FCFC - AGM Information 2017 | FinancialReports.eu

FORMOSA CHEMICALS & FIBRE CORPORATION

2017ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK (Summary)

(This English translation is prepared in accordance with the Chinese version and is for reference purposes only. If there are any inconsistency between the Chinese original and this translation, the Chinese version shall prevail.)

JUNE 9, 2017

………………………………………………. Meeting Procedure page 2 Meeting Agenda……………………………..…………………… page 3 Report Items……………………………………………………… page 4 Ratification Items………………………………………………… 15 page Discussion Items ……………………………………………... … 17 page Appendices……………………………………………………….. page 25

FORMOSA CHEMICALS & FIBRE CORPORATION

2017 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

Call Meeting to Order
Chairman’s Address
Report Items
Ratification Items
Discussion Items
Extraordinary Motions
Meeting Adjourned

FORMOSA CHEMICALS & FIBRE CORPORATION

2017 ANNUAL SHAREHOLDERS’ MEETING

AGENDA

Time: 2:00 p.m., Friday, June 9, 2017

Venue: 2F, International Ballroom at Sunworld Dynasty Hotel

(No. 100 Dun Hua North Road, Taipei, Taiwan)

1. Report Items

(1) 2016 Business Report
(2) Audit Committee’ Review Report on the 2016 Financial Statements
(3) Distribution of 2016 Employees Compensation

2. Ratification Items

(1) Please approve the 2016 Business Report and Financial Statements as required by the Company Act.
(2) Please approve the Proposal for Distribution of 2016 Profits as required by the Company Act.

3. Discussion Items

(1) To comply with the regulations of the competent authority in charge of securities affairs, the Company has established Audit Committee in lieu of Supervisor. As such, the Company’s “Procedures for Acquisition and Disposal of Assets of the Company” shall be revised to reflect such amendments. The corresponding comparison table for the articles before and after the amendment is attached. Please discuss and resolve.

Report Items

About the Company’s results of operation for fiscal year 2016, please refer to Business Report for further details (on page 5 of the Handbook.)
The Company’s Audit Committee members reviewed the 2016 Business Report and Financial Statements and issued their Review Report according to the applicable laws. Please refer to Audit Committee’s Review Report (on page 14 of the Handbook.)
The company has issued the report on compensation distributed to its employees for 2016.
The pre-tax profit prior to deducting employees compensation distributable for 2016 is NT$47,608,381,780. Adopted by the Board Meeting on March 17, 2017, 0.1% of the profit is allocated as employees’ compensation in accordance with Article 31 of the Articles of Incorporation. The total allocated amount is NT$47,608,382 ,which shall be distributed in cash. The above is hereby reported for record.

FORMOSA CHEMICALS & FIBRE CORPORATION 2016 Annual Business Report

FCFC reported annual consolidated revenue of TWD319.2 billion in 2016, which is down by TWD10.14 billion or 3.1% from the annual

consolidated revenue of TWD329.34 billion in 2015. The main factors for the decline relate to prices having remained below average prices in 2015 despite the increase in sales prices of 2016 products with the rebound of oil prices. On the other hand, the sales quantity increased by TWD4.72 billion due to the completion of the overseas expansion projects, which were put into use and increased the production capacity. Due to the increase in profits between products and raw materials, an increase in the proportion of high value products, the continued promotion of energy conservation and emission reduction, as well as the profits from investment companies, the annual consolidated pre-tax income for 2016 reached TWD54.68 billion. This represents an increase of TWD18.69 billion or a growth rate of 51.9%, as compared to the annual consolidated pre-tax income of TWD35.99 billion in 2015.

The constant occurrence of black swan events in 2016 caused enormous impacts and financial fluctuations in the international community. Such events ranged from the negative interest rates adopted by the Bank of Japan at the beginning of the year, to the expansion of the QE program to 80 billion euros adopted by the European Central Bank, to the referendum of the exit from EU by UK, and the Donald Trump won the presidency of the U.S. at the end of the year. International oil prices also suffered from fluctuations, ranging from the bottom prices of less than US$30 per barrel at the beginning of the year to the steady climbing of prices to exceed US$55 per barrel by the end of the year.

Looking ahead, due to the continuous improvement of the US labor market and salary conditions, the steady growth of private consumption capacity, while China’s economic growth rate in 2016 decreased to 6.7%, the supply side reform has begun to take effect, allowing enterprises to accelerate

the restocking of their inventories. Under the promotion of the two major economies, the Chinese and U.S. markets, the global economy is expected to gradually recover. However, due to the ineffectiveness of the administrative measures of the new Government, the Taiwanese economy is plagued by labor and environmental protection issues and other factors interfering with the industrial development of Taiwan. In addition, with increasingly distant cross-straits relations, Taiwan has failed to grasp opportunities for economic development. These factors will affect the future development of Taiwanese enterprises, thus we look forward to the Government will make prompt improvements to ensure the healthy development of Taiwan’s economy.

In the annual consolidated revenue of 2016, the net revenue of the parent company Formosa Chemicals & Fibre Corporation (FCFC) was TWD171.68 billion, accounting for 53.8% of the consolidated revenue. The total net revenue of subsidiaries in Ningbo, Vietnam, and the Formosa Taffeta Company Limited reached TWD147.52 billion, accounting for 46.2% of the consolidated revenue.

Among the various products of the parent company, petrochemical and plastic products are the main contributors to the revenue, where the net revenue in 2016 accounted for 88.4% of the parent company revenue, among which the petrochemical products reached TWD102.6 billion and plastic products TWD49.1 billion. This accounts for 59.8% and 28.6% of the net revenue of the parent company, respectively.

The operating statuses of the company’s products are as follows: In petrochemical products, the focus of the operation is to continue the refinement of production processes and energy conservation in the hopes of increasing supply chain flexibility to reduce raw material costs and processing costs.

In aromatic hydrocarbon products, in 2016, the ARO-1 Plant completed the refining of xylene to remove the bottleneck and replace the catalyst with a new alkyl type catalyst to increase the restructuring and alkyl reaction feed.

The process allows the adjustment of feed combinations according to market requirements to reduce the use of high priced raw materials for cost reduction. In addition, 107 improvement projects for water and energy conservation were completed, including the installation of cooling systems to recycle pure LPG, resulting in improved energy efficiency. In 2017, the Company is going to continue arranging for the ARO-3 Plant to use new generation adsorbents and alkyl reaction catalysts, and to restructure the heating boiler to remove bottlenecks and further reduce production costs. In addition, improvements will be made in the recycling of heavy aromatic hydrocarbon in ARO-1/2/3 Plants to increase material sources.

For styrene monomer, in 2016, styrene production was maintained at a stable rate throughout the year, and numerous improvements were implemented for fuel efficiency and energy consumption, achieving a 5.5% reduction in production costs, and thus increasing profitability. As we look forward towards 2017, SM-1, SM-2, and SM-3 plants will be respectively suspending operations to undergo annual inspections, new alkyl catalyst replacements, and production improvements, to increase production efficiency. In the future, the Company shall continue to use the Mailiao Plant for vertical integration, continue efforts in energy conservation, and actively explore the market to increase profits.

In synthetic phenol products, in 2016, the plants in Taiwan maintained stable production throughout the year. In addition to favorable pricing of raw materials benzene and propylene, the profit growth was also attributed to the improvements in energy conservation, which lowered production costs by 2.3% as compared to 2015. In 2016, the Ningbo Plant actively made optimization adjustments, improvements to energy conservations, and expanded the Chinese market to achieve full production output and sales, successfully turning losses into profits. In 2017, though the demand in Asian markets is projected to continue increasing, production capacity is underutilized. Therefore, the Company shall continue to engage in active energy conservation and optimization to reduce costs and improve operations.

It is expected that the synthetic phenol products will continue to maintain good profits. In addition, to address the increase in demand for Bisphenol A (BPA) in mainland China, the Ningbo Plant shall implement a production capacity expansion to further enhance operation performance.

For Purified Terephthalic Acid (PTA) product, both plants in Taiwan and Ningbo were able to reduce energy consumption and operation costs, resulting in significantly reduced processing costs per ton of 4.6% and 5.1%, respectively as compared to 2015. However, due to the mainland China PTA imports and the poor price, coupled with Taiwan’s exports to the mainland China still being subject to a 6.5% customs tax, the 2017 sales strategy of the Taiwan plant will be continuous focusing on the expansion of marginal interests of the domestic market. In terms of exports, besides supplying the Formosa Industries Corporation in Vietnam, the surplus will be sold to potential customers in the Southeast Asia, mainland China, and Middle East markets that have tax rebates for materials imported for processing to maintain the full capacity operation of the two production lines. As for the Ningbo Plant, due to the stability of production and quality, the products were still welcomed by downstream customers despite a market share of less than 3%. To avoid long-term losses, the plant shall fully dedicate efforts to the implementation of improvement projects in production processes, which shall be operational by the end of the year. The improvements are projected to reduce processing costs per ton by 23.1%, thus greatly improving competitiveness and ensuring company sustainability.

For Purified Isopropyl Alcohol (PIA) product, after three years of efforts and accumulation of experience, the Long-De PTA Plant has achieved significant improvement in production and quality, establishing a solid reputation in the market. Despite the fierce competition in 2016, the Company has continued to implement improvements in energy and water conservation to increase cost advantages, thus achieving a substantial profit growth as compared to 2015. With sufficient raw materials, it is projected that production capacity will increase in 2017. Besides expanding the market

to potential customers in the Middle East and other regions with similar competitiveness, the Company shall focus mainly on the users of plastic sheeting and low-melting cotton in mainland China to expand market share, and to prepare in advance for sales after the completion of the Ningbo Plant in the future.

In plastic products, supported by the demand for rigidity and the longterm low inventory stock of downstream users, the timely replenishment of inventory stocks, and the differentiation in product sales and aftersales services allowed the Company to achieve a profit growth. Looking ahead, in 2017, besides making full use of the free customs tax niches of the Economic Cooperation Framework Agreement (ECFA), the Company will continue to strengthen market development and product promotion in regions outside of China, dedicate efforts to development of new specifications, and expand product differentiation to increase company competitiveness.

For polystyrene (PS) products, the plants in Taiwan maintained a considerable profit in materials such as LCD TV diffusion boards and oriented polystyrene (OPS), while the Ningbo Plant maintained considerable profits in materials such as high gloss and high impact polystyrene, LED lighting, and light conductive panels. In 2017, besides ensuring the growth of sales objectives in the Middle East and other regions, the Taiwan Plant will actively develop customers from Japanese OA manufacturers who had transferred to the Vietnamese and Thailand Plants, as well as extend the company’s reach into regions such as Cambodia and Myanmar. The Ningbo Plant will continue to increase the sales proportion of special specification materials, such as high-light conductive panels, refrigerator lining, extra high impact specifications, and high flow specifications.

In terms of ABS, the sales of special specification ABS of the Taiwan Plant in 2016 accounted for 24.8% while the Ningbo Plant accounted for 12.2%, which were the main sources of profit in both cases. In 2017, the Company shall continue to develop high threshold, high value-added special

specification products to maximize differentiation proportion, with 30% and 21% objectives for the Taiwan Plant and Ningbo Plant, respectively. The Company shall also actively expand the market share of PC/ABS and other plastic compound products. In addition, using the Ningbo Plant as the foundation for the sales services and product promotion in Chinese markets, the Company will be able to meet customer demands for upgraded materials and develop new plastic compound products to ensure the synchronized increase in sales of special specification products.

For polyproylene (PP) product, despite the routine inspection of the first and second series in 2016, the Company was able to reach a 73.7% full production and sales of special specification products while maintaining the optimal product quality and good profits. As projections for 2017 indicate that the PP market would continue to pursue stable growth, the Company will make use of the inspection periods to implement bottleneck removal projects on the first and second series, which will bolster productivity and ensure continued development in high flow and lightweight features. Making use of the high-rigidity characteristics of the impact copolymers of the Company and the customs tax niche of the ECFA, the Company would be able to make additional flexible adjustments to production specifications in conjunction with customization and high-value product development to achieve greater profits.

For Polycarbonate product, reached recorded high profits in 2016 are attributed to the strong demands from industries such as the automobile industry, lighting markets, and plastic modifiers, the vertical integration and stable production of the company in Mailiao, increase in productivity, lift in qualities, development of medium and high-end customers, and increase in sales volume of special specification materials. In 2017, the Company will continue to implement reforms to produce high value specifications, especially since the closure of the Japanese company Idemitsu Petrochemical Co., Ltd. has led to many R&D specialists being transferred to the

Company’s Mailiao Plant. Combined with the introduction of mass production of special specification products, such as high flow specifications, high transparency light specifications, silica copolymer specifications, high flow and impact specifications, the Company will strive to develop the highend market and ensure the sustainability of high profits.

In terms of fiber textile products, due to the decrease in market demand, and the suspension of cogeneration equipment in Changhua Plant from October 2016 onwards due to failure in obtaining renewed operation permits, the revenue and profits for 2016 were undesirable. Beginning from 2017, the Company will accept orders for Rayon cotton from more profitable regions and clients, which will be made into high value-added thick and fine Denier fiber using post-end yarn spinning processes, while also expanding the market for differentiated products, such as non-woven cotton and colored cotton. In terms of nylon filaments, the Company plans to reorganize the production and sales teams of Taiwanese and Vietnamese Plants to accelerate the expansion into new markets and differentiated products. With the brand image as its main sales promotion, the Company shall use reliable highquality yarn to establish a marketing channel integrating the upstream, midstream, and downstream sectors.

In addition, the Formosa Industries Corporation, a joint venture in Vietnam, with Nan Ya Plastics Corporation has achieved major growth in both revenue and profits in 2016 as compared to 2015. This has been mainly attributable to the completion of expansion projects and commencement of operations involving equipment for the annual production capacity of 38,000 tons of polyester fiber, 80,000 spindles of yarn spinning equipment, and 150,000 kilowatt cogeneration equipment, thus increasing operation performance. Although the U.S. has withdrawn from the Trans-Pacific Partnership (TPP) agreement, the joining of Southeast Asian countries in the RCEP and the niches of the Belt and Road has allowed us to remain cautiously optimistic for future operations.

The Company shall continue to abide by the corporation philosophies of “Pursuing Root Causes” and “Seeking Perfection” to face difficulties head-on, seek pragmatic solutions, continue the implementation of improvements such as industrial safety environmental protection, and fulfill corporate social responsibilities.

In terms of industrial safety, the various plants have passed the SGS certifications in the annual company audits and have achieved the OHSAS18001 and CNS 15506 international certifications, and will continue to implement improvements using the PDCA management model. Through the organizing of case study competitions for PHA, JSA, MOC, and potential hazard drills, the plants can engage in mutual observation and learn from one another to discover the blind spots of industrial safety and the potential hazards. Besides being awarded performance excellence awards from the Ministry of Labor and the Ministry of Health and Welfare, as the Mailiao Plant of the Company had won three consecutive “Excellent Department Awards” between 2013 and 2015, the Mailiao Plant was awarded the highest honor award, “Industrial Safety Five-Star Award” in 2016.

In terms of environmental protection, the Company has continued to use the Best Available Control Technology (BACT), energy efficiency optimization, and pollution prevention and control equipment, and strongly promoted waste reduction measures. By the end of 2016, the accumulated investment in pollution prevention and control had reached over TWD16.65 billion while the various plants had achieved the ISO-14001 Environmental Management certification.

In order to ensure the recycling of resources, the Company has actively promoted energy conservation and emission/discharge reduction. Over the years, the Company invested a total of TWD9.12 billion to complete 3,189 improvement projects, which conserved 87,000 tons of water per day, 816.8 tons of steam per hour, 94,000 units of electricity per hour, accounting for

TWD8.15 billion in cost reduction, a reduction of 3.19 million tons of CO2 emission, equivalent to 265,000 hectares of afforestation. In the future, the Company shall continue to abide by the ideology of “circular economy” to promote improvements such as reduction in raw material consumption, recycling of waste materials, energy conservation, and waste reduction, and fulfill the corporate responsibilities of reducing greenhouse gases to achieve sustainability.

For Company prospects in 2017, the U.S. government is expected to raise interest rates, which will stimulate the world economy, while China has also shown signs of recovery. If the government implements policies that can enable enterprises to overcome some of the irrational social issues, and provide assistance to enterprises according to their needs by stimulating economic development, then the basic aspect of Taiwan’s economy will be able to recover together with the international community. However, if the cross-straits tensions continue to intensify, it would result in a decrease in Taiwan’s international competiveness, therefore the ability of the government in improving the cross-straits relations and engaging in more multi-lateral or bi-lateral economic agreements to avoid being isolated will be the greatest challenge for 2017.

Faced with the uncertainties of the global economy, the Company shall continue to maintain its investments to ensure sustainable management. If Taiwan were able to make the environment more conducive for investment, it would definitely be the best choice for investments. In terms of external developments, there are currently some ongoing projects in both the U.S. and mainland China. In addition, in terms of business operation, the Company should continue to engage in the active development of international markets, such as ASEAN, the Middle East, and the Americas to expand the niche market of differentiated products, ensure strict control over raw material and product inventories, and maintain stable production capacity and profits to ensure returns to stockholders.

FORMOSA CHEMICALS & FIBRE CORPORATION Audit Committee’ Review Report

The Board of Directors has prepared the Company’s 2016 Business Report, Financial Statements and Proposal for Profits Distribution. The CPA firm of PWC was retained to audit Formosa Chemicals & Fibre Corporation’s Financial Statements and has issued an audit report relating to Financial Statements. The Business Report, Financial Statements, and Proposal for Profits Distribution have been reviewed and determined to be correct and accurate by the Audit Committee members of Formosa Chemicals & Fibre Corporation. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report. Please be advised accordingly.

Formosa Chemicals & Fibre Corporation Chairman of the Audit Committee:

Ruey-Long Chen

March 17, 2017

Ratification Items Proposal 1

Proposal: For approval of the 2016 Business Report and Financial Statements as required by the Company Act.

Proposed by the Board of Directors

Explanation:

The preparation of the Company’s 2016 Consolidated and Individual Financial Statements were completed and the same were approved at the meeting of the Board on March 17, 2017 and audited by independent auditors, Mr. Chien-Hung Chou and Ms. Man-Yu Juanlu , of PWC. The aforesaid Financial Statements together with the Business Report were reviewed by the Audit Committee, which the Audit Committee’ Review Report is presented.
For the aforementioned Business Report, please refer to page 5 through page 13 of the Meeting Handbook. As for the Financial Statements, please refer to page 25 through page 38 of the Handbook. Please approve the Business Report and the Financial Statements.

Resolution:

Ratification Items Proposal 2

Proposal: For Approval of the Proposal for Distribution of 2016 Profits as required by the Company Act.

Proposed by the Board of Directors

Explanation:

Please refer to page 39 of the Handbook for the Statement of Profits Distribution, which has been reviewed by the Audit Committee members of Formosa Chemicals & Fibre Corporation and approved by the Board of Directors. Please approve the Statement of Profits Distribution.

Resolution:

Discussion Items Proposal 1

Proposal: Amendment to the Procedures for Acquisition and Disposal of Assets of the company submitted for discussion

Proposed by the Board of Directors Explanation: To comply with the requirements provided in the order Jin-Guan-Zheng-Fa-Zi No. 1060001296 dated February 9, 2017 by the Financial Supervisory Commission, certain articles of the Procedures for Acquisition and Disposal of Assets provided by the company have been amended. The comparison table for articles before and after amendment is hereby attached. Please determine whether the amendments are reasonable.

Article	Article before Amendment		Article after Amendment
Article 7	In acquiring or disposing of real property or equipment where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a governmentagency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply withthefollowing		In acquiring or disposing of real property or equipment where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government institution, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions:

		provisions: (Omitted)	(Omitted)
Article 8-1		(Added)	In acquiring or disposing of membership cards or intangible assets where the transaction amount reaches 20 percent or more of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government institution, shall obtain a CPA’s opinion on the reasonableness of the transaction price prior to the date of occurrence of the event. The CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation.
Article 8-2		The calculation of the transaction amounts referred to in the preceding twoarticles shall be done in accordance with paragraph 2 of Article 26, herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which	The calculation of the transaction amounts referred to in the precedingthree articles shall be done in accordance with paragraph 2 of Article 26, herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which

	an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.		an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.
Article 12	When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the Company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription orredemptionof domestic money market funds, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the Board of Directors: (Omitted)		When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the Company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription orrepurchaseof money market fundsissued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the Board of Directors: (Omitted)


	Article 18	The Company that conducts a merger, demerger, acquisition, or assignment of shares shall, prior to convening the Board of Directors to resolve on the matter, engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and propose the opinion to the Board of Directors for deliberation and approval.		The Company that conducts a merger, demerger, acquisition, or assignment of shares shall, prior to convening the Board of Directors to resolve on the matter, engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and propose the opinion to the Board of Directors for deliberation and approval. However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by the company of a subsidiary in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the Company directly or indirectly holds

			100 percent of the respective subsidiaries’issued shares or authorized capital.
Article 26	Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the securities competent authority's designated website in the appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event: 1.Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid- in capital, 10 percent or more of the Company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under		Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the securities competent authority's designated website in the appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event: 1.Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid- in capital, 10 percent or more of the Company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements,or subscription

	repurchase and resale agreements, or subscription orredemption of domestic money market funds. 2.Merger, demerger, acquisition, or assignment of shares. 3.Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the Company. 4.Where an asset transaction other than any of those referred to in the precedingthree subparagraphs, a disposal of receivables by a financial institution, or an investment in the Mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances: (1)Trading of government bonds. (2)Tradingof bonds under	orrepurchaseof money market fundsissued by domestic securities investment trust enterprises. 2.Merger, demerger, acquisition, or assignment of shares. 3.Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the Company. 4.Where the type of asset acquired or disposed is equipment/machinery for business use, the trading counterparty is not a related party, and the transaction amount ismorethan NT$1 billion. 5.Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the

		repurchase/resale agreements, or subscription or redemptionof domestic money market funds. (3)Where the type of asset acquired or disposed is equipment/machinery for business use, the trading counterparty is not a related party and the transaction amount isless than NT$500 million. (4) Where land is acquired under an arrangement on engaging others to build on the company's own land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction isless than NT$500 million. (Omitted)	amount the Company expects to invest in the transaction ismorethan NT$500 million. 6. An asset transaction other than any of those referred to in the preceding fivesubparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area where the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, provided this shall not apply to the following circumstances: (1)Trading of government bonds. (2)Trading of bonds under repurchase/resale agreements or the subscription or repurchaseof money market fundsissued by domestic securities investment trust enterprises. (Omitted)
Article 27		When the Company at the time ofpublic	When the Company at the time ofpublic announcement

	announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety.		makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entiretywithin two days from the date when is the Company becomes aware of the error or omission.

Resolution:

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

						Year ended December	Year ended December	Year ended December	31
					2016				2015
	Items	Notes			AMOUNT	%			AMOUNT	%
4000	Operating revenue	6(19) and 7		`$`	`319,204,627`	`100`		`$`	`329,349,307`	`100`
5000	Operating costs	6(6)(14)(23)(24) and
		7	`(`		`271,653,073 ) (`		`85) (`		`295,636,411) (`	`90)`
5900	Net operating margin				`47,551,554`		`15`		`33,712,896`	`10`
	Operating expenses	6(14)(23)(24) and 7
6100	Selling expenses		`(`		`8,524,812 ) (`		`3) (`		`8,831,840) (`	`3)`
6200	General and administrative expenses		`(`		`5,591,090 ) (`		`2) (`		`5,506,930) (`	`1)`
6000	Total operating expenses		`(`		`14,115,902 ) (`		`5) (`		`14,338,770) (`	`4)`
6900	Operating profit				`33,435,652`		`10`		`19,374,126`	`6`
	Non-operating income and expenses
7010	Other income	6(20) and 7			`7,926,142`		`3`		`5,306,716`	`2`
7020	Other gains and losses	6(21)	`(`		`3,714,696 ) (`		`1)`		`1,418,928`	`-`
7050	Finance costs	6(9)(22) and 7	`(`		`1,993,143 ) (`		`1) (`		`2,305,371) (`	`1)`
7060	Share of profit of associates and	6(8)
	joint ventures accounted for under
	equity method				`19,021,711`		`6`		`12,194,766`	`4`
7000	Total non-operating income and
	expenses				`21,240,014`		`7`		`16,615,039`	`5`
7900	Profit before income tax				`54,675,666`		`17`		`35,989,165`	`11`
7950	Income tax expense	6(25)	`(`		`5,908,938 ) (`		`2) (`		`4,371,618) (`	`1)`
8200	Profit for the year			`$`	`48,766,728`		`15`	`$`	`31,617,547`	`10`

(Continued)

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

						YearendedDecember	YearendedDecember	YearendedDecember	YearendedDecember	YearendedDecember	31
					2016						2015
	Items	Notes		AMOUNT			%				AMOUNT			%
	Other comprehensive income (net)	6(18)(25)
8311	Other comprehensive income,
	before tax, actuarial gains (losses)
	on defined benefit plans		`($`		`505,220)`			`-`	`($`		`573,733)`				`-`
8320	Share of other comprehensive loss
	of associates and joint ventures
	accounted for using equity method,
	components of other
	comprehensive income that will
	not be reclassified to profit or loss		`(`		`23,805)`			`-`	`(`		`278,660)`				`-`
8310	Components of other
	comprehensive loss that will not
	be reclassified to profit or loss		`(`		`529,025)`			`-`	`(`		`852,393)`				`-`
	Components of other comprehensive
	income that will be reclassified to
	profit or loss
8361	Financial statements translation
	differences of foreign operations		`(`		`4,757,556)`	`(`		`1)`	`(`		`756,536)`				`-`
8362	Unrealized gain (loss) on valuation
	of available-for-sale financial assets				`24,960,906`			`8`	`(`		`9,601,819) (`				`3)`
8370	Share of other comprehensive
	income (loss) of associates and
	joint ventures accounted for under
	equity method				`1,081,694`			`-`	`(`		`2,088,004) (`				`1)`
8399	Income tax relating to the
	components of other
	comprehensive income				`591,147`			`-`				`15,942`			`-`
8360	Components of other
	comprehensive income (loss)
	that will be reclassified to profit
	or loss				`21,876,191`			`7`	`(`		`12,430,417) (`				`4)`
8300	Total other comprehensive income
	(loss) for the year			`$`	`21,347,166`			`7`	`($`		`13,282,810) (`				`4)`
8500	Total comprehensive income for the
	year			`$`	`70,113,894`			`22`		`$`	`18,334,737`				`6`
	Net income attributable to:
8610	Owners of the parent			`$`	`43,833,045`			`14`		`$`	`27,578,193`				`9`
8620	Non-controlling interest				`4,933,683`			`1`			`4,039,354`				`1`
				`$`	`48,766,728`			`15`		`$`	`31,617,547`				`10`
	Total comprehensive income
	attributable to:
8710	Owners of the parent			`$`	`57,934,824`			`18`		`$`	`12,247,215`				`4`
8720	Non-controlling interest				`12,179,070`			`4`			`6,087,522`				`2`
				`$`	`70,113,894`			`22`		`$`	`18,334,737`				`6`
			Before Tax		After Tax					Before Tax			After	Tax
	Basic earnings per share	6(26)
9710	Profit for the year from continuing
	operations		$	9.36	$		8.35		$		6.16	$		5.41
9720	Non-controlling interest	(		1.22	) (		0.85	) (			1.00 ) (			0.69 )
9750	Profit attributable to common
	shareholders of the parent		$	8.14	$		7.50		$		5.16	$		4.72
	Assuming shares held by subsidiary are	not deemed as treasury stock:
	Profit for the year from continuing
	operations		$	9.33	$		8.32		$		6.14	$		5.39
	Non-controlling interest	(		1.22	) (		0.84	) (			0.99 ) (			0.68 )
	Profit attributable to common
	shareholders of the parent		$	8.11	$		7.48		$		5.15	$		4.71

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

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

Notes	For	December31,
	2016	2015
6(17) and 7 6(5)(21)(22) and 7 6(12)(21)(22) and 7 6(18) and 7 6(8)(19) and 7 6(8)(20) and 7 6(7) 6(23) 6(16)(23) 6(24) med as treasury stock:

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

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2016 AMOUNT % `$` `30,391,911` `6` `627,621` `-` `100,777,992` `18` `7,037,751` `1` `11,643` `-` `18,028,975` `3` `7,356,435` `1` `5,107,594` `1` `19,841,060` `4` `42,215,280` `8` `5,409,066` `1` `236,805,328` `43` `42,381,294` `8` `24,431,806` `5` `102,035,137` `19` `130,913,460` `24` `1,583` `-` `1,732,954` `-` `6,135,028` `1` `307,631,262` `57` `$` `544,436,590` `100`	December 31, 2015	December 31, 2015
	AMOUNT `$` `30,391,911` `627,621` `100,777,992` `7,037,751` `11,643` `18,028,975` `7,356,435` `5,107,594` `19,841,060` `42,215,280` `5,409,066` `236,805,328` `42,381,294` `24,431,806` `102,035,137` `130,913,460` `1,583` `1,732,954` `6,135,028` `307,631,262` `$` `544,436,590`	AMOUNT `$` `34,744,139` `655,811` `83,428,951` `6,581,909` `5,235` `14,682,304` `6,820,320` `7,845,329` `9,853,312` `40,002,037` `6,330,056` `210,949,403` `29,476,127` `3,524,297` `113,700,148` `144,363,759` `3,386` `2,087,690` `8,880,620` `302,036,027` `$` `512,985,430`	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1125 Available-for-sale financial assets - current 1150 Notes receivable, net 1160 Notes receivable - related parties 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventory 1470 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1543 Financial assets carried at cost - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets			`7` `-` `16` `1` `-` `3` `1` `2` `2` `8` `1`
			`41`
			`6` `1` `22` `28` `-` `-` `2`
			`59`
			`100`

(Continued )

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

Liabilities andEquity	(Expressed in thousands of New Taiwan dollars) December 31, 2016 December 31, 2015 Notes AMOUNT % AMOUNT % 6(10) `$` `26,146,750` `5` `$` `26,672,648` `5` 6(10) `1,499,464` `-` `2,049,364` `-` 6(11) `1,381` `-` `819` `-` `196,870` `-` `200,127` `-` `8,525,984` `2` `6,936,889` `1` 7 `13,385,510` `2` `12,287,595` `2` `8,387,052` `1` `10,310,254` `2` 7 `57,478` `-` `2,346,509` `1` `3,708,596` `1` `3,174,973` `1` 6(12)(13) `14,416,502` `3` `16,179,230` `3` `2,884,328` `-` `2,201,285` `1` `79,209,915` `14` `82,359,693` `16` 6(12)(13) `39,750,000` `8` `46,500,000` `9` 6(13) `38,614,620` `7` `38,774,737` `8` 6(25) `312,506` `-` `927,239` `-` 6(14) `6,909,137` `1` `11,346,228` `2` `85,586,263` `16` `97,548,204` `19` `164,796,178` `30` `179,907,897` `35` 6(15) `58,611,863` `11` `58,611,863` `11` 6(16) `8,622,642` `1` `8,875,002` `2` 6(17) `46,663,535` `9` `43,905,716` `9` `41,927,550` `8` `41,927,550` `8` 6(25) `72,560,103` `13` `52,528,055` `10` 6(18) `91,965,445` `17` `77,334,641` `15` 6(15) `(` `360,572)` `- (` `352,309)` `-` `319,990,566` `59` `282,830,518` `55` `59,649,846` `11` `50,247,015` `10` `379,640,412` `70` `333,077,533` `65` 9 11 `$` `544,436,590` `100` `$` `512,985,430` `100`	December 31, 2015	December 31, 2015
			%
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity			`5` `-` `-` `-` `1` `2` `2` `1` `1` `3` `1`
			`16`
			`9` `8` `-` `2`
			`19`
			`35`
			`11` `2` `9` `8` `10` `15` `-`
			`55`
			`10`
			`65`
			`100`

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

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars,except as otherwise indicated)

Assets	December 31, 2016 AMOUNT % `$` `13,108,011` `3` `98,777,865` `23` `335,838` `-` `129,706` `-` `5,835,641` `1` `14,424,217` `3` `2,606,436` `1` `19,376,968` `5` `21,820,886` `5` `1,818,615` `1` `178,234,183` `42` `2,463,536` `1` `186,031,851` `44` `50,831,005` `12` `1,421,036` `-` `3,693,755` `1` `244,441,183` `58` `$` `422,675,366` `100`	December 31, 2015	December 31, 2015
	AMOUNT `$` `13,108,011` `98,777,865` `335,838` `129,706` `5,835,641` `14,424,217` `2,606,436` `19,376,968` `21,820,886` `1,818,615` `178,234,183` `2,463,536` `186,031,851` `50,831,005` `1,421,036` `3,693,755` `244,441,183` `$` `422,675,366`	AMOUNT `$` `18,018,485` `81,829,505` `369,427` `140,382` `5,330,843` `11,613,706` `3,156,316` `10,583,312` `19,433,809` `3,144,364` `153,620,149` `2,463,536` `172,507,251` `55,843,737` `1,538,788` `5,482,849` `237,836,161` `$` `391,456,310`	%
Current assets 1100 Cash and cash equivalents 1125 Available-for-sale financial assets - current 1150 Notes receivable, net 1160 Notes receivable - related parties 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventory 1470 Other current assets 11XX Total current assets Non-current assets 1543 Financial assets carried at cost - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets			`4` `21` `-` `-` `1` `3` `1` `3` `5` `1`
			`39`
			`1` `44` `14` `-` `2`
			`61`
			`100`

(Continued)

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars,except as otherwise indicated) December 31, 2016 December 31, 2015 Liabilities and equity Notes AMOUNT % AMOUNT % Current liabilities 2100 Short-term borrowings 6(9) `$` `6,990,100` `2` `$` `2,508,000` `1` 2170 Accounts payable `3,221,504` `1` `3,396,755` `1` 2180 Accounts payable - related parties 7 `11,754,679` `3` `10,618,602` `3` 2200 Other payables `6,051,111` `1` `7,173,155` `2` 2230 Current income tax liabilities 6(23) `2,949,686` `1` `2,279,372` `1` 2320 Long-term liabilities, current portion 6(10)(11) `9,581,962` `2` `13,642,740` `3` 2399 Other current liabilities `2,183,611` `-` `1,140,447` `-` 21XX Total current liabilities `42,732,653` `10` `40,759,071` `11` Non-current liabilities 2530 Corporate bonds payable 6(10) `39,750,000` `10` `46,500,000` `12` 2540 Long-term borrowings 6(11) `14,139,898` `3` `12,271,194` `3` 2570 Deferred income tax liabilities 6(23) `143,676` `-` `804,375` `-` 2600 Other non-current liabilities 6(12) `5,918,573` `1` `8,291,152` `2` 25XX Total non-current liabilities `59,952,147` `14` `67,866,721` `17` 2XXX Total liabilities `102,684,800` `24` `108,625,792` `28` Equity Share capital 6(13) 3110 Common stock `58,611,863` `14` `58,611,863` `15` Capital surplus 6(14) 3200 Capital surplus `8,622,642` `2` `8,875,002` `2` Retained earnings 6(15) 3310 Legal reserve `46,663,535` `11` `43,905,716` `11` 3320 Special reserve `41,927,550` `10` `41,927,550` `11` 3350 Unappropriated retained earnings 6(23) `72,560,103` `17` `52,528,055` `13` Other equity interest 3400 Other equity interest 6(16) `91,965,445` `22` `77,334,641` `20` 3500 Treasury stocks 6(13) `(` `360,572)` `- (` `352,309)` `-` 3XXX Total equity `319,990,566` `76` `282,830,518` `72` Significant contingent liabilities and unrecognized contract commitments 9 Significant events after the balance sheet date 11 3X2X Total liabilities and equity `$` `422,675,366` `100` `$` `391,456,310` `100`	(Expressed in thousands of New Taiwan dollars,except as otherwise indicated) December 31, 2016 December 31, 2015 Liabilities and equity Notes AMOUNT % AMOUNT % Current liabilities 2100 Short-term borrowings 6(9) `$` `6,990,100` `2` `$` `2,508,000` `1` 2170 Accounts payable `3,221,504` `1` `3,396,755` `1` 2180 Accounts payable - related parties 7 `11,754,679` `3` `10,618,602` `3` 2200 Other payables `6,051,111` `1` `7,173,155` `2` 2230 Current income tax liabilities 6(23) `2,949,686` `1` `2,279,372` `1` 2320 Long-term liabilities, current portion 6(10)(11) `9,581,962` `2` `13,642,740` `3` 2399 Other current liabilities `2,183,611` `-` `1,140,447` `-` 21XX Total current liabilities `42,732,653` `10` `40,759,071` `11` Non-current liabilities 2530 Corporate bonds payable 6(10) `39,750,000` `10` `46,500,000` `12` 2540 Long-term borrowings 6(11) `14,139,898` `3` `12,271,194` `3` 2570 Deferred income tax liabilities 6(23) `143,676` `-` `804,375` `-` 2600 Other non-current liabilities 6(12) `5,918,573` `1` `8,291,152` `2` 25XX Total non-current liabilities `59,952,147` `14` `67,866,721` `17` 2XXX Total liabilities `102,684,800` `24` `108,625,792` `28` Equity Share capital 6(13) 3110 Common stock `58,611,863` `14` `58,611,863` `15` Capital surplus 6(14) 3200 Capital surplus `8,622,642` `2` `8,875,002` `2` Retained earnings 6(15) 3310 Legal reserve `46,663,535` `11` `43,905,716` `11` 3320 Special reserve `41,927,550` `10` `41,927,550` `11` 3350 Unappropriated retained earnings 6(23) `72,560,103` `17` `52,528,055` `13` Other equity interest 3400 Other equity interest 6(16) `91,965,445` `22` `77,334,641` `20` 3500 Treasury stocks 6(13) `(` `360,572)` `- (` `352,309)` `-` 3XXX Total equity `319,990,566` `76` `282,830,518` `72` Significant contingent liabilities and unrecognized contract commitments 9 Significant events after the balance sheet date 11 3X2X Total liabilities and equity `$` `422,675,366` `100` `$` `391,456,310` `100`
	%
Current liabilities 2100 Short-term borrowings 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity	`1` `1` `3` `2` `1` `3` `-`
	`11`
	`12` `3` `-` `2`
	`17`
	`28`
	`15` `2` `11` `11` `13` `20` `-`
	`72`
	`100`

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

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Notes				Equityattributable to o	Equityattributable to o	ners of theparent						Non-controlling interest	Total equity
	Share capital - common stock	Total capital surplus, additional paid-in capital		RetainedEarnings			Ot	her EquityInterest		Treasury stocks	Total
			Legal reserve	Special reserve	Unappropriated retained earnings	Financial statements translation differences of foreign operations		Unrealized gain or loss on available-for- sale financial assets	Hedging instrument gain (loss) on effective hedge of cash flow hedges
6(17) 6(15)	`$ 58,611,863` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 58,611,863`	`$ 8,668,561` `-` `-` `6,701` `-` `199,740` `-` `-` `-` `-` `-` `$ 8,875,002`	`$ 42,852,687` `1,053,029` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 43,905,716`	`$ 41,927,550` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 41,927,550`	`$ 33,888,707` `(` `1,053,029 )` `(` `7,033,423 )` `-` `-` `-` `-` `-` `-` `27,578,193` `(` `852,393 )` `$ 52,528,055`	`$ 4,235,625` `-` `-` `-` `-` `-` `-` `-` `-` `-` `413,895` `$ 4,649,520`		`$ 87,580,223` `-` `-` `-` `-` `-` `-` `-` `-` `-` `(` `14,964,675 )` `$ 72,615,548`	`($` `2,622 )` `-` `-` `-` `-` `-` `-` `-` `-` `-` `72,195` `$` `69,573`	`($ 332,413 )` `-` `-` `-` `-` `-` `(` `19,896 )` `-` `-` `-` `-` `($ 352,309 )`	`$ 277,430,181` `-` `(` `7,033,423 )` `6,701` `-` `199,740` `(` `19,896 )` `-` `-` `27,578,193` `(` `15,330,978 )` `$ 282,830,518`	`$ 45,869,920` `-` `-` `-` `2,817` `-` `-` `(` `1,708,087 )` `(` `5,157 )` `4,039,354` `2,048,168` `$ 50,247,015`	`$ 323,300,101` `-` `(` `7,033,423 )` `6,701` `2,817` `199,740` `(` `19,896 )` `(` `1,708,087 )` `(` `5,157 )` `31,617,547` `(` `13,282,810 )` `$ 333,077,533`

(Continued)

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Notes				Equityattributable to o	Equityattributable to o	ners of theparent						Non-controlling interest	Total equity
	Share capital - common stock	Total capital surplus, additional paid-in capital		Retained Earnings			Ot	her EquityInterest		Treasury stocks	Total
			Legal reserve	Special reserve	Unappropriated retained earnings	Financial statements translation differences of foreign operations		Unrealized gain or loss on available-for- sale financial assets	Hedging instrument gain (loss) on effective hedge of cash flow hedges
6(17) 6(15)	`$ 58,611,863` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 58,611,863`	`$ 8,875,002` `-` `-` `20,975` `-` `(` `273,335` `)` `-` `-` `-` `-` `$ 8,622,642`	`$ 43,905,716` `2,757,819` `-` `-` `-` `-` `-` `-` `-` `-` `$ 46,663,535`	`$ 41,927,550` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 41,927,550`	`$ 52,528,055` `(` `2,757,819 )` `(` `20,514,153 )` `-` `-` `-` `-` `-` `43,833,045` `(` `529,025 )` `$ 72,560,103`	`$ 4,649,520` `-` `-` `-` `-` `-` `-` `-` `-` `( 3,660,896` `)` `$ 988,624`		`$ 72,615,548` `-` `-` `-` `-` `-` `-` `-` `-` `18,318,099` `$ 90,933,647`	`$` `69,573` `-` `-` `-` `-` `-` `-` `-` `-` `(` `26,399 )` `$` `43,174`	`($ 352,309 )` `-` `-` `-` `-` `-` `(` `8,263 )` `-` `-` `-` `($ 360,572 )`	`$ 282,830,518` `-` `(` `20,514,153 )` `20,975` `-` `(` `273,335 )` `(` `8,263 )` `-` `43,833,045` `14,101,779` `$ 319,990,566`	`$ 50,247,015` `-` `-` `-` `90,366` `-` `-` `(` `2,866,605 )` `4,933,683` `7,245,387` `$ 59,649,846`	`$ 333,077,533` `-` `(` `20,514,153 )` `20,975` `90,366` `(` `273,335 )` `(` `8,263 )` `(` `2,866,605 )` `48,766,728` `21,347,166` `$ 379,640,412`

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

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

For the year ended December 31, 2015 Balance at January 1, 2015 Appropriation of 2014 earnings Legal reserve Cash dividends Stocks of the parent company purchased by the subsidiary and recognised as treasury stocks Dividends paid to subsidiaries to adjust capital surplus Changes in the net interest of associates recognised under the equity method Profit for the year Other comprehensive income (loss) for the year Balance at December 31, 2015 For the year ended December 31, 2016 Balance at January 1, 2016 Appropriation of 2015 earnings Legal reserve Cash dividends Stocks of the parent company purchased by the subsidiary and recognised as treasury stocks Dividends paid to subsidiaries to adjust capital surplus Changes in the net interest of associates recognised under the equity method Profit for the year Other comprehensive income (loss) for the year Balance at December 31, 2016	Notes		Share capital- common stock		Capital surplus				Retained earnings				Other equityinterest	Treasury stocks	Total
							Legal reserve		Special reserve	Unappropriated retained earnings		Financial statements translation differencesof foreign operations	Unrealizedgain on available-for- salefinancial Hedging instrumentgain oneffective hedge ofcash assets flow hedges
	6(15) 6(13) 6(14) 6(14) 6(16) 6(15) 6(13) 6(14) 6(14) 6(16)		`$ 58,611,863` `-` `-` `-` `-` `-` `-` `-` `$ 58,611,863` `$ 58,611,863` `-` `-` `-` `-` `-` `-` `-` `$ 58,611,863`	`$ 8,668,561` `-` `-` `-` `6,701` `199,740` `-` `-` `$ 8,875,002` `$ 8,875,002` `-` `-` `-` `20,975` `(` `273,335 )` `-` `-` `$ 8,622,642`			`$ 42,852,687` `1,053,029` `-` `-` `-` `-` `-` `-` `$ 43,905,716` `$ 43,905,716` `2,757,819` `-` `-` `-` `-` `-` `-` `$ 46,663,535`		`$ 41,927,550` `-` `-` `-` `-` `-` `-` `-` `$ 41,927,550` `$ 41,927,550` `-` `-` `-` `-` `-` `-` `-` `$ 41,927,550`	`$ 33,888,707` `(` `1,053,029 )` `(` `7,033,423 )` `-` `-` `-` `27,578,193` `(` `852,393 )` `$ 52,528,055` `$ 52,528,055` `(` `2,757,819 )` `(` `20,514,153 )` `-` `-` `-` `43,833,045` `(` `529,025 )` `$ 72,560,103`	`$ 4,235,625` `-` `-` `-` `-` `-` `-` `413,895` `$ 4,649,520` `$ 4,649,520` `-` `-` `-` `-` `-` `-` `(` `3,660,896 )` `$` `988,624`

(Note) Employees' compensation for the years ended December 31, 2015 and 2014 was $47,608 and $39,710, respectively, and was deducted f

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

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax `$` Adjustments Adjustments to reconcile profit (loss) Depreciation 6(9)(23) Amortization 6(23) Provision for decline in market value of inventory (gain from price recovery) 6(6) Interest income 6(20) `(` Dividend income 6(20) `(` Net gain on financial assets and liabilities at fair value through profit or loss 6(2)(11)(21) `(` Impairment loss on financial assets 6(7)(21) (Gain) loss on disposal and scrap of property, plant and equipment 6(21) `(` Impairment loss on property, plant and equipment 6(9)(21) Gain on disposal of investments 6(21) `(` Interest expense 6(22) Share of profit or loss of associates accounted for under the equity method `(` Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Notes receivable `(` Notes receivable-related parties `(` Accounts receivable `(` Accounts receivable-related parties `(` Other receivables Inventories `(` Other current assets Other non-current assets Changes in operating liabilities Financial liabilities at fair value through profit or loss Notes payable `(` Accounts payable Accounts payable-related parties Other payables Other current liabilities Accrued pension liabilities `(` Cash inflow generated from operations Interest received Interest paid `(` Income tax paid `(` Dividends received Net cash flows from operating activities	Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax `$` Adjustments Adjustments to reconcile profit (loss) Depreciation 6(9)(23) Amortization 6(23) Provision for decline in market value of inventory (gain from price recovery) 6(6) Interest income 6(20) `(` Dividend income 6(20) `(` Net gain on financial assets and liabilities at fair value through profit or loss 6(2)(11)(21) `(` Impairment loss on financial assets 6(7)(21) (Gain) loss on disposal and scrap of property, plant and equipment 6(21) `(` Impairment loss on property, plant and equipment 6(9)(21) Gain on disposal of investments 6(21) `(` Interest expense 6(22) Share of profit or loss of associates accounted for under the equity method `(` Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Notes receivable `(` Notes receivable-related parties `(` Accounts receivable `(` Accounts receivable-related parties `(` Other receivables Inventories `(` Other current assets Other non-current assets Changes in operating liabilities Financial liabilities at fair value through profit or loss Notes payable `(` Accounts payable Accounts payable-related parties Other payables Other current liabilities Accrued pension liabilities `(` Cash inflow generated from operations Interest received Interest paid `(` Income tax paid `(` Dividends received Net cash flows from operating activities	For theyears ended December 31
		2016 2015 `54,675,666` `$` `35,989,165` `16,029,866` `16,494,663` `4,311,872` `3,455,355` `498,306` `(` `1,329,388` `)` `411,097` `)` `(` `482,867` `)` `6,243,361` `)` `(` `3,285,815` `)` `1,598` `)` `(` `7,466` `)` `207,066` `-` `18,206` `)` `158,124` `781,222` `-` `181,168` `)` `(` `1,158,104` `)` `1,993,143` `2,305,371` `19,021,711` `)` `(` `12,194,766` `)` `30,350` `2,928` `455,842` `)` `(` `2,492` `)` `6,408` `)` `4,536,336` `3,346,671` `)` `4,284,153` `536,115` `)` `(` `23,820` `)` `2,752,270` `7,343,434` `2,661,979` `)` `10,257,529` `920,990` `5,906` `1,013,421` `(` `163,050` `)` `-` `(` `1,799` `)` `3,257` `)` `(` `5,440` `)` `1,589,095` `(` `13,828` `)` `1,097,915` `(` `2,756,573` `)` `231,130` `340,929` `683,043` `436,161` `4,901,984` `)` `(` `483,209` `)` `49,025,958` `63,701,437` `396,562` `515,932` `2,032,885` `)` `(` `2,579,944` `)` `5,114,947` `)` `(` `1,062,784` `)` `17,438,601` `6,798,323` `59,713,288` `67,372,964`

(Continued)

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

Notes CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in other receivables-related parties `($` Acquisition of available-for-sale financial assets `(` Proceeds from disposal of available-for-sale financial assets Acquisition of financial assets measured at cost `(` Cash refund from capital reduction in financial assets measured at cost Proceeds from disposal of financial assets measured at cost Acquisition of investments accounted for under the equity method `(` Proceeds from disposal of investments accounted for under equity method Acquisition of property, plant and equipment 6(27) `(` Proceeds from disposal of property, plant and equipment Acquisition of intangible assets `(` Increase in non-current assets `(` Net cash flows used in investing activities `(` CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings `(` Decrease in short-term notes and bills payable `(` Decrease in other payables-related parties `(` Increase in long-term borrowings Payment of long-term borrowings `(` Payment of bonds payable `(` Increase in other non-current liabilities `(` Increase (decrease) in guarantee deposits Payment of cash dividends 6(27) `(` Decrease in non-controlling interest `(` Net cash flows used in financing activities `(` Effect of foreign exchange translations Net (decrease) increase in cash and cash equivalents `(` Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year `$`	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31
	2016 `9,987,748` `)` `$` `5,478,021` `)` `(` `228,802` `104` `)` `(` `10,704` `40,357` `1,361,880` `)` `(` `8,760` `8,963,930` `)` `(` `67,473` `234` `)` `(` `2,713,339` `)` `(` `28,149,160` `)` `(` `525,898` `)` `(` `549,900` `)` `(` `2,289,031` `)` `(` `13,989,866` `12,474,284` `)` `(` `9,500,000` `)` `(` `45,849` `)` `(` `5,522` `(` `21,932,687` `)` `(` `2,866,605` `)` `(` `36,188,866` `)` `(` `272,509` `4,352,228` `)` `34,744,139` `30,391,911` `$`		2015
			`8,294,128` `95,802` `)` `107,991` `25,130` `)` `13,380` `1,576` `600,000` `)` `1,656,262` `17,086,875` `)` `178,829` `75,868` `)` `2,422,316` `)` `10,053,825` `)` `2,514,551` `)` `300,160` `)` `469,392` `)` `14,991,674` `31,474,876` `)` `10,000,000` `)` `78,501` `)` `11,098` `)` `6,277,741` `)` `1,708,087` `)` `37,842,732` `)` `931,812` `20,408,219` `14,335,920` `34,744,139`


`$`		`$`

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

FORMOSA CHEMICALS & FIBRE CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax `$` Adjustments Adjustments to reconcile profit (loss) Depreciation 6(21) Amortization 6(21) Net gain on financial assets and liabilities at fair value through profit or loss 6(19) Loss from price reduction (gain from price recovery) of inventory 6(5) Interest expense 6(20) Interest income 6(18) `(` Dividend income 6(18) `(` Share of profit or loss of associates accounted for under the equity method `(` Impairment loss on property, plant and equipment 6(8)(19) Loss (gain) on disposal and scrap of property, plant and equipment 6(19) Gain on disposal of investments 6(19) Realized loss (gain) from sales Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Notes receivable Notes receivable - related parties Accounts receivable `(` Accounts receivable - related parties `(` Other receivables Inventory `(` Other current assets Other non-current assets Changes in operating liabilities Accounts payable `(` Accounts payable - related parties Other payables Other current liabilities Accrued pension liabilities `(` Cash inflow generated from operations Interest received Dividends received Interest paid `(` Income tax paid `(` Net cash flows from operating activities	Notes	Notes	For the years ended	For the years ended	December 31, 2015
			2016 `47,560,773` `$` `7,289,036` `3,890,281` `-` `(` `329,604` `(` `1,098,747` `308,290` `)` `(` `4,623,739` `)` `(` `22,878,875` `)` `(` `781,222` `2,902` `(` `-` `(` `566,090` `(` `-` `33,589` `10,676` `504,798` `)` `2,810,511` `)` `(` `562,741` `2,716,681` `)` `1,202,022` `307,020` `175,251` `)` `(` `1,136,077` `(` `1,054,829` `1,043,163` `2,845,274` `)` `(` `30,005,353` `295,429` `17,575,534` `1,145,955` `)` `(` `3,009,214` `)` `(` `43,721,147`
					`30,162,415` `7,843,684` `3,168,326` `1,129` `)` `1,301,663` `)` `1,434,408` `381,417` `)` `2,905,441` `)` `11,479,120` `)` `-` `27,244` `)` `1,155,418` `)` `114,308` `)` `1,129` `83,342` `147,778` `452,947` `714,890` `)` `7,403,953` `8,842,536` `39,805` `174,523` `391,684` `)` `1,163,768` `)` `437,317` `144,295` `592,728` `)` `40,107,648` `388,976` `7,265,520` `1,465,008` `)` `29,815` `)` `46,267,321`

(Continued)

FORMOSA CHEMICALS & FIBRE CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

For the years ended December 31, Notes 2016 2015 CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in other receivables - related parties `($` `8,793,656` `)` `$` `9,389,128` Acquisition of available-for-sale financial assets `(` `4,903,800` `)` `-` Proceeds from disposal of available-for-sale financial assets `-` `88,599` Acquisition of financial assets measured at cost `-` `(` `25,000` `)` Acquisition of investments accounted for under the equity method `(` `2,452,940` `)` `-` Proceeds from disposal of investments accounted for under equity method `-` `1,656,262` Acquisition of property, plant and equipment 6(25) `(` `3,790,863` `)` `(` `3,529,175` `)` Proceeds from disposal of property, plant and equipment `14,966` `47,438` Increase in deferred expenses `(` `2,335,523` `)` `(` `1,799,122` `)` Decrease (increase) in guarantee deposits paid `55,381` `(` `12,152` `)` Net cash flows (used in) from investing activities `(` `22,206,435` `)` `5,815,978` CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings `4,482,100` `939,600` Increase in long-term borrowings `6,000,000` `160,000` Payment of long-term borrowings `(` `5,437,755` `)` `(` `22,941,466` `)` Payment of bonds payable `(` `9,500,000` `)` `(` `10,000,000` `)` Decrease in other non-current liabilities `(` `32,525` `)` `(` `40,955` `)` Payment of cash dividends 6(25) `(` `21,932,687` `)` `(` `6,277,741` `)` Net cash flows used in financing activities `(` `26,420,867` `)` `(` `38,160,562` `)` Effect of foreign exchange translations `(` `4,319` `)` `(` `9,901` `)` Net (decrease) increase in cash and cash equivalents `(` `4,910,474` `)` `13,912,836` Cash and cash equivalents at beginning of year `18,018,485` `4,105,649` Cash and cash equivalents at end of year `$` `13,108,011` `$` `18,018,485`	Notes	For the years ended	December 31, 2015

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

Formosa Chemicals & Fibre Corporation Statement of Profits Distribution For the year of 2016

Unit：NT$

				Unit：NT$
Items	Amount	Items	Amount	Explanation
Available for Distribution: (1) Unappropriated retained earnings of previous years (2) Net profit after tax of current year (3) Other comprehensive income transferred to unappropriated retained earnings of current year	29,256,083,229 43,833,045,398 -529,025,507	Distribution Items: (1) Appropriation of legal reserve (10% of the after-tax profit ) (2) Appropriation of special reserve (3) Distribution of dividends and bonus in cash ( $5.6 per share) (4) Unappropriated retained earnings carried forward to next year	4,383,304,540 4,639,539,105 32,822,643,230 30,714,616,245	1. Registered capital of the company is NT$58,611,862,910; outstanding shares entitled to cash dividends distribution are 5,861,186,291. 2. The Company plans to distribute dividends of $5.6 per share for current year (among which, $2.95per sharewill be distributed as dividends and $2.65per sharewill be distributed as bonus); all of which are cash dividends. 3. The Company distributes dividends and bonus, all of which are from net profit after tax of 2016. 4. While the distribution of cash dividends to each individual shareholder is less than 1 dollar, the distribution will be rounded to the nearest dollar. 5. Other comprehensive incometransferredto unappropriated retained earnings of current year, all of which arere-measurement of the actuarial pension adjustment.
Total	72,560,103,120	Total	72,560,103,120

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR16000289 To the Board of Directors and Shareholders of Formosa Chemicals & Fibre Corporation

Opinion

We have audited the accompanying consolidated balance sheets of Formosa Chemicals & Fibre Corporation and its subsidiaries (the “Group”) as at December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Impairment assessment of property, plant and equipment-PTA division

Description

Please refer to Note 4(16) for accounting policy on impairment of non-financial assets, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to impairment assessment of tangible assets, and Note 6(9) for details of property, plant and equipment impairment.

The Group’s property, plant and equipment amounted to NT$130,913,460 thousand at December 31, 2016. Due to the oversupply of the Group’s products in the market as a result of too many competitors in the industry, asset items used in the production and manufacturing of PTA may be impaired. Management has identified its Third Chemical Division, which mainly produces and manufactures PTA, as a cash-generating unit. Management used the estimated future cash flows and proper discount rate to calculate value in use and determined the recoverable amount to assess whether assets had been impaired. Based on the aforementioned valuation model, the Group recognized impairment loss on property, plant and equipment of NT$314,437 thousand for the year ended December 31, 2016.

As the estimated recoverable amount of a cash-generating unit is dependent upon significant management judgement, with respect to estimated discount rate applied to estimated future cash flows, we consider impairment assessment of property, plant and equipment a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Assessing the reasonableness of future cash flows estimated by management for its Third Chemical Division, checking whether the future 5 years cash flows are in line with the business division’s operational plan, and reviewing the operational plan proposed by management against actual performance to confirm relevance of key assumptions.
Assessing discount rate and weighted average cost of capital, and checking assumptions of market rate, capital structure and cost of debt.
Verifing the accuracy of valuation model calculation.

Impairment assessment of property, plant and equipment-Changhua plant

Description

Please refer to Note 4(16) for accounting policy on non-financial assets impairment, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to impairment assessment of tangible assets, and Note 6(9) for details of property, plant and equipment impairment.

As described in Note 12(1), the Company recognized impairment loss on its Changhua plant based on the recoverable amount of idle equipment. As the operation of three cogeneration sets had been suspended since October 7, 2016, the idle equipment are considered not recoverable. Accordingly, the Group recognized impairment loss on property, plant and equipment amounting to NT$466,785 thousand for the year ended December 31, 2016.

Given the significance of the closure of the Company’s Changhua plant, we consider management’s impairment assessment of property, plant and equipment a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Obtaining Changhua plant’s property listing, and confirming completeness of assets.
Obtaining assets impairment report prepared by management for Changhua plant, performing physical inspection of available plant assets, and verifying whether certain assets are still working.
Verifying the accuracy of the amount of impairment loss recognized.

Other matter – audits of the other independent accountants

We did not audit the financial statements of a wholly-owned consolidated subsidiary and certain investments accounted for under the equity method, which statements reflect total assets (including investments accounted for under equity method) of NT$139,881,489 thousand and NT$149,833,197 thousand, constituting 26% and 30% of consolidated total assets as of December 31, 2016 and 2015, respectively, operating income of NT$28,363,847 thousand and NT$24,936,460 thousand, constituting 9% and 8% of consolidated total operating income for the years then ended, respectively, and comprehensive income of NT$20,803,398 thousand and NT$10,709,919 thousand, constituting 30% and 58% of consolidated total comprehensive income for the years then ended, respectively. Those financial statements were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein insofar as it relates to the amounts included in the financial statements relative to the subsidiary and investee companies, is based solely on the audit reports of the other independent accountants.

Other matter – parent company only financial statements

We have audited the parent company only financial statements of Formosa Chemicals & Fibre Corporation as of and for the years ended December 31, 2016 and 2015, and have expressed an unqualified opinion on such financial statements.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate

the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5.

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

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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

Chou, Chien-Hung[Juanlu, Man-Yu ]

for and on behalf of PricewaterhouseCoopers, Taiwan March 17, 2017

----------------------------------------------------------------------------------------------------------------------------- -------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Formosa Chemicals & Fibre Corporation

Opinion

We have audited the accompanying parent company only balance sheets of Formosa Chemicals & Fibre Corporation (the “Company”) as at December 31, 2016 and 2015, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2016 and 2015, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, 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 parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Impairment assessment of property, plant and equipment-PTA division

Description

Please refer to Note 4(14) for accounting policy on non-financial assets impairment, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to impairment valuation of tangible assets, Note 6(8) for explanation of property, plant and equipment impairment.

The Company’s property, plant and equipment amounted to NT$50,831,005 thousand at December 31, 2016. Due to the oversupply of the Company’s products in the market as a result of too many competitors in the industry, asset items used in the production and manufacturing of PTA may be impaired. Management has identified its Third Chemical Division, which mainly produces and manufactures PTA, as a cash-generating unit. Management used the estimated future cash flows and proper discount rate to calculate value in use and determined the recoverable amount to assess whether assets had been impaired. Based on the aforementioned valuation model, the Company recognized impairment loss on property, plant and equipment of NT$314,437 thousand for the year ended December 31, 2016.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Assessing the reasonableness of future cash flows estimated by management for its Third Chemical Division, checking whether the future 5 years cash flows are in line with the business division’s operational plan, and reviewing the operational plan proposed by management against actual performance to confirm relevance of key assumptions.
Assessing discount rate and weighted average cost of capital, and checking assumptions of market rate, capital structure and cost of debt.
Verifing the accuracy of valuation model calculation.

Impairment assessment of property, plant and equipment - Changhua plant

Description

Please refer to Note 4(14) for accounting policy on non-financial assets impairment, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to impairment assessment of tangible assets, and Note 6(8) for details of property, plant and equipment impairment.

As described in Note 12(1), the Company recognized impairment loss on its Changhua plant based on the recoverable amount of idle equipment. As the operation of three cogeneration sets had been suspended since October 7, 2016, the idle equipment are considered not recoverable. Accordingly, the Company recognized impairment loss on property, plant and equipment amounting to NT$466,785 thousand for the year ended December 31, 2016.

Given the significance of the shutdown of the Company’s Changhua plant, we consider management’s impairment assessment of property, plant and equipment a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

Obtaining Changhua plant’s property listing, and confirming completeness of assets.
Obtaining assets impairment report prepared by management for Changhua plant, performing physical inspection of available plant assets, and verifying whether certain assets are still working.
Verifying the accuracy of the amount of impairment loss recognized.

Other matter – audits of the other independent accountants

We did not audit the financial statements of certain investments accounted for under the equity method. The balance of these investments accounted for under equity method amounted to NT$107,556,340 thousand and NT$114,043,846 thousand, constituting 25% and 29% of total assets as of December 31, 2016 and 2015, respectively, and comprehensive income was NT$21,133,455 thousand and NT$10,645,424 thousand, constituting 36% and 87% of total comprehensive income for the years then ended, respectively. Those financial statements were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein insofar as it relates to the amounts included in the financial statements, relative to three investees, is based solely on the audit reports of the other independent accountants.

Responsibilities of management and those charged with governance for the parent company only financial statements

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

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

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

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue

an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the parent company only 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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

Chou, Chien-Hung

[Juanlu, Man-Yu ]

for and on behalf of PricewaterhouseCoopers, Taiwan March 17, 2017

----------------------------------------------------------------------------------------------------------------------------- -------------------The accompanying non-consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying non-consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

Information regarding the Proposed Employees and Directors’ Compensation to Adopted by the Board of Directors of the Com n pa y:

Company:	Company:

1. Amounts of employees’ cash compensation, stock compensation, and Directors’ compensation:
Employees Cash Compensation	NT$47,608,382
Employees Stock Compensation	NT$0
Directors Compensation	NT$0
2. Share amount of the employees’ stock compensation and the percentage of the share amount to that of all stock dividend:
Share amount of employees’ stock compensation	0 share
Percentage of the share amount to that of all stock dividend	0%

The above-listed amount of employees’ cash compensation is consistent with the proposed amount adopted by the Board of Directors of the Company.

Effect upon Business Performance and Earnings Per Share of the Company by the Stock Dividend Distribution Proposed at the 2017 Annual Shareholders’ Meeting:

Not applicable since the Company does not propose the stock dividend distribution at the 2017 Annual Shareholders’ Meeting and does not required preparing financial forecast information.

Formosa Chemicals & Fibre Corporation Current Shareholdin of Directors gs

Title	Name	Shareholding (share)
Chairman	Wen Yuan, Wang	129,198,084
Vice Chairman	Fu Yuan, Hong	272,804
Managing Director	Wilfred, Wang	16,867,218
Managing Director	Nan Ya Plastics Corporation Representative: RueyYu,Wang	140,519,648
Managing Director (Independent Director)	Ruey Long, Chen	0
Independent Director	TzongYeong,Lin	0
Independent Director	Kung, Wang	0
Director	Chang Gung Medical Foundation Representative: Wen Neng,Ueng	1,089,142,009
Director	Formosa Petrochemical Corporation Representative: Walter Wang	48,567,575
Director	DongTerng, Huang	34,410
Director	Chiu Ming,Chen	79,627
Director	HungChi,Yang	152,289
Director	IngDar,Fang	73
Director	Wen Chin,Lu	3,236
Director	Sun Ju,Lee	15,450

Note: According to Article 26 of Securities and Exchange Act, the

minimum shareholdings of the Company’s Directors are 93,778,981 shares. As of April 11, 2017, the actual shareholdings of the Company’s Directors are 1,424,852,423 shares.

AI assistant

FCFC — AGM Information 2017

51780_rns_2017-06-26_45f775d3-1fb0-48dc-a719-9560e363a442.pdf

FORMOSA CHEMICALS & FIBRE CORPORATION

2017ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK (Summary)

Table of Contents

FORMOSA CHEMICALS & FIBRE CORPORATION

2017 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

FORMOSA CHEMICALS & FIBRE CORPORATION

2017 ANNUAL SHAREHOLDERS’ MEETING

AGENDA

1. Report Items

2. Ratification Items

3. Discussion Items

Report Items

FORMOSA CHEMICALS & FIBRE CORPORATION 2016 Annual Business Report

FORMOSA CHEMICALS & FIBRE CORPORATION Audit Committee’ Review Report

Ruey-Long Chen

Ratification Items Proposal 1

Resolution:

Ratification Items Proposal 2

Resolution:

Discussion Items Proposal 1

Resolution:

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FORMOSA CHEMICALS & FIBRE CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FORMOSA CHEMICALS & FIBRE CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

FORMOSA CHEMICALS & FIBRE CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

Formosa Chemicals & Fibre Corporation Statement of Profits Distribution For the year of 2016

Opinion

Basis for opinion

Key audit matters

Impairment assessment of property, plant and equipment-PTA division

How our audit addressed the matter

Impairment assessment of property, plant and equipment-Changhua plant

Description

How our audit addressed the matter

Other matter – audits of the other independent accountants

Other matter – parent company only financial statements

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

5.

Opinion

Basis for opinion

Key audit matters

Impairment assessment of property, plant and equipment-PTA division

Description

How our audit addressed the matter

Impairment assessment of property, plant and equipment - Changhua plant

Description

How our audit addressed the matter

Other matter – audits of the other independent accountants

Responsibilities of management and those charged with governance for the parent company only financial statements

Auditor’s responsibilities for the audit of the parent company only financial statements

Chou, Chien-Hung

[Juanlu, Man-Yu ]

Information regarding the Proposed Employees and Directors’ Compensation to Adopted by the Board of Directors of the Com n pa y:

Formosa Chemicals & Fibre Corporation Current Shareholdin of Directors gs

More from FCFC

FCFC AGM Information 2017