FPC — Annual Report 2021

Dec 2, 2021

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Stock Code:1301

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No.100, Shuiguan Rd., Renwu Dist., Kaohsiung City 814, Taiwan (R.O.C.) Telephone: (07)371-1411

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’ Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information

Page

1 2 3 4 5 6 7 8 9 9 9～11 11～29 29 30～67 68～75 75 76 76 76 76 77～83 84 84～85 85 86～87

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Representation Letter

The entities that are required to be included in the combined financial statements of Formosa Plastics Corporation as of and for the year ended December 31, 2021 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10, "Consolidated Financial Statements. " endorsed by the Financial Supervisory Commission of the Republic of China. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Formosa Plastics Corporation and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: Formosa Plastics Corporation Chairman: Jaing-Nan Lin Date: March 10, 2022

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of Formosa Plastics Corporation:

Opinion

We have audited the consolidated financial statements of Formosa Plastics Corporation (the "Company") and its subsidiaries (together referred to as the "Group"), which comprise the consolidated statements of financial position as of December 31, 2021 and 2020, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“ IASs” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

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

1. Revenue Recognition

As the control of products transfers at different points in time, it exposes the risk wherein revenue may not be recognized within the proper period. For this reason, revenue recognition is considered to be one of our key audit matters. The accounting policies and the related information for the revenue recognition were discussed in Notes 4(o) and 6(r) to the consolidated financial statements.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

4-1

The principal audit procedures we have performed to address the aforementioned key audit matter included assessing the rationality of accounting treatment for revenue recognition; vouching the original sales documents according to the transactions with the customers during a selected period of time before and after the balance sheet date to evaluate whether the revenue is recorded appropriately.

2. Valuation of Inventories

The Group measured the cost and net realizable value of inventory and recognized the loss on the balance sheet date according to IAS 2 (including loss on obsolescence of inventories); However, to determine whether or not the loss of inventories should be recognized depends on the subjective judgment of the management. For this reason, the valuation of inventories is considered to be one of the key audit matters. The accounting policies and the related information for the valuation of inventories were discussed in Notes 4(h), 5 and 6(e) to the consolidated financial statements.

The principal audit procedures we have performed to address the aforementioned key audit matter included assessing the appropriateness of the policy on inventory valuation and slack loss recognition; ensuring whether the process of inventory valuation is in conformity with the accounting policies, confirming the sales price adopted by the management and the changes in the market price of inventory in the period after the balance sheet date; and sampling procedures to assess the reasonableness of the net realizable value of inventory.

Other Matter

We did not audit the financial statements of certain investee companies under the equity method and the relevant information on the reinvestment business in Note 13 of the consolidated financial report has not been checked by this accountant, but is checked by other accountants. The Group's investments in the aforementioned investee companies constituted 31.06% and 31.12% of the consolidated total assets as of December 31, 2021 and 2020, respectively; and the recognized shares of profit of associates accounted for using equity method of these investee companies constituted 23.32% and 10.67% of the consolidated income before tax for the years ended December 31, 2021 and 2020, respectively. The consolidated financial statements of the aforementioned investee companies were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these investee companies, is based solely on the reports of other auditors.

We have also audited the parent company only financial statements of the Company as of and for the years ended December 31, 2021 and 2020, and have expressed an unmodified opinion thereon.

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

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

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

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

4-2

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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

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

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

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

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

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

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

4-3

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

The engagement partners on the audit resulting in this independent auditors’ report are Hui-chih Kou and Chi-Lung Yu.

KPMG

Taipei, Taiwan (Republic of China) March 10, 2022

Notes to Readers

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

The independent auditors’ audit report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and consolidated financial statements, the Chinese version shall prevail.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2021 Assets Amount % Current assets: 1100 Cash and cash equivalents (Note 6(a)) $ 13,715,454 3 1110 Current financial assets at fair value through profit or loss (Note 6(b)) 3,793,399 1 1120 Current financial assets at fair value through other comprehensive income (Note 6(b)) 109,316,870 20 1150 Notes receivable (Notes 6(c)(r)) 5,806,161 1 1170 Accounts receivable, net (Notes 6(c)(r)) 15,109,576 3 1180 Accounts receivable－related parties (Notes 6(c)(r) and 7) 4,688,703 1 1200 Other receivables (Note 6(d)) 1,365,955 - 1210 Other receivables－related parties (Notes 6(d) and 7) 7,362,620 1 130X Inventories (Note 6(e)) 24,525,572 4 1470 Other current assets 3,577,911 1 Total current assets 189,262,221 35 Non-current assets: 1517 Financial assets at fair value through other comprehensive income-non-current (Note 6(b)) 24,910,619 5 1550 Investments accounted for using equity method (Note 6(f)) 218,625,143 40 1600 Property, plant and equipment (Note 6(g), 7 and 8) 97,343,039 18 1755 Right-of-use assets (Note 6(h)) 1,133,986 - 1780 Intangible assets (Note 6(o)) 623,165 - 1840 Deferred income tax assets 1,962,887 - 1900 Other non-current assets (Note 8) 9,817,862 2 Total non-current assets 354,416,701 65 Total assets $ 543678922 100

December 31, 2020

Amount % 14,145,110 3 3,888,883 1 102,218,948 21 2,148,261 1 10,372,878 2 3,439,213 1 936,148 - 6,499,202 1 16,681,271 4 5,305,846 1 165,635,760 35 18,647,715 4 193,979,093 40 86,785,954 18 1,147,126 - 590,274 - 2,859,857 1 9,634,644 2 313,644,663 65 479280423 100

Liabilities and Equity Current liabilities: 2100 Short-term borrowings (Notes 6(i)) 2110 Short-term notes and bills payable (Note 6(j)) 2170 Accounts payable 2180 Accounts payable－related parties (Note 7) 2200 Other payables 2220 Other payables－related parties (Note 7) 2280 Current lease liabilities (Note 6(m)) 2321 Current portion of bonds payable (Note 6(l)) 2322 Current portion of long-term borrowings (Notes 6(k) and 8) 2399 Other current liabilities (Note 7) Total current liabilities Non-Current liabilities: 2530 Bonds payable (Note 6(l)) 2540 Long-term borrowings (Note 6(k) and 8). 2570 Deferred income tax liabilities (Note 6(o)) 2580 Non-current lease liabilities (Note 6(m)) 2622 Long-term accounts payable to related parties (Note 7) 2640 Net defined benefit liabilities-non-current 2670 Other non-current liabilities (Note 6(f)) Total non-current liabilities Total liabilities Equity (Note 6(p)): 3110 Ordinary shares 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Total retained earnings 3400 Other equity Total equity Total liabilities and equity	December 31, 2021		December 31, 2020
	Amount %		Amount %
	$ 4,484,676 1 2,099,824 - 7,768,898 1 8,201,747 1 10,352,387 2 15,789,544 3 23,879 - 9,395,685 2 - - 16,424,576 3 74,541,216 13 36,113,569 7 4,187,592 1 19,164,020 4 123,728 - - - 6,159,185 1 199,338 - 65,947,432 13 140,488,648 26 63,657,408 12 11,770,685 2 67,780,313 12 71,352,267 13 107,126,265 20 246,258,845 45 81,503,336 15 403,190,274 74 $ 543,678,922 100		15,356,724 3 16,996,824 4 6,012,635 1 7,102,565 1 3,481,665 1 1,705,923 - 21,452 - 2,898,401 1 2,000,000 - 12,678,838 3 68,255,027 14 38,012,054 8 1,569,776 - 17,703,674 4 121,923 - 14,396,540 3 6,560,931 2 124,358 - 78,489,256 17 146,744,283 31 63,657,408 13 11,742,124 2 65,791,185 14 68,879,676 14 55,559,015 12 190,229,876 40 66,906,732 14 332,536,140 69 479,280,423 100

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

4000 Operating revenue (Notes 6(r) and 7) 5000 Operating costs (Notes 6(e)(g)(h)(n)(s) and 7) Gross profit from operations Operating expenses (Notes 6(c)(g)(h)(n)(s) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss (gain) Total operating expenses Operating income Non-operating income and expenses (Notes 6(f)(g)(m)(t) and 7): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for using equity method Total non-operating income and expenses Profit from continuing operations before income tax 9300 Less: Income tax expenses (Note 6(o)) Profit(Loss) 8300 Other comprehensive income (loss): (Note 6(o)(p)) 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Losses on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income(loss) 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences on translation of foreign financial statements 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income (loss) 8500 Total comprehensive income (loss) Basic earnings per share(NT dollars) (Note 6(q))

2021

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2020 Profit for the year ended December 31, 2020 Other comprehensive income for the year ended December 31, 2020 Comprehensive income for the year ended December 31, 2020 Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of ordinary share Changes in equity of associates and joint ventures accounted for using equity method Other changes in capital surplus: Changes in equity of associates and joint ventures accounted for using equity method Other changes in capital surplus Balance on December 31, 2020 Profit for the year ended December 31, 2021 Other comprehensive income for the year ended December 31, 2021 Comprehensive income for the year ended December 31, 2021 Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of ordinary share Changes in equity of associates and joint ventures accounted for using equity method Other changes in capital surplus: Changes in equity of associates and joint ventures accounted for using equity method Other changes in capital surplus Balance on December 31, 2021						Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent		rest Gains (losses) on hedging instruments 779 - 37,209 37,209 - - - - - - 37,988 - (27,026) (27,026) - - - - - - 10,962	Total equity
		Share capital		Capital surplus			R	etained earnings Special reserve Unappropriate d retained earnings 63,968,902 72,320,189 - 20,036,199 - (92,181) - 19,944,018 - (3,732,416) 4,910,774 (4,910,774) - (28,009,259) - (52,743) - - - - 68,879,676 55,559,015 - 71,355,311 - (51,598) - 71,303,713 - (1,989,128) 2,472,591 (2,472,591) - (15,277,778) - 3,034 - - - - 71,352,267 107,126,265	Total	other equity inte
									Exchange differences on translation of foreign financial statements (5,278,250) - (4,324,810) (4,324,810) - - - - - - (9,603,060) - (3,135,343) (3,135,343) - - - - - - (12,738,403)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income 80,701,025 - (4,229,221) (4,229,221) - - - - - - 76,471,804 - 17,758,973 17,758,973 - - - - - - 94,230,777
		Ordinary shares				Legal reserve		Special reserve 63,968,902 - - - - 4,910,774 - - - - 68,879,676 - - - - 2,472,591 - - - - 71,352,267
	$ 63,657,408 - - - - - - - - - 63,657,408 - - - - - - - - - $ 63,657,408	$ 63,657,408		11,724,498		62,058,769						349,153,320
		- -		- -		- -						20,036,199 (8,609,003)
		-		-		-						11,427,196
		- - - - - -		- - - - 5,407 12,219		3,732,416 - - - - -						- - (28,009,259) (52,743) 5,407 12,219
		63,657,408 - -		11,742,124 - -		65,791,185 - -						332,536,140 71,355,311 14,545,006
		-		-		-						85,900,317
		- - - - - -		- - - - 527 28,034		1,989,128 - - - - -						- - (15,277,778) 3,034 527 28,034
				11,770,685		67,780,313						403,190,274

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss (gain) Net loss on financial assets or liabilities at fair value through profit Interest expense Interest revenue Dividend income Share of profit of associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Unrealized foreign exchange gain Total adjustments to reconcile (profit) loss Changes in operating assets and liabilities: Changes in operating assets: Notes receivable Accounts receivable Accounts receivable due from related parties Other receivables Other receivables due from related parties Inventories Other current assets Total changes in operating assets Changes in operating liabilities: Accounts payable Accounts payable to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets (Increase)Decrease in other receivables due from related parties Increase in other non-current assets Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings (Decrease)Increase in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Proceeds from long-term borrowings Repayments of long-term borrowings Decrease in due to related parties (recognized as other payables－related parties) Payment of lease liabilities Decrease in other non-current liabilities Cash dividends paid Net cash flows (used in) from financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		2021 $ 85,956,814 7,307,919 1,036,461 80,616 95,484 790,439 (236,164) (2,999,580) (23,453,093) (17,476) (130,129) (17,525,523) (3,657,900) (4,687,166) (1,249,491) (457,132) 172,275 (8,202,010) 1,727,935 (16,353,489) 1,756,262 1,099,182 (42,512) 515,522 3,745,737 (790,433) 6,283,758 (10,069,731) (27,595,254) 58,361,560 177,341 5,259,139 (787,439) (5,151,258) 57,859,343 (91,000) - (1,387,981) 43,895 (18,196,657) 53,791 (84,637) (993,439) (1,164,820) (21,820,848) 193,773,116 (204,637,833) (14,900,000) 7,500,000 (2,900,000) 2,636,444 (2,000,000) (137,792) (30,766) (7,263) (15,282,289) (35,986,383) (481,768) (429,656) 14,145,110 $ 13,715,454	2020 24,166,667
			7,210,271 791,281 (1,565) 155,473 1,206,988 (374,256) (3,358,166) (5,212,882) (8,803) (45,042)
			363,299
			436,428 (2,934,044) 122,804 108,293 (204,072) 1,348,028 (1,837,435)
			(2,959,998)
			1,797,199 255,174 198,260 (553,117) (5,236) (408,019)
			1,284,261
			(1,675,737)
			(1,312,438)
			22,854,229 367,388 11,694,866 (1,201,708) (2,270,322)
			31,444,453
			- 12,500 (625,000) - (8,883,039) 19,808 (214,341) 8,499,835 (2,725,618)
			(3,915,855)
			333,456,117 (338,190,057) 2,000,000 8,350,000 - 1,536,598 (4,592,694) (6,131,284) (37,891) (98,896) (28,012,404)
			(31,720,511)
			171,071
			(4,020,842) 18,165,952
			14,145,110

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Formosa Plastics Corporation (the “Company”) was incorporated on November 5, 1954, and established its factories in Kaohsiung City. The Company and its subsidiaries (the “ Group” ) engages in the manufacture and sale of plastic raw materials, chemical fibers, and petrochemical products. The Company has gone through several capital increases and established many divisions, and become a well-diversified enterprise.

(2) Approval date and procedures of the consolidated financial statements:

The accompanying consolidated financial statements of the Group as of and for the three months ended 2021 were authorized for issue by the board of directors on March 10, 2022.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its consolidated financial statements:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

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FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates”

Content of amendment Effective date per IASB The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of balance sheet, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. January 1, 2023 The key amendments to IAS 1 include: ●requiring companies to disclose their material accounting policies rather than their significant accounting policies; ●clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and as such need not be disclosed; and ●clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material to a company’s financial statements. January 1, 2023 The amendments introduce a new definition for accounting estimates: clarifying that they are monetary amounts in the financial statements that are subject to measurement uncertainty. The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy. January 1, 2023

(Continued)

11

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Summary of significant accounting policies:

The following significant accounting policies are adopted in the accompanying consolidated financial statements. The significant accounting policies have been applied consistently to all the reporting periods presented in these financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, R.O.C (hereinafter referred to IFRSs as endorsed by the FSC).

• (b) Basis of preparation

Basis of measurement

Except for the following significant accounts,the consolidated financial statements have been prepared on historical cost basis:

• (i) Financial assets at fair value through other comprehensive income are measured at fair value.

• (ii) The net defined benefit liabilities (assets) are measured as the fair value of the plan assets, less the present value of the defined benefit obligation.

Functional and presentation currency

The functional currency of the Group is determined based on the primary economic environment in which the entities operate. The consolidated financial statements are presented in New Taiwan Dollar, which is the Company’ s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(Continued)

12

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (c) Basis of consolidation

• (i) Principles of preparing consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, 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.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

• (ii) List of subsidiaries in the consolidated interim financial statements:

Name of Investor	Name of subsidiaries	Business activity	Percentage of Ownership (%) December 31, 2021 December 31, 2020 Note % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100
			December 31, 2021 % 100 % 100 % 100 % 100 % 100
The Company The Company Formosa Plastics Corporation (Cayman) Limited Formosa Industries (Hong Kong) Limited Formosa Industries (Hong Kong) Limited	Formosa Plastics Corporation (Cayman) Limited Formosa Industries Corporation U.S.A Formosa Industries (Hong Kong) Limited Formosa Industries (Ningbo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd.	Investment High Density Polyethylene Investment Plastics Electronics

(iii) Subsidiary not included in the consolidated financial statements: None.

(Continued)

13

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Foreign currency

• (i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Nonmonetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

• ●an investment in equity securities designated as at fair value through other comprehensive income;

• ●a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• ●qualifying cash flow hedges to the extent that the hedges are effective.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Group’s functional currency at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to the Group’s functional currency at average rate. Foreign currency differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(Continued)

14

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (e) Classification of current and non-current assets and liabilities

An asset is classified as current under any one of the following conditions. All other assets are classified as non-current.

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is expected to be realized within twelve months after the reporting period; or

• (iv) The asset is cash and cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under any one of the following conditions. All other liabilities are classified as non-current.

• (i) It is expected to be settled during the Group’s normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is due to be settled within twelve months after the reporting period date; or

• (iv) The Group does not have any unconditional right to defer settlement of the liability for at least twelve months after the reporting period date. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(f) Cash and cash equivalents

Cash comprises cash on hand and cash in bank. Cash equivalents are 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 which meet the above definition and are held for the purpose of meeting short?term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(g) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(Continued)

15

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

• 1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• 2) Fair value through other comprehensive income (FVOCI )

Some accounts receivables are held within a business model whose objective is achieved by both collecting contractual cash flows and selling by the Group, therefore, those receivables are measured at FVOCI. However, they are included in the ‘ trade receivables’ line item.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

(Continued)

16

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established.

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. Trade receivables that the Company intends to sell immediately or in the near term are measured at FVTPL; however, they are included in the ‘trade receivables’ line item. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4)

Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

• ‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

• ‧ how the performance of the portfolio is evaluated and reported to the Group’ s management;

• ‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• ‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

• ‧ the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

(Continued)

17

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Group’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

• 5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

‧ contingent events that would change the amount or timing of cash flows;

• ‧ terms that may adjust the contractual coupon rate, including variable rate features;

• ‧ prepayment and extension features; and

• ‧ terms that limit the Group’ s claim to cash flows from specified assets (e.g. nonrecourse features)

• 6) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and trade receivables, other receivable, leases receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

The Group measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

• ‧ debt securities that are determined to have low credit risk at the reporting date; and

• ‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

(Continued)

18

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ creditimpaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

‧ significant financial difficulty of the borrower or issuer;

‧ a breach of contract such as a default or being more than 90 days past due;

‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

‧ the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charge to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

(Continued)

19

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

Debt and equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

• 3) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

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

4) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(Continued)

20

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in acquiring the inventories, production costs and other costs incurred in bringing them to their existing location and condition. The cost of inventories is calculated using the weighted-average method. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) Investment in associates

Associates are those entities in which the Consolidated Company has significant influence, but not control or joint control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill which is arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Consolidated Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Consolidated Company, from the date on which significant influence commences until the date on which significant influence ceases. The Consolidated Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses resulting from transactions between the Consolidated Company and an associate are recognized only to the extent of unrelated Group’s interests in the associate.

When the Consolidated Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the consolidated Company has incurred legal or constructive obligations or made payments on behalf of the associate.

(j)

Joint venture

A joint venture is a joint arrangement whereby the Group has joint control of the arrangement (i.e. joint venturers) in which the Group has rights to the net assets of the arrangement , rather than rights to its assets and obligations for its liabilities. The Group recognizes its interest in a joint venture as an investment and accounts for that investment using the equity method in accordance with IAS 28 “Investments in Associates and Joint Ventures”, unless the Group qualifies for exemption from that Standard. Please refer to note X for the application of the equity method.

When assessing the classification of a joint arrangement, the Group considers the structure and legal form of the arrangement, the terms in the contractual arrangement, and other facts and circumstances. When the facts and circumstances change, the Company reevaluates whether the classification of the joint arrangement has changed.

(Continued)

21

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (k) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Consolidated Company.

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

• 1) Buildings and constructions: 3 to 55 years.

• 2) Machinery and equipment: 2 to 25 years.

• 3) Other facilities: 3 to 15 years.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(l) Lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

• (i) As a leasee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

(Continued)

22

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• －

• fixed payments, including in-substance fixed payments;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• － amounts expected to be payable under a residual value guarantee; and

• － payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• －

• there is a change in future lease payments arising from the change in an index or rate; or

• － there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or

• － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• － there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or

• －

• there is any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

(Continued)

23

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of plant and building that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a leasor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS15 to allocate the consideration in the contract.

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The lessor recognizes the interest income over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor’ s net investment in the lease. The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

(m) Intangible assets

(i) Recognition and measurement

Acquired Yung Chia Chemical Industries Corp. Goodwill and other intangible assets are measured by the excess of orginal investment cost over the fair value of net assets acquired.

(ii) Subsequent measurement

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated.

(Continued)

24

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.The estimated useful lives for current and comparative periods are as follows

1) Technical development expense 10~45 years

2) Computer software 10years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(n) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’ s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(Continued)

25

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) Revenue recognition

• (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

• 1) Sale of goods–plastic raw materials, chemical fibers, and petrochemical products.

The Group manufactures and sells plastic raw materials, chemical fibers, and petrochemical products to downstream manufacturers. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

• 2) Construction contracts

Since the Group entered into separate agreements with different customers on the development of electronic components and software products, wherein the customers have control over the development process of the said items, the Group recognizes its revenue over time on the basis of the construction costs incurred to date as a proportion of the total estimated costs of the contract. The Group recognizes revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. If the Group has recognized a revenue without issuing any bill, then the entitlement to consideration is recognized as a contract asset. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional.

If the Group cannot reasonably measure its progress towards complete satisfaction of the performance obligation of a construction contract, the Group shall recognize revenue only to the extent of the costs expected to be recovered.

A provision for onerous contracts is recognized when the Group expects the unavoidable costs of performing the obligations under a construction contract exceed the economic benefits expected to be received under the contract.

(Continued)

26

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

• 3) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(p) Contract costs

• (i) Incremental costs of obtaining a contract

The Group recognizes as an asset the incremental costs of obtaining a contract with a customer if the Group expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

The Group applies the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

• (ii) Costs to fulfil a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Group recognizes an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

• ‧ the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;

• ‧ the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and

• ‧ the costs are expected to be recovered.

General and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Group cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations(or partially satisfied performance obligations), the Group recognizes these costs as expenses when incurred.

(Continued)

27

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(q) Employee Benefits

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

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided.A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(Continued)

28

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (r) Income Tax

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• (ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Consolidated Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• (iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

• (i) the Consolidated Company has a legally enforceable right to set off current tax assets against current tax liabilities ; and

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(Continued)

29

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iii) Deferred tax asset are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(s) Earnings per share

The Group discloses the Company’ s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding.

(t) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated financial statements in conformity with the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next period.

As inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Refer to note 6(e) for further description of the valuation of inventories.

(Continued)

30

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash on hand Bank deposit Cash equivalents Cash equivalents－Time deposits Repurchase bonds	December 31, 2021 $ 287 4,051,444 9,294,564 369,159 $ 13,715,454	December 31, 2020
		312 4,051,549 9,214,840 878,409
		14,145,110

Please refer to Note 6(u) for the fair value sensitivity analysis and interest rate risk of the financial assets and liabilities of the Group.

(b) Financial assets at fair value through profit or loss and other comprehensive income

December 31, 2021 (i) Mandatorily at FVTPL Private fund $ 3,793,399 Please refer to Notes 6(t) for amount of remeasurement at FVTPL. December 31, 2021 (ii) Equity investments at fair value through other comprehensive income Listed stocks $ 109,106,270 Non-listed stocks 6,372,296 Non-domestic stocks 18,748,923 Total $ 134,227,489	December 31, 2020
	3,888,883
	December 31, 2020
	102,218,948 4,708,593 13,939,122
	120,866,663

Equity investments at fair value through other comprehensive income.

The Group designated the investments shown above as equity instruments at fair value through other comprehensive income because these equity instruments represent those investments that the Group intends to hold for long-term for strategic purposes.

On July 1, 2020, Guangyuan Investment Corp., a non-listed (cabinet) company, reduced its capital by 25%, resulting in the Group to receive the amount of $12,500 thousand on July 30, 2020, with its shareholding ratio remains unchanged.

(Continued)

31

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

On May 12, 2021, the Group approved to obtain 1,300 thousand shares of PuriBlood Medical Co., Ltd., a domestic non-listed (cabinet) company, at a par value of $70 per share, amounting to $91,000 thousand, with the shareholding ratio of 9.14%.

No strategic investments were disposed as of December 31, 2021 and 2020, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

(c) Notes receivable, accounts receivable and other receivables:

Notes receivable from operating activities Accounts receivable (including related parties)－at amortized Account receivables -at fair value through other comprehensiveincome Less : allowance for doubtful receivables	December 31, 2021 $ 5,806,161 19,705,136 175,365 (82,222) $ 25,604,440	December 31, 2020 2,148,261 13,813,715 - (1,624) 15,960,352

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables on December 31, 2021 and 2020. To measure the expected credit losses, accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward-looking information. The loss allowance provision were determined as follows:

Current 1 to 30 days past due 31 to 60 days past due Current 1 to 30 days past due 31 to 60 days past due More than 61 days past due	December 31, 2021	December 31, 2021
	Gross carrying amount Weighted- average loss rate $ 24,307,054 0.001~0.145% 1,330,734 2.836% 48,874 18.406% $ 25,686,662 December 31, 2020		Loss allowance provision
			35,482 37,744 8,996
			82,222
		Weighted- average loss rate 0.001% 0.195% 1.526% 3.090%	Loss allowance provision
			80 1,309 234 1
			1,624

(Continued)

32

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The movement of the allowance for doubtful receivable was as follows:

Beginning balance Impairment losses recognized Impairment losses reversed Foreign exchange gains Ending balance	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,624 80,616 - (18) $ 82,222	2020 3,188 - (1,565) 1 1,624

The Group entered into a factoring and financing agreement (without-recourse) with a financial institution. According to the contract, the net accounts receivable that have matured but are still uncollected will be paid by the financial institution, except for those affected by trade disputes. As of December 31, 2021, the outstanding accounts receivable factoring transaction between the Group and the financial institution was as follows:

KC de Mexico			December	31, 2021
	Purchaser	Factoring Balance Factoring Line USD 7,304,880 USD 288,000		Advanced Amount -	Range of Interest Rate Guarantee project - None
	CITIBANK

(d) Other receivables

Other receivables—loans to related parties Other receivables—related parties Other receivables	December 31, 2021 $ 5,485,564 1,877,056 1,365,955 $ 8,728,575	December 31, 2020
		4,492,125 2,007,077 936,148
		7,435,350

As of December 31, 2021 and 2020, the aging analysis of other receivables were not recognized which estimated by the Group.

• (e) Inventories

Finished goods Work in process Raw materials Supplies Machinery and accessories in process Others	December 31, 2021 $ 14,051,867 2,240,416 4,717,737 384,872 3,120,846 9,834 $ 24,525,572	December 31, 2020
		8,834,651 1,407,913 3,358,022 294,201 2,775,208 11,276
		16,681,271

(Continued)

33

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Change of net realizable value of inventories：

Gain from recovery of inventories	For the years ended December 31,	For the years ended December 31,
	2021 $ (23,344)	2020 (787,978)

The changes in net realizable value of the above inventories have been recognized as cost of goods sold.

• (f) Investments accounted for using equity method

The components of the investments accounted for using equity method were as follows:

Associates Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A. Formosa Heavy Industries Corp. Sky Dragon Investments Limited Mai Liao Power Corp. Formosa Sumco Technology Corporation Formosa Transportation Corp. Formosa Fairway Corp. Yi-Jih Development Corp. Ya Tai Development Corp. Formosa Automobile Corporation Wha Ya Park Management Consulting Corporation Ltd. Formosa Environmental Technology Corporation Formosa Resources Corporation Formosa Plastics Construction Corporation Formosa Group (Cayman) Limited Formosa Olefins, L.L.C. Lolita Packaging, L.L.C. Joint ventures Formosa Asahi Spandex Co., Ltd. Formosa Daikin Advanced Chemical Co., Ltd. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Tokuyama Advanced Chemicals Co., Ltd.	December 31, 2021 $ 101,830,792 67,037,893 7,603,943 4,531,408 12,820,290 6,059,749 1,209,845 49,214 19,682 19,368 468,645 3,196 228,808 6,860,325 593,785 662,099 5,290,503 - 1,467,538 1,331,596 79,365 457,099 $ 218,625,143	December 31, 2020
		87,874,676 61,291,795 7,017,408 4,723,141 12,415,495 5,912,495 1,136,716 68,246 20,159 18,098 259,334 3,029 227,327 6,169,287 568,402 649,229 2,892,722 108,322 1,288,207 1,210,071 - 124,934
		193,979,093

(Continued)

34

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’s shares of net income (loss) of associates and joint ventures were as follows:

Associates Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A. Formosa Heavy Industries Corp. Sky Dragon Investment Limited Mai Liao Power Corp. Formosa Sumco Technology Corporation Formosa Transportation Corp. Formosa Fairway Corp. Yi-Jih Development Corp. Ya Tai Development Corp. Formosa Automobile Corporation Wha Ya Park Management Consulting Corporation Ltd. Formosa Environmental Technology Corporation Formosa Resources Corporation Formosa Plastics Construction Corporation Formosa Group (Cayman) Limited Formosa Olefins, L.L.C. Lolita Packaging, L.L.C. Joint ventures Formosa Asahi Spandex Co., Ltd. Formosa Daikin Advanced Chemical Co., Ltd. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Tokuyama Advanced Chemicals Co., Ltd.	For the years ended December 31, 2021 2020 $ 13,981,333 2,202,241 6,067,104 375,906 69,809 179,148 (163,514) (838,331) 77,016 1,671,622 409,966 380,076 80,127 102,671 (21,230) (12,813) (30) 497 1,270 47 212,364 77,983 638 388 2,438 1,415 74,748 18,722 8,592 (7,119) 31,866 31,472 2,509,696 883,275 (177,723) (59,170) 232,786 54,729 122,970 191,614 (24,298) (41,425) (42,835) (66) $ 23,453,093 5,212,882	For the years ended December 31, 2021 2020 $ 13,981,333 2,202,241 6,067,104 375,906 69,809 179,148 (163,514) (838,331) 77,016 1,671,622 409,966 380,076 80,127 102,671 (21,230) (12,813) (30) 497 1,270 47 212,364 77,983 638 388 2,438 1,415 74,748 18,722 8,592 (7,119) 31,866 31,472 2,509,696 883,275 (177,723) (59,170) 232,786 54,729 122,970 191,614 (24,298) (41,425) (42,835) (66) $ 23,453,093 5,212,882
	2021 $ 13,981,333 6,067,104 69,809 (163,514) 77,016 409,966 80,127 (21,230) (30) 1,270 212,364 638 2,438 74,748 8,592 31,866 2,509,696 (177,723) 232,786 122,970 (24,298) (42,835) $ 23,453,093
		2,202,241 375,906 179,148 (838,331) 1,671,622 380,076 102,671 (12,813) 497 47 77,983 388 1,415 18,722 (7,119) 31,472 883,275 (59,170) 54,729 191,614 (41,425) (66) 5,212,882

(Continued)

35

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Associates

1) The information of the major associate of the investments accounted for using the equity method was as follows:

Associates Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A.	Relationship	Registration Country	Percentage of ownership
			December 31, 2021 December 31, 2020 % 28.56 % 28.56 % 22.66 % 22.66
	Formosa Petrochemical Corporation, the supplier of raw materials for the Group, engages in the manufacturing and sales of petroleum products and petrochemical raw materials. Formosa Plastics Corp., U.S.A, engages in the manufacturing and sales of oil, plastic raw materials, and petrochemical raw materials, and is also the sales target of the Group.	Taiwan U.S.A

The fair value of investments in publicly traded stocks of the major associate was as follows:

follows:
Formosa Petrochemical Corporation	December 31, 2021 $ 260,900,650	December 31, 2020
		271,510,791

The following is the aggregated financial information of the major associate, and necessary changes have already been made to the information therein concerning the associates' consolidated financial statements based on the IFRS as endorsed by FSC to reflect the fair value adjustments made at the time of acquisition and adjustment for accounting policy variations.

The financial information of Formosa Petrochemical Corporation was as follows:

December 31, 2021 Current assets $ 289,585,609 Non-current assets 169,171,499 Current liabilities (57,922,472) Non-current liabilities (39,067,548) Net asset $ 361,767,088 Net asset contributed to non-controlling interest of Formosa Petrochemical Corporation $ 4,352,620 Net asset contributed to Formosa Petrochemical Corporation$ 357,414,468	December 31, 2020 215,309,819 165,613,297 (28,887,601) (39,408,447) 312,627,068 4,525,709 308,101,359

(Continued)

36

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Revenue Net (loss) income Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive loss allocated to non-controlling interest of Formosa Petrochemical Corporation Comprehensive income (loss) allocated to Formosa Petrochemical Corporation Beginning balance of investments in major associate at January 1 Total comprehensive income (loss) allocated to the Company Dividend Received Share of net assets of affiliates as of September 30 Add: share premium acquired not according to holding percentage Add: Net adjustment Total carrying amount of equity of the major associate as of September 30

For the years ended December 31, 2021 2020 $ 620,062,326 415,281,794 $ 49,363,882 7,372,455 5,403,718 (2,174,450) $ 54,767,600 5,198,005 $ (166,074) (304,818) $ 54,933,674 5,502,823 For the years ended December 31, 2021 2020 $ 87,874,676 94,112,087 15,557,682 1,699,526 (1,605,124) (7,889,592) 101,827,234 87,922,021 524 5,398 3,034 (52,743) $ 101,830,792 87,874,676

The financial information of Formosa Plastics Corp., U.S.A. was as follows:

		December 31,	December 31,
		2021	2020
Current assets	$	118,602,999	80,388,030
Non-current assets		243,722,396	253,057,520
Current liabilities		(19,018,738)	(23,145,830)
Non-current liabilities		(36,664,966)	(32,655,356)
Net asset	$	306,641,691	277,644,364
Net asset contributed to non-controlling interest of Formosa
Plastics Corp., U.S.A.	$	10,769,237	7,132,376
Net asset contributed to Formosa Plastics Corp., U.S.A.	$	295,872,454	270,511,988
	For the years ended December 31,
		2021	2020
Revenue	$	185,459,285	101,203,474
Net income (loss)	$	30,663,514	3,043,746
Other comprehensive loss		6,731,228	(3,106,094)
Total comprehensive income (loss)	$	37,394,742	(62,348)
Comprehensive income allocated to non-controlling interest
of Formosa Plastics Corp., U.S.A.	$	3,886,314	1,384,682
Comprehensive income (loss) allocated to Formosa Plastics
Corp., U.S.A.	$	33,508,428	(1,447,030)

(Continued)

37

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Beginning balance of investments in major associate at January 1 Total comprehensive income allocated to the Group Total carrying amount of equity of the major associate as of September 30	For the years ended December 31 2021 2020 $ 61,291,795 65,167,060 5,746,098 (3,875,265) $ 67,037,893 61,291,795
	2021 $ 61,291,795 5,746,098 $ 67,037,893

2) The Group’s financial information for investments accounted for using the equity method that are individually insignificant was as follows:

Carrying amount of individually insignificant associates’ equity Attributable to the Group: Net income Other comprehensive income (loss) Total comprehensive income	December 31, 2021 December 31, 2020 $ 46,420,860 42,189,410 For the years ended December 31, 2021 2020 $ 3,116,033 2,429,883 764,230 (1,149,725) $ 3,880,263 1,280,158

• 3) On March 10, 2021, the Group participated in the capital increase by cash of Formosa Plastics Construction Corporation, an associate owned by the Group, with the total investment amounting to USD31,250 thousand (equivalent to $884,531 thousand) based on its original shareholding ratio of 25%.

• 4) The Group invested in “Lolita Packaging, L.L.C” (an investee accounted for using the equity method) and recognized the losses of $177,723 thousand for the year ended December 31, 2021, respectively. As of December 31, 2021, the Group’ s cumulative losses from the above investment had already exceeded the book value by $70,462 thousand as the Group intends to support this investee company, resulting in the Group to reclassify the investment to other non-current liabilities.

• 5) On December 21, 2020, Yi-Jih Development Corp. reduced its capital, resulting in the Group to receive the amount of 43,895 thousand on January 17, 2021, with its shareholding ratio remains unchanged.

• 6) On December 3, 2019, the Group participated in the capital increase by cash of Formosa Plastics Construction Corporation, an associate owned by the Group, with the total investment amounting to USD500,000 thousand based on its original shareholding ratio of 33%.

(Continued)

38

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Joint ventures

The Group’s financial information for investments in individually insignificant joint venture accounted for using equity method at the reporting date was as follows. This financial information is included in the consolidated financial statements.

Individually insignificant joint venture Attributable to the Group: Net income Other comprehensive loss Total comprehensive income	December 31, 2021 December 31, 2020 $ 3,335,598 2,623,212 For the years ended December 31,	December 31, 2020
		2,623,212
		2020
		204,852 373
		205,225

• 1) On May 12, 2021, the Group participated in the cash capital increase of Formosa Tokuyama Co., Ltd., an joint venture owned by the Group, with the total investment amounting to $375,000 thousand based on its original shareholding ratio of 50%.

• 2) On July 2, 2021, the Group participated in the cash capital increase of Formosa Mitsui Advanced Chemical Co., Ltd., an joint venture owned by the Group, with the total investment amounting to USD4,600 thousand (equivalent to $128,450 thousand) based on its original shareholding ratio of 50%.

• 3) On October 8, 2020, Japan Tokuyama Co., Ltd. and the company founded Formosa Tokuyama Advanced Chemicals Co., Ltd.. The company participated in the capital by cash of Formosa Tokuyama Advanced Chemicals Co., Ltd. with the total investment amounting to $125,000 thousand and had the shareholding by ratio 50%.

• 4) The Group invested in “ Formosa Mitsui Advanced Chemical Co., Ltd.” (an investee accounted for using the equity method) and recognized the losses of $41,425 thousand from this investment for the year ended December 31, 2021. As of December 31, 2020, the Group’ s cumulative losses from the above investment had already exceeded the book value by $25,767 thousand as the Group intends to support this investee company, resulting in the Group to reclassify the investment to other non-current liabilities.

(iii) Collaterals

There are no investments accounted for using the equity method which were pledged to banks as collateral to secure the Group’s bank loans as of December 31, 2021 and 2020.

(Continued)

39

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(g) Property, plant and equipment

The movements of cost and accumulated depreciation and impairments of property, plant and equipment of the the Group for the years ended 2021 were as follows:

Cost: Balance at January 1, 2021 Additions Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2020 Accumulated depreciation/ impairments: Balance at January 1, 2021 Depreciation for the period Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2021 Balance at January 1, 2020 Depreciation for the period Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2020 Carrying amounts: Balance at December 31, 2021 Balance at December 31, 2020	Land and land improvements $ 12,086,178 591,329 (2,667) - (48,518) $ 12,626,322 $ 12,085,340 7,539 - 83,276 (89,977) $ 12,086,178 $ 143,336 115,609 - - (5,445) $ 253,500 $ 29,575 119,618 - - (5,857) $ 143,336 $ 12,372,822 $ 11,942,842	Buildings and constructions 29,415,324 4,209 (18,555) 94,394 (52,267) 29,443,105 29,172,864 34,681 (2,357) 160,482 49,654 29,415,324 18,130,360 875,259 (10,719) 734 (13,854) 18,981,780 17,231,129 873,217 (2,357) 805 27,566 18,130,360 10,461,325 11,284,964	Machinery and equipment 195,709,750 946,203 (1,264,854) 3,041,072 (780,917) 197,651,254 190,805,323 396,739 (1,024,688) 6,026,366 (493,990) 195,709,750 145,399,483 5,761,712 (1,240,940) (932) (196,174) 149,723,149 140,443,440 5,719,129 (1,016,744) (2,513) 256,171 145,399,483 47,928,105 50,310,267	Other facilities 7,678,491 423,768 (162,067) 215,416 (12,829) 8,142,779 6,921,887 486,572 (134,859) 390,731 14,160 7,678,491 5,211,212 513,199 (160,169) (1,416) (7,480) 5,555,346 4,879,940 448,934 (131,798) (6) 14,142 5,211,212 2,587,433 2,467,279	Construction in progress 10,780,602 16,231,148 - (3,079,685) 61,289 23,993,354 9,234,653 7,957,508 - (6,472,139) 60,580 10,780,602 - - - - - - - - - - - - 23,993,354 10,780,602	Total 255,670,345 18,196,657 (1,448,143) 271,197 (833,242)
						271,856,814
						248,220,067 8,883,039 (1,161,904) 188,716 (459,573)
						255,670,345
						168,884,391 7,265,779 (1,411,828) (1,614) (222,953)
						174,513,775
						162,584,084 7,160,898 (1,150,899) (1,714) 292,022
						168,884,391
						97,343,039
						86,785,954

• (i) Collaterals

The property, plant and equipment pledged to secure bank loans as of December 31, 2021 and 2020, are described in Note 8.

• (ii) As of December 31, 2021 and 2020, the Group’ s parcels of land with title temporarily registered under the names of third parties for trust purpose had carrying value as of $33,529 thousand which were recorded under property, plant and equipment. The Group has implemented a deed of trust with the authorities to secure the Group’s rights related to the abovementioned properties.

• (iii) Please refer to Note 6(t) for further information about the capitalized interest on borrowings for the purchase of the property, plant and equipment and gain on disposal of property, plant and equipment.

(Continued)

40

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Right-of-use assets

The Group leases many assets including land and buildings, vehicle and machinery Information about cost and depreciation is as follows:

Cost: Balance at January 1, 2021 Additions Disposals Effect of exchange rate change Balance at December 31, 2021 Balance at January 1,2020 Additions Disposals Effect of exchange rate change Balance at December 31, 2020 Accumulated depreciation: Balance at January 1, 2021 Depreciation for the period Disposals Effect of exchange rate change Balance at December 31, 2021 Balance at January 1,2020 Depreciation for the period Disposals Effect of exchange rate change Balance at December 31, 2020 Carrying amount: Balance at December 31, 2021 Balance at December 31, 2020	Land $ 1,237,853 34,998 (80,275) (6,111) $ 1,186,465 $ 1,204,383 128,886 - (95,416) $ 1,237,853 $ 90,727 42,140 (80,275) (113) $ 52,479 $ 149,273 49,129 - (107,675) $ 90,727 $ 1,133,986 $ 1,147,126	Buildings and constructions - - - - - 304 244 (548) - - - - - - - 243 244 (487) - - - -	Total 1,237,853 34,998 (80,275) (6,111) 1,186,465 1,204,687 129,130 (548) (95,416) 1,237,853 90,727 42,140 (80,275) (113) 52,479 149,516 49,373 (487) (107,675) 90,727 1,133,986 1,147,126

For the years ended December 31, 2021 and 2020, the Group increased the right-of-use assets, please refer to Notes 6(m).

(Continued)

41

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (i) Short-term borrowings

• (i) Short-term borrowings consisted of the following:

Unsecured short-term borrowings Employees’savings Total Interest rate	December 31, 2021 $ 4,377,404 107,272 $ 4,484,676 0.730%~0.860%	December 31, 2020 14,975,936 380,788
		15,356,724
		0.405%~1.035%

(ii) Issuance and redemption of loans

Balance as of January 1, 2021 New issuance during the period Repayments during the period Effect of exchange rate change Balance as of December 31, 2021 Balance as of January 1, 2020 New issuance during the period Repayments during the period Effect of exchange rate change Balance as of December 31, 2020	For the years ended December 31, 2021 $ 15,356,724 193,773,116 (204,637,833) (7,331) $ 4,484,676 For the years ended December 31, 2020 $ 20,255,096 333,456,117 (338,190,057) (164,432) $ 15,356,724

(j) Short-term notes and bills payable

Short-term notes and bills payable Less: Discount on short-term notes and bills payable Total	December 31, 2021	December 31, 2021
	Institutions	Interest rate Amount 0.34% $ 2,100,000 (176) $ 2,099,824
	China Bills Finance Corporation

(Continued)

42

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Short-term notes and bills payable Short-term notes and bills payable Short-term notes and bills payable Short-term notes and bills payable Short-term notes and bills payable Short-term notes and bills payable Short-term notes and bills payable

Less: Discount on short-term notes and bills payable Total

December	31, 2020
Institutions	Interest rate		Amount
CTBC Bank Co., Ltd.	0.269%	$	3,000,000
China Bills Finance Corporation	0.239%~0.269%		3,200,000
Mega Bills Finance Co., Ltd.	0.269%		1,000,000
Grand Bills Finance Corporation	0.239%~0.269%		3,800,000
E.SUN Commercial Bank, Ltd.	0.229%		2,500,000
Yuanta Commercial Bank Co., Ltd.	0.239%~0.269%		2,000,000
Taishin International Bank Co., Ltd.	0.229%~0.239%		1,500,000
			17,000,000
			(3,176)
		$	16,996,824

• (k) Long-term debts

• (i) Long-term debts consisted of the following:

Currency Unsecured long-term debts NTD Currency Unsecured long-term debts NTD Less: Current portion Total (ii) Issuance and redemption of loan Balance of January 1, 2021 New issuance during the period Repayments during the period Effect of exchange rate charge Balance of December 31, 2021 Balance of January 1, 2020 New issuance during the period Repayment during the period Effect of exchange rate charge Balance of December 31, 2020		December 31, 2021 Interest rate Expiration Amount 0.893% ~4.075% 2022~2025 $ 4,187,592 December 31, 2020 Interest rate Expiration Amount 0.800% ~4.750% 2021~2025 $ 3,569,776 (2,000,000) $ 1,569,776 Total $ 3,569,776 2,636,444 (2,000,000) (18,628) $ 4,187,592 Total $ 6,610,540 1,536,598 (4,592,694) 15,332 $ 3,569,776
	Currency	Interest rate
	NTD
	Currency	Interest rate
		0.800% ~4.750%

(Continued)

43

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iii) Secured bank loans

In order to raise funds to build the plant and accessory equipment, the Group signed a syndicated loan agreement with Bank of Taiwan, the lead bank of the syndicated loan, and 19 other banks on November 14, 2013. As of December 31, 2021, the details of the loan agreement are as follows:

• 1) Credit line: $10,300,000 thousand.

• 2) Interest rate: as settled with each participating bank.

• 3) Period: 7 years (including a 3-year extension).

• 4) Collateral: the land at Sixth Naphtha Cracker pledged for 120 percent of the credit line financed by the loan.

• 5) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the audited consolidated financial reports. If the Group breaches these financial covenants, the syndicated banks may determine to declare the unpaid principal, interest, fees and other sums payable by the Group under the loan agreement to be immediately due and payable. These financial ratios are as follows:

• a) Current Ratio (total current assets divided by total current liabilities): not lower than 100%.

• b) Leverage Ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%.

• 6) The Group did not breach the above-mentioned financial covenants in respect of its financial statements as of December 31, 2020 .

• 7) As of May 29, 2020, $10,300,000 thousand of the credit line had been used, and the loan had been repaid all.

(iv) The assets pledged to secure loans are described in Note 8.

• (l) Bonds payable

• (i) Bonds payable consisted of the following:

Domestic unsecured nonconvertible corporate bonds Less: current portion Total Expiry	December 31, 2021 $ 45,509,254 (9,395,685) $ 36,113,569 2022~2030	December 31, 2020 40,910,455 (2,898,401) 38,012,054 2021~2030

(Continued)

44

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Issuance and repayment of bonds payable:

1) Issuance

Issuance
Amount Interest rate Expiry	For the years ended December 31
	2021 $ 7,500,000 0.460%、0.520% 2026、2028	2020
		8,350,000
		0.580%、0.630%、0.670%
		2026、2028、2030

2) Repayment

Amount

For the years ended December 31,	For the years ended December 31,
2021 $ 2,900,000	2020
	-

(iii) The terms of domestic corporate bonds as of December 31, 2021 and 2020 were as follows:

Issue amount 2020.12.31Ending balance 2020.12.31Current portion 2019.12.31Ending balance 2019.12.31Current portion Issuance date Coupon rate Interest payment date Repayment method	The third domestic unsecured nonconvertible corporate bond in 2012	The first domestic unsecured nonconvertible corporate bond in 2013	The second domestic unsecured nonconvertible corporate bond in 2013	The first domestic unsecured nonconvertible corporate bond in 2014
	$ 9,000,000 1,249,403 1,249,403 2,498,752 1,249,349 November 5, 2012 1.25%、1.39%、1.53% November 5 Payable in 2 equal installments for each different coupon rate in 2016~2017, 2018~2019 and 2021~2022, respectively.	11,500,000 1,497,728 748,485 1,496,213 - June 10, 2013 1.23%、1.52% June 10 Payable in 2 equal installments for each different coupon rate in 2016~2017 and 2022~2023, respectively.	8,500,000 6,297,747 3,148,825 6,296,571 - November 8, 2013 1.42%、1.94% November 8, Payable in 2 equal installments for each different coupon rate in 2017~2018 and 2022~2023, respectively.	6,000,000 5,996,261 - 5,995,166 - May 21, 2014 1.83%、1.92% May 21 Payable in 2 equal installments for each different coupon rate in 2023~2024 and 2025~2026, respectively.

(Continued)

45

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Issue amount 2020.12.31Ending balance 2020.12.31Current portion 2019.12.31Ending balance 2019.12.31Current portion Issuance date Coupon rate Interest payment date Repayment method	The first domestic unsecured nonconvertible corporate bond in 2017	The first domestic unsecured nonconvertible corporate bond in 2018	The first domestic unsecured nonconvertible corporate bond in 2020 8,350,000 8,339,615 - 8,337,835 - June 22, 2020 0.58%、0.63%、0.67% June 22 Payable in 2 equal installments for each different coupon rate in 2024~2025, 2026~2027 and 2029~2030, respectively.	The first domestic unsecured nonconvertible corporate bond in 2021
	$ 7,000,000 5,347,366 1,649,631 6,995,471 1,649,052 May 19, 2017 1.09%、1.32% May 19 Payable in 2 equal installments for each different coupon rate in 2021~2022 and 2023~2024, respectively.	9,300,000 9,292,423 2,599,341 9,290,447 - June 26, 2018 0.82%、0.93%、1.09% June 26 Payable in 2 equal installments for each different coupon rate in 2022~2023, 2024~2025 and 2027~2028, respectively.		7,500,000 7,488,711 - - - September 15, 2021 0.46%、0.52% September 15 Payable in 2 equal installments for each different coupon rate in 2025~2026, and 2026~2027, respectively.

(m) Lease liabilities

Lease liabilities consisted of the following:

Current Non-current financial assets	December 31, 2021 $ 23,879 $ 123,728	December 31, 2020
		21,452
		121,923

Please refer to Note 6 (u) the maturity analysis.

On December 31, 2021, the amounts of lease liabilities incurred from the rentals of land increased by $34,998 thousand, with the interest rates of 2.05% and 1.41%, maturing in October 2042 and December 2022. On December 31, 2020, the amounts of lease liabilities incurred from the rentals of land and building increased by $128,886 thousand and $244 thousand, with the interest rates of 2.05% and 1.41%, maturing in December 2042 and March 2021, respectively.

The amount recognized in profit or loss was as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2021 $ 2,916 $ 127,816	2020
		3,390
		135,654

(Continued)

46

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amount recognized in cash flows statement was as follows:

Total cash outflow for leases	For the years ended December 31,	For the years ended December 31,
	2021 $ 161,498	2020
		176,935

• (i) Real estate leases

As of December 31, 2021, the Group leases land and buildings for its office space and employee dormitory. The leases of office space typically run for a period of 2 to 50 years, and 1 year for employee dormitory. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Certain leases provide for additional rent payments that are based on changes in the local price indices, or sales that the Group incurred at the leased store in the period；others require the Group to make payments that relate to the property taxes levied on the lessor and insurance payments made by the lessor; these amounts are generally determined annually.

(ii) Other leases

The Group also leases its buildings with contract terms of one year. These leases are short-term and the Group has elected not to recognize its right-of-use assets and lease liabilities for these leases.

(n) Employee benefits

(i) Defined benefit plan

The movements in the present value of the defined benefit obligations and fair value of plan assets were as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2021 $ 9,286,451 (3,127,266) $ 6,159,185	December 31, 2020 9,421,525 (2,860,594) 6,560,931

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

(Continued)

47

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 1) Composition of the plan asset

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $3,105,007 as of December 31, 2021. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

• 2) Movements in present value of the defined benefit obligations

Defined benefit obligations on January 1 Benefits paid Current service and interest costs Remeasurement of net defined benefit liabilities －actuarial losses arising from change in financial assumptions Decrease due to transfer of related party employees Defined benefit obligations on December 31	For the years ended December 31, 2021 2020 $ 9,421,525 9,791,588 (540,731) (548,306) 179,283 190,814 408,010 156,264 (181,636) (168,835) $ 9,286,451 9,421,525
	2021 $ 9,421,525 (540,731) 179,283 408,010 (181,636) $ 9,286,451

• 3) Movements in fair value of defined benefit plan assets

Fair value of plan assets on January 1 Interest income Remeasurement of net defined obligation assets －return on plan assets (excluding interest income) Benefits already paid by the plan Contributions from employer Fair value of plan assets on December 31	For the years ended December 31, 2021 2020 $ 2,860,594 2,880,882 28,665 28,558 19,323 98,020 (223,381) (261,876) 442,065 115,010 $ 3,127,266 2,860,594
	2021 $ 2,860,594 28,665 19,323 (223,381) 442,065 $ 3,127,266

(Continued)

48

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Expense recognized in profit or loss

The pension costs recognized in profit or loss for the years ended 2021 were as follows:

Current service costs Interest costs Operating costs Selling expenses Administrative expenses	For the years ended December 31,	For the years ended December 31,
	2021 $ 85,578 65,040 $ 150,618 $ 106,316 4,202 40,100 $ 150,618	2020
		93,734 68,522
		162,256
		93,541 5,737 62,978
		162,256

• 5) Remeasurement of net defined benefit assets recognized in other comprehensive income

Balance of January 1, Recognized in current period Balance of December 31,	For the years ended December 31,	For the years ended December 31,
	2021 $ 2,277,163 310,950 $ 2,588,113	2020
		2,230,568 46,595
		2,277,163

• 6) Actuarial assumptions

The following are the principal actuarial assumptions as of 2021:

The following are the principal actuarial assumptions	as of 2021:
Discount rate Rate of future salary increases	For the years ended December 31,
	2021 2020 % 0.50 % 1.00 % 2.85 % 2.85

Based on the actuarial report, the Group is expected to make contributions of $110,306 to the defined benefit plans for the one year period after the reporting date.

The weighted average duration of the defined benefit plan is 8.0 years.

• 7) Sensitivity analysis

When calculating the present value of the defined benefit obligation, the Group should use judgments and estimates in determining the related actuarial assumptions at balance sheet date, including discount rate, expected return on plan assets and future salary increases. Any changes in actuarial assumptions may significantly impact the present value of the defined benefit obligation.

(Continued)

49

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of December 31, 2021 and 2020, the effects of the present value of the defined benefit obligation arising from changes in principal actuarial assumptions were as follows:

December 31, 2021 Discount rate (change 0.25%) Future salary increases (change 1.00%) December 31, 2020 Discount rate (change 0.25％) Future salary increases (change 1.00％)	Effect of defined benefit obligations Increase Amount Decrease Amount $ (153,582) 158,929 656,340 (585,755) (162,481) 168,488 710,991 (629,177)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. The sensitivity analysis adopts the same methods for determining the defined benefit assets at balance sheet date.

The same methods and assumptions are adopted in the two-year sensitivity analysis.

(ii) Defined contribution plan

The Group contributes an amount equal to 6% of the employee’s monthly wages to the Labor Pension personal account with the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act, under which, the Group is not required to bear the regulated or putative obligation subsequent to the payment of fixed-rate contribution.

The Group’s pension costs under the defined contribution pension plan amounted to $357,602 and $278,846 for the years ended 2021 and 2020, respectively.

(o) Income tax

• (i) The components of income tax for the years ended December 31, 2021 and 2020 were as follows:

Current income tax expense Deferred tax expense (income) The origination of temporary differences Income tax expense	For the years ended December 31,	For the years ended December 31,
	2021 $ 12,115,469 2,486,034 $ 14,601,503	2020 3,552,818 577,650
		4,130,468

(Continued)

50

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ii) The income tax expense related to components of other comprehensive income for the years ended December 31, 2021 and 2020 was as follows:

Remeasurement of defined benefit plan Items that will subsequently be reclassified to profit or loss: Exchange differences on translation of foreign financial statements	For the years ended December 31,	For the years ended December 31,
	2021 $ 77,737 $ 50,981	2020 11,649 (121,708)

The income tax calculated at a statutory income tax rate on accounting income before income tax was reconciled with income tax expense recognized in profit or loss as follows:

Income tax calculated based on pretax financial income Effect of difference in income tax rate between foreign investee and the Company Tax- exempt income Tax effect on investment income recognized under equity method and Non-deductible expenses Under provision in prior periods 10% income surtax on undistributed earnings Income tax expense	For the years ended December 31, 2021 2020 $ 17,191,363 4,833,333 2,733,681 137,839 (601,043) (671,633) (4,722,859) (255,218) 361 12,276 - 73,871 $ 14,601,503 4,130,468	For the years ended December 31, 2021 2020 $ 17,191,363 4,833,333 2,733,681 137,839 (601,043) (671,633) (4,722,859) (255,218) 361 12,276 - 73,871 $ 14,601,503 4,130,468
		2020
		4,833,333 137,839 (671,633) (255,218) 12,276 73,871 4,130,468

• (iii) Recognized deferred tax assets and liabilities

Movements in deferred tax assets and liabilities were as follows:

For the year ended December 31, 2020 Deferred tax assets Unrealized gross loss Unamortized fixed manufacturing expense Accrued pension liability Unamortized impairment loss on non-financial assets Unrealized foreign currency exchange loss Others Total Deferred tax liabilities Foreign investment income under equity method Unrealized foreign currency exchange gain Accumulated translation adjustment Depreciation Others Total	Beginning balance	Recognized in income or loss
	$ 5,298 14,499 1,390,686 257,257 34,348 1,157,769 $ 2,859,857 $ 17,409,468 27,092 182,021 84,831 262 $ 17,703,674

(Continued)

51

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the year ended December 31, 2018 Deferred tax assets Unrealized gross loss Unamortized fixed manufacturing expense Accrued pension liability Unrealized impairment loss on non-financial assets Unrealized foreign currency exchange loss Others Total Deferred tax liabilities Foreign investment income under equity method Unrealized foreign currency exchange gain Accumulated translation adjustment Depreciation Unrealized gross profit Others Total	Beginning balance	Recognized in income or loss
	$ - 25,507 1,460,641 319,012 56,375 1,010,405 $ 2,871,940 $ 16,817,774 58,187 60,313 85,081 6,693 - $ 17,028,048

(iv) The Company’s income tax returns have been examined and approved through 2019 by the R.O.C tax authorities.

(p) Capital and other equity

As the year ended 2021 and 2020, the Company’s government registered total authorized capital and issued capital stock both amounted to $63,657,408, divided into $6,365,741 thousand shares of stock with $10 par value per share. All issued shares were paid up upon issuance.

(i) Capital surplus

The components of capital surplus were as follows:

Paid-in capital in excess of par value Treasury stock transactions Equity in capital surplus of investee companies Overdue unpaid directors’ remuneration and dividends Paid in capital in excess of the par value derived from overseas corporate bond conversion	December 31, 2021 $ 8,130,081 16,263 202,638 424,200 2,997,503 $ 11,770,685	December 31, 2020
		8,130,081 16,263 202,111 396,166 2,997,503
		11,742,124

(Continued)

52

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(ii) Retained earnings

According to the rules of the Company’s articles and Company Act, the Company’s annual net profit, after providing for income tax and covering the losses of previous years, is first set aside for legal reserve at the rate of 10% thereof. In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside. The remainder plus the undistributed earnings of the previous years are distributed or left undistributed for business purposes according to the resolution of the stockholders’ dividend distribution plan, which are initially proposed by the Board of Directors and adopted by the shareholders in the Annual Stockholders’ Meeting.

The Company also adopts a dividend distribution policy, under which, net earnings after deducting the legal reserve and special reserve may first be distributed by way of cash dividends which shall be equal to at least fifty percent (50%) of the Company’s total dividend distribution every year. The capitalization of earnings and capital surplus shall not exceed fifty percent of the total dividends.

• 1) Legal reserve When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

• 2) Special reserve

As the Company opted to avail of the exemptions allowed under IFRS 1 “ First-time Adoption of International Financial Reporting Standards” during the Company’s firsttime adoption of the IFRS as endorsed by the FSC, unrealized revaluation increments and cumulative translation adjustments (gains) of $2,790,507 thousand, which were previously recognized in shareholders’ equity were reclassified to retained earnings. In accordance with Regulatory issued by the FSC on April 6, 2012, a special reserve is appropriated from retained earnings for aforementioned reclassification. In addition, during the use, disposal or reclassifications of relevant assets, this special reserve is reverted to distributable earnings proportionately. The carrying amount of special reserve amounted to $2,790,507 thousand as of December 31, 2021 and 2020.

According to the regulations of the FSC, the Company is also required to set aside an additional special reserve, as part of the distribution of its annual earnings, equal to the difference between the amount of above-mentioned special reserve and net debit balance of the other components of stockholders’ equity.

(Continued)

53

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Earnings distribution

The appropriation of earning in 2020 and 2019 were approved in the shareholders’ meeting on July 29, 2021, and June 10, 2020, respectively. The amounts of appropriation of dividends per share were as follows:

Dividends attributable to ordinary shareholders: Cash dividends	2020	2020	2020	2019 Dividends per share Amount 4.40 28,009,259	2019 Dividends per share Amount 4.40 28,009,259
	Dividends per share		Amount		Amount
	$ 2.40		15,277,778		28,009,259

• (iii) Other equity

Balance at January 1, 2021 Exchange differences arising on translation of foreign operations Share of exchange differences on associates and joint ventures accounted for using equity method Share of unrealized gains or losses on associates accounted for using equity method and their financial assets at fair value through other comprehensive income Unrealized gains on financial assets at fair value through other comprehensive income Share of cash flow hedge of associates and joint ventures Balance at December 31, 2021 Balance at January 1, 2020 Exchange differences arising on translation of foreign operations Share of exchange differences on associates and joint ventures accounted for using equity method Share of unrealized gains or losses on associates accounted for using equity method and their financial assets at fair value through other comprehensive income Unrealized gains on financial assets at fair value through other comprehensive income Share of cash flow hedge of associates and joint ventures Balance at December 31, 2020	Exchange differences on translation of foreign operations $ (9,603,060) (2,645,862) (489,481) - - - $ (12,738,403) Exchange differences on translation of foreign operations $ (5,278,250) (3,579,265) (745,545) - - - $ (9,603,060)	Unrealized gain (loss) on financial assets at fair value through profit or loss 76,471,804 - - 4,486,645 13,272,328 - 94,230,777 Unrealized gain (loss) on financial assets at fair value through profit or loss 80,701,025 - - (1,512,954) (2,716,267) - 76,471,804	Gain (loss) on hedging instruments 37,988 - - - - (27,026) 10,962 Gain (loss) on hedging instruments 779 - - - - 37,209 37,988	Total 66,906,732 (2,645,862) (489,481) 4,486,645 13,272,328 (27,026)
				81,503,336
				Total 75,423,554 (3,579,265) (745,545) (1,512,954) (2,716,267) 37,209
				66,906,732

(Continued)

54

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(q) Earnings per share

The basic earnings per share was calculated as follows:

The basic earnings per share was calculated as follows:
Profit (loss) attributable to ordinary shareholders Weighted average number of outstanding ordinary shares	For the years ended December 31,
	$ 71,355,311 6,365,741 $ 11.21	20,036,199
		6,365,741
		3.15

(r) Revenue from Contracts with Customers

(i) Revenue Segmentation

Major market： Taiwan Mainland China Others Major goods： PVC Liquid caustic soda HDPE LLDPE EVA PP POM AE SAP Carbon fiber n-Butanol AN MMA ECH Others			For the year	s ended Decemb	er 31, 2021
	Plastic division $ 25,362,144 26,230,283 41,088,637 $ 92,681,064 $ 66,239,455 14,345,326 - - - - - - - - - - - - 12,096,283 $ 92,681,064	Polyolefin division 12,069,147 20,471,508 25,366,530 57,907,185 - - 16,320,936 19,180,665 22,264,625 - - - - - - - - - 140,959 57,907,185	Polypropylene division 8,726,223 24,325,342 6,565,552 39,617,117 - - - - - 36,955,845 2,661,272 - - - - - - - - 39,617,117	Tairylan division 10,469,717 24,566,190 11,430,147	Chemistry division 25,062,912 2,551,253 5,798,673 33,412,838 - - - - - - - - - - - 16,182,862 4,146,842 5,866,548 7,216,586 33,412,838	Others divisions 2,546,162 560,711 407,170 3,514,043 - - - - - - - - - - - - - - 3,514,043 3,514,043	Total 84,236,305 98,705,287 90,656,709
				46,466,054			273,598,301
				- - - - - - - 28,610,686 6,862,280 3,577,242 3,415,318 - - - 4,000,528			66,239,455 14,345,326 16,320,936 19,180,665 22,264,625 36,955,845 2,661,272 28,610,686 6,862,280 3,577,242 3,415,318 16,182,862 4,146,842 5,866,548 26,968,399
				46,466,054			273,598,301

(Continued)

55

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Major market： Taiwan Mainland China Others Major goods： PVC Liquid caustic soda HDPE LLDPE EVA PP POM AE SAP Carbon fiber n-Butanol AN MMA ECH Others			For the year	s ended Decembe	r 31, 2020
	Plastic division $ 18,667,819 19,290,729 24,627,862 $ 62,586,410 $ 44,823,166 11,325,533 - - - - - - - - - - - - 6,437,711 $ 62,586,410	Polyolefin division 9,455,117 15,805,813 13,962,756 39,223,686 - - 14,464,932 12,535,316 12,044,734 - - - - - - - - - 178,704 39,223,686	Polypropylene division 7,289,657 22,723,697 3,937,297 33,950,651 - - - - - 32,088,111 1,862,540 - - - - - - - - 33,950,651	Tairylan division 5,140,695 16,190,551 6,529,930 27,861,176 - - - - - - - 13,141,652 6,044,012 3,278,919 2,792,603 - - - 2,603,990 27,861,176	Chemistry division 13,170,724 2,727,738 2,638,469 18,536,931 - - - - - - - - - - - 7,745,444 2,980,926 4,001,246 3,809,315 18,536,931	Others divisions 3,058,127 353,965 242,459 3,654,551 - - - - - - - - - - - - - - 3,654,551 3,654,551	Total 56,782,139 77,092,493 51,938,773
							185,813,405
							44,823,166 11,325,533 14,464,932 12,535,316 12,044,734 32,088,111 1,862,540 13,141,652 6,044,012 3,278,919 2,792,603 7,745,444 2,980,926 4,001,246 16,684,271
							185,813,405

(ii) Balance of contracts

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful receivables Total	December 31, 2021 $ 5,806,161 19,880,501 (82,222) $ 25,604,440	December 31, 2020 2,148,261 13,813,715 (1,624) 15,960,352	January 1, 2020 2,584,690 10,957,433 (3,188) 13,538,935

Please refer to Note 6(c) for the disclosure of accounts receivable and impairment.

(s) Employee bonus

According to the Company’s articles, 0.05%~0.5% of the Company’s profit, excluding employee compensations, and after being appropriated to offset accumulated deficits, if any, should be distributed as employee compensations.

For the years ended December 31, 2021 and 2020, the appropriated employee compensations amounted to $110,563 thousand and $30,211 thousand, respectively. These amounts were calculated based on the Company’ s articles of incorporation and the net profit before tax after deducting employee compensations, and were recognized under operating costs and operating expenses.The employee compensations were consistent with the actual distributions. Related information can be accessedfrom the Market Observation Post System website.

(Continued)

56

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(t) Non-operating income and expenses

(i) Interest income

Interest income from bank deposits Other interest income Total Interest income (ii) Other income Rental income Dividends income (iii) Other gains and losses Gain on disposal of property, plant and equipment Foreign currency exchange gain (loss) Gain (loss) on financial assets at fair value through profit or loss Other gains Other losses Net of other gains and losses (iv) Finance costs Interest expense Less: capitalized interest Interest expense from bank loans Capitalized interest rate	2021 $ 120,048 116,116 $ 236,164 2021 $ 155,929 2,999,580 $ 3,155,509 2021 $ 17,476 (458,754) (95,484) 730,235 (454,979) $ (261,506) 2021 $ 942,600 (152,161) $ 790,439 0.889%-1.394%	2020 235,453 138,803 374,256 2020 176,985 3,358,166 3,535,151 2020 8,803 (1,080,279) (155,473) 582,659 (203,559) (847,849) 2020 1,291,951 (84,963) 1,206,988 0.800%-2.885%

(u) Financial Instruments

(i) Credit risk

1) Credit risk exposure

The Group is exposed to credit risk primarily from financial assets and contract assets.

(Continued)

57

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Concentration of credit risk

As sales are made to customers worldwide, the Group’ s exposure to credit risk concentration is expected to be low. Also, the Group mitigates its exposure by evaluating the customers’ financial situation regularly.

3) Receivables and debt securities

For credit risk exposure of notes and trade receivables, please refer to note 6(c).

(ii) Liquidity risk

The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including estimated interest payments but excluding the impact of netting agreements:

Carrying amount December 31, 2021 Non-derivative financial liabilities Unsecured bank loans $ 8,564,996 Unsecured Bonds payable 45,509,254 Short-term notes and bills payable 2,099,824 Accounts payable (including related parties) 15,970,645 Other payables (including related parties) 12,573,831 Loans from related parties 13,568,100 Other current liabilities 9,484,981 Employees’ savings 107,272 Lease liabilities 147,607 $ 108,026,510 December 31, 2020 Non-derivative financial liabilities Unsecured bank loans $ 18,545,712 Unsecured Bonds payable 40,910,455 Short-term notes and bills payable 16,996,824 Accounts payable (including related parties) 13,115,200 Other payables (including related parties) 5,187,588 Loans from related parties 14,396,540 Other current liabilities 6,665,774 Employees’ savings 380,788 Lease liabilities 143,375 $ 116,342,256	Carrying amount		Contractual cash flow		Within 6 months		6~12months		1~2years		2~5years 4,483,239 18,732,685 - - - - - - 23,590 23,239,514 1,857,634 20,963,435 - - - - - - 22,291 22,843,360	Over 5 years
			8,877,555 47,079,823 2,100,000 15,970,645 12,573,831 13,946,379 9,484,981 107,696 176,925		4,394,316 5,025,353 2,100,000 15,970,645 12,573,831 - 9,484,981 107,696 13,304		- 4,480,235 - - - - - - 13,304		- 9,104,800 - - - 13,946,379 - - 7,863			- 9,736,750 - - - - - - 118,864
			110,317,835		49,670,126		4,493,539		23,059,042			9,855,614
			18,903,103 42,878,823 17,000,000 13,126,143 5,187,590 14,894,084 6,665,774 382,863 173,549		17,045,469 1,658,993 17,000,000 13,126,143 5,187,590 - 6,665,774 382,863 20,285		- 1,269,125 - - - - - - 3,846		- 9,661,880 - - - 14,894,084 - - 7,692			- 9,325,390 - - - - - - 119,435
			119,211,929		61,087,117		1,272,971		24,563,656			9,444,825

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

(Continued)

58

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Currency risk

• 1) Exposure to currency risk

The Group’s exposure to significant foreign currency risk was as follows:

Financial assets: Monetary items USD EUR JPY CNY Financial liabilities Monetary items USD EUR JPY	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2020 Foreign currency (in thousand) Exchange Rate New Taiwan Dollars 433,847 28.5080 12,368,110 6,509 34.5600 224,951 13,783 0.2724 3,754 9,335 4.3691 40,786 41,332 28.5080 1,178,293 235 34.5600 8,122 76,728 0.2724 20,901	December 31, 2020 Foreign currency (in thousand) Exchange Rate New Taiwan Dollars 433,847 28.5080 12,368,110 6,509 34.5600 224,951 13,783 0.2724 3,754 9,335 4.3691 40,786 41,332 28.5080 1,178,293 235 34.5600 8,122 76,728 0.2724 20,901
	Foreign currency (in thousand)	Exchange Rate	New Taiwan Dollars		Exchange Rate New Taiwan Dollars 28.5080 12,368,110 34.5600 224,951 0.2724 3,754 4.3691 40,786 28.5080 1,178,293 34.5600 8,122 0.2724 20,901
	$ 658,356 6,989 18,812 339 61,858 335 57,336	27.6900 31.5030 0.2408 4.3431 27.6900 31.5030 0.2408	18,229,878 220,174 4,530 1,472 1,712,848 10,554 13,807	433,847 6,509 13,783 9,335 41,332 235 76,728

• 2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the foreign currency exchange fluctuations on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, accounts payable and other payables which are denominated in different foreign currencies. A 1% depreciation of the NTD against the USD, EUR, JPY and CNY as the year ended of 2021 and 2020 would have decreased and increased the net income after tax by $167,188 and $114,303 for the years ended 2021 and 2020 respectively. This analysis is performed on the same basis assuming that all other variables remain constant and ignoring any impact of forecasted sales and purchases.

• 3) Foreign exchange gain and loss on monetary items

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For years 2021 and 2020, foreign exchange loss (including realized and unrealized portions) amounted to $458,754 and $1,080,279, respectively.

• (iv) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Group's financial assets and liabilities.

(Continued)

59

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 1% when reporting to management internally, which also represents the Group management's assessment of the reasonably possible interest rate change.

An increase 1% in interest rates mainly from loans with floating interest rates at the reporting date would have decreased net income by $85,650 thousand and $149,759 thousand for the years ended December 31, 2021 and 2020 with all other variable factors remaining constant. This is mainly due to the Group’s borrowing at variable rates.

(v) Other market price risk

If the securities price changes at the reporting date (sensitivity analyses were performed using the same basis for both twelve-month period ended September 30, 2021 and 2020, and other factors remain unchanged), impacts on comprehensive income are as below:

Prices of securities at the reporting date	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
	2021			2020
	Other comprehensive income after tax		Net income	Other comprehensive income after tax 1,022,189 (1,022,189)	Net income
Increasing 1% Decreasing 1%	$ 1,093,169 $ (1,093,169)		-		-
			-		-

(vi) Fair value

• 1) Types and fair value of financial instruments

The Group’ s financial assets and liabilities are listed as follows: (including (1) the information on the levels in fair value hierarchy, wherein, disclosures are not required for financial instruments not measured at fair value with a carrying value approximating its fair value; and (2) those equity investments in which the fair value cannot be reliably measured and without any quoted price in the open market)

Financial assets at fair value through profit or loss Mandatorily at FVTPL Subtotal Financial assets at fair value through OCI Listed stocks Non-Listed stocks Unquoted equity instruments at fair value Subtotal				December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Carrying value					Fair value
				Level 1		Level 2		Level 3 - - - - 24,910,619 24,910,619	Total
	$ 3,793,399 3,793,399 109,106,270 210,600 24,910,619 134,227,489			-		3,793,399			3,793,399
		3,793,399		-		3,793,399			3,793,399
		109,106,270 210,600 24,910,619		109,106,270 210,600 -		- - -			109,106,270 210,600 24,910,619
		134,227,489		109,316,870		-			134,227,489

(Continued)

60

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables (including related parties) Subtotal Total Financial liabilities measured at amortized cost Bonds payable Short-term notes and bills payable Short-term borrowings Long-term loans (including current portion) Loans from related parties Accounts payable (including related parties) Other payables (including related parties) Other current liabilities Lease liabilities Total Financial assets at fair value through profit or loss Mandatorily at FVTPL Subtotal Financial assets at fair value through OCI Listed stocks Unquoted equity instruments at fair value Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables (including related parties) Subtotal Total				December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Carrying value					Fair value
				Level 1		Level 2			Total
	$ 13,715,454 25,604,440 8,728,575 48,048,469 $ 186,069,357 $ 45,509,254 2,099,824 4,484,676 4,187,592 13,568,100 15,970,645 12,573,831 9,484,981 147,607 $ 108,026,510			- - -		- - -			- - -
				-		-			-
				109,316,870		3,793,399			138,020,888
				- - - - - - - - -		- - - - - - - - -			- - - - - - - - -
				-		-			-
	Carrying value					Fair value
				Level 1		Level 2		Level 3 - - - 18,647,715 18,647,715 - - - - 18,647,715	Total
	$ 3,888,883 3,888,883 102,218,948 18,647,715 120,866,663 14,145,110 15,960,352 7,435,350 37,540,812 $ 162,296,358			-		3,888,883			3,888,883
				-		3,888,883			3,888,883
				102,218,948 -		- -			102,218,948 18,647,715
				102,218,948		-			120,866,663
				- - -		- - -			- - -
				-		-			-
				102,218,948		3,888,883			124,755,546

(Continued)

61

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial liabilities measured at amortized cost Bonds payable (including current portion) Short-term notes and bills payable Short-term loans Long-term loans (including current portion) Loans from related parties Accounts payable (including related parties) Other payables (including related parties) Other current liabilities Lease liabilities Total			December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
	Carrying value				Fair value
			Level 1		Level 2		Level 3 - - - - - - - - - -	Total
	$ 40,910,455 16,996,824 15,356,724 3,569,776 14,396,540 13,115,200 5,187,588 6,665,774 143,375 $ 116,342,256		- - - - - - - - -		- - - - - - - - -			- - - - - - - - -
			-		-			-

• 2) Valuation techniques for financial instruments not measured at fair value

The Group’ s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

Financial liabilities measured at amortized cost.

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

• 3) Valuation techniques for financial instruments measured at fair value

The fair value of the financial instruments traded in active markets is based on quoted market prices. The fair value of listed equity instruments is based on the market prices that were published at main stock exchanges.

If the financial instruments possessed by the Group have quoted market prices in active markets, the fair value was as follows:

The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices (includes publicly traded stocks).

• 4) There was no transfer between the fair value hierarchy levels for the years ended December 31, 2021 and 2020.

(Continued)

62

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 5) Movement of financial instruments grouped into level 3

January 1, 2021 Total gains and losses recognized: In other comprehensive income Effect of exchange rate changes December 31, 2021 January 1, 2020 Total gains and losses recognized: In other comprehensive income Proceeds from capital reduction Effect of exchange rate changes December 31, 2020	Financial assets at fair value through other comprehensive income Unquoted equity instruments $ 18,647,715 6,265,407 (2,503) $ 24,910,619 $ 21,408,559 (1,980,080) (660,228) (12,500) (108,036) $ 18,647,715

• 6) The valuation procedures for fair value measurements being categorized within Level 3 is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price. According to the group’s accounting policy, at the reporting date, the analysis of value changes of remeasured or reevaluated assets and liabilities is performed to ensure the reasonability of the evaluation results.

• 7) The quantitative information of significant unobservable inputs (Level 3)

Most of the group’ s financial instruments that use Level 3 inputs have only one significant unobservable input. Only equity investment with no-active markets have multiple significant unobservable inputs.

(Continued)

63

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income – unquoted equity instruments	Valuation technique Market comparable companies Net Asset Value Method	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement Price to earnings ratio multiple, price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability The higher the multiple, the higher the fair value Not applicable Not applicable

• 8) Valuation model used in Level 3 fair value measurement - sensitivity analysis of the fair value to the reasonable replaceable assumption

The valuation models and assumptions used to measure the fair value of the financial instruments is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

December 31, 2021 Financial assets at fair value through other comprehensive income – unquoted equity instruments	Input Price to earnings ratio multiple price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	Recognized in other comprehensive income Change Favorable change Unfavorable change ± 1% $ 200,830 (200,830)

(Continued)

64

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2020 Financial assets at fair value through other comprehensive income – unquoted equity instruments	Input Price to earnings ratio multiple price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	Recognized in other comprehensive income Change Favorable change Unfavorable change ± 1% $ 147,165 (147,165)	Recognized in other comprehensive income	Recognized in other comprehensive income
				Unfavorable change
				(147,165)

(v) Financial risk management

The Group seeks to ensure sufficient cost-efficient funding readily available when needed. The Group manages its exposure to credit risk, liquidity risk and market risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.

(i) Framework of risk management

Items	Risk Management Department
1. Interest rate, exchange rate, and inflation 2.Investments of high risk and leverage, loans to others, guarantees and endorsements, and trade of derivatives 3.R&D plans 4.Changes on significant domestic and international policies and regulations 5.Changes on technologies 6.Changes on corporate images 7.Merge and reinvestments

(Continued)

65

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Items	Risk Management Department	Risk Detection
8.Expansion of factories 9.Centralization of purchases and sales 10.Changes of directors, controllers and major shareholders 11.Changes of management rights 12.Litigation and other affairs 13.Litigation and other affairs	General manager department; factory affair department of each business division; manager department; and general management department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; manager department of each business division; purchase department; and general management department Weekiny marker price meeting; purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; and shares management division of finance department Operation management meeting and board meeting General manager department; and general management department Operation management meeting and board meeting General manager department; general management department; and legal department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; general management department; and legal department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is exposed to credit risk from operating activities, primarily trade receivables, and from financing activities, primarily deposits, fixedincome investments and other financial instruments with banks.

1) Accounts receivable and other receivables

To maintain the credit quality of receivables, a credit risk management policy has been established. Under this policy, each customer is analyzed individually regarding customer’ s financial situation, external and internal credit rating, historical trading record, and current economic condition which may affect customer’s payment ability. In addition, some methods are adopted to reduce the credit risk for specific customers, such as prepayment and insurance of accounts receivable.

2) Investments

The Group mainly invests in Petrochemical Industry, which belongs to mature industry with lower risk. In addition, the Group’s prudent management creates financial health without high-leveraged investment.

(Continued)

66

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Guarantee

The Group’s endorsement policy is limited to endorsement of subsidiaries or associates with business relationship. The endorsed items are usually related to financing and import duty guarantee. Due to associates’ financial health created by prudent management, management of the Group believes that they are expecting no significant losses from endorsement.

(ii) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as much as possible, that it will always have sufficient current funds, such as cash and cash equivalent, securities with high liquidity and sufficient credit line from banks, to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Group’s reputation.

(iii) Market risk

Market risk is the risk of changes in market prices, such as foreign exchange rates, interest rates and equity prices that will affect the Group’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Foreign currency risk

To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Group utilizes derivative financial instruments, including currency forward contracts and cross currency swaps, to hedge its currency exposure. These instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements.

2) Interest rate risk

The Group is exposed to interest rate risk arising from long-term borrowings at floating interest rates. To reduce the risk caused by floating interest rates, the Group utilized interest rate swap contracts to partially hedge its exposure.

(w) Capital management

Although business operated by the Group has reached the stage of maturity, a sufficient amount of capital is still required to support the operation of investee companies, construction and expand its production facilities and equipment.

The Group’s policy is to maintain adequate financial resources and operating plan to meet future operating capital, capital expenditure, research and development expenditure, loans reimbursement, and dividend distribution.

(Continued)

67

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group uses debt to capital ratio to manage its capital. The debt to capital ratio is calculated by dividing the net liabilities by the total capital. Net liabilities derived from deducting cash and cash equivalents from total liabilities. Total capital includes common shares of stocks, capital surplus, retained earnings and net liabilities. The Group’s debt to capital ratio at the end of the reporting period was as follows:

Total liabilities Less: cash and cash equivalents Net liabilities Total equity Debt to capital ratio	December 31, 2021 $ 140,488,648 (13,715,454) 126,773,194 403,190,274 % 31.44	December 31, 2020 146,744,283 (14,145,110) 132,599,173 332,536,140 % 39.88

• (x) Changes in liabilities come from financing activities

Changes of liabilities arising from financing activities were as follows:

Short-term borrowings Short-term notes and bills payable Long term loan (including current portion) Bonds payable (including current portion) Lease liabilities Loans from related parties Total liabilities arisings from financing activities	January 1, 2021 $ 15,356,724 16,996,824 3,569,776 40,910,455 143,375 14,396,540 $ 91,373,694	Change in cash flows (10,864,717) (14,900,000) 636,444 4,600,000 (33,682) (137,792) (20,699,747)	Changes in non-cash - 3,000 - (1,201) 37,914 - 39,713	Effect of exchange rate changes (7,331) - (18,628) - - (690,648) (716,607)	December 31, 2021
					4,484,676 2,099,824 4,187,592 45,509,254 147,607 13,568,100
					69,997,053

Short-term borrowings Short-term notes and bills payable Long term loan (including current portion) Bonds payable (including current portion) Lease liabilities Loans from related parties Total liabilities arisings from financing activities	January 1, 2020 $ 20,255,096 14,991,544 6,610,540 32,564,312 52,197 21,375,260 $ 95,848,949	Change in cash flows (4,733,940) 2,000,000 (3,056,096) 8,350,000 (41,281) (6,131,284) (3,612,601)	Changes in non-cash - 5,280 - (3,857) 132,459 - 133,882	Effect of exchange rate changes (164,432) - 15,332 - - (847,436) (996,536)	December 31, 2020
					15,356,724 16,996,824 3,569,776 40,910,455 143,375 14,396,540
					91,373,694

(Continued)

68

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(7) Related-party transactions:

(a) Name of related parties

Name of related party

Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A. Formosa Heavy Industries Corp. Mai Liao Power Corp. Formosa Sumco Technology Corporation Formosa Transportation Corp. Wha Ya Park Management Consulting Corporation Ltd.

Formosa Resources Corporation Formosa Group (Cayman) Limited Hua Ya Power Corp. Formosa Heavy Industries (Ningbo) Corp. Japan Formosa Sumco Technology Corp. Fujian Fuxin Special Steel Co., Ltd. Formosa Transportation (Ningbo) Corp. Formosa Automobile Corporation Formosa Plastics Construction Corporation Formosa Asahi Spandex Co., Ltd. Formosa Daikin Advanced Chemical Co., Ltd. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Tokuyama Advanced Chemicals Co., Ltd. Nan Ya Plastics Corporation Formosa Chemicals and Fiber Corporation Chang Gung Medical Foundation Nan Ya PCB Corporation PFG Fiber Glass Corporation Nan Chung Petrochemical Corporation Nan Ya Plastics (HongKong) Co,. Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics Film (Huizhou) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.

Relationship with Consolidated Company

Associates

Associates Associates Associates Associates Associates Associates

Associates Associates Associates Associates Associates Associates Associates Associates Associates Joint venture Joint venture Joint venture Joint venture 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 Other related parties Other related parties Other related parties

(Continued)

69

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of related party

Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Indonesia) Co., Ltd. Nan Ya Plastics Corporation America Formosa Industries Corp., Vietnam Formosa Taffeta Co., Ltd. Formosa INEOS Chemicals Corporation Formosa Biomedical Technology Corp. Formosa Carpet Co., Ltd. Formosa Idemitsu Petrochemical Corp. Hong Jing Resources Corp. Formosa Power (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Plastics Marine Corp. Formosa Group Ocean Marine Corp Formosa Ha Tinh Steel Corporation Nan Ya Technology Corporation Nan Ya Plastics Corporation USA Inteplast Taiwan Corporation Formosa Ha Tinh (Cayman) Ltd. Xiamen Chang Gung hospital Formosa Port (Ningbo) Co., Ltd. Chang Gung Biotechnology Corporation Formosa Technologies Corporation Formosa Petrochemical Transportation Corporation, Ltd.

INTEPLAST GROUP Chang Gung University Kaohsiung Cultural Foundation of Brothers Wang Yung-ching and Wang Yung-tsal Park

Relationship with Consolidated 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 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 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 Other related parties Other related parties

(Continued)

70

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Significant related-party transactions

(i) Sales to related parties

The Group’s significant sales to related parties were as follows:

Associates Joint ventures Other related parties	For the years ended December 31,	For the years ended December 31,
	2021 $ 10,107,578 192,721 31,741,244 $ 42,041,543	2020
		6,209,144 116,493 21,348,884
		27,674,521

The receivables from related parties were as follows:

Associates Joint ventures Other related parties	December 31, 2021 $ 1,330,918 13,477 3,344,308 $ 4,688,703	December 31, 2020
		856,346 7,481 2,575,386
		3,439,213

The selling prices and collection terms for the sales to related parties are not significantly different from those third-party customers, and receivables are collected on the 27th of the month following the month of sales. The terms of receivables from other foreign related parties are O/A 60 days, O/A 90 days or L/C at sight.

(ii) Purchase from related parties

The Group’s significant purchases from related parties were as follows:

Associates Formosa Petrochemical Corporation Other Other related parties	For the years ended December 31,	For the years ended December 31,
	2021 $ 83,689,442 9,884,975 6,005,240 $ 99,579,657	2020
		54,875,577 7,836,965 3,502,623
		66,215,165

(Continued)

71

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The payables from related parties were as follows:

Associates Formosa Petrochemical Corporation Other Other related parties	December 31, 2021 $ 7,340,397 517,205 344,145 $ 8,201,747	December 31, 2020 6,272,990 399,809 429,766 7,102,565

The purchase price and payment terms for the purchase from related parties are not significantly different from those with third-party vendors, and payables are paid on the 27th of the month following the month of purchase.

• (iii) Property plant and equipment

• 1) Sales of equipment (recognized as property, plant and equipment) from related parties were as follow：

Joint ventures Other related parties	For the three months ended December 31	For the three months ended December 31
	Disposal price $ 305 9,346 $ 9,651	Gain from disposal
		230 53
		283

There were no receivables on December 31, 2021 and 2020.

• 2) Purchase property, plant and equipment

Purchase of equipment (recognized as property, plant and equipment) from related parties were as follow：

Associates Other related parties	For the years ended December 31,	For the years ended December 31,
	2021 $ - 232,317 $ 232,317	2020
		7,539 342,927
		350,466

(Continued)

72

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The outstanding balance of the Group at the end of the period is as follow (recognized as other payable-related parties):

==> picture [421 x 308] intentionally omitted <==

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

December 31, December 31,
2021 2020
Other related parties $ 76,497 50,757
3) Acquisition of financial assets
For the years
Financial Number of ended
Statement Shares December 31,
Account (in thousands) Transaction Shares 2021
Associates-
Investments Shares of stock of
Formosa Resources accounted for using Formosa Resources
Corporation equity method 88,453 Corporation $ 884,531
Joint ventures-
Formosa
Tokuyama Shares of stock of
Advanced Investments Formosa Tokuyama
Chemicals Co., accounted for using Advanced Chemicals
Ltd. equity method 37,500 Co., Ltd. 375,000
Formosa
Mitsui Shares of stock of
Advanced Investments Formosa Mitsui
Chemicals Co., accounted for using Advanced Chemicals
Ltd. equity method - Co., Ltd. 128,450
$ 1,387,981
----- End of picture text -----

The Group has no related transactions for the years ended December 31, 2020.

==> picture [420 x 95] intentionally omitted <==

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

For the years
Financial Number of ended
Statement Shares December 31,
Account (in thousands) Transaction Shares 2020
Associates-
Shares of stock of
Formosa Plastics Investments Formosa Plastics
Construction accounted for using Construction
Corporation equity method 50,000 Corporation shares $ 500,000
----- End of picture text -----

(Continued)

73

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Loans to related parties

The Group’s significant financing transactions with related parties were as follows:

1)

Associates Formosa Heavy Industries (Ningbo) Corp Joint ventures Other related parties Formosa Group Ocean Marine Corp.	Due from related parties (recognized as other receivables-related parties)	Due from related parties (recognized as other receivables-related parties)
	December 31, 2021 $ 2,171,526 691,848 2,622,190 $ 5,485,564	December 31, 2020
		- 249,039 4,243,086
		4,492,125

As of December 31, 2021 and 2020, the interest revenue receivables from the abovementioned transactions amounted to $58,792 thousand and $7,363 thousand, respectively, which was recognized as other receivables-related parties.

2)

Associates Formosa Plastics Corp., U.S.A.	Due to related parties (recognized as other payables– related parties)	Due to related parties (recognized as other payables– related parties)
	December 31, 2021 $ 13,568,100	December 31, 2020
		14,396,540

As of December 31, 2021 and 2020, the accrued interest expense from the abovementioned transactions amounted to $15,703 thousand and $17,959 thousand respectively, which was recognized as other current liabilities.

(v) Endorsements and guarantees

The Group’s endorsements guarantees to secure related parties’ loans were as follows:

Associates Formosa Group (Cayman) Limited Formosa Resources Corporation Other related Parties Formosa Ha Tinh (Cayman) Ltd.	December 31, 2021 $ 6,922,500 - 6,568,456 $ 13,490,956	December 31, 2020
		7,127,000 3,064,610 18,967,581
		29,159,191

(Continued)

74

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) Other transactions

• 1) The Group’ s income received from related parties, such as sewage treatment income, wharf usage income and utility and steam income was as follows:

Associates Joint ventures Other related parties	Other receivables–related parties	Other receivables–related parties
	December 31, 2021 $ 15 1,090 22,618 $ 23,723	December 31, 2020
		17 - 1,769
		1,786

• 2) The Group’s expenses paid to related parties, such as sewage treatment expense, wharf usage expense, utility and steam expenses, transportation expense and restoration expense were as follows:

Associates Other related parties	Other payables–related parties	Other payables–related parties
	December 31, 2021 $ 1,917,444 227,503 $ 2,144,947	December 31, 2020 1,434,109 221,057 1,655,166

• (vii) Receivables from payment on behalf of related parties

• 1) The Group paid for construction design service fees on behalf of related parties as follows:

Associates Fujian Fuxin Special steel Cor., Ltd	Other receivables–related parties	Other receivables–related parties
	December 31, 2021 $ 1,794,541	December 31, 2020 1,997,928

(Continued)

75

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(viii) Rental (recognized as other income)

The Group lease its office and building to related parties, and derived rental income thereon as follows:

Associates Formosa Petrochemical Corporation Formosa Heavy Industries Corp. Other Joint ventures Formosa Daikin Advanced Chemical Co., Ltd. Other Other related parties Nan Ya Plastics Corporation Formosa Chemicals Industries (Ningbo) Co., Ltd. Other	For the years ended December 31,	For the years ended December 31,
	2021 $ 16,568 58,764 7,209 17,397 9,033 23,520 33,225 24,630 $ 190,346	2020
		16,568 58,764 6,968 17,651 2,563 25,650 8,712 23,053
		159,929

The rentals charged to related parties are determined based on the local market prices, and rents are collected depending on the contract periods (e.g. monthly, semi-annually or annually).

(c) Compensation of key management

The compensation to key management was as follows:

Short-term employee benefits	For the years ended December 31,	For the years ended December 31,
	2021 $ 71,554	2020
		59,083

(8) Pledged assets:

The Group’s assets pledged to secure loans were as follows:

Classification of assets Nature of Pledged Assets Property plant and equipment Land and building Refundable deposits (classified under other non- current assets) Certificate of deposit	December 31, 2021 $ 2,154,928 99,101 $ 2,254,029	December 31, 2020
		2,156,562 92,675
		2,249,237

(Continued)

76

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(9) Commitments and contingencies:

• (a) The amounts of endorsements and guarantees for related parties were as follows:

Endorsements and guarantees	December 31, 2021 $ 13,490,956	December 31, 2020
		29,159,191

• (b) The amounts of unused outstanding letters of credit for the importation of raw materials for related parties were as follows:

Unused outstanding letters	December 31, 2021 $ 979,156	December 31, 2020
		456,046

• (c) As of September 30, 2021, the Company’ s investee, Formosa Ha Tinh (Cayman) Ltd. and Formosa Ha Tinh Steel Corporation, signed several contracts of syndicated credit lines of US$1,710,000 thousand with different banks amounting to US$2,602,500 thousand for its operational needs. According to the requirement of the bank consortium, the Company, together with the other related parties, have to issue a letter of undertaking and to manage the necessary funds to fulfill the repayment of obligations when needed.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

• (a) The nature of operating costs and expenses of the Group was as follows:

	For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2021	For the years ended December 31, 2020	For the years ended December 31, 2020	For the years ended December 31, 2020	For the years ended December 31, 2020
	Operating costs	Operating expenses	Non- operating expenses	Total	Operating costs	Operating expenses	Non- operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Remuneration of directors Others Depreciation expenses Amortization expenses	6,255,247 493,994 343,386 - 329,166 5,644,765 1,024,530	3,505,323 288,192 164,834 8,615 121,408 1,661,106 1,352	- - - - - 2,048 10,579	9,760,570 782,186 508,220 8,615 450,574 7,307,919 1,036,461	5,591,329 428,506 266,435 - 275,636 5,564,112 775,876	2,960,306 257,681 174,667 7,640 93,245 1,644,120 3,644	- - - - - 2,039 11,761	8,551,635 686,187 441,102 7,640 368,881 7,210,271 791,281

• (b) Seasonality of operations

The Group's operations were not affected by seasonality or cyclicality factors.

(Continued)

77

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The significant transactions required by the “Guidelines” for the Company were as follows:

• (i) Fund financing to other parties (the amounts expressed in CNY are in thousands):

(In Thousands of New Taiwan Dollars)

No.	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing	Note
													Item	Value
0 0 0 0 0 0 1 1	The Company The Company The Company The Company The Company The Company Formosa Industries(Ning bo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd.	Formosa Petrochemical Corp. Formosa Chemicals & Fiber Corp. Nan Ya plastic Corp. Formosa Heavy Industries Corp. Formosa Group Ocean Marine Corp. Japan Formosa Sumco Technology Corp. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Heavy Industries (Ningbo) 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	7,500,000 7,500,000 7,500,000 9,100,000 5,593,689 600,000 1,359,359 (CNY313,000) 2,171,500 (CNY500,000)	4,500,000 4,500,000 4,500,000 5,700,000 3,132,190 - 1,359,359 (CNY313,000) 2,171,500 (CNY500,000)	- - - - 2,622,190 - 691,848 (CNY159,300) 2,171,526 (CNY500,000)	0.980% 0.980% 0.980% 0.980%~ 1.230% 0.980%~ 1.230% 1.000% 3.080% 3.080%	2 2 2 2 2 2 2 2	- - - - - - - -	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	- - - - - - - -	- - - - - - - -	- - - - - - - -	80,638,055 80,638,055 80,638,055 80,638,055 80,638,055 80,638,055 20,265,937 25,332,421	161,276,110 161,276,110 161,276,110 161,276,110 161,276,110 161,276,110 50,664,842 50,664,842	Note 4 Note 4

Note 1: (1) Those with business contact please fill in 1

(2) Those necessary for short-term financing please fill in 2.

Note 2: (1) The maximum financing allowed should not exceed 50% of the Company’s net equity, and the maximum short-term financing to companies with no transaction with the Company could not exceed 40% of the Company’s net equity as of December 31, 2020.

(2) The Company grants financing to a related party even if the Company has no normal business transactions with the entity. However, such financing is limited to 25% of the related party’s equity based on the current independent auditor’s report.

(3) The Company grants financing to an entity even if the Company has no normal business transactions with the entity. However, such financing is limited to 20% of the Company’s equity based on the current independent auditor’s report.

(4) 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 3: The ending balance was approved by the Board of Directors.

Note 4: The exchange rate of New Taiwan dollars to CNY dollars was 4.343 to 1 for the highest balance of financing to other parties during the period and for the ending balance; and the exchange rate of New Taiwan dollars to CNY dollars was 4.3430525 to 1 for the actual usage during the period.

(Continued)

78

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

									(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company (Note 2)
0 0 0	The Company The Company The Company	Formosa Group (Cayman) Limited Formosa Ha Tinh (Cayman) Limited Formosa Resources Corporation	6 6 6	262,073,678 262,073,678 262,073,678	7,132,750 18,903,708 3,067,083	6,922,500 6,568,456 -	6,922,500 6,568,456 -	- - -	% 1.72 % 1.63 % -	524,147,356 524,147,356 524,147,356	N N N	N N N	N N N

Note 1: The guarantees and endorsements of the Company and its subsidiaries were listed in the form of numbers with the rules below:

  - (1) The Company is represented by 0.

  - (2) The subsidiaries are represented numerically starting from 1.

• Note 2: There are seven conditions in which the Company may have guarantees or endorsements for other parties as follows:

  • (1) The Company has business relationship.

  • (2) The Company holds directly and indirectly more than 50% of the voting shares of the subsidiaries.

  • (3) In aggregate, the Company holds directly or its subsidiaries hold indirectly more than 50% of the investee.

  • (4) Subsidiaries in which the Company holds directly or indirectly more than 90% of the voting shares make endorsement and guarantees for each other.

  • (5) The Company is required to provide guarantees or endorsements for the construction project based on the construction contract.

  • (6) The stockholders of the Company provide guarantees or endorsements for the investee in proportion to their stockholding percentage.

  • (7) According to Consumer Protection Act, companies are required to provide guarantees and endorsements for joint and several liability if take part in business of preconstruction real estate.

• 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.

• (iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Percentage of ownership (%)
The Company The Company The Company The Company The Company	Asian Pacific Investment Corp. Mai-Liao Harbor Administration Corp. Taiwan Aerospace Corp. Chinese Television System Inc. China Investment & Development Co., Ltd.	Other related parties Other related parties - - -	Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current	68,743 39,574 1,103 1,769 1,287	3,061,126 1,078,009 15,844 39,153 13,318	% 16.17 % 17.99 % 0.81 % 1.05 % 0.80	3,061,126 1,078,009 15,844 39,153 13,318	% 16.17 % 17.99 % 0.81 % 1.05 % 0.80

(Continued)

79

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Highest	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Percentage of 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 The Company The Company	Formosa Plastics Development Corp. Xiangho Aircraft Leasing Corp. Formosa Petrochemical Transportation Corporation, Ltd. Formosa Technologies Corporation Formosa Plastics Marine Corp. Formosa Group Ocean Investment Corp. Formosa Plastics Maritime Corp. Guangyuan Investment Corp. Central Leasing International Corp. Inteplast Taiwan Corporation Mega Growth Venture Capital Co., Ltd. Minima Technology Co., Ltd. Formosa Ha Tinh (Cayman) Limited Nan Ya Plastics Corporation Formosa Chemicals & Fibre Corporation Nan Ya Technology Corp. Puriblood medicalCo,.Ltd	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 Other related parties Other related parties Other related parties Other related parties	Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assetsat fair value throughother comprehensiveincome	19,088 2,071 2,642 2,925 2,429 3 354 3,750 2,373 2,160 2,500 7,405 621,178 - 783,357 198,744 334,815 1,300 -	284,027 - 104,640 158,130 760,976 5,343,884 368,529 36,075 - 52,837 20,050 168,982 13,244,327 24,749,907 66,898,676 16,058,510 26,149,084 210,600 109,316,870	% 18.00 % 9.55 % 12.00 % 12.50 % 15.00 % 19.00 % 18.11 % 3.91 % 1.43 % 18.00 % 1.97 % 18.99 % 11.43 % 9.88 % 3.39 % 10.81 % 9.14	284,027 - 104,640 158,130 760,976 5,343,884 368,529 36,075 - 52,837 20,050 168,982 13,244,327 24,749,907 66,898,676 16,058,510 26,149,084 210,600 109,316,870	% 18.00 % 9.55 % 12.00 % 12.50 % 15.00 % 19.00 % 18.11 % 3.91 % 1.43 % 18.00 % 1.97 % 19.07 % 11.43 % - % 9.88 % 3.39 % 10.85 % 9.14 % -

(Continued)

80

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Highest	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Percentage of ownership (%)
The Company Formosa Plastics Corp. (Cayman Ltd)	Mega Prosperity Private Placement Fund Swancor (Jiangsu) Carbon Fiber Composite Co., Ltd.	Other related parties a p - v c n	Current financial assets t fair value through rofit or loss Financial assets at fair alue through other omprehensive income- on-current	12,479 -	3,793,399	% 25.00 % 16.11	3,793,399 160,712	% 25.00 % 16.11
					160,712

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 thousand or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
The Company The Company	Securities - Formosa Resources corporation Securities - FormosaTokuy ama Advanced Chemicals Co.,Ltd.	Investmentsacc ounted forusin g equitymethod Investmentsacc ounted forusin g equitymethod	FormosaResou rcescorporatio n FormosaTokuy amaAdvanced Chemicals Co., Ltd.	Associates Joint venture	741,594 12,500	6,169,287 124,934	88,453 37,500	884,531 375,000	- -	- -	- -	- -	830,047 50,000	6,860,325 (Note 1) 457,099 (Note 2)

Note 1: The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of $74,748 thousand and accumulated translation adjustment of $(268,241) thousand.

Note 2 : The ending balance includes the share of profit or loss of associates and joint ventures accounted for using equity method of $(42,835) thousand.

• (v) Acquisition of individual real estate with amount exceeding the lower of $300 thousand or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others none
							Owner	Relationship with the Company	Date of transfer	Amount
The company	6 lands in No.2123, XizhouRd., LinyuanDist., KaohsiungCity	June 18,2021	591,001	591,0	01 SHIYU METAL CO.,LTD.	none	-	-	-	-	Purchase priceis based on themarket priceand evaluationreport	JointDistributiion center forLinyua ndistrict plant

• (vi) Disposal of individual real estate with amount exceeding the lower of $300 thousand or 20% of the capital stock: None

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $100 thousand or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company	Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation	Other related parties 〃 Associates	(Sales) 〃 〃	(16,259,488) (6,797,321) (7,295,129)	% (7.72) % (3.23) % (3.46)	Before the 27th of the following month Before the 27th of the following month Before the 27th of the following month	- - -		1,543,303 593,147 711,029	8.71% 3.35% 4.01%

(Continued)

81

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending 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 Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co. Ltd Formosa Electronic (Ningbo) Co., Ltd. Formosa Industries U.S.A Co. Ltd Formosa Industries U.S.A Co. Ltd	Formosa Heavy Industries Corp. Formosa Daikin Advanced Chemical Co., Ltd. Formosa Taffeta Co. Ltd. Inteplast Taiwan Corporation Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Industries Corp., Vietnam Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corp., U.S.A. The Company Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd Fujian Fuxin Special Steel Co., Ltd. The Company Inteplast Group	Associates Joint venture Other related parties 〃 〃 〃 Other related parties Other related parties Parent- subsidiary Associates Parent- subsidiary Other related parties 〃 〃 〃 Associates Parent- subsidiary Other related parties	(Sales) 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	(203,446) (103,965) (202,841) (252,970) (608,428) (171,119) (2,096,043) (452,925) (12,718,298) (2,335,437) (1,947,686) (1,361,829) (309,498) (587,002) (145,300) (108,143) (462,537) (2,100,564)	% (0.10) % (0.05) % (0.10) % (0.12) % (0.29) % (0.08) % (0.99) % (0.21) % (6.04) % (1.11) % (3.00) % (2.10) % (0.48) % (0.90) % (0.22) % (17.53) % (3.67) % (16.66)	Before the 27th of the following month Before the 27th of the following month Before the 27th of the following month Before the 27th of the following month O/A 60 days O/A 60 days O/A 60 days O/A 60 days O/A 90 days O/A 90 days Before the 30th of the following month Before the 30th of the following month Before the 30th of the following month Before the 30th of the following month Before the 30th of the following month Before the 30th of the following month Before the 10th of the following month Before the 10th of the following month	- - - - - - - - - - - - - - - - - -		3,270 11,091 13,651 17,122 137,515 61,272 508,970 55,696 1,961,704 604,338 332,446 96,581 19,705 50,392 12,668 - 14,063 169,244	0.02% 0.06% 0.08% 0.10% 0.78% 0.35% 2.87% 0.31% 11.07% 3.41% 3.73% 1.08% 0.22% 0.56% 0.14% -% 1.13% 13.57%	Note1 Note1 Note1

(Continued)

82

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable	Notes/Accounts receivable (payable	) Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company The Company The Company Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries U.S.A Co. Ltd.	Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation Formosa Heavy Industries Corp. Formosa Industries U.S.A Co. Ltd. The Company Nan Ya Plastics Corporation Formosa Plastics U.S.A Co. Ltd.	Other related parties 〃 Associates 〃 Parent- subsidiary Parent- subsidiary Other related parties Associates	Purchase 〃 〃 〃 〃 〃 〃 〃	2,011,186 2,582,896 83,689,442 1,306,820 462,537 28,018,377 1,266,170 8,574,678	% 1.53 % 1.96 % 63.51 % 0.99 % 0.35 % 47.52 % 2.15 % 95.81	Before the 27th of the following month Before the 27th of the following month Before the 27th of the following month Before the 27th of the following month Before the 27th of the following month O/A 90 days O/A 90 days Before the 10th of the following month	- - - - - - - -		(80,470) (212,832) (7,340,397) (4,547) (14,063) (2,660,107) (38,359) (512,658)	(0.66)% (1.74)% (59.93)% (0.04)% (0.11)% (44.06)% (0.64)% (92.22)%	Note1 Note Note1

Note ：Including the purchases of raw materials on behalf of related parties.

Note1：The transaction has already been written off in the consolidated financial statements.

(viii) Receivables from related parties with amounts exceeding the lower of $100 thousand or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts	Note
					Amount	Action taken
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries U.S.A Co. Ltd	Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation Nan Ya Plastics (Guangzhou) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corp., U.S.A. Formosa Group Ocean Marine Corp. Fujian Fuxin Special Steel Co., Ltd Formosa Industries (Ningbo) Co., Ltd. The Company Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Heavy Industries(Ningbo) Corp INTEPLAST GROUP	Other related parties 〃 Associates Other related parties Other related parties Parent subsidiary Associates Other related parties Associates Parent-subsidiary Parentsubsidiary joint venture Associates Other related parties	1,543,303 593,147 711,029 137,515 508,970 1,961,704 604,338 2,622,190 1,794,541 698,403 332,446 691,848 2,171,526 169,244	% 11.71 % 12.90 % 12.89 % 4.36 % 5.03 % 8.02 % 4.53 - - - - - - -	- - - - - - - - - - - - - -		1,543,303 593,147 711,029 74,361 171,800 1,024,435 299,203 - - - - - - -	- - - - - - - - - - - - - -	Note Note

Note：The transaction has already been written off in the consolidated financial statements.

(ix) Trading in derivative instruments:Please refer to notes .

(Continued)

83

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

(i) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 0 0 1 1 2 2	The Company The Company The Company The Company Formosa Industries (Ningbo) Co., Ltd Formosa Industries (Ningbo) Co., Ltd Formosa Industries Corporation U.S.A Formosa Industries Corporation U.S.A	Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. The Company The Company The Company The Company	1 1 1 1 2 2 2 2	Sales Accounts receivable Other revenue (Note 3) Other receivables－ related parties Sales Accounts receivable Sales Accounts receivable	12,718,298 1,961,704 15,300,079 698,403 1,947,686 332,446 462,537 14,063	O/A 90 days 〃 O/A 60 days 〃 Before the 30th of the following month 〃 Before the 10th of the following month 〃	4.65% 0.36% 5.59% 0.13% 0.71% 0.06% 0.17% -%

Note 1: Assigned numbers represent the following:

1. 0 represents the parent company.

2. The subsidiaries are represented numerically starting from 1.

Note 2: The terms of transactions are defined as follows:

1. Represents the parent company having transaction with a subsidiary.

2. Represents a subsidiary having transaction with the parent company.

3. Represents a subsidiary having transaction with a subsidiary.

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Highest	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Ownership	Carrying value	Percentage of 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	Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A. Formosa Heavy Industries Corp. Sky Dragon Investment Limited Formosa Plastics Corp. (Cayman Ltd.) Mai Liao Power Corp. Formosa Sumco Technology Corp. Formosa Transportation Corp. Formosa Fairway Corp. Yi-Jih Development Corp. Ya Tai Development Corp. Formosa Asahi Spandex Co., Ltd. Formosa Automobile Corporation Wha Ya Park Management Consulting Corporation Ltd. Formosa Daikin Advanced Chemical Co., Ltd.	Taiwan U.S.A Taiwan Samoa Cayman Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	Petrochemicals Chemicals Mechanical equipment Investment Investment Electricity Electronics manufacture Transportation Transportation Construction Development of land Artificial fiber Automobile Consulting service Chemical industry	30,144,951 5,614,024 2,498,463 13,221,416 27,347,136 5,985,531 1,709,987 110,664 33,330 12,003 54,034 501,752 270,442 341 100,000	30,144,951 5,614,024 2,498,463 13,221,416 27,218,686 5,985,531 1,709,987 110,664 33,330 12,003 54,034 501,752 270,442 341 100,000	2,720,549 70 656,639 425,800 78 764,201 112,708 6,566 4,698 1,200 1,306 50 27,044 33 24	% 28.56 % 22.66 % 32.92 % 50.00 % 100.00 % 24.94 % 29.06 % 33.33 % 33.33 % 28.72 % 45.04 % 50.00 % 45.00 % 33.00 % 50.00	101,830,792 67,037,893 7,603,943 4,531,408 51,336,239 12,820,290 6,059,749 1,209,845 49,214 19,682 19,368 1,467,538 468,645 3,196 1,331,596	% 28.56 % 22.66 % 32.92 % 50.00 % 100.00 % 24.94 % 29.06 % 33.33 % 33.33 % 28.72 % 45.04 % 50.00 % 45.00 % 33.00 % 50.00	49,401,403 26,777,227 226,233 (327,029) 8,532,508 308,781 1,410,770 240,384 (63,697) (104) 2,820 465,571 471,933 1,933 245,940	13,981,333 6,067,104 69,809 (163,514) 8,532,508 77,016 409,966 80,127 (21,230) (30) 1,270 232,786 212,364 638 122,970	Note, Note 2 Note, Note 2 Note, Note 2 Note, Note 2 Note, Note 1 Note, Note 2 Note, Note 2 Note, Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2

(Continued)

84

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Highest	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Ownership	Carrying value	Percentage of ownership
The Company The Company The Company The Company The Company The Company Formosa Plastics Corp. (Cayman Ltd.) Formosa Industries Corporation Formosa Industries Corporation	Formosa Resources Corporation Formosa Environmental Technology Corporation Formosa Plastics Construction Corporation Formosa Group (Cayman) Limited Formosa Industries Corporation Japan Tokuyama Co., Ltd. Formosa Industries (Hong Kong) Limited Formosa Olefins, L.L.C. Lolita Packaging, L.L.C.	Taiwan Taiwan Taiwan Cayman U.S.A Taiwan Hong Kong U.S.A U.S.A	Mining industry Environmental industry Construction Investment Chemicals Semiconductor Reinvestment Olefins Transportation	8,300,471 417,145 600,000 377 15,640,245 500,000 15,801,889 (USD501,902) 3,527,939 (USD108,075) 306,478 (USD9,880)	7,415,940 417,145 600,000 377 15,640,245 125,000 15,801,889 (USD501,902) 3,527,939 (USD108,075) 306,478 (USD9,880)	830,047 41,714 60,000 13 5 50,000 - - -	% 25.00 % 24.34 % 33.33 % 25.00 % 100.00 % 50.00 % 100.00 % 33.00 % 38.00	6,860,325 228,808 593,785 662,099 13,189,737 457,099 51,132,756 (USD1,846,615) 5,290,503 (USD191,062) - (USD-2,545)	% 25.00 % 24.34 % 33.33 % 25.00 % 100.00 % 50.00 % 100.00 % 33.00 % 38.00	298,994 10,018 25,775 127,467 2,766,854 (85,669) 8,556,927 (USD305,466) 7,605,139 (USD271,489) (467,693) (USD-16,696)	74,748 2,438 8,592 31,866 2,766,854 (42,835) 8,556,927 (USD305,466) 2,509,696 (USD89,591) (177,723) (USD-6,344)	Note, Note 2 Note, Note 2 Note 2 Note, Note 2 Note, Note 1 Note 2 Note, Note 1, Note3 Note 2, Note 3 Note 2, Note 3

Note ： Including cumulative translation adjustments.

Note 1：The transaction has already been written off in the consolidated financial statements..

Note 2： Long-term equity investments under equity method.

Note 3： The exchange rate of New Taiwan dollars to US dollars on December 31, 20201 was 27,6900 to 1. The average exchange rate of New Taiwan dollars to US dollars for the year ended December 31, 2021, was 28.0127 to 1.

• (c) Information on investment in mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows		Accumulated outflow of investment from Taiwan as of December 31, 2021	Net income (losses) of the investee	Percentage of ownership	Highest Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
Formosa Industries (Ningbo) Co., Ltd.(note 2) Formosa Electronic (Ningbo) Co., Ltd.(note 2) Formosa Mitsui Advanced Chemical Co., Ltd. Fujian Fuxin Special Steel Co., Ltd Swancor (Jiangsu) Carbon Fiber Composite Co., Ltd.	Plastics Electronics Electrolyte Steel Carbon fiber	31,188,509 (USD989,023) 74,648 (USD2,260) 244,196 (USD8,200) 34,347,344 (USD1,460,000) 616,986 (USD19,000)	(2) (2) (2) (2) (2)	26,928,755 (USD845,270) 66,137 (USD2,000) 122,098 (USD4,100) 13,221,416 (USD425,800) 99,993 (USD3,060)	- - 128,450 (USD4,600) - -	- - - - -	26,928,755 (USD845,270) 66,137 (USD2,000) 250,548 (USD8,700) 13,221,416 (USD425,800) 99,993 (USD3,060)	8,485,993 (USD302,934) 70,934 (USD2,532) (48,596) (USD1,735) (560,628) (USD-20,013) 75,199 (USD2,684)	100.00% 100.00% 50.00% 29.16% 16.11%	% 100.00 % 100.00 % 50.00 % 29.16 % 16.11	8,485,993 (USD302,934) 70,934 (USD2,532) (24,298) (USD867) (136,504) (USD-5,837) -	50,664,842 (USD1,829,716) 467,914 (USD16,898) 79,365 (USD2,866) 4,530,997 (USD163,633) 160,712 (USD5,804)	- - - - -

Note1: 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.

Note 2：The transaction has already been written off in the consolidated financial statements.

(Continued)

85

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

	Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment (Note 2)
	40,566,849 (USD1,284,830)	39,564,663 (USD1,428,843)	-

Note: The exchange rate of New Taiwan dollars to US dollars on December 31, 2021, was 27.690 to 1.

Note 1: Including USD$ 144,013 thousand approved capital increase out of retained earnings.

Note 2: The Industrial Development Bureau of the MOEA issued a letter to the Company stating that it qualifies under Section 12 of the Statute for Upgrading Industries.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Chang Gung Medical Foundation	601,011,035	% 9.44
Formosa Chemicals and Fiber Corporation	486,978,693	% 7.64
The business department of Standard Chartered International Commercial Bank is entrusted with the custody of Credit Suisse Bank-Credit Suisse Singapore Branch investment account	398,731,554	% 6.26

• (i) The information on major shareholders, which is provided by the Taiwan Depository & Clearing Corporation, summarized the shareholders who held over 5% of total non-physical common stocks and preferred stocks (including treasury stocks) on the last business date of each quarter. The registered non-physical stocks may be different from the capital stocks disclosed in the financial statement due to different calculations basis.

• (ii) If shares are entrusted, the above information regarding such shares will be revealed by each trustors of individual trust account, The shareholders holding more than 10% of the total shares of the company should declare insider’ s equity according to Securities and Exchange Act. The numbers of the shares declared by the insider include the shares of the trust assets which the insider has discretion over use. For details of the insider’s equity announcement please refer to the TWSE website.

(Continued)

86

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Information on investment in mainland China:

Operating segments are combined and reconciled as follows:

Revenue: From external customers From sales among intersegments Total revenue Interest expense Depreciation and amortization Reportable segment profit or loss Capital expenditure of non-current assets Reportable segment assets Reportable segment liabilities Revenue: From external customers From sales among intersegments Total revenue Interest expense Depreciation and amortization Reportable segment profit or loss Capital expenditure of non- current assets Reportable segment assets Reportable segment liabilities				For t	he years ended	December 31, 20	21
	Plastic division		Polyolefin division 57,907,185 32,658 57,939,843 48,793 628,378 13,264,405 400,895 12,959,643 2,215,097	Polypropylene division 39,617,117 59,262 39,676,379 8,749 792,798 3,478,509 2,122,857 28,142,922 1,737,805 For t	Tairylan division 46,466,054 138,143 46,604,197 94,620 1,971,048 11,439,068 270,381 27,288,862 2,171,072 he years ended	Chemistry division 33,412,838 1,950,309 35,363,147 12,609 322,558 9,624,926 104,234 7,271,518 433,148 December 31, 2	Others divisions		Adjustments and eliminated 989 (11,760,340) (11,759,351) - - 21,412,116 - (49,665,294) (1,461,039)	Total 273,598,301 -
	$ 92,681,064 1,413,631						3,513,054 8,166,337
	$ 94,094,695						11,679,391			273,598,301
	$ 44,538 1,868,174 $ 27,293,950									790,439 8,344,380 85,956,814
	$ 703,011 $ 34,093,526						14,679,916 483,587,745			18,281,294 543,678,922
	$ 6,276,177						129,116,388			140,488,648
							020
	Plastic division		Polyolefin division 39,223,686 571,336 39,795,022 48,252 630,515 2,156,913 172,865 37,366,934 17,188,904	Polypropylene division 33,950,651 44,164	Tairylan division 27,861,176 67,009 27,928,185 94,008 1,977,119 (299,541) 281,263 21,677,004 1,536,343	Chemistry division 18,536,931 1,268,336 19,805,267 12,609 322,558 1,425,201 78,992 5,859,038 310,147	Others divisions		Adjustments and eliminated - (9,832,150) (9,832,150) - - 5,878,493 - (54,525,690) (1,006,749)	Total 185,813,405 -
	$ 62,586,410 1,257,777 $ 63,844,187 $ 44,396 1,870,440 $ 10,091,896 $ 571,040 $ 28,996,176 $ 4,860,295						3,654,551 6,623,528
				33,994,815			10,278,079			185,813,405
				8,652 796,282 3,664,787			999,071 2,404,638 1,248,918			1,206,988 8,001,552 24,166,667
				3,512,592 18,838,077			4,480,628 421,068,884			9,097,380 479,280,423
				2,278,123			121,577,220			146,744,283

(a) Geographic area information

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are as follows:

Geographic Revenue from external customers: Taiwan Mainland China Others	For the years ended December 31, 2021 2020 $ 84,236,305 56,782,139 98,705,287 77,092,493 90,656,709 51,938,773 $ 273,598,301 185,813,405	For the years ended December 31, 2021 2020 $ 84,236,305 56,782,139 98,705,287 77,092,493 90,656,709 51,938,773 $ 273,598,301 185,813,405
		2020
		56,782,139 77,092,493 51,938,773
		185,813,405

(Continued)

87

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Geographic Non-current assets: Taiwan United States of America Mainland China Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 53,084,542 17,771,439 38,062,071 $ 108,918,052	2020
		48,056,461 30,531,212 19,570,325
		98,157,998

Non-current assets include property, plant and equipment, right-of-use assets, intangible assets and other assets, but do not include financial instruments and deferred tax assets.

• (b) Major customers

There is no single customer’s sale which exceeds 10% of the Group’s revenue.