nan ya plastics corporation and subsidiaries · 2018-09-10 · 3 independent auditors’ review...

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Stock Code:1303

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

NAN YA PLASTICS CORPORATION ANDSUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review ReportFor the Six Months Ended June 30, 2018 and 2017

Address: 101, Shuiguan Road, Renwu Dist., Kaohsiung City 814, Taiwan

Telephone: (07)371-1411

The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of theChinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of theEnglish and Chinese language independent auditors’ review report and consolidated financial statements, the Chinese version shallprevail.

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Table of contents

Contents Page

1. Cover Page 1

2. Table of Contents 2

3. Independent Auditors’ Report 3

4. Consolidated Balance Sheets 4

5. Consolidated Statements of Comprehensive Income 5

6. Consolidated Statements of Changes in Equity 6

7. Consolidated Statements of Cash Flows 7

8. Notes to the Consolidated Financial Statements

(1) Company history 8

(2) Approval date and procedures of the consolidated financialstatements

8

(3) New standards, amendments and interpretations adopted 8～15

(4) Summary of significant accounting policies 15～23

(5) Significant accounting assumptions and judgments, andmajor sources of estimation uncertainty

23～24

(6) Explanation of significant accounts 24～52

(7) Related-party transactions 52～59

(8) Pledged assets 59

(9) Commitments and contingencies 59～60

(10) Losses Due to Major Disasters 60

(11) Subsequent Events 60

(12) Other 61

(13) Other disclosures

(a) Information on significant transactions 61～62、64～77

(b) Information on investees 62、78～80

(c) Information on investment in mainland China 62、81～82

(14) Segment information 62～63

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Independent Auditors’ Review Report

To the Board of Directors ofNAN YA PLASTICS CORPORATION:

Introduction

We have reviewed the accompanying consolidated balance sheets of the NAN YA PLASTICS CORPORATION(the "Company") and its subsidiaries (together referred to as the "Consolidated Company") as of June 30, 2018and 2017, and the related consolidated statements of comprehensive income for the three-month and six-monthperiods ended June 30, 2018 and 2017, changes in equity and cash flows for the six months ended June 30, 2018and 2017, and notes to the consolidated financial statements, including a summary of significant accountingpolicies. The management is responsible for the preparation and fair presentation of the consolidated financialstatements in accordance with the Regulations Governing the Preparation of Financial Reports by SecuritiesIssuers and International Accounting Standards (“IASs”) 34, “Interim Financial Reporting” endorsed and issuedinto effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express aconclusion on the consolidated financial statements based on our review.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordancewith Statement of Auditing Standards 65, “ Review of Financial Information Performed by the IndependentAuditor of the Entity”. A review of the consolidated financial statements consists of making inquiries, primarilyof persons responsible for financial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted in accordance with the generallyaccepted auditing standards and consequently does not enable us to obtain assurance that we would becomeaware of all significant matters that might be identified in an audit. Accordingly, we do not express an auditopinion.

Basis for Qualified Conclusion

As stated in Note 4 (b), the consolidated financial statements included the financial statements of certain non-significant subsidiaries, which were not reviewed by independent auditors. These financial statements reflectthe total assets amounting to $73,660,593 thousand and $64,615,002 thousand, constituting 12.23% and 12.06%of the consolidated total assets; and the total liabilities amounting to $6,101,831 thousand and $6,420,114thousand, constituting 2.79% and 3.15% of the consolidated total liabilities as of June 30, 2018 and 2017,respectively; well as the total comprehensive income (loss) amounting to $5,332,849 thousand, $1,125,846thousand, $5,704,710 thousand and $(814,551) thousand, constituting 21.09%, 9.37%, 13.53% and (4.92)% ofconsolidated total comprehensive income (loss) for the three-month and six-month periods ended June 30, 2018and 2017, respectively.

Furthermore, as stated in Note 6 (g), the other equity accounted investments of the Consolidated Company in itsinvestee companies of $25,430,131 thousand and $25,230,671 thousand as of June 30, 2018 and 2017,respectively, and its equity in net earnings on these investee companies of $319,026 thousand, $154,400thousand, $359,433 thousand and $(248,456) thousand for the three-month and six-month periods ended June30, 2018 and 2017, respectively, were recognized solely on the financial statements prepared by these investeecompanies, but not reviewed by independent auditors.

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Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statementsof certain consolidated subsidiaries and equity accounted investee companies described in the Basis forQualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews and thereview report of another auditor (please refer to Other Matter paragraph), nothing has come to our attention thatcauses us to believe that the accompanying consolidated financial statements do not present fairly, in allmaterial respects, the consolidated financial position of the Consolidated Company as of June 30, 2018 and2017, and of its consolidated financial performance for the three-month and six-month periods ended June 30,2018 and 2017, as well as its consolidated cash flows for the six months ended June 30, 2018 and 2017 inaccordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IASs34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission ofthe Republic of China.

Other Matter

We did not review the financial statements of certain subsidiaries of the Company. Those financial statementswere reviewed by other auditors, whose review report has been furnished to us, and our conclusion, insofar as itrelates to the amounts included for those subsidiaries, is based solely on the review report of other auditors. Thefinancial statements of those subsidiaries reflect the total assets amounting to $110,256,710 thousand and$98,102,425 thousand, constituting 18.30% and 18.31% of the consolidated total assets as of June 30, 2018 and2017, respectively, and the total revenues amounting to $21,588,101 thousand, $16,447,257 thousand,$40,682,308 thousand and $33,184,818 thousand, constituting 24.97%, 22.19%, 24.12% and 22.61% of theconsolidated total revenues for the three-month and six-month periods ended June 30, 2018 and 2017,respectively.

We did not review the financial statements of certain investee companies, which represented the investment inother entities accounted for using the equity method of the Consolidated Company. Those financial statementswere reviewed by another auditor, whose review report has been furnished to us, and our conclusion, insofar asit relates to the amounts included for those investee companies, is based solely on the review report of anotherauditor. The aforementioned investments accounted for using the equity method amounted to $90,498,012thousand and $77,415,715 thousand, constituting 15.02% and 14.45% of the total assets as of June 30, 2018 and2017, respectively; and the related shares of profit of associates and joint ventures accounted for using theequity method amounted to $5,958,896 thousand, $2,950,443 thousand, $10,190,394 thousand and $8,238,343thousand, constituting 29.69%, 25.64%, 28.87% and 34.30% of the total profit before tax for the three-monthand six-month periods ended June 30, 2018 and 2017, respectively.

The engagement partners on the reviews resulting in this independent auditors’ review report are

Kuo, Hsin-Yi and Yu, Chi-Lung.

KPMG

Taipei, Taiwan (Republic of China)August 10, 2018

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position,financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic ofChina and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statementsare those generally accepted and applied in the Republic of China.

The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of theChinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of theEnglish and Chinese language independent auditors’ review report and consolidated financial statements, the Chinese version shallprevail.

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Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2018 and 2017

NAN YA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2018, December 31, 2017, and June 30, 2017

(Expressed in Thousands of New Taiwan Dollars)

June 30, 2018 December 31, 2017 June 30, 2017　Assets Amount % Amount % Amount %Current assets:

1100 　Cash and cash equivalents (notes 6(a) and (x)) $ 51,617,946 9 44,304,079 8 52,183,129 10

1110 　Current financial assets at fair value through profit or loss(notes 6(b) and (x))

4,842,074 1 - - - -

1120 　Current financial assets at fair value through othercomprehensive income (notes 6(c) and (x))

50,237,362 8 - - - -

1126 　Available-for-sale financial assets-current (notes 6(d) and (x))

- - 49,047,420 9 46,276,025 9

1150 　Notes receivable, net (notes 6(e) and (x)) 13,082,970 2 12,128,351 2 9,025,649 2

1170 　Accounts receivable, net(note 6(e) and (x)) 44,443,267 7 41,459,623 8 37,172,430 7

1180 　Accounts receivable due from related parties (notes 6(e),(x) and 7)

2,528,889 1 2,532,401 1 2,658,901 -

1200 　Other receivables (notes 6(f)) 19,740,591 3 2,168,987 - 16,878,823 3

1210 　Other receivables due from related parties (notes 6(f) and 7)

14,456,442 2 14,347,741 3 15,656,925 3

130X 　Inventories (notes 6(g)) 43,240,255 7 40,731,138 7 37,941,803 7

1470 　Other current assets 4,174,509 1 5,347,051 1 5,028,217 1

　　Total current assets 248,364,305 41 212,066,791 39 222,821,902 42

Non-current assets:

1517 　Total non-current financial assets at fair value throughother comprehensive income (notes 6(c) and (x))

34,153,089 6 - - - -

1524 　Non-current available-for-sale financial assets-non-current(notes 6(d) and (x))

- - 1,128,219 - 1,150,445 -

1543 　Non-current financial assets at cost non-current (note 6(d)) - - 18,694,079 3 17,336,100 3

1550 　Investments accounted for using equity method(note 6(h))

163,308,785 27 158,648,552 29 139,190,696 26

1600 　Property, plant and equipment (note 6(i)) 133,808,542 22 132,901,898 24 135,041,854 25

1782 　Trademarks(note 6(j)) 2,583,312 1 2,679,885 1 2,776,457 1

1812 　Technology development expense 44,304 - 57,905 - 71,507 -

1840 　Deferred tax assets 5,172,407 1 5,911,842 1 5,481,333 1

1915 　Prepayments for purchase of equipment 5,862,340 1 2,329,541 - 2,123,026 -

1937 　Overdue receivables (note 6(e)) - - - - - -

1975 　Net defined benefit asset-non-current 6,439 - 6,325 - 1,097 -

1990 　Other non-current assets 9,141,734 1 9,646,352 3 9,768,917 2

　　Total non-current assets 354,080,952 59 332,004,598 61 312,941,432 58

Total assets $ 602,445,257 100 544,071,389 100 535,763,334 100

June 30, 2018 December 31, 2017 June 30, 2017　Liabilities and Equity Amount % Amount % Amount %Current liabilities:

2100 　Short-term borrowings (notes 6(l) and (x)) $ 17,674,381 3 9,295,583 2 11,782,237 2

2110 　Short-term notes and bills payable (notes 6(k) and (x)) 4,799,477 1 7,998,778 1 7,999,146 1

2170 　Notes and accounts payable (note 6(x)) 9,295,453 1 10,252,937 2 9,890,766 2

2180 　Accounts payable to related parties (notes 6(x) and 7) 9,571,235 2 9,722,905 2 7,458,092 1

2200 　Other payables 59,663,595 10 20,651,855 4 52,977,803 10

2321 　Current portion of bonds payable (notes 6(n) and (x)) 9,127,204 1 7,887,079 1 9,622,678 2

2322 　Current portion of long-term borrowings (notes 6(m) and (x))

15,883,279 3 12,661,784 3 2,977,194 1

2399 　Other current liabilities 1,291,451 - 1,210,273 - 1,282,154 -

　　Total current liabilities 127,306,075 21 79,681,194 15 103,990,070 19

Non-Current liabilities:

2530 　Bonds payable (notes 6(n) and (x)) 46,843,687 8 48,036,622 9 46,468,672 9

2540 　Long-term borrowings (notes 6(m) and (x)) 4,831,759 1 10,489,649 2 18,029,479 3

2570 　Deferred tax liabilities 12,036,771 2 10,785,221 2 10,313,559 2

2611 　Long-term notes payable (notes 6(m) and (x)) 4,996,164 1 4,998,418 1 - -

2640 　Net defined benefit liability-non-current 21,677,709 3 21,792,242 4 24,288,733 5

2645 　Guarantee deposits 663,363 - 704,676 - 706,223 -

2670 　Other non-current liabilities (note 6(h)) 677,660 - 363,608 - 233,857 -

　　Total non-current liabilities 91,727,113 15 97,170,436 18 100,040,523 19

　　Total liabilities 219,033,188 36 176,851,630 33 204,030,593 38

Equity attributable to owners of parent (notes 6(q)):

3110 　Common Stock 79,308,216 13 79,308,216 15 79,308,216 15

3200 　Capital surplus 26,732,673 5 26,158,472 5 23,361,499 4

3300 　Retained earnings 199,563,169 33 208,480,444 38 175,505,789 33

3400 　Others 66,623,880 11 41,672,728 7 41,800,231 8

36XX 　Non-controlling interests 11,184,131 2 11,599,899 2 11,757,006 2

　　Total equity 383,412,069 64 367,219,759 67 331,732,741 62

Total liabilities and equity $ 602,445,257 100 544,071,389 100 535,763,334 100

See accompanying notes to Consolidated financial statements.

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Reviewed only, not audited in accordance with generally accepted auditing standards


Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

For the three months ended June 30 For the six months ended June 30

2018 2017 2018 2017

Amount % Amount % Amount % Amount %

4000 Operating revenue (notes 6(r), (s) and 7) $ 86,454,090 100 74,105,572 100 168,674,081 100 146,781,725 100

5000 Operating costs (notes 6(g), (o), (v), 7 and 12) 72,774,125 84 62,858,697 85 141,237,162 84 122,502,640 83

5910 Less:Unrealized (realized) profit from affiliated companies (note 7) (11,639) - (13,579) - (24,272) - (18,595) -

Gross profit, net 13,691,604 16 11,260,454 15 27,461,191 16 24,297,680 17

Operating expenses (notes 6(j), (o), (v), 7 and 12):

6100 Selling expenses 2,646,600 3 2,449,934 3 5,159,493 3 4,779,962 3

6200 Administrative expenses 2,234,519 3 3,111,819 4 4,426,339 2 5,341,439 4

　　Total operating expenses 4,881,119 6 5,561,753 7 9,585,832 5 10,121,401 7

Operating income 8,810,485 10 5,698,701 8 17,875,359 11 14,176,279 10

Non-operating income and expenses (notes 6(h), (w) and 7):

7010 Other income 785,447 1 604,119 1 1,427,131 1 1,215,231 1

7020 Other gains and losses 1,304,442 2 450,699 - 806,587 - (1,696,313) (1)

7050 Finance costs (459,061) (1) (502,004) (1) (874,098) (1) (923,268) (1)

7060 Share of profit of associates and joint ventures accounted for using equitymethod

9,627,449 11 5,257,521 7 16,067,714 10 11,247,299 7

　　Total non-operating income and expenses 11,258,277 13 5,810,335 7 17,427,334 10 9,842,949 6

Profit before income tax 20,068,762 23 11,509,036 15 35,302,693 21 24,019,228 16

7950 Less: Income tax expense (note 6(p)) 3,465,578 4 2,506,580 3 5,432,212 3 4,446,995 3

Profit (loss) 16,603,184 19 9,002,456 12 29,870,481 18 19,572,233 13

8300 Other comprehensive income: (notes 6 (h) and (q))

8310 Components of other comprehensive income that will not be reclassifiedto profit or loss

8316 Unrealized gains (losses) from investments in equity instruments measured atfair value through other comprehensive income

5,166,695 6 - - 7,546,278 5 - -

8320 Share of other comprehensive income of associates and joint venturesaccounted for using equity method, components of other comprehensiveincome that will not be reclassified to profit or loss

574,726 1 - - 2,233,789 1 - -

8349 Income tax related to components of other comprehensive income that willnot be reclassified to profit or loss

- - - - 171,261 - - -

5,741,421 7 - - 9,951,328 6 - -

8360 Other components of other comprehensive income that will not bereclassified to profit or loss

8361 Exchange differences on translation 2,955,448 3 2,069,740 3 2,498,408 1 (6,876,020) (5)

8362 Unrealized gains (losses) on valuation of available-for-sale financial assets - - 833,231 1 - - 705,499 1

8370 Share of other comprehensive income of associates and joint venturesaccounted for using equity method, components of other comprehensiveincome that will be reclassified to profit or loss

(9,575) - 126,335 - (10,598) - 2,787,900 2

8399 Income tax related to components of other comprehensive income that will bereclassified to profit or loss

- - (21,077) - (135,016) - 365,578 -

2,945,873 3 3,008,229 4 2,352,794 1 (3,017,043) (2)

8300 Other comprehensive income, net 8,687,294 10 3,008,229 4 12,304,122 7 (3,017,043) (2)

8500 Total comprehensive income for the year $ 25,290,478 29 12,010,685 16 42,174,603 25 16,555,190 11

Profit (loss), attributable to:

8610 Profit (loss), attributable to owners of parent $ 16,669,733 19 9,030,791 12 30,134,392 18 19,898,009 13

8620 Profit (loss), attributable to non-controlling interests (66,549) - (28,335) - (263,911) - (325,776) -

$ 16,603,184 19 9,002,456 12 29,870,481 18 19,572,233 13

Comprehensive income attributable to:

8710 Comprehensive income, attributable to owners of parent $ 25,368,367 29 11,965,164 16 42,371,827 25 17,005,452 11

8720 Comprehensive income, attributable to non-controlling interests (77,889) - 45,521 - (197,224) - (450,262) -

$ 25,290,478 29 12,010,685 16 42,174,603 25 16,555,190 11

Basic earnings per share (note 6(u)):Before

TaxAfterTax

BeforeTax

AfterTax

BeforeTax

AfterTax

BeforeTax

AfterTax

9710 Income from continuing operations $ 2.53 2.09 1.45 1.14 4.45 3.77 3.03 2.47

Income from non-controlling equity (0.13) 0.01 (0.13) - (0.24) 0.03 (0.24) 0.04

9750 Income attributable to shareholders of the parent $ 2.40 2.10 1.32 1.14 4.21 3.80 2.79 2.51


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Consolidated Statements of Changes in Equity

For the six months ended June 30, 2018 and 2017


Equity attributable to owners of parentTotal other equity interest

Share capital Retained earnings Unrealizedgains

Ordinaryshares

Capitalsurplus

Legalreserve

Specialreserve

Unappropriated retained

earnings

Exchangedifferences ontranslation of

foreignfinancial

statements

(losses) onfinancial assets

measured atfair value

through othercomprehensive

income

Unrealizedgains (losses)on available-

for-salefinancial

assets

Gains (losses)on effectiveportion ofcash flow

hedges

Gains (losses)on hedging instruments

Total equityattributable to

owners ofparent

Non-controlling

interests Total equityBalance at January 1, 2017 $ 79,308,216 23,155,633 52,989,825 80,261,502 58,045,150 584,042 - 44,067,434 41,312 - 338,453,114 12,580,352 351,033,466

　Legal reserve appropriated - - 5,884,027 - (5,884,027) - - - - - - - -

　Special reserve appropriated - - - 6,670,914 (6,670,914) - - - - - - - -

　Cash dividends of ordinary share - - - - (35,688,697) - - - - - (35,688,697) - (35,688,697)

Other changes in capital surplus:

　Other changes in capital surplus - 205,866 - - - - - - - - 205,866 - 205,866

Profit (loss) - - - - 19,898,009 - - - - - 19,898,009 (325,776) 19,572,233

Other comprehensive income - - - - - (6,385,472) - 3,517,373 (24,458) - (2,892,557) (124,486) (3,017,043)

Total comprehensive income - - - - 19,898,009 (6,385,472) - 3,517,373 (24,458) - 17,005,452 (450,262) 16,555,190

Changes in non-controlling interests - - - - - - - - - - - (373,084) (373,084)

Balance at June 30, 2017 $ 79,308,216 23,361,499 58,873,852 86,932,416 29,699,521 (5,801,430) - 47,584,807 16,854 - 319,975,735 11,757,006 331,732,741

Balance at January 1,2018 $ 79,308,216 26,158,472 57,873,852 86,932,416 63,674,176 (6,026,197) - 47,691,196 7,729 - 355,619,860 11,599,899 367,219,759

Effects of retrospective application - - - - 1,206,363 - 60,594,455 (47,691,196) (7,729) 7,729 14,109,622 (1,172) 14,108,450

Equity at beginning of period after adjustments 79,308,216 26,158,472 57,873,852 86,932,416 64,880,539 (6,026,197) 60,594,455 - - 7,729 369,729,482 11,598,727 381,328,209

　Legal reserve appropriated - - 5,452,101 - (5,452,101) - - - - - - - -

　Special reserve appropriated - - - 6,819,825 (6,819,825) - - - - - - - -

　Cash dividends of ordinary share - - - - (40,447,190) - - - - - (40,447,190) - (40,447,190)

　Reversal of special reserve - - - (13,917) 13,917 - - - - - - - -

Other changes in capital surplus:

　Other changes in capital surplus - 574,201 - - - - - - - - 574,201 - 574,201

Profit (loss) - - - - 30,134,392 - - - - - 30,134,392 (263,911) 29,870,481

Other comprehensive income - - - - 189,542 2,298,291 9,760,200 - - (10,598) 12,237,435 66,687 12,304,122

Total comprehensive income - - - - 30,323,934 2,298,291 9,760,200 - - (10,598) 42,371,827 (197,224) 42,174,603

Changes in non-controlling interests - - - - - - - - - - - (217,372) (217,372)

Disposal of investments in equity instruments designated atfair value through other comprehensive income - - - - (382) - - - - - (382) - (382)

Balance at June 30, 2018 $ 79,308,216 26,732,673 63,325,953 93,738,324 42,498,892 (3,727,906) 70,354,655 - - (2,869) 372,227,938 11,184,131 383,412,069


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Consolidated Statements of Cash Flows

For the three months and six months ended June 30, 2018 and 2017


For the six months ended June 30

2018 2017

Cash flows from (used in) operating activities:

Profit before tax $ 35,302,693 24,019,228

Adjustments:

Adjustments to reconcile profit (loss):

Depreciation expense 8,152,397 8,011,343

Amortization expense 976,960 1,047,488

Net loss on financial assets or liabilities at fair value through profit or loss (137,165) -

Interest expense 874,098 923,268

Interest income (481,115) (568,001)

Share of profit of associates and joint ventures accounted for using equity method (16,067,714) (11,247,299)

Loss on disposal of property, plant and equipment 28,949 28,847

Property, plant and equipment transferred to expenses 8,759 21,238

Impairment loss on financial assets - 1,023

Realized profit on from sales (24,272) (18,595)

Unrealized foreign exchange loss (704,157) (283,229)

Other revenue, overdue dividends and compensation of board and directors 1,705 (16,122)

Gain on reversal of impairment loss of property, plant and equipment (5,378) (86,879)

Total adjustments to reconcile profit (loss) (7,376,933) (2,186,918)

Changes in operating assets and liabilities:

Increase in notes receivable (954,619) (11,595)

Increase in accounts receivable (including related parties) (2,566,060) (989,788)

Increase in other receivable (600,959) (684,453)

Increase in inventories (3,026,824) (2,305,775)

Decrease (increase) in other current assets 1,172,794 (489,154)

Total changes in operating assets (5,975,668) (4,480,765)

Decrease in notes and accounts payable (1,126,984) (2,705,064)

Decrease (increase) in other payable (615,081) 1,151,248

Increase in other current liabilities 79,535 6,946

Decrease in net defined benefit liability (114,647) (1,232,832)

Total changes in operating liabilities (1,777,177) (2,779,702)

Total adjustments (15,129,778) (9,447,385)

Cash inflow generated from operations 20,172,915 14,571,843

Interest received 566,354 547,931

Dividends received 190,318 481,871

Interest paid (758,738) (1,102,099)

Income taxes paid (4,333,433) (3,624,349)

Net cash flows from operating activities 15,837,416 10,875,197

Cash flows from (used in) investing activities:

Acquisition of financial assets at fair value through other comprehensive income (1,676,070) -

Proceeds from capital reduction of financial assets at fair value through other comprehensive income 1,972 -

Proceeds from disposal of financial assets designated at fair value through profit or loss 772,908 -

Proceeds from capital reduction of financial assets at cost - 50

Acquisition of investments accounted for using equity method - (1,683,440)

Acquisition of property, plant and equipment (6,564,120) (5,142,340)

Proceeds from disposal of property, plant and equipment 36,675 209,834

Increase in refundable deposits (37,349) (11,549)

(Increase) decrease in other receivables due from related parties (108,701) 9,516,359

Increase in other non-current assets (5,000,036) (2,140,195)

Net cash flows (used in) from investing activities (12,574,721) 748,719

Cash flows from (used in) financing activities:

Increase (decrease) in short-term loans 8,378,798 (8,099,977)

(Decrease) increase in short-term notes and bills payable (3,199,301) 1,655,344

Proceeds from long-term debt 1,200,000 3,000,000

Repayments of long-term debt (3,636,395) (11,132,052)

(Decrease) increase in guarantee deposits received (41,313) 46,561

Increase (decrease) in other non-current liabilities 336,579 72,578

Cash dividends paid (4,594) (20,626)

Change in non-controlling interests (180,839) (243,070)

Net cash flows from (used in) financing activities 2,852,935 (14,721,242)

Effect of exchange rate changes on cash and cash equivalents 1,198,237 (2,131,050)

Net increase (decrease) in cash and cash equivalents 7,313,867 (5,228,376)

Cash and cash equivalents at beginning of period 44,304,079 57,411,505

Cash and cash equivalents at end of period $ 51,617,946 52,183,129


8

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)Reviewed only, not audited in accordance with generally accepted auditing standards


Notes to the Consolidated Financial Statements

June 30, 2018 and 2017

(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 inKaohsiung 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 andestablished many divisions. Currently, the Company has the following divisions: plastics, fiber,petrochemical, electronics, and engineering. It also has 10 manufacturing plants across Taiwan, 1 branchoffice 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 Boardof Directors on August 10, 2018.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the FinancialSupervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC andare effective for annual periods beginning on or after January 1, 2018.

New, Revised or Amended Standards and InterpretationsEffective date

per IASBAmendment to IFRS 2 “Clarifications of Classification and Measurement ofShare-based Payment Transactions”

January 1, 2018

Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4Insurance Contracts”

January 1, 2018

IFRS 9 “Financial Instruments” January 1, 2018

IFRS 15 “Revenue from Contracts with Customers” January 1, 2018

Amendment to IAS 7 “Statement of Cash Flows -Disclosure Initiative” January 1, 2017

Amendment to IAS 12 “Income Taxes- Recognition of Deferred Tax Assets forUnrealized Losses”

January 1, 2017

Amendments to IAS 40 “Transfers of Investment Property” January 1, 2018

Annual Improvements to IFRS Standards 2014–2016 Cycle:

Amendments to IFRS 12 January 1, 2017

Amendments to IFRS 1 and Amendments to IAS 28 January 1, 2018

IFRIC 22 “Foreign Currency Transactions and Advance Consideration” January 1, 2018

(Continued)

9



Except for the following items, the Consolidated Company believes that the adoption of the aboveIFRSs would not have any material impact on its consolidated financial statements. The extent andimpact of signification changes are as follows:

(i) IFRS 9 “Financial Instruments”

IFRS 9 replaces IAS 39 “ Financial Instruments: Recognition and Measurement” whichcontains classification and measurement of financial instruments, impairment and hedgeaccounting.

As a result of the adoption of IFRS 9, the Consolidated Company adopted the consequentialamendments to IAS 1 “ Presentation of Financial Statements” which requires impairment offinancial assets to be presented in a separate line item in the statement of profit or loss andOCI. Additionally, the Consolidated Company adopted the consequential amendments to IFRS7 Financial Instruments: Disclosures that are applied to disclosures about 2018 but generallyhave not been applied to comparative information.

The detail of new significant accounting policies and the nature and effect of the changes toprevious accounting policies are set out below:

1) Classification of financial assets and financial liabilities

IFRS 9 contains three principal classification categories for financial assets: measured atamortized cost, fair value through other comprehensive income (FVOCI) and fair valuethrough profit or loss (FVTPL). The classification of financial assets under IFRS 9 isgenerally based on the business model in which a financial asset is managed and itscontractual cash flow characteristics. The standard eliminates the previous IAS 39categories of held to maturity, loans and receivables and available for sale. Under IFRS9, derivatives embedded in contracts where the host is a financial asset in the scope ofthe standard are never bifurcated. Instead, the hybrid financial instrument as a whole isassessed for classification. For an explanation of how the Consolidated Companyclassifies and measures financial assets and accounts for related gains and losses underIFRS 9, please see note 4(c).

The adoption of IFRS 9 did not have any a significant impact on its accounting policieson financial liabilities.

2) Impairment of financial assets

IFRS 9 replaces the ‘ incurred loss’ model in IAS 39 with the ‘ expected credit loss’(ECL) model. The new impairment model applies to financial assets measured atamortized cost, contract assets and debt investments at FVOCI, but not to investments inequity instruments. Under IFRS 9, credit losses are recognized earlier than they are underIAS 39 – please see note 4(c).

(Continued)

10



3) Transition

The adoption of IFRS 9 have been applied retrospectively, except as described below,

‧Comparative periods have been restated only for retrospective application of the cost ofhedging approach for forward points. Differences in the carrying amounts of financialassets and financial liabilities resulting from the adoption of IFRS 9 are recognized inretained earnings and reserves as on January 1, 2018. Accordingly, the informationpresented for 2017 does not generally reflect the requirements of IFRS 9, andtherefore, is not comparable to the information presented for 2018 under IFRS 9.

‧The following assessments have been made on the basis of the facts and circumstancesthat existed at the date of initial application.

－ The determination of the business model within which a financial asset is held.

－ The designation and revocation of previous designations of certain financialassets and financial liabilities as measured at FVTPL.

－ The designation of certain investments in equity instruments not held for tradingas at FVOCI.

‧If an investment in a debt security had low credit risk at the date of initial application ofIFRS 9, then the Consolidated Company assumed that the credit risk on its asset willnot increase significantly since its initial recognition.

4) Classification of financial assets on the date of initial application of IFRS 9

The following table shows the original measurement categories under IAS 39 and thenew measurement categories under IFRS 9 for each class of the Consolidated Company’sfinancial assets as of January 1, 2018.

IAS39 IFRS9

Measurement categoriesCarryingAmount Measurement categories

CarryingAmount

Financial Assets

Debt securities Available-for-sale (note 1) 798,901 FVOCI 666,289

Equity instruments Available-for-sale (note 2) 43,898,921 FVOCI 44,010,639

Available-for-sale (note 4) 5,477,817 FVTPL 5,477,817

Carried at cost (note 2) 18,694,079 FVOCI 30,050,756

Net receivables Loans and receivables (note 3) 72,637,103 Amortized cost 72,637,103

Other financial assets

(Guarantee deposits)

Loans and receivables 412,690 Amortized cost 412,690

(Continued)

11



Note 1:The corporate debt securities categorized as available-for-sale under IAS 39 areheld by the Consolidated Company’ s treasury unit in a separate portfolio toprovide interest income; however, they may be sold to meet liquidityrequirements arising in the normal course of business. The ConsolidatedCompany considers that these securities are held within a business model whoseobjective is achieved both by collecting contractual cash flows and by sellingsecurities. The corporate debt securities mature in one to two years and thecontractual terms of these financial assets give rise on specified dates to cashflows that are solely payments of principal and interest on the principal amountoutstanding. These assets have therefore been classified as financial assets atFVOCI under IFRS 9.

Note 2:These equity securities (including financial assets measured at cost) representinvestments that the Consolidated Company intends to hold for the long term forstrategic purposes. As permitted by IFRS 9, the Consolidated Company hasdesignated these investments at the date of initial application as measured atFVOCI, resulting in an increase of $11,335,783 thousand in those assetsrecognized, as well as the increase of $12,561,654 thousand and $1,547,968thousand in other equity interests and retained earnings, respectively, which wererecognized on January 1, 2018.

Note 3:Trade, lease and other receivables that were classified as loans and receivablesunder IAS 39 are now classified at amortized cost. The adoption of IFRS 9 didnot have any significant impact on its accounting policies on financial assets.

Note 4:These equity securities (fund investments) represent investments that theConsolidated Company intends to hold for available-for-sale strategic purposes.As permitted by IFRS 9, the Consolidated Company has designated theseinvestments at the date of initial application as measured at FVTPL, resulting inan increase of $341,605 in those assets recognized, as well as the increase of$341,605 and the decrease of $1,172 in retained earnings and non-controllinginterests, respectively, which were recognized on January 1, 2018.

The following table reconciles the carrying amounts of financial assets under IAS 39 tothe carrying amounts under IFRS 9 upon transition to IFRS 9 on 1 January, 2018:

2017.12.31 2018.1.1 2018.1.1 2018.1.1 2018.1.1IAS 39

CarryingAmount Reclassifications Remeasurements

IFRS 9CarryingAmount

Retainedearnings

Otherequity

Non-controllingInterests

Fair value through profit or loss

Additions – equity instruments:

From available for sale $ - 5,477,817 - 5,477,817 (341,605) 341,605 (1,172)

Fair value through other comprehensiveincome

Beginning balance of available for sale(including measured at cost) (IAS 39) $ 68,869,718 - - - - -

Available for sale to FVOCI - - 11,335,783 1,206,363 12,903,259 -

Subtraction – equity instruments:

To FVTPL – required reclassificationbased on classification criteria - (5,477,817) - 341,605 (341,605) -

$ 68,869,718 (5,477,817) 11,335,783 74,727,684 1,547,968 12,561,654 -

(Continued)

12



2017.12.31 2018.1.1 2018.1.1 2018.1.1 2018.1.1IAS 39

CarryingAmount Reclassifications Remeasurements

IFRS 9CarryingAmount

Retainedearnings

Otherequity

Non-controllingInterests

Amortized cost

Beginning balance of trade and otherreceivables, and other financial assets

$ 73,049,793 - - 73,049,793 - - -

(b) The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC andare effective for annual periods beginning on or after January 1, 2019 in accordance with Ruling No.1070324857 issued by the FSC on July 17, 2018:


per IASBIFRS 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 aboveIFRSs would not have any material impact on its consolidated financial statements. The extent andimpact of signification changes are as follows:

(i) IFRS 16“Leases”

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determiningwhether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

IFRS 16 introduces a single and an on-balance sheet lease accounting model for lessees. Alessee recognizes a right-of-use asset representing its right to use the underlying asset and alease liability representing its obligation to make lease payments. In addition, the nature ofexpenses related to those leases will now be changed since IFRS 16 replaces the straight-lineoperating lease expense with a depreciation charge for right-of-use assets and interest expenseon lease liabilities. There are recognition exemptions for short-term leases and leases of low-value items. The lessor accounting remains similar to the current standard – i.e. the lessors willcontinue to classify leases as finance or operating leases.

(Continued)

13



The Consolidated Company has completed an initial assessment of the potential impact on itsconsolidated financial statements, wherein the detailed assessment has yet to be completed.The actual impact of applying IFRS 16 on its financial statements in the period of initialapplication will depend on future economic conditions, including the Consolidated Company’sdiscounting rate, the composition of the Consolidated Company’s lease portfolio at that date,the Consolidated Company’ s latest assessment of whether it will exercise any lease renewaloptions and the extent to which the Consolidated Company chooses to use practical expedientsand recognition exemptions.

So far, the most significant impact identified is that the Consolidated Company will have torecognize the new assets and liabilities for its operating leases of offices, warehouse andfactory facilities.No significant impact is expected for the Consolidated Company’ s financeleases. Besides, The Consolidated Company does not expect the adoption of IFRS 16 to haveany impact on its ability to comply with the revised maximum leverage threshold loancovenant.

1) Determining whether an arrangement contains a lease

On transition to IFRS 16, the Consolidated Company can choose to apply either of thefollowing:

‧ IFRS 16 definition of a lease to all its contracts; or

‧ A practical expedient that does not need any reassessment whether a contract is, orcontains, a lease.

The Consolidated Company plans to apply the practical expedient to grandfather thedefinition of a lease upon transition. This means that it will apply IFRS 16 to allcontracts entered into before January 1, 2019 and identified as leases in accordance withIAS 17 and IFRIC 4.

2) Transition

As a lessee, the Consolidated Company can apply the standard using either of thefollowing:

‧retrospective approach; or

‧modified retrospective approach with optional practical expedients.

The lessee applies the election consistently to all of its leases.

On January 1, 2019, the Consolidated Company plans to initially apply IFRS 16 using themodified retrospective approach. Therefore, the cumulative effect of adopting IFRS 16will be recognized as an adjustment to the opening balance of retained earnings atJanuary 1, 2019, with no restatement of comparative information.

(Continued)

14



When applying the modified retrospective approach to leases previously classified asoperating leases under IAS 17, the lessee can elect, on a lease-by-lease basis, whether toapply a number of practical expedients on transition. The Consolidated Company isassessing the potential impact of using these practical expedients.

The Consolidated Company is not required to make any adjustments for leases in whichthe Consolidated Company is the lessor except where the Consolidated Company is theintermediate lessor in a sub-lease.

(ii) IFRIC 23 Uncertainty over Income Tax Treatments

In assessing whether and how an uncertain tax treatment affects the determination of taxableprofit (tax loss), tax bases, unused tax losses, unused tax credits, as well as tax rates, an entityshall assume that a taxation authority will examine the amounts it has the right to examine andhave a full knowledge on all related information when making those examinations.

If an entity concludes that it is probable that the taxation authority will accept an uncertain taxtreatment, the entity shall determine the taxable profit (tax loss), tax bases, unused tax losses,unused tax credits, as well as tax rates consistently with the tax treatment used or planned to beused in its income tax filings. Otherwise, an entity shall reflect the effect of uncertainty foreach uncertain tax treatment by using either the most likely amount or the expected value,depending on which method the entity expects to better predict the resolution of theuncertainty.

So far, the most significant impact identified is that the Consolidated Company will have torecognize the new income tax liabilities and income tax expense for its uncertainty overincome tax treatments.

(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 IASB, but have not yet to beendorsed by the FSC:


per IASBAmendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Betweenan Investor and Its Associate or Joint Venture”

Effective date tobe determinedby IASB

IFRS 17 “Insurance Contracts” January 1, 2021

(Continued)

15



Those which may be relevant to The Consolidated Company are set out below:

Issuance / ReleaseDates

Standards orInterpretations Content of amendment

September 11, 2014 Amendments to IFRS 10 andIAS 28 “Sale or Contributionof Assets Between an Investorand Its Associate or JointVenture”

The amendments address an acknowledgedinconsistency between the requirements inIFRS 10 and those in IAS 28 (2011) indealing with the sale or contribution of assetsbetween an investor and its associate or jointventure.

The main consequence of the amendments isthat a full gain or loss is recognized when atransaction involves a business (whether it ishoused in a subsidiary or not). A partial gainor loss is recognized when a transactioninvolves assets that do not constitute abusiness, even if these assets are housed in asubsidiary.

The Consolidated Company is evaluating the impact of its initial adoption of the abovementionedstandards or interpretations on its consolidated financial position and consolidated financialperformance. The results thereof will be disclosed when the Consolidated Company completes itsevaluation.

(4) Summary of significant accounting policies:

(a) Statement of compliance

The consolidated interim financial statements are the English translation of the Chinese versionprepared and used in the Republic of China. If there is any conflict between, or any difference in theinterpretation of the English and Chinese language consolidated interim financial statements, theChinese version shall prevail.

These consolidated interim financial statements have been prepared in accordance with thepreparation and guidelines of IAS 34 "Interim Financial Reporting" which are endorsed by FSC, anddo not include all of the information required by the Regulations and International FinancialReporting Standards, International Accounting Standards, IFRIC Interpretations and SICInterpretations endorsed by the FSC (hereinafter referred to IFRS endorsed by the FSC) for acomplete set of the annual consolidated financial statements.

Except the following accounting policies mentioned below, the significant accounting policiesadopted in the consolidated interim financial statements are the same as those in the consolidatedfinancial statement for the year ended December 31, 2017. For the related information, please referto note 4 of the consolidated financial statements for the year ended December 31, 2017.

(Continued)

16



(b) Basis of consolidation

(i) List of subsidiaries included in the consolidated financial statements:

Shareholding

InvestorThe name of subsidiaries Business activity

June 30,2018

December 31,2017

June 30,2017 Note

The Company Nan Ya Plastics CorporationU.S.A.

production of plasticproducts

%100.00 %100.00 %100.00 Note 1

The Company Nan Ya Plastics CorporationAmerica

production of plastic,polyester and chemicalproducts

%100.00 %100.00 %100.00 Note 1

The Company Formosa Plastics GroupInvestment Corp

investment %100.00 %100.00 %100.00 Note 1

The Company Nan Ya Plastics (HongKong) Co., Ltd.

plastics and electronicproducts trading,investment holding

%100.00 %100.00 %100.00

The Company Superior World WideTrading Co., Ltd.

plastics trading,investment

%100.00 %100.00 %100.00 Note 1

The Company Nan Ya PCB Corporation production of printedcircuit board

%66.97 %66.97 %66.97

The Company Wen Fung Industrial Co.,Ltd.

production of electroniccomponents

%100.00 %100.00 %100.00 Note 1

The Company Nan Chung PetrochemicalCorporation

production of chemicalproducts

%50.00 %50.00 %50.00 Note 1

The Company Nan Ya International(Cayman) Limited

investment %100.00 %100.00 %100.00 Note 1

The Company PFG Fiber GlassCorporation

production of glass fiber %100.00 %100.00 %100.00 Note 1

The Company PFG Fiber Glass (HongKong) Corporation Limited

investment %100.00 %100.00 %100.00

Nan Ya PCBCorporation

Nan Ya PCB (U.S.A.)Corporation

retargeting %100.00 %100.00 %100.00

Nan Ya PCBCorporation

Nan Ya PCB (HK)Corporation

electronic materialstrading, investment

%100.00 %100.00 %100.00

Nan Ya PCB (HK)Corporation

Nan Ya PCB (Kunshan)Corporation

production of printedcircuit board

%100.00 %100.00 %100.00

Nan Ya Plastics (HongKong) Co., Ltd.

Nan Ya Plastics (Nantong)Co., Ltd.

production of plasticproducts, steam andelectricity

%100.00 %100.00 %100.00


Nan Ya Electric (Nantong)Co., Ltd.

production of switchgear and control panel

%100.00 %100.00 %100.00


Nan Ya Plastics Film(Nantong) Co., Ltd.


%100.00 %100.00 %100.00


China Nantong HuafengCo., Ltd.

trading %100.00 %100.00 %100.00


Nantong Huafu Plastics Co.,Ltd.

trading %100.00 %100.00 %100.00


Nan Ya Electronic Materials(Kunshan) Co., Ltd.

production of electronicmaterials, polyesterproducts, steam andelectricity

%100.00 %100.00 %100.00


Nan Ya Draw TexturedYarn (Kunshan) Co., Ltd.

production of fiber %100.00 %100.00 %100.00


Nan Ya Plastics(Guangzhou) Co., Ltd.

production of polyesterproducts

%100.00 %100.00 %100.00


Nan Ya Plastics (Huizhou)Co., Ltd.


%100.00 %100.00 %100.00

(Continued)

17



Shareholding

InvestorThe name of subsidiaries Business activity

June 30,2018

December 31,2017

June 30,2017 Note


Nan Ya Plastics Film(Huizhou) Co., Ltd.

production of plasticfilm products

%100.00 %100.00 %100.00


Nan Ya Electronic Materials(Huizhou) Co., Ltd.

production of electronicmaterials

%100.00 %100.00 %100.00


Nan Ya Trading (Huizhou)Co., Ltd.

trading %100.00 %100.00 %100.00


Nan Ya Plastics (Xiamen)Co., Ltd.


%85.00 %85.00 %85.00


Nan Ya Plastics (Ningbo)Co., Ltd.

production of plasticproducts and plasticizer

%100.00 %100.00 %100.00

Wen Fung IndustrialCo., Ltd.

Wellink TechnologyCorporation

production of electroniccomponents

%100.00 %100.00 %100.00 Note 1

Nan Ya PlasticsCorporation America

Nan Ya Plastics CorporationTexas

production of chemicalproducts

%100.00 %100.00 %100.00 Note 1

PFG Fiber Glass (HongKong) CorporationLimited

PFG Fiber Glass (Kunshan)Co., Ltd.

production of glass fiber %100.00 %100.00 %100.00

Note 1: The aforementioned companies are not material subsidiaries.Their financial statements have not been reviewed.

The Company holds fifty-percent voting shares of Nan Chung Petrochemical Corporation (NanChung), 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 includedNan Chung as one of its subsidiaries in its consolidated financial statements.

(c) Financial instruments (applicable from January 1, 2018)

(i) Financial assets

Financial assets are classified into the following categories: measured at amortized cost, fairvalue through other comprehensive income (FVOCI), and fair value through profit or loss(FVTPL).

The Consolidated Company shall reclassify all affected financial assets only when it changesits business model for managing its financial assets.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the followingconditions and is not designated as at FVTPL:

‧it is held within a business model whose objective is to hold assets to collect contractualcash flows; and

‧its contractual terms give rise on specified dates to cash flows that are solely paymentsof principal and interest on the principal amount outstanding.

(Continued)

18



A financial asset measured at amortized cost is initially recognized at fair value, plus anydirectly attributable transaction costs. These assets are subsequently measured atamortized cost using the effective interest method. The amortized cost is reduced byimpairment losses. Interest income, foreign exchange gains and losses, and impairmentloss, are recognized in profit or loss. Any gain or loss on derecognition is recognized inprofit 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 andis not designated as at FVTPL:

‧ it is held within a business model whose objective is achieved by both collectingcontractual cash flows and selling financial assets; and

‧its contractual terms give rise on specified dates to cash flows that are solely paymentsof principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, theConsolidated Company may irrevocably elect to present subsequent changes in theinvestment’ s fair value in other comprehensive income. This election is made on aninstrument-by-instrument basis.

A financial asset measured at FVOCI is initially recognized at fair value, plus anydirectly attributable transaction costs. These assets are subsequently measured at fairvalue. Interest income calculated using the effective interest method, foreign exchangegains and losses, and impairment losses, deriving from debt investments are recognizedin profit or loss; whereas dividends deriving from equity investments are recognized asincome in profit or loss, unless the dividend clearly represents a recovery of part of thecost of the investment. Other net gains and losses of financial assets measured at FVOCIare recognized in OCI. On derecognition, gains and losses accumulated in OCI of equityinvestments are reclassified to profit or loss. However, gains and losses accumulated inOCI of debt investments are reclassified to retain earnings instead of profit or loss.

Dividend income derived from equity investments is recognized on the date that theConsolidated Company’ s right to receive payment is established, which in the case ofquoted 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 aremeasured at FVTPL, including derivative financial assets and accounts receivable(except for those presented as accounts receivable but measured at FVTPL). On initialrecognition, the Consolidated Company may irrevocably designate a financial asset,which meets the requirements to be measured at amortized cost or at FVOCI, as atFVTPL if doing so eliminates or significantly reduces an accounting mismatch thatwould otherwise arise.

(Continued)

19



Financial assets in this category are measured at fair value at initial recognition.Attributable transaction costs are recognized in profit or loss as incurred. Subsequentchanges that are measured at fair value, which take into account any dividend andinterest income, are recognized in profit or loss.

4) Business model assessment

The Consolidated Company makes an assessment of the objective of the business modelin which a financial asset is held at portfolio level because this best reflects the way thebusiness is managed and information is provided to management. The informationconsidered includes:

‧the stated policies and objectives for the portfolio and the operation of those policies inpractice. These include whether management’ s strategy focuses on earning contractualinterest income, maintaining a particular interest rate profile, matching the duration ofthe financial assets to the duration of any related liabilities or expected cash outflows orrealizing cash flows through the sale of the assets;

‧ how the performance of the portfolio is evaluated and reported to the ConsolidatedCompany management;

‧the risks that affect the performance of the business model (and the financial assets heldwithin that business model) and how those risks are managed;

‧how managers of the business are compensated ─ e.g. whether compensation is based onthe 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 reasonsfor such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify forderecognition are not considered as sales for this purpose, and are consistent with theConsolidated Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance isevaluated 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 thefinancial assets on initial recognition. ‘Interest’ is defined as consideration for the timevalue of money and for the credit risk associated with the principal amount outstandingduring a particular period of time and for other basic lending risks and costs, as well as aprofit margin.

(Continued)

20



In assessing whether the contractual cash flows are solely payments of principal andinterest, the Consolidated Company considers the contractual terms of the instrument.This includes assessing whether the financial asset contains a contractual term that couldchange the timing or amount of contractual cash flows such that it would not meet thiscondition. In making this assessment, the Consolidated Company considers thefollowing:

‧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 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 onfinancial assets measured at amortized cost (including cash and cash equivalents,amortized costs, notes and accounts receivable, leases receivable, guarantee deposit paidand other financial assets), debt investments measured at FVOCI, accounts receivableand contract assets.

The Consolidated Company measures loss allowances at an amount equal to lifetimeexpected credit loss (ECL), except for the following which are measured as 12-monthECL:

‧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 defaultoccurring over the expected life of the financial instrument) has not increasedsignificantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at anamount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expectedlife of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possiblewithin the 12 month after the reporting date (or a shorter period if the expected life of theinstrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractualperiod over which the Consolidated Company is exposed to credit risk.

(Continued)

21



When determining whether the credit risk of a financial asset has increased significantlysince initial recognition and when estimating ECL, the Consolidated Company considersreasonable and supportable information that is relevant and available without undue costor effort. This includes both quantitative and qualitative information and analysis basedon the Consolidated Company’s historical experience and informed credit assessment, aswell as forward-looking information.

When there is a breach of contract, the Consolidated Company will assume that the creditrisk on a financial asset has increased significantly.

The Consolidated Company considers a financial asset to be in default when theborrower is unlikely to pay its credit obligations in full. The Consolidated Companymeasures 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 asthe present value of all cash shortfalls (i.e the difference between the cash flows due tothe Consolidated Company in accordance with the contract and the cash flows that theConsolidated Company expects to receive). ECLs are discounted at the effective interestrate of the financial asset.

At each reporting date, the Consolidated Company assesses whether financial assetscarried at amortized cost and debt securities at FVOCI are credit-impaired. A financialasset is ‘credit-impaired’ when one or more events that have a detrimental impact on theestimated future cash flows of the financial asset have occurred. Evidence that a financialassets 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 90 days past due;

‧the lender of the borrower, for economic or contractual reasons relating to the borrower'sfinancial difficulty, having granted to the borrower a concession that the lender wouldnot 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 thegross carrying amount of the assets. For debt securities at FVOCI, the loss allowance isrecognized in other comprehensive income instead of reducing the carrying amount ofthe asset. The Consolidated Company recognizes the amount of expected credit losses (orreversal) in profit or loss, as an impairment gain or loss.

(Continued)

22



The gross carrying amount of a financial asset is written off (either partially or in full) tothe extent that there is no realistic prospect of recovery. This is generally the case whenthe Consolidated Company determines that the debtor does not have assets or sources ofincome that could generate sufficient cash flows to repay the amounts subject to thewrite-off. However, financial assets that are written off could still be subject toenforcement activities in order to comply with the Consolidated Company’s proceduresfor recovery of amounts due.

7) Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from theassets expire, or when the Consolidated Company transfers substantially all the risks andrewards of ownership of the financial assets.

On derecognition of a debt instrument in its entirety, the Consolidated Companyrecognizes the difference between its carrying amount and the sum of the considerationreceived or receivable and any cumulative gain or loss that had been recognized in othercomprehensive income and presented in “other equity – unrealized gains or losses on fairvalue through other comprehensive income”, in profit or loss, and in the line item of non-operating income and expenses in the statement of comprehensive income.

On derecognition of a financial asset other than in its entirety, the Group allocates theprevious carrying amount of the financial asset between the part it continues to recognizeunder continuing involvement, and the part it no longer recognizes on the basis of therelative fair values of those parts on the date of the transfer. The difference between thecarrying amount allocated to the part that is no longer recognized and the sum of theconsideration received for the part no longer recognized and any cumulative gain or lossallocated to it that had been recognized in other comprehensive income is recognized inprofit or loss, and presented in the line item of non-operating income and expenses. Acumulative gain or loss that had been recognized in other comprehensive income isallocated between the part that continues to be recognized and the part that is no longerrecognized on the basis of the relative fair values of those parts.

(d) Revenue from contracts with customers (applicable from January 1, 2018)

Revenue is measured based on the consideration to which the Consolidated Company expects to beentitled in exchange for transferring goods or services to a customer. The Consolidated Companyrecognizes revenue when it satisfies a performance obligation by transferring control of a good or aservice to a customer. The accounting policies for the Consolidated Company’ s main types ofrevenue are explained below.

(Continued)

23



(i) 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 overthe channel and price to sell the products, and there is no unfulfilled obligation that couldaffect the customer’s acceptance of the products. Delivery occurs when the products have beenshipped to the specific location, the risks of obsolescence and loss have been transferred to thecustomer, and either the customer has accepted the products in accordance with the salescontract, the acceptance provisions have lapsed, or the Consolidated Company has objectiveevidence that all criteria for acceptance have been satisfied.

(ii) Financing components

The Consolidated Company does not expect to have any contracts where the period betweenthe transfer of the promised goods or services to the customer and payment by the customerexceeds one year. As a consequence, the group does not adjust any of the transaction prices forthe time value of money.

(e) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 ofInternational Financial Reporting Standards 34, Interim Reporting.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interimreporting period by the effective annual tax rate as forecasted by the management. This should berecognized fully as tax expense for the current period (and allocated to current and deferred taxesbased on its proportionate size).

For a change in tax rate that is substantively enacted in an interim period, the effect of the changeimmediately should immediately be recognized in the interim period in which the change occurs.

Temporary differences between the carrying amounts of assets and liabilities for financial reportingpurposes and their respective tax bases shall be measured based on the tax rates that have beenenacted or substantively enacted at the time of the asset or liability is recovered or settled, and berecognized directly in equity or other comprehensive income as tax expense.

(f) Employee benefits

The pension cost in the consolidated interim financial statements was calculated and disclosed on ayear-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscalyear, adjusted for significant market fluctuations since that time and for significant curtailments,settlements, or other significant one-off event.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated financial statements in conformity with the Regulations and IFRSs (inaccordance with IAS 34 “Interim Financial Reporting” and endorsed by the FSC) requires management tomake judgments, estimates and assumptions that affect the application of the accounting policies and thereported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

(Continued)

24



The preparation of the consolidated interim financial statements, estimates and underlying assumptions arereviewed on an ongoing basis which are in conformity with the consolidated financial statements for theyear ended December 31, 2017. For the related information, please refer to note 5 of the consolidatedfinancial statements for the year ended December 31, 2017.

(6) Explanation of significant accounts:

Except for the following disclosures, there is no significant difference as compared with those disclosed inthe consolidated financial statements for the year ended December 31, 2017. Please refer to Note 6 of the2017 annual consolidated financial statements.

(a) Cash and Cash Equivalents

June 30,2018

December 31,2017

June 30,2017

Cash on hand $ 1,454 1,421 1,382

Cash in banks 11,327,659 4,958,290 6,153,532

Time deposits 38,428,759 32,674,075 39,125,066

Cash equivalents 1,860,074 6,670,293 6,903,149

Cash and cash equivalents $ 51,617,946 44,304,079 52,183,129

Please refer to note 6(x) for the fair value sensitivity analysis and interest rate risk of the financialassets and liabilities of the Consolidated Company.

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

June 30,2018

December 31,2017

June 30,2017

Financial assets designated as at fair valuethrough profit or loss：

Funds $ 4,842,074 - -

Remeasurement at fair value recognized in profit or loss is disclosed in note 6(w).

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

Financial assets at fair value through other comprehensive income - current

June 30,2018

Equity instruments at fair value through other comprehensive income :

Stocks $ 50,237,362

(Continued)

25



Financial assets at fair value through other comprehensive income- non-current

June 30,2018

Debt instruments at fair value through other comprehensive income:

Bonds $ 680,843

Subtotal 680,843

Equity instruments at fair value through other comprehensive income：

Stocks 33,021,575

Others 450,671

Subtotal 33,472,246

Total $ 34,153,089

(i) Debt investments at fair value through other comprehensive income

The Consolidated Company has assessed that the bonds shown above are held within abusiness model whose objective is achieved by both collecting the contractual cash flows andby selling financial assets; therefore, they have been classified as debt investments at fair valuethrough other comprehensive income on January 1, 2018. The investments were classified asavailable-for-sale financial assets on December 31, 2017 and June 30, 2017.

(ii) Equity investments at fair value through other comprehensive income

The Consolidated Company designated the investments shown above as equity instruments asat fair value through other comprehensive income because these equity instruments representthose investments that the Consolidated Company intends to hold for long-term for strategicpurposes. These investments were classified as available-for-sale financial assets and financialassets at costs on December 31, 2017 and June 30, 2017.

No strategic investments were disposed as of June 30, 2018, and there were no transfers of anycumulative gain or loss within equity relating to these investments.

On April 16, 2018, the Consolidated Company participated in the proportional capital increaseby cash of Formosa Ha Tinh (Cayman) Limited, at 11.43% ownership interest, with the totalinvestment amounting to USD57,160 thousand (equivalent to NTD1,676,070 thousand),recognized under “Financial assets at fair value through other comprehensive income”(Stocks).

(iii) For credit risk and market risk; please refer to note 6(x).

(iv) As of June 30, 2018, the financial assets at fair value through other comprehensive income ofthe Consolidated Company had been pledged as collateral; please refer to note 6(x).

(Continued)

26



(d) Available-for-sale Financial Assets

(i) Financial assets consisted of the following:

December 31,2017

June 30,2017

Available-for-sale financial assets－current:

　Stocks $ 43,569,603 40,746,947

　Funds 5,477,817 5,529,078

Total $ 49,047,420 46,276,025

Available-for-sale financial assets－non-current:

Bonds and others $ 1,128,219 1,150,445

Financial assets carried at cost－non-current:

Stocks $ 18,694,079 17,336,100

The financial assets carried at cost are measured at cost, less, accumulated impairment losseson the reporting date. The fair values of these investments cannot be measured reliably becausethe range of reasonable fair value estimates is large and the probabilities for each estimatecannot be reasonably determined.

The aforementioned investments were classified as financial assets at fair value through profitor loss and financial assets at fair value through other comprehensive income on June 30,2018; please refer to note 3(a), 6(b) and (c).

For credit risk and market risk; please refer to note 6(x).

As of December 31 and June 30, 2017, the available-for-sale financial assets of theConsolidated Company had been pledged as collateral; please refer to note 6(x).

(e) Notes receivable and accounts receivable

June 30,2018

December 31,2017

June 30,2017

Notes receivable $ 13,141,412 12,186,059 9,096,704

Accounts receivable 47,324,826 44,314,368 40,159,905

Overdue receivables 35,311 38,772 45,687

Allowance for doubtful receivables (446,423) (418,824) (445,316)

$ 60,055,126 56,120,375 48,856,980

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 June 30, 2018. To measure theexpected credit losses, trade receivables have been grouped based on shared credit riskcharacteristics and the days past due, as well as incorporated forward looking information, includingmacroeconomic and relevant industry information. The loss allowance provision as of June 30, 2018amounted to 446,423, expected loss rate less than 1%.

(Continued)

27



The Consolidated Company applies the expected credit losses to analysis of notes and tradereceivable as of June 30, 2018, as follows:

June 30,2018

Past due 1 to 90 days $ 276,238

Past due 90 to 180 days 73,472

Past due 180 to 360 days 61,165

Past due over 360 days 135,045

$ 545,920

As of December 31 and June 30, 2017, the Consolidated Company applies the incurred loss model toconsider the loss allowance provision of notes and trade receivable, as well as the aging analysis ofnotes and trade receivable as of December 31 and June 30, 2017, which were past due but notimpaired, as follows:

December 31,2017

June 30,2017

Past due 1 to 90 days 581,530 632,938

Past due 90 to 180 days 132,150 139,693

Past due 180 days to 360 days 136,442 225,849

Past due over 360 days 129,170 59,802

979,292 1,058,282

As of December 31 and June 30, 2017, notes and trade receivable which were overdue or under legal

proceedings amounted to, $38,772 and $45,687, respectively. Such receivables were reclassified tooverdue receivables under other assets and provided with a full impairment loss provision.

The movement in the allowance for notes and trade receivable was as follows:

2018 2017Balance on January 1, 2018 and 2017 IAS 39 $ 418,824 461,805

Adjustment on initial application of IFRS 9 -

Balance on January 1, 2018 per IFRS 9 418,824

Impairment losses recognized (reversed) 23,501 (3,311)

Foreign exchange gains/(losses) 4,098 (13,178)

Balance on June 30, 2018 and 2017 $ 446,423 445,316

(Continued)

28



The Consolidated Company signed without-recourse factoring and financing contracts with financialinstitutions. According to these contracts, the net accounts receivable that have matured but are stilluncollected will be paid by the financial institutions, except for those affected by trade disputes. Asof June 30, 2018, and December 31, 2017 and June 30, 2017, the outstanding accounts receivablefactoring transactions between the Consolidated Company and the financial institutions were asfollows:

June 30, 2018Purchaser Factoring

BalanceAdvancedAmount

FactoringLine

Gold Circuit Electornics, ltd E. Sun Bank $ 40,902 - 100,000

December 31, 2017Purchaser Factoring


FactoringLine


June 30, 2017Purchaser Factoring


FactoringLine


(f) Other receivables

June 30,2018

December 31,2017

June 30,2017

Other accounts receivable—other $ 19,740,591 2,168,987 16,878,823

Other accounts receivable—loans toassociates

14,456,442 14,347,741 15,656,925

Less: Loss allowance - - -

Total $ 34,197,033 16,516,728 32,535,748

(Continued)

29



(g) Inventories, net

The components of inventories were as follows:

June 30,2018

December 31,2017

June 30,2017

Finished goods $ 12,038,582 11,493,525 12,489,745

Work in process 10,757,900 9,597,819 9,275,473

Machinery and accessories in process 4,746,673 4,126,753 3,079,992

Raw materials 12,200,421 12,419,521 11,492,995

Supplies 856,720 747,586 665,837

Consigned-out raw materials 1,262,077 236,578 209,542

Consigned-out finished goods 30,150 11,424 15,931

Goods in transit 1,347,732 2,097,932 712,288

Total $ 43,240,255 40,731,138 37,941,803

For the six-month period ended June 30, 2018 and 2017, cost of sales recognized in consolidated

statement of comprehensive income amounted to $141,131,858 and $122,494,111, respectively.

The revaluation inventory to net realizable value as of June 30, 2018 and 2017, resulted in a loss oninventory revaluation of $112,760, $65,291, $105,304 and $8,529 for the three-month and six-monthperiods ended June 30, 2018 and 2017, which was debited to cost of goods sold.

None of the inventory was pledged as collateral as of June 30, 2018, December 31, 2017 and June30, 2017.

(h) Investments accounted for using equity method

The components of the investments accounted for using equity method were as follows:

June 30,2018

December 31,2017

June 30,2017

Associates $ 162,799,057 158,170,613 138,706,125

Jointly ventures 509,728 477,939 484,571

$ 163,308,785 158,648,552 139,190,696

(Continued)

30



(i) Associates

The Consolidated Company’s share of net income (loss) of associates were as follows:

For the three months endedJune 30

For the six months endedJune 30

2018 2017 2018 2017The Consolidated

Company’s share ofnet income ofassociates $ 9,616,094 5,237,545 16,043,822 11,207,691

1) The unrealized translation gain or loss arising from the investment in foreign entities,which was determined on exchange rates as of June 30, 2018, December 31, 2017 andJune 30, 2017 was recognized in comprehensive income.

2) The unrealized sales profits from downstream transactions with investees under theequity method are treated as deductions from gross income. The realized sales profitsfrom downstream sales are added to gross income. Details of these transactions aredisclosed in note 7.

3) The Consolidated Company, which invested in “Formosa Automobile Sales Corporation”(originally was Formosa Automobile Corporation), an investee accounted for using the

equity method, recognized gains of $9,573, $13,945, $21,990 and $19,198 from thisinvestment for the six-month and three-month periods ended June 30, 2018 and 2017,respectively. As of June 30, 2018, December 31, 2017 and June 30, 2017, theConsolidated Company’s cumulative loss from this investment had already exceeded the

book value of the investment by $7,342, $29,473 and $47,452, respectively.

As the Consolidated Company intends to support this investee companies, theinvestments in this investees were offset against related accounts receivable-relatedparties. As the balances of accounts receivable-related parties from “ FormosaAutomobile Corporation” were $0 as of June 30, 2018, December 31, 2017 and June 30,2017, such offset resulted in credit balances to the investments in this investees of$7,342, $29,473 and $47,452, respectively, which were reclassified to non-current otherliabilities.

4) Aggregate information of associates that were not individually material:

June 30,2018

December 31,2017

June 30,2017

The carrying value of associatesthat were not individuallymaterial $ 162,799,057 158,170,613 138,706,125

(Continued)

31





2018 2017 2018 2017Attributable to the

ConsolidatedCompany:

Net Income $ 9,616,094 5,237,545 16,043,822 11,207,691

Other comprehensiveincome 1,231,472 186,260 2,442,456 1,928,210

Total comprehensiveincome $ 10,847,566 5,423,805 18,486,278 13,135,901

(ii) Joint ventures

The Consolidated Company’s share of net income of joint venture were as follows:



2018 2017 2018 2017The ConsolidatedCompany’s share of netincome of joint ventures

$ 11,355 19,976 23,892 39,608

Aggregate information of joint ventures that were not individually material:

June 30,2018

December 31,2017

June 30,2017

The carrying value of joint venturesthat were not individually material $ 509,728 477,939 484,571



2018 2017 2018 2017Attributable to the

ConsolidatedCompany:

Net income $ 11,355 19,976 23,892 39,608

Other comprehensiveincome - - - -

Total comprehensiveincome $ 11,355 19,976 23,892 39,608

(iii) Collateral

Please refer to note 8 for investments accounted for using equity method which were pledgedto banks or courts as collateral to secure the Consolidated Company’s bank loans and lawsuitsas of June 30, 2018, December 31, 2017 and June 30, 2017.

(Continued)

32



(iv) The unreviewed financial statements of investments accounted for using equity method

Except for those of Nan Ya Technology Corporation, Mai-Liao Power Corporation, FormosaPetrochemical Corporation, Nan Ya Kyowa plastics (Nantong) Corporation and Nan YaPlastics (Zhengzhou) Corporation, the shares of profit or loss and the other comprehensiveincome of those investments were calculated based on the financial statements that have notbeen reviewed.

(i) Property, Plant and Equipment

The cost, depreciation, and impairment of property, plant and equipment of the ConsolidatedCompany for the six-month period ended June 30, 2018 and 2017 were as follows:

LandBuilding andconstruction

Machineryand

equipmentTransportation

equipmentOther

facilitiesConstructionin progress Total

Cost or deemed cost:

　Balance on January 1, 2018 $ 9,870,462 61,875,380 339,296,466 1,555,915 12,091,506 13,476,233 438,165,962

　Additions 8,780 238 682,551 7,758 92,362 5,772,431 6,564,120

　Disposals (685) (75,183) (1,616,325) (24,598) (102,978) (8,407) (1,828,176)

　Reclassification 20 131,011 3,939,516 11,126 255,944 (2,666,269) 1,671,348

　Effect of exchange rate changes 1,456 343,271 1,740,325 6,924 41,098 243,822 2,376,896

　Balance on June 30, 2018 $ 9,880,033 62,274,717 344,042,533 1,557,125 12,377,932 16,817,810 446,950,150

　Balance on January 1, 2017 $ 9,871,616 61,776,017 340,269,689 1,563,481 12,073,648 12,000,648 437,555,099

　Additions - 19,940 509,713 15,425 152,288 4,444,974 5,142,340

　Disposals - (3,425) (1,764,979) (17,632) (130,255) (17,546) (1,933,837)

Reclassification - 164,943 3,214,431 14,469 144,764 (2,520,061) 1,018,546

　Effect of exchange rate changes (3,392) (1,124,335) (5,582,906) (21,305) (156,540) (243,895) (7,132,373)

　Balance on June 30, 2017 $ 9,868,224 60,833,140 336,645,948 1,554,438 12,083,905 13,664,120 434,649,775

Depreciation and impairment loss:

　Balance on January 1, 2018 $ - 33,094,723 261,429,163 1,372,432 9,367,746 - 305,264,064

　Depreciation for the period - 1,043,287 6,805,996 23,201 279,913 - 8,152,397

　Reversal of impairment - - (5,378) - - - (5,378)

　Disposals - (71,401) (1,557,113) (23,327) (101,952) - (1,753,793)

　Reclassification - - (4,808) - (663) - (5,471)

　Effect of exchange rate changes - 167,079 1,285,001 5,659 32,050 - 1,489,789

　Balance on June 30, 2018 $ - 34,233,688 267,952,861 1,377,965 9,577,094 - 313,141,608

　Balance on January 1, 2017 $ - 31,518,303 255,594,785 1,381,323 9,336,230 - 297,830,641

　Depreciation for the period - 1,015,001 6,709,915 22,432 263,995 - 8,011,343

　Reversal of impairment - - (84,425) (8) (2,446) - (86,879)

　Disposals - (409) (1,548,210) (17,391) (107,908) - (1,673,918)

　Reclassification - 2 34,364 614 (35,080) - (100)

　Effect of exchange rate changes - (511,338) (3,827,521) (17,296) (117,011) - (4,473,166)

　Balance on June 30, 2017 $ - 32,021,559 256,878,908 1,369,674 9,337,780 - 299,607,921

Carrying amounts:

　Balance on January 1, 2018 $ 9,870,462 28,780,657 77,867,303 183,483 2,723,760 13,476,233 132,901,898

　Balance on June 30, 2018 $ 9,880,033 28,041,029 76,089,672 179,160 2,800,838 16,817,810 133,808,542

　Balance on June 30, 2017 $ 9,868,224 28,811,581 79,767,040 184,764 2,746,125 13,664,120 135,041,854

(Continued)

33



(i) Please refer to note 8 for the property, plant and equipment pledged to secure bank loans as ofJune 30, 2018, December 31, 2017 and June 30, 2017.

(ii) For the three-month and six-month periods ended June 30, 2018 and 2017, the capitalizedinterest on borrowings for the purchase of the property, plant and equipment of the

Consolidated Company amounted to $15,338, $22,769, $31,993 and $44,752, respectively. Thecapitalized interest rate ranged from 1.4980% to 2.2793% and 1.562% to 2.284% for the six-months ended June 30, 2018 and 2017, respectively.

(j) Intangible assets

The cost, amortization and impairment of the intangible assets of the Consolidated Company for thesix months ended June 30, 2018 and 2017 were as follows:

TrademarkCosts :

　Balance at June 30, 2018 (as same as balance at January 1, 2018) $ 2,897,172

　Balance at June 30, 2017 (as same as balance at January 1, 2017) $ 2,897,172

Accumulated amortization and impairment losses :

　Balance at January 1, 2018 $ 217,287

　Amortization for the year 96,573

　Balance at June 30, 2018 $ 313,860

　Balance at January 1, 2017 $ 24,143

　Amortization for the year 96,572

　Balance at June 30, 2017 $ 120,715

Carrying value：

　Balance at June 30, 2018 $ 2,583,312

　Balance at January 1, 2018 $ 2,679,885

Balance at June 30, 2017 $ 2,776,457

The amortization expense relating to the intangible assets of the Consolidated Company for the six-months ended June 30, 2018 and 2017 was recognized in the administrative expenses in thestatements of comprehensive income.

(Continued)

34



(k) Short-term notes and bills payable

June 30,2018

December 31,2017

June 30,2017

Short-term notes and bills payable $ 4,800,000 8,000,000 8,000,000

Discount on short-term notes and billspayable (523) (1,222) (854)

Total $ 4,799,477 7,998,778 7,999,146

Interest rate 0.36%~0.45% 0.36%~0.45% 0.34%~0.73%

(l) Short-term borrowings

June 30,2018

December 31,2017

June 30,2017

Unsecured short-term borrowings $ 17,674,381 9,295,583 11,782,237

Interest rate 0.55%~4.35% 0.50%~4.35% 0.65%~4.5%

The Consolidated Company were no material issues, and the amount of $8,099,977 was redeemed on

short term borrowings for the six months ended June 30, 2017. The amount of $8,378,798 wasissued, and there were no material buyback or redemption during the six month periods ended June30, 2018. For information concerning interest expense, please refer to note 6(w), for otherinformation please refer to note 6(j) of the consolidated financial reports for the year ended 2017.

(m) Long-term debts

Long-term debts consisted of the following:

June 30, 2018Currency Interest rate Expiration Amount

Secured long-term debts TWD 1.6316% 2018~2021 $ 4,000,000

Unsecured long-term debts TWD 1.00%~1.09% 2019~2020 6,000,000

Unsecured long-term debts USD 1.43%~3.38% 2018 9,749,946

Unsecured long-term debts CNY 4.75% 2020 965,092

Long-term notes payable NTD 0.58%~0.89% 2019~2020 4,996,164

Current portion (15,883,279)

Total $ 9,827,923

(Continued)

35



December 31, 2017Currency Interest rate Expiration Amount

Secured long-term debts TWD 1.2180%~1.6316% 2020~2021 $ 4,766,666


Unsecured long-term debts USD 1.36%~2.3826% 2018 10,128,451

Unsecured long-term debts CNY 4.75% 2020 956,316

Long-term notes payable NTD 0.58%~0.89% 2019~2020 4,998,418

Current portion (12,661,784)

Total $ 15,488,067

June 30, 2017Currency Interest rate Expiration Amount

Secured long-term debts TWD 1.2182%~1.6316% 2017~2021 $ 5,433,333


Unsecured long-term debts USD 1.36%~2.2793% 2017~2020 11,316,197

Current portion NTD (2,977,194)

Total $ 18,029,479

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 $1,200,000 and $3,000,000 on long termloans for the six months ended June 30, 2018 and 2017, respectively. The amounts of

$3,636,395 and $11,132,052 were redeemed for the six months ended June 30, 2018 and 2017,respectively. For information on interest expense, please refer to note 6(w). For otherinformation, please refer to note 6(k) of the consolidated financial reports for the year ended2017.

(ii) Pledged assets for bank loans

Refer to note 8 for information on the Consolidated Company’s assets pledged to secure loans.

(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 asyndicated long-term mortgage loan agreement with Bank of Taiwan, the lead bank of thesyndicated loan, and other banks on November 14, 2013. The key terms and conditions of theloan agreement are as follows:

1) Credit line: NT$6,000,000

2) Interest rate: as settled with each participating bank.

3) Period: 7 years (including a 3-year grace period)

(Continued)

36



4) Collateral: the acquired land financed by the loan.

5) The financial covenants under this loan agreement include the requirement to maintaincertain financial ratios based on the audited annual financial reports. Failure to complywith these financial covenants may cause the syndicated banks to terminate the creditline or declare the unpaid principal and interest under the loan agreement to beimmediately due and payable. These financial ratios are as follows:

a) Current Ratio (total current assets divided by total current liabilities): not less than100%

b) Leverage Ratio (total liabilities plus contingent liabilities to tangible net worth):not higher than 150%

As of June 30, 2018, NT$6,000,000 of the credit line had been drawn.

(n) Unsecured bonds payable

June 30,2018

December 31,2017

June 30,2017

Domestic unsecured nonconvertible corporatebonds

$ 54,200,000 54,200,000 52,500,000

Foreign unsecured nonconvertible corporatebonds

1,830,386 1,791,254 3,652,548

Costs of issuing bonds (59,495) (67,553) (61,198)

Current portion (9,127,204) (7,887,079) (9,622,678)

Total $ 46,843,687 48,036,622 46,468,672

The terms of domestic corporate bonds as of June 30, 2018 were as follows:

The first domesticunsecured

nonconvertiblecorporate bond

The second domesticunsecured


The third domesticunsecured






in 2012 in 2012 in 2012 in 2013 in 2013

Issued amount NT$6,800,000 NT$5,200,000 NT$6,000,000 NT$9,600,000 NT$10,400,000

Balance, end of year 1,299,528 2,798,807 5,997,817 4,198,375 10,384,954

Current portion 649,764 1,399,404 1,199,563 2,299,110 -

Issuance date July 4, 2012 September 7, 2012 February 25, 2013 August 5, 2013 December 18, 2013

Issuance period 5 years and 7 years 5 years and 7 years 7 years and 10 years 4 years, 5 years and 7years

10 years and 12 years

Coupon rate 1.36% and 1.45% 1.25% and 1.37% 1.36% and 1.50% 1.40%, 1.45% and1.55%

1.98% and 2.08%

Interest payment date July 4 September 7 February 25 August 5 December 18

Repayment method Payable in 2 equalinstallments for eachcoupon rate in2016~2017 and2018~2019,respectively.

Payable in 2 equalinstallments for eachcoupon rate in2016~2017 and2018~2019,respectively.

Payable in 2 equalinstallments for eachcoupon rate in2018~2019 and2021~2022,respectively

Payable in 2 equalinstallments for eachcoupon rate in2016~2017,2017~2018 and2019~2020,respectively


(Continued)

37











in 2014 in 2014 in 2016 in 2017

Issued amount NT$10,000,000 NT$5,000,000 NT$5,000,000 NT$9,500,000

Balance, end of year 9,981,465 4,997,078 4,994,715 9,487,766

Current portion - 1,748,977 - -

Issuance date June 24, 2014 November 11, 2014 August 16, 2016 July 10, 2017

Issuance period 14 years and 15 years 5 years and 10 years 5 years 5 years and 7 years

Coupon rate 2.04% 1.45% and 1.93% 0.68% 1.03% and 1.25%

Interest payment date June 24 November 11 August 16 July 10

Repayment method Payable in 2 equalinstallments for eachcoupon rate in 2028and 2029,respectively.


Payable in 2 equalinstallments for eachcoupon rate in 2020and 2021, respectively


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 ConsolidatedCompany to redeem the bond.

Issuer with a redemption option The bond issuer bears the right to request the holders toredeem all outstanding bonds if the issuer needs to payextra tax due to change in laws and regulations.

(o) Employee Benefits

(i) Defined benefit plans

Management believes that there was no material volatility of the market, no materialreimbursement and settlement or other material one-time events since prior fiscal year. As aresult, the pension cost in the accompanying interim consolidated financial statements wasmeasured and disclosed according to the actuarial report as of December 31, 2017 and 2016.

(Continued)

38





2018 2017 2018 2017Operating costs $ 130,612 138,946 259,976 278,017

Selling expenses 6,049 6,591 12,021 13,152

Administrativeexpenses

29,012 32,938 58,142 66,013

$ 165,673 178,475 330,139 357,182

(ii) Defined contribution plan

The Labor Pension Act (“ The Act” ) prescribes a defined contribution plan. Pursuant to theAct, the Company, and its subsidiaries namely, Nan Ya PCB Corp., Wen Fung IndustrialCorp., Nan Chung Petrochemical Corp., Wellink Technology Corp. and PFG Fiber GlassCorporation have made monthly contributions equal to 6% of each employee’s monthly salaryto employees’ pension accounts.

Nan Ya Plastics Corporation, America and Nan Ya PCB (U.S.A.) Corporation adopt a DefinedContribution Plan and periodically provide contributions thereon according to local law. Thosecontributions are recognized as an expense on an accrual basis.

Subsidiaries in China are governed by China laws and regulation. Based on China laws andregulation, those companies contribute for employees’ pension benefits at rates ranging from6% to 20% of salary every month and remit those contributions to the related authority.



2018 2017 2018 2017Operating costs $ 261,308 274,663 560,269 547,111

Selling expenses 12,931 13,996 30,555 27,877

Administrativeexpenses

34,038 36,508 73,687 72,889

$ 308,277 325,167 664,511 647,877

(Continued)

39



(p) Income Tax

(i) Income tax expense

The components of income tax expense were as follows:



2018 2017 2018 2017Current income tax

expense

　Current period $ 2,301,629 1,775,684 3,357,542 2,907,952

　Adjustment for priorperiods

(42,454) 15,200 (42,454) 15,200

Deferred tax expense

　Origination andreversal oftemporarydifferences

1,193,403 715,696 2,676,922 1,523,843

　Adjustment for priorperiods

13,000 - 13,000 -

　Effect of tax ratechanges

- - (572,798) -

Total income taxexpense

$ 3,465,578 2,506,580 5,432,212 4,446,995

(i) Income tax examination and approval

The Company’s tax returns through 2016 have been examined by the ROC tax authorities.

(q) Capital and other equity

Except for the following disclosure, there was no significant change for capital and other equity forthe six months ended June 30, 2018 and 2017. For the related information, please refer to note 6(o)of the consolidated financial statements for the year ended December 31, 2017.

(i) Capital surplus

The components of capital surplus were as follows:

June 30,2018

December 31,2017

June 30,2017

Paid-in capital from conversion ofcorporate bond to common stock inexcess of par value

$ 8,997,136 8,997,136 8,997,136

Gains on acquisition of Taiwan PlasticizerCorporation

74,474 74,474 74,474

Other 17,661,063 17,086,862 14,289,889

Total $ 26,732,673 26,158,472 23,361,499

(Continued)

40



(ii) Retained earnings

1) Special reserve

As the Company opted to avail of the exemptions allowed under IFRS 1“ First-timeAdoption of International Financial Reporting Standards” during the Company’ s first-time adoption of the IFRSs as endorsed by the FSC, unrealized revaluation increments

and cumulative translation adjustments(gains) of $6,277,052, which were previouslyrecognized in shareholders’ equity were reclassified to retained earnings. In accordancewith Regulatory Permit No. 1010012865 as issued by the FSC on April 6, 2012, a specialreserve is appropriated from retained earnings for aforementioned reclassification. Inaddition, during the use, disposal or reclassifications of relevant assets, these specialreserves can be reverted to distributable earnings proportionately. As the amountappropriated 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 $6,131,117, $6,145,034 and $6,145,034as of June 30, 2018, December 31, 2017 and June 30, 2017.

Pursuant to the Regulatory Permit mentioned above, the Company is also required to setaside an additional special reserve, as part of the distribution of its annual earnings, equalto the difference between the amount of above-mentioned special reserve and net debitbalance of the other components of stockholders’ equity.

2) 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 asidefor legal reserve at the rate of 10% thereof. In addition, a special reserve in accordancewith applicable laws and regulations shall also be set aside. The remainder plus theundistributed earnings of the previous years are distributed or left undistributed forbusiness purposes according to the resolution of the stockholders’ dividend distributionplan, which are initially proposed by the Board of Directors and adopted by theshareholders in the Annual Stockholders’ Meeting.

The Company belongs to a mature industry, in which the annual profit is stable. It adoptsthree kinds of dividend distribution policies, which are cash dividends, capitalization ofearnings, and capital surplus. The net earnings after deducting the legal reserve andspecial reserve may first be distributed by way of cash dividends which shall be equal toat least fifty percent of the Company’ s total dividend distribution every year. Thecapitalization of earnings and capital surplus shall not exceed fifty percent of the totaldividends.

(Continued)

41



Based on the resolutions approved by stockholders during meetings held on June 19,2018 and June 20, 2017, the distribution of the Company's earnings in 2017 and 2016,respectively, were as follows:

2017 2016Dividends per share:

Cash dividends $ 5.10 4.50

Stock dividends - -

$ 5.10 4.50

The aforementioned earnings distributions did not differ from those proposed by theboard of directors.

(iii) Other equity accounts (net of tax)


foreignfinancial

statements

Unrealizedgains

(losses) onfinancialassets at

fair valuethroughprofit or

loss

Available-for-sale

investmentCash flow

hedge

Gains(losses) onhedging

instruments Total

Balance, January 1, 2018 $ (6,026,197) - 47,691,196 7,729 - 41,672,728

Adjustments due to new standard - 60,594,455 (47,691,196) (7,729) 7,729 12,903,259

Adjusted balance, January 1, 2018 (6,026,197) 60,594,455 - - 7,729 54,575,987

Exchange differences arising on translation offoreign operations

2,079,026 - - - - 2,079,026

Share of exchange differences of associates / jointventures under equity method

219,265 - - - - 219,265

Unrealized gains (losses) on financial assets at fairvalue through other comprehensive income

- 7,546,278 - - - 7,546,278

Share of unrealized gains (losses) on financialassets of associates / joint ventures under equitymethod through other comprehensive income

- 2,213,922 - - - 2,213,922

Share of cash flow hedge of associates / joint ventures - - - - (10,598) (10,598)

Balance, June 30, 2018 $ (3,727,906) 70,354,655 - - (2,869) 66,623,880


foreignfinancial

statements

Unrealizedgains

(losses) onavailable-for-sale

financialassets

Cash flowhedge Total

Balance, January 1, 2017 584,042 44,067,434 41,312 44,692,788

　Exchange differences arising on translation of foreign operations (5,525,782) - - (5,525,782)

　Share of exchange differences of associates/joint ventures under equity method (859,690) - - (859,690)

　Unrealized gains (losses) on available-for-sale financial assets - 705,015 - 705,015

　Share of unrealized gains (losses) on available-for-sale financial assets of associates/joint venture under equity method - 2,812,358 - 2,812,358

　Share of cash flow hedge of associates/ joint ventures - - (24,458) (24,458)

Balance, June 30, 2017 $ (5,801,430) 47,584,807 16,854 41,800,231

(Continued)

42



(r) Customer contractual revenue

For the three months ended June 30, 2018

Plasticsindustry

Chemicalindustry

Electronicindustry

Polyesterindustry

Otherindustries Total

Main Products

PVC sheet $ 1,902,390 - - - - 1,902,390

Rigid sheet 2,238,919 - - - - 2,238,919

Pipes 1,494,078 - - - - 1,494,078

Phthalate Plasticizers - 3,755,460 - - - 3,755,460

BPA - 5,076,440 - - - 5,076,440

EG - 10,644,376 - - - 10,644,376

CCL - - 7,581,610 - - 7,581,610

Epoxy - - 7,217,793 - - 7,217,793

PCB - - 6,987,907 - - 6,987,907

Polyester Staple Fiber - - - 3,365,387 - 3,365,387

PET Resin - - - 7,633,462 - 7,633,462

DTY - - - 4,936,547 - 4,936,547

Machinery and Switchgear - - - - 1,443,428 1,443,428

Others 6,114,794 5,854,776 8,397,758 1,726,226 82,739 22,176,293

$ 11,750,181 25,331,052 30,185,068 17,661,622 1,526,167 86,454,090

For the six months ended June 30, 2018

Plasticsindustry

Chemicalindustry

Electronicindustry

Polyesterindustry

Otherindustries Total

Main Products

PVC sheet $ 3,795,855 - - - - 3,795,855

Rigid sheet 4,277,613 - - - - 4,277,613

Pipes 2,860,859 - - - - 2,860,859

Phthalate Plasticizers - 6,596,279 - - - 6,596,279

BPA - 10,153,704 - - - 10,153,704

EG - 22,388,258 - - - 22,388,258

CCL - - 15,203,720 - - 15,203,720

Epoxy - - 13,188,441 - - 13,188,441

PCB - - 13,163,512 - - 13,163,512

Polyester Staple Fiber - - - 6,493,752 - 6,493,752

PET Resin - - - 14,837,586 - 14,837,586

DTY - - - 9,626,016 - 9,626,016

Machinery and Switchgear - - - - 2,640,299 2,640,299

Others 11,838,812 11,278,085 16,922,914 3,250,104 158,272 43,448,187

$ 22,773,139 50,416,326 58,478,587 34,207,458 2,798,571 168,674,081

Please refer to note 6 (s) for the total revenue for three-month and six-month periods ended June 30,2017.

(Continued)

43



(s) Revenue

For the three monthsended June 30, 2017

For the six monthsended June 30, 2017

Sale of goods $ 73,054,840 144,809,995

Rendering of services 11,301 38,818

Other operating income 1,039,431 1,932,912

$ 74,105,572 146,781,725

(t) Share-based payment

The Consolidated Company's subsidiary, Nan Ya PCB Corporation, believes that there were nosignificant changes on share-based payment for the six months ended June 30, 2018 and 2017. Forthe related information, please refer to note 6(p) of the consolidated financial statements for the yearended December 31, 2017.

The units of employee stock option issued by Nan Ya PCB Corporation on June 23, 2009 and March25, 2010 had expired on June 22, 2017 and March 24, 2018, respectively.

(u) Earnings Per Share



2018 2017 2018 2017

Net income attributable to theCompany $ 16,669,733 9,030,791 30,134,392 19,898,009

Number of weighted averageoutstanding shares 7,930,822 7,930,822 7,930,822 7,930,822

$ 2.10 1.14 3.80 2.51

(v) Employee compensation

According to the specifications of the Company’s article, 0.05% to 0.5% of the earnings before taxand bonuses should be appropriated to employees as bonuses. However, certain amounts of theearnings should be reserved if there is an accumulated loss from the operations in the previous yearsin advance of the appropriation of the employee bonuses.

For the three-month and six-month periods ended June 30, 2018 and 2017 , the Company estimated

its employee remuneration amounted to $19,066, $10,469, $33,420, and $22,157, respectively,which were calculated based on the Company's profit before tax without the employee compensationof each period, multiplied by the percentage of remuneration to employees as specified in theCompany's articles. These remunerations were expensed under operating costs or operating expensesduring 2018 and 2017. If there would be any changes after the reporting date, the changes shall beaccounted for as changes in accounting estimates and recognized as profit or loss in the followingyear.

(Continued)

44



The Company recognized its employee remuneration amounted to $58,908 in 2017 and to $51,567 in2016. There was no difference from the actual distribution. The information is available on theMarket Observation Post System website.

(w) Non-operating income and expenses

(i) Other income

The components of other income were as follows:



2018 2017 2018 2017Interest income $ 276,301 330,160 481,115 568,001

Dividend income 35,995 18,065 35,995 18,065

Other income 473,151 255,894 910,021 629,165

$ 785,447 604,119 1,427,131 1,215,231

(ii) Other gains and losses

The components of other gains and losses were as follows:



2018 2017 2018 2017Foreign exchange gain

(loss) $ 1,165,819 321,091 794,587 (1,807,637)

Net loss on financialassets at fair valuethrough profit or loss 225,137 - 137,165 -

Impairment loss onfinancial assets - - - (1,023)

Loss on disposal ofproperty, plant andequipment (23,087) (13,393) (28,949) (28,847)

Reversal of impairment/Impairment loss ofproperty, plant andequipment, and non-financial instruments 236 46,286 5,378 86,879

Others (63,663) 96,715 (101,594) 54,315

$ 1,304,442 450,699 806,587 (1,696,313)

(Continued)

45



(iii) Finance costs

The components of finance costs were as follows:



2018 2017 2018 2017Interest expense $ 474,399 524,773 906,091 968,020

Less: Capitalization ofinterest

(15,338) (22,769) (31,993) (44,752)

$ 459,061 502,004 874,098 923,268

(x) Financial Instruments

Except for the contention mentioned below, there was no significant change in the fair value of theConsolidated Company’s financial instruments and degree of exposure to credit risk, liquidity riskand market risk arising from financial instruments. For the related information, please refer to note6(u) of the consolidated financial statements for the year ended December 31, 2017.

(i) Currency risk

1) Exposure to foreign currency risk

The Consolidated Company’ s foreign currency denominated financial assets andliabilities exposed to exchange rate risk were as follows:

June 30, 2018Foreign Currency Exchange Rate TWD

Financial assets

　Monetary items

　USD $ 1,305,830 30.5000 39,827,815

　JPY 329,375 0.2765 91,072

EUR 3,278 35.3441 115,858

HKD 9,775 3.9103 38,223

　CNY 6,050 4.6099 27,890

　Non-monetary items

　USD 670,930 30.5000 20,463,365

　CNY 52,341 4.6099 241,287

IDR 120,599,474 0.0022 265,319

VND 6,226,923,371 0.0013 8,095,000

(Continued)

46




Financial liabilities

　Monetary items

　USD 423,821 30.5000 12,926,541

　JPY 714,528 0.2765 197,567

　EUR 2,581 35.3441 91,223

CNY 241 4.6099 1,111

December 31, 2017Foreign Currency Exchange Rate TWD

Financial assets

　Monetary items

　USD $ 999,623 29.8480 29,836,747

　JPY 118,876 0.2641 31,395

EUR 1,836 35.6081 65,376

HKD 6,989 3.8267 26,745

　CNY 1,324 4.5679 6,048


　USD 584,711 29.8480 17,452,454

CNY 50,062 4.5679 228,678

IDR 114,274,967 0.0022 251,405

VND 5,983,703,009 0.0013 7,778,814


　Monetary items

　USD 442,738 29.8480 13,214,844

　JPY 824,118 0.2641 217,650

　EUR 2,317 35.6081 82,504

CNY 2 4.5679 9


Financial assets

　Monetary items

　USD $ 1,419,737 30.4360 43,211,115

　JPY 431,509 0.2708 116,853

EUR 1,343 34.7536 46,674

HKD 8,104 3.9021 31,623

　CNY 1,457 4.4929 6,546

(Continued)

47





　USD $ 647,841 30.4360 19,717,689

CNY 51,639 4.4929 232,009

IDR 105,908,750 0.0023 243,590

VND 6,451,956,339 0.0013 8,387,543


　Monetary items

　USD $ 581,333 30.4360 17,693,451

　JPY 1,247,268 0.2708 337,760

　EUR 8,129 34.7536 282,512

CNY 136 4.4929 611

2) Sensitivity analysis

The Consolidated Company’ s exposure to exchange rate risk arises from the foreigncurrency exchange fluctuations on cash and cash equivalents, accounts receivable, otherreceivables, loans and borrowings, accounts payable and other payables which aredenominated in different foreign currencies. The overall effects to net income before taxfor the six months ended June 30, 2018 and 2017 assuming the TWD depreciated orappreciated by 1% against the USD, JPY, EUR, HKD and CNY as of June 30, 2018 and2017 were as follows:


2018 2017Appreciation in value of 1% $ (268,830) (251,025)

Depreciation in value of 1% 268,830 251,025

This analysis is performed on the same basis assuming that all other variables remainconstant and ignoring any impact of forecasted sales and purchases.

3) Foreign exchange gain and loss on monetary items

Due to the variety of functional currencies, the Consolidated Company disclosed itsaggregated foreign exchange gains (losses); the Consolidated Company’ s foreignexchange gains and losses, including realized and unrealized, for the six months ended

June 30, 2018 and 2017 were the net exchange losses of $794,587 and $(1,807,637),respectively.

(Continued)

48



(ii) Fair value of financial instruments

1) The categories and fair value of financial instruments

The carrying amount and fair value of the Consolidated Company’s financial assets andliabilities, including the information on fair value hierarchy as stated below. However,except as described in the following paragraphs, for financial instruments not measuredat fair value whose carrying amount is reasonably close to the fair value, and for equityinvestments that has no quoted prices in the active markets and whose fair value cannotbe reliably measured, disclosure of fair value information is not required :

June 30, 2018Fair Value

Carryingamount Level 1 Level 2 Level 3 Total

Financial assets at fair valuethrough profit or loss

Financial assets designated asat fair value through profitor loss $ 4,842,074 905,447 3,936,627 - 4,842,074

Financial assets at fair valuethrough other comprehensiveincome

Stocks in listed companies $ 50,237,362 50,237,362 - - 50,237,362

Unquoted equity instruments 33,021,575 - - 33,021,575 33,021,575

Bond investments and others 1,131,514 - - 1,131,514 1,131,514

　 Subtotal $ 84,390,451 50,237,362 - 34,153,089 84,390,451

Financial assets measured atamortized cost

Cash and cash equivalent $ 51,617,946 - - - -

Notes and accounts receivable(including related parties) 60,055,126 - - - -

　　Subtotal $ 111,673,072 - - - -

Financial liabilities at amortizedcost

Short-term borrowing $ 17,674,381 17,674,381 - - 17,674,381

Short-term notes and billspayable 4,799,477 4,799,477 - - 4,799,477

Notes and accounts payable(including related parties) 18,866,688 - - - -

Bonds payable 55,970,891 55,970,891 - - 55,970,891

Long-term borrowing 20,715,038 20,715,038 - - 20,715,038

Long-term notes payable 4,996,164 4,996,164 - - 4,996,164

　　Subtotal $ 123,022,639 104,155,951 - - 104,155,951

(Continued)

49



December 31, 2017Fair Value


Available-for-sale financialassets


Domestic and foreign funds 5,477,817 903,549 4,574,268 - 5,477,817

Bonds and others 1,128,219 - - 1,128,219 1,128,219

　 Subtotal $ 50,175,639 44,473,152 4,574,268 1,128,219 50,175,639

Loans and receivables



　　Subtotal $ 100,424,454 - - - -





Bonds payable 55,923,701 55,923,701 - - 55,923,701


Long-term notes payable 4,998,418 4,998,418 - - 4,998,418

　　Subtotal $ 121,343,755 101,367,913 - - 101,367,913



Available-for-sale financialassets


Domestic and foreign funds 5,529,078 901,763 4,627,315 - 5,529,078

Bond investments and others 1,150,445 - - 1,150,445 1,150,445

　　Subtotal $ 47,426,470 41,648,710 4,627,315 1,150,445 47,426,470

Loans and receivables



　　Subtotal $ 101,040,109 - - - -

(Continued)

50









Bonds payable 56,091,350 56,091,350 - - 56,091,350


　　Subtotal $ 114,228,264 96,879,406 - - 96,879,406

2) Valuation techniques for financial instruments not measured at fair value

The Consolidated Company’ s valuation techniques and assumptions used for financialinstruments not measured at fair value are as follows:

a) Financial assets measured at amortized cost (held-to-maturity financial assets)

If the quoted prices in active markets are available, the market price is establishedas the fair value. However, if quoted prices in active markets are not available, theestimated valuation or prices used by competitors are adopted.

b) Financial assets measured at amortized cost (debt investment that has no activemarkets) and financial liabilities measured at amortized cost

If there is quoted price generated by transactions, the recent transaction price andquoted price data is used as the basis for fair value measurement. However, if noquoted prices are available, the discounted cash flows are used to estimate fairvalues.

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 onthe quoted market prices. Quoted prices are the prices announced by the main stockexchanges and over-the-counter markets. They are the basis for recognizing the fairvalue of the listed and over-the-counter equity instruments.

Financial instrument possesses a quoted price in the active markets if the tradingprices fairly represent the frequent and orderly transactions for financialinstrument, 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 theaforementioned requirements have not been met. Large or significantly increasinggap between the purchase and the exit prices of a financial instrument, or low tradevolume, are general indicators of an inactive market.

(Continued)

51



If the financial instrument of the Consolidated Company possesses an activemarket, its fair value should be recognized according to different categories andcharacteristics as follows:

For listed and over-the-counter stocks with standard terms and are publicly tradedin 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 withfair values provided by using the valuation techniques via market approach or thediscounted cash flow method or other available methods.

If the financial instruments held by the Consolidated Company are not traded inactive markets, the valuation of their fair value is categorized as follows:

Bond investments that has no quoted prices: Fair value is measured with theincome approach by applying the discounted cash flow method that convert futurecash flow amounts to a single current amount on the basis of the value indicated bycurrent 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 six-monthperiod ended June 30, 2018 and 2017.

5) Movement of financial instruments grouped into level 3

Fair value through othercomprehensive income (available-for-

sale financial assets)Unquoted equity

instrumentsBond investment

and othersJanuary 1, 2018 $ 30,050,756 1,107,325

Total gains and losses recognized:

In other comprehensive income 878,519 -

Purchased 1,676,070 -

Capital reduction (1,972) -

Effect of exchange rate changes 418,202 24,189

June 30, 2018 $ 33,021,575 1,131,514

January 1, 2017 $ - 1,220,108

Total gains and losses recognized:

Effect of exchange rate changes - (69,663)

June 30, 2017 $ - 1,150,445

(Continued)

52



(y) Financial risk management

There were no significant changes in the Consolidated Company's financial risk management andpolicies as disclosed in Note 6(v) of the consolidated financial statements for the year endedDecember 31, 2017.

(z) Capital Management

Management believes that the objectives, policies and processes of capital management of theConsolidated Company has been applied consistently with those described in the consolidatedfinancial statements for the year ended December 31, 2017. Also, management believes that therewere no significant changes in the Consolidated Company's capital management information asdisclosed for the year ended December 31, 2017. Please refer to Note 6(w) of the consolidatedfinancial statements for the year ended December 31, 2017 for further details.

(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)

Name of related partyRelationship with the

Consolidated CompanyFormosa 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 Automobile 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

(Continued)

53



Name of related partyRelationship with the

Consolidated CompanyFormosa 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

(c) Significant related-party transactions

(i) Sales to related parties

Significant sales to related parties were as follows:



2018 2017 2018 2017Associates and joint ventures

$ 1,947,451 1,688,195 3,698,354 3,077,736

Other related parties 3,837,341 3,550,831 8,274,978 7,065,682

$ 5,784,792 5,239,026 11,973,332 10,143,418

(Continued)

54



The receivables from related parties were as follows:

June 30,2018

December 31,2017

June 30,2017

Associates and joint ventures $ 1,097,240 859,276 1,458,818

Other related parties 1,431,649 1,673,125 1,200,083

$ 2,528,889 2,532,401 2,658,901

The selling prices and collection terms of sales to related parties are not significantly differentfrom those of third-party customers. The accounts receivable arising from sales of machineryand equipment, and machine parts are collected after the delivery inspection, and the accountsreceivable arising from sales of other products are collected on the 30th day of the followingmonth.

The Company sells mainly machinery and provides engineering services to related parties inChina and Vietnam. Payment is made after the test run of machinery sold. Also, it sells otherproducts to these related parties. Selling prices and collection terms of other products sold tothese associates are not materially different from those to non-related general buyers. Paymentsare collected 30 to 180 days after shipping of these other products.

(ii) Purchase from related parties

Significant purchases from related parties were as follows:



2018 2017 2018 2017Associates and joint

ventures

Formosa PetrochemicalCorporation

$ 11,741,099 10,540,865 24,083,063 21,682,342

Other associates andjoint ventures

62,468 7,200 72,275 23,348

Other related parties

Formosa Chemicalsand FiberCorporation

8,853,094 6,441,799 17,312,235 13,781,733

Other related parties 5,889,234 4,326,881 12,303,706 9,623,843

$ 26,545,895 21,316,745 53,771,279 45,111,266

(Continued)

55



The payables to related parties were as follows:

June 30,2018

December 31,2017

June 30,2017

Associates and joint ventures

Formosa Petrochemical Corporation $ 3,624,022 3,884,307 3,328,575

Other associates and joint ventures - - 389


Formosa Chemicals and FiberCorporation

3,105,363 3,299,791 2,199,646

Other related parties 2,429,436 2,538,691 1,923,897

$ 9,158,821 9,722,789 7,452,507

Purchase prices and payment terms of purchases from related parties are not materiallydifferent from those of non-related general suppliers. Payment shall be paid within 30 to 180days of the month following the month of purchase with checks which are due and payableimmediately.

(iii) Unrealized sales profit

Significant unrealized (realized) profits from sales to related parties for the three-month andsix-month periods ended June 30, 2018 and 2017 were as follows:

For the three months ended June 30, 2018 For the six months ended June 30, 2018

Investee

Unrealized salesprofit at

beginning ofperiod

(Realized)Unrealized sales

profits

Unrealized salesprofit at end of

period


beginning ofperiod


profits

Unrealizedsales profit atend of period

Associates and joint ventures $ 89,616 (11,639) 77,977 102,249 (24,272) 77,977

For the three months ended June 30, 2018 For the six months ended June 30, 2017

Investee


beginning ofperiod


profits

Unrealized salesprofit at end of

period


beginning ofperiod


profits

Unrealizedsales profit atend of period

Associates and joint ventures $ 130,022 (13,579) 116,443 135,038 (18,595) 116,443

(iv) Construction

The Consolidated Company contracted with associates to construct and expand theConsolidated Company’s factory. The construction costs were as follows:



2018 2017 2018 2017Associates and jointventures

Formosa Heavy IndustriesCorporation

$ 219,441 34,368 655,339 108,825

(Continued)

56



The payables to related parties were as follows:

June 30,2018

December 31,2017

June 30,2017


Formosa Heavy IndustriesCorporation

$ 412,414 116 5,585

(v) Utility expenses

Part of the utilities of the Company's Lin-Yuan plant and all of the utilities of the ConsolidatedCompany’s Ren-Wu plant, including power, water and steam, are supplied by or paid on behalfof the Consolidated Company by the utility plants of Formosa Plastics Corporation. Theutilities of the Consolidated Company’s Mai Liao plant, including power, water and steam, aresupplied by Formosa Petrochemical Corporation. The expenses for utilities were as follows:



2018 2017 2018 2017Associates and joint

ventures

FormosaPetrochemicalCorporation

$ 1,829,771 1,898,721 3,746,226 3,487,285


Formosa PlasticsCorporation

27,347 27,194 51,797 50,500

$ 1,857,118 1,925,915 3,798,023 3,537,785

(vi) Loans to related parties

The loans to related parties were as follows:

Other Receivables from Related Parties

June 30,2018

December 31,2017

June 30,2017


Nanya Technology Corporation $ - - 9,800,000

Formosa Heavy Industries Corporation 2,500,000 1,000,000 1,000,000

Formosa Group (Cayman) Limited 4,259,500 4,259,500 -

Other associates and joint ventures 585,524 779,460 575,434

(Continued)

57



Other Receivables from Related Parties

June 30,2018

December 31,2017

June 30,2017


Formosa Plastics Marine Corporation $ 3,978,721 4,176,922 3,191,633

Formosa Ha Tinh (Cayman) Ltd. 3,040,500 3,040,500 -

Other related parties 92,197 1,091,359 1,089,858

$ 14,456,442 13,347,741 15,656,925

(vii) Property transactions

1) Acquisition of financial assets

FinancialStatementAccount

TransactionShares

(in thousands)Transaction

Items

For the threemonths endedJune 30, 2018

Other related parties ─ FormosaHa Tinh (Cayman) Ltd.

Non ─ currentfinancial assets atfair value throughother comprehensiveincome 56,471

Shares of stock ofFormosa Ha Tinh(Cayman) Ltd.

$ 1,676,070


TransactionShares


Items

For the threemonths endedJune 30, 2017

Associates ─ Formosa ResourcesCorporation

Investmentsaccounted for usingequity method 168,344

Shares of stock ofFormosa ResourcesCorporation $ 1,683,440


TransactionShares


Items

For the six monthsended June 30,

2018Other related parties ─ FormosaHa Tinh (Cayman) Ltd.

Non ─ currentfinancial assets atfair value throughother comprehensiveincome 56,471

Shares of stock ofFormosa Ha Tinh(Cayman) Ltd.

$ 1,676,070


TransactionShares


Items

For the six monthsended June 30,

2017Associates ─ Formosa ResourcesCorporation

Investmentsaccounted for usingequity method 168,344

Shares of stock ofFormosa ResourcesCorporation $ 1,683,440

(Continued)

58



(viii) Endorsements and guarantees

The amounts of the Consolidated Company’s endorsements and guarantees for securing relatedparties’ loans were as follows:

June 30,2018

December 31,2017

June 30,2017


Formosa Group (Cayman) Limited $ 19,062,500 21,639,800 29,522,920

Formosa Industries Corporation 5,005,309 4,898,311 4,994,806

Other associates and joint ventures 3,278,750 3,890,900 4,315,390


Formosa Ha Tinh (Cayman) Ltd. 15,795,023 15,457,372 11,760,519

$ 43,141,582 45,886,383 50,593,635

(ix) Rental

1) The rental income of the Consolidated Company from leasing its plants to its relatedparties, recognized as other income, are as follows:

For the three months ended June30

For the six months ended June30

2018 2017 2018 2017Associates and

joint ventures

Nan Ya

Technology

Corporation

$ 57,946 51,582 115,793 102,742

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 from itsrelated parties, recognized as operating costs and expenses, are as follows:

For the three months ended June 30 For the six months ended June 302018 2017 2018 2017

Associates andjoint ventures $ 3,183 3,183 6,367 6,367

Other relatedparties 22,043 18,717 42,495 41,513

$ 25,226 21,900 48,862 47,880

The related parties charged their rentals based on the local market prices, which are paiddepending on the contract periods (e.g. monthly, semi-annually or annually)

(Continued)

59



(d) Key management personnel compensation

Key management personnel compensation comprised:



2018 2017 2018 2017

Short-term employee benefits $ 28,053 26,442 54,204 50,331

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets Object Usage June 30,

2018December 31,

2017June 30,

2017

Financial asset at fair valuethrough othercomprehensive income－current－stock ofFormosa PlasticsCorporation

Others The collateral toprovisionalexecutionin litigation

$ 1,432,800 - -

Available-for-sale financialasset－current－stock ofFormosa PlasticsCorporation

Others The collateral toprovisionalexecutionin litigation - 1,257,043 1,180,627

Investment accounted forusing equity method－stock of FormosaPetrochemicalCorporation

Long-term and short-term debt

Long-term andshort-term debt

9,063,097 9,099,955 7,698,199

Land (include idle land) Long-term and short-term debt

Long-term andshort-term debt 7,529,494 7,529,494 7,529,494

Machinery and equipment Long-term and short-term debt

Long-term andshort-term debt 95,184 235,439 382,375

Total $ 18,120,575 18,121,931 16,790,695

(9) Commitments and contingencies:

June 30,2018

December 31,2017

June 30,2017

(1) Outstanding standby letter of credit $ 2,071,417 1,480,072 1,172,861

(2) Endorsements and guarantees 43,141,582 45,886,383 50,593,635

(3) Bonding guarantees by banks 25,000 25,000 31,500

(4) Letters of credit guarantees by banks 22,275 22,275 22,275

(Continued)

60



(5) Nan Ya PCB (Kunshan) Corporation, a subsidiary of Nan Ya PCB Corporation and a sub-subsidiary ofthe Company, signed a syndicated loan contract with a group of financial institutions, with Chang HwaBank as the lead bank, amounting to USD 117,330 thousand, for its construction funds commencing2012. According to the requirement of the consortium, Nan Ya PCB Corporation has to offer a letterof undertaking and commit to monitor the operations of Nan Ya PCB (Kunshan) to ensure that itcompletes its construction on schedule.

(6) Formosa Ha Tinh (Cayman) Ltd., a Company’ s investee, signed a syndicated line of credit with agroup of financial institutions amounting to USD 1,870,000 thousand for its operational needs.According to the requirement of the consortium, the Company has to offer a letter of undertakingbased on its ownership of 11.432% and commit to monitor the operations of Formosa Ha Tinh(Cayman) Ltd. to ensure that it completes its financial obligation.

(7) Litigation between the Company and DBTEL Incorporated

The Company’s client, DBTEL Inc. (DBTEL), placed several orders from the Company concerningLCD monitors since May 2003. However, in June 2004, it decided to cancel some of them, evendemanding the Company to postpone its delivery; and in some cases, it went to a certain extent as torefuse accepting the goods delivered by the Company, resulting in a stock up of both raw materials andfinished products in the Company’s warehouse amounting to USD 5,409,815 and NTD 100,846,141.In light of this matter, the Company filed a lawsuit against DBTEL to the Taiwan High Court on April6, 2006, demanding for compensation for the damage caused by DBTEL. In reply, the Courtauthorized the Company to hold certain properties of DBTEL as its collateral. However, DBTEL wasnot 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 notexceed the amounts of USD 1,246,118 and NTD 27,229,161 (both including principal and interest).Plus, the said properties that were held by the Company for collateral amounting to NTD 167,711,921should also be returned to DBTEL, with additional interest from May 3, 2011 to the return datecalculated by 5% annual interest rate. The Company considered the verdict handed down by theTaiwan High Court to be unreasonable and contradictory to its previous decision. Therefore, it filed anappeal to the Supreme Court. Currently, this case is still in progress.

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:None

(Continued)

61



(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, were asfollows:

For the three months ended June 30,

2018 2017

OperatingCosts

Operatingexpenses

Non-Operatingexpenses Total

OperatingCosts

Operatingexpenses


Employee benefit

　Salaries 5,456,117 1,426,156 - 6,882,273 5,256,102 1,426,023 - 6,682,125

　Labor and health insurance 487,987 84,914 - 572,901 470,947 84,337 - 555,284

　Pension expenses 391,920 82,030 - 473,950 413,609 90,033 - 503,642

　Remuneration of directors - 6,321 - 6,321 - 6,374 - 6,374

　Others personnel expenses 295,348 44,666 - 340,014 305,792 50,710 - 356,502

Depreciation expenses 3,908,000 137,320 6,007 4,051,327 3,786,107 198,117 5,248 3,989,472

Amortization expenses 388,307 65,809 - 454,116 520,751 64,710 - 585,461

For the six months ended June 30,

2018 2017

OperatingCosts

Operatingexpenses


OperatingCosts

Operatingexpenses


Employee benefit

　Salaries 10,880,373 2,913,681 - 13,794,054 10,363,465 2,929,929 - 13,293,394

　Labor and health insurance 1,012,526 174,988 - 1,187,514 954,154 170,941 - 1,125,095

　Pension expenses 820,245 174,405 - 994,650 825,128 179,931 - 1,005,059

　Remuneration of directors - 12,421 - 12,421 - 11,781 - 11,781

　Others personnel expenses 632,062 102,708 - 734,770 611,494 99,761 - 711,255

Depreciation expenses 7,870,781 270,556 11,060 8,152,397 7,603,126 397,722 10,495 8,011,343

Amortization expenses 839,576 137,384 - 976,960 914,484 133,004 - 1,047,488

(13) Other disclosures:

(a) Information on significant transactions:

(i) Loans to other parties: Please see attached Table 1.

(ii) Guarantees and endorsements for other parties: Please see attached Table 2.

(iii) Securities held as of June 30, 2018 (excluding investment in subsidiaries, associates and jointventures): Please see attached Table 3.

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower ofNT$300 million or 20% of the capital stock:Please see attached Table 4.

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or20% of the capital stock: Please see attached Table 5.

(Continued)

62



(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20%of the capital stock: None

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower ofNT$100 million or 20% of the capital stock: Please see attached Table 6.

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20%of the capital stock: Please see attached Table 7.

(ix) Trading in derivative instruments: None

(x) Business relationships and significant intercompany transactions: Please see attached Table 8.

(b) Information on investees: Please see attached Table 9.

(c) Information on investment in mainland China: Please see attached Table 10.

(14) Segment information:

Operating segments are combined and reconciled as follows:


PlasticsProduct

PlasticsMaterial

ElectronicMaterials

PolyesterProduct

OtherDepartment Reconciliations Total

Revenue：

　Net revenue from external customers $ 11,750,181 25,331,052 30,185,068 17,661,622 1,526,167 - 86,454,090

　Net revenue from sales among intersegments 293,747 2,369,877 5,843,870 339,703 697,626 (9,544,823) -

Total revenue $ 12,043,928 27,700,929 36,028,938 18,001,325 2,223,793 (9,544,823) 86,454,090

Reportable segment profit or loss $ 1,008,343 4,320,605 2,932,411 940,600 13,976,016 (3,109,213) 20,068,762


PlasticsProduct

PlasticsMaterial

ElectronicMaterials

PolyesterProduct


Revenue：


　Net revenue from sales among intersegments 253,214 2,079,620 4,712,582 167,398 789,242 (8,002,056) -

Total revenue $ 11,382,133 23,593,526 30,848,917 13,640,269 2,642,783 (8,002,056) 74,105,572



PlasticsProduct

PlasticsMaterial

ElectronicMaterials

PolyesterProduct


Revenue：


　Net revenue from sales among intersegments 523,974 4,799,404 11,637,618 557,908 1,599,527 (19,118,431) -

Total revenue $ 23,297,113 55,215,730 70,116,205 34,765,366 4,398,098 (19,118,431) 168,674,081

Reportable segment profit or loss $ 1,968,984 8,802,879 5,846,522 1,545,945 23,180,699 (6,042,336) 35,302,693

(Continued)

63




PlasticsProduct

PlasticsMaterial

ElectronicMaterials

PolyesterProduct


Revenue：


　Net revenue from sales among intersegments 430,779 3,769,778 9,465,130 408,215 1,398,924 (15,472,826) -

Total revenue $ 22,585,553 46,084,649 61,354,265 27,902,108 4,327,976 (15,472,826) 146,781,725


Plastics Product

PlasticsMaterial

ElectronicMaterials

PolyesterProduct


Reportable segment assets:

　June 30, 2018 $ 32,110,810 68,895,923 138,114,594 34,393,122 509,353,788 (180,422,980) 602,445,257

　December 31, 2017 $ 32,612,367 63,714,019 139,985,117 35,058,030 442,646,826 (169,944,970) 544,071,389

June 30, 2017 $ 31,669,526 62,100,424 132,203,713 34,104,711 435,327,380 (159,642,420) 535,763,334

Plastics Product

PlasticsMaterial

ElectronicMaterials

PolyesterProduct


Reportable segment liabilities

　June 30, 2018 $ 9,997,542 14,384,129 31,125,180 10,712,797 161,668,545 (8,855,005) 219,033,188

　December 31, 2017 $ 10,192,314 13,833,368 29,722,991 11,284,939 121,238,465 (9,420,447) 176,851,630

June 30, 2017 $ 9,438,772 17,374,001 28,029,666 10,847,349 145,427,110 (7,086,305) 204,030,593

64

TABLE 1

Item Value0 The Company Formosa Plastics Group

Investment Corp. (Note 6)Other receivables fromrelated parties

YES 70,000 70,000 - - 2 - Operatingcapital

- ‑ - 93,056,984 186,113,969

0 The Company Wellink TechnologyCorporation (Note 6)

Other receivables fromrelated parties


- ‑ - 93,056,984 186,113,969

0 The Company Nan Ya Plastics (Hong Kong)Co., Ltd. (Note 6)



- ‑ - 93,056,984 186,113,969

0 The Company Nan Ya Plastics CorporationTexas (Note 6)


YES 8,160,000 8,160,000 - - 2 - Operatingcapital

- ‑ - 93,056,984 186,113,969

0 The Company Nan Chung PetrochemicalCorporation (Note 6)


YES 500,000 500,000 - 1.40775%~1.408150% 2 - Operatingcapital

- ‑ - 93,056,984 186,113,969

0 The Company Formosa Heavy IndustriesCorporation


YES 10,000,000 10,000,000 2,500,000 1.408703%~1.408703% 2 - Operatingcapital

- ‑ - 93,056,984 186,113,969

0 The Company Formosa Group (Cayman)Limited



- ‑ - 93,056,984 186,113,969

0 The Company Formosa PetrochemicalCorporation



- ‑ - 93,056,984 186,113,969

0 The Company Formosa Ha Tinh (Cayman)Ltd.



- ‑ - 93,056,984 186,113,969

0 The Company Formosa Plastics Corporation Other receivables fromrelated parties


- ‑ - 93,056,984 186,113,969

0 The Company Formosa Chemicals and FiberCorporation



- ‑ - 93,056,984 186,113,969

0 The Company Formosa Plastics MarineCorporation



- ‑ - 93,056,984 186,113,969

1 Nan Ya Plastics CorporationAmerica

Nan Ya Plastics CorporationTexas (Note 6)



- ‑ - 19,403,075 38,806,150

1 Nan Ya Plastics CorporationAmerica

Nan Ya Plastics CorporationU.S.A. (Note 6)


YES 915,000 915,000 471,213 2.697%~3.128% 2 - Operatingcapital

- - - 19,403,075 38,806,150

2 Nan Ya PCB Corporation Nan Ya PCB (HK)Corporation (Note 6)



- ‑ - 14,871,071 29,742,142

2 Nan Ya PCB Corporation Nan Ya PCB (Kunshan)Corporation (Note 6)


YES 1,690,000 1,525,000 915,000 3.439%~3.439% 2 - Operatingcapital

- - - 14,871,071 29,742,142

2 Nan Ya PCB Corporation Hwa Ya Power Corporation Other receivables fromrelated parties

YES 1,000,000 - - 1.408%~1.408% 2 - Operatingcapital

- ‑ - 14,871,071 29,742,142

2 Nan Ya PCB Corporation Formosa Heavy IndustriesCorporation


YES 3,000,000 - - 1.408%~1.408% 2 - Operatingcapital

- ‑ - 14,871,071 29,742,142

2 Nan Ya PCB Corporation Formosa AutomobileCorporation


YES 180,000 180,000 - 1.408%~1.408% 2 - Operatingcapital

- ‑ - 14,871,071 29,742,142

3 Nan Ya Plastics (Hong Kong) Co.,Ltd.

Nan Ya Electronic Materials(kunshan) Co., Ltd. (Note 6)



- ‑ - 39,830,540 79,661,081

Allowancefor Bad Debt

LOANS TO OTHER PARTIESNAN YA PLASTICS CORPORATION AND SUBSIDIARIES

FOR THE SIX MONTHS ENDED JUNE 30, 2018

No. Name of Lenders Account NameName of BorrowersHighest Balance ofFinancing to Other

Parties during the Period

MaximumLimitation on FundFinancing (Note 4)

IndividualFunding LoanLimits (Note 3)

Transaction Amount forBusiness Between Two

Parties (Note 2)

Reasons forShort-termFinancing

RelatedParty

(Expressed in thousands of New Taiwan Dollars)

EndingBalance

CollateralActual Usageduring the

Period

Range of Interest Ratesduring the Period.

Purposes of FundFinancing for the

Borrowers (Note 1)

65

Item Value

Allowancefor Bad DebtNo. Name of Lenders Account NameName of Borrowers

Highest Balance ofFinancing to Other





Parties (Note 2)


RelatedParty

EndingBalance


Period



Borrowers (Note 1)3 Nan Ya Plastics (Hong Kong) Co.,

Ltd.Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)



- ‑ - 39,830,540 79,661,081

4 Wen Fung Industrial Co., Ltd. Wellink TechnologyCorporation (Note 6)



- ‑ - 48,347 241,735

4 Wen Fung Industrial Co., Ltd. Formosa EnvironmentalTechnology Corporation



- ‑ - 120,868 241,735

5 Wellink Technology Corporation Formosa AutomobileCorporation


YES 20,000 - - 1.408%~1.408% 2 - Operatingcapital

- ‑ - 67,318 134,636

6 Nan Ya Plastics (Guangzhou) Co.,Ltd.

Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)


YES 1,110,053 912,751 912,751 3.48%~3.48% 2 - Operatingcapital

- ‑ - 1,310,028 2,620,056

7 Nan Ya Plastics (Huizhou) Co.,Ltd.

Nan Ya Electronic Materials(Huizhou) Co., Ltd. (Note 6)



- - - 1,657,274 3,314,549


Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)



- ‑ - 1,657,274 3,314,549





- ‑ - 1,657,274 3,314,549


Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)



- ‑ - 1,657,274 3,314,549

8 Nan Ya Trading (Huizhou) Co.,Ltd.




- ‑ - 27,537 55,074





- ‑ - 27,537 55,074


PFG Fiber Glass (Kunshan)Co., Ltd. (Note 6)



- ‑ - 27,537 55,074

9 Nan Ya Plastics (Xiamen) Co.,Ltd.




- ‑ - 731,897 731,897





- ‑ - 731,897 731,897


Xiamen Haicang InvestmentGroup Co., Ltd.



- - - 731,897 731,897





- - - 731,897 731,897





- - - 731,897 731,897

10 Nan Ya Plastics (Nantong) Co.,Ltd.




- - - 3,749,136 7,498,271





- ‑ - 3,749,136 7,498,271





- ‑ - 3,749,136 7,498,271

11 China Nantong Huafeng Co., Ltd. Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)



- ‑ - 167,942 335,883

11 China Nantong Huafeng Co., Ltd. Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)



- ‑ - 167,942 335,883

11 China Nantong Huafeng Co., Ltd. Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)



- ‑ - 167,942 335,883

12 Nantong Huafu Plastics Co., Ltd. Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)



- ‑ - 46,850 93,700

12 Nantong Huafu Plastics Co., Ltd. PFG Fiber Glass (Kunshan)Co., Ltd. (Note 6)



- ‑ - 46,850 93,700

13 Nan Ya Electric (Nantong) Co.,Ltd.




- ‑ - 575,939 1,151,878





- ‑ - 575,939 1,151,878





- ‑ - 575,939 1,151,878

66

Item Value

Allowancefor Bad DebtNo. Name of Lenders Account NameName of Borrowers

Highest Balance ofFinancing to Other





Parties (Note 2)


RelatedParty

EndingBalance


Period



Borrowers (Note 1)14 Nan Ya Electronic Materials

(kunshan) Co., Ltd.Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)



- ‑ - 25,164,397 50,328,795

14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.

Nan Ya PCB (Kunshan)Corporation (Note 6)



- ‑ - 25,164,397 50,328,795


Nan Ya Plastics (Zhengzhou)Co., Ltd.



- ‑ - 25,164,397 50,328,795


Formosa Synthetic Rubber(Ninbo) Co., Ltd.



- ‑ - 25,164,397 50,328,795




YES 1,314,730 917,361 917,361 3.48%~3.48% 2 - Operatingcapital

- ‑ - 25,164,397 50,328,795





- ‑ - 25,164,397 50,328,795


Nan Ya PCB (Kunshan)Corporation (Note 6)



- ‑ - 25,164,397 50,328,795





- ‑ - 25,164,397 50,328,795

15 Nan Ya Plastics Film (Nantong)Co., Ltd.




- ‑ - 1,033,031 2,066,062

15 Nan Ya Plastics Film (Nantong)Co., Ltd.




- ‑ - 1,033,031 2,066,062

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 NTD to USD as of June 30, 2018 (in average) is 30.5(29.561)：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 NTD to HKD as of June 30, 2018 (in average) is 3.9103(3.7899)：1.Note 6：This transaction has already been written off during the consolidation process.

67

TABLE 2B=A/2 C D=C/SE A=S/E*1.3

0 The Company Nan Ya Plastics(Hong Kong) Co.,

2 241,948,160 12,810,183 12,810,183 12,810,183 - 3.44% 483,896,319 Y N N

0 The Company Formosa IndustriesCorporation

1 9,655,812 5,005,309 5,005,309 5,005,309 - 1.34% 483,896,319 N N N

0 The Company Formosa Group(Cayman) Ltd.

6 241,948,160 22,112,500 19,062,500 19,062,500 - 5.12% 483,896,319 N N N

0 The Company Formosa Ha Tinh(Cayman) Ltd.

6 241,948,160 15,795,023 15,795,023 15,795,023 - 4.24% 483,896,319 N N N

0 The Company Formosa ResourcesCorporation

6 241,948,160 3,278,750 3,278,750 3,278,750 - 0.88% 483,896,319 N N N

1 Nan Ya PlasticsCorporation America

Formosa UtilityVenture

1 25,223,998 697,143 - - - 0.00% 50,447,995 N N N

1 Nan Ya PlasticsCorporation America

Nan Ya PlasticsCorporation Texas

2 25,223,998 1,805,473 1,805,473 1,805,473 - 4.99% 50,447,995 Y N N

Note: The six conditions in which the Company may have guarantees or endorsements for the receiving parties are as follows:(1) The Company has business with the receiving parties.(2) The Company holds directly more than 50% of the common stock of the subsidiaries.(3) In aggregate, the Company and its subsidiaries hold more than 50% of the investee.(4) In aggregate, the Company holds directly or indirectly through its subsidiaries more than 50% of the investee.(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.

NAN YA PLASTICS CORPORATION AND SUBSIDIARIESGUARANTEES AND ENDORSEMENTS FOR OTHER PARTIES


Parent CompanyEndorses

/Guarantees toThird Parties on

Behalf ofSubsidiary

SubsidiaryEndorses

/Guarantees toThird Parties onBehalf of Parent

Company

Endorsements/Guarantees to the ThirdParties on Behalf of theCompanies in Mainland

ChinaName Relationship with

The Company (Note)

Highest Balancefor Guarantee

andEndorsements

during thePeriod

Balance ofGuarantees andEndorsements asof June 30, 2018

Amount ofEndorsement/Guarantee

Collateralized byProperties

Ratio of AccumulatedAmounts of Guarantees

and Endorsements toNet Worth of the Latest

Financial Statements

MaximumAmounts forGuarantees

andEndorsements

Amount Securedby Guaranteedand Endorsed

Property

No EndorsementGuarantee Provider

Counterparty of Guarantee andEndorsement

LimitationAmount of

Guarantees andEndorsements for

a SpecificEnterprise


68

TABLE 3

Number of Shares(in thousands)

CarryingValue

ShareholdingPercentage

Market Value or NetAsset Value

The Company Mega Internaitonal Private USD MoneyMarket

- Financial assets valued at FVTPL－current

12,479 3,936,627 - 3,936,627

Nan Ya PCB Corporation Capital Money Market - Financial assets valued at FVTPL－current

56,331 905,447 - 905,447

The Company Formosa Plastics Corporation Other related parties Financial assets valued at FVTOCI－current

294,793 33,164,225 4.63% 33,164,225 Note 1

The Company Formosa Chemicals and Fiber Corporation Other related parties Financial assets valued at FVTOCI－current

140,520 17,073,137 2.40% 17,073,137

The Company Formosa Group Ocean Marine InvestmentCorporation

Other related parties Financial assets valued at FVTOCI－non current

3 5,361,896 19.00% 5,361,896

The Company Formosa Plastics Corporation U.S.A. Other related parties Financial assets valued at FVTOCI－non current

2 2,012,865 0.51% 2,012,865

The Company Ostendo Technologies Inc. - Financial assets valued at FVTOCI－non current

150 - 0.12% -

The Company Formosa Plastics Maritime Co. Other related parties Financial assets valued at FVTOCI－non current

352 282,707 18.00% 282,707

The Company Formosa International Development Co.,Ltd.

Other related parties Financial assets valued at FVTOCI－non current

15,246 286,703 18.00% 286,703

The Company Mai Liao Harbor Administration Corp. Other related parties Financial assets valued at FVTOCI－non current

39,562 721,095 17.98% 721,095

The Company Formosa Plastics Marine Corporation Other related parties Financial assets valued at FVTOCI－non current

2,429 404,676 15.00% 404,676

The Company ASIA Pacific Investment Co. Other related parties Financial assets valued at FVTOCI－non current

63,717 3,718,073 14.99% 3,718,073

The Company Formosa Technologies Corporation Other related parties Financial assets valued at FVTOCI－non current

2,925 80,965 12.50% 80,965

The Company WK Technology Fund Ltd. - Financial assets valued at FVTOCI－non current

326 4,064 1.63% 4,064

The Company WK Technology Fund IV Ltd. - Financial assets valued at FVTOCI－non current

460 2,994 1.08% 2,994

Security Holder Category and Name of SecurityJune 30, 2018

Notes

RelationshipBetween Issuer ofSecurity and theCompany whichHolds Securities

Account Name

NAN YA PLASTICS CORPORATION AND SUBSIDIARIESSECURITIES HELD

(EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES)JUNE 30, 2018


69

Number of Shares(in thousands)

CarryingValue

ShareholdingPercentage

Market Value or NetAsset Value

Security Holder Category and Name of SecurityJune 30, 2018

Notes

RelationshipBetween Issuer ofSecurity and theCompany whichHolds Securities

Account Name

The Company Central Leasing Corp. - Financial assets valued at FVTOCI－non current

1,779 - 1.07% -

The Company Chinese Television System Inc. - Financial assets valued at FVTOCI－non current

1,769 30,678 1.04% 30,678

The Company China Investment & DevelopmentCompany, Limited

- Financial assets valued at FVTOCI－non current

1,287 6,811 0.80% 6,811

The Company Taiwan Aerospace Corp. - Financial assets valued at FVTOCI－non current

1,070 25,213 0.79% 25,213

The Company Guang Yuan Securities InvestmentConsulting Corporation


5,000 36,292 3.91% 36,292

The Company Nan Ya Photonics Inc Other related parties Financial assets valued at FVTOCI－non current

6,446 101,072 14.42% 101,072

The Company Mega Growth Capital Venture - Financial assets valued at FVTOCI－non current

2,500 19,441 1.97% 19,441

Nan Ya Plastics CorporationAmerica

Double Oak (Bonds) - Financial assets valued at FVTOCI－non current

- 219,932 - 219,932


Ballantyne Re plc (Bonds) - Financial assets valued at FVTOCI－non current

- 165,336 - 165,336


Sutton (Bonds) - Financial assets valued at FVTOCI－non current

- 295,575 - 295,575


American Overseas Reinsurance Co., Ltd.(Preferred Stock)


- 228,284 - 228,284


MBIA Insurance Corp. (Preferred Stock) - Financial assets valued at FVTOCI－non current

- 222,387 - 222,387

Nan Ya Plastics (Hong Kong)Co., Ltd.

Hua Ya (Dong Ying) Plastics Corp. - Financial assets valued at FVTOCI－non current

- 353,526 15.00% 353,526

Nan Ya Plastics (Hong Kong)Co., Ltd.

Hua Ya (Wu Hu) Plastics Corp. - Financial assets valued at FVTOCI－non current

- 379,035 15.00% 379,035

Formosa Plastics GroupInvestment Corp.

WK Technology Fund Ltd. - Financial assets valued at FVTOCI－non current

484 6,028 2.42% 6,028

Formosa Plastics GroupInvestment Corp.

WK Technology Fund IV Ltd. - Financial assets valued at FVTOCI－non current

1,534 9,981 3.60% 9,981

Nan Ya International (Cayman)Limited

Formosa Ha Tinh (Cayman) Ltd. Other related parties Financial assets valued at FVTOCI－non current

621,178 19,177,460 11.43% 19,177,460

Note 1：The Company pledged its shares of Formosa Plastics Corporation of 12,736 thousand common shares amounting to NTD 1,432,800.

70

TABLE 4

Shares(in thousands) Amount Shares

(in thousands) Amount Shares(in thousands) Price Carrying

ValueGain/Loss on

DisposalShares

(in thousands) Amount

The Company MegaInternaitonalPrivate USDMoney Market

Financial assets valuedat FVTPL－current

- - 14,979 4,574,268 - - 2,500 772,908 820,847 - (Note 3) 12,479 3,936,627(Note)

The Company Nan YaInternational(Cayman) Limited

Investments accountedfor using equitymethod

Nan YaInternational(Cayman)Limited

Investmentsaccounted forusing equitymethod

51 15,675,756 1 1,676,070 52 19,177,710(Note 1) (Note 2)

Nan YaInternational(Cayman)Limited

Formosa Ha Tinh(Cayman) Ltd.

Financial assets valuedat FVTOCI－noncurrent

Formosa HaTinh (Cayman)Ltd.

- 564,707 15,675,511 56,471 1,676,070 621,178 19,177,460(Note 1)

Note：End of period amount includes effects measured by fair value.

Note 2：This transaction has already been written off during the consolidation process.

Note 3：The carrying value has been measured at the fair value before the disposition, with the loss on valuation amounting to NTD 47,939, which was recognized under "Other gains and losses" in the consolidated statements of comprehensive income.

Note 1：End of period amount includes investment income and transaction adjustment under equity method and the effect of exchange changes.

NAN YA PLASTICS CORPORATION AND SUBSIDIARIESINDIVIDUAL SECURITIES ACQUIRED OR DISPOSED OF WITH ACCUMULATED AMOUNT EXCEEDING THE LOWER OF NT$300 MILLION OR 20% OF THE CAPITAL STOCK


CompanyName

Category andName ofSecurity

Financial StatementAccount

Sales Ending Balance

Counter-party Relationship

Beginning Balance Purchases


71

TABLE 5

OwnerRelationship

with theCompany

Date ofTransfer Amount

The Company "Taipei．CBD" Building 2018.05 3,476,500 The first andsecond

installments hadbeen paid

TransGlobe LifeInsurance Inc.

None - - - - Market price andValuation report

(Note)

Building None

The Company "Taipei．CBD" Building 2018.05 1,000,500 The first andsecond

installments hadbeen paid

MeifuDevelopment Co.,Ltd.

None - - - - Market price andValuation report

(Note)

Building None


Construction in progress 2018.01 393,525 Unpaid Formosa HeavyIndustriesCorporation

Associates - - - - Negotiation Plant expansion None


Construction in progress 2018.06 116,603 Paid Formosa HeavyIndustriesCorporation

Associates - - - - Negotiation Plant expansion None

Note：The assets are jointly paid by the Company, as well as Formosa Plastics Corporation, Formosa Chemicals and Fiber Corporation, and Formosa Petrochemical Corporation. The overall value amounting to NTD18,044,586 and NTD180,010,228 of the assets are assessed by the Euro-Asia Real Estate Appraisers Firm and Taiwan Dawa Real Estate Appraiser & Associates, respectively.

NAN YA PLASTICS CORPORATION AND SUBSIDIARIESACQUISITION OF INDIVIDUAL REAL ESTATE WITH AMOUNTS EXCEEDING THE LOWER OF NT$300 MILLION OR 20% OF THE CAPITAL STOCK


Counter-partyCompany Name Name of Property TransactionDate

TransactionAmount

Status ofPayment

Relationshipwith the

Company

Disclosure of Information on Previous Transferof Equipment is Required for Related Parties

who are also the Counter Parties References forDetermining Price

Purpose ofAcquisitionand Current

Condition

Others


72

TABLE 6

Purchases/ (Sales) Amount % to total

purchase/(sales) Credit Period UnitPrice

PaymentTerm

EndingBalance % to Total

The Company Formosa Plastics Corporation Other related parties (Sales) (733,693) (0.75)% 30 days - ‑ 151,523 0.66%The Company Formosa Chemicals and Fiber Corporation Other related parties (Sales) (4,514,776) (4.63)% 30 days - ‑ 602,936 2.62%The Company Nan Ya PCB Corporation Subsidiaries (Sales) (433,523) (0.44)% 30 days - ‑ 89,797 0.39% NoteThe Company Formosa Petrochemical Corporation Associates (Sales) (557,794) (0.57)% 30 days - ‑ 152,917 0.67%The Company Nanya Technology Corporation Associates (Sales) (142,665) (0.15)% 30 days - ‑ 19,535 0.08%The Company Formosa Heavy Industries Corporation Associates (Sales) (123,052) (0.13)% 30 days - ‑ 94,335 0.41%The Company Formosa Taffeta Co., Ltd. Other related parties (Sales) (423,961) (0.43)% 30 days - ‑ 81,970 0.36%The Company Formosa Ha Tinh Steel Corporation Other related parties (Sales) (210,691) (0.22)% O/A 150 - ‑ 226,978 0.99%The Company Formosa Industries (Ningbo) Co., Ltd. Other related parties (Sales) (112,267) (0.12)% O/A 150 - ‑ 757 0.00%The Company Nan Ya Plastics Corporation U.S.A. Subsidiaries (Sales) (175,295) (0.18)% O/A 105 - ‑ 122,138 0.53% NoteThe Company Nan Ya Plastics Corporation America Subsidiaries (Sales) (219,166) (0.22)% O/A 105 - ‑ 124,698 0.54% NoteThe Company Nan Ya Electronic Materials (Huizhou) Co., Ltd. Subsidiaries (Sales) (2,429,182) (2.49)% O/A 180 - ‑ 2,715,005 11.81% NoteThe Company Nan Ya Plastics (Nantong) Co., Ltd. Subsidiaries (Sales) (372,826) (0.38)% O/A 150 - ‑ 160,339 0.70% NoteThe Company Nan Ya Electronic Materials (Kunshan) Co., Ltd. Subsidiaries (Sales) (2,054,133) (2.10)% O/A 150 - ‑ 1,059,151 4.61% NoteThe Company Formosa Industries Corporation Associates (Sales) (2,661,337) (2.73)% O/A 150 - ‑ 721,202 3.14%The Company Nan Ya Draw Textured Yarn (Kunshan) Co., Subsidiaries (Sales) (273,865) (0.28)% O/A 150 - ‑ 207,651 0.90% NoteThe Company Nan Ya Plastics (Ningbo) Co., Ltd. Subsidiaries (Sales) (205,913) (0.21)% O/A 150 - ‑ 106,739 0.46% NoteThe Company Formosa Plastics Corporation Other related parties Purchases 6,962,938 10.48% 30 days - ‑ (1,214,166) (9.30)%The Company Formosa Chemicals and Fiber Corporation Other related parties Purchases 16,930,092 25.49% 30 days - ‑ (3,019,354) (23.13)%The Company Formosa Petrochemical Corporation Associates Purchases 20,960,299 31.56% 30 days - ‑ (3,144,389) (24.09)%The Company PFG Fiber Glass Corporation Subsidiaries Purchases 1,629,069 2.45% 30 days - ‑ (287,880) (2.21)% NoteThe Company PFG Fiber Glass (Kunshan) Co., Ltd. Subsidiaries Purchases 274,500 0.41% O/A 150 - ‑ (91,572) (0.70)% NoteThe Company Nan Chung Petrochemical Corporation Subsidiaries Purchases 1,873,257 2.82% 30 days - ‑ (320,677) (2.46)% NoteNan Ya PCB Corporation The Company Parent Purchases 433,523 5.60% 30 days - ‑ (89,797) (5.40)% NoteNan Ya PCB Corporation Nan Ya PCB (Kunshan) Corporation Subsidiaries Purchases 4,284,363 55.30% 30 days - ‑ (926,399) (55.71)% NoteNan Ya PCB (Kunshan) Corporation Nan Ya PCB Corporation Parent (Sales) (4,284,363) (65.22)% 30 days - ‑ 926,399 49.54% NoteNan Ya PCB (Kunshan) Corporation Nan Ya Electronic Materials (Kunshan) Co., Ltd. Same chairman Purchases 1,264,031 30.25% 60 days - ‑ (253,565) (20.31)% NoteNan Chung Petrochemical Corporation The Company Parent (Sales) (1,873,257) (49.95)% 30 days - ‑ 320,677 51.21% NoteNan Chung Petrochemical Corporation China Man-made Fiber Corporation Other related parties (Sales) (1,873,257) (49.95)% 15th day of next month - ‑ 302,253 48.26%Nan Chung Petrochemical Corporation Formosa Petrochemical Corporation Associates Purchases 3,009,895 97.10% 15th day of next month - ‑ (461,096) (98.24)%PFG Fiber Glass Corporation The Company Parent (Sales) (1,629,069) (68.46)% 30 days - ‑ 287,880 60.40% NotePFG Fiber Glass Corporation Formosa Chemicals and Fiber Corporation Other related parties Purchases 215,767 30.98% 30 days - ‑ (47,119) (44.47)%PFG Fiber Glass Corporation Formosa Petrochemical Corporation Other related parties Purchases 112,869 16.21% 30 days - ‑ - 18,536 (17.49)%

Relationship

RELATED-PARTY TRANSACTIONS FOR PURCHASES AND SALES WITH AMOUNTS EXCEEDING THE LOWER OF NT$100 MILLION OR 20% OF THE CAPITAL STOCKNAN YA PLASTICS CORPORATION AND SUBSIDIARIES


Related PartyCompany Name Notes

Notes/Accounts (Payable)Receivable

AbnormalTransactionTransaction Details


73

Purchases/ (Sales) Amount % to total

purchase/(sales) Credit Period UnitPrice

PaymentTerm

EndingBalance % to Total

RelationshipRelated PartyCompany Name Notes

Notes/Accounts (Payable)Receivable

AbnormalTransactionTransaction Details

Nan Ya Plastics Corporation U.S.A. Formosa Plastics Corporation U.S.A. Other related parties Purchases 421,866 28.89% payment within one - ‑ (83,492) (31.90)%Nan Ya Plastics Corporation U.S.A. The Company Parent Purchases 175,295 12.01% O/A 105 - ‑ (122,138) (46.66)% NoteNan Ya Plastics Corporation America Formosa Plastics Corporation U.S.A. Other related parties (Sales) (207,635) (1.06)% payment within one - ‑ - 0.00%Nan Ya Plastics Corporation America Formosa Plastics Corporation U.S.A. Other related parties Purchases 103,374 0.59% payment within one - ‑ (19,028) (7.63)%Nan Ya Plastics Corporation America The Company Parent Purchases 219,166 1.26% O/A 105 - ‑ (124,698) (50.03)% NotePFG Fiber Glass (Kunshan) Co., Ltd. The Company Parent (Sales) (274,500) (8.01)% O/A 150 - ‑ 91,572 6.66% NotePFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Subsidiaries (Sales) (2,118,115) (61.81)% 60 days - ‑ 410,049 29.82% NotePFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Subsidiaries Purchases 184,966 19.98% 60 days - ‑ (69,650) (27.44)% NoteNan Ya Plastics (Xiamen) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Other related parties Purchases 123,714 26.52% 60 days - ‑ (19,059) (20.03)%Nan Ya Plastics (Guangzhou) Co., Ltd. Formosa Plastics Corporation Other related parties Purchases 266,823 24.62% O/A 150 - ‑ (119,078) (41.36)%Nan Ya Plastics (Guangzhou) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Other related parties Purchases 236,808 21.85% 60 days - ‑ (66,639) (23.15)%Nan Ya Electronic Materials (Huizhou) Co., The Company Parent Purchases 2,429,182 49.07% O/A 180 - ‑ (2,715,005) (50.80)% NoteNan Ya Electronic Materials (Huizhou) Co., Nan Ya Electronic Materials (Kunshan) Co., Ltd. Subsidiaries Purchases 1,918,407 38.75% 180 days - ‑ (2,537,507) (47.47)% NoteNan Ya Plastics (Nantong) Co., Ltd. The Company Parent Purchases 372,826 16.50% O/A 150 - ‑ (160,339) (32.41)% NoteNan Ya Plastics (Nantong) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Other related parties Purchases 260,511 11.53% 60 days - ‑ (48,200) (9.74)%Nan Ya Plastics Film (Nantong) Co., Ltd. Formosa Industries (Ningbo) Co., Ltd. Other related parties Purchases 238,691 36.12% 60 days - ‑ (75,846) (57.12)%Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. Subsidiaries (Sales) (2,183,725) (34.04)% 60 days - ‑ 562,631 38.12% NoteNan Ya Plastics (Ningbo) Co., Ltd. Formosa Chemicals and Fiber Corporation Other related parties Purchases 161,961 3.15% O/A 150 - ‑ (38,889) (3.77)%Nan Ya Plastics (Ningbo) Co., Ltd. Formosa Chemicals and Fiber (Ningbo) Other related parties Purchases 3,380,013 65.82% 60 days - ‑ (698,064) (67.64)%Nan Ya Plastics (Ningbo) Co., Ltd. The Company Parent Purchases 205,913 4.01% O/A 150 - ‑ (106,739) (10.34)% NoteNan Ya Electronic Materials (Kunshan) Co., Nan Ya Electronic Materials (Huizhou) Co., Ltd. Subsidiaries (Sales) (1,918,407) (7.52)% 180 days - ‑ 2,537,507 11.98% NoteNan Ya Electronic Materials (Kunshan) Co., Nan Ya PCB (Kunshan) Corporation Same chairman (Sales) (1,264,031) (4.95)% 60 days - ‑ 253,565 1.20% NoteNan Ya Electronic Materials (Kunshan) Co., PFG Fiber Glass (Kunshan) Co., Ltd. Subsidiaries (Sales) (184,966) (3.36)% 60 days - ‑ 69,650 0.33% NoteNan Ya Electronic Materials (Kunshan) Co., The Company Parent Purchases 2,054,133 10.19% O/A 150 - ‑ (1,059,151) (30.80)% NoteNan Ya Electronic Materials (Kunshan) Co., Nan Ya Draw Textured Yarn (Kunshan) Co., Subsidiaries Purchases 141,667 0.70% 60 days - ‑ (19,389) (0.56)% NoteNan Ya Electronic Materials (Kunshan) Co., PFG Fiber Glass (Kunshan) Co., Ltd. Subsidiaries Purchases 2,118,115 10.51% 60 days - ‑ (410,049) (11.92)% NoteNan Ya Electronic Materials (Kunshan) Co., Nan Ya Plastics (Ningbo) Co., Ltd. Subsidiaries Purchases 2,183,725 10.83% 60 days - ‑ (562,631) (16.36)% NoteNan Ya Draw Textured Yarn (Kunshan) Co., The Company Parent Purchases 273,865 26.04% O/A 150 - ‑ (207,651) (49.45)% NoteNan Ya Draw Textured Yarn (Kunshan) Co., Nan Ya Electronic Materials (Kunshan) Co., Ltd. Subsidiaries (Sales) (141,667) (10.86)% 60 days - ‑ 19,389 7.01% Note

Note：The transaction has been written off during the consoliation process.

74

TABLE 7

Amount Action TakenThe Company Formosa Plastics Corporation Other related Receivables from related parties： 151,523 13.84 ‑ ‑ 149,241 ‑

The Company Formosa Chemicals and Fiber Corporation Other relatedi

Receivables from related parties： 602,936 13.08 ‑ ‑ 597,442 ‑

The Company Formosa Petrochemical Corporation Associates Receivables from related parties： 152,917 8.69 ‑ ‑ 144,286 ‑

The Company Formosa Ha Tinh Steel Corporation Other relatedi


The Company Nan Ya Plastics Corporation U.S.A. (Note 1) Subsidiaries Receivables from related parties： 122,138 2.90 ‑ ‑ 1,535 ‑

The Company Nan Ya Plastics Corporation America (Note 1) Subsidiaries Receivables from related parties： 124,698 3.55 ‑ ‑ 47,001 ‑

The Company Nan Ya Electronic Materials (Huizhou) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 2,715,005 2.01 ‑ ‑ 631,490 ‑

The Company Nan Ya Plastics (Nantong) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 160,339 4.29 ‑ ‑ 78,642 ‑

The Company Nan Ya Electronic Materials (Kunshan) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 1,059,151 3.11 ‑ ‑ 362,080 ‑

The Company Formosa Industries Corporation Associates Receivables from related parties： 721,202 7.53 ‑ ‑ 383,949 ‑

The Company Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 207,651 3.72 ‑ ‑ - ‑

The Company Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 106,739 7.64 ‑ ‑ 18 ‑

Nan Ya PCB (Kunshan) Corporation Nan Ya PCB Corporation (Note 1) Parent Receivables from related parties： 926,399 8.95 ‑ ‑ 706,236 ‑

Nan Chung Petrochemical Corporation The Company (Note 1) Parent Receivables from related parties： 320,677 9.43 ‑ ‑ 320,677 ‑

Nan Chung Petrochemical Corporation China Man-made Fiber Corporation Other relatedi


PFG Fiber Glass Corporation The Company (Note 1) Parent Receivables from related parties： 287,880 13.74 ‑ ‑ 287,880 ‑

PFG Fiber Glass (Kunshan) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 410,049 10.28 ‑ ‑ 410,049 ‑

Nan Ya Plastics (Ningbo) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 562,631 9.08 ‑ ‑ 562,631 ‑

Nan Ya Electronic Materials (Kunshan) Co.,L d

Nan Ya Electronic Materials (Huizhou) Co., Ltd. (Note 1) Subsidiaries Receivables from related parties： 2,537,507 1.49 ‑ ‑ 390,120 ‑


Nan Ya PCB (Kunshan) Corporation (Note 1) Same chairman Receivables from related parties： 253,565 7.23 ‑ ‑ 253,565 ‑

The Company Formosa Heavy Industries Corporation Associates Other receivables from relatedi

2,500,000 Note ‑ ‑ ‑ ‑

The Company Formosa Group (Cayman) Limited Associates Other receivables from relatedi

4,259,500 Note ‑ ‑ ‑ ‑

The Company Formosa Ha Tinh (Cayman) Ltd. Other relatedi

Other receivables from relatedi

3,040,500 Note ‑ ‑ ‑ ‑

The Company Formosa Plastics Marine Corporation Other relatedi

Other receivables from relatedi

3,978,721 Note ‑ ‑ ‑ ‑

Nan Ya Plastics Corporation America Nan Ya Plastics Corporation Texas (Note 1) Subsidiaries Other receivables from relatedi

7,339,388 Note ‑ ‑ ‑ ‑

Nan Ya Plastics Corporation America Nan Ya Plastics Corporation U.S.A. (Note 1) Subsidiaries Other receivables from relatedi

471,213 Note ‑ ‑ ‑ ‑

Nan Ya PCB Corporation Nan Ya PCB (Kunshan) Corporation (Note 1) Subsidiaries Other receivables from relatedi

915,000 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (HongKong) Co., Ltd. Nan Ya Electronic Materials (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

1,831,545 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (HongKong) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

2,038,175 Note ‑ ‑ ‑ ‑

NAN YA PLASTICS CORPORATION AND SUBSIDIARIESRECEIVABLES FROM RELATED PARTIES WITH AMOUNTS EXCEEDING THE LOWER OF NT$100 MILLION OR 20% OF THE CAPITAL STOCK


Related Party Relationship TurnoverRate

OverdueCompany Name Ending Balance

AmountsReceived inSubsequent

Periods

Allowancefor BadDebts


75

Amount Action TakenRelated Party Relationship Turnover

RateOverdue

Company Name Ending Balance

AmountsReceived inSubsequent

Periods

Allowancefor BadDebts

Nan Ya Plastics (Guangzhou) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

912,751 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

290,421 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

666,585 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (Huizhou) Co., Ltd. Nan Ya Plastics Film (Huizhou) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

667,046 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

138,296 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (Xiamen) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

281,201 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

622,330 Note ‑ ‑ ‑ ‑

Nan Ya Plastics (Nantong) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

2,807,861 Note ‑ ‑ ‑ ‑

China Nantong Huafeng Co., Ltd. Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

145,210 Note ‑ ‑ ‑ ‑

China Nantong Huafeng Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

165,955 Note ‑ ‑ ‑ ‑

Nan Ya Electric (Nantong) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

366,483 Note ‑ ‑ ‑ ‑

Nan Ya Electronic Materials (Kunshan) Co.,Ltd

Nan Ya Plastics (Zhengzhou) Co., Ltd. Joint ventures Other receivables from relatedi

165,955 Note ‑ ‑ ‑ ‑


Formosa Synthetic Rubber (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

359,569 Note ‑ ‑ ‑ ‑


Nan Ya Electronic Materials (Huizhou) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

917,361 Note ‑ ‑ ‑ ‑


Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

1,000,338 Note ‑ ‑ ‑ ‑


PFG Fiber Glass (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

1,908,479 Note ‑ ‑ ‑ ‑


Nan Ya Draw Textured Yarn (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

3,452,780 Note ‑ ‑ ‑ ‑

Nan Ya Plastics Film (Nantong) Co., Ltd. Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi

470,205 Note ‑ ‑ ‑ ‑

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.

76

TABLE 8

Financial StatementItem Amount Terms

Percentage ofConsolidated

Total Gross Salesor Total Assets

0 The Company Nan Ya PCB Corporation and its subsidiaries 1 Sales 472,936 30-150 days 0.28%

0 The Company Nan Chung Petrochemical Corporation 1 Sales 88,774 30 days 0.05%

0 The Company PFG Fiber Glass Corporation 1 Sales 26,220 30 days 0.02%

0 The Company Nan Ya Plastics Corporation U.S.A 1 Sales 175,295 O/A 105 0.10%

0 The Company Nan Ya Plastics Corporation America 1 Sales 219,166 O/A 105 0.13%

0 The Company Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries 1 Sales 5,554,760 O/A 150-180 3.29%

0 The Company Superior World Wide Trading Co., Ltd. 1 Sales 8,622 O/A 150 0.01%

0 The Company PFG Fiber Glass (HongKong) Corporation Limited and its subsidiaries 1 Sales 19,415 O/A 150 0.01%

1 Nan Chung Petrochemical Corporation The Company 2 Sales 1,873,257 30 days 1.11%

2 Wen Fung Industrials Co., Ltd. and its subsidiaries Nan Ya PCB Corporation and its subsidiaries 3 Sales 54,684 30 days 0.03%

3 PFG Fiber Glass Corporation The Company 2 Sales 1,629,069 30 days 0.97%

4 Nan Ya Plastics Corporation America Nan Ya Plastics Corporation U.S.A 3 Sales 89,922 payment within one month 0.05%

5 Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries The Company 2 Sales 78,264 60 days 0.05%

5 Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries Nan Ya PCB Corporation and its subsidiaries 3 Sales 1,554,951 60 days 0.92%

5 Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries PFG Fiber Glass (HongKong) Corporation Limited and its subsidiaries 3 Sales 195,569 60 days 0.12%

6 PFG Fiber Glass (HongKong) Corporation Limited and its subsidiaries The Company 2 Sales 274,500 O/A 150 0.16%

6 PFG Fiber Glass (HongKong) Corporation Limited and its subsidiaries Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries 3 Sales 2,123,080 60 days 1.26%

0 The Company Nan Ya PCB Corporation and its subsidiaries 1 Accounts receivable 103,576 30-150 days 0.02%

0 The Company Nan Ya Plastics Corporation U.S.A 1 Accounts receivable 122,138 O/A 105 0.02%

0 The Company Nan Ya Plastics Corporation America 1 Accounts receivable 124,698 O/A 105 0.02%

0 The Company Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries 1 Accounts receivable 4,351,184 O/A 150-180 0.72%

1 Nan Chung Petrochemical Corporation The Company 2 Accounts receivable 320,677 30 days 0.05%

3 PFG Fiber Glass Corporation The Company 2 Accounts receivable 287,880 30 days 0.05%

5 Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries Nan Ya PCB Corporation and its subsidiaries 3 Accounts receivable 360,443 60 days 0.06%

BUSINESS RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONSNAN YA PLASTICS CORPORATION AND SUBSIDIARIES


No.(Note 1) Company Name Counter-party Relationship

(Note 2)

Intercompany Transactions


77

Financial StatementItem Amount Terms

Percentage ofConsolidated

Total Gross Salesor Total Assets

No.(Note 1) Company Name Counter-party Relationship

(Note 2)

Intercompany Transactions

5 Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries PFG Fiber Glass (HongKong) Corporation Limited and its subsidiaries 3 Accounts receivable 71,917 60 days 0.01%

6 PFG Fiber Glass (HongKong) Corporation Limited and its subsidiaries The Company 2 Accounts receivable 91,572 O/A 150 0.02%

6 PFG Fiber Glass (HongKong) Corporation Limited and its subsidiaries Nan Ya Plastics (HongKong) Co., Ltd. and its subsidiaries 3 Accounts receivable 410,049 60 days 0.07%

0 The Company Nan Ya PCB Corporation and its subsidiaries 1 Rent revenue 96,424 30-150 days 0.06%

Note 1: The appointed numbers represent:1. 0 refers to the Parent Company.2. Subsidiaries are numbered and organized in a ascending chronological order in an ascending chronological order.

Note 2: Transactions are categorized as follows:1. Parent company to subsidiary.2. Subsidiary to parent company.3. 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.

78

TABLE 9

June 30,2018

December 31,2017

Shares(in thousands) % Carrying

Value

The Company Nan Ya Plastics Corporation U.S.A.(Note)

U.S.A. production of plastic products 313,920 313,920 2 100.00% 1,891,790 28,288 28,288 Note 5.6

The Company Nan Ya Plastics Corporation America(Note)

U.S.A. production of plastic, polyester andchemical products

7,853,605 7,853,605 60 100.00% 38,806,150 2,589,986 2,589,986 Note 5.6

The Company Nan Ya Plastics (HongKong) Co.,Ltd. (Note 1)

Hong Kong plastics and electronic productstrading, investment holding

34,858,082 34,858,082 844,053 100.00% 79,636,635 2,903,950 2,903,950 Note 5.6

The Company Superior World Wide Trading Co.,Ltd. (Note 1)

Hong Kong plastics trading and investment 33,677 33,677 14 100.00% 715,424 17,411 17,411 Note 5.6

The Company Formosa Synthetic Rubber(HongKong) Corporation Limited

Hong Kong production of synthetic rubberproducts

2,151,560 2,151,560 70,000 31.82% 617,870 (467,658) (148,801) Note 5

The Company PFG Fiber Glass (HongKong)Corporation Limited (Note 1)

Hong Kong investment 4,495,987 4,495,987 76 100.00% 7,806,452 604,602 594,590 Note 5.6

The Company Formosa Industries Corporation (Note2)

Vietnam chemical fiber, dying and finishingand electric power

8,435,875 8,435,875 - 42.50% 8,260,518 742,995 315,773 Note 5

The Company Nan Ya PCB Corporation Taiwan production of printed circuit board 4,480,417 4,480,417 432,745 66.97% 19,896,567 (892,909) (597,992) Note 5.6

The Company Formosa Plastics Group InvestmentCorp.

Taiwan investment 76,859 76,859 5,000 100.00% 84,751 12,873 12,873 Note 5.6

The Company Nanya Technology Corporation Taiwan semiconductor production andmarketing

52,438,472 52,438,472 907,304 29.26% 42,974,599 18,536,761 5,491,975 Note 5

The Company Formosa Environmental TechnologyCorporation

Taiwan environmental protection 672,370 672,370 46,257 26.99% 251,960 3,316 895 Note 5

The Company Formosa Petrochemical Corporation Taiwan production of chemical products 24,647,480 24,647,480 2,201,306 23.11% 78,514,648 43,527,264 10,059,571 Note 5

The Company PFG Fiber Glass Corporation Taiwan production of glass fiber 2,648,131 2,648,131 100,000 100.00% 4,681,963 458,756 372,195 Note 5.6

The Company Nan Chung PetrochemicalCorporation

Taiwan production of chemical products 1,000,002 1,000,002 100,000 50.00% 1,162,713 43,949 22,315 Note 5.6

The Company Wen Fung Industrial Co., Ltd. Taiwan production of electronic components 214,236 214,236 18,738 100.00% 244,486 2,828 2,828 Note 5.6

NAN YA PLASTICS CORPORATION AND SUBSIDIARIESINFORMATION ON INVESTEES (EXCLUDING THOSE IN MAINLAND CHINA)


Investor Company Investee Company Location Major Operations

Original Investment Amount Balance as of June 30, 2018Net Income of

Investee

Investment Income(Loss) Recognized

by the InvestorCompany

Notes


79

June 30,2018

December 31,2017


ValueInvestor Company Investee Company Location Major Operations


Investee



Notes

The Company Formosa Automobile SalesCorporation (Note 3.4)

Taiwan production of automobile 945,028 945,028 27,046 45.00% - 48,866 21,990 Note 5

The Company Ya Tai Development Corporation Taiwan development industry 53,941 53,941 1,304 44.96% 22,029 (3,055) (1,374) Note 5

The Company Formosa Heavy IndustriesCorporation

Taiwan machinery industry 2,497,721 2,497,721 651,706 32.91% 8,290,904 300,278 98,824 Note 5

The Company Formosa Fairway Corporation Taiwan transportation business 33,340 33,340 4,699 33.34% 109,014 (17,762) (5,922) Note 5

The Company Formosa Plastics TransportCorporation

Taiwan transportation business 17,254 17,254 4,771 33.33% 751,217 (20,941) (6,980) Note 5

The Company Hwa Ya Science Park ManagementConsulting Co., Ltd.

Taiwan service business 359 359 34 34.00% 1,473 143 49 Note 5

The Company Yi Jih Development Corporation Taiwan construction business 58,000 58,000 5,800 29.22% 64,295 585 171 Note 5

The Company Mai Liao Power Corporation Taiwan electricity generation business 5,985,465 5,985,465 547,025 24.94% 11,983,364 524,513 130,823 Note 5

The Company Su Hua Transport Corporation Taiwan transportation business 50,000 50,000 10,495 25.00% 280,780 19,523 4,881 Note 5

The Company Formosa Synthetic RubberCorporation

Taiwan production of synthetic rubberproducts

400,000 400,000 40,000 33.33% 216,760 (1,044) (348) Note 5

The Company Formosa Resources Corporation Taiwan mining industry 5,845,940 5,845,940 584,594 25.00% 5,207,661 (616,440) (154,110) Note 5

The Company Formosa Group (Cayman) Limited(Note)

CaymanIslands

investment 377 377 13 25.00% 602,393 956,241 239,060 Note 5

The Company Formosa Plastics ConstructionCorporation

Taiwan construction business 100,000 100,000 10,000 33.33% 85,485 (6,866) (2,289) Note 5

The Company Nan Ya International (Cayman)Limited (Note)

CaymanIslands

investment 18,784,619 17,108,550 52 100.00% 19,177,710 - - Note 5.6

The Company FG Inc. (Note) U.S.A. investment 660,176 660,176 2 10.00% 667,772 (23,864) (2,386) Note 5

Nan Ya Plastics CorporationAmerica (Note)

Formosa Utility Venture, Ltd. (Note) U.S.A. electricity generation and trading 244,000 244,000 - 12.10% 2,252,056 443,084 54,026 Note 5

Nan Ya Plastics CorporationAmerica (Note)

Nan Ya Plastics Corporation Texas(Note)

U.S.A. sale of chemical materials 10,065,000 10,065,000 3 100.00% 9,642,978 (142,405) (142,405) Note 5.6

Nan Ya Plastics Corporation Texas(Note)

Formosa Olefins, L.L.C. (Note) U.S.A. production of chemical products 1,857,450 1,857,450 - 21.00% 1,644,259 (247,649) (52,006) Note 5

80

June 30,2018

December 31,2017


ValueInvestor Company Investee Company Location Major Operations


Investee



Notes

Nan Ya PCB Corporation Nan Ya PCB (HK) Corporation Hong Kong production of electronic productsand investment

5,020,900 5,020,900 1,223,820 100.00% 10,129,656 (453,761) (453,761) Note 5.6

Nan Ya PCB Corporation Nan Ya PCB (U.S.A.) Corporation U.S.A. retargeting 3,479 3,479 1,000 100.00% 11,904 (642) (642) Note 5.6

Nan Ya PCB (HK) Corporation Nan Ya PCB (Kunshan) Corporation China production of printed circuit board 5,017,721 5,017,721 - 100.00% 10,116,194 (453,905) (453,905) Note 5.6

Wen Fung Industrial Co., Ltd. Wellink Technology Corporation Taiwan production of electronic components 212,017 212,017 12,739 100.00% 133,782 2,497 2,497 Note 5.6

Superior World Wide Trading Co.,Ltd. (Note 1)

P.T.Indonesia Nanya Indah PlasticsCo.

Indonesia production of plastic products 123,433 123,433 5 50.00% 268,442 26,631 13,315 Note 5

Kong) Corporation Limited, Formosa Group (Cayman) Limited and Nan Ya Internaitonal (Cayman) Limited is denominated in USD, and the exchange rate of TWD to USD as of June 30, 2018 (in average) is 30.5(29.561)：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 NTD to HKD as of

June 30, 2018 (in average) is 3.9103(3.7899)：1.

Note 2：The reporting currency of Formosa Industries Corporation is denominated in VND, and the exchange rate of NTD to VND as of June 30, 2018 (in average) is 1：0.001329(0.001298).

Note 3：Due to the fact that cumulative losses from investments under equity method have already exceeded the long term investment book value of NTD 7,342, and the excess is reclassified to other non current liabilities.

Note 4：Formosa Automobile Corporation merged with Formosa Automobile Sales Corporation on May 8, 2017, and Formosa Automobile Sales Corporation is the surviving company.

Note 5：Investment income of the current period does not include cumulative translation adjustment and capital surplus adjustment.

Note 6：The transaction has been written off during the consoliation process.

Note：The reporting currency of Nan Ya Plastics Corporation America, Nan Ya Plastics Corporation USA, FG Inc., Formosa Utility Venture, Ltd, Nan Ya Plastics Corporation Texas, Formosa Olefins, L.L.C, Formosa Synthetic Rubber (Hong

81

TABLE 10

(a) Information regarding investments in Mainland China :

Outflow Inflow

Nan Ya Plastics(Guangzhou) Co., Ltd. (Note1)


1,998,681 Indirect investment 1,998,681 - - 1,998,681 50,619 100.00% 50,619 2,473,424 611,825

Nan Ya Plastics (Xiamen)Co., Ltd. (Note 1)


775,457 Indirect investment 738,752 - - 738,752 57,939 85.00% 49,248 1,134,535 72,820

Nan Ya Plastics (Huizhou)Co., Ltd. (Note 1)


1,679,527 Indirect investment 1,679,527 - - 1,679,527 26,410 100.00% 26,410 3,325,643 -



847,935 Indirect investment 738,870 - - 738,870 (31,843) 100.00% (31,843) (26,516) -


production of electronicmaterials


Nan Ya Trading (Huizhou)Co., Ltd. (Note 1)

trading 32,267 Indirect investment 32,267 - - 32,267 1,907 100.00% 1,907 60,586 -

Nan Ya Plastics (Nantong)Co., Ltd. (Note 1)

production of plasticproducts, production ofsteam and electricity

3,219,604 Indirect investment 1,973,292 - - 1,973,292 235,979 100.00% 235,979 7,730,762 103,612

China Nantong Huafeng Co.,Ltd. (Note 1)

trading 93,004 Indirect investment 99,636 - - 99,636 3,285 100.00% 3,285 342,882 -

Nantong Huafu Plastics Co.,Ltd. (Note 1)

trading 79,111 Indirect investment 71,503 - - 71,503 792 100.00% 792 95,615 -

Nan Ya Electric (Nantong)Co., (Note 1)

production of switchgear and control panel

339,275 Indirect investment 339,275 - - 339,275 16,146 100.00% 16,146 1,108,870 -

Nan Ya Plastics Film(Nantong) Co., Ltd. (Note 1)



Nanya Kyowa Plastics(Nantong) Co., Ltd.

interior decoratingbusiness

200,988 Indirect investment 100,494 - - 100,494 24,298 50.00% 12,149 177,333 -

Nan Ya Electronic Materials(Kunshan) Co., Ltd. (Note 1)

production of electronicmaterials, production ofsteam and electricity

15,159,216 Indirect investment 15,159,216 - - 15,159,216 2,263,074 100.00% 2,263,074 54,972,917 -



7,035,085 Indirect investment 7,035,085 - - 7,035,085 (555,328) 100.00% (555,328) 798,314 -

Nan Ya Plastics (Zhengzhou)Co., Ltd.


261,737 Indirect investment 130,869 - - 130,869 (3,145) 50.00% (1,572) 63,953 -

AccumulatedInward

Remittance ofEarnings as ofJune 30, 2018

Carrying Value ofInvestment as of

June 30, 2018

Method ofInvestment

Investment Gain(Loss)

Name of the PRC InvesteeCompany

Primary BusinessScope

Amount of Paid-in Capital

NAN YA PLASTICS CORPORATION AND SUBSIDIARIESINFORMATION ON INVESTMENT IN MAINLAND CHINA


InvestmentTransferred from

Taiwan as ofJanuary 1, 2018

InvestmentTransferred fromTaiwan as of June

30, 2018

Current Incomeof Investees

For The Year Ended June 30, 2018Direct and

IndirectShareholding

Percentage by theCompany


82

Outflow Inflow

AccumulatedInward

Remittance ofEarnings as ofJune 30, 2018

Carrying Value ofInvestment as of

June 30, 2018

Method ofInvestment

Investment Gain(Loss)

Name of the PRC InvesteeCompany

Primary BusinessScope

Amount of Paid-in Capital

InvestmentTransferred from

Taiwan as ofJanuary 1, 2018

InvestmentTransferred fromTaiwan as of June

30, 2018

Current Incomeof Investees

For The Year Ended June 30, 2018Direct and

IndirectShareholding

Percentage by theCompany

Nan Ya Plastics (Ningbo)Co., Ltd. (Note 1)

production of plasticproducts and plasticizer

2,188,834 Indirect investment 1,989,308 - - 1,989,308 475,290 100.00% 475,290 848,913 -


glass fiber trading 4,668,263 Indirect investment 4,487,409 - - 4,487,409 664,302 100.00% 664,302 7,723,616 149,416

Hua Ya (Dong Ying) PlasticsCorp.


254,190 Indirect investment 34,591 - - 34,591 - 15.00% - 353,526 23,020

Hua Ya (Wu Hu) PlasticsCorp.


624,948 Indirect investment 34,591 - - 34,591 - 15.00% - 379,035 12,687

Formosa Synthetic Rubber(Ningbo) LimitedCorporation

synthetic rubber 6,746,240 Indirect investment 2,151,560 - - 2,151,560 (467,658) 31.82% (148,800) 617,870 -

for the period were based on the unreriewed interim financial statement.Note 1: The transaction has been written-off during the consolidation process.

Accumulative Remittancefrom Taiwan to MainlandChina as of June 30, 2018

(Note 1)

Amount of InvestmentApproved byInvestment

Commission, Ministryof Economic Affairs

(Note 2)41,271,928 48,854,606

Note 1：Reporting currency of Chinese subsidiaries is RMB, and the monetary amount is first translated to HKD using the exchange rate as of June 30, 2018 (in average) of 1：1.1789(1.2244), and translated to NTD using the exchange rate as of June 30, 2018

(in average) of 1：3.9103(3.7899).

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, which has already been written off during the consolidation process, between the Company and its Chinese investees for the year ended June 30, 2018, please refer to the explanation of "Information on material transaction items".

Limit on the Amount of Investmentin Mainland China (Note 3)

-

Note: All equity in the earnings (losses) are recognized according to the reviewed financial statements except for Hua Ya (DongYing) Plastics Corp., Hua Ya (Wu Hu) Plastics Corp. and Formosa Syntheic Rubber (Ninbo) Co., Ltd., Whose earnings (losses)

(b) Quota for investments in Mainland China :

Note 2：It includes the amount of NTD 3,010,315 from approved capital increase, 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.

nan ya plastics corporation and subsidiaries · 2018-09-10 · 3 independent auditors’ review...

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