China Motor Corporation and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2019 and 2018 and Independent Auditors’ Review Report INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and the Shareholders China Motor Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of China Motor Corporation and its subsidiaries (collectively, the “Group”) as of September 30, 2019 and 2018, the related consolidated statements of comprehensive income for the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, the consolidated statements of changes in equity and cash flows for the nine months then ended and the related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

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

Basis for Qualified Conclusion

The financial statements of some non-significant subsidiaries included in the consolidated financial statements were not reviewed. As of September 30, 2019 and 2018, the combined total assets of these non-significant subsidiaries were NT$11,980,280 thousand and NT$12,621,724 thousand, respectively, both representing 19% and 20% of the consolidated total assets, and the combined total liabilities of these non-significant subsidiaries were NT$3,828,737 thousand and NT$3,115,382 thousand, respectively, representing 23% and 39%, respectively, of the consolidated total liabilities; for the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, the amounts of combined comprehensive income (loss) of these non-significant subsidiaries were NT$(212,566) thousand and NT$49,106 thousand, NT$(433,944) thousand and NT$136,102 thousand, respectively, representing 240% and 11%, 106% and 5%, respectively, of the consolidated total comprehensive income. As disclosed in Note 16 to the consolidated financial statements, as of September 30, 2019 and 2018, some investments accounted for using the equity method were NT$15,899,464 thousand and NT$17,510,280 thousand, respectively, and for the three months ended September 30, 2019 and 2018 and for the

- 1 - nine months ended September 30, 2019 and 2018, total comprehensive income of these equity-method investments were NT$174,804 thousand and NT$45,825 thousand, NT$1,021,230 thousand and NT$1,056,810 thousand, respectively, which were calculated on the basis of financial statements that have not been reviewed.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the aforementioned non-significant subsidiaries, the investments accounted for using the equity method and the relevant information disclosed been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of September 30, 2019 and 2018, its consolidated financial performance for the three months ended September 30, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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

Deloitte & Touche Taipei, Taiwan Republic of China

November 13, 2019

Notice to Readers

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

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

- 2 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

September 30, 2019 December 31, 2018 September 30, 2018 (Reviewed) (Audited) (Reviewed) ASSETS Amount % Amount % Amount %

CURRENT ASSETS Cash and cash equivalents (Note 6) $ 13,612,051 22 $ 14,429,460 23 $ 13,549,632 21 Financial assets at fair value through profit or loss (Note 7) 654,069 1 567,643 1 692,748 1 Financial assets at amortized cost (Notes 9 and 10) 367,305 1 104,359 - 301,467 - Financial assets for hedging (Note 11) 279,314 - 743,303 1 432,681 1 Notes and accounts receivable, net (Note 12) 1,077,258 2 1,177,454 2 1,295,062 2 Trade receivables from related parties (Note 30) 1,922,514 3 1,952,469 3 1,763,067 3 Other receivables 420,679 1 98,749 - 525,593 1 Inventories (Note 13) 3,486,489 6 4,070,264 6 3,592,668 6 Prepayments (Note 30) 1,371,688 2 1,134,247 2 1,029,649 2 Non-current assets held for sale (Note 15) 148,023 - 148,023 - - - Other current assets (Note 31) 689,136 1 596,590 1 396,488 -

Total current assets 24,028,526 39 25,022,561 39 23,579,055 37

NON-CURRENT ASSETS Financial assets at fair value through profit or loss (Note 7) 695,808 1 734,341 1 724,592 1 Financial assets at fair value through other comprehensive income (Note 8) 205,398 - 227,396 - 252,699 - Financial assets at amortized cost (Notes 9 and 10) 659,391 1 824,705 1 875,430 1 Investments accounted for using the equity method (Note 16) 26,766,817 43 29,106,774 45 28,938,721 46 Property, plant and equipment (Notes 17, 30 and 31) 6,714,146 11 6,388,147 10 6,337,148 10 Right-of-use assets (Notes 4 and 18) 474,695 1 - - - - Investment properties (Notes 19 and 31) 1,368,807 2 1,380,002 2 1,383,783 2 Intangible assets under development 345,682 1 304,163 1 282,402 1 Deferred tax assets (Note 26) 276,125 1 336,711 1 317,591 1 Other non-current assets 136,024 - 179,616 - 263,889 1

Total non-current assets 37,642,893 61 39,481,855 61 39,376,255 63

TOTAL $ 61,671,419 100 $ 64,504,416 100 $ 62,955,310 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES Short-term borrowings (Notes 20 and 31) $ 630,000 1 $ 645,000 1 $ 640,000 1 Short-term bills payable 59,963 - 93,972 - 167,887 - Notes and accounts payable 1,979,534 3 2,705,317 4 2,135,317 3 Trade payables to related parties (Note 30) 545,158 1 944,954 2 640,463 1 Other payables (Note 21) 10,826,735 18 2,717,065 4 2,786,881 5 Current tax liabilities (Notes 4 and 26) 317,708 - 117,081 - 156,406 - Lease liabilities (Notes 4 and 18) 95,425 - - - - - Other current liabilities (Notes 7, 11 and 30) 370,482 1 297,523 1 382,032 1

Total current liabilities 14,825,005 24 7,520,912 12 6,908,986 11

NON-CURRENT LIABILITIES Long-term borrowings (Note 20) 20,000 - - - - - Deferred tax liabilities (Note 26) 407,785 1 268,161 1 149,386 - Lease liabilities (Notes 4 and 18) 384,038 1 - - - - Net defined benefit liabilities (Notes 4 and 22) 694,471 1 910,328 1 875,369 2 Other non-current liabilities 24,167 - 30,926 - 11,968 -

Total non-current liabilities 1,530,461 3 1,209,415 2 1,036,723 2

Total liabilities 16,355,466 27 8,730,327 14 7,945,709 13

EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 23) Ordinary shares 5,536,203 9 13,840,508 22 13,840,508 22 Capital surplus 6,391,520 10 6,403,633 10 6,413,249 10 Retained earnings Legal reserve 9,257,157 15 8,897,857 14 8,897,857 14 Special reserve 1,046,585 1 1,046,967 1 1,046,967 2 Unappropriated earnings 20,191,241 33 22,486,952 35 21,830,835 35 Total retained earnings 30,494,983 49 32,431,776 50 31,775,659 51 Other equity Exchange differences on translating the financial statements of foreign operations (831,511) (1) (646,278) (1) (763,746) (1) Unrealized gain on investments in financial assets at fair value through other comprehensive income 174,864 - 117,177 - 231,045 - Gain (loss) on the hedging instruments (Note 11) (2,362) - 20,997 - (4,892) - Equity directly associated with non-current assets held for sale (Note 15) (7,538) - (7,538) - - - Total other equity (666,547) (1) (515,642) (1) (537,593) (1)

Total equity attributable to owners of the Corporation 41,756,159 67 52,160,275 81 51,491,823 82

NON-CONTROLLING INTERESTS (Note 14) 3,559,794 6 3,613,814 5 3,517,778 5

Total equity 45,315,953 73 55,774,089 86 55,009,601 87

TOTAL $ 61,671,419 100 $ 64,504,416 100 $ 62,955,310 100

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

(With Deloitte & Touche review report dated November 13, 2019)

- 3 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

For the Three Months Ended September 30 For the Nine Months Ended September 30 2019 2018 2019 2018 Amount % Amount % Amount % Amount %

OPERATING REVENUE (Notes 24 and 30) Net sales $ 7,073,206 96 $ 7,843,634 96 $ 23,205,962 95 $ 26,001,994 96 Other operating revenue 317,263 4 325,203 4 1,193,181 5 1,119,118 4

Total operating revenue 7,390,469 100 8,168,837 100 24,399,143 100 27,121,112 100

OPERATING COSTS (Notes 13, 22, 25 and 30) Cost of goods sold 6,096,812 83 6,592,400 81 19,796,785 81 21,605,437 80 Other operating cost 31,102 - 57,263 - 109,284 1 148,098 -

Total operating costs 6,127,914 83 6,649,663 81 19,906,069 82 21,753,535 80

GROSS PROFIT 1,262,555 17 1,519,174 19 4,493,074 18 5,367,577 20

REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH ASSOCIATES 16,727 - 16,217 - (18,696 ) - (48,136 ) -

REALIZED GROSS PROFIT 1,279,282 17 1,535,391 19 4,474,378 18 5,319,441 20

OPERATING EXPENSES (Notes 22, 25 and 30) Selling and marketing expenses 304,592 4 453,944 6 1,109,759 4 1,359,138 5 General and administrative expenses 255,921 4 320,582 4 782,719 3 951,852 4 Research and development expenses 401,616 5 437,184 5 1,176,643 5 1,422,106 5

Total operating expenses 962,129 13 1,211,710 15 3,069,121 12 3,733,096 14

PROFIT FROM OPERATIONS 317,153 4 323,681 4 1,405,257 6 1,586,345 6

NON-OPERATING INCOME Share of profit (loss) of associates and joint ventures (Note 16) 157,872 2 354,630 4 (509,931 ) (2 ) 1,533,937 6 Interest income 40,218 1 52,828 1 124,322 - 149,216 - Other income 39,486 1 326,975 4 82,143 - 363,105 1 Interest expense (5,276 ) - (4,532 ) - (16,618 ) - (9,975 ) - Other expense (6,101 ) - (1,024 ) - (16,059 ) - (9,673 ) - Net foreign exchange loss (37,634 ) (1 ) (49,977 ) (1 ) (12,303 ) - (7,833 ) - Net loss on financial instruments at fair value through profit or loss (11,607 ) - (20,193 ) - (41,949 ) - (60,016 ) - Impairment loss (Note 17) - - (11,578 ) - (36,637 ) - (21,924 ) -

Total non-operating income and expenses 176,958 3 647,129 8 (427,032 ) (2 ) 1,936,837 7 (Continued)

- 4 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

For the Three Months Ended September 30 For the Nine Months Ended September 30 2019 2018 2019 2018 Amount % Amount % Amount % Amount %

PROFIT BEFORE INCOME TAX $ 494,111 7 $ 970,810 12 $ 978,225 4 $ 3,523,182 13

INCOME TAX EXPENSE (Notes 4 and 26) 121,154 2 51,797 1 507,243 2 392,577 2

NET PROFIT FOR THE PERIOD 372,957 5 919,013 11 470,982 2 3,130,605 11

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Unrealized loss on investment in equity instruments designated as at fair value through other comprehensive income (Note 23) (6,924 ) - (31,283 ) - (21,102 ) - (48,543 ) - Gain on hedging instruments (Notes 11 and 23) (841 ) - (14,727 ) - 39,756 - 8,301 - Share of other comprehensive income (loss) of associates accounted for using the equity method (Notes 16 and 23) (13,112 ) - (4,257 ) - 171,480 1 (8,257 ) - Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 26) 139 - 2,653 - (3,784 ) - 4,151 - Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 23) (46,958 ) (1 ) (31,326 ) - (39,594 ) - (27,597 ) - Share of the other comprehensive income of associates and joint ventures accounted for using the equity method (Notes 16 and 23) (393,840 ) (5 ) (389,969 ) (5 ) (208,438 ) (1 ) (311,254 ) (1 )

Other comprehensive loss for the period, net of income tax (461,536 ) (6 ) (468,909 ) (5 ) (61,682 ) - (383,199 ) (1 )

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD $ (88,579 ) (1 ) $ 450,104 6 $ 409,300 2 $ 2,747,406 10 (Continued)

- 5 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

For the Three Months Ended September 30 For the Nine Months Ended September 30 2019 2018 2019 2018 Amount % Amount % Amount % Amount %

NET PROFIT ATTRIBUTABLE TO: Owners of the Corporation $ 336,826 5 $ 859,701 10 $ 346,192 1 $ 2,919,706 10 Non-controlling interests 36,131 - 59,312 1 124,790 1 210,899 1

$ 372,957 5 $ 919,013 11 $ 470,982 2 $ 3,130,605 11

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Corporation $ (37,960 ) - $ 473,459 6 $ 350,923 2 $ 2,617,163 10 Non-controlling interests (50,619 ) (1 ) (23,355 ) - 58,377 - 130,243 -

$ (88,579 ) (1 ) $ 450,104 6 $ 409,300 2 $ 2,747,406 10

EARNINGS PER SHARE (Note 27) Basic $ 0.38 $ 0.63 $ 0.29 $ 2.14 Diluted $ 0.38 $ 0.63 $ 0.29 $ 2.14

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

(With Deloitte & Touche review report dated November 13, 2019) (Concluded)

- 6 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

Equity Attributable to Owners of the Corporation Other Equity Unrealized Gain on Exchange Investments in Differences on Financial Assets at Translating the Fair Value Unrealized Gain Gain (Loss) on Equity Directly Ordinary Shares Retained Earnings Financial Through Other (Loss) on Effective Gain on the Associated with Shares Unappropriated Statements of Comprehensive Available-for-sale Portion of Cash Hedging Non-current Assets Non-controlling (In Thousands) Amounts Capital Surplus Legal Reserve Special Reserve Earnings Foreign Operations Income Financial Assets Flow Hedges Instruments Held for Sale Total Interests Total Equity

BALANCE AT JANUARY 1, 2018 1,384,051 $ 13,840,508 $ 6,407,340 $ 8,487,293 $ 1,051,658 $ 20,895,137 $ (485,118 ) $ - $ 765,456 $ (12,253 ) $ - $ - $ 50,950,021 $ 3,506,941 $ 54,456,962

Effect of retrospective application - - - - - 888,982 - 273,866 (765,456 ) 12,253 (12,253 ) - 397,392 43,831 441,223

BALANCE AT JANUARY 1, 2018 AS ADJUSTED 1,384,051 13,840,508 6,407,340 8,487,293 1,051,658 21,784,119 (485,118 ) 273,866 - - (12,253 ) - 51,347,413 3,550,772 54,898,185

Appropriation of the 2017 earnings Legal reserve - - - 410,564 - (410,564 ) ------Cash dividends distributed by the Corporation - - - - - (2,491,292 ) ------(2,491,292 ) - (2,491,292 )

Reversal of special reserve - - - - (4,691 ) 4,691 ------

Change in investments in associates and joint ventures accounted for using the equity method - - 5,909 - - 12,630 ------18,539 - 18,539

Cash dividend distributed by subsidiaries ------(163,237 ) (163,237 )

Net profit for the nine months ended September 30, 2018 - - - - - 2,919,706 ------2,919,706 210,899 3,130,605

Other comprehensive income (loss) for the nine months ended September 30, 2018, net of income tax - - - - - 16,713 (278,628 ) (47,989 ) - - 7,361 - (302,543 ) (80,656 ) (383,199 )

Total comprehensive income (loss) for the nine months ended September 30, 2018 - - - - - 2,936,419 (278,628 ) (47,989 ) - - 7,361 - 2,617,163 130,243 2,747,406

Disposal of the investments in equity instruments designated as at fair value through other comprehensive income by associates - - - - - (5,696 ) - 5,696 ------

Disposals of investments in equity instruments designated as at fair value through other comprehensive income - - - - - 528 - (528 ) ------

BALANCE AT SEPTEMBER 30, 2018 1,384,051 $ 13,840,508 $ 6,413,249 $ 8,897,857 $ 1,046,967 $ 21,830,835 $ (763,746 ) $ 231,045 $ - $ - $ (4,892 ) $ - $ 51,491,823 $ 3,517,778 $ 55,009,601

BALANCE AT JANUARY 1, 2019 1,384,051 $ 13,840,508 $ 6,403,633 $ 8,897,857 $ 1,046,967 $ 22,486,952 $ (646,278 ) $ 117,177 $ - $ - $ 20,997 $ (7,538 ) $ 52,160,275 $ 3,613,814 $ 55,774,089

Effect of retrospective application - - - - - (19,503 ) ------(19,503 ) - (19,503 )

BALANCE AT JANUARY 1, 2019 AS ADJUSTED 1,384,051 13,840,508 6,403,633 8,897,857 1,046,967 22,467,449 (646,278 ) 117,177 - - 20,997 (7,538 ) 52,140,772 3,613,814 55,754,586

Appropriation of the 2018 earnings Legal reserve - - - 359,300 - (359,300 ) ------Cash dividends distributed by the Corporation - - - - - (2,352,886 ) ------(2,352,886 ) - (2,352,886 )

Reversal of special reserve - - - - (382 ) 382 ------

Change in investments in associates and joint ventures accounted for using the equity method - - (12,113 ) - - (6,975 ) ------(19,088 ) - (19,088 )

Cash dividend distributed by subsidiaries ------(112,397 ) (112,397 )

Net profit for the nine months ended September 30, 2019 - - - - - 346,192 ------346,192 124,790 470,982

Other comprehensive income (loss) for the nine months ended September 30, 2019, net of income tax - - - - - 10,907 (185,233 ) 143,159 - - 35,898 - 4,731 (66,413 ) (61,682 )

Total comprehensive income (loss) for the nine months ended September 30, 2019 - - - - - 357,099 (185,233 ) 143,159 - - 35,898 - 350,923 58,377 409,300

Capital reduction by cash (830,431 ) (8,304,305 ) ------(8,304,305 ) - (8,304,305 )

Disposals of the investments in equity instruments designated as at fair value through other comprehensive income by associates - - - - - 85,455 - (85,455 ) ------

Disposals of investments in equity instruments designated as at fair value through other comprehensive income - - - - - 17 - (17 ) ------

Basic adjustment for gain on hedging instruments ------(59,257 ) - (59,257 ) - (59,257 )

BALANCE AT SEPTEMBER 30, 2019 553,620 $ 5,536,203 $ 6,391,520 $ 9,257,157 $ 1,046,585 $ 20,191,241 $ (831,511 ) $ 174,864 $ - $ - $ (2,362 ) $ (7,538 ) $ 41,756,159 $ 3,559,794 $ 45,315,953

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

(With Deloitte & Touche review report dated November 13, 2019)

- 7 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

For the Nine Months Ended September 30 2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax $ 978,225 $ 3,523,182 Adjustments for: Depreciation expenses 782,822 726,364 Amortization expenses 82,767 87,619 Expected credit losses (reversal of expected credit losses) (319) 2,915 Net loss on fair value change of financial instruments at fair value through profit or loss 41,949 60,016 Interest expenses 16,618 9,975 Interest income (124,322) (149,216) Dividend income (20,171) (28,862) Share of loss (profit) of associates and joint ventures 509,931 (1,533,937) Loss on disposal of property, plant and equipment 2,060 3,508 Loss (gain) on disposal of investments 1,640 (292,693) Impairment loss of non-financial assets 36,637 21,924 Unrealized gain on transactions with associates 18,696 48,136 Net unrealized gain on foreign currency exchange (32,742) (20,424) Gain on lease modification (56) - Changes in operating assets and liabilities Financial instruments at fair value through profit or loss (89,255) (182,250) Notes and accounts receivable 100,801 (122,267) Trade receivables from related parties 30,674 (58,511) Other receivables 5,837 (40,779) Inventories 582,578 863,512 Prepayments (153,553) 425,317 Other current assets (98,301) 190,243 Notes and accounts payable (725,216) (418,373) Trade payables to related parties (399,280) (246,543) Other payables (190,555) (68,354) Other current liabilities 73,400 107,563 Net defined benefit liabilities (215,857) (265,328) Cash generated from operations 1,215,008 2,642,737 Income tax paid (187,378) (445,592)

Net cash generated from operating activities 1,027,630 2,197,145 (Continued)

- 8 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

For the Nine Months Ended September 30 2019 2018

CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income $ 17 $ 12,358 Acquisition of financial assets at amortized cost (1,673,882) (630,254) Proceeds from repayment of principal of financial assets at amortized cost 1,582,376 1,741,426 Acquisition of investments accounted for using the equity method - (553,113) Proceeds from disposal of investments accounted for using the equity method 227,159 27,077 Acquisition of property, plant and equipment (1,088,790) (580,968) Proceeds from disposal of property, plant and equipment 20,524 35,162 Acquisition of intangible assets (79,421) (156,394) Increase in other non-current assets (2,602) (34,686) Interest received 138,228 190,722 Dividends received 1,170,668 662,489

Net cash generated from investing activities 294,277 713,819

CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings (15,000) (105,000) Increase (decrease) in short-term bills payable (34,009) 57,954 Proceeds from long-term borrowings 20,000 - Repayment of the principal portion of lease liabilities (72,723) - Decrease in other non-current liabilities (6,734) (17,683) Cash dividends paid (2,352,886) (2,491,292) Interest paid (16,677) (9,962) Non-controlling interest (112,397) (163,237)

Net cash used in financing activities (2,590,426) (2,729,220)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES (12,879) (15,539)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,281,398) 166,205

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 15,172,763 13,816,041

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 13,891,365 $ 13,982,246 (Continued)

- 9 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

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

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at September 30, 2019 and 2018:

September 30 2019 2018

Cash and cash equivalents in the consolidated balance sheets $ 13,612,051 $ 13,549,632 Cash and cash equivalents included in financial assets for hedging 279,314 432,614 Cash and cash equivalents in the consolidated statements of cash flows $ 13,891,365 $ 13,982,246

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

(With Deloitte & Touche review report dated November 13, 2019) (Concluded)

- 10 - CHINA MOTOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

China Motor Corporation (the “Corporation”) manufactures and sells cars and related parts. Its stock is listed on the Taiwan Stock Exchange.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements of the Corporation and its subsidiaries (collectively referred to as the “Group”) were approved by the Corporation’s board of directors on November 13, 2019.

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

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

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

 IFRS 16 “Leases”

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

Definition of a lease

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

- 11 - The Group as lessee

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

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

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

The Group also applies the following practical expedients:

1) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

2) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

3) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.

4) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

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

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 $ 595,598 Less: Recognition exemption for short-term leases (3,464) Less: Recognition exemption for leases of low-value assets (594)

Undiscounted amounts on January 1, 2019 $ 591,540

Discounted amounts using the incremental borrowing rate and lease liabilities recognized on January 1, 2019 $ 538,229

The Group as lessor

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

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

Adjustments As Originally Arising from Stated on Initial Restated on January 1, 2019 Application January 1, 2019

Right-of-use assets $ - $ 538,229 $ 538,229 Investments accounted for using the equity method 29,106,774 (19,503) 29,087,271

Total effect on assets $ 29,106,774 $ 518,726 $ 29,625,500

Lease liabilities - current $ - $ 94,157 $ 94,157 Lease liabilities - non-current - 444,072 444,072

Total effect on liabilities $ - $ 538,229 $ 538,229

Unappropriated earnings $ 22,486,952 $ (19,503) $ 22,467,449 b. The IFRSs endorsed by the FSC for application starting from 2020

Effective Date New IFRSs Announced by IASB

Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 1) Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 2)

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

Note 2: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the consolidated financial statements were issued, the Group is continuously assessing the possible impact that the application of aforementioned standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed. c. New IFRSs in issue by IASB but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note)

Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark January 1, 2020 Reform” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

b. Basis of preparation

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

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

3) Level 3 inputs are unobservable inputs for the asset or liability.

c. Basis of consolidation

1) Principles for preparing the consolidated financial statements

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

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

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

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

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

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

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

2) Subsidiaries included in the consolidated financial statements

Combined Shareholding Ratio September 30, December 31, September 30, Investor Investee Main Business 2019 2018 2018 Note

China-Motor Corporation Kian Shen Corporation (“Kian Shen”) Production of frame of heavy duty 43.87 43.87 43.87 a) (parent) car and mold Hwa Wei Holdings Corporation Ltd. Overseas investment of production 100.00 100.00 100.00 (“Hwa Wei”) and service industries China Engine Corporation (“China Manufacture of automobile engine 52.11 52.11 52.11 Engine”) and parts Sino Diamond Motors Corporation (“Sino Sales and providing after-sales 100.00 100.00 100.00 Diamond Motors”) service of vehicle Alliance Investment & Management Co., Investment 100.00 100.00 100.00 Ltd. (“Alliance Investment & Management”) Gatetech Technology Inc. (“Gatetech Aluminum-magnesium alloy casting 72.81 72.81 72.81 Technology”) industry China Motor Investment Co., Ltd. (CMI) Investment 100.00 100.00 100.00 Hwa Chung Motors Corporation (“Hwa Sales of vehicle and parts 100.00 100.00 100.00 Chung Motors”) COC Tooling & Stamping Co., Ltd. (COC) Production of mold, fixture and 49.76 49.76 49.76 b) gauge of vehicle Kian Shen Kian Shen Investment Co., Ltd. (“Kian Overseas investment of production 43.87 43.87 43.87 a) Shen Investment”) and service industries China Engine Advance Power Machinery Co., Ltd. Manufacture of automobile engine 52.11 52.11 52.11 (“Advance Power Machinery”) and parts Advance Power Investment Co., Ltd. Investment and sales 52.11 52.11 52.11 (“Advance Power Investment”) Sino Diamond Motors Hwa-Yu Corporation Ltd. (“Hwa-Yu”) Overseas investment of production 100.00 100.00 100.00 and service industries Brilliant Insight International Consultancy Consulting and service 100.00 100.00 100.00 Service Co., Ltd. (“Brilliant Insight International”) Gatetech Technology Gatetech Holding Co., Ltd. (GH) Investment 72.81 72.81 72.81 Alliance Investment & Greentrans Investment Co., Ltd. Investment 100.00 100.00 100.00 Management (“Greentrans Investment”) Hwa Chung Motors Greentrans Corporation (“Greentrans”) Sales of motorcycle, bicycle and 100.00 100.00 100.00 parts Ling Wei Motor Co., Ltd. (“Ling Wei”) Sales of second-hand vehicle 100.00 100.00 100.00 COC Y. M. Hi-Tech Industry Ltd. (“Y. M. Steel cutting 42.30 42.30 42.30 b) Hi-Tech”) Shye Shinn Corporation (“Shye Shinn”) Investment 49.76 49.76 49.76 b) Kian Shen Investment Kian Shen Investment Hong Kong Co., Investment 43.87 43.87 43.87 a) Limited (KSIHK) Hwa-Yu Hwa-Lin Investments Ltd. (“Hwa-Lin”) Overseas investment of production 100.00 100.00 100.00 and service industries Fujian Rui Hua Consulting Co., Ltd. Consulting and services 100.00 100.00 100.00 (“Fujian Rui Hua”) GH Gatetech International Co., Ltd. (GI) Investment 72.81 72.81 72.81 Greentrans Investment Jiangsu Greentrans Automotive Parts Co., Production and sales of parts of 100.00 100.00 100.00 Ltd. (“Jiangsu Greentrans”) electronic motorcycle GI Gatetech (Suchou) Technology Co., Ltd Aluminum-magnesium alloy casting 72.81 72.81 72.81 (“Gatetech Suchou Technology”) industry Hwa-Lin Dongguan Huayi Motor Maintenance Co., Sales and maintenance of vehicle 100.00 100.00 100.00 Ltd. (“Dongguan Huayi”) and parts Tianjin Hwarui Maintenance Co., Ltd. Sales and maintenance of vehicle 100.00 100.00 100.00 (“Tianjin Hwarui”) and parts Sichuan Huafeng Hanwei Cars Service and Sales and maintenance of vehicle 100.00 100.00 100.00 d) Maintenance Co., Ltd. (“Sichuan and parts Huafeng Hanwei”) Guangzhou Huayou Motor Maintenance Sales and maintenance of vehicle 100.00 100.00 100.00 d) Co., Ltd. (“Guangzhou Huayou Motor and parts Maintenance”) Dongguan Huayi Dongguan Huashun Motor Sales Co., Ltd. Sales and maintenance of vehicle 100.00 100.00 100.00 (“Dongguan Huashun”) and parts Tianjin Hwarui Tianjin Hwahong Sales Co., Ltd. (“Tianjin Sales of vehicle and parts 100.00 100.00 100.00 Hwahong”) (Continued)

- 15 -

Combined Shareholding Ratio September 30, December 31, September 30, Investor Investee Main Business 2019 2018 2018 Note

Sichuan Huafeng Hanwei Sichuan Houwei Cars Service and Sales of vehicle and parts - - 100.00 c) Maintenance Co., Ltd. (“Sichuan Houwei”) Sichuan Lingwei Cars Service and Sales of vehicle and parts - 100.00 100.00 d) Maintenance Co., Ltd. (“Sichuan Lingwei”) Guangzhou Huayou Guangzhou Huayou Motor Sales Co., Ltd. Sales of vehicle and parts 100.00 100.00 100.00 d) Motor Maintenance (“Guangzhou Huayou Motor Sales”) (Concluded)

a) The Group held 43.87% equity interest in Kian Shen. Kian Shen is a listed company and 56.13% of its shares were held by numerous shareholders unrelated to the Group. Owing to the Group’s substantial influence on Kian Shen, an absolute number of voting rights and the relative size of other shareholdings, Kian Shen was deemed a subsidiary.

b) The Group held 49.76% equity in COC. However, since the Corporation controls more than half of the board members and holds relative majority of shares, COC was considered a subsidiary.

c) In October 2017, Sichuan Houwei annulled its registration. As of November 2018, the annulment had been completed.

d) In November 2018, Sichuan Huafeng Hanwei, Sichuan Lingwei, Guangzhou Huayou Motor Maintenance and Guangzhou Huayou Motor Sales resolved to dissolve their respective companies. As of September 30, 2019, the liquidation has not yet been completed, while the annulment of Sichuan Lingwei was completed in July 2019.

For the relationship between the Corporation and its controlled entities as of September 30, 2019, refer to Table 9.

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

Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2018. For the summary of other significant accounting policies, refer to the consolidated financial statements for the year ended December 31, 2018.

1) Leases

2019

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

a) The Group as lessor

All leases are classified as operating leases.

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

- 16 - Variable lease payments that do not depend on an index or a rate are recognized as income in the periods in which they are incurred.

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

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

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

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

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

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

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

- 17 - 2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

a) The Group as lessor

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

b) The Group as lessee

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

c) Leasehold land for own use

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group. The minimum lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

2) Employee benefits

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

3) Taxation

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

For the summary of critical accounting judgments and key sources of estimation uncertainty, refer to the consolidated financial statements for the year ended December 31, 2018.

- 18 - 6. CASH AND CASH EQUIVALENTS

September 30, December 31, September 30, 2019 2018 2018 c Cash Cash on hand $ 3,772 $ 4,439 $ 4,348 Checking accounts and demand deposits 1,750,894 1,870,223 2,151,006 1,754,666 1,874,662 2,155,354 Cash equivalents Time deposits 10,187,862 11,104,232 10,082,592 Repurchase agreements collateralized by bonds 1,669,523 1,450,566 1,311,686 11,857,385 12,554,798 11,394,278

$ 13,612,051 $ 14,429,460 $ 13,549,632

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

September 30, December 31, September 30, 2019 2018 2018

Financial assets - current

Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Mutual funds $ 653,762 $ 567,620 $ 692,748 Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts 307 23 -

$ 654,069 $ 567,643 $ 692,748

Financial liabilities (included in other current liabilities)

Financial liabilities held for trading Derivative financial instruments (not under hedge accounting) Foreign exchange forward contracts $ 666 $ 79 $ 803

Financial assets - non-current

Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted common shares $ 695,808 $ 734,341 $ 724,592

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

September 30, 2019

Notional Amount Transaction Currency Maturity Date (In Thousands)

Buy USD/NTD 2019.10.21 USD2,200/NTD67,859 Sale RMB/USD 2019.10.21 RMB15,564/USD2,200

December 31, 2018

Notional Amount Transaction Currency Maturity Date (In Thousands)

Buy USD/NTD 2019.01.04-2019.01.22 USD5,000/NTD153,480

September 30, 2018

Notional Amount Transaction Currency Maturity Date (In Thousands)

Buy USD/NTD 2018.10.15-2018.11.20 USD7,000/NTD213,895

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

September 30, December 31, September 30, 2019 2018 2018

Non-current

Investments in equity instruments at FVTOCI Domestic investments Listed shares $ 25,970 $ 18,673 $ 25,902 Unlisted shares 23,145 24,045 23,882 49,115 42,718 49,784 Foreign investments Unlisted shares 156,283 184,678 202,915

$ 205,398 $ 227,396 $ 252,699

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

Dividends of $675 thousand, $743 thousand, $675 thousand and $743 thousand were recognized during the three months and the nine months ended September 30, 2019 and 2018, respectively. Those dividends are all related to investments held at the end of the reporting period.

- 20 - 9. FINANCIAL ASSETS AT AMORTIZED COST

September 30, December 31, September 30, 2019 2018 2018

Current

Principal guaranteed notes $ 369,604 $ 105,015 $ 303,354 Less: Allowance for impairment loss (2,299) (656) (1,887)

$ 367,305 $ 104,359 $ 301,467

Non-current

Bonds $ 654,574 $ 820,015 $ 849,436 Preference shares 9,900 9,900 9,900 Principal guaranteed notes - - 22,180 664,474 829,915 881,516 Less: Allowance for impairment loss (5,083) (5,210) (6,086)

$ 659,391 $ 824,705 $ 875,430

a. The coupon rates of principal guaranteed notes were ranging from 2.55%-3.00%, 3.03%-3.07% and 3.03%-4.50% per annum as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

b. The coupon rates of bonds were ranging from 0.86%-4.34%, 0.86%-4.80% and 1.02%-4.80% per annum as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

c. The coupon rate of preference shares was 1.50% per annum as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

d. Refer to Note 10 for information relating to the credit risk management and impairment of investments in financial assets at amortized cost.

10. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS

Investments in debt instruments were classified as at amortized cost:

September 30, December 31, September 30, 2019 2018 2018

Gross carrying amount $ 1,034,078 $ 934,930 $ 1,184,870 Less: Allowance for impairment loss (7,382) (5,866) (7,973)

Amortized cost $ 1,026,696 $ 929,064 $ 1,176,897

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

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

Basis for Recognizing Expected Category Description Credit Losses (ECLs)

Performing The counterparty has a low risk of default and a 12-month ECLs strong capacity to meet contractual cash flows No rating The preference shares do not have credit rating Lifetime ECLs - not credit-impaired

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

September 30, 2019

Gross Carrying Amount Category Expected Loss Rate At Amortized Cost

Performing 0.0769%-0.6221% $ 1,024,178 No rating 32.4908% 9,900

December 31, 2018

Gross Carrying Amount Category Expected Loss Rate At Amortized Cost

Performing 0.0769%-0.6221% $ 925,030 No rating 32.4908% 9,900

September 30, 2018

Gross Carrying Amount Category Expected Loss Rate At Amortized Cost

Performing 0.0769%-0.6221% $ 1,174,970 No rating 39.7172% 9,900

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

Credit Rating No rating (Lifetime Performing ECLs - Not (12-month Credit- ECLs) impaired)

Balance at January 1, 2019 $ 2,650 $ 3,216 Financial assets purchased (a) 10,413 - Derecognition (b) (8,887) - Change in exchange rates or others (10) -

Balance at September 30, 2019 $ 4,166 $ 3,216

Balance at January 1, 2018 $ 5,572 $ 3,932 Financial assets purchased (a) 3,921 - Derecognition (b) (5,583) - Change in exchange rates or others 131 -

Balance at September 30, 2018 $ 4,041 $ 3,932

a. During the nine months ended September 30, 2019 and 2018, the Group purchased principal guaranteed notes of $1,673,882 thousand and $630,254 thousand, respectively, and correspondingly increased the loss allowance for investments rated as performing of $10,413 thousand and $3,921 thousand, respectively.

b. Investments in principal guaranteed notes of $1,406,917 thousand and bonds of $175,459 thousand were redeemed during the nine months ended September 30, 2019, with a consequential reduction in the loss allowance for investments rated as performing of $8,887 thousand; and investments in negotiable certificates of deposit of $700,000 thousand, principal guaranteed notes of $877,193 thousand and bonds of $164,233 thousand were redeemed during the nine months ended September 30, 2018, with a consequential reduction in the loss allowance for investments rated as performing of $5,583 thousand.

11. HEDGING INSTRUMENTS

September 30, December 31, September 30, 2019 2018 2018

Financial assets

Cash flow hedge - spot rate $ 279,314 $ 743,303 $ 432,614 Cash flow hedge - foreign exchange forward contracts - - 67

$ 279,314 $ 743,303 $ 432,681

Financial liabilities (included in other current liabilities)

Cash flow hedge - foreign exchange forward contracts $ - $ - $ 388

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

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

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

During the nine months ended September 30, 2019 and 2018, hedging instruments at fair value and transferred to initial carrying amount of hedged items are detailed in Note 23(e).

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

September 30, 2019

Change in Value Used for Carrying Calculating Notional Amount Forward Rate Line Item in Amount Hedge Hedging Instruments Currency (In Thousands) Maturity (NTD/JPY) Balance Sheet Asset Ineffectiveness

Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY970,515/ 2019.11.29 0.2763-0.2945 Financial assets $ 279,314 $ (2,288 ) NTD277,100 2020.1.14 for hedging

Accumulated Gains or Losses Change in on Hedging Value Used for Instruments in Calculating Other Equity Hedge Continuing Hedged Items Ineffectiveness Hedges

Cash flow hedge Forecast purchases $ 2,288 $ (2,288)

December 31, 2018

Change in Value Used for Carrying Calculating Notional Amount Forward Rate Line Item in Amount Hedge Hedging Instruments Currency (In Thousands) Maturity (NTD/JPY) Balance Sheet Asset Ineffectiveness

Cash flow hedge Forecast purchases - spot rate JPY/NTD JPY2,671,828/ 2019.1.15- 0.2679-0.2706 Financial assets $ 743,303 $ 20,997 NTD717,056 2019.6.30 for hedging

- 24 -

Accumulated Gains or Losses Change in on Hedging Value Used for Instruments in Calculating Other Equity Hedge Continuing Hedged Items Ineffectiveness Hedges

Cash flow hedge Forecast purchases $ (20,997) $ 20,997

September 30, 2018

Change in Value Used for Forward Calculating Notional Amount Rate Carrying Amount Hedge Hedging Instruments Currency (In Thousands) Maturity (Note) Line Item Asset Liability Ineffectiveness

Cash flow hedge Forecast purchases - foreign JPY/NTD JPY400,000/NTD108,020 2018.10.16- 0.2695- Other current $ - $ (388 ) $ (310 ) exchange forward contracts 2019.1.4 0.2706 liabilities Forecast purchases - foreign JPY/NTD JPY500,000/NTD134,500 2019.1.4 0.2690 Financial assets 67 - 54 exchange forward contracts for hedging Forecast purchases - spot rate JPY/NTD JPY1,406,655/NTD382,699 2018.12.13- 0.2695- Financial assets 378,671 - (3,222 ) 2018.12.27 0.2750 for hedging Forecast purchases - spot rate RMB/NTD RMB12,160/NTD55,170 2018.12.20 NTD4.5813: Financial assets 53,943 - (1,414 ) RMB1 for hedging

$ 432,681 $ (388 ) $ (4,892 )

Note: NTD/JPY, unless stated otherwise.

Accumulated Gains or Losses Change in on Hedging Value Used for Instruments in Calculating Other Equity Hedge Continuing Hedged Items Ineffectiveness Hedges

Cash flow hedge Forecast purchases $ 4,892 $ (4,892)

Hedging Gains (Losses) Recognized in OCI For the Three Months Ended For the Nine Months Ended September 30 September 30 Comprehensive Income 2019 2018 2019 2018

Cash flow hedge Forecast purchases $ (841) $ (14,727) $ 39,756 $ 8,301

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

- 25 - 12. NOTES AND ACCOUNTS RECEIVABLE, NET

September 30, December 31, September 30, 2019 2018 2018

At amortized cost Notes and accounts receivable $ 1,094,900 $ 1,197,225 $ 1,306,164 Less: Allowance for impairment loss (17,642) (19,771) (11,102)

$ 1,077,258 $ 1,177,454 $ 1,295,062

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

The aging of receivables was as follows:

September 30, December 31, September 30, 2019 2018 2018

Not past due $ 1,036,420 $ 1,146,617 $ 1,272,157 1-60 days 23,067 29,254 15,931 61-90 days 749 11,971 4,278 Over 91 days 34,664 9,383 13,798 Gross carrying amount 1,094,900 1,197,225 1,306,164 Loss allowance (lifetime ECLs) (17,642) (19,771) (11,102)

Amortized cost $ 1,077,258 $ 1,177,454 $ 1,295,062

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

For the Nine Months Ended September 30 2019 2018

Balance at January 1 $ 19,771 $ 6,788 Add: Net remeasurement of loss allowance - 4,446 Less: Net reversal of loss allowance (1,835) - Foreign exchange gains and losses (294) (132)

Balance at September 30 $ 17,642 $ 11,102

- 26 - 13. INVENTORIES

September 30, December 31, September 30, 2019 2018 2018

Merchandise $ 271,430 $ 196,059 $ 704,324 Finished goods 456,250 1,453,757 413,000 Work in progress 564,532 374,472 429,415 Raw materials 2,094,503 1,759,515 1,885,437 Materials in transit 99,774 286,461 160,492

$ 3,486,489 $ 4,070,264 $ 3,592,668

The costs of inventories recognized as cost of goods sold for the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018 were $6,096,812 thousand, $6,592,400 thousand, $19,796,785 thousand and $21,605,437 thousand, respectively.

14. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

The Group had a 43.87% interest in Kian Shen as of September 30, 2019, December 31, 2018 and September 30, 2018. The remaining 56.13% interest in Kian Shen is dispersed and held by shareholders unrelated to the Group.

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

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

September 30, December 31, September 30, 2019 2018 2018

Current assets $ 981,447 $ 836,938 $ 700,740 Non-current assets 3,925,524 4,140,669 4,124,222 Current liabilities (550,124) (685,896) (700,801) Non-current liabilities (295,643) (178,573) (181,494)

Equity $ 4,061,204 $ 4,113,138 $ 3,942,667

Equity attributable to: Owners of Kian Shen $ 1,781,650 $ 1,804,434 $ 1,729,648 Non-controlling interests of Kian Shen 2,279,554 2,308,704 2,213,019

$ 4,061,204 $ 4,113,138 $ 3,942,667

- 27 -

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Revenue $ 224,789 $ 302,450 $ 908,728 $ 930,601

Profit for the period $ 77,967 $ 95,546 $ 198,507 $ 297,344 Other comprehensive loss for the period (154,554) (147,277) (118,321) (143,694)

Total comprehensive income (loss) for the period $ (76,587) $ (51,731) $ 80,186 $ 153,650

Profit attributable to: Owners of Kian Shen $ 34,204 $ 41,916 $ 87,085 $ 130,445 Non-controlling interests of Kian Shen 43,763 53,630 111,422 166,899

$ 77,967 $ 95,546 $ 198,507 $ 297,344

Total comprehensive income (loss) attributable to: Owners of Kian Shen $ (33,598) $ (22,695) $ 35,178 $ 67,406 Non-controlling interests of Kian Shen (42,989) (29,036) 45,008 86,244

$ (76,587) $ (51,731) $ 80,186 $ 153,650

For the Nine Months Ended September 30 2019 2018

Net cash outflow from: Operating activities $ (57,416) $ (85,551) Investing activities 50,269 255,872 Financing activities (146,650) (168,160) Foreign exchange adjustments (62) (4,164)

Net cash outflow $ (153,859) $ (2,003)

Dividends paid to non-controlling interest $ 74,158 $ 98,877

- 28 - 15. NON-CURRENT ASSETS HELD FOR SALE

September 30, December 31, 2019 2018

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

In August 2018, the Group approved to dispose of its joint venture, Zhejiang Kanda, and entered into a transfer contract with Zhejiang Kangqiao Motor Industry and Trading. The transfer of shareholding rights was intended to be completed in 2019; therefore, the investments accounted for using the equity method were reclassified as held for sale.

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

September 30, December 31, September 30, 2019 2018 2018

Investments in associates $ 19,218,925 $ 20,979,597 $ 21,120,901 Investments in joint ventures 7,547,892 8,127,177 7,817,820

$ 26,766,817 $ 29,106,774 $ 28,938,721

a. Investments in associates

September 30, December 31, September 30, 2019 2018 2018

Material associates Yulon $ 10,867,353 $ 11,479,604 $ 11,428,441 Associates that are not individually material 8,351,572 9,499,993 9,692,460

$ 19,218,925 $ 20,979,597 $ 21,120,901

1) Material associates

The Group held 16.80% interest in Yulon on September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

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

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

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

September 30, December 31, September 30, Name of Associate 2019 2018 2018

Yulon $ 5,152,783 $ 4,772,553 $ 5,690,351

- 29 -

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

Yulon

September 30, December 31, September 30, 2019 2018 2018

Current assets $ 239,614,594 $ 209,300,378 $ 194,931,036 Non-current assets 86,851,053 96,372,715 88,440,927 Current liabilities (213,561,596) (195,992,191) (181,814,815) Non-current liabilities (33,514,393) (26,620,612) (21,535,091) Equity 79,389,658 83,060,290 80,022,057 Non-controlling interests (11,307,323) (11,323,162) (8,555,759)

$ 68,082,335 $ 71,737,128 $ 71,466,298

Proportion of the Group’s ownership 16.80% 16.80% 16.80%

Equity attributable to the Group $ 11,437,832 $ 12,051,837 $ 12,006,338 Cross shareholdings (573,764) (575,518) (581,182) Unrealized gain on sidestream transactions 3,285 3,285 3,285

Carrying amount $ 10,867,353 $ 11,479,604 $ 11,428,441

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Operating revenue $ 21,575,214 $ 20,223,757 $ 62,833,980 $ 65,658,693

Net profit (loss) for the period $ (1,106,923) $ 635,524 $ (1,122,409) $ 2,947,052 Other comprehensive income (loss) (714,279) (717,466) 86,830 (541,066)

Total comprehensive income (loss) for the period $ (1,821,202) $ (81,942) $ (1,035,579) $ 2,405,986

Dividends received from Yulon $ 175,693 $ 152,092

- 30 - 2) Aggregate information of associates that are not individually material

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

The Group’s share of: Net profit (loss) for the period $ 196,190 $ 54,527 $ (559,247) $ 277,685 Other comprehensive income (loss) (19,121) (31,143) 121,152 (9,441)

Total comprehensive income (loss) for the period $ 177,069 $ 23,384 $ (438,095) $ 268,244

The above associates are accounted for using the equity method.

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

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

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

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

In June 2019, the Group disposed of 43.85% interest in Yulon IT to Yulon and recognized a loss on disposal of investment amounting to $1,100 thousand (the loss of $1,100 thousand consisted of $17,860 thousand of proceeds less the book value of the investment of $18,960 thousand).

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

Except for Yulon and Hua-Chung Automobile Information Technical Center, the investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were based on the associate’s financial statements that have not been reviewed.

- 31 - b. Investments in joint ventures

September 30, December 31, September 30, 2019 2018 2018

Joint ventures that are not individually material $ 7,547,892 $ 8,127,177 $ 7,817,820

Aggregate information of joint ventures that are not individually material:

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018 The Group’s share of: Net profit of the period $ 241,841 $ 269,759 $ 486,017 $ 997,622 Other comprehensive loss (284,798) (247,318) (189,928) (209,057)

Total comprehensive income (loss) for the period $ (42,957) $ 22,441 $ 296,089 $ 788,565

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

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

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

17. PROPERTY, PLANT AND EQUIPMENT

September 30, December 31, September 30, 2019 2018 2018

Assets used by the Group

Land $ 2,127,397 $ 2,127,397 $ 2,127,397 Land improvement 13,308 13,618 14,374 Buildings 1,054,612 1,011,801 1,022,420 Machinery 2,187,208 2,030,592 2,117,099 Other equipment 399,940 407,735 404,120 Construction in progress 931,681 797,004 651,738

$ 6,714,146 $ 6,388,147 $ 6,337,148

The Group had no other significant disposal of property, plant and equipment except for the depreciation recognized and the cost of acquisition of property, plant and equipment for increasing productivity, which totaled $361,883 thousand, $255,926 thousand, $1,088,790 thousand and $580,968 thousand for the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, respectively.

- 32 - As a result of the declining sales in the market for several types of vehicles, the estimated future cash flows expected to arise from related equipment had decreased. Thus, the Group recognized impairment losses of $0 thousand, $11,578 thousand, $36,637 thousand and $21,924 thousand for the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, respectively. The Group determined the recoverable amount of the relevant assets on the basis of their value in use. The discount rates used in measuring value in use were 4.44% and 6.69% per annum in 2019 and 2018, respectively.

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

Category Year

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

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 31.

18. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

September 30, 2019

Carrying amounts

Land $ 89,774 Buildings 375,366 Other equipment 9,555

$ 474,695

For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2019

Additions to right-of-use assets $ 22,159

Depreciation charge for right-of-use assets Land $ 7,461 $ 22,391 Buildings 16,739 50,462 Other equipment 1,549 4,816

$ 25,749 $ 77,669

- 33 - b. Lease liabilities - 2019

September 30, 2019

Carrying amounts

Current $ 95,425 Non-current $ 384,038

Range of discount rate for lease liabilities was as follows:

September 30, 2019

Land 1.2%-1.94% Buildings 1.2%-4.35% Other equipment 0.98%-1.37% c. Material lease-in activities and terms

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

2019

For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2019

Expenses relating to short-term leases $ 6,604 $ 18,646 Expenses relating to low-value asset leases $ 413 $ 1,823 Total cash outflow for leases $ 102,860

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

2018

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

December 31, September 30, 2018 2018

Not later than 1 year $ 110,157 $ 114,027 Later than 1 year and not later than 5 years 330,544 340,302 Later than 5 years 154,897 165,231

$ 595,598 $ 619,560

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

19. INVESTMENT PROPERTIES

September 30, December 31, September 30, 2019 2018 2018

Investment properties $ 1,368,807 $ 1,380,002 $ 1,383,783

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

Except for depreciation recognized, the Group did not have significant addition, disposal, or impairment of investment properties for the three months ended 2019 and 2018 and for the nine months ended September 30, 2019 and 2018.

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

The fair values of investment properties of the Group were $2,414,732 thousand and $2,312,470 thousand as of December 31, 2018 and 2017, respectively. The management of the Group had assessed and determined that there were no significant changes in the fair values as of September 30, 2019 and 2018, as compared to that of December 31, 2018 and 2017.

The maturity analysis of lease payments receivable under operating leases of investment properties as of September 30, 2019 was as follows:

September 30, 2019

Year 1 $ 51,859 Year 2 40,615 Year 3 29,147 Year 4 12,471

$ 134,092

The future minimum lease payments of non-cancellable operating lease commitments as of December 31 and September 30, 2018 are as follows:

December 31, September 30, 2018 2018

Not later than 1 year $ 62,568 $ 58,758 Later than 1 year and not later than 5 years 125,360 123,675 Later than 5 years - 4,130

$ 187,928 $ 186,563

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

- 35 - 20. BORROWINGS

a. Short-term borrowings

September 30, December 31, September 30, 2019 2018 2018

Line of credit borrowings $ 360,000 $ 340,000 $ 320,000 Bank loans 270,000 305,000 320,000

$ 630,000 $ 645,000 $ 640,000

1) The interest rates on credit borrowings were ranging from 0.95%-1.1%, 0.95%-0.98% and 0.95%-1.25% per annum as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

2) The interest rates on bank loans were 0.98%, 1.18% and 1.18% per annum as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

b. Long-term borrowings

September 30, 2019

Unsecured borrowings

Line of credit borrowings $ 20,000 Less: Current portions -

Long-term borrowings $ 20,000

Long-term borrowings is unsecreced loans which are repayable in installments at varing amounts from October 15, 2020 to July 15, 2022. The Group has signed medium-term no revolving credit facilities with banks. As of September 30, 2019, interest rate were 0.975%. The expiry date of the repayments is in July 31, 2022.

21. OTHER PAYABLES

September 30, December 31, September 30, 2019 2018 2018

Payable due to capital reduction $ 8,304,305 $ - $ - Payable for salaries or bonus 772,339 1,149,478 884,961 Payable for advertisement 404,623 197,919 398,437 Payable for taxes 296,904 191,369 214,294 Payable for warranties 234,693 263,952 273,110 Provisions for employee benefits 95,163 153,296 114,898 Others 718,708 761,051 901,181

$ 10,826,735 $ 2,717,065 $ 2,786,881

- 36 - 22. RETIREMENT BENEFIT PLANS

For the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, the pension expenses of defined benefit plans were $14,217 thousand, $16,661 thousand, $42,900 thousand and $50,091 thousand, respectively, and these were calculated based on the pension cost rate determined by the actuarial calculation on December 31, 2018 and 2017, respectively.

23. EQUITY

a. Share capital

1) Ordinary shares

September 30, December 31, September 30, 2019 2018 2018

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

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

2) Capital reduction

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

b. Capital surplus

September 30, December 31, September 30, 2019 2018 2018

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note 1)

Conversion of bonds $ 5,183,923 $ 5,183,923 $ 5,183,923 Issuance of ordinary shares 1,184,920 1,184,920 1,184,920 Others 4,666 4,666 4,666 (Continued)

- 37 -

September 30, December 31, September 30, 2019 2018 2018

May be used to offset a deficit only

Changes in percentage of ownership interest in subsidiaries (Note 2) $ 2,225 $ 2,225 $ 2,225 Share of changes in capital surplus of associates 15,786 27,899 37,515

$ 6,391,520 $ 6,403,633 $ 6,413,249 (Concluded)

Note 1: Such capital surplus may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Corporation’s capital surplus and once a year).

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

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

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

An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Corporation’s paid-in capital. The legal reserve may be used to offset deficits. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

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

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

Dividends Per Share Appropriation of Earnings (NT$) For the Years Ended For the Years Ended December 31 December 31 2018 2017 2018 2017

Legal reserve $ 359,300 $ 410,564 Cash dividends 2,352,886 2,491,292 $ 1.7 $ 1.8

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

For the Nine Months Ended September 30 2019 2018

Beginning at January 1 $ 1,046,967 $ 1,051,658 Reversals Disposal of subsidiaries and associates (377) (4,691) Disposal of property, plant and equipment (5) -

Balance at September 30 $ 1,046,585 $ 1,046,967 e. Other equity items

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

For the Nine Months Ended September 30 2019 2018

Balance at January 1 $ (646,278) $ (485,118) Recognized during the period Exchange differences on translating the financial statements of foreign operations (28,447) (25,522) Share from associates and join ventures accounted for using the equity method (158,559) (260,644) Reclassification adjustments Disposal of associates accounted for using the equity method 1,773 7,538 Other comprehensive loss recognized for the period (185,233) (278,628)

Balance at September 30 $ (831,511) $ (763,746)

- 39 - 2) Unrealized gain on financial assets at FVTOCI

For the Nine Months Ended September 30 2019 2018

Balance at January 1 $ 117,177 $ 273,866 Recognized for the period Unrealized loss - equity instruments (17,488) (28,110) Share from associates accounted for using the equity method 160,647 (19,879) Other comprehensive gain (loss) recognized for the period 143,159 (47,989) Cumulative unrealized loss (gain) of equity instruments transferred to retained earnings due to disposal by associates (85,455) 5,696 Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal (17) (528)

Balance at September 30 $ 174,864 $ 231,045

3) Gain on the hedging instruments

For the Nine Months Ended September 30 2019 2018

Balance at January 1 $ 20,997 $ (12,253) Effect of change in tax rate - 382 Recognized for the period Gain on changes in the fair value of hedging instruments Foreign currency risk - spot rate 35,972 (2,654) Foreign currency risk - foreign exchange forward contracts - 9,633 Share from joint ventures accounted for using the equity method (74) - Other comprehensive income recognized for the period 35,898 7,361 Transferred to initial carrying amount of hedged items (59,257) -

Balance at September 30 $ (2,362) $ (4,892)

- 40 - f. Non-controlling interests

For the Nine Months Ended September 30 2019 2018

Balance at January 1 $ 3,613,814 $ 3,550,772 Attributable to non-controlling interests: Share of profit for the period 124,790 210,899 Other comprehensive income recognized for the period Unrealized loss on financial assets at FVTOCI (3,614) (20,433) Exchange differences on translating the financial statements of foreign operations (11,147) (2,075) Share from associates and joint ventures accounted for using the equity method (51,652) (58,148)

Other comprehensive loss recognized for the period (66,413) (80,656) Cash dividend distributed by subsidiaries (112,397) (163,237)

Balance at September 30 $ 3,559,794 $ 3,517,778

24. REVENUE

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Revenue from contracts with customers Revenue from the sale of goods Revenue from sale of vehicles $ 5,584,445 $ 5,893,101 $ 18,670,658 $ 20,767,484 Revenue from sale of components 1,488,761 1,950,533 4,535,304 5,234,510 7,073,206 7,843,634 23,205,962 26,001,994 Service revenue 276,570 275,603 1,084,434 996,196 Rental income 17,003 18,107 49,080 48,046 Other revenue 23,690 31,493 59,667 74,876

$ 7,390,469 $ 8,168,837 $ 24,399,143 $ 27,121,112

- 41 - 25. NET PROFIT

Net profit concludes as follows:

a. Depreciation and amortization

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

An analysis of depreciation by function Operating costs $ 165,037 $ 192,304 $ 598,401 $ 612,139 Operating expenses 61,405 38,783 184,421 114,225

$ 226,442 $ 231,087 $ 782,822 $ 726,364

An analysis of amortization by function Operating costs $ 1,711 $ 2,070 $ 5,800 $ 6,389 Operating expenses 12,250 20,367 39,065 52,610

$ 13,961 $ 22,437 $ 44,865 $ 58,999

An analysis of amortization in intangible assets by function Research and development expenses $ 13,193 $ 10,132 $ 37,902 $ 28,620

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

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Rental income from investment properties $ 16,594 $ 16,837 $ 49,753 $ 48,874 Direct operating expenses from investment properties that generated rental income $ 5,210 $ 5,424 $ 15,924 $ 16,833

c. Employee benefits expense

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Post-employment benefits Defined contribution plans $ 19,402 $ 19,586 $ 63,122 $ 58,909 Defined benefit plans 14,217 16,661 42,900 50,091 33,619 36,247 106,022 109,000 Short-term benefits 811,522 897,900 2,563,301 2,854,685

$ 845,141 $ 934,147 $ 2,669,323 $ 2,963,685 (Continued)

- 42 -

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

An analysis of employee benefits expenses by function Operating costs $ 451,631 $ 480,519 $ 1,443,663 $ 1,550,302 Operating expenses 393,510 453,628 1,225,660 1,413,383

$ 845,141 $ 934,147 $ 2,669,323 $ 2,963,685 (Concluded) d. Employees’ compensation and remuneration of directors

According to the Corporation’s Articles, the Corporation accrued employees’ compensation and remuneration of directors at the rates of no less than 0.1% and no higher than 0.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. For the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, the employees’ compensation and remuneration of directors were as follows:

Amount

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Employees’ compensation $ 499 $ 8,043 $ 793 $ 27,371 Remuneration of directors $ 3,660 $ 4,725 $ 3,660 $ 16,323

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

The appropriations of employees’ compensation and remuneration of directors for 2018 and 2017 that were resolved by the board of directors in March 2019 and 2018, respectively, are as shown below:

For the Years Ended December 31 2019 2018 Cash Cash

Employees’ compensation $ 33,511 $ 45,459 Remuneration of directors 19,746 22,036

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

Information on the employees’ compensation and remuneration of directors resolved by the Corporation’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

- 43 - 26. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of tax expense are as follows:

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Current tax In respect of the current period $ 49,501 $ 49,861 $ 345,467 $ 271,427 Adjustments for the prior periods (2) (13,010) (22,628) (21,891) 49,499 36,851 322,839 249,536 Deferred tax In respect of the current period 72,044 16,639 140,418 188,366 Adjustments for the prior periods (389) (1,693) 43,986 (740) Adjustments to deferred tax attributable to changes in tax rates and laws - - - (44,585) 71,655 14,946 184,404 143,041

Income tax expense recognized in profit or loss $ 121,154 $ 51,797 $ 507,243 $ 392,577

The Income Tax Act in the Republic of China (“ROC”) was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%. The effect of the change in tax rate on deferred tax income to be recognized in profit or loss is recognized in full in the period in which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings had been reduced from 10% to 5%.

In July 2019, the President of the ROC approved the announcement of the amendments to the Statute of Industrial Innovation, which stipulated that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in certain assets or technologies above a specific amount are allowed as deduction when computing the income tax on unappropriated earnings. However, the related implementation rules are yet to be issued by the Ministry of Finance; thus, the Corporation could not estimate the effect on the current income tax.

- 44 - b. Income tax recognized in other comprehensive income

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Deferred tax

In respect of the current period Cash flow hedges $ 2,438 $ 2,653 $ 746 $ (1,322) Arising from losses of hedging instruments in cash flow hedges transferred to the initial carrying amounts of hedged items Cash flow hedges (2,299) - (4,530) - Effect of change in tax rate - - - 5,473

$ 139 $ 2,653 $ (3,784) $ 4,151

c. Income tax assessments

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

27. EARNINGS PER SHARE

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Basic earnings per share $ 0.38 $ 0.63 $ 0.29 $ 2.14 Diluted earnings per share $ 0.38 $ 0.63 $ 0.29 $ 2.14

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

Net Profit for the Period

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Earnings used in the computation of basic earnings per share $ 336,826 $ 859,701 $ 346,192 $ 2,919,706

- 45 - Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares)

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018 Weighted average number of ordinary shares used in the computation of basic earnings per share Weighted average number of ordinary shares 896,624 1,384,051 1,219,790 1,384,051 Adjustment for associates holding shares (13,344) (20,599) (18,154) (20,599) 883,280 1,363,452 1,201,636 1,363,452 Effect of potentially dilutive ordinary shares Employees’ compensation 32 1,067 494 1,630

Weight average number of ordinary shares used in the computation of diluted earnings per share 883,312 1,364,519 1,202,130 1,365,082

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

If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed that the entire amount of the compensation will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

28. CAPITAL MANAGEMENT

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

29. FINANCIAL INSTRUMENTS

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

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

- 46 - b. Fair value of financial instruments that are measured at fair value on a recurring basis

1) Fair value hierarchy

September 30, 2019

Level 1 Level 2 Level 3 Total

Financial assets

Financial assets at FVTPL Mutual funds $ 653,762 $ - $ - $ 653,762 Domestic unlisted shares - - 695,808 695,808 Derivative financial instruments - - 307 307

$ 653,762 $ - $ 696,115 $ 1,349,877

Financial assets at FVTOCI Domestic listed shares $ 25,970 $ - $ - $ 25,970 Domestic unlisted shares - - 23,145 23,145 Overseas unlisted shares - - 156,283 156,283

$ 25,970 $ - $ 179,428 $ 205,398

Financial assets for hedging Non-derivative financial instruments $ 279,314 $ - $ - $ 279,314

Financial liabilities

Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities) $ - $ - $ 666 $ 666

December 31, 2018

Level 1 Level 2 Level 3 Total

Financial assets

Financial assets at FVTPL Mutual funds $ 567,620 $ - $ - $ 567,620 Domestic unlisted shares - - 734,341 734,341 Derivative financial instruments - - 23 23

$ 567,620 $ - $ 734,364 $ 1,301,984 (Continued)

- 47 -

Level 1 Level 2 Level 3 Total

Financial assets at FVTOCI Domestic listed shares $ 18,673 $ - $ - $ 18,673 Domestic unlisted shares - - 24,045 24,045 Overseas unlisted shares - - 184,678 184,678

$ 18,673 $ - $ 208,723 $ 227,396

Financial assets for hedging Non-derivative financial instruments $ 743,303 $ - $ - $ 743,303

Financial liabilities

Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities) $ - $ - $ 79 $ 79 (Concluded)

September 30, 2018

Level 1 Level 2 Level 3 Total

Financial assets

Financial assets at FVTPL Mutual funds $ 692,748 $ - $ - $ 692,748 Domestic unlisted shares - - 724,592 724,592

$ 692,748 $ - $ 724,592 $ 1,417,340

Financial assets at FVTOCI Domestic listed shares $ 25,902 $ - $ - $ 25,902 Domestic unlisted shares - - 23,882 23,882 Overseas unlisted shares - - 202,915 202,915

$ 25,902 $ - $ 226,797 $ 252,699

Financial assets for hedging Non-derivative financial instruments $ 432,614 $ - $ - $ 432,614 Derivative financial instruments - - 67 67

$ 432,614 $ - $ 67 $ 432,681 (Continued)

- 48 -

Level 1 Level 2 Level 3 Total

Financial liabilities

Financial liabilities at FVTPL Derivative financial instruments (included in other current liabilities) $ - $ - $ 803 $ 803 Financial liabilities for hedging Derivative financial instruments (included in other current liabilities) $ - $ - $ 388 $ 388 (Concluded)

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

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

For the three months ended September 30, 2019

Derivative Equity Equity Financial Instruments at Instruments at Instruments at Financial Assets FVTPL FVTOCI FVTPL Total

Balance at July 1 $ 711,829 $ 189,296 $ - $ 901,125 Recognized in profit or loss (16,021) - 307 (15,714) Recognized in other comprehensive loss - (9,868) - (9,868)

Balance at September 30 $ 695,808 $ 179,428 $ 307 $ 875,543

Derivative Financial Instruments at Financial Liabilities FVTPL

Balance at July 1 $ 17,237 Recognized in loss (16,571)

Balance at September 30 $ 666

- 49 - For the nine months ended September 30, 2019

Derivative Equity Equity Financial Instruments at Instruments at Instruments at Financial Assets FVTPL FVTOCI FVTPL Total

Balance at January 1 $ 734,341 $ 208,723 $ 23 $ 943,087 Recognized in profit or loss (38,533) - 284 (38,249) Recognized in other comprehensive loss - (29,278) - (29,278) Sales - (17) - (17)

Balance at September 30 $ 695,808 $ 179,428 $ 307 $ 875,543

Derivative Financial Instruments at Financial Liabilities FVTPL

Balance at January 1 $ 79 Recognized in loss 587

Balance at September 30 $ 666

For the three months ended September 30, 2018

Derivatives Derivative Equity Financial Equity Financial Instruments Instruments Instruments Instruments Financial Assets at FVTPL at FVTPL at FVTOCI for Hedging Total

Balance at July 1 $ 739,392 $ 10,605 $ 273,650 $ 4,224 $ 1,027,871 Recognized in profit or loss (14,800) (10,605) - (4,224) (29,629) Recognized in other comprehensive loss - - (34,495) 67 (34,428) Sales - - (12,358) - (12,358)

Balance at September 30 $ 724,592 $ - $ 226,797 $ 67 $ 951,456

Derivatives Derivative Financial Financial Instruments at Instruments for Financial Liabilities FVTPL Hedging Total

Balance at July 1 $ 12,822 $ 409 $ 13,231 Recognized in profit or loss (12,019) (409) (12,428) Recognized in other comprehensive loss - 388 388

Balance at September 30 $ 803 $ 388 $ 1,191

- 50 - For the nine months ended September 30, 2018

Derivative Equity Equity Financial Instruments Instruments Instruments Financial Assets at FVTPL at FVTOCI for Hedging Total

Balance at January 1 $ 767,761 $ 293,111 $ - $ 1,060,872 Recognized in profit or loss (43,169) - - (43,169) Recognized in other comprehensive loss - (53,349) 67 (53,282) Sales - (12,965) - (12,965)

Balance at September 30 $ 724,592 $ 226,797 $ 67 $ 951,456

Derivatives Derivative Financial Financial Instruments at Instruments for Financial Liabilities FVTPL Hedging Total

Balance at January 1 $ - $ 12,362 $ 12,362 Recognized in profit or loss 803 (12,362) (11,559) Recognized in other comprehensive loss - 388 388

Balance at September 30 $ 803 $ 388 $ 1,191

3) Valuation techniques and inputs applied for Level 3 fair value measurement

a) Derivative financial instruments: The fair values of foreign exchange forward contracts of future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

b) Domestic unlisted securities to which the market approach was applied: The fair values of domestic unlisted shares referred to stock prices of listed companies with operating activities that were similar to those of the Corporation. The material unobservable inputs were as follows:

September 30, December 31, September 30, 2019 2018 2018

Operating income ratio 0.14-5.68 times 0.14-5.68 times 0.15-5.28 times Gross profit ratio 0.32-13.64 times 0.32-14.44 times 0.71-16.52 times EBIT ratio 2.44-23.21 times 2.44-23.21 times 8.25-16.85 times EBITDA ratio 8.51-10.82 times - 0.76-25.47 times Post-tax profit ratio 11.99-85.49 times 11.99-85.49 times 1.70-72.94 times P/B ratio 0.79-4.94 times 0.82-5.09 times 0.91-6.92 times Discount rate for lack of 32.28% 32.28% 32.28% marketability

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

September 30, December 31, September 30, 2019 2018 2018

Operating income ratio 0.1 time increase $ 58,962 $ 36,301 $ 25,483 0.1 time decrease $ (58,962) $ (36,301) $ (25,483) Gross profit ratio 1 time increase $ 65,697 $ 65,961 $ 23,017 1 time decrease $ (65,697) $ (65,961) $ (23,017) EBIT ratio 1 time increase $ 18,188 $ 18,188 $ 21,581 1 time decrease $ (18,188) $ (18,188) $ (21,581) EBITDA ratio 1 time increase $ 189 $ - $ 69,565 1 time decrease $ (189) $ - $ (69,565) Post-tax profit ratio 1 time increase $ 11,020 $ 11,020 $ 19,283 1 time decrease $ (11,020) $ (11,020) $ (19,283) P/B ratio 0.1 time increase $ 84,544 $ 88,737 $ 76,072 0.1 time decrease $ (84,544) $ (88,737) $ (76,072) c. Categories of financial instruments

September 30, December 31, September 30, 2019 2018 2018

Financial assets

FVTPL Mandatorily at FVTPL $ 1,349,877 $ 1,301,984 1,417,340 Financial assets for hedging 279,314 743,303 432,681 Financial assets at amortized cost (Note 1) 18,454,513 19,052,314 18,624,396 Financial assets at FVTOCI 205,398 227,396 252,699

Financial liabilities

Amortized cost (Note 2) 14,080,494 7,132,785 6,380,861 FVTPL (included in other current liabilities) Held for trading 666 79 803 Financial liabilities for hedging (included in other current liabilities) - - 388

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

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

- 52 - d. Financial risk management objectives and policies

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

1) Market risk

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

a) Foreign currency risk

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

Sensitivity analysis

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

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

USD to NTD For the Nine Months Ended September 30 2019 2018

Loss $ (7,397) $ (8,428)

USD to RMB For the Nine Months Ended September 30 2019 2018

Gain (loss) $ (803) $ 1,094

- 53 -

JPY to NTD For the Nine Months Ended September 30 2019 2018

Gain (loss) $ 659 $ (67) Equity $ (2,793) $ (6,210)

RMB to NTD For the Nine Months Ended September 30 2019 2018

Loss $ (11,118) $ (19,816) Equity $ - $ (539) b) Interest rate risk

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

September 30, December 31, September 30, 2019 2018 2018

Cash flow interest rate risk Financial assets $ 14,071,304 $ 15,330,348 $ 14,140,752 Financial liabilities 539,963 554,972 579,887 Fair value interest rate risk Lease liabilities 479,463 - - Financial liabilities 170,000 184,000 228,000

Sensitivity analysis

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

If interest rates had been 0.25% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2019 and 2018 would increase/decrease by $25,371 thousand and $25,427 thousand, respectively.

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

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

- 54 - Sensitivity analysis

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

If equity prices had been 5% higher/lower, pre-tax profit for the nine months ended September 30, 2019 and 2018 would have increased/decreased by $32,688 thousand and $34,637 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the nine months ended September 30, 2019 and 2018 would have increased/decreased by $1,299 thousand and $1,295 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

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

3) Liquidity risk

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

30. TRANSACTIONS WITH RELATED PARTIES

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

a. Names and categories of related parties

Related Party Name Related Party Category

Mitsubishi Motors Corporation (Mitsubishi Motors Corp.) Investors that have significant influence over the Group Mitsubishi Corporation (Mitsubishi Corp.) Investors that have significant influence over the Group Tai Yuen Textile Co., Ltd. Investors that have significant influence over the Group Le Wen Investment Co., Ltd. Investors that have significant influence over the Group Yulon Management Company Ltd. (Yulon Management) Subsidiary of investors that have significant influence over the Group Mitsubishi Corporation (Taiwan) Ltd. Subsidiary of investors that have significant influence over the Group Mitsubishi Motors Philippines Corporation Subsidiary of investors that have significant influence over the Group Mitsubishi Motors Thailand Subsidiary of investors that have significant influence over the Group (Continued)

- 55 -

Related Party Name Related Party Category

Mitsubishi Motors North America., Inc. Subsidiary of investors that have significant influence over the Group Mitsubishi Motors Europe B.V. Subsidiary of investors that have significant influence over the Group Mitsubishi Corporation Technos Subsidiary of investors that have significant influence over the Group Shye Shyang Mechanical Industrial Co., Ltd. The Group is its major management authority Fuzhou Samnel Mechancial and Electrical Co., Ltd. The Group is its major management authority Uni-Calsonic Corp. Associate Yulon Motor Co., Ltd. (Yulon) Associate Fortune Motors Co., Ltd. (Fortune Motors) Associate ROC Spicer Ltd. (ROC-Spicer) Associate Uni Auto Parts Manufacture Co., Ltd. Associate Shung Ye Motor Co., Ltd. (Shung Ye Motor) Associate Hua-Chuang Automobile Information Technical Center Co., Associate Ltd. (Hua-Chuang Automobile Information Technical Center) Yulon IT Solutions Inc. (Yulon IT) Associate Sinjang Co., Ltd. (Sin Jang) Associate Sin Gan Co., Ltd. (Sin Gan) Associate Tokio Marine Newa Insurance Co., Ltd. Associate Hong Shuo Cultural Enterprises, Co., Ltd. Associate Hsiang Shuo Enterprises Associate Sinqual Technology Co., Ltd. Associate Yufong Property Management Co., Ltd. Associate Taiwan Acceptance Corporation (Taiwan Acceptance) Associate Yue Sheng Industrial Co., Ltd. Associate Luxgen Motor Co., Ltd. (Luxgen) Associate Yulon Nissan Motor Co., Ltd. Associate Y-Teks Co., Ltd. Associate Yulon Energy Service Co., Ltd. Associate Yue Ki Industrial Co., Ltd. (Yue Ki Industrial) Associate Carplus Auto Leasing Corporation Associate eCBO Information Services Co., Ltd. Associate Hsieh-Shin Motors Co., Ltd. Associate Yu Rich Financial Services Company Associate ROC-Keeper Industrial Ltd. Associate Taiguang Investment (HK) Co., Ltd. (Taiguang Investment) Associate ROC-Spicer Investment Co., Ltd. (BVI) (ROC-Spicer Associate Investment) Tai-Ya Investment (HK) Co., Ltd. (Tai-Ya Investment) Associate Fujian Spicer Drivetrain System Co., Ltd. (Fujian Spicer) Associate Shanghai Chiashun Motor Sales Co., Ltd. Associate Shanghai Hopeful Wheel Automobile Maintenance Co., Ltd. Associate Fuzhou Lianhong Motor Parts Co., Ltd. Associate South East (Fujian) Motor Corporation Ltd. (South East Joint Venture (Fujian) Motor) (Continued)

- 56 -

Related Party Name Related Party Category

Fujian Benz Automotive Co., Ltd. Joint Venture Fuzhou Fushiang Motor Industrial Co., Ltd. Joint Venture Xiamen King-Long Kian-Shen Frame Joint Venture Hangzhou King-Long Kian-Shen Co., Ltd. Joint Venture China Engine (Fujian) Joint Venture Zhejiang Kangda Motor Industry and Trade Co., Ltd. Joint Venture (Note) (Zhejiang Kangda) Yuanchuang Industrial Investment Consulting Co., Ltd. Substantive related party Automotive Research & Testing Center Substantive related party (Note) (Concluded)

Note: The relationship ended in August 2018. b. Operating transactions

1) Sales of goods

For the Three Months Ended For the Nine Months Ended Related Party September 30 September 30 Line Items Categories/Name 2019 2018 2019 2018

Sales Associates Fortune Motors $ 4,264,007 $ 4,240,952 $ 14,207,203 $ 14,441,739 Shung Ye Motor 1,426,718 1,435,062 4,546,945 5,399,982 Others 227,146 298,974 676,639 873,586 5,917,871 5,974,988 19,430,787 20,715,307 Investors and 14,998 32,621 79,797 92,324 subsidiaries of the investors that have significant influence over the Group Joint ventures 9,076 13,750 23,113 45,580

$ 5,941,945 $ 6,021,359 $ 19,533,697 $ 20,853,211

2) Purchases of goods

For the Three Months Ended For the Nine Months Ended Related Party September 30 September 30 Line Items Categories/Name 2019 2018 2019 2018

Purchases Investors and subsidiaries of the investors that have significant influence over the Group Mitsubishi Corp. $ 467,095 $ 638,789 $ 1,819,044 $ 2,526,706 Others 21,002 21,166 97,348 95,399 488,097 659,955 1,916,392 2,622,105 Associates 430,563 412,154 1,521,772 1,427,837 The Group is its major 63,586 68,883 230,663 242,486 management Joint ventures South East (Fujian) 62,811 205,354 161,575 1,046,020 Motor Others - 1,062 - 3,492 62,811 206,416 161,575 1,049,512

$ 1,045,057 $ 1,347,408 $ 3,830,402 $ 5,341,940

- 57 - 3) Technical services expense

For the Three Months Ended For the Nine Months Ended Related Party September 30 September 30 Line Items Categories/Name 2019 2018 2019 2018

Cost of goods sold Investors that have $ 50,713 $ 46,237 $ 170,961 $ 147,189 and selling and significant influence marketing over the Group expenses

4) Development expense

For the Three Months Ended For the Nine Months Ended Related Party September 30 September 30 Line Items Categories/Name 2019 2018 2019 2018

Research and Investors that have $ 12,436 $ 14,202 $ 37,353 $ 41,054 development significant influence expense over the Group Others - 14 3 185

$ 12,436 $ 14,216 $ 37,356 $ 41,239

5) Other expense

For the Three Months Ended For the Nine Months Ended Related Party September 30 September 30 Line Items Categories/Name 2019 2018 2019 2018

Selling and Investors and $ 26,326 $ 22,046 $ 80,979 $ 69,886 marketing subsidiaries of the expenses and investors that have general and significant influence administrative over the Group expenses Others 4,597 5,666 10,961 11,709

$ 30,923 $ 27,712 $ 91,940 $ 81,595

Research and Substantive related $ - $ 9,119 $ - $ 56,026 development parties expenses Others 549 82 621 533

$ 549 $ 9,201 $ 621 $ 56,559

- 58 - 6) Receivables from related parties

Related Party September 30, December 31, September 30, Line Items Categories/Name 2019 2018 2018

Trade receivables Associates from related Fortune Motors $ 1,279,232 $ 870,216 $ 1,132,737 parties Shung Ye Motor 378,450 536,279 302,716 Hua-Chuang 76,208 199,992 122,559 Automobile Information Technical Center Others 159,443 285,034 143,505 1,893,333 1,891,521 1,701,517 Joint ventures 17,972 44,905 51,483 Investors and subsidiaries of the investors that have 11,209 16,043 10,067 significant influence over the Group

$ 1,922,514 $ 1,952,469 $ 1,763,067

7) Prepayments

Related Party September 30, December 31, September 30, Line Items Categories/Name 2019 2018 2018

Prepayments Investors and subsidiaries of investors that have significant influence over the Group Mitsubishi Corp. $ 95,820 $ 117,943 $ 122,007 Others 2,324 6,883 7,550 98,144 124,826 129,557 Joint ventures 15,930 13,162 34,122 Others 238 91 363

$ 114,312 $ 138,079 $ 164,042

8) Acquisition of property, plant and equipment

For the Three Months Ended For the Nine Months Ended Related Party September 30 September 30 Line Items Categories/Name 2019 2018 2019 2018

Acquisition of Associates $ 14,435 $ 220 $ 51,783 $ 24,001 property, plant The group is its major and equipment management authority - - - 7,500

$ 14,435 $ 220 $ 51,783 $ 31,501

- 59 - 9) Payables to related parties

Related Party September 30, December 31, September 30, Line Items Categories/Name 2019 2018 2018

Trade payables to Associates related parties Yulon $ 97,834 $ 94,762 $ 78,564 Yue Ki Industrial 65,812 92,017 72,481 ROC-Spicer 26,484 87,219 62,470 Others 188,236 342,348 248,419 378,366 616,346 461,934 Investors and subsidiaries of the investors that have significant influence over the Group Yulon Management 70,732 95,013 66,169 Mitsubishi Motors 51,875 92,182 47,756 Corp. Others 1,717 71,715 7,801 124,324 258,910 121,726 The Group is its major 33,662 60,301 44,723 management Joint ventures 8,806 9,397 12,080

$ 545,158 $ 944,954 $ 640,463

10) Contract liabilities

Related Party September 30, December 31, September 30, Line Items Categories/Name 2019 2018 2018

Other current Associates liabilities Luxgen $ 19,356 $ 45,514 $ 41,135 Sin Jang 16,792 - 11,900 Others 5,026 1,191 1,913 41,174 46,705 54,948 Investors and 881 - 10,487 subsidiaries of the investors that have significant influence over the Group Others 292 273 -

$ 42,347 $ 46,978 $ 65,435

The outstanding payables to related parties had no guarantees and would be paid in cash. The Group receives guarantees of the receivables from part of the related parties. In addition, the Group did not recognize allowance for doubtful accounts during the nine months ended September 30, 2019 and 2018.

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

The Group signed contract with Mitsubishi Motors Corporation, refer to Note 32.

- 60 -

c. Compensation of key management personnel

The remunerations of directors and key executives for the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, respectively, were as follows:

For the Three Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Short-term employee benefits $ 28,564 $ 37,464 $ 78,527 $ 94,415 Post-employment benefits $ 595 $ 471 $ 1,781 $ 1,760

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

31. ASSETS PLEDGED AS COLLATERAL

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

September 30, December 31, September 30, 2019 2018 2018

Property, plant and equipment $ 741,755 $ 778,643 $ 781,604 Pledge deposits (included in other current assets) 179,939 157,585 158,506 Investment properties 52,323 52,323 52,323

$ 974,017 $ 988,551 $ 992,433

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant commitments and contingencies of the Group as of September 30, 2019 were as follows:

a. Guarantee notes amounted to $5,002,322 thousand, which had been issued to financial institutions as collaterals for loans; unused letters of credit amounted to $48,110 thousand.

b. The Group entered into an agreement with Mitsubishi Motors Corporation as stated below:

Date of Agreement/ Project Content Expiry Date Agreement Price Payment

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

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

- 61 - 33. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

In order to strengthen the Group’s capital structure and focus on the development of the industry, the board of directors of the Group resolved to dispose 72.81% interest in a subsidiary, Gatetech Technology, to non-related parties on November 13,2019.

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

September 30, 2019

Foreign Carrying Currencies Exchange Rate Amount

Foreign currency assets

Monetary items RMB $ 244,830 4.3500 $ 1,065,009 USD 24,527 31.0400 761,310 JPY 1,015,720 0.2878 292,324 Non-monetary items Investments accounted for using the equity method RMB 1,213,465 4.3500 5,278,573 EUR 77,883 33.9500 2,644,113

December 31, 2018

Foreign Carrying Currencies Exchange Rate Amount

Foreign currency assets

Monetary items RMB $ 289,576 4.4720 $ 1,294,982 USD 29,859 30.7150 917,123 JPY 2,765,664 0.2782 769,408 Non-monetary items Investments accounted for using the equity method RMB 1,326,111 4.4720 5,930,370 EUR 72,973 35.2000 2,568,646

Foreign currency liabilities

Monetary item JPY 556,293 0.2782 154,761

- 62 - September 30, 2018

Foreign Exchange Rate Carrying Currencies (Note) Amount

Foreign currency assets

Monetary items RMB $ 462,793 4.4360 $ 2,052,949 USD 21,325 30.5250 650,938 JPY 1,668,554 0.2692 449,175 Non-monetary items Investments accounted for using the equity method RMB 1,311,665 4.4360 5,818,545 EUR 66,518 35.4800 2,360,064

Foreign currency liabilities

Monetary item USD 6,677 6.8812 203,816 (USD:RMB)

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

For the three months ended September 30, 2019 and 2018 and for the nine months ended September 30, 2019 and 2018, net foreign exchange losses were $37,634 thousand and $49,977 thousand, $12,303 thousand and $7,833 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions.

35. SEPARATELY DISCLOSED ITEMS

Except for those listed in Notes 7, 11 and 29 and Tables 1 to 9, there were no other separately disclosed items.

36. SEGMENT INFORMATION

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

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

Segment Revenues Segment Income or Loss For the Nine Months Ended For the Nine Months Ended September 30 September 30 2019 2018 2019 2018

Vehicle manufacturing $ 21,844,885 $ 23,118,668 $ 1,110,820 $ 3,376,943 Channel 2,734,759 4,123,002 7,500 16,673 Others 51,181 61,683 (10,965) (6,125) Adjustment and eliminations (231,682) (182,241) (629) - $ 24,399,143 $ 27,121,112 1,106,726 3,387,491 Administration cost and remunerations of directors (211,400) (267,209) Other non-operating income and expenses, net 82,899 402,900

Profit before income tax $ 978,225 $ 3,523,182

Intersegment transactions were accounted for according to market prices.

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

- 64 - TABLE 1

CHINA MOTOR CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Actual Collateral Financing Limit Financial Highest Balance Business Reason for Allowance for Aggregate Related Ending Balance Borrowing Interest Nature of for Each No. Lender Borrower Statement for the Period Transaction Short-term Impairment Financing Limit Parties (Note 1) Amount Rate (%) Financing Item Value Borrower Account (Note 1) Amount Financing Loss (Note 3) (Notes 1 and 4) (Note 2)

0 China Motor Sino Diamond Motors Other receivables Yes $ 700,000 $ 700,000 $ 700,000 1.1 Short-term $ - Working capital $ - - $ - $ 1,252,685 $ 8,351,232 Corporation financing

1 Hwa-Lin Sichuan Huafeng Other receivables Yes 67,698 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Hanwei (US$ 1,200 financing thousand and RMB 7,000 thousand) Guangzhou Huayou Other receivables Yes 91,288 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Motor Maintenance (US$ 1,960 financing thousand and RMB 7,000 thousand) Dongguan Huayi Other receivables Yes 110,813 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (US$ 3,570 financing thousand) Dongguan Huashun Other receivables Yes 30,450 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 7,000 financing thousand)

2 Guangzhou Huayou Guangzhou Huayou Other receivables Yes 435,000 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Motor Maintenance Motor Sales (RMB 100,000 financing thousand) Tianjin Hwahong Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 10,000 financing thousand) Sichuan Huafeng Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Hanwei (RMB 10,000 financing thousand) Dongguan Huashun Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 10,000 financing thousand) Dongguan Huayi Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 10,000 financing thousand)

3 Sichuan Huafeng Sichuan Lingwei Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Hanwei (RMB 10,000 financing thousand) Tianjin Hwahong Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 10,000 financing thousand) Guangzhou Huayou Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Motor Maintenance (RMB 10,000 financing thousand) Dongguan Huashun Other receivables Yes 130,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 30,000 financing thousand)

(Continued)

- 65 -

Actual Collateral Financing Limit Financial Highest Balance Business Reason for Allowance for Aggregate Related Ending Balance Borrowing Interest Nature of for Each No. Lender Borrower Statement for the Period Transaction Short-term Impairment Financing Limit Parties (Note 1) Amount Rate (%) Financing Item Value Borrower Account (Note 1) Amount Financing Loss (Note 3) (Notes 1 and 4) (Note 2)

Dongguan Huayi Other receivables Yes $ 130,500 $ - $ - - Short-term $ - Working capital $ - - $ - $ 1,252,685 $ 8,351,232 (RMB 30,000 financing thousand)

4 Tianjin Hwarui Tianjin Hwahong Other receivables Yes 43,500 43,500 - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 10,000 (RMB 10,000 financing thousand) thousand) Guangzhou Huayou Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Motor Maintenance (RMB 10,000 financing thousand) Dongguan Huayi Other receivables Yes 130,500 87,000 - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 30,000 (RMB 20,000 financing thousand) thousand) Dongguan Huashun Other receivables Yes 130,500 87,000 - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 30,000 (RMB 20,000 financing thousand) thousand)

5 Tianjin Hwahong Tianjin Hwarui Other receivables Yes 217,500 87,000 - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 50,000 (RMB 20,000 financing thousand) thousand) Sichuan Huafeng Other receivables Yes 87,000 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Hanwei (RMB 20,000 financing thousand) Dongguan Huayi Other receivables Yes 87,000 87,000 - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 20,000 (RMB 20,000 financing thousand) thousand) Dongguan Huashun Other receivables Yes 87,000 87,000 - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 20,000 (RMB 20,000 financing thousand) thousand) Guangzhou Huayou Other receivables Yes 130,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Motor Maintenance (RMB 30,000 financing thousand)

6 Dongguan Huayi Dongguan Huashun Other receivables Yes 217,500 87,000 - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 50,000 (RMB 20,000 financing thousand) thousand)

7 Dongguan Huashun Dongguan Huayi Other receivables Yes 87,000 87,000 43,500 3.915 Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 20,000 (RMB 20,000 (RMB 10,000 financing thousand) thousand) thousand) Sichuan Huafeng Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Hanwei (RMB 10,000 financing thousand) Tianjin Hwahong Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 (RMB 10,000 financing thousand) Guangzhou Huayou Other receivables Yes 43,500 - - - Short-term - Working capital - - - 1,252,685 8,351,232 Motor Maintenance (RMB 10,000 financing thousand)

8 Gatech Holding Ltd. Gatech Suzhou Other receivables Yes 46,560 46,560 - - Short-term - Working capital - - - 1,252,685 8,351,232 (US$ 1,500 (US$ 1,500 financing thousand) thousand)

Note 1: At spot exchange rates on September 30, 2019; US$1=NT$31.04, RMB1=NT$4.35. Note 2: The amount is 3% of the total shareholders’ equity of the latest financial statements of China Motor Corporation. Note 3: The amount is 20% of the total shareholders’ equity of the latest financial statements of China Motor Corporation. Note 4: Eliminated.

(Concluded)

- 66 - TABLE 2

CHINA MOTOR CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Endorsee/Guarantee Receiver Maximum Ratio of Outstanding Endorsement/ Endorsement/ Endorsement/ Amount Accumulated Endorsement/ Amount Guarantee Guarantee Guarantee Limit on Endorsement/ Endorsed/ Actual Endorsement/ Guarantee at the Endorsed/ Aggregate Endorsement/ Given by Given by Given on Behalf No. Endorser/Guarantor Guarantee Given on Guaranteed Borrowing Guarantee to Net Name Relationship End of the Guaranteed by Guarantee Limit Parent on Subsidiary on of Company in Behalf of Each Party During the Amount Equity in Latest Period Collaterals Behalf of Behalf of Mainland Period Financial (Note) Subsidiary Parent China (Note) Statements (%)

1 Sino Diamond Motors Guangzhou Huayou Subsidiary 20% of the Corporation’s $ 217,500 $ 217,500 $ - $ - 0.52 50% of the Corporation’s issued No No Yes Motor Maintenance issued capital, (RMB 50,000 (RMB 50,000 capital, $2,768,102 thousand $1,107,241 thousand thousand) thousand) Tianjin Hwarui Subsidiary 20% of the Corporation’s 217,500 217,500 - - 0.52 50% of the Corporation’s issued No No Yes issued capital, (RMB 50,000 (RMB 50,000 capital, $2,768,102 thousand $1,107,241 thousand thousand) thousand) Sichuan Huafeng Hanwei Subsidiary 20% of the Corporation’s 217,500 217,500 - - 0.52 50% of the Corporation’s issued No No Yes issued capital, (RMB 50,000 (RMB 50,000 capital, $2,768,102 thousand $1,107,241 thousand thousand) thousand) Dongguan Huayi Subsidiary 20% of the Corporation’s 217,500 217,500 - - 0.52 50% of the Corporation’s issued No No Yes issued capital, (RMB 50,000 (RMB 50,000 capital, $2,768,102 thousand $1,107,241 thousand thousand) thousand)

Note: At spot exchange rate on September 30, 2019; RMB1=NT$4.35.

- 67 - TABLE 3

CHINA MOTOR CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

September 30, 2019 Relationship with Number of Carrying Percentage Holding Company Name Type and Name/Issuer of Marketable Security the Holding Financial Statement Account Note Shares (In Amount of Fair Value Company Thousands) (Note 3) Ownership

China Motor Corporation Beneficiary certificates Franklin Templeton SinoAm Money Market - Financial assets at fair value through profit or loss - 4,867 $ 50,444 - $ 50,444 current Fubon Chi Hsiang Money Market Fund - Financial assets at fair value through profit or loss - 3,205 50,402 - 50,402 current The RSIT Enhanced Money Market Fund - Financial assets at fair value through profit or loss - 4,201 50,399 - 50,399 current CTBC Hua Win Money Market Fund - Financial assets at fair value through profit or loss - 2,738 30,254 - 30,254 current UPAMC James Bond Money Market Fund - Financial assets at fair value through profit or loss - 1,806 30,251 - 30,251 current Hua Nan Phoenix Money Market Fund - Financial assets at fair value through profit or loss - 1,856 30,252 - 30,252 current Sinopac Money Market Fund - Financial assets at fair value through profit or loss - 2,167 30,241 - 30,241 current Paradigm Pion Money Market - Financial assets at fair value through profit or loss - 2,610 30,236 - 30,236 current Prudential Financial Money Market Fund - Financial assets at fair value through profit or loss - 1,906 30,232 - 30,232 current Cathay Taiwan Money Market Fund - Financial assets at fair value through profit or loss - 2,423 30,213 - 30,213 current Fubon China Policy Bank Bond ETF - Financial assets at fair value through profit or loss - 1,500 29,685 - 29,685 current

Shares Shye Shyang Mechanical Industrial Corporate director Financial assets at fair value through profit or loss - 9,009 627,795 10.00 627,795 non-current Myson Century, Inc. Corporate director Financial assets at fair value through other 4,705 24,699 7.84 24,699 comprehensive income - non-current Carnival - Financial assets at fair value through other 135 1,271 0.05 1,271 comprehensive income - non-current Taiwan Aerospace - Financial assets at fair value through other 811 11,746 0.60 11,746 comprehensive income - non-current Com2B (Cayman) Corp. - Financial assets at fair value through other 2,000 - 4.44 - comprehensive income - non-current NORM Pacific Automation Corp. - Financial assets at fair value through other 128 1,663 0.45 1,663 comprehensive income - non-current

(Continued)

- 68 -

September 30, 2019 Relationship with Number of Carrying Percentage Holding Company Name Type and Name/Issuer of Marketable Security the Holding Financial Statement Account Note Shares (In Amount of Fair Value Company Thousands) (Note 3) Ownership

Corporate bonds Taiwan Acceptance Corp. Associate Financial assets at amortized cost - non-current - $ 248,456 - $ - Gatetech Technology Subsidiary Financial assets at amortized cost - non-current - 150,000 - - (Note 1) Morgan Stanley - Financial assets at amortized cost - non-current - 130,427 - - Evergreen Marine Corporation - Financial assets at amortized cost - non-current - 99,922 - - Crédit Agricole Corporate and Investment Bank SA - Financial assets at amortized cost - non-current - 86,933 - - Fonterra Co-operative Group Ltd. - Financial assets at amortized cost - non-current - 43,503 - - Deutsche Bank Aktiengesellschaft, Singapore Branch - Financial assets at amortized cost - non-current - 43,466 - -

Principle guaranteed notes President Securities 100% Principle Guaranteed Note - Financial assets at amortized cost - current - 86,459 - -

Sino Diamond Motors Beneficiary certificates CTBC Hua Win Money Market Fund - Financial assets at fair value through profit or loss - 18,104 200,005 - 200,005 current

KSIHK Shares Beijing NTN-SEOHAN Driveshaft - Financial assets at fair value through other - 33,815 9.00 33,815 comprehensive income - non-current (RMB 7,774 thousand)

Alliance Investment & Management Shares Samuel (Cayman) Co., Ltd. - Financial assets at fair value through other 6,327 101,481 15.07 101,481 comprehensive income - non-current CARPLUS Auto Leasing Corporation - Financial assets at fair value through profit or loss - 3,248 68,013 3.45 68,013 non-current T-Car Inc. - Financial assets at fair value through other 1,275 20,987 4.05 20,987 comprehensive income - non-current Solidlite Corporation - Financial assets at fair value through other 789 5,806 3.60 5,806 comprehensive income - non-current Site information service - Financial assets at fair value through other 65 2,678 0.54 2,678 comprehensive income - non-current Phalanx Biotech Group - Financial assets at fair value through other 696 1,252 1.13 1,252 comprehensive income - non-current

Preference shares Rock Financial Risk Service Co., Ltd. - Financial assets at amortized cost - non-current - 6,684 - -

Hwa Lin Principle guaranteed notes President Securities 100% Principle Guaranteed Note - Financial assets at amortized cost - current - 280,846 - -

Brilliant Insight International Beneficiary certificates Taishin Ta-Chong Money Market - Financial assets at fair value through profit or loss - 74 1,055 - 1,055 current

China Engine Beneficiary certificates Hua Nan Phoenix Money Market Fund - Financial assets at fair value through profit or loss - 3,687 60,093 - 60,093 current

(Continued)

- 69 -

Note 1: Eliminated.

Note 2: Refer to Tables 6 and 7 for the information of investments in subsidiaries and associates.

Note 3: At spot exchange rate on September 30, 2019; RMB1=NT$4.35.

(Concluded)

- 70 - TABLE 4

CHINA MOTOR CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars)

Notes/Accounts Transaction Details Abnormal Transaction Receivable (Payable) Seller/Buyer Related Party Relationship % to % to Note Purchase/ Amount Total Payment Terms Unit Price Payment Terms Ending Balance Total Sale (Note 2) (Note 2)

China Motor Corporation Fortune Motors Equity-method investee Sale $ (13,573,727) (67) Collect after 16-60 days of delivery $ - - $ 1,274,819 55 (“CMC”) Shung Ye Motor Equity-method investee Sale (3,092,762) (15) Collect after 16-60 days of delivery - - 308,474 13 Mitsubishi Corp. Director of CMC Purchase 917,385 8 Pay after 7 days of cargo ship out - - (333) - Uni Auto Parts Manufacture Equity-method investee Purchase 487,968 4 Pay after 45 days of the month of - - (48,225) (3) delivery Kian Shen (Note 1) Subsidiary Purchase 433,978 4 Pay after 45 days of the month of - - (57,490) (3) delivery ROC-Spicer Equity-method investee Purchase 305,719 3 Pay after 45 days of the month of - - (26,484) (1) delivery Shye Shyang Mechanical CMC serves as director Purchase 228,536 2 Pay after 45 days of the month of - - (33,604) (2) Industrial delivery COC (Note 1) Subsidiary Purchase 223,762 2 Pay after 45 days of the month of - - (34,766) (2) delivery Uni-Calsonic Corp. Equity-method investee Purchase 106,969 1 Pay after 45 days of the month of - - (17,601) (1) delivery Yue Ki Industrial Equity-method investee Purchase 105,615 1 Pay after 45 days of the month of - - (15,842) (1) delivery

Sino Diamond Motors Shung Ye Motor Equity-method investee Sale (1,436,295) (65) Collect after 7-45 days of delivery - - 69,957 86 Fortune Motors Equity-method investee Sale (633,099) (29) Collect after 16-45 days of delivery - - 4,413 5 Mitsubishi Corp. Director of CMC Purchase 901,659 67 Pay before 10 days of cargo ship - - (54) - out

Kian Shen China Motor Corporation Parent company Sale (433,978) (48) Collect after 45 days of the month - - 57,490 48 (Note 1) of delivery Yue Ki Industrial Equity-method investee Purchase 117,921 16 Collect after 105 days of the month - - (49,971) (21) of sale

COC China Motor Corporation Parent company Sale (223,762) (35) Collect after 45 days of the month - - 34,766 14 (Note 1) of delivery Yulon Equity-method investee Sale (159,638) (25) Collect after 45 days of the month - - 23,530 10 of delivery Yulon Equity-method investee Purchase 128,048 27 Collect after 75 days of the month - - (22,700) (13) of sale

(Continued)

- 71 -

Notes/Accounts Transaction Details Abnormal Transaction Receivable (Payable) Seller/Buyer Related Party Relationship % to % to Note Purchase/ Amount Total Payment Terms Unit Price Payment Terms Ending Balance Total Sale (Note 2) (Note 2)

China Engine Hua-Chuang Automobile Equity-method investee Sale $ (148,846) (61) Collect after 90 days of the month $ - - $ 72,619 84 Information Technical of sale Center

Note 1: Eliminated.

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

(Concluded)

- 72 - TABLE 5

CHINA MOTOR CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars)

Overdue Amounts Allowance for Received in Company Name Related Party Relationship Ending Balance Turnover Rate Impairment Amount Actions Taken Subsequent Loss Period

China Motor Corporation Fortune Motors Equity-method investee $ 1,274,819 17.47 $ - - $ 1,274,372 $ - Shung Ye Motor Equity-method investee 308,474 13.91 - - 306,243 -

- 73 - TABLE 6

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investment Amount As of September 30, 2019 Net Income Number of Share of Profit Investor Company Investee Company Location Main Business and Product September 30, December 31, Carrying (Loss) of the Note Shares (In % (Loss) 2019 2018 Amount Investee Thousands)

China Motor Corporation Yulon (Note 5) Miaoli, Taiwan Manufacture and sale of vehicles $ 3,835,585 $ 3,835,585 262,228 16.80 $ 10,864,068 $ (2,507,501) $ (436,702) Equity-method investee Kian Shen (Note 1) Taoyuan, Taiwan The production of frame of heavy duty car and mold 344,800 344,800 32,201 43.87 2,025,794 198,507 87,232 Subsidiary Fortune Motors Taipei, Taiwan Sales and providing after-sales service of vehicle 2,132,826 2,132,826 132,117 41.93 4,352,779 884,112 370,708 Equity-method investee Sino Diamond Motors (Note 1) Taipei, Taiwan Sales and providing after-sales service of vehicle 3,463,724 3,463,724 278,167 100.00 2,386,580 (355,142) (349,207) Subsidiary Tokio Marine Newa Insurance Taipei, Taiwan Property insurance 955,941 955,941 61,511 20.57 1,981,781 774,053 159,223 Equity-method investee (Note 2) Alliance Investment & Management Taipei, Taiwan Investment 1,200,030 1,200,030 183,000 100.00 1,289,716 (320,138) (320,138) Subsidiary (Note 1) Daimler Vans Hong Kong Ltd. Hong Kong Investment 2,011,363 2,011,363 46,566 32.45 2,644,113 1,829,315 593,613 Equity-method investee ROC-Spicer Taoyuan, Taiwan Manufacture and sales of automobile parts 675,896 675,896 145 29.00 594,967 136,293 39,713 Equity-method investee CMI (Note 1) Samoa Investment 1,402 1,402 40 100.00 893,741 (244,803) (244,803) Subsidiary COC (Note 1) Taoyuan, Taiwan The production of mold, fixture and gauge of vehicle 412,125 412,125 33,565 49.76 748,379 48,336 24,039 Subsidiary Hwa Wei (Note 1) British Virgin Islands Overseas investment on production and service industries 1,202 1,202 40 40.00 594,354 (408,102) (163,241) Subsidiary Hua-Chuang Automobile Information Taipei, Taiwan Product design 1,028,013 1,028,013 56,600 17.25 - (3,875,872) (497,906) Equity-method investee Technical Center Uni Auto Parts Manufacture Miaoli, Taiwan The production of mold, fixture and gauge of vehicle 109,813 109,813 13,032 15.00 392,694 24,115 3,598 Equity-method investee Shung Ye Motor (Notes 3 and 6) Taipei, Taiwan Sales and providing after-sales service of vehicle 391,142 391,142 29,668 39.98 384,636 40,891 16,348 Equity-method investee Gatetech Technology (Note 1) Taoyuan, Taiwan Aluminum-magnesium alloy casting industry 474,941 474,941 32,494 56.53 322,027 17,994 10,169 Subsidiary China Engine (Note 1) Taoyuan, Taiwan Manufacture of automobile engine and parts 320,000 320,000 32,000 18.95 142,769 (34,601) (3,409) Subsidiary Uni-Calsonic Miaoli, Taiwan Manufacture and sale of automobile parts 105,806 105,806 6,084 31.20 137,481 22,856 7,139 Equity-method investee Yueki Industrial Co., Ltd. Hsinchu, Taiwan Manufacture and sales of car components 109,396 109,396 2,936 15.08 116,404 (30,899) (4,659) Equity-method investee Sin Gan Taipei, Taiwan Wholesale, repair and other service of vehicles - 71,316 - - - 17,070 4,211 Equity-method investee Sin Jang Taipei, Taiwan Retail and wholesale of second-hand vehicle - 85,893 - - - 8,263 1,653 Equity-method investee Tai-Ya Investment Hong Kong Investment 79,505 79,505 2,242 29.00 69,954 (20,167) (5,849) Equity-method investee Hwa Chung Motors (Note 1) Taoyuan, Taiwan Manufacture and sale of vehicles 328,900 328,900 8,790 100.00 72,984 9,071 9,071 Subsidiary Yulon IT Solutions Taipei, Taiwan Information software wholesale services - 83,320 - - - (4,366) (1,915) Equity-method investee

Kian Shen Kian Shen Investment (Note 1) British Virgin Islands Investment 328,888 328,888 10,296 100.00 3,995,295 283,783 - Subsidiary

Kian Shen Investment KSIHK (Note 1) Hong Kong Investment US$ 25,907 US$ 25,907 25,907 100.00 RMB 897,125 RMB 52,392 - Subsidiary thousand thousand thousand thousand

Alliance Investment & Hua-Chuang Automobile Information Taipei, Taiwan Product design 473,760 473,760 26,715 8.14 - (3,875,872) - Equity-method investee Management Technical Center Greentrans Investment (Note 1) Samoa Investment 344,369 344,369 11,200 100.00 247,686 (11,815) - Subsidiary Gatetech Technology (Note 1) Taoyuan, Taiwan Aluminum-magnesium alloy casting industry 145,123 145,123 4,169 7.26 41,370 17,994 - Subsidiary

Sino Diamond Motors Hua-Yu (Note 1) Samoa Overseas investment on production and service industries 1,489,334 1,758,773 36,943 100.00 680,985 (22,005) - Subsidiary Hua-Chuang Automobile Information Taipei, Taiwan Product design 473,760 473,760 26,715 8.14 - (3,875,872) - Equity-method investee Technical Center China Engine (Note 1) Taoyuan, Taiwan Manufacture of automobile engine and parts 616,000 616,000 56,000 33.16 305,984 (34,601) - Subsidiary Gatetech Technology (Note 1) Taoyuan, Taiwan Aluminum-magnesium alloy casting industry 149,369 149,369 5,186 9.02 51,441 17,994 - Subsidiary Brilliant Insight International (Note 1) Taoyuan, Taiwan Consulting and service 22,000 22,000 2,200 100.00 11,425 (9,811) - Subsidiary Shung Ye Motor (Note 4) Taipei, Taiwan Sales and providing after-sales service of vehicle 180 180 12 0.02 213 40,891 - Equity-method investee Fortune Motors Taipei, Taiwan Sales and providing after-sales service of vehicle 24 24 1 - 14 884,112 - Equity-method investee

Hua-Yu Hwa-Lin (Note 1) British Virgin Islands Overseas investment on production and service industries US$ 37,229 US$ 45,929 33,393 100.00 592,008 (21,638) - Subsidiary thousand thousand

(Continued)

- 74 -

Investment Amount As of September 30, 2019 Net Income Number of Share of Profit Investor Company Investee Company Location Main Business and Product September 30, December 31, Carrying (Loss) of the Note Shares (In % (Loss) 2019 2018 Amount Investee Thousands)

Gatetech Technology GH (Note 1) Samoa Investment $ 647,041 $ 647,041 $ 20,130 100.00 $ 617,899 $ 7,813 - Subsidiary

GH GI (Note 1) Samoa Investment US$ 20,268 US$ 20,268 20,268 100.00 617,873 7,813 - Subsidiary thousand thousand

China Engine Advance Power Investment (Note 1) Mauritius Reinvestment and sales 59,456 59,456 3,750 100.00 97,755 - - Subsidiary Advance Power Machinery (Note 1) Miaoli, Taiwan Manufacture of vehicle and parts 5,000 5,000 500 100.00 10,370 271 - Subsidiary

CMI Hwa Wei (Note 1) British Virgin Island Overseas investment on production and service industries 1,428,503 1,428,503 60 60.00 891,532 (408,102) - Subsidiary

Hwa Chung Motors Ling Wei (Note 1) Taipei, Taiwan Sales of second-hand vehicle 31,000 31,000 3,608 100.00 34,418 8,884 - Subsidiary Greentrans (Note 1) Taipei, Taiwan Sales of motorcycle and parts 10,000 10,000 1,000 100.00 10,452 100 - Subsidiary

COC Y. M. Hi-Tech (Note 1) Taoyuan, Taiwan Steel cutting 46,250 46,250 4,250 85.00 63,624 5,081 - Subsidiary Shye Shinn (Note 1) British Virgin Islands Investment US$ 968 US$ 968 968 100.00 40,420 282 - Subsidiary thousand thousand

Note 1: Eliminated.

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

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

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

Note 5: During preparation of the consolidated financial statements, sidestream transaction of $3,285 thousand had been eliminated.

Note 6: During preparation of the consolidated financial statements, sidestream transaction of $1,197 thousand had been eliminated.

(Concluded)

- 75 - TABLE 7

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Accumulated Remittance of Funds Accumulated Accumulated Outward Outward % Ownership Carrying Amount Repatriation of Remittance for Remittance for Net Income (Loss) Investment Main Businesses and Paid-in Capital of Direct or as of Investment Investee Company Method of Investment Investment from Investment from of the Investee Gain (Loss) Products (Note 1) Outward Inward Indirect September 30, Income as of Taiwan as of Taiwan as of (Notes 2 and 3) (Notes 2 and 3) Investment 2019 (Note 1) September 30, January 1, 2019 September 30, 2019 (Note 1) (Note 1) 2019 (Note 1)

South East (Fujian) Motor Manufacture and sales of $ 4,283,520 The Corporation indirectly owns these $ 1,070,880 $ - $ - $ 1,070,880 $ (2,068,486) 25.00 $ (517,122) $ 1,356,144 $ 807,754 (Note 4) industrial automation (US$ 138,000 investees through investment (US$ 34,500 (US$ 34,500 (US$ 26,023 products thousand) company registered in a third region thousand) thousand) thousand)

China Engine (Fujian) Manufacture and sales of 465,600 The Corporation indirectly owns these 232,800 - - 232,800 - 38.03 - 194,461 - engines and engine parts (US$ 15,000 investees through investment (US$ 7,500 (US$ 7,500 thousand) company registered in a third region thousand) thousand)

Fujian Benz Automotive Sales of industrial automation 9,743,650 The Corporation indirectly owns these 1,580,916 - - 1,580,916 3,659,544 16.23 593,754 2,641,853 402,070 products (EUR 287,000 investees through investment (EUR 46,566 (EUR 46,566 (EUR 104,858 (EUR 17,013 (EUR 77,816 (EUR 11,843 thousand) company registered in a third region thousand) thousand) thousand) thousand) thousand) thousand)

Guangzhou NTN-YULON Sales and manufacture of 388,000 The Corporation indirectly owns these 155,200 - - 155,200 513,218 17.55 205,827 1,764,532 489,018 Drivertrain vehicles’ components (US$ 12,500 investees through investment (US$ 5,000 (US$ 5,000 (RMB 113,544 (RMB 45,418 (RMB 405,639 (RMB 112,418 thousand) company registered in a third region thousand) thousand) thousand) thousand) thousand) thousand)

Fuzhou Fushiang Motor Sales and manufacture of 551,891 The Corporation indirectly owns these 87,998 - - 87,998 (87,409) 15.35 (30,593) 565,400 154,582 Industrial vehicles’ components (US$ 17,780 investees through investment (US$ 2,835 (US$ 2,835 (RMB -19,338 (RMB -6,768 (RMB 129,977 (RMB 35,536 thousand) company registered in a third region thousand) thousand) thousand) thousand) thousand) thousand)

Xiangyang NTN-YULON Sales and manufacture of 1,055,360 The Corporation indirectly owns these - - - - 308,818 17.55 123,527 810,182 - Drivertrain vehicles’ components (US$ 34,000 investees through investment (RMB 68,323 (RMB 27,329 (RMB 186,249 thousand) company registered in a third region thousand) thousand) thousand)

Xiamen King-Long Sales and manufacture of 417,600 The Corporation indirectly owns these 47,398 - - 47,398 (36,473) 21.94 (18,236) 225,343 - Kian-Shen Frame vehicles’ components (RMB 96,000 investees through investment (US$ 1,527 (US$ 1,527 (RMB -8,069 (RMB -4,035 (RMB 51,803 thousand) company registered in a third region thousand) thousand) thousand) thousand) thousand)

Beijing NTN-SEOHAN The assembling and extra work 186,240 The Corporation indirectly owns these 16,762 - - 16,762 - 3.95 - 33,815 - Driveshaft of transmission shafts and (US$ 6,000 investees through investment (US$ 540 (US$ 540 (RMB 7,774 other parts thousand) company registered in a third region thousand) thousand) thousand)

Jiangsu Greentrans Manufacture and sales of parts 347,648 The Corporation indirectly owns these 347,648 - - 347,648 (11,780) 100.00 (11,780) 247,636 - Automotive Parts (Note 5) of electronic motorcycles (US$ 11,200 investees through investment (US$ 11,200 (US$ 11,200 thousand) company registered in a third region thousand) thousand)

Fujian Spicer Manufacture of vehicles’ key 890,906 Go directly to the mainland China to 335,387 - - 335,387 46,934 29.00 13,611 374,794 - components, drive axle (RMB 204,806 invest (US$ 10,805 (US$ 10,805 assembly and engine parts thousand) thousand) thousand) series products

Shenyang Spicer Manufacture and sale of 373,782 The Corporation indirectly owns these 81,014 - - 81,014 (30,283) 20.25 (6,133) 69,051 - automobile transmission, (RMB 85,927 investees through investment (US$ 2,610 (US$ 2,610 (US$ -975 (US$ -198 (US$ 2,225 shafts, mechanical thousand) company registered in a third region thousand) thousand) thousand) thousand) thousand) transmission, shafts and components

(Continued)

- 76 -

Accumulated Remittance of Funds Accumulated Accumulated Outward Outward % Ownership Carrying Amount Repatriation of Remittance for Remittance for Net Income (Loss) Investment Main Businesses and Paid-in Capital of Direct or as of Investment Investee Company Method of Investment Investment from Investment from of the Investee Gain (Loss) Products (Note 1) Outward Inward Indirect September 30, Income as of Taiwan as of Taiwan as of (Notes 2 and 3) (Notes 2 and 3) Investment 2019 (Note 1) September 30, January 1, 2019 September 30, 2019 (Note 1) (Note 1) 2019 (Note 1)

Zhejiang Kangda Motor Sales of vehicle and parts $ 174,000 The Corporation indirectly owns these $ 37,496 - - $ 37,496 $ - - $ - $ - $ - Industry And Trading (RMB 40,000 investees through investment (US$ 1,208 (US$ 1,208 (Note 7) thousand) company registered in a third region thousand) thousand)

Fujian Rui Hua (Note 5) Consultation and services 105,536 The Corporation indirectly owns these 105,536 - - 105,536 (368) 100.00 (368) 88,937 - (US$ 3,400 investees through investment (US$ 3,400 (US$ 3,400 thousand) company registered in a third region thousand) thousand)

Guangzhou Huayou Motor Sales and maintenance of 397,622 The Corporation indirectly owns these 347,617 - - 347,617 7,092 100.00 7,092 35,420 - Maintenance (Notes 5 vehicle and parts (US$ 12,810 investees through investment (US$ 11,199 (US$ 11,199 and 6) thousand) company registered in a third region thousand) thousand)

Sichuan Huafeng Hanwei Sales and maintenance of 413,763 The Corporation indirectly owns these 413,763 - - 413,763 (330) 100.00 (330) 56,551 - (Notes 5 and 6) vehicle and parts (US$ 13,330 investees through investment (US$ 13,330 (US$ 13,330 thousand) company registered in a third region thousand) thousand)

Tianjin Hwarui (Note 5) Sales and maintenance of 248,941 The Corporation indirectly owns these 240,901 - - 240,901 (2,736) 100.00 (2,736) 202,784 - vehicle and parts (US$ 8,020 investees through investment (US$ 7,761 (US$ 7,761 thousand) company registered in a third region thousand) thousand)

Dongguan Huayi (Note 5) Sales and maintenance of 138,128 The Corporation indirectly owns these 130,896 - - 130,896 (23,045) 100.00 (23,045) 79,242 - vehicle and parts (US$ 4,450 investees through investment (US$ 4,217 (US$ 4,217 thousand) company registered in a third region thousand) thousand)

Sichuan Lingwei (Notes 5 Sales of vehicle and parts 8,700 The Corporation indirectly owns these - - - - (54) 100.00 (54) 152 - and 6) (RMB 2,000 investees through investment (RMB -12 (RMB -12 (RMB 35 thousand) company registered in a third region thousand) thousand) thousand)

Dongguan Huashun (Note 5) Sales of vehicle and parts 108,750 The Corporation indirectly owns these - - - - (14,464) 100.00 (14,464) 76,260 - (RMB 25,000 investees through investment (RMB -3,200 (RMB -3,200 (RMB 17,531 thousand) company registered in a third region thousand) thousand) thousand)

Tianjin Hwahong (Note 5) Sales of vehicle and parts 130,500 The Corporation indirectly owns these - - - - (1,121) 100.00 (1,121) 130,931 - (RMB 30,000 investees through investment (RMB -248 (RMB -248 (RMB 30,099 thousand) company registered in a third region thousand) thousand) thousand)

Guangzhou Huayou Motor Sales of vehicle and parts 187,050 The Corporation indirectly owns these - - - - 45 100.00 45 5,790 - Sales (Notes 5 and 6) (RMB 43,000 investees through investment (RMB 10 (RMB 10 (RMB 1,331 thousand) company registered in a third region thousand) thousand) thousand)

Gatech Suzhou (Note 5) Aluminum-magnesium alloy 754,272 The Corporation indirectly owns these 629,088 - - 629,088 7,734 72.81 7,734 599,509 - casting industry (US$ 24,300 investees through investment (US$ 20,267 (US$ 20,267 thousand) company registered in a third region thousand) thousand)

Accumulated Outward Remittance for Investment Investment Amount Authorized by Investment Limit on the Amount of Investment Stipulated by in Mainland China as of September 30, 2019 Commission, MOEA Investment Commission, MOEA (Note 1) (Note 1)

$6,043,754 $7,229,977 $25,053,695 (US$143,777 thousand and (US$218,195 thousand and EUR46,566 thousand) EUR13,467 thousand)

(Continued)

- 77 - Note 1: At spot exchange rates on September 30, 2019; US$1=NT$31.04, RMB1=NT$4.35, EUR1=NT$33.95.

Note 2: At the average exchange rates of the nine months ended September 30, 2019; US$1=NT$31.054, RMB1=NT$4.52, EUR1=NT$34.9.

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

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

Note 5: Eliminated.

Note 6: In November 2018, Sichuan Huafeng Hanwei, Sichuan Lingwei, Guangzhou Huayou Motor Maintenance and Guangzhou Huayou Motor Sales resolved to dissolve their respective companies. As of September 30, 2019, the liquidation has not been completed, while the annulment of Sichuan Lingwei was completed in July 2019.

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

(Concluded)

- 78 - TABLE 8

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (In Thousands of New Taiwan Dollars)

Transaction Details No. Company Name Related Party Relationship % to Total Financial Statement Account Amount Payment Terms Sales or Assets

0 China Motor Corporation Kian Shen Subsidiary Cost of goods sold $ 433,978 The prices and payment terms for related-party transactions were based on 1.78 market price which are not significantly different from those to third parties. COC Subsidiary Cost of goods sold 223,762 The prices and payment terms for related-party transactions were based on 0.92 market price which are not significantly different from those to third parties. Sino Diamond Motors Subsidiary Other receivables 700,000 The prices and payment terms were based on agreements. 1.14 Other operating revenue 114,210 The prices and payment terms for related-party transactions were based on 0.47 market price which are not significantly different from those to third parties. Gatetech Technology Subsidiary Financial operating revenue 150,000 The prices and payment terms were based on agreements. 0.24

Note 1: Eliminated.

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

- 79 - TABLE 9

CHINA MOTOR CORPORATION AND SUBSIDIARIES

INTERCOMPANY INVESTMENT RELATIONSHIPS AND PERCENTAGE RATE OF SHARE HELD FRAMEWORK SEPTEMBER 30, 2019

Parent Corporation

18.95% 100.00% 100.00% 56.53% 100.00% 49.76% 43.87% 100.00%

CMI Kian Shen Sino Diamond Alliance Gatetech Hwa Chung China Engine (Samoa) COC Motors Investment & Technology Motors Management

33.16% 7.26%

60.00% 100.00% 100.00% 85.00% 100.00% 9.02% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Advance Power Advance Power Hua-Yu Brilliant Insight Greentrans GH 40.00% Greentrans Ling Wei Y.M. Kian Shen Investment Machinery Investment (Samoa) International Investment (Samoa) Hi-Tech (British Virgin (Mauritius) Consultancy (Samoa)

Islands) Service 100.00% 100.00% Co., Ltd. 100.00% 100.00% 100.00% 100.00% Hwa-Lin GI Hwa Wei Holdings Shye Shinn KSIHK Fujian Rui Jiangsu (British Virgin (Samoa) (British Virgin (British Virgin (Hong Kong) Hua Greentrans Islands) Islands) Islands)

100.00% 100.00% 99.75% 100.00% 100.00% Gatech 0.25% (Suzhou) Dongguan Huayi Tianjin Hwarui Sichuan Huafeng Guangzhou Technology Hanwei Huayou Motor Maintenance

100.00% 100.00% 100.00%

Dongguan Tianjin Guangzhou Huashun Hwahong Huayou Motor Sales

- 80 -