NPC - Annual Report 2019 | FinancialReports.eu

Security Code：1303

Nan Ya Plastics Corporation

2019

Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: mops.twse.com.tw Annual Report is available at: www.npc.com.tw Printed on May 12th, 2020

I. Name, title, contact number and e-mail address of the Company’s Spokesperson and deputy spokesperson:

Spokesperson Deputy Spokesperson Name: Chia-Chau Wu Name: Ming-Jong Yeh Title: Chairman Title: Financial Officer Contact number: (02)2712-2211 Contact number: (02)2712-2211 E-mail: [email protected] E-mail: [email protected]

II. Address and telephone of the headquarters, branches, and plant

Headquarters & Renwu Plant

Address: 101, Shuiguan Road, Renwu Dist., Kaohsiung City, Taiwan Tel: 07-3711411

Taipei Branch

Address: 201, Tung Hwa North Road, Taipei City, Taiwan Tel:02-27122211

Hsinkang Branch & Plant

Address: 2, Chung-yang Industrial park, Hsinkang Township, Chiayi County, Taiwan

Tel: 05-3772111

Mailiao Branch

Address: 1-1, Formosa Plastics Group Industrial Zone, Mailiao Township, Yunlin County, Taiwan

Tel: 05-6812345

LinYuan Plant

Address: 6, Gongye 1st Rd., Linyuan Dist., Kaohsiung City, Taiwan Tel: 07-6419911

Chiayi Plant

Address: 201, Sec. 2, Beigang Rd., Taibao City, Chiayi County, Taiwan Tel: 05-2373711

Jinxing Plant

Address: 336, Sec. 1, Nankan Rd., Luzhu Dist., Taoyuan City, Taiwan Tel: 03-3223751

Kung San Plant

Address: 6, Wenming Rd., Guishan Dist., Taoyuan City, Taiwan Tel: 03-3284191

Linkou Plant

Address: 102, Nanlin Rd., Taishan Dist., New Taipei City, Taiwan Tel: 02-29019141

Shulin Plant

Address: 55, Weiwang St., Shulin Dist., New Taipei City, Taiwan Tel: 02-26806311

Dyeing & Finishing Plant

Address: 57, Weiwang St., Shulin Dist., New Taipei City, Taiwan Tel: 02-26806311

III. The name, address, website, and telephone number of the agency handling shares transfer

Name: Stock Affairs Dept., Nan Ya Plastics Corp.

Address: 201, Tung Hwa North Road, Taipei City, Taiwan

Website: N/A

Tel: (02)2718-9898

IV. Name of the certified public accountant (“CPA”) who duly audited the annual financial report for the most recent fiscal year, and the name, address and telephone number of said person's accounting firm:

Name of CPAs: Kuo, Hsin-Yi, Yu, Chi-Lung

Name of accounting firm: KPMG Certified Public Accountants

Address: 68F, Taipei 101 Tower, No. 7, Section 5, Xinyi Road, Taipei City, Taiwan. Website: http://www.kpmg.com.tw

Tel: (02)8101-6666

V. Name of any exchanges where the company's securities are traded offshore, and the method by which to access information on said offshore securities: None.
VI. Company website:www.npc.com.tw

		Content
I.	Letter	to Shareholders ...................................................................................................... 1
	1.1	Business Performance for 2019 ........................................................................... 1
	1.2	Business Strategy for 2020 .................................................................................. 4
II.	Company Introduction ..................................................................................................... 7
	2.1	Date of Establishment .......................................................................................... 7
	2.2	Business Philosophy and Vision .......................................................................... 7
	2.3	Milestone.............................................................................................................. 7
III.	Corporate Governance ................................................................................................... 20
	3.1	Organization ....................................................................................................... 20
	3.1.1	Organization Structure ................................................................................... 20
	3.1.2	Major Corporate Functions ............................................................................ 21
	3.2	Directors, Supervisors and Management Team ................................................. 22
	3.2.1	Directors ......................................................................................................... 22
	3.2.2	Management Team ......................................................................................... 30
	3.2.3	Boards of Directors and Major Managers Succession Plan of NPC .............. 32
	3.3	Remuneration of Directors, Supervisors, President, and Vice Presidents ......... 33
	3.3.1	Remuneration of Directors and Supervisors .................................................. 33
	3.3.2	Remuneration of President and Vice Presidents ............................................ 37
	3.3.3	Comparison and Description of Remuneration for Directors, Supervisors,
		President and Vice Presidents etc. in the Most Recent Two Fiscal Years and
		Remuneration Policy for Directors, President and Vice Presidents ............... 40
	3.4	Implementation of Corporate Governance......................................................... 41
	3.4.1	Board of Directors’ Meeting Status ............................................................... 41
	3.4.2	Audit Committee Meeting Status or the Participation of Supervisors in the
		Operations of the Board of Directors ............................................................. 45
	3.4.3	Corporate Governance Implementation as Required by the Taiwan Financial
		Supervisory Commission ............................................................................... 50
	3.4.4	Composition, Responsibilities and Operations of NPC’s Remuneration
		Committee ...................................................................................................... 66
	3.4.5	Social Responsibility Implementation Status as Required by the Taiwan
		Financial Supervisory Commission ............................................................... 69
	3.4.6	Implementation Status of Operational Integrity as Required by the Taiwan
		Financial Supervisory Commission ............................................................... 80
	3.4.7	NPC’s Corporate Governance Guidelines and Regulations........................... 86
	3.4.8	Other Important Corporate Governance Information .................................... 86
	3.4.9	Implementation Status of the Internal Control System .................................. 90

	3.4.10	Reprimands on the Company and its Employees in Violation of Laws, or
		Reprimand on its Employees in Violation of Internal Control System and
		Other Internal Regulations, Major Shortcomings and Status of Correction .. 91
	3.4.11	Major Resolutions of Shareholders’ Meetings and Board Meetings: ............ 91
	3.4.12	Major Issues of Record or Written Statements Made by Any Directors or
		Supervisors which Specified his/her Dissent to Important Resolutions Passed
		by the Board of Directors as of the Publication Date of the Annual Report 105
	3.4.13	Resignation or Dismissal of Chairman, President, and Accounting Officer,
		Financial Officer, Internal Audit Officer and R&D Officer as of the Date of
		this Annual Report ....................................................................................... 105
	3.5	Information Regarding NPC’s Audit Fees ....................................................... 106
	3.6	Replacement of CPA ........................................................................................ 106
	3.7	The Company’s Chairman, Executive Officer, Financial Officer, and Managers
		In Charge of its Finance and Accounting Operations did not Hold Any Positions
		in the Company’s Independent Auditing Firm or its Affiliates during 2019 ... 106
	3.8	Change in Shareholdings and in Shares Pledged by Directors, Management, and
		Shareholders Holding more than 10% Share in the Company ........................ 106
	3.9	Relationship among the Top Ten Shareholders ................................................ 109
	3.10	The Total Number of Shares and Total Equity Stake Held in Any Single
		Enterprise by the Company, the Company’s Directors, Supervisors, Managers,
		and Any Companies Controlled either Directly or Indirectly by the Company111
IV.	Capital	and Shares.........................................................................................................112
	4.1	Capital and Shares.............................................................................................112
	4.1.1	Source of Capital...........................................................................................112
	4.1.2	Status of Shareholders...................................................................................112
	4.1.3	Shareholding Distribution Status ..................................................................113
	4.1.4	List of Major Shareholders ...........................................................................113
	4.1.5	Market Price, Net Worth, Earnings, and Dividends Per Share .....................114
	4.1.6	Dividend Policy and Implementation Status.................................................114
	4.1.7	Effect upon Business Performance and EPS of the Proposed Stock Dividends
		Distribution ...................................................................................................115
	4.1.8	Compensation of Employees, Directors and Supervisors .............................115
	4.1.9	Repurchase of Common Stock......................................................................116
	4.2	Corporate Bonds ...............................................................................................117
	4.3	Status of Preferred Stock ................................................................................. 127
	4.4	Issuance of Global Depositary Receipts .......................................................... 127
	4.5	Status of Employee Stock Options .................................................................. 127
	4.6	Status of New Shares Issuance in Connection with Mergers and Acquisitions 127
	4.7	Financing Plans and Implementation ............................................................... 127

	4.7.1	Finance Plans ............................................................................................... 127
	4.7.2	Implementation ............................................................................................ 127
V.	Operations Overview ................................................................................................... 128
	5.1	Business Content .............................................................................................. 128
	5.1.1	Business Scope............................................................................................. 128
	5.1.2	Industry Overview ....................................................................................... 131
	5.1.3	Overview of Technology and R&D ............................................................. 138
	5.1.4	Short- and Long-Term Business Development Plans .................................. 139
	5.2	Markets and the Overview of Production and Sales ........................................ 142
	5.2.1	Market Analysis ........................................................................................... 142
	5.2.2	Important Applications and the Production Processes of the Major
		Products........................................................................................................ 149
	5.2.3	Supply of Primary Raw Materials................................................................ 154
	5.2.4	Suppliers/Customers Accounted for at Least 10% of Annual
		Procurement/Sales........................................................................................ 156
	5.2.5	Production Volume for the Last Two Years ................................................. 157
	5.2.6	Sales Volume/Value of the Last Two Years .................................................. 159
	5.3	Employees ........................................................................................................ 161
	5.4	Environmental Expenditure Information ......................................................... 161
	5.5	Labor Relations ................................................................................................ 166
	5.6	Important Contracts ......................................................................................... 172
VI.	Financial Information................................................................................................... 174
	6.1	Five-Year Financial Summary ......................................................................... 174
	6.2	Five-Year Financial Summary ......................................................................... 179
	6.3	Audit Committee’s Review Report for the Most Recent Year ......................... 182
	6.4	Consolidated Financial Statements for the Years Ended December 31, 2019 and
		2018, and Independent Auditors’ Report ......................................................... 183
	6.5	Stand-Alone Financial Statements for the Year Ended December 31, 2019 and
		2018, and Independent Auditors’ Report ......................................................... 183
	6.6	The Company should Disclose the Financial Impact to the Company if the
		Company and its Affiliated Companies have Incurred any Financial or Cash
		Flow Difficulties in 2018 and as of the Date of this Annual Report ................ 183
VII.	Review of Financial Conditions, Financial Performance, and Risk Management ...... 184
	7.1	Financial Status ................................................................................................ 184
	7.2	Analysis of Financial Performance .................................................................. 185
	7.3	Cash Flow ........................................................................................................ 186
	7.4	Major Capital Expenditure Item ...................................................................... 188
	7.5	Investment Policy in the Last Year, Main Causes for Profits or Losses,
		Improvement Plans and Investment Plans for the Coming Year ..................... 190

7.6	Analysis of Risk Management ......................................................................... 190
7.7	Other Significant Issues ................................................................................... 201
VIII. Other	Special Notes ..................................................................................................... 202
8.1	Summary of NPC’s Subsidiary ........................................................................ 202
8.2	Private Placement Securities in 2019 and as of the Date of this Annual
	Report. .............................................................................................................. 214
8.3	NPC’s Shares Acquired, Disposed Of, and Held by its Subsidiary in 2019 and as
	of the Date of this Annual Report .................................................................... 214
8.4	Other Necessary Supplement ........................................................................... 214
8.5	Any Events in 2019 and as of the Date of this Annual Report that Had
	Significant Impacts on Shareholders’ Right or Share Prices as Stated in Item 3
	Paragraph 2 of Article36 of Securities and Exchange Law of Taiwan ............ 214

I. Letter to Shareholders

1.1. Business Performance for 2019

In 2019, Nan Ya Plastics Corp. (NPC) recorded a consolidated revenue of NT$ 286.30 billion, 14.0% lower than NT$ 333.06 billion in 2018; and a consolidated pre-tax income of NT$ 26.69 billion, a reduction of 56.6% compared to NT$ 61.53 billion in 2018.

In 2019, NPC faced fierce industry competition, with continued increase in competitors' capacity and market supply, and the trade war had also created negative impact in the world's economy. The market adopted a strong wait-and-see attitude, and the overall performance reflected a difficult operating environment.

The four major product categories of NPC operations are plastics, chemicals, polyesters, and electronic materials.

With regard to plastic products, NPC has accelerated the research and development of new applications, new materials, and products that meet environmental protection trend and have unique specification, and increased the proportion of production and sales of differentiated and high-value products. NPC continues to transform and deploys automated monitoring equipment to ensure quality stability of production process, and together with e-commerce and online marketing, it has expanded into high-end markets such as the U.S. and Japan as well as potential emerging markets. With market expansion, sales increase, capacity utilization increase, cost reduction, the advantages of distributing production domestically and overseas in Taiwan, China, the U.S. ,and Vietnam, and timely adjustment of plants' production and sales, NPC strives to provide customers with satisfied services. The efforts of NPC have enabled plastic processing products to provide stable profitability.

In terms of petrochemical products, in line with vertical integration and division of labor in Sixth Naphtha Cracking Plant in Mailiao, NPC's products, including ethylene glycol (EG), Bisphenol-A (BPA), 1,4-butylene glycol (1,4BG), plasticizers, phthalic anhydride (PA), 2-ethylhexanol (2EH), and epoxy resin (EPOXY), have been vertically integrated with upstream and downstream industries, thereby forming a complete supply chain, which supports the development of downstream industries such as polyester, electronics, and plastic processing, respectively.

With a slow global economic growth and negative impact of the trade war, the market demand decreased in 2019. With the increasing petrochemical capacity by China, price generally declined, with the prices of main products, BPA and EG, dropped by 30% compared to 2018, resulting in significant decrease in profit. In the future, NPC will respond to the change in raw materials and product prices, flexibly adjust its capacity, continue to drive process optimization, and improve its sales in areas outside China, so as to increase revenue and profit.

In terms of polyester products, China-U.S. trade war and increase in crude oil price have made market competition more intense in 2019. The continued fall in price, and serious price-slashing situation by competitors resulted in sales not meeting expectation and a drop in profit.

NPC will continue to actively research and develop, monitor and control product quality stability, promote environmental protection, PET bottles recycling, biodegradability and green energy, and explore new application areas for products, so as to differentiate the market and expand scope of sales. NPC will enhance customer recognition so as to continue to increase sales and maintain stable profitability.

For electronic materials, with the ongoing development of various electronic product application devices since the fourth quarter of 2016, the active promotion of new energy vehicle in the world and construction of related infrastructure such as charging pile, the demand of electronic materials significantly increases, attracting companies to expand their investments, and resulting in increase in capacity. In addition, with China and the U.S. imposing higher tariffs on each other, decrease in home appliance orders, and increase in uncertainties of electronic product market, customers reduce their inventory and respond to urgent orders, and are more conservative in their placing of orders. However, due to the advance deployment of 5G communications infrastructure, mid and high-end materials demand increased, and 2019 overall revenue is only slightly lower than 2018.

The 5G infrastructure and the Internet will continue to develop in the future. With the related applications, it will drive the demand of electronic materials and upstream raw materials. NPC will actively promote differentiated products, increase sales proportion of mid and high-end materials for high-value-added and high-functionality niche products, to cater to the trend of market development. Also, it will make use of the advantages of complete upstream and downstream vertical

integration, to flexibly adjust the capacities in Taiwan and China, driving the increase in revenue and profit.

Nan Ya Printed Circuit Board Corp., which is invested by NPC, has long been focusing on the development and production of circuit boards and IC package substrates. Optimistic with the demand of 5G infrastructure, it has taken advanced move in the development of related products. The sales of high layer and large dimension substrate for the related applications were strong in 2019. In addition, the demand for high-valued products such as System-in-Package for wearable device applications, and interposer for high-end mobile device was promising during the second half of the year, driving increase in profit, and hence successfully turned loss into profit. In response to future development trend of semi-conductor, it actively strengthens its research and development capabilities, recruits more research and development talents, speeds up the development of new products, and expands IC substrate capacity to meet market demand. In the future, the company will work closely with customers, get more niche products orders, and continue to enhance production technologies, improve yield and reduce cost, to improve operational performance.

Nan Ya Technology Corp., another company invested by NPC, is committed to the development, manufacture, and sale of dynamic random-access memory (DRAM) products. Though DRAM industry significantly slowed down in 2019, the company still maintained good profitability, and completed the product development and shipping of low-power 20 nm 4Gb/8Gb LPDDR3, 2Gb/4Gb/8Gb LPDDR4/4X, etc. It has also successfully developed 10 nm DRAM cell design, enabling future DRAM products to continue to shrink in size for at least 3 generations. In 2020, it will develop first generation 10 nm lead products, DDR4 and DDR5 on its own technology platform, and is expected to gradually go into trial production after the second half of the year, in preparation for mass production of 2021. In 2020, it will continue to focus on 20 nm product portfolio optimization to increase competitiveness, and increase process technologies, product design, and customer services capabilities, to meet market demand, and provide customers with best memory solutions.

Financial analysis for revenue and expenditure and profitability are as follows:

Item	Year	2019	2018
Capital Structure(％)	Debt ratio(%)	35.90	32.15
	Long-term fund to property, plant and equipment ratio(%)	301.84	346.65
Profitability	Return on total assets(%)	4.36	9.71
	Return on total equity (%)	6.25	13.97
	Pre-tax income to paid-in capital ratio(%)	33.65	77.58
	Net margin(%)	8.11	15.81
	Earningsper share(NT$)	2.91	6.65

Note: The calculation of EPS is based on weighted average shares outstanding in each year.

1.2. Business Strategy for 2020

Looking ahead to 2020, the environment is still disturbing. The world's economy has been affected by many factors, including trade war, technological war, currency war, and threat of armed conflict of geopolitics in the long run. Also, the virus outbreak that affects human health in the beginning of the year deepens the unrest in the market, suppressing the opportunities for economic recovery through new technologies development and application in the short run. If the various uncertain factors can be reduced in the future, the economy should be able to develop normally.

With the complex international situation, maintaining stable growth and profit is still the most important goal. Therefore, NPC will continue to actively push forward its four business focus:

(1) Market expansion: Based on the physical sales channels with the assistance of online marketing, NPC actively expands and separates the market. With the configuration of domestic and overseas production bases, diversion in sales channels, production capacity allocation, and market expansion, NPC carries out overall production and sales allocation, increases revenue, boosts capacity utilization rate, and reduces cost.

(2) Research and development: Besides developing new products with different

characteristics to satisfy customer needs and market trend, NPC makes good use of the features of existing products to explore new application. It expands customer base and explore new markets to increase the proportion of differentiated and high-value products in the hope of increasing profitability continuously.

(3) Circular economy: Implement reduction, reuse, and resource recycling, reduce raw materials and energy consumption from the source, and carry out resource integration across plants and companies, recycle energy, and finally recycle the waste generated, achieving recycling and reuse, and attaining the economic benefits of low consumption, low emission, and high utilization.

(4) Process optimization: NPC will continue to improve and upgrade its equipment, increase the efficiency of existing equipment/production lines, create maximum benefit with minimum investment, and actively implement AI to attain intellectualization in production process.

In the future, we will continue to make AI our priority, and make use of image recognition technologies to carry out product quality inspection and control, and conduct systematic gathering, processing, and application on the massive data, so as to optimize the control of process conditions, increase quality and reduce raw materials and energy consumption. We will also expand it horizontally to domestic and overseas plants to create greater benefits.

In addition, besides participating in the joint venture expansion in US Texas OL-3 and Louisiana at present, our total ongoing investments amount to approximately NT$ 68 billion, including 14% in Taiwan, mainly in high-value copper foil, polyester film, PP synthetic paper, etc., and 86% in other countries, mainly in expansions of EG plant in the U.S., which is about to be completed, as well as copper foil substrate, fiberglass cloth, printed circuit board, aluminum plastic film, and BPA plants in China. When they go into production, it is expected to generate an annual output of NT$ 52.4 billion, which will drive the continued growth of NPC.

Based on the equipment production capacity and in regards to the supply and demand situation of the future market, the estimated sales volume of major products in 2020 is as follows: (including consolidated subsidiaries and inter-company internal turnover)

Product Name	Unit	Estimated Sales Volume	Product Name	Unit	Estimated Sales Volume
Flexible PVC Film	Ton	117,155	1,4BG	Ton	50,817
PVC Leather	Thousand Yard	32,700	EG	Ton	2,732,674
Rigid Film	Ton	151,204	Copper Clad Laminate	Thousand Sheet	70,200
PU Synthetic Leather	Thousand Yard	15,304	Epoxy Resin	Ton	395,550
Plastic Doors and Windows	Ton	28,430	Glass Fabrics	Thousand Meter	283,000
Rigid PVC Pipe	Ton	128,400	Copper Foil	Ton	55,540
Film Products	Ton	73,265	Glass Yarn	Ton	167,466
Plasticizer and THPA	Ton	399,109	Printed Circuit Board	Thousand SFT	17,448
PA	Ton	137,510	Polyester Staple fiber, filament, fabric	Ton	1,180,537
BPA	Ton	589,590	PET Film	Ton	68,467

II. Company Introduction

2.1 Date of Establishment: August 22nd, 1958

2.2 Business Philosophy and Vision:

(1) Business philosophy: Diligence, perseverance, frugality and trustworthiness;

aiming at the sovereign good; perpetual business operation and dedication to the society.

Today, the Company is able to keep expanding, growing, and developing is driven by the business philosophy of “diligence, perseverance, frugality and trustworthiness; aiming at the sovereign good; perpetual business operation and dedication to the society” raised and practiced by the two founders, Mr. Wang Yung-Ching and Mr. Wang Yung-Tsai.

In terms of business operations, the Company understands that only by having a good management foundation can the Company develop steadily without being shaken by changes in objective conditions. Therefore, regardless of production, sales, manpower allocation or resource utilization, the Company has long adhered to the spirit of inquiring into the root of the matter in a practical and realistic way, pursuing the rationalization management bit by bit, constantly pursuing cost reduction and efficiency improvement. This spirit has long been internalized into an important core of our corporate culture, and it is also the drive for the company to pursue progress and sustainable development.

On the other hand, the company believes that while pursuing competitiveness and profits, it must also abide by corporate ethics by basing the management on the positive contribution to the society. Therefore, while developing the business, the Company also continues to devote itself to charitable activities in fields such as education, medical services, and caring for the disadvantaged. The scale is constantly expanded to improve the efficiency and quality in order to fulfill the responsibilities of corporate citizenship.

(2) Company Vision:

In the various industrial fields in which we are engaged, we will strengthen the internationalization and diversification to achieve world-class scale, and occupy the global leadership position. We will also continue to seek depth and refinement in response to the global changes to ensure long-term stable development.

2.3 Milestone:

The Company was founded in 1958 with the capital of NT$ 4 million and had reached to NT$ 79.3 billion at the end of 2019. The consolidated revenue was NT$ 286.3 billion. At present, our main business involves various processed

plastic products, chemical products, electronic materials, the production and sales of polyester fiber, dyeing and finishing, mechanical and electrical engineering, etc. The Company has become the world's largest plastics processing plant, and the production capacity of polyester fiber and copper foil substrate is also among the best.

The Company has been in business for 62 years, and its business expansion can be divided into the following stages:

1958  The Company was founded and named “Nan Ya Plastics Processing Factory Co., Ltd.” with a capital of NT$ 4 million. Plant of Kaohsiung started production. 1967  Plant of Qian Zhen became fully operational and Plant of Taishan Mingzhi was planned for construction.  In August, the Company merged "New Easten Plastics Product Corp." and changed its name to "Nan Ya Plastics Corp.".  The stock was listed on November 5th. 1968  Plant of Mingzhi became officially operational; in October a polyester fiber plant was planned for construction. 1969  The first set of equipment at the fiber plant began production in May; in October, the second set of equipment was planned for construction. 1971  The second set of cotton processing equipment and silk processing equipment of the fiber plant were installed and went into production in January. 1972  Plant of Renwu officially went into production. Plant of Linkou was being built. 1973  Expansion of production equipment for 2,000 metric tons of polyester cotton and 1,200 metric tons of polyester yarn. 1974  In January, equipment for non-woven fabrics, brushed fabrics and wet PU leathers was installed in Plant of Shulin. 1976  In October, equipment for rigid PVC film was installed, and equipment for brushed fabric and non-woven fabrics was expanded. 1977  Equipment for rigid PVC film, brushed fabric and non-woven fabrics was expanded.  In June, the OEM for professional dyeing and finishing of longfibre nylon was added to Shulin factory area, known as Plant 1 of Shulin. 1978  The first set of doors and windows was launched in January.  In July, Plant 1 of Shulin went into official production. Two sets of giant PVC film equipment as well as equipment for PU synthetic leather and improved coil manufacturing were added.  In October, a joint venture with Huaxia, Cathay Pacific, and Ocean

Plastics was established and named as "Taiwan Plasticizer Corp.".
1979  In June, the Company expanded the long-fiber nylon dyeing and finishing factory in the Shulin factory area, namely Plant 2 of Shulin. The printing equipment for Plant 1 of Shulin was also expanded.
 Construction of Plant of Chiayi and the expansion of 10 sets of PVC film production equipment and two sets of rubber production equipment.

 In July, the Company diverted the investment in establishing Nan Ya Plastics Corp. USA. 1980  In September, the Formosa Dyeing and Finishing Corp. was merged into the Formosa Dyeing Division. The Plant 1 of Taoyuan was changed to Plant 1 of Dyeing, Plant 1 of Shulin was changed to Plant 2 of Dyeing, and Plant 3 of Shulin was changed to Plant 3 of Dyeing.  Two sets of PVC film production equipment and one set of mold production equipment were added. 1981  Dual-axis extension PP film equipment and plastic processing machinery were added to Plant of Linkou and Renwu. 1982  Expansion of the co-generation equipment of the Taishan. 1983  Giant PVC film equipment and high-speed false twisting machine were added. 1984  Circuit board printing, copper foil substrates, and dyeing plant equipment were added. 1985  Circuit board printing, copper foil substrates, fiberglass yarn, microfiber, and false twisting equipment was updated. 1986  Polyester film, electronic epoxy resin, and plastic processing machinery were added. 1987  Production equipment of petrochemical raw materials and plastic processing was expanded.  In August, a joint venture with PPG from the United States was established and named as "FPG Fiber Glass Corp.". In December, the Company merged "Taiwan Plasticizer Corp." and established the "Plasticizer Division." 1988  Production equipment for petrochemical raw materials, circuit board printing, and copper foil substrate were expanded. 1989  Petrochemical raw material equipment was added. In June, the company diverted investments and established “Nan Ya Plastics Corp., America”. 1990  Production equipment of polymer packaging materials for electronics was added. Production equipment for circuit board printing, copper foil, and glass fabrics was also expanded.

1991  Spinning equipment was added.
1992  Added production equipment for circuit board printing, epoxy resin, and the second set of power generation equipment in Shulin.
 In April, the Company diversified investments along with Nan Ya Plastics Corp. and Formosa Chemicals & Fiber Corp. to establish Formosa Petrochemical Corp.
1993  Production equipment for rigid PVC film, polyester film, and vacuum evaporation was added.
1994  Production equipment for LCD display and polyester film was added.
 In May and June, we invested in the construction of factories for PVC film, PVC leather and rigid pipes in Guangzhou and Xiamen, China.
 The total amount of overseas convertible corporate bonds issued in July raised US$ 350 million.
1995  Added production equipment for BOPP stretch film, epoxy resin, glass fabrics, and copper foil substrate, as well as setting up the electronic materials division.
 In March, the Company diversified investment in setting up “Nan Ya Technology Corp.” which engaged in the research, development, design, manufacturing and sales of semiconductors.
 In August, in order to expand the electronic materials business, the special task group of copper foil substrate, epoxy resin, glass fabrics and copper foil became an independent division from the fourth plastic division, and the electronic materials division was set up.
1996  Production equipment for circuit board printing and copper foil was added.
 In April, the Company diversified investment in setting up “MaiLiao Power Corp”.
 In June, the Company invested in the construction of plants for PVC film, PVC leather and rigid pipes in Nantong, China.
 In July, the Company jointly invested with China Man-Made Fiber Corp. to establish “Nan Chung Petrochemical Corp”.
1997  Spinning equipment was added.
 In May, the ethylene glycol plant was appointed to Nan Chung Petrochemical Corp.
 In October, the Company diversified investments in setting up “Nan Ya Printed Circuit Board Corp”.
 In November, Mr. Wang Yung-Ching, the chairman of the board, was exempted from the duty as president. Mr. Wu Chin-Jen, the vice president, was promoted to the president. The assistant vice president,

Mr. Lin Zhen-Ling, was promoted to the vice president. 1998  Production equipment for ethylene glycol and glass fabrics was added.  In October, the Company diversified investments in setting up Formosa Automobile Corp. along with “Formosa Plastics Corp.” and Asia Pacific Investment Corp.  In December, the Company conducted a cash capital increase and raised the amount of NT$ 5.05 billion. 1999  Production equipment for chlorinated polyethylene, hydrogen peroxide, epoxidzed soybean oil, and A-PET transparent sheet was added.  In June, the Company diversified investments in setting up “Formosa Environmental Technology Corp”. The Company successively invested in the construction of PVC rigid pipe and film plants in Chongqing, China. 2000  Production equipment for phthalic anhydride, optical disc, and lithium-ion battery were added.  The Company invested in plants for electronic materials, PU synthetic leather, and film in Kunshan and Huizhou, China.  The Company won the Annual Energy Conservation Excellence Award from the Ministry of Economic Affairs in 2000. 2001  Added production equipment for color filters, optical discs, solid polymer PET and 200T/H power generation equipment.  Diversified investments to establish “Formosa Plastics Marine Corp.” and “Su-Hua Transport Corp”. 2002  Added production equipment for BOPP film and DVD discs. Established Formosa Industries Corp. in Vietnam with a joint venture with Formosa Chemicals & Fiber Corp. and King Car Industrial Co., Ltd.  In December, in order to diversify shares of Nan Ya Circuit Board Corp. before the listing of shares, the Company disposed the shares of Nan Ya Circuit Board Corp. with a total amount of NT$ 219.98 million. 2003  Added ethylene glycol production equipment.  In July, the Company issued a five-year overseas registered unsecured exchangeable corporate bonds with a total amount of US$ 240 million. Bondholders had the right to exchange their corporate bonds for common stock of Nan Ya Technology Corp.  In November, the Formosa Dyeing Division was merged with the Fiber Division for business and management needs.

 In December, the Company diversified investment in establishing “Nan Ya Photonics Incorporation”. 2004  In January, the switchgear division was merged with the engineering and construction division for business and management needs.  On June 30th, the Company issued the seven-year overseas registered unsecured exchangeable corporate bonds with a total amount of US$ 250 million. The bondholders had the right to exchange the Company's bonds with the common stock of Formosa Petrochemical Corp. 2005  In July 2003, the Company issued an overseas unsecured exchangeable corporate bond with the exchange of shares of Nan Ya Technology Corp. for US$ 240 million. On July 17th, 2005, the Company redeemed US$ 217.94 million. On September 7th, the Company bought back the remaining balance of US$ 21.91 million.  In order to diversify shares of Nan Ya Printed Circuit Board Corp. before the listing of shares, the Company disposed 46,100 shares of Nan Ya Printed Circuit Board Corp. at NT$ 48 per share from June to August. 2006  In June 2004, the Company issued an overseas unsecured exchangeable corporate bond with the exchange of shares of Formosa Petrochemical Corp. for US$ 250 million. By January 13th, 2006, bondholders exercised the exchange right with the total amount of US$ 250 million. All the exchange was completed.  In line with the initial listing of Nan Ya Printed Circuit Board Corp., in April, the Company placed 10,200 shares of Nan Ya Printed Circuit Board Corp. at a price of NT$ 250 per share.  On June 23th, Mr. Wang Yung-Ching, the chairman of the Board of Directors, and Mr. Wang Yung-Tsai, the vice chairman of the Board of Directors, resigned. The Board of Directors elected Mr. Wu Chin-Jen as the chairman of the Board of Directors as well as the president. 2007  In June, three independent directors were elected.  In August, Nan Ya Technology Corp. raised NT$ 5 billion for capital increase by cash. The Company subscribed for shares as a specific person with a total amount of NT$ 198,120,000.  On November 2nd, the Board of Directors resolved to promote the vice president, Wu Chia-Chau, as the president. 2008  The Mailiao maleic anhydride (MA), γ-butyrolactone (GBL), and N-methyl-2-pyrrolidone (NMP) plants passed the environmental impact assessment of the Environmental Protection Agency of the

Executive Yuan in February. Production equipment for MA, GBL, and NMP were also added.

 In June, the products were organized into four business divisions including plastic processing, plastic materials, electronic materials, polyester products and public utilities for management purposes.
 In October, the founder Mr. Wang Yung-Ching passed away.
 In order to support the Company's investment in Nan Ya Technology Corp. and Inotera Memories Inc. to continue developing the DRAM business, advanced manufacturing technology of Micron Technology Inc. was introduced. In November, the Company signed a loan contract of US$ 200 million with Dutch Micron. And pledged contracts were signed with Dutch Micron and US Micron.
 The ethylene glycol plant won the Annual Energy Conservation Excellence Award from the Ministry of Economic Affairs in 2008.
2009  In April, the Board of Directors decided to invest in a 33.33% stake of Formosa Synthetic Rubber Corp.
 In June, the Company obtained private placements of common stocks of Nan Ya Technology Corp. with a total amount of NT$ 4,619,160,000. In December, it re-subscribed common stocks of Nan Ya Technology Corp. with a total amount of NT$ 4,270,923,000.
 In October, Plant 1 of copper foil substrate won the special award for the Annual Business Waste Cleaning, Recycling and Reuse Award of the Ministry of Economic Affairs in 2009. In November, the ethylene glycol plant was named as a greenhouse gas reduction and excellent performance unit.
 In December, the Board of Directors decided to transfer the equity of Nan Ya Plastics (Chongqing) Co., Ltd.; merging 5 companies included the production and sales of fiber products in Kunshan and steam and power etc.
2010  In March, the Company won the Model Award of the Traditional and Manufacturing Industry of the listed company in the 6[th] Corporate Social Responsibility Award of Global Views Monthly.
 In May, Nan Ya Propylene Gentamine (Ningbo) Co., Ltd. increased the production and sales of plasticizers. It also increased investment of US$ 36 million and changed its name to Nan Ya Plastics (Ningbo) Co., Ltd. Moreover, it won the Environmental Protection Agency's Green Purchasing Excellence Enterprise Award in 2009.
 Set the base date for non-physical stocks for the full issuance of physical stocks on November 30th.
 In September, Plant 1 of Shulin won the 2010 Annual Energy

Conservation Excellence Award from the Ministry of Economic Affairs.

 In November, Plant of Mailiao Recycling won the Special Award of the Environmental Protection Agency's 2010 Annual Waste Resource Management Performance Campaign.
 In December, the Board of Directors decided to reduce the shareholding ratio of Formosa Ha Tien Steel Corp. from 22.5% to 21.25%.
2011  In March, the Board of Directors decided to invest US$ 30 million in Formosa Synthetic Rubber (Hong Kong) Corp. Ltd. and reinvested Formosa Synthetic Rubber (Ningbo) Co., Ltd. through Formosa Synthetic Rubber (Hong Kong) Corp. Ltd.
 In May, the Board of Directors decided to adjust the Company's organizational structure. The environmental safety and health department was made obsolete. The safety and health department and the resource recycling department were set up in its place.
 In June, the Board of Directors resolved to increase investment in Nan Ya Plastics Construction Materials (Nantong) Co., Ltd. by US$ 5 million.
 The remuneration committee was set up on August 26th.
 In August, the Company invested in China to establish “Nan Ya Property (Kunshan) Co., Ltd”.
 In October, the cotton plant in the Polyester Fiber Division won the 2011 Annual Energy Conservation Excellence Award from the Ministry of Economic Affairs.
 In November, the Company subscribed common stocks of private placements of Nan Ya Technology Corp. with the total amount of NT$ 11,999,999,998.
 In December, the “Safety Partnership Declaration” was signed with the Labor Inspection Office of the Southern District of the Executive Yuan Labor Committee.
2012  In March, the Board of Directors decided to increase investment in Vietnam Formosa Ha Tien Steel Corp. by US$ 170 million.
 In June, the Board of Directors decided to merge three companies of PVC film (sheet), PU leather, steam, and electric power products in Nantong City, mainland China as well as merge another five companies in Kunshan City, which produced and sold electronic materials, steam, and electricity products.
 In August, the Board of Directors decided to merge two company which produce and sell BOPP film, rigid PVC film, and PVC film,

and other products in Nantong City.

 In September, the Company disposed the shares of Nan Ya Technology Corp. with a total amount of NT$ 835,906,000 and subscribed for Nan Ya Technology Corp. new shares in a cash capital increase with a total amount of NT$ 4,236,000,000.
 In November, the Ministry of Finance awarded the promotion of electronic invoices for outstanding business operators. Plant 1 of copper foil substrate won the 2012 Annual Energy Conservation Excellence Award from the Ministry of Economic Affairs.
 In December, Kung San site and Plant of Ethylene Glycol won the 2012 Annual Voluntary Reduction of Greenhouse Gases by the Industrial Bureau of the Ministry of Economic Affairs.
2013  In January, in conjunction with the transformation and reengineering of the Company’s investment business, Nan Ya Technology Corp. submitted two letters of undertaking to Micron Technology Inc. to guarantee financial support and participation contracts.
 In March, the Board of Directors decided to invest in Formosa Group (Cayman) Limited with US$ 12,500.
 In May, the Board of Directors decided to invest and establish Formosa Resources Corp. with NT$ 250,000; to participate in the private equity cash increase of Inotera Memories Inc. with a total amount of NT$ 4 billion.
 In June, Mr. Wu Chia-Chau started serving as chairman.
 In August, the Company officially announced the introduction of AEO certification for high-quality enterprises. It won the award for contribution from the Ministry of Economic Affairs.
 In September, the Board of Directors decided to reduce the shareholding ratio of Formosa Ha Tien Steel Corp. to 14.75%.
 In November, Plant 1 of copper foil substrate was awarded the 22th 2013 ROC Environmental Protection Enterprise Environmental Protection Award by the Environmental Protection Agency of the Executive Yuan. Plant 3 of Copper Foil Substrate and Kung San site were awarded the 2013 Annual Energy Conservation Excellence Award and Excellence Award from the Ministry of Economic Affairs. The fiber division won the 2013 environmental impact assessment and development of the New Taipei City Government Environmental Protection Agency.
 In December, the Company won the 2013 Green Procurement Excellence Award.
2014  In January, the Company disposed 47,700,000 shares of Formosa

Petrochemical Corp. with a total amount of NT$ 3.673 billion. It was awarded the AEO certification of the Kaohsiung Customs Quality Enterprise of the Ministry of Finance.

 In March, the Board of Directors decided to invest and establish “Formosa Group (Cayman) Ltd.”; Mr. Tzou Ming-Jen, the senior vice president, was promoted to the position of executive vice president.
 In April, in cooperation with the Kaohsiung City Government to promote urban development, the Company’s Plant of Kaohsiung was moved. The registered location was changed to 101, Shuiguan Road, Renwu Dist., Kaohsiung City. The re-investment company of Plant 4 of Kunshan glass fabrics started to operate.
 In June, the Board of Directors decided to sell and transfer 100% equity of mainland China Nan Ya Property (Kunshan) Co., Ltd.
 In July, with the adjustment of the administrative area of Mailiao Township in Yunlin County, the location of the Company’s Mailiao Branch was changed to “1-1, Formosa Plastics Group Industrial Zone, Mailiao, Yunlin County”.
 In September, the Company was awarded the 2013 Green Procurement Excellence Enterprise Award.
 In October, Plant 1 of copper foil substrate won the 23rd China Enterprise Environmental Protection Award of the Environmental Protection Agency of the Executive Yuan in 2014.
 In November, Plant 3 of spinning won the 2014 Energy Conservation Excellence Award from the Energy Bureau of the Ministry of Economic Affairs. The founder, Mr. Wang Yung-tsai, passed away.
2015  In March, the Board of Directors decided to merge three plastics, building materials, and rigid film companies in Guangzhou, and was approved by the Investment Commission (MOEA) in May.
 In May, Nan Ya Plastics America Corp. invested and established “Nan Ya Plastics Corp., Texas” which in turn transferred the investment to the construction of an ethylene plant.
 Started from July 1st, Mr. Wu Chia-Chau, the chairman of the Board of Directors, was relieved of the position of president and the executive vice president Mr. Tzou Ming-Jen was promoted as the president.
 In August, the Board of Directors resolved to adopt the Company’s corporate social responsibility code.
 In November, Plant of Xingang Copper Foil Substrate of electronics

division won the 24th Republic of China Environmental Protection Enterprise Environmental Award. Kung San Site of Fiber Division and Plant 3 of Xingang Copper Foil Substrate of electronics division won the 2015 award for annual industrial gas voluntary reduction. In November, the Board of Directors decided to reduce the proportion of indirect holdings of Formosa Ha Tien Steel Corp. to 12.346%.

 In December, the Board of Directors resolved to support Taiwan Micron Technology Inc. acquisition of Inotera Memories Inc. Through the transfer of equity enable Inotera Memories Inc. to become a 100%-owned subsidiary of Taiwan Micron Technology Inc. The Company also disposed of 22,000,000 shares of Formosa Petrochemical Corp. with a total amount of NT$ 1,669,800,000.
2016  In order to strengthen the sales of film products and take into account the scale of the fiber division, the polyester film and release film products were made independent, and the polyester film division was also established.
 The Company’s indirect shares of Formosa Ha Tien Steel Corp. was adjusted from 12.346% to 11.432%.
 In June, the audit committee was set up to replace the supervisor.
 In July, Kung San site won the 2016 Energy Conservation Excellence Award from the Energy Bureau of the Ministry of Economic Affairs.
 In September, the Board of Directors resolved to acquire 50% shares and technology license of PFG Fiber Glass Corp. as well as acquire 50% shares and technology license of Fiber Glass (Hong Kong) Co., Ltd. from PPG Industries Securities, LLC. The acquisition of both cases were completed on November 18th.
 In November, Plant of Mailiao Ethylene Glycol won the 2016 Annual Greenhouse Gas Voluntary Reduction and Excellent Performance Contribution Award from the Industrial Bureau of the Ministry of Economic Affairs. Kung San site won the 2016 Annual Voluntary Reduction of Greenhouse Gases.
 In December, the Company was awarded the AEO certification of the Kaohsiung Customs Safety Certification Quality Enterprise of the Ministry of Finance. The Company disposed 442,387,000 shares of Inotera Memories Inc. to Taiwan Micron Technology Inc. at the price of NT$ 30 per share.
2017  In March, the Board of Directors decided to donate NT$ 125 million to establish the “Kaohsiung Cultural Foundation of Brothers Wang Yung-Ching and Wang Yung-Tsai Park” and increased the

investment of “Formosa Resources Corp.” by US$ 55 million.

 In May, the Board of Directors decided to increase the investment of “Formosa Ha Tinh (Cayman) Ltd.” through “Nan Ya Plastics International (Cayman) Ltd.” by US$ 57,160,834. Plant 2 of Chiayi in Chiayi County expanded the PP synthetic paper annual production capacity by 22,000 tons. The Xingang site invested and constructed a copper foil plant 4 with an annual production capacity of 18,000 tons.
 In August, the Board of Directors decided that the mainland “Nan Ya Plastics (Nantong) Co., Ltd.” will expand the aluminum plastic film production line and transfer the surplus to increase the capital by US$ 10 million.
 In November, the Board of Directors decided to invest “FG INC” by US$ 22 million. Plant of Mailiao Ethylene Glycol won the 2017 Annual Greenhouse Gas Voluntary Reduction and Carbon Reduction Contribution Award from the Industrial Bureau of the Ministry of Economic Affairs. Kung San site, electronics division, engineering division of Xingang Plant and the subsidiary of PFG Fiber Glass Corp. were all awarded the 2017 annual greenhouse gas voluntary reduction by the Bureau of Labor.

Kung San site was awarded the silver medal of the 2017 Energy Conservation Standard Award of the Energy Bureau of the Ministry of Economic Affairs.

 In December, the Board of Directors decided to increase the investment of “Formosa Ha Tinh (Cayman) Ltd.” through “Nan Ya Plastics International (Cayman) Ltd.” by US$ 57,160,834.
2018  In March, the Board of Directors decided to donate NT$ 63.4675 million to assist Mailiao Township Office in Mailiao County to construct “Mailiao Township Community Education Park”; “Nan Ya Electronic Materials (Huizhou) Co., Ltd.” expanded product line of CCL, substrate and glass fabrics and planned to conduct a cash capital increase with the amount of US$ 140 million; the merge of Nan Ya Plastics (Nantong) Co., Ltd. and Nan Ya Plastics Film (Nantong) Co., Ltd. as well as Nan Ya Plastics (Huizhou) Co., Ltd. and Nan Ya Plastics Film (Huizhou) Co., Ltd. were both approved by the Investment Commission (MOEA) in May.
 In May, the Company planned to apply an increase investment of “Formosa Synthetic Rubber (Hong Kong) Corp., Ltd.” with the amount of US$ 65 million to the Investment Commission (MOEA); the Company planned to purchase office building from TransGlobe

Life Insurance Inc. and Meifu Construction Co., Ltd.

 In November, Kung San site and the subsidiary of PFG Fiber Glass Corp. were all awarded the 2018 annual greenhouse gas voluntary reduction by the Bureau of Labor.
2019  In March, the Board of Directors decided to increase investment to “FG INC” by US$ 15 million according to the investment framework ; expand PET release film production equipment in Shulin site, New Taipei City.
 In May, the Board of Directors decided to set up the first “Corporate Governance Officer” of the Company.
 In August, the Board of Directors decided to increase investment to “Formosa Resources Corporation” by US$81.25 million ; “Nan Ya Plastics (Ningbo) Co., Ltd.” expanded product line of BPA and planned to conduct a cash capital increase with the amount of US$ 80 million.
 In November, Kung San site won awarded the 2019 annual greenhouse gas voluntary reduction by the Bureau of Labor.
 In December, the Board of Directors decided to increase investment to “Formosa Synthetic Rubber Corp.” by NT$46 million.

III.Corporate Governance

3.1 Organization

3.1.1 Organization Structure

==> picture [196 x 613] intentionally omitted <==

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

Management office Plant 3 of Chiayi
Plant 2 of Renwu
Plastics 1st Division Rigid PVC Film Plant 1 of Hsinkang
Plant 1 of Shulin
Sales Dept. 1,2,3
Management office
Window & Door Frame Plant 1,2
P lastics 2nd Division
Sales Dept. 1,2
Management office Plant of Linkou
Plant 1 of Renwu
Plant of Linyuan
Plastics 3rd Division Plant 1,2&4 of Chiayi
Engineering Plastics Plant
Sales Dept. 1,2,3
Management office Plasticizer Plant
INA Plant
Petrochemicals 1st 2EH Plant
Division PA Plant
Sales Dept.
Management office BPA Plant
Petrochemicals 2nd H2O2 Plant
Division 1,4BG Plant
MA Plant
Sales Dept.
Management office
Petrochemicals 3rd EG Plant
Division Sales Dept.
Glass Fabrics Plant 1,2,3,4
Copper Foil Plant 1,2,3
Management office CCL Plant 1, 3 of Hsinkang
EPOXY Plant
Electronic Materials LCD Plant 1,2
Division Plant 2,3 of Shulin
Color Filter Plant
Maintenance Dept. 3,4,5
Technique Dept. 1,2,3,4,5
Quality Assurance Dept. 4,5
Sales Dept. 1,2,3,4,5
Management office Staple Fiber Plant
Dyeing & Finishing Plant
Polyester Fiber Spin & Texture Plant 1,2,3,4
Division Utilities Plant
Sales Dept. 1,2
Management office
Polyester Film Plant 1, 2
Polyester Film Polyester Release Film Plant
Division Sales Dept.
Switchgear Plant
Machinery Plant of Chiayi
Management office Power Plant of Linkou
Power Plant of Shulin
Eng. & Const. Power Plant of Chiayi
Division Power Plant of Jinxing
Machine Design Dept. 1,2,3
Electro Design Dept. 1,2,3
Engineering Dept. 1,2,3
Switchgear Sales Dept.
Maintenance Dept. 1,2,3
Predictive Maintenance Dept.
R & D Center
Safety & Health Dept.
Resource Recycling Dept.
Accounting Dept.
Materials Dept.
Shipping Dept.
Taipei Administration Dept.
Chiayi Administration Dept.
Kaohsiung Administration Dept.
Mailiao Administration Dept.
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Nan Ya Plastics
Corp.
Shareholders’
Meeting
Board of
Directors
Chairman
Internal Remuneration Audit
Auditing Office Committee Committee
President
President’s
Office
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3.1.2 Major Corporate Functions

(1) Plastics 1st Division
Production and sales of flexible PVC film, PVC leather, rigid PVC film, metallized film, A-PET film, PP synthetic paper, synthetic material, non-woven, PU synthetic leather, etc.
(2) Plastics 2nd Division

Production and sales of plastic door and window, SMC door, sound insulation door, etc.

(3) Plastics 3rd Division

Production and sales of rigid PVC pipe, film products, injected products, extruded products, tile products, PP synthetic paper, PVC compound, engineering plastics, UP resin, etc.

(4) Petrochemicals 1st Division

Production and sales of plasticizers and their upper stream raw materials such as PA, 2EH, etc.

(5) Petrochemicals 2nd Division

Production and sales of chemical raw materials, i.e. BPA, 1,4BG, MA, etc.

(6) Petrochemicals 3rd Division

Production and sales of EG products.

(7) Electronic Materials Division

Production and sales of copper clad laminate, epoxy resin, glass fabrics, copper foil, LCD, capacitive touch panel, etc.

(8) Polyester Fiber Division

Production and sales of polyester fiber, PET bottle resin, etc.

(9) Polyester Film Division

Production and sales polyester film, polyester release film, etc.

(10) Eng. & Const. Division

Design, production and sales of mechanical equipment; production and sales of types of switchgear and public flow systems.

3.2 Directors, Supervisors and Management Team

3.2.1 Directors

2020.04.14

Title (Note 1)	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Term (Years)	Date First Elected (Note 2)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education) (Note 3)	Director’s Current Position at NPC and Other Companies	Executives or Directors who are Spouses or within Two Degrees of Kinship	Executives or Directors who are Spouses or within Two Degrees of Kinship	Executives or Directors who are Spouses or within Two Degrees of Kinship	Remarks (Note 4)
							Shares	(%)	Shares	(%)	Shares	(%)	Shares	(%)			Title	Name	Relation
Chairman	R.O.C.	Chia-Chau Wu	Male	2019.06.12	3	1986.04.07	79,030	-	79,030	-	55,939	-	0	0	B.S. in Business Administration, National Chengchi University	Chairman of Nanya Technology Corp. and Nan Ya PCB Corp.	None	None	None	N/A
Managing Director	R.O.C.	Wen-Yuan Wong	Male	2019.06.12	3	2007.06.22	38,206,752	0.48	37,263,311	0.47	310,457	-	0	0	Master Degree in Industrial Engineering, University of Houston, USA	Chairman of Chinese National Federation of Industries, Director of Formosa Chemicals & Fibre Corp., Formosa Taffeta Co., Ltd., and Formosa Advanced Technologies Co.,Ltd.	Managing Director	Wen-Chiao Wang	Brother
Managing Director	R.O.C.	Formosa Petrochemical Corp.	-	2019.06.12	3	2007.06.22	179,214,423	2.26	179,214,423	2.26	0	0	0	0	B.S. in Mechanical ~~E~~ngineering, University of London	Managing Director of Formosa Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp. Chairman of Formosa Plastic Marine Corp. and Nan Ya Photonics Inc.	Managing Director	Wen-Yuan Wong	Brother
		Representative Wen-Chiao Wang	Male			2007.06.22	884,044	0.01	884,044	0.01	50,600,000	0.64	0	0
Managing Director	R.O.C.	Ruey-Yu Wang	Female	2019.06.12	3	2007.06.22	19,052,421	0.24	19,052,421	0.24	0	0	0	0	M.S. in International Business Management, National Taiwan University	Managing Director of Formosa Chemicals & Fibre Corp. Chairman of Formosa Biomedical Technology Corp. and Formosa Technologies Corp.	Director	Kuei-Yung Wang	Sister
Managing Director (Independent Director)	R.O.C.	Chih-Kang Wang	Male	2019.06.12	3	2009.06.11	0	0	0	0	0	0	0	0	Ph.D. in Business Administration, Texas A&M University, USA	Chairman of CTBC Venture Capital Co., Ltd. and Taiwan Institution of Economic Research Independent Director of Formosa Sumco TechnologyCorp.	None	None	None

Title (Note 1)	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Term (Years)	Date First Elected (Note 2)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education) (Note 3)	Director’s Current Position at NPC and Other Companies	Executives or Directors who are Spouses or within Two Degrees of Kinship	Executives or Directors who are Spouses or within Two Degrees of Kinship	Executives or Directors who are Spouses or within Two Degrees of Kinship	Remarks (Note 4)
							Shares	(%)	Shares	(%)	Shares	(%)	Shares	(%)			Title	Name	Relation
Independent Director	R.O.C.	Yi-Fu Lin	Male	2019.06.12	3	2016.06.23	0	0	0	0	3,000	-	0	0	B.A. in Accounting and Statistics, National Chengchi University	Independent Director of Taishin Financial Holding Co., Ltd., Swissray Global Healthcare Holding Ltd. and Pan German Universal Motors Ltd.	None	None	None	N/A
Independent Director	R.O.C.	Yun-Peng Chu	Male	2019.06.12	3	2011.06.21	1,199	-	1,199	-	0	0	0	0	Ph.D. in Economics, University of Maryland,USA	Independent Director of Taiwan Land Development Corp. and China Petrochemical Development Corp.	None	None	None
Director	R.O.C.	Ming-Jen Tzou	Male	2019.06.12	3	1998.05.22	188,742	-	188,742	-	0	0	0	0	Chemical Engineering, Provincial Taipei Institute of Technology	President of NPC Director of Nanya Technology Corp. and Nan Ya Printed Circuit Board Corp.	None	None	None
Director	R.O.C.	Formosa Chemicals & Fibre Corporation	-	2019.06.12	3	2007.06.22	413,327,750	5.21	413,327,750	5.21	0	0	0	0	Ph.D. in Law, Chinese ~~C~~ulture University	Vice President of Contemporary Taiwan Development Foundation Independent Director of WIN Semiconductors Corp. and Capital Securities Corp. Director of East-Tender Optoelectronics Corp.	None	None	None
		Representative Shen-Yi Lee	Male			2007.06.22	0	0	0	0	26,509	-	0	0
Director (Note 6)	R.O.C.	Formosa Plastics Corporation	-	2019.06.12	3	2007.06.22	783,356,866	9.88	783,356,866	9.88	0	0	0	0	B.S. in Electrical ~~E~~ngineering, Tatung Institute of Technology	Advisor, NPC Director of Nan Ya Electronic Materials (Kunshan) Co., Ltd	None	None	None
		Representative Zo-Chun Jen	Male			1989.04.14	303,377	-	303,377	-	167,852	-	0	0
Director	R.O.C.	Kuei-Yung Wang	Female	2019.06.12	3	2007.06.22	11,164,271	0.14	11,164,271	0.14	3,068,086	0.04	0	0	B.S. in Chemistry, University of London	Senior Vice President of NPC Director of Nan Ya Plastics Corp. U.S.A	Managing Director	Ruey-Yu Wang	Sister

Title (Note 1)	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Term (Years)	Date First Elected (Note 2)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education) (Note 3)	Director’s Current Position at NPC and Other Companies	Executives or Directors who are Spouses or within Two Degrees of Kinship	Executives or Directors who are Spouses or within Two Degrees of Kinship	Executives or Directors who are Spouses or within Two Degrees of Kinship	Remarks (Note 4)
							Shares	(%)	Shares	(%)	Shares	(%)	Shares	(%)			Title	Name	Relation
Director (Note 4)	R.O.C.	Fong-Chin Lin	Male	2019.06.12	3	1992.04.30	25,458	-	25,458	-	43,590,327	0.55	0	0	M.S. in Accounting, National Chengchi University	Senior Vice President, NPC Director of Nan Ya Plastics (Hong Kong) Corp.	Managing Director Managing Director	Wen-Yuan Wong Wen-Chiao Wang	Affinity	N/A
Director	R.O.C.	Sin-Yi Huang	Male	2019.06.12	3	2016.06.23	806	-	806	-	572	-	0	0	Chemical Engineering, Ming Chi Institute of Technology	Senior Vice President, NPC Director of Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd	None	None	None
Director	R.O.C.	Cheng-Chung Lee	Male	2019.06.12	3	2019.06.12	0	0	0	0	0	0	0	0	Vice President, NPC B.S. in Chemical Engineering, National Central University	Director of Nan Ya Electronic Materials (Kunshan) Co., Ltd.	None	None	None
Director	R.O.C.	Freedom Internation Enterprise Company	-	2019.06.12	3	2007.06.22	3,287,472	0.04	3,287,472	0.04	0	0	0	0	B.A. in Business Administration, Tunghai University	Director of Fu Tak Investment Company	None	None	None
		Representative Ching-Cheng Chang	Male			2007.06.22	1,563,989	0.02	1,563,989	0.02	0	0	0	0

Note 1: In the case of institutional shareholders, the names and representatives should be indicated respectively (for representatives, the names of institutional shareholders they represent should be indicated) and filled in the table. Note 2: Any disruption in duty as a Director or Supervisor after the date of their election should be included in a separate note.

Note 3: The experience relevant to current position i.e. held a position at the accounting firm of its auditing CPAs or at an affiliated enterprise its titles and duties should be clearly stated.

Note 4: The Chairman and the President or equivalent position (the top manager) are the same person, or relatives of each other, such as spouse or within one degree of kinship, should explain the reasons, rationality, necessity and corresponding measures (such as increasing the number of Independent Directors, more than half of the Directors have not served as employees or managers, etc.: N/A

Note 5: Director Fong-Chin Lin was not re-elected at the shareholders' meeting in 2007, but was elected at the shareholders' meeting on June 24th, 2013. Note 6: Director Zo-Chun Jen was not re-elected at the shareholders' meeting in 1995, but was elected at the shareholders' meeting on June 24th, 2013. Note 7: “-” indicates the shareholding ratio is less than 0.01%.

Major shareholders of the institutional shareholders

2020.04.14

Name of Institutional Shareholders (Note 1)	Major Shareholders (Note 2)
Formosa Petrochemical Corp.	1. Formosa Plastics Corp. (28.56%) 2. Formosa Chemicals & Fibre Corp. (24.15%) 3. Nan Ya Plastics Corp. (23.11%) 4. Chang Gung Medical Foundation (5.79%) 5. Formosa Taffeta Co., Ltd. (3.83%) 6. Standard Chartered Bank (Taiwan) Ltd. In Custody for Genesis Equity Group Inc. (0.60%) 7. Chunghwa Post Co., Ltd. (0.52%) 8. HSBC Bank (Taiwan) Limited In Custody for Power Unlimited Corporation (0.51%) 9. Standard Chartered Bank (Taiwan) Ltd. In Custody for Central Capital Management Inc. (0.49%) 10. HSBC Bank (Taiwan) Limited In Custody for Pacific Light and Power Corp. (0.48%)
Formosa Plastics Corp.	1. Chang Gung Medical Foundation (9.44%) 2. Formosa Chemicals & Fibre Corp. (7.65%), 3. Credit Suisse AG- Credit Suisse Singapore Branch (6.26%) 4. Nan Ya Plastics Corp. (4.63%) 5. Chindwell International Investment Corp. (4.16%) 6. Vanson International Investment Co., Ltd. (3.05%) 7. Formosa Petrochemical Corp. (2.07%) 8. Citibank Taiwan Limited In Custody for Government of Singapore (1.46%) 9. Ming Chi University of Technology (1.43%) 10. Nan Shan Life Insurance Co.,Ltd.(1.40%)
Formosa Chemicals & Fibre Corp.	1. Chang Gung Medical Foundation (18.58%) 2. Chindwell International Investment Corp. (6.35%) 3. Vanson International Investment Co., Ltd. (3.80%) 4. Formosa Plastics Corp. (3.39%) 5. Nan Ya Plastics Corp. (2.40%) 6. Wen-Yuan Wong (2.20%) 7. Consolidated Power Development Corp. (1.63%) 8. Standard Chartered Bank (Taiwan) Ltd. In Custody for Genesis Equity Group Inc. (1.47%), 9. HSBC Bank (Taiwan) Limited In Custody for Consolidated Power Development Corp. (1.35%) 10. Bank of Taiwan in Custody for Wang Chang-Gung Charitable Trust Fund (1.21%)
Freedom Internation Enterprise Company	Freedom International Enterprise Inc. (100%)

Note 1: Directors and supervisors acting as the representatives of institutional shareholders shall indicate the names of the institutional shareholders. Note 2: The name of major shareholders of the institutional shareholders (its 10 largest shareholders) and the holding percentage of each shall be noted. If any of those shareholders is an institutional shareholder should fill out the following table.

Note 3: If the institutional shareholder is not a company, the names and shareholding ratio of shareholders to be disclosed are the names of people who contributed or donated the capital and the ratio of their contribution or donation.

2020.04.14

Major shareholders of the Company’s major institutional shareholders

Name of Institutional Shareholders (Note 1)	Major Shareholders (Note 2)
Chang Gung Medical Foundation	1. Nan Ya Plastics Corp. (19.76%) 2. Formosa Chemicals & Fibre Corp. (15.21%) 3. Formosa Plastics Corp. (14.60%) 4. Mr. Wang Yung-Tsai (12.35%) 5. Mr. WangYung-Ching (8.08%)
Formosa Taffeta Co., Ltd.	1. Formosa Chemicals & Fibre Corp. (37.40%) 2. Chang Gung Medical Foundation (5.79%) 3. Yu Yuang Textile Co., Ltd. (2.55%) 4. Min- Xiong Lai (2.43%) 5. Chang Gung University (2.20%) 6. Chang Gung University of Science and Technology. (2.13%) 7. Ming Chi University of Technology (1.87%) 8. Taiwan Life Insurance Co., Ltd. (1.59%) 9. Cathay Life Insurance Co., Ltd. (1.53%) 10. Asia Pacific Investment Co.,Ltd.(1.43%)
Standard Chartered Bank (Taiwan) Ltd. In Custody for Genesis Equity Group Inc.	Investment Account
Chunghwa Post Co., Ltd.	Ministry of Transportation and Communications, R.O.C.
HSBC Bank (Taiwan) Limited In Custody for Power Unlimited Corporation	Investment Account
Standard Chartered Bank (Taiwan) Ltd. In Custody for Central Capital Management Inc.	Investment Account
HSBC Bank (Taiwan) Limited In Custody for Pacific Light and Power Corporation	Investment Account
Credit Suisse AG- Credit Suisse Singapore Branch	Investment Account
Chindwell International Investment Corp.	Everred Corporate, Inc. (100.00%)
Vanson International Investment Co., Ltd.	Landmark Capital Holdings Inc. (100.00%)
Citibank Taiwan Limited In Custody for Government of Singapore	Investment Account
Ming Chi University of Technology	1. Mr. Wang Yung-Ching (43.26%) 2. Mr. Wang Yung-Tsai (38.84%) 3. Nan Ya PlasticsCorp. (5.09%) 4.Chindwell International Investment Corp. (3.74%) 5.FormosaChemicals&FibreCorp. (1.66%)

Name of Institutional Shareholders (Note 1)	Major Shareholders (Note 2)
Nan Shan Life Insurance Co., Ltd.	1. First Commercial Bank Trustee Account For Representative of Ruen Chen Investment Ho5lding Co., Ltd (60.01%) 2. Ruen Chen Investment Holding Co., Ltd. (29.54%) 3. Y. T. Du (2.90%) 4. Run Tai Sing Co., Ltd. (0.30%) 5. Ruentex Dyeing and Textile Co., Ltd. (0.27%) 6. Ruentex Development Co., Ltd. (0.23%) 7. Ruentex Industries Ltd. (0.21%) 8. Taishin International Bank Trust Account of Nan Shan Life Insurance Co., Ltd. (0.21%) 9. Yuan Hsin Investment Co. Ltd. (0.16%) 10. Ruentex LeasingCo.,Ltd.(0.13%)
Consolidated Power Development Corp.	Cabo de Roca Corporation (100%)
HSBC Bank (Taiwan) Limited In Custody for Consolidated Power Development Corp.	Investment Account
Bank of Taiwan in Custody for Wang Chang-Gung Charitable Trust Fund	Trust Account
Freedom International Enterprise Inc.	United Rich Investment Holding Ltd. (100%)

Note 1: If any major shareholder is a corporation, its corporate name should be stated.

Note 2: The major shareholders of the corporation (its 10 largest shareholders) and the holding percentage of each shall be noted.

Note 4: Ratio of the contribution or donation is calculated by the cumulative amount of donations over the years and the amount of donated stocks is calculated based on the face value.

Directors’ Professional Qualifications and Independent Analysis

Criteria Name (Note 1)	Meet one of the following professional qualification requirements, together with at least fiveyears work experience	Meet one of the following professional qualification requirements, together with at least fiveyears work experience	Meet one of the following professional qualification requirements, together with at least fiveyears work experience	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Number of other public companies’ in which the individual is concurrently serving as an Independent Director
	An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university	A Judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company	Have work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Chia-Chau Wu																0
Wen-Yuan Wong																0
Formosa Petrochemical Corp. Wen-Chiao Wang																0
Ruey-Yu Wang																0
Chih-KangWang																1
Yi-Fu Lin																3
Yun-PengChu																2
Ming-Jen Tzou																0
Formosa Chemicals & Fibre Corporation Shen-Yi Lee																2
Formosa Plastics Corporation Zo-Chun Jen																0
Kuei-YungWang																0
Fong-Chin Lin																0
Sin-Yi Huang																0
Cheng-ChungLee																0
Freedom Internation Enterprise Company Ching-ChengChang																0

Note 1: The columns are adjusted along with the actual amounts. Note 2: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. (1) Not an employee of the Company or any of its affiliates.

(2) Not a director or supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.

(4) Not a managerial officer under (1), spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons under (2) and (3).
(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings, or who designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)
(6) If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: Not a director, supervisor, or employee of that other company. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)
(7) If the chairman, president, or person holding an equivalent position of the Company and a person in any of those positions at another company or institution are the same person or are spouses: Not a director (or governor), supervisor, or employee of that other company or institution. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)
(8) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company. (Not applicable in cases where the specified company or institution holds 20% or more and not exceed 50% of the total number of outstanding shares of the Company and the person is an independent director appointed in accordance with the Act or laws and regulations of the local country

by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)

(9) Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, these restrictions do not apply to any member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Not being any circumstances in the subparagraphs of Article 30 of the Company Act.
(12) Not being elected in the capacity of the government, a juristic person, or a representative thereof, as provided in Article 27 of the Company Act.

Note 3: The institutional shareholder is defined by its representative.

Note 4: Independent director, Chih-Kang Wang concurrently holds a position of independent director of Formosa Sumco Technology Corp.
Note 5: Independent director, Yi-Fu Lin concurrently holds a position of independent director of Taishin Financial Holding Co., Ltd., Swissray Global Healthcare Holding Ltd. and Pan German Universal Motors Ltd. Mr. Yi-Fu Lin concurrently hold a position of independent director of Taishin Financial Holding Co., Ltd. and Taishin International Bank Co., Ltd; the two entities are deemed to be one according to the administrative rule published on Mar. 19, 2007 by the Financial Supervisory Commission R.O.C (Taiwan)
Note 6: Independent director, Yun-Peng Chu concurrently holds a position of independent director of Taiwan Land Development Corp. and China Petrochemical Development Corp.
Note 7: Independent director, Shen-Yi Lee concurrently holds a position of independent director of WIN Semiconductors Corp. and Capital Securities Corp.

3.2.2Management Team

2020.04.14

Title (Note 1)	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Director’s Spouse & Minor	Director’s Spouse & Minor	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience（Education） (Note 2)	Current Positions at Other Companies	Managers who are Spouses or Within Two degrees of Kinship	Managers who are Spouses or Within Two degrees of Kinship	Managers who are Spouses or Within Two degrees of Kinship	Remarks
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
President	R.O.C	Ming-Jen Tzou	Male	2015.07.01	188,742	-	0	0	0	0	Executive Vice President, NPC Chemical Engineering, Provincial Taipei Institute of Technology	Director of Nan Ya Technology Co., Ltd. and Nan Ya PCB Corp.	None	None	None	N/A
Senior Vice President	R.O.C	Fong-Chin Lin	Male	2003.11.04	25,458	-	43,590,327	0.55	0	0	Vice President, NPC M.S. in Accounting, National Chengchi University	Director of Nan Ya Plastics (Hong Kong) Co., Ltd.	None	None	None
Senior Vice President	R.O.C	Sin-Yi Huang	Male	2016.03.24	806	-	572	-	0	0	Vice President, NPC Chemical Engineering, Ming Chi Institute of Technology	Director of Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd.	None	None	None
Senior Vice President	R.O.C	Kuei-Yung Wang	Female	2018.03.23	11,164,271	0.14	3,068,086	0.04	0	0	Vice President, NPC B.S. in Chemistry, University of London	Director of Nan Ya Plastics Corp. USA	None	None	None
Senior Vice President	R.O.C	Cheng-Chung Lee	Male	2017.06.20	0	0	0	0	0	0	Vice President, NPC B.S. in Chemical Engineering, National Central University	Director of Nan Ya Electronic Materials (Kunshan) Co., Ltd.	None	None	None
Senior Vice President	R.O.C	Chung-Yueh Shih	Male	2019.03.20	8,080	-	0	0	0	0	Vice President, NPC B.S. in Chemical Engineering, National Taiwan University	Director of Nan Chung Petrochemical Corp.	None	None	None
Vice President	R.O.C	Shiou-Yeh Sheng	Male	2014.05.13	0	0	0	0	0	0	Assistant Vice President, NPC B.S. in Chemical Engineering, National Central University	Director of Nan Ya Plastics (Nantong) Co., Ltd.	None	None	None
Vice President	R.O.C	Pau-Chang Liu	Male	2019.03.20	6,791	-	4,000	-	0	0	Assistant Vice President, NPC B.A. in Accounting, Soochow University	None	None	None	None
Vice President	R.O.C	Tzong-Yang Su	Male	2014.05.13	3,511	-	3,000	-	0	0	Assistant Vice President, NPC B.S. in Chemical Engineering, Chinese Culture University	Director of Nan Ya Plastics (Guanzhou) Co., Ltd.	None	None	None
Vice President	R.O.C	Yu-Lung Huang	Male	2018.05.09	4,020	-	0	0	0	0	Assistant Vice President, NPC Mechanical, Provincial Kaohsiung Institute of Technology	Director of Nan Ya Plastics (Ningbo) Co., Ltd.	None	None	None
Vice President	R.O.C	Yu-Sheng Chen	Male	2017.06.20	0	0	0	0	0	0	Assistant Vice President, NPC Chemical Engineering, Provincial Taipei Institute of Technology	Vice President of Nan Ya Corp., Texas	None	None	None
Vice President	R.O.C	Kuo-Wei Lin	Male	2017.06.20	0	0	0	0	0	0	Assistant Vice President, NPC Chemical Engineering, Ming Chi Institute of Technology	President of Wen Fung Industrial Co., Ltd. and Wenling Technology Co.,Ltd	None	None	None

Title (Note 1)	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Director’s Spouse & Minor	Director’s Spouse & Minor	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience（Education） (Note 2)	Current Positions at Other Companies	Managers who are Spouses or Within Two degrees of Kinship	Managers who are Spouses or Within Two degrees of Kinship	Managers who are Spouses or Within Two degrees of Kinship	Remarks
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Vice President	R.O.C	Yang-Doun Chien	Male	2016.03.24	0	0	0	0	0	0	Assistant Vice President, NPC Chemical Engineering, Ming Chi Institute of Technology	Director of Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd.	None	None	None	N/A
Vice President	R.O.C	Wen-Cheng Yang	Male	2018.05.09	0	0	0	0	0	0	Assistant Vice President, NPC B.S. in Chemical Engineering, National Central University	None	None	None	None
Vice President	R.O.C	Yung-Fang Chang	Male	2015.11.11	0	0	28,617	-	0	0	Assistant Vice President, NPC Electrical Engineering, Ming Chi Institute of Technology	Director of Nan Ya Electric (Nantong) Co., Ltd.	None	None	None
Financial Officer	R.O.C	Ming-Jong Yeh	Male	2013.03.27	18,426	-	0	0	0	0	President’s Office Vice President, NPC B.S. in Accounting, Soochow University	Supervisor of Wen Fung Industrial Co., Ltd.	None	None	None
Corporate Governance Officer	R.O.C	Wen-Pin Cheng	Male	2019.05.10	734	-	0	0	0	0	President’s Office Assistant Vice President, NPC B.S. in Business Administration, FengChia University	None	None	None	None
Accounting Officer	R.O.C	Li-Ta Pai	Male	2013.03.27	15,541	-	0	0	0	0	Accounting Department Manager, NPC M.S. in Accounting, Soochow University	Supervisor of PFG Fiber Glass Corp. and Wenling Technology Corp.	None	None	None

Note 1: President, Vice President, Assistant Vice President, Department Manager, and Branch Agencies and persons who hold positions equivalent to President, Vice President, Assistant Vice President or Manager shall be disclosed. Note 2: The experience relevant to current position i.e. held a position at the accounting firm of its auditing CPAs or at an affiliated enterprise its titles and duties should be clearly stated. Note 3: The Chairman and the President or equivalent position (the top manager) are the same person, or relatives of each other, such as spouse or within one degree of kinship, should explain the reasons, rationality, necessity and corresponding measures (such as increasing the number of Independent Directors, more than half of the Directors have not served as employees or managers, etc.: N/A Note 4: The Company does not provide expenses for cars, housing, and other personal expenses. Note 5: “-” indicates the shareholding ratio is less than 0.01%.

3.2.3 Boards of Directors and Major Managers Succession Plan of NPC

(1) The Company election of directors shall be conducted in accordance with the candidate nomination system and that shareholders shall elect directors from among those listed in the slate of director nominees. Now the directors are nominated by major shareholders and elected by shareholders meeting. Each director has the professional ability such as operating management, industrial knowledge and international outlook, etc. The newly appointed director will be arranged 12-hour refresher courses in the year he takes office, and will be provided regulations manuals which stated relevant laws and regulations and precautions for the directors and insiders. To improve professionalism for members in Board of Directors during their tenure and assist them to equip various professional knowledge required to perform their duties, the Company arranges refresher courses at least 6 hours per year after excluding the professional competence of each director. The courses covering business, legal affairs and corporate social responsibility etc. which are all related to the nature of the Company's industry.
(2) The Company cultivates the internal senior managers by arranging them join into the Board of Directors to let them get familiar with the operation of the Board of Directors. The Senior Vice President, Cheng-Chung Lee joined the Board of Directors to take over the retired director during the re-elected of Board of Directors in 2019.
(3) In needs of perpetual business operation and ensuring the development of major managing talents can successfully take over, the Company has set up Talent Development Rule. The rule specifies the criteria of development candidates, election principles, the way of development conduction and the review of promotion criteria. The amount of manager development candidates of each department shall at least by 2 to for future optimum selection. In order to promote excellent management and executives in 2019, the Vice President, Chung-Yueh Shih was promoted to Senior Vice President; Assistant Vice President, Pao-Chang Liu was promoted to Vice President to undertake the more important duties.
(4) If the development candidate is lack of experienced, the Company will increase his or her experiences by job rotation or increasing his or her responsible business scope. The annual working achievement of development candidates shall be included in periodic assessment in accordance with “Assessment Rule” and the periodic working assessment shall be the base of year-end performance appraisal assessment. If the year-end performance appraisal of the development candidates were rated as excellent, it shall be the reference for optimum promotion.
(5) In 2019, in order to progress the managers’ and executives’ understanding of important regulations of other business and abnormal cases, supervise the department responsibilities and ensure that the cultivation of talents can be successfully taken over and continued, the Company arranges nine cross-functional training courses, including "production", "business", "project improvement", "engineering", "maintenance", "materials", "finance", “personnel affairs” and "Work Safety". In 2019, 172 people have attended the courses and accumulated 603 training hours.

3.3 Remuneration of Directors, Supervisors, President, and Vice Presidents

3.3.1 Remuneration of Directors and Supervisors

3.3.1.1 Remuneration of Directors and Independent Directors Unit: NT$ thousands; 2019.12.31

	Title	Name	Director’s R	Director’s R	Director’s R	Director’s R	emuneration	emuneration			Total Remuneration (A+B+C+D) as a % of 2018 Net Income (Note 2)	Total Remuneration (A+B+C+D) as a % of 2018 Net Income (Note 2)	Compensation o	Compensation o	Received by a Dire r of NPC’s consoli	Received by a Dire r of NPC’s consoli	ctor who is an employee of NPC dated subsidiaries	ctor who is an employee of NPC dated subsidiaries	ctor who is an employee of NPC dated subsidiaries	ctor who is an employee of NPC dated subsidiaries	Total Compensation (A+B+C+D+E+F+G) as a % of 2018 Net Income (Note 10)	Total Compensation (A+B+C+D+E+F+G) as a % of 2018 Net Income (Note 10)	Compensation Paid to Directors from an Invested Company other than NPC ′ s Subsidiary or the Parent Company (Note 11)
			Base Compensation (A)(Note 2)		Severance Pay and Pensions (B)		Directors Compensation (C) (Note 3)		Allowances (D) (Note 4)				Salaries, Bonuses and Allowances (E) (Note 5)		Severance Pay and Pensions (F)		Employee Compensation (G) (Note 6)
			From NPC	Companies in the consolidated financial statements(Note 7)	From NPC	Companies in the consolidated financial statements(Note 7)	From NPC	Companies in the consolidated financial statements(Note 7)	From NPC	Companies in the consolidated financial statements(Note 7)	From NPC	Companies in the consolidated financial statements(Note 7)	From NPC	Companies in the consolidated financial statements(Note 7)	From NPC	Companies in the consolidated financial statements(Note 7)	Fr N	om PC	Companies in the consolidated financial statements (Note 7)		From NPC	Companies in the consolidated financial statements(Note 7)
																	Cash	Stock	Cash	Stock
Director	Chairman	Chia-Chau Wu	17,915	17,915	108	108	0	0	760	970	0.0814	0.0823	49,242	49,242	534	534	53	0	53	0	0.2973	0.2982	56,093
	ManagingDirector	Wen-Yuan Wong
	Managing Director	Formosa Petrochemical Corp. Representative Wen-Chiao Wang
	ManagingDirector	Ruey-Yu Wang
	Director	Ming-Jen Tzou
	Director	Formosa Chemicals & Fibre Corporation Representative Shen-Yi Lee
	Director (Note)	Formosa Plastics Corporation Representative Chin-Jen Wu
	Director (Note)	Formosa Plastics Corporation Representative Zo-Chun Jen
	Director	Kuei-YungWang
	Director	Fong-Chin Lin
	Director	Sin-Yi Huang
	Director	Cheng-ChungLee
	Director	Freedom Internation Enterprise Company Ching-ChengChang
Independent Director	Managing Director (Independent Director)	Chih-Kang Wang	5,466	5,466	0	0	0	0	510	510	0.0259	0.0259	0	0	0	0	0	0	0	0	0.0259	0.0259	0
	Independent Director	Yi-Fu Lin
	Independent Director	Yun-PengChu

Note: Formosa Plastics Corporation’s representative, Chin-Jen Wu resigned after the director re-election on June 12, 2019, and the representative was replaced by director Zo-Chun Jen.

Please state the policy, system, standards and structure of independent directors ’remuneration payment, and explain the relevance to the amount of remuneration according to the responsibilities, risks and time invested:
The Company does not provide compensation for directors. Independent directors' remuneration is based on a fixed payment system. The main consideration is to maintain its independence and facilitate its supervision function. The Company pays a fixed remuneration to independent directors based on the principle of NT$1.8 million and the transportation allowance is NT$10,000 each time according to the attendance of the meeting. According to the Company’s “Regulations and Scope of Independent Directors’ Duties”, the duties and risks includes: Supervise the fair presentation of the Company's financial statements, the hiring (dismissal), independence and performance of CPA of the Company, the effective implementation of the Company's internal control system, the compliance with relevant laws and regulations of the Company, the existing or potential risk management and control of the Company, etc. The Company has insured director liability insurance for independent directors. The independent director attends at least 6 times of Board of Directors, 4 times of Audit Committee and 2 times of Remuneration Committee. And in order to implement the operational integrity, the independent directors review the internal audit reports monthly, and communicate with internal audit officer and CPA regarding internal control and financial statements regularly. More communication details please refer to “3.4.2 Audit Committee Meeting Status or the Participation of Supervisors in the Operations of the Board of Directors”.
Other than disclosure in the above table, Directors remunerations earned by providing services (e.g. providing consulting services as a non-employee) to NPC and all consolidated entities in the 2018 financial statements: None.

Range of Remuneration Paid to Directors


Range of Remuneration	Name of		Directors
	Total of Remuneration (A+B+C+D)		Total of Remuneration (A+B+C+D+E+F+G)
	From NPC (Note 8)	Companies in the consolidated financial statements (Note 9)H	From NPC (Note 8)	The parent company and all re-invested businesses (Note 11)I
Under NT$ 1,000,000	Wen-Yuan Wong, Wen-Chiao Wang, Ruey-Yu Wang, Ming-Jen Tzou, Kuei-Yung Wang, Chin-Jen Wu, Shen-Yi Lee, Fong-Chin Lin, Zo-Chun Jen, Sin-Yi Huang, Cheng-Chung Lee, Ching-Cheng Chang, Formosa Petrochemical Corp., Formosa Plastics Corporation, Formosa Chemicals & Fibre Corporation	Wen-Yuan Wong, Wen-Chiao Wang, Ruey-Yu Wang, Ming-Jen Tzou, Kuei-Yung Wang, Chin-Jen Wu, Shen-Yi Lee, Fong-Chin Lin, Zo-Chun Jen, Sin-Yi Huang, Cheng-Chung Lee, Ching-Cheng Chang, Formosa Petrochemical Corp., Formosa Plastics Corporation, Formosa Chemicals & Fibre Corporation	Wen-Yuan Wong, Wen-Chiao Wang, Ruey-Yu Wang, Chin-Jen Wu, Shen-Yi Lee, Ching-Cheng Chang, Formosa Petrochemical Corp., Formosa Plastics Corporation, Formosa Chemicals & Fibre Corporation	Chin-Jen Wu, Shen-Yi Lee, Ching-Cheng Chang, Formosa Petrochemical Corp., Formosa Plastics Corporation, Formosa Chemicals & Fibre Corporation
NT$ 1,000,000`～`NT$ 1,999,999	Yi-Fu Lin, Yun-Peng Chu, Freedom Internation Enterprise Company	Yi-Fu Lin, Yun-Peng Chu, Freedom Internation Enterprise Company	Yi-Fu Lin, Yun-Peng Chu, Freedom Internation Enterprise Company	Yi-Fu Lin, Yun-Peng Chu, Freedom Internation Enterprise Company
NT$ 2,000,000`～`NT$ 3,499,999	Chih-Kang Wang	Chih-Kang Wang	Chih-Kang Wang	Chih-Kang Wang
NT$ 3,500,000`～`NT$ 4,999,999	None	None	None	None
NT$ 5,000,000`～`NT$ 9,999,999	None	None	Kuei-Yung Wang, Fong-Chin Lin, Zo-Chun Jen, Sin-Yi Huang, Cheng-ChungLee	Kuei-Yung Wang, Fong-Chin Lin, Zo-Chun Jen, Sin-Yi Huang, Cheng-ChungLee
NT$ 10,000,000`～`NT$ 14,999,999	None	None	Ming-Jen Tzou	Ming-Jen Tzou
NT$ 15,000,000`～`NT$ 29,999,999	Chia-Chau Wu	Chia-Chau Wu	Chia-Chau Wu	Chia-Chau Wu, Wen-Yuan Wong, Wen-Chiao Wang,Ruey-Yu Wang
NT$ 30,000,000`～`NT$ 49,999,999	None	None	None	None
NT$ 50,000,000`～`NT$ 99,999,999	None	None	None	None
Over NT$ 100,000,000	None	None	None	None
Total	20	20	20	20

Note 1: Names of directors shall be listed separately (both the name of the institution and its representative shall be listed for an institutional shareholder). Also, director and independent directors shall be listed separately and individual payments made shall be summarized and disclosed accordingly. If a .director is also the President or the Vice President, this table and the following one (3-1) or (3-2-1)and (3-2-2) shall also be completed. Note 2: The remunerations paid to directors in the latest year (including salaries, additional pay, service pay, various prizes, rewards, etc.). Note 3: The value of remunerations approved to be assigned to directors by the Board of Directors in the most recent year.

Note 4: This is the expenses incurred by directors over the past years from carrying out related tasks, including transportation, special expenditure, various types of allowances, dormitory, and company cars, among other supplies in kind).
.When houses, automobiles, and other transportation tools or expenses that are specific to individuals are provided, the nature and cost of the assets provided, the actual or market-value-based rental, the cost of gasoline, and other .payments shall be disclosed. If a driver is assigned, please indicate the pay available for the driver but it may not be included in the calculation of remunerations.
Note 5: Salaries, additional pay, service pay, various prizes, rewards, transportation, special expenditure, various allowances, dormitory, cars, and other actual items that are claimed by directors and employees (including concurrently hold a .position of President, Vice President, other managers and employees) in the latest year. For housing, automobiles and other transportation tools or expenses that are specific to individuals, the nature and cost of the assets provided, the .actual or market-value-based rental, the cost of gasoline and other payments shall be disclosed. If a driver is assigned, please indicate the pay available for the driver but it may not be included in the calculation of remunerations. In .addition, salaries recognized in accordance with IFRS 2: stock-based payment transaction, including employee stock option certificates restricted employee shares, and participation in subscribing shares in cash capital increase, shall .also be included as part of the remunerations.
Note 6: Directors and employees (including concurrently hold a position of President, Vice President, other managers and employees) having claimed employee remunerations (including shares and cash) shall disclose employee remunerations .distributed through the Board of Directors in the most recent year. If it is impossible to estimate the value planned to be distributed this year, follow the actual value distributed last year and calculated proportionally and Exhibit 1-3 .shall be completed.
Note 7: The total value of various remunerations paid to directors of the Company by all companies in the Consolidated Report (including the Company) shall be disclosed.
Note 8: For the total value of various remunerations paid to each director by the Company, disclose the name of the director in the respective bracket.
Note 9: For the total value of various remunerations paid to each director of the Company by all companies (including the Company) in the Consolidated Report, disclose the name of the director in the respective bracket. Note 10: After-tax pure earnings are those indicated in the entity or individual financial report from the most recent year.
Note 11: a. The value of related remunerations claimed by directors of the Company from reinvested businesses other than subsidiaries or the parent company shall be specified in this column. (If there’s no related remuneration, please fill in “none”)
.b. In the event that directors of the Company claim related remunerations from reinvested businesses other than subsidiaries or the parent company, the said remunerations shall be combined in Column I of the remuneration bracket table and the name of .the column shall be changed to "the parent company and all re-invested businesses."
.c. Remunerations are the compensation, rewards (including rewards for employees, directors, and supervisors) and operational expenditures claimed by supervisors of the Company who serve as the director, supervisor, or manager .at a reinvested business other than the subsidiary or the parent company.
Note 12: 108 thousand and 534 thousand in column B and F is the contribution amount of severance pay and pensions
The content of the remunerations disclosed in this table differs from the idea of income indicated in the Income Tax Act. As such, the purpose of this table is for disclosure of information only, not for taxation.

3.3.1.2 Remuneration of Supervisors

The Company set up an audit committee to replace the Supervisors on June 23rd, 2016.

3.3.2 Remuneration of President and Vice Presidents Unit: NT$ thousands; 2019.12.31

Title	Name	Salary (A) (Note 2)	Salary (A) (Note 2)	Severance Pay and Pensions (B)	Severance Pay and Pensions (B)	Bonuses and Allowances (C) (Note 3)	Bonuses and Allowances (C) (Note 3)	Employee Compensation (D) (Note 4)	Employee Compensation (D) (Note 4)	Employee Compensation (D) (Note 4)	Employee Compensation (D) (Note 4)	Total compensation (A+B+C+D) as a % of 2019 net income (Note 8)	Total compensation (A+B+C+D) as a % of 2019 net income (Note 8)	Compensation Paid to Directors from an Invested Company other than NPC′s Subsidiary or the Parent Company (Note 9)
		From NPC	Companies in the consolidated financial statements(Note 5)	From NPC	Companies in the consolidated financial statements(Note 5)	From NPC	Companies in the consolidated financial statements(Note 5)	From NPC		Companies in the consolidated financial statements (Note 5)		From NPC	Companies in the consolidated financial statements(Note 5)
								Cash	Stock	Cash	Stock
President	Ming-Jen Tzou	45,202	45,312	1,296	1,296	49,483	49,483	97	0	97	0	0.4164	0.4169	70
Senior Vice President	Fong-Chin Lin
Senior Vice President	Sin-Yi Huang
Senior Vice President	Kuei-Yung Wang
Senior Vice President	Cheng-Chung Lee
Senior Vice President (Note1)	Chung-Yueh Shih
Vice President	Shiou-Yeh Sheng
Vice President(Note1)	Pao-Chang Liu
Vice President	Tzong-Yang Su
Vice President	Yu-Lung Huang
Vice President	Yu-Sheng Chen
Vice President	Kuo-Wei Lin
Vice President	Yang-Doun Chien
Vice President	Wen-Cheng Yang
Vice President	Yung-Fang Chang

Note1: Mr. Chung-Yueh Shih, NPC’s former Vice President and Pao-Chang Liu, NPC’s former Assistant Vice President were separately promoted to Senior Vice President and Vice President on March 20, 2019.

Note2: This table is to disclose the remuneration of President and Vice Presidents as of December 31, 2019

Range of Remuneration of President and Vice Presidents

Range of Remuneration of President and Vice Presidents
Range of compensation	Name of President and Vice Presidents
	From NPC (Note 6)	The parent company and all re-invested businesses (Note 7)E
Under NT$ 1,000,000	None	None
NT$ 1,000,000～NT$ 1,999,999	None	None
NT$ 2,000,000～NT$ 3,499,999	None	None
NT$ 3,500,000～NT$ 4,999,999	Pao-ChangLiu, Yu-LungHuang, Wen-ChengYang	Pao-ChangLiu, Yu-LungHuang, Wen-ChengYang
NT$ 5,000,000～NT$ 9,999,999	Fong-Chin Lin, Sin-Yi Huang, Kuei-Yung Wang, Cheng-Chung Lee, Chung-Yueh Shih, Shiou-Yeh Sheng, Tzong-Yang Su, Yu-Sheng Chen, Kuo-Wei Lin, Yang-Doun Chien,Yung-FangChang	Fong-Chin Lin, Sin-Yi Huang, Kuei-Yung Wang, Cheng-Chung Lee, Chung-Yueh Shih, Shiou-Yeh Sheng, Tzong-Yang Su, Yu-Sheng Chen, Kuo-Wei Lin, Yang-Doun Chien,Yung-FangChang
NT$ 10,000,000～NT$ 14,999,999	Ming-Jen Tzou	Ming-Jen Tzou
NT$ 15,000,000～NT$ 29,999,999	None	None
NT$ 30,000,000～NT$ 49,999,999	None	None
NT$ 50,000,000～NT$ 99,999,999	None	None
Over NT$ 100,000,000	None	None
Total	15	15

Regardless of their title, the information has to be disclosed as long as their ranking is equivalent to that of a President, Vice President or assistant manager.
Note1: Names of President and Vice President shall be listed separately and individual payments made shall be disclosed through a summary. If the director is also a President or Vice President, this table and the above table (1-1) or (1-2-1) and (1-2-2) shall be completed.
Note2: Salaries, additional pay, and service pay for President and Vice President in the latest year.
Note3: Various prizes, awards, transportation, special expenditure, various allowances, dormitory, cars, and other actual items provided and other compensations for President and Vice President in the latest year. For housing, automobiles, and other transportation tools or expenses that are specific to individuals, the nature and cost of the assets provided, the actual or market-value-based rental, the cost of gasoline, and other payments shall be disclosed. If a driver is assigned, please indicate the pay available for the driver but it may not be included in the calculation of remunerations. In addition, salaries recognized in accordance with IFRS 2: stock-based payment transaction, including employee stock option certificates, restricted employee shares, and participation in subscribing shares in cash capital increase, shall also be included as part of the remunerations.
Note4: Employee remunerations (including stock and cash) distributed to President and Vice President as approved by the Board of Directors in the latest year. If it is impossible to estimate the value planned to be distributed this year, follow the actual value distributed last year and calculated proportionally. In addition, the attached Table 1-3 shall be completed.
Note5: The total value of remunerations paid to President and Vice President of the Company by all companies in the Consolidated Report (including the Company) shall be disclosed.

Note6: Disclose each President and Vice Presidents’ name in the respective bracket according to the total value of various remunerations paid by the Company.

Note7: For the total value of various remunerations paid to each President and Vice President of the Company by all companies (including the Company) in the Consolidated Report, disclose the name of the President and Vice President in the respective bracket.
Note8: After-tax pure earnings are those indicated in the entity or individual financial report from the most recent year.
Note9: a. The value of related remunerations claimed by President and Vice President of the Company from reinvestment businesses other than subsidiaries or the parent company shall be specified in this column. (If there’s no related remuneration, please fill in “none”)
.b. In the event that President and Vice President of the Company claim related remunerations from reinvestment businesses other than subsidiaries or the parent company, the said remunerations shall be combined in Column E of the remuneration bracket table and the name of the column shall be changed to "the parent company and all reinvested businesses.”
.c. Remunerations are the compensation, rewards (including rewards for employees, directors, and supervisors) and operational expenses, among others, claimed by President and Vice President of the Company who serve as the director, supervisor, or manager at a reinvested business other than the subsidiary or the parent company.

Note10: 1,296 thousand in column B is the contribution amount of severance pay and pensions

The content of the remunerations disclosed in this table differs from the idea of income indicated in the Income Tax Act. As such, the purpose of this table is for disclosure of information only, not for taxation.

Employee Compensation of Executive Officers

Unit: NT$ thousands; 2019.12.31

				Unit:	NT$ thousands; 2019.12.31
Title (Note 1)	Name (Note 1)	Employee Compensation -in Stock	Employee Compensation -in Cash	Total	Total Employee Compensation as a % of 2019 Net Income
President	Ming-Jen Tzou	0	111	111	0.0005
Senior Vice President	Fong-Chin Lin
Senior Vice President	Sin-Yi Huang
Senior Vice President	Kuei-Yung Wang
Senior Vice President	Cheng-Chung Lee
Senior Vice President (Note5)	Chung-Yueh Shih
Vice President	Shiou-Yeh Sheng
Vice President	Pao-Chang Liu
Vice President	Tzong-Yang Su
Vice President	Yu-Lung Huang
Vice President	Yu-Sheng Chen
Vice President	Kuo-Wei Lin
Vice President	Yang-Doun Chien
Vice President	Wen-Cheng Yang
Vice President	Yung-Fang Chang
Financial Officer	Ming-Jong Yeh
Corporate Governance Officer	Wen-Pin Cheng
Accounting Officer	Li-Ta Pai

Note1: The name and title of the individual shall be disclosed but distribution of profits may be disclosed through a summary. Note2: Employee remunerations (including stock and cash) distributed to managers through the Board of Directors in recent years. If it is impossible to estimate the value planned to be distributed this year, follow the actual value distributed last year and calculate proportionally. After-tax pure earnings are those in the latest year. When the International Financial Reporting Standards are adopted, after-tax pure earnings are those indicated in the entity or individual financial report from the most recent year. Note3: For the applicability of managers, follow the Tai-Cai-Zheng-San No. 0920001301 letter dated March 27, 2003.

(1) Presidents and people of equivalent ranking

(2) Vice Presidents and people of equivalent ranking

(3) Assistant managers and people of equivalent ranking

(4) Head of Department of Finance

(5) Head of Accounting Department

(6) Other people handling corporate affairs and signature rights Note4: If directors, Presidents, and Vice Presidents receive employee remunerations (including stock and cash), this table needs to be completed in addition to Exhibit 1-2.

Note5: Mr. Chung-Yueh Shih, NPC’s former Vice President, and Pao-Chang Liu, NPC’s former Assistant Vice President were separately promoted to Senior Vice President and Vice President on March 20, 2019.

Note6: The Company appointed Wen-Pin Cheng as the first corporate governance officer on May 10, 2019 Note7: This form is to disclose the employee compensation of executive officers as of 2019.12.31.

3.3.3 Comparison and Description of Remuneration for Directors, Supervisors,

President and Vice Presidents etc. in the Most Recent Two Fiscal Years and

Remuneration Policy for Directors, President and Vice Presidents.

(1) The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to Directors, Supervisors, President and Vice Presidents etc. of the Company, to the net income.

consolidated financial statements for the two most President and Vice Presidents etc. of the Company,	consolidated financial statements for the two most President and Vice Presidents etc. of the Company,	consolidated financial statements for the two most President and Vice Presidents etc. of the Company,	recent fiscal years to Directors, Supervisors, to the net income.	recent fiscal years to Directors, Supervisors, to the net income.
			Unit: %
Company Title\Year	The Company		All companies in the Consolidated Report
	2019	2018	2019	2018
Directors	0.3232	0.1243	0.3241	0.1248
President and Vice President	0.4164	0.1662	0.4169	0.1664

Note: The increase of the ratio of total remuneration to Directors, President and Vice Presidents of the Company, to the net income resulted from the reduction in 2019 net income as compared to 2018.
(2) The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with risks and business performance.
A. NPC’s Independent Directors receives base compensation monthly, and traffic fares based on attendances of Board meetings. There is no payment of the variable part of remuneration.
B. The remuneration of NPC’s Directors is determined in accordance with Article 16 of NPC’s Articles of Incorporation, which stipulates that: "The Board of Directors is authorized to determine the compensation for the Directors, according to their extent and value of the contribution provided for the Company and the common compensation standards of the same industry.", and traffic fares are based on attendances of Board meetings.
C. On June 22, 2010, the Board of Directors cancelled the policy of paying the Directors and Supervisors remuneration from earnings, and set up the Audit Committee to replace the Supervisors on June 23, 2016.
D. The remuneration of NPC’s President and Vice Presidents is determined in accordance with NPC’s Articles of Incorporation and Article 29 of Company Act. Besides their monthly base compensation, the remuneration also includes year-end bonus, festival bonus and special awards according to the Company's operating conditions. The monthly base compensation will be adjusted based on related standards every year.
E. NPC’s Remuneration Committee held 3 meetings in 2019 to propose advice to the Board of Directors about the compensation standard and structure, assessment system, salary adjustment of executive officers; and year-end bonus distribution standards .

3.4 Implementation of Corporate Governance

3.4.1 Board of Directors’ Meeting Status

A total of 7 meetings【A】of the Board of Directors’ Meeting were held in 2019. Director attendance status is shown as follows:

Title	Name (Note1)	Attendance in person `【`B`】`	Attendance rate in person (%) `【`B/A`】` (Note2)	Remark
Chairman	Chia-Chau Wu	7	100.0	Re-elected; Re-election on 2019.06.12
Managing Director	Wen-Yuan Wong	6	85.7	Re-elected; Re-election on 2019.06.12
Managing Director	Formosa Petrochemical Corp. Rep. Wen-Chiao Wang	5	71.4	Re-elected; Re-election on 2019.06.12
Managing Director	Ruey-Yu Wang	5	71.4	Re-elected; Re-election on 2019.06.12
Managing Director (Independent Director)	Chih-Kang Wang	7	100.0	Re-elected; Re-election on 2019.06.12
Independent Director	Yi-Fu Lin	7	100.0	Re-elected; Re-election on 2019.06.12
Independent Director	Yun-Peng Chu	7	100.0	Re-elected; Re-election on 2019.06.12
Director	Ming-Jen Tzou	7	100.0	Re-elected; Re-election on 2019.06.12
Director	Formosa Chemicals & Fibre Corp. Rep. Shen-Yi Lee	7	100.0	Re-elected; Re-election on 2019.06.12
Director	Formosa Plastics Corp. Rep. Chin-Jen Wu	1	33.3	Old; Re-election on 2019.06.12
Director	Formosa Plastics Corp. Rep. Zo-Chun Jen	7	100.0	Re-elected (Note); Re-election on 2019.06.12
Director	Kuei-Yung Wang	7	100.0	Re-elected; Re-election on 2019.06.12

Title	Name (Note1)	Attendance in person `【`B`】`	By Proxy	Attendance rate in person (%) `【`B/A`】` (Note2)	Remark
Director	Fong-Chin Lin	6	0	85.7	Re-elected; Re-election on 2019.06.12
Director	Sin-Yi Huang	7	0	100.0	Re-elected; Re-election on 2019.06.12
Director	Cheng-Chung Lee	4	0	100.0	New; Re-election on 2019.06.12
Director	Freedom Internation Enterprise Company Rep. Ching-ChengChang	7	0	100.0	Re-elected; Re-election on 2019.06.12
Note: Formosa Plastics Corporation’s representative, Chin-Jen Wu resigned after the director re-election on June 12, 2019, and the representative was replaced bydirector Zo-Chun Jen.
Other mentionable items: 1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all Independent Directors’ opinions and the Company’s response should be specified: (1) Matters referred to in Article 14-3 of the Securities and Exchange Act.: N/A. (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the Board of Directors: None. 2. Implementation of Directors Avoiding Conflict of Interests towards Resolution: (1) The 1stBoard of Directors’ Meeting of 2019 (March 20, 2019) Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Yuan Wong, Wen-Chiao Wang and Ruey-Yu Wang, Director Ming Jen, Tzou, Shen-Yi Lee and Zo Chun, Jen Resolutions adopted: To compile plan of lending funds for the second quarter of 2019. Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were appointed as the Chairman, Managing Director, Director or representative of the juristic person of the borrowing Company, so they were recused from the discussion and voting. (2) The 3rdBoard of Directors’ Meeting of 2019 (May 10, 2019) Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Yuan Wong and Director Ming-Jen Tzou, Shen-Yi Lee and Zo Chun, Jen Resolutions adopted: To compile plan of lending funds for the third quarter of 2019. Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were appointed as the Chairman, Managing Director, Director or representative of the juristic person of the borrowing Company, so they were recused from the discussion and voting. (3) The 3rdBoard of Directors’ Meeting of 2019 (May 10, 2019) Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Yuan Wong and Director Ming-Jen Tzou Resolutions adopted: Equipment transactions with related companies: “Formosa Heavy Industries Corp.”, “Formosa Plastics Corp.”, “Formosa Technologies Corp.” and “Nan Ya Photonics Incorporation”. Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors as Managing Director and Director of related companies, so they were recused from the discussion and voting. (4) The 3rdBoard of Directors’ Meeting of 2019 (May 10, 2019) Recusals: Chairman Chia-Chau Wu and attending Managing Director Wen-Yuan Wong Resolutions adopted: The donation NT$ 11,134,000 to Ming Chi University of Technology. Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were appointed as the Chairman and Director of Ming Chi University of Technology, so they were recused from the discussion and voting.

(5) The 3[rd] Board of Directors’ Meeting of 2019 (May 10, 2019)
Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Yuan Wong and Director Ming-Jen, Tzou, Fong- Chin Lin and Sin-Yi Huang
Resolutions adopted: The Company's investment business “Formosa Industries Corp.” would borrow loans from banks. The Company was proposed to issue a letter of support
Causes of interest conflict Avoidance and Voting status: the above-mentioned Director was appointed as the Chairman and Director of Formosa Industries Corp., so they were recused from the discussion and voting.
(6) The 4[th] Board of Directors’ Meeting of 2019 (June 12, 2019)
Recusals: Independent Director Chih-Kang Wang, Yi-Fu Lin and Yun-Peng Chu
Resolutions adopted: To appoint 3 Independent directors as the members of Remuneration Committee.
Causes of interest conflict Avoidance and Voting status: the above-mentioned Independent Directors were the parties, so they were recused from the discussion and voting.
(7) The 5[th] Board of Directors’ Meeting of 2019 (August 12, 2019)
Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Yuan Wong, Wen-Chiao Wang and Ruey-Yu Wang, Director Shen-Yi Lee and Zo Chun, Jen
Resolutions adopted: To compile plan of lending funds for the fourth quarter of 2019
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were appointed as the Chairman, Managing Director, Director or representative of the juristic person of the borrowing Company, so they were recused from the discussion and voting.
(8) The 5[th] Board of Directors’ Meeting of 2019 (August 12, 2019)
Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Yuan Wong, Wen-Chiao Wang and Ruey-Yu Wang, Director Ming-Jen, Tzou and Zo Chun, Jen
Resolutions adopted: Equipment transactions with related companies: “Formosa Heavy Industries Corp.”,
- “Formosa Plastics Corp.”, “Formosa Technologies Corp.” and “Nan Ya Photonics Incorporation”.
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were appointed as Chairman, Managing Director and Director of related companies, so they were recused from the discussion and voting.
(9) The 5[th] Board of Directors’ Meeting of 2019 (August 12, 2019)
Recusals: Chairman Chia-Chau Wu and attending Managing Director Wen-Yuan Wong and Wen-Chiao Wang Resolutions adopted: To increase investment to “Formosa Resources Corporation” for US$81.25 million
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors as the Managing Director and Director of Formosa Resources Corporation, so they were recused from the discussion and voting.
(10) The 5[th] Board of Directors’ Meeting of 2019 (August 12, 2019) Recusals: Chairman Chia-Chau Wu
Resolutions adopted: To formulate the Chairman’ compensation.
Causes of interest conflict Avoidance and Voting status: Chairman Chia-Chau Wu, acting as principal, so he was recused from the discussion and voting.
(11) The 5[th] Board of Directors’ Meeting of 2019 (August 12, 2019)
Recusals: Independent Director Chih-Kang Wang, Yi-Fu Lin, Yun-Peng Chu and Director Ching-Cheng Chang Resolutions adopted: To formulate the existing Directors’ compensation.
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were the parties, so they were recused from the discussion and voting.
(12) The 6[th] Board of Directors’ Meeting of 2019 (November 8, 2019)
Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Chiao Wang and Ruey-Yu Wang, Director Ming Jen, Tzou, Shen-Yi Lee, Zo Chun, Jen and Kuei-Yung Wang
Resolutions adopted: To compile plan of lending funds for the first quarter of 2020.
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors as the Chairman, Managing Director, Director, representative of the juristic person of the borrowing Company or Director’s relative within the second degree of kinship, so they were recused from the discussion and voting.
(13) The 6[th] Board of Directors’ Meeting of 2019 (November 8, 2019)
Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Chiao Wang and Ruey-Yu Wang, Director Ming-Jen Tzou, Zo Chun, Jen and Kuei-Yung Wang

Resolutions adopted: Equipment transactions with related companies: “Formosa Heavy Industries Corp.”, “Formosa Plastics Corp.”, “Formosa Technologies Corp.” and “Nan Ya Photonics Incorporation”.
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors as Chairman, Managing Director, Director, representative of the juristic person of the related companies or Director’s relative within the second degree of kinship, so they were recused from the discussion and voting.
(14) The 6[th] Board of Directors’ Meeting of 2019 (November 8, 2019)
Recusals: Chairman Chia-Chau Wu, attending Managing Director Wen-Chiao Wang, Ruey-Yu Wang and Director Kuei-Yung Wang

Resolutions adopted: Donation to Chang Gung University for NT$6.14 million 1,239 dollars.

Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were as Director of Chang Gung University, so they were recused from the discussion and voting.
(15) The 6[th] Board of Directors’ Meeting of 2019 (November 8, 2019)
Recusals: Chairman Chia-Chau Wu and attending Director Ming-Jen Tzou and Cheng-Chung Lee
Resolutions adopted: The Company's investment business “Nan Ya Electronic Materials (Huizhou) Co., Ltd.” would borrow loans from banks. The Company was proposed to issue a letter of support.
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were as Chairman and Director of Nan Ya Electronic Materials (Huizhou) Co., Ltd., so they were recused from the discussion and voting.
(16) The 7[th] Board of Directors’ Meeting of 2019 (December 13, 2019)
Recusals: Attending Managing Director Wen-Yuan Wong, Wen-Chiao Wang and Director Ming-Jen Tzou Resolutions adopted: To increase investment to “Formosa Synthetic Rubber Corp.” with NT$ 46 million.
Causes of interest conflict Avoidance and Voting status: the above-mentioned Directors were as Chairman, Director or Director’s relative within the second degree of kinship, so they were recused from the discussion and voting.
TWSE/TPEx Listed Companies shall disclose information including the evaluation cycles, evaluation periods, scope, method and content of the Board of Directors’ self (or peer) performance evaluation:
The Company would conduct Board of Directors’ performance evaluation from 2020, and disclose the implementation in the following year.
Measures taken to strengthen the functionality of the Board:
(1) The functions of the Board of Directors of the Company are sound and sufficient, meeting the current requirements of the Company’s corporate governance and maximize the shareholders’ interests.
(2) The Company has elected Independent Directors. In order to establish a well board governance system, sound supervision function and strengthen management functions, the Company has established the regulations governing procedure for Board of Directors’ Meetings according to the provisions of the securities authority. The main matters for discussion, operating procedures, matters to be recorded in the proceedings, the announcements and other matters to be followed shall be handled in accordance with the provisions of this code.
(3) Besides annual review of operation of Board of Directors and strengthen the functions of the Board of Directors, the internal auditors also submit monthly audit reports on operation of Board of Directors to the Independent Directors for reviewed before the end of the next month in compliance with the regulations of the competent securities authorities.
(4) In accordance with the provisions of the securities regulatory authority, the Company passed the resolution of the Board of Directors on Aug. 26, 2011 and set up the Remuneration Committee and has held 3 meetings in 2019 to report the Manager Year-End Bonus Distribution Standard of 2018, also to assess the policy and system of managers’ 2019 compensation and had submitted the proposal the Board of Directors’ meeting for discussion.
(5) In accordance with the provisions of the securities regulatory authority, the Company passed the resolution of the Board of Directors on Jun. 23, 2016 and set up the Audit Committee to replace Supervisors and has held 5 meetings in 2019 to submit the resolutions of the Board of Directors to the implementation of corporate governance.

Note 1: If directors and supervisors are institutions, names of shareholders and the representative of the institutions shall be disclosed. Note 2: (1) In the event that directors leave before a year is completed, the date when they leave should be indicated in the memo column. The actual attendance (seated) rate (%), on the other hand, shall be calculated by the number of Board of Directors’ meetings held during service and the frequency number of attendance (being seated) in the meetings. (2) Before a year is completed, upon any re-election of directors, names of the said directors, new and old, shall be listed and it shall be specified in the remark column that a specific director is old, new, or re-elected, and the date of re-election. The actual attendance (seated) rate (%), on the other hand, is to be calculated by the number of Board of Directors’ meetings.

3.4.2 Audit Committee Meeting Status or the Participation of Supervisors in the

Operations of the Board of Directors

3.4.2.1 The tenure of the committee members this year is from June 12, 2019 to June 11, 2022. A total of 5 meetings【A】of Audit Committee were held in 2019. The attendance of the members was as follows:

Title	Name	Name	Attend in person 【B】	Commissioned times	Attendance rate in person (%) 【B/A】 (Note)	Remark	Remark
Convener	Chih-Kang Wang		5	0	100.0	Independent Director (Re-elected; Re-election on 2019.06.12)
Member	Yi-Fu Lin		5	0	100.0	Independent Director (Re-elected; Re-election on 2019.06.12)
Member	Yun-Peng Chu		5	0	100.0	Independent Director (Re-elected; Re-election on 2019.06.12)
Other mentionable: 1. The operation of the Audit Committee shall, if any of the following circumstances, specify the date of the Board, date, contents, results of the Audit Committee resolutions and the handling of the opinions of the Audit Committee as below: (1) The matters listed in Article 14-5 of the Securities Exchange Act. (2) Except previous matters, the other approved by the Audit Committee, and by more than two-thirds of all directors agreed to the matter. Board of Directors Content Article 14-5 of Securities and Exchange Act The other approved by the Audit Committee, and by more than two-thirds of all directors agreed to the matter 2019.03.20 1stin 2019 1. Content (1) To formulate 2018 financial statements of the Company. (2) To formulate the Company’s Internal Control System Statement. (3) To compile plan of lending funds for the second quarter of 2019. (4) To amend the “Procedures for Acquisition or Disposal of Assets”, the “Procedures for Engaging in Derivatives Transactions”, the “Procedures for Loaning Funds to Other Parties” and the “Procedures of Endorsements and Guarantees” of the Company. (5) To invest “FG INC” for US$ 15 million in accordance of the investment framework.      - - - - - 2. Audit Committee Resolution on Mar. 20,2019 (1) In the 1st case, the CPA Kuo, Hsin-Yi reported the communication between the CPA and the audit committee. The convener asked whether there was better understanding about the content of other matters audit by CPA and took the responsibility of auditing, the CPA Kuo, Hsin-Yi responded. (2) In the 3rd case, the convener inquired whether the loan conditions and calculation of interest in the proposal would be in accordance with past practice and was responded by the financial officer Ming-Jong Yeh. (3) In the 5th case, the Chairman supplemented the plan and purpose of investing “FG INC”. (4) All the member of the audit committee agreed to pass all the cases and all the cases were submitted to the Board of Directors for a resolution. 3. The handling of the opinions of the Audit Committee of the Company and the resolution of the Board of Directors. The 5 cases discussed by audit committee were submitted to the Board of Directors for discussions, except for some Directors who did not participate in the voting due to conflicts of interest, were approved by the other attendingDirectors.
Board of Directors		Content			Article 14-5 of Securities and Exchange Act		The other approved by the Audit Committee, and by more than two-thirds of all directors agreed to the matter
2019.03.20 1stin 2019		1. Content (1) To formulate 2018 financial statements of the Company. (2) To formulate the Company’s Internal Control System Statement. (3) To compile plan of lending funds for the second quarter of 2019. (4) To amend the “Procedures for Acquisition or Disposal of Assets”, the “Procedures for Engaging in Derivatives Transactions”, the “Procedures for Loaning Funds to Other Parties” and the “Procedures of Endorsements and Guarantees” of the Company. (5) To invest “FG INC” for US$ 15 million in accordance of the investment framework.			    		- - - - -
		2. Audit Committee Resolution on Mar. 20,2019 (1) In the 1st case, the CPA Kuo, Hsin-Yi reported the communication between the CPA and the audit committee. The convener asked whether there was better understanding about the content of other matters audit by CPA and took the responsibility of auditing, the CPA Kuo, Hsin-Yi responded. (2) In the 3rd case, the convener inquired whether the loan conditions and calculation of interest in the proposal would be in accordance with past practice and was responded by the financial officer Ming-Jong Yeh. (3) In the 5th case, the Chairman supplemented the plan and purpose of investing “FG INC”. (4) All the member of the audit committee agreed to pass all the cases and all the cases were submitted to the Board of Directors for a resolution. 3. The handling of the opinions of the Audit Committee of the Company and the resolution of the Board of Directors. The 5 cases discussed by audit committee were submitted to the Board of Directors for discussions, except for some Directors who did not participate in the voting due to conflicts of interest, were approved by the other attendingDirectors.

Board of Directors	Content	Article 14-5 of Securities and Exchange Act	The other approved by the Audit Committee, and by more than two-thirds of all directors agreed to the matter
2019.05.10 3rdin 2019	1. Content (1) To compile plan of lending funds for the third quarter of 2019. (2) Equipment transactions with related parties Formosa Heavy Industries Corp., Formosa Plastics Corp., Formosa Technologies Corp. and Nan Ya Photonics Incorporation. (3) To donate NT$ 11,134,000 to Ming Chi University of Technology. (4) The Company's investment business “Formosa Industries Corp.” would borrow loans from banks. The Company was proposed to issue a letter of support. (5) To amend the Company’s regulations of shareholderprocedures.	    	- - - - -
	2. Audit Committee Resolution on May. 8,2019 (1) In the 1st case, the convener inquired whether the loan conditions and calculation of interest in the proposal would be in accordance with past practice and was responded by the financial officer. (2) In the 2nd case, the convener explained the relevant information about the transaction of related parties and was responded by the internal audit officer. (3) In the 3rd case, the convener inquired whether other companies in FPG also donated to Ming Chi University of Technology together and was responded by the Chairman. (4) In the 4th case, the convener asked the attending officers to supplement the reason of issuing the letter of support and its main content and was responded by the Chairman and the financial officer. (5) In the 5th case, the convener inquired the attending officers to supplement the key points of the amendment and was responded by the secretariat. (6) All the member of the audit committee agreed to pass all the cases and all the cases were submitted to the Board of Directors for a resolution. 3. The handling of the opinions of the Audit Committee of the Company and the resolution of the Board of Directors. The 5 cases discussed by audit committee were submitted to the Board of Directors for discussions, except for some Directors who did not participate in the voting due to conflicts of interest, were approved by the other attendingDirectors.
2019.08.12 5thin 2019	1. Content (1) To compile the financial statements of the Company for the second quarter of 2019. (2) To increase investment to “Formosa Resources Corporation” for US$81.25 million. (3) To compile plan of lending funds for the fourth quarter of 2019. (4) Equipment transactions with related parties Formosa Heavy Industries Corp., Formosa Plastics Corp., Formosa Technologies Corp. and Nan Ya Photonics Incorporation. (5) The Company’s investment business “Nan Ya Plastics (Ningbo) Co., Ltd.” planned to conduct cash capital increase with the amount of US$80 million.	    	- - - - -

Board of Directors	Content	Article 14-5 of Securities and Exchange Act	The other approved by the Audit Committee, and by more than two-thirds of all directors agreed to the matter
	2. Audit Committee Resolution on Aug. 7,2019 (1) In the 1st case, the CPA reported the communication content with the Audit Committee, and officers in attendance supplemented the financial and operating status in the first half of 2019. (2) In the 2nd case, officers in attendance supplemented the plan and purpose of the investment. (3) In the 3rd case, the convener inquired whether the loan conditions and calculation of interest in the proposal would be in line with the markets conditions and was responded by the financial officer. (4) In the 4th case, the convener inquired whether the transactions with related parties would be in accordance with past practice and was responded by the internal audit officer. (5) In the 5th case, officers in attendance supplemented the plan and purpose of the investment. (6) All the member of the audit committee agreed to pass all the cases and case 2 to case 5 were submitted to the Board of Directors for a resolution. 3. The handling of the opinions of the Audit Committee of the Company and the resolution of the Board of Directors. The 5 cases discussed by audit committee were submitted to the Board of Directors for discussions, except for some Directors who did not participate in the voting due to conflicts of interest, were approved by the other attending Directors.
2019.11.08 6thin 2019	1. Content (1) To compile plan of lending funds for the first quarter of 2020. (2) Equipment transactions with related parties Formosa Heavy Industries Corp., Formosa Plastics Corp., Formosa Technologies Corp. and Nan Ya Photonics Incorporation. (3) Donation to Chang Gung University for NT$6,141,239. (4) The Company's investment business “Nan Ya Electronic Materials (Huizhou) Co., Ltd.” would borrow loans from banks. The Company was proposed to issue a letter of support.	   	- - - -
	2.Audit Committee Resolution on Nov. 7,2019 (1) In the 1st case, the convener inquired whether the loan conditions and calculation of interest in the proposal would be in accordance with past practice and was responded by the financial officer. (2) In the 2nd case, the convener inquired whether the transactions with related parties would be in accordance with past practice and was responded by the internal audit officer. (3) In the 4th case, the convener whether the content of letter of support in the proposal would be in accordance with past practice and was responded by the financial officer. (4) All the member of the audit committee agreed to pass all the cases and all the cases were submitted to the Board of Directors for a resolution. 3. The handling of the opinions of the Audit Committee of the Company and the resolution of the Board of Directors. The 4 cases discussed by audit committee were submitted to the Board of Directors for discussions, except for some Directors who did not participate in the voting due to conflicts of interest, were approved by the other attending Directors.
2019.12.13 7thin 2019	1. Content (1) To increase investment to “Formosa Synthetic Rubber Corp.” with NT$ 46 million.		-
	2. Audit Committee Resolution on Dec. 13,2019 (1) In the 1st case, the Chairman supplemented the plan and purpose of investing “Formosa Synthetic Rubber Corp.” (2) All the member of the audit committee agreed to pass the case and the case was submitted to the Board of Directors for a resolution. 3. The handling of the opinions of the Audit Committee of the Company and the resolution of the Board of Directors. The case discussed by audit committee was submitted to the Board of Directors for discussions, except for some Directors who did not participate in the voting due to conflicts of interest, was approved by the other attendingDirectors.

Recusals of Independent Directors due to conflicts of interests in 2019, the name of Independent Director, resolutions adopted, causes of interest conflict avoidance and voting status should be stated: None. Communication between independent directors, the internal audit officer and the CPA (e.g. on the financial and business status of the Company, the means, and the results, among others): Communication between independent directors and the CPA of the Company The Audit Committee of the Company consists of all Independent Directors. The CPA is arranged to attend to report to the Independent Directors about the financial status and overall operating results of the Company and its subsidiaries, and also fully communicate any influence on accounting resulted from the changes in regulations. Communication between independent directors and the internal auditing officer of the Company A. The amendment of the “Internal Control Systems” and “Internal Audit Implementation Rules” of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. B. The assessment of internal control system effectiveness (with Declaration of Internal Control issued) of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. C. The audit office of the Company submits the internal audit report to the Independent Directors monthly for review. D. The Independent Directors and the internal audit officer shall communicate on the internal audit execution status and internal control operation status of the company at least once a quarterly regular meeting. In addition to the audit report on the status of correction of defects and irregularities of internal control systems, the report shall be continued and follow up reminders to determine relevant units to take appropriate improvement measures in time. The summary of the communication between the independent director, the internal audit officer of the Company’s and CPA in 2019 Date Meeting Object Content Result 2019.03.20 Audit Committee CPA To explain the opinion and other matters of 2018 financial report. Well, all the attended member agreed to pass. 2019.03.20 Audit Committee internal audit officer To formulate “Internal Control System Statement” of the Company of 2018. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.03.20 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Nov. and Dec. of 2018. Noted. No comment. 2019.04.19 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Jan. and Feb. of 2019. Noted. No comment. 2019.05.08 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the first quarter. Well, all the attended member agreed to pass. 2019.05.08 Audit Committee internal audit officer To amend the “Internal Control Systems” of the Company’s shareholders procedure. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.05.10 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Mar. of 2019. Noted. No comment. 2019.06.12 Board of Directors internal audit officer To report the status of correction of defects and irregularities of internal control systems for 2018. Noted. No comment. 2019.08.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the second quarter. Well, all the attended member agreed to pass. 2019.08.12 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the secondquarter of 2019. Noted. No comment. 2019.11.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the third quarter. Well, all the attended member agreed to pass.	Recusals of Independent Directors due to conflicts of interests in 2019, the name of Independent Director, resolutions adopted, causes of interest conflict avoidance and voting status should be stated: None. Communication between independent directors, the internal audit officer and the CPA (e.g. on the financial and business status of the Company, the means, and the results, among others): Communication between independent directors and the CPA of the Company The Audit Committee of the Company consists of all Independent Directors. The CPA is arranged to attend to report to the Independent Directors about the financial status and overall operating results of the Company and its subsidiaries, and also fully communicate any influence on accounting resulted from the changes in regulations. Communication between independent directors and the internal auditing officer of the Company A. The amendment of the “Internal Control Systems” and “Internal Audit Implementation Rules” of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. B. The assessment of internal control system effectiveness (with Declaration of Internal Control issued) of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. C. The audit office of the Company submits the internal audit report to the Independent Directors monthly for review. D. The Independent Directors and the internal audit officer shall communicate on the internal audit execution status and internal control operation status of the company at least once a quarterly regular meeting. In addition to the audit report on the status of correction of defects and irregularities of internal control systems, the report shall be continued and follow up reminders to determine relevant units to take appropriate improvement measures in time. The summary of the communication between the independent director, the internal audit officer of the Company’s and CPA in 2019 Date Meeting Object Content Result 2019.03.20 Audit Committee CPA To explain the opinion and other matters of 2018 financial report. Well, all the attended member agreed to pass. 2019.03.20 Audit Committee internal audit officer To formulate “Internal Control System Statement” of the Company of 2018. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.03.20 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Nov. and Dec. of 2018. Noted. No comment. 2019.04.19 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Jan. and Feb. of 2019. Noted. No comment. 2019.05.08 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the first quarter. Well, all the attended member agreed to pass. 2019.05.08 Audit Committee internal audit officer To amend the “Internal Control Systems” of the Company’s shareholders procedure. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.05.10 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Mar. of 2019. Noted. No comment. 2019.06.12 Board of Directors internal audit officer To report the status of correction of defects and irregularities of internal control systems for 2018. Noted. No comment. 2019.08.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the second quarter. Well, all the attended member agreed to pass. 2019.08.12 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the secondquarter of 2019. Noted. No comment. 2019.11.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the third quarter. Well, all the attended member agreed to pass.	Recusals of Independent Directors due to conflicts of interests in 2019, the name of Independent Director, resolutions adopted, causes of interest conflict avoidance and voting status should be stated: None. Communication between independent directors, the internal audit officer and the CPA (e.g. on the financial and business status of the Company, the means, and the results, among others): Communication between independent directors and the CPA of the Company The Audit Committee of the Company consists of all Independent Directors. The CPA is arranged to attend to report to the Independent Directors about the financial status and overall operating results of the Company and its subsidiaries, and also fully communicate any influence on accounting resulted from the changes in regulations. Communication between independent directors and the internal auditing officer of the Company A. The amendment of the “Internal Control Systems” and “Internal Audit Implementation Rules” of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. B. The assessment of internal control system effectiveness (with Declaration of Internal Control issued) of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. C. The audit office of the Company submits the internal audit report to the Independent Directors monthly for review. D. The Independent Directors and the internal audit officer shall communicate on the internal audit execution status and internal control operation status of the company at least once a quarterly regular meeting. In addition to the audit report on the status of correction of defects and irregularities of internal control systems, the report shall be continued and follow up reminders to determine relevant units to take appropriate improvement measures in time. The summary of the communication between the independent director, the internal audit officer of the Company’s and CPA in 2019 Date Meeting Object Content Result 2019.03.20 Audit Committee CPA To explain the opinion and other matters of 2018 financial report. Well, all the attended member agreed to pass. 2019.03.20 Audit Committee internal audit officer To formulate “Internal Control System Statement” of the Company of 2018. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.03.20 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Nov. and Dec. of 2018. Noted. No comment. 2019.04.19 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Jan. and Feb. of 2019. Noted. No comment. 2019.05.08 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the first quarter. Well, all the attended member agreed to pass. 2019.05.08 Audit Committee internal audit officer To amend the “Internal Control Systems” of the Company’s shareholders procedure. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.05.10 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Mar. of 2019. Noted. No comment. 2019.06.12 Board of Directors internal audit officer To report the status of correction of defects and irregularities of internal control systems for 2018. Noted. No comment. 2019.08.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the second quarter. Well, all the attended member agreed to pass. 2019.08.12 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the secondquarter of 2019. Noted. No comment. 2019.11.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the third quarter. Well, all the attended member agreed to pass.	Recusals of Independent Directors due to conflicts of interests in 2019, the name of Independent Director, resolutions adopted, causes of interest conflict avoidance and voting status should be stated: None. Communication between independent directors, the internal audit officer and the CPA (e.g. on the financial and business status of the Company, the means, and the results, among others): Communication between independent directors and the CPA of the Company The Audit Committee of the Company consists of all Independent Directors. The CPA is arranged to attend to report to the Independent Directors about the financial status and overall operating results of the Company and its subsidiaries, and also fully communicate any influence on accounting resulted from the changes in regulations. Communication between independent directors and the internal auditing officer of the Company A. The amendment of the “Internal Control Systems” and “Internal Audit Implementation Rules” of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. B. The assessment of internal control system effectiveness (with Declaration of Internal Control issued) of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. C. The audit office of the Company submits the internal audit report to the Independent Directors monthly for review. D. The Independent Directors and the internal audit officer shall communicate on the internal audit execution status and internal control operation status of the company at least once a quarterly regular meeting. In addition to the audit report on the status of correction of defects and irregularities of internal control systems, the report shall be continued and follow up reminders to determine relevant units to take appropriate improvement measures in time. The summary of the communication between the independent director, the internal audit officer of the Company’s and CPA in 2019 Date Meeting Object Content Result 2019.03.20 Audit Committee CPA To explain the opinion and other matters of 2018 financial report. Well, all the attended member agreed to pass. 2019.03.20 Audit Committee internal audit officer To formulate “Internal Control System Statement” of the Company of 2018. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.03.20 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Nov. and Dec. of 2018. Noted. No comment. 2019.04.19 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Jan. and Feb. of 2019. Noted. No comment. 2019.05.08 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the first quarter. Well, all the attended member agreed to pass. 2019.05.08 Audit Committee internal audit officer To amend the “Internal Control Systems” of the Company’s shareholders procedure. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.05.10 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Mar. of 2019. Noted. No comment. 2019.06.12 Board of Directors internal audit officer To report the status of correction of defects and irregularities of internal control systems for 2018. Noted. No comment. 2019.08.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the second quarter. Well, all the attended member agreed to pass. 2019.08.12 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the secondquarter of 2019. Noted. No comment. 2019.11.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the third quarter. Well, all the attended member agreed to pass.	Recusals of Independent Directors due to conflicts of interests in 2019, the name of Independent Director, resolutions adopted, causes of interest conflict avoidance and voting status should be stated: None. Communication between independent directors, the internal audit officer and the CPA (e.g. on the financial and business status of the Company, the means, and the results, among others): Communication between independent directors and the CPA of the Company The Audit Committee of the Company consists of all Independent Directors. The CPA is arranged to attend to report to the Independent Directors about the financial status and overall operating results of the Company and its subsidiaries, and also fully communicate any influence on accounting resulted from the changes in regulations. Communication between independent directors and the internal auditing officer of the Company A. The amendment of the “Internal Control Systems” and “Internal Audit Implementation Rules” of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. B. The assessment of internal control system effectiveness (with Declaration of Internal Control issued) of the Company shall be subject to the approval of the Audit Committee and shall be submitted to the Board of Directors for a resolution. C. The audit office of the Company submits the internal audit report to the Independent Directors monthly for review. D. The Independent Directors and the internal audit officer shall communicate on the internal audit execution status and internal control operation status of the company at least once a quarterly regular meeting. In addition to the audit report on the status of correction of defects and irregularities of internal control systems, the report shall be continued and follow up reminders to determine relevant units to take appropriate improvement measures in time. The summary of the communication between the independent director, the internal audit officer of the Company’s and CPA in 2019 Date Meeting Object Content Result 2019.03.20 Audit Committee CPA To explain the opinion and other matters of 2018 financial report. Well, all the attended member agreed to pass. 2019.03.20 Audit Committee internal audit officer To formulate “Internal Control System Statement” of the Company of 2018. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.03.20 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Nov. and Dec. of 2018. Noted. No comment. 2019.04.19 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Jan. and Feb. of 2019. Noted. No comment. 2019.05.08 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the first quarter. Well, all the attended member agreed to pass. 2019.05.08 Audit Committee internal audit officer To amend the “Internal Control Systems” of the Company’s shareholders procedure. All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution. 2019.05.10 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the Mar. of 2019. Noted. No comment. 2019.06.12 Board of Directors internal audit officer To report the status of correction of defects and irregularities of internal control systems for 2018. Noted. No comment. 2019.08.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the second quarter. Well, all the attended member agreed to pass. 2019.08.12 Board of Directors internal audit officer To report the execution status of the Company’s internal audit plan of the secondquarter of 2019. Noted. No comment. 2019.11.07 Audit Committee CPA To explain the opinion and other matters of 2019 financial report of the third quarter. Well, all the attended member agreed to pass.
Date	Meeting	Object	Content	Result
2019.03.20	Audit Committee	CPA	To explain the opinion and other matters of 2018 financial report.	Well, all the attended member agreed to pass.
2019.03.20	Audit Committee	internal audit officer	To formulate “Internal Control System Statement” of the Company of 2018.	All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution.
2019.03.20	Board of Directors	internal audit officer	To report the execution status of the Company’s internal audit plan of the Nov. and Dec. of 2018.	Noted. No comment.
2019.04.19	Board of Directors	internal audit officer	To report the execution status of the Company’s internal audit plan of the Jan. and Feb. of 2019.	Noted. No comment.
2019.05.08	Audit Committee	CPA	To explain the opinion and other matters of 2019 financial report of the first quarter.	Well, all the attended member agreed to pass.
2019.05.08	Audit Committee	internal audit officer	To amend the “Internal Control Systems” of the Company’s shareholders procedure.	All the attended member agreed to pass and the content was submitted to the Board of Directors for a resolution.
2019.05.10	Board of Directors	internal audit officer	To report the execution status of the Company’s internal audit plan of the Mar. of 2019.	Noted. No comment.
2019.06.12	Board of Directors	internal audit officer	To report the status of correction of defects and irregularities of internal control systems for 2018.	Noted. No comment.
2019.08.07	Audit Committee	CPA	To explain the opinion and other matters of 2019 financial report of the second quarter.	Well, all the attended member agreed to pass.
2019.08.12	Board of Directors	internal audit officer	To report the execution status of the Company’s internal audit plan of the secondquarter of 2019.	Noted. No comment.
2019.11.07	Audit Committee	CPA	To explain the opinion and other matters of 2019 financial report of the third quarter.	Well, all the attended member agreed to pass.

Date	Meeting	Object	Content	Result
2019.11.08	Board of Directors	internal audit officer	To report the execution status of the Company’s internal audit plan of the third quarter of 2019.	Noted. No comment.
2019.12.13	Board of Directors	internal audit officer	To report the execution status of the Company’s internal audit plan of the Oct. of 2019.	Noted. No comment.
2019.12.13	Board of Directors	internal audit officer	To formulate the Company’s internal auditplan in 2020.	The content was passed in the resolution.

The audit of annual financial statement and semi-annual financial statement and the accounting policies and procedures.

Note:

In case of resignation of independent directors before the year is completed, the date of resignation shall be stated in the remark column. The actual seated rate (%), on the other hand, shall be calculated by the number of actual frequency of the independent directors being seated in the meetings during his/her tenure.
Before a year is completed, upon any re-election of independent directors, names of the said independent directors, new and old, shall be listed and it shall be specified in the remark column that a specific supervisor is old, new, or re-elected, and the date of re-election. The actual seated rate (%), on the other hand, is calculated by the frequency of the independent directors being seated in the meetings during his/her tenure.

3.4.2.2 The Participation of Supervisors in the Operations of the Board of Directors

The Company has set up the Audit Committee to replace Supervisors on Jun. 23, 2016.

3.4.3 Corporate Governance Implementation as Required by the Taiwan Financial Supervisory Commission

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
1. Did the Company establish and disclose the Corporate Governance Best Practice Principles based on “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”?	V		The Company passed the resolution of the Board of Directors on November 12th, 2014 and set a Corporate Governance Practice Principles, which was disclosed on the information reporting website designated by the securities authority and the Company’s website.	Consistent with Article 1 and Article 2 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. The content is slightly revised in accordance with the Company's practice, but it is consistent with the spirit of the Code.
2. Shareholding structure and shareholders’ rights (1) Did the Company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Did the Company maintain a register of major shareholders with controlling power as well as a register of persons exercising ultimate control over those major shareholders? (3) Did the Company establish and execute the risk management and firewall systems with its affiliated businesses?	V V V		(1) The Company has an internal operating procedure for handling shareholder matters and has set up a spokesperson to address shareholder suggestions or concerns at any time. In addition, each functional team in the President Office fully supported the above matters, and have an in-depth understanding and review of the shareholders' suggestions or concerns. After that, an oral or written reply to the satisfaction of the shareholders is proposed. (2) The Company shall pay attention to the situation of any increase, decrease or use as collateral in the shares of shareholders holding more than 5% of shares and holding Director or manager positions. The Directors, managers and shareholders holding more than 10% of the shares are disclosed monthly by the information reporting website designated by the securities authority. (3) The Company has established and executed the risk management and firewall systems with its affiliated businesses. a. The Company implements profit center management. Each company's personnel, property management rights and responsibilities are clearly divided, and there are no irregular transactions.	In compliance with Article 13 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. In compliance with Article 19 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. In compliance with Article 14 to Article 17 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
(4) Did the Company establish internal rules that prohibit Company insiders from trading securities using undisclosed information?	V		b. The funds and loans of the Company are calculated based on the accrued market interest rate. The amount of loan is reassessed every quarter based on business needs. Guaranteed coverage and limits have also been set for endorsement guarantees for other companies. c. To reduce losses, comprehensive risk assessment for banks, customers, and suppliers are performed. Each company credit authorization to the same customer and stop payment to the same supplier can be review through the computer system. d. The relationship between the Company and the related companies, such as transaction management, endorsement, loans, etc., are monitored. In accordance with the “Regulations Governing Establishment of Internal Control Systems by Public Companies”, outlined by the Financial supervisory Commission, the Company has set up “Supervision and Management of Subsidiaries” to implement the risk control mechanism for its subsidiaries. (4)The Company has established rules for personnel management and prevention of insider trading operations to forbid using undisclosed information to buy and sell securities for illegal profits. The employees also receive training to comply with relevant regulations.	In compliance with Article 10-3 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
3. Composition and responsibilities of the Board of Directors: (1) Did the Board develop and implement a diversified policy for the composition of its members?	V		The nomination and election of the Board of Directors of the Company complies with Code of Practice for Corporate Governance of the Company and adopted candidate nomination system. Besides the assessment of each candidate’s education and experience, the Company takes stakeholders’ opinions into consideration and complies with “Rules for Election of Directors of the Company” and “Corporate Governance Principle” to ensure the diversity and independency of the board members. Besides the knowledge, skills and literacy are necessary for the performance of the Board of Director. To achieve the idol purpose of the corporate governance, the overall abilities of the Board of Directors should include: 1. operational judgment, 2. accounting and financial analysis, 3. operation management, 4. risk management, 5. industrial knowledge, 6. perspectives of the international market, 7. leadership, 8. decision-making,etc. The Company's Directors come from diversified backgrounds.	In compliance with Article 20 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
			All 15 Directors are individuals with specialization and experience in industrial management, including 3 Independent Directors and 2 female Directors. Female Directors account for 13.3% of all Directors. In addition to relying on their professional leadership decision-making ability, the Directors also possess excellent business management capabilities, as well as expertise in the industry, finance, accounting, or the legal field. This deepens the independence and diversity of corporate governance. Our future goal is to recruit professionals who are familiar with AI artificial intelligence and data analysis, etc.. Each Director's education and experience can be found in III. Corporate Governance Report and II. Director and Supervisor Information of this year's annual report. Board of Directors Diversity Policy and Its Implementation: Diverse Item Name Gender Concurrent Employment Ages Seniority Of Independent Director Industrial Experience Professional Abilities 55-64 65-74 Above 75 Less Than 3 years 3-9 years More Than 9 years Petrochemical Finance Technology Textile Operational Judgment Accounting Analysis Administration Risk Management Industrial Knowledge International Outlook Leadership Decision Making Law Chia-Chau Wu M             Wen-Yuan Wong M             Wen-Chiao Wang M             Ruey-Yu Wang F             Chih-Kang Wang M             Yi-Fu Lin M           

					Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)
Yes	No				Summary
		Diverse Item Name	Gender	Concurrent Employment	Ages			Seniority Of Independent Director			Industrial Experience				Professional Abilities
					55-64	65-74	Above 75	Less Than 3 years	3-9 years	More Than 9 years	Petrochemical	Finance	Technology	Textile	Operational Judgment	Accounting Analysis	Administration	Risk Management	Industrial Knowledge	International Outlook	Leadership	Decision Making	Law
		Yun-Peng Chu	M																			
		Ming-Jen Tzou	M																			
		Shen-Yi Lee	M																				
		Zo-Chun Jen	M																			
		Kuei-Yung Wang	F																			
		Fong-Chin Lin	M																			
		Sin-Yi Huang	M																			
		Cheng- ChungLee	M																			
		Ching- Cheng Chang	M																			

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
(2) In addition to establishing the Salary and Remuneration Committee and Audit Committee according to the regulations, has the Company voluntarily established other functional committees? (3) Did the company establish a standard to measure the performance of the Board of Directors and implement it annually? And report the results of the performance evaluation to the Board of Directors, in addition, use them as a reference for individual directors ’remuneration and nomination of re-appointment? (4) Did the Company regularly evaluate the independence of CPAs?	V	V V	(2) The Company has set up a salary remuneration committee after the resolution of the Board of Directors on August 26th, 2011. The Board of Directors also resolved on June 23th, 2016 to set up the audit committee in accordance with Article 14-4 of Securities and Exchange Act. At present, apart from the above two committees, the Company has not set up any other functional committees. (3) The Company has not yet established a performance evaluation method for the Board of Directors. The Company will hold the Evaluation of Board of Directors’ performance start from 2020 in accordance to the regulations. In addition, the company has set standards for the Board of Directors’ meetings. These meetings are convened according to the regulations. The Directors have a clear understanding of the Company's objectives, operations, and finances. The Board of Directors functions well, and it communicates effectively with the Company's management team. (4)The Company evaluates the independence and competence of CPAs at least once a year, focusing on the size and reputation of the accounting firm, the number of consecutive years of providing audit services, the nature and extent of providing non-audit services, the audit fees, peer review, whether there are any legal proceedings or investigations by the competent authorities, quality of audit services, regular training, interaction with management and internal audit supervisors, etc. Relevant information and statements are requested from CPAs and the firms. The documents are then evaluated by the President Office, and the results of recent two years have been submitted to the Board of Directors on March 23th, 2018 and March 20th, 2019 respectively.	In compliance with Article 28 and Article 28-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. Not yet in compliance with Article 37-2 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. The evaluation method is going to be implemented in 2020 according to the regulations. In compliance with Article 29 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
4. Does the TWSE/TPEx listed company have qualified corporate governance personnel in an appropriate number and appoint one chief corporate governance officer in charge of the company' corporate governance affairs (including but not limited toprovidinginformation	V		(1) The Company plans to set up a position for corporate governance officer on May, 10 2019, who will be in charge of corporate governance related issues. And set qualified corporate governance personnel in charge of corporate governance affairs. The officer supervises President Office, which is responsible for corporate governance-related matters includes handling Board of Directors’ and shareholders’ meetings, taking minutes of such meetings, assisting Directors come to the office and continue training, providingDirectors relevant information for operations,assisting	In compliance with Article 3-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

Evaluation Item			Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)
	Yes	No	Summary
required for Director/Supervisor's operations, assistance to the directors and supervisors in complying with laws and regulations, convening board/shareholder meetings in compliance with the law, apply for/change Company registry and producing meeting minutes of board/shareholder meetings)?			Directors compliance with law and regulations, and so on. (2) The corporate governance officer has completed 18 hours lessons in 2019:
			Training	Date	Organizer	Program	Hours
			BeginningDate	End Date
			2019.07.30	2019.07.31	Securities and Futures Institute	Directors and supervisors (including independent) and corporate governance executives practical workshops	12
			2019.11.15	2019.11.15	Securities and Futures Institute	Avoiding contravening Securities and Exchange Act – Discussing from false financial statement and insider trading	3
			2019.11.15	2019.11.15	Dharma Drum Mountain Humanities and Social Improvement Foundation	Innovation of enterprise value	3
			(3) The operations in 2019 and 2020 are as follows: 1. Assisted Independent Directors and Directors in performing their duties by providing the necessary information and arranging for continuing education. 2. Assisting Independent Directors in arranging meetings with the internal audit officer or the CPA in accordance with the “Corporate Governance Best Practice Principles” when the need to understand the Company's financial operations arises. 3. Assisting the proceedings of Board of Directors' meetings and shareholders' meetings, and legal compliance of resolutions 4. Drawingupthe agendas of the Board of Directors and notifyingthe Directors 7

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
			days in advance, convening meetings and providing meeting information, sending out reminders regarding agendas that require recusal, and completing the minutes within 20 days after the meeting. 5. Registering the date of the shareholders' meeting in accordance with the regulation, preparing meeting notices, manuals, and proceedings, etc. within the statutory period.
5. Has the Company established a communication channel with stakeholders (including but not limited to shareholders, employees, customers and suppliers)? Has a stakeholders’ area been set up on the Company website? Are major Corporate Social Responsibility (CSR) topics that the stakeholders are concerned with addressed appropriately by the Company?	V		(1) The Company instructs the President Office to communicate with stakeholders depending on the situation. A spokesperson and a deputy spokesperson have been appointed as the external communication channel. (2) The Company set up the stakeholder area on the Company website to provide detailed contact information for the dedicated personnel, including phone number and e-mail, as the channels for the stakeholders to communicate with the Company. (3) The Company responds to stakeholders' issues of concern at the appropriate time through the following channels: a. Shareholders: Shareholders' meetings are held annually and shareholders can fully exercise their voting rights through electronic means. In addition, the annual report of the shareholders' meeting, the monthly revenue and the quarterly self-closing profit and loss are issued to facilitate shareholders' understanding of the Company's operating conditions. b. Employees: mainly concerned with workplace safety, employee welfare, human rights protection, labor and employment issues, etc. Communication with employees can be conducted through trade unions, factory (office) meetings, etc. c. Suppliers and Contractors: mainly concerned with procurement and contracting policy. The Company adheres to the principle of sustainable management and fair trade and is committed to working with manufacturers that comply with environmental protection, safety, and human rights standards. Open tenders are held through the Formosa Plastics electronic trading platform, and regular briefings are held to strengthen two-way communication and advocacy. d. Customer: mainly concerned with after-sales service and customer relationship. Issues including productqualityand after-sales service that	In compliance with Article 47 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
			customers care about can be addressed through customer visits, participating in exhibitions, product briefings, customer satisfaction surveys, etc. The website also lists the sales service line and e-mail address. Customer complaints are handled through the "Customer Response Form" and the "Customer Complaint HandlingForm."
6. Does the Company appoint a professional shareholder services agency to deal with shareholder affairs?		V	The shareholders' meeting of the Company is currently handled by itself, but the relevant procedures are handled by the designated share unit, the legal office, and the President Office in accordance with rigorous regulations, so that the shareholders' meeting will be convened in a legal, effective, and safe context to ensure shareholders' rights.	Although it does not meet the requirements of Article 7-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, it does not impair the operational efficiency of the shareholders' meeting.
7. Information disclosure (1) Did the Company establish a website to disclose information on financial operations and corporate governance? (2) Did the Company have other information disclosure channels (such as establishing an English language website, delegating a professional to collect and disclose Company information, implementing a spokesperson system, and disclosing the process of investor conferences on the Companywebsite)?	V V		(1) The Company has set up a website in Chinese and English with disclosed relevant financial business and corporate governance information under “Investor Relations Section”. The Company's website is: www.npc.com.tw. (2) The Company has a spokesperson and a deputy spokesperson. A dedicated person has been appointed in the President Office to collect and disclose Company information, as well as providing the spokespersons and relevant business departments with answers to stakeholders, investors, and authorities.	In compliance with Article 57 and Article 59 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. In compliance with Article 55-3 and Article 56 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
(3) Did the Company register and announce the annual financial reports within 2 months after the end of every fiscal year? Besides, did the Company announce and register financial reports of first, second and third quarter and the operating status of each month before the prescribed period? 8. Has the Company disclosed other information to facilitate a better understanding of its corporate governance (including but not limited to employee's rights, employee wellness, investor relations, supplier relations, stakeholders' rights, Directors and Supervisors training records, implementation of risk management policies and measurement standards, implementation of customer policies and purchase of liability insurance for the Directors and Supervisors of the Company)?	V	V	(3) The Company announces and registers operating status of the previous month on the 6th of each month, announces the unaudited financial data of the previous quarter on the first 10 days of each quarter and announces and registers the financial reports before the prescribed period. Although the Company does not announce the financial reports within 2 months after the end of every fiscal year due to the CPA audit procedures, it has announced the unaudited annual financial reports of the previous year in advance to help investors understand the operating status of the Company. (1) Employees' rights: The Company strives to pursue a harmonious labor-management relationship and attaches importance to the right of employees to express their opinions. We have set up physical suggestion boxes at the places where employees have easy access to, as well as an online suggestion box in the Company information system. Each suggestion box is appointed to dedicated personnel for replying, in order to facilitate communication. An "inspection method" that establishes the internal whistle-blower channel and protection system has also been set up. In the meantime, Board of Supervisors and labor-management meetings are held by the unions regularly. The heads of relevant departments attend the meetings to fully communicate with the labor representatives. On major labor issues, the Company gives higher priority to the opinions of the unions, and the top leaders consult with the unions to reach a consensus and ensure the harmonious labor-management relationship as well as the sustainable development of the Company. (2) Employee wellness: In order to take care of employees' physical and mental health, the Company has budgeted annual health checks at Chang Gung Memorial Hospital. In addition to the items required by the law, the Company has added cancer screening programs such as A-type fetal protein and cancer embryo antigen which are inspection items without law required. The goal is to ensure the employees understand and improve their health status, therefore to love and strength their body health. In terms of the employees' diet, the Company follows health regulations concerning food source, acceptance and storage, water safety and hygiene, food staff and kitchen cleaning operations,and food and tableware cleaninginspections to ensure the health and	Although it does not meet the requirements of Article 55-2 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, the Company has announced the unaudited annual financial reports in advance. In compliance with Articles 51 to Articles 54 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
			safety of employees' diet. For the relevant welfare measures, please refer to “5.5 Labor Relations” of “V. Operations Overview” of the annual report. (3) Investor Relations: The Company uses the President Office and the shareholding department as a bridge between the Company and its shareholders. In terms of corporate information transparency, the Company's website has an "Investor Relations Section" to provide investors with relevant information. In order to maintain a good relationship with investors, the Company has set up a spokesperson system to provide a means of contact with shareholders and corporate investment institutions. In addition to participating in investment forums held by domestic and foreign brokerage firms, the Company holds meetings with both domestic and international investors on irregular basis. (4) Supplier Relations: The Company's procurement and contracting operations are mainly aimed at creating a level playing field by looking for good manufacturers that can provide suitable and appropriate equipment, materials or projects at reasonable prices to meet the needs of expansion or operation of various departments in a timely manner. a. Open and fair procurement and contracting mechanism: The Company uses the "open tender" method to purchase and distribute the contracting system through the Formosa Plastics electronic trading platform. It provides functions such as inquiry, quotation, bargaining, order, delivery, payment progress inquiry, etc. All information is encrypted by electronic voucher and firewall control to ensure the security of all incoming and outgoing data. Vendors can access the inquiry case and make quotations anytime and anywhere through the Internet without time and space restrictions, which greatly improves the efficiency of operations, saves time and money, and reduces operating costs to increase profits. After all the inquiry cases have been launched electronically, the manufacturers with the lowest quotation, fastest delivery time, and best quality are chosen so that both the buyer and the seller can reasonably achieve the goals in a harmonious atmosphere.

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
			b. Sound vendor management: In order to stabilize the quality and delivery of materials and ensure the quality and progress of construction, the Company has conducted evaluation and ranking of all manufacturers through the sound management and evaluation of the manufacturers. In the case of overdue delivery of the products (engineering), poor quality, or violation of the safety regulations, the event will be automatically included in the assessment record in order to replace unqualified manufacturers, and cultivate excellent manufacturers to achieve good relations as well as long-term cooperation between the two sides. c. Electronic trading for a win-win situation: The Company combines the comprehensive ERP computer management system and the digital, open, and transparent online procurement and delivery mechanism to build a high-quality, safe, convenient and fast electronic trading environment. The Company has further extended the same system vertically and horizontally to the rest of the industry, sharing the e-generation "Formosa Plastic experience" with all enterprises. At present, combined with the Company's upstream and downstream supply chain systems, with more than 10,000 suppliers and third-party suppliers, this electronic trading platform shares the business opportunities and economic benefits brought about by open trading. (5) Stakeholders' Rights In addition to continuing to improve in the industry, the Company pursues good business performance and strives to achieve the mission of “caring for the employees, serving the customers, and rewarding the shareholders.” Therefore, it is committed to caring for the shareholders, customers, suppliers, employees, and society. In addition to complying with laws and business ethics, the Company is in line with international standards in enhancing competitiveness, create shareholders' benefits, as well as providing supplies of stable, high-quality and low-cost products. With industrial and environmental protection as a priority, the Company will develop towards eco-industrial areas and promote green building and green energy conservation, raw materials procurement, actively planting forests, paying attention to various social issues, investing in community and social welfare undertakings suitable for enterprises to contribute to the society.

			Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)			Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Yes	No			Summary
		(6)Director	TrainingRecords					In compliance with Article 40 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
		Title	Name	Course Date	Organizer	Program	Hours
		Chairman	Chia-Chau Wu	2019.11.15 2019.11.15	Dharma Drum Mountain Humanities and Social Improvement Foundation Securities and Futures Institute	Innovation of enterprise value Avoiding contravening Securities and Exchange Act – Discussing from false financial statement and insider trading	3 3
		Managing Director	Wen-Yuan Wong, Wen-Chiao Wang, Ruey-Yu Wang
		Managing Director (Independent Director)	Chih-Kang Wang, Yi-Fu Lin
		Director	Ming-Jen Tzou, Shen-Yi Lee, Kuei-Yung Wang, Fong-Chin Lin, Zo-Chun Jen, Sin-Yi Huang, Ching-ChengChang
		Independent Director	Yi-Fu Lin	2019.03.29 2019.04.18	Taiwan Corporate Governance Association Taiwan Corporate Governance Association	The Amendment of Company Law and Corresponding Analysis of Shareholders' Meeting The new regulations of The International Tax Co-Operation Economic and the way companies respond to the risks andprevent	3 3

			Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)			Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Yes	No			Summary
		Title	Name	Course Date	Organizer	Program	Hours	In compliance with Article 39 of the Corporate Governance Best Practice Principles for
				2019.08.12	Taiwan Corporate Governance Association	money laundering The practice of share transfer and tax planning for directors, supervisors and accounting supervisors	3
		Independent Director	Yun-Peng Chu	2019.08.28 2019.10.30	Chung-Hua Finance and Economic Development Association Chung-Hua Finance and Economic Development Association	New challenges of legal issues in business operations Discussion in employee reward strategies and tools manipulation	3 3
		Director	Cheng-Chung Lee	2019.07.30 2019.07.31	Securities and Futures Institute	Directors and supervisors (including independent) and corporate governance executives practical workshops	12
		(7) The situation in which the Company purchased liability insurance for the Directors: The Company has purchased liability insurance for all Directors, and the insured amount is US$30 million(Around NT$900 million). The above insuranceperiod

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Summary
			is from August 1st, 2019 to February 1st, 2021. The scope of insurance coverage is when a Director, major employee or employer duties commit a mistake and a third party suffers losses as a result and shall be responsible for the compensation according to the law, during the insurance period the insurance company should is liable for providing the first compensation claim according to the contract. The Board of Directors has been informed of the status on November 8th, 2019. (8) Implementation and policies of risk management: The Company established risk management policies to identify, evaluate, supervise and control risk from every aspect, enhance the risk awareness of employees and make sure all potential risks that might happen are endurable, thus, can the Company execute the optimal strategy to rationalize the balance between profits and risks, please refer to “6.Risk Management” of “VII. Financial Status, Operating Results and Risk Management” of the annual report for further disclosure of risk management policies of the Company. (9) Implementation of customer policy: Customers are the cornerstone of the Company's existence. The goal is to quickly supply the requested products and achieve stable and adequate supply so that customers can continue operate. a. Creating a stable supply and demand The Company and its customers have an important relationship of interdependence, coexistence, and co-prosperity. Therefore, building a stable supply and demand relationship is an issue that every sustainable company must pay attention to. Focusing on the long-term development of the industries in Taiwan, the Company actively invests in the production of chemicals, plastic, and fiber raw materials to provide customers with a stable source of materials and lay a solid foundation for related industries. The solid long-term cooperation has allowed the customers to show steady growth. b. Improving raw material self-sufficiency rate The completion of the sixth naphtha cracker has greatly eased the problem of long-term raw material shortage in Taiwan and reduced the degree of dependence on foreign countries. For example, the petrochemical raw materials of the Company have greatly improved the competiveness of the overall industry due to the sufficient raw material supplyof sixth naphtha cracker.	TWSE/TPEx Listed Companies. In compliance with Article 16 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)
	Yes	No	Summary
			c. Enhancing the competitiveness of midstream and downstream manufacturers In order to improve the management capabilities of the middle and lower suppliers of the plastic industry, the founders set up a series of management courses at the early stage, and actively shared the Company's system and experience with the industry. The Company has received positive feedback while strengthening the competitiveness of customers. So far, if other companies come visit, we are willing to share. From a management point of view, the Company has always believed that by taking customer interests into account, the Company will also benefit from it. In addition, in order to cooperate with customers to expand the market, the Company also actively supports customers and provides after-sales service. d. E-commerce saves costs and improves efficiency In order to improve the efficiency of the transaction process with the customer, the customer can get instant information and respond quickly when placing orders, order progress inquiries, receipts and payments, the Company officially established the Formosa Plastics E-Commerce Center in January 2001. This B2B online trading portal imports the e-commerce trading system, coordinates the management of internal resources and strengths, and integrates upstream and downstream supplychain systems and customer business relationships.
9. Please specify the Company's measures to improve the items listed in the corporate governance review result by Taiwan Stock Exchange's Corporate Governance Center and the improvement plans for items yet to be completed. a. The Stock Exchange's Corporate Governance Center released the results of the 5th corporate governance assessment in 2018. NPC listed the top 6%~20% of the listed; among the capitalization more than NT$ 10 billion, NPC listed the top 11%~20% of Non-financial electronic category. Companies and the priority measures for assessing un-scored issues in the 5th Corporate Governance are as follows: b. Number Evaluation Index Improvement 1.11 Whether the Company uploads update the English version annual report 7 days before shareholders meeting? The Company has updated the English version of annual report to the information report system assigned by competent authority for securities 7 days before 2019 shareholders meeting. 2.13 Whether the Remuneration Committee arranges at least 2 meetings in 1year and the all the members attend at least 2 times. The Company’s Remuneration Committee has arranged 3 meetings in 2019, and the 3 members attended all the meetings. 2.21 Whether the Company sets up corporate governance officer to in charge of the matters of corporategovernance? The Company has made a resolution in the Board of Directors on May 10, 2019 that we would set upa corporategovernance officer.

Evaluation Item	Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)
		Yes	No	Summary
b. The Stock Exchange's Corporate Governance Center released the results of the 6th corporate governance assessment in 2019. NPC listed the top 6%~20% of the listed; among the market capitalization more than NT$ 10 billion, NPC listed the top 11%~20% of Non-financial electronic category. Companies and the priority measures for assessing un-scored issues in the 5th Corporate Governance are as follows: Number Evaluation Index Improvement 2.22 Has the Company's performance evaluation method for the Board of Directors been approved by the Board of Directors? Will the self-evaluation be carried out at least once a year, and will the evaluation results be disclosed on the Company's website or annual report? The Company will hold the evaluation of Board of Directors’ performance start from 2020.
Number	Evaluation Index				Improvement
2.22	Has the Company's performance evaluation method for the Board of Directors been approved by the Board of Directors? Will the self-evaluation be carried out at least once a year, and will the evaluation results be disclosed on the Company's website or annual report?				The Company will hold the evaluation of Board of Directors’ performance start from 2020.

Note: Regardless of the answer, "Yes" or "No", descriptions need to be provided in the summary column

3.4.4 Composition, Responsibilities and Operations of NPC’s Remuneration Committee

3.4.4.1 Professional Qualifications and Independence Analysis of Remuneration Committee

Title (Note1)	Criteria Name	Meet the following professional qualification requirements, together with at least five years work experience	Meet the following professional qualification requirements, together with at least five years work experience	Meet the following professional qualification requirements, together with at least five years work experience	Independence (Note2)	Independence (Note2)	Independence (Note2)	Independence (Note2)	Independence (Note2)	Independence (Note2)	Independence (Note2)	Independence (Note2)	Independence (Note2)	Independence (Note2)	Number of other public companies concurrently serving as a member of remuneration committee	Remark
		An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialists who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company	Have work experience in the area of commerce, law, finance, accounting, or otherwise necessary for the business needs of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	Chih-Kang Wang														1	-
Independent Director	Yi-Fu Lin														3	-
Independent Director	Yun-Peng Chu														2	-

Note1: Provide director, independent director, or other for the status.

Note2: When any of the following conditions is met for each member during the two years prior to and during their tenure, please check "V" in the box underneath each conditional code.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a managerial officer under (1), spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons under (2) and (3).
(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings, or who designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.).
(6) If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: Not a director, supervisor, or employee of that other company. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)
(7) If the chairman, president, or person holding an equivalent position of the Company and a person in any of those positions at another company or institution are the same person or are spouses: Not a director (or governor), supervisor, or employee of that other company or institution. (Not applicable in cases where the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)
(8) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company. (Not applicable in cases where the specified company or institution holds 20% or more and not exceed 50% of the total number of outstanding shares of the Company and the person is an independent director appointed in accordance with the Act or laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.).
(9) Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, these restrictions do not apply to any member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not being any circumstances in the subparagraphs of Article 30 of the Company Act.

3.4.4.2 Remuneration Committee Meeting Status

(1) There were 3 members of NPC’s Remuneration Committee.

(2) Current members will serve from June 12, 2019 to June 11, 2022. There were 3 meetings【A】of the remuneration committee convened in 2019. The attendance status is shown as follows:

Title	Name	Attend in person (B)	By proxy(A)	Attendance rate in person (%)(B/A)(Note)	Remark
Convener	Chih-Kang Wang	3	0	100.0	Independent Director(Re-elected; Re-election on 2019.06.12)
Committee Member	Yi-Fu Lin	3	0	100.0	Independent Director(Re-elected; Re-election on 2019.06.12)
Committee Member	Yun-Peng Chu	3	0	100.0	Independent Director(Re-elected; Re-election on 2019.06.12)
Other details to be documented: 1. If the Board of Directors does not accept or modifies suggestions provided by the Remuneration Committee, the date of the Board of Directors’ meeting, the session number, contents of the proposal, decisions made by the Board of Directors and management opinions from the Remuneration Committee by the Company should be stated (If the remuneration and rewards approved by the Board of Directors are superior to those advised by the Remuneration Committee, there should be descriptions of the differences and reasons considered): None. 2. For decisions made by the Remuneration Committee, as long as there are members objecting or having their reservations that are recorded or stated in writing, the date of the Remuneration Committee meeting, the session number, contents of the proposal, and how opinions from all members and from opposing members are handled should be described: None. 3. The duty of the Remuneration Committee of the Company is to exercise the care of a good administrator and implement the following functions, including arranging at least 2 meetings in a year, convening meetings at any time as necessary and making recommendations to the Board of Directors for its decision reference based on a professional and objective status: (1) To review the regulations and procedures of the organization and propose the amendments. (2) Prescribe and periodically review the performance review and remuneration policy, system, standards, and structure for directors, supervisors and managerial officers. (3) Periodically evaluate and prescribe the remuneration of directors, supervisors, and managerial officers. 4. While the Remuneration Committee implements the functions of the preceding paragraph, it shall accord with the following principles: (1) With respect to the performance assessment and remuneration of directors, supervisors and managerial personnel of the company, it shall refer to the typical pay levels adopted by peer companies, and take into consideration the reasonableness of the correlation between remuneration and individual performance, the company's business performance, and future risk exposure. (2) It shall not produce an incentive for the directors or managerial officers to engage in activity to pursue remuneration exceeding the risks that the company may tolerate. (3) It shall take into consideration the characteristics of the industry and the nature of the company's business when determining the ratio of bonus payout based on the short-term performance of its directors and senior management and the time forpayment of the variablepart of remuneration.

Note1: In the event that members of the Remuneration Committee resign before a year is completed, the date of resignation should be indicated in the remark column. The actual attendance rate (%), on the other hand, shall be calculated by the number of Remuneration Committee meetings held during service and the frequency number of attendance in the meetings.
Note2: Before a year is completed, upon any re-election of Remuneration Committee members, new and old, shall be listed and it shall be specified in the remark column that a specific member is old, new, or reelected, and the date of re-election. The actual attendance rate (%) is calculated by the number of Remuneration Committee meetings held during service and the frequency number of attendance in the meetings.

3.4.4.3 The discussion and results of the Remuneration Committee resolutions and the Company’s handling of the opinions of the Remuneration Committee as below:

Date	Content	Result	Opinions Handling
2019.01.16 (1st in 2019)	To report the 2018 annual year-end bonus distribution standard report of appointed manager and finance and accounting department officer that approved by the Board of Directors.	Noted.	The year-end bonus of the appointed manager and finance and accounting department officer had been calculated according to the “Principle of Year-End Bonus and Reward Distribution” and the Board of Directors approved to distribute accordingly.
2019.08.07 (2nd in 2019)	Discussion Items No.1 To formulate the Chairman’ compensation.	The content was approved by all the attending members and submitted to the Board of Directors for resolution.	The content was submitted to Board of Directors and approved by all the attending directors.
	Discussion Items No.2 To formulate the existing Directors’ compensation.	The content was approved by all the attending members and submitted to the Board of Directors for resolution.	The content was submitted to Board of Directors and approved by all the attending directors.
	Discussion Items No.3 To maintain the existing managers’ compensation standards and structure.	The content was approved by all the attending members and submitted to the Board of Directors for resolution.	The content was submitted to Board of Directors and approved by all the attending directors.
	Discussion Items No.4 To maintain the existing managers’ appraisal systems.	The content was approved by all the attending members and submitted to the Board of Directors for resolution.	The content was submitted to Board of Directors and approved by all the attending directors.
	Discussion Items No.5 To discuss the salary adjustment of the managers would be in line with all employees in 2019.	The content was approved by all the attending members and submitted to the Board of Directors for resolution.	The content was submitted to Board of Directors and approved by all the attending directors.
2019.12.13 (3rd in 2019)	In response to the expiration of the 5 year implementation cycle of the current year-end bonus formula, it is planned to revise the Company's "Regulations of Year-End Bonus and Remuneration Distribution”	The content was approved by all the attending members and submitted to the Board of Directors for resolution.	The content was submitted to Board of Directors and approved by all the attending directors.

3.4.5 Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
1. Does the Company conduct risk assessments on environmental, social and corporate governance issues regarding to the Company’s operation in accordance with the principle of materiality, and formulate relevant risk management policies or strategies? (Note3)	V		The President Office of the Company, together with the general management office of the whole enterprise, evaluate the risks of the following issues based on the principle of materiality regarding corporate social responsibility and the impacts on the stakeholders, and formulate risk policies that can be effectively identified, measured, evaluated, monitored and controlled to reduce the impact of related risks. (1) Environmental issues: Including climate change, water resources, greenhouse gas emissions, waste management, and eco-efficiency operations, etc. With the concept of equal emphasis on industrial development and environmental protection, the Company moves towards the goal of eco-industrial plants, in addition to doing a good job in pollution control, implementing energy-saving and carbon-reducing green consumption strategies of “recyclable, low pollution, resources-saving”, the Company sets yearly targets for energy consumption per unit product and greenhouse gas emission, and keeps tracking and reviewing to ensure that the targets are achieved. (2) Social issues: Including human rights, labor rights, social participation and feedback, human capital development, occupational health and safety, etc., The Company strictly abides by domestic and foreign regulations regarding labor and human rights, treats all employees fairly, protects the rights and interests of employees and arranges health checks for employees every year. It creates a safe working environment, promotes various caring activities in the neighborhoods, and actively cooperates with the government and various civil society organizations to gain a deeper understanding of social needs, care and assist for the vulnerable groups. (3) Corporate governance issues: Including strategic operations, business ethics, legal compliance, risks and hazards, and supply chain management, etc., The Company has formulated important regulations such as Corporate Governance Guidelines and Ethical Corporate Management Best Practice Principles. Through a comprehensive internal control mechanism, it promotes the Company’s operating efficiency, reduces risks, and ensures the shareholders ’rights.	In compliance with the Article 3-2 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
2. Has the Company established an exclusively (or concurrently) dedicated unit for promoting CSR? Is the unit empowered by the Board of Directors to implement CSR activities at upper management levels? Does the unit report the progress of such activities to the Board of Directors?	V		To promote Corporate Social Responsibility, the Chairman, Chia-Chau Wu has been appointed as the general convener and the President, Ming-Jen Tzou as vice convener to be in charge of the formulation of whole company’s social responsibility policy, performance supervision and management. President Office, safety and health department, resource recycling department and other units actively promote and implement social responsibility and other related operations, prepare the Corporate Social Responsibility Report and report to the Board of Directors periodically. The 2018 execution status and Corporate Social Responsibility Report had reported to the Board of Directors on June 12, 2019. The 2019 execution status and corporation social responsibility report are estimated to be reported to Board of Directors in June 2020. In addition, as the member to the Formosa Plastics Group, if the local sustainable development and social welfare are common business of the Formosa Plastics Group, the “Foundation”, “Energy Conservation and Carbon Reduction team”, and “Afforestation team” under the “Social Responsibility Promotion Center” are responsible for coordinating the work. The Corporate Social Responsibility Special Unit will report the work items to the Company's Directors through internal official documents. If the Directors believe that the relevant issues need to be further discussed with the Independent Directors, the discussion will be proposed in the Board of Directors’ meeting.	In compliance with the Article 9 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
3. Environmental issues (1) Does the Company establish an appropriate environmental management system based on its industrial characteristics	V		(1) The Company has formulated regulations of safety and health management, and established management information systems and office automation systems, etc., and strengthened the plants’ safety and health management through these sound systems. In addition, the environmental accounting system was further introduced into the Company to assist taking control of the information and benefits of environmental expenditures, and specifically exposing environmental protection activities to the stakeholders. Under the guidance of the BSMI, every plant has successively passed ISO 14001 certification since 1986. The timetable of passing certification for each factory is as follows: 1.Year 1997: The plant of Linkou, Shulin, Kung San, Jinxin, Chiayi and Hsinkang. 2.Year 1998: The plant of Renwu and Linyuan. 3.Year 2000: The plant of Mailiao and Haifeng. (For details of the environmental management system based on the industry characteristics, please refer to Chapter 3 “Green Environment Management	In compliance with Article 13 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
(2) Does the Company commit to improving usage efficiency of various resources and utilizing renewable resources with reduced environmental impact? (3) Does the Company assess the potential risks and opportunities of climate change for now and in the future, and adopt measures to deal with climate-related issues?	V V		Promotion” of the Company's 2019 Social Responsibility Report.) (2) From raw material procurement to product sales, the Company attaches great importance to the health and safety of its customers. Therefore, the production process is continuously improved upon (such as reduce the harmful formula, improve the energy Conservation and carbon reduction and develop green products). To follow market trends and meet the needs of downstream customers, the Company has shifted its focus to producing non-toxic and environmentally friendly products with improved production processes as well as green energy products. For example, developing halogen-free, phosphorus-free carrier plates and arsenic-free copper foil to make the new generation circuit board be applied to fields such as green appliances and developing waterborne epoxy resin with no volatile organic compounds to be used for industrial environmental friendly coating. (For details of the specific practices and products that are environmentally friendly, please refer to Chapter 2 “Product Value Expansion” of the 2019 Corporate Social Responsibility Report.) (3) The Company continuously assesses the potential risks and opportunities caused by climate change. After comprehensively considering the financial impacts, reputation impacts, global economic situation, volatility of energy cost, costs of environmental regulations and other factors, the Company sets energy conservation targets and measures, and promotes the development of environmentally friendly products to ensure the Company’s stable operation and maintain its competitiveness. The Company keeps adopting BACT and process optimization to reduce energy consumption, sets energy consumption per unit product and greenhouse gas emission control targets, promotes various water-saving and energy-saving improvements and encourages all departments to participate in internal and external evaluations or observation tours, in which the good cases are properly given rewards. It provides a good learning channel and strengthens the motivation for reduction. Also, the Company builds a greenhouse gas emissions ERP information management system, and annually invite impartial third-party institutions to conduct inventory verification to control greenhouse gas emissions. (More details please refer to Chapter 3 “Green Environment Management Promotion” of the Company's 2019 Social	In compliance with Article 12 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. In compliance with Article 17-1 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
(4) Does the Company count greenhouse gas emissions, water consumption and total weight of waste in the past two years, and formulate policies for energy saving, carbon reduction, greenhouse gas reduction, water use reduction or other waste management	V		Responsibility Report.) (4) The Company has formulated management measures such as safety, health and environment, greenhouse gas reduction, air pollution prevention, water pollution prevention, waste and toxicants, soil and groundwater etc. In addition to continuously promoting various water conservation, energy conservation and other resource reduction work, performance reviews of foresaid work are carried out monthly. The Company continues to promote source classification, process waste reduction and resource utilization, etc., to ensure the normal operation of production equipment and the surrounding environmental quality, and reduce the waste of resources and energy, and reduce operating costs to achieve the multiple benefits of energy saving and carbon reduction. The Company also commissioned BSI (The British Standards Institution) and SGS (SGS Taiwan Ltd.) to conduct greenhouse gas inventory and water footprint verification, and regularly count the total quantity of energy and pollutants such as water and waste. For energy saving and carbon reduction, specific reduction targets are set every year, please refer to “Chapter 5.4 Environmental Expenditure Information”. (For more detailed statistics and specific practices, please refer to Chapter 3 “Green Environment Management Promotion” of the Company's 2019 Social ResponsibilityReport.)	In compliance with Article 17-2 to Article 17-3 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
4. Social issues: (1) Has the Company referred to relevant laws and international human rights instruments to establish relevant management policies and procedures?	V		(1) In order to guarantee the human right of employees, customers and stakeholders of the Company, the Company complies with relevant labor regulations such as Labor Standards Act, and UN Universal Declaration of human Rights, UN Guiding Principles on Business & Human Rights, International Labor Office Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, etc. The Company also formulate personnel rules and regulations to protect employees' rights and interests and provides stable and excellent treatment, complete education and training, promotion and development system, and a safe and healthy working environment to enhance the professional competence of employees. The Chairman Chia-Chau Wu has formally signed the human rights policy in August, 2018, more details and specific practices and effectiveness of the human rights concern project please refer to Chapter 4 “Creating a Happy and Safe Workplace” of the Company's 2019 Social Responsibility Report.)	In compliance with Article 18 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
(2) Has the Company formulated and implemented reasonable employee welfare measures (including compensation, vacation and other benefits), and appropriately reflected the operating performance or results in employee compensation (3) Has the Company provided employees with safe and healthy work environments as well as regular classes on health and safety? (4) Has the Company established an effective competencydevelopment	V V V		(2) A. The Company has clear regulations on employees’ promotion, appraisal, training, reward and punishment and other systems. The remuneration standards for new recruits are determined according to the academic experience and other conditions which required for the job, upholding the spirit of "equal pay for equal work", the basic salary ratio of female and male employees at the same position and same grade is 1: 1, their salary and promotion would be adjusted year by year according to their work performance, and the corresponding salary will be given. B. The Company's holidays include two days of week off, national holidays, and other dates set by the Central Competent Authority for holidays, and employees are granted special holidays in accordance with the Labor Standards Act. For other employees’ benefits, please refer to "Chapter 5.5 Labor Relations”. C. Article 25 of the Company's Articles of Incorporation stipulates that if the Company makes a profit in the current year, it shall allocate 0.05% to 0.5% as the employee's remuneration according to the profit before income tax before deducting the employees' remuneration in the current year. In addition, the Company issues employees’ year-end bonuses and adjusts the annual salary adjustments depends on indicators such as the Company’s operation performance etc. (3) The Company regularly provides health and education information for employees. In order to enhance employees' safety and health awareness, the Company distributes "work hazard reminder cards" and "safety and hygiene manuals" to remind employees of work safety through education, training, and safety observation. For the protection of the work environment and personal safety of employees, please refer to Chapter 4 “Creating a Happy and Safe Workplace” of the Company's 2019 Social Responsibility Report.) (4) Through the e-training management system, the Company ensures that personnel aregraduallycompletingthe trainingof newpersonnel,foundation,	In compliance with Article 21-2 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. In compliance with Article 20 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies. In compliance with Article 21-1 of the Corporate Social Responsibility

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
career training program for employees? (5) With regard to customer health and safety, customer privacy, marketing and labeling of products and services, has the Company complied with relevant regulations and international standards, and formulated relevant policies and appeal procedures for consumer protection?	V		professional, cadre reserve, etc. In addition, in line with the work and safety needs of individual units, counseling staff with professional licenses hold occasional seminars on various topics as well as strengthening human rights and workplace safety awareness courses. (For specific training practices, please refer to “4.3 Talents Cultivation” of the 2019 Corporate Social Responsibility Report.) (5) The specific practices of the Company on customer health and safety, customer privacy, marketing and labeling of products and services are stated in Chapter 2 "Product Value Expansion" of the Company's 2019 Social Responsibility Report, the main practices are as follows: A. Since most of the products produced by the Company are not directly sold to general consumers, there are fewer marketing activities such as media advertisements and campaigns. If there are promotion activities involving regulations, all units will first consult the legal office to avoid violation. In addition, the Company has formulated the "Personal Data Management Measures" to strictly restrict the utilization and regulate the searching functions of personal data to protect customer privacy. B. Customer relationship management is an important part of the Company's sustainable operation. In order to understand the valuable opinions of customers, the Company has clearly defined the customer complaints channels as well as return and compensation application procedures so that customers can express relevant appeals through the Response Form. Product complaints are handled by the salesperson filling out the Customer Complaint Handling Form for all returns and exchanges. The process is also monitored by the computer system. The official website provides sales service hotline and e-mail address of various products to facilitate customers to directly respond to opinions using multiple channels. The relevant departments will summarize the issues that customers concerned periodically and prioritized the issues according to the level of importance and timeliness to ensure the needs of customers are handled.	Best Practice Principles for TWSE/GTSM Listed Companies. In compliance with Article 24 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
(6) Does the Company formulate supplier management policies which require suppliers to comply with relevant regulations on environmental protection, occupational safety and health or labor human rights, and how the policies been implemented?	V		(6)The Company has set a "Supplier / Contractor Social Responsibility Commitment" and a "Supplier / Contractor Social Responsibility Questionnaire". All manufacturer are required to sign a confirmation request and comply with relevant regulations when they logs in the Formosa Technology E-Market Place or after the ordering is completed. In addition, the procurement department must check the following delivery conditions according to the purchase requirements of different materials in every procurement: RoHS qualification, related national industrial safety standards, ISO certification, hazard notices and illustrations, properly recycle the used containers or delivery vehicles, products manufactured by the disadvantaged and products with nonradioactive labels are prioritized for procurement. For procurements that have checked any of the above conditions would be indicated in the “Price Inquiries” and "Orders" to require the supplier to comply with the regulations. Besides, the Company adheres to the spirit of perpetual business operation and the principle of fair trading, and commits itself to ensuring that the partners meet environment protection, industrial safety, and human rights requirements. Non-compliant manufacturers will be rejected and placed under manufacturer evaluation. (Other supplier management practices, please refer to Chapter 2 "Product Value Expansion" of the Company's 2019 Social Responsibility Report.)	In compliance with Article 26 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
5. Does the Company prepare corporate social responsibility reports and other reports that disclose the Company's non-financial information referring to international report preparation standards or guidelines? Whether the reports have obtained the assurance opinion from the third-party verification institution?	V		The content and structure of the Company's "2019 Social Responsibility Report" is based on the guidelines of GRI standards from Global Reporting Initiative, written in accordance with the guidelines and framework listed in the core options, and exposes the Company's main sustainability issues, strategies, goals and adopted measures. The report was reviewed by the British Standards Institution (BSI), a third-party impartial institution, exposed in accordance with the core options, and presented using international indicators.	In compliance with Article 29 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)
	Yes	No	Summary (Note2)
6. If the Company has established its own Best Practices on CSR according to the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies, please describe any differences between the prescribed best practices and actual implementations taken by the Company: Note: The Company passed the resolution of the “Corporate Social Responsibility Code” as set out in the resolution of the Board of Directors on August 12th, 2015. Although the Company's practice has been slightly revised, the established code and the “the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” comply with the same spirit. For the operation of the Company's Corporate Social Responsibility, please refer to the Corporate Social ResponsibilityReport and website description.
7. Other important and helpful information in understanding CSR operation: (1) Relevant systems and structures In order to effectively integrate and promote the Company's social responsibility, the Chairman, Chia-Chau Wu serves as the general convener and the President, Ming Jen, Tzou serves as the deputy convener. They are responsible for formulating the social responsibility strategy and supervising the performance. The President's office, Safety and Health Department, the Resource Recycling Department, and the safety, health, and environmental protection unit of each division actively promote and implement corporate governance, community outreach, and environmental protection. However as the member of the Formosa Plastics Group, in order to effectively integrate and promote the Company's social responsibility, the Company established a “Social Responsibility Work Promotion Center,” which is responsible for strategy formulation and performance supervision. The medical and educational units of all companies, offices, staff unit and non-profit organizations collaborate to promote social responsibility. On the other hand, the seven foundations and charitable trusts funded by the founders, Mr. Wang Yung-Ching and Mr. Wang Yung-Tsai, also play an important role. They have long held the concept of “what is taken from the society is used interests of the society” to invest in social welfare and do our part to improve social care and reduce social problems. Under the "Social Responsibility Promotion Center", the "Afforestation Team" and the "Energy Conservation and Carbon Reduction Team" have been set up. The company as a whole will be responsible for setting up a dedicated safety and health department with the responsibility of each plant as the center and related business divisions to improve the environmental quality. The charity and neighborly care group has been organized to care for the disadvantaged groups, set up medical centers to offer emergency relief, etc. in order to achieve important tasks of reducing energy consumption and pollution, creating an ecological environment balance, and successfully achieving various social responsibility work plans. (2) Social welfare engagement of the enterprise A. The system, measures, and performance of environmental protection, safety, and health: Since its establishment, the Company has always adhered to the philosophy of "industrial development and environmental protection," and pursues social responsibility and perpetual business operation. Therefore, it attaches great importance to the work of environmental protection. Following this concept, the Company adopts the latest international technology for production processes and environmental protection equipment. For example, when building a power plant more than a decade ago, the Company was the first in the country to insist on the use of closed coal bunkers. Coal dust no longer polluted the air, and BACT is used to make pollution emissions far below domestic and international standards. Although the construction cost increased, the intangible environmental improvement and the reduction of resource waste and cost reduction can be obtained. In addition to selecting the best production processes and environmental protection equipment at the beginning of the planning period, the Company also took into consideration of the integration of upstream, middle, and downstream processes, and recycles the by-products and wastes of the upstream process as raw materials and fuels for the middle and downstream processes by fully integrating and reusing waste gas, waste heat and low-level energy between the plants, make the best use of resources and energy, reduce energy and waste resources, we pursue the goal of achieving an eco-industrial park. Take the Sixth Naphtha Cracker for example, the power and steam consumption per unit of product in 2019 years has decreased by 59.2% and 72.9% respectively since the trial operation began in 1999. Future reduction targets will continue to be promoted. The spirit of the Company is to inquire into the root of the matter, continue to improve and aim at the sovereign good. Through continuous improvement, the Company will continue to improve the efficiency of equipment operation to reduce energy and resource use, and strengthen the competitiveness ofperpetual business operation.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
Taking water conservation as an example, from 1999 to 2019, the sixth naphtha cracker has invested 8.51 billion dollars to complete 2,082 improvement cases, saving 279,300 tons of water per day. The 280 ongoing improvement cases will receive 2.29 billion dollars of investment to achieve the target of saving 17,400 tons of water per day. The total investment is 10.80 billion dollars. After the completion, the annual benefit will be approximately 1.32 billion dollars. In terms of energy conservation and carbon reduction, the sixth naphtha cracker has also invested 19.93 billion dollars, 7,079 improvement cases have been completed, reducing about 10.893 million tons of CO2. 1,208 ongoing improvement cases will receive 7.60 billion dollars. It is estimated that an additional 1.373 million tons of CO2will be reduced, with a total investment of 27.53 billion dollars. The end benefits will be about 32.74 billion dollars per year. The above-mentioned results can be affirmed by the Company awards from 159 business units and commendations from the competent authorities of the Ministry of Economic Affairs, the Water Resources Department, the Industrial Bureau, the Energy Bureau, and the Environmental Protection Agency during the 12 last years from 2008 to 2019. In addition to adopting the best international production process, doing environmental protection work such as pollution prevention, clean production, energy conservation, carbon reduction, and water conservation to reach the goal of becoming ecological industrial parks, the Company also follows the trend of the times and pays attention to global warming and has promoted tree planting and greening in the plant area for years. In recent years, the Company has actively promoted the greening of various plats. At present, the Company have planted nearly 2 million trees and 390,000 square meters of shrubs, which can absorb about 15,000 tons of CO2per year. Providing a green aerobic environment for employees and nearby residents, and taking into account the best of both industrial development and environmental protection. Traditional factories give the impression that there are few green spaces and trees, and even chimneys emit black smoke from time to time, causing air pollution. The direction of the Company's various plants is to change the minds of people to create a green landscape just like the park, and to turn air pollution into the surroundings filled with the sounds of singings birds and the sweet smell of blossoms. At the same time, the Company also responded to the government's afforestation and carbon reduction plan and cooperated with the Yunlin County Government to promote flatland afforestation and carbon reduction activities. In 2011, the Company started to receive a 10-year afforestation and carbon reduction subsidy. As of 2019, the Company has received the flatland afforestation award in Yunlin County, with an application area of 1,094 hectares, and about 1.206 billion in subsidies have been provided to the afforestation applicants, contributing to the afforestation and carbon reduction. The Company also fully cooperates with the Environmental Protection Agency to promote green procurement of private enterprises to implement the energy-saving and carbon-reduction green consumption policy. The statistical green procurement amount of the Company in 2019 was 293 million dollars. In the future, the Company will continue to take into account the concept of environmental protection and economic development, and implement various measures such as water conservation, energy conservation and carbon reduction, sustainable use of resources and friendly environment in order to fulfill social responsibilities. In addition, providing a healthy and safe working environment is the responsibility of the Company to employees and their dependents. Therefore, "Safety First" is an important principle for us to cherish our employees. In addition to establishing a reward system, employees and contractors are encouraged to raise issues with unsatisfactory behaviors and false alarms. Departments with zero occupational disasters are also rewarded, encouraging all units to report potential hazards, and report abnormalities, and unsafe behaviors. The Company quarterly reviews eliminates potential hazards and conducts inter-departmental competitions and performance reviews to increase employee engagement. B. Community participation: The Company is deeply rooted in Taiwan. Plants area are distributed all over Taiwan. We strive to become a “good neighbor” with the surrounding residents by setting up a dedicated group in each plant to communicate with residents and provide all kinds of assistance. In addition, we continue to mobilize our staff to clean up neighborhood streets and beaches,continuallyinvest in localpublic welfare activities,and assist in caringfor families and disadvantagedgroups,so that our employees and communityresidents can

Taking water conservation as an example, from 1999 to 2019, the sixth naphtha cracker has invested 8.51 billion dollars to complete 2,082 improvement cases, saving 279,300 tons of water per day. The 280 ongoing improvement cases will receive 2.29 billion dollars of investment to achieve the target of saving 17,400 tons of water per day. The total investment is 10.80 billion dollars. After the completion, the annual benefit will be approximately 1.32 billion dollars. In terms of energy conservation and carbon reduction, the sixth naphtha cracker has also invested 19.93 billion dollars, 7,079 improvement cases have been completed, reducing about 10.893 million tons of CO2. 1,208 ongoing improvement cases will receive 7.60 billion dollars. It is estimated that an additional 1.373 million tons of CO2 will be reduced, with a total investment of 27.53 billion dollars. The end benefits will be about 32.74 billion dollars per year.

The above-mentioned results can be affirmed by the Company awards from 159 business units and commendations from the competent authorities of the Ministry of Economic Affairs, the Water Resources Department, the Industrial Bureau, the Energy Bureau, and the Environmental Protection Agency during the 12 last years from 2008 to 2019.

In addition to adopting the best international production process, doing environmental protection work such as pollution prevention, clean production, energy conservation, carbon reduction, and water conservation to reach the goal of becoming ecological industrial parks, the Company also follows the trend of the times and pays attention to global warming and has promoted tree planting and greening in the plant area for years. In recent years, the Company has actively promoted the greening of various plats. At present, the Company have planted nearly 2 million trees and 390,000 square meters of shrubs, which can absorb about 15,000 tons of CO2 per year. Providing a green aerobic environment for employees and nearby residents, and taking into account the best of both industrial development and environmental protection. Traditional factories give the impression that there are few green spaces and trees, and even chimneys emit black smoke from time to time, causing air pollution. The direction of the Company's various plants is to change the minds of people to create a green landscape just like the park, and to turn air pollution into the surroundings filled with the sounds of singings birds and the sweet smell of blossoms.

At the same time, the Company also responded to the government's afforestation and carbon reduction plan and cooperated with the Yunlin County Government to promote flatland afforestation and carbon reduction activities. In 2011, the Company started to receive a 10-year afforestation and carbon reduction subsidy. As of 2019, the Company has received the flatland afforestation award in Yunlin County, with an application area of 1,094 hectares, and about 1.206 billion in subsidies have been provided to the afforestation applicants, contributing to the afforestation and carbon reduction.

The Company also fully cooperates with the Environmental Protection Agency to promote green procurement of private enterprises to implement the energy-saving and carbon-reduction green consumption policy. The statistical green procurement amount of the Company in 2019 was 293 million dollars. In the future, the Company will continue to take into account the concept of environmental protection and economic development, and implement various measures such as water conservation, energy conservation and carbon reduction, sustainable use of resources and friendly environment in order to fulfill social responsibilities. In addition, providing a healthy and safe working environment is the responsibility of the Company to employees and their dependents. Therefore, "Safety First" is an important principle for us to cherish our employees. In addition to establishing a reward system, employees and contractors are encouraged to raise issues with unsatisfactory behaviors and false alarms. Departments with zero occupational disasters are also rewarded, encouraging all units to report potential hazards, and report abnormalities, and unsafe behaviors. The Company quarterly reviews eliminates potential hazards and conducts inter-departmental competitions and performance reviews to increase employee engagement.

The Company is deeply rooted in Taiwan. Plants area are distributed all over Taiwan. We strive to become a “good neighbor” with the surrounding residents by setting up a dedicated group in each plant to communicate with residents and provide all kinds of assistance. In addition, we continue to mobilize our staff to clean up neighborhood streets and beaches, continually invest in local public welfare activities, and assist in caring for families and disadvantaged groups, so that our employees and community residents can

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
be integrated. Employees have also spontaneously formed a charity group, responding to the feedback to the neighborhood, and by long-term and continuous attention, gradually expand human care and love to every corner of the society to jointly establish a peaceful society. C. Social contribution, social services, social welfare, and other social responsibility activities: Based on the spirit of "what is taken from the society is used interests of the society ", the Company is committed to the perpetual business operation and continues to give back to the society and fulfill its social responsibilities with the management policy of "quality, reputation, service, and environmental protection." Our results in social responsibility are also recorded in the "Corporate Social Responsibility Report." In addition to dedicating to business operations, we also invest in medical care, education, and various social welfare undertakings to fulfill corporate social responsibility: a. Medical treatment: Chang Gung Memorial Hospital was established in 1976. It is committed to "improving medical standards and creating social well-being" and has the courage to challenge the status quo. It not only drives the reform and progress of the medical community but also won the trust of the general public. Now, in Taiwan, there are four major sectors, the North Sector (including Keelung, Lover Lake, Taipei, Linkou, Taoyuan, and other nursing homes), Chiayi Sector, Yunlin Sector, and Kaohsiung Sector (Kaohsiung and Fengshan Hospital). In services, it is also the largest and most complete medical institution in Asia, from emergency medical treatment to rehabilitation, health care, and senior care. Chang Gung Memorial Hospital also donated 999 sets of artificial electronic ears for the benefit of hearing-impaired children, and set up a social service fund to subsidize poor patients for long-term treatment. As of the end of 2019, it has spent 9.14 billion dollars and continues to provide the medical assistance needed in remote and undeveloped countries. b. Education: In the 1960s, various industries in Taiwan flourished. In view of the shortage of industrial talents, the Company founded Ming Chi Institute of Technology (now Ming Chi University of Technology) to provide the students from poor families a chance to study and work at the same time. Later, Chang Gung Medical College (now Chang Gung University) and Chang Gung Institute of Nursing (now Chang Gung University of Science and Technology) were established to cultivate students' diligence and simplicity by combining theory and practice, and to cultivate excellent industrial middle cadres and medical staff. Since the beginning of the 1995, the Formosa Plastics Group started funding for aboriginal youth education and employment opportunities. The total donation amount is approximately 1.7 billion dollars, and the number of assisted people reached 5,484. c. Disaster relief: assisting in the 921 earthquake (1999), Morakot wind disaster (2009), Kaohsiung gas explosion incident (2014), Tainan earthquake (2016), Nibble wind disaster (2016), Hualien earthquake (2018) and other disaster relief in reconstruction and the rehabilitation of schools in the disaster areas. So far, 76 primary and secondary schools have been fully sponsored by the Company. d. Other social welfare: In addition to medical and education, the founders of Formosa Plastics Group have set up seven foundations and charitable social welfare funds. Through the operation of the foundations and the active participation of companies within the corporation, they continue to promote and donate to various social welfare undertakings, such as: (1) Nearly 1.12 million doses of Streptococcus pneumonia vaccines to promote the free vaccination program for the elderly over 75 years old to improve their health and quality of life. (2) Continue to promote the "Professional Service of Early Treatment Effectiveness Improvement Program" to systematically and comprehensively improve the quality of Taiwan's overall early treatment services. Currently, 92 institutions have been provided with relevant medical assistance and subsidies; and an "early treatment professional communication platform" has been established. Information on national early treatment activities, treatment articles, and teaching files are shared. (3) Support the inmates: donated to the Yunlin Second Prison, Kaohsiung Prison, and Taipei Prison to handle the Wang Jhan-Yang Foundation Rainbow Project (drug-addicted HIV inmates), with three courses of physiological education, psychological counseling, and vocational training the project assists drug-addicted prisoners with HIV to cultivate life skills, repair family relationships and reintegrate into society. Cooperation with Yunlin Second Prison and Kaohsiung Prison to handle the Wang Jhan-Yang charitable trust fund Xiangyang project (drug inmates) to assist inmates in returning to the society is also conducted. Collaboration with the Correctional Affairs Department of the Ministry of Justicein 2017 to expand theXiangyangProjectinthree prisonsincludingHualien Prison,Tainan Prison, andKaohsiung Women'sPrison.

be integrated. Employees have also spontaneously formed a charity group, responding to the feedback to the neighborhood, and by long-term and continuous attention, gradually expand human care and love to every corner of the society to jointly establish a peaceful society.
Based on the spirit of "what is taken from the society is used interests of the society ", the Company is committed to the perpetual business operation and continues to give
back to the society and fulfill its social responsibilities with the management policy of "quality, reputation, service, and environmental protection." Our results in social responsibility are also recorded in the "Corporate Social Responsibility Report."
a. Medical treatment: Chang Gung Memorial Hospital was established in 1976. It is committed to "improving medical standards and creating social well-being" and has the courage to challenge the status quo. It not only drives the reform and progress of the medical community but also won the trust of the general public. Now, in Taiwan, there are four major sectors, the North Sector (including Keelung, Lover Lake, Taipei, Linkou, Taoyuan, and other nursing homes), Chiayi Sector, Yunlin Sector, and Kaohsiung Sector (Kaohsiung and Fengshan Hospital). In services, it is also the largest and most complete medical institution in Asia, from emergency medical treatment to rehabilitation, health care, and senior care. Chang Gung Memorial Hospital also donated 999 sets of artificial electronic ears for the benefit of hearing-impaired children, and set up a social service fund to subsidize poor patients for long-term treatment. As of the end of 2019, it has spent 9.14 billion dollars and continues to provide the medical assistance needed in remote and undeveloped countries.
b. Education: In the 1960s, various industries in Taiwan flourished. In view of the shortage of industrial talents, the Company founded Ming Chi Institute of Technology (now Ming Chi University of Technology) to provide the students from poor families a chance to study and work at the same time. Later, Chang Gung Medical College (now Chang Gung University) and Chang Gung Institute of Nursing (now Chang Gung University of Science and Technology) were established to cultivate students' diligence and simplicity by combining theory and practice, and to cultivate excellent industrial middle cadres and medical staff. Since the beginning of the 1995, the Formosa Plastics Group started funding for aboriginal youth education and employment opportunities. The total donation amount is approximately 1.7 billion dollars, and the number of assisted people reached 5,484.
c. Disaster relief: assisting in the 921 earthquake (1999), Morakot wind disaster (2009), Kaohsiung gas explosion incident (2014), Tainan earthquake (2016), Nibble wind disaster (2016), Hualien earthquake (2018) and other disaster relief in reconstruction and the rehabilitation of schools in the disaster areas. So far, 76 primary and secondary schools have been fully sponsored by the Company.
d. Other social welfare: In addition to medical and education, the founders of Formosa Plastics Group have set up seven foundations and charitable social welfare funds. Through the operation of the foundations and the active participation of companies within the corporation, they continue to promote and donate to various social welfare undertakings, such as:
(1) Nearly 1.12 million doses of Streptococcus pneumonia vaccines to promote the free vaccination program for the elderly over 75 years old to improve their health and quality of life.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Summary (Note2)
(4) Promote various scholarships and work-study programs: such as the Children's Education Assistance Program, Disadvantaged Student Scholarship, and the Student Financial Aid Program in Remote Areas, to help the economically disadvantaged or disabled children and young students to be able to receive education unhindered. In 2017, promoted the Excellent Talents Development Program which provides long-term scholarships for outstanding students from disadvantaged backgrounds to assist them in academic and moral development. In addition, we will promote semester and summer work-study programs, match students to work in social welfare institutions, cultivate the service spirit of students contributing to society, and reduce institutional operating costs and expenditures to serve more vulnerable people. (5) Women and Children's Welfare: a. Promote the nutritional breakfast subsidy for the vulnerable children in the neighboring 7 Township for Mailiao Plant, b. Promote the economic assistance program for victims of domestic abuse, c. Promote the medical treatment and economic assistance of patients with rare diseases, d. Donation to Taitung and Hualien English Assistance Program, an introduction of outstanding American college students to primary schools in remote areas for English teaching, e. Promote the nutritional breakfast subsidy for the vulnerable Junior High School students of Pingtung County, f. Promote the nutritional lunch subsidy for the Elementary School and Junior High School students of Yunlin County, g. Promote subsidy program by donating to Taipei Orphan Welfare Foundation to improve access to school education for them, h. Promote assistant plans for the vulnerable pre-school children in New Taipei City and other counties and cities. (6) Elderly welfare: a. promote the elderly housing improvement and appliance donation plan, b. Mailiao and Taixi Township meal delivery plan for elderly living alone, c. promote the ‘’Active Aging Center’’ corporately in Taiwan. Members in this center would participate in five major classes (of the elderly) through package-based individual planning courses, including health management, brain training, vitality, physical training and social participation, to maintain their health, preventing disability, and effectiveness of helping healthy elderly people improve, d. Donate to the elderly daycare center shuttle bus and dream plan, e. Promote lighting improvement plan, donate lighting facilities to improve the lighting facilities of Elderly Welfare, to provide well care environment and saving electric bill, f. Promote rural elder care plans that provide elders with day care and various health promotion activities (7) Vulnerable group support: a. Donation to social welfare institutions daily necessities and rice, b. The low-income households near Mailiao factory receive gifts and bonus for the three most important Chinese holidays, c. Emergency Allowances plan, d. Donation of daily necessities to the Christian Relief Association food bank, e. Promote the support plan for the homeless by establishing short-term shelters and providing cooking equipment. Assist the homeless who are willing to live on their own to leave the homeless life from the beginning. f. Chang Gung University and Chang Gung University of Science and Technology jointly promote the construction of AI long-term care system and the I-Health volunteers promotion plan. (8) Promote the development of Taiwan's distinctive culture: sponsoring the "Ming Hwa Yuan Art & Cultural Group", "I Wan Jan Puppet Theater ", "Ifkids Theatre", "Apple Theatre" to go on tours in the countryside; sponsor Huang Jun-xiong Puppet Theatre to perform in Chiayi County. (9) Promote the Wang Jhan-Yang charitable trust fund "Burning Star Project" to cultivate outstanding sports talents, "Future Star Project" sports talents abroad training programs and sports player medical protection programs to help domestic sports talents improve their performance, in addition, assist Wang Chang Gung Charitable Trust in promoting the accompanying athletic trainer plan in 2019. (10) Institutional support: a. Donation to social welfare institutions includes purchasing facilities and equipment, vehicle funds or housing repair costs. A total number of 34 social welfare institutions in Yilan, Nantou, Taichung, Hualien, Yunlin, Taitung, Taoyuan, Miaoli, Hsinchu, Xinbei, and Pingtung regions etc. were donated, b. Donation to the county and city government’s plans for the vulnerable groups ( Keelung City Government, Taoyuan City Government , Kaohsiung City Government, Chiayi County Government), c.Mooncakes donationto socialwelfareinstitutions .

Note 1: If the implementation status is "Yes", please explain the adopted important policies, strategies, measures and implementation; if the implementation status is "No", please explain the reasons and the plans, strategies and measures that going to adopt in the future.
Note 2: If the Company has prepared a corporate social responsibility report, the summary description can be accepted by indicating the way to look up the corporate social responsibility report and the index pages as a replacement.
Note 3: The principle of materiality refers to those who have a significant influence on the company's investors and other stakeholders regarding to environmental, social and corporate governance issues.

3.4.6 Implementation Status of Operational Integrity as Required by the Taiwan Financial Supervisory Commission

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons
	Yes	No	Summary
1. Stipulating policies and plans for ethical corporate management (1) Has the Company formulated the ethical corporate management policies approved by the Board of Directors, clearly indicated policies and activities related to ethical corporate management in its bylaws and external documents, and are the Company’s Directors and management team actively fulfilling their commitment to corporate policies? (2) Has the Company established an evaluation mechanism for the risks of acting unethical, regularly analyzes and evaluates business activities with a high risk of acting unethical in the business scope, and formulates the prevention plan which the content at least contain the prevention measures stated in Article 7-2 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”?	V V		(1) The Company complies with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, and other related regulations, and upholding the “Diligence, Perseverance, Frugality and Trustworthiness” enterprise spirit in order to comply with the law and ethical standards. With the business philosophy of honesty, integrity, fairness, and transparency, self-discipline, and responsibility, the Board of Directors has approved the Company’s ethical corporate management policy on November 12, 2014. By setting the Company's President Office as the driving unit to formulate and implement various ethical policies, the Company establishes a good corporate governance and risk control mechanism, to seek sustainable development of the Company. The Board of Directors and the senior managements also promised to actively implement and supervise the implementation of the ethical management policies. (2) A. The Company has established strict rules of conduct and ethics in the rules and regulations such as the “Personnel Management Rules” and “Working Rules”, and has specified the relevant reward and punishment regulations. Directors, managers, servants of the Company, or those who have substantial control capabilities are prohibited from providing, pledge, requesting or accepting any illegitimate interests directly or indirectly, or making other violations of good faith, illegality, or breach of fiduciary duty to prevent malpractice, misappropriation of public funds, acceptance of bribes, disclosure or lies, and other acts of dishonesty. B. The Company regularly analyzes and evaluates business activities with a high risk of acting unethical, and specified the regulations for relevant employees in “Personnel Management Rules” and “Working Rules”. That is, positions of interest for business, procurement, contracting, supervision, and budgeting, as well as contact with other manufacturers shall not accept business dinners or other entertainment activities invited by the manufacturer, nor accept the property or other interests of gifts. The offenders shall be excused from office and their Supervisors shall bejointlyand severally punished. In addition,	In compliance with Article 4 and Article 5 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.” Although the Company does not formulate its own “Procedures for Ethical Management and Guidelines for Conduct”, the related regulations are formulated in different rules and systems, and are implemented.

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons
	Yes	No	Summary
(3) Does the Company clearly specify the procedures, behavior guidelines, and punishment for violations and grievance system in the plan of preventing unethical behaviors, and implement them, and regularly reviews and revises the foresaid plan?	V		related duties have comprehensively promoted regular rotation operations to prevent the occurrence of any corruption. C. The specific practice such as to sign the "Oaths" on the first day of the employee's employment, which requires employee to comply with the "Business Secrets Act" and has no violation of the intellectual property rights of the owner of the computer software. The Company also issue a "Working Rules" manual to the individual for immediate enquiry about “Personnel Management Rules” and “Ethical Corporate Management Best Practice Principles”. For those who are dealing with external manufacturers, it is necessary to sign the "Self-Legal Convention" and adopt regular rotation system. The relevant laws and regulations of the business are also included in the training courses for new recruits, professional job training and supervisory reserve training. In addition, in order to strengthen the employees' behavior and ethics, they have signed the "Employee Compliance Operation Policy Statement”. (3) The Company specifies the ethical policies, regulations and related procedures, behavior guidelines, punishment for violations, grievance system, etc., in “Personnel Management Rules”, “Ethical Corporate Management Best Practice Principles”, “Main Point of Preventing Insider Trading”, “Informant Regulations” and “"Employee Grievance Procedure" etc. In addition, "Code of Ethical Conduct” is formulated for the Company’s directors and managers, please refer to “Chapter 3.4.8 Other Important Corporate Governance Information”. The foresaid rules and regulations are reviewed regularly in order to meet thepractical needs.	In compliance with Article 7-1 and Article 10 to Article 13 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”
2. Implementing ethical corporate management (1) Has the Company evaluated ethical records of its counterparty? Does the contract signed by the Company and its trading counterparty clearly provide terms on ethical conduct?	V		(1) The contract signed by the Company for commercial activities is subject to the terms of good faith. In addition, the Company conduct inquiries such as honesty investigations for customers, suppliers, and other stakeholders to avoid the occurrence of dishonest behavior and damage of the Company's rights and interests.	In compliance with Article 9 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons
	Yes	No	Summary
(2) Has the Company established an exclusively (or concurrently) dedicated unit for promoting ethical corporate management that answers to the Board of Directors? Does the said unit regularly (at least once in a year) report to the Board of Directors on its ethical management policies and plans of preventing dishonesty, and its implementation? (3) Has the Company established policies preventing conflict of interests, provided proper channels of appeal, and enforced these policies and channels accordingly?	V V		(2) The President Office of the Company and the general management office of the whole enterprise promotes the operation of the integrity management of the enterprise, includes promoting ethical management policies, organizing education and training on issues related to ethical management, and deal with the cases related to informant according to the Company’s informant regulations. The ethical management promoting units shall report the implementation to the Board of Directors annually. The latest report is December 13, 2019, which mainly evaluated the policies and implementation of integrity management, the Board of Directors and the management actively implement the commitments of the business policy; the Company's consideration of the legality and integrity records of agents, suppliers, customers, or other business transactions; whether it is required for those who have access to confidential and commercially sensitive information in the business and if it has a duty of confidentiality and has set up preventive measures; whether the Company has established a specific reporting and reward system, and established a convenient reporting channel and other integrity management projects; and also submitted internal audit reports to the Independent Directors for review monthly, and regularly report to the Board of Directors . (3) The Company has established policies preventing conflict of interests, provided proper channels of appeal, and enforced these policies and channels accordingly. A. The Company’s standards for the Board of Directors meetings has clearly stated that if Directors or the juridical persons they represented have a personal interest, they shall state the key aspects of the interest in the meeting. If their interest may prejudice the interests of the Company, the persons concerned shall not participate in the discussion and voting of those items and shall recuse themselves from those sessions. Also, they shall not stand proxy for other Directors to exercise the voting right on those items. B. The Company has stated in its "Personnel Management Rules" that employees should strictly abide by the code of conduct for avoidance of interests and proactively report ethical concerns such as conflicts of interest, and haveprovisionsprohibitingcompetition toprevent conflicts of interest.	In compliance with Article 17 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.” In compliance with Article 19 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons
	Yes	No	Summary
(4) Has the Company established effective accounting systems and internal control systems for enforcing ethical corporate management? Does the internal audit unit formulate the relevant audit plans based on the results of the risk assessment of dishonesty behaviors and audit the implementation of the plan that prevents unethical behaviors or commissioned to a CPA? (5) Does the Company regularly organize internal and external training for ethical corporate management?	V V		C. The Company has provisions for "Employee Grievance Procedure" and "Internal and External Reporting Procedure of Unlawful and Unethical Behaviors", etc., and provides specific reporting channels for reporting any illegal or improper behavior. (4) The Company has established an effective and improved accounting system and internal control mechanism, and fully implemented computerization of operations. The six management functions of personnel, finance, business, production, materials, and engineering are connected by computers, layer by layer, and executed for management of any abnormalities. In addition, the Company also established a professional and independent internal audit structure. The structure is divided into three levels. The first level is carried out by the Auditing Office attached to the Company's Board of Directors, they formulate the relevant audit plans and audit the implementation of the plan to reduce the unethical behaviors, and the second level is routine and project-based independent auditing carried out by the general management office for routines and projects. Moreover, since internal auditing is the duty of all employees, the third level of auditing requires all departments to conduct voluntary operation inspections (on a monthly, quarterly, semi-annual, or annual basis depends on the projects) to extend the concept internal control to all levels of the Company. (5) Through regular corporate publications as well as various occasions, the Company promotes the corporate culture of “Diligence, Perseverance, Frugality and Trustworthiness,” as well as cultivating work ethics based on integrity, fairness and transparency, self-discipline, and a sense of responsibility. All new recruits receive corporate culture training. In addition, training courses about regulations, anti-fraud, and anti-corruption are held every year to strengthen the employees' commitment to complying with management rules based on good faith. In the internal and external 2019 integrity management training, courses like internal auditing, accounting system, CQM quality management training, ISO system, JIT production management system and other trainings like quality improvement and overseas personnel process optimization promotion were given, the total amount of people received training and the total training time is 1,626 and 34,759 hours respectively.	In compliance with Article 20 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.” In compliance with Article 22-2 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and Reasons
	Yes	No	Summary
3. Status for enforcing whistle-blowing systems in the Company (1) Has the Company established concrete whistle-blowing and reward systems as well as accessible whistle-blowing channels? Does the Company assign a suitable and dedicated individual for the case being exposed by the whistle-blower? (2) Has the Company established standard operating procedures (SOP), follow-up measures to be taken after investigation and relevant systems of confidentiality? (3) Has the Company adopted protection measures against inappropriate disciplinary actions for the whistle-blower?	V V V		The Company has a "Employee Grievance Procedure" and "Internal and External Reporting Procedure of Unlawful and Unethical Behaviors" to provide a specific reporting and reward system: (1) Providing multiple reporting channels such as mailboxes, e-mail, and fax lines. Visible notices are placed around the main entrances to be used by informants. (2) After a case is filed, the relevant team members of the general management office of the whole enterprise shall be responsible for the procedures of case review, filing, and follow-up investigation. (3) The principle of confidentiality: During and after an investigation, it is strictly forbidden to disclose any information to unrelated parties. Supervisors at all levels must also keep information confidential. All relevant information must be processed and archived according to the confidential document procedures to ensure the informant does not experience any unjust punishment. (4) If it is found that there are violations of the regulations, the one would be punished in accordance with the Company's Personnel Management Rules, it may need to notify the judicial and prosecutorial authorities if necessary. In order to understand the valuable opinions from our customers, the Company has also established a customer complaints channel, return and compensation application procedures, so that customers can express their opinions through the "Customer Feedback Form". The Company's website also provides e-mail address and service line for each product. Customers can directly respond their opinions through multiple channels. Moreover, related departments regularly summarize and analyze the issues which our customers concern, and prioritize them according to their importance and timeliness to ensure that customer needs are handled.	In compliance with Article 23 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”
4. Improvement of information disclosure Does the Company disclose its ethical corporate management policies and the results of its implementation on the Company’s website and MOPS?	V		Information on integrity management and ethical behavior has been disclosed on the Company’s website in both Chinese and English versions.	In compliance with Article 25 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”

Evaluation Item	Implementation Status(Note1)	Implementation Status(Note1)	Implementation Status(Note1)
	Yes	No	Summary
5. Where the Company has established its own best practices on ethical corporate management according to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” , please describe any gaps between the described best practices and actual implementation taken by the Company: On November 12th, 2014, the Company passed the resolution of the “Corporate Integrity Code of Practice”, which was amended by the resolution of the Board of Directors on June 23th, 2016. The code was slightly revised according to the Company's practice, but in line with spirit of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”
6. Other information helpful for understanding the principle of integrity of the Company's operations (e.g., the Company's amendment of its integrity code of practice): The Company schedules corporate governance courses for directors and managers on a regular basis to strengthen their ability in supervision and governance, with the hopes of increasingthe effectiveness ofgovernance and implementation of integrityoperation.

Note 1: Provide a brief description in the summary column, regardless whether "yes" or "no" is selected.

3.4.7 NPC’s Corporate Governance Guidelines and Regulations:

The Company has disclosed Corporate Governance Guidelines on its website under the “Corporate Governance” section of “Investor”.

3.4.8 Other Important Corporate Governance Information

3.4.8.1 In line with the requirements of Financial Supervisory Commission R.O.C. (Taiwan), the Company set up an Audit Committee and the “Code of Ethical Conduct for Directors and Managers” is as follow:

NAN YA PLASTICS CORPORATION

Code of Ethical Conduct for Directors and Managers

Amended by Board of Directors on June 23, 2016

Chapter 1 General Provisions

Article 1: The Code of Ethical Conduct (the “Code”) of Nan Ya Plastics Corporation (the “Company”) is established to stipulate rules for Directors and managers (including President, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Chief Financial Officer, Chief Accounting Officer, and other persons authorized to manage affairs and sign documents on behalf of the Company) to abide by in terms of ethical conduct when engaging in business activities within the scope of their authority, to prevent unethical conduct or any conduct that may damage the interest of the Company and its shareholders.

Chapter 2 Content of the Code

Article 2: Directors and managers shall conduct corporate affairs on the basis of integrity, faithfulness, compliance with laws, fairness and righteousness and with an ethical, self-disciplined attitude.
Article 3: Directors and managers shall avoid any conflicts of interest arising when their personal interest intervenes, or is likely to intervene in the overall interest of the Company, including but not limited to unable to perform their duties in an objective and efficient manner, or taking advantage of their position in the Company to obtain improper benefits for either themselves or their spouse, parents, children, or relatives within the second degree of kinship. To prevent conflicts of interest, any matters pertaining to lending funds, providing guarantees, and major asset transactions between the Company and the above-mentioned persons or their affiliated enterprise thereof shall be submitted to the Board of Directors for its approval in advance. The corresponding purchase (or sale) of goods shall be dealt with the best interest of the Company.

Article 4: When the Company has an opportunity for profit, the Directors and managers have the responsibility to conserve the reasonable and lawful benefits that can be obtained by the Company. The Directors and managers shall not obtain personal gain by using the Company property or information or taking advantage of their positions. Unless otherwise stipulated in the Company Act or Articles of Incorporation, they shall not engage in activities that compete with the business of the Company. Article 5: The Directors and managers shall be bound by the obligation to maintain the confidentiality of any information regarding the Company itself or its suppliers and customers, except when authorized or required by law to

disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Company or the suppliers and customers.
Article 6: The Directors and managers shall treat all suppliers and customers, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.
Article 7: The Directors and managers shall have the responsibility to safeguard the Company’s assets, to use the assets for official business purpose properly, and to avoid any impact on the Company’s profitability resulting from theft, negligence in care or waste of the assets.
Article 8: The Directors and managers shall comply with applicable laws and the Company’s regulations.
Article 9: When a director or manager is found by employee to have committed a violation of a law, regulation or the Code, the employee shall report to the Audit committee, their direct managers, president office personnel, chief internal auditor, or other appropriate personnel with sufficient evidence. Once the misconduct is confirmed, the Company will reward the above-mentioned employee in accordance with the Company's rules for employment management.
The Company shall handle the above-mentioned report properly and confidentially. The Company also shall use its best efforts to ensure the safety of the conscientious reporter and protect him/her from all kinds of reprisals.
Article 10: Where a director or manager is verified to have violated the Code, in addition to being subject to punishment under the Company's rules for employment management, the Company shall report the violation to the Board of Directors. The person involved in the violation shall be liable for civil, criminal or administrative responsibilities required by law and the Company shall disclose the violation on the Market Observation Post System (“MOPS”) immediately, including: the date of the violation, description of the violation, the provisions of the Code violated, and the disciplinary actions taken.

Chapter 3 Procedures for Exemption

Article 11: Where a Director or manager is to be exempted from the Code due to special circumstances, such exemption shall be approved by an majority vote at a meeting of the Board of Directors attended by over two-third of the Directors in person or through representation. The Company shall immediately disclose on the MOPS, including: date of exemption granted by the Board of Directors, any opposing or qualified opinion expressed by the independent directors, and the period of, reasons for, and the provisions of the Code behind the application of the exemption for shareholders to evaluate the appropriateness and to safeguard the interests of the Company.

Chapter 4 Method of information disclosure

Article 12: The Company shall disclose the Code on the Company’s website, annual reports, prospectuses, and the MOPS. Any amendment is subject to the same procedure.

Chapter 5 Additional Provision

Article 13: The Code shall be implemented after approval by the Board of Directors and shall be reported to the shareholders meeting. Any amendment is subject to the same procedure.

3.4.8.2 Managers and financial officer of the Company attend continuing education and training relevant to corporate governance every year, and all equip professional knowledge, their training status is as follow:

trainingstatus	is as follow:
Title	Name	Course Date	Organizer	Program	Hours
President	Ming-Jen Tzou	2019.11.15 2019.11.15	Dharma Drum Mountain Humanities and Social Improvement Foundation Securities and Futures Institute	Innovation of enterprise value Avoiding contravening Securities and Exchange Act – Discussing from false financial statement and insider trading	3 3
Senior Vice President	Fong-Chin Lin
Senior Vice President	Sin-Yi Huang
Senior Vice President	Kuei-Yung Wang
Financial Officer	Ming-Jong Yeh
Internal Audit Officer	Fu-Jung Peng
Accounting Officer	Li-Ta Pai
Senior Vice President	Cheng-Chung Lee	2019.07.30 2019.07.31	Securities and Futures Institute	Directors and supervisors (including independent) and corporate governance executives practical workshops	12
Corporate Governance Officer	Wen-Pin Cheng	2019.07.30 2019.07.31 2019.11.15 2019.11.15	Securities and Futures Institute Dharma Drum Mountain Humanities and Social Improvement Foundation Securities and Futures Institute Securities and Futures Institute	Directors and supervisors (including independent) and corporate governance executives practical workshops Innovation of enterprise value Avoiding contravening Securities and Exchange Act – Discussing from false financial statement and	12 3 3

insider trading

3.4.8.3 Certification of Employees Whose Jobs are Related to the Release of the Company’s Financial Information
Accounting Department: 4 Certified Public Accountants, 4 Certified Public Bookkeepers, 5 US Certified Public Accountants, 1 Chartered Financial Analysts, 1 Certified Securities Investment Analysts, 1 Certified Internal Auditor.
Financial Department: None.
Internal Auditing Department: 1 Certified Public Accountant.
3.4.8.4 Major internal information processing within the Company
The Company has always emphasized the principles of “diligence, perseverance, frugality, and trustworthiness” and has set strict ethical guidelines. We expect the employees to follow various codes of conduct and ethical guidelines in a responsible manner in their work and daily life. Employees are not allowed to engage in leaking trade secrets, false accounts, malpractices and rumors.
The Company also has established “Personnel Management Rules”. Employees are informed that unless a written permission has been given, no company information or other unpublished information can be disclosed. Neither should it be used for personal gains or other purposes.
The Company has also set up a "Code for the Spokesperson" to detail principles for information disclosure and major irregularities at the plants. Except for company spokespersons, no employee is allowed to disclose policy, operations and business-related information to media reporters and outsiders in order to avoid violations and insider trading.
The Company has specified the handling of important internal information in the “Personnel Management Rules” and published it in the internal information management system. Besides delivering this information to the employees' personal mailboxes, it is also available in the information system.

3.4.9 Implementation Status of the Internal Control System

3.4.9.1 Internal Control System Statement

NAN YA PLASTICS CORPORATION

Internal Control System Statement

Date: 2020.03.18

The Company states the following with regard to its internal control system in 2019, based on the findings of a self-assessment:

The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management. The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, however, and the Company takes corrective actions as soon as a deficiency is identified.
The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. Control environment 2. Risk assessment 3. Control activities 4. Information and communications 5. Monitoring activities. Each element further contains several items. Please refer to the Regulations for details.
The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
Based on the findings of the assessment mentioned in the preceding paragraph, the Company believes that on 2019.12.31 its internal control system (including its supervision and management of subsidiaries), encompassing internal controls for understanding of the degree of achievement of operational effectiveness and efficiency objectives, reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance of reporting, and compliance with applicable laws, regulations, and bylaws, was effectively designed and operating, and reasonably assured the achievement of the above-stated objectives.
This Statement will become a major part of the content of the Company's Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
This statement has been passed by the Board of Directors’ Meeting of the Company held on 2020.3.18, where 0 of the 14 attending directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement.

NAN YA PLASTICS CORPORATION

Chairman: Chia-Chau Wu

President: Ming-Jen Tzou

3.4.9.2 If CPA was engaged to conduct a special audit of internal control system, provide its audit report: None.
3.4.10 If there has been any legal penalty against the company or its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year up to the prospectus publication date, where the result of such penalty could have a material effect on shareholder equity or securities prices, the prospectus shall disclose the penalty, the main shortcomings, and the condition of improvement: None.
3.4.11 Major Resolutions of Shareholders’ Meetings and Board Meetings:
3.4.11.1 2019.06.12 Shareholders’ meeting
- Directors attending the shareholders’ meeting: Chia-Chau Wu, Ming-Jen Tzou, Shen-Yi Lee, Kuei-Yung Wang, Fong-Chin Lin, Zo-Chun Jen, Sin-Yi Huang(the above people are directors), Chih-Kang Wang, Yi-Fu Lin, Yun-Peng Chu (the above people are independent directors). 10 people in total.
(1)Ratification Items

Proposal 1

Proposal: For approval of the 2018 Business Report and Financial Statements as required by the Company Act.
(Proposed by the Board of Directors)
Resolution: The total votes was 6,034,805,542; the result of the vote: 5,530,164,084 approval votes (including the electronic votes of 4,847,051,011), which account for 91.6% of the total votes; 318,160 disapproval votes (including the electronic votes of 318,160); 0 invalid votes; 504,323,298 abstention votes and no votes (including the electronic votes of 501,131,588). The Company ratified the proposal as the approval votes exceed the prescribed amount.

Proposal 2

Proposal: For Approval of the Proposal for Distribution of 2018 Profits as required by the Company Act.
(Proposed by the Board of Directors)
Resolution: The total votes was 6,034,805,542; the result of the vote: 5,540,002,841 approval votes (including the electronic votes of 4,856,889,768), which account for 91.8% of the total votes; 313,080 disapproval votes (including the electronic votes of 313,080); 0 invalid votes; 494,489,621 abstention votes and no votes (including the electronic votes of 491,297,911). The Company ratified the proposal as the approval votes exceed the prescribed amount.
Implementation: 2018 shareholders' meeting approved to distribute cash dividend of NT$5.0 per share. On June 12, 2019, the Board of Directors set the date July 9, 2019 to be the base day of cash dividends distribution. And it will be distributed from August 6.
(2)Discussion Items(I) Proposal 1
Proposal: Amendment to the Procedures for Acquisition or Disposal of Assets of the Company, please discuss and resolve.

(Proposed by the Board of Directors)

Resolution: The total votes was 6,034,805,542; the result of the vote: 5,499,843,700 approval votes (including the electronic votes of 4,816,730,627), which account for 91.1% of the total votes; 347,759 disapproval votes (including the electronic votes of 347,759); 0 invalid votes; 534,614,083 abstention votes and no votes (including the electronic votes of 531,422,373). The Company ratified the proposal as the approval votes exceed the prescribed amount.
Implementation: According to approval of shareholders' meeting, the Company will implement the amended procedures and disclosed on the MOPS and on the Company’s website.

Proposal 2

Proposal: Amendment to the Procedures for Engaging in Derivatives Transactions of the Company, submitted for discussion.
(Proposed by the Board of Directors)
Resolution: The total votes was 6,034,805,542; the result of the vote: 5,499,764,161 approval votes (including the electronic votes of 4,816,651,088), which account for 91.1% of the total votes; 401,060 disapproval votes (including the electronic votes of 401,060); 0 invalid votes; 534,640,321 abstention votes and no votes (including the electronic votes of 531,448,611). The Company ratified the proposal as the approval votes exceed the prescribed amount.
Implementation: According to approval of shareholders' meeting, the Company will implement the amended procedures and disclosed on the MOPS and on the Company’s website.

Proposal 3

Proposal: Amendment to the Procedures for Loaning Funds to Other Parties of the Company, please discuss and resolve.
(Proposed by the Board of Directors)
Resolution: The total votes was 6,034,805,542; the result of the vote: 5,499,733,872 approval votes (including the electronic votes of 4,816,620,799), which account for 91.1% of the total votes; 410,419 disapproval votes (including the electronic votes of 410,419); 0 invalid votes; 534,661,251 abstention votes and no votes (including the electronic votes of 531,469,541). The Company ratified the proposal as the approval votes exceed the prescribed amount.
Implementation: According to approval of shareholders' meeting, the Company will implement the amended procedures and disclosed on the MOPS and on the Company’s website.

Proposal 4

Proposal: Amendment to the Procedures of Endorsements and Guarantees of the Company, please discuss and resolve.
(Proposed by the Board of Directors)
Resolution: The total votes was 6,034,805,542; the result of the vote: 5,499,742,033 approval votes (including the electronic votes of 4,816,628,960), which account for 91.1% of the total votes; 402,837 disapproval votes (including the electronic votes of 402,837); 0 invalid votes; 534,660,672 abstention votes and no votes (including the electronic votes of 531,468,962). The Company ratified the proposal as the approval votes exceed the prescribed

amount.

Implementation: According to approval of shareholders' meeting, the Company will implement the amended procedures and disclosed on the MOPS and on the Company’s website.

(3)Election Items

Proposal 1

Proposal: The Company’s Directors have their tenure nearly expired. Please elect the Board of Directors to conform to the applicable laws.

(Proposed by the Board of Directors)

Resolution: The total shares represented by the shareholders present were 6,034,805,542 at the time of the voting. Shareholder, Huai-Yu Liu was appointed as ballot inspectors; Li-Ching Tsai, Kuei-Chu Cheng, Shu-Wen Huang, Min-Hua Chien and Yen-Ting Fen were appointed as calculation officials by the Chairman. The election results were announced on the spot by the secretary appointed by the Chairman. The list of elected directors (including independent directors) and the number of votes received are as follows:

The 12 elected directors:

follows: The 12 elected directors:
Name	Votes received
Chia-Chau Wu	5,070,379,239
Wen-Yuan Wong	4,866,097,927
Wen-Chiao Wang (Representative of Formosa Petrochemical Corporation)	4,731,126,929
Ruey-Yu Wang	4,711,241,775
Ming-Jen Tzou	4,001,324,808
Shen-Yi Lee (Representative of Formosa Chemicals & Fibre Corp.)	3,795,824,484
Zo-Chun Jen(Representative of Formosa Plastics Corp.)	3,694,511,074
Kuei-YungWang	3,677,007,321
Fong-Chin Lin	3,649,242,635
Sin-Yi Huang	3,638,798,644
Cheng-ChungLee	3,559,729,546
Ching-Cheng Chang (Representative of Freedom Internation Enterprise Company)	3,509,912,330

The 3 elected independent directors:

The 3 elected independent directors:
Name	Votes received
Chih-KangWang	4,552,993,243
Yi-Fu Lin	3,453,396,127
Yun-PengChu	3,440,956,819

Implementation: The resolution was submitted to the Ministry of Economic Affairs for approved and registered by Shangzi No.10801077910 Letter on June 27, 2019 and then announced on the Company’s website.

(4)Discussion Items(II)

Proposal 1

Proposal: Appropriateness of releasing the newly elected Directors and the juristic person shareholder whose authorized representatives are elected as Directors, from non-competition restrictions, please discuss and resolve.

(Proposed by the Board of Directors)

Resolution: The total votes was 4,601,336,873; the result of the vote: 3,192,332,895 approval votes (including the electronic votes of 2,566,789,452), which account for 69.4% of the total votes; 698,782,999 disapproval votes (including the electronic votes of 698,782,999); 0 invalid votes; 710,220,979 abstention votes and no votes (including the electronic votes of 707,029,269). The Company ratified the proposal as the approval votes exceed the prescribed amount.

Implementation: Implement according to the resolution of Board of Director.

(5)Extempore motion

(Shui-Hsien,Chang, shareholder No.303076, asked questions about the Company's operations and stock prices under the impact of the Sino-US trade war. The Chairman replied and explained.)

(Shueh-Fen,Huang, shareholder No.162367, recognized the achievements of the management team. The Chairman replied and expressed the appreciation.)

3.4.11.2 2019.03.20 1[st] Board of Directors’ Meeting of 2019

Proposal 1

Proposal: To formulate 2018 employees’ compensation, please discuss and resolve. Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance approved the proposal. It would be reported in 2019 shareholders' meeting.

Proposal 2

Proposal: To compile 2018 final accounting books and statements and 2019 operating plan, please discuss and resolve.

(The secretariat reported that the annex of the proposal has been submitted to Audit Committee for approval. 2018 annual operating status and 2019 operating plan was respectively reported by the president office of the Company and head officer of each division.)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 3

Proposal: To compile 2018 profit distribution schedule, please discuss and resolve. (The secretariat reported that the annex of the proposal has been submitted to Audit Committee for approval.)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 4

Proposal: Preparation for 2019 shareholders' meeting on June 12, 2019, submitted for discussion.

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 5

Proposal: To re-elect the Board of Directors during 2019 shareholders' meeting, please discuss and resolve.

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 6

Proposal: To ask the shareholders' meeting’s approval for releasing the elected Directors from non-competition restrictions, please discuss and resolve. Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 7

Proposal: To formulate the Company’s Internal Control System Statement, please discuss and resolve.

(Proposed by the Audit Committee)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 8

Proposal: To compile plan of lending funds for the second quarter of 2019, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Yuan Wang, Wen-Tsao Wang, Ruey-Yu Wang, Directors in attendance including Ming Jen, Tzou, Chin-Jen Wu, Shen-Yi Lee and Zo Chun, Jen, respectively, as the Chairman, Managing Director, Director or representative of the juristic person of the borrowing Company, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement whether the loan conditions would be in accordance with past practice. Financial Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 9

Proposal: To amend the “Procedures for Acquisition or Disposal of Assets”, the “Procedures for Engaging in Derivatives Transactions”, the “Procedures for Loaning Funds to Other Parties” and the “Procedures of Endorsements and Guarantees” of the Company, please discuss and resolve.

(Proposed by the Audit Committee)

Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance approved the proposal. It would be submitted to 2019 shareholders' meeting for approval.

Proposal 10

Proposal: The Company planned to invest “FG INC” for US$ 15 million in accordance of the investment framework, please discuss and resolve.

(Proposed by the Audit Committee) Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 11

Proposal: The expansion of PET release film production equipment in Shulin Site, please discuss and resolve.

(The purpose of the expansion was supplemented by the Chairman.) Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 12

Proposal: To raise long-term funds for new expansion, replacement of old plant equipment, repayment of debts and enrichment of working capital, the Company planned to issue domestic unsecured corporate bond for NT$12 billion, please discuss and resolve.

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 13

Proposal: The promotion of management position, please discuss and resolve. (Chung-Yueh Shih was directly involved and should enter recusal.) Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

3.4.11.3 2019.04.19 2[nd ] Board of Directors’ Meeting of 2019

Proposal 1

Proposal: To present a slate of directors (and independent directors) candidates for shareholders holding 1% or more of the total number of issued shares of the Company, please review.

(Proposed by the Audit Committee)

Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance approved the proposal. The nominees were included in the slate of directors (and independent directors) candidates of 2019 shareholders’ meeting.

3.4.11.4 2019.05.10 3[rd] Board of Directors’ Meeting of 2019

Proposal 1

Proposal: To compile plan of lending funds for the third quarter of 2019, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Yuan Wang, Directors in attendance including Ming-Jen Tzou, Shen-Yi Lee and Zo-Chun Jen, respectively, as the Chairman, Managing Director, Director or representative of the juristic person of the borrowing Company, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang asked whether the loan conditions would be in accordance with past practice in the proposal. Financial Officer replied and explained.

Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 2

Proposal: Transaction with related party, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Wen-Yuan Wang, Managing Director in attendance and Ming-Jen Tzou, Directors in attendance, respectively, as the Managing Director, or Director of the related company, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement whether the transaction conditions and price comparison data with the related company in the proposal had all been audited. Internal Audit Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.
Proposal 3
Proposal: To donate NT$ 11,134,000 to Ming Chi University of Technology, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman and Wen-Yuan Wang, Managing Director in attendance, respectively, as the Chairmen, or Director of Ming Chi University of Technology, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to explain whether other companies in FPG also donated to Ming Chi University of Technology together. Financial Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 4

Proposal: The Company's investment business “Formosa Industries Corp.” would borrow loans from banks. The Company was proposed to issue a letter of support, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Yuan Wang, Directors in attendance including Ming-Jen Tzou, Fong Chin, Lin and Sin Yi, Huang, respectively, as the Chairman or Director of Formosa Industries Corp., should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement the content of the letter of support. Financial Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 5

Proposal: To amend the Company’s regulations of shareholder procedures, please discuss and resolve.

(Proposed by the Audit Committee)

(The Chairman inquired the officer in attendance to supplement the key points of the amendment. Financial Officer replied and explained.)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 6

Proposal: To amend the Company’s “Corporate Governance Best-Practice Principles”, please discuss and resolve.

(The Chairman supplemented the key points of the amendment.) Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 7

Proposal: To set up the first “Corporate Governance Officer” of the Company, please discuss and resolve.

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 8

Proposal: To amend “Standard Operation Procedures of Dealing with Directors’ Requests” of the Company, please discuss and resolve.

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

3.4.11.5 2019.06.12 4[th] Board of Directors’ Meeting of 2019

Proposal 1

Proposal: To re-elect the Managing Directors and Chairman of the Company, please discuss and resolve.

Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance elect Chia-Chau Wu, Wen-Yuan Wong, Wen-Chiao Wang, Ruey-Yu Wang and Chih-Kang Wang as the Managing Directors. And all Managing Directors in attendance elect Chia-Chau Wu as the Chairman.

Proposal 2

Proposal: To approve the record day and distribution day for cash dividends of 2018, please discuss and resolve.

Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance approved the proposal.

Proposal 3

Proposal: To appoint independent director Chih-Kang Wang, Yi-Fu Lin and Yun-Peng Chu as the members of Remuneration Committee, please discuss and resolve.

(The independent director Chih-Kang Wang, Yi-Fu Lin and Yun-Peng Chu, were the parties involved, should enter recusal.)

Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance except for above-mentioned independent

directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 4

Proposal: To meet operational needs, the Company intends to update the credit line of various financial institutions, please discuss and resolve. Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

3.4.11.6 2019.08.12 5[th] Board of Directors’ Meeting of 2019

Proposal 1

Proposal: To compile plan of lending funds for the fourth quarter of 2019, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Yuan Wang, Wen-Chiao Wang and Ruey-Yu Wang, Directors in attendance including Shen-Yi Lee and Zo-Chun Jen, respectively, as the Chairman, Managing Director, Director or representative of the juristic person of the borrowing company, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang asked whether the loan conditions were in line with the market practices. Financial Officer replied and explained.

Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 2

Proposal: Transaction with related party, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Yuan Wang, Wen-Chiao Wang and Ruey-Yu Wang, Directors in attendance including Ming-Jen Tzou and Zo-Chun Jen, respectively, as the Chairman, Managing Director, Director or representative of the juristic person of the related company, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement whether the transaction with the related party would be in accordance with past practice. Internal Audit Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 3

Proposal: To increase investment to “Formosa Resources Corporation” for US$81.25 million, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Yuan Wang and Wen-Chiao Wang, respectively, as the Chairman or Director of Formosa Resources Corporation, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement the plan and purpose of the investment. Financial Officer replied and explained.

Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 4

Proposal: To formulate the Chairman’ compensation, please discuss and resolve.

(Proposed by the Remuneration Committee) (The Chairman, acting as principal, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.) Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance except for the Chairman had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 5

Proposal: To formulate the existing Directors’ compensation, please discuss and resolve.

(Proposed by the Remuneration Committee) (The independent directors, Chih-Kang Wang, Yi-Fu Lin, Yun-Peng Chu and director, Ching Cheng, Chang acting as principal, should enter recusal.) Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 6

Proposal: The Company’s investment business “Nan Ya Plastics (Ningbo) Co., Ltd.” planned to conduct cash capital increase with the amount of US$ 80 million in order to meet the business expansion, please discuss and resolve.

(Proposed by the Audit Committee)

(The capital increase plan and purpose were supplemented by the Chairman.)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 7

Proposal: To maintain the existing managers’ compensation standards and structure, please discuss and resolve.

(Proposed by the Remuneration Committee)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 8

Proposal: To maintain the existing managers’ appraisal systems, please discuss and resolve.

(Proposed by the Remuneration Committee) Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

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Proposal 9

Proposal: The salary adjustment of the managers would be in line with all employees in 2019, please discuss and resolve.

(Proposed by the Remuneration Committee)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

3.4.11.7 2019.11.08 6[th] Board of Directors’ Meeting of 2019 Proposal 1
Proposal: To compile plan of lending funds for the first quarter of 2020, please discuss and resolve.

(Proposed by the Remuneration Committee) (The Chairman, Managing Director in attendance including Wen-Chiao Wang and Ruey-Yu Wang, Directors in attendance including Ming-Jen Tzou, Shen-Yi Lee, Zo-Chun Jen and Kuei-Yung Wang, respectively, as the Chairman, Managing Director, Director, representative of the juristic person of the borrowing Company or Director, Ruey-Yu Wang’s relative within the second degree of kinship, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement whether the loan conditions would be in accordance with past practice. Financial Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 2

Proposal: Transaction with related party, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Chiao Wang, Ruey-Yu Wang, Directors in attendance including Ming-Jen Tzou, Zo-Chun Jen and Kuei-Yung Wang, respectively, as the Chairman, Managing Director, Director or representative of the juristic person of the related company, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement whether the transaction would be in accordance with past practice. Internal Audit Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 3

Proposal: Donation to Chang Gung University for NT$6.14 million 1,239 dollars, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Chiao Wang and Ruey-Yu Wang, Director in attendance, Kuei-Yung Wang, respectively, as Director of Chang Gung University, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the

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interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired the officer in attendance to supplement the donation percentage. Financial Officer replied and explained.

Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 4

Proposal: The Company's investment business “Nan Ya Electronic Materials (Huizhou) Co., Ltd.” would borrow loans from banks. The Company was proposed to issue a letter of support, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Directors in attendance including Ming-Jen Tzou and Cheng-Chung Lee, respectively, as the Chairman or Director of Nan Ya Electronic Materials (Huizhou) Co., Ltd., should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired whether the content of the letter of support would be in accordance with past practice. Financial Officer replied and explained. Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

3.4.11.8 2019.12.13 7[th] Board of Directors’ Meeting of 2019 Proposal 1

Proposal: To formulate 2020 annual audit plans, please discuss and resolve. Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance approved the proposal.

Proposal 2

Proposal: To increase investment to “Formosa Synthetic Rubber Corp.” with NT$ 46 million according to the investment framework, please discuss and resolve. (Proposed by the Audit Committee)

(The Chairman, Managing Director in attendance including Wen-Yuan Wang, Wen-Chiao Wang and Directors, Ming-Jen Tzou respectively, as the Chairman, Managing Director or Director of Formosa Synthetic Rubber Corp., or Managing Director, Wen-Chiao Wang’s relative within the second degree of kinship, should enter recusal.)

(The purpose of the investment to Formosa Synthetic Rubber Corp. was supplement by the Chairman.)

Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance except for above-mentioned Directors who had

to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 3

Proposal: In response to the expiration of the 5 year implementation cycle of the current year-end bonus formula, it is planned to revise the Company's "Regulations of Year-End Bonus and Remuneration Distribution”, please discuss and resolve.

(Proposed by the Remuneration Committee)

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Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 4

3.4.11.9 2020.03.18 1st Board of Directors’ Meeting of 2020 Proposal 1

Proposal: To formulate 2019 employees’ compensation, please discuss and resolve. Opinions of independent directors and the implementation: None.

Resolution: All directors in attendance approved the proposal. It would be reported in 2020 shareholders' meeting.

Proposal 2

Proposal: To compile 2019 final accounting books and statements and 2020 operating plan, please discuss and resolve.

(The secretariat reported that the annex of the proposal has been submitted to Audit Committee for approval. 2019 annual operating status and 2020 operating plan was respectively reported by the president office of the Company and head officer of each division.)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 3

Proposal: To compile 2019 profit distribution schedule, please discuss and resolve. (The secretariat reported that the annex of the proposal has been submitted to Audit Committee for approval.)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 4

Proposal: Preparation for 2020 shareholders' meeting on June 12, 2020, submitted for discussion.

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 5

Proposal: To formulate the Company’s Internal Control System Statement, please discuss and resolve.

(Proposed by the Audit Committee)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 6

Proposal: To amend the Company’s “internal control systems” and “internal audit implementation rules” of compiling the financial statements, please discuss and resolve.

(Proposed by the Audit Committee) Opinions of independent directors and the implementation: None.

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Resolution: All directors in attendance approved the proposal.

Proposal 7

Proposal: To compile plan of lending funds for the second quarter of 2020, please discuss and resolve.

(Proposed by the Audit Committee) (The Chairman, Managing Director in attendance including Wen-Yuan Wang, Ruey-Yu Wang, Directors in attendance including Shen-Yi Lee, Zo Chun, Jen and Kuei-Yung Wang respectively, as the Chairman, Managing Director, Director or representative of the juristic person or Director, Ruey-Yu Wang’s relative within the second degree of kinship, should enter recusal. Managing Director Chih-Kang Wang was appointed by the Chairman as the interim Chairman.)

Opinions of independent directors and the implementation: Managing Director Chih-Kang Wang inquired whether the loan conditions would be in accordance with past practice. Financial Officer replied and explained.
Resolution: All directors in attendance except for above-mentioned Directors who had to enter recusal from voting due to conflict of interest approved the proposal.

Proposal 8

Proposal: To amend the Company’s “audit committee charter”, please discuss and resolve.

(Proposed by the Audit Committee)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 9

Proposal: To increase investment to “FG INC.” with US$ 4.3 million according to the investment framework, please discuss and resolve.

(Proposed by the Audit Committee)

Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

Proposal 10

Proposal: To amend the Company’s “shareholders’ meeting procedure rules“, please discuss and resolve.

(Proposed by the Audit Committee) Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal. It would be reported in 2020 shareholders' meeting.

Opinions of independent directors and the implementation: None.

Proposal 11

Proposal: To amend the Company’s “rules of procedure for meetings of Board of Directors“ and “Regulations of Scope for Independent Directors’ Duties” , please discuss and resolve.

(Proposed by the Audit Committee) Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.

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Proposal 12

Proposal: To raise long-term funds for new expansion, replacement of old plant equipment, repayment of debts and enrichment of working capital, the Company planned to issue domestic unsecured corporate bond for NT$10 billion, please discuss and resolve.
Opinions of independent directors and the implementation: None. Resolution: All directors in attendance approved the proposal.
3.4.12 Major Issues of Record or Written Statements Made by Any Directors or Supervisors which Specified his/her Dissent to Important Resolutions Passed by the Board of Directors as of the Publication Date of the Annual Report: None.
3.4.13 Resignation or Dismissal of Chairman, President, and Accounting Officer, Financial Officer, Internal Audit Officer, Corporate Governance Officer and R&D Officer as of the Date of this Annual Report: None.

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3.5 Information Regarding NPC’s Audit Fees

Audit Fee

Audit Fee
Accounting Firm	Name of CPA	Period Covered by CPA’s Audit	Remarks
KPMG	Kuo, Hsin-Yi Yu, Chi-Lung	2019.01.01~2019.12.13

Note: If the Company has changed CPA or Accounting Firm during the current fiscal year, the company shall report the information regarding the audit period covered by each CPA and the replacement reason.

Unit: NT$ thousands

Fee Items Fee Range	Fee Items Fee Range	Audit Fee	Non-audit Fee	Total
1	Under NT$ 2,000,000	0	1,290	1,290
2	NT$ 2,000,001 ~ NT$ 4,000,000	0	0	0
3	NT$ 4,000,001 ~ NT$ 6,000,000	0	0	0
4	NT$ 6,000,001 ~ NT$ 8,000,000	0	0	0
5	NT$ 8,000,001 ~ NT$ 10,000,000	0	0	0
6	Over NT$ 100,000,000	11,084	0	11,084

The amount of non-auditing relevant fees charged by the CPA and the related parties reaches 25 % of the Company's annual auditing expenses:

Accounting Firm	Name of CPA	Audit Fee		Non-audit Fee	Non-audit Fee			Period Covered by CPA’s Audit	Remarks
			System of Design	Company Registration	Human Resource	Others (Note2)	Subtotal
KPMG	Kuo, Hsin-Yi Yu,Chi-Lung	11,084	0	0	0	1,290	1,290	2019.01.01~ 2019.12.31	Note 3

Note1: If any CPA or the accounting firm is replaced for the Company this year, the inspection periods shall be listed separately. In addition, the reason for the replacement shall be indicated in the remark column and information on audit and non-audit public expenditure shall be disclosed.
Note2: The non-audit public expenditure shall be listed separately by the service item. When "Other" of non-audit public expenditure reaches 25% of the total value of non-audit public expenditure, contents of the service shall be listed in the remark column.
Note3: Non-audit fee includes expenditure on transfer price report, master document, master file and direct deduction of business tax.
If there is any change in the appointed in dependent auditors and the Company's annual auditing expenses decreased simultaneously, information regarding the amount, percentage and reasons for the decrease in auditing expenses shall be disclosed：N/A.
Auditing expenses decreased by 10% in comparison to the previous year, information regarding the amount, percentage and reason for the decrease in auditing expenses shall be disclosed：N/A.

3.6 Replacement of CPA: None. There’s no replacement of CPA in the last 2 years.

3.7 The Company’s Chairman, Executive Officer, Financial Officer, and Managers in Charge of its Finance and Accounting Operations did not Hold Any Positions in the Company’s Independent Auditing Firm or its Affiliates during 2019.
3.8 Change in Shareholdings and in Shares Pledged by Directors, Management, and Shareholders Holding more than 10% Share in the Company.

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1. Changes in Shareholding of Directors, Managers and Major Shareholders

Title (Note1)	Name	2019	2019	As of April 14,2020	As of April 14,2020
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	Chia-Chau Wu	0	0	0	0
Managing Director	Wen-Yuan Wong	(943,441)	0	0	0
Managing Director	Formosa Petrochemical Corp.	0	(1,746,000)	0	0
	Representative: Wen-Chiao Wang	0	0	0	0
Managing Director	Ruey-Yu Wang	0	0	0	0
Managing Director (Independent Director)	Chih-Kang Wang	0	0	0	0
Independent Director	Yi-Fu Lin	0	0	0	0
Independent Director	Yun-Peng Chu	0	0	0	0
Director and President	Ming-Jen Tzou	0	0	0	0
Director	Formosa Chemicals & Fibre Corp.	0	0	0	0
	Representative: Shen-Yi Lee
Director	Formosa Plastics Corp.
	Representative: Zo-Chun Jen
Director and Senior Vice President	Kuei-Yung Wang	0	0	0	0
Director and Senior Vice President	Fong-Chin Lin	0	0	0	0
Director and Senior Vice President	Sin-Yi Huang	0	0	0	0
Director and Senior Vice President	Cheng-Chung Lee	0	0	0	0
Director	Freedom Internation Enterprise Company	0	0	0	0
	Representative: Ching-Cheng Chang
Senior Vice President	Chung-Yueh Shih	0	0	0	0
Vice President	Shiou-Yeh Sheng	0	0	0	0
Vice President	Pao-Chang Liu	0	0	0	0
Vice President	Tzong -Yang Su	0	0	0	0
Vice President	Yu Lung Huang	2,000	0	0	0
Vice President	Yu-Sheng Chen	0	0	0	0
Vice President	Kuo-Wei Lin	0	0	0	0

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Title (Note1)	Name	2019	2019	As of April 14,2020	As of April 14,2020
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Vice President	Yang-Tun Chien	0	0	0	0
Vice President	Wen-cheng Yang	0	0	0	0
Vice President	Yung-Fang Chang	0	0	0	0
Financial Officer	Ming-Jong Yeh	0	0	0	0
Corporate Governance Officer	Wen-Pin Cheng	0	0	0	0
Accounting Officer	Li-Ta Pai	0	0	0	0
shareholders holding more than 10% share	Chang Gung Medical Foundation	0	0	0	0

Note1: Shareholders holding more than 10% share in the Company shall be indicated as major shareholders and listed respectively. Note2: Shares trading or pledging with related party shall fill out following information.

Information of shares trade or pledge: N/A.

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3.9 Relationship among the Top Ten Shareholders

2020.04.14

Name (Note1)	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees (Note3)	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees (Note3)
	Shares	%	Shares	%	Shares	%	Name	Relationship
Chang Gung Medical Foundation Rep. Diana Wang	876,733,453	11.05%	0	0	0	0	Formosa Plastics Corp.	Chairman of Formosa Plastics Corp. is one of Chang Gung Medical Foundation’s board director
							Formosa Chemicals & Fibre Corp.	Chairman of Formosa Chemicals & Fibre Corp. is one of Chang Gung Medical Foundation’s board director
							Chang Gung University	Chairman of Chang Gung University is one of Chang Gung Medical Foundation’s board director
Formosa Plastics Corporation Rep. Chien-Nan Lin	783,356,866	9.88%	0	0	0	0	Chang Gung Medical Foundation	Chairman of Formosa Plastics Corp. is one of Chang Gung Medical Foundation’s board director
							Formosa Chemicals & Fibre Corp.	Formosa Chemicals & Fibre Corp. is one of Formosa Plastics Corp.’s board director
							Chang Gung University	Chairman of Formosa Plastics Corp. is one of Chang Gung University’s board director
							Formosa Petrochemical Corp.	Formosa Plastics Corp. invested Formosa Petrochemical Corp. under equity method Formosa Petrochemical Corp. is one of Formosa Plastics Corp.’s board director
Formosa Chemicals & Fibre Corporation Rep. Wen Yuan Wong	413,327,750	5.21%	0	0	0	0	Chang Gung Medical Foundation	Chairman of Formosa Chemicals & Fibre Corp. is one of Chang Gung Medical Foundation’s board director
							Formosa Plastics Corp.	Formosa Chemicals & Fibre Corp. is one of Formosa Plastics Corp.’s board director
							Chang Gung University	Chairman of Formosa Chemicals & Fibre Corp. and Chang Gung University is the sameperson
							Formosa Petrochemical Corp.	Formosa Chemicals & Fibre Corp. invested Formosa Petrochemical Corp. under equity method Formosa Petrochemical Corp. is one of Formosa Chemicals & Fibre Corp.’s board director
Chang Gung University Rep. Wen Yuan Wong	317,469,186	4.00%	0	0	0	0	Chang Gung Medical Foundation	Chairman of Chang Gung University is one of Chang Gung Medical Foundation’s board director
							Formosa Plastics Corp.	Chairman of Formosa Plastics Corp. is one of Chang Gung University ’s board director
							Formosa Chemicals & Fibre Corp.	Chairman of Formosa Chemicals & Fibre Corp. and Chang Gung University is the same person
							Formosa Petrochemical Corp.	Chairman of Formosa Chemicals & Fibre Corp. is one of Chang Gung University’s board director

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Name (Note1)	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees (Note3)	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees (Note3)
	Shares	%	Shares	%	Shares	%	Name	Relationship
Vanson International Investment Co., Ltd. Rep. Landmark Capital Holdings Inc.	189,777,620	2.39%	0	0	0	0	Chingdwell International Investment Corp.	With same management team
							Citibank Taiwan Limited In Custody for Macro System Corp.	With same management team
Formosa Petrochemical Corporation Rep. Bao Lang Chen	179,214,423	2.26%	0	0	0	0	Formosa Plastics Corp.	Formosa Plastics Corp. invested Formosa Petrochemical Corp. under equity method Formosa Plastics Corp. is one of Formosa Petrochemical Corp.’s board director
							Formosa Chemicals & Fibre Corp.	Formosa Chemicals & Fibre Corp. invested Formosa Petrochemical Corp. under equity method Formosa Chemicals & Fibre Corp. is one of Formosa Petrochemical Corp.’s board director
							Chang Gung University	Formosa Petrochemical Corp. is one of Chang Gung University ’s board director
Chingdwell International Investment Corp. Rep. Everred Corporate, Inc.	147,556,933	1.86%	0	0	0	0	Vanson International Investment Co., Ltd.	With same management team
							Citibank Taiwan Limited In Custody for Macro System Corp.	With same management team
LGT Bank (Singapore) Ltd.	123,807,765	1.56%	0	0	0	0	None
Citibank Taiwan Limited In Custody for Macro System Corp.	109,714,138	1.38%	0	0	0	0	Vanson International Investment Co., Ltd.	With same management team
							Chingdwell International Investment Corp.	With same management team
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	99,130,133	1.25%	0	0	0	0	None

Note1: Top ten shareholders shall be listed, and both the name of the institution and its representative shall be listed for an institutional shareholder.

Note2: Calculation of the ratio of shareholdings means calculate the shareholding ratio with own shareholdings, spouse’s/minor’s shareholding, shareholding by nominee arrangement

Note3: Shareholders above-mentioned includes institutional shareholder and natural person shareholder and their relationship shall be disclosed in line with Regulations Governing the Preparation of Financial Reports by Securities Issuers.

110

Enterprise by the Company, the Company’s Directors, Supervisors, Managers, and Any Companies Controlled either Directly or Indirectly by the Company:

2019.12.31					Unit: shares/ %	Unit: shares/ %
Affiliated Enterprises (Note1)	Ownership by the Company		Direct or Indirect Ownership by Directors/Supervisors/ Managers		Total Ownership
	Shares	%	Shares	%	Shares	%
NAN YA PLASTICS CORP., U.S.A. NAN YA PLASTICS CORP., AMERICA FG INC NAN YA PLASTICS INTERNATIONAL(CAYMAN) LTD. FORMOSA GROUP(CAYMAN) LTD. NAN YA PLASTICS (HONG KONG) CO., LTD. SUPERIOR WORLD WIDE TRADING CO., LTD. FORMOSA SYNTHETIC RUBBER(HONG KONG) CORP. LTD. PFG FIBER GLASS(HONG KONG)CO., LTD. FORMOSA INDUSTRIES CORP. FORMOSA PLASTICS GROUP INVESTMENT CORP. NAN YA PCB CORP. NANYA TECHNOLOGY CORP. FORMOSA ENVIRONMENTAL TECHNOLOGY CORP. FORMOSA PETROCHEMICAL CORP. PFG FIBER GLASS CORP. FORMOSA HEAVY INDUSTRIES CORP. NAN CHUNG PETROCHEMICAL CORP. WEN FUNG INDUSTRIAL CORP. FORMOSA AUTOMOBILE CORP. YA TAI DEVELOPMET CORP. FORMOSA FAIRWAY CORP. FORMOSA PLASTICS TRANSPORT CORP. HWA YA SCIENCE PARK MANAGEMENT CONSULTING CO., LTD YI JIH DEVELOPMET CORP. MAI LIAO POWER CORP. FORMOSA SYNTHETIC RUBBER CORP. FORMOSA PLASTICS CONSTRUCTION CORP.	2,400 60,000 2,000 52,000 12,500 953,253,077 14,000 135,000,000 75,500 N/A (Note2) 5,000,000 432,744,977 907,303,775 46,256,575 2,201,306,014 100,000,000 651,706,181 100,000,000 18,738,135 27,045,801 1,303,870 4,699,367 6,566,487 34,000 5,800,000 547,024,654 44,600,000 10,000,000	100.00 100.00 10.00 100.00 25.00 100.00 100.00 32.53 100.00 42.50 100.00 66.97 29.71 26.99 23.11 100.00 32.91 50.00 100.00 45.00 44.96 33.34 33.33 34.00 29.22 24.94 33.33 33.33	0 0 17,400 0 37,500 0 0 270,000,000 0 N/A (Note2) 0 43,772 1,004,571,955 125,143,425 5,024,932,631 0 1,328,515,462 0 0 27,044,199 1,306,130 9,395,902 13,132,755 66,000 14,050,000 1,641,130,008 89,200,000 20,000,000	0.00 0.00 87.00 0.00 75.00 0.00 0.00 65.86 0.00 42.50 0.00 0.01 32.68 73.01 52.75 0.00 67.09 0.00 0.00 45.00 45.04 66.66 66.67 66.00 70.78 74.82 66.67 66.67	2,400 60,000 19,400 52,000 50,000 953,253,077 14,000 405,000,000 75,500 N/A (Note2) 5,000,000 432,788,749 1,911,875,730 171,400,000 7,226,238,645 100,000,000 1,980,221,643 100,000,000 18,738,135 54,090,000 2,610,000 14,095,269 19,699,242 100,000 19,850,000 2,188,154,662 133,800,000 30,000,000	100.00 100.00 97.00 100.00 100.00 100.00 100.00 98.39 100.00 85.00 100.00 66.98 62.39 100.00 75.86 100.00 100.00 50.00 100.00 90.00 90.00 100.00 100.00 100.00 100.00 99.76 100.00 100.00

Note1: Under the equality method. Note2: Not issue shares.

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IV. Capital and Shares

4.1 Capital and Shares

4.1.1 Source of Capital

Year / Month	Issue price (NT$ per share)	Authorized capital	Authorized capital	Paid-in capital	Paid-in capital		Remark
		Shares	Amount	Shares	Amount	Sources of capital	Capital increased by assets other than cash	notes
2013/08	10	7,930,821,589	79,308,215,890	7,930,821,589	79,308,215,890	Recapitalization of earnings	None	Note

Note: In 2012, capital increase by earnings re-capitalization amounted to NT$785,229,860 and was approved by the Financial Supervisory Commission under Jin-Guan-Zheng-Fa-Zi No.1020028386 dated July 19, 2013.

Unit: share

				Unit: share
Type of stock		Authorized capital		Remark
	Outstanding	Outstanding Unissued shares	Total shares
Common Stock (Registered)	7,930,821,589 (Note)	-	7,930,821,589	-

Note: Listed on TSE

4.1.2 Status of Shareholders

	2020.04.14	2020.04.14	2020.04.14	2020.04.14	2020.04.14	2020.04.14
Type of shareholders	Government Agencies	Financial Institutions	Other Juridical Person	Domestic Natural Person	Foreign Institutions & Natural Person	Total
Number of shareholders	4	67	771	239,476	873	241,191
Shareholding (shares)	95,654,288	484,041,880	3,201,536,350	1,788,014,880	2,361,574,191	7,930,821,589
Holding (percentage)	1.21	6.10	40.37	22.54	29.78	100.00

Note: A primary exchange-listed (or OTC-listed) company or emerging stock company shall disclosure the holding percentage of shares by Mainland Area enterprise. "Mainland Area enterprise" herein means a juristic person, group, or other institution of the Mainland Area, or a company in which the same have invested in a third jurisdiction in accordance with Article 3 of the Regulations Governing Permission for People from the Mainland Area to Invest in the Taiwan Area.

112

4.1.3 Shareholding Distribution Status

As of 2020.04.14

			As of 2020.04.14
Common shares ownership (Unit: share)	Number of shareholders	Ownership (shares)	Ownership (percentage)
000,001 ~0,000,999	96,518	22,108,375	0.28
001,000 ~0,005,000	98,806	213,195,478	2.69
005,001 ~0,010,000	21,119	151,382,169	1.91
010,001 ~0,015,000	8,431	101,451,853	1.28
015,001 ~0,020,000	4,051	71,440,179	0.90
020,001 ~0,030,000	4,326	105,493,874	1.33
030,001 ~0,050,000	3,227	124,135,880	1.57
050,001 ~0,100,000	2,368	163,618,037	2.06
100,001 ~0,200,000	1,131	154,137,980	1.94
200,001 ~0,400,000	524	144,606,227	1.82
400,001 ~0,600,000	185	91,124,315	1.15
600,001 ~0,800,000	97	66,888,027	0.84
800,001 ~ 1,000,000	63	56,989,698	0.72
1,000,001and over	345	6,464,249,497	81.51
Total	241,191	7,930,821,589	100.00

4.1.4 List of Major Shareholders

List all shareholders with a stake of 5 percent or greater, or the names of the top ten shareholders.

	As of 2020.04.14	As of 2020.04.14
Top10 shareholder	Ownership (shares)	OwnershipPercentage
1. Chang Gung Medical Foundation	876,733,453	11.05
2. Formosa Plastics Corp.	783,356,866	9.88
3. Formosa Chemicals & Fiber Corp.	413,327,750	5.21
4. Chang Gung University	317,469,186	4.00
5. Vanson International Investment Co., Ltd.	189,777,620	2.39
6. Formosa Petrochemical Corp.	179,214,423	2.26
7. Chindwell International Investment Corp.	147,556,933	1.86
8. LGT Bank(Singapore) Ltd.	123,807,765	1.56
9. Citibank Taiwan Limited In Custody for Macro System Corp.	109,714,138	1.38
10. JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund,a series of Vanguard Star Funds	99,130,133	1.25

113

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Unit: NT$

				Unit: NT$
Item	Year	2019	2018	2020.3.31
Market price per share	Highest marketprice	79.90	88.40	73.20
	Lowest market price	66.00	72.00	47.20
	Average marketprice	73.95	81.69	62.03
Book value per share	Before distribution	43.45	47.37	41.05
	After distribution	41.25	42.37	－
Earnings per share	Weighted average shares	7,930,821,589	7,930,821,589	7,930,821,589
	Earningsper share (Note 3)	2.91	6.65	0.13
Dividends per share	Cash dividends	2.20	5.00	－
	Stock dividends from retained earnings	－	－	－
	Stock dividends from capital surplus	－	－	－
	Accumulated undistributed dividends (Note 4)	－	－	－
Return on Investment	Price / earnings ratio (Note 5)	25.34	12.23	－
	Price / dividend ratio (Note 6`）`	33.51	16.26	－
	Cash dividendyield rate (Note 7)	2.98	6.15	－

If shares are distributed in connection with a capital increase out of earnings or capital reserve, further disclose information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution.
Note1: Setting forth the highest and lowest market price per share of common stock for each fiscal year. And calculating each fiscal year's average market price based upon each fiscal year's actual transaction prices and volume.
Note2: Please fill in distributions decided in the shareholders’ meeting of the following year according to the number of shares that were already issued for the specific year.
Note3: In case of retroactive adjustments due to bonus shares issued, earnings per share before and after the adjustment shall be listed.
Note4: For the equity shares issuance criteria, if there are requirements that dividends not distributed for a specific year can be carried over to the year with earnings, the dividends that have not been paid up to the said year with earnings shall be disclosed separately.

Note5: Price / earnings ratio = average market price / adjusted earnings per share

Note6: Price / dividend ratio = average market price / cash dividends per share

Note7: Cash dividend yield rate = cash dividends per share / average market price

Note8: For the net value per share and earnings per share, data for the most recent quarter, audited and certified or reviewed by a CPA shall be provided. For the other columns, data for the current fiscal year up to the date of publication of the annual report shall be provided.

Note9: The market price per share listed in the above table is based on the data released by the Taiwan Stock Exchange. Note10: The dividends per share indicate the dividends this year that are distributed in the following year.

Note11: The earning distribution of 2019 is an estimation which has not been approved by the Annual Shareholders’ Meeting.

4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy of the Company’s Articles of Incorporation

The Company is in an industry that’s in a mature phase and can expect a steady stream of profit. Dividends may be distributed in the form of cash dividend, capital increase through capitalization of retained earnings, and capital increase through capitalization of capital reserve. After deducting legal reserve and special reserve from the earnings available for the appropriation of the year, no less than 50% shall be allocated and cash dividend will be firstly distributed. The combined dividend distributed from capital increase through capitalization of retained earnings and capital increase through capitalization of capital reserve cannot exceed 50% of the year's total dividend.

114

B. Proposed Distribution of Dividend

The Company distributed cash dividend NT$2.2 per share, stock dividend NT$0 per share, totaling NT$2.2 dividend per share.

C. Expect Material Change in Dividend Policy: None

4.1.7 Dividend Policy and Implementation Status: None (Proposed stock dividends were not set in the last Shareholders' Meeting and the Company itself is not required to disclose financial forecast)

4.1.8 Compensation of Employees, Directors and Supervisors

A. The Company established an Audit Committee to replace Supervisors on June 23, 2016.
B. The percentages or ranges of employees, director’s compensation as stated in the Company's Articles of Incorporation:
(1) Article 25 of Articles of Incorporation ：

When allocating the net profits for each fiscal year, the Company shall set aside 0.05% to 0.5% of the balance of pre-tax profit prior to deducting employees’ compensation as compensation of employees. However, the Company's accumulated losses shall have been covered. The resolution of employees’ compensation is pursuant to Article 235-1 of the Company Act.

(2) Article 26 of Articles of Incorporation ：

Where there is surplus of the annual final account, when allocating the net profits for each fiscal year, the Company shall first pay its income tax and offset its prior years’ accumulated losses and set aside 10% legal capital reserve and special earning reserve as necessary followed by the dividend. For remaining surplus incorporated with the accumulated earning in previous years, the Board of Directors shall prepare the proposal concerning the appropriation of net profits and submit the same to the shareholders’ meeting for resolution.

(3)The Company's employee compensation policy follows the spirit of corporate governance which shall both stimulate the performance of employee while not diluting capital to protect existing shareholders. All the employee compensation is distributed in the form of cash.
C. The accounting treatment of the discrepancy between the actual distributed amount and the estimated figure for the current period:

The accrual basis for employees' compensation and remuneration of Directors' shall be based on relevant regulations, Articles of Incorporation, and past experiences. The difference, if any, between actual distribution and estimated amount will be included in the profit or loss in the following fiscal year based on relevant accounting principles.

D. Distribution of 2019 Compensation Approved by the Board of Directors:

The Board Meeting of March 18, 2020 approved:

(1)The amounts of employees’ cash compensation are NT$24,588,045; Stock compensation is NT$0.The above amounts are in line with the estimated amount.
(2)Share amount of employees’ stock compensation is 0, percentage of the share amount to that of all stock dividends are 0%.

115

E. Distribution of 2018 Compensation of Employees, Directors and Supervisors(with an indication of the number of shares, monetary amount, and stock price, of the shares distributed) and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor compensation, additionally the discrepancy, cause, and how it is treated.:

The Board Meeting of March 20, 2019 approved:

(1)The actual amounts of employees’ cash compensation are NT$57,878,571, stock compensation is NT$0, Directors’ compensation is NT$0.
(2)Actual share amount of employees’ stock compensation is NT$0, percentage of the share amount to that of all stock dividends are 0%.
(3)The actual amount of employees’, Directors’ compensation is consistent with the amount approved by the Board of Directors.

4.1.9 Repurchase of Common Stock: None

116

4.2 Corporate Bonds

4.2 Corporate Bonds	4.2 Corporate Bonds
Corporate Bond Type		3rd domestic unsecured corporate bond for 2012
Issue date		2013.02.25
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$2,400,000,000 Tranche B: NT$3,600,000,000
Coupon rate		Tranche A: 1.36% p.a. Tranche B: 1.50%p.a.
Tenor		Tranche A: (7 years) Maturity: 2020.02.25 Tranche B: (10years) Maturity: 2023.02.25
Guarantee agency		None
Consignee		Trust Department of Bank of Taiwan
Underwritinginstitution		None
Certified lawyer		Lin Jhih-Jhong
CPA		Wu Chiu-Hwa、Astor Kou
Repayment method		The Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$3,600,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating of corporate bonds		Taiwan Ratings Date rated: February 04, 2013 Ratingoutcome: tw AA-
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

117

Corporate Bond Type	Corporate Bond Type	1stdomestic unsecured corporate bond for 2013
Issue date		2013.08.05
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$3,100,000,000 Tranche B: NT$4,600,000,000 Tranche C: NT$1,900,000,000
Coupon rate		Tranche A: 1.40% p.a. Tranche B: 1.45% p.a. Tranche C: 1.55%p.a.
Tenor		Tranche A: (4 years) Maturity: 2017.08.05 Tranche B: (5 years) Maturity: 2018.08.05 TrancheC: (7years)Maturity:2020.08.05
Guarantee agency		None
Consignee		Trust Department of Bank of Taiwan
Underwritinginstitution		None
Certified lawyer		Lin Jhih-Jhong
CPA		Wu Chiu-Hwa`、`Astor Kou
Repayment method		The Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$95,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating of corporate bonds		Taiwan Ratings Date rated: April 22, 2013 Ratingoutcome: tw AA-
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

118

Corporate Bond Type	Corporate Bond Type	2nddomestic unsecured corporate bond for 2013
Issue date		2013.12.18
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$6,200,000,000 Tranche B: NT$4,200,000,000
Coupon rate		Tranche A: 1.98% p.a. Tranche B: 2.08%p.a.
Tenor		Tranche A: (10 years) Maturity: 2023.12.18 Tranche B:(12years)Maturity: 2025.12.18
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		None
Certified lawyer		Lin Jhih-Jhong
CPA		Wu Chiu-Hwa`、`PeggyChen
Repayment method		The Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$10,400,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating of corporate bonds		Taiwan Ratings Date rated: November 05, 2013 Ratingoutcome: tw AA-
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

119

Corporate Bond Type	Corporate Bond Type	1stdomestic unsecured corporate bond for 2014
Issue date		2014.06.24
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Totalprice		NT$10,000,000,000
Coupon rate		2.04%p.a.
Tenor		15 years Maturity: 2029.06.24
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		None
Certified lawyer		Lin Jhih-Jhong
CPA		Wu Chiu-Hwa`、`PeggyChen
Repayment method		The Company will redeem the bond in 50% of the face value, respectively, at the end of the 14thand 15th year
Outstanding principal		NT$10,000,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating of corporate bonds		Taiwan Ratings Date rated: March 27, 2014 Ratingoutcome: tw AA-
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’equity		None
Transfer agent		None

120

Corporate Bond Type	Corporate Bond Type	2nddomestic unsecured corporate bond for 2014
Issue date		2014.11.11
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$3,500,000,000 Tranche B: NT$1,500,000,000
Coupon rate		Tranche A: 1.45% p.a. Tranche B: 1.93%p.a.
Tenor		Tranche A: (5 years) Maturity: 2019.11.11 Tranche B:(10years)Maturity: 2024.11.11
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		None
Certified lawyer		Lin Jhih-Jhong
CPA		Wu Chiu-Hwa`、`PeggyChen
Repayment method		The Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$1,500,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating of corporate bonds		Taiwan Ratings Date rated: September 11, 2014 Ratingoutcome: tw AA-
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

121

Corporate Bond Type	Corporate Bond Type	1stdomestic unsecured corporate bond for 2016
Issue date		2016.08.16
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Totalprice		NT$5,000,000,000
Coupon rate		0.68%p.a.
Tenor		5 years Maturity: 2021.08.16
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		Yuanta Securities Co.,Ltd
Certified lawyer		Lin Jhih-Jhong
CPA		SinneyKuo`、`Winston Yu
Repayment method		The Company will redeem the bond in 50% of the face value, respectively, at the end of the 4thand 5th year.
Outstanding principal		NT$5,000,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, ratingof corporate bonds		None
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

122

Corporate Bond Type	Corporate Bond Type	1stdomestic unsecured corporate bond for 2017
Issue date		2017.07.10
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$6,500,000,000 Tranche B: NT$3,000,000,000
Coupon rate		Tranche A: 1.03% p.a. Tranche B: 1.25%p.a.
Tenor		Tranche A: (5 years) Maturity: 2022.07.10 Tranche B:(7years)Maturity: 2024.07.10
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		Yuanta Securities Co.,Ltd
Certified lawyer		Lin Jhih-Jhong
CPA		SinneyKuo`、`Winston Yu
Repayment method		The Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$9,500,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, ratingof corporate bonds		None
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’equity		None
Transfer agent		None

123

Corporate Bond Type	Corporate Bond Type	1stdomestic unsecured corporate bond for 2018
Issue date		2018.09.06
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$5,250,000,000 Tranche B: NT$3,050,000,000 Tranche C: NT$2,200,000,000
Coupon rate		Tranche A: 0.83% p.a. Tranche B: 0.91% p.a. Tranche C: 1.07%p.a.
Tenor		Tranche A: (5 years) Maturity: 2023.09.06 Tranche B: (7 years) Maturity: 2025.09.06 TrancheC: (10 years)Maturity:2028.09.06
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		Yuanta Securities Co.,Ltd
Certified lawyer		Lin Jhih-Jhong
CPA		SinneyKuo`、`Winston Yu
Repayment method		the Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$10,500,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating ofcorporate bonds		None
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

124

Corporate Bond Type	Corporate Bond Type	1stdomestic unsecured corporate bond for 2019
Issue date		2019.06.17
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$1,700,000,000 Tranche B: NT$2,800,000,000 Tranche C: NT$1,800,000,000
Coupon rate		Tranche A: 0.74% p.a. Tranche B: 0.82% p.a. Tranche C: 0.91%p.a.
Tenor		Tranche A: (5 years) Maturity: 2024.06.17 Tranche B: (7 years) Maturity: 2026.06.17 TrancheC: (10 years)Maturity:2029.06.17
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		Yuanta Securities Co.,Ltd
Certified lawyer		JerryHuang
CPA		SinneyKuo`、`Winston Yu
Repayment method		The Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$6,300,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating ofcorporate bonds		None
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

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Corporate Bond Type	Corporate Bond Type	2nddomestic unsecured corporate bond for 2019
Issue date		2019.10.15
Denomination		NT$1,000,000
Issuingand transaction location		Taiwan
Issueprice		At full denomination
Total price		Tranche A: NT$1,900,000,000 Tranche B: NT$2,500,000,000 Tranche C: NT$700,000,000
Coupon rate		Tranche A: 0.71% p.a. Tranche B: 0.75% p.a. Tranche C: 0.84%p.a.
Tenor		Tranche A: (5 years) Maturity: 2024.10.15 Tranche B: (7 years) Maturity: 2026.10.15 TrancheC: (10 years)Maturity:2029.10.15
Guarantee agency		None
Consignee		Trust Department of Mega International Commercial Bank
Underwritinginstitution		Yuanta Securities Co.,Ltd
Certified lawyer		JerryHuang
CPA		SinneyKuo`、`Winston Yu
Repayment method		The Company will redeem 50% of the principal at one year before maturity and redeem the rest 50% at maturityfor each tenor
Outstanding principal		NT$5,100,000,000
Terms of redemption or advance repayment		None
Restrictive clause		None
Name of credit rating agency, rating date, rating ofcorporate bonds		None
Additional rights	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None
	Issuance and conversion (exchange or subscription) method	None
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		None
Transfer agent		None

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4.3 Status of Preferred Stock: None.

4.4 Issuance of Global Depositary Receipts: None.

4.5 Status of Employee Stock Options: None.

4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.

4.7 Financing Plans and Implementation

4.7.1 Finance Plans:

For each uncompleted public issue or private placement of securities, and for such issues and placements that were completed in the most recent three years but have not yet fully yielded the planned benefits: None.

4.7.2 Implementation:

Capital received from previously-issued corporate bonds has been fully executed according to the required procedures: None.

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V. Operations Overview

5.1 Business Content

5.1.1 Business Scope

5.1.1.1 Main Business Operations
C301010 Yarn Spinning Mills
C302010 Knit Fabric Mills
C303010 Non-woven Fabrics Mills
C305010 Printing, Dyeing, and Finishing Mills
C601040 Processed Paper Manufacturing
C601990 Other Paper Products Manufacturing
C801010 Basic Industrial Chemical Manufacturing
C801020 Petrochemical Manufacturing
C801060 Synthetic Rubber Manufacturing
C801100 Synthetic Resin & Plastic Manufacturing
C801110 Fertilizer Manufacturing
C801120 Manmade Fiber Manufacturing
C801990 Other Chemical Materials Manufacturing
C802041 Drugs and Medicines Manufacturing
C802120 Industrial Catalyst Manufacturing
C802170 Poisonous Chemical Material Manufacturing
C802200 Paints, Varnishes, Lacquers, Dyeing Mills and Dyestuff Manufacturing
C805010 Plastic Sheets, Pipes and Tubes Manufacturing
C805020 Plastic Sheets & Bags Manufacturing
C805070 Strengthened Plastic Products Manufacturing
C805990 Other Plastic Products Manufacturing
C901020 Glass and glass made products manufacturing
C901060 Refractory Materials Manufacturing
CB01010 Machinery and Equipment Manufacturing
CB01030 Pollution Controlling Equipment Manufacturing
CB01990 Other Machinery Manufacturing Not Elsewhere Classified
CC01010 Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing
CC01080 Electronic Parts and Components Manufacturing
CC01090 Batteries Manufacturing
CQ01010 Die Manufacturing
CZ99990 Other Industrial Products Manufacturing Not Elsewhere Classified
D101050 Steam and Electricity Paragenesis
D401010 Heat Energy Supplying
E599010 Pipe Lines Construction
E601010 Electric Appliance Construction

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E603050 Cybernation Equipment Construction
E604010 Machinery Installation Construction
EZ15010 Warming and Cooling Maintenance Construction
H701020 Industrial Factory Buildings Lease Construction and Development
H701040 Specialized Field Construction and Development
I199990 Other Consultancy
ID01010 Metrological Instruments Identify
IZ99990 Other Industry and Commerce Services Not Elsewhere Classified
J101030 Waste Clearing
J101040 Waste Disposing
J101050 Sanitary and Pollution Controlling Services
J101060 Wastewater (Sewage) Treatment
CE01021 Metrological Instruments Manufacturing
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval
Other business operations of subsidiaries including plastics, electronics, chemical, textile fiber, investment and etc.

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5.1.1.2 2019 Business Distribution

Amount: NT$ thousands

Product Name	Unit	Volume	Amount	`％`
Flexible PVC Film	Ton	104,530	6,900,551	2.41
PVC Leather	Thousand Yard	24,540	2,996,160	1.05
Rigid PVC Film	Ton	134,610	8,170,411	2.85
PU Synthetic Leather	Thousand Yard	13,079	1,917,804	0.67
Plastic Doors and Windows	Ton	22,347	4,561,008	1.59
Rigid PVC Pipe	Ton	124,041	5,600,558	1.96
Film Products	Ton	30,704	2,262,524	0.79
Plasticizer and THPA	Ton	322,998	11,428,993	3.99
PA	Ton	110,303	3,131,568	1.09
BPA	Ton	360,924	13,964,330	4.88
1,4BG	Ton	43,027	2,144,358	0.75
EG	Ton	1,760,531	30,699,552	10.72
Copper Clad Laminate	Thousand Sheet	52,899	26,609,055	9.29
Epoxy Resin	Ton	348,764	26,508,047	9.26
Glass Fabrics	Thousand Meter	208,336	5,147,019	1.80
Copper Foil	Ton	40,621	12,436,485	4.34
Printed Circuit Board	Thousand SFT	18,279	31,093,989	10.86
Glass Yarn	Ton	40,541	1,678,544	0.59
Polyester staple fiber, filament, fabric	Ton	1,088,082	49,536,298	17.30
PET Film	Ton	58,166	4,205,595	1.47
Others			35,310,210	12.34
Total			286,303,059	100.00

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5.1.1.3 Current Products

(a) Plastic processing products: flexible PVC film, PVC leather, rigid PVC film, PP synthetic paper, metallized film, A-PET film, Synthetic Material, PU synthetic leather, Non-woven, Optical film, TPU leather (film), plastic doors and windows, SMC doors, sound absorbing materials, hard tubes, film products, profile extrusion products, injection products, plastic floor tiles, hard boards, PVC plastic pellets, PP synthetic paper, engineering plastic pellets, UP resin, etc.
(b) Plastic raw materials: ethylene glycol, plasticizer, Bisehnol A, butylene glycol, tetrahydrofuran, phthalic anhydride, 2-Ethylhexanol, etc.
(c) Electronic materials: Copper clad laminate, prepreg, copper foil, epoxy resin, electronic-grade and industrial-grade glass fiber cloth, LCD display, touch panel, capacitive circuit board, printed circuit board, and glass fiber filament.
(d) Polyester products: Spinning-grade Virgin & recycled PET Resins, Spinning-grade Bio-base PET resins, Bottle-grade virgin PET resins, Bottle-grade Antimony free PET resins, Bottle-grade Bio-base PET resins, Staple fiber of virgin & recycled, Full drawing yarn of virgin & recycled, Partial orientation yarn of virgin & recycled, Draw texturing yarn of virgin & recycled ,Yarn dyed, Industrial yarn, polyester film, and release film.
(e) Electromechanical engineering: plastics, polyesters, chemicals, electronics engineering design and supervision, switchgear, cast resin transformer, vacuum contactor switchgear, steam and electric common fluid.
5.1.1.4 New Product Development Plan
Development antifouling and antibacterial products , new automotive interior products, automotive coating film, quantum dot film, PP environmental protection decoration material, 5G copper foil substrate heat-resistant cushion, aluminum plastic film, fireproof material, high value synthetic products, PE pipe for underground fire protection service, UL-651 PVC pipe for conduct, cling film for long-term preservation of fruit and vegetable, long-fiber reinforced thermoplastic engineering plastic pellets, high-frequency low-dielectric copper clad laminate, microwave wave copper clad laminate, hydrocarbon copper clad laminate, Interposer high-end mobile phone copper clad laminate, mid/low loss and very low loss clad laminate, bismaleimide resin, flame retardants containing P-N, 50~90µm high strength thin fiberglass cloth, low dielectric 20~90µm fiberglass cloth, copper foil for ultra-high frequency substrate, ultra-thick copper foil with low roughness, high tensile strength copper foil for lithium ion battery, new generation high-grade circuit boards, low cost and high efficiency bottle-grade resins contains titanium catalyst, Bottle-To-bottle PET resins, develop decolorization technology of recycled textiles, high brightness and fast reheat PET bottle resins, PET resins for cosmetic container with high transparency & thickness, bio-based PET resins for textile or bottle uses, PE/PP low melt fiber, black low melt fiber, diversified recycled filament, ocean recycled filament diverts waste bottles, textile recycled filament, TPU filament, develop doped dyed filament with low wear rates against yarn guide, develop high tenacity yarns for air bag, UL VTM-0 flame retardant white film, and high-clarity energy-saving gray tone transparent film for vehicle front windshield.

5.1.2 Industry Overview

The current situation and development of the industry, the correlation between the upper stream, middle and the downstream of the industry, the various product development trends and the competitive situation:

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The company's main products are divided into five major industries, namely plastics, chemicals, electronic materials, polyesters, and electromechanical engineering, which are described as follows:

5.1.2.1 Plastic Industry
(a) Industry Overview:
The China-US trade war has eased after the G20 summit, and the economy has stabilized slightly after the implementation of a number of tax abatement and fee reduction policies in the China. However the overall international market is all of variables. Started from the second quarter of 2019, US turned the tariff barrage toward EU, India and Mexico. In addition, the trade friction between Japan and South Korea caused by forced labor compensation issues during World War II and the Italy debt crisis made the economic downturn in Europe. Coupled with the effect of COVID-19, by far the observation of the global economic growth rate should be conservative and the overall market consumption power will decline.
(b) Industrial Development:
In response to the competition from the China, the Company is currently actively promoting process optimization, introducing AI artificial intelligence, each plant actively promotes thorough improvement of basic management, automation improvement and process optimization, upgrading software and hardware, improving production efficiency and product quality, and implementing a circular economy to reduce production costs and raise the competitiveness. In addition, the Company develops various differentiated and high value products, actively expands the market and increases market share. From three aspects of production, development and business, the Company constructs a golden triangle of operation, analyzes the development trend of industry to implement the forward-looking business strategy.
(c) Relevance of industry upper stream, middle and lower streams (using film and rubber as an example)

PU resin		PU synthetic leather

Plastic powder		Rigid PVC film

	Flexible PVC film PVC leather
Stabilizer
		Flexible PVC film PVC leather


Plasticizer

(d) Development Trends and Competitive Situations:
The Company has plants and offices in Taiwan, China, Vietnam, Indonesia, and the United States to supply customers with the goods they need. Besides the upstream raw materials provided by internal supply within the Company, the Company also satisfies customer needs by excellent designs from creative design center. By providing the most fashionable style to the customers, the Company has its competitive market advantage.

To improve overall operating performance, the Company strengthens cross-sector integration marketing, integrate three major categories of products including medical, building materials, and automotive, plan joint research and development

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of medical products with the plastic industry technology development center; plan to visit major China customers and large builders to expand building materials products and arrange visit to the Essen International Modified Cars and Accessories Exhibition to expand domestic and overseas vehicle products.

The establishment of "Nan Ya Internet Shopping Mall" provides overall product solutions and visitor-related service information to increase visitor views and customer inquiry rates. The Company also integrates marketing websites such as ice-cooled thermal insulation paper, special film, building materials, medical products, etc. and links application websites of domestic and overseas, so that consumers can systematically search for products they need, increase online visibility, enhance brand image, and establish complete marketing link.

5.1.2.2 Chemical Industry (taking ethylene glycol products as an example)

(a) Industry Overview:

In 2019, the global polyester production capacity still grew by 5.5%, which made the demand for ethylene glycol grow steadily. The global capacity requirements for ethylene glycol are as follows:

Year Items	2017	2018	2019	2020 (Estimated)
Global Production Capacity (thousand tons)	31,692	33,506	35,751	40,748
Global Demand (thousand tons)	27,650	29,200	30,800	31,204
Capacity Utilization (%)	87.2	87.1	86.2	76.6

(b) Industrial Development:

Started from the second half of 2018, the production of ethylene glycol in China has increased and the price has begun to decline. In 2019, as the new ethylene glycol plants in China and US continue to put into production, the market competition becomes more intense.

(c) Correlation between Upstream, Midstream, and Downstream of the Industry

The main raw material of monoethylene glycol (MEG) is ethylene, and the upstream raw materials of ethylene are light oil and crude oil. Therefore, the fluctuation of international oil price will affect the price of raw material ethylene. Monothylene glycol (MEG) and pure terephthalic acid (PTA) are the main raw materials of polyester fiber, which is in turn the raw material of downstream textile products. Therefore, the seasonal demand of the market of textile, yarn and cloth will directly affect the price of ethylene glycol.

==> picture [402 x 84] intentionally omitted <==

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

Light oil Ethylene Monoethylene
Crude oil Glycol Polyester
Textile
Fiber
Pure Terephthalic Product
Acid
----- End of picture text -----

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(d) Development Trends and Competitive Situations:

It is estimated that the global demand for ethylene glycol in 2020 will increase by 1.3% compared with 2019 and the production capacity of ethylene glycol will increase by 13.9%. Due to the China-US trade war, the expectation of China economic slowing down affects the slide down export of clothing. Besides, as the refining and chemical plant in China such as Hengli and Zhejiang Petroleum & Chemical, etc. started to put into production in early 2020, the sharp increase in ethylene glycol supply causing the price drops. China is the main market for ethylene glycol in the world. In 2019, the Company supplied 1.12 million tons of its imports, accounting for 11.3%. It is estimated that the import of ethylene glycol in 2020 will be 9.30 million tons. The Company's ethylene glycol products compete with large-scale ethylene glycol manufacturers such as SABIC and MEGlobal. Due to the geographical location, the supply can be delivered quickly and on time to all major ports along the Chinese coast. The excellent quality also ensures the trust of long-term customers, therefore holding a more competitive stance.

5.1.2.3 Electronic material Industry
(a) Industry Overview:

In response to the rapid transmission of large amounts of data, the requirement for high-frequency and high-speed equipment is an important key to the development of electronic materials. The company has actively deployed in niche products such as high-frequency low-dielectric copper clad laminate, IC substrate, high-density interconnect, vehicle copper clad laminate, microwave copper clad laminate, hydrocarbon copper clad laminate, ultra-fine glass fibers, low-dielectric ultra-thin fiberglass cloth and copper foil for ultra-high frequency substrate. In 2019, the demand for terminal applications such as network communication, high level HDI, automotive electronics and smart home appliances kept growing. In 2020, the Company will continue to develop application markets in fast-growing automotive electronics, high-efficiency computing, internet of things and communication networks. Due to the lower technology threshold and the encouragement of China policy, general circuit has many manufacturers and its price competes fiercely. The same industries often expand their production capacity, through economics of scale reduces their production cost to maintain their profit, causing the whole market oversupply and the average price of general circuit keep dropping. But the automotive electronic and network communication are niche market, their application products have better profit so it is the target that general circuit suppliers want to cut in. On the other hand, the demand of personal laptop and consumer electronic are weak, the sales of smart mobile device slowdown and their average prices keep dropping causing the relevant application of IC substrate facing price pressure. Now the IC substrate manufacturers act in concert with the trend of terminal market and actively cut in markets with growth potential such as artificial intelligence, high-efficiency computing and 5G network communication products to improve their profit.

(b) Industrial Development:
As the global board production focus gradually shifted to China, domestic players have actively integrated cross-strait scale in recent years. The Company has vertically integrated electronic materials plants in Kunshan for electronic materials, including glass fiber, fiberglass cloth, copper foil, epoxy resin, copper foil substrate and circuit board, etc. The Company also plans to continue the expansion of the copper foil substrate pant II and the fiberglass cloth plant in Huizhou, which will drive revenue and profit growth.

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==> picture [398 x 176] intentionally omitted <==

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

ECH Copper Foil
Copper Clad
Laminate
Printed
BPA Epoxy Resin Circuit
Board
Prepreg
Glass Epoxy Fiber
Fiber Cloth
----- End of picture text -----

(d) Development Trends and Competitive Situations:
Electronic products use 5G, artificial intelligence, cloud server and automotive electronics as the force for future growth, and various printed circuit boards and copper foil substrate manufacturers continue to invest in high-end products. High-end products require corresponding raw materials, such as ultra-fine glass fiber, ultra-thin fiberglass cloth, and low-edge copper foil. The Company has also completed relevant deployments and has better competitiveness in terms of cost, materials and quality. On the other hand, due to the trend of the terminal electronics products of general circuit remain light, thin, short and tiny, the general circuit keeps develop toward multi-layer and fine-line. But the same industries often expand their production capacity, through economics of scale reduces their production cost to maintain their profit, causing the whole market oversupply and the average price of general circuit was under attach. Besides, the smart phone market grew rapidly in the past, many manufactures expanded their HDI production capacity to strive the business opportunities, causing the oversupply of HDI and the price kept dropping. In addition, due to the rapid change of semiconductor package technology, the usage amount of mobile device applicant IC substrate gradually decrease. The IC substrate aggregate market is now under the circumstances of the supply remain the same while the demand shrinks, the fiercely price competition causing the price of mobile device applicant IC substrate drops. Along with the recent rises of new fields such as artificial intelligence, high-efficiency computing and 5G network communication, the demand of relevant IC substrate has grown which leads to the tight supply of certain IC substrate.
5.1.2.4 Polyester Industry
(a) Industry Overview:
Affected by the China-US trade war in 2019, the global economy slowed down and consumption power weakened. Downstream customers continued to wait and see, with a low capacity utilization rate and new polyester production capacity in mainland China continued to expand and grabbed market at low prices. The sales volume and profitability of our polyester product failed to maintain growth. Besides, the large-scale chemical fiber plants in mainland China are integrated in refining and chemical, with vertical integration, large scale, and low cost, the competition will become more intense in the future.

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China's polyester filaments are mainly direct spinning, in order to master raw materials and reduce costs, China keeps expanding production capacity and developing upstream. In addition, due to the domestic demand market cooling down and economic growth slowing down, all major manufactures are expanding towards export, meanwhile domestic sales are promoted at preferential prices to reduce production capacity. Owing to the stable economic and job market of the US, the increase in consumer spending power, and the Trump government advocates protection for US industries from unfair competition, the demand of polyester products are stable, leading the revenue of US Plant continues to grow. The general spec of polyester film is under fierce competition due to the low-price competition in China and oversupply. Only by continuously developing differentiated products can the Company avoid the competition in mainland China. On the other hand, the demand of release film will grow slowly due to the laminated ceramic capacitors are affected by China-US trade war.

(b) Industrial Development:

The production capacity of polyester continues to grow. The global capacity of polyester in 2019 was 115.72 million tons, increase by 2.95%, capacity utilization rate 71.4%, reaching a recent high.

China's total polyester production capacity in 2019 was 72.15 million tons per year, increasing by 3.5% from 2018. Both production capacity and the product quality are rapidly improved and the development abilities of differentiated products are enhanced, leading the competition become fiercer. China’s percentage of polyester filament is 58%, and the capacity utilization rate is 80%-85%; its quality of polyester filament products has been improved rapidly and the development ability of differentiated products has increased. In response to the environmental protection trend, the bottle recycled products have been put into production since 2019 to expand the market and sell at competitive price. On the other hand, the total polyester production capacity of the US was 5.19 million tons in 2019. PET resin accounted for 63% of the US, and its capacity utilization rate was above 80%. Due to rising wages in Asia, brand owners of garments are returning to Central America for production, leading to an increase in the growth of the US domestic textile industry and demand for polyester fiber. Besides, Toray Group will add a set of polyester release film production line in Japan and South Korea respectively. In addition, to fulfill the 5G era and to meet growing demand of laminated ceramic capacitors coating released firm, Toyobo Co. Ltd. in Japan merged the polyester film division of Teijin Limited in October, 2019.

(c) Correlation between Upstream, Midstream, and Downstream of the Industry The main raw materials for polyester products are ethylene glycol (MEG) and pure terephthalic acid (PTA). And downstream are categorized by different uses of product, the bottle chips are made into food and beverage packaging materials; the filaments and stable fiber were the raw material of woven, dyed, garments etc. Besides, to the different functional needs of garments, trends to a small quantities of diversification.

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==> picture [418 x 174] intentionally omitted <==

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

Polyester Staple Fiber
Polyester Chips
PTA、MEG Polyester POY
Polyester Textured Yarn
Polyester Fully Oriented Yarn
PET Film
----- End of picture text -----

(d) Development Trends and Competitive Situations:
The production focus of domestic downstream manufacturers have shifted to Southeast Asian countries, resulting in oversupply of polyester products and price competition. The company continues to develop and promote high value products, 、
especially for the promotion of yarn made from PET bottle recycled yarn staple fiber 、 chip , and diversify the market to reduce the impact and increase the operating rate. The PET bottle market faces keen competition as the new global production capacity continues to grow. The Company continues to increase exports to Japan and fought for domestic customers at the same time to increase sales and achieve full-scale production and sale. With the continuous increase of production capacity of polyester products in mainland China and the volume wins and the competition is fierce. To increase the profits, Kunshan Plant actively expands the differentiated products, seize the advantages of bottle recycled silk and particle spinning meanwhile expand the sales volume of color silk, knitted fabric and PET recycled products. On the other hand, the demand of US brand customers for yarn, staple fiber, and resins made from recycled PET increases day by day, so the US Plant will continue to adapt equipment to increase the supply of recycled products and insure profitability.
5.1.2.5 Electrical and Mechanical Engineering (taking switchboards as an example)
(a) Industry Overview:

Due to the low technology threshold of switchboard in Taiwan, there is a large number of competitive peers and limited market demand. In light of Japan will host the Tokyo Olympics and the economic development of Southeast Asian countries, their basic electricity construction demand are larger, the switchboard manufactures joint Formosa Heavy Industries Corp. and other companies in the industry to jointly contract export orders from Southeast Asia, Japan, etc. And the subsidiaries in China are developing the components and system integrators of China to continuously reduce the cost of the main and adjunct materials.

(b) Industrial Development:
Besides continuing introducing “wireless temperature detector”, “partial discharge monitor” and “smart relay”, etc., the switchboard division improves the real time monitor function of the functioning switchboard, establishes statistic storage and analyst work and manages equipment maintenance to make the switchboard achieve the goal of “differentiation” and “high value”. In respond to the trend of the application of electric storage to solar energy and wind energy, the Company

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co-develop the electric storage system with Formosa Plastics Transportation Corp. to expand the market of green power storage.

(c) Correlation between Upstream, Midstream, and Downstream of the Industry Upstream: metal materials such as copper, iron, aluminum, and insulating materials such as plastics and resins.

Midstream: transformers, ratio converters, circuit breakers, wire and cable, and various types of controllers.

Downstream: switchboard and overall distribution power system.

(d) Development Trends and Competitive Situations:
Taiwan's parent company specializes in development of new products and new technology. The subsidiaries in China reduce the cost of the main and adjunct materials, develop differentiated products, consolidate the domestic market, cooperate the technology with international manufacturers, jointly fight for orders and promote the transformers market in Japan and the electric system of Southeast Asian exporting market to expand the order sources.

5.1.3 Overview of Technology and R&D:

The research and development total expenses for the fiscal year ending on March 31st, 2020 is NT$ 2,024,723,000. Successfully developed technologies or products and future research and development plans for the following years are as follows:

5.1.3.1 In 2019 and up to March 31, 2020 the R&D expenses are as follows:

Unit: NT$ thousands

	Unit: NT$thousands
2019	As of March 31,2020
1,717,682	431,199

5.1.3.2 Technologies or products developed successfully:

(a) Plastic products:

Ice cool S insulation film, outdoor workstation temperature-resistant tape, heat-resistant environmental protection wall covering, MARCO printed wallpaper, flame-resistant and smoke-proof for cooling tower PVC film, easy-release mold PVC film, V-Type window film, A-PET conductive film, pipe clad fire barriers, polyester plasticizer, high-strength ester type thermoplastics urethane, vehicle leather high solid PU, etc.

For flexible and rigid PVC film, PVC leather, PU synthetic leather, etc., Taiwan plants have submitted a total of 10 patent applications for Taiwan patents, 7 of them have passed and rest of 3 are still under review. On the other hand, overseas plants filed a total of 29 patent applications for China patents, 6 from Huizhou Plant and 23 from Nantong Plant; 6 of them have passed and rest of 23 are still under review.

(b) Chemical products: None.
(c) Electronic material products:

High-frequency low dielectric materials, HDI halogen-free materials, halogen-free flip-chip carrier, MDI modify resin, water-based epoxy resin for explosion-proof motor anti-corrosion, water-based epoxy resin for automotive plastic bumper coating, 11µm ultra-thin fiberglass cloth, reverse treatment copper foil for high frequency substrates, thick copper foil for high electric current, 2-5 mm ultra-thin copper foil, high-capacity lithium-ion copper foil, and #900 Sizing Industrial Yarn to Reinforced Plastic.

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(d) Polyester products:
Heat resistant bottle grade Titanium catalyst pellets, deep dyed cation chemical recycled pellets, 2d bio-degradable low melt fiber, coffee ground recycled yarn, flame retardant and anti-dropping yarn, elastic polyester filament, differentiated hallow cross section yarn, heather yarn with relief, PET recycled polyester film, co-extraction film for laser, polyester release film for thinning polarizers, flame retardant white film in accordance with UL VTM-0, etc.
(e) Mechanical and electrical engineering:
① The MVMSN 7.2kV VCS medium voltage switchboard has passed the CNS 15156 certification and obtained the type test report.
② The 6.6kV 1500Kva wound core cast resin transformer has passed the type test certification from the Japan TAKAOKA chemical Co., LTD.

5.1.4 Short- and Long-Term Business Development Plans:

5.1.4.1 Plastic products

Long-term: Promote process optimization, develop high-value products, develop products that comply with environmental trends and functions, and use the local production advantages of the plants in Taiwan, China, Vietnam and the United States can effectively reduce production costs, improve market competitiveness. In addition, by strengthening online marketing and promoting integrated marketing, and breaking through the difficult situation of traditional industry, to obtain the Company's best interests, create a win-win goal for customers and the Company and actively explore market opportunities.
Short-term: In response to the factor of China-US trade war and the impact of COVID-19, we adjusted production and sales plans with solid golden triangle operation policy, promoted process optimization and AI data analysis to reduce cost and improve product competitiveness. In addition, to strive for the order transfer phenomenon caused by war trade and epidemic and to improve the overall operating performance, we enhanced the management of each plant and the market expansion of each business office

5.1.4.2 Chemical products

Long-term: (a) Ethylene glycol: The global polyester fiber grows stably. It’s estimated the demand of ethylene glycol will grow by around 3.5% per year in the future, especially in Asian area such as China and India will import ethylene glycol with the total amount exceed 10 million. The location of Mailiao ethylene glycol plant of the Company is close to the major ethylene glycol consumer markets in Asia, and ethylene glycol will still be profitable.
(b) Bisphenol-A: The quality of the bisphenol-A of the Company is good and with competitive price and can fully meet the needs of downstream domestic and foreign customers. At the end of 2019, the new manufactures of polycarbonate in China such as Hubei Ganning, Honan Puyang, etc. started to put into production and the production will become stable in 2020. Since the demand of bisphenol-A increased, the Company’s production line in Ningbo, China can supply nearby and the shortage can be supplied by Taiwan to maximize the Company’s profit.
(c) Plasticizers: China's environmental protection policy has become more stringent, and the public's awareness of environmental protection

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has been greatly enhanced, which has led to a decline in the use of the phthalate plasticizer DEHP. The Company's DOTP is an environmentally-friendly plasticizer product, which can replace DEHP and has been recognized by the Chinese market in terms of transparency, odor, product stability, and customer service.

Short-term: (a) Ethylene Glycol: Besides actively contacting and increasing the supply to large domestic customers, the Mailiao ethylene glycol plant continues to develop China’s new customers which have good reputation. Through long-term and stable supply to ensures the balance between production and sales. Now 60% of ethylene glycol products are supplied to the US fiber plant in Texas, and rest of them are supplied to local customers with stable profit.
(b) Bisphenol-A: Stabilize the supply of downstream manufactures, including the Epoxy Resin Plant of the Company, the invested Kunshan Epoxy Resin Plant in mainland China and the PC Plant of Formosa Petrochemical Corp. The remaining products are sold to domestic customers, including the PC Plant of Chi Mei Corp. In addition, the Company continues to export to customers of PC and epoxy in China, Japan and South Korea and actively develops the new customers in Europe, US and the Middle East to ensure the balance between production and sales.
(c) Plasticizer: The plasticizer plants continues to improve the process and eliminate the obstacles of production process. By using tools such as AI prediction modules, ASPEN, etc. to conserve water and energy, reduce the unit usage of material and energy, reduce production cost and improve competitiveness

5.1.4.3 Electronic materials products

Long-term: (a) Promote high-frequency low-dielectric copper clad laminate, HDI materials, servers, switch, vehicle copper clad laminate, IC substrates, and buried antenna substrates, etc. And with the 5G infrastructure, the company develops products for base stations, automotive radars and RF components providing customers with stable and competitive sheet materials and increasing market share.
(b) Expanding the application fields of anti-corrosion coatings and composite materials, promoting niche products such as halogen-free environmentally friendly epoxy resins, heat-resistant phenolic epoxy resins, and water-based resins. Tapping into emerging markets such as Northeast Africa, Eastern Europe, and Central and South America, and expanding market share in industries including electronics, paint, wind power, civil engineering, and container coating in China.

(c) Continuous promotion for new products of fiberglass yarn and cloth and increase the proportion of differentiated and high value products. Through process optimization, equipment automation and the introduction of AI, improvement of yield and product quality, promotion of circular economic and various improvements of production progress to reduce cost, improve competitiveness. In addition, we will continue to develop new products and segregate the market.

(d) Through promoting the mass production of differentiated products such as thick copper foil, copper foil for high-frequency substrates, ultra-thin copper foil, etc. to increase the proportion of differentiated copper foil. Besides, the Company continues to establish the mass

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production technology of lithium-ion copper foil, develop new lithium-ion copper foil with high heat resistance and high strength, and promote the application of solid-state and high-capacity lithium-ion batteries to increase market share.

(e) The growth trend of the circuit board in the future is still mainly towards the application products of communication networks, high-efficiency computing and artificial intelligence. The Company adheres to the business philosophy of sustainable operation and continuous innovation and dedicates to the development of products and expansion of product capacity. In addition, we actively develop new customers and take the advantage of leading quality and technology as the axis of log-term business development.

Short-term: (a) Promote environmentally-friendly plates to meet environmental requirements, master industry development trends and accelerate new product development certification. Continue to reduce costs, and strive for copper foil substrate orders at a flexible price to increase sales.

(b) Actively promote high-resistance phenolic epoxy resin and water-based resins for the applications in high-end copper foil substrates, composite materials, PCB inks, and automotive plastic bumper coating etc. to increase market share, strengthen sales in the Chinese domestic market, and expand the market for wind power and automotive coatings. (c) Increase the sales of niche-type fiberglass yarn, optimize product portfolio, develop high quality customers, ensure full production and sales, increase spinning position in accordance with annual maintain, and develop multi-cakes bushing to increase the Company’s profit. Besides, according to the needs of customers, increase the supply of electronic fine yarn and fight for the industrial yarn orders of Europe, US, South Korea and India to maintain capacity utilization.

(d) Improve the quality, yield and sales volume of differentiated copper foil products, and strive to ensure full production and sales.

(e) Due to the upstream production process of semiconductor keeps shrinking and the end electric products keep develop toward micromation, the circuit board products will focus on technology improvement and potential customer development of high-density and thinning circuit board and IC substrate. In addition, the Company cooperates with the preference changes of customer toward end products, keeps adjusting product portfolio, accelerating the equipment improvement and production capacity expansion of high value products to improve the production value and profit.

5.1.4.4 Polyester products

Long-term: The production capacity of polyester in China continues to expand, the quality of polyester products is also improved, and the competition of the polyester industry will become more and more intense in the future. In long-term, the Company must keep integrating the production resources of Taiwan, US, Vietnam and China, accelerating the global layout and breaking through market segregation to obtain the maximum profit for the Company. The Kunshan Plant in China continues to cooperate with brand manufacturers to develop, adjust product portfolio, expands the sales volume of colored silk and recycled knitted fabrics, and increase the profits. The US plant continues to strive for orders from major brand manufacturers and cooperates with the development of PCR

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filament, recycled bottle chips and new products that meet green trends to increase sales and niche.

Short-term: Continue to promote the differentiated and high value products, through optimize production process to increase production volume and product quality, and reduce cost to increase competitiveness. In order to catch the trend of environmental protection, and to align with the plan of using recycled product from fashion brands and drink manufacturers, we actively promote PCR (post-consumer recycled) products. In addition, we promote functional and innovative product such as lumin max, UV CUT with anti-transparent, dark cool, heavy metal free, biodegradable, etc. to increase sales volume and profits. The Kunshan Plant in China seeks brand cooperation to expand sales of differentiated products, effectively exploit the advantages of grain spinning and expand the use of color yarns, and master the sales of recycled knitwear products. On the other hand, in order to reduce the cost and grabs the demand of vehicle cloth, we purchase yarn from other manufacturers to ensure the competitive advantage. Corresponding to the trend of textile orders returning to Central American, the US Plant actively takes orders to improve the Company's profits.

5.1.4.5 Mechanical and Electrical Engineering

Long-term: Continuous switchboard product innovation, quality improvement and cost control operations, strive for the trust of internal and external customers, develop power cloud monitoring system to segregate the market.
Short-term: Establish a supply chain system of excellent domestic and overseas material suppliers, continue to develop material counter-products, open up domestic and overseas markets, promote “wireless temperature detector”, partial discharge monitor”, etc., and enhance after sales service.

5.2 Markets and the Overview of Production and Sales

5.2.1 Market Analysis

5.2.1.1 Sales regions and market share for major products

Items Primary products	Sales region	Domestic market share
Plastic products	Taiwan, China, America, Southeast Asia, Europe	Flexible PVC Film 46%, rigid PVC film 50%, PP synthetic paper 60%, PU leather 29%, Rigid PVC Pipe 63%
Chemical products	Taiwan, China	Bisphenol-A 60%, ethylene glycol 35%
Electronic material products	Asia, Europe, America, China	Copper foil substrate 30%, epoxy resin 63%, circuit board 44%
Polyester products	Taiwan, China, Northeast Asia, Europe, America	Polyester cotton 25%, polyester yarn 24%, polyester film 62%

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Items Primary products	Sales region	Domestic market share
Mechanical and Electrical Engineering	America, Southeast Asia, Taiwan, China	Switchboard 22.1%

5.2.1.2 Please see Chapter 1. Letter to the Shareholders for information about the market's future supply and demand situation and growth, competitive niche and development prospects, unfavorable factors and countermeasures:

A. Plastic products
① Market's future supply status and growth:

Affected by the China-US trade war, the US’s import cost from China increase. The Company continues to strive for the orders transfer from China competitors affected by the trade war and transfer to plants in US, Taiwan and Vietnam for production. Besides, we continues to develop various differentiated plastics products. On the other hand, to incentivize distributors around the world to expand actively, achieve performance goal, increase the market share and improve the performance growth, we will review and revise the incentives every year.

In response to changes in market demand and competition for peer-to-peer price cuts, we actively grasp changes in customer materials, adjust orders for maneuvering to ensure orders, strengthen the promotion niche and development of high-value products. In addition we review and improve the sales portfolio to improve the market competitiveness and profitability. Due to the increasing level of peers in the China, low-priced competition and some operators set up processing machines to supply materials, the market competition will be fiercer. Therefore, we actively develop products with characteristics of high growth, conform to environmental regulation, high value to establish the uniqueness of the products and separate the market from general products, prevent the competitors can from imitation and ensure the profitability of the Company.

② Competitive Niche:

The Company has a global layout advantage to produce products that supply customers around the world within a short distance for Southeast Asia, Northeast Asia, America, and Europe to achieve a global layout.

The main raw materials are supplied by the Formosa Plastics Corp. or the Company, therefore the source and the quality of the material are stable. With the advantages of equipment for process optimization, AI data analysis, etc. and relevant technology, we can produce high value products.

The Chinese subsidiaries also have a complete management system and have obtained safety certification for the automotive industry. Their production and development capabilities are synchronized with the parent company in Taiwan and they can develop featured products that lead the industry.

In addition, China’s regulations of cessation of production toward high-polluted company has become stricter day by day. Aside from increasing the investment of environmental protection equipment in China’s subsidiaries, the Company actively invests high standard

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environmental protection equipment giving us the competition advantage of sustainable economic and environmental protection production.

③ Favorable factors affecting the Company's development prospects:

In response to the rapid global trend towards diversification and large-scale customized manufacturing, the company actively promotes process optimization, upgrades software and hardware, improves production process, and finds out the optimal process parameters to improve performance. In addition, the Company continues to introduce automation, and computerization equipment, improve overall production capacity, collect and analysis complete data, and optimize relevant conditions of the production process to improve production efficiency and reduce cost.

The company has a complete set of equipment, coupled with years of experience and a strict quality management system. It can provide the quality and service that meet the customer's satisfaction. The strong R&D team can better meet the needs of customers by developing products with special functionality and in accordance with various international standards.

④ Unfavorable factors in the prospect of future development and countermeasures:
The China-US trade war and the epidemic of COVID-19 continue to affect the global economic growth, lower the consumption power and restructure the supply chain, etc. The Company will closely gasp the dynamics of raw material market and customers, use the internet marketing, integrate the resources of domestic and overseas business offices to expand the market, strive for orders and ensure business performances.

As the plastics industry is quite mature, the competitors imitate similar products mutually. On the other hand, the environmental protection regulations have become stricter in recent years, some products are gradually replaced by non-PVC materials. Therefore, the Company keeps optimizing the production process, improving product quality and developing products made from environmental protection material to reduce the cost and meet the quality standard. In addition, we promote internet marketing, increase online visibility and enhance brand image to strive for international customers’ orders.

Along with the economic development growth of China, the labor cost continues to increase, causing the foreign companies to transfer the investment to low-cost labor areas in Southeast Asia. In addition, the Vietnam Plants will take the advantage of ASEAN and other duties preferences, keeps developing new products to attract domestic and overseas customers, expands Southeast Asia market and strive for customers’ order.

B. Chemical products
① Market's future supply status and growth:
- As the polyester industry in China continues to expand this year, the demand for ethylene glycol is still growing. The annual production capacity of Bisphenol-A products from 2019 to 2022 in the world increased by an average of 490,000 tons/year (an increase of 6.2%) and the demand increased by 180,000 tons/year (an increase of 2.8%). The increase in production capacity will be greater than the increase in demand

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in the future and the market competition is expected to be fierce. On the other hand, there will be no additional production capacity of plasticizer after 2020, but the demand will increase along with the economic growth. It is expected that the global demand will increase from 6.23 million tons/year to 6.67 million tons/year from 2019 to 2022; the compound growth rate is 2.3%.

② Competitive Niche:

Ethylene glycol products are stable in terms of raw material supply in the enterprise. Production process and energy improvement continues to be carried out so that lower production costs can be the competitive niche. The raw materials of Bisphenol-A include phenol and acetone are completely supplied by Formosa Plastics Corp., the quality is stable and most of the finished products are also supplied to the PC plant or epoxy resin plant in Formosa Plastics Corp., the products are vertically integrated as a competitive niche. On the other hand, DEHP and DINP are gradually replaced by environmental protection plasticizer such as DOTP and hydrogenated plasticizer. Since the demand of environmental protection plasticizer has grown significantly. It is estimated that after the expansion of refining and chemical in China begins to put into production, the production capacity of PTA, the material of DOTP, will increase significantly, causing the price to bearish. Therefore, the operating status of DOTP will become better and that is our competitive niche.

③ Favorable factors affecting the Company's development prospects:
The quality of the products is affirmed by the customers and long-term supply contracts are signed with the customers, thus the production and sales are stable.
④ Unfavorable factors in the prospect of future development and countermeasures:

Due to the ethylene glycol production volume of China will increase, the market competition will be fiercer in the future. In addition, the BPA producers of ASEAN countries such as Singapore and Thailand have the edge of duty-free imports from China, therefore the Company needs to maintain great quality and increase contract supply volume to improve the market share and competitiveness.

C. Electronic materials products
① Market's future supply status and growth:
- In the future, market scale of artificial intelligence, high-efficiency computing, 5G network communication and 5G smart phones will continue to evolve, which is favorable to the demand of circuit board. On the other hand, due to the insufficient consumption power, the sales of automotive electronic has been weak since 2019 and the market variables increase. However, in medium and long term, it is expected to growth continuously. In addition, the trend of semiconductor consolidation remain unchanged, and along with the expansion of its business scale, the customers’ bargain power has become stronger which will increase the cost pressure of circuit board manufactures. Therefore, aside from developing high value products and expanding the production capacity of high-end IC substrate to increase the profits and the market shares, the Company continues to promote project such as employment, materials, energy conservation, etc. to reduce production cost and improve the

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business performance of the Company. The market of glass fiber yarn in China is oversupplied, coupled with the effect of COVID-19 epidemic, the demand is weakened.

② Competitive Niche:

The Company's cross-strait layout has been completed gradually, and the upstream and downstream electronic materials have been vertically integrated. Besides masters the upstream substrate industry of the circuit board, the main raw materials of the circuit board, such as copper foil substrate, fiberglass cloth, glass fiber, epoxy resin, and copper foil are self-made to ensure a sufficient quantity and reliable quality. In addition, the flexible adjustment of production capacity, the balanced development of the products and other levels are improved significantly, therefore providing customers comprehensive circuit boards product demand. With quality rooted over years and technology abilities, the Company has the advantages of price and technology which are the competitive niche of the Company.

③ Favorable factors affecting the Company's development prospects: With automatic production equipment and a completely computerized system, logistics and information flow are combined to provide rapid production and delivery efficiency. Together with a strong R&D and after-sales service promotion team and a complete product portfolio, the needs of different customers can be met. A number of international certifications for product safety and system management has also been obtained. The Company is well-established on both sides of the strait, and has won recognition from the world's leading manufacturers in terms of quality, technology, and mass production capabilities. The Company is currently one of the world's few leading suppliers of all kinds of electronic materials. Furthermore, due to the Company cutting into the IC substrate market in an earlier and keeping accumulating development experiences of all kinds of products. With the excellent technology, quality, mass production ability and solid customer foundation, our customers are all world-renowned manufacturers and the products sells all over the world. Since our quality is deeply trusted by the customers, the customer relationship is good. Besides, we can meet the customers’ needs for product reliability and production capacity, therefore customers are willing to cooperate with the Company to develop new products which helps the Company to seize the business opportunity.

④ Unfavorable factors in the prospect of future development and countermeasures:

Electronic products continue to become lighter and smaller, and the industry continues to expand. The market will become increasingly competitive in the future. In addition, the environmental protection regulations of China are becoming stricter day by day. However, the Company can meet the environmental standards of China. Besides, the Company has the advantages of vertically integration of the upstream and downstream, excellent technology and quality. We keep cooperating with customers to develop all kinds of high niche products such as high-efficiency computing, network communication, new generation system in package substrate and high level car boards to response the growing demand driven by artificial intelligence, 5G communication, and advanced driver assistance system. Furthermore, we improve product

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portfolio, strengthen market segregation and expands markets in China, Southeast Asia and Japan, to enlarge the market share and sales volume. In response to the declining usage of IC substrates in mobile device, Nan Ya PCB has closely collaborated with clients and will launch high-end IC substrates for HPC, 5G telecom equipment, 7nm graphic chips, and new generation system in package to lift the utilization rate and reach the goal of 100% production and sales. In addition, we continue to reduce power consumption and wastes, and procure recycling equipment to increase the waste water recycling ratio and decrease the volume of bio sludge to fulfill circular economy and corporate responsibilities.

D. Polyester products
① Market's future supply status and growth:

The consumption of polyester products is growing by approximately 3.2% yearly. With the world's population growth and the change of lifestyle, polyester applications are becoming more widespread. The consumption of various types of polyester products will continue to grow steadily and the global polyester production capacity is estimated to reach 120.97 million tons in 2020. However, the increase in production capacity is greater than the growth rate of demand. The market competition will remain fierce. The new polyester capacity of China in 2020 is estimated to increase by 5.2% compared with 2019. Domestic demand slowed down and equipment utilization rate was only about 73%. In the future, the market will still be in a state of unbalanced competition between supply and demand. In the US market, there was no new capacity in 2019 and 2020. The overall equipment utilization rate remained above 80%. The market of general package and industrial polyester film are still in the situation of overcapacity. For high performance polyester products such as optical, photoresist coating, polarizer and high gas barrier transparent plating are controlled by manufactures with higher quality. The Company needs to expand high performance polyester products to avoid the dilemma of price cutting competition with China manufactures.

② Competitive Niche:

The Company has obtained stable raw material supply from the enterprise; also, the technology is excellent, the equipment is automatic and the quality control is rigorous. We are a highly vertically-integrated manufacturer that develop differentiated products, adjust product structure and enhance products competitiveness. In addition, we can cooperate with the market and produce diversified, customized and functional products. The completeness and quality of product portfolio are both better than competitors. The quality of PET recycled products made by Kunshan Plant in China is stable. We actively develop differentiated products, adjust product structure, add the equipment of differentiated products to meet customer needs, and improve product market competitiveness in order to increase profits. The US Plant has diversified products with high quality, fast delivery, and continuous development of new products. The competitiveness in the US market is much higher than its peers.

③ Favorable factors affecting the Company's development prospects: Since the Company has been continuously optimizing process coupled with self-sufficient raw materials, the production cost has been strictly controlled and reduced. In the future, aside from continuing strengthen management, the excellent R&D team will keep developing high value

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products with the two major axes of function and environmental protection according to the characteristics such as small volume, large diversity and short term delivery of the textile industry. Meanwhile, we will strive to catch the business opportunities due to the China-US trade friction. Kunshan plant in China masters the advantages of granular spinning and cooperates with brand manufactures to develop PET recycled yarn, continuously develops multi-functional products, enhances product competitiveness and improves business performance. The US plant benefits from the government's protection of US industry policies and sanctions against unfair trade practices, the sales is smooth. Process optimization and environmental product development will continue to be carried out to increase profits.

④ Unfavorable factors in the prospect of future development and countermeasures:

Major polyester chemical fiber plants accelerate their development toward petrochemical refining industry. They master the upstream raw materials, and integrates vertically coupled with large scale and low cost given them a relatively competitive advantage. Taiwan's textile industry is export-oriented and when facing the current rapid changes and competition in global trade, aside from strengthening our ability of technology development and producing high value production, we need to respond quickly in accordance with changes in market demand and improve product structure to maintain the overall competitiveness of the industry. In addition to develop new products actively, the company can also use the layout across China, US, Taiwan, and Vietnam to optimize the distribution of resources according to market demand and maintain the best competitiveness in a highly competitive global market. China industry peers has begun to devote itself to the production and development of recycled silk. Besides increasing production and reducing costs, Kunshan Plant has actively expanded high-value products, segregated markets and enhanced product competitiveness. With the abundant low-price imported product, the PET chip of US plant will face a fierce competition in the future. To improve production capacity and profit, we will keep optimizing process and developing the bottle chips with 10%-25% recycled material.

E. Mechanical and electrical engineering
① Market's future supply status and growth: Taiwan's parent company plans to strive for electrical distribution equipment of wind power and with the quality advantage of cast resin transformer to expand the market in Japan. The subsidiaries in China keep support the expansion and construction in China and Vietnam of the enterprise and strengthen the development of cooperation with Chinese-funded turnkey engineering companies to expand orders for Chinese customers.
② Competitive Niche:
- Corporate brand is conducive to the willingness of international manufacturers to cooperate with the Company and fight for the orders together. Through large scale procurement reducing the material cost, shorten the delivery time, make sure the product design and the quality of production process, and integrate enterprise resources to develop

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differentiated products which is conducive to the promotion of high end projects.

③ Favorable factors affecting the Company's development prospects: Through technology cooperation with Fuji Electric Co., Ltd. to produce vacuum contactor switches (VCS) improves product quality; cooperation with Japan Takaoka to produce molded-type transformers enhancing equipment self-made ability. On the other hand, the South Asia countries such as Philippines are actively carry out basic electricity construction, the electric equipment market is expected to grow. With the overseas investment of the enterprise, it is beneficial to local Taiwanese business market.
④ Unfavorable factors in the prospect of future development and countermeasures:
To face the low investment willingness in Taiwan and low-price competition in the industry, the Company accelerates research and development of electricity monitoring new products and lower the production costs to obtain low-cost but high-quality components and semi-finished products. Due to the slowdown of the China economy, the subsidiaries of China will not only enhance expansion the orders of the expansion of Chinese-funded corporations but also develop the after-sales service orders to maintain the grow of the revenue.

5.2.2 Important Applications and the Production Processes of the Major Products

5.2.2.1 Major uses of the primary products

Product Name	Important use
Flexible PVC Film	Tape, floor tiles, wallpaper, labels, pools, transparent, raincoats, insufflation, water beds, table mats, car, building materials etc.
PVC Leather	Furniture, purses, clothing, footwear, raincoats, toys, vehicles, gloves, boat products, etc.
Rigid PVC Film	Vacuum forming, food packaging, credit card, floor tile fitting, wood veneering, printing, stationery, electroplating, photo album, fold molding, water tower plate, medicine packaging
PP Synthetic Paper	Stationery, labels, advertising tags, cards, solar back panels, TPU liners
A-PET Film and Sheet	Food packaging, printing, stationery, folding, high frequency heat sealing
PU Synthetic leather	Shoes, vehicle interiors, furniture, 3C product covers, sports equipment, yoga mats, abrasives, fireproof material, heat insulation paint, resin etc.
POM doors and windows	Energy-saving doors, windows and curtain wall for buildings

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Product Name	Important use
SMC fiberglass door	SMC room door, fire door, entrance door
PEPA Synthetic Paper	Advertisement printing, printing paper, label paper, stationery
Rigid PVC Pipe	Engineering, water plant, electrical, drainage and general construction pipes
Plastic pallet	Automatic warehousing, cargo carrying, stacking machines, and export shipments
BOPP Stretch Film	Tape, garment bags, food packaging, photo albums, etc.
UP Resin	Crafts, transparent shower, artificial stone, shipbuilding, furniture, and building materials, etc.
Engineering plastic	Electronic and electrical parts, sports equipment, household appliance, automotive materials, etc.
PVC Compound	Extrusion, injection, blow molding, pipes, films, sheets, valve, fitting, tool handles, shoes, containers of water or oil, etc.
BPA	Epoxyresin, PC resin
Ethylene glycol	Polyester fiber products, ester pellets for bottles, polyester film, antifreeze
Copper Clad Laminate	Printed circuit boards (PCB)
Epoxy resin	Electronic, civil, paint, composite materials
General circuit board	Key component of various electronic devices which purpose is to serve as a carrier for various electronic devices and as a medium for interconnection between components. Application products include: Notebook computers, workstations, servers, high-end memory modules, game consoles, TV sets, cars, LED displays, mobile phones, and wireless charging.

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Product Name	Important use
IC Substrate	Carrier applied to IC chip products so that the output / input signals of the chip can communicate through inner/outer lead and system on the substrate. In addition, it can help cooling the chips. The products applied to various electronic products including optical sensor, cloud server chips, AI chips for data centers, 8K TV chips, traffic supervisory monitors, AI chips 5G wireless communication module chip, RF module for mobile phone, network communication chip, computer graphics IC substrate, APU IC substrate, wearable device, digital TV and set-top box chipset, vehicle carrier board, car sensors, smart speaker AP , AI identification systems, cryptocurrency(mining) and high-performance computingwafer substrates
Electronic grade glass fiber	Upstream raw materials of printed circuit boards, industrial materials, building materials, etc.
Reinforced glass fiber	Electrical and electronic parts, auto parts, sports equipment, industrial materials, etc.
Polyester staple fiber	Spinning woven fabrics are used in a variety of clothing, home furnishings, or for non-woven fabrics and fillers
PET resin	Made into a variety of bottles, yarn, cotton, film
Polyester yarn	Made into yarn woven cloth or knitted cloth for various garments, tire cords, canvas, water pipes, etc.
Polyester film	Food packaging, bronzing transfer, LCD panel, 3C electronics
Release film	Laminated ceramic capacitors coating, polarizing plate production process examination, transparent optical coating

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5.2.2.2 Production processes of major products

Flexible PVC film production flow chart

==> picture [468 x 354] intentionally omitted <==

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

Plastic
powder
Plasticizer
Stabilizer Mixing Calendering Discharg
e
Colorant
Additive
Embossing Cooling Examine
Flexible Coiling
PVC film Inspect
----- End of picture text -----

Ethylene glycol production flow chart

==> picture [450 x 223] intentionally omitted <==

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

Air CO2
Separation Removal Wastewater
Plant Unit
Treating Unit
Ethylene Glycol
EO EO EG EG Mono Ethylene Glycol Product
Oxygen Reaction Stripping Reaction Drying Di-Ethylene Glycol Storage
and and and and
Tri-Ethylene Glycol
Scrubbing Reabsorption Evaporation Purification
Unit Unit Unit Unit
Ethylene
----- End of picture text -----

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Copper clad laminate production flow chart

==> picture [409 x 202] intentionally omitted <==

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

Solvent Glass fiber
Glass fiber
Cloth Copper
Hardener
Ingredients Impregnation Lamiante Combination
Accelerator
Copper clad
Hot Press Timming laminate
Epoxy resin
----- End of picture text -----

General circuit board production flow chart

==> picture [482 x 145] intentionally omitted <==

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

Core preparation Inner layer pattern formation PP lamination
Through hole drilling Laser via drilling Desmear Copper plating
Outer layer pattern formation Solder resistance formation Printing of Legend
Surface treatment Route r Open/short test FVI Package
----- End of picture text -----

IC substrate production flow chart

==> picture [476 x 186] intentionally omitted <==

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

Core preparation Through hole drilling Inner layer pattern formation
Copper roughness ABF lamination Laser via drilling
Outer layer pattern formation Copper plating Solder resistance formation
Surface treatment Solder printing Dicing Open/short test
FVI Package
----- End of picture text -----

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Polyester products production flow chart

==> picture [420 x 351] intentionally omitted <==

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

Spinning Polyester Staple Fiber
PTA
Esterification Polycondensation Polyester Chips
Reactor Reactor
EG
Polyester Spin Drawn Yarn
Melt
Spinning
Extruding
Polyester POY
Polyester Textured Yarn
Polyester Fully Oriented Yarn
Biaxial
PET Film
Stretching
----- End of picture text -----

5.2.3 Supply of Primary Raw Materials

The Company now conducts procurement operations through an internet electronic platform to ensure the fairness and justice of the procurement process and prevent procurement defects. The procurement cases are advertised on the Internet, and the supplier submits quotes after confirming the identity with an electronic signature. This ensures the safety and fairness of the overall operation and shortens the time of procurement operations, as well as achieving a win-win situation between the Company and its suppliers. At present, this electronic platform has more than 10,000 online quotation manufacturers. The Company's 2019 major raw materials usage status and suppliers are as follows:

Material Type	Unit	Volume	Major Supplier
Plastic Powder	Ton	318,309	Formosa Plastics Corp.
Stabilizer	Ton	9,767	Intra-company transfer
Plasticizer	Ton	42,344	Intra-company transfer
Modifier	Ton	25,248	Formosa Plastics Corp.
Epichlorohydrin	Ton	175,220	Formosa Plastics Corp.

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Material Type	Unit	Volume	Major Supplier
Fiberglass Yarn	Ton	111,869	Intra-company transfer
EG	Ton	369,819	Intra-company transfer
PTA	Ton	971,261	Formosa Chemical & Fibre Corp., Formosa Chemicals Industries (Ningbo)Co.,Ltd.
Ethylene	Ton	1,207,983	Formosa Petrochemical Corp.,
Substrate	Sheet	5,692,725	Intra-company transfer
OX	Ton	155,420	Formosa Chemical & Fibre Corp.
Butadiene	Ton	37,228	Formosa Petrochemical Corp.
Normal Butane	Ton	51,205	Formosa Petrochemical Corp.
BPA	Ton	220,427	Intra-company transfer
Acetone	Ton	46,118	Formosa Chemical & Fibre Corp., Formosa Chemicals Industries (Ningbo) Co., Ltd.
Propylene	Ton	113,125	Formosa Petrochemical Corp.
Phenol	Ton	464,663	Formosa Chemical & Fibre Corp., Formosa Chemicals Industries (Ningbo)Co.,Ltd.
Naphtha	Ton	67,989	Formosa Petrochemical Corp.
Copper Wire	Ton	86,999	Xiamen Songtai Industrial Co., Ltd

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5.2.4 Suppliers/Customers Accounted for at Least 10% of Annual Procurement/Sales

5.2.4.1 Major Suppliers for the Last Two Years

Unit: NT$ thousands

5.2	.4.1 Major Suppliers for the Last Two Years	.4.1 Major Suppliers for the Last Two Years	.4.1 Major Suppliers for the Last Two Years	.4.1 Major Suppliers for the Last Two Years					Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
	2019				2018				As of March 31st,2020
Item	Company Name	Amount	Percent `〔`%`〕`	Relation to NPC	Company Name	Amount	Percent `〔`%`〕`	Relation to NPC	Company Name	Amount	Percent `〔`%`〕`	Relation to NPC
1	Formosa Petrochemical Corp.	35,608,519	18.40	Investee under equity method	Formosa Petrochemical Corp.	47,217,016	20.20	Investee under equity method	Formosa Petrochemical Corp.	8,374,075	19.18	Investee under equity method
2	Formosa Chemical & Fibre Corp.	24,944,681	12.89	Juristic person director of NPC	Formosa Chemical & Fibre Corp.	36,196,315	15.48	Juristic person director of NPC	Formosa Chemical & Fibre Corp.	5,626,776	12.88	Juristic person director of NPC
	Others	132,982,666	68.71		Others	150,356,044	64.32		Others	29,668,702	67.94
	Net Purchase	193,535,866	100.00		Net Purchase	233,769,375	100.00		Net Purchase	43,669,553	100.00
Note: Compared with 2018, the amount of procurement from Formosa Petrochemical Corp. and Formosa Chemical & Fibre Corp. decreased in 2019. It is mainly because the procurement price of raw material such as ethylene and PTA decreased.

5.2.4.2 Major Customers for the Last Two Years: None.

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5.2.5 Production Volume for the Last Two Years

Production Value: NT$ thousands

Year Production Volume & Value Product Name	Year Production Volume & Value Product Name		2019			2018
		Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
Flexible PVC Film	Ton	255,600	107,736	7,112,195	255,600	116,692	7,621,063
PVC leather	Thousand Yard	54,000	21,897	2,673,468	54,000	24,687	3,105,972
Rigid PVC Film	Ton	298,200	137,285	8,332,514	298,200	149,078	8,940,788
PU Synthetic Leather	Thousand Yard	32,880	13,788	2,021,766	32,400	14,964	2,271,579
Plastic Doors and Windows	Ton	41,649	25,306	5,164,889	40,260	23,959	4,756,904
Rigid PVC Pipe	Ton	239,000	123,608	5,581,008	239,000	125,276	5,678,733
Film Products	Ton	124,400	64,463	4,750,166	121,300	68,400	5,021,802
Plasticizer and THPA	Ton	602,000	340,150	12,035,901	602,000	388,717	14,727,840
PA	Ton	228,000	174,609	4,957,254	228,000	192,458	6,217,191
BPA	Ton	550,000	532,048	20,585,203	550,000	604,668	30,712,499
1,4BG	Ton	120,000	48,408	2,412,534	120,000	84,072	4,562,677
EG	Ton	1,980,000	2,119,557	36,960,128	1,980,000	2,087,845	55,034,017

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Year Production Volume & Value Product Name	Year Production Volume & Value Product Name		2019			2018
		Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
Copper Clad Laminate	Thousand Sheet	72,400	55,517	27,925,951	72,400	60,425	33,089,336
Epoxy Resin	Ton	457,000	403,239	30,648,457	457,000	393,097	33,333,264
Glass Fabrics	Thousand Meter	618,000	538,003	13,291,566	672,000	608,274	15,873,928
Copper Foil	Ton	88,800	82,006	25,106,875	96,000	88,293	29,830,951
Glass Yarn	Ton	233,000	164,631	6,816,319	212,000	206,802	10,096,156
Printed Circuit Board	Thousand SFT	32,340	17,437	29,661,682	29,940	19,129	28,917,372
Polyester staple fiber, filament, fabric	Ton	1,601,120	1,109,572	50,514,659	1,703,300	1,271,799	62,186,909
Polyester Film	Ton	94,800	69,008	4,989,508	94,800	74,463	5,140,332

Note1: Production Capacity refers to the quantity that can be produced using existing production equipment and under normal operation after the company has measured the necessary stoppages, holidays, etc.

Note2: If the production of each product is substitutable shall combine the calculated production capacity and note it.

Note3: The production capacity of EG only included mono-EG, excluded other by-products.

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5.2.6 Sales Volume/Value of the Last Two Years

Sales Value: NT$ thousands

						Sales Value: NT$ thousands	Sales Value: NT$ thousands	Sales Value: NT$ thousands	Sales Value: NT$ thousands
Year Sales Volume & Value Product Name	Unit	2019				2018
		Domestic		Export		Domestic		Export
		Volume	Value	Volume	Value	Volume	Value	Volume	Value
Flexible PVC Film	Ton	31,592	2,549,770	72,938	4,350,781	36,152	2,782,529	78,880	4,730,121
PVC leather	Thousand Yard	0	0	24,540	2,996,160	0	0	28,798	3,623,194
Rigid PVC Film	Ton	25,103	1,511,298	109,507	6,659,113	27,671	1,666,988	117,669	7,049,618
PU Synthetic Leather	Thousand Yard	1,433	224,199	11,646	1,693,605	2,229	387,649	11,286	1,663,968
Plastic Doors and Windows	Ton	9,611	1,698,806	12,736	2,862,202	8,636	1,512,857	13,667	2,915,163
Rigid PVC Pipe	Ton	89,298	4,323,834	34,743	1,276,724	90,076	4,365,293	34,796	1,295,127
Film Products	Ton	25,232	1,754,787	5,472	507,737	29,060	2,047,914	3,064	310,571
Plasticizer and THPA	Ton	44,230	1,777,748	278,768	9,651,245	49,412	2,003,542	286,846	10,736,714
PA	Ton	24,535	809,315	85,768	2,322,253	27,775	975,081	86,734	2,724,034
BPA	Ton	187,999	7,124,130	172,925	6,840,200	189,638	9,377,437	207,621	10,800,275
1,4BG	Ton	27,838	1,209,821	15,189	934,537	41,903	2,033,510	34,814	2,130,003
EG	Ton	416,663	7,405,312	1,343,868	23,294,240	359,728	8,809,245	1,267,161	34,074,320
Copper Clad Laminate	Thousand Sheet	7,193	4,001,906	45,706	22,607,149	7,727	4,384,794	45,981	25,026,245
Epoxy Resin	Ton	29,640	2,375,431	319,124	24,132,616	28,717	2,618,236	286,696	24,127,694
Glass Fabrics	Thousand Meter	42,725	1,243,159	165,611	3,903,860	39,136	1,113,673	197,391	5,058,895

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Year Sales Volume & Value Product Name	Unit	2019	2019	2019	2019	2018	2018	2018	2018
		Domestic		Export		Domestic		Export
		Volume	Value	Volume	Value	Volume	Value	Volume	Value
Copper Foil	Ton	2,764	945,647	37,857	11,490,838	3,090	1,119,557	37,655	12,646,677
Glass Yarn	Ton	7,260	271,721	33,281	1,406,823	7,984	453,348	57,673	2,752,053
Printed Circuit Board	Thousand SFT	3,997	13,610,001	14,282	17,483,988	3,883	10,595,938	17,406	18,236,613
Polyester staple fiber, filament, fabric	Ton	256,869	11,554,374	831,213	37,981,924	268,561	13,282,966	995,291	48,515,352
Polyester Film	Ton	13,814	1,037,684	44,352	3,167,911	16,613	1,219,862	45,434	3,063,368
Others			16,902,178		18,408,032		20,765,771		20,065,365
Total			82,326,864		203,976,195		91,516,190		241,545,370

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5.3 Employees

Employees are the most important asset of a company. Every company should strive to ensure every employee can work safely and is willing to contribute his or her talent. To recruit talented employees, the Company offers stable and competitive compensation, comprehensive training, and promotion system to achieve the basic policy of full utilization of human resources.

	Year	2019	2018	As of 2020.03.31
Number of Employees	Male	24,244	24,508	23,774
	Female	8,027	8,254	7,835
	Total	32,271	32,762	31,609
Average Age		39	39	40
Average Seniority (Year)		14	13	14
Educational Background Rate (%)	PhD	0.11	0.12	0.11
	Master	2.61	2.32	2.73
	Bachelor	9.37	9.16	9.53
	HighSchool	67.58	67.47	68.22
	Under high school	20.32	20.93	19.41

Note: The number of employees includes the consolidated financial reporting company.

5.4 Environmental Expenditure Information

5.4.1 Total losses and penalties for environmental pollution

The Company was sanctioned by the Department of Environmental Protection in a total of 3 cases, and the total sanction amount was NT$300,000 from 2019 up to March 31, 2020.

Disposition Date Item	2019.04.02	2019.05.22	2020.03.23
Compensation object or disposition unit	Environmental Protection Bureau, Chiayi County	Department of Environmental Protection, New Taipei City Government	Environmental Protection Bureau, Yunlin County
Disposition No.	Fu Shou Huan Kong Zih No. 1080045849	Huan Ji Zih No. 1080909975	Fu Huan Kong 2 Zih No. 1090014921
Regulation Violated	Paragraph 2, Article 23 of Air PollutionControl Act	Paragraph 2, Article 24 of Air Pollution Control Act	Paragraph 1, Article 31 of Air PollutionControl Act
Violation	Examination of Expansion site of Hsinkang Plant revealed the following deficiencies:	When examining the production process of PU leather in Shulin Plant, the buck value of washing tower was 30mmH2O which was different from the	When examining 2EH Plant in Mailiao, the test value of one equipment component was greater than

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Disposition Date Item	2019.04.02	2019.05.22	2020.03.23
	1. The pavement of vehicle route was not cleaned. 2. The implementation of control facilities on exposed areas within the construction site was less than 80%. 3. The sludge on the surface of the vehicle body and the tire was not effectively cleaned when the vehicle left the construction site.	permitted operation range(100~300mmH2O). Therefore, the operation was recognized not in accordance with the approved content.	10,000ppm, exceeded the control standard.
Disposition content (including disposition amount)	Administrative fine of NT$100,000	Administrative fine of NT$100,000	Administrative fine of NT$100,000

5.4.2 The possible expenses that could be incurred and measures to be taken currently and in the future

5.4.2.1 Improvement plans and measures to be taken currently and in the future
(a) Using the best available control technology in the new expansion production process to reduce the impact on the environment.
(b) Continue to promote process optimization and combine Real-Time Production Management system. Through early warning control of computer system, to ensure the operation of various equipment can meet the approved content.
(c) Strengthen the operation management of prevention equipment and regular maintenance, maintain the normal operation of the system, exert the best handling efficiency and ensure the pollutant emissions comply with regulatory requirements.
(d) Improve the operator's ability of system trouble shooting to complete the repair in the shortest time and complete the relevant notification according to regulations.
(e) In the spirit of inquiring into the root of the matter, the reason of error should be reviewed and analyzed from the management, environmental and operational aspects and recorded as case studies. The cases are created to enhance the environmental awareness and the alertness of all employees through education and training.

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5.4.2.2 Expected environmental protection capital expenditures for next two years

Year Items	2020	2021
Pollution control equipment to be purchased or expenditure	 Improve pollution source equipment and switch to low-pollution fuel  Adding waste gas prevention equipment (improving removal efficiency and eliminating white smoke-derived visual pollution)  Testing fee, air pollution fees, water pollution fees and other fees	 Inspection fees, air pollution fees, water pollution fees, etc.  Reduce the consumption of bituminous coal and replace with natural gas in accordance with the government to improve air quality.  Registration fee of the existing chemical substance standard.
Expected Improvements	 Enhance the treatment capacity of wastewater, waste gas and waste in the plant.  Compliance with laws and regulations, reducing environmental impact, and enhancing publicperception.	 Ensure the disposal ability of waste water, exhaust gas and wastes in the plant.  Compliance with government regulations and fulfill corporate social responsibility.
Amount	NT$ 1,660,194 thousand	NT$ 1,670,685 thousand

5.4.2.3 The impact on the Company's finance and operations to the implementation of Restriction of Hazardous Substances Directive (RoHS) in the European Union:

In response to the EU RoHS Directive, the Company has already imposed strict control according to the requirements of European customers, from the material formulation and process specifications, to ensure the usage volume of restricted heavy metals such as lead and cadmium is under the limitation. Therefore, the Company has not experienced a significant impact on finances and operations.

5.4.2.4 Environmental protection policy

(a) Safety and Health Environmental Protection Policy

The Company's safety and health environmental protection policy is based on the “Safety and Health Environmental Protection Policy” of Formosa Plastics Group signed on February 1st, 2012. Besides pledging to protect the environment and maintain community safety, all employees should enrich their profession; take safety and environmental protection as the basic consideration of any decision. Everyone should lead by example and regard safety, health, and environmental protection as their responsibility.

We truly believe that the environment protection and industry development are equally important. Ensuring the safety of the products, employee, contractor, plant area and community is not only are corporation social responsibility but also part of the competitiveness of the corporation.

We believe every disaster or accident can be prevented, no matter how big or small it is. Through the values of the Company and the power of organization

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and system, the working level of each plant can reach to and acceptable standards. To achieve this goal, all the supervisors must have appropriate participation and understanding of the system, provide adequate training and require thorough implementation and continuous improvement to ensure the policy and the goal are achieved.

All the employees should enrich their profession at any time, take safety and environmental protection as the basic consideration of any decision, fully understand the spirit of the system and thoroughly implement the execution of the system, face the problem with the attitude of inquiring into the root of the matter and keep improve and progress with the best operating mode of the industry.

Leading by example, starting from ourselves; maintaining the safety of colleagues, neighbors, and self; maintaining the cleanliness of the natural environment; maintaining the assets of the Company and aiming at perpetual business operation development, these are the responsibilities of each of us.

(b) Improvement of greenhouse gas reduction

The reduction of greenhouse gases has always been a topic of concern for the Company. In 2006, the Company set up the “Greenhouse Gas Inventory Reduction Group” to comprehensively promote the reduction of greenhouse gas inventory. Moreover, the “Energy Conservation, Carbon Reduction, and Pollution Prevention Promotion Organization” was set up to coordinate water and energy conservation as well as pollution prevention throughout the company. The implementation of the "Greenhouse Gas Inventory Reduction Management Method" and the completion of the "Greenhouse Gas Inventory and Reduction Computer Operation" were carried out in the meantime.

Each unit of the company sets annual energy consumption and greenhouse gas emission targets per unit of product. The reduction target of the whole company for per unit of product is the reduction of water consumption by 2%, energy consumption by 3%, waste reduction by 1% and according to the concept of “circular economy", lower down the source wastewater emission by 5% year by year. In 2019, the Company also invested NT$ 477,217 thousand to complete 540 water-saving and energy-saving improvement cases. Greenhouse gas CO2e emission was reduced to 154,407 tons/year with 284 ongoing improvement projects. It is expected to invest another NT$ 1,101,241 thousand, which will further reduce greenhouse gas CO2e emissions by 170,621 tons per year.

For the annual greenhouse gas emissions, the Company entrusted a third-party unit verified by the Bureau of Environmental Protection to verify the annual greenhouse gas emissions. It has been verified that the greenhouse gas inventory in 2016 the annual greenhouse gas emission was 6,075,317 tons of CO2e, in 2017 the annual greenhouse gas emission was 6,361,965 tons of CO2e and in 2018 the annual greenhouse gas emission was 6,210,275 tons of CO2e. The inventory operation for 2019 is expected to be completed by August 2020.

The Company continues to promote improvement to reduce pollutants in exhaust gas. Based on the principle of best feasible control technology, the Company plans to set up various prevention equipment systems to treat pollutants in exhaust gas, conduct regular inspection to ensure the discharge concentration of various pollutants can meet the national standards.

The main control measures include: self-inspection, equipment component inspection, perimeter air quality inspection, and joint odor inspection. For large-scale emission sources, there are automatic monitoring facilities (CEMS)

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and chimney surveillance video to perform 24-hour real-time monitoring. In the case of abnormalities, alerts will be issued immediately to alert personnel to improve processing.

Besides cooperate with the environmental impact assessment to implement the control of permitted volume, the Sixth Naptha Cracker plant also established a VOC gas fingerprint database to compare the sampling analysis results from plants and large storage tanks and to master the source of odor and carry out improvement. Moreover, the Fourier Transform Infrared Spectrometer (FTIR) is equipped to form a plant air pollution safety net for continuous monitor. Furthermore, it is available for mobile use with delivery vehicle.

(d) Water pollution prevention and management measures

In order to comply with the wastewater treatment and discharge management operations, relevant management measures have been formulated in accordance with government regulations, and wastewater reduction operations have been actively promoted. The main measures are as follows:

(i) Implement the wastewater source management:
- For the collection, transportation and pre-treatment facilities of household sewage, process or construction wastewater, the Company established regulations for the operation and monitoring of wastewater sources.
(ii) Establish relevant regulations for wastewater treatment processes: Including planning processing facility, rainwater collection and discharge management, emission permit application, operation and reporting record, effluent inspection management and water volume (quality) automatic continuous monitoring operation.
(iii) Each plant regularly reviews and reports waste water reduction or reuse: Supervision and inspection operation such as periodical inspection of treatment facilities, inspection of the effluent quality, etc. When an abnormality is discovered, should filing immediately and control, track and improve the abnormal.
(iv) Supervision and review operation includes periodic inspection, water quality inspection, etc. If any abnormalities were found, the Company will immediately put them on record for control and tracking improvement
(e) Waste management measures

In order to achieve resource sustainability and effectively manage waste disposal, the Company starts from the waste reduction of source as a starting point (including source reduction and production process reuse) and finally consider outsourcing treatment. Besides, we take “recycling → incineration → burying” as the order of adoption and formulate various management measures for wastes classification, storage, clearance and disposal:

(i) Classification and storage after waste production:
Comply with Waste Disposal Act, the Company classifies the general garbage and process waste first and then storing them in containers or collection bins (bags). Storage areas are set up with waterproof (rainproof) facilities, wastewater and odor collection facilities, and signs for management. Storage containers must remain intact and free from rust and leakage.
(ii) Waste clearance and disposal operations:
A waste management computer system has been set up, including the supplier for cleaning up, cleaning project documentation, and online reporting management to ensure that all business wastes are legally reused

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or cleaned up.

(iii) Flow tracking operation:
- Through regular follow-up and visits to the cleaning supplier, the Company can control the waste flow, eliminate secondary pollution caused by illegal disposal. Besides, the Company requires the contractor to cooperate with the online declaration and other regulations by attaching relevant statutory documents (such as proper handling certificate or legal clearing list) to file for cleaning fees.
(f) Operational management measures for toxic chemical

Besides the compliance with government regulations, efforts are made to strengthen the prevention and management of leakage of toxic chemical substances. The main management measures include:

(i) Reduction Management:
- Through process optimization, improve the operational conversion efficiency to reduce operations or find substitutes to reduce usage and in-plant storage.
(ii) The operation or storage process is enclosed, which effectively reduces the possibility of leakage and reduces the risk of the contact and explosion of personnel.
(iii) Regular implementation of hazard prevention and response drills: Strengthening disaster response capabilities to reduce disaster risks.
(g) Energy saving and carbon reduction measures and the acquisition of carbon right is included in the Company’s carbon reduction strategies

The Company actively promotes improvement of energy saving and carbon reduction and each plant improves process energy consumption reduction, energy reuse, waste heat reuse, equipment efficiency improvement, energy management measures, etc. Subsequently through inventory and continues review to promote and strengthen the cross-plant and cross company resource integration and achieve the purpose of waste heat fully recycle and reuse and carbon reduction. Cooperates with the project and result of greenhouse gases voluntary emission reduction implemented by Green Productivity Foundation, hosted by Industrial Development Bureau, Ministry of Economic Affairs every year, the Company is intended to use it as an offset for allocated emission allowance in the future.

5.5 Labor Relations

5.5.1 The Company continues to promote many employee caring programs in order to motivate employees, enhance employee benefits, and driven the employee to have a balance development in aspect such as work, health, life, etc.

5.5.1.1 Employee care and employee welfare measures

(a) Multiple employee benefits:

Besides the items required by law, the Company provides medical fee discounts of Chang Gung Memorial Hospital for employees and their family members, scholarships for employees’ children, encouragement bonus for stock purchasing, birthday coupons, wedding and funeral subsidies, holiday gifts and coupons, and comprehensive living facilities in the plant, sick leave pay better than the law

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required, death compensation, etc. The Company also organizes various leisure activities such as sports day, domestic travel, and a variety of club activities.

(b) Remuneration:

According to the labor market, a reasonable and competitive salary remuneration is set, a stable salary adjustment policy is provided, and holiday bonuses for occasions such as the Dragon Boat Festival, Moon Festival, and Year-End are issued according to the operation status.

The Company holds supervisor communication meetings at all levels periodically and issue bimonthly enterprise magazines. Employee can also express opinions through employee suggestion boxes or dedicated phone lines.

(d) Innovative incentives:

The Company sets up IE proposal bonuses to encourage employee to discover the abnormalities in work and design a well improvement plan. The Company will award bonuses based on the improvement effectiveness and period, after adopting the plan. Moreover, innovation platform website was set for employees to discuss professional issues and appropriate reward will be given to those who provide excellent innovative idea.

5.5.1.2 Professional Development and Training:

Employees are the company's most important asset and the foundation for perpetual business operation. Apart from providing proper welfare and care, we also hope through a good training environment, we can cultivate outstanding talents with optimism, enthusiasm, professionalism and innovation.

The Company already developed a completed personnel training system, including new recruits orientation, basic job training, professional job position training, management trainee training, expatriate training, e-learning and knowledge management system, and other courses (e.g. life and health lectures). Through e-training management system, the employees can complete the training of each stage step by step. The training courses and completion deadlines that each employee required to take are also included in the computer control and will notify each department to conduct the training within the time limit by computer. We expect all the employees to become excellent talents with enthusiasm, innovative ideas and professional and management practices.

5.5.1.3 Retirement system

(a) Retirement Application

Employee may apply for retirement under any of the following conditions:

① Where the employee attains the age of 55 and has worked for 15 years.
② Where the employee has worked for more than 25 years.
③ Where the employee attains the age of 60 and has worked for 10 years.
(b) Retirement Order

Employee are ordered to retire under any of the following situations has occurred:

① Where the employee attains the age of 65; however, executives or above are allowed to extend until the age of 70; senior executive president is allow to extend until the age of 75.
② Where the employee is unable to perform his/ her duties due to disability.
(c) Option of pension payment system:
① Employee on board before June 30th, 2005 who chooses the pension system of the "Labor Standards Law" or temporarily choose not should be conducted

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according to the "Labor Standards Law". But before June 30th, 2010, employee can still chooses the pension system of the “Labor Pension Act” and the service period started from the adopting date should be conducted accordingly; the service period before should be conducted according to the "Labor Standards Law". After adopting the “ Labor Pension Act”, employee cannot choose to adopt the "Labor Standards Law".

② Employee on board after July 1st, 2005 should adopt the pension payment system of the “Labor Pension Act”.
(d) Calculation criteria for pension:
① The base of service period before July 31th, 1984 should be accounted according to the “Regulations Governing the Retirement of the Factory Workers of Taiwan Province” and calculated by the three months’ average wage before retirement. The base of service period before August 1st, 1984 should be accounted according to Article 55 of the "Labor Standards Law" and calculated by the six months’ average wage before retirement. But the total number of bases of the two shall be no more than 45.
② Employee forced to retire due to the disability incurred from the execution of their duties his or her retirement pension calculation should add 20% based on the preceding subparagraph.
③ Employee who adapts the pension payment system of the “Labor Pension Act”, his or her reserved period in the Company before adapting the “Labor Pension Act” be calculated according to the average wage at the time of retirement and based on the preceding subparagraph and be paid at the time of retirement. The service period after adapting the “Labor Pension Act” should be claimed from the Bureau of Labor Insurance at the age of 60 in accordance with the Article 24 of the “Labor Pension Act”.

5.5.1.4 Employee Code of Conduct or Ethics

(a) In order to clearly define the rights and obligations of employers and employees, and to maintain order in the workplace, the Company has established “Working Rules” in accordance with the law and publicly disclosed at the approval of the competent authority as the base for employee management. The “Working Rules” clearly defined items such as the appointment, promotion, working hours, wages, conduct that should be complied, award, punishment, dismissal, retirement, training, assessment, occupational injury and disease benefit, pension and welfare of the employee.
(b) In order to strengthen the behavior and ethical norms of the employees, employees are required to sign the “Nan Ya Plastics Corp. Employees' Commitment to Observe the Operational Policy Statement," which is summarized as follows:
① Prohibition of Unfair Competition (Antitrust) Policy:
- Employees must fully comply with the Fair Trade Act. The Company encourages employees to gain profit by legal means, any action shall comply with relevant regulations.
② Conflict of interest prevention policy:
- When employees are required to engage in business related to the Company, they shall not damage the company's rights and interests. Employees shall not directly or indirectly accept gifts, entertainment or other benefits from any procurement (sales) customer or competitor.
③ Internal Data Policy:
- Employees may not disclose any confidential company information or other unpublished information without the written permission of the company and nor

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can employees use the information mentioned above for personal interests or other business unrelated to the Company. All technical information in personal custody should be returned when resign.

④ Political Activity Policy:
- Employees shall not directly or indirectly donate money, services or other valuable items of the Company to any candidate or political party, or engage in acts prohibited by relevant laws and regulations, nor can the employees affect the job duties of legislator, political and government official by improper interests.
5.5.1.5 Workplace and employee safety:
(a) In order to ensure the safety, health and environmental management of each department to prevent accidents and achieve the management objectives of “zero disasters”, ensure the safety and health of employees and neighborhood residents, maintain the integrity of the company's equipment and property, ensure all operations can continue with no issue, and improve the overall business performance, the industrial safety health management rules and related management measures are formulated in accordance with the government safety and health and environmental protection laws and regulations.
(b) The scope of application includes the occupational safety and health management system and the job duties of various departments, the establishment of various safety and health protection facilities, the establishment of safety operation standards for various operations, the periodic automatic inspection and assessment of safety and health, personnel safety and health, fire education and training, safety and health performance assessment, emergency response planning, disaster simulation exercises, and accident handling.
(c) There are 12 plants area in the Company and among them 51 plants have passed the ISO 14001 environmental management system, and 50 plants have passed the OHSAS 18001 Occupational Safety and Health Management System and the Taiwan Occupational Safety and Health Management System (TOSHMS).
(d) To strengthen the management of workplace safety and reduce the risk of harm, the Company actively promotes the “Process Safety Management (PSM)” and sets up PSM personnel at all levels to fully promote and control the PSM management operations of various departments to ensure the quality of PSM operations. The details of the management operations are as follows:
① 14 PSM management items such as “process hazard analysis” and “modification management” are audited one by one at each process plant monthly to ensure that each plant can implement various tasks in accordance with the standard procedures.
② The results of safety management KPIs are reported monthly by each plants to effectively control process safety management risks.
③ “PSM operation communication and PSM personnel Symposium” is hosted every half year to implement the communication of PSM operation and improve the PSM operation quality of each department.
④ The process risk management wrap-up presentation activity was held every year, to improve the level of the whole process risk management analysis and assessment through the wrap-up presentation and observation and learning activities.
(e) The company regularly or irregularly holds safety and health education training and propaganda meeting. Periodic training such as semi-annual training of stacker and crane operator, etc.; propaganda meeting such as SWAT symposium, recent

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external major accidents discussion, etc. to ensure all the employees have the appropriate and necessary training. In 2019, 171 classes of safety and health education training were conducted by the President's office. The number of participants was 7,085, and the total training hours was 49,395 hours.

(f) In order to control the working environment of employees and assess the exposure status of hazardous factors, besides setting up detection and alarm equipment at proper location, periodic workplace environmental assessment and process hazard assessment is also carried out to as the basis for improving the workplace environment. Each department should decorate the Safety, health and environment policy and certified site at the obvious access.
(g) The Company provides health and education information to the employees periodically. In order to enhance the employees' safety and health awareness, the Company distributes "work hazard reminder cards" and "safety and health manuals" and reminds the employees of operation safety through education, training, and safety observation.
(h) Conduct annual employee health checkups, including general health checkups, special health checks, health checkups for foreign employees, health checkups for food handlers, etc. and the establishment management of medical health unit such as deployment of medical health unit, management of medical appliance, deployment of first-aid personnel, deployment of medicine etc.
5.5.1.6 Implementation of Employee Welfare and Retirement System: Sound.
5.5.1.7 Implementation of Employee Advanced Study and Training:

In 2019, except the various training courses conducted by each department based on practical needs, the President's office also coordinated common professional training, such as AI preparatory school training, artificial intelligence introduction, pattern recognition, data preprocessing, R (programming language) instruction, basic and advanced statistics and quality management training, quality control junior engineer (administrator) training, work safety (re)training, and assistant supervisor and supervisor training. A total of 234 classes were conducted with 9,051 participants. The total number of training hours was 100,764 hours, and the total cost of education and training was NT$ 21,419 thousand.

5.5.1.8 Labor and Management Negotiation:

(a) Participate in the trade union congress, the Board of Supervisors, and hold regular labor-management meetings to establish a labor-management consultation mechanism.
(b) Establish an employee complaints system to improve labor relations.
(c) Formulate working rules and personnel management rules, and clearly define the rights and obligations of labor and management and management matters so that employees can fully understand and protect their rights and interests.
(d) In accordance with the provisions of the Labor Safety and Health Act, employee health checkups are regularly conducted. Labor safety and health personnel are appointed to formulate various labor safety and health management rules to avoid accidents and maintain employee safety.

5.5.1.9 Implementation of Measures to Protect Employee Rights: Sound.

The company has always attached great importance to employee rights and provided reasonable treatment. In the past five years, the voluntary quitting rate has remained below 0.08%, which fully demonstrates that the company is committed to employee care and workplace safety.

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5.5.2 Losses arising as a result of labor disputes in the most recent year up to the date of publishing of this annual report, and disclosure of potential losses in the current and future terms and countermeasures: None.

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5.6 Important Contracts

Nature of Contract	Party	Contract start/end date	Main Content	Restrictive Clauses
Distributor Contract	Taiwan Power Company	Since December 1992	Selling excessive power of Chiayi plant to Taiwan Power Company	If no objections, effective every year.
	Taiwan Power Company	Since March 1995	Selling excessive power of Shulin plant to Taiwan Power Company	If no objections, effective every year.
	Taiwan Power Company	Since August 30th, 1997	Selling excessive power of Jinxing plant to Taiwan Power Company	If no objections, effective every year.
Technology Cooperation Contract	Eastman Chemical Company	2004.02~2024.06	Co-polyester PETG resin, development of non-PVC semi-rigid film	Limited for PVC film machine
	Sharp Corporation of Japan	2019.12~2020.12	Optical film technology cooperation for high-end displays	When the contract expires, the validity period can be automatically extended for one year.
	Armstrong Flooring Corporation	Since July 1983	Non-asbestos floor tile manufacturing equipment and technology transfer	Export must be handled by technicians and the contract is valid
	Davy Process Technology Ltd. Dow Global Technology Inc.	2008.10~2033.10	Selector30 production technology and basic engineering design for shifting the Oxo reaction of 2-Ethylhexanol plant.	Technology transfer is not allowed
	Idemitsu Kosan Co., Ltd.	2004.07~2019.07	BPA production technology transfer. (Second Set)	Technology transfer is not allowed
	Idemitsu Kosan Co., Ltd.	2019.08~2034.08	BPA technology licensing contract (Ningbo BPA Phase 2 Expansion)	Technology transfer is not allowed
	Mitsui Kinzoku	2013.05~2022.04	Ultra-thin copper foil downstream processing patent authorization	1. Technology transfer is not allowed 2. Product sales are limited to outside of Japan
	Fuji Electric Co., Ltd.	Since March 2011	Vacuum contactor (VCS) manufacturing technology transfer	Sales are limited to Taiwanese companies and related overseas companies. Other regions need to be negotiated on a case-by-case basis.
	Akaoka Chemical Co., Ltd.	2010.09~2020.09	Molded Transformer (MTR) technology transfer	Only for sales outside Japan
	PPG Industries Industrial Company	Since September 2016	Glass fiber exclusive authorization contract (PFC Fiber Glass and PFC Kunshan)	If no objections, effective every year.
	NGK Spark Plug Co., Ltd.	2020.01~2028.12	Flip chip package carrier product technical cooperation	-

172

Nature of Contract	Party	Contract start/end date	Main Content	Restrictive Clauses
	IBM (International Business Machines Corporation)	2016.11~2020.05	Joint development of advanced technology of flip chip package carrier products	-
Long-term Loan contracts	Bank of Ta0069wan	2013.11~2021.04	Improve financial structure and enrich working capital.	In the credit duration, the debt-guarantor’s year-end debt asset ratio shall not exceed 150% and the working capital ratio shall not be less than 100%. This shall be subject to the annual CPA certification.
	MUFG Bank	2017.03~2019.03	Improve financial structure and enrich working capital.
	Bank of Taiwan	2018.07~2021.07	Improve financial structure and enrich working capital.	-
	KGI Bank	2019.04~2022.04	Improve financial structure and enrich working capital.	-
	CTBC Bank (Note 1)	2017.09~2020.02	Improve financial structure and enrich working capital.	-
	Mizuho Bank, Ltd.	2018.07~2020.07	Improve financial structure and enrich working capital.	-
	CHB (Note 2)	2017.08~2020.07	Nan Ya Printed Circuit Board Corp. (Kunshan) applied for long-term loans.	-
	Hua Nan Bank (Note 2)	2017.08~2020.07	Nan Ya Printed Circuit Board Corp. (Kunshan) applied for long-term loans.	-
	Bank of China (Note 3)	2017.07~2020.07	Nan Ya Printed Circuit Board Corp. (Kunshan) applied for long-term loans.	-

Note 1: This long-term loan has paid off the remaining principle in advance in June 2019. Note 2: This long-term loan has paid off the remaining principle in advance in October 2019. Note 3: This long-term loan has paid off the remaining principle in advance in July 2019.

173

VI. Financial Information

6.1 Five-Year Financial Summary

1. Condensed Statements of Financial Position and Comprehensive Income– by IFRSs

(1) Condensed Statements of Financial Position – Consolidated by IFRSs

		Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item		Five-Year Financial Summary`（`Note1`）`					Financial Information ending March 31, 2020 (Note 3)
		2019	2018	2017	2016	2015
Current assets		187,476,346	210,274,541	212,066,791	217,478,209	199,737,404	181,106,832
Property, plant and equipment (Note 2)		156,095,364	140,907,261	132,901,898	139,724,458	137,066,328	159,999,014
Intangible assets		2,323,852	2,524,125	2,737,790	2,958,086	112,325	2,274,387
Other assets(Note 2)		208,783,117	216,543,417	196,364,910	177,024,051	176,809,919	197,456,397
Total assets		554,678,679	570,249,344	544,071,389	537,184,804	513,725,976	540,836,630
Current liabilities	Before Dist.	83,516,150	81,791,547	79,681,194	84,918,274	66,602,248	84,712,244
	After Dist.	100,963,957	121,445,655	120,128,384	120,606,971	92,773,959	-
Non-currentliabilities		115,591,829	101,552,805	97,170,436	101,233,064	109,172,502	119,457,784
Total liabilities	BeforeDist.	199,107,979	183,344,352	176,851,630	186,151,338	175,774,750	204,170,028
	After Dist.	216,555,786	222,998,460	217,298,820	221,840,035	201,946,461	-
Equity attributable to theparent	owners of	344,571,884	375,672,197	355,619,860	338,453,114	324,283,742	325,534,933
Common stock		79,308,216	79,308,216	79,308,216	79,308,216	79,308,216	79,308,216
Capital surplus		26,617,834	26,672,119	26,158,472	23,155,633	23,642,467	26,622,115
Retained earnings	Before Dist.	204,105,146	220,788,020	208,480,444	191,296,477	169,705,210	205,110,660
	After Dist.	186,657,339	181,133,912	168,033,254	155,607,780	143,533,499	-
Other equity		34,540,688	48,903,842	41,672,728	44,692,788	51,627,849	14,493,942
Treasury stock		-	-	-	-	-	-
Non-controllinginterest		10,998,816	11,232,795	11,599,899	12,580,352	13,667,484	11,131,669
Total equity	Before Dist.	355,570,700	386,904,992	367,219,759	351,033,466	337,951,226	336,666,602
	After Dist.	338,122,893	347,250,884	326,772,569	315,344,769	311,779,515	-

Note1：Financial Statements from 2015 to 2019 have been audited by KPMG.

Note2：Where asset revaluation took place in a specific fiscal year, the revaluation date and revaluation surplus shall be reported in a footnote.

Note3：During the current fiscal year up to the date of publication of the annual report, a company that is listed on an exchange or has its shares traded on an OTC market shall disclose the most recent financial information audited or reviewed by CPA, if any.

Note4：Earnings distributions for 2019 has not yet been approved by the shareholders’ meeting.

Note5：Financial information as of March 31st, 2020 has been reviewed by CPA.

174

(2) Condensed Statements of Financial Position – Stand-alone by IFRSs

Unit: NT$ thousands

Year Item	Year Item	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Financial Information ending March 31, 2020
		2019	2018	2017	2016	2015
Current assets		96,587,652	116,585,515	110,598,910	119,292,304	99,573,162	We did not prepare stand-alone financial statements for the first quarter of 2020.
Property, plant and equipment (Note 2)		62,826,030	59,292,743	54,710,944	57,198,803	57,055,752
Intangible assets		30,257	34,972	53,054	77,818	102,583
Other assets(Note 2)		358,721,827	362,594,363	333,343,155	307,706,918	300,309,340
Total assets		518,165,766	538,507,593	498,706,063	484,275,843	457,040,837
Current liabilities	Before Dist.	72,889,520	67,022,935	51,537,875	62,586,548	43,986,723
	After Dist.	90,337,327	106,677,043	91,985,065	98,275,245	70,158,434
Non-current liabilities		100,704,362	95,812,461	91,548,328	83,236,181	88,770,372
Total liabilities	BeforeDist.	173,593,882	162,835,396	143,086,203	145,822,729	132,757,095
	After Dist.	191,041,689	202,489,504	183,533,393	181,511,426	158,928,806
Equity attributable to owners of theparent		344,571,884	375,672,197	355,619,860	338,453,114	324,283,742
Common stock		79,308,216	79,308,216	79,308,216	79,308,216	79,308,216
Capital surplus		26,617,834	26,672,119	26,158,472	23,155,633	23,642,467
Retained earnings	Before Dist.	204,105,146	220,788,020	208,480,444	191,296,477	169,705,210
	After Dist.	186,657,339	181,133,912	168,033,254	155,607,780	143,533,499
Other equity		34,540,688	48,903,842	41,672,728	44,692,788	51,627,849
Treasurystock		-	-	-	-	-
Non-controllinginterest		-	-	-	-	-
Total equity	BeforeDist.	344,571,884	375,672,197	355,619,860	338,453,114	324,283,742
	After Dist.	327,124,077	336,018,089	315,172,670	302,764,417	298,112,031

Note1：Financial Statements from 2015 to 2019 have been audited by KPMG.

Note2：Where asset revaluation took place in a specific fiscal year, the revaluation date and revaluation surplus shall be reported in a footnote.

Note4：Earnings distributions for 2019 has not yet been approved by the shareholders’ meeting.

175

(3) Condensed Statements of Comprehensive Income – Consolidated by IFRSs

Unit: NT$ thousands

Year Item	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Financial Information ending March 31, 2020 (Note 2)
	2019	2018	2017	2016	2015
Operatingrevenue	286,303,059	333,061,560	306,139,952	275,294,431	299,781,414	65,557,509
Gross profit	28,137,227	49,063,585	49,967,131	31,399,041	36,355,804	7,520,661
Operatingincome	9,885,385	29,420,773	29,849,625	13,282,862	18,596,532	2,853,831
Non-operatingincome and expenses	16,803,645	32,104,413	32,926,549	40,564,129	25,048,005	-794,231
Income before income tax	26,689,030	61,525,186	62,776,174	53,846,991	43,644,537	2,059,600
Profit from ContinuingOperation	23,209,523	52,658,851	53,974,776	48,713,023	36,081,704	1,177,528
Income (Loss) from Discontinued Operation	-	-	-	-	-	-
Net income(Loss)	23,209,523	52,658,851	53,974,776	48,713,023	36,081,704	1,177,528
Other comprehensive income (net after tax)	-14,584,450	-6,855,471	-4,711,464	-8,673,869	-12,905,297	-20,084,001
Totalcomprehensiveincome	8,625,073	45,803,380	49,263,312	40,039,154	23,176,407	-18,906,473
Net Income attributable to owners of theparent	23,076,123	52,746,021	54,521,016	48,840,267	35,721,346	1,005,514
Net income attributable to non-controllinginterests	133,400	-87,170	-546,240	-127,244	360,358	172,014
Total comprehensive income attributable to owners of theparent	8,608,080	45,930,928	49,852,604	40,827,917	23,428,479	-19,041,232
Total comprehensive income attributable tonon-controllinginterests	16,993	-127,548	-589,292	-788,763	-252,072	134,759
Earningsper share(NT$)	2.91	6.65	6.87	6.16	4.50	0.13

Note1：Financial Statements from 2015 to 2019 have been audited by KPMG.

Note2：During the current fiscal year up to the date of publication of the annual report, a company that is listed on an exchange or has its shares traded on an OTC market shall disclose the most recent financial information audited or reviewed by CPA, if any.

Note3：Loss of discontinued operations shall be reported as the after-tax amount.

Note4：Where the financial information is notified by Regulator that shall be corrected or restated, it shall be reported with the corrected or restated figures as well as indicating the circumstances and reasons.

Note5：Financial information as of March 31st, 2020 has been reviewed by CPA.

176

(4) Condensed Statements of Comprehensive Income– Stand-alone by IFRSs

Unit: NT$ thousands

Year Item	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Five-Year Financial Summary`（`Note1`）`	Financial Information ending March 31, 2020 (Note 2)
	2019	2018	2017	2016	2015
Operatingrevenue	154,799,788	188,909,965	173,402,399	154,864,376	179,864,666	We did not prepare stand-alone financial statements for the first quarter of 2020.
Grossprofit	13,933,923	27,744,060	28,511,689	19,470,915	22,845,716
Operatingincome	2,882,092	15,451,551	15,433,981	7,855,101	11,587,069
Non-operatingincome and expenses	21,681,365	42,369,141	43,415,501	43,660,130	28,668,935
Income before income tax	24,563,457	57,820,692	58,849,482	51,515,231	40,256,004
Profit from ContinuingOperation	23,076,123	52,746,021	54,521,016	48,840,267	35,721,346
Income (Loss) from Discontinued Operation	-	-	-	-	-
Net income(Loss)	23,076,123	52,746,021	54,521,016	48,840,267	35,721,346
Other comprehensive income (net aftertax)	-14,468,043	-6,815,093	-4,668,412	-8,012,350	-12,292,867
Total comprehensive income	8,608,080	45,930,928	49,852,604	40,827,917	23,428,479
Net Income attributable to owners of theparent	23,076,123	52,746,021	54,521,016	48,840,267	35,721,346
Net income attributable to non-controllinginterests	-	-	-	-	-
Total comprehensive income attributable to owners ofthe parent	8,608,080	45,930,928	49,852,604	40,827,917	23,428,479
Total comprehensive income attributable to non-controllinginterests	-	-	-	-	-
Earningsper share(NT$)	2.91	6.65	6.87	6.16	4.50

Note1：Financial Statements from 2015 to 2019 have been audited by KPMG.

Note3：Loss of discontinued operations shall be reported as the after-tax amount.

177

Matters of material significance which affected the comparability of the above-mentioned condensed financial statements: None.
If any untrue statement is found in the condensed financial statements, the issuer and the CPA shall be held liable in accordance with laws.
Names of CPA and audit opinions
(1) Names of CPA and audit opinions for the recent 5 years

Year	CPA Firm	CPA's Name	Auditing Opinion
2015	KPMG Taiwan	Kuo, Hsin-Yi, CPA Peggy Chen, CPA	Modified unqualified opinion
2016	KPMG Taiwan	Kuo, Hsin-Yi, CPA Yu, Chi-Lung, CPA	Unmodified opinion
2017	KPMG Taiwan	Kuo, Hsin-Yi, CPA Yu, Chi-Lung, CPA	Unmodified opinion
2018	KPMG Taiwan	Kuo, Hsin-Yi, CPA Yu, Chi-Lung, CPA	Unmodified opinion
2019	KPMG Taiwan	Kuo, Hsin-Yi, CPA Yu, Chi-Lung, CPA	Unmodified opinion

(2) To meet the internal adjustment of KPMG, we replaced Wu Chiu-Wua and Peggy Chen with Kuo, Hsin-Yi and Peggy Chen as our CPA since the first quarter of 2015.
(3) To meet the internal adjustment of KPMG, we replaced Kuo, Hsin-Yi and Peggy Chen with Kuo, Hsin-Yi and Yu, Chi-Lung as our CPA since the first quarter of 2016.

178

6.2 Five-Year Financial Analysis

1. Financial Analysis – Consolidated by IFRSs

. Financial A	nalysis – Consolidated byIFRSs
Item	Year`（`Note1`）`	Five-Year Financial Summary					Information ending March 31, 2020 (Note 2)
		2019	2018	2017	2016	2015
Capital structure	Debt ratio (%)	35.90	32.15	32.51	34.65	34.22	37.75
	Long-term fund to property, plant and equipment ratio (%)	301.84	346.65	349.42	314.68	316.24	285.08
Liquidity	Current ratio (%)	224.48	257.09	266.14	256.10	299.90	213.79
	Quick ratio (%)	169.93	192.60	208.60	210.45	237.23	158.34
	Times interest earned (times)	14.74	35.39	37.60	32.59	23.50	5.36
Operating performance	Accounts receivable turnover (times)	5.72	5.93	5.84	5.87	5.96	6.07
	Days sales outstanding	63.81	61.55	62.50	62.18	61.24	60.14
	Inventoryturnover (times)	5.70	6.33	6.73	6.58	6.12	5.51
	Accountspayable turnover (times)	15.05	14.87	12.79	13.02	15.42	15.03
	Inventoryturnover days	64.04	57.66	54.23	55.47	59.64	66.21
	Property, plant and equipment turnover (times)	1.93	2.43	2.25	1.99	2.13	1.66
	Total assets turnover (times)	0.51	0.60	0.57	0.52	0.57	0.48
Profitability	Return on total assets (%)	4.36	9.71	10.37	9.54	7.34	0.26
	Return on total equity(%)	6.25	13.97	15.03	14.70	11.23	0.34
	Pre-tax income topaid-in capital ratio (%)	33.65	77.58	79.15	67.90	55.03	2.60
	Net margin (%)	8.11	15.81	17.63	17.69	12.04	1.80
	Earningsper share(NT$)	2.91	6.65	6.87	6.16	4.50	0.13
Cash flow	Cash flow ratio (%)	62.62	66.71	51.63	54.63	94.91	5.93
	Cash flow adequacyratio (%)	101.66	108.20	129.28	142.98	128.75	85.67
	Cash flow reinvestment ratio (%)	1.60	1.76	0.71	2.83	6.37	0.64
Leverage	Operatingleverage	4.29	1.73	3.12	3.53	2.35	3.17
	Financial leverage	1.20	1.06	1.06	1.13	1.11	1.14

Note1 ： The Financial Statements from 2015 to 2019 have been audited by KPMG.

Note2 ： Financial information as of March 31, 2020 has been reviewed by CPA.

Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)

Due to the decrease of net income before tax in 2019 compared with 2018, the times interest earned decreased.
Due to the decrease of net sales in 2019 compared with 2018, the property, plant and equipment turnover decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the return on total assets decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the return on total equity decreased.
Due to the decrease of net income before tax in 2019 compared with 2018, the pre-tax income to paid-in capital ratio decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the net margin decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the earnings per share decreased.
Due to the decrease of operating income in 2019 compared with 2018, the operating leverage increased.

179

2. Financial Analysis – Stand-alone by IFRSs

Item	Year(Note 1)	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Information ending March 31, 2020 (Note 2)
		2019	2018	2017	2016	2015
Capital structure	Debt ratio (%)	33.50	30.24	28.69	30.11	29.05	We did not prepare parent company only financial statements for the first quarter of 2020.
	Long-term fund to property, plant and equipment ratio (%)	708.74	795.18	817.33	737.23	723.95
Liquidity	Current ratio (%)	132.51	173.95	214.60	190.60	226.37
	Quick ratio (%)	99.86	133.15	172.53	159.30	175.51
	Times interest earned (times)	18.10	44.28	47.85	42.29	28.59
Operating performance	Account receivable turnover (times)	7.86	8.95	9.00	8.40	7.86
	Days sales outstanding	46	41	41	43	46
	Inventory turnover (times)	5.95	7.06	7.70	7.07	6.56
	Account payable turnover (times)	12.18	12.65	10.61	10.40	12.86
	Inventory turnover days	61	52	47	52	56
	Property, plant and equipment turnover(times)	2.54	3.31	3.10	2.71	3.06
	Total assets turnover (times)	0.29	0.36	0.35	0.33	0.39
Profitability	Return on total assets (%)	4.58	10.37	11.29	10.58	7.98
	Return on total equity (%)	6.41	14.43	15.71	14.74	11.12
	Pre-tax income to paid-in capital ratio (%)	30.97	72.91	74.20	64.96	50.76
	Net margin (%)	14.91	27.92	31.44	31.54	19.86
	Earnings per share(NT$)	2.91	6.65	6.87	6.16	4.50
Cash flow	Cash flow ratio (%)	47.05	52.72	54.96	53.91	101.15
	Cash flow adequacy ratio (%)	91.85	93.20	118.19	133.20	142.92
	Cash flow reinvestment ratio (%)	-0.88	-0.81	-1.22	1.32	4.69
Leverage	Operating leverage	6.24	1.52	1.48	3.33	2.98
	Financial leverage	1.91	1.09	1.08	1.17	1.14

Note1: The Financial Statements from 2015 to 2019 have been audited by KPMG.

Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)

Due to the decrease of current assets in 2019 compared with 2018, the current ratio decreased.
Due to the decrease of current assets in 2019 compared with 2018, the quick ratio decreased.
Due to the decrease of net income before tax in 2019 compared with 2018, the times interest earned decreased.
Due to the decrease of net sales in 2019 compared with 2018, the property, plant and equipment turnover decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the return on total assets decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the return on total equity decreased.
Due to the decrease of net income before tax in 2019 compared with 2018, the pre-tax income to paid-in capital ratio decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the net margin decreased.
Due to the decrease of net income after tax in 2019 compared with 2018, the earnings per share decreased.
Due to the decrease of operating income in 2019 compared with 2018, the operating leverage increased.
Due to the decrease of operating income in 2019 compared with 2018, the financial leverage increased.

180

The above ratios of financial analysis are calculated based on the following equations:

1. Capital structure

(1) Debt ratio ＝ Total liabilities / Total assets
(2) Long-term fund to property, plant and equipment ratio ＝（ Total equity + non-current liabilities) / Net property, plant and equipment

2. Liquidity

(1) Current ratio ＝ Current assets / Current liabilities
(2) Quick ratio ＝ (Current assets – inventory – prepaid expenses) / Current liabilities
(3) Times interest earned ＝ Net Income before tax and interest expenses / Interest expenses

3. Operating performance

(1) Account receivable turnover (including accounts receivable and notes receivable) ＝ Net sales / Average account receivable (including account receivable and notes receivable) balance
(2) Days sales outstanding ＝ 365 / Receivable turnover
(3) Inventory turnover ＝ Cost of goods sold / Average inventory
(4) Account payable turnover (including accounts payable and notes payable) ＝ Cost of goods sold /Average account payable (including account payable and notes payable) balance
(5) Inventory turnover days ＝ 365 / Inventory turnover
(6) Property, plant and equipment turnover ＝ Net sales / Average net property, plant and equipment
(7) Total assets turnover ＝ Net sales / Average total assets

4. Profitability

(1) Return on total assets ＝ [Net income after tax + interest expense x (1-interest rate)] / Average total assets]
(2) Return on total equity ＝ Net income after tax / Average shareholders’ equity
(3) Net margin = Net income / Net sales
(4) Earnings per share = (Net income - preferred stock dividend) / Weighted average number of shares outstanding

5. Cash flow

(1) Cash flow ratio ＝ Net cash flow provided by operating activities / Current liabilities
(2) Cash flow adequacy ratio ＝ Five-year sum of cash from operations / Five-year sum of capital expenditures, inventory additions, and cash dividend
(3) Cash flow reinvestment ratio = (Cash provided by operating activities - cash dividends) / (Gross property, plant and equipment + long-term investments + other noncurrent assets + working capital)

6. Leverage

(1) Operating leverage ＝ (Operating revenues – variable cost and expense) / Operating Income
(2) Financial leverage ＝ Operating income / (Operating income – interest expenses)

181

6.3 Audit Committee’s Review Report for the Most Recent Year:

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2019 Business Report, Financial Statements, including Consolidated and Individual Financial Statements, and Proposal for Profits Distribution. The CPA firm of KPMG was retained to audit Nan Ya Plastics Corporation’s Financial Statements and has issued an audit report relating to Financial Statements. The Business Report, Financial Statements, and Proposal for Profits Distribution have been reviewed and determined to be correct and accurate by the Audit Committee members of Nan Ya Plastics Corporation. According to the Securities and Exchange Act and the Company Act, we hereby submit this report. Please be advised accordingly.

Nan Ya Plastics Corporation

Chairman of the Audit Committee: Chih-Kang, Wang

March 18, 2020

182

6.4 Consolidated Financial Statements for the Years Ended December 31,

2019 and 2018, and Independent Auditors’ Report:

Please refer to page 215 to page 321 of the Annual Report.

6.5 Stand-Alone Financial Statements for the Year Ended December 31,
2019 and 2018, and Independent Auditors’ Report:

Please refer to page 322 to page 414 of the Annual Report.

6.6 The Company should Disclose the Financial Impact to the Company if the Company and its Affiliated Companies have Incurred any Financial or Cash Flow Difficulties in 2019 and as of the Date of this Annual Report: None.

183

VII. Review of Financial Conditions, Financial Performance, and Risk Management

7.1 Financial Status

Major reasons for changes in assets, liabilities, and shareholders' equity, as well as related effects in the most recent two fiscal years. If such effects are significant, response measures should be elaborated:

			Unit: NT$ thousands	Unit: NT$ thousands
Year Item	2019	2018	Difference
			Amount	`％`
Current Assets	187,476,346	210,274,541	-22,798,195	-10.84
Non-Current Assets	367,202,333	359,974,803	7,227,530	2.01
Total Assets	554,678,679	570,249,344	-15,570,665	-2.73
Current Liabilities	83,516,150	81,791,547	1,724,603	2.11
Non-Current Liabilities	115,591,829	101,552,805	14,039,024	13.82
Total Liabilities	199,107,979	183,344,352	15,763,627	8.60
Capital stock	79,308,216	79,308,216	0	0.00
Capital surplus	26,617,834	26,672,119	-54,285	-0.20
Retained Earnings	204,105,146	220,788,020	-16,682,874	-7.56
Others	34,540,688	48,903,842	-14,363,154	-29.37
Total equity attributable to owners of parent	344,571,884	375,672,197	-31,100,313	-8.28
Non-controlling interests	10,998,816	11,232,795	-233,979	-2.08
Total Stockholders' Equity	355,570,700	386,904,992	-31,334,292	-8.10

Note: The decreased in others was due to the decrease in unrealized gains on financial assets and exchange differences on translation of foreign financial statement.

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7.2 Analysis of Financial Performance

Main reasons that caused the significant changes in operating revenue, operating income and income before tax and its impacts on the most recent two fiscal years:

Financial Performance Comparison/Analysis

Unit: NT$ thousands

Year Item	2019	2018	Difference	`％`
Gross Sales	294,088,363	341,845,212	-47,756,849	-13.97
Less: Sales Returns	1,734,078	1,514,953	219,125	14.46
Sales Allowances	6,051,226	7,268,699	-1,217,473	-16.75
Net Sales	286,303,059	333,061,560	-46,758,501	-14.04
Cost of Sales	258,172,796	284,054,265	-25,881,469	-9.11
Less: Realized profit from affiliated companies	-6,964	-56,290	49,326	-87.63
Gross profit	28,137,227	49,063,585	-20,926,358	-42.65
Operating expenses	18,251,842	19,642,812	-1,390,970	-7.08
Operating income	9,885,385	29,420,773	-19,535,388	-66.40
Non-operating income andgains	21,964,897	36,798,546	-14,833,649	-40.31
Non-operating expenses and losses	5,161,252	4,694,133	467,119	9.95
Profit before income tax	26,689,030	61,525,186	-34,836,156	-56.62
Less: Income tax expenses	3,479,507	8,866,335	-5,386,828	-60.76
Profit	23,209,523	52,658,851	-29,449,328	-55.92

Note:

The decrease in realized profit from affiliated companies was due to the products sold to affiliates during this period were all fully-processed and sold out.
The decrease in gross profit was mainly due to the decrease in sales was greater than cost of sales.
The decrease in operating income was mainly due to the decrease in sales was greater than cost of sales.
The decrease in non-operating income and gains was mainly due to the decrease in share of profit of associates and joint ventures accounted for using equity method.
The decrease in profit before income tax and profit were mainly due to the decrease in sales was greater than cost of sales and share of profit of associates and joint ventures accounted for using equity method.
The decrease in income tax expense was mainly due to the decrease in profit before income tax.

185

Expected sales volume and the basis, possible effects on the company's future financial operations, and response plan:

Please refer to “Business Strategy for 2020” of “I. Letters to shareholders”.

7.3 Cash Flow

Analysis of changes in cash flow, improvement plans for liquidity shortage in the most recent fiscal year, and cash liquidity analysis in the upcoming fiscal year:

Analysis of cash flow changes for the most recent fiscal year:

Unit: NT$ thousands

Cash and Cash Equivalents, Beginning of Year	Net Cash Flow from Operating Activities	Cash Outflow	Cash Surplus (Deficit)	Leverage of Cash Deficit	Leverage of Cash Deficit
				Investment Plans	Financing Plans
52,365,882	52,299,353	61,057,116	43,608,119	－	－

(1) Operating activities:

The net cash inflow from operating activities for this year was NT$ 52,299,353 thousand, which was mainly due to the profit of NT$ 23,209,523 thousand, the receiving of cash dividends of NT$20,260,972 thousand and the decrease in inventory of NT $ 7,166,765 thousand. (2) Investment Activities:

The net cash outflow from investment activities for the year was NT$ 37,413,115 thousand, mainly due to the increase in property, plant and equipment of NT$ 29,483,979 thousand.

(3) Financing Activities:

The net cash outflow from financing activities for the year was NT$ 21,226,234 thousand, mainly due to the issuance of cash dividends of NT$ 39,629,893 thousand and corporate bonds NT$11,381,560 thousand and the increase in long-term borrowings of NT$ 6,133,209 thousand.

Remedy for Cash Deficit and Liquidity Analysis:
(1) There was no cash deficit this year.
(2) The liquidity analysis for the most recent two fiscal years is as follows:

Year Item	2019	2018	Variance (%)
Cash Flow Ratio (%)	62.62	66.71	-6.13
Cash Flow Adequacy Ratio (%)	101.66	108.20	-6.04
Cash Reinvestment Ratio (%)	1.60	1.76	-9.09

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Analysis on increase/decrease in ratio:

(a) Cash flow ratio:

The 2019 annual cash flow ratio was lower than that of the 2018 year, mainly due to the decrease in net cash flow from operating activities of NT$ 2,265,587 thousand and the increase in current liabilities of NT$ 1,724,603 thousand.

(b) Cash flow adequacy ratio:

The 2019 cash flow adequacy ratio was lower than that of 2018, mainly due to the net cash flow from operating activities from 2015 to 2019 increased by NT$ 31,966,771 thousand from 2014 to 2018; the increase in capital expenditure of NT$ 23,243,854 thousand and the increase of NT$ 24,559,903 thousand in cash dividends.

The 2019 cash reinvestment ratio was lower than that of 2018, mainly due to the decrease in net cash flow from operating activities of NT$ 2,265,587 thousand and the increase in gross property, plant and equipment of NT$ 21,278,914 thousand.

Cash liquidity analysis for the coming year:

Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands
Cash and Cash Equivalents, Beginning of Year	Net Cash Flow from Operating Activities	Cash Outflow	Cash Surplus (Deficit)	Leverage of Cash Deficit
				Investment Plans	Financing Plans
43,608,119	32,545,530	32,766,425	43,387,224	`－`	`－`

(1) Operating activities:

It is estimated that the net cash inflow from operating activities in 2020 will be NT$ 32,545,530 thousand as the company's stable profit will generate net cash inflow from operating activities.

(2) Investment Activities:

It is estimated that the net cash outflow of investment activities in 2020 will be NT$15,825,826 thousand, which was mainly due to the increase in expenditures for plant construction, machinery equipment purchase and long-term investments, etc., so that the investment activities are net cash outflows.

(3) Financing Activities:

It is estimated that the net cash outflow of financing activities in 2020 will be NT$ 16,940,599 thousand, mainly due to the issuance of cash dividends and the repayment of long-term borrowings, resulting in net cash outflow from financing activities.

(4) It is expected that there will be no cash deficit in the coming year.

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7.4 Major Capital Expenditure Item

Major Capital Expenditure Items and Source of Capital

Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
				Actual or Expected Capital Expenditure
	Actual or	Actual or
	Planned	Planned	Total
Project							2021 and
	Source of	Date of	Capital	2018	2019	2020
	Capital	Completion					afterward



8th PET Film
production line in		2020.12	1,934,358	19,000	1,215,358	700,000	0
Linkou

4th polyester
release film
		2020.06	399,991	32,300	202,145	165,546	0
production line in

Shulin

5th polyester
release film
		2021.01	790,000	0	100,000	531,786	158,214
production line in

Shulin


Chia Yi 2nd Plant
	Bank loans	2020.06	1,187,788	662,630	132,526	37,632	0
Synthetic Paper	or
	self-capital

Expansion of LFT
machines of
Hsin-Kang		2021.01	237,056	0	0	164,800	72,256
Engineering
Plastics Plant


Copper Foil 4th
		2021.01	7,998,238	354,499	998,311	3,243,831	3,401,597
Plant(Hsin-Kang)


Copper Clad
Laminate Second		2021.12	4,914,982	0	177,363	400,012	4,337,607
Plant(Huizhou)

Glass Fiber Cloth
		2021.09	4,056,756	0	4,648	450,993	3,601,115
Plant(Huizhou)


	Capital
Expansion of
	increased by
Circuit Board in		2019.07	12,789,535	1,497,099	1,272,067	0	0
	cash of
Jinxing plant(3rd)
	subsidiary

	Capital
Expansion of IC
	increased by
Substrate in		2021.05	3,720,522	0	0	3,602,477	118,045
	cash of
Kunshan
	subsidiary


PVC Leather in
		2020.12	1,598,275	186,800	1,296,585	99,675	0
Nan-Tong Plant


Aluminum
Metalized Film in		2020.06	802,437	3,206	546,794	252,437	0
Nan-TongPlan
	Bank loans
The 2nd phase of
	or	2021.10	5,589,884	4,623	177,218	1,866,340	3,541,703
BPA in Ningbo
	self-capital

Flexible PVC
Sheeting in US		2021.11	648,486	0	0	0	648,486
Texas

Ethylene Glycol in
		2020.07	38,274,048	8,299,416	16,453,114	10,399,149	0
US Texas

Note ： We will timely adjust the purchase schedules of machinery equipment in accordance with whole economic trend and the needs of new products and new technologies.

188

2. Expected Benefits

(1) Expected sales, production volumes, value and gross profit

		Production		Sales Value	Gross Profit
			Sales Volumes
Year	Item	Volumes		(NT$ 100	(NT$ 100
			(Ton/Year)
		(Ton/Year)		millions)	millions)

	8th PET Film
2021	production line in	14,400	14,400	12.0	4.3
	Linkou
	4th polyester
		120,000	120,000
	l fil
2021	reease m	thousands	thousands	9.0	1.7

	production line in	square meter	square meter
	Shulin

	5th polyester
		123,600	123,600

2021	release film	thousands	thousands	9.4	2.5

	production line in	square meter	square meter
	Shulin


2020	Chia Yi 2nd Plant	21,600	21,600	16.2	2.9

	Synthetic Paper
	Expansion of LFT
	machines of
2021	Hsin-Kang	4,800	4,800	3.3	0.7
	Engineering
	Plastics Plant

2021	Copper Foil 4th	18,000	18,000	60.4	13.6

	Plant(Hsin-Kang)
	Copper Clad	13,200

2021	Laminate Second	thousands	13,200	86.5	13.6

	Plant(Huizhou)	sheet	thousands sheet


2021	Glass Fiber Cloth	117,000	117,000	24.4	3.9
		kil	kil
	Plant(Huizhou)	ometer	ometer
	Expansion of

2020	Circuit Board in	379	379	29.7	3.7
		hd f	hd f
	Jinxing plant	tousans st	tousans st

	Expansion of IC

2021	Substrate in	271	271	16.7	2.6
		hd f	hd f
	Kunshan	tousans st	tousans st

		9,000

2020	PVC Leather in	thousands	9,000	13.5	2.1

	Nan-Tong Plant	yard	thousands yard

	Aluminum	13,536	13,536
2020	Metalized Film in	thousands	thousands	13.4	2.0
	Nan-TongPlan	square meter	square meter

2022	The 2nd phase of	130,000	130,000	93.7	19.25

	BPA in Ningbo
	Flexible PVC
2022	Sheeting in US	14,400	12,000	8.4	1.0
	Texas

2020	Ethylene Glycol	828,000	828,000	142.9	45.7

	in US Texas

(2) Other Benefits(Such as product quality、pollution prevention、cost reduction etc.): None.

189

7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses,

Improvement Plans and Investment Plans for the Coming Year

Remarks Item	Amount (NT$ thousands)	Policies	Reasons for Gain or Loss	Action Plan	Future Investment Plan
Formosa Synthetic Rubber Corp.	46,000	Long-term investment	Increase working capital and improve the financial construction	None	None
Formosa Resources Corp. (reinvest Formosa Steel IB Pty., Ltd.)	1,570,000	Long-term investment	Reinvestment company Formosa Steel IB Pty Ltd and the Australian iron miner FMG Group jointly invest in the Iron Bridge iron miner project is under construction currently	None	Invest in stages according to the company's capital needs
FG INC	231,570	Long-term investment	The project continues according to the plan	None	Invest in stages according to the company's capital needs
Nan Ya Plastics (Hong Kong) Co., Ltd. (reinvest Nan Ya Electronic Materials (Huizhou) Co., Ltd.)	4,308,591	Long-term investment	Expand capacity and increase profitability	None	None

7.6 Analysis of Risk Management

Interest rate, foreign exchange rates, and inflation rate changes in the most recent year, up to the publication date of this annual report, that can affect the company's revenue and future response measures:
(1) Interest rate:
- In terms of long-term liabilities with a floating interest rate (including long-term corporate bond bearing interest at floating rates), the Company will carefully assess the financial market situation and sign an interest rate swap contract with the bank when the interest rate is relatively low to avoid the risk of interest rate fluctuation.
(2) Foreign exchange rates: Insufficient funds for foreign exchange in daily operations are addressed by making spot foreign exchange or forward foreign exchange purchases when the exchange rate is favorable. Long-term foreign currency liabilities are addressed by signing long-term forward foreign exchange contracts or cross-currency swaps with the banks when the exchange rate is relatively low to minimize the impact of exchange rates on revenue and profits.
(3) Inflation Status:
- According to Directorate –General of Budget, Accounting, and Statistics, Executive Yuan, R.O.C. (Taiwan), the CPI change rate in 2019 was 0.56%, and the CPI change rate (less food and energy) was 0.50%. The inflation risk was low and had no significant influence on the

190

Company's profit and loss.

Policies to high-risk, high-leveraged investments, lending or endorsement guarantees, and derivative transactions, main causes of gain or loss in the most recent year up to the publication of this annual report, and future response measures:
(1) High-risk, high-leveraged investments:

The Company mainly invests in the petrochemical industry, which is a mature and stable industry with low risks. The company has always maintained stable operations and a sound financial structure. It does not engage in any high-leveraged investment.

(2) Lending:

In principle, the Company only issues loans to affiliated companies. The amount is in accordance with Article 15 of Company Act and “Procedures for Loaning Funds to Other Parties” of the Company and granted with the approval of the Board of Directors. Since purposes of loans are mostly short-term fund scheduling, and the borrowers are the parent company, subsidiaries, and affiliated companies, no bad debt loss has occurred.

(3) Endorsement guarantees:

The company only endorses and guarantees the parent company, subsidiaries, affiliated companies, or invested companies whose endorsement guarantees are made by each shareholder in accordance with its shareholding ration due to joint investment. The endorsement guarantee is mostly for funding guarantee; relevant procedures are handled in accordance with “Procedures for Providing Endorsements and Guarantees to Other Parties” of the Company and granted with the approval of the Board of Directors. There has never been losses due to endorsement guarantees.

(4) Derivative transactions:

The Company's various derivative transactions are for the purpose of avoiding market risks caused by fluctuations in foreign exchange rates and interest rates. In addition, they are not used for arbitrage and speculation. Execution is based on the relevant regulations and International Financial Reporting Standards (IFRS) promulgated by the regulator. It is equally based on the “Procedures for Engaging in Derivatives Transactions of the Company” and the “Foreign Exchange Trading and Risk Management Measures” defined by the Company. The Company's various derivative transactions are all conducted by financial department of Group Administration. To comply with the risk control principles which the functions of dealing, confirmation and settlement of derivatives transactions shall be performed by different personnel, the Company set up foreign exchange transaction group and risk management group in the financial department. After foreign exchange transaction group complete the transactions, relevant transaction details would be reviewed by risk management group and other financial institutions and only then settlement would be conducted. Once any abnormal transactions was found, solutions should be planned and submitted to the highest supervisor of financial department. The improvement should be followed up.

In accordance with risks and periods of derivative and adopt long-term credit rating as an indicator, counterparties should be applicable to different credit rating to avoid default risk caused by abnormal credit. In

191

addition, it should be reviewed every 6 months to avoid losses due to any default risk.

The Company also set up an internal auditing department individually apart from financial department of Group Administration. In addition to review every outcome and appropriateness of hedging transactions, the internal auditing department prepare audit reports and submit to the supervisors. The follow-up improvements would be kept supervising.

Future Research and Development (R&D) Plans and Corresponding Budge

R&D product project	Unfinished current progress	Must be reinvested Research and development expenses from 2020 (NT$1,000)	Time expected to complete mass-production	Main factors affecting the success of R&D in the future
Development of easy clean, antibacterial and flame resistant ARES wall covering	Cooperate with DuPont proofing, physical property evaluation	5,000	2020.6	Cost and market
Development of railway car interior decoration film	Developed PVC materials for customer surface processing, blister molding, environmental testingand verification	5,000	2020.12	Quality and machining
Development of SHARP Quantum Dot film	QD technology transfer and cooperative development of Sharp, NSM company	10,000	2020.6	Quality , cost and market
Development of automotive cover film	Development of modified polymer plasticizer formula film	6,000	2020.12	Quality , cost and market
Aluminum plastic film	Addition of processing laminating machine, self-developed polyester adhesive and PO adhesive	12,000	2020.6	Quality and cost
Development of 5G high frequency copper clad laminated cushion pad	Machine equipment addition and testing	8,000	2020.12	Quality and market

192

R&D product project	Unfinished current progress	Must be reinvested Research and development expenses from 2020 (NT$1,000)	Time expected to complete mass-production	Main factors affecting the success of R&D in the future
PE pipe for underground fire protection service	Apply to the National Fire Agency, Ministry of the Interior for fire review	11,105	2020,12	Quality and cost
Halogen-free Low loss NPG-182 material development	Formula and process condition testing and evaluation	1,200	2020.03	Acquisition of key raw materials and improvement of processing technology
Halogen-free Ultra low loss NPG-188 material development	Formula and process condition testing and evaluation	1,500	2020.06	Acquisition of key raw materials and improvement of processing technology
Halogen-free high Tg low loss NPG-190BH material development	Formula and process condition testing and evaluation	1,900	2020.09	Acquisition of key raw materials and improvement of processing technology
Halogen-free high Tg low loss NPG-178 material development	Formula and process condition testing and evaluation	1,600	2020.09	Acquisition of key raw materials and improvement of processing technology
Hydrocarbon material development (High thermal conductivity)	Formula and process condition testing and evaluation	2,000	2020.03	Acquisition of key raw materials and improvement of processing technology
Bismaleimide resin development	Synthetic formula research, customer evaluation and certification	1,000	2020.12	Bismaleimide synthesis technology
Flame Retardants Containing P-N development	Synthetic formula research, customer evaluation and certification	2,000	2020.12	Key raw material acquisition and processing technology enhancement
High strength 50~90µm fiberglass cloth	Evaluation of product performance, Customer certification	1,000	2020.09	Technology of surface treatment and spreading

193

R&D product project	Unfinished current progress	Must be reinvested Research and development expenses from 2020 (NT$1,000)	Time expected to complete mass-production	Main factors affecting the success of R&D in the future
Low dielectric 20~90µm fiberglass cloth	Evaluation of product performance, Customer certification	1,500	2020.12	Technology of surface treatment and spreading
Development of copper foil for ultra high-frequency substrates	Product performance assessment, Improved heat resistance	950	2020.12	Surface roughening treatment technology
Development of ultra thick copper foil with low roughness	Equipment installation	1,000	2020.12	Formula control technology and mass production
High-capacity lithium battery copper foil	Formula development is complete and pending On-site trial production	3,000	2020.12	Mass production, processability and inspection technology
Ultra-fine yarn sizing ingredient development	Customer test ongoing	4,200	2020.08	Formula ratio, Optimum production conditions
Development of solid state polycondensation pellets for Bottle to Bottle	Customers’ approval	3,000	2020.12	Pass beverage brand’s certification
Development of textiles recycled technology by chemical recycling process	Evaluation and development of chemical recycling process.	3,000	2020.12	Pass textile brand’s certification
Improvement of solid state polycondensation reaction rate for Titanium catalyst pellets	Commercial test in polymer lines	2,000	2020.09	Pass Japanese customer’s certification
Development of bottle- grade pellets for high brightness & fast reheat bottle	Commercial test in polymer lines	2,000	2020.09	Pass beverage brand’s certification

194

R&D product project	Unfinished current progress	Must be reinvested Research and development expenses from 2020 (NT$1,000)	Time expected to complete mass-production	Main factors affecting the success of R&D in the future
Development of bottle- grade pellets for high transparency cosmetic container	Commercial test in polymer lines	2,000	2020.09	Pass Japanese customer’s certification
Recycled conjugate staple fiber	Continue to improve the quality	200	2020.06	Polymer viscosity
PTT/recycled PET conjugate staple fiber	Continue to improve the quality	400	2020.05	Viscosity and ratio of polymer
Recycled low melt staple fiber	Continue to improve the quality	300	2020.06	Adjustment of polymer constitution
Recycled DTY with hydrophilic performance	Formula research and customer evaluation	400	2020.10	Formula and processability
Deep dye cationic dyeable DTY	Formula research and customer evaluation	500	2021.02	Formula and processability
Recycle version biodegradable DTY	Formula research and customer evaluation	500	2020.11	Formula and processability
Double draw woolly	Elasticity improvement	300	2020.08	Processability
Conductive filament	Production yield improvement	100	2020.12	Conductive chip
Textile-recycled DTY	Uneven color shade	150	2021.05	Recycled textile purification
Recycle version micro-fiber filament	Production yield improvement	100	2020.12	Chip and spin yarn filtration
12 kV VCB panel type test	In preparation	19,574	2020.06	Quality certification
2000kVA wound core die-cast transformer (MTR) development	In preparation	3,500	2020.07	Quality certification

195

Important domestic and international policy and regulatory environment: changes that has an impact on the company's finances in the most recent year up to the publication of this annual report, and future response measures:

The Company closely monitors all domestic and foreign governmental policies and regulations that might impact the Company’s business and financial operations and arranges personnel to receive professional training as needed. During the period of 2019 to February 29, 2020, the following changes or developments in governmental policies and regulations may influence the Company’s business and financial operations:

(1) Amendments to the Statute for Industrial Innovation, made on July 24, 2019, were mostly concerned with extending the tax benefits for research and development (R&D) investments to the end of 2029, and introducing regulations such as allowing investment expenditure to be listed as deductions to undistributed earnings. The Company will use such amendments as references for filing R&D and investment expenses to benefit from related tax exemptions.
(2) The Management, Utilization, and Taxation of Repatriated Offshore Funds Act, announced on July 24, 2019, is mostly concerned with the investment income derived from an offshore invested enterprise that profit-seeking enterprises have applied for repatriation for use toward substantial investments and meet other conditions including 25% cap on financial investment and cannot be used for acquisition of real property. Tax benefits including 8% tax rate in the first year, 10% tax rate in the second year, and a 50% refund of the tax paid upon completing the substantial investment can be applied toward such funds. The Company will apply for repatriation of investment income derived from an offshore invested enterprise pursuant to relevant regulations when necessary based on the business and financing status of the Company and its offshore invested enterprises.
Risks associated with changes in technology and industry in the most recent year up to the publication of this annual report, and future response measures: None.
Changes in corporate image and impact on company’s crisis management in the most recent year up to the publication of this annual report, and future response measures: The Company followed the philosophy of “trustworthiness, to aim at the sovereign good, perpetual business operation and dedication to the society”. In the future, we will keep carrying out the philosophy and devoting more resources to the society.
Risks associated with mergers and acquisitions in the most recent year up to the publication of this annual report: None.
Risks associated with capacity expansion in the most recent year up to the publication of this annual report: Please refer to “7.4 Major Capital Expenditure Item” of “Chapter 7 Review of Financial Conditions, Financial Performance, and Risk Management”: None.

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Risks associated with sales concentration and purchase in the most recent year up to the publication of this annual report, and future response measures:
(1) Purchase:
- Most of the Company's main raw materials are sourced from the Formosa Plastics Group or the internal vertical integration supply. Therefore, the source, quality, and delivery date are under good control. However, if a company in the group or a division in the Company arranges annual repair or has an equipment failure, it will have to cooperate with the repair schedule or reduce production. In order to respond to customer orders, it is necessary to import raw materials to make up for any shortcoming. If the petrochemical raw materials market is at a high level, there will be the risk of being forced to import high-priced raw materials in order to meet production needs. Fortunately, the Company maintains good relations with major suppliers and diversifies the procurement areas, so the risks are still acceptable by the Company.
(2) Sales:

In the future, global economic will still be affected by multiple factors like China-US trade war, cross-strait relations, the fluctuation of oil price, etc. Paying close attention to the trend of industrial relocation in order to diversify the sales area. In addition, increase the proportion of direct sales and distributors in other parts of the world. Using Taiwan as an operation center to integrate the resources of domestic and overseas transfer companies. Besides dividing the risk of concentrated distribution and arranging the best mix of production and sales, supplemented by e-commerce and on-line marketing to enhance overall competitiveness.

Effects of, risks relating to and response to large share transfers or changes in shareholdings by directors, supervisors, or shareholders with shareholdings of over 10%: None.
Risks associated with changes in management, and future response measures: None.
If there has been any substantial impact upon shareholders' equity or prices for the company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving a company director, supervisor, general manager, de facto responsible person, or major shareholder with a stake of more than 10%, and the matter was finalized or remained pending, the prospectus shall disclose the information:
(1) The Company versus DBTEL Incorporated (formerly known as DBTEL)
- (a) Disputes:
  - The Company's liquid crystal display products customer, DBTEL Incorporated, started placing orders of LCD from May, 2003. In June, 2004, it unilaterally canceled part of orders, causing the Company's raw materials and finished goods to be stored in the company's warehouse. Due to DBTEL Incorporated continuous delay delivery time and even refusal to receive the goods, resulting in the loss of account receivable and value of inventories.

197

(b) The target amount: US$ 5,409,815 and NT$ 100,846,141.
(c) The commencement date of the lawsuit: April 6th, 2006.
(d) Major litigants: Nan Ya Plastics Corp., DBTEL Incorporated.
(e) Current situation:
1 On April 22th, 2020, Taiwan High Court ruled that the second judgment ordering the payment of more than US$ 5,395,363 of principal and interest, namely NT$ 100,846,141 of principal and interest, and the provisional execution to be abolished. Nan Ya Corp.’s suit in the first instance and the statement of provisional execution were dismissed; the rest of appeals were dismissed.
For remedies, the Company will assess whether to appeal against the statement with regards to loss part of the Company’s second judgment (namely DBTEL Incorporated does not need to pay US$ 14,452 to the Company) after receiving the verdict.

(2) Taixi villagers filed a civil litigation

(a) Reason:

74 people, including Zhang Shufen, a native of Taixi, claimed that gas emissions from Mailiao Industrial Complex caused a total of 29 persons in their families to die or suffer from cancer. In a result, they claimed for damages with the Company and other 4 companies.

(b) Target amount: NT$ 70,176,986.
(c) The commencement date of the lawsuit: August 13th, 2015.
(d) Current situation:

Since there was no legal provision in the regard of plaintiff’s claim, the Company has actively put forward a favorable defense. The case is currently been adjudicated by Taiwan Yunlin District Court.

(3) The Company versus Lin Fengyi
(a) Reason:

The plaintiff Lin Fengyi claimed for damages with the Company. He claimed that the employees of the Company and the co-defendants Pan Qinling, Li Xueqin and Tai Ya Enterprise Co., Ltd. jointly defrauded the plaintiff, causing the plaintiff to suffer the damage of NT$ 315 million. The original claim was that during October, 2016, the co-defendant Pan Qinling borrowed money from the plaintiff on the grounds that he purchased the "PVC compounds" from the Company. In November, 2016, he claimed that the price of "PVC compounds" would rise due to Trump was elected as the US President. Thus, Pan Qinling defrauded the plaintiff of his money amounted to NT$ 315 million and used the “PVC compounds” as guarantee. The plaintiff claimed that the employees of the Company cooperated with Pan Qinling to jointly defraud the plaintiff and constituted an infringement.

(b) Target amount: NT$ 315 million.
(c) The commencement date of the lawsuit: June 1st, 2017.
(d) Current situation:

Taipei District Court has judged the Company and its employees win the court case at August, 31st 2018. Lin Fengyi appealed from the judgment accordance to law. On April 30th, 2020, Taiwan High Court ruled that the appeal be dismissed and the litigation expenses shall be borne by Lin Fengyi.

198

Other significant risks and future response measures:
(1) The Company's IT system is self-developed, tailor-made for the Company's organization and various systems. Therefore, it emphasizes the division of labor, mutual checks, and balances, such as procurement and outsourcing, fund scheduling, and financial risk control through individual operations and mutual inspections to avoid operational risks. The Company's management computer operating system is divided into six management functions including personnel management, business management, production management, engineering management, material management, and financial and accounting management, which are interconnected and interlocked. After the data is input once, the application can be transmitted at multiple levels to avoid errors, and exceptions are managed. To convert a management report into a "talking report" which can actively display any abnormalities allowed the Company's operation management function has both risk control and management features.
(2) In order to ensure the security and stability of the computer network, prevent the abnormality of the information system and the damage of computer files, strengthen the protection of personal data, effectively control the risk of enterprise information systems, and maintain the continuous operation of the enterprise, we have established relevant administration regulations and processing guidelines for employees to follow, and constructs layer-by-layer control and protection mechanisms to protect application programs, operating systems and computer network. In order to ensure the safe use of information and the establishment of a reliable information environment, our company's information security policy is as follows:
- (a) Comply with government laws and regulations, and popularize awareness of information security.
- (b) Pay attention to risk management and protect data security.
- (c) All the employees must participate, and we pursue continuous improvement.
(3) The globally interconnected Internet makes business activities more flexible and fast, but cyberattacks are rising accordingly. These attacks include causing network services unavailable through creating a large number of network connections, snooping secrets over the network or affecting system service using computer viruses or malicious programs, stealing confidential information through the use of social engineering, or the leakage of confidential information due to insufficient security awareness of employees. In view of these risks, we have planned and arranged adequate security measures, as specified below:
- (a) Adopt a defense-in-depth architecture to prevent network attacks. We build systems such as Intrusion Prevention System (IPS), malicious URL filtering, and Advanced Persistent Threat (APT) Prevention, and establish management and control mechanisms for internet access, e-mail, and personal information leakage.
- (b) Establish mechanisms for physical access control, system login authentication, password control, access authorization and regular vulnerability scan, installing anti-virus software and security patches, controlling document and USB access, and establishing backup mechanisms to enhance endpoint protection.
- (c) Conduct information security education and testing for employees every year to strengthen employees' awareness of cyber security risks.

199

  - (d) Review the security measures and regulations annually, pay attention to the security issues and make the response plan to ensure its appropriateness and effectiveness.

(4) Due to the rapid changes in the attack techniques of hackers, the tactics continue to evolve, thus, we cannot guarantee our information system will not be affected by cyber threats. To mitigate the effects of cyber threats, we have considerable security protection measures and trainings.
The Organizational Structure of Risk Management

Risk Evaluation Items	Risk Management Unit	Risk Review
1. Interest Rate, Changes in Foreign Exchange Rates, and Inflation	President’s Office, Accounting Department, Finance Department, President Office of Formosa Plastics Group	Computer auditing, regular self-inspection, monthly funds meeting, joint meeting of financial executives, Internal Auditing office, the Board of Directors
2. High-risk, high- leveraged investments, lending or endorsement guarantees, and derivative transactions	President’s Office, Finance Department, President Office of Formosa Plastics Group	Computer auditing, regular self-inspection, monthly funds meeting, joint meeting of financial executives, Internal Auditing office, the Board of Directors
3. R&D Plans	President’s Office, Technical Department of various Divisions, Formosa Plastics Group	Production and sales meeting, business performance meeting, research and development project meeting, the Board of Directors, Internal Auditingoffice
4. Changes in important domestic and international policy and regulatory	President’s Office, Management Office and Technical Department of various Divisions, Legal Affairs Office, President Office of Formosa Plastics Group	Production and sales meeting, business performance meeting, the Board of Directors, Internal Auditing office
5. Changes in technology	President’s Office, Management Office of various Divisions, R&D Center, Formosa Plastics Group	Production and sales meeting, business performance meeting, Internal Auditing office, the Board of Directors
6. Changes in corporate image	President’s Office, Management Office of various Divisions, Formosa Plastics Group	Production and sales meeting, business performance meeting, the Board of Directors
7. Merger, acquisition and reinvestment	President’s Office, Management Office of various Divisions, Formosa Plastics Group	Production and sales meeting, business performance meeting, Internal Auditing office, the Board of Directors

200

Risk Evaluation Items	Risk Management Unit	Risk Review
8. Capacity expansion	President’s Office, Plant Office and Management Office of various Divisions, Formosa Plastics Group	Production and sales meeting, business performance meeting, Internal Auditing office,the Board of Directors
9. Purchase and sales concentration	President’s Office, Management Office of various Divisions, Purchasing Department, President Office of Formosa Plastics Group	Weekly market meeting, production and sales meeting, business performance meeting, Internal Auditing office, the Board of Directors
10. Large share transfers or changes in shareholdings by directors, supervisors, or substantial shareholders	President’s Office, Stock Office of the Finance Department	Business management meeting, the Board of Directors
11. Change in management	President’s Office, Formosa Plastics Group	Business management meeting, the Board of Directors
12. Litigation and non-litigation cases	President’s Office, Management Office of various Divisions, Legal Affairs Office	Production and sales meeting, business performance meeting, Internal Auditing office,the Board of Directors
13. Information security	President’s Office, Management Office of various Divisions, Formosa Plastics Group	Business management meeting, Internal Auditing office, the Board of Directors

7.7 Other Significant Issues: None.

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2019.12.31

VIII. Other Special Notes

8.1 Summary of NPC’s Subsidiary

8.1.1. Subsidiary Chart:

8.1.1. Subsid	iary Chart: 2019.12.31	iary Chart: 2019.12.31
	Nan Ya Printed Circuit Board (Kunshan) Co., Ltd. NT$ 5,017,721,000 100.00% PFG Fiber Glass (Hong Kong) Co., Ltd. NT$ 4,495,987,000 75,500 Shares, 100.00% Nan Ya Plastics Corp. USA NT$ 313,920,000 2,400 shares, 100.00% Wen Fung Industrial Co., Ltd. NT$ 214,236,000 18,738,000shares, 100.00% Nan Ya Plastics Corp., America NT$ 7,853,605,000 60,000 shares, 100.00% Nan Ya Printed Circuit Board Corp. NT$ 4,480,417,000 432,745,000 shares, 66.97% PFG Fiber Glass Corp. NT$ 2,648,131,000 100,000,000 Shares, 100.00% Nan Ya Plastics International (Cayman) Ltd. NT$ 18,784,619,000 52,000 shares, 100.00% Nan Ya Plastics (Hong Kong) Co., Ltd. NT$ 39,166,673,000 953,253,000 shares, 100.00% Superior World Wide Trading Co., Ltd. NT$ 33,677,000 14,000 shares, 100.00% Formosa Plastics Group Investment Corp. NT$ 76,859,000 5,000,000 shares, 100.00% Nan Chung Petrochemical Corp. NT$ 1,000,002,000 100,000,000 shares, 50.00% Wenling Technology Corp. NT$ 212,017,000 12,739,000 shares, 100.00% Nan Ya Printed Circuit Board (Hong Kong) Co., Ltd. NT$ 5,020,900,000 1,223,820,000 shares, 100.00% Nan Ya Plastics Corp., Texas NT$ 9,934,980,000 3,000 shares, 100.00% Nan Ya PCB (U.S.A.) Co., Ltd. NT$ 3,479,000 1,000,000 shares, 100.00% Nan Ya Plastics (Xiamen) Co., Ltd. 85% Nan Ya Plastics (Guangzhou) Co., Ltd. 100% Nan Ya Plastics (Nantong) Co., Ltd. 100% China Nantong Huafeng Co., Ltd. 100% Nantong Huafu Plastics Co., Ltd. 100% Nan Ya Electric (Nantong) Co., Ltd. 100% Nan Ya Plastics (Huizhou) Co., Ltd. 100% Nan Ya Electronic Materials (Huizhou) Co., Ltd. 100% Nan Ya Trading (Huizhou) Co., Ltd. 100% Nan Ya Electronic Materials (Kunshan) Co., Ltd. 100% Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd. 100% Nan Ya Plastics (Ningbo) Co., Ltd. 100% PFG Fiber Glass (Kunshan) Co., Ltd. NT$ 4,487,409,000 100.00%





Nan Ya Plastics Corp.		Nan Ya Plastics Corp. USA NT$ 313,920,000 2,400 shares, 100.00%

Note1: NPC is the control company of above mentioned subsidiaries. (The shareholdings and % were as of 2019.12.31) Note2: The investment amount was the original investment cost; unit NT$ thousands.

Note3: The reinvested companies in mainland area were limited companies, non-share companies.

202

Information on investment in Mainland-area of Nan Ya Plastics (Hong Kong) Co., Ltd.

Unit: NT$ thousands

Subsidiaries	Amount Invested	Subsidiaries	Amount Invested
Nan Ya Plastics (Xiamen) Co., Ltd.	738,752	Nan Ya Plastics (Huizhou) Co., Ltd.	2,418,397
Nan Ya Plastics (Guangzhou) Co., Ltd.	1,998,681	Nan Ya Electronic Materials (Huizhou) Co., Ltd.	5,489,509
Nan Ya Plastics (Nantong) Co., Ltd.	3,008,918	Nan Ya Trading (Huizhou) Co., Ltd.	32,267
China Nantong Huafeng Co., Ltd.	99,636	Nan Ya Electronic Materials (Kunshan) Co., Ltd.	15,159,216
Nantong Huafu Plastics Co., Ltd.	71,503	Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd.	7,035,085
Nan Ya Electric (Nantong) Co., Ltd.	339,275	Nan Ya Plastics (Ningbo) Co., Ltd.	1,989,308

203

8.1.2. Subsidiary Information:

2019.12.31 Unit: Thousands

8.1.2. Subsidiary Information:				2019.12.31 Unit: Thousands
Subsidiaries	Date of Incorporation	Address	Capital Stock (Note)	Business Activities
Nan Ya PCB Corp.	1997.10.28	3F., No. 201-36, Dunhua N. Rd., Songshan Dist., Taipei City105, Taiwan(R.O.C.)	NT$ 6,461,655	Production and Selling of Printed Circuit Board and IC Substrate
Nan Chung Petrochemical Corp.	1996.07.09	No.21, Taisu Industrial Park, Mailiao Township, Yunlin County 638, Taiwan (R.O.C.)	NT$ 2,000,000	Production and Selling of Mono-EG, Di-EG, Tri-EG, Nitrogen, Oxygen, Argon, Liquid Oxygen, and Liquid Nitrogen
Wen Fung Industrial Corp.	1973.07.02	No. 118, Nanlin Rd., Taishan Dist., New Taipei City 243, Taiwan(R.O.C.)	NT$ 187,381	1.Production of Electronic Components 2.Wholesale of Electronic Materials
Formosa Plastics Group Investment Corp.	1985.08.31	3F., No. 201-5, Dunhua N. Rd., Songshan Dist., Taipei City105, Taiwan(R.O.C.)	NT$ 50,000	1.Investment 2.Other Investment Related Business
PFG Fiber Glass Corp.	1987.08.31	No.2-1, Zhongyang Industrial Park, Hsinkang Township, Chiayi County616, Taiwan(R.O.C.)	NT$ 1,000,000	Production and Selling of Glass and Glass Products
Wenling Technology Corp.	2003.11.25	No. 118, Nanlin Rd., Taishan Dist., New Taipei City 243, Taiwan (R.O.C.)	NT$ 127,385	Production and Selling of Electronic Components
Nan Ya Plastics Corp. USA.	1979.07.12	9 Peach Tree Hill Road, Livingston, NJ 07039, USA	US$ 12,000	Production and Selling of Rigid PVC Film, A-PET Film and Patio Door
Nan Ya Plastics Corp., America	1989.06.20	9 Peach Tree Hill Road, Livingston, NJ 07039, USA	US$ 300,000	Production and Selling of EG, Polyester Fiber and Flexible PVC Sheeting
Nan Ya Plastics Corp., Texas	2015.05.20	9 Peach Tree Hill Road, Livingston, NJ 07039, USA	US$ 330,000	Production and Selling of EG
Nan Ya Plastics International (Cayman) Ltd.	2016.01.12	Caribbean Plaza, 878 West Bay Road, P O Box 10335, Grand Cayman KY1-1003, Cayman Islands	US$ 52	Investment
Nan Ya PCB (U.S.A.) Corp.	2002.06.13	1761 E. McNair Drive, Suite 101 TEMPE, AZ 85283, USA	US$ 100	Customer Promotion
Nan Ya Plastics (Hong Kong) Co., Ltd.	1990.04.20	Room 707, Citicorp Centre 7/F,18 Whitfield Road, CausewayBay, HongKong	HKD 9,532,531	Selling of Plastics and Electronic Products
Nan Ya PCB (Hong Kong) Co., Ltd	1999.08.04	Room 707, Citicorp Centre 7/F,18 Whitfield Road, CausewayBay, HongKong	HKD 1,223,820	Selling of Electronic Products
Superior World Wide Trading Co, Ltd.	1973.03.30	Room 707, Citicorp Centre 7/F,18 Whitfield Road, CausewayBay, HongKong	HKD 1,400	Plastics Trading

204

Subsidiaries	Date of Incorporation	Address	Capital Stock (Note)	Business Activities
PFG Fiber Glass (Hong Kong) Co., Ltd.	2001.01.08	Room 707, Citicorp Centre 7/F,18 Whitfield Road, CausewayBay, HongKong	HKD 588,900	Investment
Nan Ya Plastics (Xiamen) Co., Ltd.	1994.06.30	No.2 Xin Mei Road, Xinyang Industrial Zone Haicang District of Xiamen City, Fujian Province, China	US$ 28,724	Development and Production of PVC Rigid Pipe and Pipe Fittings
Nan Ya Plastics (Nantong) Co., Ltd.	1996.03.22	No.88 Tongjing Road, Nantong City, Jiangsu Province, China	US$ 150,500	Production and Selling of Flexible PVC sheeting, Rigid PVC film, PVC leather, Paper Tube, Processing and Grinding of PVC Scrap, PU synthetic leather, PP Non-Woven Fabric, Aluminum Film, Plastic Honeycomb Board, Wood Frame Material, PVC film and Electric Power and Steam
China Nantong Huafeng Co., Ltd.	1984.05.11	No.88 Tongjing Road, Nantong City, Jiangsu Province, China	US$ 3,300	Wholesale Sales of PVC Leather and PVC sheet
Nantong Huafu Plastics Co., Ltd.	1993.04.13	No.88 Tongjing Road, Nantong City, Jiangsu Province, China	US$ 2,650	Wholesale Sales of PVC Leather and PVC sheet
Nan Ya Electric (Nantong) Co., Ltd.	2000.10.16	No.88 Tongjing Road, Nantong City, Jiangsu Province, China	US$ 10,000	Production and Selling of Switchgear and components
Nan Ya Plastics (Guangzhou) Co., Ltd.	1994.05.23	No.1Nan Ya Rd., Jiaoxin Village, Shi Men St., Guang Zhou, Guangdong, China	US$ 65,000	Production and Selling of Flexible PVC Sheeting, PVC Leather, Rigid PVC Film, Metallized PVC Film, Pipe Fittings, PVC Compound, Metallized Roll and Rubber Roll
Nan Ya Plastics (Huizhou) Co., Ltd	2000.12.18	Yongshi Boulevard, Shiwan Town, Boluo County, Huizhou City, Guangdong, China	US$ 75,300	Production and Selling of PU Synthetic Leather, Casting PVC, Engineering Plastics and PVC Film
Nan Ya Electronic Materials (Huizhou) Co., Ltd.	2002.11.07	Yongshi Boulevard, Shiwan Town, Boluo County, Huizhou City, Guangdong, China	US$ 176,000	Production and Selling of CCL and Glass Fabrics
Nan Ya Trading (Huizhou) Co., Ltd.	2006.01.10	Yongshi Boulevard, Shiwan Town, Boluo County, Huizhou City, Guangdong, China	US$ 1,000	Import, Export and Wholesale Sales of Materials and Products of Electronic, Plastics and Chemical Fiber
Nan Ya Electronic Materials (Kunshan) Co., Ltd.	2000.08.07	No.201.Chang Jiang South Road, Kunshan Economic and Technical Development Zone, Jiangsu, China	US$ 463,800	Production and Selling of CCL, Copper Foil, Fiber Glass Fabric, Epoxy`、`Electric Power And Steam

205

Subsidiaries	Date of Incorporation	Address	Capital Stock (Note)	Business Activities
Nan Ya PCB (Kunshan) Co., Ltd.	2000.08.07	No.201.Chang Jiang South Road, Kunshan Economic and Technical Development Zone, Jiangsu, China	US$ 156,800	Production and Selling of Printed Circuit Board
PFG Fiber Glass (Kunshan) Co., Ltd.	2001.05.11	No.201.Chang Jiang South Road, Kunshan Economic and Technical Development Zone, Jiangsu, China	US$ 141,000	Production and Selling of Fiber Glass
Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd.	2002.12.12	No.889 Xin Nan Dong Road, Kunshan Economic and Technical Development Zone, Jiangsu, China	US$ 214,000	Production and Selling of Polyester Fiber Goods, Dyeing Machining, Electric Power and Steam
Nan Ya Plastics (Ningbo) Co., Ltd.	2011.01.04	Fpg Ningbo Industrial Park, Ningbo, China	US$ 73,000	Production and Selling of plasticizer and BPA

Note: The origin investment amount as of December 31, 2019; the capital of related parties set up at mainland China is the registered capital.

8.1.3 Shareholders in Common of NPC and Its Subsidiary with Deemed Control and Subordination: None.

8.1.4. Business Scope of NPC’s Subsidiary: Plastics industry, electronic industry, chemical industry, fiber textile and investment business.

8.1.5. Directors, Supervisors and Presidents of NPC’s Subsidiaries

2019.12.31 Unit: shares；%

Name of Subsidiary	Title (Note1)	Name or Representative	Shareholding (Note2) (Note3)	Shareholding (Note2) (Note3)
			Shares	%
Nan Ya PCB Corp.	Chairman	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)	432,744,977	66.97
	Director	Nan Ya Plastics Corp.(Representative: Wen-Yuan Wong)
	Director	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics Corp.(Representative: Fong-Chin Lin)
	Director	Chia-FungChang	692,841	0.11
	Director and President	Ann-De Tang	194	-
	Director(Independent Director)	Cheng-I Wang	0	0
	Director(Independent Director)	De-Ho Jan	0	0
	Director(Independent Director)	Ta-ShengLin	0	0

206

Name of Subsidiary	Title (Note1)	Name or Representative	Shareholding (Note2) (Note3)	Shareholding (Note2) (Note3)
			Shares	%
Nan Chung Petrochemical Corp.	Chairman	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)	100,000,000	50.00
	Director	Nan Ya Plastics Corp.(Representative: Wen-Yuan Wong)
	Director and President	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics Corp.(Representative: Chung-Yueh Shih)
	Director	China Man-made Fiber Corp.(Representative: Kuei-ShiangWang)	100,000,000	50.00
	Director	China Man-made Fiber Corp.(Representative: Hung-YangWu)
	Director	China Man-made Fiber Corp.(Representative: Ping-CingSyu)
	Supervisor	Vacancy	0	0
	Supervisor	Jie-Yi Wang	0	0
Wen Fung Industrial Co., Ltd.	Chairman	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)	18,738,135	100.00
	Director	Nan Ya Plastics Corp.(Representative: Wen-Yuan Wong)
	Director	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics Corp.(Representative: Kuo-Wei Lin)
	Director	Nan Ya Plastics Corp.(Representative: Cheng-ChungLee)
	Supervisor	Nan Ya Plastics Corp.(Representative: Ming-JongYeh)
Formosa Plastics Group Investment Corp.	Chairman	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)	5,000,000	100.00
	Director	Nan Ya Plastics Corp.(Representative: Wen-Yuan Wong)
	Director	Nan Ya Plastics Corp.(Representative: Susan Wang)
	Supervisor	Nan Ya Plastics Corp.(Representative: Ming-JongYeh)
PFG Fiber Glass Corp.	Chairman	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)	100,000,000	100.00
	Director	Nan Ya Plastics Corp.(Representative: Wen-Yuan Wong)
	Director and President	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)
	Supervisor	Nan Ya Plastics Corp.(Representative: Li-Ta Pai)
Wenling Technology Corp.	Chairman	Wen FungIndustrial Co.,Ltd.(Representative: Chia-Chau Wu)	12,738,515	100.00
	Director	Wen FungIndustrial Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director	Wen FungIndustrial Co.,Ltd.(Representative: Chia-FungChang)
	Supervisor	Wen FungIndustrial Co.,Ltd.(Representative: Ming-JongYeh)

207

Name of Subsidiary	Title (Note1)	Name or Representative	Shareholding (Note2) (Note3)	Shareholding (Note2) (Note3)
			Shares	%
Nan Ya Plastics Corp. USA	Chairman	Nan Ya Plastics Corp.(Representative: Wen-Yuan Wong)	2,400	100.00
	Director	Nan Ya Plastics Corp.(Representative: Susan Wang)
	Director and President	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)
	Director	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics Corp.(Representative: Fong-Chin Lin)
	Director	Nan Ya Plastics Corp.(Representative: Kuei-YungWang)
Nan Ya Plastics Corp., America	Chairman	Nan Ya Plastics Corp.(Representative: Wen-Yuan Wong)	60,000	100.00
	Director	Nan Ya Plastics Corp.(Representative: Susan Wang)
	Director and President	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)
	Director	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics Corp.(Representative: Fong-Chin Lin)
Nan Ya Plastics Corp., Texas	Chairman	Nan Ya Plastics Corp.,America(Representative: Wen-Yuan Wong)	3,000	100.00
	Director	Nan Ya Plastics Corp.,America(Representative: Susan Wang)
	Director and President	Nan Ya Plastics Corp.,America(Representative: Chia-Chau Wu)
	Director	Nan Ya Plastics Corp.,America(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics Corp.,America(Representative: Zo-Chun Jen)
Nan Ya Plastics International (Cayman) Ltd.	Chairman	Nan Ya Plastics Corp. (Representative: Chia-Chau Wu)	52,000	100.00
Nan Ya PCB (U.S.A.) Co., Ltd.	Chairman	Nan Ya PCB Corp.(Representative: Ann-De Tang)	1,000,000	100.00
	Director	Nan Ya PCB Corp.(Representative: Chia-FungChang)
Nan Ya Plastics (Hong Kong) Co.,Ltd.	Chairman of the Board of Directors	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)	953,253,077	100.00
	Director	Nan Ya Plastics Corp. (Representative: Fong-Chin Lin)
Nan Ya PCB (HongKong)Co.,Ltd.	Chairman of the Board of Directors	Nan Ya PCB Corp.(Representative: Ann-De Tang)	1,223,820,000	100.00
	Director	Nan Ya PCB Corp.(Representative: Chia-FungChang)
Superior World Wide Trading Co, Ltd.	Chairman of the Board of Directors	Nan Ya Plastics Corp.(Representative: Susan Wang)	14,000	100.00
	Director	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)
	Director	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)

208

Name of Subsidiary	Title (Note1)	Name or Representative	Shareholding (Note2)(Note3)	Shareholding (Note2)(Note3)
			Shares	%
PFG Fiber Glass (Hong Kong) Co., Ltd.	Chairman of the Board of Directors	Nan Ya Plastics Corp.(Representative: Chia-Chau Wu)	75,500	100.00
	Director	Nan Ya Plastics Corp.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics Corp.(Representative: Yao-MingShih)
Nan Ya Plastics (Xiamen) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	85.00
	Vice Chairman	Xiamen HaicangInvestment GroupCo.,Ltd.(Representative: Siao-Jyuan Shen)	-	15.00
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Fong-Chin Lin)	-	85.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Tzong-YangSu)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Guo-MingShang)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
	Supervisor	Xiamen HaicangInvestment GroupCo.,Ltd.(Representative: Yan-FangLyu)	-	15.00
Nan Ya Plastics (Nantong) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Fong-Chin Lin)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Zo-Chun Jen)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Tzong-YangSu)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Shiou-Yeh Sheng)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Yung-FangChang)
	Director and Vice President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Zhen-ShengYeh)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
China Nantong Huafeng Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Fong-Chin Lin)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Shiou-Yeh Sheng)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Zhen-ShengYeh)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)

209

Name of Subsidiary	Title (Note1)	Name or Representative	Shareholding (Note2) (Note3)	Shareholding (Note2) (Note3)
			Shares	%
Nantong Huafu Plastics Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Fong-Chin Lin)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Shiou-Yeh Sheng)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Zhen-ShengYeh)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
Nan Ya Electric (Nantong) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Yong-Cai Cai)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Zo-Chun Jen)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Yung-FangChang)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Zhen-ShengYeh)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
Nan Ya Plastics (Guangzhou) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Fong-Chin Lin)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Tzong-YangSu)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Shiou-Yeh Sheng)
	Director and Vice President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Jhong-Jhih Deng)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
Nan Ya Plastics (Huizhou) Co., Ltd	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Fong-Chin Lin)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Tzong-YangSu)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Shiou-Yeh Sheng)
	Director and Vice President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Si-Cun Yang)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)

210

Name of Subsidiary	Title (Note1)	Name or Representative	Shareholding (Note2) (Note3)	Shareholding (Note2) (Note3)
			Shares	%
Nan Ya Electronic Materials (Huizhou) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Cheng-ChungLee)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Kuo-Wei Lin)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Si-Cun Yang)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
Nan Ya Trading (Huizhou) Co., Ltd.	Chairman and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Cheng-ChungLee)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Kuo-Wei Lin)
Nan Ya Electronic Materials (Kunshan) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Zo-Chun Jen)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Cheng-ChungLee)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Yung-FangChang)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: You-MingKe)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
Nan Ya PCB (Kunshan) Co., Ltd.	Chairman	Nan Ya PCB(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya PCB(HongKong)Co.,Ltd.(Representative: Chia-FungChang)
	Director and President	Nan Ya PCB(HongKong)Co.,Ltd.(Representative: Ann-De Tang)
	Director and Vice President	Nan Ya PCB(HongKong)Co.,Ltd.(Representative: Yong-Ji Lin)
	Director	Nan Ya PCB(HongKong)Co.,Ltd.(Representative: Hong-ZhongChen)
	Supervisor	Nan Ya PCB(HongKong)Co.,Ltd.(Representative: Ruei-Lian Lyu)
PFG Fiber Glass (Kunshan) Co., Ltd.	Chairman	PFG Fiber Glass(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	PFG Fiber Glass(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director and President	PFG Fiber Glass(HongKong)Co.,Ltd.(Representative: Cheng-ChungLee)
	Director	PFG Fiber Glass(HongKong)Co.,Ltd.(Representative: Yao-MingShih)
	Director and Vice President	PFG Fiber Glass(HongKong)Co.,Ltd.(Representative: Sian-Jhih Cai)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)

211

Name of Subsidiary	Title (Note1)	Name or Representative	Shareholding (Note2) (Note3)	Shareholding (Note2) (Note3)
			Shares	%
Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Sin-Yi Huang)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Yang-Doun Chien)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)
Nan Ya Plastics (Ningbo) Co., Ltd.	Chairman	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chia-Chau Wu)	-	100.00
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-Jen Tzou)
	Director and President	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Chung-Yueh Shih)
	Director	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Yu-LungHuang)
	Supervisor	Nan Ya Plastics(HongKong)Co.,Ltd.(Representative: Ming-JongYeh)

Note1: If the subsidiary is a foreign company, the equivalent position shall be listed.

Note2: If the invested company is a corporation, number of shares and percentage of shareholding shall be listed; others shall disclosed the amount and portion of the contribution to the capital.

Note3: If the director or supervisor is a juristic person, the relevant information of representative shall be disclosed.

8.1.6. Operational Highlights of NPC's Subsidiaries:

2019.12.31 Unit: NT$ thousands

Company	Capital	Total assets	Total liabilities	Net worth	Operating revenue	Operating income	Net income	Earnings per share (NT$) (After-Tax)
Nan Ya PCB Corp.	6,461,655	38,313,309	9,088,628	29,224,681	31,093,989	71,315	308,203	0.48
Nan Chung Petrochemical Corp.	2,000,000	3,045,138	705,102	2,340,036	6,757,302	11,918	34,675	0.17
Wen Fung Industrial Co., Ltd	187,381	250,337	50	250,287	0	-129	5,182	0.28
Formosa Plastics Group Investment Corp.	50,000	86,943	70	86,873	0	-72	202	0.04
PFG Fiber Glass Corp.	1,000,000	5,352,938	3,212,834	2,140,104	3,667,819	199,269	182,704	1.83
Wenling Technology Corp.	127,385	158,721	22,968	135,753	158,350	454	1,767	0.14

212

Company	Capital	Total assets	Total liabilities	Net worth	Operating revenue	Operating income	Net income	Earnings per share (NT$) (After-Tax)
Nan Ya Plastics Corp. USA	313,920	2,782,087	920,084	1,862,003	3,772,193	38,770	13,498	5,624.17
Nan Ya Plastics Corp., America	7,853,605	44,238,910	2,655,072	41,583,838	31,666,263	2,090,045	1,454,262	24,237.70
Nan Ya Plastics Corp., Texas	9,934,980	30,747,940	22,182,375	8,565,565	0	-191,370	-745,044	-248,348.00
Nan Ya Plastics International (Cayman) Ltd.	1,741	11,407,974	0	11,407,974	0	0	0	0.00
Nan Ya PCB (U.S.A.) Co., Ltd.	3,479	13,739	0	13,739	23,394	1,047	676	0.68
Nan Ya Plastics (Hong Kong) Co., Ltd.	39,166,673	95,323,639	9,811,840	85,511,799	76,342,258	4,866,703	4,524,884	4.75
Nan Ya PCB (Hong Kong) Co., Ltd.	5,020,900	9,603,190	68	9,603,122	0	-84	-86,474	-0.07
Superior World Wide Trading Co., Ltd.	33,685	781,224	2,979	778,245	12,711	-15,798	60,095	4,292.50
PFG Fiber Glass (Hong Kong) Co., Ltd.	2,407,676	8,498,135	998,821	7,499,314	3,514,922	-71,124	83,276	1,102.98
Nan Ya Plastics (Xiamen) Co., Ltd.	775,457	1,323,652	132,404	1,191,248	1,401,151	115,690	93,803	-
Nan Ya Plastics (Nantong) Co., Ltd.	4,540,736	10,764,202	972,647	9,791,555	6,495,393	312,527	362,886	-
China Nantong Huafeng Co., Ltd.	93,004	332,572	1,812	330,760	0	-1,308	6,880	-
Nantong Huafu Plastics Co., Ltd.	79,111	99,977	6,986	92,991	0	-219	2,596	-
Nan Ya Electric (Nantong) Co., Ltd.	339,275	1,259,266	154,797	1,104,469	585,143	36,839	42,247	-
Nan Ya Plastics (Guangzhou) Co., Ltd.	1,998,681	2,686,342	365,955	2,320,387	2,456,878	-50,065	-17,017	-
Nan Ya Plastics (Huizhou) Co., Ltd	2,527,462	3,509,998	282,912	3,227,086	2,264,616	52,060	104,835	-

213

Company	Capital	Total assets	Total liabilities	Net worth	Operating revenue	Operating income	Net income	Earnings per share (NT$) (After-Tax)
Nan Ya Electronic Materials (Huizhou) Co., Ltd.	5,489,509	11,165,040	4,813,688	6,351,352	10,173,866	327,920	322,453	-
Nan Ya Trading (Huizhou) Co., Ltd.	32,267	58,915	1,159	57,756	7,354	-134	867	-
Nan Ya Electronic Materials (Kunshan) Co., Ltd.	15,159,216	60,820,416	4,414,369	56,406,047	46,874,056	3,872,470	3,272,429	-
Nan Ya PCB (Kunshan) Co., Ltd.	5,017,721	12,785,578	3,196,182	9,589,396	13,831,978	-118,849	-86,812	-
PFG Fiber Glass (Kunshan) Co., Ltd.	4,668,263	8,463,077	754,659	7,708,418	3,514,922	-70,812	90,954	-
Nan Ya Draw-Textured Yarn (Kunshan) Co., Ltd.	7,035,085	6,735,383	6,532,369	203,014	3,170,543	-378,227	-209,593	-
Nan Ya Plastics (Ningbo) Co., Ltd.	2,188,834	6,457,583	4,571,004	1,886,579	11,240,524	591,509	440,322	-
Note1: All subsidiaries shall be disclosed regardless the scale. Note2: If the subsidiaryis a foreign company,the relevant number shall be disclosed base on its 2019 financial report and exchange to NT$. The currency is as follow: Total assets,Total liabilities Operatingrevenue,Operatingincome,Net income (1) 1USD = NT$30.106 1USD = NT$30.924 (2) 1HKD = NT$3.8597 1HKD = NT$3.9646 (3) 1CNY = NT$4.3155 1CNY = NT$4.4844

(2) Affiliated company’s Consolidated Financial Statements: same as NPC’s Financial Statements.

(3) Consolidated Business Reports of Affiliated Enterprises: None.

8.2 Private Placement Securities in 2019 and as of the Date of this Annual Report: None.

8.3 NPC’s Shares Acquired, Disposed Of, and Held by its Subsidiary in 2019 and as of the Date of this Annual Report: None. 8.4 Other Necessary Supplement: None.

8.5 Any Events in 2019 and as of the Date of this Annual Report that Had Significant Impacts on Shareholders’ Right or Share Prices as Stated in Item 3 Paragraph 2 of Article36 of Securities and Exchange Law of Taiwan: None.

214

Stock Code:1303

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2019 and 2018

Address: 101, Shuiguan Road, Renwu Dist., Kaohsiung City 814, Taiwan Telephone: (07)371-1411

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

215

		Contents	Page
1.	Cover Page		215
2.	Table of Contents		216
3.	Representation Letter		217
4.	Independent Auditors’ Report		218
5.	Consolidated Balance Sheets		223
6.	Consolidated Statements of Comprehensive Income		224
7.	Consolidated Statements of Changes in Equity		225
8.	Consolidated Statements of Cash Flows		226
9.	Notes to the Consolidated Financial Statements
	(1)	Company history	227
	(2)	Approval date and procedures of the consolidated financial	227
		statements
	(3)	New standards, amendments and interpretations adopted	227～230
	(4)	Summary of significant accounting policies	230～252
	(5)	Significant accounting assumptions and judgments, and	252～253
		major sources of estimation uncertainty
	(6)	Explanation of significant accounts	253～290
	(7)	Related-party transactions	290～297
	(8)	Pledged assets	297
	(9)	Significant commitment and contingencies	298
	(10)	Losses Due to Major Disasters	299
	(11)	Subsequent Events	299
	(12)	Other	299
	(13)	Other disclosures
		(a) Information on significant transactions	299、303～316
		(b) Information on investees	300、317～319
		(c) Information on investment in mainland China	300、320～321
	(14)	Segment information	300～302

216

Representation Letter

The entities that are required to be included in the combined financial statements of NAN YA PLASTICS CORPORATION as of and for the year ended December 31, 2019 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, NAN YA PLASTICS CORPORATION and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: NAN YA PLASTICS CORPORATION Chairman: Wu, Chia-Chau Date: March 18, 2020

217

Independent Auditors’ Report

To the Board of Directors of NAN YA PLASTICS CORPORATION:

Opinion

We have audited the consolidated financial statements of NAN YA PLASTICS CORPORATION ("the Company") and its subsidiaries (“the Group”), which comprise the consolidated statement of financial position as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2019 and 2018, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“ IFRIC” ) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code” ), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the report of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

218

Key Audit Matters

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

Revenue recognition

How the matter was addressed in our audit

Please refer to note 4(p) "Revenue recognition" for accounting policy related to revenue recognition, and note 6(u) "Revenue" for information related to revenue recognition of the consolidated financial statements.

The operating performance of the Group has an effect on the distribution to its shareholders and stock price. Thus, their financial performance will have an impact on the users of financial statements. Therefore, the veracity and appropriateness of revenue recognition is a key matter when conducting our audit.

Our principal audit procedures included the following:

(1) Assessing the accounting policies and appropriateness of revenue recognition (including sales returns and discounts).
(2) Obtaining the list of the top ten newly-added clients and the list of newly added related parties for the current year, inspecting whether the transaction terms are different for normal clients, and reviewing the Consolidated Company’ s financial position after the reporting period to verify the frequency of the unusual sales returns for the purpose of assessing the appropriateness of revenue recognition.
(3) Selecting a moderate number of samples from sales invoices to verify that the accounts receivable have been recovered and to ensure that the remitter matches the customer for the purpose of assessing the accuracy of revenue recognition.
(4) Performing sales cut-off test on the period before and after the financial position date by vouching relevant documents of sales transactions to determine whether sales income, return, and discounts have been appropriately recognized.
Valuation of inventories

How the matter was addressed in our audit

Please refer to note 4(h) "Inventories" for accounting policy related to valuation of inventories, and note 6(f) "Inventories, net" for information related to valuation of inventories of the consolidated financial statements.

The amount of inventories shall be disclosed by using the lower of cost or net realizable values. Since the net realizable value is influenced by the international raw material pricing, there is a risk that the cost will exceed the net realizable value. Therefore, the valuation of inventories is a key matter when conducting our audit.

219

Our principal audit procedures included the following:

(1) Assessing the appropriateness of inventory valuation policies.
(2) Ensuring the process of inventory valuation is in conformity with the accounting policies.
(3) Understanding the net realizable value used by the management, and the variation of the prices in a period after the reporting date, to ensure the appropriateness of the valuation price.
(4) Assessing whether the disclosure of provision for inventory valuation is appropriate.

Other Matter

We did not audit the financial statements of certain subsidiaries and investee companies, which represented investment in other entities accounted for using the equity method of the Group. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for certain subsidiaries and investee companies, is based solely on the report of other auditors. The financial statements of the aforementioned subsidiaries reflect the total assets constituting 9.8 percent and 9.53 percent of the consolidated total assets as at December 31, 2019 and 2018, respectively; and the total revenues constituting 11 percent and 12.55 percent of the consolidated total revenues for the years ended December 31, 2019 and 2018, respectively . The investment in aforementioned investee companies accounted for using the equity method constituted 14.44 percent and 14.4 percent of the consolidated total assets as at December 31, 2019 and 2018, respectively, and the related share of profit of associated and joint ventures accounted for using the equity method constituted 95.85 percent and 30.19 percent of consolidated total comprehensive income for the years ended December 31, 2019 and 2018, respectively.

The Company has prepared its parent-company-only financial statements as of and for the years ended December 31, 2019 and 2018, on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

220

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

221

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

The engagement partners on the audit resulting in this independent auditors’ report are

Kuo, Hsin-Yi and Yu, Chi-Lung.

KPMG

Taipei, Taiwan (Republic of China) March 18, 2020

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and consolidated financial statements, the Chinese version shall prevail.

222

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (notes 6(a) and (x)) 1110 Current financial assets at fair value through profit or loss (notes 6(b), (x)) 1120 Current financial assets at fair value through other comprehensive income (notes 6(c), (x), and 8) 1150 Notes receivable, net (notes 6(d) and (x)) 1170 Accounts receivable, net (notes 6(d) and (x)) 1180 Accounts receivable due from related parties (notes 6(d), (x) and 7) 1200 Other receivables (note 6(e)) 1210 Other receivables due from related parties (notes 6(e), (x), and 7) 130X Inventories (note 6(f)) 1470 Other current assets Total current assets Non-current assets: 1510 Non-current financial assets at fair value through profit or loss (notes 6(b) and (x)) 1517 Non-current financial assets at fair value through other comprehensive income (notes 6(c) and (x)) 1550 Investments accounted for using equity method (notes 6(g) and 8) 1600 Property, plant and equipment (notes 6(h) and 8) 1755 Right-of-use assets (notes 6(i) and 7) 1782 Intangible assets (note 6(j)) 1812 Technology development expense 1840 Deferred tax assets (note 6(q)) 1915 Prepayments for purchase of equipment 1937 Overdue receivables (note 6(d)) 1975 Net defined benefit asset-non-current (note 6(p)) 1990 Other non-current assets Total non-current assets Total assets	December 31, 2019 Amount % $ 43,608,119 8 4,044,356 1 41,715,821 8 5,557,174 1 36,640,358 7 1,866,001 - 2,237,168 - 5,925,227 1 41,567,752 7 4,314,370 1 187,476,346 34 824,726 - 22,662,110 4 165,109,381 30 156,095,364 28 1,198,549 - 2,293,595 - 30,257 - 5,439,156 1 3,468,440 1 - - 1,865 - 10,078,890 2 367,202,333 66 $ 554,678,679 100	December 31, 2018 Amount % 52,365,882 9 4,017,249 1 44,528,667 8 6,524,088 1 39,237,627 7 2,484,349 - 1,869,037 - 6,117,870 1 49,040,842 9 4,088,930 1 210,274,541 37 1,047,877 - 28,011,349 5 169,871,136 30 140,907,261 25 - - 2,486,740 - 37,385 - 5,519,863 1 2,710,252 - - - 1,040 - 9,381,900 2 359,974,803 63 570,249,344 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (notes 6(l), (x), and (aa)) 2110 Short-term notes and bills payable (notes 6(k), (x) and (aa)) 2170 Notes and accounts payable (note 6(x)) 2180 Accounts payable to related parties (notes 6(x) and 7) 2200 Other payables (note 7) 2280 Current lease liabilities (notes 6(o),(x) , (aa), and 7) 2321 Current portion of bonds payable (notes 6(n), (x) and (aa)) 2322 Current portion of long-term borrowings (note 6(m), (x) and (aa)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2530 Bonds payable (notes 6(n), (x) and (aa)) 2540 Long-term borrowings (notes 6(m), (x) and (aa)) 2570 Deferred tax liabilities (note 6(q)) 2580 Non-current lease liabilities (notes 6(o), (x) , (aa) and 7) 2611 Long-term notes payable (notes 6(m), (x) and (aa)) 2640 Net defined benefit liability-non-current (note 6(p)) 2645 Guarantee deposits 2670 Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to owners of parent (notes 6(r)): 3110 Common Stock 3200 Capital surplus 3300 Retained earnings 3400 Others 36XX Non-controlling interests Total equity Total liabilities and equity	December 31, 2019		December 31, 2018
			Amount %		Amount %
			$ 24,012,100 4 15,392,795 3 9,102,231 2 6,986,969 1 18,539,776 3 197,527 - 4,647,875 1 3,333,333 1 1,303,544 - 83,516,150 15 59,330,786 11 14,751,117 3 13,122,029 2 291,222 - 5,096,417 1 22,183,650 4 712,939 - 103,669 - 115,591,829 21 199,107,979 36 79,308,216 14 26,617,834 5 204,105,146 37 34,540,688 6 10,998,816 2 355,570,700 64 $ 554,678,679 100		21,253,381 4 8,897,747 1 9,496,716 2 8,720,846 1 20,233,152 4 - - 5,946,931 1 6,133,333 1 1,109,441 - 81,791,547 14 52,584,524 9 6,137,472 1 12,639,024 3 - - 7,096,550 1 22,287,385 4 679,464 - 128,386 - 101,552,805 18 183,344,352 32 79,308,216 14 26,672,119 5 220,788,020 39 48,903,842 8 11,232,795 2 386,904,992 68 570,249,344 100

223

See accompanying notes to Consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

4000 Operating revenue (notes 6(u) and 7) 5000 Operating costs (notes 6(f), (p), (v), 7 and 12) 5910 Less: Unrealized (realized) profit from affiliated companies (note 7) Gross profit from operation Operating expenses (notes 6(j), (p), (v), 7 and 12): 6100 Selling expenses 6200 Administrative expenses Total operating expenses Net Operating income Non-operating income and expenses (notes 6(g), (o), (w) and 7): 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for using equity method Total non-operating income and expenses Profit before tax 7950 Less: Income tax expenses (note 6(q)) Profit 8300 Other comprehensive income (loss) (note 6(g) and (r)): 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Less: income tax related to components of other comprehensive income that will not be reclassified to profit or loss Total items that may not be reclassified subsequently to profit and loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Less: income tax related to components of other comprehensive income that will be reclassified to profit or loss Total items that may be reclassified subsequently to profit and loss 8300 Other comprehensive income 8500 Total comprehensive income Profit, attributable to: 8610 Owners of parent 8620 Non-controlling interests Comprehensive income attributable to: 8710 Owners of parent 8720 Non-controlling interests Basic earnings per share (note 6(t)): 9710 Income from continuing operations Income from non-controlling equity 9750 Income attributable to shareholders of the parent	2019 Amount % $ 286,303,059 100 258,172,796 90 (6,964) - 28,137,227 10 9,661,546 3 8,590,296 3 18,251,842 6 9,885,385 4 6,371,567 2 213,753 - (1,620,428) (1) 11,838,753 4 16,803,645 5 26,689,030 9 3,479,507 1 23,209,523 8 (52,911) - (7,787,479) (3) (808,135) - (10,556) - (8,637,969) (3) (5,962,293) (2) 15,812 - - - (5,946,481) (2) (14,584,450) (5) $ 8,625,073 3 $ 23,076,123 8 133,400 - $ 23,209,523 8 $ 8,608,080 3 16,993 - $ 8,625,073 3 Before Tax After Tax $ 3.37 2.93 (0.27) (0.02) $ 3.10 2.91	2018 Amount % 333,061,560 100 284,054,265 85 (56,290) - 49,063,585 15 10,261,727 3 9,381,085 3 19,642,812 6 29,420,773 9 6,635,682 2 1,012,460 - (1,723,469) - 26,179,740 8 32,104,413 10 61,525,186 19 8,866,335 3 52,658,851 16 (768,275) - (3,311,346) (1) (3,383,834) (1) (324,897) - (7,138,558) (2) 441,013 - (22,910) - 135,016 - 283,087 - (6,855,471) (2) 45,803,380 14 52,746,021 16 (87,170) - 52,658,851 16 45,930,928 14 (127,548) - 45,803,380 14 Before Tax After Tax 7.76 6.64 (0.47) 0.01 7.29 6.65

See accompanying notes to Consolidated financial statements.

224

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

					Equity attrib	Equity attrib	Equity attrib	utable to owne	rs of parent	rs of parent							Non- controlling interests Total equity
Ordinary shares		Capital surplus		R	etained earnings				Items o		f	other equity i	n	terest		Total equity attributable to owners of parent
								Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income			Unrealized gains (losses) on available- for-sale financial assets		Gains (losses) on effective portion of cash flow hedges	Gains (losses) on hedging instruments
			Legal reserve		Special reserve	Unappropriated retained earnings
$ 79,308,216 - 79,308,216 - - - - - - - - - - 79,308,216 - - - - - - - - - $ 79,308,216		26,158,472 -	57,873,852 -		86,932,416 -		63,674,176 507,292	(6,026,197) - (6,026,197) - - - - - - 320,901 320,901 - - (5,705,296) - - - - - - (5,866,135) (5,866,135) - (11,571,431)		- 61,239,238		47,691,196 (47,691,196) - - - - - - - - - - - - - - - - - - - - - -		7,729 (7,729) - - - - - - - - - - - - - - - - - - - - - -	- 7,729	355,619,860 14,055,334	11,599,899 367,219,759 (1,172) 14,054,162 11,598,727 381,273,921 - - - - - (40,447,190) - - - 513,647 (87,170) 52,658,851 (40,378) (6,855,471) (127,548) 45,803,380 (238,384) (238,384) - (382) 11,232,795 386,904,992 - - - - - (39,654,108) - - - (54,285) 133,400 23,209,523 (116,407) (14,584,450) 16,993 8,625,073 (250,972) (250,972) 10,998,816 355,570,700
	79,308,216	26,158,472	57,873,852		86,932,416		64,181,468			61,239,238					7,729	369,675,194
	- - - - - - -	- - - - 513,647 - -	5,452,101 - - - - - -
	-	-	-
	- -	- -	- -
	79,308,216 - - - - - - -		63,325,953 5,274,602 - - - - - -
	-		-
	-		-
	$ 79,308,216		68,600,555

See accompanying notes to Consolidated financial statements.

225

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Amortization expense
Net gain on diposal of financial assets
Net loss (profit) on financial assets at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of profit of associates and joint ventures accounted for using equity method
(Profit) loss on disposal of property, plant and equipment
Property, plant and equipment transferred to expenses
Realized profit from affiliated companies
Unrealized foreign exchange profit or loss
Other revenue, overdue dividends and compensation of board and directors
Gain on reversal of impairment loss of property, plant and equipment
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Decrease (increase) in notes receivable
Decrease in accounts receivable (including related parties)
(Increase) decrease in other receivable
Decrease (increase) in inventories
(Increase) decrease in other current assets
Total changes in operating assets
Decrease in notes and accounts payable
(Decrease) increase in other payable
Increase (decrease) in other current liabilities
Decrease in net defined benefit liability
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Proceeds from capital reduction of financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets at amortised cost
Proceeds from disposal of financial assets at fair value through profit or loss
Acquisition of investments accounted for using equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Decrease in other receivables due from related parties
Increase in other non-current assets
Net cash flows used in investing activities
Cash flows from (used in) financing activities:
Increase in short-term loans
Increase in short-term notes and bills payable
Proceeds from issuing bonds
Repayments of bonds
Proceeds from long-term debt
Repayments of long-term debt
(Decrease) increase in other borrowings (long-term notes payables)
Increase (decrease) in guarantee deposits received
Payment of lease liabilities
Decrease in other non-current liabilities
Cash dividends paid
Change in non-controlling interests
Net cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

See accompanying notes to Consolidated financial statements.

226

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Nan Ya Plastics Corporation was incorporated on August 22, 1958, and established its factories in Kaohsiung City. The Company engages in the manufacture and sale of plastic products, polyester fibers, petrochemical products, and electronic materials. It has gone through several capital increases and established many divisions. Currently, the Company has the following divisions: plastics, fiber, petrochemical, electronics, and engineering. It also has 10 manufacturing plants across Taiwan, 1 branch office in Mai-Liao and 1 branch office in Sen-Kong.

(2) Approval date and procedures of the consolidated financial statements:

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 18, 2019.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

are effective for annual periods beginning on or after January 1, 2019.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16 “Leases”	January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019
Amendments to IFRS 9 “Prepayment features with negative compensation”	January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”	January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures”	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

Except for the following items, the Consolidated Company believes that the adoption of the above IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of signification changes are as follows:

(i) IFRS 16“Leases”

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

(Continued)

227

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Consolidated Company applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below,

1) Definition of a lease

Previously, the Consolidated Company determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Consolidated Company assesses whether a contract is or contains a lease based on the definition of a lease, as explained in Note 4(m).

On transition to IFRS 16, the Consolidated Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Consolidated Company applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

2) As a lessee

As a lessee, the Consolidated Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Consolidated Company. Under IFRS 16, the Consolidated Company recognizes right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.

The Consolidated Company decided to apply recognition exemptions to short-term leases of buildings that have a lease term of 12 months or less.

Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Consolidated Company’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at either:

－ their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’ s incremental borrowing rate at the date of initial application – the Consolidated Company applied this approach to its largest property leases; or
－ an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Consolidated Company applied this approach to all other lease.

(Continued)

228

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In addition, the Consolidated Company used the following practical expedients when applying IFRS 16 to leases.

－ Applied a single discount rate to a portfolio of leases with similar characteristics.
－ Adjusted the right-of-use assets by the amount of IAS 37 onerous contract provision immediately before the date of initial application, as an alternative to an impairment review.
－ Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.
－ Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
－ Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
3) Impacts on financial statements

On transition to IFRS 16, the Consolidated Company recognized additional $1,394,800 of right-of-use assets and $624,278 of lease liabilities, the difference was recognized in retained earnings. When measuring lease liabilities, the Consolidated Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 3.10%.

Operating lease commitment on December 31, 2018 as disclosed in the Consolidated Company’s consolidated financial statements Discounted using the incremental borrowing rate on January 1, 2019 Lease liabilities recognized on January 1, 2019	January 1, 2019
	$ 666,080 624,278 $ 624,278

(b) The impact of IFRS issued by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2020 in accordance with Ruling No. 1080323028 issued by the FSC on July 29, 2019:

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3 “Definition of a Business”	January 1, 2020
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”	January 1, 2020
Amendments to IAS 1 and IAS 8 “Definition of Material”	January 1, 2020

The Consolidated Company assesses that the adoption of the abovementioned standards would not have any material impact on its consolidated financial statements.

(Continued)

229

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Effective date New, Revised or Amended Standards and Interpretations per IASB Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between Effective date to an Investor and Its Associate or Joint Venture” be determined by IASB IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” January 1, 2022

Those which may be relevant to the Consolidated Company are set out below:

Issuance / Release
Dates
September 11, 2014

Standards or
Interpretations
Content of amendment
Amendments to IFRS 10 and
IAS 28 “Sale or Contribution
of Assets Between an Investor
and Its Associate or Joint
Venture”
The amendments address an acknowledged
inconsistency between the requirements in
IFRS 10 and those in IAS 28 (2011) in
dealing with the sale or contribution of assets
between an investor and its associate or joint
venture.
The main consequence of the amendments is
that a full gain or loss is recognized when a
transaction involves a business (whether it is
housed in a subsidiary or not). A partial gain
or loss is recognized when a transaction
involves assets that do not constitute a
business, even if these assets are housed in a
subsidiary.

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

(4) Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed by the Financial Supervisory Commission, ROC.

(Continued)

230

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Basis of preparation

Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on a historical cost basis:

(i) Financial instruments at fair value through profit or loss are measured at fair value;
(ii) Fair value through other comprehensive income (Available-for-sale) financial assets are measured at fair value;
(iii) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 6(p).

Functional and presentation currency

The functional currency of each Consolidated Company entity is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’ s functional currency. All financial information presented in New Taiwan Dollars has been rounded to the nearest thousand.

(c) Basis of consolidation
(i) Principle of preparing consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Consolidated Company. The Consolidated Company ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

(ii) List of subsidiaries in the consolidated financial statements:

Investor	The name of subsidiaries	Business activity	Shareholding December 31, 2019 December 31, 2018 Note % 100.00 % 100.00 % 100.00 % 100.00	Shareholding December 31, 2019 December 31, 2018 Note % 100.00 % 100.00 % 100.00 % 100.00
			December 31, 2019 % 100.00 % 100.00
The Company The Company	Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation America	production of plastic products production of plastic, polyester and chemical products		% 100.00 % 100.00

(Continued)

231

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Investor	The name of subsidiaries	Business activity	Shareholding December 31, 2019 December 31, 2018 Note % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 66.97 % 66.97 % 100.00 % 100.00 % 50.00 % 50.00 % 100.00 % 100.00 % 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 1 % 100.00 % 100.00 % - % - Note 1 % 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 % 100.00 % 100.00	Shareholding December 31, 2019 December 31, 2018 Note % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 66.97 % 66.97 % 100.00 % 100.00 % 50.00 % 50.00 % 100.00 % 100.00 % 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 1 % 100.00 % 100.00 % - % - Note 1 % 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 % 100.00 % 100.00
			December 31, 2019 % 100.00 % 100.00 % 100.00 % 66.97 % 100.00 % 50.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % 100.00
The Company The Company The Company The Company The Company The Company The Company The Company The Company Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB (HK) Corporation Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd.	Formosa Plastics Group Investment Corp. Nan Ya Plastics (Hong Kong) Co., Ltd. Superior World Wide Trading Co., Ltd. Nan Ya PCB Corporation Wen Fung Industrial Co., Ltd. Nan Chung Petrochemical Corporation Nan Ya Plastics International (Cayman) Limited PFG Fiber Glass Corporation PFG Fiber Glass (Hong Kong) Corporation Limited Nan Ya PCB (U.S.A.) Corporation Nan Ya PCB (HK) Corporation Nan Ya PCB (Kunshan) Corporation Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Plastics Film (Nantong) Co., Ltd. China Nantong Huafeng Co., Ltd. Nantong Huafu Plastics Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics Film (Huizhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd.	investment plastics and electronic products trading, investment plastics trading, investment production of printed circuit board production of electronic components production of chemical products investment production of glass fiber investment retargeting electronic materials trading, investment production of printed circuit board production of plastic products, steam and electricity production of switch gear and control panel production of plastic products trading trading production of electronic materials, polyester products, steam and electricity production of fiber production of polyester products production of polyester products production of plastic film products production of electronic materials		% 100.00 % 100.00 % 100.00 % 66.97 % 100.00 % 50.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 Note 1 % 100.00 % - Note 1 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 Note 2 % - Note 2 % 100.00

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Investor	The name of subsidiaries	Business activity	Shareholding December 31, 2019 December 31, 2018 Note % 100.00 % 100.00 % 85.00 % 85.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	Shareholding December 31, 2019 December 31, 2018 Note % 100.00 % 100.00 % 85.00 % 85.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
			December 31, 2019 % 100.00 % 85.00 % 100.00 % 100.00 % 100.00 % 100.00
Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Wen Fung Industrial Co., Ltd. Nan Ya Plastics Corporation America PFG Fiber Glass (Hong Kong) Corporation Limited	Nan Ya Trading (Huizhou) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Wellink Technology Corporation Nan Ya Plastics Corporation Texas PFG Fiber Glass (Kunshan) Co., Ltd.	trading production of plastic products production of plastic products and plasticizer production of electronic components production of chemical products production of glass fiber		% 100.00 % 85.00 % 100.00 % 100.00 % 100.00 % 100.00

Note 1： On October 1, 2018, Nan Ya Plastics (Nantong) Co., Ltd and Nan Ya Plastics Film (Nantong) Co., Ltd merged into Nan Ya Plastics (Nantong) Co., Ltd.
Note 2： On October 1, 2018, Nan Ya Plastics (Huizhou) Co., Ltd and Nan Ya Plastics Film (Huizhou) Co., Ltd merged into Nan Ya Plastics (Huizhou) Co., Ltd.

The Company holds fifty-percent voting shares of Nan Chung Petrochemical Corporation (Nan Chung), therefore, the general manager of Nan Chung has been designated by the Company. As the Company has control over the operations of Nan Chung, hence, the Company included Nan Chung as one of its subsidiaries in its consolidated financial statements.

(d) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of the Consolidated Company entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

an investment in equity securities designated as at fair value through other comprehensive income;
a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
qualifying cash flow hedges to the extent that the hedges are effective.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Consolidated Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non controlling interests. When the Consolidated Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future. Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(e) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period ; or
(iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period date.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

An entity shall classify a liability as current when:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period date; or

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) The Consolidated Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period date. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(f) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(g) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Consolidated Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI); or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Consolidated Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Consolidated Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income derived from equity investments is recognized on the date that the Consolidated Company’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date.

3)
Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Consolidated Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Business model assessment

The Consolidated Company makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Consolidated Company management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered as sales for this purpose, and are consistent with the Consolidated Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Consolidated Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Consolidated Company considers the following:

contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable rate features;

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

prepayment and extension features; and
terms that limit the Consolidated Company's claim to cash flows from specified assets (e.g. non-recourse features)
6)
Impairment of financial assets

The Consolidated Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivable, other receivable, guarantee deposit paid and other financial assets) and contract assets.

The Consolidated Company measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

debt securities that are determined to have low credit risk at the reporting date; and
other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Consolidated Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Consolidated Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Consolidated Company’s historical experience and informed credit assessment, as well as forward-looking information.

The Consolidated Company assumes that the credit risk on a financial asset has increased significantly if there is a breach of contract.

The Consolidated Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations in full. The Consolidated Company measures its loss allowances at an amount equal to lifetime expected credit loss.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Consolidated Company in accordance with the contract and the cash flows that the Consolidated Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Consolidated Company assesses whether financial assets carried at amortized cost is credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or being more than one year past due;
the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
it is probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Consolidated Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Consolidated Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Consolidated Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Consolidated Company’s procedures for recovery of amounts due.

7) Derecognition of financial assets

The Consolidated Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Consolidated Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Consolidated Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Financial liabilities and equity instruments

1) Classification of debt or equity

Debt and equity instruments issued by the Consolidated Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions ofa financial liability and an equity instrument.

2) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

3) Derecognition of financial liabilities

The Consolidated Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Consolidated Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

4) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Consolidated Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) Investment in associates

Associates are those entities in which the Consolidated Company has significant influence, but not control or joint control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill which is arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Consolidated Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Consolidated Company, from the date on which significant influence commences until the date on which significant influence ceases. The Consolidated Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant influence.

Gains and losses resulting from transactions between the Consolidated Company and an associate are recognized only to the extent of unrelated Group’s interests in the associate.

When the Consolidated Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the consolidated Company has incurred legal or constructive obligations or made payments on behalf of the associate.

When the Consolidated Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Consolidated Company’s proportionate interest in the net assets of the associate. The Consolidated Company records such a difference as an adjustment to its investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under additional paid in capital. If the additional paid in capital resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Consolidated Company’s ownership interest is reduced due to the additional subscription of the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of its related assets or liabilities.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control. The IFRS classifies joint arrangements into two types — joint operations and joint ventures, which have the following characteristics:

(i) All parties are bound by the arrangement; and
(ii) the contractual arrangement gives two or more of those parties joint control of the arrangement. IFRS 11 “Joint Arrangements” defines joint control as the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (ie activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control.

A joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Consolidated Company accounts for the assets, liabilities, revenues and expenses in relation to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses. When assessing whether a joint arrangement is a joint operation or a joint venture, the Consolidated Company considers the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances.

A joint venture is a joint arrangement whereby the Consolidated Company has joint control of the arrangement (i.e. joint venturers) in which the Consolidated Company has rights to the net assets of the arrangement , rather than rights to its assets and obligations for its liabilities.The Consolidated Company recognizes its interest in a joint venture as an investment and accounts for that investment using the equity method in accordance with IAS 28 “Investments in Associates and Joint Ventures”, unless the Consolidated Company qualifies for exemption from that Standard. Please refer to note 6(g) for the application of the equity method.

When assessing the classification of a joint arrangement, the Consolidated Company considers the structure and legal form of the arrangement, the terms in the contractual arrangement, and other facts and circumstances. When the facts and circumstances change, the Consolidated Company reevaluates whether the classification of the joint arrangement has changed.

(k) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss. Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they

are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Consolidated Company.

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for the current and comparative years are as follows:

1) Buildings: 25 to 50 years.
2) Machinery and transportation equipment: 7 to 15 years.
3) Miscellaneous equipment: 7 to 15 years.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner occupied to investment property.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Lease

Lease (applicable from January 1, 2019)

(i) Identifying a lease

At inception of a contract, the Consolidated Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Consolidated Company assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the Consolidated Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Consolidated Company has the right to direct the use of the asset, if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
the relevant decisions about how and for what purpose the asset is used are predetermined and:
- － the Consolidated Company has the right to operate the asset is used throughout the period of use, without the supplier having the right to change those operating instructions; or
- － the Consolidated Company designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

At inception or on reassessment of a contract that contains a lease component, the Consolidated Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Consolidated Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

(ii) As a lessee

The Consolidated Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Consolidated Company’s incremental borrowing rate. Generally, the Consolidated Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

－
fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－
there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Consolidated Company’s estimate of the amount expected to be payable under a residual value guarantee; or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
there is a change in scope, object or other conditions of a lease.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Consolidated Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-ofuse asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Consolidated Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Consolidated Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases of buildings that have a lease term of 12 months or less and leases of lowvalue assets. The Consolidated Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(iii) As a leasor

When the Consolidated Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Consolidated Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Consolidated Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Consolidated Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Consolidated Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Consolidated Company applies IFRS15 to allocate the consideration in the contract.

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The interest income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the lease. The Consolidated Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘rental income’.

Lease (applicable before January 1, 2019)

(i) Lessor

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and recognized as an expense over the lease term on the same basis as the lease income. Incentives granted to the lessee to enter into an operating lease are spread over the lease term on a straight-line basis in order that the lease income received is reduced accordingly.

Contingent rents are recognized as income in the period when the lease adjustments are confirmed.

(Continued)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Lessee

Leases are operating leases and are not recognized in the Consolidated Company’s balance sheets. Payments made under operating leases (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

Contingency rent is recognized as expense in the period in which it is incurred.

(n) Intangible assets, technical cooperation fee and long-term prepaid rental expense (recognized as other assets)
(i) Intangible assets, technical cooperation fee and long-term prepaid rental expense

Other intangible assets, including intangible assets, technical cooperation fee and long-term prepaid rental expense, that are acquired by the Consolidated Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

1)	Goodwill	15 years
2)	Technical cooperation fee	5~15 years
3)	Long-term prepaid rental expense	50 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(o) Impairment – Non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties, measured at fair value) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

(Continued)

247

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(p) Revenue recognition

(i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’ s main types of revenue are explained below.

1) Sale of goods

The Consolidated Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Consolidated Company any has objective evidence that all criteria for acceptance have been satisfied.

(Continued)

248

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Financing components

The Consolidated Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Consolidated Company does not adjust any of the transaction prices for the time value of money.

(q) Contract costs (applicable from January 1, 2018)
(i) Incremental costs of obtaining a contract

The Consolidated Company recognizes as an asset the incremental costs of obtaining a contract with a customer if the Consolidated Company expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Consolidated Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

The Consolidated Company applies the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

(ii) Costs to fulfill a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Consolidated Company recognizes an asset from the costs incurred to fulfill a contract only if those costs meet all of the following criteria:

●the costs relate directly to a contract or to an anticipated contract that the Consolidated Company can specifically identify;
●the costs generate or enhance resources of the Consolidated Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and
●the costs are expected to be recovered.

General and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Consolidated Company cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations (or partially satisfied performance obligations), the Consolidated Company recognizes these costs as expenses when incurred.

(Continued)

249

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(r) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Consolidated Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Consolidated Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Consolidated Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Consolidated Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Consolidated Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(s) Share–based payment

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

(Continued)

250

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

(t) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Consolidated Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Consolidated Company has a legally enforceable right to set off current tax assets against current tax liabilities ; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(Continued)

251

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Deferred tax asset are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves..

(u) Earnings per share

The Consolidated Company discloses the Company’ s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as employee compensation.

(v) Operating segments

An operating segment is a component of the Consolidated Company that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Consolidated Company). Operating results of the operating segment are regularly reviewed by the Consolidated Company’ s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to

make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

(a) Evaluation of inventories

Because inventories are measured at the lower of cost and net realizable value, the Consolidated Company evaluates the amount of normal waste, obsolete, and inventories without market price as of the reporting date, and reduces the book value to net realizable value. Such evaluation method depends on the demand of merchandise for a particular period of time in the future; therefore, there might be significant change due to the rapid industry transformation. Please refer to note 6(f) for further description of the evaluation of inventories.

(Continued)

252

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Measurement of defined benefit obligations

Accrued pension liabilities and resulting pension expenses under defined benefit pension plans are calculated using the Projected Unit Credit Method. Actuarial assumptions comprise the discount rate, rate of employee turnover, future salary increase rate, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of the expense and the liability. Refer to note 6(p) for further description of the actuarial assumptions and sensitivity analysis.

The Consolidated Company’ s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Consolidated Company establishes a measurement and review mechanism for measuring fair value.

The Consolidated Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

(a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
(b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).
(c) Level 3: inputs for the assets or liability that are not based on observable market data. For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to note 6(x), financial instruments, for assumptions used in measuring fair value.

(6) Explanation of significant accounts:

(a) Cash and Cash Equivalents

Cash on hand Cash in banks Time deposits Cash equivalents Cash and cash equivalents	December 31, 2019 December 31, 2018 $ 1,483 1,454 5,922,259 10,533,271 28,061,383 33,242,563 9,622,994 8,588,594 $ 43,608,119 52,365,882

Please refer to note 6(x) for the interest rate risk and fair value sensitivity analysis of the financial assets and liabilities of the Consolidated Company.

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

Current financial assets designated as at fair value through profit or loss: Funds $	December 31, 2019 December 31, 2018 4,044,356 4,017,249

(Continued)

253

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Non-current financial assets designated as at fair value through profit or loss: Foreign Bonds Foreign Stocks Total	December 31, 2019 December 31, 2018 $ 510,611 715,289 314,115 332,588 $ 824,726 1,047,877

Remeasurement at fair value recognized in profit or loss is disclosed in note 6(w).

Current financial assets at fair value through other comprehensive income

	December 31,	December 31,	December 31,
		2019	2018
Equity instruments at fair value through other comprehensive
income:
Stocks	$	41,715,821	44,528,667
Non-current financial assets at fair value through other comprehensive income
		December 31,	December 31,
		2019	2018
Stocks	$	22,662,110	28,011,349

(i) Debt investments at fair value through other comprehensive income

The Consolidated Company has assessed that the following securities were held within a business model whose objective was achieved by both collecting the contractual cash flows and by selling securities. Therefore, they have been classified as debt investments at fair value through other comprehensive income.

(ii) Equity investments at fair value through other comprehensive income

The Consolidated Company designated the investments shown above as equity instruments at fair value through other comprehensive income because these equity instruments represent those investments that the Consolidated Company intends to hold for long-term for strategic purposes.

On April 16, 2018, the Consolidated Company participated in the proportional capital increase by cash of Formosa Ha Tinh (Cayman) Limited, at 11.43% ownership interest, with the total investment amounting to USD57,161 thousand (equivalent to $1,676,070).

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of December 31, 2019 and 2018.

(Continued)

254

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) For credit risk and market risk; please refer to note 6(x).

(iv) The financial assets at fair value through other comprehensive income of the Consolidated Company had been pledged as collateral; please refer to note 8.

(d) Notes and accounts receivable

Notes receivable from operating activities Accounts receivable Overdue receivables Less: Loss allowance	December 31, 2019 December 31, 2018 $ 5,573,110 6,581,868 38,849,472 42,029,583 4,555 34,567 (363,604) (399,954) $ 44,063,533 48,246,064

The Consolidated Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables on December 31, 2019 and 2018. To measure the expected credit losses, accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision as of December 31, 2019 and 2018 amounted to $363,604 and $399,954, respectively, expected loss rate less than 1%.

The Consolidated Company applies the expected credit losses to analysis of notes and accounts receivable as of December 31, 2019 and 2018 were determined as follows:

Past due 1 to 90 days Past due 90 to 180 days Past due 180 to 360 days Past due over 360 days	December 31, 2019 December 31, 2018 $ 99,867 356,122 63,102 85,466 45,317 83,682 56,025 76,580 $ 264,311 601,850

The movement in the allowance for notes and accounts receivable were as follows:

Balance at January 1, 2019 and 2018 Impairment losses reversed Foreign exchange gains/(losses) Balance at December 31, 2019 and 2018	For the years ended December 31 2019 2018 $ 399,954 418,824 (29,028) (16,472) (7,322) (2,398) $ 363,604 399,954

As of December 31, 2019 and 2018, notes and accounts receivable which were overdue or under legal proceedings amounted to $4,555 and $34,567. Such receivables were reclassified to overdue receivables under other assets and provided with a full impairment loss provision.

(Continued)

255

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Consolidated Company signed without-recourse factoring and financing contracts with financial institutions. According to these contracts, the net accounts receivable that have matured but are still uncollected will be paid by the financial institutions, except for those affected by trade disputes. As of December 31, 2019 and 2018, the outstanding accounts receivable factoring transactions between the Consolidated Company and the financial institutions were as follows:

Purchaser Gold Circuit Electronics, Ltd E. Sun Bank Purchaser Gold Circuit Electronics, Ltd E. Sun Bank Other receivables Other accounts receivable—other Other accounts receivable—loans to associates Less: Loss allowance Total		December 31, 2019
	Purchaser	Factoring Balance Advanced Amount Factoring Line $ 69,693 - 100,000 December 31, 2018
	E. Sun Bank
	Purchaser

(e) Other receivables

Other receivables are financial assets with low credit risk, thus the Consolidated Company measured the loss allowance based on 12-month expected credit losses.

(f) Inventories

The components of inventories were as follows:

Finished goods Work in process Machinery and accessories in process Raw materials Supplies Consigned-out raw materials Consigned-out finished goods Goods in transit Inventories, net	December 31, 2019 December 31, 2018 $ 12,537,778 15,454,895 10,154,245 12,788,826 4,835,894 4,011,249 11,326,558 13,234,237 950,930 832,700 189,211 219,347 16,881 9,612 1,556,255 2,489,976 $ 41,567,752 49,040,842

(Continued)

256

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The details of the cost of sales were as follows:

		For the years	ended
		December	31
		2019	2018
Inventory that has been sold	$	254,673,143	281,091,295
Write-down of inventories (Reversal of write-downs)		(306,449)	404,341
Unallocated production overheads		3,806,102	2,558,629
	$	258,172,796	284,054,265

(g) Investments accounted for using equity method

The components of the investments accounted for using equity method at the reporting date were as follows:

Associates Joint ventures	December 31, 2019 December 31, 2018 $ 164,591,844 169,446,506 517,537 424,630 $ 165,109,381 169,871,136

(i) Associates

The Consolidated Company’s share of net income (loss) of associates were as follows:

		For the years	ended
		December	31
		2019	2018
The Consolidated Company’s share of net income of
associates	$	11,731,913	26,149,691

1) The unrealized translation gain or loss arising from the investment in foreign entities, which was determined on exchange rates as of December 31, 2019 and 2018, were recognized in comprehensive income.
2) The unrealized sales profits from downstream transactions with investees under the equity method are treated as deductions from gross income. The realized sales profits from downstream sales are added to gross income. Details of these transactions are disclosed in note 7.
3) In March, August and Decenber, 2019, the Consolidated Company participated in the capital increase by cash of FG Inc., Formosa Resources Corporation, and Formosa Synthetic Rubber Corporation, with total investment amounting to USD7,500 thousand (equivalent to $231,570), $1,570,000 and $46,000, respectively.

(Continued)

257

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) In October, 2018, the Consolidated Company participated in the capital increase by cash of Formosa Synthetic Rubber (Hong Kong) Corporation Limited, with the total investment amounting to USD65,000 thousand (equivalent to $2,010,450).
5) The Consolidated Company’s financial information for investments accounted for using the equity method that are individually insignificant were as follows:

	December 31,	December 31,	December 31,
		2019	2018
Carrying amount of individually insignificant
associates’ equity	$	164,591,844	169,446,506
	For	the years ended December 31
		2019	2018
Attributable to the Consolidated Company:
Net Income	$	11,731,913	26,149,691
Other comprehensive income		(1,739,976)	(2,994,412)
Total comprehensive income	$	9,991,937	23,155,279
Joint ventures
The Consolidated Company’s share of net income of joint	venture were as follows:
		For the years ended
		December 31
		2019	2018
The Consolidated Company’s share of net income of joint
ventures	$	106,840	30,049

(ii) Joint ventures

The Consolidated Company’ s financial information for investments in individually insignificant joint venture accounted for using equity method at the reporting date was as follows. These financial information are included in the consolidated financial statements.

The carrying value of joint ventures that were not individually material Attributable to the Consolidated Company: Net income Other comprehensive income Total comprehensive income	December 31, 2019 December 31, 2018 $ 517,537 424,630 For the years ended December 31

(Continued)

258

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Collateral

Please refer to note 8 for investments accounted for using equity method which were pledged to banks or courts as collateral to secure the Consolidated Company’s bank loans and lawsuits as of December 31, 2019 and 2018

(h) Property, Plant and Equipment

The cost, depreciation, and impairment of property, plant and equipment of the Consolidated Company were as follows:

Cost or deemed cost: Balance on January 1, 2019 Additions Disposals Reclassification Effect of movements in exchange rates Balance on December 31, 2019 Balance on January 1, 2018 Additions Disposals Reclassification Effect of movements in exchange rates Balance on December 31, 2018 Depreciation and impairment loss: Balance on January 1, 2019 Depreciation for the period Reversal of impairment Disposals Reclassification Effect of movements in exchange rates Balance on December 31, 2019 Balance on January 1, 2018 Depreciation for the period Reversal of impairment Disposals Reclassification Effect of movements in exchange rates Balance on December 31, 2018 Carrying amounts: Balance on December 31, 2019 Balance on December 31, 2018	Land $ 13,494,231 9,869 (2,016) - (1,587) $ 13,500,497 $ 9,870,462 3,613,725 (700) 8,966 1,778 $ 13,494,231 $ - - - - - - $ - $ - - - - - - $ - $ 13,500,497 $ 13,494,231	Building and construction 62,744,023 1,927 (38,438) (107,656) (911,035) 61,688,821 61,875,380 1,175,812 (149,525) 82,631 (240,275) 62,744,023 34,982,056 1,996,284 - (20,320) (158,796) (478,605) 36,320,619 33,094,723 2,089,876 - (119,768) 1 (82,776) 34,982,056 25,368,202 27,761,967	Machinery and equipment 344,851,726 1,448,022 (5,598,968) 11,025,265 (4,397,209) 347,328,836 339,296,466 1,423,544 (3,542,559) 8,700,603 (1,026,328) 344,851,726 270,655,062 12,319,601 (59) (4,641,689) 6,982 (3,117,272) 275,222,625 261,429,163 13,298,915 (9,761) (3,339,156) (427,516) (296,583) 270,655,062 72,106,211 74,196,664	Transportation equipment 1,547,158 15,152 (50,393) 36,040 (14,574) 1,533,383 1,555,915 21,787 (64,783) 34,490 (251) 1,547,158 1,357,620 51,865 - (49,482) (8,525) (11,779) 1,339,699 1,372,432 47,954 - (62,873) - 107 1,357,620 193,684 189,538	Other facilities 12,480,222 270,447 (318,298) 701,345 (155,094) 12,978,622 12,091,506 159,637 (194,523) 493,829 (70,227) 12,480,222 9,685,710 640,467 - (312,134) (6,991) (118,736) 9,888,316 9,367,746 555,824 - (188,106) 226 (49,980) 9,685,710 3,090,306 2,794,512	Construction in progress Total 22,470,349 457,587,709 27,738,562 29,483,979 (45,986) (6,054,099) (7,493,082) 4,161,912 (833,379) (6,312,878) 41,836,464 478,866,623 13,476,233 438,165,962 14,752,512 21,147,017 (68,198) (4,020,288) (5,991,643) 3,328,876 301,445 (1,033,858) 22,470,349 457,587,709 - 316,680,448 - 15,008,217 - (59) - (5,023,625) - (167,330) - (3,726,392) - 322,771,259 - 305,264,064 - 15,992,569 - (9,761) - (3,709,903) - (427,289) - (429,232) - 316,680,448 41,836,464 156,095,364 22,470,349 140,907,261

(Continued)

259

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Please refer to note 8 for the property, plant and equipment pledged to secure bank loans as of December 31, 2019 and 2018.
(ii) For the years ended December 31, 2019 and 2018, the capitalized interest on borrowings for the purchase of the property, plant and equipment of the Consolidated Company amounted to $299,843 and $63,733, respectively. The capitalized interest rate ranged from 1.3030% to 3.5230% and 1.405% to 2.2793% for the years ended December 31, 2019 and 2018, respectively.
(i) Right-of-use assets

The Consolidated Company leases many assets including land and buildings, machinery and transportation equipment. Information about leases for which the Consolidated Company as a lessee is presented below:

Cost： Balance at January 1, 2019 Effects of retrospective application Acquisitions Disposal Effect of changes in foreign exchange rates Balance at December 31, 2019 Accumulated depreciation and impairment losses: Balance at January 1, 2019 Depreciation for the period Disposal Effect of changes in foreign exchange rates Balance at December 31, 2019 Carrying amount: Balance at December 31, 2019	Land $ - 777,198 2,270 (272) (35,475) $ 743,721 $ - 29,094 (272) (8,549) $ 20,273 $ 723,448	Building and construction - 121,009 79,378 (1,486) (40) 198,861 - 62,694 - (23) 62,671 136,190	Machinery and equipment - 29,296 - (1,047) (304) 27,945 - 9,203 (1,047) (136) 8,020 19,925	Transportation equipment Total - - 467,297 1,394,800 356 82,004 - (2,805) (9,543) (45,362) 458,110 1,428,637 - - 142,903 243,894 - (1,319) (3,779) (12,487) 139,124 230,088 318,986 1,198,549

(j) Intangible assets

The cost, amortization and impairment of the intangible assets of the Consolidated Company were as follows:

Costs : Balance at December 31, 2019 (as same as balance at January 1, 2019) Balance at December 31, 2018 (as same as balance at January 1, 2018) Accumulated amortization and impairment losses : Balance at January 1, 2019 Amortization for the period Balance at December 31, 2019	Trademark
	$ 2,897,172 $ 2,897,172 $ 410,432 193,145 $ 603,577

(Continued)

260

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance at January 1, 2018 Amortization for the period Balance at December 31, 2018 Carrying value： Balance at December 31, 2019 Balance at December 31, 2018	Trademark
	$ 217,287 193,145 $ 410,432 $ 2,293,595 $ 2,486,740

The amortization expense relating to the intangible assets of the Consolidated Company for the years ended December 31, 2019 and 2018 was recognized in the administrative expenses in the statements of comprehensive income.

(k) Short-term notes and bills payable

Short-term notes and bills payable Discount on short-term notes and bills payable Total Range of interest rates (l) Short-term borrowings Unsecured short-term borrowings Range of interest rates	December 31, 2019 December 31, 2018 $ 15,400,000 8,900,000 (7,205) (2,253) $ 15,392,795 8,897,747 0.532%~0.695% 0.36%~0.75% December 31, 2019 December 31, 2018 $ 24,012,100 21,253,381 0.67%~0.99% 0.74%~4.35%

The amount of $2,772,313 and $11,969,794 were issued respectively, and there were no material buyback or redemption on short-term borrowings for the years ended December 31, 2019 and 2018. For information concerning interest expense, please refer to note 6(w).

(m) Long-term debts

Long-term debts consisted of the following:

Secured long-term debts Unsecured long-term debts Unsecured long-term debts Long-term notes payable Less: current portion Total		December 31, 2019 Interest rate Expiration Amount 0.9900%~1.6316% 2020~2021 $ 4,000,000 0.9456%~1.0920% 2020~2022 4,300,000 3.2140%~3.5230% 2021 9,784,450 0.57%~0.842% 2020 5,096,417 (3,333,333) $ 19,847,534
	Currency	Interest rate
	TWD TWD USD TWD	0.9900%~1.6316% 0.9456%~1.0920% 3.2140%~3.5230% 0.57%~0.842%

(Continued)

261

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Secured long-term debts Unsecured long-term debts Unsecured long-term debts Long-term notes payable Less: current portion Total		December 31, 2018 Interest rate Expiration Amount 1.6316% 2018~2021 $ 3,333,333 0.98%~1.09% 2019~2020 8,000,000 4.75% 2020 937,472 0.44%~0.84% 2019~2020 7,096,550 (6,133,333) $ 13,234,022
	Currency	Interest rate
	TWD TWD CNY TWD	1.6316% 0.98%~1.09% 4.75% 0.44%~0.84%

Please refer to note 6(x) for information on the Consolidated Company’s exposure to liquidity risk, and risk of changes in interest rates and liquidation risk.

(i) The Consolidated Company issued the amounts of $14,388,650 and $3,200,000 on long term loans for the years ended December 31, 2019 and 2018, respectively. The amounts of $8,255,441 and $15,802,786 were redeemed for the years ended December 31, 2019 and 2018, respectively. For information on interest expenses, please refer to note 6(w).
(ii) Pledged assets for bank loans

For the collateral for long-term borrowings, please refer to note 8.

(iii) Secured debts

In order to raise funds to repay debts and for reinvestments, new factory construction plans, and foreign and domestic equipment acquisitions, the Consolidated Company signed a syndicated long-term mortgage loan agreement with Bank of Taiwan, the lead bank of the syndicated loan, and other banks on November 14, 2013. The key terms and conditions of the loan agreement are as follows:

1) Credit line: TWD6,000,000
2) Interest rate: as settled with each participating bank.
3) Period: 7 years (including a 3-year grace period)
4) Collateral: the acquired land financed by the loan.
5) The financial covenants under this loan agreement include the requirement to maintain certain financial ratios based on the audited annual financial reports. Failure to comply with these financial covenants may cause the syndicated banks to terminate the credit line or declare the unpaid principal and interest under the loan agreement to be immediately due and payable. These financial ratios are as follows:
a) Current Ratio (total current assets divided by total current liabilities): not less than 100%
b) Leverage Ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%

As of December 31, 2019, TWD6,000,000 of the credit line had been drawn.

(Continued)

262

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Bonds payable

Domestic unsecured nonconvertible corporate bonds Costs of issuing bonds Current portion Total	December 31, 2019 December 31, 2018 $ 64,050,000 58,600,000 (71,339) (68,545) (4,647,875) (5,946,931) $ 59,330,786 52,584,524

The terms of domestic corporate bonds as of December 31, 2019 were as follows:

Issued amount Balance, end of year Current portion Issuance date Issuance period Coupon rate Interest payment date Repayment method Issued amount Balance, end of year Current portion Issuance date Issuance period Coupon rate Interest payment date Repayment method	The third domestic unsecured nonconvertible corporate bond in 2012	The first domestic unsecured nonconvertible corporate bond in 2013	The second domestic unsecured nonconvertible corporate bond in 2013	The first domestic unsecured nonconvertible corporate bond The second domestic unsecured nonconvertible corporate bond in 2014 in 2014 TWD10,000,000 TWD5,000,000 9,983,992 1,498,875 - - June 24, 2014 November 11, 2014 14 years and 15 years 5 years and 10 years 2.04% 1.45% and 1.93% June 24 November 11 Payable in 2 equal installments for each coupon rate in 2028 and 2029, respectively. Payable in 2 equal installments for each coupon rate in 2018~2019 and 2023~2024, respectively. The first domestic unsecured nonconvertible corporate bond The second domestic unsecured nonconvertible corporate bond in 2019 in 2019 TWD6,300,000 TWD5,100,000 6,290,742 5,092,009 - - June 17, 2019 October 15, 2019 5 years, 7 years and 10 years 5 years.7 years and 10 years 0.74%, 0.82%, and 0.91% 0.71%. 0.75% and 0.84% June 17 October 15 Payable in 2 equal installments for each coupon rate in 2023~2024, 2025~2026, and 2028~2029, respectively Payable in 2 equal installments for each coupon rate in 2023~2024, 2025~2026, and 2028~2029, respectively
	TWD6,000,000 4,798,532 1,199,633 February 25, 2013 7 years and 10 years 1.36% and 1.50% February 25 Payable in 2 equal installments for each coupon rate in 2018~2019 and 2021~2022, respectively The first domestic unsecured nonconvertible corporate bond in 2016	TWD9,600,000 949,599 949,599 August 5, 2013 4 years, 5 years and 7 years 1.40%, 1.45% and 1.55% August 5 Payable in 2 equal installments for each coupon rate in 2016~2017, 2017~2018 and 2019~2020, respectively The first domestic unsecured nonconvertible corporate bond in 2017	TWD10,400,000 10,388,631 - December 18, 2013 10 years and 12 years 1.98% and 2.08% December 18 Payable in 2 equal installments for each coupon rate in 2022~2023 and 2024~2025, respectively The first domestic unsecured nonconvertible corporate bond in 2018
	TWD5,000,000 4,997,286 2,498,643 August 16, 2016 5 years 0.68% August 16 Payable in 2 equal installments for each coupon rate in 2020 and 2021, respectively	TWD9,500,000 401,847 - July 10, 2017 5 years and 7 years 1.03% and 1.25% July 10 Payable in 2 equal installments for each coupon rate in 2021~2022 and 2023~2024, respectively	TWD10,500,000 10,487,148 - September 6, 2018 5 years, 7 years and 10 years 0.83%, 0.91%, and 1.07% September 6 Payable in 2 equal installments for each coupon rate in 2022~2023, 2024~2025, and 2027~2028, respectively

(Continued)

263

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The details of Nan Ya Plastics (Hong Kong) Co., Ltd’s overseas corporate bond were as follows:

Issued in 2013 Issued amount USD 180,000 thousand Issuance date August 5, 2013 Issuance period 5 years Coupon rate 3 month LIBOR+1.1% Interest payment date February 5, May 5, August 5, and November 5 Bondholders with a put option The bondholders bear no right to request the Consolidated Company to redeem the bond.

Issuer with a redemption option The bond issuer bears the right to request the holders to redeem all outstanding bonds if the issuer needs to pay extra tax due to change in laws and regulations.

(o) Lease liabilities

The carrying values of lease liabilities were as follows:

The carrying values of lease liabilities were as follows:
Current Non-current	December 31, 2019
	$ 197,527 $ 291,222

For information on the maturity analysis, please refer to note 6(x).

The amounts recognized in profit or loss were as follows:

The amounts recognized in profit or loss were as follows:
		For the years
		ended
		December 31,
		2019
Interest on lease liabilities	$	17,681
Expenses relating to short-term leases	$	128,661

The amounts recognized in the statement of cash flows for the Consolidated Company was as follows:

Total cash outflow for leases	For the year ended December 31, 2019
	$ 356,283

(Continued)

264

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Real estate leases

As of December 31, 2019, the Consolidated Company leases land and buildings for its office space and plants. The leases of land typically run for a period of 4 to 20 years, of office space for 2 to 20 years, and of plants for 3 years. Besides, the rights-of-use for land in mainland China typically run for 50 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some also require the Consolidated Company to make payments that relate to the property taxes levied on the lessor and insurance payments made by the lessor; these amounts are generally determined annually.

(ii) Other leases

The Consolidated Company leases transportation equipment, with lease terms of 2 to 7 years. In some cases, the Consolidated Company has options to purchase the assets at the end of the contract term.

The Consolidated Company also leases buildings with contract terms of one year or less. These leases are short-term. The Consolidated Company has elected not to recognize right-of-use assets and lease liabilities for these leases.

(p) Employee Benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2019 December 31, 2018 $ 31,416,494 31,872,431 (9,234,709) (9,586,086) $ 22,181,785 22,286,345

The Consolidated Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for its employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Consolidated Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

(Continued)

265

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Consolidated Company’ s Bank of Taiwan labor pension reserve account balance amounted to $9,100,116 as of December 31, 2019. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in the present value of the defined benefit obligation

The movements in the present value of the defined benefit obligation were as follows:

Balance, beginning of year Current service cost and interest expense Remeasurements of the net defined benefit liabilities: Actuarial losses (gains) arising from changes in financial assumptions Experience adjustments Benefits paid from plan assets Increase from transfer of related party employees Effect of movements in exchange rates Balance, end of year	For the years ended December 31 2019 2018 $ 31,872,431 31,686,207 775,748 783,247 (8,649) 730,174 448,365 208,321 (1,672,846) (1,561,576) 4,886 21,084 (3,441) 4,974 31,416,494 31,872,431

3) Movements in the fair value of the plan assets

The movements in the fair value of the plan assets were as follows:

Balance, beginning of year Interest income Remeasurements of the net defined benefit liabilities: Return on plan assets Contributions from employer Benefits paid Effect of movements in exchange rates Balance, end of year	For the years ended December 31 2019 2018 $ 9,586,086 9,900,290 120,577 122,962 386,803 170,220 406,606 439,565 (1,261,962) (1,051,927) (3,401) 4,976 $ 9,234,709 9,586,086

(Continued)

266

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss were as follows:

Current service cost Net interest expense of net defined benefit liabilities Operating Costs Selling expenses Administrative expenses	For the years ended December 31
	2019 2018 $ 379,380 390,880 275,791 269,405 $ 655,171 660,285 For the years ended December 31

5) Remeasurement of net defined benefit liability recognized in other comprehensive income

The Consolidated Company's remeasurement of the net defined benefit liability recognized in other comprehensive income were as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	For the years ended December 31 2019 2018 $ (6,065,249) (5,296,974) (52,913) (768,275) $ (6,118,162) (6,065,249)

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increase rate	December 31, 2019 December 31, 2018 1.00%~3.24% 1.25%~4.15% 2.50%~4.62% 2.50%~3.50%

The expected allocation payment to be made by the Consolidated Company to the defined benefit plans for the one-year period after the reporting date is $407,329.

The weighted average lifetime of the defined benefits plans is 8.8~21 years.

(Continued)

267

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Sensitivity analysis

As the principle actuarial assumptions change, the present value of the defined benefit obligation of the Company, Nan Ya PCB Corp., Nan Chung Petrochemical Corp., Wellink Technology Corp., and PFG Fiber Glass Corporation would increase (decrease) as follows:

December 31, 2019 Discount rate( 0.25% variation) Future salary increasing rate( 1.00% variation) December 31, 2018 Discount rate( 0.25% variation) Future salary increasing rate( 1.00% variation)	Influences of defined benefit obligations Increase Decrease $ (559,036) 581,465 2,480,687 (2,169,550) (624,311) 650,735 2,785,372 (2,414,004)

As the principle actuarial assumptions change, the present value of the defined benefit obligation of Nan Ya Plastics Corporation U.S.A. would increase (decrease) as follows:

December 31, 2019 Discount rate( 1.00% variation) Future salary increasing rate( 1.50% variation) December 31, 2018 Discount rate( 1.00% variation) Future salary increasing rate( 1.50% variation)	Influences of defined benefit obligations Increase Decrease $ (15,200) 18,520 6,225 (5,220) (13,789) 16,579 4,771 (4,095)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2019 and 2018.

(Continued)

268

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Defined contribution plan

The Labor Pension Act (“The Act”) prescribes a defined contribution plan. Pursuant to the Act, the Company, and its subsidiaries namely, Nan Ya PCB Corp., Wen Fung Industrial Corp., Nan Chung Petrochemical Corp., Wellink Technology Corp. and PFG Fiber Glass Corporation have made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts.

Nan Ya Plastics Corporation America and Nan Ya PCB (U.S.A.) Corporation adopt a Defined Contribution Plan and periodically provide contributions thereon according to local law. Those contributions are recognized as an expense on an accrual basis.

Subsidiaries in China are governed by China laws and regulation. Based on China laws and regulation, those companies contribute for employees’ pension benefits at rates ranging from 6% to 20% of salary every month and remit those contributions to the related authority.

The Consolidated Company’ s pension costs under the defined contribution pension plan amounted to $1,334,582 and $1,304,581 for the years ended December 31, 2019 and 2018, respectively.

(q) Income Tax

(i) Income tax expense

The components of income tax expense for 2019 and 2018were as follows:

		For the years	ended
		December	31
		2019	2018
Current income tax expense
Current period	$	2,887,588	6,323,793
Adjustment for prior periods		(57,400)	(66,970)
Deferred tax expense
Origination and reversal of temporary differences		649,319	2,574,453
Adjustment for prior periods		-	35,059
Total income tax expense	$	3,479,507	8,866,335

The amount of income tax recognized in other comprehensive income for 2019 and 2018 were as follows:

Items that will not be reclassified subsequently to profit or loss: Re-measurement from defined benefit plans Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements	For the years ended December 31 2019 2018 $ 10,556 324,897 $ - (135,016)

(Continued)

269

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Reconciliation of income tax and profit before tax for 2019 and 2018 were as follows:

Income tax using the Company's domestic tax rate
Effect of tax rate in foreign jurisdiction
Tax effect on tax-exempt dividend income
Adjustment in tax rate
Tax-exempt income
Tax effect on unrecognized deferred assets of tax losses
Tax effect on unrecognized temporary differences
Income tax expense arising from investment income in joint
ventures
Tax effect on investment income recognized under equity method
Differences between estimated and actual income tax and income
tax adjustments on prior years
Undistributed earnings additional tax
Recognition of previously unrecognized tax losses
Other income tax adjustments
Income tax expense

For the years ended December 31
2019
2018
$ 6,671,347
14,651,481
158,174
454,169
(642,419)
(713,998)
-
(566,136)
(36,841)
(88,504)
92,790
184,935
(85,969)
6,528
25,374
112,310
(3,341,606)
(6,490,250)
(57,400)
(31,911)
391,303
697,337
(3,204)
(13,523)
307,958
663,897
$
3,479,507
8,866,335

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Tax effect of deductible temporary differences The carryforward of unused tax losses	December 31, 2019 December 31, 2018 $ 1,029,699 123,128 500 987,371 $ 1,030,199 1,110,499

The R.O.C Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Consolidated Company can utilize the benefits therefrom.

(Continued)

270

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of December 31, 2019, the information of the Consolidated Company’s unutilized business losses for which no deferred tax assets were recognized are as follows:

Occurrence year	Unutilized creditable amount Expiry date $ 33,282 2020 23,925 2021 36,973 2022 1,135,895 2023 36,692 2024 93 2025 1,565,767 2026 1,886,099 2027 429,770 2028 $ 5,148,496
2010 2011 2012 2013 2014 2015 2016 2017 2018

2) Recognized deferred tax assets and liabilities

Movement in the deferred tax assets and liabilities for 2019 and 2018 were as follows:

Deferred tax liabilities:

Balance on January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income Foreign currency translation differences for foreign operations Balance on December 31, 2019 Balance on January 1, 2018 Recognized in profit or loss Recognized in other comprehensive income Foreign currency translation differences for foreign operations Balance on December 31, 2018 Deferred tax assets:	Foreign investment income recognized under equity method $ 11,822,444 478,348 - - $ 12,300,792 $ 10,108,698 1,713,746 - - $ 11,822,444	Defined benefit plans (4,179) (81) 554 112 (3,594) (5,691) 1,282 400 (170) (4,179)	Others Total 820,759 12,639,024 10,483 488,750 - 554 (6,411) (6,299) 824,831 13,122,029 682,214 10,785,221 130,844 1,845,872 - 400 7,701 7,531 820,759 12,639,024

Balance on January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income Foreign currency translation differences for foreign operations Balance on December 31, 2019	Investment tax credits $ - - - - $ -	Defined benefit plans 4,446,111 (32,962) 11,110 - 4,424,259	Idle capacity 78,039 223 - - 78,262	Loss carryforward - - - - -	Others Total 995,713 5,519,863 (127,830) (160,569) - 11,110 68,752 68,752 936,635 5,439,156

(Continued)

271

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance on January 1, 2018 Recognized in profit or loss Recognized in other comprehensive income Foreign currency translation differences for foreign operations Balance on December 31, 2018	Investment tax credits $ 17,818 (17,818) - - $ -	Defined benefit plans 3,686,959 433,855 325,297 - 4,446,111	Idle capacity	Loss carryforward 1,354,361 (1,354,361) - - -	Others Total 819,385 5,911,842 129,964 (763,640) (135,016) 190,281 181,380 181,380 995,713 5,519,863
			33,319 44,720 - -
			78,039

(iii) Assessment of tax

The Corporation’ s income tax return for the year 2017 had been examined by the tax authorities.

(r) Capital and other equity

As of December 31, 2019 and 2018, the Consolidated Company’ s government registered total authorized capital and issued capital stock both amounted to $79,308,216, divided into 7,930,822 thousand shares of stock with $10 par value per share.

(i) Capital surplus

The components of capital surplus were as follows:

Paid-in capital from conversion of corporate bond to common stock in excess of par value Gains on acquisition of Taiwan Plasticizer Corporation Other Total	December 31, 2019 December 31, 2018 $ 8,997,136 8,997,136 74,474 74,474 17,546,224 17,600,509 $ 26,617,834 26,672,119

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(ii) Retained earnings

1) Legal reserve

If the Company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

(Continued)

272

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Special reserve

As the Company opted to avail of the exemptions allowed under IFRS 1“ First-time Adoption of International Financial Reporting Standards” during the Company’s firsttime adoption of the IFRSs as endorsed by the FSC, unrealized revaluation increments and cumulative translation adjustments (gains) of $6,277,052, which were previously recognized in shareholders’ equity were reclassified to retained earnings. In accordance with Regulatory Permit No. 1010012865 as issued by the FSC on April 6, 2012, a special reserve is appropriated from retained earnings for aforementioned reclassification. In addition, during the use, disposal or reclassifications of relevant assets, these special reserves can be reverted to distributable earnings proportionately. As the amount appropriated exceeds the increase in retained earnings arising from the adoption of IFRSs, only $6,243,060 is appropriated in compliance to the IFRSs as endorsed by the FSC. The balance of special reserve amounted to $6,128,451 and $6,129,884 as of December 31, 2019 and 2018.

Pursuant to the Regulatory Permit mentioned above, the Company is also required to set aside an additional special reserve, as part of the distribution of its annual earnings, equal to the difference between the amount of above-mentioned special reserve and net debit balance of the other components of stockholders’ equity.

3) Earnings distribution

According to the rules of the Company’s articles, the Company’s annual net earnings, after providing for income tax and covering the losses of previous years, is first set aside for legal reserve at the rate of 10% thereof. In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside. The remainder plus the undistributed earnings of the previous years are distributed or left undistributed for business purposes according to the resolution of the stockholders’ dividend distribution plan, which are initially proposed by the Board of Directors and adopted by the shareholders in the Annual Stockholders’ Meeting.

The Company belongs to a mature industry, in which the annual profit is stable. It adopts three kinds of dividend distribution policies, which are cash dividends, capitalization of earnings, and capital surplus. The net earnings after deducting the legal reserve and special reserve may first be distributed by way of cash dividends which shall be equal to at least fifty percent of the Company’ s total dividend distribution every year. The capitalization of earnings and capital surplus shall not exceed fifty percent of the total dividends.

(Continued)

273

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Based on the resolutions approved by stockholders during meetings held on June 12, 2019 and June 19, 2018, the distribution of the Company's earnings in 2018 and 2017, respectively, were as follows:

Dividends per share: Cash dividends Stock dividends	2018 2017 $ 5.00 5.10 - - $ 5.00 5.10

The aforementioned earnings distributions did not differ from those proposed by the board of directors and those estimated and accrued amount in the financial statements in 2018 and 2017. The related information can be obtained from the Market Observation Post System website.

(iii) Other equity accounts (net of tax)

Balance at January 1, 2019 Exchange differences arising on translation of foreign operations Exchange differences on associates / joint ventures accounts for using equity method Unrealized gains (losses) from financial assets at fair value through other comprehensive income Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income, associates and joint ventures accounted for using equity method Share of cash flow hedge of associates / joint ventures Balance at December 31, 2019	Exchange differences on translation of foreign financial statements $ (5,705,296) (4,917,128) (949,007) - - - $ (11,571,431)	Unrealized gains (losses) on financial assets at fair value through other comprehensive income 54,624,319 - - (7,787,927) (724,904) - 46,111,488	Gains (losses) on hedging instruments Total (15,181) 48,903,842 - (4,917,128) - (949,007) - (7,787,927) - (724,904) 15,812 15,812 631 34,540,688

Balance at January 1, 2018 Effects of retrospective application Balance at January 1, 2018 after adjustments Exchange differences arising on translation of foreign operations Exchange differences on associates / joint ventures accounted for using equity method Unrealized gains (losses) from financial assets at fair value through other comprehensive income Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income, associates and joint ventures accounted for using equity method Share of cash flow hedge of associates / joint ventures Balance at December 31, 2018	Exchange differences on translation of foreign financial statements $ (6,026,197) - (6,026,197) (91,431) 412,332 - - - $ (5,705,296)	Unrealized gains (losses) on financial assets at fair value through other comprehensive income - 61,239,238 61,239,238 - - (3,311,346) (3,303,573) - 54,624,319	Available- for-sale investment 47,691,196 (47,691,196) - - - - - - -	Cash flow hedge 7,729 (7,729) - - - - - - -	Gains (losses) on hedging instruments Total - 41,672,728 7,729 13,548,042 7,729 55,220,770 - (91,431 - 412,332 - (3,311,346 - (3,303,573 (22,910) (22,910 (15,181) 48,903,842

(Continued)

274

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) Share-based payment

The Consolidated Company was authorized to issue 9,912 units and 1,588 units of employee stock options on June 23, 2009 and March 25, 2010, respectively, and each option entitles the holder to subscribe for one thousand common shares of the Consolidated Company at the exercise price of $89 and $124.5, respectively. The Consolidated Company transferred capital surplus to share capital on August 5, 2011, and adjusted the exercise price to $75.4 and $116. The Consolidated Company distributed cash dividend on July 23, 2012, July 22, 2015, and July 12, 2016, and adjusted the exercise price to $72.2 (9,912 units) and $111.1 (1,588 units), $70.0 (9,912 units) and $107.5 (1,588 units), and $67.6 (9,912 units) and $103.8 (1,588 units), respectively. The Consolidated Company distributed cash dividend from capital surplus on July 26, 2017, and adjusted the exercise price to NT$100.5 (1,588 units). The grant was limited to regular employees of NanYa PCB Corporation. The options are exercisable at certain percentages after the second anniversary from the grant date, with 50%, 75%, and 100% of these stock options vested after the second, third, and fourth anniversary dates, respectively, and the options granted are valid for 8 years. Among all other stock options, those issued in 2009 and 2010 were already expired on June 23, 2017 and March 24, 2018, respectively.

(i) Parameter of the measurement of the fair value on grant dates

The Consolidated Company utilized the Black-Scholes option pricing model to value the stock options granted, and the main inputs to the valuation model were as follows:

Dividend rate Expected price volatility Risk-free interest rate Expected valid period (years) Projected turnover rate	The 1st batch 2009 of employee stock options - % 42.89 % 1.0102 5.375 % 13.01	The 2nd batch 2010 of employee stock options - % 39.77 % 0.9584 5.375 % 23.43

(ii) Related information of employee stock option plans

The details of these employee stock option plans for the years ended December 31, 2019 were as follows:

Employee stock option plans Outstanding at January 1, 2018 Options exercised Outstanding at December 31, 2018 Options exercisable at December 31, 2018		For the years ended December 31 2018	For the years ended December 31 2018
			Number of options (Units) 978 (978) - -

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(t) Earnings Per Share

The basic earnings per share for the years ended December 31, 2019 and 2018 were calculated on profit attributable to ordinary shareholders of the Company of $23,076,123 and $52,746,021, respectively, and weighted average number of outstanding shares of stock were 7,930,822 ordinary shares, were calculated as follows:

(i) Profit attributable to ordinary shareholders

		For the years	ended
		December	31,
		2019	2018
Profit attributable to ordinary shareholders	$	23,076,123	52,746,021

(ii) Weighted average number of outstanding ordinary shares

Shares outstanding as of January 1 is the same as weighted average number of common stock outstanding as of December 31	For the years ended December 31,
	2019 2018 $ 7,930,822 7,930,822

(u) Revenue from contracts with customers

Main Products PVC sheet Rigid sheet Pipes Phthalate Plasticizers BPA EG CCL Epoxy PCB Polyester Staple Fiber PET Resin DTY Machinery and Switchgear Others		For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2019
	Plastics industry $ 6,900,551 8,170,411 5,600,558 - - - - - - - - - - 21,857,861 $ 42,529,381	Chemical industry - - - 11,428,993 13,964,330 30,699,552 - - - - - - - 16,092,620 72,185,495	Electronic industry - - - - - - 26,609,055 26,508,047 31,089,732 - - - - 28,050,812 112,257,646	Polyester industry - - - - - - - - - 10,914,349 20,728,025 17,271,587 - 6,236,615 55,150,576	Other industries Total - 6,900,551 - 8,170,411 - 5,600,558 - 11,428,993 - 13,964,330 - 30,699,552 - 26,609,055 - 26,508,047 - 31,089,732 - 10,914,349 - 20,728,025 - 17,271,587 3,954,305 3,954,305 225,656 72,463,564 4,179,961 286,303,059

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Main Products PVC sheet Rigid sheet Pipes Phthalate Plasticizers BPA EG CCL Epoxy PCB Polyester Staple Fiber PET Resin DTY Machinery and Switchgear Others		For the years ended December 31, 2018	For the years ended December 31, 2018	For the years ended December 31, 2018	For the years ended December 31, 2018
	Plastics industry $ 7,512,651 8,716,606 5,660,420 - - - - - - - - - - 23,648,401 $ 45,538,078	Chemical industry - - - 12,740,256 20,177,712 42,883,565 - - - - - - - 20,691,572 96,493,105	Electronic industry - - - - - - 29,411,039 26,745,930 28,829,433 - - - - 32,035,262 117,021,664	Polyester industry - - - - - - - - - 13,361,926 28,926,507 18,922,604 - 6,646,451 67,857,488	Other industries Total - 7,512,651 - 8,716,606 - 5,660,420 - 12,740,256 - 20,177,712 - 42,883,565 - 29,411,039 - 26,745,930 - 28,829,433 - 13,361,926 - 28,926,507 - 18,922,604 5,766,342 5,766,342 384,883 83,406,569 6,151,225 333,061,560

(v) Employee compensation

According to the specifications of the Company’s article, 0.05% to 0.5% of the earnings before tax and bonuses should be appropriated to employees as bonuses. However, certain amounts of the earnings should be reserved if there is an accumulated loss from the operations in the previous years in advance of the appropriation of the employee bonuses.

The remunerations to employees amounted to $24,588 and $57,879, respectively, for the years ended December 31, 2019 and 2018, respectively. These amounts were calculated using the Company's net income before tax without the remunerations to employees for each period, multiplied by the proposed percentage which is stated under the Company's proposed Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period. If there are any subsequent adjustments to the actual remuneration amounts after the annual shareholder’ meeting, the adjustment will be regarded as changes in accounting estimates and will be reflected in profit or loss in the following year.

For the year ended December 31, 2018 and 2017, the remunerations to employees amounted to $57,879 and $58,908, respectively, which were paid in cash. There was no difference from the actual distribution. The information is available on the Market Observation Post System website.

(w) Non-operating income and expenses

(i) Other income

The details of other income were as follows:

Interest income Dividend income Other income	2019 2018 $ 1,090,433 1,047,522 3,237,464 3,613,797 2,043,670 1,974,363 $ 6,371,567 6,635,682

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Other gains and losses

The details of other gains and losses were as follows:

Loss on disposal of property, plant and equipment Foreign currency exchange gain (loss) Gain on financial assets and liabilities at fair value through profit or loss Gain on disposal of financial assets Reversal of impairment loss on plant, property, and equipment and non-financial assets Others	2019 2018 $ 307,736 (105,817) 100,199 1,137,154 (26,211) 198,301 53,863 - 59 - (221,893) (217,178) $ 213,753 1,012,460

(iii) Finance costs

The details of finance costs were as follows:

Interest expense Less: interest capitalized	2019 2018 $ 1,920,271 1,787,202 (299,843) (63,733) $ 1,620,428 1,723,469

(x) Financial Instruments

(i) Credit Risk

1) Credit risk exposure

The Consolidated Company is exposed to credit risk primarily from cash and cash equivalents, deposits, and trade receivables.

2) Concentration of credit risk

As sales are made to customers worldwide, the Consolidated Company’ s exposure to credit risk concentration is expected to be low. Also, the Consolidated Company mitigates its exposure by evaluating the customers’ financial situation regularly.

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2019 Non-derivative financial liabilities Short-term notes and bills payable Notes and accounts payable Accounts payables to related parties Short-term borrowings Long-term borrowings Bonds payable (TWD) Long-term notes payable December 31, 2018 Non-derivative financial liabilities Short-term notes and bills payable Notes and accounts payable Accounts payables to related parties Short-term borrowings Long-term borrowings Bonds payable (TWD) Long-term notes payable	Carrying amount $ 15,392,795 9,102,231 6,986,969 1,568,800 9,784,450 63,978,661 5,096,417 $ 111,910,323 $ 8,897,747 9,496,716 8,720,846 21,253,381 12,270,805 58,531,455 7,096,550 $ 126,267,500	Contractual cash flows 15,402,402 9,102,231 6,986,969 1,583,873 9,820,116 68,740,741 5,185,968 116,822,300 8,902,253 9,496,716 8,720,846 21,275,726 12,468,908 63,537,300 7,169,000 131,570,749	Within 6 months 15,402,402 9,102,231 6,986,969 43,690 - 1,526,240 7,164 33,068,696 8,902,253 9,496,716 8,720,846 21,062,328 5,520,038 1,490,640 6,900 55,199,721	6-12 months - - - 1,540,183 - 3,975,235 7,164 5,522,582 - - - 213,398 702,628 5,305,820 6,900 6,228,746	1-2 years - - - - 9,820,116 6,553,430 2,128,656 18,502,202 - - - - 5,576,178 5,411,435 4,113,800 15,101,413	2-5 years Over 5 years - - - - - - - - - - 31,840,153 24,845,683 3,042,984 - 34,883,137 24,845,683 - - - - - - - - 670,064 - 28,195,578 23,133,827 3,041,400 - 31,907,042 23,133,827

It is expected that the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Currency risk

1) Exposure to foreign currency risk

The Consolidated Company’ s significant exposure to foreign currency risk were as follows:

Financial assets Monetary items USD JPY EUR HKD CNY	December 31, 2019	December 31, 2019
	Foreign Currency $ 814,690 391,109 598 5,840 23,304	Exchange Rate TWD 30.1060 24,527,057 0.2763 108,063 33.6895 20,146 3.8597 22,541 4.3155 100,568

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Non-monetary items USD CNY IDR VND Financial liabilities Monetary items USD JPY EUR Financial assets Monetary items USD JPY EUR HKD CNY Non-monetary items USD CNY IDR VND Financial liabilities Monetary items USD JPY EUR CNY	December 31, 2019	December 31, 2019
	Foreign Currency Exchange Rate TWD $ 482,507 30.1060 14,526,356 59,888 4.3155 258,447 119,869,376 0.0022 263,713 6,283,412,736 0.0013 8,168,437 159,283 30.1060 4,795,374 1,487,754 0.2763 411,066 2,498 33.6895 84,156 December 31, 2018
	Foreign Currency $ 984,912 146,226 1,865 1,926 2,003 637,933 49,723 115,654,799 6,171,469,405 74,665 1,266,777 1,079 1	Exchange Rate TWD 30.7330 30,269,300 0.2772 40,534 35.1670 65,586 3.9401 7,589 4.4779 8,969 30.7330 19,605,595 4.4779 222,655 0.0020 231,310 0.0013 8,022,910 30.7330 2,294,679 0.2772 351,151 35.1670 37,945 4.4779 4

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Sensitivity analysis

The Consolidated Company’ s exposure to exchange rate risk arises from the foreign currency exchange fluctuations on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, accounts payable and other payables that are dominated in foreign currency. The overall effects to net income before tax for the years ended December 31, 2019 and 2018 assuming the TWD depreciated or appreciated by 1% against the USD, JPY, EUR, HKD and CNY as of December 31, 2019 and 2018 were as follows:

Appreciation in value of 1% Depreciation in value of 1%	For the years ended December 31, 2019 2018 $ (194,865) (277,022) 194,865 277,022

This analysis is performed on the same basis for the two periods.

3) Foreign exchange gain and loss on monetary items

Since the Consolidated Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. for the years ended December 31, 2019 and 2018, foreign exchange gain (loss) (including realized and unrealized portions) amounted to $100,199 and $1,137,154, respectively.

(iv) Other market price risks

For the years ended December 31, 2019 and 2018, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the comprehensive income as illustrated below:

Prices of securities at the reporting date Increasing 1% Decreasing 1%	For the years ended December 31, 2019 For the years ended December 31, 2018 Other comprehensive income after tax Other comprehensive income after tax $ 417,158 445,287 $ (417,158) (445,287)

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Group's financial assets and liabilities.

The following sensitivity analysis is based on the risk exposure to the interest rates risk of derivative and non derivative financial instruments on the reporting date. For variable rate instruments, the sensitivity analysis assumes the liabilities bearing variable interest rates are outstanding for the whole year. A 1% increase or decrease in interest rate is assessed by management to be a reasonable possible change in interest rate.

An increase or decrease of 1% in interest rates mainly from loans with floating interest rates at the reporting date would have increased or decreased net income by $978 and $1,362 for the years ended December 31, 2019 and 2018, respectively.

(vi) Fair value of financial instruments
1) Fair value hierarchy

The fair value of financial assets and liabilities at fair value through profit or loss and financial assets at fair value though other comprehensive income is measured on a recurring basis. The carrying amount and fair value of the Consolidated Company’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required :

Financial assets at fair value through profit or loss Designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks in listed companies Unquoted equity instruments Subtotal Financial assets measured at amortized cost Cash and cash equivalent Notes and accounts receivable (including related parties) Other receivables due from related parties Subtotal		December 31, 2019	December 31, 2019	December 31, 2019
	Book Value $ 4,869,082 $ 41,715,821 22,662,110 $ 64,377,931 $ 43,608,119 44,063,533 5,925,227 $ 93,596,879	Level 1 - 41,715,821 - 41,715,821 - - - -	Fair Value
			Level 2 4,044,356 - - - - - - -	Level 3 Total 824,726 4,869,082 - 41,715,821 22,662,110 22,662,110 22,662,110 64,377,931 - - - - - - - -

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	December 31, 2019	December 31, 2019	December 31, 2019
Book Value $ 24,012,100 15,392,795 16,089,200 63,978,661 18,084,450 5,096,417 $ 142,653,623	Fair Value Level 1 Level 2 Level 3 Total 24,012,100 - - 24,012,100 15,392,795 - - 15,392,795 - - - - 63,978,661 - - 63,978,661 18,084,450 - - 18,084,450 5,096,417 - - 5,096,417 126,564,423 - - 126,564,423 December 31, 2018	Fair Value
	Level 1 - 44,528,667 - 44,528,667 - - - - 21,253,381 8,897,747 - 58,531,455 12,270,805 7,096,550 108,049,938	Fair Value
		Level 2 4,017,249 - - - - - - - - - - - - - -	Level 3 Total 1,047,877 5,065,126 - 44,528,667 28,011,349 28,011,349 28,011,349 72,540,016 - - - - - - - - - 21,253,381 - 8,897,747 - - - 58,531,455 - 12,270,805 - 7,096,550 - 108,049,938

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Valuation techniques for financial instruments not measured at fair value

The Consolidated Company’s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

a) Financial assets measured at amortized cost

If the quoted prices in active markets are available, the market price is established as the fair value. However, if quoted prices in active markets are not available, the estimated valuation or prices used by competitors are adopted.

b) Financial liabilities measured at amortized cost

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

3) Valuation techniques for financial instruments measured at fair value
a) Non-derivative financial instruments

Financial instrument possesses a quoted price in the active markets if the trading prices fairly represent the frequent and orderly transactions for financial instrument, and are readily available from trade centers, security brokers, underwriters, trade unions, pricing service institutes or other related authorities. The market for the said financial instrument shall be seen as inactive should the aforementioned requirements have not been met. Large or significantly increasing gap between the purchase and the exit prices of a financial instrument, or low trade volume, are general indicators of an inactive market.

If the financial instrument of the Consolidated Company possesses an active market, its fair value should be recognized according to different categories and characteristics as follows:

For listed and over-the-counter stocks with standard terms and are publicly traded in active markets, their fair value are calculated by the market’s quoted prices.

Other financial instruments that are not traded in active markets are measured with fair values provided by using the valuation techniques via market approach or the discounted cash flow method or other available methods.

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

If the financial instruments held by the Consolidated Company are not traded in active markets, the valuation of their fair value is categorized as follows:

Bond investments that has no quoted prices: Fair value is measured with the income approach by applying the discounted cash flow method that convert future cash flow amounts to a single current amount on the basis of the value indicated by current market expectations about those future amounts.

4) Transfers between levels of the fair value hierarchy

There were no transfers between levels of the fair value hierarchy for the years ended December 31, 2019 and 2018.

5) Reconciliation of Level 3 fair value

Balance at January 1, 2019 Total gains and losses recognized: In profit or loss In other comprehensive income Disposals Effect of exchange rate changes Balance at December 31, 2019 Balance at January 1, 2018 Total gains and losses recognized: In profit or loss In other comprehensive income Purchased Proceeds from capital reduction Effect of exchange rate changes Balance at December 31, 2018	Fair value through profit and loss Bond investment and others $ 1,047,877 545 - (207,799) (15,897) $ 824,726 $ 1,038,606 (21,142) - - - 30,413 $ 1,047,877	Fair value through other comprehensive income
		Unquoted equity instruments Bond investment and others 28,011,349 - - - (4,975,987) - - - (373,252) - 22,662,110 - 30,050,756 - - - (4,270,410) - 1,676,070 - (1,972) - 556,905 - 28,011,349 -

6) The valuation procedures for fair value measurements being categorized within Level 3 is to ensure the valuation results are reasonable by applying independent information to make results close to the current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price. According to the Consolidated Company’s accounting policy, the analysis of value changes on remeasured or reevaluated assets and liabilities at the reporting date is performed to ensure the reasonability of the evaluation results.

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

Most of the Consolidated Company’ s financial instruments that use Level 3 inputs involve only one significant unobservable input. Only equity investment with no-active markets involves multiple significant unobservable inputs.

Quantified information of significant unobservable inputs were as follows:

Inter-relationship between significant unobservable inputs Significant and fair value Item Valuation technique unobservable inputs measurement Financial assets at Market comparable Price to earnings ratio The higher the fair value through companies multiple, price to book multiple, the higher the ratio multiple, fair value other enterprise value to comprehensive operating income ratio income - multiple, enterprise equity instruments value to EBITA without an active market multiple, discount for lack of marketability Net Asset Value Not applicable Not applicable Method

8) Fair value measurement in Level 3 - sensitivity analysis of the possible alternative assumptions

The valuation models and assumptions used to measure the fair value of the financial instruments is reasonable. However, the use of different valuation models or assumptions may result in different measurements. For fair value measurements in Level 3, changing one or more of the assumptions to reflect reasonably possible alternative assumptions would have the following effects:

December 31, 2019 Financial assets at fair value through other comprehensive income – unquoted equity instruments December 31, 2018	Input	Change	Recognized in other comprehensive income
			Favorable change Unfavorable change $ 189,147 (189,147)
	Price to earnings ratio multiple, price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	± 1%

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets at fair value through other comprehensive income – unquoted equity instruments	Input	Change	Recognized in other comprehensive income
			Favorable change Unfavorable change $ 239,952 (239,952)
	Price to earnings ratio multiple, price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	± 1%

(y) Financial risk management

(i) The Consolidated Company have exposures to the following risks from its financial instruments:
1) Credit risk
2) Liquidity risk
3) Market risk

The following likewise discusses the Consolidated Company's objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risks exposures, please refer to the respective notes in the accompanying consolidated financial statements.

(ii) Structure of risk management

The Consolidated Company’s risk management policies are established to identify and analyze the risks faced by the Consolidated Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

The Consolidated Company Audit Committee oversees how management monitors compliance with the Consolidated Company’ s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Consolidated Company.

(iii) Credit risk

Credit risk is the risk of financial loss to the Consolidated Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

To maintain the credit quality of receivables, a credit risk management policy has been established. Under this policy, each customer is analyzed individually regarding customer’s financial situation, external and internal credit rating, historical trading record, and current economic condition which may affect customer’s payment ability. In addition, some methods are adopted to reduce the credit risk for specific customers, such as prepayment and insurance of accounts receivable.

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The credit risk exposure on bank deposits and other financial instruments are measured and monitored by the Consolidated Company’s finance department. As the Consolidated Company’ s transactions are done with the banks and other external parties with good credit standing, management is not aware of any noncompliance issues and is not expecting significant credit risk.

(iv) Liquidity risk

Liquidity risk is the risk that the Consolidated Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Consolidated Company’ s approach to managing liquidity is to ensure, as much as possible, that it will always have sufficient current funds, such as cash and cash equivalents, securities with high liquidity and sufficient credit line from banks, to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Consolidated Company’s reputation.

(v) Market risk

Market risk is the risk that changes in the market, such as foreign exchange rates, interest rates, and equity prices, of that will affect the Consolidated Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Consolidated Company is exposed to currency risk is due to global transactions that are denominated in a currency other than the respective functional currency of the Company, primarily the New Taiwan Dollars (TWD). The currencies used in these transactions are denominated in USD. The currency risk mainly arises from future business transactions and recognized assets and liabilities. Part of the currency risks arising from purchases and sales can be offset each other to achieve automatic hedge.

When the Consolidated Company has foreign currency needs, the Consolidated Company uses spot exchange contracts and forward exchange contracts if the exchange rate is advantageous to the Consolidated Company to manage the risk. If necessary, the Consolidated Company uses derivatives operated by prestigious international banks to manage its exposure to foreign currency exchange rate fluctuation risk, which monitor the exchange rate risks and adhere to acceptable levels by the Consolidated Company.

2) Interest rate risk

The Consolidated Company’s interest rate risk mainly arises from long-term loans with variable interest rates, which bear cash flow risks to the Consolidated Company. Part of the interest rate risks can be offset by cash and cash equivalents with variable interest rates held by the Consolidated Company.

The Consolidated Company manages interest rate risks by using derivatives when necessary, to lower the risk to acceptable levels.

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Other market price risk

The Consolidated Company is exposed to fair value change risk due to financial assets at fair value through other comprehensive income (available-for-sale financial assets), which were measured at fair value.

(z) Capital Management

Although business operated by the Consolidated Company has reached the stage of maturity, a sufficient amount of capital is still required to support the operation of investee companies, construction and expand its production facilities and equipment.

The Consolidated Company’s policy is to maintain sufficient financial resources and operating plan to meet future demands such as operating capital, capital expenditure, research and development expenditures, loan reimbursements, and dividend distributions.

The Consolidated Company and other entities in the same industry use the debt-to-equity ratio to manage its capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt. The Consolidated Company’s debt-to-equity ratio at the end of the reporting period were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Debt-to-equity ratio at December 31	December 31, 2019 December 31, 2018 $ 199,107,979 183,344,352 (43,608,119) (52,365,882) $ 155,499,860 130,978,470 $ 355,570,700 386,904,992 % 30.43 % 25.29

(aa) Reconciliation of liabilities arising from financing activities

Short-term borrowings Balance as of January 1, 2019 $ 21,253,381 Change in cash from financing activities 2,772,313 Non-cash changes - Influence due to fluctuation of exchange rate (13,594) Balance as of December 31, 2019 $ 24,012,100	Short-term notes payable 8,897,747 6,500,000 (4,952) - 15,392,795	Long-term notes payable 7,096,550 (2,000,000) (133) - 5,096,417	Long-term borrowings (including current portion) 12,270,805 6,133,209 - (319,564) 18,084,450	Bonds payable (including current portion) 58,531,455 5,431,560 15,646 - 63,978,661	Lease liabilities (including current portion) Total liabilities arising from financing activities 624,278 108,674,216 (209,941) 18,627,141 80,518 91,079 (6,106) (339,264) 488,749 127,053,172

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance as of January 1, 2018 Change in cash from financing activities Non-cash changes Influence due to fluctuation of exchange rate Balance as of December 31, 2018	Short-term borrowings	Short-term notes payable	Long-term notes payable	Long-term borrowings (including current portion)	Bonds payable (including current portion) Total liabilities arising from financing activities
	$ 9,295,583 11,969,794 - (11,996) $ 21,253,381	7,998,778 900,000 (1,031) - 8,897,747	4,998,418 2,100,000 (1,868) - 7,096,550	23,151,433 (12,602,786) - 1,722,158 12,270,805	55,923,701 101,367,913 2,598,472 4,965,480 15,414 12,515 (6,132) 1,704,030 58,531,455 108,049,938

(7) Related-party transactions:

(a) Parent company and ultimate controlling party

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

(b) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

	Relationship with the
Name of related party	Consolidated Company
Formosa Petrochemical Corporation	Associates
Nanya Technology Corporation	Associates
Formosa Resources Corporation	Associates
Formosa Plastics Construction Corporation	Associates
Formosa Heavy Industries Corporation	Associates
Formosa Heavy Industries (Ningbo) Co., Ltd.	Associates
Formosa Heavy Industries Corp. (GZ) Ltd.	Associates
Formosa Synthetic Rubber (Hong Kong) Corporation Limited	Associates
Formosa Synthetic Rubber (Ningbo) Co., Ltd.	Associates
Formosa Industries Corporation	Associates
Formosa Group (Cayman) Limited	Associates
Formosa Utility Venture, Ltd.	Associates
Formosa Environmental Technology Corporation	Associates
Formosa Plastics Transport Corporation	Associates
FG Inc.	Associates
Nan Ya Plastics (Zhengzhou) Co., Ltd.	Joint ventures
Nanya Kyowa Plastics (Nantong) Co., Ltd.	Joint ventures
P.T. Indonesia Nanya Indah Plastics Co.	Joint ventures
Formosa Plastics Corporation	Other related parties
Formosa Chemicals and Fiber Corporation	Other related parties

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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Relationship with the Consolidated Company

Name of related party Hwa Ya Power Corporation Other related parties Formosa Taffeta Co., Ltd. Other related parties Formosa Advanced Technologies Co., Ltd. Other related parties Formosa Ha Tinh (Cayman) Ltd. Other related parties Formosa Ha Tinh Steel Corporation Other related parties Formosa Ha Tinh (Cayman) Limited Taiwan Branch Other related parties China Man-made Fiber Corporation Other related parties Mai Liao Harbor Administration Corp. Other related parties Formosa Industries (Ningbo) Co., Ltd. Other related parties Formosa Power (Ningbo) Limited Company Other related parties Formosa Chemicals and Fiber (Ningbo) Corporation Other related parties Xiamen Haicang Investment Group Co., Ltd. Other related parties Formosa Plastics Marine Corporation Other related parties Formosa Plastics Corporation U.S.A. Other related parties FG LA LLC Other related parties Ming Chi University Of Technology Other related parties Formosa Industries Corporation, U.S.A. Other related parties Formosa Plastics Marine Corporation Other related parties Formosa Electronic (Ningbo) Co., Ltd. Other related parties

(i) Sales to related parties

The amounts of significant sales by the Consolidated Company to related parties were as follows:

Associates and joint ventures Other related parties	For the years ended December 31
	2019 2018 $ 4,823,266 7,582,255 13,749,358 16,804,638 $ 18,572,624 24,386,893

The receivables from related parties were as follows:

Associates and joint ventures Other related parties	December 31, 2019 December 31, 2018 $ 683,497 975,340 1,182,504 1,509,009 $ 1,866,001 2,484,349

(Continued)

291

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The selling prices and collection terms of sales to related parties are not significantly different from those of third-party customers. The accounts receivable arising from sales of machinery and equipment, and machine parts are collected after the delivery inspection, and the accounts receivable arising from sales of other products are collected on the 30th day of the following month.

The Consolidated Company sells mainly machinery and provides engineering services to related parties in China and Vietnam. Payment is made after the test run of machinery sold. Also, it sells other products to these related parties. Selling prices and collection terms of other products sold to these associates are not materially different from those to non-related general buyers. Payments are collected 30 to 180 days after shipping of these other products.

(ii) Purchase from related parties

The amounts of significant purchases by the Consolidated Company from related parties were as follows:

		2019	2018
Associates and joint ventures
Formosa Petrochemical Corporation	$	35,608,519	47,217,016
Other associates and joint ventures		39,150	90,169
Other related parties
Formosa Chemicals and Fiber Corporation		24,944,681	36,196,315
Other related parties		21,870,354	24,913,017
	$	82,462,704	108,416,517

The payables to related parties were as follows:

Associates and joint ventures Formosa Petrochemical Corporation Other associates and joint ventures Other related parties Formosa Chemicals and Fiber Corporation Other related parties	December 31, 2019 December 31, 2018 $ 2,862,473 3,376,770 4,727 72 1,959,178 2,763,341 2,160,591 2,165,767 $ 6,986,969 8,305,950

Purchase prices and payment terms of purchases from related parties are not materially different from those of non-related general suppliers. Payment shall be paid within 30 to 180 days of the month following the month of purchase with checks which are due and payable immediately.

(Continued)

292

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Unrealized sales profit

Significant unrealized (realized) profits from sales to related parties were as follows:

Investee Associates and joint ventures	For the ye	a	rs ended Decemb	e	r 31, 2019		For the y	e	ars ended December 31, 2018
	Unrealized sales profit at beginning of period		(Realized) Unrealized sales profits		Unrealized sales profit at end of period		Unrealized sales profit at beginning of period		(Realized) Unrealized sales profits Unrealized sales profit at end of period (56,290) 45,959
	$ 45,959				38,995		102,249

(iv) Construction

The Consolidated Company contracted with associates to construct and expand the factory. The construction costs were as follows:

Associates and joint ventures Formosa Heavy Industries Corporation Other related parties Formosa Plastics Corporation The payables to related parties were as follows: Associates and joint ventures Formosa Heavy Industries Corporation	For the years ended December 31
	2019 2018 $ 3,082,860 728,593 17,988 - $ 3,100,848 728,593 December 31, 2019 December 31, 2018 $ - 414,896

(v) Utility expenses

Part of the utilities of the Consolidated Company's Lin-Yuan plant and all of the utilities of the Consolidated Company’s Ren-Wu plant, including power, water and steam, are supplied by or paid on behalf of the Consolidated Company by the utility plants of Formosa Plastics Corporation. The utilities of the Consolidated Company’s Mai Liao plant, including power, water and steam, are supplied by Formosa Petrochemical Corporation. The expenses for utilities were as follows:

Associates and joint ventures Formosa Petrochemical Corporation Other related parties Other related parties	For the years ended December 31
	2019 2018 $ 7,217,914 7,903,439 106,786 109,049 $ 7,324,700 8,012,488

(Continued)

293

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The payables to related parties were as follows:

Associates and joint ventures Formosa Petrochemical Corporation	December 31, 2019 December 31, 2018 $ 84,083 89,949

(vi) Property transactions
1) Purchase of Property, Plant and Equipment

The purchases price of property, plant and equipment purchased from related parties were as follows:

Associates－Formosa Petrochemical Corporation	December 31, 2019 December 31, 2018 $ 9,618 30,768

In November, December, 2019 and June, 2018, the Consolidated Company purchased property, plant, and equipment, amounting to $9,618 and $30,768, respectively. As of December 31, 2019 and 2018, the ownership transfer process has been finished. The purchase price for the property, plant, and equipment was determined based on market condition and asset evaluation report. For further description of the property, plant, and equipment, please refer to note 6(i).

2) Acquisition of financial assets

==> picture [394 x 173] intentionally omitted <==

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

For the year
Number of Shares ended
Account (in thousands) Purpose December 31, 2019
Associates－ Investments accounted Shares of stock of Formosa
Formosa Resources for using equity method Resources Corporation
Corporation 157,000 $ 1,570,000
Associates－FG Inc.Investments accounted Shares of stock of FG Inc.
for using equity meth - 231,570
Associates－ Investments accounted Shares of stock of Formosa
Formosa Synthetic for using equity method Synthetic Rubber Corporation
Rubber Corporation Limited
Limited 4,600 46,000
Subsidiaries－Nan Investments accounted Shares of stock of Formosa
Ya PCB Corporation for using equity method" Advanced Technologies
13,267 Co.,Ltd 472,968
$ 2,320,538
----- End of picture text -----

(Continued)

294

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Account Other related parties `－`Formosa Ha Tinh (Cayman) Ltd. Non-current financial assets at fair value through other comprehensive income Associates`－` Formosa Synthetic Rubber (Hong Kong) Corporation Limited Investments accounted for using equity method	Number of Shares (in thousands) 56,471 65,000	Purpose For the year ended December 31, 2018 Shares of stock of Formosa Ha Tinh (Cayman) Ltd. $ 1,676,070 Shares of stock of Formosa Synthetic Rubber (Hong Kong) Corporation Limited 2,010,450 $ 3,686,520

3) Disposals of property, plant and equipment

The disposals of property, plant and equipment to related parties are summarized as follows:

Associates Formosa Industries Corporation Other related parties Formosa Plastic Corporation	For the years ended December 31, 2019 Disposal price Gain (loss) from disposal $ 1,247,436 (62,144) - - $ 1,247,436 (62,144)	For the years ended December 31, 2018
	Disposal price $ 1,247,436 - $ 1,247,436	Disposal price Gain (loss) from disposal - - 187 57 187 57

As of December 31, 2019 and 2018, the outstanding balance were $748,193 and $0, respectively. Please refer to note 6(h) for the details of property, plant and equipment.

(vii) Loans to related parties

The loans to related parties were as follows:

Associates and joint ventures Other associates and joint ventures Other related parties Formosa Plastics Marine Corporation Other related parties	Other receivables from related parties
	December 31, 2019 December 31, 2018 $ 198,097 221,205 5,640,819 5,807,107 86,311 89,558 $ 5,925,227 6,117,870

(Continued)

295

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(viii) Endorsements and guarantees

The amounts of the Consolidated Company’s endorsements and guarantees for securing related parties’ loans were as follows:

Associates and joint ventures Formosa Group (Cayman) Limited Formosa Industries Corporation Formosa Resources Corporation Other related parties Formosa Ha Tinh (Cayman) Ltd.	December 31, 2019 December 31, 2018 $ 7,526,500 19,208,125 602,120 5,043,547 3,236,395 3,303,798 20,753,559 15,915,686 $ 32,118,574 43,471,156

(ix) Leases

1) The rental income of the Consolidated Company from leasing its plants to its related parties, recognized as other income, were as follows:

Associates and joint ventures Nan Ya Technology Corporation	For the years ended December 31
	2019 2018 $ 258,976 234,064

The rentals charged to related parties are determined based on the local market prices, and rents are collected monthly depending on the contract.

2) The rental expenses of the Consolidated Company's offices and buildings leased its related parties, recognized as operating costs and expenses, were as follows:

The Consolidated Company rented an office building and a piece of land from Formosa Plastics Corporation. The rentals charged to related parties are determined based on the local market prices. Rental expenses for the years ended December 31, 2018 amounted to $41,171. The Consolidated Company applied IFRS 16, with a date of initial application on January 1, 2019. This lease transaction recognized the additional amounts of $51,295 and $51,295 of right-of-use assets and lease liabilities, respectively. For the years ended December 31, 2019, the Consolidated Company recognized the amount of $564 as interest expense. As of December 31, 2019, the balance of lease liabilities amounted to $26,385, consisting of current and noncurrent portion amounting to $25,264 and $1,121, respectively.

(Continued)

296

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Consolidated Company rented an office building from Formosa Chemicals and Fiber Corporation. The rentals charged to related parties are determined based on the local market prices. Rental expenses for the years ended December 31, 2018 amounted to $27,125. The Consolidated Company applied IFRS 16, with a date of initial application on January 1, 2019. This lease transaction recognized the additional amounts of $53,458 and $53,458 of right-of-use assets and lease liabilities, respectively. For the year ended December 31, 2019, the Consolidated Company recognized the amount of $584 as interest expense. As of December 31, 2019, the balance of lease liabilities amounted to $26,918.

The Consolidated Company rented an office building from Ming Chi University of technology in May 2019, where in the rental is determined based on the local market prices. The interest expenses for the years ended December 31, 2019 amounted to $984. As of December 31, 2019, the balance of lease liabilities amounting to $67,947, consisted of current and non-current portion of $3,140 and $64,807, respectively.

(x) Others

Associates－Formosa Plastics Corporation	For the years ended December 31, 2019
	$ 10

For the year ended December 31, 2019, the Consolidated Company purchased official vehicles from Formosa Plastics Corporation, which were managed assets, and recognized as miscellaneous purchases. The Consolidated Company did not have similar transactions for the year ended December 31, 2018.

(d) Key management personnel compensation

Key management personnel compensation comprised:

		For the years ended
		December 31
		2019 2018
Short-term employee benefits	$	143,949 130,435

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets	Object	Usage	December 31, 2019 December 31, 2018 $ 1,271,053 1,286,336 7,529,494 7,529,494 - 11,681 $ 8,800,547 8,827,511
Current Financial asset at fair value through other comprehensive income－stock of Formosa Plastics Corporation Land (include idle land) Machinery and equipment Total	Others Bank loans Bank loans	The collateral to provisional execution in litigation Bank loans Bank loans

(Continued)

297

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(9) Significant commitment and contingencies:

(1) Outstanding standby letter of credit (2) Endorsements and guarantees (3) Bonding guarantees by banks (4) Letters of credit guarantees by banks	December 31, 2019 December 31, 2018 $ 2,358,537 1,359,423 32,118,574 43,471,156 29,000 22,000 24,000 20,000

(5) Formosa Industries Corporation, a Company’s investee, signed a syndicated line of credit with a group of financial institutions amounting to USD 250,000 thousand for its operational needs. According to the requirement of the consortium, the Company has to offer a letter of support based on its ownership of 42.5% and commit to monitor the operations of Formosa Industries Corporation to ensure that it completes its financial obligation.
(6) Formosa Ha Tinh (Cayman) Ltd. and Formosa Ha Tinh Steel Corporation, Company’ s investees, signed a syndicated line of credit with a group of financial institutions amounting to USD 1,990,000 thousand and USD 500,000 thousand, respectively, for its operational needs. According to the requirement of the consortium, the Company has to offer a letter of undertaking or a letter of support based on its ownership of 11.432% and commit to monitor the operations of Formosa Ha Tinh (Cayman) Ltd. and Formosa Ha Tinh Steel Corporation to ensure that they complete their financial obligation.
(7) Nan Ya Electronic Materials (Huizhou) Co., Ltd, a Company's investee, planned to apply for a fiveyear syndicated loan with a total amount of no more than CNY 1,000,000 thousand, with a group of financial institutions, among which Mega International Commercial Bank Suzhou Branch and Fubon Bank (China) Co., Ltd. act as leading banks. According to the requirement of the consortium, the Company has to offer a letter of support, and commit to monitor the operations of Nan Ya Electronic Materials (Huizhou) Co., Ltd to ensure that it completes its financial obligation.
(8) Litigation between the Company and DBTEL Incorporated

The Company’s client, DBTEL Inc. (DBTEL), placed several orders from the Company concerning LCD monitors since May 2003. However, in June 2004, it decided to cancel some of them, even demanding the Company to postpone its delivery; and in some cases, it went to a certain extent as to refuse accepting the goods delivered by the Company, resulting in a stock up of both raw materials and finished products in the Company’s warehouse amounting to USD 5,409,815 and TWD 100,846,141. In light of this matter, the Company filed a lawsuit against DBTEL to the Taiwan High Court on April 6, 2006, demanding for compensation for the damage caused by DBTEL. In reply, the Court authorized the Company to hold certain properties of DBTEL as its collateral. However, DBTEL was not satisfied with the decision made by the Court; therefore, it filed an appeal against the Company. On April 18, 2017, the Court decided that the compensation demanded by the Company should not exceed the amounts of USD 1,246,118 and TWD 27,229,161 (both including principal and interest). Plus, the said properties that were held by the Company for collateral should also be returned to DBTEL. On August 8, 2018, the Supreme Court rejected the verdict handed down by the High Court about the dismissal of the Company’ s appeal in the first instance, the appeal of DBTEL, other declaration of provisional execution, and the related legal expenses. Therefore, the High Court will have to decide on this matter. Currently, this case is still in progress.

(Continued)

298

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, were as follows:

follows:
by function by item	For the years ended December 31,
	2019				2018
	Operating Costs	Operating expenses	Non-Operating expenses	Total	Operating Costs	Operating expenses	Non-Operating expenses	Total
Employee benefit Salaries Labor and health insurance Pension expenses Remuneration of directors Others personnel expenses Depreciation expenses Amortization expenses	29,371,912 2,103,858 1,638,905 - 1,249,637 14,546,276 1,039,106	5,432,775 363,328 350,848 35,172 211,038 681,407 247,073	- - - - - 30,780 -	34,804,687 2,467,186 1,989,753 35,172 1,460,675 15,258,463 1,286,179	22,652,598 2,018,259 1,616,508 - 1,230,798 15,424,744 1,614,247	5,711,946 345,431 348,358 30,235 196,730 542,501 246,372	- - - - - 25,324 -	28,364,544 2,363,690 1,964,866 30,235 1,427,528 15,992,569 1,860,619

(13) Other disclosures:

(a) Information on significant transactions:
(i) Lending to other parties: Please see attached Table 1.
(ii) Guarantees and endorsements for other parties: Please see attached Table 2.
(iii) Information regarding securities held at the reporting date (subsidiaries, associates and joint ventures not included): Please see attached Table 3.
(iv) Information regarding purchase or sale of securities for the period exceeding 300 million or 20% of the Company’s paid-in capital: Please see attached Table 4.
(v) Information on acquisition of real estate with purchase amount exceeding 300 million or 20% of the Company's paid-in capital: Please see attached Table 5.
(vi) Information regarding receivables from disposal of real estate exceeding 300 million or 20% of the Company's paid-in capital: Please see attached Table 6.
(vii) Information regarding related-parties purchases and/or sales exceeding 100 million or 20% of the Company's paid-in capital: Please see attached Table 7.
(viii) Information regarding receivables from related-parties exceeding 100 million or 20% of the Company's paid-in capital: Please see attached Table 8.
(ix) Information regarding trading in derivative financial instruments: None.
(x) Significant transactions and business relationship: Please see attached Table 9.

(Continued)

299

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees: Please see attached Table 10.
(c) Information on investment in mainland China: Please see attached Table 11.

(14) Segment information:

(a) General Information

The Consolidated Company’ s four reportable segments are: plastics products, plastic materials, electronic materials and fiber products. Plastic products department mainly engaged in the manufacture and sale of flexible PVC sheets and other plastics processing products; plastic materials department is mainly engaged in the manufacture and sale of ethylene glycol and other plastic petrochemical raw materials; electronic materials department is mainly engaged in the manufacture and sale of copper clad laminate; fiber products department is mainly engaged in the manufacture and sale of polyester products.

The Consolidated Company’s reportable segments are responsible for the Consolidated Company’s strategic business units, including the manufacturing and supplying of different products. As each strategic business unit requires different technology and marketing strategies, each unit is administered individually.

(b) Segment revenue and operating results

The Consolidated Company uses the internal management report that the chief operating decision maker reviews as the basis to determine resource allocation and make a performance evaluation. The internal management report includes profit before taxation, excluding any shares of profit (loss) of associates and joint ventures accounted for using equity method, income tax, extraordinary gains and losses, and foreign exchange gains and losses, because they are managed on a group basis, and hence they are not allocated to each reportable segment. In addition, not all reportable segments include depreciation and amortization of significant non-cash items. The reportable amount is similar to that in the report used by the chief operating decision maker.

There were no material differences between the accounting policies adopted for the Consolidated Company’ s operating segments and those described in Note 4. The terms and conditions for the Consolidated Company’ s intersegment sales and transfers are the same as those of third-party transactions, which are measured at market price.

Operating segments are combined and reconciled as follows:

		For the ye	ar ended Decemb	er 31, 2019
Plastics Product $ 42,529,381 1,294,908 217,255 $ 44,041,544 $ 95,805 1,520,694 $ 3,222,819 $ 36,222,891 $ 10,417,840	Plastics Material 72,185,495 8,277,826 148,752	Electronic Materials 112,257,646 19,627,835 565,513 132,450,994 295,524 7,849,577 7,979,595 139,519,674 29,203,048	Polyester Product 55,150,576 991,997 1,385 56,143,958 204,706 1,823,620 2,112,671 34,504,449 10,063,287	Other Department 4,179,961 3,704,696 631,436 8,516,093 606,273 616,861 22,471,164 451,894,399 142,497,488	Reconciliations Total - 286,303,059 (33,897,262) - (473,908) 1,090,433 (34,371,170) 287,393,492 (473,908) 1,620,428 - 16,544,642 11,838,753 (6,547,650) 26,689,030 (184,015,915) 554,678,679 (12,329,576) 199,107,979
	80,612,073
	892,028 4,733,890 (2,549,569)
	76,553,181
	19,255,892

(Continued)

300

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

evenue： Net revenue from external customers Net revenue from sales among intersegments Interest revenue otal revenue nterest expense epreciation and amortization hare of profit (loss) of associates and joint ventures accounted for using equity method eportable segment profit or loss eportable segment assets eportable segment liabilities			For the ye	ar ended Decemb	er 31, 2018	Reconciliations Total - 333,061,560 (38,923,763) - (629,546) 1,047,522 (39,553,309) 334,109,082 (629,546) 1,723,469 - 17,853,188 26,179,740 (11,519,443) 61,525,186 (185,860,854) 570,249,344 (14,347,554) 183,344,352
	Plastics Product $ 45,538,078 1,225,586 271,715 $ 47,035,379 $ 98,397 1,498,561 $ 3,345,913 $ 33,571,790 $ 10,551,184	Plastics Material 96,493,105 10,196,690 23,327 106,713,122 565,344 5,392,569 12,916,430 81,947,557 13,929,371	Electronic Materials 117,021,664 23,255,143 422,509 140,699,316 446,900 8,551,325 11,011,174 133,224,420 27,416,068	Polyester Product 67,857,488 1,129,823 1,175 68,988,486 177,355 1,788,845 2,958,826 35,866,701 10,561,594	Other Department 6,151,225 3,116,521 958,342 10,226,088 1,065,019 621,888 42,812,286 471,499,730 135,233,689

Further explanations of the significant reconciling items of reportable segment information exhibited above are described as follows:

The eliminations of the Consolidated Company’s intersegment revenue amounted to $34,371,170 and $39,553,309 in 2019 and 2018, respectively.

(c) Geographic information

The Consolidated Company’ s revenues from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are as follows:

Geographic Net Revenue from External Customers: Taiwan China and HK U.S.A. Others Geographic Non-current Assets: Taiwan China and HK U.S.A.	For the years ended December 31
	2019 2018 $ 82,326,864 91,516,190 116,321,519 136,624,703 37,218,261 45,444,934 50,436,415 59,475,733 $ 286,303,059 333,061,560 December 31, 2019 December 31, 2018 $ 87,701,251 79,773,532 49,900,319 55,581,958 35,563,525 20,168,048 $ 173,165,095 155,523,538

Non-current assets include property, plant and equipment, intangible assets, technology development expense, prepayments for purchase of equipment and other assets, but do not include financial instruments, deferred tax assets, post-employment benefit assets, and non-current assets arising from insurance contracts.

(Continued)

301

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Information about major customers

There is no single customer’s sale which exceeds 10% of the Consolidated Company’s revenues.

302

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES LOANS TO OTHER PARTIES FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 1

No.	Name of Lenders	Name of Borrowers	Account Name	Related Party	Highest Balance of Financing to Other Parties during the Period	Ending Balance	Actual Usage during the Period	Range of Interest Rates during the Period.	Purposes of Fund Financing for the Borrowers (Note 1)	Transaction Amount for Business Between Two Parties (Note 2)	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Individual Funding Loan Limits (Note 3)	Maximum Limitation on Fund Financing (Note 4)
													Item	Value
0 0 0 0 0 0 0 0 0 0 0 1 1 2 2 2 2 2	The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation	Formosa Plastics Group Investment Corp. (Note 6) Wellink Technology Corporation (Note 6) Nan Ya Plastics (Hong Kong) Co., Ltd. (Note 6) Nan Ya Plastics Corporation Texas (Note 6) Nan Chung Petrochemical Corporation (Note 6) Formosa Heavy Industries Corporation Nanya Technology Corporation Formosa Petrochemical Corporation Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Formosa Plastics Marine Corporation Nan Ya Plastics Corporation Texas (Note 6) Nan Ya Plastics Corporation U.S.A. (Note 6) The Company (Note 6) Nan Ya PCB (HK) Corporation (Note 6) Nan Ya PCB (Kunshan) Corporation (Note 6) Formosa Plastics Marine Corporation Formosa Heavy Industries Corporation	Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related	YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES	70,000 100,000 500,000 21,205,840 500,000 12,000,000 1,500,000 14,000,000 8,000,000 8,000,000 9,385,318 19,267,840 903,180 4,500,000 100,000 1,854,300 500,000 1,000,000	70,000 100,000 500,000 - 500,000 6,500,000 - 6,000,000 6,000,000 6,000,000 8,460,819 12,042,400 903,180 4,000,000 100,000 - - -	- - - - - - - - - - 5,640,819 12,042,400 286,237 4,000,000 - - - -	- - - 3.211%~3.613% 1.4142%~1.4181% 1.4138%~1.4181% - 1.4180%~1.4181% - - 1.4138%~1.4181% 2.8130%~3.546% 2.8130%~3.610% 1.418% - 3.471%~3.471% 1.414%~1.418% -	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2	- - - - - - - - - - - - - - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	- - - - - - - - - - - - - - - - - -	‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ - - ‑ - ‑ ‑	- - - - - - - - - - - - - - - - - -	86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 20,791,919 20,791,919 7,306,170 7,306,170 7,306,170 7,306,170 7,306,170	172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 41,583,838 41,583,838 14,612,340 14,612,340 14,612,340 14,612,340 14,612,340
~~ti~~

303

No.	Name of Lenders	Name of Borrowers	Account Name	Related Party	Highest Balance of Financing to Other Parties during the Period	Ending Balance	Actual Usage during the Period	Range of Interest Rates during the Period.	Purposes of Fund Financing for the Borrowers (Note 1)	Transaction Amount for Business Between Two Parties (Note 2)	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Individual Funding Loan Limits (Note 3)	Maximum Limitation on Fund Financing (Note 4)
													Item	Value
3 4 4 5 5 6 6 7 8 8 8 8 8 9 9 10 10	Nan Ya Plastics (Hong Kong) Co., Ltd. Wen Fung Industrial Co., Ltd. Wen Fung Industrial Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Trading (Huizhou) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. China Nantong Huafeng Co., Ltd. China Nantong Huafeng Co., Ltd.	Nan Ya Electronic Materials (Kunshan) Co., Ltd. (Note 6) Wellink Technology Corporation (Note 6) Formosa Environmental Technology Corporation Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 6) Nan Ya Plastics (Ningbo) Co., Ltd. (Note 6) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 6) Nan Ya Plastics (Ningbo) Co., Ltd. (Note 6) PFG Fiber Glass (Kunshan) Co., Ltd. (Note 6) Xiamen Haicang Investment Group Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 6) Nan Ya Plastics (Ningbo) Co., Ltd. (Note 6) PFG Fiber Glass (Kunshan) Co., Ltd. (Note 6) Nan Ya Plastics (Zhengzhou) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 6) Nan Ya Plastics (Ningbo) Co., Ltd. (Note 6) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 6) Nan Ya Plastics (Ningbo) Co., Ltd. (Note 6)	Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related	YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES	362,773 23,000 60,000 215,777 772,480 504,917 589,501 23,735 86,311 133,781 263,247 129,466 155,359 863,106 2,840,914 135,508 155,359	- 23,000 60,000 215,777 720,694 504,917 526,495 - 86,311 133,781 - - 138,097 - 1,631,271 135,076 155,359	- - 60,000 215,777 720,694 504,917 526,495 - 86,311 133,781 - - 138,097 - 1,631,271 135,076 155,359	4.12% - 1.418% 3.32%~3.48% 3.32%~3.48% 3.32%~3.48% 3.32%~3.48% 3.48%~3.48% 3.48%~3.48% 3.32%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.32%~3.48% 3.32%~3.48% 3.32%~3.48%	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2	- - - - - - - - - - - - - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	- - - - - - - - - - - - - - - - -	‑ ‑ ‑ - ‑ ‑ ‑ ‑ - - - ‑ - ‑ ‑ ‑ ‑	- - - - - - - - - - - - - - - - -	42,667,670 24,174 120,868 1,316,852 1,316,852 1,691,034 1,691,034 28,644 684,281 684,281 684,281 684,281 684,281 4,980,774 4,980,774 163,893 163,893	85,335,340 241,735 241,735 2,633,704 2,633,704 3,382,068 3,382,068 57,289 684,281 684,281 684,281 684,281 684,281 9,961,548 9,961,548 327,786 327,786
~~ti~~

304

No.	Name of Lenders	Name of Borrowers	Account Name	Related Party	Highest Balance of Financing to Other Parties during the Period	Ending Balance	Actual Usage during the Period	Range of Interest Rates during the Period.	Purposes of Fund Financing for the Borrowers (Note 1)	Transaction Amount for Business Between Two Parties (Note 2)	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Individual Funding Loan Limits (Note 3)	Maximum Limitation on Fund Financing (Note 4)
													Item	Value
11 11 12 12 13 13 13 13 13 13	Nantong Huafu Plastics Co., Ltd. Nantong Huafu Plastics Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd.	PFG Fiber Glass (Kunshan) Co., Ltd. (Note 6) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 6) PFG Fiber Glass (Kunshan) Co., Ltd. (Note 6) Nan Ya Plastics (Ningbo) Co., Ltd. (Note 6) Nan Ya Plastics (Zhengzhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. (Note 6) Nan Ya Plastics (Ningbo) Co., Ltd. (Note 6) PFG Fiber Glass (Kunshan) Co., Ltd. (Note 6) Nan Ya PCB (Kunshan) Corporation (Note 6) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 6)	Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related ti Other receivables from related	YES YES YES YES YES YES YES YES YES YES	31,072 43,155 43,155 343,085 155,359 2,800,779 265,405 945,101 1,639,902 5,264,947	31,072 43,155 - 310,718 - - 258,932 280,509 1,639,902 4,837,710	31,072 43,155 - 310,718 - - 258,932 280,509 1,639,902 4,837,710	3.32%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.36%~3.48% 3.32%~3.48%	2 2 2 2 2 2 2 2 2 2	- - - - - - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	- - - - - - - - - -	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑	- - - - - - - - - -	45,816 45,816 575,088 575,088 27,718,743 27,718,743 27,718,743 27,718,743 27,718,743 27,718,743	91,632 91,632 1,150,175 1,150,175 55,437,487 55,437,487 55,437,487 55,437,487 55,437,487 55,437,487
~~ti~~

Note 1 ： (a) Those with business contact please fill in 1; (b) Those necessary for short-term financing please fill in 2.

Note 2 ： Amount from business contact stands for the sum of purchases and sales.

Note 3：Capital loaned to other parties should not exceed 50% of the lender’s net worth, of which the sum loaned to non interested parties for capital requirements should not exceed 40% of the net worth of borrower. The cap amount of loans to associates and interested parties should not exceed 25% of the equity of the lenders. Other parties should not exceed 20% of the lender’s net worth.
Note 4 ： Subsidiaries' capital loaned to associates and interested parties should not exceed 50% of the equity of the lenders. Other parties should not exceed 40% of the lender’s net worth.

The subsidiaries' cap amount of loans to other parties should not exceed 100% of its equity. Non-interested parties should not exceed 40% of its net worth. However, subsidiaries' capital loaned to the parties located in non-Taiwan and directly or indirectly held by the company 100% of the shares are not be limited.

Note 5：Nan Ya Plastics corporation, America and Nan Ya Plastics corporation USA s’reporting currency are denominated in USD, and the exchange rate of TWD to USD as of December 31, 2019 (in average) is 30.106(30.924)：1.

Nan Ya Plastics (Hong Kong) Co., Ltd and Superior World Wide Trading Co., Ltd. s’reporting currency are denominated in HKD, and the exchange rate of TWD to HKD as of December 31, 2019 (in average) is 3.8597(3.9646)：1.

Note 6 ： This transaction has already been written off during the consolidation process.

305

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES GUARANTEES AND ENDORSEMENTS FOR OTHER PARTIES FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 2

				B=A/2		C			D=C/SE	*A=S/E1.3**
No	Endorsement Guarantee Provider	Counterparty of Guarantee and Endorsement		Limitation Amount of Guarantees and Endorsements for a Specific Enterprise	Highest Balance for Guarantee and Endorsements during the Period	Balance of Guarantees and Endorsements as of December 31, 2019	Amount Secured by Guaranteed and Endorsed Property	Amount of Endorsement /Guarantee Collateralized by Properties	Ratio of Accumulated Amounts of Guarantees and Endorsements to Net Worth of the Latest Financial Statements	Maximum Amounts for Guarantees and Endorsements	Parent Company Endorses /Guarantees to Third Parties on Behalf of Subsidiary	Subsidiary Endorses /Guarantees to Third Parties on Behalf of Parent Company	Endorsements /Guarantees to the Third Parties on Behalf of the Companies in Mainland China
		Name	Relationship with The Company (Note)
0 0 0 0 1	The Company The Company The Company The Company Nan Ya Plastics Corporation America	Formosa Industries Corporation Formosa Group (Cayman) Ltd. Formosa Ha Tinh (Cayman) Ltd. Formosa Resources Corporation Nan Ya Plastics Corporation Texas	1 6 6 6 4	9,531,078 223,971,725 223,971,725 223,971,725 27,029,495	4,940,651 18,816,250 20,753,559 3,236,395 139,201	602,120 7,526,500 20,753,559 3,236,395 102,946	602,120 7,526,500 20,753,559 3,236,395 102,946	- - - - -	0.17% 2.18% 6.02% 0.94% 0.26%	447,943,449 447,943,449 447,943,449 447,943,449 54,058,989	N N N N Y	N N N N N	N N N N N

Note1: The total amount of guarantees and endorsements by the company shall not exceed 1.3 times of the company's net value, and the amount of guarantees and endorsements for a specific enterprise shall not exceed one half of the foregoing total.

Note2: There are seven conditions in which the Company may have guarantees or endorsements for other parties as follows:

(1)The Company has business relationship.
(2)The Company holds directly and indirectly more than 50% of the voting shares of the subsidiaries.
(3)In aggregate, the Company holds directly or its subsidiaries hold indirectly more than 50% of the investee.
(4)Subsidiaries in which the Company holds directly or indirectly more than 90% of the voting shares make endoresement and guarantees for each other.
(5)The Company is required to provide guarantees or endorsements for the construction project based on the construction contract.
(6)The stockholders of the Company provide guarantees or endorsements for the investee in proportion to their stockholding percentage.
(7)According to Consumer Protection Act, companies are required to provide guarantees and endorsements for joint and several libility if take part in business of preconstruction real estate.

306

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES SECURITIES HELD AS OF DECEMBER 31, 2019

(EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES) DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 3

Security Holder	Category and Name of Security	Relationship Between Issuer of Security and the Company which Holds Securities	Account Name	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019	Notes
				Number of Shares (in thousands)	Carrying Value	Shareholding Percentage	Market Value or Net Asset Value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Mega Internaitonal Private USD Money Market Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Formosa Group Ocean Marine Investment Corporation Formosa Plastics Corporation U.S.A. Ostendo Technologies Inc. Formosa Plastics Maritime Corp. Formosa International Development Co., Ltd. Mai Liao Harbor Administration Corp. Formosa Plastics Marine Corporation ASIA Pacific Investment Co. Formosa Technologies Corporation WK Technology Fund Ltd. WK Technology Fund IV Ltd. Central Leasing Corp. Chinese Television System Inc. China Investment & Development Company,Limited	- Other related parties Other related parties Other related parties Other related parties - Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties - - - - -	Financial assets valued at FVTPL －current Financial assets valued at FVTOCI－current Financial assets valued at FVTOCI－current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current	12,479 294,793 140,520 3 2 150 352 16,509 39,562 2,429 63,717 2,925 326 460 1,779 1,769 1,287	4,044,356 29,420,352 12,295,469 4,842,526 1,283,210 - 299,258 259,076 896,136 752,699 2,209,623 72,959 8,304 5,573 - 34,075 4,431	- 4.63% 2.40% 19.00% 0.51% 0.12% 18.00% 18.00% 17.98% 15.00% 14.99% 12.50% 1.63% 1.08% 1.07% 1.04% 0.80%	4,044,356 29,420,352 12,295,469 4,842,526 1,283,210 - 299,258 259,076 896,136 752,699 2,209,623 72,959 8,304 5,573 - 34,075 4,431	Note 1

307

Security Holder	Category and Name of Security	Relationship Between Issuer of Security and the Company which Holds Securities	Account Name	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019	Notes
				Number of Shares (in thousands)	Carrying Value	Shareholding Percentage	Market Value or Net Asset Value
The Company The Company The Company The Company Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Formosa Plastics Group Investment Corp. Formosa Plastics Group Investment Corp. Nan Ya International (Cayman) Limited	Taiwan Aerospace Corp. Guang Yuan Securities Investment Consulting Corporation Nan Ya Photonics Inc. Mega Growth Capital Venture Double Oak (Bonds) Sutton (Bonds) American Overseas Reinsurance Co., Ltd. (Preferred Stock) MBIA Insurance Corp. (Preferred Stock) Hua Ya (Dong Ying) Plastics Corp. Hua Ya (Wu Hu) Plastics Corp. WK Technology Fund Ltd. WK Technology Fund IV Ltd. Formosa Ha Tinh (Cayman) Ltd.	- - Other related parties - - - - - - - - - Other related parties	Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTPL －non current Financial assets valued at FVTPL －non current Financial assets valued at FVTPL －non current Financial assets valued at FVTPL －non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current Financial assets valued at FVTOCI－non current	1,070 5,000 6,646 2,500 - - - - - - 1,935 658 621,178	18,849 26,600 110,131 19,746 180,019 330,592 106,768 207,347 199,951 180,342 12,318 18,576 11,407,727	0.79% 3.91% 14.42% 1.97% - - - - 15.00% 15.00% 2.42% 3.60% 11.43%	18,849 26,600 110,131 19,746 180,019 330,592 106,768 207,347 199,951 180,342 12,318 18,576 11,407,727

Note 1 ： The Company pledged its shares of Formosa Plastics Corporation of 12,736 thousand common shares amounting to $1,271,053.

308

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

INDIVIDUAL SECURITIES ACQUIRED OR DISPOSED OF WITH ACCUMULATED AMOUNT EXCEEDING THE LOWER OF TWD300 MILLION OR 20% OF THE CAPITAL STOCK FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 4

Company Name	Category and Name of Security	Financial Statement Account	Counter-party	Relationship	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares (in thousands)	Amount	Shares (in thousands)	Amount	Shares (in thousands)	Price	Carrying Value	Gain/Loss on Disposal	Shares (in thousands)	Amount
The Company Nan Ya Plastics (Hong Kong) Co., Ltd. The Company Nan Ya PCB Corporation	Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Formosa Resources Corporation Formosa Advanced Technologies Co.,Ltd	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Formosa Resources Corporation Formosa Taffeta Co., Ltd.	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	844,053 - 584,594 -	79,668,326 1,965,292 5,370,047 -	109,200 - 157,000 13,267	4,308,591 4,308,591 1,570,000 472,968					953,253 - 741,594 13,267	85,283,330 (Note 1.2) 6,351,352 (Note 1.2) 6,615,934 (Note 1) 475,710 (Note 1)

Note 1 ： End of period amount includes investment income and transaction adjustment under equity method and the effect of exchange changes. Note 2 ： This transaction has already been written off during the consolidation process.

309

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES ACQUISITION OF INDIVIDUAL REAL ESTATE WITH AMOUNT EXCEEDING THE LOWER OF TWD300 MILLION OR 20% OF THE CAPITAL STOCK FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 5

TABLE 5
Company Name	Name of Property	Transaction Date	Transaction Amount	Status of Payment	Counter-party	Relationship with the Company	Disclosure of Information on Previous Transfer of Equipment is Required for Related Parties who are also the Counter Parties				References for Determining Price	Purpose of Acquisition and Current Condition	Others
							Owner	Relationship with the Company	Date of Transfer	Amount
Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas	Construction in progress and eqipment Construction in progress and eqipment Construction in progress and eqipment Construction in progress and eqipment Construction in progress and eqipment	2019.04 2019.05 2019.06 2019.07 2019.08	396,685 853,524 822,674 530,544 368,674	Paid Paid Paid Paid Paid	Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation	Associates Associates Associates Associates Associates	- - - - -	- - - - -	- - - - -	- - - - -	Negotiation Negotiation Negotiation Negotiation Negotiation	Plant expansion Plant expansion Plant expansion Plant expansion Plant expansion	None None None None None

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES RECEIVABLES FROM DISPOSAL OF REAL ESTATE EXCEEDING 300 MILLION OR 20% OF THE COMPANY'S PAID-IN CAPITAL (Expressed in thousands of New Taiwan Dollars)

TABLE 6

TABLE 6
Company Name	Name of Property	Transaction Date	Acquisition Date	Book Value	Transaction amount	Amount actually receivable	Gain (Loss) fom Disposal	Counter- party	Relationship with the Company	Purpose of Disposal	References for Determining Price	Others
Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.	Polyester plant esterfication process equipment	2019.01.24	2007.07~2016.05	1,309,580	1,247,436	40% received, final payment due after acceptance	(62,144)	Formosa Industries Corporation	Associates	Asset activation and operating performance improvement	Asset Valuation Report	None

310

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES RELATED-PARTY TRANSACTIONS FOR PURCHASES AND SALES WITH AMOUNTSEXCEEDING THE LOWER OF TWD100 MILLION OR 20% OF THE CAPITAL STOCK FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 7

TABLE 7
Company Name	Related Party	Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts (Payable) Receivable		Notes
			Purchases / (Sales)	Amount	% to total purchase/(sales)	Credit Period	Unit Price	Payment Term	Ending Balance	% to Total
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB (Kunshan) Corporation Nan Ya PCB (Kunshan) Corporation Nan Ya PCB (Kunshan) Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation PFG Fiber Glass Corporation PFG Fiber Glass Corporation PFG Fiber Glass Corporation PFG Fiber Glass Corporation	Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Nan Ya PCB Corporation Formosa Petrochemical Corporation Nanya Technology Corporation Formosa Taffeta Co., Ltd. Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation America Nan Ya Plastics Corporation Texas Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Industries Corporation Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Chung Petrochemical Corporation PFG Fiber Glass Corporation Nan Ya Plastics (Guangzhou) Co., Ltd. Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Formosa Petrochemical Corporation PFG Fiber Glass Corporation Nan Chung Petrochemical Corporation The Company Nan Ya PCB (Kunshan) Corporation Formosa Advanced Technologies Co.,Ltd Nan Ya PCB Corporation Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Advanced Technologies Co.,Ltd The Company China Man-made Fiber Corporation Formosa Petrochemical Corporation The Company The Company Formosa Chemicals and Fiber Corporation Formosa Petrochemical Corporation The Company	Other related parties Other related parties Subsidiaries Associates Associates Other related parties Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Associates Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Other related parties Other related parties Associates Subsidiaries Subsidiaries Parent Subsidiaries Associates Subsidiaries Same chairman Associates Parent Other related parties Associates Parent Parent Other related parties Other related parties Parent	(Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) Purchases (Sales) (Sales) (Sales) Purchases Purchases (Sales) Purchases Purchases Purchases	(1,184,681) (7,531,843) (976,163) (1,422,244) (144,369) (872,256) (553,828) (325,829) (396,946) (4,427,438) (934,785) (4,418,060) (2,521,147) (618,908) (266,521) (228,823) (123,484) (187,763) 11,978,383 24,442,785 30,339,000 2,548,914 3,382,831 976,163 8,438,867 (106,503) (8,438,867) 1,655,334 (215,081) (3,382,831) (3,361,822) 5,040,286 228,823 (2,548,914) 462,079 229,233 123,484	(0.77)% (4.87)% (0.63)% (0.92)% (0.09)% (0.56)% (0.36)% (0.21)% (0.26)% (2.86)% (0.60)% (2.85)% (1.63)% (0.40)% (0.17)% (0.15)% (0.08)% (0.12)% 11.46% 23.39% 29.04% 2.44% 3.24% 6.07% 52.47% (0.41)% (61.01)% 19.67% (1.55)% (50.06)% (49.75)% 89.15% 4.05% (69.49)% 20.30% 10.07% 5.42%	30 days 30 days 30 days 30 days 30 days 30 days O/A105 days O/A105 days O/A105 days O/A180 days O/A150 days O/A150 days O/A150 days O/A150 days O/A150 days 30 days 30 days O/A150 days 30 days 30 days 30 days 30 days 30 days 30 days 30 days 70 days 30 days 60 days 70 days 30 days 15th day of next month 15th day of next month 30 days 30 days 30 days 30 days 30 days	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ -	57,849 632,141 83,490 87,584 9,888 85,949 281,253 71,817 0 2,254,032 291,773 1,138,058 258,445 269,959 1,065 14,678 7,470 54,176 (1,080,354) (1,923,275) (2,358,012) (241,454) (329,258) (83,490) (978,457) 16,398 978,457 (130,455) 46,710 329,258 313,981 (487,616) (14,678) 241,454 (35,903) (16,845) (7,470)	0.32% 3.50% 0.46% 0.48% 0.05% 0.48% 1.56% 0.40% 0.00% 12.48% 1.62% 6.30% 1.43% 1.49% 0.01% 0.08% 0.04% 0.30% (9.82)% (17.48)% (21.43)% (2.19)% (2.99)% (4.18)% (49.04)% 0.25% 50.28% (14.75)% 2.40% 51.19% 48.81% (96.55)% (2.91)% 74.66% (23.90)% (11.22)% (4.97)%	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note

311

Company Name	Related Party	Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts (Payable) Receivable	Notes/Accounts (Payable) Receivable	Notes
			Purchases / (Sales)	Amount	% to total purchase/(sales)	Credit Period	Unit Price	Payment Term	Ending Balance	% to Total
Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America PFG Fiber Glass (Kunshan) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.	Formosa Plastics Corporation U.S.A. The Company Nan Ya Plastics Corporation America Formosa Industries Corporation Formosa Plastics Corporation U.S.A. Nan Ya Plastics Corporation U.S.A. Formosa Plastics Corporation U.S.A. The Company Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corporation Formosa Industries (Ningbo) Co., Ltd. The Company The Company Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corporation The Company Formosa Industries (Ningbo) Co., Ltd. Nanya Kyowa Plastics (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Chemicals and Fiber (Ningbo) Corporation The Company Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya PCB (Kunshan) Corporation PFG Fiber Glass (Kunshan) Co., Ltd. The Company Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. The Company Nan Ya Electronic Materials (Kunshan) Co., Ltd.	Other related parties Parent Subsidiaries Other related parties Other related parties Subsidiaries Other related parties Parent Subsidiaries Subsidiaries Other related parties Other related parties Other related parties Parent Parent Subsidiaries Other related parties Other related parties Parent Other related parties Joint venture Subsidiaries Subsidiaries Other related parties Parent Subsidiaries Same chairman Subsidiaries Parent Subsidiaries Subsidiaries Subsidiaries Subsidiaries Parent Subsidiaries	Purchases Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases (Sales)	762,014 553,828 118,192 (175,567) (328,436) (118,192) 229,374 325,829 (2,790,904) 275,369 226,523 432,111 434,314 187,763 4,427,438 3,720,449 109,958 159,162 934,785 1,046,261 (330,017) (129,795) (3,786,561) 6,221,820 266,521 (3,720,449) (1,655,334) (275,369) 4,418,060 251,162 2,790,904 3,786,561 129,795 618,908 (251,162)	29.16% 21.19% 4.52% (0.55)% (1.04)% (0.37)% 0.83% 1.17% (79.40)% 18.38% 21.37% 22.88% 23.00% 9.94% 49.93% 41.96% 6.98% 2.60% 15.25% 17.07% (5.08)% (22.18)% (33.69)% 72.74% 3.12% (7.94)% (3.53)% (0.59)% 12.46% 0.71% 7.87% 10.68% 0.37% 24.49% (7.92)%	payment within one h O/A 105 days payment within one h O/A 105 days payment within one h payment within one h payment within one h O/A 105 days 60 days 60 days 60 days O/A 150 days 60 days O/A 150 days O/A 180 days 180 days 60 days O/A 150 days O/A 150 days 60 days 60 days 60 days 60 days 60 days O/A 150 days 180 days 60 days 60 days O/A 150 days 60 days 60 days 60 days 60 days O/A 150 days 60 days	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	(49,326) (281,253) 0 170,923 0 0 (11,219) (71,817) 269,349 (20,862) (33,010) (149,140) (41,500) (54,176) (2,254,032) (2,408,494) (12,641) (97,889) (291,773) (59,540) 79,907 7,526 335,747 (579,512) (1,065) 2,408,494 130,455 20,862 (1,138,058) (16,029) (269,349) (335,747) (7,526) (269,959) 16,029	(11.85)% (67.56)% 0.00% 5.67% 0.00% 0.00% (4.81)% (30.80)% 64.67% (8.34)% (36.23)% (51.40)% (14.30)% (18.67)% (47.96)% (51.24)% (7.01)% (14.31)% (42.64)% (8.70)% 4.47% 2.49% 51.42% (96.47)% (0.18)% 15.79% 0.86% 0.14% (36.49)% (0.51)% (8.64)% (10.77)% (0.24)% (85.71)% 7.70%	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note

Note ： The transaction has been written off during the consoliation process.

312

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES RECEIVABLES FROM RELATED PARTIES WITH AMOUNTS EXCEEDING THE LOWER OF TWD100 MILLION OR 20% OF THE CAPITAL STOCK DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 8

TABLE 8
Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue		Amounts Received in Subsequent Periods	Allowance for Bad Debts
					Amount	Action Taken
The Company The Company The Company The Company The Company The Company The Company Nan Ya PCB (Kunshan) Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation PFG Fiber Glass Corporation Nan Ya Plastics Corporation America PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. The Company Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya PCB Corporation Nan Ya Plastics (Nantong) Co., Ltd.	Formosa Chemicals and Fiber Corporation Nan Ya Plastics Corporation U.S.A.(Note1) Nan Ya Electronic Materials (Huizhou) Co., Ltd.(Note1) Nan Ya Plastics (Nantong) Co., Ltd.(Note1) Nan Ya Electronic Materials (Kunshan) Co., Ltd.(Note1) Formosa Industries Corporation Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.(Note1) Nan Ya PCB Corporation(Note1) The Company(Note1) China Man-made Fiber Corporation The Company(Note1) Formosa Industries Corporation Nan Ya Electronic Materials (Kunshan) Co., Ltd.(Note1) Nan Ya Electronic Materials (Kunshan) Co., Ltd.(Note1) Nan Ya Electronic Materials (Huizhou) Co., Ltd.(Note1) Nan Ya PCB (Kunshan) Corporation(Note1) Formosa Plastics Marine Corporation Nan Ya Plastics Corporation Texas(Note1) Nan Ya Plastics Corporation U.S.A.(Note1) The Company(Note1) Nan Ya Plastics (Ningbo) Co., Ltd.(Note1)	Other related parties Subsidiaries Subsidiaries Subsidiaries Subsidiaries Assosiates Subsidiaries Subsidiaries Parent Other related parties Parent Other related parties Subsidiaries Subsidiaries Subsidiaries Same chairman Other related parties Subsidiaries Subsidiaries Parent Subsidiaries	Receivables from related parties： 632,141 Receivables from related parties： 281,253 Receivables from related parties： 2,254,032 Receivables from related parties： 291,773 Receivables from related parties： 1,138,058 Receivables from related parties： 258,445 Receivables from related parties： 269,959 Receivables from related parties： 978,457 Receivables from related parties： 329,258 Receivables from related parties： 313,981 Receivables from related parties： 241,454 Receivables from related parties： 170,923 Receivables from related parties： 269,349 Receivables from related parties： 335,747 Receivables from related parties： 2,408,494 Receivables from related parties： 130,455 Other receivables from related i 5,640,819 Other receivables from related i 12,042,400 Other receivables from related i 286,237 Other receivables from related i 4,000,000 Other receivables from related 1,631,271	10.77 1.88 2.01 3.86 3.75 4.94 2.50 9.47 10.33 10.22 10.16 2.05 9.54 20.07 1.46 10.59 note note note note note	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑	626,437 4 72,922 206,664 432,426 93,197 105,855 978,457 326,840 307,149 241,454 170,923 269,349 335,747 520,388 130,455 ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑
~~i~~

313

Company Name	Related Party	Relationship	Ending Balance		Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Periods	Allowance for Bad Debts
						Amount	Action Taken
Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. China Nantong Huafeng Co., Ltd. China Nantong Huafeng Co., Ltd.	Nan Ya Plastics (Ningbo) Co., Ltd.(Note1) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.(Note1) Nan Ya Plastics (Zhengzhou) Co., Ltd.(Note1) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.(Note1) Nan Ya Plastics (Ningbo) Co., Ltd.(Note1) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.(Note1) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.(Note1) PFG Fiber Glass (Kunshan) Co., Ltd.(Note1) Nan Ya PCB (Kunshan) Corporation(Note1) Nan Ya Plastics (Ningbo) Co., Ltd.(Note1) Nan Ya Plastics (Ningbo) Co., Ltd.(Note1) Nan Ya Plastics (Ningbo) Co., Ltd.(Note1) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.(Note1)	Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries	Other receivables from related i Other receivables from related i Other receivables from related ti ： Other receivables from related Other receivables from related i Other receivables from related Other receivables from related i Other receivables from related i Other receivables from related i Other receivables from related i Other receivables from related i Other receivables from related i Other receivables from related	526,495 504,917 138,097 133,781 720,694 215,777 4,837,710 280,509 1,639,902 258,932 310,718 155,359 135,076	note note note note note note note note note note note note note	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑
	~~i~~

Note： The turnover rate of other receivables from related parties can not be calculated.

Note 1 ： The transaction has been written off during the consoliation process.

314

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS AND BUSINESS RELATIONSHIP BETWEEN THE PARENT AND ITS SUBSIDIARIES FOR THE NINE MONTHS ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 9

No. (Note 1)	Company Name	Counter-party	Relationship (Note 2)	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions
				Financial Statement Item	Amount	Terms	Percentage of Consolidated Total Gross Sales or Total Assets
0 0 0 0 0 0 0 0 1 2 3 4 5 5 6 6 6 7 7 0 0 0 0	The Company The Company The Company The Company The Company The Company The Company The Company Nan Chung Petrochemical Corporation Wen Fung Industrials Co., Ltd. and its subsidiaries PFG Fiber Glass Corporation Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries PFG Fiber Glass (Hong Kong) Corporation Limited and its subsidiaries PFG Fiber Glass (Hong Kong) Corporation Limited and its subsidiaries The Company The Company The Company The Company	Nan Ya PCB Corporation and its subsidiaries Nan Chung Petrochemical Corporation PFG Fiber Glass Corporation Nan Ya Plastics Corporation U.S.A Nan Ya Plastics Corporation America Nan Ya Plastics Corporation Texas Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries PFG Fiber Glass (Hong Kong) Corporation Limited and its subsidiaries The Company Nan Ya PCB Corporation and its subsidiaries The Company The Company Nan Ya Plastics Corporation U.S.A The Company The Company Nan Ya PCB Corporation and its subsidiaries PFG Fiber Glass (Hong Kong) Corporation Limited and its subsidiaries The Company Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries Nan Ya PCB Corporation and its subsidiaries Nan Ya Plastics Corporation U.S.A Nan Ya Plastics Corporation America Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries	1 1 1 1 1 1 1 1 2 3 2 2 3 2 2 3 3 2 3 1 1 1 1	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Accounts receivable Accounts receivable Accounts receivable Accounts receivable	1,014,444 228,823 123,484 553,828 325,829 396,946 11,055,007 20,062 3,382,831 125,007 2,548,914 61,994 118,192 48,651 104,694 2,153,824 334,930 52,737 2,802,369 98,754 281,253 71,817 4,055,790	30-150 days 30 days 30 days O/A 105 days O/A 105 days O/A 105 days O/A 150-180 days O/A 150 days 30 days 30 days 30 days O/A 105 days payment within one month O/A 105 days 60 days 60 days 60 days O/A 150 days 60 days 30-150 days O/A 105 days O/A 105 days O/A 150-180 days	0.35% 0.08% 0.04% 0.19% 0.11% 0.14% 3.86% 0.01% 1.18% 0.04% 0.89% 0.02% 0.04% 0.02% 0.04% 0.75% 0.12% 0.02% 0.98% 0.02% 0.05% 0.01% 0.73%

315

No. (Note 1)	Company Name	Counter-party	Relationship (Note 2)	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions
				Financial Statement Item	Amount	Terms	Percentage of Consolidated Total Gross Sales or Total Assets
1 3 6 7 0	Nan Chung Petrochemical Corporation PFG Fiber Glass Corporation Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries PFG Fiber Glass (Hong Kong) Corporation Limited and its subsidiaries The Company	The Company The Company Nan Ya PCB Corporation and its subsidiaries Nan Ya Plastics (Hong Kong) Co., Ltd. and its subsidiaries Nan Ya PCB Corporation and its subsidiaries	2 2 3 3 1	Accounts receivable Accounts receivable Accounts receivable Accounts receivable Rent revenue	329,258 241,454 202,961 271,581 202,242	30 days 30 days 60 days 60 days 30-150 days	0.06% 0.04% 0.04% 0.05% 0.07%

Note 1: The appointed numbers represent:

0 refers to the Parent Company.
Subsidiaries are numbered and organized in a ascending chronological order in an ascending chronological order.

Note 2: Transactions are categorized as follows:

Parent company to subsidiary.
Subsidiary to parent company.
Subsidiary to subsidiary.

Note 3: Disclosure of information on significant transactions and business relationship between the parent company and its subsidiaries regarding sales and accounts receivable, excluding their related purchases and accounts payable.

316

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES INFORMATION ON INVESTEES (EXCLUDING THOSE IN MAINLAND CHINA) FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 10

TABLE 10
Investor Company	Investee Company	Location	Major Operations	Original Investment Amount		Balance as of December 31, 2019			Net Income of Investee	Investment Income (Loss) Recognized by the Investor Company	Notes
				December 31, 2019	December 31, 2018	Shares (in thousands)	%	Carrying Value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Nan Ya Plastics Corporation U.S.A. (Note) Nan Ya Plastics Corporation America (Note) Nan Ya Plastics (Hong Kong) Co., Ltd. (Note 1) Superior World Wide Trading Co., Ltd. (Note 1) Formosa Synthetic Rubber (Hong Kong) Corporation Limited (Note) PFG Fiber Glass (Hong Kong) Corporation Limited (Note 1) Formosa Industries Corporation (Note 2) Nan Ya PCB Corporation Formosa Plastics Group Investment Corp. Nanya Technology Corporation Formosa Environmental Technology Corporation Formosa Petrochemical Corporation PFG Fiber Glass Corporation Nan Chung Petrochemical Corporation Wen Fung Industrial Co., Ltd.	U.S.A. U.S.A. Hong Kong Hong Kong Hong Kong Hong Kong Vietnam Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	production of plastic products production of plastic, polyester and chemical plastics, electronic products trading, and plastics trading and investment production of synthetic rubber products investment chemical fiber, dying and finishing and production of printed circuit board investment semiconductor production and environmental protection production of chemical products production of glass fiber production of chemical products production of electronic components	313,920 7,853,605 39,166,673 33,677 4,162,010 4,495,987 8,435,875 4,480,417 76,859 52,438,472 672,370 24,647,480 2,648,131 1,000,002 214,236	313,920 7,853,605 34,858,082 33,677 4,162,010 4,495,987 8,435,875 4,480,417 76,859 52,438,472 672,370 24,647,480 2,648,131 1,000,002 214,236	2 60 953,253 14 135,000 76 - 432,745 5,000 907,304 46,257 2,201,306 100,000 100,000 18,738	100.00% 100.00% 100.00% 100.00% 32.53% 100.00% 42.50% 66.97% 100.00% 29.71% 26.99% 23.11% 100.00% 50.00% 100.00%	1,862,003 41,583,838 85,283,330 778,245 2,249,187 7,737,129 8,163,096 19,551,043 86,873 45,168,287 250,241 76,273,869 4,196,150 1,169,804 250,287	13,498 1,454,262 4,524,884 60,095 (564,873) 83,276 350,666 308,203 202 9,824,600 366 36,798,213 182,704 34,675 5,182	13,498 1,454,262 4,524,884 60,095 (183,754) 63,291 149,033 207,963 202 2,926,374 99 8,501,950 9,811 17,535 5,182	Note 3.4 Note 3.4 Note 3.4 Note 3.4 Note 3 Note 3.4 Note 3 Note 3.4 Note 3.4 Note 3 Note 3 Note 3 Note 3.4 Note 3.4 Note 3.4

317

Investor Company	Investee Company	Location	Major Operations	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2019	Balance as of December 31, 2019	Balance as of December 31, 2019	Net Income of Investee	Investment Income (Loss) Recognized by the Investor Company	Notes
				December 31, 2019	December 31, 2018	Shares (in thousands)	%	Carrying Value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation Texas	Formosa Automobile Sales Corporation Ya Tai Development Corporation Formosa Heavy Industries Corporation Formosa Fairway Corporation Formosa Plastics Transport Corporation Hwa Ya Science Park Management Consulting Co., Ltd. Yi Jih Development Corporation Mai Liao Power Corporation Formosa Synthetic Rubber Corporation Formosa Resources Corporation Formosa Group (Cayman) Limited (Note) Formosa Plastics Construction Corporation Nan Ya International (Cayman) Limited (Note) FG Inc. (Note) Formosa Utility Venture, Ltd.(Note) Nan Ya Plastics Corporation Texas (Note) Formosa Olefins, L.L.C. (Note)	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Cayman Islands Taiwan Cayman Islands U.S.A. U.S.A. U.S.A. U.S.A.	production of automobile development industry machinery industry transportation business transportation business service business construction business electricity generation business production of synthetic rubber products mining industry investment construction business investment investment electricity generation and trading production of chemical products chemical business	945,028 53,941 2,497,721 33,340 67,254 359 58,000 5,985,465 446,000 7,415,940 377 100,000 18,784,619 891,746 240,848 9,934,980 2,070,540	945,028 53,941 2,497,721 33,340 67,254 359 58,000 5,985,465 400,000 5,845,940 377 100,000 18,784,619 660,176 240,848 9,934,980 2,070,540	27,046 1,304 651,706 4,699 6,566 34 5,800 547,025 44,600 741,594 13 10,000 52 2 - 3 -	45.00% 44.96% 32.91% 33.34% 33.33% 34.00% 29.22% 24.94% 33.33% 25.00% 25.00% 33.33% 100.00% 10.00% 12.10% 100.00% 21.00%	181,332 18,020 7,247,995 82,185 1,062,879 2,606 64,672 11,050,586 292,635 6,615,934 653,576 75,521 11,407,973 869,209 2,419,574 8,565,565 1,374,730	170,099 (1,856) 124,778 (16,684) 137,544 2,908 876 2,199,499 (2,050) (605,807) 145,410 (20,335) - (132,609) 1,150,743 (745,044) (1,781,360)	76,547 (834) 41,066 (5,563) 45,849 988 256 548,596 (684) (151,452) 36,352 (6,778) - (13,261) 139,665 (745,044) (374,086)	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3.4 Note 3 Note 3 Note 3.4 Note 3

318

Investor Company	Investee Company	Location	Major Operations	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2019	Balance as of December 31, 2019	Balance as of December 31, 2019	Net Income of Investee	Investment Income (Loss) Recognized by the Investor Company	Notes
				December 31, 2019	December 31, 2018	Shares (in thousands)	%	Carrying Value
Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB (HK) Corporation Wen Fung Industrial Co., Ltd. Superior World Wide Trading Co., Ltd.	Nan Ya PCB (HK) Corporation Nan Ya PCB (U.S.A.) Corporation Formosa Advanced Technologies Co.,LTD. Nan Ya PCB (Kunshan) Corporation Wellink Technology Corporation P.T.Indonesia Nanya Indah Plastics Co.	Hong Kong U.S.A. Taiwan China Taiwan Indonesia	production of electronic products and retargeting IC packaging, testing and modules production of printed circuit board production of electronic components production of plastic products	5,020,900 3,479 472,968 5,017,721 212,017 121,835	5,020,900 3,479 - 5,017,721 212,017 121,835	1,223,820 1,000 13,267 - 12,739 5	100.00% 100.00% 3.00% 100.00% 100.00% 50.00%	9,603,122 13,739 475,710 9,589,396 135,753 259,090	(86,474) 676 1,262,495 (86,812) 1,767 122,511	(86,474) 676 1,550 (86,812) 1,767 61,256	Note 3.4 Note 3.4 Note 3 Note 3.4 Note 3.4 Note 3

Note ： The reporting currency of Nan Ya Plastics Corporation USA, Nan Ya Plastics Corporation America, Formosa Synthetic Rubber (Hong Kong) Corporation Limited, Formosa Group (Cayman) Limited, Nan Ya Internaitonal (Cayman) Limited, , FG Inc., Formosa Utility Venture, Ltd, Nan Ya Plastics Corporation Texas, and Formosa Olefins, L.L.C is denominated in USD,

and the exchange rate of TWD to USD as of December 31, 2019 (in average) is 30.106(30.924) ： 1 .

Note 1 ： The reporting currency of Nan Ya Plastics (Hong Kong) Co., Ltd., Superior World Wide Trading Co., Ltd. and PFG Fiber Glass (Hong Kong) Corporation Limited is denominated in HKD,

and the exchange rate of TWD to HKD as of December 31, 2019 (in average) is 3.8597(3.9646) ： 1.

Note 2 ： The reporting currency of Formosa Industries Corporation, Vietnam is denominated in VND, and the exchange rate of TWD to VND as of December 31, 2019 (in average) is 1 ： 0.001299(0.001331) .

Note 3 ： Investment income of the current period does not include cumulative translation adjustment and capital surplus adjustment.

Note 4 ： The transaction has been written off during the consoliation process.

319

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES INFORMATON ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 11

(a) Information regarding investments in Mainland China :

Name of the PRC Investee Company	Primary Business Scope	Amount of Paid-in Capital	Method of Investment	Investment Transferred from Taiwan as of January 1, 2019	For The Year Ended December 31, 2019	For The Year Ended December 31, 2019	Investment Transferred from Taiwan as of December 31, 2019	Current Income of Investees	Direct and Indirect Shareholding Percentage by the Company	Investment Gain (Loss)	Carrying Value of Investment as of December 31, 2019	Accumulated Inward Remittance of Earnings as of December 31, 2019
					Outflow	Inflow
Nan Ya Plastics (Guangzhou) Co., Ltd.(Note1) Nan Ya Plastics (Xiamen) Co., Ltd.(Note1) Nan Ya Plastics (Huizhou) Co., Ltd.(Note1) Nan Ya Electronic Materials (Huizhou) Co., Ltd.(Note1) Nan Ya Trading (Huizhou) Co., Ltd.(Note1) Nan Ya Plastics (Nantong) Co., Ltd.(Note1) China Nantong Huafeng Co., Ltd.(Note1) Nantong Huafu Plastics Co., Ltd.(Note1) Nan Ya Electric (Nantong) Co.,(Note1) Nanya Kyowa Plastics (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd.(Note1) Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.(Note1) Nan Ya Plastics (Zhengzhou) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd.(Note1) PFG Fiber Glass (Kunshan) Co., Ltd.(Note1)	production of polyester products production of plastic products production of polyester products production of electronic materials trading production of plastic products, steam and electricity trading trading production of switch gear and control panel interior decorating business production of electronic materials, polyester products, steam and electricity production of polyester products production of plastic products production of plastic products and plasticizer production of glass fiber	1,998,681 775,457 2,527,462 5,489,509 32,267 4,540,736 93,004 79,111 339,275 200,988 15,159,216 7,035,085 261,737 2,188,834 4,668,263	Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment	1,998,681 738,752 2,418,397 1,180,918 32,267 3,008,918 99,636 71,503 339,275 100,494 15,159,216 7,035,085 130,869 1,989,308 4,487,409	- - - 4,308,591 - - - - - - - - - - -	- - - - - - - - - - - - - - -	1,998,681 738,752 2,418,397 5,489,509 32,267 3,008,918 99,636 71,503 339,275 100,494 15,159,216 7,035,085 130,869 1,989,308 4,487,409	(17,017) 93,803 104,835 322,453 867 362,886 6,880 2,596 42,247 95,175 3,272,429 (209,593) (4,008) 440,322 90,954	100.00% 85.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 50.00% 100.00% 100.00% 50.00% 100.00% 100.00%	(17,017) 79,733 104,835 322,453 867 362,886 6,880 2,596 42,247 47,588 3,272,429 (209,593) (2,004) 440,322 90,954	2,320,387 1,012,561 3,227,086 6,351,352 57,756 9,791,555 330,760 92,991 1,104,469 199,844 56,406,047 203,014 58,603 1,886,579 7,708,418	611,825 72,820 - - - 103,612 - - - - - - - - 149,416

320

Name of the PRC Investee Company	Primary Business Scope	Amount of Paid-in Capital	Method of Investment	Investment Transferred from Taiwan as of January 1, 2019	For The Year Ended December 31, 2019	For The Year Ended December 31, 2019	Investment Transferred from Taiwan as of December 31, 2019	Current Income of Investees	Direct and Indirect Shareholding Percentage by the Company	Investment Gain (Loss)	Carrying Value of Investment as of December 31, 2019	Accumulated Inward Remittance of Earnings as of December 31, 2019
					Outflow	Inflow
Hua Ya (Dong Ying) Plastics Corp. Hua Ya (Wu Hu) Plastics Corp. Formosa Synthetic Rubber (Ningbo) Limited Corporation	production of plastic products production of plastic products synthetic rubber	254,190 624,948 12,777,590	Indirect investment Indirect investment Indirect investment	34,591 34,591 4,162,010	- - -	- - -	34,591 34,591 4,162,010	- - (564,873)	15.00% 15.00% 32.53%	- - (183,754)	199,951 180,342 2,249,187	23,020 12,687 -

Note: All companies disclosed within the investment income of the current year column are recognized according to the audited financial statements of the Company, except for Formosa Synthetic Rubber (Ningbo) Co., Ltd., which are recognized according to the financial statements audited by an international accounting firm.

Note 1: The transaction has been written-off during the consolidation process.

(b) Quota for investments in Mainland China :

Accumulative Remittance from Taiwan to Mainland China as of September 30, 2019 (Note 1)	Amount of Investment Approved by Investment Commission, Ministry of Economic Affairs (Note 2)	Limit on the Amount of Investment in Mainland China (Note 3)
47,590,969	53,616,900	-

Note 1：Reporting currency of Chinese subsidiaries is CNY, and the monetary amount is first translated to HKD using the exchange rate as of December 31, 2019 (in average) is 1：1.1181(1.1311), and translated to TWD using the exchange rate as of December 31, 2019 (in average) is 1：3.8597(3.9646). Note 2：It includes the amount of $3,010,315 from capital increase out of earnings and capital increase out of capital surplus.

Note 3：The Industrial Development Bureau of the MOEA issued a letter to the Company stating that it qualifies under Section 12 of the Statute for Upgrading Industries.

Note 4 : The accumulative remittance from Taiwan to Mainland China, end of the period includes the amount of Nan Ya Plastics (Anshan) Co., Ltd.

(c) Information on significant transactions ：

For more information concerning the direct or indirect significant transactions between the Company and its Chinese investees for the year ended December 31, 2019, please refer to the attatchemant of note 13 for "Information on material transaction items".

321

Stock Code:1303

(English Translation of Financial Statements and Report Originally Issued in Chinese) NAN YA PLASTICS CORPORATION

Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2019 and 2018

Address: 101, Shuiguan Road, Renwu Dist., Kaohsiung City 814, Taiwan Telephone: (07)371-1411

The independent auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and financial statements, the Chinese version shall prevail.

322

		Contents	Page
1.	Cover Page		322
2.	Table of Contents		323
3.	Independent Auditors’ Report		324
4.	Balance Sheets		328
5.	Statements of Comprehensive Income		329
6.	Statements of Changes in Equity		330
7.	Statements of Cash Flows		331
8.	Notes to the Financial Statements
	(1)	Company history	332
	(2)	Approval date and procedures of the financial statements	332
	(3)	New standards, amendments and interpretations adopted	332～335
	(4)	Summary of significant accounting policies	335～353
	(5)	Significant accounting assumptions and judgments, and major	353～354
		sources of estimation uncertainty
	(6)	Explanation of significant accounts	354～387
	(7)	Related-party transactions	387～395
	(8)	Pledged assets	395
	(9)	Significant commitments and contingencies	395～396
	(10)	Losses Due to Major Disasters	396
	(11)	Subsequent Events	396
	(12)	Other	396～397
	(13)	Other disclosures
		(a) Information on material transaction items	397、398～409
		(b) Information on investees	397、410～412
		(c) Information on investment in mainland China	397、413～414
	(14)	Segment information	397

323

Independent Auditors’ Report

To the Board of Directors of NAN YA PLASTICS CORPORATION:

Opinion

We have audited the financial statements of NAN YA PLASTICS CORPORATION (“the Company”), which comprises the statement of financial position as of December 31, 2019 and 2018, the statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2019 and 2018, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit of the financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the financial statements as of and for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the report of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

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

1. Revenue recognition

Please refer to note 4(o) "Revenue recognition" for the accounting policy related to revenue recognition, and note 6(s) "Revenue" for information related to revenue recognition for the individual financial statement.

324

How the matter was addressed in our audit

Nan Ya Plastics Corporation is a listed company and its operating performance has an effect on distribution to its shareholders and stock price. Thus, its financial performance will have an impact on the users of financial statement. Therefore, the veracity and appropriateness of revenue recognition is a key matter when conducting our audit.

Our principal audit procedures included the following:

(1) Assessing the accounting policies and appropriateness of revenue recognition (including sales returns and discounts).
(2) Obtaining the list of the top ten newly-added clients and the list of newly added related parties for the current year, inspecting whether the transaction terms are different for normal clients, and reviewing the Company’s financial position after the reporting period to verify the frequency of unusual sales returns for the purpose of assessing the appropriateness of revenue recognition.
(3) Selecting a moderate number of samples from sales invoices to verify that the accounts receivable have been recovered and to ensure that the remitter matches the customer for the purpose of assessing the accuracy of revenue recognition.
(4) Performing sales cut-off test on the period before and after the financial position date by vouching relevant documents of sales transactions to determine whether sales income, return, and discounts have been appropriately recognized.
Valuation of inventories

Please refer to note 4(g) "Inventories" for the accounting policy related to valuation of inventories, and note 6(f) "Inventories, net" for information related to valuation of inventories for the parent-company-only financial statement.

How the matter was addressed in our audit

The amount of inventories shall be disclosed by lower of cost or net realizable value. Since the net realizable value is influenced by the international raw material pricing, there is a risk that the cost will exceed its net realizable value. Therefore, the valuation of inventories is a key audit matter when conducting the audit of the individual financial statement.

Our principal audit procedures included the following:

(1) Assessing the appropriateness of inventories valuation policies.
(2) Ensuring the process of inventory valuation is in conformity with the accounting policies.
(3) Understanding the net realizable values used by management and the variation of the prices in a period after the reporting date to ensure the appropriateness of the valuation price.
(4) Assessed whether the disclosure of provision for inventory valuation is appropriate.

325

Other Matter

We did not audit the financial statements of certain investee companies, which represented investment in other entities accounted for using the equity method of the Company. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for aforementioned investee companies, is based solely on the report of other auditors. The investment in aforementioned investee companies accounted for using the equity method constituting 22.75 percent and 22.45 percent of total assets at December 31, 2019 and 2018, respectively, and the related share of profit of subsidiaries, associates and joint ventures accounted for using the equity method constituting 40.53 percent and 31.93 percent of total profit before tax for the years ended December 31, 2019 and 2018, respectively.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

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

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

326

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

The engagement partners on the audit resulting in this independent auditors’ report are

Kou, Hsin-Yi and Yu, Chi-Lung.

KPMG

Taipei, Taiwan (Republic of China) March 18, 2020

Notes to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and financial statements, the Chinese version shall prevail.

327

(English Translation of Financial Statements and Report Originally Issued in Chinese) NAN YA PLASTICS CORPORATION

Balance Sheets

December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (notes 6(a) and (v)) 1110 Current financial assets at fair value through profit or loss (notes 6(b) and (v)) 1120 Current financial assets at fair value through other comprehensive income (notes 6(c) and (v)) 1150 Notes receivable, net (notes 6(d) and (v)) 1170 Accounts receivable, net (notes 6(d) and (v)) 1180 Accounts receivable due from related parties (notes 6(d), (v) and 7) 1200 Other receivables (note 6(e)) 1210 Other receivables due from related parties (notes 6(e), (v) and 7) 130X Inventories (note 6(f)) 1470 Other current assets Total current assets Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (notes 6(c) and (v)) 1550 Investments accounted for using equity method (notes 6(g)) 1600 Property, plant and equipment (note 6(h)) 1755 Right-of-use assets (note 6(i)) 1812 Technology development expense 1840 Deferred tax assets (note 6(p)) 1915 Prepayments for purchase of equipment 1937 Overdue receivables (note 6(d)) 1990 Other non-current assets Total non-current assets Total assets	December 31, 2019 Amount % $ 2,398,959 1 4,044,356 1 41,715,821 8 2,035,966 1 10,297,642 2 5,726,710 1 928,677 - 5,640,819 1 21,787,220 4 2,011,482 - 96,587,652 19 10,843,196 2 334,228,505 64 62,826,030 12 127,874 - 30,257 - 3,979,584 1 1,669,032 - - - 7,873,636 2 421,578,114 81 $ 518,165,766 100	December 31, 2018 Amount % 5,508,330 1 4,017,249 1 44,528,667 8 2,417,539 1 12,333,877 2 6,409,203 1 1,346,114 - 12,683,027 3 25,605,150 5 1,736,359 - 116,585,515 22 11,132,158 2 339,241,706 63 59,292,743 11 - - 34,972 - 4,060,736 1 1,401,284 - - - 6,758,479 1 421,922,078 78 538,507,593 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (notes 6(k), (v) and (y)) 2111 Short-term notes and bills payable (notes 6(j), (v) and (y)) 2170 Notes and accounts payable (note 6(v)) 2180 Accounts payable to related parties (notes 6(v) and 7) 2200 Other payables 2220 Other payables to related parties (notes 6(v), (y) and 7) 2280 Current lease liabilities (notes 6(n), (v), (y), and 7) 2321 Current portion of bonds payable (notes 6(m), (v) and (y)) 2322 Current portion of long-term borrowings (notes 6(l), (v) and (y)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2530 Bonds payable (notes 6(m), (v) and (y)) 2540 Long-term borrowings (notes 6(m), (v) and (y)) 2570 Deferred tax liabilities (notes 6(p)) 2580 Non-current lease liabilities (note 6(n), (v), (y), and 7) 2611 Long-term notes payable (note 6(l), (v) and (y)) 2640 Net defined benefit liability-non-current (note 6(n)) 2645 Guarantee deposits 2670 Other non-current liabilities Total non-current liabilities Total liabilities Equity(notes 6(q)): 3110 Common Stock 3200 Capital surplus 3300 Retained earnings 3400 Others Total equity Total liabilities and equity	December 31, 2019		December 31, 2018
			Amount %		Amount %
			$ 22,443,300 4 15,392,795 3 5,045,472 1 5,957,209 1 11,350,723 2 4,000,000 1 59,288 - 4,647,875 1 3,333,333 1 659,525 - 72,889,520 14 59,330,786 12 4,966,667 1 11,480,294 2 69,457 - 5,096,417 1 19,424,132 4 288,238 - 48,371 - 100,704,362 20 173,593,882 34 79,308,216 15 26,617,834 5 204,105,146 39 34,540,688 7 344,571,884 66 $ 518,165,766 100		20,880,900 4 8,897,747 2 4,993,365 1 7,130,082 1 12,493,985 2 - - - - 5,946,931 1 6,133,333 1 546,592 - 67,022,935 12 52,584,524 10 5,200,000 1 10,984,786 2 - - 7,096,550 1 19,596,620 4 305,584 - 44,397 - 95,812,461 18 162,835,396 30 79,308,216 15 26,672,119 5 220,788,020 41 48,903,842 9 375,672,197 70 538,507,593 100

328

See accompanying notes to financial statements.

(English Translation of Financial Statements and Report Originally Issued in Chinese) NAN YA PLASTICS CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

4000 Operating revenue, net (notes 6(s) and 7) 5000 Operating costs (notes 6(f), (o), (t), 7 and 12) 5910 Less: Unrealized (realized) profit from affiliated companies (note 7) Gross profit from operations Operating expenses (notes 6(e), (o), (t), 7 and 12): 6100 Selling expenses 6200 Administrative expenses Total operating expenses Operating income Non-operating income and expenses (notes 6(g), (n), (u) and 7): 7010 Other income 7020 Gains (losses) on reclassification of financial assets 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for using equity method, net Total non-operating income and expenses Profit before income tax 7950 Less: Income tax expenses(benefits)(notes 6(p)) Profit (loss) 8300 Other comprehensive income (notes 6(g) and (q)): 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized losses from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Less : income tax related to components of other comprehensive income that will not be reclassified to profit or loss Total items that may not be reclassified subsequently to profit and loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8380 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Less : income tax related to components of other comprehensive income that will be reclassified to profit or loss Total items that may be reclassified subsequently to profit or loss 8300 Other comprehensive income 8500 Total comprehensive income Basic earnings per share (note 6(r) ) :	2019 Amount % $154,799,788 100 140,895,897 91 (30,032) - 13,933,923 9 5,658,176 4 5,393,655 3 11,051,831 7 2,882,092 2 4,814,269 3 (84,658) - (1,369,753) (1) 18,321,507 12 21,681,365 14 24,563,457 16 1,487,334 1 23,076,123 15 34,401 - (3,101,808) (2) (5,543,433) (3) 6,880 - (8,617,720) (5) (5,866,135) (4) 15,812 - - - (5,850,323) (4) (14,468,043) (9) $ 8,608,080 6 Before Tax After Tax $ 3.10 2.91	2018 Amount % 188,909,965 100 161,183,893 85 (17,988) - 27,744,060 15 5,959,140 3 6,333,369 4 12,292,509 7 15,451,551 8 5,120,668 3 988,720 1 (1,274,829) (1) 37,534,582 20 42,369,141 23 57,820,692 31 5,074,671 3 52,746,021 28 (582,901) - (1,513,062) (1) (5,280,046) (3) (262,925) - (7,113,084) (4) 455,917 - (22,910) - 135,016 - 297,991 - (6,815,093) (4) 45,930,928 24 Before Tax After Tax 7.29 6.65

See accompanying notes to financial statements.

329

(English Translation of Financial Statements and Report Originally Issued in Chinese) NAN YA PLASTICS CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Capital surplus	R	etained earnings	etained earnings		Items o	f other equity in	terest
	Legal reserve 57,873,852 - 57,873,852 5,452,101 - - - - - - - - 63,325,953 5,274,602 - - - - - - - 68,600,555	Special reserve 86,932,416 - 86,932,416 - 6,819,825 - (15,150) - - - - - 93,737,091 - 6,106,008 - (1,433) - - - - 99,841,666	Unappropriated retained earnings 63,674,176 507,292 64,181,468 (5,452,101) (6,819,825) (40,447,190) 15,150 - 52,746,021 (498,165) 52,247,856 (382) 63,724,976 (5,274,602) (6,106,008) (39,654,108) 1,433 - 23,076,123 (104,889) 22,971,234 35,662,925	Exchange differences on translation of foreign financial statements (6,026,197) - (6,026,197) - - - - - - 320,901 320,901 - (5,705,296) - - - - - - (5,866,135) (5,866,135) (11,571,431)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income - 61,239,238 61,239,238 - - - - - - (6,614,919) (6,614,919) - 54,624,319 - - - - - - (8,512,831) (8,512,831) 46,111,488	Unrealized gains (losses) on available- for-sale financial assets 47,691,196 (47,691,196) - - - - - - - - - - - - - - - - - - - -	Gains (losses) on effective portion of cash flow hedges 7,729 (7,729) - - - - - - - - - - - - - - - - - - - -
26,158,472 -
26,158,472
- - - - 513,647 - -
-
-
26,672,119
- - - - (54,285) - -
-
26,617,834

See accompanying notes to financial statements.

330

(English Translation of Financial Statements and Report Originally Issued in Chinese) NAN YA PLASTICS CORPORATION

Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Amortization expense
Net profit on financial assets or liabilities at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of profit of subsidiaries, associates and joint ventures accounted for using equity method
(Gain) loss on disposal of property, plant and equipment
Realized profit from affiliated companies
Unrealized foreign exchange loss
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Decrease (increase) in notes receivable
Decrease (increase) in accounts receivable (including related parties)
Decrease in other receivable
Decrease (increase) in inventories
Increase in other current assets
Total changes in operating assets
Decrease in notes and accounts payable (including related parties)
Increase (decrease) in other payable
Increase (decrease) in other current liabilities
Decrease in net defined benefit liability
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities
Cash flows from (used in) investing activities:
Proceeds from capital reduction of financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets designated at fair value through profit or loss
Acquisition of investments accounted for using equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease (increase) in other receivables due from related parties
Increase in other non-current assets
Net cash flows (used in) from investing activities
Cash flows from (used in) financing activities:
Increase in short-term loans
Increase in short-term notes and bills payable
Proceeds from issuance of bonds
Repayments of bonds
Proceeds from long-term debt
Repayments of long-term debt
(Decrease) increase in long-term notes payable
Decrease in guarantee deposits
Increase in other payables to related parties
Payment of lease liabilities
Increase in other non-current liabilities
Cash dividends paid
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

See accompanying notes to financial statements.

331

(English Translation of Financial Statements and Report Originally Issued in Chinese) NAN YA PLASTICS CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Nan Ya Plastics Corporation was incorporated on August 22, 1958, and established its factories in Kaohsiung City. The Company engages in the manufacture and sale of plastic products, polyester fibers, petrochemical products, and electronic materials. The Company has gone through several capital increases and established many divisions. Currently, the Company has the following divisions: plastics, fiber, petrochemical, electronics, and engineering. The Company has 10 manufacturing plants across Taiwan, 1 branch office in Mai-Liao and 1 branch office in Sen-Kong.

(2) Approval date and procedures of the financial statements:

The accompanying financial statements were approved and authorized for issue by the Board of Directors on March 18, 2020.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

are effective for annual periods beginning on or after January 1, 2019.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16 “Leases”	January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019
Amendments to IFRS 9 “Prepayment features with negative compensation”	January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”	January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures”	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

Except for the following items, the Company believes that the adoption of the above IFRSs would not have any material impact on its financial statements. The extent and impact of signification changes are as follows:

(i) IFRS 16“Leases”

(Continued)

332

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

The Company applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below,

1) Definition of a lease

Previously, the Company determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Company assesses whether a contract is or contains a lease based on the definition of a lease, as explained in Note 4(l).

On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Company applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

2) As a lessee

As a lessee, the Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Company. Under IFRS 16, the Company recognizes right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.

The Company decided to apply recognition exemptions to short-term leases of buildings that have a lease term of 12 months or less.

Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Company’ s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at either:

－ their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’ s incremental borrowing rate at the date of initial application – the Company applied this approach to its largest property leases; or
－ an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Company applied this approach to all other lease.

In addition, the Company used the following practical expedients when applying IFRS 16 to leases.

－ Applied a single discount rate to a portfolio of leases with similar characteristics.

(Continued)

333

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

－ Adjusted the right-of-use assets by the amount of IAS 37 onerous contract provision immediately before the date of initial application, as an alternative to an impairment review.
－ Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.
－ Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
－ Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
3) Impacts on financial statements

On transition to IFRS 16, the Company additional the amount of the right-of-use assets and lease liabilities recognized were both $114,265, the difference was recognized in retained earnings. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 1.41%.

Operating lease commitment on December 31, 2018 as disclosed in the Company’s financial statements Discounted using the incremental borrowing rate on January 1, 2019 Lease liabilities recognized on January 1, 2019	January 1, 2019
	$ 116,104 114,265 $ 114,265

(b) The impact of IFRS issued by FSC but not yet effective

1080323028 issued by the FSC on July 29, 2019:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3 “Definition of a Business”	January 1, 2020
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”	January 1, 2020
Amendments to IAS 1 and IAS 8 “Definition of Material”	January 1, 2020

The Company assesses that the adoption of the abovementioned standards would not have any material impact on its financial statements.

(Continued)

334

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Those which may be relevant to the Company are set out below:

Issuance / Release
Dates
September 11, 2014

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

(4) Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These annual financial statements have been prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the Guidelines).

(Continued)

335

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(b) Basis of preparation

Basis of measurement

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

(i) Financial instruments at fair value through profit or loss are measured at fair value;
(ii) Financial assets at fair value through other comprehensive income are measured at fair value;
(iii) The defined benefit liabilities are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(q).

Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entity operates. The financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currenciesy using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

an investment in equity securities designated as at fair value through other comprehensive income;
a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
qualifying cash flow hedges to the extent that the hedges are effective.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations, are translated into the presentation currency at the average rate. Exchange differences are recognized in other comprehensive income.

(Continued)

336

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planed nor likely to occur in the foreseeable future. Exchange differences arising from such a monetary item that are considered to form part of a net investment in the foreign operation are recognized in other comprehensive income.

(d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

An entity shall classify a liability as current when:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(Continued)

337

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(Continued)

338

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Dividend income derived from equity investments is recognized on the date that the Company’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date.

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4) Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Company’s management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

(Continued)

339

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

5) Assessment whether contractual cash flows are solely payments of principal and interest

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable rate features;
prepayment and extension features; and
terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features)
6) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivable, other receivable, guarantee deposit paid and other financial assets), and contract assets.

The Company measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

debt securities that are determined to have low credit risk at the reporting date; and
other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

(Continued)

340

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

The Company assumes that the credit risk on a financial asset has increased significantly if there is a breach of contract.

The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full. The Company measures its loss allowances at an amount equal to lifetime expected credit loss.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost is credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or being more than one year past due;
the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
it is probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for a security because of financial difficulties.

(Continued)

341

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Financial liabilities

(Continued)

342

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

3) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

4) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(g) Inventories

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over the financial and operating policies.

The financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant influence.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

(Continued)

343

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

When the Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Company’s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to its investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under additional paid in capital. If the additional paid in capital resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Company’s ownership interest is reduced due to the additional subscription of the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of its related assets or liabilities.

(i)

Subsidiaries

The Company accounts the investee companies that it possesses control using the equity. Net income, other comprehensive income, and shareholder’ s equity in the financial reports of the Company and the net income, other comprehensive income, and shareholder’s equity that belongs to the Consolidated Company in the consolidated financial reports should be the same.

The Company accounts the changes in equity, under the condition that control is still present, as equity transactions between the proprietors.

(j) Joint arrangements

(i) the parties are bound by a contractual arrangement; and
(ii) the contractual arrangement gives two or more of those parties joint control of the arrangement. IFRS 11 “Joint Arrangements” defines joint control as the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (ie activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control.

A joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Company accounts for the assets, liabilities, revenues and expenses in relation to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses. When assessing whether a joint arrangement is a joint operation or a joint venture, the Company considers the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances.

(Continued)

344

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

A joint venture is a joint arrangement whereby the Company has joint control of the arrangement (i.e. joint venturers) in which the Company has rights to the net assets of the arrangement , rather than rights to its assets and obligations for its liabilities. The Company recognizes its interest in a joint venture as an investment and accounts for that investment using the equity method in accordance with IAS 28 “ Investments in Associates and Joint Ventures” , unless the Company qualifies for exemption from that Standard. Please refer to note 4(i) for the application of the equity method.

When assessing the classification of a joint arrangement, the Company considers the structure and legal form of the arrangement, the terms in the contractual arrangement, and other facts and circumstances. When the facts and circumstances change, the Company reevaluates whether the classification of the joint arrangement has changed.

(k) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iii) Depreciation

Land is not depreciated.

The estimated useful lives of property, plant and equipment for the current and comparative years are as follows:

1) Buildings: 25 to 50 years.
2) Machinery and transportation equipment: 7 to 15 years.
3) Miscellaneous equipment: 7 to 15 years.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(Continued)

345

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(l) Lease

Lease (applicable from January 1, 2019)

(i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Company has the right to direct the use of the asset if either:
the Company has the right to direct how and for what purpose the asset is used throughout the period of use, without the supplier having the right to change those operating instructions; or
the relevant decisions about how and for what purpose the asset is used are predetermined and:
- － the Company has the right to operate the asset is used throughout the period of use, without the supplier having the right to change those operating instructions; or
- － the Company designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

(ii) As a lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

(Continued)

346

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

－
fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－
there is a change in future lease payments arising from the change in an index or rate; or
－ there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise a extension or termination option; or
－
there is a change in scope, object or other conditions of a lease.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

(Continued)

347

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of buildings that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(iii) As a leasor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The interest income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘rental income’.

Lease (applicable before January 1, 2019)

(i) Lessor

Contingent rents are recognized as income in the period when the lease adjustments are confirmed.

(Continued)

348

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(ii) Lessee

Payments made under operating leases (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

Contingency rent is recognized as expense in the period in which it is incurred.

(m) Technical cooperation fee
(i) Technical cooperation fee

Technical cooperation fee is measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iii) Amortization

1) Technical cooperation fee 5~15 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(n) Impairment – Non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

(Continued)

349

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

(o) Revenue recognition
(i) Revenue from contracts with customers

1) Sale of goods

The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company any has objective evidence that all criteria for acceptance have been satisfied.

2) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(p) Contract costs

(i) Incremental costs of obtaining a contract

The Company recognizes as an asset the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

The Company applies the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

(Continued)

350

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(ii) Costs to fulfill a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Company recognizes an asset from the costs incurred to fulfill a contract only if those costs meet all of the following criteria:

●the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify;
●the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and
●the costs are expected to be recovered.

General and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Company cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations(or partially satisfied performance obligations), the Company recognizes these costs as expenses when incurred.

(q) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

(Continued)

351

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(r) Income taxes

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities ; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or

(Continued)

352

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(s) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding.

(t)

Operating segments

The Company has already disclosed related information of its operating segments in the consolidated financial report of the Consolidated Company as of December 31, 2019, thus no additional information will be disclosed herein.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the financial statements in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

(a) Evauation of inventory

Because inventories are measured at the lower of cost and net realizable value, the Company evaluates the amount of normal waste, obsolete, and inventories without market price as of the reporting date, and reduces the book value to net realizable value. Such evaluation method depends on the demand of merchandise for a particular period of time in the future; therefore, there might be significant change due to the rapid industry transformation. Please refer to note 6(f) for further description of the evaluation of inventories.

(Continued)

353

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(b) The Company's accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company establishes a measurement and review mechanism for measuring fair value.

The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

(a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
(b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).
(c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to note 6(v), financial instruments, for assumptions used in measuring fair value.

(6) Explanation of significant accounts:

(a) Cash and Cash Equivalents

Cash on hand Cash in banks Time deposits Cash and cash equivalents	December 31, 2019 December 31, 2018 $ 245 96 2,398,714 3,664,254 - 1,843,980 $ 2,398,959 5,508,330

Please refer to note 6(v) for the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Company.

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

Financial assets designated as at fair value through profit or loss： Funds $	December 31, 2019 December 31, 2018 4,044,356 4,017,249

Remeasurement at fair value recognized in profit or loss is disclosed in note 6(u).

(Continued)

354

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Financial assets at fair value through other comprehensive income - current

	December 31,	December 31,	December 31,
		2019	2018
Equity instruments at fair value through other comprehensive
income :
Stocks	$	41,715,821	44,528,667

Financial assets at fair value through other comprehensive income- non-current
		December 31,	December 31,
		2019	2018
Equity instruments at fair value through other comprehensive
income：
Stocks	$	10,843,196	11,132,158

(i) Equity investments at fair value through other comprehensive income

The Company designated the investments shown above as equity instruments at fair value through other comprehensive income because these equity instruments represent those investments that the Company intends to hold for long-term for strategic purposes.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of December 31, 2019 and 2018.

(ii) For credit risk and market risk; please refer to note 6(v).
(iii) As of December 31, 2019, the financial assets at fair value through other comprehensive income of the Company had been pledged as collateral for its long-term borrowings. Please refer to note 8.
(d) Notes receivable, accounts receivable and other receivables

Notes receivable Accounts receivable Overdue receivables Allowance for doubtful receivables	December 31, 2019 December 31, 2018 $ 2,051,902 2,432,508 16,096,019 18,813,719 4,555 6,550 (92,158) (92,158) $ 18,060,318 21,160,619

(Continued)

355

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables on December 31, 2019 and 2018. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision as of December 31, 2019 amounted to $92,158, expected loss rate less than 1%.

The Company applies the expected credit losses to analysis of notes and accounts receivable as of December 31, 2019, as follows:

Past due 1 to 90 days Past due 90 to 180 days Past due 180 to 360 days Past due over 360 days	December 31, 2019 December 31, 2018 $ 35,370 69,756 12,070 16,198 2,965 4,890 7,621 8,572 $ 58,026 99,416

The movement in the allowance for notes and accounts receivable were as follows:

Balance at January 1, 2019 and 2018 Impairment loss recognized Balance at December 31, 2019 and 2018	For the years ended December 31
	2019 2018 $ 92,158 86,533 - 5,625 $ 92,158 92,158

As of December 31, 2019 and 2018, notes and trade receivable which were overdue or under legal proceedings amounted to $4,555 and $6,550, respectively. Such receivables were reclassified to overdue receivables under other assets and provided with a full impairment loss provision.

The Company signed without-recourse factoring and financing contracts with financial institutions. According to these contracts, the net accounts receivable that have matured but are still uncollected will be paid by the financial institutions, except for those affected by trade disputes. As of December 31, 2019 and 2018, the outstanding accounts receivable factoring transactions between the Company and the financial institutions were as follows:

	December 31, 2019	December 31, 2019
Purchaser	Factoring Balance Advanced Amount Factoring Line $ 69,693 - 100,000 December 31, 2018
E. Sun Bank
Purchaser		Advanced Amount Factoring Line - 100,000
E. Sun Bank

(Continued)

356

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(e) Other receivables

Other accounts receivable—other Other accounts receivable—loans to associates Less: Loss allowance Total	December 31, 2019 December 31, 2018 $ 928,677 1,346,114 5,640,819 12,683,027 - - $ 6,569,496 14,029,141

Other receivables are financial assets with low credit risk, thus the Company measured the loss allowance based on 12-month expected credit losses.

(f) Inventories

As of December 31, 2019 and 2018, the components of inventories were as follows:

Finished goods Work in process Machinery and accessories in process Raw materials Supplies Consigned-out raw materials Consigned-out finished goods Goods in transit Inventories, net	December 31, 2019 December 31, 2018 $ 6,183,288 8,276,355 5,005,165 6,582,025 4,788,355 3,955,613 5,141,749 6,270,672 807 669 174,917 206,046 13,943 1,013 478,996 312,757 $ 21,787,220 25,605,150

The details of the cost of sales were as follows:

Inventory that has been sold $ Write-down of inventories (Reversal of write-downs) Unallocated production overheads $	2019 2018 137,443,958 158,335,071 (227,666) 300,047 3,679,605 2,548,775 140,895,897 161,183,893

As of December 31, 2019 and 2018, the Company did not provide any inventories as collateral for its loans.

(Continued)

357

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(g) Investments accounted for using equity method

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

Subsidiaries Associates	December 31, 2019 December 31, 2018 $ 173,906,675 173,901,499 160,321,830 165,340,207 $ 334,228,505 339,241,706

(i) Subsidiaries

For the years ended December 31, 2019 and 2018, the Company’s share of net income in its subsidiaries was as follows:

The Company’s share of net income in its subsidiaries	For the year ended December 31 2019 2018 $ 6,356,723 11,326,244

In April and August, 2019, the Company participated in the capital increase by cash of its subsidiary, Nan Ya Plastics (Hong Kong) Co., Ltd., with the total investments amounting to USD77,000 thousand (equivalent to $2,378,838) and USD63,000 thousand (equivalent to $1,929,753), respectively.

In April, 2018, the Company participated in the capital increase by cash of its subsidiary, Nan Ya International (Cayman) Limited, with the total investments amounting to USD57,161 thousand (equivalent to $1,676,070).

Please refer to the consolidated financial statements for the year ended December 31, 2019 for further related information.

(ii) Associates

For the years ended December 31, 2019 and 2018, the Company’s share of net income (loss) of associates were as follows:

The Company’s share of net income of associates	For the years ended December 31 2019 2018 $ 11,964,784 26,208,338

(Continued)

358

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

1) Aforementioned information of associates was derived from financial statements audited by auditors.
2) The unrealized translation gain or loss arising from the investment in foreign entities, which was determined on exchange rates as of December 31, 2019 and 2018, were recognized in comprehensive income.
3) The unrealized sales profits from downstream transactions with investees under the equity method are treated as deductions from gross income. The realized sales profits from downstream sales are added to gross income. Details of these transactions are disclosed in note 7.
4) In March, August and December, 2019, the Company participated in the capital increase by cash of FG Inc., Formosa Resources Corporation and Formosa Synthetic Rubber Corporation, with the total investment amounting to USD7,500 thousand (equivalent to $231,570), $1,570,000 and $46,000, respectively.
5) In October, 2018, the Company participated in the capital increase by cash of Formosa Synthetic Rubber (Hong Kong) Corporation Limited, with the total investment amounting to USD65,000 thousand (equivalent to $2,010,450).
6) The Company’ s financial information for investments accounted for using the equity method that are individually insignificant were as follows:

The carrying value of associates that were not individually material Attributable to the Company: Net Income Other comprehensive income Total comprehensive income	December 31, 2019 December 31, 2018 $ 160,321,830 165,340,207 For the years ended December 31 2019 2018 $ 11,964,784 26,208,338 (1,741,168) (2,994,412) $ 10,223,616 23,213,926

(iii) Collateral

Please refer to note 8 for investments accounted for using equity method which were pledged to banks or courts as collateral to secure the Company’ s bank loans and lawsuits as of December 31, 2019 and 2018.

(Continued)

359

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(h) Property, Plant and Equipment

The cost, depreciation, and impairment of property, plant and equipment of the Company for the years ended December 31, 2019 and 2018 were as follows:

Cost or deemed cost: Balance on January 1, 2019 Additions Disposals Reclassification Balance on December 31, 2019 Balance on January 1, 2018 Additions Disposals Reclassification Balance on December 31, 2018 Depreciation and impairment loss: Balance on January 1, 2019 Depreciation for the period Disposals Reclassification Balance on December 31, 2019 Balance on January 1, 2018 Depreciation for the period Disposals Reclassification Balance on December 31, 2018 Carrying amounts: Balance on December 31, 2019 Balance on December 31, 2018	Land $ 13,337,724 - - - $ 13,337,724 $ 9,723,999 3,613,725 - - $ 13,337,724 $ - - - - $ - $ - - - - $ - $ 13,337,724 $ 13,337,724	Building and construction 30,485,242 - - 110,011 30,595,253 29,482,761 1,151,296 (148,815) - 30,485,242 18,730,805 788,819 - - 19,519,624 18,027,652 822,246 (119,093) - 18,730,805 11,075,629 11,754,437	Machinery equipment 167,019,428 - (728,957) 6,551,321 172,841,792 162,300,821 - (1,756,375) 6,474,982 167,019,428 139,613,668 4,856,548 (725,759) 125 143,744,582 136,078,625 5,288,965 (1,753,887) (35) 139,613,668 29,097,210 27,405,760	Transportation equipment 1,021,680 - (32,137) 32,891 1,022,434 1,026,845 - (28,588) 23,423 1,021,680 941,893 20,782 (32,137) - 930,538 951,476 19,005 (28,588) - 941,893 91,896 79,787	Other facilities 3,759,966 - (178,250) 558,053 4,139,769 3,530,943 - (97,865) 326,888 3,759,966 2,716,908 263,582 (178,043) (134) 2,802,313 2,590,509 224,254 (97,865) 10 2,716,908 1,337,456 1,043,058	Construction in progress Total 5,671,977 221,296,017 4,842,444 4,842,444 - (939,344) (2,628,306) 4,623,970 7,886,115 229,823,087 6,293,836 212,359,205 2,540,978 7,305,999 - (2,031,643) (3,162,837) 3,662,456 5,671,977 221,296,017 - 162,003,274 - 5,929,731 - (935,939) - (9) - 166,997,057 - 157,648,262 - 6,354,470 - (1,999,433) - (25) - 162,003,274 7,886,115 62,826,030 5,671,977 59,292,743

(i) Please refer to note 8 for the property, plant and equipment pledged to secure bank loans as of December 31, 2019 and 2018.

(ii) For the years ended December 31, 2019 and 2018, the capitalized interest on borrowings for the purchase of the property, plant and equipment of the Company amounted to $63,061 and $59,705, respectively. The capitalized interest rate ranged from 1.303% to 1.410% and 1.405% to 1.507% for the years ended December 31, 2019 and 2018, respectively.

(Continued)

360

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(i) Right-of-use assets

The Company leases many assets including land and buildings. Information about leases for which the Company as a lessee is presented below:

Cost：
Balance at January 1, 2019
Effects of retrospective application
Acquisitions
Reclassification
Balance at December 31, 2019
Accumulated depreciation and impairment losses:
Balance at January 1, 2019
Depreciation for the period
Reversal od impairment
Balance at December 31, 2019
Carrying amount:
Balance at December 31, 2019
(j)
Short-term notes and bills payable
Short-term notes and bills payable
Discount on short-term notes and bills payable
Total
Interest rate
(k)
Short-term borrowings
Unsecured short-term borrowings
Interest rate

Land
Building and
construction
Total
$ -
-
-
5,356
108,909
114,265
2,270
71,043
73,313
(272)
-
(272)
$
7,354
179,952
187,306
$ -
-
-
1,655
58,049
59,704
(272)
-
(272)
$
1,383
58,049
59,432
$
5,971
121,903
127,874
December 31,
2019
December 31,
2018
$ 15,400,000
8,900,000
(7,205)
(2,253)
$
15,392,795
8,897,747
0.532%~0.695%
0.36%~0.75%
December 31,
2019
December 31,
2018
$
22,443,300
20,880,900
0.67%~0.98%
0.74%~1.10%

The amount of $1,562,821 and $12,452,539 was issued, and there were no material buyback or redemption on short term borrowings for the year ended December 31, 2019 and 2018. For information concerning interest expense, please refer to note 6(u).

(Continued)

361

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(l) Long-term debts

Long-term debts consisted of the following:

Secured long-term debts Unsecured long-term debts Long-term notes payable Current portion Total Secured long-term debts Unsecured long-term debts Long-term notes payable Current portion Total		December 31, 2019 Interest rate Expiration Amount 0.9900%~1.6316% 2020~2021 $ 4,000,000 0.9456%~1.0920% 2020~2022 4,300,000 0.57%~0.842% 2020 5,096,417 (3,333,333) $ 10,063,084 December 31, 2018 Interest rate Expiration Amount 1.6316% 2018~2021 $ 3,333,333 0.98%~1.09% 2019~2020 8,000,000 0.44%~0.84% 2019~2020 7,096,550 (6,133,333) $ 12,296,550
	Currency	Interest rate
	TWD TWD TWD TWD
	Currency	Interest rate
	TWD TWD TWD TWD	1.6316% 0.98%~1.09% 0.44%~0.84%

Please refer to note 6(v) for information on the Company’s exposure to liquidity risk, and risk of changes in interest rates and liquidation risk.

(i) The Company issued the amounts of $4,300,000 and $3,200,000 on long term loans for the year ended December 31, 2019 and 2018, respectively. The amounts of $7,333,333and $3,933,333 were redeemed for the year ended December 31, 2019 and 2018, respectively. For information on interest expense, please refer to note 6(u).
(ii) Pledged assets for bank loans

For the collateral for long-term borrowings, please refer to note 8.

(iii) Secured debts

In order to raise funds to repay debts and for reinvestments, new factory construction plans, and foreign and domestic equipment acquisitions, the Company signed a syndicated long-term mortgage loan agreement with Bank of Taiwan, the lead bank of the syndicated loan, and other banks on November 14, 2013. The key terms and conditions of the loan agreement were as follows:

1) Credit line: TWD6,000,000
2) Interest rate: as settled with each participating bank.

(Continued)

362

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

3) Period: 7 years (including a 3-year grace period)
4) Collateral: the acquired land financed by the loan.
5) The financial covenants under this loan agreement include the requirement to maintain certain financial ratios based on the audited annual financial reports. Failure to comply with these financial covenants may cause the syndicated banks to terminate the credit line or declare the unpaid principal and interest under the loan agreement to be immediately due and payable. These financial ratios were as follows:
a) Current Ratio (total current assets divided by total current liabilities): not less than 100%
b) Leverage Ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%

As of December 31, 2019, TWD6,000,000 of the credit line had been drawn.

(m) Unsecured bonds payable

Domestic unsecured nonconvertible corporate bonds Costs of issuing bonds Current portion Total	December 31, 2019 December 31, 2018 $ 64,050,000 58,600,000 (71,339) (68,545) (4,647,875) (5,946,931) $ 59,330,786 52,584,524

The terms of domestic corporate bonds as of December 31, 2019 were as follows:

Issued amount Balance, end of year Current portion Issuance date Issuance period Coupon rate Interest payment date Repayment method	The third domestic unsecured nonconvertible corporate bond in 2012	The first domestic unsecured nonconvertible corporate bond in 2013	The second domestic unsecured nonconvertible corporate bond in 2013	The first domestic unsecured nonconvertible corporate bond The second domestic unsecured nonconvertible corporate bond in 2014 in 2014 TWD10,000,000 TWD5,000,000 9,983,992 1,498,875 - - June 24, 2014 November 11, 2014 14 years and 15 years 5 years and 10 years 2.04% 1.45% and 1.93% June 24 November 11 Payable in 2 equal installments for each coupon rate in 2028 and 2029, respectively. Payable in 2 equal installments for each coupon rate in 2018~2019 and 2023~2024, respectively
	TWD6,000,000 4,798,532 1,199,633 February 25, 2013 7 years and 10 years 1.36% and 1.50% February 25 Payable in 2 equal installments for each coupon rate in 2018~2019 and 2021~2022, respectively	TWD9,600,000 949,599 949,599 August 5, 2013 4 years, 5 years and 7 years 1.40%, 1.45% and 1.55% August 5 Payable in 2 equal installments for each coupon rate in 2016~2017, 2017~2018 and 2019~2020, respectively	TWD10,400,000 10,388,631 - December 18, 2013 10 years and 12 years 1.98% and 2.08% December 18 Payable in 2 equal installments for each coupon rate in 2022~2023 and 2024~2025, respectively

(Continued)

363

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Issued amount Balance, end of year Current portion Issuance date Issuance period Coupon rate Interest payment date Repayment method	The first domestic unsecured nonconvertible corporate bond in 2016	The first domestic unsecured nonconvertible corporate bond in 2017	The first domestic unsecured nonconvertible corporate bond in 2018	The first domestic unsecured nonconvertible corporate bond The second domestic unsecured nonconvertible corporate bond in 2019 in 2019 TWD6,300,000 TWD5,100,000 6,290,742 5,092,009 - - June 17, 2019 October 15, 2019 5 years, 7 years and 10 years 5 years, 7 years and 10 years 0.74% , 0.82% and 0.91% 0.71%%, 0.75% and 0.84% June 17 October 15 Payable in 2 equal installments for each coupon rate in 2023~2024, 2025~2026, and 2028~2029 respectively Payable in 2 equal installments for each coupon rate in 2023~2024, 2025~2026, and 2028~2029 respectively
	TWD5,000,000 4,997,286 2,498,643 August 16, 2016 5 years 0.68% August 16 Payable in 2 equal installments for each coupon rate in 2020 and 2021, respectively	TWD9,500,000 9,491,847 - July 10, 2017 5 years and 7 years 1.03% and 1.25% July 10 Payable in 2 equal installments for each coupon rate in 2021~2022 and 2023~2024, respectively	TWD10,500,000 10,487,148 - September 6, 2018 5 years, 7 years and 10 years 0.83%%, 0.91% and 1.07% September 6 Payable in 2 equal installments for each coupon rate in 2022~2023, 2024~2025, and 2027~2028 respectively

(n) Lease liabilities

The carrying values of lease liabilities were as follows:

The carrying values of lease liabilities were as follows:
Current Non-current For information on the maturity analysis, please refer to note 6(v).	December 31, 2019
	$ 59,288 $ 69,457

The amounts recognized in profit or loss were as follows:

		For the years
		ended
		December 31,
		2019
Interest on lease liabilities	$	2,248
Expenses relating to short-term lease	$	12,790

The amounts recognized in the statement of cash flows for the Company was as follows:

Total cash outflow for leases	For the years ended December 31, 2019
	$ 73,871

(Continued)

364

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(i) Real estate leases

As of December 31, 2019, the Company leases land and buildings for its office space and plant. The leases of land typically run for a period of 1 to 17 years, of office space for 2 to 20 years, and of plant for 2 year. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases require the Company to make payments that relate to the property taxes levied on the lessor and insurance payments made by the lessor; these amounts are generally determined annually.

The Company expects the relative proportions of fixed and variable lease payments to remain broadly consistent in future years.

(ii) Other leases

The Company leases buildings with contract terms of one year. These leases are short-term items. The Company has elected not to recognize right-of-use assets and lease liabilities for these leases.

(o) Employee Benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2019 December 31, 2018 $ 27,140,150 27,760,041 (7,716,018) (8,163,421) $ 19,424,132 19,596,620

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for its employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $7,764,729 as of December 31, 2019. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(Continued)

365

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

2) Movements in the present value of the defined benefit obligation

The movements in the present value of the defined benefit obligation were as follows:

Balance, beginning of year Current service cost and interest expense Remeasurements of the net defined benefit liabilities: Experience adjustments Benefits paid from plan assets Increase from transfer of related party employees Balance, end of year	For the years ended December 31 2019 2018 $ 27,760,041 27,829,507 658,029 669,298 297,227 733,228 (1,583,581) (1,484,214) 8,434 12,222 $ 27,140,150 27,760,041

3) Movements in the fair value of the plan assets

The movements in the fair value of the plan assets were as follows:

Balance, beginning of year Interest income Remeasurements of the net defined benefit liabilities: Return on plan assets (except for interest income) Contributions from employer Benefits paid Balance, end of year	For the years ended December 31 2019 2018 $ 8,163,421 8,601,387 97,717 102,419 331,628 150,327 293,315 301,126 (1,170,063) (991,838) $ 7,716,018 8,163,421

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss were as follows:

Current service cost Net interest expense of net defined benefit liabilities	For the years ended December 31 2019 2018 $ 317,276 328,413 243,036 238,466 $ 560,312 566,879

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366

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Operating costs Selling expenses Administrative expenses	For the years ended December 31 2019 2018 $ 432,688 436,303 20,830 21,788 106,794 108,788 $ 560,312 566,879

5) Remeasurement of net defined benefit liability recognized in other comprehensive income

The Company's remeasurement of the net defined benefit liability recognized in other comprehensive income were as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	For the years ended December 31 2019 2018 $ (5,461,051) (4,878,150 34,401 (582,901 $ (5,426,650) (5,461,051

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

	For the years	ended	December 31
	December 31,		December 31,
	2019		2018
Discount rate	1.00	%	% 1.25
Future salary increase rate	2.85	%	% 2.85

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $293,231.

The weighted-average lifetime of the defined benefits plans is 8.8 years.

7) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation as of December 31, 2019 and 2018 shall be as follows:

December 31, 2019 Discount rate( 0.25% variation) Future salary increasing rate( 1.00% variation)	Influences of defined benefit obligations
	Increase Decrease $ (418,103) 433,712 1,859,641 (1,643,891

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367

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

December 31, 2018 Discount rate( 0.25% variation) Future salary increasing rate( 1.00% variation)	Influences of defined benefit obligations
	Increase Decrease $ (477,456) 496,477 2,133,518 (1,866,790)

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2019 and 2018.

(ii) Defined contribution plan

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Bureau of the Labour Insurance amounted to $301,776 and $288,938 for the years ended December 31, 2019 and 2018, respectively.

(p) Income taxes

(i) Income tax expense

The components of income tax expense for 2019 and 2018 were as follows:

Current income tax expense Current period Adjustment for prior periods Deferred tax expense Origination and reversal of temporary differences Adjustment for prior periods Total income tax expense	For the years ended December 31 2019 2018 $ 976,213 2,563,282 (58,659) (42,455) 569,780 2,518,785 - 35,059 $ 1,487,334 5,074,671

(Continued)

368

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

The amount of income tax recognized in other comprehensive income for 2019 and 2018 were as follows:

Items that will not be reclassified subsequently to profit or loss: Remeasurement from defined benefit plans Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements	For the years ended December 31 2019 2018 $ (6,880) 262,925 $ - (135,016)

Reconciliation of income tax and profit before tax for 2019 and 2018 were as follows:

		For the years ended	December 31
		2019	2018
Profit excluding income tax	$	24,563,457	57,820,692
Income tax using the Company's domestic tax rate	$	4,912,691	11,564,138
Effect of tax rates in foreign jurisdiction		162,493	466,284
Tax effect on tax-exempt dividend income		(642,419)	(713,998)
Adjustment in tax rate		-	(572,798)
Unrecognized deferred tax asset due to current deductable loss		-	36,659
Tax-exempt income		(5,421)	(43,177)
Income tax expense arising from investment income in associates
and joint ventures		25,374	112,310
Tax effect on investment income recognized under equity method		(3,340,943)	(6,489,688)
Differences between estimated and actual income tax and income
tax adjustments on prior years		(58,659)	(7,396)
Undistributed earnings additional tax		391,303	697,337
Other income tax adjustments		42,915	25,000
Income tax expense	$	1,487,334	5,074,671

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

The amount of unrecognized deferred tax assets as of December 31, 2019 and 2018 were as follows:

Deductible temporary difference	December 31, 2019 December 31, 2018 $ - 36,659

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NAN YA PLASTICS CORPORATION Notes to the Financial Statements

2) Recognized deferred tax assets and liabilities

Movement in the amount of deferred tax assets and liabilities for 2019 and 2018 were as follows:

Deferred tax liabilities:

Balance on January 1, 2019 Recognized in profit or loss Balance on December 31, 2019 Balance on January 1, 2018 Recognized in profit or loss Balance on December 31, 2018	Foreign investment income recognized under equity method
	$ 10,984,786 495,508 $ 11,480,294 $ 9,292,780 1,692,006 $ 10,984,786

Deferred tax assets:

Balance on January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2019 Balance on January 1, 2018 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2018	Investment tax credits $ - - - $ - $ 17,818 (17,818) - $ -	Defined benefit plans 3,919,324 (27,617) (6,880) 3,884,827 3,268,780 387,619 262,925 3,919,324	Idle capacity 78,039 223 - 78,262 33,319 44,720 - 78,039	Loss carryforward - - - - 1,354,361 (1,354,361) - -	Others Total 63,373 4,060,736 (46,878) (74,272) - (6,880) 16,495 3,979,584 120,387 4,794,665 78,002 (861,838) (135,016) 127,909 63,373 4,060,736

3) Assessment of tax

The Company’ s tax returns for the year through 2017 were assessed by the ROC authorities.

(Continued)

370

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(q) Capital and other equity

As of December 31, 2019 and 2018, the Company’s government registered total authorized capital and issued capital stock both amounted to $79,308,216, divided into 7,930,822 thousand shares of stock with $10 par value per share.

(i) Capital surplus

The components of capital surplus as of December 31, 2019 and 2018 were as follows:

Paid-in capital from conversion of corporate bond to common stock in excess of par value Gains on acquisition of Taiwan Plasticizer Corporation Other Total	December 31, 2019 December 31, 2018 $ 8,997,136 8,997,136 74,474 74,474 17,546,224 17,600,509 $ 26,617,834 26,672,119

(ii) Retained earnings

1) Legal reserve

2) Special reserve

As the Company opted to avail of the exemptions allowed under IFRS 1“ First-time Adoption of International Financial Reporting Standards” during the Company’s firsttime adoption of the IFRSs as endorsed by the FSC, unrealized revaluation increments and cumulative translation adjustments (gains) of $6,277,052, which were previously recognized in shareholders’ equity were reclassified to retained earnings. In accordance with Regulatory Permit No.1010012865 as issued by the FSC on April 6, 2012, a special reserve is appropriated from retained earnings for aforementioned reclassification. In addition, during the use, disposal or reclassifications of relevant assets, these special reserves can be reverted to distributable earnings proportionately. As the amount appropriated exceeds the increase in retained earnings arising from the adoption of IFRSs, only $6,243,060 is appropriated in compliance to the IFRSs as endorsed by the FSC. The balance of special reserve amounted to $6,128,451 and $6,129,884 as of December 31, 2019 and 2018, respectively.

(Continued)

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NAN YA PLASTICS CORPORATION Notes to the Financial Statements

3) Earnings distribution

Based on the resolution approved by stockholders during meetings held on June 12, 2019 and June 19, 2018, the distribution of the Company's earnings in 2018 and 2017, respectively, were as follows:

Dividends per share: Cash dividends Stock dividends	2018 2017 $ 5.00 5.10 - - $ 5.00 5.10

(Continued)

372

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(iii) Other equity accounts (net of tax)

Balance, January 1, 2019 Exchange differences on associates and subsidiaries accounted for using equity method Unrealized gains (losses) from financial assets at fair value through other comprehensive income Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income, associates and joint venture accounted for using equity method Share of cash flow hedge of associates and subsidiaries under equity method Balance, December 31, 2019	Exchange differences on translation of foreign financial statements $ (5,705,296) (5,866,135) - - - $ (11,571,431)	Unrealized gains (losses) on financial assets at fair value through other comprehensive income 54,624,319 - (3,101,808) (5,411,023) - 46,111,488	Gains (losses) on hedging instruments Total (15,181) 48,903,842 - (5,866,135) - (3,101,808) - (5,411,023) 15,812 15,812 631 34,540,688

Balance, January 1, 2018 Effects of retrospective application Balance at January 1, 2018 after adjustments Exchange differences on associates and subsidiaries accounted for using equity method Unrealized gains (losses) from financial assets at fair value through other comprehensive income Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income, associates and joint venture accounted for using equity method Share of cash flow hedge of associates and subsidiaries under equity method Balance, December 31, 2018	Exchange differences on translation of foreign financial statements $ (6,026,197) - (6,026,197) 320,901 - - - $ (5,705,296)	Unrealized gains (losses) on financial assets at fair value through other comprehensive income - 61,239,238 61,239,238 - (1,513,062) (5,101,857) - 54,624,319	Available- for-sale investment 47,691,196 (47,691,196) - - - - - -	Cash flow hedge 7,729 (7,729) - - - - - -	Gains (losses) on hedging instruments Total - 41,672,728 7,729 13,548,042 7,729 55,220,770 - 320,901 - (1,513,062) - (5,101,857) (22,910) (22,910) (15,181) 48,903,842

(r) Earnings Per Share

(i) Profit attributable to ordinary shareholders

Profit attributable to ordinary shareholders	For the years ended December 31
	2019 2018 $ 23,076,123 52,746,021

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NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(ii) Weighted average number of outstanding ordinary shares

	For	the years ended	December 31
		2019	2018
Shares outstanding as of January 1 is the same as weighted average
number of common stock outstanding as of December 31	$	7,930,822	7,930,822

(s) Revenue from contracts with customers

Main Products PVC sheet Rigid sheet Pipes Phthalate Plasticizers BPA EG CCL Epoxy Polyester Staple Fiber PET Resin DTY Machinery and Switchgear Others Main Products PVC sheet Rigid sheet Pipes Phthalate Plasticizers BPA EG CCL Epoxy Polyester Staple Fiber PET Resin DTY Machinery and Switchgear Others		For	the year ended December 31, 2019 Electronic industry Polyester industry Other industries Total - - - 3,540,253 - - - 3,571,701 - - - 4,328,463 - - - 8,033,180 - - - 10,538,314 - - - 25,064,611 12,369,984 - - 12,369,984 13,205,639 - - 13,205,639 - 4,226,708 - 4,226,708 - 5,415,426 - 5,415,426 - 10,653,668 - 10,653,668 - - 5,357,299 5,357,299 11,860,046 5,734,443 572,199 48,494,542 37,435,669 26,030,245 5,929,498 154,799,788 the year ended December 31, 2018 Electronic industry Polyester industry Other industries Total - - - 3,816,661 - - - 3,796,990 - - - 4,367,640 - - - 9,314,544 - - - 15,486,085 - - - 37,729,350 14,131,008 - - 14,131,008 13,883,654 - - 13,883,654 - 4,910,005 - 4,910,005 - 7,797,077 - 7,797,077 - 12,377,992 - 12,377,992 - - 6,307,507 6,307,507 12,468,338 6,119,522 666,468 54,991,452 40,483,000 31,204,596 6,973,975 188,909,965	the year ended December 31, 2019 Electronic industry Polyester industry Other industries Total - - - 3,540,253 - - - 3,571,701 - - - 4,328,463 - - - 8,033,180 - - - 10,538,314 - - - 25,064,611 12,369,984 - - 12,369,984 13,205,639 - - 13,205,639 - 4,226,708 - 4,226,708 - 5,415,426 - 5,415,426 - 10,653,668 - 10,653,668 - - 5,357,299 5,357,299 11,860,046 5,734,443 572,199 48,494,542 37,435,669 26,030,245 5,929,498 154,799,788 the year ended December 31, 2018 Electronic industry Polyester industry Other industries Total - - - 3,816,661 - - - 3,796,990 - - - 4,367,640 - - - 9,314,544 - - - 15,486,085 - - - 37,729,350 14,131,008 - - 14,131,008 13,883,654 - - 13,883,654 - 4,910,005 - 4,910,005 - 7,797,077 - 7,797,077 - 12,377,992 - 12,377,992 - - 6,307,507 6,307,507 12,468,338 6,119,522 666,468 54,991,452 40,483,000 31,204,596 6,973,975 188,909,965
	Plastics industry $ 3,540,253 3,571,701 4,328,463 - - - - - - - - - 14,900,186 $ 26,340,603	Chemical industry - - - 8,033,180 10,538,314 25,064,611 - - - - - - 15,427,668 59,063,773 For
		Chemical industry - - - 9,314,544 15,486,085 37,729,350 - - - - - - 19,807,266 82,337,245	Electronic industry - - - - - - 14,131,008 13,883,654 - - - - 12,468,338 40,483,000	Polyester industry - - - - - - - - 4,910,005 7,797,077 12,377,992 - 6,119,522 31,204,596

(Continued)

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NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(t) Employee compensation

For the years ended December 31, 2019 and 2018, the Company estimated its employee remuneration amounted to $24,588 and $57,879, respectively, which were based on the Company's profit before tax without the employee's compensation of each period, multiplied by the percentage of remuneration to employees as specified in the Company's articles. These remunerations were expensed under operating costs or operating expenses during 2019 and 2018.

(u) Non-operating income and expenses
(i) Other income

The details of other income were as follows:

Interest income Dividend income Other income	For the years ended December 31 2019 2018 $ 305,117 312,106 3,212,093 3,569,990 1,297,059 1,238,572 $ 4,814,269 5,120,668

(ii) Other gains and losses

The details of other gains and losses were as follows:

Foreign exchange gains (losses) Gain of financial assets at fair value through profit or loss Gains on disposal of property, plant and equipment Others	For the years ended December 31 2019 2018 $ 22,628 927,028 27,107 215,889 8,856 (11,107) (143,249) (143,090) $ (84,658) 988,720

(Continued)

375

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(iii) Finance costs

The details of finance costs were as follows:

Interest expense Less: Capitalization of interest	For the years ended December 31 2019 2018 $ 1,432,814 1,334,534 (63,061) (59,705) $ 1,369,753 1,274,829

(v) Financial Instruments

(i) Credit Risk

1) Credit risk exposure

The Company is exposed to credit risk primarily from cash and cash equivalents, deposits, and trade receivables.

2) Concentration of credit risk

As sales are made to customers worldwide, the Company’ s exposure to credit risk concentration is expected to be low. Also, the Company mitigates its exposure by evaluating the customers’ financial situation regularly.

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying amount December 31, 2019 Non-derivative financial liabilities Short-term notes and bills payable $ 15,392,795 Notes and accounts payable 5,045,472 Payables to related parties 5,957,209 Short-term borrowings 22,443,300 Long-term debts 8,300,000 Bonds payable 63,978,661 Long-term notes payable 5,096,417 Other payables-related parties 4,000,000 Lease lisbility 128,745 $ 130,342,599	Contractual cash flows 15,407,205 5,045,472 5,957,209 22,456,331 8,415,051 68,740,741 5,185,968 4,000,000 139,028 135,347,005	Within 6 months 15,407,205 5,045,472 5,957,209 22,456,331 711,826 1,526,240 7,164 - 30,485 51,141,932	6-12 months - - - - 2,698,470 3,975,235 7,164 4,000,000 30,239 10,711,108	1-2 years - - - - 3,200,372 6,553,430 2,128,656 - 5,202 11,887,660	2-5 years Over 5 years - - - - - - - - 1,804,383 - 31,840,153 24,845,683 3,042,984 - - - 14,521 58,581 36,702,041 24,904,264

(Continued)

376

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Carrying amount December 31, 2018 Non-derivative financial liabilities Short-term notes and bills payable $ 8,897,747 Notes and accounts payable 4,993,365 Payables to related parties 7,130,082 Short-term borrowings 20,880,900 Long-term debts 11,333,333 Bonds payable 58,531,455 Long-term notes payable 7,096,550 $ 118,863,432	Contractual cash flows 8,902,253 4,993,365 7,130,082 20,894,315 11,462,092 63,537,300 7,169,000 124,088,407	Within 6 months 8,902,253 4,993,365 7,130,082 20,894,315 5,520,038 1,490,640 6,900 48,937,593	6-12 months - - - - 702,628 5,305,820 6,900 6,015,348	1-2 years - - - - 4,569,362 5,411,435 4,113,800 14,094,597	2-5 years Over 5 years - - - - - - - - 670,064 - 28,195,578 23,133,827 3,041,400 - 31,907,042 23,133,827

It is not expected that the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Currency risk

1) Exposure to foreign currency risk

The Company’s significant exposure to foreign currency were as follows:

Financial assets Monetary items USD JPY EUR CNY Non-monetary items USD HKD VND Financial liabilities Monetary items USD JPY EUR	December 31, 2019	December 31, 2019
	Foreign Currency $ 475,805 139,561 118 22,179 2,285,122 24,253,931 6,283,412,736 28,723 416,880 1,151	Exchange Rate TWD 30.1060 14,324,585 0.2763 38,561 33.6900 3,975 4.3160 95,713 30.1060 68,795,879 3.8597 93,612,898 0.0013 8,164,369 30.1060 864,735 0.2763 115,184 33.6900 38,777

(Continued)

377

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Financial assets Monetary items USD JPY EUR CNY Non-monetary items USD HKD VND Financial liabilities Monetary items USD JPY EUR	December 31, 2018	December 31, 2018
	Foreign Currency $ 884,463 111,915 1,155 1,643 2,054,030 22,368,943 6,171,469,405 27,024 553,746 863	Exchange Rate TWD 30.7330 27,182,201 0.2772 31,023 35.1670 40,625 4.4779 7,358 30.7330 63,126,490 3.9401 88,135,872 0.0013 8,170,053 30.7330 830,536 0.2772 153,498 35.1670 30,365

2) Sensitivity analysis

The Company’ s exposure to exchange rate risk arises from the foreign currency exchange fluctuations on cash and cash equivalents, accounts receivable, other receivables, financial assets at fair value through other comprehensive income (availablefor-sale financial assets), loans and borrowings, accounts payable and other payables which are denominated in different foreign currencies. The overall effects to net income before tax for the year ended December 31, 2019 and 2018 assuming the TWD depreciated or appreciated by 1% against the USD, JPY, EUR and CNY as of December 31, 2019 and 2018 were as follows:

Appreciation in value of 1% Depreciation in value of 1%	For the years ended December 31 2019 2018 $ (134,452) (262,468) 134,452 262,468

This analysis is performed on the same basis for the two periods.

(Continued)

378

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

3) Foreign exchange gain and loss on monetary items

The Company foreign exchange gains and losses on monetary items (including realized and unrealized portions) converted to functional currency were as follow :

TWD	For the years ended December 31 2019 2018 foreign exchange gains and (losses) foreign exchange gains and (losses) $ 22,628 927,028

(iv) Interest rate analysis

The Company's financial assets and liabilities exposed to interest rates risk are described in liquidity risk

The following sensitivity analysis is based on the risk exposure to the interest rates of derivative and non-derivative financial instruments on the reporting date. For variable rate instruments, the sensitivity analysis assumes the liabilities bearing variable interest rates are outstanding for the whole year. A 1% increase or decrease in interest rate is assessed by management to be a reasonably possible change in interest rate.

An increase or decrease of 1% in interest rates mainly from loans with floating interest rates at the reporting date would have increased or decreased net income by $945 and $1,362 for the years ended December 31, 2019 and 2018, respectively.

(v) Other market price risks

Prices of securities at the reporting date Increasing 1% Decreasing 1%	For the years ended December 31, 2019 For the years ended December 31, 2018
	Other comprehensive income after tax Other comprehensive income after tax $ 417,158 445,287 $ (417,158) (445,287)

(Continued)

379

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(vi) Fair value of financial instruments

1) Fair value hierarchy

The fair value of financial assets and liabilities at fair value through profit or loss and financial assets at fair value though other comprehensive income (available for sale financial assets) is measured on a recurring basis. The carrying amount and fair value of the Company’ s financial assets and liabilities, including the information on fair value hierarchy as stated below. However, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required :

Financial assets at fair value through profit or loss Financial assets designated as at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks in listed companies Unquoted equity instruments Subtotal Financial assets measured at amortized cost Cash and cash equivalent Notes and accounts receivable (including related parties) Subtotal Financial liabilities at amortized cost Short-term borrowings Short-term notes and bills payable Other payables-related parties Notes and accounts payable (including related parties) Bonds payable Long-term borrowings Long-term notes payable Lease liabilities Subtotal		December 31, 2019	December 31, 2019	December 31, 2019
	Carrying amount $ 4,044,356 $ 41,715,821 10,843,196 $ 52,559,017 $ 2,398,959 18,060,318 $ 20,459,277 $ 22,443,300 15,392,795 4,000,000 11,002,681 63,978,661 8,300,000 5,096,417 128,745 $ 130,342,599	Level 1 - 41,715,821 - 41,715,821 - - - 22,443,300 15,392,795 - - 63,978,661 8,300,000 5,096,417 128,745 115,339,918	Fair Value
			Level 2 4,044,356 - - - - - - - - - - - - - - -	Level 3 Total - 4,044,356 - 41,715,821 10,843,196 10,843,196 10,843,196 52,559,017 - - - - - - - 22,443,300 - 15,392,795 - - - - - 63,978,661 - 8,300,000 - 5,096,417 - 128,745 - 115,339,918

(Continued)

380

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Financial assets at fair value through profit or loss Financial assets designated as at fair value through profit or loss Available-for-sale financial assets Stocks in listed companies Unquoted equity instruments Subtotal Loans and receivables Cash and cash equivalent Notes and accounts receivable (including related parties) Subtotal Financial liabilities at amortized cost Short-term borrowings Short-term notes and bills payable Notes and accounts payable (including related parties) Bonds payable Long-term borrowings Long-term notes payable Subtotal		December 31, 2018	December 31, 2018	December 31, 2018
	Carrying amount $ 4,017,249 $ 44,528,667 11,132,158 $ 55,660,825 $ 5,508,330 21,160,619 $ 26,668,949 $ 20,880,900 8,897,747 12,123,447 58,531,455 11,333,333 7,096,550 $ 118,863,432	Level 1 - 44,528,667 - 44,528,667 - - - 20,880,900 8,897,747 - 58,531,455 11,333,333 7,096,550 106,739,985	Fair Value
			Level 2 4,017,249 - - - - - - - - - - - - -	Level 3 Total - 4,017,249 - 44,528,667 11,132,158 11,132,158 11,132,158 55,660,825 - - - - - - - 20,880,900 - 8,897,747 - - - 58,531,455 - 11,333,333 - 7,096,550 - 106,739,985

2) Valuation techniques for financial instruments not measured at fair value

The Company’ s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

a) Financial assets measured at amortized cost (held-to-maturity financial assets)

b) Financial liabilities measured at amortized cost

(Continued)

381

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

3) Valuation techniques for financial instruments measured at fair value
a) Non-derivative financial instruments

Financial instruments traded in active markets are measured at fair value based on the quoted market prices. Quoted prices are the prices announced by the main stock exchanges and over-the-counter markets. They are the basis for recognizing the fair value of the listed and over-the-counter equity instruments. Financial instrument possesses a quoted price in the active markets if the trading prices fairly represent the frequent and orderly transactions for financial instrument, and are readily available from trade centers, security brokers, underwriters, trade unions, pricing service institutes or other related authorities. The market for the said financial instrument shall be seen as inactive should the aforementioned requirements have not been met. Large or significantly increasing gap between the purchase and the exit prices of a financial instrument, or low trade volume, are general indicators of an inactive market.

If the financial instrument of the Company possesses an active market, its fair value should be recognized according to different categories and characteristics as follows:

For listed and over-the-counter stocks with standard terms and are publicly traded in active markets, their fair value are calculated by the market’ s quoted prices. Other financial instruments that are not traded in active markets are measured with fair values provided by using the valuation techniques via market approach or the discounted cash flow method or other available methods.

4) Transfers between levels of the fair value hierarchy

There were no transfers between levels of the fair value hierarchy for the years ended December 31, 2019 and 2018.

5) Reconciliation of Level 3 fair values

Fair value through other comprehensive income (availablefor-sale financial assets) Unquoted equity instruments January 1, 2019 $ 11,132,158 Total gains and losses recognized: In other comprehensive income (288,962) December 31, 2019 $ 10,843,196

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382

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

January 1, 2018 Total gains and losses recognized: In other comprehensive income Disposals December 31, 2018	Fair value through other comprehensive income (available- for-sale financial assets) Unquoted equity instruments $ 13,606,256 (2,472,125) (1,973) $ 11,132,158

6) The valuation procedures for fair value measurements being categorized within Level 3 is to ensure the valuation results are reasonable by applying independent information to make results close to the current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price. According to the Company’ s accounting policy, the analysis of value changes on remeasured or reevaluated assets and liabilities at the reporting date is performed to ensure the reasonability of the evaluation results.
7) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

Most of the Company’s financial instruments that use Level 3 inputs involve only one significant unobservable input. Only equity investment with no-active markets involves multiple significant unobservable inputs.

Quantified information of significant unobservable inputs were as follows:

Inter-relationship between significant unobservable inputs and fair value measurement The higher the multiple, the higher the fair value

Significant Item Valuation technique unobservable inputs Market comparable Price to earnings ratio The higher the companies multiple, price to book ratio multiple, fair value enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability Net Asset Value Not applicable Not applicable

Financial assets at fair value through other comprehensive income – unquoted equity instruments

Net Asset Value Method

(Continued)

383

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

8) Fair value measurement in Level 3 - sensitivity analysis of reasonably possible alternative assumption

The valuation models and assumptions used to measure the fair value of the financial instruments is reasonable. However, the use of different valuation models or assumptions may result in different measurements. The following is the effect of other comprehensive income resulting from financial assets and liabilities categorized within Level 3 if the inputs used in valuation models have changed:

December 31, 2019 Financial assets at fair value through other comprehensive income – unquoted equity instruments December 31, 2018 Financial assets at fair value through other comprehensive income – unquoted equity instruments	Input	Change	Recognized in other comprehensive income
			Favorable change Unfavorable change $ 71,266 (71,266) $ 71,321 (71,321)
	Price to earnings ratio multiple, price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability Price to earnings ratio multiple, price to book ratio multiple, enterprise value to operating income ratio multiple, enterprise value to EBITA multiple, discount for lack of marketability	± 1% ± 1%

(w) Financial risk management
(i) The Company have exposures to the following risks from its financial instruments:
- 1) Credit risk
- 2) Liquidity risk
- 3) Market risk

The following likewise discusses the Company’ s objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risks exposures, please refer to the respective notes in the accompanying financial statements.

(Continued)

384

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(ii) Structure of risk management

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

The Company Audit Committee oversees how management monitors compliance with the Company’ s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

The credit risk exposure on bank deposits and other financial instruments are measured and monitored by the Company’ s finance department. As the Company’ s transactions are done with the banks and other external parties with good credit standing, management is not aware of any noncompliance issues and is not expecting significant credit risk.

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as much as possible, that it will always have sufficient current funds, such as cash and cash equivalents, securities with high liquidity and sufficient credit line from banks, to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Company’s reputation.

(v) Market risk

Market risk is the risk that changes in the market, such as foreign exchange rates, interest rates and equity prices of that will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Company is exposed to currency risk is due to global transactions that are denominated in a currency other than the respective functional currency of the Company, the New Taiwan Dollars (TWD). These transactions are primarily denominated in USD. The currency risk mainly arises from future business transactions and recognized assets and liabilities. Part of the currency risks arising from purchases and sales can be offset each other to achieve automatic hedge.

(Continued)

385

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

When the Company has foreign currency needs, the Company uses spot exchange contracts and forward exchange contracts if the exchange rate is advantageous to the Company to manage the risk. If necessary, the Company uses derivatives operated by prestigious international banks to manage its exposure to foreign currency exchange rate fluctuation risk, which monitor the exchange rate risks and adhere to acceptable levels by the Company.

2) Interest rate risk

The Company’ s interest rate risk mainly arises from long-term loans with variable interest rates, which bear cash flow risks to the Company. Part of the interest rate risk can be offset by cash and cash equivalents with variable interest rates held by the Company.

The Company monitors and manages interest rate risks, using derivatives when necessary, to lower the risks to acceptable levels.

3) Other market price risk

The Company is exposed to fair value change risk due to financial assets at fair value through other comprehensive income (available-for-sale financial assets), which were measured at fair value.

(x) Capital management

Although business operated by the Company has reached the stage of maturity, a sufficient amount of capital is still required to support the operation of investee companies, construction and expand its production facilities and equipment.

The Company’s policy is to maintain sufficient financial resources and operating plan to meet future demands such as operating capital, capital expenditure, research and development expenditures, loan reimbursements, and dividend distributions.

The Company and other entities in the same industry use the debt-to-equity ratio to manage its capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt. The Company’s debt-to-equity ratio at the end of the reporting period were as follows :

Total liabilities Less: cash and cash equivalents Net debt Total equity Debt-to-equity ratio at December 31	December 31, 2019 December 31, 2018 $ 173,593,882 162,835,396 (2,398,959) (5,508,330) $ 171,194,923 157,327,066 $ 344,571,884 375,672,197 % 33.19 % 29.52

(Continued)

386

NAN YA PLASTICS CORPORATION

Notes to the Financial Statements

(y) Movements in liabilities arising from financing activities

Balance, January 1, 2019 Changes in cash flows from financing activities Changes in non-cash Changes in foreign exchange movement Balance, December 31, 2019 Balance, January 1, 2018 Changes in cash flows from financing activities Changes in non-cash Changes in foreign exchange movement Balance, December 31, 2018	Short-term borrowings			S b	hort-term notes and ills payable		Long-term notes payable	Long-term notes payable		Long-term borrowings (including current portion)		Bonds payable (including current portion)
												58,531,455 5,431,560 15,646 -
												63,978,661

(7) Related-party transactions:

(a) Parent company and ultimate controlling party

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

(b) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

in the consolidated financial statements.
Name of related party	Relationship with the Group
Nan Ya Plastics Corporation U.S.A	Subsidiaries
Nan Ya Plastics Corporation America	Subsidiaries
Formosa Plastics Group Investment Corp.	Subsidiaries
Nan Ya Plastics (Hong Kong) Co., Ltd	Subsidiaries
Superior World Wide Trading Co., Ltd	Subsidiaries
Nan Ya PCB Corporation	Subsidiaries
Wen Fung Industrial Co., Ltd	Subsidiaries
Nan Chung Petrochemical Corporation	Subsidiaries
Nan Ya International (Cayman) Limited	Subsidiaries

(Continued)

387

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Name of related party

Relationship with the Group

PFG Fiber Glass Corporation Subsidiaries PFG Fiber Glass (Hong Kong) Corporation Limited Subsidiaries Nan Ya PCB (U.S.A) Corporation Subsidiaries Nan Ya PCB (Hong Kong) Corporation Subsidiaries Nan Ya PCB (Kunshan) Corporation Subsidiaries Nan Ya Plastics (Nantong) Co., Ltd Subsidiaries (note 1) Nan Ya Electric (Nantong) Co., Ltd Subsidiaries Nan Ya Plastics Film (Nantong) Co., Ltd Subsidiaries (note 1) China Nantong Huafeng Co., Ltd Subsidiaries Nantong Huafu Plastics Co., Ltd. Subsidiaries Nan Ya Electronic Materials (Kunshan) Co., Ltd Subsidiaries Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd Subsidiaries Nan Ya Plastics (Guangzhou) Co., Ltd Subsidiaries Nan Ya Plastics (Huizhou) Co., Ltd Subsidiaries (note 2) Nan Ya Plastics Film (Huizhou) Co., Ltd Subsidiaries (note 2) Nan Ya Electronic Materials (Huizhou) Co., Ltd Subsidiaries Nan Ya Trading (Huizhou) Co., Ltd Subsidiaries Nan Ya Plastics (Xiamen) Co., Ltd Subsidiaries Nan Ya Plastics (Ningbo) Co., Ltd Subsidiaries Wellink Technology Corporation Subsidiaries Nan Ya Plastics Corporation Texas Subsidiaries PFG Fiber Glass (Kunshan) Co., Ltd Subsidiaries Formosa Petrochemical Corporation Associates Nanya Technology Corporation Associates Formosa Resources Corporation Associates Formosa Plastics Construction Corporation Associates Formosa Heavy Industries Corporation Associates Formosa Heavy Industries (Ningbo) Co., Ltd. Associates Formosa Heavy Industries Corp. (GZ) Ltd. Associates Formosa Synthetic Rubber (Hong Kong) Corporation Limited Associates Formosa Synthetic Rubber (Ningbo) Co., Ltd. Associates Formosa Industries Corporation Associates

(Continued)

388

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

Name of related party

Relationship with the Group

Formosa Group (Cayman) Limited Associates Formosa Utility Venture, Ltd. Associates Formosa Environmental Technology Corporation Associates FG Inc. Associates P.T. Indonesia Nanya Indah Plastics Co. Joint ventures Nan Ya Plastics (Zhengzhou) Co., Ltd. Joint ventures Nanya Kyowa Plastics (Nantong) Co., Ltd. Joint ventures Formosa Plastics Corporation Other related parties Formosa Chemicals and Fiber Corporation Other related parties Hwa Ya Power Corporation Other related parties Formosa Taffeta Co., Ltd. Other related parties Formosa Advanced Technology Corporation Other related parties Formosa Ha Tinh (Cayman) Ltd. Other related parties Formosa Ha Tinh Steel Corporation Other related parties Formosa Ha Tinh (Cayman) Limited Taiwan Branch Other related parties China Man-made Fiber Corporation Other related parties Mai Liao Harbor Administration Corp. Other related parties Formosa Industries (Ningbo) Co., Ltd. Other related parties Formosa Power (Ningbo) Limited Company Other related parties Formosa Electronic (Ningbo) Co., Ltd. Other related parties Formosa ABS Plastics (Ningbo) Limited Company Other related parties Formosa Chemicals and Fiber (Ningbo) Corporation Other related parties Formosa Phenol (Ningbo) Limited Company Other related parties Xiamen Haicang Investment Group Co., Ltd. Other related parties Formosa Plastics Marine Corporation Other related parties Formosa Plastics Corporation U.S.A. Other related parties FG LA LLC Other related parties Ming Chi University Of Technology Other related parties

Note 1： On October 1, 2018, Nan Ya Plastics (Nantong) Co., Ltd and Nan Ya Plastics Film (Nantong) Co., Ltd merged into Nan Ya Plastics (Nantong) Co., Ltd.

Note 2： On October 1, 2018, Nan Ya Plastics (Huizhou) Co., Ltd and Nan Ya Plastics Film (Huizhou) Co., Ltd merged into Nan Ya Plastics (Huizhou) Co., Ltd.

(Continued)

389

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(c) Significant related-party transactions

(i) Sales to related parties

The amount of significant sales by the Company to related parties were as follows:

The amount of significant sales by the Company to related	parties were as follows:
Subsidiaries Associates and joint ventures Other related parties	For the years ended December 31
	2019 2018 $ 13,730,940 13,504,808 4,207,868 7,213,615 9,619,460 11,891,020 $ 27,558,268 32,609,443

The receivables from related parties were as follows:

Subsidiaries Nan Ya Electronic Materials (Huizhou) Co., Ltd Other subsidiaries Associates and joint ventures Other related parties	December 31, 2019 December 31, 2018 $ 2,254,032 2,148,099 2,282,104 2,206,191 410,877 941,679 779,697 1,113,234 $ 5,726,710 6,409,203

The Company sells mainly machinery and provides engineering services to related parties in China and Vietnam. Payment is made after the test run of machinery sold. Also, it sells other products to these related parties. Selling prices and collection terms of other products sold to these associates are not materially different from those to non-related general buyers. Payments are collected 30 to 180 days after shipping of these other products.

(ii) Purchase from related parties

The amounts of significant purchases by the company from related parties were as follows:

Subsidiaries Associates and joint ventures Formosa Petrochemical Corporation Other related parties Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Other related parties	For the years ended December 31
	2019 2018 $ 6,074,110 7,946,081 30,339,000 40,296,020 11,978,383 13,244,230 24,442,785 35,324,798 13,686 22,212 $ 72,847,964 96,833,341

(Continued)

390

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

The payables to related parties were as follows:

Subsidiaries Associates and joint ventures Formosa Petrochemical Corporation Other related parties Formosa Chemicals and Fiber Corporation Other related parties	December 31, 2019 December 31, 2018 $ 594,849 603,968 2,358,012 2,835,106 1,923,275 2,688,279 1,081,073 1,002,729 $ 5,957,209 7,130,082

(iii) Unrealized sales profit

Significant unrealized (realized) profits from sales to related parties for the years ended December 31, 2019 and 2018 were as follows:

Investee company Subsidiaries Associates and joint ventures Investee company Subsidiaries Associates and joint ventures	For the year ended December 31, 2019	For the year ended December 31, 2019	For the year ended December 31, 2019
	Unrealized sales profit at beginning of period
	Unrealized sales profit at beginning of period		(Realized) Unrealized Sales Profits Unrealized sales profit at end of period 38,302 97,719 (56,290) 45,960
	$ 59,417 $ 102,250

(iv) Construction

The Company contracted with associates to construct and expand the Company’s factory. The construction costs were as follows:

Associates and joint ventures Formosa Heavy Industries Corporation	For the years ended December 31
	2019 2018 $ 110,994 218,464

No outstanding balance in December 31, 2019 and 2018.

(Continued)

391

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(v) Utility expenses

Part of the utilities of the Company's Lin-Yuan plant and all of the utilities of the Company’s Ren-Wu plant, including power, water and steam, are supplied by or paid on behalf of the Company by the utility plants of Formosa Plastics Corporation. The utilities of the Company’s Mai Liao plant, including power, water and steam, are supplied by Formosa Petrochemical Corporation. The expenses for utilities for the years ended December 31, 2019 and 2018 were as follows:

Subsidiaries Nan Chung Petrochemical Corporation Associates and joint ventures Formosa Petrochemical Corporation Other related parties Formosa Plastics Corporation	For the years ended December 31 2019 2018 $ 21,017 3,754 6,329,046 6,996,065 106,786 109,049 $ 6,456,849 7,108,868

(vi) Property transactions ─ Acquisition of financial assets

Subsidiaries ─ Nan Ya Plastics (Hong Kong) Co., Ltd. Associates ─ Formosa Resources Corporation Associates ─ FG Inc. Associates ─ Formosa Synthetic Rubber Corporation Limited Subsidiaries ─ Nan Ya International (Cayman) Limited Associates ─ Formosa Synthetic Rubber (Hong Kong) Corporation Limited	Account Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Account Investments accounted for using equity method Investments accounted for using equity method	Number of Shares (in thousands) 109,200 157,000 - 4,600 Number of Shares (in thousands) 1 65,000	Purpose For the year ended December 31, 2019 Shares of stock of Nan Ya Plastics (Hong Kong) Co., Ltd. $ 4,308,591 Shares of stock of Formosa Resources Corporation 1,570,000 Shares of stock of FG Inc. 231,570 Shares of stock of Formosa Synthetic Rubber Corporation Limited 46,000 $ 6,156,161 Purpose For the year ended December 31, 2018 Shares of stock of Nan Ya International (Cayman) Limited $ 1,676,070 Shares of stock of Formosa Synthetic Rubber (Hong Kong) Corporation Limited 2,010,450 $ 3,686,520

(Continued)

392

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(vii) Loans to related parties

The loans to related parties were as follows:

Subsidiaries Nan Ya Plastics Corporation Texas Other related parties Formosa Plastics Marine Corporation	Other Receivables from Related Parties
	December 31, 2019 December 31, 2018 $ - 7,375,920 5,640,819 5,307,107 $ 5,640,819 12,683,027

(viii) Borrowings from Related Parties:

Subsidiaries Nan Ya PCB Corporation	Other Payables to Related Parties
	December 31, 2019 December 31, 2018 $ 4,000,000 -

(ix) Endorsements and guarantees

As of December 31, 2019 and 2018, the amounts of the Company’ s endorsements and guarantees for securing related parties’ loans were as follows:

Associates and joint ventures Formosa Group (Cayman) Limited Formosa Industries Corporation Formosa Resources Corporation Other related parties Formosa Ha Tinh (Cayman) Ltd.	December 31, 2019 December 31, 2018 $ 7,526,500 19,208,125 602,120 5,043,547 3,236,395 3,303,798 20,753,559 15,915,686 $ 32,118,574 43,471,156

(Continued)

393

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(x) Leases

1) The rental income of the Company from leasing its plants to its related parties, recognized as other income, were as follows:

Subsidiaries Nan Ya PCB Corporation Associates and joint ventures Nan Ya Technology Corporation	For the years ended December 31
	2019 2018 $ 202,242 195,815 258,976 234,065 $ 461,218 429,880

The rentals charged to related parties are determined based on the local market prices, and rents are collected monthly depending on the contract.

2) The rental expenses of the Company's offices and buildings leased from its related parties, recognized as operating costs and expenses, were as follows:

The Company rented an office building and a piece of land from Formosa Plastics Corporation. The rentals charged to related parties are determined based on the local market prices. Rental expenses for the years ended December 31, 2018 amounted to $40,437. The Company applied IFRS 16, with a date of initial application on January 1, 2019. This lease transaction recognized the additional amounts of $49,848 and $49,848 of right-of-use assets and lease liabilities, respectively. For the years ended December 31, 2019, the Company recognized the amount of $548 as interest expense. As of December 31, 2019, the balance of lease liabilities amounted to $25,657, consisting of current and noncurrent portion amounting to $24,536 and $1,121, respectively.

The Company rented an office building from Formosa Chemicals and Fiber Corporation. The rentals charged to related parties are determined based on the local market prices. Rental expenses for the years ended December 31, 2018 amounted to $26,391. The Company applied IFRS 16, with a date of initial application on January 1, 2019. This lease transaction recognized the additional amounts of $52,012 and $52,012 of right-ofuse assets and lease liabilities, respectively. For the year ended December 31, 2019, the Company recognized the amount of $568 as interest expense. As of December 31, 2019, the balance of lease liabilities amounted to $26,190.

The Company rented an office building from Ming Chi University of technology in May 2019, where in the rental is determined based on the local market prices. The interest expenses for the years ended December 31, 2019 amounted to $984. As of December 31, 2019, the balance of lease liabilities amounting to $67,947, consisted of current and noncurrent portion of $3,140 and $64,807, respectively.

(Continued)

394

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(xi) Other

Associates－Formosa Plastics Corporation	For the years ended December 31, 2019 $ 10

For the year ended December 31, 2019, the Company purchased official vehicles from Formosa Plastics Corporation, which were managed assets, and recognized as miscellaneous purchases. The Company did not have similar transactions for the year ended December 31, 2018.

(d) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits	For the years ended December 31
	2019 2018 $ 126,953 118,080

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets	Object	Usage	December 31, 2019 December 31, 2018 $ 1,271,053 1,286,336 7,529,494 7,529,494 - 11,681 $ 8,800,547 8,827,511
Current financial assets at fair value through other comprehensive income－stock of Formosa Plastics Corporation Land (include idle land) Machinery and equipment Total	Others Bank loans Bank loans	The collateral to provisional execution in litigation Bank loans Bank loans

(9) Significant commitments and contingencies:

(a) Outstanding standby letter of credit (b) Endorsements and guarantees	December 31, 2019 December 31, 2018 $ 2,247,989 1,192,060 32,118,574 43,471,156

(c) Formosa Industries Corporation, a Company’s investee, signed a syndicated line of credit with a group of financial institutions amounting to USD 250,000 thousand for its operational needs. According to the requirement of the consortium, the Company has to offer a letter of support based on its ownership of 42.5% and commit to monitor the operations of Formosa Industries Corporation to ensure that it completes its financial obligation.
(d) Formosa Ha Tinh (Cayman) Ltd. and Formosa Ha Tinh Steel Corporation, Company’ s investees, signed a syndicated line of credit with a group of financial institutions amounting to USD 1,990,000 thousand and USD 500,000 thousand, respectively, for its operational needs. According to the requirement of the consortium, the Company has to offer a letter of undertaking or a letter of support based on its ownership of 11.432% and commit to monitor the operations of Formosa Ha Tinh (Cayman) Ltd. and Formosa Ha Tinh Steel Corporation to ensure that they complete their financial obligation.

(Continued)

395

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

(e) Nan Ya Electronic Materials (Huizhou) Co., Ltd, a Company's investee, planned to apply for a fiveyear syndicated loan with a total amount of no more than CNY 1,000,000 thousand, with a group of financial institutions, among which Mega International Commercial Bank Suzhou Branch and Fubon Bank (China) Co., Ltd. act as leading banks. According to the requirement of the consortium, the Company has to offer a letter of support, and commit to monitor the operations of Nan Ya Electronic Materials (Huizhou) Co., Ltd to ensure that it completes its financial obligation.
(f) Litigation between the Company and DBTEL Incorporated

On April 18, 2017, the Court decided that the compensation demanded by the Company should not exceed the amounts of USD 1,246,118 and TWD 27,229,161 (both including principal and interest). Plus, the said properties that were held by the Company for collateral should also be returned to DBTEL. On August 8, 2018, the Supreme Court rejected the verdict handed down by the High Court’ s judgment about the dismissal of the Company’ s appeal in the first instance, the appeal of DBTEL, other declaration of provisional execution, and the related legal expenses. Therefore, the High Court will have to decide on this matter. Currently, this case is still in progress.

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:None

(12) Other:

(a) A summary of current-period employee benefits, depreciation, and amortization, by function, were as follows:

as follows:
By function By item	For the year ended December 31, 2019				For the year ended December 31, 2018
	Operating costs	Operating expenses	Non-Operating expenses	Total	Operating costs	Operating expenses	Non-Operating expenses	Total
Employee benefit Salaries Labor and health insurance Pension expenses Remuneration of directors Others personnel expenses Depreciation Amortization	10,265,158 735,699 637,644 - 263,439 5,779,963 891,226	4,171,573 230,520 224,444 29,092 74,368 178,692 15,646	- - - - - 30,780 -	14,436,731 966,219 862,088 29,092 337,807 5,989,435 906,872	11,030,984 709,804 632,245 - 261,664 6,129,460 1,484,780	4,451,774 219,615 223,572 24,125 72,574 199,686 15,414	- - - - - 25,324 -	15,482,758 929,419 855,817 24,125 334,238 6,354,470 1,500,194

(Continued)

396

NAN YA PLASTICS CORPORATION Notes to the Financial Statements

The company's number of employees and additional information on employee benefits are as follows:

Number of employees Number of non-concurrently employees by directors Average employee benefit expenses Average employee salary expenses Adjustment of average employee salary expenses		For the years ended December 31,

(13) Other disclosures:

(a) Information on material transaction items:
(i) Loans to other parties: Please see attached Table 1.
(ii) Guarantees and endorsements for other parties: Please see attached Table 2.
(iii) Information regarding securities held as of December 31, 2019 (excluding investment in subsidiaries, associates and joint ventures): Please see attached Table 3.
(iv) Information regarding individual securities acquired or disposed of with accumulated amount exceeding the lower of TWD300 million or 20% of the capital stock: Please see attached Table 4.
(v) Information regarding acquisition of individual real estate with amount exceeding the lower of TWD300 million or 20% of the capital stock: Please see attached Table 5.
(vi) Information regarding disposal of individual real estate with amount exceeding the lower of TWD300 million or 20% of the capital stock: Please see attached Table 6.
(vii) Information regarding related-party transactions for purchases and sales with amounts exceeding the lower of TWD100 million or 20% of the capital stock: Please see attached Table 7.
(viii) Information regarding receivables from related parties with amounts exceeding the lower of TWD100 million or 20% of the capital stock: Please see attached Table 8.
(ix) Information regarding trading in derivative instruments: None
(b) Information on investees (excluding those in mainland China): Please see attached Table 9.
(c) Information on investment in mainland China: Please see attached Table 10.

(14) Segment information:

Please refer to the consolidated financial report as of and for the year ended December 31, 2019.

(Continued)

397

NAN YA PLASTICS CORPORATION LOANS TO OTHER PARTIES

FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 1

No.	Name of Lenders	Name of Borrowers	Account Name	Related Party	Highest Balance of Financing to Other Parties during the Period	Ending Balance	Actual Usage during the Period	Range of Interest Rates during the Period.	Purposes of Fund Financing for the Borrowers (Note 1)	Transaction Amount for Business Between Two Parties (Note 2)	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Individual Funding Loan Limits (Note 3)	Maximum Limitation on Fund Financing (Note 4)
													Item	Value
0 0 0 0 0 0 0 0 0 0 0 1 1 2 2 2 2 2	The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation	Formosa Plastics Group Investment Corp. Wellink Technology Corporation Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics Corporation Texas Nan Chung Petrochemical Corporation Formosa Heavy Industries Corporation Nanya Technology Corporation Formosa Petrochemical Corporation Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Formosa Plastics Marine Corporation Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation U.S.A. The Company Nan Ya PCB (HK) Corporation Nan Ya PCB (Kunshan) Corporation Formosa Plastics Marine Corporation Formosa Heavy Industries Corporation	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties	YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES	70,000 100,000 500,000 21,205,840 500,000 12,000,000 1,500,000 14,000,000 8,000,000 8,000,000 9,385,318 19,267,840 903,180 4,500,000 100,000 1,854,300 500,000 1,000,000	70,000 100,000 500,000 - 500,000 6,500,000 - 6,000,000 6,000,000 6,000,000 8,460,819 12,042,400 903,180 4,000,000 100,000 - - -	- - - - - - - - - - 5,640,819 12,042,400 286,237 4,000,000 - - - -	- - - 3.211%~3.613% 1.4142%~1.4181% 1.4138%~1.4181% - 1.4180%~1.4181% - - 1.4138%~1.4181% 2.8130%~3.546% 2.8130%~3.610% 1.418% - 3.471%~3.471% 1.414%~1.418% -	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2	- - - - - - - - - - - - - - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	- - - - - - - - - - - - - - - - - -	‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ - - ‑ - ‑ ‑	- - - - - - - - - - - - - - - - - -	86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 86,142,971 20,791,919 20,791,919 7,306,170 7,306,170 7,306,170 7,306,170 7,306,170	172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 172,285,942 41,583,838 41,583,838 14,612,340 14,612,340 14,612,340 14,612,340 14,612,340

398

No.	Name of Lenders	Name of Borrowers	Account Name	Related Party	Highest Balance of Financing to Other Parties during the Period	Ending Balance	Actual Usage during the Period	Range of Interest Rates during the Period.	Purposes of Fund Financing for the Borrowers (Note 1)	Transaction Amount for Business Between Two Parties (Note 2)	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Individual Funding Loan Limits (Note 3)	Maximum Limitation on Fund Financing (Note 4)
													Item	Value
3 4 4 5 5 6 6 7 8 8 8 8 8 9 9 10 10	Nan Ya Plastics (Hong Kong) Co., Ltd. Wen Fung Industrial Co., Ltd. Wen Fung Industrial Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Trading (Huizhou) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. China Nantong Huafeng Co., Ltd. China Nantong Huafeng Co., Ltd.	Nan Ya Electronic Materials (Kunshan) Co., Ltd. Wellink Technology Corporation Formosa Environmental Technology Corporation Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Xiamen Haicang Investment Group Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Zhengzhou) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd.	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties	YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES	362,773 23,000 60,000 215,777 772,480 504,917 589,501 23,735 86,311 133,781 263,247 129,466 155,359 863,106 2,840,914 135,508 155,359	- 23,000 60,000 215,777 720,694 504,917 526,495 - 86,311 133,781 - - 138,097 - 1,631,271 135,076 155,359	- - 60,000 215,777 720,694 504,917 526,495 - 86,311 133,781 - - 138,097 - 1,631,271 135,076 155,359	4.12% - 1.418% 3.32%~3.48% 3.32%~3.48% 3.32%~3.48% 3.32%~3.48% 3.48%~3.48% 3.48%~3.48% 3.32%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.32%~3.48% 3.32%~3.48% 3.32%~3.48%	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2	- - - - - - - - - - - - - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	- - - - - - - - - - - - - - - - -	‑ ‑ ‑ - ‑ ‑ ‑ ‑ - - - ‑ - ‑ ‑ ‑ ‑	- - - - - - - - - - - - - - - - -	42,667,670 24,174 120,868 1,316,852 1,316,852 1,691,034 1,691,034 28,644 684,281 684,281 684,281 684,281 684,281 4,980,774 4,980,774 163,893 163,893	85,335,340 241,735 241,735 2,633,704 2,633,704 3,382,068 3,382,068 57,289 684,281 684,281 684,281 684,281 684,281 9,961,548 9,961,548 327,786 327,786

399

No.	Name of Lenders	Name of Borrowers	Account Name	Related Party	Highest Balance of Financing to Other Parties during the Period	Ending Balance	Actual Usage during the Period	Range of Interest Rates during the Period.	Purposes of Fund Financing for the Borrowers (Note 1)	Transaction Amount for Business Between Two Parties (Note 2)	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Individual Funding Loan Limits (Note 3)	Maximum Limitation on Fund Financing (Note 4)
													Item	Value
11 11 12 12 13 13 13 13 13 13	Nantong Huafu Plastics Co., Ltd. Nantong Huafu Plastics Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd.	PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Zhengzhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya PCB (Kunshan) Corporation Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties	YES YES YES YES YES YES YES YES YES YES	31,072 43,155 43,155 343,085 155,359 2,800,779 265,405 945,101 1,639,902 5,264,947	31,072 43,155 - 310,718 - - 258,932 280,509 1,639,902 4,837,710	31,072 43,155 - 310,718 - - 258,932 280,509 1,639,902 4,837,710	3.32%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.48%~3.48% 3.36%~3.48% 3.32%~3.48%	2 2 2 2 2 2 2 2 2 2	- - - - - - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	- - - - - - - - - -	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑	- - - - - - - - - -	45,816 45,816 575,088 575,088 27,718,743 27,718,743 27,718,743 27,718,743 27,718,743 27,718,743	91,632 91,632 1,150,175 1,150,175 55,437,487 55,437,487 55,437,487 55,437,487 55,437,487 55,437,487

Note 1 ： (a) Those with business contact please fill in 1; (b) Those necessary for short-term financing please fill in 2.

Note 2 ： Amount from business contact stands for the sum of purchases and sales.

Note 3：Capital loaned to other parties should not exceed 50% of the lender’s net worth, of which the sum loaned to non interested parties for capital requirements should not exceed 40% of the net worth of borrower. The cap amount of loans to associates and interested parties should not exceed 25% of the equity of the lenders. Other parties should not exceed 20% of the lender’s net worth.
Note 4 ： Subsidiaries' capital loaned to associates and interested parties should not exceed 50% of the equity of the lenders. Other parties should not exceed 40% of the lender’s net worth.
The subsidiaries' cap amount of loans to other parties should not exceed 100% of its equity. Non-interested parties should not exceed 40% of its net worth. However, subsidiaries' capital loaned to the parties located in non-Taiwan and directly or indirectly held by the company 100% of the shares are not be limited.
Note 5：Nan Ya Plastics corporation, America and Nan Ya Plastics corporation USA s’reporting currency are denominated in USD, and the exchange rate of TWD to USD as of December 31, 2019 (in average) is 30.106(30.924)：1.

Nan Ya Plastics (Hong Kong) Co., Ltd and Superior World Wide Trading Co., Ltd. s’reporting currency are denominated in HKD, and the exchange rate of TWD to HKD as of December 31, 2019 (in average) is 3.8597(3.9646)：1.

400

NAN YA PLASTICS CORPORATION GUARANTEES AND ENDORSEMENTS FOR OTHER PARTIES FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 2

				B=A/2		C			D=C/SE	*A=S/E1.3**
No	Endorsement Guarantee Provider	Counterparty of Guarantee and Endorsement		Limitation Amount of Guarantees and Endorsements for a Specific Enterprise	Highest Balance for Guarantee and Endorsements during the Period	Balance of Guarantees and Endorsements as of December 31, 2019	Amount Secured by Guaranteed and Endorsed Property	Amount of Endorsement /Guarantee Collateralized by Properties	Ratio of Accumulated Amounts of Guarantees and Endorsements to Net Worth of the Latest Financial Statements	Maximum Amounts for Guarantees and Endorsements	Parent Company Endorses /Guarantees to Third Parties on Behalf of Subsidiary	Subsidiary Endorses /Guarantees to Third Parties on Behalf of Parent Company	Endorsements /Guarantees to the Third Parties on Behalf of the Companies in Mainland China
		Name	Relationship with The Company (Note)
0 0 0 0 1	The Company The Company The Company The Company Nan Ya Plastics Corporation America	Formosa Industries Corporation Formosa Group (Cayman) Ltd. Formosa Ha Tinh (Cayman) Ltd. Formosa Resources Corporation Nan Ya Plastics Corporation Texas	1 6 6 6 4	9,531,078 223,971,725 223,971,725 223,971,725 27,029,495	4,940,651 18,816,250 20,753,559 3,236,395 139,201	602,120 7,526,500 20,753,559 3,236,395 102,946	602,120 7,526,500 20,753,559 3,236,395 102,946	- - - - -	0.17% 2.18% 6.02% 0.94% 0.26%	447,943,449 447,943,449 447,943,449 447,943,449 54,058,989	N N N N Y	N N N N N	N N N N N

Note2: There are seven conditions in which the Company may have guarantees or endorsements for other parties as follows:

(1)The Company has business relationship.
(2)The Company holds directly and indirectly more than 50% of the voting shares of the subsidiaries.
(3)In aggregate, the Company holds directly or its subsidiaries hold indirectly more than 50% of the investee.
(4)Subsidiaries in which the Company holds directly or indirectly more than 90% of the voting shares make endoresement and guarantees for each other.
(5)The Company is required to provide guarantees or endorsements for the construction project based on the construction contract.
(6)The stockholders of the Company provide guarantees or endorsements for the investee in proportion to their stockholding percentage.
(7)According to Consumer Protection Act, companies are required to provide guarantees and endorsements for joint and several libility if take part in business of preconstruction real estate.

401

NAN YA PLASTICS CORPORATION SECURITIES HELD AS OF DECEMBER 31, 2019

(EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES) DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 3

Security Holder	Category and Name of Security	Relationship Between Issuer of Security and the Company which Holds Securities	Account Name	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019	Notes
				Number of Shares (in thousands)	Carrying Value	Shareholding Percentage	Market Value or Net Asset Value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Mega Internaitonal Private USD Money Market Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Formosa Group Ocean Marine Investment Corporation Formosa Plastics Corporation U.S.A. Ostendo Technologies Inc. Formosa Plastics Maritime Corp. Formosa International Development Co., Ltd. Mai Liao Harbor Administration Corp. Formosa Plastics Marine Corporation ASIA Pacific Investment Co. Formosa Technologies Corporation WK Technology Fund Ltd. WK Technology Fund IV Ltd. Central Leasing Corp. Chinese Television System Inc. China Investment & Development Company,Limited	- Other related parties Other related parties Other related parties Other related parties - Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties - - - - -	Financial assets valued at FVTPL －current Financial assets valued at FVTOCI －current Financial assets valued at FVTOCI －current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current	12,479 294,793 140,520 3 2 150 352 16,509 39,562 2,429 63,717 2,925 326 460 1,779 1,769 1,287	4,044,356 29,420,352 12,295,469 4,842,526 1,283,210 - 299,258 259,076 896,136 752,699 2,209,623 72,959 8,304 5,573 - 34,075 4,431	- 4.63% 2.40% 19.00% 0.51% 0.12% 18.00% 18.00% 17.98% 15.00% 14.99% 12.50% 1.63% 1.08% 1.07% 1.04% 0.80%	4,044,356 29,420,352 12,295,469 4,842,526 1,283,210 - 299,258 259,076 896,136 752,699 2,209,623 72,959 8,304 5,573 - 34,075 4,431	Note 1

402

Security Holder	Category and Name of Security	Relationship Between Issuer of Security and the Company which Holds Securities	Account Name	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019	Notes
				Number of Shares (in thousands)	Carrying Value	Shareholding Percentage	Market Value or Net Asset Value
The Company The Company The Company The Company Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Plastics (Hong Kong) Co., Ltd. Formosa Plastics Group Investment Corp. Formosa Plastics Group Investment Corp. Nan Ya International (Cayman) Limited	Taiwan Aerospace Corp. Guang Yuan Securities Investment Consulting Corporation Nan Ya Photonics Inc. Mega Growth Capital Venture Double Oak (Bonds) Sutton (Bonds) American Overseas Reinsurance Co., Ltd. (Preferred Stock) MBIA Insurance Corp. (Preferred Stock) Hua Ya (Dong Ying) Plastics Corp. Hua Ya (Wu Hu) Plastics Corp. WK Technology Fund Ltd. WK Technology Fund IV Ltd. Formosa Ha Tinh (Cayman) Ltd.	- - Other related parties - - - - - - - - - Other related parties	Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTPL －non current Financial assets valued at FVTPL －non current Financial assets valued at FVTPL －non current Financial assets valued at FVTPL －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current Financial assets valued at FVTOCI －non current	1,070 5,000 6,646 2,500 - - - - - - 1,935 658 621,178	18,849 26,600 110,131 19,746 180,019 330,592 106,768 207,347 199,951 180,342 12,318 18,576 11,407,727	0.79% 3.91% 14.42% 1.97% - - - - 15.00% 15.00% 2.42% 3.60% 11.43%	18,849 26,600 110,131 19,746 180,019 330,592 106,768 207,347 199,951 180,342 12,318 18,576 11,407,727

Note 1 ： The Company pledged its shares of Formosa Plastics Corporation of 12,736 thousand common shares amounting to $1,271,053.

403

NAN YA PLASTICS CORPORATION

INDIVIDUAL SECURITIES ACQUIRED OR DISPOSED OF WITH ACCUMULATED AMOUNT EXCEEDING THE LOWER OF TWD300 MILLION OR 20% OF THE CAPITAL STOCK FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 4

Company holding securities	Security type and name	Account	Counter -party	Relationship	Beginning	Beginning	Purchase	Purchase	Sale	Sale	Sale	Sale	Ending	Ending
					Shares (in thousands)	Amount	Shares (in thousands)	Amount	Shares (in thousands)	Price	Cost	Gain (loss) on disposal	Shares (in thousands)	Price
The Company Nan Ya Plastics (Hong Kong) Co., Ltd. The Company Nan Ya PCB Corporation	Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Formosa Resources Corporation Formosa Advanced Technologies Co.,Ltd	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	Nan Ya Plastics (Hong Kong) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Formosa Resources Corporatio n Formosa Taffeta Co., Ltd.	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	844,053 - 584,594 -	79,668,326 1,965,292 5,370,047 -	109,200 - 157,000 13,267	4,308,591 4,308,591 1,570,000 472,968					953,253 - 741,594 13,267	85,283,330 (Note 1) 6,351,352 (Note 1) 6,615,934 (Note 1) 475,710 (Note 1)

Note 1 ： End of period amount includes investment income and transaction adjustment under equity method and the effect of exchange changes.

404

NAN YA PLASTICS CORPORATION

ACQUISITION OF INDIVIDUAL REAL ESTATE WITH AMOUNT EXCEEDING THE LOWER OF TWD300 MILLION OR 20% OF THE CAPITAL STOCK FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 5

TABLE 5
Company Name	Name of Property	Transaction Date	Transaction Amount	Status of Payment	Counter-party	Relationship with the Company	Disclosure of Information on Previous Transfer of Equipment is Required for Related Parties who are also the Counter Parties				References for Determining Price	Purpose of Acquisition and Current Condition	Others
							Owner	Relationship with the Company	Date of Transfer	Amount
Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation Texas	Construction in progress and eqipment Construction in progress and eqipment Construction in progress and eqipment Construction in progress and eqipment Construction in progress and eqipment	2019.04 2019.05 2019.06 2019.07 2019.08	396,685 853,524 822,674 530,544 368,674	Paid Paid Paid Paid Paid	Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation Formosa Heavy Industries Corporation	Associates Associates Associates Associates Associates	- - - - -	- - - - -	- - - - -	- - - - -	Negotiation Negotiation Negotiation Negotiation Negotiation	Plant expansion Plant expansion Plant expansion Plant expansion Plant expansion	None None None None None

NAN YA PLASTICS CORPORATION DISPOSAL OF INDIVIDUAL REAL ESTATE WITH AMOUNT EXCEEDING THE LOWER OF TWD 300 MILLION OR 20% OF THE CAPITAL STOCK FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

TABLE 6

TABLE 6
Company Name	Name of Property	Transaction Date	Acquisition Date	Book Value	Transaction amount	Amount actually receivable	Gain (Loss) fom Disposal	Counter- party	Relationship with the Company	Purpose of Disposal	References for Determining Price	Others
Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.	Polyester plant esterfication process equipment	2019.01.24	2007.07~2016 .05	1,309,580	1,247,436	40% received, final payment due after acceptance	(62,144)	Formosa Industries Corporation	Associates	Asset Activation and operating performance	Asset Valuation Report	None

405

NAN YA PLASTICS CORPORATION INFORMATION REGARDING RELATED-PARTIES PURCHASES AND/OR SALES EXCEEDING 100 MILLION OR 20% OF THE COMPANY'S PAID-IN-CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 7

TABLE 7
Company Name	Related Party	Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts (Payable) Receivable		Notes
			Purchases / (Sales)	Amount	% to total purchase/(sales)	Credit Period	Unit Price	Payment Term	Ending Balance	% to Total
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB (Kunshan) Corporation Nan Ya PCB (Kunshan) Corporation Nan Ya PCB (Kunshan) Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation	Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Nan Ya PCB Corporation Formosa Petrochemical Corporation Nanya Technology Corporation Formosa Taffeta Co., Ltd. Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation America Nan Ya Plastics Corporation Texas Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Industries Corporation Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Chung Petrochemical Corporation PFG Fiber Glass Corporation Nan Ya Plastics (Guangzhou) Co., Ltd. Formosa Plastics Corporation Formosa Chemicals and Fiber Corporation Formosa Petrochemical Corporation PFG Fiber Glass Corporation Nan Chung Petrochemical Corporation The Company Nan Ya PCB (Kunshan) Corporation Formosa Advanced Technologies Co.,Ltd Nan Ya PCB Corporation Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Advanced Technologies Co.,Ltd The Company China Man-made Fiber Corporation Formosa Petrochemical Corporation The Company	Other related parties Other related parties Subsidiaries Associates Associates Other related parties Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Associates Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Other related parties Other related parties Associates Subsidiaries Subsidiaries Parent Subsidiaries Associates Subsidiaries Same chairman Associates Parent Other related parties Associates Parent	(Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) Purchases (Sales) (Sales) (Sales) Purchases Purchases	(1,184,681) (7,531,843) (976,163) (1,422,244) (144,369) (872,256) (553,828) (325,829) (396,946) (4,427,438) (934,785) (4,418,060) (2,521,147) (618,908) (266,521) (228,823) (123,484) (187,763) 11,978,383 24,442,785 30,339,000 2,548,914 3,382,831 976,163 8,438,867 (106,503) (8,438,867) 1,655,334 (215,081) (3,382,831) (3,361,822) 5,040,286 228,823	(0.77)% (4.87)% (0.63)% (0.92)% (0.09)% (0.56)% (0.36)% (0.21)% (0.26)% (2.86)% (0.60)% (2.85)% (1.63)% (0.40)% (0.17)% (0.15)% (0.08)% (0.12)% 11.46% 23.39% 29.04% 2.44% 3.24% 6.07% 52.47% (0.41)% (61.01)% 19.67% (1.55)% (50.06)% (49.75)% 89.15% 4.05%	30 days 30 days 30 days 30 days 30 days 30 days O/A105 days O/A105 days O/A105 days O/A180 days O/A150 days O/A150 days O/A150 days O/A150 days O/A150 days 30 days 30 days O/A150 days 30 days 30 days 30 days 30 days 30 days 30 days 30 days 70 days 30 days 60 days 70 days 30 days 15th day of next month 15th day of next month 30 days	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	57,849 632,141 83,490 87,584 9,888 85,949 281,253 71,817 0 2,254,032 291,773 1,138,058 258,445 269,959 1,065 14,678 7,470 54,176 (1,080,354) (1,923,275) (2,358,012) (241,454) (329,258) (83,490) (978,457) 16,398 978,457 (130,455) 46,710 329,258 313,981 (487,616) (14,678)	0.32% 3.50% 0.46% 0.48% 0.05% 0.48% 1.56% 0.40% 0.00% 12.48% 1.62% 6.30% 1.43% 1.49% 0.01% 0.08% 0.04% 0.30% (9.82)% (17.48)% (21.43)% (2.19)% (2.99)% (4.18)% (49.04)% 0.25% 50.28% (14.75)% 2.40% 51.19% 48.81% (96.55)% (2.91)%

406

Company Name	Related Party	Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts (Payable) Receivable	Notes/Accounts (Payable) Receivable	Notes
			Purchases / (Sales)	Amount	% to total purchase/(sales)	Credit Period	Unit Price	Payment Term	Ending Balance	% to Total
PFG Fiber Glass Corporation PFG Fiber Glass Corporation PFG Fiber Glass Corporation PFG Fiber Glass Corporation Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation U.S.A. Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America PFG Fiber Glass (Kunshan) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.	The Company Formosa Chemicals and Fiber Corporation Formosa Petrochemical Corporation The Company Formosa Plastics Corporation U.S.A. The Company Nan Ya Plastics Corporation America Formosa Industries Corporation Formosa Plastics Corporation U.S.A. Nan Ya Plastics Corporation U.S.A. Formosa Plastics Corporation U.S.A. The Company Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corporation Formosa Industries (Ningbo) Co., Ltd. The Company The Company Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Formosa Plastics Corporation The Company Formosa Industries (Ningbo) Co., Ltd. Nanya Kyowa Plastics (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Chemicals and Fiber (Ningbo) Corporation The Company Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya PCB (Kunshan) Corporation PFG Fiber Glass (Kunshan) Co., Ltd. The Company Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. The Company Nan Ya Electronic Materials (Kunshan) Co., Ltd.	Parent Other related parties Other related parties Parent Other related parties Parent Subsidiaries Other related parties Other related parties Subsidiaries Other related parties Parent Subsidiaries Subsidiaries Other related parties Other related parties Other related parties Parent Parent Subsidiaries Other related parties Other related parties Parent Other related parties Joint venture Subsidiaries Subsidiaries Other related parties Parent Subsidiaries Same chairman Subsidiaries Parent Subsidiaries Subsidiaries Subsidiaries Subsidiaries Parent Subsidiaries	(Sales) Purchases Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases (Sales)	(2,548,914) 462,079 229,233 123,484 762,014 553,828 118,192 (175,567) (328,436) (118,192) 229,374 325,829 (2,790,904) 275,369 226,523 432,111 434,314 187,763 4,427,438 3,720,449 109,958 159,162 934,785 1,046,261 (330,017) (129,795) (3,786,561) 6,221,820 266,521 (3,720,449) (1,655,334) (275,369) 4,418,060 251,162 2,790,904 3,786,561 129,795 618,908 (251,162)	(69.49)% 20.30% 10.07% 5.42% 29.16% 21.19% 4.52% (0.55)% (1.04)% (0.37)% 0.83% 1.17% (79.40)% 18.38% 21.37% 22.88% 23.00% 9.94% 49.93% 41.96% 6.98% 2.60% 15.25% 17.07% (5.08)% (22.18)% (33.69)% 72.74% 3.12% (7.94)% (3.53)% (0.59)% 12.46% 0.71% 7.87% 10.68% 0.37% 24.49% (7.92)%	30 days 30 days 30 days 30 days payment within one h O/A 105 days payment within one h O/A 105 days payment within one h payment within one h payment within one h O/A 105 days 60 days 60 days 60 days O/A 150 days 60 days O/A 150 days O/A 180 days 180 days 60 days O/A 150 days O/A 150 days 60 days 60 days 60 days 60 days 60 days O/A 150 days 180 days 60 days 60 days O/A 150 days 60 days 60 days 60 days 60 days O/A 150 days 60 days	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	‑ ‑ ‑ - ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	241,454 (35,903) (16,845) (7,470) (49,326) (281,253) 0 170,923 0 0 (11,219) (71,817) 269,349 (20,862) (33,010) (149,140) (41,500) (54,176) (2,254,032) (2,408,494) (12,641) (97,889) (291,773) (59,540) 79,907 7,526 335,747 (579,512) (1,065) 2,408,494 130,455 20,862 (1,138,058) (16,029) (269,349) (335,747) (7,526) (269,959) 16,029	74.66% (23.90)% (11.22)% (4.97)% (11.85)% (67.56)% 0.00% 5.67% 0.00% 0.00% (4.81)% (30.80)% 64.67% (8.34)% (36.23)% (51.40)% (14.30)% (18.67)% (47.96)% (51.24)% (7.01)% (14.31)% (42.64)% (8.70)% 4.47% 2.49% 51.42% (96.47)% (0.18)% 15.79% 0.86% 0.14% (36.49)% (0.51)% (8.64)% (10.77)% (0.24)% (85.71)% 7.70%

407

NAN YA PLASTICS CORPORATION RECEIVABLES FROM RELATED PARTIES WITH AMOUNTS EXCEEDING THE LOWER OF TWD100 MILLION OR 20% OF THE CAPITAL STOCK December 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 8

TABLE 8
Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue		Amounts Received in Subsequent Periods	Allowance for Bad Debts
					Amount	Action Taken
The Company The Company The Company The Company The Company The Company The Company Nan Ya PCB (Kunshan) Corporation Nan Chung Petrochemical Corporation Nan Chung Petrochemical Corporation PFG Fiber Glass Corporation Nan Ya Plastics Corporation America PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. The Company Nan Ya Plastics Corporation America Nan Ya Plastics Corporation America Nan Ya PCB Corporation Nan Ya Plastics (Nantong) Co., Ltd.	Formosa Chemicals and Fiber Corporation Nan Ya Plastics Corporation U.S.A. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Formosa Industries Corporation Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya PCB Corporation The Company China Man-made Fiber Corporation The Company Formosa Industries Corporation Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya PCB (Kunshan) Corporation Formosa Plastics Marine Corporation Nan Ya Plastics Corporation Texas Nan Ya Plastics Corporation U.S.A. The Company Nan Ya Plastics (Ningbo) Co., Ltd.	Other related parties Subsidiaries Subsidiaries Subsidiaries Subsidiaries Assosiates Subsidiaries Subsidiaries Parent Other related parties Parent Other related parties Subsidiaries Subsidiaries Subsidiaries Same chairman Other related parties Subsidiaries Subsidiaries Parent Subsidiaries	Receivables from related parties： 632,141 Receivables from related parties： 281,253 Receivables from related parties： 2,254,032 Receivables from related parties： 291,773 Receivables from related parties： 1,138,058 Receivables from related parties： 258,445 Receivables from related parties： 269,959 Receivables from related parties： 978,457 Receivables from related parties： 329,258 Receivables from related parties： 313,981 Receivables from related parties： 241,454 Receivables from related parties： 170,923 Receivables from related parties： 269,349 Receivables from related parties： 335,747 Receivables from related parties： 2,408,494 Receivables from related parties： 130,455 Other receivables from related parties： 5,640,819 Other receivables from related parties： 12,042,400 Other receivables from related parties： 286,237 Other receivables from related parties： 4,000,000 Other receivables from related parties： 1,631,271	10.77 1.88 2.01 3.86 3.75 4.94 2.50 9.47 10.33 10.22 10.16 2.05 9.54 20.07 1.46 10.59 Note Note Note Note Note	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ - ‑ ‑ ‑ ‑ ‑ ‑ ‑	626,437 4 72,922 206,664 432,426 93,197 105,855 978,457 326,840 307,149 241,454 170,923 269,349 335,747 520,388 130,455 ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑

408

Company Name	Related Party	Relationship	Ending Balance		Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Periods	Allowance for Bad Debts
						Amount	Action Taken
Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Electric (Nantong) Co., Ltd. China Nantong Huafeng Co., Ltd. China Nantong Huafeng Co., Ltd.	Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Zhengzhou) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya PCB (Kunshan) Corporation Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd.	Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries	Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties： Other receivables from related parties：	526,495 504,917 138,097 133,781 720,694 215,777 4,837,710 280,509 1,639,902 258,932 310,718 155,359 135,076	Note Note Note Note Note Note Note Note Note Note Note Note Note	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑

Note： The turnover rate of other receivables from related parties can not be calculated.

409

NAN YA PLASTICS CORPORATION INFORMATION ON INVESTEES (EXCLUDING THOSE IN MAINLAND CHINA) FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 9

TABLE 9
Investor Company	Investee Company	Location	Major Operations	Original Investment Amount		Balance as of December 31, 2019			Mid-term maximum shareholding or capital	Net Income of Investee	Investment Income (Loss) Recognized by the Investor Company	Notes
				December 31, 2019	December 31, 2018	Shares (in thousands)	%	Carrying Value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Nan Ya Plastics Corporation U.S.A. (Note) Nan Ya Plastics Corporation America (Note) Nan Ya Plastics (Hong Kong) Co., Ltd. (Note 1) Superior World Wide Trading Co., Ltd. (Note 1) Formosa Synthetic Rubber (Hong Kong) Corporation Limited (Note) PFG Fiber Glass (Hong Kong) Corporation Limited (Note 1) Formosa Industries Corporation (Note 2) Nan Ya PCB Corporation Formosa Plastics Group Investment Corp. Nanya Technology Corporation Formosa Environmental Technology Corporation Formosa Petrochemical Corporation PFG Fiber Glass Corporation Nan Chung Petrochemical Corporation Wen Fung Industrial Co., Ltd.	U.S.A. U.S.A. Hong Kong Hong Kong Hong Kong Hong Kong Vietnam Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	production of plastic products production of plastic, polyester and chemical plastics, electronic products trading, and plastics trading and investment production of synthetic rubber products investment chemical fiber, dying and finishing and production of printed circuit board investment semiconductor production and environmental protection production of chemical products production of glass fiber production of chemical products production of electronic components	313,920 7,853,605 39,166,673 33,677 4,162,010 4,495,987 8,435,875 4,480,417 76,859 52,438,472 672,370 24,647,480 2,648,131 1,000,002 214,236	313,920 7,853,605 34,858,082 33,677 4,162,010 4,495,987 8,435,875 4,480,417 76,859 52,438,472 672,370 24,647,480 2,648,131 1,000,002 214,236	2 60 953,253 14 135,000 76 - 432,745 5,000 907,304 46,257 2,201,306 100,000 100,000 18,738	100.00% 100.00% 100.00% 100.00% 32.53% 100.00% 42.50% 66.97% 100.00% 29.71% 26.99% 23.11% 100.00% 50.00% 100.00%	1,862,003 41,583,838 85,283,330 778,245 2,249,187 7,737,129 8,163,096 19,551,043 86,873 45,168,287 250,241 76,273,869 4,196,150 1,169,804 250,287	100.00% 100.00% 100.00% 100.00% 32.53% 100.00% 42.50% 66.97% 100.00% 29.91% 26.99% 23.11% 100.00% 50.00% 100.00%	13,498 1,454,262 4,524,884 60,095 (564,873) 83,276 350,666 308,203 202 9,824,600 366 36,798,213 182,704 34,675 5,182	13,498 1,454,262 4,524,884 60,095 (183,754) 63,291 149,033 207,963 202 2,926,374 99 8,501,950 9,811 17,535 5,182	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3

410

Investor Company	Investee Company	Location	Major Operations	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2019	Balance as of December 31, 2019	Balance as of December 31, 2019	Mid-term maximum shareholding or capital	Net Income of Investee	Investment Income (Loss) Recognized by the Investor Company	Notes
				December 31, 2019	December 31, 2018	Shares (in thousands)	%	Carrying Value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Nan Ya Plastics Corporation America (Note) Nan Ya Plastics Corporation America (Note) Nan Ya Plastics Corporation Texas (Note)	Formosa Automobile Sales Corporation Ya Tai Development Corporation Formosa Heavy Industries Corporation Formosa Fairway Corporation Formosa Plastics Transport Corporation Hwa Ya Science Park Management Consulting Co., Ltd. Yi Jih Development Corporation Mai Liao Power Corporation Formosa Synthetic Rubber Corporation Formosa Resources Corporation Formosa Group (Cayman) Limited (Note) Formosa Plastics Construction Corporation Nan Ya International (Cayman) Limited (Note) FG Inc. (Note) Formosa Utility Venture, Ltd.(Note) Nan Ya Plastics Corporation Texas (Note) Formosa Olefins, L.L.C. (Note)	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Cayman Islands Taiwan Cayman Islands U.S.A. U.S.A. U.S.A. U.S.A.	production of automobile development industry machinery industry transportation business transportation business service business construction business electricity generation business production of synthetic rubber products mining industry investment construction business investment investment electricity generation and trading production of chemical products chemical business	945,028 53,941 2,497,721 33,340 67,254 359 58,000 5,985,465 446,000 7,415,940 377 100,000 18,784,619 891,746 240,848 9,934,980 2,070,540	945,028 53,941 2,497,721 33,340 67,254 359 58,000 5,985,465 400,000 5,845,940 377 100,000 18,784,619 660,176 240,848 9,934,980 2,070,540	27,046 1,304 651,706 4,699 6,566 34 5,800 547,025 44,600 741,594 13 10,000 52 2 - 3 -	45.00% 44.96% 32.91% 33.34% 33.33% 34.00% 29.22% 24.94% 33.33% 25.00% 25.00% 33.33% 100.00% 10.00% 12.10% 100.00% 21.00%	181,332 18,020 7,247,995 82,185 1,062,879 2,606 64,672 11,050,586 292,635 6,615,934 653,576 75,521 11,407,973 869,209 2,419,574 8,565,565 1,374,730	45.00% 44.96% 32.91% 33.34% 33.33% 34.00% 29.22% 24.94% 33.33% 25.00% 25.00% 33.33% 100.00% 10.00% 12.10% 100.00% 21.00%	170,099 (1,856) 124,778 (16,684) 137,544 2,908 876 2,199,499 (2,050) (605,807) 145,410 (20,335) - (132,609) 1,150,743 (745,044) (1,781,360)	76,547 (834) 41,066 (5,563) 45,849 988 256 548,596 (684) (151,452) 36,352 (6,778) - (13,261) 139,665 (745,044) (374,086)	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3

411

Investor Company	Investee Company	Location	Major Operations	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2019	Balance as of December 31, 2019	Balance as of December 31, 2019	Mid-term maximum shareholding or capital	Net Income of Investee	Investment Income (Loss) Recognized by the Investor Company	Notes
				December 31, 2019	December 31, 2018	Shares (in thousands)	%	Carrying Value
Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB Corporation Nan Ya PCB (HK) Corporation Wen Fung Industrial Co., Ltd. Superior World Wide Trading Co., Ltd. (Note 1)	Nan Ya PCB (HK) Corporation Nan Ya PCB (U.S.A.) Corporation Formosa Advanced Technologies Co.,LTD. Nan Ya PCB (Kunshan) Corporation Wellink Technology Corporation P.T.Indonesia Nanya Indah Plastics Co.	Hong Kong U.S.A. Taiwan China Taiwan Indonesia	production of electronic products and retargeting IC packaging, testing and modules production of printed circuit board production of electronic components production of plastic products	5,020,900 3,479 472,968 5,017,721 212,017 121,835	5,020,900 3,479 - 5,017,721 212,017 121,835	1,223,820 1,000 13,267 - 12,739 5	100.00% 100.00% 3.00% 100.00% 100.00% 50.00%	9,603,122 13,739 475,710 9,589,396 135,753 259,090	100.00% 100.00% 3.00% 100.00% 100.00% 50.00%	(86,474) 676 1,262,495 (86,812) 1,767 122,511	(86,474) 676 1,550 (86,812) 1,767 61,256	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3

Note ： The reporting currency of Nan Ya Plastics Corporation USA, Nan Ya Plastics Corporation America, Formosa Synthetic Rubber (Hong Kong) Corporation Limited, Formosa Group (Cayman)
Limited, Nan Ya Internaitonal (Cayman) Limited, , FG Inc., Formosa Utility Venture, Ltd, Nan Ya Plastics Corporation Texas, and Formosa Olefins, L.L.C is denominated in USD,
and the exchange rate of TWD to USD as of December 31, 2019 (in average) is 30.106(30.924) ： 1 .
Note 1 ： The reporting currency of Nan Ya Plastics (Hong Kong) Co., Ltd., Superior World Wide Trading Co., Ltd. and PFG Fiber Glass (Hong Kong) Corporation Limited is denominated in HKD,
and the exchange rate of TWD to HKD as of December 31, 2019 (in average) is 3.8597(3.9646) ： 1.
Note 2 ： The reporting currency of Formosa Industries Corporation, Vietnam is denominated in VND, and the exchange rate of TWD to VND as of December 31, 2019 (in average) is 1 ： 0.001299(0.001331) .
Note 3 ： Investment income of the current period does not include cumulative translation adjustment and capital surplus adjustment.

412

NAN YA PLASTICS CORPORATION INFORMATON ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (Expressed in thousands of New Taiwan Dollars)

TABLE 10

(a) Information regarding investments in Mainland China :

Name of the PRC Investee Company	Primary Business Scope	Amount of Paid-in Capital	Method of Investment	Investment Transferred from Taiwan as of January 1, 2019	For The Year Ended December 31, 2019	For The Year Ended December 31, 2019	Investment Transferred from Taiwan as of December 31, 2019	Current Income of Investees	Direct and Indirect Shareholding Percentage by the Company	Investment Gain (Loss)	Carrying Value of Investment as of December 31, 2019	Accumulated Inward Remittance of Earnings as of December 31, 2019
					Outflow	Inflow
Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Electronic Materials (Huizhou) Co., Ltd. Nan Ya Trading (Huizhou) Co., Ltd. Nan Ya Plastics (Nantong) Co., Ltd. China Nantong Huafeng Co., Ltd. Nantong Huafu Plastics Co., Ltd. Nan Ya Electric (Nantong) Co., Nanya Kyowa Plastics (Nantong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. Nan Ya Plastics (Zhengzhou) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. PFG Fiber Glass (Kunshan) Co., Ltd.	production of polyester products production of plastic products production of polyester products production of electronic materials trading production of plastic products, steam and electricity trading trading production of switch gear and control panel interior decorating business production of electronic materials, polyester products, steam and electricity production of polyester products production of plastic products production of plastic products and plasticizer production of glass fiber	1,998,681 775,457 2,527,462 5,489,509 32,267 4,540,736 93,004 79,111 339,275 200,988 15,159,216 7,035,085 261,737 2,188,834 4,668,263	Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment Indirect investment	1,998,681 738,752 2,418,397 1,180,918 32,267 3,008,918 99,636 71,503 339,275 100,494 15,159,216 7,035,085 130,869 1,989,308 4,487,409	- - - 4,308,591 - - - - - - - - - - -	- - - - - - - - - - - - - - -	1,998,681 738,752 2,418,397 5,489,509 32,267 3,008,918 99,636 71,503 339,275 100,494 15,159,216 7,035,085 130,869 1,989,308 4,487,409	(17,017) 93,803 104,835 322,453 867 362,886 6,880 2,596 42,247 95,175 3,272,429 (209,593) (4,008) 440,322 90,954	100.00% 85.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 50.00% 100.00% 100.00% 50.00% 100.00% 100.00%	(17,017) 79,733 104,835 322,453 867 362,886 6,880 2,596 42,247 47,588 3,272,429 (209,593) (2,004) 440,322 90,954	2,320,387 1,012,561 3,227,086 6,351,352 57,756 9,791,555 330,760 92,991 1,104,469 199,844 56,406,047 203,014 58,603 1,886,579 7,708,418	611,825 72,820 - - - 103,612 - - - - - - - - 149,416

413

Name of the PRC Investee Company	Primary Business Scope	Amount of Paid-in Capital	Method of Investment	Investment Transferred from Taiwan as of January 1, 2019	For The Year Ended December 31, 2019	For The Year Ended December 31, 2019	Investment Transferred from Taiwan as of December 31, 2019	Current Income of Investees	Direct and Indirect Shareholding Percentage by the Company	Investment Gain (Loss)	Carrying Value of Investment as of December 31, 2019	Accumulated Inward Remittance of Earnings as of December 31, 2019
					Outflow	Inflow
Hua Ya (Dong Ying) Plastics Corp. Hua Ya (Wu Hu) Plastics Corp. Formosa Synthetic Rubber (Ningbo) Limited Corporation	production of plastic products production of plastic products synthetic rubber	254,190 624,948 12,777,590	Indirect investment Indirect investment Indirect investment	34,591 34,591 4,162,010	- - -	- - -	34,591 34,591 4,162,010	- - (564,873)	15.00% 15.00% 32.53%	- - (183,754)	199,951 180,342 2,249,187	23,020 12,687 -

(b) Quota for investments in Mainland China :

Accumulative Remittance from Taiwan to Mainland China as of September 30, 2019(Note 1)	Amount of Investment Approved by Investment Commission, Ministry of Economic Affairs(Note 2)	Limit on the Amount of Investment in Mainland China (Note 3)
47,590,969	53,616,900	-

Note 3：The Industrial Development Bureau of the MOEA issued a letter to the Company stating that it qualifies under Section 12 of the Statute for Upgrading Industries.

Note 4 : The accumulative remittance from Taiwan to Mainland China, end of the period includes the amount of Nan Ya Plastics (Anshan) Co., Ltd.

(c) Information on significant transactions ：

414

AI assistant

NPC — Annual Report 2019

51763_rns_2020-08-19_434b043e-f0f2-47c6-90b8-64c215da22c7.pdf

Nan Ya Plastics Corporation

2019

Annual Report

Notice to readers

Headquarters & Renwu Plant

Taipei Branch

Hsinkang Branch & Plant

Mailiao Branch

LinYuan Plant

Chiayi Plant

Jinxing Plant

Kung San Plant

Linkou Plant

Shulin Plant

Dyeing & Finishing Plant

I. Letter to Shareholders

1.1. Business Performance for 2019

1.2. Business Strategy for 2020

II. Company Introduction

2.1 Date of Establishment: August 22nd, 1958

2.2 Business Philosophy and Vision:

2.3 Milestone:

III.Corporate Governance

3.1 Organization

3.1.1 Organization Structure

3.1.2 Major Corporate Functions

3.2 Directors, Supervisors and Management Team

3.2.1 Directors

3.2.2Management Team

3.2.3 Boards of Directors and Major Managers Succession Plan of NPC

3.3 Remuneration of Directors, Supervisors, President, and Vice Presidents

3.3.1 Remuneration of Directors and Supervisors

Range of Remuneration Paid to Directors

3.3.1.2 Remuneration of Supervisors

Range of Remuneration of President and Vice Presidents

Employee Compensation of Executive Officers

3.3.3 Comparison and Description of Remuneration for Directors, Supervisors,

Remuneration Policy for Directors, President and Vice Presidents.

3.4 Implementation of Corporate Governance

3.4.1 Board of Directors’ Meeting Status

3.4.2 Audit Committee Meeting Status or the Participation of Supervisors in the

Operations of the Board of Directors

3.4.2.2 The Participation of Supervisors in the Operations of the Board of Directors

3.4.3 Corporate Governance Implementation as Required by the Taiwan Financial Supervisory Commission

3.4.4 Composition, Responsibilities and Operations of NPC’s Remuneration Committee

3.4.4.1 Professional Qualifications and Independence Analysis of Remuneration Committee

3.4.4.2 Remuneration Committee Meeting Status

(1) There were 3 members of NPC’s Remuneration Committee.

3.4.5 Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission

3.4.6 Implementation Status of Operational Integrity as Required by the Taiwan Financial Supervisory Commission

3.4.7 NPC’s Corporate Governance Guidelines and Regulations:

3.4.8 Other Important Corporate Governance Information

NAN YA PLASTICS CORPORATION

Code of Ethical Conduct for Directors and Managers

Chapter 1 General Provisions

Chapter 2 Content of the Code

Chapter 3 Procedures for Exemption

Chapter 4 Method of information disclosure

Chapter 5 Additional Provision

3.4.9 Implementation Status of the Internal Control System

3.4.9.1 Internal Control System Statement

NAN YA PLASTICS CORPORATION

Internal Control System Statement

Date: 2020.03.18

Proposal 2

Proposal 3

Proposal 4

(3)Election Items

(4)Discussion Items(II)

3.4.11.2 2019.03.20 1[st] Board of Directors’ Meeting of 2019

Proposal 8

3.4.11.3 2019.04.19 2[nd ] Board of Directors’ Meeting of 2019

3.4.11.4 2019.05.10 3[rd] Board of Directors’ Meeting of 2019

Proposal 4

3.4.11.5 2019.06.12 4[th] Board of Directors’ Meeting of 2019

3.4.11.6 2019.08.12 5[th] Board of Directors’ Meeting of 2019

Proposal 7

NPC Annual Report 2019