FCFC — Interim / Quarterly Report 2017

Dec 1, 2017

FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

JUNE 30, 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
	1-2 3-4 5-6 7-8 9-10 11-108

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR17000058 To the Board of Directors and Shareholders of Formosa Chemicals & Fibre Corporation

We have reviewed the accompanying consolidated balance sheets of Formosa Chemicals & Fibre Corporation and subsidiaries as of June 30, 2017 and 2016, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the six-month periods then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our reviews. We did not review the financial statements of certain investments accounted for using equity method of Formosa Chemicals & Fibre Corporation and subsidiaries and certain investees information disclosed in Note 13 for the sixmonth periods ended June 30, 2017 and 2016. The balance of related investments accounted for using equity method amounted to NT$80,180,339 thousand and NT$82,552,454 thousand as of June 30, 2017 and 2016, respectively. The comprehensive income (including share of profit (loss) of associates accounted for using equity method and share of profit (loss) and other comprehensive income of associates) amounted to NT$4,211,741 thousand, NT$6,243,961 thousand, NT$9,355,468 thousand and NT$8,557,317 thousand for the three-month periods and the six-month periods ended June 30, 2017 and 2016, respectively. Those financial statements and the information disclosed in Note 13 were reviewed by other independent accountants whose reports thereon have been furnished to us, and our conclusion expressed herein is based solely on the review reports of the other independent accountants.

Except as described in the following paragraph, our reviews were made in accordance with the Generally Accepted Auditing Standards No. 36, “Review of Financial Statements” in the Republic of China. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

The financial statements of certain insignificant subsidiaries, investments accounted for using equity method and the information disclosed in Note 13 were not reviewed by independent accountants. Those statements reflect total assets (including investments accounted for using equity method) of NT$93,023,216 thousand and NT$96,602,409 thousand, constituting 17% and 18% of the consolidated

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total assets, and total liabilities of NT$18,949,851 thousand and NT$19,647,599 thousand, both constituting 10% of the consolidated total liabilities as of June 30, 2017 and 2016, respectively; and total operating revenues of NT$13,063,797 thousand, NT$12,567,607 thousand, NT$26,706,902 thousand and NT$24,496,458 thousand, constituting 16%, 15%, 16% and 16% of the consolidated operating revenue, and comprehensive income (including share of profit (loss) of associates accounted for using equity method and share of profit (loss) and other comprehensive income of associates) amounting to NT$1,307,662 thousand, NT$1,195,611 thousand, NT$1,309,246 thousand and NT$2,422,199 thousand, constituting 8%, 17%, 6% and 12% of the total comprehensive income for the three-month periods and six-month periods ended June 30, 2017 and 2016, respectively.

Based on our reviews and the review reports of other independent accountants, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain insignificant subsidiaries, investments accounted for using equity method and the information disclosed in Note 13 been reviewed by independent accountants, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the “Regulation Governing the Preparation of Financial Statements by Securities Issuers”, and IAS 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Chou, Chien-Hung

[Juanlu, Man-Yu ]

for and on behalf of PricewaterhouseCoopers, Taiwan August 4, 2017

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

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

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FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2017 and 2016 are reviewed, not audited)

Assets	Notes	June 30, 2017 AMOUNT % $ 45,171,425 8 629,437 - 107,130,325 19 11,585,404 2 3,560 - 16,357,011 3 6,690,263 1 23,295,480 4 8,387,841 2 37,443,717 7 7,788,745 1 264,483,208 47 40,022,425 7 23,217,621 4 98,006,244 18 125,404,225 22 1,188 - 2,024,482 - 9,900,489 2 298,576,674 53 $ 563,059,882 100	December 31, 2016 AMOUNT % $ 30,391,911 6 627,621 - 100,777,992 18 7,037,751 1 11,643 - 18,028,975 3 7,356,435 1 5,107,594 1 19,841,060 4 42,215,280 8 5,409,066 1 236,805,328 43 42,381,294 8 24,431,806 5 102,035,137 19 130,913,460 24 1,583 - 1,732,954 - 6,135,028 1 307,631,262 57 $ 544,436,590 100	June 30, 2016
			AMOUNT $ 30,391,911 627,621 100,777,992 7,037,751 11,643 18,028,975 7,356,435 5,107,594 19,841,060 42,215,280 5,409,066 236,805,328 42,381,294 24,431,806 102,035,137 130,913,460 1,583 1,732,954 6,135,028 307,631,262 $ 544,436,590	AMOUNT % $ 38,537,895 7 626,926 - 86,394,776 17 7,305,622 2 7,934 - 15,746,213 3 6,875,893 1 7,085,195 1 11,766,986 2 37,338,130 7 7,330,071 2 219,015,641 42 33,161,125 6 23,760,309 5 98,845,319 19 138,542,626 26 2,511 - 1,836,360 - 8,173,196 2 304,321,446 58 $ 523,337,087 100
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	6(1) 6(2) 6(3) 6(4) 7 6(5) 7 7 7 6(6) and 8 7 and 8 6(3) and 8 6(7) 6(8), 7 and 8 7

(Continued)

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FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2017 and 2016 are reviewed, not audited)

Liabilities and Equity	Notes	June 30, 2017	December 31, 2016 June 30, 2016 % AMOUNT % AMOUNT % 5 $ 26,146,750 5 $ 26,711,042 5 - 1,499,464 - 2,099,471 - - 1,381 - 531 - - 196,870 - 209,935 - 1 8,525,984 2 7,877,404 2 2 13,385,510 2 11,798,819 2 8 8,387,052 1 30,860,666 6 - 57,478 - 8,000 - 1 3,708,596 1 3,080,083 1 3 14,416,502 3 11,355,077 2 - 2,884,328 - 2,339,963 1 20 79,209,915 14 96,340,991 19 7 39,750,000 8 46,500,000 9 7 38,614,620 7 39,007,112 7 - 312,506 - 575,683 - 1 6,909,137 1 9,342,175 2 15 85,586,263 16 95,424,970 18 35 164,796,178 30 191,765,961 37 10 58,611,863 11 58,611,863 11 2 8,622,642 1 8,839,492 2 9 46,663,535 9 46,663,535 9 8 41,927,550 8 41,927,550 8 9 72,560,103 13 49,298,212 9 17 91,965,445 17 73,922,567 14 - ( 360,572 ) - ( 360,572) - 55 319,990,566 59 278,902,647 53 10 59,649,846 11 52,668,479 10 65 379,640,412 70 331,571,126 63 100 $ 544,436,590 100 $ 523,337,087 100	June 30, 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 unrecognized contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity

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)

(UNAUDITED)

Items	Notes	Three	months endedJune30	months endedJune30
		2017		2016
4000 Operating revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period

(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) (UNAUDITED)

					Three	months	endedJune30	endedJune30	endedJune30					Six months	Six months	endedJune30	endedJune30	endedJune30
					2017				2016					2017				2016
	Items	Notes			AMOUNT	%			AMOUNT		%			AMOUNT	%			AMOUNT	%
	Other comprehensive income (net)	6(19)(26)
	Components of other comprehensive income that will be
	reclassified to profit or loss
8361	Financial statements translation differences of foreign
	operations			$	903,458	1	($		1,001,100)	(	1) ($			3,726,404) (	2) (		$	2,873,385 ) (		2)
8362	Unrealized gain (loss) on valuation of available-for-sale
	financial assets				3,899,601	5	(		5,985,733)	(	7)			3,532,035	2			1,220,856		1
8370	Share of other comprehensive income (loss) of associates
	and joint ventures accounted for uner equity method				887,614	1	(		438,102)	(	1)			309,280	- (			738,208 )		-
8399	Income tax relating to the components of other
	comprehensive income		(		127,037 )	-			155,047		-			399,853	-			320,566		-
8360	Components of other comprehensive income that
	will be reclassified to profit or loss				5,563,636	7	(		7,269,888)	(	9)			514,764	- (			2,070,171 ) (		1)
8300	Total other comprehensive income for the period			$	5,563,636	7	($		7,269,888)	(	9)		$	514,764	- (		$	2,070,171 ) (		1)
8500	Total comprehensive income for the period			$	16,254,525	20		$	7,035,244		9		$	23,927,446	14		$	20,054,098	13
	Net income attributable to:
8610	Owners of the parent			$	8,440,534	10		$	13,285,183		17		$	20,151,504	12		$	20,042,129	13
8620	Non-controlling interest				2,250,355	3			1,019,949		1			3,261,178	2			2,082,140		1
				$	10,690,889	13		$	14,305,132		18		$	23,412,682	14		$	22,124,269	14
	Total comprehensive income attributable to:
8710	Owners of the parent			$	14,025,374	17		$	7,253,004		9		$	23,209,655	14		$	16,630,055	11
8720	Non-controlling interest				2,229,151	3	(		217,760)		-			717,791	-			3,424,043		2
				$	16,254,525	20		$	7,035,244		9		$	23,927,446	14		$	20,054,098	13
				Before Tax After Tax				Before Tax After			Tax		Before Tax After		Tax			Before Tax After Tax
	Basic earnings per share	6(27)
9710	Profit for the period from continuing operations		$		2.08 $	1.83	$		2.80 $	2.45		$		4.52 $	4.01		$	4.36 $	3.79
9720	Non-controlling interests		(		0.47) (	0.38)	(		0.27) (	0.18)		(		0.71 ) (	0.56)		(	0.57) (	0.36 )
9750	Profit attributable to common shareholders of the parent		$		1.61 $	1.45	$		2.53 $	2.27		$		3.81 $	3.45		$	3.79 $	3.43
	Assuming shares held by subsidiary are not deemed as treasury stock:
	Profit for the period from continuing operations		$		2.07 $	1.82	$		2.79 $	2.44		$		4.51 $	3.99		$	4.34 $	3.77
	Non-controlling interests		(		0.47) (	0.38)	(		0.27) (	0.17)		(		0.72 ) (	0.55)		(	0.56) (	0.35 )
	Profit attributable to common shareholders of the parent		$		1.60 $	1.44	$		2.52 $	2.27		$		3.79 $	3.44		$	3.78 $	3.42

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 CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

F	or the six-month period ended June 30, 2016 Balance at January 1, 2016 Appropriations of 2015 earnings Legal reserve Cash dividends 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 Changes in the net interest of associates recognised under the equity method Cash dividends paid by consolidated subsidiaries Profit for the period Other comprehensive income (loss) for the period Balance at June 30, 2016	Notes							Equity attributable to o	Equity attributable to o	wn	ers of the parent	ers of the parent						Non-controlling interest	Total equity
				Share capital - common stock	Total capital surplus, additional paid-in capital			R	etained Earnings				Ot	her EquityInteres	t		Treasury stocks	Total
							Legal reserve		Special reserve	Unappropriated retained earnings		Financial statements translation differences of foreign operations		Unrealized gain or loss on available-for- sale financial assets		Hedging instrument gain (loss) on effective hedge of cash flow hedges
		6(18) 6(17)		$ 58,611,863 - - - - - - - - $ 58,611,863	$ 8,875,002 - - - - ( 35,510 ) - - - $ 8,839,492		$ 43,905,716 2,757,819 - - - - - - - $ 46,663,535		$ 41,927,550 - - - - - - - - $ 41,927,550	$ 52,528,055 ( 2,757,819 ) ( 20,514,153 ) - - - - 20,042,129 - $ 49,298,212	(	$ 4,649,520 - - - - - - - 2,067,070 ) $ 2,582,450	(	$ 72,615,548 - - - - - - - 1,313,400 ) $ 71,302,148	(	$ 69,573 - - - - - - - 31,604 ) $ 37,969	($ 352,309 ) - - ( 8,263 ) - - - - - ($ 360,572 )	$ 282,830,518 - ( 20,514,153 ) ( 8,263 ) - ( 35,510 ) - 20,042,129 ( 3,412,074 ) $ 278,902,647	$ 50,247,015 - - - ( 59,436 ) - ( 943,143 ) 2,082,140 1,341,903 $ 52,668,479	$ 333,077,533 - ( 20,514,153 ) ( 8,263 ) ( 59,436 ) ( 35,510 ) ( 943,143 ) 22,124,269 ( 2,070,171 ) $ 331,571,126

(Continued)

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

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

F	or the six-month period ended June 30, 2017 Balance at January 1, 2017 ew Item Legal reserve Special reserve Cash dividends 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 Changes in the net interest of associates recognised under the equity method Cash dividends paid by consolidated subsidiaries Profit for the period Other comprehensive income (loss) for the period Balance at June 30, 2017	Notes								Equity attributable to o	Equity attributable to o	wn	ers of the parent	ers of the parent						Non-controlling interest	Total equity
				Share capital - common stock		Total capital surplus, additional paid-in capital			R	etained Earnings				Ot	her EquityInteres	t		Treasury stocks	Total
								Legal reserve		Special reserve	Unappropriated retained earnings		Financial statements translation differences of foreign operations		Unrealized gain or loss on available-for- sale financial assets		Hedging instrument gain (loss) on effective hedge of cash flow hedges
		6(18) 6(17)		$ 58,611,863 - - - - - - - - - $ 58,611,863		$ 8,622,642 - - - - - 1,668 - - - $ 8,624,310		$ 46,663,535 4,383,305 - - - - - - - - $ 51,046,840		$ 41,927,550 - 4,639,539 - - - - - - - $ 46,567,089	$ 72,560,103 ( 4,383,305 ) ( 4,639,539 ) ( 32,822,643 ) - - - - 20,151,504 - $ 50,866,120	$ 988,624 - - - - - - - - ( 2,737,631 ) ( $ 1,749,007 )			$ 90,933,647 - - - - - - - - 5,821,343 $ 96,754,990		$ 43,174 - - - - - - - - ( 25,561 ) $ 17,613	($ 360,572 ) - - - ( 222,832 ) - - - - - ($ 583,404 )	$ 319,990,566 - - ( 32,822,643 ) ( 222,832 ) - 1,668 - 20,151,504 3,058,151 $ 310,156,414	$ 59,649,846 - - - - 2,790 - ( 4,464,502 ) 3,261,178 ( 2,543,387 ) $ 55,905,925	$ 379,640,412 - - ( 32,822,643 ) ( 222,832 ) 2,790 1,668 ( 4,464,502 ) 23,412,682 514,764 $ 366,062,339
N

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 CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation Amortization Net gain on financial assets and liabilities at fair value through profit or loss Provision for decline in market value of inventory (gain from price recovery) 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 disposal of investments Changes in operating assets and liabilities Changes in operating assets 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

For the six-month periods ended June30, Notes 2017 2016 $ 26,410,276 $ 25,448,269 6(9)(24) 7,284,029 8,199,968 6(24) 1,386,479 1,839,914 6(2)(11)(22) ( 2,303 ) ( 1,774 ) 6(6) 145,401 ( 317,480 ) 6(7)(22) - 207,066 6(23) 1,203,078 995,756 6(21) ( 275,433 ) ( 176,774 ) 6(21) ( 2,793,585 ) ( 5,395 ) ( 8,316,700 ) ( 8,961,721 ) 6(22) ( 788,868 ) ( 3,432 ) 6(22) ( 34,876 ) ( 34,951 ) ( 4,547,653 ) ( 723,713 ) 8,083 ( 2,699 ) 1,671,964 ( 1,063,909 ) 666,172 ( 55,573 ) ( 1,589,626 ) 936,833 4,565,419 3,051,976 ( 2,379,679 ) ( 1,000,015 ) ( 225,298 ) 363,556 3,657 9,808 ( 101,567 ) 940,515 ( 2,108,168 ) ( 488,776 ) 1,192,650 ( 147,222 ) ( 351,483 ) 138,678 ( 449,119 ) ( 2,021,634 ) 20,572,850 27,127,271 282,543 147,049 ( 1,065,017 ) ( 875,578 ) ( 4,055,688 ) ( 3,180,582 ) 488,589 1,850,978 16,223,277 25,069,138

(Continued)

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

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

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

For the six-month periods ended June30, Notes 2017 2016 $ 11,453,219 ($ 1,913,674 ) ( 461,503 ) ( 5,478,021 ) - 77,796 ( 2,000 ) - - 10,704 65,878 - ( 1,683,440 ) ( 85,000 ) - 8,790 6(28) ( 4,783,693 ) ( 5,752,342 ) 875,004 16,425 ( 176 ) ( 243 ) ( 4,991,823 ) ( 1,563,832 ) 471,466 ( 14,679,397 ) 1,501,257 38,394 780,260 50,107 ( 26,378 ) ( 2,338,509 ) 5,624,778 8,452,698 ( 8,039,280 ) ( 12,393,764 ) 134,190 18,506 ( 12,380 ) ( 925 ) ( 1,524,030 ) - ( 1,561,583 ) ( 6,173,493 ) ( 353,646 ) ( 422,492 ) 14,779,514 3,793,756 30,391,911 34,744,139 $ 45,171,425 $ 38,537,895

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

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FORMOSA CHEMICALS & FIBRE CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

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

1. HISTORY AND ORGANIZATION

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 AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on August 4, 2017.

1. 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:

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New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Investment entities: applying the consolidation exception (amendments to IFRS 10, IFRS 12 and IAS 28)	January 1, 2016
Accounting for acquisition of interests in joint operations (amendments to IFRS 11)	January 1, 2016
IFRS 14,‘Regulatorydeferral accounts’	January1,2016
Disclosure initiative(amendments to IAS 1)	January1,2016
Clarification of acceptable methods of depreciation and amortisation (amendments to IAS 16 and IAS 38)	January 1, 2016
Agriculture: bearerplants(amendments to IAS 16 and IAS 41)	January1,2016
Defined benefit plans: employee contributions (amendments to IAS 19R)	July 1, 2014
Equitymethod in separate financial statements(amendments to IAS 27)	January1,2016
Recoverable amount disclosures for non-financial assets (amendments to IAS 36)	January 1, 2014
Novation of derivatives and continuation of hedge accounting (amendments to IAS 39)	January 1, 2014
IFRIC 21,‘Levies’	January1,2014
Improvements to IFRSs 2010-2012	July1,2014
Improvements to IFRSs 2011-2013	July1,2014
Improvements to IFRSs 2012-2014	January1,2016

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:

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New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Classification and measurement of share-based payment transactions (amendmentsto IFRS 2)	January 1, 2018
Applying IFRS 9, ‘Financial instruments’with IFRS 4, ‘Insurance contracts’(amendments to IFRS 4)	January 1, 2018
IFRS 9,‘Financial instruments’	January1,2018
IFRS 15,‘Revenue from contracts with customers’	January1,2018
Clarifications to IFRS 15, ‘Revenue from contracts with customers’ (amendments to IFRS 15)	January 1, 2018
Disclosure initiative(amendments to IAS 7)	January1,2017
Recognition of deferred tax assets for unrealised losses (amendments to IAS 12)	January 1, 2017
Transfers of investmentproperty (amendments to IAS 40)	January1,2018
IFRIC 22,‘Foreign currencytransactions and advance consideration’	January1,2018
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

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.IFRS 9, ‘Financial instruments’

• (a) 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)The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected

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credit losses for trade receivables that do not contain a significant financing component.

• (c)The amended general hedge accounting requirements align hedge accounting more closely with an entity’s risk management strategy. Risk components of non-financial items and a group of items can be designated as hedged items. The standard relaxes the requirements for hedge effectiveness, removing the 80-125% bright line, and introduces the concept of ‘rebalancing’; while its risk management objective remains unchanged, an entity shall rebalance the hedged item or the hedging instrument for the purpose of maintaining the hedge ratio.

• 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 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 licence 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.

• 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

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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.

(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:

IFRSs issued by IASB but not yet endorsed by the FSC New standards, interpretations and amendments issued by IASB but not endorsed by the FSC are as follows:	yet included in the IFRSs
New Standards, Interpretations and Amendments	Effective Date by International Accounting Standards Board
Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)	To be determined by International Accounting Standards Board
IFRS 16, 'Leases'	January1, 2019
IFRS 17, 'Insurance contracts'	January1, 2021
IFRIC 23, 'Uncertaintyover income tax treatments'	January1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. 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 recognized 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 recognized;

• (b) If sales or contributions of assets do not constitute a ‘business’, the partial gain or loss is recognized 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

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by lessors.

• C. IFRIC 23, ‘Uncertainty over income tax treatments’

• This Interpretation clarifies when there is uncertainty over income tax treatments, an entity shall recognize 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 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 recognized based on the net amount of pension fund assets plus unrecognized past service cost and unrecognized actuarial losses, and less unrecognized 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 judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment 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 unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been

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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 recognized directly in equity.

• (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

• 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 and finishing, and manufacturing synthetic fibre and rug and carpet The Company FCFC Investment Corp. (Cayman) Investing The Company FCFC International Limited (Cayman) Investing		Ownership (%)	June30,2016 Description 100.00 The Company holds more than 50% of voting rights. (Note l) 100.00 The Company holds more than 50% of voting rights. 100.00 The Company holds more than 50% of voting rights. (Note l)	Description
	June30,2017 100.00 100.00 100.00	December31,2016 100.00 100.00 100.00

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Name of Name of Main business investor subsidiary activities June30,2017 December31,2016 FCFC Investment Corp. (Cayman) Formosa Power (Ningbo) Co., Ltd. Cogeneration power generation business 100.00 100.00 FCFC Investment Corp. (Cayman) Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Investing 100.00 100.00 Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd. Sale of Acrylonitrile Butadiene Styrene (ABS) 100.00 100.00 Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa Phenol (Ningbo) Co., Ltd. Manufacturing Acetone and Synthetic Phenolic 100.00 100.00 Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa PS (Ningbo) Co., Ltd. Production and marketing of Polystyrene 100.00 100.00 Formosa Chemicals & Fibre (Hong Kong) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Production and marketing of PTA 100.00 100.00 The Company Formosa Biomedical Technology Corp. Manufacturing and sale of cleaner and cosmetics 88.59 88.59 Formosa Biomedical Technology Corp. Hong Jing Resources Corp. Removal and disposal of waste 51.00 51.00 Formosa Biomedical Technology Corp. Formosa Biomedical Technology (SAMOA) Co., Ltd. Investment 100.00 100.00 Ownership (%)

June30,2016 Description 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Cayman) 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Cayman) 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) 100.00 The company holds more than 50% of voting rights through wholly-owned company - FCFC Investment Corp. (Hong Kong) 88.59 The Company holds more than 50% of voting rights. (Note l) 51.00 The Company holds more than 50% of voting rights through a 88.59% of voting rights owned company - Formosa Biochemical Technology Corp. (Note 1) 100.00 Formosa Biochemical Technology holds more than 50% of voting rights. (Note 1)

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Name of Name of Main business investor subsidiary activities Formosa Biomedical Technology (SAMOA) Co., Ltd. Formosa Biomedical Trading (Shanghai) Co., Ltd. Importing, exporting amd whosale of heatlhy food The Company Ta Shin Spining Corp. Spinning The Company Formosa Idemitsu Petrochemical Corp. Whosale and retail of petrochemical and plastic raw materials The Company Formosa BP Chemicals Corp. Chemistry, international trade of petrochemistry The Company Formosa Industried Corp. 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		December31,2016 June30,2016 Description 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 (Note 1) 86.40 86.40 The Company holds more than 50% of voting rights. (Note l) 50.00 50.00 The Company has substantial control and thus regards Formosa Idemitsu Petrochemical Corp. as a subsidiary. (Note 1) 50.00 50.00 The Company has substantial control and thus regards Formosa BP Chemicals Corp. as a subsidiary. (Note 1) 42.50 42.50 The Company has substantial control and thus regards Formosa Industries Corp. as a subsidiary. (Note 1) 37.40 37.40 The Company has substantial control and thus regards Formosa Taffeta Corp. as a subsidiary. (Note 1) 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. (Note l) Ownership (%)	Description
	June30,2017 100.00 86.40 50.00 50.00 42.50 37.40 65.68 100.00

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Name of Name of Main business investor subsidiary activities 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 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		Ownership (%)	June30,2016 Description 100.00 The Company and Formosa Taffeta Co., Ltd. hold more than 50% of voting rights. (Note l) 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. (Note l) 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. (Note l) 43.00 Formosa Taffeta Co., Ltd. has substantial control and thus regards Schoeller F.T.C. (Hong Kong) Co., Ltd. as a subsidiary. (Note l) 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. (Note l) 100.00 Formosa Taffeta Co., Ltd. holds more than 50% of voting rights. (Note l)	Description
	June30,2017 100.00 100.00 100.00 43.00 100.00 100.00	December31,2016 100.00 100.00 100.00 43.00 100.00 100.00

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Name of Name of Main business investor subsidiary activities 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		December31,2016 June30,2016 Description 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. (Note l) - - Formosa Taffeta Co., Ltd. holds more than 50% of voting rights through a 100% owned company - Formosa Development Co., Ltd. (Note l) Ownership (%)	Description
	June30,2017 100.00 100.00 100.00

Note 1: The financial statements of the entity as of and for the six-month periods ended June 30, 2017 and 2016 were not reviewed by the independent auditors as the entity did not meet the definition of significant subsidiary.

• 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 June 30, 2017, December 31, 2016 and June 30, 2016, the non-controlling interest amounted to $55,905,925, $59,649,846 and $52,668,479, respectively. The information of non-controlling interest and respective subsidiary is as follows:

Name of subsidiary	Principal place of business Taiwan		Ownership (%) Amount Ownership (%) 62.60 $41,591,321 62.60 Non-controllinginterest 2017 December31,2016	Ownership (%) Amount Ownership (%) 62.60 $41,591,321 62.60 Non-controllinginterest 2017 December31,2016	Description -
		June30,	Ownership (%) 62.60 2017
		Amount $ 39,992,062		Amount $41,591,321
Formosa Taffeta Co., Ltd.

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Non-controlling interest

		inginterest
		June30,	Ownership (%) 62.60 2016 Co.,Ltd.		Description -
	June30,2017 December31,2016 27,223,257 $ 23,210,986 $ 65,722,666 68,819,110 12,948,819 9,293,527 12,357,101 12,456,669 67,640,003 $ 70,279,900 $			June30,2016 23,428,651 $ 59,958,837 12,247,696 13,296,064 57,843,728 $

Statements of comprehensive income

Formosa Taffeta Co., Ltd.

Revenue Profit before income tax Income tax expense Profit for the period Other comprehensive loss, net of tax Total comprehensive income (loss) for the period Comprehensive income attributable to non-controlling interest		Three-month period ended June 30,2017		Three-month period ended June 30,2016
	10,845,893 $ 2,964,040 198,652) ( 2,765,388 144,322) ( 2,621,066 $ 143,918 $		10,363,144 $ 695,529 186,816) ( 508,713 1,958,428) ( 1,449,715) ($ 72,365 $

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Formosa Taffeta Co., Ltd.

Revenue Profit before income tax Income tax expense Profit for the period Other comprehensive (loss) income, net of tax Total comprehensive income for the period Comprehensive income attributable to non-controlling interest		Six-month period ended June 30,2017		Six-month period ended June 30,2016
	21,100,166 $ 3,598,624 323,882) ( 3,274,742 3,089,496) ( 185,246 $ 218,245 $		20,792,739 $ 1,645,652 406,785) ( 1,238,867 2,860,331 4,099,198 $ 189,564 $

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 in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period
		Six-month period ended June 30,2017
	1,239,080 $ 1,763,541) ( 923,501 121,214) ( 277,826 5,653,854 5,931,680 $		2,733,402 $ 1,702,063) ( 434,315) ( 30,205 627,229 5,640,597 6,267,826 $

(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 “functiona l 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

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recognized in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, 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 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 recognized 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, if 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 realized, or are intended to be sold or consumed within the normal operating cycle;

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realized within twelve months from the balance sheet date;

• (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to

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be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (a) Liabilities that are expected to be paid off within the normal operating cycle;

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be paid off 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 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 recognized and derecognized using trade date accounting.

• C. Financial assets at fair value through profit or loss are initially recognized 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 recognized 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

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not classified in any of the other categories.

• B. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.

• C. Available-for-sale financial assets are initially recognized 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 recognized 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 recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts 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;

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• (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 amortized 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 recognized 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 recognized, the previously recognized 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 recognized previously. Impairment loss is recognized and reversed 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 recognized in profit or loss. Impairment loss recognized for this category shall not be reversed subsequently. Impairment loss is recognized 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 recognized 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 recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized 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 derecognizes a financial asset when one of the following conditions is met:

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the

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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 realizable 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 realizable value. Net realizable 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 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 recognized at cost.

• B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• C. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

• D. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for 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 recognized in other comprehensive income in relation to the associate are reclassified to profit

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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 recognized in profit or loss.

• G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognized 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 capitalized.

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each 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

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Transportation equipment 3 ~ 15 years Other equipment 2 ~ 15 years

(15) Intangible assets

Computer software is stated at cost and amortized 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 recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

(17) Borrowings

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

(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 recognized initially at fair value and subsequently measured at amortized 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 derecognized when the obligation under the liability specified in the contract

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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 recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(22) Derivative financial instruments

Derivatives are initially recognized 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 recognized 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 recognized as expenses in that period when the employees render service.

• B. Pensions

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expenses 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 recognized 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 recognized in other comprehensive income in the period in which they arise and are recorded as other equity.

• iii.Past service costs are recognized immediately in profit or loss.

• iv. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed

~31~

accordingly.

• C. Employees’, directors’ and supervisors’ remuneration

• Employees’ remuneration and directors’ and supervisors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(24) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 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.

• C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred 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 realized or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred 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 recognized amounts and there is an intention to settle on a net basis or realize 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

~32~

• levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

• F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

• G. The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

(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 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 recognized 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 recognized. 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

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chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates 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 utilized and industrial characteristics. 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 recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. 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.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents Time deposits Bonds repurchased and commercial paper	June 30,2017 December31,2016 76,459 $ 104,883 $ 6,554,774 8,374,036 23,317,599 14,186,540 15,222,593 7,726,452 45,171,425 $ 30,391,911 $	June 30,2016
		299,771 $ 9,710,806 23,566,848 4,960,470
		38,537,895 $

• A. The Group associates 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.

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

Items Current items: Financial assets at fair value through profit or loss Beneficiary certificate Non-hedging derivatives Valuation adjustments of financial assets at fair value through profit or loss	June30,2017 December31,2016 $ 619,504 $ 619,504 775 66 620,279 619,570 9,158 8,051 629,437 $ 627,621 $	June30,2016
		$ 619,504 268
		619,772 7,154
		626,926 $

• A. The Group recognized gain on valuation of financial assets at fair value through profit or loss amounting to $671, $275, $1,816 and $1,486 for the three-month and six-month periods ended June 30, 2017 and 2016, respectively.

• B. The non-hedging derivative instruments transaction and contract information are as follows:

~35~

June 30, 2017 December 31, 2016 Contract Amount Contract Amount (Notional (Notional Derivative Principal) Principal) Instruments (in thousands) Contract Period (in thousands) Contract Period Current items: Forward exchange contracts: Apr. 2017 - Taipei Fubon - - JPY 226,470 Sep. 2017 Dec. 2016 - CHB - - USD 1,000 Feb. 2017 June 30, 2016 Contract Amount (Notional Derivative Principal) Instruments (in thousands) Contract Period Current items: Forward exchange contracts: Jun. 2016 - CHB USD 2,000 Jul. 2016

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

			June30,2017	December31,2016	December31,2016			June30,2016
Current items:
Listed (TSE and OTC) stocks		$	26,119,856	$	25,658,353		$	25,793,601
Unlisted stocks			825,839		825,839			825,839
Fund			4,903,800		4,903,800			4,903,800
Valuation adjustments of
available-for-sale financial
assets			77,572,533		71,681,703			57,163,239
			109,422,028		103,069,695			88,686,479
Less: Accumulated impairment	(		2,291,703)	(	2,291,703)	(		2,291,703)
		$	107,130,325	$	100,777,992		$	86,394,776
Non-current items:
Listed (TSE and OTC) stocks		$	9,418,267	$	9,418,267		$	9,418,267
Valuation adjustments of
available-for-sale financial
assets			33,217,243		35,576,112			26,355,943
			42,635,510		44,994,379			35,774,210
Less: Accumulated impairment	(		2,613,085)	(	2,613,085)	(		2,613,085)
		$	40,022,425	$	42,381,294		$	33,161,125

• A. 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.

• B. The Group recognized $2,786,877 and $0 as dividend income from available-for-sale financial assets for the six-month periods ended June 30, 2017 and 2016, respectively.

• C. As of June 30, 2017, December 31, 2016 and June 30, 2016, no financial assets measured at cost held by the Group were pledged to others.

(4) Notes receivable, net

Notes receivable, net
Notes receivable Less: allowance for bad debts	June 30,2017 11,585,404 $ - 11,585,404 $	December31,2016 7,037,751 $ - 7,037,751 $	June 30,2016
			7,305,622 $ -
			7,305,622 $

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(5) Accounts receivable, net

			June30,2017		December31,2016	December31,2016			June30,2016
Accounts receivable		$	16,629,807		$	18,303,379		$	16,025,102
Less: allowance for bad debts	(		272,796)	(		274,404)	(		278,889)
		$	16,357,011		$	18,028,975		$	15,746,213

• 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 181 days	June 30,2017 302,800 $ 90,728 5,976 7,205 406,709 $	December31,2016 332,950 $ 72,739 26,408 4,816 436,913 $	June 30,2016
			303,184 $ 82,413 6,292 5,401
			397,290 $

The above ageing analysis was based on past due date.

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

Six-month period ended June 30, 2017

0 At January 1 Write-off Effect of exchange rate At June 30 0 At January 1 Write-off Effect of exchange rate At June 30	Individualprovision Group provision Total 156,022 $ 118,382 $ 274,404 $ - 228) ( 228) ( - 1,380) ( 1,380) ( 156,022 $ 116,774 $ 272,796 $ Individualprovision Group provision Total 156,022 $ 124,330 $ 280,352 $ - 127) ( 127) ( - 1,336) ( 1,336) ( 156,022 $ 122,867 $ 278,889 $ Six-monthperiod ended June 30,2016

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

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(6) Inventories

Inventories
Raw materials Materials Work in process Finished goods Other inventory Raw materials Materials Work in process Finished goods Other inventory Raw materials Materials Work in process Finished goods Other inventory		June 30,2017
	Allowance for Cost valuation loss 12,341,954 $ 138,885) ($ 5,955,656 568,015) ( 6,994,294 13,760) ( 13,518,800 779,846) ( 133,519 - $ 38,944,223 ($1,500,506) December31,2016		Bookvalue
			12,203,069 $ 5,387,641 6,980,534 12,738,954 133,519
			$ 37,443,717
	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) June 30,2016		Bookvalue
			17,542,558 $ 5,143,280 6,352,699 13,075,406 101,337
			$42,215,280
	Allowance for Cost valuation loss 11,807,922 $ 92,081) ($ 5,541,483 4,694) ( 6,278,723 26,255) ( 14,078,579 418,649) ( 173,102 - 37,879,809 $ 541,679) ($		Bookvalue
			11,715,841 $ 5,536,789 6,252,468 13,659,930 173,102
			$ 37,338,130

A. Expense and loss incurred on inventories for the three-month periods and six-month periods ended June 30, 2017 and 2016 were as follows:

~39~

Cost of inventories sold Loss (gain) on inventory valuation (Note) Idle capacity Others	2017 2016 73,016,308 $ 66,449,765 $ 106,955 67,867) ( 813,491 254,097 39,969 22,500) ( 73,976,723 $ 66,613,495 $ Forthe three-monthperiods ended June 30,

Cost of inventories sold Loss (gain) on inventory valuation (Note) Idle capacity Others	2017 2016 146,695,196 $ 131,755,402 $ 145,401 317,480) ( 1,118,003 395,437 150,569 10,736) ( 148,109,169 $ 131,822,623 $ Forthe six-monthperiods ended June 30,

Note: The gain from price recovery for the three-month period and six-month period ended June 30, 2016 resulted from the disposal of inventory which were previously provided with allowance. As the market value of petroleum related products decreased for the three-month and six-month periods ended June 30, 2017, the Group recognized related allowance for inventory valuation loss after assessment.

B. As of June 30, 2017 and 2016, inventories pledged are described in Note 8.

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(7) Financial assets measured at cost

Items		June 30,2017	December31,2016	December31,2016		June 30,2016
Mai Liao Harbor Administration Corp.	$	539,260	$	539,260	$	539,260
Formosa Plastic Corp. U.S.A		818,316		818,316		818,316
Taiwan Stock Exchange Corp.		1,800		1,800		1,800
Taiwan Aerospace Corp.		10,702		10,702		10,702
Yi-Jih Development Corp.		3,000		3,000		3,000
Chinese Television System Corp.		38,419		38,419		38,419
Formosa Automobile Corp.		1,750		1,750		1,750
Formosa Development Corp.		90,010		90,010		90,010
Formosa Technologies Corp.		15,848		15,848		16,058
Formosa Plastics Marine Corp.		15,000		15,000		15,000
Formosa Ocean Group Marine Investment Corp.		856,948		856,948		856,948
Guangyuan Investment Corp.		50,000		50,000		50,000
Benjhou Technologies Corp.		2,000		-		-
Taiwan Leader Biotech Corp.		21,033		21,033		21,033
Toa Resin Corp., Ltd.		3,000		3,000		3,000
Shin Yun Natural Gas Corp.		3,100		3,100		3,100
Wk Technology Fund IV Ltd.		23,812		23,812		23,813
Syntronix Corporation		4,417		4,417		4,417
United Performance Materials Corp.		8,400		8,400		8,400
Association of R.O.C. in Xiamen		135		141		146
Nan Ya Photonics Inc.		294,583		294,583		294,583
United Biopharma, Inc.		613,436		635,828		635,828
Formosa Lithium Iron Oxide Corp.		53,000		53,000		53,000
Mega Growth Venture Capital Co.,Ltd.		25,000		25,000		25,000
Formosa Ha Tinh (Cayman) Limited		19,264,111		20,449,290		20,453,792
UBI Pharma Inc.		667,607		676,215		-
		23,424,687		24,638,872		23,967,375
Less: Accumulated impairment	(	207,066)	(	207,066)	(	207,066)
	$	23,217,621	$	24,431,806	$	23,760,309

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• 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 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 recognized $6,708 and $5,395 as dividend income from investment in financial assets measured at cost for the six-month periods ended June 30, 2017 and 2016, respectively.

• C. As the value of the stocks mentioned above was impaired, the Group recognized impairment loss of $207,066 from April 1, 2016 till December 31, 2016.

• D. As of June 30, 2017, December 31, 2016 and June 30, 2016, no financial assets measured at cost held by the Group were pledged to others.

(8) 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. Beyoung International Corp. Ubi Pharma Inc. Kuang Yueh Co., Ltd. Changshu Yu Yuan Co., Ltd.	June 30,2017 December31,2016 7,635,057 $ 7,644,268 $ 95,674 101,719 754,080 750,304 69,455,793 74,173,344 10,724,546 10,936,483 1,826 1,776 254,271 261,922 269,453 251,008 253,843 255,716 294,605 315,764 1,069,169 1,212,400 5,593,661 4,159,625 222,116 549,598 89,904 91,895 93,207 94,389 - - 1,139,580 1,175,070 59,459 59,856 $ 98,006,244 $102,035,137	June 30,2016
		7,905,850 $ 77,313 757,096 72,034,035 10,518,419 1,929 255,455 237,292 259,008 360,237 285,700 4,230,439 275,069 93,881 92,843 613,585 818,952 28,216
		$ 98,845,319

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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 ofbusiness	June 30, 2017	December 31,2016	June 30, 2016	Nature of relationship	Method of measurement
Formosa Petrochemical Corp.	Taiwan	24.15%	24.15%	24.15%	Investments accounted for using equity method	Equity method

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

Balance sheets

below: Balance sheets
			Formosa		PetrochemicalCorp.
.			June 30,2017	December31,2016			June 30,2016
Current assets		$	271,609,342	$	281,610,398	$	265,461,324
Non-current assets			165,779,066		168,006,910		181,648,315
Current liabilities	(		120,976,737)	(	67,458,120)	(	100,612,572)
Non-current liabilities	(		27,675,953)	(	73,094,405)	(	84,054,327)
Total net assets		$	288,735,718	$	309,064,783	$	262,442,740
Share in associate's net assets		$	69,729,676	$	74,639,145	$	63,371,115
Dividends receivable			-		-		9,202,077
Unrealised profit from sale of
upstream transactions eliminations	(		163,164)	(	355,082)	(	428,437)
Net differences in share catiptal	(		110,719)	(	110,719)	(	110,720)
Carrying amount of the associate		$	69,455,793	$	74,173,344	$	72,034,035

Statements of comprehensive income

Statements of comprehensive income Carrying amount of the associate 6 $	9	,455,793 74,173,344 $ 72,034,035 $	,455,793 74,173,344 $ 72,034,035 $
Revenue Profit for the period from continuing operations Other comprehensive income (loss), net of tax Total comprehensive income		Three-month period ended June 30,2017 Three-month period ended June 30,2016 138,502,156 $ 140,951,994 $ 12,053,970 $ 25,833,989 $ 3,444,324 1,718,721) ( 15,498,294 $ 24,115,268 $ FormosaPetrochemicalCorp.
		Three-month period ended June 30,2017
		138,502,156 $ 12,053,970 $ 3,444,324 15,498,294 $	140,951,994 $ 25,833,989 $ 1,718,721) ( 24,115,268 $

~43~

Formosa Petrochemical Corp.

Revenue Profit for the period from continuing operations Other comprehensive income (loss), net of tax Total comprehensive income		Six-month period ended June 30,2017		Six-month period ended June 30,2016
		302,494,912 $ 34,669,920 $ 2,156,773 36,826,693 $	265,423,672 $ 36,281,649 $ 2,458,784) ( 33,822,865 $

• (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 June 30, 2017, December 31, 2016 and June 30, 2016, the carrying amount of the Group’s individually immaterial associates amounted to $28,550,451, $27,861,793 and $26,811,284, respectively.

Profit for the period from continuing operations Other comprehensive income (loss), net of tax Total comprehensive income (Loss) profit for the period from continuing operations Other comprehensive loss-net of tax Total comprehensive (loss) income		Three-month period endedJune30,2017	Three-month period endedJune30,2016
		1,181,781 $ 222,505 1,404,286 $ Six-month period ended June 30,2017	1,926,964 $ 102,250) ( 1,824,714 $ Six-month period ended June 30,2016
	720,390) ($ 1,021,254) ( 1,741,644) ($		2,755,680 $ 644,585) ( 2,111,095 $

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

June 30, 2017 December 31, 2016 June 30, 2016 Formosa Petrochemical Corp. $ 244,866,059 $ 260,367,309 $ 201,319,983

• B. Except for the financial statements of Formosa Petrochemical Corp. and Mai Liao Power Corp., which were reviewed by the Company’s appointed independent accountants, the financial statements of other investees accounted for using equity method for the six-month periods ended June 30, 2017 and 2016 were not reviewed.

• 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

~44~

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 recognized. 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, 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 June 30, 2017, the shareholding ratio was 18.99%.

• E. As of June 30, 2017 and 2016, parts of equity investments pledged to banks are described in Note 8.

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(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		-		3,033		114,914		78,046		4,426,657		4,622,650
Disposals	(	43,196)	(	1,837)	(	37,806)	(	3,297)		-	(	86,136)
Reclassifications		108		1,982,315		5,867,630		98,503	(	7,887,815)		60,741
Depreciation
charge	(	144)	(	734,969)	(	6,309,283)	(	239,633)		-	(	7,284,029)
Net exchange
difference	(	76)	(	562,571)	(	1,791,713)	(	29,623)	(	438,478)	(	2,822,461)
Closing net
book amount	$	8,566,268	$	22,891,283	$	81,553,518	$	2,184,641	$	10,208,515	$	125,404,225
At June 30, 2017
Cost	$	8,736,233	$	45,967,130	$	295,448,147	$	14,689,874	$	10,208,515	$	375,049,899
Accumulated
depreciation
and impairment	(	169,965)	(	23,075,847)	(	213,894,629)	(	12,505,233)		-	(	249,645,674)
	$	8,566,268	$	22,891,283	$	81,553,518	$	2,184,641	$	10,208,515	$	125,404,225

~46~

									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		-		14,465		169,019		70,143		4,618,876		4,872,503
Disposals		-	(	2,333)	(	5,725)	(	4,935)		-	(	12,993)
Reclassifications		465		691,971		9,445,476		124,389	(	10,332,889)	(	70,588)
Depreciation
charge	(	162)	(	728,724)	(	7,207,872)	(	263,210)		-	(	8,199,968)
Net exchange
difference	(	114)	(	451,285)	(	1,670,402)	(	22,425)	(	265,861)	(	2,410,087)
Closing net
book amount	$	8,605,547	$	22,701,099	$	89,050,874	$	2,366,033	$	15,819,073	$	138,542,626
At June 30, 2016
Cost	$	8,776,317	$	44,706,532	$	294,078,824	$	14,733,966	$	15,819,073	$	378,114,712
Accumulated
depreciation
and impairment	(	170,770)	(	22,005,433)	(	205,027,950)	(	12,367,933)		-	(	239,572,086)
	$	8,605,547	$	22,701,099	$	89,050,874	$	2,366,033	$	15,819,073	$	138,542,626

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

Amount capitalized Interest rate	Forthe three-monthperiods ended June 30,	Forthe three-monthperiods ended June 30,
	2017 $22,071 1.01%~2.62%	2016 $ 39,018
		1.11%~2.06%

For the six-month periods ended June 30,

Amount capitalized Interest rate	2017 $40,211 1.01%~2.62%	2016 $ 90,405
		1.11%~2.06%

• B. Under regulations, land may only be owned by individuals. Thus, the Group has already obtained

~47~

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 June 30, 2017, the pledged amount was $822,993; as of December 31, 2016 and June 30, 2016, the pledged amount was $824,537.

• C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

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

provided in Note 8. Short-term loans and short-term notes and bills payable
Type of loans June 30,2017 OA loans $ 8,948 Secured loans 3,006,986 Unsecured loans 24,632,073 Total short-term loans $27,648,007 Short-term notes and bills payable $ 2,280,000 Short-term notes and bills payable discount ( 276) Net short-term notes and bills payable $2,279,724 Type of loans December31,2016 OA loans $ 20,162 Secured loans 2,969,220 Unsecured loans 23,157,368 Total short-term loans $26,146,750 Short-term notes and bills payable $ 1,500,000 Short-term notes and bills payable discount (536) Net short-term notes and bills payable $1,499,464 Type of loans June 30,2016 OA loans $ 5,145 Secured loans 3,282,526 Unsecured loans 23,423,371 Total short-term loans $26,711,042 Short-term notes and bills payable $ 2,100,000 Short-term notes and bills payable discount (529) Net short-term notes and bills payable $2,099,471	Interestraterange 0.34%~2.09% 1.40%~2.50% 0.69%~4.60% 0.60%~0.84% Interestraterange 0.32%~1.95% 1.40%~2.33% 0.87%~4.13% 0.43%~0.96% Interestraterange 0.36%~1.53% 1.43% 0.69%~4.60% 0.50%~0.90%	Collateral
		None Note 8 None None Collateral
		None Note 8 None None Collateral
		None Note 8 None None

~48~

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

Items Current items: Non-hedging derivatives	June 30,2017 894 $	December31,2016 1,381 $	June 30,2016
			531 $

• A. The Group recognized net gain (loss) on valuation of financial liabilities at fair value through profit or loss amounting to ($661), $640, $487 and $288 for the three-month and six-month periods ended June 30, 2017 and 2016, respectively.

• B. The non-hedging derivative instruments transaction and contract information are as follows:

Derivative Financial Liabilities Current items: Forward foreign exchange contracts CHB Taipei Fubon Taipei Fubon Derivative Financial Liabilities Current items: Forward foreign exchange contracts Taipei Fubon	Contract Amount (Notional Principal) (In thousand dollars) Contract Period JYP 3,000 May. 2017 ~ Aug. 2017 USD 1,741 Mar. 2017 ~ Aug. 2017 JYP 40,460 Mar. 2017 ~ Sep. 2017 June30,2017	December31,2016	December31,2016
	Contract Amount (Notional Principal) (In thousand dollars) JYP 3,000 USD 1,741 JYP 40,460	Contract Amount (Notional Principal) (In thousand dollars) Contract Period USD 5,000 Nov. 2016 ~ Feb. 2017 June30,2016	Contract Period
		Contract Amount (Notional Principal) (In thousand dollars) JYP 103,020	Contract Period
			Jun. 2016 ~ Jul. 2016

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.

~49~

(12) Other payables

Other payables
			June 30,2017	December31,2016				June 30,2016
Dividend payable		$	35,803,060	$	45,694		$	22,448,716
Wages payable			2,058,376		2,876,871			2,101,497
Accrued interest payable			711,196		573,135			731,830
Payables for construction project			637,173		721,574			606,088
Utilities payable			411,190		222,070			427,801
Freight payable			294,836		124,515			201,150
Others			5,404,004		3,823,193			4,343,584
		$	45,319,835	$	8,387,052		$	30,860,666
Bonds payable
			June 30,2017	December31,2016				June 30,2016
Bonds payable
Domestic unsecured nonconvertible		$	46,500,000	$	46,500,000		$	53,000,000
corporate bonds
Less: current portion	(		6,750,000)	(	6,750,000)	(		6,500,000)
		$	39,750,000	$	39,750,000		$	46,500,000

(13) Bonds payable

The terms of nonconvertible corporate bonds were as follows:

~50~

Description Second issued domestic unsecured nonconvertible corporate bonds 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 2011 2012	Issuance date 2011.10.31 2012.7.26 2012.7.26 2012.12.7 2012.12.7 2012.12.7 2013.1.22 2013.1.22	Maturity date 2015.10.31~ 2016.10.31 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(%) 1.38 1.29 1.40 1.23 1.36 1.51 1.34 1.50	Issued principal amount $ 4,000,000 6,000,000 3,000,000 3,000,000 3,900,000 4,100,000 2,800,000 2,200,000	June30,2017 December31,2016 $ - $ - 3,000,000 3,000,000 3,000,000 3,000,000 1,500,000 1,500,000 3,900,000 3,900,000 4,100,000 4,100,000 2,800,000 2,800,000 2,200,000 2,200,000	June30,2016 Note $ 2,000,000 Serial bonds, to be settled 50%, 50% 6,000,000 Serial bonds, to be settled 50%, 50% 3,000,000 Serial bonds, to be settled 50%, 50% 3,000,000 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

~51~

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-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 1.81 2.03	Issued principal amount June30,2017 December31,2016 June30,2016 Note $ 4,500,000 $ 4,500,000 $ 4,500,000 $ 4,500,000 Serial bonds, to be settled 50%, 50% 2,700,000 2,700,000 2,700,000 2,700,000 Serial bonds, to be settled 50%, 50% 2,800,000 2,800,000 2,800,000 2,800,000 Serial bonds, to be settled 50%, 50% 10,000,000 10,000,000 10,000,000 10,000,000 Serial bonds, to be settled 50%, 50% 1,400,000 1,400,000 1,400,000 1,400,000 Serial bonds, to be settled 50%, 50% 1,400,000 1,400,000 1,400,000 1,400,000 Serial bonds, to be settled 50%, 50% 4,600,000 4,600,000 4,600,000 4,600,000 Serial bonds, to be settled 50%, 50% 46,500,000 46,500,000 53,000,000 6,750,000) ( 6,750,000) ( 6,500,000) ( 39,750,000 $ 39,750,000 $ 46,500,000 $	Note

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- (14) Long term bank loans and notes payable

Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	June30,2017
Japanese Mitsubishi Bank Export-Import Bank of the ROC China Trust Bank Taipei Fubon Bank 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	1.05% 0.96% 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% 0.82%	None " " " "	$ 3,000,000 57,143 2,892,006 600,000 1,100,000

~53~

Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	June30,2017
Sumitomo Mitsui Banking Corporation Mega International Commercial Bank Mega International Commercial Bank Taiwan Cooperative Bank Taiwan Cooperative Bank	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 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	2.49%~2.59% TAIFX+0.80% 3 months 1 to 5 years (including 5 years) 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	None " " " "	$ 5,205,610 578,284 1,541,029 512,179 1,260,050

~54~

Borrowing

	Borrowing
Type of loans	period/repayment term	Interest rate range	Collateral	June30,2017
Taiwan Bank Taiwan Bank Taiwan Business Bank Hua Nan Bank Hua Nan Bank Sino Pac Bank O-BANK (Originally named Industrial Bank of Taiwan)	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 Feb. 3, 2017 ~ Feb. 3, 2020, ratio payable at maturity date Mar. 15, 2017 ~ Mar. 15, 2019, payable in full at maturity Jun. 16, 2017 ~ Jun. 16, 2019, payable in full at maturity Sep. 25, 2015 ~ Sep. 25, 2018, payable in full at maturity	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 LIBOR+1.35% 3 months 1.03% 1.05% 1.07%	None " " " " " "	$ 539,135 2,434,880 588,872 157,248 1,500,000 300,000 300,000

~55~

Borrowing period/repayment Interest term rate range First Commercial Bank Sep. 16, 2015 ~ Sep. 16, 2018, payable in full at maturity 0.99% First Commercial Bank Sep. 16, 2015 ~ Sep. 16, 2018, payable in full at maturity 1.04% Mizuho Corporate Bank Aug. 19, 2016 ~ Aug. 19, 2018, payable in full at maturity 1.06% E. Sun Bank Aug. 20, 2015 ~ Aug. 20, 2018, payable in full at maturity 1.04% China Trust Bank Sep. 23, 2016 ~ Sep. 23, 2018, payable in full at maturity 1.05% Land Bank of Taiwan May. 25, 2017 -Sep. 30, 2018, payable in full at maturity 1.05% KGI Bank Jun. 20, 2017 -Jun. 20, 2019, payable in full at maturity 1.04% Taipei Fubon Bank Jan. 11, 2017 -Jan. 11, 2019, payable in full at maturity 1.04% Bangkok Bank Dec. 2, 2016 ~ Dec. 1, 2018, payable in full at maturity 1.05% Type of loans

Collateral June30,2017 None 1,500,000 $ " 500,000 " 900,000 " 500,000 " 500,000 " 200,000 " 1,000,000 " 1,500,000 " 200,000

~56~

Type of loans	Borrowing period/repayment term	Interest rate range	Collateral June30,2017 None 700,000 $ " 1,500,000 Land 10,755,556 Endorsement and guarantees of Formosa Taffeta Co,. Ltd. 501,218 None 56,326 42,879,536 7,665,358) ( 35,214,178 $	June30,2017
		1.03% 1.03% 1.63% SIBOR 6 months +1.6% 0.86%~1.01%

~57~

Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	December31,2016
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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Borrowing

period/repayment Interest term rate range Mega International Commercial Bank Nov. 19, 2012 ~ Nov.17, 2017, principal payable semi-annually TAIFX+0.80% 3 months Mega International Commercial Bank Nov. 17, 2016 ~ Nov.17, 2021, principal payable semi-annually after 18 months 1 to 5 year (including 5 year) rate of CBC, 4.75% Taiwan Cooperative Bank Dec. 10, 2013 ~ Dec. 7, 2018, principal payable semi-annually 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) Taiwan Cooperative Bank Dec. 10, 2013 ~ Dec. 7, 2018, principal payable semi-annually TAIFX+0.75% 3 months Taiwan Bank Oct. 22, 2014 ~ Oct. 21, 2019, principal payable semi- annually after Oct. 22, 2017, interest payable quarterly 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) Taiwan Bank Oct. 24, 2014~Oct. 21, 2019, principal payable semi- annually after three years; interest payable quarterly LIBOR+1.4% 3 months Type of loans

Collateral December31,2016 None $ 1,226,602 " 991,124 " 707,281 " 1,781,801 " 558,380 " 2,582,320

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Borrowing

period/repayment Interest term rate range Taiwan Business Bank Jan.1, 2016~Jan.1, 2019, principal payable quarterly after 27 months LIBOR+1.1% 3 months Hua Nan Bank Mar. 15, 2016 ~ Mar. 15, 2018, payable in full at maturity 1.03% Sino Pac Bank May. 16, 2016 ~ May. 16, 2018, payable in full at maturity 1.05% Industrial Bank of Taiwan Sep. 25, 2015 ~ Sep. 25, 2018, payable in full at maturity 1.07% First Commercial Bank Sep. 16, 2015 ~ Sep. 16, 2018, payable in full at maturity 0.99% First Commercial Bank May. 16, 2016 ~ Sep. 16, 2018, payable in full at maturity 1.04% Mizuho Corporate Bank Aug. 19, 2015 ~ Aug. 19, 2017, payable in full at maturity 1.06% E. Sun Bank Aug. 20, 2015 ~ Aug. 20, 2018, payable in full at maturity 1.06% Type of loans

Collateral December31,2016 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	December31,2016
	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 December31,2016 None 57,574 $ 46,281,122 7,666,502) ( 38,614,620 $	December31,2016
		0.86%~1.01%

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Borrowing period/repayment Interest term rate range Japanese Mitsubishi Bank Mar. 29, 2013 ~ Mar. 29, 2016, payable at maturity date; interest payable monthly 1.00%~1.05% Export-Import Bank of the ROC Jul. 27, 2012 ~ Jul. 27, 2017, principal payable semi- annually 1.05%~1.12% China Trust Bank Aug. 24, 2015~Aug. 24, 2020, payable in full after Aug. 24, 2018 or payable in full at maturity with a two-year extension LIBOR+1.25% (if TAIFX is higher than LIBOR+0.35%, the difference between TAIFX and LIBOR+0.35% is payable by the borrower) Sumitomo Mitsui Banking Corporation 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 2.09%~2.18% Mega International Commercial Bank Nov. 19, 2012 ~ Nov.17, 2017, principal payable semi-annually TAIFX+0.80% 3 months Type of loans Long-term bank loans Unsecured loans

Collateral June30,2016 None $ 3,000,000 " 171,429 " 3,067,531 " 6,135,063 " 1,840,302

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	June30,2016
Taiwan Cooperative Bank Taiwan Cooperative Bank Taiwan Bank Taiwan Bank Taiwan Business Bank	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, 2017, principal payable semi- annually after three years; interest payable quarterly Jan.1, 2016~Jan.1, 2019, principal payable quarterly after 27 months	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 LIBOR+1.10% 3 months	None " " " "	$ 925,072 2,227,734 584,256 2,582,880 624,666

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral	June30,2016
Hua Nan Bank Sino Pac Bank Industrial Bank of Taiwan First Commercial Bank First Commercial Bank Mizuho Corporate Bank E. Sun Bank China Trust Bank KGI Bank Taipei Fubon Bank	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. 20, 2015 ~ Aug. 20, 2017, payable in full at maturity Aug. 20, 2015 ~ Aug. 20, 2018, payable in full at maturity Sep. 25, 2015 ~ Sep. 25, 2017, payable in full at maturity Jun. 22, 2015 -Jun. 22, 2017, payable in full at maturity Jan. 11, 2016 -Jan. 11, 2018, payable in full at maturity	1.15% 1.22% 1.10% 1.06% 1.11% 1.08% 1.18% 1.18% 1.06% 1.07%	None " " " " " " " " "	$ 1,500,000 300,000 500,000 1,500,000 500,000 900,000 500,000 500,000 500,000 1,500,000

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Type of loans	Borrowing period/repayment term	Interest rate range	Collateral		June30,2016
		1.18% 1.15% 1.63% SIBOR 6 months +1.6% 0.86%~1.01%	None " Land Endorsement and guarantees of Formosa Taffeta Co,. Ltd. None	$ 200,000 1,500,000 12,100,000 605,413 97,843 43,862,189 4,855,077) ( 39,007,112 $

• 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

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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 $4,994,806.

• (15) 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.

  • (b) For the aforementioned pension plan, the Group recognized pension costs of $52,595, $79,101, $105,284 and $158,166 for the three-month and six-month periods ended June 30, 2017 and 2016, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2018 are $170,521.

• 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 for the three-month and six-month periods ended June 30, 2017 and 2016 was 10~20% and 14%, 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 threemonth and six-month periods ended June 30, 2017 and 2016 were $85,370, $67,842,

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$170,238 and $152,699, respectively.

(16) Capital stock

• A. As of June 30, 2017, the Company’s authorized 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 six-month periods ended June 30, 2017 and 2016 are set forth below:

Reason for reacquisition	Subsidiary	For the six-monthperiod endedJune	For the six-monthperiod endedJune	For the six-monthperiod endedJune	30,2017
		Beginning shares 11,219,610 7,316,000 18,535,610	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.		950,000 6,029,000 6,979,000		12,169,610 13,345,000 25,514,610

Reason for reacquisition	Subsidiary	For the six-monthperiod endedJune	For the six-monthperiod endedJune	For the six-monthperiod endedJune	30,2016
		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 $95.5 and $81(in dollars) per share at June 30, 2017 and 2016, respectively.

• D. The above treasury stocks of the parent company were purchased by subsidiaries.

(17) Capital surplus

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

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reserve is insufficient.

At January 1, 2017 Effect from disposal of net stockholding of associates recognised under the equity method At June 30, 2017 At January 1, 2016 Effect from net stockholding of associates recognised under the equity method At June 30, 2016		For the six-monthperiod ended June 30,2017	For the six-monthperiod ended June 30,2017	For the six-monthperiod ended June 30,2017	For the six-monthperiod ended June 30,2017
	Share premium	Conversion premium of corporate bonds		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 -			$ 9,447 -	$204,224 -
	$2,710,554					$204,224
	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 -	$ 298,338 ( 35,510) 262,828 $	$ 9,447 -	$204,224 -
	2,710,554 $	5,514,032 $	138,407 $		9,447 $	$204,224

(18) Retained earnings

• A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior years' operating losses 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 recognized under equity method and deferred income tax assets arising from unused investment tax credits which are deemed unrealized and transferred to special reserve. Such investment income and deferred income tax assets are reclassified to unappropriated earnings only when they are realized;

• (c)Net unrealized gains from financial instruments transactions. The special reserve for unrealized gains from financial instruments is reduced when the accumulated value of the

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unrealized 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 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 (in dollars) $ 4,383,305 4,639,539 32,822,643 $ 5.60 41,845,487 $ 2016	Dividends per share Amount (in dollars) $ 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. Information relating to employees’ bonuses and directors’ and supervisors’ remuneration is summarized in Note 6(25).

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(19) 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				-			4,962,857					-			4,962,857
–Associates				-			858,486					-			858,486
Cash flow hedges:
–Associates	(			25,561)				-				-	(		25,561)
Currency translation
differences:
–Group				-				-	(		2,613,839)		(		2,613,839)
–Tax of Group				-				-			399,853				399,853
–Associates				-				-	(		523,645)		(		523,645)
At June 30, 2017		$		17,613		$	96,754,990		($		1,749,007)			$	95,023,596
					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				-	(		818,562)					-	(		818,562)
–Associates				-	(		494,838)					-	(		494,838)
Cash flow hedges:
–Associates	(			31,604)				-				-	(		31,604)
Currency translation
differences:
–Group				-				-	(		2,175,870)		(		2,175,870)
–Tax of Group				-				-			320,566				320,566
–Associates				-				-	(		211,766)		(		211,766)
At June 30, 2016	$			37,969	$		71,302,148		$		2,582,450		$		73,922,567

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(20) Operating revenue

For the three-month periods ended June 30

Operating revenue	For the three-monthperiods endedJune30	periods endedJune30
Sales revenue Service revenue Other operating revenue Sales revenue Service revenue Other operating revenue	2017 2016 81,941,706 $ 81,097,149 $ 134,622 107,076 92,095 70,305 82,168,423 $ 81,274,530 $ Forthe six-monthperiods ended June 30	2016
		81,097,149 $ 107,076 70,305
		81,274,530 $
	2017 170,944,034 $ 276,287 207,633 171,427,954 $	2016
		156,669,409 $ 245,528 159,097
		157,074,034 $

(21) Other income

Rental revenue Interest income: Interest income from bank deposits Interest from current account with others Other interest income Dividend income Other revenue Rental revenue Interest income: Interest income from bank deposits Interest from current account with others Other interest income Dividend income Other revenue	2017 2016 34,821 $ 35,391 $ 104,813 58,029 26,540 31,024 8,569 2,329 139,922 91,382 2,793,585 5,395 268,989 265,916 3,237,317 $ 398,084 $ Forthe three-monthperiods ended June 30 2017 2016 69,671 $ 70,495 $ 185,735 106,554 77,005 64,085 12,693 6,135 275,433 176,774 2,793,585 5,395 522,299 614,710 3,660,988 $ 867,374 $ Forthe six-monthperiods ended June 30,
	2017 69,671 $ 185,735 77,005 12,693 275,433 2,793,585 522,299 3,660,988 $

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(22) Other gains and losses

Other gains and losses
			Forthe three-month			periods ended June 30,
			2017				2016
Net gain on financial assets at fair value
through profit or loss		$	671			$	275
Net (loss) gain on financial liabilities at fair
value through profit or loss	(		661)				640
Net currency exchange gain (loss)			552,296		(		790,497)
Gain on disposal of investments			10,591				23,135
Gain (loss) on disposal of property, plant and equipment			785,823		(		11,635)
Impairment loss			-		(		207,066)
Other losses	(		57,120)		(		88,736)
		$	1,291,600			($	1,073,884)
			Forthe six-monthperiods ended June 30,
			2017				2016
Net gain on financial assets at fair value
through profit or loss		$	1,816		$		1,486
Net gain on financial liabilities at fair
value through profit or loss			487				288
Net currency exchange loss	(		1,606,555)	(			1,139,633)
Gain on disposal of investments			34,876				34,951
Gain on disposal of property, plant and equipment			788,868				3,432
Impairment loss			-	(			207,066)
Other losses	(		115,650)	(			243,958)
	($		896,158)	($			1,550,500)

(23) Finance costs

Finance costs
			Forthe three-month	periods	ended June 30,
			2017		2016
Interest expense:
Bank loans		$	419,590	$	287,628
Corporate bonds			184,982		214,159
Current account with others			3,473		2,202
Discount			21,998		15,329
Other interest expenses			12,452		12,245
			642,495		531,563
Less: capitalisation of qualifying assets	(		22,071)	(	39,018)
Finance costs		$	620,424	$	492,545

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(24)	Expenses by nature 2017 2016 Interest expense: Bank loans 801,395 $ 596,243 $ Corporate bonds 367,931 431,041 Current account with others 6,884 5,161 Discount 41,217 28,927 Other interest expenses 25,862 24,789 1,243,289 1,086,161 Less: capitalisation of qualifying assets 40,211) ( 90,405) ( Finance costs 1,203,078 $ 995,756 $ Forthe six-monthperiods ended June 30, 2017 2016 Depreciation charges on property, plant and equipment 3,617,272 $ 4,093,564 $ Employee benefit expense 3,504,955 3,648,647 Amortisation 702,317 945,423 7,824,544 $ 8,687,634 $ Forthe three-monthperiods ended June 30, 2017 2016 Depreciation charges on property, plant and equipment 7,284,029 $ 8,199,968 $ Employee benefit expense 7,226,888 7,355,734 Amortisation 1,386,479 1,839,914 15,897,396 $ 17,395,616 $ Forthe six-monthperiods ended June 30,	Forthe six-monthperiods ended June 30,	Forthe six-monthperiods ended June 30,
			2016
			596,243 $ 431,041 5,161 28,927 24,789
		2017 2016 3,617,272 $ 4,093,564 $ 3,504,955 3,648,647 702,317 945,423 7,824,544 $ 8,687,634 $ Forthe six-monthperiods ended June 30,	2016
			4,093,564 $ 3,648,647 945,423
			8,687,634 $
		2017 7,284,029 $ 7,226,888 1,386,479 15,897,396 $	2016
			8,199,968 $ 7,355,734 1,839,914
			17,395,616 $

(25) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	Forthe three-monthperiods ended June 30,
	2017 2,999,910 $ 232,109 137,965 134,971 3,504,955 $	2016
		3,131,074 $ 233,999 146,943 136,631
		3,648,647 $

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Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	Forthe six-monthperiods ended June 30,	Forthe six-monthperiods ended June 30,
	2017 6,190,995 $ 480,150 275,522 280,221 7,226,888 $	2016
		6,295,587 $ 471,193 310,865 278,089
		7,355,734 $

• 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 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 three-month periods and six-month periods ended June 30, 2017 and 2016, employees’ remuneration (bonuses) was accrued at $9,399, $18,231, $22,264 and $22,141, respectively. The aforementioned amount was recognized in salary expenses.

• For the six-month periods ended June 30, 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 recognized in the profit or loss for 2016. Employees’ compensation of 2016 has not been distributed.

Information about the appropriations of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the

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stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(26) Income tax

A. Income tax expense

• (a)Components of income tax expense:

Stock Exchange. ome tax Income tax expense (a)Components of income tax expense:
		Forthe three-monthperiods ended June 30,
		2017		2016
Current tax:
Current tax on profits for the period	$	924,229	$	1,506,061
Additional tax on undistributed earnings		688,790		390,244
Adjustments in respect of prior years	(	221,070)	(	159,246)
Total current tax		1,391,949		1,737,059
Deferred tax:
Effect of exchange rate	(	1,103)		12,168
Origination and reversal of temporary
differences		38,465		296,218
Total deferred tax		37,362		308,386
Income tax expense	$	1,429,311	$	2,045,445
		Forthe six-monthperiods ended June 30,
		2017		2016
Current tax:
Current tax on profits for the period	$	2,535,257	$	2,862,140
Additional tax on undistributed earnings		688,790		390,244
Adjustments in respect of prior years	(	221,070)	(	159,246)
Total current tax		3,002,977		3,093,138
Deferred tax:
Effect of exchange rate		1,723		13,677
Origination and reversal of temporary
differences	(	7,106)		217,185
Total deferred tax	(	5,383)		230,862
Income tax expense	$	2,997,594	$	3,324,000
(b)The income tax charge relating to components of other comprehensive income is as follows:
		For the three-monthperiods endedJune30,
		2017		2016
Currency translation differences	($127,037)		$	155,047
		For the six-monthperiods endedJune30,
		2017		2016
Currency translation differences		$ 399,853	$	320,566

~76~

B. Unappropriated retained earnings:

Unappropriated retained earnings:
Earnings generated in and before 1997 Earnings generated in and after 1998	June 30,2017 6,198,462 $ 44,667,658 50,866,120 $	December31,2016 6,198,462 $ 66,361,641 72,560,103 $	June 30,2016
			6,198,462 $ 43,099,750 49,298,212 $

• C. Information on the imputation credit account is as follows:

. Balance of the imputation credit account Creditable tax rate	June30,2017 June30,2016 9,720,146 $ 4,850,075 $ December31,2016 4,453,266 $ 2016 (Estimate) 14.65% 2015 (Actual) 12.76%	June30,2017 June30,2016 9,720,146 $ 4,850,075 $ December31,2016 4,453,266 $ 2016 (Estimate) 14.65% 2015 (Actual) 12.76%	June30,2016
			4,850,075 $
		12.76%

(27) 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 period.

For the three-month period ended June 30, 2017

Before tax After tax Consolidated net income 12,120,200 $ 10,690,889 $ Net income of non- controlling interest 2,730,879) ( 2,250,355) ( Profit attributable to ordinary shareholders of the parent 9,389,321 $ 8,440,534 $ Amount Basic earnings per share	Weighted average number of ordinary shares outstanding (shares in thousands) Before tax After tax 2.08 $ 1.83 $ 0.47) ( 0.38) ( 5,835,672 1.61 $ 1.45 $ Earnings per share (in dollars)

~77~

For the three-month period ended June 30, 2016

Before tax After tax Consolidated net income 16,350,577 $ 14,305,132 $ Net income of non- controlling interest 1,580,355) ( 1,019,949) ( Profit attributable to ordinary shareholders of the parent 14,770,222 $ 13,285,183 $ Basic earnings per share Amount Before tax After tax Consolidated net income 26,410,276 $ 23,412,682 $ Net income of non- controlling interest 4,168,858) ( 3,261,178) ( Profit attributable to ordinary shareholders of the parent 22,241,418 $ 20,151,504 $ For the Amount Basic earnings per share	Before tax After tax Consolidated net income 16,350,577 $ 14,305,132 $ Net income of non- controlling interest 1,580,355) ( 1,019,949) ( Profit attributable to ordinary shareholders of the parent 14,770,222 $ 13,285,183 $ Basic earnings per share Amount Before tax After tax Consolidated net income 26,410,276 $ 23,412,682 $ Net income of non- controlling interest 4,168,858) ( 3,261,178) ( Profit attributable to ordinary shareholders of the parent 22,241,418 $ 20,151,504 $ For the Amount Basic earnings per share	Weighted average number of ordinary shares outstanding (shares in thousands) Before tax After tax 2.80 $ 2.45 $ 0.27) ( 0.18) ( 5,842,651 2.53 $ 2.27 $ Earnings per share (in dollars) six-monthperiod endedJune30,2017	Weighted average number of ordinary shares outstanding (shares in thousands) Before tax After tax 2.80 $ 2.45 $ 0.27) ( 0.18) ( 5,842,651 2.53 $ 2.27 $ Earnings per share (in dollars) six-monthperiod endedJune30,2017	Weighted average number of ordinary shares outstanding (shares in thousands) Before tax After tax 2.80 $ 2.45 $ 0.27) ( 0.18) ( 5,842,651 2.53 $ 2.27 $ Earnings per share (in dollars) six-monthperiod endedJune30,2017
	Before tax After tax 26,410,276 $ 23,412,682 $ 4,168,858) ( 3,261,178) ( 22,241,418 $ 20,151,504 $ Amount	Weighted average number of ordinary shares outstanding (shares in thousands) Before tax After tax 4.52 $ 4.01 $ 0.71) ( 0.56) ( 5,839,142 3.81 $ 3.45 $ Earnings per share (in dollars)	Earnings per share (in dollars)
				After tax
				3.45 $

Before tax After tax Consolidated net income 25,448,269 $ 22,124,269 $ Net income of non- controlling interest 3,307,490) ( 2,082,140) ( Profit attributable to ordinary shareholders of the parent 22,140,779 $ 20,042,129 $ Basic earnings per share For the Amount	For the	six-monthperiod endedJune30,2016	six-monthperiod endedJune30,2016	six-monthperiod endedJune30,2016
		Weighted average number of ordinary shares outstanding (shares in thousands) Before tax After tax 4.36 $ 3.79 $ 0.57) ( 0.36) ( 5,842,651 3.79 $ 3.43 $ Earnings per share (in dollars)	Earnings per share (in dollars)
				After tax
				3.43 $

• 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:

~78~

For the three-month period ended June 30, 2017

					Weighted average
					number of
					ordinary shares			Earnings	per share
		Amount			outstanding			(in dollars)
		Before tax		After tax	(shares in thousands)		Before tax			After tax
Basic earnings per share
Consolidated net income	$	12,120,200	$	10,690,889		$		2.07	$	1.82
Net income of non-
controlling interest	(	2,730,879)	(	2,250,355)		(		0.47)	(	0.38)
Profit attributable to ordinary
shareholders of the parent	$	9,389,321	$	8,440,534	5,861,186	$		1.60	$	1.44
				For the three-monthperiod endedJune30,2016
					Weighted average
					number of
					ordinary shares			Earnings	per share
		Amount			outstanding			(in dollars)
		Before tax		After tax	(shares in thousands)		Before tax			After tax
Basic earnings per share
Consolidated net income	$	16,350,577	$	14,305,132		$		2.79	$	2.44
Net income of non-
controlling interest	(	1,580,355)	(	1,019,949)		(		0.27)	(	0.17)
Profit attributable to ordinary
shareholders of the parent	$	14,770,222	$	13,285,183	5,861,186	$		2.52	$	2.27
				For the six-monthperiod endedJune30,2017
					Weighted average
					number of
					ordinary shares			Earnings	per share
		Amount			outstanding			(in dollars)
		Before tax		After tax	(shares in thousands)		Before tax			After tax
Basic earnings per share
Consolidated net income	$	26,410,276	$	23,412,682		$		4.51	$	3.99
Net income of non-
controlling interest	(	4,168,858)	(	3,261,178)		(		0.72)	(	0.55)
Profit attributable to ordinary
shareholders of the parent	$	22,241,418	$	20,151,504	5,861,186	$		3.79	$	3.44

~79~

For the six-month period ended June 30, 2016

Before tax After tax Consolidated net income 25,448,269 $ 22,124,269 $ Net income of non- controlling interest 3,307,490) ( 2,082,140) ( Profit attributable to ordinary shareholders of the parent 22,140,779 $ 20,042,129 $ Basic earnings per share Amount	Weighted average number of ordinary shares outstanding (shares in thousands) Before tax After tax 4.34 $ 3.77 $ 0.56) ( 0.35) ( 5,861,186 3.78 $ 3.42 $ Earnings per share (in dollars)

(28) Non-cash transactions

1.Investing activities with partial cash payments:

		Forthe six-monthperiods ended June	Forthe six-monthperiods ended June	30,
		2017	2016
Purchase of fixed assets	$	4,622,650	$	4,872,503
Add: opening balance of payable on
equipment		789,871		1,485,927
Less: ending balance of payable on
equipment	(	628,828)	(	606,088)
Cash paid during the period	$	4,783,693	$	5,752,342

2.Financing activities with partial cash flow effects

.Financing activities with partial cash flow effects
Dividends payable	For the six-monthperiods endedJune30,
	2017 32,822,643 $	2016 20,514,153 $

~80~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

LATED PARTY TRANSACTIONS Names of related parties and relationship
Names of related parties	Relationship withthe Group
Formosa Petrochemical Corp. Formosa Heavy Industries Corp. Formosa Plastics Transport Corp. Formosa Plastics Maritime Corp. Mai Liao Power Corp. Formosa Environmental Technology Corp. Chia-Nan Enterprise Corp. Su Hua Transport Corp. Hwa Ya Science Park Management Consulting Corp. Formosa Resourses Corp. Formosa Synthetic Rubber Corp. Formosa Synthetic Rubber (Hong Kong) Corp. Formosa Group (Cayman) Corp. Kuang Yueh Co., Ltd. Formosa Synthetic Rubber (Ningbo) Corp. BP Chemicals (Malaysia) SDN Corp. BP Singapore Ltd. (BPSG) Idemitsu Kosan Co., Ltd Formosa Heavy Industr. Co.(Guangzhou) Ltd. Formosa Plastics Logistics Corp. Formosa Plastics Corp. Nan Ya Plastics Corp. Asia Pacific Investment Corp. Nan Ya PCB Corp. Mai Liao Harbor Administration Corp. Formosa Plastics Marine Corp. Formosa Plastics Marine Co., Ltd. Yue Chi Development Corp. PFG Fiber Glass Corp. Formosa Automobile Corp. Hua Ya Power Corp. Nan Ya Technology Corp. Formosa Network Technology Corp. Asia Pacific Technology Corp. Ya Tai Development Corp. Asia Pacific Development Corp. Chang Gung Memorial Hospital	Associates ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ Other related parties ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵

~81~

Names of related parties

Relationship withthe Group

Chang Gung University Kong You Industrial Co., Ltd. Yugen Co., Ltd. Kuang Yueh Co., Ltd. Hong Jing Metal Corp. Formosa Plastics Transport (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd. Formosa Polypropylene (Ningbo) Co., Ltd. Formosa Acrylic Esters (Ningbo) Co., Ltd. Nan Ya Plastics Construction Materials Co., Ltd. Nan Ya Plastics Film (Nan Tong) Corp. Nan Ya Plastics (Nan Tong) Corp. Nan Ya Plastics Film (Hui Zhou) Corp. Nan Ya Plastics (Hui Zhou) Corp. Nan Ya Chemical Fiber (KunShan) Corp. Nan Ya Plastics (Xiamen) Corp. Nan Ya Epoxy Resin (Kun Shan) Co., Ltd. Nan Ya Rigid Film (Guangzhou) Co., Ltd. Nan Ya Plastics (Anshan) Corp. Nan Ya Electronic Materials (Kunshan) Corp. Formosa Ha Tinh (Cayman) Ltd. Formosa Ha Tinh Steel Corp. -TW Formosa Ha Tinh Steel Corp. Formosa Plastics Building Parking Lot Formosa Trading Co., Ltd. Sino-Asia Steel (Ningbo) Co., Ltd. Hwa Ya Technologies Corp. (Loss the relationship of related party in substance after merged by Micron Technology Co., Ltd. in December 2016 ) Fujian Fuxin Special Steel Co., Ltd. Nan Ya Electronic Materials Co., Ltd. Bio Trust International Corp.

Other related parties ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵ ˵

~82~

(2) Significant related party transactions

A. Sales of goods:

nificant related party transactions Sales of goods:
Sales of goods: － Associates － Other related parties Sales of goods: － Associates － Other related parties	For the three-monthperiods endedJune30,
	2017 2016 5,206,239 $ 4,515,368 $ 9,985,787 12,731,550 15,192,026 $ 17,246,918 $ Forthe six-monthperiods ended June 30,	2016
		4,515,368 $ 12,731,550
		17,246,918 $
	2017 12,376,723 $ 22,549,156 34,925,879 $	2016
		8,845,540 $ 23,140,531
		31,986,071 $

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:

longer, prices are the same with third parties. Purchases of goods:
Purchases of goods: － Associates Formosa Petrochemical Corp. Others － Other related parties Purchases of goods: － Associates Formosa Petrochemical Corp. Others － Other related parties	Forthe three-monthperiods ended June 30,
	2017 2016 26,155,154 $ 29,984,584 $ 611 560 4,880,006 4,444,158 31,035,771 $ 34,429,302 $ Forthe six-monthperiods ended June 30,	2016
		29,984,584 $ 560 4,444,158
		34,429,302 $
	2017 61,348,379 $ 682 10,360,081 71,709,142 $	2016
		57,975,602 $ 1,224 8,422,368
		66,399,194 $

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.

~83~

C. Receivables from related parties:

Receivables from related parties:
. Receivables from related parties: － Associates － Other related parties Other receivables: － Other related parties	June 30,2017 1,902,883 $ 4,790,940 6,693,823 423 6,694,246 $	December31,2016 2,456,042 $ 4,912,036 7,368,078 440,981 7,809,059 $	June 30,2016
			1,879,975 $ 5,003,852
			6,883,827
			691,595
			7,575,422 $

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 don‘t 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	June30,2017 9,276,037 $ 2,001,305 11,277,342 $	December31,2016 11,291,646 $ 2,093,864 13,385,510 $	June30,2016
			9,851,259 $ 1,947,560
			11,798,819 $

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.

E. Expansion and repair project

(a)Expansion and repair project:

ansion and repair project Expansion and repair project:
Expansion and repair works of factory sites － Associates － Other related parties Expansion and repair works of factory sites － Associates － Other related parties	Forthe three-monthperiods ended June 30,
	2017 2016 27,839 $ 68,063 $ 47,358 25,064 75,197 $ 93,127 $ Forthe six-monthperiods ended June 30,	2016
		68,063 $ 25,064
		93,127 $
	2017 58,961 $ 120,889 179,850 $	2016
		225,391 $ 30,567
		255,958 $

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

~84~

. Payables to related parties: － Associates － Other related parties	June30,2017 9,812 $ 7,957 17,769 $	December31,2016 - $ 3,738 3,738 $	June30,2016
			10,010 $ 11,977
			21,987 $

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	June 30,2017 - $ 3,000,000 1,572,445 260,000 4,832,445 - 3,555,396 - - 3,555,396 8,387,841 $	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 $	June 30,2016
			3,245,500 $ - - 460,000
			3,705,500
			4,500,000 3,491,486 20,000 50,000
			8,061,486
			11,766,986 $

~85~

(ii)Interest income

i)Interest income
－ Associates Formosa Synthetic Rubber (Ningbo) Co., Ltd. Others － Other related parties Nan Ya Technology Corp. Formosa Plastics Marine Co., Ltd. Others － Associates Formosa Group (Cayman) 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	Forthe three-monthperiods ended June 30,
	2017 2016 9,669 $ - $ 4,245 1,644 13,914 1,644 - 16,086 12,550 12,411 78 859 12,628 29,356 26,542 $ 31,000 $ Forthe six-monthperiods ended June 30,	2016
		- $ 1,644
		1,644
		16,086 12,411 859
		29,356
		31,000 $
	2017 16,383 $ 18,369 6,296 41,048 1,999 25,228 8,559 171 35,957 77,005 $	2016
		- $ - 3,349
		3,349
		33,855 23,383 - 3,474
		60,712
		64,061 $

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% and 1.43%~1.50% per annum for the six-month periods ended June 30, 2017 and 2016, respectively.

• (b) Loans from related parties:

(i)Ending balance of payables to related parties

~86~

(ii)Interest expense － Associates － Other related parties － Associates － Other related parties － Associates － Other related parties	June 30,2017 December31,2016 June 30,2016 31,100 $ 15,600 $ 8,000 $ - 41,878 - 31,100 $ 57,478 $ 8,000 $ 2017 2016 148 $ 199 $ 367 46 515 $ 245 $ For the three-monthperiods endedJune30, 2017 2016 383 $ 403 $ 616 2,597 999 $ 3,000 $ For the six-monthperiods endedJune30,	June 30,2017 December31,2016 June 30,2016 31,100 $ 15,600 $ 8,000 $ - 41,878 - 31,100 $ 57,478 $ 8,000 $ 2017 2016 148 $ 199 $ 367 46 515 $ 245 $ For the three-monthperiods endedJune30, 2017 2016 383 $ 403 $ 616 2,597 999 $ 3,000 $ For the six-monthperiods endedJune30,	June 30,2017 December31,2016 June 30,2016 31,100 $ 15,600 $ 8,000 $ - 41,878 - 31,100 $ 57,478 $ 8,000 $ 2017 2016 148 $ 199 $ 367 46 515 $ 245 $ For the three-monthperiods endedJune30, 2017 2016 383 $ 403 $ 616 2,597 999 $ 3,000 $ For the six-monthperiods endedJune30,	June 30,2016
	$			8,000 $ -
	$			8,000 $
		2017 2016 148 $ 199 $ 367 46 515 $ 245 $ 2017 2016 383 $ 403 $ 616 2,597 999 $ 3,000 $ For the six-monthperiods endedJune30,	2016
			199 $ 46
			245 $
		2017 383 $ 616 999 $

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 1.43%~3.92% per annum for the sixmonth periods ended June 30, 2017 and 2016, respectively.

G. Receivables for payment on behalf of others

eceivables for payment on behalf of	others
－ Other related parties	June 30,2017 December31,2016 - $ 164,332 $	June 30,2016
		312,659 $

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

H. Operating expenses

other current assets. Operating expenses
Transportation charges － Other related parties Formosa Plastics Marine Corp. Formosa Plastics Transport (Ningbo) Co., Ltd. Others		Forthe three-monthperiods ended June 30,
		2017 $ 257,961 153,318 - 411,279 $	2016
			$ 144,589 182,577 26,761
			353,927 $

~87~

Transportation charges － Other related parties Formosa Plastics Marine Corp. Formosa Plastics Transport (Ningbo) Co., Ltd. Others		Forthe six-monthperiods ended June 30,	Forthe six-monthperiods ended June 30,
		2017 $ 607,425 244,637 - 852,062 $	2016
			$ 365,872 359,070 92,887
			817,829 $

I. Rental revenue

Rental revenue
－ Associates Formosa Petrochemical Corp. Others － Other related parties Nan Ya Plastics Corp. Formosa Plastics Building Parking Lot Formosa Network Technology Corp. Others － Associates Formosa Petrochemical Corp. Others － Other related parties Nan Ya Plastics Corp. Formosa Plastics Building Parking Lot Formosa Network Technology Corp. Others	Forthe three-monthperiods ended June 30,
	2017 2016 5,036 $ 5,036 $ 3,093 3,197 8,129 8,233 6,629 6,437 3,836 3,916 3,850 3,850 7,789 2,064 22,104 16,267 30,233 $ 24,500 $ Forthe six-monthperiods ended June 30,	2016
		5,036 $ 3,197
		8,233
		6,437 3,916 3,850 2,064
		16,267
		24,500 $
	2017 10,072 $ 6,185 16,257 13,259 7,673 7,700 15,624 44,256 60,513 $	2016
		10,072 $ 6,748
		16,820
		12,874 7,831 7,700 16,136
		44,541
		61,361 $

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

~88~

• J. Property transactions:

• (a) Acquisition of property, plant and equipment

Purchase of property, plant and equipment

• － Associates

• － Other related parties

	Forthe three-monthperiods	Forthe three-monthperiods	ended June 30,
	2017		2016
$	10,953	$	42,724
	-		-
$	10,953	$	42,724

Purchase of property, plant and equipment

• － Associates

• － Other related parties

Forthe six-monthperiods ended June 30,	Forthe six-monthperiods ended June 30,
2017 23,490 $ 108 23,598 $	2016
	168,690 $ 34
	168,724 $

• (b) Acquisition of financial assets

-Associates -Associates -Associates	Items	Number of shares 168,344,000 Number of shares	Name of the securities Formosa Resources Corp. Name of the securities	Three-month period ended June 30,2017
				Acquisition cost
	Investments accounted for using equity method Items			1,683,440 $ Three-month period ended June 30,2016
				Acquisition cost
	Investments accounted for using equity method Items	8,500,000 Number of shares	Formosa Construction Corp. Name of the securities	85,000 $ Six-month period ended June 30,2017
				Acquisition cost
	Investments accounted for using equity method	168,344,000	Formosa Resources Corp.	1,683,440 $

~89~

Six-month period ended June 30, 2016

-Associates -Other related parties -Other related parties	Items	Number of shares	Name of the securities	Acquisition cost 85,000 $ 16,084,840 558,348 16,728,188 $
	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 Construction Corp. Formosa Ha Tinh (Cayman) Limited (Note) Nan Ya Technology Corp.

(c) Disposal of financial assets

For the three-month periods ended June 30, 2017 and 2016: None. For the six-month period ended June 30, 2017: None.

Formosa Group Investment Corp. (Cayman)	Items	Number of shares	Name of the securities		Six-month period ended June30,2016	Six-month period ended June30,2016
					Disposal proceeds	Gain (loss) on disposal
	Investments accounted for using equity method	508,249,225	Formosa Group Investment Corp. (Cayman) (Note)		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(14). (3) Key management compensation

Key management compensation
Salaries Post-employment benefits Salaries Post-employment benefits	For the three-monthperiods endedJune30,
	2017 2016 13,904 $ 14,636 $ 445 459 14,349 $ 15,095 $ For the six-monthperiods endedJune30,	2016
		14,636 $ 459
		15,095 $
	2017 69,038 $ 910 69,948 $	2016
		63,885 $ 911
		64,796 $

~90~

8. PLEDGED ASSETS

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

Pledged assets Long-term equity investments accounted for under the equity method Property, plant and equipment Inventory	Bookvalue	June30,2016 Purpose 12,084,120 $ Collateral for bank loans 7,247,238 Collateral for bank loans 21,264 Limited transfer for land tax reassessment and collateral 19,352,622 $	Purpose
	June30,2017 December31,2016 - $ - $ 6,272,339 6,594,298 21,264 21,264 6,293,603 $ 6,615,562 $

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

The details of commitments and contingencies as of June 30, 2017 were as follows:

• (1) Capital expenditures of property, plant and equipment that were contracted but not yet paid amounted to $5,390,503 thousand, RMB340,660 thousand and VND459,502,969 thousand.

• (2) The outstanding letters of credit for major raw materials and equipment purchases amounted to USD 6,794 thousand, JPY130,226 thousand, EUR1,764 thousand and CHF630 thousand.

• (3) The provision of endorsements and guarantees to others are as follows:

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.	June 30,2017 December31,2016 4,994,806 $ 5,297,258 $ 3,271,870 - 29,522,920 33,247,370 15,715,989 14,380,788 425,880 564,375 137,504 86,251 343,746 407,382 2,569,527 2,405,391 3,000 - 56,985,242 $ 56,388,815 $	June 30,2016
		5,621,267 $ - 40,074,998 9,660,575 758,463 154,334 593,215 2,336,400 -
		59,199,252 $

• (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

~91~

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.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

• (1) On May 5, 2017, the Board of Directors of the Company and subsidiary, Formosa Taffeta Co., Ltd., resolved to increase investment in the reinvested company, Formosa Ha Tinh (Cayman) Limited, which increased its capital by cash from July 2017. The subsidiary, FCFC International Limited (Cayman) and Formosa Taffeta (Cayman) Co., Ltd., participated in the capital increase proportionately to their own shareholding ratio at the amount of USD 76,394 thousand.

• (2) The Group reinvested in Formosa Ha Tinh (Cayman) Limited through FCFC International Limited (Cayman) and Formosa Taffeta (Cayman) Co., Ltd. with shareholding ratios of 11.43% and 3.85%, respectively. Formosa Ha Tinh (Cayman) Limited plans to apply with Bank of China (Hong Kong) for a credit line at a maximum amount of USD 1,150 million in 5 years to finance payments for construction and business facilities, repayment of other borrowings and operating capital of Son Duong Port & Integrated Steel Mill Complex of Formosa Ha Tinh Steel Corporation, which is a trans-investment company of Formosa Ha Tinh (Cayman) Limited. The Group will provide endorsement/guarantee in proportion to its shareholding ratio.

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 judgment 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

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not resulted in plant shutdown and industry safety hazard.

The Company filed an appeal with the EPA on the case mentioned above on October 7, 2016. The EPA decided to revoke the original administrative action, ordered the original authority to make another action in accordance with appropriate regulations, and dismissed the administrative action for extension approval which was based on initial content of license. Accordingly, the Company reapplied for an extension of the three related licenses of Changhua plant with the Changhua City Government, and submitted the opinion on the review of the original administrative action. As of March 17, 2017, the Changhua City Government has not replied yet.

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 recognized impairment loss on property, plant and equipment amounting to $466,785 for the year ended December 31, 2016.

• (2) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a 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 June 30, 2017, December 31, 2016 and June 30, 2016 were as follows:

			June 30,2017	December31,2016	December31,2016			June 30,2016
Total borrowings		$	119,307,267	$	120,427,336		$	125,672,702
Less: cash and cash equivalents	(		45,171,425)	(	30,391,911)	(		38,537,895)
Net debt			74,135,842		90,035,425			87,134,807
Total equity			366,062,339		379,640,412			331,571,126
Total capital		$	440,198,181	$	469,675,837		$	418,705,933
Gearing ratio			17%		19%			21%

(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

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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 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, recognized 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 recognized assets and liabilities, the Group uses forward foreign exchange contracts.

• iii.The Group hedges recognized assets or liabilities denominated in foreign currencies or highly expectable transactions by utilizing 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

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fluctuations is as follows:

June 30, 2017

	Foreign Currency	Foreign Currency
.	Amount (In Thousands)		ExchangeRate	Book	Value (NTD)
Financial assets
Monetary items
USD：NTD	$	452,762	30.44	$	13,782,075
JPY：NTD		338,848	0.27		91,489
Non-monetary items
RMB：NTD	$	6,748,133	4.49	$	30,299,117
USD：NTD		517,121	30.44		15,741,163
VND：NTD		7,270,407,701	0.0013		9,451,530
JPY：NTD		139,500	0.27		37,665
Financial liabilities
Monetary items
USD：NTD	$	61,242	30.44	$	1,864,206
JPY：NTD		418,332	0.27		112,950
USD：RMB		457,659	30.44		13,931,140
USD：VND		266,000	30.44		8,097,040
		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

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			June30,2016
		Foreign Currency
.	Amount (In Thousands)		ExchangeRate	Book	Value (NTD)
Financial assets
Monetary items
USD：NTD	$	432,016	32.29	$	13,949,797
JPY：NTD		301,993	0.27		81,538
Non-monetary items
RMB：NTD	$	6,321,653	4.87	$	30,786,450
USD：NTD		494,283	32.29		15,960,398
VND：NTD		7,870,685,317	0.0014		11,018,959
JPY：NTD		181,602	0.27		49,033
Financial liabilities
Monetary items
USD：NTD	$	62,132	32.29	$	2,006,242
JPY：NTD		496,401	0.27		134,028
USD：RMB		717,510	32.29		23,168,398
USD：VND		285,000	32.29		9,202,650

• v.Total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and six-month periods ended June 30, 2017 and 2016 amounted to $552,296, ($790,497), ($1,606,555) and ($1,139,633), respectively.

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

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Six-month period ended June 30, 2017 Sensitivity analysis

Degree ofvariation Financial assets Monetary items USD：NTD 1% JPY：NTD 1% Non-monetary items RMB：NTD 1% USD：NTD 1% VND：NTD 1% JPY：NTD 1% Financial liabilities Monetary items USD：NTD 1% JPY：NTD 1% USD：RMB 1% USD：VND 1%	Effect on profit or loss $ 137,821 915 $ - - - - $ 18,642 1,130 139,311 80,970	Effect on other comprehensive income $ - - $ 302,991 157,412 94,515 377 $ - - - -

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Six-month period ended June 30, 2016

Financial assets Monetary items USD：NTD JPY：NTD Non-monetary items RMB：NTD USD：NTD VND：NTD USD：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% 1%	Effect on profit or loss $ 139,498 815 $ - - - - $ 20,062 1,340 231,684 92,027	Effect on other comprehensive income $ - - $ 307,865 159,604 110,190 490 $ - - - -

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 six-month periods ended June 30, 2017 and 2016 would have increased/decreased by $1,432,341 and $1,171,124, 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 six-month periods ended June 30, 2017

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

• ii. At June 30, 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 six-month periods ended June 30, 2017 and 2016 would have been $355,900 and $364,056 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 utilizes 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 utilization 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 gross-settled derivative financial liabilities into relevant maturity groupings based on the

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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:

June 30, 2017 Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable (including related parties) Other payables (including related parties) Bonds payable Long-term borrowings December 31, 2016 Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable (including related parties) Other payables (including related parties) Bonds payable Long-term borrowings	Less than 1year 27,648,007 $ 2,279,724 200,527 19,701,759 45,350,935 6,750,000 7,665,358 Less than 1year 26,146,750 $ 1,499,464 196,870 21,911,494 8,444,530 6,750,000 7,666,502	Between 1 and2years - $ - - - - 7,100,000 24,409,182 Between 1 and2years - $ - - - - 5,700,000 21,089,630	Between 3 and 5 years - $ - - - - 10,700,000 10,804,996 Between 3 and 5 years - $ - - - - 8,950,000 17,524,990	Over5 years
				- $ - - - - 21,950,000 - Over5 years
				- $ - - - - 25,100,000 -

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June 30, 2016 Less than 1year Short-term borrowings 26,711,042 $ Short-term notes and bills payable 2,099,471 Notes payable (including related parties) 209,935 Accounts payable (including related parties) 19,676,223 Other payables (including related parties) 30,868,666 Bonds payable 6,500,000 Long-term borrowings 4,855,077 June 30, 2017 Less than 1year Forward exchange contracts 894 $ Derivative financial liabilities: December 31, 2016 Less than 1year Forward exchange contracts 1,381 $ June 30, 2016 Less than 1year Forward exchange contracts 531 $	Between 1 and2years - $ - - - - 6,750,000 15,103,329 Between 1 and2years - $ Between 1 and 2years - $ Between 1 and 2years - $	Between 3 and 5 years - $ - - - - 14,650,000 23,580,885 Between 3 and 5 years - $ Between 3 and5 years - $ Between 3 and5 years - $	Over5 years
			- $ - - - - 25,100,000 322,898 Over5 years
June 30, 2017 Forward exchange contracts December 31, 2016 Forward exchange contracts June 30, 2016 Forward exchange contracts
			- $ Over5 years
			- $ Over5 years
			- $

• 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).

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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 June 30, 2017, December 31, 2016 and June 30, 2016:

June 30, 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 Liabilities: Recurring fair value measurement Financial liabilities at fair value through profit or loss Forward exchange contracts	Level 1 - $ 628,662 138,648,161 - 139,276,823 $ - $	Level 2 775 $ - 3,877,644 4,626,945 8,505,364 $ 894 $	Level3 - $ - - - - $ - $	Total
				775 $ 628,662 142,525,805 4,626,945
				147,782,187 $
				894 $

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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 - $ 627,555 135,122,609 - 135,750,164 $ - $	Level 2 66 $ - 3,162,625 4,874,052 8,036,743 $ 1,381 $	Level3 - $ - - - - $ - $	Total
				66 $ 627,555 138,285,234 4,874,052
				143,786,907 $
				1,381 $

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==> picture [449 x 348] intentionally omitted <==

----- Start of picture text -----

June 30, 2016 Level 1 Level 2 Level 3 Total
Assets:
Recurring fair value
measurement
Financial assets at fair
value through profit
or loss
Forward exchange $ - $ 268 $ - $ 268
contracts
- -
Beneficiary certificate 626,658 626,658
Available-for-sale
financial assets
-
Equity securities 112,260,699 2,443,498 114,704,197
Fund - 4,851,704 - 4,851,704
$ 112,887,357 $ 7,295,470 $ - $ 120,182,827
Liabilities:
Recurring fair value
measurement
Financial liabilities
at fair value through
profit or loss
Forward exchange $ - $ 531 $ - $ 531
contracts
----- End of picture text -----

• 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 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

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  - 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 six-month periods ended June 30, 2017 and 2016, there was no transfer between Level 1 and Level 2.

• F. For the six-month periods ended June 30, 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.

• 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.

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(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 amortized 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 amortization. Reporting amount and reports for operating decision-maker 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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(3) Information about segment profit or loss, assets and liabilities

For the six-month period ended June 30, 2017

External revenue Internal revenue Total revenue Segment profit (loss) Total assets of segments	1st Petrochemical Div $ 23,564,905 32,256,238 $ 55,821,143 $4,913,579 $ 37,763,518	2nd Petrochemical Div $ 20,172,431 15,174,296 $ 35,346,727 $2,023,900 $ 31,866,498	3rd Petrochemical Div and Formosa Chemical Industries $ 30,709,558 1,410,440 $ 32,119,998 $2,505,535 $ 33,606,085	Plastics Division, Formosa ABS Plastics Co., Ltd. and Formosa PS $ 52,759,338 6,825,743 $ 59,585,081 $4,197,649 $47,344,276	Formosa Taffeta Co.,Ltd. $ 12,887,970 148,832 $13,036,802 $ 3,231,657 $ 83,552,161	Formosa Advanced Technologies Co.,Ltd. $ 4,110,012 - $4,110,012 $ 618,623 $11,927,741	Other divisions	Reconciliation and offset $ - (62,384,788) ($ 62,384,788) ($2,847,686) ($ 98,810,181)	Total
							$ 27,223,740 6,569,239 $ 33,792,979 $11,767,019 $415,809,784		$ 171,427,954 -
									$171,427,954 $26,410,276 $ 563,059,882

For the six-month period ended June 30, 2016

External revenue Internal revenue Total revenue Segment profit (loss) Total assets of segments	1st Petrochemical Div $ 19,046,155 32,708,305 $ 51,754,460 $4,574,947 $ 36,247,683	2nd Petrochemical Div $ 21,345,319 16,674,748 $ 38,020,067 $4,516,402 $ 35,894,706	3rd Petrochemical Div and Formosa Chemical Industries $ 25,858,224 1,162,305 $27,020,529 ($123,104) $ 35,540,100	Plastics Division, Formosa ABS Plastics Co., Ltd. and Formosa PS $ 44,913,839 5,817,585 $ 50,731,424 $4,173,156 $47,070,678	Formosa Taffeta Co.,Ltd.	Formosa Advanced Technologies Co.,Ltd. $ 4,286,054 - $4,286,054 $ 580,789 $11,377,579	Other divisions	Reconciliation and offset $ - ( 64,349,492) ($ 64,349,492) ($1,837,420) ($ 98,538,088)	Total
					$ 11,607,584 1,017,047 $12,624,631 $1,274,577 $73,734,879		$ 30,016,859 6,969,502 $ 36,986,361 $12,288,922 $ 382,009,550		$ 157,074,034 -
									$157,074,034 $25,448,269 $ 523,337,087

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(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 six-month period ended June 30, 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 six-month period ended June 30, 2017 （Note 3）	Balance at June 30, 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	7,000,000 $ 800,000 6,500,000 600,000 10,800,000 5,267,711 1,500,000 100,000	5,000,000 $ 800,000 4,500,000 600,000 9,500,000 4,975,396 1,500,000 100,000	- $ - - - 3,000,000 3,555,396 - 100	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	- $ - - - - - - -	- - - - - - - -	- $ - - - - - - -	77,539,104 $ 77,539,104 77,539,104 62,031,283 62,031,283 62,031,283 77,539,104 62,031,283	155,078,207 $ 155,078,207 155,078,207 124,062,566 124,062,566 124,062,566 155,078,207 124,062,566	- - - - - - - -

Table 1, Page 1

No. （Note 1）	Creditor	Borrower	General ledger account （Note 2）	Is a related party	Maximum outstanding balance during the six-month period ended June 30, 2017 （Note 3）	Balance at June 30, 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	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	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	1,600,000 $ 8,006,500 100,000 17,000,000 900,000 460,000 40,000 3,610,000 7,023,483	1,600,000 $ - 100,000 15,000,000 - 260,000 - 3,610,000 -	470,000 $ - - - - 260,000 - - -	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	1 1 1 2 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	- $ - - - - - - - -	- - - - - - - - -	- $ - - - - - - - -	62,031,283 $ 62,031,283 62,031,283 77,539,104 62,031,283 62,031,283 62,031,283 62,031,283 62,031,283	124,062,566 $ 124,062,566 124,062,566 155,078,207 124,062,566 124,062,566 124,062,566 124,062,566 124,062,566	- - - - - - - - -

Table 1, Page 2

No. （Note 1）	Creditor	Borrower	General ledger account （Note 2）	Is a related party	Maximum outstanding balance during the six-month period ended June 30, 2017 （Note 3）	Balance at June 30, 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 3 3	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 Chemicals Industries (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd.	Hong Jing Resources Corp. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Synthetic Rubber (Ningbo) Limited Co. Formosa PS (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa ABS Plastics (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 1,572,445 910,158 133,929 856,516	15,000 $ 2,367,653 - 1,572,445 485,212 67,391 848,222	15,000 $ 2,367,653 - 1,572,445 485,212 67,391 848,222	1.41 3.05-3.48 3.05-3.48 3.05-3.48 3.05-3.48 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	- $ - - - - - -	- - - - - - -	- $ - - - - - -	768,398 $ 5,139,983 5,139,983 5,139,983 5,139,983 2,536,631 2,536,631	1,920,994 $ 12,849,957 12,849,957 12,849,957 12,849,957 6,341,578 6,341,578	- - - - - - -

Table 1, Page 3

No. （Note 1）	Creditor	Borrower	General ledger account （Note 2）	Is a related party	Maximum outstanding balance during the six-month period ended June 30, 2017 （Note 3）	Balance at June 30, 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	Formosa Chemicals Industries (Ningbo)	Formosa PS (Ningbo) Co., Ltd.	Receivables from related party	Yes	210,321 $	206,664 $	206,664 $	3.48	2	1	Additional operating capital	- $	-	- $	2,536,631 $	6,341,578 $	-

Co., Ltd.

• 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 six-month period ended June 30, 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

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

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

For the six-month period ended June 30, 2017

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 June 30, 2017 （Note 4）	Outstanding endorsement/ guarantee amount at June 30, 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	14,617,798 $ 201,601,670 201,601,670 201,601,670 41,725,197 41,725,197 41,725,197 41,725,197 41,725,197 179,056	5,146,443 $ 32,300,800 12,117,554 3,271,870 1,410,525 1,567,250 2,037,425 3,914,005 4,075,746 3,000	4,994,806 $ 29,522,920 11,760,519 3,271,870 1,308,060 1,521,000 1,977,300 3,823,794 3,955,470 3,000	4,994,806 $ 29,522,920 11,760,519 3,271,870 425,880 137,504 343,746 2,569,527 3,955,470 3,000	- $ - - - - - - - - -	1.61 9.52 3.79 1.05 2.04 2.37 3.08 5.96 6.16 1.09	403,203,339 $ 403,203,339 403,203,339 403,203,339 83,450,394 83,450,394 83,450,394 83,450,394 83,450,394 358,113	Y N N N Y Y Y Y N Y	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 six-month period ended June 30, 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 ofJune	30,2017	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 - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent	486,978,692 63,621,500 413,327,750 364,815,409 14,936,190 14,977,992 39,562,740 8,999 1,778,611 13,533,879 1,070,151 300,000 2,376,202 355,880 14,672,636	45,142,925 $ 3,350,944 31,206,245 19,991,884 298,724 4,626,945 539,260 818,316 - 1,800 10,702 3,000 38,419 1,750 90,010	7.65 14.97 5.21 13.27 3.31 - 17.98 2.92 1.07 2.00 0.79 1.51 1.41 18.22 18.00	45,142,925 $ - 3,350,944 - 31,206,245 - 19,991,884 - 298,724 - 4,626,945 - 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 ofJune	30,2017	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. Hong Jing Resources Corp.	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 Energy & Material Technology 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_Bemjhou Technology Corp.	Other related parties Other related parties Other related parties - - Other related parties - - - Other related parties Other related parties - Other related parties - -	Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Available-for-sale financial assets - current Available-for-sale financial assets - current Available-for-sale financial assets - current Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent	2,925,000 2,428,500 2,622 5,000,000 2,500,000 508,236,725 6,367 877,879 3,000 5,300,000 458,120 2,100,000 423,720 22,189,750 26,850,922 200,000	13,331 $ 15,000 856,948 50,000 25,000 14,250,962 349 17,558 125 53,000 2,517 21,033 8,400 613,436 667,607 2,000	12.50 15.00 19.00 3.91 1.97 11.43 - 0.20 0.01 15.14 2.60 6.30 0.46 13.82 18.99 8.33	13,331 $ - 15,000 - 856,948 - 50,000 - 25,000 - 14,250,962 - 349 - 177,558 - 125 - 53,000 - 2,517 - 21,033 - 8,400 - 613,436 - 667,607 - 2,000

Table 3, Page 2

Securities held by	Marketable securities （Note 1）	Relationship with the securities issuer（Note 2）	General ledger account		As ofJune	30,2017	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_Formosa Chemicals & Fibre Corp. 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. Stocks_Formosa Ha Tinh (Cayman) Limited Stocks_Formosa Taffeta Co., Ltd. Stocks_Association of R.O.C. in Xiamen	Parent company - 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 - current Available-for-sale financial assets - noncurrent Available-for-sale financial assets - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Available-for-sale financial assets - noncurrent Financial assets measured at cost - noncurrent	12,169,610 32 640 482,194 10,000,000 15,421,010 365,267,576 174,441 14,400 613,553 4,281,686 4,261,443 171,008,736 2,293,228 -	1,162,198 $ - 59 36,406 526,700 845,071 38,353,095 3,236 3,000 3,100 23,812 58,345 5,013,149 70,058 135	0.21 - - 0.01 2.35 0.56 3.83 0.45 10.00 1.20 3.17 9.53 3.85 0.14 0.11	1,162,198 $ - - - 59 - 36,406 - 526,700 - 845,071 - 38,353,095 - 3,236 - 3,000 - 3,100 - 23,812 - 58,345 - 5,013,149 - 70,058 - 135 -

Table 3, Page 3

Securities held by	Marketable securities （Note 1）	Relationship with the securities issuer（Note 2）	General ledger account		As ofJune	30,2017	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 - noncurrent Financial assets measured at cost - noncurrent Financial assets measured at cost - noncurrent Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	146,388 312,512 13,345,000 391,000 15,041,215 2,130,721 59,945 25,512,583 20,396,748	13,570 $ 23,595 1,274,447 41,055 824,259 29,172 1,181 374,953 253,709	- - 0.23 - 0.55 4.77 0.15 - -	13,570 $ - 23,595 - 1,274,447 - 41,055 - 824,259 - 29,172 - 1,181 - 374,953 - 253,709 -

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 six-month period ended June 30, 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	Balance as at January1,2017	Addition （Note 3）	Addition （Note 3）		Disposal （Note 3）	Disposal （Note 3）		Balance as a Expressed i (Except as	t June 30,2017 n thousands of NTD otherwise indicated)
					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 Formosa Advanced Technologies Co., Ltd.	Formosa Resource Corp. Formosa Chemicals & Fibre Corp.	Investments accounted for under equity method Available-for- sale financial assets - current	Formosa Resource Corp. -	- -	416,250,000 7,316,000	$ 4,159,625 704,531	168,344,000 6,029,000	$ 1,683,440 551,309	- -	$ - -	$ - -	$ - -	584,594,000 13,345,000	$ 5,593,661 1,274,447

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 six-month period ended June 30, 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 six-month period ended June 30, 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 Plastics 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 Other related parties Subsidiary	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Purchases Sales	1,157,312) ($ 13,250,281) ( 828,006) ( 10,410,744) ( 1,805,720) ( 8,412,030) ( 2,518,060) ( 1,287,031) ( 1,055,528) ( 199,426) ( 160,018) ( 6,092,104) ( 163,887) ( 2,996,423	1) ( 12) ( 1) ( 9) ( 2) ( 8) ( 2) ( 1) ( 1) ( - - 5) ( - 4	30 days 30 days 30 days 90 days 90 days 90 days 90 days 30 days 30 days 30 days 30 days 30 days 30 days 60 days	$ - - - - - - - - - - - - - -	- - - - - - - - - - - - - -	176,095 $ 2,089,977 Notes receivable 124,665 Accounts receivable 246,902 1,581,885 414,619 3,528,106 909,276 528,510 204,333 46,234 59,350 989,635 22,218 549,203) (	1 13 33 1 10 2 21 5 3 1 - - 6 - 4) (	- - - - - - - - - - - - - - -

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 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 ABS Plastics (Ningbo) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd.	Nan Ya Plastics Corp. Formosa Petrochemical Corp. Formosa Industries Corp.,Vietnam The Company Nan Ya Plastics Corp. Formosa Petrochemical Corp. Formosa Petrochemical Corp. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Corp. Formosa Synthetic Rubber (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Corp. Formosa Plastics Corp. Formosa Petrochemical Corp.	Other related parties Associates Subsidiary Parent company Other related parties Associates Associates Associates Associates Associates Other related parties Other related parties Associates Other related parties Other related parties Associates	Purchases Purchases Purchases Sales Sales Sales Purchases Sales Sales Sales Sales Sales Sales Sales Purchases Purchases	3,768,481 $ 53,948,711 144,758 593,800) ( 123,218) ( 286,819) ( 945,695 379,712) ( 700,368) ( 429,816) ( 1,134,066) ( 230,662) ( 348,520) ( 307,327) ( 1,281,131 621,714	4 64 - 24) ( 5) ( 12) ( 51 11) ( 21) ( 13) ( 34) ( 7) ( 10) ( 3) ( 11 6	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 90 days 90 days	$ - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - -	572,997) ($ 8,340,631) ( 21,259) ( 96,921 25,043 43,601 152,075) ( 75,842 150,065 82,185 218,726 52,722 75,802 128,232 358,734) ( 115,337) (	4) ( 61) ( - 16 4 7 56) ( 11 22 12 31 8 11 13 19) ( 6) (	- - - - - - - - - - - - - - - -

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 Industries Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Idemitsu Petrochemical Corp. Formosa Phenol (Ningbo) Limited Co. Formosa Phenol (Ningbo) Limited Co. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd.	Nan Ya Plastics Corp. The Company Idemitsu Europe Co., Ltd. Idemitsu Chemicals Taiwan Corp. Idemitsu Kosan Co., Ltd. Idemitsu Chemicals (Hong Kong) Co., Ltd. Nan Ya Plastics (Ningbo) Corp. Formosa Petrochemical Corp. Kuang Yueh Co., Ltd. Yugen Co., Ltd.	Other related parties Parent company Associates Associates Associates Associates Other related parties Associates Associates Other related parties	Purchases Sales Sales Sales Sales Sales Sales Purchases Sales Sales	1,382,704 $ 295,761) ( 169,018) ( 251,035) ( 404,805) ( 391,698) ( 2,005,044) ( 1,170,048 277,336) ( 150,389) (	13 4) ( 2) ( 3) ( 5) ( 5) ( 29) ( 17 2) ( 1) (	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 90 days 60 days after monthly billings 120 days after monthly billings	$ - - - - - - - - - -	- - - - - - - - - -	401,936) ($ 74,895 38,089 79,874 82,172 60,106 452,237 279,605) ( 129,777 82,579	27) ( 8 4 9 9 7 45 21) ( 5 3	- - - - - - - - - -

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 Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Advanced Technologies 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.	Formosa Petrochemical Corp. Nan Ya Plastics Corp. Formosa Plastics Corp. Nan Ya Technology Corp. Formosa Taffeta (Changshu) Co., Ltd. Formosa Industries Corp.,Vietnam Formosa Taffeta (Vietnam) Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Industries Corp.,Vietnam	Other related parties Other related parties Other related parties Other related parties Associates Associates Associates Parent company Parent company Associates	Purchases Purchases Purchases Sales Sales Purchases Sales Sales Purchases Purchases	4,649,729 $ 409,563 150,684 2,754,159) ( 202,717) ( 112,116 120,105) ( 318,926) ( 182,811 277,275	44 4 1 67) ( 23) ( 14 6) ( 16) ( 10 16	15 days 15 days 15 days 60 days 60 days 60 days 60 days 60 days 120 days 60 days	$ - - - - - - - - - -	- - - - - - - - - -	385,724) ($ 56,217) ( 14,680) ( 972,597 187,458 26,427) ( 36,065 120,209 - 46,085) (	18) ( 3) ( 1) ( 60 54 22) ( 4 14 - 13) (	- - - - - - - - - -

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

Table 6, Page 4

Formosa Chemicals and Fibre Corporation and subsidiaries

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

For the six-month period ended June 30, 2017

Table 7 Creditor	Counterparty	Relationship with the counterparty	Balance as at June 30, 2017 （Note 1）	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date Allowance for doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)	Amount collected subsequent to the balance sheet date Allowance for doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)
					Amount	Action taken
The Company The Company The Company The Company The Company Formosa Power (Ningbo) Co., Ltd. Formosa Power (Ningbo) Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Taffeta (Zhong Shan) Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Taffeta (Zhongshan) Co., Ltd. The Company The Company The Company The Company The Company	Formosa Plastics Corp. Nan Ya Plastics Corp. Formosa Idemitsu Petrochemical Corp. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Corp. Nan Ya Plastics (Ningbo) Corp. Nan Ya Technology Corp. Formosa Taffeta (Changshu) Co., Ltd. Kuang Yueh Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa PS (Ningbo) Co., Ltd. Formosa Taffeta Co., Ltd. Formosa Phenol (Ningbo) Limited Co. Formosa Petrochemical Corp. Formosa Industries Corp., Vietnam	Other related parties Other related parties Subsidiary Associates Other related parties Other related parties Other related parties Other related parties Associates Associates Parent company Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associates Subsidiary	176,095 $ 2,089,977 Accounts receivable 1,581,885 Other receivables 38,331 Notes receivable 124,665 Accounts receivable 246,902 Accounts receivable 204,333 Other receivables 116,284 Accounts receivable 414,619 Other receivables 516,079 Accounts receivable 528,510 Other receivables 63,410 Accounts receivable 909,276 Other receivables 371,644 Accounts receivable 3,528,106 Other receivables 290,184 989,635 150,065 218,726 452,237 128,232 972,597 187,458 129,777 120,209	13.11 11.96 11.85 9.34 16.05 7.92 7.14 5.61 2.86 6.51 5.64 4.16 4.64 3.62 11.16 10.08 9.74 2.85	- $ - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - -	176,095 $ 2,089,977 1,581,885 1,043 119,509 141,587 139,535 74,523 29,439 50 288,388 83 211,681 3 859,239 1,580 989,635 150,065 218,726 452,237 128,232 476,540 33,920 65,843 115,598	- $ - - - - - - - - - - - - - - - - - -

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 six-month period ended June 30, 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	8,412,030) ($ 6,092,104) (	In regular terms In regular terms	(5) (4)

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

Expressed in thousands of NTD (Except as otherwise indicated)

Information on investees (Excluding those in Mainland China)

For the six-month period ended June 30, 2017

Investor	Investee （Note 1）	Location	Main business activities	Initial investment amount	Initial investment amount	Shares	held as at June 30,2017	held as at June 30,2017	Net profit (loss) of the investee for the six-month period ended June 30,2017	Investment income (loss) recognised by the Company for the six-month period ended June 30,2017	Footnote
				Balance as at June 30,2017	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 19,534,946 340 225,034 299,999 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 4,546,462 2,300,799,801 498,842,000 84,000 33,000 12,448,800 60,000,000 7,658,750 -	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	126,571 $ 23,296,340 7,635,057 95,674 754,080 69,455,793 10,724,546 29,867,955 1,826 254,271 1,998,807 269,453 7,820,178	2,200) ($ 3,096,177 33,124) ( 13,281) ( 11,331 34,669,920 908,692 461,227 149 20,140 1,508,171 73,783 501,738	6,409) ($ 1,157,970 9,211) ( 4,427) ( 3,776 8,564,704 226,628 461,227 49 6,043 757,050 18,446 213,239	- - - - - - - - - - - - -

Table 9, Page 1

Investor	Investee （Note 1）	Location	Main business activities	Initial investment amount	Initial investment amount	Shares	held as at June 30,2017	held as at June 30,2017	Net profit (loss) of the investee for the six-month period ended June 30,2017	Investment income (loss) recognised by the Company for the six-month period ended June 30,2017	Footnote
				Balance as at June 30,2017	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 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. FCFC International (Cayman) Limited Formosa Chemicals & Fibre (Hong Kong) Co., Ltd.	Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong Taiwan Cayman Islands Taiwan 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	1,201,500 $ 417,145 1,566,879 300,000 400,000 2,151,560 5,845,940 377 100,000 16,084,840 15,482,159	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 - 584,594,000 - 10,000,000 50,000 -	50.00 24.34 88.59 100.00 33.33 33.33 25.00 25.00 33.33 100.00 100.00	1,472,507 $ 253,843 1,699,007 212,806 294,605 1,069,168 5,593,661 222,116 89,904 14,559,454 17,468,026	303,297 $ 7,696) ( 54,395 2,089) ( 63,482) ( 429,739) ( 101,530) ( 1,193,044) ( 5,993) ( - 2,834) (	137,786 $ 1,873) ( 48,189 2,089) ( 21,159) ( 143,232) ( 25,383) ( 298,261) ( 1,997) ( - 2,834) (	- - - - - - - - - - -

Table 9, Page 2

Investor	Investee （Note 1）	Location	Main business activities	Initial investment amount	Initial investment amount	Shares	held as at June 30,2017	held as at June 30,2017	Net profit (loss) of the investee for the six-month period ended June 30,2017	Investment income (loss) recognised by the Company for the six-month period ended June 30,2017	Footnote
				Balance as at June 30,2017	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 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 Development Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Taffeta (Hong Kong) Co., Ltd. Formosa Taffeta (Vietnam) Co., Ltd.	Taiwan Taiwan Samoa Taiwan Taiwan Hong Kong Vietnam	International trading Recycle of spent catalyst Investments 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 29,610 114,912 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	467,600 19,289,016 - 16,100,000 290,464,472 - -	30.00 51.00 100.00 100.00 65.68 100.00 100.00	93,207 $ 307,039 18,422 212,982 7,233,645 1,061,825 1,749,286	3,906 $ 10,277 1,202) ( 11,777 518,373 72,783 86,484	1,172 $ 5,241 1,202) ( 8,887 340,467 72,783 86,484	- - - - - - -

Table 9, Page 3

Investor	Investee （Note 1）	Location	Main business activities	Initial investment amount	Initial investment amount	Shares	held as at June 30,2017	held as at June 30,2017	Net profit (loss) of the investee for the six-month period ended June 30,2017	Investment income (loss) recognised by the Company for the six-month period ended June 30,2017	Footnote
				Balance as at June 30,2017	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 5,090,180 21,119 5,000	213,771 $ 2,958 2,590,434 1,987,122 5,090,180 21,119 -	18,595,352 - - - 171,028,736 469,500 500,000	17.92 43.00 100.00 10.00 100.00 0.11 100.00	1,139,580 $ 9,134 2,261,444 2,127,069 5,013,337 22,498 5,232	52,509) ($ 2,124 56,321 501,738 - 518,373 232	1,954) ($ 913 56,321 49,671 - 389) ( 232	- - - - - - -

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 six-month period ended June 30, 2017

					For the six-month period ended	For the six-month period ended	June 30, 2017
Table 10 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 six-month period ended June 30,2017		Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2017	Net income of investee for the six-month period ended June 30,2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30,2017	Accumulated amount of investment income remitted back to Taiwan as of June 30,2017 Footnote Book value of investments in Mainland China as of June 30, 2017 Expressed in thousands of NTD (Except as otherwise indicated)
					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 9,066,960 1,732,458 4,679,623 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	$ - - - - - -	$ - - - - - -	4,682,741 $ 4,051,414 9,066,960 1,732,458 - 2,151,560	945,501 $ 464,061 703,565) ( 12,290) ( 232,480) ( 429,739) (	100 100 100 100 100 33	945,501 $ 464,061 703,565) ( 12,290) ( 232,480) ( 143,232) (	8,137,720 $ 12,849,957 6,341,578 1,170,949 1,817,779 1,069,168	$ - - - - - -	2 2 2 2 2 7

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 six-month period ended June 30,2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the six-month period ended June 30,2017	Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2017	Net income of investee for the six-month period ended June 30,2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30,2017	Book value of investments in Mainland China as of June 30, 2017	Accumulated amount of investment income remitted back to Taiwan as of June 30,2017	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、4	29,610 $ 1,402,085 15,273 1,334,739	$ - - - -	$ - - - -	29,610 $ 1,402,085 15,273 1,334,739	1,202) ($ 49,139 545) ( 71,819	100 100 100 100	1,202) ($ 49,139 545) ( 71,819	15,543 $ 1,585,314 6,513 947,337	$ - - - -	7 3、7 4、7 5、7

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 six-month period ended June 30,2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the six-month period ended June 30,2017	Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2017	Net income of investee for the six-month period ended June 30,2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30,2017	Book value of investments in Mainland China as of June 30, 2017	Accumulated amount of investment income remitted back to Taiwan as of June 30,2017	Footnote
					Remitted to Mainland China	Remitted back toTaiwan
Changshu Yu Yuan Development Co., Ltd.	Building and selling real estate	70,788 $	2、4	$ -	$ -	$ -	-	5,248 $	41	1,655 $	59,459 $	$ -	6、7

• 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 reviewed 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 June 30, 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 June 30, 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 June 30, 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. Note 7: Investment income recognized in current period is based on the financial reports not reviewed by the independent auditors.

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 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	$ 21,685,133	$ 37,663,637	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

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 six-month period ended June 30, 2017

Table 11 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	Interest during the six- month period ended June30,2017 Others Expressed in thousands of NTD (Except as otherwise indicated)	Interest during the six- month period ended June30,2017 Others Expressed in thousands of NTD (Except as otherwise indicated)
	Amount	%	Amount	%	Balance at June30,2017	%	Balance at June30,2017	Purpose	Maximum balance during the six-month period endedJune30,2017	Balance at June30,2017	Interest rate	Interest during the six- month period ended June30,2017
Formosa Taffeta (Zhongshan) Co., Ltd. Formosa Taffeta (Changshu) Co., Ltd.	$ 12,468 18,162	0.10 0.14	$ - -	- -	$ 4,633 11,819	0.17 0.44	$ 1,308,060 1,977,300	For short-term loans from financial institutions For short-term loans from financial institutions	$ - -	- $ -	- -	- $ -	- -

Table 11, Page 1