FPC — Annual Report 2021

Dec 2, 2021

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Stock Code:1301

(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

Parent Company Only 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 Telephone: (02)2712-2211

The independent auditors’ report and the accompanying parent company only 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 parent company only financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the 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 9. List of major account titles

Page

1 2 3 4 5 6 7 8 8 8～10 10～27 27～28 28～65 66～72 72 73 73 73 73～74 75～80 81 82 82 82 83～103

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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 financial statements of Formosa Plastics Corporation (the “Company”) which comprise the balance sheets as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuer.

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 Company 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 financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters for the Company's financial statements are stated as follows:

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 revenue recognition were discussed in Notes 4(o) and 6(r) to the financial statements.

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.

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.

3-1

1. Valuation of Inventories

The Group measured the cost and net realizable value of inventory and recognized a 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(g), 5 and 6(e) to the 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 equity method and the relevant information on the reinvestment business in Note 13 of the financial report has not been checked by this accountant, but is checked by other accountants. The Company's investments in the aforementioned investee companies constituted 32.65% and 32.73% of the 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 24.35% and 11.08% of the income before tax for the years ended December 31, 2021 and 2020, respectively. The 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.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

3-2

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

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

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

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

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

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

We also provide those charged with governance with 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.

3-3

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements 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 parent company only financial statements are intended only to present the 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 parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying parent company only 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 parent company only financial statements, the Chinese version shall prevail.

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(English Translation of Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (Note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1120 Current financial assets at fair value through other comprehensive income (Note 6(b)) 1170 Notes and accounts receivable, net (Notes 6(c)) 1180 Accounts receivable－related parties (Note 6(c) and 7) 1200 Other receivables (Notes 6(d)) 1210 Other receivables－related parties (Note 6(d) and 7) 130X Inventories (note 6(e)) 1470 Other current assets Total current assets Non-current assets: 1510 Financial assets at fair value through other comprehensive income-non- current (Note 6(b)) 1550 Investments accounted for using equity method (Note 6(f) and 7) 1600 Property, plant and equipment (Notes 6(g), 7 and 8) 1755 Right-of-use assets (Notes 6(h)) 1780 Intangible assets 1840 Deferred income tax assets (Note 6(o)) 1900 Other non-current assets (Notes 8) Total non-current assets Total assets	December 31, 2021 Amount % $ 5,946,231 1 3,793,399 1 109,316,870 21 11,430,079 2 6,295,311 1 1,333,041 - 5,117,317 1 14,317,296 3 2,504,367 1 160,053,911 31 24,749,907 5 277,781,251 54 46,142,880 9 145,095 - 124,762 - 1,560,055 - 6,671,805 1 357,175,755 69 $ 517,229,666 100	December 31, 2020 Amount % 3,768,327 1 3,888,883 1 102,218,948 22 7,398,424 2 4,377,266 1 909,517 - 7,355,148 2 9,730,081 2 3,154,905 1 142,801,499 32 18,539,632 4 244,629,349 54 41,804,267 9 141,821 - 124,762 - 1,702,088 - 5,985,612 1 312,927,531 68 455,729,030 100 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 Total current liabilities Non-Current liabilities: 2530 Bonds payable (Note 6(l)) 2570 Deferred income tax liabilities (Note 6(o)) 2580 Non-current lease liabilities (Notes 6(m)) 2640 Net defined benefit liabilities (Note 6(n)) 2670 Other non-current liabilities Total non-current liabilities Total liabilities Equity (Notes 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 - 4,253,157 1 7,994,840 1 9,380,901 2 1,228,772 - 23,879 - 9,395,685 2 - - 13,531,605 3 52,393,339 10 36,113,569 7 19,163,791 4 123,728 - 6,159,185 1 85,780 - 61,646,053 12 114,039,392 22 63,657,408 12 11,770,685 2 67,780,313 13 71,352,267 14 107,126,265 21 246,258,845 48 81,503,336 16 403,190,274 78 $ 517,229,666 100		14,627,108 3 16,996,824 4 3,563,593 1 6,825,377 1 2,636,727 1 1,080,287 - 21,452 - 2,898,401 1 2,000,000 - 10,073,563 2 60,723,332 13 38,012,054 8 17,703,412 4 121,923 - 6,560,931 2 71,238 - 62,469,558 14 123,192,890 27 63,657,408 14 11,742,124 3 65,791,185 14 68,879,676 15 55,559,015 12 190,229,876 41 66,906,732 15 332,536,140 73 455,729,030 100

See accompanying notes to financial statements.

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(English Translation of Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

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 5920 Less:Realized loss on from sales (note) 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)(n)(t) and 7): 7100 Total interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 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 6400 Less: Income tax expenses (Note 6(o)) Profit 8300 Other comprehensive income (loss) (Note (n)(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 8330 Share of other comprehensive income of subsidiaries, 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 8380 Share of other comprehensive income of subsidiaries, 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 8300 Other comprehensive income (loss) Total comprehensive income (loss) 9710 Basic earnings per share (NT dollars) (Note 6(q))

2021

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

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 Net Income for the period Other comprehensive income (loss) for the period Total comprehensive income (loss) for the period 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 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 Net Income for the period Other comprehensive income (loss) for the period Total comprehensive income (loss) for the period 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 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		Share capital		Capital surplus			R	etained earnings	etained earnings	etained earnings	Tota	Tota	l	other equity int	e	rest Gains (losses) on hedging instruments	Total equity
											Exchange differences on translation of foreign financial statements			Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income
		Ordinary shares				Legal reserve		Special reserve	Unappropriated retained earnings
	$ 63,657,408 - - - - - - - - - 63,657,408 - - - - - - - - - $ 63,657,408	$ 63,657,408		11,724,498		62,058,769		63,968,902		72,320,189		(5,278,250) - (4,324,810) (4,324,810) - - - - - - (9,603,060) - (3,135,343) (3,135,343) - - - - - - (12,738,403)		80,701,025		779 - 37,209 37,209 - - - - - - 37,988 - (27,026) (27,026) - - - - - - 10,962	349,153,320
		- -		- -		- -		- -									20,036,199 (8,609,003)
		-		-		-		-									11,427,196
		- - - - - -		- - - - 5,407 12,219		3,732,416 - - - - -		- 4,910,774 - - - -									- - (28,009,259) (52,743) 5,407 12,219
		63,657,408 - -		11,742,124 - -		65,791,185 - -		68,879,676 - -									332,536,140 71,355,311 14,545,006
		-		-		-		-									85,900,317
		- - - - - -		- - - - 527 28,034		1,989,128 - - - - -		- 2,472,591 - - - -									- - (15,277,778) 3,034 527 28,034
				11,770,685		67,780,313		71,352,267									403,190,274

See accompanying notes to financial statements.

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(English Translation of and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

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) Interest expense Net loss on financial assets at fair value through profit 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 Realized loss on from sales Unrealized foreign exchange gain Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Notes and accounts receivable Accounts receivable due from related parties Other receivable Other receivable 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 payable Other payable 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 (used in) from 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 Liquidation of investments accounted for using equity method 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 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 Repayments of long-term borrowings Payment of lease liabilities Increase (decrease) in other non-current liabilities Cash dividends paid Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		2021 $ 82,318,302 3,969,927 310,774 63,492 595,976 95,484 (62,838) (2,999,580) (32,444,780) (22,606) 12,640 (123,237) (30,604,748) (4,081,607) (1,918,046) (457,413) 618,030 (4,863,996) 650,539 (10,052,493) 692,286 1,169,463 24,704 148,486 2,038,898 (790,433) 3,283,404 (6,769,089) (37,373,837) 44,944,465 55,267 5,259,139 (603,419) (2,479,847) 47,175,605 (91,000) - - (1,387,981) 43,895 (8,013,993) 36,564 - 1,620,896 (986,387) (8,778,006) 193,642,107 (203,784,041) (14,900,000) 7,500,000 (2,900,000) (2,000,000) (30,766) 1,432,348 (15,282,289) (36,322,641) 102,946 2,177,904 3,768,327 $ 5,946,231	2020 23,278,277
			3,584,577 245,891 (1,687) 788,782 155,473 (229,622) (3,358,166) (6,869,606) (13,514) 59,955 (110,138)
			(5,748,055)
			(2,419,886) 917,230 90,816 (83,637) 712,341 (809,880)
			(1,593,016)
			779,444 81,950 (4,104) (18,717) 364,670 (408,019)
			795,224
			(797,792)
			(6,545,847)
			16,732,430 251,751 11,694,866 (756,578) (1,634,922)
			26,287,547
			- 12,500 236 (14,041,020) - (5,835,240) 19,702 (2,000) 8,632,355 (985,255)
			(12,198,722)
			326,554,054 (328,097,145) 2,000,000 8,350,000 - (3,433,333) (37,891) (11,298) (28,012,404)
			(22,688,017)
			66,262
			(8,532,930) 12,301,257
			3,768,327

See accompanying notes to financial statements.

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(English Translation of Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

Notes to the 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 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 financial statements:

The accompanying financial statements of the Company for the years ended 2021 were approved and 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 Company has initially adopted the following new amendments, which do not have a significant impact on its 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 Company 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 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 Notes to the 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 Company, 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)

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FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

The Company 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 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 significant accounting policies presented in the financial statements are summarized below. The following significant accounting policies were applied consistently throughout the periods presented in these financial statements.

(a) Statement of compliance

These annual 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 financial statements have been prepared on a historical cost basis:

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

• (ii) The 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 Company is determined based on the primary economic environment in which the entities operate. The financial statements are presented in NTD, which is the Company’ s functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

(Continued)

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FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(c) Foreign currencies

(i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Company 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. Non-monetary 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 into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations, are translated into the presentation currency at the average exchange rate. Exchange 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 Company disposes of only 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 noncontrolling interest. When the Company 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 planed nor likely 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)

12

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

An asset is classified as current under one of the following criteria, and 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 one of the following criteria. and all other liabilities are classified as non-current.

• (i) It is expected to be settled in 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; or

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

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and 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.

(f) 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)

13

FORMOSA PLASTICS CORPORATION Notes to the 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 Company, 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 Company 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)

14

FORMOSA PLASTICS CORPORATION Notes to the 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 Company’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 Company 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 Company 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 Company’ 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)

15

FORMOSA PLASTICS CORPORATION Notes to the 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 Company’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 Company 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 Company 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 Company’s claim to cash flows from specified assets (e.g. nonrecourse features)

• 6) Impairment of financial assets

The Company 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 Company 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)

16

FORMOSA PLASTICS CORPORATION Notes to the 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 Company 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 Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ 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 Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company 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 Company 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 Company’s procedures for recovery of amounts due.

(Continued)

17

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

7) Derecognition of financial assets

The Company 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 Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company 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 Company 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 Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company 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.

(Continued)

18

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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 Company 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.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present existing location and condition. 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.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control, or joint control, over their 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 arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the or 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 Company, from the date on which significant influence commences until the date on which significant influence ceases. The 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 the transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company’s share of losses of an associate equals or exceeds its interest in associates, 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 Company has incurred legal or constructive obligations or made payments on behalf of the associate.

(Continued)

19

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(i) Subsidiaries

The Company accounts the investee companies that it possesses control using the equity. Net income, other comprehensive income, and shareholder’ s equity in the financial reports of the Company and the net income, other comprehensive income, and shareholder’s equity that belongs to the Consolidated Company in the consolidated financial reports should be the same.

The Company accounts the changes in equity, under the condition that control is still present, as equity transactions between the proprietors. 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.

(j) Joint venture

A joint venture is a joint arrangement whereby the Company has joint control of the arrangement in which the Company has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. The Company 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 Company qualifies for exemption from that Standard. Please refer to note 4(h) for the application of the equity method.

When assessing the classification of a joint arrangement, the Company 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.

(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 Company.

(Continued)

20

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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 Company 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.

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 Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

(Continued)

21

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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 Company’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,

• － 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 Company 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.

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

(Continued)

22

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(ii) As a leasor

When the Company 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 Company 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 Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company 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. If a head lease is a short-term lease to which the Company 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 Company 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 Company 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 expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

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

(Continued)

23

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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, deferred tax assets and investment properties and biological assets, measured at fair value, less costs) 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 cash-generating units (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.

(o) Revenue recognition

• (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company 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 Company’ s main types of revenue are explained below.

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

The Company manufactures and sells plastic raw materials, chemical fibers, and petrochemical products to downstream manufacturers. The Company 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

(Continued)

24

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company 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 Company has a right to an amount of consideration that is unconditional.

2) Construction contracts

The Company enters into contracts to the development of electronic components and software products. Because its customers controls the development process of the said items, the Company recognizes 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 Company 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 Company has recognized revenue, but not issued a 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 Company cannot reasonably measure its progress towards complete satisfaction of the performance obligation of a construction contract, the Company shall recognize revenue only to the extent of the costs expected to be recovered.

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

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 Company 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 Company 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 Company recognizes as an asset the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Company 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.

(Continued)

25

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

The Company 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 Company 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 Company can specifically identify;

• ‧ the costs generate or enhance resources of the Company 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 Company cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations(or partially satisfied performance obligations), the Company recognizes these costs as expenses when incurred.

(q) Employee benefits

(i) Defined contribution plans

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

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated 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 Company, 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.

(Continued)

26

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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 Company 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 Company 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 if the Company 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.

(r) Income taxes

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

Current tax comprises 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 Group 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

(Continued)

27

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

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 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.

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 Company 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

The Company discloses its information on operating segments in its consolidated financial statements, so it need not disclose such information in the parent company only financial statements.

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

The preparation of the 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.

(Continued)

28

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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.

Judgment of whether the Group has substantive control over its investees, the Company discloses its information on operating segments in its consolidated financial statements by 2020.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

As inventories are stated at the lower of cost or net realizable value, the Company 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.

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Bank deposit Cash equivalents Time deposits Repurchase bonds	December 31, 2021 $ 287 2,622,839 3,323,105 - $ 5,946,231	December 31, 2020
		312 2,603,498 286,108 878,409
		3,768,327

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

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

(i) Mandatorily at FVTPL Private fund	December 31, 2021 $ 3,793,399	December 31, 2020
		3,888,883

Please refer to Notes 6(t) for amount of remeasurement at FVTPL.

(Continued)

29

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(ii) Equity investments at fair value through other comprehensive income Listed stocks Non-listed stocks Non-domestic stocks Total	December 31, 2021 $ 109,106,270 6,372,296 18,588,211 $ 134,066,777	December 31, 2020
		102,218,948 4,708,593 13,831,039
		120,758,580

Equity investments at fair value through other comprehensive income

The Company designated the investments shown above as equity instruments as 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 May 12, 2021, the Company's Board of Director approved to obtain the domestic non listed (cabinet) company - Puriblood Medical Co., Ltd. 1,300 thousand shares, $70 per shares, total amount of $91,000 thousand, with the shareholding ratio of 9.14%.

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.

On November 19, 2020, the Company obtained the shares of Formosa Ha Tinh (Cayman) Ltd., a non-domestic non-listed (cabinet) company; please refer to Note 6(f).

The Company's accumulated gains and losses in equity of strategic investments that have not been disposal, remains unchanged during the 2021 and 2020 period.

• (c) Notes receivable and accounts receivable:

Notes receivable from operating activities Accounts receivable (including related parties)－at amortized cost Account receivables -at fair value through other comprehensive income Less : allowance for doubtful receivables	December 31, 2021 $ 107,109 17,507,909 175,365 (64,993) $ 17,725,390	December 31, 2020 56,306 11,720,885 - (1,501) 11,775,690

(Continued)

30

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

The Company 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,notes receivables and accounts receivables have been grouped based on shared credit risk characteristics according to the customers contract regulations of payment ability on due date; and the days past due, as well as the incorporated forward-looking information.The Company's note receivables and account receivables expected credit losses are analysed as follows: 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 $ 16,515,035 0.001~0.145% 1,226,474 2.836% 48,874 18.406% $ 17,790,383 December 31, 2020		Loss allowance provision
			21,210 34,787 8,996
			64,993
		Weighted- average loss rate 0.001% 0.195% 1.526% 3.090%	Loss allowance provision
			64 1,223 213 1
			1,501

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

Beginning balance Impairment losses recognized Impairment losses reversed Ending balance	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,501 63,492 - $ 64,993	2020 3,188 - (1,687) 1,501

(Continued)

31

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

The Company 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 Company and the financial institution was as follows:

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

• (d) Other receivable

Other receivable－loans to related parties Other receivable－related parties Other receivable	December 31, 2021 $ 2,622,190 2,495,127 1,333,041 $ 6,450,358	December 31, 2020
		4,243,086 3,112,062 909,517
		8,264,665

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

(e) Inventories

Finished goods Work in process Raw materials Supplies Machinery and accessories in process Others	December 31, 2021 $ 9,061,937 2,049,399 1,338,604 64,247 1,794,318 8,791 $ 14,317,296	December 31, 2020
		6,044,015 1,248,529 764,833 18,888 1,644,157 9,659
		9,730,081

ˋ

Change of net realizable value of inventories

Loss from devaluation (gain from recovery) of inventories	For the years ended December 31,	For the years ended December 31,
	2021 $ 11,693	2020 (481,667)

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

(Continued)

32

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(f) Investments accounted for using equity method

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

Subsidiaries Formosa Plastics Corp. (Cayman Ltd.) Formosa Industries Corporation 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 Joint ventures Formosa Asahi Spandex Co., Ltd. Formosa Daikin Advanced Chemical Co., Ltd. Formosa Tokuyama Advanced Chemicals Co., Ltd.	December 31, 2021 $ 51,336,239 13,189,737 101,830,792 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 1,467,538 1,331,596 457,099 $ 277,781,251	December 31, 2020
		42,887,695 10,763,605 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 1,288,207 1,210,071 124,934
		244,629,349

(Continued)

33

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

For the years ended 2021 and 2020, the share of net income (loss) of subsidiaries, associates and joint ventures were as follows:

Subsidiaries Formosa Plastics Corp. (Cayman Ltd.) Formosa Industries Corporation 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 Joint ventures Formosa Asahi Spandex Co., Ltd. Formosa Daikin Advanced Chemical Co., Ltd. Formosa Tokuyama Advanced Chemicals Co., Ltd.

For the years ended December 31, 2021 2020 $ 8,532,508 3,287,192 2,766,854 (847,788) 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 31,472 232,786 54,729 122,970 191,614 (42,835) (66) $ 32,444,780 6,869,606

2021 $ 8,532,508 2,766,854 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 31,866 232,786 122,970 (42,835) $ 32,444,780

(i) Subsidiaries

• 1) On July 2, 2021 the Company participated in the capital increase by cash of Formosa Plastics Corp. (Cayman Ltd.) by acquiring additional shares of stock amounting to US$4,600 thousand (equivalent to $128,450).

• 2) On January 21, 2020, the Company participated in the capital increase by cash of Formosa Industries Corporation, by acquiring additional shares of stock amounting to US$100,000 thousand (equivalent to $2,998,000 thousand)

(Continued)

34

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

• 3) On March 26, 2020, the Company participated in the capital increase by cash of Formosa Plastics Corp.(Cayman Ltd.) by acquiring additional shares of stock amounting to US$100,000 thousand (equivalent to $3,034,500 thousand)

• 4) On June 24, 2020, the Company participated in the capital increase by cash of Formosa Plastics Corp.(Cayman Ltd.) by acquiring additional shares of stock amounting to US$67,000 thousand(equivalent to $1,986,885 thousand).

• 5) On September 30, 2020, the Company participated in the capital increase by cash of Formosa Industries Corporation, by acquiring additional shares of stock amounting to US$185,000 thousand(equivalent to $5,396,635 thousand).

• 6) Formosa Plastics International (Cayman) Limited was liquidated on November 19, 2020, resulting in the 11.43% ownership of Formosa Ha Tinh (Cayman) Limited, recognized as financial assets at fair value through other comprehensive income non-current, to be transferred to the Company.

• (ii) Associates

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

					Percentage of	Percentage of	Percentage of
					ownership
		Registration		December 31,			December 31,
Associates	Relationship	Country			2021		2020
Formosa Petrochemical	Formosa Petrochemical Corporation, the	Taiwan			28.56	%	28.56	%
Corporation	supplier of raw materials for the
	Company, engages in the manufacturing
	and sales of petroleum products and
	petrochemical raw materials.
Formosa Plastic Corp.	Formosa Plastics Corp., U.S.A, engages	U.S.A			22.66	%	22.66	%
U.S.A.	in the manufacturing and sales of oil,
	plastic raw materials, and petrochemical
	raw materials, and is also the sales target
	of the Company.
The fair value of investments in publicly traded		stocks	of the major associate was as
follows:
		December 31,				December 31,
			2021				2020
Formosa Petrochemical Corporation		$	260,900,650				271,510,791

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

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.

(Continued)

35

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

The financial information of Formosa Petrochemical Corporation was as follows:

Current assets Non-current assets Current liabilities Non-current liabilities Net asset Net asset contributed to non-controlling interest of Formosa Petrochemical Corporation Net asset contributed to Formosa Petrochemical Corporation Revenue Net income Other comprehensive income Total comprehensive income Income allocated to non-controlling interest of Formosa Petrochemical Corporation Income allocated to Formosa Petrochemical Corporation Beginning balance of share of net assets of associates at January 1 Share of net assets of associates as of January 1 after adjustment Total comprehensive income allocated to the Company Dividend Received Share of net assets of affiliates as of December 31 Add : share premium acquired not according to holding percentage Add : adjustment of net value Total carrying amount of equity of the major associate as of December 31

December 31, 2021 December 31, 2020 $ 289,585,609 215,309,819 169,171,499 165,613,297 (57,922,472) (28,887,601) (39,067,548) (39,408,447) $ 361,767,088 312,627,068 $ 4,352,620 4,525,709 $ 357,414,468 308,101,359 For the years ended December 31, 2021 2020 $ 620,062,326 415,281,764 $ 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 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

(Continued)

36

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

			December 31,	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	$		30,663,514	3,043,746
	Other comprehensive income			6,731,228	(3,106,094)
	Total comprehensive income	$		37,394,742	(62,348)
	Income allocated to non-controlling interest of
	Formosa Plastics Corp., U.S.A.	$		3,886,314	1,384,682
	Income allocated to Formosa Plastics Corp., U.S.A.	$		33,508,428	(1,447,030)
				For the years ended
				December 31,
				2021	2020
	Beginning balance of share of net assets of associates at	$		61,291,795	65,167,060
	January 1
	Total comprehensive income allocated to the Company			5,746,098	(3,875,265)
	Ending balance of investments in major associate at
	December 31,	$		67,037,893	61,291,795
2)	The information of the minor associate of the investments			accounted for	using the equity
	method was as follows:
			December 31,		December 31,
				2021	2020
	Total carrying amount of equity of the minor	$		41,130,357	39,188,366
	associates

(Continued)

37

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Attributable to the Company: Net income Other comprehensive loss Total comprehensive income	For the years ended December 31, 2021 2020 $ 784,060 1,605,778 877,206 (996,514) $ 1,661,266 609,264
	2021 $ 784,060 877,206 $ 1,661,266

• 3) On March 10, 2021, the Company participated in the capital increase by cash of Formosa Resources Corporation by acquiring additional shares of stock amounting to US$31,250 thousand (equivalent to $884,531 thousand), based on its original shareholding ratio of 25%.

• 4) On December 3, 2020, the Company participated in the capital increase by cash of Formosa Plastics Development Corporation Ltd., an associate owned by the Group, with the total investment amounting to $500,000 thousand, based on its original shareholding ratio of 33.33%.

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

• (iii) Joint ventures

The Company’s investments in joint ventures are not significant. The financial information of the minor joint ventures of the investments accounted for using equity method was as follows:

Total carrying amount of investments in the minor joint ventures Attributable to the Company: Net income Other comprehensive loss Total comprehensive income	December 31, 2021 December 31, 2020 $ 3,256,233 2,623,212 For the years ended December 31,	December 31, 2020
		2,623,212
	2021 $ 312,921 (4,274) $ 308,647	2020
		246,277 970
		247,247

On May 12, 2021, the Company participated in the capital increase by cash of Formosa Tokuyama Advanced Chemicals Co,. Ltd. by acquiring additional shares of stock amounting to $375,000 thousand, based on its original shareholding ratio of 50%.

On October 8, 2020, Japan Tokuyama Co., Ltd. and the Company founded Formosa Tokuyama Advanced Chemicals Co., Ltd, wherein the company participated in the capital by cash of Formosa Tokuyama Advanced Chemicals Co., Ltd., with the total investment amounting to $125,000 thousand, having the shareholding of 50%.

(Continued)

38

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(iv) Collaterals

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

(g) Property, plant and equipment

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

Land Cast: Balance as of January 1, 2021 $ 10,395,277 Additions 591,329 Disposals (2,666) Reclassification - Balance as of December 31, 2021 $ 10,983,940 Balance as of January 1, 2020 $ 10,395,277 Additions - Disposals - Reclassification - Balance as of December 31, 2020 $ 10,395,277 Accumulated depreciation/impairment: Balance as of January 1, 2021 $ - Depreciation for the year - Disposals - Reclassification - Balance as of December 31, 2021 $ - Balance as of January 1, 2020 $ - Depreciation for the year - Disposals - Reclassification - Balance as of December 31 , 2020 $ - Carrying amounts:： Balance as of December 31 , 2021 $ 10,983,940 Balance as of December 31 , 2020 $ 10,395,277	Land		Buildings and constructions		Machinery and equipment		Other facilities		Construction in progress 6,631,054 6,096,330 - (2,822,051) 9,905,333 4,854,898 4,978,305 - (3,202,149) 6,631,054 - - - - - - - - - - 9,905,333 6,631,054	Total 181,539,251 8,013,993 (1,371,114) 275,167
										188,457,297
										176,574,623 5,835,240 (1,109,075) 238,463
										181,539,251
										139,734,984 3,938,203 (1,357,156) (1,614)
										142,314,417
										137,294,061 3,545,524 (1,102,887) (1,714)
										139,734,984
										46,142,880
										41,804,267

(i) Collaterals

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

(Continued)

39

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

• (ii) As of 2021, the Company’s parcels of land with title temporarily registered under the names of third parties for trust purpose had carrying value of $33,529 thousand for both years. which were recorded under property, plant and equipment. The Company has implemented a deed of trust with the authorities to secure the Company’ 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.

• (h) Right-of-use assets

The Company leases many assets including land and buildings, vehicle and machinery Information about cost, depreciation and impairment are as follows:

Cost: Balance at January 1, 2021 Additions Disposals Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Accumulated depreciation: Balance at January 1, 2021 Depreciation for the period Disposals Balance at December 31, 2021 Balance at January 1, 2020 Depreciation for the period Disposals Balance at December 31, 2020 Carrying amount: Balance at December 31, 2021 Balance at December 31, 2020	Land $ 213,200 34,998 (80,275) $ 167,923 $ 84,314 128,886 - $ 213,200 $ 71,379 31,724 (80,275) $ 22,828 $ 32,570 38,809 - $ 71,379 $ 145,095 $ 141,821	Buildings - - - - 304 244 (548) - - - - - 243 244 (487) - - -	Total 213,200 34,998 (80,275) 167,923 84,618 129,130 (548) 213,200 71,379 31,724 (80,275) 22,828 32,813 39,053 (487) 71,379 145,095 141,821

On the year ended of 2021 and 2020, the Group increased the right-of-use assets, please refer to Notes 6(m).

(Continued)

40

FORMOSA PLASTICS CORPORATION Notes to the 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 14,246,320 380,788
		14,627,108
		0.630%~1.035%

(ii) Borrowings issuance and repayments:

Balance as of January 1,2021 New issuance during the period Repayments during the period Effect of exchange rate change Balance as ofDecember 31, 2021 Balance as of January 1,2020 New issuance during the period Repayments during the period Effect of exchange rate change Balance as ofDecember 31, 2020	Total $ 14,627,108 193,642,107 (203,784,041) (498) $ 4,484,676 Total $ 16,170,175 326,554,054 (328,097,145) 24 $ 14,627,108

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

(j) Short-term notes and bills payable

Short-term notes and bills payable Less: Discount on short-term notes and bills payable Total 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, 2021	December 31, 2021	December 31, 2021
	Institutions
	Institutions	Interest rate Amount 0.269% $ 3,000,000 0.239%~0.269% 3,200,000 0.269% 1,000,000 0.239%~0.269% 3,800,000 0.229% 2,500,000 0.239%~0.269% 2,000,000 0.229%~0.239% 1,500,000 17,000,000 (3,176) $ 16,996,824
	CTBC Bank Co., Ltd. China bills Finance Corporation Mega Bills Finance Co., Ltd. Grand Bills Finance Corporation E Sun Commercial Bank, LTD. Yuanta Commercial Bank. LTD. Taishin Internation Bank

(Continued)

41

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(k) Long-term debts

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

Unsecured long-term debts Less: Current portion Total Repayment period Interest rate (ii) Issuance and redemption of loan Balance of January 1, 2021 New issuance during the period Repayment during the period Balance of December 31, 2021 Balance of January 1, 2020 New issuance during the period Repayment during the period Balance of December 31, 2020	December 31, 2020 $ 2,000,000 (2,000,000) $ - 2021 0.800% Total $ 2,000,000 - (2,000,000) $ - Total $ 5,433,333 - (3,433,333) $ 2,000,000

• (iii) Secured bank loans

、 In order to raise funds to build the plant accessory equipment and paid off existing financial, debts, the Company 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 years extension).

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

(Continued)

42

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

  - 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 Company breaches these financial covenants, the syndicated banks may determine to declare the unpaid principal, interest, fees and other sums payable by the Company 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 Company did not breach the above mentioned financial covenants in respect of its financial statements as of 2021 and 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 long-term 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

• (ii) Issuance and repayment of bonds payable for the twelve-month periods ended 2021:

• 1) Issuance

1) Issuance
Face value Coupon rate Expiry 2) Repayment	2021 $ 7,500,000 0.460%、0.520% 2026、2028	2020
		8,350,000
		0.580%、0.630%、0.670%
		2026、2028、2030

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

(Continued)

43

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

3) The term of domestic corporate bonds as December 31, 2021 and 2020 were as follows:

Issue amount 2021.12.31 Ending balance 2021.12.31 Current portion 2020.12.31 Ending balance 2020.12.31 Current portion Issuance date Coupon rate Interest payment date Repayment method Issue amount 2021.12.31 Ending balance 2021.12.31 Current portion 2020.12.31 Ending balance 2020.12.31 Current 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 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. 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, 2026~2027and 2029~2030, respectively.	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. The first domestic unsecured nonconvertible corporate bond in 2017 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.	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. The first domestic unsecured nonconvertible corporate bond in 2018 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.		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. The first domestic unsecured nonconvertible corporate bond in 2021
				7,500,000 7,488,711 - - - June 26, 2018 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

(Continued)

44

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

In 2021, the amount of lease liabilities incurred from the rentals of land and building increased by $34,998 thousand, with the interest rates of 2.05% and 1.41%, maturing in October 2042 and December 2022, respectively.

In 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 The amount recognized in cash flows statement was as follows: Total cash outflow for leases	December 31, 2021 $ 2,916 $ 102,229 December 31, 2021 $ 135,911	December 31, 2020
		3,390
		110,556
		December 31, 2020
		151,837

The amount recognized in cash flows statement was as follows:

(i) Real estate leases

As of December 31, 2021, the Company leases land and buildings for its office space and employee dormitory. The leases of office space typically run for a period of 2 to 8 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 Company incurred at the leased store in the period；others require the Company 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 Company also leases its buildings with contract terms of one year. These leases are shortterm and the Company has elected not to recognize its right-of-use assets and lease liabilities for these leases.

(Continued)

45

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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 Company 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.

1) Composition of the plan asset

The Company 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 Company's Bank of Taiwan labor pension reserve account balance amounted to $3,105,007 thousand 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

(Continued)

46

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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,	For the years ended December 31,
	2021 $ 2,860,594 28,665 19,323 (223,381) 442,065 $ 3,127,266	2020
		2,880,882 28,558 98,020 (261,876 115,010
		2,860,594

• 4) Expense recognized in profit or loss

The pension costs recognized in profit or loss for the years ended 2021 and 2020 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:

Discount rate Rate of future salary increases	For the years ended December 31,
	2021 2020 % 0.50 % 1.00 % 2.85 % 2.85

(Continued)

47

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Based on the actuarial report, the Company is expected to make contributions of $110,306 thousand 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 Company should use judgments and estimates in determining the related actuarial assumptions at balance sheet date, including discount rate, employment turnover rate and future salary increases. Any changes in actuarial assumptions may significantly impact the present value of the defined benefit obligation.

As the year ended of 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 (change0.25％) Future salary increases (change1.00％)	Effect of defined benefit obligations Increase Decrease $ (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 the same with last period.

(ii) Defined contribution plan

The Company 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 Company is not required to bear the regulated or putative obligation subsequent to the payment of fixed-rate contribution.

The Company’ s pension costs under the defined contribution pension plan amounted to $256,257 thousand and $256,536 thousand for the years ended 2021 and 2020, respectively.

(Continued)

48

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(o) Income tax

• (i) The details of income tax expense for the years ended 2021 and 2020 were as follows:

The details of income tax expense for the years ended 2021	and 2020 were as follows:	and 2020 were as follows:
Current income tax expense Deferred tax expense The origination of temporary differences Income tax expense	For the years ended December 31,
	2021 $ 9,231,861 1,731,130 $ 10,962,991	2020 2,517,326 724,752
		3,242,078

The income tax expense related to components of other comprehensive income for the years ended 2021 and 2020 was as follows:

Items that could not be reclassified subsequently to profit or loss: 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 (over) provision in prior periods Additional tax on undistributed earnings Income tax expense	For the years ended December 31,	For the years ended December 31,
	2021 $ 16,463,660 (170,650) (601,043) (4,728,862) (114) - $ 10,962,991	2020 4,655,655 (65,744) (671,633) (762,327) 12,256 73,871 3,242,078

(Continued)

49

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(ii) 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 profit Unamortized fixed manufacturing expense Accrued pension liability Unrealized impairment loss on financial assets Unrealized foreign currency exchange loss Total Deferred tax liabilities Foreign investment income under equity method Unrealized foreign currency exchange gain Cumulative translation adjustment Depreciation Total For the year ended December 31, 2021 Deferred tax assets Unrealized gross loss Unamortized fixed manufacturing expense Accrued pension liability Unrealized impairment loss on financial assets Unrealized foreign currency exchange loss Total Deferred tax liabilities Foreign investment income under equity method Unrealized foreign currency exchange gain Cumulative translation adjustment Depreciation Unrealized gross profit Total	Beginning balance	Beginning balance	Recognized in income or loss
	$ 5,298 14,499 1,390,686 257,257 34,348 $ 1,702,088 $ 17,409,468 27,092 182,021 84,831 $ 17,703,412 Beginning balance
		Beginning balance
	$ - 25,507 1,460,641 319,012 56,375 $ 1,861,535 $ 16,817,774 58,187 60,313 85,081 6,693 $ 17,028,048

(iii) The Company’s income tax returns have been examined and approved through 2019 by the ROC tax authorities.

(Continued)

50

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(p) Capital and other equity

As the year ended of 2021 and 2020, the Company’s government registered total authorized capital and issued capital stock both amounted to $63,657,408 thousand, 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

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.

(Continued)

51

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

• 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, 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 both as of 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.

3) Earnings distribution

The appropriations of earnings in 2020 and 2019 had been approved in the stockholders' meetings on July 29, 2020, and June 10, 2019, respectively. The amounts of appropriation of dividend 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 (net of tax)

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 Unrealized gains on financial assets at fair value through other comprehensive income Share of unrealized gains or losses on associates accounted for using equity method and their financial assets at fair value through other comprehensive income Share of cash flow hedge of associates and joint ventures Balance at December 31, 2021	Exchange differences on translation of foreign operations $ (9,603,060) (2,645,862) (489,481) - - - $ (12,738,403)		Unrealized gain (loss) on financial assets at fair value through profit or loss 76,471,804 - - 13,217,196 4,541,777 -		Gain (loss) on hedging instruments 37,988 - - - - (27,026)	Total 66,906,732 (2,645,862) (489,481) 13,217,196 4,541,777 (27,026)
			94,230,777		10,962	81,503,336

(Continued)

52

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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 Unrealized gains on financial assets at fair value through other comprehensive income Share of unrealized gains or losses on associates accounted for using equity method and their 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 $ (5,278,250) (3,579,265) (745,545) - - - $ (9,603,060)		Unrealized gain (loss) on financial assets at fair value through profit or loss 80,701,025 - - (12,135,231) 7,906,010 -		Gain (loss) on hedging instruments 779 - - - - 37,209	Total 75,423,554 (3,579,265) (745,545) (12,135,231) 7,906,010 37,209
			76,471,804		37,988	66,906,732

(q) Earnings per share

The basic earnings per share were calculated as follows:

Profit attributable to ordinary shareholders Weighted average number of outstanding ordinary shares

For the years ended December 31,	For the years ended December 31,
2021 $ 71,355,311 6,365,741 $ 11.21	2020
	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 Decembe	r 31, 2021
	Plastic division $ 25,345,936 19,458,421 40,120,510 $ 84,924,867 $ 48,428,260 14,345,326 - - - - - - - - - - - - 22,151,281 $ 84,924,867	Polyolefin division 12,069,147 14,438,834 13,362,913 39,870,894 - - 16,287,118 7,084,479 16,358,337 - - - - - - - - - 140,960 39,870,894	Polypropylene division 8,726,223 6,887,646 6,556,848 22,170,717 - - - - - 19,509,445 2,661,272 - - - - - - - - 22,170,717	Tairylan division 10,469,717 6,935,356 9,916,985 27,322,058 - - - - - - - 12,886,655 4,070,482 3,577,242 5,764,461 - - - 1,023,218 27,322,058	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 20,824 407,170 2,974,156 - - - - - - - - - - - - - - 2,974,156 2,974,156	Total 84,220,097 50,292,334 76,163,099
							210,675,530
							48,428,260 14,345,326 16,287,118 7,084,479 16,358,337 19,509,445 2,661,272 12,886,655 4,070,482 3,577,242 5,764,461 16,182,862 4,146,842 5,866,548 33,506,201
							210,675,530

(Continued)

53

FORMOSA PLASTICS CORPORATION Notes to the 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 $ 18,646,355 13,231,026 23,919,567 $ 55,796,948 $ 32,249,161 11,325,533 - - - - - - - - - - - - 12,222,254 $ 55,796,948	Polyolefin division 9,455,117 11,659,832 6,415,352 27,530,301 - - 13,820,214 4,988,938 8,542,446 - - - - - - - - - 178,703 27,530,301	Polypropylene division 7,289,657 6,482,100 3,915,699 17,687,456 - - - - - 15,824,916 1,862,540 - - - - - - - - 17,687,456	Tairylan division 5,140,280 5,828,366 5,316,581 16,285,227 - - - - - - - 5,550,072 3,353,752 3,278,919 3,801,224 - - - 301,260 16,285,227	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 19,596 242,459 3,320,182 - - - - - - - - - - - - - - 3,320,182 3,320,182	Total 56,760,260 39,948,658 42,448,127
							139,157,045
							32,249,161 11,325,533 13,820,214 4,988,938 8,542,446 15,824,916 1,862,540 5,550,072 3,353,752 3,278,919 3,801,224 7,745,444 2,980,926 4,001,246 19,831,714
							139,157,045

(ii) Balance of contracts

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful receivables Total	December 31, 2021 $ 107,109 17,683,274 (64,993) $ 17,725,390	December 31, 2020 62,560 10,166,933 (3,188) 10,226,305	January 1, 2020 62,560 10,166,933 (3,188) 10,226,305

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.

(Continued)

54

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

For the years ended 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 was recognized under operating costs and operating expenses. The employee compensations were consistent with the actual distributions. Related information can be accessed from the Market Observation Post System website.

• (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 Gains (losses) on evaluating financial assets Other gain Other loss Net of other gain and loss (iv) Finance costs Interest expense Less: capitalized interest Interest expense from bank loans Capitalized interest rate	2021 $ 8,196 54,642 $ 62,838 2021 $ 155,929 2,999,580 $ 3,155,509 2021 $ 22,606 (498,187) (95,484) 350,815 (164,183) $ (384,433) 2021 $ 666,570 (70,594) $ 595,976 0.800%-1.290%	2020 96,784 132,838 229,622 2020 153,692 3,358,166 3,511,858 2020 13,514 (994,132) (155,473) 317,873 (105,476) (923,694) 2020 826,738 (37,956) 788,782 0.800%-1.350%
	$ $
	$ $
	$ $

(Continued)

55

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(u) Financial instruments

• (i) Credit risk

• 1) Maximum credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to credit risk exposure.

• 2) Concentration of credit risk

The company’s revenue was not attributable to sales transactions with a single customer or to sales in a specific region. Therefore, accounts receivable have no obvious concentrated credit risk. To reduce credit risk, the Company regularly monitors and reviews the recoverable amount of the trade receivables to its clients, but the company usually doesn’t ask its clients to provide collateral.

• 3) Credit risk of receivables

For credit risk exposure of 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 $ 4,377,404 Unsecured Bonds payable 45,509,254 Short-term notes and bills payable 2,099,824 Accounts payable (including related parties) 12,247,997 Other payables (including related parties) 10,609,673 Other current liabilities 8,681,142 Employees’ savings 107,272 Lease liabilities 147,607 $ 83,780,173 December 31, 2020 Non-derivative financial liabilities Unsecured bank loans $ 16,246,320 Unsecured Bonds payable 40,910,455 Short-term notes and bills payable 16,996,824 Accounts payable (including related parties) 10,388,970 Other payables (including related parties) 3,717,014 Other current liabilities 5,994,658 Employees’ savings 380,788 Lease liabilities 143,375 $ 94,778,404	Carrying amount		Contractual cash flow		Within 6 months		6~12months		1~2years		2~5years - 18,732,685 - - - - - 23,590 18,756,275 - 20,963,435 - - - - - 22,291 20,985,726	Over 5 years
			4,394,316 47,079,823 21,000,000 12,247,997 10,609,673 8,681,142 107,696 176,925		4,394,316 5,025,353 21,000,000 12,247,997 10,609,673 8,681,142 107,696 13,304		- 4,480,235 - - - - - 13,304		- 9,104,800 - - - - - 7,863			- 9,736,750 - - - - - 118,864
			104,297,572		62,079,481		4,493,539		9,112,663			9,855,614
			16,314,345 42,878,823 17,000,000 10,388,970 3,717,014 5,994,658 382,863 173,549		16,314,345 1,658,993 17,000,000 10,388,970 3,717,014 5,994,658 382,863 20,285		- 1,269,125 - - - - - 3,846		- 9,661,880 - - - - - 7,692			- 9,325,390 - - - - - 119,435
			96,850,222		55,477,128		1,272,971		9,669,572			9,444,825

(Continued)

56

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

• (iii) Currency risk

• 1) Exposure to currency risk

The Company’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 426,598 28.5080 12,161,456 6,509 34.5600 224,951 13,783 0.2724 3,754 9,335 4.3691 40,786 27,129 28.5080 773,394 209 34.5600 7,223 76,394 0.2724 20,810	December 31, 2020 Foreign currency (in thousand) Exchange Rate New Taiwan Dollars 426,598 28.5080 12,161,456 6,509 34.5600 224,951 13,783 0.2724 3,754 9,335 4.3691 40,786 27,129 28.5080 773,394 209 34.5600 7,223 76,394 0.2724 20,810
	Foreign currency (in thousand)	Exchange Rate	New Taiwan Dollars		Exchange Rate New Taiwan Dollars 28.5080 12,161,456 34.5600 224,951 0.2724 3,754 4.3691 40,786 28.5080 773,394 34.5600 7,223 0.2724 20,810
	$ 680,665 6,989 18,812 339 40,842 188 56,566	27.6900 31.5030 0.2408 4.3431 27.6900 31.5030 0.2408	18,847,614 220,174 4,530 1,472 1,130,915 5,923 13,621	426,598 6,509 13,783 9,335 27,129 209 76,394

• 2) Sensitivity analysis

The Company exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade and other receivables, loans and borrowings; and trade and other payables that are denominated in foreign currency.

A strengthening (weakening) of 1% of the NTD against the USD, EUR, JPY and CNY as of December 31, 2021 and 2020 would have increased (decreased) net profit before tax by $179,233 thousand and $116,295 thousand. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for 2021 and 2020.

• 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 gain (loss) (including realized and unrealized portions) amounted to $498,187 thousand and $994,132 thousand, respectively.

(Continued)

57

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(iv) Interest rate analysis

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

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 liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities 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.

If the interest rate had increased / decreased by 1%, the company’s net income would have decreased / increased by $43,774 thousand and by $162,463 thousand for the year 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

Prices of securities at the reporting date	2021	2021	2020	2020
	Other comprehensive income after tax $ 1,093,169 $ (1,093,169)	Net income - -	Other comprehensive income after tax 1,022,189 (1,022,189)	Net income
Increasing 1% Decreasing1%				-
				-

(vi) Fair value

• 1) Types and fair value of financial instruments

The fair value of financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income (available for sale financial assets ) is measured on a recurring basis.

The Company’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				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 - -	Total
	$ 3,793,399 3,793,399			-		3,793,399			3,793,399
		3,793,399		-		3,793,399			3,793,399

(Continued)

58

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Carrying value Financial assets at fair value through OCI Listed stocks $ 109,106,270 210,600 Unquoted equity instruments at fair value 24,749,907 Subtotal 134,066,777 Financial assets measured at amortized cost Cash and cash equivalents 5,946,231 Notes and accounts receivable (including related parties) 17,725,390 Other receivables (including related parties) 6,450,358 Subtotal 30,121,979 Total $ 167,982,155 Financial liabilities measured at amortized cost Bonds payable (including current portion) $ 45,509,254 Short-term notes and bills payable 2,099,824 Short-term borrowings 4,484,676 Accounts payable (including related parties) 12,247,997 Other payables (including related parties) 10,609,673 Other current liabilities 8,681,142 Lease liabilities 147,607 Total $ 83,780,173			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 - - 24,749,907 24,749,907 - - - - 24,749,907 - - - - - - - -	Total
			109,106,270 210,600 -		- - -			109,106,270 210,600 24,749,907
			109,316,870		-			134,066,777
			- - -		- - -			- - -
			-		-			-
			109,316,870		3,793,399			137,860,176
			- - - - - - -		- - - - - - -			- - - - - - -
			-		-			-

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				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 - - - 18,539,632 18,539,632	Total
	$ 3,888,883 3,888,883 102,218,948 18,539,632 120,758,580			-		3,888,883			3,888,883
		3,888,883		-		3,888,883			3,888,883
		102,218,948 18,539,632		102,218,948 -		- -			102,218,948 18,539,632
		120,758,580		102,218,948		-			120,758,580

(Continued)

59

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Carrying value Financial assets measured at amortized cost Cash and cash equivalents $ 3,768,327 Notes and accounts receivable (including related parties) 11,775,690 Other receivables (including related parties) 8,264,665 Subtotal 23,808,682 Total $ 148,456,145 Financial liabilities measured at amortized cost Bonds payable (including current portion) $ 40,910,455 Short-term notes and bills payable 16,996,824 Short-term borrowings 14,627,108 Long-term loans (including current portion) 2,000,000 Accounts payable (including related parties) 10,388,970 Other payables (including related parties) 3,717,014 Other current liabilities 5,994,658 Lease liabilities 143,375 Total $ 94,778,404			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 - - - - 18,539,632 - - - - - - - - -	Total
			- - -		- - -			- - -
			-		-			-
			102,218,948		3,888,883			124,647,463
			- - - - - - - -		- - - - - - - -			- - - - - - - -
			-		-			-

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

The Company’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.

(Continued)

60

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

If the financial instruments possessed by the Company 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).

Except for financial instruments traded in active market, Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor.

• 4) There were no transfer between the fair value hierarchy levels for the years ended 2021.

• 5) Movement of financial instruments grouped into level 3

January 1, 2021 Total gains and losses recognized: In other comprehensive income December 31, 2021 January 1, 2020 Total gains and losses recognized: In other comprehensive income Reduce Reclassification December 31, 2020	Financial assets at fair value through other comprehensive income Unquoted equity instruments $ 18,539,632 6,210,275 $ 24,749,907 $ 9,924,415 (9,112,399) (12,500) 17,740,116 $ 18,539,632

• 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 the results close to the current market conditions, to confirm whether the resource of information is independent, reliable and in line with other resources, and to represent the independent information as the exercisable price. According to the Company’ s accounting policy, the analysis on the value changes of remeasured or reevaluated assets and liabilities is performed to ensure the reasonability of the evaluation results at the reporting date.

(Continued)

61

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

Most of the Company’ s financial instruments that use Level 3 inputs have only one significant unobservable input, except for equity investment without an active market which have multiple significant unobservable inputs.

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, the use of different valuation models or assumptions may result in different measurements. The following is the effect of other comprehensive income from financial assets and liabilities categorized within Level 3 when 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% $ 199,223 (199,223)

(Continued)

62

FORMOSA PLASTICS CORPORATION Notes to the 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 $ 146,084 (146,084)

(v) Financial risk management

The Company seeks to ensure sufficient cost-efficient funding readily available when needed. The Company 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	Risk Detection
1. Interest rate, exchange rate, and inflation General manager department; accounting department; finance department; and general management department 2.Investments of high risk and leverage, loans to others, guarantees and endorsements, and trade of derivatives General manager department; finance department; and general management department 3.R&D plans General manager department; technology department of each business division; and general management department 4.Changes on significant domestic and international policies and regulations General manager department; manager department and technology department of each business division; legal department; and general management department 5.Changes on technologies General manager department; and manager department of each business division; R&D center; and general management department 6.Changes on corporate imagesGeneral manager department; and manager department of each business division; and general management department		Computer audit & regular self audit; monthly budget meeting; finance supervisors meeting; internal audit department; and board meeting Computer audit & regular self audit; monthly budget meeting; finance supervisors meeting; internal audit department; and board meeting Purchase & sales meeting; operation performance meeting; R&D meeting; board meeting; and internal audit department Purchases & sales meeting; operation performance meeting; board meeting; and internal audit department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting Purchase & sales meeting; operation performance meeting; and board meeting

(Continued)

63

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Items	Risk Management Department	Risk Detection
7.Merge and reinvestments 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.Information security	General manager department; manager department of each business division; and general management department General manager department; factory affair department of each business division; manager department; and general management department General manager department; manager department of each business division; purchase department; and general management department General manager department; and shares management division of finance department General manager department; and general management department General manager department; general management department; and legal department General manager department; general management department; and legal department	Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting Weekly marker price meeting; purchase & sales meeting; operation performance meeting; internal audit department; and board meeting Operation management meeting and board meeting Operation management meeting and board meeting Purchase & sales meeting, operation performance meeting, internal audit department, and board meeting. 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 Company. The Company is exposed to credit risk from operating activities, primarily trade receivables, and from financing activities, primarily deposits, fixed-income 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 Company mainly invests in Petrochemical Industry, which belongs to mature industry with lower risk. In addition, the Company’ s prudent management creates financial health without high-leveraged investment.

(Continued)

64

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

3) Guarantee

The Company’ 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 Company believes that they are expecting no significant losses from endorsement.

(ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’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 Company’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 Company’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 Company 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 Company 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 Company utilized interest rate swap contracts to partially hedge its exposure.

(w) Capital management

Although business operated by the Company 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 Company’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)

65

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

The Company 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 Company’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 $ 114,039,392 (5,946,231) 108,093,161 403,190,274 % 26.81	December 31, 2020 123,192,890 (3,768,327) 119,424,563 332,536,140 % 35.91

• (x) Changes of liabilities arising from financing activities

Changes of liabilities arising from financing activities were as follows:

Short-term loans Short-term notes and bills Long-term loan (including current portion) Bonds Payable (including current portion) Lease liabilities Total liabilities arisings from financing activities Short-term loans Short-term notes and bills Long-term loan (including current portion) Bonds Payable (including current portion) Lease liabilities Total liabilities arisings from financing activities	2021.1.1 $ 14,627,108 16,996,824 2,000,000 40,910,455 143,375 $ 74,677,762 2020.1.1 $ 16,170,175 14,991,544 5,433,333 32,564,312 52,197 $ 69,211,561	Change in cash flows from financing activities (10,141,934) (14,900,000) (2,000,000) 4,600,000 (33,682) (22,475,616) Change in cash flows from financing activities (1,543,091) 2,000,000 (3,433,333) 8,350,000 (41,281) 5,332,295	Changes in non-cash - 3,000 - (1,201) 37,914 39,713 Changes in non-cash - 5,280 - (3,857) 132,459 133,882	Effect of exchange rate changes (498) - - - - (498) Effect of exchange rate changes 24 - - - - 24	December 31, 2021 4,484,676 2,099,824 - 45,509,254 147,607
					52,241,361
					December 31, 2021 14,627,108 16,996,824 2,000,000 40,910,455 143,375
					74,677,762

(Continued)

66

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(7) Related-party transactions:

• (a) Name of related parties

Name of related party Relationship with Consolidated Company Formosa Plastics Corp. (Cayman Ltd.) Subsidiary Formosa Industries Corporation Subsidiary Formosa Industries (Hong Kong) Limited Subsidiary Formosa Industries (Ningbo) Co., Ltd. Subsidiary Formosa Petrochemical Corporation Associates Formosa Plastics Corp., U.S.A. Associates Formosa Heavy Industries Corp. Associates Mai Liao Power Corp. Associates Formosa Sumco Technology Corporation Associates Formosa Transportation Corp. Associates Ya Tai Development Corp. Associates Wha Ya Park Management Consulting Corporation Associates Ltd. Formosa Environmental Technology Corporation Associates Formosa Resources Corporation Associates Formosa Group (Cayman) Limited Associates Hua Ya Power Corp. Associates Formosa Plastics Construction Corporation Associates Japan Formosa Sumco Technology Corp. Associates Formosa Automobile Corp. Associates Fujian Fuxin Special Steel Co., Ltd. Associates Formosa Asahi Spandex Co., Ltd. Joint venture Formosa Daikin Advanced Chemical Co., Ltd. Joint venture Formosa Tokuyama Advanced Chemicals Co., Ltd. Joint venture Nan Ya Plastics Corporation Other related parties Formosa Chemicals and Fiber Corporation Other related parties Chang Gung Medical Foundation Other related parties Nan Ya PCB Corporation Other related parties Nan Chung Petrochemical Corporation Other related parties

(Continued)

67

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Name of related party

PFG Fiber Glass Corporation Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics Corporation America Formosa Industries Corp., Vietnam Formosa Taffeta Co., Ltd. Formosa BP Chemicals Corp. Formosa Biomedical Technology Corp. Formosa Carpet Co., Ltd. Formosa Idemitsu Petrochemical Corp. Hong Jing Resources Corp. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Plastics Marine Corp. Formosa Group Ocean Marine Corp. Nanya Technology Corporation Inteplast Taiwan Corporation Formosa Ha Tinh (Cayman) Ltd. Formosa Technologies Corporation Formosa Petrochemical Transportation Corporation, Ltd.

Chang Gung Biotechnology Corporation Nan Ya Plastics Corporation USA Formosa Ha Tinh Steel Corporation 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

(Continued)

68

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(b) Significant related-party transactions

(i) Sales to related parties

Significant sales to related parties and the balance of accounts receivable were as follows:

Subsidiaries Associates Joint ventures Other related parties	Sales for the years ended December 31, 2021 2020 $ 12,718,298 7,525,587 9,957,511 6,019,829 184,894 115,534 27,166,881 19,034,522 $ 50,027,584 32,695,472		Accounts receivable –related parties	Accounts receivable –related parties
	2021 $ 12,718,298 9,957,511 184,894 27,166,881 $ 50,027,584		December 31, 2021 1,961,704 1,330,918 13,477 2,989,212 6,295,311	December 31, 2020
				1,209,990 855,813 7,481 2,303,982
				4,377,266

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 subsidiaries are O/A 90 days and from other foreign related parties are O/A 60 days or L/C at sight.

(ii) Purchase from related parties

Purchases from related parties and the balance of accounts payables were as follows:

Subsidiaries Associates Formosa Petrochemical Corporation Others Other related parties	Purchases for the years ended December 31, 2021 2020 $ 2,410,223 1,132,624 83,689,442 54,875,577 1,310,296 1,168,900 4,687,965 3,441,610 $ 92,097,926 60,618,711	Purchases for the years ended December 31, 2021 2020 $ 2,410,223 1,132,624 83,689,442 54,875,577 1,310,296 1,168,900 4,687,965 3,441,610 $ 92,097,926 60,618,711	Accounts payable –related parties	Accounts payable –related parties
	2021 $ 2,410,223 83,689,442 1,310,296 4,687,965 $ 92,097,926		December 31, 2021 346,509 7,340,397 4,547 303,387 7,994,840	December 31, 2020
				124,430 6,272,990 2,167 425,790
				6,825,377

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. The terms of receivables are O/A 90 days for subsidiaries.

(Continued)

69

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(iii) Property plant and equipment

• 1) Disposals of lands and equipment (recognized as property, plant and equipment) to related parties were as follow, there were no related transactions for the year ended December 31, 2021.

Other

For the year ended December 31, 2019	For the year ended December 31, 2019
Disposal price $ 305	Gain from disposal 230

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

• 2) Property plant and equipment

Purchase of lands and equipment (recognized as property, plant and equipment) from related parties and the balance of accounts payable were as follow:

Other related parties	For the years ended December 31, 2021 2020 $ 232,317 342,927	For the years ended December 31, 2021 2020 $ 232,317 342,927		Other payables –related parties	Other payables –related parties
	2021 $ 232,317			December 31, 2021 76,497	December 31, 2020
					50,757

• 3) Acquisition of financial assets

Subsidiaries Formosa Plastics Corp. (Cayman Ltd.) Associates Formosa Resources Corporation Joint ventures Formosa Tokuyama Advanced Chemicals Co., Ltd.	Financial Statement Account Number of Shares (in thousands) Investments accounted for using equity method - Investments accounted for using equity method 88,453 Investments accounted for using equity method 37,500	Transaction Shares For the year ended December 31, 2021 Shares of stock of Formosa Plastics Corp. (Cayman Ltd.) $ 128,450 Shares of stock of Formosa Resources Corporation 884,531 Shares of stock of Formosa Tokuyama Advanced Chemicals Co., Ltd. 375,000 $ 1,387,981

(Continued)

70

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Subsidiaries Formosa Plastics Corp. (Cayman Ltd.) Formosa Industries Corporation Associates- Formosa Resources Corporation	Financial Statement Account Number of Shares (in thousands) Investments accounted for using equity method 1 Investments accounted for using equity method 3 Investments accounted for using equity method 50,000 -	Transaction Shares For the year ended December 31, 2020 Shares of stock of Formosa Plastics Corp. (Cayman Ltd.) $ 5,021,385 Shares of stock of Formosa Industries Corporation 8,394,635 Shares of stock of Formosa Resources Corporation 500,000 - $ 13,916,020

(iv) Financing transactions

Financing transactions with related parties were as follows:

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 $ 2,622,190	December 31, 2020
		4,243,086

As the year ended of 2021 and 2020, the interest receivable from the abovementioned transactions amounted to $2,183 thousand and $4,618 thousand, respectively, which was recognized as other receivables–related parties.

(Continued)

71

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

• (v) Endorsements and guarantees

1) The Company’ 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

• (vi) Purchases of raw materials on behalf of related parties

The detailed information of buying raw materials on behalf of related parties were as follows:

Subsidiaries	Amount of purchases of raw materials on behalf for the years ended December 31, 2021 2020 $ 15,300,079 9,015,126	Amount of purchases of raw materials on behalf for the years ended December 31, 2021 2020 $ 15,300,079 9,015,126	Other receivables –related parties	Other receivables –related parties
	2021		December 31, 2021 698,403	December 31, 2020
	$ 15,300,079			1,109,516

• (vii) Other transactions

The Company's utility and steam expenses paid to related parties were as follow:

Associates Formosa Petrochemical Corporation	Other payables–related parties	Other payables–related parties
	December 31, 2021 $ 1,152,275	December 31, 2020 1,029,530

(viii) Receivables from payment on behalf of related parties

The Company paid for construction design service fees on behalf of related parties as follows:

Associates Fujian Fuxin Sepecial steel Corporation	Other receivables －related parties	Other receivables －related parties
	December 31, 2021 $ 1,794,541	December 31, 2020
		1,997,928

(Continued)

72

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(ix) Rental (recognized as other income)

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

Associates Formosa Petrochemical Corporation Formosa Heavy Industries Corp. Others Joint ventures Formosa Daikin Advanced Chemical Co., Ltd. Others Other related parties Nan Ya Plastics Corporation Others	For the years ended December 31,	For the years ended December 31,
	2021 $ 16,568 58,764 6,969 17,397 8,049 23,520 14,334 $ 145,601	2020
		16,568 58,764 6,968 17,651 595 25,650 17,763
		143,959

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:

The compensation to key management was as follows:
Short-term employee benefits	For the years ended December 31,
	2021 $ 71,554	2020
		59,083

(8) Pledged assets:

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

The Company’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 (recognized as 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)

73

FORMOSA PLASTICS CORPORATION Notes to the 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 December 31, 2021, the Company’ s investee, Formosa Ha Tinh (Cayman) Ltd., signed several contracts of syndicated credit lines with different banks amounting to US$1,710,000 thousand and credit line of $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 Company were as follows:

	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year 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	5,440,525 369,839 259,501 - 197,041 3,659,951 300,195	3,263,118 261,274 147,374 8,615 118,633 309,976 -	- - - - - - 10,579	8,703,643 631,113 406,875 8,615 315,674 3,969,927 310,774	4,877,209 332,738 245,064 - 150,274 3,288,535 232,070	2,794,178 242,127 173,728 7,640 90,731 296,042 2,060	- - - - - - 11,761	7,671,387 574,865 418,792 7,640 241,005 3,584,577 245,891

The Company's number of employees and additional information on employee benefits were as follows:

Number of employees Number of directors who were not employees The average employee benefit The average salaries and wages Adjustment of the average salaries and wages Remuneration of supervisors

(Continued)

74

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(i) Policy for directors’ remuneration:

• 1) The Company's independent directors will receive the remuneration monthly, and they are also provided with transportation allowances based on their board meeting attendance. However, no variable remuneration was paid by the Company.

• 2) According to the Company's articles, the directors’ remuneration is approved by the board of directors in accordance with the degree of participation and value of contributions of each director to the operation of the Company, as well as the salary standards of the same peer or industry. Also, they are provided with transportation allowances based on their board meeting attendance. However, no variable remuneration was paid by the Company

• 3) On June 5, 2009, the Company had approved to abolish the appropriation earnings for directors and supervisors as remuneration at the annual stockholders’ meeting.

• (ii) Policy for remuneration to supervisors:

On June 25, 2015, the Company has established an Audit Committee to replace its supervisors.

• (iii) Policy for managers’ remuneration:

According to the Company’ s articles and Article 29 of the R.O.C. Company Act, the Company’s managers will receive a monthly remuneration, annual bonus,performance bonus and managers’ bonus. Also, The Company monthly allocates retirement pension (including both old and new) and welfare payments to their personal accounts in accordance with the provisions of the Company's Pension. Furthermore, an additional remuneration will be provided to managers under exceptional situations, such as executive retirement bonuses, severance payment, etc. Also, a fixed monthly remuneration will be adjusted based on the annual standard adjustment for general employees. Besides, the chairman of the board of directors will propose the adjustment to the remuneration committee after considering and evaluating the overall performance of the manager's responsibilities (including operational effectiveness, financial performance, industrial safety incidents, environmental sustainability, energy saving, etc.) as well as the achievement of the individual's "annual work target".

(iv) Policy for employee remuneration:

The Company's employees are paid monthly. They will also receive their annual bonus, festival bonus, performance bonus and managers’ bonus, depending on the business condition of the Company.Besides, the monthly wages are adjusted with reference to the Consumer Price Index (CPI), industry salary level, and relevant economic data.

(Continued)

75

FORMOSA PLASTICS CORPORATION

Notes to the 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) Co.Ltd	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)

76

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

No.	Name of guarantor	Counter-party of guarantee and endorsement	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	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company 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. Formosa Plastics Development Corp.	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	68,743 39,574 1,103 1,769 1,287 19,088	3,061,126 1,078,009 15,844 39,153 13,318 284,027	% 16.17 % 17.99 % 0.81 % 1.05 % 0.80 % 18.00	3,061,126 1,078,009 15,844 39,153 13,318 284,027

(Continued)

77

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Formosa Plastics Corp. (Cayman Ltd)	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 medical Co,.Ltd Mega Prosperity Private Placement Fund Swancor (Jiangsu) Carbon Fiber Composite Co., 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 -	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 Current financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income- non-current	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 - 12,479 -	- 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 3,793,399 160,712	% 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 % 25.00 % 16.11	- 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 3,793,399 160,712

(Continued)

78

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

(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 - Formosa Tokuyama Advanced Chemicals Co., Ltd.	Investments accounted for using equity method Investments accounted for using equity method	Formosa Resources corporation Formosa Tokuyama Advanced 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 and accumulated translation adjustment of $ 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
							Owner	Relationship with the Company	Date of transfer	Amount
	6 lands in No. 2123, Xizhou Rd., Linyuan Dist., Kaohsiung City	June 18,2021	591,001	591,001	SHIYU METAL CO., LTD.	none				-	Purchase price is based on the market price and evaluation report	Joint Distributiion center for Linyuan district plant	none

• (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) o % (3.23) o % (3.46) o	Before the 27th f the following month Before the 27th f the following month Before the 27th f the following month	- - -		1,543,303 593,147 711,029	8.71% 3.35% 4.01%

(Continued)

79

FORMOSA PLASTICS CORPORATION

Notes to the 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%

(Continued)

80

FORMOSA PLASTICS CORPORATION

Notes to the 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 Corporation,U.S .A. 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)%	Note

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

(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 Industries U.S.A Co. Ltd. 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 Corp(Ningbo) INTEPLAST GROUP	Other related parties 〃 Associates Other related parties Other related parties Parent subsidiary Associates Other related parties Associates Parent-subsidiary 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 - - - - - - -	- - - - - - - - - - - - - -		1,543,303 593,147 666,686 74,361 171,800 1,024,435 299,203 - - - - - - -	- - - - - - - - - - - - - -

(ix) Trading in derivative instruments: None.

(Continued)

81

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

(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	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Ownership	Carrying value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Formosa Plastics Corp. (Cayman Ltd.) Formosa Industries Corporation Formosa Industries Corporation	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. 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 Lolita Packaging, L.L.C. Lolita Packaging, L.L.C.	Taiwan U.S.A Taiwan Samoa Cayman Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Cayman U.S.A Taiwan Hong Kong U.S.A U.S.A	Petrochemicals Chemicals Mechanical equipment Investment Investment Electricity Electronics manufacture Transportation Transportation Construction Development of land Artificial fiber Automobile Consulting service Chemical industry Mining industry Environmental industry Construction Investment Chemicals Semiconductor Reinvestment Transportation Transportation	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 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)	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 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)	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 24 830,047 41,714 60,000 13 5 50,000 - - -	% 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 % 25.00 % 24.34 % 33.33 % 25.00 % 100.00 % 50.00 % 100.00 % 33.00 % 38.00	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 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) (70,462) (USD-2,545)	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 1,933 245,940 298,994 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)	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 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 1 Note, Note 1 Note, Note 1 Note, Note 1 Note, Note 1, Note 2 Note, Note 1 Note, Note 1 Note, Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note, Note 1 Note, Note 1 Note 1 Note, Note 1 Note, Note 1 Note 1 Note, Note 1, Note2 Note 1, Note2 Note 1, Note 2

Note ： Including cumulative translation adjustments.

Note 1： Long-term equity investments under equity method.

Note 2： The exchange rate of New Taiwan dollars to US dollars on December 31, 2021, 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.

(Continued)

82

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -	(In Thousands of New Taiwan Dollars) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -	(In Thousands of New Taiwan Dollars) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -	(In Thousands of New Taiwan Dollars) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -	(In Thousands of New Taiwan Dollars) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -	(In Thousands of New Taiwan Dollars) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -	(In Thousands of New Taiwan Dollars) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -	(In Thousands of New Taiwan Dollars) Investment flows Accumulated outflow Net income Accumulated Outflow Inflow of investment from Taiwan as of December 31, 2021 (losses) of the investee Percentage of ownership Book value Highest Percentage of ownership remittance of earnings in current period - (USD-) - 26,928,755 (USD845,270) 8,485,993 (USD302,934) 100.00% 8,485,993 (USD302,934) 50,664,842 (USD1,829,716) - - - 66,137 (USD2,000) 70,934 (USD2,532) 100.00% 70,934 (USD2,532) 467,914 (USD16,898) - 128,450 (USD4,600) - 250,548 (USD8,700) (48,596) (USD1,735) 50.00% (24,298) (USD867) 79,365 (USD2,866) - - - 13,221,416 (USD425,800) (560,628) (USD-20,013) 29.16% (136,504) (USD-5,837) 4,530,997 (USD163,633) - - - 99,993 (USD3,060) 75,199 (USD2,684) 16.11% - 160,712 (USD5,804) -
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	Book value	Highest Percentage of ownership	Accumulated remittance of earnings in current period
					Outflow	Inflow
Formosa Industries (Ningbo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd. 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)	- (USD-) - 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%	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.

• (ii) Limitation on investment in Mainland China:

itation 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: None

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
ChangGungMedical 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.

(14) Segment information:

Please refer to the consolidated financial statements in 2021.

83

Formosa Plastics Corporation

List of Cash and Cash Equivalents

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

	Items Description	Amount
Cash on hand	$	87
Petty cash		200
Bank deposit	Checking account	1,349
	Demand account	39,441
	USD 92,859 thousand	2,571,270
	JPY 18,812 thousand	4,522
	EUR 153 thousand	4,784
	CNY 339 thousand	1,473
		2,622,839
	Time deposits-USD 120,011 thousand(note1)	3,323,105
	$	5,946,231
note: Exchange rate on December 31, 2021 USD 1.00=NTD 27.6900
	JPY 1.00=NTD 0.2408
	EUR 1.00=NTD 31.5030
	CNY 1.00=NTD 4.3431

note 1:

Bank	Original currency (thousand) USD 30,000 USD 60,000 USD 30,011	Original currency (thousand) Period % 0.300 2021/12/27-2022/01/07 % 0.110 2021/12/30-2022/01/06 % 0.300 2021/12/24-2022/01/07
Chang Hwa Commercial Bank Bank of Taiwan Bank of Kaohsiung

84

Formosa Plastics Corporation

List of Assets Designated at FVTPL - Current

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Fair value Total Unit Total Name of financial assets Description Shares Face value amount Cost price amount Note Private equity of Mega Funds 12,479 $ 328.34 4,097,403 4,097,403 303.98 3,793,399 - International Commercial Bank Co. Ltd

85

Formosa Plastics Corporation

List of Assets Measured at Fair Value Through Other Comprehensive Income - Current

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name of financial assets Nan Ya Plastics Corporation Formosa Chemicals and Fiber Corporation Nanya Technology Corporation Puriblood Medical Co.,Ltd	Description Stocks Stocks Stocks Stocks	Shares 783,357 198,744 334,815 1,300	Face value Total amount $ 10 7,833,570 10 1,987,440 10 3,348,150 10 13,000 $ 13,182,160	Cost 16,930,051 1,775,505 10,215,315 91,000 29,011,871	Fair	value Total amount Note 66,898,676 - 16,058,510 - 26,149,084 - 210,600 - 109,316,870
					Unit price 85.40 80.80 78.10 162.00

Statement of notes receivable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
FSSC	$	13,309
TWYK		5,589
YCCYQ		13,348
SUNWEL		35,800
TMSY		6,025
YJFS		12,000
YCCY14		10,779
Others(Note)		10,259
Total	$	107,109
Note: Items that do not reach the five percent benchmark for this account.

86

Formosa Plastics Corporation

Statement of trade receivables

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items	Description		Amount
AUVI	General Customer	$	1,666,990
Others(Note)	"		9,720,973
Less:allowance for doubtful receivables	"		(64,993)
Total		$	11,322,970
Formosa Industries(Ningbo) Co., Ltd.	Related Parties	$	1,961,704
Nan Ya Plastics Corporation	"		1,543,303
Others(Note)	"		2,790,304
Total		$	6,295,311
Note: Items that do not reach the five percent benchmark for this account.

87

Formosa Plastics Corporation

List of Other Current Assets and Other Receivables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Prepaid expense Prepaid material expense Payment on behalf of others Other current assets Other receivables	Description Amount Insurance $ 18,437 Construction Materials 947,841 Others 839,810 1,806,088 Materials from third party 672,219 26,060 $ 2,504,367 Interest $ 19,828 Claims 33,571 Materials 158,008 Tax refund of sales tax 949,576 Allocation of common expense 100,924 Payment on behalf of related parties 9,762 Rent 4,144 Others 57,228 $ 1,333,041

88

Formosa Plastics Corporation

List of Inventory

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Raw materials Supplies Work in process Finished goods Machinery and accessories in process Others Less : allowance to reduce inventory to NRV Total	Amount Cost NRV Annotations $ 1,340,131 1,338,604 NRV 537,056 64,247 ″ 2,049,775 2,049,399 ″ 9,114,662 9,061,937 ″ 1,794,318 1,794,318 ″ 8,791 8,791 ″ 14,844,733 14,317,296 (527,437) $ 14,317,296
	Cost $ 1,340,131 537,056 2,049,775 9,114,662 1,794,318 8,791 14,844,733 (527,437) $ 14,317,296

89

Formosa Plastics Corporation

Changes in Investments Using Equity Method

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A. Formosa Heavy Industries Corp. Sky Dragon Investments Limited Formosa Plastics Corp. (Cayman Ltd) Mai Liao Power Corp. Formosa Sumco Technology Corporation 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. Formosa Environmental Technology Corporation Formosa Resources Corporation Formosa Plastics Construction Corporation Formosa Group (Cayman) Limited Japan Tokuyama Co., Ltd. Formosa Industries Corp.,U.S.A Total Cumulative translation adjustments Long-term investment using equity method, net	Janua	ry, 1	Acquisition Shares Amount - - - - 4,811 - - - 1 128,450 162,468 - - - - - - - - - - - - - - - - - - - - - 88,453 884,531 - - - - 37,500 375,000 - - 1,387,981 - 1,387,981	Acquisition Shares Amount - - - - 4,811 - - - 1 128,450 162,468 - - - - - - - - - - - - - - - - - - - - - 88,453 884,531 - - - - 37,500 375,000 - - 1,387,981 - 1,387,981	Acquisition Shares Amount - - - - 4,811 - - - 1 128,450 162,468 - - - - - - - - - - - - - - - - - - - - - 88,453 884,531 - - - - 37,500 375,000 - - 1,387,981 - 1,387,981	Disposal Shares Amount - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	Equity	m	ethod Share loss - - - 163,514 - - - - 21,230 30 - - - - - - - - - 42,835 - 227,609 - 227,609	Dividends fr	o	m investees Cash dividends 1,605,124 - - - - 361,040 242,322 - - 447 - 50,626 - - - - - - - - - 2,259,559 - 2,259,559	Others	(	note2) Amount 1,759,308 1,732,996 512,833 - 42,493 716,217 (6,013) (3,055) 2,198 - - (2,829) (3,053) (471) (1,445) (944) - 16,791 - - - 4,765,026 (3,186,326) 1,578,700		December, 31		Amount Note 102,362,452 - 73,149,359 - 7,814,089 - 4,836,340 - 51,933,971 - 12,952,721 - 6,068,336 1,236,049 49,214 - 19,682 - 19,368 - 1,467,538 - 468,645 - 3,196 - 1,331,596 - 228,849 - 7,515,334 - 593,785 - 751,476 - 457,099 - 14,448,715 - 287,707,814 (9,926,563) Note 1 277,781,251
	Shares	Amount	Shares			Shares - - - - - - - - - - - - - - - - - - - - -	Share profit			Share dividends (shares)			Shares			Shares 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 41,714 830,047 60,000 13 50,000 5	Holding %
	2,720,549 70 651,828 425,800 77 601,733 112,708 6,566 4,698 1,200 1,306 50 27,044 33 24 41,714 741,594 60,000 13 12,500 5	$ 88,226,935 65,349,259 7,231,447 4,999,854 43,230,520 12,520,528 5,906,705 1,158,977 68,246 20,159 18,098 1,288,207 259,334 3,029 1,210,071 227,355 6,556,055 568,402 719,610 124,934 11,681,861	- - 4,811 - 1 162,468 - - - - - - - - - - 88,453 - - 37,500 -				13,981,333 6,067,104 69,809 - 8,532,508 77,016 409,966 80,127 - - 1,270 232,786 212,364 638 122,970 2,438 74,748 8,592 31,866 - 2,766,854			- - - - - - - - - - - - - - - - - - - - -			- - - - - - - - - - - - - - - - - - - - -				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 24.34 25.00 33.33 25.00 50.00 100.00
		251,369,586 (6,740,237) $ 244,629,349			1,387,981 -		32,672,389 -
					1,387,981		32,672,389

Note 1 : cumulative translation adjustments come from exchanging financial statements of Formosa Plastics Corp., U.S.A., Formosa Plastics Corp. (Cayman Ltd), Sky Dragon Investments Limited, Formosa Industries Corp.,U.S.A, Formosa Group (Cayman) Limited, Formosa Plastics International (Cayman) Ltd. into NTD, which are (6,111,466) thousand, (597,732) thousand, (304,932) thousand, (1,258,978) thousand, (89,377) thousand and - thousand, respectively, and from translation adjustments of investees Formosa Petrochemical Corporation, Formosa Heavy Industries Corp., Mai Liao Power Corp., Formosa Sumco Technology Corporation, Formosa Transportation Corp., Formosa Environmental Technology Corporation, Formosa Resources Corporation, which are (531,660) thousand, (210,146) thousand, (132,431) thousand, (8,587) thousand, (26,204) thousand, (41) thousand and (655,009) thousand.

• Note 2 : others come from recognition based on holding percentage of investees' pension actuarial report adjustment capital surplus and unrealized gains (losses) from financial assets in shareholder equity.The amount shown in Formosa Plastics Corp. (Cayman Ltd) includes realized gross profit of transactions between related parties.

90

Formosa Plastics Corporation

Statements of Financial assets at fair value through other comprehensive income - Non current

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name	January, 1	January, 1	January, 1	Acquisition	Acquisition	Disposal	Disposal		Dividends from investees	Measurement Gain or Loss	December, 31 Shares Amount 68,743 3,061,126 39,574 1,078,009 1,103 15,844 1,769 39,153 1,287 13,318 19,088 284,027 2,071 - 2,642 104,640 2,925 158,130 2,429 760,976 3 5,343,884 2,160 52,837 354 368,529 - - 3,750 36,075 2,373 - 2,500 20,050 7,405 168,982 621,178 13,244,327 24,749,907	Guarantee /Pledge N/A 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	Note
	Shares	Amount		Shares - - - - - 833 - - - - - - - - - - - - -	Amount	Shares - - - - - - - - - - - - - - - - - - -	Amount		Cash dividends 68,743 72,341 220 - 517 - - 7,016 7,312 - - - 31,799 - - - 593 - - 188,541	2018 429,644 296,764 992 1,876 6,392 17,316 - 39,032 64,383 447,018 (341,223) 12,003 152,041 - 14,625 - (400) (28,583) 5,098,395 6,210,275	Shares 68,743 39,574 1,103 1,769 1,287 19,088 2,071 2,642 2,925 2,429 3 2,160 354 - 3,750 2,373 2,500 7,405 621,178
Asian Pacific Investment Corp. Mai-Liao Harbor Administration Corp. Taiwan Aerospace Corp. Chinese Television System Inc. China Investment & Development Co., Ltd. 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. Inteplast Taiwan Corporation Formosa Plastics Maritime Corp. Taiwan Times Guangyuan Investment Corp. Central Leasing International Corp. Mega Growth Venture Capital Co., Ltd Minima Technology Co., Ltd. Formosa Ha Tinh (Cayman) Ltd. Financial assets, net	68,743 39,574 1,103 1,769 1,287 18,255 2,071 2,642 2,925 2,429 3 2,160 354 - 3,750 2,373 2,500 7,405 621,178	$ 2,631,482 781,245 14,852 37,277 6,926 266,711 - 65,608 93,747 313,958 5,685,107 40,834 216,488 - 21,450 - 20,450 197,565 8,145,932 $ 18,539,632			- - - - - - - - - - - - - - - - - - -		- - - - - - - - - - - - - - - - - - -						- - - - - - - - - - - - - - - - - -
			$ 18,539,632		-		-

91

Formosa Plastics Corporation

List of Other Assets-Non current December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items		Amount
Materials for repairment and maintenance	$	4,473,806
Prepaid equipment expense		1,564,037
Others		633,962
Total	$	6,671,805

92

Formosa Plastics Corporation

List of Short-term Borrowings

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Banks Chang Hwa Commercial Bank First Commercial Bank (Nanking- East-Road Branch) Mega International Commercial Bank Co., Ltd. Hua Nan Bank (Min-Sheng Branch) Land Bank Taiwan Business Bank Hua Nan Bank (Min-Sheng Branch) Taiwan Cooperative Bank (Nanjing Donglu Branch)	Description Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Advances to employees Loan for Material Loan for Material	Rate 0.860% 0.780% 0.730% 0.860% 0.780% 0.742% 0.790%	Amount Mortgages or Guarantees $ 700,000 〃 1,600,000 〃 488,000 〃 422,200 〃 700,000 300,000 107,272 141,348 25,856 $ 4,484,676

93

Formosa Plastics Corporation

List of Bonds Payable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name		Amount Issued 2,200,000 4,300,000 2,500,000 10,000,000 1,500,000 2,200,000 6,300,000 1,000,000 5,000,000 3,300,000 3,700,000 5,200,000 2,700,000 1,400,000 3,600,000 3,750,000 1,000,000 4,300,000 3,200,000 $ 67,150,000	Amount Paid 2,200,000 4,300,000 1,250,000 10,000,000 - 2,200,000 - - - 1,650,000 - - - - - - - - - 21,600,000	Premiums/ Discounts - - 597 - 2,272 - 2,253 1,322 2,417 369 2,265 988 2,306 4,283 2,077 3,264 5,044 4,663 6,626 40,746	Ending Balance Issue Date Coupon rate Interest payment made 2012.11.5 1.25%, annual , simple, once a year November 2012.11.5 1.39%, annual , simple, once a year November 1,249,403 2012.11.5 1.53%, annual , simple, once a year November 2013.6.10 1.23%, annual , simple, once a year June 1,497,728 2013.6.10 1.52%, annual , simple, once a year June 2013..11.8 1.42%, annual , simple, once a year November 6,297,747 2013..11.8 1.94%, annual , simple, once a year November 998,678 2014.5.21 1.83%, annual , simple, once a year May 4,997,583 2014.5.21 1.92%, annual , simple, once a year May 1,649,631 2017.5.19 1.09%, annual , simple, once a year May 3,697,735 2017.5.19 1.32%, annual , simple, once a year May 5,199,012 2018.6.26 0.82%, annual , simple, once a year June 2,697,694 2018.6.26 0.93%, annual , simple, once a year June 1,395,717 2018.6.26 1.09%, annual , simple, once a year June 3,597,923 2020.6.22 0.58%, annual , simple, once a year June 3,746,736 2020.6.22 0.63%, annual , simple, once a year June 994,956 2020.6.22 0.67%, annual , simple, once a year June 4,295,337 2021.9.15 0.46%, annual , simple, once a year September 3,193,374 2021.9.15 0.52%, annual , simple, once a year September 45,509,254	Repayment method Payable in 2 equal installments at the end of the fourth and fifth year after the issuance day Payable in 2 equal installments at the end of the sixth and seventh year after the issuance day Payable in 2 equal installments at the end of the nineth and tenth year after the issuance day Payable in 2 equal installments at the end of the third and fourth year after the issuance day Payable in 2 equal installments at the end of the nineth and tenth year after the issuance day Payable in 2 equal installments at the end of the fourth and fifth year after the issuance day Payable in 2 equal installments at the end of the nineth and tenth year after the issuance day Payable in 2 equal installments at the end of the nineth and tenth year after the issuance day Payable in 2 equal installments at the end of the eleventh and twelfth year after the issuance day Payable in 2 equal installments at the end of the fourth and fifth year after the issuance day Payable in 2 equal installments at the end of the sixth and seventh year after the issuance day Payable in 2 equal installments at the end of the fourth and fifth year after the issuance day Payable in 2 equal installments at the end of the sixth and seventh year after the issuance day Payable in 2 equal installments at the end of the nineth and tenth year after the issuance day Payable in 2 equal installments at the end of the fourth and fifth year after the issuance day Payable in 2 equal installments at the end of the sixth and seventh year after the issuance day Payable in 2 equal installments at the end of the nineth and tenth year after the issuance day Payable in 2 equal installments at the end of the fourth and fifth year after the issuance day Payable in 2 equal installments at the end of the sixth and seventh year after the issuance day	Pledge/ Guarantee
The third issuance of domestic corporate bonds in 2012 (November) －type A －type B －type C The first issuance of domestic corporate bonds in 2013 (June) －type A －type B The second issuance of domestic corporate bonds in 2013 (November) －type A －type B The first issuance of domestic corporate bonds in 2014(May) －type A －type B The first issuance of domestic corporate bonds in 2017(May) －type A －type B The first issuance of domestic corporate bonds in 2018(June) －type A －type B －type C The first issuance of domestic corporate bonds in 2020(June) －type A －type B －type C The first issuance of domestic corporate bonds in 2021(September) －type A －type B							N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

94

Formosa Plastics Corporation

List of Other Current Liabilities

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Accrued expense Unearned revenue Withholding payment Temporary receipt Other notes payable	Description Amount Salary (includes bonus) $ 4,113,941 Tax 72,402 Utilities expense 2,875,261 Freight fee 153,107 Interest expense 230,042 Insurance premiums 185,890 Pension 68,003 Others 982,496 8,681,142 Sales revenue 4,057,892 Rent 164 Transfer money of bid 4,987 Others 404,700 4,467,743 Health and labor insurance expense 24,746 Others 29,015 53,761 Others 314,398 Others 14,561 $ 13,531,605

95

Formosa Plastics Corporation

List of Operating Revenue (1)

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Products PVC PA Processing Aid Modifier Chloromothane Liquid Caustic Soda Flake Caustic Soda Hydrogen CI HCL VCM EPC Hydrofluoric Acid Micropearls Caustic Soda Chlorine Trifluoride Others Plastic Division HPAA MA Butyl Acrylate 2-Ethylhexyl Acrylate Ethyl Acrylate Syngas N-Butanol N-Butyraldehyde Isobutyraldehyde SAP Tairy Carbon Fiber Others Tairylan Division	Unit MT 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 KG 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	Quantity 1,226,974.776 7,217.550 19,882.280 29,340.994 1,380,253.689 42,705.325 11,616.320 61,571.162 98,741.988 436,281.274 221,600.844 36,145.370 64,637.717 84,681.000 21,385.489 32,279.510 21,225.720 107,111.535 40,343.172 6,013.060 7,429.983 130,819.917 15,086.460 5,378.920 96,522.680 9,173.910 -	Amount
			$ 48,428,260 553,131 1,345,804 594,450 14,345,326 610,659 594,973 307,856 594,077 12,023,852 4,542,059 98,122 803,427 27,105 55,766 84,924,867 1,673,080 1,345,151 6,668,483 2,813,483 386,458 146,563 5,764,461 601,876 255,408 4,070,482 3,577,242 19,371 27,322,058

96

Formosa Plastics Corporation

List of Operating Revenue (2)

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Products Calcium carbide PCC GCC TAICAL U-CAL Taiso Lime Others Carbide Division HDPE EVA LLDPE Paraffin D.F.P level GZ Process Fuel Polyolefin Division Acrylonitrile MTBE MTBE Residual Acetonitrile B-1 Epichlorohydrin 30% HCL Methyl Methacrylate Dichloropropane DCP Chemistry Division DCS WMS Automation Maintenance RTPMS Electronics Special Project Department Extrusion Molding General Purpose Injection Molding Multi-Filament Molding Film Molding Block Copolymer PP Products Out Of Standard POM Polypropylene Division DSC models DSC application element DSC Special project Department Total of sales Revenue Total of Other Revenue Net Operating Revenue	Unit MT MT 〃 〃 〃 〃 〃 MT 〃 〃 〃 〃 MT 〃 〃 〃 〃 〃 〃 〃 〃 〃 MT 〃 〃 〃 〃 〃 〃 〃 〃	Quantity 585.000 12,658.435 74,899.843 4,393.300 3,592.750 2,406.058 135,385.020 - 472,220.687 221,637.295 200,759.790 5,466.280 489.830 264,737.555 176,742.205 77,203.000 6,440.695 13,663.164 96,010.012 24,810.039 76,446.306 16,340.015 1,001.950 75,983.210 7,455.400 65,601.280 50,842.745 83,335.335 168,687.445 42,806.575 5,169.343 43,634.750 - -	Amount
			$ 20,403 175,585 243,038 64,779 80,322 193,282 462,025 1,408 1,240,842 16,287,118 16,358,337 7,084,479 140,552 408 39,870,894 16,182,862 3,484,894 1,330,799 680,328 309,172 5,866,548 151,139 4,146,842 1,254,543 5,711 33,412,838 371,282 173,464 5,965 49,423 43,153 643,287 3,127,027 292,834 2,509,050 1,917,243 3,236,510 6,496,537 1,818,655 111,589 2,661,272 22,170,717 522 467 989 209,586,492 1,089,038 $ 210,675,530

97

Formosa Plastics Corporation

List of Operating Cost

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Direct materials Raw materials at the beginning of period (includes inventories in transit) Purchase Add : others Less : raw materials at the end of period (includes inventories in transit) others Subtotal of raw materials Supplies Supplies at the beginning of period Purchase Add : others Less : supplies at the end of period others Subtotal of supplies Direct labor Manufacturing overhead Manufacturing cost Add : work in process at the beginning of period (includes Machinery and accessories in process) others Less : work in process at the end of period (includes Machinery and accessories in process) others Cost of finished goods Add : Finished goods at the beginning of period others Less : Finished goods at the end of period Others Differences of transfer pricing Cost of goods sold Idle Capacity Loss on write-down of inventory Gain from sale of scraps Stock gain Stock loss Other operating costs Total of operating costs

Amount $ 764,844 106,563,858 73,901,698 (1,340,131) (1,224,965) 178,665,304 503,072 25,207,688 6,129 (537,056) (25,179,833) - 3,113,566 55,920,681 237,699,551 2,896,271 1,514,687 (3,844,093) (76,228,771) 162,037,645 6,071,978 39,386 (9,114,662) (12,553,490) 148,359 146,629,216 1,368,363 11,693 (88,311) (44,591) 8,813 1,097,192 $ 148,982,375

98

Formosa Plastics Corporation

List of Manufacturing Expense

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Salaries Employees bonus expense Meals expense Pension Main by-product Depreciation expense Fuel expense Steam expense Package expense Utilities expense Repair and maintenance expense Rental expense Insurance expense Tax expense Miscellaneous expense Consumables Travel expense Internal arrangement expense Freight fee Pollution prevention fee Security expense Project improving expense Research expense - researchers salaries Research expense - researchers bonus Research expense - researchers meal expense Research expense - researchers pension Research expense - depreciation Research expense - repair and maintenance Research expense - development Research expense - travel expense Research expense - project improving expense Research expense - others Other manufacturing expense Total

Amount

$ 2,669,633 30,373 48,100 113,493 3,961,008 3,659,775 7,480,031 2,952,082 1,510,576 16,419,243 10,215,791 65,083 55,569 135,777 87,455 1,191,026 12,442 159,869 252,602 1,165,850 1,300,287 315,376 256,178 3,005 4,469 10,191 176 704,049 896 450 21,600 11,434 1,106,792 $ 55,920,681

99

Formosa Plastics Corporation

List of Administration Expense

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Salaries Meals expense Pension Bonus expense Benefit expense Depreciation expense Repair and maintenance expense Rental expense Insurance expense Tax expense Entertainment expense Postage and phone expense Transportation expense Books and publications expense Printing & supplies expense Office equipment expense Travel expense Utilities expense Freight fee Medical expense Internal arrangement expense Miscellaneous expense Computer user fee Remuneration Security expense Donations Material test expense Advertisement expense Overseas promotion expense Pollution prevention expense Fines Others Total

Amount

$ 2,472,132 46,745 107,099 31,669 47,443 226,630 319,717 18,553 6,694 69,466 35,096 19,389 37,757 5,460 5,347 3,049 56,360 102,347 1,688 4,537 14,138 318,148 184,612 14,888 66,911 459,728 12,151 1,046 6,076 96,492 104 153,798 $ 4,945,270

100

Formosa Plastics Corporation

List of R&D Expense and Selling Expense

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

R&D Expense：

Items Salary expense of researchers Meal expense of researchers Pension of researchers Bonus for researchers Depreciation Materials test expense R&D expense Travel expense Utilities expense Repair and maintenance expense Security expense Others Total Selling Expense: Items Salary expense Meal expense Pension Employees bonus Export freight fees of sea & air Export insurance expense Export commission Export freight fees of ground Export miscellaneous expense Customs clearance fee Export package expense Export port administration expense User fee of port facilities regards to export Export terminal handling charge Port user fee due to export Export storage expense Freight fee of domestic sales Employees benefit expense Depreciation Rental expense Entertainment expense Postage and phone expense Travel expense Miscellaneous expense Others Total	Amount	Amount
	$ 668,047 11,525 25,695 7,761 82,991 40,087 261,430 10,713 56,809 322,886 35,434 189,911 $ 1,713,289 Amount
		Amount
	$ 384,213 6,917 14,580 4,362 3,078,665 6,738 138,229 477,588 138,670 769 278,706 152,375 63,950 648,376 153,540 115,105 1,443,386 57,895 355 18,593 2,682 3,943 619 7,031 125,593 $ 7,322,880

Selling Expense:

101

Formosa Plastics Corporation

List of Other Revenue

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Interest revenue Dividend revenue Rent revenue

Description Amount Demand account $ 1,720 Time deposits 6,476 Related parties - loans & receivables from payment on behalf of related parties 43,480 Others 11,162 $ 62,838 Nan Ya Plastics Corporation $ 1,880,057 Formosa Chemicals and Fiber Corporation 496,860 Nanya Technology Corporation 434,122 Asian Pacific Investment Corp. 68,743 Mai-Liao Harbor Administration Corp. 72,341 Taiwan Aerospace Corp. 220 China Investment & Development Co., Ltd. 517 Formosa Petrochemical Transportation Corporation, Ltd. 7,016 Formosa Technologies Corporation 7,312 Formosa Plastics Maritime Corp. 31,799 Mega Growth Venture Capital Co., Ltd. 593 $ 2,999,580 $ 155,929

102

Formosa Plastics Corporation

List of Other Gains and Losses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Gain on disposal of property, plant and equipment Net gain from foreign exchange Impairment loss on non-financial assets Other gains Other losses

Description Amount $ 22,606 Realized net gain from foreign exchange $ (621,424) Unrealized foreign exchange gain - accounts receivable 13,541 Unrealized foreign exchange gain - other receviables 3,530 Unrealized foreign exchange gain - bank deposit & Cash equivalent 102,946 Unrealized foreign exchange loss - financing of import using foreign currency 3,220 $ (498,187) Impairment on assets $ (95,484) Expense estimate surplus ( actual cost less than estimated cost) $ 24,917 Gain from purchases of raw materials on behalf of others 121,108 Revenue from claims 3,094 Others 201,696 $ 350,815 Expense estimate deficit ( actual cost greater than estimated cost) $ 28,426 Loss on materials 132,251 Others 3,506 $ 164,183

103

Formosa Plastics Corporation

List of Financing Cost

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Items Interest expense

Description Amount Interest of short-term unsecured loans $ 69,628 Interest of payable benefit to employees 795 Discount interest (banks financing interest paid by seller due to L/C export & discount interest of bill of exchange of D/A export) 22,919 Interest of financing and reimbursement between related parties 53 Interest of short-term notes and bills payable 31,682 Interest of domestic bonds payable 513,199 Interest of long-term debts - syndicated loan agreement with Mega Bills Finance Co., Ltd. & other long-term debts 467 Interest on rental expense 2,916 Others 229 Service expense 24,682 less : capitalized interest (70,594) $ 595,976