Unqualified — Modified Wording Chou, Chien-Hung Hsiao, Chin-Mu Unqualified — Emphasis of Matter Paragraphs and 2016 Chou, Chien-Hung Other Matter Paragraphs Hsiao, Chin-Mu 2017 Unqualified and Other Matter Paragraphs Chou, Chien-Hung Hsiao, Chin-Mu 2018 Unqualified and Other Matter Paragraphs Wang, Fang-Yu Hsiao, Chin-Mu 2019 Unqualified and Other Matter Paragraphs Wang, Fang-Yu Wu Yu-Lung 2020 Q1 Qualified Conclusion Wang, Fang-Yu

VI. Financial Information 2. Financial Analysis for the Last Five Years (1) Consolidated Financial Analysis – Based on IFRS Year Financial Analysis for the Last Five Years As of March 31, Item (Note) 2015 2016 2017 2018 2019 2020 Debt Ratio 72.02 71.73 73.44 74.61 70.41 69.85 Financial Structure Ratio of Long-Term (%) Capital to Property, 183.29 207.73 214.64 188.97 209.23 213.39 Plant and Equipment Current Ratio 112.20 117.32 109.13 103.96 108.00 109.67

Solvency (%) Quick Ratio 101.17 102.33 99.20 92.96 95.38 99.12 Interest Earned Ratio 214.65 325.67 362.21 223.71 118.02 162.52 (times) Accounts Receivable 1.87 1.78 1.40 1.24 1.28 1.30 Turnover (times) Average Collection 195 205 261 294 285 281 Period Inventory Turnover 23.47 18.33 15.55 15.45 13.46 14.40 (times) Accounts Payable Operating 25.35 17.48 13.29 12.85 14.47 15.54 Turnover (times) Performance Average Days’ Sales 16 20 23 24 27 25 in Inventory Property, Plant and Equipment Turnover 4.45 4.99 4.50 4.12 4.13 4.25 (times) Total Assets 1.03 1.01 0.80 0.73 0.75 0.76 Turnover (times) Return on Total 6.99 7.06 6.02 5.35 5.65 6.38 Assets (%) Return On Equity (%) 25.06 25.03 21.93 20.51 20.30 21.21 Pre-Tax Income to Profitability 242.06 266.35 261.53 278.21 318.08 379.25 Paid-In Capital (%) Profit Ratio (%) 6.78 6.99 7.47 7.33 7.50 8.36 Earnings Per Share 17.90 19.66 18.52 18.36 21.55 6.35 (NT$) Cash Flow Ratio (%) 15.51 12.64 15.21 5.78 10.31 5.29 Cash Flow Adequacy 42.50 48.70 62.97 56.51 64.23 66.89 Cash Flow Ratio (%) Cash Reinvestment 11.69 8.35 15.57 2.44 9.69 8.02 Ratio (%) Operating Leverage 1.43 1.42 1.43 1.29 1.33 1.25 Leverage Financial Leverage 1.01 1.00 1.00 1.00 1.01 1.01 Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%) 1. Interest Earned Ratio decreased by 47%: mainly due to higher interest expenses. 2. Cash Flow Ratio increased by 78%: mainly due to increased net cash flow from operating activities. 3. Cash Reinvestment Ratio increased by 297%: mainly due to increased net cash flow from operating activities.

VI. Financial Information (2) Individual Financial Analysis-Based on IFRS Year Financial Analysis for the Last Five Years As of March

31, 2020 Item(Note) 2015 2016 2017 2018 2019 Debt Ratio 22.61 24.80 23.61 25.40 23.39 Financial Ratio of Long- Structure Term Capital to 1103.10 1201.14 1300.37 1369.44 1529.82 (%) Property, Plant And Equipment Current Ratio 129.77 140.96 91.84 62.48 76.90

Solvency (%) Quick Ratio 111.43 89.83 65.70 24.55 25.94 Interest Earned 473.77 616.86 489.03 275.49 308.03 Ratio (times) Accounts Receivable 87.99 69.20 50.81 39.89 51.28 Turnover (times) Average Collection 4 5 7 9 7 Period Inventory 70.22 28.06 23.29 23.28 18.42 Turnover (times) Accounts Operating Payable 23.50 15.32 13.22 12.32 13.96 Performance Turnover (times) Average Days’ Sales in 5 13 16 16 20 Inventory Property, Plant and Equipment 27.43 29.76 30.22 29.20 32.61 N/A Turnover (times) Total Assets 2.15 2.04 1.90 1.71 1.78 Turnover (times) Return on Total 20.68 19.88 17.12 15.82 16.56 Assets (%) Return on Equity 26.16 26.05 22.54 20.89 21.81 (%) Pre-Tax Income Profitability to Paid-In 203.85 224.07 215.35 218.47 251.52 Capital (%) Profit Ratio (%) 9.59 9.73 9.01 9.19 9.27 Earnings Per 17.90 19.66 18.52 18.36 21.55 Share (NT$) Cash Flow Ratio 94.69 49.92 103.48 46.06 57.15 (%) Cash Flow Adequacy Ratio 99.95 83.11 85.79 84.42 90.66 Cash Flow (%) Cash Reinvestment 9.26 - 13.94 0.43 3.61 Ratio (%) Operating 1.22 1.20 1.21 1.22 1.21 Leverage Leverage Financial 1.00 1.00 1.00 1.01 1.01 Leverage

VI. Financial Information Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%) 1. Current ratio increased by 23%: mainly due to higher current assets. 2. Accounts receivable turnover rate increased by 29%: mainly due to higher quick assets. 3. Average collection period decreased by 22%: mainly due to higher net sales. 4. Inventory turnover decreased by 21%: mainly due to higher net sales. 5. Average days’ sales in inventory increased by 25%: mainly due to higher net sales. 6. Cash flow ratio increased by 24%: mainly due to higher net cash flow from operating activities. 7. Cash reinvestment ratio increased by 736%: mainly due to higher net cash flow from operating activities.

Note: The IFRS formulas for calculating the financial ratios are as follows: 1. Financial Structure (1) Debt Ratio = total liabilities/total assets (2) Ratio of Long-Term Capital to Property, Plant and Equipment = (total equity + non-current liabilities)/net property, plant and equipment 2. Solvency (1) Current Ratio = current assets/current liabilities (2) Quick Ratio = (current assets – inventory – prepaid expenses)/current liabilities (3) Interest Earned Ratio = net income before tax and interest expenses/interest expenses 3. Operating Performance (1) Accounts Receivable Turnover (including accounts receivable and notes receivable generated from business operations) = net sales/average balance of accounts receivable (including accounts receivable and notes receivable generated from business operations) (2) Average Collection Period = 365/accounts receivable turnover (3) Inventory Turnover = cost of goods sold/average inventory (4) Accounts Payable Turnover (including accounts payable and notes payable generated from business operations) = cost of goods sold/average balance of accounts payable (including accounts payable and notes payable generated from business operations) (5) Average days’ sales in inventory = 365/inventory turnover (6) Property, Plant and Equipment Turnover = net sales/average net property, plant and equipment (7) Total Assets Turnover = net sales/average total assets 4. Profitability (1) Return on Total Assets = [profit after tax + interest expenses *(1-effective tax rate)]/average total assets (2) Return on Equity = profit after tax/average total equity (3) Profit Ratio = profit after tax/net sales (4) Earning Per Share = (equity attributable to shareholders of parent - preferred stock dividend)/weighted average of issued shares 5. Cash Flow (1) Cash Flow Ratio = net cash flow from operating activities/current liabilities (2) Cash Flow Adequacy Ratio = (net cash flow from operating activities for the last five years/(capital expenditure + increase in inventory + cash dividend) for the last five years (3) Cash Reinvestment Ratio = (net cash flow from operating activities - cash dividend)/(gross property, plant and equipment + long-term investments + other non-current assets + working capital) 6. Leverage: (1) Operating Leverage = (net operating revenue - variable operating costs and expenses)/operating income (2) Financial Leverage = operating income/(operating income - interest expenses)

VI. Financial Information 3. The Audit Committee Report regarding the most recent annual financial report

Audit Committee Report

The Audit Committee recommended to the Board of Directors, and the Board of Directors has approved the Company’s 2019 Financial Statements (including the Consolidated Financial Statements), Business Report, and proposal for allocation of profit. PricewaterhouseCoopers Taiwan, an independent registered public accounting firm retained by the Board of Directors, has audited the 2019 Financial Statements (including the Consolidated Financial Statements) and issued an audit report with unqualified opinion based on their review. The Audit Committee has the responsibility to oversee the Company’s financial reporting process. In auditing and certifying the Company’s 2019 Financial Statements (including Consolidated Financial Statements), the external auditor discussed with the Audit Committee the following items: 1. No significant deficiencies were identified regarding the overall scope and time period covered by the audit. 2. The external auditor has provided an auditor independence statement to the Audit Committee, stating that the auditors and their audit team who are subject to independence requirement have complied with the Code of Ethics for Professional Accountants, and no other relationships existing or circumstances were found to have potentially compromised auditor independence. The Audit Committee recommended to the Board of Directors, and the Board of Director has approved, that the Company’s 2019 Financial Statements (including Consolidated Financial Statements), Business Report, and proposal for allocation of profit are in compliance with applicable regulatory requirements. We hereby issue this report pursuant to Article 219 of the Company Act of the Republic of China.

Members of the Audit Committee

Independent Director: Shih, Hsien-Fu

VI. Financial Information Independent Director: Wu, Shih-Hao

Independent Director: Su, Chin-Huo

March 26, 2020

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4. Consolidated financial statements and report of independent accountants

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2019, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the companies that are required to be included in the consolidated financial statements of affiliates, are the same as the company required to be included in the consolidated financial statements of parent and subsidiary companies under International Financial Reporting Standard 10. And if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare separate consolidated financial statements of affiliates.

Hereby declare,

Ho Tai Motor Co., Ltd. March 26, 2020

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REPORT OF INDEPENDENT ACCOUNTANTS (TRANSLATED FROM CHINESE)

PWCR19000372 To the Board of Directors and Shareholders of Ho Tai Motor Co., Ltd.

Opinion We have audited the accompanying consolidated balance sheets of Ho Tai Motor Co., Ltd. and its subsidiaries (the “Group”) as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, based on our audits and the reports of other independent accountants (please refer to “other matter” section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, “Regulations Governing the Preparation of Financial and Operational Reports by Enterprises Engaging in Insurance” and the International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations Committee (IFRIC) Interpretations, and Standard Interpretations Committee (SIC) Interpretations as endorsed by the Financial Supervisory Commission. Basis for opinion We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained and the reports of other independent accountants are sufficient and appropriate to provide a basis for our opinion.

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Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

The key audit matters in our audit of the consolidated financial statements of the current period are as follows: Evaluation of provision for impairment of accounts receivable in Hotai Finance Co., Ltd., the subsidiary Description Please refer to Note 4(11) to the consolidated financial statements for accounting policies on provision for impairment of accounts receivable; Note 5(2) D for uncertainty of accounting estimate and assumptions of provisions for impairment of accounts receivable, and Note 6(5) for the details of accounts receivable. Hotai Finance Co., Ltd. (“Hotai Finance“), a subsidiary of Ho Tai Motor Co., Ltd., is primarily engaged in the installment sales and leases of vehicles. In the supply chain of motor vehicles, the role of Hotai Finance is to provide customers with flexible financing options and to streamline the vehicle delivery process. Therefore, Hotai Finance is responsible for the collection of accounts receivable and manages overdue accounts. When accounts receivable are past due over 30 days, Hotai Finance already considers the collectability of those accounts in doubt. In addition to enhancing the collection process from customers, management also assesses the probability of overdue accounts becoming impaired over the past years. Impairment is provided for those doubtful accounts receivable depending on the length of overdue days and considering forward-looking factors such as the future economic conditions. Management evaluates the individual circumstances of each overdue amount to decide whether to measure the loss allowance. The assessment above involves management’s judgement and factors on multiple factors that may be affected by the past events, current conditions, and the future economic conditions. The results will directly influence the amounts recognized. Therefore, the estimation of the loss allowance is identified as a key audit matter.

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How our audit addressed the matter Our key audit procedures performed in respect of the above matter are summarized as follows: 1. Understood the policy of provision for impairment of accounts receivable (including relevance to macroeconomic indicators of forward-looking information) and the logic of the aging report system. 2. For those accounts past due over 30 days, Hotai Finance will estimate and recognize the impairment of account receivable based on the probability of overdue accounts becoming impaired over the past years and Hotai Finance’s policy. We understood and assessed the occurrence percentage of actual impairment compared to the overdue accounts receivable over the past years, and the forward-looking information, to evaluate the reasonableness of the provision for impairment policy. In addition, we sampled and examined the group category of expected credit losses report, and checked the consistency with system information. 3. Examined and evaluated samples of the categorized group report of the loss of expected credit and compared it with the system information. Valuation of the provisions for warranty Description Please refer to Note 4(31) to the consolidated financial statements for the accounting policies on provisions for warranty, Note 5(2) B for uncertainty of accounting estimate and assumptions of provisions for warranty, and Note 6(23) for details of the provisions for warranty. In order to enhance customer confidence on product quality, Ho Tai Motor Co., Ltd. provides a warranty, 120,000 kilometers over a period of 4 years, free of charge for customers in Taiwan driving Toyota cars. Since the provisions for warranty involves massive historical data as well as complex calculation in respect of maintenance and repair experience, it was identified as a key audit matter. How our audit addressed the matter Our key audit procedures performed in respect of the above matter are summarized as follows : 1. In terms of the agent brands, obtained the car sold information in the last four years that met the warranty items Ho Tai Motor Co., Ltd. offered, such as cars being used in the fourth year or with mileage under 120,000 kilometers, cars’ maintenance details as well as registration forms, sampled and tested each car’s warranty cost on maintenance records for each car model.

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2. Reviewed the system information in respect of total cars sold in the last four years which qualify for the warranty scheme. Evaluated the reasonableness of provision for warranty by considering the warranty average claimed cost from each agent brand. Claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd., the subsidiary Description

Please refer to Note 4(38) to the consolidated financial statements for the accounting policies on claims reserve (including ceded claims), Note 5(2) E for uncertainty of accounting estimate and assumptions of claims reserve (including ceded claims), and Note 6(9) for details of claims reserve and ceded claims reserve. The claims reserve (including ceded claims) of!Hotai Insurance Co., Ltd. (“Hotai Insurance”), the subsidiary of Ho Tai Motor Co., Ltd., is derived from the reasonable amount of ultimate claims prior and after reinsurance based on the actuarial department’s historical claims development trend and experience, etc. As of December 31, 2019, the claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd. was NT$3,091,211 thousand and NT$707,719 thousand, respectively. Since the calculation method and assumptions selection of claims reserve (including those ceded) involve subjective judgement and higher degree of uncertainty, and the estimation results have a material impact on the financial statements, we have thus included claims reserve and ceded claims reserve as the key audit matter in our audit. How our audit addressed the matter

The procedures that we have conducted in response to specific aspects of the above-mentioned key audit matter are summarized as follows: 1. Understood and assessed Hotai Insurance’s policies, internal control, and operational procedures related to claims reserve (including those ceded) and sampled and inspected the effectiveness of controls related to claims reserve calculation on a sample basis. 2. Sampled and examined the consistency of financial values used in calculating claims reserve with the recorded amounts in the books in order to confirm the accuracy and completeness. 3. Used the work of actuarial expert to assists us in assessing the reasonableness of the claims reserve (including those prior to and after reinsurance). This included the following procedures: (1) Examined the reasonableness of the assessment method for the reserves;

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(2) Examined the reasonableness of the assumptions used by Hotai Insurance; (3) Recalculated each assumption adopted by Hotai Insurance for incurred but not report claims reserve in order to confirm the accuracy of the allowances for the reserves. 4. Examined those significant incurred but not reported cases on a sample basis and assessed the reasonableness of the estimated claims amount. Other matter – Using the work of other independent accountants We did not audit the financial statements of investments recognized under the equity method that are included in the financial statements. Investments using equity method amounted to NT$ 5,929,129 thousand and NT$ 5,640,440 thousand as at December 31, 2019 and 2018, constituting 2.32% and 2.46% of consolidated total assets, respectively. For the years ended December 31, 2019 and 2018, the comprehensive income amounted to NT$ 329,241 thousand and NT$ 180,387 thousand, constituting 2.19% and 1.68% of consolidated total comprehensive income, respectively. Those financial statements and information disclosed were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants. Other matter – Parent company only financial reports We have audited and expressed an unqualified opinion with an other matter paragraph on the parent company only financial statements of Ho Tai Motor Co., Ltd. as of and for the years ended December 31, 2019 and 2018. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers” “Regulations Governing the Preparation of Financial and Operational Reports by Enterprises Engaging in Insurance” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: A. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. E. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Chin-Mu, Hsiao Fang-Yu, Wang For and on behalf of PricewaterhouseCoopers, Taiwan March 26, 2020 ------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the review of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and review report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of management, PricewaterhouseCoopers, Taiwan cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars)

! December 31, 2019 December 31, 2018 Assets Notes Amount % Amount % Current Assets 1100 Cash and cash equivalents 6(1) $ 12,023,739 5 $ 9,469,088 4 1120 Financial assets at fair value through profit 6(2) or loss-current 4,679,120 2 3,772,918 2 1125 Financial assets at fair value through other 6(3) comprehensive income-current 27,531 - 267,421 - 1150 Derivative financial assets for 6(4) hedging-current 81,131 - 70,038 - 1190 Other financial assets-current 6(1) and 8 1,771,190 1 2,219,628 1 1195 Contract assets-current 6(28) 19,643 - 18,780 - 1201 Notes receivable 6(5), 7 and 8 8,307,202 3 9,300,979 4 1202 Accounts receivable 6(5), 7 and 8 123,348,962 48 111,958,948 49 1203 Other receivables 7 881,921 - 1,401,834 1 1270 Inventories 6(7) 13,025,026 5 10,017,654 4 1280 Prepayments 6(8) 7,141,104 3 6,517,069 3 1290 Non-current assets held for sale (or disposal group), net 15,767 - 15,767 - 1310 Reinsurance contract assets, net 6(9) 1,286,604 1 1,225,913 - Total current assets 172,608,940 68 156,256,037 68 Non-current assets 1410 Financial assets at fair value through profit 6(2) or loss-non-current 1,000,000 - 1,000,000 - 1415 Financial assets at fair value through other 6(3) comprehensive income-non-current 9,419,496 4 7,886,843 3 1470 Investments accounted for using equity 6(10) method 15,118,829 6 14,448,509 6 1480 Other financial assets-non-current 6(1) 118,925 - 60,657 - 1500 Property, plant and equipment, net 6(11) 45,743,695 18 41,852,407 18 1595 Right-of-use assets, net 6(12) 2,300,394 1 - - 1600 Investment property, net 6(14) 1,845,315 1 1,846,459 1 1700 Intangible assets, net 6(15) 1,232,870 - 1,224,857 1 1800 Deferred income tax assets, net 6(23) 1,460,004 - 1,170,731 1 1900 Other assets 6(5)(9)(16) 4,685,587 2 3,639,205 2 Total non-current assets 82,925,115 32 73,129,668 32 1XXX Total Assets $ 255,534,055 100 $ 229,385,705 100

(Continued)

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars)

! December 31, 2019 December 31, 2018 Liabilities and equity Notes Amount % Amount % Current Liabilities 2110 Short-term loans 6(17) $ 61,183,045 24 $ 62,900,378 27 2120 Short-term notes and bills payable 6(18) 53,735,476 21 47,871,914 21 2140 Financial liabilities at fair value through 6(2) profit or loss-current 149,572 - 19,047 - 2150 Derivative financial liabilities for 6(4) hedging-current 112,291 - 52,424 - 2165 Contract liabilities-current 6(28) 1,202,758 - 1,075,173 1 2201 Notes payable 708,449 - 633,880 - 2202 Accounts payable 7 10,447,079 4 10,482,820 5 2203 Accrued expenses 6(21) and 7 5,041,474 2 4,844,381 2 2204 Other payables 7 1,501,372 1 1,458,313 1 2250 Commissions payable 7 440,989 - 360,108 - 2260 Due to reinsurance and ceding companies 478,159 - 399,968 - 2270 Claims payable 12,231 - 13,080 - 2310 Current income tax liabilities 2,187,265 1 2,050,170 1 2320 Advance receipts 233,269 - 274,865 - 2330 Long-term liabilities-current portion 6(19)(20) 7,626,749 3 7,947,522 4 2335 Current lease liabilities 430,478 - - - 2350 Other current liabilities 6(9)(23)(24) 14,331,959 6 9,914,590 4 Total current liabilities 159,822,615 62 150,298,633 66 Non-current liabilities 2550 Long-term loans 6(20) 3,500,851 1 4,086,168 2 2600 Provisions 6(9)(23) 5,956,311 2 4,998,599 2 2620 Guarantee deposits received-non-current 6(24) 6,274,655 3 9,133,047 4 2625 Non-current lease liabilities 1,492,840 1 - - 2630 Deferred income tax liabilities 6(33) 2,854,911 1 2,581,556 1 2660 Other liabilities 23,245 - 51,744 - Total non-current liabilities 20,102,813 8 20,851,114 9 2XXX Total liabilities 179,925,428 70 171,149,747 75 Equity attributable to shareholders of the parent Share capital 6(25) 3110 Common stock 5,461,792 2 5,461,792 2 Capital surplus 6(26) 3200 Capital surplus 2,816,734 1 292,159 - Retained earnings 6(27) 3310 Legal reserve 11,350,835 4 10,348,282 5 3320 Special reserve 381,843 - 381,843 - 3330 Unappropriated earnings 37,362,029 15 32,983,752 14 Other equity 3400 Other equity 1,213,203 1 ( 132,102) - 31XX Total equity attributable to shareholders of the parent 58,586,436 23 49,335,726 21 32XX Non-controlling interest 17,022,191 7 8,900,232 4 3XXX Total equity 75,608,627 30 58,235,958 25 Significant contingent liabilities and 9 unrecognized contract commitments Significant events after balance sheet 11 date Total liabilities and equity $ 255,534,055 100 $ 229,385,705 100

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

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars, except earnings per share amounts) !

2019 2018 Items Notes Amount % Amount % Revenues 4010 Interest income 6(3)(29) and 7 $ 9,377,005 4 $ 8,194,392 4 4020 Premiums revenue 6(30) and 7 5,913,553 3 4,675,980 3 4040 Reinsurance commission revenue 353,929 - 253,713 - 4050 Fee income 11,327 - 11,201 - 4060 Share of profit of associates and joint 6(10) ventures accounted for using equity method 1,153,209 1 1,006,530 1 4090 Gain on financial assets (liabilities) at fair 6(2) value through profit or loss 284,513 - - - 4105 Realized gains on financial assets at fair value through other comprehensive income 495,322 - 146,499 - 4160 Net sales revenue 6(28) and 7 4161 Sales revenue 186,106,179 87 163,665,294 88 4162 Sales returns ( 1,052,135 ) - ( 1,108,867 ) ( 1) 4163 Sales discounts and allowances ( 3,952,257 ) ( 2) ( 4,335,156 ) ( 2) 4170 Rental revenue 12,292,084 6 11,478,288 6 4180 Service revenue 6(28) and 7 1,948,239 1 1,887,310 1 4210 Gains on disposals of property, plant and equipment 35,695 - 34,487 - 4230 Income from investment property 6(14) and 7 129,078 - 136,194 - 4260 Foreign exchange gains 362,700 - - - 4270 Other income 669,336 - 639,699 - 4256 Impairment loss on expected credit of investment ( 123) - ( 4) - 4245 Gains (losses) on using overlay approach 6(2) of investment ( 392,611) - 328,161 - 4280 Unrealized profit from sales ( 48,845) - ( 58,873) - 4290 Realized profit from sales 58,873 - 72,738 - Total revenues 213,745,071 100 187,027,586 100 Expenses 5010 Interest expense 7 ( 2,061,794 ) ( 1) ( 1,840,788 ) ( 1) 5030 Underwriting expenses ( 409) - ( 195) - 5040 Commission expenses 7 ( 3,148,619) ( 1) ( 2,670,441 ) ( 1) 5050 Claims payment 7 ( 2,724,685 ) ( 1) ( 2,082,829 ) ( 1) 5070 Net changes in other insurance liabilities ( 414,257 ) - ( 272,344 ) - 5110 Losses on financial assets (liabilities) at 6(2) fair value through profit or loss - - ( 197,978 ) - 5190 Cost of sales 6(7) and 7 ( 161,157,643 ) ( 75 ) ( 140,189,231 ) ( 75 ) 5200 Cost of rental revenue ( 9,666,391 ) ( 5) ( 9,241,200 ) ( 5) 5210 Cost of services ( 1,319,114 ) ( 1) ( 1,057,052 ) ( 1) 5230 Operating expenses 6(31)(32) and 7 5231 Selling expenses ( 8,720,567 ) ( 4) ( 8,652,442 ) ( 5) 5232 General and administrative expenses ( 5,586,386 ) ( 3) ( 4,519,609 ) ( 2) 5233 Research and development expenses ( 96,512) - ( 60,722) - 5287 Impairment loss on non-expected credit of 12(5) investment 2,373 - 2,675 - 5288 Expected credit impairment loss ( 1,169,760 ) ( 1) ( 878,508 ) ( 1) 5240 Loss on disposal of investments ( 3,583 ) - ( 22,143) - 5270 Expenses and losses from investment 6(14) property ( 24,296) - ( 29,102) - 5290 Foreign exchange loss - - ( 11,073 ) - 5320 Other expenses ( 280,442 ) - ( 109,330 ) - Total expenses ( 196,372,085 ) ( 92 ) ( 171,832,312 ) ( 92 ) 6100 Income before income tax from continuing operation 17,372,986 8 15,195,274 8 6200 Income tax expense 6(33) ( 3,788,087 ) ( 2) ( 3,595,444 ) ( 2) 6500 Profit for the year $ 13,584,899 6 $ 11,599,830 6 (Continued)

2019 2018 Items Notes Amount % Amount % Other comprehensive income (loss) for the year Components of other comprehensive income (loss) that may not be reclassified to profit or loss 6617 Gain from investments in equity 6(3) instruments measured at fair value through other comprehensive income $ 1,242,303 1 ($ 351,062) - 6625 Share of other comprehensive loss of associates and joint ventures accounted for using equity method 160,553 - ( 32,876) - 6610 Total components of other comprehensive income that may not be reclassified to profit or loss 1,402,856 1 ( 383,938) - 6650 Components of other comprehensive income (loss) that will be reclassified to profit or loss 6651 Financial statement translation differences of foreign operations ( 378,771) - ( 126,907) - 6659 Unrealized losses from investments in debt 6(3) instruments measured at fair value through other comprehensive income 39,459 - 41,686 - 6661 Gain on hedging instrument 6(4) 90,557 - ( 36,744) - 6675 Other comprehensive income reclassified 6(2) by using overlay approach 392,611 - ( 328,161) - 6665 Share of other comprehensive income of associates and joint ventures accounted for using equity method - components of other comprehensive income ( 55,641) - ( 29,461) - 6689 Income tax related to components of other 6(33) comprehensive income ( 26,795) - 9,610 - Total components of other comprehensive income (loss) that will be reclassified to profit or loss 61,420 - ( 469,977) - 6600 Other comprehensive income (loss) for the year $ 1,464,276 1 ($ 853,915) - 6700 Total comprehensive income for the year $ 15,049,175 7 $ 10,745,915 6 Profit attributable to: 6810 Owners of parent $ 11,768,815 5 $ 10,025,535 5 6820 Non-controlling interests 1,816,084 1 1,574,295 1 $ 13,584,899 6 $ 11,599,830 6 Comprehensive income attributable to: 6910 Owners of parent $ 13,280,285 6 $ 9,205,476 5 6920 Non-controlling interests 1,768,890 1 1,540,439 1 $ 15,049,175 7 $ 10,745,915 6 Earnings per share (in dollars) Basic earnings per share 6(34) $ 21.55 $ 18.36 Diluted earnings per share 6(34) $ 21.54 $ 18.34 !

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

) ) ) )

- - - - - 16 3,826 52,683 853,915 663,336 7,442,614 1,464,276 7,502,865 9,163,039 11,599,830 11,599,830 54,876,148 10,745,915 13,584,899 15,049,175 Total equity equity Total $ 54,876,148 $ 58,235,958 $ 58,235,958 $ 75,608,627

( ( ( ( ! !

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- - - - 776 33,856 26,049 52,683 47,194 888,464 948,715 499,139 Non- 8,220,847 1,574,295 1,540,439 1,816,084 1,768,890 2,360,394 9,163,039 interests controlling $ 8,220,847 $ 8,900,232 $ 8,900,232 $ 17,022,191

( ( ( ( ( ( ! !

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- - - - - 16 3,050 26,049 820,059 164,197 Total Total 1,511,470 1,511,470 9,205,476 6,554,150 6,554,150 2,360,394 11,768,815 11,768,815 46,655,301 10,025,535 13,280,285 $ 46,655,301 $ 49,335,726 $ 49,335,726 $ 58,586,436

( ( ( ( !

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------21,621 21,621 18,716 18,716 47,205 47,205 $ - $ 40,337 $ 40,337 $ 6,868

Gain (loss) (loss) Gain on hedging on hedging instruments instruments ( ( ( ( ( (

)

------21,621 hedges Loss on effective cash flow cash portion of portion of $ 21,621 $ - $ - $ - (

) ) ) ) ------39,479 39,479 327,505 327,505 390,078 390,078 approach using overlay using Other compre- Other compre- reclassified by reclassified $ - $ 288,026 $ 288,026 $ 102,052 hensive income income hensive

( ( ( (

) )

------848,446 848,446 324,202 324,202 Other equity Other equity 1,267,167 1,267,167 income income gains on gains Unrealized Unrealized at fair value value fair at through other through other comprehensive comprehensive financial assets financial assets $ - $ 524,244 $ 524,244 $ 1,791,411

( (

) ------

909,962 for-sale for-sale gain from from gain available- available- Unrealized financial assets financial assets $ 909,962 $ - $ - $ -

(

) ) ) ) ) ) ) ) )

------194,239 133,744 133,744 359,145 359,145 Financial Financial statement statement ! translation translation differences of $ 194,239 $ 327,983 $ 327,983 $ 687,128

( ( ( ( ( ( ( ( ( foreign operations foreign operations

) ) ) ) )

------22,037 15,892 166,165 Equity attributable to shareholders of the parent parent of the shareholders Equity to attributable 1,011,561 1,011,561 6,554,150 1,002,553 6,554,150 11,768,815 11,768,815 11,934,980 30,539,820 10,025,535 10,009,643 earnings earnings Unappropriated $ 30,517,783 $ 32,983,752 $ 32,983,752 $ 37,362,029

( ( ( ( (

------(Expressed in thousands of New Taiwan dollars) Taiwan of New in thousands (Expressed HO TAI MOTOR CO., LTD. AND SUBSIDIARIES MOTOR CO., LTD. TAI HO YEARS ENDED DECEMBER 31, 20192018 AND 381,843 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY IN CHANGES OF STATEMENTS CONSOLIDATED Special reserve reserve Special $ 381,843 $ 381,843 $ 381,843 $ 381,843

Retained earnings Retained

------The accompanying notes are an integral part of these consolidated financial statements. statements. financial consolidated of these part integral an are notes The accompanying 1,011,561 1,011,561 9,336,721 1,002,553 Legal reserve $ 9,336,721 $ 10,348,282 $ 10,348,282 $ 11,350,835

! )

------16 3,050 26,049 263,060 164,197 2,360,394 Capital surplus surplus Capital $ 263,060 $ 292,159 $ 292,159 $ 2,816,734

( !

------5,461,792 Share capital- Share capital- common stock stock common $ 5,461,792 $ 5,461,792 $ 5,461,792 $ 5,461,792

! ! Notes ! ! 6(27) 6(27) retrospective adjustment adjustment retrospective year for the year for the adjustment adjustment earnings: retained using for accounted joint ventures method equity subsidiaries of carryingand amount disposed earnings: retained for using joint accounted ventures method equity subsidiaries of carryingand amount disposed subsidiaries ! ! ! ! 2018 31, December ended For year the 2018 1, January at Balance on Effects retrospective modified 2018 after 1, January at Balance the year for Profit (loss) income comprehensive Other (loss) income comprehensive Total of distribution and Appropriation Legal reserve dividends Cash and associates in equity of Changes consideration between Difference interests in non-controlling Changes 2018 31, at December Balance 2019 31, December ended For year the 2019 1, January at Balance year the for Profit (loss) income comprehensive Other (loss) income comprehensive Total of distribution and Appropriation Legal reserve dividends Cash and associates in of equity Changes consideration between Difference in interests in ownership Changes interests in non-controlling Changes 2019 31, December at Balance HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars) ! ! Notes 2019 2018 Cash flows from operating activities Consolidated profit before income tax $ 17,372,986 $ 15,195,274 Adjustments to reconcile profit before tax to net cash provided by operating activities Income and expenses having no effect on cash flows Net (gain) loss on financial assets and liabilities at 6(2) fair value through profit or loss ( 284,513 ) 197,978 Expected credit loss / bad debts expense and financial guarantee expense 1,842,792 1,545,995 Expected credit impairment loss of investment 123 4 Expected credit impairment loss (gain on reversal) of non-investment ( 2,373 ) ( 2,675 ) Depreciation 6(11)(12)(14) (31) 8,879,781 7,963,334 Amortization 6(31) 65,333 81,272 Share-based payments 17,743 - Impairment loss (gain on reversal) of rental assets 6(11) 85,046 ( 58,391 ) Net gain on disposal of property, plant and equipment ( 35,695 ) ( 34,487 ) Share of profit of associates accounted for using 6(10) equity method ( 1,153,209 ) ( 1,006,530 ) Interest expense 2,061,794 1,840,788 Interest income 6(29) ( 9,377,005 ) ( 8,194,392 ) Dividend income ( 256,523 ) ( 139,156 ) Unrealized profit from sales 48,845 58,873 Realized profit from sales ( 58,873 ) ( 72,738 ) Changes in assets and liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss ( 229,078 ) ( 2,040,132 ) Contract assets ( 863 ) 887 Notes and accounts receivable ( 12,236,656 ) ( 14,260,065 ) Other receivables 528,392 ( 550,627 ) Inventories 2,795,664 1,730,539 Prepayments ( 622,173 ) ( 686,970 ) Reinsurance contract assets ( 151,273 ) ( 174,422 ) Net changes in liabilities relating to operating activities Financial liabilities at fair value through profit or loss 130,525 ( 76,956 ) Contract liabilities 127,585 106,417 Notes and accounts payable 38,828 413,183 Accrued expenses 238,414 8,572 Other payables 53,201 313,215 Commission payable 80,881 83,372 Due to reinsurance and ceding companies 78,191 121,706 Claims payable ( 849 ) ( 27,110 ) Advance receipts ( 41,596 ) ( 48,032 ) Other current liabilities 1,027,303 1,689,369 Provisions 957,712 75,279 Other liabilities ( 28,498 ) 22,863 Cash inflow generated from operations 11,951,962 4,076,237 Cash dividends received 956,888 1,143,424 Income tax paid ( 3,693,260 ) ( 2,926,165 ) Interest received 9,368,526 8,198,460 Interest paid ( 2,105,421 ) ( 1,801,113 ) Net cash provided by operating activities 16,478,695 8,690,843 (Continued)

! !

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars) ! ! Notes 2019 2018 Cash flows from investing activities Increase in financial assets at fair value through other comprehensive income ( $ 11,123 ) ( $ 3,796,034 ) Decrease in other financial assets 390,170 680,361 Acquisition of investments accounted for using equity 6(10) method ( 102,554 ) ( 11,064 ) Acquisition of property, plant and equipment 6(11) ( 18,639,170 ) ( 19,156,100 ) Proceeds from disposal of property, plant and equipment 423,017 65,447 Acquisition of intangible assets 6(15) ( 62,194 ) ( 55,413 ) Increase in other assets ( 1,249,868 ) ( 208,121 ) Acquisition of investment property 6(14) ( 7,824 ) ( 9,050 ) Acquisition of right-of-use assets ( 179,238 ) - Net cash used in investing activities ( 19,438,784 ) ( 22,489,974 ) Cash flows from financing activities Proceeds from issuance of bonds 6(19)(36) - 2,400,000 (Decrease) increase in short-term loans 6(36) ( 1,371,792 ) 18,932,720 Increase (decrease) in short-term notes and bills payable 6(36) 5,863,562 ( 7,212,232 ) Proceeds from long-term loans 6(36) 1,851,093 1,992,361 Repayment of long-term loans 6(36) ( 2,750,000 ) ( 1,100,000 ) Changes in non-controlling interests 9,145,296 - Repayment of principal portion of lease liability 6(12)(36) ( 455,899 ) - Increase in guarantee deposits received 6(36) 531,674 669,680 Cash dividends paid 6(27)(36) ( 6,554,150 ) ( 6,554,150 ) Cash dividends paid from subsidiaries to non-controlling

interests ( 948,715 ) ( 888,464 ) Proceeds from disposal of ownership interests in subsidiaries (without losing control) 665,056 52,683 Net cash flows provided by financing activities 5,976,125 8,292,598 Net effect of changes in foreign currency exchange rates ( 461,385 ) ( 66,055 ) Increase (decrease) in cash and cash equivalents 2,554,651 ( 5,572,588 ) Cash and cash equivalents at beginning of year 9,469,088 15,041,676 Cash and cash equivalents at end of year $ 12,023,739 $ 9,469,088

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

! !

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. History and Organization

Ho Tai Motor Co., Ltd. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in import, trading, selling and repairing of vehicles and their parts, as well as installment sales and leases of vehicles, and sales of used vehicles and business of property insurance.

2. The Date of Authorization for Issuance of the Financial Statements and Procedures for Authorization

These consolidated financial statements were authorized for issuance by the Board of Directors on March 26, 2020.

3. Application of New Standards, Amendments and Interpretations

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New and revised standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows: Effective date issued by International Accounting New and revised Standards, Interpretations and Amendments Standards Board Amendments to IFRS 9, ‘Prepayment features with negative January 1, 2019 compensation’ IFRS 16, ‘Leases’ January 1, 2019 Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019 Amendments to IAS 28, ‘Long-term interests in associates and joint January 1, 2019 ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019 Annual improvements to IFRSs 2015-2017 cycle January 1, 2019 Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

! ! !

IFRS 16, ‘Leases’ A. IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognize a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors. B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’ by $2,568,254, increased ‘lease liability’ by $2,274,081 and decreased property, plant and equipment, other payables and other assets by $10,100, $10,142 and $294,215, respectively, with respect to the lease contracts of lessees on January 1, 2019. C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16: (a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4. (b) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics. (c) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease. D. The Group calculated the present value of lease liabilities by using weighted average incremental borrowing interest rate range from 0.6% to 5%. E. The Group recognized lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognized as of January 1, 2019 is as follows: Operating lease commitments disclosed by applying IAS 17 as at December $ 2,664,549 31, 2018 Less: Short-term leases ( 12,046) Less: Low-value assets ( 10,022) Add/Less: Adjustments as a result of a different treatment of extension and termination options 2,341 Total lease contracts amount recognized as lease liabilities by applying IFRS 16 on January 1, 2019 2,644,822 Incremental borrowing interest rate at the date of initial application 0.6%~5% Present value of lease contracts amount recognized as lease liabilities by applying IFRS 16 on January 1, 2019 2,263,939 Add: Lease payable recognized by applying IAS 17 as at December 31, 2018 10,142 Lease liabilities recognized as at January 1, 2019 by applying IFRS 16 $ 2,274,081

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(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows: Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of January 1, 2020 Material’ Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020 Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark January 1, 2020 reform’ The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. (3) Effects of IFRSs issued by IASB but not yet endorsed by the FSC New and revised standards, interpretations and amendments issued by IASB but not yet included in the IFRSs endorsed by the FSC are as follows: Effective date issued by International Accounting New and revised Standards, Interpretations and Amendments Standards Board Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets To be determined by between an investor and its associate or joint venture’ International Accounting Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2021 Amendments to IAS 1, ‘Classification of liabilities as current or January 1, 2022 noncurrent’ Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete. IFRS 17, ‘Insurance contracts’ IFRS 17 'Insurance Contracts' replaces IFRS 4 and establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued. The standard applies to insurance contracts (including reinsurance contracts) issued, to reinsurance contracts held and to investment contracts with discretionary participation features issued, provided the entity also issues insurance contracts. Embedded derivatives, distinct investment components and distinct performance obligations shall be separated from the insurance contracts. An entity shall disaggregate a portfolio into three groups of contracts at initial recognition: onerous, no significant risk of becoming onerous, and remaining contracts. IFRS 17 requires a current measurement model, where estimates are remeasured in each reporting period. The measurement is based on the building blocks of discounted, probability-weighted cash flows, a risk adjustment and a contractual service margin (‘CSM’) representing the unearned profit of the contract. An entity may apply a modified simplified measurement approach (the premium allocation approach) to some insurance contracts. An entity recognizes the profit from a group of insurance contracts over the

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period the entity provides insurance coverage, and as the entity is released from risk. If a group of contracts is or becomes loss-making, an entity recognizes the loss immediately. Entities are required to separately present insurance revenue, insurance service expenses and insurance finance income or expenses and to disclose information about amounts, judgements and risks arising from insurance contracts. 4. Summary of Significant Accounting Policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (1) Compliance statement The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, “Regulations Governing the Preparation of Financial Reports by Enterprises Engaging in Insurance” International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”). (2) Basis of preparation A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention: (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. (b) Financial assets at fair value through other comprehensive income. (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation. (d) The insurance liabilities and reinsurance reserve assets recognized in accordance with specific statutory requirements and regulations relevant to insurance enterprises. B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5. (3) Basis of consolidation A. Basis for preparation of consolidated financial statements: (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries. (b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

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(c) Profit or loss and each component of other comprehensive income are attributed to the shareholders of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. 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. (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of. (f) The consolidated financial statements are prepared based on the valuation and disclosures of the entities’ financial statements audited by the independent accountants. B. Subsidiaries included in the consolidated financial statements: Ownership (%) December December Investor Investee Main business activities 30, 2019 31, 2018 Note Ho Tai Motor Co., Ltd. Shanghai Ho-Yu (BVI) Equity investments in Mainland China 100.00 100.00 Investment Co., Ltd. (trading and repairing of vehicles and their parts) Ho Tai Motor Co., Ltd. Hozan Investment Co., Ltd. General investment 100.00 100.00 Ho Tai Motor Co., Ltd. Chang Yuan Motor Co., Ltd. Sales of vehicles and parts and repairing of 100.00 100.00 vehicles Ho Tai Motor Co., Ltd. Toyota Material Handling Sales of vehicles and parts for industry use 100.00 100.00 Taiwan Ltd. Ho Tai Motor Co., Ltd. Ho Tai Development Co., Agent for sales of air conditioning system 45.01 45.01 Note 2 Ltd. and contracting of air conditioning construction Ho Tai Motor Co., Ltd. Carmax Co., Ltd. Trading of vehicle products/accessories 51.00 51.00 Ho Tai Motor Co., Ltd. Eastern Motor Co., Ltd. Sales of vehicles and parts and repairing of 100.00 100.00 vehicles Ho Tai Motor Co., Ltd. Smart Design Technology Electronic parts and components 20.00 20.00 Note 1 Co., Ltd. manufacturing Shanghai Ho-Yu (BVI) Tienjin Ho Yu Investment Equity investments in Mainland China, 70.00 70.00 Investment Co., Ltd. Co., Ltd. trading and repairing of vehicles and their parts Shanghai Ho-Yu (BVI) Hotong Motor Investment Operation decision making, capital and 100.00 100.00 Investment Co., Ltd. Co., Ltd. financial management, information services, employee trainings and other services Tienjin Ho Yu Investment Tianjin Ho-Yu Motor Sales Sales and repairing of vehicles 100.00 100.00 Co., Ltd. & Service Co., Ltd.

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Ownership (%) December December Investor Investee Main business activities 30, 2019 31, 2018 Note Hotong Motor Investment Tianjin Heling Lexus Motor Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Sales & Service Co., Ltd. Hotong Motor Investment Tianjin Hozhan Motor Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Service Co., Ltd. Hotong Motor Investment Shanghai Hoyu Motor Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Service Co., Ltd. Hotong Motor Investment Shanghai Heling Motor Sales and repairing of vehicles 75.00 75.00 Co., Ltd. Service Co., Ltd. Hotong Motor Investment Shanghai Hozhan Motor Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Service Co., Ltd. Hotong Motor Investment Chongqing Heling Lexus Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Motor Sales & Service Co., Ltd. Hotong Motor Investment Tangshan Heling Lexus Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Motor Sales & Service Co., Ltd. Hotong Motor Investment Nanchang Heling Lexus Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Motor Sales & Service Co., Ltd. Hotong Motor Investment Zaozhuang Ho-Yu Toyota Sales and repairing of vehicles 100.00 100.00 Co., Ltd. Motor Sales & Service Co., Ltd. Hotong Motor Investment Shanghai Ho Mian Motor Trading of vehicle products / accessories 100.00 100.00 Co., Ltd. Technology Co., Ltd. and property management Hotong Motor Investment Shanghai Hoxin Motor Consulting services 100.00 100.00 Note 4 Co., Ltd. Service Consulting Co.,Ltd. Hotong Motor Investment Shanghai HoChen Motor Trading of vehicle products / accessories 100.00 - Note 9 Co., Ltd. Technology Co.,Ltd. and property management Hotong Motor Investment Shanghai Jiading Heling Sales and repairing of vehicles 100.00 - Note 10 Co., Ltd. Lexus Motor Service Co., Ltd. Zaozhuang Ho-Yu Toyota Zaozhuang Ho-Wan Motor Sales and repairing of vehicles 100.00 100.00 Motor Sales & Service Co., Sales & Service Co., Ltd. Ltd. Shanghai Hoyu Motor Shanghai Heling Motor Sales and repairing of vehicles 25.00 25.00 Note 1 Service Co., Ltd. Service Co., Ltd. Shanghai Hoyu Motor Shanghai Hede Used Vehicle Trading of used vehicles 20.00 20.00 Note 1 Service Co., Ltd. Co., Ltd. Shanghai Hoyu Motor Shanghai Guangxin Cultural Advertisement design and production 100.00 100.00 Service Co., Ltd. Media Co., Ltd. Shanghai Heling Motor Shanghai Hede Used Vehicle Trading of used vehicles 20.00 20.00 Note 1 Service Co., Ltd. Co., Ltd. Shanghai Heling Motor Shanghai Yangpu Heling Sales and repairing of vehicles 100.00 100.00 Service Co., Ltd. Lexus Motor Sales & Service Co., Ltd. Shanghai Heling Motor Tianjin Heyi International Sales of imported cars 100.00 100.00 Note 3 Service Co., Ltd. Trading Co., Ltd. Shanghai Heling Motor Shanghai Howang Financial Leasing, wholesale, retail of and support - 75.00 Note 5 Service Co., Ltd. Leasing Co., Ltd service for vehicles Shanghai Hozhan Motor Shanghai Hede Used Vehicle Trading of used vehicles 20.00 20.00 Note 1 Service Co., Ltd. Co., Ltd. Hozan Investment Co., Ltd. Hotai Leasing Co., Ltd. Leasing of vehicles 66.04 66.04 Hozan Investment Co., Ltd. Hotai Finance Co., Ltd. Installment trading and leasing of various 45.39 65.77 Note 2 vehicles Note 11

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Ownership (%) December December Investor Investee Main business activities 30, 2019 31, 2018 Note Hozan Investment Co., Ltd. Hotai Insurance Co., Ltd. Property and casualty insurance services 99.80 99.80 Hozan Investment Co., Ltd. Ho Tai Cyber Connection E-commerce platform services of used 100.00 100.00 Co., Ltd. vehicles Hozan Investment Co., Ltd. Hoati Innovation Marketing Retail and wholesale of collections 100.00 100.00 Note 6 Co., Ltd. Hotai Finance Co., Ltd. Hoyun International Limited General investment 50.50 50.50 Note 7 Hotai Leasing Co., Ltd. Hoyun International Limited General investment 49.50 49.50 Note 1 Hotai Leasing Co., Ltd. Hoing Mobility Service Co., Leasing of vehicles 100.00 100.00 Note 6 Ltd. Hoyun International Hoyun International Lease Leasing, wholesale, retail of and support 100.00 100.00 Note 8 Limited Co., Ltd. service for vehicles Hoyun International Lease Hoyun (Shanghai) Factoring services 100.00 100.00 Co., Ltd. Commercial Factoring Co., Ltd. Ho Tai Development Co., Ichiban International Co., General investment 100.00 100.00 Ltd. Ltd. Toyota Material Handling Shanghai Ho-Qian Logistics Sales of vehicles and parts for industry use 100.00 100.00 Taiwan Ltd. Equipment Trading Co., Ltd. Ho Tai Development Co., Ho Tai Service & Marketing Repairing of air conditioning equipment 100.00 100.00 Ltd. Co., Ltd. and trading of their parts Ichiban International Co., Air Master International Co., General investment 100.00 100.00 Ltd. Ltd. Air Master International He Zhan Development Co., Trading of air conditioning equipment 100.00 100.00 Co., Ltd. Ltd. Carmax Co., Ltd. Carmax Autotech (Shanghai) Trading of vehicle products/accessories 100.00 100.00 Co., Ltd. Carmax Co., Ltd. Smart Design Technology Electronic parts and components 61.77 61.77 Co., Ltd. manufacturing Eastern Motor Co., Ltd. Doroman Autoparts Co., Ltd. Wholesale and retail of vehicles parts and 100.00 100.00 accessories Note 1: The Group holds more than 50% shareholding in the subsidiary. Note 2: The abovementioned investees whose equity were held directly or indirectly by the Group not exceeding 50%, were regarded as subsidiaries and consolidated in the Company’s financial statements, since the Company could control over a half of voting rights in the Board of Directors. Note 3: The investee was newly established in the second quarter of 2018. Note 4: The investee was newly established in the third quarter of 2018. Note 5: In the third quarter of 2018, Shanghai Heling Motor Service Co., Ltd. acquired the shares of Shanghai Howang Financial Leasing Co., Ltd. (formerly Shanghai Huanshun Financial Leasing Co., Ltd.). Injection of capital had not been completed. In June 2019, Shanghai Howang Financial Leasing Co., Ltd. was liquidated. Note 6: The investee was newly established in the fourth quarter of 2018. Note 7: In October 2018, Hotai Finance Co., Ltd. increased capital in Hoyun International Limited amounting to USD 15.15 million, which did not change the shareholding ratio. Note 8: In October 2018, Hoyun International Limited increased capital in Hoyun International Lease Co., Ltd. amounting to USD 30 million, which did not change the shareholding ratio.

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Note 9: The investee was newly established in the first quarter of 2019. Note 10: The investee was newly established in the second quarter of 2019. However, the asset injection of Hotong Motor Investment Co., Ltd. was not completed. Note 11: On December 5, 2019, Hozan Investment Co., Ltd. did not participate in the capital increase raised by Hotai Finance Co., Ltd.. As a result, the shareholding ratio decreased to 47.84%. On December 9, 2019, Hozan Investment Co., Ltd., sold shares of Hotai Finance Co., Ltd., and the shareholding ratio decreased to 45.39%. C. Subsidiaries not included in the consolidated financial statements: None. D. Adjustments for subsidiaries with different balance sheet dates: None. E. Significant restrictions: None. F. Subsidiaries that have non-controlling interest that are material to the Group: As of December 31, 2019 and 2018, the non-controlling interest amounted to $17,022,191 and $8,900,232 respectively. The information of non-controlling interest that are material to the Group and respective subsidiaries is as follows: Non-controlling interest December 31, 2019 December 31, 2018 Principal place Ownership Ownership Name of subsidiary of business Amount (%) Amount (%) Hotai Finance Co., Ltd. Taiwan $ 11,179,015 54.610% $ 3,527,813 34.233% Hotai Leasing Co., Ltd. Taiwan 1,289,539 33.958% 1,130,729 33.958%

Summarized financial information of the subsidiaries: Balance sheets Hotai Finance Co., Ltd. December 31, 2019 December 31, 2018 Current assets $ 128,573,629 $ 118,680,518 Non-current assets 4,772,046 3,583,285 Current liabilities ( 110,584,126) ( 109,964,986) Non-current liabilities ( 667,286) ( 441,569) Total net assets $ 22,094,263 $ 11,857,248

Hotai Leasing Co., Ltd. December 31, 2019 December 31, 2018 Current assets $ 2,945,095 $ 2,584,181 Non-current assets 32,444,164 28,714,167 Current liabilities ( 21,174,848) ( 13,940,337) Non-current liabilities ( 10,416,959) ( 14,028,225) Total net assets $ 3,797,452 $ 3,329,786

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Statements of comprehensive income Hotai Finance Co., Ltd. Years ended December 31, 2019 2018 Revenue $ 12,116,446 $ 11,083,472 Profit before income tax 3,061,800 2,397,615 Income tax expense ( 686,052 ) ( 559,526 ) Profit for the year 2,375,748 1,838,089 Other comprehensive loss for the year, net of tax ( 65,557 ) ( 71,447 ) Total comprehensive income for the year $ 2,310,191 $ 1,766,642 Comprehensive income attributable to non-controlling interests $ 770,754 $ 582,322

Hotai Leasing Co., Ltd. Years ended December 31, 2019 2018 Revenue $ 17,592,921 $ 15,381,583 Profit before income tax 842,056 737,207 Income tax expense ( 190,954 ) ( 347,800 ) Profit for the year 651,102 389,407 Other comprehensive loss for the year, net of tax ( 68,318 ) ( 20,682) Total comprehensive income for the year $ 582,784 $ 368,725 Comprehensive income attributable to non-controlling interests $ 197,902 $ 125,212

Statements of cash flows Hotai Finance Co., Ltd. Years ended December 31, 2019 2018 Net cash used in operating activities ($ 7,379,605) ($ 10,097,253 ) Net cash used in investing activities ( 784,650) ( 688,399 ) Net cash provided by financing activities 8,349,472 10,565,697 Net effect of changes in foreign currency exchange rates ( 308,888 ) ( 78,946 ) Decrease in cash and cash equivalents ( 123,671 ) ( 298,901 ) Cash and cash equivalents, beginning of year 464,836 763,737 Cash and cash equivalents, end of year $ 341,165 $ 464,836 !

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! Hotai Leasing Co., Ltd. Years ended December 31, 2019 2018 Net cash provided by operating activities $ 15,353,878 $ 11,429,381 Net cash used in investing activities ( 16,604,304 ) ( 14,749,150 ) Net cash provided by financing activities 1,127,367 3,512,505 (Decrease) increase in cash and cash equivalents ( 123,059 ) 192,736 Cash and cash equivalents, beginning of year 346,127 153,391 Cash and cash equivalents, end of year $ 223,068 $ 346,127 (4) Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollar (“NTD”), which is the Company’s functional and the Group’s presentation currency. A. Foreign currency transactions and balances (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise, except when deferred in other comprehensive income as qualifying cash flow hedges. (b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss. (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions. (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within “foreign exchange gains or losses”. B. Translation of foreign operations The operating results and financial position of all the group entities, associates and jointly arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet; (b) Income and expenses for each statement of comprehensive income are translated at average

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exchange rates of that period; and (c) All resulting exchange differences are recognized in other comprehensive income. (5) Classification of current and non-current items Consolidated subsidiaries are engaged in installment sales, and the operating cycle usually exceeds 1 year. The consolidated subsidiaries use the operating cycle as its criterion for classifying current or non-current assets and liabilities related to installment sales. For other assets and liabilities, the criteria are as follows: A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets: (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle; (b) Assets held mainly for trading purposes; (c) Assets that are expected to be realized within twelve months from the balance sheet date; (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date. B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: (a) Liabilities that are expected to be settled within the normal operating cycle; (b) Liabilities arising mainly from trading activities; (c) Liabilities that are to be settled within twelve months from the balance sheet date; (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. (6) Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits and short-term notes and bills that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents. (7) Financial assets at fair value through profit or loss A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income. The Group’s subsidiary, Hotai Insurance Co., Ltd., could designate financial assets at fair value through profit or loss using overlay approach when financial assets meet the following conditions: (a) It is measured at fair value through profit or loss applying IFRS 9 but would not have been measured at fair value through profit or loss in its entirety applying IAS 39; and (b) It is not held in respect of an activity that is unconnected with contracts within the scope of IFRS 4. B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.

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C. At initial recognition, the Group measures the financial assets at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures the financial assets at fair value with any gain or loss recognized in profit or loss. D. The Group recognizes the dividend income when the right to receive dividends is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably. E. Subsidiary, Hotai Insurance Co., Ltd., reclassifies between profit or loss and other comprehensive income an amount for the designated financial assets applying overlay approach. Accordingly, the amount reclassified is equal to the difference between: (a) The amount reported in profit or loss for the designated financial assets applying overlay approach; and (b) The amount that would have been reported in profit or loss for the designated financial assets applying overlay approach if IAS 39 had been applied. (8) Financial assets at fair value through other comprehensive income A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria: (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and (b) The assets’ contractual cash flows represent solely payments of principal and interest. B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting. C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value: The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably. Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognized in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. (9) Accounts and notes receivable A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services. B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial. (10) Offsetting financial instruments Financial assets and liabilities are offset and reported in the net amount in the balance sheet when

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there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. (11) Impairment of financial assets A. For financial assets at fair value through other comprehensive income, receivables, and financial assets at amortized cost, at each reporting date, the Group recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognizes the impairment provision for lifetime ECLs. B. The Group will perform the following procedure when the financial assets are assessed as having a significant increase in credit risk after initial recognition: (a) Financial assets at fair value through other comprehensive income Reclassify the amount of credit loss which originally are unrealized gains (losses) of accumulated losses of other comprehensive income as profit or loss. (b) Financial assets at amortized cost Decrease its carrying amount through allowance account. When financial assets at amortized cost are assessed as no longer recoverable, write-off the allowance accounts. For proceeds that were previously written-off and subsequently recovered, credit the allowance account. Except for financial assets at amortized cost that are assessed as no longer recoverable and written-off allowance accounts, the carrying amount of allowance accounts are recognized in profit or loss. (12) Loss allowance of the subsidiary, Hotai Insurance Co., Ltd. The Company’s subsidiary, Hotai Insurance Co., Ltd., provisioned for an appropriate allowance loss under IFRS 9 and IFRS 4 for receivables, financial assets measured at amortized cost and reinsurance contract assets. (13) Derecognition of financial assets The Group derecognizes a financial asset when one of the following conditions is met: A. The contractual rights to receive the cash flows from the financial asset expire. B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset. C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained the control of the financial asset. (14) Leasing arrangements (lessor) - lease receivables/operating leases A. Based on the terms of a lease contract, a lease is classified as a finance lease if the lessee assumes substantially all the risks and rewards incidental to ownership of the leased asset. (a) At commencement of the lease term, the lessor should record a finance lease in the balance sheet as ‘lease receivables’ at an amount equal to the net investment in the lease (including initial direct costs). The difference between gross lease receivable and the present value of the receivable is recognized as ‘unearned finance income of finance lease’.

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(b) The lessor should allocate finance income over the lease term based on a systematic and rational basis reflecting a constant periodic rate of return on the lessor’s net investment in the finance lease. (c) Lease payments (excluding costs for services) relating to the lease term are applied against the gross investment in the lease to reduce both the principal and the unearned finance income. B. Lease income from an operating lease (net of any incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease term. (15) Inventories Inventories are stated at the lower of cost and net realizable value. Except for the cost of inventories of Ho Tai Development Co., Ltd. which is determined using the weighted-average method, the cost of inventories of all other entities in the group is determined using the moving average method. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the applicable variable selling expenses. (16) Investments accounted for using equity method/associates A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost. B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. C. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership. D. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group. E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for using the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

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F. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach. (17) Property, plant and equipment A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each component of property, plant and equipment that is significant in relation to the total cost of the item must be depreciated separately. D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate using IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows: Buildings and structures 3 ɴ 60 years Utility equipment 5 ɴ 10 years Office equipment 1 ɴ 20 years Machinery and equipment 1 ɴ 15 years Leasehold improvements 1 ɴ 35 years (18) Leasing arrangements (lessee) - right-of-use assets/lease liabilities Effective 2019 A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low-value assets, lease payments are recognized as an expense on a straight-line basis over the lease term. B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate or the interest rate implicit in the lease. Lease payments are fixed payments, less any lease incentives receivable.

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The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications. C. At the commencement date, the right-of-use asset is stated at cost comprising the amount of the initial measurement of lease liability The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right-of-use asset. (19) Leased assets/ operating leases (lessee) A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Group assumes substantially all the risks and rewards incidental to ownership of the leased asset. (a) A finance lease is recognised as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments. (b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. (c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Group will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life. B. Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term. (20) Investment property A. An investment property is stated initially at its cost and measured subsequently using the cost model. B. The significant improvements, additions and betterments of an item of investment property shall be recognized as an asset if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of those parts that are replaced is derecognized. General repairs and maintenance are charged to current expenses. C. An investment property shall be derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. When assets are derecognized, the cost and the accumulated depreciation at the time of sale or retirement are written off. Gain and loss on sale of the investment property, rental income, and relevant payment shall be recognized in gain and loss on investment property under net investment income (loss). Except for land, property (including accessory equipment)

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is depreciated on a straight-line basis over its estimated useful life of 2ɴ60 years. Each part of an item of investment property with a cost that is significant in relation to the total cost of the item shall be depreciated separately. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. D. Investment property of the Group’s subsidiary-Hotai Insurance Co., Ltd. including the office building and land rented in the form of an operating lease are to generate rental income or capital increase or both. Investment property is recognized initially at cost plus transaction costs incurred and subsequently applies cost model measuring at cost net of accumulated depreciation and impairment. Part of the property may be held by the Group and another part generates rental income or capital increase. If the property held by the Group can be sold individually, then the accounting treatment should be made separately. IAS 16 as endorsed by FSC applies to the self-used property, and property used to generate rental income or capital increase or both is applicable for investment property set out in IAS 40 as endorsed by FSC. If each part of the property cannot be sold individually and the self-used proportion is not material, then the property is deemed as investment property in its entirety. (21) Intangible assets A. Computer software Intangible assets held by the Group pertain to computer software which are stated at cost and subsequently measured using the cost model. The computer software has a finite useful life and is amortized on a straight-line basis over its estimated economic useful life of 2~5 years. B. Goodwill Goodwill arises from business combination accounted for using the acquisition method. Goodwill acquired in business combination shall be tested for impairment at least once a year. Impairment loss is recognized when the goodwill is impaired. Impairment loss of goodwill that has been recognized shall not be reversed. C. Client relationship Arising from business combination, and amortized on a straight-line basis over 30 years. (22) Impairment of non-financial assets A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized. B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use are evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its

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recoverable amount. C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. (23) Borrowings Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method. (24) Notes and accounts payable A. Liabilities for purchases of raw materials, goods or services and notes payables resulting from operating and non-operating activities. B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial. (25) Financial liabilities at fair value through profit or loss A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges. B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures the financial liabilities at fair value with any gain or loss recognized in profit or loss. (26) Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires. (27) Ordinary corporate bonds Ordinary corporate bonds issued by the Group are initially recognized at fair value, net of transaction costs incurred. Ordinary corporate bonds are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortized in profit or loss as an adjustment to the ‘interest expense’ over the period of bond circulation using the effective interest method. (28) Financial guarantee contracts A financial guarantee contract is a contract that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. At initial recognition, the Group measures financial guarantee contracts at fair value and subsequently at the higher of the amount of provisions determined by the expected credit losses and the cumulative gains that were previously recognized. (29) Non-hedging and embedded derivatives A. Non-hedging derivatives are initially recognized at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or

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loss. They are subsequently remeasured at fair value and the gains or losses are recognized in profit or loss. B. Under the financial assets, the hybrid contracts embedded with derivatives are initially recognized as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and financial assets at amortized cost based on the contract terms. C. Under the non-financial assets, whether the hybrid contracts embedded with derivatives are accounted for separately at initial recognition is based on whether the economic characteristics and risks of an embedded derivative are closely related in the host contract. When they are closely related, the entire hybrid instrument is accounted for by its nature in accordance with the applicable standard. When they are not closely related, the derivative is accounted for differently from the host contract as derivative while the host contract is accounted for by its nature in accordance with the applicable standard. Alternatively, the entire hybrid instrument is designated as financial liabilities at fair value through profit or loss upon initial recognition. (30) Hedge accounting A. At the inception of the hedging relationship, there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements. B. The Group designates the hedging relationship as follows: Cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction. C. Cash flow hedges (a) The cash flow hedge reserve associated with the hedged item is adjusted to the lower of the following (in absolute amounts): i. The cumulative gain or loss on the hedging instrument from inception of the hedge; and ii. The cumulative change in fair value of the hedged item from inception of the hedge. (b) The effective portion of the gain or loss on the hedging instrument is recognized in other comprehensive income. The gain or loss on the hedging instrument relating to the ineffective portion is recognized in profit or loss. (c) The amount that has been accumulated in the cash flow hedge reserve in accordance with item (a) is accounted for as follows: i. If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the Group shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or liability. ii. For cash flow hedges other than those covered by item i. above, that amount shall be

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reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit or loss. iii. If that amount is a loss and the Group expects that all or a portion of that loss will not be recovered in one or more future periods, it shall immediately reclassify the amount that is not expected to be recovered into profit or loss as a reclassification adjustment. (d) When the hedging instrument expires, or is sold, terminated, exercised or when the hedging relationship ceases to meet the qualifying criteria, if the forecast transaction is still expected to occur, the amount that has been accumulated in the cash flow hedge reserve shall remain in the cash flow hedge reserve until the forecast transaction occurs; if the forecast transaction is no longer expected to occur, the amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment. (31) Provisions Provisions (provision for warranties) are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses. For details of provisions for other insurance liabilities, please refer to Note 4(38). (32) Employee benefits A. Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expenses in that period when the employees render service. B. Pensions Defined contribution plans For defined contribution plans, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments. C. Termination benefits Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognizes expense as it can no longer withdraw an offer of termination benefits or it recognizes relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value. D. Employees’ compensation and directors’ remuneration

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Employees’ compensation and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. (33) Classification of insurance contracts The insurance and reinsurance businesses of the subsidiary, Hotai Insurance Co., Ltd. for insurance contracts newly issued or undertaken are accounted for in accordance with IFRS 4, ‘Insurance Contracts’. They are tested in accordance with the subsidiary’s internal control procedures to classify newly issued insurance products. Currently, insurance policies sold by Hotai Insurance Co., Ltd. are all insurance contracts. Insurance contract is a contract under which one party (the insurer) accepts significant risk transferred from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder, including reinsurance contracts with a transferrable significant risk held. The definition of significant transferred risks employed by Hotai Insurance Co., Ltd. refers to an occurrence of any event or incident that leads to Hotai Insurance Co., Ltd.’s additional significant payment. (34) Direct insurance income and expenses A. Direct premiums are recognized in the year the insurance policies are issued without regard to the effective dates of the policies except premiums related to open cover policies which are recognized in the year they are earned. Premiums adjustments, including policy cancellations, are recorded in the year they occur. B. Claims are accrued after the claim letters are received. C. Commission expenses are accrued after the policies are issued. (35) Reinsurance contract Reinsurance premiums ceded and reinsurance premiums are recognized on the date the bills are received. A sufficient and reasonable method should be adopted to estimate reinsurance premiums ceded. Relevant revenues and expenses (such as reinsurance commission expenses and revenues, handling fee expenses and revenues, reinsurance claims recovery, etc.) shall all be recognized. With the classification of reinsurance contracts, Hotai Insurance Co., Ltd. assesses whether significant insurance risk transferred to the reinsurer. If the significant insurance risks of reinsurance contracts are not transferred to reinsurer, the subsidiary should treat reinsurance contracts as deposit accounting. Hotai Insurance Co., Ltd. evaluates the impairment losses and unrecoverable amounts of reinsurance reserve assets, claims recoverable from reinsurers, due from reinsurers and ceding companies and funds held by other insurance companies. When there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance asset, that the cedant may not receive all amounts due to it under the terms of the contract; and that event has a reliably measurable impact on the amounts that the cedant will receive from the reinsurer, the cedant reduces the carrying amount accordingly and recognizes the provision for impairment loss. Allowance for doubtful debts of recoverable from the reinsurers, due from reinsurers and ceding companies and funds held by other insurance companies is recognized when the cedant may not receive all amounts.

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(36) Salvage and subrogation Salvage legally assumed from the claim procedure by direct underwriting business and subrogation legally acquired for the rights of the subject matter and relevant claims expenses are recognized when the actual recovery is definite and the amount can be reliably measured. (37) Underwriting pools and coinsurance Hotai Insurance Co., Ltd. has participated in the coinsurance of compulsory automobile liability insurance, residential earthquake fund, engineering insurance association, injury insurance for acts of terrorism co-insurance organizations and Nuclear Energy Insurance Federation of the Republic of China. The Company recognizes coinsurance premiums based on its participation share. (38) Insurance liabilities All reserves of insurance contracts that Hotai Insurance Co., Ltd. recognized are based on “Regulations Governing the Setting Aside of Various Reserves by Insurance Enterprises”, “Regulations Governing the Setting Aside and for Management of the Reserves of Compulsory Automobile Liability Insurance”, “Regulations Governing the Setting Aside of Nuclear Reserve by Property Insurance Enterprises”, “Enforcement Rules for the Risk Spreading Mechanism of Residential Earthquake Insurance”, “Notes for Strengthening Reserve of Pool Members Residential Earthquake”, “Regulations Governing Various Reserves for Commercial Earthquake Insurance and Typhoon Flood Insurance by Property Insurance Enterprises” and “Notes for Strengthening Catastrophe Reserve of Property Insurance Enterprises”, and shall be certified by actuary authorized by the Financial Supervisory Commission. Provision for reserve is also applicable for assumed reinsurance and ceded reinsurance business, but is not applicable for special reserve and liability adequacy reserve. Except for the reserves for one-year group accident insurance which is provided based on the higher of actual insurance premium or insurance premium calculated in accordance with the Letter No. Tai-Cai-Bao-Zi-852367814, the provision for other insurance liabilities is based on the following: A. Unearned premium reserve Unearned premium reserve is provided based on various risk calculation for effective contracts yet to mature or covered risks yet to terminate in the coverage period based on unexpired risks of effective and unexpired contracts or covered risks. B. Claims reserve Claims reserve with a coverage period are provided based on claim experience and expenses of various insurance types and are calculated based on actuarial principles. Besides, reserves are provided for “claims reported but not paid” and “claims incurred but not reported”. For “claims reported but not paid”, a reserve has been provided on an individual claim basis for each type of insurance. C. Special reserve Special reserves includes “catastrophe reserve” and “risk claim reserve”. Except for compulsory automobile liability insurance, nuclear insurance, residential earthquake insurance and commercial earthquake and typhoon flood insurance which are covered by other regulations requiring reserves for them to be recognized under liability, the additional provision for special reserve less income tax should be recognized as special reserve under equity after annual closing. The release of special reserve shall be made through special reserve under equity based

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on its net value after tax. D. Premium deficiency reserve Potential claims and expenses are estimated for effective contracts yet to mature and injury insurance contracts with a coverage period. If the assessed amount is more than unearned premium reserve and expected premium income, the insufficient amount is recognized as premium deficiency reserve by product types. E. Liability adequacy reserve In accordance with IFRS 4, ‘Insurance Contracts’ and the regulations of The Actuarial Institute of the Republic of China, the subsidiary’s liability adequacy test is performed using the gross premium valuation method based on all contracts of the subsidiary. At the end of each reporting period, the test is performed by comparing the carrying amount of insurance liabilities less related deferred acquisition costs and related intangible assets with current estimates of future cash flows under its insurance contracts. If the carrying amount is insufficient, the provision for liability adequacy reserve for the entire deficiency is recognized in profit or loss in the period. F. Unqualified ceded reserve Unqualified reinsurance ceded reserve under “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms”, should be disclosed in financial statements. Among the reserves above, except for unearned premium reserve for long-term fire insurance which was calculated at a rate of 7.8% based on the coefficient table of unearned premium reserve for long-term fire insurance, the other reserves were not calculated by discounting. (39) Income tax A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity. B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings. C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related

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deferred tax asset is realized or the deferred tax liability is settled. D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed. E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously. F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized. (40) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds. (41) Dividends Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance. (42) Revenue recognition A. Sales of goods (a) The Group sells cars and related products. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied. (b) Sales revenue was recognized based on the contract price net of sales discount. Accumulated experience and other known reason is used to estimate and provide for the sales discounts and allowances, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognized for expected sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. (c) The Group’s obligation to provide a refund or maintenance for faulty products under the standard warranty terms is recognized as a provision. (d) A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

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(e) The Group operates a loyalty programme where retail customers accumulate points for purchases made which entitle them to discount on future purchases. The points provide a material right to customers that they would not receive without entering into a contract. Therefore, the promise to provide points to the customer is a separate performance obligation. The transaction price is allocated to the product and the points on a relative stand-alone selling price basis. The stand-alone selling price per point is estimated on the basis of the discount granted when the points are redeemed and on the basis of the likelihood of redemption, based on past experience. The stand-alone selling price of the product sold is estimated on the basis of the retail price. A contract liability is recognized for the transaction price which is allocated to the points and revenue is recognized when the points are redeemed or expire. (f) Installment sales for vehicles - the subsidiary, Hotai Finance Co., Ltd. engages in installment sales which mainly aims to receive interest income rather than gross profit. There is no gross profit from such transactions. The accounting treatment is to recognize future proceeds from loans receivable and not to recognize sales revenue and cost of sales when the transaction occurs. When the amount of installment payment exceeds the price of cash sale, the difference is recognized as unrealized interest income and listed as a deduction to installment notes and accounts receivable, and interest is recognized using interest method annually over the installment period. B. Service revenue The Group provides services related to vehicles and air conditioners for vehicles. Revenue from delivering services is recognized under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the proportion of contract costs incurred for services performed as of the financial reporting date to the estimated total costs for the service contract. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognized only to the extent that contract costs incurred are likely to be recoverable. C. Recognition of premium revenue and deferred acquisition cost of the insurance business of Hotai Insurance Co., Ltd. were as follows: (a) For the revenue recognition policies on insurance and reinsurance contracts, please refer to Notes 4(34) and (35). (b) Commission revenue is recognized on the accrual basis of the service period. D. Financing components The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year or one operating period. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. (43) Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Group’s Chief Operating Decision-Maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. 5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates

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concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below: (1) Critical judgements in applying the Group’s accounting policies None. (2) Critical accounting estimates and assumptions A. Revenue recognition The Group estimates sales discounts and returns refund liabilities for sales returns based on historical results and other known factors. Provisions for such liabilities are recorded as a deduction item to sales revenues when the sales are recognized. The Group reassesses the reasonableness of estimates of discounts and returns periodically. Please refer to Note 6(28) for the information of sales of goods. B. Provisions for warranty In order to enhance customer’s confidence on the quality of products, the Company provides additional warranty services apart from the warranty offered by the original manufacturer. Provisions for warranty is estimated based on historical information regarding the nature, frequency, and average cost of claims for each vehicle line by model year, and is revaluated on a regular basis. Please refer to Note 6(23) “Provisions” for more information. C. Impairment assessment of goodwill and customer relation The impairment assessment of goodwill and customer relation relies on the Group’s subjective judgement, including identifying cash-generating units, allocating assets and liabilities as well as goodwill and customer relation to related cash-generating units, and determining the recoverable amounts of related cash-generating units. Please refer to Note 6(15) for details. D. Evaluation of allowance for uncollectible accounts The subsidiary, Hotai Finance Co., Ltd., provides loss allowance for uncollectible accounts based on the forecast factors such as past due days and future economic conditions to assess the default possibility of accounts receivable. The subsidiary recognizes loss allowance individually after the management assesses the customers’ financial condition or payment situation which indicate that the accounts receivable may not be recovered. Given the evaluation process involves estimates and predictions of the past events, current conditions and future overall economic situation, changes might arise due to the difference between the actual results and estimates. Please refer to Note 6(5) for the information of evaluation of allowance for uncollectible accounts. E. Insurance liabilities The estimates and significant assumptions of Hotai Insurance Co., Ltd.’s insurance contracts are used for claim reserve liabilities and claim reserve assets ceded. The claim reserve liabilities are estimated through adoption of internationally accepted actuarial methods, nature or location of insurance risks, claim payment development module, experience data, and etc., which resulted in a reasonable ultimate claims paid amount. The calculation for reported but not paid claims are based on the experience of claim handling experts by each case and the remaining shall be incurred but not reported reserve. For claim reserve assets ceded, the amounts of claim reserve recovered from reinsurers are estimated for each insurance case.

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Hotai Insurance Co., Ltd.’s significant assumptions for claims reserve include: (a) Loss development factors: properly chosen loss development factors based on experience over the past few years. (b) Expected loss ratio for each insurance line of business and accident year: the expected loss ratio is selected based on the historical loss trends of each insurance line of business and accident years. The abovementioned assumptions exclude earthquake insurances, compulsory automobile insurances and nuclear insurances, while their reserves are provided in accordance with the regulatory requirements. Analysis of insurance risk sensitivity is provided in Note 12(6) B. 6. Details of Significant Accounts (1) Cash and cash equivalents December 31, 2019 December 31, 2018 Cash on hand and revolving funds $ 13,248 $ 13,847 Checking accounts and demand deposits 7,863,543 5,653,179 Cash equivalents Time deposits 1,220,947 1,215,085 Short-term notes and bills 2,926,001 2,586,977 $ 12,023,739 $ 9,469,088 A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. B. As of December 31, 2019 and 2018, the Group presented its long-term time deposits of $1,783,125 and $2,170,436, respectively, under other financial assets-current and non-current. C. Of the short-term notes held by the Group, investments in notes issued under reverse repurchase agreements have obtained notes as collateral. The maximum exposure amount after receiving financial collateral is the net amount after offsetting. For related explanations, please refer to Note 6(6). (2) Financial instruments at fair value through profit or loss Items December 31, 2019 December 31, 2018 Financial assets at fair value through profit or loss Current items: Financial assets mandatorily measured at fair value through profit or loss Domestic and foreign beneficiary certificates $ 2,376,442 $ 1,750,167 Derivative instruments 9,346 8,484 Financial instruments 190,543 95,943 Listed stocks 703,896 902,397 Listed preference share 59,980 59,980 Exchange Traded Funds 1,160,929 1,174,890 Valuation adjustment 177,984 ( 218,943)

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Items December 31, 2019 December 31, 2018 $ 4,679,120 $ 3,772,918

Non-current items: Financial assets mandatorily measured at fair value through profit or loss Corporate bonds $ 1,000,000 $ 1,000,000 Financial liabilities at fair value through profit or loss Current items: Financial liabilities held for trading Derivative instruments $ 149,572 $ 19,047 A. Amounts recognized in profit or loss in relation to financial instruments at fair value through profit or loss are listed below: Years ended December 31, Items 2019 2018 Financial instruments mandatorily measured at fair value through profit or loss Derivative instruments ($ 129,663) $ 77,726 Domestic and foreign beneficiary 139,734 ( 122,961) certificates Listed stocks 93,278 ( 161,123) Listed preference share 2,779 3,473 Exchange Traded Funds 161,135 ( 12,343) Corporate bonds 17,250 17,250 $ 284,513 ($ 197,978) B. The Group entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below: December 31, 2019 Contract amount (Notional principal) Derivative instruments (in thousands) Contract period Current items: Forward foreign exchange contracts USD 404,846 2019.07.25~2020.05.14 Foreign exchange swap contracts USD 21,950 2019.11.04~2020.03.02

December 31, 2018 Contract amount (Notional principal) Derivative instruments (in thousands) Contract period Current items: Forward foreign exchange contracts USD 249,726 2018.10.15~2019.03.14 Foreign exchange swap contracts USD 20,000 2018.11.22~2019.02.27 The Group entered into forward foreign exchange contracts and foreign exchange swap

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contracts to buy USD to hedge exchange rate risk of import proceeds and foreign investments. In addition, Hotai Insurance Co., Ltd. entered into foreign exchange swap contracts to hedge exchange rate risk of foreign investments. However, these forward foreign exchange contracts and foreign exchange swap contracts are not accounted for under hedge accounting. C. The Group has no financial assets at fair value through profit or loss pledged to others. D. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2). E. On December 31, 2019 and 2018, such financial assets designated using overlay approach are as follows: Items December 31, 2019 December 31, 2018 Financial assets at fair value through profit or loss designated using overlay approach Listed stocks $ 703,896 $ 902,397 Listed preference shares 59,980 59,980 Exchange Traded Funds 1,160,929 1,174,890 Domestic and foreign beneficiary certificates 906,494 961,300 Corporate bonds 500,000 500,000 Valuation adjustment 168,683 ( 223,928) $ 3,499,982 $ 3,374,639 For the years ended December 31, 2019 and 2018, the reclassifications between profit or loss and other comprehensive income of such financial assets designated using overlay approach are as follows: Years ended December 31, 2019 2018 Gains recognized in profit or loss under IFRS 9 $ 649,706 ($ 277,173) Less: Gains recognized in profit or loss under IAS ( 257,095) ( 50,988) 39 Profit reclassified under overlay approach $ 392,611 ($ 328,161) Effect from change in tax $ 1,761 $ -

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F. Information on equity of the structured entities which were not controlled by the Group is as follows: (a) Type of structured Book value at entities December 31, 2019 Description Investment fund is set for raising capital, and investors acquire long-term capital gains through Infrastructure fund $ 305,540 investing in restricted fund. Investment fund is set for raising capital, and Real estate private investors acquire long-term capital gains through placement fund $ 32,367 investing in restricted fund.

Type of structured Book value at entities December 31, 2018 Description Investment fund is set for raising capital, and investors acquire long-term capital gains through Infrastructure fund $ 302,104 investing in restricted fund. (b) The intention of the Group for holding these structured entities is for earning investment income. (c) The Group recognized equity of the structured entities which were not consolidated into the financial statements under financial assets at fair value through profit or loss.

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(3) Financial assets at fair value through other comprehensive income Items December 31, 2019 December 31, 2018 Current items: Debt instrument Government bonds $ - $ 99,952 Financial bonds - 200,035 Foreign financial bonds 27,197 64,605 27,197 364,592 Valuation adjustment (including loss allowance) 334 1,029 Less: Operation bonds - ( 98,200) $ 27,531 $ 267,421 Non-current items: Debt instrument Government bonds $ 373,497 $ 267,585 Corporate bonds 306,976 308,854 Financial bonds 506,614 299,248 Foreign corporate and financial bonds 651,189 613,323 1,838,276 1,489,010 Valuation adjustment (including loss allowance) 37,239 ( 2,937) Less: Operation bonds ( 300,300) ( 202,100) 1,575,215 1,283,973 Equity instruments Listed stocks and unlisted stocks 6,442,009 6,442,572 Valuation adjustment 1,402,272 160,298 7,844,281 6,602,870 $ 9,419,496 $ 7,886,843 A. The Group has elected to classify equity instruments that are considered to be strategic investments and steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $7,844,281 and $6,602,870, respectively, as at December 31, 2019 and 2018.

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B. Amounts recognized in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below: Years ended December 31, Items 2019 2018 Debt instruments at fair value through other comprehensive income Fair value change recognized in other $ 38,367 ($ 28,179) comprehensive income Cumulative other comprehensive income reclassified to profit or loss Reclassified due to impairment ( 22) ( 122) recognition Reclassified due to derecognition 1,114 ( 7,470) $ 39,459 ($ 35,771) Interest income recognized in profit or loss $ 38,565 $ 55,449

Years ended December 31, Items 2019 2018 Equity instruments at fair value through other comprehensive income Fair value change recognized in other $ 1,242,303 ($ 351,062) comprehensive income C. Under the Insurance Law of the Republic of China, Hotai Insurance Co., Ltd. is required to deposit 15% of its registered operating capital with the Central Bank of Republic of China. As of December 31, 2019, government bonds with par value of $300,300 were deposited. D. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2). (4) Hedging financial assets and liabilities December 31, 2019 Current assets Current liabilities Cash flow hedges Exchange rate risk and interest rate risk Cross currency swaps $ 81,131 ($ 112,291 )

December 31, 2018 Current assets Current liabilities Cash flow hedges Exchange rate risk and interest rate risk Cross currency swaps $ 70,038 ($ 52,424 )

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A. Hedge accounting is applied to remove the accounting inconsistency between the hedging instrument and the hedged item. As the Group’s USD denominated borrowings are exposed to the impact of variable exchange rate and interest rates, the Group uses cross currency swap to control the exchange rate risk and interest rates under their acceptable range. B. Transaction information associated with the Group adopting hedge accounting is as follows: December 31, 2019 Year ended December 31, 2019 Gains (losses) on valuation of Changes in fair ineffective hedge that value in relation will be recognized in Notional to recognizing financial amount hedge Average Average assets/liabilities at (in thousand Contract Assets Liabilities ineffectiveness exchange interest fair value through Hedging instruments dollars) period carrying amount carrying amount basis rates rate profit or loss

Cash flow hedgesǺ

Exchange rate risk and

Interest rate risk Cross currency swaps 2019/1/7 USD 18,000 $ 5,349 $ - $ - 6.87~6.89 4.35~4.74 $ - transactions ~2021/6/18 2017/3/13 USD 200,000 75,782 ( 112,291) - 29.20~30.85 0.92~1.29 - ~2021/9/17

December 31, 2019 Valuation on liabilities’ carrying Liabilities amount due to fair carrying amount value hedges Hedged items Cash flow hedges Exchange rates risk and interest rate risk Short-term borrowings $ 6,585,672 $ 59,784

December 31, 2018 Year ended December 31, 2018

Gains (losses) on valuation of Changes in fair ineffective hedge that value in relation will be recognized in Notional to recognizing financial amount hedge Average Average assets/liabilities at (in thousand Contract Assets Liabilities ineffectiveness exchange interest fair value through Hedging instruments dollars) period carrying amount carrying amount basis rates rate profit or loss

Cash flow hedgesǺ

Exchange rate risk and

Interest rate risk Cross currency swaps 2017/5/23 USD 5,000 $ - ($ 1,486) $ - 6.89 4.74 $ - transactions ~2019/5/10 2017/3/13 USD 200,000 70,038 ( 50,938) - 29.20~30.85 0.92~1.29 - ~2021/9/17

December 31, 2018 Valuation on liabilities’ carrying Liabilities amount due to fair carrying amount value hedges Hedged items Cash flow hedges Exchange rates risk and interest rate risk Short-term borrowings $ 6,208,749 $ 94,041

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C. Cash flow hedges Years ended December 31 2019 2018 Cash flow hedge reserve At January 1 ($ 61,330) ($ 32,741) Add: Gains (losses) on hedge effectiveness-amount recognized in other comprehensive income ( 40,302) ( 115,405) Reclassified to profit or loss as the hedged item has affected profit or loss 129,165 77,987 Income tax relating to the hedge effectiveness-amount recognized in other comprehensive income ( 18,157) 8,829 At December 31 $ 9,376 ($ 61,330) To hedge exposed exchange rate risk and interest rate risk arising from short-term borrowings, the Group entered into a cross currency swap agreement. The effective portion with respect to the changes in the fair value of the hedging instruments is deferred to recognize in the cash flow hedge reserve, which is under other comprehensive income, and will be directly included in gain or loss on foreign exchange and finance costs when the hedged items, principal and interest are subsequently paid. (5) Notes and accounts receivable, net (including related parties) December 31, 2019 December 31, 2018 Notes receivable $ 1,582,045 $ 2,014,292 Installment notes receivable 6,219,543 6,637,807 Accounts receivable 6,577,888 6,249,605 Installment accounts receivable 115,005,470 101,191,658 Lease payments and notes receivable 19,556,694 18,985,922 Premiums receivable 458,737 462,779 Overdue receivable 62,418 62,553 149,462,795 135,604,616 Less: Unrealized interest income ( 11,362,192) ( 9,551,319) Unearned finance income ( 2,232,584) ( 2,184,823) Allowance for doubtful accounts ( 2,677,141) ( 2,116,783) Notes and accounts receivable, net $ 133,190,878 $ 121,751,691

December 31, 2019 December 31, 2018 Current $ 131,656,164 $ 121,259,927 Non-current (shown as other assets) $ 1,534,714 $ 491,764 As of December 31, 2019 and 2018, the subsidiary - Hotai Finance Co., Ltd.’s notes receivable were pledged as collateral for loans and issuance of commercial papers to banks amounted to $4,092,545 and $4,519,334, respectively. Furthermore, the promissory note for installment accounts receivable pledged as collateral for loans to banks amounted to $1,850,785 and $2,216,836 as of December 31, 2019 and 2018, respectively. Information on the Group’s notes and accounts receivable pledged as collateral is provided in Note 8.

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A. The aging analysis of receivables that were past due but not impaired is as follows: December 31, 2019 December 31, 2018 Receivables Receivables Not past due $ 147,712,605 $ 133,508,361 Up to 30 days 46,189 129,012 31 to ~ 90 days 589,259 557,721 91 to ~ 180 days 411,053 575,339 Over 180 days 703,689 834,183 $ 149,462,795 $ 135,604,616 The above aging analysis was based on past due date. B. As of December 31, 2019, December 31, 2018 and January 1, 2018, the balances of receivables (including notes receivable) from contracts with customers amounted to $7,999,700, $8,184,591 and $7,652,703, respectively. C. The expected recovery of the Group’s installment notes and accounts receivable is as follows: December 31, 2019 December 31, 2018 Up to 12 months $ 46,216,840 $ 43,219,320 Over 12 months 75,008,173 64,610,145 $ 121,225,013 $ 107,829,465 D. Lease payments receivable Prior to 2019 The Group leases office machines and vehicles to others under finance lease. Based on the terms of the lease contracts, the ownership of these assets shall be transferred to the lessees when the leases expire. The gross investments in those leases and present value of total minimum lease payments receivable as of December 31, 2018 were as follows: December 31, 2018 Total lease Net lease payments Unearned payments receivable finance income receivable Not later than one year $ 4,099,515 ($ 231,179) $ 3,868,336 Later than one year but not later than five years 14,886,329 ( 1,953,644) 12,932,685 Over five years 78 - 78 $ 18,985,922 ($ 2,184,823) $ 16,801,099 E. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2). (6) Offsetting financial assets and financial liabilities A. The derivatives and reverse repurchase agreement held by the Group do not conform to the offsetting requirements under paragraph 42 of IAS 32. However, the subsidiary has entered into enforceable master netting arrangements or similar agreements with counterparties. Upon the event of a delinquency (default, insolvency or bankruptcy) of a party, the counterparties may set-off the netting arrangement or pursue legal action against the collateral. The related amount of the collateral received (paid) is its fair value. However, the offsetting amount is limited to recognized financial assets (liabilities).

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B. Financial assets and financial liabilities subject to master netting arrangements are as follows: December 31, 2019 Financial assets Gross Net amounts Not set off in the Gross amounts of of financial balance sheets amounts of recognized assets recognized financial presented in financial liabilities set the balance Financial Collateral assets off sheet instruments received Net amount Description (a) (b) (c)=(a)-(b) (d) (e) (f)=(c)-(d)- (e) Reverse repurchase $1,897,937 $ - $ 1,897,937 $ - $ 1,897,937 $ - agreement

December 31, 2018 Financial assets Gross Net amounts Not set off in the Gross amounts of of financial balance sheets amounts of recognized assets recognized financial presented in financial liabilities set the balance Financial Collateral assets off sheet instruments received Net amount Description (a) (b) (c)=(a)-(b) (d) (e) (f)=(c)-(d)- (e) Reverse repurchase $2,586,977 $ - $ 2,586,977 $ - $ 2,586,977 $ - agreement (7) Inventories December 31, 2019 Allowance for Cost valuation loss Book value Vehicles and parts $ 8,117,585 ($ 89,066) $ 8,028,519 Air conditioner and parts 2,453,390 ( 340,093) 2,113,297 Other goods 246,432 ( 8,897) 237,535 Inventory in transit 2,645,675 - 2,645,675 $ 13,463,082 ($ 438,056) $ 13,025,026

December 31, 2018 Allowance for Cost valuation loss Book value Vehicles and parts $ 5,331,492 ($ 71,952) $ 5,259,540 Air conditioner and parts 2,878,154 ( 388,524) 2,489,630 Other goods 92,128 ( 7,225) 84,903 Inventory in transit 2,183,581 - 2,183,581 $ 10,485,355 ($ 467,701) $ 10,017,654 A. Above listed inventories were not pledged to others as collateral. B. The cost of inventories recognized as expense for the period: Years ended December 31, 2019 2018 Cost of goods sold $ 161,187,288 $ 140,168,602 Loss on market value decline of inventories ( 29,645) 20,629 $ 161,157,643 $ 140,189,231

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(8) Prepayments December 31, 2019 December 31, 2018 Prepayments to commissions $ 3,060,537 $ 2,820,471 Prepayments to suppliers 2,108,374 1,891,184 Offset against business tax payable 853,909 1,047,110 Prepaid insurance premiums 391,733 442,283 Other prepayments 726,551 316,021 $ 7,141,104 $ 6,517,069 (9) Reinsurance contract assets and insurance liabilities A. Details of reinsurance contract assets are as follows: December 31, 2019 December 31, 2018 Claims recoverable from reinsurers $ 99,868 $ 158,967 Due from reinsurance and ceding companies 77,019 115,112 Reinsurance reserve assets -Ceded unearned premium reserve 899,632 727,955 -Ceded claims reserve 707,719 634,445 Due from reinsurance and ceding companies - overdue 24,155 17,981 1,808,393 1,654,460 Less: Loss allowance ( 14,258) ( 11,598) $ 1,794,135 $ 1,642,862

December 31, 2019 December 31, 2018 Current $ 1,286,604 $ 1,225,913 Non-current (shown as other assets) $ 507,531 $ 416,949 For the credit risk of reinsurance contract assets, please refer to Note 12(5). B. Movements of loss allowance/allowance for bad debts of reinsurance contract assets are as follows: Years ended December 31, 2019 2018 At January 1 $ 11,598 $ 8,681 Prevision during the period 2,660 2,917 At December 31 $ 14,258 $ 11,598 C. Details of insurance liabilities are as follows: December 31, 2019 December 31, 2018 Unearned premium reserve $ 4,393,809 $ 3,567,154 Claims reserve 3,091,211 2,601,984 Special reserve 1,913,192 1,914,888 $ 9,398,212 $ 8,084,026

December 31, 2019 December 31, 2018 Current (shown as other current liabilities) $ 5,966,415 $ 4,798,754 Non-current (shown as provisions) 3,431,797 $ 3,285,272

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D. Movements of ceded unearned premium reserve and unearned premium reserve are as follows: Year ended December 31, 2019 Gross amount Ceded amount Net amount At January 1 $ 3,567,154 $ 727,955 $ 2,839,199 Provision during the period 4,393,809 899,632 3,494,177 Recovery during the period ( 3,567,154 ) ( 727,955 ) ( 2,839,199 ) At December 31 $ 4,393,809 $ 899,632 $ 3,494,177

Year ended December 31, 2018 Gross amount Ceded amount Net amount At January 1 $ 2,850,169 $ 618,021 $ 2,232,148 Provision during the period 3,567,154 727,955 2,839,199 Recovery during the period ( 2,850,169 ) ( 618,021 ) ( 2,232,148 ) At December 31 $ 3,567,154 $ 727,955 $ 2,839,199 E. Details of claims reserve and movements of ceded claims reserve and claims reserve are as follows: (a) As of December 31, 2019 and 2018, details of claims reserve and ceded claims reserve are as follows: December 31, 2019 Gross amount Ceded amount Net amount Reported but not paid $ 1,741,618 $ 298,444 $ 1,443,174 Incurred but not reported 1,349,593 409,275 940,318 $ 3,091,211 $ 707,719 $ 2,383,492

December 31, 2018 Gross amount Ceded amount Net amount Reported but not paid $ 1,544,389 $ 335,373 $ 1,209,016 Incurred but not reported 1,057,595 299,072 758,523 $ 2,601,984 $ 634,445 $ 1,967,539 (b) Movements of claims reserve and ceded claims reserve are as follows: Year ended December 31, 2019 Gross amount Ceded amount Net amount At January 1 $ 2,601,984 $ 634,445 $ 1,967,539 Provision during the period 3,091,211 707,719 2,383,492 Recovery during the period ( 2,601,984 ) ( 634,445 ) ( 1,967,539 ) At December 31 $ 3,091,211 $ 707,719 $ 2,383,492

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! Year ended December 31, 2018 Gross amount Ceded amount Net amount At January 1 $ 2,398,727 $ 684,194 $ 1,714,533 Provision during the period 2,601,984 634,445 1,967,539 Recovery during the period ( 2,398,727 ) ( 684,194 ) ( 1,714,533 ) At December 31 $ 2,601,984 $ 634,445 $ 1,967,539 F. Movement of special reserve is as follows: Years ended December 31, 2019 2018 At January 1 $ 1,914,888 $ 1,895,550 Provision during the period - 20,931 Recovery during the period ( 1,696) ( 1,593) At December 31 $ 1,913,192 $ 1,914,888 To Hotai Insurance Co., Ltd., the insurance types of the special reserve include compulsory automobile liability insurance, nuclear insurance, policy earthquake insurance and typhoon and flood insurance.

G. Pursuant to Jin-Guan-Pao-Tsai Letter No. 10102515061, “Guidelines for Strengthening Catastrophe Reserve of Property Insurance Enterprises”, special reserve recognized under liabilities shall first be used to make up required catastrophe reserve and risk claim reserve for commercial earthquake insurance and typhoon flood insurance. The remaining, net of income tax, shall be recognized as special reserve under stockholders’ equity in accordance with IAS 12. If the above is not taken into consideration, the effects on liabilities, equity, profit and earnings per share to Hotai Insurance Co., Ltd. are as follows: December 31, 2019 December 31, 2018 Decrease in special reserve under liability $ 382,576 $ 384,169 Increase in special reserve under retained earnings 317,634 318,908

Years ended December 31, 2019 2018 Increase in net loss (income) before tax $ 1,593 $ 1,593 Increase in losses (earnings) per share before tax 0.08 0.08

H. Pursuant to Jin-Guan-Pao-Chan Letter No. 10102531541, “Guidelines for Strengthening Reserve of Pool Members Residential Earthquake” and Jin-Guan-Pao-Tsai Letter No. 10102517091, “Regulations Governing the Setting Aside of Nuclear Reserve by Property Insurance Enterprises”, Hotai Insurance Co., Ltd. maintains a special reserve for the residential earthquake insurance and nuclear insurance provisioned under insurance liabilities as of December 31, 2019 and 2018. If the above is not taken into consideration, the effects on liabilities, equity and profit to Hotai Insurance Co., Ltd. are as follows:

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December 31, 2019 December 31, 2018 Decrease in special reserve under liability $ 223,894 $ 223,894 Increase in special reserve under retained earnings 185,832 185,832 Both special reserve of the residential earthquake insurance and nuclear insurance have no provision or recovery and have no effect on net income before tax and earnings per share before tax for the years ended December 31, 2019 and 2018. (10) Investments accounted for using equity method December 31, 2019 December 31, 2018 Kuozui Motors, Ltd. $ 4,315,317 $ 4,286,842 Central Motor Co., Ltd. 2,528,177 2,444,355 Tau Miau Motor Co., Ltd. 1,501,798 1,428,177 Kau Du Automobile Co., Ltd. 1,361,522 1,321,898 Kuotu Motor Co., Ltd. 1,124,145 1,018,969 Taipei Toyota Motor Co., Ltd. 1,078,783 980,767 Nan Du Motor Co., Ltd. 1,009,110 938,419 Lang Yang Toyota Motor Co., Ltd. 293,845 284,740 Formosa Flexible Packaging Corp. 357,798 272,434 Shi-Ho Screw Industrial Co., Ltd. 124,467 132,677 Yokohama Tire Taiwan Co., Ltd., etc. 1,423,867 1,339,231 $ 15,118,829 $ 14,448,509 A. The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the financial performance are summarized as follows: As of December 31, 2019 and 2018, the carrying amount of the Group’s individually immaterial associates amounted to $15,118,929 and $14,448,509, respectively. Years ended December 31, 2019 2018 Comprehensive income for the period $ 1,258,121 $ 944,194 B. The Group’s investments have no quoted market price. The share of profit of investments accounted for using the equity method amounted to $1,153,209 and $1,006,530 for the years ended December 31, 2019, and 2018, respectively, and were valued based on the investees’ financial statements audited by independent accountants. C. On July 31, 2019, the Group participated in the capital increase of Formosa Flexible Packaging Corporation by acquiring 287,499 shares amounting to $81,963, and the shareholding would be 44.44% after the completion. D. In March 2019 and May 2019, the Group proportionately participated in the capital increase of Chongqing Taikang Heling Lexus Motor Sales & Service Co., Ltd. for cash amounting to $6,893 and $13,698, respectively. E. The Group’s indirect subsidiary-Ho Tai Service & Marketing Co., Ltd. acquired 24.5% shares of Kashiwabara Hotai Taiwan Co., Ltd. for a cash consideration of $8,820 in December 2018. F. The Group invested $2,244 in cash to establish Chongqing Taikang Heling Lexus Motor Sales & Service Co., Ltd. in December 2018 and acquired 50% shares of the investee.

! ___Total___

$ 57,869,803 1,358,046 $ 41,852,407 $ 41,852,407 18,639,170 $ 45,743,695 $ 61,631,529 1,358,046 $ 45,743,695 ( 17,375,442 ) ( ( ) 387,322 ) 5,828,732 ( 8,329,846 ) ( ( 85,046 ) ) 116,936 ( 17,245,880 ) Construction

156,026$ - - 156,026$ 156,026$ 386,507 - - - 473,146$ 473,146$ - - 473,146$ in progress ( 68,737 ) ( 650 ) Leasehold

improvements 673,824$ - 228,506$ 228,506$ 58,563 - - 205,975$ 687,803$ - 205,975$ ( ( ) 445,318 ( 20,500 ) ( 60,219 ) ( 375 ) ( ) 481,828 )

ries. The rental assets for disposal should be Lease (Note) $ 39,955,966 - $ 26,839,836 $ 26,839,836 16,896,525 $ 29,848,346 $ 42,579,797 - $ 29,848,346 m disposal are reclassifiedrevenue sales as and ( 13,116,130) 13,116,130) ( ( ( ) 236,681 ) 5,834,058 ( ) 7,682,465 ( ( 96,846 ) 37,965 ) ( 12,731,451 Owner- Owner- occupied Machinery and equipment 461,420$ - 222,620$ 222,620$ 42,937 - 261,268$ 543,681$ - 261,268$ ( 238,800) ( 265) 41,257 ( 39,577) ( 5,704) 282,413) ( Lease (Note) (Note) Lease $ 814,182 - $ 409,819 $ 409,819 194,091 11,800 $ 417,674 $ 840,370 - $ 417,674 ( ( ) 404,363 ( 31,022 24,203 ) ( ) 203,028 ( 1,827 ) ( ) 422,696 Owner- Owner- occupied Office equipment Office 1,662,102 $ - 583,307$ 583,307$ 359,432 25,962 - 656,314$ 1,743,954 $ - 656,314$ ( ( ) 1,078,795 ( ) 105,519 ( ) 194,586 ( 12,282 ) ( ) 1,087,640 Lease $ 59,990 - 317$ 317$ - - - - 273$ $ 59,990 - 273$ ( 59,673 ) - ( 44 ) ( 59,717 )

Owner- Owner- occupied Utility equipment Utility 138,177$ - 3,957$ 3,957$ 634 - - - 3,596$ 138,715$ - 3,596$ ( 134,220 ) ( ( 974 ) 21 ) ( ) 135,119 Buildings and structures 5,299,693 $ 12,079 ( ) 1,871,293 3,440,479$ 3,440,479 $ 58,429 - 3,267,511$ 5,273,598 $ 12,079 3,267,511$ ( ( ( 154 ) 24,178 ) ) 148,953 ( ) 58,112 ( ) 2,018,166 Prepayment for real estatefor $ 88,000 - - $ 88,000 88,000$ 26,165 - - - - $ 26,165 26,165$ - - $ 26,165 ( 88,000 ) Land 8,560,423$ 1,345,967 9,879,540$ 9,879,540 $ 615,887 - 88,000 - - - $ 10,583,427 9,264,310 $ 1,345,967 $ 10,583,427 ( 26,850 ) ( 26,850 ) reclassified to inventoriesat their carrying valueare when thenoassets longer leased and are ready to be frosold. Proceeds the related costof should sales be recognized. At January2019 1, Cost gain Revaluation impairment and depreciation Accumulated 2019 Opening net book amount as of January 1 Additions Disposals Reclassifications Depreciation loss Impairment differences exchange Net 31 of December as amount net book Closing At December 31, 2019 Cost gain Revaluation Accumulated depreciation and impairment Note: Rental assetsare exclusively for leasing business by Hotai Leasing Co., Ltd., Hotai Finance Co., Ltd. and other subsidia Property, plant and equipment equipment plant and Property,

(11) ! !

Total Total $ 50,700,414 1,358,046 $ 34,993,759 $ 34,993,759 19,156,100 58,391 $ 41,852,407 $ 57,869,803 1,358,046 $ 41,852,407 ( 17,064,701) 17,064,701) ( 34,757) ( 4,312,021) ( 7,946,094) ( 62,971) ( 17,375,442) ( in progress Construction $ 77,433 - - $ 77,433 $ 77,433 165,298 - - $ 156,026 $ 156,026 - - $ 156,026 ( 1,115) ( 1,115) 85,288) ( ( 302) Leasehold improvements improvements $ 655,849 - $ 242,958 $ 242,958 52,914 1,539 - $ 228,506 $ 673,824 - $ 228,506 ( 412,891) 412,891) ( 1,943) ( 66,719) ( 243) ( 445,318) (

) aries. The rental for assets disposal should be Rental 13,522,622 assets (Note)assets $ 39,032,620 - $ 25,509,998 $ 25,509,998 13,706,540 58,391 $ 27,249,972 $ 40,830,138 - $ 27,249,972 ( 3,797) ( ( 4,466,700) 7,529,519) ( 24,941) ( 13,580,166) (

) Machinery and equipment $ 366,066 - $ 132,161 $ 132,161 125,520 - $ 222,620 $ 461,420 - $ 222,620 ( 233,905) 233,905) ( 2,353) ( ( 92) 29,892) ( 2,724) ( 238,800 (

) ) Office equipment $ 1,501,043 - $ 475,013 $ 475,013 278,361 25,095 - $ 583,307 $ 1,662,102 - $ 583,307 ( 1,026,030 ( 21,287) ( 168,807) ( 5,068 ( 1,078,795) (

leased and are ready Proceeds sold. be disposal leased from to and are sales reclassified are revenue as and the Utility equipment $ 138,212 - $ 4,861 $ 4,861 628 - - $ 3,957 $ 138,177 - $ 3,957 ( 133,351) 133,351) ( ( 598) ( 924) ( 10) 134,220) ( onger onger Buildings and structures $4,301,177 12,079 $2,604,204 $2,604,204 965,321 55,132 - $3,440,479 $5,299,693 12,079 $3,440,479 ( 1,709,052) 1,709,052) ( 4,262) ( 150,233) ( 29,683) ( 1,871,293) ( Prepayment for real estate $ - - - $ - $ - 88,000 - - - - - $ 88,000 $ 88,000 - - $ 88,000 ognized. Land $ 4,628,014 1,345,967 $ 5,947,131 $ 5,947,131 3,773,518 - 158,891 - - - $ 9,879,540 $ 8,560,423 1,345,967 $ 9,879,540 ( 26,850) 26,850) ( ( 26,850) reclassified to inventoriesat carrying value when the assetsno are l related cost of should sales recbe Note : Rental assets are exclusively for leasing by business : Hotai Leasing Co., Ltd., Hotai Finance Co., Ltd. and other subsidi Note impairment rental assets impairment 2018 1, January At Cost Revaluation gain Accumulated depreciation and 2018 Opening book net amount of as 1 January Additions Disposals Reclassifications Depreciation Impairment loss recognized on Net exchange differences Closing net book amount of as December 31 At December 31, 2018 Cost Revaluation gain Accumulated depreciation and ! !

! (12) Leasing arrangements - lessee Effective 2019 A. The Group leases various assets including land, buildings and structures and office equipment. Rental contracts are typically made for periods of 1 to 13 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes. B. The carrying amount of right-of-use assets and the depreciation charge are as follows: Year ended December 31, 2019 December 31, 2019 Carrying amount Depreciation charge Land $ 797,637 $ 145,773 Buildings and structures 1,498,544 386,561 Office equipment 4,213 4,336 $ 2,300,394 $ 536,670 C. For the year ended December 31, 2019, the additions to right-of-use assets amounted to $374,344. D. The information on profit and lose accounts relating to lease contracts is as follows:

Year ended December 31, 2019 Items affecting profit or loss Interest expense on lease liabilities $ 50,761 Expense on short-term lease contracts and leases of low-value assets 123,892 E. For the year ended December 31, 2019, the Group’s total cash outflow for lease (including short-term lease contracts and leases of low-value assets) amounted to $630,552. (13) Leasing arrangements - lessor Effective 2019 A. The Group leases various assets including land, buildings, machinery and equipment, business vehicles and multifunction printers. Rental contracts are typically made for periods of 1 and 7 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. B. The Group leases machinery and equipment, business vehicles and so on under a finance lease. Based on the terms of the lease contract, the ownership of assets will be transferred to lessees when the leases expire. Information on profit or loss in relation to lease contracts is as follows:

Year ended December 31, 2019 Finance income from the net investment in the finance lease $ 2,452,665

! C. The maturity analysis of the undiscounted lease payment receivable in the finance lease is as follows: December 31, 2019 Less than 1 year $ 12,766,789 Between 1 and 2 years 5,256,626 Between 2 and 3 years 1,325,712 Between 3 to 4 years 169,648 Between 4 to 5 years 37,795 More than 6 years 124 $ 19,556,694 D. Reconciliation of the undiscounted lease payments receivable and the net investment in the finance lease is provided as follows: December 31, 2019

Non-current Undiscounted lease payments $ 19,556,694 Unearned finance income ( 2,232,584) Net investment in the lease $ 17,324,110 E. For the year ended December 31, 2019, the Group recognized rent income in the amount of $18,544 based on the operating lease agreement, which does not include variable lease payments. F. The maturity analysis of the undiscounted lease payments receivable under the operating leases is as follows: December 31, 2019 Less than 1 year $ 9,505,592 Between 1 and 2 years 5,899,366 Between 2 and 3 years 2,670,459 Between 3 to 4 years 729,099 More than Ķ years 255,479

$ 19,059,995

! (14) Investment property 2019 Buildings and Land structures Total At January 1 Cost $ 1,212,157 $ 590,202 $ 1,802,359 Revaluation gain 327,794 - 327,794 Accumulated depreciation - ( 283,694) ( 283,694 ) $ 1,539,951 $ 306,508 $ 1,846,459 2019 Opening net book amount as of January 1 $ 1,539,951 $ 306,508 $ 1,846,459 Additions - 7,824 7,824 Reclassifications - 4,297 4,297 Depreciation - ( 13,265 ) ( 13,265 ) Closing net book amount as of December 31 $ 1,539,951 $ 305,364 $ 1,845,315 At December 31 Cost $ 1,212,157 $ 600,882 $ 1,813,039 Revaluation gain 327,794 - 327,794 Accumulated depreciation - ( 295,518 ) ( 295,518 ) $ 1,539,951 $ 305,364 $ 1,845,315

2018 Buildings and Land structures Total At January 1 Cost $ 1,212,157 $ 634,963 $ 1,847,120 Revaluation gain 327,794 - 327,794 Accumulated depreciation - ( 317,192 ) ( 317,192 ) $ 1,539,951 $ 317,771 $ 1,857,722

Opening net book amount as of January 1 $ 1,539,951 $ 317,771 $ 1,857,722 Additions - 9,050 9,050 Reclassifications - ( 3,073 ) ( 3,073 ) Depreciation - ( 17,240 ) ( 17,240 ) Closing net book amount as of December 31 $ 1,539,951 $ 306,508 $ 1,846,459 At December 31 Cost $ 1,212,157 $ 590,202 $ 1,802,359 Revaluation gain 327,794 - 327,794 Accumulated depreciation - ( 283,694 ) ( 283,694 ) $ 1,539,951 $ 306,508 $ 1,846,459

! A. Rental income from investment property and direct operating expenses arising from investment property are as follows: Years ended December 31, 2019 2018 Rental income from investment property $ 129,078 $ 136,194 Direct operating expenses arising from the investment property that generated rental income during the period (including depreciation) $ 24,296 $ 29,102 B. The fair value of the investment property held by the Group was $2,249,864 and $2,208,554 as of December 31, 2019 and 2018, respectively, based on the market value method, except for Hotai Insurance Co., Ltd., who appoints external independent appraisers to calculate and estimate the price of investment property every three years using at least two appraisal techniques among income approach, comparison method and cost approach, basing on observable price in an active market as well as according to the nature, location and situation of individual asset under “Regulations on Real Estate Appraisal”. It also prepares an internal assessment every year, and if a significant difference has been identified, the Company will engage an external independent appraiser revaluing the fair values of investment property under “Regulations on Real Estate Appraisal” and take the result as the basis of the adjustments for financial statement disclosures. The valuations based on the aforementioned method were categorized within Level 3 in the fair value hierarchy as assessed and its main input was capitalization rate. (15) Intangible assets 2019 Client Computer Goodwill relationship software Total At January 1 Cost $ 662,323 $ 527,106 $ 144,315 $ 1,333,744 Accumulated amortization and impairment - ( 34,408 ) ( 74,479) ( 108,887 ) $ 662,323 $ 492,698 $ 69,836 $ 1,224,857 2019 Opening net book amount as of January 1 $ 662,323 $ 492,698 $ 69,836 $ 1,224,857 Additions-acquired separately - - 62,194 62,194 Amortization - ( 17,571 ) ( 36,610 ) ( 54,181 ) Closing net book amount as of December 31 $ 662,323 $ 475,127 $ 95,420 $ 1,232,870

At December 31 Cost $ 662,323 $ 527,106 $ 213,693 $ 1,403,122 Accumulated amortization and impairment - ( 51,979 ) ( 118,273 ) ( 170,252 ) $ 662,323 $ 475,127 $ 95,420 $ 1,232,870

! 2019 Client Computer Goodwill relationship software Total At January 1 Cost $ 662,323 $ 527,106 $ 100,141 $ 1,289,570 Accumulated amortization and impairment - ( 16,838 ) ( 63,740 ) ( 80,578 ) $ 662,323 $ 510,268 $ 36,401 $ 1,208,992 2018 Opening net book amount as of January 1 $ 662,323 $ 510,268 $ 36,401 $ 1,208,992 Additions-acquired separately - - 55,413 55,413 Amortization - ( 17,570 ) ( 21,978 ) ( 39,548 ) Closing net book amount as of December 31 $ 662,323 $ 492,698 $ 69,836 $ 1,224,857

At December 31 Cost $ 662,323 $ 527,106 $ 144,315 $ 1,333,744 Accumulated amortization and impairment - ( 34,408 ) ( 74,479 ) ( 108,887 ) $ 662,323 $ 492,698 $ 69,836 $ 1,224,857

Details of amortization on intangible assets are as follows: Years ended December 31, 2019 2018 Administrative expenses $ 54,181 $ 39,548 (16) Other assets December 31, 2019 December 31, 2018 Long-term accounts receivable (Including long-term $ 2,044,790 $ 950,331 notes and accounts receivable) Reinsurance contract assets 507,531 416,949 Land use right - 294,215 Operation bonds 300,300 300,300 Guarantee deposits paid 358,442 308,228 Prepayments for business facilities 58,471 29,839 Others 1,416,053 1,339,343 $ 4,685,587 $ 3,639,205 (17) Short-term loans Type of loans December 31, 2019 December 31, 2018 Bank loans ! Unsecured loans $ 56,245,258 $ 54,879,055 ! Mortgage loans 3,600,000 6,389,345 Mid-term syndicated loans for working capital 1,337,787 1,631,978 $ 61,183,045 $ 62,900,378 Annual interest rate 0.78%~5.30% 0.76%~5.49% As of December 31, 2019 and 2018, the details of loans are as follows: A. The subsidiary, Hotai Finance Co., Ltd., has entered into a mid-term syndicated contract for a credit line of $3.32 billion with 8 financial institutions including Japan Bank for International Cooperation, in order to fulfill its working capital. The duration is 35 months (from September

! 25, 2015 to September 18, 2018). The loan can be drawn several times but is non-revolving. The payment term is to repay the full amount drawn at the maturity date. This loan has been settled at maturity. B. The subsidiary, Hoyun International Lease Co., Ltd., has entered into a mid-term syndicated 570 contract for a credit line of RMB 380 million with 3 financial institutions including DBS Bank 578 ) Ltd., in order to fulfil its working capital. The duration is 36 months (from November 9, 2017 992 to November 9, 2020). The loan can be drawn several times but is non-revolving. The payment term is to repay the drawn amounts in installments within the contract period. 992 413 C. The subsidiary, Hotai Finance Co., Ltd.’s commitments to the abovementioned syndicated 548 ) loans and partial loans from other financial institutions during the contract periods are 857 summarized as follows: (a) Current ratio: At least 90% (b) Ratio of self-owned capital: At least 7% 744 (c) Interest coverage ratio: At least 120% 887 ) (d) Net value: At least $3.5 billion 857 D. The subsidiary, Hoyun International Lease Co., Ltd.’s commitments to the abovementioned syndicated loans and partial loans from other financial institutions during the contract periods are summarized as follows:

(a) Net assets: At least RMB 330 million. (b) Debt/equity ratio: Lower than 800%. (c) Interest coverage ratio: At least 115%. (d) Non performing loans ratio: Lower than 3%. (18) Short-term notes and bills payable December 31, 2019 December 31, 2018 Commercial paper payable $ 53,770,000 $ 47,920,000 Less: Unamortized discount ( 34,524 ) ( 48,086 ) $ 53,735,476 $ 47,871,914 Annual interest rate 0.68%~1.19% 0.67%~1.3%

(19) Bonds payable (Recorded as ‘long-term liabilities current portion’) December 31, 2019 December 31, 2018 Bonds payable $ 5,200,000 $ 5,200,000 The information on corporate bonds issued by the Group’s subsidiary, Hotai Finance Co., Ltd. that has been approved by the competent authority are as follows: A. The first unsecured ordinary corporate bonds was issued in 2018. The total amount was $2,400,000, the coupon rate was 0.73% with a 3-year period, the outstanding period was from July 6, 2018 to July 6, 2021, and the bonds would be repaid at face value in a lump sum with cash on the due date. B. The first unsecured ordinary corporate bonds was issued in 2016. The total amount was $2,800,000, the coupon rate was 0.93% with a 3-year period, the outstanding period was from January 11, 2017 to January 11, 2020, and the bonds would be repaid at face value in a lump sum with cash on the due date.

! (20) Long-term loans

Borrowing period Interest Type of borrowings and repayment term rate range Collateral December 31, 2019 December 31, 2018 Long-term bank

borrowings US dollar denominated USD 3,000 thousand; borrowing period borrowings is from September 2018 to July 2021; 3.10%~ interest is repayable seasonally 3.99% None. $ 89,852 $ 91,722 USD 3,500 thousand; borrowing period is from June 2019 to October 2021; interest is repayable seasonally 3.33% None 104,828 - USD 1,300 thousand; borrowing period is from June 2019 to October 2021; interest is repayable seasonally 3.33% None 38,936 - Secured borrowings From December 2019 to December Land (please refer 2024 1.20% to Note 8) 250,000 From January 2019 to January 2022 Notes receivable for lease payments (please 1.18% refer to Note 8) 150,000 - Commercial papers From January 2017 to January 2022 0.96%~ payable 1.06% s 5,300,000 -

From January 2016 to August 2021 0.92%~ 1.22% s - 6,750,000 Less: unamortized discounts ( 6,016) ( 8,032 )

5,927,600 6,833,690

Less: long-term liabilities, current portion ( 2,426,749) ( 2,747,522 )

$ 3,500,851 $ 4,086,168

Interest rate range 0.96%~3.33% 0.92%~3.99%

As of December 31, 2019, the maturities of long-term loans are as follows: Duration of maturity Loans amount Up to 1 year $ 2,430,000 1 to 2 years 2,863,616 2 to 3 years 480,000 3 to 4 years 30,000 4 to 5 years 130,000 $ 5,933,616 (21) Accrued expenses December 31, 2019 December 31, 2018 Wages and salaries payable $ 1,898,455 $ 1,697,687 Dealer bonus payable 578,644 486,265 Remuneration payable to employees 641,497 517,590 Remuneration payable to directors 283,244 246,033 Interest payable 152,648 193,969 Others 1,486,986 1,702,837 $ 5,041,474 $ 4,844,381

(22) Pensions Defined contribution pension plan A. Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. B. The Company’s mainland China subsidiaries have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (“PRC”) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the mainland China subsidiaries have no further obligations. C. The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2019 and 2018, were $275,825 and $281,871, respectively. (23) Provisions December 31, 2019 December 31, 2018 At January 1, $ 2,584,955 $ 2,328,294 Additional provisions during the period 1,640,539 1,479,206 Used during the period ( 824,432 ) ( 1,188,937 ) Unused amounts reversed ( 7,995 ) ( 33,608 ) At December 31, 2019 $ 3,393,067 $ 2,584,955 Analysis of provision for warranty is as follows: December 31, 2019 December 31, 2018 Current (shown as other current liabilities) $ 868,555 $ 871,630 Non-current $ 2,524,512 $ 1,713,325 The Group provides warranties on vehicles and air conditioners sold. Provision for warranty is estimated based on historical warranty data of vehicles, air conditioners and related products. (24) Guarantee deposits received December 31, 2019 December 31, 2018 Deposits received for car rentals $ 13,036,277 $ 12,503,258 Others 23,687 25,032 $ 13,059,964 $ 12,528,290 Analysis of guarantee deposits received for warranty is as follows: December 31, 2019 December 31, 2018 Current (shown as other current liabilities) $ 6,785,309 $ 3,395,243 Non-current $ 6,274,655 $ 9,133,047 (25) Share capital As of December 31, 2019, the Company’s authorized capital was $6,000,000, consisting of 600,000,000 shares of ordinary stock and the paid-in capital was $5,461,792 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. The number of the

! Company’s ordinary shares outstanding at January 1, 2019 and December 31, 2019 was both 546,179,184 shares. (26) Capital surplus Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient. (27) Retained earnings A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses, then 10% of the remaining amount shall be set aside as legal reserve, and shall be set aside as special reserve as required by the regulations when necessary. The remainder, if any, shall be appropriated as dividends to shareholders which shall account for at least 50%, and cash dividends shall account for at least 10% of the total dividends distributed. The earnings appropriation ratios and distribution method of dividends to shareholders are determined based on current year’s profit and capital position and shall be proposed by the Board of Directors and resolved by the shareholders. B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital. C. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings. (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865 issued by FSC on April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land. D. The Company recognized dividends distributed to shareholders amounting to $6,554,150 ($12.0 per share) for both the years of 2019 and 2018. On March 26, 2020, the Board of Directors resolved that total dividends for the distribution of earnings for the year of 2019 was $7,646,509 with $14 (in dollars) per share. E. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(32). (28) Revenue from contracts with customers A. Disaggregation of revenue from contracts with customers The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines:

! Years ended December 31, 2019 2018 Goods category: Sales of goods $ 181,101,787 $ 158,221,271 Others 1,948,239 1,887,310 $ 183,050,026 $ 160,108,581 Timing of revenue recognition At a point in time $ 181,955,421 $ 158,956,746 Over time 1,094,605 1,151,835 $ 183,050,026 $ 160,108,581 B. Contract assets and liabilities The Group has recognized the following revenue-related contract assets and liabilities: December 31, 2019 December 31, 2018 January 1, 2018 Contract assets: Contract assets- construction contracts $ 19,643 $ 18,780 $ 23,787 Contract liabilities: Contract liabilities- sales of goods $ 1,194,976 $ 1,066,673 $ 880,597 Contract liabilities-customer loyalty programmers 7,782 8,500 7,950 $ 1,202,758 $ 1,075,173 $ 888,547 For the years ended December 31, 2019 and 2018, revenue recognized that was included in the contract liability balance at the beginning of the period amounted to $957,632 and $788,898, respectively. (29) Interest income Years ended December 31, 2019 2018 Installment revenue $ 6,699,550 $ 5,759,235 Finance leasing revenue 2,443,229 2,191,035 Interest from deposits and short-term notes 156,370 170,571 Other interest income 77,856 73,551 $ 9,377,005 $ 8,194,392 (30) Premium Details of premium are as follows: Years ended December 31, 2019 2018 Written premium $ 8,162,626 $ 6,314,671 Reinsurance premium 337,946 364,514 Less: Reinsurance expense ( 1,932,041 ) ( 1,396,155 ) Net change in unearned premiums reserve ( 654,978 ) ( 607,050 ) $ 5,913,553 $ 4,675,980

! (31) Expenses by nature Years ended December 31, 2019 2018 Employee benefit expense $ 7,891,468 $ 7,520,854 Depreciation 8,879,781 7,963,334 Amortization 65,333 81,272 $ 16,836,582 $ 15,565,460 (32) Employee benefit expense Years ended December 31, 2019 2018 Wages and salaries $ 6,749,454 $ 6,404,064 Labor and health insurance fees 486,111 452,374 Pension costs 275,825 281,871 Other personnel expenses 380,078 382,545 $ 7,891,468 $ 7,520,854 A. According to the Articles of Incorporation of the Company, a percentage of distributable profit of the current year, shall be distributed as employees’ compensation and directors’ remuneration. The percentage shall be 1% for employees’ compensation and shall not be higher than 2% for directors’ remuneration. Independent directors will not receive any distributable profit. If a company has accumulated deficit, earnings should be channeled to cover losses. B. For the years ended December 31, 2019 and 2018, employees’ remuneration was accrued at $141,622 and $123,016, respectively; while directors’ remuneration was accrued at $283,244 and $246,033, respectively. The aforementioned amounts were recognized in salary expenses. The employees’ compensation and directors’ remuneration were estimated and accrued based on 1% and 2% of distributable profit of current year for the year ended December 31, 2019. The employees’ remuneration and directors’ remuneration resolved by the Board of Directors were $141,622 and $283,244 on March 26, 2020, and the employees’ remuneration will be distributed in cash. Employees’ compensation and directors’ remuneration of 2018 as resolved by the Board of Directors were in agreement with those amounts recognized in the 2018 financial statements. The employees’ compensation will be distributed in cash. Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors and shareholders’ meeting will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

! (33) Income tax A. Income tax expense (a)Components of income tax expense: Years ended December 31, 2019 2018 Current tax: Current tax expense recognized in the current period $ 3,560,042 $ 2,953,909 Tax on undistributed surplus earnings 206,956 349,319 Prior year income tax overestimation ( 19,631 ) 25,914 Total current tax 3,747,367 3,329,142 Deferred tax: Origination and reversal of temporary differences 40,720 151,506 Impact of change in tax rate - 114,796 Total deferred tax 40,720 266,302 Income tax expense $ 3,788,087 $ 3,595,444 (b) The income tax (charge)/credit relating to components of other comprehensive income are as follows: Years ended December 31, 2019 2018 Cash flow hedges ($ 16,951 ) ($ 7,248 ) Changes in fair value of financial assets at fair value through other comprehensive income ($ 8,083 ) ($ 1,261 ) Changes in fair value of financial assets designated using overlay approach ($ 1,761 ) $ - Impact of change in tax rate $ - ($ 1,101 ) B. Reconciliation between income tax expense and accounting profit Years ended December 31, 2019 2018 Income tax expense at the statutory rate (Note) $ 4,948,235 $ 4,439,397 Effects from adjustments based on regulation ( 1,308,973) ( 1,333,982) Additional 10% surtax on undistributed earnings 168,456 349,319 Prior year income tax overestimation ( 19,631) 25,914 Effect from changes in tax regulation - 114,796 Income tax expense $ 3,788,087 $ 3,595,444 Note: The basis for computing the applicable tax rate are the rates applicable in the respective countries where the Group entities operate.

! C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows: Year ended December 31, 2019 Recognized in other Acquired from Recognized in comprehensive business January 1 profit or loss income combinations December 31 Temporary differences: -Deferred tax assets: Allowance for inventory $ 93,375 $ 4,581 $ - $ - $ 97,656 obsolescence Provision for after-sales service 348,442 123,680 - - 472,122 Bad debt expense 364,298 130,501 - - 494,799 Provision of allowance for loss 42,482 17,009 - - 59,491 on rental assets Loss carryforward 72,050 ( 978 ) - - 71,072 Others 250,084 32,097 ( 17,617) - 264,564 1,170,731 306,890 ( 17,617) - 1,460,004 -Deferred tax liabilities: Land value increment tax ( 709,097 ) - - - ( 709,097 ) Gain on investments accounted ( 748,368 ) ( 246,494 ) - - ( 994,862 ) for using equity method Difference between finance and ( 1,120,015 ) 2,719 - - ( 1,117,296 ) tax due to depreciation Others ( 4,076 ) ( 22,395 ) ( 9,178) 1,993 ( 33,656 ) ( 2,581,556 ) ( 266,170 ) ( 9,178) 1,993 ( 2,854,911 ) ($ 1,410,825 ) ($ 40,720 ) ($ 26,795) $ 1,993 ($ 1,394,907 )

Year ended December 31, 2018 Recognized in other Acquired from Recognized in comprehensive business January 1 profit or loss income combinations December 31 Temporary differences: -Deferred tax assets: Allowance for inventory $ 76,246 $ 17,129 $ - $ - $ 93,375 obsolescence Provision for after-sales service 257,636 90,806 - - 348,442 Bad debt expense 316,327 47,971 - - 364,298 Provision of allowance for loss 45,160 ( 2,678 ) - - 42,482 on rental assets Loss carryforward 83,910 ( 11,860 ) - - 72,050 Others 219,809 20,665 9,610 - 250,084 999,088 162,033 9,610 - 1,170,731 -Deferred tax liabilities: Land value increment tax ( 716,331 ) - - 7,234 ( 709,097 ) Gain on investments accounted ( 456,732 ) ( 291,636 ) - - ( 748,368 ) for using equity method Difference between finance and ( 969,529 ) ( 150,486 ) - - ( 1,120,015 ) tax due to depreciation Others ( 17,863 ) 13,787 - - ( 4,076 ) ( 2,160,455 ) ( 428,335 ) - 7,234 ( 2,581,556 ) ($1,161,367) ($ 266,302 ) $ 9,610 $ 7,234 ($ 1,410,825 )

! D. Expiration dates of unused loss carryforward amounts of unrecognized deferred tax assets of the Group’s subsidiaries are as follows: December 31, 2019 Unrecognized Amount deferred Year incurred filed/assessed Unused amount tax assets Usable until 2016 $ 359,487 $ 227,182 $ - 2026 2017 127,576 127,576 4,167 2027 2018 90,814 90,814 90,814 2028 2019 100,754 100,754 100,754 2029

December 31, 2018 Unrecognized Amount deferred Year incurred filed/assessed Unused amount tax assets Usable until 2015 $ 9,180 $ - $ - 2025 2016 359,487 230,564 - 2026 2017 127,576 127,576 4,167 2027 2018 97,794 97,794 91,515 2028 E. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority. F. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate. (34) Earnings per share Year ended December 31, 2019 Weighted average number of ordinary Earnings Amount shares outstanding per share after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to common shareholders of the parent $ 11,768,815 546,179 $ 21.55 Diluted earnings per share Profit attributable to common shareholders of the parent $ 11,768,515 546,179 Assumed conversion of all dilutive potential common shares Employees’ compensation - 287 Profit attributable to common shareholders of the parent plus assumed conversion of all dilutive potential common shares $ 11,768,815 546,466 $ 21.54

! ! Year ended December 31, 2018 Weighted average number of ordinary Earnings Amount shares outstanding per share after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to common shareholders of the parent $ 10,025,535 546,179 $ 18.36 Diluted earnings per share Profit attributable to common shareholders of the parent $ 10,025,535 546,179 Assumed conversion of all dilutive potential common shares Employees’ compensation - 578 Profit attributable to common shareholders of the parent plus assumed conversion of all dilutive potential common shares $ 10,025,535 546,757 $ 18.34 (35) Operating leases Prior to 2018 A. Lessor (a) The subsidiaries, Hotai Finance Co., Ltd. and Hotai Leasing Co., Ltd., engage in vehicles rental services. Partial collection is advance receipts of notes for rents which expire based on payment terms. As of December 31, 2018, the notes receivable collected in advance amounted to $7,696,961. The notes receivable and advance rents are presented at net amount and are not shown in the balance sheet. As of December 31, 2018, the amounts of $5,646,350 of notes receivable have been pledged as collateral for long-term and short-term bank loans and issuance of commercial papers. Total future notes receivable for rents are as follows: December 31, 2018 Up to 1 year $ 4,542,187 1 to 5 years 3,154,774 $ 7,696,961 (b) The Group entered into lease agreements with related parties and the third party to lease land and building, the future aggregate minimum lease payments receivable are as follows: December 31, 2018 Up to 1 year $ 122,816 1 to 5 years 130,806 Over 5 years 3,765 $ 257,387 B. Lessee The Group leases buildings for operation under operating lease agreements. The lease terms are between 1 and 10 years, and all these lease agreements are renewable at the end of the lease period. The Group recognized rental expense of $668,864 for the year ended December 31, 2018. The future aggregate minimum lease payments under non-cancellable operating leases agreements are as follows:

December 31, 2018 Up to 1 year $ 528,924 1 to 5 years 1,138,491 Over 5 years 997,134 $ 2,664,549 (36) Changes in liabilities from financing activities

Long-term Guarantee Liabilities from Short-term Short-term notes liabilities- Long-term deposits Lease Dividend financing loans and bills payable current portion loans received liabilities payable activities-gross January 1, 2019 $ 62,900,378 $ 47,871,914 $ 7,947,522 $ 4,086,168 $ 12,528,290 $2,274,081 $ 7,456 $ 137,615,809 Changes in cash flow ( 1,371,792 ) 5,863,562 - ( 898,907 ) 531,674 ( 455,899 ) ( 6,554,150) ( 2,885,512 ) from financing activities Impact of changes in - - - ( 7,183 ) - ( 42,574 ) - ( 49,757 ) foreign exchange rate Changes in other non-cash items ( 345,541 ) - ( 320,773) 320,773 - 147,710 6,553,945 6,356,114 December 31, 2019 $ 61,183,045 $ 53,735,476 $ 7,626,749 $ 3,500,851 $ 13,059,964 $1,923,318 $ 7,251 $ 141,036,654

Long-term Guarantee Liabilities from Short-term Short-term notes liabilities- Long-term deposits Dividend financing loans and bills payable current portion loans received payable activities-gross January 1, 2018 $ 43,509,601 $ 55,084,146 $ 3,899,034 $ 4,844,412 $ 11,858,610 $ 9,753 $ 119,205,556 Changes in cash flow from 18,932,720 ( 7,212,232 ) 2,400,000 892,361 669,680 ( 6,554,150) 9,128,379 financing activities Impact of changes in foreign - - - ( 2,117 ) - - ( 2,117 ) exchange rate Changes in other non-cash items 458,057 - 1,648,488 ( 1,648,488 ) - 6,551,853 7,009,910 December 31, 2018 $ 62,900,378 $ 47,871,914 $ 7,947,522 $ 4,086,168 $ 12,528,290 $ 7,456 $ 135,341,728 7. Related Party Transactions (1) Names of related parties and Relationship with the Group (Significant counterparties only) Names of related parties Relationship with the Group Toyota Industries Corporation Entities controlled by key management Toyota Motor Asia Pacific Pte Ltd. Entities controlled by key management (TMAP) Toyota Motor Manufacturing Turkey Inc. Entities controlled by key management Toyota Motor Philippines Corp. Entities controlled by key management Toyota New Zealand Ltd. Entities controlled by key management Toyota South Africa Motors (Pty) Ltd. Entities controlled by key management Toyota-Motor-Europe-Nv/Sa(TME) Entities controlled by key management Toyota-Motor-Sales-USA(TMS) Entities controlled by key management Toyota Auto Body Co., Ltd. Entities controlled by key management Toyota Daihatsu Engineering & Entities controlled by key management Manufacturing Co., Ltd. San Xing (Shanghai) Business Management Entities controlled by key management Consulting Co., Ltd.! Triple S Digital Co.,Ltd.! Entities controlled by key management Hino Motors, Ltd. (Hino) Entities controlled by key management

! Names of related parties Relationship with the Group Toyota Motor Corporation (TMC) Entities controlled by key management Ho Chuang Insurance Agency Co., Ltd. Entities controlled by key management Ho An Insurance Agency Co., Ltd. (Ho An) Entities controlled by key management Ho Yu Investment Co., Ltd. (Ho Yu) Entities controlled by key management Toyota Motor (China) Investment Co., Ltd. Entities controlled by key management (Toyota China) Formosa Flexible Packaging Corp. Associates Zhongyang Motor Co., Ltd. Associates Beijing Heling Lexus Motor Sales & Service Associates Co., Ltd. Kashiwabara Hotai Taiwan Co., Ltd. Associates Yokohama Tire Taiwan Co., Ltd. Associates Shi-Ho Screw Industrial Co., Ltd. Associates Kuai Shun Transportation Co., Ltd. Associates Wang Fu Co., Ltd. Associates Nan I Motor Co., Ltd. Associates Chang Guan Logistics Co., Ltd. Associates ChongQing Yuou Toyota Automobile Sales Associates and Service Co., Ltd. ChongQing Yurun Toyota Automobile Service Associates Co., Ltd. Jinzhong Central Toyota Motor Sale Service Associates Co., Ltd. Taizhou Zhongdu Lexus Motor Sale & Service Associates Co., Ltd. Tung Tai Asset Management Co., Ltd. Associates Tung Yu Motor Co., Ltd. Associates Innovation Auto Parts Co., Ltd Associates Guangzhou Gac Changho Autotech Associates Corporation Linyi Heling Lexus Motor Sales & Service Associates Co., Ltd. Linyi Ho-Yu Toyota Motor Sales And Service Associates Co., Ltd. Kuozui Motors, Ltd. (Kuozui) Associates Kuotu Motor Co., Ltd. (Kuotu) Associates Taipei Toyota Motor Co., Ltd. (Taipei Motor) Associates Tau Miau Motor Co., Ltd. (Tau Miau) Associates Central Motor Co ., Ltd. (Central Motor) Associates Nan Du Motor Co., Ltd. (Nan Du) Associates Kau Du Automobile Co., Ltd. (Kau Du) Associates Lang Yang Toyota Motor Co., Ltd. Associates

! Names of related parties Relationship with the Group Ho Cheng Auto Parts Co., Ltd. Associates Hozao Enterprise Co., Ltd. Associates Hohung Motors Co., Ltd. Associates Horung Motors Co., Ltd. Associates Zhong Cheng Motors Co., Ltd. Associates Fan Tai Transportation Co., Ltd. (Fan Tai) Associates Yi Tai Transportation Co., Ltd. (Yi Tai) Associates Hua Tai Transportation Co., Ltd. Associates The Company’s Directors, president, vice Key management president and others (2) Significant related party transactions and balances A. Revenue Years ended December 31, 2019 2018 (a) Interest income: -Associates $ 55,014 $ 47,966 -Entities controlled by key management 10 5 $ 55,024 $ 47,951 Interest income is the interest between transaction dates and collection dates due to the collection of sales transaction is based on agreed collection period. Starting from July 3, 2016, the annual interest rate was adjusted to 2.275%. Years ended December 31, 2019 2018 (b) Premium: -Associates $ 43,267 $ 38,350 -Entities controlled by key management 1,306 1,504 $ 44,573 $ 39,854

Years ended December 31, 2019 2018 (c) Sales revenue: -Associates Central Motor $ 24,759,682 $ 21,866,118 Tau Miau 22,596,968 19,982,922 Kuotu 19,629,150 15,072,330 Taipei Motor 18,441,045 16,570,774 Others 37,694,012 33,161,679 -Entities controlled by key management 229,463 131,965 $ 123,350,320 $ 106,785,788 Sales from the Company and subsidiaries to related parties are based on the price lists in force and terms that would be available to third parties. Terms are shown in table 6 of Note 13(1) significant transactions information.

! ! Years ended December 31, 2019 2018 (d) Rental revenue: -Associates $ 108,388 $ 118,648 -Entities controlled by key management 10,122 6,963 $ 118,510 $ 125,611 The Company and subsidiary entered into rental contracts based on normal conditions with related parties and collects rents monthly based on the contracts. Years ended December 31, 2019 2018 (e) Service revenue: Service sales: -Associates $ 41,378 $ 41,367 -Entities controlled by key management 26,538 19,648 Contracted operating revenue: -Associates 15,814 19,167 $ 83,730 $ 80,182

Years ended December 31, 2019 2018 (f) Subsidy income for price difference from installments: -Associates $ 238,803 $ 308,700

Years ended December 31, 2019 2018 (g) Warranty revenue (shown as deductions to cost of sales): -Associates Kuozui $ 192,830 $ 164,505 -Entities controlled by key management TMAP 605,492 686,945 Others 2,095 2,243 $ 800,417 $ 853,693

Years ended December 31, 2019 2018 (h) Advertisement subsidy and sales promotion revenue (shown as deductions to advertisement expense): -Associates $ 167,713 $ 143,156 -Entities controlled by key management 61,820 80,845 $ 229,533 $ 224,001

Years ended December 31, 2019 2018 (i) Distribution income (shown as deductions to freight): -Associates $ 21,359 $ 25,914 -Entities controlled by key management 45 15 $ 21,404 $ 25,929

Years ended December 31, 2019 2018 (j) Miscellaneous income: -Associates Kuotu $ 94,069 $ 105,744 Kuozui 73,509 80,166 Others 88,359 89,467 -Entities controlled by key management 105,375 77,304 $ 361,312 $ 352,681 B. Expenditures Years ended December 31, (a) Interest expense: 2019 2018 -Associates $ 15,604 $ 15,629 -Entities controlled by key management 906 - $ 16,510 $ 15,629 The interest expense is paid for interest arising from purchases between transaction dates and payment dates. Starting from July 3, 2016, the annual interest rate was adjusted to 1.875%.

Years ended December 31, (b) Purchases of goods: 2019 2018 -Associates Kuozui $ 42,625,684 $ 44,220,103 Others 1,026,119 1,076,717 -Entities controlled by key management TMC 50,513,418 35,713,057 Others 18,591,182 18,371,785 $ 112,756,403 $ 99,381,662

The Company and subsidiaries sold domestic cars which were purchased from Kuozui and imported cars and parts which were purchased from TMC, HINO, Toyota Motor (China) Investment Co., Ltd. (“TMCI”), TMAP, TMS and TME. Payment terms are shown in table 6 of Note 13(1) Significant transactions information.

! ! Years ended December 31, 2019 2018 (c) Warranty cost: -Associates Central Motor $ 145,011 $ 160,162 Tau Miau 113,497 145,385 Kuotu 102,682 135,692 Kau Du 81,691 100,904 Nan Du 81,599 100,960 Others 85,962 101,672 -Entities controlled by key management 351 685 $ 610,793 $ 745,460

Years ended December 31, 2019 2018 (d) Advertisement expense: -Associates $ 14,690 $ 27,725 -Entities controlled by key management 18,561 9,163 $ 33,251 $ 36,888

Years ended December 31, 2019 2018 (e) Freight: -Associates Fan Tai $ 207,050 $ 158,171 Yi Tai 109,797 70,825 Others 4,167 3,584 $ 321,014 $ 232,580

Years ended December 31, 2019 2018 (f) Insurance claim payment: -Associates $ 12,448 $ 23,545 -Entities controlled by key management 233 5 $ 12,681 $ 23,550

Years ended December 31, 2019 2018 (g) Commission expense: -Entities controlled by key management Ho An $ 718,130 $ 507,927

! Years ended December 31, 2019 2018 (h) Others: -Associates Central Motor $ 5,954,803 $ 6,725,755 Kuotu 5,443,416 5,061,053 Kau Du 5,252,154 5,075,517 Tau Miau 4,870,355 4,997,564 Taipei Motor 4,476,212 4,184,138 Nan Du 4,035,189 4,035,044 Others 649,570 743,248 $ 30,681,699 $ 30,822,319 As described in Note 4(42), Hotai Finance Co., Ltd. receives only interest income rather than gross profit from the instalment sales with related parties. Therefore, sales revenue and cost of sales are presented in net amount and movable properties arising from the transaction are all pledged as collateral. Terms of purchases from related parties are in agreement with third parties. Terms are shown in table 6 of Note 13(1) significant transactions information. C. Receivables from (payables to) related parties December 31, 2019 December 31, 2018 (a) Receivables from related parties: -Associates $ 2,729,614 $ 2,864,138 -Entities controlled by key management 13,142 32,045 $ 2,742,756 $ 2,896,183

December 31, 2019 December 31, 2018 (b) Other receivables from related parties: -Associates $ 133,499 $ 396,426 -Entities controlled by key management 5,343 4,574 $ 138,842 $ 401,000

December 31, 2019 December 31, 2018 (c) Accounts payable: -Associates Kuozui $ 1,191,910 $ 529,296 Others 517,784 624,089 -Entities controlled by key management TMC 4,786,371 3,942,992 Others 340,089 1,007,277 $ 6,836,154 $ 6,103,654

! ! December 31, 2019 December 31, 2018 (d) Accrued expenses and other payables: -Associates $ 543,966 $ 561,794 -Entities controlled by key management 217 2,098 $ 544,213 $ 563,892

December 31, 2019 December 31, 2018 (e) Commissions payable: -Entities controlled by key management Ho An $ 60,553 $ 40,590

D. Prepayments to suppliers December 31, 2019 December 31, 2018 Entities controlled by key management $ 244,497 $ 170,967 E. Property transactions Acquisition of rental assets and equipment Years ended December 31, 2019 2018 -Associates Kuotu $ 2,667,926 $ 2,291,006 Taipei Motor 1,143,432 1,396,678 Central Motor 954,635 845,629 Tau Miau 867,297 838,761 Others 1,337,834 1,227,853 -Entities controlled by key management 19,238 12,851 $ 6,990,362 $ 6,612,778

F. Leasing arrangements - lessee (a) The Company and subsidiaries entered into the lease agreement with related parties based on the market price and the rent is paid on a monthly basis according to the agreement. (b) On January 1, 2019 (the date of initial application of IFRS 16), the Group increased right-of-use assets by $138,034. Years ended December 31, 2019 2018 Rental expense: - Associates $ 7,013 $ 7,068 - Entities controlled by key management Ho Yu 15,083 9,766 $ 22,096 $ 16,834 The Company and subsidiaries entered into the lease agreement with related parties based on the market price and the rent is paid on a monthly basis according to the agreement.

! December 31, 2019 Lease liability: - Entities controlled by key management Ho Yu $ 104,709 - Associates 7,928 $ 112,637 (3) Key management remuneration Years ended December 31, 2019 2018 Salaries and other short-term employee benefits $ 383,304 $ 323,361 Post-employment benefits 3,126 - Total $ 386,430 $ 323,361 8. Pledged Assets The Group’s assets pledged as collateral are as follows: Pledged asset December 31, 2019 December 31, 2018 Purpose Notes and accounts receivable $ 5,943,330 $ 6,736,170 Short-term borrowings and commercial papers payable Financial assets at fair value through other 300,300 300,300 Operation bonds comprehensive income (Note 1) Restricted assets (Note 2) -Demand and time deposits 240,826 601,580 Short-term borrowings, performance guarantee and issuance of L/C (Note 3) -Land 543,133 - $ 7,027,589 $ 7,638,050 Transactions not listed in the balance sheet -Notes receivable for rent $ 4,981,325 $ 5,646,350 Long-term and short-term borrowings and commercial papers payable Note 1: Shown as ‘other assets’. Note 2: Shown as ‘other financial assets-current’ and ‘other financial assets-non-current’. Note 3: As of December 31, 2019 and 2018 the certificates of deposits amounting to $6,107 and $6,147, respectively, were pledged to the financial institution to issue the letter of credit required by the unexpired insurance policies worldwide underwritten by the subsidiary, Hotai Insurance Co., Ltd. 9. Significant Contingent Liabilities and Unrecognized Contract Commitments (1) In November 2018, the Company signed a contract with Guo Gong Construction Company which was commissioned to a $519,761 project to build a pre-delivery inspection centre in Yangmei logistics centre on a owner-occupied land. As of March 26, 2020, the outstanding payments amounted to $155,928. (2) Details of operating lease agreements are shown in Note 6(35)2. (3) Significant contracts signed by the Group as of December 31, 2019 are summarized as follows: Type of contracts Party involved Contract period Main contents The Company Distributor agreement Toyota Motor January 1, 2019 to December 31, Sales of imported or domestic Corporation 2021 models, parts and accessories of Toyota and Hino in Taiwan.

! Type of contracts Party involved Contract period Main contents Distributor agreement Hino Motors, Ltd. April 1, 2016 to March 31, 2021 Sales of imported or domestic (Hino) models, parts and accessories of Toyota and Hino in Taiwan.

Agreement on sale Kuozui Motors, Ltd. Except for execution of termination Kuozui Motors, Ltd. agrees to and purchase of clause, contract terms remain provide vehicles, parts and Kuozui product effective from July 1, 1995 (Hino) accessories, which are and January 1, 1998 (Toyota). manufactured under authorization, to the Company for sale purpose in Taiwan.

Product dealership Kuotu Motor Co., Ltd. May 15, 2018 to May 14, 2021 Authorized dealers sell vehicles, agreement and other dealers parts and automobile products provided by the Company. The Company Contracted operating Kuotu Motor Co., Ltd. Starting from July 1, 2009 The Company was designated contracts Kuozui Motors, Ltd. Starting from June 1, 2002 to conduct affairs such as sales, Chang Yuan Motor Co., Starting from January 1, 2003 supply chain management, Ltd. pre-sale services, after-sale Except for termination signed by services and promotion both parties, contracts remain management. effective.

Chang Yuan Motor Co., Ltd. Trading contracts Kuozui Motors, Ltd. Starting from January 1, 2003, Kuozui Motors, Ltd. agrees to except for termination signed by provide vehicles and parts, both parties or breach of contract, which are manufactured under contracts remain effective. authorization, to the Company for sale purpose in Taiwan.

Toyota Material Handling Taiwan Ltd. Distributor agreement Toyota Industries April 1, 2017 to March 31, 2020 Sales of imported Toyota Corporation vehicles and parts for industrial and industry use in Taiwan. 10. Significant Disaster Loss None. 11. Significant Events after the Balance Sheet Date (1) For the appropriation of retained earnings of 2019, please refer to Note 6(27). (2) On March 18, 2020, the Board of Directors of the subsidiary, Hotai Finance Co., Ltd., resolved the issuance of unsecured corporate bonds in an amount not exceeding $8 billion. 12. Others (1) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and considering future capital requirements and long-term capital plan in order to support operations and maximize returns for shareholders. Information on the capital management policy that the Group’s subsidiary, Hotai Insurance Co., Ltd., made based on the Insurance Law of the Republic of China is provided in Note 12(12).

! (2) Financial instruments

A. Financial instruments by category December 31, 2019 December 31, 2018 Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value $ 5,679,120 $ 4,772,918 through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument 7,844,281 6,602,870 Qualifying equity instrument 1,602,746 1,551,394 Financial assets at amortized cost/Loans and receivables Cash and cash equivalents 12,023,739 9,469,088 Notes receivable 8,307,202 9,300,979 Accounts receivable 123,348,962 111,958,948 Long-term notes and accounts receivable 1,534,714 491,764 Other receivables 881,921 1,401,834 Guarantee deposits paid 658,742 608,528 Other financial assets 1,890,115 2,280,285 $ 163,771,542 $ 148,508,645 Derivative financial assets for hedging $ 81,131 $ 70,038

December 31, 2019 December 31, 2018 Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading $ 149,572 $ 19,047 Financial liabilities at amortized cost Short-term loans 61,183,045 62,900,378 Short-term notes and bills payable 53,735,476 47,871,914 Notes payable 708,449 633,880 Accounts payable 10,447,079 10,482,820 Accrued expenses 5,041,474 4,844,381 Other payables 1,501,372 1,458,313 Commission payable 440,989 360,108 Corporate bonds payable (including current portion) 5,200,000 5,200,000 Long-term borrowings (including current portion) 5,927,600 6,833,690 Guarantee deposits received 13,059,964 12,528,290 Other financial liabilities 81,187 81,738 $ 157,476,207 $ 153,214,559 Lease liabilities $ 1,923,318 $ - Financial liabilities for hedging $ 112,291 $ 52,424 B. Financial risk management policies (a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To minimize any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign exchange forward contracts are used to hedge certain exchange rate risk, and cross currency swap contracts are used to fix variable future cash flows.

! (b) Risk management is carried out by finance departments of companies within the Group under policies approved by the Board of Directors. Finance departments identify, evaluate and hedge financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. (c) Information on the additional risk management policy of the Company’s subsidiary, Hotai Insurance Co., Ltd., is provided in Note 12(4). C. Significant financial risks and degrees of financial risks (a) Market risk Foreign exchange risk i. The Group operates internationally and is exposed to foreign exchange rate arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate risk is measured through a forecast of highly probable USD and JPY expenditures. Forward foreign exchange contracts are adopted to minimize the volatility of the exchange rate affecting cost of forecast inventory purchases. iii. The Group hedges foreign exchange rate by using forward exchange contracts. However, the Group does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(2). Moreover, the Group enters into cross currency swap contracts to hedge the foreign exchange risk arising from foreign currency loan underwritten by financial institutions, shown as derivative financial assets and liabilities for hedging. The information is provided in Note 6(4). iv. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: RMB). After taking into consideration the use of cross currency swap contracts, the information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December 31, 2019 December 31, 2018 Foreign currency Foreign currency amount Exchange amount Exchange (In thousands) rate Book value (In thousands) rate Book value (Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD 52,504 29.9800 $ 1,574,068 USD 23,463 30.7150 $ 720,666 JPY:NTD JPY 198,379 0.2760 54,753 JPY 216,215 0.2782 60,151 RMB:NTD CNY 2,016 4.2933 8,657 CNY 11,446 4.4736 51,205 Financial liabilities Monetary items USD:NTD USD 439,309 29.9800 $ 13,170,477 USD 191,949 30.7150 $ 5,895,714 JPY:NTD JPY 14,558 0.2760 4,018 JPY 65,352 0.2782 18,181 USD:RMB USD 84,750 6.9830 2,540,805 USD 134,950 6.8658 4,144,989 Note: The functional currencies of certain consolidated entities are not NTD, thus, this information has to be considered when reporting. For example, when a subsidiary’s functional currency is RMB, the subsidiary’s segments that are involved with USD have to be taken into consideration. v. The total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2019 and 2018, amounted to $362,700 and ($11,073), respectively. vi. The Group took the use of cross currency swap contracts into account and analysis of foreign currency market risk arising from significant foreign exchange variation is as follows: Year ended December 31, 2019 Year ended December 31, 2018 Sensitivity analysis Sensitivity analysis Effect on Effect on other Effect on Effect on other Degree of profit or comprehensive Degree of profit or comprehensive variation loss income variation loss income (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 1% $ 15,741 $ - 1% $ 7,207 $ - JPY:NTD 1% 548 - 1% 602 - RMB:NTD 1% 87 - 1% 512 - Financial liabilities Monetary items USD:NTD 1% 131,705 - 1% 58,957 - JPY:NTD 1% 40 - 1% 182 - USD:RMB (Note) 1% 25,408 - 1% 41,450 - Note: The functional currencies of certain consolidated entities are not NTD, thus, this information has to be considered when reporting. For example, when a subsidiary’s functional currency is RMB, the subsidiary’s segments that are involved with USD have to be taken into consideration. Price risk and interest rate risk i. The Company’s and the subsidiaries’ financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income are domestic quasi money market fund and listed stocks which are influenced by fluctuation in market price. ii. The subsidiary’s, Hotai Finance Co., Ltd., main interest rate risk arises from borrowings

! with variable rates, which expose the Group to cash flow interest rate risk. iii. The subsidiary, Hotai Finance Co., Ltd., assessed the market risk of cross currency swap by using PVBP (Present Value of Basis Point). However, the contracted notional principal equal to the amount of hedged liabilities, and the duration, resetting date, date of receiving and paying of interest and principal and the index of measuring interest were both the same, which can use to offset the market risk, thus, the Group did not expect significant market risk. iv. The subsidiary, Hotai Finance Co., Ltd., is not exposed to the risk arising from variations in the market interest rates as the debt products the subsidiary issued are all fixed rate liabilities. v. If the borrowing interest rate had increased/decreased by 1% with all other variables held constant and considering the use of cross currency swap contracts, profit after tax for the years ended December 31, 2019 and 2018 would have increased/decreased by $62,838 and $89,887, respectively. The main factor is that changes in interest expense result in floating-rate borrowings. (b) Credit risk i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost, at fair value through profit or loss and at fair value through other comprehensive income. ii. The Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions, only independently rated parties with good rating are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. iii. The subsidiary, Hotai Finance Co., Ltd. (HFC), entered into agreements with banks for handling financing through pledging new and used vehicles. In accordance with the agreements, HFC is responsible for expansion of client lists, assisting expansion of installment loans for cars and unsecured loans. If borrowers are late for payment, HFC shall repay on behalf of the borrowers, and request claims of the borrowings and mortgage of vehicles. As of December 31, 2019 and 2018, HFC has financial instruments with off-balance-sheet credit risk amounting to $8,360,262 and $9,358,523, respectively, and HFC has collected notes for installment payment on behalf of the banks amounting to $296,378 and $367,181, respectively. HFC assesses financial

! guarantee contract liabilities which may arise from rendering the above services based on historical experience, and recognizes financial guarantee expense which is shown as ‘other current liabilities’. iv. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: (i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. (ii) For investments in bonds that are traded over the counter, if any external credit rating agency rates these bonds as investment grade, the credit risk of these financial assets is low. v. For the subsidiaries, Hotai Finance Co., Ltd. and Hoyun International Lease Co., Ltd., the default occurs when the contract payments are past due over 150 days. Additionally, when the contract payments are past due over 90 days and are not expected to be recovered, the default has occurred. vi. The Group classified accounts receivable and contract assets based on customers’ default and used the forecastability of Taiwan Institute of Economic Research boom observation report to adjust historical and timely information to assess the default possibility of accounts receivable and contract assets. Not including the subsidiaries, Hotai Finance Co., Ltd., Hoyun International Lease Co., Ltd. and Hotai Insurance Co., Ltd., estimated loss allowance arising from accounts receivable and contract assets amounted to $29,751. viii. Subsidiary, Hotai Finance Co., Ltd. and Hoyun International Lease Co., Ltd. used forecastability such as historical experience and the prediction of future economic situation to establish loss rate for estimating loss allowance for instalment and lease payments accounts and notes receivable. As of December 31, 2019 and 2018, the provision matrix is as follows: Later than Later than Later than Later than Over December 31, 2019 Not past due 31 to 60 days 61 to 90 days 91 to 120 days 121 to 150 days 151 days Total Total book value $ 138,636,663 $ 403,011 $ 170,399 $ 156,666 $ 124,677 $ 758,881 $ 140,250,297 Loss allowance $ 1,453,645 $ 176,595 $ 122,457 $ 131,784 $ 115,194 $ 633,465 $ 2,633,140

Later than Later than Later than Later than Over December 31, 2018 Not past due 31 to 60 days 61 to 90 days 91 to 120 days 121 to 150 days 151 days Total Total book value $ 124,626,193 $ 372,786 $ 157,360 $ 149,195 $ 128,573 $ 855,549 $ 126,289,656 Loss allowance $ 900,231 $ 100,816 $ 98,606 $ 128,111 $ 120,222 $ 730,036 $ 2,078,022 viii. Credit risk information of subsidiary, Hotai Insurance Co., Ltd., as of December 31, 2019 and 2018 is provided in Note 12(5)A.

! ix. Movements in relation to the Group applying the simplified approach to provide loss allowance are as follows (Note): Year ended

December 31, 2019 Receivables At January 1 $ 2,116,783 Provision for impairment 1,733,475 Write-offs ( 1,028,631 ) Others ( 144,486 ) At December 31 $ 2,677,141

Year ended December 31, 2019 Receivables At January 1_IAS 39 $ 1,658,679 Adjustments under new standards - At January 1_IFRS 9 1,658,679 Provision for impairment 1,387,798 Write-offs ( 925,148) Others ( 4,546) At December 31 $ 2,116,783

NoteǺIncluding all the Group’s consolidated entities. For the years ended December 31, 2019 and 2018, gain on recoverable bad debts amounted to $563,715 and $506,373, respectively, presented as a deduction item to expected credit loss. (c) Liquidity risk i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by finance departments of companies within the Group. Finance departments of companies within the Group monitor rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets. ii. As of December 31, 2019 and 2018, the Group’s unused credit line amounted to $73,319,879 and $46,613,280, respectively. iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative

! financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Non-derivative financial liabilities: December 31, 2019 Up to 1 year 1 to 2 years 2 to 3 years Short-term loans $ 61,527,869 $ 100,871 $ 17,329 Short-term notes and bills payable 39,553,442 10,087,847 4,094,187 Notes payable 708,449 - - Accounts payable 10,447,079 - - Accrued expenses 5,041,474 - - Other payables 1,501,372 - - Commission payable 440,989 Lease liabilities 464,670 326,782 1,409,408 Bonds payable 2,800,000 2,400,000 - Long-term loans (including current 2,430,000 2,863,616 640,000 portion)

Non-derivative financial liabilities: December 31, 2018 Up to 1 year 1 to 2 years 2 to 3 years Short-term loans $ 50,142,853 $ 5,709,428 $ 7,048,097 Short-term notes and bills payable 36,639,726 4,844,098 6,388,090 Notes payable 156,296 - - Accounts payable 10,960,404 - - Accrued expenses 4,844,381 - - Other payables 1,458,313 - - Commission payable 360,108 Bonds payable - 2,800,000 2,400,000 Long-term loans (including current 2,750,000 2,400,000 1,691,722 portion)

Derivative financial liabilities: December 31, 2019 Up to 1 year 1 to 2 years 2 to 3 years Cross currency samps $ 26,674 $ 85,617 $ - Forward exchange contracts 149,572 - -

! ! Derivative financial liabilities: December 31, 2018 Up to 1 year 1 to 2 years 2 to 3 years Cross currency swaps $ 1,486 $ 16,262 $ 34,676 Forward exchange contracts 19,047 - - iv. Information on insurance contracts risk of the Company’s subsidiary, Hotai Insurance Co., Ltd., is provided in Note 12(5). (3) Fair value information A. The different levels of valuation techniques used to measure fair value of financial and non-financial instruments have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed shares and beneficial certificates is included in Level 1. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in derivative instruments is included in Level 2. Level 3: Unobservable inputs for the asset or liability. The Group’s equity investments with no active markets and infrastructure fund are included in Level 3. B. Fair value information of investment property at cost is provided in Note 6(14). C. Financial instruments not measured at fair value Including the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term loans, notes payable, accounts payable, accrued expenses, other payables, commission payables and bonds payable are approximate to their fair values.

! D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows: (a) The related information of natures of the assets and liabilities is as follows: December 31, 2019 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through profit or loss ! Domestic and foreign $ 2,058,432 $ - $ 337,907 $ 2,396,339 beneficiary certificates Bond investment - 1,000,000 - 1,000,000 Foreign exchange swap - 9,346 9,346 contracts ! Equity securities 782,071 - - 782,071 ! Exchange traded funds 1,300,428 - - 1,300,428 Financial instruments - 190,936 - 190,936 Derivative financial assets for - 81,131 - 81,131 hedging Financial assets at fair value through other comprehensive income Bond investment (Note) - 1,602,746 - 1,602,746 ! Equity securities 7,525,714 - 318,567 7,844,281 $ 11,666,645 $ 2,884,159 $ 656,474 $ 15,207,278 Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss ! Forward exchange contracts $ - $ 149,572 $ - $ 149,572 Derivative financial liabilities for hedging - 112,291 - 112,291 $ - $ 261,863 $ - $ 261,863 Note: Including operation bonds.

December 31, 2018 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through profit or loss ! Domestic and foreign $ 1,328,515 $ - $ 302,104 $ 1,630,619 beneficiary certificates ! Forward exchange contracts - 4,171 - 4,171 Foreign exchange swap - 4,313 - 4,313 contracts Bond investment - 1,000,000 - 1,000,000 ! Equity securities 884,515 - - 884,515 ! Exchange traded funds 1,153,253 - - 1,153,253 Financial instruments - 96,047 - 96,047 Derivative financial assets for - 70,038 - 70,038 hedging Financial assets at fair value through other comprehensive income Bond investment (Note) - 1,551,394 - 1,551,394 ! Equity securities 6,313,093 - 289,777 6,602,870 $ 9,679,376 $ 2,725,963 $ 591,881 $ 12,997,220 Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts $ - $ 19,047 $ - $ 19,047 Derivative financial liabilities for hedging - 52,424 - 52,424 $ - $ 71,471 $ - $ 71,471 Note: Including operation bonds. (b) The methods and assumptions the Group used to measure fair value are as follows: i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics: Beneficiary Exchange Listed stocks certificates Open-end fund traded funds Market quoted price Closing price Closing price Net asset value Closing price ii. Except for financial instruments with active markets, domestic investments of the Company’s subsidiary, Hotai Insurance Co., Ltd., take the quoted price of Taipei Exchange while foreign investments take the quoted price of the Swiss Exchange’s financial information system as the fair value aside from infrastructure fund and real estate private placement fund that are assessed by balance sheet approach. The fair

! value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date. 19 iii. When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts and 71 foreign exchange swap contracts and options, the Group adopts valuation technique 13 that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market. Forward 00 foreign currency contracts are generally assessed using forward exchange rates. 15 iv. The Group takes into account adjustments for credit risks to measure the fair value of 53 financial and non-financial instruments to reflect credit risk of the counterparty and 47 the Group’s credit quality. 38 E. The following chart is the movement of Level 3 for the years ended December 31, 2019 and 2018: 2019 2019 Beneficiary 94 certificates Equity securities At January 1 $ 302,104 $ 289,777 70 Recorded as unrealized gains on valuation of 20 investments in equity instruments measured at fair value through other comprehensive income - 28,790 Recorded as gains on financial assets at fair value through profit or loss ( 1,997) - Acquired during the period 37,800 - 47 At December 31 $ 337,907 $ 318,567

2018 2018 24 Beneficiary 71 certificates Equity securities At January 1 $ - $ 281,388 Acquisition of Level 3 financial assets 291,300 - Recorded as unrealized losses on valuation of investments in equity instruments measured at fair value through other comprehensive income - 8,389 Recorded as gains on financial assets at fair value through profit or loss 10,804 - At December 31 $ 302,104 $ 289,777

F. For the years ended December 31, 2019 and 2018, there was no transfer between Level 1, Level 2, and Level 3. G. Treasury department is in charge of valuation procedures for fair value measurements being

! categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value. H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement: Range Fair value at Valuation Significant (weighted Relationship December 31, 2019 technique unobservable input average) of inputs to fair value Non-derivative equity instrument: Unlisted shares $ 318,567 Asset liability Net asset value, price - The higher the method, Market to earnings ratio multiple and control comparable multiple premium, the higher companies method the fair value. Infrastructure fund 337,907 Net assets value Not applicable Not Not applicable and real estate applicable private placement fund

Range Fair value at Valuation Significant (weighted Relationship December 31, 2018 technique unobservable input average) of inputs to fair value Non-derivative equity instrument: Unlisted shares $ 289,777 Asset liability Net asset value, price - The higher the method, Market to earnings ratio multiple and control comparable multiple premium, the higher companies method the fair value. Infrastructure fund 302,104 Net asset value Not applicable Not Not applicable applicable I. The Group has carefully assessed the valuation models and assumptions used to measure fair value, and regards its fair value measurements as reasonable. However, the use of different valuation models or assumptions may result in different measurements. If assumptions from financial assets and liabilities categorized within Level 3 had increased or decreased by 1%, other comprehensive income would not have been significantly impacted as of December 31, 2019 and 2018. (4) The nature and range of contract risk governance of the subsidiary, Hotai Insurance Co., Ltd.

A. The objectives, policies, procedures and methods of risk governance on insurance contracts: (a) Risk Governance Structure and Responsibilities The subsidiary, Hotai Insurance Co., Ltd. has set up the Risk & Control Committee (RCC) under the Board of Directors as well as an independent risk management department in order to effectively plan, advocate and monitor risk management matters. The subsidiary’s goals in managing its risks are to: i. Protect the subsidiary’s capital by not taking risks beyond the subsidiary’s risk

! tolerance. ii. Enhance value creation and achieve an optimal risk-return profile by efficiently deploying capital. iii. Support decision making processes by providing consistent, reliable and timely risk information. iv. Protect the subsidiary’s brand and reputation by fostering the subsidiary’s core values and promoting a sound culture of risk awareness. The “three lines of defense” approach runs through the subsidiary’s risk governance structure, so that risks are clearly identified, owned, and managed: 1st line: Business management takes risks and is responsible for day-to-day risk management. ue 2nd line: The risk management function oversees the overall risk management framework, and helps manage risk. Other governance and control functions (e.g. legal and compliance, finance, technical underwriting review, claims QA) are responsible for and help control specific types of risks. 3rd line: The audit function provides independent assurance regarding the effectiveness of the ERM framework and risk controls. In accordance with "Risk Management Practice Rules for Insurance Industry", the subsidiary has established "Risk Management Policy" which is approved by the subsidiary’s Board of Directors, to establish its corporate risk management framework. (b) Risk Reporting and Measurement System ue i. Risk Reporting Each department branch periodically delivers risk information to the risk management department for monitoring purpose. The mitigating actions and response plans are required while breaching the risk-type limits. Risk management department consolidates risk information, reviews and follows up improvement actions. In the quarterly RCC meeting, Integrated Assessment and Assurance Reporting will be presented in accordance with the meeting agenda. After the CEO signs off quarterly RCC meeting minutes as a formal risk report, the report will be submitted to RCC and the Board of Directors for monitoring and verifying the soundness of the risk management framework.

ii. Measurement System Pursuant to the regulatory authority’s requirement, the subsidiary has performed sensitivity analysis, scenario analysis and stress test to understand the related risks which have quantitative influence on the subsidiary’s performance. (c) Insurance Risk and Underwriting Guidelines Insurance risk management includes product development, pricing, underwriting, reinsurance, natural/man-made catastrophes, claims and reserve related risks. All of these risks are managed by the front-line responsible functions, such as underwriting, claims,

! technical management, product development and actuarial departments. According to the “Risk Management Policy,” related functional policies and procedures, and local regulations, the Risk management framework and mechanism are designed and embedded into day-to-day operations, which includes authorization, operational process and risk-type limit monitoring, etc. The Risk Policy adherence self-assessment checklist and Risk Management Practice Rules for Insurance Industry checklist should be filled in by risk-type owners annually, in order to comply with the requirements of “Risk Management Policy” and “Risk Management Practice Rules for Insurance Industry”. (d) Total Risk Profiling and Insurance Risk Management The subsidiary adopts the Total Risk Profiling (TRP) methodology to identify, assess, response and document its overall risks (incl. Business and Strategic Risk, Insurance Risk, Operational Risk, ALM / Investment / Credit Risk, and Financial Reporting Risk that can have an impact on the sustainability of Earnings, Capital and Reputation) systematically across the subsidiary. The risk management department coordinates the TRP efforts and provides quality assurance with all departments within their areas of responsibilities. The implementation status of improvement actions will be reviewed quarterly according to the fall TRP results in the previous year. The insurance risks (incl. product development, pricing, underwriting, reinsurance, natural / man-made catastrophes, claims, reserve and so on) are covered in the TRP process as well. (e) Concentration Exposures on Insurance Risk The subsidiary, Hotai Insurance Co., Ltd. has established the related risk control mechanism and developed risk management plan to run retention and ceded/assumed businesses based on reinsurance capacity by following the “Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms”. The net retention limit per risk for each line of business is listed below: Line of Business December 31, 2019 December 31, 2018 Fire insurance $ 50,000 $ 50,000 Fire & A.P. insurance 50,000 50,000 Long-term residential fire insurance 50,000 50,000 Residential fire insurance 50,000 50,000 Marine cargo insurance 20,000 20,000 Inland marine insurance 20,000 20,000 Automobile insurance Nil Nil General liability insurance 50,000 50,000 Engineering insurance 50,000 50,000 Fidelity insurance 60,000 60,000 Other property insurance 50,000 50,000 Personal accident insurance 50,000 50,000 In addition to control the own-retention limit per risk/catastrophe for confining risk exposures, the subsidiary, in accordance with the characteristics of each line of insurance business and to align with operational strategies, arranges reinsurance contracts or arranges facultative reinsurance to appropriately spread the subsidiary’s endured risk. For the credit

! risk of main reinsurers, the subsidiary considers their credit rating, financial status, and location to ensure that the subsidiary has a stable and appropriate reinsurance coverage. (f) Asset/Liability Management The Asset/Liability Management Investment Committee (ALMIC) meeting is held on a quarterly basis to monitor the subsidiary’s asset/liability matching duration and evaluate liquidity risk by ensuring the fulfillment of due liabilities and future claims provisions. (g) Capital Adequacy Management In accordance with the “Regulations Governing Capital Adequacy of Insurance Companies”, the subsidiary has established the capital solvency management mechanism, which includes a risk-based capital ratio review on a regular basis. Also, the RBC Ratio Report is prepared and filed semiannually to monitor and implement regulatory capital adequacy requirements. Currently, the subsidiary’s RBC ratio ((adjusted net capital / risk-based capital) X 100%) is in compliance with the regulatory requirement of “no lower than 200%.” (5) Credit risk, liquidity risk and market risk of insurance contract The insurance contracts of the subsidiary, Hotai Insurance Co., Ltd. are all short-term policies and the reserves are not discounted; therefore, there is no significant impact in the interest rate risk. A. Credit risk (a) Credit risk refers to the risk of financial loss to the subsidiary, Hotai Insurance Co., Ltd., arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable and other financial assets based on the agreed terms, and the contract cash flows of debt instruments stated at fair value through other comprehensive income. (b) Except for using historical loss rate as a basis and forecastable macroeconomic information to estimate expected credit loss in line with IAS, the subsidiary, Hotai Insurance Co., Ltd. also provisioned allowance for loss in line with “Regulation of the Procedure for Asset Assessment and Collection of Overdue Debts” and related procedures. (c) The subsidiary, Hotai Insurance Co., Ltd., adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk since initial recognition: i. If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. ii. For bonds or banks that issue non-short-term certificates of deposit, if any external credit rating agency rates these bonds and banks as investment grade, the credit risk of these financial assets is low. However, if the rating of these bonds and banks are degraded to non-investment grade, the credit risk of these financial assets was significantly increased. (d) The subsidiary, Hotai Insurance Co., Ltd., adopts IFRS 9 to presume the following assumptions that financial assets have been impaired: i. If the contract payments were past due over 90 days based on the terms, there has been an impairment and default on that instrument since initial recognition. ii. If companies that issue bonds or banks that issue non-short-term certificates of deposit

! experience significant financial difficulties and enter into bankruptcy or financial reorganization, the credit of the financial assets would be considered impaired. iii. If the Company actively clears these financial assets in line with the“Regulation of the Procedure for Asset Assessment and Collection of Overdue Debts”, and the financial assets could no longer be recovered, the financial assets should be written-off after it is reported to the Board of Directors. However, the Group will continue executing the recourse procedures to secure their rights. (e) On December 31, 2019, the subsidiary, Hotai Insurance Co., Ltd., included receivables (excluding interest receivables from bonds and interest receivables from time deposits) and other assets (excluding operating bonds and restricted time deposits) into the group whose impairment should be assessed and the expected loss rates are as follows:

December 31, 2019 Significant increase in credit Impairment 12 months risk of credit Not past due or not over 30 days Over 30 days Over 90 days Expected loss rate 0% 0% 100% Total book value $ 765,662 $ - $ 160 Loss allowance - - 160

December 31, 2018 Significant increase in credit Impairment 12 months risk of credit Not past due or not over 30 days Over 30 days Over 90 days Expected loss rate 0% 0% 100% Total book value $ 681,769 $ - $ 160 Loss allowance - - 160 The provision of allowance for loss referred to the “Regulation of the Procedure for Asset Assessment and Collection of Overdue Debts”. For the years ended December 31, 2019 and 2018, the movement of allowance for loss are as follows: 2019 Amount of provision in line with the “Regulation of the Procedure for Asset Significant Assessment and increase Impairment Collection of 12 months in credit risk of credit Overdue Debts” Total At January 1 $ - $ - $ 160 $ 16,526 $ 16,686 Amounts reversed - - - ( 2,373) ( 2,373) At December 31 $ - $ - $ 160 $ 14,153 $ 14,313

2018 Amount of provision in line with the “Regulation of the Procedure for Asset Significant Assessment and increase Impairment Collection of 12 months in credit risk of credit Overdue Debts” Total At January 1 $ - $ - $ 160 $ 19,201 $ 19,361 Amounts reversed - - - ( 2,675) ( 2,675) At December 31 $ - $ - $ 160 $ 16,526 $ 16,686 As of December 31, 2019 and 2018, the allowance for loss of abovementioned financial assets was $14,313 and $16,686, respectively, and the maximum exposure to credit risk was $751,509 and $665,243, respectively. (f) As of December 31, 2019 and 2018, the subsidiary, Hotai Insurance Co., Ltd., has financial assets at fair value through other comprehensive income (including operating bonds), interest receivables from bonds, non-short term time deposits (excluding valuation adjustment) and interest receivables from time deposits amounting to $3,507,857 and $3,426,852, respectively, and are all classified as investment grade. The external credit risk rating are as follows: Credit risk rating December 31, 2019 December 31, 2018 tw AAA $ 940,489 $ 962,874 tw AA+ 335,331 365,422 tw AA 302,988 598,326 tw AA- 990,444 828,788 tw A+ 347,795 303,574 tw A 477,224 355,224 tw A- 113,586 12,644 $ 3,507,857 $ 3,426,852 The probable expected loss rates of abovementioned financial assets within 12 months were 0%~0.07% and 0%~0.08%, respectively, the amounts of allowance for loss were $633 and $510, respectively, and the maximum exposure amounts were $3,507,224 and $3,426,342, respectively. Aforementioned amounts of allowance for loss were using the forecastability of Standard & Poor’s research report to adjust historical and timely information to assess the expected loss rate. For the years ended December 31, 2019 and 2018, the movements of allowance for loss are as follows: 2019 2018 At January 1 $ 510 $ 506 Provisions during the period 123 4 At December 31 $ 633 $ 510 (g) Reinsurance Credit Risk The counterparties of the subsidiary, Hotai Insurance Co., Ltd. in conducting reinsurance transactions are companies with good credit ratings. Also, the subsidiary, Hotai Insurance

! Co., Ltd. transacts with numerous counterparties to diversify credit risk. The possibility of expected defaults is remote. In addition, the reinsurer list that the subsidiaries transacts with has been reviewed and approved by the subsidiary, Hotai Insurance Co., Ltd., and all are qualified reinsurance ceded companies. Policy underwriting units also non-routinely check on the newest approved reinsurance list. For the years ended December 31, 2019 and 2018, the reinsurance companies reinsurance premiums ceded and credit rating levels are as follows (if the reinsurance companies’ reinsurance transactions is through reinsurance brokers, then the credit rating levels as follows is based on the reinsurance broker): Year ended December 31, 2019 Reinsurance Credit rating levels (S&P) premiums ceded Percentage AA+ $ 1,697 0.10 AA 3,934 0.23 AA- 438,882 26.05 A++ 921 0.06 A+ 621,583 36.89 A 66,599 3.95 A- 1,735 0.10 Unrated 549,527 32.62 Total $ 1,684,878 100.00 Year ended December 31, 2018 Reinsurance Credit rating levels (S&P) premiums ceded Percentage AA+ $ 1,449 0.13 AA 2,351 0.20 AA- 325,221 27.81 A+ 428,656 36.67 A 44,585 3.81 A- 15,186 1.30 BBB+ 1,211 0.10 Unrated 350,423 29.98 Total $ 1,169,082 100.00 Note: Compulsory automobile insurance and residential earthquake insurance are excluded. B. Liquidity risk management Liquidity risk is the risk that the subsidiary, Hotai Insurance Co., Ltd. may not have sufficient liquid financial resources to meet its obligations when they fall due, or would have to incur excessive costs to do so. The subsidiary is not exposed to liquidity risk as there is no need for the subsidiary to hold adequate current assets to fulfill the financial liabilities as they become due or use higher costs to settle relevant financial liabilities.

! (a) Cash flow control and hedging strategy With the following controls and hedge strategies, the working capital of the subsidiary, Hotai Insurance Co., Ltd. is sufficient to meet insurance services and operational needs, and no liquidity risk is expected. i. The investment in debt instruments and equity instruments are mostly traded in the active market and can be expected to be disposed at the price close to fair value. ii. To make sure liquidity fund fulfill the liabilities when they fall due or capital requirements, the subsidiary manages liquidity through bank deposits and money market instruments. iii. To make sure the effectiveness of liquidity risk management, cash flow analysis is employed, the subsidiary generates yearly and monthly net cash flow forecast according to annual plan of operating income and expenses. Based on the cash flow forecast, the subsidiary periodically monitors the actual income and expenses to execute cash management activities. (b) Liquidity risk management To effectively manage liquidity risk, except for holding a considerable portion of current assets, the subsidiary also limits the proportion of investment amount and reviews current assets and liabilities on a regular basis to ensure that above requirement is fully supported. The table below analyses the insurance liabilities and non-derivative financial liabilities of the subsidiary, Hotai Insurance Co., Ltd., based on the remaining period at the balance sheet date to the contractual maturity date. i. Non-derivative financial liabilities Contractual undiscounted cash flows Less than Between Between December 31, 2019 1 year 1 and 5 years 5 and 10 years Over 10 years Insurance liabilities $ 5,966,415 $ 1,343,109 $ 171,546 $ 1,917,142 Payables 1,189,663 - - - Deposits-in 4,300 390 100 - Lease liabilities 55,447 107,065 - -

Contractual undiscounted cash flows Less than Between Between December 31, 2018 1 year 1 and 5 years 5 and 10 years Over 10 years Insurance liabilities $ 4,798,754 $ 1,256,846 $ 108,635 $ 1,919,791 Payables 942,876 - - - Deposits-in 2,733 1,607 390 - ii. Derivatives On December 31, 2019, the subsidiary, Hotai Insurance Co., Ltd., has derivative instruments at net settlement whose duration are all within 3 months from reporting period-end to the due date of contract. C. Market risk Market risk refers to the risk of changes in values or cash flows of accounts on the subsidiary, Hotai Insurance Co., Ltd.’s financial statements due to changes in financial markets. Major risk factors are as follows: y Equity market prices y Interest rate and credit spreads

! y Currency exchange rates The subsidiary, Hotai Insurance Co., Ltd., defines its risk tolerance and regularly measures and reviews this risk by adoption of “assets allocation strategy”. In compliance with the subsidiary’s “Risk Management Policy”, the subsidiary’s “Investment Policy Statement”, and regulations of the competent authority, the subsidiary imposes investment limit on individual investment targets, restricts investments in assets with low liquidity, and manages the difference between the interest rate sensitive assets and the interest rate sensitive liabilities. To ensure effective market risk management, the subsidiary, Hotai Insurance Co., Ltd. also implements relevant stress tests in compliance with requirement by the competent authority. The table below further describes the subsidiary, Hotai Insurance Co., Ltd.’s current risk management mechanism in terms of individual risk factor: (a) Price risk The price risk is arising from the uncertainty of the prices of beneficiary certificates. However, the subsidiary Hotai Insurance Co., Ltd. has appropriately spread the price risk through diversified portfolio to decrease the risk of investments centralised in any specific industry or issuance institution. With other conditions unchanged, the reasonable sensitivity analysis on stock price change is shown below: December 31, 2019 Change in other comprehensive Change of variables income Listed stocks, ETF and domestic and foreign beneficiary certificates Increase in price 10% $ 299,998 Decrease in price 10% ( 299,998 )

December 31, 2018 Change in other comprehensive Change of variables Income____ Listed stocks, ETF and domestic and foreign beneficiary certificates Increase in price 10% $ 287,464 Decrease in price 10% ( 287,464 ) (b) Interest rate risk Interest rate risk refers to the risk from market interest rate change which results in change of fair value of financial instruments. The major investment for the subsidiary, Hotai Insurance Co., Ltd., is fixed interest rate debt investment. Increase in interest rate will result in decrease in fair value. However, due to focus on long-term stability and predictable income, the short-term interest rate change would have insignificant impact to the subsidiary. Thus, no major interest rate risk is expected.

! With other conditions unchanged, the reasonable sensitivity analysis on interest rate change is shown below: December 31, 2019 Change in Change of variables fair value Fixed-income investments Increase in interest rate 100 basis point ($ 110,576 ) Decrease in interest rate 100 basis point 110,576

December 31, 2018 Change in Change of variables fair value Fixed-income investments Increase in interest rate 100 basis point ($ 97,574 ) Decrease in interest rate 100 basis point 97,574 (c) Foreign exchange risk Foreign exchange risk refers to the risk from fluctuations in fair value of assets or future cash flow due to foreign exchange volatility. The major foreign exchange risk of the subsidiary, Hotai Insurance Co., Ltd., results from US dollar position. The US dollar foreign exchange rate is shown below: December 31, 2019 December 31, 2018 Foreign exchange rate 29.99 30.74 The US dollar assets and liabilities are shown as below: December 31, 2019 December 31, 2018 USD Assets USD 40,276 thousand USD 33,886 thousand USD Liabilities USD 1,205 thousand USD 639 thousand Foreign exchange risk will affect the subsidiary, Hotai Insurance Co., Ltd.’s foreign currency denominated assets and liabilities. All foreign currency denominated investment assets held by the subsidiary has been commissioned by investors for hedging, using the foreign exchange swap contracts to effectively control the risk. Under the circumstance that other variables remain unchanged and after deducting the nominal principal of hedge items, the sensitivity analysis for reasonable fluctuations in exchange rates is as follows: December 31, 2019 Change on variable Impact on net (loss) income USD assets, net Appreciate 5% against NTD ($ 24,560 ) Depreciate 5% against NTD 24,560

! ! December 31, 2018 Change on variable Impact on net (loss) income USD assets, net Appreciate 5% against NTD ($ 20,980 ) Depreciate 5% against NTD 20,980 (6) Insurance risk information A. Insurance risk concentration Insurance businesses undertaken by the subsidiary, Hotai Insurance Co., Ltd., comprise fire insurance, engineering insurance, accident insurance, transportation insurance, automobile insurance, and personal accident insurance. Among them, as the subject matters of transportation insurance, automobile insurance, and personal accident insurance have mobility, the level of risk is deemed relatively dispersed. The subject matter of accident insurance has legality, and the risks in relation to accident insurance and aforesaid insurances are all dispersed through coverage limit control. Besides, as the subject matters of fire insurance and engineering insurance do not have mobility, the level of risk is deemed relatively concentrated. The subsidiary, Hotai Insurance Co., Ltd., disperses the risks mainly through reinsurance ceding. For the years ended December 31, 2019 and 2018, the insurance risk concentration degree of premiums income and self-retained premiums from effective insurance contracts of fire insurance and engineering insurance are listed below: Year ended December 31, 2019 Line of Business Premiums revenue Retention premiums Fire insurance $ 1,185,414 $ 499,752 Engineering insurance 185,158 44,016

Year ended December 31, 2018 Line of Business Premiums revenue Retention premiums Fire insurance $ 1,105,923 $ 523,467 Engineering insurance 43,542 10,924 The subsidiary, Hotai Insurance Co., Ltd., has established catastrophe claims system to record losses of various line of insurance businesses and risks assumed by the subsidiary, including earthquake, typhoon, fire accident, air crash, and man-made catastrophes. The system also provides information for reinsurance brokers to implement catastrophe measurement models and perform analysis on expected occurrence years such as 10 years, 50 years, 100 years, and 250 years. The model covers fire insurance, engineering insurance, marine insurance, automobile insurance, as well as earthquake and typhoon risks. The model provides monthly report of cumulative risk assessment for the purpose of monitoring the risk. With strict reinsurance strategies and arrangements, as well as system monitoring cumulative risk, the subsidiary, Hotai Insurance Co., Ltd., can appropriately and effectively prevent high risk concentration to achieve a goal of risk dispersion.

! B. Analysis of insurance risk sensitivity The subsidiary, Hotai Insurance Co., Ltd., estimates claims reserve fund mainly through a series of development modules and various estimated loss ratios. With concern of unexpected factors, such as external environmental change (change of regulation or judicial order), trend or different ways of claims paid, these could change the loss development and expected loss ratio and therefore influence the estimated result of claims reserve. Therefore, the subsidiary, Hotai Insurance Co., Ltd., conducted a sensitivity test for the years ended December 31, 2019 and 2018 and the result is shown below: ! Year ended December 31, 2019 Expected loss ratio increased by 5% Expected loss ratio decreased by 5% Decrease in Increase in claim Increase in claim reserve Decrease in reserve before claim reserve before claim reserve Line of Business reinsurance after reinsurance reinsurance after reinsurance Automobile property damage insurance $ 136,009 $ 118,492 $ 136,009 $ 118,492 Automobile third party liability insurance 63,039 56,047 63,039 56,047 Personal property insurance 6,419 4,429 6,419 4,429 Commercial property insurance 49,204 19,186 49,204 19,186 Liability insurance 33,677 24,376 33,677 24,376 Marine cargo insurance 9,678 7,486 9,678 7,486 Engineering insurance 3,885 915 3,885 915 Personal accident insurance 50,783 47,961 50,783 47,961 Health insurance 7,602 6,407 7,602 6,407 Foreign inward reinsurance 1,581 1,455 1,581 1,455

! ! Year ended December 31, 2018 Expected loss ratio increased by 5% Expected loss ratio decreased by 5% Decrease in Increase in claim Increase in claim reserve Decrease in reserve before claim reserve before claim reserve Line of Business reinsurance after reinsurance reinsurance after reinsurance Automobile property damage insurance $ 100,422 $ 89,253 $ 100,422 $ 89,253 Automobile third party liability insurance 48,388 44,471 48,388 44,471 Personal property insurance 6,673 4,005 6,673 4,005 Commercial property insurance 41,109 16,569 41,109 16,569 Liability insurance 22,903 17,295 22,903 17,295 Marine cargo insurance 8,861 7,056 8,861 7,056 Engineering insurance 3,908 745 3,908 745 Personal accident insurance 42,953 40,353 42,953 40,353 Health insurance 6,897 5,821 6,897 5,821 Foreign inward reinsurance 1,323 1,304 1,323 1,304 Sensitivity test determines the impact on profit and loss based on before-reinsurance and after-reinsurance calculation from the increase or decrease by 5% in the expected loss ratio for the years ended December 31, 2019 and 2018. C. Loss development pattern As of December 31, 2019 and 2018, the loss development pattern of the subsidiary, Hotai Insurance Co., Ltd., are as followsǺ (a) Direct business Unit:NTD December 31, 2019 Accident Year Development Year ʀ2015 2016 2017 2018 2019 Total End of underwriting year $ 21,235,766 $ 2,644,742 $ 1,788,662 $ 2,584,648 $ 3,732,983 One year after underwriting year 21,303,252 2,344,556 1,806,176 2,563,399 - Two years after underwriting year 21,320,482 2,297,738 1,602,243 - - Three years after underwriting year 21,192,337 2,241,054 - - - Four years after underwriting year 21,125,360 - - - - Estimated ultimate losses 21,125,360 2,241,054 1,602,243 2,563,399 3,732,983 Paid losses ( 20,633,235) ( 2,122,922 ) ( 1,331,121 ) ( 2,148,063 ) ( 2,257,525) Total reserve $ 492,125 $ 118,132 $ 271,122 $ 415,336 $ 1,475,458 $ 2,772,173 Adjustment item (Note) 319,038 Realized amount in balance sheet (Shown as claims reserve for insurance liabilities) $ 3,091,211

! !

December 31, 2018 Accident Year Development Year ʀ2014 2015 2016 2017 2018 Total End of underwriting year $ 19,944,293 $ 1,399,479 $ 2,644,742 $ 1,788,662 $ 2,584,648 One year after underwriting year 19,836,286 1,401,087 2,344,556 1,806,176 - Two years after underwriting year 19,902,165 1,395,084 2,297,738 - - Three years after underwriting year 19,925,398 1,321,887 - - - Four years after underwriting year 19,870,451 - - - - Estimated ultimate losses 19,870,451 1,321,887 2,297,738 1,806,176 2,584,648 Paid losses ( 19,484,894) ( 1,130,313) ( 2,070,452 ) ( 1,263,860 ) ( 1,574,267 ) Total reserve $ 385,557 $ 191,574 $ 227,286 $ 542,316 $ 1,010,381 $ 2,357,114 Adjustment item (Note) 244,870 Realized amount in balance sheet (Shown as claims reserve for insurance liabilities) $ 2,601,984

(b) Retention business Unit: NTD December 31, 2019 Accident Year Development Year ʀ2015 2016 2017 2018 2019 Total End of underwriting year $ 14,201,574 $ 1,100,469 $ 1,351,056 $ 2,301,559 $ 3,215,297 One year after underwriting year 14,196,090 1,112,765 1,375,530 2,293,058 - Two years after underwriting year 14,231,405 1,069,063 1,282,986 - - Three years after underwriting year 14,151,656 1,027,182 - - - Four years after underwriting year 14,098,904 - - - - Estimated ultimate losses 14,098,904 1,027,182 1,282,986 2,293,058 3,215,297 Paid losses ( 13,725,918 ) ( 973,411 ) ( 1,106,042 ) ( 1,953,806 ) ( 1,999,784 ) Total reserve $ 372,986 $ 53,771 $ 176,944 $ 339,252 $ 1,215,513 $ 2,158,466

Adjustment item (Note) 225,026 Realized amount in balance sheet (Shown as claims reserve for insurance liabilities) $ 2,383,492

December 31, 2018 Accident Year Development Year ʀ2014 2015 2016 2017 2018 Total End of underwriting year $ 13,034,142 $ 1,197,810 $ 1,100,469 $ 1,351,056 $ 2,301,559 One year after underwriting year 13,003,762 1,216,337 1,112,765 1,375,530 - Two years after underwriting year 12,979,752 1,225,395 1,069,063 - - Three years after underwriting year 13,006,010 1,181,837 - - - Four years after underwriting year 12,969,819 - - - - Estimated ultimate losses 12,969,819 1,181,837 1,069,063 1,375,530 2,301,559 Paid losses ( 12,692,504 ) ( 1,015,999 ) ( 923,829) ( 1,051,392 ) ( 1,436,083 ) Total reserve $ 277,315 $ 165,838 $ 145,234 $ 324,138 $ 865,476 $ 1,778,001

Adjustment item (Note) 189,537 Realized amount in balance sheet (Shown as claims reserve for insurance liabilities) $ 1,967,538

Note: Adjustment items include estimated claims for earthquake insurance, compulsory automobile insurance, nuclear insurance, and the total sum of non-distributable claim reserve fund. Based on the table above, the estimated cumulative loss amount of each accident year is estimated based on the current available information, however, the actual amounts may be deviated from the estimation due to the loss development in the following years.

! (7) The subsidiary-Hotai Insurance Co., Ltd. assets and liabilities recoverable or payable within or over 12 months after the balance sheet date are as follows: Within Over Book value 12 months 12 months December 31, 2019 Assets Cash and cash equivalents $ 3,329,144 $ 3,329,144 $ - Receivables 678,361 678,361 - Current tax assets 7,633 - 7,633 Assets held for sale 15,767 15,767 - Financial assets at fair value through profit or loss 3,509,328 3,009,328 500,000 Financial assets at fair value through other comprehensive income 1,602,746 27,531 1,575,215 Other financial assets 1,610,125 1,509,696 100,429 Right-of-use assets 157,978 - 157,978 Investment property 331,784 - 331,784 Reinsurance contract assets 1,794,135 1,286,604 507,531 Property and equipment 2,632,995 - 2,632,995 Intangible assets 89,563 - 89,563 Other assets 524,967 75,853 449,114

Liabilities Payables $ 1,189,663 $ 1,189,663 $ - Current income tax liabilities 30,657 30,657 - Insurance liabilities 9,398,212 5,966,415 3,431,797 Lease liabilities 159,562 55,447 104,115 Other liabilities 116,552 116,062 490

Within Over December 31, 2018 Book value 12 months 12 months Assets Cash and cash equivalents $ 1,564,420 $ 1,564,420 $ - Receivables 605,870 605,870 - Current income tax assets 13,777 - 13,777 Assets held for sale 15,767 15,767 - Financial assets at fair value through profit or loss 3,378,952 2,878,952 500,000 Financial assets at fair value through other comprehensive income 1,551,395 267,421 1,283,974 Other financial assets 1,550,443 1,493,201 57,242 Investment property 325,567 - 325,567 Reinsurance contract assets 1,642,862 1,225,913 416,949 Property and equipment 2,594,886 - 2,594,886 Intangible assets 66,412 - 66,412 Other assets 443,865 31,870 411,995

! Within Over December 31, 2018 Book value 12 months 12 months Liabilities Payables $ 942,876 $ 942,876 $ - Insurance liabilities 8,084,026 4,798,754 3,285,272 Other liabilities 96,040 94,043 1,997

(8) The subsidiary-Hotai Insurance Co., Ltd.’s related information on commissioned investments Beginning on December 12, 2018, the subsidiary, Hotai Insurance Co., Ltd., signed a discretionary investment management contract with Uni-President Assets Management Corp., to commission Uni-President Assets Management Corp. to manage the investment in domestic listed companies’ stocks and short-term notes and bills totaling $600,000. However, the subsidiary, Hotai Insurance Co., Ltd. adjusted the commissioned investment amounts in Uni-President Assets Management Corp. to $800,000, in November 2019. Beginning on July 31, 2017, the subsidiary, Hotai Insurance Co., Ltd., signed a discretionary investment management contract with Yuanta Securities Investment Trust Company Limited (“Yuanta Funds”) and First Securities Investment Trust Company Limited (“FSITC”), to commission Yuanta Funds and FSITC to manage the investment in domestic listed companies’ stocks and short-term notes and bills totaling $500,000 and $1,000,000, respectively. However, the subsidiary, Hotai Insurance Co., Ltd. adjusted the commissioned investment amounts in Yuanta Funds and FSITC to $700,000 and $800,000, respectively, in November 2018. The subsidiary, Hotai Insurance Co., Ltd. adjusted the commissioned investment amounts in Yuanta Funds to $890,778, in November 2019. The subsidiary, Hotai Insurance Co., Ltd. terminated the discretionary investment management contract signed with FSITC starting from December 31, 2019. In 2015, the subsidiary, Hotai Insurance Co., Ltd., signed a discretionary commission investment contract with JPMorgan Asset Management (Taiwan) Limited (“JPMorgan”), commissioning JPMorgan to conduct and manage domestic and foreign investments in various bonds on behalf of the subsidiary. The ceiling of this commissioned contract is based on the limit stipulated in the regulations.

premiums premiums premiums Retention earned earned Retention earned Retention (6)=(4)-(5) (6)=(4)-(5) $ 181,634 5,731,906 5,913,540 13 $ 5,913,553 (6)=(4)-(5) $ 136,267 4,539,711 4,675,978 2 $ 4,675,980 Net in change Net in change unearned premium premium unearned premium unearned (5) $ 14,706 640,272 654,978 - $ 654,978 (5) $ 10,692 596,358 607,050 - $ 607,050 Retention premiums premiums Retention (4)=(1)+(2)-(3) $ 196,340 6,372,178 6,568,518 13 $ 6,568,531 premiums Retention (4)=(1)+(2)-(3) $ 146,959 5,136,069 5,283,028 2 $ 5,283,030 Reinsurance Reinsurance Reinsurance premiums ceded ceded premiums premiums ceded (3) $ 137,267 1,794,774 1,932,041 - $ 1,932,041 (3) $ 114,422 1,281,733 1,396,155 - $ 1,396,155 premiums premiums premiums Reinsurance Reinsurance Reinsurance (2) $ 140,537 197,409 337,946 - $ 337,946 (2) $ 126,083 238,431 364,514 - $ 364,514 calculation earned is premiums shown below: of retention Written Written Written ’s premiums premiums premiums (1) $ 193,070 7,969,543 8,162,613 13 $ 8,162,626 (1) $ 135,298 6,179,371 6,314,669 2 $ 6,314,671

Year ended December 31, 2019 2019 31, December ended Year insurance of Category insurance Compulsory insurance Elective Discount 2018 31, December ended Year Insurance of Category insurance Compulsory insurance Elective Discount (9) The subsidiary-Hotai The Co., Ltd. (9) Insurance !

expenditures expenditures Retention claim claim Retention claim Retention (4)=(1)+(2)-(3) $ 202,501 2,637,152 $ 2,839,653 (4)=(1)+(2)-(3) $ 165,534 1,979,568 $ 2,145,102 Reinsurance Reinsurance Reinsurance claims recoveryclaims recoveryclaims (3) 116,151 $ 321,453 437,604 $ (3) 77,927 $ 299,721 377,648 $ expenditures expenditures Reinsurance claim claim Reinsurance claim Reinsurance (2) $ 121,160 43,749 $ 164,909 (2) $ 113,033 33,765 $ 146,798 2019 2019 2018 Claim Claim expenditures expenditures (1) $ 197,492 2,914,856 $ 3,112,348 (1) $ 130,428 2,245,524 $ 2,375,952 calculation of retention claim expenditures is calculationclaim shown retention expenditures below: of ’s

31, December ended Year insurance of Category Compulsory insurance insurance Elective 31, December ended Year insurance of Category Compulsory insurance insurance Elective (10) The subsidiary-Hotai Insurance Co., Ltd. subsidiary-Hotai The (10) Insurance

! ! (11) Financial information of compulsory automobile insurance: The subsidiary, Hotai Insurance Co., Ltd., sets independent accounting for its compulsory automobile liability insurance in accordance with Compulsory Automobile Liability Insurance Act, recording the insurance’ business and financial condition. A. Balance sheets for compulsory automobile liability insurance are as follows: December 31, 2019 December 31, 2018 Assets Cash and cash equivalents $ 1,583,915 $ 1,548,083 Notes receivable 1,399 1,822 Premiums receivable 7,924 8,010 Claims recoverable from reinsurers 12,285 2,686 Due from reinsurance and ceding companies 23,052 20,830 Ceded unearned premium reserve 72,949 61,729 Ceded claim reserve 86,986 60,779 Temporary payments and suspense accounts 52 423 Total assets $ 1,788,562 $ 1,704,362 Liabilities Claims payable $ 705 $ 227 Due to reinsurance and ceding companies 24,805 21,617 Unearned premium reserve 201,404 175,478 Claims reserve 254,754 200,079 Special reserve 1,306,722 1,306,825 Temporary payments and suspense accounts 172 136 Total liabilities $ 1,788,562 $ 1,704,362 As of December 31, 2019 and 2018, the subsidiary, Hotai Insurance Co., Ltd., has long-term time deposits amounting to $1,484,913 and $1,420,263, respectively, shown as other financial assets in the balance sheets.

! ! B. Details of revenues and costs for compulsory automobile liability insurance are as follows: Years ended December 31, 2019 2018 Operating revenues Written premiums $ 228,778 $ 190,698 Reinsurance premiums 140,537 126,083 Less: Reinsurance premiums ceded ( 137,267) ( 114,422) Net change in unearned premium reserve ( 14,706) ( 10,692) Retention earned premiums 217,342 191,667 Interest income 13,525 13,309 $ 230,867 $ 204,976 Operating costs Claim expenditures $ 197,492 $ 130,428 Reinsurance claim expenditures 121,160 113,033 Less: Reinsurance claims recovery ( 116,151) ( 77,927) Retention claim expenditures 202,501 165,534 Net change in claims reserve 28,468 18,511 Net change in special reserve ( 102) 20,931 $ 230,867 $ 204,976 (12) Capital management- Hotai Insurance Co., Ltd. The primary objectives of the subsidiary, Hotai Insurance Co., Ltd., when managing capital are to safeguard capital adequacy and solvency of the subsidiary in order to support the subsidiary’s sustainable development and continuously create interests for shareholder. Taiwan insurance enterprises usually measure whether the capital is adequate in accordance with the capital adequacy ratio. Pursuant to Article 143-4 of Insurance Act, an insurance enterprise's ratio of self-owned capital to risk-based capital may not be lower than 200%. The subsidiary, Hotai Insurance Co., Ltd. calculates the capital adequacy ratio once every half year in accordance with “Regulations Governing Capital Adequacy of Insurance Enterprises” to ensure that it can continuously meet the statutory capital requirement. Under the amendments to the “Regulations Governing Capital Adequacy of Insurance Enterprises” which will be effective recently, net worth ratio will be included in the monitor indicators of capital adequacy ratio. Capital adequacy ratio is calculated as self-owned capital divided by risk-based capital. Self-owned capital is the total capital approved by the competent authority, which includes recognized owners' equity and other adjustment items as regulated by the competent authority; risk-based capital is the total capital calculated based on the extent of risk that an insurance enterprise assumes in its actual operations. The subsidiary, Hotai Insurance Co., Ltd. calculates capital adequacy ratio in accordance with “Regulations Governing Capital Adequacy of Insurance Companies”, the capital adequacy ratio were exceed 300% within the last two years and compliant with regulations.

! ! Net worth ratio is calculated as the owner's equity divided by total assets excluding separate accounts for investment-linked insurance. In 2019, the net worth ratio of the Subsidiary, Hotai Insurance Co., Ltd., was 32.64%. (13) The total amount of current assets and liabilities of the subsidiary, Hotai Finance Co., Ltd., that are expected to be recovered and repaid within or over 12 months Within Over December 31, 2019 Book value 12 months 12 months Assets Cash and cash equivalents $ 341,165 $ 341,165 $ - Current financial assets for hedging 81,131 - 81,131 Accounts and notes receivable, net 122,636,168 51,370,621 71,265,547 Other receivables 79,839 79,839 - Inventories 2,587 2,587 - Prepayments 5,358,141 3,761,403 1,596,738 Other current financial assets 74,598 74,598 - Liabilities Current borrowings $ 51,469,638 $ 43,235,968 $ 8,233,670 Short-term notes and bills payable 47,187,967 33,005,933 14,182,034 Current financial liabilities for hedging 112,291 26,674 85,617 Accounts and notes payable 1,391,753 1,391,753 - Other payables 1,382,654 1,382,654 - Current income tax liabilities 426,353 426,353 - Lease liabilities-current 64,884 64,884 - Financial guarantee liabilities-current 81,187 81,187 - Bonds payable 5,200,000 2,800,000 2,400,000 Guarantee deposits received - current 3,141,979 1,295,105 1,846,874 Other current liabilities, others 125,420 125,420 -

! ! ! Within Over December 31, 2018 Book value 12 months 12 months Assets Cash and cash equivalents $ 464,836 $ 464,836 $ - Current financial assets for hedging 70,038 - 70,038 Accounts and notes receivable, net 112,114,777 41,617,727 70,497,050 Other receivables 56,385 56,385 - Inventories 13,029 13,029 - Prepayments 5,407,985 3,977,144 1,430,841 Other current financial assets 553,468 553,468 - Liabilities Current borrowings $ 53,911,741 $ 41,120,217 $ 12,791,524 Short-term notes and bills payable 44,424,835 33,192,647 11,232,188 Current financial liabilities for hedging 52,424 1,486 50,938 Accounts and notes payable 1,204,492 1,204,492 - Other payables 1,216,024 1,216,024 - Current tax liabilities 390,619 390,619 - Financial guarantee liabilities-current 81,738 81,738 - Bonds payable 5,200,000 - 5,200,000 Guarantee deposits received - current 3,392,510 1,539,177 1,853,333 Other current liabilities, others 90,603 90,603 - 13. Supplementary Disclosures Related information of significant transactions are as follows: (1) Significant transactions information (a) Loans to others: Please refer to table 1. (b) Provision of endorsements and guarantees to others: Please refer to table 2. (c) Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3. (d) Acquisition or sale of the same security with the accumulated cost reaching $300 million or 20% of the Company’s paid-in capital: Please refer to table 4. (e) Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Plese refer to table 5. (f) Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None. (g) Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6. (h) Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 7.

! ! (i) Trading in derivative instruments undertaken during the reporting periods: The table below listed the derivative instruments undertaken but not yet expired as of December 31, 2019: Derivative Contract Amount Company Name Maturity Date Book Value Fair Value Instruments (in thousands) Ho Tai Motor Co., Ltd. Forward exchange USD 404,846 2020/1/7~2020/5/14 ($ 149,572 ) ($ 149,572 ) contracts Hotai Insurance Co., Ltd. Foreign exchange USD 21,950 2020/1/6~2020/3/2 9,346 9,346 swap contracts Hotai Finance Co., Ltd. Cross currency USD 200,000 2020/3/13~2021/9/17 ( 36,509 ) ( 36,509 ) swaps Hoyun International Cross currency USD 18,000 2021/6/18 5,349 5,349 Lease Co., Ltd. swaps (j) Significant inter-company transactions during the reporting periods: Please refer to table 8. (2) Information on investees Names, locations and other information of investee companies (not including investees in Mainland China)ǺPlease refer to table 9. (3) Information on investments in Mainland China (a) Basic information: Please refer to table 10. (b) Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: i. The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None. ii. The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None. iii. The amount of property transactions and the amount of the resulting gains or losses: None. iv. The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Please refer to table 2. v. The highest balance, end of period balance, interest rate range, and total current period interest with respect to financing of funds: Please refer to table 1. vi. Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: None. 14. Segment Information (1) General information Management has determined the reportable operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decisions. The Company considers the business from operating perspective, and the reportable operating segments are as follows: A. Distributor of Toyota and Hino products segments: distributor for sale of Toyota and Hino vehicles, parts and other products to dealers. This segment refers to Ho Tai Motor Co., Ltd. As of December 31, 2019, the Company’s self-owned capital ratio was 77%. B. Installment trading segments: trading various vehicles in installments. C. Leasing segments: leasing of various vehicles in installments.

! ! D. Other segments: business activities and operating segments not included above. (2) Measurement of segment information A. The accounting policies of operating segments are in agreement with the significant accounting policies summarized in Note 4. B. The pre-tax net income is used to measure the Company’s operating segment profit (loss) and performance of the operating segments. (3) Information about segment profit or loss, assets and liabilities The segment information provided to the Chief Operating Decision-Maker for the reportable segments is as follows: Year ended December 31, 2019 Distributor of Toyota and Installment Hino products trading Leasing Reconciliation Items segments segments segments Other segments and elimination Total Revenue from external customers $ 121,411,772 $ 8,558,651 $ 20,133,244 $ 63,651,404 $ - $ 213,745,071 Inter-segment revenue (Note) 12,427,869 163,048 52,210 10,750,071 ( 23,393,198 ) - Total segment revenue $ 133,839,641 $ 8,721,699 $ 20,175,454 $ 74,401,475 ($ 23,393,198 ) $ 213,745,071 Segment income (loss) (Note) $ 13,737,315 $ 2,823,044 $ 1,080,679 $ 8,866,396 ($ 9,134,448 ) $ 17,372,986 Depreciation and amortization $ 97,423 $ 224,327 $ 7,586,110 $ 429,215 $ 608,039 $ 8,945,114 Income expense $ 1,968,501 $ 587,458 $ 289,415 $ 942,713 $ - $ 3,788,087 Gain on investments accounted for using $ 5,376,506 $ 142,994 $ 140,698 $ 4,683,445 ($ 9,190,434 ) $ 1,153,209 equity method Segment assets $ 76,469,958 $ 114,720,710 $ 51,284,995 $ 84,333,907 ($ 71,275,515 ) $ 255,534,055 Segment liabilities $ 17,883,522 $ 94,250,073 $ 45,863,918 $ 22,506,610 ($ 578,695 ) $ 179,925,428

Year ended December 31, 2018 Distributor of Toyota and Installment Hino products trading Leasing Reconciliation Items segments segments segments Other segments and elimination Total Revenue from external customers $ 105,195,659 $ 7,724,486 $ 18,681,090 $ 55,426,351 $ - $ 187,027,586 Inter-segment revenue (Note) 9,431,436 328,093 332,491 8,466,915 ( 18,558,935 ) - Total segment revenue $ 114,627,095 $ 8,052,579 $ 19,013,581 $ 63,893,266 ($ 18,558,935 ) $ 187,027,586 Segment income (loss) (Note) $ 11,932,596 $ 2,251,361 $ 956,542 $ 9,059,510 ($ 9,004,735 ) $ 15,195,274 Depreciation and amortization $ 89,916 $ 223,661 $ 7,319,073 $ 407,993 $ 3,963 $ 8,044,606 Income tax expense $ 1,907,061 $ 489,846 $ 412,440 $ 786,097 $ - $ 3,595,444 Gain on investments accounted for using $ 4,500,124 $ 78,121 $ 91,161 $ 3,640,460 ($ 7,303,336 ) $ 1,006,530 equity method Segment assets $ 66,132,309 $ 103,043,040 $ 51,840,019 $ 70,889,740 ($ 62,519,403 ) $ 229,385,705 Segment liabilities $ 16,796,583 $ 92,737,741 $ 45,374,986 $ 17,949,485 ($ 1,709,048 ) $ 171,149,747 Note: Inter-segment revenue is revenue from goods sold and services rendered between segments. Sales and transfers between consolidated entities are deemed as transactions with third parties and are measured at present market price. (4) Reconciliation for segment income (loss) A. The Company’s Chief Operating Decision-Maker assesses performance of operating segments and allocates resources based on pre-tax net income, thus, reconciliation is not needed. B. The total assets reported to the Chief Operating Decision-Maker are measured in a manner consistent with that in the Company’s financial statements. (5)Information on products and services Revenue from external customers is primarily derived from the exclusive agent of Toyota and Hino products segment and leasing segment.

! ! Details of revenue balance are as follows: Years ended December 31, 2019 2018 Sales revenue $ 181,101,787 $ 158,221,271 Rental revenue 12,421,162 11,614,482 Interest revenue 9,377,005 8,194,392 Premium 5,913,553 4,675,980 Others 4,931,564 4,321,461 $ 213,745,071 $ 187,027,586 (6)Geographical information Geographical information for the years ended December 31, 2019 and 2018 is as follows: Year ended December 31, 2019 Year ended December 31, 2018 Revenue (Note) Non-current assets Revenue (Note) Non-current assets Taiwan $ 187,848,759 $ 64,807,616 $ 164,360,899 $ 58,905,070 Mainland China 25,896,312 6,119,074 22,666,687 4,106,367 $ 213,745,071 $ 70,926,690 $ 187,027,586 $ 63,011,437 Note: Revenue is categorized based on the locations of customers. (7)Major customer information Major customer information of the Group for the years ended December 31, 2019 and 2018 is as

follows: Ho Tai Motor Co Ltd Year ended December 31, 2019 Year ended December 31, 2018 Revenue Segment Revenue Segment A $ 24,759,682 Distributor of Toyota and $ 21,866,118 Distributor of Toyota and Hino products Hino products B 22,596,968 " 19,982,922 " C 19,629,150 " 15,072,330 " D 18,441,045 " 16,570,774 "

Note 2 Note 2 Note 2 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Footnote 8,782 4,525 87,125 42,382

289,942 434,459 179,359 392,874 210,222 408,518 152,862 974,614 311,690 340,740 609,951 165,023 272,257

11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 loans granted loans Ceiling on total Note 2 Note 2

Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 $ $ Note2

609,951 165,023 272,257

5,673,713 5,673,713 5,673,713 5,673,713 single party granted to a

$ $

Limit on loans ------$ $ 289,942 8,782 4,525 5,673,713 5,673,713 5,673,713

434,459 179,359 392,874 210,222 408,518 152,862 974,614 87,125 42,382 5,673,713 5,673,713 5,673,713 311,690 5,673,713 340,740 5,673,713 Value Collateral Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Item

------accounts $ None -

Allowance for doubtful for Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ financing short-term Reason for Reason

------with Amount of Amount transactions the borrower the Operations

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ loan financing Nature ofNature rate 2.15% 2.15% 2.15% 3.35% 3.35% 3.35% 3.35% Interest

------

21,466 18,032 37,352 51,949 72,986 85,866 75,304 111,196 191,480 117,207 114,201 130,086 drawn down drawn 2.15% 2.15% 3.35% 3.35% 3.35%

2.15% 2.15% 2.15% 3.35% 3.35% 3.35% 3.35% 3.35% $ $ 2.15%Short-term 2.15% 2.15% 2.15% 2.15% 2.15% 2.15%

2.15% 2.15% Actual amount Actual 5,152 3,435 9,445 85,866 85,866 20,608 21,466

150,265 180,318 373,516 193,198 158,851 279,063 107,332 193,198 558,127 386,396 128,799 128,799 120,212 120,212 137,385 450,795 279,063 184,611 120,212 223,251 287,650 223,251 2019 Loans toLoans others Balance at $

December 31, December

Ho TaiHo Motor Co., Ltd. Year ended December 31, 2019 31, December ended Year 2019 5,984 3,669 91,728 91,728 22,015 10,090 23,014

206,388 160,524 192,629 399,017 412,777 137,592 137,592 128,419 128,419 146,765 481,573 169,697 299,185 115,071 206,388 596,233 299,185 197,216 128,419 238,493 307,289 238,493 Maximum outstanding the year ended the year balance duringbalance

$ December 31, 31, December (Expressed indollars,otherwisethousandsTaiwan except New as indicated) of Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ party Related ɃɃ ɃɃ ɃɃ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ account General ledger Sales & Sales Sales & Sales Sales & Sales Sales & Sales Service Co., Service ales & ales o., Ltd. o., receivables Other Y Borrower Ltd. Service Co., Ltd. Service Co., Ltd. Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Hozhan MotorShanghai Service Co., Ltd. Ltd. Co., Service Motor Hozhan Tianjin Motor Hoyu Service Co., Ltd. Shanghai Heling MotorShanghai Service Co., Ltd. Service Co., Ltd. Co.,Ltd.& Service Sales Service Co., Ltd. Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Trading Co., Ltd. Service Co., Ltd. Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Creditor Sales & Service Co.,Ltd.& Service Sales Shanghai Heling MotorShanghai Service Co., Ltd. Hozhan MotorShanghai Service Co., Ltd. Service Co., Ltd. Service Co., Ltd. Ltd. Co., Service Motor Hozhan Tianjin Service Co., Ltd. Co.,Ltd. Ltd. Trading Co., Ltd. Consulting Co.,Ltd. Ltd. Co.,LtdService Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Service Co., Ltd. Co.,Ltd. Service Co., Ltd. 1 MotorHoyu Service Co., Ltd. Shanghai 2 Hotong MotorC Investment 3 4Motor Lexus Heling Yangpu Shanghai 5 Chongqing HelingMotorLexus & Sales 7 Tangshan HelingMotor Lexus & Sales 6 Tianjin Motor Service Ho-Yu & Sales 8 HelingMotor Lexus Nanchang & Sales 9Toyota Motor Zaozhuang & Ho-Yu Sales 18Ltd. Co., Investment Motor Hotong & Sales Motor Ho-Yu Tianjin 18Ltd. Co., Investment Motor Hotong Motor Lexus Heling Tangshan 10 11 TianjinHelingMotor Lexus & Sales 18 18Ltd. Co., Investment Motor Hotong Motors Lexus Heling Nanchang 18 18 18 18Ltd. Co., Investment Motor Hotong Motor Lexus Heling Chongqing 12Technology Motor Ho-Mian Shanghai 14Equipment Logistics Ho-Qian Shanghai 15Service Motor Hoxin Shanghai 16 Tianjin International Trading Co.,Heyi 13Co., Media Cultural Guangxin Shanghai 17 Motor & Ho-Wan Sales ZaoZhuang 18Ltd. Co., Investment Motor Hotong 18Ltd. Co., Investment Motor Hotong Motor Toyota Ho-Yu Zaozhuang S Motor Lexus Heling Tianjin 18Ltd. Co., Investment Motor Hotong Motor Lexus Heling Yangpu Shanghai 18Ltd. Co., Investment Motor Hotong Equipment Logistics Ho-Qian Shanghai Number Table 1 Note 3 Note 3 Note 3 Note 3 Note 3 Note 4 Note 3 Note 3 Footnote 6,560,098

11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 loans granted loans Ceiling on total $

5,673,713 single party granted to a

$ $ Limit on loans ------5,673,713 5,673,713 5,673,713 5,673,713 $ $ 5,673,713 3,280,049

5,673,713 Value ″ Collateral Ƀ Ƀ Ƀ Ƀ Ƀ Item 100% of the company’s total equity. total company’s the of 100%

------″- - 100% of the company’s total equity. total company’s the of 100% accounts

$ None -

Allowance for doubtful for ″ Ƀ Ƀ Ƀ Ƀ Ƀ financing short-term Reason for Reason

------with Amount of Amount transactions the borrower the Operations ″

″ s totalThe equity. limit onsingle loans to entityis a Ƀ Ƀ Ƀ Ƀ Ƀ loan financing Nature ofNature rate 3.85% Interest

------28,808 drawn down drawn 3.35% 3.35% 3.35% 3.35% 3.35% 5.44% ″

$ $ 3.35%Short-term Actual amount Actual

- - 4,293 4,293 85,866 21,466 251,586 128,799 2019 e creditor’s net value. Balance at $

December 31, December Ho Tai Motor Co Ltd 2019 4,586 4,586 91,728 22,932

138,085 268,763 223,681 230,142 Maximum outstanding the year ended the year balance duringbalance

$ December 31, 31, December ″ ″ party Related 100% owned directly and indirectly by Hotai Finance Co., Ltd. is 200% of the company’ the of 200% is Ltd. Co., Finance Hotai by indirectly and directly owned 100% ″ ″ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ account General ledger Other receivables Other Y 100% owned directly and indirectly by the Company is 100% of th of 100% is Company the by indirectly and directly owned 100% logy Co., ology Co., Borrower s to foreign companiess to foreign whose100% votingrightsowned are 200% isthe total parent The equity. directly thecompany indirectly company’s and of by same limit onsingle loans to entityis a Company's total equity; the limit on loans to any single entity is no more than 10% of the Company's total equity. total Company's the of 10% than more no is entity single any to loans on limit the equity; total Company's Ltd. Shanghai Guangxin Cultural Guangxin MediaShanghai Co., Ltd. Consulting Service Motor Hoxin Shanghai Co.,Ltd. Tianjin InternationalTrading Co., Heyi Ltd. Motor & ZaoZhuang Ho-Wan Sales Co.,LtdService Hoyun International Lease Co.,Ltd. International Lease Hoyun Ltd. Commerical Factoring (Shanghai) Hoyun Co.,Ltd. Creditor Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong :The limit:The on total loans toothers is nomorethan20% the of loan total on limit the Ltd., Co., Investment Motor Hotong :For Co., Ltd., InternationaltheLease Hoyun limit on:For totalcompanies loans to foreign whose voting are rights 18Ltd. Co., Investment Motor Hotong 18Ltd. Co., Investment Motor Hotong 18Ltd. Co., Investment Motor Hotong 18Ltd. Co., Investment Motor Hotong 18Ltd. Co., Investment Motor Hotong Techno Motor HoChen Shanghai 18Ltd. Co., Investment Motor Hotong Techn Motor Ho-Mian Shanghai 18 19 Co., Ltd. International Lease Hoyun Number Note 1 The Note2: limit on total loans tothe borrowercreditorand whose both voting are rights Note 3 Note 4 ″ ″ Ƀ Ƀ Ƀ Ƀ Note 4 Note 3 Note 2 Note 1 Footnote N Y Y Y Y Y Y Y Y Y party in Provision of Provision endorsements/ Mainland China guarantees tothe N N N N N N N N N N subsidiary to Provision of Provision guarantees by endorsements/ parent company parent Y Y Y Y Y Y Y Y Y Y to subsidiary Provision of Provision guarantees by endorsements/ parent company parent 488,753 3,037,962 20,470,639 20,470,639 29,265,936 29,265,936 29,265,936 29,265,936 29,265,936 29,265,936 provided amount of amount guarantees endorsements/ Ceiling on Ceiling total

$ $ 3.07% 1.57% 0.00% 0.00% 0.00% 0.00% 0.00% 0.08% 42.13% 16.78% Ratioof company guarantor guarantee accumulated the endorser/ the endorsement/ asset value of value asset amount to net to amount % of the total% of equity.Company’s ------% of the Company's totalequity. the% of Company's collateral wise indicated) wise guarantees Amount of Amount secured with endorsements/

$ ------$ -$ s toothers 930,000 219,141 1,337,787 % of the Company's totalequity. the% of Company's drawn down drawn

Actual amount Actual - - - - - 29,980 44,970 321,631 1,600,000 3,434,627 2019 ndorsement for any single entity is no more than 30% of the Company's total equity. total Company's the of 30% than more no is entity single any for ndorsement guarantee amount at amount Ho Tai Ho MotorLtd. Co., Outstanding endorsement/ December 31, December

$ Year ended December 31, 2019 31, December ended Year ndorsement for any single entity is no more than 75 than more no is entity single any for ndorsement 31,600 47,400 522,077 142,200 189,600 173,800 142,200 142,200 ndorsement for any single entity is no more than 100 than more no is entity single any for ndorsement Provision of endorsements and guarantee and endorsements of Provision 1,600,000 3,682,274 2019 guarantee Maximum outstanding amount as of as amount endorsement/ December 31, December

$ $ (Expressed in thousands of New Taiwan dollars, except as other as except dollars, Taiwan New of thousands in (Expressed 293,252 s total equity;on the e limit 2,848,089 20,470,639 20,470,639 17,559,561 17,559,561 17,559,561 17,559,561 17,559,561 17,559,561 Limit on Limit guarantees single party provided for a for provided endorsements/

$ s total equity;on the e limit 100% of it' of 100% ″ ″ ″ ″ ″ /guarantor Ƀ Ƀ Ƀ Ƀ Note 5.b t isno than more endorsemen 50% its of total equity;on the e limit endorser Relationshipwith the Party being Party ndorsement is no more than 80% of the company' the of 80% than more no is ndorsement /guaranteedendorsed Company name Company Hoing Mobility Service Mobility Hoing Corporation Shanghai Ho-Quian Logistics Ltd. Co., Trading Equipment Hoyun (Shanghai) Commerical (Shanghai) Hoyun FactoringLtd. Co., Hoyun International Lease Co., Lease International Hoyun Ltd. Zaozhuang Ho-Yu Toyota Motor Toyota Ho-Yu Zaozhuang Ltd. Service & Co., Sales Tianjin Motor& Ho-Yu Sales ServiceLtd. Co., Shanghai Hoyu Motor Service Motor Hoyu Shanghai Ltd. Co., Shanghai Hozhan Motor Service Ltd. Co., Tianjin Hozhan Motor Service Motor Hozhan Tianjin Ltd. Co., Shanghai Logistics Ho-Qian Ltd. Co., Trading Equipment ndorsement is no more than 50% of the Company's total equity; the limit on endorsement for any single entity is no more than 30 than more no is entity single any for endorsement on limit the equity; total Company's the of 50% than more no is ndorsement guarantor Endorser/ The on total e limit Net assetsvalue is basedon the amount includedin the financial of latest filing statements and reportindependent of accounts. ForToyota MaterialTaiwan Handling Ltd., the onlimited total ForHotai Financialon Ltd.the totallimit Co., endorsement isno than more Hotai LeasingCo., Ltd. For Hotai Leasing Co., Ltd., the limit onForHotaithe Leasing Ltd., totalCo., limit e Relationship between the endorser/guarantor: the between Relationship company. endorsed/guaranteed the of shares voting 50% than more indirectly and directly owns company parent endorser/guarantor The a. company. endorsed/guaranteed the of shares voting 90% than more indirectly and directly owns company parent endorser/guarantor The b. Toyota Material Toyota Taiwan Handling Hotai Finance Co., Ltd. Hotai Finance Co., Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ǻ Ǻ Ǻ Ǻ Ǻ 3 2 1 1 0Co., Motor Tai Ho 0Co., Motor Tai Ho 0Co., Motor Tai Ho 0Co., Motor Tai Ho 0Co., Motor Tai Ho 0Co., Motor Tai Ho Number Note 1 Note 3 Note 2 Note 4 Note 5 Table 2

Footnote Footnote ------2,982 1,436 2,982 2,982 3,203 3,203 31,404 31,404 30,378 30,378 120,842 483,620 305,062 662,127 483,620 221,219 190,936 100,377 357,065 630,885 500,000 190,936 500,000 6,794,269 Fair value Fair

$ $ $ $ $ $ $ $ $

$ $ $ $ $ $

$ $ $ ------焍 0.50% 焍 0.42% 99,124 焍 3.10% 280,276 焍 0.51% 0.50% 0.50% 0.50% 0.10% 0.15% 2019 , Ownership (%) Ownership - - 127 404 999 393 378 2,982 3,203 1,436 2,982 2,982 6,892 3,203 31,000 99,124 30,378 31,404 30,000 120,000 476,728 305,000 100,220 357,000 630,885 662,127 483,620 221,219 190,936 500,000 280,276 500,000 190,543 6,794,269 Book value Book As of 31, 2019 December As As of 31 December As

0.42% 0.01%

$ $ $ 0.01% $ 0.00% $ $ $ $ $ $

$ $ $ $ $ $ 0.11%

$ $ $ 11,974 3,025,660 2,527,891 3,191,200 9,073,865 ------11,642,842 46,595,533 29,391,924 22,482,807 20,617,157 Number of Number shares

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ General ledger account ledger General current current Financial assets profit through at or- fair loss Financial value current adjustmentValuation assets of financial Total Financial assets profit through at or- fair loss Financial value current Financial assets other through at fair comprehensive Financial value non-current - income Financial assets other through at fair comprehensive Financial value non-current - income assets other through at fair comprehensive Financial value non-current - income assets other through at fair comprehensive Financial value non-current - income current Financial assets other through at fair comprehensive Financial value non-current - income Valuation adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total Valuation adjustmentValuation assets of financial Financial assets profit non- through at or- fair loss Financial value current Total assets other through at fair comprehensive Financial value non-current - income assets profit through at or- fair loss Financial value current Ho Tai MotorHo Ltd. Co., Year ended 31, 2019 December ------Ƀ Ƀ None None None None Not applicable Not applicable Not applicable Not applicable assets profit through at or- fair loss Financial value Not applicable assets profit through at or- fair loss Financial value Not applicable assets profit through at or- fair loss value Financial securities issuer Relationship with the Relationship with the with Relationship (Expressed in thousands of New Taiwan dollars, except dollars, indicated) as otherwise (Expressed Taiwan thousands in of New Holding of marketable securities associates of at marketable subsidiaries, and the joint end ventures) of the (not period Holding including Type and name of and Type securities name - CTBC Hwa-win Money Market Market Fund Money Hwa-win CTBC - Ho An Insurance Agency Co., Ltd. Etc. Ltd. Co., Insurance An Agency Ho Beneficiary certificatesBeneficiary Market Money Fund Templeton Sinoam Franklin - - Franklin Templeton Sinoam Money Market Money Fund Templeton Sinoam Franklin - Taian Etc. Insurance Ltd. Co., Beneficiary certificatesBeneficiary Market Money Fund Templeton Sinoam Franklin - Market Fund Money Prudential- Financial Ho An Insurance Agency Co., Ltd. Etc. Ltd. Co., Insurance An Agency Ho - Franklin Templeton Sinoam Money Market Money Fund Templeton Sinoam Franklin - Etc. Ltd. Co., Insurance An Agency Ho Etc. Ltd. Co. Holding Financial First - Stock Ltd. Co., Bestaiwan Beneficiary certificatesBeneficiary Market Fund BOT Money - Stock - Mega Financial Holding Company Holding Financial Mega - Stock Nan Shan Life Insurance Life Perpetual Bonds Shan Nan Subordinated President securites Corp-PGNW0085 Ho An Insurance Agency Co., Ltd. Etc. Ltd. Co., Insurance An Agency Ho - Toyota Motor - Corporation Corporation Etc. & Electric Engineering Shihlin - Etc. Ltd. Co., Insurance An Agency Ho Securities held by held Securities Ho Tai Cyber Connection Co., Ltd Co., Connection Tai Cyber Ho certificates Beneficiary Hotai Finance Co., Ltd. Co., Finance Hotai Toyota Material Handling Taiwan Ltd. Taiwan Toyota Material Handling certificates Beneficiary Ltd. Co., Carmax Ltd. Co., Tai Development Ho Ltd Co., & Marketing Tai Service Ho Table 3 Ho Tai MotorHo Ltd. Co., Ltd. Co., Leasing Hotai Hozan Investment Co., Ltd. Hozan Investment Co.,

Footnote - 50,108 50,108 22,939 Fair value Fair $ $ $ - 10.48% Ownership (%) Ownership 108 50,000 22,939 50,108 Book value Book As of 31, 2019 December As

$ $ $ 4,827,821 - Number of Number shares

General ledger account ledger General Financial assets profit non- through at or- fair loss Financial value current adjustmentValuation assets of financial Total Financial assets other through at fair comprehensive Financial value non-current - income None Not applicable securities issuer Relationship with the with Relationship Type and name of and Type securities name Beneficiary certificatesBeneficiary Market Money Fund Templeton Sinoam Franklin - Securities held by held Securities Shanghai Ho-Yu (BVI) Investment Ltd.Co., Ho-Yu Shanghai Investment Corporation (BVI) Finance YU-TU Hotai Innovation marketing corporation marketing Innovation Hotai Note: Hotai Insurance Co., Ltd. does Insurance Hotai notNote: need Ltd. to an insurance Co., it as is be disclosed company. - 357,000 305,000 190,543 Amount $ $ $ $ $ $ $ $ - - 2019 shares Balance Balance as at 31, December Number of

- - 584 2,342 disposal Gain (loss) on Gain $ $ $ $ 391,924 29, $ 482,807 22, $ $ -$ -$ -$ -$ 142,140$ 142,140$ 633,731$ 633,731$ Book Book value tal - - Disposal 142,724 636,073 Selling price Selling $ $ $ $ $ $ - - - shares 13,784,868 Number of

-$ -$ 335,000$ 335,000$ 357,000 728,331 Amount $ $ $ $ - - Addition shares 32,290,447 Number of

-$ -$ -$ 482,807 22, -$ 112,140$ 112,140$ Amount Ho Tai Motor Co., Ltd. - - - Year ended Year December 31, ended 2019 Balance as at as Balance January 1, January 2019 shares 10,886,345 Number of

95,943$ 95,943$ (Expressed in thousands of New Taiwan dollars, except as otherwise indicated) asdollars, (Expressed in Taiwan thousands otherwise of New except Subsidiary the investor the Not applicable Not applicable Relationship with Relationship Ltd. Yu (BVI) Counterparty Shanghai Ho- Not applicable Not applicable Not applicable Not applicable Investment Co., Investment Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capi $300 ormillion exceeding 20% Company's accumulated cost the the of with or same the of sale security Acquisition General ledger account ledger General Investments accounted Investments method for using equity Financial assets at fair Financial through or profit value current loss - Financial assets at fair Financial through or profit value current loss - Financial assets at fair Financial through or profit value current loss - securities Marketable Shanghai Ho-Yu Investment (BVI) Ltd. Co., Prudential Money Financial Market Fund Franklin Templeton Sinoam Money Market Fund President Corp.- Securities PGNW0085 Investor Note: Hotai Insurance Co., Ltd. does not need to be disclosed as it is an disclosed to not be Co.,need does Hotaiinsurance company. Ltd. Note: Insurance Ho Tai Motor Ltd. Co., Hozan Investment Ltd. Co., Table 4 Table Hozan Investment Ltd. Co., Ho Tai Co., Development Ltd. Other commitments o owners nt of the the of nt real estate real Operation purposeOperation None Reason for acquisition of acquisition for Reason real estate and status of the and status estate real equity attributable t attributable equity in in setting the price Basis or reference used or reference Basis Evaluated by Evaluated appraisal professional institute and active price market % of paid-in capital shall be replaced by 10% of 10% by replaced be shall capital paid-in of % ise indicated) Prior transaction ofcounterparty related Prior transaction - - - - 31, 2019 31, Owner Relationship date Transfer Amount d be appraised d be Ho Tai MotorHo Co., Tai Ltd. with the Year December ended Year counterparty Relationship The third party third The Counterparty (Expressed in thousands of New Taiwan dollars, except as otherw as except dollars, of Taiwan New thousands in (Expressed Acquisition of real estate reaching NT$300 or 20%million or more reaching of capital paid-in of estate real Acquisition Three Shine Trading Shine Three Ltd. Co., payment Status of Status $540,000 $540,000 amount Transaction 2019.8.2 ted in the ‘Basis or reference used in setting the price’ column if the real estate acquired shoul acquired estate real if the column price’ the setting in used or reference ‘Basis the ted in d be presen d be Real estate acquired estate Real of event Date the No. 24, 34 and 34-1, 34 and 24, No. Peipo Section, Dist., New Tucheng Taipei City Real estate Real acquired by acquired calculation. the in of parent the amou monetary the and counterparty the confirm can of that date date or board other of order, transfer, ofdate of date ofdate resolution, title a trading payment, execution signing, of date contract is the to herein referred Noteof 3: Date event the earlier. is whichever transaction, Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 NT$10the than share, per other value or par a no par value with issued were shares that case the of In company. parent capital paid-in is the to herein referred capital Note 2: Paid-in Table 5 Table shoul result appraisal Note 1: The Ho Tai Service & Service Ho Tai Co., Marketing Ltd.

″ ″ ″ ″ ″ ″ Note 1 Footnote ------2% 2% 2% 1% 3% 3% 1% 2% 1% 9% 7% 7% 6% 6% 9% 2% 5% 4% 8% 42% 14% 20% 58% 13% 22% 13% 11% 20% 21% 22% 15% 15% 12% 12% 11% total (payable) receivable Percentage of notes/accounts

- - - 246 550)

1,263) 2,600)

41,472 51,183 12,919 41,134) 93,426) 31,054 11,991 54,301) 76,721 77,135 64,797 62,141 64,276) 12,919) 25,690) 21,380) 36,973 340,243 181,879) 255,694 324,251 254,522) 250,172) 250,172 144,901 126,401 102,875 113,940) 117,372) 122,580) 264,540 448,873 248,266 181,879

4,786,371) 1,137,609)

Balance

Notes/accounts receivable (payable) ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( Notes/accounts receivable (payable) ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Credit term Credit Not applicable Not ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Normal Normal Normal Normal Unit price Not applicable Not Not applicable Not Not applicable Not Differences in transaction terms transaction in Differences Differences in transaction terms transaction in Differences from from from from from from from from from from from nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing Credit term Credit after the end of each month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after after the end of each month each of end the after after the e the after after the e the after e the after after the e the after after the e the after after the e the after after the e the after after the e the after after the e the after after the e the after after the e the after nvoice datenvoice Transaction Transaction Closes its accounts 7 days transaction date transaction Collection at sight Collection at sight Collection at sight Closes its accounts 15 days Closes its accounts 15 days Closes its accounts 16 days Closes its accounts 15 days Closes its accounts 16 days Closes its accounts 15 days Closes its accounts 15 days i after 14 days Collection at sight 7 days after date invoice 7 days after date invoice Closes its accounts 16 days Closes its accounts 10 days Closes its accounts 35 days Closes its accounts 35 days Closes its accounts 25 days Closes its accounts 40 days Closes its accounts 40 days Closes its accounts 40 days Closes its accounts 10 days Closes its accounts 10 days Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 15 days Closes its accounts 7 days transaction date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days transaction date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days transaction date transaction on or 20% of paid-in capital or more - - - - $100 milli $100 2% 2% 2% 1% 3% 2% 2% 1% 4% 3% 1% 9% 8% 8% 7% 5% 4% 4% 9% 2% 8% 9% 1% 2% 19% 20% 28% 43% 73% 32% 12% 11% 11% 10% 18% 16% 15% 13% 12% (sales) Percentage of total purchases total Ho TaiHo Motor Co., Ltd. 147,392 512,354 124,227 828,352 313,764 152,573 640,044 484,796 213,172 612,671 553,305 499,035 443,681 340,014 290,584 245,099 473,711 124,227 647,094

1,015,101 3,104,647 2,139,978 1,951,519 2,139,978 5,954,803 5,443,416 5,252,153 4,870,355 4,035,189 4,476,212 2,663,928 2,576,511 2,187,417 2,663,928

50,513,418 10,235,502 Year ended December 31, December Year ended 2019

Amount

″ 32,390,170 ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ 22,529,225 ″ 19,528,719 ″ 18,390,880 ″ 16,496,040 ″ ″ ″ 14,464,154 ″ Sales Sales 24,687,620 (sales) Purchases Purchases Purchases (Expressed in thousands Taiwan ofdollars, New except as otherwise indicated) Purchases or sales of goods from or to related parties reaching s ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ with the Subsidiary Subsidiary Subsidiary Subsidiary Associates Associates Associates Associates Associates Associates Associate counterparty Relationship Ultimate parent company Ultimate parent company parent Ultimate trolled by the Company's key management key Company's the by trolled Entity controlled by the Company'smanagement key Entity controlled by the Company'smanagement key Entity controlled by the Company'smanagement key Entity controlled by the Company'smanagement key Counterparty Toyota South Africa Motors (Pty) Ltd. Entity con Hotai Leasing Co., Ltd. Hoing Mobility Corporation Service Ltd. Co., Carmax Toyota Motor Corporation Toyota Motor Asia Pacific Pte Ltd. Ltd. Co., Carmax Toyota Motor Europe - NV/SA Yokohama Tire Taiwan Co., Ltd. Hino Motors, Ltd. Toyota Motor Sales-USA Ltd. Co., Enterprise Hozao Hotai Leasing Co., Ltd. Lang Yang Toyota Motor Co., Ltd. Ltd. Motors, Kuozui TaiHo Motor Co., Ltd. Ltd. Motors, Kuozui MotorZhongyang Co., Ltd. Wang Fu Co., Ltd. Innovation AUTO Parts Co., Ltd. Nan Motor I Co., Ltd. Chang Guan Logistics Co., Ltd. Tung Yu Motor Co., Ltd. Smart Co., Design Ltd.Technology TaiHo Motor Co., Ltd. Central Motor Co., Ltd. Kuotu Motor Co., Ltd. Du AutomobileKau Co., Ltd. Tau Miau Motor Co., Ltd. Nan MotorDu Co., Ltd. Ltd. Co., Motor Toyota Taipei Lang Yang Toyota Motor Co., Ltd. Central Motor Co., Ltd. Motors,Kuozui Ltd. Ho Tai Motor Co., Ltd. Tau Miau Motor Co., Ltd. Kuotu Motor Co., Ltd. Taipei Toyota Motor Co., Ltd. Kau Du Du Kau Automobile Co., Ltd. Easterm Motor Co., Ltd. Lang Yang Toyota Motor Co., Ltd. Nan MotorDu Co., Ltd. Chang Yuan Motor Co., Ltd. Purchaser/seller Table 6 Ho TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. TaiHo Motor Co., Ltd. Chang Yuan Motor Co., Ltd. Chang Yuan Motor Co., Ltd. Chang Yuan Motor Co., Ltd. Chang Yuan Motor Co., Ltd. Chang Yuan Motor Co., Ltd. Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Carmax Carmax Co., Ltd. Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Finance Hotai Ltd. Co., Finance Hotai Ltd. Co., Finance Hotai Ltd. Co., Finance Hotai Ltd. Co., Finance Hotai Ltd. Co., Finance Hotai Ltd. Co., Finance Hotai Ho TaiHo Motor Co., Ltd. Ho TaiHo Motor Co., Ltd. Ho TaiHo Motor Co., Ltd. Ho TaiHo Motor Co., Ltd. Ho TaiHo Motor Co., Ltd. Ho TaiHo Motor Co., Ltd. Ho TaiHo Motor Co., Ltd. Ho TaiHo Motor Co., Ltd.

″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Note 1 Note 2 Footnote ------2% 1% 1% 9% 3% 7% 7% 89% 43% 39% 92% 12% 67% 31% total (payable) receivable Percentage of notes/accounts

------,409)

3,620) 3,026)

41,472) 14,976 10,223) 51,183) 14,976) 14,745 14,745) Balance

------3,620 64,276 35,425 Notes/accounts receivable (payable) ( ( ( ( ( ( ( 35,425) ( ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Credit term Credit ″ ″″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Normal Unit price Not applicable ″ ( 4 Differences in transaction terms transaction in Differences from nd of each week, interestnd of week, each bearing Credit term Credit after the end of each month each of end the after month each of end the after month each of end the after month each of end the after after the end of each month each of end the after after the e the after Transaction Closes its accounts 7 days transaction date transaction Payment Payment at sight Collection at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Collection at sight Closes its accounts 10 days Closes its accounts 60 days Closes its accounts 60 days Closes its accounts 30 days Closes its accounts 15 days after the monthof end each advance in Payment Closes its accounts 30 days Payment in advance in Payment Payment in advance in Payment Payment in advance in Payment Payment in advance in Payment Payment in advance in Payment Payment in advance in Payment 1% 8% 7% 7% 6% 5% 4% 3% 1% 2% 89% 43% 90% 24% 18% 53% 18% 24% 97% 34% 51% 89% 90% 97% 98% 11% 100% 100% (sales) Percentage of total purchases total 646,339 896,924 811,856 641,482 484,796 467,180 122,340 512,354 646,339 473,711 192,332 192,332 136,392 117,196

1,513,927 2,465,817 1,059,314 1,015,101 1,513,927 2,187,417 2,091,864 1,467,123 1,519,248

Amount

2,205,456 2,141,363 ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Ɇ Sales Sales Sales Sales Sales (sales) Purchases 3,141,820 Purchases 285,749 Purchases Purchases Purchases Purchases 136,392 Purchases ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Ɇ with the Subsidiary Subsidiary Associates Associates Associates Associates Associates counterparty Relationship Parent company Parent company Parent company Ultimate parent company parent Ultimate company parent Ultimate Entity controlled by the Company'smanagement key Entity controlled by the Company'smanagement key re re provided in Note 7(2)B(h). Counterparty Ltd. Easterm Motor Co., Ltd. Hoing Mobility Corporation Service Central Motor Co., Ltd. Ltd. Co., Motor Toyota Taipei TaiHo Motor Co., Ltd. Central Motor Co., Ltd. Tau Miau Motor Co., Ltd. Du AutomobileKau Co., Ltd. Chang Yuan Motor Co., Ltd. Nan MotorDu Co., Ltd. Lang Yang Toyota Motor Co., Ltd. Hotai Leasing Co., Ltd. TaiHo Motor Co., Ltd. Ltd. Co., Finance Hotai Ltd. Co., Carmax Ltd. Co., & Marketing Tai Service Ho TaiHo Co.,Development Ltd. Hotong Motor Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Ho Tai Motor Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Ltd. tor Sale tor tor Sales & Sales tor Purchaser/seller Hotai Finance Co., Ltd. Co., Finance Hotai Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hoing Mobility Corporation Service Hoing Mobility Corporation Service Eastern Motor Co., Ltd. Eastern Motor Co., Ltd. Toyota Material Handling Taiwan Ltd.Smart Co., Design Ltd.Technology Toyota Industries Corporation TaiHo Co.,Development Ltd. Ltd. Co., & Marketing Tai Service Ho Shanghai Motor Heling Co., Service Ltd. Toyota Motor (China) Investment Co., Carmax Autotech (Shanghai) Co., Ltd. Hotong Motor Investment Co., Ltd. Carmax Autotech (Shanghai) Co., Ltd. Chongqing Lexus Heling Motor Sales & Ltd. Co., Service a Details party. related to sales installment the was It Note1: Note2: Hotai Leasing Co., Ltd. and Hoing Mobility Corporation Service purchase for vehicles renting services, the related assets are reported under property, plant, and equipment. Nanchang Heling LexusNanchang Heling Motors Sales & Ltd. Co., Service Shanghai Yangpu Lexus Heling Mo & Co., Service Ltd. Tangshan Lexus Heling Mo Ltd. Co., Service Tianjin Lexus Heling Motor Sales & Ltd. Co., Service Tianjin Hozhan Motor Co., Service Ltd. Toyota Motor (China) Investment Co., ------Allowance for Allowance doubtful accounts doubtful

9,297 9,689 7,702 35,799 18,917 12,082 13,314 126,401 102,875 144,901 250,172 248,266 255,694 264,540 324,251 181,879 340,243 448,873 subsequent to the subsequent balance sheet date sheet balance Amount collected Amount

ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ Action taken Action ------Overdue receivables Overdue Amount

4.44 4.61 7.87 6.06 57.90 52.43 59.11 54.50 12.25 64.72 55.60 Turnover rate Turnover

$ 126,401 $ 102,875 $ 144,901 December 31, 2019 December Ho Tai Motor Co., Ltd. H T i M t C Ltd Balance as at Balance Ƀ December 31, 2019 December Other receivables Other $ 9,297 Other receivables Other $ 35,799 Accounts receivable Accounts $ 248,266 Other receivables Other receivable Accounts $ 9,689 $ 255,694 Other receivables Other receivable Accounts $ 7,702 $ 264,540 Other receivables Other $ 18,917 Accounts receivable Accounts $ 324,251 Other receivables Other $ 12,082 Accounts receivable Accounts $ 181,879 Other receivables Other $ 13,314 Accounts receivable Accounts $ 340,243 Accounts receivable Accounts $ 448,873 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated) as otherwise except Taiwan dollars, New in thousands of (Expressed Receivables from related parties reaching $100 million or 20% of paid-in capital or more capital paid-in 20% of or $100 million reaching parties related from Receivables ɃɃ ɃɃ Ƀ Ƀ Ƀ Ƀ Associates Associates Subsidiary Relationship with the counterparty with the Ultimate parent companyparent Ultimate receivable Accounts $ 250,172 Associates Counterparty Central Motor Co., Motor Ltd. Central Creditor Ho Tai Motor Co., Ltd. Carmax Co., Ltd.Carmax Co., Motor Ltd. Zhongyang Carmax Co., Ltd.Carmax Co., Ltd. Fu Wang Carmax Co., Ltd.Carmax Motors, Ltd. Kuozui Carmax Co., Ltd.Carmax Tai MotorCo., Ho Ltd. Table 7 Table Ho Tai Motor Co., Ltd. Motor Co., Ltd. Taipei Toyota Ho Tai Motor Co., Ltd.Co., Ltd. Du Automobile Kau Ho Tai Motor Co., Ltd. Du Motor Co., Ltd. Nan Ho Tai Motor Co., Ltd. Tau Miau Motor Co., Ltd. Ho Tai Motor Co., Ltd. Motor Co., Ltd. Chang Yuan Ho Tai Motor Co., Ltd. Kuotu Motor Co., Ltd. ------1% 1% 1% 1% assets Percentage of total operating total revenues total or he Transaction terms end of following two months end of each interestweek, end bearing of transaction date from end of each interestweek, end bearing of transaction date from end of eachmonth end of end of each interestweek, end bearing of transaction date from eachmonth end of end of each interestweek, end bearing of transaction date from end of eachmonth end of Transaction 30,772 56,697 44,763 92,868 71,283 31,250 15,101 41,472 51,183 181,879 250,172 646,339 123,650 154,810 512,354 179,777 484,796 124,227 2,663,928 2,187,417 2,139,978 1,0 1,419,432 Amount

sight at Collection

theafter accounts 16 its days Closes at sight Collection at sight Collection theafter accounts 16 its days Closes at sight Collection theafter accountsits 16 days Closes $ $ theafter accountsits 7 days Closes theafter accountsits 7 days Closes

t after accountsits 7 days Closes theafter accountsits 16 days Closes theafter accountsits 7 days Closes sign at Collection sight at Collection ble ble

ue ise indicated) ise expense and allowances and Other income Sales revenue Sales Sales revenue Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenueSales Sales revenue Sales Sales revenue Sales Sales revenue Sales revenue Sales Rental income Rental Service revenService Accounts payable Accounts Accounts receivable Accounts Accounts receiva Accounts Accounts receiva Accounts Compensation Compensation General ledger account ledger General 1 discounts Sales 1 1 3 1 2 3 3 1 1 1 1 1 1 3 1 3 1 1 1 3 3 (Note 2) Ho Tai Motor Co., Ltd. Co., Tai Motor Ho Relationship Year ended December 31, 2019 31, December ended Year Significant inter-company transactionsduring periods the reporting inter-company Significant (Expressed in thousands of New Taiwan dollars, except as otherw as except in New Taiwan(Expressed thousands dollars, of Counterparty Chang Yuan Motor Co., Ltd. YuanChang Co., Motor Chang Yuan Motor Co., Ltd. YuanChang Co., Motor Chang Yuan Motor Co., Ltd. YuanChang Co., Motor Chang Yuan Motor Co., Ltd. YuanChang Co., Motor Chang Yuan Motor Co., Ltd. YuanChang Co., Motor Chang Yuan Motor Co., Ltd. YuanChang Co., Motor Ho Tai Motor Co., Ltd. Co., Motor Tai Ho Doroman Autoparts Co., Ltd. Co., Autoparts Doroman Chang Yuan Motor Co., Ltd. YuanChang Co., Motor Eastern Motor Co., Ltd. Co., Eastern Motor Ltd. Co., Eastern Motor Carmax Co., Ltd. Co., Carmax Ltd. Co., Carmax Ltd. Co., Service Mobility Hoing Ltd. Finance Co., Hotai Hotai Leasing Co., Ltd. Co., Leasing Hotai Hotai Leasing Co., Ltd. Co., Leasing Hotai Hotai Finance Co., Ltd. Finance Co., Hotai Hotai Leasing Co., Ltd. Co., Leasing Hotai Hotai Finance Co., Ltd. Co., Finance Hotai Hotai Leasing Co., Ltd. Co., Leasing Hotai Eastern Motor Co., Ltd. Eastern Co., Motor Company name Company 0 Ltd. Co., Tai Motor Ho 0 Ltd. Co., Tai Motor Ho 0 Ltd. Co., Tai Motor Ho 0 Ltd. Co., Tai Motor Ho 0 Ltd. Co., Tai Motor Ho 3 Ltd. Co., Carmax 0 Ltd. Co., Tai Motor Ho 3 Ltd. Co., Carmax 3 Ltd. Co., Carmax 0 Ltd. Co., Tai Motor Ho 0 Ltd. Co., Tai Motor Ho 2 Ltd. Eastern Co., Motor 0 Ltd. Co., Tai Motor Ho 0 Ltd. Co., Tai Motor Ho 00 Ltd. Co., Tai Motor Ho Ltd. Co., Tai Motor Ho 1Ltd. Yuan ChangCo., Motor 0 Ltd. Co., Tai Motor Ho 0 Ltd. Co., Tai Motor Ho 1Ltd. Yuan ChangCo., Motor 2 Ltd. Eastern Co., Motor 1Ltd. Yuan ChangCo., Motor (Note 1) Number Table 8 ------assets Percentage of total operating total revenues total or the the Transaction terms end of eachmonth end of end of eachmonth end of end of eachmonth end of end of eachmonth end of end of eachmonth end of Transaction 75,304 51,949 32,606 37,352 42,139 62,675 72,986 35,425 37,070 39,137 64,276 85,866 76,769 44,936 31,616 136,392 473,711 192,332 117,207 130,086 111,196 135,497 191,480 114,201 1,513,927 Amount

after accounts 60 its days Closes

after accounts 10 its days Closes

theafter accounts 60 its days Closes

theafter accounts 30 its days Closes

theafter accounts 10 its days Closes

at sight Collection ium enue Sales rev Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Sales revenue Sales Otherpayables Other payables Other Other payables Other payables Other Other payables Other payables Other payables Other Other payables Other Other payables Otherreceivables Insuranceprem Accounts receivable Accounts Accounts receivable Accounts Internal - rental income - Internal General ledger account ledger General 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 (Note 2) Relationship d. Counterparty Ltd. Ltd. Hotai Leasing Co., Ltd. Co., Leasing Hotai Service Co., Ltd. Co., Service Ltd. Ltd. Service Co., Ltd. Co., Service Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Hoing Mobility Service Co., Ltd. Co., Service Mobility Hoing Hoing Mobility Service Co., Ltd. Co., Service Mobility Hoing Company name Company 8 Ltd. Marketing Co., Tai& Service Ho Lt Co., Development Tai Ho 8 Ltd. Marketing Co., Tai& Service Ho Ltd. Co., Development Tai Ho 7 Ltd. Co., Investment Motor Hotong Service Co., & Sales Motor Toyota Ho-Yu Zaozhuang 7 Ltd. Co., Investment Motor Hotong 7Co., Service & Sales Motors Nanchang Lexus Heling Ltd. Co., Investment Motor Hotong 7 Ltd. Co., Service Motor Shanghail Hozhan Ltd. Co., Investment Motor Hotong Trading Co., Equipment Logistics ShanghaiHo-Qian 7 Ltd. Co., Investment Motor Hotong Ltd. Co., Service Motor Shanghail Hozhan 9 Ltd Insurance Co., Hotai 4 (Shanghai) Ltd. Autotech Co., Carmax Ltd. Co., Investment Motor Hotong 4 (Shanghai) Ltd. Autotech Co., Carmax Ltd. Co., Carmax 7 Ltd. Co., Investment Motor Hotong & Sales Motor Shanghai Lexus Yangpu Heling 7 Ltd. Co., Investment Motor Hotong Co., Service & Sales Motors Nanchang Lexus Heling 5Ltd. Co., Technology Design Smart Ltd. Co., Carmax 5Ltd. Co., Technology Design Smart Ltd. Co., Carmax 7 Ltd. Co., Investment Motor Hotong & Sales Motor Shanghai Lexus Yangpu Heling 6 Ltd. Co., Leasing Hotai 7 Ltd. Co., Investment Motor Hotong Co., Service & Sales Motor Shanghai Lexus Heling 6 Ltd. Co., Leasing Hotai 77 Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Service & Sales Motor Tianjin Lexus Heling Co., Service & Sales Motor Shanghai Lexus Heling 3 7 Ltd. Co., Investment Motor Hotong Co., Service & Sales Motor Lexus Heling Chongqing 7 Ltd. Co., Investment Motor Hotong Ltd. Co., Tianjin Service Motor Hozhan 7 Ltd. Co., Investment Motor Hotong Co., Service & Sales Motor Tangshan Lexus Heling 7 Ltd. Co., Investment Motor Hotong Co., Service & Sales Motor Lexus Heling Chongqing 7 Ltd. Co., Investment Motor Hotong Co., Service & Sales Motor Tangshan Lexus Heling (Note 1) Number The numbers filled for inter-company transactions follows: are as inter-company for filled The numbers "0". numbered is 1.Thecompany parent "1". 2.The from arenumbered starting subsidiaries thetransaction follows: are as parties among The relationships the subsidiary. to 1.Thecompany parent theto parent company. 2.The subsidiary anotherto subsidiary. 3.The subsidiary follows: as is assets revenues total or total consolidated over transactionThe amount of percentage at eneding period; assets total the consolidated ending usingover the are calculated balance and liabilities Assets period. the revenue of total theconsolidated over theperiod of using theamount calculated is Sales Ǻ Ǻ Ǻ Note 2 Note 3 Note 1

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Footnote Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary equity method equity equity method equity equity method equity equity method equity equity method equity owned owned subsidiary Investee company Investee Investee company Investee Investee company Investee Investee company Investee accounted for using the accounted for using accounted for using the accounted for using accounted for using the accounted for using accounted for using the accounted for using accounted for using the accounted for using - 4,354 6,204 2,512

24,150 15,077 20,071 60,482

303,730 104,826 147,888 411,819 142,417 877,941 243,292 435,950 134,711 119,804 121,330 2,199,949

31, 2019 the Company for the Company Investment income Investment income (loss) recognized by recognized (loss) the year ended December ended the year wholly- indirect An

company Investee

$ $ 5,614 22,676 21,772 96,599 29,346 78,797 20,071 547,498 675,638 754,811 411,819 409,127 877,941 812,159 854,804 134,711 333,425 597,525 512,590

2,199,949

the year ended the year Net (loss) profit of the investee for the of investee December 31, 2019 December

$ $ 16,636 125,552 111,996 124,467 357,798 293,845 378,068 977,506 501,798 1, 616,032 2, 528,177 2, 150,614 4, 078,674 1, 834,220 5, 315,317 4, 284,584 1, 1,361,522 1,124,145 1,009,110

20,714,779

Book value

$ $ 70.00 70.00 20.00 20.00 25.00 25.00 21.14 21.14 20.00 20.00 44.44 44.44 45.01 45.01 20.00 20.00 20.00 20.00 34.81 34.81 30.00 30.00 51.00 20.00 20.05 23.67

100.00 100.00 100.00 100.00 100.00 (%)

Ownership 3,000 960,961 211,433 500,000 3, 295,108 1, 000,000 2,

153,573 15, 710,856 24, 000,000 15, 397,360 79, 438,987 25, 765,670 33, 950,000 22, 597,690 70, 22,161,150 17,553,761 14,806,073 Shares held as at December 31, 2019 as at December held Shares 313,500,000 103,800,000 Number of shares of Number

- - 3,000 7,400 5,557 10,763 73,787 80,000 50,000 104,930 256,000 326,463 201,700 153,030 186,851

324,655 1, 098,966 2, 765,743 1, 390,907 4, 7,780,182 1,236,592 1,010,667

Balance as as at Balance December 31, 2018 December

$ $ 3,000 7,400 10,763 87,520 73,787 80,000 50,000 104,930 256,000 326,463 201,700 153,030 186,851

Ho Tai Motor Ltd. Co., Ho Tai 1,324,655 2,380,333 2,098,966 4,390,907 7,780,182 1,236,592 1,010,667

Initial investment amount Year ended December 31, 2019 December Year ended Balance at Balance December 31, 2019 December

$ $ (Expressed in thousands of New Taiwan dollars, except as otherwise indicated) as otherwise except dollars, Taiwan New of thousands in (Expressed Ƀ Ƀ Ƀ Names, locations and other information of investee companies (not including investees in Mainland China) Mainland in investees (not including companies investee of otherand information locations Names, Main business activities business Main Electronic parts and Electronic manufacturing components Import and export of all kinds Import exportand all of tubes inner and tires of Manufacturing and sales of sales and Manufacturing screws precision Sales of vehicles and partsand and vehicles of Sales vehicles of repairing Production and marketing of Production marketing and products packaging Agent for sales of air of for sales Agent and system conditioning conditioning air of contracting construction repairing of vehicles of repairing Sales of vehicles and partsand and vehicles of Sales vehicles of repairing partsand and vehicles of Sales vehicles of repairing Sales of vehicles and partsand and vehicles of Sales vehicles of manufacturing vehicle of Trading products/accessories partsand for vehicles of Sales use industry General investment General Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ ɃɃ ɃɃ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Taiwan partsand and vehicles of Sales Taiwan Location British Virgin Islands Virgin British investment General British Virgin Islands Virgin British investment General e Packaging Corp. e Packaging Investee Yuan MotorYuan Co., Ltd. Tienjin Ho Yu Investment Co., Ho Yu Investment Tienjin Ltd. Ltd. Smart Design Technology Co., Technology Smart Design Yokohama Tire Taiwan Co., Ltd.Taiwan Tire Yokohama Ltd. Shi-Ho Screw Industrial Co., Ltd. Screw Industrial Shi-Ho Tau Miau Motor Ltd. Co., Miau Tau Investment Co., Ltd. Co., Investment Formosa Flexibl Formosa Ho Tai Development Co., Ltd. Co., Development Ho Tai Ltd. Lang Yang Toyota Motor Co., Toyota Yang Lang Central Motor Ltd. Co., Central Hozan Investment Co., Ltd.Investment Hozan Co., Ltd. Du Automobile Kau Motor Ltd. Co., Kuotu Motor Ltd. Co., Du Nan Chang Chang Shanghai Ho-Yu (BVI) Shanghai Motor Ltd. Co., Toyota Taipei Motor Ltd. Co., Eastern Kuozui Motors, Ltd. Motors, Kuozui Ltd. Co., Carmax Taiwan Handling Toyota Material Investor Shanghai Ho-Yu (BVI) Investment Co.,Ho-Yu (BVI) Investment Shanghai Ltd. Ho Tai HoMotor Tai Co., Ltd. Ho Tai HoMotor Tai Co., Ltd. Ho Tai HoMotor Tai Co., Ltd. Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai HoMotor Tai Co., Ltd. Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai HoMotor Tai Co., Ltd. Table 9 Table

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Footnote owned owned subsidiary owned owned subsidiary owned owned subsidiary owned owned subsidiary owned owned subsidiary company accounted for company company accounted for company company accounted for company company accounted for company using the equity method the equity using using the equity method the equity using using the equity method the equity using using the equity method the equity using ------

31, 2019 the Company for the Company Investment income (loss) recognized by recognized (loss) the year ended December ended the year wholly- indirect An Subsidiary wholly- indirect An

wholly- indirect An

investee Subsidiary's wholly- indirect An

investee Subsidiary's wholly- indirect An investee Subsidiary's investee Subsidiary's

- -

536 356) 8, 9,309 9,309 8,428) 10,754 21,772 74,569 100,381) 106,247 283,157 283,157 139,623 327,478 409,127 106,929 651,102

235,585 2, the year ended the year Net (loss) profit of the investee for the of investee December 31, 2019 December

( ( ( ( ( ( - - 109 9,690 16,837 51,201 11,101 31,196 104,745 116,079 335,909 330,318 586,465 274,393 104,779

623,4001, 657,0521, 423,832 7, 313,1929, 2,528,492

Book value

- - 0.00 0.00 61.77 61.77 49.50 49.50 24.50 24.50 50.50 50.50 40.00 40.00 24.50 24.50 99.80 99.80 45.39 45.39 40.00 40.00 18.29 66.04

100.00 100.00 100.00 100.00 100.00 100.00 100.00 (%)

Ownership - 2,000 138,718 882,000 882,000

000,000 3, 968,016 2, 000,000 1, 200,000 1, 823,128 3, 3,000,000

600,000 39, 000,000 23, 400,000 40, 960,531 19, 470,156 20, 652,898 12, 83,629,381 30,000,000 Shares held as at December 31, 2019 as at December held Shares 233,782,831 Number of shares of Number

77 500 8,820 8,820 2,400 89,940 33,242 10,000 89,940 35,976 34,756 50,000

230,000 298,864 727,060 181,907 300,000

187,208 1, 211,192 1, 831,887 6, Balance as as at Balance December 31, 2018 December

- 77 500 8,820 8,820 89,940 33,242 10,000 62,003 35,976 89,940 34,756

298,864 230,000 100,000 181,907 300,000

1,211,192 1,187,208 6,831,887 Initial investment amount Balance at Balance December 31, 2019 December

Main business activities business Main Wholesale and retail of retail and Wholesale parts assessories and vehicles Electronic parts and Electronic manufacturing components E-commerce platform services platform E-commerce used vehicles of Retail and wholesale of wholesale and Retail collections General investment General Property casualty and services insurance Wholesale and retail of paints of retail and Wholesale coating and of various vehicles various of Sales of vehicles and partsand and vehicles of Sales vehicles of repairing Advertisement making Advertisement Leasing of vehicles of Leasing vehicles of Leasing investment General Installment trading of various of trading Installment vehicles their of trading and equipment parts Ƀ Ƀ ɃɃ Ƀ Ƀ ɃɃ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Samoa Taiwan Taiwan leasing and trading Installment Taiwan conditioning air of Repairing Location British Virgin Islands Virgin British investment General British Virgin Islands Virgin British investment General ., Ltd ., Ltd. arketing Co., arketing Investee Air Master International Co., Ltd.Master International Air Samoa investment General Doroman AutopartsDoroman Co., Ltd. Hotai Innovation M International Hoyun Ho Tai Cyber Connection Co., Connection Cyber Tai Ho Heng Yun Investment Co., Ltd. Investment Yun Heng Hotai Insurance Co., Ltd Co., Insurance Hotai Ltd. Limited Taipei Toyota Motor Ltd. Co., Toyota Taipei Hotai Finance Co., Ltd. Hotai Finance Smart Design Technology Co., Technology Smart Design Ltd. Ltd. Limited Hozao Co Enterprise Ltd. Kashiwabara Hotai Taiwan Co., Hotai Taiwan Kashiwabara Ltd. Hoyun International Hoyun Interface Communications Ltd. Communications Interface Beijing Ho-Yu (BVI) Investment Beijing Ltd. Co., Co., Marketing & HoService Tai Hotai Leasing Co., Ltd. Hotai Leasing Hoing Mobility Service Co Co., Ltd. International Ichiban Ltd. Investor Ichiban International Co., Ltd. International Ichiban Eastern Motor Co., Ltd. Carmax Co., Ltd. Carmax Hozan Investment Co., Ltd. Co., Ltd. Hotai Finance Co., Ltd. Hotai Leasing Ho Tai Service & Marketing Co., Marketing & Ltd. HoService Tai Co., Hotai Taiwan Kashiwabara Hozan Investment Co., Ltd. Co., Investment Hozan Hozan Investment Co., Ltd.Investment Hozan Hozan Investment Co., Ltd. Co., Investment Hozan Ho Tai Development Co., Ltd. HoDevelopment Tai Hozan Investment Co., Ltd. Co., Investment Hozan Hozan Investment Co., Ltd.Investment Hozan Ho Tai Development Co., Ltd. HoDevelopment Tai Shanghai Ho-Yu (BVI) Investment Co.,Ho-Yu (BVI) Investment Shanghai Ltd. Co., Ltd.Investment Hozan Co., Ltd.Investment Hozan Co., Ltd. Hotai Leasing Co., Ltd. HoDevelopment Tai Co., Ltd. HoDevelopment Tai

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Footnote ------

91,074 26,106 investment income of December 31, 2019 31, December of Accumulated amount Accumulated of

Note 2.1

Note 2.2 Note 2.2

Note 2.1

Note 2.2 Note 2.2

Note 2.1

remitted back to Taiwan as Taiwan to back remitted - 49,305 42,382 58,284 11,018 89,251 11,805 47,144 289,942 210,222 392,874 165,023 408,518 133,464 125,552 311,690 340,740 272,257 107,286 152,863 609,951

5,673,713 1,824,262 December 31, 2019 31, December in Mainland China as of Book ofvalue investment

- - - 351) 425) 4,486 2,130 3,761) 9,016

47,315 24,687 86,145 15,873 12,575 26,948 18,532 99,600 117,345 101,070 131,465 897,404 157,471 321,036 2019 Investment income ended December 31, Company for the year

(loss) by the recognized

( ( ( 35.00 45.01 22.95 55.61 70.00 35.00 55.61 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

indirect) (direct or

Ownership held by the Company - - - 351) 4,486 1,214) 8,356) 9,016 3,830 22,676 99,600 47,315 86,145 35,929 26,948 36,338

107,570 117,345 321,036 101,070 131,465 897,404 283,157 for the ended year December 31, 2019 31, December

40.00

10.48

Net income of investee Net income ( ( ( ------29,980 89,940 11,018 43,081 11,805 89,940 39,873 78,698

101,033 278,814 179,880 104,930 173,884 194,870 957,861 179,880 2,398,400 December 31, 2019 31, December

remittance from Taiwan from remittance

to Mainland China as of

Accumulated amount Accumulated of

------Taiwan Remitted back to

Ho TaiHo Motor Co., Ltd.

------2019 Year ended December 31, December Year ended 2019 614,590 Amount remitted from Taiwan to Remitted to Amount remitted from Taiwan to Mainland China

Taiwan 31, forDecember the ended year Mainland China/ Amount remitted back to Information on investments in Mainland China-Basic information ------(Expressed in thousands Taiwan ofdollars, New except as otherwise indicated) 43,081 29,980 89,940 11,018 11,805 89,940 39,873 78,698

278,814 179,880 104,930 173,884 194,870 179,880 101,033 343,271 2,398,400 Accumulated from Taiwan to January 1, 2019 amount of remittance

Mainland China as of

″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Note 3 Note 3 Note 2 Note 3 Note 2 Note 3 Note 2 Note 1 Note 3 Note 2 method (Note 1) (Note Investment 89,940 89,940 42,933 95,736 89,940 39,873

214,665 409,227 359,760 299,800 128,799 149,900 128,799 173,884 194,870 359,760 179,880 101,033 294,520 104,930 179,880 2,954,379 2,398,400 Paid-in capital Paid-in

ital Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Main business activities Sales and repairing of vehicles Sales and repairing of vehicles services Factoring Sales and repairing of vehicles Sales and repairing of vehicles using and financial management, information services, employee trainings and other services equipment products/accessories support service for vehicles Sales of and parts vehicles for industry use tor Sales & Sales tor Investee Investee in Mainland China Zaozhung Ho-Wan Motor Sales & Shanghai Hozhan Motor Co., Service Chongqing Lexus Heling Motor Sales & Ltd. Co., Service Tianjin Ho-Yu Motor Sales & Service Linyi Heling Lexus Heling MotorLinyi Sales & Ltd. Co., Service Hotong Motor Investment Co., Ltd. Operation making, cap decision ShanghaiMotor Hoyu Co., Service Ltd. ChongQing ToyotaYuou Automobile Ltd. Co., & Service Sales Ltd. Co., Service Ltd. Co., Ltd. Ltd. Co., Service & Co., Service Ltd. Ltd. Co., Service Ltd. Co., Service Ltd. Co., Service Co., Ltd. Ltd. Co., Service Ltd. Co., Service Corporation Tianjin Hozhan Motor Co., Service Ltd. He Zhan Co.,He Development Ltd. Trading of air conditioning Tangshan Lexus Heling Mo Carmax Autotech (Shanghai) Co., Ltd. Trading of vehicle Beijing Hoyu Toyota Hoyu Beijing Motor Sales & Shanghai Motor Heling Co., Service Ltd. LexusNanchang Heling Motors Sales & InternationalHoyun Lease Co., Ltd. Leasing, retail wholesale, of and Table 10 Table Linyi Hoyu Toyota Hoyu MotorLinyi Sales & Hoyun (Shanghai)Hoyun Factoring Commercial Shanghai Ho-Qian Logistics Equipment Trading Co., Ltd. Tianjin Lexus Heling Motor Sales & Guangzhou Gac Changho Autotech Zaozhuang Ho-Yu Toyota Motor Sales ChongQing Yurun Toyota Automobile

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Note 4 Note 2.1 Footnote ------

investment income of December 31, 2019 31, December of Accumulated amount Accumulated of Note 2.1

Note 2.2 Note 2.1

Note 2.3 Note 2.2

Note 2.3 remitted back to Taiwan as Taiwan to back remitted 3,005 4,525 8,782 18,533 22,106 59,845 87,125

149,964 974,614 434,459 152,301 300,558 314,790 December 31, 2019 31, December in Mainland China as of

Book ofvalue investment

- - 641

9,624) 1,360) 1,320) 2,496) 6,043) 1,795 6,818 31,969 80,429 15,429 2019 Investment income ended December 31, Company for the year

(loss) by the recognized

( ( ( ( ( 35.00 50.00 60.00 35.00 35.00

100.00 100.00 100.00 100.00 100.00 100.00 indirect) (direct or

Ownership held by the Company - - 641 1,360) 1,320) 6,043) 4,991) 1,795 11,364 91,341 27,496) 84,650 44,084

for the ended year December 31, 2019 31, December 100.00 35.00

Net income of investee Net income ( ( ( ( (

------December 31, 2019 31, December

remittance from Taiwan from remittance

to Mainland China as of Accumulated amount Accumulated of

------Taiwan Remitted back to

------2019 Amount remitted from Taiwan to Remitted to Mainland China

Taiwan 31, forDecember the ended year Mainland China/ Amount remitted back to

------45,365,176 Mainland Accumulated from Taiwan to January 1, 2019 amount of remittance

Mainland China as of Commission of MOEA ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Note 3 method (Note 1) (Note China imposed by the Investment Ceiling Ceiling on investments in Investment $ 8,587 8,587 4,293

85,866 42,933 12,880 458,957 449,700 299,800 987,459 314,790 359,760 419,720 ffairs 5,662,729 (MOEA) Paid-in capital Paid-in approved the by of the Ministry of Economic A Economic Investment amount on from Hotong Motor Investment Co., Ltd. has not been completed. Investment Commission

$ 2,228,260 NT$. parent company's CPA. company's parent Ƀ Ƀ 2019. However, capital injecti December 31, 2019 31, December Mainland China as of Accumulated amount Accumulated of Main business activities remittance from Taiwan to $ Trading of vehicle products/accessories and property management Consulting and service property management Trading of vehicle products/accessories and property management Trading of used vehicles Sales and repairing of vehicles Sales of imported vehicles Sales and repairing of vehicles Sales and repairing of vehicles Sales and repairing of vehicles Design and production of advertisements Sales and repairing of vehicles arter of of arter nd China companies through ainvested company and established ain third region. Company name Investee Investee in Mainland China Shanghai Jiading Lexus Heling Motor Shanghai MotorHoChen Technology Co., Ltd. Note 1: The investmets are classified as follows: (1) Direct investment in Mainland China. Mainla in (2)Investment (3) Others. Note 2:The amount of (loss) investment 31, income forDecember recognized the ended 2019 year is based on: (1) The financial statements audited by R.O.C were (2) The financial statements audited by other were independent accountants in PricewaterhouseCoopers, Taiwan. (3) Others. Note 3: Related amounts in thetable following are expressed in Note 4: It was established in the second qu Jinzhong Central Toyota Motor Sales & Tianjin Heyi International Trading Co., Trading International Heyi Tianjin Shanghai Hoxin Motor Service Consulting Co.,Ltd. Shanghai Ho-Mian Motor Technology Co., Ltd. Shanghai Yangpu Lexus Heling Motor Taizhou LexusZhongdu Motor Sales & Co.,Ltd.Service Ltd. Co., Service Co.,Service Ltd. Co.,Shanghai Ltd.Used Vehicle Hede Shanghai Guangxin Cultural Media Co., Ltd. Ltd. Co., & Service Sales Ltd. Ltd. Co., Service Tianjin Binhai LEXUS MotorHeling Co.,Ltd.Service TaiHo Motor Co., Ltd. Chongqing Taikang Lexus Heling Motor Co.,Ltd. & Service Sales Beijing Heling Lexus Heling Beijing Motor Sales &

5. Parent company only financial statements and report of independent Accountants

REPORT OF INDEPENDENT ACCOUNTANTS (TRANSLATED FROM CHINESE)

PWCR19000474 To the Board of Directors and Shareholders Ho Tai Motor Co., Ltd.

Opinion We have audited the accompanying parent company only balance sheets of Ho Tai Motor Co., Ltd. (the “Company”) as of December 31, 2019 and 2018, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies. In our opinion, based on our audits and the reports of other auditors (please refer to “other matter” section), the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2019 and 2018, and its parent company only financial performance and its cash flows for the years then ended, in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”. Basis for opinion We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained and the reports of other auditors are sufficient and appropriate to provide a basis for our opinion.

Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters. The key audit matters of the parent company only financial reports are as follows: Evaluation of provision for impairment of accounts receivable of Hotai Finance Co., Ltd., the investment accounted for using equity method Description Hotai Finance Co., Ltd. (“Hotai Finance’’) is an investment by Ho Tai Motor Co., Ltd. accounted for using equity method. Its primary business is providing installment sales and leasing of vehicles. In the supply chain of motor vehicles, the role of Hotai Finance is to provide customers with flexible financing options and to streamline the vehicle delivery process. Therefore, Hotai Finance is responsible for the collections of accounts receivable and manages overdue accounts. When accounts receivable are past due over 30 days, Hotai Finance already considers the collectibility of those accounts in doubt. In addition to enhancing the collection process from customers, management also assesses the probability of overdue accounts becoming impaired over the past years. Impairment is provided for those doubtful accounts receivable depending on the length of overdue days and considering forward-looking factors such as the future economic conditions. Management evaluates the individual circumstances of each overdue amount to decide whether to measure the loss allowance. The assessment above involves management’s judgement and factors on multiple factors that may be affected by the past events, current conditions, and the future economic conditions. The results will directly influence the amounts recognized. Therefore, the estimation of the loss allowance is identified as a key audit matter. How our audit addressed the matter Our key audit procedures performed in respect of the above matter are summarized as follows: 1. Understood the policy of provision for impairment of accounts receivable (including relevance to macroeconomic indicators of forward-looking information) and the logic of the aging report system.

2. For those accounts past due over 30 days, Hotai Finance will estimate and recognize the impairment of account receivable based on the probability of overdue accounts becoming impaired over the past years and Hotai Finance’s policy. We understood and assessed the occurrence percentage of actual impairment compared to the overdue accounts receivable over the past years, and the forward-looking information, to evaluate the reasonableness of the provision for impairment policy. In addition, we sampled and examined the group category of expected credit losses report, and checked the consistency with system information. 3. Examined and evaluated samples of the categorized group report of the loss of expected credit and compared it with the system information. Valuation of the provisions for warranty Description Please refer to Note 4(23) to the parent company only financial statements for the accounting policies on provisions for warranty, Note 5(2)B for uncertainty of accounting estimate and assumptions of provisions for warranty, and Note 6(15) for details of the provisions for warranty. In order to enhance customer confidence on product quality, Ho Tai Motor Co., Ltd. provides a warranty, 120,000 kilometers over a period of 4 years, free of charge for customers in Taiwan driving Toyota cars. Since the provisions for warranty involves massive historical data as well as complex calculation in respect of maintenance and repair experience, it was identified as a key audit matter. How our audit addressed the matter Our key audit procedures performed in respect of the above matter are summarized as follows: 1. In terms of the agent brands, obtained the car sold information in the last four years that met the warranty items Ho Tai Motor Co., Ltd. offered, such as cars being used in the fourth year or with mileage under 120,000 kilometers, cars’ maintenance details as well as registration forms, sampled and tested each car’s warranty cost on maintenance records for each car model. 2. Reviewed the system information in respect of total cars sold in the last four years which qualify for the warranty scheme. Evaluated the reasonableness of provision for warranty by considering the average warranty claimed cost from each agent brand.

Claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd., the investment accounted for using equity method Description The claims reserve (including ceded claims) of Hotai Insurance Co., Ltd. (“Hotai Insurance”), an investment by Ho Tai Motor Co., Ltd. accounted for using equity method, is derived from the reasonable amount of ultimate claims prior and after reinsurance based on the actuarial department’s historical claims development trend and experience, etc. As of December 31, 2019, the claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd. was NT$3,091,211 thousand and NT$707,719 thousand, respectively. Since the calculation method and assumptions selection of claims reserve (including those ceded) involve subjective judgement and higher degree of uncertainty, and the estimation results have a material impact on the financial statements, we have thus included claims reserve and ceded claims reserve as a key audit matter in our audit. How our audit addressed the matter The procedures that we have conducted in response to specific aspects of the above-mentioned key audit matter are summarized as follows: 1. Understood and assessed Hotai Insurance’s policies, internal control, and operational procedures related to claims reserve (including those ceded) and sampled and inspected the effectiveness of controls related to claims reserve calculation on a sample basis. 2. Sampled and examined the consistency of financial values used in calculating claims reserve with the recorded amounts in the books in order to confirm the accuracy and completeness. 3. Used the work of actuarial expert to assists us in assessing the reasonableness of the!claims reserve (including those prior to and after reinsurance). This included the following procedures: (1) Examined the reasonableness of the assessment method for the reserves; (2) Examined the reasonableness of the assumptions used by Hotai Insurance; (3) Recalculated each assumption adopted by Hotai Insurance for incurred but not reported claims reserve in order to confirm the accuracy of the allowances for the reserves. 4. Examined those significant incurred but not reported cases on a sample basis and assessed the reasonableness of the estimated claims amount.

Other matter – Using the work of other auditors We did not audit the financial statements of certain investments recognized under the equity method that are included in the parent company only financial statements. Investments using equity method amounted to NT$5,929,129 thousand and NT$5,640,440 thousand as of December 31, 2019 and 2018, constituting 7.75 % and 8.53% of total assets, respectively. For the years ended December 31, 2019 and 2018, the comprehensive income amounted to NT$329,241 thousand and NT$180,387 thousand, constituting 2.48% and 1.96% of total comprehensive income, respectively. Those financial statements and information disclosed were audited by other auditors whose report thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other auditors. Responsibilities of management and those charged with governance for the parent company only financial statements Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers”, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of financial reporting users. As part of an audit in accordance with ROC GAAS, we exercise professional judgement and

maintain professional skepticism throughout the audit. We also:

A. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore, considered to be the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Chin-Mu, Hsiao Fang-Yu, Wang For and on behalf of PricewaterhouseCoopers, Taiwan March 26, 2020

------The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of management, PricewaterhouseCoopers, Taiwan cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars)

! December 31, 2019 December 31, 2018 Assets Notes Amount % Amount %

Current Assets

1100 Cash and cash equivalents 6(1) $ 1,028,230 1 $ 131,976 -

1110 Financial assets at fair value through 6(2)

profit or loss – current - - 4,171 -

1150 Notes receivable, net 6(4) 8,674 - 3,772 -

1160 Notes receivable – related parties, net 6(4) and 7 5 - 4,070 -

1170 Accounts receivable, net 6(4) 35,277 - 37,335 -

1180 Accounts receivable – related parties, net 6(4) and 7 2,209,087 3 2,651,008 4

1200 Other receivables 7 589,829 1 766,672 1

130X Inventories, net 6(5) 7,225,714 10 5,236,340 8

1410 Prepayments 377,952 - 323,829 -

11XX Total current assets 11,474,768 15 9,159,173 13

Non-current assets

1510 Financial assets at fair value through 6(2)

profit or loss-non-current 500,000 1 500,000 1

1517 Financial assets at fair value through 6(3)

other comprehensive income-non-current 7,804,554 10 6,563,424 10

1550 Investments accounted for using equity 6(6)

method 49,779,288 65 43,509,228 66

1600 Property, plant and equipment 6(7) 4,023,217 5 3,758,640 6

1755 Right-of-use assets, net 6(8) 7,306 - - -

1760 Investment property, net 6(10) 1,965,743 3 1,989,619 3

1840 Deferred income tax assets 6(24) 427,112 - 255,350 -

1900 Other non-current assets 487,970 1 396,875 1

15XX Total non-current assets 64,995,190 85 56,973,136 87

1XXX Total Assets $ 76,469,958 100 $ 66,132,309 100

(Continued)

HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars)

! December 31, 2019 December 31, 2018 Liabilities and equity Notes Amount % Amount % Current Liabilities 2100 Short-term loans 6(11) $ 1,951,407 3 $ 1,880,814 3 2120 Financial liabilities at fair value through 6(2) profit or loss-current 149,572 - 19,047 - 2170 Accounts payable 6(12) 1,714,046 2 2,639,209 4 2180 Accounts payable – related parties 6(12) and 7 6,603,010 9 5,663,092 8 2200 Other payables 6(13) and 7 2,514,857 3 2,637,685 4 2230 Current income tax liabilities 1,177,022 1 1,081,109 2 2250 Provisions-current 6(15) 720,784 1 649,784 1 2280 Current lease liabilities 5,861 - - - 2300 Other current liabilities 85,507 - 89,367 - 21XX Total current liabilities 14,922,066 19 14,660,107 22 Non-current liabilities 2550 Provisions-non-current 6(15) 1,699,732 2 1,074,673 2 2570 Deferred income tax liabilities 6(24) 1,259,504 2 1,061,052 1 2580 Non-current lease liabilities 1,472 - - - 2600 Other non-current liabilities 748 - 751 - 25XX Total non-current liabilities 2,961,456 4 2,136,476 3 2XXX Total liabilities 17,883,522 23 16,796,583 25 Equity Share capital 6(16) 3110 Common stock 5,461,792 7 5,461,792 8 Capital surplus 6(17) 3200 Capital surplus 2,816,734 3 292,159 - Retained earnings 6(8) 3310 Legal reserve 11,350,835 15 10,348,282 16 3320 Special reserve 381,843 1 381,843 1 3350 Unappropriated earnings 37,362,029 49 32,983,752 50 Other equity 3400 Other equity 1,213,203 2 ( 132,102 ) - 3XXX Total equity 58,586,436 77 49,335,726 75 Significant contingent liabilities and 9 unrecognized contract commitments Significant events after balance sheet date 11 3X2X Total liabilities and equity $ 76,469,958 100 $ 66,132,309 100 !

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

HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)

! 2019 2018 Items Notes Amount % Amount % 4000 Operating revenue 6(19) and 7 $ 126,892,633 100 $ 109,034,011 100 5000 Operating costs 6(5) and 7 ( 116,041,832) ( 91) ( 99,481,045) ( 91 ) 5900 Gross profit before realized (unrealized) profit from sales to subsidiaries and associates 10,850,801 9 9,552,966 9 5910 Unrealized profit from sales ( 219,755 ) - ( 106,760 ) - 5920 Realized profit from sales 106,759 - 125,117 - 5950 Gross profit 10,737,805 9 9,571,323 9 Operating expenses 6(22) (23) and 7 6100 Selling expenses ( 2,370,053 ) ( 2) ( 2,128,256 ) ( 2) 6200 General and administrative expenses ( 1,478,673) ( 1) ( 1,318,632) ( 1) 6000 Total operating expenses ( 3,848,726) ( 3) ( 3,446,888) ( 3) 6900 Operating profit 6,889,079 6 6,124,435 6 Non-operating income and expenses 7010 Other income 6(20) and 7 1,362,154 1 1,093,122 1 7020 Other gains and losses 6(21) 154,320 - 258,387 - 7050 Finance costs ( 44,743) - ( 43,472) - 7070 Share of profit of subsidiaries, associates and 6(6) joint ventures accounted for using equity method 5,376,506 4 4,500,124 4 7000 Total non-operating income and expenses 6,848,237 5 5,808,161 5 7900 Profit before income tax 13,737,316 11 11,932,596 11 7950 Income tax expense 6(24) ( 1,968,501) ( 2) ( 1,907,061) ( 2) 8200 Profit for the year $ 11,768,815 9 $ 10,025,535 9 Other comprehensive income (loss) for the year, net of tax Components of other comprehensive income (loss) that may not be reclassified to profit or loss 8316 Unrealized gain from investments in equity 6(3) instruments measured at fair value through other comprehensive income $ 1,241,130 1 ( $ 349,323 ) - 8330 Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for using equity method 160,893 - ( 33,771) - 8310 Total components of other comprehensive income (loss) that may not be reclassified to profit or loss 1,402,023 1 ( 383,094 ) - Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statement translation differences of foreign operations ( 246,805 ) - ( 92,653 ) - 8380 Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for using equity method 356,252 - ( 344,312 ) ( 1) 8399 Income tax related to components of other comprehensive income - - - - 8360 Total components of other comprehensive income (loss) that will be reclassified to profit or loss 109,447 - ( 436,965 ) ( 1) 8300 Other comprehensive income (loss) for the year, net of tax $ 1,511,470 1 ( $ 820,059 ) ( 1) 8500 Total comprehensive income for the year $ 13,280,285 10 $ 9,205,476 8

Earnings per share (in dollars) 6(25) 9750 Basic earnings per share $ 21.55 $ 18.36 9850 Diluted earnings per share $ 21.54 $ 18.34

The accompanying notes are an integral part of the parent company only financial statements. !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! * * * * ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! . . . 27 4-161

37-15: 931-16: 275-2:8 :-316-587 7-665-261 2-622-581 7-665-261 3-471-4:5 57-766-412 21-136-646 22-879-926 24-391-396 Total equity Total %!5:-446-837 %!57-766-412 %!5:-446-837 %!69-697-547 ) ) ) ) ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! * * * * * * ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ...... 32-732 32-732 29-827 29-827 58-316 58-316 hedging instruments Gain (loss)Gain on %! %! 51-448 %! 51-448 %! 7-979 ) ) ) ) ) ) ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! * ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ...... 32-732 flow hedgesflow portion cash of Loss on effective Loss on effective %! 32-732 %! %! %! ) ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! * ...... :1:-:73 Unrealized Unrealized Other equityOther available-for- gain (loss) from %! :1:-:73 %! %! %! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! sale financial assets )

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! * * ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ...... 998-:36 998-:36 762-818 762-818 2-768-356 2-768-356 Unrealized gains (loss) on financial assets at fair fair assets at value through value through other compre-other %! %! 347-329 %! 347-329 %! 2-9:4-574 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! hensive income ) )

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! * * * * * * * * * ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ...... 2:5-34: 244-855 244-855 46:-256 46:-256 translation differences of differences of %! 2:5-34: %!%! 438-:94 438-:94 %! 798-239 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! foreign operationsforeign Financial statement ) ) ) ) ) ) ) ) )

* * * * * ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! . . . . . 33-148 26-9:3 277-276 2-122-672 7-665-261 2-113-664 7-665-261 41-64:-931 21-136-646 21-11:-754 22-879-926 22-:45-:91 earnings Unapproprated

%! 41-628-894 %! 43-:94-863 %! 43-:94-863 %! 48-473-13: ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ) ) ) ) ) ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ...... 492-954 Retained earnings Special reserve HO TAI MOTOR CO., LTD. CO., MOTOR LTD. TAI HO ! %!! 492-954 ! ! ! ! ! ! ! ! ! ! %!! 492-954 ! %!! 492-954 ! ! ! ! ! ! ! ! ! %! 492-954 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ...... (Expressed in thousands of New Taiwan Dollars) (Expressedthousands in Taiwan New of :-447-832 2-122-672 2-113-664 ! %! :-447-832 ! ! ! ! ! ! ! ! ! ! ! %!21-459-393 ! ! %!21-459-393 ! ! ! ! ! ! ! ! ! ! %!22-461-946 Legal reserve Legal ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 2018 AND 2019 31, DECEMBER ENDED YEARS THE FOR * ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ...... 27 4-161 PARENTCOMPANY ONLY STATEMENTS OF CHANGES EQUITYIN 37-15:

374-171 275-2:8 3-471-4:5 %! 374-171 %! 3:3-26: %! 3:3-26: %! 3-927-845 Capital surplus ) ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

The accompanying notes are an integral part of the parent company only financial statements. ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ......

6-572-8:3 Share-capital common stockcommon %! 6-572-8:3 %! 6-572-8:3 %! 6-572-8:3 %! 6-572-8:3

Notes 6(18) 6(18) 6(6) 6(6)

adjustment accounted using for equity method subsidiariesof amount disposed proportionately to ownership accounted using methodequity for amount of subsidiariesamount of disposed 2018 January Balance 1, at 2018 on modified retrospective Effects adjustment January Balance 1, at 2018 after retrospective for the year Profit comprehensive Other loss the year for comprehensive income (loss) Total Appropriationand distribution retained of earnings: reserve Legal dividends Cash Changesequity associates in of ventures and joint between consideration and carrying Difference Balance December 31, at 2019 2019 Balance January 1, at 2019 for the year Profit comprehensive Other income (loss) the for year comprehensive income (loss) Total Appropriation and distribution retained of earnings: reserve Legal dividends Cash Changes associates of equity in ventures and joint between consideration Difference and carrying of Participation capitalincrease subsidiaries of not December Balance at 31, 2019 ! ! ! HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars) ! ! !

Notes 2019 2018 Cash flows from operating activities Profit before income tax $ 13,737,316 $ 11,932,596 Adjustments to reconcile profit before tax to net cash provided by operating activities Income and expenses having no effect on cash flows Net (gain) loss on financial assets and liabilities at fair value through 6(21) profit or loss 117,446 ( 81,126 ) Depreciation 97,423 89,916 Net loss on disposal of property, plant and equipment 6(21) 773 162 Loss on abandonment of property, plant and equipment 6(21) 139 154 Share of profit of associates accounted for using equity method 6(6) ( 5,376,506 ) ( 4,500,124 ) Dividend income ( 250,185 ) ( 134,285 ) Interest expense 44,743 43,472 Interest income 6(20) ( 63,416 ) ( 85,190 ) Gains on disposal of investments - ( 4,678 ) Unrealized profit from sales 219,755 106,760 Realized profit from sales ( 106,759 ) ( 125,117 ) Changes in assets and liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss 17,250 4,678 Notes receivable ( 837 ) 80,277 Accounts receivable 443,979 ( 6,137 ) Other receivables 176,701 ( 77,288 ) Inventories ( 1,989,374 ) ( 2,056,753 ) Prepayments ( 53,974 ) ( 146,783 ) Net changes in liabilities relating to operating activities Notes and accounts payable 14,755 452,295 Other payables ( 122,841 ) 497,368 Other current liabilities ( 3,860 ) ( 10,486 ) Other non-current liabilities 696,056 1,534 Cash inflow generated from operations 7,598,584 5,981,245 Cash dividends received 2,757,140 2,318,801 Interest paid ( 44,878 ) ( 42,793 ) Interest received 63,558 77,102 Income tax paid ( 1,845,898 ) ( 1,581,432 ) Net cash provided by operating activities 8,528,506 6,752,923 Cash flows from investing activities Acquisition of financial assets at fair value through other comprehensive income - ( 6,083,183 ) Acquisition of investments accounted for using equity method 6(6) ( 718,591 ) - Acquisition of property, plant and equipment and investment property 6(7)(10) ( 341,954 ) ( 113,258 ) Proceeds from disposal of property, plant and equipment 6(7) 8,762 528 Decrease in other non-current assets ( 91,094 ) 42,370 Net cash used in investing activities ( 1,142,877 ) ( 6,153,543 ) Cash flows from financing activities Increase in short-term loans 6(27) 70,593 1,071,101 Cash dividends paid 6(18)(27) ( 6,554,150 ) ( 6,554,150 ) Repayments of principal portion of lease liability 6(27) ( 5,818 ) - Net cash used in financing activities ( 6,489,375 ) ( 5,483,049 ) Increase (decrease) in cash and cash equivalents 896,254 ( 4,883,669 ) Cash and cash equivalents at beginning of year 131,976 5,015,645 Cash and cash equivalents at end of year $ 1,028,230 $ 131,976

The accompanying notes are an integral part of the parent company only financial statements.! !

HO TAI MOTOR CO., LTD. NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS DECEMBER 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANISATION Ho Tai Motor Co., Ltd. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) on April 25, 1955. The Company is primarily engaged in assembling, trading, import of vehicles, automobile air conditioners and their parts. 2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION These parent company only financial statements were authorized for issuance by the Board of Directors on March 26, 2019. 3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows: Effective date issued by International Accounting New and Revised Standards, Interpretations and Amendments Standards Board Amendments to IFRS 9, ‘Prepayment features with negative January 1, 2019 compensation’ IFRS 16, ‘Leases’ January 1, 2019 Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019 Amendments to IAS 28, ‘Long-term interests in associates and joint January 1, 2019 ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019 Annual improvements to IFRSs 2015-2017 cycle January 1, 2019 Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. IFRS 16, ‘Leases’ A. IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognize a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and

account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors. B. The Company has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Company increased ‘right-of-use asset’ by $13,151 and increased ‘lease liability’ by $13,151, with respect to the lease contracts of lessees on January 1, 2019. C. The Company has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16: (a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4. (b) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics. (c) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease. D. The Company calculated the present value of lease liabilities by using weighted average incremental borrowing interest rate of 0.76%. E. The Company recognized lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognized as of January 1, 2019 is as follows: Operating lease commitments disclosed by applying IAS 17 as at $ 13,268 December 31, 2018 Total lease contracts amount recognized as lease liabilities by applying IFRS 16 on January 1, 2019 13,268 Incremental borrowing interest rate at the date of initial application 0.76% Lease liabilities recognized as at January 1, 2019 by applying IFRS 16 $ 13,151 (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows: Effective date issued by International Accounting New and Revised Standards, Interpretations and Amendments Standards Board Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of January 1, 2020 Material’ Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020 Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark January 1, 2020 reform’ The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

(3) Effects of IFRSs issued by IASB but not yet endorsed by the FSC New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs asendorsed by the FSC are as follows: Effective date issued by International Accounting New and revised Standards, Interpretations and Amendments Standards Board Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets To be determined by between an investor and its associate or joint venture” International Accounting Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2021 Amendments to IAS 1, ‘Classification of liabilities as current or January 1, 2022 noncurrent’ The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (1) Compliance statement The financial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”. (2) Basis of preparation A. Except for the following items, the financial statements have been prepared under the historical cost convention: (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. (b) Financial assets at fair value through other comprehensive income. B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5. (3) Foreign currency translation Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). The parent company only financial statements are presented in New Taiwan dollar (“NTD”), which is the Company’s functional currency. A. Foreign currency transactions and balances (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are

recognized in profit or loss in the period in which they arise. (b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss. (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions. (d) All foreign exchange gains and losses based on the nature of those transitions are presented in the statement of comprehensive income within “other gains or losses”. B. Translation of foreign operations (a) The operating results and financial position of all the entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet; ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and iii. All resulting exchange differences are recognized in other comprehensive income. (b) When the foreign operation partially disposed of or sold is an associate or jointly arrangements, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, when the Company retains partial interest in the former foreign associate or joint arrangements after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangements, such transactions should be accounted for as disposal of all interest in these foreign operations. (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, when the Company retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation. (4) Classification of current and non-current items A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets: (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes; (c) Assets that are expected to be realized within twelve months from the balance sheet date; (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date. B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: (a) Liabilities that are expected to be settled within the normal operating cycle; (b) Liabilities arising mainly from trading activities; (c) Liabilities that are to be settled within twelve months from the balance sheet date; (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. (5) Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents. (6) Financial assets at fair value through profit or loss A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income. B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting. C. At initial recognition, the Company measures the financial assets at fair value. All related transaction costs are recognized in profit or loss. The Company subsequently measures the financial assets at fair value with any gain or loss recognized in profit or loss. D. The Company recognizes the dividend income when the right to receive dividends is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably. (7) Financial assets at fair value through other comprehensive income A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income. B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting. C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value: The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to

receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably. (8) Accounts and notes receivable A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services. B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial. (9) Impairment of financial assets For debt instruments measured at fair value through other comprehensive income, receivables, and financial assets at amortized cost, at each reporting date, the Company recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognizes the impairment provision for lifetime ECLs. (10) Derecognition of financial assets The Company derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire. (11) Operating leases (lessor) Lease income from an operating lease (net of any incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease term. (12) Inventories Inventories are stated at the lower of cost and net realizable value. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the applicable variable selling expenses. (13) Investments accounted for using equity method / subsidiaries and associates A. Subsidiaries are all entities controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. B. Unrealized gains or losses resulting from inter-company transactions with subsidiaries are eliminated. Necessary adjustments are made to the accounting policies of subsidiaries, to be consistent with the accounting policies of the Company. C. After acquisition of subsidiaries, the Company recognizes proportionately the share of profit and loss and other comprehensive incomes in the income statement as part of the Company’s profit and loss and other comprehensive income, respectively. When the share of loss from a subsidiary exceeds the carrying amount of company’s interest in that subsidiary, the Company continues to recognize its share in the subsidiary’s loss proportionately. D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost. E. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit

or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. F. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership. G. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company. H. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for using the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of. I. When the Company disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach. J. Pursuant to the “Rules Governing the Preparation of Financial Statements by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements. (14) Property, plant and equipment A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each component of property, plant and equipment that is significant in relation to the total cost of the item must be depreciated separately. D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate using IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows: Buildings and structures 3 ɴ 50 years Utility equipment 8 ɴ 10 years Office equipment 2 ɴ 20 years Other equipment 5 ɴ 6 years Rental assets 8 years (15) Leasing arrangements (lessee) - right-of-use assets/lease liabilities Effective 2019 A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognized as an expense on a straight-line basis over the lease term. B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following: The Company subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications. C. At the commencement date, the right-of-use asset is stated at cost comprising the amount of the initial measurement of lease liability The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right-of-use asset. (16) Operating leases (lessee) Prior to 2019 Payments made under an operating lease (net of any incentives received from the lessor) are recognized in profit or loss on a straight-line basis over the lease term.

(17) Investment property An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 10~50 years. (18) Impairment of non-financial assets The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized. (19) Borrowings Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method. (20) Notes and accounts payable A. Liabilities for purchases of raw materials, goods or services and notes payables resulting from operating and non-operating activities. B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial. (21) Financial liabilities at fair value through profit or loss A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges. B. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Company subsequently measures the financial liabilities at fair value with any gain or loss recognized in profit or loss. (22) Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires. (23) Provisions Provisions (provision for warranties) are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(24) Employee benefits A. Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expenses in that period when the employees render service. B. Pensions Defined contribution plans For defined contribution plans, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments. C. Employees’ compensation and directors’ remuneration Employees’ compensation and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. (25) Income tax A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity. B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings. C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed. E. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and

equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized. (26) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds. (27) Dividends Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities. (28) Revenue recognition Sales of goods A. The Company sells cars and related products. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. B. Sales revenue was recognized based on the contract price net of sales discount. Accumulated experience and other known reason is used to estimate and provide for the sales discounts and allowances, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognized for expected sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. C. The Company’s obligation to provide a refund or maintenance for faulty products under the standard warranty terms is recognized as a provision. D. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. 5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY The preparation of the parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below: (1) Critical judgements in applying the Company’s accounting policies None. (2) Critical accounting estimates and assumptions A. Revenue recognition The Company estimates sales discounts based on historical results and other known factors. Provisions for such liabilities are recorded as a deduction item to sales revenues when the sales

are recognized. The Company reassesses the reasonableness of estimates of discounts and returns periodically. B. Provisions for warranty To enhance customer’s confidence on product quality, the Company provides additional warranty services apart from the warranty offered by the original manufacturer. Provisions for warranty is estimated based on historical information regarding the nature, frequency, and average cost of claims for each vehicle line by model year, and is revaluated on a regular basis. Please refer to Note 6(15) “Provisions” for more information. As of December 31, 2019, the carrying amount of provisions for warranty was $2,420,516. 6. DETAILS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents December 31, 2019 2018 Cash on hand and revolving funds $ 330 $ 320 Checking accounts and demand deposits 229,585 131,656 Cash equivalents-short-term notes and bills 798,315 - $ 1,028,230 $ 131,976 The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

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(2) Financial instruments at fair value through profit or loss December 31, Items 2019 2018 Financial assets at fair value through profit or loss Current items: Financial assets mandatorily measured at fair value through profit or loss Derivative instruments $ - $ 4,171 Non-current items: Financial assets mandatorily measured at fair value through profit or loss Corporate bonds $ 500,000 $ 500,000

Financial liabilities at fair value through profit or loss Current items: Financial liabilities held for trading Derivative instruments $ 149,572 $ 19,047 A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below: Years ended December 31, Items 2019 2018 Financial assets mandatorily measured at fair value through profit or loss Derivative instruments ($ 134,696) $ 81,126 Beneficiary certificates - 4,678 ($ 134,696) $ 85,804 B. The Company entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below: December 31, 2019 Contract amount (Notional principal) Derivative instruments (in thousands) Contract period Current items: Forward foreign exchange contracts USD 404,846 2019.7.25~2020.5.14

December 31, 2018 Contract amount (Notional principal) Derivative instruments (in thousands) Contract period Current items: Forward foreign exchange contracts USD 249,726 2018.10.15~2019.3.14 The Company entered into forward foreign exchange contracts to buy USD to hedge exchange rate risk of import proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

C. The Company has no financial assets at fair value through profit or loss pledged to others. D. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2). (3) Financial assets at fair value through other comprehensive income December 31, Items 2019 2018 Current items: Equity instruments Listed stocks and unlisted stocks $ 6,413,881 $ 6,413,880 Valuation adjustment 1,390,673 149,544 $ 7,804,554 $ 6,563,424 A. The Company has elected to classify equity instruments that are considered to be strategic investments and steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $7,804,554 and $6,563,424, respectively, as of December 31, 2019 and 2018. B. Amounts recognized in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below: Years ended December 31, Items 2019 2018 Equity instruments at fair value through other comprehensive income Changes in fair value recognized in other $ 1,241,130 ($ 349,323) comprehensive income C. The Company has no financial assets at fair value through other comprehensive income pledged to others. D. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).

(4) Notes and accounts receivable, net (including related parties) December 31, 2019 2018 Notes receivable $ 8,679 $ 7,842 Accounts receivable 2,244,364 2,688,343 $ 2,253,043 $ 2,696,185 A. The Company has no past due accounts receivable. B. As of December 31, 2019, December 31, 2018 and January 1, 2018, the balances of receivables (including notes receivable) from contracts with customers amounted to $2,253,043, $2,696,185 and $2,770,325, respectively. C. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

(5) Inventories December 31, 2019 Allowance for Cost valuation loss Book value Vehicles $ 4,211,089 $ - $ 4,211,089 Parts 671,209 ( 73,245) 597,964 Inventory in transit 2,416,661 - 2,416,661 $ 7,298,959 ($ 73,245) $ 7,225,714

December 31, 2018 Allowance for Cost valuation loss Book value Vehicles $ 2,721,010 $ - $ 2,721,010 Parts 695,535 ( 66,794) 628,741 Inventory in transit 1,886,589 - 1,886,589 $ 5,303,134 ($ 66,794) $ 5,236,340 A. Above listed inventories were not pledged to others as collateral. B. Expenses and losses incurred on inventories were as follows: Years ended December 31, 2019 2018 Cost of goods sold $ 116,031,159 $ 99,473,107 Loss on market value decline of inventories 6,451 2,216 $ 116,037,610 $ 99,475,323 (6) Investments accounted for using equity method December 31, 2019 2018 Hozan Investment Co., Ltd. $ 20,714,779 $ 16,621,719 Shanghai Ho-Yu (BVI) Investment Co., Ltd. 5,834,220 4,566,458 Kuozui Motors, Ltd. 4,315,317 4,286,842 Change Yuan Motor Co., Ltd. 4,150,614 4,226,064 Central Motor Co., Ltd. 2,528,177 2,444,355 Ho Tai Development Co., 2,616,032 2,437,722 Tau Miau Motor Co., Ltd. 1,501,798 1,428,177 Kau Du Automobile Co., Ltd. 1,361,522 1,321,898 Carmax Co., Ltd. 1,284,584 1,201,670 Kuotu Motor Co., Ltd. 1,124,145 1,018,969 Taipei Toyota Motor Co., Ltd. 1,078,674 980,667 Nan Du Motor Co., Ltd. 1,009,110 938,419 Toyota Material Handing Taiwan Ltd. 977,506 849,171 Eastern Motor Co., Ltd. 378,068 359,618 Lang Yang Toyota Motor Co., Ltd. 293,845 284,740 Formosa Flexible Packaging Corp. 357,798 272,434 Shi-Ho Screw Industrial Co., Ltd., etc. 253,099 270,305 $ 49,779,288 $ 43,509,228

A. Please refer to Note 4(3) of the 2019 and 2018 consolidated financial statements for related information about subsidiaries of the Company. B. Hotai Finance Co., Ltd. has quoted market price. As of December 31, 2019, the fair value of Hotai Finance Co., Ltd. was $20,783,294. C. The share of profit of investments accounted for using the equity method were $5,376,506 and $4,500,124, which were valued based on the investees’ financial statements audited by auditors for the years ended December 31, 2019 and 2018, respectively. D. The carrying amount of the Company’s interests in all individually immaterial associates and the Company’s share of the financial performance are summarized as follows: The individually immaterial associates of the Company for the years ended December 31, 2019 and 2018 amounted to $13,806,849 and $13,234,524, respectively. Years ended December 31, 2019 2018 Comprehensive income for the year $ 4,505,197 $ 3,208,831

E. On July 31, 2019, the Company participated in the capital increase of Formosa Flexible Packaging Corporation by acquiring 287,499 shares amounting to $81,963, and the shareholding would be 44.44% after the completion. F. On July 16, 2019, the Company participated in the capital increase of Shanghai Ho-Yu (BVI) Investment Co., Ltd. amounting to $636,628. G. On December 5, 2019, the shareholders of the subsidiary, Hozan Investment Co., Ltd., during their meeting approved that Hozan Investment Co., Ltd. did not participate in the capital increase raised by Hotai Finance Co., Ltd.. As a result, its shareholding ratio decreased to 47.84%. Hozan Investment Co., Ltd. still has substantial control over Hotai Finance Co., Ltd. even if Hozan Investment Co., Ltd.’s shareholding ratio was under 50%. Therefore, Hozan Investment Co., Ltd. did not classify the change of equity from acquiring shares disproportionately to ownership of $2,360,394 as changes of capital surplus. H. On December 9, 2019, the shareholders of the subsidiary, Hozan Investment Co., Ltd., during their meeting approved to sell 12,586,000 shares of Hotai Finance Co., Ltd.. The total consideration was $665,057, net of securities exchange tax. Hozan Investment Co., Ltd. recognised gain on disposal amounting to $164,197, which was recognised in changes of capital surplus since the Hozan Investment Co.,Ltd. did not lose its control over Hotai Finance Co., Ltd..

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Total Total $ 4,206,176 931,593 $ 3,758,640 $ 3,758,640 341,685 $ 4,023,217 $ 4,516,095 931,593 $ 4,023,217 ( 1,379,129) ( 1,379,129) ( 9,674) ( 748) ( 66,686) ( 1,424,471)

Construction Construction in progress $ 80,186 - - $ 80,186 $ 80,186 308,273 - - $ 341,682 $ 341,682 - - $ 341,682 ( 46,777) ( 46,777)

$ 7,821 - $ 2,306 $ 2,306 5,492 - - $ 7,177 $ 13,236 - $ 7,177 Others ( 5,515) ( 5,515) ( 621) ( 6,059)

Office $ 515,052 - $ 84,703 $ 84,703 24,702 34,194 $ 104,705 $ 542,237 - $ 104,705 Equipment ( 430,349) ( 430,349) ( 9,582) ( 29,312) ( 437,532) Lease $ 78,612 - 318 $ 318 $ - - - 274 $ $ 78,612 - 274 $ ( 78,294) ( 78,294) ( 44) ( 78,338) Owner- Owner- occupied occupied Utility equipment equipment Utility $ 129,642 - $ 1,997 $ 1,997 410 - - $ 1,845 $ 130,052 - $ 1,845 ( 127,645) ( 127,645) ( 562) ( 128,207)

Buildings Buildings $ 1,251,553 96 $ 541,173 $ 541,173 2,808 11,835 $ 519,577 $ 1,266,966 96 $ 519,577 and structures ( 710,476) ( 710,476) ( 92) ( 36,147) ( 747,485)

Land Land 2,143,310 $ 931,497 3,047,957 $ 3,047,957 $ - - - - 3,047,957 $ 2,143,310 $ 931,497 3,047,957 $ ( 26,850) ( 26,850) ( 26,850) Property, plant and equipment plant and Property, 1, 2019 JanuaryAt Cost gain Revaluation and depreciation impairment Accumulated 2019 Opening net book amount as of 1 January Additions Disposals Reclassifications Depreciation 31 of December as amount book net Closing 2019 31, December At Cost gain Revaluation and depreciation impairment Accumulated

(7) !

Total Total $ 4,137,802 931,593 $ 3,709,471 $ 3,709,471 113,090 1,139 $ 3,758,640 $ 4,206,176 931,593 $ 3,758,640 ( ( ) 1,359,924 ( ( ) 844 ) 64,216 ( ) 1,379,129 in progress Construction $ 11,237 - - $ 11,237 $ 11,237 92,269 - - $ 80,186 $ 80,186 - - $ 80,186 ( ( ) 23,320 Rental assets assets $ 102,538 - $ 362 $ 362 - - - $ 318 $ 78,612 - $ 318 ( ( ) 102,176 ( ) 44 ( 78,294 )

Others $ 6,103 - $ 995 $ 995 1,718 $ 2,306 $ 7,821 - $ 2,306 ( ( ) 5,108 - - ( ) 407 ( ) 5,515 Office $ 526,759 - $ 91,945 $ 91,945 7,312 $ 84,703 $ 515,052 - $ 84,703 equipment ( 434,814) 434,814) ( ( 844) 14,518 28,228) ( 430,349) ( Utility $129,010 - $1,924 $1,924 270 362 $1,997 $129,642 - $1,997 equipment ( 127,086) 127,086) ( - ( ) 559 ( ) 127,645 Buildings and structures $ 1,218,845 96 $ 555,051 $ 555,051 11,521 $ 541,173 $ 1,251,553 96 $ 541,173 ( 663,890) 663,890) ( - 9,579 ( 34,978) 710,476) ( Land $ 2,143,310 931,497 $ 3,047,957 $ 3,047,957 - - - - $ 3,047,957 $ 2,143,310 931,497 $ 3,047,957 ( ( ) 26,850 ( ) 26,850

as of January 1 of January as as of December 31 December of as

2018 1, January At Cost Revaluation gain Accumulated depreciation impairment and 2018 amount book net Opening Additions Disposals Reclassifications Depreciation Closing net book amount At December 31, 2018 Cost Revaluation gain Accumulated impairment depreciation and ! !

! ! (8) Leasing arrangements - lessee Effective 2019 A. The Company leases various assets including land and buildings. Rental contracts are typically made for periods of 2 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes. B. The carrying amount of right-of-use assets and the depreciation charge are as follows: Year ended December 31, 2019 December 31, 2019 Carrying amount Depreciation charge Land $ 6,906 $ 5,525 Buildings 400 320 $ 7,306 $ 5,845 C. The information on profit and lose accounts relating to lease contracts is as follows: Year ended December 31, 2019 Items affecting profit or loss Interest expense on lease liabilities $ 80 Expense on short-term lease contracts and leases of low-value assets 33,007 D. For the year ended December 31, 2019, the Company’s total cash outflow for lease amounted to $38,905. (9) Leasing arrangements - lessor Effective 2019 A. The Group leases various assets including land and buildings. Rental contracts are typically made for periods of 1 and 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. B. For the year ended December 31, 2019, the Company recognized rent income in the amount of $195,942 based on the operating lease agreement, which does not include variable lease payments. C. The maturity analysis of the lease payments receivable under the operating leases is as follows: December 31, 2019 Less than 1 year $ 199,992 Between 1 and 2 years 8,444 Between 2 and 3 years 8,444 Between 3 to 4 years 8,444 Between 4 to 5 years 1,181 More than 6 years 7,774 $ 234,279

! ! (10) Investment property Buildings and Land Structures Total At January 1, 2019 Cost $ 755,900 $ 978,816 $ 1,734,716 Revaluation gain 742,263 11,983 754,246 Accumulated depreciation - ( 499,343 ) ( 499,343 ) $ 1,498,163 $ 491,456 $ 1,989,619 2019 Opening net book amount as of January 1 $ 1,498,163 $ 491,456 $ 1,989,619 Additions - 269 269 Reclassifications - 747 747 Depreciation - ( 24,892 ) ( 24,892 ) Closing net book amount as of December 31 $ 1,498,163 $ 467,580 $ 1,965,743 At December 31, 2019 Cost $ 755,900 $ 977,322 $ 1,733,222 Revaluation gain 742,263 11,983 754,246 Accumulated depreciation - ( 521,725 ) ( 521,725 ) $ 1,498,163 $ 467,580 $ 1,965,743

Buildings and Land Structures Total At January 1, 2018 Cost $ 755,900 $ 991,395 $ 1,747,295 Revaluation gain 742,263 11,983 754,246 Accumulated depreciation - ( 485,251 ) ( 485,251 ) $ 1,498,163 $ 518,127 $ 2,016,290 2018 Opening net book amount as of January 1 $ 1,498,163 $ 518,127 $ 2,016,290 Additions - 168 168 Reclassifications - ( 1,139 ) ( 1,139 ) Depreciation - ( 25,700 ) ( 25,700 ) Closing net book amount as of December 31 $ 1,498,163 $ 491,456 $ 1,989,619 At December 31, 2018 Cost $ 755,900 $ 978,816 $ 1,734,716 Revaluation gain 742,263 11,983 754,246 Accumulated depreciation - ( 499,343 ) ( 499,343 ) $ 1,498,163 $ 491,456 $ 1,989,619

! ! A. Rental income from investment property and direct operating expenses arising from investment property are as follows: Years ended December 31, 2019 2018 Rental income from investment property $ 195,942 $ 202,313 Direct operating expenses arising from the investment property that generated rental income during the year $ 24,892 $ 25,700 B. The fair value of the investment property held by the Company was $3,899,316 and $3,893,857 as of December 31, 2019 and 2018, respectively. (11) Short-term loans

December 31, Type of loans 2019 2018 Unsecured loans $ 1,951,407 $ 1,880,814 Annual interest rate 2.10%~2.36% 0.76%~2.94% Interest expense recognised in profit or loss amounted to $32,854 and $30,789 for the years ended December 31, 2019 and 2018, respectively. (12) Accounts payable (including related parties)

December 31, 2018 2017 Accounts payable $ 3,236,035 $ 3,395,389 Accounts payable - foreign currencies 5,177,178 4,934,039 8,413,213 8,329,428 Valuation adjustment ( 96,157) ( 27,127) $ 8,317,056 $ 8,302,301 (13) Other payables

December 31, 2019 2018 Year-end bonus payable $ 728,944 $ 658,214 Dealer premium bonus payable 578,644 486,265 Remuneration payable to directors 283,244 246,033 Advertisement expense payable 173,988 464,443 Warranty cost payable 93,165 144,541 Remuneration payable to employees 141,622 123,016 Others 515,250 515,173 $ 2,514,857 $ 2,637,685

! ! (14) Pensions Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2019 and 2018 were $27,704 and $27,189, respectively. (15) Provisions Warranty At January 1, 2018 $ 1,724,457 Additional provisions during the year 1,489,014 Used during the year ( 792,955 ) At December 31, 2018 $ 2,420,516 Analysis of total provision: December 31, 2019 2018 Current $ 720,784 $ 649,784 Non-current $ 1,699,732 $ 1,074,673 The Company provides warranties on vehicles and related products sold. Provision for warranty is estimated based on historical warranty data of vehicles and related products. (16) Share capital As of December 31, 2019, the Company’s authorized capital was $6,000,000, consisting of 600,000,000 shares of ordinary stock and the paid-in capital was $5,461,792 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. The number of the Company’s ordinary shares outstanding at January 1, 2019 and December 31, 2019 was both 546,179,184 shares. (17) Capital surplus Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient. (18) Retained earnings A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses, then 10% of the remaining amount shall be set aside as legal reserve, and shall be set aside as special reserve as required by the regulations when necessary. The remainder, if any, shall be appropriated as dividends to shareholders which shall account for at least 50%, and cash dividends shall account for at least 10% of the total dividends distributed.

! ! The earnings appropriation ratios and distribution method of dividends to shareholders are determined based on current year’s profit and capital position and shall be proposed by the Board of Directors and resolved by the shareholders. B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital. C. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings. (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865 issued by FSC on April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land. D. The Company recognized dividends distributed to shareholders amounting to $6,554,150 ($12.0 per share) for both the years of 2019 and 2018. On March 26, 2020, the Board of Directors resolved that total dividends for the distribution of earnings for the year 2019 was $7,646,509 at $14 (in dollars) per share. E. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(23). (19) Operating revenue Years ended December 31, 2019 2018 Revenue from contracts with customers - Sales revenue $ 125,454,108 $ 107,752,609 Revenue from contracts with customers - Service revenue 1,438,525 1,281,402 $ 126,892,633 $ 109,034,011 Disaggregation of revenue from contracts with customers The Company derives revenue from the transfer of goods and services at a point in time in the following major product lines: Years ended December 31, 2019 2018 Goods category: Sales of goods $ 125,454,108 $ 107,752,609 Service revenue 1,438,525 1,281,402 $ 126,892,633 $ 109,034,011 Timing of revenue recognition At a point in time $ 126,892,633 $ 109,034,011

! ! (20) Other income Years ended December 31, 2019 2018 Rental income $ 195,942 $ 202,313 Interest income 63,416 85,190 Others 1,102,796 805,619 $ 1,362,154 $ 1,093,122 (21) Other gains and losses Years ended December 31, 2019 2018 Net (loss) gain on financial assets/liabilities at fair value through profit or loss ($ 117,446) $ 81,126 Loss on disposal of property, plant and equipment ( 773) ( 162) Loss on abandonment of property, plant and equipment ( 139) ( 154) Net currency exchange gain 439,563 199,129 Gain on disposal of investments - 4,678 Miscellaneous disbursements ( 166,885) ( 26,230) $ 154,320 $ 258,387 (22) Expenses by nature (shown as operating expenses) Years ended December 31, 2019 2018 Employee benefit expense $ 1,918,383 $ 1,749,732 Depreciation 97,423 89,916 $ 2,015,806 $ 1,839,648 (23) Employee benefit expense (shown as operating expenses) Years ended December 31, 2019 2018 Wages and salaries $ 1,426,229 $ 1,309,180 Labor and health insurance fees 64,101 62,314 Pension costs 27,704 27,189 Directors’ remuneration 300,134 262,853 Other personnel expenses 100,215 88,196 $ 1,918,383 $ 1,749,732 A. According to the Articles of Incorporation of the Company, a percentage of distributable profit of the current year, shall be distributed as employees’ compensation and directors’ remuneration. The percentage shall be 1% for employees’ compensation and shall not be higher than 2% for directors’ remuneration. Independent directors will not receive any distributable profit. If a company has accumulated deficit, earnings should be channeled to cover losses. B. For the years ended December 31, 2019 and 2018, employees’ remuneration was accrued at $141,622 and $123,016, respectively; while directors’ remuneration was accrued at $283,244 and $246,033, respectively. The aforementioned amounts were recognized in salary expenses. The employees’ compensation and directors’ remuneration were estimated and accrued based

! ! on 1% and 2% of distributable profit of current year for the year ended December 31, 2019. The employees’ compensation and directors’ remuneration resolved by the Board of Directors were $141,622 and $283,244 on March 26, 2020, and the employees’ compensation will be distributed in cash. Employees’ compensation and directors’ remuneration of 2018 as resolved by the Board of Directors were in agreement with those amounts recognized in the 2018 financial statements. Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors and shareholders’ meeting will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange. (24) Income tax A. Income tax expense Years ended December 31, 2019 2018 Current tax: Current tax expense recognized in the current year $ 1,810,874 $ 1,457,873 Tx on undistributed surplus earnings 123,442 254,990 Prior year income tax under (over) estimation 7,495 ( 4,999) Total current tax 1,941,811 1,707,864 Deferred tax: Origination and reversal of temporary differences 26,690 182,055 Impact of change in tax rate - 17,142 Total deferred tax 26,690 199,197 Income tax expense $ 1,968,501 $ 1,907,061 B. Reconciliation between income tax expense and accounting profit Years ended December 31, 2019 2018 Income tax expense at the statutory rate $ 2,747,462 $ 2,386,519 Effects from adjustments based on regulation ( 909,898) ( 746,591) Tax on undistributed surplus earnings 123,442 254,990 Prior year income tax under (over) estimation 7,495 ( 4,999) Effect from changes in tax regulation - 17,142 Income tax expense $ 1,968,501 $ 1,907,061

! ! C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows: Year ended December 31, 2019 Recognized in January 1 profit or loss December 31 Temporary differences: -Deferred tax assets: Allowance for inventory obsolescence $ 13,359 $ 1,290 $ 14,649 Provision for after-sale service 9,094 - 9,094 Unrealized gain on inter-affiliate accounts 21,352 22,599 43,951 Others 211,545 147,873 359,418 255,350 171,762 427,112 -Deferred tax liabilities: Gain on investment accounted for using equity method ( 545,238 ) ( 175,588 ) ( 720,826 ) Land value increment tax ( 509,365 ) - ( 509,365 ) Others ( 6,449 ) ( 22,864 ) ( 29,313 ) ( 1,061,052 ) ( 198,452 ) ( 1,259,504 ) ($ 805,702 ) ($ 26,690 ) ($ 832,392 ) ! Year ended December 31, 2018 Recognized in January 1 profit or loss December 31 Temporary differences: -Deferred tax assets: Allowance for inventory obsolescence $ 10,979 $ 2,380 $ 13,359 Provision for after-sale service 7,730 1,364 9,094 Bad debt expense 13,906 ( 13,906 ) - Unrealized gain on inter-affiliate accounts 21,270 82 21,352 Others 185,468 26,077 211,545 239,353 15,997 255,350 -Deferred tax liabilities: Gain on investment accounted for using equity method ( 324,167 ) ( 221,071 ) ( 545,238 ) Land value increment tax ( 509,365 ) - ( 509,365 ) Others ( 12,326 ) 5,877 ( 6,449 ) ( 845,858 ) ( 215,194 ) ( 1,061,052 ) ($ 606,505 ) ($ 199,197 ) ($ 805,702 ) D. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority. E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

! ! (25) Earnings per share Year ended December 31, 2019 Weighted average number of ordinary Earnings Amount shares outstanding per share after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to ordinary shareholders $ 11,768,815 546,179 $ 21.55 Diluted earnings per share Profit attributable to ordinary shareholders $ 11,768,815 546,179 Assumed conversion of all dilutive potential ordinary shares Employees’ bonus - 287 Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares $ 11,768,815 546,466 $ 21.54

Year ended December 31, 2018 Weighted average number of ordinary Earnings Amount shares outstanding per share after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to ordinary shareholders $ 10,025,535 546,179 $ 18.36 Diluted earnings per share Profit attributable to ordinary shareholders $ 10,025,535 546,179 Assumed conversion of all dilutive potential ordinary shares Employees’ bonus - 578 Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares $ 10,025,535 546,757 $ 18.34 (26) Operating leases Prior to 2018 A. Lessor The Company leases its land and office building to related and non-related parties under operating lease agreements with terms 3 years. Future expected rental income are as follows: December 31, 2018 Up to 1 year $ 188,843 1 to 5 years 184,670 $ 373,513 B. Lessee The Company leases business premises from related and non-related parties. Rental expenses recognized in operating expense for the year ended December 31 amounted to $41,290. Future expected rental expenses are as follows: December 31, 2018 Up to 1 year $ 5,897 1 to 5 years 7,371 $ 13,268

! ! (27) Changes in liabilities from financing activities

Liabilities from Short-term Dividend Lease Financing loans payable liabilities activities-gross January 1, 2019 $ 1,880,814 $ 6,574 $ - $ 1,887,388 Changes in cash flow from financing activities 70,593 ( 6,554,150) ( 5,818) ( 6,489,375 ) Changes in other non-cash items - 6,553,944 13,151 6,567,095 December 31, 2019 $ 1,951,407 $ 6,368 $ 7,333 $ 1,965,108

Liabilities from Short-term Dividend Lease Financing loans payable liabilities activities-gross January 1, 2018 $ 809,713 $ 6,604 $ - $ 816,317 Changes in cash flow from financing activities 1,071,101 ( 6,554,150) - ( 5,483,049 ) Changes in other non-cash items - 6,554,120 - 6,554,120 December 31, 2018 $ 1,880,814 $ 6,574 $ - $ 1,887,388 7. RELATED PARTY TRANSACTIONS (1) Names of related parties and relationship with the Company Names of related parties Relationship with the Company Toyota Motor Asia Pacific Pte Ltd.(TMAP) Entity controlled by key management Toyota Motor Manufacturing Turkey Inc. Entity controlled by key management Toyota Motor Philippines Corp. Entity controlled by key management Toyota-Motor-Europe-Nv/Sa Entity controlled by key management Toyota-Motor-Sales-USA Entity controlled by key management Toyota Auto Body Co.,Ltd Entity controlled by key management Toyota Daihatsu Engineering & Manufacturing Entity controlled by key management

Co.,Ltd Hino Motors, Ltd. Entity controlled by key management Toyota Motor Corporation (TMC) Entity controlled by key management Ho Chuang Insurance Agency Co., Ltd. Entity controlled by key management Ho An Insurance Agency Co., Ltd. Entity controlled by key management Ho Yu Investment Co., Ltd. Entity controlled by key management Shanghai Hoxin Motor Service Consulting Subsidiary

Co.,Ltd. Toyota Material Handling Taiwan Ltd. Subsidiary Doroman Autoparts Co., Ltd. Subsidiary Carmax Co., Ltd. (Carmax) Subsidiary Hotai Innovation Marketing Co. Subsidiary Hozan Investment Co., Ltd. Subsidiary Ho Tai Service & Marketing Co., Ltd. Subsidiary Hotai Insurance Co., Ltd. Subsidiary Ho Tai Development Co., Ltd. Subsidiary Ho Tai Cyber Connection Co., Ltd. Subsidiary Hotong Motor Investment Co., Ltd. Subsidiary Hoing Mobility Service Corporation Subsidiary

! ! Names of related parties Relationship with the Company Hotai Leasing Co., Ltd. (Hotai Leasing) Subsidiary Hotai Finance Co., Ltd. Subsidiary Eastern Motor Co., Ltd. Subsidiary Chang Yuan Motor Co., Ltd. (Chang Yuan) Subsidiary Smart Design Technology Co., Ltd. Subsidiary Triple S Digital Co.,Ltd Associate Formosa Flexible Packaging Corp. Associate Yokohama Tire Taiwan Co., Ltd. Associate Kuozui Motors, Ltd. (Kuozui) Associate Kuotu Motor Co., Ltd. (Kuotu) Associate Taipei Toyota Motor Co., Ltd. (Taipei Motor) Associate Tau Miau Motor Co., Ltd. (Tau Miau) Associate Central Motor Co ., Ltd. (Central Motor) Associate Nan Du Motor Co., Ltd. (Nan Du) Associate Kau Du Automobile Co., Ltd. (Kau Du) Associate Lang Yang Toyota Motor Co., Ltd. Associate Hozao Enterprise Co., Ltd. Associate Hohung Motors Co., Ltd. Associate Horung Motors Co., Ltd. Associate Zhong Cheng Motors Co., Ltd. Associate Fan Tai Transportation Co., Ltd. Associate Yi Tai Transportation Co., Ltd. Associate Hua Tai Transportation Co., Ltd. Associate (2) Significant related party transactions and balances A. Operating revenue Years ended December 31, 2019 2018 (a)Interest income: -Associates Central Motor $ 24,687,620 $ 21,865,842 Tau Miau 22,529,225 19,979,421 Kuotu 19,528,719 15,051,068 Taipei Motor 18,390,880 16,557,920 Kau Du 16,496,040 14,613,035 Nan Du 14,464,154 12,889,691 Others 2,601,809 2,283,547 -Subsidiaries 6,340,455 4,314,793 -Entities controlled by key management - 587 $ 125,039,902 $ 107,555,904 Sales from the Company and subsidiaries to related parties are based on the price lists in force and terms that would be available to third parties. Terms are provided in item 7 of Note 13(1) significant transactions information. Years ended December 31, 2019 2018

! ! (b) Service revenue: Service sales: -Associates $ 3,235 $ 3,313 -Subsidiaries Chang Yuan 1,419,432 1,258,892 Others 44 30 Contracted operating revenue: -Associates 15,814 19,167 $ 1,438,525 $ 1,281,402

Years ended December 31, 2019 2018 (c) Interest income: -Associates Central Motor $ 11,391 $ 10,175 Tau Miau 10,430 9,284 Kuotu 8,989 6,965 Taipei Motor 8,538 7,691 Others 15,496 13,836 -Subsidiaries 2,008 1,389 $ 56,852 $ 49,340 Interest income is interest between transaction dates and collection dates due to the collection of sales transaction is based on agreed collection period. Starting from July 3, 2016, the annual interest rate was adjusted to 2.275%. Years ended December 31, 2019 2018 (d) Rental revenue: -Associates Kuotu $ 77,862 $ 84,183 Others 26,582 30,795 -Subsidiaries Chang Yuan 71,558 67,867 Others 31,975 33,351 -Entities controlled by key management 3,352 3,615 $ 211,329 $ 219,811 The Company entered into rental contracts based on normal conditions with related parties and collects rental revenue monthly based on the contracts.

! !

Years ended December 31, 2019 2018 (e) Warranty revenue (shown as deductions to warranty costs): -Associates Kuozui $ 192,830 $ 164,505 -Subsidiaries 20,352 14,682 -Entities controlled by key management TMAP 605,492 686,925 Others 2,095 2,221 $ 820,769 $ 868,333

Years ended December 31, 2019 2018 (f) Advertisement subsidy and sales promotion revenue (shown as deductions to advertisement expense): -Associates Kuotu $ 81,360 $ 70,654 Others 122,537 113,350 -Subsidiaries Carmax 32,992 - Others 5,616 16,167 -Entities controlled by key management TMC 59,353 74,157 Others 6,096 6,688 $ 307,954 $ 281,016

Years ended December 31, 2019 2018 (g) Miscellaneous income: -Associates Kuotu $ 93,894 $ 105,219 Kuozui 73,509 80,165 Others 81,745 81,047 -Subsidiaries Chang Yuan 123,650 127,551 Others 159,716 126,475 -Entities controlled by key management 40,432 32,404 $ 572,946 $ 552,861

! ! B. Expenditures Years ended December 31, 2019 2018 (a) Purchase of goods: -Associates Kuozui $ 32,390,170 $ 35,215,454 Others 839,000 756,633 -Subsidiaries 2,141,245 1,509,082 -Entities controlled by key management TMC 50,513,418 35,713,057 Others 5,559,350 6,421,674 $ 91,483,183 $ 79,615,900 The Company sold domestic cars which were purchased from Kuozui and imported cars and parts which were purchased from Toyota Motor Corporation (“TMC”), Toyota Motor Asia Pacific Pte Ltd. (“TMAP”) and Toyota Motor Sales USA (“TMS”). Payment terms are provided in item 7 of Note 13(1) significant transactions information.

Years ended December 31, 2019 2018 (b) Rental expense: -Associates Kuozui $ 5,897 $ 5,926 Others - 137 -Subsidiaries Hotai Leasing 16,219 17,754 Others 1,301 1,325 -Entities controlled by key management 137 138 $ 23,554 $ 25,280 The Company entered into the lease agreement with related parties based on the market price and the rental expense is paid on a monthly basis according to the agreement.

! ! ! Years ended December 31, 2019 2018 (c) Warranty cost: -Associates Central Motor $ 144,688 $ 160,103 Tau Miau 113,318 145,188 Kuotu 102,509 135,570 Kau Du 81,584 100,854 Nan Du 81,521 100,884 Others 85,757 101,451 -Subsidiaries Chang Yuan 154,810 100,302 Others 9,851 13,141 -Entities controlled by key management 632 - $ 774,670 $ 857,493

Years ended December 31, 2019 2018 (d) Advertisement expense: -Associates $ 49,396 $ 67,818 -Subsidiaries 56,400 27,531 -Entities controlled by key management 22,388 9,101 $ 128,184 $ 104,450 C. Receivables from (payables to) related parties December 31, 2019 2018 (a) Receivables from related parties: -Associates Central Motor $ 448,873 $ 439,220 Tau Miau 340,243 356,004 Taipei Motor 324,251 350,691 Kau Du 264,540 293,586 Kuoto 255,694 489,181 Nan Du 248,266 251,383 Others 38,843 53,742 -Subsidiaries 288,382 421,210 -Entities controlled by key management - 61 $ 2,209,092 $ 2,655,078

! !

December 31, 2019 2018 (b) Other receivables from related parties: -Associates $ 131,978 $ 361,750 -Subsidiaries 45,927 36,973 -Entities controlled by key management 630 937 $ 178,535 $ 399,660

December 31, 2019 2018 (c) Payables to related parties: -Associates Kuozui $ 1,137,609 $ 343,572 Others 94,245 97,003 -Subsidiaries 250,292 293,693 -Entities controlled by key management TMC 4,786,371 3,942,992 TMAP 254,522 961,284 Others 79,971 24,548 $ 6,603,010 $ 5,663,092 ! December 31, 2019 2018 (d) Other payables -Associates $ 497,428 $ 500,327 -Subsidiaries 72,167 80,069 -Entities controlled by key management 123 2,056 $ 569,718 $ 582,452 (3) Endorsements and guarantees provided to related parties:

December 31, 2019 2018 -Subsidiaries USD 1,500 USD 26,500 TWD - TWD 921,674 (4) Key management remuneration

Years ended December 31, 2019 2018 Salaries and other short-term employee benefits $ 347,297 $ 308,662 Post-employment benefits $ 2,700 $ -

8. PLEDGED ASSETS None.

! ! 9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS (1) In November 2018, the Company signed a contract with GuoGong Construction Company which was commissioned to a $519,761 project to build a pre-delivery inspection center in Yangmei logistics center on an owner-occupied land. As of March 26, 2020, the outstanding payments amounted to $155,928. (2) Details of operating lease agreements are shown in Notes 6(9) and 6(26). (3) Significant contracts signed by the Company as of December 31, 2019 are summarized as follows: Type of contracts Party involved Contract period Main contents Distributor agreement Toyota Motor January 1, 2019 to December 31, Sales of imported or domestic Corporation 2021 models, parts and accessories of Toyota and Hino in Taiwan.

Hino Motors, Ltd. April 1, 2016 to March 31, 2021 (Hino)

Product dealership Kuotu Motor Co., Ltd. May 15, 2018 to May 14, 2021 Authorized dealers sell vehicles, agreement and other dealers parts and automobile products provided by the Company. Contracted operating Kuotu Motor Co., Ltd. Starting from July 1, 2009 The Company was designated contracts Kuozui Motors, Ltd. Starting from June 1, 2002 to conduct affairs such as sales, Chang Yuan Motor Co., Starting from January 1, 2003 supply chain management, Ltd. pre-sale services, after-sale Except for termination signed by services and promotion both parties, contracts remain management. effective. 10. SIGNIFICANT DISASTER LOSS None. 11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE For the appropriation of retained earnings of 2019, please refer to Note 6(18).

12. OTHERS (1) Capital management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and considering future capital requirements and long-term capital plan in order to support operations and maximize returns for shareholders.

! ! (2) Financial instruments A. Financial instruments by category

December 31, 2019 2018 Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through $ 500,000 $ 504,171 profit or loss Financial assets at fair value through other comprehensive income Equity instrument 7,804,554 6,563,424 Cash and cash equivalents 1,028,230 131,976 Notes receivable (including related parties) 8,679 7,842 Accounts receivable (including related parties) 2,244,364 2,688,343 Other receivables 589,829 766,672 Guarantee deposits paid (shown as “other non-current assets”) 80,873 39,462 $ 12,256,529 $ 10,701,890 Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities mandatorily measured at fair value through $ 149,572 $ 19,047 profit or loss Financial liabilities at amortized cost Short-term loans 1,951,407 1,880,814 Accounts payable (including related parties) 8,317,056 8,302,301 Other payables 2,514,857 2,637,685 Guarantee deposits received (shown as “other non-current liabilities”) 748 751 $ 12,933,640 $ 12,840,598 Lease liability $ 7,333 $ - B. Financial risk management policies (a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial position and financial performance. The Company uses derivative financial instruments to hedge certain risk exposures (please refer to Note 6(2)). (b) Risk management is carried out by the Company’s finance departments under policies approved by the Board of Directors. Finance departments identify, evaluate and hedge financial risks in close cooperation with the Company’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

! ! C. Significant financial risks and degrees of financial risks (a) Market risk Foreign exchange risk i. Management has set up a policy to require management of foreign exchange risk against its functional currency. The Company is required to hedge its entire foreign exchange risk exposure with the finance department. To manage the foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, the Company enters into forward exchange contracts, through finance department. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. ii. The Company’s businesses involve some non-functional currency operations (the functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows: December 31, 2019 Foreign currency amount Exchange Book value (In thousands) rate (NTD) (Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD 70 29.9800 $ 2,111 JPY:NTD JPY 14,582 0.2760 4,025 Financial liabilities Monetary items USD:NTD USD 234,435 29.9800 $ 7,028,358 JPY:NTD JPY 3,518 0.2760 971 EUR:NTD EUR 90 34.3900 3,099

! ! ! December 31, 2018 Foreign currency amount Exchange Book value (In thousands) rate (NTD) (Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD 114 30.7150 $ 3,489 JPY:NTD JPY 24,069 0.2782 6,696 Financial liabilities Monetary items USD:NTD USD 184,184 30.7150 $ 5,657,198 JPY:NTD JPY 19,870 0.2782 5,528 iii. The total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2019 and 2018, amounted to $439,563 and $199,129 respectively. iv. Analysis of foreign currency market risk arising from significant foreign exchange variation: Year ended December 31, 2019 Sensitivity analysis Effect on other Degree Effect on comprehensive of variation profit or loss income (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 1% $ 21 $ - JPY:NTD 1% 40 - Financial liabilities Monetary items USD:NTD 1% $ 70,284 - JPY:NTD 1% 10 - EUR:NTD 1% 31 -

! ! ! Year ended December 31, 2018 Sensitivity analysis Effect on other Degree Effect on comprehensive of variation profit or loss income (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 1% $ 35 $ - JPY:NTD 1% 67 - Financial liabilities Monetary items USD:NTD 1% 56,572 - JPY:NTD 1% 55 - Price risk The Company’s financial assets at fair value through profit or loss and available-for-sale financial assets are domestic quasi money market fund and listed stocks which are influenced by fluctuation in market price. (b) Credit risk i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost, at fair value through profit or loss and at fair value through other comprehensive income. ii. The Company establishes its credit risk management. For banks and financial institutions, only independently rated parties with good rating are accepted. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. iii. The Company adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: (i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. (ii) For investments in bonds that are traded over the counter, if any external credit

! ! rating agency rates these bonds as investment grade, the credit risk of these financial assets is low. iv. The Company adopts the assumptions under IFRS 9, the default occurs when the contract payments are uncollectable and transferred to overdue receivables. (c) Liquidity risk i. Cash flow forecasting is performed in the Company’s finance department. Finance department monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. ii. The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Non-derivative financial liabilities:

December 31, 2019 Up to 1 year 1 to 2 years 2 to 3 years Short-term loans $ 1,951,407 $ - $ - Accounts payable 8,317,056 - - Other payables 2,514,857 - - Lease liability 5,897 1,474 -

Non-derivative financial liabilities:

December 31, 2018 Up to 1 year 1 to 2 years 2 to 3 years Short-term loans $ 1,880,814 $ - $ - Accounts payable 8,302,301 - - Other payables 2,637,685 - - (3) Fair value information

A. The different levels of valuation techniques used to measure fair value of financial and non-financial instruments have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed shares and beneficial certificates is included in Level 1. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in derivative instruments is included in Level 2.

! ! Level 3: Unobservable inputs for the asset or liability. The Company’s equity investments with no active markets are included in Level 3. B. Fair value information of investment property at cost is provided in Note 6(10). C. Financial instruments not measured at fair value Including the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term loans, accounts payable, and other payables, are approximate to their fair values. D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows: (a) The related information of natures of the assets and liabilities is as follows: December 31, 2019 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through profit or loss Bond investment $ - $ 500,000 $ - $ 500,000 Financial assets at fair value through other comprehensive income Equity securities 7,524,278 - 280,276 7,804.554 $ 7,524,278 $ 500,000 $ 280,276 $ 8,304,554 Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss ġ Forward exchange contracts $ - $ 149,572 $ - $ 149,572

! !

December 31, 2018 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through profit or loss Bond investment $ - $ 500,000 $ - $ 500,000 ġ Forward exchange contracts - 4,171 - 4,171 Financial assets at fair value through other comprehensive income Equity securities 6,311,910 - 251,514 6,563,424 $ 6,311,910 $ 504,171 $ 251,514 $ 7,067,595 Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss ġ Forward exchange contracts $ - $ 19,047 $ - $ 19,047 E. The methods and assumptions the Company used to measure fair value are as follows: (a) The instruments the Company used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics: Listed stocks Open-end fund Market quoted price Closing price Net asset value (b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the parent company only balance sheet date. (c) When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts and foreign exchange swap contracts and options, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market. (d) The Company takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Company’s credit quality.

! !

F. For the years ended December 31, 2019 and 2018, there was no transfer between Level 1 and Level 2. G. The following chart is the movement of Level 3 for the years ended December 31, 2019 and 2018: Years ended December 31, 2019 2018 Equity securities Equity securities At January 1 $ 251,514 $ 243,265 Recorded as unrealized gains (losses) on valuation of investments in equity instruments measured at fair value through other comprehensive income 28,762 8,249 At December 31 $ 280,276 $ 251,514 H. Financial segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value. I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement: Fair value at Range December 31, Valuation Significant (weighted Relationship 2019 technique unobservable input average) of inputs to fair value Non-derivative equity instrument: Unlisted shares $ 280,276 Asset liability Net asset value, price - The higher the method, Market to earnings ratio multiple and control comparable multiple premium, the higher companies method the fair value. Fair value at Range December 31, Valuation Significant (weighted Relationship 2018 technique unobservable input average) of inputs to fair value Non-derivative equity instrument: Unlisted shares $ 251,514 Asset liability Net asset value, price - The higher the method, Market to earnings ratio multiple and control comparable multiple premium, the higher companies method the fair value. J. The Company has carefully assessed the valuation models and assumptions used to measure fair value, and regards its fair value measurements as reasonable. However, the use of different valuation models or assumptions may result in different measurements. If assumptions from financial assets and liabilities categorized within Level 3 had increased or decreased by 1%,

! ! other comprehensive income would not have been significantly impacted as of December 31, 2019 and 2018. 13. SUPPLEMENTARY DISCLOSURES Related information of significant transactions are as follows (Information on investees is based solely on the reports of other independent accountants. Inter-company transactions are eliminated in the preparation of the parent company only financial statements.): A. Significant transactions information (a) Loans to others: Please refer to table 1. (b) Provision of endorsements and guarantees to others: Please refer to table 2. (c) Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3. (d) Acquisition or sale of the same security with the accumulated cost reaching $300 million or 20% of the Company’s paid-in capital: Please refer to table 4. (e) Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 5. (f) Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None. (g) Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6. (h) Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 7. (i) Trading in derivative instruments undertaken during the reporting periods: The table below listed the derivative instruments undertaken but not yet expired as of December 31, 2019: Derivative Contract Amount Company Name Maturity Date Book Value Fair Value Instruments (in thousands) Ho Tai Motor Co., Forward exchange USD 404,846 2020/1/7~2020/5/14 ($ 149,572) ($ 149,572) Ltd. contracts Hotai Insurance Foreign exchange USD 21,950 2020/1/6~2020/3/2 9,346 9,346 Co., Ltd. swap contracts Hotai Finance Co., Cross currency USD 200,000 2020/3/13~2021/9/17 ( 36,509) ( 36,509) Ltd. swaps Hoyun Cross currency USD 18,000 2021/6/18 5,349 5,349 International Lease swaps Co., Ltd. (j) Significant inter-company transactions during the reporting periods: Please refer to table 8. B. Information on investees Names, locations and other information of investee companies (not including investees in Mainland China)ǺPlease refer to table 9. C. Information on investments in Mainland China (a) Basic information: Please refer to table 10. (b) Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area:

! ! i. The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None. ii. The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None. iii. The amount of property transactions and the amount of the resulting gains or losses: None. iv. The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Please refer to table 2. v. The highest balance, end of period balance, interest rate range, and total current period interest with respect to financing of funds: Please refer to table 1. vi. Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: None. 14. SEGMENT INFORMATION Not applicable.

Ho Tai Motor Co Ltd

Note 2 Note 2 Note 2 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Footnote 8,782 4,525 87,125 42,382

289,942 152,862 434,459 179,359 392,874 210,222 408,518 974,614 311,690 340,740 609,951 165,023 272,257

11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 loans granted loans Ceiling on total Note 2 Note 2 Note 2 Note 2 Note 2

Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 $ $ Note2

609,951 165,023 272,257

5,673,713 5,673,713 5,673,713 5,673,713 single party granted to a

$ $

Limit on loans ------$ $ 289,942 152,862 8,782 4,525 87,125 42,382 5,673,713 5,673,713 5,673,713

434,459 179,359 392,874 210,222 408,518 974,614 5,673,713 5,673,713 5,673,713 311,690 5,673,713 340,740 5,673,713 Value Collateral Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Item

------accounts $ None -

Allowance for doubtful for Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ financing short-term Reason for Reason

------with Amount of Amount transactions the borrower the Operations

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ loan financing Nature ofNature rate 2.15% 2.15% 2.15% 3.35% 3.35% 3.35% 3.35% Interest

------

21,466 51,949 18,032 37,352 72,986 85,866 75,304 111,196 191,480 117,207 114,201 130,086 drawn down drawn 2.15% 2.15% 2.15% 2.15% 3.35% 3.35% 3.35%

2.15% 3.35% 3.35% 3.35% 3.35% 3.35% 2.15% $ $ 2.15% Short-term 2.15% 2.15% 2.15% 2.15% 2.15%

2.15% 2.15% Actual amount Actual 5,152 3,435 9,445 85,866 20,608 85,866 21,466

180,318 373,516 150,265 158,851 193,198 279,063 107,332 193,198 558,127 386,396 128,799 128,799 120,212 120,212 137,385 450,795 279,063 184,611 120,212 223,251 287,650 223,251 2019 Loans toLoans others Balance at $

December 31, December

Ho TaiHo Motor Co., Ltd. Year ended December 31, 2019 31, December ended Year 2019 5,984 3,669 91,728 22,015 10,090 91,728 23,014

206,388 192,629 399,017 160,524 412,777 137,592 137,592 128,419 128,419 146,765 481,573 169,697 299,185 115,071 206,388 596,233 299,185 197,216 128,419 238,493 307,289 238,493 Maximum outstanding the year ended the year balance duringbalance

$ December 31, 31, December (Expressed indollars,otherwisethousandsTaiwan except New as indicated) of Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ party Related ɃɃ ɃɃ ɃɃ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ ɃɃ account General ledger Sales & Sales Sales & Sales Sales & Sales Sales & Sales Service Co., Service ales & ales o., Ltd. o., receivables Other Y Borrower Service Co., Ltd. Service Co., Ltd. Ltd. Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Hozhan MotorShanghai Service Co., Ltd. Ltd. Co., Service Motor Hozhan Tianjin Motor Hoyu Service Co., Ltd. Shanghai Heling MotorShanghai Service Co., Ltd. Service Co., Ltd. Co.,Ltd.& Service Sales Service Co., Ltd. Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Trading Co., Ltd. Service Co., Ltd. Hotong Motor Investment Co., Ltd. Co., Investment Motor Hotong Creditor Sales & Service Co.,Ltd.& Service Sales Shanghai Heling MotorShanghai Service Co., Ltd. Hozhan MotorShanghai Service Co., Ltd. Service Co., Ltd. Service Co., Ltd. Ltd. Co., Service Motor Hozhan Tianjin Service Co., Ltd. Co.,Ltd. Ltd. Trading Co., Ltd. Consulting Co.,Ltd. Ltd. Co.,LtdService Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Ltd. Co., Investment Motor Hotong Service Co., Ltd. Co.,Ltd. Service Co., Ltd. 1 MotorHoyu Service Co., Ltd. Shanghai 2 Hotong MotorC Investment 3 4Motor Lexus Heling Yangpu Shanghai 5 Chongqing HelingMotorLexus & Sales 7 Tangshan HelingMotor Lexus & Sales 6 Tianjin Motor Service Ho-Yu & Sales 8 HelingMotor Lexus Nanchang & Sales 9Toyota Motor Zaozhuang Ho-Yu & Sales 15Service Motor Hoxin Shanghai 17 Motor & Ho-Wan Sales ZaoZhuang 10 11 TianjinHelingMotor Lexus & Sales 18 18Ltd. Co., Investment Motor Hotong Motors Lexus Heling Nanchang 18 18 18 18Ltd. Co., Investment Motor Hotong Motor Lexus Heling Chongqing 18Ltd. Co., Investment Motor Hotong & Sales Motor Ho-Yu Tianjin 18Ltd. Co., Investment Motor Hotong Motor Lexus Heling Tangshan 12Technology Motor Ho-Mian Shanghai 14Equipment Logistics Ho-Qian Shanghai 16 Tianjin International Trading Co.,Heyi 13Co., Media Cultural Guangxin Shanghai 18Ltd. Co., Investment Motor Hotong 18Ltd. Co., Investment Motor Hotong Motor Toyota Ho-Yu Zaozhuang S Motor Lexus Heling Tianjin 18Ltd. Co., Investment Motor Hotong Motor Lexus Heling Yangpu Shanghai 18Ltd. Co., Investment Motor Hotong Equipment Logistics Ho-Qian Shanghai Number Table 1 Note 3 Note 3 Note 3 Note 3 Note 3 Note 4 Note 3 Note 3 Footnote 6,560,098

11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 11,347,425 loans granted loans Ceiling on total $

5,673,713 single party granted to a

$ $ Limit on loans ------5,673,713 5,673,713 5,673,713 5,673,713 $ $ 5,673,713 3,280,049

5,673,713 Value ″ Collateral Ƀ Ƀ Ƀ Ƀ Ƀ Item 100% of the company’s total equity. total company’s the of 100%

------″- - 100% of the company’s total equity. total company’s the of 100% accounts

$ None -

Allowance for doubtful for ″ Ƀ Ƀ Ƀ Ƀ Ƀ financing short-term Reason for Reason

------with Amount of Amount transactions the borrower the Operations ″

″ s totalThe equity. limit onsingle loans to entityis a Ƀ Ƀ Ƀ Ƀ Ƀ loan financing Nature ofNature rate 3.85% Interest

------28,808 drawn down drawn 3.35% 3.35% 3.35% 3.35% 3.35% 5.44% ″

$ $ 3.35%Short-term Actual amount Actual

- - 4,293 4,293 85,866 21,466 251,586 128,799 2019 e creditor’s net value. Balance at $

December 31, December Ho Tai Motor Co Ltd 2019 4,586 4,586 91,728 22,932

138,085 268,763 223,681 230,142 Maximum outstanding the year ended the year balance duringbalance

″ ″ Ƀ Ƀ Ƀ Ƀ Note 4 Note 3 Note 2 Note 1 Footnote N Y Y Y Y Y Y Y Y Y party in Provision of Provision endorsements/ Mainland China guarantees tothe N N N N N N N N N N subsidiary to Provision of Provision guarantees by endorsements/ parent company parent Y Y Y Y Y Y Y Y Y Y to subsidiary Provision of Provision guarantees by endorsements/ parent company parent 488,753 3,037,962 20,470,639 20,470,639 29,265,936 29,265,936 29,265,936 29,265,936 29,265,936 29,265,936 provided amount of amount guarantees endorsements/ Ceiling on Ceiling total

$ ------$ -$ s toothers 930,000 219,141 1,337,787 % of the Company's totalequity. the% of Company's drawn down drawn

Footnote ------2,982 1,436 2,982 2,982 3,203 3,203 31,404 31,404 30,378 30,378 120,842 483,620 305,062 662,127 483,620 221,219 190,936 100,377 357,065 630,885 500,000 190,936 500,000 6,794,269 Fair value Fair

$ $ $ $ $ $ $ $ $

$ $ $ $ $ $

$ $

$ ------焍 0.50% 焍 0.42% 99,124 焍 3.10% 280,276 焍 0.51% 0.50% 0.50% 0.50% 0.10% 0.15% Ownership (%) Ownership - - 127 404 999 393 378 2,982 3,203 1,436 2,982 2,982 6,892 3,203 31,000 99,124 30,378 31,404 30,000 120,000 476,728 305,000 100,220 357,000 630,885 662,127 483,620 221,219 190,936 500,000 280,276 500,000 190,543 6,794,269 Book value Book As of 31, 2019 December As

0.42% 0.01%

$ $ $ 0.01% $ 0.00% $ $ $ $ $ $

$ $ $ $ $ $ 0.11%

$ $ $ 11,974 3,025,660 2,527,891 3,191,200 9,073,865 ------11,642,842 46,595,533 29,391,924 22,482,807 20,617,157 Number of Number shares

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ General ledger account ledger General current current Total Financial assets profit through at or- fair loss Financial value current adjustmentValuation assets of financial Financial assets profit through at or- fair loss Financial value current Financial assets other through at fair comprehensive Financial value non-current - income Financial assets other through at fair comprehensive Financial value non-current - income assets other through at fair comprehensive Financial value non-current - income assets other through at fair comprehensive Financial value non-current - income current Financial assets other through at fair comprehensive Financial value non-current - income Valuation adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total adjustmentValuation assets of financial Total Valuation adjustmentValuation assets of financial assets profit through at or- fair loss Financial value current Financial assets profit non- through at or- fair loss Financial value current Total assets other through at fair comprehensive Financial value non-current - income Ho Tai MotorHo Ltd. Co., Year ended 31, 2019 December ------Ƀ Ƀ None None None None Not applicable Not applicable Not applicable Not applicable assets profit through at or- fair loss Financial value Not applicable assets profit through at or- fair loss Financial value Not applicable assets profit through at or - fair loss value Financial securities issuer Relationship with the with Relationship (Expressed in thousands of New Taiwan dollars, except dollars, indicated) as otherwise (Expressed Taiwan thousands in of New Holding of marketable securities associates of at marketable subsidiaries, and the joint end ventures) of the (not period Holding including Type and name of and Type securities name - CTBC Hwa-win Money Market Market Fund Money Hwa-win CTBC - Ho An Insurance Agency Co., Ltd. Etc. Ltd. Co., Insurance An Agency Ho Beneficiary certificatesBeneficiary Market Money Fund Templeton Sinoam Franklin - - Franklin Templeton Sinoam Money Market Money Fund Templeton Sinoam Franklin - Taian Etc. Insurance Ltd. Co., Beneficiary certificatesBeneficiary Market Money Fund Templeton Sinoam Franklin - Market Fund Money Prudential- Financial Ho An Insurance Agency Co., Ltd. Etc. Ltd. Co., Insurance An Agency Ho - Franklin Templeton Sinoam Money Market Money Fund Templeton Sinoam Franklin - Etc. Ltd. Co., Insurance An Agency Ho Etc. Ltd. Co. Holding Financial First - Stock Ltd. Co., Bestaiwan Beneficiary certificatesBeneficiary Market Fund BOT Money - Stock - Mega Financial Holding Company Holding Financial Mega - Stock President securites Corp-PGNW0085 Nan Shan Life Insurance Life Perpetual Bonds Shan Nan Subordinated Ho An Insurance Agency Co., Ltd. Etc. Ltd. Co., Insurance An Agency Ho - Toyota Motor - Corporation Corporation Etc. & Electric Engineering Shihlin - Etc. Ltd. Co., Insurance An Agency Ho Securities held by held Securities Ho Tai Cyber Connection Co., Ltd Co., Connection Tai Cyber Ho certificates Beneficiary Hotai Finance Co., Ltd. Co., Finance Hotai Table 3 Toyota Material Handling Taiwan Ltd. Taiwan Toyota Material Handling certificates Beneficiary Ltd. Co., Carmax Ltd. Co., Tai Development Ho Ltd Co., & Marketing Tai Service Ho Ho Tai MotorHo Ltd. Co., Ltd. Co., Leasing Hotai Hozan Investment Co., Ltd. Hozan Investment Co., Footnote - 22,939 50,108 50,108 Fair value Fair $ $ $ - 10.48% Ownership (%) Ownership 108 50,000 22,939 50,108 Book value Book As of 31, 2019 December As

$ $ $ 4,827,821 - Number of Number shares

General ledger account ledger General Financial assets profit non- through at or- fair loss Financial value current adjustment assetsValuation of financial Total Financial assets other through at fair comprehensive Financial value non-current - income None Not applicable securities issuer Relationship with the with Relationship Type and name of and Type securities name Beneficiary certificatesBeneficiary Market Money Fund Templeton Sinoam Franklin - Securities held by held Securities Note: Hotai Insurance Co., Ltd. does Insurance Hotai notNote: need Ltd. to an insurance Co., it as is be disclosed company. Shanghai Ho-Yu (BVI) Investment Ltd.Co., Ho-Yu Shanghai Investment Corporation (BVI) Finance YU-TU Hotai Innovation marketing corporation marketing Innovation Hotai - 357,000 305,000 190,543 Amount $ $ $ $ $ $ $ $ - - 2019 shares Balance Balance as at 31, December Number of

- - 584 2,342 disposal Gain (loss) on Gain $ $ $ $ 482,807 22, $ $ 391,924 29, $ $ -$ -$ -$ -$ 142,140$ 142,140$ 633,731$ 633,731$ Book Book value tal - - Disposal 142,724 636,073 Selling price Selling $ $ $ $ $ $ - - - shares 13,784,868 Number of

-$ -$ 335,000$ 335,000$ 357,000 728,331 Amount $ $ $ $ - - Addition shares 32,290,447 Number of

-$ 482,807 22, -$ -$ 112,140$ 112,140$ Amount Ho Tai Motor Co., Ltd. - - - Year ended Year December 31, ended 2019 Balance as at as Balance January 1,January 2019 shares 10,886,345 Number of

Other commitments o owners nt of the the of nt real estate real Operation purposeOperation None Reason for acquisition of acquisition for Reason real estate and status of the and status estate real equity attributable t attributable equity in in setting the price Basis or reference used or reference Basis Evaluated by Evaluated appraisal professional institute and active price market % of paid-in capital shall be replaced by 10% of 10% by replaced be shall capital paid-in of % ise indicated) Prior transaction ofcounterparty related Prior transaction - - - - 31, 2019 31, Owner Relationship date Transfer Amount d be appraised d be Ho Tai MotorHo Co., Tai Ltd. with the Year December ended Year counterparty Relationship The third party third The Counterparty (Expressed in thousands of New Taiwan dollars, except as otherw as except dollars, of Taiwan New thousands in (Expressed Acquisition of real estate reaching NT$300 or 20%million or more reaching of capital paid-in of estate real Acquisition Three Shine Trading Shine Three Ltd. Co., payment Status of Status $540,000 $540,000 amount Transaction 2019.8.2 ted in the ‘Basis or reference used in setting the price’ column if the real estate acquired shoul acquired estate real if the column price’ the setting in used or reference ‘Basis the ted in d be presen d be Real estate acquired estate Real of event Date the No. 24, 34 and 34-1, 34 and 24, No. Peipo Section, Dist., New Tucheng Taipei City Real estate Real acquired by acquired calculation. the in of parent the amou monetary the and counterparty the confirm can of that date date or board other of order, transfer, ofdate of date ofdate resolution, title a trading payment, execution signing, of date contract is the to herein referred Noteof 3: Date event the earlier. is whichever transaction, Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 NT$10the than share, per other value or par a no par value with issued were shares that case the of In company. parent capital paid-in is the to herein referred capital Note 2: Paid-in Table 5 Table shoul result appraisal Note 1: The Ho Tai Service & Service Ho Tai Co., Marketing Ltd.

- - - 246 550)

1,263) 2,600)

4,786,371) 1,137,609)

Balance

Notes/accounts receivable (payable) ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Credit term Credit Not applicable Not ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Normal Normal Normal Normal Unit price Not applicable Not Not applicable Not Not applicable Not Differences in transaction terms transaction in Differences from from from from from from from from from from from nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing nd of each week, interestnd of week, each bearing Credit term Credit after the end of each month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after month each of end the after after the end of each month each of end the after after the e the after after the e the after e the after after the e the after after the e the after after the e the after after the e the after after the e the after after the e the after after the e the after after the e the after nvoice datenvoice Transaction Closes its accounts 7 days transaction date transaction Collection at sight Collection at sight Collection at sight Closes its accounts 15 days Closes its accounts 15 days Closes its accounts 16 days Closes its accounts 15 days Closes its accounts 16 days Closes its accounts 15 days Closes its accounts 15 days i after 14 days Collection at sight 7 days after date invoice 7 days after date invoice Closes its accounts 16 days Closes its accounts 10 days Closes its accounts 35 days Closes its accounts 35 days Closes its accounts 25 days Closes its accounts 40 days Closes its accounts 40 days Closes its accounts 40 days Closes its accounts 10 days Closes its accounts 10 days Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 15 days Closes its accounts 7 days transaction date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days transaction date transaction Closes its accounts 7 days date transaction Closes its accounts 7 days transaction date transaction on or 20% of paid-in capital or more - - - - $100 milli $100 2% 2% 2% 1% 3% 2% 2% 1% 4% 3% 1% 9% 8% 8% 7% 5% 4% 4% 9% 2% 8% 9% 1% 2% 19% 20% 28% 43% 73% 32% 12% 11% 11% 10% 18% 16% 15% 13% 12% (sales) Percentage of total purchases total Ho TaiHo Motor Co., Ltd. 147,392 512,354 124,227 828,352 313,764 152,573 640,044 484,796 213,172 612,671 553,305 499,035 443,681 340,014 290,584 245,099 473,711 124,227 647,094

1,015,101 3,104,647 2,139,978 1,951,519 2,139,978 5,954,803 5,443,416 5,252,153 4,870,355 4,035,189 4,476,212 2,663,928 2,576,511 2,187,417 2,663,928

50,513,418 10,235,502 Year ended December 31, December Year ended 2019

Amount

″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Note 1 Note 2 Footnote ------2% 1% 1% 9% 3% 7% 7% 89% 43% 39% 92% 12% 67% 31% total (payable) receivable Percentage of notes/accounts

------,409)

3,620) 3,026)

41,472) 14,976 10,223) 51,183) 14,976) 14,745 14,745) Balance

------3,620 64,276 35,425 Notes/accounts receivable (payable) ( ( ( ( ( ( ( 35,425) ( ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Credit term Credit ″ ″″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Normal Normal Unit price Not applicable ″ ( 4 Differences in transaction terms transaction in Differences from nd of each week, interestnd of week, each bearing Credit term Credit after the end of each month each of end the after month each of end the after month each of end the after month each of end the after after the end of each month each of end the after after the e the after Transaction Closes its accounts 7 days date transaction Payment Payment at sight Collection at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Payment at sight Collection at sight Closes its accounts 10 days Closes its accounts 60 days Closes its accounts 60 days Closes its accounts 30 days Closes its accounts 15 days after the monthof end each advance in Payment Payment in advance in Payment Closes its accounts 30 days Payment in advance in Payment Payment in advance in Payment Payment in advance in Payment Payment in advance in Payment Payment in advance in Payment 1% 8% 7% 7% 6% 5% 4% 3% 1% 2% 89% 43% 90% 24% 18% 53% 18% 24% 97% 34% 51% 89% 90% 97% 98% 11% 100% 100% (sales) Percentage of total purchases total 646,339 896,924 811,856 641,482 484,796 467,180 122,340 512,354 646,339 473,711 192,332 192,332 136,392 117,196

1,513,927 2,465,817 1,059,314 1,015,101 1,513,927 2,187,417 2,091,864 1,467,123 1,519,248

Amount

2,205,456 2,141,363 ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Ɇ Sales Sales Sales Sales Sales (sales) Purchases 285,749 Purchases 3,141,820 Purchases Purchases Purchases Purchases 136,392 Purchases ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Ɇ with the Subsidiary Subsidiary Associates Associates Associates Associates Associates counterparty Relationship Parent company Parent company Parent company Ultimate parent company parent Ultimate company parent Ultimate Entity controlled by the Company'smanagement key Entity controlled by the Company'smanagement key re re provided in Note 7(2)B(h). Counterparty Ltd. Easterm Motor Co., Ltd. Hoing Mobility Corporation Service Central Motor Co., Ltd. Ltd. Co., Motor Toyota Taipei TaiHo Motor Co., Ltd. Central Motor Co., Ltd. Tau Miau Motor Co., Ltd. Du AutomobileKau Co., Ltd. Chang Yuan Motor Co., Ltd. Nan MotorDu Co., Ltd. Lang Yang Toyota Motor Co., Ltd. Hotai Leasing Co., Ltd. TaiHo Motor Co., Ltd. Ltd. Co., Finance Hotai Ltd. Co., Carmax Ltd. Co., & Marketing Tai Service Ho TaiHo Co.,Development Ltd. Hotong Motor Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Ho Tai Motor Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Toyota Motor (China) Investment Co., Ltd. Ltd. tor Sale tor tor Sales & Sales tor Purchaser/seller Hotai Finance Co., Ltd. Co., Finance Hotai Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hotai Leasing Co., Ltd. Hoing Mobility Corporation Service Hoing Mobility Corporation Service Eastern Motor Co., Ltd. Eastern Motor Co., Ltd. Toyota Material Handling Taiwan Ltd.Smart Co., Design Ltd.Technology Toyota Industries Corporation TaiHo Co.,Development Ltd. Ltd. Co., & Marketing Tai Service Ho Shanghai Motor Heling Co., Service Ltd. Toyota Motor (China) Investment Co., Carmax Autotech (Shanghai) Co., Ltd. Hotong Motor Investment Co., Ltd. Carmax Autotech (Shanghai) Co., Ltd. Chongqing Lexus Heling Motor Sales & Ltd. Co., Service Nanchang Heling LexusNanchang Heling Motors Sales & Ltd. Co., Service a Details party. related to sales installment the was It Note1: Note2: Hotai Leasing Co., Ltd. and Hoing Mobility Corporation Service purchase for vehicles renting services, the related assets are reported under property, plant, and equipment. Shanghai Yangpu Lexus Heling Mo & Co., Service Ltd. Tangshan Lexus Heling Mo Ltd. Co., Service Tianjin Lexus Heling Motor Sales & Ltd. Co., Service Tianjin Hozhan Motor Co., Service Ltd. Toyota Motor (China) Investment Co., ------Allowance for Allowance doubtful accounts doubtful

ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ ɡ Action taken Action ------Overdue receivables Overdue Amount

4.44 4.61 7.87 6.06 57.90 52.43 59.11 54.50 12.25 64.72 55.60 Turnover rate Turnover

sight at Collection

t after accountsits 7 days Closes theafter accountsits 16 days Closes theafter accountsits 7 days Closes sign at Collection sight at Collection ble ble

after accounts 60 its days Closes

after accounts 10 its days Closes

theafter accounts 60 its days Closes

theafter accounts 30 its days Closes

theafter accounts 10 its days Closes

24,150 15,077 20,071 60,482

303,730 104,826 147,888 142,417 411,819 243,292 877,941 435,950 134,711 119,804 121,330 2,199,949

31, 2019 the Company for the Company Investment income (loss) recognized by recognized (loss) Investment income the year ended December ended the year wholly- indirect An

company Investee

$ $ 5,614 22,676 21,772 96,599 29,346 78,797 20,071 547,498 675,638 754,811 409,127 411,819 812,159 877,941 854,804 134,711 333,425 597,525 512,590

2,199,949

the year ended the year Net (loss) profit of the investee for the of investee December 31, 2019 December

$ $ 16,636 125,552 111,996 124,467 357,798 293,845 378,068 977,506 501,7981, 616,0322, 528,1772, 078,6741, 150,614 4, 315,3174, 834,220 5, 284,5841, 1,361,522 1,124,145 1,009,110

20,714,779

Book value

$ $ 70.00 70.00 20.00 20.00 25.00 25.00 21.14 21.14 44.44 44.44 20.00 20.00 45.01 45.01 20.00 20.00 20.00 34.81 34.81 30.00 30.00 51.00 51.00 20.00 20.05 23.67

100.00 100.00 100.00 100.00 100.00 (%)

Ownership 3,000 960,961 211,433 500,000 3, 295,108 1, 000,000 2,

153,573 15, 710,856 24, 000,000 15, 438,987 25, 765,670 33, 397,360 79, 950,000 22, 597,690 70, 22,161,150 17,553,761 14,806,073 Shares held as at December 31, 2019 as at December held Shares 313,500,000 103,800,000 Number of shares of Number

- - 3,000 7,400 5,557 10,763 73,787 80,000 50,000 104,930 256,000 326,463 201,700 153,030 186,851

324,655 1, 098,966 2, 765,743 1, 390,907 4, 7,780,182 1,236,592 1,010,667

Balance as as at Balance December 31, 2018 December

$ $ 3,000 7,400 10,763 87,520 73,787 80,000 50,000 104,930 256,000 326,463 201,700 153,030 186,851

Ho Tai Motor Ltd. Co., Ho Tai 1,324,655 2,098,966 2,380,333 4,390,907 7,780,182 1,236,592 1,010,667

Initial investment amount Year ended December 31, 2019 December Year ended Balance at Balance December 31, 2019 December

$ $ (Expressed in thousands of New Taiwan dollars, except as otherwise indicated) as otherwise except dollars, Taiwan New of thousands in (Expressed Ƀ Ƀ Ƀ Names, locations and other information of investee companies (not including investees in Mainland China) Mainland in investees (not including companies investee of otherand information locations Names, Main business activities business Main Electronic parts and Electronic manufacturing components Import and export of all kinds Import exportand all of tubes inner and tires of Manufacturing and sales of sales and Manufacturing screws precision Sales of vehicles and partsand and vehicles of Sales vehicles of repairing Production and marketing of Production marketing and products packaging Agent for sales of air of for sales Agent and system conditioning conditioning air of contracting construction repairing of vehicles of repairing Sales of vehicles and partsand and vehicles of Sales vehicles of repairing partsand and vehicles of Sales vehicles of repairing Sales of vehicles and partsand and vehicles of Sales vehicles of manufacturing vehicle of Trading products/accessories partsand for vehicles of Sales use industry General investment General Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ ɃɃ ɃɃ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Taiwan parts and and vehicles of Sales Taiwan Location British Virgin Islands Virgin British investment General British Virgin Islands Virgin British investment General e Packaging Corp. e Packaging Investee Yuan MotorYuan Co., Ltd. Tienjin Ho Yu Investment Co., Ho Yu Investment Tienjin Ltd. Ltd. Smart Design Technology Co., Technology Smart Design Yokohama Tire Taiwan Co., Ltd.Taiwan Tire Yokohama Ltd. Shi-Ho Screw Industrial Co., Ltd. Screw Industrial Shi-Ho Investment Co., Ltd. Co., Investment Tau Miau Motor Ltd. Co., Miau Tau Formosa Flexibl Formosa Ltd. Ho Tai Development Co., Ltd. Co., Development Ho Tai Lang Yang Toyota Motor Co., Toyota Yang Lang Hozan Investment Co., Ltd.Investment Hozan Co., Ltd. Du Automobile Kau Motor Ltd. Co., Kuotu Motor Ltd. Co., Du Nan Central Motor Ltd. Co., Central Shanghai Ho-Yu (BVI) Shanghai Chang Taipei Toyota Motor Ltd. Co., Toyota Taipei Motor Ltd. Co., Eastern Kuozui Motors, Ltd. Motors, Kuozui Ltd. Co., Carmax Taiwan Handling Toyota Material Investor Shanghai Ho-Yu (BVI) Investment Co.,Ho-Yu (BVI) Investment Shanghai Ltd. Ho Tai HoMotor Tai Co., Ltd. Ho Tai HoMotor Tai Co., Ltd. Ho Tai HoMotor Tai Co., Ltd. Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Ho Tai HoMotor Tai Co., Ltd. Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai Motor Ltd. Co., Ho Tai HoMotor Tai Co., Ltd. Table 9 Table

31, 2019 the Company for the Company Investment income (loss) recognized by recognized (loss) the year ended December ended the year wholly- indirect An Subsidiary wholly- indirect An

wholly- indirect An

investee Subsidiary's wholly- indirect An

investee Subsidiary's wholly- indirect An investee Subsidiary's investee Subsidiary's

- -

536 356) 8, 9,309 9,309 8,428) 10,754 21,772 74,569 100,381) 106,247 283,157 283,157 139,623 327,478 409,127 106,929 651,102

235,585 2, the year ended the year Net (loss) profit of the investee for the of investee December 31, 2019 December

( ( ( ( ( ( - - 109 9,690 16,837 51,201 11,101 31,196 104,745 116,079 335,909 330,318 586,465 274,393 104,779

623,4001, 657,0521, 423,832 7, 313,1929, 2,528,492

Book value

- - 0.00 0.00 61.77 61.77 49.50 49.50 24.50 24.50 50.50 50.50 40.00 40.00 24.50 24.50 99.80 99.80 45.39 45.39 40.00 40.00 18.29 66.04

100.00 100.00 100.00 100.00 100.00 100.00 100.00 (%)

Ownership - 2,000 138,718 882,000 882,000

000,000 3, 968,016 2, 000,000 1, 200,000 1, 823,128 3, 3,000,000

600,000 39, 000,000 23, 400,000 40, 960,531 19, 470,156 20, 652,898 12, 83,629,381 30,000,000 Shares held as at December 31, 2019 as at December held Shares 233,782,831 Number of shares of Number

77 500 8,820 8,820 2,400 89,940 33,242 10,000 89,940 35,976 34,756 50,000

230,000 298,864 727,060 181,907 300,000

187,208 1, 211,192 1, 831,887 6, Balance as as at Balance December 31, 2018 December

- 77 500 8,820 8,820 89,940 33,242 10,000 62,003 35,976 89,940 34,756

298,864 230,000 100,000 181,907 300,000

1,211,192 1,187,208 6,831,887 Initial investment amount Balance at Balance December 31, 2019 December

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Footnote ------

91,074 26,106 investment income of December 31, 2019 31, December of Accumulated amount Accumulated of Note 2.1

Note 2.2 Note 2.2

Note 2.1 Note 2.2 Note 2.1

Note 2.2

Note 2.1 remitted back to Taiwan as Taiwan to back remitted - 49,305 11,018 42,382 58,284 47,144 11,805 89,251 289,942 392,874 165,023 210,222 133,464 125,552 340,740 311,690 272,257 408,518 107,286 609,951 152,863

1,824,262 5,673,713 December 31, 2019 31, December in Mainland China as of Book ofvalue investment

- - - 351) 425) 4,486 2,130 3,761) 9,016

47,315 24,687 15,873 26,948 86,145 12,575 18,532 99,600 117,345 131,465 157,471 101,070 897,404 321,036 2019 Investment income ended December 31, Company for the year

(loss) by the recognized

( ( ( 35.00 45.01 22.95 55.61 70.00 55.61 35.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

indirect) (direct or

Ownership held by the Company - - - 351) 4,486 1,214) 8,356) 9,016 3,830 22,676 99,600 47,315 26,948 86,145 35,929 36,338

107,570 117,345 321,036 131,465 283,157 101,070 897,404 for the ended year December 31, 2019 31, December

40.00

10.48

Net income of investee Net income ( ( ( ------29,980 89,940 11,018 43,081 89,940 11,805 39,873 78,698

101,033 179,880 278,814 104,930 194,870 173,884 957,861 179,880 2,398,400 December 31, 2019 31, December

remittance from Taiwan from remittance

to Mainland China as of

Accumulated amount Accumulated of

------Taiwan Remitted back to

Ho TaiHo Motor Co., Ltd.

------2019 Year ended December 31, December Year ended 2019 614,590 Amount remitted from Taiwan to Amount remitted from Taiwan to Remitted to Mainland China

179,880 104,930 194,870 173,884 278,814 179,880 101,033 343,271 2,398,400 Accumulated from Taiwan to January 1, 2019 amount of remittance

Mainland China as of

″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Note 3 Note 3 Note 2 Note 2 Note 2 Note 3 Note 1 Note 3 Note 3 Note 2 method (Note 1) (Note Investment 89,940 89,940 42,933 95,736 89,940 39,873

214,665 409,227 359,760 299,800 128,799 179,880 149,900 128,799 173,884 194,870 359,760 101,033 104,930 294,520 179,880 2,954,379 2,398,400 Paid-in capital Paid-in

ital Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Main business activities Sales and repairing of vehicles Sales and repairing of vehicles services Factoring Sales and repairing of vehicles Sales and repairing of vehicles using and financial management, information services, employee trainings and other services equipment products/accessories support service for vehicles Sales of and parts vehicles for industry use tor Sales & Sales tor Investee Investee in Mainland China Shanghai Hozhan Motor Co., Service Tianjin Ho-Yu Motor Sales & Service Chongqing Lexus Heling Motor Sales & Ltd. Co., Service Linyi Heling Lexus Heling MotorLinyi Sales & Ltd. Co., Service Hotong Motor Investment Co., Ltd. Operation making, cap decision ShanghaiMotor Hoyu Co., Service Ltd. ChongQing ToyotaYuou Automobile Ltd. Co., & Service Sales Ltd. Co., Service Ltd. Co., Ltd. Ltd. Co., Service & Co., Service Ltd. Ltd. Co., Service Ltd. Co., Service Ltd. Co., Service Co., Ltd. Ltd. Co., Service Ltd. Co., Service Corporation Zaozhung Ho-Wan Motor Sales & Zhan Co.,He Development Ltd. Trading of air conditioning Beijing Hoyu Toyota Hoyu Beijing Motor Sales & Tangshan Lexus Heling Mo (Shanghai)Hoyun Factoring Commercial Carmax Autotech (Shanghai) Co., Ltd. Trading of vehicle Shanghai Motor Heling Co., Service Ltd. InternationalHoyun Lease Co., Ltd. Leasing, retail wholesale, of and Nanchang Heling LexusNanchang Heling Motors Sales & Table 10 Table Tianjin Lexus Heling Motor Sales & Toyota Hoyu MotorLinyi Sales & Tianjin Hozhan Motor Co., Service Ltd. Shanghai Ho-Qian Logistics Equipment Trading Co., Ltd. Guangzhou Gac Changho Autotech ChongQing Yurun Toyota Automobile Zaozhuang Ho-Yu Toyota Motor Sales

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Note 4 Note 2.1 Footnote ------

investment income of December 31, 2019 31, December of Accumulated amount Accumulated of Note 2.1 Note 2.2 Note 2.1

Note 2.3 Note 2.2

Note 2.3 remitted back to Taiwan as Taiwan to back remitted 3,005 8,782 4,525 18,533 22,106 59,845 87,125

434,459 149,964 974,614 300,558 314,790 152,301 December 31, 2019 31, December in Mainland China as of

Book ofvalue investment

- - 641

1,360) 2,496) 9,624) 1,795 6,043) 6,818 1,320) 80,429 31,969 15,429 2019 Investment income ended December 31, Company for the year

(loss) by the recognized

( ( ( ( ( 35.00 50.00 60.00 35.00 35.00

100.00 100.00 100.00 100.00 100.00 100.00 indirect) (direct or

Ownership held by the Company - - 641 1,360) 4,991) 1,795 6,043) 1,320) 11,364 84,650 91,341 27,496) 44,084

for the ended year December 31, 2019 31, December 100.00 35.00

Net income of investee Net income ( ( ( ( (

------December 31, 2019 31, December

remittance from Taiwan from remittance

to Mainland China as of Accumulated amount Accumulated of

------Taiwan Remitted back to

------2019 Amount remitted from Taiwan to Remitted to Mainland China

Taiwan 31, forDecember the ended year Mainland China/ Amount remitted back to

------45,365,176 Mainland Accumulated from Taiwan to January 1, 2019 amount of remittance

Mainland China as of Commission of MOEA ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Note 3 method (Note 1) (Note China imposed the by Investment Ceiling Ceiling on investments in Investment $ 8,587 4,293 8,587

85,866 42,933 12,880 458,957 449,700 299,800 314,790 359,760 419,720 987,459 ffairs 5,662,729 (MOEA) Paid-in capital Paid-in approved the by of the Ministry of Economic A Economic Investment amount on from Hotong Motor Investment Co., Ltd. has not been completed. Investment Commission

$ 2,228,260 NT$. parent company's CPA. company's parent Ƀ Ƀ 2019. However, capital injecti December 31, 2019 31, December Mainland China as of Accumulated amount Accumulated of Main business activities remittance from Taiwan to $ Trading of vehicle products/accessories and property management Trading of used vehicles Sales and repairing of vehicles Sales of imported vehicles Sales and repairing of vehicles Sales and repairing of vehicles Sales and repairing of vehicles Design and production of advertisements Trading of vehicle products/accessories and property management Sales and repairing of vehicles Consulting and service property management arter of of arter nd China companies through ainvested company and established ain third region. Company name Investee Investee in Mainland China Shanghai Jiading Lexus Heling Motor Note 1: The investmets are classified as follows: (1) Direct investment in Mainland China. Mainla in (2)Investment (3) Others. Note 2:The amount of (loss) investment 31, income forDecember recognized the ended 2019 year is based on: (1) The financial statements audited by R.O.C were (2) The financial statements audited by other were independent accountants in PricewaterhouseCoopers, Taiwan. (3) Others. Note 3: Related amounts in thetable following are expressed in Note 4: It was established in the second qu Shanghai MotorHoChen Technology Co., Ltd. Taizhou LexusZhongdu Motor Sales & Co.,Ltd.Service Ltd. Co., Service Co.,Service Ltd. Co.,Shanghai Ltd.Used Vehicle Hede Shanghai Guangxin Cultural Media Co., Ltd. Ltd. Co., & Service Sales Ltd. Ltd. Co., Service Tianjin Binhai LEXUS MotorHeling Co.,Ltd.Service TaiHo Motor Co., Ltd. Shanghai Ho-Mian Motor Technology Co., Ltd. Chongqing Taikang Lexus Heling Motor Co.,Ltd. & Service Sales Jinzhong Central Toyota Motor Sales & Shanghai Yangpu Lexus Heling Motor Shanghai Hoxin Motor Service Consulting Co.,Ltd. Tianjin Heyi International Trading Co., Trading International Heyi Tianjin Beijing Heling Lexus Heling Beijing Motor Sales &

HO TAI MOTOR CO., LTD. STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2019 (Expressed in thousands of New Taiwan dollars)

STATEMENT 1

Items Description Amount Petty cash $ 330 Checking accounts 9,916 Demand deposits -NTD 213,533 -USD USD 70 thousand, conversion rate 29.98 2,111 -JPY JPY 14,582 thousand, conversion rate 0.2760 4,025 Cash equivalents-short-term notes and bills 798,315 $ 1,028,230

HO TAI MOTOR CO., LTD. STATEMENT OF INVENTORIES DECEMBER 31, 2019 (Expressed in thousands of New Taiwan dollars)

STATEMENT 2

Amount Net realizable Items Cost value Footnote Vehicles $ 4,211,089 $ 4,211,089 Parts 671,209 597,964 Inventory in transit 2,416,661 2,416,661 7,298,959 $ 7,225,714 Less: Allowance for inventory obsolescence ( 73,245 ) $ 7,225,714

Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ None pledged Collateral Collateral

16,497

115,716 873,829 977,507 384,464 164,251 381,854 120,685 4,333,463 4,315,128 5,826,634 1,676,620 2,649,947 1,064,958 1,271,605 1,295,831 1,127,145 1,016,241 Total amountTotal $ 20,715,416

11 42 14 73 70 39 55 51 64 69 16 82 17 112 107 295 571 38,572

Net equity value equity Net Unit price Unit (In dollars) $ - $

METHOD 16,636 111,996 977,506 378,068 293,845 357,798 124,467

1,009,110 4,315,317 4,150,614 5,834,220 2,528,177 2,616,032 1,501,798 1,361,522 1,284,584 1,078,674 1,124,145 Amount $ 20,714,779 $ 49,779,288

(%) 30.00% 20.00% 45.01% 20.00% 20.00% 51.00% 34.81% 20.05% 23.67% 20.00% 45.54% 21.14% 25.00% 20.00% 100.00% 100.00% 100.00% 100.00% 100.00% Ownership !

3,000 Balance at December 31, 2019 31, December at Balance 211,433 960,961 2,000,000 1,295,108 Shares 79,397,360 15,000,000 24,710,856 15,153,573 22,161,150 22,950,000 25,438,987 17,553,761 14,806,073 59,670,833 33,765,670 103,800,000 313,500,000

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

- - 243

6,376 5,800 50,811 71,837 38,000 22,161 12,687 53,465 14,414 37,500 505,314 365,867 246,806 125,553 353,058

$1,123,265 $3,033,157 Amount

( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (

------

Deductions Shares

6,204 4,354 61,785 18,450 14,905 85,607 24,150 111,621 117,863 134,711 533,789 290,417 155,659 303,730 435,972 148,818 124,156 HO TAI MOTOR CO., LTD. MOTOR TAI HO 1,514,568

Amount $ 5,216,325 $ 9,303,084

YEAR ENDED DECEMBER ENDED 31, 2019 YEAR

------Additions

(Expressed in thousands of New Taiwan dollars) Taiwan in thousands of New (Expressed 287,499 Shares 20,500,000

12,282 980,667 938,419 849,171 359,618 284,740 272,434 132,677 125,346 4,286,842 4,226,064 4,566,458 2,444,355 2,437,722 1,428,177 1,321,898 1,201,670 1,018,969 Amount $ 16,621,719 $ 43,509,228

3,000 211,433 960,961 2,000,000 1,007,609 Shares 58,897,360 15,000,000 24,710,856 15,153,573 22,161,150 22,950,000 25,438,987 17,553,761 14,806,073 59,670,833 33,765,670 Balance at January 1, 2019 1, January at Balance 103,800,000 313,500,000 STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY EQUITY FOR USING ACCOUNTED OF CHANGES INVESTMENTS IN STATEMENT

Investee

! STATEMENT 3 STATEMENT Ltd. Co., Investment Hozan Ltd. Motors, Kuozui Ltd. Co., Motor Yuan Chang (BVI) Investment Shanghai Ho-Yu Ltd. Co., Central Motor Co., Ltd. DevelopmentHo Tai Co., Ltd. Ltd. Co., Motor Miau Tau Ltd. Co., Automobile Du Kau Ltd. Co., Carmax Motor Co.,Toyota Ltd. Taipei Kuotu MotorCo., Ltd. Ltd. Co., Motor Du Nan MaterialToyota Handling Taiwan Ltd. Eastern Motor Co., Ltd. MotorCo., Toyota Ltd. Yang Lang Corp. Packaging Flexible Formosa Ltd. Co., Industrial Screw Shi-Ho Ltd. Co., Taiwan Tire Yokohama Ltd. Co., Technology Design Smart

! ! ! ! ! ! ! ! ! ! ! ! Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ Ƀ None collateral Pledged as as Pledged Guaranteed or Guaranteed

)

96 26,850 13,236 78,612 931,497 130,052 542,237 341,682 2,116,460 1,266,966

Balance as of as Balance $ 2,143,310 $ 5,420,838 $ December 31, 2019 December

( )

- - - -

- - - 1,762 14,345 34,194 46,777 !

$ Reclassifications $

(

------

77) 1,740) 31,711) 33,528)

Deductions $ $

( ( ( (

- - - - -

410 2,808 5,492 24,702 308,273 HO TAI MOTOR CO., LTD. MOTOR TAI HO Additions YEAR ENDED DECEMBER ENDED 31, 2019 YEAR $ 341,685 $ $

)

(Expressed in thousands of New Taiwan dollars) Taiwan in thousands of New (Expressed 96 7,821 26,850 78,612 80,186 10,919 931,497 129,642 515,052 2,116,460 1,251,553 Balance as of as Balance January 1, 2019 January $ 5,1 $ $ 2,143,310 $

STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT-COST AND PLANT OF CHANGES IN PROPERTY, STATEMENT

(

Items

! STATEMENT 4 STATEMENT Land Cost Accumulated impairment Less: Subtotal gain Revaluation Buildings structures and Cost gain Revaluation Utility equipment equipment Office Others assets Rental Construction in progress

Footnote

6,059 78,338 747,485 128,207 437,532 1,397,621 Balance as of as Balance December 31, 2019 December ATED DEPRECIATION ATED $ $

- - - - ! 2,510 2,510

Reclassifications $ $

) ) ) ) - -

77 1,648 22,129 Deductions $ 23,854 $ $

( ( ( (

44 562 621 29,312 36,147 HO TAI MOTOR CO., LTD. MOTOR TAI HO Additions $ $ 66,686 $ YEAR ENDED DECEMBER ENDED 31, 2019 YEAR

(Expressed in thousands of New Taiwan dollars) Taiwan in thousands of New (Expressed 5,515 78,294 127,645 430,349 710,476 1,352,279 Balance as of as Balance January 1, 2019 January $ $

STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT – ACCUMUL – EQUIPMENT AND PLANT OF CHANGES PROPERTY, IN STATEMENT

Items

! STATEMENT 5 STATEMENT Buildings structures and Utility equipment equipment Office Others assets Rental

! ! ! ! Ƀ Ƀ Ƀ None Guaranteed or Guaranteed Pledged as collateral as Pledged

11,983 11,983 755,900 742,263 977,322 2,487,468 Balance as of as Balance ! December 31, 2019 December $ $

) )

- - - 1,763 ! $1,763

Reclassifications ! $ $

( (

- - - - -

Deductions $ $

- - -

269 269 HO TAI MOTOR CO., LTD. MOTOR TAI HO Additions YEAR ENDED DECEMBER ENDED 31, 2019 YEAR $ $

(Expressed in thousands of New Taiwan dollars) Taiwan in thousands of New (Expressed

11,983 755,900 742,263 978,816 2,488,962 STATEMENT OF CHANGES IN INVESTMENT PROPERTY COST - PROPERTY OF CHANGES INVESTMENT IN STATEMENT Balance as of as Balance January 1, 2019 January $ $

Items

! STATEMENT 6 STATEMENT ! Land Cost gain Revaluation Buildings structures and Cost gain Revaluation ! ! !

HO TAI MOTOR CO., LTD.! STATEMENT OF CHANGES IN INVESTMENT PROPERTY – ACCUMULATED DEPRECIATION! YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan dollars)! ! STATEMENT 7

Balance as Balance as of of January 1, December 31, Items 2019 Additions Deductions Reclassifications 2019 Footnote Buildings and structures $ 499,343 $ 24,892 $ - ( $ 2,510 ) $ 521,725

Ƀ Ƀ Ƀ Ƀ None collaterals Pledges or Pledges

959,360 959,360 6,000,000 6,000,000 Loans Loans $ 1,798,800 Commitments

(%) 2.36% 2.22% 2.22% 2.10% 2.10% Range of Range interest rate rate interest

Contract period Contract

2019/12/16~2020/1/7 2019/12/30~2020/1/13 2019/12/16~2020/1/15 2019/12/16~2020/1/15 2019/12/16~2020/1/15

77,640 803,464 659,560 275,696

1,951,407

135,047 Balance as of as Balance $ $ December 31, 2019 31, December $ $ December 31, 2019 31, December

HO TAI MOTOR CO., LTD. MOTOR TAI HO STATEMENT OF SHORT-TERM LOANS OF SHORT-TERM STATEMENT (Expressed in thousands of New Taiwan dollars) Taiwan in thousands of New (Expressed !

Description MUFG Bank, Ltd., Taipei Branch Branch Taipei Ltd., MUFG Bank, currency) (foreign Branch Taipei Ltd., Mizuho Bank, currency) (foreign Branch Taipei Ltd., Mizuho Bank, currency) (foreign currency) Ltd. (foreign Taiwan, Citibank currency) Ltd. (foreign Taiwan, Citibank

Type STATEMENT 8 STATEMENT borrowingsUnsecured rate between Interest Note: 2.10%~2.36%.

HO TAI MOTOR CO., LTD.! STATEMENT OF OPERATING REVENUE! YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan dollars)! ! STATEMENT 9

Items Quantity Amount Footnote Revenue from contracts with customers:

Sales revenue of vehicles Sedan 121,807 cars $ 113,717,750 Others 1,048 cars 1,721,088 Sales revenue of parts 12,049,178 Others 1,472,435 Subtotal 128,960,451 Sales returns and allowance ( 2,067,818 ) $ 126,892,633

HO TAI MOTOR CO., LTD. STATEMENT OF OPERATING COSTS YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan dollars)! ! STATEMENT 10

Items Description Amount Footnote

Initial inventories $ 5,303,134 Add: Merchandise purchase 117,121,722 Others 943,512 Less: Ending inventories ( 7,298,959) Reclassified to fixed assets and expenses ( 20,399) Loss on physical inventory observation ( 23) Others ( 7,155) Operating costs $116,041,832

(Remainder of page intentionally left blank)

HO TAI MOTOR CO., LTD. STATEMENT OF SELLING EXPENSES YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan dollars)! ! STATEMENT 11

Items Description Amount Footnote

Wages and salaries $ 597,037 Including pension costs Advertisement expense 963,036 Freight 292,923 Miscellaneous 517,057 The amount of each item in others does not exceed 5% of the account balance. $ 2,370,053

HO TAI MOTOR CO., LTD. STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan dollars)! ! STATEMENT 12

Items Description Amount Footnote

Wages and salaries $ 856,896 Including pension costs Directors’ remuneration 300,134 Miscellaneous disbursements 60,677 Others 260,966 The amount of each item in others does not exceed 5% of the account balance. $ 1,478,673

- 62,314 27,189 88,196 89,916 Ǻ 262,853 1,749,732 Total

$ 1,309,180 $ !

62,314 27,189 88,196 89,916 262,853

1,309,180 1,749,732 2018 expenses operating operating Classified as as Classified

$ $ !

------

Classified as as Classified

operating costs operating $ - $

! )

- 64,101 27,704 97,423

300,134 100,215

1,918,383 Total Years ended December 31,ended Years

$ 1,426,229 $ !

64,101 27,704 97,423 300,134 100,215 1,918,383 2019 expenses operating operating directors in previous year)). previous in directors ployee salaries in current year- Average employee salaries in previous year)/ Average employee ployee employee salaries salaries ininAverage Average current previous year)/ year- Classified as as Classified

loyee loyee salaries in current year / (Number of employees in current year–Number of non-employee Total employee benefit expense in previous year–Total directors’ compensation in employee benefit previous Total expense year)/ directors’ in previous year–Total n current year)). current n $ 1,426,229 $ ployee salaries in previous year / (Number of employees in previous year–Number of non-employee non-employee of year–Number previous in employees of (Number / year previous in salaries ployee ! otal employee benefit expense in current year–Total directors’ compensation in current year)/(Number year)/(Number current in compensation directors’ year–Total current in expense benefit employee otal

HO TAI MOTOR CO., LTD. MOTOR TAI HO ------

6 employees, including 11 and 12 non-employee directors, respectively. directors, non-employee and 12 11 including employees, 6 hange or over-the-counter securities exchange shall additionally disclose the following information following the disclose shall additionally exchange securities over-the-counter or hange Expressed in thousands of New Taiwan dollars Taiwan in thousands Expressed of New ( YEARS ENDED DECEMBER 31, 2019 AND 2018AND DECEMBERYEARS ENDED 31, 2019 Classified as as Classified

operating costs operating $ - $ !

By function

SUMMARY OF EMPLOYEE BENEFITS EXPENSES, DEPRECIATION AND AMORTIZATION BY FUNCTION AND BENEFITS EXPENSES, EMPLOYEE DEPRECIATION SUMMARY OF

of employees in current year–Number of non-employee directors i directors non-employee of year–Number current in of employees employee benefit expense Average in previous year was $2,733 (( of non-employee – Number year previous in employees of (Number Average employee benefit expense in current year was $2,937 ((T $2,937 was year current in expense benefit employee Average Average employee Average salaries in current year was $2,588 emp (Total salaries in previous year). in previous salaries directors in current year)). in current directors em (Total $2,407 was year previous in salaries employee Average directors in previous year)). in previous directors Adjustments of average employee em salaries was 7.52% ((Average

(b) (c) (a) Wages and salaries and Wages healthfees and insurance Labour Pension costs benefit expenses employee Other Employee benefit expense Employee ! ! ! remuneration Directors’ ! Subtotal Depreciation Amortization By nature STATEMENT 13 STATEMENT Note: 55 562 and had Company the and 2018, 31, 2019 atAs December A. exc stock the on trading for is listed stock whose company A B.

VI. Financial Information 6. Any cash flow difficulties in the Company and its affiliates during the most recent year and as of the date of this Annual Report: N/A

㞹˚岈⋀䊧㲨⎱岈⋀严㔯Ḳ㪉姵⇭㝷凮梏暑Ṳ柬 Review of Financial Conditions, Operating Results, and Risk Management

VII. Financial Status, Operating Results and Risk Management 1. Financial Condition Unit: in thousand NT$ Year Change Item 2019 2018 Amount %

Current Assets 172,608,940 156,256,037 16,352,903 10 柬 Non-current assets 82,925,115 73,129,668 9,795,447 13 Total Assets 255,534,055 229,385,705 26,148,350 11 Current Liabilities 159,822,615 150,298,633 9,523,982 6 t Non-current liabilities 20,102,813 20,851,114 (748,301) (4)

Total Liabilities 179,925,428 171,149,747 8,775,681 5

Share Capital 5,461,792 5,461,792 - -

Capital Surplus 2,816,734 292,159 2,524,575 864

Retained Earnings 49,094,707 43,713,877 5,380,830 12

Other Equity Interest 1,213,203 (132,102) 1,345,305 1,018

Non-controlling Interest 17,022,191 8,900,232 8,121,959 91

Total Equity 75,608,627 58,235,958 17,372,669 30

Analysis of percentage changes: x Non-current assets: Higher figures of non-current assets were primarily due to increased real property, facilities and equipment in 2018. x Capital Surplus and other equity interest: The impacted number of the subsidiaries’ capital increase during the year not recognized by the shareholding ratio and the unrealized gains on financial assets at fair value through other comprehensive income in 2018.

VII. Financial Status, Operating Results and Risk Management 2. Financial Performance (1) Analysis of Financial Performance Unit: in thousand NT$

Year +(-) 2019 2018 Item +(-) Amount +(-) %

Total income 213,745,071 187,027,586 26,717,485 14

Total expenses 196,372,085 171,832,312 24,539,773 14 Profit before income 17,372,986 15,195,274 2,177,712 14 tax Income tax expense (3,788,087) (3,595,444) (192,643) 5

Profit for the year 13,584,899 11,599,830 1,985,069 17 Other Comprehensive 1,464,276 (853,915) 2,318,191 271 Income (Loss), Net of Tax Comprehensive 15,049,175 10,745,915 4,303,260 40 Income Profit Attributable to 11,768,815 10,025,535 1,743,280 17 Owners of Parent Profit Attributable to Non-controlling 1,816,084 1,574,295 241,789 15 Interest Comprehensive Income Attributable 13,280,285 9,205,476 4,074,809 44 to Owners of Parent Comprehensive Income Attributable 1,768,890 1,540,439 228,451 15 to Non-controlling Interest 1. Analysis of percentage changes: Other comprehensive income (loss), net of tax, declined primarily due to lower unrealized gains on financial asset at fair value through other comprehensive income in 2018. 2. The Company’s main business has not changed. 3. For more information regarding forecasted sales in the coming year and assumptions, as well as factors that may affect the Company’s expectations of continued growth or decline in sales, refer to “2020 Business Outlook” on page 3 of the Annual Report.

Note: On January 17, 2017, we acquired 99.80% of the equities in Zurich Insurance (Taiwan) Ltd. (which was renamed as Hotai Insurance Co., Ltd.). Since Hotai Insurance Co., Ltd. is considered a consolidated business from a different industry, the 2018 and 2019 comprehensive income statements are issued in a single-step format. Therefore, there are no figures available on gross profit, operating profit (loss), and non-operating income and expenses.

(2) Analysis of Changes in Gross Profit: N/A

VII. Financial Status, Operating Results and Risk Management 3. Cash Flows (1) Liquidity Analysis

December 31, 2019 December 31, 2018 +(-)%

Cash Flow Ratio 10.31% 5.78% 4.53%

Cash Flow Adequacy Ratio 64.23% 56.51% 7.72%

Cash Reinvestment Ratio 9.69% 2.44% 7.25% Analysis of ratio changes: x The increase in cash flow ratio was primarily attributable to lower net cash from operating activities. x The increase of cash flow adequacy ratio was primarily attributable to decreased net cash from operating activities. x The change in cash reinvestment ratio was primarily due to higher net cash from operating activities.

(2) Projection of Fiscal Year 2020 Cash Flows and Liquidity Analysis Unit: in thousand NT$ Cash and Cash Projected Net Cash Projected Net Cash Projected Surplus Measures for Managing Equivalents at from Operating from Investing and (Deficit) of Cash and Cash Deficit Beginning of Year Activities Financing Activities Cash Equivalents at Investment Financing (1) (2) (3) End of Year Plans Plans (1)+(2)-(3)

12,023,739 13,607,866 (11,024,718) 14,606,887 ─ ─

1. Analysis of projected cash flows: (1) The Company expects steady business growth in 2020 where its operating activities will generate net cash flow. (2) The net cash flow is expected to be offset by investing and financing activities, primarily due to payment of cash dividends, equipment purchases, and construction of new facilities. 2. Measures for managing potential cash deficit and liquidity analysis: N/A

VII. Financial Status, Operating Results and Risk Management 4. Major Capital Expenditures and Impact on Financial Condition (1) Major Capital Expenditures and Capital Resources: Capital Project Time Target Amount Resources Mo 20% of Tau Miau 1,333,514,000 Motor Co., Ltd. shares Mo 20% of Lang Yang Toyota 2013 October Owned Funds 256,000,000 Motor Co., Ltd. shares A 20% of Kau Du Automobile 1,236,592,000 Purchasing of Co., Ltd. shares Mo the shares of 20% of Central June 2,100,000,000 dealers Motor Co., Ltd. shares Mo As of December 31, 2014, the Company Ya 2014 Owned Funds has acquired 20.05% of the total number Le December of issued shares through the proposal 889,502,000 that Kuotu Motor Co., Ltd. increases Se capital by cash.

99.80% of the equities in Hotai Insurance Ins Expansion of 2017 January Owned Funds Co., Ltd. (formerly known as Zurich 6,831,887,000 business Insurance (Taiwan) Ltd.) To C 100% equities in Shanghai Yangpu Heling Expansion of Lexus Motor Sales & Services Co., Ltd. 2017 January Owned Funds RMB 55,000,000 business (formerly known as Shanghai Yingzhijie T Auto Sales & Services Co., Ltd.) Purchasing of Ji 0.1% equities in Toyota Motor the shares of 2018 September Owned Funds 6,083,183,000 Se Corporation (TMC) TMC

Expansion of 100% equities in Shanghai Hochen 2019 July Owned Funds RMB 70,312,000 business Technology Co., Ltd.

RMB 72,097,000 Expansion of 100% equities in Shanghai Jiading Holin 2019 July Owned Funds (The contribution has business Services Co., Ltd. not been completed.)

VII. Financial Status, Operating Results and Risk Management

Profit attributable to owners of the parent Cash Dividends Hotai Receives 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Tau Miau 60,566 85,918 45,240 47,918 104,826 75,768 39,399 51,522 4,546 15,154 Motor Co., Ltd Lang Yang Toyota 10,559 11,954 7,298 7,903 15,077 14,000 6,000 7,400 4,800 5,800 Motor Co., Ltd Kau Du Automobile 50,206 78,047 40,786 28,821 60,482 44,322 33,242 48,755 26,593 22,161 Co., Ltd Central 75,964 117,348 62,833 71,236 147,888 45,000 45,000 45,000 30,000 30,000 Motor Co., Ltd Kuotu Motor Co., Ltd 68,500 92,254 56,402 78,656 119,804 17,554 17,554 17,554 7,022 8,777 Shanghai Yangpu Heling Lexus Motor Sales & 34,370 93,413 80,429 Services Co., Ltd Hotai Insurance Co., 1,587 138,907 282,970 Ltd. Toyota Motor Corporation - 86,801 199,259 86,801 199,259 Shanghai Hochen Technology Co., Ltd. Shanghai Jiading Holin Services Co., Ltd.

Total 265,795 385,521 248,516 553,655 1,010,735 196,644 141,195 170,231 159,762 281,151

Unit: in thousand NT$

(2) Expected Benefits: By investing in Toyota Motor Corporation and car dealers, strategic partnerships are formed to enhance the business development of both parties. Furthermore, profits from our investments in the affiliates will increase overall income of the Group.

VII. Financial Status, Operating Results and Risk Management 5. Investment Policy of the Latest Fiscal Year, Reasons for Gains or Losses, Improvements and Investment Plan for the Coming Year (1) Investment Policy The investments we have made are primarily in the automotive industry. The Company focuses on developing distribution channels for convertibles, commercial and industrial vehicles while building up its portfolio by investing in automotive related businesses, including CPO cars, auto accessories, installment sales, rental and leasing, auto insurance, and Toyota dealerships in China. Going forward, we will continue combining group resources and expand the Company’s diversified portfolio into the field of Mobility as a Service (MaaS) and Sharing for investment. (2) Profitability Gains from our investments in affiliates and joint ventures recognized using the equity method was NT$1.153 billion in the 2019 consolidated financial statements, while gains from our investments in subsidiaries, affiliates and joint ventures recognized using the equity method was NT$5.577 billion in the 2019 individual financial statements. These investments accounted for 8.49% and 45.68% of the total net income in the respective financial statements. The gains were mainly attributed to investments in Hotai Finance Co., Ltd. (“Hotai Finance”), Hotai Leasing Co., Ltd. (“Hotai Leasing”), our dealers, Carmax Co., Ltd., and Toyota dealerships in China.

Under the structural changes in the automotive industry, we are taking a proactive approach to expand the value chain to other automotive related business, which drives our continuous growth. In addition to our core business—vehicle sales and services, we also tap into e- commerce by setting up Hotai Cyber Connection, incorporating existing CPO car business from @bc Car with the goals to reinvent the vehicle owner experience and create an online community. The Group also invests in the insurance sector: Hotai Insurance Co., Ltd., a one- stop shop that offers premium motor insurance service to drivers, is an example of industry vertical integration achieved. Apart from the above business, we invest in the transport and logistics sector, integrating and optimizing Group logistics and expanding business operations. (3) 2020 Investment Plans Hozan Investment Co., Ltd. has contributed USD$600 million in the capital increase of Ho Tai Cyber Connection Co., Ltd. in March 2020. Ho Tai Cyber Connection Co., Ltd.

VII. Financial Status, Operating Results and Risk Management 6. Risk Factors Provide Evaluations and Analysis of the Following Items over the Latest Fiscal Year and as of the Date of the Annual Report

(1) Impact of Interest Rates, Foreign Exchange, and Inflation on the Gains or Losses of the Company, and Measures for Managing Risks: Risk management is carried out by the financial division of each group company in accordance with policies approved by the Board of Directors of the Company. The Group’s financial divisions, which work closely with the Group’s operational divisions, are responsible for identifying, evaluating, and hedging against financial risks. The Board of Directors has established written guidelines for risk management and provided written policies in selected areas of market risks. 1. Interest Rate Risk (1) The interest rate risk is mainly attributable to certain floating interest rate loans taken out by the Company’s subsidiary, Hotai Finance, which exposes the Group to cash flow interest rate risk. (2) Cross currency swap transactions by the Company’s subsidiary, Hotai Finance, use present value of a basis point (PVBP) to evaluate market risks. Since the notional amount is equal to the amount of the hedged liabilities, and the duration, reset date, interest and principal payment schedule, and interest rate benchmark are all identical, they should offset market risk exposures. Therefore, the investments are not expected to result in major market risk. (3) Debt-based financial instruments issued by the Company’s subsidiary, Hotai Finance, are fixed-rate debts/liabilities, which are not subject to interest rate fluctuations in the market. (4) As our subsidiary, Hotai Insurance Co., Ltd. mainly invests in bonds with fixed interest rates, the fair market value of the bonds invested will be impacted by the fluctuations of interest rate in the market. If the market interest rate rises, the fair market value of the bonds will decline. However, the investment objectives of Hotai Insurance Co., Ltd. are long-term robust performance and predictable profitability, which makes it less susceptible to short-term interest rate fluctuations in the market. Therefore, the investments are not expected to result in major interest rate risk. 2. Foreign Exchange Risk (1) Hotai Group has operations worldwide and is therefore exposed to changes in foreign currency rates, primarily in U.S. dollars and Renminbi. The foreign exchange risk mainly arises from future business transactions, net assets and liabilities, and net investment in foreign affiliates. (2) The management of Hotai Group has established a policy that requires each group company to manage foreign exchange transaction risk arising from functional currency. Through its own financial division, each group company is to hedge its foreign currency exposure. Currently, all the group companies use foreign currency contracts to manage risks arising from future business transactions and net assets and liabilities, except for Hotai Insurance Co., Ltd., which fully authorizes investors to hedge foreign exchange investment exposures by using swap agreements. A group company is exposed to foreign exchange transaction risk and translation risk when the future transaction or net assets and liabilities are denominated in non-functional currency of such group company. (3) The business conducted by Hotai Group involves several non-functional currencies (the functional currency of the Company and certain subsidiaries is New Taiwan dollars, and Renminbi for some other subsidiaries), and is, therefore, exposed to

VII. Financial Status, Operating Results and Risk Management changes in foreign currency rates. For more information regarding foreign currency denominated assets and liabilities that are exposed to major foreign exchange risks, refer to the 2019 Consolidated Financial Statements and Reports of Independent Registered Public Accounting Firm. 3. Inflation Risk The operations of the Company have not been materially impacted by exposure to inflation within the latest fiscal year and as of the date of the Annual Report. (2) Policies for High-risk Leveraged Investments, Fund Lending to Third Parties, Endorsement and Guarantee of Obligations, Transactions in Financial Derivatives, Reasons for Gains or Losses, and Measures for Managing the Risks: 1. High-risk Leveraged Investment Hotai Group has not made any high-risk leveraged investments. 2. Fund Lending, Endorsement and Guarantee of Obligations The management of Hotai Group has established a policy that requires each group company to adopt its own Procedures for Fund Lending and Procedures for Providing Endorsement and Guarantee of Obligations for internal control purpose. Fund lending and endorsement and guarantee of obligations that occurred in 2019 were borrowings between subsidiaries in the ordinary course of business and guarantees provided for bank financing. No losses were attributed to fund lending or endorsement and guarantee of obligations in 2019. 3. Transaction in Financial Derivatives The management of Hotai Group has established a policy that requires each group company to follow the Procedures for Financial Derivative Transactions when entering into transactions in financial derivatives. Some of the derivative financial instruments used by the Company for hedging in 2019 include foreign currency forward contracts in U.S. dollar terms and cross currency swaps. (3) Future R&D Programs and Projected R&D Expenses: As an auto distributor, we dedicate our business exclusively to vehicle sales and marketing, therefore, we have no future R&D programs or projected R&D expenses. Toyota Motor Corporation and Kuozui Motors are responsible for the manufacturing and research and development of our products. (4) Risks Associated with Government Policy and Regulatory Changes and Impact on Financial Condition and Operations: Hotai Group complies with regulatory updates (e.g., corporate governance rules, Company Act, and other laws and regulations) prescribed by the authorities and makes amendments to our internal rules accordingly. As of the date of the Annual Report, no such changes would materially impact the financial condition or operations of the Company. (5) Impact of Changes in Technology and Industry on the Company’s Financial Condition and Operations and Measures for Managing Associated Risks: With the development of the digital environment, such as phone APP, network cash flow, 5G, etc., and the evolution of other technologies, such as: electric vehicles, self-driving cars, etc., the overall industry has gradually transformed from vehicle sales to providing mobile service solutions. In response to this change and the policy adjustment of the original Japanese factory, the Company established the MaaS (Mobility as a Service) Promotion Department to respond accordingly, allowing accelerated data retrieval for our account analysis purposes and further benefiting the overall operations of the Company.

VII. Financial Status, Operating Results and Risk Management (6) Risks Associated with Brand Image and Impact on Crisis Management Hotai Motor is the distributor of the well-known auto brands such as TOYOTA, LEXUS, HINO, and Toyota industrial equipment. We strive to deliver high quality products and innovative services to our customers. It is our commitment to customers and ability to exceed consumer expectations that have allowed us to maintain the leading brand in the automotive industry. We have also remained dedicated to corporate social responsibility, reaching out to traffic safety, youth training, social care, environmental protection to the general public. We have established and maintained a positive brand image without any negative events affecting our reputation. (7) Expected Benefits of Mergers and Acquisitions and Risks Associated: N/A (8) Expected Benefits of Capacity Expansion and Risks Associated: 1. In the end of 2018, by out-sourcing the construction on land owned by the Company, construction of the Yangmei PDS Automotive Preparation Plant is commenced, to increase the efficiency of new car preparation. 2. Construction expenses total NT$519,000,000; construction to last from January, 2019 through April, 2020; parking capacity of approximately 2,800 cars. Memorandum with KUOTU MOTOR CO.,LTD. has been signed; to be leased to KUOTU MOTOR CO.,LTD. after completion of construction.

(9) Risks Associated with Concentration of Sales and Measures for Managing the Risks 1. The automotive industry is highly concentrated. The parent company, Hotai Motor Co., Ltd., sells all series of Toyota and Lexus vehicles from Toyota Motor Corporation and Hino Motors, Ltd., auto parts and accessories, as well as vehicles, auto parts and accessories manufactured by Kuozui Motors. However, from our established long-term partnerships with manufacturers, we are able to limit exposure to the risks associated with supply concentration. 2. According to the dealership contracts entered into by the Company and our dealers, the dealers are authorized to sell Toyota and Lexus vehicles, auto parts and accessories in their respective sales territories; these being the characteristics of distribution channels. Therefore, the Company is not subject to risks associated with sales concentration. (10) Impact of Transfer of Significant Number of Shares by Directors, Supervisors, and/or Major Shareholders Holding 10% or More of the Total Outstanding Shares, Risks Associated: N/A (11) Impact of Change in Ownership and Risks Associated: N/A (12) Disclosure of issues in dispute, amount of claims, filing date, parties involved, and status of any litigation or other legal proceedings within the latest fiscal year and as of the date of the Annual Report where the Company and/or any of its directors, supervisors, president, person in charge, shareholders with 10% or more share ownership, subsidiaries or affiliates are involved in pending litigation, legal proceedings, or administrative proceedings, or a judgement or ruling without prejudice which may have a material adverse effect on the Company’s shareholder equity or price of securities. (13) Other Material Risks: N/A

7. Other Material Disclosures: N/A

㌳˚䉠∌姿廰Ṳ柬 Special Disclosure

VIII. Specific Notes 1. Subsidiaries (As of December 31, 2019) (1) Hotai Subsidiaries Chart

100% Tianjin Heling Lexus Motor 100% Shanghai Ho Yu (BVI) 100% Hotong Motor Investmentn- Co., Ltd. Investment Co., Ltd. Sales & Service Co., Ltd.

100% Tianjin Hozhan Motor 100% Chang Yuan Motor Service Co., Ltd. Co., Ltd. 100% Shanghai Hozhan Motor 20% Service Co., Ltd.

100% Shanghai Hoyu Motor 20% Shanghai Hede Used Service Co., Ltd. Vehicle Co., Ltd.

100% Thanghai Guang 25% Xin Culture Media Co., Ltd. 75% Shanghai Heling Motor 20% Service Co., Ltd. 100% Shanghai Yangpu Heling 100% Chongqing Heling Lexus Lexus Motor Sales & Motor Sales & Service Co., Ltd. Service Co., Ltd. 100% Tangshan Heling Lexus 100% Tianjin Heyi Motor Sales & Service Co., Ltd. International Trading 100% Nanchang Heling Lexus Co., Ltd. Motor Sales & Service Co., Ltd. 100% Shanghai Ho Mian Motor Technology Co., Ltd. 100% Zaozhuang Ho-Yu Toyota 100% Zaozhuang Ho-Wan Motor Sales and Service Motor Sales and Services 100% Shanghai Hoxin Motor Service Co., Ltd. and Consulting Co., Ltd. Hotai Motor 100% Shanghai Hochen Motor Co., Ltd. Technology Co., Ltd. 100% Shanghai Jiading Heling Lexus Motor Sales & Service Co., Ltd. Tien jin Ho Yu d 70% 100% Investment Co., Ltd. Tianjin Ho-Yu Motor Sales and Service Co., Ltd. 100% Shanghai Ho-Qian Logistics 100% Toyota Material Equipment Trading Co., Ltd. Handling Taiwan Ltd.

100% Eastern Motor 100% Doroman Autoparts Co., Ltd. Co., Ltd.

51% 100% CarMax Autotech CarMax Co., Ltd. (Shanghai) Co., Ltd. 61.77% 99.80% Hotai Insurance Co., Ltd. 20% Smart Design Technology Co., Ltd. 100% Hoing Mobility 66.04% Hotai Leasing Co., Ltd. Services Co., Ltd. 100% 49.5% Hoyun International 45.34% Hoyun International Hotai Finance Co., Ltd. 50.5% Lease Co., Ltd. 100% Hozan Investment Limited Co., Ltd. 100% 100% Hotai Cyber Hoyun (Shanghai) Connection Co., Ltd. Commercial Factoring Co., Ltd. 100% Hotai Innovation Marketing Co. He Zhan 100% Air Master 100% 45.01% Ho Tai Development 100% Ichiban International Development Co., Ltd. International Co., Ltd. Co., Ltd. Co., Ltd.

100% Ho Tai Service & Marketing Co., Ltd.

VIII. Specific Notes (2) Group Company Profiles Main Business Name Establishment Address Paid-in Capital Activities 10F, No.121, Songjiang Rd., Sales of vehicles and Chang Yuan Motor September 25, Zhongshan Dist., Taipei City, NT$3,135,000,000 parts and repairing of Co., Ltd. 1998 Taiwan vehicles 12F, No.121, Songjiang Rd., Toyota Material September 10, Sales of vehicles and Zhongshan Dist., Taipei City, NT$705,976,900 Handling Taiwan Ltd. 2002 parts for industry use Taiwan Shanghai Ho-Qian No. 515, Caonong Rd., Sales of vehicles and Logistics Equipment May 20, 2008 Xinqiaozhen, Songjiang Dist., US$6,000,000 parts for industry use Trading Co., Ltd. Shanghai, China 1F, No.500, Sec. 3, Zhongyang Sales of vehicles and Eastern Motor Co., April 6, 2009 Rd., Ji’an Township, Hualien NT$337,656,700 parts and repairing of Ltd. County, Taiwan vehicles 1F, No.500, Sec. 3, Zhongyang Wholesale and retail of Doroman Autoparts June 18, 2014 Rd., Ji’an Township, Hualien NT$1,387,180 vehicles parts and Co., Ltd. County, Taiwan accessories

September 29, No.1, Jilin Rd., Zhongli Dist., Trading of vehicle Carmax Co., Ltd. NT$450,000,000 1987 Taoyuan City, Taiwan products/accessories

Building 1, No. 28, Rongshu Rd., Carmax Autotech January 18, Trading of vehicle Rongbei Town, Songjiang Dist., US$1,330,000 (Shanghai) Co., Ltd. 2011 products/accessories Shanghai, China 20F-8, No.5, Sec. 3, New Taipei Electronic parts and Smart Design August 31, 2006 Blvd., Xinzhuang Dist., New NT$48,048,050 components Technology Co., Ltd. Taipei City, Taiwan manufacturing 9F, No.121, Songjiang Rd., Hozan Investment April 22, 1999 Zhongshan Dist., Taipei City, NT$13,956,680,729 General investment Co., Ltd. Taiwan 13F, No.126, Songjiang Rd., Hotai Insurance Co., Property and casualty April 26, 1961 Zhongshan Dist., Taipei City, NT$2,000,000,000 Ltd. insurance services Taiwan 12F, No.121, Songjiang Rd., Ho Tai Cyber September 29, E-commerce platform Zhongshan Dist., Taipei City, NT$230,000,000 Connection Co., Ltd. 2017 for used vehicles Taiwan 12F, No.121, Songjiang Rd., Hotai Innovation October 18, Boutique retail and Zhongshan Dist., Taipei City, NT$10,000,000 Marketing Co. 2018 wholesale Taiwan 15F, No.121, Songjiang Rd., Hotai Leasing Co., Leasing of light May 24, 1999 Zhongshan Dist., Taipei City, NT$1,266,297,870 Ltd. passenger vehicles Taiwan 4F, No.433, Songjiang Rd., Leasing of light Hoing Mobility October 24, Zhongshan Dist., Taipei City, NT$300,000,000 passenger vehicles and Service Co., Ltd. 2018 Taiwan other business 15F, No.121, Songjiang Rd., Installment trading and Hotai Finance Co., May 25, 1999 Zhongshan Dist., Taipei City, NT$5,150,004,070 leasing of various Ltd. Taiwan vehicles

VIII. Specific Notes Main Business Name Establishment Address Paid-in Capital Activities

Hoyun International January 27, Wickhams Cay II, Road Town, US$80,000,000 General investment Limited 2006 Tortola, British Virgin Islands

Building D, 9F, No. 427, Nujiang Leasing, wholesale, Hoyun International January 29, N. Rd., Putuo Dist., Shanghai City, US$80,000,000 retail of and support Lease Co., Ltd. 2007 China service for vehicles Hoyun (Shanghai) Room A72, 1F, No. 477, Fute Commercial August 7, 2014 West 1st Rd., Pilot Free Trade RMB$50,000,000 Factoring services Factoring Co., Ltd. Zone, Shanghai, China Agent for sales of air conditioning system Ho Tai Development 1-7F, No.18, Ln. 36, Xinhu 1st Rd., and October 4, 1963 NT$549,028,080 Co., Ltd. Neihu Dist., Taipei City, Taiwan contracting of air conditioning construction Repairing of air Ho Tai Service & 1-4F, No.18, Ln. 36, Xinhu 1st Rd., conditioning October 8, 2007 NT$271,902,390 Marketing Co., Ltd. Neihu Dist., Taipei City, Taiwan equipment and trading of their parts Ichiban International October 13, Equity Trust Chambers, P.O. Box US$3,000,000 General investment Co., Ltd. 2005 3269, Apia, Samoa

Air Master November 11, Equity Trust Chambers, P.O. Box US$3,000,000 General investment International Co., Ltd. 2005 3269, Apia, Samoa He Zhan Room 701A, No. 300, Xuanhua Trading of air Development Co., March 12, 2007 Rd., Changning Dist., Shanghai, US$3,000,000 conditioning Ltd. China equipment Equity investments Shanghai Ho-Yu (BVI) Wickhams Cay II, Road Town, Mainland China, April 11, 1995 US$79,397,360 Investment Co., Ltd. Tortola, British Virgin Islands trading and repairing of vehicles and their parts Operation decision making, capital using Room 1513 and 1514, No.238, and financial Hotong Motor May 20, 2010 Jiangchang 3rd Rd., Jingan Dist., US$98,545,000 management, Investment Co., Ltd. Shanghai, China information services, employee trainings and other services Shanghai Hoyu February 13, No. 999, Huqingping Hwy, Sales and repairing of Motor Service Co., US$3,370,000 1996 Minhang Dist., Shanghai, China vehicles Ltd. Shanghai Heling December 30, No. 1411, Tongpu Rd., Putuo Sales and repairing of Motor Service Co., US$3,500,000 2003 Dist., Shanghai, China vehicles Ltd. Shanghai Hozhan No. 2058, Lianhua S. Rd., Sales and repairing of Motor Service Co., March 20, 2007 US$3,000,000 Minhang Dist., Shanghai, China vehicles Ltd. Room A, Level 1F, Building 1, Shanghai Hede Used January 24, Trading of used NO. 999, Huqingping Hwy., RMB$3,000,000 Vehicle Co., Ltd. 2014 vehicles Minhang Dist., Shanghai, China Shanghai Guangxin Room 507, Building E, 6F, No. Advertisement design Cultural Media May 19, 2016 1000, Zhenchen Rd., Baoshan RMB$1,000,000 and production Co.,Ltd. Dist., Shanghai, China

VIII. Specific Notes Main Business Name Establishment Address Paid-in Capital Activities Shanghai Yangpu Room 108, Building 1, No. 401, Heling Lexus Motor Sales and repairing of August 23, 2007 Shiguang Rd., Yangpu Dist., RMB$106,900,794 Sales & Service Co., vehicles Shanghai, China Ltd. Shanghai Ho Mian Room 401, No. 11, Aly. 276, November 1, Trading of vehicle Motor Technology Luding Rd., Putuo Dist., RMB$230,000,000 2017 products / accessories Co., Ltd. Shanghai, China Shanghai Hoxin Room 203, Building 1, No. 401, Automotive technical Motor Service and July 13, 2018 Shiguang Rd., Yangpu Dist., RMB$2,000,000 consulting, services Consulting Co., Ltd. Shanghai, China and education Shanghai Hochen Room 403, Building 11, Aly. January 24, Motor Technology 276, Yindin Rd., Putao Dist., US$10,000,000 Automotive retail 2019 Co., Ltd. Shanghai, China Shanghai Jiading Room 105, No. 2, Aly. 509, Heling Lexus Motor Share capital not Automotive sales and June 20, 2019 Anchi Rd. Chiadin city, Sales and Service Co., paid maintenance services Shanghai, China Ltd. No. 8 of No. 88, Jinyu Rd., Chongqing Heling Chongqing Economic and Sales and repairing of Lexus Motor Sales & April 17, 2006 Technological Development US$6,000,000 vehicles Service Co., Ltd. Park, New North Zone, Chongqing, China Tangshan Heling No. 590, Kaiyue Rd., Kaiping Sales and repairing of Lexus Motor Sales & August 4, 2008 US$5,800,000 Dist., Tangshan, Hebei, China vehicles Service Co., Ltd. Nanchang Heling No. 509, Liantang N Ave., November 6, Sales and repairing of Lexus Motor Sales & Liantang Town, Nanchang US$6,500,000 2008 vehicles Service Co., Ltd. County, Jiangxi, China No. 1, Fuxing Rd., Zhangfan Zaozhuang Ho-Yu Town, Xuecheng Dist., Sales and repairing of Toyota Motor Sales July 23, 2008 US$13,650,000 Zaozhuang City, Shangdong, vehicles and Service Co., Ltd. China Zaozhuang Ho-Wan Room 101, No. 1, Fuqing Rd., Sales and repairing of Motor Sales and July 25, 2017 Zhangfan Town, Zaozhuang Hi- RMB$10,000,000 vehicles Services Co., Ltd. Tech Zone, Shangdong, China Intersection of Saida 3rd Ave. Tianjin Heling Lexus and Saida 4th Branch Rd., Xiqing Sales and repairing of Motor Sales & June 9, 2010 US$12,000,000 Economic Development Area, vehicles Service Co., Ltd. Tianjin, China Tianjin Hozhan No. 11, Saida 4th Branch Rd., November 19, Sales and repairing of Motor Service Co., Xiqing Economic Development RMB$68,600,000 2010 vehicles Ltd. Area, Tianjin, China 202-12, Building 4, Hengshen Tianjin Ho-Yi Plaza (North of Helan Road and Automotive related International Trading April 19, 2018 East of Ouzhou Road), Tianjin RMB$20,000,000 business Co., Ltd. Free Trade Zone (Dongjiang Bonded Port), China Equity investments in Tienjin Ho Yu February 5, Wickhams Cay II, Road Town, Mainland China, US$5,000,000 Investment Co., Ltd. 2002 Tortola, British Virgin Islands trading and repairing of vehicles and their parts Tianjin Ho-Yu Motor No. 299, Weijin S. Rd., Tianjin, Sales and repairing of Sales and Service Co., July 31, 2002 US$5,000,000 China vehicles Ltd.

VIII. Specific Notes (3) Any affiliate or subsidiary whose management of personnel, financial or business operations is directly or indirectly controlled by the Company pursuant to Article 369-2, Paragraph 2 of the Company Act: N/A

(4) Any company which is considered controlled by, subordinated to, or affiliated with the Company pursuant to Article 369-3 of the Company Act: N/A

(5) Industries involved in the Hotai Group companies’ business: see “2. Group Company Profiles”

VIII. Specific Notes (6) Directors, Supervisors, and President of our Group Companies

As of December 31, 2019 Share Ownership Company Name Title Name/Representative Number/Value of % Shares Held Hotai Motor Co., Ltd., represented by Ko, Junn-Yuan, Su, Shih-An, Director Huang, Nan-Kuang, Su, Chwen-Shing, Chang Yuan Motor Chang, Tien-Chun, Yeh, Chia-Han, and Lu, Li- 313,500,000 100% Co., Ltd. Yin Hotai Motor Co., Ltd., represented by Supervisor Leon Soo and Roger Huang President Lu, Li-Yin ɡ ɡ Hotai Motor Co., Ltd., represented by Director Huang, Chih-Cheng, Liu, Chuan-Hung, and Toyota Material Hsiao, Hsing-Chien 100% Handling Taiwan Hotai Motor Co., Ltd., represented by Supervisor Ltd. Huang, Tao-Tien President Hsiao, Hsing-Chien ɡ ɡ Toyota Material Handling Taiwan Ltd., represented by Huang, Chih-Cheng, Director Shanghai Ho-Qian Su, Chwen-Shing, Huang, I-Jan, Leon Soo, US$6,000,000 100% Logistics Roger Huang, and Hsiao, Hsing-Chien Equipment Trading Toyota Material Handling Taiwan Ltd., Supervisor Co., Ltd. represented by Su, Maick (Note 1) President Tai, Wen-Hsing ɡ ɡ Hotai Motor Co., Ltd., represented by Su, Chwen-Shing, Wu, Chia-Yen, Director Yeh, Chia-Han, Liu, Chuan-Hung, and 33,765,670 100% Eastern Motor Co., Huang, Tin-Hwei Ltd. Hotai Motor Co., Ltd., represented by Supervisor Chen, Chien-Chou President Huang, Tin-Hwei ɡ ɡ Eastern Motor Co., Ltd., represented by Director Huang, Tin-Hwei, Yang, Chang-Lung, and Doroman Chang, Hsiao-Jung 138,718 100% Eastern Motor Co., Ltd., represented by Hsu, Autoparts Co., Ltd. Supervisor Li-Der President Yang, Chang-Lung ɡ ɡ

Hotai Motor Co., Ltd., represented by Su, Chwen-Shing, Kazuo Naganuma, and 22,950,000 51.00% Lai, Hung-Ta Director Toyota Customizing & Development Co., Ltd., represented by Murata 15,030,000 33.40% Carmax Co., Ltd. Shosuke and Kota Funato Hoyu Investment Co., Ltd., represented by Supervisor 7,020,000 15.60% Huang, Nan-Kuang

President Lai, Hung-Ta ɡ ɡ

VIII. Specific Notes Share Ownership Company Name Title Name/Representative Number/Value of % Shares Held Carmax Co., Ltd., represented by Lai, Hung-Ta, Huang, Chih-Cheng, Director Carmax Autotech Su, Chwen-Shing, Huang, I-Jan, Leon Soo, and US$1,330,000 100% (Shanghai) Co., Ltd. Roger Huang Supervisor Carmax Co., Ltd., represented by Ko, Wang-Te President Hsu,Wen-Chin ɡ ɡ Carmax Co., Ltd., represented by Lai, Hung-Ta 2,968,016 61.77% Director and Liu, Chuan-Hung Smart Design Chen, Yang-Ming 593,495 12.35% Technology Co., Hotai Motor Co., Ltd., represented by Ltd. Supervisor 960,961 20.00% Lai, Chih-Wei President Chen, Yang-Ming 593,495 12.35% Hozan Investment Hotai Motor Co., Ltd., represented by Director NT$ 100% Co., Ltd. Huang, Nan-Kuang and Su, Chwen-Shing Hozan Investment Co., Ltd., represented by Director Cheng, Lin-Ching, Liu, Yuan-Sen, Chan, Wen- 19,960,531 99.80% Chuan, and Chien, Shu-Ching Hotai Insurance Independent Chien, Sung-Chi, Su, Chin-Huo, and Chen, Ji- Co., Ltd. - - Director Jhen President Chan, Wen-Chuan - - Hozan Investment Co., Ltd., represented by Director Su, Chwen-Shing, Huang, Cheng-Yang, Su, Se- Ho Tai Cyber I, Liu, Chuan-Hung, and Tai, Heng-Hu 23,000,000 100% Connection Co., Hozan Investment Co., Ltd., represented by Supervisor Ltd. Ko, Wen-Sheng President Tai, Heng-Hu - - Hozan Investment Co., Ltd., represented by Director Su, Chwen-Shing, Wu, Pin-Tsung, and Hsu, Hotai Innovation Liang-Chuan 1,000,000 100% Hozan Investment Co., Ltd., represented by Marketing Co. Supervisor Roger Huang President Hsu, Liang-Chuan - - Hozan Investment Co., Ltd., represented by Tien, Tien-Ming, Huang, Nan-Kuang, 66.04% Su, Chwen-Shing, Leon Soo, Huang, Cheng- Director Yang, and Fred Hsieh Toyota Financial Services Corporation, 33.40% represented by Hori Zenkatsu Hotai Leasing Co., ɡ ɡ Ltd. Kazuo Naganuma Supervisor Su, Se-I ɡ ɡ

President Fred Hsieh ɡ ɡ

VIII. Specific Notes Share Ownership Company Name Title Name/Representative Number/Value of % Shares Held Hotai Leasing Co., Ltd., represented by Tien, Tien-Ming, Huang, Nan-Kuang, Director Su, Chwen-Shing, Leon Soo, Huang, Cheng- 30,000,000 100% Hoing Mobility Yang, Fred Hsieh, and Hori Zenkatsu Service Co., Ltd. Hotai Leasing Co., Ltd., represented by Supervisor Kazuo Naganuma and Su, Se-I President Fred Hsieh - - Hozan Investment Co., Ltd., represented by Tien, Tien-Ming, Roger Huang, and Su, Chwen-Shing Director Toyota Financial Services Corporation, Hotai Finance Co., represented by Hori Zenkatsu Ltd. Chang, Sung-Che and Liu, Ching-Wen ɡ ɡ Independent Huang, Ming-Yu, Mao, Wei-Lin and Hu, Han- ɡ ɡ Director Miao President Lin, Yen-Liang ɡ ɡ Hoyun Su, Shih-Pang, Huang, Wen-Jui, and International Director US$80,000,000 100% Ko, Wen-Sheng Limited Hoyun International Limited, represented by Director Tien, Tien-Ming, Su, Chwen-Shing, Hoyun Huang, I-Jan, Leon Soo, and Hori Zenkatsu US$80,000,000 100% International Lease Hoyun International Limited, represented by Supervisor Co., Ltd. Ko, Wang-Te

President Huang, Lai-En ɡ ɡ

Managing Hoyun International Lease Co., Ltd., Director represented by Tien, Tien-Ming Hoyun (Shanghai) RMB$50,000,000 100% Hoyun International Lease Co., Ltd., Commercial Supervisor Factoring Co., Ltd. represented by Ko, Wang-Te President Huang, Lai-En ɡ ɡ Hotai Motor Co., Ltd., represented by Huang, Chih-Cheng, Su, Yin, 24,710,856 45.01% Ko, Wang-Chung, Wang, Hsuan-Lang, Su, Shih-Pang, Huang, I-Jan, and Leon Soo Hotai Environmental Sustainability 1,000 0.00% Director Foundation, represented by Su, Yi-Chung Ho-Shan Development Co., Ltd., represented Ho Tai 40 0.00% by Chuang, Yu-Jen Development Co., Daikin Industries, Ltd., represented by Ltd. 5,490,281 10.00% Kitawaki Akio Hozao Enterprise Co., Ltd., represented by 9,382,796 17.09% Chang, Tien-Chun Supervisor Jin Yuan Shan Investment Co., Ltd., 4,857,882 8.85% represented by Su, Yin and Su, Maick (Note 1) President Wang, Hsuan-Lang ɡ ɡ

VIII. Specific Notes Share Ownership Company Name Title Name/Representative Number/Value of % Shares Held

Ho Tai Development Co., Ltd., represented by Wang, Hsuan-Lang, Su, Yi-Chung, Lin, Hung- Director Chih, Chang, Yu-Cheng, Chen, Li-Hong, CHIN SHENG TECK and Tsai, Chin-Xian Ho Tai Service & 100% Marketing Co., Ltd. Ho Tai Development Co., Ltd., represented by Supervisor Chuang, Yu-Ren

President Wang, Hsuan-Lang ɡ ɡ

Ichiban Ho Tai Development Co., Ltd., represented by International Co., Director US$3,000,000 100% Wang, Hsuan-Lang and Chuang, Yu-Jen Ltd.

Air Master Ichiban International Co., Ltd., represented by International Co., Director US$3,000,000 100% Wang, Hsuan-Lang and Chuang, Yu-Jen Ltd.

Air Master International Co., Ltd., represented by Lin, Hong-Chi, &+,16+(1* Director 7(&./LX

President Li, Zheng-Yu ɡ ɡ Shanghai Ho-Yu Su, Shih-Pang, Huang, Wen-Jui, and (BVI) Investment Director US$ 100% Ko, Wen-Sheng Co., Ltd.

Shanghai Ho-Yu (BVI) Investment Co., Ltd., represented by Huang, Nan-Kuang, Director Su, Chwen-Shing, Huang, Chih-Cheng, Leon Soo, Huang, I-Jan, Ko, Wang-Te, Kazuo US$ 100% Hotong Motor Naganuma, and Wang, Shih-Hao Investment Co., Ltd. Shanghai Ho-Yu (BVI) Investment Co., Ltd., Supervisor represented by Su, Shih-Pang

President Leon Soo ɡ ɡ

Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, US$3,370,000 100% Su, Chwen-Shing, Huang, Chih-Cheng, Leon Director Soo, Huang, I-Jan, and Roger Huang Shanghai Hoyu Shanghai Hua Tsao Real Estate Development ɡ ɡ Motor Service Co., Co., Ltd., represented by Lu, Yung-Te Ltd. Hotong Motor Investment Co., Ltd., Supervisor US$3,370,000 100% represented by Su, Shih-Pang

President Sun, Chiang ɡ ɡ

VIII. Specific Notes Share Ownership Company Name Title Name/Representative Number/Value of % Shares Held Hotong Motor Investment Co., Ltd., represented by Su, Chwen-Shing, Huang, US$2,625,000 75.00% Chih-Cheng, Leon Soo, Huang, I-Jan, and Director Roger Huang Shanghai Heling Shanghai Hoyu Motor Service Co., Ltd., Motor Service Co., US$875,000 25.00% Ltd. represented by Wang, Shih-Hao Hotong Motor Investment Co., Ltd., Supervisor US$2,625,000 75.00% represented by Ko, Wang-Te

President Li, Chiang ɡ ɡ

Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, Director Su, Chwen-Shing, Huang, Chih-Cheng, Shanghai Hozhan Leon Soo, Huang, I-Jan, and Roger Huang US$3,000,000 100% Motor Service Co., Ltd. Hotong Motor Investment Co., Ltd., Supervisor represented by Ko, Wang-Te

President Li, Chin-Fu ɡ ɡ Shanghai Heling Motor Service Co., Ltd., Shanghai Hoyu Motor Service Co., Ltd., and Shanghai Hozhan Motor Service Co., Ltd., RMB$1,800,000 60% represented by Leon Soo, Huang, I-Jan, Wang, Shih-Hao, Yeh, Chung-Goo and Wu, Director Chin-Nan Shanghai Te Shih Tung Used Vehicle Co., Ltd., Shanghai Hede represented by Liu, Kuo-Chiang, RMB$1,200,000 40% Used Vehicle Co., Wu, Ting, and Lu, Hsueh-Ying Ltd. Shanghai Heling Motor Service Co., Ltd., Shanghai Hoyu Motor Service Co., Ltd., and RMB$1,800,000 60% Shanghai Hozhan Motor Service Co., Ltd., Supervisor represented by Lin, Ying-Wen Shanghai Te Shih Tung Used Vehicle Co., Ltd., RMB$1,200,000 40% represented by Tsao, Hsien-Chiang President Yeh, Chung-Goo ɡ ɡ

Managing Shanghai Hoyu Motor Service Co., Ltd., Director represented by Leon Soo Shanghai Guangxin Cultural Media Co., Shanghai Hoyu Motor Service Co., Ltd., RMB$1,000,000 100% Supervisor Ltd. represented by Wang, Shih-Hao

President Leon Soo Shanghai Heling Motor Service Co., Ltd., represented by Wang, Shih-Hao, Su, Chwen- Shanghai Yangpu Director Shing, Huang, Chih-Cheng, Leon Soo, Huang, Heling Lexus Motor RMB$106,900,794 100% I-Jan, and Roger Huang Sales & Service Co., Shanghai Heling Motor Service Co., Ltd., Ltd. Supervisor represented by Su, Maick President Wu, Ching-Nan - - Shanghai Ho Mian Managing Hotong Motor Investment Co., Ltd., RMB$230,000,00 100%

VIII. Specific Notes Share Ownership Company Name Title Name/Representative Number/Value of % Shares Held Motor Technology Director represented by Leon Soo 0 Co., Ltd. Hotong Motor Investment Co., Ltd., Supervisor represented by Wang, Shih-Hao President Leon Soo - - Managing Hotong Motor Investment Co., Ltd., Shanghai Hoxin Director represented by Leon Soo RMB$2,000,000 100% Motor Service and Hotong Motor Investment Co., Ltd., Supervisor Consulting Co., Ltd. represented by Wang, Shih-Hao President Kuo, Chun-Hsing - - Managing Hotong Motor Investment Co., Ltd., Shanghai Hochen Director represented by Leon Soo 86 Motor Technology Hotong Motor Investment Co., Ltd., Supervisor Co., Ltd. represented by Wang, Shih-Hao President Leon Soo - - Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, Su, Chwen- Shanghai Jiading Director Shing, Huang, Chi-Cheng, Leon Soo, Huang, Share capital not Heling Lexus Motor 100% Yi-Rein paid Sales & Service Co., Hotong Motor Investment Co., Ltd, Ltd. Supervisor represented by Su, Shi-Bon President - - - Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, Director Su, Chwen-Shing, Huang, Chih-Cheng, Chongqing Heling US$6,000,000 100% Lexus Motor Sales Leon Soo, Huang, I-Jan, and Roger Huang Hotong Motor Investment Co., Ltd., & Service Co., Ltd. Supervisor represented by Ko, Wang-Te President Huang, Kuo-Hsin ɡ ɡ Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, Director Su, Chwen-Shing, Huang, Chih-Cheng, Leon Tangshan Heling US$5,800,000 100% Lexus Motor Sales Soo, Huang, I-Jan, and Roger Huang & Service Co., Ltd. Hotong Motor Investment Co., Ltd., Supervisor represented by Su, Maick President Wang, Min-Ning ɡ ɡ

Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, Su, Chwen- Director Shing, Huang, Chih-Cheng, Leon Soo, Nanchang Heling Huang, I-Jan, and Roger Huang US$6,500,000 100% Lexus Motor Sales & Service Co., Ltd. Hotong Motor Investment Co., Ltd., Supervisor represented by Su, Maick President Hsieh, Yung-Ta ɡ ɡ

Hotong Motor Investment Co., Ltd., representated by Wang, Shih-Hao, Director Zaozhuang Ho-Yu Huang, Chih-Cheng, Su, Chwen-Shing, US$13,650,000 100% Toyota Motor Sales Huang, I-Jan, Leon Soo, and Roger Huang and Service Co., Hotong Motor Investment Co., Ltd., Ltd. Supervisor represented by Su, Shih-Pang

President Hsu, Yu-Po ɡ ɡ

VIII. Specific Notes Share Ownership Company Name Title Name/Representative Number/Value of % Shares Held Zaozhuang Ho-Yu Toyota Motor Sales and Service Co., Ltd., represented by Hsu, Yu-Po, Director Leon Soo, Wang, Shih-Hao, Huang, I-Jan, and Zaozhuang Ho-Wan Lin, Ying-Wen 50% 100% Motor Sales and Zaozhuang Ho-Yu Toyota Motor Sales and Services Co., Ltd. Supervisor Service Co., Ltd., represented by Liang, Ching- Hui President Yu, Chuan-Li - - Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, Su, Chwen- Director Shing, Huang, Chih-Cheng, Tianjin Heling Lexus US$12,000,000 100% Motor Sales & Leon Soo, Huang, I-Jan, and Roger Huang Hotong Motor Investment Co., Ltd., Service Co., Ltd. Supervisor represented by Ko, Wang-Te President Hsu, Chin-Yi ɡ ɡ Hotong Motor Investment Co., Ltd., represented by Wang, Shih-Hao, Su, Chwen- Director Shing, Huang, Chih-Cheng, Tianjin Hozhan RMB$68,600,000 100% Motor Service Leon Soo, Huang, I-Jan, and Roger Huang Hotong Motor Investment Co., Ltd., Co., Ltd. Supervisor represented by Ko, Wang-Te President Chao, Chun-Tao ɡ ɡ Shanghai Heling Motor Service Co., Ltd., Director represented by Leon Soo, Wang, Shih-Hao, Tianjin Ho-Yi Huang, I-Jan, Sun, Chiang, and Tsai, Wen-Hsin 50% 100% International Shanghai Heling Motor Service Co., Ltd., Supervisor Trading Co., Ltd. represented by Lin, Ying-Wen President Wang, Shih-Hao ɡ ɡ Tienjin Ho Yu Su, Shih-Pang, Huang, Wen-Jui, and Investment Co., Director US$3,500,000 70 % Ko, Wen-Sheng Ltd. Tienjin Ho Yu Investment Co., Ltd., represented by Wang, Shih-Hao, Su, Chwen- Director Shing, Huang, Chih-Cheng, Leon Soo, Tianjin Ho-Yu US$5,000,000 100% Motor Sales and Huang, I-Jan, and Roger Huang Tienjin Ho Yu Investment Co., Ltd., Service Co., Ltd. Supervisor represented by Su, Shih-Pang President Chou, Bin ɡ ɡ Note 1 Mr. Maick Su changed his name to Shang-Yung Su in December 2019.

VIII S ifi N t

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1.31 4.53 1.91 0.59 5.81 5.14 3.93 1.64 0.02 21.55 12.31 19.00 77.53 106.25 (NT$) Per Share Share Per Net Earnings Earnings Net NT$ inThousands 536

9,016 4,486 3,830 -8,428 -8,356 -8,356 21,772 20,071 22,676 10,754 99,600 47,315 22,675 86,145 877,941 411,819 675,638 854,804 134,711 651,102 283,157 106,929 327,478 106,247 897,404 117,345 321,036 101,070 131,465 283,157 -100,381 2,199,949 2,235,585 11,768,815 the period the period Net profit Netfor or loss profit -897 -147 9,477 7,605 2,958 6,099 - - -7,020 -3,552 27,450 87,433 13,284 18,293 62,093 24,802 -99,893 -10,592 529,437 678,983 951,440 145,672 429,320 362,188 100,321 165,842 291,294 147,920 191,993 367,333 110,974 6,889,079 2,635,072 - - (loss) Operating Profit Profit Operating ------60,477 28,589 38,950 43,983 - - 501,267 883,329 567,947 487,336 999,498 212,528 716,822 6,855,489 2,683,237 8,721,699 6,764,949 1,605,986 2,900,332 2,052,942 1,171,936 4,190,300 1,727,606 2,645,378 3,364,273 1,789,649 15,450,549 10,845,934 16,780,707 126,892,633 432,553 432,553 - - - - Operating Revenues Revenues Operating 82,487 16,837 34,666 977,506 384,464 179,361 104,797 586,465 104,763 116,079 300,003 289,942 392,874 165,023 179,360 609,951 152,863 210,222 311,690 340,740 773,128 104,745 408,518 5,826,634 4,315,128 5,887,725 2,493,343 3,797,453 3,280,049 5,341,647 5,673,713 3,280,061 58,586,436 20,715,415 20,470,639 Net Asset Value - - - - - 31,564 31,564 10,638 76,949 84,243 98,543 52,422 31,787 18,645 26,383 144,555 206,207 583,009 357,499 273,303 295,819 103,859 554,133 282,435 252,117 179,261 2,138,014 2,404,990 1,174,505 2,735,272 1,025,741 17,883,522 94,250,071 28,842,693 11,022,365 16,449,387 Total Liabilities Liabilities Total 27,475 227,042 967,473 179,361 104,797 943,964 104,763 111,615 200,322 388,485 666,177 460,842 283,219 205,285 242,009 594,125 592,857 791,773 131,128 587,779 6,453,142 5,826,634 8,292,715 3,667,848 1,183,713 3,280,049 3,035,275 6,699,454 1,164,084 76,469,958 20,746,979 32,640,146 16,364,012 19,729,448 114,720,710

Total Assets Total 1,387 48,048 48,048 89,940 89,940 10,000 89,940 89,940 450,000 450,000 549,028 705,977 337,657 149,900 271,902 230,000 300,000 101,033 179,880 149,900 104,930 179,880 409,227 173,884 194,870 214,665 359,760 5,461,792 3,135,000 2,380,333 5,150,004 1,266,298 2,398,400 2,000,000 2,954,379 2,398,400 13,956,681 Capital Capital

Company Name Company Name Financial Highlights of Group Companies Companies Group of Highlights Financial

(7) HOTAI MOTORHOTAI CO., LTD. HOZAN INVESTMENT CO.,LTD. SHANGHAI HO-YU (BVI) INVESTMENT LTD. CO., LTD. CO., MOTOR YUAN CHANG LTD. CO., DEVELOPMENT TAI HO CARMAX LTD. CO., SMART DESIGN TECHNOLOGY CO., LTD. LTD. MATERIAL HANDLING TAIWAN TOYOTA LTD. CO., MOTOR EASTERN TIENJIN HO YU INVESTMENT CO., LTD. FINANCE CO., LTD. HOTAI LEASING LTD. CO., HOTAI HOYUNINTERNATIONAL LIMITED ICHIBAN INTERNATIONAL CO., LTD. HOSERVICE &TAI MARKETING CO., LTD. DOROMAN AUTOPARTS CO., LTD. AIR MASTER INTERNATIONAL CO., LTD. LTD. CO., INSURANCE HOTAI HOCYBER CONNECTIONTAI LTD. CO., CO. MARKETING INNOVATION HOTAI HOING MOBILITY SERVICE LTD. CO., INVESTMENTHOTONG MOTOR CO.,LTD. CO.,LTD. SERVICE MOTOR HOYU SHANGHAI CHONGING HELING LEXUS SALES MOTOR & SERVICE CO.,LTD. SHANGHAI HOZHAN MOTOR SERVICE CO.,LTD. CO.,LTD. SERVICE AND SALES MOTOR HO-YU TIANJIN CO.,LTD. SERVICE MOTOR HELING SHANGHAI CO.,LTD. TRADING EQUIPMENT LOGISTICS HO-QIAN SHANGHAI SERVICE AND SALES MOTOR TOYOTA HO-YU ZAOZHUANG CO.,LTD. CO.,LTD. SERVICE & SALES MOTOR LEXUS HELING TANGSHAN CO.,LTD. SERVICE & SALES MOTOR LEXUS HELING NANCHANG HOYUNINTERNATIONAL LEASE LTD. CO., HOYUN(SHANGHAI) COMMERCIAL CO., LTD. FACTORING HE ZHAN DEVELOPMENT LTD. CO., CO.,LTD. SERVICE & SALES MOTOR LEXUS HELING TIANJIN VIII. Specific VIII. Specific Notes

------(NT$) Per Share Share Per Net Earnings Earnings Net - 641 -351 1,795 -6,043 -1,320 -1,360 26,948 36,338 11,364 84,650 the period the period Net profit Netfor or loss profit - 941 -613 (loss) 1,349 -4,581 -1,254 -5,282 26,175 44,014 15,928 107,157 Operating Profit Profit Operating - - 67,549 48,465 37,725 10,673 380,360 101,674 402,815 1,222,029 2,521,578 agraph of2, Item agraph 2 Securities the and Act:Exchange NA the Annual Report: NA Operating Revenues Revenues Operating the Auditing Division 8,782 4,525 36,843 42,382 87,125 272,257 210,672 362,548 974,614 300,558 314,790 Net Asset Value - 346 528 818 5,408 3,678

32,971 41,706 11,111 -20,266 888,620 Total Liabilities Liabilities Total 9,128 5,343 47,954 42,910 92,533 305,228 252,378 954,348 304,236 314,790 1,251,168 Total Assets Total ity or price of the securities stipulated under Article 36, Par sidiaries in fiscal and as year of the most ofrecent the date s of the date of the Annual Report: NA and asof of the the date Report: Annual NA

ersonal Information Protection & Administration System: 1 from ancial and Accounting Division the financial transparency theof Company is as follows: 4,293 8,587 39,873 12,880 42,933 Capital Capital 294,520 458,957 987,459 299,800 314,790 Certified Public Accountant – Republic of China: 4 thefrom Fin Certified Internal Auditor: 1 from the Auditing Division InformationPersonal Administrator certified P under the Taiwan

A summary the of certification of personnel who are involved in Certification Any circumstance which has a material effect on shareholder equ Other required in the Other fiscaldisclosures and a required year recent most 3. 1. 2.

Private placement of securities in the most recent fiscal year Shareholding or disposition of shares of the Company by any sub Other required disclosures:

(2) (3) (1) Company Name Name Company CO.,LTD. SERVICE MOTOR TIANJIN HOZHAN LTD. CO., (SHANGHAI) AUTOTECH CARMAX LTD. CO., VEHICLE USED HEDE SHANGHAI SHANGHAI GUANGXIN MEDIA CULTURAL LTD. CO., SERVICE & SALES MOTOR LEXUS HELING YANGPU SHANGHAI CO., LTD. LTD. CO., SERVICES AND SALES MOTOR HO-WAN ZAOZHUANG LTD. CO., TECHNOLOGY AUTO HO-MIAN SHANGHAI LTD. CO., CONSULTING AND SERVICE MOTOR HOXIN SHANGHAI TIANJIN INTERNATIONALHO-YI TRADING LTD. CO., LTD. CO., TECHNOLOGY AUTO HOCHEN SHANGHAI LTD. CO., SERVICE MOTOR LEXUS HELING JIADING SHANGHAI 3. 4. 2. VIII. Other Disclosures VIII. Other Disclosures

CMY

8-14F, No. 121, Sung Chiang Rd., Taipei, Taiwan, R.O.C. TEL:(02)2506-2121 / FAX:(02)2504-1749 www.hotaimotor.com.tw