FCFC - Annual Report 2017 | FinancialReports.eu

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2017 AND 2016

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

FORMOSA CHEMICALS & FIBRE CORPORATION

AND SUBSIDIARIES

INDEX

INDEX
Items Index Report of Independent Accountants Consolidated Balance Sheets Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements	Pages
	1-6 7-8 9-10 11-12 13-14 15-103

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR17000308 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, 2017 and 2016, 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, 2017 and 2016, 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

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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

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$125,345,618 thousand at December 31, 2017. Due to the oversupply of the Group’s products in the market as a result of too many competitors in the industry, property and equipment 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 has assessed that there is no impairment loss on property, plant and equipment for the year ended December 31, 2017.

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

Our audit procedures in respect of the above key audit matter included:

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.
3.Verifying the accuracy of valuation model calculation.

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Investments accounted for under equity method and recognition of investment income

Description

Refer to Note 4(13) for accounting policies on investments accounted for using equity method (including associates) and Note 6(8) for details of investments accounted for using equity method.

The Group held investments accounted for using equity method amounting to NT$112,476,716 thousand as at December 31, 2017 and recognised comprehensive income of NT$16,831,919 thousand for the year then ended. Given the substantial amount and its impact on the financial statements, we consider the valuation of investments accounted for using equity method a key audit matter.

How our audit addressed the matter

Our audit procedures in respect of the above key audit matter included:

Obtaining an understanding of the Group’s accounting policies for investments accounted for using equity method and evaluating whether the accounting policies are appropriate based on the applicable framework.
Obtaining an understanding of the related controls and testing mathematical accuracy for the recognition of additions, disposals, gains (losses) on investments, and share of profit (losses) in comprehensive income.

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$148,098,437 thousand and NT$139,881,489 thousand, both constituting 26% of consolidated total assets as of December 31, 2017 and 2016, respectively, operating income of NT$29,987,682 thousand and NT$28,363,847 thousand, constituting 8% and 9% of consolidated total operating income for the years then ended, respectively, and comprehensive income of NT$21,612,354 thousand and NT$20,803,398 thousand, constituting 28% and 30% 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.

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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, 2017 and 2016, 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:

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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.
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.

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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 16, 2018

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.

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FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2017 AMOUNT % � �� � �� � �� �� �� � �� � �� � �� � �� � �� � �� � �� � �� �� �� � �� � �� �� �� �� �� � �� � �� � �� �� � �� ��	December 31, 2016	December 31, 2016
	AMOUNT � �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� � ��	AMOUNT � �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� � ��	%
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			� � �� � � � � � � � �
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(Continued)

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FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31, 2017 December 31, 2016 Notes AMOUNT % AMOUNT % 6(10) � �� � � �� � 6(10) �� � �� � 6(11) � � �� � �� � �� � �� � �� � 7 �� � �� � �� � �� � 7 �� � �� � �� � �� � 6(12)(13) �� � �� � �� � �� � �� �� �� �� 6(12) �� � �� � 6(13) �� � �� � 6(25) �� � �� � 6(14) �� � �� � �� �� �� �� �� �� �� �� 6(15) �� �� �� �� 6(16) �� � �� � 6(17) �� � �� � �� � �� � 6(25) �� �� �� �� 6(18) �� �� �� �� 6(15) � �� �� �� � �� �� �� �� �� �� �� �� �� �� �� �� 9 11 � �� �� � �� ��	December 31, 2016	December 31, 2016
			%
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 unrecognised contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity			� � � � � � � � � � �
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The accompanying notes are an integral part of these consolidated financial statements.

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

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

					For the	years ended	years ended	December 31
					2017			2016
	Items	Notes			AMOUNT	%		AMOUNT	%
4000	Operating revenue	6(19) and 7		�	��	��	�	��	��
5000	Operating costs	6(6)(14)(23)(24) and
		7	�		��	��		��	��
5900	Net operating margin				��	��		��	��
	Operating expenses	6(14)(23)(24) and 7
6100	Selling expenses		�		��	��		��	��
6200	General and administrative expenses		�		��	��		��	��
6000	Total operating expenses		�		��	��		��	��
6900	Operating profit				��	��		��	��
	Non-operating income and expenses
7010	Other income	6(20) and 7			��	�		��	�
7020	Other gains and losses	6(21)			��	�	�	��	��
7050	Finance costs	6(9)(22) and 7	�		��	��		��	��
7060	Share of profit of associates and joint	6(8)
	ventures accounted for under equity
	method				��	�		��	�
7000	Total non-operating income and
	expenses				��	�		��	�
7900	Profit before income tax				��	��		��	��
7950	Income tax expense	6(25)	�		��	��		��	��
8200	Profit for the year			�	��	��	�	��	��

(Continued)

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

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

							Forthe	years	ended	ended	ended	December31
						2017						2016
	Items	Notes			AMOUNT			%				AMOUNT				%
	Other comprehensive income (net)	6(18)(25)
	Components of other comprehensive
	loss that will not be reclassified to
	profit or loss
8311	Other comprehensive loss, before
	tax, actuarial loss on defined benefit
	plans		��			��			��				��			�
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		�			��			�	�				��		�
8310	Components of other
	comprehensive income that will
	not be reclassified to profit or
	loss		�			��			��				��			�
	Components of other comprehensive
	income that will be reclassified to
	profit or loss
8361	Financial statements translation
	differences of foreign operations		�		��				��			��				��
8362	Unrealised gain on valuation of
	available-for-sale financial assets				��				�			��				�
8370	Share of other comprehensive
	income of associates and joint
	ventures accounted for under equity
	method				��				�			��				�
8399	Income tax relating to the
	components of other comprehensive
	income					��			�				��			�
8360	Components of other
	comprehensive income that will
	be reclassified to profit or loss				��				�			��				�
8300	Total other comprehensive income for
	the year			�	��				�		�	��				�
8500	Total comprehensive income for the
	year			�	��			��			�	��				��
	Net income attributable to:
8610	Owners of the parent			�	��			��			�	��				��
8620	Non-controlling interest				��				�			��				�
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	Total comprehensive income
	attributable to:
8710	Owners of the parent			�	��			��			�	��				��
8720	Non-controlling interest				��				�			��				�
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				Before Tax			After Tax					Before Tax			After	Tax
	Basic earnings per share	6(26)
9710	Profit for the year from continuing
	operations		$		11.43	$		10.29			$	9.36		$		8.35
9720	Non-controlling interest	(			1.34	) (		0.96	)	(		1.22	)	(		0.85
9750	Profit attributable to common
	shareholders of the parent		$		10.09	$		9.33			$	8.14		$		7.50
	Assuming shares held by subsidiary are not deemed as treasury				stock:
	Profit for the year from continuing
	operations		$		11.38	$		10.24			$	9.33		$		8.32
	Non-controlling interest	(			1.34	) (		0.96	)	(		1.22	)	(		0.84
	Profit attributable to common
	shareholders of the parent		$		10.04	$		9.28			$	8.11		$		7.48

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

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											Total equity			��			�	��			��			��					��					��		��	��		��		��
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										Treasury	stocks			��			�	�			�			�					� ��					�		�	�		�		��
					Hedging	instrument	gain (loss)	on effective	hedge of	cash flow	hedges			� ��			�	�			�			�					�					�		�	�		� ��		� ��
FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	(Expressed in thousands of New Taiwan dollars)	Equity attributable to owners of the parent	Retained Earnings Other Equity Interest		Financial	statements Unrealised gain	translation or loss on	Unappropriated differences of available-for-	retained foreign sale financial	Legal reserve Special reserve earnings operations assets			�� �� �� �� ��			�� � � �� � �	� � � �� � �			� � � � �			� � � � �					� � � � �					� � � � �		� � � � �	� � �� � �		� � � �� �� ��		�� �� �� � �� ��	(Continued)
								Total capital	surplus,	additional	paid-in capital			��			�	�			��			� ��					�					�		�	�		�		��
										Share capital -	common stock			��			�	�			�			�					�					�		�	�		�		��
											Notes				6(17)				6(16)			6(16)
												For the year ended December	31, 2016	Balance at January 1, 2016	Appropriations of 2015	earnings	Legal reserve	Cash dividends	Dividends paid to	subsidiaries to adjust	capital surplus	Changes in the net interest of	associates recognised	under the equity method	Stocks of the parent	company purchased by	the subsidiary and	recognised as treasury	stock	Difference between proceeds	on acquisition of or	disposal of equity interest	in a subsidiary and its	carrying amount	Cash dividends paid by	consolidated subsidiaries	Profit for the year	Other comprehensive income	for the year	Balance at December 31,	2016

											Total equity			��			�	�	��			��			��					�			��					��					��		��	��		��		��
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										Treasury	stocks			��			�	�	�			�			�					�			�					��					�		�	�		�		��
					Hedging	instrument	gain (loss)	on effective	hedge of	cash flow	hedges			� ��			�	�	�			�			�					�			�					�					�		�	�		� ��		� ��
FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	(Expressed in thousands of New Taiwan dollars)	Equity attributable to owners of the parent	Retained Earnings Other Equity Interest		Financial	statements Unrealised gain	translation or loss on	Unappropriated differences of available-for-	retained foreign sale financial	Legal reserve Special reserve earnings operations assets			�� �� �� � �� ��			�� � � �� � �	� �� � �� � �	� � � �� � �			� � � � �			� � � � �					� � � � �			� � � � �					� � � � �					� � � � �		� � � � �	� � �� � �		� � � �� �� ��		�� �� �� �� ��
								Total capital	surplus,	additional	paid-in capital			��			�	�	�			��			��					�			��					�					�		�	�		�		��
										Share capital -	common stock			��			�	�	�			�			�					�			�					�					�		�	�		�		��
											Notes				6(17)					6(16)			6(16)			6(16)					6(16)
												For the year ended December	31, 2017	Balance at January 1, 2017	Appropriations of 2016	earnings	Legal reserve	Special reserve	Cash dividends	Dividends paid to	subsidiaries to adjust	capital surplus	Changes in the net interest of	associates recognised	under the equity method	Stocks of the parent	company disposed by the	subsidiary and recognised	as treasury stock	transaction	Expired cash dividends	reclassified to capital	surplus	Stocks of the parent	company purchased by	the subsidiary and	recognised as treasury	stock	Difference between proceeds	on acquisition of or	disposal of equity interest	in a subsidiary and its	carrying amount	Cash dividends paid by	consolidated subsidiaries	Profit for the year	Other comprehensive income	(loss) for the year	Balance at December 31,	2017

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Amortisation
Net gain on financial assets and liabilities at fair value
through profit or loss
(Gain) Loss on inventory valuation
Impairment loss on financial assets
Interest expense
Interest income
Dividend income
Share of profit or loss of associates accounted for
under the equity method
Gain on disposal and scrap of property, plant and
equipment
(Gain on reversal of impairment loss) Impairment loss
on property, plant and equipment
Gain on disposal of investments
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
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

Forthe years endedDecember31,
Notes
2017
2016
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(Continued)

~13~

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) 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
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
Increase (decrease) in short-term notes and bills payable
Increase (decrease) in other payables-related parties
Increase in long-term borrowings
Payment of long-term borrowings
Payment of bonds payable
Decrease in other non-current liabilities
Increase in guarantee deposits
Payment of cash dividends
Decrease in non-controlling interests
Net cash flows used in financing activities
Effect of foreign exchange translations
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Forthe years endedDecember31,
Notes
2017
2016
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The accompanying notes are an integral part of these consolidated financial statements.

~14~

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

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

1. HISTORY AND ORGANISATION

Formosa Chemicals & Fibre Corporation (the ‘‘Company”) was founded on March 5, 1965. The Company and its subsidiaries (together referred herein as the “Group”) now has eight business divisions, namely First Chemical Division, Petrochemicals Division, Third Chemical Division, Plastics Division, Textile Division, First Fiber Division and its subsidiaries, Second Fiber Division, and Engineering & Construction Division. The Group’s major businesses are production and sales of petrochemical products, including PTA, PS, AN, Butadiene, SM polymer, SM, benzene, toluene, p-xylene (PX) and o-xylene (OX), as well as nylon fiber, and rayon staple fiber. The Group is also engaged in spinning, weaving, dyeing and finishing.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on March 16, 2018.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments as endorsed by FSC effective from 2017 are as follows:

~15~

New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10, IFRS 12 and IAS 28, ‘Investment entities: applying the consolidation exception’	January 1, 2016
Amendments to IFRS 11, ‘Accounting for acquisition of interests in joint operations’	January 1, 2016
IFRS 14,‘Regulatory deferral accounts’	January 1, 2016
Amendments to IAS 1,‘Disclosure initiative’	January 1, 2016
Amendments to IAS 16 and IAS 38, ‘Clarification of acceptable methods of depreciation and amortisation’	January 1, 2016
Amendments to IAS 16 and IAS 41,‘Agriculture: bearer plants’	January 1, 2016
Amendments to IAS 19, ‘Defined benefit plans: employee contributions’	July 1, 2014
Amendments to IAS 27, ‘Equity method in separate financial statements’	January 1, 2016
Amendments to IAS 36, ‘Recoverable amount disclosures for non- financial assets’	January 1, 2014
Amendments to IAS 39, ‘Novation of derivatives and continuation of hedge accounting’	January 1, 2014
IFRIC 21,‘Levies’	January 1, 2014
Annual improvements to IFRSs 2010-2012 cycle	July 1, 2014
Annual improvements to IFRSs 2011-2013 cycle	July 1, 2014
Annual improvements to IFRSs 2012-2014 cycle	January 1, 2016

The above standards and interpretations have no significant impact to the Group’s financial condition and operating results based on the Group’s assessment.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

New standards, interpretations and amendments as endorsed by FSC effective from 2018 are as follows:

~16~

New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 2, ‘Classification and measurement of share- based payment transactions’	January 1, 2018
Amendments to IFRS 4, ‘Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts’	January 1, 2018
IFRS 9,‘Financial instruments’	January 1, 2018
IFRS 15,‘Revenue from contracts with customers’	January 1, 2018
Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from contracts with customers’	January 1, 2018
Amendments to IAS 7,‘Disclosure initiative’	January 1, 2017
Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’	January 1, 2017
Amendments to IAS 40,‘Transfers of investment property’	January 1, 2018
IFRIC 22,‘Foreign currency transactions and advance consideration’	January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle-Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’	January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle-Amendments to IFRS 12,‘Disclosure of interests in other entities’	January 1, 2017
Annual improvements to IFRSs 2014-2016 cycle-Amendments to IAS 28,‘Investments in associates and joint ventures’	January 1, 2018

Based on the Group’s assessment, the above standards and interpretations affect the Group’s financial condition and financial performance as follows:

A. IFRS 9, ‘Financial instruments’

Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.

B. IFRS 15, ‘Revenue from contracts with customers’

IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’, IAS 18, ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from the asset.

The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in

~17~

accordance with that core principle by applying the following steps:

Step 1: Identify contracts with customer

Step 2: Identify separate performance obligations in the contract(s)

Step 3: Determine the transaction price

Step 4: Allocate the transaction price

Step 5: Recognise revenue when the performance obligation is satisfied

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

C. Amendments to IFRS 15, ‘Clarifications to 'Revenue from contracts with customers’ The amendments clarify how to identify a performance obligation (the promise to transfer goods or services to a customer) in a contract; determine whether a company is a principal (the provider of goods or services) or an agent (responsible for arranging for the goods or services to be provided); and determine whether the revenue from granting a license should be recognised at a point in time or over time. In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new Standard.
D. Amendments to IAS 7, ‘Disclosure initiative’
This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

The Group expects to provide additional disclosure to explain the changes in liabilities arising from financing activities.

E. Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ These amendments clarify the recognition of deferred tax assets for unrealised losses related to debt instruments measured at fair value, and they clarify several of the general principles underlying the accounting for deferred tax assets. The amendments clarify that a deductible temporary difference exists whenever an asset is measured at fair value and that fair value is below the asset’s tax base. When an entity assesses whether taxable profits will be available against which it can utilise a deductible temporary difference, it considers a deductible temporary difference in combination with all of its other deductible temporary differences unless there are tax law restrictions, and the tax deduction resulting from temporary differences is excluded from estimated future taxable profits. The amendments are effective from January 1, 2017.

When adopting the new standards endorsed by the FSC effective from 2018, the Group will apply the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. Further, the Group expects to adopt IFRS 15 using the modified retrospective approach. The significant effects of applying the new standards as of January 1, 2018 are summarised below:

~18~

A. In accordance with IFRS 9, the Group expects to reclassify available-for-sale financial assets – current, available-for-sale financial assets – non-current and financial assets at cost in the amounts of $3,649,141, $157,962,945 and $25,093,528, respectively, and make an irrevocable election at initial recognition on equity instruments not held for dealing or trading purpose, by increasing financial assets at fair value through profit and loss, financial assets at fair value through other comprehensive income – current, financial assets at fair value through other comprehensive income – non-current, increasing investments accounted for under equity method, increasing retained earnings and other equity interest in the amounts of $4,573,903, $3,649,141, $195,161,657, $2,812,561, $5,089,978 and $14,411,439, respectively, and decreasing noncontrolling interest in the amount of $9,769.
B. Formosa Advanced Technologies Co., Ltd. renders customised processing services in integrated circuit assembly and testing based on customers’ specifications. The revenue is recognised when the significant risks and rewards are transferred under previous accounting policies, and the timing of recognition usually occurred upon acceptance. Considering that the highly customised products have no alternative use to Formosa Advanced Technologies Co., Ltd. and Formosa Advanced Technologies Co., Ltd. has an enforceable right to payment for performance completed to date in accordance with the contract terms, the revenue will have to be recognised based on the percentage of completion under the new revenue standard. As a result, inventory will have to be decreased by $392,220, contract assets increased by $491,632, retained earnings increased by $24,420 and non-controlling interests increased by $74,992 with the application of the new standard on January 1, 2018.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

endorsed by the FSC are as follows:
New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’	January 1, 2019
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’	To be determined by International Accounting Standards Board
IFRS 16,‘Leases’	January 1, 2019
IFRS 17,‘Insurance contracts’	January 1, 2021
Amendments to IAS 19,‘Plan amendment, curtailment or settlement’	January 1, 2019
Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’	January 1, 2019
IFRIC 23,‘Uncertainty over income tax treatments’	January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019

~19~

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

A. Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’
The amendments resolve a current inconsistency between IFRS 10 and IAS 28. The gain or loss resulting from a transaction that involves sales or contribution of assets between an investor and its associates or joint ventures is recognised either in full or partially depending on the nature of the assets sold or contributed:
(a) If sales or contributions of assets constitute a ‘business’, the full gain or loss is recognised;
(b) If sales or contributions of assets do not constitute a ‘business’, the partial gain or loss is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.
B. IFRS 16, ‘Leases’
IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.
C. Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ When a change to a plan take place, the amendments require a company to use the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan.
D. IFRIC 23, ‘Uncertainty over income tax treatments’
This Interpretation clarifies when there is uncertainty over income tax treatments, an entity shall recognise and measure its current or deferred tax asset or liability applying the requirements in IAS 12 , ‘Income taxes’ based on taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined applying this Interpretation.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standards 34, “Interim Financial Reporting” as endorsed by FSC.

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under

~20~

the historical cost convention:

  - (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  - (b) Available-for-sale financial assets measured at fair value.

  - (c) Defined benefit liabilities recognised based on the net amount of pension fund assets plus unrecognised past service cost and unrecognised actuarial losses, and less unrecognised actuarial gains and present value of defined benefit obligation.

B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
- (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
- (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other

~21~

comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

Name of Name of Main business investor subsidiary activities The Company Formosa Carpet Corp. Spinning, dyeing, printing, finishing and manufacturing synthetic fibre, rug and carpet The Company FCFC Investment Corp. (Cayman) Investing The Company FCFC International Limited (Cayman) Investing FCFC Investment Corp. (Cayman) Formosa Power (Ningbo) Co., Ltd. Cogeneration power generation business FCFC Investment Corp. (Cayman) Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Investing Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd. Sale of Acrylonitrile Butadiene Styrene (ABS) Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa Phenol (Ningbo) Co., Ltd. Manufacturing Acetone and Synthetic Phenolic Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa PS (Ningbo) Co., Ltd. Producing and marketing of Polystyrene	December 31,2017 December 31,2016 Description 100.00 100.00 The Company holds more than 50% of voting rights. (Note l) 100.00 100.00 The Company holds more than 50% of voting rights. 100.00 100.00 The Company holds more than 50% of voting rights. (Note l) 100.00 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Cayman) 100.00 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Cayman) 100.00 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) 100.00 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) 100.00 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) Ownership (%)	Description
	December 31,2017 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

~22~

Name of Name of Main business investor subsidiary activities Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Producing and marketing of PTA The Company Formosa Biomedical Technology Corp. Manufacturing and sale of cleaner and cosmetics Formosa Biomedical Technology Corp. Hong Jing Resources Corp. Removal and disposal of waste Formosa Biomedical Technology Corp. Formosa Biomedical Technology (SAMOA) Co., Ltd. Investment Formosa Biomedical Technology Corp. Formosa Waters Technology Co., Ltd. Manufacturing industrial catalyst and wholesale of other chemical products Formosa Biomedical Technology (SAMOA) Co., Ltd. Formosa Biomedical Trading (Shanghai) Co., Ltd. Importing, exporting and wholesale of heatlhy food The Company Ta Shin Spining Corp. Spinning The Company Formosa Idemitsu Petrochemical Corp. Wholesale and retail of petrochemical and plastic raw materials	December 31,2017 December 31,2016 Description 100.00 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) 88.59 88.59 The Company holds more than 50% of voting rights. 51.00 51.00 The Company holds more than 50% of voting rights through a 88.59% of voting rights owned company - Formosa Biochemical Technology Corp. 100.00 100.00 Formosa Biochemical Technology holds more than 50% of voting rights. 57.00 - Formosa Biochemical Technology holds more than 50% of voting rights. 100.00 100.00 Formosa Biochemical Technology holds more than 50% of voting rights through a 100% owned company - Formsa Biomedical Technology (SAMOA) Co., Ltd 86.40 86.40 The Company holds more than 50% of voting rights. 50.00 50.00 The Company has substantial control and thus regards Formosa Idemitsu Petrochemical Corp. as a subsidiary. Ownership (%)	Description
	December 31,2017 100.00 88.59 51.00 100.00 57.00 100.00 86.40 50.00

~23~

Name of Name of Main business investor subsidiary activities The Company Formosa BP Chemicals Corp. Chemistry, international trade of petrochemistry The Company Formosa Industried Corp., Vietnam Production and marketing of textile, polyester staple fibre, cotton, hydropower The Company Formosa Taffeta Co., Ltd. Production and marketing of Polyamine fabric, Polyester fabric, cotton fabric, blended fabric and tire cord fabric Formosa Taffeta Co., Ltd. Formosa Advanced Technologies Co., Ltd. Assembly, testing, model processing and research and development of various integrated circuits Formosa Taffeta Co., Ltd. Formosa Taffeta (Zhong Shan) Co., Ltd. Production of cotton lun, Terylene greige cloth, coloured cloth and textured processing yarn products Formosa Taffeta Co., Ltd. Formosa Taffeta (Vietnam) Co., Ltd. Production and marketing of textile, polyester staple fibre, cotton, hydropower Formosa Taffeta Co., Ltd. Formosa Development Co., Ltd. Assembly, testing, model processing and research and development of various integrated circuits	December 31,2017 December 31,2016 Description 50.00 50.00 The Company has substantial control and thus regards Formosa BP Chemicals Corp. as a subsidiary. 42.50 42.50 The Company has substantial control and thus regards Formosa Industries Corp. as a subsidiary. 37.40 37.40 The Company has substantial control and thus regards Formosa Taffeta Corp. as a subsidiary. 65.68 65.68 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. 100.00 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. 100.00 100.00 The Company and Formosa Taffeta Co., Ltd. hold more than 50% of voting rights. 100.00 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. Ownership (%)
	December 31,2017 50.00 42.50 37.40 65.68 100.00 100.00 100.00

Name of
Name of
Main business
investor
subsidiary
activities
The Company Formosa BP
Chemicals Corp.
Chemistry,
international trade
of petrochemistry
The Company Formosa
Industried
Corp., Vietnam
Production and
marketing of
textile, polyester
staple fibre, cotton,
hydropower
The Company Formosa Taffeta
Co., Ltd.
Production and
marketing of
Polyamine fabric,
Polyester fabric,
cotton fabric,
blended fabric and
tire cord fabric
Formosa
Taffeta Co.,
Ltd.
Formosa
Advanced
Technologies
Co., Ltd.
Assembly, testing,
model processing
and research and
development of
various integrated
circuits
Formosa
Taffeta Co.,
Ltd.
Formosa Taffeta
(Zhong Shan)
Co., Ltd.
Production of
cotton lun,
Terylene greige
cloth, coloured
cloth and textured
processing yarn
products
Formosa
Taffeta Co.,
Ltd.
Formosa Taffeta
(Vietnam) Co.,
Ltd.
Production and
marketing of
textile, polyester
staple fibre, cotton,
hydropower
Formosa
Taffeta Co.,
Ltd.
Formosa
Development
Co., Ltd.
Assembly, testing,
model processing
and research and
development of
various integrated
circuits

December 31,2017
December 31,2016
Description
50.00
50.00 The Company has substantial
control and thus regards
Formosa BP Chemicals Corp.
as a subsidiary.
42.50
42.50 The Company has substantial
control and thus regards
Formosa Industries Corp. as a
subsidiary.
37.40
37.40 The Company has substantial
control and thus regards
Formosa Taffeta Corp. as a
subsidiary.
65.68
65.68 Formosa Taffeta Co., Ltd.
holds more than 50% of voting
rights.
100.00
100.00 Formosa Taffeta Co., Ltd.
holds more than 50% of voting
rights.
100.00
100.00 The Company and Formosa
Taffeta Co., Ltd. hold more
than 50% of voting rights.
100.00
100.00 Formosa Taffeta Co., Ltd.
holds more than 50% of voting
rights.
Ownership (%)

December 31,2017
50.00
42.50
37.40
65.68
100.00
100.00
100.00

~24~

Name of Name of Main business investor subsidiary activities Formosa Taffeta Co., Ltd. Formosa Taffeta (Hong Kong) Co., Ltd. Sale of Nylon and Polyamine fabric Formosa Taffeta Co., Ltd. Schoeller F.T.C. (Hong Kong) Co., Ltd. Sale of hi-tech performance fabric of 3XDRY, Nanosphere, Keprotec, Dynatec, Spirit and Reflex Formosa Taffeta Co., Ltd. Xiamen Xiangyu Formosa Import & Export Trading Co., Ltd. Import and export, entrepot trade, merchandise export processing, warehousing and design and drawing of black and white and colour graphs Formosa Taffeta Co., Ltd. Formosa Taffeta (Dong Nai) Co., Ltd. Manufacturing of nylon and polyester filament products Formosa Taffeta Co., Ltd. Formosa Taffeta (Cayman) Co., Ltd. Investment Formosa Taffeta (Hong Kong) Co., Ltd. Formosa Taffeta (Changshu) Co., Ltd. Manufacturing of processing fabric of nylon filament knitted cloth, weaving and dyeing as well as post processing of knitted fabric Formosa Development Co., Ltd. Public More Internation Co., Ltd. Employment services and temporary worker services	December 31,2017 December 31,2016 Description 100.00 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. 43.00 43.00 Formosa Taffeta Co., Ltd. has substantial control and thus regards Schoeller F.T.C. (Hong Kong) Co., Ltd. as a subsidiary. 100.00 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. 100.00 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. 100.00 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. (Note l) 100.00 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights through a 100% owned company - Formosa Taffeta (Hong Kong) Co., Ltd. 100.00 - Formosa Taffeta Co., Ltd. holds more than 50% of voting rights through a 100% owned company - Formosa Development Co., Ltd. Ownership (%)	Description
	December 31,2017 100.00 43.00 100.00 100.00 100.00 100.00 100.00

~25~

C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:
As of December 31, 2017 and 2016, the non-controlling interest amounted to $60,831,200 and $59,649,846, respectively. The information of non-controlling interest and respective subsidiary is as follows:

Name of subsidiary	Amount Ownership (%) Amount Ownership (%) $ 43,310,992 62.60 $ 41,591,321 62.60 Non-controllinginterest December 31,2017 December 31,2016	Amount Ownership (%) Amount Ownership (%) $ 43,310,992 62.60 $ 41,591,321 62.60 Non-controllinginterest December 31,2017 December 31,2016	Description
	Amount Ownership (%) $ 43,310,992 62.60 December 31,2017
	Amount $ 43,310,992	Amount $ 41,591,321
Formosa Taffeta Co., Ltd.			-

Summarised financial information of the subsidiary:

Balance sheets

Balance sheets
Current assets Non-current assets Current liabilities Non-current liabilities Total net assets	Formosa Taffeta Co.,Ltd.
	December 31,2017 23,982,143 $ 70,720,892 9,413,895 12,106,570 73,182,570 $	December 31,2016 23,210,986 $ 68,819,110 9,293,527 12,456,669 70,279,900 $

Statements of comprehensive income

Revenue Profit before income tax Income tax expense Profit for the year Other comprehensive income, net of tax Total comprehensive income for the year Comprehensive income attributable to non-controlling interest	Year ended December 31, 2017 Year ended December 31, 2016 40,705,664 $ 39,848,986 $ 5,276,484 4,474,799 516,468) ( 634,299) ( 4,760,016 3,840,500 5,731,460 16,298,058 10,491,476 $ 20,138,558 $ 582,649 $ 473,896 $ Formosa TaffetaCo.,Ltd.	Year ended December 31, 2017 Year ended December 31, 2016 40,705,664 $ 39,848,986 $ 5,276,484 4,474,799 516,468) ( 634,299) ( 4,760,016 3,840,500 5,731,460 16,298,058 10,491,476 $ 20,138,558 $ 582,649 $ 473,896 $ Formosa TaffetaCo.,Ltd.	Year ended December 31, 2017 Year ended December 31, 2016 40,705,664 $ 39,848,986 $ 5,276,484 4,474,799 516,468) ( 634,299) ( 4,760,016 3,840,500 5,731,460 16,298,058 10,491,476 $ 20,138,558 $ 582,649 $ 473,896 $ Formosa TaffetaCo.,Ltd.
	Year ended December 31, 2017
	40,705,664 $ 5,276,484 516,468) ( 4,760,016 5,731,460 10,491,476 $ 582,649 $		39,848,986 $ 4,474,799 634,299) ( 3,840,500 16,298,058 20,138,558 $ 473,896 $

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Statements of cash flows

Statements of cash flows
Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Effect of exchange rates on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year
		Year ended December 31, 2017
	6,335,824 $ 3,917,476) ( 3,094,693) ( 34,590) ( 710,935) ( 5,653,854 4,942,919 $		4,903,770 $ 2,551,350) ( 2,383,317) ( 44,154 13,257 5,640,597 5,653,854 $

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Group’s functional and presentation currency.

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income

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within ‘other gains and losses’.

B. Translation of foreign operations
- (a) The operating results and financial position of all the group entities, associates and jointly controlled entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
  - i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
  - ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
  - iii. All resulting exchange differences are recognised in other comprehensive income.
- (b) When the foreign operation partially disposed of or sold is an associate or jointly controlled entity, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate or jointly controlled entity after losing significant influence over the former foreign associate, or losing joint control of the former jointly controlled entity, such transactions should be accounted for as disposal of all interest in these foreign operations.
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realised within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be settled within the normal operating cycle;
- (b) Liabilities arising mainly from trading activities;
- (c) Liabilities that are to be settled within twelve months from the balance sheet date;
- (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that

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meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(7) Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
(a) Hybrid (combined) contracts; or
(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. Financial assets at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.

(8) Available-for-sale financial assets

A. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.
B. On a regular way purchase or sale basis, available-for-sale financial assets are recognised and derecognised using trade date accounting.
C. Available-for-sale financial assets are initially recognised at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.
(9) Loans and receivables
Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts

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receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(10) Impairment of financial assets

A. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
B. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:
(a) Significant financial difficulty of the issuer or debtor;
(b) A breach of contract, such as a default or delinquency in interest or principal payments;
(c) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
(d) It becomes probable that the borrower will enter bankruptcy or other financial reorganization;
(e) The disappearance of an active market for that financial asset because of financial difficulties;
(f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
(g) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
(h) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C.When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(a) Financial assets measured at amortised cost
- The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed

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by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(b) Financial assets measured at cost
The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognised in profit or loss. Impairment loss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset through the use of an impairment allowance account.
(c) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognised, such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognised in profit or loss shall not be reversed through profit or loss. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(11) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has not retained control of the financial asset.

(12) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(13) Investments accounted for using equity method /associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or

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indirectly 20 per cent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C.When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.
G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts

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previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

(14) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Land improvements 3 ~ 15 years Buildings 10 ~ 60 years Machinery and equipment 5 ~ 15 years Transportation equipment 3 ~ 15 years Other equipment 2 ~ 15 years

(15) Intangible assets

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life.

(16) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

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(17) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(18) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(19) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are financial liabilities held for trading or financial liabilities designated as at fair value through profit or loss on initial recognition. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
(a)Hybrid (combined) contracts; or
(b)They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c)They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.
(20) Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.
(21) Offsetting financial instruments
Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
(22) Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognised in profit or loss.

(23) Employee benefits

A. Short-term employee benefits
Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

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B. Pensions
(a) Defined contribution plans
- For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.
(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
- ii.Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as other equity.
- iii.Past service costs are recognised immediately in profit or loss.
C. Employees’, directors’ and supervisors’ remuneration
Employees’ remuneration and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(24) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.
(25) Treasury shares
Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(26) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(27) Revenue recognition

A. Revenue is measured at the fair value of the consideration received or receivable taking into

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account corporate tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

B. The Group offers customers price discounts. The Group estimates such discounts based on historical experience. Provisions for such liabilities are recorded when the sales are recognised. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments.

(28) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICALACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies
Financial assets—impairment of equity investments
The Group follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

(2) Critical accounting estimates and assumptions

A. Impairment assessment of tangible assets

The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics.

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Any changes of economic circumstances or estimates due to the change of the Group strategy might cause material impairment on assets in the future.

B. Realisability of deferred tax assets
Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred tax assets.
C. Calculation of net defined benefit liabilities

When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and future salary growth rate. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents Time deposits Bonds repurchased and commercial paper	December31,2017 132,789 $ 5,714,328 15,122,751 8,714,731 29,684,599 $	December31,2016
		104,883 $ 8,374,036 14,186,540 7,726,452
		30,391,911 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.
B. The Group has no cash and cash equivalents pledged to others.

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(2) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss	Financial assets at fair value through profit or loss
A. The Group recognised gain on valuation of financial assets at fair value through profit or lo amounting to $2,775 and $2,160 for the years ended December 31, 2017 and 2016, respectivel B. The non-hedging derivative instruments transaction and contract information are as follows: Items December31,2017 December31,2016 Current items: Financial assets at fair value through profit or loss Beneficiary certificate $ 619,504 $ 619,504 Non-hedging derivatives 398 66 619,902 619,570 Valuation adjustments of financial assets at fair value through profit or loss 10,494 8,051 630,396 $ 627,621 $ Contract Amount Contract Amount (Notional (Notional Derivative Principal) Principal) Instruments (in thousands) (in thousands) Current items: Forward exchange contracts: Taipei Fubon JPY 192,020 Nov. 2017 - Feb. 2018 - - CHB - - USD 1,000 Dec. 2016 - Feb. 2017 December 31,2017 December 31,2016 Contract Period Contract Period		December31,2016
		$ 619,504 66
		619,570 8,051
		627,621 $
	Contract Amount (Notional Principal) (in thousands) - USD 1,000		- Dec. 2016 - Feb. 2017 Contract Period

A. The Group recognised gain on valuation of financial assets at fair value through profit or loss amounting to $2,775 and $2,160 for the years ended December 31, 2017 and 2016, respectively.
B. The non-hedging derivative instruments transaction and contract information are as follows:

The Group entered into forward exchange contracts to buy USD and JPY to hedge exchange rate risk of Ninth Naphtha Cracker Project from syndicated long-term borrowings. However, these forward exchange contracts are not accounted for under hedge accounting.

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(3) Available-for-sale financial assets

December 31, 2017 December 31, 2016

Current items: Listed (TSE and OTC) stocks Unlisted stocks Fund Valuation adjustments of available-for-sale financial assets Less: Accumulated impairment Non-current items: Listed (TSE and OTC) stocks Valuation adjustments of available-for-sale financial assets Less: Accumulated impairment	25,540,146 $ 825,839 4,903,800 88,589,604 119,859,389 2,241,589) ( 117,617,800 $ 9,075,966 $ 37,437,306 46,513,272 2,518,986) ( 43,994,286 $	25,658,353 $ 825,839 4,903,800 71,681,703 103,069,695 2,291,703) ( 100,777,992 $ 9,418,267 $ 35,576,112 44,994,379 2,613,085) ( 42,381,294 $

A. The Company has sold Nan Ya Technology Corporation’s shares of 3,673 thousand shares in open market between September 2017 and November 2017 for use of operating capital. Accordingly, the Company has recognised gain on disposal of investments of $2,140,569 (recorded as other gains and losses).
B. The Group purchased the Mega Private US Dollar Money Market Funds in January, March and May 2016. The trading unit was 2,500,000 units, 4,994,157 units and 7,483,835 units and the trading amount was USD 25 million, USD 50 million and USD 75 million, respectively.
C. The Group recognised $7,161,297 and $5,897,644 as dividend income from available-for-sale financial assets for the years ended December 31, 2017 and 2016, respectively.
D. The Group recognised $17,333,899 and $16,824,750 as other comprehensive income from change in fair value of available-for-sale financial assets for the years ended December 31, 2017 and 2016, respectively.
E. As of December 31, 2017 and 2016, no financial assets measured at cost held by the Group were pledged to others.

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(4) Notes receivable, net

Notes receivable, net
Accounts receivable, net Notes receivable Less: Allowance for bad debts Accounts receivable Less: Allowance for bad debts	December31,2017 10,971,286 $ - 10,971,286 $ December 31,2017 21,910,658 $ 257,573) ( 21,653,085 $	December31,2016
		7,037,751 $ -
		7,037,751 $
		December 31,2016
		18,303,379 $ 274,404 (
		18,028,975 $

(5) Accounts receivable, net

A. The credit quality of the Group’s accounts receivable that are neither past due nor impaired qualify the industrial characteristics, operating scale and profit situation of the counterparty.
B. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

. Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December 31,2017 347,818 $ 66,606 3,172 7,075 424,671 $	December 31,2016 332,950 $ 72,739 26,408 4,816 436,913 $

The above ageing analysis was based on past due date.

C. Movement analysis of financial assets that were impaired is as follows:

Year ended December 31, 2017

	0		Individual	provision			Group provision			Total
At January 1			$	156,022		$	118,382	$		274,404
Transfer to other income				-	(		2,223)	(		2,223)
Write-off		(		13,443)			-	(		13,443)
Effect of exchange rate				-	(		1,165)	(		1,165)
At December 31			$	142,579		$	114,994		$	257,573
				Year		endedDecember 31,2016
	0		Individual	provision			Group provision			Total
At January 1			$	156,022		$	124,330	$		280,352
Write-off				-	(		3,279)	(		3,279)
Effect of exchange rate				-	(		2,669)	(		2,669)
At December 31			$	156,022		$	118,382		$	274,404

D. The Group does not hold any collateral as security.

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(6) Inventories

Inventories
Raw materials Materials Work in progress Finished goods Other inventory Raw materials Materials Work in progress Finished goods Other inventory		December31,2017
	Allowance for Cost valuation loss 13,536,387 $ 162,771) ($ 5,951,408 593,228) ( 6,726,046 7,281) ( 13,747,398 504,946) ( 144,127 109) ( $ 40,105,366 ($ 1,268,335) December31,2016		Bookvalue
			13,373,616 $ 5,358,180 6,718,765 13,242,452 144,018
			$ 38,837,031

	Allowance for Cost valuation loss 17,685,864 $ 143,306) ($ 5,660,605 517,325) ( 6,371,263 18,564) ( 13,750,552 675,146) ( 102,503 1,166) ( $ 43,570,787 ($ 1,355,507)		Bookvalue
			17,542,558 $ 5,143,280 6,352,699 13,075,406 101,337
			$ 42,215,280

A. Expense and loss incurred on inventories for the years ended December 31, 2017 and 2016 were as follows:

as follows:
			For the years ended			December 31,
			2017			2016
Cost of inventories sold		$	303,434,842	$		270,249,925
(Gain) loss on inventory valuation (Note)	(		86,032)			498,306
Idle capacity			1,554,522			1,317,736
Others			321,937	(		412,894)
		$	305,225,269		$	271,653,073

Note: The gain from price recovery for the year ended December 31, 2016 resulted from the disposal of inventory which were previously provided with allowance. As the market value of petroleum related products decreased for the year ended December 31, 2017, the Group recognised related allowance for inventory valuation loss after assessment.

B. As of December 31, 2017 and 2016, inventories pledged are described in Note 8.

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(7) Financial assets measured at cost

Items Mai Liao Harbor Administration Corp. Formosa Plastic Corp. U.S.A Taiwan Stock Exchange Corp. Taiwan Aerospace Corp. Yi-Jih Development Corp. Chinese Television System Corp. Formosa Automobile Corp. Formosa Development Corp. Formosa Technologies Corp. Formosa Plastics Marine Corp. Formosa Ocean Group Marine Investment Corp. Guangyuan Investment Corp. Taiwan Leader Biotech Corp. Toa Resin Corp., Ltd. Shin Yun Natural Gas Corp. Wk Technology Fund IV Ltd. Syntronix Corporation United Performance Materials Corp. Association of R.O.C. in Xiamen Nan Ya Photonics Inc. United Biopharma, Inc. Formosa Lithium Iron Oxide Corp. Mega Growth Venture Capital Co.,Ltd. Formosa Ha Tinh (Cayman) Limited UBI Pharma Inc. Less: Accumulated impairment	December31,2017 539,260 $ 818,316 1,800 10,702 3,000 38,419 1,750 90,010 15,497 15,000 856,948 50,000 21,033 3,000 3,100 262 4,417 8,400 137 294,583 613,159 53,000 25,000 21,166,194 667,607 25,300,594 207,066) ( $ 25,093,528	December31,2016 539,260 $ 818,316 1,800 10,702 3,000 38,419 1,750 90,010 15,848 15,000 856,948 50,000 21,033 3,000 3,100 23,812 4,417 8,400 141 294,583 635,828 53,000 25,000 20,449,290 676,215 24,638,872 207,066) ( $ 24,431,806

A. According to the Group’s intention, the investment in above stocks should be classified as available-for-sale financial assets. However, as these stocks are not traded in active market, and

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no sufficient industry information of companies similar to the Group’s financial information can be obtained, the fair value of the investment in stocks cannot be measured reliably. Accordingly, the Group classified those stocks as ‘financial assets measured at cost’.

B. The Group recognised $303,660 and $345,717 as dividend income from investment in financial assets measured at cost for the years ended December 31, 2017 and 2016, respectively.
C. Value of the stocks mentioned above was impaired, accordingly, the Group recognised impairment loss of $207,066 for the year ended December 31, 2016.
D. As of December 31, 2017 and 2016, no financial assets measured at cost held by the Group were pledged to others.

(8) Investments accounted for using equity method

Investments accounted for using equity method
. Formosa Heavy Industries Corp. Formosa Fairway Corp. Formosa Plastics Transport Corp. Formosa Petrochemical Corp. Mai Liao Power Corp. Hwa Ya Science Park Management Consulting Co., Ltd. Chia-Nan Enterprise Corp. Su Hua Transport Corp. Formosa Environmental Technology Corp. Formosa Synthetic Rubber Corp. Formosa Synthetic Rubber Corp. (Hong Kong) Formosa Resourse Corp. Formosa Group (Cayman) Corp. Formosa Construction Corp. FG INC. Beyoung International Corp. Kuang Yueh Co., Ltd. Changshu Yu Yuan Co., Ltd.	December31,2017 7,694,277 $ 100,952 738,229 82,001,789 10,845,857 1,382 260,483 277,136 226,435 283,679 802,566 5,361,771 348,135 87,774 2,165,787 95,491 1,149,965 35,008 $ 112,476,716	December31,2016
		7,644,268 $ 101,719 750,304 74,173,344 10,936,483 1,776 261,922 251,008 255,716 315,764 1,212,400 4,159,625 549,598 91,895 - 94,389 1,175,070 59,856
		$ 102,035,137

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A. Associates

(a) The basic information of the associate that is material to the Group is as follows:

Shareholding ratio

Company name	Principal place of business	December 31,2017	December 31,2016	Nature of relationship	Method of measurement Equity method
Formosa Petrochemical Corp.	Taiwan	24.15%	24.15%	Investments accounted for using equity method

(b) The summarised financial information of the associate that is material to the Group is shown below:

Balance sheets

Balance sheets
			Formosa Petrochemical Corp.
.			December 31,2017		December 31,2016
Current assets	$		264,858,391	$	281,610,398
Non-current assets			161,521,779		168,006,910
Current liabilities	(		64,714,687)	(	67,458,120)
Non-current liabilities	(		20,378,883)	(	73,094,405)
Total net assets		$	341,286,600	$	309,064,783
Share in associate's net assets		$	82,420,714	$	74,639,145
Unrealised profit from sale of upstream
transactions eliminations	(		308,206)	(	355,082)
Net differences in share catiptal	(		110,719)	(	110,719)
Carrying amount of the associate		$	82,001,789	$	74,173,344

Statements of comprehensive income

Revenue Profit for the year from continuing operations Other comprehensive income, net of tax Total comprehensive income Dividends received from associates		Formosa Petrochemical Corp.	Formosa Petrochemical Corp.	Formosa Petrochemical Corp.
		Year ended December 31,2017		Year ended December 31,2016
		622,236,734 $ 80,170,146 9,204,227 89,374,373 $ 13,804,799 $		544,397,827 $
				75,764,102 4,766,840
				80,530,942 $
				9,203,199 $

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarised below:

As of December 31, 2017 and 2016, the carrying amount of the Group’s individually

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immaterial associates amounted to $30,474,927 and $27,861,793, respectively.

Profit for the year from continuing operations Other comprehensive loss, net of tax Total comprehensive income		Year ended December31,2017		Year ended December31,2016
	( (	78,251 $ 1,034,719) 956,468) $		5,668,226 $ 675,571) ( 4,992,655 $

(d) The fair value of the Group’s associates which have quoted market price was as follows:

Formosa Petrochemical Corp.

December 31,2017 $ 265,742,377	December 31,2016
	$ 257,689,578

B. The investments accounted for using equity method were based on the investees’ audited financial statements for the years ended December 31, 2017 and 2016.
C. In response to Formosa Ha Tinh Steel Corporation’s planning of shareholding, the Group has signed an agreement for the transfer of capital contribution with Formosa Ha Tinh (Cayman) Limited in September 2014, whereby the Group will transfer all its capital contribution of US$689,955 thousand in Formosa Ha Tinh Steel Corporation as investment in Formosa Ha Tinh (Cayman) Limited. The Group has conducted restructuring in June, 2015, transferring 14.75% of equity in Formosa Ha Tinh (Cayman) Limited to Formosa Group Investment (Cayman) Limited as capital contribution. After reorganization, the Group now indirectly holds 19.71% of voting rights of Formosa Ha Tinh Steel Corporation through direct ownership in Formosa Ha Tinh (Cayman) Limited. Although the shareholding ratio is less than 20%, as the Group still has significant influence over Formosa Ha Tinh Steel Corp., the Group accounts for Formosa Ha Tinh Steel Corp. using equity method. In August, 2015, Formosa Ha Tinh (Cayman) Limited received cash from a capital increase. Since Formosa Taffeta (Cayman) Co., Ltd., the Group’s subsidiary, and Formosa Group Investment (Cayman) Corp., the Group’s associate, did not subscribe to the capital increase proportionately, the Group’s overall ownership percentage decreased from 19.71% to 16.5%. Accordingly, capital surplus was recognised. In January 2016, the Group has transferred all its share capital of Formosa Group Investment (Cayman) Corp. as investment in FCFC International Limited (Cayman). After reorganization, the Group’s subsidiaries, FCFC International Limited (Cayman) and Formosa Biomedical Technology (SAMOA) Co., Ltd. collectively hold 15.28% of share capital of Formosa Ha Tinh (Cayman) Limited. As the Group has no significant influence over the subsidiaries in management decisions, the Group discontinued accounting the subsidiary using the equity method when the Group lost significant influence and reclassified the investment as financial assets at cost.
D. In order to improve technical value and integrate related resources of biomedical industry and further develop the Group toward the high-end medical domain, the Group acquired 150 million shares of UBI Pharma Inc. at NT$4 per share and shareholding ratio is 21.99%. Since July 2016,

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the Group has lost significant influence in operational decision making over UBI Pharma Inc. As a result, the Group discontinued accounting for this investment under equity method and reclassified the investment as financial assets at cost. As of September 30, 2017, the shareholding ratio was 18.99%.

E. The Board of Directors resolved to invest USD 72,600 thousand, equivalent to 30% of ownership, in FG INC in November, 2017.
F. The Group received cash dividends of $14,443,403 and $11,195,240 for the years ended December 31, 2017 and 2016, respectively, from its investments accounted for using equity method. The cash dividends are recorded as a deduction from the Group’s investments accounted for using equity method.
G. As of December 31, 2017 and 2016, no equity investments by the Group were pledged to others.

(9) Property, plant and equipment

									Construction in	Construction in
									progress and
	Land	and land				Machinery	Transportation		equipment to
.	improvements			Buildings	and equipment			equipment	be	inspected		Total
At January 1, 2017
Cost	$	8,779,868	$	44,776,889	$	293,971,383	$	14,692,225	$	14,151,660	$	376,372,025
Accumulated
depreciation
and impairment	(	170,292)	(	22,571,577)	(	210,261,607)	(	12,411,580)	(	43,509)	(	245,458,565)
	$	8,609,576	$	22,205,312	$	83,709,776	$	2,280,645	$	14,108,151	$	130,913,460
2017
Opening net
book amount	$	8,609,576	$	22,205,312	$	83,709,776	$	2,280,645	$	14,108,151	$	130,913,460
Additions		-		11,884		203,377		207,007		11,247,250		11,669,518
Disposals	(	43,196)	(	28,735)	(	94,182)	(	5,003)		-	(	171,116)
Reclassifications		108		2,203,995		10,182,040		202,435	(	12,526,624)		61,954
Depreciation
charge	(	290)	(	1,471,045)	(	12,505,276)	(	495,868)		-	(	14,472,479)
Reversal of
impairment loss								3,090		-		3,090
Net exchange
difference	(	44)	(	550,609)	(	1,546,359)	(	30,430)	(	531,367)	(	2,658,809)
Closing net
book amount	$	8,566,154	$	22,370,802	$	79,949,376	$	2,161,876	$	12,297,410	$	125,345,618
At December 31, 2017
Cost	$	8,736,490	$	46,210,594	$	297,714,457	$	14,717,555	$	12,297,410	$	379,676,506
Accumulated
depreciation
and impairment	(	170,336)	(	23,839,792)	(	217,765,081)	(	12,555,679)		-	(	254,330,888)
	$	8,566,154	$	22,370,802	$	79,949,376	$	2,161,876	$	12,297,410	$	125,345,618

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										Construction in	Construction in
										progress and
		Land	and land				Machinery	Transportation		equipment to
.		improvements			Buildings	and equipment			equipment	be	inspected		Total
At January 1, 2016
Cost		$	8,776,614	$	44,661,550	$	288,265,584	$	14,794,731	$	21,798,947	$	378,297,426
Accumulated
depreciation
and impairment	(		171,256)	(	21,484,545)	(	199,945,206)	(	12,332,660)		-	(	233,933,667)
		$	8,605,358	$	23,177,005	$	88,320,378	$	2,462,071	$	21,798,947	$	144,363,759
2016
Opening net
book amount		$	8,605,358	$	23,177,005	$	88,320,378	$	2,462,071	$	21,798,947	$	144,363,759
Additions			-		67,402		505,723		168,135		7,526,614		8,267,874
Disposals	(		6)	(	2,296)	(	38,191)	(	8,775)		-	(	49,268)
Reclassifications			4,758		1,365,457		12,931,220		242,886	(	14,593,891)	(	49,570)
Depreciation
charge	(		313)	(	1,443,640)	(	14,052,099)	(	533,814)		-	(	16,029,866)
Impairment loss			-	(	77,231)	(	650,121)	(	10,361)	(	43,509)	(	781,222)
Net exchange
difference	(		221)	(	881,385)	(	3,307,134)	(	39,497)	(	580,010)	(	4,808,247)
Closing net
book amount		$	8,609,576	$	22,205,312	$	83,709,776	$	2,280,645	$	14,108,151	$	130,913,460
At December 31, 2016
Cost		$	8,779,868	$	44,776,889	$	293,971,383	$	14,692,225	$	14,151,660	$	376,372,025
Accumulated
depreciation
and impairment	(		170,292)	(	22,571,577)	(	210,261,607)	(	12,411,580)	(	43,509)	(	245,458,565)
		$	8,609,576	$	22,205,312	$	83,709,776	$	2,280,645	$	14,108,151	$	130,913,460

A. Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalisation are as follows:

Amount capitalised Interest rate		For the years endedDecember 31,	For the years endedDecember 31,
		2017 $ 84,752 0.98%~3.03%	2016 $ 167,447 1.01%~2.62%

B. Under the regulations, land may only be owned by individuals. Thus, the Group has already obtained ownership of the agricultural land for future plant expansion which was acquired by the Group under the name of a third party, and has pledged the full amount to the Company. As of December 31, 2017 and 2016, the pledged amount was $822,993 and $824,537, respectively.
C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

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D. The Group recognised impairment loss (gain from reversal) for the years ended December 31, 2017 and 2016. Details of such loss are as follows:

For theyears ended December 31,	For theyears ended December 31,	For theyears ended December 31,	For theyears ended December 31,
Recognised in profit or loss Recognised in other comprehensive income - $ - $ - - 3,090) ( - - - 3,090) ($ - $ 2017	2016
Recognised in profit or loss - $ - 3,090) ( - 3,090) ($	Recognised in profit or loss 77,231 $ 650,121 10,361 43,509 781,222 $	Recognised in other comprehensive income
			- $ - - - - $

E. The impairment loss (gain from reversal) reported by operating segments is as follows:

For theyears ended December 31,	For theyears ended December 31,	For theyears ended December 31,
Recognised in profit or loss Recognised in other comprehensive income - $ - $ 3,090) ( - 3,090) ($ - $ 2017	2016
Recognised in profit or loss - $ 3,090) ( 3,090) ($	Recognised in profit or loss 314,437 $ 466,785 781,222 $	Recognised in other comprehensive income
		- $ - - $

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(10) Short-term loans and short-term notes and bills payable

Short-term loans and short-term notes and bills payable	Short-term loans and short-term notes and bills payable
Financial liabilities at fair value through profit or loss Type of loans December31,2017 Interest raterange Collateral OA loans $ 7,386 0.32%~0.36% None Secured loans 2,798,304 1.40%~4.79% Note 8 Unsecured loans 20,336,444 0.96%~4.57% None Total short-term loans $ 23,142,134 Short-term notes and bills payable $ 1,580,000 0.56%~0.79% None Short-term notes and bills payable discount ( 237) Net short-term notes and bills payable $ 1,579,763 Type of loans December31,2016 Interest raterange Collateral OA loans $ 20,162 0.32%~1.95% None Secured loans 2,969,220 1.40%~2.33% Note 8 Unsecured loans 23,157,368 0.87%~4.13% None Total short-term loans $ 26,146,750 Short-term notes and bills payable $ 1,500,000 0.43%~0.96% None Short-term notes and bills payable discount ( 536) Net short-term notes and bills payable $ 1,499,464 Items December31,2017 December31,2016 Current items: Non-hedging derivatives - $ 1,381 $
Items Current items: Non-hedging derivatives
	1,381 $

(11) Financial liabilities at fair value through profit or loss

A. The Group recognised net gain (loss) on valuation of financial liabilities at fair value through profit or loss amounting to $1,381 and ($562) for the years ended December 31, 2017 and 2016, respectively.
B. The non-hedging derivative instruments transaction and contract information are as follows: As of December 31, 2017: None.

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Derivative Financial Liabilities Current items: Forward foreign exchange contracts CHB	December	31,2016
	Contract Amount (Notional Principal) (In thousand dollars) USD 5,000	Contract Period
		Nov. 2016 ~ Feb. 2017

The Group entered into forward foreign exchange contracts to buy USD and JPY to hedge exchange rate risk of selling prices. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

(12) Bonds payable

Bonds payable Domestic unsecured nonconvertible corporate bonds Less: Current portion	December 31,2017 39,750,000 $ 5,700,000) ( 34,050,000 $	December 31,2016 46,500,000 $ 6,750,000) ( 39,750,000 $

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The terms of nonconvertible corporate bonds were as follows:

Description First issued domestic unsecured nonconvertible corporate bonds - A First issued domestic unsecured nonconvertible corporate bonds - B Second issued domestic unsecured nonconvertible corporate bonds - A Second issued domestic unsecured nonconvertible corporate bonds - B Second issued domestic unsecured nonconvertible corporate bonds - C Third issued domestic unsecured nonconvertible corporate bonds - A Third issued domestic unsecured nonconvertible corporate bonds - B 2012	Issuance date 2012.7.26 2012.7.26 2012.12.7 2012.12.7 2012.12.7 2013.1.22 2013.1.22	Maturity date 2016.7.26~ 2017.7.26 2018.7.26~ 2019.7.26 2016.12.7~ 2017.12.7 2018.12.7~ 2019.12.7 2021.12.7~ 2022.12.7 2019.1.22~ 2020.1.22 2022.1.22~ 2023.1.22	Yield rate(%) 1.29 1.40 1.23 1.36 1.51 1.34 1.50	Issued principal amount $ 6,000,000 3,000,000 3,000,000 3,900,000 4,100,000 2,800,000 2,200,000	December 31,2017 $ - 3,000,000 - 3,900,000 4,100,000 2,800,000 2,200,000	December 31,2016 Note $ 3,000,000 Serial bonds, to be settled 50%, 50% 3,000,000 Serial bonds, to be settled 50%, 50% 1,500,000 Serial bonds, to be settled 50%, 50% 3,900,000 Serial bonds, to be settled 50%, 50% 4,100,000 Serial bonds, to be settled 50%, 50% 2,800,000 Serial bonds, to be settled 50%, 50% 2,200,000 Serial bonds, to be settled 50%, 50%	Note

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Issuance Maturity Description date date First issued domestic unsecured nonconvertible corporate bonds - A 2013.7.8 2017.7.8~ 2018.7.8 First issued domestic unsecured nonconvertible corporate bonds - B 2013.7.8 2019.7.8~ 2020.7.8 First issued domestic unsecured nonconvertible corporate bonds - C 2013.7.8 2022.7.8~ 2023.7.8 Second issued domestic unsecured nonconvertible corporate bonds 2014.1.17 2025.1.17 ~ 2026..1.17 First issued domestic unsecured nonconvertible corporate bonds-A 2014.7.4 2023.7.4 ~ 2024.7.4 First issued domestic unsecured nonconvertible corporate bonds-B 2014.7.4 2028.7.4 ~ 2029.7.4 Less: Current portion of bonds payable 2013 2014	Yield rate(%) 1.24 1.38 1.52 2.03 1.81 2.03	Issued principal amount $ 4,500,000 2,700,000 2,800,000 10,000,000 1,400,000 4,600,000	December 31,2017 $ 2,250,000 2,700,000 2,800,000 10,000,000 1,400,000 4,600,000 39,750,000 5,700,000) ( 34,050,000 $	December 31,2016 Note $ 4,500,000 Serial bonds, to be settled 50%, 50% 2,700,000 Serial bonds, to be settled 50%, 50% 2,800,000 Serial bonds, to be settled 50%, 50% 10,000,000 Serial bonds, to be settled 50%, 50% 1,400,000 Serial bonds, to be settled 50%, 50% 4,600,000 Serial bonds, to be settled 50%, 50% 46,500,000 6,750,000) ( 39,750,000 $	Note

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- (13) Long term bank loans and notes payable

Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	December 31,2017
Japanese Mitsubishi Bank China Trust Bank Sumitomo Mitsui Banking Corporation Sumitomo Mitsui Banking Corporation Mega International Commercial Bank Long-term bank loans Unsecured loans	Mar. 29, 2016 ~ Mar. 29, 2019, payable at maturity date; interest payable monthly Aug. 24, 2015 ~ Aug. 24, 2020, payable in full after Aug. 24, 2018 or payable in full at maturity with a two- year extension Oct. 16, 2014 ~ Jul. 22, 2019, domestic: one hundred million principal payable semi-annually after Apr. 16, 2017; overseas: one hundred and ten million payable semi- annually after Apr. 16, 2017 with a two- year extension Oct. 16, 2014 ~ Jul. 22, 2019, principal payable semi- annually after Apr. 16, 2017 with a two- year extension Oct. 23, 2017 ~ Oct. 23, 2022, principal payable semi- annually after 18 months	1.05%~1.08% LIBOR+1.25% (if TAIFX is higher than LIBOR+0.35%, the difference between TAIFX and LIBOR+0.35% is payable by the borrower) LIBOR+1.55% LIBOR+1.45% and TAIFX+0.4% higher 1 to 5 years (including 5 years) rate of CBC, 4.75%	None " " " "	$ 3,000,000 2,555,333 2,390,954 2,151,859 475,069

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	December 31,2017
Mega International Commercial Bank Taiwan Bank Taiwan Bank Taiwan Business Bank Chang Hwa Bank Hua Nan Bank Hua Nan Bank	Nov. 17, 2016 ~ Nov. 17, 2021, principal payable semi-annually after 18 months Oct. 22, 2014 ~ Oct. 21, 2019, principal payable semi- annually after Oct. 22, 2017, interest payable quarterly Oct. 24, 2014 ~ Oct. 21, 2019, principal payable semi- annually after three years; interest payable quarterly Jan.1, 2016 ~ Jan. 1, 2019, principal payable quarterly after 27 months Sep. 2017 ~ Sep. 2022, principal payable semi- annually after 36 months Feb. 3, 2017 ~ Feb. 3, 2020, principal payable at maturity date Mar. 15, 2017 ~ Mar. 15, 2019, payable in full at maturity	1 to 5 years (including 5 years) rate of CBC, 4.75% The interest rate is 1.75% plus the average of the 3- month RMB interbank lending rate of HSBC (HK) and that of China Bank (HK), 2 business days before the interest accrued (the interest rate for the second year is 6.0173%, and the interest accrual period is from October to January) LIBOR+1.40% 3 months LIBOR+1.10% 3 months 1 to 5 years (including 5 years) rate of CBC, 4.75% 4.75% 1.03%	None " " " " "	$ 1,566,812 438,525 1,910,272 577,495 383,709 159,879 1,500,000

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral December 31,2017 None $ 300,000 " 2,000,000 " 900,000 " 500,000 " 500,000 " 200,000 " 1,000,000 " 1,500,000
Sino Pac Bank First Commercial Bank Mizuho Corporate Bank E. Sun Bank China Trust Bank Land Bank of Taiwan KGI Bank Taipei Fubon Bank	Jun. 16, 2017 ~ Jun. 16, 2019, payable in full at maturity Sep. 15, 2017 ~ Sep. 15, 2018, payable in full at maturity Aug. 18, 2017 ~ Aug. 18, 2019, payable in full at maturity Sep. 20, 2017 ~ Sep. 20, 2020, payable in full at maturity Sep. 22, 2017 ~ Sep. 22, 2019, payable in full at maturity May. 25, 2017 ~ Sep. 30, 2020, payable in full at maturity Jun. 20, 2017 ~ Jun. 20, 2019, payable in full at maturity Jan. 11, 2017 ~ Jan. 11, 2019, payable in full at maturity	1.02% 1.02% 1.03% 1.04% 1.04% 1.05% 1.04% 1.04%

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral December 31,2017 None $ 200,000 " 700,000 " 1,500,000 Land 9,411,111 Endorsement and guarantees of Formosa Taffeta Co,. Ltd. 422,070 None 27,466 36,270,554 6,474,978) ( 29,795,576 $	December 31,2017
		1.04% 1.00% 1.02% 1.63% SIBOR 6 months +1.6% 0.86%~0.87%

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	December 31,2016
Japanese Mitsubishi Bank Export-Import Bank of the ROC China Trust Bank Taipei Fubon Bank Sumitomo Mitsui Banking Corporation Sumitomo Mitsui Banking Corporation Long-term bank loans Unsecured loans	Mar. 29, 2016 ~ Mar. 29, 2019, payable at maturity date; interest payable monthly Jul. 27, 2012 ~ Jul. 27, 2017, principal payable semi- annually Aug. 24, 2015 ~ Aug. 24, 2020, payable in full after Aug. 24, 2018 or payable in full at maturity with a two- year extension Aug. 2, 2016 ~ Aug. 2, 2018, payable at maturity date; interest payable monthly Aug. 2, 2016 ~ Aug. 2, 2018, payable at maturity date; interest payable monthly Oct. 16, 2014 ~ Jul. 22, 2019, domestic: one hundred million principal payable semi-annually after Apr. 16, 2017; overseas: one hundred and ten million payable semi- annually after Apr. 16, 2017 with a two- year extension	1.00%~1.13% 1.05%~1.19% LIBOR+1.25% (if TAIFX is higher than LIBOR+0.35%, the difference between TAIFX and LIBOR+0.35% is payable by the borrower) 1.14%~1.14% 0.82%~0.82% 2.08%~2.18%	None " " " " "	$ 3,000,000 114,286 3,067,876 600,000 1,100,000 6,135,751

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	December 31,2016
Mega International Commercial Bank Mega International Commercial Bank Taiwan Cooperative Bank Taiwan Cooperative Bank Taiwan Bank Taiwan Bank	Nov. 19, 2012 ~ Nov. 17, 2017, principal payable semi-annually Nov. 17, 2016 ~ Nov. 17, 2021, principal payable semi-annually after 18 months Dec. 10, 2013 ~ Dec. 7, 2018, principal payable semi-annually Dec. 10, 2013 ~ Dec. 7, 2018, principal payable semi-annually Oct. 22, 2014 ~ Oct. 21, 2019, principal payable semi- annually after Oct. 22, 2017, interest payable quarterly Oct. 24, 2014 ~ Oct. 21, 2019, principal payable semi- annually after three years; interest payable quarterly	TAIFX+0.80% 3 months 1 to 5 year (including 5 year) rate of CBC, 4.75% The interest rate is 1.3% plus the average of the 3- month RMB interbank lending rate of HSBC (HK) and that of China Bank (HK), 2 business days before the interest accrued (the interest rate for the third year is 6.598%, and the interest accrual period is from December to March) TAIFX+0.75% 3 months The interest rate is 1.75% plus the average of the 3- month RMB interbank lending rate of HSBC (HK) and that of China Bank (HK), 2 business days before the interest accrued (the interest rate for the second year is 6.0173%, and the interest accrual period is from October to January) LIBOR+1.4% 3 months	None " " " " "	$ 1,226,602 991,124 707,281 1,781,801 558,380 2,582,320

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	December 31,2016
Taiwan Business Bank Hua Nan Bank Sino Pac Bank Industrial Bank of Taiwan First Commercial Bank First Commercial Bank Mizuho Corporate Bank E. Sun Bank	Jan.1, 2016 ~ Jan.1, 2019, principal payable quarterly after 27 months Mar. 15, 2016 ~ Mar. 15, 2018, payable in full at maturity May. 16, 2016 ~ May. 16, 2018, payable in full at maturity Sep. 25, 2015 ~ Sep. 25, 2018, payable in full at maturity Sep. 16, 2015 ~ Sep. 16, 2018, payable in full at maturity May. 16, 2016 ~ Sep. 16, 2018, payable in full at maturity Aug. 19, 2015 ~ Aug. 19, 2017, payable in full at maturity Aug. 20, 2015 ~ Aug. 20, 2018, payable in full at maturity	LIBOR+1.1% 3 months 1.03% 1.05% 1.07% 0.99% 1.04% 1.06% 1.06%	None " " " " " " "	$ 624,530 1,500,000 300,000 500,000 1,500,000 500,000 900,000 500,000

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China Trust Bank KGI Bank Taipei Fubon Bank Bangkok Bank Far Eastern International Bank HSBC Mega International Commercial Bank Hua Nan Bank China Trust Bank ANZ Type of loans Secured loans	Borrowing period/repayment term	Interest rate range	Collateral	December 31,2016
	Sep. 23, 2015 ~ Sep. 23, 2017, payable in full at maturity Jun. 20, 2015 ~ Jun. 20, 2017, payable in full at maturity Jan. 11, 2016 ~ Jan. 11, 2018, payable in full at maturity Dec. 2, 2015 ~ Dec. 1, 2017, payable in full at maturity Dec. 2, 2016 ~ Aug. 10, 2018, payable in full at maturity Dec. 19, 2015 ~ Dec. 19, 2017, payable in full at maturity Apr. 21, 2014 ~ Apr. 21, 2021, principal payable semi- annually after Apr. 21, 2017; interest payable monthly Apr. 26, 2010 ~ Jun. 11, 2019, principal payable annually	1.05% 1.04% 1.04% 1.05% 1.05% 1.03% 1.63%~1.65% SIBOR 6 months +1.6%	None " " " " " Land Endorsement and guarantees of Formosa Taffeta	$ 500,000 1,000,000 1,500,000 200,000 700,000 1,500,000 12,100,000 533,597

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral December 31,2016 None 57,574 $ 46,281,122 7,666,502) ( 38,614,620 $	December 31,2016
		0.86%~1.01%

A. The collaterals for long-term bank loans are described in Note 8.
B. The Group has signed contracts for syndicated loans with Mega Bank and others on November 14, 2013 to finance plant construction for Formosa Ha Tinh Steel Corp. Information is as follows: (a) Total credit line: $12,100,000
(b) Interest rate: Based on the agreement with the banks
(c) Period: 7 years
(d) Collateral: Land in Six Naphtha Cracking Plant, Mailiao Township, Yunlin County The Group is required to meet certain financial covenants, namely liability ratio (liabilities/net equity) of less than 150% and current ratio (current assets/current liabilities) of above 100% at the end of each year. In the event the Group fails to meet the required covenants, a capital increase has to be completed by June of the following year.
C. Formosa Industries Corp.’s long-term borrowing from banks is for the plant construction. The borrowing is guaranteed by Nan Ya Plastics Corp.’s drawn note of $4,898,311.

(14) Pensions

A. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

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(b) The amounts recognised in the balance sheet are as follows:

Movements in net defined benefit liabilities are as follows: December 31,2017 December 31,2016 Present value of defined benefit obligations 11,641,211 $ 11,147,801 $ Fair value of plan assets 4,601,536) ( 4,463,607) ( Net defined benefit liability 7,039,675 $ 6,684,194 $ Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability Year ended December 31, 2017 Balance at January 1 11,147,801 $ 4,463,607) ($ 6,684,194 $ Current service cost 128,630 - 128,630 Interest (expense) income 139,347 56,860) ( 82,487 11,415,778 4,520,467) ( 6,895,311 Remeasurements: Return on plan assets - 13,805 13,805 Change in financial assumptions 257,231 - 257,231 Experience adjustments 725,138 - 725,138 982,369 13,805 996,174 Pension fund contribution - 434,145) ( 434,145) ( Paid pension 756,936) ( 339,271 417,665) ( Balance at December 31 11,641,211 $ 4,601,536) ($ 7,039,675 $ Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability Year ended December 31, 2016 Balance at January 1 11,766,593 $ 685,635) ($ 11,080,958 $ Current service cost 151,987 - 151,987 Interest (expense) income 174,753 10,185) ( 164,568 12,093,333 695,820) ( 11,397,513 Remeasurements: Return on plan assets - 7,000) ( 7,000) ( Change in financial assumptions 225,099 - 225,099 Experience adjustments 146,603 - 146,603 371,702 7,000) ( 364,702 Pension fund contribution - 4,016,417) ( 4,016,417) ( Paid pension 1,317,234) ( 255,630 1,061,604) ( Balance at December 31 11,147,801 $ 4,463,607) ($ 6,684,194 $	December 31,2017	December 31,2016	December 31,2016	December 31,2016
		$ (		11,147,801 4,463,607) 6,684,194 Net defined benefit liability
		$

11,147,801 $ 128,630 139,347 11,415,778 - 257,231 725,138 982,369 - 756,936) ( 11,641,211 $ Present value of defined benefit obligations	4,463,607) ($ - 56,860) ( 4,520,467) ( 13,805 - - 13,805 434,145) ( 339,271 4,601,536) ($ Fair value of plan assets		6,684,194 $ 128,630 82,487 6,895,311 13,805 257,231 725,138 996,174 434,145) ( 417,665) ( 7,039,675 $ Net defined benefit liability
11,766,593 $ 151,987 174,753 12,093,333 - 225,099 146,603 371,702 - 1,317,234) ( 11,147,801 $	685,635) ($ - 10,185) ( 695,820) ( 7,000) ( - - 7,000) ( 4,016,417) ( 255,630 4,463,607) ($		11,080,958 $ 151,987 164,568 11,397,513 7,000) ( 225,099 146,603 364,702 4,016,417) ( 1,061,604) ( 6,684,194 $

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(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2017 and 2016 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Year ended December31,2017 1.25% 1%~2.85%	Year ended December31,2016 1.25%
		1%~2.5%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

	Discount rate	Discount rate	Discount rate	Future salaryincreases	Future salaryincreases
	Increase 0.25%	Decrease 0.25%		Increase 0.35%	Decrease 0.35%
(
	Increase 0.25%	Decrease 0.25%		Increase 0.35%	Decrease 0.35%
(	218,769) $		228,442 $	324,320 $	301,919) ($

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once.

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The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

     - The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

  - (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2018 amount to $157,554.

B. (a) From July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
- (b) The Company’s mainland subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage was 10~20% and 10%~20% for the years ended December 31, 2017 and 2016, respectively. Other than the monthly contributions, the Group has no further obligations.
- (c) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2017 and 2016 were $358,705 and $373,379, respectively.
(15) Capital stock
A. As of December 31, 2017, the Company’s authorised and paid-in capital was $58,611,863, and total issued stocks was 5,861,186 thousand shares with a par value of $10 per share. All proceeds from shares issued have been collected.
B. Changes in the treasury stocks for the years ended December 31, 2017 and 2016 are set forth below:

For the year ended December 31, 2017

Reason for reacquisition	Formosa Taffeta Co. Formosa Advanced Technologies Co. Subsidiary	Beginning shares 11,219,610 7,316,000 18,535,610	950,000 - 7,936,000 ( 3,000) 8,886,000 ( 3,000) Additions Disposal	Ending shares
Parent company shares held by subsidiaries reclassified from long-term investment to treasury stock				12,169,610 15,249,000 27,418,610

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Reason for reacquisition	Subsidiary	For theyear ended	For theyear ended	December 31,	2016
		Beginning shares 11,219,610 7,037,000 18,256,610	Additions	- - - Disposal	Ending shares
Parent company shares held by subsidiaries reclassified from long-term investment to treasury stock	Formosa Taffeta Co. Formosa Advanced Technologies Co.		- 279,000 279,000		11,219,610 7,316,000 18,535,610

C. The market value of treasury stocks was $103 and $96.3 (in dollars) per share at December 31, 2017 and 2016, respectively.
D. The above treasury stocks of the parent company were purchased by subsidiaries.

(16) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Group has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

For the year ended December 31, 2017

At January 1, 2017 Dividends allocated to subsidiaries Disposal of treasury shares Effect from net stockholding of associates recognised under the equity method Expired cash dividends reclassified to capital surplus At December 31, 2017	Share premium	Conversion premium of corporate bonds	Treasury share transactions	Effect from net stockholding of associates recognised usingequitymethod	Difference between stock price and book value for disposal of subsidiaries	Others
	$ 2,710,554 - -	$ 5,514,032 - -	$ 159,382 43,842 8 -	$ 25,003 - 4,304 -	$ 9,447 - -	$204,224 - 12,002
	$2,710,554	$5,514,032	$ 203,232	$ 29,307	$ 9,447	$216,226

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For the year ended December 31, 2016

At January 1, 2016 Dividends allocated to subsidiaries Effect from net stockholding of associates recognised under the equity method At December 31, 2016		Share premium		Conversion premium of corporate bonds		Treasury share transactions		Effect from net stockholding of associates recognised usingequitymethod		Difference between stock price and book value for disposal of subsidiaries	Others
		$ 2,710,554 - -		$ 5,514,032 - -		$ 138,407 20,975 -		$ 298,338 - ( 273,335) 25,003 $		$ 9,447 - -	$204,224 - -
		2,710,554 $		5,514,032 $		159,382 $				9,447 $	$204,224

(17) Retained earnings

A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior years' operating losses and then 10% of the remaining amount shall be set aside as legal reserve. The remaining balance is to be set aside as special reserve if necessary; and distributed to shareholders as interest on capital. The remaining balance for current year, after allocating for interest on capital, shall be accumulated with remaining balance of previous year. Bonus distributed shall be proposed by the Board of Directors and resolved by the stockholders.

The special reserve includes:

(a)Reserve for a special purpose;
(b)Investment income recognised under equity method and deferred income tax assets arising from unused investment tax credits which are deemed unrealised and transferred to special reserve. Such investment income and deferred income tax assets are reclassified to unappropriated earnings only when they are realised;
(c)Net unrealised gains from financial instruments transactions. The special reserve for unrealised gains from financial instruments is reduced when the accumulated value of the unrealised gains also decreases; and
(d)Other special reserves as stipulated by other laws.
- The board of directors of the Company has approved the amended Articles of Incorporation of the Company on December 24, 2015, and the amended articles had been resolved in the shareholders’ meeting in 2016.
B. The Group is in the mature stage and the profit is stable. The Board of Directors shall establish the cash dividend or stock dividend percentage. At least 50% of the distributable earnings after deducting the legal reserve, directors' and supervisors' remuneration, employee bonus and special reserves shall be distributed to stockholders. The Group would prefer cash dividend. If the Group requires funds for significant investments or needs to improve its financial structure, part of the

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dividend will be in the form of stocks which shall not exceed 50% of the total dividends.

C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Group’s paid-in capital.
D. In accordance with the regulations, the Group shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
E. The appropriations of 2016 and 2015 earnings had been resolved at the stockholders’ meeting on June 9, 2017 and June 7, 2016, respectively. Details are as follows:

For the years ended December 31,

Legal reserve Special reserve Cash dividends		Dividends per share Amount (indollars) $ 4,383,305 4,639,539 32,822,643 $ 5.60 41,845,487 $ 2016	Dividends per share Amount (indollars) $ 2,757,819 - 20,514,153 $ 3.50 23,271,972 $ 2015
		Amount $ 4,383,305 4,639,539 32,822,643 41,845,487 $	Amount $ 2,757,819 - 20,514,153 23,271,972 $

Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Group as proposed by the Board of Directors and resolved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

F. The resolution of the appropriations of the 2017 net income was approved by the Board of Directors during its meeting on March 16, 2018 as follows:

Legal reserve Special reserve Cash dividends		For theyear ended December 31,2017	For theyear ended December 31,2017
		Amount 5,441,080 $ 6,564,296 41,028,304 53,033,680 $	Dividends per share (indollars)
			7.00 $

G. Information relating to employees’ bonuses and directors’ and supervisors’ remuneration is summarised in Note 6(24).

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(18) Other equity items

Other equity items
					Available-for-sale						Currency
			Hedgingreserve			investment					translation					Total
At January 1, 2017		$		43,174	$	90,933,647				$	988,624			$		91,965,445
Unrealised gain (loss)
on available-for-sale
investments:
–Group				-		17,333,899						-				17,333,899
–Associates				-		2,945,654						-				2,945,654
Cash flow hedges:
–Associates	(			35,097)			-					-	(			35,097)
Currency translation
differences:
–Group				-			-	(			2,563,384)		(			2,563,384)
–Tax of Group				-			-				385,061					385,061
–Associates				-			-	(			862,552)		(			862,552)
At December 31, 2017		$		8,077	$	111,213,200		($			2,052,251)				$	109,169,026
					Available-for-sale						Currency
		Hedging		reserve		investment					translation					Total
At January 1, 2016	$			69,573	$	72,615,548		$			4,649,520		$			77,334,641
Unrealised gain (loss)
on available-for-sale
investments:
–Group				-		16,824,750						-				16,824,750
–Associates				-		1,493,349						-				1,493,349
Cash flow hedges:
–Associates	(			26,399)			-					-	(			26,399)
Currency translation
differences:
–Group				-			-	(			3,866,787)		(			3,866,787)
–Tax of Group				-			-				591,147					591,147
–Associates				-			-	(			385,256)		(			385,256)
At December 31, 2016	$			43,174	$	90,933,647			$		988,624			$		91,965,445

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(19) Operating revenue

Operating revenue
Sales revenue Service revenue Other operating revenue	For the years endedDecember31,
	2017 357,471,640 $ 526,313 423,518 358,421,471 $	2016
		318,280,136 $ 525,910 398,581
		319,204,627 $

(20) Other income

Other gains and losses Rental revenue Interest income: Interest income from bank deposits Interest from current account with others Other interest income Dividend income Other revenue Net gain on financial assets at fair value through profit or loss Net gain (loss) on financial liabilities at fair value through profit or loss Net currency exchange loss Gain on disposal of investments Gain on disposal of property, plant and equipment Impairment loss on financial assets Gain from reversal (impairment loss) of property, plant and equipment Other losses	For the years endedDecember31,	For the years endedDecember31,
	2017 2016 134,619 $ 138,368 $ 336,764 211,589 176,156 188,467 31,134 11,041 544,054 411,097 7,464,957 6,243,361 1,447,744 1,133,316 9,591,374 $ 7,926,142 $ 2017 2016 2,775 $ 2,160 $ 1,381 562) ( 1,334,333) ( 2,549,870) ( 2,177,153 181,168 840,582 18,206 - 207,066) ( 3,090 781,222) ( 287,877) ( 377,510) ( 1,402,771 $ 3,714,696) ($ For the years endedDecember31,	2016
		138,368 $ 211,589 188,467 11,041
		411,097
		6,243,361 1,133,316
		7,926,142 $

(21) Other gains and losses

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(22) Finance costs

Finance costs
Expenses by nature Employee benefit expense Interest expense: Bank loans Corporate bonds Current account with others Discount Other interest expenses Less: Capitalisation of qualifying assets Finance costs Depreciation charges on property, plant and equipment Employee benefit expense Amortisation Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	2017 2016 1,546,746 $ 1,223,010 $ 710,152 824,600 9,933 4,000 90,473 59,770 50,152 49,210 2,407,456 2,160,590 84,752) ( 167,447) ( 2,322,704 $ 1,993,143 $ For the years endedDecember 31, 2017 2016 14,472,479 $ 16,029,866 $ 14,807,455 14,968,050 3,353,928 4,311,872 32,633,862 $ 35,309,788 $ For the years endedDecember31, 2017 2016 12,685,503 $ 12,738,180 $ 953,547 940,901 569,822 689,934 598,583 599,035 14,807,455 $ 14,968,050 $ For the years endedDecember 31,

		2017 12,685,503 $ 953,547 569,822 598,583 14,807,455 $

(23) Expenses by nature

(24) Employee benefit expense

A. In accordance with the Articles of Incorporation of the Company, after distributing earnings, the Company shall distribute bonus to the employees that accounts for 0.1%-1% of the total distributed amount.

According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees and pay remuneration to the directors and supervisors. However, in accordance with the Company Act amended on May 20, 2015, a company shall distribute employee remuneration, based on the current year's profit condition, in a fixed amount or a proportion of profits. If a company has accumulated deficit, earnings should be channeled to cover losses. Aforementioned employee remuneration could be paid by cash or stocks. Specifics of the compensation are to be determined in a board meeting that registers twothirds of directors in attendance, and the resolution must receive support from half of

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participating members. The resolution should be reported to the shareholders during the shareholders’ meeting. Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation.

The board of directors of the Company has approved the amended Articles of Incorporation of the Company on December 24, 2015. In accordance with the amended articles, a ratio of profit before income tax of the current year distributable, after covering accumulated losses, shall be distributed as employees' compensation. The ratio shall not be lower than 0.05% and shall not be higher than 0.5% for employees’ compensation. The amended articles had been resolved in the shareholders’ meeting in 2016.

B. For the years ended December 31, 2017 and 2016, employees’ remuneration (bonuses) was accrued at $58,908 and $47,608, respectively. The aforementioned amount was recognised in salary expenses.

For the years ended December 31, 2017 and 2016, the employees’ compensation was estimated and accrued based on approximately 0.1% of the retained earnings.

Employees’ compensation for 2016 as resolved by the Board of Directors was in agreement with the amount of $47,608 recognised in the profit or loss for 2016. Employees’ compensation of 2016 has been distributed.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(25) Income tax
A. Income tax expense
- (a)Components of income tax expense:

Current tax: Current tax on profits for the year Additional tax on undistributed earnings Adjustments in respect of prior years Total current tax Deferred tax: Origination and reversal of temporary differences Effect of exchange rate Total deferred tax Income tax expense		2017 2016 $ 6,094,734 $ 5,085,890 690,712 444,490 ( 295,673) 59,125 6,489,773 5,589,505 181,371 331,150 ( 207) ( 11,717) 181,164 319,433 $ 6,670,937 $ 5,908,938 For the years endedDecember31,	2017 2016 $ 6,094,734 $ 5,085,890 690,712 444,490 ( 295,673) 59,125 6,489,773 5,589,505 181,371 331,150 ( 207) ( 11,717) 181,164 319,433 $ 6,670,937 $ 5,908,938 For the years endedDecember31,	2017 2016 $ 6,094,734 $ 5,085,890 690,712 444,490 ( 295,673) 59,125 6,489,773 5,589,505 181,371 331,150 ( 207) ( 11,717) 181,164 319,433 $ 6,670,937 $ 5,908,938 For the years endedDecember31,
		2017
		$ 6,094,734 690,712 ( 295,673) 6,489,773 181,371 ( 207) 181,164 $ 6,670,937		$ 5,085,890 444,490 59,125 5,589,505 331,150 ( 11,717) 319,433 $ 5,908,938

(b)The income tax charge relating to components of other comprehensive income is as follows:

~72~

			Forthe years endedDecember	Forthe years endedDecember	Forthe years endedDecember	31,
			2017		2016
Currency translation differences	$		385,061	$		591,147
Reconciliation between income tax expense	and accounting profit
			For theyears ended December 31,
			2017		2016
Tax calculated based on profit before tax and
statutory tax rate		$	13,410,971	$	10,620,257
Expenses disallowed by tax regulation		(	6,485,352)	(	4,963,604)
Effect from investment tax credits		(	24,998)	(		35,118)
Effect from five-year exemption		(	18,511)	(		26,077)
Effect from net operating loss carryforward		(	422,340)			39,607
Effect from allowance for deferred tax assets		(	105,343)			5,279
Effect from changes in tax regulation of
overseas subsidiaries		(	78,612)	(	246,556)
Additional 10% tax on undistributed earnings			690,712		444,490
Under provision of prior year's income tax		(	295,673)			59,125
Effect from Alternative Minimum Tax			83			11,535
Income tax expense		$	6,670,937	$	5,908,938

B. Reconciliation between income tax expense and accounting profit

C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

~73~

For the year ended December 31, 2017

Deferred tax assets: Temporary differences: Currency translation differences Unrealised gain from downstream transactions Loss on inventory Accrued pension liabilities Impairment loss Others Net operating loss carryforward Deferred tax liabilities: Temporary differences: Currency translation differences Unrealised gain on financial assets Investment income accounted for using equity methed Unrealised exchange gain Depreciation useful life difference		January1	Recognised in profit or loss		Recognised in other comprehensive income		December 31
	- $ 82,938 129,183 1,028,109 181,181 192,606 118,937 1,732,954 86,493) ($ - 156,601) ( 69,412) ( - 312,506) ( 1,420,448 $		- $ 32,692) ( 12,153 102,747) ( 24,558) ( 69,700 69,549) ( 147,693) ( - $ 641) ( 13,556) ( 40,478 59,959) ( 33,678) ( 181,371) ($		298,568 $ - - - - - - 298,568 86,493 $ - - - 86,493 385,061 $	298,568 $ 50,246 141,336 925,362 156,623 262,306 49,388 1,883,829 - $ 641) ( 170,157) ( 28,934) ( 59,959) ( 259,691) ( 1,624,138 $

~74~

For the year ended December 31, 2016

Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are follows: January1 Recognised in profit or loss Recognised in other comprehensive income December 31 Deferred tax assets: Temporary differences: Unrealised gain from downstream transactions - $ 82,938 $ - $ 82,938 $ Loss on inventory 70,677 58,506 - 129,183 Accrued pension liabilities 1,757,774 729,665) ( - 1,028,109 Impairment loss 57,746 123,435 - 181,181 Others 192,572 34 - 192,606 Net operating loss carryforward 8,921 110,016 - 118,937 2,087,690 354,736) ( - 1,732,954 Deferred tax liabilities: Temporary differences: Currency translation differences 677,640) ($ - $ 591,147 $ 86,493) ($ Unrealised gain on financial assets 583) ( 583 - - Investment income accounted for using equity methed 120,389) ( 36,212) ( - 156,601) ( Unrealised gain from downstream transactions 13,297) ( 13,297 - - Unrealised exchange gain 115,330) ( 45,918 - 69,412) ( 927,239) ( 23,586 591,147 312,506) ( 1,160,451 $ 331,150) ($ 591,147 $ 1,420,448 $ Unusedamount Unrecognised deferred tax assets 2009 Assessed 26,790 $ 26,790 $ 2019 2010 Assessed 5,323 5,323 2020 2011 Assessed 18,315 18,315 2021 2012 Assessed 42,502 42,502 2022 2013 Assessed 14,438 14,438 2023 2014 Assessed 690,327 690,327 2024 2015 Assessed 2,915,788 2,915,788 2025 2016 Amount filed 2,197,336 1,906,811 2026 2017 Amount filed 126,738 126,738 2027 6,037,557 $ 5,747,032 $ December 31,2017 Year incurred Amount filed/ assessed Expiry year	Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are follows: January1 Recognised in profit or loss Recognised in other comprehensive income December 31 Deferred tax assets: Temporary differences: Unrealised gain from downstream transactions - $ 82,938 $ - $ 82,938 $ Loss on inventory 70,677 58,506 - 129,183 Accrued pension liabilities 1,757,774 729,665) ( - 1,028,109 Impairment loss 57,746 123,435 - 181,181 Others 192,572 34 - 192,606 Net operating loss carryforward 8,921 110,016 - 118,937 2,087,690 354,736) ( - 1,732,954 Deferred tax liabilities: Temporary differences: Currency translation differences 677,640) ($ - $ 591,147 $ 86,493) ($ Unrealised gain on financial assets 583) ( 583 - - Investment income accounted for using equity methed 120,389) ( 36,212) ( - 156,601) ( Unrealised gain from downstream transactions 13,297) ( 13,297 - - Unrealised exchange gain 115,330) ( 45,918 - 69,412) ( 927,239) ( 23,586 591,147 312,506) ( 1,160,451 $ 331,150) ($ 591,147 $ 1,420,448 $ Unusedamount Unrecognised deferred tax assets 2009 Assessed 26,790 $ 26,790 $ 2019 2010 Assessed 5,323 5,323 2020 2011 Assessed 18,315 18,315 2021 2012 Assessed 42,502 42,502 2022 2013 Assessed 14,438 14,438 2023 2014 Assessed 690,327 690,327 2024 2015 Assessed 2,915,788 2,915,788 2025 2016 Amount filed 2,197,336 1,906,811 2026 2017 Amount filed 126,738 126,738 2027 6,037,557 $ 5,747,032 $ December 31,2017 Year incurred Amount filed/ assessed Expiry year		January1	January1	January1	Recognised in profit or loss	Recognised in profit or loss	Recognised in profit or loss		Recognised in other comprehensive income		December 31
					Unusedamount			Unrecognised deferred tax assets
2009 2010 2011 2012 2013 2014 2015 2016 2017	Assessed Assessed Assessed Assessed Assessed Assessed Assessed Amount filed Amount filed				26,790 $ 5,323 18,315 42,502 14,438 690,327 2,915,788 2,197,336 126,738 6,037,557 $			26,790 $ 5,323 18,315 42,502 14,438 690,327 2,915,788 1,906,811 126,738 5,747,032 $

D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

~75~

December 31, 2016

Year incurred	Amount filed/ assessed		Unusedamount		Unrecognised deferred tax assets
2007 2009 2010 2011 2012 2013 2014 2015 2016	Assessed Assessed Assessed Assessed Assessed Assessed Assessed Amount filed Amount filed		3,118 $ 26,790 5,323 18,315 364,820 810,773 916,205 4,015,966 2,625,654 8,786,964 $		3,118 $ 26,790 5,323 18,315 364,820 810,773 916,205 4,015,966 1,926,020 8,087,330 $

E. The amounts of deductible temporary differences that were not recognised as deferred tax assets are as follows:

are as follows:
Deductible temporary differences		December 31,2017	December 31,2016
		80,000 $	223,000 $

F. As of December 31, 2017, the status of the Group’s income tax assessment is as follows:

The Company Subsidiary-Formosa Taffeta Co., Ltd. Subsidiary-Formosa Carpet Corp. Subsidiary-Formosa BP Chemicals Corp. Subsidiary-Formosa Idemitsu Petrochemical Corp. Subsidiary-Formosa Biomedical Technology Corp. Subsidiary-Tah Shin Spinning Corp. Indirect subsidiary-Hong Jing Resources Corp. Indirect Subsidiary-Formosa Advanced Technologies Co., Indirect subsidiary-Formosa Development Co., Ltd.	Incometax assessment
	Assessed through 2015 Assessed through 2014 Assessed through 2015 " " " " " " "

G. With the abolishment of the imputation tax system under the amendments to the Income Tax Act promulgated by the President of the Republic of China in February, 2018, the information on unappropriated retained earnings and the balance of the imputation credit account as of December 31, 2017, as well as the estimated creditable tax rate for the year ended December 31, 2017 is no longer disclosed.

Unappropriated retained earnings on December 31, 2016:

Unappropriated retained earnings on December 31, 2016:
Earnings generated in and before 1997 Earnings generated in and after 1998		December 31,2016
		6,198,462 $ 66,361,641 72,560,103 $

~76~

H. As of December 31, 2016, the balance of the imputation tax credit account was $4,453,266. The creditable tax rate was 14.65% for the year ended December 31, 2016.
(26) Earnings per share
A. Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares in issue during the year.

Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 66,706,883 $ 60,035,946 $ 11.43 $ 10.29 $ 7,858,050) ( 5,625,144) ( 1.34) ( 0.96) ( 58,848,833 $ 54,410,802 $ 5,833,768 10.09 $ 9.33 $ Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 54,675,666 $ 48,766,728 $ 9.36 $ 8.35 $ 7,114,893) ( 4,933,683) ( 1.22) ( 0.85) ( 47,560,773 $ 43,833,045 $ 5,842,651 8.14 $ 7.50 $ For theyear ended December 31,2017 Earnings per share Amount (in dollars) For theyear ended December 31,2016 Earnings per share Amount (in dollars)	Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 66,706,883 $ 60,035,946 $ 11.43 $ 10.29 $ 7,858,050) ( 5,625,144) ( 1.34) ( 0.96) ( 58,848,833 $ 54,410,802 $ 5,833,768 10.09 $ 9.33 $ Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 54,675,666 $ 48,766,728 $ 9.36 $ 8.35 $ 7,114,893) ( 4,933,683) ( 1.22) ( 0.85) ( 47,560,773 $ 43,833,045 $ 5,842,651 8.14 $ 7.50 $ For theyear ended December 31,2017 Earnings per share Amount (in dollars) For theyear ended December 31,2016 Earnings per share Amount (in dollars)	Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 66,706,883 $ 60,035,946 $ 11.43 $ 10.29 $ 7,858,050) ( 5,625,144) ( 1.34) ( 0.96) ( 58,848,833 $ 54,410,802 $ 5,833,768 10.09 $ 9.33 $ Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 54,675,666 $ 48,766,728 $ 9.36 $ 8.35 $ 7,114,893) ( 4,933,683) ( 1.22) ( 0.85) ( 47,560,773 $ 43,833,045 $ 5,842,651 8.14 $ 7.50 $ For theyear ended December 31,2017 Earnings per share Amount (in dollars) For theyear ended December 31,2016 Earnings per share Amount (in dollars)
Before tax 66,706,883 $ 7,858,050) ( 58,848,833 $
Before tax After tax 54,675,666 $ 48,766,728 $ 7,114,893) ( 4,933,683) ( 47,560,773 $ 43,833,045 $ Amount	Weighted average number of ordinary shares outstanding (shares in thousands) 5,842,651
Before tax 54,675,666 $ 7,114,893) ( 47,560,773 $		Before tax 9.36 $ 1.22) ( 8.14 $

B. Employees’ bonus could be distributed in the form of stock. Since there is no significant impact when calculating diluted earnings per share, basic earnings per share equals diluted earnings per share.
C. If stocks of the parent company held by subsidiaries are not treated as treasury stocks, the calculation of basic earnings per share is as follows:

~77~

For the year ended December 31, 2017

	For theyear ended December 31,2017	For theyear ended December 31,2017	For theyear ended December 31,2017
Consolidated net income Net income of non- controlling interest Profit attributable to ordinary shareholders of the parent Basic earnings per share Consolidated net income Net income of non- controlling interest Profit attributable to ordinary shareholders of the parent Basic earnings per share	Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 66,706,883 $ 60,035,946 $ 11.38 $ 10.24 $ 7,858,050) ( 5,625,144) ( 1.34) ( 0.96) ( 58,848,833 $ 54,410,802 $ 5,861,186 10.04 $ 9.28 $ (in dollars) Earnings per share Amount Weighted average number of ordinary shares outstanding Before tax After tax (shares in thousands) Before tax After tax 54,675,666 $ 48,766,728 $ 9.33 $ 8.32 $ 7,114,893) ( 4,933,683) ( 1.22) ( 0.84) ( 47,560,773 $ 43,833,045 $ 5,861,186 8.11 $ 7.48 $ For theyear ended December 31,2016 Earnings per share Amount (in dollars)
	Before tax 66,706,883 $ 7,858,050) ( 58,848,833 $
	Before tax After tax 54,675,666 $ 48,766,728 $ 7,114,893) ( 4,933,683) ( 47,560,773 $ 43,833,045 $ Amount	Weighted average number of ordinary shares outstanding (shares in thousands) 5,861,186
	Before tax 54,675,666 $ 7,114,893) ( 47,560,773 $		Before tax 9.33 $ 1.22) ( 8.11 $

(27) Non-cash transactions

1.Investing activities with partial cash payments:

		For theyears ended	For theyears ended	December 31,
		2017		2016
Purchase of fixed assets	$	11,669,518	$	8,267,874
Add: Opening balance of payable on
equipment		789,871		1,485,927
Less: Ending balance of payable on
equipment	(	577,616)	(	789,871)
Cash paid during the period	$	11,881,773	$	8,963,930
.Financing activities with partial cash flow effects
		For theyears ended		December 31,
		2017		2016
Appropriation for cash dividends	$	32,822,643	$	20,514,153
(Increase) decrease in dividends payable	(	8,069)		1,418,534
Cash dividends paid during the year	$	32,814,574	$	21,932,687

2.Financing activities with partial cash flow effects

~78~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties and relationship

Names of related parties

Relationship with the Group

Formosa Petrochemical Corp.
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Hwa Ya Science Park Management Consulting
Corp.
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Formosa Plastics Corp.
Formosa Plastics (Ningbo) Corp.
Nan Ya Plastics Corp.
Nan Ya Plastics (Hui Zhou) Corp.
Nan Ya Plastics (Nan Tong) Corp.
Nan Ya Plastics Corp., U.S.A.
Nan Ya Plastics (Ningbo) Corp.
Nan Ya Technology Corp.
Nan Ya Optical Corp.
Nan Ya PCB Corp.
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Formosa Petrochemical Transportation
Corporation
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Yue Chi Development Corp
PFG Fiber Glass Corp.
Formosa Plastics Marine Corp.
Formosa Plastics Marine Co., Ltd.

Associates
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Other related parties
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~79~

Names of related parties

Relationship with the Group

Mai Liao Harbor Administration Corp.
Formosa Plastics Building Parking Lot
Formosa Network Technology Corp.
FPG Travel Service Co., Ltd.
Formosa Daikin Advanced Chemicals Co., Ltd.
Formosa Sumco Technology Corporation
Formosa Asahi Spandex Co., Ltd.
Formosa Plastics Logistics Corp.
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Inteplast Taiwan Corporation
Formosa Oil (Asia Pacific) Corporation
Asia Pacific Development Corp.
Ya Tai Development Corp.
Bio Trust International Corp.
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Hua Ya Power Corp.
Hwa Ya Technologies Corp.
(Lost the related party relationship in substance
after merger with Micron Technology Co., Ltd.
in December 2016 )

Other related parties
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(2) Significant related party transactions

A. Sales of goods:

Sales of goods:
Sales of goods: `�`Associates `�`Other related parties	For theyears ended December 31,
	2017 26,786,015 $ 47,007,315 73,793,330 $	2016
		19,204,061 $ 45,311,897
		64,515,958 $

~80~

The Group sells goods to related parties. Except for terms to certain related parties which are longer, prices are the same with third parties.

B. Purchases of goods:

Purchases of goods: `�`Associates Formosa Petrochemical Corp. Others `�`Other related parties	For theyears ended December 31,	For theyears ended December 31,
	2017 134,705,980 $ 1,232 21,604,849 156,312,061 $	2016
		116,876,247 $ - 17,273,004
		134,149,251 $

The payment terms for related parties are within 30~60 days of purchase. The purchase prices and terms for related parties are the same with non-related parties.

C. Receivables from related parties:

Receivables from related parties:
`�` Receivables from related parties: `�`Associates `�`Other related parties Other receivables: `�`Other related parties	December 31,2017 3,115,452 $ 5,947,115 9,062,567 - 9,062,567 $	December 31,2016
		2,456,042 $ 4,912,036
		7,368,078
		440,981
		7,809,059 $

Receivables from related parties are mainly from sales of goods and receivables for payments on behalf of others for construction design services. Receivables for sales are due 30~120 days from the date of sale; receivables for payments on behalf of others for construction design services are due 270 days from the services rendered. The receivables do not bear interest and no collaterals were pledged. No provision was accrued for receivables from related party.

D. Payables to related parties:

Payables to related parties:
. Payables to related parties: `�`Associates Formosa Petrochemical Corp. `�`Other related parties	December 31,2017 14,889,016 $ 3,060,923 17,949,939 $	December 31,2016
		11,291,646 $ 2,093,864
		13,385,510 $

The payables to related parties arise mainly from purchase transactions and are due 30~60 days after the date of purchase. The payables bear no interest.

~81~

E. Expansion and repair project

(a)Expansion and repair project:

Expansion and repair project:
		For theyears ended		December 31,
		2017		2016
Expansion and repair works of factory sites
`�`Associates	$	216,599	$	399,534
`�`Other related parties		179,523		58,267
	$	396,122	$	457,801
Ending balance of payables for expansion and	repair	project:
`�`	December31,2017		December31,		2016
Payables to related parties:
`�`Associates	$	2,262	$		-
`�`Other related parties		2,032			3,738
	$	4,294	$		3,738

(b)Ending balance of payables for expansion and repair project:

The Group contracted the expansion and repair works of the factory sites to related parties. The payment terms are in accordance with the industry practice with payment due within a month after inspection.

F. Financing

(a) Loans to related parties:
(i)Ending balance of accounts receivable - related parties

`�` `�`Associates Formosa Group (Cayman) Corp. Formosa Heavy Industries Corp. Formosa Synthetic Rubber (Ningbo) Co., Ltd. Others `�`Other related parties Nan Ya Technology Corp. Formosa Plastics Marine Co., Ltd. Formosa Ha Tinh (Cayman) Co., Ltd. Others	December31,2017 4,259,500 $ - 2,192,592 82,222 6,534,314 - 4,190,892 3,002,600 - 7,193,492 13,727,806 $	December31,2016
		8,006,500 $ 1,000,000 1,163,291 490,000
		10,659,791
		1,500,000 3,680,924 3,960,345 40,000
		9,181,269
		19,841,060 $

~82~

(ii)Interest income

For the years ended December 31,

`�`Associates Formosa Group (Cayman) Corp. Others `�`Otherrelated parties Nan Ya Technology Corp. Formosa Plastics Marine Co., Ltd. Others	2017 31,827 $ 70,823 102,650 1,200 52,230 22,500 75,930 178,580 $	2016
		45,871 $ 17,316
		63,187
		64,971 49,561 13,414
		127,946
		191,133 $

The loan terms to related parties are in accordance with the contract’s repayment schedule after the loan is made; interest was collected at 1.41%~3.48% per annum for the years ended December 31, 2017 and 2016, respectively.

(b) Loans from related parties:

(i)Ending balance of payables to related parties

`�`Associates Formosa Heavy Industries Corp. `�`Otherrelated parties Sino-Asia Steel (Ningbo) Co.,Ltd.	December 31,2017 118,800 $ - 118,800 $	December 31,2016
		15,600 $ 41,878
		57,478 $

(ii)Interest expense

For the years ended December 31,

`�`Associates `�`Other related parties	2017 1,422 $ 622 2,044 $	2016
		617 $ 2,453
		3,070 $

The loan terms from associates are in accordance with the contract’s repayment schedule after the loan is made; interest is paid at a rate of 1.41% and 1.41%~3.92% per annum for the years ended December 31, 2017 and 2016, respectively.

G. Receivables for payment on behalf of others

� Other related parties

December 31,2017 16,608 $	December 31,2016
	164,332 $

~83~

The amount for equipment for resale that the Company paid on behalf of associates is recorded as other current assets.

H. Operating expenses

Operating expenses
Rental revenue Transportation charges `�`Otherrelated parties Formosa Plastics Marine Corp. Formosa Plastics Transport (Ningbo) Corp. Others `�`Associates Formosa Petrochemical Corp. Others `�`Other related parties Nan Ya Plastics Corp. Formosa Plastics Building Parking Lot Formosa Network Technology Corp. Others	For theyears ended December 31,
	2017 2016 $ 1,287,304 $ 725,882 844,522 714,542 - 144,370 2,131,826 $ 1,584,794 $ For theyears ended December 31,	2016
		$ 725,882 714,542 144,370
		1,584,794 $
	2017 20,144 $ 12,370 32,514 25,984 15,780 15,400 31,265 88,429 120,943 $	2016
		20,144 $ 12,964
		33,108
		25,616 15,347 15,400 31,856
		88,219
		121,327 $

I. Rental revenue

The rental prices charged to related parties are determined considering the local rental prices and payments, and are collected monthly.

J. Property transactions:

(a) Acquisition of property, plant and equipment

Acquisition of property, plant and equipment
Purchase of property, plant and equipment `�`Associates `�`Other related parties	For theyears ended December 31,
	2017 149,137 $ 108 149,245 $	2016
		248,063 $ 34
		248,097 $

~84~

(b) Disposal of property, plant and equipment:

Acquisition of financial assets Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal Associates 390 $ - $ - $ - $ Year ended December 31,2017 Year ended December 31,2016 Year ended December 31,2017 Items Number of shares Name of the securities Acquisition cost `�`Associates Investments accounted for using equity method 168,344,000 Formosa Resources Corp. 1,683,440 $ `�`Associates Investments accounted for using equity method 6,600 FG Inc. 2,178,660 `�`Other related parties Financial assets measured at cost 75,471,717 Formosa Ha Tinh (Cayman) Limited 2,322,552 6,184,652 $ Year ended December 31,2016 Items Number of shares Name of the securities Acquisition cost `�`Associates Investments accounted for using equity method - Formosa Synthetic Rubber Corp. (Hong Kong) 1,276,880 $ `�`Associates Investments accounted for using equity method 8,500,000 Formosa Construction Corp. 85,000 `�`Other related parties Financial assets measured at cost 508,236,725 Formosa Ha Tinh (Cayman) Limited 16,084,840 `�`Other related parties Available-for-sale financial assets 15,297,204 Nan Ya Technology Corp. 558,348 18,005,068 $	Year ended December 31,2017	Year ended December 31,2017	Year ended December 31,2017
	Disposal proceeds	Gain (loss) on disposal		Disposal proceeds
	390 $	$	-	- $
		Number of shares		Name of the securities
					Acquisition cost
Investments accounted for using equity method Investments accounted for using equity method Financial assets measured at cost Items		168,344,000 6,600 75,471,717 Number of shares	Formosa Resources Corp. FG Inc. Formosa Ha Tinh (Cayman) Limited Name of the securities		1,683,440 $ 2,178,660 2,322,552 6,184,652 $ Year ended December 31,2016
					Acquisition cost
Investments accounted for using equity method Investments accounted for using equity method Financial assets measured at cost Available-for-sale financial assets		- 8,500,000 508,236,725 15,297,204	Formosa Synthetic Rubber Corp. (Hong Kong) Formosa Construction Corp. Formosa Ha Tinh (Cayman) Limited Nan Ya Technology Corp.		1,276,880 $ 85,000 16,084,840 558,348 18,005,068 $

(d) Disposal of financial assets

For the year ended December 31, 2017: None.

~85~

Formosa Group Investment Corp. (Cayman)	Items	Number of shares	Name of the securities Formosa Group Investment Corp. (Cayman) (Note)		Year ended December 31,2016	Year ended December 31,2016
					Disposal proceeds	Gain (loss) on disposal
	Investments accounted for using equity method	508,249,225			16,085,211 $	- $

Note: Details of the Group’s acquisition of financial assets are provided in Note 6(8) C.

K. Details of affiliates endorsed/guaranteed for the Group’s borrowings are provided in Note 6(13).

(3) Key management compensation

Key management compensation
Salaries Post-employment benefits	Forthe years endedDecember31,
	2017 173,767 $ 2,740 176,507 $	2016
		165,770 $ 1,797
		167,567 $

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Book value

Pledged assets Property, plant and equipment Inventory	December 31,2017 6,107,499 $ 21,264 6,128,763 $	December 31,2016 Purpose 6,594,298 $ Collateral for bank loans 21,264 Limited transfer for land tax reassessment and collateral 6,615,562 $	Purpose

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

The details of commitments and contingencies as of December 31, 2017 were as follows:

(1) Capital expenditures of property, plant and equipment that were contracted but not yet paid amounted to $5,910,824 thousand, RMB 330,003 thousand and VND 359,280,541 thousand.
(2) The outstanding letters of credit for major raw materials and equipment purchases amounted to USD 110,634 thousand, JPY 3,166,314 thousand and EUR 10,899 thousand.
(3) The provision of endorsements and guarantees to others are as follows:

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Formosa Industries Corp. Formosa Resources Corp. Formosa Group (Cayman) Corp. Formosa Ha Tinh (Cayman) Corp. Formosa Taffeta (Zhong Shan) Co., Ltd. Formosa Taffeta (Vietnam) Co., Ltd. Formosa Taffeta (Changshu) Co., Ltd. Formosa Taffeta (Dong Nai) Co., Ltd. Public More Internation Co., Ltd.	December 31,2017 4,898,311 $ 3,208,660 21,639,800 19,361,369 282,720 98,141 329,353 2,472,112 3,000 52,293,466 $	December 31,2016
		5,297,258 $ - 33,247,370 14,380,788 564,375 86,251 407,382 2,405,391 -
		56,388,815 $

(4) The promissory notes issued for others are as follows:
A. Beginning in 2013, the Group’s investment accounted for using equity method, Formosa Synthetic Rubber Corp. (Ningbo), entered into a syndicated loan contract with the syndicated banking group including Hua Nan Bank, arranging the credit facilities of USD130 million and RMB300 million to meet the operation needs. The Company is required to issue a promissory note equivalent to the shareholding ratio of 33.33% and is obliged to facilitate the repayment for the borrower whenever necessary.
B. Beginning in 2012, the Group’s consolidated entity, Formosa Phenol (Ningbo) Limited Co., entered into a syndicated loan contract with the syndicated banking group including Mega International Commercial Bank, Taiwan Cooperative Bank and Bank of Taiwan, arranging the credit facilities of USD244 million and RMB310 million to meet the capital needs of building the plant. The Company is required to issue a promissory note and is obliged to facilitate the repayment of the borrower whenever necessary.
C. The Company’s indirect investee, Formosa Ha Tinh (Cayman) Limited Co., was provided a bank loan facility of USD835 million to meet the operation needs. To secure the rights of its shareholders, the Company is required to issue a promissory note to ensure the borrower has fulfilled its obligation for repayment.
D. The Group’s consolidated entity, Formosa Chemicals Industries (Ningbo) Limited Co., entered into a syndicated loan contract with the syndicated banking group lead by Mega International Commercial Bank, arranging the credit facilities of USD155 million or equal value of RMB to meet the capital needs of building the plant. The Company is required to issue a promissory note and is obliged to facilitate the repayment of the borrower whenever necessary.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

A. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate will be raised from 17% to 20% effective from January 1, 2018. Such amendment has no significant impact to the

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Company’s deferred tax assets and deferred tax liabilities based on the Company’s assessment.

B. The Board of Directors has resolved the appropriation of 2017 earnings on March 16, 2018. Details are provided in Note 6(17) F.

12. OTHERS

(1) Litigation

The Company’s operating permit and bituminous coal usage permit for co-generation equipment, M16, M17 and M22, have expired on September 28, 2016. The Company has applied for permit extension in June, 2016, however, after months of investigation and review, the Changhua County Government stated that improvements were not satisfied and decided to revoke the extension application on September 29, 2016. The Company filed a suspension application with Taichung High Administrative Court on September 30, 2016 and asked for continued operations until judgement on the administrative lawsuit has been rendered. Meanwhile, the Company filed an administrative appeal with the Executive Yuan.

Under the Taichung High Administrative Court judgement, the suspension application filed regarding discontinued operations of M16, M17 and M22 had been denied. The loss or dangerous status of discontinued operation of co-generation equipment claimed by the Company was considered ‘possible’but not ‘certain’before November 1, 2016, and the discontinued operation has not resulted in plant shutdown and industry safety hazard.

The Company’s Changhua plant was forced to shut down and consequently, incurred losses due to the lack of vapor power. The Company will explore all available legal remedies in filing a claim for indemnity and protect stockholders’ and the Company’s interest.

Because of the Changhua plant shutdown, the Company assessed that part of idle production equipment may not be recoverable. Accordingly, the Company recognised impairment loss on property, plant and equipment amounting to $466,785 for the year ended December 31, 2016. On November 16, 2017, the Company received a violation decision from Changhua County Government of an enhanced fine amounting to NT$12.44 billion pursuant to Article 7 of Environmental Impact Assessment Act. The fine was levied on the ground that the indigenous coal used in the combined heat and power system is contrary to that indicated in the Environmental Impact Statement. The lawyers have filed an appeal with the Environmental Protection Administration (EPA) on behalf of the Company on November 22, 2017. On December 19, 2017, Changhua Country Government consented to suspend the fine until the appeal was concluded as stated in Letter No. Fu-Sho-Huan-Zong-Zi-1060429733. On December 11, 2017, the Company stated its opinion in EPA to dispute the fine. On February 14, 2018, the Company was informed that the decision on the appeal was postponed for two months in EPA’s Letter No. Huan-Shu-Zi1070014111. On March 8, 2018, the EPAruled to revoke the violation decision of Changhua County Government.

(2) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a

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going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’as shown in the consolidated balance sheet plus net debt.

The gearing ratios at December 31, 2017 and 2016 were as follows:

Total borrowings Less: Cash and cash equivalents Net debt Total equity Total capital Gearing ratio	December31,2017 100,742,451 $ 29,684,599) ( 71,057,852 418,501,076 489,558,928 $ 15%	December31,2016 120,427,336 $ 30,391,911) ( 90,035,425 379,640,412 469,675,837 $ 19%

(3) Financial instruments

A. Fair value information of financial instruments

Except those listed in the table below, the carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, notes receivable (including related parties), accounts receivable (including related parties), other receivables (including related parties)), are approximate to their fair values. Because the interest rates of the long-term loans (including portion maturing within one year or one operating cycle, whichever is longer) are close to the market interest rate, thus the carrying amount is a reasonable basis for the estimation of fair value. The fair value information of financial instruments measured at fair value is provided in Note 12(4).

B. Financial risk management policies
(a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance. The Group uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2) and 6(11)).
(b)Risk management is carried out by a central treasury department (Company treasury) under policies approved by the board of directors. Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of

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derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

C. Significant financial risks and degrees of financial risks
(a)Market risk

Foreign exchange risk

i. The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities.
ii. Management has set up a policy to manage its foreign exchange risk against its functional currency. The Group hedges its entire foreign exchange risk exposure. To manage its foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, the Group uses forward foreign exchange contracts.
iii. The Group hedges recognised assets or liabilities denominated in foreign currencies or highly expectable transactions by utilising forward exchange contracts and trading forward exchanges and cross currency swap contracts amongst other derivative financial instruments in order to lower the risk from changes in fair value resulting from fluctuations in the exchange rate. The Group also monitors the changes in the exchange rate and sets stop loss points to lower the risk from exchange rate.
iv. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’functional currency: USD, VND and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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		December31,2017	December31,2017
	Foreign Currency
`�`	Amount(In Thousands)		ExchangeRate	Book	Value (NTD)
Financial assets
Monetary items
USD`�`NTD	$	598,566	29.85	$	17,867,195
JPY`�`NTD		470,271	0.26		122,270
Non-monetary items
RMB`�`NTD	$	8,931,843	4.57	$	40,818,523
USD`�`NTD		572,296	29.85		17,083,036
VND`�`NTD		7,391,633,129	0.0013		9,609,123
Financial liabilities
Monetary items
USD`�`NTD	$	69,418	29.85	$	2,072,127
JPY`�`NTD		289,378	0.26		75,238
USD`�`RMB		325,931	29.85		9,729,040
USD`�`VND		237,500	29.85		7,089,375
		December31,2016
	Foreign Currency
`�`	Amount(In Thousands)		ExchangeRate	Book	Value (NTD)
Financial assets
Monetary items
USD`�`NTD	$	486,040	32.28	$	15,689,371
JPY`�`NTD		574,020	0.28		160,726
Non-monetary items
RMB`�`NTD	$	6,644,783	4.65	$	30,898,241
USD`�`NTD		518,328	32.28		16,731,628
VND`�`NTD		7,791,363,252	0.0014		10,907,909
Financial liabilities
Monetary items
USD`�`NTD	$	59,914	32.28	$	1,934,024
JPY`�`NTD		350,755	0.28		98,211
USD`�`RMB		380,661	32.28		12,287,737
USD`�`VND		285,000	32.28		9,199,800

v. Total exchange loss, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2017 and 2016 amounted to $1,334,333 and $2,549,870, respectively.

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vi. Analysis of foreign currency market risk arising from significant foreign exchange variation:

Year ended December 31, 2017

Financial assets Monetary items USD`�`NTD JPY`�`NTD Non-monetary items RMB`�`NTD USD`�`NTD VND`�`NTD Financial liabilities Monetary items USD`�`NTD JPY`�`NTD USD`�`RMB USD`�`VND		Sensitivityanalysis	Sensitivityanalysis
		Degree ofvariation 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profitor loss $ 178,672 1,223 $ - - - $ 20,721 752 97,290 70,894	Effect on other comprehensive income $ - - $ 408,185 170,830 96,091 $ - - - -

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Year ended December 31, 2016

Financial assets Monetary items USD`�`NTD JPY`�`NTD Non-monetary items RMB`�`NTD USD`�`NTD VND`�`NTD Financial liabilities Monetary items USD`�`NTD JPY`�`NTD USD`�`RMB USD`�`VND		Sensitivityanalysis	Sensitivityanalysis
		Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profit or loss $ 156,894 1,607 $ - - - $ 19,340 982 122,877 91,998	Effect on other comprehensive income $ - - $ 308,982 167,316 109,079 $ - - - -

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, components of equity for the years ended December 31, 2017 and 2016 would have increased/decreased by $1,523,428 and $1,346,255, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

Interest rate risk

i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the years ended December 31, 2017 and

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  - 2016, the Group’s borrowings at variable rate were denominated in the NTD and USD.

ii. At December 31, 2017 and 2016, if interest rates on denominated borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2017 and 2016 would have been $301,046 and $384,133 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b)Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. The Group utilises certain credit enhancement instruments (such as sales revenue or guarantees received in advance) at appropriate times to lower the credit risk from specific customers. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board of directors. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables. For banks and financial institutions, only independently rated parties are accepted.
ii. No credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.
(c)Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable, external regulatory or legal requirements, for example, currency restrictions.
ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, loans to related parties, time deposits and cash equivalents, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.
iii.The table below analyses the Group’s non-derivative financial liabilities and net-settled or

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gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
December 31, 2017 Lessthan 1year Short-term borrowings 23,142,134 $ Short-term notes and bills payable 1,579,763 Notes payable (including related parties) 199,518 Accounts payable (including related parties) 24,450,101 Other payables (including related parties) 10,812,667 Bonds payable 5,700,000 Long-term borrowings 6,474,979 December 31, 2016 Lessthan 1year Short-term borrowings 26,146,750 $ Short-term notes and bills payable 1,499,464 Notes payable (including related parties) 196,870 Accounts payable (including related parties) 21,911,494 Other payables (including related parties) 8,444,530 Bonds payable 6,750,000 Long-term borrowings 7,666,502	Between 1 and2years - $ - - - - 6,200,000 16,009,033 Between 1 and2years - $ - - - - 5,700,000 21,089,630	Between 3 and 5 years - $ - - - - 4,800,000 13,786,543 Between 3 and 5 years - $ - - - - 8,950,000 17,524,990	Over5 years
			- $ - - - - 23,050,000 - Over5 years
			- $ - - - - 25,100,000 -

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Derivative financial liabilities:

December 31, 2017 Forward exchange contracts December 31, 2016 Forward exchange contracts	Less than 1year - $ Less than 1year 1,381 $	Between 1 and2years - $ Between 1 and 2years - $	Between 3 and 5 years - $ Between 3 and 5years - $	Over5 years
				- $ Over 5years
				- $

iv.The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(4) Fair value estimation

A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3) A.
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data.
C. The following table presents the Group’s financial assets and liabilities that are measured at fair value at December 31, 2017 and 2016:

December 31, 2017 Assets: Recurring fair value measurement Financial assets at fair value through profit or loss Forward exchange contracts Beneficiary certificate Available-for-sale financial assets Equity securities Fund	Level 1 - $ 629,998 152,470,961 - 153,100,959 $	Level 2 398 $ - 4,567,223 4,573,902 9,141,523 $	Level 3 - $ - - - - $	Total
				398 $ 629,998 157,038,184 4,573,902
				162,242,482 $

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December 31, 2017 Liabilities: Recurring fair value measurement Financial liabilities at fair value through profit or loss Forward exchange contracts December 31, 2016 Assets: Recurring fair value measurement Financial assets at fair value through profit or loss Forward exchange contracts Beneficiary certificate Available-for-sale financial assets Equity securities Fund Liabilities: Recurring fair value measurement Financial liabilities at fair value through profit or loss Forward exchange contracts	Level 1 - $ Level 1 - $ 627,555 135,122,609 - 135,750,164 $ - $	Level 2 - $ Level 2 66 $ - 3,162,625 4,874,052 8,036,743 $ 1,381 $	Level 3 - $ Level3 - $ - - - - $ - $	Total - $ Total
				66 $ 627,555 138,285,234 4,874,052
				143,786,907 $
				1,381 $

D. The methods and assumptions the Group used to measure fair value are as follows:

(a) The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Open-end fund Market quoted price Closing price Net asset value

(b)Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be

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referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

(c)When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
(d)The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate. Structured interest derivative instruments are measured by using appropriate option pricing models (i.e. Black-Scholes model) or other valuation methods, such as Monte Carlo simulation.
(e)The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
(f) The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.
E. For the years ended December 31, 2017 and 2016, there was no transfer between Level 1 and Level 2.
F. For the years ended December 31, 2017 and 2016, there was no transfer into or out from Level 3.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 4.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

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F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 5.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.
H.Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 7.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2), and (11); 12(3) and (4).
J. Significant intragroup transactions during the reporting periods: Please refer to table 8.
(2) Information on investees
Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 9.
(3) Information on investments in Mainland China
A. Basic information: Please refer to table 10.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 11.

14. SEGMENT INFORMATION

(1) General information
The Group’s reportable segments are strategic business units and provide different products and services. Strategic business units are separately managed because each unit needs different techniques and marketing strategies. The Group’s reportable segments are as follows:
1st Petrochemical Div: responsible for production of benzene, p-xylene and o-xylene.
2nd Petrochemical Div: responsible for production of styrene, synthetic phenolic and acetone. 3rd Petrochemical Div and Formosa Chemicals Industries (Ningbo) Limited Co.: responsible for production of purified terephthalic acid.
Plastics Division, Formosa ABS Plastics (Ningbo) Co., Ltd. and Formosa PS (Ningbo) Co., Ltd.: responsible for production of ABS resin, polypropylene and PS.
Formosa Taffeta Co., Ltd.: responsible for production of blended fabric, spun fabric, cross-woven fabric, polyamine and polyester fabric, epidemic fabric, designer sportswear fabric, high-tech and function fabric, tire cord fabric, pure cotton yarn, blended yarn, various functional yarn, fireproof fabric, anti-static cloth and industrial fabric, and operation of petrol stations to sell petroleum, diesel fuel, kerosene and small package of petroleum products and provide car wash services.
Formosa Advanced Technologies Co.: responsible for IC packaging, testing and production of memory module.
(2) Measurement of segment information
The Group has not yet amortised tax expenses or non-recurring gains and losses to reportable segments. Furthermore, not all reportable segments’profit or loss include significant non-cash items besides depreciation and amortisation. Reporting amount and reports for operating decision-maker

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are the same.

The Group’s operating segment profit or loss is measured based on operating income before tax for performance assessment basis. The Group considers the sale and transfer among segments as transactions with third parties and measured at market price.

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					Total	$ 358,421,471	-	$ 358,421,471	$ 66,706,883				$ 17,826,407	$ 2,322,704			$ 19,121,378					$ 6,670,937	$ 572,326,493
				Reconciliation	and offset	$ -	( 127,139,953)	($ 127,139,953)	($ 8,446,375)				$ -	($ 143,223)									($ 118,142,832)
					Other divisions	$ 55,157,117	10,399,329	$ 65,556,446	$ 34,453,352				$ 9,539,843	$ 879,765									$439,102,883
	Plastics Division,	Formosa ABS Formosa	Plastics Formosa Advanced	Co., Ltd. Taffeta Technologies	and Formosa PS Co., Ltd. Co., Ltd.	$ 108,787,174 $ 25,424,545 $ 7,888,494	13,277,723 289,294 -	$ 122,064,897 $25,713,839 $ 7,888,494	$ 11,859,834 $ 4,504,908 $ 1,587,964				$ 1,417,207 $ 779,922 $ 976,198	$ 516,171 $ 117,088 $ -									$ 50,584,771 $85,504,160 $12,175,822
3rd	Petrochemical	Div and	1st 2nd Formosa	Petrochemical Petrochemical Chemical	Div Div Industries	External revenue $ 52,968,882 $ 44,562,042 $ 63,633,217	Internal revenue 68,447,633 32,119,723 2,606,251	Total revenue $121,416,515 $76,681,765 $ 66,239,468	Segment profit (loss) $ 9,573,599 $ 6,333,121 $ 6,840,480	Segment income	(loss):	Total depreciation and	amortisation $ 1,976,078 $ 1,614,305 $ 1,522,854	Interest expense $ 233,644 $ 510,723 $ 208,536	Investment income	accounted for using equity	method	Not included in segments’	income measurement, but	regularly provided to	operating decision-maker:	Income tax expense	Total assets of segments $ 39,731,368 $35,711,870 $ 27,658,451

					Total	$ 319,204,627	-	$ 319,204,627	$ 54,675,666				$ 20,341,738	$ 1,993,143			$ 19,021,711					$ 5,908,938	$ 544,436,590
				Reconciliation	and offset	$ -	( 126,720,069)	($ 126,720,069)	($ 4,153,330)				$ -	($ 124,891)									($ 103,882,140)
					Other divisions	$ 57,380,745	14,354,675	$ 71,735,420	$ 29,472,115				$ 4,456,200	$ 769,768									$ 401,458,118
	Plastics Division,	Formosa ABS Formosa	Plastics Formosa Advanced	Co., Ltd. Taffeta Technologies	and Formosa PS Co., Ltd. Co., Ltd.	$ 92,348,091 $ 24,027,506 $ 8,491,396	11,276,816 567,678 -	$ 103,624,907 $24,595,184 $ 8,491,396	$ 8,320,387 $ 3,767,985 $ 1,259,505				$ 2,947,922 $ 805,303 $ 1,405,513	$ 383,238 $ 115,565 $ -									$ 47,601,722 $83,017,562 $11,357,367
3rd	Petrochemical	Div and	Formosa	Chemical	Industries	$ 53,969,625	2,338,745	$ 56,308,370	($ 240,470)				$ 3,130,398	$ 149,647									$ 31,664,828
			2nd	Petrochemical	Div	$ 42,806,793	33,437,773	$76,244,566	$ 8,501,038				$ 2,844,443	$ 454,496									$34,150,772
			1st	Petrochemical	Div	$ 40,180,471	64,744,382	$104,924,853	$ 7,748,436				$ 4,751,959	$ 245,320									$ 39,068,361
						External revenue	Internal revenue	Total revenue	Segment profit (loss)	Segment income	(loss):	Total depreciation and	amortisation	Interest expense	Investment income	accounted for using equity	method	Not included in segments’	income measurement, but	regularly provided to	operating decision-maker:	Income tax expense	Total assets of segments

(4) Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The revenue from external parties reported to the chief operating decision-maker is measured in a manner consistent with that in the income statement.

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Formosa Chemicals and Fibre Corporation and subsidiaries

Loans to others

For the year ended December 31, 2017

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

No. （Note 1）	Creditor	Borrower	General ledger account （Note 2）	Is a related party	Maximum outstanding balance during the year ended December 31, 2017 （Note 3）	Balance at December 31, 2017 （Note 8）	Actual amount drawn down	Interest rate	Nature of loan （Note 4）	Amount of transactions with the borrower （Note 5）	Reason for short-term financing `（`Note 6`）`	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a single party （Note 7）	Ceiling on total loans granted （Note 7）	Footnote
													Item	Value
0 0 0 0 0 0 0 0	The Company The Company The Company The Company The Company The Company The Company The Company	Formosa Plastics Corp. Formosa Idemitsu Petrochemical Corp. Nan Ya Plastics Corp. Formosa Biomedical Technology Corp. Formosa Heavy Industries Corp. Formosa Plastics Marine Corp. Formosa BP Chemicals Corp. Formosa Carpet Corp.	Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties	Yes Yes Yes Yes Yes Yes Yes Yes	8,000,000 $ 800,000 8,000,000 600,000 10,800,000 7,719,480 1,500,000 100,000	6,000,000 $ 800,000 6,000,000 600,000 6,500,000 7,230,892 1,500,000 100,000	- $ - - - `-` 4,190,892 - 2,300	1.41 1.41 1.41 1.41 1.41 1.41 1.41 1.41	1 1 1 2 2 2 1 2	2 2 2 1 1 1 2 1	Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital	- $ - - - - - - -	- - - - - - - -	- $ - - - - - - -	89,417,469 $ 89,417,469 89,417,469 71,533,975 71,533,975 71,533,975 89,417,469 71,533,975	178,834,938 $ 178,834,938 178,834,938 143,067,951 143,067,951 143,067,951 178,834,938 143,067,951	- - - - - - - -

Table 1, Page 1

No. （Note 1）	Creditor	Borrower	General ledger account （Note 2）	Is a related party	Maximum outstanding balance during the year ended December 31, 2017 （Note 3）	Balance at December 31, 2017 （Note 8）	Actual amount drawn down	Interest rate	Nature of loan （Note 4）	Amount of transactions with the borrower （Note 5）	Reason for short-term financing `（`Note 6`）`	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a single party （Note 7）	Ceiling on total loans granted （Note 7）	Footnote
													Item	Value
0 0 0 0 0 0 0 0 0 0	The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Hong Jing Resources Corp. Formosa Group (Cayman) Limited Tah Shin Spinning Corp. Formosa Petrochemical Corp. Nan Ya Technology Corp. Formosa Plastics Transport Corp. Mai-Liao Harbor Administration Corp. Formosa Ha Tinh Steel Corporation-TW Formosa Ha Tinh (Cayman) Limited Mai-Liao Power Corp.	Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties Other receivables- related parties	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes	1,600,000 $ 8,006,500 100,000 17,000,000 900,000 460,000 40,000 30,000 7,023,483 1,200,000	1,600,000 $ 4,259,500 100,000 6,000,000 - - - - 3,002,600 -	100,000 $ 4,259,500 - - - - - - 3,002,600 -	1.41 1.41 1.41 1.41 1.41 1.41 1.41 1.41 1.41 1.41	2 2 2 1 2 2 2 2 2 2	1 1 1 2 1 1 1 1 1 1	Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital	- $ - - - - - - - - -	- - - - - - - - - -	- $ - - - - - - - - -	71,533,975 $ 71,533,975 71,533,975 89,417,469 71,533,975 71,533,975 71,533,975 71,533,975 71,533,975 71,533,975	143,067,951 $ 143,067,951 143,067,951 178,834,938 143,067,951 143,067,951 143,067,951 143,067,951 143,067,951 143,067,951	- - - - - - - - -

Table 1, Page 2

No. （Note 1）	Creditor	Borrower	General ledger account （Note 2）	Is a related party	Maximum outstanding balance during the year ended December 31, 2017 （Note 3）	Balance at December 31, 2017 （Note 8）	Actual amount drawn down	Interest rate	Nature of loan （Note 4）	Amount of transactions with the borrower （Note 5）	Reason for short-term financing `（`Note 6`）`	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a single party （Note 7）	Ceiling on total loans granted （Note 7）	Footnote
													Item	Value
1 2 2 2 2 2 2	Formosa Biomedical Technology Corp. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd.	Hong Jing Resources Corp. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa PS (Ningbo) Co., Ltd. Formosa Synthetic Rubber (Ningbo) Limited Co. Formosa Heavy Industries Corp. Formosa Chemicals Industries (Ningbo) Co., Ltd.	Other receivables- related parties Receivables from related party Receivables from related party Receivables from related party Receivables from related party Receivables from related party Receivables from related party	Yes Yes Yes Yes Yes Yes Yes	15,000 $ 2,686,635 749,841 910,158 2,786,419 82,222 370,000	15,000 $ - - - 2,192,592 82,222 370,000	15,000 $ - - - 2,192,592 82,222 370,000	1.41 3.045~3.48 3.045~3.48 3.045~3.48 3.045~3.48 3.48 3.48	2 2 2 2 2 2 2	1 1 1 1 1 1 1	Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital Additional operating capital	- $ - - - - - -	- - - - - - -	- $ - - - - - -	802,961 $ 5,388,374 5,388,374 5,388,374 5,388,374 5,388,374 5,388,374	2,007,402 $ 13,470,934 13,470,934 13,470,934 13,470,934 13,470,934 13,470,934	- - - - - - -

Table 1, Page 3

No. （Note 1）	Creditor	Borrower	General ledger account （Note 2）	Is a related party	Maximum outstanding balance during the year ended December 31, 2017 （Note 3）	Balance at December 31, 2017 （Note 8）	Actual amount drawn down	Interest rate	Nature of loan （Note 4）	Amount of transactions with the borrower （Note 5）	Reason for short-term financing `（`Note 6`）`	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a single party （Note 7）	Ceiling on total loans granted （Note 7）	Footnote
													Item	Value
3 3 3 4	Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa PS (Ningbo) Co., Ltd.	Formosa Phenol (Ningbo) Limited Co. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa PS (Ningbo) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd.	Receivables from related party Receivables from related party Receivables from related party Receivables from related party	Yes Yes Yes Yes	2,473,518 $ 4,233,530 340,785 9,089	2,473,518 $ 4,233,530 - -	2,473,518 $ 4,233,530 - -	3.48 3.48 3.48 3.48	2 2 2 2	1 1 1 1	Additional operating capital Additional operating capital Additional operating capital Additional operating capital	- $ - - -	- - - -	- $ - - -	4,116,069 $ 4,116,069 4,116,069 664,718	10,290,172 $ 10,290,172 10,290,172 1,661,794	- - - -

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1) The Company is ‘0’.
(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Name of account in which the loans are recognised including but not limited to accounts receivables-related parties, other receivables-related parties and, current account with stockholders, prepayments, and temporary

payments, etc.

Note 3 : Maximum outstanding balance of loans to others during the year period ended December 31, 2017

Note 4 : The nature of loans:

(1) Related to business transactions is "1".
(2) Short-term financing is "2".

Note 5 : Amount of business transactions with the borrower :

(1) No business transactions is "1".
(2) Business transactions amount is provided in Note 13 (1) G.
Note 6 : Provided that loans to others are for necessary short-term financing by nature, shall specifically note necessary reasons for the loans and purposes of the borrowers, for example, repayment of loans, acquisition of equipment, and financing for operation, etc.

Note 7 : The calculation of line of credit:

The limit on loans granted by the Company to a single party, related party and party with business transactions shall not be more than 25% of the Company's net assets, and limit to others is 20% of the Company's net assets. The ceiling on loans granted by the Company to others shall not be more than 50% of the Company's net assets, and ceiling on loans granted a short-term financing borrower with no business transactions shall not be more than 40% of the Company's net assets.

The limit on loans granted by a subsidiary to a single party, related party and party with business transactions shall not be more than 50% of the subsidiary's net assets, and limit to others is 40% of the subsidiary's net assets. The ceiling on loans granted by a subsidiary to others shall not be more than 100% of the Company's net assets, and ceiling on loans granted a short-term financing borrower with no business transactions shall not be more than 40% of the Company's net assets.

Note 8 : The amount was resolved by the Board of Directors.

Table 1, Page 4

Table 2

Formosa Chemicals and Fibre Corporation and subsidiaries Provision of endorsements and guarantees to others

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Number （Note 1） Endorser/ guarantor	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party （Note 3）	Maximum outstanding endorsement/ guarantee amount as of December 31, 2017 （Note 4）	Outstanding endorsement/ guarantee amount at December 31, 2017	Actual amount drawn down	Amount of endorsements / guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided （Note 3）	Provision of endorsements/ guarantees by parent company to subsidiary （Note 5）	Provision of endorsements/ guarantees by subsidiary to parent company （Note 5）	Provision of endorsements/ guarantees to the party in Mainland China （Note 5）	Footnote
	Companyname Relationship with the endorser/ guarantor （Note 2）
0 The Company 0 The Company 0 The Company 0 The Company 1 Formosa Taffeta Co., Ltd. 1 Formosa Taffeta Co., Ltd. 1 Formosa Taffeta Co., Ltd. 1 Formosa Taffeta Co., Ltd. 1 Formosa Taffeta Co., Ltd. 2 Formosa Development Co., Ltd.	Formosa Industries Corp.,Vietnam 1 Formosa Group (Cayman) Limited 6 Formosa Ha Tinh (Cayman) Limited 6 Formosa Resources Corporation 6 Formosa Taffeta (Zhongshan) Co., Ltd. 2 Formosa Taffeta (Vietnam) Co., Ltd. 2 Formosa Taffeta (Changshu) Co., Ltd. 3 Formosa Taffeta (Dong Nai) Co., Ltd. 2 Formosa Ha Tinh (Cayman) Co., Ltd. 6 Public More Internation Company Co., Ltd. 3	14,335,393 $ 232,485,420 232,485,420 232,485,420 45,096,606 45,096,606 45,096,606 45,096,606 45,096,606 182,401	5,146,443 $ 32,300,800 15,694,038 3,271,870 1,410,525 1,567,250 2,037,425 4,599,520 5,273,383 3,000	4,898,311 $ 21,639,800 15,457,372 3,208,660 982,080 1,488,000 1,636,800 4,523,520 5,186,248 3,000	4,898,311 $ 21,639,800 15,457,372 3,208,660 282,720 98,141 329,353 2,472,112 3,903,997 3,000	- $ - - - - - - - - -	1.37 6.05 4.32 0.90 1.42 2.14 2.36 6.52 7.48 1.07	464,970,839 $ 464,970,839 464,970,839 464,970,839 90,193,213 90,193,213 90,193,213 90,193,213 90,193,213 364,803	Y N N N Y Y Y Y N N	N N N N N N N N N N	N N N N Y N Y N N N	- - - - - - - - - -

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

(1) The Company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories: (1) Having business relationship.

(2) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(3) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

(4) The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

(5) Mutual guarantee of the trade as required by the construction contract.

(6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

Note 3: In accordance with Company's procedures of endorsements and guarantees, limit on the Company's total guarantee amount is 130% of the Company's net assets, the limit on endorsement/guarantee to a single party is 50% of the aforementioned total amount. For companies having business relationship with the Company and thus being provided endorsements/guarantees, the limit on endorsements to a single party is the higher value of purchasing or selling.

Note 4: Year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.

Note 5: 'Y' represents cases of provision of endorsements/guarantees by listed parent company to subsidiary, provision by subsidiary to listed parent company, or provision to the party in Mainland China.

Table 2, Page 1

Formosa Chemicals and Fibre Corporation and subsidiaries

Table 3

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by	Marketable securities （Note 1）	Relationship with the securities issuer（Note 2）	General ledger account		As of December31,2017	As of December31,2017	Fairvalue Footnote
				Number of shares	Bookvalue	Ownership (%)
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Stocks_Formosa Plastics Corp. Stocks_Asia Pacific Investment Corp. Stocks_Nan Ya Plastics Corp. Stocks_Nan Ya Technology Corp. Stocks_Formosa Union Chemical Corp. Mega Private US Dollar Money Market Funds Stocks_Mai-Liao Harbor Administration Corp. Stocks_Formosa Plastic Corp. U.S.A Stocks_Central Leasing Corp. Stocks_Taiwan Stock Exchange Corp. Stocks_Taiwan Aerospace Corp. Stocks_Yi-Jih Development Corp. Stocks_Chinese Television System Corp. Stocks_Formosa Plastics Maritime Corp. Stocks_Formosa Development Corp.	Other related parties Other related parties Other related parties Other related parties - - Other related parties Other related parties - - - Other related parties - Other related parties Other related parties	Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current	486,978,692 63,621,500 413,327,750 334,815,409 15,498,339 14,977,992 39,562,740 8,999 1,778,611 13,533,879 1,070,151 300,000 2,376,202 355,880 15,246,336	48,064,796 $ 3,946,824 32,198,232 25,512,934 281,295 4,573,903 539,260 818,316 - 1,800 10,702 3,000 38,419 1,750 90,010	7.65 14.97 5.21 11.30 3.16 - 17.98 2.92 1.07 2.00 0.79 1.51 1.41 18.22 18.00	48,064,796 $ - 3,946,824 - 32,198,232 - 25,512,934 - 281,295 - 4,573,903 - 539,260 - 818,316 - - - 1,800 - 10,702 - 3,000 - 38,419 - 1,750 - 90,010 -

Table 3, Page 1

Securities held by	Marketable securities （Note 1）	Relationship with the securities issuer（Note 2）	General ledger account		As of December31,2017	As of December31,2017	Fairvalue Footnote
				Number of shares	Bookvalue	Ownership (%)
The Company The Company The Company The Company The Company FCFC International (Cayman) Limited Tah Shin Spinning Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Taffeta Co., Ltd.	Stocks_Formosa Network Technology Corp. Stocks_Formosa Plastics Marine Corp. Stocks_Formosa Ocean Group Marine Investment Corp. Stocks_Guangyuan Investment Corp. Stocks_Mega Growth Venture Capital Co., Ltd. Stocks_Formosa Ha Tinh (Cayman) Limited Stocks_Nan Ya Technology Corp. Stocks_Formosa Union Chemical Corp. Stocks_Changs Ascending Enterprise Corp., Ltd. Stocks_Formosa Lithium Iron Oxide Corp. Stocks_Formosa Network Technology Corp. Stocks_Taiwan Leader Biotech Corp. Stocks_United Performance Materials Corp. Stocks_United Biopharma, Inc. Stocks_UBI Pharma Inc. Stocks_Formosa Chemicals & Fibre Corp.	Other related parties Other related parties Other related parties - - Other related parties - - - Other related parties Other related parties - Other related parties - - Parent company	Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - current	2,925,000 2,428,500 2,622 5,000,000 2,500,000 564,707,472 6,367 910,919 3,000 5,300,000 395,120 2,100,000 423,720 22,179,750 26,597,922 12,169,610	13,331 $ 15,000 856,948 50,000 25,000 15,675,823 485 16,533 125 53,000 2,166 21,033 8,400 613,159 667,607 1,253,470	12.50 15.00 19.00 3.91 1.97 11.43 - 0.19 0.01 15.14 1.69 5.20 0.46 12.63 18.81 0.21	13,331 $ - 15,000 - 856,948 - 50,000 - 25,000 - 15,675,823 - 485 - 16,533 - 125 - 53,000 - 2,166 - 21,033 - 8,400 - 613,159 - 667,607 - 1,253,470 -

Table 3, Page 2

Securities held by	Marketable securities （Note 1）	Relationship with the securities issuer（Note 2）	General ledger account		As of December31,2017	As of December31,2017	Fairvalue Footnote
				Number of shares	Bookvalue	Ownership (%)
Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta (Cayman) Co., Ltd. Formosa Development Co., Ltd. Xiamen Xiangyu Formosa Import & Export Trading Co., Ltd.	Stocks_Pacific Electric Wire & Cable Corp., Ltd. Stocks_Formosa Plastics Corp. Stocks_Nan Ya Plastics Corp. Stocks_Asia Pacific Investment Corp. Stocks_Nan Ya Technology Corp. Stocks_Formosa Petrochemical Corp. Stocks_Syntronix Corporation Stocks_Toa Resin Corp., Ltd. Stocks_Shin Yun Natural Gas Corp. Stocks_Wk Technology Fund IV Ltd. Stocks_Nan Ya Optical Corp. FG INC Stocks_Formosa Ha Tinh (Cayman) Limited Stocks_Formosa Taffeta Co., Ltd. Stocks_Association of R.O.C. in Xiamen	- Other related parties Other related parties Other related parties Other related parties Other related parties - Other related parties - - Other related parties Other related parties Other related parties Parent company -	Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current	32 640 482,194 10,000,000 15,421,010 365,267,576 174,441 14,400 644,230 1,926,759 4,261,443 600 190,009,706 2,293,228 -	- $ 63 37,563 620,400 1,175,081 42,188,405 3,236 3,000 3,100 262 58,345 198,066 5,490,371 71,778 137	- - 0.01 2.35 0.52 3.83 0.45 10.00 1.20 3.17 9.53 3.00 3.85 0.14 0.11	- $ - 63 - 37,563 - 620,400 - 1,175,081 - 42,188,405 - 3,236 - 3,000 - 3,100 - 262 - 58,345 - 198,066 5,490,371 - 71,778 - 137 -

Table 3, Page 3

Securities held by	Marketable securities （Note 1）	Relationship with the securities issuer（Note 2）	General ledger account		As of December31,2017	As of December31,2017	Fairvalue Footnote
				Number of shares	Bookvalue	Ownership (%)
Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd.	Stocks_Formosa Plastics Corp. Stocks_Nan Ya Plastics Corp. Stocks_Formosa Chemicals & Fibre Corp. Stocks_Formosa Petrochemical Corp. Stocks_Nan Ya Technology Corp. Stocks_Nan Ya Optical Corp. Stocks_Syntronix Corporation Beneficiary certificates_Jih Sun Money Market Fund Beneficiary certificates_Mega Diamond Money Market Fund	Other related parties Other related parties Ultimate parent company Other related parties Other related parties Other related parties - - -	Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	146,388 312,512 15,249,000 1,110,000 8,278,215 2,130,721 59,945 25,512,583 20,396,748	14,448 $ 24,345 1,570,647 128,205 630,800 29,172 1,181 375,736 254,262	- - 0.26 0.01 0.28 4.77 0.15 - -	14,448 $ - 24,345 - 1,570,647 - 128,205 - 630,800 - 29,172 - 1,181 - 375,736 - 254,262 -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities, as defined in IAS 39 "Financial instruments: Recognition and Measurement". Note 2: The column is left blank if the issuer of marketable securities is non-related party.

Note 3: The Company's stocks held by the subsidiaries—Formosa Taffeta Co., Ltd. anf Formosa Advanced Technologies Co., Ltd.—are deemed as treasury stocks. Details are provided in Note 6 (15). Note 4: Not a limited liability company and thus, not applicable.

Table 3, Page 4

Formosa Chemicals and Fibre Corporation and subsidiaries

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

For the year ended December 31, 2017

							For the year ended December 31, 2017	For the year ended December 31, 2017
Table 4 Investor	Marketable securities `（`Note 1`）`	General ledger account	Counterparty `（`Note 2`）`	Relationship with the investor `（`Note 2`）`	Balance as at January1,2017		Addition `（`Note 3`）`			Disposal `（`Note 3`）`			Expressed in thousands of NTD (Except as otherwise indicated) Balance as at December 31,2017
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
The Company The Company The Company The Company The Company The Company The Company FCFC International (Cayman) Limited Formosa Advanced Technologies Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Taffeta (Cayman) Co., Ltd.	Formosa Resource Corp. Franklin Templeton Sinoam Money Market Fund CapitalMoney Market Fund Fubon Chi- Hsiang Money Market Fund Jih Sun Money Market Fund Yuanta Wan Tai Money Market Fund `FG INC.` Formosa Ha Tinh (Cayman) Limited Formosa Chemicals & Fibre Corp. Nan Ya Technology Corp. Formosa Ha Tinh (Cayman) Limited	Investments accounted for under equity method Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Investments accounted for under equity method Financial assets measured at cost - noncurrent Available-for-sale financial assets - current Available-for-sale financial assets - current Financial assets measured at cost - noncurrent	Formosa Resource Corp. - - - - - `FG INC.` - - - -	- - - - - - - - - - -	416,250,000 - - - - - - 508,236,725 7,316,000 15,041,215 171,008,736	$ 4,159,625 - - - - - - 15,132,580 704,531 726,491 5,316,710	168,344,000 29,259,443 31,228,335 64,217,415 54,423,250 39,899,984 6,000 56,470,747 7,936,000 - 19,000,970	$ 1,683,440 300,000 500,000 1,000,000 800,000 600,000 1,980,594 1,738,438 726,892 - 587,072	- 29,259,443 31,228,335 64,217,415 54,423,250 39,899,984 - - 3,000 6,763,000 -	$ - 300,056 500,084 1,000,161 800,141 600,060 - - 274 523,781 -	$ - 300,000 500,000 1,000,000 800,000 600,000 - - 242 248,202 -	$ - 56 84 161 141 60 - - 32 275,579 -	584,594,000 - - - - - 6,000 564,707,472 15,429,000 8,278,215 190,009,706	$ 5,361,771 - - - - - 1,967,721 15,675,823 1,570,647 630,800 5,490,371

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach $300 million or 20% of paid-in capital or more.

Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In case that shares were issued with no par value or a par value other than NT$10 per share, the 20% of paid-in capital level shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Table 4, Page 1

Formosa Chemicals and Fibre Corporation and subsidiaries

Disposal of real estate reaching $300 million or 20% of paid-in capital or more

For the year ended Decemver 31, 2017

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Real estate disposed by	Real estate	Transaction date or date of the event	Date of acquisition	Book value	Disposal amount	Status of collection of proceeds	Gain (loss) on disposal	Counterparty	Relationship with the seller	Reason for disposal	Basis or reference used in settingtheprice	Other commitments
The Company	25 lands No. 269 and etc. in Shinfang section, Xinyuan Township, Pingtung County	2017/3/17	1980/12/1	41,652 $	830,541 $	Completed	788,889 $	Ming Dih Industry Co., Ltd.	-	Disposal of idle land	Taiwan Dawa Real Estate Appraisers Firm valuated at $881,436; Cushman & Wakefield valuated at $888,714.	-

Note 1: The appraisal result should be presented in the ‘Basis or reference used in setting the price’ column if the real estate disposed of should be appraised pursuant to the regulations. Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Note 3: Date of the event referred to herein is the date of contract signing, date of payment, date of execution of a trading order, date of title transfer, date of board resolution, or other date that can confirm the counterparty and the monetary amount of the transaction, whichever is earlier.

Table 5, Page 1

Formosa Chemicals and Fibre Corporation and subsidiaries

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

For the year ended December 31, 2017

Purchaser/seller	Counterparty	Relationship with the counterparty		Transac	tion		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote `（`Note 1`）`
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Formosa Plastics Corp. Nan Ya Plastics Corp. Formosa Petrochemical Corp. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa PS (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Industries Corp.,Vietnam PFG Fiber Glass Corp. Nan Ya Plastics Corp., U.S.A. Formosa Idemitsu Petrochemical Corp. Nan Ya Plastics (Ningbo) Corp. Formosa Taffeta (Dong Nai) Corp. Formosa Taffeta Co., Ltd.	Other related parties Other related parties Associates Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Other related parties Other related parties Subsidiary Other related parties Subsidiary Subsidiary	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	2,424,287) ($ 27,606,381) ( 23,053,152) ( 3,341,241) ( 18,444,670) ( 6,712,378) ( 1,673,931) ( 2,177,459) ( 445,033) ( 290,151) ( 11,169,445) ( 320,782) ( 272,094) ( 1,745,553) (	1) ( 12) ( 10) ( 1) ( 8) ( 3) ( 1) ( 1) ( - - 5) ( - - 1) (	30 days 30 days 30 days 90 days 90 days 90 days 90 days 30 days 30 days 30 days 30 days 30 days 60 days 60 days	$ - - - - - - - - - - - - - -	- - - - - - - - - - - - - -	206,879 $ 3,157,801 Notes receivable 239,552 Accounts receivable 297,761 2,719,332 778,036 4,566,816 2,444,547 258,337 380,343 36,881 42,742 1,169,651 61,188 78,023	1 12 35 1 11 3 18 9 1 1 - - 5 - -	- - - - - - - - - - - - - - -

Table 6, Page 1

Purchaser/seller	Counterparty	Relationship with the counterparty		Transac	tion		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote `（`Note 1`）`
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company The Company Formosa BP Chemicals Corp. Formosa BP Chemicals Corp. Formosa BP Chemicals Corp. Formosa BP Chemicals Corp. Formosa BP Chemicals Corp. Formosa BP Chemicals Corp. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd.	Formosa Plastics Corp. Nan Ya Plastics Corp. Formosa Petrochemical Corp. Formosa Industries Corp.,Vietnam The Company BP Chemicals (Malaysia) SDN Corp. Nan Ya Plastics Corp. Formosa Plastics Corp. Formosa Petrochemical Corp. Formosa Petrochemical Corp. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Co., Ltd. Formosa Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Corp. Formosa Synthetic Rubber (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Corp.	Other related parties Other related parties Associates Subsidiary Parent company Associates Other related parties Other related parties Associates Associates Associates Associates Associates Other related parties Other related parties Associates Other related parties	Purchases Purchases Purchases Purchases Sales Sales Sales Sales Sales Purchases Sales Sales Sales Sales Sales Sales Sales	6,490,522 $ 6,835,091 120,170,203 344,900 1,095,868) ( 169,984) ( 262,591) ( 102,272) ( 523,253) ( 1,856,570 777,562) ( 1,463,326) ( 858,693) ( 2,367,797) ( 497,080) ( 380,918) ( 731,405) (	4 4 68 - 21) ( 3) ( 5) ( 2) ( 10) ( 56 11) ( 21) ( 13) ( 35) ( 7) ( 6) ( 3) (	30 days 30 days 30 days 30 days 30 days 30 days 30 days 30 days 30 days 45 days 30 days 30 days 30 days 30 days 30 days 30 days 90 days	$ - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - -	732,814) ($ 776,021) ( 13,728,239) ( 50,771) ( 106,125 80,982 32,892 3,766 61,831 198,198) ( - 143,563 - 236,467 50,980 4,419 112,569	4) ( 4) ( 69) ( - 11 8 3 - 6 116) ( - 32 - 52 11 1 10	- - - - - - - - - - - - - - - - -

Table 6, Page 2

Purchaser/seller	Counterparty	Relationship with the counterparty		Transac	tion		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote `（`Note 1`）`
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Industries Corp. Formosa Industries Corp. Formosa Industries Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp.	Formosa Plastics Corp. Formosa Petrochemical Corp. Formosa Taffeta (Dong Nai) Corp. Formosa Taffeta (Long An) Corp. Nan Ya Plastics Corp. The Company Idemitsu Europe Co., Ltd. Idemitsu Chemicals Taiwan Corp. Idemitsu Kosan Co., Ltd. Idemitsu Chemicals (Hong Kong) Co., Ltd. Idemitsu Chemicals (U.S.A) Co., Ltd.	Other related parties Associates Associates Associates Other related parties Parent company Associates Associates Associates Associates Associates	Purchases Purchases Sales Sales Purchases Sales Sales Sales Sales Sales Sales	2,498,300 $ 1,055,811 576,930) ( 241,441) ( 3,464,817 993,335) ( 364,922) ( 511,059) ( 828,109) ( 871,016) ( 145,480) (	15 6 2) ( 1) ( 21 6) ( 2) ( 3) ( 5) ( 6) ( 1) (	90 days 90 days 60 days 60 days 30 days 30 days 30 days after closing date 30 days after closing date 30 days after closing date 30 days after closing date 30 days after closing date	$ - - - - - - - - - - -	- - - - - - - - - - -	649,734) ($ 179,866) ( 109,427 63,685 691,848) ( 153,310 43,449 - 87,665 155,447 21,434	33) ( 9) ( - - 35) ( 14 4 - 8 14 2	- - - - - - - - - - -

Table 6, Page 3

Purchaser/seller	Counterparty	Relationship with the counterparty		Transac	tion		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote `（`Note 1`）`
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Formosa Phenol (Ningbo) Limited Co. Formosa Phenol (Ningbo) Limited Co. Formosa Phenol (Ningbo) Limited Co. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Taffeta Co., Ltd.	Nan Ya Plastics (Ningbo) Corp. Nan Ya Electronic Materials (Kunshan) Co., Ltd Formosa Petrochemical Corp. Yugen Co., Ltd. Formosa Taffeta (Dong Nai) Corp. Formosa Petrochemical Corp. Nan Ya Plastics Corp. Formosa Plastics Corp. Nan Ya Technology Corp. Quang Viet Enterprise Co., Ltd.	Other related parties Other related parties Associates Other related parties Subsidiary Other related parties Other related parties Other related parties Other related parties Associates	Sales Sales Purchases Sales Sales Purchases Purchases Purchases Sales Sales	4,826,983) ($ 133,746) ($ 1,990,178 305,466) ( 102,664) ( 9,606,981 790,453 335,499 5,295,339) ( 372,384) (	33) ( 1) ( 20 1) ( 0) ( 45 4 2 67) ( 1) (	30 days 30 days 90 days Pay 120 days after delivery 60 days after monthly billings Pay every 15 days by mail transfer Pay every 15 days by mail transfer Pay every 15 days by mail transfer 60 days after monthly billings Pay by mail transfer 60 days after delivery	$ - - - - - - - - - -	- - - - - - - - - -	709,403 $ 20,213 $ 237,292) ( Notes receivable 55 Accounts receivable 50,422 73,603 31,814 542,953) ( 73,260) ( 16,118) ( 953,005	60 2 44) ( - 2 3 1 31) ( 4) ( 1) ( 63	- - - - - - - - - - -

Table 6, Page 4

Purchaser/seller	Counterparty	Relationship with the counterparty		Transac	tion		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote `（`Note 1`）`
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Formosa Advanced Technologies Co., Ltd. Formosa Taffeta (Zhong Shan) Co., Ltd. Formosa Taffeta (Zhong Shan) Co., Ltd. Formosa Taffeta (Vietnam) Co., Ltd. Formosa Taffeta (Dong Nai) Co., Ltd. Formosa Taffeta (Dong Nai) Co., Ltd. Formosa Taffeta (Dong Nai) Co., Ltd. Formosa Taffeta (Dong Nai) Co., Ltd.	Nan Ya PCB Corp. Formosa Taffeta (Changshu) Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Industries Corp.,Vietnam Formosa Taffeta (Vietnam) Co., Ltd. Formosa Taffeta Co., Ltd. Kuang Yueh Co., Ltd. Nan Ya Plastics Corp.	Other related parties Associates Parent company Associates Associates Parent company Associates Associates	Purchases Sales Sales Purchases Sales Sales Sales Purchases	134,787 365,021) ($ 160,962) ( 218,104 287,418) ( 626,300) ( 115,689) ( 172,678	5 23) ( 10) ( 13 7) ( 16) ( 3) ( 5	45 days after inspection 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings	$ - - - - - - - -	- - - - - - - -	10,929) ($ 120,362 23,359 34,122) ( 42,321 82,385 20,869 2,711) (	3) ( 55 11 19) ( 5 10 3 1) (	- - - - - - - -

Note 1: The disclosed transaction is the revenue side and related transactions are no longer disclosed.

Table 6, Page 5

Formosa Chemicals and Fibre Corporation and subsidiaries

Table 7

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship withthe counterparty	Balance as at December 31, 2017 `（`Note1`）`	Turnover rate	Overduereceivables	Overduereceivables	Amount collected subsequent to the balance sheet date	Allowance for doubtfulaccounts
					Amount	Actiontaken
The Company The Company The Company Formosa Idemitsu Petrochemical Corp. Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Industries Corp., Vietnam Formosa Advanced Technologies Co., Ltd. Formosa Taffeta (Zhong Shan) Co., Ltd. The Company The Company The Company The Company The Company The Company The Company	Formosa Plastics Corp. Nan Ya Plastics Corp. Formosa Idemitsu Petrochemical Corp. Idemitsu Chemicals (Hong Kong) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Corp. Nan Ya Plastics (Ningbo) Corp. Formosa Taffeta (Dong Nai) Co., Ltd. Nan Ya Technology Corp. Formosa Taffeta (Changshu) Co., Ltd. Formosa Petrochemical Corp. Formosa Industries Corp., Vietnam Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa PS (Ningbo) Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Chemicals Industries (Ningbo) Co., Ltd.	Other related parties Other related parties Subsidiary Associates Associates Other related parties Other related parties Other related parties Other related parties Other related parties Associates Subsidiary Associates Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	206,879 $ 3,157,801 Accounts receivable 2,719,332 Other receivables 134,350 Notes receivable 239,552 Accounts receivable 297,761 Accounts receivable 380,343 Other receivables 96,176 Accounts receivable 778,036 Other receivables 539,842 Accounts receivable 258,337 Other receivables 21,879 Accounts receivable 2,444,547 Other receivables 429,046 Accounts receivable 4,566,816 Other receivables 351,976 1,169,651 155,447 143,563 236,467 709,403 112,569 109,427 953,005 120,362	12.63 10.04 9.99 8.00 9.97 15.77 7.60 9.35 10.54 5.44 3.37 9.47 7.32 12.96 2.31 3.62 3.23 4.04	- $ - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - -	206,879 $ 3,157,801 2,719,332 40,559 239,552 195,364 374,735 16,785 135,894 - 177,632 - 1,345,570 - 3,164,716 - 1,169,651 155,447 143,563 236,467 709,403 112,569 109,427 465,954 55,530	- $ - - - - - - - - - - - - - - - - - - - - -

Note 1: Fill in separately the balances of accounts receivable–related parties, notes receivable–related parties, other receivables–related parties….

Table 7, Page 1

Formosa Chemicals and Fibre Corporation and subsidiaries

Table 8

Significant inter-company transactions during the reporting period

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)			Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note3)
0 0	The Company The Company	Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Idemitsu Petrochemical Corp.	1 1	Sales revenue Sales revenue	18,444,670) ($ 11,169,445) (	In regular terms In regular terms	(5) (3)

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: If the transaction amount in this sheet reaches 3% of consolidated operating income or total assets, it is considered material.

Table 8, Page 1

Formosa Chemicals and Fibre Corporation and subsidiaries

Table 9

Information on investees (Excluding those in Mainland China)

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee `（`Note 1`）`	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2017	Shares held as at December 31,2017	Shares held as at December 31,2017	Net profit (loss) of the investee for the year ended December 31,2017	Investment income (loss) recognised by the Company for the year ended December 31,2017	Footnote
				Balance as at December 31,2017	Balance as at December 31,2016	Number of shares	Ownership (%)	Book value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Tah Shin Spinning Corp. Formosa Taffeta Co., Ltd. Formosa Heavy Industries Corp. Formosa Fairway Corporation Formosa Plastics Transport Corp. Formosa Petrochemical Corp. Mai-Liao Power Corp. FCFC Investment Corp. (Cayman) Hwa Ya Science Park Management Consulting Co, Ltd. Chia-Nan Enterprise Corporation Formosa Idemitsu Petrochemical Corp. Su Hua Transport Corp. Formosa Industries Corp., Vietnam	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Cayman Islands Taiwan Taiwan Taiwan Taiwan Vietnam	Spinning Spinning Machinery Transportation Transportation Chemistry Electricity generation Investments Management Electricity generation Wholesale and retail of petrochemical and plastic raw materials Transportation Textile, polyester staple fibre, cotton	85,188 $ 719,003 2,497,721 33,320 17,255 25,842,468 5,985,531 25,690,257 340 225,034 299,999 50,000 8,435,801	85,188 $ 719,003 2,497,721 33,320 17,255 25,842,468 5,985,531 19,534,946 340 225,034 299,999 50,000 8,435,801	18,467,619 630,022,431 651,706,181 4,697,951 4,770,421 2,300,799,801 547,030,137 56,000 33,000 12,448,800 60,000,000 10,494,785 -	86.40 37.40 32.91 33.33 33.33 24.15 24.94 100.00 33.00 30.00 50.00 25.00 42.50	120,888 $ 25,190,400 7,694,277 100,952 738,229 82,001,789 10,845,857 40,547,409 1,382 260,483 2,845,575 277,136 7,837,301	6,967) ($ 4,279,871 342,788 15,393) ( 14,979 80,170,146 855,329 4,220,011 327 40,845 3,215,726 104,601 806,833	12,210) ($ 1,556,758 116,191 5,131) ( 4,993 19,409,650 213,360 4,220,011 108 12,255 1,603,889 26,150 342,904	- - - - - - - - - - - - -

Table 9, Page 1

Investor	Investee `（`Note 1`）`	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2017	Shares held as at December 31,2017	Shares held as at December 31,2017	Net profit (loss) of the investee for the year ended December 31,2017	Investment income (loss) recognised by the Company for the year ended December 31,2017	Footnote
				Balance as at December 31,2017	Balance as at December 31,2016	Number of shares	Ownership (%)	Book value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company FCFC Investment Corp. (Cayman)	Formosa BP Chemicals Corp. Formosa Environmental Technology Co. Formosa Biomedical Technology Corp. Formosa Carpet Corp. Formosa Synthetic Rubber Corp. Formosa Synthetic Rubber (Hong Kong) Co., Ltd. Formosa Resources Corporation Formosa Group Corp. (Cayman) Formosa Construction Corp. FG INC. FCFC International (Cayman) Limited Formosa Chemicals & Fibre (Hong Kong) Co., Ltd.	Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong Taiwan Cayman Islands Taiwan United States Cayman Islands Hong Kong	Chemistry, international of petrochemistry Disposals of wastes and sewage Manufacturing and sale of cosmetics Yarn spinning mills, finishing of textiles and carpet manufacturing Manufacturing of synthetic rubber Manufacturing of synthetic rubber Mining industry and its trading, wholesale of chemical material and international trading Investments Development and sale of rebuilt housing, buildings and plants under urban redevelopment Investments Investments Investments	1,201,500 $ 417,145 1,566,879 300,000 400,000 2,151,560 5,845,940 377 100,000 1,980,594 17,823,278 21,637,470	1,201,500 $ 417,145 1,566,879 300,000 400,000 2,151,560 4,162,500 377 100,000 - 16,084,840 15,482,159	120,150,000 41,714,475 147,556,136 22,037,185 40,000,000 70,000,000 584,594,000 - 10,000,000 6,000 50,000 -	50.00 24.34 88.59 100.00 33.33 33.33 25.00 25.00 33.33 30.00 100.00 100.00	1,717,051 $ 226,435 1,775,628 210,601 283,679 802,566 5,361,771 348,135 87,774 1,967,721 15,984,457 27,329,416	788,730 $ 119,695) ( 145,318 4,302) ( 96,263) ( 1,229,627) ( 543,427) ( 652,585) ( 12,454) ( 7,634) ( 147 3,351,047	383,116 $ 29,134) ( 128,738 4,302) ( 32,085) ( 409,834) ( 135,857) ( 163,146) ( 4,151) ( 2,290) ( 147 3,351,047	- - - - - - - - - - - -

Table 9, Page 2

Investor	Investee `（`Note 1`）`	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2017	Shares held as at December 31,2017	Shares held as at December 31,2017	Net profit (loss) of the investee for the year ended December 31,2017	Investment income (loss) recognised by the Company for the year ended December 31,2017	Footnote
				Balance as at December 31,2017	Balance as at December 31,2016	Number of shares	Ownership (%)	Book value
Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Biomedical Technology Corp. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd.	Beyoung International Corp. Hong Jing Resources Corp. Formosa Biomedical Technology (Samoa) Co., Ltd. Formosa Waters Technology Co., Ltd. Formosa Development Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Taffeta (Hong Kong) Co., Ltd. Formosa Taffeta (Vietnam) Co., Ltd.	Taiwan Taiwan Samoa Taiwan Taiwan Taiwan Hong Kong Vietnam	International trading Recycle of spent catalyst Investments 1.Industrial catalyst manufacturing 2.Wholesale of other chemical products 1.Handling urban land consolidation 2.Development, rent and sale of industrial plants, residences and building IC assembly, testing and modules Sale of spun fabrics and filament textile Production, processing, further processing various yam and cotton cloth, dyeing and finishing clothes, curtains, towels, bed covers and carpets	90,000 $ 252,969 29,610 7,650 114,912 3,773,440 1,356,862 1,709,221	90,000 $ 252,969 29,610 - 114,912 3,773,440 1,356,862 1,709,221	467,400 19,636,218 - 765,001 16,100,000 290,464,472 - -	30.00 51.00 100.00 57.00 100.00 65.68 100.00 100.00	95,491 $ 249,437 5,289 7,537 206,279 7,347,846 1,092,248 1,806,539	11,469 $ 157,781 11,583) ( 199) ( 17,643 1,393,086 89,049 163,188	3,456 $ 80,469 11,583) ( 113) ( 11,313 914,979 89,049 163,188	- - - - - - - -

Table 9, Page 3

Investor	Investee `（`Note 1`）`	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2017	Shares held as at December 31,2017	Shares held as at December 31,2017	Net profit (loss) of the investee for the year ended December 31,2017	Investment income (loss) recognised by the Company for the year ended December 31,2017	Footnote
				Balance as at December 31,2017	Balance as at December 31,2016	Number of shares	Ownership (%)	Book value
Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Development Co., Ltd. Formosa Development Co., Ltd.	Kuang Yueh Co., Ltd. Schoeller F.T.C. (Hong Kong) Co., Ltd. Formosa Taffeta (Dong Nai) Co., Ltd. Formosa Industries Corp., Vietnam Formosa Taffeta (Cayman) Co., Ltd. Formosa Advanced Technologies Co., Ltd. Public More Internation Co., Ltd.	Taiwan Hong Kong Vietnam Vietnam Cayman Islands Taiwan Taiwan	Processing and production of ready-to-wear, processing and trading of cotton cloth, and import and export of the aforementioned products Trading of textiles Production, processing and sale of various dyeing and finishing textiles and yarn Synthetic fiber, spinning, weaving, dyeing and finishing and electricity generation Investments IC assembly, testing and modules Employment service, manpower allocation and agency service	213,771 $ 2,958 2,590,434 1,987,122 5,675,253 21,119 5,000	213,771 $ 2,958 2,590,434 1,987,122 5,090,180 21,119 -	18,595,352 - - - 171,028,736 469,500 -	17.92 50.00 100.00 10.00 100.00 0.11 100.00	1,149,965 $ 4,217 2,228,212 1,938,483 5,490,420 23,622 6,586	546,996 $ 6,171 57,981 806,833 137) ( 1,393,086 1,586	112,417 $ 2,653 57,981 77,090 137) ( 1,473 1,586	- - - - - - -

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding company about the disclosure of related overseas investee information.

Table 9, Page 4

Formosa Chemicals and Fibre Corporation and subsidiaries

Information on investments in Mainland China

For the year ended December 31, 2017

Table 10

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-incapital	Investment method `（`Note1`）`	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2017	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2017	Net income of investee for the year ended December 31, 2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December31,2017	Book value of investments in Mainland China as of December 31,2017	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2017	Footnote
					Remitted to Mainland China	Remitted back toTaiwan
Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa PS (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Synthetic Rubber (Ningbo) Co., Ltd.	Sale of Acrylonitrile Butadiene Styrene (ABS) Cogeneration power generation business Production and market of PTA Sale of Polystyrene Production and sale of phenol- acetone and acetone Production and sale of synthetic rubber	5,618,707 $ 4,834,511 12,199,971 1,732,458 7,701,923 6,743,008	2、4 2、4 2、4 2、4 2、4 2、4	4,682,741 $ 4,051,414 9,066,960 1,732,458 - 2,151,560	$ - - 3,133,011 - 3,022,300 -	$ - - - - - -	4,682,741 $ 4,051,414 12,199,971 1,732,458 3,022,300 2,151,560	2,660,566 $ 868,964 35,299) ( 452,417 273,363 1,229,627) (	100 100 100 100 100 33	2,660,566 $ 868,964 35,299) ( 452,417 273,363 409,834) (	10,003,452 $ 13,470,934 10,290,172 1,661,794 5,373,998 802,566	$ - - - - - -	2 2 2 2 2 2

Table 10, Page 1

Investee in Mainland China	Main business activities	Paid-incapital	Investment method `（`Note1`）`	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2017	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2017	Net income of investee for the year ended December 31, 2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December31,2017	Book value of investments in Mainland China as of December 31,2017	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2017	Footnote
					Remitted to Mainland China	Remitted back toTaiwan
Formosa Biomedical Trading (Shanghai) Co., Ltd. Formosa Taffeta (Zhong Shan) Co., Ltd. Xiamen Xiangyu Formosa Import & Export Trading Co., Ltd. Formosa Taffeta (Changshu) Co., Ltd.	Investments Production and sale of polyester and polyamide fabrics Import and export, entrepot trade, merchandise exhibition, export processing, warehousing and design and drawing of black and white and colour graphs Weaving and dyeing as well as post dressing of high-grade loomage face fabric	29,610 $ 1,402,085 15,273 1,302,019	2、4 1 1 2	29,610 $ 1,402,085 15,273 1,334,739	$ - - - -	$ - - - -	29,610 $ 1,402,085 15,273 1,334,739	11,583) ($ 72,999 959) ( 85,091	100 100 100 100	11,583) ($ 72,999 959) ( 85,091	5,289 $ 1,635,550 6,206 975,944	$ - - - -	2 2`、3` 2`、4` 2`、5`

Table 10, Page 2

Investee in Mainland China	Main business activities	Paid-incapital	Investment method `（`Note1`）`	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2017	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2017	Net income of investee for the year ended December 31, 2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December31,2017	Book value of investments in Mainland China as of December 31,2017	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2017	Footnote
					Remitted to Mainland China	Remitted back toTaiwan
Changshu Yu Yuan Development Co., Ltd.	Building and selling real estate	70,788 $	2	$ -	$ -	$ -	- $	11,436 $	41	4,427 $	35,008 $	$ -	2`、6`

Note 1: Investment methods are classified into the following three categories.
(1) Directly invest in a company in Mainland China..
(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China.
(3) Others
(4) Formosa Power (Ningbo) Co., Ltd. is an investee company in Mainland China through the Company's investee - FCFC Investment Corp. (Cayman).
Formosa Chemicals Industries (Ningbo) Co., Ltd., Formosa PS (Ningbo) Co., Ltd., Formosa ABS Plastics (Ningbo) Co., Ltd. and Formosa Phenol (Ningbo) Limited Co. were investee companies in Mainland China through the Company's investee - FCFC Investment Corp. (Cayman). After share structure adjustment in 2008 and 2014, the parent company of the 4 investees became Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. is a wholly-owned subsidiary through reinvestment of FCFC Investment Corp. (Cayman).
Formosa Synthetic Rubber (Ningbo) Co., Ltd. is an investee company in Mainland China through the investee - Formosa Synthetic Rubber (Hong Kong) Co., Ltd..
Formosa Biomedical Trading (Shanghai) Co., Ltd. is an investee company in Mainland China through the investee - Formosa Biomedical (Samoa) Co., Ltd..
Formosa Taffeta (Changshu) Co., Ltd. is an investee company in Mainland China through the subsidiary - Formosa Taffeta (Hong Kong) Co., Ltd..
The Company is the surviving company after the consolidation of Changshu Yu Yuan Development.Co.,Ltd. and Changshu Fushun Enterprise Management Co.,Ltd. It’s paid-in capital is RMB$13,592,920.
Note 2: Investment income recognized in current period is based on the financial reports audited by CPAs of the Taiwan parent company .
Note 3: The Company's paid-in capital, accumulative remittance from Taiwan as of January 1, 2017 and that as of December 31, 2017 all amount to US$46,400,000.
(The remittance of US$46,388,800 and the capitalised value of machinery and equipment of US$11,200)
Note 4: The Company's paid-in capital, accumulative remittance from Taiwan as of January 1, 2017 and that as of December 31, 2017 all amount to US$570,000.
Note 5: The Company's paid-in capital, accumulative remittance from Taiwan as of January 1, 2017 and that as of December 31, 2017 all amount to US$42,000,000. In order to effectively utilise the residential land of the Company, Formosa Chemicals & Fibre Co. split the residential land and established Changshu Fushun Enterprise Management Co., Ltd. by capitalizing the residential land in the first quarter, 2015.
Formosa Chemicals & Fibre Co. reduced the capital of Formosa Taffeta (Changshu) Co., Ltd. by US$900,000, so the Company's paid-in capital amounts to $41,100,000.
Note 6: The Company is the surviving company after the merger with Changshu Yu Yuan Development.Co., Ltd. in the third quarter, 2015. The paid-in capital of the Company is RMB$13,592,920.

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2017	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
The Company	$ 27,840,444	$ 36,936,005	Note

Note: Corporations that are qualified with operations headquarters certification issued by the Industrial Development Bureau, Ministry of Economic Affairs, R.O.C.

Table 10, Page 3

Table 11

Formosa Chemicals and Fibre Corporation and subsidiaries

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Sale(purchase)	Sale(purchase)	Propertytransaction	Propertytransaction	Accounts receivable (payable)	Accounts receivable (payable)	Provision of endorsements/guarantees or collaterals	Provision of endorsements/guarantees or collaterals		Financing	Financing		Others
	Amount	%	Amount	%	Balance at December 31, 2017	%	Balance at December 31, 2017	Purpose	Maximum balance during the year ended December 31,2017	Balance at December31,2017	Interest rate	Interest during the year ended December 31,2017
Formosa Taffeta (Zhongshan) Co., Ltd. Formosa Taffeta (Changshu) Co., Ltd.	$ 23,276 30,966	0.09 0.12	$ - 29,526	- -	$ 2,616 5,015	0.12 0.23	$ 982,080 1,636,800	For short-term loans from financial institutions For short-term loans from financial institutions	$ - -	- $ -	- -	- $ -	- -

Table 11, Page 1

AI assistant

FCFC — Annual Report 2017

51780_rns_2017-12-01_ff2c7551-1587-49d4-a13e-27e8642d0d9b.pdf

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

FORMOSA CHEMICALS & FIBRE CORPORATION

AND SUBSIDIARIES

INDEX

Opinion

Basis for opinion

Key audit matters

Impairment assessment of property, plant and equipment-PTA division

Description

How our audit addressed the matter

Investments accounted for under equity method and recognition of investment income

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

Juanlu, Man-Yu

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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 AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

1. HISTORY AND ORGANISATION

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

the Group

(3) IFRSs issued by IASB but not yet endorsed by the FSC

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

Balance sheets

Statements of cash flows

(4) Foreign currency translation

(6) Cash equivalents

(7) Financial assets at fair value through profit or loss

(8) Available-for-sale financial assets

(10) Impairment of financial assets

(11) Derecognition of financial assets

(12) Inventories

(13) Investments accounted for using equity method /associates

(14) Property, plant and equipment

(15) Intangible assets

(16) Impairment of non-financial assets

(17) Borrowings

(18) Notes and accounts payable

(19) Financial liabilities at fair value through profit or loss

(23) Employee benefits

(24) Income tax

(26) Dividends

(27) Revenue recognition

(28) Operating segments

5. CRITICALACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

(2) Critical accounting estimates and assumptions

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

(2) Financial assets at fair value through profit or loss

(3) Available-for-sale financial assets

(4) Notes receivable, net

(5) Accounts receivable, net

(6) Inventories

(7) Financial assets measured at cost

(8) Investments accounted for using equity method

A. Associates

Balance sheets

(9) Property, plant and equipment

(10) Short-term loans and short-term notes and bills payable

(11) Financial liabilities at fair value through profit or loss

FCFC Annual Report 2017