FPC - Annual Report 2020 | FinancialReports.eu

Stock Code: 1301

Formosa Plastics Corporation

2020 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: http: //newmops.twse.com.tw Annual Report is available at: www.fpc.com.tw Printed on May 23, 2021

I. Name, title, contact number and e-mail address of the Company’s Spokesperson and deputy spokesperson:

	Spokesperson	DeputySpokesperson
Name	JerryLin	Chia-Tse Chang
Title	Senior Vice President	Assistant Vice President
Contact number	(02)2712-2211	(02)2712-2211
E-mail address	[email protected]	[email protected]

II. Address and telephone of the headquarters, branches, and plants

Factory	Address	Telephone
Headquarter and Renwu Plant	No. 100, Shuiguan Rd., Renwu Dist., Kaohsiung City 814, Taiwan	(07)3711411
Linyuan Plant	No. 1, Shihua 1st Rd., Linyuan Dist., KaohsiungCity832,Taiwan	(07)6419911
Taipei Office	No. 201, Dunhua N. Rd., Songshan Dist., Taipei City105,Taiwan	(02)27122211
Dongshan Plant	No. 201, Dongfu Rd., Dongshan Township, Yilan County269,Taiwan	(039)591134
Hsinkang Plant	No. 3, Zhongyang Industrial Park, Xingang Township,Chiayi County616,Taiwan	(05)3772111
Mailiao Plant	No. 1, Taisu Industrial Park, Mailiao Township,Yunlin County638,Taiwan	(05)6812345
Ningbo Plant	FPG Industrial Zone, Xiapu, Beilun, Ningbo,China	86-574-86902999
USA Plant	9 Peach Tree Hill Road Livingston, NJ 07039,USA	1-973-9922090

III. The name, address, website, and telephone number of the agency handling shares transfer

Name: Stock Affairs Dept., Formosa Plastics Corp.

Address: No. 201, Dunhua N. Rd., Songshan Dist., Taipei City 105, Taiwan Website: N/A

Tel: (02)2718-9898

IV. Name of the certified public accountant (“CPA”): Astor Kou, Winston Yu Name of accounting firm: KPMG Certified Public Accountants Address: 68F., No. 7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan Website: http: //www.kpmg.com.tw Tel: (02)8101-6666
V. Name of any exchanges where the Company’s securities are traded offshore, and the method by which to access information on said offshore securities: None.
VI. Company website: www.fpc.com.tw

Contents
I. Letter to Shareholders
1.1 Business Performance for 2020………………………………………….	1
1.2 A Summary of the Business Plan for 2021, the Company’s Future
Development Strategy, and the Effect of External Competition, the
Legal Environment, and the Overall Business Environment……………	15
II. Company Profile
2.1 Date of Incorporation…………………………………………………….	19
2.2 Business Philosophy and Vision………………………………………….	19
2.3 Milestone……….………………………………………………………...	20
III. Corporate Governance Report
3.1 Organization……………………………………………………………...	37
3.2 Directors, Supervisors and Management Team…………………………..	38
3.2.1 Directors and Supervisors……………………………………………	38
3.2.2 Management Team…………………………………………………...	49
3.2.3 Succession Plan of Board of Directors and the Middle and
High-Level Management…………………………………………….	51
3.3 Remuneration of Directors, Supervisors, President, and Vice
Presidents………………………………………………………………...	53
3.3.1 Remuneration of Directors and Independent Directors) …………….	53
3.3.2 Remuneration of Supervisors………………………………………..	55
3.3.3 Remuneration of the President and Vice Presidents………..………..	56
3.3.4 Employee Compensation of Managers………………………………	58
3.3.5 Comparison of Remuneration for Directors, Supervisors, President
and Vice Presidents in the Two Most Recent Fiscal Years and
Remuneration Policy for Directors, Supervisors, President and Vice
Presidents…………………………………………………………….	59
3.4 Implementation of Corporate Governance……………………………….	61
3.4.1 Board of Directors’ Meeting Status……………………………...…..	61
3.4.2 Evaluation of the Implementation of the Board of Directors……….	66
3.4.3 Audit Committee Meeting Status…………………………………….	68

3.4.4 Corporate Governance Implementation Status and Deviations from
the “Corporate Governance Best Practice Principles for
TWSE/TPEx Listed Companies”…………........................................	73
3.4.5 Composition, Responsibilities and Operations of the Remuneration
Committee……………………………………………………………	95
3.4.6 Fulfillment of CSR and Deviations from the “Corporate Social
Responsibility Best Practice Principles for TWSE/GTSM Listed
Companies”……………………..........................................................	99
3.4.7 Fulfillment of Ethical Corporate Management and Deviations from
the “Ethical Corporate Management Best Practice Principles for
TWSE/GTSM Listed Companies”……..…………………………….	114
3.4.8 The Searching Way of Principles of Corporate Governance and
Related Bylaws the Company Adopted……………………………...	122
3.4.9 Other Significant Information Provides a Better Understanding of the
State of the Company’s Implementation of Corporate Governance…..	122
3.4.10 Implementation Status of the Internal Control System…………….	127
3.4.11 If there Has Been Any Legal Penalty against the Company and its
Internal Personnel, or any Disciplinary Penalty by the Company
against its Internal Personnel for Violation of the Internal Control
System, during the Most Recent Fiscal Year or during the Current
Fiscal Year Up to the Publication Date of the Annual Report,
Where the Result of such Penalty Could Have a Material Effect on
Shareholder Interests or Securities Prices, the Annual Report Shall
Disclose the Penalty, the Main Shortcomings, and Condition of
Improvement………………….……….............................................	128
3.4.12 Material Resolutions of a Shareholders Meeting or Board of
Directors Meeting during the Most Recent Fiscal Year or during
the Current Fiscal Year Up to the Date of Publication of the Annual
Report……………………………………………………………..	128
3.4.13 During the Most Recent Fiscal Year or during the Current Fiscal
Year Up to the Date of Publication of the Annual Report, a Director
or Supervisor Has Expressed a Dissenting Opinion with Respect to
a Material Resolution Approved by the Board of Directors, and
Said Dissenting Opinion Has Been Recorded or Prepared as a
Written Declaration, Disclose the Principal Content Thereof……...	141

3.4.14 A Summary of Resignations and Dismissals, during the Most
Recent Fiscal Year or during the Current Fiscal Year Up to the Date
of Publication of the Annual Report, of the Company’s Chairman,
General Manager, Chief Accounting Officer, Chief Financial
Officer, Chief Internal Auditor, Chief Corporate Governance
Officer, and Chief Research and Development Officer…………….	141
3.5 Information Regarding the Company’s Audit Fee…………………….....	142
3.5.1 When Non-Audit Fees Paid to CPA, to the Accounting Firm of the
Certified Public Accountant, and/or to Any Affiliated Enterprise of
Such Accounting Firm Are One Quarter or More of the Audit Fees
Paid Thereto, the Amounts of Both Audit and Non-Audit Fees as
well as Details of Non-audit Services Shall Be Disclosed…………	142
3.5.2 When the Company Changes its Accounting Firm and the Audit
Fees Paid for the Fiscal Year in Which Such Change Took Place Are
Lower Than Those for the Previous Fiscal Year, the Amounts Of
The Audit Fees Before and After The Change and the Reasons Shall
Be Disclosed…………………………………………………………	143
3.5.3 When the Audit Fees Paid for the Current Fiscal Year Are Lower
Than Those for the Previous Fiscal Year by 10 % or More, the
Reduction in the Amount of Audit Fees, Reduction Percentage, and
Reasons Therefor Shall Be Disclosed……………………………...	143
3.6 Replacement of CPA……………………………………………………..	143
3.7 The Company’s Chairman, President, or Any Manager Involved in
Financial or Accounting Affairs Being Employed by the Auditor’s Firm
or Any of its Affiliated Company within the Last Year………………….	143
3.8 Changes in Shareholding Transfer or Shareholding Pledge by Directors,
Supervisors, or Managers, and Major Shareholders Who Holds 10% of
the Company Shares or More during the Most Recent Fiscal Year Up to
the Date of Publication of the Annual Report….………………………...	144
3.9 Information on the Relationship of the 10 Largest Shareholders Any
One Is a Related Party According to Financial Accounting Criteria
No.6, Spouses or a Relative within Second Degree of Kinship of
Another…………………………………………………………………..	147

3.10 The Total Number of Shares and Total Equity Stake Held in Any
Single Enterprise by the Company, its Directors and Supervisors,
Managers, and Any Companies Controlled Either Directly or Indirectly
by the Company...……………..……………………………...................	150
IV. Capital Overview
4.1 Capital and Shares…………………………………………….................	152
4.1.1 Source of Capital…………………………………………..................	152
4.1.2 Structure of Shareholders…………………………………………….	153
4.1.3 Status of Shareholding Distribution………………………………….	153
4.1.4 List of Major Shareholders………………………………..................	154
4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share in the
Two Most Recent Years…………………….......................................	154
4.1.6 Dividend Policy and Implementation Status…………………………	155
4.1.7 Effect upon Business Performance and Earnings per Share of Any
Stock Dividend Distribution Proposed or Adopted at the Most
Recent Shareholders’ Meeting……………………………………….	156
4.1.8 Compensation of Employees and Directors…………….……………	156
4.1.9 Share Repurchases by the Company…………………………………	157
4.2 Issuance of Corporate Bonds…………………………………………….	158
4.3 Issuance of Preferred Stock……………………………………………...	162
4.4 Issuance of Global Depositary Receipts…………………………………	162
4.5 Issuance of Employee Stock Options……………………………………	162
4.6 Issuance of New Shares in Connection with Mergers or Acquisitions or
with Acquisitions of Shares of Other Companies………………………..	162
4.7 The Implementation of the Company’s Capital Allocation Plans……….	162
4.7.1 Content of the Plan…………………………………………………...	162
4.7.2 The Status of Implementation……………………………..................	162
V. Operational Highlights
5.1 Business Activities……………………………………………………….	163
5.1.1 Scope of Business…………………………………………………...	163
5.1.2 Industry Overview………………………………………..................	165
5.1.3 Research and Development (R&D) ………………………………...	173
5.1.4 Long-term and Short-term Business Development Plans…………..	179

5.2 Market and Sales Overview……………………………………………...	184
5.2.1 Market Analysis……………………………………………………...	184
5.2.2 Main Applications and Production Process of Main Products……...	185
5.2.3 Supply Status of Main Materials………………………….................	188
5.2.4 The Name, Purchase (Sale) Amount, and Ratio of the Customers
Accounted for Over 10% of the Total Purchase (Sale) in One of the
Two Most Recent Fiscal Years, and the Reason for the Changes in
Purchase (Sales)..........……….............................................................	190
5.2.5 Production in the Two Most Recent Fiscal Years……………………	191
5.2.6 Sales in the Two Most Recent Fiscal Years………………………….	192
5.3 Employees……………………………………………………..................	193
5.4 Environmental Protection Expenditure………………………..................	194
5.5 Labor Relations………………………………………………..................	203
5.6 Important Contracts……………………………………………………....	209
VI. Financial Information
6.1 Consolidated Balance Sheet and Income Statement for the Last Five
Fiscal Years………………………………………………………………	210
6.2 Financial Analysis for the Last Five Fiscal Years……………..................	215
6.3 Audit Committee’s Review Report for the Most Recent Year’s Financial
Statement………………………………………………………………...	219
6.4 Consolidated Financial Statements for the Years Ended December 31,
2019 and 2018, and Independent Auditors’ Report………………………..	220
6.5 The Parent Company Only Financial Statements for the Years Ended
December 31, 2019 and 2018, and Independent Auditors’ Report………...	220
6.6 The Financial Difficulties of the Company and its Affiliated Companies	220
VII. Review of Financial Conditions, Financial Performance, and Risk
Management
7.1 Analysis of Financial Status……………………………………………..	221
7.2 Analysis of Financial Performance………………………………………	222
7.3 Analysis of Cash Flow…………………………………………………...	223
7.4 The Effect upon Financial Operations of Any Major Capital
Expenditures in the Most Recent Years….………………………………	225
7.5 Reinvestment Policy in the Most Recent Years…………….....................	226

7.6	Risks……………………………………………………………………..	229
7.7	Other Important Matters…………………………………………………	242
VIII.	Other Special Notes
8.1	Summary of Affiliated Companies………………………………………	243
8.2	The Status of Private Placement of Securities…………..……………….	249
8.3	The Subsidiaries of the Company Acquired, Disposed of the Shares of
	the Company………………………...…………………………………...	249
8.4	Other Necessary Supplement…………………………………………….	249
8.5	The Significant Impacts on Shareholders’ Right or Share Prices as
	Stated in Item 3 Paragraph 2 of Article 36 of Securities and Exchange
	Law of Taiwan in the Most Recent Year and as of the Date of
	Publication of the Annual Report………………………………………..	249

I. Letter to Shareholders

1.1 Business Performance for 2020

The Company (Formosa Plastics Corporation) generated consolidated sales of NTD 185.81bn in 2020, reaching 89% of its target of NTD 208.06bn and was down 11% from NTD 207.84bn generated in 2019. Consolidated pre-tax profit came in at NTD 24.16bn in 2020, reaching 76% of its target of NTD 31.76bn and declined by 43% from NTD 42.21bn generated in 2019.

Due to the worldwide COVID-19 pandemic, countries locked down since March 2020 resulted in a sharp demand decline and supply disruptions. Production activities, consumptions, and global economy were hit hard and dragged down crude oil, ethylene, propylene, and petrochemical product prices. Especially, WTI crude oil futures prices even fell to a negative value on April 20, 2020. Although the Company's product prices declined in 1H20 to narrow down the margins, the sharply falling feedstock prices still made the Company profit for its core business. However, it still reported a net loss on a consolidated basis as dragged by the decline in investment incomes from Formosa Petrochemical Corp. and Formosa Plastics Corp., USA in 1H20. Nevertheless, in 2H20, given the easing of lockdown, demand for work-from-home related products, anti-epidemic products, home gym equipment, building materials, 3C, and home appliances have been surging. Given the gradual recovery of global economy as well as the roll out of monetary easing measures and fiscal stimulus policies by countries, the prices of petrochemical products have rebounded strongly and returned to the levels of the end of 2020 before COVID-19. Among them, polyvinyl chloride (PVC) and polyethylene vinyl acetate (EVA) prices reached the record high in the latest 9 year, which made the Company turn profitable in 2020.

Even though sales volume of polyethylene (PE) increased by 329K tons in 2020 from 2019 thanks to the contribution from

the new HDPE plant built by 100% owned subsidiary, Formosa Industries Corp. with selling its products under full production in 2020, the Company’s operating profit of NTD 17.09bn still dropped by 15% in 2020 from 2019 due to the ASP decline with 12-38% and narrowing product margins. In addition, the total cash dividends of NTD 3.35bn in 2020 from investees including Nanya Plastics Corp., Formosa Chemicals & Fibre Corp. and Nanya Technology Corp., etc. deceased by NTD 4.82bn from 2019. Also equity investment incomes of NTD 5.21bn from investees including Formosa Petrochemical Corp., FPC-USA and Formosa Sumco Technology Corp., etc. significantly lower NTD 9.52bn from 2019. The decrease in 2020 led to a 43% decline of the Company’s pre-tax profit from 2019.

Looking back at 2020, the confrontation between China and the US had spread from trade war to technology war and financial war. Moreover, the supply disruptions impacted by COVID-19 led to the decline in economy growth for many countries. Except for China, of which the economy could still maintain positive growth due to better control of COVID-19, the economy of other developed counties were declining.

While the world is under the shadow of COVID-19, Taiwan has been the top performer in term of GDP growth among the Four Asian Tigers for 2 consecutive years as benefiting from 1) the homecoming capital, 2) order reallocation, 3) strong demand rebound after the easing of lockdown, and 4) better control of COVID-19. Both export value and domestic investment showed positive growth in 2020. However, the China-US trade war, which has lasted for more than 2 years, caused the change for international division of labor between Taiwan, China and US. The COVID-19 also accelerated the anti-globalization trend, which put Taiwanese companies located in China and ASEAN countries at risks on supply chain issue.

In addition, the Regional Comprehensive Economic Partnership Agreement (RCEP) was signed on November 15, 2020. It will be not only the world's largest free trade zone, but

also bring a huge boost to the economic and trade integration for Eastern Asia and reshape the global economy and trade. However, due to political issues, Taiwan is absent from the two major free trade zones, RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which becomes a missing corner of the regional economic and trade integration picture. In the short term, RCEP’s impact to Taiwan is not too significant with low deduction of tariffs rate, long preferential period and exempt from tariffs about 70% of Taiwan’s exports to the ASEAN region. However, in the long term, it may not only result in a rising concentration rate for semiconductor and electronics industries which is not good for Taiwan’s export structure, but also the growing tariff pressure for the homecoming Taiwanese companies. If Taiwan is not able to actively seek for solutions on the breakthrough for the obstacle on trade tariff, in the long run, it will not only harm Taiwan’s international trade, but also the economic growth momentum. Moreover, it will create hurdles on the development of relationships with regional trade partners.

Furthermore, in order to build green energy and connect with the international trend, in accordance with the newly revised Renewable Energy Development Act, which requires the major users to bear a 10% obligation on renewable energy including the investment on green energy equipment and cash payment, etc. However, Taiwan’s power grid is independent, and the power generated by renewable energy is still unstable. Moreover, there are transportation and storage problems for natural gas. It is difficult to undertake the energy transformation policy of "replacing nuclear power with green energy; replacing coal-based power plant with natural gas-based power plant." This triggered producers concern about a stable electricity supply going forward. Furthermore, the society has been long brimming with the ideology of environmental protection and unreasonable EPA review system is along with the stringent environmental regulations, which has hindered many investment

projects and is adverse effect on the long-term development of Taiwan’s industry and economy.

At the critical moment in developing Taiwan’s industry and economy during US-China trade war and COVID-19, the governments should roll out a fiscal tax policy with investment incentives, amend the irrational environmental assessment process, loosen the environmental regulation restrictions and revisit the energy transformation policy to formulate reasonable energy generation allocation. In the meantime, government should improve regulations to be in-line with international standards, and continue to participate in regional economic and trade integration with key trading partners to make up for Taiwan’s lacking of connection among international trade, and allow the industry to enjoy a fair competition environment with regional peers. By improving the investment environment and joining regional economic and trade integration to strengthen economic and industry competiveness, the government can create a friendly and sustainable investment environment.

In view of the impact from COVID-19 globally and the difficulty in an oversupplied market under the supply addition wave, the Company has been proactively engaging in the development of artificial intelligence (AI) technology, and established an AI research and development center in Renwu Complex, combining AI professionals from various departments to enhance operational efficiency in five aspects "optimization of production and sales, quality assurance, intelligent maintenance, digital inspection, and cost reduction". In 2020, 75 out of 148 AI projects have been completed with an estimated annual benefit of NTD 290m, while the remaining 73 projects are still ongoing.

Aside from this, in an effort to strengthen the AI technology capability, the Company continues providing systematic training courses to employees, interacting with companies and academic institutions outside the Company, inviting domestic and foreign experts for speeches, building platforms to hold competitions, etc. In view of the rapid development of AI technology, in

addition to continuing to select outstanding talents to train in Taiwan's AI schools, starting from 2020, the Company entrusted Taiwan's AI schools and Taiwan’s top universities to cooperate with experts and various academic institutions to organize advanced AI courses to cultivate more high-end AI talents in order to build a solid foundation for digital transformation, of which, 44 talents have completed the training.

Besides, during COVID-19 period, the Company fully supported the "National Mask Team" on raw materials for medical protection and hygiene products, in order to contribute to Taiwan's efforts in the prevention from the spread of COVID-19 and to ensure the citizens health. Meanwhile, to secure the supply of raw materials for the non-woven fabric for the mask industry, the Company applied blockchain technology to build a non-woven fabric integrated marketing platform. The application is also expanded into supply chains in medical, automotive, shoe materials and wind power industries to connect upstream, midstream and downstream supply chains for the formation of global industry alliance to provide customers with a full range of services.

Furthermore, in order to achieve the goal of customer-oriented digital transformation and the optimization in selling and production to improve the service quality, the Company set up “FPC E-commerce Platform” which combined the Enterprise Resource Planning (ERP) information and AI technology and has been worked online. In addition, in order to continue to serve customers, the Company conducted multi methods to promote business by remote marketing to create a win-win situation during COVID-19 period.

Moreover, to pursue a reasonable profitability, strengthen business and reduce the negative impact from COVID-19, the Company implemented the improvement measures including circular economy development, project improvements promotion, the consumption of water, energy, and the utility usage volume

per unit reduction. The Company accomplished 1,121 projects in 2020 with an annual benefit of NTD 850m.

At the same time, 13 office buildings, including the 2 founders' offices in the Kaohsiung plant, the birthplace of Formosa Plastics Group, were registered as monument by the Kaohsiung City Government. The “Y.C. Wang and Y.T. Wang Brothers Park” will be established in the 2.5 hectares original site. The restoration and reuse plans were reviewed and approved by the Kaohsiung City Government in January 2021.The park is expected to be completed by the end of 2023 and will be opened to public.

The Company and its China Ningbo and United States subsidiaries mainly produce plastics and chemical fiber raw materials. In 1H2020, sales volume of PVC decreased sharply due to COVID-19 given worldwide lockdown, but PVC price continued to raise from 2H20 because of demand for COVID-19 prevention in China, Vietnam, India, Europe and the United States, automobiles, and construction markets recovery and force majeure of many Europe and US peers. However, due to global shipping and container shortages, total PVC sales volume in 2020 declined by 3% to 1,640K tons from 2019. Sales volume of caustic soda was 1,351K tons in 2020, decreased by 10% from 2019 given the declining downstream demand in alumina, textiles and pulp. Moreover, the price of caustic soda decreased because caustic soda plants raised their utilization rates to increase supply based on a better profit of PVC. In consideration of the unfavorable prices, the Company has conducted an off-peak production strategy and to export based on contract prices.

HDPE was in oversupply situation given a continued capacity expansion globally, while demand was lower in 2020 than 2019 impacted by COVID-19. However, the Company actively increased the selling of the differentiated products such as COVID-19 prevention related fabric grade and bottle blowing grade products, as well as pipe grade and bottle cap grade HDPE,

along with the start of the new HDPE plant by the Company’s US subsidiary. The Company’s HDPE sales volume in 2020 increased by 2% to 524K tons from 2019. The Company’s EVA sales volume in 2020 increased by 2% to 290K tons from 2019 given the growth in solar packaging filming demand in China and no new capacity from peers. In addition, despite a high competition in the LLDPE market given new capacity from global peers and demand impact from COVID-19, the Company’s LLDPE sales volume in 2020 increased by 150% to 528K tons from 2019, given the aggressive expansion into Vietnam market, promotion of the injection grade and rotation molding grade differentiated products, and the conversion of LLDPE from the US subsidiary’s HDPE plant.

Due to a slump in crude oil price and the outbreak of COVID-19 at the beginning of 2020, the lockdown worldwide resulted in the lack of raw materials and labor shortages in the upstream, as well as the declined demand for tapes, coatings and resins in the downstream. Despite the shutdown of Linyuan plant’s first phase AA production, the Company’s AE sales volume in 2020 increased by 6% to 527k tons from 2019, given demand recovery in 2H20 and the unexpected shutdown from peers. The Company’s sales volume of NBA is mainly for captive use by AE plants. The Company’s NBA sales volume in 2020 increased by 9% to 241K tons from 2019 given strengthening the bonded customers in Eastern China and also active expansion to Eastern China, Southern China and South Korea. Despite oversupply and a severe pricing competition in SAP market, the Company’s SAP sales volume in 2020 increased by 9% to 185k from 2019 given stable orders from contract customers and actively developing new customers.

The Company’s PP sales volume in 2020 increased by 5% to 977K tons from 2019 given full production and selling after the scheduled maintenance of Linyuan PP plant and the renewal of the granulator in 2019. The Company’s AN sales volume in 2020 decreased by 9% to 253K tons from 2019 due to a weak

market demand impacted by COVID-19. The Company’s MMA sales volume of 82K tons in 2020 was similar to 2019 due to the recovery of the PMMA light guide plate and the strong demand for anti-COVID-19 plates. The Company’s ECH sales volume in 2020 increased by 3% to 97K tons from 2019, which was benefited from the booming development of the wind energy and 5G industries, and the stronger demand from downstream epoxy products.

In terms of capacity expansion, in order to strengthen the competitiveness, the Company aggressively expanded its capacities and conducted debottleneck projects, including the completed debottleneck project of PVC plant in Linyuan in 2020 with new capacities by 50K tons to 1,315K tons per annum, and the ongoing debottleneck project of PVC plant in Renwu, Linyaun and Mailiao with new capacities by 100K tons to 1,415K tons per annum by 2022. In addition, in response to the construction of the IPA plant for the joint venture "Formosa Tokuyama Advanced Chemicals Co., Ltd.", the first phase of the acrylic acid (AA) equipment in Linyuan AE plant with an annual capacity of 21K tons was dismantled in August 2020. As a result, the annual capacity of AA reduced to 147K tons and AE lowered from 268K tons to 250K tons.

In Ningbo Complex, the SAP plant debottleneck project of 10K ton completed in 2020 and the annual capacity increased to 100K tons. The new PDH plant with annual capacity of 600K tons propylene is expected to complete and commence production in 3Q21. The EVA debottleneck project of 28K is expected to complete its construction and commence production in 1Q23 and the annual capacity increased to 100K tons.

Furthermore, in Kaohsiung, the Company’s storage tank in Qianzhen District will be moved to the Phase II intercontinental petrochemical zone. The Company has rent the land and dock from Port of Kaohsiung Taiwan International Ports Corporation for petrochemical usage and will build 12 storage tanks and 1 salt warehouse, which are expected to be completed in 1Q22.

In terms of equity investments, FPC-USA (22.66% owned by the Company) generated pre-tax loss of USD200m in 2020, decline from 2019, mainly due to the U.S. economy impacted by COVID-19 and 14 plants under maintenance shutdown and equipment inspections leading to significant losses. However, as benefiting from the US CARES tax reform bill which returns the tax expenses incurred in the past five year if a company reported net loss in 2020, FPC-USA’s net profit after tax was USD100million in 2020. Looking into 2021, it is expected that the successful development and roll-out of vaccines could help the US economy to resume growth, and to boost the demand for petrochemical products and the increase in product prices. Moreover, there will be only the second olefin plant (OL-2) and specialty PVC plant needed to conduct equipment inspections, and the new LDPE plant in Texas, US put into operation since November 2020, which will increase total sales volume and resume stable profit growth.

In addition, the loss of Fujian Fuxin Special Steel Co., Ltd. (29.16% owned by the Company) in 2020 further expanded from 2019 due to (1) the slowdown in economic growth in China with shrinking demand affected by COVID-19, and (2) market oversupplied due to pricing competition from Indonesia peers that led to poor ASPs in finished goods. In 2021, Fujian Fuxin expects to benefit from order shift effect after the resumption of work in China, a sustained economic growth, new infrastructure projects and RCEP, etc., which will support a substantial growth in downstream exports demand for home appliances and metal products. In addition, Fujian Fuxin expects to decrease the loss as Fujian Fuxin will adjust the sales area, expand the sales in super ferritic stainless steel differentiated products, optimize production process and lower cost, and increase the hot rolling OEM for Formosa Ha Tinh Steel Corporation. In order to enlarge the synergy of vertical integration and enhance the competitiveness, Fujian Fuxin is conducting the new cold rolling

mill plant project with 300K tpa capacity, and expects the plant to commerce production from 3Q21.

Besides, the Company has invested in Minima Technology Co. Ltd. in 2019 with a 19.07% of shareholding. It mainly produces disposable consumer products such as tableware, paper cups, straws and other decomposable plastic products. However, Minima Technology Co. Ltd. reported the loss in 2020 with severely declined demand in Europe and the US market impacted by COVID-19. Its new capacity in Huwei plant in Central Taiwan Science Park commenced production in 4Q20, which increased the overall annual capacity of decomposable compound rubber particles to 20K tons from 4K tons annually. In 2021, it is expected to turn profitable supported by the rising trend of plastics restriction globally, demand recovery from COVID-19, and the increase in capacity.

In view of the demand in advanced nodes from Taiwan’s semiconductor industry, the Company and Japan’s Tokuyama Co., Ltd. established a joint venture " Formosa Tokuyama Advanced Chemicals Co., Ltd." with 50% share respectively in October 2020. The new capacity will produce a 30K tons of electronic-grade IPA annually to meet domestic demand from semiconductor industry. The capacity is scheduled to be completed and put into production in the 3Q21.

In terms of research and development, the Company spent NTD 2bn on R&D in 2020, accounted for 1% of the Company’s revenues. These R&D expenses were mainly spent on new formulation development, production process improvement, product quality upgrade, energy consumption saving, and human resources cultivation to increase production capacity and lower cost. In 2020, the Company completed 40 R&D projects with an annual benefit of NTD 90m. Meanwhile, the Company conducted R&D on industrial production technique and to commercialize specialty products including High temperature resistant and high mechanical strength chlorinated PVC, 5G wire and cable foam grade HDPE, HDPE cap & closure grade,

LLDPE fiber grade, white color EVA encapsulate film grade, super high retention capacity SAP for sanitary napkins and baby diapers, medium modulus carbon fiber by DJWS process, carbon fiber for vinyl ester (VE) resin, carbon fiber for polyether ether ketone(PEEK), pultrusion process for carbon fiber reinforced polymer (CFRP), reactor-grade meltblown PP and low-energy consumption and high toughness EPP foam material, which has achieved good results.

Besides, the Company was awarded the “R&D 100 Awards” in 2020 for the technology of the "application of dye-sensitized battery for smart home", which cooperated with the Industrial Technology Research Institute. This demonstrates the Company's innovation capabilities in R&D and commercialization.

In order to enhance the competitiveness, the Company actively invested in the key technology development and applied for both domestic and international patent. In 2020, the Company received approval on 22 patents, and had a total of 182 effective patents as of the end of 2020. Meanwhile, the Company will continue to work with both domestic and international industry experts and academic area, to strengthen academic fundamentals and R&D to apply to the design for production capacity expansion and shortening the time of production process shift. The Company also set up a new high-end equipment center in Mailiao, and combined with virtual laboratory and talents in production process simulation, to accelerate the development of scratch resistance, flame resistance, toughness, gas barrier, dielectric products, as well as natural antibacterial and beauty-related green products.

Among them, the "Capture and Reuse of Flue Gas ", which was a joint project with academic research institutions, was qualified to receive the subsidy from “the A+ Industrial Innovative R&D Program” by Ministry of Economic Affairs in January 2019. It is scheduled to complete the construction and operation in Renwu plant in 2H21. At the same time, in order to

support the development in 5G industry in Taiwan, the Company will cooperate with Industrial Technology Research Institute and downstream companies to form a 5G raw material alliance, and expand its R&D towards products such as 5G and 6G base station housings, radomes and high-frequency network communication wires.

On the operational safety and environmental protection front, the Company always put emphasis on industry developments and environmental protection equally. As of the end of 2020, the accumulated investments on operational safety, environmental protection, and firefighting reached NTD 25.4bn, which was mainly spent on controlling pollution, energy saving, waste and greenhouse gases reduction, and operational safety and firefighting improvement. The Company’s pollution treatment and emissions are better than national regulatory standards.

In 2020, there were 4 business units praised by competent authority. Among them, Mailiao LLDPE, AN and ECH plants were all praised by Yunlin County for strong performance on occupational safety and health. Among them, the LLDPE and AN plants even received the “Occupational Safety 5-Star Award” from Yunlin County given the three consecutive years of praise awarded. Besides, Mailiao Complex was praised by Ministry of Labor for strong performance.

In terms of water and energy conservation and greenhouse emissions reduction, in 2020, the Company accomplished 973 improvement projects. Total water saved amounted to 5,351 tons/day, while greenhouse gas emissions reduction reached 179K tons/year. Other ongoing 930 improvement projects would further conserve water by 5,593 tons/day and reduce greenhouse gas emissions by 228K tons/year. According to the results announced by Carbon Disclosure Project (CDP) in 2020, the Company was ranked “A” in climate change assessment and “A-” in water resources assessment. Both achievements were among the top rankings within many well-known international

chemical companies, which shows that the Company’s efforts in energy-saving, emission-reduction and circular economy in response to climate change have achieved considerable results.

Besides, in order to enhance operational safety, the Company moved factory manager and section chief’s office to the side of production process control room, in order to response immediately to any production abnormalities. The Company also installed interlock and foolproof devices to avoid operational errors by operators. In addition, the Company set up a Standard Operating Procedures (SOP) platform for operators to familiarize themselves with the operation procedures to reduce errors, and an augmented reality (AR) interactive technology will be further introduced to help improve the effectiveness of the SOP platform. In the meantime, other than using AI and other technologies to assist construction safety, develop smart wearable devices and assist inspections and maintenance, the Company also introduced AI smart detection system for pipeline leakage at Renwu Complex by using 360-degree high-altitude cameras to monitor key production process areas to effectively detect the location of pipeline leaks and protect the safety of employee and equipment.

In view of the international ESG (Environmental, Social and and the domestic severe Corporate Governance) environmental regulations trend, the Company continues to improve the elimination of white smoke from the chimneys of Renwu Complex and to promote zero discharge of wastewater in each Complex. At the same time, each plant is reducing volatile organic compounds (VOCs) and streamlining equipment components to gradually replace the low-leakage equipment components. This is also supplemented by the application of infrared detector (GasFinder) to strengthen autonomous inspections for a friendly environment.

The following is production and sales volume, and business performance in 2020:

1. Production and Sales volume in 2020 (including consolidated subsidiaries and inter-company internal turnover)

Product	Unit	Production volume	Sales volume
Polyvinyl chloride(PVC)	ton	1,648,273	1,640,133
Caustic Soda	ton	1,491,167	1,351,270
High density polyethylene (HDPE)	ton	507,462	524,022
Ethylene vinyl acetate copolymer(EVA)	ton	284,740	289,948
Linear low density polyethylene(LLDPE)	ton	553,148	528,002
Acrylonitrile(AN)	ton	261,246	252,595
Epichlorohydrin(ECH)	ton	94,687	97,418
Methyl tert-butyl ether (MTBE)	ton	133,001	130,792
Methyl methacrylate(MMA)	ton	81,279	81,872
Acrylic esters(AE)	ton	529,650	527,173
N-butanol(NBA)	ton	217,382	240,522
Super absorbent polymer (SAP)	ton	184,412	185,114
Polypropylene(PP)	ton	981,740	976,734

In 2020, total sales value was at NTD 185.81bn, and domestic sales (in Taiwan) was at NTD 56.78bn accounted for 31% of total sales in 2020, export sales was at NTD 129.03bn, accounted for 69% of total sales.

2. Business performance:

The consolidated revenue in 2020 was NTD 185.8bn, a decrease of NTD 22.03bn from NTD 207.84bn in 2019. Operating profit was NTD 17.09bn with a 9% of operating margin after deducting COGS of NTD 156.75bn and operating expenses of NTD 11.95bn. Plus non-operating income of NTD 7.06bn (included equity investment income of NTD 5.21bn), the pre-tax profit was NTD 24.16bn in 2020, decrease 43% from 2019.

1.2 A Summary of the Business Plan for 2021, the Company’s Future Development Strategy, and the Effect of External Competition, the Legal Environment, and the Overall Business Environment

Looking into 2021, the global economic activities is expected return to normal with the gradual normalization of COVID-19 prevention measures by countries, the optimistic expectation of effectiveness of vaccines and the support of large-scale fiscal and monetary easing policies by major economies. According to the latest forecast by the Monetary Fund (IMF), the global economy will recover quickly with ease of COVID-19.

However, the spread of the new variant COVID-19 virus at the beginning of 2021 led to a more severely global pandemic. The resumption of COVID-19 control measures, the shortage of vaccines and the delayed delivery schedules will affect the popularity of vaccination, which may weaken the rebound of economy growth. Besides, the uncertainties from the follow-up of China-US trade tension, whether countries to continue to adopt fiscal stimulus and monetary easing policies, the timetable for the re-lockdown by countries, and the rising geopolitical situation are still need to be closely monitored in the future.

In terms of supply, IHS forecasts that the global ethylene capacity will increase around 11.19 million tons in 2021, and the new capacity from China, Korea, and US will increase by 8.77 million tons. In terms of demand, based on the global ethylene demand growth of 0.6x of GDP growth, incremental demand should only be 5.1million tons in 2021. While polypropylene net capacity increase will be 8.33 million tons in 2021, mainly in China, by 6.13 million tons. Based on 1x of GDP growth, the incremental polypropylene demand should only be 5.7million tons in 2021. The global ethylene and propylene market will be oversupplied.

Furthermore, after the last upcycle of petrochemical industry during 2015-2019, a large number of incoming new

capacities of ethylene, propylene and downstream derivatives in China and the US will result in market oversupply, while decreased demand has been largely impacted by COVID-19 in 2020. Looking into 2021, although demand might not be able to fully return to pre-pandemic level before COVID-19 is fully controlled, the roll-out of vaccines and forecast from international agencies generally indicated a slow recovery of global economy growth. Moreover, many of the capacity expansion plans in global petrochemical peers suspended or delayed due to COVID-19, which will help alleviate the pressure of oversupply. Therefore, it is expected that the petrochemical market in 2021 will be better than 2020.

Based on a better control of pandemic in China and some overseas supply chains impacted by COVID-19, some orders have been shifted to China, and it is expected that downstream product exports will increase. Additionally, the "14th Five-Year Plan" from 2021 to 2025 will focus on "the building of a new development pattern with domestic and international dual cycles as the main body" to support a steady recovery of economic growth, and expand investments in traditional infrastructure, AI, 5G, big data, etc. The 2021 GDP growth in China is expected to be faster than other major economies in the world, which will help to increase the Company’s sales.

In the new year, given the uncertainties of COVID-19 and the continued capacity expansion from China and US, the Company still has pressures for its business operation. In response, the Company will deepen its applications and R&D in AI. In addition to actively cultivating AI, big data, and cloud computing talents, accelerating the application of AI in various fields, optimizing production and sales, improving product quality and management performance, lowering energy consumption to reduce costs, conducting pipeline inspections and leak detection, and strengthening the management of operational safety, the Company will continue to develop the R&D for forward-looking and high value-added products and

production process in response to the trend of the development of semiconductor, 5G, renewable energy and medical and epidemic prevention industries. In the meantime, the Company moves towards the trend in refinization of products to strengthen long-term competitiveness.

Moreover, there will be fewer days of maintenance shutdown for ethylene capacity in Taiwan in 2021 than 2020. The Company expects that the supply of ethylene and propylene feedstock will increase, and will seek for imports to cover the shortfall in raw material, aiming to reach the target of “full production and sales”. Meanwhile, the Company will conduct deep-dive review on petrochemical plant management, and to continue to promote a comprehensive inspection on equipment and the implementation of SOP, in order to manufacture under zero accidents. Besides, in response to the regionalization trend of the supply chain caused by COVID-19, the Company will not only continue to expand differentiated product markets, but also will integrate its past experience and fundamentals on automation and digitalization to accelerate digital transformation by using AI technology to optimize production and sales, and through remote marketing to overcome restrictions of traditional marketing method, which will help to actively expand into new customers and new markets in response to the drastic changing business environment.

In addition, as taking the sustainable development of industry and environment into account, the Company will build renewable energy capacity, continue to promote circular economy, energy saving and carbon reduction in order to fulfill corporate social responsibilities for a friendly environment. The Company also will aggressively promote the capacity expansion and debottleneck projects in Taiwan and overseas. Through the efforts above, the Company expects to strengthen its business, reverse the business downturn and to make the breakthrough of the challenges and maintain a steady performance.

The expected sales volume of major product in 2021 is following: (including consolidated subsidiaries and inter-com an internal turnover p y )

Product	Unit	Sales volume
PVC	ton	1,722,456
Caustic Soda	ton	1,457,077
HDPE	ton	610,898
EVA	ton	301,245
LLDPE	ton	455,916
AN	ton	279,028
ECH	ton	93,286
MTBE	ton	85,750
MMA	ton	135,600
AE	ton	510,416
NBA	ton	223,526
SAP	ton	216,551
PP	ton	971,095

II.Company Profile

2.1 Date of Incorporation: November 5, 1954

2.2 Business Philosophy and Vision

The Company has undergone more than 60 years of development and has continuously expanded to maintain a global presence in Taiwan, China, the U.S., Vietnam and other regions. The Company’s business involvement consists of such industries as petrochemical, plastics, textile, fibers, electron, energy, transportation and steel. The driving force behind FPC’s constant expansion, growth and development is the founders, Mr. Wang Yung-Ching and Mr. Wang Yung-Tsai, who have always emphasized and demonstrated the spirit of “Diligence, Perseverance, Frugality and Trustworthiness; Aiming at the Sovereign Good; Perpetual Business Operation; Dedication to the Society”.

In terms of business operations, the company deeply understands that a good management is the base of steady operations. Therefore, for a long time, in the aspects of production and sale, human resource allocation or resource utilization, the Company keeps the sprit of tracking the root, seeking truth from fact and rationalization to reduce the cost and increase the benefits. This spirit has also been internalized as an important core of the company culture, but also the driving force for progress and sustainability. Moreover, the Company keeps the Company’s meaning based on reaching a reasonable profit and a good contribution to society at the same time. Therefore, in addition to its business operations, the Company and the affliated companies have also established a number of non-profit public welfare institutions, such as schools, hospitals and foundations, to invest in medical care, education and various social welfare, and continuously expands its scale to enhance efficiency and quality to fulfill the corporate social responsibility.

The Company’s vision for future development is in the various industrial fields in which it is engaged, not only to achieve world-class production capacity, but also to enhance the international competitiveness of its strong products, and to achieve its goal of sustainable development by staying in the global leadership position of the industry.

2.3 Milestone

Formosa Plastics Corporation established in November 1954, with capitalization of NT$5 million and constructed the first PVC plant in Kaohsiung City. The capital of the Company has built up to NTD 63.6 billion by the end of 2020. The primary businesses included the production and sale of plastics and fibers products, where the capacity of VCM is 1,644K tons and it will be up to 3,106K tons including the capacity of USA re-invested companies, which places the Company to the second rank VCM manufacturers in the world. In addition, the Company’s capacity of PVC is 1,315K tons, which is the largest PVC manufacturers in Twain, and it will be up to 3,247K tons including the capacity of USA and China re-invested companies, which places the Company to the third rank PVC manufacturers in the world. The capacity of others such as the caustic soda, Acrylic acid(AA), n-butanol(NBA), super absorbent polymer(SAP), acrylonitrile(AN), Methyl methacrylate (MMA) and epichlorohydrin(ECH) also ranks among the top in the world. The Company’s business expansion roughly divided into the following stages:

1954  Establishment of Formosa Plastics Corporation with capitalization of NT$5 million. Constructed the first PVC plant in Kaohsiung City.
1957  Started operations in April with a monthly PVC capacity of 120 metric tons.
1960  Invested in Tungshan Calcium Carbide Corporation with a monthly capacity of 2,000 metric tons.
1963  Expanded capacity of PVC plant in Kaohsiung to 2,100 MT/month.
1965  The Caustic Soda plant in Chienchen came on stream (70 MT/day).
Merged Tung Shan Calcium Carbide Corporation and added an electric furnace to increase capacity to 4,000 MT/month.
1966  The Caustic Soda plant in Chienchen set up a department to produce DOP.
1967  The Tairylan plant was built in Chienchen to produce acrylic fiber, with a daily capacity of 4 metric tons.
1968  Set up Kuandu plant to produce acrylic yarn and carpet.
Increased calcium carbide capacity to 8,500 MT/month.
Improved production technology to increase acrylic fiber capacity to 20 MT/day.
20 tanks were added to Caustic Soda plant in Chienchen to raise capacity to 88 MT/day.

1969		Took over Chi Ho Fiber Co. and changed the name as Sanhsia plant.
		Set up a Machinery plant.
1970		The Caustic Soda plant in Chienchen added a commutator to
		increase capacity to 100 MT/day.
1971		The Acrylic Fiber plant in Chienchen set two new units and raised
		capacity to 55 MT/day.
1972		The PVC plant in Renwu started operation with a monthly capacity
		of 2,400 MT.
		Dyeing and knitting equipment in Kuandu plant were moved to
		Sanhsia plant.
		Engineering Section was expanded and renamed as Engineering
		Division.
1973		Built a PVC plant in Puerto Rico with a monthly capacity of 6,000
		MT.
		Began construction of Caustic Soda and VCM plant in Renwu, with
		a capacity of 525 MT/day and 240,000 MT/year respectively.
		Capacity of DOP plant was increased to 2,500 MT/month.
		Machinery plant was expanded and moved to Renwu complex.
1974		Expanded capacity of 50 MT/day of Acrylic Fiber plant (A and B
		series) in Renwu.
1975		The capacity of PVC plant in Renwu was increased to 9,000
		MT/month.
		The Caustic Soda plant in Renwu completed construction and came
		on stream (525 MT/day).
		The VCM plant (phase I) in Renwu completed construction and
		came on stream with an annual capacity of 240,000 MT.
		The Utility plant with a 246 T/H boiler was added.
		Machinery plant was restructured into Machinery Division.
		Construction of Wharf#29 in Kaohsiung was completed.
1977		A 130M3reactor of PVC plant in Renwu was completed and
		increased capacity to 18,000 MT/month.
		The Plastics Division phased out the use of calcium carbide in its
		manufacture of VCM.
		Test production of E-process Compound fiber (C series) began in
		Acrylic Fiber plant in Renwu.
1978		Began the construction of VCM plant (phase II) in Renwu, with
		capacity of 240,000 MT/Y.

The capacity of Caustic Soda plant in Chienchen was increased to 105 MT/day.
Construction of the first phase PVC plant at Kaohsiung was completed, increasing production capacity of suspension PVC resin by 1,500 MT/month to a total of 9,000 MT/month.
The Tairylan plant at Renwu successfully developed E-process Compound fiber (D series).
Chienchen and Renwu plants totaled 165 MT/day.
1979  Started planning investments in the United States.
An expansion was added to PVC plant in Renwu to produce 100,000 MT/Y of Mass PVC resin.
The Tairylan plant in Chienchen was shut down, and some equipments were transferred to Tairylan plant in Renwu.
The Tairylan plant in Renwu expanded capacity by 30 MT/day (F series).
Two 8,000 KW oil-fired generators were added.
1980  The Puerto Rico plant was shut down.
The VCM plant (phase II) in Renwu completed construction, increasing the total production capacity to 480,000 MT/Y.
The Caustic Soda plant in Renwu added four tanks, increasing its capacity to 530 MT/month.
The Tairylan plant in Renwu expanded its capacity by 30 MT/day.
Installed a Benson boiler of 180 T/H, a steam generator of 23,500 KW, and an oxygen plant of 3,667 NM[3] /H.
The Machinery Division entered into technical cooperation with Renk Corp in Germany.
1981  Expanded PE plant (120,000 MT/Y), Utility plant (boiler 120T/H, co-generation 15,800 KW) and AE plant (28,500 MT/Y) in Linyuan.
The DOP plant was shut down in November.
Completed the expansion of phase II Dispersion PVC resin of PVC plant in Kaohsiung with a monthly capacity of 900 MT.
Completed the 30 MT/day (G series) expansion of Tairylan plant in Renwu and increased capacity to 210 MT/day.
Began the set-up calcium carbonate equipments with capacity of 10,800 MT/month in Calcium Carbide plant.
1982  The expansion of 100,000 MT/Y Mass PVC resin of PVC plant in Renwu was completed and came on stream.

FPC USA started operations.
The A and B series of Tairylan plant in Renwu were converted to E-Type, resulting in an increase of production capacity to 240 MT/day.
The Caustic Soda plant in Renwu added an IEM-1 ion-exchange system with capacity of 116 MT/day.
1983  Set up the PE processing section.
A Polyolefin Division was established.
Planned to expand Phase III of VCM plant in Linyuan with capacity of 240,000 MT/Y.
Succeeded in developing carbon fiber
1984  The AE plant in Linyuan came on stream with an annual capacity of 28,500 MT.
The Machinery Division signed a cooperative agreement with Murata Corp. of Japan to manufacture automatic warehousing system.
The 120,000 MT/Y HDPE plant in Linyuan came on stream.
1985  A carbon fiber plant with an annual capacity of 100 MT was constructed.
Completed the expansion project of 2EHA (2 Ethyl Hexyl Acrylate) with capacity 60 MT/day.
A chlorofluorocarbon plant with capacity of 23,040 MT/Y was constructed.
The VCM plant (phase III) in Linyuan came on stream; as a result, the total capacity of VCM was increased to 720,000 MT/Y.
The Caustic Soda plant using IEM-1 process in Renwu came on stream with capacity of 116 MT/day.
The Caustic Soda plant in Chienchen was shut down.
1986  Planned to invest in No.6 Naphtha Cracking Project.
Built the 300 MT/Y carbon precursor plant.
Built the 330 T/H coal boiler.
Set up Machinery plant in Lungteh.
Built a wax plant with an annual capacity of 1,440 MT.
The 100 MT/Y carbon fiber plant came on stream.
Built a MBS plant in Linyuan with capacity of 12,000 MT/Y.
Phase I of PVC plant in Linyuan with capacity of 140,000 MT/Y was completed.
Expansion of Chemical Wharf#28 in Kaohsiung was completed.

1987  Phase II of PVC plant in Linyuan with capacity of 70,000 MT/Y was completed.
Added equipments for carpet tile production with a monthly capacity of 16,500 M[2] .
The Taical plant came on stream with capacity of 400 MT/month.
The Carbon Precursor plant came on stream with capacity of 300 MT/Y.
The Carbon Precursor plant came on stream with capacity of 300 MT/Y.
Phase II of AE plant in Linyuan with capacity of 75,000 MT/Y was completed.
1988  Installed the BCF-PP and flat fiber production line in Sanhsia plant.
Production of Caustic Soda plant in Renwu was shifted from mercury process to ion-exchange process, with capacity of 425 MT/day.
Phase II of Carbon Fiber plant with capacity of 130 MT/Y was completed.
Built the Plastic Precessing plant in Hsinkang, Chiayi to produce garbage bags (120 MT/month), shopping bags (140 MT/month) and deli bags (40 MT/month).
Finished special fiber construction of Tairylan plant with capacity of 30 MT/day and came on stream, increasing total capacity to 300 MT/day.
Utility plant in Linyuan added a 200 T/H boiler and 49,460 KW co-generator.
A 6,000 MT/month Maerz limestone kiln was installed.
Utility plant in Renwu added two boilers (350 T/H).
Expansion of second line of Taical production (600 MT/month).
1989  The mercury process was shut down and IEM-2 started operation with capacity of 425 MT/day.
Phase I of PVC plant in Linyuan came on stream with capacity of 140,000 MT/Y.
The MBS plant in Linyuan came on stream with capacity of 12,000 MT/Y.
Invested US$100 million to establish Formosa Plastics Corporation, America (FPCA), building IEM plant (caustic soda 633,000 MT/Y, chlorine 571,000 MT/Y) and EDC plant (600,000 MT/Y).
The second line of Taical production came on stream with capacity of 600 MT/month, having total capacity of 12,000 MT/Y.

1990  Phase II of AE plant in Linyuan was completed, increasing total capacity to 75,000 MT/Y.
Phase II of Carbon Fiber plant was completed, increasing total capacity to 230 MT/Y.
The Chlorofluorocarbon plant came on stream with capacity of 23,040 MT/Y.
Phase II of PVC plant in Linyuan was completed, with capacity of 70,000 MT/Y.
1991  Constructed POM plant in Hsinkang, with an annual capacity of 20,000 MT.
- Constructed SAP (Super Absorbent Polymer) plant in Hsinkang, with an annual capacity of 6,000 MT.
Completed PE Processing plant in Hsinkang.
Two sets of 350 T/H boilers and co-generators with 201,400 KW capacity come on stream in Renwu.
One 200 T/H boiler and co-generator with 49,460 KW capacity came on stream in Linyuan.
Formosa Heavy Industries Corporation was established.
Started production of distributed control system (DCS), with capacity of 18~24 sets per year.
Constructed NS-2500 calcium carbonate process with an annual capacity of 6,000 MT.
1992  Transferred assets and personnel of Machinery Division to Formosa Heavy Industries Corporation.
Formosa Petrochemical Corporation (FPCC) was established. The personnel of Olefin Team I were transferred to FPCC.
Fiber Processing Division was closed.
Added one set of co-generator with 125,900 KW capacity in Renwu.
DCS installation and testing facilities went into operation.
Started pilot production for CFC substitutes HCFC-141b and 142b.
1993  Commencement of work on No.6 Naphtha Cracking Project officially announced on July 5.
Super Absorbent Polymer plant in Hsinkang with capacity of 6,000 MT/Y was completed and went into operation.
POM Pilot plant in Hsinkang, with capacity of 1,000 MT/Y, went into operation.

Six electrolytic cells were added in Caustic Soda plant in Renwu, increasing an annual capacity of 35,300 MT.
Mailiao Harbor Administration Corporation was established.
Constructed KS-50 calcium carbonate facilities with capacity of 7,500 MT/month.
1994  Invested in Asia Pacific Investment Corporation.
Processed with the expansion of PVC plant in Linyuan, including Processing Aids and Acrylic Modifiers (5,760 MT/Y for PA, 1,440 MT/Y for AM and 3,600 MT/Y for MBS).
Successful developed CFC substitutes HCFC-141b and 142b came on stream.
Processed with the second phase expansion of Super Absorbent Polymer plant (6,000 MT/Y).
Added a MAERZ limestone Kiln (9,000 MT/Y) in Calcium Carbide plant.
1995  Processed with the expansion of HDPE plant to raise annual capacity to 180,000 MT.
Completed and started production of POM plant in Hsinkang (20,000 MT/Y).
Completed the installation of one set co-generator with 500 T/H (125,900 KW) capacity in Renwu.
Completed the second phase expansion of Super Absorbent Polymer plant (6,000 MT/Y).
Invested NT$432 million (24% share holding) to establish Formosa Komatsu Silicon Corporation with Japan’s Komatsu Electronic Metals Co., Ltd. and Asia Pacific Investment Corporation.
Processed with the phase three expansion for carbon fiber with annual capacity of 500 MT.
Addition of one precipitated calcium carbonate plant (3,000 MT/month) and one set of U-Cal facility (1,200 MT/month) in Calcium Carbide plant.
1996  Mailiao Power Corporation was established.
Formosa Mailiao Maintenance Corporation was established.
Completed the expansion for processing aids and acrylic modifiers of PVC plant in Linyuan.
Completed the expansion of HDPE plant in Linyuan to raise annual capacity to 180,000 MT.
Completed the phase three expansion for carbon fiber.

1997  Processed with the phase one expansion for Carbon Fiber plant in Mailiao with annual capacity of 2,000 MT.
Chlorofluorocarbon plant renamed as Hydrochlorofluorocarbon plant.
Precipitated calcium carbonate plant (3,000 MT/month) and U-Cal facility (1,200 MT/month) began production.
1998  Completed and started production of AE plant in Mailiao (100,000 MT/Y).
Completed and started production of HDPE plant in Mailiao (240,000 MT/Y).
Completed and started production of PVC plant in Mailiao (420,000 MT/Y).
Olefin Team-Ⅱ renamed as Chemicals Division.
Invested NT$200 million (50% share holding) to establish Formosa Asahi Spandex Co., Ltd. with Japan’s Asahi Chemical Industry Co., Ltd.
1999  Completed and started production of VCM plant in Mailiao (600,000 MT/Y).
Completed and started production of Caustic Soda plant in Mailiao (phase I 1,000 MT/day).
Processed with phase three expansion for Super Absorbent Polymer plant (12,000 MT/Y).
Invested NT$50 million (50% share holding) to establish Formosa Daikin Advanced Chemicals Co., Ltd. with Japan’s Daikin Industries, Ltd.
Processed with PDP plant in Sanhsia (phase I 7,200 SETS/Y).
2000  Completed and started production of Carbon Fiber plant in Mailiao (1,000 MT/Y).
Completed and started production of EVA/LDPE plant in Mailiao (200,000 MT/Y).
Completed and started production of AN plant in Mailiao (200,000 MT/Y).
Completed and started production of C4 plant in Mailiao (MTBE 151,000 MT/Y and B-1 17,000 MT/Y).
Completed and started production of Caustic Soda plant in Mailiao (phase II 500 MT/day).
Completed and started production of phase three expansion for Super Absorbent Polymer plant (12,000 MT/Y).
Formosa Plastics Marine Corporation was established.

2001  Completed and started production for paste PVC of PVC plant in Mailiao (36,000 MT/Y).
Completed and started production of LLDPE plant in Mailiao (240,000 MT/Y).
Completed and started production of MMA plant in Mailiao (70,000 MT/Y).
Completed and started production of ECH plant in Mailiao (80,000 MT/Y).
PDP plant (phase I 7,200 SETS/Y) in Sanhsia began production.
Formosa Teletek. Corporation (100% share holding) was established.
Formosa Group Ocean Marine Investment Corporation (19% share holding) was established.
SU-HUA Transport Corporation (25% share holding) was established.
2002  Completed the expansion project of AE plant in Mailiao (18,000 MT/Y).
Invested Gala Television Corporation (6.25% share holding).
Signed the PDP MOU with Fujitsu Hitachi Plasma Display Corporation and AU Optronics Corporation.
Formosa Plasma Display Corporation was established (77.5% share holding).
Acquired 49% and 0.46% share holdings of Yungchia Chemical Industries Corporation from Central Investment Corporation and China Petroleum Corporation respectively.
100% owned subsidiary Formosa Industries (Ningbo) Co., Ltd. was established.
2003  Completed and started production for phase three of HDPE plant in Mailiao (50,000 MT/Y).
Completed and started production for MAA of MMA plant in Mailiao (20,000 MT/Y).
Completed and started production for LiPF6 of Hydrochlorofluorocarbon plant in Renwu (200 MT/Y).
Completed and started production for debottlenecking plan of Acrylic Fiber plant in Renwu (13,000 MT/Y).
- Completed and started production for debottlenecking plan of PP plant in Linyuan (50,000 MT/Y).

Completed and started production for debottlenecking plan of POM plant in Hsinkang (5,000 MT/Y).
Processed with phase one of NF3 plant in Renwu (100 MT/Y).
Processed with the phase four expansion of No.6 Naphtha Cracking Project in Mailiao: 38,000 MT/Y for paste PVC phase two, 333,000 MT/Y for caustic soda phase four, 30,000 MT/Y for HDPE, 80,000 MT/Y for AN, 28,000 MT/Y for MMA, 20,000 MT/Y for ECH and 23,000 MT/Y for MTBE.
The Board Meeting dated March 6th decided to merge Yungchia Chemicals Industries Corporation (1.96 shares of Yungchia stock for 1 share of FPC stock).
Formosa Environmental Technology Corporation was established (24.34% share holding).
FPC supplied 63,734,000 FPCC shares for FPCC IPO (NT$ 43 per share).
100% owned subsidiary Formosa Acrylic Esters (Ningbo) Co., Ltd. was established.
2004  Completed and started production for phase one NF3 in Renwu (100 MT/Y).
Completed and started production for debottlenecking plan of PP plant in Linyuan (25,000 MT/Y).
Completed and started production for debottlenecking plan of SAP plant in Hsinkang (6,500 MT/Y).
Completed and started production for phase three of Caustic Soda plant in Mailiao (167,000 MT/Y).
Completed and started production for phase three of VCM plant in Mailiao (80,000 MT/Y).
Completed and started production for debottlenecking plan of AE plant in Mailiao (13,500 MT/Y).
Completed and started production for debottlenecking plan of LLDPE plant in Mailiao (24,000 MT/Y).
Completed and started production for debottlenecking plan of AN plant in Mailiao (40,000 MT/Y).
Processed with phase two & three of NF3 plant in Renwu (100 % 200 MT/Y), renewal the first set of co-generation in Renwu, expansion for Caustic Soda plant in Renwu (133,000 MT/Y for caustic soda-liquid and 100,000 MT/Y for caustic soda-pearls), expansion for MBS (4,100 MT/Y) and AM (17,800 MT/Y) in

Linyuan, debottlenecking plan for LDPE/EVA plant in Mailiao (40,000 MT/Y) and phase two of Carbon Fiber plant in Mailiao (1,100 MT/Y).

100% owned subsidiary Formosa Polypropylene (Ningbo) Co., Ltd. was established.
- 100% owned subsidiary Formosa Electronics (Ningbo) Co., Ltd. was established.
Issued foreign corporate bond of US$ 250 million, exchangeable for FPCC’s stock.
Facilities of PE Processing plant in Chienchen were moved to Hsinkang complex, and the carbide production was shut down.
2005  Completed and started production of PVC plant in Ningbo, China.
The Board Meeting of 100% owned subsidiary Formosa Teletek. Corporation decided to shut down its production of LTCC.
The production of chlorofluorocarbon in Hydrochlorofluorocarbon plant was shut down.
Completed and started production of 38,000 MT/Y for paste PVC phase two, 333,000 MT/Y for caustic soda phase four, 14,000 MT/Y for MMA, 23,000 MT/Y for MTBE and 40,000 MT/Y for LDPE/EVA in Mailiao.
Completed and started production for the first set renewal of co-generation, expansion of 100 MT/Y for NF3 phase two in Renwu.
Processed with the debottlenecking plan of VCM plant in Mailiao (100,000 MT/Y) and SAP plant in Hsinkang (9,500 MT/Y).
100% owned subsidiary Formosa Super Absorbent Polymer (Ningbo) Co., Ltd. was established.
The Board Meeting dated December 19th decided to exchange all FPC-America stocks for FPC-USA, and FPC holds 22.43% of FPC-USA from 6.04% after exchanging.
2006  The Shareholders’ Meeting of 93.37% owned subsidiary Formosa Plasma Display Corporation decided to dissolve.
The Shareholders’ Meeting of 100% owned subsidiary Formosa Teletek. Corporation decided dissolve.
FPC’s foreign corporate bonds, exchangeable for FPCC’s stock, were all exchanged.
Completed and started production of AE plant in Ningbo, China.
The Board members was reduced from 17 to 15, and Chairman Y.C. Wang & Executive Director Y.T. Wang retired.

Completed and started production of following debottlenecking plan in Mailiao: 40,000 MT/Y for AN, 20,000 MT/Y for ECH, 14,000 MT/Y for MMA, 30,000 MT/Y for HDPE.
Completed and started production of following expansion plan in Renwu: 200 MT/Y for NF3 phase three, 133,000 MT/Y for caustic soda-liquid and 100,000 MT/Y for caustic soda-pearls.
Completed and started production of 9,500 MT/Y for SAP expansion plan in Hsinkang.
Completed and started production of 4,100 MT/Y for MBS and 17,800 MT/Y for AM expansion plan in Linyuan.
Completed and started production of 25,000 MT/Y for PP debottlenecking plan in Linyuan.
Processed with the following expansion plan in Mailiao: 1,100 MT/Y for Carbon Fiber phase two, 2,200 MT/Y for Carbon Fiber phase three, 250,000 MT/Y for NBA and 30,000 MT/Y for SAP.
Processed with 700 MT/Y for Carbon Fiber debottlenecking plan in Mailiao.
Issued domestic unsecured corporate bond for NT$ 10 billion.
2007  Completed and started production of 1,100 MT/Y expansion for Carbon Fiber phase two and 700 MT/Y debottlenecking for Carbon Fiber in Mailiao.
The Board Meeting decided to invest Fujian FuXin Special Steel Corporation in China for 25% share holding. Formosa Industries (Hong Kong) Limited was established and adjusted the structure for investment in China.
Processed with 2,600 MT/Y expansion plan for Carbon Fiber phase four.
2008  Completed and started production of SAP and PP plant in Ningbo, China.
Completed and started production of 2,200 MT/Y for Carbon Fiber phase three and 250,000 MT/Y for NBA.
The Board Meeting decided to invest Formosa Ha Tinh Steel Corporation in Vietnam for 25% share holding.
Founder Mr. Y.C. Wang passed away.
Issued domestic unsecured corporate bond twice for NT$ 6 billion each.
2009  3 Independent Director were elected.
Issued domestic unsecured corporate bond for NT$ 6 billion.

The Shareholders’ Meeting decided to increase capital of NT$ 4,004,330,110 to set up a Silane plant in Mailiao.
2010  Issued domestic unsecured corporate bond for NT$ 6 billion.
Top Advisor Mr. C.S. Wang passed away.
Board of Directors decided to lower the share holding ratio of Formosa Ha Tinh Steel Corporation to 21.25%.
Board of Directors approved the expansion of PVC of Formosa Industries (Ningbo) Co., Ltd. for 150,000 MT/Y, AA/AE of Formosa Acrylic Esters (Ningbo) Co., Ltd. for 160,000 /200,000 MT/Y, SAP of Formosa SAP (Ningbo) Co., Ltd. for 60,000 MT/Y, and also established Formosa Polyethylene (Ningbo) Co., Ltd. to produce EVA for 100,000 MT/Y for Phase I.
Processed the expansion of SAP for 60,000 MY/Y in Mailiao Plant.
Completed and started production of 1,300 MT/Y for Carbon Fiber Phase IV Line H expansion plan in Mailiao and of 20,000 MT/Y for POM debottlenecking plan in Hsinkang.
2011  Board of Directors approved Formosa Industries (Ningbo) Co., Ltd. to build a new plant producing paste PVC for capacity of 70,000 MT/Y.
Issued domestic unsecured corporate bond twice for total NT$ 10 billion.
Completed and started production of Carbon Fiber Phase IV expansion for 1,300 MT/Y.
Processed with debottlenecking plan for SAP of 10,000 MT/Y in Hsinkang plant.
Established Remuneration Committee.
2012  Issued domestic unsecured bond three times for total NT$ 21 billion.
Completed and started production: SAP debottlenecking plan for 10,000 MT/Y in Hsinkang plant and SAP expansion plan for 60,000 MT/Y in Mailiao plant.
Board of Directors agreed to have a joint venture, Formosa Mitsui Advanced Chemicals Co., Ltd., with Mitsui Chemicals Inc. for 50% share holding each to produce electrolyte solution for lithium battery with capacity 5,000 MT/Y.
Board of Directors agreed to consolidate Formosa Industries (Ningbo) Co., Ltd, Formosa Acrylic Esters (Ningbo) Co., Ltd, Formosa Polypropylene (Ningbo) Co., Ltd, Formosa Electronics

(Ningbo) Co., Ltd, Formosa SAP (Ningbo) Co., Ltd and Formosa Polyethylene (Ningbo) Co., Ltd into one company as Formosa Industries (Ningbo) Co., Ltd.

Board of Directors agreed to invest Formosa Ha Tinh Steel Corporation for USD$ 170 million.
2013  Board of Directors approved to issue domestic unsecured bond for NT$ 2 million.
Formosa Group (Cayman) Limited, located on British Cayman Islands, was established together by Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp.
Formosa Resources Corporation was established together by Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp., with capital of NT$ 1 million and for 25% share holding each.
Lowered share holding ratio of Formosa Ha Tinh Steel Corporation from 21.25% to 14.75%.
Increased to invest Formosa Resources Corporation for NT$ 2.99975 billion.
2014  Disposed 49,348,000 shares of Formosa Petrochemical Corporation with lowering share holding ratio from 29.31% to 28.79%.
Increased to invest Formosa Resources Corporation for NT$ 1.1625 billion.
Kaohsiung plant was no longer operational, so our registration address was changed to No.100, Shuiguan Rd., Renwu Dist., Kaohsiung City 814, Taiwan (R.O.C.)
Board of Directors agreed to issue domestic unsecured bond for NT$ 6 billion.
Established “Formosa Group Investment (Cayman) Limited” with Nanya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp. in the British Cayman Islands.
Founder, Y. T. Wang, passed away.
Board of Directors agreed to establish Formosa Industries Corporation in U.S. to invested in ethane cracker of 1.2 million MT/Y ethylene. and HDPE for capacity of 400,000 MT/Y.
Formosa Industries (Ningbo) Co., Ltd. completed and started production of paste PVC expansion for 70,000 MT/Y.
The machinery equipment and inventory of the plastic processing group were sold to Inteplast Taiwan Corp.

2015  Formosa Acrylic Esters (Ningbo) Co., Ltd has expanded AA/AE for capacity of 160,000/170,000 MT/Y. Formosa SAP (Ningbo) Co., Ltd has expanded SAP for capacity of 60,000 MT/Y into completion.
Disposed 3,821,000 shares of Nanya Technology Corporation with lowering share holding ratio from 15.48% to 15.32%.
Disposed 22,000,000 shares of Formosa Petrochemical Corporation with lowering share holding ratio from 28.79% to 28.56%.
Board of Directors agreed to establish the Audit Committee instead of supervisors and Audit Committee’s term of service is from June 25, 2015 to June 24, 2018.
The Chairman, C.T. Lee, changed to be as the top advisor of the Company.
Formosa Industries Corporation was established in Texas, U.S. to produce HDPE for capacity of 400,000 MT/Y and also invested in ethane cracker of 1.2 million MT/Y ethylene.
Lowered share holding ratio of Formosa Ha Tinh Steel Corporation from 14.75% to 12.346%.
A joint venture, Shang Wei (Jiangsu) carbon fiber composite material Co. Ltd., with Swancor IND Co. Ltd. for 18% share holding.
2016  Formosa Polyethylene (Ningbo) Co., Ltd has expanded EVA for capacity of 72,000 MT/Y into completion.
Lowered share holding ratio of Formosa Ha Tinh Steel Corporation from 12.346% to 11.432%.
Completed and started production of 34,000 MT/Y for PP debottlenecking plan in Linyuan Plant.
Board of Directors agreed to cease producing acrylic fiber in Renwu Plant.
Established “Lolita Packaging L.L.C” through a US subsidiary, “Formosa Industries Corporation”, with an investment of USD 9.88 million for 38% share holding.
Formosa Mitsui Advanced Chemicals Co., Ltd., the reinvested company, processed with phase two expansion for electrolyte solution for lithium battery with capacity 3,500 MT/Y.
2017  A merger involving several Ningbo subsidiaries, including Formosa Industries (Ningbo) Co., Ltd., Formosa Acrylic Esters (Ningbo) Co., Ltd., Formosa Polyethylene (Ningbo) Co., Ltd., Formosa

Polypropylene (Ningbo) Co., Ltd. and Formosa Super Absorbent Polymer (Ningbo) Co., Ltd. was completed and Formosa Industries (Ningbo) Co., Ltd. is the surviving company.

Board of Directors agreed to cease producing NF3 and NH3 in Renwu Plant.
Donation of NTD 125 million to establish Foundation of Y. C. Wang and Y. T. Wang Brothers Park in Kaohsiung.
Increased to invest Formosa Resources Corporation for USD 55 million.
Issue domestic unsecured bond for NT$ 7 billion.
Increased to invest Formosa Ha Tinh (Cayman) Limited for USD 114,321,668.
Increased to invest Fujian Fuxin Special Steel Co., Ltd. for USD 145.8 million.
Increased to invest Formosa Industries (Ningbo) Co., Ltd. for USD 267 million.
Disposed 32,722,000 shares of Nanya Technology Corporation with lowering share holding ratio from 13.37% to 11.30%.
2018  Issue domestic unsecured bond for NT$ 9.3 billion.
Signed the Letter of Intent to establish Y. C. Wang and Y. T. Wang Brothers Park in Kaohsiung with Kaohsiung City Government.
Board of Directors agreed to invest NT$4.675 billions to purchase the “ Taipei Industrial Park of Cooperation Headquarters “ located at Sec. 6, Nanjing E. Rd., Neihu Dist., Taipei City with holding a quarter of buildings and land.
Formosa Industries (Ningbo) Co., Ltd will construct a PDH plant for Propylene capacity of 600,000 MT/Y.
Increased to invest Formosa Industries Corporation for USD 12,375 thousand to reinvest Formosa Olefins, L.L.C.
2019  To invest Minima Technology Co. Ltd. for NTD 229,555 thousand with 7,405,000 stocks, equvlent to share holding ratio 19.15%.
Increased to invest Formosa Resources Corporation for USD 81.25 million.
Increased to invest Formosa Industries Corporation for USD 100 million.
2020  Issue domestic unsecured bond for NT$ 8.35 billion.
Adjust the investment structure of Formosa Ha Tinh Steel Corp..
Increased to invest Formosa Industries Corporation for USD 185 millon.

Invest a join venture, Formosa Tokuyama Advanced Chemicals Co., Ltd. (50% share holding), with Tokuyama Corp..
Increased to invest Formosa Plastics Construction Corporation for NT$ 500 millon.
Board of Directors agreed to increase investment for USD 4,600,000 to Formosa Mitsui Advanced Chemicals Co., Ltd..
Board of Directors agreed to issue 2021 domestic unsecured bond for NT$ 20 billion.
2021  Formosa Plastics Corporation (Cayman) Limited completed and commenced production of 10,000 MT/Y for SAP debottlenecking plan.
The name of “Electronic Special Project Department” of the Company exchanged to “Electronic Materials Division”.

Renwu Plastic Plant Renwu Caustic Soda Plant Renwu Vinyl Chloride Monomer(VCM) Plant PVC Resin Linyuan Plastic Plant Liquid Caustic Soda Vinyl Chloride Mailiao Caustic Soda Plant Monomer (VCM) Mailiao Vinyl Chloride Monomer (VCM) Plant Impact Modifiers Mailiao Plastic Plant 1st Sales Department Support Department Tairylan Plant Linyuan Acrylic Acid & Esters Plant Mailiao Super Absorbent Polymer Plant Acrylic Acid Super Absorbent Hsinkang Super Absorbent Polymer Plant Polymer (SAP) Mailiao Acrylic Acid & Esters Plant n-Butanol (NBA) Mailiao Carbon Fiber Plant Carbon Fiber n-Butanol Plant 2nd Sales Department TAICAL Support Department Calcium Carbonate Carbide Plant FORMOLIGHT (Precipitated Calcium 4th Sales Department Carbonate) Design Unit Water, Electricity, Ha Tinh Steel Engineering Unit Steam Ningbo Engineering Unit Oxygen, Nitrogen Fuxin Engineering Unit Project Planning Design & Mailiao Engineering Unit Manufacturing Renwu Engineering Unit Renwu Public Utilities Plant Linyuan Public Utilities Plant High-Density Polyethylene Linyuan Polyethylene Plant (HDPE) Ethylene Vinyl Acetate Mailiao High-Density Polyethylene Plant (EVA) Linear Low-Density Mailiao Ethylene Vinyl Acetate Plant Polyethylene (LLDPE) Mailiao Linear Low-Density Polyethylene Plant 5th Sales Department Support Department Acrylonitrile Methyl Methacrylate Acrylonitrile Plant (MMA) Methyl Methacrylate Plant Epichlorohydrin (ECH) Methyl-Tert-Butyl Epichlorohydrin Plant Ether (MTBE) C4 Plant 1-Butene Sales Department Warehouse Equipment Unit Polypropylene Plant Polypropylene, Polyoxymethylene Polyoxymethylene Plant Support Department Sales Department RTPMS Products Unit Electronic Materials Division DCS Products Unit Automated Products Unit Cloud Computing Project Unit Inspection Center Mailiao Inspection Department Renwu Maintenance Plant Mailiao Maintenance Plant Maintenance Center Linyuan Maintenance Plant Professional Maintenance Plant Mailiao Administration Dept. Mailiao Management Department Mailiao Security Department Kaohsiung Administration Department Safety & Health Department Research & Development Unit Kaohsiung Tank & Shipping Department Accounting Department Renwu Warehouse Department Mailiao Warehouse Department

Remark (Note 4)	Remark (Note 4)	Note 4
Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Relation	None	Brother, Brother in law		Sister		Brother, Brother in law
	Name	None	Wilfred Wang, K. H. Wu		Cher Wang		William Wong, K. H. Wu
	Title	None	Managing Director, Director		Director		Managing Director, Director
Director’s Current Positions at FPC & Other Companies		Chairman of Formosa Sumco Technology Corporation, President of Formosa Plastics Corporation, U.S.A	Chairman of Chinese National Federation of Industries, Taiwan Textile Federation, Formosa Chemicals & Fibre Corporation and Formosa Taffeta Co., Ltd.		Managing Director of Formosa Petrochemical Corporation		Managing Director of Formosa Petrochemical Corporation
Experience (Education) (Note 3)		Master of Science in Environmental Sciences, Wageningen Agricultural University	Master of Industrial Engineering University of Houston		Barnard	College, U.S.	BA of Mechanical Engineering, University of London
Shareholding by Nominee Arrangement	％	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Shares	0	0	0	0	0	0	0
Spouse & Minor Shareholding	％	0.00	0.00	0.02	0.00	0.00	0.00	0.52
	Shares	0	0	1,168,100	0	0	0	32,800,000
Current Shareholding	％	0.00	7.65	0.71	4.63	0.14	2.07	0.19
	Shares	0	486,978,693	45,151,509	294,793,105	8,828,219	131,460,365	12,066,840
Shareholding when Elected	％	0.00	7.65	0.71	4.63	0.14	2.07	0.19
	Shares	0	486,978,692	45,151,509	294,793,105	8,828,219	131,460,365	12,066,840
Date First Elected (Note2)		May 23 2003		Jun 5 2006	Jun 5	2006	Jun 5 2006
Term (Years)		3		3		3	3
Date Elected		Jun 20 2018		Jun 20 2018	Jun 20	2018	Jun 20 2018
Gender		Male	-	Male	-	Female	-	Male
Name		Jason Lin	Formosa Chemicals & Fibre Corp.	William Wong	Nanya Plastics Corp.	Susan Wang	Formosa Petrochemical Corp.	Wilfred Wang
Nationality/ Place of Registration		R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C
Title (Note 1)		Chairman		Managing Director	Managing Director		Managing Director

Remark (Note 4)	Remark (Note 4)
Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Relation	None	None	None	None	Sister	Brother in law, Brother in law	None
	Name	None	None	None	None	Susan Wang	William Wong, Wilfred Wang	None
	Title	None	None	None	None	Managing Director	Managing Director, Managing Director	None
Director’s Current Positions at FPC & Other Companies		Chairman of Waterland Financial	None	Independent Director of CTCI Corporation and AU Optronics Corp.	Chairman of Formosa Plastics Corporation, U.S.A	Chairman of High Tech Computer Corporation	Consultant of Formosa Heavy Industries Corporation	Chairman of Y F Chemical Corporation
Experience (Education) (Note 3)		Ph.D. of Economic, Paris of University	Ph.D. of Education, National Taiwan Normal University	Ph.D. of Massachusetts Institute of Technology	BA of Chemical Engineering, National Cheng Kung University	BA of Economics, University of California, Berkeley	BA of Mechanical Engineering, Chung Yuan Christian University	BA of Industrial Administration , University of San Francisco
Shareholding by Nominee Arrangement	％	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Shares	0	0	0	0	0	0	0
Spouse & Minor Shareholding	％	0.00	0.00	0.00	0.00	0.00	0.59	0.00
	Shares	0	0	166,403	0	0	37,470,112	0
Current Shareholding	％	0.00	0.00	0.00	0.03	0.12	0.00	0.44
	Shares	0	0	0	1,846,541	7,369,380	134,537	27,824,363
Shareholding when Elected	％	0.00	0.00	0.00	0.01	0.12	0.00	0.44
	Shares	0	0	0	632,541	7,369,380	134,537	27,824,363
Date First Elected (Note2)		Jun 5 2009	Jun 19 2012	Jun 20 2018	Mar 20 1973	Jun 5 2009	Apr 26 1994	May 17 2000
Term (Years)		3	3	3	3	3	3	3
Date Elected		Jun 20 2018	Jun 20 2018	Jun 20 2018	Jun 20 2018	Jun 20 2018	Jun 20 2018	Jun 20 2018
Gender		Male	Male	Male	Male	Female	Male	Male
Name		C. L. Wei	C. J. Wu	Yen-Shiang Shih	C. T. Lee	Cher Wang	K. H. Wu	Ralph Ho
Nationality/ Place of Registration		R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C
Title (Note 1)		Managing Director (Independent Director)	Independent Director	Independent Director	Director	Director	Director	Director

Remark (Note 4)	Remark (Note 4)
Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Relation	None	None	None	None
	Name	None	None	None	None
	Title	None	None	None	None
Director’s Current Positions at FPC & Other Companies		Executive Vice President of FPC	Consultant of FPC	Senior Vice President of FPC	Vice President of FPC
Experience (Education) (Note 3)		BA of Chemical Engineering, Taipei Institute of Technology	BA of Chemistry, National Chung Hsing University	BA of Business Administration , National Chengchi University	BA of Chemical Engineering, Tunghai University
Shareholding by Nominee Arrangement	％	0.00	0.00	0.00	0.00
	Shares	0	0	0	0
Spouse & Minor Shareholding	％	0.00	0.00	0.00	0.00
	Shares	0	0	0	0
Current Shareholding	％	0.00	0.00	0.00	0.00
	Shares	10,400	0	0	0
Shareholding when Elected	％	0.00	0.00	0.00	0.00
	Shares	10,400	0	0	0
Date First Elected (Note2)		Jun 20 2018	Jun 19 2012	Jun 20 2018	Jun 20 2018
Term (Years)		3	3	3	3
Date Elected		Jun 20 2018	Jun 20 2018	Jun 20 2018	Jun 20 2018
Gender		Male	Male	Male	Male
Name		K. L. Huang	Cheng-Chung Cheng	Jerry Lin	Ching-Lian Huang
Nationality/ Place of Registration		R.O.C	R.O.C	R.O.C	R.O.C
Title (Note 1)		Director	Director	Director	Director

Table 1: Major shareholders of the institutional shareholders

Table 1: Major shareholders of the institutional shareholders	Table 1: Major shareholders of the institutional shareholders
		2021.4.25
Name of Institutional Shareholders(Note1)	Major Shareholders(Note 2)	Shareholding Ratio
Formosa Chemicals & Fibre Corp.	Chang Gung Medical Foundation Chindwell International Investment Corp. Vanson International Investment Co., Ltd. Formosa Plastics Corp. Nanya Plastics Corp. William Wong Fubon Life Assurance Co.,Ltd. Consolidated Power Development Corp. Standard Chartered Bank (Taiwan) Ltd. in custody for Genesis Equity Group Inc. HSBC Bank (Taiwan) Limited in custody for Consolidated Power Development Corp.	18.58% 6.35% 3.80% 3.39% 2.40% 2.20% 2.06% 1.63% 1.50% 1.41%
Nanya Plastics Corp.	Chang Gung Medical Foundation Formosa Plastics Corp. Formosa Chemicals & Fibre Corp. Chang Gung University Vanson International Investment Co., Ltd. Formosa Petrochemical Corp. Chindwell International Investment Corp. LGT Bank (Singapore) Ltd. Citibank Taiwan Limited in custody for Macro System Corp. Credit Suisse AG-Credit Suisse Singapore Branch	11.05% 9.88% 5.21% 4.00% 2.39% 2.26% 1.86% 1.51% 1.43% 1.20%
Formosa Petrochemical Corp.	Formosa Plastics Corp. Formosa Chemicals & Fibre Corp. Nanya Plastics Corp. Chang Gung Medical Foundation Formosa Taffeta Co., Ltd. Standard Chartered Bank (Taiwan) Ltd. in custody for Genesis Equity Group Inc. New Labor Pension Fund HSBC Bank (Taiwan) Limited in custody for Power Unlimited Corporation Standard Chartered Bank (Taiwan) Ltd. in custody for Central Capital Management Inc. HSBC Bank (Taiwan) Limited in custody for Pacific Light and Power Corporation	28.56% 24.15% 23.11% 5.79% 3.83% 0.60% 0.59% 0.51% 0.49% 0.48%

Note 1: Directors acting as the representatives of institutional shareholders shall indicate the names of the institutional shareholders.

Note 2: The name of major shareholders of the institutional shareholders (top-10 in terms of shareholding percentage) and the holding percentage of each shall be noted. If any of those shareholders is an institutional shareholder should fill out the following table 2.
Note 3: If the institutional shareholder is not a company, the names and shareholding ratio of shareholders to be disclosed are the names of people who contributed or donated the capital and the ratio of their contribution or donation.

Table 2: Major shareholders of the Company’s major institutional

shareholders in Table 1 2021.4.25

Name of Institutional Shareholders (Note 1)	Major Shareholders (Note 2)	Shareholding (Donation) Ratio(Note 4)
Chang Gung Medical Foundation (Note 5)	Nanya Plastics Corp. Formosa Chemicals & Fibre Corp. Formosa Plastics Corp. Yung-Tsai Wang Yung-ChingWang	19.51% 15.02% 14.41% 12.19% 7.97%
Chindwell International Investment Corp.	Everred Corporate, Inc.	100.00%
Vanson International Investment Co.,Ltd.	Landmark Capital Holdings Inc.	100.00%
Fubon Life Assurance Co.,Ltd.	Fubon Financial HoldingCo.,Ltd.	100.00%
Consolidated Power Development Corp.	Cabo de Roca Corporation	100.00%
Standard Chartered Bank (Taiwan) Ltd. in custody for Genesis EquityGroupInc.	Investment account	-
HSBC Bank (Taiwan) Limited in custody for Consolidated Power Development Corp.	Investment account	-
Chang Gung University (Note 5)	Chang Gung Medical Foundation Yung-Ching Wang Chindwell International Investment Corp. Nanya Plastics Corp. Formosa Plastics Corp.	57.08% 13.19% 3.90% 2.57% 2.27%
LGT Bank(Singapore)Ltd.	Investment account	-
Citibank Taiwan Limited in custody for Macro System Corp.	Investment account	-

Name of Institutional Shareholders (Note 1)	Major Shareholders (Note 2)	Shareholding (Donation) Ratio(Note 4)
Credit Suisse AG- Credit Suisse Singapore Branch	Investment account	-
Formosa Taffeta Co., Ltd.	Formosa Chemicals & Fibre Corp. Chang Gung Medical Foundation Yuanta/P-shares Taiwan Dividend Plus ETF Yu Yuang Textile Co., Ltd. Min- Xiong Lai Chang Gung University Chang Gung University of Science and Technology Ming Chi University of Technology Taiwan Life Insurance Co., Ltd. Asia- Pacific Investment Corporation	37.40% 5.79% 3.48% 2.55% 2.43% 2.20% 2.13% 1.87% 1.59% 1.43%
New Labor Pension Fund	Not appliable	-
HSBC Bank (Taiwan) Limited in custody for Power Unlimited Corporation	Investment account	-
Standard Chartered Bank (Taiwan) Ltd. in custody for Central Capital Management Inc.	Investment account	-
HSBC Bank (Taiwan) Limited in custody for Pacific Light and Power Corporation	Investment account	-

Note 1: If any major shareholder listed in Table 1 is an institutional shareholder, it shall indicate the institutional shareholder’s name.
Note 2: The major shareholders of the corporation (top-10 in terms of shareholding percentage) and the holding percentage of each shall be noted.
Note 3: If the institutional shareholder is not a company, the names and shareholding ratio of shareholders to be disclosed are the names of people who contributed or donated the capital and the ratio of their contribution or donation.
Note 4: Ratio of the contribution or donation is calculated by the cumulative amount of donations over the years and the amount of donated stocks is calculated based on the par value.
Note 5: Ratio of the donation of Chang Gung Medical Foundation is calculated by the cumulative amount of donation by December 31, 2020. Ratio of the donation of Chang Gung University is calculated by the cumulative amount of donation by the end of semester of 2019 (as July 31, 2020).

Number of other public	companies in which the individual is concurrently serving as an independent director	0	0	0	0	2	0	2	0	0	0	0	0	0	0	0
Independence Criteria(Note 2)	12															
	11															
	10															
	9															
	8															
	7															
	6															
	5															
	4															
	3															
	2							
	1											
Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience	Have work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company															
	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company						
	An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college or university							
Criteria	Name (Note 1)	Jason Lin	William Wong, Representative of Formosa Chemicals & Fibre Corp.	Susan Wang, Representative of Nanya Plastics Corp.	Wilfred Wang, Representative of Formosa Petrochemical Corp.	C. L. Wei	C. J. Wu	Yen-Shiang Shih	C. T. Lee	Cher Wang	K. H. Wu	Ralph Ho	K. L. Huang	Cheng-Chung Cheng	Jerry Lin	Ching-Lian Huang

Operation Management Background and Decision Management Ability	~~Financial and~~ Accounting ~~Analysis~~	~~Financial and~~ Accounting ~~Analysis~~					
	International Perspective							
	Industry Knowledge							
	Leadership Decision							
	Business Management							
Industry Experience	Education							
	Technology						
	Finance						
	Petrochemical							
Basic Information	Term of office of Independent Director	Over 9 years					
		3-9 years						
		Less than 3 years
	Age	Over 71 years old					
		61-70 years old						
		51-60 years old			
	Also serves as an employee of the Company				
	Gender		Male	Male	Female	Male	Male	Male
	Nationality		R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C
	Name		Jason Lin	William Wong, Representative of Formosa Chemicals & Fibre Corp.	Susan Wang, Representative of Nanya Plastics Corp.	Wilfred Wang, Representative of Formosa Petrochemical Corp.	C. L. Wei	C. J. Wu
	Title		Chairman	Managing Director	Managing Director	Managing Director	Managing Director (Independent Director)	Independent Director

			Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.	Independent Director Yen-Shiang Shih R.O.C Male            Director C. T. Lee R.O.C Male          Director Cher Wang R.O.C Female         Director K. H. Wu R.O.C Male        Director Ralph Ho U.S.A Male        Director K. L. Huang R.O.C Male         Director Cheng-Chung Cheng R.O.C Male         Director Jerry Lin R.O.C Male          Director Ching-Lian Huang R.O.C Male         (2) In order to reach gender equal in Board’s numbers, the Company set the target that at least 10% of Directors should be female.. The Compnay includes 2 female Directors, accounted for 13% of the Board’s numbers, which reached the goal we set. Moreover, in order to ehhance the supervisor fuction of Board of Director, the Company set the target that at least 25% of Directors should be as Independent Directors. The Company includes 3 Independent Directors now, accounted for 20% of the Board’s numbers. For reaching the target, the Company will increase the ratio of the Independent Directors at the next directors reelection.
Operation Management Background and Decision Management Ability	~~Financial and~~ Accounting ~~Analysis~~										
	International Perspective										
	Industry Knowledge										
	Leadership Decision										
	Business Management										
Industry Experience	Education		
	Technology									
	Finance		
	Petrochemical										
Basic Information	Term of office of Independent Director	Over 9 years
		3-9 years
		Less than 3 years	
	Age	Over 71 years old							
		61-70 years old									
		51-60 years old								
	Also serves as an employee of the Company										
	Gender		Male	Male	Female	Male	Male	Male	Male	Male	Male
	Nationality		R.O.C	R.O.C	R.O.C	R.O.C	U.S.A	R.O.C	R.O.C	R.O.C	R.O.C
	Name		Yen-Shiang Shih	C. T. Lee	Cher Wang	K. H. Wu	Ralph Ho	K. L. Huang	Cheng-Chung Cheng	Jerry Lin	Ching-Lian Huang
	Title		Independent Director	Director	Director	Director	Director	Director	Director	Director	Director

Remark (Note 3)		Note 3
Managers who are Spouses or Within Two Degrees of Kinship	Relation	-	-	-	-	-	-	-	-	-
	Name	-	-	-	-	-	-	-	-	-
	Title	-	-	-	-	-	-	-	-	-
Current Position at Other Companies		Chairman of Formosa Sumco Technology Corp., President of Formosa Plastics Corp., U.S.A	None	None	None	None	None	None	None	None
Experience(Education) (Note 2)		Master of Science in Environmental Sciences, Wageningen Agricultural University	Taipei Institute of Technology	BA of Business Administration, National Chengchi University	BA of Chemical Engineering, Tsing Hua University	BA of Mechanical Engineering, National Chiao Tung University	BA of Chemical Engineering, National Cheng Kung University	Master of Chemistry, National Taiwan University	BA of Chemical Engineering, National Central University	BA of Chemical Engineering, Chung Yuan Chtistian University
Shareholding by Nominee Arrangement	％	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Shares	0	0	0	0	0	0	0	0	0
Director’s Spouse & Minor Shareholding	％	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Shares	0	0	0	0	0	0	944	0	0
Shareholding	％	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Shares	0	10,400	0	0	0	6,268	0	16,141	0
Date Effective		Aug 11, 2015	Mar 23, 2017	Mar 23, 2017	Mar.17, 2021	Mar.17, 2021	Mar.17, 2021	Jun 20, 2011	May 8, 2016	Mar.17, 2021
Gender		Male	Male	Male	Male	Male	Male	Male	Male	Male
Name		Jason Lin	K. L. Huang	Jerry Lin	Wen-Bee Kuo	Tony Liang	Ming-Hung Cheng	Kwang-Ming Chen	Jen-Long Wu	Han-Sheung Wang
Nationality		R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C	R.O.C
Title (Note 1)		President	Executive Vice President	Senior Vice President	Acting Senior Vice President	Acting Senior Vice President	Plastics Division Acting Vice President	Polypropylene Division Vice President	Polyolefin Division Vice President	Tairylan Division Acting Vice President

Remark (Note 3)
Managers who are Spouses or Within Two Degrees of Kinship	Relation	-	-	-	-	-
	Name	-	-	-	-	-
	Title	-	-	-	-	-
Current Position at Other Companies		None	None	None	Financial Officer of Nanya Printed Circuit Board Corp.	None
Experience(Education) (Note 2)		BA of Chemical Engineering, National Central University	Taipei Institute of Technology	Ming Chi Institute of Technology	Master of Business Administration, National Taiwan University	BA of Accounting, National Cheng Kung University
Shareholding by Nominee Arrangement	％	0.00	0.00	0.00	0.00	0.00
	Shares	0	0	0	0	0
Director’s Spouse & Minor Shareholding	％	0.00	0.00	0.00	0.00	0.00
	Shares	0	145	0	0	1,323
Shareholding	％	0.00	0.00	0.00	0.00	0.00
	Shares	1,000	0	0	0	674
Date Effective		Mar.17, 2021	Mar.17, 2021	Mar.17, 2021	Dec 26, 2011	Dec 25, 2015
Gender		Male	Male	Male	Male	Male
Name		Yeats Yeh	Chao-Jung Chen	Y.Y. Lee	Ray Lei	Chia-Tse Chang
Nationality		R.O.C	R.O.C	R.O.C	R.O.C	R.O.C
Title (Note 1)		Chemicals Division Acting Vice President	Eng. & Const. Division Acting Vice President	Electronic Materials Division Acting Vice President	Financial Officer	Accounting and Corporate Governance Officer

Duty	Manage the Group of Plastics	Manage the Group of Chemistry	Manage Plastics Division	Manage Tairylan Division	Manage Chemicals Division	Manage Eng. & Const. Division	Manage Economic Materials Division
New Manager	Acting Senior Vice President	Acting Senior Vice President	Acting Vice President	Acting Vice President	Acting Vice President	Acting Vice President	Acting Vice President
	Wen-Bee Kuo	Tony Liang	Ming-Hung Cheng	Han-Sheung Wang	Yeats Yeh	Chao-Jung Chen	Y.Y. Lee
Origngal Manager	Consultant	Consultant	Vice President	Vice President	Vice President	Vice President	Assistant Manager
	Cheng-Chung Cheng	Dong-Qin Ji	Wen-Bee Kuo	Tony Liang	Tien-Hsiang Lee	Jian-San Yang	Y.Y. Lee

Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary or Parent Company (Note 11)	Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary or Parent Company (Note 11)	Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary or Parent Company (Note 11)	Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary or Parent Company (Note 11)	42,666	42,666	42,666	42,666	42,666	42,666	42,666	42,666	42,666	42,666	42,666	42,666	None	None	None
Ratio of Total Compensation (A+B+C+D+E+F+G ) to Net Income (%) (Note 10)		Companies in the consolidated financial statements		0.3099												0.0292
		The company		0.3099												0.0292
Relevant Remuneration Received by Directors Who are Also Employees	Employee Compensation (G) (Note 6)	Companies in the consolidated financial statements (Note 7)	Stock	0												0
			Cash	103												0
		The company	Stock	0												0
			Cash	103												0
	Severance Pay (F)	Companies in the consolidated financial statements (Note 7)		526												0
		The company		526												0
	Salary, Bonuses, and Allowances (E) (Note 5)	Companies in the consolidated financial statements (Note 7)		59,675												0
		The company		59,675												0
Ratio of Total Remuneration	(A+B+C+D) to Net Income (%) (Note 10)	Companies in the consolidated financial statements		0.0089												0.0292
		The company		0.0089												0.0292
Director’s Remuneration	Allowances (D)(Note 4)	Companies in the consolidated financial statements (Note 7)		590												450
		The company		590												450
	Directors Compensation (C)(Note 3)	Companies in the consolidated financial statements (Note 7)		0												0
		The company		0												0
	Severance Pay (B) (Note 2)	Companies in the consolidated financial statements (Note 7)		0												0
		The company		0												0
	Base Compensation (A)	Companies in the consolidated financial statements (Note 7)		1,200												5,400
		The company		1,200												5,400
		Name (Note 1)		Jason Lin	William Wong, Representative of Formosa Chemicals & Fibre Corp.	Susan Wang, Representative of Nanya Plastics Corp.	Wilfred Wang, Representative of Formosa Petrochemical Corp.	C. T. Lee	Cher Wang	K. H. Wu	Ralph Ho	K. L. Huang	Cheng-Chung Cheng	Jerry Lin	Ching-Lian Huang	C. L. Wei	C. J. Wu	Yen-Shiang Shih
		Title		Chairman	Managing Director	Managing Director	Managing Director	Director	Director	Director	Director	Director	Director	Director	Director	Managing Director (Independent Director)	Independent Director	Independent Director

Total of (A+B+C+D+E+F+G)	Compensation Paid to Directors from Parent Company and Invested Companies (Note 11) I	Cher Wang, Formosa Chemicals & Fibre Corp., Nanya Plastics Corp., Formosa Petrochemical Corp.	C. L. Wei, C. J. Wu, Yen-Shiang Shih, Ralph Ho	None	K. H. Wu	Susan Wang, C. T. Lee, K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Ching-Lian Huang	None	Jason Lin, William Wong, Wilfred Wang	None	None	None	18
	The company (Note 8)	William Wong, Wilfred Wang, Cher Wang, K. H. Wu, Formosa Chemicals & Fibre Corp., Nanya Plastics Corp., Formosa Petrochemical Corp.	C. L. Wei, C. J. Wu, Yen-Shiang Shih, Ralph Ho	None	None	Susan Wang, C. T. Lee, K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Ching-Lian Huang	None	Jason Lin	None	None	None	18
Total of (A+B+C+D)	Companies in the consolidated financial statements (Note 9) H	Jason Lin, William Wong, Susan Wang, Wilfred Wang, C. T. Lee, Cher Wang, K. H. Wu , K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Ching-Lian Huang, Formosa Chemicals & Fibre Corp., Nanya Plastics Corp., Formosa Petrochemical Corp.	C. L. Wei, C. J. Wu, Yen-Shiang Shih, Ralph Ho	None	None	None	None	None	None	None	None	18
	The company (Note 8)	Jason Lin, William Wong, Susan Wang, Wilfred Wang, C. T. Lee, Cher Wang, K. H. Wu , K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Ching-Lian Huang, Formosa Chemicals & Fibre Corp., Nanya Plastics Corp., Formosa Petrochemical Corp.	C. L. Wei, C. J. Wu, Yen-Shiang Shih, Ralph Ho	None	None	None	None	None	None	None	None	18
	Range of Remuneration	Under NT$1,000,000	NT$1,000,00 ~ NT$1,999,999	NT$2,000,000 ~ NT$3,499,999	NT$3,500,000 ~ NT$4,999,999	NT$5,000,000 ~ NT$9,999,999	NT$10,000,000 ~ NT$14,999,999	NT$15,000,000 ~ NT$29,999,999	NT$30,000,000~ NT$49,999,999	NT$50,000,000 ~ NT$99,999,999	Over NT$100,000,000	Total

Compensation Paid to the President and Vice Presidents from an Invested Company Other than the Company’s Subsidiary or Parent Company (Note 9)	Compensation Paid to the President and Vice Presidents from an Invested Company Other than the Company’s Subsidiary or Parent Company (Note 9)	Compensation Paid to the President and Vice Presidents from an Invested Company Other than the Company’s Subsidiary or Parent Company (Note 9)	60	60	60	60	60	60	60	60	60	60	60	60	Compensation Paid to Directors from Partent Company and Invested Companies (Note 7)E	None	None	Tony Liang	Wen-Bee Kuo	K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Dong-Qin Ji, Ching-Lian Huang, Kwang-Ming Chen, Jen-Long Wu, Tien-Hsiang Lee, Jiann-San Yang	None	Jason Lin	None	None	None	12
Ratio of total compensation (A+B+C+D) to net income (%)(Note 8)	Companies in the consolidated financial statements		0.3952
	The company		0.3952
Employee Compensation (D) (Note 4)	Companies in the consolidated financial statements (Note 5)	Stock	0
		Cash	188
	The company	Stock	0
		Cash	188
															The company (Note 6)	None	None	Tony Liang	Wen-Bee Kuo	K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Dong-Qin Ji, Ching-Lian Huang, Kwang-Ming Chen, Jen-Long Wu, Tien-Hsiang Lee, Jiann-San Yang	None	Jason Lin	None	None	None	12
Bonuses and Allowances (C) (Note 3)	Companies in the consolidated financial statements (Note 5)		0
	The company		0
Severance Pay (B)	Companies in the consolidated financial statements (Note 5)		989
	The company		989
Salary (A) (Note 2)	Companies in the consolidated financial statements (Note 5)		78,003
	The company		78,003
	Name (Note 1)		Jason Lin	K. L. Huang	Cheng-Chung Cheng	Jerry Lin	Dong-Qin Ji	Ching-Lian Huang	Wen-Bee Kuo	Kwang-Ming Chen	Jen-Long Wu	Tony Liang	Tien-Hsiang Lee	Jiann-San Yang	Range of Remuneration	Under NT$1,000,000	NT$1,000,000 ~ NT$1,999,999	NT$2,000,000 ~ NT$3,499,999	NT$3,500,000 ~ NT$4,999,999	NT$5,000,000 ~ NT$9,999,999	NT$10,000,000 ~ NT$14,999,999	NT$15,000,000 ~ NT$29,999,999	NT$30,000,000~ NT$49,999,999	NT$50,000,000 ~ NT$99,999,999	Over NT$100,000,000	Total
	Title		President	Executive Vice President	Consultant (Note 10)	Senior Vice President	Consultant (Note 10)	Vice President (Note 10)	Acting Vice President	Vice President	Vice President	Acting Vice President	Consultant (Note 10)	Consultant (Note 10)

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0.0010
2020.12.31
；
)
％
Ratio of Total Amount to Net Income (
Unit: NT$ thousands
192
Total
192
-in Cash
Employee
Compensation
0
Employee -in Stock
Compensation
Name(Note 1)
Jason Lin K. L. Huang Cheng-Chung Cheng Jerry Lin Dong-Qin Ji Ching-Lian Huang Wen-Bee Kuo Tony Liang Tien-Hsiang Lee Jian-San Yang Kwang-Ming Chen Jen-Long Wu Ray Lei Chia-Tse Chang
(Note 5) (Note 5)
Title(Note 1)
ompensation of Managers
President Executive Vice President Consultant (Note 5) Senior Vice President Consultant (Note 5) Vice President (Note 5) Vice President Vice President Consultant Consultant Vice President Vice President Financial Officer Accounting and Corporate Governance Officer
C
recent year’s earnings adopted at a meeting of Board of Directors. If such amount is unable to be estimated, the amount can be determined in accordance with the actual distribution ratio for last year. It refers to the net income of the recent year. After the adoption of IFRS, it refers to the net income in the parent company only financial reports or individual financial reports of the recent year. Commission as follows: (1) President and the equals (2) Vice President and the equals (3) Assistant managers and the equals (4) Head of Department of Finance (5) Head of Accounting Department (6) Other people handling corporate affairs and signature rights If Directors, President, and Senior Vice President have collected employee remuneration (including stock and cash), in addition to filling out the above table, and it shall fill in this table too.
Managers Note 1: Names and job title of each individual should be separately disclosed. The amount of remunerations can be disclosed in summary. Note 2: It refers to the employee remuneration (including stock and cash) received by the managerial officers that is distributed in accordance with the proposal for distributing the Note 3: The scope of application for managers is defined in accordance with the Tai-Tsai-Cheng-San No. 0920001301 Letter dated March 27, 2003 by the Securities and Future Note 4: Note 5: Cheng-Chung Cheng, Dong-Qin Ji, Ching-Lian Huang, Tien-Hsiang Lee and Jiann-San Yang resigned the managers duty from March 17, 2021.
3.3.4 Employee
----- End of picture text -----

3.3.5 Comparison of Remuneration for Directors, Supervisors, President and Vice Presidents in the Two Most Recent Fiscal Years and Remuneration Policy for Directors, Supervisors, President and Vice Presidents
The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, president and vice presidents of the Company, to the net income. Unit: ％

residents of the Company	,to the net inco	me. Unit:％
Year Item	2020	2019
Directors	0.3391	0.1913
President and Vice Presidents	0.3952	0.2002

Explanation:

A.Remuneration of directors includes the Directors who are adjunct managers.
B.The ratios of total remuneration of Directors, Presidents and Vice Presidents to the after-tax net income in 2020 are higher than in 2019, because the after-tax net income was down 46.32 ％ from 2019 to 2020.
The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with risks and business performance.
A. Remuneration of the Company’s Directors and managers is submitted to Remuneration Committee and Board of Directors for approval.
B. According to Articles 28 of the Association of FPC, the Board of Directors are authorized to determine the remuneration amount based on a Director’s involvement in the Company’s operations and his/her contribution values and in comparison with payments in other business of the same industry. However, Independent Directors receive a fixed monthly remuneration, as well as reimbursement for transportation expenses based on their actual attendance of the Board meetings. Other Directors only receive reimbursement for transportation expenses based on their actual attendance of the Board meetings.
C. On June 5, 2009, the Shareholders’ Meeting approved to cancel the policy of paying the Directors’ Remuneration from earning.
D. The Company had replace supervisors with audit committee from June 26, 2015.

E. The remuneration of the Company’s president, vice presidents and managers is determined in accordance with the Article 36 of Association of FPC and Article 29 of Company Act. The remuneration includes fixed monthly salary, diligence bonus, year-end bonus, supervisor bonus, severance pay and other welfare. The fixed monthly salary is adjusted base on the standard of all employees’ salary adjustment and the annually individual performance including the manangement, finance, occupational safety, environmental sustainability and waster and energy saving, etc. assessed by Chairman and approved by Remuneration Committee.

3.4 Implementation of Corporate Governance

3.4.1 Board of Directors’ Meeting Status

A total of 7 (A) meetings of the Board of Directors were held in 2020. The attendance of director and supervisor was as follows:

Title	Name (Note1)	Attendance in Person(Ｂ)	By Proxy	Attendance Rate (%) 【Ｂ/Ａ】(Note2)
Chairman	Jason Lin	7	0	100.00
Managing Director	William Wong, Representative of Formosa Chemicals & Fibre Corp.	7	0	100.00
Managing Director	Susan Wang, Representative of Nanya Plastics Corp.	1	0	14.29
Managing Director	Wilfred Wang, Representative of Formosa Petrochemical Corp.	4	0	57.14
Managing Director (Independent Director)	C. L. Wei	7	0	100.00
Independent Director	C. J. Wu	7	0	100.00
Independent Director	Yen-Shiang Shih	7	0	100.00
Director	C.T.Lee	7	0	100.00
Director	CherWang	5	0	71.43
Director	K.H. Wu	0	0	0
Director	Ralph Ho	0	0	0
Director	K.L.Huang	7	0	100.00
Director	Cheng-Chung Cheng	7	0	100.00
Director	JerryLin	7	0	100.00
Director	Ching-Lian Huang	7	0	100.00
Other mentionable items: 1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (1)Matters referred to in Article 14-3 of the Securities and Exchange Act: The Company is not applied to Article 14-3 of the Securities and Exchange Act, because it had set up audit committee. The statements about Article 14-5 of the Securities and Exchange Act refer to “3.4.3 Audit Committee Meeting Status”. (2)Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writingthat require a resolution bythe Board of Directors: None.

If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (1)Matters referred to in Article 14-3 of the Securities and Exchange Act: The Company is not applied to Article 14-3 of the Securities and Exchange Act, because it had set up audit committee. The statements about Article 14-5 of the Securities and Exchange Act refer to “3.4.3 Audit Committee Meeting Status”.
(2)Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the Board of Directors: None.

If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:
(1) Board of Directors Meeting on March 17, 2020
- A. Name: Jason Lin, William Wong, Wilfred Wang, Cher Wang
- B. Proposal: To compile plan of lending funds for 2020 Q2.
- C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director or representative of the institutional shareholders of the borrowing company, or as a relative party within the second degree of kinship of a managing director the were recused from the discussion and voting.
(2) Board of Directors Meeting on March 17, 2020
- A. Name: Jason Lin, William Wong, Wilfred Wang, Cher Wang
- B. Proposal: Transaction with related parties, Nanya Plastics Corp., Formosa Heavy Industries Corp. and Formosa Technologies Corp..
- C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director of the company of equipment transaction, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting.
(3) Board of Directors Meeting on May 13, 2020
- A. Name: Jason Lin, William Wong, Wilfred Wang
- B. Proposal: To compile plan of lending funds for 2020 Q3.
- C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director or representative of the institutional shareholders of the borrowing company were recused from the discussion and voting.
(4) Board of Directors Meeting on May 13, 2020
- A. Name: Jason Lin, William Wong, Wilfred Wang
- B. Proposal: Transaction with related party, Nanya Plastics Corp., Formosa Heavy Industries Corp. and Formosa Petrochemical Transportation Corporation
- C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director of the company of equipment transaction were recused from the discussion and voting.
(5) Board of Directors Meeting on August 12, 2020
- A. Name: Jason Lin, William Wong, Cher Wang
- B. Proposal: To compile plan of lending funds for 2020 Q4.
- C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director or representative of the institutional shareholders of the borrowing company, or or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting.
(6) Board of Directors Meeting on August 12, 2020
- A. Name: Jason Lin, William Wong, Cher Wang
- B. Proposal: Transaction with related parties, Nanya Plastics Corp. and Formosa Heavy Industries Corp..
- C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director of the company of equipment transaction, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting.

(7) Board of Directors Meeting on August 12, 2020
A. Name: Jason Lin, C. T. Lee, K. L. Huang
B. Proposal: Increased to invest Formosa Industries Corporation.
C. Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors serve as Director of the invested company were recused from the discussion and voting.
(8) Board of Directors Meeting on November 11, 2020
A. Name: Jason Lin, William Wong, Cher Wang
B. Proposal: To compile plan of lending funds for 2021 Q1.
C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director or representative of the institutional shareholders of the borrowing company, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting.
(9) Board of Directors Meeting on November 11, 2020
A. Name: Jason Lin, William Wong, Cher Wang
B. Proposal: Transaction with related parties, Nanya Plastics Corp., Formosa Heavy Industries Corp. and Formosa Technologies Corp..
C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director or representative of the institutional shareholders of the company of equipment transaction, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting.
(10) Board of Directors Meeting on November 11, 2020
A. Name: Jason Lin, William Wong
B. Proposal: To donate Chang Gung University.
C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director of the university donated were recused from the discussion and voting.
(11) Board of Directors Meeting on November 11, 2020
A. Name: Jason Lin
B. Proposal: Increased to invest Formosa Plastics Construction Corp..
C. Causes of interest conflict avoidance and voting status: the above-mentioned Director serve as Director of the invested company was recused from the discussion and voting.
(12) Board of Directors Meeting on December 17, 2020
A. Name: Jason Lin, William Wong, Wilfred Wang
B. Proposal: Transaction with related parties, Formosa Heavy Industries Corp. and Formosa Technologies Corp..
C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director of the company of equipment transaction were recused from the discussion and voting.
(13) Board of Directors Meeting on December 17, 2020
A. Name: Jason Lin, William Wong, Susan Wang, Wilfred Wang, Cher Wang
B. Proposal: To issue a letter of support for bank loan of Formosa Ha Tinh (Cayman) Ltd..
C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director of the borrowing company from bank, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting.

  - (14) Board of Directors Meeting on December 17, 2020

     - A. Name: Jason Lin, William Wong, Susan Wang, Wilfred Wang, Cher Wang

     - B. Proposal: To issue a letter of support for bank loan of Formosa Ha Tinh Steel Corp..

     - C. Causes of interest conflict avoidance and voting status: the above-mentioned Directors serve as Director of the borrowing company from bank, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting.

  - (14) Board of Directors Meeting on August 12, 2020

     - A. Name: Jason Lin

     - B. Proposal: Increased to invest Formosa Mitsui Advanced Chemicals Co., Ltd..

     - C. Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors serve as Chairman of the invested company were recused from the discussion and voting.

TWSE/TPEx Listed Companies shall disclose the evaluation cycles, evaluation periods, scope and method of evaluation, the evaluation content of self-evaluation or peer evaluation of the Board of Directors: Board of Directors of the Company has approve the “Self-Evaluation of the Board of Directors” on August 12, 2020. According this rule, the Company conducts the implementation evaluation of the board of directors as a whole, individual board members, and each functional committee annually. The evaluation results refers to “3.4.2 Evaluation of the Implementation of the Board of Directors”.
4.Measures taken to strengthen the functionality of the Board:
(1)The operations of the Board of Directors of the Company are exercised in accordance with the provisions of the laws and regulations, the Articles of Association, and the resolutions of the Shareholders’ Meetings. All Directors, in addition to the professional knowledge and skills necessary to perform their duties, should strive for the best shareholder interests based on the principles of loyalty and integrity.
(2)The Company has elected 3 Independent Directors. In order to establish a good board governance system, sound supervision function and strengthen management functions, the Board of Directors agreed to established Remuneration Committees at August 29, 2011 according to the provisions of the securities authority. Moreover, in order to implement corporate governance, Remuneration Committee held the meeting to evaluate the manager salary and remuneration policy and rules on January 16 and August 12, 2020, respectively, and submit the suggestions to Board of Director for discussing.
(3)In addition to the annual review of the operation of the Board of Directors and the strengthening of the functions of the Board of Directors, the internal auditors also submit monthly audit reports on the operation of the Board of Directors to the Independent Directors before the end of the next month in compliance with the regulations of the competent securities authorities.
(4)In accordance with the provisions of the securities regulatory authority, the Board of Directors approved to set up an Audit Committee in order to replace the Supervisors on June 25, 2015. Audit Committee held the meeting on March 214, May 13, August 12, November 11 and December 16, 2020, respectively, and resolutions were submitted to the Board of Directors to implement corporate governance.

Note 1: Directors acting as the representatives of institutional shareholders shall indicate the names of the institutional shareholders.
Note 2: (1) If there is a director leaving the company before the end of the year, the date of departure should be indicated in the remarks column. The actual attendance rate (%) is calculated based on the number of meetings of the board of directors during the term of office and their actual attendance.
(2) Before the end of the year, if there are reelected directors, the new and outgoing directors should be filled in, and the remarks should indicate that the directors are new or outgoing, and reelection date. The actual attendance rate (%) is calculated based on the number of meetings of the board of directors during the term of office and their actual attendance.

3.4.2 Evaluation of the Implementation of the Board of Directors

Evaluation cycle	Evaluation period	Evaluation scope	Evaluation method	Evaluation content
Once annually	2019.10.01- 2020.09.30	Board of Directors	Self-evaluation of Directors	1. Participation level in the company’s operations 2. Improvement of the quality of the board of directors’ decision making 3.Composition and structure of the Board of Directors 4. Election of the directors and their continuing professional education 5. Internal control
Once annually	2019.10.01- 2020.09.30	Directors	Self-evaluation of Directors	1.Control of the company’s goal and mission 2. Acknowledge the duty of Directors. 3. Participation level in the company’s operations 4. Communication and relationship maintainance within the Board of Directors 5. Director’s profession and continuing professional education 6. Internal control

Evaluation cycle	Evaluation period	Evaluation scope	Evaluation method	Evaluation content
Once annually	2019.10.01- 2020.09.30	Audit Committee	Self-evaluation of Directors	1. Participation level in the company’s operations 2. Acknowledge the duty of Audit Committee 3. Improvement of the quality of Audit Committee’s decision making 4.Composition and structure, and election of Audit Committee 5. Internal control
Once annually	2019.10.01- 2020.09.30	Remuneration Committee	Self-evaluation of Directors	1. Participation level in the company’s operations 2.Acknowledge the duty of Remuneration Committee 3. Improvement of the quality of Remuneration Committee’s decision making 4. Composition and structure, and election of Remuneration Committee

3.4.3 Audit Committee Meeting Status

1.There are 3 members in Audit Committee.
2.The term of office: 2018.6.20~2021.6.19. A total of 6 (A) Audit Committee meetings were held in 2020. The attendance of the Audit Committee members was as follows:

Title	Name	Attendance in Person(Ｂ)	By Proxy	Attendance Rate (%)(Ｂ/Ａ)(Note)
Convener	C. L. Wei	6	0	100.00
Committee Member	C. J. Wu	6	0	100.00
Committee Member	Yen-Shiang Shih	6	0	100.00
Other mentionable items: 1.If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified: (1) Matters referred to in Article 14-5 of the Securities and Exchange Act. Date and Session of Board Meetng Contents 20120.03.17 (No.1 in 2020 ) 1.Proposal: (1)To formulate the business report and financial statement for 2019. (2)To compile plan of lending funds for 2020 Q2. (3)Transaction with related parties. (4)To formulate the Company’s internal control system statement. (5)To amend the procedure of financial statements formulation of “Internal Control Systems” and “Internal Audit Implementation Rules”. (6)To amend the “Audit Committee Charter”. 2.Audit Committee Resolution: All attendants approved the all above proposals and they were submitted to Board of Directors for approval. 3.The Company’s handling of the opinions of the Audit Committee: Board of Directors approved the all aboveproposals. 2020.05.13 (No.2 in 2020 ) 1.Proposal: (1)To amend “Internal Control Systems” and “Internal Audit Implementation Rules”. (2)To compile plan of lending funds for 2020 Q3. (3)Transaction with related parties. (4)To adjust investment structure of Formosa Ha Tinh Steel Corp.. 2.Audit Committee Resolution: All attendants approved the all above proposals and they were submitted to Board of Directors for approval. 3.The Company’s handling of the opinions of the Audit Committee: Board of Directors approved the all above proposals.

	2020.08.12 (No.4 in 2020 )	1.Proposal: (1)To compile plan of lending funds for 2020 Q4. (2)Transaction with related parties. (3)Increased to invest USD 185,000,000 to Formosa Industries Corporation. 2.Audit Committee Resolution: All attendants approved the all above proposals and they were submitted to Board of Directors for approval, except the first proposal reported to Board of Directors. 3.The Company’s handling of the opinions of the Audit Committee: Board of Directors approved the all aboveproposals.
	2020.09.25 (No.5 in 2020 )	1.Proposal: To invest a join venture with Tokuyama Corp. 2.Audit Committee Resolution: All attendants approved the above proposal and they were submitted to Board of Directors for approval. 3.The Company’s handling of the opinions of the Audit Committee: Board of Directors approved the aboveproposal.
	2020.11.11 (No.6 in 2020 )	1.Proposal: (1)To compile plan of lending funds for 2021 Q1. (2)Transaction with related parties. (3)To donate NT$ 6,120,673 to Chang Gung University. (4)Increased to invest NT$ 500,000,000 to Formosa Plastics Construction Corp.. 2.Audit Committee Resolution: All attendants approved the all above proposals and they were submitted to Board of Directors for approval. 3.The Company’s handling of the opinions of the Audit Committee: Board of Directors approved the all aboveproposals.
	2020.12.17 (No.7 in 2020 )	1.Proposal: (1)Transaction with related parties. (2)To issue a letter of support for bank loan of Formosa Ha Tinh (Cayman) Ltd.. (3)To issue a letter of support for bank loan of Formosa Ha Tinh Steel Corp.. (4)Increased to invest USD 4,600,000 to Formosa Mitsui Advanced Chemicals Co., Ltd.. 2.Audit Committee Resolution: All attendants approved the all above proposals and they were submitted to Board of Directors for approval. 3.The Company’s handling of the opinions of the Audit Committee: Board of Directors approved the all aboveproposals.
(2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors: None. 2.If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names,contents of motion,causes for avoidance and votingshould be specified: None.

(2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors: None.
2.If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: None.

3.Communications between the independent directors, the Company’s internal audit officer and CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.):
(1) Communication between Independent Directors and CPAs:
I. The Audit Committee of the Company consists of all Independent Directors. The CPAs are arranged to attend at least once a year to report to the Independent Directors about the financial status and overall operating results of the Company and its subsidiaries at home and abroad, and internal audit status. They also fully communicate any influence on accounting resulted from the changes in regulations.
II.Audit Committee also appoints CPAs to audit various reports and financial statements, which are prepared by the Board of Directors and delivered to shareholders, and submits a review report.
(2) Communication between Independent Directors and internal audit officer:
I. The revision of the “Internal Control Systems” and “Internal Audit Implementation Rules” of the Company shall be submitted to the Board of Directors for resolution after the approval of the Audit Committee.
II. The assessment of the effectiveness of the Company’s internal control system (issuing a statement) is submitted to the Board of Directors for resolution after the approval of the Audit Committee.
III. The internal auditing office of the Company will submit the internal audit report issued by the Company to the Independent Director for review each month.
IV. The internal audit plans for the next year prepared by the internal auditing office will be submitted to the Board of Directors for resolution before the end of fiscal year.
V. The Independent Directors and the internal audit officer shall communicate on the internal audit execution status and internal control operation status of the Company at least once a quarterly regular meeting. In addition to the audit report on the status of correction of defects and irregularities of internal control systems, the report shall be continued and follow up reminders to determine relevant units to take appropriate improvement measures in time.

Date	Meeting	Object	Content	Result
2020.3.17	Audit Committee	CPA	To explain the opinion and other matters of 2019 financial report.	Well and approved by Audit Committee
	Board of Directors	Internal Audit Officer	To report the execution status of the Company’s internal audit plan of the Nov. and Dec. of 2019.	Acknowledged
	Audit Committee	Internal Audit Officer	To formulate “Internal Control System Statement” of the Company.	Submitted to the Board of Directors for approval
	Board of Directors	Internal Audit Officer	To formulate “Internal Control System Statement” of the Company.	Approved by the Board of Directors
	Audit Committee	Internal Audit Officer	To amend the “Internal Control Systems” and “Internal Audit Implementation Rules”.	Submitted to the Board of Directors for approval
	Board of Directors	Internal Audit Officer	To amend the “Internal Control Systems” and “Internal Audit Implementation Rules”.	Approved by the Board of Directors

			To report the execution status of
	Board of Directors	Internal Audit Officer	the Company’s internal audit plan of the first quarter of 2020.	Acknowledged
2020.5.13	Audit Committee	Internal Audit Officer	To amend the “Internal Control Systems” and “Internal Audit Implementation Rules”.	Submitted to the Board of Directors for approval
	Board of Directors	Internal Audit Officer	To amend the “Internal Control Systems” and “Internal Audit Implementation Rules”.	Approved by the Board of Directors
			To report the status of correction
2020.6.10	Board of Directors	Internal Audit Officer	of defects and irregularities of internal control systems for	Acknowledged
			2019.
			To report the execution status of
2020.8.12	Board of Directors	Internal Audit Officer	the Company’s internal audit plan of the second quarter of	Acknowledged
			2020.
2020.11.11	Board of Directors	Internal Audit Officer	To report the execution status of the Company’s internal audit plan of the thirdquarter of 2020.	Acknowledged
2020.12.17	Board of Directors	Internal Audit Officer	To report the execution status of the Company’s internal audit plan of the Oct. of 2020.	Acknowledged
	Board of	Internal Audit	To formulate the Company’s	Approved by the
	Directors	Officer	internal auditplan in 2021.	Board of Directors

4.Annual work highlights and operation status:
(1) The Company’s Audit Committee is composed of 3 Independent Directors. A toal of 6 meetings were held in 2020. The discussion proposals and status of follow-up addressing refer to “1. resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion” and the work highlights are as follows:
- I. Amendments to the “Internal Control Systems” and “Internal Audit Implementation Rules”.
- II. Assessment of the effectiveness of the internal control system.
- III. Amendments to the Audit Committee Charter.
- IV. Rationality of matters in which a director is an interested party.
- V. Asset transactions of a material nature.
- VI. Loans of funds, endorsements, or provision of guarantees of a material nature.
- VII. Annual financial reports review.
(2) The Audit Committee will continue to assist the Board of Directors to supervise fair presentation of the financial reports, the hiring (and dismissal), independence, and performance of certificated public accountants, the effective implementation of the internal control system, compliance with relevant laws and regulations, management of the existing or potential risks of the Company in 2021.

Note:

＊ If there is an independent director leaving the company before the end of the year, the date of departure should be indicated in the remarks column. The actual attendance rate (%) is calculated based on the number of meetings of the audit committee during the term of office and their actual attendance.

＊ Before the end of the year, if there are reelected independent directors, the new and old directors should be filled in, and the remarks should indicate that the directors are new or outgoing, and reelection date. The actual attendance rate (%) is calculated based on the number of meetings of the audit committee during the term of office and their actual attendance.

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Consistent with Article 1 and Article 2 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. The “Principles of Corporate Governance” established by the Company adheres to the principles of the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” with minor amendments based on the Company’s actual practices.	In compliance with Article 13 of the Corporate Governance
Implementation Status(Note)	Summary	The Company passed the resolution of the Board of Directors on November 11, 2014 and set Principles of Corporate Governance, which was disclosed on the information reporting website designated by the securities authority and the Company’s website.	(1) The Company has an internal operating procedure for handling shareholder matters and has set up a spokesperson to address shareholder suggestions or concerns at any time. In
	No
	Yes	V	V
	Evaluation Item	1. Did the Company establish and disclose the Corporate Governance Best Practice Principles based on “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”?	2. Shareholding structure and shareholders’ rights (1) Did the Company establish an internal operating procedure to deal with shareholders’

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Best Practice Principles for TWSE/TPEx Listed Companies. In compliance with Article 19 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. In compliance with Article 14 to Article 17 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
Implementation Status(Note)	Summary	addition, each functional team in the President Office fully supported the above matters, and have an in-depth understanding and review of the shareholders’ suggestions or concerns. After that, an oral or written reply to the satisfaction of the shareholders is proposed. (2) The Company shall pay attention to the situation of any increase, decrease or use as collateral in the shares of shareholders holding more than 5% of shares and holding Director or manager positions, and has disclosed the information of shareholders holding more than 5% of shares in the quarterly financial report. The Directors, managers and shareholders holding more than 10% of the shares are disclosed monthly by the information reporting website designated by the securities authority. (3) a.Both the Company and its subsidiaries implement profit center management. Each company’s personnel, property management rights and responsibilities are clearly divided, and there are no irregular transactions. b.The funds and loans of the Company and its related companies are calculated based on the accrued market interest rate. The amount of loan is reassessed every quarter based on business needs. Guaranteed coverage and limits have also been set for endorsement guarantees for other companies.
	No
	Yes	V V
	Evaluation Item	suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Did the Company maintain a register of major shareholders with controlling power as well as a register of persons exercising ultimate control over those major shareholders? (3) Did the Company establish and execute the risk management and firewall systems with its affiliated businesses?

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	In compliance with Article 10-3 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.	In compliance with Article 20 of the Corporate Governance Best Practice Principles
Implementation Status(Note)	Summary	c.To reduce losses, comprehensive risk assessment for banks, customers, and suppliers are performed. Each company credit authorization to the same customer and stop payment to the same supplier can be review through the computer system. d.The relationship between the Company and the related companies, such as transaction management, endorsement, loans, etc., are monitored. In accordance with the “Regulations Governing Establishment of Internal Control Systems by Public Companies”, outlined by the Financial supervisory Commission, the Company has set up supervision and management operations to implement the risk control mechanism for its subsidiaries. (4) The Company has established “Personnel Management Rules,” and “Guidelines for Prevention of Insider Trading” to forbid using undisclosed information to buy and sell securities for illegal profits. The employees also receive training to comply with relevant regulations.	(1) Article 20 of Principles of Corporate Governance of the Company states that diversified backgrounds of the Company's Directors should be considered when forming the Board of Directors. Gender and nationality of the Board
	No
	Yes	V	V
	Evaluation Item	(4) Did the Company establish internal rules that prohibit Company insiders from trading securities using undisclosed information?	3. Composition and responsibilities of the Board of Directors: (1) Did the Board develop and implement a diversified policy for the composition of its members?

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	for TWSE/TPEx Listed Companies. In compliance with Article 28 and Article 28-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. Article 28-2 has not been met, since the Company is able to nominate suitable and appropriate Director candidates, and there is no operational need to set up a Nomination Committee.
Implementation Status(Note)	Summary	members shall not be limited, and the overall Board shall possess the following abilities: to make operational judgments, to perform accounting and financial analysis, to conduct management administration, to conduct crisis management, to possess knowledge of the industry and an international market perspective, as well as to have abilities to lead and to make policy decisions. The Board of Directors of the Comany include 15 Directors including 3 Independent Directors and 2 female Directors Please refer to Page 47-48 of this annual report for implementation of the Board members' diversification policy. (2) The Company has set up a remuneration committee after the resolution of the Board of Directors on August 29, 2011. The Board of Directors also resolved on June 25, 2015 to set up the Audit Committee. At present, apart from the above two committees, the Company has not set up any other functional committees.
	No	V
	Yes
	Evaluation Item	(2) In addition to establishing the Remuneration Committee and Audit Committee according to the regulations, has the Company voluntarily established other functional committees?

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Not yet in compliance with Article 37-2 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, with items yet to be completed in 2020 accordingly. In compliance with Article 29 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
Implementation Status(Note)	Summary	(3) The Company has established the "Self-Evaluation or Peer Evaluation of the Board of Directors" upon resolution from the Board of Directors on August 12, 2020. The performance evaluation for 2020 has also been completed, and the results of which have been submitted to the Board meeting convened on December 17, 2020. The preceding information could serve as references in determining remunerations, nomination, and re-election of the Company Directors. (4) The Company evaluates the independence and competence of CPAs at least once a year, focusing on the size and reputation of the accounting firm, the number of consecutive years of providing audit services, the nature and extent of providing non-audit services, the audit fees, peer review, whether there are any legal proceedings or investigations by the competent authorities, quality of audit services, regular training, interaction with management and internal audit supervisors, etc. Relevant information and statements are requested from CPAs and the firms. The documents are then evaluated by the President Office, and the latest results have been submitted to the Board of Directors on March 17, 2020.
	No	V
	Yes	V
	Evaluation Item	(3) Did the Company establish a standard to measure the performance of the Board of Directors and implement it annually? Did the Company submit the results of performance assessments to the board of directors and use them as reference in determining remuneration for individual directors, their nomination, and additional office term? (4) Did the Company regularly evaluate the independence of CPAs?

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	In compliance with Article 3-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.	In compliance with Article 51 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
Implementation Status(Note)	Summary	(1) The Company has set up a Chief Governance Officer as the most senior manager in charge of corporate governance-related tasks on May 7, 2019. Appropriate personnel have also been designated to handle corporate governance tasks. (2) The officer supervises President Office, which is responsible for corporate governance-related matters and is assisted by the relevant departments such as the Legal Affairs Office of the General Administrative Office, which includes handling Board of Directors and shareholders meetings, taking minutes of such meetings, assisting Directors come to office and continue training, providing Directors relevant information for operations, assisting Directors compliance with law and regulations, and so on. (3) The traning records of Chief Governance Officer refers to Page 125 of this annual report.	(1) The Company instructs the President Office to communicate with stakeholders depending on the situation. A spokesperson and a deputy spokesperson have been appointed as the external communication channel. (2) The Company set up the stakeholder area on the Company website to provide detailed contact information for the dedicated personnel, including phone number and e-mail, as the channels for the stakeholders to communicate with the Company.
	No
	Yes	V	V
	Evaluation Item	4. Did the TWSE/TPEx listed company have designated appropriate personnel to handle corporate governance tasks and set up a Chief Governance Officer as the most senior manager in charge of corporate governance-related tasks (including but not limited to providing information required for Director/Supervisor’s operations, convening board/shareholder meetings in compliance with the law, apply for/change Company registry and producing meeting minutes of board/shareholder meetings)?	5. Has the Company established a communication channel with stakeholders (including but not limited to shareholders, employees, customers and suppliers)? Has a stakeholders’ area been set up on the Company website? Are major Corporate

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	(3) The Company responds to stakeholders’ issues of concern at the appropriate time through the following channels: a. Shareholders and investors: Shareholders’ meetings are held annually and shareholders can fully exercise their voting rights through electronic means. In addition, the annual report of the shareholders’ meeting, the monthly revenue and the quarterly self-closing profit and loss are issued to facilitate shareholders’ understanding of the Company’s operating conditions. b. Employees: mainly concerned with workplace safety, employee welfare, human rights protection, labor and employment issues, etc. Communication with employees can be conducted through trade unions, factory (office) meetings, etc. c. Suppliers and contractors: The Company adheres to the principle of sustainable management and fair trade and is committed to working with manufacturers that comply with environmental protection, safety, and human rights standards. Open tenders are held through the Formosa Plastics electronic trading platform, and regular briefings are held to strengthen two-way communication and advocacy. Also suppliers can ask questions on the Formosa Plastics electronic trading platform, and the questions will be replied by personnel immediately, to achieve the goals with good communications.
	No
	Yes
	Evaluation Item	Social Responsibility (CSR) topics that the stakeholders are concerned with addressed appropriately by the Company?

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons		Although it does not meet the requirements of Article 7-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, it does not impair the operational efficiency of the shareholders’ meeting.
Implementation Status(Note)	Summary	d. Customer: Issues including product quality and after-sales service that customers care about can be addressed through customer visits, participating in exhibitions, product briefings, customer satisfaction surveys, etc. The website also lists the sales service line and e-mail address. Customer complaints are handled through the “Customer Response Form” and the “Customer Complaint Handling Form.” (The status of stakeholder communication refes to 1.3 Stakeholder Identification and Communication of 2020 Coporation Social Responsibility Report)	The shareholders’ meeting of the Company is currently handled by itself, but the relevant procedures are handled by the designated Share Unit, the Legal Affairs Office and the President Office in accordance with rigorous regulations, so that the shareholders’ meeting will be convened in a legal, effective, and safe context to ensure shareholders’ rights.
	No		V
	Yes
	Evaluation Item		6. Does the Company appoint a professional shareholder services agency to deal with shareholder affairs?

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	In compliance with Article 57 and Article 59 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. In compliance with Article 55 paragraph 3 and Article 56 and Article 58 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. Although it does not meet the requirements of Article 55 paragraph 2 of the Corporate Governance Best Practice Principles for
Implementation Status(Note)	Summary	(1) The Company has set up a website in Chinese and English with disclosed relevant financial business and corporate governance information under “Investor Relations Section”. The Company’s website is: www.fpc.com.tw. (2) The Company has a spokesperson and a deputy spokesperson. A dedicated person has been appointed in the President Office to collect and disclose Company information, as well as providing the spokespersons and relevant business departments with answers to stakeholders, investors, and authorities. (3) In principle, the Company submits and announces operating revenue data from the previous month on the 6thin every month and announces self-monitored finance data from the previous quarter on the 10thday in each quarter. The Company also submits and announces financial reports before the deadline in accordance with laws and regulations. Though the Company does not announce annual financial statements two months within the end of an accounting
	No	V
	Yes	V V
	Evaluation Item	7. Information disclosure (1) Did the Company establish a website to disclose information on financial operations and corporate governance? (2)Did the Company have other information disclosure channels (such as establishing an English language website, delegating a professional to collect and disclose Company information, implementing a spokesperson system, and disclosing the process of investor conferences on the Company website)? (3)(Does the Company publish and report its annual financial report within two months after the end of an accounting period, and publish and report its financial reports for the

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	TWSE/TPEx Listed Companies ,the Company does announce our self-monitored financial information	In compliance with Articles 52 to Articles 54 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
Implementation Status(Note)	Summary	period due to CPA's auditing work, the Company does announce our self-monitored financial information one month before the deadline to help investors to understand our operating status.	(1) Employees’ rights: The Company strives to pursue a harmonious labor-management relationship and attaches importance to the right of employees to express their opinions. We have set up physical suggestion boxes at the places where employees have easy access to, as well as an online suggestion box in the Company information system. Each suggestion box is appointed to dedicated personnel for replying, in order to facilitate communication. An “inspection method” that establishes the internal whistle-blower channel and protection system has also been set up. In the meantime, board of supervisors and labor-management meetings are held by the unions regularly. The heads of relevant departments attend the meetings to fully communicate with the labor representatives. On major labor issues, the Company gives higher priority to the opinions of the unions, and the top leaders consult with the unions to reach a consensus and ensure the harmonious labor-management relationship as well as the sustainable development of the Company.
	No
	Yes		V
	Evaluation Item	first, second, and third quarters as well as its operating status for each month before the specified deadline?	8. Has the Company disclosed other information to facilitate a better understanding of its corporate governance (including but not limited to employee’s rights, employee wellness, investor relations, supplier relations, stakeholders’ rights, Directors and Supervisors training records, implementation of risk management policies and measurement standards, implementation of customer policies and purchase of liability insurance for the Directors and Supervisors of the Company)?

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	(2) Employee wellness: In order to take care of employees’ physical and mental health, the Company has budgeted annual health checks at Chang Gung Memorial Hospital. In addition to the items required by the law, the Company has added cancer screening programs such as A-type fetal protein and cancer embryo antigen. The goal is to ensure the employees understand and improve their health status. In terms of the employees’ diet, the Company follows health regulations concerning food source, acceptance and storage, water safety and hygiene, food staff and kitchen cleaning operations, and food and tableware cleaning inspections to ensure the health and safety of employees’ diet. Besides, the Company has employed counseling personnel in charge of the interview with newcomers, helping them fit in the Company as soon as possible. The counseling personnel could also provide both advice and care when employees face difficulties with work or life. For the relevant welfare measures, please refer to page 203 of the annual report. (3) Investor relations: The Company uses the President Office and the shareholding department as a bridge between the Company and its shareholders. In terms of corporate information transparency, the Company’s website has an “Investor Relations Section”
	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	to provide investors with relevant information. In order to maintain a good relationship with investors, the Company has set up a spokesperson system to provide a means of contact with shareholders and corporate investment institutions. In addition to participating in investment forums held by domestic and foreign brokerage firms, the Company holds 31 times meetings with both domestic and international investors on irregular basis. (4) Supplier relations: The Company’s procurement and contracting operations are mainly aimed at creating a level playing field by looking for good manufacturers that can provide suitable and appropriate equipment, materials or projects at reasonable prices to meet the needs of expansion or operation of various departments in a timely manner. a. Open and fair procurement and delivery mechanism: The Company uses the “open tender” method to purchase and distribute the contracting system through the Formosa Plastics electronic trading platform. It provides functions such as inquiry, quotation, bargaining, order, delivery, payment progress inquiry, etc. All information is encrypted by electronic voucher and firewall control to ensure the security of all incoming and outgoing data. Vendors can access the inquiry case and make quotations anytime and
	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	anywhere through the Internet without time and space restrictions, which greatly improves the efficiency of operations, saves time and money, and reduces operating costs to increase profits. After all the inquiry cases have been launched electronically, the manufacturers with the lowest quotation, fastest delivery time, and best quality are chosen so that both the buyer and the seller can reasonably achieve the goals in a harmonious atmosphere. b. Sound vendor management: In order to stabilize the quality and delivery of materials and ensure the quality and progress of construction, the Company has conducted evaluation and ranking of all manufacturers through the sound management and evaluation of the manufacturers. In the case of overdue delivery of the products (engineering), poor quality, or violation of the safety regulations, the event will be automatically included in the assessment record in order to replace unqualified manufacturers, and cultivate excellent manufacturers to achieve good relations as well as long-term cooperation between the two sides. c. Electronic trading for a win-win situation: The Company combines the comprehensive ERP computer management system and the digital, open, and transparent online procurement and delivery mechanism to build a
	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	high-quality, safe, convenient and fast electronic trading environment. The Company has further extended the same system vertically and horizontally to the rest of the industry, sharing the e-generation “Formosa Plastic experience” with all enterprises. At present, combined with the Company’s upstream and downstream supply chain systems, with more than 10,000 suppliers and third-party suppliers, this electronic trading platform shares the business opportunities and economic benefits brought about by open trading. (5) Stakeholders’ rights: In addition to continuing to improve in the industry, the Company pursues good business performance and strives to achieve the mission of “caring for the employees, serving the customers, and rewarding the shareholders.” Therefore, it is committed to caring for the shareholders, customers, suppliers, employees, and society. In addition to complying with laws and business ethics, the Company is in line with international standards in enhancing competitiveness, create shareholders’ benefits, as well as providing supplies of stable, high-quality and low-cost products. With industrial and environmental protection as a priority, the Company will develop towards eco-industrial areas and promote green building and green energy conservation, raw materials
	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	In compliance with Article 40 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.	In compliance with Article 40 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.	In compliance with Article 40 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.	In compliance with Article 40 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.	In compliance with Article 40 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
Implementation Status(Note)	Summary	procurement, actively planting forests, paying attention to various social issues, investing in community and social welfare undertakings suitable for enterprises to contribute to the society. (6) Director Training Records:
			Hours		3		3	3
			Course		1.Econimic Outlook and Industrial Trends in 2021		2.The Role of Institutional Shareholder in the Corporation Governance Enhancement	1. Disclosure of Material Information of Companies and Duty of Directors and Supervisors
			Organization		1.Securities and Futures Institute		2.Taiwan Corporate Governance Association	1.Taiwan Corporate Governance Association
			Date of Training		2020/11/27		2020/11/27	2020/8/11
			Name	Jason Lin	William Wong, Susan Wang, Wilfred Wang	C. J. Wu,	Cher Wang, C. T. Lee, K. H. Wu, K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Ching-Lian Huang	C. L. Wei
			Title	Chairman	Managing Director	Independent Director	Director	Managing Director (Independent Director)

	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary
		3 1.5 3 1.5 3
		2.The Impact of the New Amendment of Company Act to Directors, Supervisors and Shareholders 3.The Argument of Luckin Coffee in View of Corporate Governance 4. Corporate Governance Regulations, Institutional Shareholders’ Transparency in M&A, and New Trends of Money Laundering Prevention Regulation 5. The New Generation of Consumer Behavior Creates Economic Models. 6.Econimic Outlook and Industrial Trends in 2021
		2.Taiwan Corporate Governance Association 3.Taiwan Corporate Governance Association 4.Securities and Futures Institute 5.Taiwan Corporate Governance Association 6.Securities and Futures Institute
		2020/8/11 2020/8/11 2020/9/29 2020/11/10 2020/11/27



	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons		In compliance with Article 39 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
Implementation Status(Note)	Summary		Independent Director Yen-Shiang Shih 2020/7/29 2020/8/5 2020/11/27 2020/11/27 1.Taiwan Institute of Directors 2.Securities and Futures Institute 3.Securities and Futures Institute 4.Taiwan Corporate Governance Association 1. Enterprise Transformation in the Era of Change 2. Key Technologies and Application Opportunities of 5G 3.Econimic Outlook and Industrial Trends in 2021 4.The Role of Institutional Shareholder in the Corporation Governance Enhancement 3 3 3 3 (7) The situation in which the Company purchased liability insurance for the Directors: The Company has purchased liability insurance for all Directors, and the insured amount is US$30 million. The above insurance period is from August 1, 2013 to today.
		3	3 3 3 3
		7.The Role of Institutional Shareholder in the Corporation Governance Enhancement	1. Enterprise Transformation in the Era of Change 2. Key Technologies and Application Opportunities of 5G 3.Econimic Outlook and Industrial Trends in 2021 4.The Role of Institutional Shareholder in the Corporation Governance Enhancement
		7.Taiwan Corporate Governance Association	1.Taiwan Institute of Directors 2.Securities and Futures Institute 3.Securities and Futures Institute 4.Taiwan Corporate Governance Association
		2020/11/27	2020/7/29 2020/8/5 2020/11/27 2020/11/27
			Yen-Shiang Shih
			Independent Director

	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	(8) Implementation and policies of risk management: The Company established risk management policies to identify, evaluate, supervise and control risk from every aspect, enhance the sense of awareness of employees and make sure all potential risks that might happen are endurable, thus, can the Company execute the optimal strategy to rationalize the balance between profits and risks, please refer to page 229~242 of the annual report for further disclosure of risk management policies of the Company. (9) Implementation of customer policy: Customers are the cornerstone of the Company’s existence. The goal is to quickly supply the requested products and achieve stable and adequate supply so that customers can continue operate. a. Creating a stable supply and demand The Company and its customers have an important relationship of interdependence, coexistence, and co-prosperity. Therefore, building a stable supply and demand relationship is an issue that every sustainable company must pay attention to. Focusing on the long-term development of the industries in Taiwan, the Company actively invests in the production of chemicals, plastic, and Fibre raw materials to provide customers with a stable source of materials and lay a solid foundation for related industries. The solid long-term cooperation has allowed the customers to show steady growth.
	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	b. Improving raw material self-sufficiency rate The completion of the sixth naphtha cracker has greatly eased the problem of long-term raw material shortage in Taiwan and reduced the degree of dependence on foreign countries. Current self-efficiency rate of Ethylene in Taiwan reaches above 90 percent, therefore, greatly mitigating the dependence of Ethylene import and enhancing the competitiveness of the overall industry. c. Enhancing the competitiveness of midstream and downstream manufacturers In order to improve the management capabilities of the middle and lower suppliers of the plastic industry, the founders set up a series of management courses at the early stage, and actively shared the Company’s system and experience with the industry. The Company has received positive feedback while strengthening the competitiveness of customers. So far, if other companies come visit, we are willing to share. From a management point of view, the Company has always believed that by taking customer interests into account, the Company will also benefit from it. In addition, in order to cooperate with customers to expand the market, the Company also actively supports customers and provides after-sales service.
	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Implementation Status(Note)	Summary	d. E-commerce saves costs and improves efficiency In order to improve the efficiency of the transaction process with the customer, the customer can get instant information and respond quickly when placing orders, order progress inquiries, receipts and payments, the Company officially established the Formosa Plastics E-Commerce Center in January 2001. This B2B online trading portal imports the e-commerce trading system, coordinates the management of internal resources and strengths, and integrates upstream and downstream supply chain systems and customer business relationships. Due to the remote marketing demand, the Company established “FPC E-commerce Platform” which integrates automatic sales and production fuction, AI arranging production schedule technology and delivery information base on ERP system. The platform provides the customers to make orders from online system and inform the lastest orders information to customers, which inceases the shipment efficiency, and it started from September, 2020.
	No
	Yes
	Evaluation Item

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Improvement Status	The Company has disclosed material information in English starting from 2020.	Pursuant to a resolution from the Board of Directors on June 10, 2020, the Company has amended the Corporate Governance Best Practice Principles to include the appointment, removal, appraisal, and remuneration policy of the Company's internal auditors. The policy has been signed by the audit supervisor and submitted to the Chairman of the Board for approval, and has been implemented in practice and disclosed on the Company website.	The Company has formulated the risk management upon resolution from the Board of Directors on December 17, 2020. The scope, the organizational structure, and the operations of risk management are disclosed on the Company website and reported to Board of Directors at least once a year.	The Company has launched the self-evaluation of the Board of Directors from 2020, and disclose the result in the annual report.
Implementation Status(Note)	Summary
		Evaluation Indicator	1. Does the Company simultaneously disclose material information in English?	2. Does the Company establish appointment, removal, appraisal, and remuneration policy of the Company's internal auditors, which have been either submitted to the Board of Directors or signed by the audit supervisor and submitted to the Chairman of the Board for approval? And is the preceding policy disclosed on the Company’s website?	3. Does the Company formulate risk management policies and procedures approved by the Board, which disclose the scope, the organizational structure, and the operations of risk management?	4. Was self-evaluation of the Board of Directors approved by Board of Directors? Does the Company evaluate Board of Directors at least once a year and disclose the evaluation result on the Company’s websie or in the annual report?
	No
	Yes
	Evaluation Item
		Category		Items Improved

Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons		Improvement Set as a Priority 2. Does the Company’s annual report disclose the relation of performance and remuneration of Directors and managers? The Company has diclsoe the the relation of performance and remuneration of Directors and managers in the annual report and on the website. 3. Do the Company’s Directors finish the annual traing by Directions for the Implementation of Continuing Education for Directors and Supervisors? The Compnay actively encourages the Directors to attend tranning.	Improvement Set as a Priority 2. Does the Company’s annual report disclose the relation of performance and remuneration of Directors and managers? The Company has diclsoe the the relation of performance and remuneration of Directors and managers in the annual report and on the website. 3. Do the Company’s Directors finish the annual traing by Directions for the Implementation of Continuing Education for Directors and Supervisors? The Compnay actively encourages the Directors to attend tranning.
		The Company actively encourages the Directors to attend Board meetings.	The Company has diclsoe the the relation of performance and remuneration of Directors and managers in the annual report and on the website.	The Compnay actively encourages the Directors to attend tranning.
Implementation Status(Note)	Summary
		1. Has the average attendance rate of the entire Board of Directors subject to the annual evaluation reached 85% or more?	2. Does the Company’s annual report disclose the relation of performance and remuneration of Directors and managers?	3. Do the Company’s Directors finish the annual traing by Directions for the Implementation of Continuing Education for Directors and Supervisors?
	No
	Yes
	Evaluation Item
			Improvement Set as a Priority

Remarks	Remarks
Number of other public companies in which the individual is concurrently serving as an remuneration committee member		3	0	2
Independence Criteria(Note2)	10			
	9			
	8			
	7			
	6			
	5			
	4			
	3			
	2			
	1			
Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company			
	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company		
	An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university			
Criteria Name		C. L. Wei	C. J. Wu	Yen-Shiang Shih
Title (Note 1)		Independent Director	Independent Director	Independent Director

==> picture [415 x 640] intentionally omitted <==

Remarks
Attendance Rate (%) (Ｂ/Ａ)(Note)	100.00	100.00	100.00
By Proxy	0	0	0
Attendance in Person (Ｂ)	2	2	2
Name	C. L. Wei	C. J. Wu	Yen-Shiang Shih
Title	Convener	Committee Member	Committee Member


Contents	1.Proposal: To report the 2019 year-end bonus distribution standard of managers who are appointed by Board of Directors. 2. Remuneration Committee Resolution: acknowledged. 3.The Company’s handling of the opinions of the Remuneration Committee: The year-end bonus of the appointed managers had been calculated according to the “Principle of Year-End Bonus and Reward Distribution” and the Board of Directors approved to distribute accordingly.	1.Proposal: (1) To discuss the 2020 annual salary of the managers not adjusts. (2) To amend the “Remuneration Committee Chater”. (3) To set up the “Self-Evaluation of the Board of Directors”. 2. Remuneration Committee Resolution: All attendants approved the all above proposals and they were submitted to Board of Directors for approval. 3.The Company’s handling of the opinions of the Remuneration Committee: Board of Directors approved the all above proposals.
Date and Session of Meetng	2020.01.15 (No.1 in 2020 )	2020.08.12 (No.2 in 2020 )

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	In compliance with the Article 3 paragraph 2 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.	In compliance with the Article 9 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	The Company's President Office and FPG Administration Department assess the risks to the Company from environmental, social and governance issues based on the levels of influence to stakeholders, and establish risk policies that enable effective identification, measurement and evaluation, supervision, and control to lower influences from relevant risks. The related scope of risk management refers to FPC website. (http://csr.fpc.com.tw/FPC_CSR/coporate_governance/operation _risk.aspx)	To promote Corporate Social Responsibility, the Chairman-Jason Lin has been appointed as the general convener and the Senior Vice President-Jerry Lin as Vic convener. President Office, safety and health department, accounting department, Mailiao and Kaohsiung management department and other units form “The Corporate Social Responsibility Special Unit” which is dedicated to the implementation of social responsibility. The Corporate Social Responsibility Special Unit will report the work items to the Company’s Directors through internal official documents. The unit will also reports the preparation and implement of Corporate Social Responsibility report in the Board of Directors meeting at least one time at each year.
	No
	Yes	V	V
	Evaluation Item	1. Does the Company conduct risk assessment in regards to environmental, social, and governance topics related to company operations in accordance with the materiality principle, and establish relevant risk management policy or strategy?(Note 3)	2. Has the Company established an exclusively (or concurrently) dedicated unit for promoting CSR? Is the unit empowered by the Board of Directors to implement CSR activities at upper management levels? Does the unit report the progress of such activities to the Board of Directors?

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	In compliance with Article 13 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. In compliance with Article 12 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	(1) The Company formulated the administrative standards for security and health management, management information systems, office automation systems, etc., and strengthened the management of the security zone in the plants area through the improvement of the system. In addition, the Company will further introduce environmental accounting systems by collecting environmental expenditure information, environmental expenditure benefits, and informing stakeholders of environmental protection measures. (For details of the environmental management system based on industrial characteristics, please refer to 3.1 Environmental Management Strategies of the 2020 Corporate Social Responsibility Report. ) (2) From raw material procurement to product sales, the Company attaches great importance to the health and safety of its customers. Therefore, the production process is continuously improved upon. To follow market trends and meet customer’s needs, the Company has shifted its focus to producing non-toxic and environmentally friendly products with improved production processes as well as green energy products. (For details of the specific practices and products that are environmentally friendly, please refer to 2.3.3 Product Safety and Health Responsibility of the 2020 Corporate Social Responsibility Report)
	No
	Yes	V V
	Evaluation Item	3. Environmental issues (1) Has the Company referred to the nature of its industry to establish a suitable environment management system (EMS)? (2) Is the Company committed to improving usage efficiency of various resources and utilizing renewable resources with reduced environmental impact?

100

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	In compliance with Article 17, paragraph 1 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. In compliance with Article 17, paragraph 2~3 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.	In compliance with Article 18 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	(3) The Company continued to assess potential risks and opportunities arising from climate change in aspects of finance, reputation, global economy, energy cost volatility, and environmental compliance costs, set energy conservation targets and measures, and develop eco-friendly products to keep the business operations stable and competitive. (Please refer to 3.2 Risks and Opportunities Arising from Climate Change of the 2020 Corporate Social Responsibility Report.) (4) The Company regularly commissions BSI (British Standards Association) and SGS (Taiwan Inspection and Technology Corporation) to conduct greenhouse gas inventory. For energy conservation and carbon reduction, the Company will set a specific reduction target each year. (For further details, please refer to Chapter 3.2 Water Resource Use & Management, 3.3 Greenhouse Gas and Energy Management and 3.6 Waste Management of the 2020 Corporate Social Responsibility Report.)	(1) In order to guarantee the human right of employees, customers and stakeholders of the Company, the Company complies with relevant employment relations acts such as the Labor Standard Act, UN Unversal Declaration of human Rights, and UN Guiding Principles on Business & Human Rights, International Labor Office Tripartite Declaration of
	No
	Yes	V V	V
	Evaluation Item	(3)Does the Company assess potential risks and opportunities arising from climate change, and establish relevant risk management policy or strate? (4) Does the company monitor its greenhouse gas (GHG) emissions, water consumption, and waste volume for the past two years, and establish policies for energy conservation, carbon and GHG reduction, water consumption reduction, waste volume reduction accordingly?	4. Social issues (1) Has the Company referred to relevant laws and international human rights instruments to establish relevant management policies and procedures?

101

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	In compliance with Article 21, paragraph 2 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	Principles Concerning Multinational Enterprises and Social Policy, etc. The Company also complies with the various labor laws and regulations of the Republic of China and the local laws and regulations of each operating branch. The Company also complies relevant labor laws to formulate personnel rules and regulations to protect employees’ rights and interests. It also provides stable and excellent treatment, complete education and training, promotion and development system, and a safe and healthy working environment to enhance the professional competence of employees. The Chairman of the Company, Jason Lin, officially signed the human rights policy in August, 2018. For details, please refer to the official website of the Company. (http://csr.fpc.com.tw/FPC_CSR/talent/policy.aspx) (2) a.The Company has clear regulations on employee promotion, assessment, training, rewards, and punishments. The salary for new recruits is based on the qualifications required for the job. Female and male employees of the same position and rank receive equal pay for equal work. Employee performance is reviewed regularly in order for raise and promotion to be given accordingly. b. The Company’s fixed holidays are 2 days off, national holidays, and other holidays as stipulated by the central competent authority. Annual leaves are also given to employees pursuant to the Labor Standards Act.. For more
	No
	Yes	V
	Evaluation Item	(2)Did the company establish and implement reasonable employee benefits (including compensations, holidays, and other benefits), and appropriately reflect its business performance and results on its employee compensations?

102

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	In compliance with Article 20 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. In compliance with Article 21, paragraph 1 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	details on other employee benefits, please refers to page 203~208 of the annual report. c. Article 39 of the Articles of Incorporation of the Company states that when allocating the net profits for each fiscal year, the Company shall set aside 0.05% to 0.5% of the balance of pre-tax profit prior to deducting employees compensation as compensation of employees. In addition, the Company provide year-end bonus and formulate the degree of salary increase each year according to operation performance of the Company. (3) The Company regularly provides health and education information for employees. In order to enhance employees’ safety and health awareness, the Company distributes “work hazard reminder cards” and “safety and hygiene manuals” to remind employees of work safety through education, training, and safety observation. (For details on how to improve employee safety in the workplace, please refer to 5.1 Workplace Safety Management of the 2020 Corporate Social Responsibility Report.) (4) Through the e-training management system, the Company ensures that personnel are gradually completing the training of new personnel, foundation, professional and cadre reserve. In addition, in line with the work and safety needs of individual units, counseling staff with professional licenses hold occasional seminars on various topics as well as
	No
	Yes	V V
	Evaluation Item	(3) Has the Company provided employees with safe and healthy work environments as well as regular classes on health and safety? (4) Has the Company established an effective competency development career training program for employees?

103

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	In compliance with Article 24 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	strengthening human rights and workplace safety awareness courses. For more details of the lessons of human rights, please refer to the official website of the Company.(http://csr.fpc.com.tw/FPC_CSR/talent/policy.aspx) (For specific training practices, please refer to 4.2 Emplyee Rights, Benefits and Training of the 2020 Corporate Social Responsibility Report.) (5) a.Since most of the products produced by the Company are not directly sold to general consumers, there are fewer marketing activities such as media advertisements and campaigns. If there are promotion activities involving regulations, all units will first consult the legal office to avoid violation. To protect customer privacy, the Company has established the “Personal Data Management Procedures” to strictly limit the use and control on any queries into personal data. b. Customer relationship management is an important part of the Company’s sustainable operation. In order to understand the valuable opinions of customers, the Company has clearly defined the customer complaints pipeline as well as return and compensation application procedures so that customers can express relevant appeals through the Response Form. Product complaints are handled by the salesperson filling out the Customer Complaint Handling Form for all returns and exchanges.
	No
	Yes	V
	Evaluation Item	(5) Does the company follow relevant laws, regulations and international guidelines in terms of customer health, safety, and privacy, as well as when marketing or labeling its products and services and has the company established relevant consumer protection policies and grievance procedures?

104

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	In compliance with Article 26 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	The process is also monitored by the computer system. Another method for customers to make inquiries or comments is to contact the telephone number or e-mail address listed on the official website. Comments and suggestions are prioritized according to the level of importance and timeliness. They are then forwarded to the relevant departments to ensure that the Company meets all customers’ needs. (6) During procurement, the Company has always required upstream suppliers to meet RoHS, ISO, and related national industrial safety standards, where all goods must be suitably labeled according to the nature of the products, i.e. warning labels. Suppliers should also adopt appropriate recycling procedures for used containers or delivery vehicles. Products manufactured by the disadvantaged and products with non-radioactive labels are prioritized for procurement. The “Price Inquiries” and “Orders” include requirements for suppliers that they comply with the regulations and fair trade principles. The Company commits itself to ensuring that the partners meet environment protection, industrial safety, and human rights requirements. Non-compliant manufacturers will be rejected and placed under manufacturer evaluation. When purchasing materials, parts or products containing metal components, suppliers are required to investigate whether they meet the “conflict-free metal” to ensure that the
	No
	Yes	V
	Evaluation Item	(6)Has the company established supplier management policy and require suppliers to comply with relevant standards on environmental protection, occupational safety and health, or labor and human rights issues?

105

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons		In compliance with Article 29 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
Implementation Status(Note1)	Summary(Note2)	purchased raw materials are obtained through legal channels. (For further details, please refer to 5.2 Supply Chain Management of the 2020 Corporate Social Responsibility Report.)	The content structure of the Company’s 2020 Corporate Social Responsibility Report is based on the Global Resiliency Reporting Association’s GRI standards guidelines, written in accordance with the guidelines and framework outlined in the Core Options, and exposes the Company’s main sustainability issues, strategies, goals and objectives, as well as measures. Verified by the British Standards Association (BSI), an impartial third-party unit, and is disclosed in accordance with the core options, and is presented in international common indicators.
	No
	Yes		V
	Evaluation Item		5. Does the company refer to guidelines for the preparation of internationally accepted reports and prepare corporate social responsibility reports and other reports that disclose the company’s non-financial information? Has the aforementioned statement received any validation or guarantee from third-party accreditation/attestation organization?

106

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	7. Other important and helpful information in understanding CSR operation: (Explanation 1) Relevant systems and structures the Chairman-Jason Lin serves as the general convener and the Senior Vice President-Jerry Lin serves as Vic convener to be responsible for. strategy formulation, goal planning, performance monitoring and management policy about the Company’s CSR. President Office, safety and health department, accounting department, Mailiao and Kaohsiung management department and other units form “The Corporate Social Responsibility Special Unit to be responsible for corporate governance, work safety and environmental sustainability, water and energy saving, product and customer service, supplier and contractor management, happy workplace, good neighbors and other related work. Moreover, in order to effectively integrate and promote the Company’s social responsibility, the Company established a “Social Responsibility Work Promotion Center,” which is responsible for strategy formulation and performance supervision. The medical and educational units of all companies, offices, staff unit and non-profit organizations collaborate to promote social responsibility. On the other hand, the seven foundations and charitable trusts funded by the founders, Mr. Wang Yong-Ching and Mr. Wang Yong-Tsai, also play an important role. They have long held the concept of “Take from society, give back to society” to invest in social welfare and do our part to improve social care and reduce social problems. Under the “Social Responsibility Promotion Center”, the “Afforestation Team” and the “Energy Conservation and Carbon Reduction Group” have been set up. The company as a whole will be responsible for setting up a dedicated safety and health department with the responsibility of each plant as the center and related business divisions to improve the environmental quality. The charity and neighborly care group has been organized to care for the disadvantaged groups, set up medical centers to offer emergency relief, etc. in order to achieve important tasks of reducing energy consumption and pollution, creating an ecological environment balance, and successfully achieving various social responsibility work plans. (Explanation 2)Social welfare engagement of the enterprise 1. The system, measures, and performance of environmental protection, safety, and health: Since its establishment, the Company has always adhered to the philosophy of “industrial development and environmental protection,” and pursues social responsibility and sustainable business. Therefore, it attaches great importance to the work of environmental protection. Following this concept, the Company adopts the latest international technology for production processes and environmental protection equipment. For example, when building a power plant more than a decade ago, the Company was the first in the country to insist on the use of closed coal bunkers. Coal dust no longer polluted the air, and BACT is used to make pollution emissions far below domestic and
Implementation Status(Note1)	Summary(Note2)
	No
	Yes
	Evaluation Item

107

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	international standards. Although the construction cost increased, the intangible environmental improvement and the reduction of resource waste and cost reduction can be obtained. In addition to selecting the best production processes and environmental protection equipment at the beginning of the planning period, the Company also took into consideration of the integration of upstream, middle, and downstream processes, and recycles the by-products and wastes of the upstream process as raw materials and fuels for the middle and downstream processes by fully integrating and reusing waste gas, waste heat and low-level energy between the plants, make the best use of resources and energy, reduce energy and waste resources, we pursue the goal of achieving an eco-industrial park. For example, the power and steam consumption per unit of product in 2020 years has decreased by 55.1% and 68.8% respectively since the trial operation began in 1999. Future reduction targets will continue to be promoted. The spirit of the Company is to always find out the root cause of any problem, continue to improve, consists in stopping in perfect goodness. Through continuous improvement, the Company will continue to improve the efficiency of equipment operation to reduce energy and resource use, and strengthen the competitiveness of sustainable operation. Taking water conservation as an example, from 1999 years to 2020, the sixth naphtha cracker has invested 8.79 billion dollars to complete 2,329 improvement cases, saving 287,600 tons of water per day. The 318 ongoing cases will receive 2.24 billion dollars of investment to achieve the target of saving 17,500 tons of water per day. The total investment is 11.03 billion dollars. After the completion, the annual benefit will be approximately 1.36 billion dollars. In terms of energy conservation and carbon reduction, the sixth naphtha cracker has also invested 22.82 billion dollars 8,214 improvement cases have been completed, reducing about 11.536 million tons of CO2. 1,281 ongoing cases will receive 8.44 billion dollars. It is estimated that an additional 1.532 million tons of CO2will be reduced, with a total investment of 31.26 billion dollars. The end benefits will be about 34.58 billion dollars per year. The above-mentioned results can be affirmed by the Company awards from 52 business units and commendations from the competent authorities of the Ministry of Economic Affairs, the Water Resources Department, the Industrial Bureau, the Energy Bureau, and the Environmental Protection Agency during the 10 last years between 2011 to 2020. In addition to adopting the best international production process, doing environmental protection work such as pollution prevention, clean production, energy conservation, carbon reduction, and water conservation to reach the goal of becoming ecological industrial parks, the Company also follows the trend of the times and pays attention to global warming. In recent years, the Company has promoted tree planting in the factory area. The Company have actively promoted the greening of various factories. At present, the Company have planted nearly 2 million trees and 390,000 square meters of shrubs, which can absorb about 15,000 tons of CO2 per year. Providing a green aerobic
Implementation Status(Note1)	Summary(Note2)
	No
	Yes
	Evaluation Item

108

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	environment for employees and nearby residents, and taking into account the best of both industrial development and environmental protection. Traditional factories give the impression that there are few green spaces and trees, and even chimneys emit black smoke from time to time, causing air pollution. The direction of the Company’s various factories is to change the minds of people to create a green landscape just like the park, and to turn air pollution into a natural landscape. At the same time, the Company also responded to the government's afforestation and carbon reduction plan and cooperated with the Yunlin County Government to promote flatland afforestation and carbon reduction activities. In 2011, the Company started to receive a 10-year afforestation and carbon reduction subsidy. The Company has received the flatland afforestation award in Yunlin County, with an application area of 1,094 hectares, and about 1.359 billion in subsidies have been provided to the afforestation applicants, contributing to the afforestation and carbon reduction. The Company also fully cooperates with the Environmental Protection Agency to promote green procurement of private enterprises to implement the energy-saving and carbon-reduction green consumption policy. The statistical green procurement amount of the Company in 2020 is 588 million dollars. In the future, the Company will continue to take into account the concept of environmental protection and economic development, and implement various measures such as water conservation, energy conservation and carbon reduction, sustainable use of resources and friendly environment in order to fulfill social responsibilities. In addition, providing a healthy and safe working environment is the responsibility of the Company to employees and their dependents. Therefore, “Safety First” is an important principle for us to cherish our employees. In addition to establishing a reward system, employees and contractors are encouraged to raise issues with unsatisfactory behaviors and false alarms. Departments with zero occupational disasters are also rewarded, encouraging all units to report potential hazards, and report abnormalities, and unsafe behaviors. The quarterly review eliminates potential hazards and conducts inter-departmental competitions and performance reviews to increase employee engagement. 2. Community participation: The Company is deeply rooted in Taiwan. Factories are distributed all over Taiwan. We strive to become a “good neighbor” with the surrounding residents by setting up a dedicated group in each factory to communicate with residents and provide all kinds of assistance. In addition, we continue to mobilize our staff to clean up neighborhood streets and beaches, continually invest in local public welfare activities, and assist in caring for families and disadvantaged groups, so that our employees and community residents can be integrated. Employees
Implementation Status(Note1)	Summary(Note2)
	No
	Yes
	Evaluation Item

109

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	have also spontaneously formed a charity group, responding to the feedback to the neighborhood, and by long-term and continuous attention, gradually expand human care and love to every corner of the society to jointly establish a peaceful society. 3. Social contribution, social services, social welfare, and other social responsibility activities: Based on the spirit of “ Take from society, give back to society “, the Company is committed to the sustainable operation and continues to give back to the society and fulfill its social responsibilities with the management policy of “quality, reputation, service, and environmental protection.” Our results in social responsibility are also recorded in the “Corporate Social Responsibility Report.” In addition to dedicating to business operations, we also invest in medical care, education, and various social welfare undertakings to fulfill Corporate Social Responsibility: (1) Medical treatment: Chang Gung Memorial Hospital was established in 1976. It is committed to "improving medical standards and creating social well-being" and has the courage to challenge the status quo. It not only drives the reform and progress of the medical community but also won the trust of the general public. Now, in Taiwan, there are four major sectors, the North Sector (including Keelung, Lover Lake, Taipei, Linkou, Taoyuan, Tucheng, and other nursing homes), Chiayi Sector, Yunlin Sector, and Kaohsiung Sector (Kaohsiung and Fengshan Hospital). In services, it is also the largest and most complete medical institution in Asia, from emergency medical treatment to rehabilitation, health care, and senior care. Chang Gung Memorial Hospital also donated 1,042 sets of artificial electronic ears for the benefit of hearing-impaired children, and set up a social service fund to subsidize poor patients for long-term treatment. As of the end of 2020, it has spent 9.55 billion dollars and continues to provide the medical assistance needed in remote and undeveloped countries. (2) Education: In the 1960s, various industries in Taiwan flourished. In view of the shortage of industrial talents, the Company founded Mingzhi Institute of Technology (now Mingzhi University of Science and Technology) to provide the students from poor families a chance to study and work at the same time. Later, Chang Gung Medical College (now Chang Gung University) and Chang Gung College (now Chang Gung University of Science and Technology) were established to cultivate students' diligence and simplicity by combining theory and practice, and to cultivate excellent industrial middle cadres and medical staff. Since the beginning of the 1995, the Company started funding for Aboriginal youth education and employment opportunities. The total donation amount is over 1.7 billion dollars, and the number of assisted people reached 5,507.
Implementation Status(Note1)	Summary(Note2)
	No
	Yes
	Evaluation Item

110

Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	(3) Disaster relief: assisting in the 921 earthquake (1999), Morakot wind disaster (2009), Kaohsiung gas explosion incident (2014), Tainan earthquake (2016), Nibble wind disaster (2016), Hualien earthquake (2018) and other disaster relief in reconstruction and the rehabilitation of schools in the disaster areas. So far, 76 primary and secondary schools have been fully sponsored by the Company. (4) Other social welfare: In addition to medical and education, the founders of Formosa Plastics have set up seven foundations and charitable social welfare funds. Through the operation of the foundations and the active participation of companies within the corporation, they continue to promote and donate to various social welfare undertakings, such as: A. Nearly 1.15 million doses of Streptococcus pneumonia vaccines to promote the free vaccination program for the elderly over 75 years old to improve their health and quality of life. B. Continue to promote the "Professional Service of Early Treatment Effectiveness Improvement Program" to systematically and comprehensively improve the quality of Taiwan's overall early treatment services. Currently, 92 institutions have been provided with relevant medical assistance and subsidies; and an "early treatment professional communication platform" has been established. Information on national early treatment activities, treatment articles, and teaching files are shared. C. Support the inmates: donated to the Yunlin Second Prison, Kaohsiung Prison, and Taipei Prison to handle the Wang Jhan-Yang Foundation Rainbow Project (drug-addicted HIV inmates), with three courses of physiological education, psychological counseling, and vocational training the project assists drug-addicted prisoners with HIV to cultivate life skills, repair family relationships and reintegrate into society. Cooperation with Yunlin Second Prison and Kaohsiung Prison to handle the Wang Jhan-Yang charitable trust fund Xiangyang project (drug inmates) to assist inmates in returning to the society is also conducted. Collaboration with the Correctional Affairs Department of the Ministry of Justice in 2017 to expand the Xiangyang Project in three prisons including Hualien Prison, Tainan Prison, and Kaohsiung Women's Prison. D. Promote various scholarships and work-study programs: such as the Children's Education Assistance Program, Assistance to Teenagers/Young Adults who Recently Graduated from Children's Homes, Disadvantaged Student Scholarship, and the Student Financial Aid Program in Remote Areas, to help the economically disadvantaged or disabled children and young students to be able to receive education unhindered. The Excellent Talents Development Program provides long-term scholarships for outstanding students from disadvantaged backgrounds to assist them in academic and moral development. In addition, we will promote semester and summer work-study programs, match students to work in social welfare institutions, cultivate the service spirit of students contributing to society, and reduce institutional operating costs and expenditures to serve more vulnerable people.
Implementation Status(Note1)	Summary(Note2)
	No
	Yes
	Evaluation Item

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Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons	E. Women and Children's Welfare: a. Promote the nutritional breakfast subsidy for the vulnerable children in the neighboring 7 Township for Mailiao Factory, b. Promote the economic assistance program for victims of domestic abuse, c. Promote the medical treatment and economic assistance of patients with rare diseases, d. Donation to Taitung and Hualien English Assistance Program, an introduction of outstanding American college students to primary schools in remote areas for English teaching, e. Promote the nutritional breakfast subsidy for the vulnerable Junior High School students of Pingtung County, f. Donation the nutritional lunch subsidy for all public elementary and junior high school students of Yunlin County, g. Donation Scholarship for Orphan, h. Donation living expenses for Preschool children from disadvantaged families. i. Donation the HPV 9-valent vaccine for the girls in the first year of junior high school of Yunlin County , j. Donation the ‘Childminder Management and Subsidy Programme’of Yunlin County k. Set up a used toy recycling center. F. Elderly welfare: a. promote the elderly housing improvement and appliance donation plan, b. Mailiao and Taixi Township meal delivery plan for elderly living alone, c. promote the ‘’Active Aging Center’’ corporately in Taiwan. Members in this center would participate in five major classes (of the elderly) through package-based individual planning courses, including health management, brain training, vitality, physical training and social participation, to maintain their health, preventing disability, and effectiveness of helping healthy elderly people improve, d. Donate to the elderly daycare center shuttle bus and dream plan, e. Elderly welfare institution lighting improvements plan, f. Donation daycare and health promotion for elder in Remote Areas. g. Donation the ‘Evergreen Canteen’of Yunlin County. G. Vulnerable group support: a. Donation to social welfare institutions daily necessities and rice, b. The low-income households near Mailiao factory receive gifts and bonus for the three most important Chinese holidays c. Emergency Allowances plan, d. Donation of daily necessities to the Christian Relief Association food bank, e. Promoting Homeless Assistance Program, including the establishment of supportive housing and the subsidy of kitchen facilities, to support the homeless to live as independently as possible within their community., f. Promote「The design and implementation of intelligent support system in long term care」and「Love Health Volunteer Promotion Program」. H. Promote the development of Taiwan's distinctive culture: sponsoring the "Ming Hwa Yuan Art & Cultural Group", " I Wan Jan Puppet Theater ", "If kids Theatre", "Apple Theatre" to go on tours in the countryside. I. Promote the Wang Jhan-Yang charitable trust fund " Burning Star Project" to cultivate outstanding sports talents, "Future Star Project " sports talents abroad training programs and sports player medical protection programs to help domestic sports talents improve their performance. Wang Chang Gung charitable trust has implemented the”Caretaker for Athletes Program” since 2019.
Implementation Status(Note1)	Summary(Note2)
	No
	Yes
	Evaluation Item

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Evaluation Item Implementation Status(Note1) Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons Yes No Summary(Note2) J. Institutional support: a. Donation of social welfare institutions to purchase facilities and equipment and construction and repair (17 social welfare institutions), b. Donate funds for vulnerable groups to help plan(Kaohsiung City Government, Taoyuan City Government, Keelung City Government, ChiaYi County Government) ,c. donation of mooncakes to social welfare institutions. Note 1: If “Yes” is checked under implementation, please describe the key policies, strategies, and measures and results adopted. If “No” is checked under implementation, please give reasons and describe relevant strategies and measures to be adopted in the future. Note 2: Companies who have compiled CSR reports may cite the source from specific pages of their CSR reports instead. Note 3: The materiality principle refers to environmental, social, or corporate governance issues that have a material impact on the investors or other stakeholders of the company.	Evaluation Item Implementation Status(Note1) Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons Yes No Summary(Note2) J. Institutional support: a. Donation of social welfare institutions to purchase facilities and equipment and construction and repair (17 social welfare institutions), b. Donate funds for vulnerable groups to help plan(Kaohsiung City Government, Taoyuan City Government, Keelung City Government, ChiaYi County Government) ,c. donation of mooncakes to social welfare institutions. Note 1: If “Yes” is checked under implementation, please describe the key policies, strategies, and measures and results adopted. If “No” is checked under implementation, please give reasons and describe relevant strategies and measures to be adopted in the future. Note 2: Companies who have compiled CSR reports may cite the source from specific pages of their CSR reports instead. Note 3: The materiality principle refers to environmental, social, or corporate governance issues that have a material impact on the investors or other stakeholders of the company.	Evaluation Item Implementation Status(Note1) Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons Yes No Summary(Note2) J. Institutional support: a. Donation of social welfare institutions to purchase facilities and equipment and construction and repair (17 social welfare institutions), b. Donate funds for vulnerable groups to help plan(Kaohsiung City Government, Taoyuan City Government, Keelung City Government, ChiaYi County Government) ,c. donation of mooncakes to social welfare institutions. Note 1: If “Yes” is checked under implementation, please describe the key policies, strategies, and measures and results adopted. If “No” is checked under implementation, please give reasons and describe relevant strategies and measures to be adopted in the future. Note 2: Companies who have compiled CSR reports may cite the source from specific pages of their CSR reports instead. Note 3: The materiality principle refers to environmental, social, or corporate governance issues that have a material impact on the investors or other stakeholders of the company.
Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons		J. Institutional support: a. Donation of social welfare institutions to purchase facilities and equipment and construction and repair (17 social welfare institutions), b. Donate funds for vulnerable groups to help plan(Kaohsiung City Government, Taoyuan City Government, Keelung City Government, ChiaYi County Government) ,c. donation of mooncakes to social welfare institutions.
Implementation Status(Note1)	Summary(Note2)
	No
	Yes
	Evaluation Item

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	In compliance with Article 4 and Article 5 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.” Complying with the regulations specified in Article 7 of "Ethical Corporate Management
Implementation Status(Note)	Summary	(1) The Company complies with the Company Act, the securities trading law, and other related regulations, and upholding the “Diligence, Perseverance, Frugality and Trustworthiness” enterprise spirit in order to comply with the law and ethical standards. With the business philosophy of honesty, integrity, fairness, and transparency, self-discipline, and responsibility, the Company has established the Code of Ethics and Business Conduct, which have been approved by the Board of Directors. With the Company’s President Office as the driving unit to formulate and implement various ethical policies, the Company establishes a good corporate governance and risk control mechanism, to seek sustainable development of the Company. The Board of Directors and management also promises to actively implement and supervise the implementation of the integrity management policy. (2) a. The Company has established strict rules of conduct and ethics in the rules and regulations such as the “Personnel Management Rules” and “Working Rules”, and has specified the relevant reward and punishment regulations. Directors, managers,
	No
	Yes	V V
	Evaluation Item	1. Stipulating policies and plans for ethical corporate management (1) Has the Company established the Code of Ethics and Business Conduct, which have been approved by the Board of Directors, and clearly stipulated regulations and policies for ethical business conduct and relevant guidelines in company articles and external documents? Does the Company’s Directors and management team actively fulfill their commitment to corporate policies? (2) Has the company established a risk assessment mechanism against unethical conduct, regularly analyzed business

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Best Practice Principles for TWSE/GTSM Listed Companies," the Company has specified and enacted regulations designed to prevent unethical conduct in multiple rules and systems. Nevertheless, specific "Procedures for Ethical Management and Guidelines for Conduct" has yet to be formulated.
Implementation Status(Note)	Summary	servants of the Company, or those who have substantial control capabilities are prohibited from providing, pledge, requesting or accepting any illegitimate interests directly or indirectly, or making other violations of good faith, illegality, or breach of fiduciary duty to prevent malpractice, misappropriation of public funds, acceptance of bribes, disclosure or lies, and other acts of dishonesty. b. The Compay analyzes and assess periodically business activities within their business scope which are at a higher risk of being involved in unethical conduct. For those who engage in business activities with a high risk of dishonest behavior, the company has clearly established “Personnel Management Rules” and “Working Rules” which state that positions of interest for business, procurement, contracting, supervision, and budgeting, as well as contact with other manufacturers shall not accept business dinners or other entertainment activities invited by the manufacturer, nor accept the property or other interests of gifts. The offenders shall be excused from office and their Supervisors shall be jointly and severally punished. Besides, related duties have comprehensively promoted regular rotation operations to prevent the occurrence of any corruption.
	No
	Yes
	Evaluation Item	activities within their business scope which are at a higher risk of being involved in unethical conduct? Does the company establish prevention programs accordingly including measures prescribed in Article 7 Paragraph 2 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companie?

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	In compliance with Article 6, paragraph 1 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”	In compliance with Article 9 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.” In compliance with Article 17 of the “Ethical
Implementation Status(Note)	Summary	(3)The Company has clearly stipulated regulations and policies for ethical business conduct and relevant guidelines, code of conduct, whistleblowing, punitive measures for violations, and grievances in company articles and systems, including the “Personnel Management Rules,” “Code of Ethics and Business Conduct,” “Guidelines for Prevention of Insider Trading,” “Whistleblowing Procedures,” and “Guidelines to Employee Grievances.”. The Company has established “Ethical Code of Conduct” for the Directors and Managers of the Company to adhere to (please refer to page 122 of the annual report.). The adequacy and effectiveness of regulations and policies for ethical business conduct were reviewed on a regular basis。	(1) The contract signed by the Company for commercial activities is subject to the terms of good faith. In addition, the Company conduct inquiries such as honesty investigations for customers, suppliers, and other stakeholders to avoid the occurrence of dishonest behavior and damage of the Company’s rights and interests. (2) The President Office of the Company and the general management office of the whole enterprise are in charge of promoting ethical
	No
	Yes	V	V V
	Evaluation Item	(3) Has the Company established action plans to prevent unethical conduct? Has the Company clearly prescribed procedures, code of conduct, punitive measures for violations and appeal systems within the said plan? Did the action plans be implemented accordingly?	2. Implementing ethical corporate management (1) Has the Company evaluated ethical records of its counterparty? Does the contract signed by the Company and its trading counterparty clearly provide terms on ethical conduct? (2) Has the Company designated an exclusively (or

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.” In compliance with Article 19 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”
Implementation Status(Note)	Summary	business. They promote regulations and policies for ethical business conduct .In addition, they handles and verifies whistleblowing cases based on the Company’s Whistleblowing Procedure. The department in charge of promoting ethical business reports its ethical business management policy, and action plans to prevent unethical conduct to the Board of Directors at least once per year. The most recent report dated is on December 25, 2019. They mainly report the ethical corporate management policies, measures, implementation status of supervisory measures and commitments of the board of directors and management to implement business policies actively. Additionally the internal audit report is submitted to the Independent Director monthly. (3) a. The Company’s standards for the Board of Directors meetings has clearly states that if Directors or the juridical persons they represented have a personal interest, they shall state the key aspects of the interest in the meeting. If their interest may prejudice the interests of the Company, the persons concerned shall not participate in the discussion and voting of those items and shall recuse themselves from those sessions. Also, they shall not stand proxy for other Directors to exercise the voting right on those items. b. The Company has stated in its “Personnel Management Rules” that employees should strictly abide by the code of conduct for
	No
	Yes	V
	Evaluation Item	concurrently) dedicated unit reports its ethical business management policy, action plans to prevent unethical conduct, and implementation status of supervisory measures to the Board of Directors? (3) Has the Company established policies preventing conflict of interests, provided proper channels of appeal, and enforced these policies and channels accordingly?

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	In compliance with Article 20 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”
Implementation Status(Note)	Summary	avoidance of interests and proactively report ethical concerns such as conflicts of interest, and have provisions prohibiting competition to prevent conflicts of interest. c. The Company has provisions for “operational key-points for employee complaints” and “ Reporting Procedure “, etc., and provides specific reporting channels for reporting any illegal or improper behavior. (4) The Company has established an effective and improved accounting system and internal control mechanism, and fully implemented computerization of operations. The six management functions of personnel, finance, business, production, materials, and engineering are connected by computers, layer by layer, and executed for management of any abnormalities. In addition, the Company also established a professional and independent internal audit structure. The structure is divided into three levels. The first level is carried out by the Auditing Office attached to the Company’s Board of Directors. The internal auditors will establish annual audit plan to verify the level of compliance with established regulations to lower the risk from unethical conduct. And the second level is routine and project-based independent auditing carried out by the general management office for routines and projects. Moreover, since internal auditing is the duty of all employees, the third level of
	No
	Yes	V
	Evaluation Item	(4) Has the Company established effective accounting systems and internal control systems for enforcing ethical corporate management? Did internal auditors establish relevant audit plan to verify the status of compliance with unethical conduct prevention action plans based on the result of risk assessment on unethical conduct? Did the Company entrust audits to a CPA ?

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	In compliance with Article 22-2 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”	In compliance with Article 23 of the “Ethical Corporate Management
Implementation Status(Note)	Summary	auditing requires all departments to conduct voluntary operation inspections (on a monthly, quarterly, semi-annual, or annual basis) to extend the concept internal control to all levels of the Company. (5) Through regular corporate publications as well as various occasions, the Company promotes the corporate culture of “Diligence, Perseverance, Frugality and Trustworthiness,” as well as cultivating work ethics based on integrity, fairness and transparency, self-discipline, and a sense of responsibility. All new recruits receive corporate culture training. In addition, training courses about regulations, anti-fraud, and anti-corruption are held every year to strengthen the employees’ commitment to complying with management rules based on good faith. In 2020, the Company held internal and external education training related to the issue of integrity management (including compliance with business ethics, corporate ethics, prevention of insider trading, risk management and strengthening corporate governance), with a total of 27,678 person involved in, and the 262,515 training hours.	The Company has a “Employee Grievance Procedure” and “Internal and External Reporting Procedure of Unlawful and Unethical Behaviors” to provide a specific reporting and reward system:
	No
	Yes	V	V
	Evaluation Item	(5) Does the Company regularly organize internal and external training for ethical corporate management?	3. Status for enforcing whistle-blowing systems in the Company (1) Has the Company established concrete whistle-blowing and reward systems as well as

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Best Practice Principles for TWSE/GTSM Listed Companies.”	In compliance with Article 25 of the “Ethical
Implementation Status(Note)	Summary	(1) Providing multiple reporting channels such as actual mailboxes, e-mail boxes, and fax lines. Visible notices are placed around the main entrances to be used by informants. (2) After a case is filed, the relevant team members of the president office of the whole enterprise shall be responsible for the procedures of case review, filing, and follow-up investigation. (3) The principle of confidentiality: During and after an investigation, it is strictly forbidden to disclose any information to unrelated parties. Supervisors at all levels must also keep information confidential. All relevant information must be processed and archived according to the confidential document procedures to ensure the informant does not experience any unjust setback. (4) Where the occurrence of illegal or improper act has been found to be true, punitive actions will be taken based on the “Personnel Management Rules”. Judicial or prosecuting institutions will be alerted when necessary.	Information on integrity management and ethical behavior has been disclosed on both Chinese and English website of the Company.
	No
	Yes	V V	V
	Evaluation Item	accessible whistle-blowing channels? Does the Company assign a suitable and dedicated individual for the case being exposed by the whistle-blower? (2) Has the Company established standard operating procedures (SOP) for whistleblowing cases, follow-up measures and relevant systems of confidentiality after the investigation ? (3) Has the Company adopted protection measures against inappropriate disciplinary actions for the whistle-blower?	4. Improvement of information disclosure Does the Company disclose its ethical corporate management

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Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons	Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”
Implementation Status(Note)	Summary
	No
	Yes
	Evaluation Item	policies and the results of its implementation on the Company’s website and MOPS?

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3.4.8 The Searching Way of Principles of Corporate Governance and Related Bylaws the Company Adopted:
- The Principles of Corporate Governance and related bylaws the Company adopted are available on the Company’s website.
3.4.9 Other Significant Information Provides a Better Understanding of the State of the Company’s Implementation of Corporate Governance:
1.In line with Letter No. 0930005101 issued by the provisions of the Securities and Futures Bureau of the Executive Yuan Financial Supervisory Commission on October 28, 2004, and Letter No. 0930028186 issued by Taiwan Stock Exchange Cooperation on November 11, 2004, Principles of Ethical Corporate Management established by the Company is as follows:

Formosa Plastics Corporation

Code of Ethical Conduct for Directors and Managers

Chapter 1 General Principles

Article 1: The Code of Ethical Conduct (the “Code”) of Formosa Plastics Corporation (the “Company”) is established to stipulate rules for Directors and managers (including President, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Chief Financial Officer, Chief Accounting Officer, and other persons authorized to manage affairs and sign documents on behalf of the Company) to abide by in terms of ethical conduct when engaging in business activities within the scope of their authority, to prevent unethical conduct or any conduct that may damage the interest of the Company and its shareholders.

Chapter 2 Content of the Code

Article 2: Directors and managers shall conduct corporate affairs on the basis of integrity, faithfulness, compliance with laws, fairness and righteousness and with an ethical, self-disciplined attitude.
Article 3: Directors and managers shall avoid any conflicts of interest arising when their personal interest intervenes, or is likely to intervene in the overall interest of the Company, including but not limited to unable to perform their duties in an objective and efficient manner, or taking advantage of their position in the Company to obtain improper benefits for either themselves or their spouse, parents,

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children, or relatives within the second degree of kinship. To prevent conflicts of interest, any matters pertaining to lending funds, providing guarantees, and major asset transactions between the Company and the above-mentioned persons or their affiliated enterprise thereof shall be submitted to the Board of Directors for its approval in advance. The corresponding purchase (or sale) of goods shall be dealt with the best interest of the Company.

Article 4: When the Company has an opportunity for profit, the Directors and managers have the responsibility to conserve the reasonable and lawful benefits that can be obtained by the Company.
The Directors and managers shall not obtain personal gain by using the Company property or information or taking advantage of their positions. Unless otherwise stipulated in the Company Act or Articles of Association, they shall not engage in activities that compete with the business of the Company.
Article 5: The Directors and managers shall be bound by the obligation to maintain the confidentiality of any information regarding the Company itself or its suppliers and customers, except when authorized or required by law to disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Company or the suppliers and customers.
Article 6: The Directors and managers shall treat all suppliers and customers, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.
Article 7: The Directors and managers shall have the responsibility to safeguard the Company’s assets, to use the assets for official business purpose properly, and to avoid any impact on the Company’s profitability resulting from theft, negligence in care or waste of the assets.
Article 8: The Directors and managers shall comply with applicable laws and the Company’s regulations.
Article 9: When a director or manager is found by employee to have committed a violation of a law, regulation or the Code, the employee shall report to the Audit Committee, their direct

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managers, president office personnel, internal audit officer, or other appropriate personnel with sufficient evidence. Once the misconduct is confirmed, the Company will reward the above-mentioned employee in accordance with the Company’s rules for employment management.

The Company shall handle the above-mentioned report properly and confidentially. The Company also shall use its best efforts to ensure the safety of the conscientious reporter and protect him/her from all kinds of reprisals.

Article 10: Where a director or manager is verified to have violated the Code, in addition to being subject to punishment under the Company’s rules for employment management, the Company shall report the violation to the Board of Directors. The person involved in the violation shall be liable for civil, criminal or administrative responsibilities required by law and the Company shall disclose the violation on the Market Observation Post System (“MOPS”) immediately, including: the date of the violation, description of the violation, the provisions of the Code violated, and the disciplinary actions taken.

Chapter 3 Procedures for Exemption

Article 11: Where a Director or manager is to be exempted from the Code due to special circumstances, such exemption shall be approved by an majority vote at a meeting of the Board of Directors attended by over two-third of the Directors in person or through representation. The Company shall immediately disclose on the MOPS, including: date of exemption granted by the Board of Directors, any opposing or qualified opinion expressed by the independent directors, and the period of, reasons for, and the provisions of the Code behind the application of the exemption for shareholders to evaluate the appropriateness and to safeguard the interests of the Company.

Chapter 4 Method of Information Disclosure

Article 12: The Company shall disclose the Code on the Company’s website, annual reports, prospectuses, and the MOPS. Any amendment is subject to the same procedure.

Chapter 5 Additional Provision

Article 13: The Code shall be implemented after approval by the Board of Directors and shall be reported to a shareholders meeting. Any amendment is subject to the same procedure.

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2.The Company’s managers attend continuing education and training relevant to corporate governance each year, and all equip professional knowledge. Their training status is as follows:

Title	Name	Date of Training	Organization	Course	Hours
President	Jason Lin	2020.11.27 2020.11.27	Securities and Futures Institute Taiwan Corporate Governance Association	Econimic Outlook and Industrial Trends in 2021 The Role of Institutional Shareholder in the Corporation Governance Enhancement	3 3
Executive Vice President	K. L. Huang
Consultant	Cheng-Chung Cheng
Senior Vice President	Jerry Lin
Vice President	Ching-Lian Huang
Financial Officer	Ray Lei
Internal Audit Officer	Chin-Chuan Chuang
Accounting and Corporate Governance Officer	Chia-Tse Chang	2020.04.28	Securities and Futures Institute	How do the Directors and Supervisor of Listing Company Conduct their Duty?	3
		2020.07.20	Taiwan enterprise accounting association	The Investing Accounting Treatment of Related Company, JointVentureand Subsidiary	3
		2020.08.13	Taiwan enterprise accounting association	The Development Direction in the Post-Tax Avoidance Era and the Practice of Transfer Pricing andTax Inspection	3
		2020.09.15	Taiwan enterprise accounting association	Consolidated financial Statement Preparation Practice	3
		2020.10.13	Taiwan enterprise accounting association	Annual Budget Preparation-a Budget Template Combining Strategic GoalsandActions	3
		2020.11.27	Securities and FuturesInstitute	Econimic Outlook and Industrial Trendsin 2021	3
		2020.11.27	Taiwan Corporate Governance Association	The Role of Institutional Shareholder in the Corporation GovernanceEnhancement	3

Certification of employees whose jobs are related to the release of the Company’s financial information:

(1)Accounting department: 9 employees with Certified Public Accountant of Republic of China (Taiwan) Certification, 1 employees with Certified Public Accountant of USA Certification, 1 employee with Certified Internal Auditor(CIA) Certification and 1 employee with Certified Securities Analyst of Republic of China (Taiwan) Certification

(2)Finance department: None.

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(3)Audit department: 4 employees with Certified Internal Auditor (CIA) Certification, 6 employees with Certified Public Accountant of Republic of China (Taiwan) Certification and 1 employees with Chinese Institute of Certified Public Accountants.
Company Procedures for Handling Material Inside Information:
(1)"Diligence, Perseverance, Frugality and Trustworthiness" is the core enterprise spirit. The Company therefore set up a strict ethical policy hoping employees to obey every behavioral standard and principle of moral, and take full responsibility either for working or daily routine. Thus, employees disclose confidential information, tell a lie, indulge in malpractices, or spread rumors is strictly prohibited.
(2)The Company has set up and clearly stated the “Personnel Management Rules.” Without written permission issued by the Company, employees should not release any inside information or information has not been announced. Besides, the use of inside information for personal or business unrelated purposes are also strictly forbidden.
(3)The Company has set up "Spokesperson Procedure" for information announcement and the procedures for critical factory events. Besides the Company’s spokesperson, none of the staff can reveal corporate policies or business related information in order to prevent insider trading.

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3.4.10 Implementation Status of the Internal Control System

1. Internal control system statement

Formosa Plastics Corporation Internal Control System Statement

Date: 2021.3.17

The Company states the following with regard to its internal control system in 2020, based on the findings of a self-assessment:

The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management. The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, however, and the Company takes corrective actions as soon as a deficiency is identified.
The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. Control environment 2. Risk assessment 3. Control activities 4. Information and communications 5. Monitoring activities. Each element further contains several items. Please refer to the Regulations for details.
The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
Based on the findings of the assessment mentioned in the preceding paragraph, the Company believes that on 2019.12.31 its internal control system (including its supervision and management of subsidiaries), encompassing internal controls for understanding of the degree of achievement of operational effectiveness and efficiency objectives, reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance of reporting, and compliance with applicable laws, regulations, and bylaws, was effectively designed and operating, and reasonably assured the achievement of the above-stated objectives.
This Statement will become a major part of the content of the Company’s Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
This statement has been passed by the Board of Directors Meeting of the Company held on 2020.3.17, where all of 15 attending directors affirmed the content of this Statement.

Formosa Plastics Corporation

Chairman: Jason Lin

President: Jason Lin

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Where a CPA is commissioned to conduct a review on the internal control system, disclose the CPA’s audit report: None
3.4.11 If there has been any legal penalty against the company and its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder interests or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement: None.
3.4.12 Material resolutions of Shareholders Meeting or Board of Directors Meeting during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report:

1. Shareholders’ Meeting on June 10, 2020

Directors attending the Shareholders’ Meeting: 8 people including Jason Lin, K. L. Huang, Cheng-Chung Cheng, Jerry Lin, Ching-Lian Huang (above as Directors), C. L. Wei, C. J. Wu, Yen-Shiang Shih (above as Independent Directors).
(1) Ratification item

Proposal 1

Proposal: For approval of the 2019 Business Report and Financial

Statements as required by the Company Act.

(Proposed by the Board of Directors)

Resolution: Total voting rights represented by the attending shareholders are 4,943,078,492 votes for this proposal. Voting results show adoption of 4,574,902,376 votes (of which votes through electronic means account for 3,816,299,806), representing 92.6 ％ of the total voting rights. Dissent voting rights are 107,783 votes (of which votes through electronic means account for 107,783 votes), and invalid voting rights are 0 votes. Forfeit and rights not exercised are 368,068,333 votes (of which votes through electronic means account for 367,200,852 votes). The rights of adoption has exceeded the required number. The proposal has been adopted.

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Proposal 2

Proposal: For approval of the proposal for distribution of 2019 Profits as required by the Company Act. (Proposed by the Board of Directors)
Resolution: Total voting rights represented by the attending shareholders are 4,943,078,492 votes for this proposal. Voting results show adoption of 4,581,461,057 votes (of which votes through electronic means account for 3,822,858,487), representing 92.7 ％ of the total voting rights. Dissent voting rights are 167,098 votes (of which votes through electronic means account for 167,098 votes), and invalid voting rights are 0 votes. Forfeit and rights not exercised are 361,450,337 votes (of which votes through electronic means account for 360,582,856 votes). The rights of adoption has exceeded the required number. The proposal has been adopted.
(2) Discussion item

Proposal 1

Proposal: To amend the Articles of Incorporation of the Company.

(Proposed by the Board of Directors)

Resolution: Total voting rights represented by the attending shareholders are 4,943,078,492 votes for this proposal. Voting results show adoption of 4,514,236,601 votes (of which votes through electronic means account for 3,755,634,031), representing 91.3 ％ of the total voting rights. Dissent voting rights are 120,885 votes (of which votes through electronic means account for 120,885 votes), and invalid voting rights are 0 votes. Forfeit and rights not exercised are 428,721,006 votes (of which votes through electronic means account for 427,853,525 votes). The rights of adoption has exceeded the required number. The proposal has been adopted.

Proposal 2

Proposal: To amend the Rules of Procedure for Shareholders’ Meetings of the Company. (Proposed by the Board of Directors)
Resolution: Total voting rights represented by the attending shareholders are 4,943,078,492 votes for this proposal. Voting results show adoption of 4,514,229,721 votes (of which votes through electronic means account for 3,755,627,151), representing 91.3

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  - ％ of the total voting rights. Dissent voting rights are 122,169 votes (of which votes through electronic means account for 122,169 votes), and invalid voting rights are 0 votes. Forfeit and rights not exercised are 428,726,602 votes (of which votes through electronic means account for 427,859,121 votes). The rights of adoption has exceeded the required number. The proposal has been adopted.

(3) Extempore motion
(Yue-Ying, Shi, shareholder No.0489589, suggested that the Company should set up more chimney real-time monitoring system in Mailiao Complex of Formosa Grop. The Chairmanreplied and explained.)
(Rui-Yi, Chen, shareholder No. 0620408, asked the question about the medical dispute of Chang Gung Memorial Hospital. The Chairmanreplied and explained.)
(Yan-Ting, Lin, shareholder No. 0592925, asked the question about the Formosa Group expansion plan at Louisiana. The Chairmanreplied and explained.)

(4) Execution of key resolution

A. The 2020 Shareholders’ Meeting resolved cash dividends of NT$4.4 per share. On June 10, 2020, the Board of Directors set the date of July 8, 2020 as the base for the distribution of cash dividends. The actual distribution date was on July 31, 2020.
B. Other proposals of 2020 Shareholders’ Meeting including amendments to the Articles of Incorporation and the Rules of Procedure for Shareholders’ Meetings of the Company are carried out in accordance with the resolutions of the Shareholders’ Meeting.

2. Board of Directors Meeting on March 17, 2020

Proposal 1

Proposal: Employee compensation of 2019.

Resolution: All attendants approved and it submitted to report on the 2020 Shareholders’ Meeting.

Proposal 2

Proposal: Creation of the 2019 business report and financial statements and the 2020 operating plans.

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(The Secretariat reported that the appendix of this proposal have been submitted to the Audit Committee for approval, and the managers of each division reported the 2019 operating status and the 2020 annual operating plans.)

Resolution: All attendants voted in favor of the resolution.

Proposal 3

Proposal: Distribution of 2019 profits. Resolution: All attendants voted in favor of the resolution.

Proposal 4

Proposal: Calling of the 2020 Shareholders’ Meeting to take place on June 10, 2020.

Resolution: All attendants voted in favor of the resolution.

Proposal 5

Proposal: To amend the Articles of Incorporation of the Company. Resolution: All attendants voted in favor of the resolution and it is submitted to 2020 Shareholders’ Meeting for approval.

Proposal 6

Proposal: To compile plan of lending funds for 2020 Q2.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong, Wilfred Wang and Cher Wang, serve as Chairman, Managing Director, Director or representative of the institutional shareholders of the borrowing company, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse

themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 7

Proposal: Transaction with related parties.

(Proposed by the Audit Committee) (The Chairman and attending Managing Directors, William Wong, Wilfred Wang and Cher Wang, serve as Chairman, Managing Director, Director or

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representative of the institutional shareholders of the company of equipment transaction, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse

themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 8

Proposal: To formulate the Company’s internal control system statement. (Proposed by the Audit Committee)

Resolution: All attendants voted in favor of the resolution.

Proposal 9

Proposal: To amend the procedure of financial statements formulation of “Internal Control Systems” and “Internal Audit Implementation Rules”. (Proposed by the Audit Committee) Resolution: All attendants voted in favor of the resolution.

Proposal 10

Proposal: To amend the “Audit Committee Charter”.

(Proposed by the Audit Committee) Resolution: All attendants voted in favor of the resolution.

Proposal 11

Proposal: To amend the Rules of Procedure for Shareholders’ Meetings of the Company.

Resolution: All attendants voted in favor of the resolution.

Proposal 12

Proposal: To amend the “Rules and Procedures of Board Meeting” and “Rules Governing the Scope of Powers of Independent Directors” of the Company.

Resolution: All attendants voted in favor of the resolution.

Proposal 13

Proposal: Issuance of domestic unsecured ordinary corporate bonds of NT$10 billion to raise long-term funds to invest in domestic or overseas

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business, to build and expand current plant, to replace current plant and equipment, to pay off loans, and to fund the working capital. Resolution: All attendants voted in favor of the resolution.

3. Board of Directors Meeting on May 13, 2020

Proposal 1

Proposal: To amend “Internal Control Systems” and “Internal Audit Implementation Rules”. (Proposed by the Audit Committee) Resolution: All attendants voted in favor of the resolution. Proposal 2 Proposal: To compile plan of lending funds for 2020 Q3.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong and Wilfred Wang, serve as Chairman, Managing Director, Director or representative of the institutional shareholders of the borrowing company were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 3

Proposal: Transaction with related parties.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong and Wilfred Wang, serve as Chairman, Managing Director, Director or representative of the institutional shareholders of the company of equipment transaction were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse

themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 4

Proposal: To adjust investment structure of Formosa Ha Tinh Steel Corp..

(Proposed by the Audit Committee) Resolution: All attendants voted in favor of the resolution.

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Proposal 5

Proposal: To promote the managers. (Proposed by the Audit Committee) Resolution: All attendants voted in favor of the resolution.

4. Board of Directors Meeting on June 10, 2020

Proposal 1

Proposal: To set the base date and distribution date of the Company’s 2019 allocation of cash dividend.

Resolution: All attendants voted in favor of the resolution.

Proposal 2

Proposal: To amend the “Principles of Corporate Governance” and the “Principles of Corporate Social Responsibility” of the Company. Resolution: All attendants voted in favor of the resolution.

Proposal 3

Proposal: In order to meet operational needs, the Company plans to update the credit line negotiated with financial institutions

Resolution: All attendants voted in favor of the resolution.

5. Board of Directors Meeting on August 12, 2020

Proposal 1

Proposal: To discuss the 2020 annual salary of the managers not adjusts.

(Proposed by the Remuneration Committee)

Resolution: All attendants voted in favor of the resolution.

Proposal 2

Proposal: To amend the “Remuneration Committee Chater”.

(Proposed by the Remuneration Committee) Resolution: All attendants voted in favor of the resolution.

Proposal 3

Proposal: To set up the “Self-Evaluation of the Board of Directors”.

(Proposed by the Remuneration Committee) Resolution: All attendants voted in favor of the resolution.

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Proposal 4 Proposal: To compile plan of lending funds for 2020 Q4.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong and Cher Wang, serve as Chairman, Managing Director, Director or representative of the institutional shareholders of the borrowing company, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 5 Proposal: Transaction with related parties.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong and Cher Wang, serve as Chairman, Managing Director, Director or representative of the institutional shareholders of the company of equipment transaction, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse

themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 6

Proposal: Increased to invest Formosa Industries Corporation (FIC) for USD

185,000,000. (Proposed by the Audit Committee) (The Chairman and attending Directors, C. T. Lee and K. L. Huang serve as Director or Chairman of FIC were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

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6. Board of Directors Meeting on September 25, 2020

Proposal: To invest a join venture with Tokuyama Corp..

(Proposed by the Audit Committee) Resolution: All attendants voted in favor of the resolution.

7. Board of Directors Meeting on November 11, 2020

Proposal 1

Proposal: To compile plan of lending funds for 2021 Q1.

(Proposed by the Audit Committee)

Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 2 Proposal: Transaction with related parties.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong and Cher Wang, serve as Chairman, Managing Director, Director or representative of the institutional shareholders of the company of equipment transaction, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse

themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 3

Proposal: To donate NT$ 6,120,673 to Chang Gung University.

(Proposed by the Audit Committee) (The Chairman and attending Managing Directors, William Wong serve as Director or Chairman of Chang Gung University were recused from the discussion and voting. The Managing Director, C. T. Lee, was designated as temporary chair of the meeting.)

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Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 4

Proposal: Increased to invest NT$ 500,000,000 to Formosa Plastics Construction Corp..

(Proposed by the Audit Committee)

(The Chairman serves as Director of Formosa Plastics Construction Corp. was recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Director who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

8. Board of Directors Meeting on December 17, 2020

Proposal 1 Proposal: Preparation of 2020 internal audit plan.

Resolution: All attendants voted in favor of the resolution.

Proposal 2

Proposal: Transaction with related parties.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong and Wilfred Wang, serve as Chairman, Managing Director or Director of the company of equipment transaction were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse

themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 3

Proposal: To issue a letter of Support for bank loan of Formosa Ha Tinh (Cayman) Ltd.. (Proposed by the Audit Committee) (The Chairman and attending Directors, William Wong, Susan Wang, Wilfred Wang and Cher Wang, serve as Chairman or Director of Formosa Ha Tinh (Cayman) Ltd., or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

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Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 4

Proposal: To issue a letter of Support for bank loan of Formosa Ha Tinh Steel

Corp.. (Proposed by the Audit Committee) (The Chairman and attending Directors, William Wong, Susan Wang, Wilfred Wang and Cher Wang, serve as Chairman or Director of Formosa Ha Tinh Steel Corp., or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 5

Proposal: Increased to invest USD 4,600,000 to Formosa Mitsui Advanced

Chemicals Co., Ltd.. (Proposed by the Audit Committee) (The Chairman serves as Chairman of Formosa Mitsui Advanced Chemicals Co., Ltd. was recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Director who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 6

Proposal: To formulate the “Rules of Risk Management” of the Company.. Resolution: All attendants voted in favor of the resolution.

Proposal 7

Proposal: Issuance of domestic unsecured ordinary corporate bonds of NT$20 billion to raise long-term funds to invest in domestic or overseas business, to build and expand current plant, to replace current plant and equipment, to pay off loans, and to fund the working capital. Resolution: All attendants voted in favor of the resolution.

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Proposal 8

Proposal: In order to meet operational needs, the Company plans to get the credit line negotiated with financial institutions

Resolution: All attendants voted in favor of the resolution.

9. Board of Directors Meeting on March 17, 2021

Proposal 1

Proposal: Employee compensation of 2020.

Resolution: All attendants approved and it submitted to report on the 2021 Shareholders’ Meeting.

Proposal 2

Proposal: Creation of the 2020 business report and financial statements and the 2021 operating plans.

(The Secretariat reported that the appendix of this proposal have been submitted to the Audit Committee for approval, and the manager reported the 2020 operating status and the 20201annual operating plans.)

Resolution: All attendants voted in favor of the resolution.

Proposal 3

Proposal: Distribution of 2020 profits. Resolution: All attendants voted in favor of the resolution.

Proposal 4

Proposal: Calling of the 2021 Shareholders’ Meeting to take place on June 23, 2021.

Resolution: All attendants voted in favor of the resolution.

Proposal 5

Proposal: To reelect the all Directors of the Company at Shareholders’ meeting of 2021.

Resolution: All attendants voted in favor of the resolution.

Proposal 6 Proposal: To compile plan of lending funds for 2021 Q2.

(Proposed by the Audit Committee) (The Chairman and attending Managing Directors, William Wong, Susan Wang, Wilfred Wang and Cher Wang, serve as Chairman, Managing Director, Director or representative of the institutional shareholders of the borrowing

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company, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 7 Proposal: Transaction with related parties.

(Proposed by the Audit Committee)

(The Chairman and attending Managing Directors, William Wong, Susan Wang, Wilfred Wang and Cher Wang, serve as Chairman, Managing Director or Director of the company of equipment transaction, or as a relative party within the second degree of kinship of a managing director were recused from the discussion and voting. The Managing Director, C. L. Wei, was designated as temporary chair of the meeting.)

Resolution: Except for the above-mentioned Directors who had to recuse themselves from voting due to conflict of interest, the rest voted in favor of the resolution.

Proposal 8

Proposal: To formulate Internal Control System Statement of the Company. Resolution: All attendants voted in favor of the resolution.

Proposal 9

Proposal: Amendment of Rules for Election of Directors of the Company. Resolution: All attendants voted in favor of the resolution.

Proposal 10

Proposal: Amendment of Rules of Procedure for Shareholders’ Meetings of the Company.

Resolution: All attendants voted in favor of the resolution.

Proposal 11

Proposal: To promote the maangers of the Company. Resolution: All attendants voted in favor of the resolution.

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3.4.13 During the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, a director or supervisor has expressed a dissenting opinion with respect to a material resolution approved by the Board of Directors, and said dissenting opinion has been recorded or prepared as a written declaration, disclose the principal content thereof: None.
3.4.14 A summary of resignations and dismissals, during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, of the company’s chairman, general manager, chief accounting officer, chief financial officer, chief internal auditor, chief corporate governance officer, and chief research and development officer: None.

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3.5 Information Regarding the Company’s Audit Fee

Audit fee Range Table

Audit fee Range Table
Name of accounting firm	Name of CPA	Audit period	Remarks
KPMG Certified Public Accountants Firm	Astor Kou	2020.01.01~ 2020.12.31
	Winston Yu	2020.01.01~ 2020.12.31

Note: If the Company has changed CPA or accounting firm during the current fiscal year, the company shall report the information regarding the audit period covered by each CPA and the replacement reason.

Unit: NT$ thousands

			Unit: NT$	thousands
Fee Items Fee Range		Audit Fee	Non-audit Fee	Total
1	Under NT$ 1,999,999	-	770	770
2	NT$2,000,000~NT$3,999,999	-	-	-
3	NT$4,000,000~NT$5,999,999	-	-	-
4	NT$6,000,000~NT$7,999,999	6,600	-	6,600
5	NT$8,000,000~NT$9,999,999	-	-	-
6	Over NT$100,000,000	-	-	-

3.5.1 When non-audit fees paid to CPA, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed:

Name of accounting firm	Name of CPA	Audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Non-audit Fee	Audit period
			System Design	Company Registration	Human Resource	Others	Subtotal
KPMG Certified Public Accountants Firm	Astor Kou	6,600	0	0	0	770	770	2020.01.01 ~ 2020.12.31
	Winston Yu

Explanation: Non-audit fee includes the transfer pricing documentation with NT$400 thousand, master file of NT$150 thousand, country- by-country report of NT$100 thousand and sales tax direct deduction method of NT$120 thousand.

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3.5.2 When the company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed: Not applicable.
3.5.3 When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 10 % or more, the reduction in the amount of audit fees, reduction percentage, and reasons therefor shall be disclosed: Not applicable.
3.6 Replacement of CPA: the Company did not replace CPAs within the last two fiscal years.
3.7 The Company’s Chairman, President, or Any Manager Involved in Financial or Accounting Affairs Being Employed by the Auditor’s Firm or Any of its Affiliated Company within the Last Year: None.

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3.8 Changes in Shareholding Transfer or Shareholding Pledge by Directors, Supervisors, or Managers, and Major Shareholders Who Holds 10% of the Company Shares or More during the Most Recent Fiscal Year Up to the Date of Publication of the Annual Report.

3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

Title (Note 1)	Name	2020	2020	As of April 25, 2021	As of April 25, 2021
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman (President)	Jason Lin	0	0	0	0
Managing Director	Formosa Chemicals & Fibre Corp.	1	0	0	0
	William Wong	0	0	0	0
Managing Director	Nanya Plastics Corp.	0	0	0	0
	Susan Wang	0	0	0	0
Managing Director	Formosa Petrochemical Corp.	0	0	0	0
	Wilfred Wang	0	0	0	0
Managing Director (Independent Director)	C. L. Wei	0	0	0	0
Independent Director	C. J. Wu	0	0	0	0
Independent Director	Yen-Shiang Shih	0	0	0	0
Director	C. T. Lee	0	0	150,000	0
Director	Cher Wang	0	0	0	0
Director	K. H. Wu	0	0	0	0
Director	Ralph Ho	0	0	0	0
Director (Executive Vice President)	K. L. Huang	0	0	0	0
Director (Consultant) (Note 3)	Cheng-Chung Cheng	0	0	0	0
Director (Senior Vice President)	Jerry Lin	0	0	0	0
Director (Vice President) (Note 3)	Ching-Lian Huang	0	0	0	0
Consultant (Note 3)	Dong-Qin Ji	0	0	5,000	0
Acting Senior Vice President	Wen-Bee Kuo	0	0	0	0

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Title (Note 1)	Name	2020	2020	As of April 25, 2021	As of April 25, 2021
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Acting Senior Vice President	Tony Liang	0	0	0	0
Consultant (Note 3)	Tien-Hsiang Lee	0	0	0	0
Consultant (Note 3)	Jiann-San Yang	0	0	0	0
ActingVice President (Note 4)	Ming-Hung Cheng	-	-	6,000	0
ActingVice President (Note 4)	Han-Sheung Wang	-	-	0	0
Vice President	Kwang-Ming Chen	0	0	0	0
Vice President	Jen-Long Wu	0	0	0	0
ActingVice President (Note 4)	Yeats Yeh	-	-	0	0
ActingVice President (Note 4)	Chao-Jung Chen	-	-	0	0
ActingVice President (Note 4)	Y.Y. Lee	-	-	0	0
Financial Officer	Ray Lei	0	0	0	0
Accounting and Corporate Governance Officer	Chia-Tse Chang	0	0	0	0

Note 1: Shareholders holding greater than a 10 percent stake in the Company should be remark as major shareholders.
Note 2: If the transferees of shareholding transfer or shareholding pledge are related party, it should fill in the following table.
Note 3: Cheng-Chung Cheng, Dong-Qin Ji, Ching-Lian Huang, Tien-Hsiang Lee and Jiann-San Yang resigned the managers duty from March 17, 2021. Due to the resignation, the information of changes in shareholding transfer or pledge of Dong-Qin Ji, Tien-Hsiang Lee and Jiann-San Yang were as of March 17, 2021.
Note 4: Ming-Hung Cheng, Han-Sheung Wang, Yeats Yeh, Chao-Jung Chen and Y.Y. Lee were as the managers from March 17, 2021, and the information of changes in shareholding transfer or pledge was from March 17, 2021.

3.8.2 Information of Shareholdin Transfer: None. g

Name (Note1)	Reason for Transfer (Note2)	Date of Transaction	Transferee	Relationship between Transferee and Directors, Supervisors, Managers and Major Shareholders	Shares	Transaction Price
-	-	-	-	-	-	-

Note 1: Fill in the name of shareholders of the Company directors, supervisors, managers and 。 whose shareholding rate is over 10 percent.

Note 2: Fill in gain or disposal.

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3.8.3 Information of Shareholdin Pled e: None. g g

Name (Note1)	Reason for change of pledge (Note 2)	Date of change	Transferee	Relationship between Transferee and Directors, Supervisors, Managers and Major Shareholders	Shares	Shareholding Ratio	Pledge Ratio	Amount of pledge (redemption)
-	-	-	-	-	-	-	-	-

Note 1: Fill in the name of shareholders of the Company directors, supervisors, managers and 。 whose shareholding rate is over 10 percentage. Note 2: Fill in pledge or redemption.

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Remarks	Remarks
The relationship of the top 10 shareholders who are related parties according to Financial Accounting Criteria No.6, spouses or within second degree of kinship(Note 3)	Relationship	Representative of Formosa Chemicals & Fibre Corp. is the one of Chang Gung Medical Foundation’s Directors.	Representative of Formosa Chemicals & Fibre Corp. is the one of Chang Gung Medical Foundation’s Directors.	Nanya Plastics Corp. is the one of Formosa Chemicals & Fibre Corp.’s Directors.	1.Formosa Chemicals & Fibre Corp. invests in Formosa Petrochemical Corp. under equity method. 2.Formosa Petrochemical Corp. is the one of Formosa Chemicals & Fibre Corp.’s Directors.	Those two have the same key management personnel.	Those two have the same key management personnel.
	Name	Formosa Chemicals & Fibre Corp.	Chang Gung Medical Foundation	Nanya Plastics Corp.	Formosa Petrochemical Corp.	Chindwell International Investment Corp.	Vanson International Investment Co., Ltd.
Shareholding by nominee arrangement	%	-	-			-
	Shares	-	-			-
Spouse’s/minor’s Shareholding	%	-	-			-
	Shares	-	-			-
Own shareholding	%	9.44%	7.65%			6.26%
	Shares	601,011,035	486,978,693			398,731,554
Name (Note1)		Chang Gung Medical Foundation Representative: Ruey-Huei Wang	Formosa Chemicals & Fibre Corp. Representative: William Wong			Credit Suisse AG- Credit Suisse Singapore Branch

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Remarks	Remarks
The relationship of the top 10 shareholders who are related parties according to Financial Accounting Criteria No.6, spouses or within second degree of kinship(Note 3)	Relationship	Formosa Chemicals & Fibre Corp. is the one of Nanya Plastics Corp.’s Directors.	1.Nanya Plastics Corp. invests in Formosa Petrochemical Corp. under equity method. 2.Formosa Petrochemical Corp. is the one of Nanya Plastics Corp.’s Directors.	Those two have the same key management personnel.	Those two have the same key management personnel.	Those two have the same key management personnel.	Those two have the same key management personnel.
	Name	Formosa Chemicals & Fibre Corp.	Formosa Petrochemical Corp.	Credit Suisse AG- Credit Suisse Singapore Branch	Vanson International Investment Co., Ltd.	Credit Suisse AG- Credit Suisse Singapore Branch	Chindwell International Investment Corp.
Shareholding by nominee arrangement	%	-		-		-
	Shares	-		-		-
Spouse’s/minor’s Shareholding	%	-		-		-
	Shares	-		-		-
Own shareholding	%	4.63%		4.16%		3.05%
	Shares	294,793,105		264,692,768		194,241,528
Name (Note1)		Nanya Plastics Corp. Representative: Chia-Chau Wu		Chindwell International Investment Corp. Representative: Everred Corporate, Inc.		Vanson International Investment Co., Ltd. Representative: Landmark Capital Holdings Inc.

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Remarks	Remarks
The relationship of the top 10 shareholders who are related parties according to Financial Accounting Criteria No.6, spouses or within second degree of kinship(Note 3)	Relationship	1.Formosa Chemicals & Fibre Corp. invests in Formosa Petrochemical Corp. under equity method. 2.Formosa Chemicals & Fibre Corp.is the one of Formosa Petrochemical Corp.’s Directors.	1.Nanya Plastics Corp. invests in Formosa Petrochemical Corp. under equity method. 2.Nanya Plastics Corp. is the one of Formosa Petrochemical Corp.’s Directors.	-	-	-
	Name	Formosa Chemicals & Fibre Corp.	Nanya Plastics Corp.	-	-	-
Shareholding by nominee arrangement	%	-		-	-	-
	Shares	-		-	-	-
Spouse’s/minor’s Shareholding	%	-		-	-	-
	Shares	-		-	-	-
Own shareholding	%	2.07%		1.74%	1.56%	1.52%
	Shares	131,460,365		110,916,862	99,254,690	96,523,005
Name (Note1)		Formosa Petrochemical Corp. Representative: Bao-Lang Chen		Fubon Life Assurance Co.,Limited.- TWOTC-FFI	Government of Singapore	New Labor Pension Fund

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Total Ownership	%	75.86	26.09	100.00	50.00	100.00	99.77	29.07	100.00	100.00	100.00	90.00	50.00
	Shares	7,226,114,945	80,212	1,980,221,643	425,800,000	77,000	2,406,970,127	112,737,605	19,699,242	14,095,269	4,180,000	2,610,000	50,125
Direct or Indirect Ownership by Directors/Supervisors/Managers	%	47.30	3.43	67.08	0.00	0.00	74.83	0.01	66.67	66.67	71.28	44.96	0.00
	Shares	4,505,565,935	10,558	1,328,393,746	0	0	1,805,236,977	29,889	13,132,871	9,397,318	2,979,698	1,303,870	0
Ownership by the Company	%	28.56	22.66	32.92	50.00	100.00	24.94	29.06	33.33	33.33	28.72	45.04	50.00
	Shares	2,720,549,010	69,654	651,827,897	425,800,000	77,000	601,733,150	112,707,716	6,566,371	4,697,951	1,200,302	1,306,130	50,125
Affiliated Enterprises	(Note)	Formosa Petrochemical Corp.	Formosa Plastics Corp. U.S.A	Formosa Heavy Industries Corp.	Sky Dragon Investments Limited	Formosa Plastics Corporation (Cayman) Limited	Mai Liao Power Corp.	Formosa Sumco Technology Corp.	Formosa Transportaion Corp.	Formosa Fairway Corp.	Yi-Jih Development Corp.	Ya Tai Development Corp.	Formosa Asahi Spandex Co., Ltd.

150

Total Ownership	%	90.00	100.00	50.00	50.00	100.00	75.67	100.00	100.00	100.00
	Shares	54,090,000	100,000	24,459	12,500,000	2,966,376,000	129,685,525	180,000,000	50,000	5,073
Direct or Indirect Ownership by Directors/Supervisors/Managers	%	45.00	67.00	0.00	0.00	75.00	51.33	66.67	75.00	0.00
	Shares	27,045,801	67,000	0	0	2,224,782,000	87,971,050	120,000,000	37,500	0
Ownership by the Company	%	45.00	33.00	50.00	50.00	25.00	24.34	33.33	25.00	100.00
	Shares	27,044,199	33,000	24,459	12,500,000	741,594,000	41,714,475	60,000,000	12,500	5,073
Affiliated Enterprises	(Note)	Formosa Automobile Corp.	Wha Ya Park Management Consulting Co,.Ltd.	Formosa Daikin Advanced Chemicals Co., Ltd.	Formosa Tokuyama Advanced Chemicals Co., Ltd.	Formosa Resources Corp.	Formosa Environmental Technology Corp.	Formosa Plastics Construction Corp.	Formosa Group (Cayman) Limited	Formosa Industries Corporation

151

4.1.1 Source of Capital	Authorized Capital Paid-in Capital Remarks	Year / Par Capital	Month Value Shares Amount Shares Amount Sources of Capital Increased by Assets Other Others	than Cash	Earnings	capitalization	NT$ 2,448,361,840	2013.7 10 6,365,740,781 63,657,407,810 6,365,740,781 63,657,407,810 (Approval sought from Letter No. None None	Jin-Guan-Zheng-Fa	-1020025067 dated	2013.6.28)	Note 1: Fill up to the current fiscal year up to the date of publication of the annual report.	Note 2: Note the validity (approval) date and literature for fund increase.	Note 3: Shares issued in value lower than the par value shall be labelled through visible marks	Note 4: Monetary liabilities and technology offsetting shares shall be described with the type and amount of offset indicated.	Note 5: Private fundraising shall be labelled through visible marks.	Share Type Authorized Capital Remarks Issued Shares (Note) Un-issued Shares Total Shares	Common Stock 6,365,740,781 0 6,365,740,781 None	Note: Listed on TWSE

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Structure of Shareholders Quantity (Qty) Governmental Institution Financial Institution Other legal persons Natural Person Foreign Institutions and Foreign Individuals Total Number of persons 7 147 836 216,791 968 226,096 Shareholding 139,455,673 619,042,218 2,120,058,739 1,201,251,483 2,285,932,668 6,365,740,781 Shareholding ratio 2.19% 9.72% 33.31% 18.87% 35.91% 100.00% Note: A primary exchange-listed (or OTC-listed) company and emerging company should disclose the shareholding ratio of Chinese investors. Chinese investors meant for the citizens, legal persons, groups, institutions of Mainland China or the companies invested in third countries that have invested in Taiwan in accordance with Article 3 of the “the Measures Governing Investment Permit to the People of the Mainland Area.” 4.1.3 Status of Shareholding Distribution (The Company does not issue preferred stock.) 2021.4.25	Structure of Shareholders Quantity (Qty) Governmental Institution Financial Institution Other legal persons Natural Person Foreign Institutions and Foreign Individuals Total Number of persons 7 147 836 216,791 968 226,096 Shareholding 139,455,673 619,042,218 2,120,058,739 1,201,251,483 2,285,932,668 6,365,740,781 Shareholding ratio 2.19% 9.72% 33.31% 18.87% 35.91% 100.00% Note: A primary exchange-listed (or OTC-listed) company and emerging company should disclose the shareholding ratio of Chinese investors. Chinese investors meant for the citizens, legal persons, groups, institutions of Mainland China or the companies invested in third countries that have invested in Taiwan in accordance with Article 3 of the “the Measures Governing Investment Permit to the People of the Mainland Area.” 4.1.3 Status of Shareholding Distribution (The Company does not issue preferred stock.) 2021.4.25	Structure of Shareholders Quantity (Qty) Governmental Institution Financial Institution Other legal persons Natural Person Foreign Institutions and Foreign Individuals Total Number of persons 7 147 836 216,791 968 226,096 Shareholding 139,455,673 619,042,218 2,120,058,739 1,201,251,483 2,285,932,668 6,365,740,781 Shareholding ratio 2.19% 9.72% 33.31% 18.87% 35.91% 100.00% Note: A primary exchange-listed (or OTC-listed) company and emerging company should disclose the shareholding ratio of Chinese investors. Chinese investors meant for the citizens, legal persons, groups, institutions of Mainland China or the companies invested in third countries that have invested in Taiwan in accordance with Article 3 of the “the Measures Governing Investment Permit to the People of the Mainland Area.” 4.1.3 Status of Shareholding Distribution (The Company does not issue preferred stock.) 2021.4.25	Structure of Shareholders Quantity (Qty) Governmental Institution Financial Institution Other legal persons Natural Person Foreign Institutions and Foreign Individuals Total Number of persons 7 147 836 216,791 968 226,096 Shareholding 139,455,673 619,042,218 2,120,058,739 1,201,251,483 2,285,932,668 6,365,740,781 Shareholding ratio 2.19% 9.72% 33.31% 18.87% 35.91% 100.00% Note: A primary exchange-listed (or OTC-listed) company and emerging company should disclose the shareholding ratio of Chinese investors. Chinese investors meant for the citizens, legal persons, groups, institutions of Mainland China or the companies invested in third countries that have invested in Taiwan in accordance with Article 3 of the “the Measures Governing Investment Permit to the People of the Mainland Area.” 4.1.3 Status of Shareholding Distribution (The Company does not issue preferred stock.) 2021.4.25
Total	226,096	6,365,740,781	100.00%	Shareholding ratio(％)	0.379	2.764	1.637	1.083	0.746	1.114	1.300	1.703	1.661	1.599	1.172	0.868	0.791	83.183	100.000
Foreign Institutions and Foreign Individuals	968	2,285,932,668	35.91%
				Shareholding (Shares)	24,146,644	175,960,977	104,175,544	68,954,281	47,488,451	70,926,925	82,779,266	108,421,550	105,709,367	101,765,578	74,629,503	55,277,543	50,330,474	5,295,174,678	6,365,740,781
Natural Person	216,791	1,201,251,483	18.87%
Other legal persons	836	2,120,058,739	33.31%
				Number of Shareholders	101,957	85,644	14,413	5,701	2,689	2,918	2,122	1,561	768	364	152	78	56	326	218,749
Financial Institution	147	619,042,218	9.72%
Governmental Institution	7	139,455,673	2.19%
				Shareholding class	1~ 999	1,000~ 5,000	5,001~ 10,000	10,001~ 15,000	15,001~ 20,000	20,001~ 30,000	30,001~ 50,000	50,001~ 100,000	100,001~ 200,000	200,001~ 400,000	400,001~ 600,000	600,001~ 800,000	800,001~1,000,000	Over 1,000,001	Total
Structure of Shareholders Quantity (Qty)	Number of persons	Shareholding	Shareholding ratio

153

4.1.4 List of Major Shareholders 2021.4.25

4.1.4 Listof MajorShareholders		2021.4.25
Shares Name of Major Shareholders	Shareholding	Shareholding ratio(％)
Chang Gung Medical Foundation	601,011,035	9.44
Formosa Chemicals & Fibre Corp.	486,978,693	7.65
Credit Suisse AG- Credit Suisse Singapore Branch	398,731,554	6.26
Nanya Plastics Corp.	294,793,105	4.63
Chindwell International Investment Corp.	264,692,768	4.16
Vanson International Investment Co., Ltd.	194,241,528	3.05
Formosa Petrochemical Corp.	131,460,365	2.07
Fubon Life Assurance Co., Limited.- TWOTC-FFI	110,916,862	1.74
Government of Singapore	99,254,690	1.56
New Labor Pension Fund	96,523,005	1.52

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

in the Two Most Recent Years Unit: NT$ ； per share

Item	Year	Year	2019	2019	2021/1/1~ 2021/3/31 (Note 8)
Market Value per share(Note 1)	Highest		115.50	102.00	107.50
	Lowest		90.00	64.80	86.60
	Average		101.98	84.86	97.37
Net Worth per Share (Note 2)	Before Distribution		54.85	52.24	56.42
	After Distribution		50.45	49.84	-
Earnings per Share	Weighted Average Outstanding Shares		6,365,740,781	6,365,740,781	6,365,740,781
	EPS (Note 3)		5.86	3.15	2.35
Dividends per Share	Dividends perShare(Note 9)		4.40	2.40	-
	Stock Dividends	Stock Dividends from Retained earnings	0	0	-
		Stock Dividends from CapitalSurplus	0	0	-
	Accumulated Undistributed Dividends (Note4)		0	0	-
Investment Return Analysis	Price /EarningsRatio (Note 5)		17.40	26.94	-
	Price /DividendRatio (Note 6)		23.18	35.36	-
	Cash DividendYieldRate (Note7)		4.31	2.83	-

154

＊ In case of profits or capital reserve reinvested to allotment of shares, the number of shares to be distrusted should be disclosed with traced adjustment of market value and cash dividend information.
Note 1: Denotes the common shares with highest and lowest market value for each year, calculated for the average annual market value for the trading value of each year and the trading volume.
Note 2: Please use the number of share outstanding by the end of the year and filled out by the distribution of the resolutions made by the Shareholders’ Meeting of the second year.
Note 3: In the event of free allotment and requires tracing for adjustment, each EPS shall be listed before and after adjustment.
Note 4: In case the condition of outstanding equity security is distributed according to the undistributed dividends of that year accumulated to the year with earnings, the accumulated undistributed dividends of that year shall be disclosed respectively.
Note 5: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 6: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share
Note 7: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price
Note 8: Net worth per share and EPS shall be filled to the date of publication of the annual report with the data attested (reviewed) by the CPA in last quarter. The other columns should also be filled up data during the current fiscal year up to the date of publication of the annual.
Note 9: Dividends per share about 2020 is estimated, including NT$ 2.4 cash dividends/per share and NT$ 0 stock dividends/per share.

4.1.6 Dividend Policy and Implementation Status

Dividend policy:
The Company adheres to the principle of stability and balance considering shareholders’ profits. The dividend policy set out in the Articles of Association of the Company is as follows: The Company is in a business of a mature industry and earns its annual profits on a stable basis. The Company adopts a dividend policy that allows the distribution to be made in either way of or a combination of cash dividends, earnings capitalization and capitalization of capital reserve. At least fifty percent (50%) of the annual distributable earning remained after deducting the legal reserve and special reserve will be distributed, preferably in cash. The total percentage of the capitalization of retained earnings and capital reserve shall not be more than fifty percent (50%) of the total dividends distributed of such year.
The proposal to this Shareholders’ Meeting for dividend distribution: For this Shareholders’ Meeting, a proposed dividend per share is NT$ 2.4, including cash dividends with NT$ 2.4 per share and stock dividend with NT$ 0 per share.

155

Expected significant change in dividend policy: None.
4.1.7 Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent Shareholders’ Meeting: There are no proposed stock dividends at this Shareholders’ Meeting and the Company does not need to prepare financial forecasts, so it is not applicable.
4.1.8 Compensation of Employees and Directors
The compensation of employees and directors set out in the Articles of Association of the Company is as follows: Article 39: If the Company gains any profits in any year, the Company shall retain 0.05% to 0.5% of the pre-tax profit as employee compensation before deducting the employee compensation of such year; provided, however, that the Company shall reserve the amount for compensating the deficit, if any. The determination of employee compensation shall be made in accordance with Article 235-1 of the Company Act. Article 40: If there are any earnings after final account settlement, the Company shall pay off the applicable taxes, compensate the accrued deficit and retain 10% as legal reserve and an additional amount as special reserve before distributing dividends. If there are any remaining earnings of such year, the Board may, combining the undistributed earnings of previous years, propose a shareholder bonus plan and submit for the approval in a general shareholders meeting.
The accounting treatment of the discrepancy between accrual and actual payment for the employee compensation for directors: Based on the Articles of Association of the Company, it retains 0.13 ％ of the pre-tax profit of 2020 as employee compensation before deducting the employee compensation of such year and employee compensation is paid in cash. If the actual amounts are different from the accrual amounts approved by Board of Directors, the difference will be treated as changes in accounting estimates for next year.
Distribution of 2020 compensation approved by the Board of Directors:

The Board of Directors meeting on March 17, 2021 approved:

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(1) The amounts of employees’ cash compensation are NT$ 30,211 thousand; the amount of employees’ stock compensation is NT$ 0; the amount of directors’ cash compensation is NT$ 0.
(2) The amount of employees’ stock compensation is NT$ 0, which accounted for 0% to the amount to earnings after tax and employee compensation.
The actual distribution of employee, director, and supervisor compensation for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor compensation, additionally the discrepancy, cause, and how it is treated.

The Board of Directors meeting on March 17, 2020 approved:

(1) The actual amounts of employees’ cash compensation are NT$ 55,553 thousand; the actual amount of employees’ stock compensation is NT$ 0; the actual amount of directors’ cash compensation is NT$ 0.
(2) The actual amount of employees’ stock compensation is NT$ 0, which accounted for 0% to the amount to earnings after tax and employee compensation.
(3) The actual amounts of employees’ cash compensation and stock compensation, and the actual amounts of directors’ cash compensation are consistent with the amounts approved by Board of Directors. If the directors and supervisors have not received the compensations for more than five years, they will be transferred to other income of the Company.
The Company’s employee compensation is distributed in cash, which adheres to the spirit of corporate governance, and is based on the dual principle of motivating employee performance and not diluting equity to protect shareholders’ equity.

4.1.9 Share Repurchases by the Company: None.

157

4.2 Issuance of Cor orate Bonds p

Corporate Bond Type (Note 1)	Corporate Bond Type (Note 1)	The 3rdTranche of Unsecured Corporate Bonds, 2012	The 1stTranche of Unsecured Corporate Bonds, 2013
Issue date		2012.11.5	2013.6.10
Denomination		NT$1,000,000	NT$1,000,000
Issuing and transaction location(Note 2)		Taiwan	Taiwan
Issue price		Issue by denomination	Issue by denomination
Total price		NT$9,000,000,000	NT$11,500,000,000
Coupon rate		5 years: 1.25% 7 years: 1.39% 10 years: 1.53%	4 years: 1.23% 10 years: 1.52%
Tenor		Coupon A: 5 years； Maturity: 2017.11.5 Coupon B: 7 years； Maturity: 2019.11.5 Coupon C: 10 years； Maturity: 2022.11.5	Coupon A: 4 years； Maturity: 2017.6.10 Coupon B: 10 years； Maturity: 2023.6.10
Guarantee		None	None
Trustee		Bank of Taiwan-Trust Department	Bank of Taiwan-Trust Department
Underwriting institution		None	None
Certified lawyer		AY Commercial Law Offices: Frank Lin	AY Commercial Law Offices: Frank Lin
CPA		KPMG: Eric Wu,Isabel Lee	KPMG: Eric Wu,Isabel Lee
Repayment method		1.Interest: paid annually on the outstanding amount of the bond. 2. Principle: Coupon A: Repayment of 50% of the principal in the fourth and fifth year respectively. Coupon B: Repayment of 50% of the principal in the sixth and seventh year respectively. Coupon C: Repayment of 50% of the principal in the ninth and tenth year respectively.	1.Interest: paid annually on the outstanding amount of the bond. 2. Principle: Coupon A: Repayment of 50% of the principal in the third and fourth year respectively. Coupon B: Repayment of 50% of the principal in the ninth and tenth year respectively.
Outstanding principal		NT$2,500,000,000	NT$1,500,000,000
Terms of redemption or advance repayment		None	None
Restrictive clause(Note 3)		None	None
Name of credit rating agency, rating date, rating of corporate bonds		Taiwan Ratings Corp.；2012.9.19； twAA-	Taiwan Ratings Corp.；2013.4.9； twAA-
Other rights attached	As of the publication date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None	None
	Issuance and conversion (exchange or subscription) method	None	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’equity		None	None
Transfer agent		None	None

158

Corporate Bond Type (Note 1)	Corporate Bond Type (Note 1)	The 2ndTranche of Unsecured CorporateBonds,2013	The 1stTranche of Unsecured CorporateBonds,2014
Issue date		2013.11.8	2014.5.21
Denomination		NT$1,000,000	NT$1,000,000
Issuing and transaction location(Note 2)		Taiwan	Taiwan
Issueprice		Issue by denomination	Issue by denomination
Totalprice		NT$8,500,000,000元	NT$6,000,000,000元
Coupon rate		5 years: 1.42% 10 years:1.94%	10 years: 1.83% 12years:1.92%
Tenor		Coupon A: 5 years； Maturity: 2018.11.8 Coupon B: 10 years； Maturity:2023.11.8	Coupon A: 10 years； Maturity: 2024.5.21 Coupon B: 12 years； Maturity:2026.5.21
Guarantee		None	None
Trustee		Bankof Taiwan- TrustDepartment	Bankof Taiwan- TrustDepartment
Underwritinginstitution		None	None
Certified lawyer		AY Commercial Law Offices: Frank Lin	AY Commercial Law Offices: Frank Lin
CPA		KPMG:Eric Wu,Astor Kou	KPMG:Eric Wu,Astor Kou
Repayment method		1.Interest: paid annually on the outstanding amount of the bond. 2. Principle: Coupon A: Repayment of 50% of the principal in the fourth and fifth year respectively. Coupon B: Repayment of 50% of the principal in the ninth and tenth year respectively.	1.Interest: paid annually on the outstanding amount of the bond. 2. Principle: Coupon A: Repayment of 50% of the principal in the ninth and tenth year respectively. Coupon B: Repayment of 50% of the principal in the eleventh and twelfth year respectively.
Outstanding principal		NT$6,300,000,000	NT$6,000,000,000
Terms of redemption or advance repayment		None	None
Restrictive clause(Note 3)		None	None
Name of credit rating agency, rating date, rating of corporate bonds		Taiwan Ratings Corp.; 2013.8.23； twAA-	Taiwan Ratings Corp.；2014.3.27； twAA-
Other rights attached	As of the publication date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None	None
	Issuance and conversion (exchange or subscription) method	None	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’equity		None	None
Transfer agent		None	None

159

Corporate Bond Type (Note 1)	Corporate Bond Type (Note 1)	The 1~~st~~Tranche of Unsecured Corporate Bonds, 2017	The 1~~st~~Tranche of Unsecured Corporate Bonds, 2018
Issue date		2017.5.19	2018.6.26
Denomination		NT$1,000,000	NT$1,000,000
Issuing and transaction location(Note 2)		Taiwan	Taiwan
Issue price		Issue by denomination	Issue by denomination
Total price		NT$7,000,000,000	NT$9,300,000,000
Coupon rate		5 years: 1.09% 7 years: 1.32%	5 years: 0.82% 7 years: 0.93% 10 years: 1.09%
Tenor		Coupon A: 5 years； Maturity: 2022.5.19 Coupon B: 7 years； Maturity: 2024.5.19	Coupon A: 5 years； Maturity: 2023.6.26 Coupon B: 7 years； Maturity: 2025.6.26 Coupon C: 10 years； Maturity: 2028.6.26
Guarantee		None	None
Trustee		Bank of Taiwan-Trust Department	Bank of Taiwan-Trust Department
Underwriting institution		Total 13 underwriting institutions, including Yuanta Securities and so on.	Total 13 underwriting institutions, including Fubon Securities and so on.
Certified lawyer		AY Commercial Law Offices: Frank Lin	AY Commercial Law Offices: Frank Lin
CPA		KPMG: Delphi Chen, Winston Yu	KPMG: Astor Kou, Winston Yu
Repayment method		1.Interest: paid annually on the outstanding amount of the bond. 2. Principle: Coupon A: Repayment of 50% of the principal in the fourth and fifth year respectively. Coupon B: Repayment of 50% of the principal in the sixth and seventh year respectively.	~~1.Interest: paid annually on the~~ outstanding amount of the bond. 2. Principle: Coupon A: Repayment of 50% of the principal in the fourth and fifth year respectively. Coupon B: Repayment of 50% of the principal in the sixth and seventh year respectively. Coupon C: Repayment of 50% of the principal in the ninth and tenth year respectively.
Outstanding principal		NT$7,000,000,000	NT$9,300,000,000
Terms of redemption or advance repayment		None	None
Restrictive clause(Note 3)		None	None
Name of credit rating agency, rating date, rating of corporate bonds		None	None
Other rights attached	As of the publication date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None	None
	Issuance and conversion (exchange or subscription) method	None	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’equity		None	None
Transfer agent		None	None

160

Corporate Bond Type (Note 1)	Corporate Bond Type (Note 1)	The 1~~st~~Tranche of Unsecured Corporate Bonds, 2020
Issue date		2020.6.22
Denomination		NT$1,000,000
Issuing and transaction location(Note 2)		Taiwan
Issue price		Issue by denomination
Total price		NT$8,350,000,000
Coupon rate		5 years: 0.58% 7 years: 0.63% 10 years: 0.67%
Tenor		Coupon A: 5 years； Maturity: 2025.6.22 Coupon B: 7 years； Maturity: 2027.6.22 Coupon C: 10 years； Maturity: 2030.6.22
Guarantee		None
Trustee		Bank of Taiwan-Trust Department
Underwriting institution		Total 12 underwriting institutions, including Fubon Securities and so on.
Certified lawyer		AY Commercial Law Offices: Jerry Huang
CPA		KPMG: Astor Kou, Winston Yu
Repayment method		~~1.Interest: paid annually on the~~ outstanding amount of the bond. 2. Principle: Coupon A: Repayment of 50% of the principal in the fourth and fifth year respectively. Coupon B: Repayment of 50% of the principal in the sixth and seventh year respectively. Coupon C: Repayment of 50% of the principal in the ninth and tenth year respectively.
Outstanding principal		NT$8,350,000,000
Terms of redemption or advance repayment		None
Restrictive clause(Note 3)		None
Name of credit rating agency, rating date, rating of corporate bonds		None
Other rights attached	As of the publication date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’equity		None
Transfer agent		None

161

Note 1: The number of columns is adjusted depending on the actual issuances.

Note 2: Fill in if it is overseas corporation bond.

Note 3: Such as limiting the distribution of cash dividends, foreign investment or the requirement to maintain a certain proportion of assets, etc.

4.3 Issuance of Preferred Stock: None.

4.4 Issuance of Global Depositary Receipts: None.
4.5 Issuance of Employee Stock Options: None.
4.6 Issuance of New Shares in Connection with Mergers or Acquisitions or with Acquisitions of Shares of Other Companies: None.

4.7 The Implementation of the Company’s Capital Allocation Plans

4.7.1 Content of the Plan
For the period as of the quarter preceding the date of publication of the annual report, with respect to each uncompleted public issue or private placement of securities: None.
Issues and placements that were completed in the past 3 years but have not yet fully yielded the planned benefits: None.

4.7.2 The Status of Implementation

With respect to funds usage under the plans referred to in the preceding subparagraph, the annual report shall (for the period as of the quarter preceding the date of publication of the annual report) analyze the status of implementation and compare actual benefits with expected benefits: None.

162

V. Operational Highlights

5.1 Business Activities

5.1.1 Scope of Business

Main areas of business operations:
(1)B202010: Nonmetallic Mining
(2)C199990: Other Food Manufacturing Not Elsewhere Classified
(3)C801010: Basic Industrial Chemical Manufacturing

(4)C801020: Petrochemical Manufacturing

(5)C801100: Synthetic Resin & Plastic Manufacturing

(6)C801120: Manmade Fiber Manufacturing

(7)C801990: Other Chemical Materials Manufacturing

(8)C802120: Industrial Catalyst Manufacturing

(9)C802170: Poisonous Chemical Material Manufacturing

(10)C805020: Plastic Sheets & Bags Manufacturing

(11)C901070: Stone Products Manufacturing

(12)CB01010: Machinery and Equipment Manufacturing

(13)CC01080: Electronic Parts and Components Manufacturing

(14)D101050: Steam and Electricity Paragenesis

(15)D301010: Water Supply

(16)D401010: Heat Energy Supplying

(17)E603050: Cybernation Equipments Construction

(18)H701010: Residence and Buildings Lease Construction and Development

(19)H701040: Specialized Field Construction and Development

(20)ID01010: Metrological Instruments Identify

(21)IZ99990: Other Industry and Commerce Services Not Elsewhere Classified

(22)J101050: Sanitary and Pollution Controlling Services

(23)ZZ99999: All business items that are not prohibited or restricted by law, except those that are subject to special approval

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2. Revenue distribution

Divisions	(％) of Total Sales	Mainly Products
Plastics Division	33.68	Polyvinyl chloride(PVC), Caustic soda
Polyolefin Division	21.11	High density polyethylene(HDPE), Ethylene vinyl acetate copolymer(EVA), Linear low density polyethylene(LLDPE), Low density polyethylene(LDPE)
Polypropylene Division	18.27	Polypropylene(PP)、 Polyoxymethylene(POM)
Tairylan Division	14.99	Acrylic esters(AE), Carbon fiber, N-butanol(NBA)、Super absorbent polymer(SAP)
Chemicals Division	9.98	Acrylonitrile(AN), Methyl tert-butyl ether(MTBE), Methyl methacrylate (MMA), Epichlorohydrin(ECH)
CarbideDivision	0.58	Calciumcarbonate, Calciumoxide
Eng. & Const. Division	0.75	Water, Electricity, Steam
Others	0.64	Distributed control system(DCS), etc.

Products:
(1) Petrochemical and plastic products: PVC, caustic soda (liquid, flakes, pearls), liquid chlorine, hydrochloric acid (HCl), vinyl chloride (VCM), ethylene dichloride (EDC), impact modifier (MBS), refrigerant, processing aids (PA), lithium-ion battery electrolyte, acrylic acid and ester, SAP, NBA, butyraldehyde, iso-butyraldehyde, HDPE, LDPE, EVA, LLDPE, wax, acetonitrile (ACN), AN, ECH, MMA, methacrylic acid(MAA), MTBE, 1-butene (B1), PP, POM.
(2) Electronic control system: DCS, power management system (PMS), safety instrumented system (SIS), automated warehouse management system & logistics control system, cloud application integration & big data analysis, artificial intelligence application, the solution of the industrial internet of things, real-time production management system (RTPMS), laboratory information management system (LIMS).

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(3) Others: calcium oxide, ground calcium carbonate, precipitated calcium carbonate, calcium carbonate masterbatch and white masterbatch
(4) Artificial fiber: Carbon fiber.
New product development plan:
synthesis and development of aerogel materials, anti-static PVC, acryl grafted vinyl chloride copolymer resin for internal plasticized flexible material, super-elastic PVC glove paste resin, colloidal electrolytes, transparence weatherability modifier, intermediate modulus carbon fiber by DJWS process, carbon fiber for polyether ether ketone (PEEK) resin, carbon fiber for thermoplastic PP resin, eco-friendly SAP, novel odor control SAP, new SAP applied to ultra-thin diapers with low pulp content, new SAP applied to napkins, SAP applied to adult incontinence of Europe and baby diaper of North Africa, seabed cable sheath pipe grade for the wind power, 5G wire and cable foam grade material, high performance package material BOPE, PE50 pipe grade, EVA product with high VA content(VA 33%), PP microfiber grade, melt-blown PP of anti-γ-ray for medical grade, impact copolymer for optical protective film grade, no-spraying and metallic like PP, calcium carbonate whisker, matting agent with high haze, breathable film compound, PBAT-based white masterbatch and calcium carbonate masterbatch, anti-bacterial oyster shell powder, anti-fouling compound resin.

5.1.2 Industry Overview

The current status and development of the industry, and development trends and competition for the Company’s products:
(1) PVC: China’s PVC demand increased from 20.27m tons in 2019 to 20.68m tons in 2020, up 2.0%. PVC volume of the Company exports to China accounted for 26% of total exports. China’s PVC market continued to grow with total capacities increased from 25.18m tons in 2019 to 26.64m tons in 2020 and a utilization rate of 76%. Chinese government pays highly attention on environment and occupational safety. Restricting factories expansion and eliminating idle capacity are also highly concerned by central and local authorities. In order to comply with environmental regulations, the PVC peers have to pay higher costs to improve the process and exhaust emissions. Moreover, the increasing cost of delivery, manpower, raw material (coal,

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calcium carbide), and the trade war between Australia and China led to the higher price of coal in China, which pushed up the cost for coal-based PVC production and diminished the export of China. In 2020, PVC demand in India was 2.83m tons, dwon 17.8% from 2019. The Company’s India PVC export accounted for 27% of total PVC export volume. Indian Government restricted people migration in April and August with preventing from COVID-19, wich resulted in the export and import difficulty and the decline of PVC demand in 2020. Moreover, the Company has recently expanded to Australia market and have received the credential from clients on the quality and delivery time. Clients also provided the technical exchanges and increased the purchase. The PVC sales volume in Australia and New Zealand were 166k tons in 2020. Furthermore, PVC demand in the US increased from 4.65m tons in 2019 to 4.99m in 2020, up 7.3% with a 81.5% utilization rate. The hurrican in the US hit the Gulf of Mexico, which caused the PVC makers major such as FPCUSA and Westlake in the towns of petrochemical raw material production in Texas and Louisiana declared force majeure and decreased the capacity utilization. The Company is expected that domestic PVC demand in the US will grow gradually and export volume will decline in 2021. In summary, the decrease in the export volume from China and the US along with the incremental demand from emerging market will benefit the Company’s PVC sales.

(2) Caustic Soda: The outbreak of COVID-19 in 2020 impacted the global economy negatively. The deamd of Caustic Soda downstream, such as textiles and alumina industry, has been weak for a period of time. In the first half of 2020, the average utilization rate of textiles in China fell to 50%, and the London aluminum price (LME) also fell to a lower level of US$1,600/ton. Subsequent difficulties for international PVC sales due to the city’s lockdown in India and chlorine outlet problem caused caustic soda plants to reduce production and a short-term price rise. Following the unblocking in Europe and the rise of PVC price in Asia, the utilization rate of caustic soda plants increased, resulting in the surplus status. In the second half of 2020, Qingdao Haiwan and Yantai Wanhua etc added 1 million DMT/Y

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of caustic soda capacity to make a significant downward trend of caustic soda price. Although the production in Japan and South Korea decreased following by South Korea's LG, YNCC and Japan's Eneos Ethylene Cracker outage, the impact for caustic soda price was quite limited. Looking at the Asian Caustic Soda market in 2020, the major exporters such as China, Japan, and South Korea, all increased their export volume compared to 2019. It was obvious that the domestic market was not very well because of pandemic, and manufacturers increase the export. With the pandemic status getting to the positive gradually in 2021, the caustic soda price is expected to rebound. The caustic soda contract export volume of the Company accounted for 96% of total export, mainly supplied to US West Coast and Australia. In the future, in addition to stabilizing the contract volume, the Company will increase the spot volume to gain the profit with the increasing price .
(3) Acrylic esters (AE): In first half of 2020, due to COVID 19 pandemic, the most countries applied lockdown, which depressed the worldwide economic. However, in Q4 of 2020, AE peers’ mechanical problems, such as Tasnee and LG, resulted in the tight supply and market price increased sharply. In Q1 of 2021, force majure of German BASF and south Africa Sasol, and the shortage of cargo pushed up the AE price. The Company estimated the demand in coating and package industry in Q2 of 2021 will be strong gradually. The Company will keep the market share and expand Europe market.
(4) Super Absorbent Polymer (SAP): In the first half of 2020, the production capacity of non-woven fabrics was converted into masks and protective clothing under the influence of COVID-19, which caused the price of non-woven fabrics trend up, and affected the capacity utilization rate of diaper factories, and the continuous oversupply of SAP made the price down. SAP demand stabilized in the second half of 2020, but the increasing ocean freight led to the unfavorable for the shipment to the countries with longer sea voyage. In the view of this, the Company keeps expanding South East Asian market, where the freight is cheaper. In 2020, Bangladesh’s sales record increased by 48% from 2019. The Company also successfully opened up new customers in Malaysian in 2020. The Company will continue

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to improve the quality of SAP to compiete Sumitomo and Sandia, and expanding sales in the South East Asian market.

(5) N-butanol (NBA): NBA is mainly used in various resins and solvents such as butyl acrylate (BA), butyl acetate and ethylene glycol butyl ether. In Q1 to Q3 of 2020, In Q1 to Q3 of 2020, due to COVID 19 pandemic, the most countries applied lockdown, which depressed the worldwide economic. The only 50~70% utilization rate of downstream ester plants in 2020 made the n-butanol market weaker. From Q4 of 2020, along with the controlled pandemic, the gradually recovering downstream demand and shutdown of NBA peers for maintenance made the market gradually recovered to 2021. The global new NBA capacity is only 150K tons/year from India (accounting for 2.3% of global capacity). The oversupply situation is expected to ease. In 2021, the Company will give its priority to the supply of NBA to AE plant in Taiwan to produce BA, and strengthen the advantages from vertical integration. At the same time, the Company will develop the customers in China and expand its NBA, n-butyraldehyde and isobutyraldehyde sales in other East Asia and South Asia countries.
(6) Polyethylene (PE): In 2020, due to COVID-19 outbreak and global economic decline, the growth of global PE demand was weighed down to the lowest point of -0.3% growth rate in the last decade. In 2021, with the controlled COVID-19, IHS estimated that the growth of PE will turn to the positive and forcasted global demand is 10.9m tons with 4.8% growth rate. However, the global capacity is 13.1m tons with overcapacity around 22.64 m tons. In China PE market, the total PE capacity is 26.94m tons (added 5.9m tpa capacity in 2021) with total demand 38.78m tons (still hold the highest PE imports at 11.84m tons). China market is still the key export market for the Company because of the geographic advantage. In terms of Ethylene Vinyl Acetate (EVA), in 2020, with healthy footwear and solar PV demand growth and without new capacity addition, EVA price was quite firm. Looking into 2021, China is still a major EVA importing country, and the forecast of the Company operating conditions would be moderate. However, with pending 1,200 KTA of EVA capacity coming online in 2021, the Company expects the price may be down and the market competition becomes more severe.

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(7) Acrylonitrile (AN): In 2020, with COVID-19 outbreak, many countries had curtailed economic activities in order to control the pandemic, causing the demand for AN to shrink sharply. In March 2020, the crude oil price collapsed made downstream customers withdrew from the market to wait and see. In order to reduce losses, AN suppliers were forced to drastically lower their capacity utilization rate. AN average price in Asia fell sharply from USD 1,417/tons (2019/12) to USD 870/tons (2020/5), a drop of USD 547/mt. Subsequently, as OPEC+ reached a joint production reduction agreement, crude oil prices rebound and downstream customers actively replenished their inventory. The AN price finally stopped falling and stabilized. In the second half of 2020, AN plants of Jiangsu Sailboat, Shandong Haili in China, CPDC in Taiwan, and Taekwang, Tongsuh Petrochemical in South Korea were successively shut down for maintenance due to technical issues, and deep-sea volumes form America and Europe reduced by hurricanes in the US and Turkey's Petkim repeatedly delayed maintenance. As a result, the supply of AN in Asia has dropped sharply, and AN price has been rising driven by the strong recovery in downstream ABS product demand. The average AN price in December 2020 has risen to USD1,709/tons. Looking into 2021, the spot supplies were tight globally following the force majeures announced by Cornerstone(240K tap) in the US and Ineos(360K tap) in Europe in Q1. Starting from Q2, as the global economic recovery and the shutdown or reduce production facilities will be back to the normal, market supply and demand are expected balance to tight, and the AN price will continue moving up. Until Q4, due to the commissioning of the new ANⅡ plant (130K tpa) in Keluer, Shandong, China, and the low season of traditional demand for downstream products, the AN market will once again face downward pressure.
(8) Methyl methacrylate (MMA): In the frist half of 2020, in order to curb the COVID-19 pandemic, many countries adopt the lockdown. The global flow of people, logistics, and consumer demand have almost stagnated, resulting in a sharp decline in MMA demand. Although MMA suppliers have taken measures such as reduction or even suspension of production, it still can’t

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keep up with the shrinking demand. MMA price in Asia fell sharply from USD1,553/tons (2019/12) to USD1,332/tons (2020/5). Immediately afterwards, due to the sharp rise in the price of acetone raw material, the MMA peers intensified production cuts due to unbearable huge losses, and the MMA price finally bottomed out and stabilized. In the second half of 2020, because of the strengthening of orders for pandemic prevention panels and light guide panels in Europe and the America, MMA suppliers intensively overhauled and continued to reduce production. The supply began to tighten, and the price rose slowly. Looking into 2021, during Q2 to Q3 of China, Shandong Yuhuang Huayi II (50K tpa), Shandong Qixiang Tengda II (100K tpa), Jiangsu Jiankun Chemical (150K tpa) and Henan Zhongyuan Petrochemical (80K tpa) new plants are planned to be start operation. Although Lucite's American Beaumont plant (156K tpa) will be permanently closed from the end of February, which is expected to offset the part of the oversupply impact, the overall market oversupply situation cannot be changed. Producers will need to moderate production cuts to ensure not loss more. It is expected that the MMA price will remain at the edge of the cost line ups and downs.

(9) Epichlorohydrin (ECH): In the first half of 2020, because COVID-19 made the reduced demand for terminal products, ECH price in Asia has dropped from USD1,619/tons (2020/1) to USD1,244 /tons (2020/8). Subsequently, in order to reduce losses, ECH suppliers responded with production cuts, resulting in a sharp drop in market supply, while China wind power companies rushed to install equipment before the end of the government subsidy policy at the end of 2020, which made the demand for Epoxy products significantly changed from weak to strong. Driven by the sharp rise in the prices of raw materials such as propylene and glycerin, the ECH market quickly stopped falling and rebounded. ECH price in December 2020 rose to USD1,600/tons with an increase of USD356/tons. Looking into 2021, Fujian Huanyang (100K tap), Ningbo Zhenyang (40K tpa), Zhejiang Haobang (60K tap) and Shandong Xinyue (60K tap) new plants are planned to be put into operation from Q1, which increases the market supply and is expected that the ECH price will decline.

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(10) Polypropylene (PP): In 2020, three main domestic PP manufacturers (FPC, FCFC, and LCY Chemical) produced a total of 1.41m tons of PP, increasing 5.2% from 1.34m tons in 2019. PP demand in Taiwan is about 610K tons. Comparing with the output, the PP market is obviously oversupplied. Meanwhile, the PP import volume about 170K tons further intensified the competition. PP export are about 970K tons, accounting for 69% of total output, mainly sold to China, Hong Kong, and the rest to South Asia, Southeast Asia, the US, Middle East, Africa and other European countries. As China has surpassed the US to become the largest PP consumer of the world with a demand is about 30.57m tons in 2020, of which 4.89m tons were relying imported. Despite the global economy affected by COVID-19, China still has the largest demand in the world. In 2021, the PP market will be affected by global overcapacity and COVID-19. Economics activities will slow down, leading to serious market competition. The Company will develop raw materials for epidemic prevention and medical use, expand sales of differentiated products with better profits, and distribute sales in South Asia, Southeast Asia, Central and South America and other regional markets.

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The links between the upstream, midstream, and downstream of industry:

The links of products of the Company with the upstream, midstream, and downstream of industry.

==> picture [454 x 469] intentionally omitted <==

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

Basic Raw Intermediate Plastics Chemical Processing
Materials Monomer Fiber Materials Applications
Salt Caustic Soda Aluminum Refinement, Paper Production,
Bleach, Neutralizing Agent, Dyes
LPG
Chlorine
Plastic Cloth, Hard Pipes, Bricks,
Gasoline EDC VCM PVC
Electrical Insulation, Blood Bag
Water tank, Food wrap,
LLDPE
Heavy duty sack
Naphtha Ethylene
Cap, Bottle, Chemical tank,
HDPE
Pressure pipe
Athletic shoe, Wire and Cable,
VAM EVA
Solar cell encapsulant film
Crude Oil BBR
MTBE Gasoline Additives
Woven Bags, Corrugated Boards,
Kerosine PP
Automotive Fiber Parts, Stretch Film
Aircraft Structure Materials, Mechanical
Diesel AN Carbon Fiber Arms, Wind Turbine Blades, Athletic
Equipment
Home Appliances, IT Products, Helmets,
Fuel Oil ABS
Briefcases, Automotive Parts
HCN
Lubricate Oil Propylene
LCD Guiding Plates, Advertisement
Asphalt MMA PMMA Billboards, LED TVs, Automotive Light
Covers
Synthetic Fibers, Resins, Adhesives,
NBA AE
Emulsion Paints
AA SAP Sanitary Products, Diapers
ECH Epoxy CCL Printed Circuit Boards (PCB)
----- End of picture text -----

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5.1.3 Research and Development (R&D)

1. R&D expenditures (including R&D and improvement):

		Unit: NT$thousands 2021(Estimated) 2021/1/1~ 2021/3/31 2,112,000 565,174	Unit: NT$thousands 2021(Estimated) 2021/1/1~ 2021/3/31 2,112,000 565,174
Year	2020	2021(Estimated)	2021/1/1~ 2021/3/31
Amount	1,955,953	2,112,000	565,174

Technologies or products successfully developed

Items	R&D product project	R&D expenditures (NT$ thousands)	R&D completion date	Explanation
1	Processing aid P-701	600	2020/12	It is applied to PVC low-density foaming materials to achieve lightweight, energy-saving, thermal insulation, and sound absorption functions.
2	High bulk density B-62S	600	2020/12	It is applied to highly transparent rigid plate with high extrusion rate, good initial color, and good transparent property.
3	Eco-friendly paste resin for PVC foam	600	2020/6	Brand new paste resin for foaming vehicle leather. It is designed to meet the strict

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Items	R&D product project	R&D expenditures (NT$ thousands)	R&D completion date	Explanation
				requirements and customer demands for low VOCs.
4	High transparence impact modifier M-45	600	2020/12	It is applied to PVC transparent rubber particles with high transparency and high impact resistance.
5	Electrolyte for 48V starter battery	500	2020/12	Start batteries can improve vehicles' fuel efficiency and have an effective way to recover braking kinetic energy.
6	TC780 carbon fiber by DJWS process	19,200	2020/11	Carbon fiber DJWS process development by using DMSO as its solvent for the high-pressure vessel market
7	HDPE high weathering resistant grade for floating solar platform application	5,000	2020/10	It is a high UV resistance material for the floating solar platform application.

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Items	R&D product project	R&D expenditures (NT$ thousands)	R&D completion date	Explanation
8	HDPE FM underground fire fighting pipe grade	10,000	2020/10	It is applied to the underground fire fighting water pipe.
9	LLDPE fiber grade	5,000	2020/12	It is a high spinnability, low fisheye, and low smoke LLDPE bicomponent fiber.
10	LLDPE cable sheath material grade	10,000	2020/12	It is an UV resistance for cable sheath material.
11	Super critical foaming grade EVA	8,000	2020/12	It is applied to recyclable shoe middle midsole.
12	White color EVA encapsulate film grade	8,000	2020/12	It is applied to white color EVA encapsulate film.
13	PP for antibacterial luggage	3,000	2020/7	Apply to housing of antibacterial luggage.
14	Anti-γ-ray homo PP for medical grade	1,500	2020/9	Apply to micro-tips, centrifuge tube
15	High impact strength and high crystallinity PP grade	2,400	2020/6	Apply to housing of appliances.
16	PP for optical protective film grade	2,800	2020/12	Apply to protective film of optical device.

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Items	R&D product project	R&D expenditures (NT$ thousands)	R&D completion date	Explanation
17	Melt-blown PP for medical mask grade	5,000	2020/12	Apply to medical mask and filter.
18	Calcium carbonate for high opacity paint	100	2020/12	It is with excellent dispersion and could increase the opacity of water -based paint.
19	PET functional masterbatch	500	2020/12	Apply to PET films with functions such as UV resistance, high whiteness etc.

The Company attaches great importance to R&D, and constantly focus on new product development, technology of production improvement, technology of management improvement, process improvement, energy conservation, pollution prevention, industrial safety and hygiene research to ensure operational safety, pollution prevention and energy conservation work well and increase productivity. In recent years, it has been effective on improving product productivity and added value. As of 2020, the developed products are as follows:

products are as

follows:

Division

Developed Products

Plastics
Division

impact modifier, lubrication type processing aid,
PVC for electronic grade transparent industrial board,
PVC resin for high transparent rigid sheet, paste resin
PR-L for foaming product, new process processing
aid, high transparent paste resin PR-G, PVC with
ultra-high degree of polymerization, antifouling agent
for PVC polymerization, pseudo-plastic paste resin
PR-700, high molecular weight paste resin PR-1060
with abrasion resistance grade, impact modifier for
engineering plastics, low odor PVC for car interior,
electrolytefor low-temperature startlithiumbattery

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Division Developed Products of vehicles, electrolyte for high-capacity lithium battery of electric bus, ultra high molecular weight processing aid, high molecular weight paste resin, low melting viscosity S-57 PVC resin for pipe fittings, foaming grade PVC powder for building materials, matte PVC powder, high insulation PVC for wire and cable, PVC resin S-58 with low degree of polymerization, MASS PVC for CPVC process, fast gelation type processing aid P-251, ultra high efficiency lubrication type processing aid P-1000, electrolyte for low-temperature power battery, PVC for car interior, low fogging paste resin PR-1500 for automotive interior parts, weather resistant impact modifier A-607, copolymer C-15R, reduce plate-out processing aid P-220, VC-VAc copolymer paste resin for underbody coatings, special PVC B65G for CPVC process with gas-solid phase method, PVC S-50 with ultra-low degree of polymerization, low odor PVC S-60M, semi-solid electrolyte of lithium ion battery, electrolyte with function of high temperature and long life for lithium battery of vehicle, low melting viscosity PVC resin S-57 for injection fitting, PVC emulsion PR-900G for medical gloves, bacterial cellulose composite membrane, processing aid P-701, high bulk density B-62S, eco-friendly paste resin for PVC foam, high transparence impact modifier M-45, electrolyte for 48V starter battery, dye-sensitized cell (DSC), cellulose nanofiber (CNF)

Polyolefin coated steel pipe grade HDPE, wire & cable grade Division HDPE, PE100 pipe grade HDPE, black PE100 pipe grade HDPE, large chemical tanks grade HDPE, small fuel tanks grade HDPE, pressure pipe grade HDPE, super thinness bag grade HDPE, high strength injection grade HDPE, monofilament grade HDPE, injection blow molding grade HDPE, flame-retarding grade HDPE, high cleanliness for electronic grade tank HDPE, high MI for light bottle grade HDPE, high barrier gas injection cap grade HDPE, PERT heat resistant pipe grade HDPE, special low-sagging grade HDPE, injection and compression molding grade HDPE, heat resistance fiber grade

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Division Developed Products HDPE, high SCG (slow crack growth) pipe grade HDPE, HDPE high weathering resistant grade for floating solar platform application, HDPE FM underground fire fighting pipe grade, high impact resistance IBC grade HDPE, yarn grade HDPE 8009L, HDPE cap & closure grade 8020L/8040L , HDPE injection grade 8050L, HDPE fiber grade 7200FL, fruit bag grade LLDPE, high MI injection grade LLDPE, weatherability rotation molding grade LLDPE, LLDPE high-fluidity injection-grade powder, LLDPE fiber grade, LLDPE cable sheath material grade, LSFH for wire & cable grade EVA, high MI for hot melt grade EVA, powder coated grade EVA, lamination grade EVA, hot melt grade EVA, high VA content and low MI grade EVA, encapsulate film for silicon solar cell grade EVA, high strength EVA elastomer, super critical foaming grade EVA, white color EVA encapsulate film grade Polypropylene high heat resistance blow bottle grade PP, PP for Division aluminum metallized homopolymer CPP grade, high crystal impact copolymer grade PP, PP for washing-machine, high stiffness and high fluidity homopolymer grade PP, PP for PPR pipe, good luster and low whiteness impact copolymer grade PP, high heat resistance electrical appliances grade PP, high stiffness impact copolymer grade PP, PP for high heat resistance BOPP, PP for aluminum metallized BOPP, high fluidity homopolymer injection grade PP, PP for bottle cap, PP for low heat seal layer for aluminum metallized CPP film, Lamination grade PP, high stiffness thin walled injection molding grade PP, low migration and transparent pharmaceutical grade PP, PP for low heat seal layer CPP, anti-whitening injection grade PP for luggage base, PP for ultra-high transparent sheet, PP for pressure forming cup, Lightweight and high rigidity grade PP for compounding, PP for high stiffness CPP film, PP for drinking water purifier system, PP for shrink film, PP for IV bag, High impact grade PP for automotive compounding, PP for contact lens mold grade, PP for low MI high stiffness impact sheet, Less whitening extrusion grade PP, anti-scratch grade PP, high melt

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Division Developed Products strength PP, high fluidity grade PP for PP filter, super high fluidity melt-blown grade PP, anti-gamma ray pharmaceutical grade PP, lithium battery PP separator film for Lithium battery, extrusion grade POM, low mold deposit POM, high liquidity, low odor and excellent transparency grade PP, high liquidity and low-temperature impact resistance transparent grade PP, high liquidity and high impact PP copolymer, special PP grade of high-standard and general-purpose car battery casing, high anti-scratch PP, PP for high heat resistance retort CPP film, PP for aluminum laminated CPP film, polypropylene resin for expanded polypropylene (EPP) foam, polypropylene resin for medicine container, PP for antibacterial luggage, anti-γ-ray homo PP for medical grade, high impact strength and high crystallinity PP, PP for optical protective film grade, melt-blown PP for medical mask grade
Tairylan aerospace carbon fiber, large tow carbon fiber, Division middle modulus carbon fiber, carbon fibers for electric cable, high modulus carbon fiber, pultrusion carbon fiber plate for blade of wind energy, carbon fiber for high pressure vessel, high absorption capacity SAP, anti-discoloration SAP, anti-bacterial SAP, high strength and anti-hydrolysis SAP, high strength SAP, high absorption against pressure SAP, high absorption speed SAP, ultra-high capacity SAP applied to Japanese adult incontinence
Carbide food additive calcium oxide, calcium carbonate for Division fine paper coating, calcium carbonate for high opacity paint, calcium carbonate for automotive underbody coating, calcium carbonate masterbatch for food packaging, high concentration and low gel white masterbatch, PET functional masterbatch

5.1.4 Long-term and Short-term Business Development Plans

PVC: In short-term, joint sales with FPC Ningbo has become normal for responding to international market changes. At present, the Company’s PVC sold to India is not subject to anti-dumping duty tariff and is with better profits. Under consideration of a stable exporting sales volume and the advantages of non-anti-dumping tax, the Company will increase the differentiated PVC products such as

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wires, cables, high quality PVC rubber film and medical catheter to avoid competing with the peers. Setting up processing plants in Vietnam and Cambodia has been the trend, the Company should keep broaden local markets in Southeast for great goods. In the long-term, as the upstream feedstock ethylene can be fully obtained, the Company’s PVC production can be fully utilized. The Company will plan on the vertical integration selling model of caustic soda/EDC/VCM/PVC. For instance, caustic soda and PVC could be de-stocking through long-term contracts to stabilize PVC production and to receive the biggest benefits. Looking into 2021, in addition to maintaining stable sales in China and India, the Company will continue to expand Australia, New Zealand, Vietnam, Middle East markets. Furthermore, the Company will adjust the sales strategies following seasonality and to diversify market risk and monitor closely on impact of PVC demand from the global economy and political development. Moreover, the Company will also raise the sales volume for clients in differentiated products, such as wires, cables, medical, automobile PVC rubber film. It is estimated that the sales volume of differentiated products will grow from 138k tons in 2020 to 143k tons in 2021.

Caustic Soda: In short-term, with the widespread implementation of vaccines, the global epidemic is expected to gradually improve. Although China automobile market have been slowly stabilizing and overseas textile orders increased, Qingdao Haiwan, Yantai Wanhua, Shandong Jinling New Material and Shintech of US have expanded new capacities with total 1.27 million DMT/Y since Q4 of 2020. The oversuply situation will not be improved until the second half of 2021. It is estimated that caustic soda price will remain stable in the first half of 2021, and will bottom up in the second half of 2021. In the long term, due to the China-US trade war and the COVID-19, caustic soda demand is pretty weak and caused price on the downward trend. Caustic soda price is at a relatively low level in history. As a result, manufacturers are not willing to invest further, and expansion is not large in coming years. New project with 1.27 million DMT/Y are mainly dominated by China and the US. Global caustic soda expansion is limited, and demand in Asia-Pacific region will continue to grow in next three years. From 2021 to 2023, there will be more expansions from alumina, rayon and lithium industries in Asia and

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Australia, which will increase the caustic soda consumption by about 1.62 million DMT/Y. In addition, Western Australia will complete the production of lithium hydroxide by the end of 2021 (caustic soda consumption is 70,000 DMT/Y). In recent years, Indonesia has encouraged foreign investment to set up alumina plants in the local area, and it will complete 2 million MT/Y capacity in 2021 (Caustic Soda consumption is 200,000 DMT/Y). The Company has planned to establish the sales channel to achieve the purpose of decentralizing the market. Due to the continuous increase of new investment in Taiwan’s electronics industry, the Company has been actively seeking new opportunity for caustic soda from various electronic industry. It is estimated that caustic soda will increase by about 11,000 DMT/Y in 2021, including 9,000 DMT/Y for TSMC and 2,000 DMT/Y for the panel industry. To reduce the disadvantages of lower export prices, it is estimated that caustic soda consumption will increase by 36,000 DMT/Y by 2024 after TSMC completes each stage of the advanced manufacturing process. With the COVID-19 gradually eases in the future, demand will recover gradually, and caustic soda price will rise to a reasonable level.

Acrylic esters (AE): In the short-term, the Company will maintain its long term relationship with clients in Taiwan, China and Southeast Asia, highly pay attention to the impact of raw material prices and COVID-19 to the downstream producers’ operation, and take market price into consideration and adjust price actively to grasp the SWOT chance with international company to increase market shares. In the long term, based on that India is main AE importing country, the Company will keep discussuing possibility to supply Europe customers on contract basis.
Super absorbent polymer (SAP): In the short-term, in addition to expanding sales in the Southeast Asian market, the Company continues to strengthen the development of customers in various regions to diversify the market. In 2020, the SAP market share of the Company in Central and South America countries, Ghana in Africa, Syria in the Middle East increased significantly, and the Company will continue to expand it in 2021. In the long-term, the Company will strive to cooperate with major international manufacturers, stabilize sales volume with contract pricing, and continue to expand sales of differentiated products to increase revenue. In addition, the

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Company keeps strengthening the research and development of high value-added products along with improving the cost performance of products in order to get rid of the vicious price cut competition in the industry. In response to European and American customers attaching importance to green energy and environmental protection, the Company has developed biodegradable SAP to expand sales in the European and American markets. In 2020, biodegradable SAP sales increased by 163% from 2019. In 2021, the Company will continue to expand new customers to increase sales in the European and American markets.

N-butanol (NBA): In the short-term, in response to China’s imposition of NBA anti-dumping duties on Taiwan, the Company will maintain its market share by seeking for more orders from domestic customers, giving priority to supply Taiwan AE factory to produce BA, and to stabilize NBA production and captive use. In the long-term, the Company will diversify its market risks through expanding into China, Southeast Asia, South Korea and India, establishing mid to long-term relationship with clients and sales channels, and to continue developing into n-butyraldehyde and isobutyraldehyde markets.
Polyethylene (PE): In the short-term, the Company’s domestic marketing strategy is to import low-cost feedstock HDPE and LLDPE product from Formosa Industries Corporation and sale with FPC product to improve the share of the domestic market. Besides, the Company will continue to develop customized product to differentiate from the peers. Taking the advantage of the faster delivery time and supplying the resins constantly can enhance our competitiveness. Furthermore, the Company will aggressively strive for cooperating with domestic solar floating companies and endeavor to get the order from blow-molding resins and pipe resins in domestic market. On the exporting side, the Company will keep developing the high value-added products and avoiding the pricing competition with Middle East supplier’s general film grades materials in China market. In terms of EVA, the Company has been working on the integration of three EVA lines in Ningbo and Mailiao. Aside from increasing the sales volume of existing high VA foam grade products, the Company is expanding on the niche products such as photovoltaic grade, melt adhesive grade, wire and cable grade. In the long-term, PE/EVA

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demand in China is expected to be impacted by COVID-19 and the global economy growth slowdown. To avoid single segment concentration and diversify the market risks, the Company will expand markets to the regions that have no tariff or have lower tariff such as Southeast Asia, Africa and Central and South America.

Acrylonitrile (AN): In the short-term, the Company will meet the internal demand from Formosa Chemicals & Fibre Corporation first. In the long-term, the Company will optimize its profitability following the inventory level and market trend.
Methyl methacrylate (MMA): In the short-term, the Company will increase its sales to higher margin PMMA plate molding and resin domestic customers. In the long-term, the Company will adjust its client portfolio based on clients’ profitability profile in the domestic, and oversea like China and Southeast Asia.
Epichlorohydrin (ECH): In the short-term, the Company will meet the internal demand from Nanya Plastics Corporation first. In the long-term, the Company is aiming to sell drum ECH to India customers with relatively higher price with available sales volume.
Polypropylene (PP): In the short-term, the Company will develop high-value-added products with "process advantage product orientation" and increase the proportion of more profitable products (such as medical materials, electric appliances, low melt index and melt blown materials, etc.) to avoid competing with low-priced products in the Middle East. In the long-term, in addition to strengthening existing customers and markets, the Company will continue to expand sales with differentiated products, cooperate with customers to develop new products to increase market competitiveness, and continue to expand the markets in South Asia, Southeast Asia, Central and South America and other regions to diversify markets to avoid the excessive concentration of the single market in response to the rapid market changes.

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	Export location	Export location	China, India, Australia, Vietnam	U.S.A., Canada, Australia	China	India, U.S.A., Vietnam	Turkey, Mexico, Philippines	China	China, Vietnam	China, Vietnam, Indonesia	China, Vietnam, Bangladesh	China, Korea, Malaysia	No export	China, Vietnam, Philippines	China, India	China
2019	Export	％	79	55	98	72	98	80	61	97	81	41	0	36	6	79
		Amount	35,203,403	4,685,306	1,146,841	9,139,681	5,889,565	2,203,256	8,351,934	11,628,156	9,726,019	3,054,462	0	1,051,836	285,943	25,174,248
		Quantity	1,296,672	669,326	65,541	290,805	180,942	106,632	317,455	280,851	426,547	97,701	0	26,150	6,310	770,270
	Domestic	％	21	45	2	28	2	20	39	3	19	59	100	64	94	21
		Amount	9,619,763	6,640,227	28,303	4,001,971	151,648	589,347	6,112,998	416,578	2,809,297	4,690,982	1,626,924	1,929,090	3,715,303	6,913,863
		Quantity	343,461	539,419	1,271	112,401	4,172	27,215	206,373	9,097	101,069	140,167	130,792	47,022	91,108	205,103
Year		Product	PVC	Caustic soda	VCM	AE	SAP	NBA	HDPE	EVA	LLDPE	AN	MTBE	MMA	ECH	PP

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Market share of major products

PVC: 67 ％ Caustic soda: 68 ％ AE: 87 ％ SAP: 57 ％ NBA: 93 ％ HDPE: 53 ％ EVA: 24 ％ LLDPE: 42 ％ AN: 42 ％ MMA: 35 ％ ECH: 65 ％ PP: 29 ％

Demand and supply conditions for the market in the future, the market’s growth potential, the Company’s competitive niche, positive and negative factors for future development, and the Company’s response to such factors: Please refer to Letter to Shareholders, 5.1.2 Industry Overview and 5.1.4 Long-term and Short-term Business Development Plans.

5.2.2 Main applications and production process of main products

1.PVC

 Main applications:

Sheet, film, pipe, insulation material, tile, vinyl record, paint, ink, toys, foaming article, blood bag, hemodialysis blood tumbling set.  Production process:

VCM → distillation → main reactor → PVC slurry → drying → PVC silo → packing

2.Caustic Soda

Main applications:

paper production, textile, bleach, dyeing, water treatment, aluminum production, organic and inorganic chemistry.

Production process:

industry salt → dissolution → crude brine → clarifier → pure brine → electrolyzer → 32%caustic soda → evaporation → 50% caustic soda→ tank→loading

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3.AE

 Main applications:

synthetic fibers, fiber treatments, synthetic resins, emulsifier oil, solvent-base paints, paper finishes, adhesives, thermosetting industrial finishes.

 Production process:

(a)propylene → oxidization reactor (by catalyst) → absorber → fractional distillation → crude acrylic acid
(b)crude acrylic acid, alcohols (e.g. methanol, ethanol, n-butanol,

2-ethylhexanol) → esterification reactor → fractional distillation → rectification → acrylic esters

4.Carbon fiber
Main applications:
- (a)aircraft (structural components, interior components).
- (b)industrial application: wind generators (blades), architecture reinforcement, automotive, yacht, roller, robotic arm, the fuel cell parts, oil well structure, cable core, high-pressure gas cylinders.
- (c)sporting goods: bicycle, tennis rackets, badminton rackets, golf club shafts, fishing rods, helmet, baseball bat

 Production process:

AE→polymerization→spinning → carbonization → carbon fiber

5.SAP

 Main applications:

baby diaper, adult diaper, sanitary napkin, pet sheet.

 Production process:

Acrylic acid (AA) + NaOH→neutralization→ polymerization+cross linker→dry → grinding → surface treatment → SAP

6.NBA

 Main applications:

butyl acrylate, butyl acetate, glycol ether.

 Production process:

→ Propylene, syn gas hydroformylation →butyraldehyde→isolation and purification→ n-butyraldehyde → hydrogenation and purification → NBA

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7.HDPE

 Main applications:

shopping bags, garbage bags, salad oil bottles, milk bottles, labor boxes, ropes, file folders, fish net, woven bag, crate, beer boxes, toys.

 Production process:

polymerization reactor (HDPE slurry) → centrifugation and drying (HDPE powder)→ pelletizing (HDPE particle) → HDPE pellets

8.EVA

 Main applications:

greenhouse film, hot melt, foam sole, PEVA raincoat, shock absorber gasket, injection-articles, flexible items.

 Production process:

ethylene, vinyl acetate, peroxide →reaction → separation → extruder → EVA pellets

9.LLDPE

 Main applications:

duty sacks, agricultural film, light or medium duty film for shopping bag, crate, thin wall food container, greenhouse film, stretching film, overwrap film.

Production process:

ethylene (monomer) + butene (co-monomer) + catalyst →

polymerization → polyethylene powders →degassing → extrusion and palletization → LLDPE pellets

10.AN

 Main applications:

acrylic fiber, ABS/SAN resin, household appliances, car parts, stationery, helmet, luggage case, fitness equipment and nitrile butadiene rubber (NBR).

 Production process:

propylene and ammonia → reactors → quench columns → absorber columns → recovery column → purification column (AN product)

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11.MMA

 Main applications:

PMMA plate and particles, MBS (Methyl methacrylate -Butadiene-Styrene) resin, transparent ABS, adhesive, textile treatment, paint, water-based overprint varnish.

Production process:

acetone and hydrogen cyanide (HCN) → reactors (to produce acetone cyanohydrin (ACH)) → amidation reactor → esterification (by methanol) reactor → purification column (MMA product)

12.ECH

 Main applications:

epoxy resin, plasticizer, polyamide-polyamine- epichlorohydrin (wet strength agent for papermaking, abbr. PPE), dyeing and finishing auxiliaries.

Production process:

propylene and chlorine → reactors (to produce allyl chloride) → hypochlorous acid (HOCL) reactor → saponification (by sodium hydroxide) reactor → purification column (ECH product)

13.PP

Main applications:

automotive parts, bumpers, electric appliance parts, battery case, washing machine parts, general food & garment packaging case film, electrical appliances, housewares, pail, sports appliance, luggage base, high transparent container, woven bags, medical supplies, disposable syringes, medical mask .

 Production process:

propylene, ethylene, H2, catalyst → reactor → degas (solvent recovery) → granulation → package

5.2.3 Supply status of main materials

The Company conducts procurement operations through an internet electronic platform to ensure the fairness and justice of the procurement process and prevent procurement defects. The procurement cases are advertised on the internet, and the supplier submits quotes after confirming the identity with an electronic signature. This ensures the safety and fairness of the overall operation and shortens the time of procurement operations, as well as achieving a win-win situation between the Company and suppliers. At present, this electronic platform has more than 10,000 manufacturers involved in online quotation. The Company’s 2020 major raw materials usage status and suppliers are as follows:

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Unit: NT$ thousands

			Unit: NT$thousand
Major Raw Materials	Quantity (MetricTon)	Amount	Main Supplier
Ethylene	2,112,212	41,623,113	Formosa Petrochemical Corp., CPC Corp., Taiwan, Mitsubishi Corp., Marubeni Corp., and Formosa Plastics Corp. U.S.A
VCM	2,048,908	32,538,627	Self-supplied, Mitsubishi Corp., Mitsui & Co., Ltd., Hanwha Chemical Corp., SP Chemicals Ltd.,TOSOH
EDC	1,408,531	10,403,942	Self-supplied and TaiwanVCMCorp.
Salt	2,402,656	2,429,667	Marubeni Corp., Mitsubishi Corp., Mitsui & Co., Ltd., and SojitzCorp.
AN	14,727	482,394	Self-supplied
Propylene	1,728,751	41,100,462	Formosa Petrochemical Corp., CPC Corp., Taiwan, Marubeni Corp., China Petrochemical Development Corp., Gammon International TradingLtd., JXTG
Coal Dust	1,238,311	2,811,479	SUEKATW、 DRAGOTA、 TCSUECH、 ECOCACY
Alcohol	350,672	6,615,875	Self-supplied, SABIC, METHAHKI, and Tianjin Red Triangle International Trading Co.,Ltd.,

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		1 Formosa Petrochemical Corp. 54,875,577 42.06 Note 3 Formosa Petrochemical Corp. 76,932,917 51.62 Note 3 Formosa Petrochemical Corp. 20,584,064 47.52 Note 3 2 Others 75,603,717 57.94 Others 72,112,401 48.38 Others 22,731,156 52.48 Net purchase amount 130,479,294 100.00 Net purchase amount 149,045,318 100.00 Net purchase amount 43,315,220 100.00 Explanation: The purchase amount in 2020 decreased from 2019, which is mainly due to the decrease purchase amount of ethylene and propylene affected by COVID-19 and the decreased price of crude oil, light oil and ethylene and propylene in the spot market. Note 1: List the name of the suppliers with more than 10% of the total purchase amount, purchase amount, and purchase ratio in the two most recent fiscal years. Note 2: The listed companies or OTC companies shall disclose the financial information that audited or reviewed by a CPA as of the date of publication of the annual report. Note 3: Long-term equity investments under equity method. 2. Major clients: There is no client with ratio of the sales accounted for over 10% of the total sales in one of the most recent two fiscal years.	1 Formosa Petrochemical Corp. 54,875,577 42.06 Note 3 Formosa Petrochemical Corp. 76,932,917 51.62 Note 3 Formosa Petrochemical Corp. 20,584,064 47.52 Note 3 2 Others 75,603,717 57.94 Others 72,112,401 48.38 Others 22,731,156 52.48 Net purchase amount 130,479,294 100.00 Net purchase amount 149,045,318 100.00 Net purchase amount 43,315,220 100.00 Explanation: The purchase amount in 2020 decreased from 2019, which is mainly due to the decrease purchase amount of ethylene and propylene affected by COVID-19 and the decreased price of crude oil, light oil and ethylene and propylene in the spot market. Note 1: List the name of the suppliers with more than 10% of the total purchase amount, purchase amount, and purchase ratio in the two most recent fiscal years. Note 2: The listed companies or OTC companies shall disclose the financial information that audited or reviewed by a CPA as of the date of publication of the annual report. Note 3: Long-term equity investments under equity method. 2. Major clients: There is no client with ratio of the sales accounted for over 10% of the total sales in one of the most recent two fiscal years.	1 Formosa Petrochemical Corp. 54,875,577 42.06 Note 3 Formosa Petrochemical Corp. 76,932,917 51.62 Note 3 Formosa Petrochemical Corp. 20,584,064 47.52 Note 3 2 Others 75,603,717 57.94 Others 72,112,401 48.38 Others 22,731,156 52.48 Net purchase amount 130,479,294 100.00 Net purchase amount 149,045,318 100.00 Net purchase amount 43,315,220 100.00 Explanation: The purchase amount in 2020 decreased from 2019, which is mainly due to the decrease purchase amount of ethylene and propylene affected by COVID-19 and the decreased price of crude oil, light oil and ethylene and propylene in the spot market. Note 1: List the name of the suppliers with more than 10% of the total purchase amount, purchase amount, and purchase ratio in the two most recent fiscal years. Note 2: The listed companies or OTC companies shall disclose the financial information that audited or reviewed by a CPA as of the date of publication of the annual report. Note 3: Long-term equity investments under equity method. 2. Major clients: There is no client with ratio of the sales accounted for over 10% of the total sales in one of the most recent two fiscal years.
2021Q1 (Note 2)	Relation with Issuer	Note 3
	%	47.52	52.48	100.00
	Amount	20,584,064	22,731,156	43,315,220
	Company Name	Formosa Petrochemical Corp.	Others	Net purchase amount
2019 (Note 2)	Relation with Issuer	Note 3
	%	51.62	48.38	100.00
	Amount	76,932,917	72,112,401	149,045,318
	Company Name	Formosa Petrochemical Corp.	Others	Net purchase amount
2020	Relation with Issuer	Note 3
	%	42.06	57.94	100.00
	Amount	54,875,577	75,603,717	130,479,294
	Company Name	Formosa Petrochemical Corp.	Others	Net purchase amount
	Item	1	2

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2019	Amount	53,675,028		26,912,051	15,811,855	10,753,100	7,126,400	15,389,039	6,198,871	5,764,751	8,876,739	2,800,751	2,804,201	3,510,132	31,825,191
	Quantity	1,673,544	1,646,655	1,596,467	518,934	279,079	231,967	521,677	172,180	226,521	273,895	165,433	82,905	93,468	929,046
	Capacity	1,735,000	1,700,000	1,644,000	966,000	312,000	264,000	668,000	200,000	250,000	280,000	174,000	98,000	100,000	972,000
2020	Amount	47,337,202		23,718,210	12,378,009	9,733,980	12,961,469	13,668,078	5,475,414	4,266,807	7,154,392	1,543,115	2,844,911	3,254,683	29,941,634
	Quantity	1,648,273	1,491,167	1,582,804	507,462	284,740	553,148	529,650	184,412	217,382	261,246	133,001	81,279	94,687	981,740
	Capacity	1,735,000	1,700,000	1,644,000	966,000	312,000	264,000	680,000	200,000	250,000	280,000	174,000	98,000	100,000	996,000
Year	Output Products	PVC	Caustic soda	VCM	HDPE	EVA	LLDPE	AE	SAP	NBA	AN	MTBE	MMA	ECH	PP

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2018	Export	Amount	45,343,530	45,343,530	1,369,676	10,121,205	13,056,483	3,335,569	9,567,406	6,423,795	2,563,000	5,505,102	0	1,677,300	476,497	27,740,143	13,071,562	140,251,268
		Quantity	1,374,222	771,820	72,684	313,544	275,235	119,891	256,047	165,162	103,463	117,097	0	32,853	9,835	740,284
	Domestic	Amount	18,058,516		38,085	6,878,875	391,561	2,944,465	5,223,954	161,173	641,626	7,454,733	3,259,246	2,162,667	4,325,611	7,045,659	9,011,133	67,597,304
		Quantity	316,134	595,183	1,616	198,328	8,498	90,640	130,068	3,918	25,120	148,781	161,927	41,311	85,102	185,757
2019	Export	Amount	39,888,709		1,146,841	8,351,934	11,628,156	9,726,019	9,139,681	5,889,565	2,203,256	3,054,462	0	1,051,836	285,943	25,174,248	11,490,616	129,031,266
		Quantity	1,296,672	669,326	65,541	317,455	280,851	426,547	290,805	180,942	106,632	97,701	0	26,150	6,310	770,270
	Domestic	Amount	16,259,990		28,303	6,112,998	416,578	2,809,297	4,001,971	151,648	589,347	4,690,982	1,626,924	1,929,090	3,715,303	6,913,863	7,535,845	56,782,139
		Quantity	343,461	539,419	1,271	206,373	9,097	101,069	112,401	4,172	27,215	140,167	130,792	47,022	91,108	205,103
Year	Sales	Products	PVC	Caustic soda	VCM	HDPE	EVA	LLDPE	AE	SAP	NBA	AN	MTBE	MMA	ECH	PP	Others	Total

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5.3 Employees

Employees are the most important asset of a company. The Company strives to ensure every employee can work safely and is willing to contribute his or her talent. To recruit talented employees, the Company offers stable and competitive salaries and benefits, comprehensive training, and promotion system so that every employee can fully utilize his or her talent under these basic conditions.

	Year	2019	2020	2021.3.31
Number of Employee	Executive and Management Level	1,504	1,553	1,531
	Supervisor Level	2,058	2,117	2,161
	Staff Level	3,798	3,854	3,769
	Total	7,360	7,524	7,461
Average Age		41.5	41.7	41.8
Average	Years of Service	15.9	16.1	16.2
Academy Ratio (％)	Ph.D.	0.54	0.56	0.56
	Masters	12.46	12.56	12.54
	Bachelor	14.84	14.88	15.12
	Senior High School	70.90	70.83	70.61
	Under Senior High	1.26	1.17	1.17

Note: The number of employees includes the consolidated financial reporting company..

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5.4 Environmental Protection Expenditure

5.4.1 Total Losses and Penalties for Environmental Pollution

Unit: NT$ thousands

Sanction Date	No.	Article	Violation	Sanction	Sanction
				Penalty	Others
2020.3.2	Environmental Protection Bureau Kaohsiung City Government, No. 1093602519	Article 20 of Air Pollution Control Act	The leakage from equipment components of NBA manufacturing process (M01) was over volatile organic quantity control and emission standards in Yunlin,1,000ppm.	100	2 hours of environmental education traning
2020.3.9	Environmental Protection Bureau Kaohsiung City Government, Air Pollution No. 10931925500	Article 20 of Air Pollution Control Act	The leakage from equipment components of HDPE manufacturing process (M51) was over volatile organic quantity control and emission standards in Kaohsiung, 2,000 ppm.	200	4 hours of environmental education traning
2020.4.22	Environmental Protection Bureau Kaohsiung City Government, Audit No. 10932978900	Article 67 of Air Pollution Control Act	VCM gas inside the tank truck was released into the air due to the safety valve of the VCM tank truck tripping.	150	2 hours of environmental education traning
2020.5.13	Environmental Protection Bureau Kaohsiung City Government, Audit No. 10934359200	Article 32 of Air Pollution Control Act	VCM gas was released into the air due to the 4-inch pipe failure at caustic washing tank in rectification zone.	900	2 hours of environmental education traning
2020.6.22	Environmental Protection Bureau Kaohsiung City Government, Audit No. 10937652700	Article 32 of Air Pollution Control Act	The accumulation of VOC flashes the rubber particle storage tank leding to the broken top tank and th fires resulted in the obviousparticles.	200	2 hours of environmental education traning
2020.8.10	Environmental Protection Bureau Kaohsiung City Government, No. 1090074081	Article 24 of Air Pollution Control Act	The Environmental Protection Bureau of Yunlin County audited the emission pipeline (P005) performed atthe carbon fiberplant.	100	2 hours of environmental education traning

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Sanction Date	No.	Article	Violation	Sanction	Sanction
				Penalty	Others
			They were found that the operation record of an exhaust gas flowmeter in the absorption tower (A005) was faulty, and the repair was not completed from May 15to June19,2020.
2020.8.10	Environmental Protection Bureau Kaohsiung City Government, Audit No. 10939720600	Article 20 of Air Pollution Control Act	The odor pollutants in the discharge pipeline was over emission standards, 2,000 ppm.	100	2 hours of environmental education traning
2019.10.5	Environmental Protection Bureau Kaohsiung City Government, Air Pollution No. 10941667100	Article 20 of Air Pollution Control Act	The leakage from equipment components of PVC manufacturing process (M31) was over volatile organic quantity control and emission standards in Kaohsiung, 2,000 ppm.	450	2 hours of environmental education traning
Subtoal of 2020				2,200
2021.1.8	Environmental Protection Bureau Kaohsiung City Government, Air Pollution No. 10945740700	Article 23 of Air Pollution Control Act	The system compressor was shut down for maintenance, and the Environmental Protection Bureau detecteda leak.	225	2 hours of environmental education traning
2021/1/1~2021/3/31				225
Total				2,425

5.4.2 Future Countermeasures and Expected Expenditure:

In order to prevent industrial safety and environmental pollution incidents, it is planned to adopt countermeasures:
(1)Continue to promote intelligent security management.
(2)Strengthen industry safety and health management.
(3)Arrange to set up air pollution monitoring system to quickly find the source of air pollution.
(4)Keep monitoring the plant air pollutants with FT-IR.
(5)Strengthen the inspection of process pipelines.
(6)Report the process safety incident.
(7)Control groundwater pollution.

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(8)Keep strengthening Volatile Organic Compounds (VOC) emissions management.
(9)Continue to promote zero discharge of wastewater.
(10)Continue to promote noise improvement measures.
(11)Update equipment pipeline.
(12)Continue to promote ISO-14001 Environmental Management Systmes, ISO-45001 Occupational Health and Safety Management Systems and Taiwan Occupational Safety & Health Management Systems(TOSHMS)
At present, each pollution prevention measures of the Company has complied with the current national control standards. In order to achieve stricter control and in view of the gradual improvement of environmental quality requirements, the Company is constantly striving to reduce pollutant emission. The Company is expected to invest NT$ 1,358,779 thousands to improve pollution prevention.

5.4.3 Summar of Environmental Im rovement Pr t: y p ojec

Category	Category	Number of Project	Invested Amount (NT$ thousands)
Completed	Soil	297	3,907,806
	Waste gas	1,119	10,473,141
	Waste water	660	5,482,100
	Waste andnoise	149	957,501
	Subtotal	2,225	20,820,548
Processing	Soil	17	12,000
	Waste gas	44	1,294,360
	Waste water	8	45,535
	Waste andnoise	2	6,884
	Subtotal	71	1,358,779
	Total	2,296	22,179,327

5.4.4 Environmental Protection Policy:

Safety and health environmental protection policy The Company convinced that both environmental protection and industrial development are equally important. Ensuring the safety of product, employees, contractors, plants and communities is not only a corporate social responsibility, but also a part of corporate competitiveness.

The Company believes that all disasters and accidents are preventable no matter how small it is. Through the values of the Company and the power of organization and system, the working level of each plant can reach to and acceptable standards0 To

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achieve this goal, all supervisors must have appropriate participation and understanding of the system, provide adequate training and require thorough implementation and continuous improvement to ensure the policy and the goal are achieved.

All employees must constantly enhance their professional knowledge, and make all decisions by taking health and safety as prioritised concerns. Employees must thoroughly understand the spirit behind the health and safety system and carry out standards without compromise, in addition to holding the attitude of inquiring into the root of the matter and continuously making improvement by seeing themselves as a model employee.

Being self-disciplined, protecting the safety of colleagues, communities, and themselves at all times, keeping the natural environment clean, protecting corporate assets, and targeting effort at perpetual business operation – all of these should be taken as necessary responsibilities by our employees.

Improvement of greenhouse gas reduction
The Company adheres to the business philosophy of both industrial development and environmental protection, and does a good job in environmental protection in the spirit of pursuing the roots. In order to fulfill the responsibility of the global village, the Company actively promoted greenhouse gas reduction and formed a greenhouse gas emission investigation team. At the end of 2005, the Company held the first and largest greenhouse gas inventory personnel training in Taiwan. The total of 309 people are responsible for checking the correctness of the greenhouse gas of plants under their jurisdiction, as a reference for greenhouse gas reduction strategies, in response to future domestic and international regulatory trends. In order to actively reduce greenhouse gas emissions, the Company carries out the following emission reduction measures for large emission sources such as petrochemical plants and HCFC plants:
(1)Energy saving: Improve the combustion efficiency of electrical power and combined heat and power plants, and improve the power transmission and distribution system.
(2)Process reduction: Improve greenhouse gas emission sources and reduce the consumption of raw materials per unit.
(3)Looking for alternatives: Strengthen the leakage control and

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recovery management of fluorochemicals (refrigerants, solvents) and seek alternatives that have a lower impact on the greenhouse effect.

The Company reviews the energy consumption targets year by year, sets up process improvement personnel, implements improvement projects and personal creative reward system, and sets the greenhouse gas emission control standard for per unit product. The improvement of material and energy consumption reduction is as follows:

Greenhouse gas reduction practices

Item	Category	Content
1	Review energy consumption targets year by year	Each plant reviews and sets energy consumption targets when preparing annual budget at each year, and compares the implementation results monthly. It also proposes project improvement and reporting on energy-specific issues.
2	Set improvement project personnel at plants	Continue to improve to reduce materials and energy consumption.
3	Award improvement project	Implement a reward system about project improvement, and reward NT$300 to 20,000 according to the improvement level.
4	Encourage personal creativity	Have implemented a reward system about IE improvement, and reward NT$300 to 20,000 according to the improvement level.。
5	Set the greenhouse gas emission control standard for unit of each product	Understand the difference between the actual and baseline emissions of greenhouse gases at each plant, and improve the difference after review. The current implementation status is better than the international standards.

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In order to comply with the operations of greenhouse gas inventory, reduction, internal audit and inventory report preparation, the Company promulgated and implemented the “Greenhouse Gas Inventory and Reduction Management Measures” in 2006. In addition, considering the long-term review of greenhouse gases, in order to save human operating time, ensure the correctness and consistency of the data, and improve the efficiency of the inventory operation, the Company also implements the “greenhouse gas inventory reduction computer operation” to computerize the manual form, which can directly obtain the statistical greenhouse gas emissions data and reduction performance from the computer to benefit comparison of emissions control.

Air pollution prevention and management measures

The Company has been actively improving in pollution prevention and control for a long time and has achieved good results and accumulated considerable experience in pollution prevention. Therefore, in order to do a good job in environmental protection, the Company continues to adopt the best process technology and comprehensive pollution prevention systems with long-term accumulated experience. The current pollution prevention effectiveness is not only better than national standards, but also meets the world’s best standards.

In order to accurately grasp the actual emission of air pollutants in the sixth naphtha cracker, the current implementation of the air pollution emission control operation in the Mailiao sixth naphtha cracker includes total emission assessment, best available control technology (BACT) survey, pollution prevention technology research, plant maintenance dispatching plan, permitted total emission control, and total emission management.

In addition, the air pollution control of the plant includes environmental independent inspection in the plants, on-site inspection of equipment components, continuous emission monitoring systems (CEMS), chimney monitoring video of the whole plant, VOC sampling analysis of storage tank and around each plant, air quality monitoring around the out of plants and weekly odor joint inspection. The Company is committed to maintaining the surrounding environment and work safety of the plant to avoid cost loss from leakage of raw materials or finished goods.

The Company installs continuous emission monitoring systems

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(CEMS) on large-scale emission sources, and performs 24-hour real-time monitoring through a distributed integrated electronic equipment and distributed control system (DCS). If an abnormality occurs, an alarm will be issued and it will be immediately addressed. In order to strengthen the prevention of VOC leakage, the Company builds a strict monitoring and control system, with 39 sets of forward-looking infrared (FLIR) detectors to find out the source of leakage more quickly, which cannot easily be captured through the general camera, eyes, and portable VOC detectors. By using a portable and easy-to-use forward-looking infrared (FLIR) detectors to scan, the source of leakage can be easily and clearly found, and it can be addressed immediately. The Company also purchased 14 sets of fourier transform infra red (FTIR) spectrometer (FTIR) to build a more comprehensive plant air pollution protection network.

Water pollution prevention and management measures

In order to comply with the environmental regulations of and promote wastewater reduction operation, the Company eastablished the measures of water pollution prevention in accordance with government regulations are as follows:

(1)Implementation of wastewater source management

In order to implement wastewater source management, the Company have set up the operation control and monitoring management in the following terms:

A. Collection and transportation facility about process wastewater.
B. Collection and treatment facility about construction wastewater.
C. Collection and transportation facility about Domestic sewage.
D. Collection and transportation facility about other wastewater.
E. Facility about Wastewater pre-treatment.
F. Facility about water quality and quantity stabilization of Wastewater source facility.
(2)Relevant regulations for wastewater treatment processes:
A. Scopes of regulation for plans of setting treatment facility and emission permit include:  plan for setting department  wastewater treatment facility setting  wastewater discharge permit.

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  - B. Scopes of regulation for operation management of wastewater treatment facility include:  wastewater treatment operation  wastewater discharge operation  wastewater treatment records and inputs  wastewater treatment daily reports  wastewater treatment periodic declaration  wastewater treatment function evaluation analysis  legal abnormal report.

  - C. Scopes of regulation for wastewater treatment cost management include:  scope of cost  wastewater cost center setting  cost comparison unit setting  wastewater cost item setting  cost distribution  wastewater treatment pricing  cost summary review.

  - D. Scopes of regulation for rainwater collection and discharge management include:  Collection, transportation and pre-treatment facilities: report for rainwater collection and discharge facilities at the plant, rainwater discharge systems in public areas, and rainwater discharge hatch.  Management measures: regulation of rainwater discharge hatch, rainwater collection and discharge at plants, and inspection, maintenance and operation of rainwater drainage channels and gates in public areas.

  - E. Scopes of wastewater and rainwater supervision (inspection) measurement management include:  wastewater discharge automatically monitors  wastewater and rainwater discharge detection.

(3)The regulation of wastewater reduction is as follows:
- A. Set the wastewater standard for unit of each product.
- B. Review and improve wastewater reduction.
(4)Supervision and inspection operations include:
- A. Supervision
- B. Inspection
- C. Audit
- D. Abnormal reaction and treatment
Waste management measures

In order to achieve sustainable use of resources and control the cost of waste disposal, the Company’s management of waste is mainly based on process waste reduction, and secondly, it is considered to be properly handled by the outside party, while the order of subcontracting treatment is given priority to reuse, followed by

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incineration and landfill. The management measures related to the classification, storage, and removal of wastes of the company are as follows:

(1)Classification and storage after waste production:
In imply with regulations of waste and waste removal and treatment, reclassified general waste, process waste and engineering waste should be stored in a collection tank (bag) or appropriate container which should be keep intact, no dirt, rust, leaks or irregularities. In addition, according to regulations, the waste storage place should equipped with waterproof (rain) facilities, control facilities and signs of waste water and odor.
(2)Waste removal and disposal operations:
To ensure that all business waste are legally reused or cleaned, the Company has established a waste management computer system including:
A. Database of clean-up vendor to manage environmental information of waste contractor.
B. Online reporting management operations to ensure that waste shipped from the plants have completed reporting.
C. Clean-up plan management to ensure that the waste items and quantity of the plant meet the declaration information.

In addition, in order to grasp the flow of waste, the Company requires the contractor to cooperate with the network declaration, set the clearing flow tracking operation requirements, require on-site personnel to track the vehicle from time to time, and also require the waste manufacturers should attach a legal online triple list and proper documents when they bills the waste cleaning fees to avoid pollution caused by illegal cleaning of waste.

(3)Waste treatment performance management:
- Each department of the Company has set three standards: A. waste clearance standard B. waste outsourcing cost standard C. waste self-processing standard. Each department will review and improve that exceeding the control standard monthly.
5.4.5 Impact of the implementation of the European Union’s Restriction of Hazardous Substances (RoHS) on the financial operations of the Company: The Company’s products sold in Europe are not subject to RoHS regulations, so there is no impact on the Company’s business.

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5.5 Labor Relations

5.5.1 Any employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees’ rights and interests:
Employee benefit plans: the Company’s employee benefit plans to promote a balance in work, health and life are as follows:
(1)The Company’s Employee Welfare Committee established in accordance with the “Employee Welfare Fund Act”, “ Organization Regulations on Employee Welfare Committee” and other regulations, appropriates employee welfare funds for handling welfare businesses for employees including welfare club, staff restaurants, barber shop, laundry department, catering departments, library, sports facilities, movie appreciation, annual welfare products, birthday gifts, travel grants, life lectures, jogging and hiking activities, etc.
(2)Regulations on year-end bonuses and remuneration.
(3)Regulations on attendance management: According to Labor Standards Act, set up regulations on regular leave day and holiday and overtime pay standard.
(4)Regulations on salary: standardize the principles of employees’ payroll and salary adjustment
(5)Regulations on consolation payment.
(6)Regulations on marriage subsidies and funeral gifts.
(7)Regulations on preferential treatment of Chang Gung Hospital for employees and their dependants.
(8)Labor insurance and national health insurance.
(9)Occupational Safety and Health Act and Labor Health Protection Rules: Each plant has a medical office, employs doctors and full-time nurses and regularly conduct health checkups for employees according to law.
(10)Regulations on operating clothing and safety shoes provided.
(11)Regulations on dorm(including single and dependants).
(12)Regulations on stock ownership reward for employee.
(13)Departmental funds and year-end meal subsidies.
(14)Hospital condolences, senior staff commemorating gold coins and praise.
(15)Legal advisory services.

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(16)Regulations on improvement proposal incentives: Set up an IE proposal bonus to encourage employees to discover abnormalities in their work, envisage a good improvement plan to improve the Company’s performance. The Company will reward the employee whose proposal adopted depending on the improving effect and period.
(17)Regulations on innovative platform management: Set up an innovation platform website for employees to discuss professional issues and give appropriate rewards to those who provide good ideas for innovation.
(18)Regulations on Artifical Intelligence incentives: For colleagues who hold AI licenses or lunch AI projects to increase the Company’s benefits, the Company will give the bonus and be a reference for promotion to encourage colleagues to actively participate.
Advanced study system:
(1)Regulations on foreign language development class.
(2)Professional and managerial class for each level employee.
Training system: The Company has a complete training system for new recruits, and has created a good working and learning environment, in order to cultivate professional talents with enthusiasm and innovative ideas. At the same time, through the complete training program at all stages of the career, each employee can become a talented person with professional and management practices under the gradual and self-transcending growth experience. Complete training programs include college management associate training, job basic training, job professional training, supervisor training at all levels, middle and high level supervisor training, etc., with online teaching, work rotation, external training opportunities, and external specialist to provide a working environment for continuous learning and development. The training system is as follows:
(1)Regulations on training management.
(2)Regulations on network knowledge base management.
(3)Regulations on college new recruits training.
(4)Regulations on dispatched training.
(5)Regulations on middle and high level supervisor talents cultivating.

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4. Retirement system:

(1)Retirement application:

Employees who are in one of the following conditions are eligible for retirement:

Those who have served for more than 15 years and are over 55 years old.
Those who have served for more than 25 years.
Those who have served for more than 10 years and are over 60 years old.

(2)Mandatory retirement:

Employees who are in one of the following descriptions must retire:

Those who are 65 years old or older, but those at or above the level of senior manager may be extended to 70 years old, and the high-level manager may be extended to 75 years old.
Employees are unable to perform their duties due to mental disorders or physical disabilities.
(3)Retirement pensions disbursement:

Employees’ retirement pensions disbursement is as follows:

Pension for service period on and before July 31, 1984 is calculated based on Taiwan Provincial Factory Workers Retirement Rules, and the average salary of the three months prior to retirement is taken into account. Pension for service period on and after August 1, 1984 is calculated based on Article 55 of the Labor Standards Act, and the average salary of the six months prior to retirement is taken into account. However, the total of the above two is limited to a maximum number of 45 bases.
For an employee who has mental disorder or physical disability occurred in his or her work duties and can no longer fulfill the work responsibilities, the pension for the aforementioned employee is issued according to the preceding paragraph and plus 20%.
(4)The new “ Labor Pension Act “ was implemented on July 1, 2005. If employees choose the old pension system, they will be handled according to the above retirement system. If employees choose the new pension system, the Company will appropriate 6% of the monthly salary to the employees pension account.

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(5)Employee Code of Conduct or Ethics:
In order to clearly define the rights and obligations of employers and employees, and to maintain order in the workplace, the Company has established “Working Rules” in accordance with the law and publicly disclosed at the approval of the competent authority as the base for employee management. Working Rules includes recruitment, promotion, working time, salary, discipline, reward and punishment, dismissal, severance, retirement, training and performance evaluation, compensation and consolation payment for accident, injury or disease, and welfare measures, etc.
In order to strengthen the behavior and ethical norms of the employees, the Company not only sets up “Regulations on Personal Information” but also requires employees to sign the “Formosa Plastics Corp. Employees’ Commitment to Observe the Operational Policy Statement,” which is summarized as follows:
- A.Prohibition of unfair competition (antitrust) policy: Employees must fully comply with the Fair Trade Act. The Company encourages that emplyees obtains profit by using legal and proper ways, and takes all actions complying with relevant laws and regulations.
- B.Conflict of interest policy: When employees are required to engage in business related to the Company, they should avoid damaging the interests of the Company. They should never directly or indirectly request or accept gifts, entertainment or other benefits from customers or competitors of the Company.
- C.Internal data security policy: Employees handling the Company’s data should not reveal confidential data or other information that has not been published without the written permission of the Company. They should not use the information for personal gain or use it for any purpose that is not relevant to the Company’s operation. Employees should hand over all technological information when they leave the Company.
- D.Participation in political activity policy: Employees should not directly or indirectly donate money, provide services, or give valuable items to any candidates or political parties.

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They should not conduct any behavior forbidden by the law or give any ill-gotten gain to legislators, political figures, or government officials that may prevent them from performing their duties.

(6)Work environment and employee personal safety protection measures:
- The Company sets up rules of safety and health management to ensure each department to comply with, which could prevent accidents and achieve the goals of “zero disasters” to ensure the safety and health of employees and neighborhood residents, maintain the integrity of the Company’s equipment, ensure operation smoothly, and improve the overall business performance.
- The scope of application includes the safety and health management system and the work responsibilities of each department, the establishment of various safety and health protection facilities, the establishment of safety standards for various operations, the regular automatic inspection of safety and health, personnel safety and health, fire prevention education training, safety and health performance evaluation, emergency response planning, disaster simulation exercises, and accident handling.
- The Company regularly conducts safety and health education training and publicity and ensure that all employees receive appropriate and necessary training, and have the ability to perform work. All departments should hang the safety and health policy of the Company and verification site at entrance and exist clearly.
- The Company regularly conducts employee health checks, such as general health (physical) checks, special health checks, foreign employee health (physical) checks and catering employee health checks, and manages health care unit settings, such as health care unit configuration, drug and equipment management, first-aid staff, drug configuration and ambulance setup and management, etc.
Implementation status of employee benefit plans and retirement system: Well.

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Implementation status of employee advanced study and training: In 2019, advanced study and training courses conducted by Company were 4,166 items. The average number of training hours per person was 55.1 hours, and the total cost was NT$16,302 thousand. The courses include work safety on-the-job training, English and Japanese foreign language training, Labor law, standard operating procedure (SOP), job specialty, artificial intelligence (AI) and other professional course, etc.
Employee and employer negotiation:
- (1)Participate in the member representatives meeting of labor union and the board of directors and supervisors, and hold regular labor-management meetings to establish a labor-management consultation mechanism.
- (2)Establish an employee complaints system to improve labor relations and gender equality, hold each level supervisory meetings regularly, issue corporate magazines quarterly. Employees can also express their opinions through employee suggestion boxes or reaction lines.
- (3)Formulate working rules and personnel management rules, and clearly define the rights and obligations of employee and employer so that employees can fully understand and protect their rights and interests.
- (4)In accordance with Occupational Safety and Health Act, conduct employee health checkups regularly, set labor safety and health personnel and rules to avoid accidents and maintain employee safety.
Status of implementation for preserving employees’ rights and interests: Well.
5.5.2 Any loss sustained as a result of labor disputes, disclose an estimate of losses incurred to date or likely to be incurred in the future, and indicate mitigation measures being or to be taken: The Company had no major dispute on labor agreement in the latest year and up to the prining date of this Annual Report .

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5.6 Im rtant Contracts po

Agreement	Counterparty	Period	Major Contents	Restrictions
Sale and purchase contract	CPC Corp., Taiwan	2020.01~ 2020.12	Supply of ethylene for PVC and HDPE, propylene and hydrogen	None
Sale and purchase contract	Formosa Petrochemical Corp.	2020.01~ 2020.12	Supply of Ethylene, propylene, butadiene, butadiene raffinate oil	None
Technical authorization contract	Lummus Technology LLC	2018.11~ 2033.11	Propane Dehydrogenation technology	None
Technical authorization contract	Univation Technologies, LLC	2014.10~ 2034.10	Full density vapor phase polyethylene technology	None
Technical authorization contract	Dow Chemical Company	2005.10~ 2025.10	N-butanol process technology	Note
Long-term loan contract	Sumitomo Mitsui Banking Corporation	2016.08~ 2021.01	Improve financial structure and enrich working capital	None
Long-term loan contract	CTBC Bank, Shanghai Branch	2020.4~ 2025.4	For PDH expansion project	None

Note: The important equipment of process do not allow changes arbitrarily.

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VI. Financial Information

6.1 Consolidated Balance Sheet and Income Statement for the Last Five Fiscal Years

6.1.1 Condensed Balance Sheet- Based on Consolidated Financial

Statement Unit: NT$ thousands

Year Item	Year Item	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	As of Mar. 31, 2021 (Note 3)
		2016	2017	2018	2019	2020
Current assets		173,359,433	184,212,236	184,262,229	175,616,860	165,635,760	183,938,952
Property, plant and equipment (Note 2)		73,367,695	69,094,450	76,618,563	85,635,983	86,785,954	89,375,247
Intangible assets		489,499	431,315	430,613	423,488	590,274	613,896
Otherassets (Note2)		208,449,445	222,333,035	240,201,862	235,411,628	226,268,435	235,997,218
Totalassets		455,666,072	476,071,036	501,513,267	497,087,959	479,280,423	509,925,313
Current liabilities	Before distribution	80,455,932	71,274,256	83,051,141	89,283,378	68,255,027	71,471,851
	After distribution	109,738,340	107,558,978	119,972,438	117,292,637	83,532,805	-
Non-current liabilities		62,139,653	59,786,614	62,894,125	58,651,261	78,489,256	79,296,127
Total liabilities	Before distribution	142,595,585	131,060,870	145,945,266	147,934,639	146,744,283	150,767,978
	After distribution	171,877,993	167,345,592	182,866,563	175,943,898	162,022,061	-
Shareholder’s equity attributable to parent company		313,070,487	345,010,166	355,568,001	349,153,320	332,536,140	359,157,335
Capital stock		63,657,408	63,657,408	63,657,408	63,657,408	63,657,408	63,657,408
Capital reserve		11,428,970	11,649,929	11,713,842	11,724,498	11,742,124	11,741,693
Retained earnings	Before distribution	162,650,639	182,149,818	198,382,191	198,347,860	190,229,876	205,192,910
	After distribution	133,368,231	145,865,096	161,460,894	170,338,601	174,952,098	-
Other equityinterest		75,333,470	87,553,011	81,814,560	75,423,554	66,906,732	78,565,324
Treasurystock		-	-	-	-	-	-
Non-controlling interest		-	-	-	-	-	-
Total equity	Before distribution	313,070,487	345,010,166	355,568,001	349,153,320	332,536,140	359,157,335
	After distribution	283,788,079	308,725,444	318,646,704	321,144,061	317,258,362	-

Note 1: It is required to specify the fiscal year that has not been audited by a CPA.

Note 2: If in the current year there is revaluation of assets, it is required to specify the revaluation date and the revaluation value.
Note 3: A company whose stock is listed on an exchange or trade on OTC shall disclose the financial information that audited or reviewed by a CPA as of the date of publication of the annual report: The financial information is audited by CPAs, except the information of 2021 Q1 reviewed by CPAs.
Note 4: For the financial data of after distribution, please fill out in accordance with the resolutions approved by shareholders’ Meeting.
Note 5: For those who have been notified by the competent authorities to revise or recomposed their financial data, all the figures/numbers used shall be the revised ones, and the status and reasons for such revision shall be noted.
Note 6: The after-distribution data of 2020 are estimated by the earnings distribution approved by Board of Directors Meeting on March 17, 2021.

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6.1.2 Condensed Balance Sheet– Based on the Parent Company only Financial Statement

Unit: NT$ thousands

		Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item		Financial information for the last five fiscal years (Note 1)
		2016	2017	2018	2019	2020
Current assets		160,402,486	169,889,273	169,916,838	158,815,312	142,801,499
Property, plant and equipment (Note 2)		38,930,009	33,679,540	38,227,497	39,280,562	41,804,267
Intangible assets		124,762	124,762	124,762	124,762	124,762
Other assets (Note 2)		236,091,804	251,778,005	269,115,479	266,224,934	270,998,502
Total assets		435,549,061	455,471,580	477,384,576	464,445,570	455,729,030
Current liabilities	Before distribution	65,117,009	54,782,430	60,678,960	56,755,940	60,723,332
	After distribution	94,399,417	91,067,152	97,600,257	84,765,199	76,001,110
Non-current liabilities		57,361,565	55,678,984	61,137,615	58,536,310	62,469,558
Total liabilities	Before distribution	122,478,574	110,461,414	121,816,575	115,292,250	123,192,890
	After distribution	151,760,982	146,746,136	158,737,872	143,301,509	138,470,668
Shareholder’s equity attributable to parent company		313,070,487	345,010,166	355,568,001	349,153,320	332,536,140
Capital stock		63,657,408	63,657,408	63,657,408	63,657,408	63,657,408
Capital reserve		11,428,970	11,649,929	11,713,842	11,724,498	11,742,124
Retained earnings	Before distribution	162,650,639	182,149,818	198,382,191	198,347,860	190,229,876
	After distribution	133,368,231	145,865,096	161,460,894	170,338,601	174,952,098
Other equity interest		75,333,470	87,553,011	81,814,560	75,423,554	66,906,732
Treasury stock		-	-	-	-	-
Non-controlling interest		-	-	-	-	-
Total equity	Before distribution	313,070,487	345,010,166	355,568,001	349,153,320	332,536,140
	After distribution	283,788,079	308,725,444	318,646,704	321,144,061	317,258,362

Note 1: It is required to specify the fiscal year that has not been audited by a CPA.

Note 2: If in the current year there is revaluation of assets, it is required to specify the revaluation date and the revaluation value.
Note 3: A company whose stock is listed on an exchange or trade on OTC shall disclose the financial information that audited or reviewed by a CPA as of the date of publication of the annual report: The financial information is audited by CPAs.
Note 4: For the financial data of after distribution, please fill out in accordance with the resolutions approved by shareholders’ Meeting.
Note 5: For those who have been notified by the competent authorities to revise or recomposed their financial data, all the figures/numbers used shall be the revised ones, and the status and reasons for such revision shall be noted.
Note 6: The after-distribution data of 2020 are estimated by the earnings distribution approved by Board of Directors Meeting on March 17, 2021.

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6.1.3 Condensed Balance Sheet– Based on R.O.C. GAAP: Not applicable.

6.1.4 Condensed Comprehensive Income- Based on Consolidated Financial Statement

Unit: NT$ thousands

Year Item	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	Financial information for the last five fiscal years (Note 1)	2021/1/1~ 2021/3/31 (Note 2)
	2016	2017	2018	2019	2020
Operating revenue	180,173,192	206,709,755	230,370,027	207,848,572	185,813,405	60,601,937
Gross profit	24,299,196	33,469,176	37,308,068	32,113,950	29,054,284	16,558,906
Gross profit from operations	13,017,213	21,938,196	25,341,312	20,196,366	17,099,215	12,884,760
Non-operating income and expense	30,796,736	32,966,147	31,751,064	22,022,786	7,067,452	5,177,394
Income before tax	43,813,949	54,904,343	57,092,376	42,219,152	24,166,667	18,062,154
Income from operations of continued segments - after tax	39,392,543	49,382,853	49,549,540	37,324,162	20,036,199	14,959,942
Income from discontinued operations (Note 3)	-	-	-	-	-	-
Net income (Loss)	39,392,543	49,382,853	49,549,540	37,324,162	20,036,199	14,959,942
Total other comprehensive income (net of income tax)	10,278,034	11,618,275	-15,095,900	-6,768,604	-8,609,003	11,658,592
Total comprehensive income	49,670,577	61,001,128	34,453,640	30,555,558	11,427,196	26,618,534
Net income attributable to parent company’s shareholders	39,392,543	49,382,853	49,549,540	37,324,162	20,036,199	14,959,942
Net income attributable to non-controlling interest	-	-	-	-	-	-
Comprehensive income attributable to parent company’s shareholders	49,670,577	61,001,128	34,453,640	30,555,558	11,427,196	26,618,534
Comprehensive income attributable to non-controlling interest	-	-	-	-	-	-
Earningsper share	6.19	7.76	7.78	5.86	3.15	2.35

Note 1: It is required to specify the fiscal year that has not been audited by a CPA.

Note 2: A company whose stock is listed on an exchange or trade on OTC shall disclose the financial information that audited or reviewed by a CPA as of the date of publication of the annual report: The financial information is audited by CPAs, except the information of 2021 Q1 reviewed by CPAs.

Note 3: The net loss from discontinued operations is an amount net of income tax.

Note 4: For those who have been notified by the competent authorities to revise or recomposed their financial data, all

the figures/numbers used shall be the revised ones, and the status and reasons for such revision shall be noted.

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6.1.5 Condensed Comprehensive Income Statement– Based on the Parent Company only Financial Statement

Unit: NT$ thousands

Year Item	Financial information for the past five fiscal years (Note 1)	Financial information for the past five fiscal years (Note 1)	Financial information for the past five fiscal years (Note 1)	Financial information for the past five fiscal years (Note 1)	Financial information for the past five fiscal years (Note 1)
	2016	2017	2018	2019	2020
Operating revenue	149,792,471	170,273,933	189,246,407	165,823,943	139,157,045
Gross profit	20,263,505	29,533,412	33,603,300	27,914,090	24,683,662
Gross profit from operations	10,495,959	19,290,525	22,999,374	17,493,179	14,379,667
Non-operating income and expense	32,763,068	35,578,788	34,046,784	24,298,942	8,898,610
Income before tax	43,259,027	54,869,313	57,046,158	41,792,121	23,278,277
Income from operations of continued segments - after tax	39,392,543	49,382,853	49,549,540	37,324,162	20,036,199
Income from discontinued operations (Note 3)	-	-	-	-	-
Net income (Loss)	39,392,543	49,382,853	49,549,540	37,324,162	20,036,199
Total other comprehensive income (net of tax)	10,278,034	11,618,275	-15,095,900	-6,768,604	-8,609,003
Total comprehensive income	49,670,577	61,001,128	34,453,640	30,555,558	11,427,196
Net income attributable to parent company’s shareholders	39,392,543	49,382,853	49,549,540	37,324,162	20,036,199
Net income attributable to non-controlling interest	-	-	-	-	-
Comprehensive income attributable to parent company’s shareholders	49,670,577	61,001,128	34,453,640	30,555,558	11,427,196
Comprehensive income attributable to non-controlling interest	-	-	-	-	-
Earningsper share	6.19	7.76	7.78	5.86	3.15

Note 1: It is required to specify the fiscal year that has not been audited by a CPA.

Note 3: The net loss from discontinued operations is an amount net of income tax.

Note 4: For those who have been notified by the competent authorities to revise or recomposed their financial data, all the figures/numbers used shall be the revised ones, and the status and reasons for such revision shall be noted.

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6.1.6 Condensed Balance Sheet– Based on R.O.C. GAAP: Not applicable.
6.1.7 Matters of material significance which affected the comparability of the above-mentioned condensed financial statements: None.
6.1.8 The Name of the Certified Public Accountant and the Auditor’s opinion
The name of the certified public accountant and the auditor’s opinion for the last five fiscal years

Year	2020	2019	2018	2017	2016
Name	Astor Kou Winston Yu	Astor Kou Winston Yu	Astor Kou Winston Yu	Delphi Chen Winston Yu	Delphi Chen Winston Yu
Auditor’s opinion	An unqualified opinion with emphasis of matter paragraph or other matter paragraph	An unqualified opinion with emphasis of matter paragraph or other matter paragraph	An unqualified opinion with emphasis of matter paragraph or other matter paragraph	An unqualified opinion with other matter paragraph	An unqualified opinion with other matter paragraph

According to the job adjustment of KPMG, the CPAs of the Company have been changed from Eric Wu and Astor Kou to Delphi Chen and Astor Kou since the first quarter of 2015.
According to the job adjustment of KPMG, the CPAs of the Company have been changed from Delphi Chen and Astor Kou to Delphi Chen and Winston Yu since the first quarter of 2016.
According to the job adjustment of KPMG, the CPAs of the Company have been changed from Delphi Chen and Winston Yu to Astor Kou and Winston Yu since the first quarter of 2018.

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6.2 Financial Analysis for the Last Five Fiscal Years

6.2.1 Consolidated Financial Analysis – Consolidated Financial Statement Based on IFRS

Item	Year	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years
		2016	2017	2018	2019	2020	As of Mar. 31, 2021
Financial structure (%)	Debt ratio	31.29	27.53	29.10	29.76	30.62	29.57
	Ratio of long term capital to property, plant, and equipment	511.41	585.86	546.16	476.21	473.61	490.58
Solvency (%)	Current ratio	215.47	258.46	221.87	196.70	242.67	257.36
	Quick ratio	189.05	228.23	192.66	172.37	210.51	224.32
	Interest coverage ratio	31.01	36.67	39.35	24.22	19.64	66.10
Operating ability	Accounts Receivable turnover (times)	14.34	13.94	14.36	14.00	12.60	3.35
	Average collectionperiod	25	26	25	26	29	27
	Inventory turnover (times)	9.21	9.97	10.06	9.01	8.97	2.47
	Accounts payable turnover (times)	13.41	13.99	15.66	15.14	12.97	3.29
	Average days in sales	40	37	36	41	41	36
	Property, plant, and property turnover (times)	2.46	2.90	3.16	2.56	2.16	0.69
	Total asset turnover (times)	0.40	0.44	0.47	0.42	0.38	0.12
Profitability	Return on total assets(%)	9.23	10.87	10.38	7.69	4.30	3.06
	Return on stockholders’ equity (%)	13.12	15.01	14.15	10.59	5.88	4.33
	Ratio of income before tax to paid-in capital (Note 7)	68.83	86.25	89.69	66.32	37.96	28.37
	Profit margin before tax (%)	21.86	23.89	21.51	17.96	10.78	24.69
	Earnings Per Share (NT$)	6.19	7.76	7.78	5.86	3.15	2.35
Cash flow	Cash flow ratio (%)	45.43	64.64	60.81	52.17	46.07	15.65
	Cash flow adequacy ratio (%)	111.11	126.08	120.31	116.90	100.76	97.93
	Cash reinvestment ratio (%)	2.54	3.02	2.46	1.69	0.59	1.84
Leverage	Operating leverage	1.69	1.38	1.29	1.37	1.47	1.17
	Financial leverage	1.12	1.07	1.06	1.07	1.08	1.02

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Reasons for changes of financial ratios for the last two years(analysis is exempted for any change less than 20% ):

Current ratio and Quick ratio in 2020 were higher than that in 2019, because current liabilities NT$68,255,027 thousand in 2020 decreased by NT$21,028,351 thousand from 2019.
Return on total assets, return on stockholders’ equity, ratio of income before tax to paid-in capital, profit margin before tax and earnings per share in 2020 were lower than that in 2019, because after-tax net income NT$20,036,199 thousand in 2020 decreased by NT$17,287,963 thousand from 2019.
3.Cash reinvestment ratio in 2020 was lower than that in 2019, because cash flow from operating activities NT$31,444,453 thousand in 2020 decreased by NT$15,135,975 thousand from 2019.

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Note 1:The fiscal years for which reports were not CPA audited or reviewed shall be noted.
Note 2: A company that is listed on the TWSE or traded at the place of business of a securities firm shall include in its analysis the then current financial data up to and until the quarter immediately preceding the printing date of the annual report’ publication date .
Note3: The following calculation formulas shall be listed at the end of this Table in the annual report:
Financial structure
- (1) Debt ratio = Total liabilities/total assets.
- (2) Long term funds to property, plant, and equipment ratio = (Total shareholders’ equity + non-current liabilities)/net property, plant, and equipment
Solvency
- (1) Current ratio = Current assets/current liabilities
- (2) Quick ratio = (Current assets - inventory - prepaid expenses)/current liabilities
- (3) Times Interest Earned = Net income before tax and interest expense/current interest expense
Operating ability
- (1) Accounts Receivable (including account receivable and note receivable from operating) turnover = Net sales/average Receivables (including account receivable and note receivable from operating) balance
- (2) Average collection period = 365 days/ accounts receivable turnover
- (3) Inventory turnover(times) = Cost of goods sold/average inventory
- (4) Accounts Payable (including Account payable and Note payable from operating) turnover = Cost of goods sold/average accounts payable (including Account payable and Note payable from operating)
- (5) Average inventory turnover days = 365 days/ inventory turnover
- (6) Property, plant, and equipment turnover (times) = Net sales/ average net average property, plant, and equipment
- (7) Total asset turnover = Net sales/average total assets
Profitability
- (1) Return on total assets = [net income + interest expense x (1-tax ratio)]/average total assets
- (2) Return on shareholder’s equity = Net income/average total shareholder’s equity
- (3) Profit margin = Net income/ net sales
- (4) Earnings per Share = (Net income attributable to parent company’s shareholders - preferred stock dividend)/ weighted average number of shares issued (Note 4)
Cash flow
- (1) Cash flow ratio = Cash flow from operating activities/current liabilities
- (2) Net cash flow adequacy ratio = Five-year sum of cash from operations / Five-year sum of capital expenditures, inventory additions, and cash dividends
- (3) Cash reinvestment ratio = (Net cash flow from operating activities - cash dividends)/ (gross property, plant, and equipment + long-term investments + other non-current assets + working capital) (Note 5)
Leverage
- (1) Operating leverage = (Net operating income - variable operating cost and expense)/operating income (Note 6)
- (2) Financial leverage = Operating income/ (operating income - interest expenses)
Note 4: When the above formula for calculation of earnings per share is used during measurement, give special attention to the following matters:
1.Measurement should be based on the weighted average number of common shares, not the number of issued shares at year end.
2.In any case where there is a cash capital increase or treasury stock transaction, the period of time in circulation shall be considered in calculating the weighted average number of shares.
3.In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.
4.If the preferred shares are non-convertible cumulative preferred shares, the dividend of the current year (whether issued or not) shall be substracted from the net profit after tax, or added to the net loss after tax. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be substracted from the net profit after tax; if there is loss, then no adjustment need be made.
Note 5: Give special attention to the following matters when carrying out cash flow analysis:
1.Net cash flow from operating activities means net cash in-flow amounts from operating activities listed in the statement of cash flows.
2.Capital expenditures means the amounts of cash out-flows for annual capital investment.
3.Inventory increase will only be entered when the ending balance is larger than the beginning balance. An inventory decrease at year end will be deemed zero for calculation.
4.Cash dividend includes cash dividends from both common shares and preferred shares.
5.Gross property, plant and equipment value means the total value of property, plant and equipment prior to the subtraction of accumulated depreciation.
Note 6: Issuers shall separate operating costs and operating expenses by their nature into fixed and variable categories. When estimations or subjective judgments are involved, give special attention to their reasonableness and to maintaining consistency .
Note 7: In the case of a company whose shares have no par value or have a par value other than NT$10, for the calculation of the above-mentioned paid-in capital ratio, the ratio of equity attributable to owners of the parent as stated in the balance sheet shall be substituted.

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6.2.2 Financial Analysis– Based on the Parent Company only Financial Statement

Item	Year	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years	Financial analysis for the last five fiscal years
		2016	2017	2018	2019	2020
Financial structure (%)	Debt ratio	28.12	24.25	25.52	24.82	27.03
	Ratio of long term capital to property, plant, and equipment	951.53	1,189.71	1,090.07	1,037.89	944.89
Solvency (%)	Current ratio	246.33	310.12	280.03	279.82	235.17
	Quick ratio	226.35	285.35	253.48	256.90	214.00
	Interest coverage ratio	42.79	57.25	59.37	45.03	29.11
Operating performance	Accounts Receivable turnover (times)	14.17	14.22	15.16	14.41	12.65
	Average collectionperiod	26	26	24	25	29
	Inventory turnover (times)	10.83	12.03	11.90	11.09	11.22
	Accounts payable turnover (times)	12.27	12.33	14.01	13.56	11.50
	Average days in sales	34	30	31	33	33
	Property, plant, and property turnover (times)	3.85	4.69	5.26	4.28	3.43
	Total asset turnover (times)	0.34	0.38	0.41	0.35	0.30
Profitability	Return on total assets(%)	9.62	11.26	10.79	8.08	4.49
	Return on stockholders’ equity (%)	13.12	15.01	14.15	10.59	5.88
	Pre-tax income to paid-in capital ratio (%)	67.96	86.19	89.61	65.65	36.57
	Profit margin(%)	26.30	29.00	26.18	22.51	14.40
	Earnings Per Share (NT$)	6.19	7.76	7.78	5.86	3.15
Cash flow	Cash flow ratio(%)	53.36	76.46	71.44	70.41	43.29
	Cash flow adequacy ratio (%)	132.63	149.24	130.54	124.32	103.25
	Cash reinvestment ratio (%)	2.29	2.37	1.28	0.56	-0.32
Leverage	Operating leverage	1.56	1.28	1.19	1.23	1.27
	Financial leverage	1.11	1.05	1.04	1.06	1.06

6.2.3 Financial Analysis– Based on R.O.C. GAAP: Not applicable.

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6.3 Audit Committee’s Review Report for the Most Recent Year’s Financial Statement

Formosa Plastics Corporation Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2020 Business Report, Financial Statements, including Consolidated and Individual Financial Statement, and Proposal for Profits Distribution. The CPA firm of KPMG was retained to audit Formosa Plastics Corporation’s Financial Statements and has issued an audit report relating to Financial Statements. The Business Report, Financial Statements, and Proposal for Profits Distribution have been reviewed and determined to be correct and accurate by the Audit Committee members of Formosa Plastics Corporation. According to the Securities and Exchange Act and the Company Act, we hereby submit this report. Please be advised accordingly.

Formosa Plastics Corporation Chairman of the Audit Committee: Chi-Lin, Wei

March 17, 2021

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6.4 Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019, and Independent Auditors’ Report: Please refer to the pages 250 to 339 of the Annual Report.
6.5 The Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019, and Independent Auditors’ Report:
Please refer to the pages 340 to 424 of the Annual Report.
6.6 The Financial Difficulties of the Company and its Affiliated Companies: None.

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VII. Review of Financial Conditions, Financial Performance, and Risk Management

7.1 Analysis of Financial Status

The reasons for, and impact of, any significant change over the two most recent fiscal years in its assets, liabilities, or equity. Where the impact is significant, describe further how the company plans to respond.

Unit: NT$ thousands

			Unit: NT$thousands	Unit: NT$thousands
Year Item	2020	2019	Difference
			Amount	％
Current Assets	165,635,760	175,616,860	-9,981,100	-5.68
Fixed Assets	313,644,663	321,471,099	-7,826,436	-2.43
Total Assets	479,280,423	497,087,959	-17,807,536	-3.58
Current Liabilities	68,255,027	89,283,378	-21,028,351	-23.55
Long-term Liabilities	78,489,256	58,651,261	19,837,995	33.82
Total Liabilities	146,744,283	147,934,639	-1,190,356	-0.80
Capital Stock	63,657,408	63,657,408	0	0.00
Capital Reserve	11,742,124	11,724,498	17,626	0.15
Retained Earnings	190,229,876	198,347,860	-8,117,984	-4.09
Other EquityInterest	66,906,732	75,423,554	-8,516,822	-11.29
Total Stockholders’ Equity	332,536,140	349,153,320	-16,617,180	-4.76

Explanation:

Current liabilities decreased 23.55%, which is mainly due to the decrease of short-term borrowings, accounts payable-related parties and current portion of long-term debts of NT$4,898,372 thousand, NT$21,928,377 thousand and NT$2,666,096 thousand, respectively.
Long-term Liabilities increased 33.82%, which is mainly due to the increase of current portion of bonds payable and long-term accounts payable to related parties of NT$5,447,742 thousand and NT$14,396,540 thousand, respectively.

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7.2 Analysis of Financial Performance

The annual report shall list the main reasons for any material change in operating revenues, operating income, or income before tax in the two most recent fiscal years, provide a sales volume forecast and the basis therefor, and describe the effect upon the company’s financial operations as well as measures to be taken in response.

Unit: NT$ thousands

			Unit: NT$thousands	Unit: NT$thousands
Year Item	2020	2019	Difference
			Amount	％
Operating revenues Cost of sales Gross profit Operating expenses Operating income Non-operating income and expense Net income before tax Income tax expense Net income	185,813,405 156,759,121 29,054,284 11,955,069 17,099,215 7,067,452 24,166,667 4,130,468 20,036,199	207,848,572 175,734,622 32,113,950 11,917,584 20,196,366 22,022,786 42,219,152 4,894,990 37,324,162	-22,035,167 -18,975,501 -3,059,666 37,485 -3,097,151 -14,955,334 -18,052,485 -764,522 -17,287,963	-10.60 -10.80 -9.53 0.31 -15.34 -67.91 -42.76 -15.62 -46.32

Explanation:

Non-operating income and expense, net income before tax, and net income in 2020 were down 67.91 ％ , 42.76 ％ , and 46.32% from 2019, respectively. The main reason is as follows: due to the worldwide COVID-19 pandemic, countries locked down since March 2020 resulted in a sharp demand decline and supply disruptions. Production activities, consumptions, and global economy were hit hard and dragged down crude oil, ethylene, propylene, and petrochemical product prices. Especially, WTI crude oil futures prices even fell to a negative value on April 20, 2020. Although the Company's product prices declined in 1H20 to narrow down the margins, the sharply falling feedstock prices still made the Company profit for its core business. However, it still reported a net loss on a consolidated basis as dragged by the decline in investment incomes from Formosa Petrochemical Corp. and Formosa Plastics Corp., USA in 1H20. Nevertheless, in 2H20, given the easing of lockdown, demand for work-from-home related products, anti-epidemic products, home gym equipment, building materials, 3C, and home appliances have been surging. Given the gradual recovery of global economy as well as the roll out of monetary easing measures and fiscal stimulus policies by countries, the prices of petrochemical products have rebounded strongly and returned to the levels of the end of 2020 before COVID-19. Among them, polyvinyl chloride (PVC) and polyethylene vinyl acetate (EVA) prices

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reached the record high in the latest 9 year, which made the Company turn profitable in 2020. Even though sales volume of polyethylene (PE) increased by 329K tons in 2020 from 2019 thanks to the contribution from the new HDPE plant built by 100% owned subsidiary, Formosa Industries Corp. with selling its products under full production in 2020, the Company’s operating profit of NTD 17.09bn still dropped by 15% in 2020 from 2019 due to the ASP decline with 12-38% and narrowing product margins. In addition, the total cash dividends of NTD 3.35bn in 2020 from investees including Nanya Plastics Corp., Formosa Chemicals & Fibre Corp. and Nanya Technology Corp., etc. deceased by NTD 4.82bn from 2019. Also equity investment incomes of NTD 5.21bn from investees including Formosa Petrochemical Corp., FPC-USA and Formosa Sumco Technology Corp., etc. significantly lower NTD 9.52bn from 2019. As a result, the Company’s consolidated non-operating income and expense, net income before tax, and net income in 2020 decreased from 2019.

Gross profit variance analysis:

		Unit: NT$ thousands Effect of variances Sales variancesCost variances Product mix Quantity variances -26,596,001 28,800,202 1,848,236 -7,112,103	Unit: NT$ thousands Effect of variances Sales variancesCost variances Product mix Quantity variances -26,596,001 28,800,202 1,848,236 -7,112,103	Unit: NT$ thousands Effect of variances Sales variancesCost variances Product mix Quantity variances -26,596,001 28,800,202 1,848,236 -7,112,103	Unit: NT$ thousands Effect of variances Sales variancesCost variances Product mix Quantity variances -26,596,001 28,800,202 1,848,236 -7,112,103
Item	Variances between 2020 and 2019	Effect of variances
		Sales variances	Cost variances	Product mix	Quantity variances
Gross Profit	-3,059,666	-26,596,001	28,800,202	1,848,236	-7,112,103

Explanation: The gross profit in 2020 decreased from 2019, which is mainly due to the decrease of prices and price spreads of caustic soda, AN, AE, SAP and MTBE.

Provide a sales volume forecast and the basis therefor, and describe the effect upon the Company’s financial operations as well as measures to be taken in response:
Please refer to “1.2 A Summary of the Business Plan for 2021” of “I. Letter to Shareholders”.

7.3 Analysis of Cash Flow

Describe and analyze any cash flow changes in the most recent fiscal year, describe corrective measures to be taken in response to illiquidity, and provide a liquidity analysis for the coming year.

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1. Cash flow analysis for the current year:

Unit: NT$ thousands

Cash, Beginning of Year	Net Cash Flow from Operating Activities	Cash Outflow	Cash Surplus (Deficit)	Remedies of Cash Deficit	Remedies of Cash Deficit
				Investment Plans	Financing Plans
18,165,952	31,444,453	35,465,295	14,145,110	-	-

(1)Operating activities: The net cash inflow from operating activities in 2020 was NT$31,444,453 thousand, which is mainly due to net cash inflow generated from operations of NT$22,854,229 thousand, interest received of NT$367,388 thousand, dividends received of NT$11,694,866 thousand, interest paid of NT$1,201,708 thousand and income tax of NT$2,270,322 thousand.
(2)Investing activities: The net cash outflow from investing activities in 2020 was NT$3,915,855 thousand, which is mainly due to acquisition of property, plant and equipment of NT$8,883,039 thousand.
(3)Financing activities: The net cash outflow from financing activities in 2020 was NT$32,567,947 thousand, which is mainly due to cash dividends paid of NT$28,012,404 thousand, repayment of long-term debts of NT$4,592,694 thousand.
Remedy for cash deficit and liquidity analysis (1)There was no cash deficit in this year.
(2)Liquidity analysis in the two most recent fiscal years:

Year Item	2020	2019	Variation (%)
Cash flow ratio	46.07%	52.17%	-6.10%
Cash flow adequacyratio	100.76%	116.90%	-16.14%
Cash reinvestment ratio	0.59%	1.69%	-1.10%

Explanation: The cash flow ratio and the cash flow adequacy ratio in 2020 decreased from 2019, because the cash inflow from operating activities in 2020 decreased by NT$15,135,975 thousand from 2019.

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3. Liquidity analysis for the coming year

Unit: NT$ thousands

Estimated Cash, Beginning of Year	Estimated Net Cash Flow from Operating Activities	Estimated Cash Outflow	Estimated Cash Surplus (Deficit)	Remedies of Cash Deficit	Remedies of Cash Deficit
				Investment Plans	Financing Plans
14,145,110	25,494,828	30,638,791	9,001,147	-	-

Explanation: Cash flows from operating activities in 2021 is expected to be less than that in 2020, because of the expected less cash dividend from the invested company. However, due to sufficient cash at beginning of 2021, the estimated cash at the end of 2021 is surplus.

7.4 The Effect upon Financial Operations of Any Major Capital Expenditures in the Most Recent Year

7.4.1 Major Capital Expenditure Items and Source of Capital:

Unit: NT$ thousands

Project	Actual or Planned Source of Capital	Actual or Planned Date of Completion	Total Capital	~~Atl Etd~~	~~Atl Etd~~	~~Citl Edit~~	~~Citl Edit~~
				~~cua o~~ 2020	~~r xpece~~ 2021	~~apa x~~ 2022	~~enure~~ 2023
PDH expansion project in Ningbo	Working Capital, Bank loan	2021.09.30	23,992,026	1,687,920	18,113,959	363,385
EVA debottleneck project in Ningbo	Working Capital	2023.06.30	1,137,254	81,882	379,085	560,215	116,073
PVC debottleneck project in Mailiao, Linyuan and Renwu	Working Capital	2023.12.31	257,502	72,529	101,045	57,898	25,917

Note: If material change is expected in the corresponding cost of capital of future borrowings and capital increase or in the policy of borrowing and capital increase, an explanation shall be provided.

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7.4.2 Expected Benefits:

Estimated increase in production, sales, and gross profits:

Unit: Metric tons ； NT$ thousands

Year	Item	Quantity of Production	Quantity of Sales	Amount of Sales	Gross Profit
2022	PDH expansion project in Ningbo	600,000	600,000	15,282,180	3,147,120
2024	EVA debottleneck project in Ningbo	28,000	28,000	1,218,675	73,051
2024	PVC debottleneck project in Mailiao, Linyuan and Renwu	91,244	91,244	2,514,684	577,939

Other benefits(such as the quality of products, pollution prevention, cost reduction and so on): None.
7.5 Reinvestment Policy in the Most Recent Years, the Main Reasons for the Profits/Losses Generated Thereby, the Plan for Improving Reinvestment Profitability, and Investment Plans for the Coming Year: Unit: NT$ thousands

Remark Item	Amounts	Policies	Reasons for Gainor Loss	Action Plan	Investment Plan
Formosa Industries (Ningbo) Co., Ltd.)	5,021,000	Long-term investment	PDH plant is under construction and will commence production from September, 2021.	None	None
Fromosa Industries Corp. (reinvest Formosa Olefins, L.L.C.)	2,998,000	Long-term investment	The construction period of Formosa Olefins, L.L.C. coincided with the large expansion of the U.S. petrochemical plant, severe shortage of laborand	None	None

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Remark Item	Amounts	Policies	Reasons for Gainor Loss	Action Plan	Investment Plan
			hurricanes, which caused the increase in construction costs. Formosa Olefins, L.L.C. commenced production from January,2020.
Fromosa Industries Corp.	5,396,635	Long-term investment	The product price decreased due to COVID-19 pandemic and the new capacity of the peers.	None	None
Formosa Plastics Constructio n Corp.	500,000	Long-term investment	The plan of entity and right transfer of urban renewal is waiting for approval.	None	The urban renewal of Formosa Plastics Building is in progress.
Formosa Tokuyama Advanced Chemicals Co.,Ltd.	125,000	Long-term investment	The IPA plantis under construction.	None	None
Formosa Resources Corp. (reinvest Formosa Steel IB Pty Ltd.)	884,531	Long-term investment	The reinvested company, Formosa Steel IB Pty Ltd., and Australian Iron Miner, FMG group invested Iron Bridge project together. The plant is under construction.	None	None

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Remark Item	Amounts	Policies	Reasons for Gainor Loss	Action Plan	Investment Plan
Formosa Mitsui Advanced Chemical Co., Ltd.	USD 4.6 million	Long-term investment	The bad automotive market condition and decreasing the need of electrolytes caused the company’s loss due to the reduction in subsidies for purchase of new energy vehicles in Mainland China since June 2019 and COVID-19 outbreak.	1.the automotive market is recovring and the auto price is growing up. 2.Develop more profitable products with new additives 3. Lunch the debottleneck project with 3,500 tons/year	Reinvestment depends on the capital needs.

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7.6 Risks

7.6.1 The impact of interest rate, exchange rate, and inflation rate changes on the Company’s revenue, as well as corresponding actions:
Interest rate:
- In terms of long-term liabilities under floating interest rate basis (corporate bond included), the Company will carefully assess financial market conditions and consider the implementation of interest rate swap when the interest rate is relatively low to avoid interest rate fluctuation risks. The Company strives to make sure the undertaking interest rate is below the estimated cost of capital of investment plans.
Exchange rate fluctuation: Insufficient foreign exchange funds in daily operations are addressed by making spot or forward foreign exchange purchases when the exchange rate is favorable. Long-term foreign exchange liabilities are addressed by implementing long-term forward foreign exchange contracts or exchange-for-exchange contracts when the exchange rate is relatively low to minimize the impact of exchange rates on profitability.
Inflation:
- According to Directorate of Budget, Accounting, and Statistics, Executive Yuan, the annual growth rate of consumer prices in 2020 was -0.23%, and the annual growth rate of core consumer prices was 0.35%. The inflation risk was low and had no significant influence on the Company’s profitability.
7.6.2 Policies on high risk, highly leveraged investments, loans to other parties, endorsements, and derivative trading policies, main reasons for profits or losses, and future response measures:
Investment under high risks and leverage: The Company mainly invests in the petrochemical industry. The petrochemical industry is a mature and stable industry with low risks. The Company has always maintained stable operations and a sound financial structure. It does not engage in any high leverage investment.
Lending of Capital:
- In principle, the Company only issues loans to affiliated companies.

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The amount is in accordance with Article 15 of the Company Law and Procedures for Loaning Funds to other Parties of the Company, and granted with the approval of the Board of Directors. Since the issuance of loans are mostly for short-term funding purposes, and the borrowers are subsidiaries and affiliated companies, no bad debt loss has occurred.

Endorsement:
The Company only endorses and guarantees subsidiaries, affiliated companies or where all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages. The endorsement is mostly for funding. The endorsement is in accordance with Procedures for Providing Endorsements and Guarantees to other Parties of the Company and granted with the approval of the Board of Directors. The Company has never been losses due to endorsement.
Derivative product transactions:
The Company’s various derivative commodity transactions are for the purpose of avoiding market risks caused by fluctuations in exchange rates and interest rates instead of arbitrage and speculation. Any of the implementation of derivative product transactions is based on not only relevant regulations and International Financial Reporting Standards (IFRS) promulgated by the competent authority, but also “Procedures for Derivatives Transaction Processing” and the “Foreign Exchange Trading and Risk Management Measures” defined by the Company.

7.6.3 Future Research & Development (R&D) Plans and Expected R&D Ex nses: pe

Item	R&D project products	Expected R&D Investments (NT$ thousands)	Expected R&D period	Explanation
1	Anti-static PVC	600	2020.12-2021.12	In order to avoid electrostatic adsorption of dust on PVC products, the surface resistance of PVC must be reduced to below 109Ω/cm2.

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Item	R&D project products	Expected R&D Investments (NT$ thousands)	Expected R&D period	Explanation
2	Acryl grafted vinyl chloride copolymer resin	1,200	2020.06-2021.12	Thermoplastic elastomer (TPE) based on PVC and polyacrylate is produced by graft polymerization. It is an internal plasticized flexible material, without using plasticizer.
3	Super-elastic PVC glove paste resin for internal plasticized flexible material	750	2020.07-2021.12	It is designed to provide effective self-crosslinking performance to enhance the elasticity of gloves.
4	Colloidal electrolytes	2,000	2020.01-2021.09	Lithium batteries are developing towards high energy density. The existing flammable liquid electrolyte encounters safety problems, which limit its development. Therefore, colloidal electrolytes are developed to solve the safety problems of lithium batteries.
5	Transparence weatherability modifier	600	2020.06-2021.12	Transparence weatherability modifier is special

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Item	R&D project products	Expected R&D Investments (NT$ thousands)	Expected R&D period	Explanation
				copolymer designed to impart impact strength, weathering resistance and is suited for clear outdoor and durable PVC products.
6	Intermediate modulus carbon fiber by DJWS process	5,200	2020.01-2021.09	It is with higher strength and modulus character, and would raise the burst strength of pressure vessel. It is applied to the aerospace such as the component of airplane, artificial satellite, and rocket.
7	Carbon fiber for polyether ether ketone (PEEK) resin	3,200	2020.03-2021.12	It is an adhesion with polyether ether ketone (PEEK) with improved heat resistance, and mainly applied to aerospace, medical and automotive.
8	Carbon fiber for thermoplastic PP resin	1,200	2020.03-2021.12	It is a good adhesion to PP and mainly applied to automobiles and bicycles.

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Item	R&D project products	Expected R&D Investments (NT$ thousands)	Expected R&D period	Explanation
9	Eco-friendly SAP	2,246	2020.06-2021.12	Develop in response to rising environmental awareness in Europe and America.
10	Novel odor control SAP	2,240	2020.05-2021.05	Develop to meet the deodorizing performance requirements of light incontinence products in Europe, America, Japan and Taiwan.
11	New SAP applied to ultra-thin diapers with low pulp content	9,600	2020.06-2021.06	Develop in response to the trend of European baby diapers with low pulp content.
12	New SAP applied to napkins	250	2020.09-2021.09	In view of the characteristics of menstrual blood absorption, develop new SAP with high absorption capacity and fast absorption.
13	SAP applied to adult incontinence of Europe and baby diaper of North Africa	1,443	2020.06-2021.06	Develop to meet the demand of adult incontinence of Europe and baby diaper of North Africa.

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Item	R&D project products	Expected R&D Investments (NT$ thousands)	Expected R&D period	Explanation
14	Seabed cable sheath pipe grade for the wind power	5,000	2020.01~2020.12	It is applied to high strength and high resistance to crack growth cable sheath pipe.
15	5G wire and cable foam grade material	10,000	2020.01~2020.12	It is applied to low dielectric constant and high insulation material.
16	High performance package material BOPE	10,000	2020.01~2020.12	It is applied to high mechanical and transparency package application.
17	PE50 pipe grade	10,000	2020.03~2020.12	It is a soft characteristic water pipe material.
18	EVA product with high VA content (VA 33%)	8,000	2020.01~2020.12	It is applied to high resiliency shoe-sole, LSFH wire and cable compounds.
19	PP microfiber grade	4,200	2020.12~2023.12	Apply to high-efficiency particulate air filter
20	Melt-blown PP of anti-γ-ray for medical grade	3,800	2021.01~2021.12	Apply to the filter applications in medical, gas and blood purification
21	Impact copolymer for optical protective film grade	2,800	2020.03~2021.11	Apply to reflective polarizer, light guide plate and prism sheet of optoelectronics industry

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Item	R&D project products	Expected R&D Investments (NT$ thousands)	Expected R&D period	Explanation
22	No-spraying and metallic like PP	3,200	2020.05~2021.12	Apply to automobile accessories and housing of high-end appliances
23	PBAT-based white masterbatch and calcium carbonate masterbatch	600	2020.10~2021.12	Apply to bio-degradable plastics
24	Anti-bacteria oyster shell powder	3,000	2020.08~2021.08	Use wasted oyster shells to develop high value-added anti-bacterial materials

7.6.4 Effect on the Company’s financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response:

The Company closely monitors all domestic and foreign governmental policies and regulations that might impact the Company’s business and financial operations and arranges personnel to receive professional training as needed. During the period of 2020 to February 28, 2021, the following changes or developments in governmental policies and regulations may influence the Company’s business and financial operations:

Pursuant to the Announcement No. 10904606910 dated December 31, 2020 from the Ministry of Economic Affairs regarding the "Regulations Governing the Chartered Capacity on Electricity Consumption Agreements Which the Users Shall Install Renewable Energy Facilities for Exceeding a Certain Capacity," starting from January 1, 2021, electricity consumers with chartered capacity exceeding 5,000 kWh shall either install a renewable energy power generation device and an energy storage device with a certain

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capacity on their own, or purchase a certain amount of renewable energy power and renewable energy certificates. The aforementioned required capacity of renewable energy storage shall be calculated based on 10% of the average chartered capacity from the previous year, and such obligation shall be fulfilled within 5 years (by 2025). In addition, the obligation of the entitled reductions and the early completion of reductions for existing renewable power generation devices are also specified. The Company will set up renewable energy devices or power configurations in line with relevant regulations.

7.6.5 Effect on the Company’s financial operations of developments in science and technology as well as industrial change, and measures to be taken in response: None.
7.6.6 Effect on the Company’s crisis management of changes in the company’s corporate image, and measures to be taken in response: The Company has built up the good image by adhering to the business philosophy of “diligence, perseverance, frugality and trustworthiness; aiming at the sovereign good; perpetual business operation; dedication to the society”. In the future, we will keep carrying out the philosophy and devotinh more resources to the society.
7.6.7 Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken: None.
7.6.8 Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken: Please refer to 7.4 The Expected benefits of major capital expenditures in recent years. The potential risks and measures to be taken in response: None.
7.6.9 Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken:
Purchases: The Company’s raw materials, ethylene and propylene, are mainly from Formosa Petrochemical Corp. and CPC Corp.,

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Taiwan. If those two companies arrange maintenance or reduce the output, the Company also has to cooperate with maintenance or reduce production. Therefore, the Company sets up an imported ethylene storage tank lease contract with CPC Corp., Taiwan. When the supply of ethylene is insufficient due to maintenance and reduction production of CPC Corp., Taiwan, the Company can purchase the imported ethylene supplement from abroad and apply for a foreign ship to carry the ethylene from Mailiao to Kaohsiung or exchange with the trading company to carry ethylene to Kaohsiung. However, if the petrochemical market is at a high level, in order to maintain production, there will be a risk of being forced to import high-priced raw materials. In addition, the raw material, industry salt, is imported from Mexico, Australia and other regions by diversifying import areas to avoid purchasing concentration.

Sales: At present, most of the Company’s petrochemical products are exported to China, which situation faces the risks of that rapid increase in production capacity or policy changes in China. Therefore, the Company gradually expands its export markets to other regions to diversify risks. Taking PVC as an example, the Compamy will actively expand markets in Southeast Asia, New Zealand, Australia, the Middle East, Africa and South America besides China to diversify risks. In 2020, PE export market is concentrated in China. However, the tax barriers, and the Middle East materials and the new capacity from coal chemical industry competing at a low price are not conducive to the sales of PE products of the Company. In order to mitigate those risks, the Company actively expands the high-yield products market, and diversifies markets risk by actively expanding areas of zero tariffs (such as Vietnam) or lower tariff barriers (such as Bangladesh), and spreading to other potential markets. In addition, the Company sets up overseas delivery warehouses to shorten the delivery period, and sets up technical service offices outside China, such as Germany, India and Vietnam, with sales and technical personnel to stay in the station, to strengthen relationship with foreign customers and promote business and technical services to increase sales.

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7.6.10 Effect upon and risk to the Company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the Company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken: None.
7.6.11 Effect upon and risk to company associated with any change in governance personnel or top management, and mitigation measures being or to be taken: None.
7.6.12 Litigious and non-litigious matters. List major litigious, non-litigious or administrative disputes that: (1) involve the company and/or any company director, any company supervisor, president, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappealable judgment, or are still under litigation, where such a dispute could materially affect shareholders’ equity or the prices of the company’s securities:
The civil lawsuit about 74 people including Shu-fen Zhang from Taixi Township against five company, Formosa Plastics Corp., Nanya Plastics Corp., Formosa Chemicals & Fibre Corp., Formosa Petrochemical Corp. and Mai-Liao Power Corp. for NT$70,176,986.
(1)Disputes: 74 people including Shu-fen Zhang from Taixi Township claimed that the five company including the Company in the sixth nephra cracker’s gas emission caused that 20 persons in their families died and 9 persons suffered from cancer. Hence, they filed damaged lawsuit from Taiwan Yulin District Court, asking compensation. However, despite that fact that plaintiff makes the case that petrochemical industry is the direct cause to the death and caner by the air pollution it produced, but never provide evidence about the pollution tolerance, air quality, causation to cancer by its operation. None of them filed by scientific evidence. Therefore, the Company actively defended to protect our own interest.

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  - (2)Target amount:: NT$70,176,986

  - (3)The commencement date of the lawsuit: August 13, 2015

  - (4)Main litigants: 74 people including Shu-fen Zhang from Taixi Township

  - (5)Current situation: This lawsuit belongs to the Yunlin District Court. The litigation agents of plaintiffs are appointed by the Legal Aid Foundation with lawyers. They has submitted to the court as public nuisance dispute. Therefore, Yunlin District Court had ruled to stop the litigation procedure. The case is mediated by Yunlin County Government.

7.6.13 Other important risks, and mitigation measures being or to be taken: Information Security Risk Assessment
In order to ensure the security and stability of the computer network, prevent the abnormality of the information system and the damage of computer files, strengthen the protection of personal data, effectively control the risk of enterprise information systems, and maintain the continuous operation of the enterprise, the Company has established relevant administration regulations and processing guidelines for employees to follow, and constructs layer-by-layer control and protection mechanisms to protect application programs, operating systems and computer network. In order to ensure the safe use of information and the establishment of a reliable information environment, our company’s information security policy is as follows:
- (1)Comply with government laws and regulations, and popularize awareness of information security.
- (2)Pay attention to risk management and protect data security.
- (3)All the employees must participate, and we pursue continuous improvement.
The globally interconnected internet makes business activities more flexible and faster, but cyber attacks are rising accordingly. These attacks include causing network services unavailable through creating a large number of network connections, snooping secrets over the network or affecting system service using computer viruses or malicious programs, stealing confidential information through the use of social engineering, or the leakage of confidential information due to insufficient security awareness of employees. In view of these risks, we have planned and arranged adequate security measures, as specified below:

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(1)Adopt a defense-in-depth architecture to prevent network attacks. We build systems such as Intrusion Prevention System (IPS), malicious URL filtering, and Advanced Persistent Threat (APT) Prevention, and establish management and control mechanisms for Internet access, e-mail, and personal information leakage.
(2))Establish mechanisms for physical access control, system login authentication, password control, access authorization and regular vulnerability scan, installing anti-virus software and security patches, controlling document and USB access, and establishing backup mechanisms to enhance endpoint protection.
(3)Conduct information security education and testing for employees every year to strengthen employees’ awareness of cyber security risks.
(4)Review the security measures and regulations annually, pay attention to the security issues and make the response plan to ensure its appropriateness and effectiveness.
Due to the rapid changes in the attack techniques of hackers, the tactics continue to evolve, thus, the Company cannot guarantee the information system will not be affected by cyber threats. To mitigate the effects of cyber threats, the Company has considerable security protection measures and trainings.

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7.6.14 The Or anization Structure of Risk Mana ment: g ge

Risk Evaluation Items	Risk Management Unit	Risk Review
1. Interest rate, fluctuation in foreign exchange rate, and inflation	President Office, Accounting Department, Financial Department, President Office of the General Administrative Office of Formosa Plastics Group	Computer audit and regular self-inspection, monthly fund meeting, joint meeting of financial executives, internal auditing office, and the Board of Directors
2.High-risk, high leverage investments, loaning funds to other parties, providing endorsements and guarantees to other parties, and derivatives transaction	President Office, Financial Department, President Office of the General Administrative Office of Formosa Plastics Group	Computer audit and regular self-inspection, monthly fund meeting, joint meeting of financial executives, internal auditing office, and the Board of Directors
3. R&D plan	President Office, Support Department of each business division, General Administrative Office of Formosa Plastics Group	Production and sales meeting, business performance meeting, R&D project meeting, the Board of Directors, and internal auditingoffice
4. Important policy and legal changes at home and abroad	President Office, Manager Office and Support Department of each business division, Legal Affairs Office, President Office of the General Administrative Office of Formosa Plastics Group	Production and sales meeting, business performance meeting, the Board of Directors, and internal auditing office
5. Technology Changes	President Office, Manager Office of each business division, R&D Department, General Administrative Office of Formosa Plastics Group	Production and sales meeting, business performance meeting, internal auditing office, and the Board of Directors
6. Changes in Corporate Image	President Office, Manager Office of each business division, General Administrative Office of Formosa Plastics Group	Production and sales meeting, business performance meeting, and the Board of Directors

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Risk Evaluation Items	Risk Management Unit	Risk Review
7. M&A or reinvestment	President Office, Manager Office of each business division, General Administrative Office of Formosa Plastics Group	Production and sales meeting, business performance meeting, internal auditing office, and the Board of Directors
8. Expansion of Plants	President Office, Manager Office and Factory Affairs Office of each business division, General Administrative Office of Formosa Plastics Group	Production and sales meeting, business performance meeting, internal auditing office, and the Board of Directors
9. Purchase or turnover concentration	President Office, Manager Office of each business division, Procurement Department, President Office of the General Administrative Office of Formosa Plastics Group	Market weekly meeting, production and sales meeting, business performance meeting, auditing department, and the Board of Directors
10. Directors and supervisors and major shareholders equitytransfer	President Office, Share Unit of Financial Department	Business management meeting and the Board of Directors
11. Changes in Operation Right	President Office, General Administrative Office of Formosa Plastics Group	Business management meeting and the Board of Directors
12. Litigious and non-litigious matters	President Office, Manager Office of each business division, Legal Affairs Office	Production and sales meeting, business performance meeting, internal auditing office, and the Board of Directors
13. Information Security	President Office, Manager Office of each business division, General Administrative Office of Formosa Plastics Group	Business management meeting, internal auditing office and the Board of Directors

7.7 Other Important Matters: None.

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==> picture [412 x 539] intentionally omitted <==

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

100.00% thousand
NT$ 42,429,791
0%
100.00% thousand 100.00% thousand 0 share NT$ 0
thousand
77,000 shares Formosa Industries (Ningbo) Co., Ltd.
NT$ 42,887,695 NT$ 42,829,135
0% 0 share NT$ 0 thousand (Cayman) Limited 0% 0 share NT$ 0 thousand 100.00% NT$ 399,344 thousand
Formosa Plastics Corporation
Formosa Industries (Hong Kong) Limited 0% Formosa Electronic (Ningbo) Co., Ltd.
0 share NT$ 0
thousand
Formosa Plastics Corporation
100.00% thousand
5,073shares
NT$ 10,763,605
Corporation
0%
0 share NT$ 0
thousand Formosa Industries
Organization chart of affiliated companies
(1)
1.Status of affiliated companies
8.1.1 Consolidated Business Report of Affiliated Companies
8.1 Summary of Affiliated Companies
----- End of picture text -----

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	Formosa Plastics Corporation (Cayman) Limited 2002 Corporate Centre, West Bay Road, P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies 77 Investment Formosa Industries (Hong Kong) Limited 2007 7/F, Citicorp Centre, 18 Whitfield Rd, Causeway Bay, HK 991,283 Investment Formosa Industries (Ningbo) Co., Ltd. 2002 Petrochemical Economical & Technological Development Zone, Beilun District, Ningbo City, Zhejiang Province, China 989,023 PVC, acrylic acid and ester, polypropylene, super absorbent polymer, ethylene vinyl acetate copolymer Formosa Electronic (Ningbo) Co., Ltd. 2004 No. 1-10, Linganger 2nd Road, Xiapu Sub-District, Beilun District, Ningbo City, Zhejiang Province, China 2,260 Distributed control system (DCS) Formosa Industries Corporation 2015 9 Peach Tree Hill Road, Livingston, NJ, U.S.A. 507,255 High density polyethylene Note 1: All affiliated companies should be disclosed no matter its scales. Note 2: If an affiliated company has a factory which sales value of product exceeds 10% of the operating income of the controlling company, the name of the factory, the incorporation date, address and the main production products of the factory should be specified.	Formosa Plastics Corporation (Cayman) Limited 2002 Corporate Centre, West Bay Road, P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies 77 Investment Formosa Industries (Hong Kong) Limited 2007 7/F, Citicorp Centre, 18 Whitfield Rd, Causeway Bay, HK 991,283 Investment Formosa Industries (Ningbo) Co., Ltd. 2002 Petrochemical Economical & Technological Development Zone, Beilun District, Ningbo City, Zhejiang Province, China 989,023 PVC, acrylic acid and ester, polypropylene, super absorbent polymer, ethylene vinyl acetate copolymer Formosa Electronic (Ningbo) Co., Ltd. 2004 No. 1-10, Linganger 2nd Road, Xiapu Sub-District, Beilun District, Ningbo City, Zhejiang Province, China 2,260 Distributed control system (DCS) Formosa Industries Corporation 2015 9 Peach Tree Hill Road, Livingston, NJ, U.S.A. 507,255 High density polyethylene Note 1: All affiliated companies should be disclosed no matter its scales. Note 2: If an affiliated company has a factory which sales value of product exceeds 10% of the operating income of the controlling company, the name of the factory, the incorporation date, address and the main production products of the factory should be specified.	Formosa Plastics Corporation (Cayman) Limited 2002 Corporate Centre, West Bay Road, P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies 77 Investment Formosa Industries (Hong Kong) Limited 2007 7/F, Citicorp Centre, 18 Whitfield Rd, Causeway Bay, HK 991,283 Investment Formosa Industries (Ningbo) Co., Ltd. 2002 Petrochemical Economical & Technological Development Zone, Beilun District, Ningbo City, Zhejiang Province, China 989,023 PVC, acrylic acid and ester, polypropylene, super absorbent polymer, ethylene vinyl acetate copolymer Formosa Electronic (Ningbo) Co., Ltd. 2004 No. 1-10, Linganger 2nd Road, Xiapu Sub-District, Beilun District, Ningbo City, Zhejiang Province, China 2,260 Distributed control system (DCS) Formosa Industries Corporation 2015 9 Peach Tree Hill Road, Livingston, NJ, U.S.A. 507,255 High density polyethylene Note 1: All affiliated companies should be disclosed no matter its scales. Note 2: If an affiliated company has a factory which sales value of product exceeds 10% of the operating income of the controlling company, the name of the factory, the incorporation date, address and the main production products of the factory should be specified.	Formosa Plastics Corporation (Cayman) Limited 2002 Corporate Centre, West Bay Road, P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies 77 Investment Formosa Industries (Hong Kong) Limited 2007 7/F, Citicorp Centre, 18 Whitfield Rd, Causeway Bay, HK 991,283 Investment Formosa Industries (Ningbo) Co., Ltd. 2002 Petrochemical Economical & Technological Development Zone, Beilun District, Ningbo City, Zhejiang Province, China 989,023 PVC, acrylic acid and ester, polypropylene, super absorbent polymer, ethylene vinyl acetate copolymer Formosa Electronic (Ningbo) Co., Ltd. 2004 No. 1-10, Linganger 2nd Road, Xiapu Sub-District, Beilun District, Ningbo City, Zhejiang Province, China 2,260 Distributed control system (DCS) Formosa Industries Corporation 2015 9 Peach Tree Hill Road, Livingston, NJ, U.S.A. 507,255 High density polyethylene Note 1: All affiliated companies should be disclosed no matter its scales. Note 2: If an affiliated company has a factory which sales value of product exceeds 10% of the operating income of the controlling company, the name of the factory, the incorporation date, address and the main production products of the factory should be specified.	Formosa Plastics Corporation (Cayman) Limited 2002 Corporate Centre, West Bay Road, P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies 77 Investment Formosa Industries (Hong Kong) Limited 2007 7/F, Citicorp Centre, 18 Whitfield Rd, Causeway Bay, HK 991,283 Investment Formosa Industries (Ningbo) Co., Ltd. 2002 Petrochemical Economical & Technological Development Zone, Beilun District, Ningbo City, Zhejiang Province, China 989,023 PVC, acrylic acid and ester, polypropylene, super absorbent polymer, ethylene vinyl acetate copolymer Formosa Electronic (Ningbo) Co., Ltd. 2004 No. 1-10, Linganger 2nd Road, Xiapu Sub-District, Beilun District, Ningbo City, Zhejiang Province, China 2,260 Distributed control system (DCS) Formosa Industries Corporation 2015 9 Peach Tree Hill Road, Livingston, NJ, U.S.A. 507,255 High density polyethylene Note 1: All affiliated companies should be disclosed no matter its scales. Note 2: If an affiliated company has a factory which sales value of product exceeds 10% of the operating income of the controlling company, the name of the factory, the incorporation date, address and the main production products of the factory should be specified.
Main Business Items	Investment	Investment	PVC, acrylic acid and ester, polypropylene, super absorbent polymer, ethylene vinyl acetate copolymer	Distributed control system (DCS)	High density polyethylene
Paid-in capital Unit: USD thousands	77	991,283	989,023	2,260	507,255
Address	Corporate Centre, West Bay Road, P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies	7/F, Citicorp Centre, 18 Whitfield Rd, Causeway Bay, HK	Petrochemical Economical & Technological Development Zone, Beilun District, Ningbo City, Zhejiang Province, China	No. 1-10, Linganger 2nd Road, Xiapu Sub-District, Beilun District, Ningbo City, Zhejiang Province, China	9 Peach Tree Hill Road, Livingston, NJ, U.S.A.
Incorporation Date	2002	2007	2002	2004	2015
Name of Company	Formosa Plastics Corporation (Cayman) Limited	Formosa Industries (Hong Kong) Limited	Formosa Industries (Ningbo) Co., Ltd.	Formosa Electronic (Ningbo) Co., Ltd.	Formosa Industries Corporation

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Main Business Items	Main Business Items	-
Paid-in capital		-
Address		-
Incorporation Date		-
Shareholding (Note 2)	Shareholding ratio	-
	Shares	-
Name	(Note 1)	-
Presumptive reason		-

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Shareholding Ratio (Investment Holding)	0 100.00	0 100.00	0 0 0 0 0 0 0 0 100.00
Shares (Investment Amount)	77,000 FPC holds 77,000 shares	0 Invesment of Formosa Plastics Corporation (Cayman) Limited USD 991,283 thousand.	0 0 0 0 0 0 0 0 Invesment of Formosa Industries (Hong Kong) Limited USD 989,023 thousand.
Name or Representative	Jason Lin (Note 3.1)	Jason Lin (Note 3.2)	Jason Lin (Note 3.3) K. L. Huang (Note 3.3) Wen-Bee Kuo (Note 3.3) Tien-Show Shih(Note 3.3) Cheng-Chang Wu (Note 3.3) T. T. Chen (Note 3.3) Feng-Chou Chuang (Note 3.3) Chia-Tso Chang (Note 3.3)
Title (Note 1)	Chairman	Chairman	Chairman Director Director Director Director Director Director Supervisor
Name of Company	Formosa Plastics Corporation (Cayman) Limited	Formosa Industries (Hong Kong) Limited	Formosa Industries (Ningbo) Co., Ltd.

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			Formosa Industries Corporation Chairman C. T. Lee (Note 3.5) 0 0 Director Jason Lin (Note 3.5) 0 0 Director K. L. Huang (Note 3.5) 0 0 FPC holds 5072.55 shares 100.00 Note 1: If an affiliated company is a foreign company, list the equivalent title. Note 2: If the invested company is a company limited by shares, please fill in the share number and shareholding ratio. For others, please indicate so, and fill in invested amount and invested percentage. Note 3: 1. The chairman of Formosa Plastics Corporation (Cayman) Limited, Jason Lin, and his spouse & minor children do not hold the share of Formosa Plastics Corporation (Cayman) Limited. 2. The chairman of Formosa Industries (Hong Kong) Limited, Jason Lin, and his spouse & minor children do not hold the shares of Formosa Industries (Hong Kong) Limited. 3. The chairman of Formosa Industries (Ningbo) Co., Ltd., Jason Lin, and directors, K. L. Huang, Wen-Bee Kuo, Tien-Show Shih, Cheng-Chang Wu, T. T. Chen and Feng-Chou Chuang and supervisor, Chia-Test Chang, and their spouses & minor children do not hold the shares of Formosa Industries (Ningbo) Co., Ltd. 4. The chairman of Formosa Electronic (Ningbo) Co., Ltd., Jason Lin, and directors, Y.Y. Lee and Si-Fu Hsieh and supervisor, Chia-Test Chang, and their spouses & minor children do not hold the shares of Formosa Electronic (Ningbo) Co., Ltd.
Shareholding (Note 2) (Note 3)	Shareholding Ratio (Investment Holding)	0 0 0 0 100.00	0 0 0 100.00
	Shares (Investment Amount)	0 0 0 0 Invesment of Formosa Industries (Hong Kong) Limited USD 2,260 thousand.	0 0 0 FPC holds 5072.55 shares
	Name or Representative	Jason Lin (Note 3.4) Y.Y. Lee (Note 3.4) Si-Fu Hsieh (Note 3.4) Chia-Tso Chang (Note 3.4)	C. T. Lee (Note 3.5) Jason Lin (Note 3.5) K. L. Huang (Note 3.5)
	Title (Note 1)	Chairman Director Director Supervisor	Chairman Director Director
	Name of Company	Formosa Electronic (Ningbo) Co., Ltd.	Formosa Industries Corporation

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Earnings per share (NT$)	42,690.81	-	-	-	-167,132.50
Net income	3,287,192	3,328,723	3,285,792	42,932	-847,788
Operating income	-106	0	4,225,349	48,402	-1,561,875
Operating revenue	0	0	46,209,585	407,533	8,770,617
Net worth	42,914,183	42,829,135	42,429,791	399,344	10,763,605
Total liabilities	25,767	0	9,359,881	1,221,226	15,388,457
Total assets	42,939,950	42,829,135	51,789,672	1,620,570	26,152,062
Capital	2,560	31,263,157	31,188,509	74,648	15,640,245
Name of Company	Formosa Plastics Corporation (Cayman) Limited	Formosa Industries (Hong Kong) Limited	Formosa Industries (Ningbo) Co., Ltd.	Formosa Electronic (Ningbo) Co., Ltd.	Formosa Industries Corporation

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8.1.2 Affiliated company’s consolidated financial statements: same as the Company financial statements.
8.2 The Status of Private Placement of Securities in the Most Recent Year and as of the Date of Publication of the Annual Report: None.
8.3 The Subsidiaries of the Company Acquired, Disposed of the Shares of the Company in the most Recent Year and as of the Date of Publication of the Annual Report: None.
8.4 Other Necessary Supplement: None.
8.5 The Significant Impacts on Shareholders’ Right or Share Prices as Stated in Item 3 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan in the Most Recent Year and as of the Date of Publication of the Annual Report: None.

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Stock Code:1301

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2020 and 2019

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

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

250

	Contents	Page
1.	Cover Page	250
2.	Table of Contents	251
3.	Representation Letter	252
4.	Independent Accountants’ Review Report	253～256
5.	Consolidated Balance Sheets	257
6.	Consolidated Statements of Comprehensive Income	258
7.	Consolidated Statements of Changes in Equity	259
8.	Consolidated Statements of Cash Flows	260
9.	Notes to the Consolidated Financial Statements
	(1) Company history	261
	(2) Approval date and procedures of the consolidated financial	261
	review
	(3) New standards, amendments and interpretations	261～263
	(4) Summary of significant accounting policies	263～281
	(5) Significant accounting assumptions and judgments, and major	281~282
	sources of estimation uncertainty
	(6) Explanation of significant accounts	282～320
	(7) Related-party transactions	321～328
	(8) Pledged assets	328
	(9) Significant commitments and contingencies	328~329
	(10) Losses due to major disasters	330
	(11) Subsequent events	330
	(12) Other	330
	(13) Other disclosures
	(a) Information on significant transactions	331～335
	(b) Information on investees	336
	(c) Information on investment in mainland China	337
	(14) Segment information	338～339

251

Representation Letter

The entities that are required to be included in the combined financial statements of Formosa Plastics Corporation as of and for the year ended December 31, 2020 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Formosa Plastics Corporation and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: Formosa Plastics Corporation Chairman: Jaing-Nan Lin Date: March 17, 2021

252

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KPMG

��110615��5�7�68�(��101��) 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei City 110615, Taiwan (R.O.C.)

Telephone �� + 886 2 8101 6666 Fax �� + 886 2 8101 6667 Internet �� home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of Formosa Plastics Corporation:

Opinion

We have audited the consolidated financial statements of Formosa Plastics Corporation (the "Company") and its subsidiaries (together referred to as the "Group"), which comprise the consolidated statements of financial position as of December 31, 2020 and 2019, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“ IASs” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the Consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

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

1. Revenue Recognition

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

��

�� 253

4-1

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

2. Valuation of Inventories

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

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

Other Matter

We did not audit the financial statements of certain investee companies under the equity method and the relevant information on the reinvestment business in Note 13 of the consolidated financial report has not been checked by this accountant, but is checked by other accountants. The Group's investments in the aforementioned investee companies constituted 31.12% and 32.04% of the consolidated total assets as of December 31, 2020 and 2019, respectively; and the recognized shares of profit of associates accounted for using equity method of these investee companies constituted 10.67% and 35.26% of the consolidated income before tax for the years ended December 31, 2020 and 2019, respectively. The consolidated financial statements of the aforementioned investee companies were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these investee companies, is based solely on the reports of other auditors.

We have also audited the parent company only financial statements of the Company as of and for the years ended December 31, 2020 and 2019, and have expressed an unmodified opinion thereon.

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

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

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

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

254

4-2

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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

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

255

4-3

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

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

KPMG

Taipei, Taiwan (Republic of China) March 17, 2021

Notes to Readers

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

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

256

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES	Consolidated Balance Sheets	December 31, 2020 and 2019	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019	Amount % Amount % Liabilities and Equity	Current liabilities:	14,145,110 3 18,165,952 4 2100 (Notes 6(i))	3,888,883 1 4,044,356 1 2110 (Note 6(j))	102,218,948 21 102,342,079 20 2170	2,148,261 1 2,584,690 - 2180 (Note 7)	10,372,878 2 7,392,229 1 2200	3,439,213 1 3,562,016 1 2220 (Note 7)	936,148 - 997,608 - 2280 (Note 6(m))	6,499,202 1 14,791,036 3 2321 (Note 6(l))	16,681,271 4 18,269,476 4 2322 (Notes 6(k) and 8)	5,305,846 1 3,467,418 1 2399 (Note 7)	5,305,846 1 3,467,418 1 2399 (Note 7)	165,635,760 35 175,616,860 35 Total current liabilities	Non-Current liabilities:	18,647,715 4 21,408,559 4 2530 (Note 6(l))	193,979,093 40 202,446,613 41 2540 (Note 6(k) and 8)	86,785,954 18 85,635,983 17 2570 (Note 6(o))	1,147,126 - 1,055,171 - 2580 (Note 6(m))	590,274 - 423,488 - 2622 (Note 7)	2,859,857 1 2,871,940 1 2640 -non-current (Note 6(n))	2,859,857 1 2,871,940 1 2640 -non-current (Note 6(n))	9,634,644 2 7,629,345 2 2670 (Note 6(f))	9,634,644 2 7,629,345 2 2670 (Note 6(f))	313,644,663 65 321,471,099 65 Total non-current liabilities	Total liabilities	Equity (Note 6(p)):	3110	3200	Retained earnings:	3310	3320	3350	Total retained earnings	3400	3400	479,280,423 100 497,087,959 100 Total equity	479,280,423 100 497,087,959 100 Total equity	Total liabilities and equity
									$																																		$

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

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

2020

See accompanying notes to consolidated financial statements.

258

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Consolidated Statements of Changes in Equity For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars) Equity attributable to owners of parent Total other equity interest Share capital Retained earnings Ordinary shares Capital surplus Legal reserve Special reserve Unappropriate d retained earnings Exchange differences on translation of foreign financial statements Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Gains (losses) on hedging instruments Total equity Balance at January 1, 2019 $ 63,657,408 11,713,842 57,103,815 58,778,533 82,499,843 (1,556,605) 83,389,928 (18,763) 355,568,001 Net Income for the period - - - - 37,324,162 - - - 37,324,162 Other comprehensive income (loss) for the period, net of income tax - - - - (377,598) (3,721,645) (2,688,903) 19,542 (6,768,604) Total comprehensive income (loss) for the period - - - - 36,946,564 (3,721,645) (2,688,903) 19,542 30,555,558 Appropriation and distribution of retained earnings: Legal reserve appropriated - - 4,954,954 - (4,954,954) - - - - Special reserve appropriated - - - 5,190,369 (5,190,369) - - - - Cash dividends of ordinary share - - - - (36,921,297) - - - (36,921,297) Changes in equity of associates and joint ventures accounted for using equity method - - - - (59,598) - - - (59,598) Other changes in capital surplus: Changes in equity of associates and joint ventures accounted for using equity method - 4,003 - - - - - - 4,003 Other changes in capital surplus - 6,653 - - - - - - 6,653 Balance at December 31, 2019 63,657,408 11,724,498 62,058,769 63,968,902 72,320,189 (5,278,250) 80,701,025 779 349,153,320 Net loss for the period - - - - 20,036,199 - - - 20,036,199 Other comprehensive income (loss) for the period, net of income tax - - - - (92,181) (4,324,810) (4,229,221) 37,209 (8,609,003) Total comprehensive income (loss) for the period - - - - 19,944,018 (4,324,810) (4,229,221) 37,209 11,427,196 Appropriation and distribution of retained earnings: Legal reserve appropriated - - 3,732,416 - (3,732,416) - - - - Special reserve appropriated - - - 4,910,774 (4,910,774) - - - - Cash dividends of ordinary share - - - - (28,009,259) - - - (28,009,259) Changes in equity of associates and joint ventures accounted for using equity method - - - - (52,743) - - - (52,743) Other changes in capital surplus: Changes in equity of associates and joint ventures accounted for using equity method - 5,407 - - - - - - 5,407 Other changes in capital surplus - 12,219 - - - - - - 12,219 Balance at December 31, 2020 $ 63,657,408 11,742,124 65,791,185 68,879,676 55,559,015 (9,603,060) 76,471,804 37,988 332,536,140	355,568,001	37,324,162 (6,768,604)	30,555,558	- - (36,921,297) (59,598) 4,003 6,653	349,153,320 20,036,199 (8,609,003)	11,427,196	- - (28,009,259) (52,743) 5,407 12,219	332,536,140

259

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit gain Net gain (loss) on financial assets or liabilities at fair value through profit Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Gain on disposal of right-of-use assets Unrealized foreign exchange (gain) loss Total adjustments to reconcile loss (profit) Changes in operating assets and liabilities: Changes in operating assets: Notes receivable Accounts receivable Accounts receivable due from related parties Other receivables Other receivables due from related parties Inventories Other current assets Total changes in operating assets Changes in operating liabilities: Accounts payable Accounts payable to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method 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 Acquisition of right-of-use assets Proceeds from disposal of right-of-use assets 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 Increase in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Proceeds from long-term debt Repayments of long-term debt (Decrease) Increase in due to related parties (recognized as other payables�related parties) Payment of lease liabilities Decrease in other non-current liabilities Cash dividends paid Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		2020 $ 24,166,667 7,210,271 791,281 (1,565) 155,473 1,206,988 (374,256) (3,358,166) (5,212,882) (8,803) - (45,042) 363,299 436,428 (2,934,044) 122,804 108,293 (204,072) 1,348,028 (1,837,435) (2,959,998) 1,797,199 255,174 198,260 (553,117) (5,236) (408,019) 1,284,261 (1,675,737) (1,312,438) 22,854,229 367,388 11,694,866 (1,201,708) (2,270,322) 31,444,453 - 12,500 (625,000) (8,883,039) 19,808 (214,341) 8,499,835 - - (2,725,618) (3,915,855) 333,456,117 (338,190,057) 2,000,000 8,350,000 - 1,536,598 (4,592,694) (6,978,720) (37,891) (98,896) (28,012,404) (32,567,947) 1,018,507 (4,020,842) 18,165,952 $ 14,145,110	2019 42,219,152

			6,909,994 481,013 (1,567) (27,107) 1,359,114 (623,668) (8,186,145) (14,734,118) (31,109) (12,834) 1,755,009
			(13,111,418)
			(152,244) 1,938,516 733,575 371,720 (391,997) 2,444,492 127,399
			5,071,461
			(91,835) (1,165,761) (560,817) 806,845 (608,817) (542,266)
			(2,162,651)
			2,908,810
			(10,202,608)
			32,016,544 635,930 22,475,201 (1,363,206) (7,184,041)
			46,580,428
			(229,555) - (1,951,323) (17,293,279) 44,773 (52,559) 2,293,804 (684,825) 13,630 (2,657,326)
			(20,516,660)
			341,549,459 (341,928,883) 3,000,000 - (4,600,000) 2,300,000 (6,491,026) 11,663,632 (32,421) (78,446) (36,927,613)
			(31,545,298)
			336,710
			(5,144,820) 23,310,772
			18,165,952

See accompanying notes to consolidated financial statements.

260

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

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

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

(1) Company history

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

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

The accompanying consolidated financial statements of the Group as of and for the three months ended 2020 were authorized for issue by the board of directors on March 17, 2021.

(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. (“FSC”) which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2020:

�Amendments to IFRS 3 “Definition of a Business”
�Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”
�Amendments to IAS 1 and IAS 8 “Definition of Material”
�Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its consolidated financial statements:

�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”

(Continued)

261

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

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

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

(Continued)

262

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

�Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
�IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
�Amendments to IAS 16 “Property, Plant and Equipmentt 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”

(4) Summary of significant accounting policies:

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

(a) Statement of compliance

The accompanying consolidated financial statements have been prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to the Guidelines) and the International Financial Reporting Standards, International Accounting Standards, IFRIC interpretations and SIC interpretations as endorsed by the Financial Supervisory Commission of the Republic of China (hereinafter referred to IFRSs as endorsed by the FSC).

(b) Basis of preparation

Basis of measurement

The consolidated financial statements have been prepared on historical cost basis, except for the following material items in the statement of financial position.

(i) Financial assets at fair value through other comprehensive income are measured at fair value.
(ii) The net defined benefit liabilities are measured as the fair value of the plan assets, less the present value of the defined benefit obligation.

Functional and presentation currency

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

(Continued)

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FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Basis of consolidation
(i) Principles of preparing consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

Changes in the ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

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

Investor	Name of subsidiaries	Business activity	Percentage of Ownership (%) December 31, 2020 December 31, 2019 Note % 100 % 100 % 100 % 100 % - % 100 (Note) % 100 % 100 % 100 % 100 % 100 % 100
			December 31, 2020 % 100 % 100 % - % 100 % 100 % 100
The Company The Company The Company Formosa Plastics Corporation (Cayman) Limited Formosa Industries (Hong Kong) Limited Formosa Industries (Hong Kong) Limited	Formosa Plastics Corporation (Cayman) Limited Formosa Industries Corporation U.S.A Formosa Plastics International (Cayman) Limited Formosa Industries (Hong Kong) Limited Formosa Industries (Ningbo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd.	Investment High Density Polyethylene Investment Investment Plastics Electronics

Note: Formosa Plastics International (Cayman) Limited was liquidated on November 19, 2020.

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

(Continued)

264

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Foreign currency

(i) Foreign currency transaction

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

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

�an investment in equity securities designated as at fair value through other comprehensive income;
�a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
�qualifying cash flow hedges to the extent that the hedges are effective.

(ii) Foreign operations

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

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

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planed nor likely in the foreseeable future, foreign currency gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income.

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

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

(Continued)

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FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date.

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

(i) It is expected to be settled during the Group’s normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the balance sheet date; or
(iv) The Group does not have any unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(f) Cash and cash equivalents

Cash comprises cash on hand and cash in bank. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are classified under cash equivalents.

(g) Financial instruments

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

(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.

(Continued)

266

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 )

A debt investment is measured at FVOCI 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 achieved by both collecting contractual cash flows and selling financial assets; 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.

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

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

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

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

(Continued)

267

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Fair value through profit or loss (FVTPL)

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

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

4) Business model assessment

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

�the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
�how the performance of the portfolio is evaluated and reported to the Group’ s management;
�the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
�how managers of the business are compensated � e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
�the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

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

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

(Continued)

268

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

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

�contingent events that would change the amount or timing of cash flows;
�terms that may adjust the contractual coupon rate, including variable rate features;
�prepayment and extension features; and
�terms that limit the Group’ s claim to cash flows from specified assets (e.g. nonrecourse features)
6) Impairment of financial assets

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

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

�debt securities that are determined to have low credit risk at the reporting date; and
�other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

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

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

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

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

(Continued)

269

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

�significant financial difficulty of the borrower or issuer;

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

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

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

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

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

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

7) Derecognition of financial assets

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

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

(Continued)

270

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Financial liabilities and equity instruments

1) Classification of debt or equity

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

2) Financial liabilities

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

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

3) Derecognition of financial liabilities

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

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

4) Offsetting of financial assets and liabilities

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

(h) Inventories

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

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

(Continued)

271

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Investment in associates

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

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

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

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

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

(j) Joint venture

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Those parties are called joint ventures. Joint ventures should account the rights from the joint arrangement as an investment, and account it for using equity method according to IAS 28, unless, the entity is exempted from applying the equity method as specified in the standard.

(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.

(Continued)

272

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Subsequent cost

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

(iii) Depreciation

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

Land is not depreciated.

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

1) Buildings and constructions: 3 to 55 years.
2) Machinery and equipment: 2 to 25 years.
3) Other facilities: 3 to 15 years.

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

(l) Lease

(i) Identifying a 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. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3)the customer has the right to direct the use of the asset throughout the period of use only if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or

(Continued)

273

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

the relevant decisions about how and for what purpose the asset is used are predetermined and:
- the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
- the customer designed the asset in a way that predetermines how and for what purpose it will be?used throughout the period of use.
(ii) As a leasee

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

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

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

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

fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

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

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
there is any lease modifications

(Continued)

274

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

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

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

(iii) As a leasor

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

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

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

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

(Continued)

275

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Intangible assets
(i) Goodwill
- 1) Initial Recognition

When Yung Chia Chemical Industries Corp. was acquired, the excess of original investment cost over the fair value of net assets acquired was recognized as goodwill.

2) Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses.

(ii) Other intangible assets

Other intangible assets are measured at cost less accumulated amortization and any accumulated impairment losses.

(iii) Subsequent expenditure:

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

(iv) Amortization:

The depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value.

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill and intangible assets with indefinite useful life, from the date that they are made available for use. The estimated useful lives for the current and comparative periods are as follows:

Technical development expense 10~45 years

Computer software 10years

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

(n) Impairment of non-financial assets

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

(Continued)

276

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

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

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

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

(o) Revenue recognition
(i) Revenue from contracts with customers

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

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

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

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

(Continued)

277

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Construction contracts

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

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

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

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

3) Financing components

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

(p) Contract costs

(i) Incremental costs of obtaining a contract

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

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

(Continued)

278

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Costs to fulfil a contract

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

the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;
the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and
the costs are expected to be recovered.

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

(q) Employee Benefits

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

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss for the period in which services are rendered by employees.

(ii) Defined benefit plans

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

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

(Continued)

279

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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 Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

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

(iii) Short-term employee benefits

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

(r) Income Tax

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

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

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

(i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Consolidated Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred 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.

(Continued)

280

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(i) the Consolidated Company has a legally enforceable right to set off current tax assets against current tax liabilities ; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(iii) Deferred tax asset are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(s) Earnings per share

The basic earnings per share is calculated based on the profit attributable to the ordinary shareholders of the Group divided by weighted average number of ordinary shares outstanding.

(t) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may incur revenues and incur expenses. Operating results of the operating segment are regularly reviewed by the Group’ s chief operating decision maker to make decisions about allocating the resources to the segment and assessing its performance.

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

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

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

(Continued)

281

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The accounting policies which involved significant judgments and the information that have significant effect on the amounts recognized in the consolidated financial statements are as follows:

(a) Judgment of whether the Group has substantive control over Formosa Petrochemical Corporation

The Group holds 28.56% outstanding ordinary shares of Formosa Petrochemical Corporation, who has a total number of 15 directors in its board, including 2 seats representing the Group. Although the Group is the biggest shareholder of Formosa Petrochemical Corporation, the Group does not have definite control on its overall operating related activities. Therefore, it is determined that the Group has no control over Formosa Petrochemical Corporation.

(b) Judgment of whether the Group has substantive control over Formosa Heavy Industries Corporation

The Group holds 32.92% outstanding ordinary shares of Formosa Heavy Industries Corporation, who has a total number of 7 directors in its board, with the Group obtaining none of the seats, but having only one supervisor serving as its representative. Although the Group is the biggest shareholder of Formosa Heavy Industries Corporation, the Group does not have definite control on its overall operating related activities. Therefore, it is determined that the Group has no control over Formosa Heavy Industries Corporation.

The Group holds 50.00% outstanding shares of Sky Dragon Investments Limited, which has only 1 director who is not connected with the Group. Although the Group is the biggest shareholder of Sky Dragon Investments Limited, the Group does not have definite control on its overall operating related activities. Therefore, it is determined that the Group has no control over Sky Dragon Investments Limited.

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

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash on hand Bank deposit Cash equivalents Cash equivalents�Time deposits Repurchase bonds	December 31, 2020 $ 312 4,051,549 9,214,840 878,409 $ 14,145,110	December 31, 2019
		2,211 2,904,856 14,343,543 915,342
		18,165,952

(Continued)

282

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

December 31, 2020 (i) Mandatorily at FVTPL Private fund $ 3,888,883 Please refer to Notes 6(t) for amount of remeasurement at FVTPL. December 31, 2020 (ii) Equity investments at fair value through other comprehensive income Listed stocks $ 102,218,948 Non-listed stocks 4,708,593 Non-domestic stocks 13,939,122 Total $ 120,866,663	December 31, 2019
	4,044,356
	December 31, 2019
	79,316,584 4,062,824 11,925,841
	95,305,249

Equity investments at fair value through other comprehensive income.

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

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

On June 11, 2019, the Group approved to obtain 7,405 thousand shares of Minima Technology Co., Ltd., a domestic nonlisted (cabinet) company, at a par value of $31 per share, amounting to$229,555 thousand, with the shareholding ratio of 19.15%. All related registration procedures had been completed on September 17, 2019.

No strategic investments were disposed as of December 31, 2020 and 2019, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

Notes receivable from operating activities Accounts receivable (including related parties) Less : allowance for doubtful receivables	December 31, 2020 $ 2,148,261 13,813,715 (1,624) $ 15,960,352	December 31, 2019 2,584,690 10,957,433 (3,188) 13,538,935

(Continued)

283

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables on December 31, 2020 and 2019. To measure the expected credit losses, accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward-looking information. The loss allowance provision on receivables as of December 31, 2020 and 2019, amounted to $1,624 thousand and $3,188 thousand, respectively. The expected credit risk on June 30, 2020 is 0.001% for current, 0.195% for 1 to 30 days past due, 1.526% for 31 to 60 days past due, 3.090% for more than 61 days past due. And the expected credit risk was no more than 0.1% on December 31 and June 30, 2019.

The loss allowance provision of notes and accounts receivable, as well as the aging analysis of notes and trade receivable as of December 31, 2020 and 2019, which were past due but not impaired, are as follows:

1 to 30 days past due 31 to 60 days past due More than 61 days past due Total	December 31, 2020 $ 671,383 15,321 26 $ 686,730	December 31, 2019
		38,054 4,287 177
		42,518

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

Beginning balance Impairment losses reversed Foreign exchange gains Ending balance (d) Other receivables	For the years ended December 31,	For the years ended December 31,
	2020 $ 3,188 (1,565) 1 $ 1,624	2019 4,755 (1,567) - 3,188

Other receivables—loans to related parties Other receivables—related parties Other receivables	December 31, 2020 $ 4,492,125 2,007,077 936,148 $ 7,435,350	December 31, 2019 12,991,960 1,799,076 997,608 15,788,644

As of December 31, 2020 and 2019, the aging analysis of other receivables were not recognized which estimated by the Group.

(Continued)

284

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Inventories

Finished goods Work in process Raw materials Supplies Machinery and accessories in process Others	December 31, 2020 $ 8,834,651 1,407,913 3,358,022 294,201 2,775,208 11,276 $ 16,681,271	December 31, 2019
		9,822,871 1,736,396 4,017,444 491,110 2,188,092 13,563
		18,269,476

Change of net realizable value of inventories�

(Gain) Loss from recovery of inventories	For the years ended December 31,	For the years ended December 31,
	2020 $ (787,978)	2019 500,229

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

(f) Investments accounted for using equity method

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

Associates
Formosa Petrochemical Corporation
Formosa Plastics Corp., U.S.A.
Formosa Heavy Industries Corp.
Sky Dragon Investments Limited
Mai Liao Power Corp.
Formosa Sumco Technology Corporation
Formosa Transportation Corp.
Formosa Fairway Corp.
Yi-Jih Development Corp.
Ya Tai Development Corp.
Formosa Automobile Corporation
Wha Ya Park Management Consulting Corporation Ltd.
Formosa Environmental Technology Corporation
Formosa Resources Corporation

December 31,
2020
December 31,
2019
$ 87,874,676
94,112,087
61,291,795
65,167,060
7,017,408
7,090,652
4,723,141
5,509,231
12,415,495
11,050,697
5,912,495
5,926,658
1,136,716
1,021,908
68,246
82,160
20,159
63,557
18,098
18,051
259,334
181,321
3,029
2,530
227,327
225,669
6,169,287
6,615,934

(Continued)

285

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

		December 31,	December 31,
		2020	2019
Formosa Plastics Construction Corporation	$	568,402	75,521
Formosa Group (Cayman) Limited		649,229	653,576
Formosa Olefins, L.L.C.		2,892,722	2,155,509
Lolita Packaging, L.L.C.		108,322	174,641
Joint ventures
Formosa Asahi Spandex Co., Ltd.		1,288,207	1,284,962
Formosa Daikin Advanced Chemical Co., Ltd.		1,210,071	1,018,634
Formosa Mitsui Advanced Chemical Co., Ltd.		-	16,255
Formosa Tokuyama Advanced Chemicals Co., Ltd.		124,934	-
	$	193,979,093	202,446,613
The Group’s shares of net income (loss) of associates and joint	ventures were as follows:
	For the years ended December
		31,
		2020	2019
Associates
Formosa Petrochemical Corporation	$	2,202,241	10,570,039
Formosa Plastics Corp., U.S.A.		375,906	4,315,020
Formosa Heavy Industries Corp.		179,148	42,009
Sky Dragon Investment Limited		(838,331)	(831,633)
Mai Liao Power Corp.		1,671,622	548,601
Formosa Sumco Technology Corporation		380,076	617,750
Formosa Transportation Corp.		102,671	45,848
Formosa Fairway Corp.		(12,813)	(5,561)
Yi-Jih Development Corp.		497	252
Ya Tai Development Corp.		47	(836)
Formosa Automobile Corporation		77,983	76,543
Wha Ya Park Management Consulting Corporation Ltd.		388	960
Formosa Environmental Technology Corporation		1,415	89
Formosa Resources Corporation		18,722	(151,452)
Formosa Plastics Construction Corporation		(7,119)	(6,778)
Formosa Group (Cayman) Limited		31,472	36,352
Formosa Olefins, L.L.C.		883,275	(592,758)
Lolita Packaging, L.L.C.		(59,170)	(83,615)
Joint ventures

(Continued)

286

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Formosa Asahi Spandex Co., Ltd. Formosa Daikin Advanced Chemical Co., Ltd. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Tokuyama Advanced Chemicals Co., Ltd.	For the years ended December 31,	For the years ended December 31,
	2020 $ 54,729 191,614 (41,425) (66) $ 5,212,882	2019
		59,696 126,402 (32,810) -
		14,734,118

(i) Associates

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

Associates Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A.	Relationship	Registration Country	Percentage of ownership
			December 31, 2020 December 31, 2019 % 28.56 % 28.56 % 22.66 % 22.66
	Formosa Petrochemical Corporation, the supplier of raw materials for the Group, engages in the manufacturing and sales of petroleum products and petrochemical raw materials. Formosa Plastics Corp., U.S.A, engages in the manufacturing and sales of oil, plastic raw materials, and petrochemical raw materials, and is also the sales target of the Group.	Taiwan U.S.A

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

Formosa Petrochemical Corporation	December 31, 2020 $ 271,510,791	December 31, 2019
		265,253,528

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)

287

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The financial information of Formosa Petrochemical Corporation was as follows:

		December 31,	December 31,
		2020	2019
Current assets	$	215,309,819	226,492,637
Non-current assets		165,613,297	171,539,156
Current liabilities		(28,887,601)	(36,762,243)
Non-current liabilities		(39,408,447)	(27,267,545)
Net asset	$	312,627,068	334,002,005
Net asset contributed to non-controlling interest of Formosa
Petrochemical Corporation	$	4,525,709	3,778,944
Net asset contributed to Formosa Petrochemical Corporation$		308,101,359	330,223,061
	For the years ended December 31,
		2020	2019
Revenue	$	415,281,764	646,022,809
Net (loss) income		7,372,455	36,748,173
Other comprehensive (loss) income		(2,174,450)	1,314,700
Total comprehensive income (loss)	$	5,198,005	38,062,873
Comprehensive (loss) income allocated to non-controlling
interest of Formosa Petrochemical Corporation	$	(304,818)	(132,636)
Comprehensive income (loss) allocated to Formosa
Petrochemical Corporation	$	5,502,823	38,195,509
	For the years ended December 31,
		2020	2019
Beginning balance of investments in major associate at	$	94,112,087	96,197,632
January 1
Total comprehensive loss allocated to the Company		1,699,526	10,969,106
Dividend Received		(7,889,592)	(13,058,635)
Share of net assets of affiliates as of September 30		87,922,021	94,108,103
Add: share premium acquired not according to
holding percentage		5,398	3,984
Add: Net adjustment		(52,743)	-
Total carrying amount of equity of the major associate as of
December 31	$	87,874,676	94,112,087

(Continued)

288

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

			December 31,	December 31,
			2020	2019
	Current assets	$	80,388,030	91,230,820
	Non-current assets		253,057,520	246,666,550
	Current liabilities		(23,145,830)	(19,974,120)
	Non-current liabilities		(32,655,356)	(24,652,204)
	Net asset	$	277,644,364	293,271,046
	Net asset contributed to non-controlling interest of Formosa
	Plastics Corp., U.S.A.	$	7,132,376	6,122,277
	Net asset contributed to Formosa Plastics Corp., U.S.A.	$	270,511,988	287,148,769
		For the years ended December 31,
			2020	2019
	Revenue		101,203,474	125,273,202
	Net (loss) income		3,043,746	18,147,970
	Other comprehensive (loss) income		(3,106,094)	(4,797,535)
	Total comprehensive (loss) income		(62,348)	13,350,435
	Comprehensive income (loss) allocated to non-controlling
	interest of Formosa Plastics Corp., U.S.A.		1,384,682	(913,474)
	Comprehensive income (loss) allocated to Formosa Plastics
	Corp., U.S.A.		(1,447,030)	14,266,909
		For the years ended December 31
			2020	2019
	Beginning balance of investments in major associate at	$	65,167,060	63,350,563
	January 1
	Total comprehensive income allocated to the Group		(3,875,265)	1,875,854
	Add: Net adjustment (treasure stock)		-	(59,357)
	Total carrying amount of equity of the major associate as of
	December 31	$	61,291,795	65,167,060
2)	The Group’s financial information for investments accounted for using the equity method
	that are individually insignificant was as follows:
			December 31,	December 31,
			2020	2019
	Carrying amount of individually insignificant
	associates’ equity	$	42,189,410	40,847,615
		For the years ended December
			31,
			2020	2019
	Attributable to the Group:
	Net income		2,429,883	(304,230)
				(Continued)

289

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Other comprehensive income (loss) Total comprehensive income (loss)	(1,149,725) 1,280,158	(1,398,993) (1,703,223)

3) On December 31, 2020, the Group participated in the capital increase by cash of Formosa Plastics Construction Corporation, an associate owned by the Group, with the total investment amounting to $500,000 thousand based on its original shareholding ratio of 33.33%.
4) On December 21, 2020, Yi-Jih Development Corp. reduced its capital, resulting in the Group to receive the amount of $43,895 thousand on January 17, 2021, with its shareholding ratio remains unchanged.
5) On January 3, 2019, the Group participated in the capital increase by cash of Formosa Olefins, L.L.C, an associate owned by the Group, with the total investment amounting to USD12,375 thousand (equivalent to $381,323 thousand) based on its original shareholding ratio of 33%.
6) Formosa Plastics Corp., U.S.A., an associate owned by the Group, bought back 664 of its treasury stocks on April 26, 2019, resulting in its outstanding shares to decrease to 307,419 shares and the holding percentage of Formosa Plastic Corp. to increase from 22.61% to 22.66%.
7) On August 19, 2019, the Group participated in the capital increase by cash of Formosa Resources Corporation, an associate owned by the Group, with the total investment amounting to USD50,000 thousand (equivalent to $1,570,000 thousand) based on its original shareholding ratio of 25%.
(ii) Joint ventures

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

Individually insignificant joint venture Attributable to the Group: Net income Other comprehensive loss Total comprehensive income	December 31, 2020 December 31, 2019 $ 2,623,212 2,319,851 For the years ended December 31, 2020 2019 $ 204,852 153,288 373 (5,334) $ 205,225 147,954

(Continued)

290

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) The Group, which invested in “ Formosa Mitsui Advanced Chemical Co., Ltd.” (an investee accounted for using the equity method) recognized the loss of $41,425 thousand from this investment for the years ended December 31, 2020. As of December 31, 2020, the Group’ s cumulative lossesfrom this investment had already exceeded the book value of the investment by $25,767 thousand. As the Group intends to support this investee company which was reclassified to other non-current liabilities.
2) On Octomber 8, 2020, Japan Tokuyama Co., Ltd. and the company founded Formosa Tokuyama Advanced Chemicals Co., Ltd.. The company participated in the capital by cash of Formosa Tokuyama Advanced Chemicals Co., Ltd. with the total investment amounting to $125,000 thousand and had the shareholding by ratio 50%.

(iii) Collaterals

There are no investments accounted for using the equity method which were pledged to banks as collateral to secure the Group’s bank loans as of December 31, 2020 and 2019.

(g) Property, plant and equipment

The movements of cost and accumulated depreciation and impairments of property, plant and equipment of the Group for the years ended 2020 were as follows:

Cost: Balance at January 1, 2020 Additions Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2020 Balance at January 1, 2019 Additions Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2019 Accumulated depreciation/ impairments: Balance at January 1, 2020 Depreciation for the period Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2020 Balance at January 1, 2019 Depreciation for the period Disposals Reclassification Effect of exchange rate changes Balance at December 31, 2019 Carrying amounts: Balance at December 31, 2020 Balance at December 31, 2019	Land and land improvements $ 12,085,340 7,539 - 83,276 (89,977) $ 12,086,178 $ 10,398,532 - - 1,686,808 - $ 12,085,340 $ 29,575 119,618 - - (5,857) $ 143,336 $ - 30,378 - - (803) $ 29,575 $ 11,942,842 $ 12,055,765	Buildings and constructions 29,172,864 34,681 (2,357) 160,482 49,654 29,415,324 28,750,122 1,502 (13,524) 681,965 (247,201) 29,172,864 17,231,129 873,217 (2,357) 805 27,566 18,130,360 16,446,435 871,485 (13,524) 883 (74,150) 17,231,129 11,284,964 11,941,735	Machinery and equipment 190,805,323 396,739 (1,024,688) 6,026,366 (493,990) 195,709,750 173,461,487 1,059,459 (1,608,944) 19,868,010 (1,974,689) 190,805,323 140,443,440 5,719,129 (1,016,744) (2,513) 256,171 145,399,483 137,289,626 5,546,324 (1,595,856) 37,916 (834,570) 140,443,440 50,310,267 50,361,883	Other facilities 6,921,887 486,572 (134,859) 390,731 14,160 7,678,491 6,494,922 419,060 (174,705) 243,354 (60,744) 6,921,887 4,879,940 448,934 (131,798) (6) 14,142 5,211,212 4,718,321 417,633 (174,129) (39,261) (42,624) 4,879,940 2,467,279 2,041,947	Construction in progress 9,234,653 7,957,508 - (6,472,139) 60,580 10,780,602 15,967,882 15,813,258 - (22,484,693) (61,794) 9,234,653 - - - - - - - - - - - - 10,780,602 9,234,653	Total 248,220,067 8,883,039 (1,161,904) 188,716 (459,573)
						255,670,345
						235,072,945 17,293,279 (1,797,173) (4,556) (2,344,428)
						248,220,067
						162,584,084 7,160,898 (1,150,899) (1,714) 292,022
						168,884,391
						158,454,382 6,865,820 (1,783,509) (462) (952,147)
						162,584,084
						86,785,954
						85,635,983

(Continued)

291

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Collaterals

The property, plant and equipment pledged to secure bank loans as of December 31, 2020 and 2019, are described in Note 8.

(ii) As of December 31, 2020 and 2019, the Group’ s parcels of land with title temporarily registered under the names of third parties for trust purpose had carrying value as of $33,529 thousand which were recorded under property, plant and equipment. The Group has implemented a deed of trust with the authorities to secure the Group’s rights related to the abovementioned properties.
(iii) Please refer to Note 6(t) for further information about the capitalized interest on borrowings for the purchase of the property, plant and equipment and gain on disposal of property, plant and equipment.

(h) Right-of-use assets

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

Cost: Balance at January 1, 2020 Additions Disposals Effect of exchange rate change Balance at December 31, 2020 Balance at January 1,2019 Disposals Effect of exchange rate change Balance at December 31, 2019 Accumulated depreciation: Balance at January 1, 2020 Depreciation for the period Disposals Effect of exchange rate change Balance at December 31, 2020 Balance at January 1,2019 Depreciation for the period Disposals Effect of exchange rate change Balance at December 31, 2019	Land $ 1,204,383 128,886 - (95,416) $ 1,237,853 $ 450,390 (1,122) 67,268 $ 1,204,383 $ 149,273 49,129 - (107,675) $ 90,727 $ - 43,931 (326) 105,668 $ 149,273	Buildings and constructions 304 244 (548) - - 304 - - 304 243 244 (487) - - - 243 - - 243	Total 1,204,687 129,130 (548) (95,416) 1,237,853 450,694 (1,122) 67,268 1,204,687 149,516 49,373 (487) (107,675) 90,727 - 44,174 (326) 105,668 149,516

(Continued)

292

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Carrying amount: Balance at December 31, 2020 Balance at December 31, 2019 Balance at December 31, 2019	Land $ 1,147,126 $ 450,390 $ 1,055,110	Buildings and constructions - 304 61	Total
			1,147,126
			450,694
			1,055,171

On the year ended of 2020 and 2019, the Group increased the right-of-use assets, please refer to Notes 6(m), then on the year ended of 2020, the Group decreased the right-of-use assets, because the Group didn't continue to sign the lease.

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

Unsecured short-term borrowings Employees’savings Total Interest rate	December 31, 2020 $ 14,975,936 380,788 $ 15,356,724 0.405%~1.035%	December 31, 2019
		19,920,321 334,775
		20,255,096
		0.750%~3.567%

(ii) Issuance and redemption of loans

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 Balance as of January 1, 2019 New issuance during the period Repayments during the period Effect of exchange rate change Balance as of December 31, 2019	For the years ended December 31, 2020 $ 20,255,096 333,456,117 (338,190,057) (164,432) $ 15,356,724 For the years ended December 31, 2019 $ 20,398,302 341,549,459 (341,928,883) 236,218 $ 20,255,096

(Continued)

293

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Short-term notes and bills payable

Short-term notes and bills payable

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

December 31, 2020	December 31, 2020	December 31, 2020
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
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 Co., Ltd. Ta Ching Securities Co., Ltd.
		17,000,000

	(3,176)
$	16,996,824

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

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

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

December 31, 2019	December 31, 2019
Institutions	Interest rate		Amount
CTBC Bank Co., Ltd.	0.622%	$	1,000,000
International Bills Finance	0.777%		500,000
Corporation
Ta Ching Securities Co., Ltd.	0.590%		600,000
China Bills Finance Corporation	0.560%		2,000,000
Mega Bills Finance Co., Ltd.	0.857%		1,000,000
Grand Bills Finance Corporation 0.600%~0.622%			2,400,000
Taipei Fubon Commercial Bank
Co., Ltd.	0.637%		2,000,000
E.SUN Commercial Bank, Ltd.	0.622%		2,500,000
Yuanta Commercial Bank Co.,	0.632%		3,000,000
Ltd.
			15,000,000
			(8,456)
		$	14,991,544

(Continued)

294

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(k) Long-term debts

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

Currency Unsecured long-term debts NTD Less: Current portion Total Currency Unsecured long-term debts NTD Secured long-term debts NTD Less: Current portion Total (ii) Issuance and redemption of loan Balance of January 1,2020 New issuance during the period Repayments during the period Effect of exchange rate charge Balance of December 31,2020 Balance of January 1,2019 New issuance during the period Repayment during the period Effect of exchange rate charge Balance of December 31,2019		December 31, 2020 Interest rate Expiration Amount 0.800% ~4.075% 2021~2025 $ 3,569,776 (2,000,000) $ 1,569,776 December 31, 2019 Interest rate Expiration Amount 0.800% ~4.750% 2020~2021 $ 3,177,207 1.632% 2020~2021 3,433,333 6,610,540 (4,666,096) $ 1,944,444 Total $ 6,610,540 1,536,598 (4,592,694) 15,332 $ 3,569,776 Total $ 10,823,054 2,300,000 (6,491,026) (21,488) $ 6,610,540
	Currency	Interest rate
	NTD
	Currency	Interest rate
		0.800% ~4.750% 1.632%

(Continued)

295

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Secured bank loans

In order to raise funds to build the plant and accessory equipment, the Group signed a syndicated loan agreement with Bank of Taiwan, the lead bank of the syndicated loan, and 19 other banks on November 14, 2013. As of December 31, 2020, the details of the loan agreement are as follows:

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

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

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

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

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

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

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

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

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

(iv) The assets pledged to secure loans are described in Note 8.
(l) Bonds payable
(i) Bonds payable consisted of the following:

Domestic unsecured nonconvertible corporate bonds Less: current portion Total Expiry	December 31, 2020 $ 40,910,455 (2,898,401) $ 38,012,054 2021~2030	December 31, 2019
		32,564,312 -
		32,564,312
		2021~2028

(Continued)

296

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Issuance and repayment of bonds payable for the years ended December 31, 2020 and 2019.
1) Issuance

For the years ended December 31, 2020 Amount $ 8,350,000 Interest rate 0.580% � 0.630% � 0.670% Expiry 2026 � 2028 � 2030

2) Repayment

For the years ended December 31, 2020 2019 Amount $ - 4,600,000

(iii) The terms of domestic corporate bonds as of December 31, 2020 and 2019 were as follows:

Issue amount 2020.12.31Ending balance 2020.12.31Current portion 2019.12.31Ending balance 2019.12.31Current portion Issuance date Coupon rate Interest payment date Repayment method	The third domestic unsecured nonconvertible corporate bond in 2012	The first domestic unsecured nonconvertible corporate bond in 2013	The second domestic unsecured nonconvertible corporate bond in 2013	The first domestic unsecured nonconvertible corporate bond in 2014
	$ 9,000,000 2,498,752 1,249,349 2,498,102 - November 5, 2012 1.25%�1.39%�1.53% November 5 Payable in 2 equal installments for each different coupon rate in 2016~2017, 2018~2019 and 2021~2022, respectively.	11,500,000 1,496,213 - 1,494,697 - June 10, 2013 1.23%�1.52% June 10 Payable in 2 equal installments for each different coupon rate in 2016~2017 and 2022~2023, respectively.	8,500,000 6,296,571 - 6,295,396 - November 8, 2013 1.42%�1.94% November 8, Payable in 2 equal installments for each different coupon rate in 2017~2018 and 2022~2023, respectively.	6,000,000 5,995,166 - 5,994,072 - May 21, 2014 1.83%�1.92% May 21 Payable in 2 equal installments for each different coupon rate in 2023~2024 and 2025~2026, respectively.

(Continued)

297

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Issue amount 2020.12.31Ending balance 2020.12.31Current portion 2019.12.31Ending balance 2019.12.31Current portion Issuance date Coupon rate Interest payment date Repayment method	The first domestic unsecured nonconvertible corporate bond in 2017	The first domestic unsecured nonconvertible corporate bond in 2018 9,300,000 9,290,447 - 9,288,470 - 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.	The first domestic unsecured nonconvertible corporate bond in 2020
	7,000,000 6,995,471 1,649,052 6,993,575 - 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.		8,350,000 8,337,835 - - - June 22, 2020 0.58%�0.63%�0.67% June 22 Payable in 2 equal installments for each different coupon rate in 2024~2025, 2026~2027 and 2029~2030, respectively.

(m) Lease liabilities

Lease liabilities consisted of the following:

Current Non-current financial assets Please refer to Note 6 (u) the maturity analysis.	December 31, 2020 $ 21,452 $ 121,923	December 31, 2019
		32,878
		19,319

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. In 2019, the amount of lease liabilities increased by $3,022 thousand, with the interest rate of 1.79%, maturing in December 2027.

The amount recognized in profit or loss was as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2020 $ 3,390 $ 135,654	2019
		1,064
		126,688

The amount recognized in cash flows statement was as follows:

Total cash outflow for leases $	For the years ended December 31,	For the years ended December 31,
	2020 176,935	2019
		160,173

(Continued)

298

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Real estate leases

As of December 31, 2020, the Group leases land and buildings for its office space and employee dormitory. The leases of office space typically run for a period of 2 to 50 years, and 1 year for employee dormitory. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

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

(ii) Other leases

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

(n) Employee benefits

(i) Defined benefit plan

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

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2020 $ 9,421,525 (2,860,594) $ 6,560,931	December 31, 2019 9,791,588 (2,880,882) 6,910,706

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

1) Composition of the plan asset

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

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $2,839,055 as of December 31, 2019. 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.

(Continued)

299

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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,	For the years ended December 31,
	2020 $ 9,791,588 (548,306) 190,814 156,264 (168,835) $ 9,421,525	2019
		9,710,141 (474,088) 216,534 421,322 (82,321)
		9,791,588

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,
	2020 $ 2,880,882 28,558 98,020 (261,876) 115,010 $ 2,860,594	2019
		2,587,023 31,777 91,468 (169,101) 339,715
		2,880,882

4) Expense recognized in profit or loss

The pension costs recognized in profit or loss for the years ended 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,
	2020 $ 93,734 68,522 $ 162,256 $ 93,541 5,737 62,978 $ 162,256	2019
		96,496 88,261
		184,757
		107,892 6,445 70,420
		184,757

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,
	2020 $ 2,230,568 46,595 $ 2,277,163	2019
		1,966,685 263,883
		2,230,568

(Continued)

300

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

6) Actuarial assumptions

The following are the principal actuarial assumptions as of 2020:

The following are the principal actuarial assumptions	as of 2020:
Discount rate Rate of future salary increases	For the years ended December 31,
	2020 2019 % 1.00 % 1.00 % 2.85 % 2.85

Based on the actuarial report, the Group is expected to make contributions of $114,000 to the defined benefit plans for the one year period after the reporting date.

The weighted average duration of the defined benefit plan is 8.7 years.

7) Sensitivity analysis

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

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

December 31, 2020 Discount rate (change 0.25%) Future salary increases (change 1.00%) December 31, 2019 Discount rate (change 0.25�) Future salary increases (change 1.00�)	Effect of defined benefit obligations Increase Amount Decrease Amount $ (162,481) 168,488 710,991 (629,177) (186,726) 194,154 820,501 (718,167)

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

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

(Continued)

301

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Defined contribution plan

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

The Group’s pension costs under the defined contribution pension plan amounted to $278,846 and $323,993 for the years ended 2020 and 2019, respectively.

(o) Income tax

(i) The components of income tax for the years ended December 31, 2020 and 2019 were as follows:

Current income tax expense Deferred tax expense (income) The origination of temporary differences Income tax expense	For the years ended December 31, 2020 2019 $ 3,552,818 4,697,607 577,650 197,383 $ 4,130,468 4,894,990	For the years ended December 31, 2020 2019 $ 3,552,818 4,697,607 577,650 197,383 $ 4,130,468 4,894,990
		2019 4,697,607 197,383 4,894,990

(ii) The income tax expense related to components of other comprehensive income for the years ended December 31, 2020 and 2019 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,
	2020 $ 11,649 $ (121,708)	2019 65,971 190,273

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

Income tax calculated based on pretax financial income Effect of difference in income tax rate between foreign investee and the Company Tax- exempt income Tax effect on investment income recognized under equity method and Non-deductible expenses Under provision in prior periods 10% income surtax on undistributed earnings Income tax expense	For the years ended December 31,	For the years ended December 31,
	2020 $ 4,833,333 137,839 (671,633) (255,218) 12,276 73,871 $ 4,130,468	2019 8,443,830 74,635 (1,637,229) (2,379,976) 82,182 311,548 4,894,990

(Continued)

302

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Recognized deferred tax assets and liabilities

Movements in deferred tax assets and liabilities were as follows:

For the year ended December 31, 2020 Deferred tax assets Unrealized gross loss Unamortized fixed manufacturing expense Accrued pension liability Unamortized impairment loss on non-financial assets Unrealized foreign currency exchange loss Others Total Deferred tax liabilities Foreign investment income under equity method Unrealized foreign currency exchange gain Accumulated translation adjustment Depreciation Unrealized gross profit Others Total For the year ended December 31, 2018 Deferred tax assets Unrealized gross loss Unamortized fixed manufacturing expense Accrued pension liability Unrealized impairment loss on non-financial assets Unrealized foreign currency exchange loss Others Total Deferred tax liabilities Foreign investment income under equity method Unrealized foreign currency exchange gain Accumulated translation adjustment Depreciation Unrealized gross profit Total	Beginning balance	Beginning balance	Recognized in income or loss
	$ - 25,507 1,460,641 319,012 56,375 1,010,405 $ 2,871,940 $ 16,817,774 58,187 60,313 85,081 6,693 - $ 17,028,048 Beginning balance
		Beginning balance
	$ 1,867 24,845 1,503,124 383,007 16,099 526,873 $ 2,455,815 $ 16,284,936 52,766 250,586 82,496 - $ 16,670,784

(iv) The Company’s income tax returns have been examined and approved through 2018 by the R.O.C tax authorities.

(Continued)

303

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Capital and other equity

As the year ended 2020 and 2019, the Company’s government registered total authorized capital and issued capital stock both amounted to $63,657,408, divided into $6,365,741 thousand shares of stock with $10 par value per share. All issued shares were paid up upon issuance.

(i) Capital surplus

The components of capital surplus were as follows:

Paid-in capital in excess of par value Treasury stock transactions Equity in capital surplus of investee companies Overdue unpaid directors’ remuneration and dividends Paid in capital in excess of the par value derived from overseas corporate bond conversion	December 31, 2020 $ 8,130,081 16,263 202,111 396,166 2,997,503 $ 11,742,124	December 31, 2019
		8,130,081 16,263 196,704 383,947 2,997,503
		11,724,498

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

(ii) Retained earnings

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

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

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

(Continued)

304

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Special reserve

As the Company opted to avail of the exemptions allowed under IFRS 1 “ First-time Adoption of International Financial Reporting Standards” during the Company’s firsttime adoption of the IFRS as endorsed by the FSC, unrealized revaluation increments and cumulative translation adjustments (gains) of $2,790,507 thousand, which were previously recognized in shareholders’ equity were reclassified to retained earnings. In accordance with Regulatory Permit No. 1010012865 as issued by the FSC on April 6, 2012, a special reserve is appropriated from retained earnings for aforementioned reclassification. In addition, during the use, disposal or reclassifications of relevant assets, this special reserve is reverted to distributable earnings proportionately. The carrying amount of special reserve amounted to $2,790,507 thousand as of December 31, 2020 and 2019.

Pursuant to the Regulatory Permit mentioned above, 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 2019 and 2018 were approved in the stockholders' meeting on June 10, 2020, and June 11, 2019, respectively. The amounts of appropriation of dividends per share were as follows:

			For	the years ended December 31,	the years ended December 31,	the years ended December 31,	the years ended December 31,	the years ended December 31,
				2019			2018
Dividends attributable to ordinary shareholders:
Cash dividends			$	28,009,259			36,921,297
Dividends per share			$		4.40			5.80
		2019				2018
		Dividends		Dividends
		per share	Amount	per share			Amount
Dividends attributable to
ordinary shareholders:
Cash dividends	$	4.40	28,009,259		5.80		36,921,297

(Continued)

305

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Other equity

Balance at January 1, 2020 Exchange differences arising on translation of foreign operations Share of exchange differences on associates and joint ventures accounted for using equity method Share of unrealized gains or losses on associates accounted for using equity method and their financial assets at fair value through other comprehensive income Unrealized gains on financial assets at fair value through other comprehensive income Share of cash flow hedge of associates and joint ventures Balance at December 31, 2020 Balance at January 1, 2019 Exchange differences arising on translation of foreign operations Share of exchange differences on associates and joint ventures accounted for using equity method Share of unrealized gains or losses on associates accounted for using equity method and their financial assets at fair value through other comprehensive income Unrealized gains on financial assets at fair value through other comprehensive income Share of cash flow hedge of associates and joint ventures Balance at December 31, 2019	Exchange differences on translation of foreign operations $ (5,278,250) (3,579,265) (745,545) - - - $ (9,603,060) $ (1,556,605) (3,228,641) (493,004) - - - $ (5,278,250)	Unrealized gain (loss) on financial assets at fair value through profit or loss 80,701,025 - - (1,512,954) (2,716,267) - 76,471,804 83,389,928 - - (1,614,742) (1,074,161) - 80,701,025	Gain (loss) on hedging instruments 779 - - - - 37,209 37,988 (18,763) - - - - 19,542 779	Total 75,423,554 (3,579,265) (745,545) (1,512,954) (2,716,267) 37,209
				66,906,732
				81,814,560 (3,228,641) (493,004) (1,614,742) (1,074,161) 19,542
				75,423,554

(q) Earnings per share

The basic earnings per share was 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,
	$ 20,036,199 6,365,741 $ 3.15	37,324,162
		6,365,741
		5.86

(Continued)

306

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(r) Revenue from Contracts with Customers

(i) Revenue Segmentation

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

		For the year	s ended Decembe	r 31, 2019
Plastic division $ 21,446,804 19,532,847 31,308,804 $ 72,288,455 $ 46,784,538 16,617,508 - - - - - - - - - - - - 8,886,409 $ 72,288,455	Polyolefin division 10,470,835 17,049,124 9,560,235 37,080,194 - - 17,000,080 6,280,034 13,448,044 - - - - - - - - - 352,036 37,080,194	Polypropylene division 7,409,012 24,555,556 4,934,570 36,899,138 - - - - - 34,785,802 2,113,336 - - - - - - - - 36,899,138	Tairylan division 6,639,632 16,011,795 7,686,636 30,338,063 - - - - - - - 14,791,360 6,585,002 2,649,588 3,204,626 - - - 3,107,487 30,338,063	Chemistry division 19,089,340 4,613,024 4,272,320 27,974,684 - - - - - - - - - - - 12,959,835 3,839,967 4,802,108 6,372,774 27,974,684	Others divisions 2,541,681 333,734 392,623 3,268,038 - - - - - - - - - - - - - - 3,268,038 3,268,038	Total 67,597,304 82,096,080 58,155,188
						207,848,572
						46,784,538 16,617,508 17,000,080 6,280,034 13,448,044 34,785,802 2,113,336 14,791,360 6,585,002 2,649,588 3,204,626 12,959,835 3,839,967 4,802,108 21,986,744
						207,848,572

(Continued)

307

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Balance of contracts

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful receivables Total	December 31, 2020 $ 2,148,261 13,813,715 (1,624) $ 15,960,352	December 31, 2019 2,584,690 10,957,433 (3,188) 13,538,935	January 1, 2019 2,432,446 13,722,378 (4,755) 16,150,069

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

(s) Employee bonus

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

For the years ended December 31, 2020 and 2019, the appropriated employee compensations amounted to $30,211 thousand and $55,553 thousand, respectively. These amounts were calculated based on the Company’ s articles of incorporation and the net profit before tax after deducting employee compensations, and were recognized under operating costs and operating expenses. If there would be any changes after the reporting date, the changes shall be accounted for as changes in accounting estimates and shall be recognized as profit or loss in the following year.

(t) Non-operating income and expenses

(i) Interest income

Interest income from bank deposits Other interest income Total Interest income	2020 $ 235,453 138,803 $ 374,256	2019 423,105 200,563 623,668

(ii) Other income

Rental income Dividends income	2020 $ 176,985 3,358,166 $ 3,535,151	2019
		157,425 8,186,145
		8,343,570

(Continued)

308

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Other gains and losses

Gain on disposal of property, plant and equipment Gain on disposals of right-of-use assets Foreign currency exchange loss (Loss) Gain on financial assets at fair value through profit or loss Other gains Other losses Net of other gains and losses Finance costs Interest expense Less: capitalized interest Interest expense from bank loans Capitalized interest rate	2020 $ 8,803 - (1,080,279) (155,473) 582,659 (203,559) $ (847,849) 2020 $ 1,291,951 (84,963) $ 1,206,988 0.800%-2.885%	2019 31,109 12,834 (280,225) 27,107 658,322 (768,603) (319,456) 2019 1,799,314 (440,200) 1,359,114 1.330%~3.638%

(iv) Finance costs

(u) Financial Instruments

(i) Credit risk
1) Credit risk exposure

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

2) Concentration of credit risk

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

3) Receivables and debt securities

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

(Continued)

309

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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:

Contractual cash flow	Within 6 months	6~12months	1~2years	Over 5 years
18,903,103 42,878,823 17,000,000 13,126,143 5,187,590 14,894,084 6,665,774 382,863 173,549	17,045,469 1,658,993 17,000,000 13,126,143 5,187,590 - 6,665,774 382,863 20,285	- 1,269,125 - - - - - - 3,846	- 9,661,880 - - - 14,894,084 - - 7,692	- 9,325,390 - - - - - - 119,435
119,211,929	61,087,117	1,272,971	24,563,656	9,444,825
23,313,152 34,691,935 3,498,704 15,000,000 11,062,826 4,215,506 21,375,260 7,454,342 336,600 53,023	20,057,627 - 1,153,783 15,000,000 11,062,826 4,215,506 - 7,454,342 336,600 16,760	2,442,725 - 1,163,122 - - - 21,375,260 - - 16,699	812,800 2,974,220 1,181,799 - - - - - - 17,020	- 8,634,670 - - - - - - - 1,141
121,001,348	59,297,444	24,997,806	4,985,839	8,635,811

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

(Continued)

310

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Currency risk

1) Exposure to currency risk

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

Financial assets: Monetary items USD EUR JPY CNY Financial liabilities Monetary items USD EUR JPY	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2019 Foreign currency (in thousand) Exchange Rate New Taiwan Dollars 684,081 30.1060 20,594,943 1,027 33.6895 34,599 4,366 0.2763 1,206 852 4.3155 3,677 23,303 30.1060 701,560 290 33.6895 9,770 50,407 0.2763 13,927	December 31, 2019 Foreign currency (in thousand) Exchange Rate New Taiwan Dollars 684,081 30.1060 20,594,943 1,027 33.6895 34,599 4,366 0.2763 1,206 852 4.3155 3,677 23,303 30.1060 701,560 290 33.6895 9,770 50,407 0.2763 13,927
	Foreign currency (in thousand)	Exchange Rate	New Taiwan Dollars		Exchange Rate New Taiwan Dollars 30.1060 20,594,943 33.6895 34,599 0.2763 1,206 4.3155 3,677 30.1060 701,560 33.6895 9,770 0.2763 13,927
	$ 433,847 6,509 13,783 9,335 41,332 235 76,728	28.5080 34.5600 0.2724 4.3691 28.5080 34.5600 0.2724	12,368,110 224,951 3,754 40,786 1,178,293 8,122 20,901	684,081 1,027 4,366 852 23,303 290 50,407

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the foreign currency exchange fluctuations on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, accounts payable and other payables which are denominated in different foreign currencies. A 1% depreciation of the NTD against the USD, EUR, JPY and CNY as the year ended of 2020 and 2019 would have decreased and increased the net income after tax by $114,303 and $199,092 for the years ended 2020 and 2019 respectively. This analysis is performed on the same basis assuming that all other variables remain constant and ignoring any impact of forecasted sales and purchases.

3) Foreign exchange gain and loss on monetary items

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For years 2020 and 2019, foreign exchange loss (including realized and unrealized portions) amounted to $1,080,279 and $280,225, respectively.

(iv) Interest rate analysis

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

(Continued)

311

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

An increase 1% in interest rates mainly from loans with floating interest rates at the reporting date would have decreased net income by $149,759 thousand and $230,975 thousand for the years ended December 31, 2020 and 2019 with all other variable factors remaining constant. This is mainly due to the Group’s borrowing at variable rates.

(v) Other market price risk

If the securities price changes at the reporting date (sensitivity analyses were performed using the same basis for both twelve-month period ended September 30, 2020 and 2019, and other factors remain unchanged), impacts on comprehensive income are as below:

Prices of securities at the reporting date	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
	2020		2019
	Other comprehensive income after tax	Net income	Other comprehensive income after tax 1,023,421 (1,023,421)	Net income
Increasing 1% Decreasing 1%	$ 1,022,189 $ (1,022,189)	-		-
		-		-

(vi) Fair value

1) Types and fair value of financial instruments

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

		December 31, 2020	December 31, 2020	December 31, 2020
Carrying value			Fair value
		Level 1	Level 2	Level 3 - - - 18,647,715 18,647,715	Total
$ 3,888,883 3,888,883 102,218,948 18,647,715 120,866,663		-	3,888,883		3,888,883
	3,888,883	-	3,888,883		3,888,883
	102,218,948 18,647,715	102,218,948 -	- -		102,218,948 18,647,715
	120,866,663	102,218,948	-		120,866,663

(Continued)

312

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	December 31, 2020	December 31, 2020	December 31, 2020
Carrying value		Fair value
	Level 1	Level 2		Total
$ 14,145,110 15,960,352 7,435,350 37,540,812 $ 162,296,358 $ 40,910,455 16,996,824 15,356,724 3,569,776 14,396,540 13,115,200 5,187,588 6,665,774 143,375 $ 116,342,256	- - -	- - -		- - -
	-	-		-
	102,218,948	3,888,883		124,755,546
	- - - - - - - - -	- - - - - - - - -		- - - - - - - - -
	-	-		-

Carrying value		Fair value
	Level 1	Level 2	Level 3 - - - 21,408,559 21,408,559 - - - - 21,408,559	Total
$ 4,044,356 4,044,356 102,342,079 21,408,559 123,750,638 18,165,952 13,538,935 15,788,644 47,493,531 $ 175,288,525	-	4,044,356		4,044,356
	-	4,044,356		4,044,356
	102,342,079 -	- -		102,342,079 21,408,559
	102,342,079	-		123,750,638
	- - -	- - -		- - -
	-	-		-
	102,342,079	4,044,356		127,794,994

(Continued)

313

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	December 31, 2019	December 31, 2019	December 31, 2019
Carrying value		Fair value
	Level 1	Level 2	Level 3 - - - - - - - - - -	Total
$ 32,564,312 14,991,544 20,255,096 6,610,540 21,375,260 11,062,826 4,215,506 7,454,342 52,197 $ 118,581,623	- - - - - - - - -	- - - - - - - - -		- - - - - - - - -
	-	-		-

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

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

Financial liabilities measured at amortized cost.

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

3) Valuation techniques for financial instruments measured at fair value

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

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

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

4) There was no transfer between the fair value hierarchy levels for the years ended December 31, 2020 and 2019.

(Continued)

314

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Movement of financial instruments grouped into level 3

January 1, 2020 Total gains and losses recognized: In other comprehensive income Reclassification Decrease Effect of exchange rate changes December 31, 2020 January 1, 2019 Total gains and losses recognized: In other comprehensive income Purchase Effect of exchange rate changes December 31, 2019	Financial assets at fair value through other comprehensive income Unquoted equity instruments $ 21,408,559 (1,980,080) (660,228) (12,500) (108,036) $ 18,647,715 $ 26,542,369 (4,989,836) 229,555 (373,529) $ 21,408,559

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

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

(Continued)

315

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Quantified information of significant unobservable inputs was as follows:

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

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

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

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

December 31, 2019

(Continued)

316

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Recognized in other comprehensive income Favorable Unfavorable Input Change change change Financial assets at fair Price to earnings ratio multiple ± 1% value through other price to book ratio multiple, comprehensive income enterprise value to operating – unquoted equity income ratio multiple, instruments enterprise value to EBITA multiple, discount for lack of marketability $ 175,287 (175,287)

(v) Financial risk management

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

(i) Framework of risk management

Items	Risk Management Department	Risk Detection
1. Interest rate, exchange rate, and inflation 2.Investments of high risk and leverage, loans to others, guarantees and endorsements, and trade of derivatives 3.R&D plans 4.Changes on significant domestic and international policies and regulations 5.Changes on technologies 6.Changes on corporate images	General manager department; accounting department; finance department; and general management department Computer audit & regular self audit; monthly budget meeting; finance supervisors meeting; internal audit department; and board meeting General manager department; finance department; and general management department Computer audit & regular self audit; monthly budget meeting; finance supervisors meeting; internal audit department; and board meeting General manager department; technology department of each business division; and general management department Purchase & sales meeting; operation performance meeting; R&D meeting; board meeting; and internal audit department General manager department; manager department and technology department of each business division; legal department; and general management department Purchases & sales meeting; operation performance meeting; board meeting; and internal audit department General manager department; manager department of each business division; R&D center; and general management department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; manager department of each business division; and general management department Purchase & sales meeting; operation performance meeting; and board meeting

(Continued)

317

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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.Litigation and other affairs	General manager department; manager department of each business division; and general management department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; factory affair department of each business division; manager department; and general management department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; manager department of each business division; purchase department; and general management department Weekiny marker price meeting; purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; and shares management division of finance department Operation management meeting and board meeting General manager department; and general management department Operation management meeting and board meeting General manager department; general management department; and legal department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; general management department; and legal department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting

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

1) Accounts receivable and other receivables

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

2) Investments

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

(Continued)

318

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Guarantee

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

(ii) Liquidity risk

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

(iii) Market risk

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

1) Foreign currency risk

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

2) Interest rate risk

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

(w) Capital management

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

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

(Continued)

319

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Total liabilities Less: cash and cash equivalents Net liabilities Total equity Debt to capital ratio	December 31, 2020 $ 146,744,283 (14,145,110) 132,599,173 332,536,140 % 39.88	December 31, 2019 147,934,639 (18,165,952) 129,768,687 349,153,320 % 37.17

(x) Changes in liabilities come from financing activities

Changes of liabilities arising from financing activities were as follows:�

Short-term borrowings Short-term notes and bills payable Long term loan (including current portion) Bonds payable (including current portion) Lease liabilities Total liabilities arisings from financing activities	January 1, 2020 $ 20,255,096 14,991,544 6,610,540 32,564,312 52,197 $ 74,473,689	Change in cash flows (4,733,940) 2,000,000 (3,056,096) 8,350,000 (41,281) 2,518,683	Changes in non-cash - 5,280 - (3,857) 132,459 133,882	Effect of exchange rate changes (164,432) - 15,332 - - (149,100)	December 31, 2020
					15,356,724 16,996,824 3,569,776 40,910,455 143,375
					76,977,154

Short-term borrowings Short-term notes and bills payable Long term loan (including current portion) Bonds payable (including current portion) Lease liabilities Total liabilities arisings from financing activities	January 1, 2019 $ 20,398,302 11,995,636 10,823,054 37,154,561 81,596 $ 80,453,149	Change in cash flows (379,424) 3,000,000 (4,191,026) (4,600,000) (33,485) (6,203,935)	Changes in non-cash - (4,092) - 9,751 4,086 9,745	Effect of exchange rate changes 236,218 - (21,488) - - 214,730	December 31, 2019
					20,255,096 14,991,544 6,610,540 32,564,312 52,197
					74,473,689

(Continued)

320

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(7) Related-party transactions:

(a) Name of related parties

Name of related party

Relationship with Consolidated Company

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 Heavy Industries (Ningbo) Corp. Associates Japan Formosa Sumco Technology Corp. Associates Fujian Fuxin Special Steel Co., Ltd. Associates Formosa Transportation (Ningbo) Corp. Associates Formosa Automobile Corporation Associates Formosa Plastics Construction Corporation Associates Formosa Asahi Spandex Co., Ltd. Joint venture Formosa Daikin Advanced Chemical Co., Ltd. Joint venture Formosa Mitsui Advanced Chemical Co., Ltd. Joint venture Formosa Chemicals and Fiber Corporation Other related parties Chang Gung Medical Foundation Other related parties Nan Ya PCB Corporation Other related parties PFG Fiber Glass Corporation Other related parties Nan Chung Petrochemical Corporation Other related parties Nan Ya Plastics (Hong Kong) Co., Ltd. Other related parties Nan Ya Plastics (Guangzhou) Co., Ltd. Other related parties Nan Ya Plastics (Nantong) Co., Ltd. Other related parties Nan Ya Plastics Film (Huizhou) Co., Ltd. Other related parties

(Continued)

321

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of related party

Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Indonesia) Co., Ltd. Nan Ya Plastics Corporation America Formosa Industries Corp., Vietnam Formosa Taffeta Co., Ltd. Formosa 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 Power (Ningbo) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Group Ocean Marine Corp. Formosa Ha Tinh Steel Corporation Nan Ya Technology Corporation Nan Ya Plastics Corporation USA Inteplast Taiwan Corporation Formosa Ha Tinh (Cayman) Ltd. Xiamen Chang Gung hospital Formosa Port (Ningbo) Co., Ltd. Chang Gung Biotechnology Corporation Formosa Network Technology Corp. Formosa Petrochemical Transportation Corporation, Ltd.

INTEPLAST GROUP Chang Gung University

Relationship with Consolidated Company Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties

Other related parties Other related parties

(Continued)

322

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Significant related-party transactions

(i) Sales to related parties

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

Associates Joint ventures Other related parties	For the years ended December 31,	For the years ended December 31,
	2020 $ 6,209,144 116,493 21,348,884 $ 27,674,521	2019
		10,314,781 119,181 24,628,413
		35,062,375

The receivables from related parties were as follows:

Associates Joint ventures Other related parties	December 31, 2020 $ 856,346 7,481 2,575,386 $ 3,439,213	December 31, 2019
		969,160 5,546 2,587,310
		3,562,016

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

(ii) Purchase from related parties

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

Associates Formosa Petrochemical Corporation Other Other related parties	For the years ended December 31,	For the years ended December 31,
	2020 $ 54,875,577 7,836,965 3,502,623 $ 66,215,165	2019
		76,932,917 2,979,555 2,980,604
		82,893,076

(Continued)

323

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The payables from related parties were as follows:

Associates Formosa Petrochemical Corporation Other Other related parties	December 31, 2020 $ 6,272,990 399,809 429,766 $ 7,102,565	December 31, 2019 6,450,088 173,518 223,784 6,847,390

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

(iii) Property plant and equipment
1) Disposal of property, plant and equipment (recognized as property, plant and equipment and right-of-use assets), the group has no related transactions for the years ended December 31, 2020.

Joint ventures Other related parties		For the years ended December 31, 2019	For the years ended December 31, 2019
			Gain from disposal
			12,834 10
			12,844

There were no receivables on December 31,2019.

2) Purchase property, plant and equipment

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

Associates Other related parties	For the years ended December 31,	For the years ended December 31,
	2020 $ 7,539 342,927 $ 350,466	2019
		- 173,408
		173,408

(Continued)

324

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

December 31, December 31, 2020 2019 Other related parties $ 50,757 13,453 3) Acquisition of financial assets For the years Financial Number of ended Statement Shares December 31, Account (in thousands) Transaction Shares 2020 AssociatesShares of stock of Formosa Plastics Investments Formosa Plastics Construction accounted for using Construction Corporation equity method 50,000 Corporation $ 500,000 - - $ 500,000 For the years Financial Number of ended Statement Shares December 31, Account (in thousands) Transaction Shares 2019 AssociatesInvestments Shares of stock of Formosa Olefins, accounted for using Formosa Olefins, L.L.C. equity method - L.L.C. shares $ 381,323 AssociatesFormosa Investments Shares of stock of Resources accounted for using Formosa Resources Corporation equity method 157,000 Corporation shares 1,570,000 $ 1,951,323

(Continued)

325

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Loans to related parties

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

1)

Associates Formosa Heavy Industries Corp. Joint ventures Other related parties Formosa Group Ocean Marine Corp. Other	Due from related parties (recognized as other receivables-related parties)	Due from related parties (recognized as other receivables-related parties)
	December 31, 2020 $ - 249,039 4,243,086 - $ 4,492,125	December 31, 2019
		7,100,000 116,519 5,475,441 300,000
		12,991,960

As of December 31, 2020 and 2019, the interest revenue receivables from the abovementioned transactions amounted to $7,363 thousand and $12,683 thousand, respectively, which was recognized as other receivables-related parties.

2)

Associates Formosa Plastics Corp., U.S.A.	Due to related parties (recognized as other payables– related parties)	Due to related parties (recognized as other payables– related parties)
	December 31, 2020 $ 14,396,540	December 31, 2019
		21,375,260

As of December 31, 2020 and 2019, the accrued interest expense from the abovementioned transactions amounted to $17,959 thousand and $50,269 thousand respectively, which was recognized as other current liabilities.

(v) Endorsements and guarantees

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

Associates Formosa Group (Cayman) Limited Formosa Resources Corporation Other related Parties Formosa Ha Tinh (Cayman) Ltd.	December 31, 2020 $ 7,127,000 3,064,610 18,967,581 $ 29,159,191	December 31, 2019 7,526,500 3,236,395 20,753,559 31,516,454 (Continued)

326

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) Other transactions

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

Associates Other related parties	Other receivables–related parties	Other receivables–related parties
	December 31, 2020 $ 17 1,769 $ 1,786	December 31, 2019
		23 28,308
		28,331

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

Associates Other related parties	Other payables–related parties	Other payables–related parties
	December 31, 2020 $ 1,434,109 221,057 $ 1,655,166	December 31, 2019 2,025,831 219,756 2,245,587

(vii) Receivables from payment on behalf of related parties
1) The Group paid for construction design service fees on behalf of related parties as follows:

Associates Fujian Fuxin Special steel Cor., Ltd	Other receivables–related parties	Other receivables–related parties
	December 31, 2020 $ 1,997,928	December 31, 2019 1,758,062

(Continued)

327

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(viii) Rental (recognized as other income)

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

Associates Formosa Petrochemical Corporation Formosa Heavy Industries Corp. Other Joint ventures Other related parties Nan Ya Plastics Corporation Other	For the years ended December 31,	For the years ended December 31,
	2020 $ 16,568 58,764 6,968 20,214 25,650 31,765 $ 159,929	2019
		16,568 58,764 7,479 15,108 24,740 17,821
		140,480

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

(c) Compensation of key management

The compensation to key management was as follows:

Short-term employee benefits	For the years ended December 31, 2020 2019 59,083 70,958	For the years ended December 31, 2020 2019 59,083 70,958
	2020 59,083
		70,958

(8) Pledged assets:

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

The Group’s assets pledged to secure loans were as follows:
Classification of assets Nature of Pledged Assets Property plant and equipment Land and building Refundable deposits (classified under other assets) Certificate of deposit	December 31, 2020 $ 2,156,562 92,675 $ 2,249,237	December 31, 2019
		2,158,282 134,529
		2,292,811

(9) Commitments and contingencies:

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

Endorsements and guarantees	December 31, 2020 $ 29,159,191	December 31, 2019 31,516,454

(Continued)

328

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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, 2020 $ 456,046	December 31, 2019
		899,055

(c) As of December 31, 2020, the Company’ s investee, Formosa Ha Tinh (Cayman) Ltd., signed several contracts of syndicated credit lines with different banks amounting to US$1,485,000 thousand and credit line of $500,000 thousand for its operational needs. According to the requirement of the bank consortium, the Company together with the other related parties have to issue a letter of undertaking and to manage the necessary funds to fulfill the repayment of obligations when needed.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

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

	For the years ended December 31, 2020	For the years ended December 31, 2020	For the years ended December 31, 2020	For the years ended December 31, 2020	For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2019
	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	5,591,329 428,506 266,435 - 275,636 5,564,112 775,876	2,960,306 257,681 174,667 7,640 93,245 1,644,120 3,644	- - - - - 2,039 11,761	8,551,635 686,187 441,102 7,640 368,881 7,210,271 791,281	5,532,517 432,631 323,167 - 375,495 6,232,040 465,283	2,808,955 248,200 185,583 7,560 100,876 677,841 3,183	- - - - - 113 12,547	8,341,472 680,831 508,750 7,560 476,371 6,909,994 481,013

(b) I mpact assessment of the COVID-19:

The outbreak of COVID-19 in the first half of 2020 affected the global economy. Under the influence of the decrease in price of crude oil, the Group’s product sales and the price have both declined, and the losses of some affiliated companies have been recognized. However, as a result of losses from affiliated companies, the Group’s combined pre-tax profit for the nine months ended September 30, 2020 was less than for the nine months ended September 30, 2019. The Group has already taken relevant countermeasures, and its subsequent impact still depends on the subsequent development of the epidemic.

(Continued)

329

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

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

(i) Fund financing to other parties:

(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 0 1 2 2	The Company The Company The Company The Company The Company The Company The Company Formosa Industries (Ningbo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd.	Formosa Petrochemical Corp. Formosa Chemicals & Fiber Corp. Nan Ya plastic Corp. Formosa Heavy Industries Corp. Formosa Plastics Marine Corp. Formosa Group Ocean Marine Corp. Japan Formosa Sumco Technology Corp. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Mitsui Advanced Chemical Co., Ltd Formosa 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 Other receivables- related parties Other receivables- related parties	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes	14,500,000 8,500,000 8,500,000 16,800,000 300,000 8,698,697 930,000 249,033 (CNY 29,000) 117,963 (CNY 27,000) 126,701 (CNY 29,000)	4,500,000 4,500,000 4,500,000 5,700,000 - 5,713,086 - 249,033 (CNY 29,000) - (CNY 27,000) -	- - - - - 4,243,086 - 249,039 (CNY 29,000) - (CNY 27,000) -	1.230% 1.230% 1.230% 1.230% ~1.418% 1.230% ~1.418% 1.230% ~1.418% 1.000% 3.080% 3.360% ~3.480% 3.480%	2 2 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 Short-term financing Short-term financing	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	66,507,228 66,507,228 66,507,228 66,507,228 66,507,228 66,507,228 66,507,228 16,971,916 159,738 199,672	133,014,456 133,014,456 133,014,456 133,014,456 133,014,456 133,014,456 133,014,456 42,429,791 399,344 399,344	Note 4 Note 4 Notes 4, 5

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 NTD to CNY for the highest balance of financing to other parties during the year and for the ending balance was TWD 4.369 to CNY1; and the exchange rate for the actual usage during the year was TWD4.3691091 to CNY1.

(Continued)

330

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated 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
0 0 0	The Company The Company The Company	Formosa Group (Cayman) Limited Formosa Ha Tinh (Cayman) Limited Formosa Resources Corporation	6 6 6	216,148,491 216,148,491 216,148,491	7,582,500 20,907,973 3,260,475	7,127,000 18,967,581 3,064,610	7,127,000 18,967,581 3,064,610	- - -	% 2.14 % 5.70 % 0.92	432,426,982 432,426,982 432,426,982	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, 2020 (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		Highest	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Percentage of ownership (%)
The Company The Company The Company The Company The Company The Company	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 18,255	2,631,482 781,245 14,852 37,277 6,926 266,711	% 16.17 % 17.99 % 0.81 % 1.05 % 0.80 % 18.00	2,631,482 781,245 14,852 37,277 6,926 266,711	% 16.17 % 17.99 % 0.81 % 1.05 % 0.80 % 18.00

(Continued)

331

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending	balance		Highest	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Percentage of ownership (%)
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Formosa Plastics Corp. (Cayman Ltd) The Company The Company The Company The Company	Xiangho Aircraft Leasing Corp. Formosa Petrochemical Transportation Corporation, Ltd. Formosa Network Technology Corp. 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 Swancor (Jiangsu) Carbon Fiber Composite Co., Ltd. Nan Ya Plastics Corporation Formosa Chemicals & Fibre Corporation Nan Ya Technology Corp. Mega Prosperity Private Placement Fund	Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties - - Other related parties - - Other related parties - Other related parties Other related parties Other related parties -	Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through other comprehensive income- non-current Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through profit or loss	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 12,479	- 65,608 93,747 313,958 5,685,107 216,488 21,450 - 40,834 20,450 197,565 8,145,932 18,539,632 108,083 18,647,715 56,323,359 16,833,611 29,061,978 102,218,948 3,888,883	% 9.55 % 12.00 % 12.50 % 15.00 % 19.00 % 18.11 % 3.91 % 1.43 % 18.00 % 1.97 % 19.07 % 11.43 % 16.11 % 9.88 % 3.39 % 10.89 % 25.00	- 65,608 93,747 313,958 5,685,107 216,488 21,450 - 40,834 20,450 197,565 8,145,932 18,539,632 108,083 18,647,715 56,323,359 16,833,611 29,061,978 102,218,948 3,888,883	% 9.55 % 12.00 % 12.50 % 15.00 % 19.00 % 18.11 % 3.91 % 1.43 % 18.00 % 1.97 % 19.07 % 11.43 % 16.11 % 9.88 % 3.39 % 10.97 % 25.00

(Continued)

332

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated 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	Beginnin	g 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 Formosa Plastics Corporation (Cayman) Limited Formosa Industries (Hong Kong) Limited The Company	Securities-Formosa Industries Corporation Securities-Formosa Plastics Corporation (Cayman) Limited Securities-Formosa Industries (Hong Kong) Limited Securities-Formosa Industries (Ningbo) Co., Ltd Securities-Formosa Plastics Construction Corporation	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	Formosa Industries Corporation Formosa Plastics Corporation (Cayman) Limited Formosa Industries (Hong Kong) Limited Formosa Industries (Ningbo) Co., Ltd Formosa Plastics Construction Corporation	Subsidiary Subsidiary Subsidiary Subsidiary Associates	2 76 - - 10,000	3,649,971 33,993,977 33,898,313 33,547,087 75,521	3 1 - - 50,000	8,394,635 5,021,385 5,021,385 5,021,385 500,000	- - - - -	- - - - -	- - - - -	- - - - -	5 77 - - 60,000	10,763,605 (Note 1) (Note 6) 42,887,695 (Note 2) (Note 6) 42,829,135 (Note 3) (Note 6) 42,429,791 (Note 4) (Note 6) 568,402 (Note 5)

Note 1: The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of ($847,788) thousand and accumulated translation adjustment of ($433,213) thousand.

Note 2 : The ending balance includes the share of profit or loss of associates and joint ventures accounted for using equity method of $3,287,192 thousand and accumulated translation adjustment of $585,141 thousand.

Note3 : The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of $3,328,723 thousand and accumulated translation adjustment of $580,714 thousand.

Note 4: The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of $3,285,792 thousand and accumulated translation adjustment of 575,527 thousand.

Note 5: The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of ($7,119) thousand.

Note 6: The transaction has already been written off in the consolidated financial statements.

(v) Acquisition of individual real estate with amount exceeding the lower of $300 thousand or 20% of the capital stock: 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 NT$100 million 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 The Company The Company The Company	Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation Formosa Heavy Industries Corp. Formosa Taffeta Co. Ltd. Inteplast Taiwan Corporation	Other related parties � Associates Associates Other related parties �	(Sales) � � (Sales) � �	(11,243,526) (4,126,755) (3,798,833) (108,942) (195,470) (172,346)	% (8.08) % (2.97) % (2.73) % (0.08) % (0.14) % (0.12)	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 30th of the following month Before the 27th of the following month	- - - - - -		1,233,063 460,581 421,072 3,171 11,739 16,717	10.47% 3.91% 3.58% 0.03% 0.10% 0.14%

(Continued)

333

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company The Company The Company The Company 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 Corporation Formosa Industries Corporation The Company The Company The Company The Company The Company Formosa Industries (Ningbo) Co., Ltd. Formosa Industries Corporation	Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd Formosa Chemicals Industries (Ningbo) Co., Ltd. Formosa Industries Corp., Vietnam Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corp., U.S.A. The Company Nan Ya Plastics Film (Nantong) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co.,Ltd Fujian FuxinSpecial SteelCo., Ltd. The Company INTEPLAST GROUP Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation Formosa Heavy Industries Corp. Formosa BP Chemicals Corp. The Company Formosa Plastics Corp., U.S.A.	Other related parties � � Other related parties Parent- subsidiary Associates Parent- subsidiary Other related parties � � � Associates Parent- subsidiary Other related parties � � Associates � Other related parties Parent- subsidiary Associates	(Sales) � � (Sales) � � � � � � � � Purchase � � � � � �	(555,587) (348,605) (1,850,112) (318,315) (7,525,587) (2,035,275) (565,487) (759,341) (243,759) (349,405) (115,062) (148,837) (567,137) (790,159) 871,419 2,388,131 54,875,577 1,168,197 135,883 16,540,713 6,668,065	% (0.40) % (0.25) % (1.33) % (0.23) % (5.41) % (1.46) % (1.22) % (1.64) % (0.53) % (0.76) % (0.25) % (36.52) % (6.47) % (9.01) % 0.92 % 2.52 % 57.90 % 1.23 % 0.14 % 45.36 % 91.03	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 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 Before the 10th of the following month	- - - - - - - - - - - - - - - - - - - - -		141,287 40,748 325,011 33,905 1,209,990 426,678 45,186 85,392 17,749 54,885 19,604 - 79,244 92,674 (125,688) (290,632) (6,727,990) (1,489) (8,612) (2,319,506) (397,643)	1.20% 0.35% 2.76% 0.29% 10.28% 3.62% 0.93% 1.75% 0.36% 1.13% 0.40% -% 12.27% 14.35% (1.21)% (2.80)% (60.38)% (0.01)% (0.08)% (51.51)% (79.13)%	Note 1 Note 1 Note� Note 1

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

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

(Continued)

334

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	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 electronic (Ningbo) Co., Ltd	Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation Nan Ya Plastics (Guangzhou) Co., Ltd. Formosa Chemicals Industries (Ningbo) Co., Ltd Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corp., U.S.A. Formosa Group Ocean Marine Corp. Formosa Industries (Ningbo) Co., Ltd. Fujian Fuxin Special Steel Co., Ltd Formosa Mitsui Advanced Chemical Co., Ltd.	Other related parties Other related parties Associates Other related parties Other related parties Parent-subsidiary Associates Other related parties Parent-subsidiary Associates Associates	1,233,063 460,581 421,072 141,287 325,011 1,209,990 426,678 4,243,086 1,109,516 1,997,928 249,039	9.68 8.15 8.24 3.83 5.59 4.72 4.60 - - - -	- - - - - - - - - - -		1,233,063 460,581 421,072 38,315 214,577 622,224 238,632 - - - -	- - - - - - - - - - -	Note Note

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

(ix) Trading in derivative instruments: Please refer to notes .
(x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

No.	Name of company	Name of counter-party	Nature of relationship		Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 0 0 1 1 2 2	The Company The Company The Company The Company Formosa Industries (Ningbo) Co., Ltd Formosa Industries (Ningbo) Co., Ltd Formosa Industries Corporation Formosa Industries Corporation	Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. The Company The Company The Company The Company	1 1 1 1 2 2 2 2	Sales Accounts receivable Other revenue (Note 3) Other receivables� related parties Sales Accounts receivable Sales Accounts receivable	7,525,587 1,209,990 9,015,126 1,109,516 565,487 45,186 567,137 79,244	O/A 90 days � O/A 60 days � Before the 30th of the following month � Before the 10th of the following month �	4.05% 0.25% 4.85% 0.23% 0.30% 0.01% 0.31% 0.02%

Note 1: Assigned numbers represent the following:

0 represents the parent company.
The subsidiaries are represented numerically starting from 1.

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

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

Note 3: Including the purchases of raw materials on behalf of related parties.

(Continued)

335

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (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 inves	tment amount	Balanc	e as of December	31, 2020	Highest3	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of ownership	Carrying value	Percentage of ownership
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company 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 Formosa Plastics International (Cayman) Limited. Formosa Tokuyama Advanced Chemicals Co., Ltd. Formosa Industries (Hong Kong) Limited Formosa Olefins, 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 Cayman 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 Investment Semiconductor Reinvestment Olefins Transportation	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 (USD-) 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 22,197,301 5,985,531 1,709,987 110,664 33,330 57,000 54,034 501,752 270,442 341 100,000 7,415,940 417,145 100,000 377 7,245,610 18,784,620 - (USD-) 10,780,504 (USD334,902) 3,527,939 (USD108,075) 306,478 (USD9,880)	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 24 741,594 41,714 60,000 13 5 - 12,500 - - -	% 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	87,874,676 61,291,795 7,017,408 4,723,141 42,887,695 12,415,495 5,912,495 1,136,716 68,246 20,159 18,098 1,288,207 259,334 3,029 1,210,071 6,169,287 227,327 568,402 649,229 10,763,605 - 124,934 ( USD-) 42,829,135 (USD1,502,355) 2,892,722 (USD101,470) 108,322 ( USD3,800)	% 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 % 100.00 % 50.00 % 100.00 % 33.00 % 38.00	7,429,610 3,043,746 566,338 (1,676,661) 3,287,192 6,702,012 1,307,911 308,015 (38,443) 1,730 104 109,459 173,301 1,176 383,229 74,886 5,812 (21,358) 125,886 (847,788) - (132) ( USD-) 3,328,723 (USD112,580) 2,676,591 (USD90,525) (155,709) (-5266)	2,202,241 375,906 179,148 (838,331) 3,287,192 1,671,622 380,076 102,671 (12,813) 497 47 54,729 77,983 388 191,614 18,722 1,415 (7,119) 31,472 (847,788) - (66) ( USD-) 3,328,723 (USD112,580) 883,275 (USD29,873) (59,170) (-2001)	Note, Note 2 Note, Note 2 Note, Note 2 Note, Note 2 Note, Note 1, Note 2 Note, Note 2 Note, Note 2 Note, Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note, Note 2 Note, Note 2 Note 2 Note, Note 2 Note, Note 1, Note 2 Note, Note 1, Note 2 Note 2 Note, Note 1, Note 2, Note 3 Note 2, Note 3 Note 2, Note 3

Note � Including cumulative translation adjustments.

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

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

Note 3�The exchange rate of New Taiwan dollars to US dollars on December 31, 2020, was 28.5080 to 1. The average exchange rate of New Taiwan dollars to US dollars for the years ended December 31, 2020, was 29.5675 to 1.

(Continued)

336

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements

(c) Information on overseas branches and representative offices:
(i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2020	Investme	nt flows	Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Investment income (losses) (Note 3)	Book value	Accumulated remittance of earnings in currentperiod
					Outflow	Inflow
Formosa Industries (Ningbo) Co., Ltd. (note 2) Formosa Electronic (Ningbo) Co., Ltd. (note 2) Formosa Mitsui Advanced Chemical Co., Ltd. Fujian Fuxin Special Steel Co., Ltd Swancor (Jiangsu) Carbon Fiber Composite Co., Ltd.	Plastics Electronics Electrolyte Steel Carbon fiber	31,188,509 (USD989,023) 74,648 (USD2,260) 244,196 (USD8,200) 34,347,344 (USD1,460,000) 616,986 (USD19,000)	( 2 ) ( 2 ) ( 2 ) ( 2 ) ( 2 )	21,907,370 (USD678,270) 66,137 (USD2,000) 122,098 (USD4,100) 13,221,416 (USD425,800) 99,993 (USD3,060)	5,021,385 (USD167,000 - - - -	) - - - - -	26,928,755 (USD845,270) 66,137 (USD2,000) 122,098 (USD4,100) 13,221,416 (USD(425,800)) 99,993 (USD3,060)	3,285,792 (USD111,128) 42,932 (USD1,452) (82,850) (USD-2,802) (2,874,463) (USD-97,217) (163,408) (USD-5,527)	100.00% 100.00% 50.00% 29.16% 16.11%	100.00 100.00 50.00 29.16 16.11	3,285,792 (USD111,128) 42,932 (USD1,452) (41,425) (USD-1,401) (838,319) (USD-28,353) -	42,429,791 (USD1,488,347) 399,344 (USD14,008) (25,767) (USD-904) 4,722,707 (USD165,663) 108,083 (USD3,791)	- - - - -

Note 1: Investment methods are classified into the following three categories. (1) Directly invest in a company in Mainland China.

(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China. (3) Others.

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

(ii) Limitation on investment in Mainland China:

	Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA (Note 1)	Upper Limit on Investment (Note 2)
	40,438,399 (USD 1,280,230)	40,602,319 (USD 1,424,243)	-

Note: The exchange rate of New Taiwan dollars to US dollars on December 31, 2020, was 28.508 to 1.

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

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

(iii) Significant transactions:

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

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
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.

(Continued)

337

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Information on investment in mainland China:

Operating segments are combined and reconciled as follows:

		For t	he years ended	December 31, 20	20
Plastic division	Polyolefin division 39,223,686 571,336 39,795,022 48,252 630,515 2,156,913 172,865 37,366,934 17,188,904	Polypropylene division 33,950,651 44,164 33,994,815 8,652 796,282 3,664,787 3,512,592 18,838,077 2,278,123	Tairylan division 27,861,176 67,009 27,928,185 94,008 1,977,119 (299,541) 281,263 21,677,004 1,536,343	Chemistry division 18,536,931 1,268,336 19,805,267 12,609 322,558 1,425,201 78,992 5,859,038 310,147	Others divisions	Adjustments and eliminated - (9,832,150) (9,832,150) - - 5,878,493 - (54,525,690) (1,006,749)	Total 185,813,405 -
$ 62,586,410 1,257,777					3,654,551 6,623,528
$ 63,844,187					10,278,079		185,813,405
$ 44,396 1,870,440 $ 10,091,896					999,071 2,404,638 1,248,918		1,206,988 8,001,552 24,166,667
$ 571,040 $ 28,996,176					4,480,628 421,068,884		9,097,380 479,280,423
$ 4,860,295					121,577,220		146,744,283

		For t	he years ended	December 31, 2	019
Plastic division	Polyolefin division 37,080,194 1,842,914 38,923,108 128,760 628,435 2,183,186 11,504,697 12,040,326 1,297,854	Polypropylene division 36,899,138 69,985 36,969,123 19,722 782,487 3,539,143 2,049,767 15,570,770 2,326,908	Tairylan division 30,338,063 76,513 30,414,576 203,797 2,513,475 (534,086) 424,204 24,409,381 1,555,888	Chemistry division 27,974,684 1,582,979 29,557,663 - 309,441 6,629,582 164,603 5,526,370 238,233	Others divisions	Adjustments and eliminated - (10,669,420) (10,669,420) - - 22,160,951 - (51,273,456) (2,425,691)	Total 207,848,572 -
$ 72,288,455 1,495,181 $ 73,783,636 $ 87,576 1,981,062 $ 10,213,373 $ 1,767,024 $ 27,281,353 $ 5,066,903					3,268,038 5,601,848
					8,869,886		207,848,572
							1,359,114 7,391,007 42,219,152
							18,030,663 497,087,959
							147,934,639

(a) Geographic area information

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

Geographic Revenue from external customers: Taiwan Mainland China Others	For the years ended December 31, 2020 2019 $ 56,782,139 67,597,304 77,092,493 82,096,080 51,938,773 58,155,188 $ 185,813,405 207,848,572	For the years ended December 31, 2020 2019 $ 56,782,139 67,597,304 77,092,493 82,096,080 51,938,773 58,155,188 $ 185,813,405 207,848,572
		2019
		67,597,304 82,096,080 58,155,188
		207,848,572

(Continued)

338

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Geographic Non-current assets: Taiwan United States of America Mainland China Total	For the years ended December 31,	For the years ended December 31,
	2020 $ 48,056,461 30,531,212 19,570,325 $ 98,157,998	2019
		44,692,178 27,970,678 22,081,131
		94,743,987

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

(b) Major customers

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

339

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, 2020 and 2019

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.

340

	Contents	Page
1.	Cover Page	340
2.	Table of Contents	341
3.	Independent Accountants’ Review Report	342～342
4.	Balance Sheets	346
5.	Statements of Comprehensive Income	347
6.	Statements of Changes in Equity	348
7.	Statements of Cash Flows	349
8.	Notes to Financial Statements
	(1) Company history	350
	(2) Approval date and procedures of the consolidated financial	350
	review
	(3) Application of new standards, amendments and interpretations	350～352
	(4) Summary of significant accounting policies	352～369
	(5) Critical accounting judgments, and key sources of estimation	369~370
	uncertainty
	(6) Significant account disclosures	370～407
	(7) Related-party transactions	408～414
	(8) Pledged assets	414
	(9) Significant commitments and contingencies	415
	(10) Losses due to major disasters	415
	(11) Subsequent events	415
	(12) Other	415~416
	(13) Other disclosures
	(a) Information on significant transactions	417～422
	(b) Information on investees	422～423
	(c) Information on investment in mainland China	423~424
	(14) Segment information	424

341

==> picture [168 x 19] intentionally omitted <==

KPMG

��110615��5�7�68�(��101��) Telephone �� + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Fax �� + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) Internet �� 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, 2020 and 2019, 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, 2020 and 2019, 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 audit of the consolidated financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, 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 consolidated financial statements.

��

�� 342

3-1

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 consolidated financial statements.

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 32.73% and 34.29% of the total assets as of December 31, 2020 and 2019, respectively; and the recognized shares of profit of associates accounted for using equity method of these investee companies constituted 11.08% and 35.62% of the income before tax for the years ended December 31, 2020 and 2019, 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.

343

3-2

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.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the 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.

344

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 17, 2021

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.

345

December 31, 2020 December 31, 2019	Amount % Amount %	$ 14,627,108 3 16,170,175 4 16,996,824 4 14,991,544 3 3,563,593 1 2,775,256 1 6,825,377 1 6,743,427 1 2,636,727 1 1,772,799 - 1,080,287 - 1,099,004 - 21,452 - 32,878 - 2,898,401 1 - - 2,000,000 - 3,488,889 1 10,073,563 2 9,681,968 2 60,723,332 13 56,755,940 12 38,012,054 8 32,564,312 7 - - 1,944,444 - 17,703,412 4 17,028,048 4 121,923 - 19,319 - 6,560,931 2 6,910,706 2 71,238 - 69,481 - 62,469,558 14 58,536,310 13 123,192,890 27 115,292,250 25 63,657,408 14 63,657,408 14 11,742,124 3 11,724,498 2 65,791,185 14 62,058,769 13 68,879,676 15 63,968,902 14 55,559,015 12 72,320,189 16 190,229,876 41 198,347,860 43 66,906,732 15 75,423,554 16 332,536,140 73 349,153,320 75 $ 455,729,030 100 464,445,570 100

(English Translation of Financial Statements and Report Originally Issued in Chinese)	FORMOSA PLASTICS CORPORATION	Balance Sheets	December 31, 2020 and 2019	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019	Amount % Amount % Liabilities and Equity	Amount % Amount % Liabilities and Equity	Current liabilities:	$ 3,768,327 1 12,301,257 3 2100 Short-term borrowings (Notes 6(i))	3,888,883 1 4,044,356 1 2110 Short-term notes and bills payable (Note 6(j))	3,888,883 1 4,044,356 1 2110 Short-term notes and bills payable (Note 6(j))	102,218,948 22 102,342,079 22 2170 Accounts payable	102,218,948 22 102,342,079 22 2170 Accounts payable	2180 Accounts payable�related parties (Note 7)	2180 Accounts payable�related parties (Note 7)	7,398,424 2 4,931,809 1 2200 Other payables	4,377,266 1 5,294,496 1 2220 Other payables�related parties (Note 7)	909,517 - 970,934 - 2280 Current lease liabilities (Note 6(m))	7,355,148 2 15,903,748 3 2321 Current portion of bonds payable (Note 6(l))	9,730,081 2 10,682,599 2 2322 Current portion of long-term debts (Notes 6(k) and 8)	3,154,905 1 2,344,034 1 2399 Other current liabilities	3,154,905 1 2,344,034 1 2399 Other current liabilities	142,801,499 32 158,815,312 34 Total current liabilities	142,801,499 32 158,815,312 34 Total current liabilities	Non-Current liabilities:	18,539,632 4 9,924,415 2 2530 Bonds payable (Note 6(l))	244,629,349 54 249,152,130 54 2540 Long-term debts (Note 6(k) and 8)	41,804,267 9 39,280,562 9 2570 Deferred tax liabilities (Note 6(o))	141,821 - 51,805 - 2580 Non-current lease liabilities (Notes 6(m))	124,762 - 124,762 - 2640 Net defined benefit liabilities (Note 6(n))	1,702,088 - 1,861,535 - 2670 Other non-current liabilities	5,985,612 1 5,235,049 1 Total non-current liabilities		312,927,531 68 305,630,258 66 Total liabilities	Equity (Notes 6(p)):	3110 Common stock	3200 Capital surplus	Retained earnings:	3310 Legal reserve	3320 Special reserve	3350 Unappropriated retained earnings	Total retained earnings	3400 Other components of equity	Total equity	$ 455,729,030 100 464,445,570 100 Total liabilities and equity	$ 455,729,030 100 464,445,570 100 Total liabilities and equity
							Assets		Current assets:	Cash and cash equivalents (Note 6(a))	Current financial assets at fair value through profit or loss (note 6(b))		Current financial assets at fair value through other comprehensive income		(Note 6(b))		Notes and accounts receivable, net (Notes 6(c))	Accounts receivable�related parties (Note 6(c) and 7)	Other receivables (Notes 6(d))	Other receivables�related parties (Note 6(d) and 7)	Inventories (note 6(e))	Other current assets		Total current assets		Non-current assets:	Financial assets at fair value through other comprehensive income-non- current (Note 6(b))	Investments accounted for using equity method (Note 6(f) and 7)	Property, plant and equipment (Notes 6(g), 7 and 8)	Right-of-use assets (Notes 6(h))	Intangible assets	Deferred tax assets (Note 6(o))	Other non-current assets (Notes 8)		Total non-current assets											Total assets
										1100	1110		1120				1170	1180	1200	1210	130X	1470					1510	1550	1600	1755	1780	1840	1900

346

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

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(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
5920
Add: Realized profit (loss) on from sales
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 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, net
Total non-operating income and expenses
Profit from continuing operations before tax
6400
Less: Income tax expenses (Note 6(o))
Profit
8300
Other comprehensive income (loss) (Note (n)(o)(p)):
8310
Components of other comprehensive income (loss) that will not be
reclassified 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 to profit or loss
8349
Income tax related to components of other comprehensive income that will
not be reclassified to profit or loss
8360
Components of other comprehensive income (loss) that will be reclassified
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
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 -before income tax (Note 6(q))

2020

See accompanying notes to financial statements.

347

								Total equity	355,568,001	37,324,162	(6,768,604)	30,555,558		-	-	(36,921,297)	(59,598)		4,003	6,653	349,153,320	20,036,199	(8,609,003)	11,427,196		-	-	(28,009,259)	(52,743)		5,407	12,219	332,536,140
Total other equity interest	Unrealized	gains (losses)	from financial	Exchange assets measured	differences on at fair value	Unappropriated translation of through other Gains (losses)	retained foreign financial comprehensive on hedging	earnings statements income instruments	82,499,843 (1,556,605) 83,389,928 (18,763)	37,324,162 - - -	(377,598) (3,721,645) (2,688,903) 19,542	36,946,564 (3,721,645) (2,688,903) 19,542		(4,954,954) - - -	(5,190,369) - - -	(36,921,297) - - -	(59,598) - - -		- - - -	- - - -	72,320,189 (5,278,250) 80,701,025 779	20,036,199 - - -	(92,181) (4,324,810) (4,229,221) 37,209	19,944,018 (4,324,810) (4,229,221) 37,209		(3,732,416) - - -	(4,910,774) - - -	(28,009,259) - - -	(52,743) - - -		- - - -	- - - -	55,559,015 (9,603,060) 76,471,804 37,988
	Retained earnings							Legal reserve Special reserve	57,103,815 58,778,533	- -	- -	- -		4,954,954 -	- 5,190,369	- -	- -		- -	- -	62,058,769 63,968,902	- -	- -	- -		3,732,416 -	- 4,910,774	- -	- -		- -	- -	65,791,185 68,879,676
								Capital surplus	11,713,842	-	-	-		-	-	-	-		4,003	6,653	11,724,498	-	-	-		-	-	-	-		5,407	12,219	11,742,124
	Share capital						Ordinary	shares	63,657,408	-	-	-		-	-	-	-		-	-	63,657,408	-	-	-		-	-	-	-		-	-	63,657,408
									$																								$
									Balance at January 1, 2019	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 at December 31, 2019	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 at December 31, 2020

348

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

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit gain Interest expense Net loss(gain) on financial assets at fair value through profit Interest income 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 (profit) 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 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 Increase in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Proceeds from long-term debt Repayments of long-term debt Decrease in lease payable 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 (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		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	2019 41,792,121

			3,909,081 133,555 (1,567) 931,962 (27,107) (519,376) (8,186,145) (16,390,959) (31,614) (42,800) (281,878)
			(20,506,848)
			2,140,592 514,635 393,102 180,510 3,471,424 (320,824)
			6,379,439
			(96,315) (1,204,191) (398,575) (68,099) (1,201,193) (542,266)
			(3,510,639)
			2,868,800
			(17,638,048)
			24,154,073 536,374 22,475,202 (952,564) (6,253,106)
			39,959,979
			(229,555) - - (5,044,323) (4,899,716) 44,769 - 2,150,603 (487,361)
			(8,465,583)
			333,165,116 (331,348,845) 3,000,000 - (4,600,000) 2,300,000 (3,788,889) (32,421) (89,518) (36,927,613)
			(38,322,170)
			187,396
			(6,640,378) 18,941,635
			12,301,257

See accompanying notes to financial statements.

349

(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, 2020 and 2019

(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 2020 were approved and authorized for issue by the Board of Directors on March 17, 2020.

(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. (“FSC”) 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 3 “Definition of a Business”
�Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”
�Amendments to IAS 1 and IAS 8 “Definition of Material”
�Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(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, 2021, would not have a significant impact on its consolidated financial statements:

�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”

(Continued)

350

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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:

(Continued)

351

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 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 consolidated financial statements:

�Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
�IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
�Amendments to IAS 16 “Property, Plant and Equipmentt 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”

(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.

(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)

352

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)

353

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 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

(i) Financial assets

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

(Continued)

354

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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.

2) Fair value through other comprehensive income (FVOCI )

A debt investment is measured at FVOCI 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 achieved by both collecting contractual cash flows and selling financial assets; and
�it contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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.

(Continued)

355

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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.

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.

(Continued)

356

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

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.

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

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

(Continued)

357

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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.

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.

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.

(Continued)

358

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

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.

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.

(Continued)

359

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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 significant influence.

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.

(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.

(Continued)

360

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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.

(iii) Depreciation

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.

(Continued)

361

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(l) Lease

(i) Identifying a lease

At inception of a contract, the Company 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. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the customer has the right to direct the use of the asset throughout the period of use only if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
the relevant decisions about how and for what purpose the asset is used are predetermined and:
- the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
- the customer designed the asset in a way that predetermines how and for what purpose it will be?used throughout the period of use.

(ii) 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 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)

362

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

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 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 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 machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(iii) 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.

(Continued)

363

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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, not with reference to the underlying asset. 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

When Yung Chia Chemical Industries Corp. was acquired, the excess of original investment cost over the fair value of net assets acquired was recognized as goodwill.

(ii) Subsequent measurement

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

(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.

(Continued)

364

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

(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 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.

(Continued)

365

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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.

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.

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.

(Continued)

366

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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.

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.

(Continued)

367

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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.

(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
(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.

(Continued)

368

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

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.

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:

(Continued)

369

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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 on hand Bank deposit Cash equivalents Time deposits Repurchase bonds	December 31, 2020 $ 312 2,603,498 286,108 878,409 $ 3,768,327	December 31, 2019
		2,211 2,089,843 9,293,861 915,342
		12,301,257

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, 2020 $ 3,888,883	December 31, 2019
		4,017,249

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

(ii) Equity investments at fair value through other comprehensive income Listed stocks Non-listed stocks Non-domestic stocks Total	December 31, 2020 $ 102,218,948 4,708,593 13,831,039 $ 120,758,580	December 31, 2019
		102,342,079 5,081,889 4,842,526
		112,266,494

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.

(Continued)

370

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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).

On June 11, 2019, the Board of Directors of the merged company approved to obtain the shares of domestic non-listed (cabinet) companies - Minima Technology Co., Ltd. 7,405 thousand shares, $31 per share, total amount of $229,555 thousand, the shareholding ratio is 19.15%, change registration was completed on September 17, 2019.

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

Notes receivable from operating activities Accounts receivable (including related parties)�at amortized cost Less : allowance for doubtful receivables	December 31, 2020 $ 56,306 11,720,885 (1,501) $ 11,775,690	December 31, 2019 62,560 10,166,933 (3,188) 10,226,305

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, 2020 and 2019. To measure the expected credit losses, accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward-looking information. The loss allowance provision on receivables as of December 31, 2020 and 2019, amounted to $1,501 thousand and $3,188 thousand, respectively. The expected credit risk on December 31, 2020 is 0.001% for current, 0.195% for 1 to 30 days past due, 1.526% for 31 to 60 days past due, 3.090% for more than 61 days past due. And the expected credit risk was no more than 0.1% on December 31, 2019.

The Company applies the incurred loss model to consider the loss allowance provision of notes and trade receivable, as well as the aging analysis of notes and trade receivable as of December 31, 2020 and 2019, which were past due but not impaired, as follows:

Within 30 days 30~60 days over 61 days Total	December 31, 2020 $ 627,475 13,962 26 $ 641,463	December 31, 2019
		27,753 5 -
		27,758

(Continued)

371

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

Beginning balance Impairment losses reversed Ending balance (d) Other receivable Other receivable�loans to related parties Other receivable�related parties Other receivable	For the years ended December 31, 2020 2019 $ 3,188 4,755 (1,687) (1,567) $ 1,501 3,188 December 31, 2020 December 31, 2019 $ 4,243,086 12,875,441 3,112,062 3,028,307 909,517 970,934 $ 8,264,665 16,874,682	For the years ended December 31, 2020 2019 $ 3,188 4,755 (1,687) (1,567) $ 1,501 3,188 December 31, 2020 December 31, 2019 $ 4,243,086 12,875,441 3,112,062 3,028,307 909,517 970,934 $ 8,264,665 16,874,682
	2020 $ 3,188 (1,687) $ 1,501 December 31, 2020 $ 4,243,086 3,112,062 909,517 $ 8,264,665
		12,875,441 3,028,307 970,934
		16,874,682

As of December 31, 2020 and 2019, 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, 2020 $ 6,044,015 1,248,529 764,833 18,888 1,644,157 9,659 $ 9,730,081	December 31, 2019
		6,536,517 1,419,802 790,624 249,796 1,672,298 13,562
		10,682,599

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,
	2020 $ (481,667)	2019 213,540

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

(Continued)

372

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 Formosa Plastics International (Cayman) Limited 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, 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	December 31, 2019
		33,993,977 3,649,971 11,407,974 94,112,087 65,167,060 7,090,652 5,509,231 11,050,697 5,926,658 1,021,908 82,160 63,557 18,051 181,321 2,530 225,669 6,615,934 75,521 653,576 1,284,962 1,018,634 -
		249,152,130

(Continued)

373

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

For the years ended 2020 and 2019, 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, 2020 2019 $ 3,287,192 2,960,201 (847,788) (2,012,543) 2,202,241 10,570,039 375,906 4,315,020 179,148 42,009 (838,331) (831,633) 1,671,622 548,601 380,076 617,750 102,671 45,848 (12,813) (5,561) 497 252 47 (836) 77,983 76,543 388 960 1,415 89 18,722 (151,452) (7,119) (6,778) 31,472 36,352 54,729 59,696 191,614 126,402 (66) - $ 6,869,606 16,390,959	For the years ended December 31, 2020 2019 $ 3,287,192 2,960,201 (847,788) (2,012,543) 2,202,241 10,570,039 375,906 4,315,020 179,148 42,009 (838,331) (831,633) 1,671,622 548,601 380,076 617,750 102,671 45,848 (12,813) (5,561) 497 252 47 (836) 77,983 76,543 388 960 1,415 89 18,722 (151,452) (7,119) (6,778) 31,472 36,352 54,729 59,696 191,614 126,402 (66) - $ 6,869,606 16,390,959
	2020 $ 3,287,192 (847,788) 2,202,241 375,906 179,148 (838,331) 1,671,622 380,076 102,671 (12,813) 497 47 77,983 388 1,415 18,722 (7,119) 31,472 54,729 191,614 (66) $ 6,869,606
		2,960,201 (2,012,543) 10,570,039 4,315,020 42,009 (831,633) 548,601 617,750 45,848 (5,561) 252 (836) 76,543 960 89 (151,452) (6,778) 36,352 59,696 126,402 - 16,390,959

(Continued)

374

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(i) Subsidiaries

1) 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)
2) 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)
3) 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).
4) 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).
5) 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.
6) On January 3, 2019, the Company participated in the capital increase by cash of Formosa Industries Corporation by acquiring additional shares of stock amounting to US$12,375 thousand (equivalent to $381,323 thousand)
7) On March 14, 2019, 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 $3,093,000 thousand).

(ii) Associates

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

Associates	Relationship	Registration Country	Percentage of ownership
			December 31, 2020 December 31, 2019 % 28.56 % 28.56 % 22.66 % 22.66
Formosa Petrochemical Corporation Formosa Plastic Corp. U.S.A.	Formosa Petrochemical Corporation, the supplier of raw materials for the Company, engages in the manufacturing and sales of petroleum products and petrochemical raw materials. Formosa Plastics Corp., U.S.A, engages in the manufacturing and sales of oil, plastic raw materials, and petrochemical raw materials, and is also the sales target of the Company.	Taiwan U.S.A

(Continued)

375

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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

Formosa Petrochemical Corporation	December 31, 2020 $ 271,510,791	December 31, 2019
		265,253,528

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	December 31, 2020 December 31, 2019 $ 215,309,819 226,492,637 165,613,297 171,539,156 (28,887,601) (36,762,243 (39,408,447) (27,267,545 $ 312,627,068 334,002,005 $ 4,525,709 3,778,944 $ 308,101,359 330,223,061 For the years ended December 31,	December 31, 2019
		226,492,637 171,539,156 (36,762,243 (27,267,545
		334,002,005
		3,778,944
		330,223,061
	2020 $ 415,281,764 $ 7,372,455 (2,174,450) $ 5,198,005 $ (304,818) $ 5,502,823	2019
		646,022,809
		36,748,173 1,314,700
		38,062,873
		(132,636
		38,195,509

(Continued)

376

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

	For	For	the years ended December 31,	the years ended December 31,
			2020	2019
Beginning balance of share of net assets of associates at	$		94,112,087	96,197,632
January 1
Share of net assets of associates as of January 1 after
adjustment			94,112,087	96,197,632
Total comprehensive income allocated to the Company			1,699,526	10,969,106
Dividend Received			(7,889,592)	(13,058,635)
Share of net assets of affiliates as of December 31			87,922,021	94,108,103
Add : share premium acquired not according to holding
percentage			5,398	3,984
Add : adjustment of net value			(52,743)	-
Total carrying amount of equity of the major associate as of
December 31	$		87,874,676	94,112,087
The financial information of Formosa Plastics Corp.,	U.S.A. was as follows:
		December 31,		December 31,
			2020	2019
Current assets	$		80,388,030	91,230,820
Non-current assets			253,057,520	246,666,550
Current liabilities			(23,145,830)	(19,974,120)
Non-current liabilities			(32,655,356)	(24,652,204)
Net asset	$		277,644,364	293,271,046
Net asset contributed to non-controlling interest of
Formosa Plastics Corp., U.S.A.	$		7,132,376	6,122,277
Net asset contributed to Formosa Plastics Corp.,
U.S.A.	$		270,511,988	287,148,769
			For the years ended
			December 31,
			2020	2019
Revenue	$		101,203,474	125,273,202
Net income	$		3,043,746	18,147,970
Other comprehensive income			(3,106,094)	(4,794,535)
Total comprehensive income	$		(62,348)	13,353,435
Income allocated to non-controlling interest of
Formosa Plastics Corp., U.S.A.	$		1,384,682	(913,474)
Income allocated to Formosa Plastics Corp., U.S.A.	$		(1,447,030)	14,266,909

(Continued)

377

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Beginning balance of share of net assets of associates at January 1 Total comprehensive income allocated to the Company Dividend Received Ending balance of share of net assets of associates at December 31	For the years ended December 31, 2020 2019 $ 65,167,060 63,350,563 (3,875,265) 1,875,854 - (59,357) $ 61,291,795 65,167,060
	2020 $ 65,167,060 (3,875,265) - $ 61,291,795

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

Total carrying amount of equity of the minor associates Attributable to the Company: Net income Other comprehensive loss Total comprehensive income	December 31, 2020 December 31, 2019 $ 39,188,366 38,517,465 For the years ended December 31, 2020 2019 $ 1,605,778 372,143 (996,514) (1,273,229) $ 609,264 (901,086)

3) 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%.
4) 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.
5) Formosa Plastics Corp., U.S.A., an associate owned by the Company, bought back 664 of its treasury stocks on April 26, 2019, resulting in its outstanding shares to decrease to 307,419 shares and the holding percentage of Formosa Plastic Corp. to increase from 22.61% to 22.66%.
6) On August 19, 2019, the Company participated in the capital increase by cash, at 25% ownership interest (originally of Formosa Resources Corporation), with the total investment amounting to US $50,000 thousand (equivalent to $1,570,000 thousand).

(Continued)

378

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(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, 2020 December 31, 2019 $ 2,623,212 2,303,596 For the years ended December 31, 2020 2019 $ 246,277 186,098 970 (4,754) $ 247,247 181,344
	2020 $ 246,277 970 $ 247,247

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%.

(iv) Collaterals

Please refer to Note 8 for investments accounted for using equity method which were pledged to banks as collateral to secure the Company’s bank loans as of 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 2020 were as follows:

Cast: Balance as of January 1, 2020 Additions Disposals Reclassification Balance as of December 31, 2020 Balance as of January 1, 2019 Additions Disposals Reclassification Balance as of December 31, 2019	Land		Buildings and constructions		Machinery and equipment		Other facilities		Construction in progress 4,854,898 4,978,305 - (3,202,149) 6,631,054 3,494,767 3,516,065 - (2,155,934) 4,854,898	Total 176,574,623 5,835,240 (1,109,075) 238,463
										181,539,251
										173,425,331 4,899,716 (1,791,783) 41,359
										176,574,623

(Continued)

379

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Land Accumulated depreciation/impairment: Balance as of January 1, 2020 $ - Depreciation for the year - Disposals - Reclassification - Balance as of December 31, 2020 $ - Balance as of January 1, 2019 $ - Depreciation for the year - Disposals - Reclassification - Balance as of December 31 , 2019 $ - Carrying amounts:� Balance as of December 31 , 2020 $ 10,395,277 Balance as of December 31 , 2019 $ 10,395,277	Land		Buildings and constructions		Machinery and equipment		Other facilities		Construction in progress - - - -	Total 137,294,061 3,545,524 (1,102,887) (1,714) 139,734,984 135,197,834 3,876,268 (1,778,628) (1,413) 137,294,061 41,804,267 39,280,562

									-
									- - - -
									-
									6,631,054
									4,854,898

(i) Collaterals

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

(ii) As of 2020, 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, 2020 Additions Disposals Balance at December 31, 2020 Balance at January 1, 2019 Additions Balance at December 31, 2019	Land $ 84,314 128,886 - $ 213,200 $ 81,292 3,022 $ 84,314	Buildings 304 244 (548) - 304 - 304	Total 84,618 129,130 (548)
			213,200
			81,596 3,022
			84,618

(Continued)

380

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Accumulated depreciation: Balance at January 1, 2020 Depreciation for the period Disposals Balance at December 31, 2020 Depreciation for the period Balance at December 31, 2019 Carrying amount: Balance at December 31, 2020 Balance at December 31, 2019	Land $ 32,570 38,809 - $ 71,379 $ 32,570 $ 32,570 $ 141,821 $ 51,744	Buildings 243 244 (487) - 243 243 - 61	Total 32,813 39,053 (487) 71,379 32,813 32,813 141,821 51,805

(i) Short-term borrowings

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

Unsecured short-term borrowings Employees’ savings Total Interest rate 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 Balance as of January 1,2019 New issuance during the period Repayments during the period Effect of exchange rate change Balance as ofDecember 31, 2019	December 31, 2020 $ 14,246,320 380,788 $ 14,627,108 0.630%~1.035% Total $ 16,170,175 326,554,054 (328,097,145) 24 $ 14,627,108 Total $ 14,343,680 333,165,116 (331,348,845) 10,224 $ 16,170,175	December 31, 2019
		15,835,400 334,775
		16,170,175
		0.750%~1.090%

(Continued)

381

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(j) 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
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
Short-term notes and bills payable
Short-term notes and bills payable
Less: Discount on short-term notes and
bills payable
Total

December 31, 2020
Institutions
Interest rate
Amount
CTBC Bank Co., Ltd.
0.269%
$ 3,000,000
China bills Finance Corporation 0.239%~0.269%
3,200,000
Mega Bills Finance Co., Ltd.
0.269%
1,000,000
Grand Bills Finance Corporation 0.239%~0.269%
3,800,000
E Sun Commercial Bank, LTD.
0.229%
2,500,000
Yuanta Commercial Bank. LTD. 0.239%~0.269%
2,000,000
Taishin International Bank
0.229%~0.239%
1,500,000
17,000,000
(3,176)
$
16,996,824
December 31, 2019
Institutions
Interest rate
Amount
CTBC Bank Co., Ltd.
0.622%
$ 1,000,000
International Bills Finance
Corporation
0.777%
500,000
Ta Ching Securities Co., Ltd.
0.590%
600,000
China bills Finance Corporation
0.560%
2,000,000
Mega Bills Finance Co., Ltd.
0.857%
1,000,000
Grand Bills Finance Corporation 0.600%~0.622%
2,400,000
Taipei Fubon Commercial Bank
Co., Ltd.
0.637%
2,000,000
E Sun Commercial Bank, LTD.
0.622%
2,500,000
Yuanta Commercial Bank. LTD.
0.632%
3,000,000
15,000,000
(8,456)
$
14,991,544

Institutions

CTBC Bank Co., Ltd.
International Bills Finance
Corporation
Ta Ching Securities Co., Ltd.
China bills Finance Corporation
Mega Bills Finance Co., Ltd.
Grand Bills Finance Corporation
Taipei Fubon Commercial Bank
Co., Ltd.
E Sun Commercial Bank, LTD.
Yuanta Commercial Bank. LTD.

(Continued)

382

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(k) Long-term debts

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

Unsecured long-term debts Secured long-term debts Less: Current portion Total Repayment period Interest rate Issuance and redemption of loan Balance of January 1, 2020 New issuance during the period Repayment during the period Balance of December 31, 2020 Balance of January 1, 2019 New issuance during the period Repayment during the period Other Balance of December 31, 2019			December 31, 2020 $ 2,000,000 - (2,000,000) $ - 2021 0.800% Total 5,433,333 - (3,433,333) 2,000,000 Total 6,913,038 2,300,000 (3,788,889) 9,184 5,433,333	December 31, 2019 2,000,000 3,433,333 (3,488,889) 1,944,444 2020~2021 0.800%~1.632%
	$ $


	$ $

(ii) Issuance and redemption of loan
(iii) Secured bank loans
1) In order to raise funds to finance the Sixth Naphtha Cracker project and the construction of related factories, the Group signed a syndicated loan agreement with Mega International Commercial Bank (formerly Chiao Tung Bank), the lead bank of the syndicated loan, and other banks on 2013/11/14. The details of the loan agreement are as follows:

In order to raise funds to build the plant and accessory equipment, 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, 2020, the details of the loan agreement are as follows:

2) Credit line: $10,300,000 thousand.
3) Interest rate: as settled with each participating bank.
4) Period: 7 years (including a 3 years extension).

(Continued)

383

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

5) Collateral: the land at Sixth Naphtha Cracker pledged for 120 percent of the credit line financed by the loan.
6) 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%.
7) The Company did not breach the above mentioned financial covenants in respect of its financial statements as of 2020.
8) 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:

(i)Bonds payable consisted of the following:
Domestic unsecured nonconvertible corporate bonds Less: current portion Total Expiry	December 31, 2020 $ 40,910,455 (2,898,401) $ 38,012,054 2021~2030	December 31, 2019
		32,564,312 -
		32,564,312
		2021~2028

(ii) Issuance and repayment of bonds payable for the twelve-month periods ended 2020:

1) Issuance

Face value Coupon rate Expiry	2020	2020
	$ 8,350,000 0.580%�0.630%�0.670% 2026�2028�2030
		0.580%�0.630%�0.670%
		2026�2028�2030

(Continued)

384

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

2) Repayment

For the years ended December 31, 2020 2019 Repayment $ - 4,600,000

3) The term of domestic corporate bonds as December 31, 2020 and 2019 were as follows:

Issue amount 2020.12.31 Ending balance 2020.12.31 Current portion 2019.12.31 Ending balance 2019.12.31 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	The first domestic unsecured nonconvertible corporate bond in 2014
	9,000,000 2,498,752 1,249,349 2,498,102 - November 5, 2012 1.25%�1.39%�1.53% November 5 Payable in 2 equal installments for each different coupon rate in 2016~2017, 2018~2019 and 2021~2022, respectively.	11,500,000 1,496,213 - 1,494,697 - June 10, 2013 1.23%�1.52% June 10 Payable in 2 equal installments for each different coupon rate in 2016~2017 and 2022~2023, respectively.	8,500,000 6,296,571 - 6,295,396 - November 8, 2013 1.42%�1.94% November 8 Payable in 2 equal installments for each different coupon rate in 2017~2018 and 2022~2023, respectively.	6,000,000 5,995,166 - 5,994,072 - 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.

Issue amount 2020.12.31 Ending balance 2020.12.31 Current portion 2019.12.31 Ending balance 2019.12.31 Current portion Issuance date Coupon rate Interest payment date Repayment method	The first domestic unsecured nonconvertible corporate bond in 2017 7,000,000 6,995,471 1,649,052 6,993,575 - 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.	The first domestic unsecured nonconvertible corporate bond in 2018 9,300,000 9,290,447 - 9,288,470 - 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.	The first domestic unsecured nonconvertible corporate bond in 2020
			8,350,000 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.

(Continued)

385

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(m) Lease liabilities

Lease liabilities consisted of the following:

Lease liabilities consisted of the following:
Current Non-current financial assets	December 31, 2020 $ 21,452 $ 121,923	December 31, 2019
		32,813
		27,571

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

The amount recognized in profit or loss was as follows:

Interest on lease liabilities Expenses relating to short-term leases	December 31, 2020 $ 3,390 110,556	December 31, 2019
		1,064
		103,150

The amount recognized in cash flows statement was as follows:

Total cash outflow for leases	December 31, 2020 $ 151,837	December 31, 2019
		136,635

(i) Real estate leases

As of December 31, 2020, 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)

386

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, 2020 $ 9,421,525 (2,860,594) $ 6,560,931	December 31, 2019 9,791,588 (2,880,882) 6,910,706

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 $2,839,055 thousand as of December 31, 2020. 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, 2020 2019 $ 9,791,588 9,710,141 (548,306) (474,088) 190,814 216,534 156,264 421,322 (168,835) (82,321) $ 9,421,525 9,791,588
	2020 $ 9,791,588 (548,306) 190,814 156,264 (168,835) $ 9,421,525

(Continued)

387

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,
	2020 $ 2,880,882 28,558 98,020 (261,876) 115,010 $ 2,860,594	2019
		2,587,023 31,777 91,468 (169,101 339,715
		2,880,882

4) Expense recognized in profit or loss

The pension costs recognized in profit or loss for the years ended 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,
	2020 $ 93,734 68,522 $ 162,256 $ 93,541 5,737 62,978 $ 162,256	2019
		96,496 88,261
		184,757
		107,892 6,445 70,420
		184,757

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,
	2020 $ 2,230,568 46,595 $ 2,277,163	2019
		1,966,685 263,883
		2,230,568

6) Actuarial assumptions

The following are the principal actuarial assumptions as of 2020:

Discount rate Rate of future salary increases	For the years ended December 31,
	2020 2019 % 1.00 % 1.00 % 2.85 % 2.85

(Continued)

388

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Based on the actuarial report, the Company is expected to make contributions of $114,000 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 8.7 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, expected return on plan assets and future salary increases. Any changes in actuarial assumptions may significantly impact the present value of the defined benefit obligation.

As the year ended of 2020 and 2019, the effects of the present value of the defined benefit obligation arising from changes in principal actuarial assumptions were as follows:

December 31, 2020 Discount rate (change 0.25%) Future salary increases (change 1.00%) December 31, 2019 Discount rate (change0.25�) Future salary increases (change1.00�)	Effect of defined benefit obligations Increase Decrease $ (162,481) 168,488 710,991 (629,177) (186,726) 194,154 820,501 (718,167)

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

(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 $256,536 thousand and $246,011 thousand for the years ended 2020 and 2019, respectively.

(Continued)

389

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(o) Income tax

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

The details of income tax expense for the years ended 2020	were as follows:	were as follows:
Current income tax expense Deferred tax expense The origination of temporary differences Income tax expense	For the years ended December 31,
	2020 $ 2,517,326 724,752 $ 3,242,078	2019 3,787,044 680,915 4,467,959

The income tax expense related to components of other comprehensive income for the years ended 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,
	2020 $ 11,649 $ (121,708)	2019 65,971 190,273

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,
	2020 $ 4,655,655 (65,744) (671,633) (762,327) 12,256 73,871 $ 3,242,078	2019
		8,358,424 (59,204) (1,637,229) (2,587,197) 81,617 311,548
		4,467,959

(Continued)

390

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 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 For the year ended December 31, 2019 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 Unrealized gross profit Total	Beginning balance	Beginning balance	Recognized in income or loss
	$ - 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 Beginning balance
		Beginning balance
	$ 1,867 24,845 1,503,124 383,007 16,099 $ 1,928,942 $ 16,284,936 52,766 250,586 82,496 - $ 16,670,784

(iii) The Company’s income tax returns have been examined and approved through 2018 by the ROC tax authorities.

(Continued)

391

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(p) Capital and other equity

As the year ended of 2020 and 2019, 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, 2020 $ 8,130,081 16,263 202,111 396,166 2,997,503 $ 11,742,124	December 31, 2019
		8,130,081 16,263 196,704 383,947 2,997,503
		11,724,498

(ii) Retained earnings

(Continued)

392

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 Permit No. 1010012865 as 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 2020 and 2019.

3) Earnings distribution

The appropriations of earnings in 2018 and 2017 had been approved in the stockholders' meetings on June 11, 2019, and June 20, 2018, respectively. The amounts of appropriation of dividend per share were as follows:

Dividends attributable to ordinary shareholders: Cash dividends	2019	2019	2019	2018 Dividends per share Amount 5.80 36,921,297	2018 Dividends per share Amount 5.80 36,921,297
	Dividends per share		Amount		Amount
	$ 4.40		28,009,259		36,921,297

(iii) Other equity (net of tax)

Balance at January 1, 2019 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 on financial assets of associates and joint ventures under equity method through profit or loss Share of cash flow hedge of associates and joint ventures Balance at December 31, 2019	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 - - 7,906,010 (12,135,231) -		Gain (loss) on hedging instruments 779 - - - - 37,209	Total 75,423,554 (3,579,265) (745,545) 7,906,010 (12,135,231) 37,209
			76,471,804		37,988	66,906,732

(Continued)

393

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Balance at January 1, 2018 Adjustments due to new standard Balance adjusted as of January 1, 2018 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 on financial assets of associates and joint ventures under equity method through profit or loss Share of cash flow hedge of associates and joint ventures Balance at December 31, 2018	Exchange differences on translation of foreign operations $ (1,556,605) - (1,556,605) (3,228,641) (493,004) - - - $ (5,278,250)		Unrealized gain (loss) on financial assets at fair value through profit or loss 83,389,928 -		Available-for- sale investments - -		Cash flow hedge - -		Gain (loss) on hedging instruments (18,763) -	Total 81,814,560 -
			83,389,928 - - 3,571,622 (6,260,525) -		- - - - - -		- - - - - -		(18,763) - - - - 19,542	81,814,560 (3,228,641) (493,004) 3,571,622 (6,260,525) 19,542
			80,701,025		-		-		779	75,423,554

(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,
2020 $ 20,036,199 6,365,741 $ 3.15	2019
	37,324,162
	6,365,741
	5.86

(r) Revenue from Contracts with Customers

(i) Revenue Segmentation

		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

(Continued)

394

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

		For the year	s ended Decembe	r 31, 2019		Total 67,584,941 42,909,790 55,329,212
Plastic division $ 21,434,441 13,286,070 30,998,399 $ 65,718,910 $ 33,817,024 16,617,508 - - - - - - - - - - - - 15,284,378 $ 65,718,910	Polyolefin division 10,470,835 13,409,240 8,490,381 32,370,456 - - 16,752,140 5,469,465 9,796,814 - - - - - - - - - 352,037 32,370,456	Polypropylene division 7,409,012 6,186,753 4,921,551 18,517,316 - - - - - 16,403,980 2,113,336 - - - - - - - - 18,517,316	Tairylan division 6,639,632 5,393,364 6,253,938 18,286,934 - - - - - - - 7,059,353 3,708,654 2,649,588 4,387,946 - - - 481,393 18,286,934	Chemistry division 19,089,340 4,613,024 4,272,320 27,974,684 - - - - - - - - - - - 12,959,835 3,839,967 4,802,108 6,372,774 27,974,684	Others divisions 2,541,681 21,339 392,623 2,955,643 - - - - - - - - - - - - - - 2,955,643 2,955,643
						165,823,943
						33,817,024 16,617,508 16,752,140 5,469,465 9,796,814 16,403,980 2,113,336 7,059,353 3,708,654 2,649,588 4,387,946 12,959,835 3,839,967 4,802,108 25,446,225
						165,823,943

(ii) Balance of contracts

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful receivables Total	December 31, 2020 $ 56,306 11,720,885 (1,501) $ 11,775,690	December 31, 2019 79,150 12,712,715 (4,755) 12,787,110	January 1, 2019
			79,150 12,712,715 (4,755
			12,787,110

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

(s) Employee bonus

(Continued)

395

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

For the years ended 2020 and 2019, the appropriated employee compensations amounted to $30,211 thousand and $55,553 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

2020 Interest income from bank deposits $ 96,784 Other interest income 132,838 Total Interest income $ 229,622	2019 325,582 193,794 519,376

(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	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%	2019 157,425 8,186,145 8,343,570 2019 31,614 (291,717) 27,107 313,457 (103,462) (23,001) 2019 948,845 (16,883) 931,962 1.325%~1.394%

(Continued)

396

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

Contractual cash flow	Within 6 months	6~12months	1~2years	Over 5 years
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
17,924,744 34,691,935 3,498,704 15,000,000 9,518,683 2,871,803 5,983,846 336,600 53,023	15,902,344 - 1,153,783 15,000,000 9,518,683 2,871,803 5,983,846 336,600 16,760	1,209,600 - 1,163,122 - - - - - 16,699	812,800 2,974,220 1,181,799 - - - - - 17,020	- 8,634,670 - - - - - - 1,141
89,879,338	50,783,819	2,389,421	4,985,839	8,635,811

(Continued)

397

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, 2020	December 31, 2020	December 31, 2020	December 31, 2019 Foreign currency (in thousand) Exchange Rate New Taiwan Dollars 663,619 30.1060 19,978,914 1,027 33.6895 34,599 4,366 0.2763 1,206 852 4.3155 3,677 40,542 30.1060 1,220,557 216 33.6895 7,277 37,417 0.2763 10,338	December 31, 2019 Foreign currency (in thousand) Exchange Rate New Taiwan Dollars 663,619 30.1060 19,978,914 1,027 33.6895 34,599 4,366 0.2763 1,206 852 4.3155 3,677 40,542 30.1060 1,220,557 216 33.6895 7,277 37,417 0.2763 10,338
	Foreign currency (in thousand)	Exchange Rate	New Taiwan Dollars		Exchange Rate New Taiwan Dollars 30.1060 19,978,914 33.6895 34,599 0.2763 1,206 4.3155 3,677 30.1060 1,220,557 33.6895 7,277 0.2763 10,338
	$ 426,598 6,509 13,783 9,335 27,129 209 76,394	28.5080 34.5600 0.2724 4.3691 28.5080 34.5600 0.2724	12,161,456 224,951 3,754 40,786 773,394 7,223 20,810	663,619 1,027 4,366 852 40,542 216 37,417

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, 2020 and 2019 would have increased (decreased) net profit before tax by $116,295 thousand and $187,802 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 2020 and 2019.

(Continued)

398

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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 2020 and 2019, foreign exchange gain (loss) (including realized and unrealized portions) amounted to $994,132 thousand and $(291,717) thousand, respectively.

(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 $162,463 thousand and by $178,354 thousand for the year ended December 31, 2020 and 2019, with all other variable factors remaining constant. This is mainly due to the Group’s borrowing at variable rates.

(v) Other market price risk

Other market price risk
Prices of securities at the reporting date	2020		2019
	Other comprehensive income after tax $ 1,022,189 $ (1,022,189)	Net income - -	Other comprehensive income after tax 1,023,421 (1,023,421)	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.

(Continued)

399

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

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)

	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 - - - - 18,539,632 - - - - - - - - -	Total
	-	3,888,883		3,888,883
	-	3,888,883		3,888,883
	102,218,948 -	- -		102,218,948 18,539,632
	102,218,948	-		120,758,580
	- - -	- - -		- - -
	-	-		-
	102,218,948	3,888,883		124,647,463
	- - - - - - - -	- - - - - - - -		- - - - - - - -
	-	-		-

(Continued)

400

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

	December 31, 2019	December 31, 2019	December 31, 2019
Carrying value		Fair value
	Level 1	Level 2	Level 3 - - - 9,924,415 9,924,415 - - - - 9,924,415 - - - - - - - - -	Total
$ 4,044,356 4,044,356 102,342,079 9,924,415 112,266,494 12,301,257 10,226,305 16,874,682 39,402,244 $ 155,713,094 $ 32,564,312 14,991,544 16,170,175 5,433,333 9,518,683 2,871,803 5,984,859 52,197 $ 87,586,906	-	4,044,356		4,044,356
	-	4,044,356		4,044,356
	102,342,079 -	- -		102,342,079 9,924,415
	102,342,079	-		112,266,494
	- - -	- - -		- - -
	-	-		-
	102,342,079	4,044,356		116,310,850
	- - - - - - - -	- - - - - - - -		- - - - - - - -
	-	-		-

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.

(Continued)

401

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

3) Valuation techniques for financial instruments measured at fair value

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

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 2020.
5) Movement of financial instruments grouped into level 3

January 1, 2020 Total gains and losses recognized: In other comprehensive income Reduce Reclassification December 31, 2020 January 1, 2019 Total gains and losses recognized: In other comprehensive income Purchase December 31, 2019	Financial assets at fair value through other comprehensive income Unquoted equity instruments $ 9,924,415 (9,112,399) (12,500) 17,740,116 $ 18,539,632 $ 10,038,913 (344,053) 229,555 $ 9,924,415

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)

402

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, 2020 Financial assets at fair value through other comprehensive income – unquoted equity instruments	Input Price to earnings ratio multiple price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	Recognized in other comprehensive income Change Favorable change Unfavorable change ± 1% $ 146,084 (146,084)

(Continued)

403

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

December 31, 2019 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 $ 60,446 (60,446)	Recognized in other comprehensive income	Recognized in other comprehensive income
				Unfavorable change
				(60,446)

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

(Continued)

404

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 Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; factory affair department of each business division; manager department; and general management department Purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; manager department of each business division; purchase department; and general management department Weekly marker price meeting; purchase & sales meeting; operation performance meeting; internal audit department; and board meeting General manager department; and shares management division of finance department Operation management meeting and board meeting General manager department; and general management department Operation management meeting and board meeting General manager department; general management department; and legal department Purchase & sales meeting, operation performance meeting, internal audit department, and board meeting. General manager department; general management department; and legal department Purchase & sales meeting, operation performance meeting, internal audit department, and board meeting.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the 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

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)

405

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)

406

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, 2020 $ 123,192,890 (3,768,327) 119,424,563 332,536,140 % 35.91	December 31, 2019 115,292,250 (12,301,257) 102,990,993 349,153,320 % 29.50

(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) Total liabilities arisings from financing activities	2020.1.1 $ 16,170,175 14,991,544 5,433,333 32,564,312 52,197 $ 69,211,561 2019.1.1 $ 14,343,680 11,995,636 6,913,038 37,154,561 81,596 $ 70,488,511	Change in cash flows from financing activities (1,543,091) 2,000,000 (3,433,333) 8,350,000 (41,281) 5,332,295 Change in cash flows from financing activities 1,816,271 3,000,000 (1,488,889) (4,600,000) (33,485) (1,306,103)	Changes in non-cash - 5,280 - (3,857) 132,459 133,882 Changes in non-cash - (4,092) 9,184 9,751 4,086 18,929	Effect of exchange rate changes 24 - - - - 24 Effect of exchange rate changes 10,224 - - - - 10,224	December 31, 2020 14,627,108 16,996,824 2,000,000 40,910,455 143,375
					74,677,762
					December 31, 2019 16,170,175 14,991,544 5,433,333 32,564,312 52,197
					69,211,561

(Continued)

407

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 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 PFG Fiber Glass Corporation Other related parties

(Continued)

408

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

Name of related party

Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Electronic Materials (Kunshan) 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

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)

409

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:

Sales for the years ended December 31, 2020 2019 $ 7,525,587 7,703,969 6,019,829 10,192,469 115,534 118,203 19,034,522 22,649,761 $ 32,695,472 40,664,402	Accounts receivable –related parties	Accounts receivable –related parties
2020 $ 7,525,587 6,019,829 115,534 19,034,522 $ 32,695,472	December 31, 2020 1,209,990 855,813 7,481 2,303,982 4,377,266	December 31, 2019
		1,980,464 968,534 5,546 2,339,952
		5,294,496

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:

Purchases for the years ended December 31, 2020 2019 $ 1,132,624 1,237,661 54,875,577 76,932,917 1,168,900 955,675 3,441,610 2,951,554 $ 60,618,711 82,077,807	Accounts payable –related parties	Accounts payable –related parties
2020 $ 1,132,624 54,875,577 1,168,900 3,441,610 $ 60,618,711	December 31, 2020 124,430 6,272,990 2,167 425,790 6,825,377	December 31, 2019
		72,162 6,450,088 136 221,041
		6,743,427

(Continued)

410

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, 2020.

Other related parties

	For the year ended December 31, 2019	For the year ended December 31, 2019
Disposal price $ 10		Gain from disposal 10

There were no receivables on December 31, 2019.

Other receivables–related parties:

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, 2020 2019 $ 342,927 173,408	For the years ended December 31, 2020 2019 $ 342,927 173,408		Other payables –related parties	Other payables –related parties
	2020 $ 342,927			December 31, 2020 50,757	December 31, 2019
					13,453

3) Acquisition of financial assets

Subsidiaries Formosa Plastics Corp. (Cayman Ltd.) Formosa Industries Corporation Associates Formosa Plastics Construction 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 Plastics Construction Corporation 500,000 $ 13,916,020

(Continued)

411

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 - Investments accounted for using equity method - Investments accounted for using equity method 157,000 -	Transaction Shares For the year ended December 31, 2019 Shares of stock of Formosa Plastics Corp. (Cayman Ltd.) $ 3,093,000 Shares of stock of Formosa Industries Corporation 381,323 Shares of stock of Formosa Resources Corporation 1,570,000 - $ 5,044,323

4) Disposal of financial assets

The Group has no related transactions for the three-month periods ended September 30, 2015 and 2016.

(iv) Financing transactions

Financing transactions with related parties were as follows:

Associates Formosa Heavy Industries Corp. Other related parties Formosa Group Ocean Marine Corp. Other	Due from related parties (recognized as other receivables–related parties)	Due from related parties (recognized as other receivables–related parties)
	December 31, 2020 $ - 4,243,086 - $ 4,243,086	December 31, 2019
		7,100,000 5,475,441 300,000
		12,875,441

As the year ended of 2020 and 2019, the interest receivable from the abovementioned transactions amounted to $4,618 thousand and $12,251 thousand, respectively, which was recognized as other receivables–related parties.

(Continued)

412

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, 2020 $ 7,127,000 3,064,610 18,967,581 $ 29,159,191	December 31, 2019
		7,526,500 3,236,395 20,753,559
		31,516,454

(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, 2020 2019 $ 9,015,126 16,860,312	Amount of purchases of raw materials on behalf for the years ended December 31, 2020 2019 $ 9,015,126 16,860,312		Other receivables –related parties	Other receivables –related parties
	2020			December 31, 2020 1,109,516	December 31, 2019
	$ 9,015,126				1,257,994

(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, 2020 $ 1,029,530	December 31, 2019
		1,085,551

(viii) Receivables from payment on behalf of related parties

1) 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, 2020 $ 1,997,928	December 31, 2019
		1,758,062

(Continued)

413

FORMOSA PLASTICS CORPORATION Notes to the Financial Statements

(ii) 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,
	2020 $ 16,568 58,764 6,968 17,651 595 25,650 17,763 $ 143,959	2019
		16,568 58,764 7,479 14,513 595 24,740 17,821
		140,480

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,
	2020 $ 59,083	2019
		70,958

(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, 2020 $ 2,156,562 92,675 $ 2,249,237	December 31, 2019 2,158,282 134,529
		2,292,811

(Continued)

414

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, 2020 $ 29,159,191	December 31, 2019
		31,516,454

(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, 2020 $ 456,046	December 31, 2019
		899,055

(c) As of December 31, 2020, the Company’ s investee, Formosa Ha Tinh (Cayman) Ltd., signed several contracts of syndicated credit lines with different banks amounting to US$1,485,000 thousand and credit line of $500,000 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, 2020	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, 2019	For the year ended December 31, 2019	For the year ended December 31, 2019	For the year ended December 31, 2019
	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	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	4,819,440 330,403 253,139 - 161,450 3,621,157 119,242	2,682,705 236,178 177,629 7,560 96,994 287,924 1,766	- - - - - - 12,547	7,502,145 566,581 430,768 7,560 258,444 3,909,081 133,555
The Company's number of employees and additional information on employee benefits were as follows: 2020 2019 Number of employees 6,937 6,828 Number of directors who were not employees 8 8 The average employee benefit $ 1,285 1,284 The average salaries and wages $ 1,107 1,100 Adjustment of the average salaries and wages % 0.64 % (13.17) $ - -

(Continued)

415

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.
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 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.
3) On June 5, 2009, the Company had approved to abolish the appropriation earnings for directors 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 the remuneration monthly. They will also receive their annual bonus, performance bonus and managers’ bonus, depending on the business condition of the Company. Besides, they can propose the adjustment of their remuneration to the remuneration committee based on that offered to general employees.

(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.

(b) Impact assessment of the COVID-19:

The outbreak of COVID-19 in the first half of 2020 affected the global economy. Under the influence of the decrease in price of crude oil, the Group’ s product sales and the price have both declined, and the losses of some affiliated companies have been recognized. However, as a result of losses from affiliated companies, the Group’ s combined pre-tax profit for the twelve months ended December 31, 2020 was less than for the twelve months ended December 31, 2019. The Group has already taken relevant countermeasures, and its subsequent impact still depends on the subsequent development of the epidemic.

(Continued)

416

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 0 1 2 2	The Company The Company The Company The Company The Company The Company The Company Formosa Industries(Ning bo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd. Formosa Electronic (Ningbo) Co., Ltd.	Formosa Petrochemical Corp. Formosa Chemicals & Fiber Corp. Nan Ya plastic Corp. Formosa Heavy Industries Corp. Formosa Plastics Marine Corp. Formosa Group Ocean Marine Corp. Japan Formosa Sumco Technology Corp. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa Mitsui Advanced Chemical Co., Ltd. Formosa 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 Other receivables- related parties Other receivables- related parties	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes	14,500,000 8,500,000 8,500,000 16,800,000 300,000 8,698,697 930,000 249,033 (CNY-) 117,963 (CNY27,000) 126,701 (CNY29,000)	4,500,000 4,500,000 4,500,000 5,700,000 - 5,713,086 - 249,033 - -	- - - - - 4,243,086 - 249,039 - -	1.230% 1.230% 1.230% 1.230%~ 1.418% 1.230%~ 1.418% 1.230%~ 1.418% 1.000% 3.080% 3.360%~ 3.480% 3.480%	2 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 Short-term financing	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	66,507,228 66,507,228 66,507,228 66,507,228 66,507,228 66,507,228 66,507,228 16,971,916 159,738 199,672	133,014,456 133,014,456 133,014,456 133,014,456 133,014,456 133,014,456 133,014,456 42,429,791 399,344 399,344	Note 4 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 3: The ending balance was approved by the Board of Directors.

Note 4: The exchange rate of New Taiwan dollars to CNY dollars was 4.369 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 4.3691091 to 1 for the actual usage during the period.

(Continued)

417

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	216,148,491 216,148,491 216,148,491	7,582,500 20,907,973 3,260,475	7,127,000 18,967,581 3,064,610	7,127,000 18,967,581 3,064,610	- - -	% 2.14 % 5.70 % 0.92	432,296,982 432,296,982 432,296,982	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, 2020 (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 18,255	2,631,482 781,245 14,852 37,277 6,926 266,711	% 16.17 % 17.99 % 0.81 % 1.05 % 0.80 % 18.00	2,631,482 781,245 14,852 37,277 6,926 266,711

(Continued)

418

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending b	alance		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 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. 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 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 - 12,479 -	- 65,608 93,747 313,958 5,685,107 216,488 21,450 - 40,834 20,450 197,565 8,145,932 18,539,632 56,323,359 16,833,611 29,061,978 102,218,948 3,888,883 108,083	% 9.55 % 12.00 % 12.50 % 15.00 % 19.00 % 18.11 % 3.91 % 1.43 % 18.00 % 1.97 % 19.07 % 11.43 % 9.88 % 3.39 % 10.89 % 25.00 % 16.11	- 65,608 93,747 313,958 5,685,107 216,488 21,450 - 40,834 20,450 197,565 8,145,932 18,539,632 56,323,359 16,833,611 29,061,978 102,218,948 3,888,883 108,083

(Continued)

419

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 Formosa Plastics Corporation (Cayman) Limited Formosa Industries (Hong Kong) Limited The Company	Securities- Formosa Industries Corporation Securities- Formosa Plastics Corporation (Cayman) Limited Securities- Formosa Industries (Hong Kong) Limited Securities- Formosa Industries (Ningbo) Co., Ltd Securities- Formosa Resources Corporation	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	Formosa Industries Corporation Formosa Plastics Corporation (Cayman) Limited Formosa Industries (Hong Kong) Limited Formosa Industries (Ningbo) Co., Ltd Formosa Plastics Construction Corporation	Subsidiary Subsidiary Subsidiary Subsidiary Associates	2 76 - - 10,000	3,649,971 33,993,977 33,898,313 33,547,087 75,521	3 1 - - 50,000	8,394,635 5,021,385 5,021,385 5,021,385 500,000	- - - - -	- - - - -	- - - - -	- - - - -	5 77 - - 60,000	10,763,605 (Note 1) 42,887,695 (Note 2) 42,829,135 (Note 3) 42,429,791 (Note 4) 568,402 (Note 5)

Note 1: The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of $(847,788) thousand and accumulated translation adjustment of $(433,213) thousand.

Note 3:The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of $3,328,723 thousand and accumulated translation adjustment of $580,714 thousand.

Note 4:The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of $3,285,792 thousand and accumulated translation adjustment of $575,527 thousand.

Note 5:The ending balance includes the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method of $(7,119) thousand.

(v) Acquisition of individual real estate with amount exceeding the lower of $300 thousand or 20% of the capital stock: 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) � �	(11,243,526) (4,126,755) (3,798,833)	% (8.08) % (2.97) % (2.73)	Before the 27th of the following month Before the 27th of the following month Before the 27th of the following month	- - -		1,233,063 460,581 421,072	10.47% 3.91% 3.58%

(Continued)

420

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

Name of company	Related party	Nature of relationship		Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	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 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 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 Other related parties � � � Other related parties Other related parties Parent- subsidiary Associates Parent- subsidiary Other related parties � � � Associates Parent- subsidiary Other related parties	(Sales) � � � � � � � � � � � � � � � �	(108,942) (195,470) (172,346) (555,587) (348,605) (1,850,112) (318,315) (7,525,587) (2,035,275) (565,487) (759,341) (243,759) (349,405) (115,062) (148,837) (567,137) (790,159)	% (0.08) % (0.14) % (0.12) % (0.40) % (0.25) % (1.33) % (0.23) % (5.41) % (1.46) % (1.22) % (1.64) % (0.53) % (0.76) % (0.25) % (36.52) % (6.47) % (9.01)	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	- - - - - - - - - - - - - - - - -		3,171 11,739 16,717 141,287 40,748 325,011 33,905 1,209,990 426,678 45,186 85,392 17,749 54,885 19,604 - 79,244 92,674	0.03% 0.10% 0.14% 1.20% 0.35% 2.76% 0.29% 10.28% 3.62% 0.93% 1.75% 0.36% 1.13% 0.40% -% 12.27% 14.35%

(Continued)

421

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 U.S.A Co. Ltd.	Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation Formosa Heavy Industries Corp. Formosa BP Chemicals Corp. The Company Formosa Plastics U.S.A Co. Ltd.	Other related parties � Associates � Other related parties Parent- subsidiary Associates	Purchase � � � � � �	871,419 2,388,131 54,875,577 1,168,197 135,883 16,540,713 6,668,065	% 0.92 % 2.52 % 57.90 % 1.23 % 0.14 % 45.36 % 91.03	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 Before the 10th of the following month	- - - - - - -		(125,688) (290,632) (6,272,990) (1,489) (8,162) (2,319,506) (397,643)	(1.21)% (2.80)% (60.38)% (0.01)% (0.08)% (51.51)% (79.13)%	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	Ove	rdue	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.	Nan Ya Plastics Corporation Formosa Chemicals & Fiber Corporation Formosa Petrochemical Corporation Nan Ya Plastics (Guangzhou) Co., Ltd. Formosa ABS Plastics (Ningbo) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corp., U.S.A. Formosa Group Ocean Marine Corp. Fujian Fuxin Special Steel Co., Ltd Formosa Industries (Ningbo) Co., Ltd. Formosa Mitsui Advanced Chemical Co., Ltd.	Other related parties � Associates Other related parties Other related parties Parent subsidiary Associates Other related parties Associates Parent-subsidiary joint venture	1,233,063 460,581 421,072 141,287 325,011 1,209,990 426,678 4,243,086 1,997,928 1,109,516 249,039	% 9.68 % 8.15 % 8.24 % 3.83 % 5.59 % 4.72 % 4.60 - - - -	- - - - - - - - - - -		1,233,063 460,581 421,072 38,315 214,577 622,224 238,632 - - - -	- - - - - - - - - - -

(ix) Trading in derivative instruments: None.

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (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 invest	ment amount	Balance a	s of December 3	1, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Ownership	Carrying value
The Company The Company The Company The Company The Company The Company	Formosa Petrochemical Corporation Formosa Plastics Corp., U.S.A. Formosa Heavy Industries Corp. Sky Dragon Investment Limited Formosa Plastics Corp. (Cayman Ltd.) Mai Liao Power Corp.	Taiwan U.S.A Taiwan Samoa Cayman Taiwan	Petrochemicals Chemicals Mechanical equipment Investment Investment Electricity	30,144,951 5,614,024 2,498,463 13,221,416 27,218,686 5,985,531	30,144,951 5,614,024 2,498,463 13,221,416 22,197,301 5,985,531	2,720,549 70 651,828 425,800 77 601,733	% 28.56 % 22.66 % 32.92 % 50.00 % 100.00 % 24.94	87,874,676 61,291,795 7,017,408 4,723,141 42,887,695 12,415,495	7,429,610 3,043,746 566,338 (1,676,661) 3,287,192 6,702,012	2,202,241 375,906 179,148 (838,331) 3,287,192 1,671,622	Note, Note 1 Note, Note 1 Note, Note 1 Note, Note 1 Note, Note 1, Note 2 Note, Note 1

(Continued)

422

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original invest	ment amount	Balance a	s of December 3	1, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	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 Formosa Plastics Corp. (Cayman Ltd.) Formosa Industries Corporation Formosa Industries Corporation	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 Formosa Plastics International (Cayman) Limited. Japan Tokuyama Co., Ltd. Formosa Industries (Hong Kong) Limited Formosa Olefins, L.L.C. Lolita Packaging, L.L.C.	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Cayman U.S.A Cayman Taiwan Hong Kong U.S.A U.S.A	Electronics manufacture Transportation Transportation Construction Development of land Artificial fiber Automobile Consulting service Chemical industry Mining industry Environmental industry Construction Investment Chemicals Investment Semiconductor Reinvestment Olefins Transportation	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 (USD-) - (USD501,902) 15,801,889 (USD108,075) 3,527,939 306,478	1,709,987 110,664 33,330 57,000 54,034 501,752 270,442 341 100,000 7,415,940 417,145 100,000 377 7,245,610 18,784,620 - (USD- - (USD334,902 10,780,504 (USD108,075 3,527,939 306,478	112,708 6,566 4,698 1,200 1,306 50 27,044 33 24 741,594 41,714 60,000 13 5 - ) 12,500 ) - ) - - -	% 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	5,912,495 1,136,716 68,246 20,159 18,098 1,288,207 259,334 3,029 1,210,071 6,169,287 227,327 568,402 649,229 10,763,605 - 124,934 (USD-) - ( USD1,502,355 ) 42,829,135 (USD101,470) 2,892,722 108,322	1,307,911 308,015 (38,443) 1,730 104 109,459 173,301 1,176 383,229 74,886 5,812 (21,358) 125,886 (847,788) - (132) (USD-) - (USD112,580) 3,328,723 (USD90,525) 2,676,591 (155,709)	380,076 102,671 (12,813) 497 47 54,729 77,983 388 191,614 18,722 1,415 (7,119) 31,472 (847,788) - (66) (USD-) - (USD112,580) 3,328,723 (USD29,873) 883,275 (59,170)	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 2 Note, Note 1, Note 2 Note, Note 1, Note 2 Note 1 Note, Note 1, Note2 Note 1, Note 2 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, 2020, was 28.5080 to 1. The average exchange rate of New Taiwan dollars to US dollars for the year ended December 31, 2020, was 29.5675 to 1.

(c) Information on investment in mainland China:
(i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products o	Total amount f paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2020	Investme	nt flows A Inflow	ccumulated outflo of investment from Taiwan as of December 31, 2020	w Net income (losses) of the investee	Percentage of ownership	Book value	Highest Percentage of ownership	Accumulated remittance of earnings in current period
					Outflow
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)	21,907,370 (USD678,270) 66,137 (USD2,000) 122,098 (USD4,100) 13,221,416 (USD425,800) 99,993 (USD3,060)	5,021,385 (USD167,000) - - - -	- - - - -	26,928,75 (USD845,27 66,13 (USD2,00 122,09 (USD4,10 13,221,41 (USD425,80 99,99 (USD3,06	5 0) 3,285,792 (USD111,128) 7 0) 42,932 (USD1,452) 8 0) (82,850) (USD-2,802) 6 0) (2,874,463) (USD-97,217) 3 0) (163,408) (USD-5,527)	100.00% 100.00% 50.00% 29.16% 16.11%	3,285,792 (USD111,128) 42,932 (USD1,452) (41,425) (USD-1,401) (838,319) (USD-28,353) -	42,429,791 (USD1,488,347) 399,344 (USD14,008) (25,767) (USD-904) 4,722,707 (USD165,663) 108,083 (USD3,791)	- - - - -

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.

(Continued)

423

FORMOSA PLASTICS CORPORATION

Notes to the Financial Statements

(ii) Limitation on investment in Mainland China:

itation on investment in Mainland China:
Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment (Note 2)
40,438,399 (USD1,280,230)	40,602,319 (USD1,424,243)	-

Note: The exchange rate of New Taiwan dollars to US dollars on December 31, 2020, was 28.508 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
Chang Gung Medical Foundation	601,011,035	% 9.44
Formosa Chemicals and Fiber Corporation	486,978,693	% 7.64
The business department of Standard Chartered International Commercial Bank is entrusted with the custody of Credit Suisse Bank-Credit Suisse Singapore Branch investment account	398,731,554	% 6.26

(i) The information on major shareholders, which is provided by the Taiwan Depository & Clearing Corporation, summarized the shareholders who held over 5% of total non-physical common stocks and preferred stocks (including treasury stocks) on the last business date of each quarter. The registered non-physical stocks may be different from the capital stocks disclosed in the financial statement due to different calculations basis.
(ii) If shares are entrusted, the above information regarding such shares will be revealed by each trustors of individual trust account, The shareholders holding more than 10% of the total shares of the company should declare insider’ s equity according to Securities and Exchange Act. The numbers of the shares declared by the insider include the shares of the trust assets which the insider has discretion over use. For details of the insider’s equity announcement please refer to the TWSE website.

(14) Segment information:

Please refer to the consolidated financial statements in 2020.

(Continued)

424

Formosa Plastics Corporation

Chairman : Jason Lin

AI assistant

FPC — Annual Report 2020

51762_rns_2021-08-03_2f6740a9-7da5-4781-bdf1-5eb022797ab5.pdf

Formosa Plastics Corporation

2020 Annual Report

Notice to readers

Contents

I. Letter to Shareholders

1. Production and Sales volume in 2020 (including consolidated subsidiaries and inter-company internal turnover)

2. Business performance:

II.Company Profile

2.1 Date of Incorporation: November 5, 1954

2.2 Business Philosophy and Vision

2.3 Milestone

Table 1: Major shareholders of the institutional shareholders

Table 2: Major shareholders of the Company’s major institutional

3.4 Implementation of Corporate Governance

3.4.1 Board of Directors’ Meeting Status

3.4.3 Audit Committee Meeting Status

Note:

Formosa Plastics Corporation

Code of Ethical Conduct for Directors and Managers

Chapter 1 General Principles

Chapter 2 Content of the Code

Chapter 3 Procedures for Exemption

Chapter 4 Method of Information Disclosure

Chapter 5 Additional Provision

3.4.10 Implementation Status of the Internal Control System

1. Internal control system statement

Formosa Plastics Corporation Internal Control System Statement

1. Shareholders’ Meeting on June 10, 2020

Proposal 2

(4) Execution of key resolution

2. Board of Directors Meeting on March 17, 2020

Proposal 6

Proposal 7

3. Board of Directors Meeting on May 13, 2020

Proposal 4

4. Board of Directors Meeting on June 10, 2020

5. Board of Directors Meeting on August 12, 2020

Proposal 5 Proposal: Transaction with related parties.

Proposal 6

6. Board of Directors Meeting on September 25, 2020

7. Board of Directors Meeting on November 11, 2020

Proposal 2 Proposal: Transaction with related parties.

Proposal 3

8. Board of Directors Meeting on December 17, 2020

Proposal 5

Proposal 6

Proposal 7

9. Board of Directors Meeting on March 17, 2021

3.5 Information Regarding the Company’s Audit Fee

3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

3.8.2 Information of Shareholdin Transfer: None. g

3.8.3 Information of Shareholdin Pled e: None. g g

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

in the Two Most Recent Years Unit: NT$ ； per share

4.1.6 Dividend Policy and Implementation Status

4.1.9 Share Repurchases by the Company: None.

4.2 Issuance of Cor orate Bonds p

4.3 Issuance of Preferred Stock: None.

4.7 The Implementation of the Company’s Capital Allocation Plans

4.7.2 The Status of Implementation

V. Operational Highlights

5.1 Business Activities

5.1.1 Scope of Business

2. Revenue distribution

5.1.2 Industry Overview

5.1.3 Research and Development (R&D)

1. R&D expenditures (including R&D and improvement):

5.1.4 Long-term and Short-term Business Development Plans

5.2.2 Main applications and production process of main products

2.Caustic Soda

 Main applications:

 Main applications:

6.NBA

 Main applications:

7.HDPE

 Main applications:

 Production process:

FPC Annual Report 2020