F.T.C — Investor Presentation 2017

Nov 24, 2017

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Investor Conference Stock Code1434 FORMOSA TAFFETA CO., LTD

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Disclaimer

• The information provided in the document, other than number and data of financial reports, has not been audited or reviewed by any accountant or any independent third party. FTC does not ensure the fairness, completeness and accuracy of the information.

• This document may contain forward-looking statements, including but not limited to statements that address activities, events or developments that FTC expects or anticipates to occur in the future. All statements are based on FTC plan and best knowledge toward the future while subject to various factors and uncertainness beyond FTC control. Therefore, the actual results may differ materially from those contained in the forward-looking statements.

• This document does not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments.

• This material must not be copied, reproduced, distributed or passed to others at any time, in whole or in part, without the prior written consent of FTC.

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1

Agenda

I. Corporate Overview II. Sales Statistics III. Competitive Advantages IV. Financial Status V. Development Plans VI. Q&A

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2

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Corporate Overview

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3

Corporate Overview

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Corporate Profile

 Established Date: April 19, 1973

 Main Members: Formosa Taffeta Co., Ltd. (FTC), Formosa Advanced Technologies Co., Ltd. (FATC), Formosa Development Co., Ltd.

 Listing Date: December 24, 1985  Capital: NT$16.85 billion (Data dated September 30th, 2017)  Number of employees: 9,371(Data dated September 30th, 2017)  Locations of Factories: Headquartered in Taiwan, 2 in China, and 2 in Vietnam  Business Area: Woven fabrics, tyre cord, cotton spun yarn, blended yarn, protective; petroleum /diesel; assembing | testing | module services (FATC)  Market Position:

 The most productive factory of woven fabrics and tyre cord in Taiwan

 The firs global exclusive authorized producer of Gore  FTC Gas Station (FTC’s subsidiary) is the 4th largest channel in Taiwan

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4

Corporate Overview

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Production Bases

Formosa Taffeta Changshu Co., Ltd. (2005)

Formosa Taffeta Co., Ltd. (Headquarters) (1973) Formosa Advanced Technology Co., Ltd. (1990)

Formosa Taffeta Zhong Shan

CO., Ltd. (1992)

Formosa Taffeta Vietnam Co., Ltd. (1999)

Formosa Taffeta Dong Nai Co., Ltd. (2004)

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Legend: Base Name (Founded Year)

5

Corporate Overview

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History

Cooperation with American Gore for History Established Weaving Tyre Cord Formosa “Bumblebee Project” Registration for Go D&F Plant in Plant in Plant 1 in Establishment Public Taffeta Hong Vietnam Dong-nai Dong-nai & establishment of Kong Co., Ltd. Bumblebee Plant 1973 1985 1989 1999 2004 2011 2016 1972 1975 1980 1990 1992 1998 2001 2005 2014

of Preparatory Establishment Officially Tyre Cord Business • FATC Starts In Hsinchu of the 2Establishment[nd] Plant Enter Oil Product Establishment of Schoeller FTC H.K. Establishment of • Tyre cord Plant 2 Office Operated • Formosa Formosa Taffeta in Dong-nai Begins Development in Taiwan Business Co., Ltd. through Changshu Co., Ltd. • Formosa Taffeta joint venture with Co., Ltd. Swiss Schoeller (Cayman) Co., Ltd.

• Establishment of Formosa Taffeta Fiber Co, Ltd. in April, 1973

• Being renamed Formosa Taffeta Co., Ltd. and establish umbrella bone plant in January, 1979

• Established tyre cord plant in 1980

• Go public on December 24, 1985

• Establish Formosa Advanced Technology Co., Ltd. And Formosa Development Co., Ltd. In 1990

• Establish the 2[nd] Plant in Taiwan and Formosa Taffeta Zhongshan Co., Ltd. in 1992

• Merged pants material Plant of Rui-yuan Co., in Long-an of Vietnam and name it as Formosa Taffeta Vietnam Co., Ltd. in 1999

• Established Schoeller FTC H.K. Co., Ltd. through joint venture with Swiss Schoeller in 2001

• Established Formosa Taffeta Dong-nai Co., Ltd. in 2004

• Cooperated with American Gore to manufacture high performance breathable waterproof coating and

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6

Corporate Overview

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Subsidiaries and Holding Ratios

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Formosa
Advanced
Technologies
Formosa
Co., Ltd. Formosa
Taffeta
65.68% Co., Ltd.
(Cayman)
Development
Co., Ltd.
100.00%
100.00%
Formosa
Taffeta
Formosa Formosa Changshu
Taffeta Taffeta
Co., Ltd.
Dong Nai Hong Kong
Co., Ltd. Co., Ltd. 100.00%
100.00% 100.00%
Formosa
Schoeller
Taffeta
FTC H.K.
Vietnam
Co., Ltd.
Co., Ltd.
50.00%
100.00% Xiamen
Formosa
Xiangyu
Formosa Taffeta
Import & Zhongshan
Export Trading Co., Ltd.
Co., Ltd.
100.00%
100.00%
Formosa Taffeta Co., Ltd
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7

Corporate Overview

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Products of 2[nd] Business Segment and Scope of Their Applications

Polyamine fabric

Polyester fabric

• Wet breathable & waterproof rain coat, skiwear and jackets

• Garments, down jackets, sportswear, hunting suits

• Hats, gloves

• Sports casual wear

• Microfiber clothing

• Curtains

• Umbrellas | parasols

• Tents, air beds, sails

• Umbrellas | parasols, golf umbrellas, beach umbrellas

• Shields with electromagnetic insulation

Cotton fabric, blended fabric, fabrics interwoven with filament/staple fiber, pre-dyed plaid

New functional yarn

• Garments, jackets, shirts

• Umbrellas | parasols

• Backpacks

• Medical health care supplies

• Sports casual wear, hats, coats

• Bedding

• Health care supplies

• Umbrellas | parasols

• Special processing purpose

• Diverse woven/knitted fabrics

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Corporate Overview

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Products of 2[nd] Business Segment and Scope of Their Applications

Combed cotton yarn, blended yarn

Protective/special fabric

• Diverse woven/knitted fabrics for various garment

• Cotton and blended fabrics

• Fabrics interwove with filament/staple fiber

• Pre-dyed plaid

• Flame retardant/resistant fabric

• Air force flight suits, tank suits, Secret Service suits, firefighting suits, electric arc suits, motorcycle suits

• Clean-room clothes/aseptic clothes for electronic, foodstuff, and pharmaceutical factories

• Sterile gown, wrapping fabric, petroleum clothes, anti-electric arc clothes, uniform for policemen and servicemen, bullet-proof/stab-proof clothes

• Helmet, shield

• Drum paper for speaker, damper fabric for stereo equipment

Plastic bags

Carbon fiber fabrics as composite materials

• Plastic shopping bags

• Perforated bags

• Garbage bags

• Sports equipment, bicycles, motorcycles, automobiles

• Aerospace industry, electronic products, industrial mechanical arms and mechanisms

• Electronic products

• Construction reinforcement

• Wind turbine blades

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9

Corporate Overview

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Products of 2[nd] Business Segment and Scope of Their Applications

Tyre cord fabrics

Oil products

• Tire cord fabrics for various vehicles

• Chafers for tyre-lips

• Puncture resistant fabric for bicycle tires

• Diesel, petroleum in 98 、 95+ 、 92

• Car wash

• Lubrication, car appliances

• Lining canvas or ducks for conveyor belts

FATC’s Business and its Scope of Application

IC Assembling |Testing | Module

• Services of assembling, testing, module and R&D of any types of IC

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10

Sales Status

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11

Sales Statistics

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Sales Volume Constitution of Woven Fabrics _by Brand Customers

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Umbrella
Cloth
1,934
Fashion
10%
Other & Leisure
Outdoors
1,538
3,091 2,472
19,525 8,269
8% 16% thousand yard 42% 13%
679 /month
3%
Sports
6,231
32% 883 1,879
10%
4%
NIKE
1,874
10%
2,852
15%
Unit:
thousand yard/month, %
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Usage	Required Cloth	Functionality
Outdoors	Functional fabrics, Coating & lamination	moisture permeability, waterproof, light- weight and keeping warm
Sports	Functional fabrics Stretch and multi- functions	moisture absorption and quick drying, deodorant, and anti-bacterial
Fashion & Leisure	Material, stretch, handfeel that focus on the variety of garment styles.	natural hand feel stretch
Umbrella Fabric	Sun-blocked and rain protection.	UV-cut, shading and cooling

12

Sales Statistics

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Sales Constitution of Tyre Cord Business _ by Area

Area Representative customers Taiwan Cheng Shin ( Maxxis ) Kenda Bridgestone Federal Hwa Fong Nankang Japan YokohamaSumitomoBS Korea HankookHung-AKumhoNexen India MRFApolloJKCeat Europe ContinentalMichelinPirelli Tire USA GoodyearCooperTitan South- east Asia Multistrada Samson Casumina Da Nang South-east Asia 1,561 32.6% Taiwan 1,138 23.8% India 978 20.4% Other 99 2.1% Unit: ton/month, % 4,785 ton/month	Area Representative customers Taiwan Cheng Shin ( Maxxis ) Kenda Bridgestone Federal Hwa Fong Nankang Japan YokohamaSumitomoBS Korea HankookHung-AKumhoNexen India MRFApolloJKCeat Europe ContinentalMichelinPirelli Tire USA GoodyearCooperTitan South- east Asia Multistrada Samson Casumina Da Nang South-east Asia 1,561 32.6% Taiwan 1,138 23.8% India 978 20.4% Other 99 2.1% Unit: ton/month, % 4,785 ton/month	Area Representative customers Taiwan Cheng Shin ( Maxxis ) Kenda Bridgestone Federal Hwa Fong Nankang Japan YokohamaSumitomoBS Korea HankookHung-AKumhoNexen India MRFApolloJKCeat Europe ContinentalMichelinPirelli Tire USA GoodyearCooperTitan South- east Asia Multistrada Samson Casumina Da Nang South-east Asia 1,561 32.6% Taiwan 1,138 23.8% India 978 20.4% Other 99 2.1% Unit: ton/month, % 4,785 ton/month	Area Representative customers Taiwan Cheng Shin ( Maxxis ) Kenda Bridgestone Federal Hwa Fong Nankang Japan YokohamaSumitomoBS Korea HankookHung-AKumhoNexen India MRFApolloJKCeat Europe ContinentalMichelinPirelli Tire USA GoodyearCooperTitan South- east Asia Multistrada Samson Casumina Da Nang South-east Asia 1,561 32.6% Taiwan 1,138 23.8% India 978 20.4% Other 99 2.1% Unit: ton/month, % 4,785 ton/month
	Area	Representative customers
	Taiwan	Cheng Shin ( Maxxis )	Kenda
		Bridgestone	Federal
		Hwa Fong	Nankang
	Japan	YokohamaSumitomoBS
	Korea	HankookHung-AKumhoNexen
	India	MRFApolloJKCeat
	Europe	ContinentalMichelinPirelli Tire
	USA	GoodyearCooperTitan
	South- east Asia	Multistrada	Samson
		Casumina	Da Nang

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13

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Sales Statistics

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Sales Revenue Constitution of Industrial Material Business _ by Categories of Products

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Unit: %
Carbon
Fabric
5.8%
PE Bags
Spinning
19.8%
Fabric
38.1%
Industrial
Material
Special
Fabric
36.3%
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Product Application Spinning Conventional Yarn, Functional Yarn, Fabric MVS Yarn Special Flameproof fabric, Bulletproof Fabrics fabric, Anti-static fabric PE Bags R-Bag, T-Bag Carbon Woven carbon fiber cloth, Carbon Fiber fiber panel, UD prepreg fabric Fabrics

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14

Sales Statistics

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Petroleum Business

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Keelung
Taipei City
City
X 4 Taoyuan
City
X [1 ] Hsinchu New
County TaipeCity
Hsinchu
City Yilan
Conty
X 2 Miaoli
County
X [10 ] Taichung
City Nantou X 6
X 18 Changhua County
County
Hualien
Yunlin
X 20
County County
X 15
Chiayi County
X [5 ]
Chiayi City
X [13 ]
Tainan City
Taitung
County
Kaohsiung
X [6 ]
City
Pingtung
X [5 ]
County
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• 105 stations across Taiwan by September 2017

• Services:

• Sales of petroleum, diesel, lubrication and car appliances

• — Car wash

• High-quality oil with stable supply source—100% from Formosa Petrochemical Corporation Co., Ltd. (FPCC)

• Sales revenue (Jan. ~ Sept., 2017): NT$ 7.87 billion

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15

Competitive Advantages

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16

Competitive Advantages

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Core Competitiveness

Plan of Production

and Sales

FTC R&D Center in Taiwan is the center of fabric design and development. Production bases were built in south-east Asia to benefit from Preferential Tariff Scheme for ASEAN Free Trade Area and low labor cost and increase competitiveness of products

Strong R&D Capabilities

FTC ‘s strong capabilities In R&D and product design enable us to cooperate with brand customers to further develop new product that meet their requests in a timely fashion.

Vertical integration

FTC integrates supply chain to meet brand customers’ requirements of ODM and shorter delivery time

Being ecofriendly

FTC uses recycled resources, advocating of energy saving and carbon reduction. We pursue green materials and efficient management of toxic chemicals. To further realizing the green production processes.

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17

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Competitive Advantages

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Formosa Plastic Group’s Plan of textile Products

Taiwan China Vietnam 1. Advantage in China’s domestic Gongsan trade Linkou ★ 2. Preferential Tariff Scheme for the Shulin ASEAN Free Trade Area 1. Generalized System of Long-de ● Preferences (GSP) 2. Preferential Tariff Scheme for the ASEAN Free Trade Area Mailiao ▓ spinning, weaving, Douliu ▲ dyeing and finishing Xing-gang ● Chang-shu ▲ dyeing and finishing Kun-shan ★ weaving, dyeing and Zhong-shan ▲ ▲ FTC finishing weaving, dyeing and ★● finishing, tyre cord, Dong-nai ■ Formosa Asahi Spandex Co., Ltd (FAS) ▲ special textile ▲ ★ Nan Ya Plastics Corporation (NPC) Long-an weaving, dyeing and finishing ● Formosa Chemicals & Fibre Generalized System of Preferences (FCFC)

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18

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Competitive Advantages

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Being Eco-friendly

To carry out sustainability and environmental protection, FTC has obtained the following certificates since 2009:

Certification Items

Certificates of Eco Products ＆Production Processes：Oeko-Tex[®] Standard 100 Certification

Organization Quantification and Reporting of Greenhouse Gas (GHG) Emissions (ISO 14064-1) Occupational Health and Safety Administration System Certification (OHSAS 18001), 2007 Taiwan Occupational Safety and Health Management System (TOHMAS Certification) GOTS Organic Cotton Certification OE Organic Cotton Certification GRS Polyester Recycle Standards Environmental Management System (ISO14001), 2004 Quality Management System (ISO 9001), 2008 bluesign[®] Standard Certification Product Carbon Footprint Certification PAS2050, 2011 Energy Management System (ISO 50001), 2011

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19

Competitive Advantage

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Strong R&D Capabilities _ External Associations Participation

Development of Intelligent Shape Memory Clothing The Hong Kong 1.Conductive fabric shielding and Polytechnic Yunlin absorbing radio wave Chaoyang 2.The titania photocatalysts fabric University University Electroplating University of Science 3.Anti-radio wavy material R&D Solution R&D of and Technology Technology Industrial Technology National Research PET Supercritical Carbon Applying caprylolactone Taiwan to SARS (Anti-SARS No.1) Institute in Dioxide dying Research University Taiwan (ITRI) Fashion ITRI Design and The Study of Carbon Southern Inspection and Analyses Textile Nanocapsule in Thermal Region Exhibition Taiwan Conduction and Anti-Radio Wave Campus Planning Textile Federation (TTF) Fashion Design and Textile Exhibition Planning

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20

Competitive Advantages

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Strong R&D Capabilities_ Our developments

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Double weave baffle

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Sandwich fabric

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21

Competitive Advantages

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Strong R&D Capabilities_ Our developments (Cont.)

Fuse yarn

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22

Competitive Advantages

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Strong R&D Capabilities_ Our developments (Cont.)

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High density down proof fabric

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X-Static Fiber Yarn

Breathable waterproof coating and laminated fabrics

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23

Competitive Advantages

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Strong R&D Capabilities_ Our developments (Cont.)

Special Finishes

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Ecofriendly Recycled Yarn

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24

Competitive Advantages

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Strong R&D Capabilities_ Our developments (Cont.)

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Cooling Down Fiber Yarn

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Permawarm®

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Competitive Advantages

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FTC’s Own & Authorized Brands

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
柔細膚感織物
™
涼感織物
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®

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吸濕快乾織物
環保塗佈織物
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奈米光觸媒抗菌消臭織物
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蓄熱保濕機能織物
記憶的智慧型布料
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®
微多孔型透溼防水織物
新一代環保綠色產品
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™
雲染織物
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® 單向導濕織物

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超耐久性奈米撥水織物
超細纖維布料
26
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Competitive Advantages

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Vertical integration of FPC’s Raw Materials

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Upstream
Wood pulp EG PTA CPL THF Ethylene Propylene Crude oil
(NPC) (FCFC) (NPC) (FPC) (FPC)
Middle-stream
Polyester
grain Nylon grain PTMG HDPE grain Acrylonitrile
(NPC) (FCFC) (FAS) (FPC) (FPC)
Cotton Rayon Polyester Polyester Gasoline
Fiber Fiber Fiber Yarn Nylon Yarn Spandex PAN Precursor
(FPC)
(FCFC) (NPC) (NPC) (FCFC) (FAS)
(FPC)
Carbon Fiber
Spun Yarn
(FPC)
(FTC)
Tyre cord
Greige
Fabric Carbon Fiber Fabric
Greige (FTC) (FTC)
(FTC)
(FTC)
Downstream Colored Fabric Tyre cord Colored Fabric Plastic bags Prepreg Sales
conveyor
(FTC) (FTC) (FTC) (FTC)
(FTC) belts
Apparel
Industrial
Molding
Material Industrial
Application
Fiber
Staple
Weaving Filament
D&F
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27

Competitive Advantages

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Strategic Alliance through Vertical Integration for FTC’s Textile Products

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The downstream drive the upstream to
Brand customers request
collaboratively develop brand customers.
1) fabrics for garment factory
production
1) The upstream can fully understand the
2) yarn that is special and in small
end customers’ needs to catch/lead the
volume
trend.
Upstream 2) FTC can provide better integrated service.
Raw 、
(NPC FCFC)
material
Request Desired Yarn (small volume and special)
Yarn
Request Desired Fabrics
Fabric
Production Bases of garment Place an order
Under Strategic Alliance Garment
(FTC)
Brands
Brand Customers
Downstream
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28

Competitive Advantages

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Strategic Alliance between FTC and GORE

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Fabric
suppliers
FTC is selected as the
global 1 [st] Lamination
Finishing Supplier by
GORE
FTC
Fabrics
Bumblebee
Plant
Garment firms Terminal
markets
Fiber Dept.
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29

Financial Status

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30

Financial Status

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Sales Revenue in Consolidated Financial Statements

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Unit: hundred million NT$
428.73
398.49
500 303.25 309.29
400
300
200
100
0
2015 2016 Nine months Nine months
ended ended
September 30, September 30,
2016 2017
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 Reasons that sales revenue of 2016 is 7.0% less than that of 2015 are:

1. Declined sales of sports and outdoors wear, resulting from brand customers’ reduction of purchase volume and adjustment of their stock;

2. Reduced sales of tyre cord, due to weak global demand, tariff barriers on exports and competition in the same line;

3. Drop of the retail price of oil because of the falling international oil price.

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31

Financial Status

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Structure of Sales Revenue _ by Business

Sales Revenue of nine months Sales Revenue of nine months ended in 2017 ended in 2016 NT$ 309.29 hundred million NT$ 303.25 hundred million

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Oil
Filament
Product
| Staple
Business
Fabrics
75.58
96.63
24.9%
31.9%
FATC Other
59.78 64.10 Tyre 12.57
19.3% 21.1% Cord 4.1%
59.93 54.37
19.4% 17.9%
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• Sales revenue of nine months ended in 2017 (NT$ 309.29 hundred million) is 2.0% higher than that of 2016 (NT$ 303.25 hundred million).

• Both sales volume and sales price of tyre cord go up.

• Sales volume and retail price of gasoline and diesel results in the increase of sales revenue.

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Financial Status

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Consolidated profit before income tax

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in one
hundred
million
60.00
44.75 45.73
38.99
37.61
40.00
20.00
0.00
2015 2016 Nine months Nine months
ended September ended September
30, 2016 30, 2017
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Financial Status

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Consolidated Balance Sheet

Consolidated Balance Sheet(Unit: thousands of New Taiwan dollars)	Consolidated Balance Sheet(Unit: thousands of New Taiwan dollars)	Consolidated Balance Sheet(Unit: thousands of New Taiwan dollars)	Consolidated Balance Sheet(Unit: thousands of New Taiwan dollars)	Consolidated Balance Sheet(Unit: thousands of New Taiwan dollars)	Consolidated Balance Sheet(Unit: thousands of New Taiwan dollars)
Year Items			Nine months ended September 30, 2017		Nine months ended September 30, 2016
Sales revenue				30,929,414	30,325,459
Operating costs				(27,098,265)	(27,980,338)
Net operating margin				3,831,349	4,354,121
Operating profit				1,814,636	2,307,258
Non-operating income and expenses				2,758,611	1,591,689
Profit before income tax				4,573,247	3,898,947
Profit for the period				4,191,484	3,377,743
Profit attributable to :
Owners of the parent				3,848,539	3,114,803
Non-controlling interest				342,945	262,940
EPS based on:				(Unit: New Taiwan dollar/share)
Net income		Before tax		2.72	2.32
		After tax		2.49	2.01
Profit attributable to the parent		Before tax		2.37	2.00
		After Tax		2.29	1.85

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Development Plan

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Development Plans

Operation Plan _Expansion

Product Area	Product Area	Investment Amount (in thousands of NT$)	Present Annual Capacity Annual Capacity after Expansion Estimated Completion Date	Present Annual Capacity Annual Capacity after Expansion Estimated Completion Date	Present Annual Capacity Annual Capacity after Expansion Estimated Completion Date
Filament fabric (used for garment	umbrella)	Long-an Dying and Finishing Plant in Vietnam	315,212	6,120	8,520
			(ten thousand yard/year)
High performance Breathable waterproof coating and laminated fabrics	Taiwan (2ndphase of Bumblebee Project)	217,708	600	1000	2018/10
			(myriameter/year)
Filament greige	Dong-nai Weaving Plant in Vietnam	152,815	427	500	2018/03
			(ten thousand yard/year)
Gas station	Taiwan	37,094	515,285	524,501	2018/01 2018/04
			(kl/year)
Tyre cord	Dong-nai Tyre Cord Plant in Vietnam	490,290	19,200	25,800	2019/12
			(ton/year)
Total		1,213,119	─	─	─

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