FPC — Regulatory Filings 2016

Nov 14, 2016

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2016 (With Independent Accountants' Review Report Thereon)

Reviewed only, not audited in accordance with generally accepted auditing standards as of September 30, 2015 and 2016 FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

SEPTEMBER 30, 2015, DECEMBER 31, 2015 AND SEPTEMBER 30, 2016 (Expressed in thousands of New Taiwan Dollars)

Sep ber Dec ber 31 tem em , 30, 20 15 201 5		Sep ber tem 30, 20 16

	Sep ber tem 30, 20 15	31 Dec ber em , 201 5	Sep ber tem 30, 20 16		Sep ber tem 30, 20 15	Dec ber 31 em , 201 5	Sep ber tem 30, 20 16
A ts sse				Lia bili ties ity d E an qu
Cu nt a ts: rre sse				Cu nt l iab iliti : rre es
Cas h a nd h e iva len ts ( e 6 ( 1) ) not cas qu	\$ 26, 810 ,12 4	19,7 56, 722	16,2 23, 800	Sho bo ing nd s (n s 6( 7) a 8) rt-t ote erm rrow	\$ 17,7 46, 611	12,3 99, 653	18,6 18,4 70
aila ble -for -sal e fi cial Av nt ( e 6 ( 2) ) ets not nan ass -c urre	65, 410 ,93 1	79, 288 ,30 0	84, 472 ,50 1	Sho and bil ls p ble (no ( 8) ) te 6 rt-t tes erm no aya	-	-	7,4 610 99,
No eiv abl e (n 6( 3) ) tes ote rec	1,74 1,90 6	1,9 14,7 85	1,10 9,1 51	Acc ble ts p oun aya	1,99 27 6,6	4,3 45, 240	2,1 37, 386
ceiv abl A et ( e 6 ( 3) ) unt not cco s re e, n	7,0 37, 200	5,9 56, 527	6,3 77, 588	Acc ble elat ed p arti es ( e 7 ) ts p not oun aya -r	6,2 94, 558	6,6 49, 234	5,2 61, 247
Acc iva ble elat ed p arti es ( ( 3) a nd 7) es 6 ts r not oun ece -r	3,8 92, 038	3,5 29, 159	2,7 74, 861	Oth ble er p aya s	4,8 02, 662	4,9 66, 775	2,2 31, 566
Oth iva ble s (n 6( 3) ) ote er r ece	1,22 1,24 1	1,09 9,3 64	622 ,98 8	Oth ble rela ted rtie s (n 7) ote er p aya s- pa	3,0 09, 414	2,8 01, 830	1,4 85, 883
Oth iva ble rela ted rtie s (n s 6( 3) a nd 7) ote er r ece s- pa	20, 007 ,78 1	15, 815 ,49 6	18,9 02, 132	Cur rtio f bo nds ble (no te 6 ( 10) ) t po ren n o pa ya	13,5 36, 885	14,6 35, 089	14,6 41, 348
orie s (n 6( 4) ) Inv ent ote	18,4 40, 697	16,6 96, 688	16,9 98, 946	rtio f lo de bts nd Cur (no 6( 9) a 8) t po term tes ren n o ng-	3,6 30, 090	1,62 7,2 54	5,4 29, 028
Oth nt a ts er c urre sse	5,6 60, 311	4,5 01, 464	4,0 47, 294	Oth nt l iab iliti es ( ) e 7 not er c urre	12,9 272 79,	12,0 38, 977	13,9 328 69,
Tot al c ent ets urr ass	150 ,22 2,2 29	148 ,55 8,5 05	151 ,52 9,2 61	Tot al c lia bili ties ent urr	63, 996 ,11 9	59, 464 ,05 2	71, 273 ,86 6
No ent ets : n-c urr ass				lia bili ties No ent : n-c urr
Av aila ble -for -sal e fi cial t (n 6( 2) ) ets ote nan ass -n on- cur ren	4,8 34, 937	-	-	Bon ds p ble (no te 6 ( 10) ) aya	43, 393 ,93 8	37, 303 ,24 2	28, 762 ,91 7
Fin ial ried t (n s 6( 5) a nd 7) ets at t- ote anc ass car cos non -cu rren	2,4 62, 768	2,5 34, 190	17,5 62, 973	Lon deb ts ( es 6 ( 9) a nd 8) g-te not rm	22, 392 ,56 8	18,0 97, 544	16,2 93, 338
d fo ing uity tho d (n s 6( 5), nd 8) Inv 7 a estm ent nte ote s ac cou r us eq me	171 ,42 7,0 25	180 ,27 4,4 82	168 ,12 8,2 84	Def d ta x li abi litie erre s	11,2 46, 254	11,5 54, 480	12, 198 ,60 6
lan d e ipm (no 6(6 ), 7 d 8 ) Pro ty, t an ent tes per p qu an	81, 586 ,95 5	81, 461 ,32 9	74, 707 ,80 6	de fine d b fit l iab iliti nt l iab iliti Net ene es-n onc urre es	8,5 80, 758	8,8 233 76,	43, 6,7 766
Inta ible ets ng ass	550 ,16 7	586 ,85 7	506 ,18 0	Oth er l iab iliti es ( ( 5) ) e 6 not	361 ,41 0	770 ,59 5	477 ,30 4
Def d ta ts erre x a sse	1,59 8,5 35	1,63 7,8 19	1,34 0,4 41	t lia bili ties Tot al n on- cur ren	85, 974 ,92 8	602 ,09 4 76,	64, 475 ,93 1
Oth s (n s 6( 3), 7 an d 8 ) sset ote er a	9,5 95, 519	8,4 47, 868	7,8 70, 858	iab iliti Tot al l es	149 ,97 1,04 7	136 ,06 6,1 46	135 ,74 9,7 97
Tot al n t as sets on- cur ren	272 ,05 5,9 06	274 ,94 2,5 45	270 ,11 6,5 42	Eq uity (no 6( 12) ( 13) ): tes
				ock Com n st mo	657 63, ,40 8	657 63, ,40 8	657 63, ,40 8
				Cap ital lus sur p	11,4 43, 725	11,4 43, 715	11,4 43, 654
				Ret ain ed nin ear gs
				Leg al r ese rve	45, 138 ,54 9	45, 138 ,54 9	48, 226 ,27 6
				Spe cial res erv e	43, 706 ,91 6	43, 706 ,91 6	46, 721 ,32 4
				riat ed r etai ned nin Un app rop ear gs	53, 851 ,31 1	58, 804 ,13 1	57, 122 ,07 0
				al r etai ned nin Tot ear gs	142 ,69 6,7 76	147 ,64 9,5 96	152 ,06 70 9,6
				Oth s of uity ent er c om pon eq	54, 509 ,17 9	64, 684 ,18 5	58, 725 ,27 4
				ity Tot al e qu	272 ,30 7,0 88	287 ,43 4,9 04	285 ,89 6,0 06
Tot al a ts sse	\$ 4 22, 278 135 ,	4 23, 501 050 ,	421 645 803 , ,	Tot al L iab iliti nd Eq uity es a	\$ 422 278 135 , ,	423 501 050 , ,	421 645 803 , ,

Reviewed only, not audited in accordance with generally accepted auditing standards FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2015 AND 2016 (Expressed in thousands of New Taiwan Dollars, except for earnings per share)

	For the three-month periods ended September 30,		For the nine-month periods ended September 30,
	2015	2016	2015	2016
Operating revenues (notes 6(15) and 7)	\$ 46,995,229	42,144,696	145,699,706	129,726,099
Operating costs (notes 6(4)(11)(16) and 7)	41,560,996	37,572,809	128,635,155	114,096,015
Gross profit	5,434,233	4,571,887	17,064,551	15,630,084
Operating expenses (notes 6(3)(11)(16) and 7):
Selling expenses	1,325,871	1,250,219	4,076,322	3,904,199
Administrative expenses	1,126,933	1,408,424	3,278,251	3,614,968
Research and development expenses	209,962	205,299	605,000	559,235
Total operating expenses	2,662,766	2,863,942	7,959,573	8,078,402
Operating income	2,771,467	1,707,945	9,104,978	7,551,682
Non-operating income and expenses (notes 6(5)(17) and 7):
Other income	3,303,900	4,902,621	3,520,291	5,130,712
Other gains and losses	1,633,304	(749,945)	1,490,772	(1,901,006)
Finance costs	(326,989)	(350,613)	(1,021,720)	(1,006,670)
Recognized share of profit of associates and joint ventures accounted for using equity method, net	4,363,623	6,618,516	15,332,248	20,661,074
Total non-operating income and expenses	8,973,838	10,420,579	19,321,591	22,884,110
Income before income tax	11,745,305	12,128,524	28,426,569	30,435,792
Less: income tax expense (note 6(12))	1,215,226	733,143	3,391,698	3,099,051
Net income	10,530,079	11,395,381	25,034,871	27,336,741
Other comprehensive income (loss) (notes 6(12)(13)):
Items that could be reclassified subsequently to profit or loss
Exchange differences arising on translation foreign operations	4,845,686	(3,189,107)	2,863,694	(6,428,228)
Unrealized gains on available-for-sale financial assets	(20,217,676)	1,256,390	(24,291,149)	265,951
Share of other comprehensive income of associates and joint ventures accounted for using equity method	(2,760,473)	27,818	(5,210,061)	(587,233)
Income tax expense related to components of other
comprehensive income	(833,342)	434,138	(584,455)	790,599
Total items that could be reclassified subsequently to loss	(18,965,805)	(1,470,761)	(27,221,971)	(5,958,911)
Total comprehensive income (loss)	\$ (8,435,726)	9,924,620	(2,187,100)	21,377,830
Basic earnings per share (note 6(14))
-before income tax	\$ 1.85	1.90	4.47	4.78
-after income tax	\$ 1.65	1.79	3.93	4.29

Reviewed only, not audited in accordance with generally accepted auditing standards FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2015 AND 2016 (Expressed in thousands of New Taiwan Dollars)

				Eq uity At trib uta	ble Ow s of the to ner	Pa t ren
				ain nin Ret ed Ear gs			Oth ers
	Co ck sto mm on	Ca ital lus p su rp	Leg al r ese rve	Spe cia l re ser ve	Un ria ted app rop ain nin ed ret ear gs	Exc han ge diff ere nce on nsl atio f tra n o for eig atio n o per ns	lize Un d rea ins ga on ilab le-f sale ava or- f ina nci al a ts sse	Ga ins ( es) loss effe ctiv on e tion of por sh f low he dge ca s	ity Tot al E qu
Bal s of Ja 1, 201 5 anc e a nua ry	\$ 63, 657 ,40 8	11,2 77, 988	43, 339 ,20 5	39, 078 ,21 8	46, 066 ,24 1	5,4 16,7 84	76, 317 ,46 2	( 3,0 96)	285 ,15 0,2 10
inc e fo r th erio d Net om e p	-	-	-	-	25, 034 ,87 1	-	-	-	25, 034 ,87 1
Oth hen sive inc e ( los s) for the riod t af ter tax er c om pre om pe , ne	-	-	-	-	-	2,2 79, 239	( 29, 525 ,32 3)	24, 113	( 27, 221 ,97 1)
Tot al c hen sive inc e ( los s) for the riod om pre om pe	-	-	-	-	25, 034 ,78 1	2,2 79, 239	( 29, 525 ,32 3)	24, 113	( 2,1 87, 100 )
Leg al r ese rve	-	-	1,79 9,3 44	-	( 1,79 9,3 44)	-	-	-	-
Spe cial res erv e	-	-	-	4,6 28, 698	( 4,6 28, 698 )	-	-	-	-
Cas h d ivid end s	-	-	-	-	( 10, 821 ,75 9)	-	-	-	( 10, 821 ,75 9)
Cha s in ital lus nge cap sur p
Cas h d ivid end s	-	165 ,90 4	-	-	-	-	-	-	165 ,90 4
Oth er	-	( 167	) -	-	-	-	-	-	( 167 )
s of Se er 3 0, 201 Bal mb 5 pte anc e a	\$ 63, 657 408 ,	11, 443 725 ,	4 138 549 5, ,	43, 706 916 ,	53, 851 311 ,	696 023 7, ,	46, 792 139 ,	21, 017	272 307 088 , ,
Bal s of Ja 1, 201 6 anc e a nua ry	\$ 63, 657 ,40 8	11,4 43, 715	45, 138 ,54 9	43, 706 ,91 6	58, 804 ,13 1	7,1 82, 538	57, 419 ,37 1	82, 276	287 ,43 4,9 04
inc e fo r th erio d Net om e p	-	-	-	-	27, 336 ,74 1	-	-	-	27, 336 ,74 1
Oth hen sive inc e ( los s) for the riod t of inc e ta er c om pre om pe , ne om x	-	-	-	-	-	( 5,6 37, 629 )	( 274 3) ,66	( 46, 619 )	( 5,9 58, 911 )
al c hen sive inc e ( los s) for the riod Tot om pre om pe	-	-	-	-	27, 336 ,74 1	( 5,6 37, 629 )	( 274 3) ,66	( 46, 619 )	21, 377 ,83 0
Leg al r ese rve	-	-	3,0 87, 727	-	( 3,0 87, 727 )	-	-	-	-
Spe cial res erv e	-	-	-	3,0 14,4 08	( 3,0 14,4 08)	-	-	-	-
h d ivid end Cas s	-	-	-	-	( 22, 916 ,66 7)	-	-	-	( 22, 916 ,66 7)
Cha s in ital lus nge cap sur p
Oth er	-	(6 1)	-	-	-	-	-	-	(6 1)
Bal s of Se mb er 3 0, 201 6 pte anc e a	\$ 63, 657 408 ,	11, 443 654 ,	4 8, 226 276 ,	46, 721 324 ,	57, 122 070 ,	1, 544 909 ,	57, 144 708 ,	35, 657	285 896 006 , ,

See accompanying notes to consolidated financial statements.

Reviewed only, not audited in accordance with generally accepted auditing standards FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2015 AND 2016 (Expressed in thousands of New Taiwan Dollars)

	For the nine-month periods	ended September 30,
	2015	2016
Cash flows from operating activities:
Income before income tax Adjustments for:	\$ 28,426,569	30,435,792
Depreciation expense	5,744,791	6,295,465
Amortization expense	487,479	454,725
Provision for bad debt expense Interest expenses	121 1,021,720	693 1,006,670
Interest income	(279,719)	(247,812)
Share of profit of associates and joint ventures accounted for using equity method	(15,332,248)	(20,661,074)
Gain (loss) on disposal of property, plant and equipment Gain on disposal of investments	(7,173) (160,655)	140 -
Unrealized foreign exchange gain	(103,389)	254,392
Incomes and expenses not affecting cash flows	(8,629,073)	(12,896,801)
Changes in operating assets and liabilities :
Changes in operating assets : Notes receivable	(715,088)	805,634
Accounts receivable	569,847	(475,074)
Accounts receivable-related parties	333,956	754,298
Other receivables Other receivables-related parties	(152,148) 4,490,973	(672,096) 5,022,354
Inventories	4,112,979	(74,938)
Other current assets	(577,590)	454,170
Total changes in operating assets	8,062,929	5,814,348
Changes in operating liabilities : Accounts payable	(3,458,348)	(2,207,854)
Accounts payable-related parties	(1,064,081)	(1,387,987)
Other payables	1,035,554	20,170
Other payables-related parties	1,131,614	(407,506)
Accrued expense and other current liabilities Net defined benefit liabilities	3,225,601 (404,378)	2,685,468 (2,132,467)
Total changes in operating liabilities	462,962	(3,430,176)
Total changes in operating assets and liabilities	8,528,891	2,384,172
Total adjustments	(100,182)	(10,512,629)
Cash generated from operations:	28,326,387	19,923,163
Interest received Dividends received	262,787 4,143,477	228,161 13,168,123
Interest paid	(893,891)	(1,761,787)
Income tax paid	(48,051)	(3,671,722)
Net cash provided by operating activities	31,790,709	27,885,938
Cash flows from investing activities:
Acquisition of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets	(3,500,000) 3,809549	(4,918,250) -
Acquisition of financial assets carried at cost-non-current	(25,000)	(29,223)
Acquisition of investment accounted for using equity method	(2,349,150)	(85,000)
Acquisition of property, plant and equipment	(2,851,847)	(2,323,056)
Proceeds from disposal of property, plant and equipment Decrease (increase) in due from related parties (listed under other receivables-related parties)	29,498 5,227,657	4,471 (8,119,741)
Decrease in other assets	945,098	595,078
Net cash provided by (used in) investing activities	1,285,805	(14,875,721)
Cash flows from financing activities:
Increase in short-term borrowings	92,682,389	152,246,901
Decrease in short-term borrowings Increase in short-term notes and bills payable	(88,707,880) -	(146,026,273) 7,499,610
Repayments of bonds payable	(3,000,000)	(8,550,000)
Proceeds from long-term debts	4,010,000	3,800,000
Repayments of long-term debts Increase (decrease) in due to related parties (recognized as other payables-related parties)	(7,304,287) 940,641	(1,331,877) (908,441)
(Decrease) increase in other liabilities	(111,885)	(275,949)
Cash dividends paid	(10,340,505)	(23,367,333)
Net cash used in financing activities	(11,831,227)	(16,913,362)
Effect of foreign currency exchange translation	172,012	370,223
Increase in cash and cash equivalents	21,417,299	(3,532,922)
Cash and cash equivalents at beginning of period	5,392,825	19,756,722
Cash and cash equivalents at end of period	\$ 26,810,124	16,223,800

Notes to consolidated financial statements as of September 30, 2015 and 2016 are reviewed only, not audited in accordance with generally accepted auditing standards FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2016 (All amounts are expressed in thousands of New Taiwan Dollars, except for per share information or unless otherwise specified)

1. Organization and Principal Activities

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") engage 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 consolidated financial statements as of and for the nine-month period ended September 30, 2016 were approved and authorized for issue by the board of directors on November 8, 2016.

3. New and Revised Standards and Interpretations

Impact of the International Financial Reporting Standards ("IFRSs") endorsed by the Financial Supervisory Commissions R.O.C. ("FSC") but not yet in effect

According to the Ruling No. 1050026834 issued on July 18, 2016 by the FSC, public entities are required to conform to the IFRSs which were issued by the International Accounting Standards Board (IASB) before January 1, 2016, and were endorsed by the FSC on January 1, 2017 (excluding IFRS 9 "Financial Instruments", IFRS 15 "Revenue from Contracts with Customers", and others which have yet to be approved by the FSC in order for them to take effect) in preparing their financial statements. The related new standards, interpretations and amendments are as follows:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 10, IFRS 12 and IAS 28 "Investment Entities: Applying	January 1, 2016
the Consolidation Exception"
Amendments to IFRS 11 "Accounting for Acquisitions of Interests in Joint	January 1, 2016
Operations"
IFRS 14 "Regulatory Deferral Accounts"	January 1, 2016
Amendment to IAS 1 "Disclosure Initiative"	January 1, 2016
Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of	January 1, 2016
Depreciation and Amortization"

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants"	January 1, 2016
Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions"	July 1, 2014
Amendment to IAS 27 "Equity Method in Separate Financial Statements"	January 1, 2016
Amendments to IAS 36 "Recoverable Amount Disclosures for Non-Financial Assets"	January 1, 2014
Amendments to IAS 39 "Novation of Derivatives and Continuation of Hedge Accounting"	January 1, 2014
Annual improvements cycles 2010-2012 and 2011-2013	July 1, 2014
Annual improvements cycle 2012-2014	January 1, 2016
IFRIC 21 "Levies"	January 1, 2014

The Group assessed that the initial application of the above IFRSs would not have any material impact on its consolidated financial statements.

Newly released or amended standards and interpretations not yet endorsed by the FSC

A summary of the new standards and amendments issued by the IASB but not yet endorsed by the FSC as of the end of reporting date is as follows:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
IFRS 9 "Financial Instruments"	January 1, 2018
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets	Effective date to be
Between an Investor and Its Associate or Joint Venture"	determined by IASB
IFRS 15 "Revenue from Contracts with Customers"	January 1, 2018
IFRS 16 "Leases"	January 1, 2019
Amendment to IFRS 2 "Clarifications of classification and measurement of share-based payment transactions"	January 1, 2018
Amendment to IFRS 15 "Clarifications of IFRS 15"	January 1, 2018
Amendment to IAS 7 "Disclosure Initiative"	January 1, 2017
Amendment to IAS 12 "Recognition of Deferred Tax Assets for Unrealized	January 1, 2017
Losses"

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Group is still currently determining the potential impact of the standards listed below:

Issuance / Release Dates	Standards or Interpretations	Content of amendment
May 28, 2014 April 12, 2016	IFRS 15 "Revenue from Contracts with Customers"	The new standard provides a single model for determining whether an entity recognizes revenue in accordance with the method, timing and amount by applying the five-step model. IFRS 15 replaces IAS 11"Construction Contracts", IAS 18 "Revenue", and the relevant interpretations.
		Final amendments issued on April 12, 2016 clarify how to (i) identify performance obligations in a contract; (ii) determine whether a company is a principal or an agent; (iii) account for a license for intellectual property (IP); and (iv) apply the transition requirements.
November 19, 2013 July 24, 2014	IFRS 9 "Financial Instruments"	The standard will replace IAS 39 "Financial Instruments: Recognition and Measurement", and the main amendments are as follows:  Classification and measurement: Financial assets are measured at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity's business model for managing the financial assets and the financial assets' contractual cash flow characteristics. Financial liabilities are measured at amortized cost or fair value through profit or loss. Furthermore, there is a requirement that "own credit risk" adjustments be measured at fair value through other comprehensive income.  Impairment: The expected credit loss model is used to evaluate impairment.  Hedge accounting: Hedge accounting is more closely aligned with risk management activities, and hedge effectiveness is measured based on the hedge ratio.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Issuance / Release Dates	Standards or Interpretations	Content of amendment
January 13, 2016	IFRS 16 "Leases"	The new standard of accounting for lease is amended as follows:  For a contract that is, or contains, a lease, the lessee shall recognize a right-of-use asset and a lease liability in the balance sheet. In the statement of profit or loss and other comprehensive income, a lessee shall present the interest expense on the lease liability separately from the depreciation charge for the right-of use asset during the lease term.  A lessor classifies a lease as either a finance lease or an operating lease, and therefore, the accounting remains similar to IAS 17.

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

4. Summary of Significant Accounting Policies

(1) Statement of Compliance

The accompanying consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to the Regulations) and guidelines of IAS 34 "Interim Financial Reporting" which are endorsed by the FSC. These consolidated financial statements are not required to include all disclosures required for full annual financial statements under the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations as endorsed by the FSC (hereinafter referred to as IFRS as endorsed by the FSC).

Except as described below, the significant accounting policies adopted in the accompanying consolidated financial statements are the same as the consolidated financial statements as of and for the year ended December 31, 2015. Please refer to Note 4 of the financial statements as of and for the year ended December 31, 2015 for the detail disclosures of significant accounting policies.

(2) Basis of Consolidation

Principle of preparing consolidated financial statements are the same as the consolidated financial statements as of and for the year ended December 31, 2015. Please refer to Note 4 of the consolidated financial statements as of and for the year ended December 31, 2015.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Subsidiary included in the consolidated financial statements is as follows:

				Percentage of Ownership (%)
Investor	Name of subsidiaries	Business activity	September 30,2015	December 31,2015	September 30,2016	Note
The Company	Formosa Plastics Corp. (Cayman Ltd).	Investment	100%	100%	100%	-
The Company	Formosa Industries Corporation	High Density Polyethylene	-	100%	100%	(Note)
The Company	Formosa Plastics International (Cayman) Limited	Investment	-	-	100%	(Note)
Formosa Plastics Corp. (Cayman Ltd.)	Formosa Industries (Hong Kong) Limited	Investment	100%	100%	100%	-
Formosa Industries (Hong Kong) Limited	Formosa Industries (Ningbo) Co., Ltd.	Plastics	100%	100%	100%	-
Formosa Industries (Hong Kong) Limited	Formosa Acrylic Esters (Ningbo) Co., Ltd.	Acrylic Esters	100%	100%	100%	-
Formosa Industries (Hong Kong) Limited	Formosa Polyethylene (Ningbo) Co., Ltd.	Polyethylene	100%	100%	100%	-
Formosa Industries (Hong Kong) Limited	Formosa Polypropylene (Ningbo) Co., Ltd.	Polypropylene	100%	100%	100%	-
Formosa Industries (Hong Kong) Limited	Formosa Super Absorbent Polymer (Ningbo) Co., Ltd.	Absorbent polymer	100%	100%	100%	-
Formosa Industries (Hong Kong) Limited	Formosa electronic (Ningbo) Co., Ltd.	Electronics	100%	100%	100%	-

Note: The subsidiaries' financial statements were not reviewed for the nine-month period ended September 30, 2016.

1. Subsidiary not included in the consolidated financial statements: None.

(3) Income Tax

The Group evaluates and discloses interim period income tax expense in accordance with paragraph B12 of IAS 34 "Interim Financial Reporting".

Income tax expense is the best estimated by multiplying the pretax income for the interim reporting period by the effective annual tax rate as forecasted by the management, and is recognized as current tax expense.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled and recognized directly in equity or other comprehensive income as tax expense.

(4) 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Critical Accounting Judgments and Key Sources of Estimation Uncertainly

The consolidated financial statements are prepared in conformity with IAS 34 "Interim financial reporting" as endorsed by the FSC, under which, management 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.

In these consolidated financial statements, judgments and key sources of estimation uncertainty used by management in the application of critical accounting policies are expected to be consistent with those of Note 5 of the consolidated financial statements as of and for the year ended December 31, 2015.

6. Significant Accounts

Except as described below, the description of significant accounts in the accompanying consolidated financial statements is not materially different from the consolidated financial statements as of and for the year ended December 31, 2015. Please refer to Note 6 of the financial statements as of and for the year ended December 31, 2015 for the detailed disclosures of these significant accounts.

(1) Cash and Cash Equivalents

	September 30, 2015	December 31, 2015	September30 2016
Cash on hand	\$ 477	315	314
Bank deposit	10,812,431	3,572,021	3,726,384
Time deposits	15,997,216	16,184,386	12,497,102
	\$ 26,810,124	19,756,722	16,223,800
(2) Available-for-sale Financial Assets	September 30, 2015	December 31, 2015	September30, 2016
Publicly traded investment:
Listed stocks	\$ 70,245,868	79,288,300	79,748,100
Unpublicly traded investment:
Private fund	-	-	4,724,401

(Continued)

\$ 70,245,868 79,288,300 84,472,501

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) Notes Receivable, Accounts Receivable and Other Receivables

	September 30, 2015	December 31, 2015	September30, 2016
Notes receivable	\$ 1,741,906	1,914,785	1,109,151
Accounts receivable (including related parties)	10,934,336	9,489,427	9,156,883
Other receivables-current (including related parties)	21,229,022	16,914,860	19,525,120
Other receivables-non-current (listed under other assets)	485,859	296,866	3,962
Less : allowance for doubtful receivables	(5,098)	(3,741)	(4,434)
	\$ 34,386,025	28,612,197	29,790,682

Aging analysis of notes receivable, accounts receivable and other receivables:

			Past due but not impaired
	Neither past due nor impaired	Within 30 days	31-60 days	Over 61 days	Total
September 30, 2015	\$ 34,366,657	19,364	4	-	34,386,025
December 31, 2015 September 30, 2015	28,554,175 29,749,059	55,257 34,227	503 1,439	2,262 5,957	28,612,197 29,790,682

Movements of the allowance for doubtful receivables were as follows:

	For the nine-month periods	ended September 30,
	2015	2016
Balance, beginning of period	\$ 4,977	3,741
Provision of impairment	772	1,496
Reversal of impairment	(651)	(803)
Balance, end of period	\$ 5,098	4,434

The terms of sales made by the Group were net 30~90 days. Based on historical default rates, the Group recognizes 0.1% allowance for impairment of uncollectible accounts receivable.

(4) Inventories

	September 30, 2015	December 31, 2015	September 30, 2016
Finished goods	\$ 10,837,890	9,264,696	9,171,540
Work in process	1,906,919	1,807,412	1,896,076
Raw materials	3,188,966	2,656,831	3,341,458
Supplies	759,818	793,883	493,469
Machinery and accessories in process	1,711,112	1,747,984	1,778,925
Others	35,992	425,882	317,478
Total	\$ 18,440,697	16,696,688	16,998,946

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Change of net realizable value of inventories

	For the three-month periods ended September 30			For the nine-month periods ended September 30
		2015	2016	2015	2016
Loss from devaluation of inventories	\$	252,414	64,707	214,392	-
Gain from recovery of inventories		-	-	-	(173,254)
Total	\$	252,414	64,707	214,392	(173,254)

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

(5) Investments Accounted For Using Equity Method

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

	September 30, 2015		December 31, 2015	September 30, 2016
Associates
Formosa Petrochemical Corporation	\$	71,391,111	75,919,673	79,255,962
Formosa Plastics Corp., U.S.A.		47,456,205	49,094,371	51,729,444
Formosa Heavy Industries Corp.		8,269,295	8,262,295	7,826,306
Sky Dragon Investment Limited		3,356,266	2,663,931	7,826,306
Mai Liao Power Corp.		11,249,821	11,324,458	10,891,479
Formosa Sumco Technology Corporation		5,819,821	5,848,130	5,758,609
Formosa Transportation Corp.		683,853	690,336	718,719
Formosa Fairway Corp.		79,292	81,091	78,247
Yi-Jih Development Corp.		62,422	62,526	62,684
Ya Tai Development Corp.		47,499	33,014	26,760
Formosa Automobile Corporation		-	-	-
Wha Ya Park Management Consulting
Corporation Ltd.		2,263	1,861	1,948
Su-Hua Transportation Corporation		212,395	218,155	242,494
Formosa Environmental Technology
Corporation		263,448	261,178	257,652
Formosa Resources Corporation		4,277,028	4,387,101	4,296,548
Formosa Group (Cayman) Limited		98,601	154,121	212,728
Formosa Group Investment (Cayman) Limited		15,864,917	15,817,802	-
Formosa Plastics Development Corporation
Ltd.		11,499	10,662	92,818
Formosa Olefins, L.L.C.		-	3,126,418	2,915,860
Joint ventures
Formosa Asahi Spandex Co., Ltd.		1,331,754	1,365,900	1,312,752
Formosa Daikin Advanced Chemical Co., Ltd.		825,981	831,620	861,845
Formosa Mitsui Advanced Chemical Co., Ltd.		123,554	119,839	103,129
	\$	171,427,025	180,274,482	168,128,284

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the three-month and nine-month periods ended September 30, 2015 and 2016, the Group's share of net income (loss) of associates and jointly controlled entities were as follows:

	For the three-month periods ended September 30,			For the nine-month periods ended September 30,
		2015	2016	2015	2016
Associates
Formosa Petrochemical Corporation	\$	2,594,959	4,760,061	9,932,732	15,057,825
Formosa Plastics Corp., U.S.A.		1,558,946	1,714,003	4,638,733	5,270,401
Formosa Heavy Industries Corp.		254,543	2,224	485,297	(57,929)
Sky Dragon Investment Limited		(691,708)	(245,928)	(1,285,813)	(1,024,979)
Mai Liao Power Corp.		605,026	373,183	1,508,577	1,072,615
Formosa Sumco Technology
Corporation		120,331	38,446	331,249	148,352
Formosa Transportation Corp.		7,637	5,091	31,301	28,384
Formosa Fairway Corp.		2,047	935	3,883	(2,843)
Yi-Jih Development Corp.		69	51	213	159
Ya Tai Development Corp.		169	(2,835)	(1,556)	(6,255)
Formosa Automobile Corporation		12,305	(1,119)	44,148	17,342
Wha Ya Park Management Consulting
Corporation Ltd.		53	30	150	86
Su-Hua Transportation Corporation		9,003	6,475	31,826	24,340
Formosa Environmental Technology
Corporation		(1,294)	(1,356)	(3,905)	(3,526)
Formosa Resources Corporation		(28,686)	(34,397)	(82,160)	(90,553)
Formosa Group (Cayman) Limited		33,445	(57,950)	72,181	68,897
Formosa Group Investment (Cayman)
Limited		(172,355)	-	(172,351)	-
Formosa Plastics Development
Corporation Ltd.		(1,321)	(1,065)	(3,061)	(2,844)
Formosa Ha Tinh (Cayman) Limited		-	-	(364,845)	-
Joint ventures
Formosa Asahi Spandex Co., Ltd.		47,780	32,630	139,537	112,265
Formosa Daikin Advanced Chemical Co., Ltd.		10,026	32,095	26,679	57,130
Formosa Mitsui Advanced Chemical
Co., Ltd.		2,648	(2,058)	(547)	(7,793)
	\$	4,363,623	6,618,516	15,332,248	20,661,074

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) Associates

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

			Percentage of ownership
Associates	Relationship	Registration Country	September 30, 2015	December 31, 2105	September 30, 2016
Formosa Petrochemical Corporation	Formosa Petrochemical Corporation , the main supplier of raw materials for the Company, has principal activities that consists of petroleum refining and integrated manufacture of hydrocarbon	Taiwan	28.79%	28.56%	28.56%

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

	September 30,	December 31,	September 30,
	2015	2015	2016
Formosa Petrochemical Corporation	\$ 214,741,587	214,379,262	256,275,717

The aggregated financial information of the major associate was as follows:

The financial information of Formosa Petrochemical Corporation was as follows:

2015	December 31, 2015	September 30, 2016
		240,202,278
		175,748,734
		(56,302,260)
		(81,004,323)
		278,611,219
\$ 34,662	34,688	33,210
		278,611,219
\$ \$ \$	September 30, 213,600,459 201,121,438 (59,524,006) (106,472,217) 248,725,674 248,691,012	230,637,376 194,830,098 (58,763,026) (99,980,734) 266,723,714 266,689,026

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	For the three-month periods ended September 30,		For the nine-month periods ended September 30,
	2015	2016	2015	2016
Revenue	\$ 140,207,369	128,451,229	479,217,566	393,874,901
Net income	\$ 8,966,726	16,686,479	34,781,503	52,968,128
Other comprehensive income	(8,240,100)	(480,348)	(17,730,581)	(2,939,132)
Total comprehensive income	\$ 726,626	16,206,131	17,050,922	50,028,996
Income allocated to non-controlling interest of Formosa Petrochemical Corporation	\$ 1,524	1,184	3,758	2,964
Income allocated to Formosa Petrochemical Corporation	\$ 725,102	16,204,947	17,047,164	50,026,032
			For the nine-month periods ended September 30,

	2015	2016
Beginning balance of investment in associate at January 1,	\$ 68,855,649	75,919,673
Total comprehensive income allocated to the Group	4,828,036	14,218,485
Dividend Received	(2,331,167)	(10,882,196)
Total carrying amount of equity of the major associate	71,352,518	79,255,962
Difference in capital surplus from changes in holding proportion due to
non-acquisition of newly-issued shares	38,593	-
Total carrying amount of equity of the major associate	\$ 71,391,111	79,255,962

(ii) The financial information of the minor associates of the investments accounted for using equity method was as follows:

			September 30, 2015	December 31, 2015	September 30, 2016
Total carrying amount of equity of the minor associates		\$	97,754,625	102,037,450	86,594,596
		ended September 30,	For the three-month periods		For the nine-month periods ended September 30,
		2015	2016	2015	2016
Attributable to the parent
Net income Other comprehensive income Total comprehensive income	\$ \$	1,708,210 3,710,307 5,418,517	1,795,788 (1,078,481) 717,307	5,233,847 2,630,666 7,864,513	5,441,647 (2,039,591) 3,402,056

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(c) Joint ventures

The financial information of the minor joint ventures of the investments accounted for using equity method was as follows:

		September 30, 2015	December 31, 2015	September 30, 2016
Total carrying amount of equity of the minor joint
ventures	\$	2,281,289	2,317,359	2,277,726
	For the three-month periods			For the nine-month periods
	ended September 30,		ended September 30,
	2015	2016	2015	2016
Attributable to the parent
Net income	\$ 60,454	62,667	165,669	161,602
Other comprehensive income	2,995	-	567	-
Total comprehensive income	\$ 63,449	62,667	166,236	161,602

(d) The Group, which invested in "Formosa Automobile Corporation" (an investee accounted for using the equity method) recognized the gains of \$12,305, \$(1,119), \$44,148 and \$17,342 from this investment for the three-month and nine-month periods ended September 30, 2015 and 2016, respectively. As of September 30 and December 31, 2015, and September 30, 2016, the Group's cumulative losses from this investment had already exceeded the book value of the investment by \$78,825, \$82,335 and \$64,993, respectively.

As the Group intends to support this investee company, the investments in this investee were offset against the related the accounts receivable—related parties. Since there were no accounts receivable—related parties from "Formosa Automobile Corporation" as of September 30 and December 31, 2015, and September 30, 2016, such offset resulted in the credit balances to the investments in this investee of \$78,825, \$82,335 and \$64,993, respectively, which were reclassified to other liabilities.

(e) On January 13, 2016, Formosa Group Investment (Cayman) Limited, originally owned by the Company, underwent liquidation. The ownership of Formosa Ha Tinh (Cayman) Limited was transferred to Formosa Plastics International (Cayman) Limited as consideration of the acquisition of newly issued common stock by Formosa Plastics International (Cayman) Limited. On January 29, 2016, the cash capital increased brought in external stockholders to Formosa Ha Tinh (Cayman) Limited, decreasing the ownership of the Group to 11.43% and resulting in a lack of significant influence; therefore, the securities were reclassified to financial assets carried at cost-non-current as of September 30, 2016.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• (f) On April 20, 2016, the Company participated in the capital increase by cash of Formosa Industries Corporation, the total investment amounted to US\$50,000 thousand (equivalent to NT\$1,614,250 thousand).
• (g) On April 26, 2016, the Group participated in the capital increase by cash of Formosa Plastics Development Corporation Ltd., the total investment amounted to \$85,000 thousand.
• (h) 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 September 30, and December 31, 2015 and September 30, 2016.

(6) Property, Plant and Equipment

The cost and depreciation of the property, plant and equipment of the Group as of and for the nine-month periods ended September 30, 2015 and 2016:

	Land	Building	Machinery and equipment	Other facilities	Construction in progress	Total
Cost:
Balance as of January 1, 2015 Additions Disposals Reclassification Effect of exchange rate change	\$ 6,679,420 6,830 (1,954) - -	25,987,137 5,074 (3,121) 27,909 984,212	154,812,660 76,335 (269,568) 6,234,495 138,016	5,986,397 128,890 (49,140) 81,948 6,673	22,272,129 2,634,718 - (6,958,817) 85,851	215,737,743 2,851,847 (323,783) (614,465) 1,214,752
Balance as of September 30, 2015	\$ 6,684,296	27,001,211	160,991,938	6,154,768	18,033,881	218,866,094
Balance as of January 1, 2016 Additions Disposals Reclassification Effect of exchange rate change	\$ 6,684,296 25,704 (14) - -	27,117,013 - - 13,763 615,537	166,112,089 123,237 (427,825) 9,273,501 (2,955,658)	6,144,528 100,253 (172,840) 182,477 (113,621)	14,223,054 2,073,862 - (10,421,365) (754,379)	220,280,980 2,323,056 (600,679) (951,624) (3,208,121)
Balance as of September 30, 2016	\$ 6,709,986	27,746,313	172,125,344	6,140,797	5,121,172	217,843,612
Accumulated depreciation:
Balance as of January 1, 2015 Depreciation for the period Disposals Reclassification Effect of exchange rate change	\$ - - - - -	12,178,285 675,394 (3,121) - 7,839	115,117,081 4,827,096 (251,888) (33) 82,366	4,444,750 242,301 (46,449) 434 5,084	- - - - -	131,740,116 5,744,791 (301,458) 401 95,289
Balance as of September 30, 2015	\$ -	12,858,397	119,774,622	4,646,120	-	137,279,139
Balance as of January 1, 2016 Depreciation for the period Disposals Reclassification Effect of exchange rate change	\$ - - - - -	13,057,942 702,527 - - (113,675)	121,074,584 5,352,643 (426,236) 1,734 (1,197,283)	4,687,125 240,295 (169,832) (951) (73,067)	- - - - -	138,819,651 6,295,465 (596,068) 783 (1,384,025)
Balance as of September 30, 2016	\$ -	13,646,794	124,805,442	4,683,570	-	143,135,806
Carrying amounts:
Balance as of September 30, 2015	\$ 6,684,296	14,142,814	41,217,316	1,508,648	18,033,881	81,586,955
Balance as of December 31, 2015	\$ 6,684,296	14,059,071	45,037,505	1,457,403	14,223,054	81,461,329
Balance as of September 30, 2016	\$ 6,709,986	14,099,519	47,319,902	1,457,227	5,121,172	74,707,806

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• (a) As of September 30, and December 31, 2015 and September 30, 2016, the Group's parcels of land with title temporarily registered under the names of third parties for trust purpose had carrying value of \$33,960, \$33,960, and \$33,946, respectively, 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.
• (b)Please refer to Note 6 (17) for further information about the capitalized interest on borrowings for the purchase of the property, plant and equipment and gain (loss) on disposal of property, plant and equipment.
• (c) Collaterals

The property, plant and equipment pledged to secure bank loans as of September 30, and December 31, 2015 and September 30, 2016 are described in Note 8.

• (7) Short-term Borrowings
• (a) Short-term borrowings consisted of the following:

	September 30, 2015	December 31, 2015	September 30, 2016
Unsecured short-term borrowings	\$ 16,347,292	11,985,013	18,396,863
Secured short-term borrowings	1,000,000	-	-
Employees' savings	399,319	414,640	221,607
Total	\$ 17,746,611	12,399,653	18,618,470
Interest rate	0.681%~4.600%	0.818%~4.600%	0.900%~4.133%

(b)Issuance and redemption of loans

	For the nine-month periods ended September 30,
		2015	2016
Balance as of January 1,	\$	13,767,560	12,399,653
New issuance during the period		92,682,689	152,246,901
Repayments during the period		(88,707,880)	(146,026,273)
Effect of exchange rate change		4,242	(1,811)
Balance as of September 30	\$	17,746,611	18,618,470
Interest Rate		0.681%~4.600%	0.900%~4.133%

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Short-term Notes and Bills Payable

The Group has no outstanding short-term notes and bills payable as of September 30 and December 31, 2015.

	September 30, 2016
	Institutions	Interest rate		Amount
Short-term notes and bills payable	Grand Bills Finance Corporation	0.320%	\$	1,000,000
Short-term notes and bills payable Short-term notes and bills payable	China Bills Finance Corporation Dah Chung Finance Corporation	0.320% 0.310%		500,000 500,000
Short-term notes and bills payable Short-term notes and bills payable	Union Bank of Taiwan Co., Ltd. Mega Bills Finance Co., Ltd.	0.320% 0.320%		500,000 2,000,000
Short-term notes and bills payable Short-term notes and bills payable	CTBC Bank Co., Ltd Taipeifubon Commercial Bank Co., Ltd.	0.310% 0.320%		2,000,000 500,000
				7,500,000
Less: Discount on short-term notes and bills payable				(390)
Total			\$	7,499,610

(9) Long-term Loans

(a)Long-term loans consisted of the following:

	September 30, 2015	December 31, 2015	September 30, 2016
Unsecured bank loans	\$ 15,746,667	9,447,666	11,441,814
Secured bank loans	10,275,991	10,277,132	10,280,552
Less: Current portion of long-term loans	(3,630,090)	(1,627,254)	(5,429,028)
Total	\$ 22,392,568	18,097,544	16,293,338
Repayment period	2015~2021	2016~2021	2017~2021
Interest rate	1.184%~2.280%	1.184%~1.670%	1.779%~2.040%

(b)Issuance and redemption of loans

	For the nine-month periods ended September 30,
		2015	2016
Balance as of January 1,	\$	28,460,640	19,724,798
New issuance during the period		4,010,000	3,800,000
Repayments during the period		(7,304,287)	(1,331,877)
Effect of exchange rate change		856,305	(470,555)
Balance as of September 30,	\$	26,022,658	21,722,366
Interest Rate		1.184%~2.280%	1.779%~2.040%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(c) 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 September 30, 2016, the details of the loan agreement are as follows:

• I. Credit line: \$10,300,000.
• II. Interest rate: as settled with each participating bank.
• III.Period: 7 years (including a 3 years extension).
• IV.Collateral: the land at Sixth Naphtha Cracker pledged for 120 percent of the credit line financed by the loan.
• V. 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:
• Current Ratio (total current assets divided by total current liabilities): not lower than 100%.
• Leverage Ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%
• VI.As of September 30, 2016, NT\$10,300,000 of the credit line had been used.
• (d) The assets pledged to secure loans are described in Note 8.

(10) Bonds Payable

	September 30, 2015	December 31, 2015	September 30, 2016
Domestic unsecured nonconvertible corporate bonds	\$ 56,923,823	51,938,331	43,404,265
Less: current portion	(13,536,885)	(14,635,089)	(14,641,348)
Total	\$ 43,393,938	37,303,242	28,762,917
Expiry	2015~2026	2016~2026	2016~2026

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	The first domestic unsecured nonconvertible corporate bond in 2011	The second domestic unsecured nonconvertible corporate bond in 2011	The first domestic unsecured nonconvertible corporate bond in 2012	The second domestic unsecured nonconvertible corporate bond in 2012
Issue amount	\$6,000,000	\$4,000,000	\$7,000,000	\$5,000,000
2015.9.30Ending balance	5,996,325	3,997,418	6,994,218	4,995,014
2015.9.30Current portion	2,998,162	1,998,709	2,497,935	1,048,952
2015.12.31Ending balance	2,997,143	1,997,952	6,995,100	4,995,646
2015.12.31Current portion	2,997,143	1,997,952	2,498,250	1,049,085
2016.9.30Ending balance	2,999,490	1,999,495	4,496,910	3,947,022
2016.9.30Current portion	2,999,490	1,999,495	2,498,455	1,048,511
Issuance date	November 16, 2011	December 15, 2011	May 22, 2012	September 12, 2012
Coupon rate	1.34%	1.35%	1.26%、1.42%	1.28%、1.40%
Interest payment date	November 16	December 15	May 22	September 12
Repayment method	Payable in 2 equal installments for each different coupon rate in 2015 and 2016, respectively.	Payable in 2 equal installments for each different coupon rate in 2015 and 2016, respectively.	Payable in 2 equal installments for each different coupon rate in 2016~2017 and 2018~2019, respectively.	Payable in 2 equal installments for each different coupon rate in 2016~2017 and 2018~2019., respectively.
	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
Issue amount	\$9,000,000	\$11,500,000	\$8,500,000	\$6,000,000
2015.9.30Ending balance	8,989,747	11,484,188	8,485,544	5,988,369
2015.9.30Current portion	-	4,993,127	-	-
2015.12.31Ending balance	8,990,969	11,485,656	8,486,698	5,989,167
2015.12.31Current portion	1,098,896	4,993,763	-	-
2016.9.30Ending balance	8,993,167	6,488,638	8,489,028	5,990,515
2016.9.30Current portion	1,098,048	4,997,349	-	-
Issuance date	November 5, 2012	June 10, 2013	November 8, 2013	May 21, 2014
Coupon rate
	1.25%、1.39%、1.53%	1.23%、1.52%	1.42%、1.94%	1.83%、1.92%
Interest payment date Repayment method	November 5 Payable in 3 equal installments for each different coupon rate in 2016~2017, 2018~2019 and 2021~2022,	June 10 Payable in 2 equal installments for each different coupon rate in 2016~2017 and 2022~2023, respectively.	November 8 Payable in 2 equal installments for each different coupon rate in 2017~2018 and 2022~2023, respectively.	May 21 Payable in 2 equal installments for each different coupon rate in 2023~2024 and 2025~2026, respectively.

respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(11) Employee Benefits

(a) Defined benefit plan

Subsequent to December 31, 2015, there is apparently no evidence of any material market volatility, material curtailment, reimbursement and settlement or other material one-time events. Therefore, pension cost in the consolidated financial statements is measured and disclosed according to the respective actuarial report for the years ended December 31, 2014 and 2015.

The Group's pension costs recognized in profit or loss were as follows:

	For the three-month periods ended June 30,			For the nine-month periods ended September 30,
Operating cost		2015	2016	2015	2016
	\$	42,339	37,993	127,595	112,061
Selling expenses	\$	1,738	2,074	5,082	6,071
Administrative expenses	\$	25,633	19,566	76,452	60,763

(b) Defined contribution plan

The Group's pension costs recognized in profit or loss were as follows:

	For the three-month periods ended September 30,		For the nine-month periods ended September 30,
	2015	2016	2015	2016
Operating cost	\$ 41,091	43,709	121,216	129,706
Selling expenses	\$ 2,019	2,077	5,866	6,206
Administrative expenses	\$ 23,092	21,943	68,769	66,882

(12)Income Tax

(a) The details of income tax expense for the nine-month periods ended September 30, 2015 and 2016 were as follows:

	ended September 30,	For the three-month periods	For the nine-month periods ended September 30,
	2015	2016	2015	2016
Current income tax expense	\$ 781,595	(26,528)	2,063,328	1,395,467
Deferred tax expense	433,631	759,671	1,328,370	1,703,584
Income tax expense	\$ 1,215,226	733,143	3,391,698	3,099,051

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) The income tax expense related to components of other comprehensive income for the nine-month periods ended September 30, 2015 and 2016 was as follows:

	For the three-month periods ended September 30,		For the nine-month periods ended September 30,
	2015	2016	2015	2016
Items that could be reclassified subsequently to profit: Exchange differences on translation of foreign
financial statements	\$ (833,342)	434,138	(584,455)	790,599

(c) Examination and approval

The Company's income tax returns have been examined by the ROC tax authority through 2013.

(d) Information related to the accumulated deficit and imputation credit account (ICA) and creditable ratio were as follows:

	September 30, 2015	December 31, 2015	September30, 2016
Undistributed earnings in 1997 and prior years	\$ 432,111	432,111	432,111
Undistributed earnings in 1998 and thereafter	53,419,200	58,372,020	56,689,959
	\$ 53,851,311	58,804,131	57,122,070
Imputation credit account	\$ 2,846,401	2,877,332	3,808,911
		2014 (actual)	2015 (actual)
Tax deduction ratio for earnings distribution to ROC residents	9.81%	12.21%

Under the information for integrated income tax, the above imputation credit account and creditable ratio were calculated according to the formal interpretation No.10204562810 issued by Taxation Administration, Ministry of Finance, R.O.C. on October 17, 2013.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) Equity

Except as described below, there was no material change in equity for the nine-month periods ended September 30, 2015 and 2016. Please refer to Note 6(13) of the consolidated financial statements as of and for the year ended December 31, 2015 for the related detail disclosures on equity.

(a) Capital surplus

The components of capital surplus were as follows:

	September 30, 2015	December 31, 2015	September30, 2016
Paid-in capital in excess of par value	\$ 8,130,081	8,130,081	8,130,081
Overdue unpaid directors' remuneration and dividends	83,131	83,121	83,060
Paid in capital in excess of the par value derived from overseas corporate bond conversion	2,997,503	2,997,503	2,997,503
Treasury stock transactions	16,263	16,263	16,263
Equity in capital surplus of investee companies	216,747	216,747	216,747
	\$ 11,443,725	11,443,715	11,443,654

(b) Retained earnings

In accordance with the Company's articles of incorporation, the Company's annual earnings after providing for income tax are appropriated and distributed as follows:

• Cover prior year's accumulated deficit, if any;
• Of the remaining balance, if any, 10% is set aside as legal reserve;
• Of the remaining balance, if any, certain amount is set aside as special reserve and as common stockholders' dividends;
• The remainder, together with accumulated earnings from prior year, is reported to the board of directors for purposes of making a plan for the distribution of cash dividend and/or stock dividend and bonuses for stockholders, directors, and supervisors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the amended Company Act which was published in May 2015, employee bonuses are no longer a part of the composition of appropriation and distribution of earnings. For this reason, the Company will amend the articles of incorporation accordingly within the period prescribed by the authority.

(i) 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 first-time 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 as of September 30, and December 31, 2015 and September 30, 2016.

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.

(ii) Earnings distribution

The appropriations of earnings in 2015 were approved in the stockholders' meeting on June 17, 2016, and the appropriations in 2014 earnings were approved in the stockholders' meeting on June 25, 2015, respectively. The amounts of appropriation of dividends per share were as follows:

	2014		2015
	Dividends per share	Amount	Dividends per share	Amount
Dividends attributable to ordinary shareholders: Cash dividends	\$ 1.70	10,821,759	3.60	22,916,667

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(c) Other equity

	Exchange differences on translation of foreign operations	Unrealized gains (losses) on available-for-sale financial assets	Cash flow hedge
Balance at January 1, 2015 Exchange differences on translation of foreign operations, net of tax	\$ 5,416,784	76,317,462	(3,096)
-the Group	2,035,783	-	-
-associates	243,456	-	-
Unrealized gains (losses) on available-for-sale financial assets
-the Group	-	(24,291,149)	-
-associates	-	(5,234,174)	24,113
Balance at September 30, 2015	\$ 7,696,023	46,792,139	21,017
Balance at January 1, 2016 Exchange differences on translation of foreign operations, net of tax	\$ 7,182,538	57,419,371	82,276
-the Group	(5,357,603)	-	-
-associates	(280,026)	-	-
Unrealized gains (losses) on available-for-sale financial assets
-the Group	-	265,951	-
-associates	-	(540,614)	(46,619)
Balance at September 30, 2016	\$ 1,544,909	57,144,708	35,657

(14) Earnings Per Share

The basic earnings per share were calculated as follows:

		For the three-month periods ended September 30,	For the nine-month periods ended September 30,
	2015	2016	2015	2016
Net income attributable to the Group	\$ 10,530,079	11,395,381	25,034,871	27,336,741
Weighted-average number of ordinary shares outstanding
(basic)	6,365,741	6,365,741	6,365,741	6,365,741
Basic earnings per share (dollars)	\$ 1.65	1.79	3.93	4.29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(15)Revenue

For the three-month and nine-month periods ended September 30, 2015 and 2016, the Group's details of revenue were as follows:

	For the three-month periods ended September 30,		For the nine-month periods ended September 30,
	2015	2016	2015	2016
Sale of goods	\$ 46,283,160	41,516,822	143,685,339	127,774,919
Construction revenue	203,240	206,027	614,275	738,444
Others	508,829	421,847	1,400,092	1,212,736
Total	\$ 46,995,229	42,144,696	145,699,706	129,726,099

(16) Employee Compensations

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 three-month and nine-month periods ended September 30, 2015 and 2016, the appropriated employee compensations amounted to \$8,511, \$11,644, \$25,534, and \$34,931, 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 amounted to \$49,507 thousand, which were consistent with the actual distributions. Related information can be accessed from the Market Observation Post System website.

(17) Non-operating Income and Expenses

(a) Other income

For the three-month and nine-month periods ended September 30, 2015 and 2016, the components of other income were as follows:

	For the three-month periods ended September 30,		For the nine-month periods ended September 30,
Interest income Rental income Dividends income	2015	2016	2015	2016
	\$ 119,971	92,041	279,719	247,812
	26,151	40,394	82,794	110,964
	3,157,778	4,770,186	3,157,778	4,771,936
	\$ 3,303,900	4,902,621	3,520,291	5,130,712

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) Other gains and losses

For the three-month and nine-month periods ended September 30, 2015 and 2016, the components of other gains and losses were as follows:

	ended September 30,	For the three-month periods	For the nine-month periods ended September 30,
	2015	2016	2015	2016
Gain (loss) on disposal of property, plant and equipment	\$ (2,544)	(553)	7,173	(140)
Gain on disposal of investments	842	-	160,655	-
Foreign exchange gain (loss), net	1,562,994	(783,540)	964,754	(1,950,747)
Other gains	197,785	140,104	774,026	448,817
Other losses	(125,773)	(105,956)	(415,836)	(398,936)
	\$ 1,633,304	(749,945)	1,490,772	(1,901,006)

(c) Finance expenses

The Group's details of finance expenses were as follows:

	ended September 30,	For the three-month periods	For the nine-month periods ended September 30,
	2015	2016	2015	2016
Interest expense	\$ 606,365	355,473	1,427,997	1,063,221
Less: capitalized interest	(279,376)	(4,860)	(406,277)	(56,551)
	\$ 326,989	350,613	1,021,720	1,006,670
Capitalized interest rate	1.35%~3.49%	1.3%~3.045%		1.33%~3.92% 0.88%~3.045%

(18) Financial Instruments

Except as described below, there was no material change with regard to the fair value and exposure risks of credit risk, liquidity risk and market risk on financial instruments. Please refer to Note 6(18) of the consolidated financial statements as of and for the year ended December 31, 2015 for the related detail disclosures on financial instruments.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(a) Currency risk

(i) Exposure to currency risk

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

		September 30, 2015			December 31, 2015		September 30, 2016
	Foreign currency (in thousands)	Exchange rate	New Taiwan Dollars	Foreign currency (in thousands)	Exchange rate	New Taiwan Dollars	Foreign currency (in thousands)	Exchange rate	New Taiwan Dollars
Financial assets:
Monetary items
USD	\$ 1,074,332		33.1280 35,590,470	795,960	33.0660	26,319,213	554,084		31.3660 17,379,399
EUR	429	36.8674	15,816	274	36.0384	9,875	351	35.2519	12,373
JPY	4,629	0.2752	1,274	172,032	0.2736	47,068	198,290	0.3109	61,648
Financial liabilities
Monetary items
USD	446,658		33.1280 14,796,886	363,433	33.0660	12,017,276	446,808		31.3660 14,014,580
EUR	88	36.8674	3,244	435	36.0384	15,677	8	35.2519	282
JPY	99,686	0.2752	27,434	141,594	0.2736	38,740	121,923	0.3109	37,906
SGD	1	23.1668	23	-	-	-
GBP	2	50.015	100	-	-	-	8	40.737	326
CHF	289	33.9852	9,822	-	-	-	258	32.5116	8,388
CAD	80	24.5977	1,968	-	-	-	-	-	-

(ii) 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 TWD against the USD, EUR, JPY, SGD, GBP, CHF and CAD as of September 30, 2015 and 2016 would have increased the net income after tax by \$207,681 and \$33,920 for the nine-month periods ended September 30, 2015 and 2016, respectively. This analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The management believes that the analysis is performed on the same basis.

Because there are a variety of functional currencies, the Group discloses a summary of its information on exchange gain or loss. The realized and unrealized exchange loss amounted to \$964,754 and \$(1,950,747) for the nine-month periods ended September 30, 2015 and 2016, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) Fair value

(i) Type 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)

	September 30, 2015
				Fair value
		Carrying value	Level 1	Level 2	Level 3	Total
Available-for-sale financial assets
Listed stocks	\$	70,245,868	70,245,868	-	-	70,245,868
Loans and receivables
Cash and cash equivalents		26,810,124	-	-	-	-
Notes and accounts receivable (including related parties)		12,671,144	-	-	-	-
Other receivables (including
related parties)		21,229,022	-	-	-	-
Subtotal		60,710,290	-	-	-	-
Total		\$ 130,956,158	70,245,868	-	-	70,245,868
Financial liabilities measured at amortized cost
Bonds payable	\$	56,930,823	-	-	-	-
Short-term loans		17,746,611	-	-	-	-
Long-term loans (including
current portion)		26,022,658	-	-	-	-
Loans from related parties		1,599,424	-	-	-	-
Notes and accounts payable
(including related parties)		8,291,185	-	-	-	-
Other payables (including related
parties)		6,212,652	-	-	-	-
Total		\$ 116,803,353	-	-	-	-

		December 31, 2015
		Fair value
	Carrying value	Level 1	Level 2	Level 3	Total
Available-for-sale financial assets
Listed stocks	\$ 79,288,300	79,288,300	-	-	79,288,300
Loans and receivables
Cash and cash equivalents	19,756,722	-	-	-	-
Notes and accounts receivable
(including related parties)	11,400,471	-	-	-	-
Other receivables (including
related parties)	17,211,726	-	-	-	-
Subtotal	48,368,919	-	-	-	-
Total	\$ 127,657,219	79,288,300	-	-	79,288,300

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2015
			Fair value
		Carrying value	Level 1	Level 2	Level 3	Total
Financial liabilities measured at amortized cost
Bonds payable	\$	51,938,331	-	-	-	-
Short-term loans		12,399,653	-	-	-	-
Long-term loans (including
current portion)		19,724,798	-	-	-	-
Loans from related parties		1,441,663	-	-	-	-
Notes and accounts payable (including related parties)		10,994,474	-	-	-	-
Other payables (including related parties)		6,326,942	-	-	-	-
Total		\$ 102,825,861	-	-	-	-

	September 30, 2016
				Fair value
		Carrying value	Level 1	Level 2	Level 3	Total
Available-for-sale financial assets
Listed stocks	\$	79,748,100	79,748,100	-	-	79,748,100
Private fund		4,724,401	-	4,724,401	-	4,724,401
Subtotal		84,472,501	79,748,100	4,724,401	-	84,472,501
Loans and receivables
Cash and cash equivalents		16,223,800	-	-	-	-
Notes and accounts receivable
(including related parties)		10,261,600	-	-	-	-
Other receivables (including
related parties)		19,525,120	-	-	-	-
Subtotal		46,010,520	-	-	-	-
Total		\$ 130,483,021	79,748,100	4,724,401	-	84,472,501
Financial liabilities measured at amortized cost
Bonds payable	\$	43,404,265	-	-	-	-
Short-term notes and bills payable		7,499,610	-	-	-	-
Short-term loans		18,618,470	-	-	-	-
Long-term loans (including
current portion)		21,722,366	-	-	-	-
Loans from related parties		533,222	-	-	-	-
Notes and accounts payable
(including related parties)		7,398,633	-	-	-	-
Other payables (including related
parties)		3,184,227	-	-	-	-
Total		\$ 102,360,793	-	-	-	-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ii)Fair value measurement of financial instruments unrecognized at fair value

The company estimates non-methodological tools to measure at fair value and assumptions used are as follows:

Financial liabilities measured at amortized cost.

Fair value measurement is based on the latest quoted price and agreed-upon price if these prices are available in an active market. When market value is unavailable, fair value of financial assets and liabilities are evaluated based on the discounted cash flow of the financial assets and liabilities.

(iii)Fair value measurement of financial instruments recognized 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 Company have quoted market prices in active markets, the fair value was as follows:

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

• (iv) There was no transfer between the fair value hierarchy levels for the nine-month periods ended September 30, 2015 and 2016.
• (19) Financial Risk Management

There were no material changes in financial risk management in comparison to Note 6(19) of the consolidated financial statements as of and for the year ended December 31, 2015.

(20)Capital Management

There were no material changes in capital management target adopted for capital management in comparison to Note 6(20) of the consolidated financial statements as of and for the year ended December 31, 2015.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Related-party Transactions

(1) Parent company and ultimate controlling party

The Company is the ultimate controlling party of the Group and its subsidiaries.

(2) Significant related-party transactions

(a) Sales to related parties

The Group's significant sales to related parties and the balance of accounts receivable were as follows:

	ended September 30, 2015	For the three-month periods		For the nine-month periods ended September 30,	September	Accounts receivable-related parties December	September
		2016	2015	2016	30, 2015	31, 2015	30, 2016
Associates \$ Joint ventures Other related parties Total \$	2,373,590 132,961 5,908,513 8,415,064	1,804,280 137,429 5,239,372 7,181,081	7,463,216 416,390 19,607,688 27,487,294	6,433,822 385,578 15,398,967 22,218,367	1,393,241 47,289 2,451,508 3,892,038	1,106,025 48,604 2,374,530 3,529,159	751,853 48,900 1,974,108 2,774,861

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 or L/C at sight.

(b) Purchase from related parties

The Group's significant purchases from related parties and the balance of accounts payable were as follows:

		Purchases
		For the three-month periods ended September 30,		For the nine-month periods ended September 30,		Accounts payable-related parties
	2015	2016	2015	2016	September 30, 2015	December 31, 2015	September 30, 2016
Associates	\$ 12,549,514	16,209,652	58,877,123	52,673,455	5,984,207	6,436,431	4,955,068
Joint ventures	6,494	4,813	21,947	15,178	2,125	2,383	1,662
Other related parties	821,907	876,107	2,746,244	2,301,383	308,226	210,420	304,517
Total	\$ 13,377,915	17,090,572	61,645,314	54,990,016	6,294,558	6,649,234	5,261,247

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

(c) Property plant and equipment

(i)

	Disposal proceeds of property plant and equipment for the three-month periods ended September 30,			Disposal proceeds of property plant and equipment for the nine-month periods ended September 30,	Other receivables–related parties
	2015	2016	2015	2016	September 30, 2015	December 31, 2015	September 30, 2016
Joint ventures	\$ -	-	-	18	-	-	-
Other related parties	-	-	-	64	-	180	-
	\$ -	-	-	82	-	180	-

(ii)

	Purchase of property plant and equipment for the three-month periods ended September 30,		Purchase of property plant and equipment for the nine-month periods ended September 30,		Other payables–related parties
		2015	2016	2015	2016	September 30, 2015	December 31, 2015	September 30, 2016
Associates	\$	-	30	-	239	-	-	3
Other related parties		25,493	17,107	106,322	70,586	693	7,825	7,268
	\$	25,493	17,137	106,322	70,825	693	7,825	7,271

(iii)Acquisition of financial assets

The Group has no related transactions for the three-month periods ended September 30, 2015 and 2016.

	Financial Statement Account	Number of Shares (in thousands)	Transaction Shares	For the nine-month period ended September 30, 2015
Associates	Investments accounted for using equity method	75,000	Shares of stock of Sky Dragon Investment Limited	\$ 2,349,150
	Investments accounted for using equity method	508,237	Shares of stock of Formosa Group Investment (Cayman)
			Limited	\$ 15,077,105 17,426,255

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Financial Statement Account	Number of Shares (in thousands)	Transaction Shares	For the nine-month period ended September 30, 2016
Associates	Investments accounted for using equity method	8,500	Shares of stock of Formosa Plastics Development Co., Ltd	\$ 85,000
Other Related Parties	Financial asset carried at cost-non-current	508,237	Shares of stock of Formosa Group Investment (Cayman)
			Limited	16,084,840
				\$ 16,169,840

(iv) Disposal of financial assets

The Group has no related transactions for the three-month periods ended September 30, 2015 and 2016.

	Financial Statement	Transaction Shares		For the nine-month period ended September 30, 2015
	Account	(in thousands)	Transaction Items	Proceeds	Gains (Losses)
Associates	Investments accounted for using equity method	508,237	Shares of stock of Formosa Ha Tinh (Cayman) Limited	\$ 15,817,802	-
	Financial Statement	Transaction Shares		For the nine-month period ended June 30, 2016
	Account	(in thousands)	Transaction Items	Proceeds	Gains (Losses)
Associates	Investments accounted for using equity method	508,237	Shares of stock of Formosa Petrochemical Corporation	\$ 15,077,105	-
Other	Available-for-sale financial	3,821	Shares of stock of Nan Ya
Related Parties	assets-current		Technology Corp.	308,707	159,813
				\$ 15,385,812	159,813

(d) Financing transactions

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

	Due from related parties (recognized as other receivables–related parties)
		September 30, 2015	December 31, 2015	September 30, 2016
Associates	\$	3,544,000	689,000	8,941,750
Joint ventures		46,870	45,829	42,274
Other related parties		9,357,728	8,464,352	8,334,899
	\$	12,948,598	9,199,181	17,318,923

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, and December 31, 2015 and September 30, 2016, the interest revenue from the abovementioned transactions amounted to \$17,713, \$13,291 and \$19,628, respectively, which was recognized as other receivables–related parties.

		Due from related parties (recognized as other payables–related parties)
	September 30, 2015	December 31, 2015	September 30, 2016
Other related parties	\$ 1,599,424	1,441,663	533,222

As of September 30, and December 31, 2015 and September 30, 2016, the interest expense from the abovementioned transactions amounted to \$2,021, \$ 2,446 and \$ 3,090 respectively, which was recognized as accrued expenses.

• (e) Endorsements and guarantees
• (i) The Group's endorsements guarantees to secure related parties' loans were as follows:

	September 30, 2015	December 31, 2015	September 30, 2016
Associates	\$ 39,049,630	42,696,473	34,620,223
Other related parties	-	-	7,530,098
	\$ 39,049,630	42,696,473	42,150,321

(ii) The amounts of commitment letters for related parties that the Group had issued to financial institutions were as follows (expressed in thousands):

		September 30, 2015		December 31, 2015		September 30, 2016
	USD	CNY	USD	CNY	USD	CNY
Associates	\$ 1,054,000 1,130,000 1,054,000			1,130,000 1,020,400		-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(f) Other significant transactions

(i) The Group's income received from related parties, such as sewage treatment income, wharf usage income and utility and steam income were as follows:

	Other receivables–related parties
		September 30, 2015	December 31, 2015	September 30, 2016
Other related parties	\$	104,481	17	22,595

(ii) 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:

		Other payables–related parties
	September 30, 2015	December 31, 2015	September 30, 2016
Associates	\$ 1,103,728	1,017,859	702,879
Other related parties	305,569	334,483	242,511
	\$ 1,409,297	1,352,342	945,390

• (g) Receivables from payment on behalf of related parties
• (i) The Group paid for construction design service fees on behalf of related parties as follows:

	Other receivables–related parties
		September 30, 2015	December 31, 2015	September 30, 2016
Associates	\$	6,936,989	6,602,827	576,105
Other related parties		-	-	964,881
	\$	6,936,989	6,602,827	1,540,986

(ii) The Group paid the down payments on behalf of related parties as follows:

	Prepayments (classified under other assets)
		September 30, 2015	December 31, 2015	September 30, 2016
Associates	\$	485,859	296,866	-
Other related parties		-	-	3,962
	\$	485,859	296,866	3,962

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(h) Rental (recognized as other income)

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

	For the three-month periods ended September 30,		For the nine-month periods ended September 30,
	2015	2016	2015	2016
Associates	\$ 10,022	24,771	30,067	59,457
Joint ventures	1,791	2,041	5,375	6,875
Other related parties	12,817	9,623	33,071	28,769
	\$ 24,630	36,435	68,513	95,101

(3) Compensation of key management

The compensation to key management was as follows:

		For the three-month periods ended September 30,	For the nine-month periods ended September 30,
	2015	2016	2015	2016
Short-term employee benefits	\$ 12,776	15,683	39,255	45,910

8. Pledged Properties

The Group's assets pledged to secure loans are as follows:

Classification of assets	Nature of Pledged Assets	September 30,2015	December 31, 2015	September 30, 2016
Fixed assets	Property plant and equipment	\$ 2,799,459	2,687,219	1,976,798
Refundable deposits Investments accounted for using	Certificate of deposit Stocks of Formosa Petrochemical	34,637	34,637	34,648
equity method	Corp.	7,809,280	8,371,804	8,739,702
		\$ 10,643,376	11,093,660	10,751,148

9. Commitments and Contingencies

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

	September 30, 2015	December 31, 2015	September 30, 2016
Endorsements and guarantees	\$ 39,049,630	42,696,473	42,150,321

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	September 30, 2015	December 31, 2015	September 30, 2016
Unused outstanding letters	\$ 702,660	1,033,916	191,904

(c) The amounts of commitment letters for related parties were as follows (expressed in thousands):

	September 30, 2015	December 31, 2015	September 30, 2016
USD	\$ 1,054,000	1,054,000	1,020,400
CNY	\$ 1,130,000	1,130,000	-

10. Significant Disaster Loss: None.

11. Subsequent Event: None.

12. Others

(1) The nature of operating costs and expenses of the Group were as follows:

		For the three-month periods ended September 30,
			2015				2016
	Operating	Operating	Non- operating		Operating	Operating	Non- operating
	costs	expenses	expenses	Total	costs	expenses	expenses	Total
Employee benefits
Salaries	1,252,398	892,068	-	2,144,466	1,407,430	933,628	-	2,341,058
Labor and health insurance	88,846	58,899	-	147,745	92,470	56,694	-	149,164
Pension	83,430	52,482	-	135,912	81,702	45,660	-	127,362
Others	36,772	19,860	-	56,632	41,315	7,606	-	48,921
Depreciation expenses	1,859,248	94,866	-	1,954,114	2,017,169	87,386	-	2,104,555
Amortization expenses	123,681	2,583	8,207	134,471	139,072	2,099	4,912	146,083

					For the nine-month periods ended September 30,
			2015				2016
	Operating	Operating	Non- operating		Operating	Operating	Non- operating
	costs	expenses	expenses	Total	costs	expenses	expenses	Total
Employee benefits
Salaries	3,584,073	2,524,688	-	6,108,761	3,889,394	2,569,958	-	6,459,352
Labor and health insurance	257,681	171,136	-	428,817	270,024	165,669	-	435,693
Pension	248,811	156,169	-	404,980	241,767	139,922	-	381,689
Others	96,111	52,475	-	148,586	122,088	54,221	-	176,309
Depreciation expenses	5,465,185	279,606	-	5,744,791	6,021,875	273,590	-	6,295,465
Amortization expenses	453,713	7,812	25,954	487,479	429,650	7,044	18,031	454,725

(2) Seasonality of operation

The operation of the Group is not influenced by seasonality and periodicity.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.Other Disclosure Items

(a) Related information on material transaction items

The significant transactions required by the "Guidelines" for the Group were as follows:

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

					Hig hes t			Ra of	Pur f	Tra ctio			Col	late ral		Ma xim
No	of Na Len der me s	of Bor Na me row ers	Acc t nam oun e	Rel d par ate ty	bal e of anc fina nci to ng oth ies art er p dur ing the iod per	En din g Bal anc e	Act ual usa ge dur ing the iod per	nge inte t res rat es ing dur the iod per	pos es o fun d fi cin nan g for the bor row ers (No te 1 )	nsa n t fo am oun r ine bus ss bet n tw wee o ties par	Rea s fo son r sho rt-t erm fina nci ng	All ow anc e for ba d deb t	Na me	Val ue	Ind ivid ual fun din g loa n li mit s (No te 2 )	um lim itat ion fun d on fina nci ng (No te 2 )	No te
0	The Co mp any	che mic al For sa P etro mo	e fr Du om	Yes	\$ 1 2,5 00, 000	\$ 4 ,50 0,0 00	\$ -	1.40 6%	2	-	Sho rt-t erm	-	-	-	\$ 5 7,1 201 79,	\$11 4,3 58, 402
		Cor p.	rela ted ties par					~1. 407 %			fina nci ng
0	The Co mp any	For sa C hem ical s & mo	Du e fr om	Yes	7,0 00, 000	4,5 00, 000	-	1.40 7%	2	-	Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		Fib re C orp	rela ted ties par								fina nci ng
0	The Co mp any	Nan Ya last ic C p orp	Du e fr om	Yes	8,5 00, 000	4,5 00, 000	-	1.40 7%	2	-	Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
0	The Co	For sa H	rela ted ties par e fr Du	Yes	000	000	750 0	1.4 06%	2		fina nci ng Sho				179 1	114 02
	mp any	mo eav y Ind ies Cor ustr	om rela ted ties		6,5 00,	5,2 50,	,00	435 ~1. %		-	rt-t erm fina nci	-	-	-	57, ,20	,35 8,4
0	The Co mp any	p. Jap an F Su orm osa mc o	par Du e fr om	Yes	1,50 0,0 00	-	-	1.00 0%	2	-	ng Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		Tec hno log Cor y p.	rela ted ties par								fina nci ng
0	The Co mp any	For sa P last ic mo	Du e fr om	Yes	300 ,00 0	150 ,00 0	150 ,00 0	1.4 06%	2	-	Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		Tra tion Co orta nsp rp.	rela ted ties par					~1. 497 %			fina nci ng
0	The Co mp any	chn olo Nan Ya Te gy	e fr Du om	Yes	13,0 00, 000	13, 000 ,00 0	4,5 00, 000	1.4 06%	2	-	Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		Cor p.	rela ted ties par					~1. 497 %			fina nci ng
0	The Co mp any	Asi an P acif ic	Du e fr om	Yes	680 ,00 0	244 ,80 0	244 ,80 0	1.4 06%	2	-	Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		Inv Co estm ent rp.	rela ted ties par					~1. 497 %			fina nci ng
0	The Co mp any	For sa H a T inh mo	Du e fr om	Yes	4,6 10,0 00		-	1.40 7%	2		Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		( Cay n) L imi ted ma	rela ted ties par			4,6 10,0 00					fina nci ng
0	The Co mp any	For sa H a T inh mo imi ted	Du e fr om rela ted ties	Yes	777 ,00 0	163 ,00 0	30, 000	1.4 06% ~1. 497 %	2	-	Sho rt-t erm fina nci	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		( Cay n) L ma Tai h Br wan anc	par								ng
0	The Co mp any	For sa G mo rou p	Du e fr om	Yes	9,2 15,0 00	8,0 41, 750	8,0 41, 750	1.4 06%	2	-	Sho rt-t erm	-	-	-	57, 179 ,20 1	114 ,35 8,4 02
		( Cay n) L imi ted ma	rela ted ties par					~1. 435 %			fina nci ng

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

					Hig hes t			Ra of	Pur f es o	Tra ctio nsa n			Col late	ral		Ma xim um
No	Na of Len der me s	of Bor Na me row ers	Acc t nam oun e	Rel d par ate ty	bal e of anc fina nci to ng oth ies art er p dur ing the iod per	din En g Bal anc e	Act ual usa ge dur ing the iod per	nge inte t res rat es dur ing the iod per	pos fun d fi cin nan g for the bor row ers (No te 1 )	t fo am oun r bus ine ss bet n tw wee o ties par	Rea s fo son r sho rt-t erm fina nci ng	All ow anc e for ba d deb t	Na me	Val ue	Ind ivid ual fun din g loa n li mit s (No te 2 )	lim itat ion fun d on fina nci ng (No te 2 )	No te
0	The Co mp any	For sa G Oce mo rou p an	Du e fr om	Yes	\$ 5 ,40 3,0 41	\$ 4 ,30 0,0 99	\$ 3 ,56 0,0 99	1.4 06%	2	-	Sho rt-t erm	-	-	-	\$ 5 7,1 79, 201	\$ 1 14,3 58, 402
		Ma rine Co rp.	rela ted ties par					~1. 497 %			fina nci ng
1	ndu stri For sa I mo es	oly eth len For sa P mo y e	e fr Du om	Yes	629 ,39 8	49 7,8 82	49 7,8 88	3.0 45%	2	-	Sho rt-t erm	-	-	-	2,9 53, 574	5,9 07, 147	N ote
	ing bo) td. (N Co ., L	ing bo) td. (N Co ., L	rela ted ties par		( CN Y1 34, 000 )	( CN Y 1 06, 000 )	( CN Y1 06, 000 )				fina nci ng						4, 5
2	For sa A lic Est mo cry ers	For sa S mo upe r	Du e fr om	Yes	2,0 83, 120	2,0 83, 120	2,0 83, 144	3.0 45%	2	-	Sho rt-t erm	-	-	-	5,3 13, 175	10, 626 ,35 1	No te
	(N ing bo) Co ., L td.	Ab sorb Pol ent ym er	rela ted ties par		( CN Y 4 43, 500 )	( CN Y 4 43, 500 )	( CN Y 4 43, 500 )				fina nci ng						4, 5
		(N ing bo) Co ., L td.
2	For sa A lic Est mo cry ers	For sa P oly eth len mo y e	Du e fr om	Yes	455 ,60 9	34 7,5 78	34 7,5 82	3.0 45%	2	-	Sho rt-t erm	-	-	-	5,3 13, 175	10, 626 ,35 1	No te
	(N ing bo) Co td. ., L	(N ing bo) Co td. ., L	rela ted ties par		( CN 7,0 00) Y 9	( CN 4,0 00) Y 7	( CN 4,0 00) Y 7				fina nci ng						4, 5
2	lic For sa A Est mo cry ers	itsu i For sa M mo	e fr Du om	Yes	42, 273	42 ,27 3	42 ,274	45% 3.0	2	-	Sho rt-t erm	-	-	-	50, 540 4,2	,35 10, 626 1	No te
	(N ing bo) Co ., L td.	Ad ced Ch emi cal van	rela ted ties par		( CN Y 9 ,00 0)	( CN Y 9 ,00 0)	( CN Y 9 ,00 0)	3.7 45% ~			fina nci ng						4
		Co ., L td.
3	For sa E lect ic mo ron	For sa P oly eth len mo y e	Du e fr om	Yes	116 ,48 6	11 6,4 86	11 6,4 87	3.0 45%	2	-	Sho rt-t erm	-	-	-	134 ,584	269 ,16 7	No te
	(N ing bo) Co ., L td.	(N ing bo) Co ., L td.	rela ted ties par		( CN Y 2 4,8 00)	( CN Y 2 4,8 00)	( CN Y 2 4,8 00)				fina nci ng						4, 5
3	lect ic For sa E mo ron	sa S For mo upe r	e fr Du om	Yes	130 ,10 7	130 ,10 7	130 ,10 8	3.0 45%	2	-	Sho rt-t erm				134 ,584	269 ,16 7	No te
	(N ing bo) Co td. ., L	Ab sorb Pol ent ym er	rela ted ties par		( CN Y 2 00) 7,7	( CN Y 2 00) 7,7	( CN Y 2 00) 7,7				fina nci ng						4, 5
4	For	(N ing bo) Co ., L td. For sa S	Du e fr	Yes	126 9	126 9	126 1	3.0 45%	2		Sho				752	504	N
	mo sa Pol len	mo upe r Ab sorb Pol ent	om rela ted ties		,81 CN Y 2 7,0	,81 CN Y 2 7,0	,82 CN Y 2 7,0			-	rt-t erm fina nci	-	-	-	4,0 03,	8,0 07,	ote 4, 5
	ypr opy e (N ing bo) Co ., L td.	ym er (N ing bo) Co ., L td.	par		( 00)	( 00)	( 00)				ng
4	For mo sa	For sa P oly eth len mo e	Du e fr om	Yes	1,05 4,4 77	906 ,52 1	906 ,53 2	3.0 45%	2		Sho rt-t erm				4,0 03, 752	8,0 07, 504	N ote
	Pol len e	y (N ing bo) Co td. ., L	rela ted ties		( CN Y 2 24, 500 )	( CN Y 1 93, 000 )	( CN Y 1 93, 000 )			-	fina nci	-	-	-			4, 5
	ypr opy ing bo) td. (N Co ., L		par								ng

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 September 30, 2016.

(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 limit on loans granted by a subsidiary to a single party, related party and party with business transactions shall not be more than 50% of the subsidiary's net assets, and the limit to others is 40% of the subsidiary's net assets.

(5) The limit on loans granted by a subsidiary to others is 100% of the Company's net assets; the limit on loan granted to a short-term financing borrower with no business transactions is 40% of the Company's net assets. There is no such restriction for non-Taiwanese companies whose voting rights are 100% owned directly and indirectly by the same company.

Note 3: The ending balance was approved by the Board of Directors.

Note 4: The transaction has already been written off in the consolidated financial statements.

Note 5: The exchange rate of New Taiwan dollars to CNY dollars was 4.697 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 4.69706 to 1 for the actual usage during the period.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ii) Guarantees and endorsements for other parties:

		Cou nte r-p	art y						Ra tio of		Par ent
No	En dor ent sem tee gua ran vid pro er	Na me	Rel atio nsh ip wit h T he Com pan y (No te 2 )	Lim itat ion t of am oun d tee gua ran s an end s fo ent ors em r ecif ic a sp rise ent erp	Hig hes t bal e fo anc r d tee gua ran an end ent ors em s dur ing the iod per	Bal e of anc d tee gua ran s an end ent ors em s as of J 30 201 6 une ,	Am t oun Act ual ly Dra wn	Am t of oun En dor / ent sem Gu nte ara e Col late ral ized by Pro ties per	ula ted acc um f ts o am oun d tee gua ran s an end ent ors em s f to n et w ort h o the lat est fina nci al sta tem ent s	Ma xim um ts f am oun or d tee gua ran s an end ent ors em s	Com pan y es/ end ors tee gua ran s hir d to t ties par on beh alf of sub sid iar y	Sub sid iar y end es/ ors tee s to gua ran thir d p art ies beh alf of P nt on are Com pan y	s/ En dor ent sem tee gua ran s he thir d to t ties be hal f par on of t he Com ies pan in M ain lan d Ch ina
0	The Co mp any	sa G For mo rou p ( Cay n) L imi ted ma	6	\$ 1 85, 832 ,404	\$ 43, 450 ,56	3 \$34 ,62 0,2 23	\$ 3 4,6 20, 223	-	12. 11%	\$ 3 71, 664 ,80 8	N	N	0
0	The Co mp any	For sa H a T inh mo ( Cay n) L imi ted ma	6	185 ,83 2,4 04	13,0 55, 916	12, 119 ,87 2	7 ,53 0,0 98	-	4.2 4%	371 ,664 ,80 8	N	N	0

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 six 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 more than 50% of the common shares of stock of the subsidiaries.
• (3) In aggregate, the Company and its subsidiaries hold more than 50% of the investee.
• (4) In aggregate, the Company holds directly or its subsidiaries hold indirectly more than 50% of the investee.
• (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.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(iii) The securities held at balance sheet date (excluding subsidiaries, associates and joint ventures):

		Re lat ion shi bet p we en			20 16.	6.3 0
Sec uri ho lde ty r	Ca d n f se ity teg an am e o cur	iss of ity d uer se cur an		s / Un Sh are	Ca ing	Pe nta rce ge	Ma rke alu t v e	No te
	ory	the wh ich co mp any	Ac nt cou na me	its ( in	rry val ue	of	or
		itie ho lds se cur s		tho nd s) usa		shi ow ner p	lue net set as va
Th e C om pan y	ian cifi As Pa c In Co tm ent ves rp.	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	\$ 68, 743	\$ 777 804 ,	16 .17 %	\$ 2, 399 684 ,	No 1 te
Th e C om pan y	Ma i-L iao Ha rbo r A dm ini tio n C stra orp	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	39, 574	53 9, 486	17 .99 %	96 1, 309	No 1 te
Th e C om pan y	Tai n A Co wa ero spa ce rp.	-	Fin ial rrie d a ets t co st anc ass ca	1, 103	11, 026	0.8 1%	12 173 ,	No 1 te
Th e C om pan y	Ch ine ele vis ion Sy se T m I ste nc.	-	Fin ial rrie d a ets t co st anc ass ca	1, 769	28 609 ,	1.0 5%	53 933 ,	1 No te
Th e C om pan y	Ch ina In & De vel Co Ltd tm ent ent ves opm .,	-	Fin ial rrie d a ets t co st anc ass ca	1, 287	8, 250	0.8 0%	12 765 ,	No 1 te
Th e C om pan y	For sa P las tics De vel Co ent mo opm rp.	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	14, 672	90 010 ,	18 .00 %	237 074 ,	No 1 te
Th e C om pan y	Xia ho Air ft L ing Co ng cra eas rp.	-	Fin ial rrie d a ets t co st anc ass ca	2, 07 1	-	9.5 5%	-
Th e C om pan y	For sa P och ica l T tio n C tio etr rta mo em ran spo orp ora n,	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	2, 642	24 013 ,	12 .00 %	38 702 ,	No 1 te
	Ltd
Th e C om pan y	ork chn olo Co For sa N Te etw mo gy rp.	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	2, 925	13 33 1 ,	12 .50 %	54 138 ,	1 No te
Th e C om pan y	For sa P las tics M arin e C mo orp	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	2, 429	15 000 ,	15 .00 %	14 3, 098	No 1 te
Th e C om pan y	For Gr Oc In Co tm ent mo sa oup ean ves rp.	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	3	85 6, 948	19 .00 %	9, 595 132 ,	No 1 te
Th e C om pan y	For sa P las tics M arit im e C mo orp	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	354	1, 69 1	18 .11 %	65 03 1 ,	No 1 te
Th e C om pan y	Am Tr Ca ital I C ust p orp	-	Fin ial rrie d a ets t co st anc ass ca	5, 000	50 000 ,	3.9 1%	52 890 ,	No 1 te
Th e C om pan y	Ce al L ing ion al C In ntr ter nat eas orp	-	Fin ial rrie d a ets t co st anc ass ca	2, 373	-	1.4 3%	-
Th e C om pan y	Int las t T aiw Co ion rat ep an rpo	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	2, 160	21 600 ,	18 .00 %	22 74 1 ,	No 1 te
Th e C om pan y	wth ital Ltd Me Gro Ve re C Co ntu ga ap .,	-	Fin ial rrie d a ets t co st anc ass ca	500 2,	25 000 ,	1.9 7%	24 804 ,	No 1 te
For sa P las tics mo	Sw ( Jia u) Ca rbo n F ibe r C ite Co Ltd anc or ngs om pos .,	-	Fin ial rrie d a ets t co st anc ass ca	-	95, 979	18 .00 %	71, 07 1	No te 2
Co ( Ca Ltd rp. ym an	)
las tics For sa P mo	inh ( Ca an) Li mit ed For sa H a T mo ym	Oth ela ted rtie er r pa s	Fin ial rrie d a ets t co st anc ass ca	508 237 ,	15 004 226 , ,	11 .43 %	15 449 801 , ,	te3 No
Int atio nal ern
Li mit ed ( Ca an) ym
Th e C om pan y	Na n Y a P las tics Co ion rat rpo	Oth ela ted rtie er r pa s	Av aila ble -fo ale fin ial et- t r-s anc ass cur ren	783 357 ,	48 568 125 , ,	9.8 8%	48 568 125 , ,
Th e C om pan y	Ch ica ls & Fi bre Co ion For rat mo sa em rpo	Oth ela ted rtie er r pa s	Av aila ble -fo ale fin ial et- t r-s anc ass cur ren	198 744 ,	16 754 114 , ,	3.3 9%	16 754 114 , ,
Th e C om pan y	ech nol Na n Y a T Co ogy rp.	Oth ela ted rtie er r pa s	Av aila ble -fo ale fin ial et- t r-s anc ass cur ren	367 538 ,	14 425 861 , ,	13 .37 %	14 425 861 , ,
Th e C om pan y	Me Pro rity Pr iva te P lac Fu nd ent ga spe em	-	aila ble -fo ale fin ial Av et- t r-s anc ass cur ren	14, 979	4, 724 40 1 ,	25 .00 %	4, 724 40 1 ,

Note 1: The net asset value of equity was calculated based on audited financial statements.

Note 2: The net asset value of equity was calculated based on unaudited financial statements.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(iv) The accumulated purchase or sale of securities for the period exceeding \$300 million or 20% of the paid-in capital:

	d Is r of				Beg inn ing	Ba lan ce	Acq uis	itio n		Dis pos	al		En din g	Bal anc e
Com pan y Na me	Typ e an sue Ma rke tab le Sec uri ties	Acc t N oun am e	Cou nte rty rpa	e of Na tur the Rel atio ip nsh	Nu mb f er o Sha res ( in t ds) hou san	Am t oun	Nu mb f er o Sha res ( in t ds) hou san	Am t oun	Nu mb f er o Sha res ( in t ds) hou san	Am t oun	Ca ing rry Val ue	Ga s) on Dis in ( Los al pos	Nu f Sha mb er o res ( in t ds) hou san	Am t oun
The Com pan y	Sec urit ies- For mo sa Gro Inv estm ent up ( Cay n) L imi ted ma	Inv d fo estm ent nte s ac cou r usin uity tho d g eq me	For sa G mo rou p Inv estm ent ( Cay n) L imi ted ma	Ass oci ates	508 ,24 9	15, 817 ,80 2	-	-	508 ,24 9	-	15,8 17,8 02 (No te 1 )	-	-	-
The Com pan y	Sec urit ies- For mo sa Pla stic s In atio nal tern ( Cay n) L imi ted ma	Inv d fo estm ent nte s ac cou r usin uity tho d g eq me	For sa P last ics mo Inte tion al rna ( Cay n) L imi ted ma	Sub sidi arie s	-	-	50	15,8 17,8 02 (No te 1 )	-	-	-	-	50	15,0 04, 572 (No te 2 )
For mo sa Pla stic s tion al Inte rna ( Cay n) ma Lim ited	Sec urit ies- For mo sa Ha Tin h ( Cay n) ma Lim ited	Fin ial ried ets at anc ass car t cos	For sa H a T inh mo ( Cay n) L imi ted ma	Oth elat ed er r ties par	-	-	508 ,23	7 16,0 84, 840 (No te 1 、3)	-	-	-	-	508 ,23 7	15,0 04, 226 (No te 4 )
The Com pan y	Me Pro rity ga spe Priv Pla ate ent cem Fun d	Ava ilab le-f ale or-s fina nci al a sset nt -c urre	-	-	-	-	14,9 79	4,9 18,2 50	-	-	-	-	14,9 79	4,7 24, 401 (No te5 )
The Com pan y	Sto ck- Fo rmo sa Ind ies Cor ustr p	Inv d fo estm ent nte s ac cou r usin uity tho d g eq me	For sa I ndu stri mo es Cor atio por n	Sub sidi arie s	2	4 ,90 9,4 61	-	1,6 14,2 50					2	6,1 47, 583 (No te6 )

Note 1: On January 13, 2016, the Group reorganized its investment structure. Please refer to Note 6(5) for detail information.

Note 2: The ending balance includes the accumulated translation adjustment of investment accounted for using equity method of \$ (813,230).

Note 3: The acquisition amount was revalued using the exchange rate of TWD to USD on the date of the reorganization.

Note 4: The ending balance includes the evaluation adjustment of ending exchange rate of \$ (1,080,614).

Note 5: The ending balance includes the evaluation adjustment of ending exchange rate of \$(193,849).

Note 6: The ending balance includes the evaluation adjustment of ending exchange rate of \$(376,128).

(v) Information on the acquisition of real estate which exceeds \$300 million or 20% of the paid-in capital for the year ended September 30, 2016: None.

(vi) Information on the disposal of real estate which exceeds \$300 million or 20% of the paid-in capital for the year ended September 30, 2016: None.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(vii) Information regarding related-party purchase and sale transactions which exceed \$100 million or 20% of the paid-in capital:

					Tra ctio nsa	n d ils eta	Ab l tra nor ma ctio nsa n		te/A No unt cco (pa ble ) re ceiv abl ya e
Com pan y n am e	Rel d p ate art y	Rel atio nsh ip	Pur cha se ( Sal e)	Am t oun	% t tal o to cha pur se /sal e	Pay nt t me erm s	Un it p rice	Pay nt ter me ms	En din g bal anc e	% t o tota l	No te
The Co mp any	Pla stic s C tion Nan Ya orp ora	Oth elat ed p arti er r es	( Sal es)	\$ (7 6,8 32) ,99	( 10.8 6)%	th o Bef the 27 f th e fo llow ing ore nth mo	-		\$ 8 56, 673	3% 9.7
The Co mp any	For sa C hem ical s & Fib er C tion mo orp ora	〃	〃	( 3,9 26, 590 )	( 5.3 3)%	th o Bef the 27 f th e fo llow ing ore nth mo	-		450 ,96 2	5.1 2%
The Co mp any	For sa P che mic al C tion etro mo orp ora	Ass oci ates	〃	( 4,5 83, 725 )	(6. 23) %	th o Bef the 27 f th e fo llow ing ore nth mo	-		376 ,49 1	4.2 8%
The Co mp any	Ind ies For sa H Cor ustr mo eav y p.	〃	〃	( 141 ,66 7)	( 0.1 9)%	th o Bef the 27 f th e fo llow ing ore nth mo	-		3,0 89	0.0 4 %
The Co mp any	For sa D aik in A dva d C hem ical Co ., L td. mo nce	Join t ve ntu res	〃	( 372 ,31 5)	( 0.5 1)%	th o Bef the 27 f th e fo llow ing ore nth mo	-		48, 487	0.5 5 %
The Co mp any	For sa T affe ta C o. L td. mo	Oth elat ed p arti er r es	〃	( 252 ,31 6)	( 0.3 4)%	th o Bef the 27 f th e fo llow ing ore nth mo			20, 422	0.2 3 %
The Co mp any	Inte last Ta iwa n C tion p orp ora	〃	〃	( 147 ,18 5)	( 0.2 0)%	th o Bef the f th e fo llow ing 27 ore nth mo			15,5 71	0.1 8%
The Co mp any	Ele nic teri als (Ku nsh an) Co .Ltd .) Nan Ya Ma ctro	〃	〃	( 122 ,74 3)	( 0.1 7)%	O/A 60 da ys			18,2 24	0.2 1 %
The Co mp any	For sa I ndu stri es ( Nin bo) Co ., L td. mo g	Par -sub sidi ent ary	〃	( 2,6 68, 191 )	( 3.6 2)%	O/A 90 da ys	-		801 ,78 5	9.1 1 %	No te
The Co mp any	For sa A lic Est (N ing bo) Co ., L td. mo cry ers	Par -sub sidi ent ary	〃	( 1,45 2,0 80)	( 1.97 )%	O/A 90 da ys	-		165 ,61 2	1.8 8 %	No te
The Co mp any	For sa A BS Pla stic (N ing bo) Co ., L td. mo	Oth elat ed p arti er r es	〃	( 1,3 15,3 37)	( 1.79 )%	O/A 60 da ys	-		380 ,67 7	4.3 2 %
The Co mp any	last ics For sa P Cor U.S .A. mo p.,	oci Ass ates	〃	( 1,65 9,2 22)	( 2.2 5)%	da O/A 90 ys	-		366 ,80 5	4.1 7 %
The Co mp any	Pla stic s ( Gu zho u) Co td. Nan Ya ., L ang	Oth elat ed p arti er r es	〃	( 272 ,47 3)	( 0.3 7)%	O/A 60 da ys	-		50, 330	0.5 7 %
For sa I ndu stri es ( Nin bo) mo g Co td. ., L	Nan Ya Pla stic s (N ) Co ., L td. ant ong	Oth elat ed p arti er r es	〃	( 362 ,04 7)	( 5.0 1)%	th o Bef the 30 f th e fo llow ing ore nth mo	-		31, 860	7.0 0 %
For sa I ndu stri es ( Nin bo) mo g Co ., L td.	Nan Ya Pla stic s Fi lm (Na ) Co ., L td nto ng	Oth elat ed p arti er r es	〃	( 174 ,86 7)	( 2.4 2)%	th o Bef the 30 f th e fo llow ing ore nth mo	-		15,2 27	3.3 4 %
For sa I ndu stri es ( Nin bo) mo g Co ., L td.	Nan Ya Pla stic s ( Gu zho u) Co ., L td. ang	Oth elat ed p arti er r es	〃	( 280 ,17 3)	( 3.8 8)%	th o Bef the 30 f th e fo llow ing ore nth mo	-		58, 767	12.9 1 %

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

					ctio Tra nsa	ils n d eta	l tra Ab nor ma ctio nsa n		No te/A unt cco (pa ble ) re ceiv abl ya e
Com pan y n am e	Rel d p ate art y	Rel atio nsh ip	Pur cha se ( Sal e)	Am t oun	% t o to tal cha pur se /sal e	Pay nt t me erm s	Un it p rice	Pay nt ter me ms	En din g bal anc e	% t o tota l	No te
For sa I ndu stri es ( Nin bo) mo g Co ., L td.	Nan Ya Pla stic s (X iam en) Co ., L td.	Oth elat ed p arti er r es	( Sal es)	( 178 ,434 )	( 2.4 7)%	th o Bef the 30 f th e fo llow ing ore nth mo	-		31, 685	6.6 9 %
For sa A lic Est (N ing bo) mo cry ers td. Co ., L	The Co mp any	-sub sidi Par ent ary	〃	( 437 ,71 6)	(6.7 4)%	th o Bef the 90 f th e fo llow ing ore nth mo			-	-%	No te
For sa A lic Est (N ing bo) mo cry ers Co ., L td.	For sa S r A bso rbe nt P oly (N ing bo) Co mo upe mer ., Ltd	Sub sidi arie s	〃	( 545 ,05 0)	( 8.3 9)%	th o Bef the 90 f th e fo llow ing ore nth mo	-		431 66,	3.7 5 %	No te
The Co mp any	Nan Ya Pla stic s C tion orp ora	Oth elat ed p arti er r es	Pu rch ase	656 ,17 3	0.8 4 % B	27th efo he of the fol low ing re t nth mo	-		(7 2,2 29)	( 1.09 )%
The Co mp any	hem ical Fib tion For sa C s & er C mo orp ora	Oth elat ed p arti er r es	〃	1,55 1,42 4	1.9 9 % B	27th efo he of the fol low ing re t nth mo	-		( 218 ,22 1)	( 3.3 1)%
The Co mp any	For sa P che mic al C tion etro mo orp ora	Ass oci ates	〃	52, 218 ,89 1	89 66. %	th o Bef the 27 f th e fo llow ing ore nth mo	-		( 4,9 09, 869 )	(7 4.3 6)%
The Co mp any	For sa H Ind ies Cor ustr mo eav y p.	Ass oci ates	〃	454 ,564	0.5 8 % B	27th efo he of the fol low ing re t nth mo	-		( 45, 199 )	( 0.6 8)%
lic ing bo) For sa A Est (N mo cry ers Co ., L td.	The Co mp any	Par -sub sidi ent ary	〃	3,9 43, 041	66. 52 %	O/A 90 da ys	-		( 386 ,38 8)	(7 0.2 1)%	No No te 1 te,
For sa P oly len mo pro py e (N ing bo) Co td. ., L	The Co mp any	-sub sidi Par ent ary	〃	6,3 84, 599	80. 31 %	O/A 90 da ys	-		( 299 ,63 7)	( 54. 66) %	te 1 No No te,
For sa P oly eth len e (N ing bo) mo y Co ., L td.	The Co mp any	Par -sub sidi ent ary	〃	712 ,40 2	100 .00 %	O/A 90 da ys			-	- %	N , No te 1 ote

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

Note 1:Including the purchases of raw materials on behalf of related parties.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(viii) Information regarding receivables from related parties which exceed \$100 million or 20% of the paid-in capital:

			En din	Tur nov	Ov	erd ue	Am ive d ts r oun ece	All e fo ow anc
Com pan y n am e	Rel ate d p art y	atio ip Rel nsh	g bal anc e	er day	Am t oun	Ac tion tak en	in s ubs ent equ per iod s	r bad de bts	No te
The Co mp any	Nan Ya Pla stic s C tion orp ora	Oth elat ed p arti er r es	\$85 6,6 73	12. 31%	-	-	-	-
The Co mp any	For sa C hem ical s & Fib er C tion mo orp ora	〃	450 ,96 2	11. 21%	-	-	-	-
The Co mp any	For sa P che mic al C tion etro mo orp ora	Ass oci ates	376 ,49 1	13. 80%	-	-	-	-
The Co mp any	ndu stri es ( Nin bo) Co td. For sa I ., L mo g	-sub sidi Par ent ary	801 ,78 5	4.3 6%	-	-	-	-	No te
The Co mp any	lic ing bo) td. For sa A Est (N Co ., L mo cry ers	-sub sidi Par ent ary	165 ,61 2	7.2 5%			-	-	No te
The Co mp any	For sa A BS Pla stic s (N ing bo) Co ., L td. mo	Oth elat ed p arti er r es	380 ,67 7	3.7 2%	-	-	-	-
The Co mp any	For sa P last ics Cor U.S .A. mo p.,	Ass oci ates	366 ,80 5	4.6 4%	-	-	-	-
The Co mp any	For sa H Ind ies Cor ustr mo eav y p.	Ass oci ates	750 ,00 0		-	-	-	-
The Co mp any	Nan Ya Te chn olo Cor gy p.	Oth elat ed p arti er r es	4,5 00, 000	-	-	-	-	-
The Co mp any	Asi acif ic I Co an P stm ent nve rp.	〃	244 ,80 0	-	-	-	-	-
The Co mp any	For sa G Oce an M arin e C mo rou p orp	〃	3,5 60, 099	-	-	-	-	-
The Co mp any	For sa P last ic T ion Co rtat mo ran spo rp.	Ass oci ates	150 ,00 0	-	-	-	-	-
The Co mp any	For sa G ( Cay n) L imi ted mo rou p ma	〃	8,0 41, 750	-	-	-	-	-
The Co mp any	For sa A lic Est (N ing bo) Co ., L td mo cry ers	Par -sub sidi ent ary	220 ,77 6	-	-	-	-	-	No te
The Co mp any	For sa P oly len e (N ing bo) Co ., L td mo pro py	〃	299 ,63 7	-	-	-	-	-	No te
The Co mp any	Fuj ian Fu xin Sp ecia l St eel Co ., L td	Ass oci ates	576 ,10 5	-	-	-	-	-
The Co mp any	inh Ste el C tion For sa H a T mo orp ora	Oth elat ed p arti er r es	968 ,84 3	-	-	-	-	-
ndu stri Nin bo) td. For sa I es ( Co ., L mo g	oly eth len ing bo) td. For sa P e (N Co ., L mo y	Sub sidi arie s	497 ,88 8	-	-	-	-	-	No te
For sa A lic Est (N ing bo) Co ., L td. mo cry ers	For sa S r A bso rbe nt P oly (N ing bo) Co ., L td. mo upe mer	〃	2,0 83, 144	-	-	-	-	-	No te
For sa A lic Est (N ing bo) Co ., L td. mo cry ers	For sa P oly eth len e (N ing bo) Co ., L td. mo y	〃	374 ,58 2	-	-	-	-	-	No te
oly len ing bo) td. For sa P e (N Co ., L mo pro py	oly eth len ing bo) td. For sa P e (N Co ., L mo y	〃	906 ,53 2	-	-	-	-	-	No te
For sa P oly len e (N ing bo) Co ., L td. mo pro py	For sa S r A bso rbe nt P oly (N ing bo) Co ., L td. mo upe mer	〃	126 ,82 1	-	-	-	-	-	No te
lect ic ( Nin bo) Co td. For sa E ., L mo ron g	oly eth len e (N ing bo) Co td. For sa P ., L mo y	〃	116 ,48 7	-	-	-	-	-	No te
For sa E lect ic ( Nin bo) Co ., L td. mo ron g	For sa S r A bso rbe nt P oly (N ing bo) Co ., L td. mo upe mer	〃	130 ,10 8	-	-	-	-	-	No te

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

(ix) For information regarding trading in derivative financial instruments: None.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(x) Intercompany relationships and significant intercompany transactions:

				Int ion y tr act erc om pan ans s
No	Com pan y n am e	Cou nte art r p y		Fin ial anc Sta tem ent Ite m	Am t oun	Ter ms	Per e of tag cen soli dat ed l gr tota con oss sale al a tot ts s or sse
0	The Co mp any	For sa I ndu stri es ( Nin bo) Co ., L td. mo g	1	Sal es	\$ 2 8,1 91 ,66	O/A 90 da ys	2.0 6 %
0	The Co mp any	For sa I ndu stri es ( Nin bo) Co ., L td. mo g	1	Acc iva ble ts r oun ece	801 ,78 5	〃	0.1 9 %
0	The Co mp any	For sa A lic Est (N ing bo) Co ., L td. mo cry ers	1	Sal es	1,45 2,0 80	〃	1.12 %
0	The Co mp any	sa A lic (N ing bo) Co td. For Est ., L mo cry ers	1	Acc iva ble ts r oun ece	165 ,61 2	〃	0.0 4 %
0	The Co mp any	sa A lic (N ing bo) Co td. For Est ., L mo cry ers	1	Oth iva ble rela ted rtie er r ece s- pa s	220 ,77 6	O/A 30 da ys	0.0 5 %
0	The Co mp any	oly len e (N ing bo) Co td. For sa P ., L mo pro py	1	Oth iva ble rela ted rtie er r ece s- pa s	299 ,63 7	〃	0.0 7 %
1	ndu stri es ( Nin bo) Co td. For sa I ., L mo g	oly eth len e (N ing bo) Co td. For sa P ., L mo y	3	e fr rel ated ties Du om par	497 ,88 8		0.1 2 %
2	lic ing bo) td. For sa A Est (N Co ., L mo cry ers	The Co mp any	2	Sal es	437 ,71 6	th o Bef the f th e fo llow ing 90 ore nth mo	0.3 4 %
2	lic ing bo) td. For sa A Est (N Co ., L mo cry ers	sa S r A bso rbe oly (N ing bo) Co td For nt P ., L mo upe mer	3	Sal es	545 ,05 0	〃	0.4 2 %
2	lic ing bo) td. For sa A Est (N Co ., L mo cry ers	sa S r A bso rbe oly (N ing bo) Co td. For nt P ., L mo upe mer	3	iva ble Acc ts r oun ece	66, 431	〃	0.0 2 %
2	lic ing bo) td. For sa A Est (N Co ., L mo cry ers	sa S r A bso rbe oly (N ing bo) Co td. For nt P ., L mo upe mer	3	e fr rel ated ties Du om par	2,0 83, 144	-	0.4 9 %
2	For sa A lic Est (N ing bo) Co ., L td mo cry ers	oly eth len e (N ing bo) Co td. For sa P ., L mo y	3	Du e fr rel ated ties om par	347 ,58 2	-	0.0 8 %
3	For sa P oly len e (N ing bo) Co ., L td. mo pro py	sa S bso rbe oly (N ing bo) Co td. For r A nt P ., L mo upe mer	3	Du e fr rel ated ties om par	126 ,82 1	-	0.0 3 %
3	For sa P oly len e (N ing bo) Co ., L td. mo pro py	oly eth len ing bo) td. For sa P e (N Co ., L mo y	3	Du e fr rel ated ties om par	906 ,53 2	-	0.0 2 %
4	For lect ic ( Nin bo) Co ., L td. mo sa e ron g	oly eth len ing bo) td. For sa P e (N Co ., L mo y	3	Du e fr rel ated ties om par	116 ,48 7	-	0.0 3 %
4	For lect ic ( Nin bo) Co ., L td. mo sa e ron g	bso rbe oly ing bo) td. For sa S r A nt P (N Co ., L mo upe mer	3	Du e fr rel ated ties om par	130 ,10 8		0.0 3 %

Note 1: Assigned numbers represent the following:

• 1. 0 represents the parent company.
• 1. The subsidiaries are represented numerically starting from 1.

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

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

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) Information on investment (excluding those in Mainland China, the amounts expressed USD are in thousands):

				Ori ina l in g ves	tme nt A unt mo	Ba lan	s of M ce a	ar 3 1, 201 6		Inv inc
Inv esto r co mp any	Inv este e co mp any	Loc atio n	Ma jor tion op era s	Jun e 30 , 201 6	Dec ber 31 em , 201 5	Sha res	%	Ca ing rry val ue	Net inc e of om inv este e	estm ent om e (los s) r ized by eco gn the inv esto r com pan y	No tes
The Co mp any	For sa P che mic al C tion etro mo orp ora	Tai wan	Pet hem ical roc s	\$ 3 0,1 44, 951	\$ 3 0,1 44, 951	2,7 20, 549	28. 56%	\$ 7 9,2 55, 962	\$ 5 2,9 64, 971	\$ 1 5,0 57, 825	No No te 2 te,
The Co mp any	For sa P last ics Cor U.S .A. mo p.,	U.S .A	Che mic als	5,6 14,0 24	5,6 14,0 24	70	22. 61%	51, 729 ,444	23, 414 ,984	5,2 70, 401	No No te 2 te,
The Co mp any	For sa H Ind ies Cor ustr mo eav y p.	Tai wan	Me cha nic al e ipm ent qu	2,4 98, 463	2,4 98, 463	651 ,82 8	32. 92%	7,8 26, 306	( 221 ,68 6)	( 57, 929 )	No No te 2 te,
The Co mp any	Sky Dr n In nt L imi ted tme ago ves	Sam oa	Inv estm ent	6,2 01, 032	6,2 01, 032	200 ,00 0	50. 00%	1,4 82, 300	( 2,0 49, 957 )	( 1,02 4,9 79)	No No te 2 te,
The Co mp any	last ics Cor ( Cay td.) For sa P n L mo p. ma	Cay ma n	Inv estm ent	19, 104 ,30 1	19,0 75, 078	75	100 .00 %	26, 600 ,43 9	( 317 ,35 9)	( 317 ,35 9)	te 1 No No te,
The Co mp any	i Li er C Ma ao P ow orp	Tai wan	Ele ctri city	5,9 85, 531	5,9 85, 531	498 ,84 2	24. 94%	10, 891 ,47 9	4,3 00, 784	1,0 72, 615	te 2 No No te,
The Co mp any	For sa S co T ech nol Co mo um ogy rp.	Tai wan	Ele nic fac ctro ture s m anu	2,8 37, 042	2,8 37, 042	225 ,41 5	29. 06%	5,7 58, 609	510 ,50 9	148 ,35 2	No No te 2 te,
The Co mp any	For sa T ion Co rtat mo ran spo rp.	Tai wan	Tra tion orta nsp	60, 664	60, 664	4,5 46	33. 33%	718 ,71 9	85, 160	28, 384	No No te 2 te,
The Co mp any	For sa F airw Cor mo ay p.	Tai wan	Tra tion orta nsp	33, 330	33, 330	4,4 72	33. 33%	78, 247	( 8,5 31)	( 2,8 43)	No te 2
The Co mp any	Yi- Jih Dev elo Co ent pm rp.	Tai wan	Con ctio stru n	57, 000	57, 000	5,7 00	28. 72%	62, 684	549	159	No te 2
The Co mp any	Ya Tai De vel Co ent opm rp.	Tai wan	Dev elop f la nd nt o me	54, 034	54, 034	1,3 06	45. 04%	26, 760	( 13,8 87)	(6, 255 )	No te 2
The Co mp any	sa A sah i Sp and ex C Ltd For mo o.,	Tai wan	Art ific ial fibe r	501 ,75 2	501 ,75 2	50	50. 00%	1,3 12,7 52	224 ,52 9	112 ,26 5	te 2 No
The Co mp any	bile rati For sa A Co uto mo mo rpo on	Tai wan	obi le Au tom	270 ,44 2	270 ,44 2	27, 044	45. 00%	(6 4,9 93)	38, 538	17, 342	No te 2
The Co mp any	Wh a Y a P ark Ma Co ltin Cor atio n L td. ent nag em nsu g por	Tai wan	Con sult ing vic ser e	341	341	33	33. 00%	1,9 48	262	86	No te 2
The Co mp any	For sa D aik in A dva d C hem ical Co ., L td. mo nce	Tai wan	Che mic al i ndu stry	100 ,00 0	100 ,00 0	24	50. 00%	861 ,84 5	114 ,26 0	57, 130	No te 2
The Co mp any	Su- Hu a T ion Co rati rtat ran spo rpo on	Tai wan	Tra tion orta nsp	50, 000	50, 000	7,6 59	25. 00%	242 ,494	97, 358	24, 340	No te 2
The Co mp any	For sa R es C tion mo eso urc orp ora	Tai wan	Min ing ind ustr y	4,1 62, 500	4,1 62, 500	416 ,25 0	25. 00%	4,2 96, 548	( 362 ,21 1)	(9 0,5 53)	No No te 2 te,
The Co mp any	nvi l Te chn olo Cor atio For sa E nta mo ron me gy por n	Tai wan	iron l in dus Env nta try me	417 ,14 5	417 ,14 5	41, 714	24. 34%	257 ,65 2	( 14,4 88)	( 3,5 26)	te 2 No No te,
The Co mp any	imi ted For sa G ( Cay n) L mo rou p ma	Cay ma n	Inv estm ent	377	377	13	25. 00%	212 ,72 8	275 ,58 7	68, 897	No No te 2 te,
The Co mp any	For sa P last ics Dev elo Co rati Ltd ent mo pm rpo on	Tai wan	Con ctio stru n	100 ,00 0	15,0 00	10, 000	33. 33%	92, 818	( 8,5 31)	( 2,8 44)	No te 2
The Co mp any	For sa I ndu stri es C tion mo orp ora	U.S .A	Che mic als	6,5 46, 250	4,9 32, 000	2	100 .00 %	6,4 17,5 83	( 80, 538 )	( 80, 538 )	No No te 1 te,
The Co mp any	For sa P last ics Inte tion al ( Cay n) L imi ted mo rna ma	Cay ma n	Inv estm ent	15,3 70, 112	-	50	100 .00 %	15, 004 ,57 2	-	-	No No te 1 te,
For sa P last ics mo	For sa I ndu stri es ( Ho Kon ) L imi ted mo ng g	Ho Kon ng g	Rei stm ent nve	7,3 67, 936	7,7 67, 270	-	100 .00 %	26, 397 ,86 1	( 309 ,564 )	( 309 ,564 )	No te 2 , No te 3
Cor ( Cay n L td.) p. ma				(U SD 23 4,9 02)	(U SD 234 ,90 2)			(U SD 841 ,60 7)	(U SD -9,5 31)	(U SD -9,5 31)
ndu stri For sa I mo es	sa O lefi .C. For L.L mo ns,	U.S .A	Ole fins	3,0 01, 726	3,1 46, 616	-	33. 00%	2,9 15,8 60	-	-	te 2 te 3 No , No
Cor atio por n				(U SD 95 ,70 0)	(U SD 95 ,70 0)			(U SD 92, 962 )

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 September 30, 2016, was 31.3660 to 1.

The average exchange rate of New Taiwan dollars to US dollars for the nine-month periods ended September 30, 2016, was 32.4816 to 1.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(c) Information regarding investments in Mainland China (amounts expressed in USD are in thousands):

(i) Information on indirect investment in companies in Mainland China:

				Inv estm ent	Six nth rio ds e nde d -mo pe Jun e 30 201 6 ,		Inv estm ent		Dir and ect	Rec ized ogn in o r lo ga ss
Na of the PR C i stee me nve co mp any	Pri ma ry bus ine ss sco pe	Am t oun of p aid -in ital cap	f Me tho d o inv estm ent	nsf ed tra err fro aiw m T an, inn ing of beg iod per	Rem itta nce	Re mit tan ce	nsf ed tra err fro m T aiw an, end of iod per	Eq uity in t he nin (los ) ear gs ses	ind irec t ing sha reh old tag e b per cen y the co mp any	fro m inv for estm ent the nt cu rre iod per (No te 1 )	Ca ing rry of i val stm ent ue nve of iod end per	Rem itte d g ain inv estm ent on , , of iod end per
For sa I ndu stri es ( Nin bo) Co ., L td. mo g	Pla stic s	\$ 5 ,74 0,2 34	Ind irec t	\$ 4 ,20 6,5 83	-	-	\$ 4 ,20 6,5 83	\$ 7 9,3 93	100 .00 %	\$ 7 9,3 93	\$5, 967 ,23 8	-
For sa A lic Est (N ing bo) Co ., L td. mo cry ers	lic Acr este y rs	(U SD 177 ,35 0) 7,8 49, 446 (U SD 248 ,97 3)	inv estm ent Ind irec t inv estm ent	(U SD 126 ,00 0) 5,3 705 32, (U SD 163 ,57 0)	-	-	(U SD 126 ,00 0) 5,3 705 32, (U SD 163 ,57 0)	(U SD 2,4 44) (7 39, 243 ) (U SD -22 ,75 9)	100 .00 %	(U SD 2,4 44) (7 39, 243 ) (U SD -22 ,75 9)	(U SD 190 ,24 5) 10,6 43, 012 (U SD 339 ,31 7)	-
For sa P oly len e (N ing bo) Co ., L td. mo pro py	Pol len ypr opy e	6,9 80, 064 (U SD 211 ,90 0)	Ind irec t inv estm ent	6,9 80, 064 (U SD 211 ,90 0)	-	-	6,9 80, 064 (U SD 211 ,90 0)	1,15 9,4 27 (U SD 35, 695 )	100 .00 %	1,15 9,4 27 (U SD 35, 695 )	8,0 07, 504 (U SD 255 ,29 2)	-
For sa S r A bso rbe nt P oly (N ing bo) mo upe mer Co ., L td.	Ab sorb ent lym po er	834 ,29 3 (U SD 26, 300 )	Ind irec t inv estm ent	624 ,93 0 (U SD 19,3 00)	-	-	624 ,93 0 (U SD 19,3 00)	( 250 ,45 2) (U SD -7,7 11)	100 .00 %	( 250 ,45 2) (U SD -7,7 11)	739 ,78 6 (U SD 23, 586 )	-
For lect ic ( Nin bo) Co ., L td. mo sa e ron g	Ele nic ctro s	74, 648 (U SD 2,2 60)	Ind irec t inv estm ent	137 66, (U SD 2,0 00)	-	-	137 66, (U SD 2,0 00)	21, 798 (U SD 671 )	100 .00 %	21, 798 (U SD 671 )	269 ,16 7 (U SD 8,5 81)	-
For sa P oly eth len e (N ing bo) Co ., L td. mo y	Pol hy len yet e	1,6 70, 088 (U SD 57, 500 )	Ind irec t inv estm ent	1,67 0,0 88 (U SD 57, 500 )	-	-	1,67 0,0 88 (U SD 57, 500 )	( 580 ,48 7) (U SD -17 ,87 1)	100 .00 %	( 580 ,48 7) (U SD -17 ,87 1)	771 ,154 (U SD 24, 586 )	-
itsu i A dva d C hem ical Co td. For sa M ., L mo nce	Ele lyte ctro	244 ,19 6 (U SD 8,2 00)	Ind irec t inv estm ent	122 ,09 8 (U SD 4,1 00)	-	-	122 ,09 8 (U SD 4,1 00)	( 15,5 86) (U SD -48 0)	50. 00%	(7,7 93) (U SD -24 0)	103 ,12 9 (U SD 3,2 88)	-
Fuj ian Fu xin Sp ecia l St eel Co ., L td.	Ste el	24, 768 ,00 0 (U SD 800 ,00 0)	Ind irec t inv estm ent	6,1 92, 000 (U SD 200 ,00 0)	-	-	6,1 92, 000 (U SD 200 ,00 0)	( 4,0 99, 915 ) (U SD -12 6,2 23)	32. 90%	( 1,02 4,9 79) (U SD -31 ,55 6)	1,48 1,73 4 (U SD 47, 240 )	-
Jian bon Fib ite Sw or ( ) Car er C anc gsu om pos td. Co ., L	Car bon fib er	555 ,51 7 (U SD 17,0 00)	Ind irec t inv estm ent	70, 770 (U SD 2,1 60)	29, 223 ( US D9 00)	-	993 99, (U SD 3,0 60)	-	18.0 0%	-	95, 979 (U SD 3,0 60)	-

Note 1: Recognized gains or losses from investment for the current period were based on the financial report reviewed by the Company's auditor, except for that of Fujian Fuxin Special Steel Co., which were based solely on the reports which were not reviewed by auditors.

Note 2: Except for Formosa Mitsui Advanced Chemical Co., Ltd., Fujian Fuxin Special Steel Co., Ltd. and Swancor (Jiangsu) Carbon Fiber Composite Co., Ltd., the amounts of investment of other subsidiaries had already been written off in the consolidated financial statements.

FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ii) Quota for investment in Mainland China:

Ac ive i fro la t t tan cu mu re m ce m Ta iw M in lan d C h ina to an a , d o f he io d t en p er	Am f inv d t o tm t a ou n es en p p ro ve by In Co iss ion tm t ve s en mm , in is f ic A f fa irs M Ec try o on om ( No 1 ) te	L im i he f inv t o t t o tm t n am ou n es en in in C ina ( 2 ) M lan d h No te a
2 5, 2 9 4, 5 9 8	2 9, 2 1 5, 4 1 6	-
( U S D 7 8 7, 4 3 0 )	( U S D 9 3 1, 4 4 3 )

Note: The exchange rate of New Taiwan dollars to US dollars on September 30, 2016, was 31.3660 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Segment information

Operating segments are combined and reconciled as follows:

	For the nine-month periods ended September 30, 2015
	Plastic division	Polyolefin division	Polypropylene division	Tairylan division	Chemistry division	Others divisions	Adjustments and eliminated	Total
Revenue:
From external customers	\$ 48,005,345	27,768,355	28,225,526	19,342,665	19,516,206	2,841,609	-	145,699,706
From sales among intersegments	1,032,985	1,353,501	74,686	45,693	1,920,5116	3,847,515	(8,274,891)	-
Total revenue	\$ 49,038,330	29,121,856	28,300,212	19,388,358	21,436,717	6,689,124	(8,274,891)	145,699,706
Reportable segment profit or loss	\$ 2,835,581	2,802,824	3,540,882	(2,054,513)	2,457,993	987,396	17,856,406	28,426,569
				For the nine-month periods ended September 30, 2016
	Plastic division	Polyolefin division	Polypropylene division	Tairylan division	Chemistry division	Others divisions	Adjustments and eliminated	Total
Revenue:
From external customers	\$ 46,301,348	27,425,170	21,917,180	15,707,159	15,638,853	2,736,389	-	129,726,099
From sales among intersegments	899,573	1,277,681	47,532	32,875	1,391,056	3,533,337	(7,182,054)	-
Total revenue	\$ 47,200,921	28,702,851	21,964,712	15,740,034	17,029,909	6,269,726	(7,182,054)	129,726,099
Reportable segment profit or loss	\$ 2,649,507	2,916,609	3,532,683	(3,062,904)	1,529,181	822,210	22,048,506	30,435,792
	Plastic	Polyolefin	Polypropylene	Tairylan	Chemistry	Others	Adjustments
	division	division	division	division	division	divisions	and eliminated	Total
Reportable segment assets
June 30, 2015	\$ 35,284,314	17,018,016	18,172,134	42,665,906	8,552,311	347,959,768	(47,374,314)	422,278,135
December 31, 2015	\$ 33,735,122	17,553,153	19,518,724	41,711,650	8,933,130	348,019,862	(45,970,591)	423,501,050
June 30, 2015	\$ 31,674,072	17,652,931	17,649,164	37,050,076	7,529,358	348,808,722	(38,718,520)	421,645,803