F.T.C - AGM Information 2016 | FinancialReports.eu

FORMOSA TAFFETA CO., LTD.

2016 ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK (SUMMARY)

(This English translation is prepared in compliance with the Chinese version and is for reference purposes only. If there are any inconsistency between the Chinese original and this translation, the Chinese version shall prevail.)

JUNE 24, 2016

MEETING PROCEDURE………………………………………………....1 MEETING AGENDA……………………………………………………...2 DISCUSSION ITEM(S) (I)………………………………………………...3 REPORT ITEMS………………………………………………………….12 RATIFICATION ITEMS……………………………………………….…22 DISCUSSION ITEM(S) (II)……………………………….……………...24 APPENDIX……………………………….………………………………42

Independent Auditor’s Report

 Information regarding the Proposed Compensation, approved by the Board of Directors of the Company, to Employees, Directors and Supervisors

FORMOSA TAFFETA CO., LTD.

2016 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

I. Call Meeting to Order

II. Chairman’s Speech

III. Discussion Item(s) (I)

IV. Reporting Items

V. Ratification Items

VI. Discussion Item(s) (II)

VII. Extraordinary Motions

VIII. Meeting Adjourned

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FORMOSA TAFFETA CO., LTD.

2016 ANNUAL SHAREHOLDERS’ MEETING AGENDA

Time: 10:00 a.m., Friday, June 24[th] , 2016 Venue: 317, Shu Liu Rd., Douliu 640, Yunlin County, Taiwan

I. Discussion Item(s) (I)

Amendments of the Articles of Incorporation of the Company, shown on the attached comparison table

Please discuss and resolve.

II. Report Items

Business report for 2015
Supervisors’ review Report for 2015
Report of compensation of employees, directors and supervisors for 2015

III. Ratification Items

The 2015 business report and financial statements required by the Company Act

Please ratify them.

The proposal for distribution of 2015 profits required by the Company Act

Please ratify it.

IV. Discussion Item(s) (II)

Amendments of the Rules for Election of Directors and Supervisors of the Company, shown on the attached comparison table, for the establishment of an audit committee according to regulations of the Financial Supervisory Commission

Please discuss and resolve.

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Discussion Item(s) (I) Proposal 1

Proposal: Amendments of the Articles of Incorporation of the Company, shown on the attached comparison table Please discuss and resolve.

		Proposed bythe Board of	Proposed bythe Board of	Directors
Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
Chapter IV	Directorsand Supervisors	Chapte r IV	Directors
Article 18	The Company shall have 11 Directorsand 3 Supervisors, and they shall be elected by shareholders from the nominees listed in the roster of candidates under the candidate nomination system. The term of office of directorsand supervisorsshall be three years, and they shall be eligible for re-elections and consecutive terms. The total shares of nominal stocks held by the entire body of directorsand supervisorsof the Companyshall not be	Article 18	The Company shall have 11 Directors, and they shall be elected by shareholders from the nominees listed in the roster of candidates under the candidate nomination system. The term of office of directors shall be three years, and they shall be eligible for re-elections and consecutive terms. The total shares of nominal stocks held by the entire body of directors of the Company shall not be less than a specified percentage of its total	In response to the requirement made by the Competent Securities Authority, an audit committee shall be established, and rules referring to the supervisors shall be deleted.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	less than a specified percentage of its total issued shares; the rules regulating the minimum percentage shall follow the ones prescribed by the Competent Securities Authority. The entire body of directors in the preceding paragraph shall include three independent directors, whose nomination, election methods and other related matters shall be conducted in compliance with the Company Act and related regulations of Competent Securities Authority. The board of directors is authorized to determine the compensation of directorsand supervisorsaccording to their extent and		issued shares; the rules regulating the minimum percentage shall follow the ones prescribed by the Competent Securities Authority. The entire body of directors in the preceding paragraph shall include three independent directors, whose nomination, election methods and other related matters shall be conducted in compliance with the Company Act and related regulations of Competent Securities Authority. The Company shall establish an audit committee composed of the entire body of independent directors under the Article 14-4 of the Securities and Exchange Act, and the exercise of powers

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	value of the contribution provided for the Company and the common compensation standards of the same industry. The Company shall buy D&O insurance for the directorsand supervisorsduring the term.		of the Audit Committee and the related shall follow the Securities and Exchange Act and other relevant laws and regulations. The board of directors is authorized to determine the compensation of directors according to their extent and value of the contribution provided for the Company and the common compensation standards of the same industry. The Company shall buy D&O insurance for the directors during the term.
Article 22	The Company’s business polices and other critical matters shall be resolved by the board of directors. Pursuant to Article	Article 22	The Company’s business polices and other critical matters shall be resolved by the board of directors. Pursuant to Article	In response to the establishment of a vice chariman, the first

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	203 of the Company Act, except the first meeting of each term of the board of directors, meetings shall be convened and presided by the chairman of the board of directors. In case the chairman of the board of directors cannot exercise his power and authority, he shall designate one of the managing directors to act on his behalf. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting chairman of the board of directors. During the recess of the board of directors, the Company’s board of directors may authorize the		203 of the Company Act, except the first meeting of each term of the board of directors, of each term of the board of directors, meetings shall be convened and presided by the chairman of the board of directors. In case the chairman of the board of directorsis on leave or absent or cannot exercise his power and authority for any cause, a designation shall be executed pursuant to Article 208 of the Company Act. During the recess of the board of directors, the Company’s board of directors may authorize the chairman to exercise its power and authority, except for requirements of laws	paragraph of this article is amended.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	chairman to exercise its power and authority, except for requirements of laws or regulations or the Company's Articles of Incorporation, and matters that involve the Company’s material interest or significant transactions with related parties and shall be resolved by the board of directors, as follows: 1. Examination and approval of all important contracts 2. Examination and approval of mortgages and other loans 3. Examination and approval of the purchase and disposal of the Company’s properties and		or regulations or the Company's Articles of Incorporation, and matters that involve the Company’s material interest or significant transactions with related parties and shall be resolved by the board of directors, as follows: 1. Examination and approval of all important contracts. 2. Examination and approval of mortgages and other loans 3. Examination and approval of the purchase and disposal of the Company’s properties and real estate 4. Appointment of directors and supervisors of

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	real estate 4. Appointment of directors and supervisors of invested enterprises 5. Examination and approval of record dates of capital increase/reduction and the record date of distribution of cash dividend		invested enterprises 5. Examination and approval of record dates of capital increase/reduction and the record date of distribution of cash dividend
Article 23	Except for what are as otherwise stated in the Act or in the Company Act, a resolution on a matter at a board of directors meeting requires the approval of a majority of the directors present at the meeting that shall be attended by a majority of all directors. If a director is, for any reason, unable to attend a board meetingin	Article 23	Except for what are as otherwise stated in the Act or in the Company Act, a resolution on a matter at a board of directors meeting requires the approval of a majority of the directors present at the meeting that shall be attended by a majority of all directors. If a director is, for any reason, unable to attend a board meetingin	In response to the requirement made by the Competent Securities Authority, an audit committee shall be established, and rules referring to the supervisors shall be

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	person, he or she may appoint another director to attend as their proxy by giving to that director a written proxy stating the scope of authorization with respect to the reasons for the meeting. However,a person may accept a proxy from one person only. Attendance via tele- or video-conference is deemed as attendance in person. The reasons for calling a board of directors meeting shall be notified to each directorand supervisorat least seven days in advance. In emergency circumstances, however, a meeting may be called on shorter notice. The		person, he or she may appoint another director to attend as their proxy by giving to that director a written proxy stating the scope of authorization with respect to the reasons for the meeting. However,a proxy may accept a proxy from one person only. Attendance via tele- or video-conference is deemed as attendance in person. The reasons for calling a board of directors meeting shall be notified to each director at least seven days in advance. In emergency circumstances, however, a meeting may be called on shorter notice. The notice set forth in the	deleted.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	notice set forth in the preceding paragraph may be effected in writing, electronic form, or by fax.		preceding paragraph may be effected in writing, electronic form, or by fax.
Article 25	Besides independently exercising his or her power and authority pursuant to relevant laws and regulations, a supervisor may attend meetings of the board of directors, but he or she shall not participate in voting.	Article 25	(Deleted)	In response to the establishment of an audit committee, this article is deleted.
Article 27	In compliance with Article 23 of Articles of Incorporation, the Company hires advisors and important officers by the resolution of the board of directors.	Article 27	(Deleted)	In response to practical operations, this article is deleted.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
Article 28	The appointment or dismissal of the other officers shall be conducted by the general manager and reported to the board of directors for examination and approval.	Article 28	(Deleted)	In response to practical operations, this article is deleted.
Article 29	The fiscal year of the Company shall be from January 1 to December 31 every year. After the close of each fiscal year, the board of directors shall prepare statements and records, shown on the left,at shareholders’ meeting for their auditingafter forwarding them to supervisors for examination 30 days before the general shareholders’meeting: (1) the business report; (2) the financial statements;and	Article 29	The fiscal year of the Company shall be from January 1 to December 31 every year. After the close of each fiscal year, the board of directors shall prepare the following statements and records andforward the same at shareholders’ meeting for their auditing: (1) the business report; (2) the financial statements; and (3) the surplus earning distribution or loss off-setting proposals.	In response to the establishment of an audit committee, rules referring to supervisros shall be deleted.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	(3) the surplus earning distribution or loss off- setting proposals.
	(Appended)	Article 30	If there is profit, 0.05% to 0.5% of pre- tax profit of the current year that does not deduct employees’ and directors’ compensation shall be distributed as employees’ compensation and at most 0.5% of such profit as directors’ compensation. However, the Company’s accumulated losses shall have been covered. In regard to resolutions of employees’ and directors’ compensation, Article 235-1 of the Company Act shallgovern.	In response to Act 235-1 of the Company Act, regulations with respect to the distribution of employees’ and directors’ compensation are appended.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
Article 30	Besides the appropriation of income tax pursuant to relevant laws and regulations, the annual net income shall be used initially to cover any accumulated deficit, then another 10% shall be set aside as legal reserve and, if necessary, special reserve and then the dividends. The remainder (distributable earnings after interest)plus the unappropriated earnings of the previous years shall be distributed according to the resolution of the shareholders’ dividend distribution plan, which shall be proposed by the Board of Directors and adopted bythe	Article 31	Besides the appropriation of income tax pursuant to relevant laws and regulations, the annual net income shall be used initially to cover any accumulated deficit, then another 10% shall be set aside as legal reserve and, if necessary, special reserve, and then the dividends. The remainder plus the unappropriated earnings of the previous years shall be distributed according to the resolution of the shareholders’ dividend distribution plan, which shall be proposed by the Board of Directors and adopted by the shareholders in the Annual Shareholders’	In response to the creation of regulations with respect to employees’ and directors’ compensation , the 3rd paragraph of the original article is deleted and the order of articles is adjusted.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	shareholders in the Annual Shareholders’ Meeting. The aforesaid special reserves include: 1. Reserve for special purposes 2. Investment income recognized under the equity method 3. Net proceeds from the recognition of financial transactions, only when the accumulated value decrease should the special reserve be adjusted by the same amount, subject to the provisions in this section 4. Other special reserves set out by legal provisions.		Meeting. The aforesaid special reserves include: 1. Reserve for special purposes 2. Investment income recognized under the equity method 3. Net proceeds from the recognition of financial transactions, only when the accumulated value decrease should the special reserve be adjusted by the same amount, subject to the provisions in this section 4. Other special reserves set out by legal provisions. As the Company operated in a volatile

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	After deducting the above item, the remaining earnings, if any, shall be appropriated up to 1 % as directors’and supervisors’ compensation, and 0.1% to 1% as employees’s bonus, which shall be recognized as current expense. As the Company operated in a volatile business environment and is in the stable growth stage, the dividend policy includes cash dividends, stock dividends and capital increase by earnings recapitalization. At least 50% of the Company’s distributable earnings shall be appropriated as dividends after deductingthe legal		business environment and is in the stable growth stage, the dividend policy includes cash dividends, stock dividends and capital increase by earnings recapitalization. At least 50% of the Company’s distributable earnings shall be appropriated as dividends after deducting the legal reserve and special reserves. The Company would prefer distributing cash dividends. However, if significant investment measures are taken or the Company’s financial structure needs to be improved, part of the dividends would be in the form of stock dividends but not to exceed 50 % of the total dividends.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
	reserve and special reserves. The Company would prefer distributing cash dividends. However, if significant investment measures are taken or the Company’s financial structure needs to be improved, part of the dividends would be in the form of stock dividends but not to exceed 50 % of the total dividends.
Article 31	The internal organization of the Corporation and the detailed procedures of business operation shall be determined by the Board of Directors.	Article 32	The internal organization of the Corporation and the detailed procedures of business operation shall be determined by the Board of Directors.	The amendment of Articles is accompanied with the adjustment of the sequence number of Articles.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
Article 32	In regard to all matters not provided for in these Articles of Incorporation, the Company Act, other related laws and regulations shall govern.	Article 33	In regard to all matters not provided for in these Articles of Incorporation, the Company Act, other related laws and regulations shall govern.	The amendment of Articles is accompanied with the adjustment of the sequence number of Articles.
Article 33	If the extra employees' welfare funds are available, under the circumstances that the employees’ welfare committee has implemented every related employees’ welfare business, the amount of not exceeding 10% of the funds can be used for the purchase of “shares in fractional units and government bonds of the Company”.	Article 34	If the extra employees' welfare funds are available, under the circumstances that the employees’ welfare committee has implemented every related employees’ welfare business, the amount of not exceeding 10% of the funds can be used for the purchase of “shares in fractional units and government bonds of the Company”.	The amendment of Articles is accompanied with the adjustment of the sequence number of Articles.

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Article	Before Amendment	Article	After Amendment	Reason(s) for Amendment
Article 34	(Omitted)	Article 35	‘The 46th amendment is added to the existing Article on June 24, 2016. Such amendment regarding the establishment of an Audit Committee and deletion of supervisors will be applied upon the expiry of the term of office of supervisors elected at the annual shareholders’meeting on June 24, 2013.’	The adjustment of the sequence number of Articles is synchromized with the amendment of Articles, and dates of the amendment and administration are added.

Resolution :

Report Items

Business Report for 2015 Explanatory Notes:

Please refer to Page 13 for the Business Report for 2015.

2. Supervisors’ Review Report for 2015 Explanatory Notes:

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The Company’s Supervisors reviewed the financial statements of 2015 and issued their review report according to the applicable laws. Please refer to Page 21 for the Supervisors’ Review Report.

Report of compensation of employees, directors and supervisors for 2015

Explanatory Notes:

According to the newly amended Article 30 of Articles of Incorporation approved by the Board of Directors on March 16, 2016, 0.2% of 2015 pre-tax income without deductions of compensation of employees, directors and supervisors, NT $ 6,096,167, is appropriated as employees’ compensation; another 0.1%, NT$ 3,048,083, is as directors’ and supervisors’ compensation. The aforementioned compensation is all paid in cash.

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Formosa Taffeta Company Limited 2015 Annual Business Report

1. 2015 Overview of Operations

In 2015, the Company's consolidated revenue was US$ 1,296,576 thousand, a decrease of US$ 160,846 thousand, or 11%, from US$ 1,457,422 thousand reported in 2014. The consolidated pre-tax income was US$ 113,751 thousand, a decrease of US$ 12,420 thousand, or 9.8%, from US$ 126,171 thousand reported in 2014.

2. Operations Highlight

Through reviewing operations in 2015, operating performance was deeply impacted by the international financial circumstances, primarily including declining oil prices throughout the year, falling raw material prices, partial capital markets (stock/future/bond) bubbles derived from easy monetary, a lower growth rate of Mainland China than previous years, competitive currency devaluation of the non-US dollars, and so on. This led to a decrease of US$ 160,846 thousand, by 11%, of the Company's revenue, which was primarily attributed to a dramatic drop—NT$ 3.3 billion--in revenue of the Oil Business Division, whose decline resulted from the falling oil prices. The secondary factor in such decline was difficulty in raising the selling price of all products, which arose from falling prices of raw materials.

The above circumstances are conservatively expected to be improved because there is going to be a pick-up in economy. The demand for functional sportswear in America and Europe significantly increases in 2015, which will facilitate popularity of functional garments, and such popularity appears to last till 2016. Besides, there will be no too much room for the international oil prices to go on falling. Furthermore, steel, cement, coal and other heavy industries in China engage in cutting excessive industrial capacity; this may allow raw material prices to rally. The aforementioned are all beneficial to the growth of the Company’s operating performance.

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3. 2016 Operation Plans and Outlook

The business plans and outlook of seven major product categories for 2016 are as follows:

(1) Filament dyeing processed fabrics:

The end markets of filament fabrics are mainly in four categories: Outdoor Performance, Sportswear, Casual Fashion and Umbrella. The Company's textile products keep pace with diversified development trends; R&D and sales of functional and differential products, such as lightweight fine denier fabric, stretch fabric, waterproof and breathable laminated and coated fabrics, etc. are expanded so as to increase the ratio of volume to price, and to promote production process improvement, cost reduction and energy conservation in line with SOP in each weaving/dyeing plant at home and abroad. Requirements of many performance assessment indicators were thus met in 2015.

For filament fabric, in the aspect of production and sales, we are active in developing new brand customers and continue to deepen the close cooperation with current strategic brand partners of the supply chain by involving ourselves in their planning and designs of new seasonal products , and form an alliance with supply chain manufacturers that are designated by brand customers, by working together on from design and development to the employment of raw materials to promotion of garments so as to dominate distribution channels and increase the market shares. From operation perspective, we integrated the individual advantages of five plants in Taiwan, Mainland China and Vietnam, and allocate their capacity to enhance the overall synergy. With such efforts, strategic partnerships with Chinese brand customers of sportswear and outdoor casual clothing have been growing in 2015, which injects vitality into the Company; moreover, significant progress in transformations of some products has been made under such collaboration. As for cooperation on export and feather down fashion markets, bitter cold in high northern latitudes is

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highly beneficial to the increase of demand for thermal clothing. In the Vietnam Plant, differentiation of product lines is strengthened through the installment of wet-process coating machines and thermal paper transfer machines, which may increase opportunities to build relationships with strategically cooperative customers. The quantity and added value of textiles of this plant synchronously grow on account of multinational duty exemption and preferences, zero export duties on apparel sold in Japan, and, especially, a match between the differentiated functional fabrics and Japanese demand for sportswear and fashion garments of masstige brands.

Looking to 2016, there is potential for the global market of functional textiles to grow with the expansion of the strategic cooperation with the garment supply chain on sales of apparel, the development of new brand customers, innovation and R&D of products, and solid cultivation of mutually beneficial relationships with brand manufacturers. It is predicted that sales will be better than those in 2015, which will bring about the growth of financial performance in 2016.

(2) Tyre cord:

In recent years, some orders of the Taiwan Plant are either lost or shifted to the Vietnamese Plant for production, which results from the disadvantage of tariffs on exports, unremitting expansion of capacity of enterprises in the same industry, price competition and excess supply in Asia, and so forth. Equipment with an annual capacity of 12,000 tons in the new plants in Vietnam is in place in the fourth quarter of 2014. Coarse denier is the main product and sold to markets nearby Vietnam, and markets in ASEAN, KOREA, and China. In 2015, the ratio of sales to capacity is 80%, which suggests a growth of revenue and a decrease of loss. In 2015, many challenges confronting plants in Taiwan and Vietnam are all overcome with vigorous efforts. There is a slight fall of revenue in 2014, compared to that in 2015, because international prices of both tyre cord yarn and fabric go down at the same time while there

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is a significant increase in profits, which can mainly be attributed to the depreciation of the New Taiwanese dollar, fine denier yarn, differentiated specifications, and diversity of product mixes.

As to the outlook for 2016, the economies of scale of the Vietnam Plant will escalate in that the production in Phase One is of full capacity, that there is zero tariff in ASEAN markets, and that an annual capacity of 12,000 tons will be gradually carried out from July derived from the expansion in Phase Two. Such expansion of economies of scale allows flexible assortments of products for enhancement of product competitiveness and adaptation to market changes. Moreover, the commencement of the TPP agreement will enable better competitiveness and the broader spread of Vietnamese products by means of tariff preferences on exports to the US and Asia-Pacific countries. The missions for the Taiwan Plant are to develop customers of the top global 30 brands of tire manufacturers, strengthen the flexibility of assortments of products, and take more orders of differentiated products. Based on the aforementioned, profits in 2016 are expected to grow.

(3) Cotton Yarn:

The Spinning Plant continued to provide thermal clothing to primary domestic distribution channels, such as 7-11, the website of CORPO-X, Pierre Cardin, Crocodile and some warehouse wholesalers, and so forth in 2015. Besides stable supply of bamboo charcoal fiber, far infrared ray fiber, anion fiber, hollow section fiber, germanium fiber, bamboo fiber, moisture absorbing & quick drying fiber, etc., fibers with high price-per-unit, made from seaweed, zinc oxide and silver, are introduced into markets one after another and in mass production as materials of sports brands with a worldwide reputation. Output of these three fibers in 2016 is expected to go up, which can boost overall output value.

Regarding the outlook for 2016, current long-term strategic

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alliances with suppliers of raw materials and cooperation with the up-, mid- and down-stream vendors of supply chains possibly come closer. Despite of bad circumstances, a slight rise in the domestic cotton yarn market is still expected.

(4) Special fabrics:

In 2015, anti-static cloth has promoted to the European market by means of its application to anti-bacterial clean room suits. The production of low-end anti-static cloth is shifted in batches to the plants in Vietnam, and this cloth is made from competitive polyester yarn against tariff barriers and price competition. With respect to flameproof cloth, it is supplied in the forms of blended flameproof cloth and multifunction anti-arc cloth to meet demand due to falling demand for petrochemical coveralls and price competition of low-end flameproof cloth. To increase the visibility and broaden the application scope of (opportunities of sale of) special fabric, it is under way to penetrate apparel markets of military, police and fire safety, where commodities, like flight suits, tanker uniforms, marine coveralls, riot gear, intelligent firefighting coats, etc., are traded with bidding processes. For industrial textiles, in addition to the promotion of existing composite materials, acoustical fabrics, anti-puncture fabrics, industrial fabrics, etc., markets of motorcycle clothing, abrasion resistant fabrics, rubber laminated foundation cloth, filter foundation cloth, bedding fabrics and medical fabrics, etc., are further developed.

For the prospect for 2016, an expected growth of some the differentiated products may be fulfilled.

(5) Carbon fiber composite materials:

Major products of such composite materials are carbon fiber cloth in 3K and 12K, stiffeners in 12K, one-sided prepreg in 12K and 24K, and two-sided prepreg in 3K, etc.; they are distributed to domestic bicycle parts manufacturers, sports equipment manufacturers, the construction stiffener industry, etc. What are introduced to the Japanese market primarily are one-sided prepreg in 12K and carbon fiber cloth in

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3K. For the multi-axial layered carbon fiber fabric and spreading tow fabric developed in 2015, experimental manufacturing is in progress in light of small orders from several Japanese auto factories and domestic bicycle carbon fiber parts manufacturers.

Looking to 2016, it is planned to develop the market of construction stiffener materials in Japan to increase sales of stiffeners in 12K. The deployment of resources for markets of carbon fiber composite materials in Europe and Southeastern Asia is also projected to gain a steady foothold in markets of ASEAN.

(6) PE Bags:

The percentage of sales of high density polyethylene plastic bags in Japan, America and the domestic market are 79%, 19% and 2% respectively. While sales of t-shirt bags grow steadily, sales of roll bags are worse than those in 2014 in consequence of fierce market competition. Despite the fall of 2015 revenue, profits are doubled as a result of the consequent fall, arising from falling oil prices, in raw material prices and grasp on demand from increased Japanese convenience stores.

In the coming 2016, sales are expected to grow on the basis of present developments.

(7) Gas Station:

Formosa Taffeta Company Limited (FTC) owns 105 gas stations at the end of 2015, which renders itself one of the top 5 distribution channels in Taiwan. With a 23% decrease of annual (gross) revenue of these stations, profits in 2015 still grew 47.8% as a result of an all-yearround drop of the international oil prices in 2015. Its earnings have been quite stable for many years by virtue of separating the wheat from the chaff, depending on the overall assessment result of operating performance, locations, and rental terms of each station. To respond to the dramatic fluctuation of the international oil prices in the past two years, it shall pay more attention on flexible control over the stock

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levels of gas tanks. From January of 2013, when self-service fueling is available, to the first half year of 2016, the number of stations with self-service equipment mounts to 85; the timing to enable the other stations to be equipped with the mechanism of self-service relies on whether derived benefits justify such installation. To satisfy customers’ diversified needs with comprehensive services and retails, we expand the monthly billing contract customer base, including enterprises, users of agricultural machinery, users of engineering machinery, etc., focus on the improvement of the quality of services of patented car-washing machines, and promote daily casual necessities and auto by-products through the business-to-customer consuming channel. Moreover, we pursue better quality of services and realization of management pursuant to SOP via continuous implementation of on-site staff training for SOP, 5S and, TPM, etc.

Looking into 2016, a small margin of growth of profits may be yielded subsequent to the increase of sold gasoline while the revenue performance depends on the international oil prices.

4. Conclusion

Looking into 2016, under the circumstances that Asian currencies compete to depreciate, that supplies of international raw materials are excessive, and that oil prices hover around lows, deflation may occur and a promising outlook can hardly appear. Besides the aforementioned, factors that impose a huge strain (and challenges) on the Company’s business operations include much worse growth rate of Mainland China than ever before, volatile circumstances of supply chains of international famous brands, and tariff disadvantages to Taiwanese exported products, etc. On instructions and encouragements, “get to the bottom of f issues and aim at perfection”, of our founders, Mr. Yung-Ching Wang and Mr. Yung-Tsai Wang, efforts to achieve standardization and rationalization for each improvement project have been made for many years and borne fruit. Meanwhile, by taking advantage of international circumstances of Cross-

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Straits Economic Cooperation Framework Agreement (ECFA) and ASEANChina Free Trade Area (ACFTA) to take the headquarter in Taiwan as the platform for integration of overseas plants in China and Vietnam, we strive for an investment of more capacity and innovative skills, the division of regional work, distribution of global sales, dedicated production of distinct plants, centralized production and especially elimination of failure costs and waste of resources, so as to pursue high value of products, consistency of standards, and exquisiteness of the brand, and finally to create and amplify integrated effects. The Company’s “2015/2016 Business Policy”—transform mentality, accelerate innovation and pursue value—signifies that thorough transformation, great enthusiasm ceaseless innovation and persistence are required in four aspects, thinking, work, organization and products. In 2016, the targets are to carry out the performance by overcoming challenges, create better investment rewards and a promising vision for shareholders, and gain the cooperation with partners of the supply chain, sustainable relationship with customers and the social respect.

Chairman: Wen-Yuan Wong

President: Shih-Ming Hsie

In-charge Accountant: Hung-Ning Cheng

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FORMOSA TAFFETA CO., LTD Supervisors’ Review Report

The Board of Directors has prepared and submitted the Company’s 2015 Business Report, Proposal for Profits Distribution, and Consolidated and Parent Company Only Financial Statements, all of which are audited by the CPAs of PricewaterhouseCoopers Taiwan (PwC). We as the Supervisors of the Company have reviewed the aforementioned documents and found no unconformities. According to Article 219 of the Company Act, we hereby submit this report. Please be advised accordingly.

Submitted to

2016 Annual Shareholders’ Meeting of the Company

Supervisor: Man-Chun Lee

Shen-Fu Lu

How-Jen Huang

March 16, 2016

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Ratification Items Proposal 1

Proposal: To ratify the 2015 Business Report and Financial Statements required by the Company Act.

Proposed by the Board of Directors

Explanatory Notes:

The preparation of the Company’s 2015 Consolidated and Individual Financial Statements were completed and the same were approved at the 1st meeting of the Board of Directors in 2016 and audited by independent auditors, CPA Mr. Han-Chi Wu and CPA Ms. Man-Yu Juanlu, of PwC. The aforesaid Financial Statements together with the Business Report were reviewed by the supervisors, which the Supervisors’ Review Report is presented.
For the aforementioned Business Report, please refer to page 13 through page 20 of the Meeting Handbook. As for the Financial Statements, please refer to page 28 through page 40 of this Handbook. Please approve the Business Report and the Financial Statements.

Resolution:

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Ratification Items Proposal 2

Proposal: To ratify the Proposal for Distribution of 2015 profits required by the Company Law.

Proposed by the Board of Directors

Attachment:

Please refer to page 41 of this Handbook for the Statement of Profits Distribution.

Resolution:

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Discussion Item(s) (II) Proposal 1

Proposal: To establish an audit committee according to regulations of the Financial Supervisory Commission, the Company’s “Rules for Election of Directors and Supervisors” are proposed to be amended as amendments on the attached comparison table.

Please discuss and resolve.

Pro osed b the Board of Directors p y

Article	Before Amendment	After Amendment
Article 1	Rules for Election of Directors and Supervisors of Nan Ya Plastics Company	Rules for Election of Directors of Nan Ya Plastics Company
Article 2	The single open-ballot, cumulative election method will be used for election of the directors and supervisors at the Company. Each share will have voting rights in number equal to the directorsor supervisors to be elected, and may be cast for a single candidate or split among multiple candidates. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.	The cumulative voting system shall be used for election of the directors at the Company. Each share will have voting rights in number equal to the directors to be elected, and may be cast for a single candidate or split among multiple candidates. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.
Article 4	The number of directorsand supervisorswill be as specified in the Company's Articles of Incorporation. Those receiving ballots representingthe highest	The number of directors will be as specified in the Company's Articles of Incorporation. Those receiving ballots representingthe highest

~ 31 ~

Article	Before Amendment	After Amendment
	numbers of voting rights will be elected sequentially according to their respective numbers of votes.If a person is elected to be director and supervisor at the same time, he/she shall only decide to be a director or a supervisor. After the above-mentioned person decided, the vacant position shall be filled by the candidate receiving the second highest numbers of voting rights.When two or more persons receive the same number of votes, thus exceeding the specified number of positions, they shall draw lots to determine the winner, with the Chair drawing lots on behalf of any person not in attendance.	numbers of voting rights will be elected sequentially according to their respective numbers of votes. When two or more persons receive the same number of votes, thus exceeding the specified number of positions, they shall draw lots to determine the winner, with the Chair drawing lots on behalf of any person not in attendance.
Article 5	The election of directorsand supervisorsshall be elected in compliance with the candidate nomination system set out in the Company's Articles of Incorporation and shareholders shall elect directorsand supervisorsfrom among the nominees listed in the slate of	The election of directors shall be elected in compliance with the candidate nomination system set out in the Company's Articles of Incorporation and shareholders shall elect directors from among the nominees listed in the slate of director candidates.

~ 32 ~

Article	Before Amendment	After Amendment
	directorand supervisor candidates. Independent and non- independent directors shall be elected at the same time, but in separately calculated numbers as stated as Article 4.Ifthe company has established an audit committee, at least one of its independent directors is required to have accounting or financial expertise. The Company shall, prior to the book closure date before the convening of the shareholders' meeting, publish a notice specifying a period for receiving nominations of director and supervisor candidates, the number of directorsand supervisorsto be elected, the place for receiving such nominations, and other necessary matters; the period for receiving nominations shall not be less than 10 days. The Board of Directors and a shareholder holding one percent or more of the total number of issued shares may present a slate of directorand	Independent and non- independent directors shall be elected at the same time, but in separately calculated numbers as stated as Article 4. The company at least one of its independent directors is required to have accounting or financial expertise. The Company shall, prior to the book closure date before the convening of the shareholders' meeting, publish a notice specifying a period for receiving nominations of director candidates, the number of directors to be elected, the place for receiving such nominations, and other necessary matters; the period for receiving nominations shall not be less than 10 days. The Board of Directors and a shareholder holding one percent or more of the total number of issued shares may present a slate of director nominees to the Company, provided that the number of nominees shall not exceed the number of directors to be

~ 33 ~

Article	Before Amendment	After Amendment
	supervisornominees to the Company, provided that the number of nominees shall not exceed the number of directors and supervisorsto be elected. When providing a recommended slate of director and supervisor candidates, a shareholder or the Board of Directors shall include in the documentation attached thereto each nominee's name, educational background, work experience, a written undertaking indicating the nominee's consent to serve as a directoror a supervisorif elected as such, a written statement that none of the circumstances in Article 30 of the Company Act exists, and other relevant documentary proof. If the candidate is a juristic person shareholder or a juristic person’s representative, basic registration information of the above-mentioned juristic person shareholder and a document certifying the shareholding of the Company shall be attached. he Board of	elected. When providing a recommended slate of director and supervisor candidates, a shareholder or the Board of Directors shall include in the documentation attached thereto each nominee's name, educational background, work experience, a written undertaking indicating the nominee's consent to serve as a director if elected as such, a written statement that none of the circumstances in Article 30 of the Company Act exists, and other relevant documentary proof. If the candidate is a juristic person shareholder or a juristic person’s representative, basic registration information of the above-mentioned juristic person shareholder and a document certifying the shareholding of the Company shall be attached. The Board of Directors, or other person having the authority to convene a Shareholders' Meeting, shall review thequalifications of

~ 34 ~

Article	Before Amendment	After Amendment
	Directors, or other person having the authority to convene a Shareholders' Meeting, shall review the qualifications of each directorand supervisor nominee; except under any of the following circumstances, all qualified nominees shall be included in the slate of director and supervisorcandidates: 1. Where the nominating shareholder submits the nomination at a time not within the published period for receiving nominations. 2. Where the shareholding of the nominating shareholder is less than one percent at the time of book closure by the Company under Article 165, paragraph 2 or 3 of the Company Act. 3. Where the number of nominees exceeds the number of directorsand supervisorsto be elected. 4. Where the relevant documentary proof required under the preceding paragraph is not attached	each director nominee; except under any of the following circumstances, all qualified nominees shall be included in the slate of director candidates: 1.Where the nominating shareholder submits the nomination at a time not within the published period for receiving nominations. 2.Where the shareholding of the nominating shareholder is less than one percent at the time of book closure by the Company under Article 165, paragraph 2 or 3 of the Company Act. 3.Where the number of nominees exceeds the number of directors to be elected. 4.Where the relevant documentary proof required under the preceding paragraph is not attached.

~ 35 ~

Article	Before Amendment	After Amendment
Article 9	The voting rights shall be calculated on site immediately after the end of the poll and the Chair shall announce the voting results on site immediately, including the names of those elected as directorsand supervisorsand the numbers of votes with which they were elected. The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.	The voting rights shall be calculated on site immediately after the end of the poll and the Chair shall announce the voting results on site immediately, including the names of those elected as directors and the numbers of votes with which they were elected. The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

Resolution:

~ 36 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Expressed

in thousands of New Taiwan dollars, except for earnings per share amount)

Items	For theyears ended December 31 2015 2014(adjusted) Notes AMOUNT % AMOUNT % 6(21) and 7 $ 42,872,570 100 $ 48,191,112 100 6(6)(24)(25) and 7 ( 36,732,939)( 86) ( 42,451,350)( 88) 6,139,631 14 5,739,762 12 6(24)(25) and 7 ( 1,836,218) ( 4) ( 1,893,970) ( 4) ( 918,716) ( 2) ( 898,891) ( 2) ( 52,197) - ( 50,326) - ( 2,807,131)( 6) ( 2,843,187)( 6) 3,332,500 8 2,896,575 6 6(22) and 7 653,564 1 1,197,173 3 6(23) ( 352,197) ( 1) 59,883 - 6(26) ( 190,352) - ( 211,869) - 6(8) 317,782 1 230,208 - 428,797 1 1,275,395 3 3,761,297 9 4,171,970 9 6(27) ( 537,345)( 2) ( 352,295) ( 1) $ 3,223,952 7 $ 3,819,675 8
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year

Items

For theyears ended December 31
2015
2014(adjusted)
Notes
AMOUNT
%
AMOUNT
%
6(21) and 7
$ 42,872,570
100
$ 48,191,112
100
6(6)(24)(25) and 7 (
36,732,939)(
86) (
42,451,350)(
88)
6,139,631
14
5,739,762
12
6(24)(25) and 7
(
1,836,218) (
4) (
1,893,970) (
4)
(
918,716) (
2) (
898,891) (
2)
(
52,197)
- (
50,326)
-
(
2,807,131)(
6) (
2,843,187)(
6)
3,332,500
8
2,896,575
6
6(22) and 7
653,564
1
1,197,173
3
6(23)
(
352,197) (
1)
59,883
-
6(26)
(
190,352)
- (
211,869)
-
6(8)
317,782
1
230,208
-
428,797
1
1,275,395
3
3,761,297
9
4,171,970
9
6(27)
(
537,345)(
2) (
352,295) (
1)
$ 3,223,952
7
$ 3,819,675
8

4000 Sales revenue
5000 Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6000
Total operating expenses
6900 Operating profit
Non-operating income and
expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit of associates and
joint ventures accounted for
under equity method
7000
Total non-operating income
and expenses
7900 Profit before income tax
7950
Income tax expense
8200 Profit for the year

(Continued)

~ 38 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

For theyears ended December 31 2015 2014(adjusted) Notes AMOUNT % AMOUNT % 6(20) ($ 197,495) - ($ 132,252) - 270,933 1 464,689 1 3,168,512 7 ( 4,268,475) ( 9) ( 19,388) - 13,513 - 3,420,057 8 ( 3,790,273)( 8) $ 3,222,562 8 ($ 3,922,525)( 8) $ 6,446,514 15 ($ 102,850) - $ 2,828,679 6 $ 3,518,325 7 395,273 1 301,350 1 $ 3,223,952 7 $ 3,819,675 8 $ 6,057,275 14 ($ 414,483) ( 1) 389,239 1 311,633 1 $ 6,446,514 15 ($ 102,850) - 6(28) B e f o r e Ta x A f t e r T a x B e f o r e Ta x A f t e r T a x $ 2.24 $ 1.92 $ 2.48 $ 2.27 ( 0.43) ( 0.24) ( 0.35) ( 0.18) $ 1.81 $ 1.68 $ 2.13 $ 2.09 not deemed as treasury stock: $ 2.23 $ 1.91 $ 2.48 $ 2.27 ( 0.43 ) ( 0.23 ) ( 0.36 ) ( 0.18) $ 1.80 $ 1.68 $ 2.12 $ 2.09	For theyears ended December 31 2015 2014(adjusted) Notes AMOUNT % AMOUNT % 6(20) ($ 197,495) - ($ 132,252) - 270,933 1 464,689 1 3,168,512 7 ( 4,268,475) ( 9) ( 19,388) - 13,513 - 3,420,057 8 ( 3,790,273)( 8) $ 3,222,562 8 ($ 3,922,525)( 8) $ 6,446,514 15 ($ 102,850) - $ 2,828,679 6 $ 3,518,325 7 395,273 1 301,350 1 $ 3,223,952 7 $ 3,819,675 8 $ 6,057,275 14 ($ 414,483) ( 1) 389,239 1 311,633 1 $ 6,446,514 15 ($ 102,850) - 6(28) B e f o r e Ta x A f t e r T a x B e f o r e Ta x A f t e r T a x $ 2.24 $ 1.92 $ 2.48 $ 2.27 ( 0.43) ( 0.24) ( 0.35) ( 0.18) $ 1.81 $ 1.68 $ 2.13 $ 2.09 not deemed as treasury stock: $ 2.23 $ 1.91 $ 2.48 $ 2.27 ( 0.43 ) ( 0.23 ) ( 0.36 ) ( 0.18) $ 1.80 $ 1.68 $ 2.12 $ 2.09	For theyears ended December 31 2015 2014(adjusted) Notes AMOUNT % AMOUNT % 6(20) ($ 197,495) - ($ 132,252) - 270,933 1 464,689 1 3,168,512 7 ( 4,268,475) ( 9) ( 19,388) - 13,513 - 3,420,057 8 ( 3,790,273)( 8) $ 3,222,562 8 ($ 3,922,525)( 8) $ 6,446,514 15 ($ 102,850) - $ 2,828,679 6 $ 3,518,325 7 395,273 1 301,350 1 $ 3,223,952 7 $ 3,819,675 8 $ 6,057,275 14 ($ 414,483) ( 1) 389,239 1 311,633 1 $ 6,446,514 15 ($ 102,850) - 6(28) B e f o r e Ta x A f t e r T a x B e f o r e Ta x A f t e r T a x $ 2.24 $ 1.92 $ 2.48 $ 2.27 ( 0.43) ( 0.24) ( 0.35) ( 0.18) $ 1.81 $ 1.68 $ 2.13 $ 2.09 not deemed as treasury stock: $ 2.23 $ 1.91 $ 2.48 $ 2.27 ( 0.43 ) ( 0.23 ) ( 0.36 ) ( 0.18) $ 1.80 $ 1.68 $ 2.12 $ 2.09
	2014(adjusted) % AMOUNT % - ($ 132,252) - 1 464,689 1 7 ( 4,268,475) ( 9) - 13,513 - 8 ( 3,790,273)( 8) 8 ($ 3,922,525)( 8) 15 ($ 102,850) - 6 $ 3,518,325 7 1 301,350 1 7 $ 3,819,675 8 14 ($ 414,483) ( 1) 1 311,633 1 15 ($ 102,850) - r T a x B e f o r e Ta x A f t e r T a x 1.92 $ 2.48 $ 2.27 0.24) ( 0.35) ( 0.18) 1.68 $ 2.13 $ 2.09 1.91 $ 2.48 $ 2.27 0.23 ) ( 0.36 ) ( 0.18) 1.68 $ 2.12 $ 2.09	2014(adjusted)
			%
			-
			- r T a x
			2.27 0.18)
			2.09 2.27 0.18) 2.09
$

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 16, 2016.

~ 39 ~

FORMOSA TAFFETA CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

						For	years ended December 31	years ended December 31	years ended December 31	years ended December 31
						2015				2014(adjusted)
	Items	Notes			AMOUNT		%			AMOUNT	%
4000	Sales revenue	6(19) and 7		$	27,761,888		100		$	32,842,284	100
5000	Operating costs	6(6)(22)(23) and 7 (			24,479,844)(		88)	(		29,244,095)(	89)
5900	Net operating margin				3,282,044		12			3,598,189	11
	Operating expenses	6(22)(23) and 7
6100	Selling expenses		(		1,515,739) (		6)	(		1,596,514) (	5)
6200	General and administrative
	expenses		(			529,805)(	2)	(		525,988) (	1)
6000	Total operating expenses		(		2,045,544)(		8)	(		2,122,502)(	6)
6900	Operating profit				1,236,500		4			1,475,687	5
	Non-operating income and
	expenses
7010	Other income	6(20) and 7				609,275	2			1,137,082	3
7020	Other gains and losses	6(21) and 7				9,257	-			116,094	-
7050	Finance costs	6(24)	(			132,507)	-	(		136,054)	-
7070	Share of profit of associates and	6(8)
	joint ventures accounted for
	using equity method, net				1,316,442		5			981,898	3
7000	Total non-operating income
	and expenses				1,802,467		7			2,099,020	6
7900	Profit before income tax				3,038,967		11			3,574,707	11
7950	Income tax expense	6(25)	(			210,288)(	1)	(		56,382)	-
8200	Profit for the year			$	2,828,679		10		$	3,518,325	11
	Other comprehensive (loss)	6(18)
	income
	Components of other
	comprehensive loss that will not
	be reclassified to profit or loss
8311	Other comprehensive loss,
	before tax, actuarial gains
	(losses) on defined benefit plans		($			197,495)(	1)	($		131,222)	-
	Components of other
	comprehensive income (loss) that
	will be reclassified to profit or loss
8361	Other comprehensive income,
	before tax, exchange differences
	on translation					260,455	1			481,015	1
8362	Other comprehensive income
	(loss), before tax,
	available-for-sale financial assets				3,165,636		12	(		4,282,601)(	13)
8360	Components of other
	comprehensive income (loss)
	that will be reclassified to
	profit or loss				3,228,596		12	(		3,932,808)(	12)
8500	Total comprehensive income
	(loss) for the year			$	6,057,275		22	($		414,483) (	1)
			B e	f o r e T a x		A f t e r T	a x	B e f o r e T a x A f t e r			T a x
9750	Basic and diluted earnings per	6(26)
	share		$		1.81	$	1.68	$		2.13 $	2.09
	Assuming shares held by subsidiary are not deemed as treasury stock:
	Basic earnings per share		$		1.80	$	1.68	$		2.12 $	2.09

The accompanying notes are an integral part of these non-consolidated financial statements. See report of independent accountants dated March 16, 2016.

~ 40 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31,2015 AMOUNT % $ 5,640,597 7 655,811 1 1,824,656 2 72,028 - 5,236 - 3,764,065 5 1,277,332 2 360,728 - 7,827,720 10 991,013 1 508,021 1 22,927,207 29 29,476,126 37 5,786,109 7 3,158,212 4 17,311,841 22 450,573 - 944,987 1 57,127,848 71 $ 80,055,055 100 $ 3,507,956 5 1,699,525 2 818 - 200,128 - 140,382 - 1,602,029 2 981,723 1 1,813,430 2 381,633 1 281,377 - 10,609,001 13 10,362,409 13 120,972 - 2,893,943 4 13,377,324 17 23,986,325 30	(adjusted) December 31,2014 AMOUNT % $ 3,796,868 5 654,499 1 1,709,615 2 93,100 - 2,743 - 4,154,561 6 1,321,930 2 354,982 - 7,950,289 11 393,671 1 384,755 - 20,817,013 28 26,322,249 35 5,442,727 7 2,909,436 4 17,846,148 24 516,201 1 1,051,206 1 54,087,967 72 $ 74,904,980 100 $ 2,761,686 4 2,349,524 3 5,843 - 205,567 - 288,160 - 1,169,886 2 1,186,014 2 2,047,240 3 154,960 - 354,132 - 10,523,012 14 9,218,895 12 95,730 - 2,840,680 4 12,155,305 16 22,678,317 30	(adjusted) January1,2014	(adjusted) January1,2014
	AMOUNT $ 5,640,597 655,811 1,824,656 72,028 5,236 3,764,065 1,277,332 360,728 7,827,720 991,013 508,021 22,927,207 29,476,126 5,786,109 3,158,212 17,311,841 450,573 944,987 57,127,848 $ 80,055,055 $ 3,507,956 1,699,525 818 200,128 140,382 1,602,029 981,723 1,813,430 381,633 281,377 10,609,001 10,362,409 120,972 2,893,943 13,377,324 23,986,325		AMOUNT $ 3,064,945 1,352 1,422,657 101,000 6,963 3,760,435 1,036,415 266,519 7,362,831 197,527 660,737 17,881,381 30,486,495 353,144 7,551,755 19,014,371 654,651 692,017 58,752,433 $ 76,633,814 $ 3,706,477 1,249,862 704 172,069 218,650 1,032,409 1,491,693 1,309,490 307,292 240,159 9,728,805 10,085,653 55,383 2,629,243 12,770,279 22,499,084	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1125 Available-for-sale financial assets - current 1150 Notes receivable, net 1160 Notes receivable - related parties 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 130X Inventory 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1543 Financial assets carried at cost - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets Liabilities and Equity	$	$	$	4 - 2 - - 5 1 - 10 - 1
				23
				40 - 10 25 1 1
				77
	$	$	$	100
	$	$	$	5 2 - - - 1 2 2 1 -
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2160 Notes payable - related parties 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities
				13
				13 - 3
				16
				29

~ 41 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	(adjusted) (adjusted) Notes December 31,2015 December 31,2014 January1,2014 AMOUNT % AMOUNT % AMOUNT % 6(17) 6(18) $ 16,846,646 21 $ 16,846,646 23 $ 16,846,646 22 6(19) 20,791 - 38,348 - 98,898 - 6,508,610 8 6,156,773 8 5,943,868 8 1,381,824 2 644,262 1 326,534 - 3,819,939 5 4,636,684 6 3,464,878 5 6(20) 24,143,610 30 20,717,519 28 24,519,105 32 6(17) ( 22,285) - ( 22,723) - ( 23,423) - 52,699,135 66 49,017,509 66 51,176,506 67 3,369,595 4 3,209,154 4 2,958,224 4 56,068,730 70 52,226,663 70 54,134,730 71 9 11 $ 80,055,055 100 $ 74,904,980 100 $ 76,633,814 100	(adjusted) January1,2014	(adjusted) January1,2014
			%
Equity attributable to owners of parent Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet 3X2X Total liabilities and equity			22 - 8 - 5 32 -
			67
			4
			71
			100

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 16, 2016.

~ 42 ~

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	Notes	(adjusted) December 31,2014 AMOUNT % $ 1,051,513 2 2,394 - 1,315,682 2 70,043 - 2,743 - 2,396,584 4 287,865 - 126,526 - 4,324,890 7 142,496 - 193,867 - 9,914,603 15 26,223,870 39 5,343,196 8 16,006,026 24 7,787,140 12 425,616 1 476,969 1 388,992 - 56,651,809 85 $ 66,566,412 100	(adjusted) January1,2014	(adjusted) January1,2014
		AMOUNT $ 1,051,513 2,394 1,315,682 70,043 2,743 2,396,584 287,865 126,526 4,324,890 142,496 193,867 9,914,603 26,223,870 5,343,196 16,006,026 7,787,140 425,616 476,969 388,992 56,651,809 $ 66,566,412	AMOUNT $ 1,226,867 904 1,401,093 76,796 6,963 2,344,288 228,931 237,920 4,250,515 75,623 179,731 10,029,631 30,437,832 253,621 18,761,516 7,891,096 445,037 490,310 110,299 58,389,711 $ 68,419,342	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1125 Available-for-sale financial assets - current 1150 Notes receivable, net 1160 Notes receivable - related parties 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 130X Inventory 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1543 Financial assets carried at cost - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1760 Investment property - net 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets	6(1) 6(2) 6(3) 6(4) 7 6(5) 7 7 6(6) 6(3) 6(7) 6(8) 6(9) and 7 7 6(25)			2 - 2 - - 4 - 1 6 - -
				15
				44 - 27 12 1 1 -
				85
				100

~ 43 ~

FORMOSA TAFFETA CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes	December 31,2015 AMOUNT % $ 306,791 1 1,699,525 3 277 - 170,387 - 140,382 - 905,003 1 967,924 2 885,404 1 137,042 - 80,140 - 5,292,875 8 10,000,000 14 120,389 - 2,810,608 4 12,930,997 18 18,223,872 26 16,846,646 24 20,791 - 6,508,610 9 1,381,824 2 3,819,939 5 24,143,610 34 ( 22,285) - 52,699,135 74 $ 70,923,007 100	(adjusted) December 31,2014 AMOUNT % $ 290,000 - 2,349,524 4 - - 157,549 - 288,160 - 494,702 1 1,131,306 2 890,522 1 - - 172,063 - 5,773,826 8 8,900,000 14 93,401 - 2,781,676 4 11,775,077 18 17,548,903 26 16,846,646 25 38,348 - 6,156,773 9 644,262 1 4,636,684 7 20,717,519 32 ( 22,723) - 49,017,509 74 $ 66,566,412 100	(adjusted) January1,2014	(adjusted) January1,2014
		AMOUNT $ 306,791 1,699,525 277 170,387 140,382 905,003 967,924 885,404 137,042 80,140 5,292,875 10,000,000 120,389 2,810,608 12,930,997 18,223,872 16,846,646 20,791 6,508,610 1,381,824 3,819,939 24,143,610 ( 22,285) 52,699,135 $ 70,923,007	AMOUNT $ 290,000 2,349,524 - 157,549 288,160 494,702 1,131,306 890,522 - 172,063 5,773,826 8,900,000 93,401 2,781,676 11,775,077 17,548,903 16,846,646 38,348 6,156,773 644,262 4,636,684 20,717,519 ( 22,723) 49,017,509 $ 66,566,412	AMOUNT $ 290,000 1,249,863 - 149,525 218,650 436,944 1,388,975 790,869 215,466 89,871 4,830,163 9,800,000 54,451 2,558,222	%
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2160 Notes payable - related parties 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 3XXX Total equity Commitments and contingent liabilities Subsequent event 3X2X Total liabilities and equity	6(10) 6(11) 6(12) 7 7 7 6(25) 6(13) 6(25) 6(14) 6(15) 6(16) 6(17) 6(18) 6(15) 9 11				1 2 - - - 1 2 1 - -
					7
					14 - 4
				12,412,673 17,242,836 16,846,646 98,898 5,943,868 326,534 3,464,878 24,519,105 ( 23,423)	18
					25
					25 - 9 - 5 36 -
				51,176,506 $ 68,419,342	75
					100

The accompanying notes are an integral part of these non-consolidated financial statements. See report of independent accountants dated March 16, 2016.

~ 44 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Notes					Equityattributable to R Change in net equity of associates and joint ventures accounted for under equity Legal method reserve	Equityattributable to R Change in net equity of associates and joint ventures accounted for under equity Legal method reserve	owners of theparent	owners of theparent	owners of theparent						Non-controlling interest	Non-controlling interest	Total equity
	Share capital - common stock		Capital Re	serves	Change in net equity of associates and joint ventures accounted for under equity method		etained Earnings			Other EquityInterest		Treasury stocks	Total
		Difference Treasury stock transactions	between the acquisition or disposal of subsidiaries and carrying amount	Donated assets received		Legal reserve	Special reserve	Unappropriated retained earnings		Financial statements translation differences of foreign operations	Unrealized gain or loss on available-for- sale financial assets
6(19) 6(17) 6(20) 6(20)	$ 16,846,646 - - - - - - - - - - - $ 16,846,646	$7,019 - - - - - - - 2,613 1,445 - - $11,077	$ - - - - - - - 545 - - - - $ 545	$2,032 - - - - - - - - - - -	$89,847 - - - - - ( 65,153 ) - - - - - $24,694	$ 5,943,868 212,905 - - - - - - - - - - $ 6,156,773	$ 326,534 - 608,754 ( 291,026 - - - - - - - -	)	$ 3,464,878 ( 212,905 ) ( 608,754 ) 291,026 ( 1,684,664 ) 3,518,325 - - - - ( 131,222 ) - $ 4,636,684	( $95,294 ) - - - - - - - - - 481,015 - $385,721	$ 24,614,399 ( $23,423) $ 51,176,506 - - - - - - - - - - - ( 1,684,664 - - 3,518,325 - - ( 65,153 - - 545 - - 2,613 - 700 2,145 ( 4,282,601) - ( 3,932,808 - - - $ 20,331,798 ( $22,723 ) $ 49,017,509				) ) )	$ 2,958,224 - - - - 301,350 - - - - 10,283 ( 60,703 ) $ 3,209,154	$ 54,134,730 - - - ( 1,684,664 ) 3,819,675 ( 65,153 ) 545 2,613 2,145 ( 3,922,525 ) ( 60,703 ) $ 52,226,663

				$2,032			$ 644,262							$ 49,017,509

(Continued)

~ 45 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Difference price for For theyear ended December						Equityattributab	Equityattributab	to	owners of theparent	owners of theparent	owners of theparent						Total equity
	Share capital - common stock		Capital Re		serves			R	etained Earnings				Other EquityInterest		Treasury stocks	Total
		Treasury stock transactions	between the acquisition or disposal of subsidiaries and carrying amount		Donated assets received	Change in net equity of associates and joint ventures accounted for under equity method	Legal reserve		Unappropriated Special retained reserve earnings $ 644,262 $ 4,636,684 - ( 351,837 737,562 ( 737,562 - ( 2,358,530 - 2,828,679 - - - - - ( 197,495 - - $1,381,824 $ 3,819,939	Unappropriated retained earnings			Financial statements translation differences of foreign operations	Unrealized gain or loss on available-for- sale financial assets
	$ 16,846,646 - - - - - - - - $ 16,846,646	$11,077 - - - - 1,058 - - -		$ 545 - - - - - - - - $ 545	$2,032 - - - - - - - - $2,032	$24,694 - - - - - ( 18,615 ) - - $ 6,079	$ 6,156,773 351,837 - - - - - - - $ 6,508,610				$ 4,636,684 ( 351,837 ( 737,562 ( 2,358,530 2,828,679 - - ( 197,495 -	) ) ) )	$385,721 - - - - - - 260,455 - $646,176	$ 20,331,798 - - - - - - 3,165,636 - $ 23,497,434			$ 52,226,663 - - ( 2,358,530 ) 3,223,952 1,496 ( 18,615 ) 3,222,562 ( 228,798 ) $ 56,068,730
31, 2015 Balance at January 1, 2015 Appropriations of 2014 earnings: Legal reserve Special reserve Cash dividends Profit for the year Disposal of treasury stock Changes in the net interest of associates recognised und the equity method Other comprehensive income for the year Cash dividends paid by consolidated subsidiaries Balance at December 31, 201
		$12,135									$ 3,819,939

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 16, 2016.

~ 46 ~

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLYSTATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

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

2014 Balance at January 1, 2014 Appropriations of 2013 net income (Note 2): Legal reserve Special reserve Reversal of special reserve Cash dividends Profit for the year Change of equity from not acquiring new shares proportionately to ownership Difference between proceeds on acquisition of or disposal of equity interest in a subsidiary and its carrying amount Stocks of the parent company bought by the subsidiary and recognised as treasury stock Disposal of treasury stock Other comprehensive loss for the year Balance at December 31, 2014	Notes		Share capital - common stock				Capital Reserves	Capital Reserves	Capital Reserves				Retained Earnings		Other equityinterest	Other equityinterest	Treasurystocks	Total equity
					Treasury stock transaction s		Capital Surplus, changes in ownership interests in subsidiarie s		Undistributed earnings	Change in net equity of associates and joint ventures accounted for under equity method		Legal reserve	Special reserve	Unappropriated retained earnings	Financial statements translation differences of foreign operations	Unrealized gain or loss on available-for- sale financial assets
	6(17) 6(15) 6(18)		`$ 16,846,646` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 16,846,646`		`$ 7,019` `-` `-` `-` `-` `-` `-` `-` `2,613` `1,445` `-` `$ 11,077`		`$` `-` `-` `-` `-` `-` `-` `-` `545` `-` `-` `-` `$` `545`		`$` `2,032` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `2,032`	`$` `89,847` `-` `-` `-` `-` `-` `(` `65,153` `)` `-` `-` `-` `-` `$` `24,694`		`$ 5,943,868` `212,905` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 6,156,773`	`$` `326,534` `-` `608,754` `(` `291,026 )` `-` `-` `-` `-` `-` `-` `-` `$` `644,262`	`$ 3,464,878` `(` `212,905 )` `(` `608,754 )` `291,026` `(` `1,684,664 )` `3,518,325` `-` `-` `-` `-` `(` `131,222 )` `$ 4,636,684`	`($` `95,294 )` `-` `-` `-` `-` `-` `-` `-` `-` `-` `481,015` `$` `385,721`	`$ 24,614,399` `-` `-` `-` `-` `-` `-` `-` `-` `-` `(` `4,282,601 )` `$ 20,331,798`	`($` `23,423 )` `-` `-` `-` `-` `-` `-` `-` `-` `700` `-` `($` `22,723 )`	`$ 51,176,506` `-` `-` `-` `(` `1,684,664 )` `3,518,325` `(` `65,153 )` `545` `2,613` `2,145` `(` `3,932,808 )` `$ 49,017,509`

~ 47 ~

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLYSTATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

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

Year 2015 Balance at January 1, 2015 New Item New Item New Item New Item Profit (Loss) for the period/year New Item New Item Other comprehensive income for the period/year Balance at December 31, 2015	Notes		Share capital - common stock				Capital Reserves	Capital Reserves	Capital Reserves					Retained Earnings			Other equityinterest	Other equityinterest	Other equityinterest	Treasurystocks	Total equity
					Treasury stock transaction s		Capital Surplus, changes in ownership interests in subsidiarie s		Undistributed earnings	Change in net equity of associates and joint ventures accounted for under equity method		Legal reserve		Special reserve	Unappropriated retained earnings		Financial statements translation differences of foreign operations		Unrealized gain or loss on available-for- sale financial assets
	6(17) 6(15) 6(18)		`$ 16,846,646` `-` `-` `-` `-` `-` `-` `-` `$ 16,846,646`		`$ 11,077` `-` `-` `-` `-` `1,058` `-` `-` `$ 12,135`		`$` `545` `-` `-` `-` `-` `-` `-` `-` `$` `545`		`$` `2,032` `-` `-` `-` `-` `-` `-` `-` `$` `2,032`	`$` `24,694` `-` `-` `-` `-` `-` `(` `18,615` `)` `-` `$` `6,079`		`$ 6,156,773` `351,837` `-` `-` `-` `-` `-` `-` `$ 6,508,610`		`$` `644,262` `-` `737,562` `-` `-` `-` `-` `-` `$ 1,381,824`	`$ 4,636,684` `(` `351,837 )` `(` `737,562 )` `(` `2,358,530 )` `2,828,679` `-` `-` `(` `197,495 )` `$ 3,819,939`		`$` `385,721` `-` `-` `-` `-` `-` `-` `260,455` `$` `646,176`		`$ 20,331,798` `-` `-` `-` `-` `-` `-` `3,165,636` `$ 23,497,434`	`($` `22,723 )` `-` `-` `-` `-` `438` `-` `-` `($` `22,285 )`	`$ 49,017,509` `-` `-` `(` `2,358,530 )` `2,828,679` `1,496` `(` `18,615 )` `3,228,596` `$ 52,699,135`

Note 1: Directors' and supervisors' remuneration amounting to $2,896 and employees' bonus amounting to $5,791 had been deducted from the Statement of Comprehensive Income in 2012.

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated March 16, 2016.

~ 48 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before tax for the year
Adjustments to reconcile net income to net cash provided by
operating activities
Income and expenses having no effect on cash flows
(Reversed of impairment) provision for bad debts
Depreciation
Interest expense
Interest income
Dividend income
Gain on valuation of financial assets
(Gain) loss on valuation of financial liabilities
Share of profit of associates and joint ventures accounted for
under equity method
Cash dividend from investments accounted for under equity
method
Gain on disposal of investments
Loss on disposal and scrap of property, plant and equipment
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets at fair value through profit or loss
Notes receivable
Notes receivable - related parties
Accounts receivable, net
Accounts receivable - related parties
Other receivables
Inventory
Prepayments
Other current assets
Net changes in liabilities relating to operating activities
Financial liabilities at fair value through profit or loss
Notes payable
Notes payable - related parties
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Other non-current liabilities
Cash generated from operations
Interest received
Dividend received
Interest paid
Income tax paid
Net cash provided by operating activities

Notes
For theyears ended December 31
2015
2014
$ 3,761,297
$ 4,171,970
6(5)
(
22,373 )
5,724
6(9)(24)
2,857,619
3,367,232
6(26)
190,352
211,869
6(22)
(
27,750 ) (
20,777 )
6(22)
(
386,084 ) (
967,716 )
6(2)(23)
(
3,706 ) (
3,610 )
6(13)(23)
(
2,632 )
5,379
6(8)
(
317,782 ) (
230,208 )
56,595
46,056
6(23)
-
(
36,476 )
6(23)
199,113
38,231
-
(
649,537 )
23,038
7,900
(
2,493 )
4,220
410,350
(
399,850 )
44,598
(
285,515 )
(
5,746 ) (
88,463 )
122,569
(
587,458 )
(
597,342 ) (
196,144 )
(
123,266 )
275,982
-
(
240 )
(
5,439 )
33,498
(
147,778 )
69,510
432,143
137,477
(
204,291 ) (
305,679 )
(
173,062 )
668,553
(
121,920 )
102,561
53,263
79,185
6,009,273
5,453,674
27,750
20,777
386,084
967,716
(
202,574 ) (
216,324 )
(
218,387 ) (
325,832 )
6,002,146
5,900,011

(Continued)

~ 49 ~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of available-for-sale financial assets Proceeds from capital reduction of financial assets measured at cost Acquisition of investment accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in other non-current assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings (Decrease) increase in short-term notes and bills payable Payment of long-term borrowings Increase in long-term borrowings Cash dividends paid Cash dividends paid - non-controlling interest Net cash used in financing activities Effect of foreign exchange rate Increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	Notes ( 6(29) ( ( ( ( 6(19) ( ( ( ( 6(1) 6(1)	For theyears ended December 31 2015 2014 $ 95,802 ) ( $ 390,435 ) 13,380 - - ( 119,154 ) 2,776,031 ) ( 1,893,163 ) 119,536 49,157 134,374 ( 422,244 ) 2,604,543 ) ( 2,775,839 ) 746,270 ( 1,101,334 ) 649,999 ) 1,099,662 4,962,052 ) ( 8,107,115 ) 6,167,902 7,200,000 2,358,530 ) ( 1,684,664 ) 228,798 ) ( 60,703 ) 1,285,207 ) ( 2,654,154 ) 268,667 ) 261,905 1,843,729 731,923 3,796,868 3,064,945 $ 5,640,597 $ 3,796,868
		2015 $ 95,802 ) ( 13,380 - ( 2,776,031 ) ( 119,536 134,374 ( 2,604,543 ) ( 746,270 ( 649,999 ) 4,962,052 ) ( 6,167,902 2,358,530 ) ( 228,798 ) ( 1,285,207 ) ( 268,667 ) 1,843,729 3,796,868 $ 5,640,597

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 16, 2016.

~ 50 ~

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year
Adjustments to reconcile net income to net cash provided by
operating activities
Income and expenses having no effect on cash flows
(Reversal of impairment) provision for bad debts
Depreciation (including depreciation on investment
property)
Interest expense
Interest income
Dividend income
Gain on valuation of financial assets
Loss on valuation of financial liabilities
Receipt of cash dividends from investment accounted
for under the equity method
Share of profit of subsidiaries and associates accounted
for under the equity method
Gain on disposal of investments
Gain on disposal and scrap of property, plant and
equipment
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Notes receivable
Notes receivable - related parties
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Net changes in liabilities relating to operating activities
Notes payable
Notes payable - related parties
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Other non-current liabilities
Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash provided by operating activities

Notes
For theyears ended December 31
2015
2014
$ 3,038,967
$ 3,574,707
6(5)
(
18,261 )
-
6(9)(22) and 7
852,571
894,419
6(24)
132,507
136,054
6(20)
(
3,205 ) (
1,804 )
6(20)
(
376,155 ) (
965,996 )
6(2)(21)
-
(
1,730 )
6(12)(21)
2,671
240
507,389
162,242
6(8)
(
1,316,442 ) (
981,898 )
6(21)
-
(
36,476 )
6(21)
(
27,467 ) (
6,842 )
7,034
6,753
(
2,493 )
4,220
333,926
(
52,296 )
98,323
(
58,934 )
44,892
111,580
60,901
(
74,375 )
(
569,130 ) (
66,873 )
17,107
(
14,136 )
12,838
8,024
(
147,778 )
69,510
410,301
57,758
(
163,382 ) (
257,669 )
(
5,406 )
100,533
(
91,923 )
82,192
(
165,721 )
94,212
2,632,064
2,783,415
3,205
1,804
376,155
965,996
(
132,219 ) (
136,934 )
(
317 ) (
219,744 )
2,878,888
3,394,537

(Continued)

~ 51 ~

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from capital reduction of financial assets
measured at cost
Acquisition of investments accounted for under the equity
method
Acquisition of property, plant, and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in other non-current assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
(Decrease) increase in short-term notes and bills payable
Increase in long-term borrowings
Payment of long-term borrowings
Payment of cash dividends
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
For theyears ended December 31
2015
2014
$ 13,380
$ -
6(8)
-
(
1,041,995 )
6(27)
(
1,090,894 ) (
691,226 )
55,559
7,784
178,926
(
359,451 )
(
843,029 ) (
2,084,888 )
16,791
-
(
649,999 )
1,099,661
6,000,000
7,200,000
(
4,900,000 ) (
8,100,000 )
6(17)
(
2,358,530) (
1,684,664 )
(
1,891,738 ) (
1,485,003 )
144,121
(
175,354 )
6(1)
1,051,513
1,226,867
6(1)
$ 1,195,634
$ 1,051,513

The accompanying notes are an integral part of these non-consolidated financial statements. See report of independent accountants dated March 16, 2016.

~ 52 ~

FORMOSA TAFFETA CO., LTD Statement of Profits Distribution

For the year of 2015 Unit ： NT$

Items	Amount	Items	Amount	Explanation
Available for Distribution: (1) Unappropriated retained earnings of previous years (2) Adjustment in beginning unappropriated earnings for transition to 2013 version IFRSs (3) Other comprehensive income transferred into unappropriated earnings (4) Net profit after tax of the current year	1,390,911,939 -202,156,934 -197,495,176 2,828,679,046	Distribution Items: (1) Appropriation of legal reserve (10% of the after- tax profit) (2) Appropriation of special reserve (3) Distribution of dividends and bonus in cash ($1.2 per share) (4) Unappropriated retained earnings carried forward to next year	282,867,905 326,718,401 2,021,597,564 1,188,755,005	1. The Company’s registered capital is $16,846,646,370, and shares for distribution are 1,684,664,637. 2. The Company plans to distribute dividends of $1.2 per share for the current year (among which, $0.96 will be distributed as dividends and $0.24 will be distributed as bonus); all of which are cash dividends. 3. The distribution of dividends for this time is based on the pattern of profits distribution of 1998 afterwards. 4. While the amount of distributed cash dividends to each individual shareholder is less than 1 dollar, it will be rounded to the nearestdollar.
Total	3,819,938,875	Total	3,819,938,875

~ 52 ~

Independent Auditor’s Report

To the Board of Directors and Stockholders of Formosa Taffeta Co., Ltd.

We have audited the accompanying consolidated balance sheets of Formosa Taffeta Co., Ltd. and its subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These consolidated financial statements are the responsibility of Formosa Taffeta Co., Ltd. management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit financial statements of certain consolidated subsidiaries, which statements reflect total assets of NT$7,018,162 thousand and NT$6,042,605 thousand, ~~all~~ constituting 9% and 8% of the consolidated total assets as of December 31,2015 and 2014, respectively, and total operating revenues of NT$4,294,178 thousand and NT$4,327,699 thousand, constituting 10% and 9% of the consolidated total operating revenues for the years then ended, respectively. We also did not audit certain investments accounted for under equity method. The balance of related investment accounted for using equity method amounted to NT$3,158,212 thousand and NT$2,909,436 thousand as of December 31, 2015 and 2014, respectively, and the comprehensive income (including share of profit (loss) of associates accounted for using equity method and share of profit (loss) and other comprehensive income of associates) amounted to NT$317,763 thousand and NT$230,305 thousand for the years then ended. Those financial statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants.

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other independent accountants provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Formosa Taffeta Co., Ltd. and its subsidiaries as of December 31,

~ 53 ~

2015 and 2014, and their financial performance and cash flows for the years then ended in conformity with the “Rules Governing the Preparations of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

We have also audited the non-consolidated financial statements of Formosa Taffeta Co., Ltd. (not presented herein) as of and for the years ended December 31, 2015 and 2014, on which we have expressed a modified unqualified opinion on such financial statements.

PricewaterhouseCoopers, Taiwan March 16, 2016

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

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

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Independent Auditor’s Report

To the Board of Directors and Stockholders of Formosa Taffeta Co., Ltd.

We have audited the accompanying parent company only balance sheets of Formosa Taffeta Co., Ltd. as of December 31, 2015 and 2014, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These parent company only financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these parent company only financial statements based on our audits. We did not audit the financial statements of certain investee companies accounted for under the equity method. These investments accounted for under the equity method amounted to $7,205,429 thousand and $6,818,570 thousand as of December 31, 2015 and 2014, respectively, and the comprehensive income (including share of profit/(loss) of subsidiaries, associates and joint ventures accounted for under equity method and share of other comprehensive income of subsidiaries, associates and joint ventures accounted for under equity method) was $525,244 thousand and $384,331 thousand for the years then ended, respectively. The financial statements of these investee companies were audited by other auditors, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for these investee companies, is based solely on the reports of the other independent accountants.

In our opinion, based on our audits and the reports of other independent accountants, the parent company only financial statements referred to above present fairly, in all material respects, the financial position of Formosa Taffeta Co., Ltd. as of December 31, 2015 and 2014, and its financial performance and cash flows for the years then ended in conformity with the “Rules Governing the Preparations of Financial Statements by Securities Issuers”.

PricewaterhouseCoopers, Taiwan March 16, 2016

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

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Information regarding the Proposed Compensation to Employees, Directors and Supervisors Adopted by the Board of Directors of the Company:

Amounts of employees’ cash compensation, stock compensation, and com ensation to Directors and Su ervisors: p p Employees’ cash compensation NT$ 6,096,167 Employees’ stock compensation NT$ 0 Compensation to Directors and Supervisors NT$ 3,048,083 2. Shares of the proposed employees’ stock compensation and the ercenta e of the share amount to that of all stock dividend: p g Shares of em lo ees’ stock com ensation 0 share p y p Percentage of the share amount to that of all 0% stock dividend

The above-listed amounts of compensation to employees, directors and supervisors are consistent with the proposed amounts adopted by the Board of Directors of the Company.

Effect upon Business Performance and Earnings Per Share of the Company by the Stock Dividend Distribution Proposed at the 2016 Annual Shareholders’ Meeting:

Not applicable since the Company does not propose the stock dividend distribution to the 2016 Annual Shareholders’ Meeting and not need to disclose its financial forecast information.

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AI assistant

F.T.C — AGM Information 2016

51797_rns_2016-07-11_0f0863d6-f1a8-44d9-a6c0-db7f035c1b13.pdf

FORMOSA TAFFETA CO., LTD.

2016 ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK (SUMMARY)

Table of Contents

FORMOSA TAFFETA CO., LTD.

2016 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

IV. Reporting Items

V. Ratification Items

VII. Extraordinary Motions

VIII. Meeting Adjourned

FORMOSA TAFFETA CO., LTD.

2016 ANNUAL SHAREHOLDERS’ MEETING AGENDA

I. Discussion Item(s) (I)

II. Report Items

III. Ratification Items

IV. Discussion Item(s) (II)

Discussion Item(s) (I) Proposal 1

Resolution :

Report Items

2. Supervisors’ Review Report for 2015 Explanatory Notes:

Explanatory Notes:

Formosa Taffeta Company Limited 2015 Annual Business Report

1. 2015 Overview of Operations

2. Operations Highlight

3. 2016 Operation Plans and Outlook

(1) Filament dyeing processed fabrics:

(2) Tyre cord:

(3) Cotton Yarn:

(4) Special fabrics:

(5) Carbon fiber composite materials:

(6) PE Bags:

4. Conclusion

FORMOSA TAFFETA CO., LTD Supervisors’ Review Report

Submitted to

Ratification Items Proposal 1

Explanatory Notes:

Resolution:

Ratification Items Proposal 2

Attachment:

Resolution:

Discussion Item(s) (II) Proposal 1

Pro osed b the Board of Directors p y

Resolution:

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Expressed

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FORMOSA TAFFETA CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

FORMOSA TAFFETA CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLYSTATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLYSTATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FORMOSA TAFFETA CO., LTD Statement of Profits Distribution

Independent Auditor’s Report

Independent Auditor’s Report

Information regarding the Proposed Compensation to Employees, Directors and Supervisors Adopted by the Board of Directors of the Company:

Effect upon Business Performance and Earnings Per Share of the Company by the Stock Dividend Distribution Proposed at the 2016 Annual Shareholders’ Meeting:

More from F.T.C

F.T.C AGM Information 2016