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F.T.C Interim / Quarterly Report 2019

Dec 4, 2019

51797_rns_2019-12-04_962be938-4abf-4fa7-9cf0-64c4ddb58305.pdf

Interim / Quarterly Report

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FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

MARCH 31, 2019 AND 2018

----------------------------------------------------------------------------------------------------------------------------- ------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.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Formosa Taffeta Co., Ltd. and subsidiaries (the “Group”) as at March 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As explained in Notes 4(3) and 6(6), the financial statements of certain insignificant consolidated subsidiaries and investments accounted for under equity method were not reviewed by independent accountants. Those statements reflect total assets (including investments accounted for using equity method) of NT$21,989,753 thousand and NT$20,420,409 thousand, constituting 23% and 21% of the consolidated total assets, and total liabilities of NT$5,869,878 thousand and NT$5,113,378 thousand, constituting 31% and 22% of the consolidated total liabilities as at March 31, 2019 and 2018, respectively, and total comprehensive income (including share of profit (loss) of associates accounted for using equity

~1~

method and share of profit (loss) of associates and other comprehensive income of associates) of NT$103,906 thousand and NT$33,478 thousand, constituting 3% and 2% of the consolidated total comprehensive income for the three months then ended, respectively.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries been reviewed by independent accountants, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2019 and 2018, and of its consolidated financial performance and its consolidated cash flows for the three months then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Wu, Han-Chi Chou, Chien-Hung

For and on behalf of PricewaterhouseCoopers, Taiwan May 3, 2019

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

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

~2~

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

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of March 31, 2019 and 2018 are reviewed, not audited)

Assets Notes March31,2019
AMOUNT
%
$
3,335,177
3
255,828
-
3,898,037
4
907,388
1
92,785
-
5,660
-
4,811,799
5
1,448,683
2
342,431
-
8,667,058
9
581,391
1
409,472
-
24,755,709
25
48,954,125
50
3,249,020
4
18,818,618
19
1,149,968
1
91,986
-
422,993
1
72,686,710
75
$
97,442,419
100		 December31,2018
AMOUNT
%
$
3,391,896
4
479,490
1
3,674,217
4
788,643
1
116,511
-
4,429
-
4,110,277
4
1,228,428
1
326,802
-
8,710,037
9
457,003
1
483,826
1
23,771,559
26
46,512,701
50
3,216,506
3
18,770,958
20
-
-
93,797
-
660,972
1
69,254,934
74
$
93,026,493
100		 March31,2018 March31,2018
AMOUNT
$
3,335,177
255,828
3,898,037
907,388
92,785
5,660
4,811,799
1,448,683
342,431
8,667,058
581,391
409,472
24,755,709
48,954,125
3,249,020
18,818,618
1,149,968
91,986
422,993
72,686,710
$
97,442,419		 AMOUNT
$
3,391,896
479,490
3,674,217
788,643
116,511
4,429
4,110,277
1,228,428
326,802
8,710,037
457,003
483,826
23,771,559
46,512,701
3,216,506
18,770,958
-
93,797
660,972
69,254,934
$
93,026,493		 AMOUNT
$
5,102,447
630,929
3,753,569
582,646
48,252
2,097
4,427,463
1,324,888
489,082
8,360,585
524,958
588,594
25,835,510
50,651,763
3,077,216
17,556,199
-
161,827
752,044
72,199,049
$
98,034,559		 %
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
1140
Current contract assets
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
1550
Investments accounted for
under equity method
1600
Property, plant and equipment
1755
Right-of-use assets
1840
Deferred income tax assets
1900
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 6(1)
6(2)
6(3)
6(20)
6(4)
7
6(4)
7
7
6(5) and 8
6(3)
6(6)
6(7) and 8
6(8)
6(26)		 5
1
4
1
-
-
4
1
-
8
1
1
26
52
3
18
-
-
1
74
100

(Continued)

~3~

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

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of March 31, 2019 and 2018 are reviewed, not audited)

March31,2019 December31,2018 December31,2018 March31,2018
Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
2100 Short-term borrowings 6(10) and 8 $ 3,967,988 4 $ 3,638,538 4 $ 3,473,868 4
2110 Short-term notes and bills 6(11)
payable 100,000 - - - 2,399,361 2
2120 Financial liabilities at fair value
6(12)
through profit or loss - current 16 - 774 - 1,332 -
2150 Notes payable 256,554 - 251,576 - 226,098 -
2160 Notes payable - related parties 7 202,167 - 335,830 - 145,960 -
2170 Accounts payable 1,460,264 2 1,312,601 2 1,669,046 2
2180 Accounts payable - related 7
parties 1,064,356 1 996,011 1 1,092,556 1
2200 Other payables 6(13) and 7 1,579,114 2 1,949,497 2 1,548,818 2
2230 Current income tax liabilities 6(26) 488,629 1 391,662 1 244,853 -
2280 Current lease liabilities 6(8) 131,141 - - - - -
2300 Other current liabilities 6(14) 311,743 - 314,741 - 276,626 -
21XX Total current liabilities 9,561,972 10 9,191,230 10 11,078,518 11
Non-current liabilities
2540 Long-term borrowings 6(14) 8,022,615 8 8,022,299 9 11,076,616 12
2570 Deferred income tax liabilities 6(26) 299,476 - 292,165 - 238,208 -
2580 Non-current lease liabilities 6(8) 757,552 1 - - - -
2600 Other non-current liabilities 6(15) 585,299 1 552,109 - 756,942 1
25XX Total non-current
liabilities 9,664,942 10 8,866,573 9 12,071,766 13
2XXX Total liabilities 19,226,914 20 18,057,803 19 23,150,284 24
Equity attributable to owners of
parent
Share capital 6(16)
3110 Share capital - common stock 16,846,646 17 16,846,646 18 16,846,646 17
Capital surplus 6(17)
3200 Capital surplus 1,268,860 1 1,268,860 1 275,423 -
Retained earnings 6(18)
3310 Legal reserve 7,567,594 8 7,567,594 8 7,139,607 7
3320 Special reserve 2,214,578 2 2,214,578 2 2,214,578 2
3350 Unappropriated retained
earnings 10,167,493 11 9,743,048 11 9,653,410 10
Other equity interest 6(19)
3400 Other equity interest 33,883,857 35 31,291,978 34 34,767,316 36
3500 Treasury stocks 6(16) ( 19,500 ) - ( 19,500) - ( 19,935 ) -
31XX Equity attributable to
owners of the parent 71,929,528 74 68,913,204 74 70,877,045 72
36XX Non-controlling interest 6(19) 6,285,977 6 6,055,486 7 4,007,230 4
3XXX Total equity 78,215,505 80 74,968,690 81 74,884,275 76
Significant contingent liabilities 9
and unrecognized contract
commitments
Significant event after the 11
balance sheet date
3X2X Total liabilities and equity $ 97,442,419 100 $ 93,026,493 100 $ 98,034,559 100

The accompanying notes are an integral part of these consolidated financial statements.

~4~

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

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

(REVIEWED, NOT AUDITED)

Items Three months ended March 31
2019
2018
Notes
AMOUNT
%
AMOUNT
%
6(20) and 7
$
11,718,847
100
$
10,730,423
100
6(5)(22)(23) and 7
(
10,299,194) (
88) (
9,439,184 ) (
88)
1,419,653
12
1,291,239
12
6(23)(24) and 7
(
438,618) (
4) (
422,259 ) (
4)
(
250,546) (
2) (
221,478 ) (
2)
(
22,607)
-
(
17,719 )
-
(
711,771) (
6) (
661,456 ) (
6)
707,882
6
629,783
6
6(21) and 7
45,981
-
35,663
-
6(22)
16,536
-
(
48,696 )
-
6(25)
(
59,127)
-
(
55,815 ) (
1)
6(6)
21,858
-
(
8,024 )
-
25,248
-
(
76,872 ) (
1)
733,130
6
552,911
5
6(26)
(
171,737) (
1) (
170,994 ) (
2)
$
561,393
5
$
381,917
3
4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit (loss) of associates
and joint ventures accounted for
under equity method
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the period

(Continued)

~5~

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

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

(REVIEWED, NOT AUDITED)

Items
Notes
Other comprehensive income
6(19)
Components of other comprehensive
income that will not be reclassified to
profit or loss
6(3)
8316
Unrealized gain on valuation of
financial assets at fair value through
other comprehensive income
8320
Share of other comprehensive
income 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
8370
Share of other comprehensive
income (loss) of associates and joint
ventures accounted for under equity
method
8360
Other comprehensive income
(loss) that will be reclassified to
profit or loss
8300
Total other comprehensive income for
the period
8500
Total comprehensive income for the
period
Profit attributable to:
8610
Owners of the parent
8620
Non-controlling interest
Comprehensive income attributable
to:
8710
Owners of the parent
8720
Non-controlling interest
Basic and diluted earnings per share (in dollars)
6(27)
9710
Profit for the period from continuing operations
Non-controlling interest
9750
Profit attributable to common shareholders of
the parent
Assuming shares held by subsidiaries are not deemed as treasury stock:
Profit for the period from continuing operations
Non-controlling interest
Profit attributable to common shareholders of the
parent		 Threemonths endedMarch31 Threemonths endedMarch31 Threemonths endedMarch31 Threemonths endedMarch31 Threemonths endedMarch31
2019 %
22
$
-
22
1
(
-
(
1
(
23
$
28
$
4
$
1
5
$
26
$
2
28
$		 2018
AMOUNT
2,569,121
857
2,569,978
106,280
9,164
115,444
2,685,422
3,246,815
424,445
136,948
561,393
3,016,324
230,491
3,246,815
$ $
$ $ 1,153,219
$ $ 1,535,136
$ $ 284,674
97,243
$ $ 381,917
$ $ 1,365,032
170,104
$ $ 1,535,136
B e f o r e T a x A
$
0.44$
(
0.15 ) (
$
0.29$
$
0.43$
(
0.15 ) (
$
0.28$		 A f t e r T a
$

The accompanying notes are an integral part of these consolidated financial statements.

~6~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND 2018 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(UNAUDITED)

Three months ended March 31, 2018 Notes Equityattributable to o Equityattributable to o w ners of theparent Non-controlling
interest		 Total equity
Share capital -
common stock		 Treasury stock
transactions		 RetainedEarnings Otherequityinterest Treasury
stocks		 Total
Legal reserve Special reserve Total unappropriated
retained earnings
(accumulated deficit)
d		 Financial statements
translation
ifferences of foreign
operations		 Unrealized gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income		 l Unrealized gain or
oss on available-for-
sale financial assets

6(19)
6(18)
6(18)

6(3)
6(19)		 $
16,846,646
-
16,846,646
-
-
-
-
-
-
$
16,846,646
$
16,846,646
-
-
-
$
16,846,646		 $
274,323
-
274,323
-
-
-
1,105
(
5 )
-
$
275,423
$ 1,268,860
-
-
-
$ 1,268,860		 $ 7,139,607
-
7,139,607
-
-
-
-
-
-
$ 7,139,607
$ 7,567,594
-
-
-
$ 7,567,594		 $
2,214,578
-
2,214,578
-
-
-
-
-
-
$
2,214,578
$
2,214,578
-
-
-
$
2,214,578		 $
5,398,225
4,890,917
10,289,142
284,674
-
284,674
-
-
(
920,406 )
$
9,653,410
$
9,743,048
424,445
-
424,445
$
10,167,493





($
914,267 )
-
(
914,267 )
-
(
254,790 )
(
254,790 )
-
-
-
($
1,169,057 )
($
744,846 )
-
115,442
115,442
($
629,404 )		 $
-
33,680,146
33,680,146
-
1,335,148
1,335,148
-
-
921,079
$
35,936,373
$
32,036,824
-
2,476,437
2,476,437
$
34,513,261



$
38,440,218
(
38,440,218 )
-
-
-
-
-
-
-
$
-
$
-
-
-
-
$
-



($ 19,935 )
-
(
19,935 )
-
-
-
-
-
-
($ 19,935 )
($ 19,500 )
-
-
-
($ 19,500 )




$
69,379,395
130,845
69,510,240
284,674
1,080,358
1,365,032
1,105
(
5 )
673
$
70,877,045
$
68,913,204
424,445
2,591,879
3,016,324
$
71,929,528




$ 3,803,175
33,939
3,837,114
97,243
72,861
170,104
(
1,105 )
-
1,117
$ 4,007,230
$ 6,055,486
136,948
93,543
230,491
$ 6,285,977		 $
73,182,570
164,784
73,347,354
381,917
1,153,219
1,535,136
-
(
5 )
1,790
$
74,884,275
$
74,968,690
561,393
2,685,422
3,246,815
$
78,215,505

Balance at January 1, 2018
Retrospective adjustments
Balance at January 1 after
adjustments
Profit for the period
Other comprehensive income (loss)
for the period
Total comprehensive income (loss)
Difference between proceeds on
acquisition of or disposal of equity
interest in a subsidiary and its
carrying amount
Paid expired cash dividends
transferred to capital surplus
Disposal of financial assets at fair
value through other comprehensive
income
Balance at March 31, 2018
Three months ended March 31, 2019

Balance at January 1, 2019
Profit for the period
Other comprehensive income for
the period
Total comprehensive income
Balance at March 31, 2019

The accompanying notes are an integral part of these consolidated financial statements.

~7~

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

(Expressed in thousands of New Taiwan dollars)

(REVIEWED, NOT AUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Interest expense

Interest income

Gain on valuation of financial assets

(Gain) loss on valuation of financial liabilities

Share of (profit) loss of associates and joint
ventures accounted for under equity method

Gain on disposal and scrap of property, plant
and equipment

Changes in operating assets and liabilities
Changes in operating assets
Current contract assets
Notes receivable
Notes receivable - related parties
Accounts receivable, net
Accounts receivable - related parties
Other receivables
Inventory
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 liabilities
Cash inflow (outflow) generated from
operations
Interest received
Interest paid
Income tax paid
Net cash flows from (used in) operating
activities		 Three months ended March 31,
Notes
2019
2018
$
733,130 $
552,911
6(8)(23)
737,152
509,003
6(8)(25)
59,127
55,815
6(21)
(
8,529 ) (
9,261 )
6(2)(22)
(
506 ) (
534 )
6(12)(22)
(
758 )
1,332
6(6)
(
21,858 )
8,024
6(22)
(
9,182 ) (
943 )
(
118,745 )
26,191
23,726
116,059
(
1,231 )
10,910
(
701,522 ) (
859,732 )
(
220,255 ) (
156,573 )
(
18,016 ) (
38,467 )
42,979 (
417,957 )
(
124,388 ) (
5,452 )
74,354 (
38,654 )
4,978
26,580
(
133,663 ) (
93,593 )
147,663
222,976
68,345 (
55,420 )
(
349,450 ) (
287,581 )
(
3,438 )
14,667
33,190 (
95,258 )
213,103 (
514,957 )
10,916
7,690
(
64,068 ) (
55,263 )
(
65,643 ) (
64,583 )
94,308 (
627,113 )

(Continued)

~8~

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

(Expressed in thousands of New Taiwan dollars)

(REVIEWED, NOT AUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through
other comprehensive income
Proceeds from disposal of financial assets at fair
value through other comprehensive income

Proceeds from disposal of financial assets at fair
value through profit or loss
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Increase in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings

Increase in short-term notes and bills payable

Payment of long-term borrowings
Increase in long-term borrowings
Payment of lease principal

Expired cash dividends paid
Net cash flows from financing activities
Effect of foreign exchange rate
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period
 Three months ended March 31,
Notes
2019
2018
($
69,570 ) ($
28,533 )
6(3)
-
394,792
224,168
-
6(28)
(
717,853 ) (
1,247,358 )
15,898
10,639
(
22,918 ) (
96,924 )
(
570,275 ) (
967,384 )
6(29)
329,450
668,178
6(29)
100,000
1,099,555
(
900,126 ) (
3,000,000 )
900,000
3,001,549
6(8)
(
37,510 )
-
- (
5 )
391,814
1,769,277
27,434 (
15,252 )
(
56,719 )
159,528
6(1)
3,391,896
4,942,919
6(1)
$
3,335,177 $
5,102,447

The accompanying notes are an integral part of these consolidated financial statements.

~9~

FORMOSA TAFFETA CO., LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (REVIEWED, NOT AUDITED)

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. The major operations of the Company’s various departments are as follows:

Business departments Major activities Primary department: Amine fabrics, polyester fabrics, cotton fabrics, Fabrics, dyeing and others blending fabrics and umbrella ribs Secondary department: Cord, plastic bags, refineries for gasoline, diesel, Cord fabrics, petroleum crude oil and the related petroleum products, cotton fibers, blending fibers and protection fibers Formosa Advanced Technologies Co., Ltd. Assembly, testing, model processing and research and development of various integrated circuits

  • (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 March 31, 2019, the Company and its subsidiaries (collectively referred herein as the “Group”) had 10,329 employees.

  • THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

  • These consolidated financial statements were authorized for issuance by the Board of Directors on May 3, 2019.

  • APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

  • (1)Effect of 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 2019 are as follows: 
~10~
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 Group’s financial condition and financial performance based on the Group’s assessment. IFRS 16, ‘Leases’

  • A. 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.

  • B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’ by $1,048,552 (including $260,897 reclassified from long-term prepaid rent) and ‘lease liability’ by $787,655 with respect to the lease contracts of lessees on January 1, 2019.

  • C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:

  • (a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.

  • (b) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.

  • (c) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

  • (d) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

  • D. The Group calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate of 1.01%.

  • E. The Group recognized lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments 

~11~

under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognized as of January 1, 2019 is as follows:

Operating lease commitments disclosed by applying IAS 17 as at
December 31, 2018
Total lease contracts amount recognized as lease liabilities by applying
IFRS 16 on January 1, 2019
Incremental borrowing interest rate at the date of
initial application
Lease liabilities recognized as at January 1, 2019 by applying IFRS 16		 859,527
$ 859,527
$ 1.01%
787,655
$

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

the Group

None.

(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 Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2018, except for the compliance statement, basis of preparation, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

  • A. The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

  • B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2018. 

~12~

(2) Basis of preparation

  • A. Except for the following items, these consolidated 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.

  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less 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 critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

  • A. Basis for preparation of consolidated financial statements:

  • The basis for preparation of the consolidated financial statements is the same with the consolidated financial statements as of and for the year ended December 31, 2018.

  • B. Subsidiaries included in the consolidated financial statements: 

~13~

Ownership (%)

Name of investor Name of subsidiary Main business activities March 31,
2019		 December 31,
2018		 March 31,
2018		 Description
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
Advanced
Technologies Co.,
Ltd.
Formosa Taffeta
(Zhong Shan) Co,
Ltd.
Formosa
Development Co.,
Ltd.
Formosa Taffeta
Vietnam Co., Ltd.
Formosa Taffeta
(Hong Kong) Co.,
Ltd.
Schoeller F.T.C.
(Hong Kong) Co.,
Ltd.
Xiamen Xiangyu
Formosa Import &
Export Trading
Co., Ltd.		 Assembly, testing, model
processing and research and
development of various
integrated circuits
Manufacturing of nylon and
polyester filament greige
cloth, coloured cloth, printed
cloth and textured processing
yarn products
Urban land consolidation,
development and rent and
sale of residences and
buildings, and development
of new community and
specialised zones
Manufacturing, processing,
supply and marketing of
yarn, knitted fabric, dyeing
and finishing, carpets,
curtains and cleaning
Sale of nylon and polyamine
goods
Sale of hi-tech performance
fabric for 3XDRY,
Nanosphere, Keprotec,
Dynatec, Spirit and Reflex
Export trading, entrepot
trading, displaying goods,
processing of exporting
goods, warehousing and
black and white and colour
design and graph		 46.68
100.00
100.00
100.00
100.00
50.00
100.00		 46.68
100.00
100.00
100.00
100.00
50.00
100.00		 65.68
100.00
100.00
100.00
100.00
50.00
100.00		 Note 1
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2		 
~14~

Ownership (%)

Name of investor Name of subsidiary Main business activities March 31,
2019		 December 31,
2018		 March 31,
2018		 Description
Formosa Taffeta
Co., Ltd.
Formosa Taffeta
Co., Ltd.
Formosa Taffeta
(Hong Kong) Co.,
Ltd.
Formosa
Development Co.,
Ltd.		 Formosa Taffeta
Dong Nai Co.,
Ltd.
Formosa Taffeta
(Cayman) Limited
Formosa Taffeta
(Changshu) Co.,
Ltd.
Public More
Internation
Company Ltd.		 Manufacturing of nylon and
polyester filament products
Holding company
Manufacturing and
processing fabric of nylon
filament knitted cloth,
weaving and dyeing as well
as post processing of knitted
fabric
Employment service,
manpower allocation and
agency service etc.		 100.00
100.00
100.00
100.00		 100.00
100.00
100.00
100.00		 100.00
100.00
100.00
100.00		 Note 2
Note 2
Note 2
Note 2		 
  - Corp. in July, 2018. As the Company owns more than half of the seats in the Board of Directors of Formosa Advanced Technologies Co., Ltd., the Company has substantive control over the latter.

  • Note 2: The financial statements of the entity as of and for the three months ended March 31, 2019 and 2018 were not reviewed by independent accountants as the entity did not meet the definition of significant subsidiary.

  • C. Subsidiaries not included in the consolidated financial statements: None.

  • D. Adjustments for subsidiaries with different balance sheet dates: None.

  • E. Significant restrictions: None.

  • F. Subsidiaries that have non-controlling interests that are material to the Group:

    • As of Mach 31, 2019, December 31, 2018 and March 31, 2018, the non-controlling interest amounted to $6,285,977, $6,055,486 and $4,007,230, respectively. The information on noncontrolling interest and respective subsidiaries is as follows:
Name of
Principal place
subsidiary
ofbusiness
Formosa Advanced
Technologies Co.,
Ltd.
Taiwan		 Non-controllinginterest Non-controllinginterest Ownership (%)
53.32
31,2018
Amount
Ownership (%)
6,285,428
$ 53.32
March31,2019		 December
Amount

6,285,428
$		 Amount

6,055,275
$		 
~15~
Name of
Principal place
subsidiary
ofbusiness
Formosa Advanced
Technologies Co.,
Ltd.
Taiwan		 Amount
Ownership (%)
4,008,205
$ 34.32
March31,2018
Non-controllinginterest
Amount

4,008,205
$

Summarized financial information on the subsidiaries:

Balance sheets

Balance sheets
Formosa Advanced Technologies Co., Ltd.
March31,2019 December31,2018 March31,2018
Current assets $ 6,894,114
 $ 6,792,443
 $ 8,206,367
Non-current assets 6,599,457 5,882,131 4,685,096
Current liabilities ( 1,094,878)
 ( 1,231,815)
 ( 1,130,457)
Non-current liabilities ( 610,569)
 ( 86,280)
 ( 82,086)
Total net assets $ 11,788,124 $ 11,356,479 $ 11,678,920

Statements of comprehensive income

Statements of comprehensive income
Total net assets
11
$		 ,78 8,124
11,356,479
$ 11,678,9
$		 8,124
11,356,479
$ 11,678,9
$		 8,124
11,356,479
$ 11,678,9
$		 8,124
11,356,479
$ 11,678,9
$
FormosaAdvancedTechnologies Co.,Ltd.
Three months ended March31,
2019 2018
Revenue $ 2,172,966 $ 2,047,736
Profit before income tax 320,165 352,861
Income tax expense ( 63,951)
 ( 70,572)
Profit for the period 256,214 282,289
Other comprehensive income,
net of tax 175,431 212,988
Total comprehensive income for the period $ 431,645 $ 495,277
Comprehensive income attributable to non-
controlling interest $ 230,153 $ 169,979

Statements of cash flows

Formosa Advanced Technologies Co., Ltd.

Threemonths ended Threemonths ended March31,
2019 2018
Net cash provided by operating activities $ 594,349
 $ 336,230
Net cash used in investing activities ( 318,179)
 ( 880,289)
Net cash used in financing activities ( 6,686)
 -
Increase (decrease) in cash and cash
equivalents 269,484 ( 544,059)
Cash and cash equivalents, beginning of
period 1,267,335 3,479,352
Cash and cash equivalents, end of period $ 1,536,819 $ 2,935,293 
~16~

(4) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities Effective 2019

  • A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognized as an expense on a straight-line basis over the lease term.

  • B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate.

  • Lease payments are comprised of the fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

  • C. At the commencement date, the right-of-use asset is stated at cost comprising the amount of the initial measurement of lease liability.

  • The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right-of-use asset.

(5) 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

  • (a) Defined contribution plans

For defined contribution plans, 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 plans

  • 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 

~17~

rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) instead. 

     - ii. Remeasurements arising on defined benefit plans 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.

     - iv. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. The related information is disclosed accordingly.

  • 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.

  • (6) 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 the consolidated 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 Group 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 

~18~

enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised 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.

  • G. The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

  • H. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognizes the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognized outside profit or loss is recognized in other comprehensive income or equity while the effect of the change on items recognized in profit or loss is recognized in profit or loss.

  • CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

There was no significant change during this period. Please refer to Note 5 to the consolidated financial statements as of and for the year ended December 31, 2018 for related information.

  1. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and petty cash
Checking accounts and
demand deposits
Time deposits
Commercial paper		 March31,2019
126,693
$ 1,677,503
420,901
1,110,080
3,335,177
$		 December31,2018
156,022
$ 1,797,743
419,938
1,018,193
3,391,896
$		 March31,2018
53,516
$ 1,343,008
1,045,258
2,660,665
5,102,447
$
  • A. The Group transacts with a variety of financial institutions all with high credit quality to disperse 
~19~

credit risk, so it expects that the probability of counterparty default is remote.

  • B. The rate range of time deposit on March 31, 2019, December 31, 2018 and March 31, 2018 are

    • 1.60%~7.78%, 2.75%~5.47% and 1.65%~7.40%, respectively.

  • C. The Group has no cash and cash equivalents pledged to others.

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

Items
Current items:
Beneficiary certificates
Forward foreign exchange
contracts
Valuation adjustment		 March31,2019
250,000
$ 96
250,096
5,732
255,828
$		 December31,2018
466,353
$ -
466,353
13,137
479,490
$		 March31,2018
619,504
$ 229
619,733
11,196
630,929
$
  • A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:
Beneficiary certificates
Forward foreign exchange contracts		 2019
2018
410
$ 702
$ 96
168)
(
506
$ 534
$ Threemonths endedMarch31,
  • B. The Group entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below:
March31,2019 March31,2019 March31, March31, 2018
Derivative Contract Amount Contract Amount
Instruments (Notional Principal) Contract Period (Notional Principal) Contract Period
Current items:
Forward foreign
exchange contracts
Taipei Fubon Bank JPY 45,000
 2019.03~2019.05 JPY 113,710
 2018.03~2018.06
Taipei Fubon Bank USD 558
 2018.02~2018.05
The Group had no financial assets held for trading on December 31, 2018.

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). 
~20~

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

Items
Current items:
Equity instruments
Listed stocks
Unlisted stocks
Valuation adjustment
Non-current items:
Equity instruments
Listed stocks
Unlisted stocks
Valuation adjustment		 March31,2019 December31,2018 March31,2018
2,482,504
$ 10,000
2,492,504
1,315,533
3,808,037
$ 8,739,607
$ 6,835,682
15,575,289
33,378,836
48,954,125
$		 2,482,503
$ 100,000
2,582,503
1,091,714
3,674,217
$ 8,739,607
$ 6,747,554
15,487,161
31,025,540
46,512,701
$		 2,311,395
$ 100,000
2,411,395
1,342,174
3,753,569
$ 10,004,390
$ 5,865,439
15,869,829
34,781,934
50,651,763
$

  • A. The Group 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 $52,852,162, $50,186,918 and $54,405,332 as at March 31, 2019, December 31, 2018 and March 31, 2018, respectively.

  • B. Aiming to satisfy the operating capital needs, the Group sold its equity investment in Nan Ya Technology Corp. at fair value of $394,792 which resulted in loss on disposal (including the portion attributable to non-controlling interests) of ($919,289) during the three months ended March 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:

Equity instruments at fair value through other
comprehensive income
Fair value change recognized in other
comprehensive income
Cumulative losses reclassified to
retained earnings due to derecognition
(including the portion attributable to
non-controlling interest)		 2019
2018
2,579,227
$ 1,408,245
$ -
$ 919,289)
($ Threemonths endedMarch31,
  • D. As at March 31, 2019, December 31, 2018 and March 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 Group were $52,852,162, $50,186,918 and $54,405,332, respectively. 
~21~
  • E. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).

(4) Notes and accounts receivable

Notes and accounts receivable
March31,2019 December31,2018 March31,2018
Notes receivable $ 92,785 $ 116,511 $ 48,252
Accounts receivable $ 4,883,378
 $ 4,181,310
 $ 4,504,051
Less: Allowance for uncollectible
accounts ( 71,579)
 ( 71,033)
 ( 76,588)
$ 4,811,799 $ 4,110,277 $ 4,427,463
A. The ageing analysis of notes and accounts receivable is as follows:
March31,2019 December31,2018 March31,2018
Not past due $ 4,800,092
 $ 4,092,982
 $ 4,310,698
Up to 30 days 119,112 154,591 159,061
31 to 90 days 42,782 45,066 58,995
Over 90 days 14,177 5,182 23,549
$ 4,976,163 $ 4,297,821 $ 4,552,303

The above ageing analysis was based on past due date.

  • B. As at March 31, 2019, December 31, 2018 and March 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 Group’s notes and accounts receivable were $4,976,163, $4,297,821 and $4,552,303, 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
Construction in progress
Land for construction		 March31,2019
Allowance for
Cost
valuation loss
1,748,683
$ 104,945)
($ 275,412
5,201)
(
2,789,901
6,305)
(
3,634,767
574,675)
(
307,039
-
319,895
-
243,414
67)
(
16,916
-
22,224
-
9,358,251
$ 691,193)
($		 Bookvalue
1,643,738
$ 270,211
2,783,596
3,060,092
307,039
319,895
243,347
16,916
22,224
8,667,058
$		 
~22~

December 31, 2018

December31,2018
Raw materials
Supplies
Work in process
Finished goods
Merchandise inventory
Materials in transit
Outsourced processed materials
Construction in progress
Land for construction
Raw materials
Supplies
Work in process
Finished goods
Merchandise inventory
Materials in transit
Outsourced processed materials
Construction in progress
Land for construction		 Allowance for
Cost
valuation loss
1,762,233
$ 94,897)
($ 212,154
3,968)
(
2,866,411
6,643)
(
3,789,718
578,621)
(
159,786
-
348,702
-
216,874
71)
(
16,135
-
22,224
-
9,394,237
$ 684,200)
($ March31,2018		 Bookvalue
1,667,336
$ 208,186
2,859,768
3,211,097
159,786
348,702
216,803
16,135
22,224
8,710,037
$
Allowance for
Cost
valuation loss
1,715,900
$ 46,188)
($ 251,378
7,553)
(
2,590,650
7,229)
(
3,387,753
483,213)
(
291,330
-
406,629
-
215,683
109)
(
23,330
-
22,224
-
8,904,877
$ 544,292)
($		 Bookvalue
1,669,712
$ 243,825
2,583,421
2,904,540
291,330
406,629
215,574
23,330
22,224
8,360,585
$

Information about the inventories that were pledged to others as collateral is provided in Note 8. The cost of inventories recognized as expense for the year:

Threemonths ended Threemonths ended March31,
2019 2018
Cost of goods sold $ 10,305,077
 $ 9,418,523
Inventory valuation loss 6,993 23,558
Others (Note) ( 12,876)
 ( 2,897)
$ 10,299,194 $ 9,439,184

Note: Others consist of inventory overage/shortage and disposal of scrap and defective materials and service costs. 

~23~

(6) Investments accounted for using equity method

Formosa Industries Co., Ltd.
Quang Viet Enterprise Co., Ltd.
Changshu Yu Yuan
Development Co., Ltd.		 March31,2019
2,032,311
$ 1,199,695
17,014
3,249,020
$		 December31,2018
2,008,842
$ 1,191,261
16,403
3,216,506
$		 March31,2018
1,922,074
$ 1,105,473
49,669
3,077,216
$

A. Associates

  • (a) The basic information of the associates that are material to the Group is as follows:

Shareholding ratio

Companyname Principal
place
of business		 March 31,
2019		 December
31,2018		 March 31,
2018		 Nature of
relationship
Formosa
Industries Co.,
Ltd.
Quang Viet
Enterprise Co.,
Ltd.
Changshu Yu
Yuan
Development
Co., Ltd.		 Vietnam
Taiwan
China		 10.00%
17.99%
40.78%		 10.00%
17.99%
40.78%		 10.00%
17.92%
40.78%

(b) The summarized financial information of the associates that are material to the Group is shown

below:

Balance sheets

below:
Balance sheets
Formosa Industries Co., Ltd.
March31,2019 December31,2018 March31,2018
Current assets $ 26,244,938
 $ 12,272,938
 $ 18,258,780
Non-current assets 21,361,539 21,232,063 20,751,265
Current liabilities ( 22,773,333)
 ( 11,529,804)
 ( 13,748,350)
Non-current liabilities ( 5,274,284)
 ( 2,749,255)
 ( 6,893,320)
Total net assets $ 19,558,860 $ 19,225,942 $ 18,368,375
Share in associate’s net assets $ 1,955,886
 $ 1,922,594
 $ 1,836,838
Difference 76,425 86,248 85,236
Carrying amount of the associate $ 2,032,311 $ 2,008,842 $ 1,922,074 
~24~
Quang VietEnterprise Co.,Ltd. Quang VietEnterprise Co.,Ltd. Quang VietEnterprise Co.,Ltd. Quang VietEnterprise Co.,Ltd.
March31,2019 December31,2018 March31,2018
Current assets $ 8,641,190
 $ 7,605,631
 $ 6,809,665
Non-current assets 3,379,834 3,222,091 2,798,195
Current liabilities ( 4,199,140)
 ( 3,043,953)
 ( 3,074,781)
Non-current liabilities ( 377,855)
 ( 329,187)
 ( 31,251)
Total net assets $ 7,444,029 $ 7,454,582 $ 6,501,828
Share in associate’s net assets $ 1,339,181
 $ 1,341,079
 $ 1,165,128
Difference ( 139,486)
 ( 149,818)
 ( 59,655)
Carrying amount of the associate $ 1,199,695 $ 1,191,261 $ 1,105,473
Changshu YuYuan Development Co., Ltd.
March31,2019 December31,2018 March31,2018
Current assets $ 97,563
 $ 96,864
 $ 154,400
Non-current assets 65 106 240
Current liabilities ( 26,118)
 ( 26,867)
 ( 49,824)
Total net assets $ 71,510 $ 70,103 $ 104,816
Share in associate’s net assets $ 29,162
 $ 28,588
 $ 42,744
Difference ( 12,148)
 ( 12,185)
 6,925
Carrying amount of the associate $ 17,014 $ 16,403 $ 49,669

Statements of comprehensive income

Statements of comprehensive income
FormosaIndustries Co.,Ltd.
Threemonths endedMarch31,
2019 2018
Revenue $ 7,234,797 $ 7,607,859
Profit for the period from continuing
operations
(Total comprehensive income) $ 137,840 $ 329,815
Quang VietEnterprise Co.,Ltd.
Threemonths endedMarch31,
2019 2018
Revenue $ 2,315,912 $ 1,164,632
Loss for the period from continuing
operations ($ 41,602)
 ($ 135,237)
Other comprehensive income, net of tax 31,049 9
Total comprehensive loss ($ 10,553) ($ 135,228) 
~25~
ChangshuYuYuan Development Co.,Ltd. ChangshuYuYuan Development Co.,Ltd. ChangshuYuYuan Development Co.,Ltd.
Threemonths ended March31,
2019 2018
Revenue $ - $ -
Loss for the period from continuing
operations (Total comprehensive loss) ($ 58) ($ 313)

  • B. The investment income (loss) of $21,858 and ($8,024) for the three months ended March 31, 2019 and 2018, respectively, were accounted for under the equity method based on the unreviewed financial statements of the investee companies.

  • C. The Group is the director of Formosa Industries Co., Ltd. and Quang Viet Enterprise Co., Ltd. and has significant impact to its operations, thus, Formosa Industries Co., Ltd. and Quang Viet Enterprise Co., Ltd. are accounted for under the equity method.

  • D. The Group’s material associate, Quang Viet Enterprise Co., Ltd., has quoted market prices. As of March 31, 2019, December 31, 2018 and March 31, 2018, the fair value were $2,621,945, $1,952,512 and $2,240,740, respectively.

(Blank) 

~26~

(7) Property, plant and equipment

==> picture [729 x 368] intentionally omitted <==

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

Transportation Construction in
Land and land equipment and progress and equipment
At January 1, 2019 improvements Buildings Machinery other equipment to be inspected Total
Cost $ 2,202,809 $ 11,402,399 $ 44,120,710 $ 8,938,006 $ 1,310,921 $ 67,974,845
-
Accumulated depreciation ( 14,616) ( 6,199,016) ( 34,499,873) ( 8,334,527) ( 49,048,032)
Accumulated impairment ( 155,738) - ( 117) - - ( 155,855)
$ 2,032,455 $ 5,203,383 $ 9,620,720 $ 603,479 $ 1,310,921 $ 18,770,958
Three months ended March 31, 2019
Opening net book amount $ 2,032,455 $ 5,203,383 $ 9,620,720 $ 603,479 $ 1,310,921 $ 18,770,958
Additions 3,014 - - 5 701,393 704,412
Disposals ( 53) - ( 5,979) ( 684) - ( 6,716)
Transfers - 16,944 616,557 24,140 ( 657,641) -
-
Depreciation charge ( 2,740) ( 91,215) ( 563,932) ( 41,243) ( 699,130)
Net exchange differences ( 260) 25,688 20,128 1,827 1,711 49,094
Closing net book amount $ 2,032,416 $ 5,154,800 $ 9,687,494 $ 587,524 $ 1,356,384 $ 18,818,618
At March 31, 2019
Cost $ 2,203,150 $ 11,472,882 $ 44,738,923 $ 8,929,943 $ 1,356,384 $ 68,701,282
-
Accumulated depreciation ( 14,996) ( 6,318,082) ( 35,051,312) ( 8,342,419) ( 49,726,809)
Accumulated impairment ( 155,738) - ( 117) - - ( 155,855)
$ 2,032,416 $ 5,154,800 $ 9,687,494 $ 587,524 $ 1,356,384 $ 18,818,618
----- End of picture text -----

~27~
Transportation Transportation Construction in
Land and land equipment and progress and equipment
improvements Buildings Machinery other equipment to be inspected Total
At January 1, 2018
Cost $ 2,545,786
 $ 11,047,542
 $ 41,347,517
 $ 9,003,970
 $ 1,976,014
 $ 65,920,829
Accumulated depreciation ( 14,598)
 ( 5,864,637)
 ( 34,546,863)
 ( 8,316,598)
 - ( 48,742,696)
Accumulated impairment ( 155,738)
 - ( 117)
 - - ( 155,855)
$ 2,375,450 $ 5,182,905 $ 6,800,537 $ 687,372 $ 1,976,014 $ 17,022,278
Three months ended March 31, 2018
Opening net book amount $ 2,375,450
 $ 5,182,905
 $ 6,800,537
 $ 687,372
 $ 1,976,014
 $ 17,022,278
Additions - - - - 1,271,598 1,271,598
Disposals - - ( 12,694)
 2,998 - ( 9,696)
Transfers (Note) ( 124,220)
 100,061 920,868 22,041 ( 1,044,532)
 ( 125,782)
Depreciation charge ( 74)
 ( 91,078)
 ( 366,921)
 ( 50,930)
 - ( 509,003)
Net exchange differences 25 ( 28,168)
 ( 40,338)
 ( 3,903)
 ( 20,812)
 ( 93,196)
Closing net book amount $ 2,251,181 $ 5,163,720 $ 7,301,452 $ 657,578 $ 2,182,268 $ 17,556,199
At March 31, 2018
Cost $ 2,421,781
 $ 11,126,118
 $ 41,750,838
 $ 8,971,360
 $ 2,182,268
 $ 66,452,365
Accumulated depreciation ( 14,862)
 ( 5,962,398)
 ( 34,449,269)
 ( 8,313,782)
 - ( 48,740,311)
Accumulated impairment ( 155,738)
 - ( 117)
 - - ( 155,855)
$ 2,251,181 $ 5,163,720 $ 7,301,452 $ 657,578 $ 2,182,268 $ 17,556,199

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

~28~
  • A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:
Amount capitalized
Range of the interest rates for capitalization		 Threemonths endedMarch31, Threemonths endedMarch31,
2019
2,930
$ 0.94%~4.8%		 2018
1,588
$
0.94%~3.36%
  • B. The significant components and useful lives of property, plant and equipment are as follows:
Items Significant components
Pipelines
Factory and gasoline stations
Impregnating machine, dyeing machine and
other machinery equipment
Pallet trucks and fork lift trucks
Cogeneration power generation equipment		 Estimated useful lives
3 ~ 15 years
10 ~ 60 years
2 ~ 20 years
3 ~ 15 years
2 ~ 17 years
Land improvements
Buildings
Machinery and equipment
Transportation equipment
Other equipment

  • C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

  • D. Certain regulations restrict ownership of land to individuals. Accordingly, the titles of land which the Company has acquired for future plant expansion are under the name of third parties. Such land titles were transferred and mortgaged to the Company. As of March 31, 2019, December 31, 2018 and March 31, 2018, the land mortgaged to the Company was $808,300.

  • －

  • (8) Leasing arrangements lessee Effective 2019

  • A. The Group leases various assets including land. Rental contracts are typically made for periods of 3 to 25 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

  • B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land March 31,2019 March 31,2019
Carryingamount Depreciation charge
1,149,968
$		 38,022
$

  • C. For the three months ended March 31, 2019, the additions to right-of-use assets was $135,997.

  • D. The information on income and expense accounts relating to lease contracts is as follows:

C. For the three months ended March 31, 2019, the additions to
D. The information on income and expense accounts relating to
Carryingamount
Land
1,149,968
$		 right-of-use assets was $1
lease contracts is as follo
Depreciation charge
38,022
$
Items affecting profit or loss
Interest expense on lease liabilities
Expense on short-term lease contracts		 Three months ended
March 31,2019
$ 2,551
23		 
~29~

E. For the three months ended March 31, 2019, the Group’s total cash outflow for leases was $37,510. (9) Non-current assets held for sale and discontinued operations (shown as “Other current assets” ) March 31, 2019 December 31, 2018 March 31, 2018 Property, plant and equipment $ - $ - $ 124,220 The assets related to land have been reclassified as disposal group held for sale following the approval of the Board of Directors during the three months ended March 31, 2018 to sell its land. The transaction was completed in 2018.

(10) Short-term borrowings

Type ofborrowings
Bank borrowings
Mortgage loan
Purchase loans
Type ofborrowings
Bank borrowings
Mortgage loan
Type of borrowings
Bank borrowings
Secured borrowings
Purchase loans		 March31,2019
3,965,293
$ 2,695
3,967,988
$ December31,2018
3,638,538
$ March31,2018
3,472,005
$ 1,863
3,473,868
$		 Interestraterange
1.40%~4.32%
0.43%
Interestraterange
1.40%~4.35%
Interest rate range
1.40%~4.03%
0.32%		 Collateral
Property, plant and
equipment and inventories
-
Collateral
Property, plant and
equipment and inventories
Collateral
Property, plant and
equipment and inventories
-

(11) Short-term notes and bills payable

Commercial paper payable
Less: Commercial paper
payable discount
Interest rate		 March31,2019
100,000
$ -
100,000
$ 0.66%		 December31,2018
March31,2018
-
$ 2,400,000
$ -
639)
(
-
$ 2,399,361
$ -
0.56%

The abovementioned commercial paper payable is issued by International Bills Finance Corp. etc. 

~30~

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

Items
Financial liabilities held for
trading
Forward foreign exchange
contracts		 March31,2019
16
$		 December31,2018
774
$		 March31,2018
1,332
$

  • A. The Group recognized net gain (loss) of $758 and ($1,332) on financial liabilities held for trading for the three months ended March 31, 2019 and 2018, respectively.

  • B. Explanations of the transactions and contract information in respect of derivative financial liabilities that the Group 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
Derivative Financial
Liabilities
Current items:
Forward foreign
exchange contracts
Taipei Fubon Bank
Taipei Fubon Bank		 Contract Amount
Contract
(Notional Principal)
Period
40,000
JPY
2019.3~2019.5
-
JPY
-
-
JPY
-
-
JPY
-
March31,2019		 Contract Amount
Contract
(Notional Principal)
Period
50,000
JPY
2018.12~2019.2
56,800
JPY
2018.12~2019.2
50,000
JPY
2018.12~2019.1
50,210
JPY
2018.12~2019.1
Contract Amount
Contract
(Notional Principal)
Period
779
USD
2018.01~2018.04
201,430
JPY
2018.01~2018.05
December31,2018
March31,2019
Contract Amount
(Notional Principal)
40,000
JPY
-
JPY
-
JPY
-
JPY

The Group 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. 

~31~

(13) Other payables

Other payables
March31,2019 December31,2018 March31,2018
Salaries and year-end bonus
payable $ 372,395
 $ 784,330
 $ 442,319
Accrued utilities expenses 188,075 130,048 143,081
Payable on equipment 49,373 62,814 -
Commission payable 59,789 54,564 65,693
Dividend payable 9,921 9,943 9,080
Others 899,561 907,798 888,645
$ 1,579,114 $ 1,949,497 $ 1,548,818
Long-term borrowings
March31,2019 December31,2018 March31,2018
Credit borrowings $ 8,192,956
 $ 8,192,200
 $ 11,211,718
Less: Current portion ( 170,341)
 ( 169,901)
 ( 135,102)
$ 8,022,615 $ 8,022,299 $ 11,076,616
Interest rate 0.94%~4.80% 0.98%~4.45% 1.00%~3.36%

- (14) Long term borrowings

(15) Pensions

  • A. (a) The Company and its domestic subsidiaries have 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 and its domestic subsidiaries contribute monthly an amount equal to 2%~15% 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 and its domestic subsidiaries would assess the balance in the aforementioned employees pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions for the deficit by next March.

  • (b) For the aforementioned pension plan, the Group recognized pension costs of $7,257 and $9,869 for the three months ended March 31, 2019 and 2018, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Company and its domestic subsidiaries for the year ending December 31, 2019 amount to $88,821.

  • B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have established defined 

~32~

contribution pension plans (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 and its domestic subsidiaries contribute 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 Company’s mainland China subsidiaries, Formosa Taffeta (Zhong Shan) Co., Ltd., Formosa Taffeta (Changshu) Co., Ltd., and Xiamen Xiangyu Formosa Import & Export Trading Co., Ltd., have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on a certain percentage of the employees’ monthly salaries and wages. The contribution percentage was between 10% and 20%. Other than the monthly contributions, the Group has no further obligations.

  - (c) The Company’s subsidiaries, Formosa Taffeta Vietnam Co., Ltd. and Formosa Taffeta (Dong Nai) Co., Ltd., have defined contribution plans. Contributions of social security to an independent fund administered by the government in accordance with the pension regulations of local governments are based on certain percentage of employees’ salaries and wages. Other than the monthly contributions, the Group has no further obligations.

  - (d) Formosa Taffeta (Hong Kong) Co., Ltd. and Schoeller FTC (Hong Kong) Co., Ltd. have defined contribution plans whereby contributions are made to the mandatory provident fund based on a percentage of the employees’ salaries and wages as full-time employees’ pension benefit.

  - (e) Formosa Taffeta (Cayman) Co., Ltd. does not have a pension plan, and is not required to have one under local regulations.

  - (f) The pension costs under the defined contribution pension plans of the Group for the three months ended March 31, 2019 and 2018 were $37,239 and $36,232, respectively.

  • (16) Share capital

  • A. As of March 31, 2019, the Company’s authorized and issued capital was $16,846,646, consisting of 1,684,665,000 shares of common stock, with a par value of $10 per share.

  • B. For the three months ended March 31, 2019 and 2018, changes in the number of treasury stocks are as follows (in thousands of shares): 

~33~
Reason for
Investee
reacquisition
company
Long-term equity
investment transferred to
treasury stock for parent
company’s shares held
by subsidiaries
Formosa
Development
Co., Ltd.
Reason for
Investee
reacquisition
company
Long-term equity
investment transferred to
treasury stock for parent
company’s shares held
by subsidiaries
Formosa
Development
Co., Ltd.		 Threemonths endedMarch Threemonths endedMarch Threemonths endedMarch 31,2019 Endingshares
2,243
Ending shares
2,293
Beginning
shares
Additions
2,243
-
Threemonths endedMarch		 Disposal

-
31,2018
Beginning
shares
2,293		 Additions
-		 Disposal
(Note)

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

(17) 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 Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

reserve is insufficient.
At January 1, 2019
(equal to March 31, 2019)		 Three months ended March 31,2019
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
25,297
$		 1,650
$		 2,032
$		 1,236,557
$		 3,324
$		 
~34~

Three months ended March 31, 2018

At January 1, 2018
Difference between
consideration and
carrying amount of
subsidiaries acquired
Paid expired cash
dividends transferred
to capital surplus
At March 31, 2018		 Treasury
share
transactions		 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
$ -
-
19,899
$		 545
$ 1,105
-
1,650
$		 2,032
$ -
-
2,032
$		 250,345
$ -
-
250,345
$		 1,502
$ -
5)
(
1,497
$

(18) Retained earnings

  • A. According to the R.O.C. Securities and Exchange Act No. 41, a company should reserve the amount 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 contra-account in stockholders’ equity belongs to prior periods, the same amount from prior period earnings should be considered as 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.

  • 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 2018 earnings had been resolved at the Board of Directors on March 15, 2019 and 2017 earnings had been resolved by the stockholders on June 22, 2018. Details are summarized below: 

~35~
Legal reserve
Cash dividends		 Dividends
Amount
per share
(inthousands)
(indollars)
473,741
$ 3,537,796
2.10
$ 2018earnings		 2017 earnings 2017 earnings
Amount
(inthousands)
473,741
$ 3,537,796		 Amount
(inthousands)
427,987
$ 3,200,863		 Dividends
per share
(indollars)
1.90
$

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

  • E. As of March 31, 2019, December 31, 2018 and March 31, 2018, unpaid stock dividends amounted to $9,921, $9,943 and $9,080, respectively.

  • F. For information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(24).

(19) Other equity items

Other equity items
January 1, 2019
Revaluation
─Group
─Associates
─Non-controlling interest
Difference of currency translation
─Group
─Associates
─Non-controlling interest
Net income of
non-controlling interest
March 31, 2019		 Unrealized gains
Currency
onvaluation
translation
32,036,824
$ 744,846)
($ 2,475,580
-
857
-
-
-
-
106,278
-
9,164
-
-
-
-
34,513,261
$ 629,404)
($		 Non-controlling
interest
6,055,486
$ -
-
93,541
-
-
2
136,948
6,285,977
$		 
~36~
(20) Operating revenue
Unrealized gains
Currency
Non-controlling
(losses)onvaluation
translation
interest
January 1, 2018
38,440,218
$ 914,267)
($ 3,803,175
$ Retrospective adjustments
4,760,072)
(
-
33,939
January 1, 2018 after adjustments
33,680,146
914,267)
(
3,837,114
Revaluation
─Group
1,334,513
-
-
─Associates
635
-
-
─Non-controlling interest
-
-
73,097
Revaluation transferred to
retained earnings
─Group
921,079
-
-
─Non-controlling interest
-
-
1,117
Difference of currency translation
─Group
-
201,152)
(
-
─Associates
-
53,638)
(
-
─Non-controlling interest
-
-
236)
(
Net income of
non-controlling interest
-
-
97,243
Difference between consideration
and carrying amount of
subsidiaries aquired or disposed
-
-
1,105)
(
March 31, 2018
35,936,373
$ 1,169,057)
($ 4,007,230
$ 2019
2018
Sales revenue
11,664,511
$ 10,672,691
$ Service revenue
54,336
57,732
11,718,847
$ 10,730,423
$ Three months ended March31,		 Non-controlling
interest
3,803,175
$ 33,939

A. Contract assets

Formosa Advanced Technologies Co., Ltd. has recognized the following IC revenue-related contract assets:

contract assets:
Contract assets relating to IC
revenue		 March31,2019
907,388
$		 December31,2018
788,643
$		 March31,2018
582,646
$

B. All Formosa Advanced Technologies Co., Ltd. assembly and testing services contracts of various integrated circuits are for periods of one year or less. As permitted under IFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed. 

~37~

(21) Other income

Other income
Interest income from bank deposits
Other income		 Three months ended March31,
2019
8,529
$ 37,452
45,981
$		 2018
9,261
$ 26,402
35,663
$

(22) Other gains and losses

Other gains and losses
Threemonths endedMarch31,
2019 2018
Gains on disposals of property, plant and
equipment $ 9,182
 $ 943
Net currenty exchange gains (losses) 24,789 ( 42,791)
Forward foreign exchange contracts
Gains on financial assets at fair
value through profit or loss 506 534
Gains (losses) on financial liabilities at fair
value through profit or loss 758 ( 1,332)
Bank charges ( 8,820)
 ( 9,022)
Other (losses) gains ( 9,879)
 2,972
$ 16,536 ($ 48,696)

(23) Expenses by nature

Expenses by nature
Employee benefit expense
Depreciation charges on property, plant and
equipment		 Threemonths endedMarch31,
2019
1,307,371
$ 737,152
2,044,523
$		 2018
1,270,181
$ 509,003
1,779,184
$

(24) Employee benefit expense

Employee benefit expense
Wages and salaries
Labor and health insurance fees
Pension costs
Other personnel expenses		 Threemonths endedMarch31,
2019
1,100,787
$ 120,066
44,496
42,022
1,307,371
$		 2018
1,068,242
$ 114,083
46,101
41,755
1,270,181
$

A. In accordance with the Company’s Articles of Incorporation, a ratio of distributable profit of the current year after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall be between 0.05%-0.5% for employees’ compensation and shall not be higher than 0.5% for directors’ and supervisors’ 

~38~

remuneration.

  • B. For the three months ended March 31, 2019 and 2018, employees’ compensation was accrued at $500 and $333, respectively; while directors’ and supervisors’ remuneration was accrued at $250 and $167, respectively. The aforementioned amounts were recognized in salary expenses.

    • The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on the Company’s Articles of Incorporation of profit of current year distributable for the three months ended March 31, 2019.

    • The employees’ compensation and directors’ and supervisors’ remuneration for 2018 as approved by shareholders were the same as the amounts shown in the 2018 financial statements. The employees’ compensation and directors’ and supervisors’ remuneration resolved by the Board of Directors were both $15,815 in the form of cash.

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

  • (25) Finance costs

Finance costs
Threemonths endedMarch31,
2019 2018
Interest expense:
Bank borrowings $ 59,506
 $ 57,403
Other financial expense 2,551 -
Less: Capitalization of qualifying assets ( 2,930) ( 1,588)
$ 59,127 $ 55,815 
~39~

(26) Income tax

A. Components of income tax expense

ome tax
Components of income tax expense
Threemonths ended March31,
2019 2018
Current tax:
Current tax on profit for the period $ 139,262
 $ 92,423
Prior year income tax
underestimation 24,090 29,617
Prepayment of taxes - 443
Effect of foreign exchange rate ( 742)
 134
Total current tax 162,610 122,617
Deferred tax:
Origination and reversal of temporary
differences 9,127 40,645
Impact of change in tax rate - 7,732
Total deferred tax 9,127 48,377
Income tax expense $ 171,737 $ 170,994

  • B. The income tax returns of the Company, Formosa Advanced Technologies Co., Ltd., Formosa Development Co., Ltd. and Public More Internation Company Ltd. through 2017, 2016, 2017 and 2017 have been assessed and approved by the Tax Authority, respectively.

  • C. 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 Group has assessed the impact of the change in income tax rate.

  • D. Starting from January 1, 2007, the enterprise income tax of Formosa Taffeta (Zhong Shan) Co., Ltd., Formosa Taffeta (Changshu) Co., Ltd. and Xiamen Xiangyu Formosa Import & Export Trading Co., Ltd. is based on 25% of income generated within and outside Mainland China. In addition, Formosa Taffeta (Zhong Shan) Co., Ltd. was certified as high-tech enterprise by Guangdong Provincial Government and accordingly, is entitled to the applicable income tax rate of 15% for 3 years from 2018.

  • E. The income tax rate of Formosa Taffeta Vietnam Co., Ltd. was approved by Vietnam government to be 10% for 15 years from the year of official establishment (December 1993). The Company was granted income tax exemption for 4 years from the first profit-making year and 20% income tax exemption for the next 4 years.

  • F. The income tax rate of Formosa Taffeta Dong Nai Co., Ltd. was approved by Vietnam government to be 15% for 12 years from the year of official establishment (October 2006); 20% after 12 years. The Company was granted income tax exemption for 3 years from the first profit-making year and income tax reduction of 15% or 20% for the next 4 to 10 years.

  • G. In accordance with local tax regulations, the applicable income tax rate of Schoeller F.T.C. (Hong Kong) Co., Ltd. and indirectly owned subsidiary, Formosa Taffeta (Hong Kong) Co., Ltd., was 

~40~

16.5%.

(27) 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’s parent company divided by the weighted average number of outstanding common stocks for the period.

Threemonths endedMarch31, Threemonths endedMarch31, Threemonths endedMarch31, 2019
Weighted-average
common shares Earnings per share
Amount outstanding (indollars)
Before tax Aftertax (inthousands) Before tax After tax
Net income $ 733,130
 $ 561,393
 1,682,421 $ 0.44
 $ 0.33
Profit attributable to
the non-controlling
interest ( 253,418)
 ( 136,948)
 ( 0.15)
 ( 0.08)
Profit attributable to
the parent $ 479,712 $ 424,445 $ 0.29 $ 0.25
Threemonths endedMarch31, 2018
Weighted-average
common shares Earnings per share
Amount outstanding (indollars)
Before tax Aftertax (inthousands) Before tax After tax
Net income $ 552,911
 $ 381,917
 1,682,372 $ 0.33
 $ 0.23
Profit attributable to
the non-controlling
interest ( 219,415)
 ( 97,243)
 ( 0.13)
 ( 0.06)
Profit attributable to
the parent $ 333,496 $ 284,674 $ 0.20 $ 0.17

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

Threemonths endedMarch Threemonths endedMarch 31, 2019
Common shares Earnings per share
Amount outstanding (indollars)
Before tax Aftertax (inthousands) Before tax After tax
Net income $ 733,130
 $ 561,393
 1,684,665 $ 0.43
 $ 0.33
Profit attributable to
the non-controlling
interest ( 253,418)
 ( 136,948)
 ( 0.15)
 ( 0.08)
Profit attributable to
the parent $ 479,712 $ 424,445 $ 0.28 $ 0.25 
~41~

Three months ended March 31, 2018

Before tax
Aftertax
Net income
552,911
$ 381,917
$ Profit attributable to
the non-controlling
interest
219,415)
(
97,243)
(
Profit attributable to
the parent
333,496
$ 284,674
$ Amount		 Common shares
outstanding
(inthousands)
Before tax
Aftertax
1,684,665
0.33
$ 0.23
$ 0.13)
(
0.06)
(
0.20
$ 0.17
$ Earnings per share
(indollars)

B. Employees' bonuses could be distributed in the form of stock. It does not have significant effect on the financial statements and diluted earnings per share for the three months ended March 31, 2019 and 2018.

(28) Supplemental cash flow information

Investing activities with partial cash payments:

2019 and 2018.
Supplemental cash flow information
Investing activities with partial cash payments:
Threemonths ended March31,
2019 2018
Purchase of property, plant and equipment $ 704,412
 $ 1,271,598
Add: Opening balance of payable on
equipment 62,814 86,955
Less: Ending balance of payable on equipment ( 49,373)
 ( 111,195)
Cash paid during the period $ 717,853 $ 1,247,358

(29) Changes in liabilities from financing activities

At January 1, 2019
Changes in cash flow from financing activities
Impact of changes in foreign exchange rate
At March 31, 2019
At January 1, 2018
Changes in cash flow from financing activities
Impact of changes in foreign exchange rate
At March 31, 2018		 Short-term
borrowings
3,638,538
$ 329,450
-
3,967,988
$ Short-term
borrowings		 Short-term
notespayable		 Long-term
borrowings
(including current
portion)		 Liabilities from
financing activities-
gross
-
$ 100,000
-
100,000
$ Short-term
notespayable		 8,192,200
$ 882
126)
(
8,192,956
$ Long-term
borrowings
(including current
portion)
11,222,071
$ 1,549
11,902)
(

11,211,718
$		 11,830,738
$ 430,332
126)
(
12,260,944
$ Liabilities from
financing activities-
gross
2,805,690
$ 668,178
-
3,473,868
$		 1,299,806
$ 1,099,555
-
2,399,361
$		 15,327,567
$ 1,769,282
11,902)
(
17,084,947
$		 
~42~

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 also the ultimate controlling party.

(2) Names of related parties and relationship

Names of related parties

Relationship with the Group

Formosa Chemicals & Fibre Corp. Parent company Quang Viet Enterprise Co., Ltd. Associate Formosa Industries Corp. Associate Formosa Biomedical Technology Corp. Other related party Toa Resin Corp. Other related party Formosa Petrochemical Corp. Other related party Formosa Heavy Industries Corp. Other related party Formosa Network Technology Corp. Other related party Formosa Plastics Corp. Other related party Formosa Plastics Transport Corp. Other related party Formosa Asahi Spandex Corp. Other related party Nan Ya Technology Corp. Other related party Nan Ya Plastics Corp. Other related party Nan Ya PCB Corp. Other related party Nan Ya Photonics Inc. Other related party Yumaowu Enterprise Co., Ltd. Other related party Great King Garment Co., Ltd. Other related party Bellmart Industrial Co., Ltd. Other related party Yugen Yueh Co.,Ltd. Other related party Chang Gung Biotechnology Co., Ltd. Other related party Nan Ya Polyester Fiber (Kunshan) Corp. Other related party Nanya Plastic (Guangzhou) Co.,Ltd. Other related party Nan Ya (Kunshan) Corp. Other related party Kwang Viet Garment Co., Ltd. Other related party Yu Yuang Textile Co., Ltd. Other related party Yu Maowu Complex Co., Ltd. Other related party Piecemakers Technology, Inc. (Note) Other related party Kong You Industrial Co., Ltd. Other related party Jiaxing Quang Viet Garment Co., Ltd. Other related party Formosa HA Tinh(Cayman) Limited Other related party FG INC. Other related party NKFG Other related party 

~43~

Note: Since Nan Ya Technology Corp. sold all owned shares of Piecemakers Technology Inc. in February 2018, Piecemakers Technology Inc. is no longer a related party of the Group.

  • (3) Significant related party transactions and balances

  • A. Operating revenue

Sales of goods:
－Ultimate parent
－Associates
－Other related party
Nan Ya Technology Corp.
Others		 Threemonths endedMarch31, Threemonths endedMarch31,
2019
551
$ 133,290
1,625,320
314,626
2,073,787
$		 2018
157
$ 135,633
1,401,038
273,263
1,810,091
$

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
－Associates
－Other related party
Formosa Petrochemical Corp.
Others		 Threemonths endedMarch31,
2019
512,774
$ 241,403
2,671,489
520,888
3,946,554
$		 2018
528,626
$ 233,652
2,528,623
496,045
3,786,946
$

Goods and services are purchased from ultimate parent and other related parties on normal commercial terms and conditions.

  • C. Receivables from related parties 
~44~

March 31, 2019 December 31, 2018 March 31, 2018

Notes and accounts receivable:
－Ultimate parent
－Associates
－Other related party
Nan Ya Technology Corp.
Others
Other receivables - dividends
－Associates
Formosa Industries Corp.		 187
$ 113,870
1,047,131
293,155
1,454,343
-
1,454,343
$		 98
$ 41,091
1,006,359
185,309
1,232,857
-
1,232,857
$		 37
$ 107,895
945,290
273,763
1,326,985
90,347
1,417,332
$

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

  • D. Notes and accounts payable
parties.
Notes and accounts payable
Notes and accounts payable:
－Ultimate parent
－Associates
－Other related party
Formosa Petrochemical Corp.
Others		 March31,2019
549,691
$ 43,170
497,285
176,377
1,266,523
$		 December31,2018
693,798
$ 46,854
397,563
193,626
1,331,841
$		 March31,2018
408,901
$ 74,729
577,735
177,151
1,238,516
$

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

  • (a) Acquisition of financial assets:

perty transactions
Acquisition of financial assets:
Accounts
Other related
party
Non-current financial assets
at fair value through other
comprehensive income		 No. ofshares
-		 Objects Three months
ended March 31,
2019
Consideration
69,570
$
FG INC. 
~45~

F. Others

  • Formosa Taffeta Dong Nai Co., Ltd. was engaged by the related party, Formosa Industry, to provide management services to Nhon Trach 3 Industrial Zone. In accordance with the yearly service consignment contract signed by Formosa Taffeta Dong Nai Co., Ltd. and Nhon Trach 3 Industrial Zone, Formosa Taffeta Dong Nai Co., Ltd. is responsible for managing land that is available for rent, meter reading and payment collection of water, electricity, steam and other utilities sold to lessees in investment district, repairing and performing services on various public facilities of power plant. Under the contract, Formosa Taffeta Dong Nai Co., Ltd. shall collect a service fee as follows:

  • i. Land lease fee: 3% of Formosa Industry’s land rent revenue

  • ii. Utilities service fee: 3% of Formosa Industry’s monthly sale of electricity to lessees in investment district

  • iii. Management fee: the full amount of management fee collected from lessees in investment district to Formosa Industry shall be paid to the Company and its subsidiaries.

  • For the three months ended March 31, 2019 and 2018, Formosa Taffeta Dong Nai Co., Ltd. has recognized lease service fee income in investment district of $8,529 and $7,816, respectively, for rendering the abovementioned consigned services. As of March 31, 2019, December 31, 2018 and March 31, 2018 the uncollected amount of $3,246, $3,241 and $2,902, respectively, was recognized under ‘other receivables’.

For the above land leasing, as of March 31, 2019, December 31, 2018 and March 31, 2018, the total management expenses and utility expenses which Formosa Taffeta Dong Nai Co., Ltd. is due to collect from the related party, Formosa Industry, were $38,587, $37,745 and $32,545, respectively, and was recognized under ‘other payables’.

(4) Key management compensation

Key management compensation
Salaries and other short-term employee benefits
Post-employment benefits		 Three months ended March31,
2019
25,385
$ 27
25,412
$		 2018
25,829
$ 26
25,855
$

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Book Value

Item
Property, plant and
equipment
Inventories
(Held-to-maturity land)		 March31,2019
December31,2018
137,787
$ 137,962
$ 21,264
21,264
159,051
$ 159,226
$		 March31,2018
Purpose
138,487
$ Security for short-
term borrowings
21,264
Security for short-
term borrowings
159,751
$		 Purpose 
~46~

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) Formosa Advanced Technologies Co., Ltd. is engaged in the processing of various integrated circuits packaging test and is responsible for custody for which the subsidiary needs to be compensated if lost. As of March 31, 2019, the items in custody are as follows:

March 31, 2019

A. Work in process
LED
FBGA
TSOP
LED assembly
Module
MICRO-SD
Others
B. Finished goods
LED
FBGA
TSOP
LED assembly
Module
MICRO-SD
Others		 Quantity
(Unit：PC)
6,722,372
NTD 0.015~0.825
48,733,771
USD
0.75~15
4,329,851
USD
0.2~0.6
4,378,465
NTD 0.35~10.87
1,245,848
USD
0.2~15
495,757
USD
1.42~4.911
30,281
USD
1.45~3.8
65,936,345
Quantity
(Unit：PC)
1,079,043
NTD 0.015~0.825
173,981,814
USD
0.75~15
6,218,268
USD
0.2~0.6
7,343,692
NTD 0.35~10.87
474,678
USD
0.2~15
158,540
USD
1.42~4.911
11,121
USD
1.45~3.8
189,267,156
Market value
(per PC)
Market value
(per PC)		 Quantity
(Unit：piece)
-
-
-
-
-
-
1,856
1,856
Quantity
(Unit：piece)
-
-
-
-
-
-
401
401		 Market value
(perpiece)
-
-
-
-
-
-
USD 1,500
Market value
(perpiece)
-
-
-
-
-
-
USD 1,500		 Quantity
(Unit：bar)
-
-
-
-
89,228
-
-
89,228
Quantity
(Unit：bar)
-
-
-
-
46,617
-
-
46,617		 Market value
(per bar)
-
-
-
-
USD 21.48~259.57
-
-
Market value
(per bar)
-
-
-
-
USD 21.48~259.57
-
-		 Quantity
(Unit：stick)
-
-
-
1,180
-
-
-
1,180
Quantity
(Unit：stick)
-
-
-
592
-
-
-
592		 Market value
(stick)
-
-
-
NTD 25~1,320
-
-
-
Market value
(stick)
-
-
-
NTD 25~1,320
-
-
-		 
~47~
  • (2) 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
133,799
$ 398,418
327,310
859,527
$		 March31,2018
150,480
$ 438,845
381,747
971,072
$
  • (3) As of March 31, 2019, 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
GBP
CHF		 March31,2019
Amount (In Thousands)
2,024
$ 1,554,993
1,048
500
84

(4) Endorsements and guarantees

As of March 31, 2019, in order to assist the subsidiaries is obtaining credit line, the Company has guaranteed the following amounts for subsidiaries:

guaranteed the following amounts for subsidiaries:
Name of company
Formosa Taffeta (Zhong Shan) Co., Ltd.
Formosa Taffeta Vietnam Co., Ltd.
Formosa Taffeta (Changshu) Co., Ltd.
Formosa Taffeta Dong Nai Co., Ltd.
Formosa HA Tinh (Cayman) Limited
Public More Internation Company Ltd.		 March31,2019
1,017,060
$ 1,541,000
1,695,100
4,684,640
7,149,442
3,000

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

There was no significant change during this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2018 for related information.

(2) Financial instruments

A. Financial instruments by category

~48~
Financial assets
Financial assets measured at fair
value through profit or loss
Financial assets measured at fair
value through other comprehensive
income
Financial assets at amortized cost
Financial liabilities
Financial liabilities measured at fair
value through profit or loss
Financial liabilities at amortized
cost		 March31,2019
255,828
$ 52,852,162
10,036,535
63,144,525
$ 16
$ 16,823,399
16,823,415
$		 December31,2018
479,490
$ 50,186,918
9,178,343
59,844,751
$ 774
$ 16,676,253
16,677,027
$		 March31,2018
630,929
$ 54,405,332
11,394,229
66,430,490
$ 1,332
$ 21,767,425
21,768,757
$

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

  • B. Financial risk management policies

There was no significant change during this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2018 for related information.

  • C. Significant financial risks and degrees of financial risks

Except for the following items, there was no significant change during this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2018 for related information.

  • (a) Market risk

Foreign exchange risk

  • i. Some of the Group’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: 
~49~
Financial assets
Monetary items
USD:NTD
USD:RMB
JPY:NTD
Non-monetary items
VND:NTD
HKD:NTD
RMB:NTD
USD:NTD
Financial liabilities
Monetary items
USD:NTD
USD:RMB
Financial assets
Monetary items
USD:NTD
JPY:NTD
Non-monetary items
VND:NTD
HKD:NTD
RMB:NTD
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 March31,2019 March31,2019
Foreign Currency
Amount
(In Thousands)
ExchangeRate
123,971
$ 30.83
13,820
6.73
372,666
0.28
4,769,761,295
0.0013
300,798
3.93
621,033
4.58
175,542
30.83
4,354
30.83
8,382
6.73
December31,2018		 Book Value
(NTD)
3,822,026
$ 426,071
104,346
6,200,690
1,182,136
2,844,331
5,411,960
134,234
258,417
Foreign Currency
Amount
(In Thousands)
117,372
$ 412,840
4,723,641,239
289,967
439,400
183,430
3,951		 ExchangeRate
30.73
0.28
0.0013
3.93
4.48
30.73
30.73		 Book Value
(NTD)
3,606,842
$ 115,595
6,140,734
1,139,570
1,968,512
5,636,804
121,414		 

~50~

March 31, 2018

March31,2018
Financial assets
Monetary items
USD:NTD
USD:RMB
JPY:NTD
Non-monetary items
VND:NTD
HKD:NTD
RMB:NTD
USD:NTD
Financial liabilities
Monetary items
USD:NTD
USD:RMB		 Foreign Currency
Amount
Book Value
(In Thousands)
ExchangeRate
(NTD)
134,034
$ 29.12
3,903,070
$ 9,449
6.29
275,155
440,884
0.27
119,039
4,583,182,459
0.0013
5,958,137
310,136

3.70
1,147,503
582,120

4.63
2,695,216
190,798
29.12
5,556,038
4,741
29.12

138,058
12,650
6.29
368,368


ii.The total exchange income (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three months ended March 31, 2019 and 2018 amounted to $24,789 and ($42,791), respectively.

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

Financial assets
Monetary items
USD:NTD
USD:RMB
JPY:NTD
Non-monetary items
VND:NTD
HKD:NTD
RMB:NTD
USD:NTD
Financial liabilities
Monetary items
USD:NTD
USD:NTD		 Threemonths endedMarch31,2019 Threemonths endedMarch31,2019 Threemonths endedMarch31,2019
Sensitivity analysis
Degree ofvariation
1%
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on
profit or loss
38,220
$ 4,261
1,043
-
-
-
-
1,342
2,584		 Effect on other
comprehensive
income
-
$ -
-
62,007
11,821
28,443
54,120
-
-		 


~51~

Three months ended March 31, 2018

Financial assets
Monetary items
USD:NTD
USD:RMB
JPY:NTD
Non-monetary items
VND:NTD
HKD:NTD
RMB:NTD
USD:NTD
Financial liabilities
Monetary items
USD:NTD
USD:RMB		 Sensitivity analysis Sensitivity analysis
Degree ofvariation
1%
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on
profit or loss
39,031
$ 2,752
1,190
-
-
-
-
1,381
3,684		 Effect on other
comprehensive
income
-
$ -
-
59,581
11,475
26,860
55,560
-
-


Price risk

  • i. The Group’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 Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

  • ii. The Group’s investments in equity securities comprise shares, open-end funds and beneficiary certificates issued by the domestic companies. 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 three months ended March 31, 2019 and 2018 would have increased/decreased by $2,047 and $5,047, 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 $528,522 and $544,053, 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.

Cash flow and fair value interest rate risk

  • i. The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During the three months ended March 31, 2019 and 2018, the Group’s borrowings at variable rate were denominated in the NTD and USD. 
~52~

  • ii. The Group’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. If the borrowing interest rate of NTD dollars had increased/decreased by 1% with all other variables held constant, profit, net of tax for the three months ended March 31, 2019 and 2018 would have decreased/increased by $63,200 and $86,400, respectively. The main factor is that changes in interest expense result from floating rate borrowings.

  • iv. If the borrowing interest rate of USD dollars had increased/decreased by 1% with all other variables held constant, profit, net of tax for the three months ended March 31, 2019 and 2018 would have decreased/increased by $981and $2,213, respectively. The main factor is that changes in interest expense result from floating rate borrowings.

  • (b) Credit risk

  • i. Credit risk refers to the risk of financial loss to the Group 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 Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions, only independently rated parties with good rating are accepted. According to the Group’s credit policy, each local entity in the Group 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 Group 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 Group adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.

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

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

  • vii. The Group uses the forecastability of National Development Council Business Cycle Indicator to adjust historical and timely information to assess the default possibility of notes 

~53~

receivable, accounts receivable and contract assets. On March 31, 2019, December 31, 2018 and March 31, 2018, the provision matrix is as follows:

At March 31, 2019
Expected loss rate
Total book value
Loss allowance
At December 31, 2018
Expected loss rate
Total book value
Loss allowance
At March 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%
4,800,092
$ 16,546
Notpast due		 19%
119,112
$ 22,716
Up to 30
days past
due		 44%
42,782
$ 18,808
31 to 90
days past
due		 95%
14,177
$ 13,509
Over 90
days past
due		 4,976,163
$ 71,579
Total
1%
4,092,982
$ 31,694
Notpast due		 9%
154,591
$ 14,088
Up to 30
days past
due		 47%
45,066
$ 21,367
31 to 90
days past
due		 75%
5,182
$ 3,884
Over 90
days past
due		 4,297,821
$ 71,033
Total
0%
4,310,698
$ 12,197		 16%
159,061
$ 24,781		 38%
58,995
$ 22,257		 74%
23,549
$ 17,353		 4,552,303
$ 76,588

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

At January 1
Effect of foreign exchange
At March 31
At January 1
Effect of foreign exchange
At March 31		 Notes receivable
Accounts receivable
Contract assets
-
$ 71,033)
($ -
$ -
546)
(
-
-
$ 71,579)
($ -
$ Notes receivable
Accounts receivable
Contract assets
-
$ 76,521)
($ -
$ -
67)
(
-
-
$ 76,588)
($ -
$ Threemonths endedMarch31,2019
Threemonths endedMarch31,2018		 Notes receivable
Accounts receivable
Contract assets
-
$ 71,033)
($ -
$ -
546)
(
-
-
$ 71,579)
($ -
$ Notes receivable
Accounts receivable
Contract assets
-
$ 76,521)
($ -
$ -
67)
(
-
-
$ 76,588)
($ -
$ Threemonths endedMarch31,2019
Threemonths endedMarch31,2018		 Notes receivable
Accounts receivable
Contract assets
-
$ 71,033)
($ -
$ -
546)
(
-
-
$ 71,579)
($ -
$ Notes receivable
Accounts receivable
Contract assets
-
$ 76,521)
($ -
$ -
67)
(
-
-
$ 76,588)
($ -
$ Threemonths endedMarch31,2019
Threemonths endedMarch31,2018		 Notes receivable
Accounts receivable
Contract assets
-
$ 71,033)
($ -
$ -
546)
(
-
-
$ 71,579)
($ -
$ Notes receivable
Accounts receivable
Contract assets
-
$ 76,521)
($ -
$ -
67)
(
-
-
$ 76,588)
($ -
$ Threemonths endedMarch31,2019
Threemonths endedMarch31,2018
Notes receivable Accounts receivable
Notes receivable Accounts receivable
-
$ -
-
$		 76,521)
($ 67)
(
76,588)
($		 -
$ -
-
$		 
~54~

(c) Liquidity risk

  • i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets.

  • ii.Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits, commercial paper and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. As at March 31, 2019, December 31, 2018 and March 31, 2018, the Group held money market position of $56,316,474, $53,902,282 and $60,085,192, respectively, that are expected to readily generate cash inflows for managing liquidity risk.

  • iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled 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 nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
Long-term borrowings
(including current portion)
March 31, 2019
December 31, 2018
March 31, 2018
Lease liability
March 31, 2019		 Less than 1year
170,341
$ 169,901
135,102
131,141
$		 Over 1year
8,022,615
$ 8,022,299
11,076,616
757,552
$

Except for the above, the Group’s non-derivative financial liabilities were all due in one year.

  • (d) The Group 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 

~55~

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 Group’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 or liability, either directly or indirectly. The fair value of the Group’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 Group’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 the nature of the assets and liabilities is as follows:

March 31, 2019
Financial assets:
Recurring fair value
measurements
Financial assets at fair value
through profit or loss
Forward exchange contracts
Beneficiary certificates
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		 Level 1
-
$ 255,732
46,597,398
46,853,130
$ -
$		 Level 2
96
$ -
415,400
415,496
$ 16
$		 Level3
-
$ -
5,839,364
5,839,364
$ -
$		 Total
96
$ 255,732
52,852,162
53,107,990
$
16
$		 
~56~
December 31, 2018
Financial assets:
Recurring fair value
measurements
Financial assets at fair value
through profit or loss
Beneficiary certificates
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
March 31, 2018
Financial assets:
Recurring fair value
measurements
Financial assets at fair value
through profit or loss
Forward exchange contracts
Beneficiary certificates
Financial assets at fair value
through other comprehensive
income
Equity securities
Financial liabilities:
Financial liabilities at fair value
through profit or loss
Forward exchange contracts		 Level 1
479,490
$ 43,914,680
44,394,170
$ -
$ Level 1
-
$ 630,700
48,256,208
48,886,908
$ -
$		 Level 2
-
$ 403,500
403,500
$ 774
$ Level 2
229
$ -
537,600
537,829
$ 1,332
$		 Level3
-
$ 5,868,738
5,868,738
$ -
$ Level3
-
$ -
5,611,524
5,611,524
$ -
$		 Total
479,490
$ 50,186,918
50,666,408
$
774
$
Total
229
$ 630,700
54,405,332
55,036,261
$
1,332
$

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

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

Market quoted price Listed shares Open-end fund
Closing price Net asset value 
~57~

  • 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 consolidated 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 Group 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 Group’s credit quality.

  • D. For the three months ended March 31, 2019 and 2018, there was no transfer between Level 1 and Level 2.

  • E. The following chart is the movement of Level 3 for the three months ended March 31, 2019 and 2018:

2018:
At January 1
Recorded as unrealized losses on valuation of
investments in equity instruments measured
at fair value through other comprehensive income
Effect of exchange rate changes
At March 31
At January 1
Retrospective adjustments
At January 1 after adjustments
Recorded as unrealized losses on valuation of
investments in equity instruments measured
at fair value through other comprehensive income
Effect of exchange rate changes
At March 31		 Non-derivative equityinstruments
Three months ended March31,2019
5,868,738
$ 45,955)
(
16,581
5,839,364
$ Non-derivative equityinstruments
Threemonths endedMarch31,2018
5,786,870
$ 65,372
5,852,242
107,604)
(
133,114)
(
5,611,524
$

For the three months ended ended March 31, 2019 and 2018, there was no movement of Level 3.

  • F. For the three months ended March 31, 2019 and 2018, 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 

~58~

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 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
Non-derivative
equity
instrument:
Unlisted shares		 Fair value at
March 31,
2019		 Valuation
technique		 Significant
unobservable input		 Relationship
of inputs to fair value
427,451
$ 5,411,913
Fair value at
December 31,
2018		 Market
comparable
companies
Net asset
value
Valuation
technique		 Price to earnings ratio
multiple, price to book ratio
multiple, enterprise value to
EBITA multiple, discount
for lack of marketability
Not applicable
Significant
unobservable input		 The higher the multiple,
the higher the fair value
the higher the discount
for lack of marketability,
the lower the fair value
Not applicable
Relationship
of inputs to fair value
344,372
$ 5,524,366		 Market
comparable
companies
Net asset
value		 Price to earnings ratio
multiple, price to book ratio
multiple, enterprise value to
EBITA multiple, discount
for lack of marketability
Not applicable		 The higher the multiple,
the higher the fair value
the higher the discount
for lack of marketability,
the lower the fair value
Not applicable		 
~59~
Non-derivative
equity
instrument:
Unlisted shares		 Fair value at
March 31,
2018		 Valuation
technique		 Significant
unobservable input		 Relationship
of inputs to fair value
369,896
$ 5,241,628		 Market
comparable
companies
Net asset
value		 Price to earnings ratio
multiple, price to book ratio
multiple, enterprise value to
EBITA multiple, discount
for lack of marketability
Not applicable		 The higher the multiple,
the higher the fair value
the higher the discount
for lack of marketability,
the lower the fair value
Not applicable
  • I. The Group 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
Financial assets
Equity instrument
Equity instrument		 Input Change March 31,2019 March 31,2019
Recognized in other
comprehensive income
Favourable
change		 Unfavourable
change
Input
Price to earnings ratio multiple,
price to book ratio multiple,
enterprise value to EBITA
multiple, discount for lack of
marketability		 Change
±1%
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% 3,444
$		 3,444
$		 
~60~

March 31, 2018

Recognized in other comprehensive income

Financial assets
Equity instrument		 Input Change 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% 3,699
$		 3,699
$

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

In accordance with “Rules Governing the Preparation of Financial Statements by Securities Issuers”, significant transactions for the three months ended March 31, 2019 are stated as follows. Furthermore, the inter-company transactions were eliminated based on the financial statements of investees which were not reviewed by other independent accountants, except for the reviewed financial statements of Formosa Advanced Technologies Co., Ltd. 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 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: None.

  • 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: None.

  • 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 3.

  • H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.

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

  • J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 6. 

~61~

(3) Information on investments in Mainland China

  • A. Basic information: Please refer to table 7.

  • B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 8.

14. SEGMENT INFORMATION

  • (1) General information

  • A. The Group operates and sets policies from product and service perspective; thus, management also identifies reportable segments using the same method.

  • B. The Group has four reportable segments: First business group, Second business group consisting of Cord fabric department, Gasoline department and FORMOSA ADVANCED TECHNOLOGIES CO., LTD. (FATC) department. Details are as follows:

    • (a) First business group: Mainly produces and sells woven, dyeing and finishing products and manages plants of overseas subsidiaries–FORMOSA TAFFETA (ZHONG SHAN) CO., LTD., FORMOSA TAFFETA VIETNAM CO., LTD. and FORMOSA TAFFETA (HONG KONG) CO., LTD, etc.

    • (b) Cord fabric department: Mainly produces and provides tire cords.

    • (c) Gasoline department: Mainly operates gasoline stations, sells gasoline and provides car washing.

    • (d) FATC department: The subsidiary – FORMOSA ADVANCED TECHNOLOGIES CO., LTD. mainly provides installation and testing of various integrated circuit and engages in processing and research and development of modules.

  • (2) Measurement of segment information

  • The measurement based on each operating segment’s profit before tax excludes the effects of nonrecurring expenditure, i.e. from the unrealized gain or loss on financial instruments. Furthermore, interest income and expense are not allocated to operating segments.

(Blank) 

~62~

(3) Information about segment profit or loss and assets

Segment revenue
Revenue from
external customers
Inter-segment revenue
Total segment
revenue
Segment income
Segment assets
Identifiable assets
Investments accounted
for under equity methed
General assets
Total assets		 First business
group
4,224,117
$ 334,264
4,558,381
$ 490,150
$ 15,220,638
$		 Cord fabric
Gasoline
department
department
Othersegment
2,068,619
$ 2,823,394
$ 429,751
$ 102,713
-
77,090
2,171,332
$ 2,823,394
$ 506,841
$ (249)
$ 112,529
$ 24,518
$ 6,467,603
$ 1,357,882
$ 3,442,746
$ Three months ended March
Second business group		 FATC
Adjustment
department
and write-off
2,172,966
$ -
$ -
514,067)
(
2,172,966
$ 514,067)
($ 320,165
$ 213,983)
($ 7,354,349
$ 1,385
$ 31,2019		 Total
11,718,847
$ -
11,718,847
$
733,130
$
33,844,603
$ 3,249,020
60,348,796
97,442,419
$		 
~63~

Three months ended March 31, 2018

Second business group

Segment revenue
Revenue from
external customers
Inter-segment revenue
Total segment
revenue
Segment income
Segment assets
Identifiable assets
Investments accounted
for under equity methed
General assets
Total assets		 First business
group
3,669,392
$ 277,300
3,946,692
$ 363,423
$ 14,496,467
$		 Cord fabric
department
1,768,446
$ 25,722
1,794,168
$ 13,629
$ 6,115,113
$		 Gasoline
department
Othersegment
2,804,054
$ 440,795
$ -
29,819
2,804,054
$ 470,614
$ 97,357
$ 45,614)
($ 1,306,864
$ 3,902,894
$		 FATC
Adjustment
department
and write-off
2,047,736
$ -
$ -
332,841)
(
2,047,736
$ 332,841)
($ 352,862
$ 228,746)
($ 5,812,677
$ 85,469
$		 Total
10,730,423
$ -
10,730,423
$
552,911
$
31,719,484
$ 3,077,216
63,237,859
98,034,559
$

(4) Reconciliation for segment income (loss)

  • A. Sales between segments are carried out at arm’s length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.

  • B. The total consolidated profit (loss) after adjustment and reconciliation information for profit after tax of reportable segments are provided in Note 14(3). 

~64~

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others

Table 1

For the three months ended March 31, 2019

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
March 31,
2019
(Note 4)		 Outstanding
endorsement/
guarantee
amount at
March 31,
2019
(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		 46,754,193
$ 46,754,193
46,754,193
46,754,193
46,754,193
188,563		 1,017,060
$ 1,541,000
1,695,100
4,684,640
7,149,442
3,000		 1,017,060
$ 1,541,000
1,695,100
4,684,640
7,149,442
3,000		 215,740
$ 420,175
433,026
3,168,626
5,370,974
3,000		 $ -
-
-
-
-
-		 1.41
2.14
2.36
6.51
9.94
1.03		 93,508,386
$ 93,508,386
93,508,386
93,508,386
93,508,386
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. AND SUBSIDIARIES

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

For the three months ended March 31, 2019

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by Marketable securities
(Note 1)		 Relationship with the
securities issuer(Note 2)		 General
ledger account		 As of March 31,2019 As of March 31,2019 Footnote
(Note 4)
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		 1,362,997
$ -
70
38,045
415,400
473,456
42,188,405
3,700
39,471
16,567		 0.21
-
-
0.01
2.35
0.25
3.83
0.45
10.00
1.20		 1,362,997
$ -
70
38,045
415,400
473,456
42,188,405
3,700
39,471
16,567

Table 2, Page 1

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

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

For the three months ended March 31, 2019

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by Marketable securities
(Note 1)		 Relationship with the
securities issuer(Note 2)		 General
ledger account		 As of March 31,2019 As of March 31,2019 Footnote
(Note 4)
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.
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.
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
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		 10,046
$ 55,782
272,758
5,411,913
82,551
16,029
229,403
1,707,888
128,205		 3.17
9.53
3.00
3.85
0.13
-
0.04
0.26
0.01		 10,046
$ 55,782
272,758
5,411,913
82,551
16,029
229,403
1,707,888
128,205

Table 2, Page 2

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

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

For the three months ended March 31, 2019

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities
(Note 1)		 Relationship with the
securities issuer(Note 2)		 General
ledger account		 As of March 31,2019 As of March 31,2019 Footnote
(Note 4)
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.		 NAN YA TECHNOLOGY
CORPORATION
NAN YA PHOTONICS INC.
SYNTRONIX
CORPORATION
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		 7,376,215
2,130,721
59,945
20,396,748		 452,900
$ 27,894
1,233
255,732		 0.24
4.77
0.15
-		 452,900
$ 27,894
1,233
255,732

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

Table 3

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

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

For the three months ended March 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Differences in transaction terms compared to third party transactions

Differences in transaction
terms compared to third
party transactions		 Differences in transaction
terms compared to third
party transactions
Purchaser/seller Counterparty Relationship with the
counterparty		 Transaction (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 ADVANCED
TECHNOLOGIES CO., LTD.
FORMOSA TAFFETA CO., LTD.
FORMOSA TAFFETA CO., LTD.		 FORMOSA
PETROCHEMICAL
CORP. (FPCC)
NAN YA PLASTICS
CORPORATION
NAN YA TECHNOLOGY
CORPORATION
QUANG VIET
ENTERPRISE CO., LTD.
FORMOSA CHEMICALS
& FIBRE CORPORATION		 Other related party
Other related party
Other related party
Associate
Ultimate parent
company		 Purchases
Purchases
Sales
Purchases
Sales		 133,290)
($ 2,671,489
406,666
283,151
1,625,320)
(		 1.89)
(
44.72
6.81
4.74
75.00)
(		 Pay every 15
days by mail
transfer
Pay every 15
days by mail
transfer
60 days after
monthly
billings
Draw
promissory
notes due in 2
months after
inspection
Pay by mail
transfer 60 days
after delivery		 -
-
-
-
$ -		 -
-
-
-
-		 Notes payable
$ 715
Accounts receivable
113,155
Accounts payable
497,285)
(
Notes payable
194,509)
(
Accounts payable
300,618)
(
Accounts payable
103,907)
(
Accounts receivable
1,047,131		 -
4.26
29.27)
(
11.45)
(
17.69)
(
6.12)
(
69.00

Table 3, Page 1

Table 3

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

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

For the three months ended March 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller Counterparty Relationship with the
counterparty		 Transaction Transaction Differences in transaction
terms compared to third
party transactions
(Note 1)		 Differences in transaction
terms compared to third
party transactions
(Note 1)		 Notes/accounts receivable(payable) 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 DONG
NAI CO., LTD.
FORMOSA TAFFETA DONG
NAI CO., LTD.
FORMOSA TAFFETA DONG
NAI CO., LTD.		 FORMOSA TAFFETA
VIETNAM CO., LTD.
FORMOSA TAFFETA CO.,
LTD.
FORMOSA INDUSTRY
CO., LTD.		 Associate
Parent company
Associate		 Sales
Sales
Purchases		 100,495)
($ 117,489)
(
185,886		 7.86)
(
9.19)
(
19.03		 60 days after
monthly
billings
60 days after
monthly
billings
60 days after
monthly
billings		 -
-
-		 -
-
-		 Accounts receivable
$ 98,220
Accounts receivable
101,310
Accounts payable
106,683)
(		 8.06
8.31
24.15)
(

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 3, Page 2

Table 4

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

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

For the three months ended March 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor Counterparty Relationship
with the counterparty		 Balance as at March 31, 2019
(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.
FORMOSA TAFFETA CO., LTD.		 NAN YA TECHNOLOGY
CORPORATION
FORMOSA TAFFETA (CHANG
SHU) CO., LTD.
FORMOSA TAFFETA CO., LTD.
QUANG VIET
ENTERPRISE CO., LTD.		 Other related party
Associate
Parent company
Associate		 1,047,131
$ 127,724
101,310
Notes payable
715
Accounts
receivable
113,155		 6.33
1.71
2.20
6.88		 -
$
-
-		 -
-
-		 498,074
$ 43,740
40,822
24,202		 -
$ -
-

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 4, Page 1

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

Table 5

Significant inter-company transactions during the reporting period

For the three months ended March 31, 2019

Expressed in thousands of NTD

(Except as otherwise indicated)

Number
(Note 1)		 Companyname Counterparty Relationship
(Note 2)		 Transaction
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
Accounts payable
Notes payable		 406,666
$ 300,618
194,509		 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		 3.47
0.31
0.20

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 5, Page 1

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

Information on investees

Table 6

For the three months ended March 31, 2019

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor Investee
(Notes 1 and 2)		 Location Main business
activities		 Initial invest ment amount Shares held as at March 31,2019 held as at March 31,2019 Net profit (loss)
of the investee for the
three months ended
March 31, 2019
(Note 2(2))		 Investment income
(loss) recognized by
the company for the
three months ended
March 31, 2019
（Note 2(3)）		 Footnote
Balance as at
March31,2019		 Balance as at
December31,2018		 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
TAFFETA
(HONG KONG)
CO., LTD.
FORMOSA
ADVANCED
TECHNOLOGIES
CO., LTD.
FORMOSA
DEVELOPMENT
CO., LTD.
FORMOSA
TAFFETA
VIETNAM
CO., LTD.
SCHOELLER
FTC (HONG
KONG) CO.,
LTD.		 Hong Kong
Taiwan
Taiwan
Vietnam
Hong Kong		 Sale of spun
fabrics and
filament textile
IC assembly,
testing and
modules
Handling urban
land consolidation,
development,
rent and sale of
industrial plants,
residences and
building
Production,
processing, further
processing various
yam and cotton
cloth, and dyeing
and finishing
clothes, curtains,
towels, bed covers
and carpets
Trading of textiles		 1,356,862
$ 2,681,906
114,912
1,709,221
2,958
$		 1,356,862
$ 2,681,906
114,912
1,709,221
2,958
$		 -
206,442,472
16,100,000
-
-		 100.00
46.68
100.00
100.00
50.00		 1,176,103
$ 5,551,916
223,732
2,005,512
6,272
$		 18,797
$ 256,214
1,450
35,616
1,214
$		 18,797
$ 119,601
1,450
35,616
607
$

Table 6, Page 1

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

Information on investees

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

For the three months ended March 31, 2019

Investor Investee
(Notes 1 and 2)		 Location Main business
activities		 Initial invest ment amount Shares held as at March 31,2019 held as at March 31,2019 Net profit (loss)
of the investee for the
three months ended
March 31, 2019
(Note 2(2))		 Investment income
(loss) recognized by
the company for the
three months ended
March 31, 2019
（Note 2(3)）		 Footnote
Balance as at
March31,2019		 Balance as at
December31,2018		 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.		 QUANG VIET
ENTERPRISE
CO., LTD.
FORMOSA
INDUSTRIES
CORPORATION
FORMOSA
TAFFETA
(CAYMAN)
LIMITED
FORMOSA
TAFFETA
DONG NAI
CO., LTD.
FORMOSA
ADVANCED
TECHNOLOGIES
CO., LTD.
PUBLIC MORE
INTERNATION
COMPANY LTD.		 Taiwan
Vietnam
Cayman
Islands
Vietnam
Taiwan
Taiwan		 Processing and
producion of
ready-to-wear,
processing and
trading of cotton
cloth, and import
and export of the
aforementioned
products
Synthetic fiber,
spinning,
weaving, dyeing
and finishing and
electricity
generation
Investments
Production,
processing and
sale of various
dyeing and
finishing textiles
and yarn
IC assembly, testing
and modules
Employment service,
manpower allocation
and agency service etc		 213,771
$ 1,987,122
6,241,670
2,590,434
21,119
5,000		 213,771
$ 1,987,122
6,241,670
2,590,434
21,119
5,000		 18,595,352
-
171,028,736
-
469,500
-		 17.99
10.00
100.00
100.00
0.11
100.00		 1,199,695
$ 2,032,311
5,411,966
2,295,057
24,185
11,719		 857,041
$ 190,543
-
499)
(
256,214
1,725		 305
$ 21,577
-
499)
(
272
1,725

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 March 31, 2019’ 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 three months ended March 31, 2019’ 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 three months ended March 31, 2019’ 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 6, Page 2

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China

For the three months ended March 31, 2019

Table 7

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,
2019		 Amount remitted
Mainlan
Amount re
to Taiwan for th
ended Marc		 from Taiwan to
d China/
mitted back
e three months
h 31,2019		 Accumulated
amount
of remittance
from Taiwan to
Mainland China
as of March 31,
2019		 Net income of
investee for the
three months
ended March
31,2019		 Ownership
held by
the
Company
(direct or
indirect)		 Investment income
(loss) recognized
by the Company
for the three
months ended
March 31, 2019
（Note 2）		 Book value of
investments in
Mainland China
as of March 31,
2019		 Accumulated
amount
of investment
income
remitted back to
Taiwan as of
March 31,
2019		 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
-		 36,920
$ 245)
(
20,136
58)
(		 100.00
100.00
100.00
40.78		 36,920
$ 245)
(
20,136
24)
(		 1,770,672
$ 13,203
1,059,126
17,014		 -
$ -
-
-		 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) recognised by the Company for the three months ended March 31, 2019 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, 2019 and March 31, 2019 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, 2019 and March 31, 2019 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, 2019 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 March 31, 2019 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 7, Page 1

Investment Ceiling on amount approved investments in Accumulated amount of by the Investment Mainland China remittance from Taiwan Commission of imposed by the to Mainland China the Ministry of Investment as of March 31, Economic Affairs Commission of Company name 2019 (MOEA) MOEA FORMOSA $ 1,402,085 $ 1,430,048 $ 46,929,303 TAFFETA (ZHONG SHAN) CO., LTD. XIAMEN 15,273 17,567 46,929,303 XIANGYU FORMOSA IMPORT & EXPORT TRADING CO., LTD. FORMOSA 1,334,739 1,294,440 46,929,303 TAFFETA (CHANGSHU) CO., LTD.

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 = 1:30.82

Table 7, Page 2

Table 8

FORMOSA TAFFETA CO., LTD. AND SUBSIDIARIES

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

For the three months ended March 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in
Mainland China		 Sale(purchase) Sale(purchase) Propertytran saction Accounts receivable
(payable)		 Accounts receivable
(payable)		 Provision of endorsements/guarantees
or collaterals		 Financing Financing Others
Amount % Amount % Balance at
March 31,
2019		 % Balance at
March 31,
2019		 Purpose Maximum balance during
the three months ended
March31,2019		 Balance at
March31,2019		 Interest rate Interest during the
three months ended
March31,2019
FORMOSA
TAFFETA
(ZHONG
SHAN) CO.,
LTD.
FORMOSA
TAFFETA
(CHANGSHU)
CO., LTD.		 6,995
$ 7,468		 0.10
0.11		 $ -
-		 -
-		 $ 3,714
3,193		 0.14
0.12		 $ 1,017,060
1,695,100		 For short-tem loans from financial institutions
For short-tem loans from financial institutions		 $ -
-		 -
$ -		 -
-		 -
$ -

Table 8, Page 1

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