F.T.C — Audit Report / Information 2018

Nov 28, 2018

FORMOSA TAFFETA CO., LTD.

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS

DECEMBER 31, 2018 AND 2017

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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

Opinion

We have audited the accompanying balance sheets of Formosa Taffeta Co., Ltd. (the “Company”) as at December 31, 2018 and 2017, and the related statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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 (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

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

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Valuation of allowance for uncollectible accounts

Description

Refer to Note 4(9) for accounting policy on financial assets impairment, Note 5(2) for accounting estimates and assumption uncertainty in relation to accounts receivable, and Note 6(4) for details of allowance for uncollectible accounts. As of December 31, 2018, the Company’s accounts receivable amounted to NT$2,128,150 thousand (excluding allowance for bad debts amounting to NT$31,678 thousand), respectively.

The Company assesses the collectability of accounts receivable based on historical experience, known reason or existing objective evidence. For those accounts which are considered uncollectible, the Company recognizes impairment with a credit to accounts receivable. The Company examines the reasonableness periodically. As the estimation of allowance for uncollectible accounts is subject to management’s judgement, and given the significance of accounts receivable and allowance for uncollectible accounts to the financial statements, we consider the valuation of allowance for uncollectible accounts a key audit matter.

How our audit addressed the matter

Our procedures in relation to management’s assessment of the allowance for uncollectible accounts included:

• A. Evaluating the reasonableness of the estimates used by management to estimate the expected credit losses of accounts receivable and obtaining relevant supporting documents, including: forwardlooking adjustments, accounting disputes, overdue status, post-account collections and indications that show that the customer cannot repay the loan as scheduled;

• B. Assessing the adequacy of allowance for uncollectible accounts estimated by management to confirm whether the provision policy on allowance for uncollectible accounts has been consistently applied in the comparative periods of financial statements and testing the related assessment to

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confirm the accuracy of ageing analysis of accounts receivable; and

• C. Testing collections after the balance sheet date to check the adequacy of allowance for uncollectible accounts.

Valuation of inventory

Description

Refer to Note 4(11) for accounting policy on inventory valuation, Note 5(3) for accounting estimates and assumption uncertainty in relation to inventory valuation, and Note 6(5) for description of allowance for inventory valuation losses. As of December 31, 2018, the Company’s inventory and allowance for market value decline and obsolete and slow-moving inventories amounted to NT$5,334,258 thousand and NT$440,522 thousand, respectively.

The Company is primarily engaged in fiber dyeing and finishing, manufacturing and sales of curtains. As the textile manufacturing market is competitive, there is higher risk of incurring loss on inventory valuation. The Company recognizes inventories at the lower of cost and net realizable value, and the net realizable value is calculated based on the average price less estimated selling expenses. Since the calculation of net realizable value involves subjective judgement and uncertainty and the inventory is material to the financial statements, we consider the valuation of inventory a key audit matter.

How our audit addressed the matter

Our procedures in relation to management’s assessment of the allowance for inventory valuation losses included:

• A. Assessing the reasonableness of policies and procedures on allowance for inventory valuation loss, including the reasonableness of classification of inventory in determining the net realizable value;

• B. Understanding the inventory management procedures, examining and participating in annual physical count and assessing the effectiveness of inventory management and inventory classification determined by management; and

• C. Checking the method in calculating the net realizable value of inventory and assessing the reasonableness of allowance for valuation loss.

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Other matter - audits of the other independent accountants

We did not audit the financial statements of certain investments accounted for under the equity method. The balance of these investments accounted for under the equity method amounted to NT$7,464,179 thousand and NT$7,133,622, constituting 9% and 8% of total assets as of December 31, 2018 and 2017, respectively, and comprehensive income was NT$382,256 thousand and NT$412,764 thousand, constituting 22% and 8% of total comprehensive income for the years then ended, respectively. The financial statements of these investees were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements relative to these investees is based solely on the audit reports of the other independent accountants.

Responsibilities of management and those charged with governance for the financial statements

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

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

Those charged with governance, including members of the Audit Committee, are responsible for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain

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professional skepticism throughout the audit. We also:

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

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

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

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

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

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

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

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

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

Wu, Han-Chi Chou, Chien-Hung For and on behalf of PricewaterhouseCoopers, Taiwan March 15, 2019

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying parent company only 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 parent company only 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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FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 12(4) 7 6(4) 7 7 6(5) 6(3) 12(4) 7 and 12(4) 6(6) 6(7) and 7 7 6(23)	December 31, 2018 AMOUNT % $ 1,447,966 2 - - 1,717,779 2 - - 109,709 - 4,429 - 2,128,150 3 220,365 - 290,656 1 4,893,736 6 92,227 - 194,023 - 11,099,040 14 40,556,651 50 - - - - 21,385,854 27 6,785,900 8 473,658 1 79,023 - 119,377 - 69,400,463 86 $ 80,499,503 100	December 31, 2017	December 31, 2017
		AMOUNT $ 1,447,966 - 1,717,779 - 109,709 4,429 2,128,150 220,365 290,656 4,893,736 92,227 194,023 11,099,040 40,556,651 - - 21,385,854 6,785,900 473,658 79,023 119,377 69,400,463 $ 80,499,503	AMOUNT $ 851,569 398 - 1,911,496 114,555 13,007 1,948,346 194,371 415,375 4,963,569 149,485 188,207 10,750,378 - 43,363,486 266,009 22,905,965 7,432,389 498,499 124,629 162,805 74,753,782 $ 85,504,160	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Current financial assets at fair value through other comprehensive income 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 1517 Non-current financial assets at fair value through other comprehensive income 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				1 - - 2 - - 3 - 1 6 - -
				13
				- 51 - 27 9 - - -
				87
				100

(Continued)

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

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31, 2018 December 31, 2017 Notes AMOUNT % AMOUNT % 6(8) $ - - $ 7,386 - 6(9) - - 1,299,806 2 6(10) 774 - - - 127,600 - 135,455 - 7 331,828 - 239,553 - 484,745 1 684,049 1 7 964,825 1 1,062,882 1 7 854,276 1 837,873 1 6(23) 104,403 - 51,445 - 85,154 - 90,457 - 2,953,605 3 4,408,906 5 6(11) 7,900,000 10 10,800,000 13 6(23) 290,513 - 170,157 - 6(12) 442,181 1 745,702 1 8,632,694 11 11,715,859 14 11,586,299 14 16,124,765 19 6(13) 16,846,646 21 16,846,646 20 6(14) 1,268,860 2 274,323 - 6(15) 7,567,594 9 7,139,607 8 2,214,578 3 2,214,578 3 9,743,048 12 5,398,225 6 6(16) 31,291,978 39 37,525,951 44 6(13) ( 19,500) - ( 19,935 ) - 68,913,204 86 69,379,395 81 $ 80,499,503 100 $ 85,504,160 100	December 31, 2017	December 31, 2017
			%
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			- 2 - - - 1 1 1 - -
			5
			13 - 1
			14
			19
			20 - 8 3 6 44 -
			81
			100

The accompanying notes are an integral part of these parent company only financial statements.

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FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

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

Items

Years endedDecember31 2018 2017 Notes AMOUNT % AMOUNT % 6(17) and 7 $ 27,593,484 100 $ 25,713,839 100 6(5)(20)(21) and 7 ( 25,442,866) ( 92) ( 23,215,460 ) ( 90) 2,150,618 8 2,498,379 10 6(20)(21) and 7 ( 1,397,836) ( 5) ( 1,396,951 ) ( 5) ( 528,989) ( 2) ( 496,956 ) ( 2) ( 1,926,825) ( 7) ( 1,893,907 ) ( 7) 223,793 1 604,472 3 6(18) and 7 2,820,730 10 2,664,014 10 6(19) and 7 924,798 3 ( 168,551 ) ( 1) 6(22) ( 103,358) - ( 117,088 ) - 6(6) 1,389,799 5 1,500,573 6 5,031,969 18 3,878,948 15 5,255,762 19 4,483,420 18 6(23) ( 518,356) ( 2) ( 203,549 ) ( 1) $ 4,737,406 17 $ 4,279,871 17 6(16) $ 153,145 1 ($ 330,584 ) ( 1) 6(3) ( 2,635,914) ( 10) - - ( 693,862) ( 3) - - ( 3,176,631) ( 12) ( 330,584 ) ( 1) 154,507 1 ( 927,654 ) ( 4) 12(4) - - 2,127,178 8 14,914 - - - 169,421 1 1,199,524 4 ($ 3,007,210) ( 11) $ 868,940 3 $ 1,730,196 6 $ 5,148,811 20 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 6(24) $ 3.12 $ 2.82 $ 2.66 $ 2.54 t deemed as treasury stock: $ 3.12 $ 2.81 $ 2.66 $ 2.54

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for using equity method, net 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income (net) Components of other comprehensive income that will not be reclassified to profit or loss 8311 Actuarial gains (losses) on defined benefit plans 8316 Unrealized loss on valuation of financial assets at fair value through other comprehensive income 8330 Share of other comprehensive loss of associates and joint ventures accounted for under equity method that will not be reclassified to profit or loss 8310 Other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8362 Unrealized gain on valuation of available-for-sale financial assets 8380 Share of other comprehensive income of associates and joint ventures accounted for under equity method that will be reclassified to profit or loss 8360 Other comprehensive income that will be reclassified to profit or loss 8300 Total other comprehensive (loss) income for the year 8500 Total comprehensive income for the year 9750 Basic earnings per share Assuming shares held by subsidiary are no Basic earnings per share

The accompanying notes are an integral part of these parent company only financial statements.

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FORMOSA TAFFETA CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Year ended December 31, 2017 Balance at January 1, 2017 Profit for the year Other comprehensive income (loss) for the year Total comprehensive income Appropriations of 2016 earnings: Legal reserve Special reserve Cash dividends Disposal of treasury stock Change in the net interest of associates recognized under the equity method Adjustment of cash dividends paid to consolidated subsidiaries Expired cash dividends transferred to capital surplus Balance at December 31, 2017 Year ended December 31, 2018 Balance at January 1, 2018 Retrospective adjustments Balance at January 1, 2018 after adjustments Profit for the year Other comprehensive income (loss) for the year Total comprehensive income Appropriations of 2017 earnings: Legal reserve Cash dividends Disposal of treasury stock Changes in the net interest of associates recognized under the equity method Changes in share of consolidated subsidiaries Difference between consideration and carrying amount of subsidiaries acquired or disposed Adjustment of cash dividends paid to consolidated subsidiaries Expired cash dividends transferred to capital surplus Disposal of financial assets at fair value through other comprehensive income Balance at December 31, 2018	Notes		Share capital - commonstock		CapitalSurplus				RetainedEarnings						Other EquityInterest			Treasury stocks	Treasury stocks		Totalequity
							Legal reserve		Special reserve		Unappropriated retained earnings		Financial statements translation differences of foreignoperations		Unrealized gains (losses) from financial assets measured at fair value through other comprehensiveincome		Unrealized gain or loss on available-for-sale financial assets
	6(16) 6(15) 6(13) 12(4) 6(16) 6(15) 6(13) 6(3)		$ 16,846,646 - - - - - - - - - - $ 16,846,646 $ 16,846,646 - 16,846,646 - - - - - - - - - - - - $ 16,846,646		$ 266,458 - - - - - - 2,891 33 3,439 1,502 $ 274,323 $ 274,323 - 274,323 - - - - - 1,041 5,264 - 982,053 4,357 1,822 - $ 1,268,860		$ 6,791,478 - - - 348,129 - - - - - - $ 7,139,607 $ 7,139,607 - 7,139,607 - - - 427,987 - - - - - - - - $ 7,567,594		$ 1,708,542 - - - - 506,036 - - - - - $ 2,214,578 $ 2,214,578 - 2,214,578 - - - - - - - - - - - - $ 2,214,578		$ 4,830,100 4,279,871 ( 330,584 ) 3,949,287 ( 348,129 ) ( 506,036 ) ( 2,526,997 ) - - - - $ 5,398,225 $ 5,398,225 4,890,917 10,289,142 4,737,406 153,145 4,890,551 ( 427,987 ) ( 3,200,863 ) - 1,562 4,347 - - - ( 1,813,704 ) $ 9,743,048		$ 13,387 - ( 927,654 ) ( 927,654 ) - - - - - - - ($ 914,267 ) ($ 914,267 ) - ( 914,267 ) - 169,421 169,421 - - - - - - - - - ($ 744,846 )		$ - - - - - - - - - - - $ - $ - 33,680,146 33,680,146 - ( 3,329,776 ) ( 3,329,776 ) - - - ( 1,562 ) ( 3,804 ) ( 118,806 ) - - 1,810,626 $ 32,036,824		$ 36,313,040 - 2,127,178 2,127,178 - - - - - - - $ 38,440,218 $ 38,440,218 ( 38,440,218 ) - - - - - - - - - - - - - $ -		($ 21,501 ) - - - - - - 1,566 - - - ($ 19,935 ) ($ 19,935 ) - ( 19,935 ) - - - - - 435 - - - - - - ($ 19,500 )		$ 66,748,150 4,279,871 868,940 5,148,811 - - ( 2,526,997 ) 4,457 33 3,439 1,502 $ 69,379,395 $ 69,379,395 130,845 69,510,240 4,737,406 ( 3,007,210 ) 1,730,196 - ( 3,200,863 ) 1,476 5,264 543 863,247 4,357 1,822 ( 3,078 ) $ 68,913,204

The accompanying notes are an integral part of these parent company only financial statements.

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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 Adjustments Adjustments to reconcile profit (loss) Reversal of impairment of receivable Reversal of expected credit loss Depreciation (including depreciation on investment property) Interest expense Interest income Dividend income Loss (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 and scrap of property, plant and equipment Unrealized (gain) loss on disposal and scrap of property, plant and equipment, net Changes in operating assets and liabilities Changes in operating assets Notes receivable Notes receivable - related parties Accounts receivable, net Accounts receivable - related parties Other receivables Inventories Prepayments Other current assets Changes in operating liabilities Notes payable Notes payable - related parties Accounts payable Accounts payable - related parties Other payables Other current liabilities Other non-current assets Cash inflow generated from operations Interest received Dividends received Interest paid Income tax paid Net cash flows from operating activities

Years ended December 31, Notes 2018 2017 $ 5,255,762 $ 4,483,420 - ( 1,995 ) ( 5,386 ) - 6(7)(20) and 7 740,702 804,763 6(22) 103,358 117,088 6(18) ( 5,537 ) ( 1,883 ) 6(18) ( 2,531,826 ) ( 2,310,238 ) 6(2)(19) 398 ( 398 ) 6(10)(19) 774 - 893,308 898,499 6(6) ( 1,389,799 ) ( 1,500,573 ) 6(19) and 7 ( 870,873 ) ( 46,693 ) 6(19) and 7 ( 43,894 ) 1,078 4,846 ( 8,144 ) 8,578 ( 1,364 ) ( 174,418 ) 4,368 ( 25,994 ) 653 55,398 ( 67,673 ) 69,833 ( 599,219 ) 57,258 318,583 ( 5,816 ) ( 8,539 ) ( 7,855 ) ( 25,869 ) 92,275 109,847 ( 199,304 ) ( 180,892 ) ( 98,057 ) ( 51,877 ) 34,188 ( 31,210 ) ( 5,303 ) 11,275 ( 147,909 ) ( 347,246 ) 1,804,707 1,565,761 5,537 1,883 2,526,309 2,310,238 ( 107,748 ) ( 120,511 ) ( 230,114 ) ( 179 ) 3,998,691 3,757,192

(Continued)

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FORMOSA TAFFETA CO., LTD. PARENT COMPANY ONLY 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 disposal of financial assets at fair value through other comprehensive income .Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of financial assets measured at cost Proceeds from capital reduction of financial assets measured at cost Acquisition of investments accounted for under the equity method .Proceeds from disposal 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 flows from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings (Decrease) increase in short-term notes and bills payable Increase in long-term borrowings Payment of long-term borrowings Cash dividends paid Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Years ended December 31, Notes 2018 2017 $ - ($ 85,852 ) 693,200 - 5,780 - - ( 198,066 ) - 23,549 ( 566,417 ) ( 585,073 ) 3,039,857 - 6(25) ( 446,701 ) ( 570,916 ) 1,236,614 86,080 43,428 ( 59,498 ) 4,005,761 ( 1,389,776 ) ( 7,386 ) ( 12,776 ) ( 1,299,806 ) 299,979 1,600,000 10,900,000 ( 4,500,000 ) ( 11,200,000 ) 6(15) ( 3,200,863 ) ( 2,526,997 ) ( 7,408,055 ) ( 2,539,794 ) 596,397 ( 172,378 ) 6(1) 851,569 1,023,947 6(1) $ 1,447,966 $ 851,569

The accompanying notes are an integral part of these parent company only financial statements.

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FORMOSA TAFFETA CO., LTD. NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2018 AND 2017

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

1. HISTORY AND ORGANIZATION

• (1) Formosa Taffeta Co., Ltd. (the “Company”) was incorporated on April 19, 1973 under the provisions of the Company Law of the Republic of China (R.O.C.). Factories were established in Douliou City of Yulin County, R.O.C. On December 24, 1985, the Company’s common stock was officially listed on the Taiwan Stock Exchange Corporation.

The major operations of each department are as follows:

Business department Major activities Primary department: Amine fabrics, polyester fabrics, cotton fabrics, blending Fabrics, dyeing and others fabrics and umbrella ribs Secondary department: Cord, plastics bags, refineries for gasoline, diesel, crude oil Cord fabrics & petroleum and the related petroleum products, cotton fibers, blending fibers and protection fibers

• (2) Formosa Chemicals & Fiber Corp. has significant control over the Company since Formosa Chemicals & Fiber Corp. holds over half of the Board seats after the stockholders’ meeting on June 27, 2008. Since June 27, 2008, Formosa Chemicals & Fiber Corp. became the Company’s parent company and accordingly, the Company and its subsidiaries are included in its consolidated financial statements.

• (3) As of December 31, 2018 and 2017, the Company had 4,706 and 4,741 employees, respectively.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorized for issuance by the Board of Directors on March 15, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments as endorsed by the FSC effective from 2018 are as follows:

Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 2, ‘ Classification and measurement of share-based January 1, 2018 payment transactions’

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New Standards,Interpretations and Amendments

Effective date by International Accounting Standards Board

Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with IFRS 4, Insurance contracts’ IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from contracts with customers’ Amendments to IAS 7, ‘Disclosure initiative’ Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ Amendments to IAS 40, ‘Transfers of investment property’ IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’

January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2018

Based on the Company’s assessment, the major effects of the above standards and interpretations on the Company’s financial condition and financial performance are summarized below:

• A. IFRS 9, ‘Financial instruments’

• (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.

• (b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.

• (c) The amended general hedge accounting requirements align hedge accounting more closely

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with an entity’s risk management strategy. Risk components of non-financial items and a group of items can be designated as hedged items. The standard relaxes the requirements for hedge effectiveness, removing the 80-125% bright line, and introduces the concept of ‘rebalancing’; while its risk management objective remains unchanged, an entity shall rebalance the hedged item or the hedging instrument for the purpose of maintaining the hedge ratio.

• (d) The Company has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018, please refer to Note 12(4).

• B. IFRS 15, ‘Revenue from contracts with customers’ and amendments

IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’, IAS 18, ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognized when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps:

Step 1: Identify contracts with customer

Step 2: Identify separate performance obligations in the contract(s)

Step 3: Determine the transaction price

Step 4: Allocate the transaction price

Step 5: Recognize revenue when the performance obligation is satisfied

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity

to disclose sufficient information to enable users of financial statements to understand the nature,

amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

• C. Amendments to IAS 7, ‘Disclosure initiative’

This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

The Company expects to provide additional disclosure to explain the changes in liabilities arising from financing activities.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company

New standards, interpretations and amendments as endorsed by the FSC effective from 2019 are as follows:

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. IFRS 16, ‘Leases’

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognize a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

The Company expects to recognize the lease contract of lessees in line with IFRS 16. However, the Company does not intend to restate the financial statements of prior period (referred herein as the “modified retrospective approach”). On January 1, 2019, ‘ right-of-use asset ’ and lease liability will both be increased by $725,099.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

The above standards and interpretations have no significant impact to the Company’s financial

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condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

• (1) Compliance statement

• The parent company only financial statements have been prepared in accordance with the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

• (2) Basis of preparation

• A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:

  • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • (b) Financial assets at fair value through other comprehensive income/Available-for-sale financial assets measured at fair value.

  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets and unrecognized actuarial losses, and less unrecognized actuarial gains and present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain Ecritical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

• C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Company has elected to apply modified retrospective approach whereby the cumulative impact of the adoption was recognized as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies.

• (3) Foreign currency translation

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). These parent company only financial statements are presented in New Taiwan Dollars, which is the Company’s

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functional and presentation currency.

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions. All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses.

• B. Translation of foreign operations

The operating results and financial position of all the company entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  - (a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  - (b) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  - (c) All resulting exchange differences are recognized in other comprehensive income.

• (4) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

  • (b) Assets held mainly for trading purposes;

  • (c) Assets that are expected to be realized within twelve months from the balance sheet date;

  • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

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• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (a) Liabilities that are expected to be paid off within the normal operating cycle;

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be paid off within twelve months from the balance sheet date;

• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(5) Cash equivalents

• Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(6) Financial assets at fair value through profit or loss

Effective 2018

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using settlement date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

• D. The Company recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(7) Financial assets at fair value through other comprehensive income

Effective 2018

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value: The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive

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payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(8) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(9) Impairment of financial assets

• For financial assets at amortized cost including accounts receivable or contract assets that have a significant financing component, at each reporting date, the Company recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognizes the impairment provision for lifetime ECLs.

(10) Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred, and the Company has not retained control of the financial asset.

• (11) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(12) Investments accounted for using equity method / subsidiaries and associates

• A. Subsidiaries refer to the entities (including special purpose entities) that the Company has control over their financial and operating policies and own more than 50% of voting shares directly or indirectly. The Company evaluates investments in subsidiaries accounted under equity method in these parent company only financial statements.

• B. Unrealized profit (loss) from the transactions between the Company and subsidiaries have been offset. The accounting policies of the subsidiaries have been adjusted to ensure consistency with

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the polices of the Company.

• C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income.

• D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20% or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.

• E. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate (including any other unsecured receivables), the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• F. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes the Company’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

• G. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• H. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest.

• I. When the Company disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss.

• J. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements.

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(13) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change.

The estimated useful lives of property, plant and equipment are as follows:

Item Buildings and structures Machinery and equipment Transportation equipment Other equipment	Estimated useful lives
	10 ~ 60 years 5 ~ 20 years 5 ~ 10 years 2 ~ 15 years

(14) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 30 years.

(15) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognized.

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(16) Borrowings

• Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

(17) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(18) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.

(19) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(20) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

• (21) Financial guarantee contracts

• A financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. At initial recognition, the Company measures financial guarantee contracts at fair value and subsequently at the higher of the amount of provisions determined by the expected credit losses and the cumulative gains that were previously recognized.

(22) Employee benefits

• A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expenses in that period when the employees render service.

• B. Pensions

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• (a) Defined contribution plan

For defined contribution plan, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

• (b) Defined benefit plan

• i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) instead.

• ii. Remeaurements arising on defined benefit plan are recognized in other comprehensive income in the period in which they arise and recorded as retained earnings.

iii. Past service costs are recognized immediately in profit or loss.

• C. Employees’ compensation and directors’ and supervisors’ remuneration

  • Employees’ compensation and directors’ and supervisors’ remuneration are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

• (23) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in

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the balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

• F. A deferred tax asset shall be recognized for the carry forward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(24) Share capital

• Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(25) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities.

• (26) Revenue recognition

• A. The Company manufactures and sells various fabrics and renders services as an oil distributor Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of

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the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

• B. Revenue is measured at the fair value of the consideration received or receivable taking into account business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities.

• C. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Impairment assessment of investments accounted for using equity method

The Company assesses the impairment of an investment accounted for using equity method as soon as there is any indication that it might have been impaired and its carrying amount cannot be recovered. The Company assesses the recoverable amount of an investment accounted for under the equity method based on the present value of the Company’s share of expected future cash flows of the investee, and analyses the reasonableness.

(2) Impairment valuation of accounts receivable

In evaluating impairment, the Company determines future recoverability of accounts receivable based on subjective judgement and estimates, taking into consideration the customer’s financial condition, internal credit rating, and historical transaction records. If the future indicators decline, the impairment of accounts receivable may be significant.

(3) Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2018, the carrying amount of inventories was $4,893,736.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents - Commercial paper	December 31,2018 137,858 $ 716,435 593,673 1,447,966 $	December 31,2017
		127,882 $ 583,406 140,281
		851,569 $

• A. The Company associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The Company has no cash and cash equivalents pledged to others.

• (2) Financial assets at fair value through profit or loss

Items Current items: Forward foreign exchange contracts	December 31,2018 - $	December 31,2017
		398 $

• A. For the years ended December 31, 2018 and 2017, the Company recognized ($398) and $398 in profit or loss in relation to financial assets at fair value through profit or loss, respectively.

• B. The Company entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below:

Derivative Instruments Current items: Forward foreign exchange contracts Taipei Fubon Bank	December 31,2017	December 31,2017
	Contract Amount (Notional Principal) 192,020 JPY	Contract Period
		2017.11~2018.02

The forward exchange contracts are buy and sell to hedge the change of exchange rate due to import and export transactions, but not adopting hedge accounting.

• C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

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(3) Financial assets at fair value through other comprehensive income

Effective 2018

Financial assets at fair value through other comprehensive income Effective 2018
Items Current items: Equity instruments Listed stocks Unlisted stocks Valuation adjustment Non-current items: Equity instruments Listed stocks Unlisted stocks Valuation adjustment	December 31,2018
	900,285 $ 100,000
	1,000,285 717,494
	1,717,779 $
	8,163,125 $ 403,790
	8,566,915 31,989,736
	40,556,651 $

• A. The Company has elected to classify equity investments that are considered to be steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $42,274,430 as at December 31, 2018.

• B. Aiming to satisfy the operating capital needs, the Company sold its equity investment in Nan Ya Technology Corp. at fair value of $696,277 which resulted in loss on disposal of ($1,810,626) during the year ended December 31, 2018 which was reclassified to retained earnings.

• C. Amounts recognized in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Year ended December 31, 2018

Equity instruments at fair value through

other comprehensive income Fair value change recognized in other ($ 2,635,914) comprehensive income Cumulative losses reclassified to retained earnings due to derecognition (including the portion attributable to non-controlling interest) ($ 1,813,704)

• D. As at December 31, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Company was $42,274,430.

• E. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).

• F. Information on available-for-sale financial assets and financial assets at cost as of December 31,

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2017 is provided in Note 12(4).

(4) Notes and accounts receivable

2017 is provided in Note 12(4). Notes and accounts receivable
	December 31,2018		December	31,2017
Notes receivable	$	109,709	$	114,555
Accounts receivable	$	2,159,828	$	1,985,410
Less: Allowance for uncollectible accounts	(	31,678)	(	37,064)
	$	2,128,150	$	1,948,346
A. The ageing analysis of notes and accounts	receivable are as follows:
	December	31,2018	December	31,2017
Not past due	$	2,222,050	$	2,046,580
Up to 30 days		28,939		42,773
31 to 90 days		17,818		6,944
Over 90 days		730		3,668
	$	2,269,537	$	2,099,965

The above ageing analysis was based on past due date.

• B. As at December 31, 2018 and 2017, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’s notes and accounts receivable were $2,269,537 and $2,099,965 respectively.

• C. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

(5) Inventories

12(2). Inventories
Raw materials Supplies Work in process Finished goods Merchandise inventory Materials in transit Outsourced processed materials		December 31,2018
	Allowance for Cost valuation loss 471,312 $ 9,898) ($ 66,872 1,287) ( 1,835,698 - 2,409,232 429,337) ( 159,786 - 251,557 - 139,801 - 5,334,258 $ 440,522) ($		Book value
			461,414 $ 65,585 1,835,698 1,979,895 159,786 251,557 139,801
			4,893,736 $

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Raw materials Supplies Work in process Finished goods Merchandise inventory Materials in transit Outsourced processed materials		December 31,2017
	Allowance for Cost valuation loss 435,007 $ 8,283) ($ 73,480 5,309) ( 1,710,500 - 2,212,326 230,286) ( 286,276 - 369,828 - 120,030 - 5,207,447 $ 243,878) ($		Book value
			426,724 $ 68,171 1,710,500 1,982,040 286,276 369,828 120,030
			4,963,569 $

The cost of inventories recognized as expense for the years ended December 31, 2018 and 2017 were as follows:

as follows:
		Years ended	December 31,
		2018		2017
Cost of inventories sold	$	25,252,173	$	23,211,459
Loss on inventory valuation		196,644		24,564
Others (Note)	(	5,951)	(	20,563)
	$	25,442,866	$	23,215,460

Note: Others consist of inventory overage/shortage and disposal of scrap and defective materials. (6) Investments accounted for using equity method A. List of long-term investments

Formosa Advanced Technologies Co., Ltd. Formosa Taffeta (Cayman) Limited Formosa Taffeta Dong Nai Co., Ltd. Formosa Industry Co., Ltd. Taffeta (Zhong Shan) Co, Ltd. Formosa Taffeta Vietnam Co., Ltd. Formosa Taffeta (Hong Kong) Co., Ltd. Quang Viet Enterprise Co., Ltd. Formosa Development Co., Ltd. Schoeller F.T.C. (Hong Kong) Co., Ltd. Xiamen Xiangyu Formosa Import & Export Trading Co., Ltd.	December 31,2018 5,350,424 $ 5,524,284 2,281,893 2,008,842 1,695,852 1,963,366 1,133,880 1,191,261 217,235 5,663 13,154 21,385,854 $	December 31,2017
		7,347,846 $ 5,490,420 2,228,212 1,938,483 1,635,550 1,806,539 1,092,248 1,149,965 206,279 4,217 6,206
		22,905,965 $

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• B. The investment income (loss) on subsidiaries and associates accounted for using equity method for the years ended December 31, 2018 and 2017 was as follows:

		Years ended	December 31,	December 31,
		2018		2017
Formosa Advanced Technologies Co., Ltd.	$	838,593	$	914,979
Quang Viet Enterprise Co., Ltd.		116,954		112,417
Formosa Taffeta Vietnam Co., Ltd.		139,974		163,188
Formosa Industry Co., Ltd.		121,457		77,090
Formosa Development Co., Ltd.		13,708		11,313
Taffeta (Zhong Shan) Co, Ltd.		94,273		72,999
Formosa Taffeta Dong Nai Co., Ltd.	(	5,943)		57,981
Schoeller F.T.C. (Hong Kong) Co., Ltd.		3,103		2,653
Formosa Taffeta (Hong Kong) Co., Ltd.		60,477		89,049
Xiamen Xiangyu Formosa Import & Export
Trading Co., Ltd.		7,203	(	959)
Formosa Taffeta (Cayman) Limited		-	(	137)
	$	1,389,799	$	1,500,573

Except for the investee companies, Formosa Advanced Technologies Co., Ltd., Formosa Taffeta (Zhong Shan) Co., Ltd., Formosa Taffeta (Cayman) Co., Ltd., Formosa Taffeta (Hong Kong) Co., Ltd. and its subsidiary, Formosa Taffeta (Changshu) Co., Ltd., Formosa Development Co., Ltd. and its subsidiary, Public More Internation Ltd. (established in 2017), the investment income or loss for the years ended December 31, 2018 and 2017 was based on the investees’ financial statements audited by other auditors.

• C. The share of income of subsidiaries and associates accounted for using equity method of $382,748 and $412,370 for the years ended December 31, 2018 and 2017, respectively, were based on the audited financial statements of the investee companies.

• D. Subsidiaries

• (a) Information on the Company’s subsidiaries is provided in Note 4(3) of the Company’s 2018 consolidated financial statements.

• (b) As at December 31, 2018 and 2017, the Company’s common stocks owned by its subsidiary, Formosa Development Co., Ltd., were 2,243,228 and 2,293,228 shares, respectively, treated as treasury stock.

E. Associates

• (a) The financial information of the Company’s principal associates is summarized below:

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Companyname	Principal place of business	Shareholdingratio	Shareholdingratio	Nature of relationship	Method of measurement
		December 31, 2018	December 31, 2017
Formosa Industry Co., Ltd. Kuang Yueh Co., Ltd.	Vietnam Taiwan	10.00% 17.99%	10.00% 17.92%	Associate Associate	Equity method Equity method

• (b) As the Company is a director of Formosa Industry Co., Ltd. and Quang Viet Enterprise Co., Ltd., it exercises significant influence over its operations. Accordingly, Formosa Industry Co., Ltd. and Quang Viet Enterprise Co., Ltd. are accounted for using equity method.

• (c) The financial information of the Company’s principal associates is summarized below: Balance sheets

Balance sheets
		Formosa Industry		Co.,Ltd.
	December 31,2018		December 31,2017
Current assets	$	12,272,938	$	9,291,100
Non-current assets		21,232,063		20,614,037
Current liabilities	(	11,529,804)	(	5,965,869)
Non-current liabilities	(	2,749,255)	(	5,439,066)
Total net assets	$	19,225,942	$	18,500,202
Share in associate’s net assets	$	1,922,594	$	1,850,020
Difference		86,248		88,463
Carrying amount of the associate	$	2,008,842	$	1,938,483
		QuangViet Enterprise Co.,Ltd.
	December 31,2018		December 31,2017
Current assets	$	7,605,631	$	5,987,697
Non-current assets		3,222,091		2,705,609
Current liabilities	(	3,043,953)	(	2,064,121)
Non-current liabilities	(	329,187)	(	52,152)
Total net assets	$	7,454,582	$	6,577,033
Share in associate’s net assets	$	1,341,079	$	1,178,604
Difference	(	149,818)	(	28,639)
Carrying amount of the associate	$	1,191,261	$	1,149,965
Statements of comprehensive income
		Formosa Industry		Co.,Ltd.
		Year ended		Year ended
	December 31,2018		December 31,2017
Revenue	$	31,560,607	$	25,827,459
Profit for the year from continuing
operations
(Total comprehensive income)	$	1,202,739	$	806,833

Statements of comprehensive income

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Revenue Profit for the year from continuing operations Other comprehensive income (loss) Total comprehensive income	Year ended Year ended December 31,2018 December 31,2017 13,280,633 $ 10,203,655 $ 849,357 546,996 9 110,617) ( 849,366 $ 436,379 $ QuangViet Enterprise Co.,Ltd.

• F. The significant associate, Kuang Yueh Co., Ltd., has quoted market prices. As of December 31, 2018 and 2017, the fair value was $1,952,512 and $2,426,693, respectively.

• G. Investment in Formosa Advanced Technologies Co., Ltd. has quoted market price and the fair value was $6,564,871 and $9,135,108 as of December 31, 2018 and 2017, respectively.

• H. The Company sold 84,022 thousand shares of Formosa Advanced Technologies Co., Ltd. at fair value of $3,039,857 on July 23, 2018, resulting in gain on disposal of $980,948 in 2018 which was reclassified to retained earnings, causing the decline in shareholding ratio to 46.68%.

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(7) Property, plant and equipment

							Transportation	Transportation
							equipment and			Prepayments
		Land	Buildings and structures			Machinery	other	equipment		for equipment		Total
At January 1, 2018
Cost	$	2,411,087	$	6,293,337	$	14,217,461	$	4,251,596	$	412,462	$	27,585,943
Accumulated depreciation		-	(	4,092,322)	(	11,870,188)	(	4,035,306)		-	(	19,997,816)
Accumulated impairment	(	155,738)		-		-		-		-	(	155,738)
	$	2,255,349	$	2,201,015	$	2,347,273	$	216,290	$	412,462	$	7,432,389
2018
Opening net book amount	$	2,255,349	$	2,201,015	$	2,347,273	$	216,290	$	412,462	$	7,432,389
Additions		-		-		-		-		435,113		435,113
Disposals	(	342,670)		-	(	23,014)	(	57)		-	(	365,741)
Transfers		-		95,468		435,093		58,496	(	589,057)		-
Depreciation charge		-	(	207,233)	(	460,418)	(	48,210)		-	(	715,861)
Closing net book amount	$	1,912,679	$	2,089,250	$	2,298,934	$	226,519	$	258,518	$	6,785,900
At December 31, 2018
Cost	$	2,068,417	$	6,388,806	$	14,293,461	$	4,226,369	$	258,518	$	27,235,571
Accumulated depreciation		-	(	4,299,556)	(	11,994,527)	(	3,999,850)		-	(	20,293,933)
Accumulated impairment	(	155,738)		-		-		-		-	(	155,738)
	$	1,912,679	$	2,089,250	$	2,298,934	$	226,519	$	258,518	$	6,785,900

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							Transportation	Transportation
							equipment and			Prepayments
		Land	Buildings and structures			Machinery	other	equipment		for equipment		Total
At January 1, 2017
Cost	$	2,410,979	$	6,339,163	$	14,156,729	$	4,330,752	$	159,812	$	27,397,435
Accumulated depreciation		-	(	3,864,255)	(	11,659,728)	(	4,103,065)		-	(	19,627,048)
Accumulated impairment	(	155,738)		-		-		-		-	(	155,738)
	$	2,255,241	$	2,474,908	$	2,497,001	$	227,687	$	159,812	$	7,614,649
2017
Opening net book amount	$	2,255,241	$	2,474,908	$	2,497,001	$	227,687	$	159,812	$	7,614,649
Additions		-		-		-		-		574,174		574,174
Disposals		-	(	29)	(	39,032)	(	326)		-	(	39,387)
Transfers (Note)		108	(	45,614)		394,748		35,157	(	321,524)		62,875
Depreciation charge		-	(	228,250)	(	505,444)	(	46,228)		-	(	779,922)
Closing net book amount	$	2,255,349	$	2,201,015	$	2,347,273	$	216,290	$	412,462	$	7,432,389
At December 31, 2017
Cost	$	2,411,087	$	6,293,337	$	14,217,461	$	4,251,596	$	412,462	$	27,585,943
Accumulated depreciation		-	(	4,092,322)	(	11,870,188)	(	4,035,306)		-	(	19,997,816)
Accumulated impairment	(	155,738)		-		-		-		-	(	155,738)
	$	2,255,349	$	2,201,015	$	2,347,273	$	216,290	$	412,462	$	7,432,389

Note: Transferred from non-current assets held for sale and discontinued operations.

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• A. Borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:

rates for such capitalization are as follows:
Amount capitalized Interest rate	Years ended December31,
	2018 2,733 $ 0.98%~1.04%	2017
		3,485 $
		0.97%~1.03%

• B. The components and useful lives of property, plant and equipment are as follows:

Items	Significant components	Estimated useful lives
Buildings Machinery and equipment Transportation equipment Other equipment	Factory and gasoline stations Impregnating machine, dyeing machine and other machinery equipment Pallet trucks and fork lift trucks Cogeneration power generation equipment	10 ~ 60 years 5 ~ 20 years 5 ~ 10 years 2~ 15 years

• C. Certain regulations restrict ownership of land to individuals, thus, the title of land which the Company has acquired for future plant expansion is under the name of third parties but the titles were transferred and mortgaged by the Company. As of December 31, 2018 and 2017, the amount of titles mortgaged to the Company was $808,300.

(8) Short-term borrowings

Type of borrowings Bank borrowings Purchase loans Type of borrowings Bank borrowings Purchase loans	December 31,2018 - $ December 31,2017 7,386 $	Interest rate range - Interest rate range 0.32%~0.36%	Collateral
			- Collateral
			-

(9) Short-term notes and bills payable

Commercial papers payable Less: Commercial papers payable discount Interest rate	December 31,2018 December 31,2017 - $ 1,300,000 $ - 194) ( - $ 1,299,806 $ - 0.56%

As at December 31, 2017, the abovementioned commercial papers payable are guaranteed by International Bills Finance Corporation, etc.

(10) Financial liabilities at fair value through profit or loss - current

nternational Bills Finance Corporation, etc. Financial liabilities at fair value through profit or loss-current
Items Financial liabilities held for trading Forward foreign exchange contracts	December 31,2018
	774 $

• A. The Company recognized net loss of $774 and $0 on financial liabilities held for trading for the

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years ended December 31, 2018 and 2017, respectively.

• B. Explanations of the transactions and contract information in respect of derivative financial liabilities that the Company does not adopt hedge accounting are as follows:

Derivative Financial Liabilities Current items: Forward foreign exchange contracts Taipei Fubon Bank Taipei Fubon Bank Chang Hwa Bank Chang Hwa Bank	Contract Amount Contract (Notional Principal) Period 50,000,000 JPY 2018.12~2019.2 56,680,000 JPY 2018.12~2019.2 50,000,000 JPY 2018.12~2019.1 50,210,000 JPY 2018.12~2019.1 December 31,2018

The Company had no financial liabilities held for trading on December 31, 2017.

The Company entered into forward foreign exchange contracts to hedge exchange rate risk of assets and liabilities denominated in foreign currencies. However, these forward foreign exchange contracts do not meet all conditions of hedge accounting and are not accounted for under hedge accounting.

- (11) Long term borrowings

under hedge accounting. Long-term borrowings
Credit borrowing Interest rate	December 31,2018 7,900,000 $ 0.98%~1.04%	December 31,2017
		10,800,000 $
		1.00%~1.05%

(12) Pensions

• A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contribution for the deficit by next March.

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(b) The amounts recognized in the balance sheet are determined as follows:

	December	31,2018	December	31,2017
Present value of defined benefit
obligations	$	2,500,851	$	2,789,932
Fair value of plan assets	(	2,068,801)	(	2,055,899)
Net defined benefit liability	$	432,050	$	734,033

(c) Movements in net defined benefit liabilities are as follows:

	Present value of	Present value of
		defined		Fair value of		Net defined
	benefit obligations			plan assets	benefit liability
Year ended December 31, 2018
Balance at January 1	$	2,789,932	($	2,055,899)	$	734,033
Current service cost		29,226		-		29,226
Interest expense (income)		34,874	(	26,293)		8,581
		2,854,032	(	2,082,192)		771,840
Remeasurements:
Return on plan assets
(excluding amounts included in
interest income or expense)		-	(	55,693)	(	55,693)
Experience adjustments	(	99,918)		-	(	99,918)
	(	99,918)	(	55,693)	(	155,611)
Pension fund contribution		-	(	180,776)	(	180,776)
Paid pension	(	253,263)		249,860	(	3,403)
Balance at December 31	$	2,500,851	($	2,068,801)	$	432,050
	Present value of
		defined		Fair value of		Net defined
	benefit obligations			plan assets	benefit liability
Year ended December 31, 2017
Balance at January 1	$	2,635,292	($	1,885,026)	$	750,266
Current service cost		31,452		-		31,452
Interest expense (income)		32,941	(	24,238)		8,703
		2,699,685	(	1,909,264)		790,421
Remeasurements:
Return on plan assets
(excluding amounts included in
interest income or expense)		-		10,450		10,450
Experience adjustments		316,171		-		316,171
		316,171		10,450		326,621
Pension fund contribution		-	(	373,420)	(	373,420)
Paid pension	(	225,924)		216,335	(	9,589)
Balance at December 31	$	2,789,932	($	2,055,899)	$	734,033

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• (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earning is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

• (e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Years ended December31,	Years ended December31,
	2018 1.25% 1.00%	2017
		1.25%
		1.00%

Assumptions regarding future mortality experience are set based on the Taiwan Standard Ordinary Experience Mortality Table for the years ended December 31, 2018 and 2017, respectively.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

Increase Decrease 0.25% 0.25% December 31, 2018 Effect on present value of defined benefit obligation 31,086) ($ 32,308 $ December 31, 2017 Effect on present value of defined benefit obligation 36,610) ($ 38,067 $ Discount rate	Increase Decrease 1.00% 1.00% 139,373 $ 122,059) ($ 167,805 $ 146,598) ($ Future salaryincreases

The sensitivity analysis above was arrived at based on one assumption which changed while the other conditions remain unchanged. In practice more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

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  - (f) For the aforementioned pension plan, the Group recognized pension costs of $37,807 and $40,155 for the years ended December 31, 2018 and 2017, respectively.

  - (g) Expected contributions to the defined benefit pension plan of the Company for the year ending December 31, 2019 are $83,938.

  - (h) As of December 31, 2018, the weighted average duration of that retirement plan is 8 years.

• B. (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • (b) The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2018 and 2017 were $74,523 and $72,370, respectively.

• (13) Share capital

• A. As of December 31, 2018, the Company’s authorized and issued capital was $16,846,646, consisting of 1,684,665,000 shares of common stocks, with a par value of $10 per share.

• B. For the years ended December 31, 2018 and 2017, changes in treasury stocks are as follows (in thousands of shares):

thousands of shares):
Reason for reacquisition Long-term equity investment transferred to treasury stock for parent company’s shares held by subsidiaries Reason for reacquisition Long-term equity investment transferred to treasury stock for parent company’s shares held by subsidiaries			2018
	Investee company Formosa Development Co., Ltd.	Beginning Shares 2,293	Disposal Additions (Note) - 50) ( 2017		Ending Shares
					2,243
	Investee company Formosa Development Co., Ltd.	Beginning Shares 2,473	Disposal Additions (Note) - 180) (		Ending Shares
					2,293

Note: For the years ended December 31, 2018 and 2017, the subsidiary company disposed its investment in the Company of 50,000 shares and 180,000 shares and generated capital surplus of $1,041 and $2,891, respectively.

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• C. The abovementioned treasury stocks were acquired by the subsidiary, Formosa Development Co., Ltd., for investment purposes.

(14) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

legal reserve is insufficient.
At January 1 Disposal of treasury shares Adjustment of cash dividends paid to consolidated subsidiaries Changes in the net interest of associates recognized under the equity method Difference between consideration and carrying amount of subsidiaries acquired Expired cash dividends transferred to capital surplus At December 31 At January 1 Disposal of treasury shares Adjustment of cash dividends paid to consolidated subsidiaries Changes in the net interest of associates recognized under the equity method Expired cash dividends transferred to capital surplus At December 31				2018
	Treasury share transactions		Difference between consideration and carrying amount of subsidiaries acquired or disposed	Donated assets received	Changes in net equity of associates and joint ventures accounted for under equitymethod	Other
		19,899 $ 1,041 4,357 - - - 25,297 $	545 $ - - - 1,105 - 1,650 $	2,032 $ - - - - - 2,032 $ 2017	250,345 $ - 5,264 980,948 - 1,236,557 $	1,502 $ - - - - 1,822 3,324 $
		Treasury share transactions	Difference between consideration and carrying amount of subsidiaries acquired or disposed	Donated assets received	Changes in net equity of associates and joint ventures accounted for under equitymethod	Other
		13,569 $ 2,891 3,439 - - 19,899 $	545 $ - - - - 545 $	2,032 $ - - - - 2,032 $	250,312 $ - - 33 - 250,345 $	- $ - - - 1,502 1,502 $

(15) Retained earnings

A. According to the R.O.C. Securities Exchange Law No. 41, a company should reserve the amount

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equal to any valuation or contra-account in the stockholders' equity in the fiscal year from the net income and prior unappropriated earnings as special reserve. If the valuation or contraaccount in stockholders' equity belongs to prior periods, the same amount from prior period earnings should be considered special reserve and cannot be distributed. The special reserve includes: i) reserve for special purposes, ii) investment income recognized under the equity method, iii) net proceeds from the recognition of financial asset transactions; only when the accumulated value decreases should the special reserve be adjusted by the same amount, subject to the provisions in this section; and iv) other special reserves set out by legal provisions. According to the R.O.C. Company Law and the Company’s Articles of Incorporation, the annual net income should be used initially to cover any accumulated deficit; 10% of the annual net income should be set aside as legal reserve and special reserve. The remaining balance shall be distributed to shareholders according to their shareholding percentage.

• B. The Company’s dividend policy is summarized below:

As the Company operates 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 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.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• D. The appropriations of 2017 and 2016 earnings had been resolved at the stockholders’ meeting on June 22, 2018 and June 23, 2017, respectively. Details are summarized below:

Legal reserve Special reserve Cash dividends	Dividends per share Amount (in dollars) 427,987 $ - 3,200,863 1.90 $ 3,628,850 $ 2017	2016	2016
	Amount 427,987 $ - 3,200,863 3,628,850 $	Amount 348,129 $ 506,036 2,526,997 3,381,162 $	Dividends per share (in dollars)
			1.50 $

• E. As of December 31, 2018 and 2017, unpaid stock dividends amounted to $9,455 and $8,444, respectively.

• F. The appropriations of 2018 earnings had been resolved by the Board of Directors on March 15,

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2019. Details are summarized below:

2019. Details are summarized below:
Legal reserve Cash dividends	2018
	Amount 473,741 $ 3,537,796	Dividends per share (in dollars)
		2.10 $

As of March 15, 2019, the above appropriations of 2018 earnings have not yet been resolved by the shareholders.

• G. For information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(21).

(16) Other equity items

Other equity items
		Unrealized gains		Currency
		on valuation		translation
January 1, 2018	$	38,440,218	($	914,267)
Retrospective adjustments	(	4,760,072)		-
January 1, 2018 after adjustments		33,680,146	(	914,267)
Revaluation
─Parent company	(	2,635,914)		-
─Associates	(	693,862)		-
Revaluation transferred to
retained earnings
─Parent company		1,810,626		-
─Associates	(	5,366)		-
Difference of currency translation
─Parent company		-		154,507
─Associates		-		14,914
Difference between consideration
and carrying amount of subsidiaries
aquired or disposed	(	118,806)		-
December 31, 2018	$	32,036,824	($	744,846)

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(17)	Operating revenue January 1, 2017 Change in unrealized gain or loss on available-for-sale financial assets ─ Parent company ─ Subsidiaries and associates Difference in long-term equity investment from financial statements translation differences of foreign operations ─ Parent company ─ Associates December 31, 2017 Sales revenue Service revenue	Hedgingreserve		Currency translation 13,387 $ - - 732,473) ( 195,181) ( 914,267) ($ Year ended December 31,2018	Currency translation
		36,313,040 $ 1,922,389 204,789 - -
		38,440,218 $
					Year ended December 31,2018
				27,350,551 $ 242,933 27,593,484 $

Related disclosures on operating revenue for 2017 are provided in Note 12(5) B.

(18) Other income

Other income
Interest income from bank deposits Dividend income Other income	Years ended December 31,
	2018 5,537 $ 2,531,826 283,367 2,820,730 $	2017
		1,883 $ 2,310,238 351,893
		2,664,014 $

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(19) Other gains and losses

		Years ended	December 31,
		2018	2017
Forward foreign exchange contracts
Net gain on financial assets at fair value
through profit or loss	($	398)	$	398
Net gain on financial liabilities at fair value				-
through profit or loss	(	774)
Net currency exchange loss		100,476	(	120,816)
Gain on disposal of property, plant
and equipment		914,767		45,615
Bank charges	(	37,700)	(	33,578)
Other losses	(	51,573)	(	60,170)
	$	924,798	($	168,551)

(20) Expenses by nature

Expenses by nature
Employee benefit expense Employee benefit expense Depreciation charges on property, plant and equipment Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses	Years ended December 31,
	2018 2017 2,785,539 $ 2,804,386 $ 715,861 779,922 3,501,400 $ 3,584,308 $ Years ended December 31,	2017
		2,804,386 $ 779,922
		3,584,308 $
	2018 2,346,420 $ 235,499 112,330 91,290 2,785,539 $	2017
		2,361,835 $ 234,761 112,525 95,265
		2,804,386 $

(21) Employee benefit expense

• A. According to the Articles of Incorporation, the Company distributed employees’ compensation at a ratio of profit before income tax of the current year, after covering accumulated losses. The ratio shall not be lower than 0.05% and shall not be higher than 0.5% for employees’ compensation.

• B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at $10,543 and $8,994, respectively; while directors’ and supervisors’ remuneration was accrued at $5,272 and $4,497, respectively. The aforementioned amount was recognized in salary expenses. For the year ended December 31, 2018, the employees’ compensation was estimated and accrued based on the Articles of Incorporation. The employees’ compensation and directors’ and supervisors’ remuneration resolved by the Board of Directors totalled to $10,543 and $5,272,

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respectively, and the employees’ compensation will be distributed in the form of cash. Employees’ compensation and directors’ and supervisors’ remuneration for 2017 as resolved by the Board of Directors were in agreement with those amounts recognized in the 2017 financial statements. For the year ended December 31, 2017, employees’ compensation was $8,994 and distributed in cash.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors and shareholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(22) Finance costs

ance costs
		Years ended	December 31,
		2018		2017
Interest expense:
Bank borrowings	$	106,091	$	120,573
Less: Capitalization of qualifying assets	(	2,733)	(	3,485)
Finance costs	$	103,358	$	117,088

(23) Income tax

A. Income tax expense

Current tax: Current tax on profits for the year Additional 10% tax on undistributed earnings Adjustments in respect of prior years Prepayment of taxes Total current tax Deferred tax: Impact of change in tax rate Origination and reversal of temporary differences Tax expense	2018 2017 111,830 $ 24,998) ($ 32,440 76,622 81,038 24,997 127,086 - 352,394 76,621 16,750 149,212 126,928 518,356 $ 203,549 $ Years ended December 31,

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B. Reconciliation between income tax expense and accounting profit

		Years ended	December 31,	December 31,
		2018		2017
Tax calculated based on profit before tax and	$	1,051,152	$	762,182
statutory tax rate (Note)
Tax effect of permanent differences	(	654,125)	(	558,800)
Tax effect of temporary differences	(	84,813)	(	122,472)
Tax exempt income by tax regulation	(	173,443)		-
Land Value Increment Tax from selling land		127,086		-
Tax effect of investment tax credits		-	(	24,998)
Under provision of prior year’s income tax		81,038		24,997
Net change in deferred income tax assets and
liabilities		149,212		126,928
Impact of change in tax rate		16,750		-
Suspension of securities trading income	(	26,941)		-
Effect on income tax from loss carryforward		-	(	80,910)
Additional 10% tax on undistributed earnings		32,440		76,622
Tax expense	$	518,356	$	203,549

Note: The basis for computing the applicable tax rate is the rate applicable in the respective countries where the Group entities operate .

• C. Amounts of deferred tax assets or liabilities as a result of temporary differences and loss carryforward are as follows:

January1 Deferred tax assets: -Temporary differences Provision for inventory obsolescence 21,049 $ Allowance for bad debts in excess of tax deductible limit 2,128 Accrued pension liabilities 31,776 Unrealized foreign exchange loss 2,576 Unrealized gain on disposal of equipment 17,711 -Loss carryforward 49,389 124,629 Deferred tax liabilities: -Temporary differences Unrealized foreign exchange gain - Investment income accounted for under equity method 170,157) ( 170,157) ( 45,528) ($		Year ended December 31,2018	Year ended December 31,2018	Year ended December 31,2018		December 31
		Recognized in profit or loss		Recognized in other comprehensive income
		43,044 $ 375 31,776) ( 2,206) ( 5,654) ( 49,389) ( 45,606) ( 6,219) ( 114,137) ( 120,356) ( 165,962) ($		- $ - - - - - - - - - - $	64,093 $ 2,503 - 370 12,057 - 79,023 6,219) ( 284,294) ( 290,513) ( 211,490) ($

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January1 Deferred tax assets: -Temporary differences Provision for inventory obsolescence 16,874 $ Allowance for bad debts in excess of tax deductible limit 2,084 Accrued pension liabilities 88,432 Unrealized foreign exchange loss - Unrealized gain on disposal of equipment 17,506 -Loss carryforward 118,938 243,834 Deferred tax liabilities: -Temporary differences Unrealized foreign exchange gain 5,833) ( Investment income accounted for under equity method 156,601) ( 162,434) ( 81,400 $		Year ended December 31,2017	Year ended December 31,2017	Year ended December 31,2017		December 31
		Recognized in profit or loss		Recognized in other comprehensive income
		4,175 $ 44 56,656) ( 2,576 205 69,549) ( 119,205) ( 5,833 13,556) ( 7,723) ( 126,928) ($		- $ - - - - - - - - - - $	21,049 $ 2,128 31,776 2,576 17,711 49,389 124,629 - 170,157) ( 170,157) ( 45,528) ($

• D. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

• E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.

(24) Earnings per share

• A. Basic earnings per share

The calculation of basic earnings per share is profit or loss attributable to the common stockholders of the Company divided by weighted average amount of outstanding common stocks for the year.

Net income	Year ended December 31,2018	Year ended December 31,2018	Year ended December 31,2018
	Weighted-average outstanding common shares Before tax After tax (in thousands) 5,255,762 $ 4,737,406 $ 1,682,385 Amount	Earnings per share (in dollars)
	Before tax 5,255,762 $	Before tax 3.12 $	After tax
			2.82 $

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Year ended December 31, 2017

Net income	Weighted-average outstanding common shares Before tax After tax (in thousands) 4,483,420 $ 4,279,871 $ 1,682,339 Amount	(in dollars) Earnings per share	(in dollars) Earnings per share
	Before tax 4,483,420 $	Before tax 2.66 $	After tax
			2.54 $

The following is the earnings per share assuming the shares of the Company held by its subsidiary, Formosa Development Co., Ltd., are not deemed as treasury shares:

Year ended December 31, 2018

	Year ended December 31,2018	Year ended December 31,2018	018	018
Net income Net income	Outstanding common shares Before tax After tax (in thousands) Before tax After tax 5,255,762 $ 4,737,406 $ 1,684,665 3.12 $ 2.81 $ Year ended December 31,2017 Earnings per share Amount (in dollars)		Earnings per share (in dollars)
	Before tax 5,255,762 $			After tax
				2.81 $
	Before tax After tax 4,483,420 $ 4,279,871 $ Amount	Outstanding common shares (in thousands) 1,684,665	Earnings per share (in dollars)
	Before tax 4,483,420 $		Before tax 2.66 $	After tax
				2.54 $

• B. Employees’ compensation could be distributed in the form of stock. It does not have significant effect on the financial statements for the years ended December 31, 2018 and 2017. It also had no significant effect on earnings per share.

(25) Non-cash transaction

Investing activities with partial cash payments:

Non-cash transaction Investing activities with partial cash payments:
		Years ended	December 31,
		2018	2017
Purchase of property, plant and equipment	$	435,113	$	574,174
Add: Opening balance of payable on equipment		13,354		10,096
Less: Ending balance of payable on equipment	(	1,766)	(	13,354)
Cash paid during the year	$	446,701	$	570,916

(26) Changes in liabilities from financing activities

For the year ended December 31, 2018, the change of short-term borrowings, short-term notes and bills payable and long-term borrowings are ($7,386), ($1,299,806) and ($2,900,000), respectively.

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

The Company is controlled by FORMOSA CHEMICALS & FIBRE CORPORATION (incorporated in R.O.C), which owns 37.4% of the Company’s shares and is the Company’s ultimate controlling

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party.

(2) Names of related parties and relationship

party. Names of related parties and relationship
Names of relatedparties	Relationshipwith the Company
Formosa Chemicals & Fibre Corp. Formosa Taffeta Dong Nai Co., Ltd. Formosa Advanced Technologies Co., Ltd. Formosa Taffeta Vietnam Co., Ltd. Schoeller F.T.C. (Hong Kong) Co., Ltd. Formosa Taffeta (Zhong Shan) Co., Ltd. Formosa Taffeta (Hong Kong) Co., Ltd. Formosa Taffeta (Changshu) Co., Ltd. Quang Viet Enterprise Corp. Formosa Industries Corp. Formosa Heavy Industries Corp. Formosa Biomedical Technology Corp. Formosa Petrochemical Corp. Formosa Asahi Spandex Corp. Formosa Technologies Corp. Formosa Plastics Corp. Chang Gung Biotechnology Corp. Nanya Technology Corp. Nan Ya Plastics Corp. Yugen Yueh Co., Ltd. Yumaowu Enterprise Co., Ltd. Yu Yuang Textile Co., Ltd. Yu Maowu Complex Co., Ltd. Great King Garment Co., Ltd. Kong You Industrial Co., Ltd. Bellmart Indurstrial Co., Ltd. TOA Resin Corp. Formosa HA TINH (CAYMAN) LIMITED	Parent Company Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Associate Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party Other Related Party

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(3) Significant related party transactions

A. Operating revenue

nificant related party transactions Operating revenue
Sales of goods: －Ultimate parent －Subsidiaries －Associates －Other related parties	Years ended December 31,
	2018 565 $ 386,125 393,650 500,161 1,280,501 $	2017
		17,705 $ 271,589 372,384 435,493
		1,097,171 $

Goods are sold based on the price lists in force and terms that would be available to third parties. B. Purchases of goods

Purchases of goods
Purchases of goods: －Ultimate parent －Subsidiaries －Other related parties Formosa Petrochemical Corp. Others	Years ended December 31,
	2018 1,978,969 $ 622,950 10,916,187 1,187,012 14,705,118 $	2017
		1,745,553 $ 883,791 9,606,981 1,178,958
		13,415,283 $

Goods and services are purchased from parent company, subsidiaries and associates on normal commercial terms and conditions.

C. Notes and accounts receivable

commercial terms and conditions. Notes and accounts receivable
Receivables from related parties: －Ultimate parent －Subsidiaries －Associates －Other related parties	December 31,2018 98 $ 72,017 41,091 111,588 224,794 $	December 31,2017
		75 $ 52,738 50,477 104,088
		207,378 $

The receivables from related parties arise mainly from sale transactions. The receivables are due 45~120 days after the date of sale. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties.

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D. Notes and accounts payable

Notes and accounts payable
Payables from related parties: －Ultimate parent －Subsidiaries －Other related parties Formosa Petrochemical Corp. Others	December 31,2018 644,076 $ 159,888 397,563 95,126 1,296,653 $	December 31,2017
		537,314 $ 125,659 542,953 96,509
		1,302,435 $

The payables to related parties arise mainly from purchase transactions and are due 15~60 days after the date of purchase. The payables bear no interest.

• E. Property transactions, investment property and other receivables

(a)The Company sold fixed assets to related parties at cost plus any necessary expense. Gain or loss is recorded as gain or loss on disposal of property, plant and equipment. Details are as follows:

follows:
Sale of property, plant and equipment: －Subsidiaries	Years ended December 31,
	Disposal Gain (loss) proceeds on disposal 35,777 $ 17,560 $ 2018	2017
	Disposal proceeds 35,777 $	Disposal proceeds 92,305 $	Gain (loss) on disposal
			53,807 $

The unrealized gain on disposal of property, plant and equipment from the transactions above amounted to $11,117 and $32,816 for the years ended December 31, 2018 and 2017, respectively.

• (b) Rental income (shown as other income)

The Company rent out buildings on No. 319 and 329, Henan St., Douliu City, Yunlin County, and land on No. 497-1 Neilin Section and employees’ dormitory to Formosa Advanced Technologies Co., Ltd. The lessee pays the Company at the beginning of every month. For the years ended December 31, 2018 and 2017, rental income amounted to $36,883 and $36,883, respectively.

Investment property leased to Formosa Advanced Technologies Co., Ltd. are as follows:

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At January 1, 2018 Cost Accumulated depreciation Year ended December 31, 2018 Opening net book amount Depreciation charge Closing net book amount At December 31, 2018 Cost Accumulated depreciation At January 1, 2017 Cost Accumulated depreciation Year ended December 31, 2017 Opening net book amount Depreciation charge Closing net book amount At December 31, 2017 Cost Accumulated depreciation	Land 6,833 $ - 6,833 $ 6,833 $ - 6,833 $ 6,833 $ - 6,833 $ Land 6,833 $ - 6,833 $ 6,833 $ - 6,833 $ 6,833 $ - 6,833 $	Building and structures Total 764,479 $ 771,312 $ 272,813) ( 272,813) ( 491,666 $ 498,499 $ 491,666 $ 498,499 $ 24,841) ( 24,841) ( 466,825 $ 473,658 $ 764,479 $ 771,312 $ 297,654) ( 297,654) ( 466,825 $ 473,658 $ Building and structures Total 764,479 $ 771,312 $ 247,972) ( 247,972) ( 516,507 $ 523,340 $ 516,507 $ 523,340 $ 24,841) ( 24,841) ( 491,666 $ 498,499 $ 764,479 $ 771,312 $ 272,813) ( 272,813) ( 491,666 $ 498,499 $

The fair value of the Company’s investment property was based on the selling price of similar property in neighbouring areas. As of December 31, 2018 and 2017, the fair value was $520,354 and $524,963, respectively.

(c) Other income

Other income pertains to the Company’s collections and payment transfer of utilities and disposal fee, etc. for Formosa Advanced Technologies Co., Ltd. For the years ended December 31, 2018 and 2017, other income amounted to $16,068 and $13,710, respectively.

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(d) Other receivables

Other receivables
Items Subsidiaries -Formosa Taffeta Dong Nai Co., Ltd. -Formosa Taffeta Vietnam Co., Ltd. -Other Associates -Formosa Industries Corp. Dividends receivable Other related party -Formosa HA TINH (CAYMAN) LIMITED Payments of guarantee commission -Other Payments made by the Company on behalf of related party Purchase of raw materials and supplies and disposal of equipment, payments made by the Company on behalf of related party	December 31,2018 42,469 $ 43,168 4,514 - 9,409 2 99,562 $	December 31,2017
		39,699 $ 41,891 4,883 90,347 3,686 2
		180,508 $

(e) Acquisition of financial assets:

Other related parties	Account Non-current financial assets carried at cost	No. of shares 600	Object FG INC	Year ended December 31,2017
				Consideration
				198,066 $

(f) Disposal of financial assets:

Accounts Other related party Investments accounted for under equity method	No. of shares (inthousands) 84,022	Objects	YearendedDecember31,2018	YearendedDecember31,2018	YearendedDecember31,2018
				Proceeds 3,039,857 $	Gain/(loss) Note
		Formosa Advanced Technologies Co., Ltd.

Note: The gain on disposal of $980,948 was reclassified to capital surplus.

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(g) Other payables

Other payables
Subsidiaries Associates Other related parties	December31,2018 8,167 $ 930 27,880 36,977 $	December31,2017
		2,848 $ 677 3,918
		7,443 $

• F. Commission expenses and commissions payable

• (a) The Company paid commissions for sales rendered to Formosa Taffeta (Hong Kong) Co., Ltd. equivalent to 2.5%. Details are as follows (shown as sales and marketing expenses):

(b) The balances of commission payable (shown as other payables) consisted of the following: G. Endorsements and guarantees provided to related parties: Key management compensation 2018 2017 Subsidiaries 3,272 $ 4,084 $ Years ended December31, December 31,2018 December 31,2017 Subsidiaries 788 $ 1,943 $ December 31,2018 December 31,2017 Formosa Taffeta (Zhong Shan) Co., Ltd. 1,013,595 $ 982,080 $ Formosa Taffeta Vietnam Co., Ltd. 1,535,750 1,488,000 Formosa Taffeta (Changshu) Co., Ltd. 1,689,325 1,636,800 Formosa Taffeta Dong Nai Co., Ltd. 4,668,680 4,523,520 Formosa HA TINH (CAYMAN) Ltd. 7,125,084 5,186,248 16,032,434 $ 13,816,648 $ 2018 2017 Salaries and other short-term employee benefits 33,399 $ 27,909 $ Years ended December 31,	Years ended December31,	Years ended December31,
		2017
		4,084 $
	2018 33,399 $	2017
		27,909 $

• (b) The balances of commission payable (shown as other payables) consisted of the following:

(4) Key management compensation

8. PLEDGED ASSETS

None.

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

• (1) The Company leases factory and land of gas station. The lease expense estimated to be incurred is as follows:

follows:
Less than 1 year Between 1 and 5 years More than 5 years	December 31,2018 129,761 $ 382,264 242,499 754,524 $	December 31,2017
		120,690 $ 336,082 191,640
		648,412 $

• (2) As of December 31, 2018, the significant commitments and contingent liabilities are the outstanding

• letters of credit for materials and equipment purchases with various companies listed as follows:

Currency USD JPY EUR	Amount
	1,171 $ 105,462 904

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

• (1) Refer to Note 6(15) F for the distribution of 2018 earnings which was proposed by the Board of Directors on March 15, 2019.

• (2) Owing to the capital increase of FG INC. the Board of Directors during its meeting on March 15, 2019 resolved to increase its investment in FG INC. in the amount of USD 4,500 thousand, in proportion to the original shareholding ratio of 3% in FG INC. Consequently, the total investment in FG INC. will be USD 11 million.

12. OTHERS

(1) Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current, non-current borrowings and short-term notes and bills payable’ as shown in the parent company only balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.

At December 31, 2018, the Company’s strategy, was unchanged from December 31, 2017. The gearing ratios at December 31, 2018 and 2017 were as follows:

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		December 31,2018	December 31,2018		December 31,2017	December 31,2017
Total borrowings	$		7,900,000	$		12,107,192
Less: Cash and cash equivalents	(		1,447,966)	(		851,569)
Net debt			6,452,034			11,255,623
Total equity			68,913,204			69,379,395
Total capital	$		75,365,238	$		80,635,018
Gearing ratio			9%			14%
inancial instruments
A. Financial instruments by category
			December31,2018			December31,2017
Financial assets
Financial assets measured at fair	$		-	$		398
value through profit or loss
Financial assets measured at fair
value through other comprehensive
profit or loss			42,274,430			-
Available-for-sale financial assets			-			45,274,982
Financial assets at cost			-			266,009
Financial assets at amortized cost			4,201,275			3,537,223
	$		46,475,705	$		49,078,612
Financial liabilities
Financial liabilities measured at fair	$		774	$		-
value through profit or loss
Financial liabilities at amortized cost			10,663,274			15,067,004
	$		10,664,048	$		15,067,004

(2) Financial instruments

• A. Financial instruments by category

• Note: Financial assets at amortized cost includes cash, notes and accounts receivable and other receivables; financial liabilities at amortized cost includes short-term borrowings, shortterm notes and bills payable, notes and accounts payable, other payables and long-term borrowings.

• B. Financial risk management policies

• (a) The Company’s activities expose it to a variety of financial risk: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The financial risk management policies of the Company are focus upon unpredictable factors in financial market, and aim to reduce unfavorable impact on financial position and financial performance.

• (b) Risk management is carried out by a central treasury department under policies approved by the Board of Directors. Company treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial

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instruments and non-derivative financial instruments, and investment of excess liquidity.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

  • i. Foreign exchange risk

Some of the Company’s transactions are conducted in foreign currencies, which are subject to exchange rate fluctuation. The information on foreign currency denominated assets and liabilities are as follows:

iabilities are as follows:
Financial assets Monetary items USD:NTD Non-monetary items VND:NTD HKD:NTD RMB:NTD USD:NTD Financial assets Monetary items USD:NTD Non-monetary items VND:NTD HKD:NTD RMB:NTD USD:NTD	December 31,2018
	Foreign Currency Amount (In Thousands) Exchange Rate 60,910 $ 30.73 4,723,641,239 0.0013 289,967 3.93 439,198 4.48 179,768 30.73 December 31,2017		Book Value (NTD)
			1,871,764 $ 6,140,734 1,139,570 1,967,607 5,524,271
	Foreign Currency Amount (In Thousands) 57,288 $ 4,545,840,640 287,387 406,178 183,934	Exchange Rate 29.85 0.0013 3.82 4.57 29.85	Book Value (NTD)
			1,710,047 $ 5,909,593 1,097,818 1,856,233 5,490,430

The total exchange income (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2018 and 2017, amounted to $100,476 and ($120,816), respectively.

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Analysis of foreign currency market risk arising from significant foreign exchange variation:

variation:
Financial assets Monetary items USD:NTD Non-monetary items VND:NTD HKD:NTD RMB:NTD USD:NTD Financial assets Monetary items USD:NTD Non-monetary items VND:NTD HKD:NTD RMB:NTD USD:NTD	Year ended December 31,2018
	Sensitivityanalysis
	Effect on other Effect on comprehensive Degree of variation profit or loss income 1% 18,718 $ - $ 1% - 61,407 1% - 11,396 1% - 19,676 1% - 55,243 Year ended December 31,2017		Effect on other comprehensive income
	Sensitivityanalysis
	Degree of variation 1% 1% 1% 1% 1%	Effect on profit or loss 17,100 $ - - - -	Effect on other comprehensive income
			- $ 59,096 10,978 18,562 54,904

ii. Price risk

• (i) The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

• (ii) The Company’s investments in equity securities comprise shares. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2018 and 2017 would have increased/decreased by $6 and $3, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $422,724 and $452,750,

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respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income and available-for sale equity investment.

• iii. Cash flow and fair value interest rate risk

  • (i) The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During the years ended December 31, 2018 and 2017, the Company’s borrowings at variable rate were denominated in the NTD and USD.

  • (ii) The Company’s borrowings are measured at amortized cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.

  • (iii)At December 31, 2018 and 2017, if interest rates on NTD-denominated borrowings had been 1% higher with all other variables held constant, post-tax profit for the years ended December 31, 2018 and 2017 would have been $63,200 and $89,640 lower, respectively, mainly as a result of higher interest expense on floating rate borrowings.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.

• ii. The Company manages their credit risk taking into consideration the entire company’s concern. For banks and financial institutions, only independently rated parties with good rating are accepted. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

• iii. The Company adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• iv. The Company adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.

• v. The Company classifies customer’s accounts receivable and contract assets in accordance with product types and customer types. The Company applies the simplified approach using provision matrix to estimate expected credit loss under the provision matrix basis.

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• vi. The Company wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Company will continue executing the recourse procedures to secure their rights.

• vii. The Company uses the forecastability of National Development Council Business Cycle Indicator to adjust historical and timely information to assess the default possibility of notes receivable, accounts receivable and contract assets. On December 31, 2018, the provision matrix is as follows:

At December 31, 2018 Expected loss rate Total book value Loss allowance	Notpast due	Up to 30 days past due	31 to 90 days past due	Over 90 days past due	Total
	0% 2,222,050 $ 8,498	30% 28,939 $ 8,729	78% 17,818 $ 13,852	82% 730 $ 599	2,269,537 $ 31,678

• viii. Movements in relation to the Company applying the simplified approach to provide loss allowance for notes receivable, accounts receivable and contract assets are as follows:

Year ended December 31, 2018

At January 1 Reversal of impairment loss At December 31	Notes receivable Accounts receivable - $ 37,064) ($ - 5,386 - $ 31,678) ($

(c) Liquidity risk

• i. The Company’s investments in equity financial instruments which have active markets are expected to be sold easily and quickly in the market at the price close to fair value. The Company’s investments in equity financial instruments without active markets are exposed to liquidity risk.

• ii. Due to well-managed operations, the Company has an excellent credit in financial institutions and the money market, and has adequate working capital to meet commitments associated with receivables and payables. Therefore, no liquidity risk is expected to arise.

• iii. The table below analyses the Company’s non-derivative financial liabilities and netsettled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities.

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Non-derivative financial liabilities:

==> picture [397 x 30] intentionally omitted <==

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

Between 1 Between 2 and
December 31, 2018 Less than 1 year and 2 years 5 years
----- End of picture text -----

Notes payable (including related parties) 459,428 Accounts payable (including related parties) 1,449,570 Other payables 854,276 Long-term borrowings - Financial guarantee contracts 16,032,434 Derivative financial liabilities December 31, 2018 Less than 1year Forward exchange contracts 774 $ December 31, 2017 Less than 1year Short-term borrowings 7,412 $ Short-term bills payable 13,000,000 Notes payable (including related parties) 375,008 Accounts payable (including related parties) 1,746,931 Other payables 837,873 Long-term borrowings - Financial guarantee contracts 13,816,648 Non-derivative financial liabilities:

- - - - - - 7,000,000 200,000 - - Between 1 Between 2 and and2years 5 years - - Between 1 Between 2 and and 2years 5 years - - - - - - - - - - 7,509,683 3,436,380 - -

• (d) The Company does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks and beneficiary certificates with quoted market prices is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset

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or liability, either directly or indirectly. The fair value of the Company’s investment in some unlisted stocks and most derivative instruments is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market is included in Level 3.

• B. Financial instruments not measured at fair value

• The carrying amounts of cash and cash equivalents, notes receivable (including related parties), accounts receivable (including related parties), other receivables, short-term borrowings, shortterm bills payable, notes payable (including related parties), accounts payable (including related parties), other payables and long-term borrowings (including current portion) are approximate to their fair values.

• C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

• (a) The related information of nature of the assets and liabilities is as follows:

December 31, 2018 Financial assets: Recurring fair value measurements Financial assets at fair value through other comprehensive income Equity securities Financial liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts December 31, 2017 Financial assets: Recurring fair value measurements Financial assets at fair value through profit or loss Forward exchange contracts Available-for-sale financial assets Equity securities	Level 1 41,552,550 41,552,550 $ - $ Level 1 - $ 44,654,582 44,654,582 $	Level 2 403,500 403,500 $ 774 $ Level 2 398 $ 620,400 620,798 $	Level 3 318,380 318,380 $ - $ Level 3 - $ - - $	Total
				42,274,430
				42,274,430 $
				774 $
				Total
				398 $ 45,274,982
				45,275,380 $

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• (b)The methods and assumptions the Company used to measure fair value are as follows:

  • i. The instruments the Company used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

    • Listed shares

    • Market quoted price Closing price

  • ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques such as current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including applying a model using market information available at the balance sheet date.

  • iii. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.

  • iv. The Company takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Company’s credit quality.

• D. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and Level 2.

• E. The following chart is the movement of Level 3 for the year ended December 31, 2018:

		Year ended December 31,2018
		Non-derivative equityinstruments
At January 1	$	-
Retrospective adjustments		331,904
At January 1 after adjustments		331,904
Gains and losses recognized in other comprehensive
income
Recorded as unrealized losses on valuation of
investments in equity instruments measured
at fair value through other comprehensive income	(	13,524)
At December 31	$	318,380

For the year ended December 31, 2017, there was no movement of Level 3.

• F. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level 3.

• G. The accounting segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the

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exercisable price, and frequently calibrating valuation model, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

The accounting segment set up valuation policies, valuation processes and rules for measuring fair value of financial instruments and ensure compliance with the related requirements in IFRS. The related valuation results are reported to the supervisor of accounting segment monthly. The supervisor is responsible for managing and reviewing valuation processes.

• H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Non- derivative equity instrument: Unlisted shares	Fair value at December 31, 2018	Valuation technique	Significant unobservable input	Relationship of inputs to fair value
	318,380 $	Market comparable companies	Price to earnings ratio multiple, price to book ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	The higher the multiple, the higher the fair value the higher the discount for lack of marketability, the lower the fair value

There are no financial instruments within Level 3 for the year ended December 31, 2017.

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

Financial assets Equity instrument	Input	Change		December 31,2018	December 31,2018	December 31,2018
				Recognized in other comprehensive income
				Favourable change	Unfavourable change
	Price to earnings ratio multiple, price to book ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	±1%		3,184 $		3,184 $

There is no effect of other comprehensive income from financial assets and liabilities categorized

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within Level 3 for the year ended December 31, 2017.

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

• A. Summary of significant accounting policies adopted for the year ended December 31, 2017:

• (a) Financial assets at fair value through profit or loss

• i. They are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges.

• ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using settlement date accounting.

• Iiii. They are initially recognized at fair value. Related transaction costs are expensed in profit or loss. They are subsequently remeasured and stated at fair value, and any changes in the fair value are recognized in profit or loss.

• (b) Available for sale financial assets

• i. They are non-derivatives that are either designated in this category or not classified in any of the other categories.

• ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.

• iii. They are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.

• (c) Loans and receivables

• Loans and receivables receivable are originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. They are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (d) Impairment of financial assets

• i. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

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• ii. The criteria that the Company uses to determine whether there is objective evidence of an impairment loss is as follows:

• (i) Significant financial difficulty of the issuer or debtor;

• (ii) A breach of contract, such as a default or delinquency in interest or principal payments;

• (iii) The Company, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;

• (iv) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

• (v) The disappearance of an active market for that financial asset because of financial difficulties;

• (vi) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

• (vii)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;

• (viii) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• iii. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

• (i) Financial assets at amortized cost

  • The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

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  - (ii) Financial assets at cost

     - The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognized in profit or loss. Impairment loss recognized for this category shall not be reversed subsequently. Impairment loss is recognized by adjusting the carrying amount of the asset directly.

  - (iii) Available-for-sale financial assets

     - The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

• (e) Financial guarantee contracts

• A. A financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract is initially recognized at its fair value adjusted for transaction costs on the trade date. After initial recognition, the financial guarantee is measured at the higher of the initial fair value less cumulative amortization and the best estimate of the amount required to settle the present obligation on each balance sheet date.

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• B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, were as follows:

IAS 39 Transferred into and measured at fair value through other comprehensive income-non-current Fair value adjustment IFRS 9		Available-for- sale-current Measured at fair value through other comprehensive income-current 1,911,496 $ - - 1,911,496 $	Available-for-sale- non-current Measured at fair value through other comprehensive income-non-current 43,363,486 $ 266,009 $ 266,009 266,009) ( 65,895 - 43,695,390 $ - $ Measured at cost		Total				Effects
							Investments accounted for under equity method		Retained earnings	Other equity
					45,540,991 $ - 65,895 45,606,886 $		- $ - 64,950 64,950 $		- $ 4,890,917 4,890,917 $	- $ - 4,760,072) ( 4,760,072) ($

Under IAS 39, because the equity instruments, which were classified as available-for-sale financial assets and financial assets at cost, amounting to $45,274,982 and $266,009, respectively, were not held for the purpose of trading, they were reclassified as "financial assets at fair value through other comprehensive income (equity instruments)" amounting to $45,606,886, increasing investments accounted for under equity method in the amount of $64,950, which resulted to an increase in retained earnings in the amount of $4,890,917, and decrease in other equity interest in the amount of $4,760,072, on initial application of IFRS 9.

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• C. The significant accounts as of December 31, 2017 and for the year ended December 31, 2017 are as follows:

• (a)Available-for-sale financial assets

	Items		December 31,2017	December 31,2017
Current items:
Listed stocks		$		900,285
Unlisted stocks				100,000
Valuation adjustment				911,211
		$		1,911,496
Non-current items:
Listed stocks		$		10,670,029
Valuation adjustment				37,110,306
				47,780,335
Accumulated impairment		(		4,416,849)
		$		43,363,486

• i. The Company recognized $2,127,178 in other comprehensive income for fair value change for the year ended December 31, 2017.

• ii. As of December 31, 2017, no available-for-sale financial assets held by the Company were pledged as collateral.

• (b) Financial assets at cost

Items Unlisted stocks	December 31,2017
	266,009 $

  - i. According to the Company’s intention, its investment should be classified as ‘availablefor-sale financial assets’. However, as the stocks are not traded in active market, and no sufficient industry information of companies similar to the corporations or the corporation’s financial information cannot be obtained, the fair value of the investment in the stocks cannot be measured reliably. Accordingly, the Company classified those stocks as ‘financial assets measured at cost’.

  - ii. As of December 31, 2017, no financial assets measured at cost held by the Company were pledged to others.

• D. Credit risk information for the year ended December 31, 2017 is as follows:

• (a) Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits

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set by the Board of Directors. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. For banks and financial institutions, only independently rated parties with good rating are accepted.

• (b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.

• (c) The credit quality of accounts receivable that were neither past due nor impaired was in the following categories based on the Company’s Credit Quality Control Policy:

Group 1 Group 2 Group 3	December 31,2017
	1,669,468 $ 221,529 41,028
	1,932,025 $

Note:

• Group 1: Transnational customers, brand customers or credit customers that have applied for collateralised mortgage.

• Group 2: Non-transnational customers, non-brand customers or credit customers that have not applied for collateralised mortgage with 2 or more years of transaction history with the Company.

• Group 3: Non-transnational customers, non-brand customers or credit customers that have not applied for collateralised mortgage with less than 2 years of transaction history with the Company.

• (f) The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December 31,2017
	42,773 $ 6,944 32 3,636
	53,385 $

• (g) Movement analysis of financial assets that were impaired - allowance for bad debts is as follows:

• i. As of December 31, 2017, the Company’s accounts receivable that were impaired were $0.

• ii. Movements on the Company’s provision for impairment of accounts receivable are as follows:

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	Year ended December 31,2017	Year ended December 31,2017
At January 1	$	35,059
Reversal of provision for impairment	(	1,995)
At December 31	$	33,064

(5)Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in 2017

• A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 are set out below.

• The Company manufactures and sells various fabrics and renders services as an oil distributor. Revenue is measured at the fair value of the consideration received or receivable taking into account business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities. Revenue arising from the sales of goods is recognized when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

• B. The revenue recognized by using above accounting policies for the year ended December 31, 2017 are as follows:

2017 are as follows:
Sales revenue Service revenue	Year ended December 31,2017
	25,453,390 $ 260,449
	25,713,839 $

• C. There is no impact on line item of current balance sheet and comprehensive income statement if the Company continues adopting above accounting policies.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

In accordance with “Rules Governing the Preparation of Financial Statements by Securities Issuers”, significant transactions for the year ended December 31, 2018 are stated as follows. Furthermore, the inter-company transactions were eliminated when preparing financial statements of investees which were audited by other independent accountants. The following disclosures are for reference only.

A. Loans to others: None.

• B. Provision of endorsements and guarantees to others: Please refer to table 1.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates

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and joint ventures): Please refer to table 2.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 3.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 4.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2), (10) and 12(2).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 9.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 10.

14. SEGMENT INFORMATION

None.

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FORMOSA TAFFETA CO., LTD.

Table 1

Provision of endorsements and guarantees to others

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1) Endorser/ guarantor	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3,8)	Maximum outstanding endorsement/ guarantee amount as of December 31, 2018 (Note 4)	Outstanding endorsement/ guarantee amount at December 31, 2018 (Note 5)	Actual amount drawn down (Note 6)	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided (Note 3,8)	Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)	Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)	Provision of endorsements/ guarantees to the party in Mainland China (Note 7)	Footnote
	Companyname Relationship with the endorser/ guarantor (Note2)
0 FORMOSA TAFFETA CO., LTD. 0 FORMOSA TAFFETA CO., LTD. 0 FORMOSA TAFFETA CO., LTD. 0 FORMOSA TAFFETA CO., LTD. 0 FORMOSA TAFFETA CO., LTD. 1 FORMOSA DEVELOPMENT CO., LTD.	FORMOSA TAFFETA (ZHONG SHAN) CO., LTD. 2 FORMOSA TAFFETA VIETNAM CO., LTD. 2 FORMOSA TAFFETA (CHANGSHU) CO., LTD. 2 FORMOSA TAFFETA DONG NAI CO., LTD. 2 FORMOSA HA TINH (CAYMAN) LIMITED 6 PUBLIC MORE INTERNATION COMPANY LTD. 2	44,793,582 $ 44,793,582 44,793,582 44,793,582 44,793,582 188,563	1,410,525 $ 1,567,250 2,037,425 4,705,160 7,125,084 3,000	1,013,595 $ 1,535,750 1,689,325 4,668,680 7,125,084 3,000	230,363 $ 307,028 272,011 3,080,801 5,352,675 3,000	- $ - - - - -	1.47 2.23 2.45 6.77 10.34 1.03	89,587,165 $ 89,587,165 89,587,165 89,587,165 89,587,165 377,127	Y Y Y Y N Y	N N N N N N	Y N Y N N N

• Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

• (1)The Company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

• Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories.

(1)Having business relationship.

(2)The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(3)The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.

(4)The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.

(5)Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.

(6)Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

(7)Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

• Note 3: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s “Procedures for Provision of Endorsements and

Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on total amount of endorsements/guarantees provided in the footnote.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.

• Note 5: Fill in the amount approved by the Board of Directors or the chariman if the chairman has been authorised by the Board of Directors based on subparagraph 8, Article 12 of the Regulations Governing

Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.

• Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.

Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.

Note 8: In accordance with the Company’s procedures of endorsements and guarantees, limit on the Company’s total guarantee amount is 1.3 times of the Company's net assets, and limit on endorsement/guarantee to a single party is 50% of the aforementioned total amount.

Table 1, Page 1

FORMOSA TAFFETA CO., LTD.

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

For the year ended December 31, 2018

Table 2 Securities held by	Marketable securities (Note 1)	Relationship with the securities issuer(Note 2)	General ledger account		As of December 31,2018	As of December 31,2018	Fair value Footnote (Note 4) Expressed in thousands of NTD (Except as otherwise indicated)	Fair value Footnote (Note 4) Expressed in thousands of NTD (Except as otherwise indicated)
				Number of shares	Book value (Note 3)	Ownership (%)	Fair value
FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD.	FORMOSA CHEMICALS & FIBRE CORPORATION PACIFIC ELECTRIC WIRE AND CABLE CO., LTD. FORMOSA PLASTICS CORPORATION NAN YA PLASTICS CORPORATION ASIA PACIFIC INVESTMENT CO. (APIC) NAN YA TECHNOLOGY CORPORATION FORMOSA PETROCHEMICAL CORP. SYNTRONIX CORPORATION TOA RESIN CORPORATION LIMITED SHIN YUN GAS CO., LTD.	Ultimate parent company - Other related party Other related party Other related party Other related party Other related party - Other related party -	Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income	12,169,610 32 640 482,194 10,000,000 7,711,010 365,267,576 174,441 14,400 676,441	1,277,809 $ - 64 36,406 403,500 424,106 39,814,166 3,224 37,437 16,309	0.21 - - 0.01 2.35 0.25 3.83 0.45 10.00 1.20	1,277,809 $ - 64 36,406 403,500 424,106 39,814,166 3,224 37,437 16,309

Table 2, Page 1

FORMOSA TAFFETA CO., LTD.

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

For the year ended December 31, 2018

Table 2 Securities held by	Marketable securities (Note 1)	Relationship with the securities issuer(Note 2)	General ledger account		As of December 31,2018	As of December 31,2018	Fair value Footnote (Note 4) Expressed in thousands of NTD (Except as otherwise indicated)	Fair value Footnote (Note 4) Expressed in thousands of NTD (Except as otherwise indicated)
				Number of shares	Book value (Note 3)	Ownership (%)	Fair value
FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA (CAYMAN) LIMITED FORMOSA DEVELOPMENT CO., LTD. XIAMEN XIANGYU FORMOSA IMPORT & EXPORT TRADING CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD.	WK TECHNOLOGY FUND IV LIMITED NAN YA PHOTONICS INC. FG INC FORMOSA HA TINH (CAYMAN) LIMITED FORMOSA TAFFETA CO., LTD. Association of R.O.C. FORMOSA PLASTICS CORPORATION NAN YA PLASTICS CORPORATION FORMOSA CHEMICALS & FIBRE CORPORATION FORMOSA PETROCHEMICAL CORP.	- Other related party Other related party Other related party Parent company - Other related party Other related party Utimate parent company Other related party	Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income Current financial assets at fair value through other comprehensive income	1,348,731 4,261,443 600 209,010,676 2,243,228 - 146,388 2,907,512 15,249,000 1,110,000	8,874 $ 49,816 202,719 5,524,232 77,504 134 14,785 219,517 1,601,145 120,990	3.17 9.53 3.00 3.85 0.13 0.11 - 0.04 0.26 0.01	8,874 $ 49,816 202,719 5,524,232 77,504 134 14,785 219,517 1,601,145 120,990

Table 2, Page 2

FORMOSA TAFFETA CO., LTD.

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

For the year ended December 31, 2018

Table 2 Securities held by	Marketable securities (Note 1)	Relationship with the securities issuer(Note 2)	General ledger account		As of December 31,2018	As of December 31,2018	Fair value Footnote (Note 4) Expressed in thousands of NTD (Except as otherwise indicated)	Fair value Footnote (Note 4) Expressed in thousands of NTD (Except as otherwise indicated)
				Number of shares	Book value (Note 3)	Ownership (%)	Fair value
FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD.	NAN YA TECHNOLOGY CORPORATION NAN YA PHOTONICS INC. SYNTRONIX CORPORATION JIH SUN MONEY MARKET FUND MEGA DIAMOND MONEY MARKET FUND	Other related party Other related party - - -	Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	7,376,215 2,130,721 59,945 15,147,454 20,396,748	405,692 $ 24,917 1,075 224,084 255,406	0.24 4.77 0.15 - -	405,692 $ 24,917 1,075 224,084 255,406

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Leave the column blank if the issuer of marketable securities is non-related party. Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Table 2, Page 3

FORMOSA TAFFETA CO., LTD.

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

For the year ended December 31, 2018

Table 3 Investor	Marketable securities (Note 1)	General ledger account	Counterparty (Note 2)	Relationship with the investor (Note 2)	Balance as at January1,2018	Balance as at January1,2018	Addition (Note 3)(Note 4)	Addition (Note 3)(Note 4)		Disposal (Note 3)	Disposal (Note 3)		(Except as otherwise indicated) Expressed in thousands of NTD Balance as at December 31,2018	(Except as otherwise indicated) Expressed in thousands of NTD Balance as at December 31,2018
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA (CAYMAN) LIMITED	NAN YA TECHNOLOGY CORPORATION FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA HA TINH (CAYMAN) LIMITED	Non-current financial assets at fair value through other comprehensive income Investments accounted for under equity method Non-current financial assets at fair value through other comprehensive income	- NAN YA TECHNOLOGY CORPORATION -	- Other related party -	15,421,010 290,464,472 190,009,706	$ 1,175,081 7,412,797 5,490,371	- - 19,000,970	$ - - 566,417	7,710,000 84,022,000 -	$ 693,199 3,039,857 -	$ 696,277 2,177,715 -	note 5 note 6 -	7,711,010 206,442,472 209,010,676	$ 424,106 5,350,424 5,524,232

• Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more. Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Note 4: Beginning balance plus addition amount is not equal to balance at December 31, 2018 because of valuation in exchange rate.

Note 5: The loss on disposal (including the portion attributable to non-controlling interests) of ($1,804,708) was reclassified to retained earnings.

Note 6: The gain on disposal (including the portion attributable to non-controlling interests) of $980,948 was reclassified to capital surplus.

Table 3, Page 1

FORMOSA TAFFETA CO., LTD.

Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more For the year ended December 31, 2018

Table 4 Real estate disposed by	Realestate	Transaction date or date of the event	Date of acquisition	Bookvalue	Disposal amount	Status of collection of proceeds	Gain (loss) ondisposal(Note4)	Counterparty	Relationship with the seller	Reason for disposal	Basis or reference used Other insetting the price commitments Expressed in thousands of NTD (Except as otherwise indicated)	Basis or reference used Other insetting the price commitments Expressed in thousands of NTD (Except as otherwise indicated)
FORMOSA TAFFETA CO.,LTD. FORMOSA TAFFETA CO.,LTD.	No.540、543、 543-1,Beiming section,Dounan Township, Yunlin County No514、514-1、 536、537、538、 539、540-2、 543-6,Beiming section,Dounan Township, Yunlin County	2018/3/16 2018/5/4	1991/10/30 1991/10/30 2004/3/31 2011/5/27	124,320 $ 218,350	401,841 $ 810,514	401,841 $ 810,514	275,299 $ 591,918	HOME MARK CO., LTD. SHIH HSIANG AUTO PARTS CO., LTD.	- -	Disposal of idle land Disposal of idle land	Valuation amount of $331,160 by Euro- Asia Real Estate Appraisers Firm Valuation amount of $672,437 by Euro- Asia Real Estate Appraisers Firm	NA NA

Note 1: The appraisal result should be presented in the ‘Basis or reference used in setting the price’ column if the real estate disposed of should be appraised pursuant to the regulations. Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Note 3: Date of the event referred to herein is the date of contract signing, date of payment, date of execution of a trading order, date of title transfer, date of board resolution, or other date that can confirm the counterparty and the monetary amount of the transaction, whichever is earlier. Note 4:Including expense for transaction.

Table 4, Page 1

Table 5

FORMOSA TAFFETA CO., LTD.

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Differences in transaction

							Differences in transaction	Differences in transaction
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			terms compared to third party transactions (Note 1)		Notes/accounts receivable(payable)		Footnote (Note 2)
			Purchases(sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD.	YUGEN YUEH CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. SCHOELLER FTC (HONG KONG) CO., LTD. FORMOSA PETROCHEMICAL CORP. (FPCC) NAN YA PLASTICS CORPORATION FORMOSA PLASTICS CORP. NAN YA TECHNOLOGY CORPORATION NAN YA POLYESTER FIBER (KUNSHAN) CORP. QUANG VIET ENTERPRISE CO., LTD. FORMOSA CHEMICALS & FIBRE CORPORATION	Other related party Associate Associate Other related party Other related party Other related party Other related party Other related party Associate Ultimate parent company	Sales Sales Sales Purchases Purchases Purchases Sales Purchases Purchases Sales	393,650) ($ 340,846) ( 158,160) ( 101,998) ( 10,916,187 1,978,969 793,906 339,048 6,161,227) ( 152,357	1.44) ( 1.24) ( 0.57) ( 0.37) ( 47.21 8.56 3.43 1.47 70.13) ( 2.00	Pay 120 days after delivery 60 days after monthly billings Pay 120 days after delivery Pay every 15 days by mail transfer Pay every 15 days by mail transfer Pay every 15 days by mail transfer 60 days after monthly billings 45 days after inspection Draw promissory notes due in 2 months after inspection Pay by mail transfer 60 days after delivery	- - - - - - - - $ - -	- - - - - - - - - -	Accounts receivable $ 41,091 Accounts receivable 84,289 Accounts receivable 47,640 Accounts receivable 5,829 Accounts payable 397,563) ( Notes payable 331,826) ( Accounts payable 312,250) ( Accounts payable 72,264) ( Accounts payable 19,816) ( Accounts receivable 1,006,359 Accounts payable 22,116) (	1.75 3.59 2.03 0.25 27.43) ( 72.23) ( 21.54) ( 4.99) ( 1.37) ( 63.09 5.00) (

Table 5, Page 1

Table 5

FORMOSA TAFFETA CO., LTD.

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Differences in transaction

							Differences in transaction	Differences in transaction
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			terms compared to third party transactions (Note 1)		Notes/accounts receivable(payable)		Footnote (Note 2)
			Purchases(sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
FORMOSA TAFFETA (ZHONG SHAN) CO., LTD. FORMOSA TAFFETA VIETNAM CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. FORMOSA TAFFETA (CHANGSHU) CO., LTD.	FORMOSA TAFFETA (CHANGSHU) CO., LTD. FORMOSA INDUSTRY CO., LTD FORMOSA TAFFETA VIETNAM CO., LTD. FORMOSA TAFFETA CO., LTD. KWANG VIET GARMENT CO., LTD. FORMOSA INDUSTRY CO., LTD. FORMOSA CHEMICALS & FIBRE CORPORATION NAN YA PLASTICS CORPORATION JIAXING QUANG VIET GARMENT CO., LTD.	Associate Associate Associate Parent company Associate Associate Ultimate parent company Other related party Associate	Sales Purchases Sales Sales Sales Purchases Purchases Purchases Sales	416,462) ($ 229,715 295,886) ( 442,296) ( 146,486) ( 635,272 437,120 171,232 152,808) (	25.18) ( 11.26 6.74) ( 9.62) ( 3.34) ( 15.28 10.52 4.12 11.56) (	60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings 60 days after monthly billings Pay by mail transfer 60 days after delivery	- - - - $ - - - - -	- - - - - - - - -	Accounts receivable $ 210,492 Accounts payable 13,943) ( Accounts receivable 58,448 Accounts receivable 112,770 Accounts receivable 23,855 Accounts payable 32,911) ( Accounts payable 49,532) ( Accounts payable 20,741) ( Accounts receivable 19,878	69.43 11.52) ( 5.37 10.36 2.19 7.08) ( 10.65) ( 4.46) ( 10.91

Note 1: If terms of related party transactions are different from third party transactions, explain the differences and reasons in the ‘Unit price’ and ‘Credit term’ columns.

Note 2: In case related-party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party transactions.

Note 3: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Note 4:The transactions are disclosed by presenting revenues. The related transactions are not disclosed.

Table 5, Page 2

Table 6

FORMOSA TAFFETA CO., LTD.

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

For the year ended December 31, 2018

Expressed in thousands of NTD

(Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31, 2018(Note 1)	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA TAFFETA (ZHONG SHAN) CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD.	NAN YA TECHNOLOGY CORPORATION FORMOSA TAFFETA (CHANG SHU) CO., LTD. FORMOSA TAFFETA CO., LTD.	Other related party Associate Parent company	1,006,359 $ 210,492 112,770	6.29 2.52 1.93	- $ - -	- - -	553,008 $ 85,779 81,544	- $ - -

Note 1: Fill in separately the balances of accounts receivable–related parties, notes receivable–related parties, other receivables–related parties.

Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Table 6, Page 1

Table 7

FORMOSA TAFFETA CO., LTD.

Significant inter-company transactions during the reporting period

For the year ended December 31, 2018

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note 3)
0 0 0	FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD.	FORMOSA CHEMICALS & FIBRE CORPORATION FORMOSA CHEMICALS & FIBRE CORPORATION FORMOSA CHEMICALS & FIBRE CORPORATION	1 1 1	Purchases Notes payable Accounts payable	1,978,969 $ 312,250 331,826	Draw promissory notes due in 2 months after inspection Draw promissory notes due in 2 months after inspection Draw promissory notes due in 2 months after inspection	4.44 0.34 0.36

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

• (1) Parent company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

• (2) Subsidiary to parent company.

• (3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The amount of transactions which is listed in the table is determined by its material.�

Table 7, Page 1

FORMOSA TAFFETA CO., LTD. Information on investees

Table 8

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee (Notes 1 and 2)	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2018	Shares held as at December 31,2018	Shares held as at December 31,2018	Net profit (loss) of the investee for the year ended December 31, 2018 (Note 2(2))	Investment income (loss) recognized by the company for the year ended December 31, 2018 （Note 2(3)）	Footnote
				Balance as at December31,2018	Balance as at December31,2017	Number of shares	Ownership (%)	Bookvalue
FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD.	FORMOSA DEVELOPMENT CO., LTD. FORMOSA ADVANCED TECHNOLOGIES CO., LTD. FORMOSA TAFFETA (HONG KONG) CO., LTD. FORMOSA TAFFETA VIETNAM CO., LTD. QUANG VIET ENTERPRISE CO., LTD.	Taiwan Taiwan Hong Kong Vietnam Taiwan	Handling urban land consolidation, development, rent and sale of industrial plants, residences and building IC assembly, testing and modules Sale of spun fabrics and filament textile Production, processing, further processing various yam and cotton cloth, and dyeing and finishing clothes, curtains, towels, bed covers and carpets Processing and producion of ready-to-wear, processing and trading of cotton cloth, and import and export of the aforementioned products	114,912 $ 2,681,906 1,356,862 1,709,221 213,771	114,912 $ 3,773,440 1,356,862 1,709,221 213,771	16,100,000 206,442,472 - - 18,595,352	100.00 46.68 100.00 100.00 17.99	217,235 $ 5,350,424 1,133,880 1,963,366 1,191,261	18,065 $ 1,420,293 60,477 139,974 768,584	13,708 $ 838,593 60,477 139,974 116,954

Table 8, Page 1

FORMOSA TAFFETA CO., LTD. Information on investees

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

For the year ended December 31, 2018

Investor	Investee (Notes 1 and 2)	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2018	Shares held as at December 31,2018	Shares held as at December 31,2018	Net profit (loss) of the investee for the year ended December 31, 2018 (Note 2(2))	Investment income (loss) recognized by the company for the year ended December 31, 2018 （Note 2(3)）	Footnote
				Balance as at December31,2018	Balance as at December31,2017	Number of shares	Ownership (%)	Bookvalue
FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA TAFFETA CO., LTD. FORMOSA DEVELOPMENT CO., LTD. FORMOSA DEVELOPMENT CO., LTD.	SCHOELLER FTC (HONG KONG) CO., LTD. FORMOSA TAFFETA DONG NAI CO., LTD. FORMOSA INDUSTRIES CORPORATION FORMOSA TAFFETA (CAYMAN) LIMITED FORMOSA ADVANCED TECHNOLOGIES CO., LTD. PUBLIC MORE INTERNATION COMPANY LTD.	Hong Kong Vietnam Vietnam Cayman Islands Taiwan Taiwan	Trading of textiles Production, processing and sale of various dyeing and finishing textiles and yarn Synthetic fiber, spinning, weaving, dyeing and finishing and electricity generation Investments IC assembly, testing and modules Employment service, manpower allocation and agency service etc	2,958 $ 2,590,434 1,987,122 6,241,670 21,119 5,000	2,958 $ 2,590,434 1,987,122 5,675,253 21,119 5,000	- - - 171,028,736 469,500 -	50.00 100.00 10.00 100.00 0.11 100.00	5,663 $ 2,281,893 2,008,842 5,524,284 23,914 9,994	6,206 $ 5,943) ( 1,181,028 - 1,420,293 4,834	3,103 $ 5,943) ( 121,457 - 1,508 4,834

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding company about the disclosure of related overseas investee information.

Note 2: If situation does not belong to Note 1, fill in the columns according to the following regulations:

(1)The columns of ‘Investee’, ‘Location’, ‘Main business activities’, Initial investment amount’ and ‘Shares held as at December 31, 2018’ should fill orderly in the Company’s (public company’s) information on investees and every directly or indirectly controlled investee’s investment information, and note the relationship between the Company (public company) and its investee each (ex. direct subsidiary or indirect subsidiary) in the ‘footnote’ column. (2)The ‘Net profit (loss) of the investee for the year ended December 31, 2018’ column should fill in amount of net profit (loss) of the investee for this period.

(3)The ‘Investment income (loss) recognised by the Company for the year ended December 31, 2018’ column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary and recognised investment income (loss) of its investee accounted for under the equity method for this period. When filling in recognised investment income (loss) of its direct subsidiary, the Company (public company) should confirm that direct subsidiary’s net profit (loss) for this period has included its investment income (loss) which shall be recognised by regulations.

Table 8, Page 2

FORMOSA TAFFETA CO., LTD.

Information on investments in Mainland China

For the year ended December 31, 2018

Table 9

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method （Note 1）	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31,2018	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2018	Net income of investee for the year ended December 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2018 （Note 2）	Book value of investments in Mainland China as of December 31,2018	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2018	Footnote
					Remitted to MainlandChina	Remitted back to Taiwan
FORMOSA TAFFETA (ZHONG SHAN) CO., LTD. XIAMEN XIANGYU FORMOSA IMPORT & EXPORT TRADING CO., LTD. FORMOSA TAFFETA (CHANGSHU) CO., LTD. CHANG SHU YU YUAN DEVELOPMENT. CO., LTD.	Production and sale of polyester and polyamide fabrics Import and export, entrepot trade, merchandise export processing, warehousing and design and drawing of black and white and colour graphs Weaving and dyeing as well as post dressing of high-grade loomage face fabric Building and selling real estate	1,402,085 $ 15,273 1,302,019 70,788	(1) (1) (2) (2)	1,402,085 $ 15,273 1,334,739 -	- $ - - -	- $ - - -	1,402,085 $ 15,273 1,334,739 -	94,273 $ 7,203 60,688 240) (	100.00 100.00 100.00 40.78	94,273 $ 7,203 60,688 98) (	1,695,852 $ 13,154 1,016,281 16,403	- $ - - -	Note 3 Note 4 Note 5 Note 6

Note 1: Investment methods are classified into the following three categories:

(1) Directly invest in a company in Mainland China.

(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China.

(3) Others

Note 2: The amount of ‘Investment income (loss) recognized by the Company for the year ended December 31, 2018 were derived from financial statements which were reviewed by independent accountants.

Note 3: The Company's paid-in capital and accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018 and December 31, 2018 are both US$46,400,000 (remitted out US$46,388,800 and equipment amounted to US$11,200).

Note 4: The Company’s paid-in capital and accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018 and December 31, 2018 are both US$570,000.

Note 5: The Company’s paid-in capital and accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018 is US$42,000,000. Formosa Taffeta (Changshu) Co., Ltd. reduced its capital amounting to US$900,000

and divided the housing land to establish a new company named Changshu Fushun Enterprise Management Co., Ltd. in March 2015. Thus, the original currency of paid-in capital and accumulated amount of remittance from Taiwan as of December 31, 2018 was US$41,100,000.�

Note 6: The Company was the surviving company after the consolidation of Changshu Yu Yuan Development.Co.,Ltd. and Changshu Fushun Enterprise Management Co., Ltd. Its paid-in capital is RMB$13,592,920.�

Table 9, Page 1

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
FORMOSA TAFFETA (ZHONG SHAN) CO., LTD. XIAMEN XIANGYU FORMOSA IMPORT & EXPORT TRADING CO., LTD. FORMOSA TAFFETA (CHANGSHU) CO., LTD.	1,402,085 $ 15,273 1,334,739	1,425,872 $ 17,516 1,290,660	44,981,214 $ 44,981,214 44,981,214

Note ：

(1)The investment in FORMOSA TAFFETA (ZHONG SHAN) CO., LTD. approved by the Investment Commission of MOEA is US$46,400,000.

(2)The investment in XIAMEN XIANGYU FORMOSA IMPORT & EXPORT TRADING CO., LTD. approved by the Investment Commission of MOEA is US$570,000.

(3)The investment in FORMOSA TAFFETA (CHANG SHU) CO., LTD. approved by the Investment Commission of MOEA is US$42,000,000, while the company reduced its capital and divided some part of housing land to Changshu Fushun Enterprise Management Co.,Ltd. Such investment is still awaiting approval by MOEA.

(4)The original currency of paid-in capital was translated at USD:TWD = 1:30.73

Table 9, Page 2

FORMOSA TAFFETA CO., LTD.

Table 10

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Sale(purchase)	Propertytransaction	Accounts receivable (payable)	Provision of endorsements/guarantees or collaterals	Maximum balance during the year ended December 31,2018 Balance at December 31,2018 Interest rate Interest during the year ended December 31,2018 Others Financing
	Amount %	Amount %	Balance at December 31, 2018 %	Balance at December 31, 2018 Purpose
FORMOSA TAFFETA (ZHONG SHAN) CO., LTD. FORMOSA TAFFETA (CHANGSHU) CO., LTD.	33,068 $ 0.12 63,966 0.23	$ - - - -	$ 3,305 0.14 12,463 0.53	$ 1,013,595 For short-tem loans from financial institutions 1,689,325 For short-tem loans from financial institutions	$ - - $ - - $ - - - -

Table 10, Page 1