APC — Annual Report 2017

Nov 13, 2017

Asia Polymer Corporation

Financial Statements for the Years Ended December 31, 2017 and 2016 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Asia Polymer Corporation

Opinion

We have audited the accompanying financial statements of Asia Polymer Corporation (the “Company”), which comprise the balance sheets as of December 31, 2017 and 2016, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2017. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters related to the Company’s financial statements for the year ended December 31, 2017 are stated as follows:

Revenue Recognition

The increase in sales revenue of the Company in 2017 was due to sales of products with new specifications produced by a new production line, which accounted for approximately 29% of net operating revenue. In addition, the new products were sold mainly to new customers and the Company’s parent company. Therefore, revenue recognition has been identified as a key audit matter.

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The audit procedures performed in response to the risk were as follows:

1. We obtained an understanding of the design and implementation of the new product's internal controls and tested if these controls were performed effectively. Such controls include credit assessments of customers, revenue recognition and receivables collection.

2. We sampled and inspected new product purchase orders from customers, shipping confirmations and receivables collection receipts in order to verify the accuracy of sales revenue.

3. We reviewed sales returns and discounts recognized and the amounts received in subsequent periods to assess for any abnormalities.

Valuation of Inventory

As of December 31, 2017, the carrying amount of inventory was NT$745,434 thousand (i.e. the gross amount of inventory of NT$756,115 thousand with a deduction for the allowance for inventory valuation and obsolescence losses of NT$10,681 thousand). Refer to Note 11 to the Company’s financial statements for details.

Inventories of the Company are stated on the lower of cost or net realizable value. The net realizable value is subject to price fluctuations of ethylene. With volatile oil prices worldwide, such valuation of inventory requires significant judgment from management; therefore, the valuation of inventory has been identified as a key audit matter.

The audit procedures performed in response to the risk were as follows:

1. We obtained an understanding of the reasonableness of the Company’s policy and methods for the allowance for losses on obsolete inventory.

2. We obtained the evaluation documents of the allowance for losses on obsolete inventory from management. We sampled and inspected the latest inventory quotations or sales invoices to verify basis of the evaluation and whether it is appropriate.

3. By performing a year-end inventory observation, we understood the inventory status and evaluated the reasonableness of the allowance for losses on obsolete inventory.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the audit committee) are responsible for overseeing the Company’s financial reporting process.

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Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with statements that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2017 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation preludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent audits’ report are Hsiu-Chun Huang and Shih-Tsung Wu.

Deloitte & Touche Taipei, Taiwan Republic of China March 12, 2018

Notice to Readers

The accompanying financial statements are intended only to present the 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 audit such financial statements are those generally applied in the Republic of China.

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

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ASIA POLYMER CORPORATION

BALANCE SHEETS DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Available-for-sale financial assets - current (Notes 4 and 8) Notes receivable (Notes 4, 5 and 10) Accounts receivable from unrelated parties (Notes 4, 5 and 10) Accounts receivable from related parties (Notes 4, 5, 10 and 28) Other receivables (Note 4) Other receivables from related parties (Notes 4 and 28) Inventories (Notes 4, 5 and 11) Prepayments Other current assets Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current (Notes 4 and 8) Financial assets measured at cost - non-current (Notes 4 and 9) Investments accounted for using the equity method (Notes 4, 12 and 29) Property, plant and equipment (Notes 4 and 13) Investment properties (Notes 4 and 14) Other intangible assets (Notes 4 and 15) Deferred tax assets (Notes 4 and 23) Other non-current assets (Note 25) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 16) Short-term bills payable (Note 16) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Accounts payable to unrelated parties (Note 17) Accounts payable to related parties (Notes 17 and 28) Other payables to unrelated parties (Note 18) Other payables to related parties (Note 28) Current tax liabilities (Notes 4 and 23) Provisions - current (Notes 4 and 19) Current portion of long-term borrowings (Note 16) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 16) Deferred tax liabilities (Notes 4 and 23) Net defined benefit liabilities - non-current (Notes 4, 5 and 20) Other non-current liabilities (Note 25) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 21 and 23) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2017 Amount % $ 1,815,129 12 1,379,447 9 85,936 1 1,627 - 489,782 3 143,594 1 1,176 - 6,296 - 745,434 5 122,043 1 110 - 4,790,574 32 2,403,409 16 193,775 1 3,309,037 22 3,630,715 25 433,504 3 318 - 56,574 1 2,168 - 10,029,500 68 $ 14,820,074 100 $ 500,000 4 699,834 5 666 - 108,284 1 29,568 - 150,882 1 302,627 2 40,690 - 5,899 - 450,000 3 6,332 - 2,294,782 16 2,450,000 17 39,902 - 212,209 1 6,711 - 2,708,822 18 5,003,604 34 5,181,147 35 16,434 - 1,627,934 11 565,379 4 2,061,039 14 4,254,352 29 364,537 2 9,816,470 66 $ 14,820,074 100		2016
				Amount % $ 2,545,667 18 1,490,012 10 40,569 - 1,789 - 727,801 5 195,813 1 944 - 58,733 - 662,327 5 162,313 1 110 - 5,886,078 40 2,363,564 16 214,769 2 1,866,647 13 3,795,283 26 434,234 3 1,272 - 53,997 - 2,227 - 8,731,993 60 $ 14,618,071 100 $ 950,000 6 699,791 5 1,732 - 241,803 2 34,574 - 266,552 2 118,296 1 48,424 - 5,899 - - - 14,717 - 2,381,788 16 2,450,000 17 43,240 - 239,127 2 6,711 - 2,739,078 19 5,120,866 35 5,030,240 35 14,046 - 1,561,352 10 565,379 4 2,026,291 14 4,153,022 28 299,897 2 9,497,205 65 $ 14,618,071 100

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

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ASIA POLYMER CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET REVENUE (Notes 4, 5 and 28) OPERATING COSTS (Notes 4, 11, 20, 22 and 28) GROSS PROFIT OPERATING EXPENSES (Notes 20, 22 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 12, 22 and 28) Other income Other losses Interest expense Share of profit or loss of associates Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 20, 21 and 23) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Share of the other comprehensive loss of associates accounted for using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss		2017 Amount % $ 6,241,496 100 5,556,727 89 684,769 11 105,253 2 106,318 2 6,226 - 217,797 4 466,972 7 163,928 3 (50,793) (1) (41,762) (1) 114,334 2 185,707 3 652,679 10 87,325 1 565,354 9 (12,161) - (1,209) - 2,067 - (11,303) -		2016
				Amount % $ 5,749,060 100 4,982,646 87 766,414 13 95,273 1 99,835 2 6,583 - 201,691 3 564,723 10 151,424 3 (11,392) - (21,895) (1) 107,404 2 225,541 4 790,264 14 119,325 2 670,939 12 (24,935) (1) (8,110) - 4,239 - (28,806) (1) (Continued)

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ASIA POLYMER CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized gain on available-for-sale financial assets Share of the other comprehensive income (loss) of associates accounted for using the equity method Income tax relating to items that may be reclassified subsequently to profit or loss Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Former owners of business contribution under common control TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Former owners of business contribution under common control EARNINGS PER SHARE (Note 24) Basic Diluted		2017 Amount % $ (44,287) (1) 99,107 2 3,438 - 6,382 - 64,640 1 53,337 1 $ 618,691 10 $ 565,354 9 - - $ 565,354 9 $ 618,691 10 - - $ 618,691 10 $ 1.09 $ 1.09		2016
				Amount % $ (36,266) (1) 489,480 9 (6,290) - 4,891 - 451,815 8 423,009 7 $ 1,093,948 19 $ 665,825 12 5,114 - $ 670,939 12 $ 1,097,395 19 (3,447) - $ 1,093,948 19 $ 1.29 $ 1.28
		$
		$
		$
		$
		$

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

(Concluded)

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ASIA POLYMER CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2016 Appropriation of the 2015 earnings Legal reserve Cash dividends distributed Share dividends distributed Net profit for the year ended December 31, 2016 Other comprehensive income (loss) for the year ended December 31, 2016, net of income tax Total comprehensive income (loss) for the year ended December 31, 2016 Former owners of business contribution under common control BALANCE, DECEMBER 31, 2016 Appropriation of the 2016 earnings Legal reserve Cash dividends distributed Share dividends distributed Reclassification of past dividends to capital surplus Changes in capital surplus from investments in associates accounted for using the equity method Net profit for the year ended December 31, 2017 Other comprehensive income (loss) for the year ended December 31, 2017, net of income tax Total comprehensive income (loss) for the year ended December 31, 2017 BALANCE, DECEMBER 31, 2017		Equity Attributable to Owners of the Company (Notes 21 and 24)	Equity Attributable to Owners of the Company (Notes 21 and 24)	Other Equity Former Owners Exchange Unrealized of Business Differences on Gain (Loss) on Contribution Translating Available-for- Under Common Foreign sale Financial Control Operations Assets (Note 12) $ 34,477 $ (194,956) $ 140,429 - - - - - (41,786) - - - - - 5,114 (40,133) 500,509 (8,561) (40,133) 500,509 (3,447) - - (95,196) (5,656) 305,553 - - - - - - - - - - - - - - - - - - - (51,095) 115,735 - (51,095) 115,735 - $ (56,751) $ 421,288 $ -	Total Equity $ 8,836,135 - (337,682) - 670,939 423,009 1,093,948 (95,196) 9,497,205 - (301,814) - 2,063 325 565,354 53,337 618,691 $ 9,816,470
		Share Capital Shares (In Ordinary Thousands) Shares Capital Surplus 493,160 $ 4,931,607 $ 14,046 - - - - - - 9,863 98,633 - - - - - - - - - - - - - 503,023 5,030,240 14,046 - - - - - - 15,091 150,907 - - - 2,063 - - 325 - - - - - - - - - 518,114 $ 5,181,147 $ 16,434	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 1,508,197 $ 565,379 $ 1,836,956 53,155 - (53,155) - - (295,896) - - (98,633) - - 665,825 - - (28,806) - - 637,019 - - - 1,561,352 565,379 2,026,291 66,582 - (66,582) - - (301,814) - - (150,907) - - - - - - - - 565,354 - - (11,303) - - 554,051 $ 1,627,934 $ 565,379 $ 2,061,039
		Shares (In Thousands) 493,160 - - 9,863 - - - - 503,023 - - 15,091 - - - - - 518,114

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

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ASIA POLYMER CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Net loss on fair value change of financial assets held for trading Interest expense Interest income Dividend income Share of profit of associates (Gain) loss on disposal of property, plant and equipment Loss on disposal of investment properties Net (gain) loss on disposal of available-for-sale financial assets (Reversal of) write-down of inventories Net loss (gain) on foreign currency exchange Changes in operating assets and liabilities Financial assets held for trading Notes receivable Accounts receivable from unrelated parties Accounts receivable from related parties Other receivables from unrelated parties Other receivables from related parties Inventories Prepayments Accounts payable from unrelated parties Accounts payable from related parties Other payables from unrelated parties Other payables from related parties Other current liabilities Net defined benefit liabilities Cash generated from (used in) operations Interest received Interest paid Income tax paid Net cash generated from (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Capital reduction of financial assets measured at cost Capital reduction of investments accounted for using the equity method Acquisition of associates Payments for property, plant and equipment	2017 $ 652,679 287,148 954 23,328 41,762 (13,821) (96,308) (114,334) (186) 497 (7,739) 10,330 1,053 86,171 160 235,565 51,741 - 52,437 (93,437) 40,270 (133,413) (4,780) (113,878) 185,857 (8,385) (39,080) 1,044,591 13,632 (41,517) (92,525) 924,181 - 21,634 20,994 - (1,437,647) (122,371)	2016 $ 790,264 177,737 1,785 3,622 21,895 (11,329) (88,701) (107,404) 34 - 912 (6,622) (8,820) (1,029,124) (1,057) (502,245) 45,298 177 (21,433) 131,502 (74,153) (38,278) 23,472 104,334 48,573 5,252 (85,684) (619,993) 10,404 (20,884) (97,695) (728,168) (1,993) 2,216 3,977 6,661 - (333,069) (Continued)

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ASIA POLYMER CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (repayments of) short-term borrowings Proceeds from short-term bills payable Proceeds from long-term borrowings Repayments of long-term borrowings Decrease in other non-current liabilities Dividends paid to owners of the Company Net cash generated from (used in) financing activities NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2017 $ 210 59 164,167 (1,352,954) (450,000) - 7,150,000 (6,700,000) - (301,765) (301,765) (730,538) 2,545,667 $ 1,815,129	2016 $ 12 (59) 128,825 (193,430) 740,000 449,836 4,450,000 (2,000,000) (49) (295,896) 3,343,891 2,422,293 123,374 $ 2,545,667

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

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ASIA POLYMER CORPORATION

1. GENERAL INFORMATION

Asia Polymer Corporation (the “Company”) was established in January 1977. The Company designs, develops, manufactures and sells low-density polyethylene (LDPE), and ethylene vinyl acetate copolymer (EVA).

The ordinary shares of the Company have been listed on the Taiwan Stock Exchange since June 1986. As of December 31, 2017, the ultimate parent company, USI Corporation, held 36.08% of ordinary shares of the Company.

The functional currency of the Company is the New Taiwan dollar, and the financial statements of the Company are presented in the Company’s functional currency.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors and authorized for issue on March 12, 2018.

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

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

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

1) Amendments to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

The amendments clarify that the recoverable amount of an asset or a cash-generating unit is disclosed only when an impairment loss on the asset has been recognized or reversed during the period. Furthermore, if the recoverable amount of an item of property, plant and equipment for which impairment loss has been recognized or reversed is the fair value less costs of disposal, the Company is required to disclose the fair value hierarchy. If the fair value measurements are categorized within Levels 2 and 3, the valuation technique and key assumptions used to measure the fair value are disclosed. The discount rate used is disclosed if such fair value less costs of disposal is measured by using the present value technique. The amendments should be applied retrospectively starting from January 1, 2017.

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• 2) Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers

The amendments include additions of several accounting items and requirements for disclosures of impairment of non-financial assets as a consequence of the IFRSs endorsed and issued into effect by the FSC. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments also include an emphasis on certain recognition and measurement considerations and add requirements for disclosures of related party transactions.

The amendments stipulate that other companies or institutions of which the chairman of the board of directors or president serves as the chairman of the board of directors or the president of the Company, or is the spouse or second immediate family of the chairman of the board of directors or president of the Company, are deemed to have a substantive related party relationship, unless it can be demonstrated that no control, joint control, or significant influence exists. Furthermore, the amendments require the disclosure of the names of the related parties and the relationships with whom the Company has significant transactions. If the transaction amount or balance with a specific related party is 10% or more of the Company’s respective total transaction amount or balance, such transactions should be separately disclosed by the name of each related party.

When the amendments are applied retrospectively from January 1, 2017, the disclosure of related party transactions is enhanced. Refer to Note 28 for the related disclosure.

• b. The Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC for application starting from 2018 and the amendments to IFRS 9 for early adoption starting from 2018

New, Revised or Amended Standards and Interpretations (the“New IFRSs”) Annual Improvements to IFRSs 2014-2016 Cycle Amendments to IFRS 2 “Classification and Measurement of Share-based Payment Transactions” Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts” IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” IFRS 15 “Revenue from Contracts with Customers” Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from Contracts with Customers” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” Amendments to IAS 40 “Transfers of Investment Property” IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

Effective Date Announced by IASB (Note 1)

Note 2 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

• Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendments to IAS 28 are retrospectively applied for annual periods beginning on or after January 1, 2018.

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IFRS 9 “Financial Instruments” and related amendments

Classification, measurement and impairment of financial assets

With regard to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

For the Company’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

• 1) For debt instruments held within a business model whose objective is to collect contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with any impairment loss recognized in profit or loss. Interest revenue is recognized in profit or loss by using the effective interest method; and

• 2) For debt instruments held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gains or losses shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Except for the above, all other financial assets are measured at fair value through profit or loss. However, the Company may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

The Company analyzed the facts and circumstances of its financial assets that exist at December 31, 2017 and performed the assessment of the impact of IFRS 9 on the classification and measurement of financial assets. Under IFRS 9, listed shares classified as available-for-sale will be designated as at fair value through other comprehensive income and the fair value gains or losses accumulated in other equity will be transferred directly to retained earnings instead of being reclassified to profit or loss on disposal. Besides this, unlisted shares measured at cost will be measured at fair value instead.

IFRS 9 requires impairment loss on financial assets to be recognized by using the “Expected Credit Losses Model”. A credit loss allowance is required for financial assets measured at amortized cost. A loss allowance for 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full-lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full-lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

For purchased or originated credit-impaired financial assets, the Company takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

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The Company has performed a preliminary assessment in which it will apply the simplified approach to recognize full-lifetime expected credit losses for trade receivables. In general, the Company anticipates that the application of the expected credit losses model of IFRS 9 will result in an earlier recognition of credit losses for financial assets.

The Company elects not to restate prior reporting periods when applying the requirements for the classification, measurement and impairment of financial assets under IFRS 9 with the cumulative effect of the initial application recognized at the date of initial application and will provide the disclosures related to the classification and the adjustment information upon initial application of IFRS 9.

The anticipated impact on assets and equity of retrospective application of the requirements for the classification, measurement and impairment of financial assets as of January 1, 2018 is set out below:

Carrying Amount as of December 31, 2017 Impact on assets and equity Financial assets at fair value through other comprehensive income $ - Available-for-sale financial assets - current 85,936 Available-for-sale financial assets - non-current 2,403,409 Financial assets measured at cost - non-current 193,775 Total effect on assets $ 2,683,120 Retained earnings $ 4,254,352 Unrealized gain on available-for-sale financial assets 421,288 Unrealized gain on financial assets at fair value through other comprehensive income - Total effect on equity $ 4,675,640

Adjustments Arising from Initial Application Adjusted Carrying Amount as of January 1, 2018 $ 2,717,338 $ 2,717,338 (85,936) - (2,403,409) - (193,775) - $ 34,218 $ 2,717,338 $ 69,163 $ 4,323,515 (421,288) - 386,343 386,343 $ 34,218 $ 4,709,858

Except for the above impact, as of the date the financial statements were authorized for issue, the Company has assessed and determined that the application of other standards and interpretations will not have a significant influence on the Company’s financial position and financial performance.

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

New IFRSs Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 16 “Leases” IFRS 17 “Insurance Contracts”	Effective Date Announced by IASB (Note 1)
	January 1, 2019 January 1, 2019 (Note 2) To be determined by IASB January 1, 2019 (Note 3) January 1, 2021 (Continued)

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New IFRSs Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty Over Income Tax Treatments”	Effective Date Announced by IASB (Note 1)
	January 1, 2019 (Note 4) January 1, 2019 January 1, 2019 (Concluded)

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

• Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.

• Note 3: On December 19, 2017, the FSC announced that IFRS 16 will take effect starting from January 1, 2019.

• Note 4: The Company shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.

IFRS 16 “Leases”

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

Under IFRS 16, if the Company is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the balance sheets except for low-value and short-term leases. The Company may elect to apply the accounting method similar to the accounting for operating leases under IAS 17 to low-value and short-term leases. On the statements of comprehensive income, the Company should present the depreciation expense charged on right-of-use assets separately from interest expense accrued on lease liabilities; interest is computed by using the effective interest method. On the statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within operating activities.

The application of IFRS 16 is not expected to have a material impact on the accounting of the Company as lessor.

When IFRS 16 becomes effective, the Company may elect to apply this standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this standard recognized on the date of initial application.

Except for the above impact, as of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’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

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value.

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

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

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

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates, the share of other comprehensive income of subsidiaries and associates and the related equity items, as appropriate, in these parent company only financial statements.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within twelve months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within twelve months after the reporting period even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as non-current.

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d. Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the Company’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purposes of presenting financial statements, the assets and liabilities of the Company’s foreign operations (including of the subsidiaries in other countries or currencies which are different from the currency of the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income.

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

e. Inventories

Inventories consist of raw materials, production supplies, finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

• f. Investments accounted for using the equity method

The Company uses the equity method to account for its investments in subsidiaries and associates.

1) Investments in subsidiaries

A subsidiary is an entity (including a structured entity) that is controlled by the Company.

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Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company’s financial statements only to the extent of interests in the subsidiaries of parties that are not related to the Company.

• 2) Investments in associates

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The Company uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates attributable to Group.

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Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Company’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company ’ s net investment in the associate), the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the investment remains associated with the Company.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’ financial statements only to the extent that interests in the associate are not related to the Company.

• g. Property, plant and equipment

Property, plant and equipment are stated at cost less subsequent accumulated depreciation and subsequent accumulated impairment loss.

Property, plant and equipment in the course of construction are carried at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

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Freehold land is not depreciated.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

• h. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

• i. Intangible assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each year, with the effects of any changes in the estimates accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset are recognized in profit or loss.

• j. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

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When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

k. Financial instruments

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to an acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1) Financial assets

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

a) Measurement categories

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

• i. Financial assets at fair value through profit or loss

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

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 27.

ii. Available-for-sale financial assets

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

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

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

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

iii. Loans and receivables

Loans and receivables (including cash and cash equivalents, accounts receivable, notes receivable and other receivables) are measured using the effective interest method at amortized cost less any impairment, except for short-term receivables when the effect of discounting is immaterial.

Cash equivalent includes time deposits and reverse repurchase agreements collateralized by bonds with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

b) Impairment of financial assets

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

For financial assets measured at amortized cost, such as accounts receivable, notes receivable and other receivables, such assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 15-90 days, as well as observable changes in national or local economic conditions that correlate with defaults on receivable.

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

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

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

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

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

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

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

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

• c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

• 2) Financial liabilities

• a) Subsequent measurement

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

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any interest or dividends paid on such financial liabilities. Fair value is determined in the manner described in Note 27.

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b) Derecognition of financial liabilities

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

3) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

l. Provisions

Provisions are measured at the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

The provision for sales returns and rebates is an estimate, based on previous experience and relevant factors, of the possible amounts needed to settle sales returns and rebates and is treated as a reduction of sales revenue in the period in which the corresponding sales are made.

m. Revenue recognition

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

• 1) Sale of goods

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

• a) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

• b) The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• c) The amount of revenue can be measured reliably;

• d) It is probable that the economic benefits associated with the transaction will flow to the Company; and

• e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

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• 2) Dividend and interest income

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

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

• n. Leasing

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

1) The Company as lessor

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

• 2) The Company as lessee

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

• o. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

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p. Taxation

Income tax expense represents the sum of the tax currently payables and deferred tax.

1) Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profit against which to utilize the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

a. Revenue recognition

As described in Note 4, the Company recognizes revenue when certain conditions are satisfied. The Company records a provision for estimated sales return and liabilities for returns in the period when the related revenue is recorded. Provisions for estimated sales returns and related liabilities are generally made and adjusted based on management judgment, provision historical experience and other factors that would significantly affect the estimated provision; management periodically reviews the reasonableness of the provisions.

b. Estimated impairment of accounts receivable

When there is objective evidence of an impairment loss on accounts receivable, the Company takes into consideration the estimated future cash flows of such receivables. Impairment loss is measured as the difference between such an asset’s carrying amount and the present value of its estimated future cash flows discounted at the financial asset’s original effective interest rate. If the actual future cash flows are less than expected, a material impairment loss may arise.

c. Write-down of inventories

The net realizable value of inventory is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of the net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

d. Impairment assessment for tangible assets and intangible assets (excluding goodwill)

In the process of evaluating the impairment of assets, the Company is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to specific asset groups while taking into consideration the nature of the industry. Furthermore, any changes in such estimations resulting from changes in economic conditions or the Company’s strategy could possibly lead to a material impairment loss in future periods.

e. Recognition and measurement of defined benefit plans

The resulting defined benefit costs under defined benefit pension plans and the net defined benefit liabilities (assets) are calculated using the projected unit credit method. Actuarial assumptions comprise the discount rates, rates of employee turnover, future salary increases, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of expenses and liabilities.

• 27 -

6. CASH AND CASH EQUIVALENTS

Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents Time deposits Reverse repurchase agreements collateralized by bonds		December 31	December 31
		2017 $ 146 70,418 1,694,640 49,925 $ 1,815,129	2016 $ 200 41,486 1,858,565 645,416 $ 2,545,667

At the end of the reporting period, the market rate intervals for bank deposits and reverse repurchase agreements collateralized by bonds were as follows:

Time deposits Reverse repurchase agreements collateralized by bonds	December 31
	2017 2016 0.13%-0.79% 0.07%-1.50% 0.61% 0.32%-0.40%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)

Financial assets-current Financial assets held for trading Non-derivative financial assets Domestic listed shares Mutual funds Financial liabilities-current Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts		**December 31 **	**December 31 **
		2017 $ 86,034 1,293,413 $ 1,379,447 $ 666	2016 $ 57,778 1,432,234 $ 1,490,012 $ 1,732

The net loss on operations of financial assets and liabilities at FVTPL - current in 2017 and 2016 was $18,233 thousand and $2,899 thousand, respectively.

• 28 -

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

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	2017
Sell			USD/NTD	2018.01.03-2018.02.08	USD2,300/NTD68,951
Sell			RMB/NTD	2018.01.04-2018.03.29	RMB33,600/NTD151,548
December	31,	2016
Sell			USD/NTD	2017.01.25-2017.02.10	USD3,000/NTD94,904
Sell			RMB/NTD	2017.02.02-2017.03.13	RMB20,944/NTD94,866
Sell			RMB/USD	2017.01.20-2017.01.23	RMB13,400/USD1,914

The Company entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and, therefore, were not accounted for using hedge accounting.

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Domestic investments Publicly traded shares Current portion Non-current portion		December 31	December 31
		2017 $ 2,489,345 $ 85,936 2,403,409 $ 2,489,345	2016 $ 2,404,133 $ 40,569 2,363,564 $ 2,404,133

The Company disposed of certain available-for-sale financial assets, recognizing a disposal gain of $7,739 thousand and a disposal loss of $912 thousand, during 2017 and 2016, respectively.

9. FINANCIAL ASSETS MEASURED AT COST - NON-CURRENT

Domestic unlisted ordinary shares Classified according to financial asset measurement categories Available-for-sale financial assets		December 31	December 31
		2017 $ 193,775 $ 193,775	2016 $ 214,769 $ 214,769

As the range of reasonable fair value estimates was significant, the probabilities of the various estimates cannot be reasonably assessed. The management believes that the fair values of the unlisted equity investments held by the Company cannot be reliably measured; therefore, they were measured at cost less impairment at the end of reporting period.

An investee, KHL IB Venture Capital Co., Ltd., reduced its capital and returned cash to its shareholders in July 2017. The Company received $18,000 thousand back, according to its shareholding ratio.

• 29 -

An investee, Riselink Venture Capital Corp., reduced its capital and returned cash to its shareholders in August 2017 and August 2016. The Company received $2,994 thousand and $1,457 thousand back, respectively, according to its shareholding ratio.

An investee, Harbinger Venture Capital Corp., reduced its capital and returned cash to its shareholders in July 2016. The Company received $2,520 thousand back, according to its shareholding ratio.

10. NOTES AND ACCOUNTS RECEIVABLE

Notes receivable Notes receivable - operating Less: Allowance for impairment loss Accounts receivable Accounts receivable from unrelated parties Less: Allowance for impairment loss Accounts receivable from related parties (Note 28)		**December 31 **	**December 31 **
		2017 $ 1,634 (7) $ 1,627 $ 491,775 (1,993) $ 489,782 $ 143,594	2016 $ 1,794 (5) $ 1,789 $ 729,796 (1,995) $ 727,801 $ 195,813

Accounts receivable

The average credit period of sales of goods was 15-90 days. In determining the recoverability of an account receivable, the Company considered any change in the credit quality of the account receivable since the date credit was initially granted to the end of the reporting period.

Before accepting a new customer, the Company takes both the client evaluation results generated by its internal system and the evaluation report provided by an external hedging institution into consideration to measure the potential customer’s credit quality and determine the customer’s credit limit. Customer credit limits and ratings are reviewed regularly every year. Therefore, the recoverable receivables of the Company mainly come from those companies with good credit long-term business relationships.

The aging of receivables based on the number of days past due from the invoice date was as follows:

Less than and including 60 days 61-90 days 91-120		December 31	December 31
		2017 $ 436,171 168,248 30,950 $ 635,369	2016 $ 745,922 157,471 22,216 $ 925,609

The above aging schedule was based on the number of days past due from the invoice date.

• 30 -

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

Less than and including 30 days		December	31
		2017 $ 1	2016 $ 3,895

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

For the accounts receivable that were past due at the end of the reporting period, the Company did not recognize an allowance for impairment loss because there was no significant change in the credit quality of these receivables and the amounts were considered recoverable.

Movements in the allowance for impairment loss recognized on notes receivable and accounts receivable were as follows:

Individually Assessed for Impairment Collectively Assessed for Impairment Balance at January 1, 2016 $ - $ 2,000 Add: Reclassification - - Balance at December 31, 2016 $ $ 2,000 Balance at January 1, 2017 $ - $ 2,000 Add: Reclassification - - Balance at December 31, 2017 $ $ 2,000	Total $ 2,000 - $ 2,000 $ 2,000 - $ 2,000

11. INVENTORIES

Finished goods Work in progress Raw materials Production supplies		**December 31 **	**December 31 **
		2017 $ 628,838 51,989 21,296 43,311 $ 745,434	2016 $ 469,266 43,507 104,821 44,733 $ 662,327

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2017 and 2016 was $5,556,727 thousand and $4,982,646 thousand, respectively. The cost of goods sold included inventory write-downs of $10,330 thousand and reversals of inventory write-downs of $6,622 thousand as of December 31, 2017 and 2016, respectively. Previous write-downs were reversed as a result of increased selling prices in certain markets.

• 31 -

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2017 $ 665,219 2,643,818 $ 3,309,037	2016 $ 684,475 1,182,172 $ 1,866,647

a. Investments in subsidiaries

Unlisted company APC (BVI) Holding Co., Ltd. APC Investment Co., Ltd. USI International Corp.		December 31	December 31
		2017 $ 435,497 108,578 121,144 $ 665,219	2016 $ 449,929 106,901 127,645 $ 684,475

As of December 31, 2017, the percentage of ownership interests and voting rights of the Company in the subsidiaries were as follows:

APC (BVI) Holding Co., Ltd. APC Investment Co., Ltd. USI International Corp.	Proportion of Ownership and Voting Rights
	**December 31 **
	2017 2016 100% 100% 100% 100% 70% 70%

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2017 and 2016 were based on the subsidiaries’ financial statements audited by auditors for the same years.

On October 19, 2016, APC BVI acquired a 100% interest in USITA, a subsidiary of Swanlake Traders Ltd. APC BVI paid RMB20,300 thousand (approximately $95,196 thousand), the net amount of equity on the equity transfer basic day, to acquire the 100% interest in USITA. The transfer transaction was authorized by the Investment Commission, MOEA on August 3, 2016, and the equity transfer was completed on October 19, 2016.

• 32 -

b. Investments in associates

Material associates Ever Conquest Global Ltd. Associates that are not individually material Listed company China General Plastics Corporation (“CGPC”) Acme Electronics Corporation (“ACME”) Unlisted company China General Terminal & Distribution Corporation (“CGTD”) Swanson Plastics Corporation (“SPC”) Taiwan United Venture Capital Corp. (“TUVC”) Thintec Materials Corporation (“TMC”) USI Optronics Corporation (“USIO”)		December 31	December 31
		2017 $ 1,420,944 629,910 45,253 272,509 197,140 26,748 7,617 43,697 $ 2,643,818	2016 $ 63,554 595,143 49,041 243,047 198,234 25,273 7,880 - $ 1,182,172

1) Material associates

Nature Principal Place Name of Associate of Activities of Business Ever Conquest Global Ltd. Reinvestment British Virgin Islands	Proportion of Ownership and Voting Rights
	December 31
	2017 2016 37.43% 40.94%

The Company uses the equity method to account for the above associate.

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

Ever Conquest Global Ltd.

Non-current assets Equity Proportion of the Company’s ownership Equity attributable to the Company Carrying amount		December 31	December 31
		2017 $ 3,796,226 $ 3,796,226 37.43% $ 1,420,944 $ 1,420,944	2016 $ 155,219 $ 155,219 40.94% $ 63,554 $ 63,554

During 2017 and 2016, no significant operating revenue was generated by Ever Conquest Global Ltd.

• 33 -

The Company’s share of: Profit (loss) from continuing operations Other comprehensive loss Total comprehensive loss for the year	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2017 $ 868 (21,725) $ (20,857)	2016 $ (3,403) (1,204) $ (4,607)

2) Aggregate information of subsidiaries and associates that are not individually material

The Company’s share of: Profit from continuing operations Other comprehensive gain (loss) Total comprehensive income for the year	For the Year Ended	For the Year Ended	December 31
		2017 $ 113,466 23,954 $ 137,420	2016 $ 110,807 (13,196) $ 97,611

As of December 31, 2017, the percentage of ownership interests and voting rights of the Company in the associates were as follows:

Name of Associates CGPC ACME CGTD SPC TUVC TMC USIO	Proportion of Ownership and Voting Rights
	December 31
	2017 2016 8.07% 8.07% 3.32% 3.32% 33.33% 33.33% 7.95% 7.95% 8.33% 8.33% 30.42% 30.42% 9.20% -

Refer to Table 4 “Information on Investees” and Table 5 “Information on Investments in Mainland China” for the nature of activities, principal places of business and countries of incorporation of the associates.

The Company’s percentage of ownership over CGPC, ACME, SPC, TUVC, and USIO was less than 20%. These associates were accounted for using the equity method, as the Company retained significant influence over them.

The Company and USI Corporation originally scheduled to sign a joint venture arrangement for Fujian Gulei Petrochemical Co., Ltd. on April 17, 2014. But due to an increase in the investment plan funding requirements, the joint venture arrangement was re-signed on September 30, 2016. The Company and USI Corporation established Ever Conquest Global Ltd., so as to invest in the joint venture through a holding company registered in a third region. As of December 31, 2017, the Company and USI Corporation had respectively invested US$46,270 thousand (approximately $1,443,125 thousand) and US$77,346 thousand (approximately $2,407,735 thousand). Refer to Note 29 for more information.

• 34 -

TUVC held an interim shareholders meeting on September 6, 2016, resolving to reduce its capital and return cash to shareholders and make up for losses. The reduction record date was September 29, 2016, and the Company received $6,661 thousand back in September 2016.

For the purposes of strengthening its financial structure, a cash injection plan of $410,000 thousand was approved by USIO’s board of directors on February 22, 2017. And USIO held a shareholders meeting on April 7, 2017, resolving to reduce its capital by $966,795 thousand to offset losses and eliminated 96,680 thousand ordinary shares, with a capital reduction ratio of 80.18%. The Company’s board of directors approved its participation in the cash injection plan of USIO within a $60,000 thousand injection, and completed its subscription for 5,972 thousands shares on June 7, 2017, with a resulting proportion of ownership of 9.20% after the cash injection.

The Company uses the equity method to account for its investments in USIO. As of December 31, 2017, their book values were higher than the carrying amounts of the Company’s interests in its investments in USIO by $6,583 thousand. An impairment loss of $6,583 thousand was assessed and recognized on the Company’s share of profit or loss of subsidiaries and associates for the year ended December 31, 2017.

The market prices of the investments accounted for using the equity method in publicly traded shares calculated by the closing price at the end of the reporting period are summarized as follows.

Name of Associate CGPC ACME		December 31	December 31
		2017 $ 1,286,296 $ 111,442	2016 $ 923,133 $ 73,891

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2017 and 2016 were based on the associates’ financial statements which were audited for the same years.

13. PROPERTY, PLANT AND EQUIPMENT

Freehold Land Buildings Improvements Cost Balance at January 1, 2016 $ 230,587 $ 250,912 Additions - - Disposals - - Reclassification - 511,833 Balance at December 31, 2016 $ 230,587 $ 762,745 Accumulated depreciation Balance at January 1, 2016 $ - $ 209,474 Depreciation expenses - 8,829 Disposals - - Balance at December 31, 2016 $ - $ 218,303 Carrying amounts at December 31, 2016 $ 230,587 $ 544,442	Machinery and Equipment $ 3,394,465 15,051 (16,850 ) 2,792,928 $ 6,185,594 $ 3,116,064 161,757 (16,805) $ 3,261,016 $ 2,924,578	Other Equipment Construction in Progress and Prepayments for Equipment Total $ 87,020 $ 3,076,725 $ 7,039,709 - 318,018 333,069 (3,397 ) - (20,247 ) 4,342 (3,309,103) - $ 87,965 $ 85,640 $ 7,352,531 $ 76,836 $ - $ 3,402,374 4,489 - 175,075 (3,396) - (20,201) $ 77,929 $ - $ 3,557,248 $ 10,036 $ 85,640 $ 3,795,283 (Continued)

• 35 -

Freehold Land Buildings Improvements Cost Balance at January 1, 2017 $ 230,587 $ 762,745 Additions - - Disposals - - Reclassification (2,358) 3,950 Balance at December 31, 2017 $ 228,229 $ 766,695 Accumulated depreciation Balance at January 1, 2017 $ - $ 218,303 Depreciation expenses - 20,063 Disposals - - Balance at December 31, 2017 $ - $ 238,366 Carrying amounts at December 31, 2017 $ 228,229 $ 528,329	Machinery and Equipment $ 6,185,594 25,444 (6,118 ) 80,515 $ 6,285,435 $ 3,261,016 259,927 (6,109) $ 3,514,834 $ 2,770,601	Other Equipment Construction in Progress and Prepayments for Equipment Total $ 87,965 $ 85,640 $ 7,352,531 2,082 94,845 122,371 (8,046 ) - (14,164 ) 2,573 (87,038) (2,358) $ 84,574 $ 93,447 $ 7,458,380 $ 77,929 $ - $ 3,557,248 4,567 - 284,557 (8,031) - (14,140) $ 74,465 $ - $ 3,827,665 $ 10,109 $ 93,447 $ 3,630,715 (Concluded)

There was no indication of impairment for the years ended December 31, 2017 and 2016.

The board of directors passed an EVA capacity expansion in the Linyuan plant and authorized the chairman with full power on December 28, 2011. The Company signed the EVA equipment contract with CTCI Corporation on November 8, 2012. On March 5, 2014 and May 31, 2017, respectively, the Company signed the EVA equipment renewal contracts and the amendment with CTCI Corporation. The total contract fee was $2,608,911 thousand (including addition costs), which is paid monthly according to the progress of the project. As of December 31, 2017, total fees and charges have been paid.

The above items of property, plant and equipment were depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings improvements Factory and improvements 15 to 40 years Main buildings and improvements 10 to 40 years Storage rooms 11 to 45 years Engineering systems 35 to 40 years Others 2 to 20 years Machinery and equipment 5 to 22 years Other equipment 3 to 13 years

14. INVESTMENT PROPERTIES

Cost Balance at January 1, 2016 Reclassification Balance at December 31, 2016	Land Buildings and Improvements $ 367,844 $ 133,952 - - $ 367,844 $ 133,952	Total $ 501,796 - $ 501,796 (Continued)

• 36 -

Accumulated depreciation Balance at January 1, 2016 Depreciation expenses Balance at December 31, 2016 Carrying amounts at December 31, 2016 Cost Balance at January 1, 2017 Disposals Transfers from property, plant and equipment Balance at December 31, 2017 Accumulated depreciation Balance at January 1, 2017 Disposals Depreciation expenses Balance at December 31, 2017 Carrying amounts at December 31, 2017	Land Buildings and Improvements $ - $ 64,900 - 2,662 $ - $ 67,562 $ 367,844 $ 66,390 $ 367,844 $ 133,952 - (2,262) 2,358 - $ 370,202 $ 131,690 $ - $ 67,562 - (1,765) - 2,591 $ - $ 68,388 $ 370,202 $ 63,302	Total $ 64,900 2,662 $ 67,562 $ 434,234 $ 501,796 (2,262) 2,358 $ 501,892 $ 67,562 (1,765) 2,591 $ 68,388 $ 433,504

(Concluded)

The investment properties held by the Company were depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings and improvements Main buildings and improvements 5 to 50 years

The fair value of the investment property (i.e. the land) located in Linyuan Industrial Park, which is for industrial use, cannot be reliably determined due to infrequent market transactions.

The fair value of investment properties (i.e. the land), excluding the land located in the Linyuan Industrial Park, was $929,973 thousand as at December 31, 2017. This fair value was not evaluated by an independent evaluator but was measured by the Company's management using the valuation model that market participants would use in determining fair value, and the fair value was measured by using Level 3 inputs. The evaluation referred to the transaction price of similar real estate in the neighboring areas. Were the transaction price per square meter to increase or decrease by 10%, the fair value of the investment properties would increase or decrease respectively by $92,997 thousand as at December 31, 2017.

15. INTANGIBLE ASSETS

For the Year Ended December 31 2017 2016 $ 318 $ 1,272

Computer software

• 37 -

The amortization expense was recognized on a straight-line basis according to the following estimated useful life:

Computer software

3 years

16. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Bank loans		**December 31 **	**December 31 **
		2017 $ 500,000	2016 $ 950,000

The range of interest rates on bank loans was 0.88%-0.89% and 0.95%-1.10% per annum as of December 31, 2017 and 2016, respectively.

• b. Short-term bills payable

Commercial paper Less: Unamortized discount on bills payable Range of interest rates		December 31
	2017 2016 $ 700,000 $ 700,000 (166) (209) $ 699,834 $ 699,791 0.40%-0.75% 0.50%-0.70%

Outstanding short-term bills payable were as follows:

December 31, 2017

Promissory Institution Commercial paper China Bills Financial Co., Ltd. Dan Chung Bills Financial C Co., Ltd. Taiwan Cooperative Bills Finance Co., Ltd. Mega Bills Finance Co., Ltd. Ta Ching Bills Finance Co., Ltd.	Nominal Amount $ 200,000 200,000 100,000 100,000 100,000 $ 700,000	Discount Amount $ (37) (61) (35) (18) (15) $ (166)	Carrying Amount Interest Rate $ 199,963 0.40% 199,939 0.65% 99,965 0.75% 99,982 0.66% 99,985 0.56% $ 699,834

• 38 -

December 31, 2016

Promissory Institution Nominal Amount Discount Amount Commercial paper China Bills Financial Co., Ltd. $ 200,000 $ (52) Dah Chung Bills Financial C Co., Ltd. 200,000 (73) Taiwan Cooperative Bills Finance Co., Ltd. 100,000 (37) Mega Bills Finance Co., Ltd. 100,000 (18) Ta Ching Bills Finance Co., Ltd. 100,000 (29) $ 700,000 $ (209) Long-term borrowings Unsecured borrowings Bank SinoPac Revolving credit line: $500,000 thousand Maturity date: 2017.08-2020.06, repayment of principle upon maturity Annual rate: 2017.12.31: 1.05% 2016.12.31: 1.00% KGI Bank Credit line: $400,000 thousand and $200,000 thousand Maturity date: 2015.10-2021.03 and 2016.07-2019.04, repayment of principle upon maturity Annual rate: 2017.12.31: 1.036%-1.175% 2016.12.31: 0.98556%-1.175% Chang Hwa Bank Revolving credit line: $400,000 thousand Maturity date: 2015.11-2018.06 Annual rate: 1.20% Shin Kong Bank Revolving credit line: $450,000 thousand Maturity date: 2015.10-2018.10, repayment of principle upon maturity Annual rate: 1.00% Yuanta Bank Revolving credit line: $500,000 thousand Maturity date: 2015.10-2021.01, repayment of principle upon maturity Annual rate: 2017.12.31: 1.15% 2016.12.31: 1.20%		Carrying Amount Interest Rate $ 199,948 0.50% 199,927 0.70% 99,963 0.70% 99,982 0.60% 99,971 0.56% $ 699,791 December 31
	$	2017 2016 500,000 $ 500,000 600,000 600,000 - 400,000 450,000 450,000 500,000 50,000 (Continued)

c. Long-term borrowings

• 39 -

Fubon Bank Revolving credit line: $500,000 thousand Maturity date: 2016.08-2019.09, repayment of principle upon maturity Annual rate: 2017.12.31: 1.307% 2016.12.31: 1.306% First Commercial Bank Revolving credit line: $500,000 thousand Maturity date: 2017.12-2020.11, repayment of principle upon maturity Annual rate: 1.04% Less: Current portions		**December 31 **	**December 31 **
		2017 $ 450,000 400,000 2,900,000 (450,000) $ 2,450,000	2016 $ 450,000 - 2,450,000 - $ 2,450,000 (Concluded)

To maintain medium- and long-term working capital, the Company signed a three-year medium- and long-term credit agreement with Bank SinoPac in July 2015 and renewed the agreement in July 2017. A credit line of $500,000 thousand was granted to the Company, with a revolving credit line within the terms of the agreement. Under the credit agreement, the Company should maintain financial ratios in which the current ratio is not below 100% and the debt ratio does not exceed 100%. As of December 31, 2017, the Company did not violate these financial ratios.

To maintain medium- and long-term working capital, the Company signed a three-year medium- and long-term credit agreement with KGI Bank in October 2015 and renewed the agreement in March 2018. A credit line of $600,000 thousand was granted to the Company, including a $400,000 thousand with a revolving credit line within the terms of the agreement and $200,000 thousand that would be used in fixed rates. Under the credit agreement, the Company should maintain financial ratios in which the current ratio is not below 150% and the debt ratio does not exceed 125%. As of December 31, 2017, the Company did not violate these financial ratios.

To maintain medium- and long-term working capital, the Company signed a three-year medium- and long-term credit agreement with Fubon Bank in October 2016. A credit line of $500,000 thousand was granted to the Company, with a revolving credit line within the terms of the agreement. Under the credit agreement, the Company should maintain financial ratios in which the current ratio is not below 100%, the debt ratio does not exceed 150% and the amount of equity is not below $7,000,000 thousand. As of December 31, 2017, the Company did not violate these financial ratios and terms.

17. ACCOUNTS PAYABLE

Accounts payable Operating (including related parties)		December 31	December 31
		2017 $ 137,852	2016 $ 276,377

The average credit period was 1 month. The Company had financial risk management policies in place to ensure that all payables were paid within the pre-agreed credit terms.

• 40 -

18. OTHER PAYABLES

Payables for salaries or bonuses Payables for utilities Payables for annual leave Payables for freight fees Payables for dividends Payables for insurance Payables on equipment Others PROVISIONS - CURRENT Customer returns and rebates		December 31	December 31
		2017 $ 57,505 33,087 13,045 10,363 9,331 2,099 1,742 23,710 $ 150,882 **December **	2016 $ 62,270 32,237 12,915 11,702 9,430 3,339 59,221 75,438 $ 266,552 **31 **
		2017 $ 5,899	2016 $ 5,899

19. PROVISIONS - CURRENT

The provision of customer returns and rebates was based on historical experience, management’s judgments and other known reasons for which estimated product returns and rebates may occur in the year. The provision was recognized as a reduction of operating income in the period in which the related goods were sold.

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 10% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.

• 41 -

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December 31	December 31
		2017 $ 431,266 (219,057) $ 212,209	2016 $ 435,749 (196,622) $ 239,127

Movements in net defined benefit liabilities (assets) were as follows:

	Present Value		Net Defined
	of the Defined		Benefit
	Benefit	Fair Value of	Liabilities
	Obligation	the Plan Assets	(Assets)
Balance at January 1, 2016	$ 450,912	$ (151,036)	$ 299,876
Service cost
Current service cost	4,943	-	4,943
Net interest expense (income)	5,427	(1,737)	3,690
Recognized in profit or loss	10,370	(1,737)	8,633
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	809	809
Actuarial loss - changes in financial
assumptions	8,613	-	8,613
Actuarial loss - changes in demographic
assumptions	1,306	-	1,306
Actuarial loss - experience adjustments	14,207	-	14,207
Recognized in other comprehensive income	24,126	809	24,935
Contributions from the employer	-	(94,317)	(94,317)
Benefits paid	(49,659)	49,659	-
Balance at December 31, 2016	435,749	(196,622)	239,127
Service cost
Current service cost	4,520	-	4,520
Net interest expense (income)	4,309	(1,970)	2,339
Recognized in profit or loss	8,829	(1,970)	6,859
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	200	200
Actuarial loss - changes in financial
assumptions	7,968	-	7,968
Actuarial loss - changes in demographic
assumptions	1,049	-	1,049
Actuarial loss - experience adjustments	2,944	-	2,944
Recognized in other comprehensive income	11,961	200	12,161
Contributions from the employer	-	(45,938)	(45,938)
Benefits paid	(25,273)	25,273	-
Balance at December 31, 2017	$ 431,266	$ (219,057)	$ 212,209

• 42 -

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic or foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate of a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in corporate bond interest rates will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	December 31
	2017 2016 1.00% 1.00% 2.25% 2.00%

If possible reasonable changes in each of the significant actuarial assumptions were to occur and all other assumptions were to remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		**December **	**31 **
		2017 $ (8,177) $ 8,426 $ 8,171 $ (7,972)	2016 $ (8,620) $ 8,889 $ 8,639 $ (8,421)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that changes in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		**December **	**31 **
		2017 $ 21,000 7.9 years	2016 $ 10,400 8.2 years

• 43 -

21. EQUITY

a. Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		**December 31 **	**December 31 **
		2017 620,000 $ 6,200,000 518,114 $ 5,181,147	2016 620,000 $ 6,200,000 503,023 $ 5,030,240

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

The shareholders held their regular meeting on June 8, 2016 and, in that meeting, resolved to issue 9,863 thousand ordinary shares as share dividends appropriated from earnings, with a par value of $10, which increased the share capital issued and fully paid to $5,030,240 thousand. On July 15, 2016, the transaction was approved by the FSC, and the subscription base date was determined as at August 25, 2016 by the board of directors.

The shareholders held their regular meeting on June 8, 2017 and, in that meeting, resolved to issue 15,091 thousand ordinary shares as share dividends appropriated from earnings, with a par value of $10, which increased the share capital issued and fully paid to $5,181,147 thousand. On June 21, 2017, the transaction was approved by the FSC, and the subscription base date was determined as at August 4, 2017 by the board of directors.

b. Capital surplus

Unpaid dividends Share of changes in capital surplus of associates		December	31
		2017 $ 15,252 1,182 $ 16,434	2016 $ 13,189 857 $ 14,046

Capital surplus which arises from the issuance consideration of shares (including issuance consideration of ordinary shares) and donations may be used to offset a deficit.

Capital surplus which arises from unpaid dividends and the share of changes in capital surplus of associates may not be used for any purpose.

c. Retained earnings and dividends policy

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The shareholders held their regular meeting on June 8, 2016 and, in that meeting, resolved amendments to the Company’s Articles of Incorporation (the “Articles”), particularly the amendment to the policy on dividends distribution and the addition of the policy on the distribution of employees’ compensation.

• 44 -

Under the dividends policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of the remaining profit, setting aside or reversing 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 Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors after the amendment, refer to “Employees’ compensation and remuneration of directors” in Note 22-f.

As the Company is in the maturation stage, for research and development needs and business diversification, the amount of dividends for shareholders shall be no less than 10% of distributable retained earnings for the current year, among which the amount of cash dividends shall be no less than 10%. If the distributable retained earnings per share of the current year are less than $0.1, the retained earnings are not to be distributed.

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

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

The appropriations of earnings for 2016 and 2015 approved in the shareholders’ meetings on June 8, 2017 and June 8, 2016, respectively, were as follows:

Legal reserve Cash dividends Share dividends		Appropriation of Earnings For the Year Ended December 31 2016 2015 $ 66,582 $ 53,155 301,814 295,896 150,907 98,633 $ 519,303 $ 447,684	Dividends Per Share (NT$)
			For the Year Ended **December 31 **
		2016 $ 66,582 301,814 150,907 $ 519,303	2016 2015 $0.6 $0.6 0.3 0.2

The appropriation of earnings for 2017 were proposed by the Company’s board of directors on March 12, 2018. The appropriation and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	56,535	$ -
Cash dividends		103,623	0.2
Share dividends		362,680	0.7

The appropriation of earnings for 2017 are subject to resolution in the shareholders’ meeting to be held on June 5, 2018.

• 45 -

d. Other equity items

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

Balance at January 1 Exchange differences on translating foreign operations Share of exchange differences of associates accounted for using the equity method Related income tax Balance at December 31	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2017 $ (5,656) (44,287) (14,337) 7,529 $ (56,751)	2016 $ 34,477 (27,705) (17,138) 4,710 $ (5,656)

2) Unrealized gain (loss) on available-for-sale financial assets

Balance at January 1 Gain (loss) on disposal of available-for-sale financial assets Unrealized gain on revaluation of available-for-sale financial assets Share of unrealized gain on revaluation of available-for-sale financial assets of associates accounted for using the equity method Related income tax Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2017 $ 305,553 7,739 91,368 17,775 (1,147) $ 421,288	2016 $ (194,956) (912) 490,392 10,848 181 $ 305,553

22. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

Net profit (loss) from continuing operations included the following:

a. Other income

Interest income Bank deposits Financial assets at fair value through profit or loss Reverse repurchase agreements collateralized by bonds Dividends Rental income Others	For the Year Ended	For the Year Ended	December 31
		2017 $ 7,597 5,879 345 13,821 96,308 44,076 9,723 $ 163,928	2016 $ 3,255 6,085 1,989 11,329 88,701 41,733 9,661 $ 151,424

• 46 -

b. Other gains and losses

Net foreign exchange gains (losses) Loss on disposal of investment properties Net loss on financial assets at FVTPL Gain (loss) on disposal of available-for-sale financial assets Gain (loss) on disposal of property, plant and equipment Net loss on financial liabilities at FVTPL Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2017 $ (24,176) (497) (13,540) 7,739 186 (10,572) (9,933) $ (50,793)	2016 $ 5,446 - (6,709) (912) (34) (2,275) (6,908) $ (11,392)

c. Finance costs

Information about capitalized interest was as follows:

Capitalized interest Capitalization rate d. Depreciation and amortization Property, plant and equipment Investment properties Intangible assets An analysis of depreciation by function Operating costs Operating expenses Other gains and losses An analysis of amortization by function Operating expenses	For the Year Ended	For the Year Ended	December 31
	2017 $ - - **For the Year Ended **		2016 $ 1,854 0.99% **December 31 **
		2017 $ 284,557 2,591 954 $ 288,102 $ 284,342 215 2,591 $ 287,148 $ 954	2016 $ 175,075 2,662 1,785 $ 179,522 $ 174,910 165 2,662 $ 177,737 $ 1,785

• 47 -

e. Employee benefits expense

Post-employment benefits (see Note 20) Defined contribution plans Defined benefit plans Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2017 $ 7,318 6,859 14,177 330,750 $ 344,927 $ 275,560 69,367 $ 344,927	2016 $ 7,120 8,633 15,753 327,050 $ 342,803 $ 275,398 67,405 $ 342,803

f. Employees’ compensation and remuneration of directors

The Company accrued employees’ compensation and remuneration of directors and supervisors at rates of no less than 1% and no higher than 1%, respectively, of net profit before income tax, employees’ compensation and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2017 and 2016, which were approved by the Company’s board of directors on March 12, 2018 and March 14, 2017, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2017 2016 1.00% 1.00% - - For the Year Ended December 31
	2017 2016 $ 6,593 $ 7,931 - -

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

There is no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the financial statements for the years ended December 31, 2016 and 2015.

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

• 48 -

• g. Gains or losses on foreign currency exchange

Foreign exchange gains Foreign exchange losses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2017 $ 25,280 (49,456) $ (24,176)	2016 $ 43,088 (37,642) $ 5,446

23. INCOME TAX RELATING TO CONTINUING OPERATIONS

a. Major components of income tax expense recognized in profit or loss

Current tax In respect of the current year Income tax on unappropriated earnings Deferred tax In respect of the current year Adjustments for prior years Income tax expense recognized in profit or loss	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2017 $ 73,020 11,771 84,791 2,607 (73) 2,534 $ 87,325	2016 $ 93,356 8,253 101,609 17,711 5 17,716 $ 119,325

A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2017 $ 652,679 $ 110,955 (16,163) (19,238) 11,771 $ 87,325	2016 $ 785,150 $ 133,475 (8,298) (14,105) 8,253 $ 119,325

The applicable corporate income tax rate used by the Company in the ROC is 17%.

In February 2018, it was announced that the Income Tax Act in the ROC was amended and, starting from 2018, the corporate income tax rate will be adjusted from 17% to 20%. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%. Deferred tax assets and deferred tax liabilities recognized as at December 31, 2017 are expected to be adjusted and increase by $9,984 thousand and $3,252 thousand, respectively, in 2018.

As the status of the 2018 appropriation of earnings is uncertain, the potential income tax consequences on the 2017 unappropriated earnings are not reliably determinable.

• 49 -

• b. Income tax recognized in other comprehensive income

Deferred tax In respect of current year Translation of foreign operations Fair value changes of available-for-sale financial assets Remeasurement on defined benefit plans	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2017 $ 7,529 (1,147) 2,067 $ 8,449	2016 $ 4,710 181 4,239 $ 9,130

c. Current tax liabilities

Current tax liabilities Income tax payable		December	31
		2017 $ 40,690	2016 $ 48,424

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2017

Deferred tax assets Temporary differences Allowance for inventory valuation and obsolescence losses Allowance for office supplies impairment losses Customer rebates Allowance for production supplies losses FVTPL financial assets FVTPL financial liabilities Payables for annual leave Defined benefit obligation Inventory tax differences Exchange differences on foreign operations Foreign exchange losses	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 60 $ 1,756 $ - 7,497 385 - 1,003 - - 1,084 31 - 665 - (665) 295 (181) - 1,918 8 - 40,461 (6,638) 2,067 1,014 (495) - - - 6,093 - 216 - $ 53,997 $ (4,918) $ 7,495	Closing Balance $ 1,816 7,882 1,003 1,115 - 114 1,926 35,890 519 6,093 216 $ 56,574

(Continued)

• 50 -

Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income Deferred tax liabilities Land value increment tax reserve $ (21,469) $ - $ - Allowance for impaired receivables (227) - - Foreign exchange gains (1,633) 1,633 - Depreciation tax differences (406) 29 - Share of profit of associates (18,069) 722 - Exchange differences on foreign operations (1,436) - 1,436 FVTPL financial assets - - (482) $ (43,240) $ 2,384 $ 954 For the year ended December 31, 2016

Closing Balance $ (21,469) (227) - (377) (17,347) - (482) $ (39,902) (Concluded)

Deferred tax assets Temporary differences Allowance for inventory valuation and obsolescence losses Allowance for office supplies impairment losses Customer rebates Allowance for production supplies losses FVTPL financial assets FVTPL financial liabilities Payables for annual leave Defined benefit obligation Inventory tax differences Deferred tax liabilities Land value increment tax reserve Allowance for impaired receivables Foreign exchange gains Depreciation differences Share of profit of associates Exchange differences on foreign operations	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 1,186 $ (1,126) $ - 7,455 42 - 1,003 - - 1,084 - - 484 - 181 - 295 - 1,643 275 - 50,810 (14,588) 4,239 43 971 - $ 63,708 $ (14,131) $ 4,420 $ (21,469) $ - $ - (227) - - (236) (1,397) - (419) 13 - (15,873) (2,196) - (6,146) - 4,710 $ (44,370) $ (3,580) $ 4,710	Closing Balance $ 60 7,497 1,003 1,084 665 295 1,918 40,461 1,014 $ 53,997 $ (21,469) (227) (1,633) (406) (18,069) (1,436) $ (43,240)

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e. Integrated income tax

Unappropriated earnings Generated before January 1, 1998 Generated on and after January 1, 1998 Imputation credits account Creditable ratio for distribution of earnings		December 31	December 31
		2017 $ 44,323 2,016,716 $ 2,061,039 (Note) $ 396,165 (Note) 2017 (Expected) (Note)	2016 $ 44,323 1,981,968 $ 2,026,291 $ 378,993 2016 (Actual) 21.57%

Note: Since the amended Income Tax Act announced in February 2018 abolished the imputation tax system, related information for 2017 is not applicable.

• f. Income tax assessments

The Company’s income tax returns through 2015 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	**For **	Unit: NT$ Per Share the Year Ended December 31	Unit: NT$ Per Share the Year Ended December 31
		2017 $ 1.09 $ 1.09	2016 $ 1.29 $ 1.28

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retroactively for the issuance of bonus shares on August 4, 2017. The basic and diluted earnings per share adjusted retrospectively for the year ended December 31, 2016 were as follows:

	Unit:	NT$ Per Share
	Before	After
	Retrospective	Retrospective
	Adjustment	Adjustment
Basic earnings per share	$ 1.32	$ 1.29
Diluted earnings per share	$ 1.32	$ 1.28

• 52 -

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

Net Profit for the Year

For the Year Ended 2017 Earnings used in the computation of basic and diluted earnings per share $ 565,354 Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares):	For the Year Ended	For the Year Ended	December 31
		2017 $ 565,354 Shares):	2016 $ 665,825

Shares Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation or bonuses issued to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2017 518,114 454 518,568	2016 518,114 520 518,634

If the Company offered to settle compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation would 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, if the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

25. OPERATING LEASE AGREEMENTS

• a. The Company as lessee

Operating leases relate to leases of office space with lease terms of 3 years.

As of December 31, 2017 and 2016, the Company’s refundable deposits paid under operating leases amounted to $$1,405 thousand.

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

Not later than 1 year Later than 1 year and not later than 5 years		December	31
		2017 $ 1,751 1,156 $ 2,907	2016 $ 701 602 $ 1,303

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• b. The Company as lessor

Operating leases relate to leases of investment properties with lease terms between 1 to 5 years. All operating lease contracts contain market review clauses in the event that the lessees exercise their options to renew. The lessees do not have bargain purchase options to acquire the properties at the expiry of the lease periods.

As of December 31, 2017 and 2016, the Company’s guaranteed deposits received under operating lease agreements amounted to $3,346 thousand.

The future minimum lease payments of non-cancellable operating leases were as follows:

Not later than 1 year Later than 1 year and not later than 5 years		December	31
		2017 $ 26,978 23,063 $ 50,041	2016 $ 26,445 39,719 $ 66,164

26. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Company’s overall management strategy remains unchanged from 2013.

The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Company (comprising issued capital, reserves, retained earnings, and other equity).

The Company is not subject to any externally imposed capital requirements.

27. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments not measured at fair value

The Company’s management believes that the carrying amounts of financial assets and financial liabilities which are recognized in the financial statements approximate their fair values.

• b. Fair value of financial instruments measured at fair value on a recurring basis

1) Fair value hierarchy

December 31, 2017

Financial assets at FVTPL Non-derivative financial assets held for trading Available-for-sale financial assets Securities listed in the ROC Equity securities Financial liabilities at FVTPL Derivatives	Level 1 $ 1,379,447 $ 2,489,345 $ -	Level 2 $ - $ - $ 666	Level 3 $ - $ - $ -	Total $ 1,379,447
				$ 2,489,345
				$ 666

• 54 -

December 31, 2016

Financial assets at FVTPL Non-derivative financial assets held for trading Available-for-sale financial assets Securities listed in the ROC Equity securities Financial liabilities at FVTPL Derivatives	Level 1 $ 1,490,012 $ 2,404,133 $ -	Level 2 $ - $ - $ 1,732	Level 3 $ - $ - $ -	Total $ 1,490,012
				$ 2,404,133
				$ 1,732

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

• 2) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instruments Valuation Techniques and Inputs Derivatives - foreign exchange Discounted cash flow. forward contracts

Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

• c. Categories of financial instruments

Financial assets Financial assets at fair value through profit or loss (FVTPL) Held for trading Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable (including related parties) Other receivables (including related parties but excluding tax refund receivables) Available-for-sale financial assets* Financial liabilities Financial liabilities at fair value through profit or loss (FVTPL) Held for trading Financial liabilities measured at amortized cost Short-term borrowings Short-term bills payable Long-term borrowings (including current portion) Accounts payable (including related parties) Other payables (including related parties)

December 31

2017 2016 $ 1,379,447 $ 1,490,012 1,815,129 2,545,667 1,627 1,789 633,376 923,614 7,472 59,677 2,683,120 2,618,902 666 1,732 500,000 950,000 699,834 699,791 2,900,000 2,450,000 137,852 276,377 453,509 384,848

• The balance includes the carrying amount of available-for-sale financial assets measured at cost.

• 55 -

d. Financial risk management objectives and policies

The Company’s risk control and hedging strategy are influenced by its operational environment. The Company properly monitors and manages the risks related to business nature and according to the principle of risk diversification. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

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

There has been no change to the Company’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Company had foreign currency sales and purchases, which exposed the Company to foreign currency risk. In order to avoid the impact of foreign currency exchange rate changes, which lead to deductions in foreign currency denominated assets and fluctuations in their future cash flows, the Company used the natural offset between foreign currency assets and liabilities and foreign exchange forward contracts on the net position. The Company sought to minimize the effects of these risks by using foreign exchange forward contracts to hedge risk exposures. The use of foreign exchange forward contracts was governed by the Company’s policies approved by the board of directors. Compliance with policies and exposure limits was reviewed by internal auditors on a continuous basis. The Company did not enter into or trade foreign exchange forward contracts for speculative purposes.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities is set out in Note 30 and of the derivatives exposing the Company to foreign currency risk at the end of the reporting period are set out in Note 7.

Sensitivity analysis

The Company was mainly exposed to the USD. The sensitivity analysis includes only outstanding foreign currency denominated monetary items at the end of the reporting period. For a 3% strengthening/weakening of the Company’s functional currency against the USD, there would be a decrease/an increase of $11,230 thousand and $30,104 thousand in pre-tax profit for the years ended December 31, 2017 and 2016, respectively.

In management’s opinion, this sensitivity analysis is unrepresentative of the Company’s inherent foreign exchange risk because the exposure at the end of the reporting period did not reflect the exposure during the period.

b) Interest rate risk

The Company was exposed to fair value interest rate risk because the Company held financial assets and financial liabilities at fixed rates; the Company was exposed to cash flow interest rate risk because the Company held financial assets and financial liabilities at floating rates. The Company’s management personnel monitors the changes in the market rates on a regular basis and adjusts the floating rate financial liabilities to make the Company’s rates approach market rates in response to the risk caused by changing market rates.

• 56 -

The carrying amount of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2017 2016 $ 1,744,565 $ 2,503,981 1,199,834 1,649,791 58,700 34,859 2,900,000 2,450,000

Sensitivity analysis

The sensitivity analysis below was determined based on the Company’s exposure to interest rates for both financial assets and liabilities at the end of the reporting period. A 50-basis point increase or decrease was 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 50 basis points higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2017 and 2016 would have decreased/increased by $14,207 thousand and $12,076 thousand, respectively.

c) Other price risk

The Company was exposed to equity price risk through its investments in equity securities listed in the ROC or other countries. The Company manages this exposure by maintaining a portfolio of investments with different risks. In addition, the Company has appointed a special team to monitor price risk.

Sensitivity analysis

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

If equity prices had been 5% higher/lower, pre-tax profit for years ended December 31, 2017 and 2016 would have increased/decreased by $68,939 thousand and $74,414 thousand, respectively, as a result of the changes in fair value of held-for-trading investments, and the pre-tax other comprehensive income for the years ended December 31, 2017 and 2016 would have increased/decreased by $124,467 thousand and $120,207 thousand, respectively, as a result of the changes in fair value of available-for-sale financial assets.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets. The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and the credit ratings of its counterparties are continuously monitored.

• 57 -

The Company transacted with a large number of unrelated customers in a variety of areas, and, thus, no concentration of credit risk was observed. Ongoing credit evaluations are performed on the financial conditions of trade receivables; therefore, the Company’s credit risk is limited.

• 3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows.

As such cash and cash equivalents are sufficient to finance the Company’s operations, there is no liquidity risk arising from the deficiency of funds to fulfill contractual obligations.

• a) Liquidity and interest rate risk table for non-derivative financial liabilities

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods based on the probable earliest repayment dates. The table was drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

December 31, 2017

Weighted Average Interest Rate On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing liabilities $ 513,498 Fixed interest rate liabilities 0.71% 1,200,000 Floating interest rate liabilities 1.10% 450,000 $ 2,163,498 December 31, 2016 Weighted Average Interest Rate On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing liabilities $ 572,005 Fixed interest rate liabilities 0.84% 1,650,000 Floating interest rate liabilities 1.10% - $ 2,222,005	1-5 Years $ 26,950 - 2,450,000 $ 2,476,950 1-5 Years $ 26,950 - 2,450,000 $ 2,476,950	5+ Years $ - - - $ - 5+ Years $ - - - $ -

• 58 -

b) Financing facilities

Bank loans are an essential source of liquidity for the Company. The table below details the used and unused amount of bank loans at the end of the reporting period.

Unsecured bank overdraft facilities, reviewed annually and payable on demand: Amount used Amount unused		December 31	December 31
		2017 $ 4,100,000 3,569,493 $ 7,669,493	2016 $ 4,100,000 1,612,825 $ 5,712,825

28. TRANSACTIONS WITH RELATED PARTIES

The Company’s ultimate parent is USI Corporation, which held 36.08% of the ordinary shares of the Company as of December 31, 2017 and 2016.

Besides the information disclosed elsewhere in the other notes, details of transactions between the Company and other related parties are disclosed below.

• a. Related parties’ names and relationships

Related Party Name Relationship with the Company

USI Corporation	Ultimate parent entity
Union Polymer Int'l Investment Corp. (“Union Polymer”)	Parent entity
China General Plastics Corporation (“CGPC”)	Associate
China General Terminal & Distribution Corporation (“CGTD”)	Associate
Acme Electronics Corporation (“ACME”)	Associate
Thintec Materials Corporation (“TMC”)	Associate
USI Optronics Corporation (“USIO”)	Associate
Swanson Plastics Corporation (“SPC”)	Associate
Taiwan United Venture Capital Corp. (“TUVC”)	Associate
Taiwan VCM Corporation (“TVCM”)	Associate
CGPC Polymer Corporation (“CGPCP”)	Associate
Forever Young Company Limited (“Forever Young”)	Associate
Taita Chemical Company, Limited (“TTC”)	Fellow subsidiary
Taiwan United Venture Management Corporation (“TUVM”)	Fellow subsidiary
USI Management Consulting Corporation (“UM”)	Fellow subsidiary
USIFE Investment Co., Ltd. (“USII”)	Fellow subsidiary
Chong Loong Trading Co., Ltd. (“CLT”)	Fellow subsidiary
USI (Hong Kong) (“USI (HK)”)	Fellow subsidiary
USI Education Foundation (“USIF”)	Essential related party

• 59 -

• b. Sales of goods

Related Party Category/Name Ultimate parent entity USI Corporation Associate Fellow subsidiary Subsidiary	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2017 $ 596,780 155,133 25,704 66,242 $ 843,859	2016 $ 942,397 167,907 23,391 5,238 $ 1,138,933

Sales of goods to related parties were made at the Company’s usual prices and conditions which were the same as those to unrelated parties.

• c. Purchases of goods

Related Party Category/Name Ultimate parent entity USI Corporation Associate	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2017 $ 135,176 38,933 $ 174,109	2016 $ 140,803 37,653 $ 178,456

Purchases from related parties were made at market prices which were at the Company’s usual prices and conditions which were the same as those from unrelated parties.

• d. Management fees (under general and administrative expenses)

Related Party Category/Name Ultimate parent entity USI Corporation Fellow subsidiary UM	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2017 $ 6,474 30,190 $ 36,664	2016 $ 5,617 26,785 $ 32,402

• e. Rental expenses (under selling and marketing expenses and general and administrative expenses)

Related Party Category/Name Ultimate parent entity USI Corporation Subsidiary Associate	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2017 $ 2,240 6 - $ 2,246	2016 $ 2,470 42 13 $ 2,525

• 60 -

• f. Donation expenses (under general and administrative expenses)

Related Party Category/Name Essential related party USI Education Foundation g. Management income (under other income) Related Party Category/Name Associate	For the Year Ended	For the Year Ended	December 31
	2017 $ 2,000 For the Year Ended		2016 $ 2,000 December 31
		2017 $ 1,745	2016 $ 1,620

h. Rental income (under other income)

Related Party Category/Name Ultimate parent entity Parent entity Subsidiary Associate TVCM Others Fellow subsidiary TTC Others	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2017 $ 3,110 202 135 13,679 7,412 21,091 7,614 1,817 9,431 $ 33,969	2016 $ 2,594 319 135 12,152 8,293 20,445 7,043 1,984 9,027 $ 32,520

The previously indicated associates leased pipelines from the Company with lease terms of 1 years. The lease contracts are to be regarded as renewed if there is no declaration of termination. The lease payments are calculated according to actual operating volume and are paid on a monthly basis.

• i. Investment consultant fees (under other gains and losses)

Related Party Category/Name Fellow subsidiary UM	For the Year Ended	For the Year Ended	December 31
		2017 $ 1,822	2016 $ 1,822

• 61 -

• j. Receivables from related parties

Related Party Category/Name Ultimate parent entity USI Corporation Associate Subsidiary CGPCP Fellow subsidiary		December 31	December 31
		2017 $ 99,228 12,303 30,659 1,404 $ 143,594	2016 $ 163,014 26,734 5,238 827 $ 195,813

• k. Other receivables from related parties

Related Party Category/Name Ultimate parent entity USI Corporation Associate TVCM CGTD Others Fellow subsidiary TTC Others		December 31	December 31
		2017 $ 240 2,945 920 513 4,378 1,606 72 1,678 $ 6,296	2016 $ 54,871 2,347 978 296 3,621 225 16 241 $ 58,733

Other receivables from related parties were the payments from the ultimate parent entity and associates to allocate and transfer raw materials from the Company.

• l. Accounts payable to related parties

Related Party Category/Name Ultimate parent entity USI Corporation Associate SPC		December 31	December 31
		2017 $ 25,687 3,881 $ 29,568	2016 $ 30,019 4,555 $ 34,574

• 62 -

m. Other payables to related parties

Related Party Category/Name Ultimate parent entity USI Corporation Subsidiary Associate Fellow subsidiary		December 31	December 31
		2017 $ 297,038 96 4,853 640 $ 302,627	2016 $ 114,969 18 2,762 547 $ 118,296

Other payables to related parties were the payments from the Company for the allocation and transfer of ethylene from related parties.

• n. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2017 $ 10,514 108 $ 10,622	2016 $ 15,804 166 $ 15,970

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

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

• a. Significant commitments

The amount available under unused letters of credit as of December 31, 2017 was $183,307 thousand.

• b. Significant contract

The Company and USI Corporation signed a joint venture contract for a Fujian Gulei Petrochemical Co., Ltd. investment on April 17, 2014. The related entities of the contract or commitments are Ho Tung Chemical Corporation, LCY Chemical Corporation, Hengtai Petroleum Company Limited, Chenergy Global Corporation and Lien Hwa Corporation. The main contents of the contract and commitments include: (1) the shareholders shall establish Ever Victory Global Limited (hereinafter referred to the “Joint Venture”) and agree to pass the establishment of the 100% owned company named Dynamic Ever Investments Limited in Hong Kong (hereinafter referred to as the “Hong Kong Company”), whose purpose is to build oil refineries and produce ethylene as well as seven other products on the Gulei Peninsula in Zhangzhou, Fujian Province, as approved by the Investment Commission at Taiwan’s Ministry of Economic Affairs and according to the operating business permitted by the Joint Venture’s board of directors; and (2) the Hong Kong Company will establish a joint venture company in accordance with the laws of the People’s Republic of China between China Petrochemical Corporation or its affiliated enterprises; Fujian Refining and Chemical Co., Ltd. will establish a joint venture company in accordance with the laws of the People’s Republic of China in Fujian Province between China Petrochemical Corporation or its affiliated enterprises (hereinafter referred to as “Gulei Company”) and acquire 50% of the shares of Gulei Company as a basis for cooperative investment. The amount which the Joint Venture invested in Gulei Company after the signing of the original investment contract increased due to the capital needs of the investment plan, which led to part of the

• 63 -

original related contract entities being unable to purchase the shares based on their respective investment ratio as provided by the original contract. Therefore, the Company and USI Corporation resigned the joint venture contract on September 30, 2016 and added a new contractually promised related entity, CTCI Corp. Also, the termination stipulations of the original joint venture contract are the same time.

As of December 31, 2017, the Company and USI Corporation invested US$46,270 thousand (approximately $1,443,125 thousand) and US$77,346 thousand (approximately $2,407,735 thousand), respectively, to establish Ever Conquest Global Limited (recognized as investments accounted for using the equity method). Via Ever Conquest Global Limited, the Company and USI Corporation increased the capital in the Joint Venture by US$123,616 thousand. The Joint Venture reinvested in the Hong Kong Company US$82,588 thousand and US$82,689 thousand in January and July 2017, respectively. The Hong Kong Company invested a total amount of RMB1,152,400 thousand (approximately US$169,901 thousand) in Gulei Company in April and August 2017.

The Company was involved in a proposal of urban renewal, in which it coordinates with neighbors by right of transfer dominated by Huaku Development Co., Ltd. and provides around ten of its investment properties (located at Yanji St., Songshan Dist., Taipei City) to increase its operating efficiency. Thus, the Company signed an agreement with Huaku Development Co., Ltd. and received $3,200 thousand as security deposits. The Taipei City Government approved the proposal on November 30, 2017. In addition, the Company, Huaku Development Co., Ltd. and the Trust Department of E.Sun Commercial Bank, who was commissioned to manage, consolidate, split up, transfer and dispose of the properties and buildings within the duration of the agreement, signed a tripartite agreement on the real estate trust.

c. Contingencies

Regarding China General Terminal & Distribution Corporation (hereinafter “CGTD”), who had been commissioned to operate the LCY Chemical Corp.’s propene pipeline resulting in a gas explosion on July 31, 2014, the Kaohsiung District Prosecutor Office instituted a public prosecution against the related personnel of the Kaohsiung Government, LCY Chemical Corp. and CGTD employees on December 18, 2014. Up to the reporting date, the attribution of responsibility for the gas explosion and the subsequent impact was still pending the conclusion of the in-progress trial of the Kaohsiung District Court.

CGTD arrived at an agreement with the Kaohsiung City Government on February 12, 2015, pledging certificates of bank deposits of $226,983 thousand, interests included, to the Kaohsiung City Government as collateral for the loss caused by the gas explosion. The Kaohsiung City Government also filed civil procedure requests in succession against LCY Chemical Corp., CGTD and CPC Corporation, Taiwan (“CPC”). Taiwan Power Company applied for provisional attachment against CGTD’s property on August 27 and November 26, 2015. Taiwan Water Corporation also applied for provisional attachment against CGTD’s property on February 3 and March 2, 2017. At the end of February 2018, the provisionally attached property was worth $151,229 thousand.

As for the victims, CGTD, LCY Chemical Corp. and the Kaohsiung City Government signed a tripartite agreement for the compensation of the 32 victims’ families on July 17, 2015. Each victim’s family received $12,000 thousand, and the compensation was $384,000 thousand in total, which was paid in four annual payments by LCY Chemical Corp. LCY Chemical Corp. was in charge of negotiating the compensation with the victims’ families and signing the settlement agreement on behalf of the three parties.

As for the seriously injured, CGTD, LCY Chemical Corp. and the Kaohsiung City Government signed a tripartite agreement for the compensation of the 65 seriously injured victims’ families on October 25, 2017. Compensation was paid by CGTD and the Kaohsiung City Government, and CGTD was in charge of negotiating the compensation with the seriously injured victims’ families and signing the settlement agreement on behalf of the three parties.

• 64 -

Up to February 2018, victims and victims’ families had written letters or filed civil procedures (and criminal procedures) against CGTD, LCY Chemical Corp. and CPC for compensation. Along with the formerly mentioned compensation, the accumulated amount of compensation is $4,038,198 thousand, and the actual payment of CGTD depends on the verdict of the civil procedures. The date of the criminal procedures is estimated to be on May 11, 2018 and part of the civil procedures will be held on June 22, 2018.

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2017

Foreign Currency (In Thousands) Exchange Rate Functional Currency (In Thousands) Financial assets Monetary items USD $ 13,749 29.760 (USD:NTD) $ 409,181 RMB 38,479 4.555 (RMB:NTD) 175,252 JPY 5 0.264 (JPY:NTD) 1 Non-monetary items Investments accounted for using the equity method USD 66,451 29.760 (USD:NTD) 1,977,585 Financial liabilities Monetary items USD 1,171 29.760 (USD:NTD) 34,858 JPY 7,500 0.264 (JPY:NTD) 1,982	Carrying Amount $ 409,181 175,252 1
	$ 584,434
	$ 1,977,585
	$ 34,858 1,982
	$ 36,840

• 65 -

December 31, 2016

		Foreign		Functional
	Currency (In			Currency (In		Carrying
	Thousands)		Exchange Rate	Thousands)		Amount
Financial assets
Monetary items
USD	$	35,038	32.250 (USD:NTD)	$ 1,129,990	$	1,129,990
RMB		63,575	4.649 (RMB:NTD)	295,562		295,562
JPY		5	0.276 (JPY:NTD)	1		1
					$	1,425,553
Non-monetary items
Investments accounted for
using the equity method
USD		19,880	32.250 (USD:NTD)	641,128	$	641,128
Financial liabilities
Monetary items
USD		3,923	32.250 (USD:NTD)	126,531	$	126,531
JPY		102	0.2756 (JPY:NTD)	28		28
					$	126,559

For the years ended December 31, 2017 and 2016, realized and unrealized net foreign exchange gains (losses) were $(24,176) thousand and $5,446 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 and functional currencies of the Company.

31. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees

• 1) Financing provided to others. (None)

• 2) Endorsements/guarantees provided. (None)

• 3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures). (Table 1)

• 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital. (Table 2)

• 5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)

• 6) Disposals of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 3)

• 66 -

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (None)

• 9) Trading in derivative instruments. (Note 7)

• 10) Information on investees. (Table 4)

• b. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 5)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses. (Table 6)

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

  • c) The amount of property transactions and the amount of the resultant gains or losses.

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.

  • e) The highest balance during the period, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.

  • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

Besides Tables 1 to 6 as disclosed, there was no other information about significant transactions, investees and investments in mainland China which should be disclosed.

32. SEGMENT INFORMATION

According to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standard (IFRS) No. 8 on segment information does not apply to these parent company only financial statements.

• 67 -

TABLE 1

ASIA POLYMER CORPORATION

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES) DECEMBER 31, 2017

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

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2017	December 31, 2017		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Asia Polymer Corporation	Ordinary shares Harbinger Venture Capital Corp. Riselink Venture Capital KHL IB Venture Capital Co., Ltd. USI Corporation CTCI Corporation AU Optronic Corporation Wafer Works Corporation Neo Solar Power Corp. Evergreen Marine Corp. Oriental Union Chemical Corp. Quanta Computer Inc. Beneficiary securities Cathay No. 1 Real Estate Investment Trust Fund Cathay No. 2 Real Estate Investment Trust Fund Shin Kong No. 1 Real Estate Investment Trust Fund Fubon No. 2 Real Estate Investment Trust Fund Jih Sun Money Market Fund Paradigm Pion Money Market Fund Nomura Taiwan Money Market Fund Prudential Financial Money Market Fund UPAMC James Bond Money Market Fund	- - - Ultimate parent company - - - - - - - - - - - - - - - -	Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	408,000 769,516 18,200,000 99,368,307 14,496,107 9,618,516 2,017,271 229,127 1,500,000 866,000 500,000 4,901,000 2,500,000 2,000,000 5,000,000 3,534,072 2,262,916 3,089,187 3,183,308 3,013,116	$ 4,080 7,695 182,000 1,629,640 654,499 119,270 85,936 3,150 24,525 27,409 30,950 64,938 33,275 29,020 56,850 52,048 26,000 50,115 50,050 50,064	1.20 1.67 11.90 8.53 1.90 0.10 0.43 0.02 0.04 0.10 0.01 - - - - - - - - -	$ - - - 1,629,640 654,499 119,270 85,936 3,150 24,525 27,409 30,950 64,938 33,275 29,020 56,850 52,048 26,000 50,115 50,050 50,064

(Continued)

• 68 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2017	December 31, 2017		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
APC (BVI) Holding Co., Ltd. APC Investment Co., Ltd.	Taishin 1699 Money Market Fund CTBC Hwa-win Money Market Fund Mirae Asset Solomon Money Market Fund Taishin Ta-Chong Money Market Fund Yuanta De-Li Money Market Fund Fubon Chi-Hsiang Money Market Fund Deutsche Far Eastern DWS Taiwan Money Market Fund Eastspring Investments Well Pool Money Market Fund Hua Nan Kirin Money Market Fund Yuanta Wan Tai Money Market Fund Shin Kong Chi-Shin Money-Market Fund Cathay Taiwan Money Market Fund TCB Taiwan Money Market Fund Capital Money Market Fund Shares Budworth Investment Ltd. - ordinary shares Teratech Corp. - ordinary shares Silicon Technology Investment (Cayman) Corp. - preference shares NeuroSky, Inc. - series D preference shares TGF Linux Communication, Inc. - preference shares Sohoware, Inc. - preference shares Boldworks, Inc. - preference shares Solargiga Energy Holdings Ltd. - preference shares Ordinary shares USI Corporation Evergreen Marine Corp. Oriental Union Chemical Corp.	- - - - - - - - - - - - - - - - - - - - - Ultimate parent company - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	6,844,627 6,396,007 798,148 3,476,051 4,570,721 10,649,432 862,076 3,715,649 6,741,512 3,319,943 3,245,636 3,230,679 8,814,087 3,120,417 256,140 112,000 1,519,701 2,397,364 300,000 450,000 689,266 15,868,333 43,930 500,000 350,000	$ 92,040 70,071 10,005 49,091 74,082 166,121 10,024 50,252 80,267 50,004 50,001 40,009 89,035 50,051 1,975 - 48,938 4,113 - - - 17,212 720 8,175 11,078	- - - - - - - - - - - - - - 4.45 0.67 2.95 0.55 - - - 0.49 - 0.01 0.04	$ 92,040 70,071 10,005 49,091 74,082 166,121 10,024 50,252 80,267 50,004 50,001 40,009 89,035 50,051 - - - - - - - 17,212 720 8,175 11,078	(1) (1) (1) (1)

(Continued)

• 69 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2017	December 31, 2017		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
	Beneficiary securities Yuanta Wan Tai Money Market Fund Cathay Taiwan Money Market Fund Ordinary shares Neo Solar Power Corp.	- - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Available-for-sale financial assets - non-current	1,112,602 1,999,525 1,131,920	$ 16,758 24,762 15,564	- - 0.11	$ 16,758 24,762 15,564

Note 1: The carrying amount was zero as of December 31, 2017 due to the impairment loss recognized in prior years.

Note 2: Refer to Tables 4 and 5 for information about subsidiaries and associates.

(Concluded)

• 70 -

TABLE 2

ASIA POLYMER CORPORATION

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2017

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

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	**Acquisition **	**Acquisition **		**Disposal **	**Disposal **		**Ending **	Balance
					Number of Shares	Amount	Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares	Amount
APC Corporation	Shares Ever Conquest Global Limited. Fund Taishin 1699 Money Market Fund TCB Taiwan Money Market Fund Jih Sun Money Market Fund Fubon Chi-Hsiang Money Market Fund	Investments accounted for using the equity method Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	- - - - -	Associate - - - -	2,171,000 18,538,306 - 10,862,044 -	$ 63,554 248,000 - 159,000 -	44,099,000 33,085,671 47,665,006 15,710,003 22,731,694	$ 1,377,923 444,300 480,700 231,000 354,000	- 44,779,350 38,850,919 23,037,975 12,082,262	$ - 601,232 392,037 339,156 188,259	$ - 600,300 391,715 337,972 188,000	$ - 932 322 1,184 259	46,270,000 6,844,627 8,814,087 3,534,072 10,649,432	$ 1,420,944 (Note 1) 92,040 (Note 2) 89,035 (Note 3) 52,048 (Note 4) 166,121 (Note 5)

Note 1: The ending balance includes the original investment amount, the share of profit (loss) of investees and other related adjustments.

Note 2: The ending balance includes the original investment amount of $92,000 thousand and adjustments for fair value changes of $40 thousand.

Note 3: The ending balance includes the original investment amount of $88,985 thousand and adjustments for fair value changes of $50 thousand. Note 4: The ending balance includes the original investment amount of $52,028 thousand and adjustments for fair value changes of $20 thousand.

Note 5: The ending balance includes the original investment amount of $166,000 thousand and adjustments for fair value changes of $121 thousand.

• 71 -

TABLE 3

ASIA POLYMER CORPORATION

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2017

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

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchase/ Sale	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Financial Statement Account and Ending Balance	% of Total
Asia Polymer Corporation	USI Corporation	Ultimate parent company	Sale Purchase	$ (596,780) 135,176	(9.56) 2.43	60 days 30 days	No significant difference No significant difference	No significant difference No significant difference	Accounts receivable - related parties $99,228 Accounts payable - related parties $25,687	15.63 18.63

• 72 -

TABLE 4

ASIA POLYMER CORPORATION

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31, 2017	As of December 31, 2017	As of December 31, 2017	Net Income (Loss) of the Investee	Share of Profits (Loss)	Note
				December 31, 2017	December 31, 2016	Number ofShares	%	Carrying Amount
Asia Polymer Corporation APC (BVI) Holding Co., Ltd. APC Investment Co., Ltd.	APC (BVI) Holding Co., Ltd. APC Investment Co., Ltd. USI International Corp. China General Plastics Corporation China General Terminal & Distribution Corporation Swanson Plastics Corporation Acme Electronics Corporation Taiwan United Venture Capital Corp. Thintec Materials Corporation USI Optronics Corporation Ever Conquest Global Ltd. ACME Electronics (Cayman) Corp. USI International Corp. Acme Electronics Corporation Swanson Technologies Corporation	British Virgin Islands Taipei, Taiwan British Virgin Islands Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan British Virgin Islands British Virgin Islands British Virgin Islands Taipei, Taiwan Taipei, Taiwan	Reinvestment Investment Reinvestment Manufacture and marketing of PVC plastic cloth and three-time processed products Warehousing and transportation of petro chemical raw materials Manufacture and marketing of stretch film, diaper film, embossed film, heavy-duty sacks Manufacture and marketing of manganese-zinc and ferrite core Investment in high technology businesses Manufacture and marketing of reinforced plastic products Manufacture and marketing of sapphire products Reinvestment Reinvestment Reinvestment Manufacture and marketing of manganese-zinc and ferrite core Manufacture and marketing of EVA film	$ 409,938 (US$ 13,774,806 ) 200,000 83,328 (US$ 2,800,000 ) 247,412 41,802 75,242 61,348 52,791 36,250 59,725 1,376,995 (US$ 46,270,000 ) 156,088 (US$ 5,244,903 ) 35,712 (US$ 1,200,000 ) 14,889 30,000	$ 409,938 (US$ 13,774,806 ) 200,000 83,328 (US$ 2,800,000 ) 247,412 41,802 75,242 61,348 52,791 36,250 - 64,609 (US$ 2,171,000 ) 156,088 (US$ 5,244,903 ) 35,712 (US$ 1,200,000 ) 14,889 30,000	11,342,594 20,000,000 2,800,000 39,700,480 17,079,107 11,909,495 6,056,623 3,913,533 1,825,000 5,972,464 46,720,000 8,316,450 1,200,000 1,884,548 3,000,000	100.00 100.00 70.00 8.07 33.33 7.95 3.32 8.33 30.42 9.20 37.43 16.64 30.00 1.03 15.00	$ 435,497 108,578 121,144 629,910 272,509 197,140 45,253 26,748 7,617 43,697 1,420,944 190,627 51,919 14,081 (9,397 )	$ (8,545 ) 3,315 4,898 1,269,808 53,358 164,402 (103,454 ) 20,110 (866 ) (175,708 ) 10,291 (50,915 ) 4,898 (103,454 ) (21,502 )	$ (8,545 ) 3,315 3,428 102,464 17,786 13,069 (3,435 ) 1,675 (263 ) (16,028 ) 868 - - - -	Subsidiary (Note 1) Subsidiary (Note 1) Subsidiary (Note 1) Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method Investments accounted for using the equity method (Note 1) Investments accounted for using the equity method Investments accounted for using the equity method

Note 1: All intercompany transactions have been eliminated on consolidation.

• 73 -

TABLE 5

ASIA POLYMER CORPORATION

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2017

(In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi in Thousands, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital (Note 3)	Paid-in Capital (Note 3)	Method and Medium of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2017 (Note 3)	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2017	Net Income (Loss) of Investee (Note 2)	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 2)	Carrying Amount as of December 31, 2017 (Note 3)	Accumulated Repatriation of Investment Income as of December 31, 2017
							Outflow (Note 3)	Inflow
ACME Electronics (Kunshan) Co., Ltd. USI Trading (Shanghai) Co., Ltd. Fujian Gulei Petrochemical Co., Ltd.	Manufacture and marketing of manganese-zinc soft ferrite core Management of chemical products, equipment, and plastic products; wholesale of electronic materials, commission agency services and related supporting import and export services Manufacture of crude oil and petroleum products		$ 914,376 (US$ 30,725,000 ) 74,400 (US$ 2,500,000 ) 10,497,212 (RMB 2,304,800,000 )		(2) ACME Electronics (Cayman) Corp. (2) APC (BVI) Holding Co., Ltd. (2) Dynamic Ever Investments Ltd.	$ 124,319 (US$ 4,177,369 ) 90,339 (US$ 3,035,601 ) -	$ - - 1,284,912 (US$ 43,175,806 )	$ - - -	$ 124,319 (US$ 4,177,369 ) 90,339 (US$ 3,035,601 ) 1,284,912 (US$ 43,175,806 )	(Note 2,b,2 ) $ (77,698 ) (Note 2,b,2 ) 6,555 (Note 2,b,1 ) (13,083 )	16.64 100.00 12.71	$ (12,931 ) 6,555 (1,662 )	$ 119,563 99,903 1,332,033	$ - - -
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2017 (Note 3)		Investment Amounts Authorized by Investment Commission, MOEA (Note 3)		Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$1,643,017 (Note 4) (US$55,208,912)		$4,802,717 (US$161,381,608)		- (Note 5)

Note 1: Investments are divided into three categories as follows:

a. Direct investment: 1. b. Investments through a holding company registered in a third region: 2. c. Others: 3.

Note 2: For the column of investment gain (loss):

• a. If there is no investment gain (loss) during the preparation, it should be noted.

b. If the basis for the recognition of investment gain (loss) is classified into the following three type, it should be noted as follows:

• 1) Financial statements audited by international accounting firms which have a cooperation relationship with an accounting firm in the Republic of China.

• 2) Financial statements audited by the parent company’s CPA.

3) Others. Note 3: The calculation was based on the exchange rate as at December 31, 2017.

Note 4: The accumulated outward remittance includes the investments in Wafer Works Epitaxial Corp., Wafer Works (Shanghai) Corp., Shanghai JingJi Electronic Materials Co., Ltd., Jinzhou Yangguang Energy Co., Ltd., Jinzhou Youhua Silicon Materials Co., Ltd., Jinzhou Yangguang Energy Co., Ltd., Qinghai Chenguang New Energy Co., Ltd., USI Trading (Shanghai) Co., Ltd. (“USIT”), and Fujian Gulei Petroleum Company.

• a. The Company invested in Wafer Works Epitaxial Corp. and Wafer Works (Shanghai) Corp. through Silicon Technology Investment (Cayman) Corp.

b. The Company invested in Solar Technology Investment (Cayman) Corp. and Risheng Investment Limted through Solargiga Energy Holdings Limited, which indirectly invested in Solar Energy Silicon Materials Co., Ltd. and then in Shanghai JingJi Electronic Materials Co., Ltd. Risheng Investment Limited indirectly invested in Jinzhou Yangguang Energy Co., Ltd., Jinzhou Youhua Silicon Materials Co., Ltd., Jinzhou Yangguang Energy Co., Ltd., and Qinghai Chenguang New Energy Co., Ltd.

Note 5: As the Company has obtained the certificate of qualification for operating headquarters issued by the Industrial Development Bureau, MOEA in Order No. 10520427730 on November 11, 2016, the upper limit on investments in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.

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TABLE 6

ASIA POLYMER CORPORATION

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES

FOR THE YEAR ENDED DECEMBER 31, 2017

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

Investee Company	Transaction Type	Purchase/Sale	Purchase/Sale	Price		Transaction Details	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Unrealized (Gain) Loss
		Amount	%		Payment Terms	Comparison with Normal Transactions	Ending Balance	%
USI Trading (Shanghai) Co., Ltd.	Sales revenue Commission expenses	$ 66,242 706	1.06 -	No significant difference -	T/T 90 days -	No significant difference -	$ 30,659 -	4.83 -	$ - -

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