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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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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)
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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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)
Reviewed only, not audited in accordance with generally accepted auditing standards
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
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
See accompanying notes to Consolidated financial statements.
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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)
Reviewed only, not audited in accordance with generally accepted auditing standards
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the six months ended June 30, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
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
See accompanying notes to Consolidated financial statements.
7
(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)
Reviewed only, not audited in accordance with generally accepted auditing standards
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three months and six months ended June 30, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
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
See accompanying notes to Consolidated financial statements.
8
(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)Reviewed only, not audited in accordance with generally accepted auditing standards
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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:
New, Revised or Amended Standards and InterpretationsEffective date
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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:
New, Revised or Amended Standards and InterpretationsEffective date
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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 Plastics (HongKong) Co., Ltd.
Nan Ya Electric (Nantong)Co., Ltd.
production of switchgear and control panel
%100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Plastics Film(Nantong) Co., Ltd.
production of plasticproducts
%100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
China Nantong HuafengCo., Ltd.
trading %100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nantong Huafu Plastics Co.,Ltd.
trading %100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Electronic Materials(Kunshan) Co., Ltd.
production of electronicmaterials, polyesterproducts, steam andelectricity
%100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Draw TexturedYarn (Kunshan) Co., Ltd.
production of fiber %100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Plastics(Guangzhou) Co., Ltd.
production of polyesterproducts
%100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Plastics (Huizhou)Co., Ltd.
production of polyesterproducts
%100.00 %100.00 %100.00
(Continued)
17
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
Shareholding
InvestorThe name of subsidiaries Business activity
June 30,2018
December 31,2017
June 30,2017 Note
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Plastics Film(Huizhou) Co., Ltd.
production of plasticfilm products
%100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Electronic Materials(Huizhou) Co., Ltd.
production of electronicmaterials
%100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Trading (Huizhou)Co., Ltd.
trading %100.00 %100.00 %100.00
Nan Ya Plastics (HongKong) Co., Ltd.
Nan Ya Plastics (Xiamen)Co., Ltd.
production of plasticproducts
%85.00 %85.00 %85.00
Nan Ya Plastics (HongKong) Co., Ltd.
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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)
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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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)
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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
BalanceAdvancedAmount
FactoringLine
Gold Circuit Electornics, ltd E. Sun Bank $ 52,231 - 100,000
June 30, 2017Purchaser Factoring
BalanceAdvancedAmount
FactoringLine
Gold Circuit Electornics, ltd E. Sun Bank $ 39,072 - 100,000
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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)
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NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the three months endedJune 30
For the six months endedJune 30
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:
For the three months endedJune 30
For the six months endedJune 30
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
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(i) Please refer to note 8 for the property, plant and equipment pledged to secure bank loans as 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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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 TWD 0.95%~1.15% 2018~2019 7,300,000
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 TWD 0.95%~1.15% 2017~2019 4,257,143
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
nonconvertiblecorporate bond
The third domesticunsecured
nonconvertiblecorporate bond
The first domesticunsecured
nonconvertiblecorporate bond
The second domesticunsecured
nonconvertiblecorporate bond
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
Payable in 2 equalinstallments for eachcoupon rate in2022~2023 and2024~2025,respectively
(Continued)
37
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
The first domesticunsecured
nonconvertiblecorporate bond
The second domesticunsecured
nonconvertiblecorporate bond
The first domesticunsecured
nonconvertiblecorporate bond
The first domesticunsecured
nonconvertiblecorporate bond
in 2014 in 2014 in 2016 in 2017
Issued amount NT$10,000,000 NT$5,000,000 NT$5,000,000 NT$9,500,000
Balance, end of year 9,981,465 4,997,078 4,994,715 9,487,766
Current portion - 1,748,977 - -
Issuance date June 24, 2014 November 11, 2014 August 16, 2016 July 10, 2017
Issuance period 14 years and 15 years 5 years and 10 years 5 years 5 years and 7 years
Coupon rate 2.04% 1.45% and 1.93% 0.68% 1.03% and 1.25%
Interest payment date June 24 November 11 August 16 July 10
Repayment method Payable in 2 equalinstallments for eachcoupon rate in 2028and 2029,respectively.
Payable in 2 equalinstallments for eachcoupon rate in2018~2019 and2023~2024,respectively
Payable in 2 equalinstallments for eachcoupon rate in 2020and 2021, respectively
Payable in 2 equalinstallments for eachcoupon rate in2021~2022 and2023~2024,respectively
The details of Nan Ya Plastics (Hong Kong) Co., Ltd’s overseas corporate bond were as follows:
Issued in 2013
Issued amount USD$ 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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the three months endedJune 30
For the six months endedJune 30
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.
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(p) Income Tax
(i) Income tax expense
The components of income tax expense were as follows:
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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)
Exchangedifferences ontranslation of
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
Exchangedifferences ontranslation of
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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:
For the three months endedJune 30
For the six months endedJune 30
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:
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(iii) Finance costs
The components of finance costs were as follows:
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
June 30, 2018Foreign Currency Exchange Rate TWD
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
Non-monetary items
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
Financial liabilities
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
June 30, 2017Foreign Currency Exchange Rate TWD
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
June 30, 2017Foreign Currency Exchange Rate TWD
Non-monetary items
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
Financial liabilities
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:
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
December 31, 2017Fair Value
Carryingamount Level 1 Level 2 Level 3 Total
Available-for-sale financialassets
Stocks in listed companies $ 43,569,603 43,569,603 - - 43,569,603
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
Cash and cash equivalent $ 44,304,079 - - - -
Notes and accounts receivable(including related parties) 56,120,375 - - - -
Subtotal $ 100,424,454 - - - -
Financial liabilities at amortizedcost
Short-term borrowing $ 9,295,583 9,295,583 - - 9,295,583
Short-term notes and billspayable 7,998,778 7,998,778 - - 7,998,778
Notes and accounts payable(including related parties) 19,975,842 - - - -
Bonds payable 55,923,701 55,923,701 - - 55,923,701
Long-term borrowing 23,151,433 23,151,433 - - 23,151,433
Long-term notes payable 4,998,418 4,998,418 - - 4,998,418
Subtotal $ 121,343,755 101,367,913 - - 101,367,913
June 30, 2017Fair Value
Carryingamount Level 1 Level 2 Level 3 Total
Available-for-sale financialassets
Stocks in listed companies $ 40,746,947 40,746,947 - - 40,746,947
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
Cash and cash equivalent $ 52,183,129 - - - -
Notes and accounts receivable(including related parties) 48,856,980 - - - -
Subtotal $ 101,040,109 - - - -
(Continued)
50
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
June 30, 2017Fair Value
Carryingamount Level 1 Level 2 Level 3 Total
Financial liabilities at amortizedcost
Short-term borrowing $ 11,782,237 11,782,237 - - 11,782,237
Short-term notes and billspayable 7,999,146 7,999,146 - - 7,999,146
Notes and accounts payable(including related parties) 17,348,858 - - - -
Bonds payable 56,091,350 56,091,350 - - 56,091,350
Long-term borrowing 21,006,673 21,006,673 - - 21,006,673
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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:
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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:
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
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
Other related parties
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
Unrealized salesprofit at
beginning ofperiod
(Realized)Unrealized sales
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
Unrealized salesprofit at
beginning ofperiod
(Realized)Unrealized sales
profits
Unrealized salesprofit at end of
period
Unrealized salesprofit at
beginning ofperiod
(Realized)Unrealized sales
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:
For the three months endedJune 30
For the six months endedJune 30
2018 2017 2018 2017Associates and jointventures
Formosa Heavy IndustriesCorporation
$ 219,441 34,368 655,339 108,825
(Continued)
56
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
The payables to related parties were as follows:
June 30,2018
December 31,2017
June 30,2017
Associates and joint ventures
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:
For the three months endedJune 30
For the six months endedJune 30
2018 2017 2018 2017Associates and joint
ventures
FormosaPetrochemicalCorporation
$ 1,829,771 1,898,721 3,746,226 3,487,285
Other related parties
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
Associates and joint ventures
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
Other Receivables from Related Parties
June 30,2018
December 31,2017
June 30,2017
Other related parties
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
FinancialStatementAccount
TransactionShares
(in thousands)Transaction
Items
For the threemonths endedJune 30, 2017
Associates ─ Formosa ResourcesCorporation
Investmentsaccounted for usingequity method 168,344
Shares of stock ofFormosa ResourcesCorporation $ 1,683,440
FinancialStatementAccount
TransactionShares
(in thousands)Transaction
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
FinancialStatementAccount
TransactionShares
(in thousands)Transaction
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(viii) Endorsements and guarantees
The amounts of the Consolidated Company’s endorsements and guarantees for securing relatedparties’ loans were as follows:
June 30,2018
December 31,2017
June 30,2017
Associates and joint ventures
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
Other related parties
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(d) Key management personnel compensation
Key management personnel compensation comprised:
For the three months endedJune 30
For the six months endedJune 30
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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
Non-Operatingexpenses Total
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
Non-Operatingexpenses Total
OperatingCosts
Operatingexpenses
Non-Operatingexpenses Total
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(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:
For the three months ended June 30, 2018
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
For the three months ended June 30, 2017
PlasticsProduct
PlasticsMaterial
ElectronicMaterials
PolyesterProduct
OtherDepartment Reconciliations Total
Revenue:
Net revenue from external customers $ 11,128,919 21,513,906 26,136,335 13,472,871 1,853,541 - 74,105,572
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
Reportable segment profit or loss $ 1,048,314 1,394,532 3,423,081 353,790 7,643,644 (2,354,325) 11,509,036
For the six months ended June 30, 2018
PlasticsProduct
PlasticsMaterial
ElectronicMaterials
PolyesterProduct
OtherDepartment Reconciliations Total
Revenue:
Net revenue from external customers $ 22,773,139 50,416,326 58,478,587 34,207,458 2,798,571 - 168,674,081
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
NAN YA PLASTICS CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the six months ended June 30, 2017
PlasticsProduct
PlasticsMaterial
ElectronicMaterials
PolyesterProduct
OtherDepartment Reconciliations Total
Revenue:
Net revenue from external customers $ 22,154,774 42,314,871 51,889,135 27,493,893 2,929,052 - 146,781,725
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
Reportable segment profit or loss $ 2,075,013 4,825,059 6,487,885 569,569 15,101,596 (5,039,894) 24,019,228
Plastics Product
PlasticsMaterial
ElectronicMaterials
PolyesterProduct
OtherDepartment Reconciliations Total
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
OtherDepartment Reconciliations Total
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
YES 100,000 100,000 - - 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Nan Ya Plastics (Hong Kong)Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 500,000 500,000 - - 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Nan Ya Plastics CorporationTexas (Note 6)
Other receivables fromrelated parties
YES 8,160,000 8,160,000 - - 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Nan Chung PetrochemicalCorporation (Note 6)
Other receivables fromrelated parties
YES 500,000 500,000 - 1.40775%~1.408150% 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Formosa Heavy IndustriesCorporation
Other receivables fromrelated parties
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
Other receivables fromrelated parties
YES 4,259,500 4,259,500 4,259,500 1.407664%~1.408703% 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Formosa PetrochemicalCorporation
Other receivables fromrelated parties
YES 16,000,000 15,500,000 - - 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Formosa Ha Tinh (Cayman)Ltd.
Other receivables fromrelated parties
YES 3,040,500 3,040,500 3,040,500 1.407664%~1.408703% 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Formosa Plastics Corporation Other receivables fromrelated parties
YES 5,500,000 5,000,000 - - 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Formosa Chemicals and FiberCorporation
Other receivables fromrelated parties
YES 5,000,000 4,500,000 - - 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
0 The Company Formosa Plastics MarineCorporation
Other receivables fromrelated parties
YES 6,734,793 5,838,721 3,978,721 1.407664%~1.408703% 2 - Operatingcapital
- ‑ - 93,056,984 186,113,969
1 Nan Ya Plastics CorporationAmerica
Nan Ya Plastics CorporationTexas (Note 6)
Other receivables fromrelated parties
YES 14,667,623 14,659,388 7,339,388 2.697%~3.128% 2 - Operatingcapital
- ‑ - 19,403,075 38,806,150
1 Nan Ya Plastics CorporationAmerica
Nan Ya Plastics CorporationU.S.A. (Note 6)
Other receivables fromrelated parties
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)
Other receivables fromrelated parties
YES 50,000 50,000 - - 2 - Operatingcapital
- ‑ - 14,871,071 29,742,142
2 Nan Ya PCB Corporation Nan Ya PCB (Kunshan)Corporation (Note 6)
Other receivables fromrelated parties
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
Other receivables fromrelated parties
YES 3,000,000 - - 1.408%~1.408% 2 - Operatingcapital
- ‑ - 14,871,071 29,742,142
2 Nan Ya PCB Corporation Formosa AutomobileCorporation
Other receivables fromrelated parties
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)
Other receivables fromrelated parties
YES 3,290,845 1,831,545 1,831,545 0.90%~3.75% 2 - Operatingcapital
- ‑ - 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 during the Period
MaximumLimitation on FundFinancing (Note 4)
IndividualFunding LoanLimits (Note 3)
Transaction Amount forBusiness Between Two
Parties (Note 2)
Reasons forShort-termFinancing
RelatedParty
EndingBalance
CollateralActual Usageduring the
Period
Range of Interest Ratesduring the Period.
Purposes of FundFinancing for the
Borrowers (Note 1)3 Nan Ya Plastics (Hong Kong) Co.,
Ltd.Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 5,442,778 2,038,175 2,038,175 0.90%~0.92% 2 - Operatingcapital
- ‑ - 39,830,540 79,661,081
4 Wen Fung Industrial Co., Ltd. Wellink TechnologyCorporation (Note 6)
Other receivables fromrelated parties
YES 23,000 23,000 - - 2 - Operatingcapital
- ‑ - 48,347 241,735
4 Wen Fung Industrial Co., Ltd. Formosa EnvironmentalTechnology Corporation
Other receivables fromrelated parties
YES 61,000 60,000 60,000 1.408%~1.408% 2 - Operatingcapital
- ‑ - 120,868 241,735
5 Wellink Technology Corporation Formosa AutomobileCorporation
Other receivables fromrelated parties
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)
Other receivables fromrelated parties
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)
Other receivables fromrelated parties
YES 265,067 - - 3.48%~3.48% 2 - Operatingcapital
- - - 1,657,274 3,314,549
7 Nan Ya Plastics (Huizhou) Co.,Ltd.
Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 451,766 290,421 290,421 3.48%~3.48% 2 - Operatingcapital
- ‑ - 1,657,274 3,314,549
7 Nan Ya Plastics (Huizhou) Co.,Ltd.
Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)
Other receivables fromrelated parties
YES 689,634 666,585 666,585 3.48%~3.48% 2 - Operatingcapital
- ‑ - 1,657,274 3,314,549
7 Nan Ya Plastics (Huizhou) Co.,Ltd.
Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 678,570 667,046 667,046 3.48%~3.48% 2 - Operatingcapital
- ‑ - 1,657,274 3,314,549
8 Nan Ya Trading (Huizhou) Co.,Ltd.
Nan Ya Electronic Materials(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 4,610 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 27,537 55,074
8 Nan Ya Trading (Huizhou) Co.,Ltd.
Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 18,439 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 27,537 55,074
8 Nan Ya Trading (Huizhou) Co.,Ltd.
PFG Fiber Glass (Kunshan)Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 25,354 25,354 25,354 3.48%~3.48% 2 - Operatingcapital
- ‑ - 27,537 55,074
9 Nan Ya Plastics (Xiamen) Co.,Ltd.
Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 18,439 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 731,897 731,897
9 Nan Ya Plastics (Xiamen) Co.,Ltd.
Nan Ya Electronic Materials(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 82,977 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 731,897 731,897
9 Nan Ya Plastics (Xiamen) Co.,Ltd.
Xiamen Haicang InvestmentGroup Co., Ltd.
Other receivables fromrelated parties
YES 92,197 92,197 92,197 3.48%~3.48% 2 - Operatingcapital
- - - 731,897 731,897
9 Nan Ya Plastics (Xiamen) Co.,Ltd.
Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 138,296 138,296 138,296 3.48%~3.48% 2 - Operatingcapital
- - - 731,897 731,897
9 Nan Ya Plastics (Xiamen) Co.,Ltd.
Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)
Other receivables fromrelated parties
YES 281,201 281,201 281,201 3.48%~3.48% 2 - Operatingcapital
- - - 731,897 731,897
10 Nan Ya Plastics (Nantong) Co.,Ltd.
Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 3,227 - - 3.48%~3.48% 2 - Operatingcapital
- - - 3,749,136 7,498,271
10 Nan Ya Plastics (Nantong) Co.,Ltd.
Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 622,330 622,330 622,330 3.48%~3.48% 2 - Operatingcapital
- ‑ - 3,749,136 7,498,271
10 Nan Ya Plastics (Nantong) Co.,Ltd.
Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)
Other receivables fromrelated parties
YES 3,397,461 2,807,861 2,807,861 3.48%~3.48% 2 - Operatingcapital
- ‑ - 3,749,136 7,498,271
11 China Nantong Huafeng Co., Ltd. Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 64,538 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 167,942 335,883
11 China Nantong Huafeng Co., Ltd. Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 145,210 145,210 145,210 3.48%~3.48% 2 - Operatingcapital
- ‑ - 167,942 335,883
11 China Nantong Huafeng Co., Ltd. Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)
Other receivables fromrelated parties
YES 165,955 165,955 165,955 3.48%~3.48% 2 - Operatingcapital
- ‑ - 167,942 335,883
12 Nantong Huafu Plastics Co., Ltd. Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 41,489 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 46,850 93,700
12 Nantong Huafu Plastics Co., Ltd. PFG Fiber Glass (Kunshan)Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 23,049 23,049 23,049 3.48%~3.48% 2 - Operatingcapital
- ‑ - 46,850 93,700
13 Nan Ya Electric (Nantong) Co.,Ltd.
Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 71,453 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 575,939 1,151,878
13 Nan Ya Electric (Nantong) Co.,Ltd.
PFG Fiber Glass (Kunshan)Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 46,099 46,099 46,099 3.48%~3.48% 2 - Operatingcapital
- ‑ - 575,939 1,151,878
13 Nan Ya Electric (Nantong) Co.,Ltd.
Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)
Other receivables fromrelated parties
YES 366,483 366,483 366,483 3.48%~3.48% 2 - Operatingcapital
- ‑ - 575,939 1,151,878
66
Item Value
Allowancefor Bad DebtNo. Name of Lenders Account NameName of Borrowers
Highest 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
EndingBalance
CollateralActual Usageduring the
Period
Range of Interest Ratesduring the Period.
Purposes of FundFinancing for the
Borrowers (Note 1)14 Nan Ya Electronic Materials
(kunshan) Co., Ltd.Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 115,246 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.
Nan Ya PCB (Kunshan)Corporation (Note 6)
Other receivables fromrelated parties
YES 161,345 - - 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.
Nan Ya Plastics (Zhengzhou)Co., Ltd.
Other receivables fromrelated parties
YES 175,174 165,955 165,955 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.
Formosa Synthetic Rubber(Ninbo) Co., Ltd.
Other receivables fromrelated parties
YES 359,569 359,569 359,569 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.
Nan Ya Electronic Materials(Huizhou) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 1,314,730 917,361 917,361 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.
Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)
Other receivables fromrelated parties
YES 1,296,752 1,000,338 1,000,338 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.
Nan Ya PCB (Kunshan)Corporation (Note 6)
Other receivables fromrelated parties
YES 3,056,332 1,908,479 1,908,479 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
14 Nan Ya Electronic Materials(Kunshan) Co., Ltd.
Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 3,452,780 3,452,780 3,452,780 3.48%~3.48% 2 - Operatingcapital
- ‑ - 25,164,397 50,328,795
15 Nan Ya Plastics Film (Nantong)Co., Ltd.
Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 6)
Other receivables fromrelated parties
YES 23,049 23,049 23,049 3.48%~3.48% 2 - Operatingcapital
- ‑ - 1,033,031 2,066,062
15 Nan Ya Plastics Film (Nantong)Co., Ltd.
Nan Ya Plastics (Ningbo) Co.,Ltd. (Note 6)
Other receivables fromrelated parties
YES 557,792 470,205 470,205 3.48%~3.48% 2 - Operatingcapital
- ‑ - 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
FOR THE SIX MONTHS ENDED JUNE 30, 2018
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
(Expressed in thousands of New Taiwan Dollars)
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
(Expressed in thousands of New Taiwan Dollars)
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
- Financial assets valued at FVTOCI-non current
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
Nan Ya Plastics CorporationAmerica
Ballantyne Re plc (Bonds) - Financial assets valued at FVTOCI-non current
- 165,336 - 165,336
Nan Ya Plastics CorporationAmerica
Sutton (Bonds) - Financial assets valued at FVTOCI-non current
- 295,575 - 295,575
Nan Ya Plastics CorporationAmerica
American Overseas Reinsurance Co., Ltd.(Preferred Stock)
- Financial assets valued at FVTOCI-non current
- 228,284 - 228,284
Nan Ya Plastics CorporationAmerica
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
FOR THE SIX MONTHS ENDED JUNE 30, 2018
CompanyName
Category andName ofSecurity
Financial StatementAccount
Sales Ending Balance
Counter-party Relationship
Beginning Balance Purchases
(Expressed in thousands of New Taiwan Dollars)
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
Nan Ya PlasticsCorporation Texas
Construction in progress 2018.01 393,525 Unpaid Formosa HeavyIndustriesCorporation
Associates - - - - Negotiation Plant expansion None
Nan Ya PlasticsCorporation Texas
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
FOR THE SIX MONTHS ENDED JUNE 30, 2018
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
(Expressed in thousands of New Taiwan Dollars)
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
FOR THE SIX MONTHS ENDED JUNE 30, 2018
Related PartyCompany Name Notes
Notes/Accounts (Payable)Receivable
AbnormalTransactionTransaction Details
(Expressed in thousands of New Taiwan Dollars)
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
Receivables from related parties: 226,978 1.84 ‑ ‑ 9,957 ‑
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
Receivables from related parties: 302,253 9.76 ‑ ‑ 302,253 ‑
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 Electronic Materials (Kunshan) Co.,L d
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
FOR THE SIX MONTHS ENDED JUNE 30, 2018
Related Party Relationship TurnoverRate
OverdueCompany Name Ending Balance
AmountsReceived inSubsequent
Periods
Allowancefor BadDebts
(Expressed in thousands of New Taiwan Dollars)
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 ‑ ‑ ‑ ‑
Nan Ya Electronic Materials (Kunshan) Co.,L d
Formosa Synthetic Rubber (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi
359,569 Note ‑ ‑ ‑ ‑
Nan Ya Electronic Materials (Kunshan) Co.,Ltd
Nan Ya Electronic Materials (Huizhou) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi
917,361 Note ‑ ‑ ‑ ‑
Nan Ya Electronic Materials (Kunshan) Co.,Ltd
Nan Ya Plastics (Ningbo) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi
1,000,338 Note ‑ ‑ ‑ ‑
Nan Ya Electronic Materials (Kunshan) Co.,Ltd
PFG Fiber Glass (Kunshan) Co., Ltd. (Note 1) Subsidiaries Other receivables from relatedi
1,908,479 Note ‑ ‑ ‑ ‑
Nan Ya Electronic Materials (Kunshan) Co.,Ltd
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
FOR THE SIX MONTHS ENDED JUNE 30, 2018
No.(Note 1) Company Name Counter-party Relationship
(Note 2)
Intercompany Transactions
(Expressed in thousands of New Taiwan Dollars)
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)
FOR THE SIX MONTHS ENDED JUNE 30, 2018
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
(Expressed in thousands of New Taiwan Dollars)
79
June 30,2018
December 31,2017
Shares(in thousands) % Carrying
ValueInvestor 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
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
Shares(in thousands) % Carrying
ValueInvestor 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
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)
production of polyesterproducts
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)
production of plasticproducts
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)
production of polyesterproducts
1,679,527 Indirect investment 1,679,527 - - 1,679,527 26,410 100.00% 26,410 3,325,643 -
Nan Ya Plastics Film(Huizhou) Co., Ltd. (Note 1)
production of polyesterproducts
847,935 Indirect investment 738,870 - - 738,870 (31,843) 100.00% (31,843) (26,516) -
Nan Ya Electronic Materials(Huizhou) Co., Ltd. (Note 1)
production of electronicmaterials
1,180,918 Indirect investment 1,180,918 - - 1,180,918 95,608 100.00% 95,608 2,056,382 -
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)
production of plasticproducts
1,321,132 Indirect investment 1,035,626 - - 1,035,626 61,119 100.00% 61,119 2,099,189 -
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 -
Nan Ya Draw Textured Yarn(Kunshan) Co., Ltd. (Note 1)
production of polyesterproducts
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.
production of plasticproducts
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
FOR THE SIX MONTHS ENDED JUNE 30, 2018
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
(Expressed in thousands of New Taiwan Dollars)
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 -
PFG Fiber Glass (Kunshan)Co., Ltd. (Note 1)
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.
production of plasticproducts
254,190 Indirect investment 34,591 - - 34,591 - 15.00% - 353,526 23,020
Hua Ya (Wu Hu) PlasticsCorp.
production of plasticproducts
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.