CPDC - Annual Report 2020 | FinancialReports.eu

Stock Code: 1314

Website:

1.http://mops.twse.com.tw (MOPS)

2.http://www.cpdc.com.tw (Website of China Petrochemical Development Corporation)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Annual Report 2020

Published on April 30, 2021

I. Company spokesman and deputy spokespersons:

Spokesman Deputy spokesman Deputy spokesman Name: Ying-Chun Chen Kuo-Tsai Huang Shu-Tong Zou Title: Vice President Vice President Vice President Tel. No.: (02)8787-8187 Ext. 8370 Ext. 1566 Ext. 8322 e-mail: [email protected]

II. Company and Plant address and Tel. Nos:

Name	Location	Tel. No.
Taipei Office	11F, No. 12 Tunghsing Road, Songshan District, Taipei City	(02)8787-8187
Toufen Plant	No. 217 Sec.2 Ziqiang Road, Toufen Township, Miaoli County,	(037)623-381
Dashe Plant	No. 1 Chinchian Road, Dashe District, Kaohsiung City	(07)351-3521
Hsiaokang	No. 34 Zhonglin Road, Hsiaokang District, Kaohsiung City	(07)871-1161
Qiaotou Plant	No. 2, Qingpu, Chenggong South Road, Qiaotou District, Kaohsiung City	(07)611-7136

III. Shares Registrar:

Name: Shareholder Services Office of CPDC

Address: 3F, No. 12, Tunghsing Road, Taipei City

Tel. No.: (02)8978-2589

Website: http://www.cpdc.com.tw

IV. External Auditors in the most recent year

CPA Name: Melody Chen & Dan-Dan Chung

Firm Name: KPMG Certified Public Accountants Address: 68F, No. 7, Sinyi Road, Sec. 5, Taipei City Tel: (02) 8101-6666

Website: http://www.kpmg.com.tw

V. Offshore secondary exchange and disclosure information available at:

Securities name: Global Depository Receipts

Luxembourg Stock Exchange: https://www.bourse.lu/home

VI. Company Website: http://www.cpdc.com.tw

Chapter 1 Message to Shareholders ........................................................................................................ 1 Chapter 2 Introduction to Company I. Date of Incorporation ...................................................................................................... 8 II. Company Profile .............................................................................................................. 8 Chapter 3 Report on Corporate Governance I. Organization ...................................................................................................................11 II. Information About Director, President, Vice President, Assistant Vice President, and Head of Department and Branch .............................................................................15 III. Remuneration to Directors (including Independent Directors), President and Vice Presidents........................................................................................................................29 IV. Implementation of Corporate Governance .....................................................................39 V. Information on CPA Professional Fees ..........................................................................92 VI. Information About Replacement of CPA: None ............................................................93 VII. Information About Chairman, President, and Financial or Accounting Manager of the Company Who Has Worked with the CPA Firm Which Conducts the Audit of the Company or Affiliate to Said Firm in the Most Recent Year: None ........................93 VIII. Any transfer of equity interests and pledge of or change in equity interests by a director, managerial officer, or shareholder with a stake of more than 10 percent in the most recent year and up to the date of publication of the annual report. ..............93 IX. Information about the relationship among the Company's 10 largest shareholders: ........97 Chapter 4 Status of Fund Raising I. Capital Stock and Shares .....................................................................................................99 II. Issuance of Corporate Bonds ...........................................................................................106 III. Issuance of Preferred Shares: None. ...............................................................................107 IV. Status of Participation in Issuance of "Global Depository Receipts (GDRs)": ..............107 V. Status of Employee Stock Option: None. ........................................................................107 VI. Restriction on Employee Share Subscription Warrant: None. .......................................107 VII. Mergers and Acquisitions, or as Assignee of New Shares Issued by Another Company: None. ...........................................................................................................107 VIII. Implementation of Capital Utilization Plan .................................................................107 Chapter 5 Operations Overview I. Business contents ..............................................................................................................109 II. Market and Sales Overview .............................................................................................118 III. Employees ......................................................................................................................124 IV. Environmental Protection Expenses ...............................................................................124 V. Labor-Management Relations .........................................................................................126

		VI. Major Contracts ..............................................................................................................133	VI. Major Contracts ..............................................................................................................133
Chapter	6	Financial Status
		I.	Condensed balance sheet, income statement, external auditor's name and audit
			opinion for the most recent five years ..........................................................................136
		II.	Financial Analysis for the most recent five years .........................................................140
		III.	Audit Committee's Audit Report on the Financial Statement for the Most Recent
			Year ..............................................................................................................................143
		VI.	In the case of any insolvency of the Company and its affiliates, specify its effect
			on the Company's financial position: None ..................................................................382
		V.	Independent Accountants’ Audit Report ......................................................................294
		VI.	In the case of any insolvency of the Company and its affiliates, specify its effect
			on the Company’s financial position ............................................................................294
Chapter	7	Review and Analysis of Financial Position and Financial Performance, and Risk
		Management
		I.	Financial status comparison and analysis (Adoption of IFRS-Consolidated) ..............383
		II.	Analysis on financial performance (Adoption of IFRS-Consolidated) ........................384
		III.	Review and Analysis of Cash Flow (Adoption of IFRS-Consolidated) .......................385
		IV.	Major capital expenditure for the most recent year and its effect on financial
			position and operation of the Company: ......................................................................385
		V.	Direct investment policy, the main reasons for profit or loss, and corrective action
			plan for the most recent year, and investment plan in the next year ............................386
		VI.	Analysis of risk factors: analyze and assess the following circumstances for the
			most recent year and until the date of publication of the annual report .......................387
		VII. Other important notes: None. ........................................................................................407
Chapter	8	Special Note
		I.	Information about Affiliates .........................................................................................408
		II.	Private placement of securities for the most recent year and until the date of
			publication of the annual report: None. ........................................................................516
		III.	Holding or disposal of the Company's stock by subsidiaries for the most recent
			year and until the date of publication of the annual report: None. ...............................516
		IV.	Supplementary Disclosure: None. ................................................................................516
		V.	Conditions that will materially affect shareholders' equity or price of securities
			as referred to in Paragraph 2.2 of Article 36 of the Securities and Exchange Act: ......516

Chapter 1 Message to Shareholders

To All Shareholders:

In 2020, CPDC operated in the change in the overall economic structure due to the COVID-19 pandemic and the continued U.S.-China trade disputes. In the petrochemical business, we focus on transformation, upgrading and innovative technology, integrate R&D technology, develop differentiated and high-value products, gradually deploy the field of semiconductors and new environmental protection products, build pioneering management, and strive to develop the diversified operations of new materials to meet the various and all-round customer requirements. In the land development business, we principally and actively revive the domestic land assets and explore potential areas overseas for future development, and continue to revitalize domestic land assets. Subsidiary Ding-Yue Development Co., Ltd. acquired land of Core Pacific City with high development value, which can be used as a niche for the development of domestic real estate business. Furthermore, in the overseas land development business, in supporting the New Southbound Policy of the Taiwan government, we continued to strive for large-scale land development and other small and medium-sized projects in potential regions such as emerging markets in Southeast Asia. We actively deploy in overseas regions with explosive investment potential while implementing the Company’s petrochemical and land development two-pronged strategy, with a view to mitigating the impact of cyclical fluctuations in the petrochemical industry on operations.

Although the Company’s operating profits were affected by the COVID-19 pandemic, we carried on expanding the layout of the fine chemical industry chain, committed to the development of highvalue new products, and kept on improving management quality by promoting a smart decision-making platform. Although the Company is currently facing multiple challenges and uncertainties, we will continue to develop towards high-value products and land development, with a view to improving profitability and repaying the long-term supports of shareholders.

I. 2020 Operating Report

The Company reported 2020 consolidated revenues of NT$17.583 billion, net operating loss of NT$1.813 billion and net profit after tax of NT$675 million. The detailed breakdown of the Company’s 2020 operating performance is as follows:

(I) Sales of Major Products:

Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:
Major Product Production & Sales Volumes in the Past 2 Years Unit: Tons
Production Volume Major Product	FY 2020 (Consolidated)		FY 2019 (Consolidated)		Increase (Decrease) Volume
	Production	Sales	Production	Sales	Production %		Sales %
Acrylonitrile(AN)	203,797	267,761	211,188	221,970	(7,391)	(3%)	45,791	21%
Caprolactam (CPL), Nylon Chips	203,423	168,256	310,561	297,252	(107,138)	(34%)	(128,996)	(43%)
O-phenylphenol (OPP)	2,151	1,948	1,971	1,898	180	9%	50	3%

1 -
The sales of Acrylonitrile (AN) include the trading sales of the subsidiaries.
2.The decrease in Caprolactam (CPL) production and sales was mainly due to weak demand

resulted from the COVID-19 pandemic and the low predatory price on imported CPL.

O-phenylphenol (OPP) is a raw material for the development of high value downstream applications and products, such as advanced optical materials, sterilization preservatives, electronic materials, and synthetic new resins.
(II) Operating Revenue and Expense and Profitability Analysis:

Annual Income Statement

Unit: NT$ thousands

Annual Income Statement			Unit: NT$	thousands
Year Line Item	FY 2020 (Consolidated)	FY 2019 (Consolidated)	Increase (Decrease)	%
Revenues	17,583,092	29,624,094	(12,041,002)	(41%)
Gross Profit	38,228	1,627,580	(1,589,352)	(98%)
Operating Profit (loss)	(1,812,878)	(409,020)	(1,403,858)	(343%)
Non-Operating Profit and Loss	1,916,654	2,272,492	(355,838)	(16%)
Pre-Tax Profit	103,776	1,863,472	(1,759,696)	(94%)
Net Profit after Tax	674,660	1,733,635	(1,058,975)	(61%)
EPS (After Tax)	0.21	0.61	(0.40)	(66%)

1. Operating Revenue

The 2020 consolidated operating revenues decreased by 41% versus the previous year, mainly due to the following reasons:

(1) The revenues from Acrylonitrile (AN) and related byproducts were NT$7.35 billion in 2020, decreased 28% or NT$2.907 billion from NT$10.257 billion versus the previous year. The decrease was mainly from a 27% decrease in unit prices versus the previous year for Acrylonitrile (AN) products.
(2) The revenues from Caprolactam (CPL) and byproduct were NT$6.77 billion in 2020, decreased 55% or NT$8.388 billion from NT$15.158 billion versus the previous year. The decrease was mainly from a 24% decrease in unit price and a 50% decrease in sales volumes versus the previous year for Caprolactam (CPL) products.
(3) The revenues from other departments (including subsidiaries) were NT$3.463 billion, decreased 18% or NT$746 million from NT$4.209 billion versus the previous year. It mainly resulted from a decrease in subsidiary revenues from trading versus the previous year caused by the pandemic.
Operating Profit

Net operating profit in 2020 decreased by NT$1.404 billion, or 343% versus the previous year due to the following reasons:

2 -
(1) For Caprolactam (CPL) products, impacted by the outbreak of the COVID-19 pandemic, the demand from the downstream textile industry was completely frozen. Therefore, Caprolactam (CPL) around the globe are sold to Taiwan at low prices that affected the sales volume, selling price, and gross profit. While overall costs were diligently controlled to reduce loss by NT$178 million as compared to the previous year.
(2) With regard to Acrylonitrile (AN), due to the pandemic and volatile oil prices, topped with supply increase from new production capacity, the selling price dropped significantly and the profit decreased by NT$1.749 billion as compared to the previous year.
(3) In 2020, overall operating expenses decreased by NT$186 million versus the previous year.
Non-Operating income and expenses

Non-operating income decreased by NT$356 million in 2020, or by 16%, due to the following reasons:

  - (1) A decrease of NT$3.275 billion from the revaluation gain of financial assets versus the previous year.

  - (2) A decrease of NT$2.901 billion from the asset impairment loss versus the previous year.

  - (3) An increase of NT$785 million from the revaluation gain of investment property versus the previous year.

  - (4) A decrease of NT$427 million from equity method profits from subsidiaries and related companies versus the previous year.

  - (5) An increase of NT$232 million from the expense of the An-Shun site versus the previous year.

  - (6) An increase of NT$81 million from the interest expenses versus the previous year.

  - (7) A decrease of NT$46 million from cost method dividends income versus the previous year.

Net profit (loss) before and after taxes
- 2020 reported pre-tax profits were NT$104 million, decreased NT$1.76 billion or 94% versus the previous year. 2020 reported net profits after tax were NT$675 million (NT$0.21 per share), decreased NT$1.059 billion or 61% from NT$1.734 billion (NT$0.61 per share) of the previous year.
(III) Financial Performance Analysis:
Financial Status: At the end of 2020, total consolidated assets amounted to NT$104.9 billion; total liabilities were NT$34 billion, and shareholder equity was NT$70.9 billion.
Key Financial Ratios: Current Ratio at the end of 2020 was 310%, Quick Ratio was 151%, and Debt Ratio (Debt to Total Assets) was 32%.
Cash and Cash Equivalents Status: Cash and cash equivalents outflow from operating, investing and financing activities was NT$1.6 billion during 2020. The year-end cash and cash equivalent balance was NT$7.5 billion.
3 -
(IV) Key Management Work and Implementation Overview:

2020 key management work and implementation overview are categorized into the following 6 categories: Production Management, Occupational Safety and Health and Environmental Protection, IT Management, HR Management, Financial Planning, and Corporate Social Responsibility. Descriptions are as follows:

Production Management:

The Company continues its planned investment project at Phase II of the Port of Kaohsiung Intercontinental Container Terminal to improve feedstock purchasing flexibility, as well as transportation and storage management. We also continue to promote smart automation at manufacturing facilities for predictive maintenance, and continue investing in projects at factories to increase production capacity, improve process efficiency, and lower production costs.

Occupational Safety and Health and Environmental Protection :

As the petrochemical industry requires a large number of resources, the Company pays special attention to environmental footprints in the operating process. All CPDC plants of the Company have introduced the ISO 14001 environmental management system to reduce the environmental impact of our plants as well as prevent pollution and spills. The management system ensures that all emissions and waste produced during production are treated in compliance with the laws and regulations. In addition, with the vision of green petrochemical, CPDC adopts mitigation and adaptation strategies to actively manage and proactively respond to and grasp climate change-related risks and opportunities. To ensure the plant management systems are in compliance with the latest international standards, our three key Plant sites have passed the certification of ISO 9001, ISO 14001, ISO 45001, ISO50001 standards with regard to quality, environmental protection, occupational safety and health, and energy management, and continued tracking certification.

(1) Occupational safety and health: In 2020, we formulated the manufacturing process safety management counseling project plan to improve the process safety management capability and promote the safety culture diagnosis evaluation and promotion plan, enhance the safety attitude of all employees, motivate the safety behavior of the employees, and enhance the corporate safety culture level.
(2) Environmental Protection: In response to the international trend and the government’s policy of promoting environmental sustainability, the Company actively promotes environmental protection and green economy to achieve the sustainable development goals. In 2020, Hsiaokang Plant, Dashe Plant, and Toufen Plant obtained a number of outstanding sustainability related awards.
IT Management:

To improve the overall operation and management performance, the Company implemented the Group-wide HR management system, secured the foundation for the corporate digital operation and transformation, and continued to optimize the digital mobile office and cloud video system under the information security protection mechanism to fulfill the demand for remote working in the post-pandemic era. To accelerate AI and data analytics applications, enhance competitiveness and create value, the Company has established a big data platform

and hardware for AI computing, infused cutting edge resources from the external institute, and continues on researching innovative AI applications and building AI research and development platform, so as to elevate technological capacity to quickly replicate the successful experience.

4. HR Management:

To support the Company’s dual core business, petrochemicals and land development, and the overseas expansion strategy, the Company continued to implement and strengthen the prevention efforts and employee care in Taiwan and overseas locations during the COVID19 pandemic. In addition, the Company continued to recruit talents devoted to overseas

development and strengthen the cultivation of talents with professional skills and a positive mindset. Moreover, through the promotion of the “Smart Decision-Making platform” by CPDC Command Center, the Company strengthened the interconnections and application of all functions and stakeholders and proactively create an independent learning environment. Furthermore, the succession plan is implemented through job rotation. At the same time, the Company continued to strengthen the implementation of annual performance evaluation, uphold the principle of reward and punishment and survival of the fittest, improve the quality of human capital, so as to recruit new talents and build efficient teams, thereby creating a differentiated competitive advantage for the Company and moving towards a sustainable and quality direction.

5. Financial Planning:

To meet the requirement of funds for the Company’s dual core business development, petrochemicals and land development, we strengthen the cooperation with financial institutions and raise funds through the capital market. With effective leveraging of company-owned real estate assets and resources, we obtain a lower cost of capital on loans and maintain a reasonable and safe cash flow level. In addition, through treasury management, invest in short-term financial products or money market funds to increase profitability.

6. Corporate Social Responsibility:

The Company's vision is “Pursuit of Green Growth; Coexistence and co-prosperity with the

environment and society”. In 2020, the Company continued its efforts in ESG and was recognized by Taiwan and the international community, laying the foundation for sustainable business operations.

(1) The Company voluntarily participated in the international sustainability assessments and obtained multiple international achievements:
a. Obtained a B[- ] management level in the CDP Climate Change questionnaire, reflecting the Company’s effectiveness of climate change governance and carbon management measures
b. Ranked 12th in the S&P Global Corporate Sustainability Assessment (CSA) in the global chemical industry and was elected as a 2021 Sustainability Yearbook member for the first time. CPDC was the only Taiwan company in the chemical industry to be included in the yearbook, and was also awarded an “Industry Mover” distinction in the
5 -

global chemical industry.

(2) The Company’s ESG performance and information disclosure in 2020:
a. Won the Taiwan TOP50 Corporate Sustainable Award and the CSR Reporting Gold Award in the 13th Taiwan Corporate Sustainability Award (TCSA).
b. Ranked among the top 6% to 20% of the Taiwan Corporate Governance Evaluation for 6 consecutive years.

In the face of the wounds of history of the Dioxin pollution at the Taiwan Alkaline An-Shun site during the state-run period, CPDC has the courage to take on the task of remediation and continues to be inspected by the competent authority. We hope that after the completion of the remediation in the future, we can find the vitality of this land and create local prosperity with the residents and the municipal government.

(V) Future Prospect and R&D:

Innovation and R&D have always been CPDC’s core objectives of moving toward the development of sustainable management. Currently, the Company’s R&D are mainly focused on the following directions:

For the existing manufacturing process improvement, we aim for continuous improvements of existing manufacturing process technology towards improving efficiency, lowering manufacturing costs, and developing circular production and green production process technologies with energy conservation, carbon reduction as our key objectives. In the related product development, we implement related byproducts and derivatives development on the current manufacturing processes, controlling the raw material advantages, and strengthening the integration of raw material supplies from up and downstream supply chains, developing cyclic ketone derivatives, nylon 6 downstream niche products and blending modified products, etc., and developing multi-aspect applications of special chemicals and new blending modified products of nylon engineering plastics. The developing series includes engineering plastics, such as nylon 66 engineering plastics, PC composite materials, ABS composite materials, PC/ABS alloys, etc. The Company also develops products with good mechanical properties, flame retardant properties, low temperature resistance, heat resistance, weather resistance, antibacterial, conductive, antistatic, and other characteristics, which can be used in industrial fields including automobiles/ locomotives, machinery, electronic parts, 3C household appliances, sports requisites, etc.

In new product development, we have combined market intelligence, worked with existing development technology surveys, evaluated our advantages to produce high value products with market development potential (such as high refractive optical materials, ester derivatives, hydrogenated products, replacing benzene ring with base hydrogen technology, biological technology, electric products, and functional polymers, etc.) in line with the Company's development strategies. Based on the core technology and existing products, we increase the sales of high-value products, expand the layout of our industrial chain, and provide comprehensive services.

In order to consolidate the technological leadership of the existing product market, as well as to break through the technical barriers of new products and manifest the strong research and development capability, the Company has obtained 227 invention patents thus far. With the accumulation and growth of patents, the protection of intellectual property must continue to be implemented. The Company is also leading the industry and has introduced the TIPS (Taiwan Intellectual Property Management System) of the Ministry of Economic Affairs, Industrial Development Bureau, and passed certification since 2010, to establish a comprehensive and complete intellectual property protection system, continue to improve, to effectively and securely protect the Company’s key assets and R&D core technology.

In adherence to the global attention towards environmental protection issues, the Company actively promotes and engages on environmental protection issues. Currently, we are embarking on the development of the biomass material field, devoting ourselves to research and development on products and new process paths including green, environmental protection, circular production while reducing the generation of pollutants, etc. We hope that by directing our efforts, we shall be able to reduce the hazards to the environment, combined with a circular economic system and achieve our core objective of sustainable management.

(VI) Management Principles and Future Operational Outlook:

The Company focuses on expanding the two-pronged business approaches of "Petrochemical Industry" and "Land Development" as the primary management principles and demonstrates our sustainable development strategies by Forward-Looking Governance, Intelligence Production, Communication and Dialogue, and Enterprise Care.

For the petrochemical business, the Company will optimize the competitiveness of its existing products and develop high-value products in the short term. In the long term, the Company will establish overseas integrated production bases and integrate with the intelligent management system to develop new materials for diversified operation and meet the comprehensive needs of customers.

In terms of land development, our goals are to revitalize the Company’s land assets domestically; while through the layout to penetrate overseas real estate development; for the longterm are to promote relevant development projects with a staged development plan, through the layout in large areas exhibit land development and investment potential domestically and overseas, to develop green building products that are environmental-friendly, energy-conservation and carbon-absorption, hoping to create a new triple win situation for shareholders, corporation and society, and demonstrate CPDC’s vision of shouldering corporate social responsibility and moving towards green building society.

CPDC upholds the development concept of sustainable business and environmental symbiosis, and continuously promotes the process of the petrochemical and land development two-pronged strategy. We never forget the corporate social responsibility we shoulder, fulfill the mission of the global citizen and the vision towards green petrochemicals. With a proactive attitude, we seek breakthroughs and enhance our growth competitiveness, strive for sustainable management and contribute to society relentlessly.

I wish you all the best,

==> picture [110 x 42] intentionally omitted <==

Steve Ruey-Long Chen, Chairman

Chapter 2 Introduction to Company

I. Date of Incorporation

Date of incorporation: April 24, 1969
Date of registration of incorporation: July 8, 1969.

II. Company Profile

The Company was founded on April 24, 1969 and the incorporation of the Company was approved by the Ministry of Economic Affairs on July 8, 1969. The Company's registered address is 11F, No. 12, Tunghsing Road, Songshan District, Taipei City. Headquarter was relocated to No.1, Jingjian Rd., Dashe Dist., Kaohsiung City on July 18, 2016. The Company and its subsidiaries are principally engaged in the business lines of the production of petrochemical products, sodium chloride and phosphoric acid and their derivatives, and storage, transportation, purchase and marketing of related chemical products and raw materials & supplies. The Company's principal product lines include CPL, AN, Nylon Chips and others. Key Milestones:

1969 April 24 The Company was established as a State-Owned Enterprise, under the supervision of the Ministry of Economic Affairs.
1973 May The ethane cracker was brought on stream, and shut down in September 1990.
1973 June DMT Plant was brought on stream, and shut down in July 1982.
1976 June No.1 Acrylonitrile unit of Dashe on stream.
1979 January No. 2 Acrylonitrile unit of Dashe brought on stream.
1982 May Following the mandate from the Ministry of Economic Affairs, the Company was merged with another State-Owned Enterprise, Chungtai Chemical Co., LTD.
1982 July Following a mandate from the Ministry of Economic Affairs, the Company took over the Kaohsiung plant of Taiwan Alkali Co., Ltd. (changing the name to CPDC Chen-Jen Plant), which was shut down in May 1988.
1983 January Following the mandate from the Ministry of Economic Affairs, the Company was merged with another State-Owned Enterprise, China Phosphate Co., Ltd.
1983 April Following a mandate from the Ministry of Economic Affairs, the Company was merged with another State-Owned Enterprise, Taiwan Alkali Co., Ltd.
1985 March Methanol and GAC units of Da-Sheh Plant were brought on stream.
1991 July 12 The Company’s stocks were listed on the Taiwan Stock Exchange Corporation (TWSE), and CPC released 20% of the Company’s stocks held by it.
1993 July The Company’s Kaohsiung Cyclohexanone Plant was shut down.
1993 December The Budget Economic Joint Committee of the Legislative Yuan passed a proposal for the Company's privatization.
1994 June 20 CPC released the Company’s stock held by it once again, and the
8 -

government-owned shareholding was reduced to 36.63% accordingly. The registration of change in the roster of shareholders was completed on the date, and the Company was privatized from a state-owned enterprise. The registration of change in the roster of shareholders was completed on the date, and the Company was privatized from a state-owned enterprise.

1999 September The nylon chip unit was brought on stream. 2001 January CPL Plant No. 3 (Hsiaokang Plant) and Co-gen units of Hsiaokang Plant and Toufen Plant were brought on stream.
2002 November Full implementation of an ERP System (Oracle ERP) 2003 December Kaohsiung Plant (CPL Plant No. 1) was shut down. 2011 April Hsiaokang Plant CPL Expansion Project test-run completed
2012 April Hsiao Plant phenolic ketone unit test-run completed
2012 June Dashe Plant Acrylonitrile unit expansion project test-run completed 2012 October Toufen Plant CPL Expansion Project test-run completed 2012 November The GAC unit was shut down. 2015 August Toufen Plant Tropolone factory test-run completed 2016 June A new production line of 100,000-ton capacity of CPL at the Toufen Plant was brought on stream.
2016 July Headquarter was relocated to No.1, Jingjian Rd., Dashe Dist., Kaohsiung City
2016 November Hsiaokang Plant receives the Industrial Development Bureau, Cleaning Production Certification
2017 April Dashe Plant receives the Industrial Development Bureau, Cleaning Production Certification
2017 October Toufen Plant receives the Industrial Development Bureau, Cleaning Production Certification
2017 November CPDC wins the 2017 Tenth Annual "Taiwan Corporate Sustainability Awards" - Traditional Manufacturing TOP50 Report Award
2017 November CPDC wins the 2017 BSI "Sustainability Implementation Award" 2018 March Dashe Plant's new control room building received the "Green Building Diamond Grade" certification
2018 July Toufen Plant nylon Plant won the "Green Building Silver" certification
2018 September Dashe plant obtained the "Green Plant Seal" issued by the industry Bureau
2018 September Toufen plant obtained the "Green Plant Seal" issued by the industry Bureau
2018 October Toufen plant obtained the ISO 14046 water Footprint Verification statement
2018 November Won the 2018 11th "TCSA Taiwan Corporate Sustainability Award" - Traditional Manufacturing TOP50 Report Award
9 -
2019 April Dashe Plant obtained the 1st "Green Chemical Application and Innovation Award" from the Environmental Protection Administration of the Executive Yuan.
2019 August The R&D Center obtained "TCIA 2019 Outstanding R&D Award" 2019 November Won the "2019 Happiness Enterprise Award - Manufacturing and Construction Consignment" Chemical Industry TOP20 held by the 1111Job Bank.
2019 November Won the 2019 12th "TCSA Taiwan Corporate Sustainability Awards" - Traditional Manufacturing TOP50 Report Gold Award and Individual Performance - "Climate Leadership Award" & "Sustainable Water Management Award"
2019 December The land of the former "Cianjhen Plant" is rezoned to "Kaohsiung Multifunctional Economic and Trade Park No. 5A Special Zone"
2020 March Hsiaokang Plant Administrative Building and CPL control room obtained the "Green Building Label"
2020 April Awarded the honor of 6%~20% of listed companies in the 6th Listed Companies Corporate Governance Evaluation
2020 April The land of the former "Kaohsiung Plant" is rezoned to "Kaohsiung Multifunctional Economic and Trade Park No. 6 Special Zone"
2020 May The Environmental Office of the Hsiaokang Plant obtained the "Green Building Label Qualification Grade".
2020 June Da-Sheh Plant and Hsiaokang Plant were awarded "2019 Outstanding Contribution to the Cleaning of Kaohsiung Air Quality Purification Zone" by the Environmental Protection Bureau of Kaohsiung City Government.
2020 September Toufen Plant obtained "ISO Water Footprint Certification" for CPL and PA6 products.
2020 September The Hsiaokang Plant was awarded the "2020 Excellent Occupational Safety and Health Unit" by the Ministry of Labor.
2020 November Qiaotou Plant officially came on stream. 2020 November Awarded the Taiwan TOP50 Corporate Sustainable Award and the CSR Reporting Gold Award - Traditional Manufacturing in the 13th Taiwan Corporate Sustainability Award (TCSA)
2020 November Awarded the TOP50 Sustainable Enterprise Award - Traditional Manufacturing Industry in the 13th TCSA Taiwan Corporate Sustainability Awards 2020
2020 November Hsiaokang Plant obtained "ISO Water Footprint Certification" for CPL product and organization level
2020 December Awarded CDP Climate Change Questionnaire Management Grade (B-)
2021 February Selected as S&P Global's The Sustainability Yearbook Member and awarded Industry Mover in the global chemical industry.
10 -

Chapter 3 Report on Corporate Governance

I. Organization

(I) Organizational Chart

==> picture [451 x 514] intentionally omitted <==

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

Shareholders' Meeting
Audit Committee
Board of Directors Secretariat
Remuneration Committee
Audit Office
CSR Committee
Shareholder Services Office
CEO
President
President's Office
Occupational Safety & Health Center Environmental Protection & Pollution Control Center
Legal Counsel R&D Center
Finance Department
Commerce Department
Administrative Resources Petrochemical Production New Venture Department
Land Development Department
----- End of picture text -----

Data updated as of March 2021

11 -
(II) Operations and functions

1. President's Office

Responsible for research, analysis, planning and making overall operational plans, ensuring the integration of production, supply and sales, assisting the General Manager in execution, policy promotion, supervisory and management, so as to assist all units in promoting business. Responsible for communication and coordination between all units. Provide a command platform for decision information to improve the quality of the decision. Through the collection of operation and management data, integrate the management processes, analysis reports, decision information, etc. of each unit; through data and innovative technology management models, establish the optimization of business process, and further link the mechanism of performance evaluation. Responsible for various identified projects assigned by the General Manager. Other business in accordance with the Article of Incorporation and general manager's assignments.

Occupational Safety & Health Center

Responsible for the Company's safety, health & environmental, fire emergency & safety, energy conservation, water conservation and waste management policies. Assist each plant in planning, promotion, execution, supervision, and management of production safety management (PSM) systems. Collect Company and industry-specific health and safety regulatory changes and technology. Participate and discuss with government parties to ensure standards are in compliance.

Environmental Protection & Pollution Control Center

Responsible for planning, execution, and operations that relate to environmental protection, energy savings and carbon reduction, waste water savings and management, pollution, and recycling so as to plan, execute, supervise, and manage environmental-related ISO systems. Responsible for evaluation, planning, and execution of land remediation plans. Collect company and industry-specific environmental regulatory changes and remediation technology. Participate and discuss with government parties to ensure standards are in compliance.

Legal Counsel

Responsible for providing legal advice and opinion to the Company, reviewing and revising the Company's contracts, legal instruments and internal regulations, executing litigation and non-litigation cases, as well as formulating and executing the Company's intellectual property management system

R&D Center

Responsible for planning and execution of the Company's R&D strategies; market research, development, test, technology transfer, production, sales, technology service and promotion of the new product. Design, planning and management of pilot plant and manufacturing process, and improvement. And investigation, research, application, maintenance, security and management of intellectual properties; operation, manufacturing, quality management, inventory control, occupational safety, environmental protection, trading, and sales of products of the Qiaotou Plant.

12 -

6. Commerce Department

Plan and execute the marketing strategy and sales policies. Responsible for matters related to the sale and purchase and resale trading business of the Company's products and byproducts. Responsible for matters related to the Company's raw materials and minor raw materials procurement, supply, and inventories management. Responsible for matters related to customer credit extension operations, the credit assessment, handling sales on account business, accounts collection, etc. Responsible for the overseas branch units' (factories) procurement of raw materials, product sales, trade, credit and other related matters governed by the above four points, as well as unifying, coordinating, and integrating the Company's domestic and overseas business synergy.

7. Petrochemical Production Department

Production, storage, transportation, and management of the Company and its subsidiaries' petrochemical products. The evaluation of production technology and equipment update, and the design, planning, and execution of project engineering for the Company' and its subsidiaries' petrochemical products. The engineering management and the collection, analysis, and research of engineering data for the Company and its subsidiaries' petrochemical products. The technical services for the Company and its subsidiaries' petrochemical products, and enhance the production capacity and production performance of each plant. Establish the planning and execution of core engineering technology. The design, planning, management, and improvement of the pilot plants, manufacturing processes, and manufacturing equipment. Handling matters related to technical regulations of technical authorization. The review and selection of process method and the preparation of project contracting for overseas petrochemical investment projects. The collation of technical data of factory construction, collation of drawings, and establishing standards of various factory construction for overseas petrochemical investment projects. The operation management and execution of actual factory construction, progress control, and coordination and communication of work for overseas petrochemical investment projects.

8. Finance Department

Planning and execution of financial business; planning and execution of accounting business; planning and execution of tax business; handle the internal auditing business; planning of the Audit Committee agenda and meeting execution; manage securities positions; planning, research and promotion of capital budgeting policies, cost of capital, and capital structure; responsible for the Company's communication with external stakeholders and the establishment, maintenance and management of related activities. Responsible for handling external information disclosure, strengthening the transparency of Company information, and regularly reviewing corporate governance evaluation projects every year and proposing improvements; provide various financial support in accordance with the Company's operating performance and global investment strategy; evaluation of long-term and short-term investment in financial commodities and financial risk review on executing each project investment plan, and supervision and management on the accounting and operating performance of domestic and overseas reinvestment projects; preparation and implementation of the investment exit plan.

Administrative Resources Department
13 -

Responsible for information systems, network systems, office automation systems, computerized standard operating procedures, information security policies, planning, building, promotion, and maintenance of software program authorization and terms of use. The planning of human resources, recruitment, compensation & benefits planning, management of job positions, performance management, talent training and development, employee relations and fixed asset, operating assets, asset insurance, and general affairs. Production, construction, plant expansion plans and construction project bids, procurement of raw materials and machinery, supply, materials, and machinery related insurance, claims, customs tax returns, refunds, and guarantee deposit returns and related matters. Construction development, raw material, and machinery supplier database maintenance and creation.

10. Land Development Department

Responsible for Company real estate investment planning, procurement, disposal, and management. Development strategy establishment and execution, evaluation of domestic and overseas land development, planning, and project management. Market research, land permit rezoning, public relations, and institutional negotiations. Land development purchasing and procurement, construction progress management and quality management, development project sales planning and business development, commercial real estate operations and facilities management, including modern residential construction and sales.

11. New Venture Department

Coordination, reporting and tracking of the Company's annual business plan; business information analysis and advice on the Company's operation and development of related industries, technology, environmental protection, economic and social environment, etc.; market research analysis and recommendations on the Company's existing products and new raw materials, new products, and derivative products; discover, evaluate, plan, execute and manage domestic and foreign industrial cooperation plans and investment opportunities; government application, project establishment and approval of investment plans; application procedures and document preparation of Company establishment; comprehensive assistance in contracts and negotiation of preferential conditions of investment plans; handle matters of technical authorization business conditions; operation and management of production plants in overseas non-petrochemical industries.

14 -

II. Information About Director, President, Vice President, Assistant Vice President, and Head of Department and Branch

(I) Information about directors

1. Information about directors

March 30, 2021

Title (Note 1)	Nationality or registered country	Name	Gender	Election (Appointm ent) Date	Term of Office	Date first elected (Note 2)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 3)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Remark (Note 4)
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
		The Core Pacific Co., Ltd.	N/A	20180411	Three years until April 10,2021	19940726	39,285,806	1.455%	45,625,096	1.389%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
Chairman	Republic of China	Core Pacific Development and Investment Company Representative: Ruey-Long Chen	male	20200131	From Jan. 31, 2020 to April 10,2021	20120630	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Department of Applied Economics in NCHU Minister, Ministry of Economic Affairs	Independent Director, Formosa Chemicals & Fiber Corporation Independent Director, Inventec Corporation Director, HANNSTAR BOARD CORPORATION Director, Asia Cement Corporation (Legal Representative) Secretary-General, Cross-Strait Entrepreneur Summit Chairman, Sinocon Industrial Standards Foundation Director, Kaohsiung Monomer Co., Ltd. (Legal Representative) Director, Taivex Therapeutics Inc. (Legal Representative) Director, Dingyue Development Co., Ltd. (Legal Representative) Director, BES Engineering Corp. (Legal Representative) Legal Representative, Unichem Development Limited Director, Weihua (Rutung) Trade Co., Ltd. Director, WeiQiang International Trading (Shanghai) Co., Ltd. Director, Jiangsu Weiming Petrochemical Corporation Director, Changzhou Weicai New Material Science & Technology Co., Ltd. Executive Director, Core Pacific Twin Tower (Myanmar) Co. Ltd. Director, Weifong (Myanmar) Co. Ltd. Director, Thanh Phong Construction Investment Co.,Ltd.*	None			Note 4

Title (Note 1)	Nationality or registered country	Name	Gender	Election (Appointm ent) Date	Term of Office	Date first elected (Note 2)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 3)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Remark (Note 4)
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
Vice Chairman	Republic of China	BES Machinery Co., Ltd.	N/A	20180411	Three years until April 10,2021	20000524	12,486,043	0.462%	13,110,345	0.399%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
		Representative of BES Machinery Co., Ltd.: Jiun-Nan Bai	male	20180411	Three years until April 10,2021	20000524	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Master Degree Department of Economics of NTU Ph.D. in Law, Institute of Economics, Chinese Culture University Senior Specialist, Council for Economic Planning and Development, Executive Yuan Vice President, Bank of Communications Chairman, Core Pacific Securities Investment Trust	Independent Director, President Securities Corp. Independent Director, Inventec Corporation. Chairman, First Leasing Co. Ltd. Chairman, Bo-Mong Investment Co. Ltd. Director, Weili Food Industries (Legal Representative) Director, Core Pacific City Co., Ltd. (Legal Representative) Director, Taivex Therapeutics Inc. (Legal Representative)* Director, BES Engineering Corp. (Legal Representative) Director, Jiansu Core Pacific - Yamachi Commercial Insurance Co. Ltd.	None	None	None	None
Independent Director	Republic of China	Yun-Peng Chu	male	20180411	Three years until April 10,2021	20120630	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Master Degree Department of Economics of NTU Master degree in Department of Economics in University of Maryland Professor of Department of Economics in NCU Professor, Chi-Jen Liu Lecture, School of Big Data Management, Soochow University, Researcher, Research Center, Department of Economic Development, National Central University Minister of State, Executive Yuan Chairman, Taiwan Insurance GuarantyFund	Independent Director, Nan Ya Plastic Corporation Chairman, Bozhen Service Co., Ltd. Independent Director, Asia Cement Corporation	None	None	None	None
Independent Director	Republic of China	Wen-Yen Pan	male	20180411	Three years until April 10,2021	20130628	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Master degree and P.h.D in Department of Chemical Engineering at University of Wyoming Chairman, Kuo Kuang Power Co., Ltd. President & Chairman, CPC Corporation Chairman, Gintech Energy Corporation (Director Representative)	Chairman, CPC Chairman, CTCI Foundation Independent Director, UPC Technology Corporation Director, CTCI Independent Director, U-Ming marine Chairman, Shih Tzu Wang Wisdom Learning Co., Ltd	None	None	None	None

Title (Note 1)	Nationality or registered country	Name	Gender	Election (Appointm ent) Date	Term of Office	Date first elected (Note 2)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 3)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Remark (Note 4)
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
Independent Director	Republic of China	Song-Nian Ye	male	20200528	May 28, 2020 to April 10, 2021	20200528	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Army Infantry Training Command Officer Reserve School Graduate Director and Chairman, Union Wide Construction Co. Ltd.	Chairman, Union Wide Construction Co. Ltd. Chairman, Union Wide Construction Co. Ltd. Chairman, Kung Cheng Construction Co. Ltd.	None	None	None	None
Director	Republic of China	The Core Pacific Co., Ltd.	N/A	20180411	Three years until April 10,2021	19940726	39,285,806	1.455%	45,625,096	1.389%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
		Representative of Core Pacific Co., Ltd.: To be reassigned	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A			N/A
Director	Republic of China	Jen Huei Enterprise Co., Ltd.	N/A	20180411	Three years until April 10,2021	20060630	16,123,959	0.597%	19,431,156	0.592%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
		Representative of Jen Huei Enterprise Co., Ltd.: Jiun-Huei Guo	male	20180411	Three years until April 10,2021	20040611	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Department of Accounting Soochow University General Manager of TPC	Director, CMC Magnetic Co., Ltd.	None	None	None	None
		Sheen Chuen- Chi Cultural and Educational Foundation	N/A	20180411	Three years until April 10,2021	20000524	1,781,269	0.066%	1,870,332	0.057%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
Director	Republic of China	Representative of Sheen Chuen-Chi Cultural and Educational Foundation: Hui-Ting Shen	male	20200525	May 25, 2020 to April 10, 2021	20090630	0	0.000%	0	0.000%	0	0.000%	0	0.000%	B.A.in Department of Electronic Machinery and Information Management, Lehigh University EMBA in School of Economics and Management, Tsinghua University Director, Core Pacific City Co., Ltd. (Legal Representative) Director, Sheen Chuen-Chi Cultural and Educational Foundation Director, Jingjie Construction Co., Ltd. Director, China Petrochemical Development Corporation (Legal representative)	Director, Core Pacific City Co., Ltd. (Legal Representative) Director, Sheen Chuen-Chi Cultural and Educational Foundation Director, Jingjie Construction Co., Ltd.* Director, Core Pacific - Yamaichi International (H.K.) Director, Jiansu Core Pacific - Yamachi Commercial Insurance Co. Ltd. Chairman, Shanghai Core Pacific - Consultant Co. Ltd. (Legal Representative) Chairman & President, Beijing Core Pacific - Investment and Consultant Co. Ltd. (Legal Representative) Vice Chairman, Yangzhou Living City Co., Ltd. Director, Yangzhou Jing Guo Co., Ltd. Director, Yangzhou Zhuoyue Property Management Co., Ltd. Director, Yangzhou Jingcai Property Co., Ltd. Director, Yangzhou Jingge Restaurant Management Co., Ltd. Director, Anshan Jinghui Real Estate Co., Ltd. Director, Changshu Jinghui Property Co., Ltd. Director, Hangzhou Jinghua Technology Movie ArtWorld Co.,Ltd.	None	None	None	None

Title (Note 1)	Nationality or registered country	Name	Gender	Election (Appointm ent) Date	Term of Office	Date first elected (Note 2)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 3)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
		Sheen Chuen- Chi Cultural and Educational Foundation	N/A	20180411	Three years until April 10,2021	20000524	1,781,269	0.066%	1,870,332	0.057%	0	0.000%	0	0.000%	N/A	N/A	N/A
Director	Republic of China	Representative of Sheen Chueh-Chi Cultural and Educational Foundation: Kuen-Ming Lin	male	20180411	Three years until April 10,2021	20120630	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Department of Electrical Engineering NTU Chairman, Taiwan Health Care Association Director, Straits Economics & Cultural Interchange Association Vice Secretary, CSCS	Vice Secretary, CSCS Chairman and General Manager of Premier Venture Capital Corp. Chairman, Premier Capital Management Corp. General Manager and Director, Kun Chi Venture Capital Corp. Chairman, Dexin Corp. Chairman, Ruby Tech Corp. Director, Amit Technology Corporation (Legal Representative) Director, Zipcom Corporation Director, Lung Hwa Electronics (Legal Representative) Director, Terawins, Inc. (Legal Representative) Director, DeltaMac (Taiwan) Co., Ltd. (Legal Representative) Director, Development Consultants Co., Ltd. (Legal Representative) Director, UISCO Independent Director, GetacTechnology Corp.	None	None	None

*: Refer to the reinvestment companies of the Company and those using the equity method
Note 1: The institutional shareholder shall be identified by name and representative (in the case of an institutional representative, please specify the institutional shareholder's name) and also complete the following Table 1.

Note 2: Please also specify if the initial term of office for the Company's director or supervisor is interrupted.

(1). Mr. Hui-Ting Shen's initial term of office as a director was from June 30, 2009 to May 16, 2011, and the term of office of his reappointment as a director of the Company (as the representative of the Sheen Chuen-Chi Cultural and Educational Foundation) was from May 25, 2020 to April 10, 2021.
Note 3: Refers to experiences related to the current post. If the officer once assumed a post in a CPA Office or an affiliate of the Company, please specify the job title and responsibilities.
Note 4: Where the Chairman and the general manager or person of an equivalent post (the highest level manager) of the Company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto (for example, increase the number of independent directors, and there shall be more than half of the directors who do not concurrently serve as employees or managers). The Company is currently actively developing the petrochemical and land development two-pronged businesses, and vigorously developing overseas competitive markets. Therefore, we hired Ruey-Long Chen, Chairman of the Board to concurrently serve as the Company’s CEO, leading the Company’s management team, actively exploring the Company’s development territory, and coordinating the Company’s overall “breakthrough” plan and sustainable development strategy. In accordance with laws and regulations, the Company will adjust the Chairman of the Board and CEO or increase the number of independent directors before December 31, 2023.
Note 5: When elected, the total shares issued was 2,699,857,267 shares.

Note 6: As of the record date, the total shares issued was 3,284,850,130 shares.

March 30, 2021

2. Major shareholders of corporate shareholders

Name of Corporate Major Shareholders of Corporate Shareholders (Note 2) Shareholder (Note 1) Fang Yang Industrial Co., Ltd. (20%), Core Pacific Investment Co., Ltd. (18.13%), Jen Huei Enterprise Co., Chang Po Enterprise Co., Ltd. (15%), Tsou Jing Technology Co., Ltd. (14.37%), Tien Ltd. Jing Investment Co., Ltd. (13.75%) Tien Jing Investment Co., Ltd. (16.23%), Chen Chi Enterprise Co., Ltd. (9.29%), Core Pacific Investment Co., Ltd. (9.11%), Tang Lin-Mei(9.11%), Core Pacific Supermarket Co., The Core Pacific Co., Ltd. Ltd.(8.49%), Ching Ding Technology Co., Ltd. (7.74%), Wu Chun-Feng (6.67%), Chang - Tung An (5.56%) Sheen Chuen-Chi Cultural and Educational Foundation[(An established non-profit organization) ] BES Engineering Corporation (99.35%), Yang Wun-Lie (0.03%), Zeng Wei-Liang BES Machinery Co., Ltd. (0.02%), Tsai Chih-Wen (0.02%), Lin Jia-He (0.02%), Jiang Jhong-Sie (0.01%)

Note 1: For a director or a supervisor who acts as a corporate shareholder's representative, please specify the corporate shareholder's name.
Note 2: Please specify names of the major shareholders of the given corporate shareholder (top ten shareholders) and the ratio of shareholding. Where the major shareholder is a corporation, please complete the following Table 2.
Note 3: If the legal person shareholder is not organized as a company, the "names of shareholders" and the "ratio of shareholding" in the preceding paragraph shall be "names of funders or donors" and the "ratio of fund or donation".
Major Shareholders of Major Corporate Shareholder

March 30, 2021

	March 30, 2021
Name of Corporate Shareholder (Note 1)	Major Shareholders of Corporate Shareholders (Note 2)
BES Engineering Co. Ltd.	CPDC 10.735%; The Core Pacific Development & Investment Co. Ltd. 2.237%; Lin Wenyang1.552%; Tony Development Industry Co., Ltd. (1.391%), Kuo Ching Chemical Co., Ltd. (1.369%), Vanguard Emerging Markets Stock Index Fund account under custody of JPMorgan (1.265%), Advanced Starlight Advanced Aggregate International Stock Index Fund investment account under custody of Chase (1.180%), Lin Shih-Chung (1.058%), Sheen Chuen-Chi Cultural and Educational Foundation (0.835%), iShares MSCI Emerging Markets ETF under custody of Standard Chartered (0.803%),
Core Pacific Investment Co., Ltd.	Ching Ding Technology Co., Ltd. (24.00%), Kuo Ching Investment Co., Ltd. (19.00%), Tao Chu Construction Co. Ltd. (19.00%), Tien Jing Investment Co., Ltd. (16.75%)
Core Pacific Supermarket Co., Ltd.	Asia Pacific Industrial & Commercial Joint Admission Co., Ltd. (41.25%), Jen Huei Enterprise Co., Ltd (18.75%), Cheng Yao Co., Ltd. (12.00%), Xing Rong Co., Ltd. (11.25%)
Ching Ding Technology Co., Ltd.	Tong Development Industrial Co., Ltd. (18.08%), Chen Chi Enterprise Co., Ltd. (14.67%), Ching Chen Industrial Co., Ltd. (9.76%), Hung Yi Construction Co., Ltd. (9.07%), Chang Po Enterprise Co., Ltd. (8.95%), Tsou Jing Technology Co., Ltd. (8.14%), Fu Hsing Management Consultation Co., Ltd. (8.13%)
Chen Chi Enterprise Co., Ltd.	Jing Kuo Real Estate Agency Co., Ltd. (33.60%), Wu Chun-Feng (30.84%), Ching Ding Technology Co., Ltd. (15.00%), Fang Yang Industrial Co., Ltd. (15.00%)
Tsou Jing Technology Co., Ltd.	Core Pacific Investment Co., Ltd. (33.75%), Kuo Ching Investment Co., Ltd. (27.50%), Chen Chi Enterprise Co., Ltd. (27.50%)
Tien Jing Investment Co., Ltd.	Hung Yi Construction Co., Ltd. (21.42%), Kuo Ching Investment Co., Ltd. (20.74%), Chang Po Enterprise Co., Ltd. (10.89%), Ching Ding Technology Co., Ltd. (10.53%)
Fang Yang Industrial Co., Ltd.	Lin Ke-Ming (30%), Wu Wang Hsiu-Ching (20%), Hong Hsiu-Feng (20%), Song Kun- Ren (20%)
Chang Po Enterprise Co.,Ltd.	Fang Yang Industrial Co., Ltd. (29.59%), C.P. Leasing Co., Ltd. (17.52%), Jheng Chao- Wun(9.73%),HungYiConstructionCo.,Ltd. (9.00%), Wu Chun-Feng (7.95%)

Note 1: The names of the major corporate shareholders referred to in Table 1, if any, shall be specified.

Note 2: Please specify names of the major shareholders of the given shareholder (top ten shareholders) and the ratio of shareholding.
Note 3: If the legal person shareholder is not organized as a company, the "names of shareholders" and the "ratio of shareholding" in the preceding paragraph shall be "names of funders or donors" and the "ratio of fund or donation".
Information on Directors and Supervisors in professionalism and independence

March 30, 2021

Qualifications Name (Note 1)	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years' Working Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years' Working Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years' Working Experience	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Number of public companies where the person holds the title as independent director
	Lecturer or above in commerce, law, finance, accounting or subjects required by the business of the company in public or private colleges or universities	Pass the qualification examination with proper licensing by the national Government Apparatus as court judge, prosecutor, lawyers, certified public accountant or other professional designations required by the business of the Company	Required Work experience in commerce, law, finance, accounting or others required by the Company	1	2	3	4	5	6	7	8	9	10	11	12
Ruey-LongChen																2
Jiun-Nan Bai																2
Yun-PengChu																2
Wen-Yen Pan																2
Song-Nian Ye																0
Jiun-Huei Guo																0
Kueng-MingLin																1
Hui-TingShen																0

Note 1: The number of spaces shall be adjusted subject to the actual circumstances.

Note 2: Respective directors and supervisors who meet the following qualifications 2 years before assumption of office and at the time of assumption office shall put a " ✓ " in the appropriate space.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or its affiliates (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).
(6) Not a director, supervisor, or employee of that other company which a majority of the company's director seats or voting shares and those of any other company are controlled by the same person (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).
(7) Not a director (or governor), supervisor, or employee of that other company or institution which the Chairman, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).
(8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company, and the company and its parent or subsidiary or a subsidiary of the same parent).
(9) Does not provide the Company or associated companies with auditing or in the past 2 years, obtained compensation cumulated over NT$500,000 in business, legal, financial, accounting services, by professionals, sole proprietorships, partnerships, companies, or institutional owners, partners, directors, supervisors, managers, and spouses. However, the Remuneration Committee, M&A Audit committee members, established in accordance with local securities regulations or mergers & acquisition regulations, are not included.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Not a person of any conditions defined in Article 30 of the Company Act.
(12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

(II) Information about President, Vice President, Assistant Vice President, and Head of Department and Branch

March 30, 2021

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
CEO	Republic of China	Ruey-Long Chen	male	2020.03.27	0	0.000%	0	0.000%	0	0.000%	Department of Applied Economics in NCHU Minister, Ministry of Economic Affairs	Independent Director, Formosa Chemicals & Fiber Corporation Legal Representative and President of Weiqiang International Trade (Shanghai) Co., Ltd.Director, HANNSTAR BOARD CORPORATION Director (Legal Representative), Asia Cement Corporation Secretary-General, Cross-Strait Entrepreneur Summit Chairman, Sinocon Industrial Standards Foundation Director, Kaohsiung Monomer Co., Ltd. (Legal Representative) Director, Taivex Therapeutics Inc. (Legal Representative) Director, Dingyue Development Co., Ltd. (Legal Representative) Director, BES Engineering Corp. (Legal Representative) Legal Representative, Unichem Development Limited Director, Weihua (Rudung) Trade Co., Ltd. Director, Jiangsu Weiming Petrochemical Corporation Director, Jiangsu Weiming Petrochemical Corporation Director, Changzhou Weicai New Material Science & Technology Co., Ltd. Executive Director, Core Pacific Twin Tower (Myanmar) Co. Ltd. Director, Weifong (Myanmar) Co. Ltd. Director,Thanh PhongConstruction Investment Co.,Ltd.*	None	None	None
President	Republic of China	Janson Yu	male	2017.11.10	127,107	0.004%	962	0.000%	0	0.000%	Director and Chief Financial Officer, Living Mall, Yangzhou. Chief Financial Officer, Living Mall Co. Ltd. Project Manager, Core Pacific Securities Co., Ltd. EMBA, Xiamen University Department of Accounting, Fu-Jen Catholic University	Director, Kaohsiung Monomer Co., Ltd. (Legal Representative) Director, Tsou Seen Chemical Industries Corporation (Legal Representative) Director, CPDC(BVI) Company Director, Taivex Therapeutics Corporation (Legal Representative) Director, Dingyue Development Co., Ltd. (Legal Representative) Director, CPDC Green Technology Corporation (Legal Representative) President, BES Twin Towers Development Corporation Ltd. Director, Core Pacific Twin Tower (Myanmar) Co. Ltd. Director, Changzhou Weicai New Material Science & Technology Co., Ltd. Director, Weihua (Rutung) Trade Co., Ltd. Legal Representative and President, WeiQiang International Trading (Shanghai)Co.,Ltd.*	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
												Director, Core Pacific Twin Star (Myanmar) Co. Ltd. Director, Frontier Fortune Investment Co., Ltd. Thanh Phong Construction Investment Limited (Legal Representative) Core Pacific Twin Star (Vietnam) Investment Co. Ltd. (Legal Representative) Chairman,Weiming (Rudong)EngineeringCo.,Ltd.*
Vice President	Republic of China	Kuo-Tsai Huang	male	2017.02.24	0	0.000%	0	0.000%	0	0.000%	Investigation Officer of Ministry of Justice, Section Chief of Civil Service Protection & Training Commission, Senior Executive Officer of National Academy of Civil Service, Secretary General of National Academy of Civil Service, Deputy Director of National Academy of Civil Service, Counselor of Civil Service Protection & Training Commission, Deputy General Manager in Management Department of BES Master Degree in Public Administration of NCCU	Director, CKS Guard Co., Ltd. (Legal Representative)*	None	None	None
Executive Vice President	Republic of China	Yun-Chih Liu	male	2020.06.17	0	0.000%	0	0.000%	0	0.000%	Vice President of Land Development Department of CPDC Department of Law in Fu Jen Catholic University	President, Dingyue Development Co., Ltd. Director, BES Twin Towers Development Corporation Ltd. (Legal Representative) Director, JEAN Pacific Development Co., Ltd. (Legal Representative) President, Thanh Phong Construction Investment Co., Ltd. President, Core Pacific Twin Tower (Vietnam) Investment Co., Ltd. Director, Weiming (Rudung) Engineering Co., Ltd. President, Changshou Jing Huei Landmark Co. Ltd. President,An Shan JingHuei Landmark Co. Ltd.	None	None	None
Vice President	Republic of China	Yuan-Long Chen	male	2016.07.01	119,660	0.004%	0	0.000%	0	0.000%	Factory Chief, CCP Manager, CTTIC Group Corporation Chief Engineer, Taiwan Industrial and Mine Corporation Assistant, ARCHWELL Corporation Manager and Factory Chief, CPDC Master Degree in Chemical Engineering of NTU	Legal Representative and President of Jiangsu Weiming Petrochemical Corporation*	None	None	None
Vice President	Republic of China	Chia-Wei Tsai	male	2019.12.25	17,414	0.001%	19,261	0.001%	0	0.000%	Engineer, Specialist, Manager, Assistant Vice President in CPDC P.h.D. in MOES of National Sun Yat-sen University	None	None	None	None
Vice President	Republic of China	Shu-Tong Zou	male	2019.08.12	79,526	0.000%	0	0.000%	0	0.000%	AVP, Global Brands Manufacturing Product Manager, DuPont Taiwan Six Sigma Black Belt AVP, Production Division MBA Fu Jen Catholic University	Director, WeiQiang International Trading (Shanghai) Co., Ltd. Director, Changzhou Weicai New Material Science & TechnologyCo.,Ltd.	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Vice President	Republic of China	Ying-Chun Chen	male	2019.08.12	0	0.000%	0	0.000%	0	0.000%	Senior Administrator, Specialist, Manager and Assistant Vice President, CPDC Department of Accounting of Chinese Culture University	Supervisor, Taivex Therapeutics Corporation Supervisor, Kaohsiung Monomer Co., Ltd. Director, CKS Guard Co., Ltd. (Legal Representative) Director, CPDC (BVI) Investment Co., Ltd. Director, CPDC Green Technology Corporation (Legal Representative) Supervisor, Dingyue Development Co., Ltd. Director, BES Twin Towers Development Corporation Ltd. (Legal Representative) Supervisor, Jean Pacific Development Co., Ltd. (Legal Representative) Supervisor, Weihua (Rudong) Trade Co., Ltd. Supervisor, WeiQiang International Trading (Shanghai) Co., Ltd. Supervisor, Jiangsu Weiming Petrochemical Corporation Supervisor, Changzhou Weicai New Material Science & Technology Co., Ltd. Director, Core Pacific-Yamaichi Financial Group Limited Director, Core Pacific-Yamaichi International (H.K.) Director, Jiansu Core Pacific - Yamachi Commercial Insurance Co. Ltd. Director, Guangxi Beibu Gulf Innovation Development Investment Fund Management Co., Ltd. Supervisor, Handy Chemical Corporation Ltd. Supervisor, Weiming (Rudung) Engineering Co., Ltd. Supervisor,Tsou Seen Chemical Industries Corporation*	None	None	None
Special Assistant	Republic of China	Chi-Chung Chia	male	2019.08.12	172	0.000%	0	0.000%	0	0.000%	Engineer, Chunglin Corporation Engineer, Supervisor, Manager, CPDC Chemical Fiber in National Taipei University of Technology	Director, Tsou Seen Chemical Industries Corporation (Legal Representative) Chairman and Director, CPDC Green Technology Corporation (Legal Representative) Director, Jiangsu Weiming Petrochemical Corporation Director, Gemini Star (India) Private Limited. .	None	None	None
Special Assistant	Republic of China	Chia-Wen Chang	male	2020.09.14	0	0.000%	0	0.000%	0	0.000%	Manager and Assistant Vice President, Pacific Construction Co., Ltd. Vice President, Taijia Development Co., Ltd. Chief Operating Officer, SOFR3SH Co., Ltd. Special Assistant of Chairman, Sun-Jet Construction Ltd. Assistant Vice President, Land Development Department of CPDC Department of Civil Engineering in Minghsin Universityof Science and Technology	None	None	None	None
Assistant Vice President	Republic of China	Huei-Fen Yang	Female	2020.05.01	0	0.000%	0	0.000%	0	0.000%	Senior Administrator, Manager and Chief Auditor, CPDC Department of Business Administration of Fu-Jen Catholic University	None	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Assistant Vice President	Republic of China	Guan-Lu Lee	male	2018.09.17	0	0.000%	0	0.000%	0	0.000%	Chemical Engineering Department of National Taipei Institute of Technology	None	None	None	None
Assistant Vice President	Republic of China	Chien-Hsien Lee	male	2019.08.12	79,562	0.002%	45,000	0.001%	0	0.000%	Supervisor, Specialist, Manager and Factory Chief, CPDC Master Degree of Chemical and Materials Engineering Department in National Central University	None	None	None	None
Assistant Vice President	Republic of China	Tien-Hua Wang	male	2020.07.24	0	0.000%	0	0.000%	0	0.000%	Designer, On-Site Supervisor, Project Manager, Manager, Research Department of TCT Architectural Resources President of Shanghai Tuike Design & Consultation Co., Ltd., Design Manager, Project Manager, Development Director, Assitant Manager, Special Assistant of Sunpowerl Group Vice President of Real Estate Department of Ting Hisin International Group, Vice President of a project company (Shanghai Xinguohuang), President and Acting President of project companies (Shanghai Jinqiuminghao, Shanghai Xinguohuang) Vice President of Real Estate Department, President of Real Estate Department, President of Hotel Department, President of Food and Beverage Department, Executive Vice President, Acting Executive General Manager, Want Want Group (San Want Holdings) Executive Director, Shanghai Mussu Investment Co., Ltd. Vice President, Xinruilian Group (Zhaoqing Ruishijie Tourism Development Co., Ltd.) MBA, School of Management of Fudan University Architecture, National Cheng Kung University	None	None	None	None
Assistant Vice President	Republic of China	Chiao-Pin Lee	male	2020.09.15	193	0.000%	0	0.000%	0	0.000%	Managerand Plant Chief, CPDC Toufen Plant, Production 1st Team Masters in Chemical Engineering, Yuntech University	None	None	None	None
Assistant Vice President	Republic of China	Chien-Yuan Huang	male	2019.08.12	411	0.000%	0	0.000%	0	0.000%	Manager, CPDC Dashe Plant, Safety Team Masters in Chemical Engineering, Tamkang University	None	None	None	None
Assistant Vice President	Republic of China	Chau-Yuan Tsai	male	2020.10.01	0	0.000%	0	0.000%	0	0.000%	Managerand Plant Chief, CPDC Hsiaokang Plant, Production 1st Team Masers in Chemical Engineering, Tunghai University	None	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Plant Chief	Republic of China	Hong-Long Chen	male	2020.09.15	0	0.000%	0	0.000%	0	0.000%	Manager, Public Department, CPDC Toufen Plant Masters in Textile Engineering, Feng Chia University	None	None	None	None
Plant Chief	Republic of China	Wang Chong-Chien	male	2019.08.12	21,346	0.001%	0	0.000%	0	0.000%	Manager, CPDC Dashe Plant, Technical Team Masters in Chemical Engineering, Yuan Zhe University	None	None	None	None
Plant Chief	Republic of China	Chi-Tsung Kao	male	2020.10.01	0	0.000%	0	0.000%	0	0.000%	Engineer in CPLIII factory of CPDC Supervisory, Senior Engineer, Director, Manager of Technical Team in Hsiaokang Plant of CPDC Master Degree of Chemical and Materials Engineeringin TamkangUniversity	None	None	None	None
Manager	Republic of China	Lee Chi- Chang	male	2018.01.01	0	0.000%	0	0.000%	0	0.000%	Manager, CPDC Admin Division, HR Department Fiber Engineering, National Taiwan Universityof Science and Technology	None	None	None	None
Manager	Republic of China	Yung-Long Chen	male	2018.01.01	0	0.000%	0	0.000%	0	0.000%	Masters in IT,TamkangUniversity	None	None	None	None
Manager	Republic of China	Chi-Wei Chang	Female	2018.01.01	0	0.000%	0	0.000%	0	0.000%	Masters in Materials Engineering,NSYSU	None	None	None	None
Manager	Republic of China	Yang Ming- Ling	Female	2018.01.01	31,375	0.001%	5,250	0.000%	0	0.000%	Manager, CPDC Legal Counsel JD,National Taipei University	None	None	None	None
Manager	Republic of China	Yang Chi- Yuan	male	2018.01.01	6,643	0.000%	0	0.000%	0	0.000%	Manager, CPDC, China Business Division, Construction Department Chemistry and Engineering, National Taiwan Universityof Science and Technology	None	None	None	None
Manager	Republic of China	Chi-Fong Wang	male	2018.01.01	6,168	0.000%	0	0.000%	0	0.000%	Chemical Engineering, National Taiwan University of Science and Technology	None	None	None	None
Manager	Republic of China	Fang-Mo Chien	male	2018.01.01	39,475	0.001%	918	0.000%	0	0.000%	Manager, Production Team of CPDC Dashe Plant Masters in Chemical Engineering,NCKU	None	None	None	None
Manager	Republic of China	Chin-Yi Lee	male	2018.01.01	66,000	0.002%	0	0.000%	0	0.000%	Manager, CPDC Dashe Plant, Administrative Department Masters in Chemistry,NCKU	None	None	None	None
Manager	Republic of China	Kuan-Der Chien	male	2018.01.01	50,084	0.002%	320	0.000%	0	0.000%	Masters in IT, Kaohsiung University of Applied Sciences	None	None	None	None
Manager	Republic of China	Chang-Hung Chien	male	2018.05.10	0	0.000%	0	0.000%	0	0.000%	Department of Industrial Engineering and Management,Yuan Zhe University	None	None	None	None
Manager	Republic of China	Pei-Yu Yang	Female	2018.08.01	9,450	0.000%	0	0.000%	0	0.000%	Senior Administrator and Specialist of CPDC Shareholder Services Office Department of International Trade in Advanced College of China University of Technology	None	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Manager	Republic of China	Mu-Chuan Ho	male	2018.01.01	45,000	0.001%	0	0.000%	0	0.000%	Engineer, Production Team and Utilities Team, section head of CPL factory of CPDC Toufen Plant; Manager, Environmental Division of CPDC Toufen Plant Textile of National Taiwan University of Science and Technology	None	None	None	None
Manager	Republic of China	Po-Cheng Hsu	male	2019.06.17	0	0.000%	0	0.000%	0	0.000%	Branch Manager, Ta Chong Commercial Bank Co., Ltd. Financial Supervisor, Fund Management Committee for Private Schools Faculties Master in Financial Management, Fu Jen Catholic University	None	None	None	None
Manager	Republic of China	Wen-Yuan Tseng	male	2019.08.12	152	0.000%	0	0.000%	0	0.000%	Sales Manager, Taiwan Cement Corporation, China Huanan Region. Deputy Manager, CPDC Product Trading Department Soochow University, Business BA Tamkang University, IMBA International Business	None	None	None	None
Manager	Republic of China	Wei-Ying Li	male	2020.08.01	0	0.000%	250	0.000%	0	0.000%	Postdoctoral Fellow, Sun Yat-Sen University Senior Engineer, CPDC R&D Center Specialist, CPDC R&D Center Assistant Manager, CPDC R&D Center Ph. D. of Chemistry,Sun Yat-Sen University	None	None	None	None

*: Refer to the reinvestment companies of the Company using the equity method

Note 1: It shall include information of president, vice president, assistant vice president, supervisors of various departments and branches; any position equivalent to president, vice president, assistant vice president, regardless of job title, shall also be disclosed.

Note 2: For the experience related to holding the current position, if one has worked in the CPA firm conducting the auditing and attesting business or related company, he/she shall state the job title and responsible position. Assistant vice president, regardless of job title, should also be disclosed.
Note 3: Where the Chairman and the general manager or person of an equivalent post (the highest level manager) of the Company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto (for example, increase the number of independent directors, and there shall be more than half of the directors who do not concurrently serve as employees or managers).

III. Remuneration to Directors (including Independent Directors), President and Vice Presidents

(I) Remuneration to Directors and Independent Directors (names and remuneration thereof to be disclosed individually)

December 31, 2020 Currency Unit: NTD Thousand

Title	Name	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	Remunerati on from investees other than subsidiaries (Note 11)
		Remuneration (A) (Note 2)		Pension (B)		Remuneration of Directors (C) (Note 3)		For Services (D) (Note 4)				Salaries, bonus and special subsidies (E) (Note 5)		Pension (F)		Remuneration of Employee (G) (Note 6)
		The Company	All companies included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company		All companies included into the financial statement (Note 7)		The Company	All companies included into the financial statement (Note 7)
																Cash dividend	Stock dividend	Cash dividend	Stock dividend
Chairman Appointed on January 31, 2020	Core Pacific Co., Ltd. Representative: Ruey- Long Chen	7,087	7,087	0	0	297	297	0	20	1.0842%	1.0872%	0	0	0	0	0	0	0	0	1.0842%	1.0872%	153
Chairman Retired on January 31, 2020	Core Pacific Co., Ltd. Representative: Ko-Ming Lin	1,465	1,764	0	0	0	0	0	0	0.2151%	0.2590%	0	0	20,000	20,000	0	0	0	0	3.1520%	3.1959%	24
Director Resigned on June 24, 2020	Representative of Core Pacific Co., Ltd.: Hwa- Yeang Shen	0	0	0	0	0	0	0	0	0.0000%	0.0000%	0	0	0	0	0	0	0	0	0.0000%	0.0000%	None
Director	Core Pacific Co., Ltd. Representative: To be appointed	0	0	0	0	297	297	0	0	0.0436%	0.0436%	0	0	0	0	0	0	0	0	0.0436%	0.0436%	None
Director & Vice Chairman	BES Machinery Co., Ltd. Representative: Jiun-Nan Bai	4,723	4,723	0	0	297	297	0	25	0.7370%	0.7407%	0	0	0	0	0	0	0	0	0.7370%	0.7407%	None
Director	Jen Huei Enterprise Co., Ltd. Representative: Jiun- Huei Guo	0	0	0	0	297	297	292	292	0.0864%	0.0864%	0	0	0	0	0	0	0	0	0.0864%	0.0864%	None
Director Appointed on May 25, 2020	Representative of Sheen Chuen-Chi Cultural and Educational Foundation: Hui-TingShen	0	0	0	0	297	297	173	173	0.0689%	0.0689%	0	0	0	0	0	0	0	0	0.0689%	0.0689%	None
Director Resigned on May 25, 2020	Representative of Sheen Chuen-Chi Cultural and Educational Foundation: Lian-ShengTsai	0	0	0	0	0	0	115	115	0.0170%	0.0170%	0	0	0	0	0	0	0	0	0.0170%	0.0170%	None
Director	Representative of Sheen Chueh-Chi Cultural and Educational Foundation: Kuen-MingLin	0	0	0	0	297	297	292	292	0.0864%	0.0864%	0	0	0	0	0	0	0	0	0.0864%	0.0864%	None

Title	Name	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	Remunerati on from investees other than subsidiaries (Note 11)
		Remuneration (A) (Note 2)		Pension (B)		Remuneration of Directors (C) (Note 3)		For Services (D) (Note 4)				Salaries, bonus and special subsidies (E) (Note 5)		Pension (F)		Remuneration of Employee (G) (Note 6)
		The Company	All companies included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company		All companies included into the financial statement (Note 7)		The Company	All companies included into the financial statement (Note 7)
																Cash dividend	Stock dividend	Cash dividend	Stock dividend
Independent Director Appointed on May 28, 2020	Song-Nian Ye◎	1,426	1,426	0	0	0	0	0	0	0.2094%	0.2094%	0	0	0	0	0	0	0	0	0.2094%	0.2094%	None
Independent Director Resigned on January 31, 2020	Ruey-Long Chen	300	300	0	0	0	0	0	0	0.0441%	0.0441%	0	0	0	0	0	0	0	0	0.0441%	0.0441%	None
Independent Director	Yun-Peng Chu◎☆	3,600	3,600	0	0	0	0	0	0	0.5286%	0.5286%	0	0	0	0	0	0	0	0	0.5286%	0.5286%	None
Independent Director	Wen-Yen Pan◎☆	3,414	3,414	0	0	0	0	0	0	0.5013%	0.5013%	0	0	0	0	0	0	0	0	0.5013%	0.5013%	None
1. Please state the policy, system, standards and structure of independent directors' remuneration payment, and describe the relevance between the amount of remuneration and the factors including responsibilities, risks, the time spent by the individual, etc.: The remuneration of the Company's Directors shall be distributed by the Board of Directors in accordance with the authorization of the Articles of Incorporation, and shall take into account the pay levels in the domestic and overseas industry. The Board of Directors shall, in accordance with the Articles of Incorporation, decide the amount of Directors' remuneration in the event of profits. If an independent director is a member of any of the functional committees of the Company, in addition to paying the remuneration of general directors, different reasonable remunerations may be determined in consideration of the responsibilities, risks and the time spent by the individual. (◎refers to Audit Committee members,☆refers to Remuneration Committee members) 2. In addition to the disclosures in the above table,the remuneration of directors fromprovidingservices(e.g.,as the consultant of non-employee)to all companies in financial statements in a recentyear: None.

Please state the policy, system, standards and structure of independent directors' remuneration payment, and describe the relevance between the amount of remuneration and the factors including responsibilities, risks, the time spent by the individual, etc.: The remuneration of the Company's Directors shall be distributed by the Board of Directors in accordance with the authorization of the Articles of Incorporation, and shall take into account the pay levels in the domestic and overseas industry. The Board of Directors shall, in accordance with the Articles of Incorporation, decide the amount of Directors' remuneration in the event of profits. If an independent director is a member of any of the functional committees of the Company, in addition to paying the remuneration of general directors, different reasonable remunerations may be determined in consideration of the responsibilities, risks and the time spent by the individual. (◎ refers to Audit Committee members, ☆ refers to Remuneration Committee members)
In addition to the disclosures in the above table, the remuneration of directors from providing services (e.g., as the consultant of non-employee) to all companies in financial statements in a recent year: None.
Note 1: Directors' names shall be identified one by one (corporate shareholders shall be identified by the corporate shareholder's name and representative individually), and shall list the general directors and independent directors separately and disclose the amount of various payments in summary.

Note 2: The remuneration to directors in the most recent year (including director's salary, duty allowance, severance pay, bonus and reward, et al.).

Note 3: The remuneration to directors approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year.

Note 4: The directors' professional practicing fees in the most recent year (including transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car, et al.). If a house, car and any other transportation means or exclusive personal allowance are provided, please disclose the nature and cost of the assets, rent imputed based on the actual value or fair value, fuel expenses and other benefits. If a driver is assigned, please specify the payment made by the Company to the driver, but exclude the same from the remuneration.
Note 5: It means the salary, duty allowance, severance pay, bonus, reward, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car received by the directors who acted as employees concurrently (including president, vice president, managerial officer and employee) in the most recent year. If a house, car and any other transportation means or exclusive personal allowance are provided, please disclose the nature and cost of the assets, rent imputed based on the actual value or fair value, fuel expenses and other benefits. If a driver is assigned, please specify the payment made by the Company to the driver, but exclude the same from the remuneration. Any salary listed under IFRS 2 Share-Based Payment, including employee stock options, new restricted employee shares, and cash capital increase by stock subscription, shall also be included in the remuneration.
Note 6: If the directors who acted as employees concurrently (including president, vice president, managerial officer and employee) received employee bonus (including stock dividend and cash dividend) in the most recent year, please disclose the employee bonus approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year, and please also specify the table 1-3.
Note 7: The aggregate of the remuneration to directors in the Company from the companies included into the consolidated financial reports (including the Company) should be disclosed. Note 8: The aggregate of the remuneration to each director by the Company shall include the director's name disclosed in the relevant space of the following table.

Note 9: The aggregate of the remuneration paid to each of the Company's directors by the companies included into the consolidated financial reports (including the Company) shall include the director's name disclosed in the relevant space of the following table.

Note 10: The earnings after tax shall refer to the earnings after tax identified in the entity or the parent company only financial statement for the most recent year.

Note 11: a. To specify whether the Company's directors have received remuneration from investees beyond subsidiaries (If there is none, please fill in "none").
b. If the Company's directors have received remuneration from investees beyond subsidiaries, please include the same into Section J in the following table and changed the name of the section into "all investees".
c. The remuneration shall refer to the remuneration, compensation, employee bonus and professional practicing fees received by the Company's directors who acted as the directors, supervisors or managerial officers of investees other than subsidiaries.
The remuneration disclosed herein is different from the income referred to in the Income Tax Law conceptually. Therefore, the breakdown is only intended for the disclosure of information, instead of taxation.

(II) Remuneration to President and Vice President (Summarized in accordance with the Range of Remuneration disclosed)

December 31, 2020 Currency Unit: NTD Thousand

Title	Name	Salary (A) (Note 2)	Salary (A) (Note 2)	Pension (B)	Pension (B)	Cash incentives and special discretionary allowance etc. (C) (Note 3)	Cash incentives and special discretionary allowance etc. (C) (Note 3)	Amount for employee remuneration (D) (Note 4)	Amount for employee remuneration (D) (Note 4)	Amount for employee remuneration (D) (Note 4)	Amount for employee remuneration (D) (Note 4)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 8)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 8)	Remuneration from investees other than subsidiaries (Note 9)
		The Company	All companies included into the financial statement (Note 5)	The Compan y	All companies included into the financial statement (Note 5)	The Company	All companies included into the financial statement (Note 5)	The Company		All companies included into the financial statement (Note 5)		The Company	All companies included into the financial statement (Note 5)
								Cash dividend	Stock divide nd	Cash dividend	Stock dividend
CEO Resigned on January 31,2020	Ko-Ming Lin	22,716	25,205	20,000	20,000	7,454	8,822	0	0	0	0	7.3672%	7.9336%	506
CEO Appointed on January 31,2020	Ruey-Long Chen
President	Janson Yu
Vice President of the Petrochemical Production Department	Yuan-Long Chen
Vice President of the Administrative Resources Department	Huang Kuo-Tsai
Vice President, Land Development Department	Yun-Chih Liu
Vice President of the FinanceDepartment	Ying-Chun Chen
Vice President of the New VentureDepartment	Shu-Tong Zou
Vice President of the R&DCenter	Chia-Wei Tsai
Special Assistant of Chairman	Chi-Chung Chia

Any positions correspondent to president or vice president (e.g. President, CEO or Director, et al.) shall be disclosed, irrelevant with job titles.

Breakdown of Remuneration

Breakdown of Remuneration
Breakdown of remuneration paid to president and vice president	Name of President or Vice President
	The Company (Note 6)	All companies included into the financial statement (Note 7)E
Less than NT$1,000,000
NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive)	Lin Ko-Ming	Lin Ko-Ming
NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive)	Yun-Chih Liu, Shu-Tong Zou, Kuo-Tsai Huang	Yun-Chih Liu, Kuo-Tsai Huang
NT$3,500,000 (inclusive) ~ NT$5,000,000 (exclusive)	Yuan-Lung Chen, Ying-Chun Chen, Chia-Wei Tsai, Chi-ChunChia	Yuan-Lung Chen, Ying-Chun Chen, Chia-Wei Tsai, Chi-ChunChia, Shu-TongZou
NT$5,000,000 (inclusive) ~ NT$10,000,000 (exclusive)	Ruey-Long Chen, Janson Yu	Ruey-Long Chen, Janson Yu
NT$10,000,000 (inclusive) ~ NT$15,000,000 (exclusive)
NT$15,000,000 (inclusive) ~ NT$30,000,000 (exclusive)	Ko-Ming Lin	Ko-Ming Lin
NT$30,000,000 (inclusive) ~ NT$50,000,000 (exclusive)
NT$5,000,000 (inclusive) ~ NT$100,000,000 (exclusive)
NT$100,000,000 or more
Total	10 persons	10 persons

Note 1: The name of president or vice presidents shall be identified specifically, and the various payments shall be summarized and then disclosed.

Note 2: Please specify the salary, duty allowance and severance paid to the presidents and vice presidents in the most recent year.

Note 3: Please specify the bonus, reward, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car, as well as other remunerations, received by the presidents and vice presidents in the most recent year. If a house, car and any other transportation means or exclusive personal allowance is provided, please disclose the nature and cost of the assets, rent imputed based on the actual value or fair value, fuel expenses and other benefits. If a driver is assigned, please specify the payment made by the Company to the driver, but exclude the same from the remuneration. Any salary listed under IFRS 2 Share-Based Payment, including employee stock options, new restricted employee shares, and cash capital increase by stock subscription, shall also be included in the remuneration.
Note 4: Please specify the employee bonus (proposed amount). to be allocated to the presidents and vice presidents as approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year, and please also specify the table 1-3.
Note 5: Please disclose the aggregate of the remuneration paid to the Company's presidents and vice presidents by all companies included into the consolidated financial reports (including the Company).
Note 6: The aggregate of the remuneration to each president or vice president by the Company shall include the president's or vice president's name disclosed in the relevant space of the following table.
Note 7: The aggregate of the remuneration paid to each of the Company's presidents and vice presidents by the companies included into the consolidated financial reports (including the Company) shall include the president's and vice president's names disclosed in the relevant space of the following table.
Note 8: The earnings after tax shall refer to the earnings after tax identified in the entity or the parent company only financial statement for the most recent year.

Note 9: a. To specify whether the Company's presidents and vice presidents have received remuneration from investees beyond subsidiaries (If there is none, please fill in "none").

b. If the Company's presidents and vice presidents have received remuneration from investees beyond subsidiaries, please include the same into Section E in the following table and changed the name of the section into "all investees".
c. The remuneration shall refer to the remuneration, compensation, employee bonus and professional practicing fees received by the Company's presidents and vice presidents who acted as the directors, supervisors or managerial officers of investees other than subsidiaries.
The remuneration disclosed herein is different from the income referred to in the Income Tax Law conceptually. Therefore, the breakdown is only intended for the disclosure of information, instead of taxation.
The remuneration disclosed herein is disclosed based on estimations and on an accrual basis.

(III) Employee bonus amount paid to managerial officers:

December 31, 2020 Currency Unit: NTD Thousand

	Title (Note 1)	Name (Note 1)	Stock dividend	Cash dividend	Total	Proportion to Earnings After Tax (%)
Managerial Officer	CEO	Ruey-LongChen	0	1,001	1,001	0.15%
	President	Janson Yu
	Vice President	HuangKuo-Tsai
	Executive Vice President	Yun-Chih Liu
	Vice President	Yuan-LongChen
	Vice President	Chia-Wei Tsai
	Vice President	Shu-TongZou
	Vice President	Ying-Chun Chen
	Special Assistant	Chi-Chung Chia
	Special Assistant	Chia-Wen Chang
	Special Assistant	Yu-Lan Wang
	Special Assistant	Chun-Hsien Wu
	Assistant Vice President	Huei-Fen Yang
	Assistant Vice President	Guan-Lu Lee
	Assistant Vice President	Chien-Hsien Lee
	Assistant Vice President	Tien-Hua Wang
	Assistant Vice President	Chiao-Pin Lee
	Assistant Vice President	Chien-Yuan Huang
	Assistant Vice President	Chau-Yuan Tsai
	Plant Chief	Hong-LongChen
	Plant Chief	WangChong-Chien
	Plant Chief	Chi-TsungKao
	Manager	Lee Chi-Chang
	Manager	Yung-LongChen
	Manager	Chi-Wei Chang
	Manager	YangMing-Ling
	Manager	YangChi-Yuan
	Manager	Chi-FongWang
	Manager	Fang-Mo Chien
	Manager	Chin-Yi Lee
	Manager	Kuan-Der Chien

35 -

	Title (Note 1)	Name (Note 1)	Stock dividend	Cash dividend	Total	Proportion to Earnings After Tax (%)
	Manager	Chang-HungChien
	Manager	Pei-Yu Yang
	Manager	Mu-Chuan Ho
	Manager	Po-ChengHsu
	Manager	Wen-Yuan Tseng
	Manager	Wei-YingLi
	Manager	TonyWang
	Manager	Kun-Nan Lee
	Manager	Kang-Ta Lee
	Manager	Yung-Sen Hsu

Note 1: Please disclose the name and job title individually, while the allocation of earnings may be summarized and then disclosed.
Note 2: Please specify the employee bonus (proposed amount) to be allocated to the managerial officers as approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year. The earnings after tax refer to the earnings after tax in the most recent year. If the IFRSs are adopted, the earnings after tax shall refer to the earnings after tax identified in the entity or the parent company only financial statement for the most recent year.
Note 3: The scope of managerial officers shall be defined in the following manner, as per the Board's decree under Tai-TsaiCheng-3-Tze No. 0920001301 dated March 27, 2003:
(1) President and equivalents;
(2) Vice president and equivalents;
(3) Assistant vice president and equivalents;
(4) Chief of Financial Dept.;
(5) Chief of Accounting Dept.;
(6) Any other persons in charge of the Company's affairs and entitled to sign instruments on behalf of the Company.
Note 4: If any director, president or vice president has received an employee bonus (including stock dividend and cash dividend), please complete table 1-2 and also this table.
36 -
(IV) Specify and compare the salary to directors, presidents and vice presidents of the Company in proportion to the earnings after tax from the Company and companies included in the consolidated financial statements in the most recent 2 years, and specify the policies, standards, combinations, procedure of decision-making of remunerations and their relation to business performance and future risk:
Total compensation paid to directors, presidents, and vice presidents as a percent of earnings after tax in the most recent 2 years (calculated based on estimations and on an accrual basis):

accrual basis):	accrual basis):
2020		2019
The Company	All companies included into the consolidated financial statements	The Company	All companies included into the consolidated financial statements
10.989%	11.606%	8.865%	9.021%

Total compensation paid to directors, presidents, and vice presidents as a percentage of earnings after tax, explanations is as follows: The objective of the Company's business is to generate revenue. All performance bonuses and employee compensation are based on the Company's profitability. In 2020, due to the outbreak of the epidemic, the oil price fluctuation, and the increase in the supply of new production capacity, the revenue decreased significantly compared to 2019. Accordingly, the bonus was reduced significantly. However, due to the retirement of Lin Ko-Ming, the former Chairman, in 2020, the Company paid him severance pay, which resulted in an increase in the proportion of the total remuneration of directors, president and vice presidents to the net income after tax compared with that in 2019.

The policies, standards, combinations, procedure of decision-making of remunerations, and their relation to business performance and future risk:
The remuneration to the Company's (Executive) Chairman, (Executive) Vice Chairman, and directors was based on remuneration, transportation allowance and attendance allowance applicable in the same industry domestically and overseas, taking the performance and risk into consideration, and paid in accordance with Article 28 of the Company's Articles of Incorporation. According to Article 32 of the Articles of Incorporation, 2% of the earnings shall be allocated as remuneration to directors according to the motion for allocation of shareholders' dividends.
The remuneration to the Company's presidents and vice presidents (including salary, allowance and bonus, etc.) will be evaluated based on market intelligence, seniority, responsibilities, experience, performance and risk, and paid in accordance with Article 29 of the Company Act. The Company established the Remuneration Committee in September 2011. As the companies included into the consolidated financial statements are invested and wholly owned by the Company, the Company's remuneration policy shall apply.
37 -
The compensation (including salary, allowance, bonus, etc.) to the Company's employees is based on their performance, implementation of supervisors' responsibilities, market conditions and the Company's payment ability, and in accordance with the management guidelines of the Company's compensation system.
Regarding the procedures for establishing remuneration, in addition to considerations of the overall operating performance, industry outlook, risk management, and future development, we also consider personal performance and contributions to the company's overall performance in the remuneration. Related performance evaluation and remuneration considerations are submitted to the Remuneration Committee and the Board of Directors for approval. Depending on operating conditions and related regulations, we also further review and revise our remuneration as necessary, with the aim of achieving a balance between sustainable management and risk controls.
38 -

IV. Implementation of Corporate Governance

(I) Operations of the Board

(1) A total of 13 board meetings were held in 2020 (A). The attendance record of directors & supervisors is listed below:

Title	Name (Note 1)	Representative	Actual attendance (B)	Attendance by proxy	Actual attendance Rate (%) (B/A) (Note2)	Remark
Chairman	Core Pacific Co., Ltd 1	Ruey-Long Chen	12	0	100	Ko-Ming Lin was reassigned to Ruey- long Chen on January 31,2020.
Chairman	CorePacific Co.,Ltd1	Ko-MingLin	1	0	100	Former term
Director	Core Pacific Co., Ltd 2	Hwa-Yeang Shen	7	0	100	Resigned on June 24, 2020
Vice Chairman	BES Machinery Co., Ltd	Jiun-Nan Bai	11	2	84.6
Director	Sheen Chuen-Chi Cultural and Educational Foundation 1	Hui-Ting Shen	7	0	100%	Lian-Sheng Tsai was reassigned to Hui-Ting Shenon May25,2020.
Director	Sheen Chuen-Chi Cultural and Educational Foundation 1	Lian-Sheng Tsai	5	1	83.3	Former term
Director	Sheen Chuen-Chi Cultural and Educational Foundation 2	Kueng-Ming Lin	13	0	100
Director	Jen Huei Enterprise Co., Ltd	Jiun-Huei Guo	13	0	100
Independent Director	Song-Nian Ye		6	1	85.7	By-elected on May 28, 2020
Independent Director	Ruey-Long Chen		1	0	100	Former term
Independent Director	Yun-Peng Chu		13	0	100
Independent Director	Wen-Yen Pan		13	0	100
Other notes: I. If the operation of Board of Directors has one of the following situations, the minutes shall clearly state the meeting date, period, content of the resolution, opinions of all independent directors, and the Company's handling of the opinions of the independent directors: (I) The resolutions in the Board meeting are in accordance with Article 14-3 of the Securities and Exchange Act. are as follows: 1. Establishment or revision of internal control according to Article 14-1: (1) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Procedures for Loans, Endorsements, and Guarantees". Resolution: Approved by all attended directors (2) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Procedures for the Acquisition or Disposal of Assets". Resolution: Approved by all attended directors (3) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Articles of Incorporation". Resolution: Approved by all attended directors (4) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Rules for Election of Directors". Resolution: Approved by all attended directors (5) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Rules Governing the Proceedings of Shareholder Meetings". Resolution: Approved by all attended directors (6) Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: Amendment to the Company's "Shareholder Services Internal Control Policy and Internal Audit Operational Guidelines".

I. If the operation of Board of Directors has one of the following situations, the minutes shall clearly state the meeting date, period, content of the resolution, opinions of all independent directors, and the Company's handling of the opinions of the independent directors:
(I) The resolutions in the Board meeting are in accordance with Article 14-3 of the Securities and Exchange Act. are as follows:
- (5) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Rules Governing the Proceedings of Shareholder Meetings". Resolution: Approved by all attended directors
- (6) Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: Amendment to the Company's "Shareholder Services Internal Control Policy and Internal Audit Operational Guidelines".
39 -

Resolution: Approved by all attended directors (7) Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: Establishment of the Company's "Operating Procedures for the Repurchase of Treasury Shares". Resolution: Approved by all attended directors (8) Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: Adjustment of the Company organization and amendment to the Company’s “Charter”. Resolution: Approved by all attended directors (9) Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: Amendment to the Company's "Remuneration System Management Guidelines". Resolution: Approved by all attended directors (10) Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors Motion: Amendment to certain provisions of the Company's "Audit Committee Charter" and the "Management of the Proceedings of Audit Committee Meetings" internal control procedures pursuant to the current regulations. Resolution: Approved by all attended directors (11) Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors Motion: Amendment to certain provisions of the Company's "Rules Governing the Duties of Independent Directors", "Regulations of Performance Evaluation for Board of Directors", and "Rules Governing the Proceedings of Board of Directors Meetings", as well as the "Management of the Proceedings of Board of Directors Meetings" internal control procedures pursuant to the current regulations. Resolution: Approved by all attended directors (12) Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors Motion: Amendment to certain provisions of the Company's "Remuneration Committee Charter" and the "Management of the Proceedings of Remuneration Committee Meetings" internal control procedures pursuant to the current regulations. Resolution: Approved by all attended directors (13) Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors Motion: Amendment to the Company's "Rules for the Appointment and Resignation of Managers" in response to the needs of the Company's operation and talent development and to build a proactive management team. Resolution: Approved by all attended directors 2. In accordance with Article 36-1 regulation on the establishment or revision of the acquisition or disposal of assets, the trading of derivatives, corporate loans to others, guarantees or warrants to others, and relevant operating procedures: (1) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Procedures for Loans, Endorsements, and Guarantees". Resolution: Approved by all attended directors (2) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Procedures for the Acquisition or Disposal of Assets". Resolution: Approved by all attended directors 3. Matters involving the self-interests of the Directors: (1)Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Approved the capital increase of its 100% subsidiary, Dingyue Development Co., Ltd., by NT$2.5 billion. Resolution: Approved by all attended directors (2)Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Retirement and discharge of Ko-Ming Lin, CEO of the Company. Resolution: Approved by all attended directors (3)Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: The Company’s distribution of performance bonus for the appointed managers in the 3rd quarter of 2019. Resolution: Approved by all attended directors (4)Date of the board meeting: February 26, 2020 25th session of the 21st Board of Directors Motion: Engaging the independent director, Wen-Yen Pan, as a member of the Company's 4th "Remuneration Committee". Resolution: Approved by all attended directors (5)Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: The Company's distribution of remuneration for the Directors in 2019. Resolution: Approved by all attended directors (6)Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: The Company's Chairman Ruey-Long Chen concurrently acts as the Company's CEO. Resolution: Approved by all attended directors (7)Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: The remuneration proposal of Mr. Chen, the Company's Chairman. Resolution: Approved by all attended directors

40 -

(8)Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: The remuneration proposal of the Company's independent director, Wen-Yen Pan, who concurrently acts as a member of the Remuneration Committee. Resolution: Approved by all attended directors (9)Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: Removal of the 21st Director of the Company's Prohibition of Competition Proposal Resolution: Approved by all attended directors (10)Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: The Company increased the budget for the investment plan of the Cyclohexanone Plant in Jiangsu Rudong Weiming Petrochemical Base (Stage II of Phase I). Resolution: Approved by all attended directors (11)Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd. Resolution: Approved by all attended directors (12)Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: The remuneration proposal of the Company's independent director, Song-Nian Ye. Resolution: Approved by all attended directors (13)Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd. Resolution: Approved by all attended directors (14)Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: Under the amount approved by the Board of Directors, the Company invested in its 100% subsidiary, Core Pacific Twin Star (Vietnam) Investment Co., Ltd., and authorized the Chairman to handle all matters related to the subsequent funding in tranches. Resolution: Approved by all attended directors (15)Date of the board meeting: October 28, 2020 33rd session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its 100% subsidiary, Dingyue Development Co., Ltd. Resolution: Approved by all attended directors (16)Date of the board meeting: November 13, 2020 34th session of the 21st Board of Directors Motion: The Company canceled the provision of guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd. Resolution: Approved by all attended directors (17)Date of the board meeting: November 13, 2020 34th session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd. Resolution: Approved by all attended directors (18) Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors Motion: The Company's Board of Directors approved the provision of guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd., and approved the increase in property insurance. Resolution: Approved by all attended directors (19)Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors Motion: The year-end special bonus for the managers appointed by the Company. Resolution: Approved by all attended directors 4. Transactions of major assets or derivatives: (1) Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd., by NT$2.5 billion. Resolution: Approved by all attended directors (2)Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: The Company's investment plan "Construction Project of CHDM Pilot Plant". Resolution: Approved by all attended directors (3)Date of the board meeting: February 26, 2020 25th session of the 21st Board of Directors Motion: The Company acquired Dajia Plant of Sunko Ink Co., Ltd. Resolution: Approved by all attended directors (4)Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: Amendment to the joint venture agreement between the Company and the JEAN GROUP and increase the capital of JEAN Pacific Development Co., Ltd., a joint venture of both parties. Resolution: Approved by all attended directors (5)Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: Approved the negotiation of a price reduction with Nam Long INVESTMENT CORPORATION to acquire 35% equity interest in its subsidiary, Paragon Dai Phuoc One Member Liability Company Limited,

41 -

through two of its Vietnam subsidiaries on the premise of securing investment interests. Resolution: Approved by all attended directors (6)Date of the board meeting: May 13, 2020 28th session of the 21st Board of Directors Motion: The Company's investment plan for the "Construction Project of Fine Chemical Plant - Phase I ". Resolution: Approved by all attended directors (7)Date of the board meeting: May 13, 2020 28th session of the 21st Board of Directors Motion: The Company's "Phase II Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal". Resolution: Approved by all attended directors (8)Date of the board meeting: June 17, 2020 29th session of the 21st Board of Directors Motion: The change of the Company's investment plan for the integration of Rudong Weiming in Jiangsu Province and the total investment amount (Rudong Phase I and Phase II). Resolution: Approved by all attended directors (9)Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: The Company increased the budget for the investment plan of the Cyclohexanone Plant in Jiangsu Rudong Weiming Petrochemical Base (Stage II of Phase I). Resolution: Approved by all attended directors (10)Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: The Company's "Phase III Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal". Resolution: Approved by all attended directors (11)Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd. Resolution: Approved by all attended directors. (12)Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: The Company acquired the land, plant, and equipment of the Douliu Polymer Plant of Chain Yarn Co., Ltd. Resolution: Approved by all attended directors (13)Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: Under the amount approved by the Board of Directors, the Company invested in its 100% subsidiary, Core Pacific Twin Star (Vietnam) Investment Co., Ltd., and authorized the Chairman to handle all matters related to the subsequent funding in tranches. Resolution: Approved by all attended directors (14)Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: The Company participated in the capital increase by ordinary shares and cash of Chain Yarn Co., Ltd. Resolution: Approved by all attended directors (15)Date of the board meeting: October 28, 2020 33rd session of the 21st Board of Directors Motion: To expand the chemical storage capacity and flexible trading, the Company amended the "Phase III Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal", in which the Company leased additional land, expanded storage tanks and export facilities. Resolution: Approved by all attended directors 5. Material monetary loan, endorsement, or provision of a guarantee. (1)Date of the board meeting: May 13, 2020 28th session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its China subsidiary, Jiangsu Weiming Petrochemical Corporation. Resolution: Approved by all attended directors (2)Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd. Resolution: Approved by all attended directors (3)Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors Motion：The Company co-insured with Shiny Chemical Industrial Co., Ltd. based on the Contracts between Construction Applicants, and provided guarantees and endorsements for Shiny Chemical Industrial Co., Ltd during the term of the contract for “HsiaoKang Plant’s Projects at Phase II of the Port of Kaohsiung Intercontinental Container Terminal” (4)Date of the board meeting: October 28, 2020 33rd session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its 100% subsidiary, Dingyue Development Co., Ltd. Resolution: Approved by all attended directors (5)Date of the board meeting: November 13, 2020 34th session of the 21st Board of Directors Motion: The Company canceled the provision of guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd. Resolution: Approved by all attended directors (6)Date of the board meeting: November 13, 2020 34th session of the 21st Board of Directors

42 -

Motion: The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New
Material Science & Technology Co., Ltd.
Resolution: Approved by all attended directors
(7)Date of the board meeting: November 13, 2020 34th session of the 21st Board of Directors
Motion: The Company's Board of Directors approved the provision of guarantees and endorsements for its
China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd., and approved the increase
in property insurance.
Resolution: Approved by all attended directors
6. Raising, issuing and private placement of equity-based securities:
(1)Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors
Motion: In order to increase the working capital and meet the capital needs of future development, the Company
proposed to handle the domestic issuance of ordinary shares by cash capital increase within 600 million ordinary
shares, or participate in the issuance of GDR by cash capital increase of ordinary shares.
Resolution: Approved by all attended directors
(2)Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors
Motion: The Company implemented the treasury shares system for the 1st time in 2020,
Resolution: Approved by all attended directors
(3) Date of the board meeting: August 12, 2020 31st session of the 21st Board of Directors
Motion: The Company issued domestic secured ordinary corporate bonds.
Resolution: Approved by all attended directors
7.Appointment, discharge and compensation of CPAs:
(1)Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors
Motion: Reappointed the CPAs from KPMG as the auditor of the Company's 2020 financial report.
Resolution: Approved by all attended directors
(2)Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors
Motion: KPMG was replaced by PwC as the auditor of the Company's 2020 financial report.
Resolution: Approved by all attended directors
8. Appointment or discharge of a financial, accounting, or Head of Internal Audit:
Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors
Motion: Change of the Company's Head of Internal Audit.
Resolution: Approved by all attended directors
9. Other major information:
Date of meeting: January 31, 2020 23rd session of the 21st Board of Directors
Motion: The Company assessed the asset impairment in accordance with IAS 36. After the asset impairment test,
the Company recorded an asset impairment of NT$2.9 billion for the Toufen Plant in 2019 Q4.
Resolution: Approved by all attended directors
(II) Items in board resolutions regarding which independent directors have voiced opposing or qualified opinions on the
record or in writing: None for this year.
II. In instances where a director recused himself/herself due to a conflict of interest, the minutes shall clearly state the director's
name, contents of the motion and resolution thereof, the reason for not voting and actual voting counts:
(I)
Motion: Approved the capital increase of its 100% subsidiary, Dingyue Development Co., Ltd., by NT$2.5 billion.
Recusal: Since Chairman Lin Ko-Ming is the Director of Dingyue Development Co., Ltd.; Vice Chairman Bai
Chung-Nan and Director Shen Hwa-Yeang are directors of the Core Pacific City Co., Ltd.; the Sheen Chuen-Chi
Cultural and Educational Foundation represented by Director Tsai Liang-Sheng and Director Lin Kuen-Ming is the
corporate shareholder of the Core Pacific City Co., Ltd., and assigns a representative to elect as a director of the
Core Pacific City Co., Ltd., the five directors were recused during discussion and voting.
(II)
Motion: Retirement and resignation of Ko-Ming Lin, CEO of the Company.
Recusal: Since Chairman Ko-Ming Lin has a conflict of interest, he was recused during discussion and voting.
(III)
Motion: The Company's distribution of performance bonus for the appointed managers in the 3rd quarter of 2019.
Recusal: Since Chairman Ko-Ming Lin has a conflict of interest, he was recused during discussion and voting.
(IV)
Motion: Engaging the independent director, Wen-Yen Pan, as a member of the Company's 4th "Remuneration
Committee".
Recusal: Since Independent Director Wen-Yen Pan has a conflict of interest, the director was recused during
discussion and voting.
(V)
Motion: The Company's distribution of remuneration for the Directors in 2019.
Recusal: Since Chairman Ruey-Long Chen, Vice Chairman Jiun-Nan Bai, Director Jiun-Huei Guo, Director Lian-
Sheng Tsai, Director Kuen-Ming Lin, Director and Manager Hwa-Yeang Shen have a conflict of interest, they were
recused during discussion and voting.
(VI)
Motion: The Company's Chairman Ruey-Long Chen concurrently acts as the Company's CEO.
Recusal: Since Chairman Ruey-Long Chen has a conflict of interest, he was recused during discussion and voting.
(VII) Motion: The remuneration case of Mr. Chen, the Company’s Chairman.
Recusal: Since Chairman Ruey-Long Chen has a conflict of interest, he was recused during discussion and voting.
(VIII) Motion: The remuneration case of the Company's independent director, Wen-Yen Pan, who concurrently acts as a
member of the Remuneration Committee.

43 -

	Recusal: Since Independent Director Wen-Yen Pan has a conflict of interest, the director was recused during
	discussion and voting.
(IX)	Motion: Removal of the 21st Director of the Company's Prohibition of Competition Proposal
	Recusal: Since Chairman Ruey-Long Chen has a conflict of interest, he was recused during discussion and voting.
	Since Director Lian-Sheng Tsai (attended by his proxy, Director Jiun-Huei Guo) has a conflict of interest; Director
	Jiun-Huei Guo did not represent Director Lian-Sheng Tsai in expressing opinions or voting.
(X)	Motion: The Company increased the budget for the investment plan of the consolidation of the Cyclohexanone
	Plant in Jiangsu Rudong Weiming (Stage II of Phase I).
	Recusal: Since the Chairman of Jiangsu Rudong Weiming Company and the Company's Director Hui-Ting Shen
	are relatives within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this
	case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, and requests
	Director Hui-Ting Shen to recuse himself from the discussion and voting.
(XI)	Motion: Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd.
	Recusal: Since the Core Pacific Co, Ltd. represented by Chairman Ko-Ming Lin has a direct conflict of interest
	with Core Pacific Investment Co, Ltd. represented by two directors of the Core Pacific City Co., Ltd.; Vice
	Chairman Chung-Nan Bai and Director Hui-Ting Shen are directors of the Core Pacific City Co., Ltd.; the Sheen
	Chuen-Chi Cultural and Educational Foundation represented by Director Liang-Sheng Tsai and Director Kuen-
	Ming Lin is the corporate shareholder of the Core Pacific City Co., Ltd., and assigns a representative to be elected
	as a director of the Core Pacific City Co., Ltd., the four directors have a conflict of interest in this case and were
	recused during discussion and voting.
(XII)	Motion: The remuneration case of Song-Nian Ye, the Company’s independent director.
	Recusal: Since Independent Director Song-Nian Ye has a conflict of interest, the director was recused during
	discussion and voting.
(XIII)	Motion: The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New
	Material Science & Technology Co., Ltd.
	Recusal: Since Chairman Ruey-Long Chen is a director of Changzhou Weicai New Material Science & Technology
	Co., Ltd. and has a conflict of interest, he was recused during discussion and voting. Since the Chairman of
	Changzhou Weicai and Director Hui-Ting Shen are relatives within the second degree of kinship, although Director
	Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the
	spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting.
(XIV)	Motion: Under the amount approved by the Board of Directors, the Company invested in its 100% subsidiary, Core
	Pacific Twin Star (Vietnam) Investment Co., Ltd., and authorized the Chairman to handle all matters related to the
	subsequent funding in tranches.
	Recusal: Since the Committee Chairman of Core Pacific Twin Star (Vietnam) Investment Co. Ltd. and the
	Company's Director Hui-Ting Shen are relatives within the second degree of kinship, although Director Hui-Ting
	Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of
	corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting.
(XV)	Motion: The Company provided guarantees and endorsements for its subsidiary, Dingyue Development Co., Ltd.
	Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd. and has a conflict of
	interest, he was recused during discussion and voting. Vice Chairman Chung-Nan Bai and Director Hui-Ting Shen
	are directors of the Core Pacific City Co., Ltd.; the Sheen Chuen-Chi Cultural and Educational Foundation
	represented by Director Liang-Sheng Tsai and Director Kuen-Ming Lin is the corporate shareholder of the Core
	Pacific City Co., Ltd., and assigns a representative to be elected as a director of the Core Pacific City Co., Ltd.; the
	Company upholds a high degree of self-discipline and the spirit of corporate governance, the above three directors
	were recused during discussion and voting.
(XVI)	Motion: The Company canceled the provision of guarantees and endorsements for its China subsidiary Changzhou
	Weicai New Material Science & Technology Co., Ltd.
	Recusal: Since Chairman Ruey-Long Chen is a director of Changzhou Weicai New Material Science & Technology
	Co., Ltd. and has a conflict of interest, he was recused during discussion and voting. Since the Chairman of
	Changzhou Weicai and Director Hui-Ting Shen are relatives within the second degree of kinship, although Director
	Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the
	spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting.
(XVII)	Motion: The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New
	Material Science & Technology Co., Ltd.
	Recusal: Since Chairman Ruey-Long Chen is a director of Changzhou Weicai New Material Science & Technology
	Co., Ltd. and has a conflict of interest, he was recused during discussion and voting. Since the Chairman of
	Changzhou Weicai and Director Hui-Ting Shen are relatives within the second degree of kinship, although Director
	Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the
	spirit of corporate governance, and requests Director Hui-Ting Shen to recuse himself from the discussion and
	voting.
(XVIII) Motion: The Company's Board of Directors approved the provision of guarantees and endorsements for its China
	subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd., and approved the increase in
	property insurance.
	Recusal: Since Chairman Ruey-LongChen is a director of Changzhou Weicai New Material Science &

44 -

Evaluation Period	Scope of Evaluation	Method of Evaluation	Content of Evaluation
Evaluating the performance from January 1, 2020 to December 31, 2020.	Board of Directors, Functional Committees (including Audit Committee and Remuneration Committee) and individual members.	Internal evaluation of the Board of Directors, Functional Committees (including Audit Committee and Remuneration Committee) and individual members.	1. Evaluation of performance for the Board of Directors: Including participation in the operation of the Company, enhancement of the quality of the Board of Directors' decision making, composition and structure of the Board of Directors, election and continuing education of the directors, and internal control; a total of 45 questions for the five major aspects. 2. Evaluation of performance for the individual board members: Including alignment of the goals and missions of the Company, awareness of the duties of a director, participation in the operation of the Company, management of internal relationship and communication, the director's professionalism and continuing education, and internal control; a total of 23 questions for the six major aspects. 3. Evaluation of performance for the Audit Committee: Including participation in the operation of the Company, awareness of the duties of the Audit Committee, the quality of decisions made by the Audit Committee, makeup of the Audit Committee and election of its members, and internal control; a total of 22 questions for the five major aspects. 4. Evaluation of performance for the Remuneration Committee: Including participation in the operation of the Company, awareness of the duties of the Remuneration Committee, the quality of decisions made by the Remuneration Committee, the makeup of the Remuneration Committee and election of its members; a total of 18 questions for the four major aspects.

IV. Measures undertaken during the current year and past year in order to strengthen the functions of the Board of Directors (such as the establishment of the Audit Committee and improvement of information transparency, etc.) and assessment of their implementation:
(I) In 2020, the Company conducted an internal evaluation of the performance of the Board of Directors, individual directors and Audit Committee in accordance with the "Regulations of Performance Evaluation for Board of Directors".
(II) The results of the internal performance evaluation of the Board of Directors in 2020 are: Board of Directors/93 points, individual directors/93 points, Audit Committee/99 points, and Remuneration Committee/98 points (out of 100 points). The operation of the Board of Directors, the Audit Committee and the Remuneration Committee is in good condition.
(III) The above evaluation results and improvement suggestions were reported at the 36th session of the 21st Board of Director on January 25, 2021,
Note 1: For a director or a supervisor who is a corporation, please specify the corporate shareholder's name and its representative's name.
Note 2: (1) Where a specific director or supervisor may be relieved from duties before the end of the fiscal year, please specify their date of discharge in the `Remarks" Section. Their actual attendance rate (%) to the Board session shall be calculated based on the number of meetings called and actual number of sessions he/she attended, during his/her term of office.
- (2) Where an election may be held for filling the vacancies of director or supervisor before the end of the fiscal year, please list out both the new and the discharged directors or supervisors, and specify if they are the former directors or supervisor, or newly elected, re-elected, and the date of the reelection. Their attendance rate (%) to the Board session shall be calculated based on the number of meetings called and the actual number of sessions they attended, during the term of office.
45 -
(II) The function of Audit Committee or supervisors' participation in the function of Board of Directors

The Audit Committee held 12 meetings (A) during 2020; the attendance of independent directors is summarized as follows:

Title	Name	Actual attendance (B)	Attendance by proxy	Attendance Rate (%) (B/A) (Note)	Remark
Independent Director	Yun-Peng Chu	12	0	100.00
Independent Director	Wen-Yen Pan	12	0	100.00
Independent Director	Ruey-Long Chen	1	0	100.00	Former term
Independent Director	Song-Nian Ye	6	1	85.71	Appointed and effective on May 28, 2020
Other notes: I. If the operation of the Audit Committee has one of the following situations, the minutes shall clearly state the meeting date, period, content of the resolution, opinions of all Audit Committee members and the Company's handling of said opinions. (I) Items listed in Article 14-5 of the Securities and Exchange Act: The resolutions approved by the Audit Committee are in accord with Article 14-5 of the Securities and Exchange Act. are as follows: (1) Establishment or revision of internal control according to Article 14-1: 1. Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to certain provisions of the Company's "Rules Governing the Proceedings of Shareholder Meetings". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Articles of Incorporation". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 3. Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Rules for Election of Directors". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 4. Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: In response to the amendment of the TDDC's "Shareholder Services Internal Control Policy" amended in March 2020, amend the Company's "Shareholder Services Internal Control Policy and Internal Audit Operational Guidelines". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 5. Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: Establishment of the Company's "OperatingProcedures for the Repurchase

46 -

of Treasury Shares".

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors

Motion: To optimize the existing operating capacity and strengthen the synergy of the industrial chain, the Company conducted organizational adjustment and revise the Articles of Incorporation in accordance with Article 7 of the Articles of Incorporation.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors

Motion: In order to enhance the development of the Company and improve the operating performance, and to meet the needs for consistency in the management of compensation standards and financial planning of the Group's companies, the Company amended the "Remuneration System Management Guidelines".

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 8. Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors

Motion: Amendment to certain provisions of the Company's "Rules Governing the Duties of Independent Directors", "Regulations of Performance Evaluation for Board of Directors", and "Rules of Procedures for Board of Directors Meetings ", as well as the "Management of the Proceedings of Board of Directors Meetings" procedures pursuant to the current regulations. Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting
1. Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors

Motion: Amendment to certain provisions of the Company's "Remuneration Committee Charter" and the "Management of the Proceedings of Remuneration Committee Meetings" internal control procedures pursuant to the current regulations.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 10. Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors

Motion: Amendment to certain provisions of the Company's "Audit Committee Charter" and the "Management of the Proceedings of Audit Committee Meetings" internal control procedures pursuant to the current regulations. Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

(2) Assessment of the validity of internal control:
Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors

Motion: The 2019 self-assessment of the internal control system (hereafter, "control self-assessment") has been completed. According to the results of the control self-assessment, issue a statement of the internal control system. Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

47 -
Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: Amendment to the Company's internal control audit plan for 2020. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting by the audit unit. 3. Date of the board meeting: December 30, 2020 35th session of the 21st Board of Directors Motion: The Company's internal control audit plan for 2021. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting by the audit unit. (3) In accordance with Article 36-1 regulation on the establishment or revision of the acquisition or disposal of assets, the trading of derivatives, corporate loans to others, guarantees or warrants to others, and relevant operating procedures: 1. Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Procedures for Loans, Endorsements, and Guarantees". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Amendment to the Company's "Procedures for the Acquisition or Disposal of Assets". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (4) Matters involving the self-interests of the Directors: None. (5)Transactions involving major assets or derivatives: 1. Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: Capital injection in the Company's 100% subsidiary, Ding-Yue Development Co., Ltd., by NT$2.5 billion. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the board meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: The Company's investment plan "Construction Project of CHDM Pilot Plant". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 3. Date of the board meeting: February 26, 2020 25th session of the 21st Board of Directors Motion: The Company acquired Dajia Plant of Sunko Ink Co., Ltd. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 4. Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: Amendment to the joint venture agreement between the Company and the JEAN GROUP and increase the capital of JEAN Pacific Development Co., Ltd., a joint venture of both parties.
48 -

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors

Motion: Negotiated a price reduction with Nam Long INVESTMENT

CORPORATION ("Nam Long") to acquire 35% equity interest in its subsidiary, Paragon Dai Phuoc One Member Liability Company Limited ("Dai Phuoc"), through the Company's two Vietnam subsidiaries on the premise of securing investment interests, and authorized the Chairman to handle all matters related to the subsequent matters.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: May 13, 2020 28th session of the 21st Board of Directors Motion: The Company's investment plan for the "Phase I Construction Project of Fine Chemical Plant".

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: May 13, 2020 28th session of the 21st Board of Directors Motion: The Company's "Phase II Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal".

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: June 17, 2020 29th session of the 21st Board of Directors Motion: The change of the Company's investment plan for Rudung Weiming integrated petrochemical base in Jiangsu Province and the total investment amount (Rudung Phase I Stage 1 and 2).

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors The Company amended the investment plan of the Cyclohexanone Plant in Jiangsu Rudung Weiming (Stage II of Phase I). The planned process technology was changed from phenol method to hydration method and the budget was increased by NT$1.442 billion.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: The Company's "Phase III Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal".

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: July 24, 2020 30th session of the 21st Board of Directors Motion: Capital injection in the Company's 100% subsidiary, Ding-Yue Development Co., Ltd., by NT$3.1 billion.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors

Motion: To strengthen caprolactam downstream nylon chips application in spinning, the Company acquired the land, plant, and equipment of the Douliu Polymer Plant of Chain Yarn Co., Ltd. at a consideration of no more than NT$1.38 billion.

Resolution: Approved by all attended directors

49 -

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 13. Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors

Motion: To strengthen caprolactam downstream nylon chips application in spinning, the Company participated in the common stocks capital raising of NT$300 million cash of Chain Yarn Co., Ltd. Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 14. Date of the board meeting: October 28, 2020 33rd session of the 21st Board of Directors Motion: To expand the chemical storage capacity and flexible trading, the Company amended the "Phase III Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal". The budget was increased by NT$198,157 thousand to lease additional land, expand storage tanks and export facilities. Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (6) Raising, issuing and private placement of equity-based securities:

Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: To enhance the Company’s working capital and meet the capital needs of future development, the Company proposed to issue common shares for cash by domestic public offering or to participating in global depositary receipts (“GDRs”) with an issue size no greater than 600 million shares. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the board meeting: March 27, 2020 26th session of the 21st Board of Directors Motion: The Company implemented the treasury shares system for the 1st time in 2020, Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (7) Appointment, discharge and compensation of CPAs: 1. Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: Reappointed the CPAs from KPMG as the auditor of the Company's 2020 financial report. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: CPA Mei-Fang Chen from KPMG was replaced by CPA Lin-Chu Feng from PwC as the accountant for the Company's 2020 Taiwan corporate income tax return compliance. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 3. Date of the board meeting: April 15, 2020 27th session of the 21st Board of Directors Motion: Change of the Company's Head of Internal Audit. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (8) Annual financial report and half-year financial report: Date of the board meeting: March 27, 2020; August 12, 2020
50 -

26th session of the 21st Board of Directors; 31st session of the 21st Board of Directors Motion: Preparation of the Company's 2019 parent only financial statement and consolidated financial statement.

Reviewing for the Company's 2020 Q2 consolidated financial statement. Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

(9) Other major information:
Date of meeting: January 31, 2020 23rd session of the 21st Board of Directors Motion: The Company assessed the asset impairment in accordance with IAS 36. After the asset impairment test, the Company recorded an asset impairment of NT$2.9 billion for the Toufen Plant in 2019 Q4.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: May 13, 2020 28th session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its China subsidiary, Jiangsu Weiming Petrochemical Corporation ("Jiangsu Weiming").

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: September 14, 2020 32nd session of the 21st Board of Directors

Motion: The Company provided guarantees and endorsements of no more than RMB40 million and US$20 million for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: October 28, 2020 33rd session of the 21st Board of Directors

Motion: The Company provided guarantees and endorsements of NT$4.92 billion for its subsidiary, Ding-Yue Development Co., Ltd. Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: November 13, 2020 34th session of the 21st Board of Directors

Motion: The Company canceled the provision of guarantees and endorsements of US$10 million for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

Date of the board meeting: November 13, 2020 34th session of the 21st Board of Directors

Motion: The Company provided guarantees and endorsements of no more than RMB70 million and US$15 million for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd.

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

(II) Resolution(s) not passed by the Audit Committee but receiving the consent of two thirds of the Board of Directors' members: None.

II. Regarding recusals of independent directors from voting due to conflicts of interests, the names of the independent directors, contents of motions, reasons for recusal, and results of voting shall be specified: None.

III Communication between independent director and Head of Internal Audit as well as CPAs on

51 -

company finances and business situation (such as items discussed, means of communication and results, etc.):

(1) The Company provides internal audit report and follow-up reports for all independent directors for review and communication (at least twice a year) in accordance with regulations. And the head of internal audit attends audit committee meetings (at least quarterly) to offer independent directors the information needed. The communication channel between the audit committee and the independent director’s functions well.
(2) Independent directors communicate with CPAs on the financial status at least once a year with reports and meetings. The communication channel between the audit committee and the CPAs in 2020 functions well.

The points of communication between the audit committee and the certified CPAs in 2020 are to communicate key audit matters of the audit report.

Note:

Where an independent may be relieved from duties before the end of the fiscal year, please specify the date of his/her discharge in the `Remarks" Section. His/her actual attendance rate (%) to the Board session shall be calculated on the basis of the number of meetings called and actual number of sessions he/she attended, during his/her term of office.
Where an election may be held for filling the vacancies of independent director before the end of the fiscal year, please list out both the new and the discharged independent directors and specify if they are the former independent directors, or newly elected, re-elected, and also the date of the reelection. Their actual attendance rate (%) to Board session shall be calculated on the basis of the number of meetings called and the actual number of sessions they attended, during the term of office.
52 -
(V) Status of Corporate Governance, and any nonconformity to the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies, and reasons thereof:

Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description
(1) Conformity to the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies and disclosure of Corporate Governance Best-Practice Principles		V		The Company has adopted " Corporate Governance Best Practice Principles", focused on shareholder rights, strengthening board scope, respect stakeholders and human rights, improve transparency and other related rules. The Company's "Corporate Governance Best Practice Principles" and related important regulations or the operating status are disclosed on the Company's website or theM.O.P.S.	No deviation
II. Equity structure and shareholders' equity	(I) Internal procedures for suggestions, questions, disputes and litigation from shareholders.	V		The Company has established its own corporate governance principles in accordance with the Company Act to respect and estimate the suggestions from shareholders, to protect shareholders' rights. The Company's website also provides a platform for contacting investors to deal with suggestions, entanglement or other requested items. None of the abovehas occurredin thisannualyear.	No deviation
	(II) Control over the list of major shareholders and the controlling parties of such shareholders	V		The Company submits the report as required based on the information updated and made available by directors, managerial officers and major shareholders from time to time. The Company established the Shareholder Services Office in 2012 to deal with the shareholders' affairs, and controlled the distribution of major shareholders'' equity and changes in equity of the controlling party of themajorshareholders.	No deviation
	(III) Establishment and implementation of risk control mechanism and firewall between the Company and its affiliates	V		The assets, liabilities, financial management responsibilities between the Company and its affiliates were all handled in accordance with the relevant laws and the Company's internal control system.	No deviation
	(IV) Internal regulations prohibiting insider trading	V		Article 10 of the Company's "Standards of Ethical Conduct" stipulates that "Where the personnel of the Company obtain information which would significantly influence the prices of stock transaction of the Company, until such information is publicly disclosed, all personnel shall hold such information in strict confidence as required under the Securities and Exchange Act and shall be prohibited from using such information for insider trading purposes."	No deviation
III. Organization of the Board and its duties	(I) Establishment and implementation of guidelines for diversity of the composition of the Board of Directors	V		According to Article 20 of the "Corporate Governance Best Practice Principles" and Article 2 of the "Election Rules for the Directors" adopted by the Board of Directors on December 24, 2015, the composition of the Board of Directors shall be considered for diversity. All members of the Company’s Board of Directors have the knowledge, skills, and experiences necessary to perform their duties. Their professional fields cover business management, leadership decision-making, industrial knowledge, financial accounting, law and environmental protection, etc. Considering the above, the Company submitted a female director nominee for the 2021 directors elections, the said nominee specializes in public relations and land development. The 2020 implementation of the diversification policy for the Company’s Board of Directors has been disclosed on the Company’s website, and in 2021 the implementation of the diversification of directors will be disclosed on the Company’s official website after the re-election.	No deviation

53 -

Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasonsthereof
		Yes	No	Summary Description
	(II) Other functional committees other than a remuneration committee or audit committee required bylaws		V	The Company has established remuneration and audit committee as required, establishment of other functional committees are being planned.	The Company has not yet established other committees, other functional committees are being planned.
	(III) Rule establishment and annual assessment of performance of the Board of Directors	V		The Company has already established the "Regulations of Performance Evaluation for Board of Directors" on April 21, 2016. According to the Regulations, the Company performs an internal evaluation for the Board of Directors' performance once a year and an external evaluation every three years, and completes them before the end of the first quarter of the following year. As for the evaluation methods, please refer to IV. Implementation of Corporate Governance (I) Operations of the Board, Other notes: IIIThe implementation of evaluation for the Board of Directors. The Company has conducted the internal evaluations (including the Board of Directors, individual directors, and Audit Committee) in 2020, and has reported the results of the evaluation to the 36th session of the 21st Board of Directors on January25,2021.(Note 2)	No deviation
	(IV) Regular review and assessment of the impartiality and independence of the external auditor	V		The Audit Committee and the Board of Directors evaluate independence (Note 3), competence and expertise of the CPAs annually, requiring them to offer statement of independence to make sure that except for certification and fees of financial and tax cases, there is no other interests relationship with the Company. Also, procedural reviews are done to ensure family relationships of CPAs do not violate independence, and results are reported to the Audit Committee and the Board of Directors. When the Board of Directors discuss independence and the appointment of the certifying CPA, the resumes and statement of independence of each CPAs should be also offered to them. The self-assessment by the accounting department for the independence of the certifying CPAs is done once a year and the results were presented to the Audit Committee and the Board of Directors on April 14,2021.	No deviation
IV. Does the Company established a full- (or part- ) time corporate governance unit or personnel to oversee corporate governance affairs (including but not limited to furnish information required for business execution by directors, handle matters relating to board meetings and shareholders' meetings according to laws, handle corporate registration and amendment registration, produce (or record?) minutes of board meetings and shareholders' meetings, etc.		V		The Company currently has a part-time unit for corporate governance. The Secretariat of the Board of Directors is responsible for providing the information required by the directors to conduct business, handling matters related to the Board of Directors meeting and shareholders' meeting, handling company registration and change registration, producing meeting minutes of the Board of Directors meeting and shareholders' meeting, and assisting the Company to comply with relevant laws and regulations of the Board of Directors and shareholders meeting. The Company also establishes the Shareholder Services Office and Finance Department Corporate Relation Office to jointly handle corporate governance related matters. Passed by the Board of Directors, the Company established a chief of corporate governance on April 10, 2019, which is served by the vice president of Financial Officer, Ying-Chun Chen. The chief of corporate governance is responsible for handling matters related to the Board of Directors meeting and shareholders' meeting, producing meeting minutes of the Board of Directors meeting and shareholders' meeting, assisting directors in taking office and continuing education, providing the information required bythe directors to conduct business,assisting	No deviation

54 -

Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasonsthereof
		Yes	No	Summary Description
				the directors to comply with laws and regulations, and other corporate governance related matters. The key points of corporate governance related matters are as follows 1. A total of 13 board meetings and 12 audit committee meetings were held in 2020. 2. Held 1 annual shareholders’ meeting in 2020. 3. Board members have completed at least 6 credits of advanced courses. 4. The Company insured liability insurance for directors and important staff, and reported to the Board of Directors after renewal. 5. Handled the performance evaluation for the Board of Directors and functional committees. The evaluation results of the Board of Directors, Audit Committee and Remuneration Committee were all beyond the standards. 6. The Company's 6th corporate governance evaluation results were among the top 6 ~ 20%. 7. A total of 12 training hours for the head of corporate governance in 2020, and the declaration on MOPS has been completed.
V. Communication channels with stakeholders, establishment of investors' relations office on websites and proper response to stakeholders' concerns of corporate social responsibility		V		The AA1000 Stakeholder Engagement Standard was applied by CPDC to identify our stakeholders based on the five aspects of dependency, influence, attention, responsibility, and diverse perspectives. The seven key stakeholders were identified as investors, customers, employees, suppliers, community residents, regulatory authorities, and lobby groups. In addition, the Company’s annual report and CSR report regularly disclose the identity of stakeholders, issues of concern, communication channels, and response methods. The Company’s CSR report is regularly published before June 30 every year, and the engagement status will be updated in the stakeholder section of the official website. The Company regularly reports the communication status with all stakeholders and the operation status of the CSR Committee to the Board of Directors. The operation status from 2019-2020 was reported at the 35th meeting of the 21st session of the Board of Directors on December 30,2020.	No deviation
VI. Commission of professional organizations for general meetings			V	In 2012, the Company established the Shareholders' Service Committee in charge of shareholders' services.	In 2012, the Company established the Shareholders' Service Committee in charge of shareholders'services.
VII. Disclosure	(I) Establishment of a website for the disclosure of its financial Status and status of corporate governance.	V		The Company's website fully disclosed the Company's management philosophy, corporate governance, product & business lines and financial information.	No deviation
	(II) Adoption of other means for disclosure such as setting up an English website, appointing personnel to gather and disclose relevant information, properly implementing the spokesman system, and posting the meetings minutes with institutional investors on websites	V		The Company has established the spokesman system and installed the investors' relations office dedicated to gathering and releasing the Company's messages, and updated the information posted on the website pursuant to the relevant laws periodically, and disclosed important messages from time to time, and linked with TWSE "MOPS" to fulfill the disclosure.	No deviation

55 -

Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasonsthereof
		Yes	No	Summary Description
	(III) Announcing and declaring the annual financial report within two months after the end of the fiscal year, and announcing and declaring the first, second, and third quarter financial reports and the monthly operating status within the prescribed deadline	V		The Company's 2020 annual consolidated and the parent company only financial reports were announced and filed on March 24, 2021; the financial reports for the first, second, and third quarters of 2020 and the monthly revenue status were also announced and filed at the MOPS before the prescribed period, and simultaneously uploaded to the Company's website.	No deviation
VIII. Other important information facilitating understanding of the functioning of corporate governance (such as the state of employees' rights and interests, concerning employees, investor relations, vendor relations, rights of interested parties, continuing education of directors and supervisors, implementation of risk management policy and risk assessment criteria, implementation of customer policy, and liability insurance purchased by the Company for directors and supervisors)		V		The Company has installed the Corporate Relations Office dedicated to gathering and releasing the Company's messages, and updated the information posted on the website pursuant to the relevant laws periodically, and disclosed important messages from time to time, and linked with TWSE "MOPS" to fulfill the disclosure. The Company sets different and diverse interaction methods for different stakeholders, and it is disclosed in the corporate social responsibility report every year. Directors' annual trainings are disclosed on TWSE "MOPS" to fulfill disclosure requirements. Liability insurance for directors is in accordance with the Article 19 of the Company's Article of Incorporation and the Article 39 of the Corporate Governance Best- Practice Principles for TWSE/GTSM Listed Companies.	No deviation
Ⅸ. The Composition of the Board of Directors and Senior Management Succession Plan and Related Operations		V		In preparation of high quality human resources and succession preparation, in 2020, we continue to hold cross-departmental learning courses after working hours, strengthening quickly cross-departmental skills, and in coordination with factory organization adjustment strategy, targeting multiple managerial level factory production managers, enabling cross sector learning, and appropriately deploy personnel overseas for learning opportunities, to ensure that our factory management and outside support of factory buildout personnel and talent remains sufficient. We flexibly maintain our human resources, and provide training so that our people can continue on a career path with the common goal of developing a sustainable business. The Company will be fully re-elected in 2021. In consideration of the above succession plan, the Company will nominate one to two directors who are younger than the current average age of all directors to implement the successionplan.	No deviation
X. The improvement plan from the results of the Corporate Governance Evaluation announced by the Taiwan Stock Exchange: 1. The Company did not receive 19 points in the 2020 Corporate Governance Evaluation (Excluding not applicable, extra points and non- relevant deductions of points). In 2019, the Company improved rules in regards to prevention of insider trading, governing issues of time of organizing education and training, and participants, course content as well as disclosure of the frequency of communication between independent directors, internal audit officer, and accountants through the audit committee every year. In addition, female director candidates are nominated for a full director re-election in 2021 to strengthen the diversity of the Board of Directors, and the elected directors will be disclosed on the Company's website after the re-election at the shareholders' meeting. 2. In addition, the Company has integrated the risk management plans of various departments in 2020, and is moving towards the goal of establishing a risk management system. In the future, it will continue to use the PDCA cycle to conduct correction, prevention, and review to optimize the risk management mechanism in a rolling wave approach, while strengthening communication with stakeholders, enhancing risk management culture, as well as reducing the probability of risk occurrence and the impact on corporate operations.

56 -

			Status (Note1)	Deviation from the
				Corporate Governance
				Best-Practice
Assessment Item	Yes	No	Summary Description	Principles for the TWSE/GTSM Listed
				Companies, and
				reasonsthereof

In recent years, digital automation technology and AI technology have developed rapidly, the number and frequency of cyber attacks continued to increase, the ransomware has grown rapidly, and the attack methods updated constantly. In order to protect the Company's important information service operations from being affected, it has purchased a cloud sandbox information security protection system to protect important information hosts and data, and to ensure uninterrupted operations of the information backbone.
Going forward, the Company shall maintain its focus in strengthening investments in energy saving, green energy, and other environmental protection related equipment, and continue to protect shareholder equity and fairness to all shareholder groups, while continuing our resolve in corporate social responsibility, improve information transparency. The Company shall strengthen the culture of corporate governance to boost shareholder activism, and strengthen the disclosure quality of corporate governance information and nonfinancial information.
The Company has introduced the Taiwan Intellectual Property Management System (TIPS) since 2010. In order to implement the Company's intellectual property management operations and review the effectiveness of relevant management systems, the Company conducts an internal audit at least once a year, and appoints an external party to conduct verification regularly. The Company has completed the internal audit of TIPS from June 16, 2020 to June 18, 2020, and the external audit of TIPS on October 29, 2020 while obtaining the external verification registration certificate. In the future, it is expected that the annual implementation status and results will be published on the Company's website or annual report regularly.

Note 1: Reasons for checks of "Yes" or "No" of status should be specified in "Summary Description" column. Note 2: 2020 Board of Director Performance Evaluation as follows:

2020 Board of Directors Performance Evaluation

	Indicators for Self-Evaluation	Questions	Points	Results
Board of Directors	1. Participation in the operation of the Company. 2. Improvement of the quality of the Board of Directors’ decision making. 3. Composition and structure of the Board of Directors. 4. *Election and continuing education of the directors. 5. Internal Control.	45	93	Good
Board Members	1. Alignment of the goals and missions of the Company. 2. Awareness of the duties of a director. 3. Participation in the operation of the Company. 4. Management of internal relationships and communication. 5. The director’s professionalism and continuing education. 6. Internal Control.	23	93	Good
Audit Committee	1. Participation in the operation of the Company. 2. Awareness of the duties of the Audit Committee. 3. Improvement of quality of decisions made by the Audit Committee. 4. Makeup of the Audit Committee and election of its members. 5. Internal Control.	22	99	Good
Remuneratio n Committee	1. Participation in the operation of the Company. 2. Awareness of the duties of the Remuneration Committee. 3. Improvement of quality of decisions made by the Remuneration Committee. 4. Makeup of the Remuneration Committee and election of its members.	18	98	Good

Note 3: Independent CPA Evaluation Items

57 -

(1) Evaluated Personnel：KPMG Certified Public Accountants, Melody Chen & Dan-Dan Chung and Team, as follows:

Item	Indicators	Standard	Results
1	The accountant has no direct or significant indirect financial interest with the Company.	Whether there is no interested person	
2	The accountant has no inappropriate interests with the Company.	Whether there is no inappropriate interest	
3	The accountant has no close business relationship with the Company, such as gaining commissions related to the business or establishing a potential employment relationship.	Whether there is no interested person	
4	Whether the members of the audit service team have served as the Company's directors, managers or other positions that have a significant impact on visa cases in the past two years.	Whether there is no interested person	
5	Non-audit services provided by the accountant have no important items that directly affect the visa cases.	Whether there is no interested person	
6	The accountant holds shares of the Company.	Whether there is no shareholding.	
7	There is no loan between the accountant and the Company.	Whether there is no interested person	
8	Whether the term of the principal and deputy accountant exceeds seven consecutive years.	Whether there is no exceeding.	
9	The accountant has no contingent expenses related to the Company's examination cases.	Whether there is no interested person	
10	There is no financing or guarantee between the accountant and the Company.	Whether there is no interested person	
11	No publicity or intermediary of stocks or other securities issued by the Company.	Whether there is no interested person	
12	No defense of legal cases or other disputes with the third parties on behalf of the Company.	Whether there is no interested person	
13	There is no kinship relationship with the Company's directors, supervisors, or personnel who have a significant influence on the visa case.	Whether there is no interested person	
14	No unloading of a joint certified public accountant within one year as a director, supervisor or manager of the Company or a position that has a significant influence on a visa case.	Whether there is no interested person	
15	No acceptance of gifts or special offers of great value from the Company directors, supervisors, managers or major shareholders.	Whether there is no interested person	
16	The Company has no threat to appoint or renew the accountant of visa case.	Whether there is no interested person	
17	The Company obtained an independent statement issued by the accountant.	Whether getting.	

58 -

(2) Evaluated Personnel：PwC Certified Public Accountants, Alvis Lin and Team, as follows:

Item	Indicators	Standard	Results
1	The accountant has no direct or significant indirect financial interest with the Company.	Whether there is no interested person	
2	The accountant has no inappropriate interests with the Company.	Whether there is no inappropriate interest	
3	The accountant has no close business relationship with the Company, such as gaining commissions related to the business or establishing a potential employment relationship.	Whether there is no interested person	
4	Whether the members of the audit service team have served as the Company's directors, managers or other positions that have a significant impact on visa cases in the past two years.	Whether there is no interested person	
5	Non-audit services provided by the accountant have no important items that directly affect the visa cases.	Whether there is no interested person	
6	The accountant holds shares of the Company.	Whether there is no shareholding.	
7	There is no loan between the accountant and the Company.	Whether there is no interested person	
8	Whether the term of the principal and deputy accountant exceeds seven consecutive years.	Whether there is no exceeding.	
9	The accountant has no contingent expenses related to the Company's examination cases.	Whether there is no interested person	
10	There is no financing or guarantee between the accountant and the Company.	Whether there is no interested person	
11	No publicity or intermediary of stocks or other securities issued by the Company.	Whether there is no interested person	
12	No defense of legal cases or other disputes with the third parties on behalf of the Company.	Whether there is no interested person	
13	There is no kinship relationship with the Company's directors, supervisors, or personnel who have a significant influence on the visa case.	Whether there is no interested person	
14	No unloading of a joint certified public accountant within one year as a director, supervisor or manager of the Company or a position that has a significant influence on a visa case.	Whether there is no interested person	
15	No acceptance of gifts or special offers of great value from the Company directors, supervisors, managers or major shareholders.	Whether there is no interested person	
16	The Company has no threat to appoint or renew the accountant of visa case.	Whether there is no interested person	
17	The Company obtained an independent statement issued by the accountant.	Whether getting.	

59 -

(IV) Establishment, functions, and operations of Remuneration Committee, if any:

(1) Information on the Members of the Remuneration Committee

==> picture [468 x 222] intentionally omitted <==

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

Meets One of the Following Professional
Qualification Requirements, Together with at Status of independence (Note 2)
Qualifications Least Five Years' Working Experience
Pass the
qualification
Lecturer or examination with Required Number of
above in proper licensing by Work public
the national experience companies
commerce, law, Government in where the
Title finance, Apparatus as court commerce, person holds Remark
(Note 1) subjects required accounting or judge, prosecutor, lawyers, certified finance, law, 1 2 3 4 5 6 7 8 9 10 Remuneration the title as
by the business public accountant accounting Committee
of the company or other or others member
in public or
professional required by
private colleges or universities designations the
Name required by the Company
business of the
Company
Independent Director Ruey-Long Chen            Discharged (Note 3)
Others Sung-Yong Chen           
Independent Director Yun-Peng Chu             Convenor(Note 3)
Newly-
Independent Director Wen-Yen Pan            appointed
(Note 3)
----- End of picture text -----

Note 1: Please specify director, independent director or others.

Note 2: Respective members who meet the following qualifications 2 years before assumption of office and at the time of assumption office shall put a “ ✓ ” in the appropriate space.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or its affiliates (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).
(6) Not a director, supervisor, or employee of that other company which a majority of the company's director seats or voting shares and those of any other company are controlled by the same person (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).
(7) Not a director (or governor), supervisor, or employee of that other company or institution which the Chairman, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a company and its parent or subsidiary or a subsidiary
60 -

of the same parent).

(8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company (excluding the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company, and the company and its parent or subsidiary or a subsidiary of the same parent).
(9) Does not provide the Company or associated companies with auditing or in the past 2 years, obtained compensation cumulated over NT$500,000 in business, legal, financial, accounting services, by professionals, sole proprietorships, partnerships, companies, or institutional owners, partners, directors, supervisors, managers, and spouses. However, the Remuneration Committee, M&A Audit committee members, established in accordance with local securities regulations or mergers & acquisition regulations, are not included.
(10) Not under any of the categories stated in Article 30 of the Company Law.
Note 3: Ruey-Long Chen, the member and convenor of the Remuneration Committee of the Company, resigned as an independent director at the 24th meeting of the 21st Board of Directors. Independent director WenYen Pan was appointed as a member of the 4th Remuneration Committee of the Company and independent director Yun-Peng Chu was elected as the convenor of the Remuneration Committee.
(II) Functions of the Remuneration Committee:
1. Periodically reviewing the Remuneration Committee Charter and making recommendations for amendments.
2. Establishing and periodically reviewing the performance assessment standards, annual and long-term performance goals, and the policies, systems, standards, and structure for the compensation of the directors, supervisors, and managerial officers of this Corporation, and disclose the contents of the performance assessment standards in the annual report.
3. Periodically assessing the degree to which performance goals for the directors, supervisors, and managerial officers of this Corporation have been achieved, setting the types and amounts of their individual compensation based on the results of the reviews conducted in accordance with the performance assessment standards.

The Remuneration Committee shall perform the functions referred to in the preceding paragraph in the following manners:

Ensuring that the compensation arrangements of this Corporation comply with applicable laws and regulations and are sufficient to recruit outstanding talent.
Performance assessments and compensation levels of directors, supervisors, and managerial officers shall take into account the general pay levels in the industry, individual performance assessment results, the time spent by the individual and their responsibilities, the extent of goal achievement, their performance in other positions, and the compensation paid to employees holding equivalent positions in recent years. Also to be evaluated are the reasonableness of the correlation between the individual's performance and this Corporation's operational performance and future risk exposure, with respect to the achievement of short-term and long-term business goals and the financial position of this Corporation.
There shall be no incentive for the directors or managerial officers to pursue compensation by engaging in activities that exceed the tolerable risk level of this Corporation.
For directors and senior managerial officers, the percentage of remuneration to be
61 -

distributed based on their short-term performance and the time for payment of any variable compensation shall be decided with regard to the characteristics of the industry and the nature of this Corporation's business.

Reasonableness shall be taken into account when the contents and amounts of the compensation of the directors, supervisors, and managerial officers are set. It is not advisable for decisions on the compensation of the directors, supervisors, and managerial officers to run contrary to financial performance to a material extent. It is not advisable for said compensation to be higher than that in the preceding year in the event of a material decline in profits or of long-term losses. If it is still higher than that in the preceding year, the reasonableness shall be explained in the annual report and reported at a shareholders' meeting.
No member of the Committee may participate in discussion and voting when the Committee is deciding on that member's individual compensation.

(III) Information about Remuneration Committee Members:

The Company's Remuneration Committee consists of 3 members.

Current term of office: The current term of office commences from June 28, 2018 until April 10, 2021 (at the same time when the term of office of the board member of the 21st term expires) The Remuneration Committee held 6 meetings (A) in 2020, and the attendance of the Committee members is summarized as follows:

Title	Name	Actual attendance (B)	Attendance by proxy	Attendance Rate (%) (B/A) (Note)	Remark
Convenor	Ruey-Long Chen	1	0	100	Discharged as a committee member of the 4th Remuneration Committee on January 31, 2020.
Convenor	Yun-Peng Chu	6	0	100	Elected to the Chair of Remuneration Committee on February 27, 2020.
Member	Sung-Yong Chen	5	1	83	.
Member	Wen-Yen Pan	5	0	100	New member: Elected to the 4th remuneration committee on February 26, 2020.
Other notes: I. If the Board of Directors does not adopt, or amends, the Remuneration Committee's suggestions, please specify the meeting date, term, contents of motion, resolution of the Board of Directors, and the Company's handling of the Remuneration Committee's opinions (If the remuneration ratified by the Board of Directors is superior to that suggested by the Remuneration Committee, please specify the deviation and reasons thereof): None II. For resolution(s) made by the Remuneration Committee with the Committee members voicing opposing or qualified opinions on the record or in writing, please state the meeting date, term, contents of motion, and opinions of all members and the Company's handling of said opinions: None.

62 -

Remuneration Committee	Proposal content and subsequent treatment	Resolution	The Company's treatment of the Remuneration Committee's opinion
4th Committee 11th Session 2020/01/31	I. The remuneration case of Mr. Tsai, the Vice President of the Company’s R&D Center. II. The Company's distribution of performance bonus for the appointed managers in the 3rd quarter of 2019. III. Adjustment of the living and education allowance for the appointed managers in Mainland China. IV. The Company's distribution of severance for appointed managers.	Passed by the agreement of all committee members.	Reported to the Board of Directors and approved by all the directors present.
4th Committee 12th Session 2020/03/27	I. The Company's distribution of remuneration for the Directors in 2019. II. The distribution case of the Company's 2019 employees' remuneration. III. The remuneration case of Mr. Chen, the Company’s Chairman. IV. The remuneration case of Wen-Yen Pan, an independent director of the Company who concurrently serves as a member of the Remuneration Committee. V. Severance for Mr. Lin, the Company's former CEO. VI. The remuneration case of Mr. Chen, the Manager of the Company’s Multimedia Command Center. VII. Adjustment of the remuneration of appointed managers, including Mr. Chen, manager of the Company's Information Division under the Administrative Resources Department, Mr. Chien, manager of the Management Team of Hsiaokang Plant.	Passed by the agreement of all committee members.	Reported to the Board of Directors and approved by all the directors present.
4th Committee 13th Session 2020/07/24	I. The remuneration case of Song-Nian Ye, the Company’s independent director. II. The remuneration case of Mr. Liu, the Company’s Executive Vice President. III. The remuneration case of Mr. Chao, the Assistant Manager of the Company’s Overseas Development Division under the Land Development Department. IV. The remuneration case of Mr. Huang, the Special Assistant of the Company's Chairman Office. V. The remuneration case of Mr. Chien, the manager of the purchase division of the Administrative Resources Department. VI. The Company's distribution of severance for the discharge of appointed managers.	Passed by the agreement of all committee members.	Reported to the Board of Directors and approved by all the directors present.
4th Committee 14th Session 2020/09/14	I. Amendment to the Company's "Remuneration System Management Guidelines". II. The remuneration case of Mr. Huang, the Assistant Manager of the Company’s Land Development Department. III. The remuneration case of Mr. Li, the Manager of the Company’s Technical Service Team of the R&D Center. IV. Established a special bonus for the smart decision- making platform of the Company's Multimedia Command Center.	Passed by the agreement of all committee members.	Reported to the Board of Directors and approved by all the directors present.

63 -

	Remuneration Committee	Proposal content and subsequent treatment	Resolution	The Company's treatment of the Remuneration Committee's opinion
	4th Committee 15th Session 2020/10/28	I. The patent bonus of the managers appointed by the Company. II. Adjustment of the remuneration of appointed managers, including Mr. Li, the Assistant Manager of the Company’s Multimedia Command Center under the President Office, and Mr. Chen, Chief of Toufen Plant. III. Adjustment of the remuneration of appointed managers, including Mr. Kao, Chief of Hsiaokang Plant, and Mr. Tsai, Assistant Manager of the Overseas Production Division, as well as the duty allowance case of Mr. Li, Manager of the Hsiaokang Plant. IV. The remuneration case of Mr. Chang, the Special Assistant of the Company's Chairman Office. V. Adjustment of remuneration of Mr. Yang, Assistant Manager of the Company's Administrative Resources Department.	Passed by the agreement of all committee members.	Reported to the Board of Directors and approved by all the directors present.
	4th Committee 16th Session 2020/12/30	I. Amendment to certain provisions of the Company's "Remuneration Committee Charter" and the "Management of the Proceedings of Remuneration Committee Meetings" internal control procedures. II. Amendment to the Company's "Rules for the Appointment and Resignation of Managers". III. Contract renewal of the managers appointed by the Company. IV. The Company's award for the "CPDC Smart Decision- Making Platform Competition Prize and Scoring Method". V. Annual salary difference of Mr. Li, Assistant Manager of the subsidiary, (Jiangsu Weiming) of the Overseas Production Division of the Company's Petrochemical Production Department. VI.The year-end special bonus for the managers appointed by the Company.	Passed by the agreement of all committee members.	Reported to the Board of Directors and approved by all the directors present.

Note:

(1) Where a committee member may be relieved from duties before the end of the fiscal year, please specify the date of his/her discharge in the `Remarks" Section. His/her actual attendance rate (%) to the committee meeting shall be calculated based on the number of meetings called and actual number of meetings he/she attended, during his/her term of office.
(2) Where an election may be held for filling the vacancies of committee member before the end of the fiscal year, please list out both the new and the discharged committee members, and specify if they are former members or newly elected, re-elected, and the date of the reelection. Their actual attendance rate (%) to committee meetings shall be calculated based on the number of meetings called and the actual number of meetings they attended, during the term of office.
64 -

(V) Implementation of Corporate Social Responsibility and Deviation from the Corporate Social Responsibility Best-Practice Principles for the TWSE/GTSM Listed Companies and reasons thereof:

thereof:	thereof:
Assessment Item		Status(Note 1)			Deviation from the Corporate Social Responsibility Best- Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description (Note 2)
I. Has the Company conducted risk assessment on environmental, social and corporate governance issues that are relevant to its operations, and implemented risk management policies or strategies based on principles of materiality? (Note 3)		V		The risks faced by enterprises are becoming more and more diverse and complex. With the convenience of globalization and the threat of climate change, enterprise risk management shall not only aim at non-systemic risks, but also face up to various systemic risks. In 2019, following the principle of materiality and the ISO 31000 risk management standards and guidelines, the Company established a systematic risk response policy and process, identified a total of 26 risk issues in five major areas, and invited the heads of various departments to discuss risk response and management. After the risk identification is completed, the Company will establish a special organization, "Risk Management Committee", so as to systematically grasp and manage the risks that have a significant impact on the operation and profitability of the enterprise. In addition, the Company pays more attention to climate risk. In 2019, following the four major disclosure frameworks of Task Force on Climate-related Financial Disclosures (TCFD), the Company identified and managed climate change transition risks and physical risks, and conducted financial impact assessments for high risk factors as a reference for its decision-making.	No deviation
II. Whether the Company establishes a dedicated unit (concurrently engaged in) to promote corporate social responsibility under supervision by the high-rank management authorized by the Board of Directors who shall be responsible for reporting the status thereof to the Board of Directors?		V		The Company established the Corporate Social Responsibility Committee in September 2013. The Chairman serves as the chairman of the committee, and three senior executives are responsible for supervising and promoting relevant projects of the three major aspects of corporate social responsibility. The Company established the CSR executive secretariat. The Occupational Safety and Environmental Protection Center and the Corporate Relations Division of the Finance Department are jointly responsible for the implementation and promotion of the committee's related affairs, and shall report to the Board of Directors on the achievements and the future direction of promotion from 2019 to 2020 in December 2020 (Note 4). The operation and implementation are disclosed in the Implementation effectiveness of the paragraph of CPDC CSR Committee below, as well as the Company's CSR Report and official website.	No deviation
III. Environme ntal issues	(I) Has the Company established environmental policies suitable for the Company's industrial characteristics?	V		The Company's environmental management system is established in accordance with the International Organization for Standardization's ISO 14001 standard, and passed the verification by a notary third unit such as the Metal Industries Research & Development Center, ADNOE Asia and the British Standards Institution. The Company also keeps abreast of environmental management trends and issues related to the chemical industry through international information disclosure standards (e.g., GRI, SASB) and international assessments(CDP,S&P Global CSA).	No deviation

65 -

Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best- Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
	Yes	No	Summary Description (Note 2)
(II) Does the Company endeavor to upgrade the efficient use of available resources, and the use of environmental- friendly materials?	V		The Company promotes green procurement and reduces the environmental footprint of its operations by purchasing products with energy-saving, water-saving and environmental labels. In terms of production, the Company implemented a number of energy, carbon, water and waste reduction projects every year to improve production efficiency and continuously reduce energy consumption per unit of product and resource. In recent years, the Company has actively invested in the research of biomaterials, product recycling and biodegradable products. In the future, the Company will gradually increase the proportion of recycled and environmentally friendly materials and products for the transformation into a low-carbon economy.	No deviation
(III) Does the Company assess potential risks and opportunities associated with climate change, and undertake measures in response to climate issues?	V		1. In order to understand the potential opportunities and risks of climate change for the Company, and to respond to the international sustainable trends of disclosing financial information related to climate change, in 2019, the Executive Secretariat of the CSR Committee is responsible for analyzing risks and opportunities related to climate change, and using the Task Force on Climate‐related Financial Disclosures (TCFD) to identify major climate change risks and opportunities for CPDC. 2. Based on the risk list, relevant international research reports, industry characteristics and benchmark analysis recommended by TCFD, the Company established a climate risk list, in which transition risks include policies and regulations, technology, market, and commercial reputation; physical risks include acute and chronic climate risks. Upon completion of the list, according to the degree of potential impact, potential vulnerability, and incidence rate of risks, we evaluated these threefold directions, listing climate change risk into high, medium, and low ratings. The method of classification mainly refers to three calculated risk values and their distribution positions in the risk matrix. 3. The biggest climate change risk the Company faced is the threat of substitution of green products; followed by the increasing costs of greenhouse gas emissions, and the drought caused by changes in rainfall patterns. In response to these risks, the Company will continue to research and develop high-value products, increase green awareness of products by reducing carbon emissions and conserving energy, and promote water- saving and recycling programs of reclaimed water to constantly move toward the goal of zero waste water. Please refer to the Company's corporate social responsibilityreport.	No deviation

66 -

Assessment Item	Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best- Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description (Note 2)
	(IV) Does the Company collect data for greenhouse gas emissions, water usage and waste quantity in the past two years, and set energy conservation, greenhouse gas emissions reduction, water usage reduction and other waste management policies?	V		For the Company's annual results, status of environmental goals and related data of greenhouse gas emissions, water resources management and waste reduction due to climate change, the Company discloses them in the Environmental Sustainability Chapter of CSR Report every year. In response to climate change, the Company has established an energy-saving and carbon-reduction team in 2005, and set up the goal of 2% for annual energy-saving, carbon-reduction, and water-saving. The Company holds an energy-saving and carbon-reduction meeting every quarter, reports and reviews the progress and achievement of each plant's reduction project, and collects relevant domestic and overseas information, so as to assess the trends and plan the Company's overall future strategic plan.	No deviation
IV. Social issues	(I) Does the Company set policies and procedures in compliance with regulations and internationally recognized human rights principles?	V		Each operating base of the Company strictly abides by local laws and labor orders, establishes various internal standards, contributes to creating a workplace environment that protects human rights, and respects the basic rights of formal employees, contract workers, temporary staff, and interns. At the same time, all cooperating manufacturers are required to sign the supplier's corporate social responsibility agreement and follow the regulation of human rights and labor, so as to make the Company and its partners have a consistent commitment. In response to the operating characteristics of the petrochemical industry, the Company pays attention to the following human rights issues and proposes corresponding policies to implement the emphasis on human rights: I. Respect workplace human rights. II. Provide a safe and healthy working environment. III. Prohibit child labor, and reasonable working hours. IV. Support employees to organize labor unions and maintain the labor-management communication channels. V. Periodically review relevant human rights systems and actions. In 2020, the Company promulgated the CPDC Human Rights Policy in accordance with international human rights standards, which was published on its official website. In addition, the Company conducted a human rights due diligence in the same year to keep track of the high-risk human rights issues within the Company. The results were submitted to the Human Resources Department and the Environmental Department for follow-upand management.	No deviation

67 -

Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best- Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
	Yes	No	Summary Description (Note 2)
(II) Has the Company formulated and implemented reasonable employee welfare measures (including remuneration, rest and annual leave, and other benefits), and appropriately reflected the operating performance or achievements in the employee remuneration?	V		1. According to the Article 32 of the Articles of Incorporation, if the Company has earnings, it shall set aside 3% of the balance as remuneration to the employees. 2. According to the Company's "Regulations of Distributing Rewards" and taking into account the performance of each business unit and individual, after being approved by the responsible supervisor, the Company will give reasonable compensation to employees. 3. The Company regularly participates in international market salary surveys to adjust salary levels and provide competitive salary in the market; adjusts salary based on the operations of Company, price index, economic growth rate and individual performance, etc. 4. For the measures and implementation status of the Company's employee welfare, please refer to the labor-management relations in "Five. Operations Overview".	No deviation
(III) Does the Company provide employees with a safe and healthy working environment, with regular safety and health training?	V		1. In accordance with ISO 45001 Occupational Safety and Health Management System implemented by the Occupational Safety Administration, the Company established a safety and health management system and passed the verification by a notary third unit (such as the Metal Industries Research & Development Center, AFNOR Asia, etc.) 2. The Company provides employees with a safe and healthy working environment, regularly implements safety and health education for employees, and provides health care services plans for employees, including special occupational medical specialists, doctors specializing in labor health services, and employment of nursing staff specializing in labor health services to handle the health service in the factory. The Company promotes various health promotion and health management. The factory area has a medical room; each site has simple ambulance facilities; the headquarter and the three plants all have the AED (Automated External Defibrillator). The Company also arranges annual health examinations for all employees and provides relevant health guidance and health education. 3. The plant has been promoting Process Safety Management (PSM) since 2016, in the hope of achieving process safety, stable production, and protecting our employees from negligence on the manufacturing process that could cause major disasters such as fire, explosion, and leakage, and establishing a safety culture in the Company. 4. The plant conducts regular and irregular drills to enhance employees' self-protection awareness and abilityto adapt to disasters.	No deviation

68 -

Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best- Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
	Yes	No	Summary Description (Note 2)
(IV) Has the Company established effective career development training programs for its employees?	V		The Company has set up a training plan for the professional development of employees, which systematically provides career development training for employees at all levels. By means of internal training, hiring external lecturers, implementing external training, job rotation, and duty delegation, the Company is able to cultivate versatile employees, and effectively teach and enhanceprofessional and technical skills.	No deviation
(V) Has the Company complied with laws and international standards with respect to customers' health, safety and privacy, marketing and labeling in all products and services offered, and implemented consumer protection policies and complaint procedures?	V		1. The Company has set up the "Operating Procedures for Handling After-Sales Service and Customers' Complaint" to track and ensure that the quality of products meets customers' needs and maintain customer relations. A satisfaction survey is sent out to customers at the end of every year to obtain feedback on product quality, shipping situation, after-sales service and product image. We communicate with the customer to determine what improvements should be made for any areas that score below 70. We then review and develop strategies for improving product quality and services. We also provide customer complaint channels, and establish internal procedures for handling customer complaints and improvement to ensure that customers' opinions can be included in the review and actually improved. In 2020, CPDC received several customer complaint cases related to quality management improvement, and all improvements have been completed after thorough communication with customers. 2. The Company's products are all marked in accordance with relevant regulations and international standards.	No deviation
(VI) Has the Company implemented a supplier management policy that regulates suppliers' conducts with respect to environmental protection, occupational safety and health or work rights/human rights issues, and tracked suppliers' performance on a regular basis?	V		1. All the Company's main supplier contracts complying with local laws and regulations is the most basic condition; all suppliers must comply with local laws and regulations on corporate governance, environmental protection, and labor and human rights. The Company promotes the suppliers to sign the "Suppliers' Corporate Social Responsibility Agreement", incorporates the suppliers' CSR agreement into the contracts, and expects the suppliers to accept, implement and assist the principles of "Environmental, Social, Governance" (ESG). All suppliers who have signed contracts with the Company after July 2016 have also signed the suppliers' corporate social responsibility agreement, with a signing rate of 100%. After the stage of work covers all target suppliers, the Company will gradually deepen management through regular and irregular assessments or on-site audits. 2. In 2019, the Company implemented a supply chain sustainability risk assessment project to understand the performance of major suppliers in the five major areas, including labor rights, ethics and integrity, environmental protection, occupational safety and health, and sustainability management and disclosure. In the future, the Company will continue to conduct the assessment project. The Company will also classify the suppliers by grading according to the evaluation results and require them to make improvements in each ESG aspect.	No deviation

69 -

Assessment Item	Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best- Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description (Note 2)
V. Does the Company prepare corporate social responsibility reports or any report of non- financial information based on international reporting standards or guidelines? Are the above- mentioned reports supported by assurance or opinion of a third-party certifier?		V		The Company published the first corporate social responsibility report compiled with GRI Guidelines in 2013. The CSR report prepared thereafter refers to the GRI Standards of the Global Reporting Initiative (GRI) and the International IR Framework published by the International Integrated Reporting Council, and obtains the guarantee opinion of the third-party verification unit.	No deviation
VI. If the Company has established its own corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies", please describe any discrepancy between the principles and their implementation: According to the "Corporate Social Responsibility Best Practice Principles", the Corporate Social Responsibility Committee reports to the Board of Directors on the following annual CSR implementation plan after discussion at the end of each year by the CSR Committee, and regularly reports to the Board of Directors on the implementation results and stakeholders' concerns at the end of the following year.
VII. Other important information to facilitate a better understanding of the Company's corporate social responsibility practices: "Community management that coexists with the local community" has always been the core of the Company's social care. Adhering to the original intention of "Taken from society, Give back to society", we take the business base as the core and incorporate the three aspects of "petrochemical professional education", "care for students from rural areas" and "elderly care". We hope to take care of the groups at both ends of the pyramid through practical actions, and use our professional to irrigate the young and middle-aged groups, so as to create an exclusive social welfare strategy for the Company. The main contents of various social activities in 2020 are as follows: CPDC sends love to rural school children in Christmas for two consecutive years In 2020, CPDC held the 2nd "CPDC Charity Car" event on Christmas eve for two rural schools in Liugui District, Kaohsiung City, Baolai Elementary School and Ximen Elementary School in Nei Men District. Before the event, the Company asked what the children want for gifts. The Company's employees then volunteered to purchase those gifts for the children. In addition, on 17 - 18 December, the Company took these children from the remote areas of Kaohsiung on a ride from Kaohsiung to Tainan Astronomical Education Area, where they learned and experienced astronomy. The employees also handed over 70 gifts to the children, bringing them a warm and unforgettable Christmas. Donation Campaign To fulfill corporate social responsibility, the Company encourages its employees to donate unused items. Together with the "Love Box Delivery" service of a donation website GIVE543, as well as its item arrangement and matching platform, the Company distributed all the donated goods to social welfare organizations all over Taiwan in Q3 2020. Blood Donation at Toufen Plant CPDC Toufen Plant held the first blood donation event on July 28 in cooperation with Hsinchu Blood Center. A total of 43 employees participated in the event and donated 16,500c.c of blood. Public and private sector join hands to face the epidemic In the early days of the epidemic in March 2020, many epidemic prevention supplies were in shortage. CPDC Toufen Plant donated 2 batches of sodium chlorate to Toufen City Office and the Miaoli County Council. The Company also discussed epidemic prevention strategies with the competent authorities and legislators to combat the epidemic. Target to become a chemical specialist, 100 students from National Taiwan University Chemical Camp visited the Toufen Plant To strengthen the link of industrial-academia collaboration and cultivate chemical talents, the students of the 15th NTU Chemical Camp visited the Company's Toufen Plant on July 17th and went to the Plant to understand the operation process and safety protection equipment. The Chief of the Toufen Plant, Chiao-Pin Lee, also encouraged students to uphold the spirit of "Chemist",applywhat theyhave learned to everyaspect of life,andpractice them in the future career development.
	To strengthen the link of industrial-academia collaboration and cultivate chemical talents, the students of the 15th NTU Chemical Camp visited the Company's Toufen Plant on July 17th and went to the Plant to understand the operation process and safety protection equipment. The Chief of the Toufen Plant, Chiao-Pin Lee, also encouraged students to uphold the spirit of "Chemist",applywhat theyhave learned to everyaspect of life,andpractice them in the future career development.
Note 1: If Implementation Status is specified "Yes," please explain the key policies, strategies and measures taken and the current progress; if Implementation Status is specified "No," please provide reasons and explain any policy, strategy and measure planned for the future.

Note 2: If the Company has prepared a CSR report, Implementation Status may be completed by providing page references to the CSR report instead.
Note 3: Materiality principle refers to environmental, social and corporate governance issues that are of material impact to the Company's investors and stakeholders.
70 -

Note 4:

==> picture [409 x 357] intentionally omitted <==

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

CPDC CSR Committee Structure
Board of
Regular Directors Suggested
return Feedback
Chairman of CSR Committee
CPDC Chairman
Committee Secretariat
Secretaries-General: General Manager
Executive Secretary
Occupational, Health and Safety and Environmental Protection
Center/Corporate Relations Group
Business Governance Group Social & Communiity Relations Group Environmental Sustainability Group
Energy and Climate Change
Community Giveback/
Sustainable Development Vision and Strategy Public Welfare Activities
Product Quality / Innovation
Operations / Financial Risk and Performance Labor Human Rights/Code of Ethics
Green Process and Products
Purchasing and Supply Chain Management Regulatory Compliance/Information Disclosure
Worker safety and health /
pollution prevention and control
Market/Customer Analysis survey
Stakeholder Communication & Engagement
Environment and community participation
----- End of picture text -----

The main tasks of the three major groups are as follows:

Group	Job Title Description
	• Coordinating the development and promotion of sustainable development vision and
Corporate	strategy, disclosure of operational and financial risks and performance
Governance	• Procurement process and supply chain management, as well as stakeholder
Group	communication and other matters
	• Market and customer analysis and investigation
Community	• Promoting community feedback and social welfare activities, labor human rights and
Relations	ethics
Group	• Social compliance and information disclosure
	• Manage energy and climate change related issues
Environmental
	• Product quality control and innovation research, green products
Sustainability
	• Labor safety and health issues, pollution remediation and environmental and social
Group
	participation

71 -

Implementation effectiveness of the CPDC CSR Committee in 2020

2020	CPDC CSR Committee performance
	Voluntarily participated in the S&P Global Corporate Sustainability Assessment (CSA) for two consecutive
	years, obtained 77 scores and ranking 12th in the global chemical industry (PR 90), which is the lowest
	threshold for chemical industry players to be included in the DJSI World.
	Selected as an S&P Global Sustainability Yearbook Member for 2021 and awarded Industry Mover, the
	only chemical company in Taiwan to receive this honor
	Submitted the CDP Climate Change questionnaire for three consecutive years. Review the performance of
	carbon management measures, and received the Management Grade (B-)
	Completed the 2020 CSR report, which is prepared in accordance with the GRI Standards and the Integrated
	Reporting (IR) Framework and verified by a third party.
	Participated in the 13th Taiwan Corporate Sustainability Awards (TCSA) held by the Taiwan Institute for
	Sustainable Energy, and won the Taiwan Top 50 Sustainability Award and Corporate Sustainability Report
	Award-Gold Award
	Promote the Company-wide sustainable performance KPI system
	CPDC headquarters and Dashe Plant received the iSport corporate certification from the Sports
	Administration, Ministry of Education
	Annual green purchase amount: NT$14 million
	Toufen Plant's CPL and Nylon received the ISO 14046:2014 Water Footprint Certification Statement
	The Dashe Plant and Hsiaokang Plant were awarded the Excellent Enterprise Award of the “Cleaning and
	Maintenance of Air Quality Purification Zone” in 2019.
	Hsiaokang Plant's CPL obtained ISO 14046: 2014 Water Footprint Certification Statement and ISO14067:
	2018 Carbon Footprint Verification Statement
	The administration building of Hsiaokang Plant was awarded Green Building Certification - Bronze, and
	the environmental office and control building were awarded Green Building - Qualified
	Hsiaokang Plant obtained the Occupational Safety and Health Excellence Award issued by the Ministry of
	Labor
	Hold many public welfare activities, with a total of 425 CPDC employees participated and a total number
	of 2,487 people serviced, continue to build CPDC's volunteer culture. [For related information, please
	refer to the Company's official website and CSR report]
2021	Corporate Social Responsibility Work Plan
	CPDC's 2025 strategy blueprint was established based on four pillars and eight aspects of its sustainable
	strategy
	Implemented internal CSR training and organizational corporate true value assessment
	Perform context analysis and impact quantification for high-risk climate factors based on the TCFD climate
	risk identification results
	Adjust supply chain management related policies, including ESG risk evaluation and for transportation
	suppliers audit indicators include labor rights topics
	Optimize ESG annual target for each department
	Comply with FSC regulations in advance and disclose information in accordance with Sustainability
	Accounting Standards Board (SASB) chemical industry standards
	Continue to participate in various domestic and international ESG assessments
	Continue to hold CSR activities

72 -

(VI) Corporate observance of ethical corporate management and deviation from the Ethical Corporate Management Best-Practice Principles for the TWSE/GTSM Listed Companies and reasons thereof:

reasons thereof:	reasons thereof:
Assessment Item		Status(Note 1)			Deviation from the Ethical Corporate Management Best- Practice Principles for the TWSE/GTSM Listed Companies, andreasonsthereof
		Yes	No	Summary Description
I. Enactment of ethical corporate management policy and program	(I) Does the company establish the ethical corporate management policies approved by the Board of Directors and declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its Board to implement the policies?	V		The Company discloses and publishes the "Procedures for Ethical Corporate Management and Guidelines for Conduct" and the "Standards of Ethical Conduct" approved by the Board of Directors on its website, which specifically regulates matters that directors, managers and all staff shall pay attention to when carrying out business. We actively implement and ensure the policy of ethical corporate management. In addition to disclosing the regulations mentioned above, the Company also sets out the corporate social responsibility agreement and discloses the principle of ethical corporate management on the website.	No deviation
	(II) Does the company establish a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activities within its business scope which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly, which shall at least include those specified in Paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"?	V		When the Company formulates the prevention plan, it shall include the analysis of business activities within their business scope that are at a higher risk of being involved in unethical conduct, and shall strengthen relevant prevention measures. The Company establishes the prevention programs, which shall at least include preventive measures against the following: I. Offering and acceptance of bribes. II. Illegal political donations. III. Improper charitable donations or sponsorship. IV. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits. V. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights. VI. Engaging in unfair competitive practices.	No deviation
	(III) Does the company specify in its prevention programs the operating procedures, guidelines, punishments for violations, and a grievance system and implement them and review the prevention programs on a regular basis?	V		The Company promulgated the "Procedures for Ethical Corporate Management and Guidelines for Conduct" on April 25th, 2013 and, according to the Procedures and Guidelines, indeed implemented the terms of announcement of the policy of ethical corporate management to outside parties, ethical corporate management evaluation prior to the development of commercial relationships, statement of ethical corporate management policy to counterparties in commercial dealings, avoidance of commercial dealings with unethical operators, the stipulation of terms of ethical corporate management in contracts, etc. In addition, the Company shall hold ethical corporate management education training or promotion for the personnel of the Company at least once a year, so that they can fully understand the Company's determination, policies, prevention programs and consequences of unethical conduct.	No deviation

73 -

Assessment Item	Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Ethical Corporate Management Best- Practice Principles for the TWSE/GTSM Listed Companies, andreasonsthereof
		Yes	No	Summary Description
II. Implement of ethical management	(I) Has the Company assessed a trading counterpart’s ethical management record, and expressly states the ethical management clause in the contract to be signed with the trading counterpart?	V		Before entering into a contract with another party, the Company shall gain a thorough knowledge of the status of the other party's ethical management, and shall make observance of the ethical management policy of the Company part of the terms and conditions of the contract, stipulating at the least the following matters: 1. Where a party is discovered to be engaged in unethical conduct in its commercial activities, the other party may terminate or rescind the contract unconditionally at any time. 2. Specific and reasonable payment terms, including the place and method of payment and the requirement for compliance with relatedtax laws andregulations.	No deviation
	(II) Does the Company have a unit that enforces business integrity directly under the Board of Directors? Does this unit report its progress (regarding implementation of business integrity policy and prevention against dishonest conducts) to the Board of Directors on a regular basis (at leastonceayear)?	V		The establishment and promotion of the ethical management are jointly determined by the Legal Counsel and the Human Resources Office; the Human Resources Office shall handle the amendment, implementation, interpretation, advisory services with respect to these Procedures and Guidelines, and the recording and filing of reports, as well as stipulate detailed procedures and preventive measures for dishonest conducts; the Audit Office shall be in charge of the monitoring of implementation and regularly report to the Board of Directors. Relevant operations and status of implementation are disclosed on the Company's website.	No deviation
	(III) Has the Company defined any policy against conflict of interest, provides adequate channel thereof, and fulfills the same precisely?	V		Article 11 of the Company's "Procedures for Ethical Management and Guidelines for Conduct" stipulates the recusal and actions taken in response of the Company's directors and all personnel. Article 7 of the Company's "Procedures for Ethical Management and Guidelines for Conduct" stipulates that when any personnel of the Company are provided with improper benefits by a third party, the personnel shall report to their immediate supervisor and the responsible unit shall be notified. In addition, the Company's new employees shall sign the "Business Conduct Policy" to avoid damage to the Company duetointerestconflicts.	No deviation
	(IV) Has the Company implemented an effective accounting policy and internal control system to maintain business integrity? Has an internal or external audit unit been assigned to devise audit plans based on the outcome of integrity risk assessment, and to audit employees' compliance with various preventions against dishonestconducts?	V		The Company has established an effective accounting system and internal control system, implemented in accordance with the regulations. The audit department conducts regular audits and reports the audit results to the Audit Committee and the Board of Directors on a regular basis, so that the management can control the implementation of internal control so as to achieve management purposes.	No deviation
	(V) Has the Company organized an internal/external education training program for ethical management periodically?	V		The Company promotes the "Procedures for Ethical Management and Guidelines for Conduct" and the "Standards of Ethical Conduct" to the directors at least once a year to ensure the implementation of corporate governance. In addition, the Company holds the education and promotion of the “Procedures for Ethical Management and Guidelines for Conduct” and the “Standards of Ethical Conduct” for the personnel in the Plant sites and office at least once a year. Related educational courses are available for the employees to read and learn at any time on the online learning platform.	No deviation

74 -

Assessment Item	Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Ethical Corporate Management Best- Practice Principles for the TWSE/GTSM Listed Companies, andreasonsthereof
		Yes	No	Summary Description
III. Status of the Company's complaint system	(I) Does the company establish both a reward/whistle- blowing system and convenient whistle- blowing channels? Are appropriate personnel assigned to the accused party?	V		Anyone who discovers any personnel of the Company involved in unethical conduct in the course of their duties, may file a whistleblower report with the time of the violation, facts or evidence to the Audit Office via in writing, over the phone or email. The Company shall keep confidential the identity of whistle-blowers and the content of reported cases. Whistleblowers can report through the following channels:  Dedicated hotline: 02-8787-1003  Email: [email protected] Article 25 of the Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" stipulates that the Company shall link ethical corporate management to employee performance evaluations and human resources policy, and establish clear and effective systemsfor rewards, penaltiesand complaints	No deviation
	(II) Has the company established standard operating procedures and confidentiality measures for the investigation of reportedincidents?	V		Article 11 of the Company's "Standards of Ethical Conduct" (Reporting obligations and protection of whistleblowers): The Company shall process the case through classified documents and put forth maximum possible efforts to safeguard the personal data as well as the safety of the reporting personnel. An accused person shall not in any way intimidate or retaliate against the reporter aforementioned in the preceding paragraph. Article 21 of the Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" stipulates the handling procedures for discovering, or receiving a whistle-blowing report, that any personnel of the Company is involved in unethical conduct; Article 22 stipulates the actions upon the event of unethical conduct by others towards the Company; Article 24 stipulates that the Company shall keep confidential the identity of whistle-blowersandthe contentof reported cases.	No deviation
	(III) Does the company provide protection for whistle-blowers against receiving improper treatment?	V
IV. Enhancing Information Disclosure Has the Company disclosed the Ethical Corporate Management Principles and effect of implementation thereof on its website and Market Observation Post System?		V		The "Corporate Social Responsibility Report" on the Company's website sets out the content and results of promotion of the "Procedures for Ethical Corporate Management and Guidelines for Conduct". The Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" is also disclosed on the Company's website, and the results of ethical corporate management areregularly updated every year.	No deviation
V. If the Company has established ethical corporate management principles based on "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", please describe any discrepancy between the principles and their implementation: The Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" is adopted pursuant to the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies", and there is no material discrepancy between the two principles.
VI. Other information material to the understanding of ethical corporate management operation: In accordance with the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", the Company issued the "Procedures for Ethical Corporate Management and Guidelines for Conduct" in the CPDC Chief Executive letter No. 2013040027 issued on April 25, 2013, and implemented the ethical corporate management policy. The Company formally adopted the "Procedures for Ethical Corporate Management and Guidelines for Conduct" and the "Standards of Ethical Conduct" in the 2012 Board of Directors meeting. In addition to disclosing the Company's policy of ethical corporate management in internal rules, annual reports, on the Company's websites, or disclosing externally, the Company shall make its suppliers, customers, and other stakeholders fully aware of its principles and rules with respect to ethical corporate management. In addition, the Company conducts relevant education training or promotion at least once a year for employees in all operation bases, and establishes detailed procedures, guidelines, and reward and punishment systems so as to make all personnel fully aware of the Company's ethical corporate management policy, prevention programs and consequences of unethical conduct. If any employee has questions about the principles of integrity and ethical conduct, or wants to report related illegal matters, he/she can raise them through the whistle-blowing channel. The Company strictly requires the high-level managers, supervisors, employees and on-site operators to observe the "Procedures for Technical Document Management" and other regulations of information security, and regularly organizes education and training. In addition,all employees are required to sign a non-disclosure agreement when theytake office and resign.

Note : Regardless "Yes" or "No", the status shall be stated in the Remarks section.

75 -
(VII) Please disclose the access to the Company's Corporate Governance Best Practice Principles and related rules and regulations, if any:
1.The Company has the "Corporate Governance Best Practice Principles", which has relevant regulations for protecting shareholders' rights, strengthening the functions of the Board of Directors, respecting the rights and interests of stakeholders, and improving information transparency. The Company's "Corporate Governance Best Practice Principles" and related important regulations or the operating status are disclosed on the Company's website or the M.O.P.S.
2.Access to the Company website at http://www.cpdc.com.tw, where the information about the Company's finance and corporate governance is disclosed. M.O.P.S.: https://mops.twse.com.tw/mops/web/index
(VIII) Other information enabling a better understanding of the Company's corporate governance: 1. The “Operating Procedures for the Handling of Internal Material Information” was prepared in order to manage the Company’s internal material information and this procedure has been communicated to all directors, managerial officers and employees. The procedures and precautions are posted on the Company’s intranet to be bound by all employees to prevent any violations of laws and regulations, and education and advocacy shall be provided at least once a year.
For every newly elected director, on their appointment, a director's manual and handbook and the latest announcements are distributed to each director of the Company. Also, the latest manual for insider trading prepared by TWSE and the Company's important policies and procedures will also be distributed to each insider including directors and managerial officers.
Continuing education of directors 2020:

Title	Name	Election Date	Date of Continuing Education	Date of Continuing Education	Organizer	Class Name	Hour s	Whether Continuing Education Complies with Regulations (Note 1)
			From	Until
					Taiwan	Impact of COVID-19	1.5
					Corporate	on the Economy and
			2020/5/12	2020/5/12
					Governance	Industry and Future

					Association	Outlook
					Taiwan	Investigating The Little	1.5
					Corporate	Blue Cup - Luckin
			2020/8/11	2020/8/11
					Governance	Coffee from Corporate

					Association	Governance
Legal	Ruey-Long					Directors' and	3.0
		2020/1/31						Yes
Representative	Chen				Taiwan	Supervisors'

					Corporate	Responsibilities in
			2020/9/4	2020/9/4
					Governance	Merger and

					Association	Acquisition of
						Enterprises
					Taiwan	Creation of Economic	1.5
					Corporate	Model by New
			2020/11/10	2020/11/10
					Governance	Generation Consumer

					Association	Behavior
						The Study of	3.0
						Regulations to Enhance
						Corporate Governance:
					Taiwan
						Fair Treatment of
			2020/8/27	2020/8/27	Institute of
						Customers, Prevention
					Directors
						of Money Laundering

Legal	Jiun-Nan					and Insider Trading as
								Yes
Representative	Bai	2018/4/11				Examples

						Directors' and	3.0
					Taiwan	Supervisors'
					Corporate	Responsibilities in
			2020/9/4	2020/9/4
					Governance	Merger and

					Association	Acquisition of
						Enterprises

76 -

Title	Name	Election Date	Date of Continuing Education	Date of Continuing Education	Organizer	Class Name	Hour s	Whether Continuing Education Complies with Regulations (Note 1)
			From	Until
					Taiwan	Trends of Digital	3.0
					Corporate	Technology and
			2020/11/20	2020/11/20
					Governance	Artificial Intelligence

					Association	andRisk Management
					Taiwan	Seminar on Board	3.0
					Academy of	Operations and
			2020/7/22	2020/7/22
					Banking and	Practices and

Independent	Yun-Peng				Finance	Corporate Governance
								Yes
Director	Chu	2018/4/11			Taiwan	The Role of	3.0

					Corporate	Institutional Investors
			2020/11/27	2020/11/27
					Governance	in the Improvement of

					Association	Corporate Governance
						Financial Analysis	3.0
					Taiwan
						under Pressure: A Case
					Corporate
			2020/5/6	2020/5/6		Study of US-China
					Governance
						Trade War and
Independent	Wen-Yen				Association
						COVID-19		Yes
i		2018/4/11
Drector	Pan				Taiwan	Seminar on Board	3.0

					Academy of	Operations and
			2020/7/22	2020/7/22
					Banking and	Practices and

					Finance	Corporate Governance
						Directors' and	3.0
					Taiwan	Supervisors'
					Corporate	Responsibilities in
			2020/9/4	2020/9/4
					Governance	Merger and

					Association	Acquisition of
						Enterprises
						2020 Seminar on	3.0
					Securities and	Prevention of Insider

Independent	Song-Nian		2020/9/30	2020/9/30	Future Institute	Trading and Insider
								Yes
Director	Ye	2020/5/28				EquityTrading

					Taiwan	[Audit Committee	3.0
					Corporate	Courses] Establishment
			2020/10/14	2020/10/14
					Governance	and Operation of Audit

					Association	Committee
					Taiwan		3.0
						Civil and Criminal
					Corporate
			2020/11/3	2020/11/3		Liability of Directors
					Governance
						of Public Companies
					Association

					Taiwan		3.0
						How Enterprises
					Corporate
			2020/8/6	2020/8/6		Strengthen Strategy
					Governance
						Execution Ability
Legal	Jiun-Huei				Association
								Yes
Representative	Guo	2018/04/11			Taiwan	Securities Lawsuit	3.0

					Corporate	Cases and Directors'
			2020/11/11	2020/11/11
					Governance	and Supervisors'

					Association	Liability
					Taiwan	How to Innovate KPI	3.0
					Corporate	and Performance
			2020/8/5	2020/8/5
					Governance	Management in the

Legal	Kueng-				Association	Digital EconomyEra
		2018/04/11						Yes
Representative	Ming Lin				Taiwan	Trends of Digital	3.0

					Corporate	Technology and
			2020/11/4	2020/11/4
					Governance	Artificial Intelligence

					Association	and Risk Management

77 -

Title	Name	Election Date	Date of Continuing Education	Date of Continuing Education	Organizer	Class Name	Hour s	Whether Continuing Education Complies with Regulations (Note 1)
			From	Until
						Directors' and	3.0
					Taiwan	Supervisors'
					Corporate	Responsibilities in
			2020/9/4	2020/9/4
					Governance	Merger and

					Association	Acquisition of
						Enterprises
						Advanced Seminar for	3.0
						Directors and
						Supervisors (including
						Independent) and
					Securities and	Corporate Governance
			2020/9/8	2020/9/8
					Future Institute	Executives - How to

						Innovate KPI and
						Performance
Legal	Hui-Ting					Management in the
								Yes
Representative	Shen	2020/5/25				Digital EconomyEra

						Advanced Seminar for	3.0
						Directors and
						Supervisors (including
						Independent) and
					Securities and	Corporate Governance
			2020/10/21	2020/10/21
					Future Institute	Executives - Mergers

						and Acquisitions of
						Enterprises - Focusing
						on Hostile Mergers and
						Acquisitions
					Taiwan	Trends of Digital	3.0
					Corporate	Technology and
			2020/11/20	2020/11/20
					Governance	Artificial Intelligence

					Association	and Risk Management
					Chinese	Sustainability	3.0
					National	(including the latest
					Association of	development trend of
			2020/3/19	2020/3/19
					Industry and	CSR reporting and

					Commerce,	related corporate
Legal	Lian-Sheng				Taiwan	governanceanalysis)		Yes
		2018/4/11
Representative	Tsai				Chinese			(Note 2)

					National		3.0
						Impacts and Response
					Association of
			2020/3/24	2020/3/24		of the Labor Incident
					Industry and
						Act
					Commerce,

					Taiwan

Note 1: Whether it complies with the hours, scope, system and arrangement of continuing education and information disclosure defined in the "the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and GTSM Listed Companies".

Note 2: Due to the reappointment of the corporate director of the Shen Chun-Chi Cultural & Education Foundation, Mr. LianSheng Tsai was no longer a director of the Company on May 25, 2020. The number of hours of education has met the requirements number of education hours, the scope, the system, and the arrangements and information of education as stipulated in the "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies".

4. Continuing education of directors/managers:

(1) The Company entrusted the Taiwan Corporate Governance Association to invite lecturers, so as to teach the Company's directors and managerial officers about "Directors' and Supervisors' Responsibilities in Merger and Acquisition of Enterprises" in September 2020.
78 -

Date/Time: 9:00 A.M. ~ 12:00 P.M., September 4, 2020

Title: Directors' and Supervisors' Responsibilities in Merger and Acquisition of Enterprises Lecturer: Lawyer Ching-Hsien Yangk, PwC

Lawyer Shuo-Yuan Ma

Name list of directors/managerial officers attending the continuing education programs:

Title	Name
Chairman	Ruey-Long Chen
Vice Chairman	Jiun-Nan Bai
Independent Director	Song-Nian Ye
Director	Hui-Ting Shen
President	Janson Yu
Vice President and Chief of Corporate Governance	Ying-Chun Chen
Vice President	Yuan-Long Chen
Vice President	Huang Kuo-Tsai
Vice President	Shu-Tong Zou
Vice President	Chia-Wei Tsai
Assistant Vice President	Huei-Fen Yang
Assistant Vice President	Lin Chin-Hsiang
Plant Chief	Wang Chong-Chien
Head of Audit	Yang Ming-Ling
Manager	Pei-Yu Yang
Manager	Wen-Yuan Tseng

(2) The Company entrusted the Taiwan Corporate Governance Association to invite lecturers, so as to teach the Company's directors and managerial officers about "Trends of Digital Technology and Artificial Intelligence and Risk Management" in November 2020.

Date/Time: 9:00 A.M. ~ 12:00 P.M., November 20, 2020

Title: Trends of Digital Technology and Artificial Intelligence and Risk Management Lecturer: Ta-Kuei Lin, Vice President of KPMG

Name list of directors/managerial officers attending the continuing education programs:

Title	Name
Vice Chairman	Jiun-Nan Bai
Director	Hui-Ting Shen
Special Assistant of Chairman	Chi-Chung Chia
Assistant Vice President	Chiao-Pin Lee
Manager	Yung-Long Chen

M.O.P.S.: http://mops.twse.com.tw/
The Company website: http://www.cpdc.com.tw Investor Relations
79 -

(IX) Disclosure of internal control system:

Internal control declaration

China Petrochemical Development Corporation Declaration of Internal Control System

March 23, 2021

China Petrochemical Development Corporation (CPDC) had inspected the 2020 internal control system autonomously with the results illustrated as follows:

I. CPDC is fully aware that the board of directors and the management are responsible for the establishment, implementation, and maintenance of the internal control system and it is established accordingly. The purpose of establishing the internal control system is to reasonably ensure the fulfillment of operation effect and efficiency (including profit, performance, and protection of assets safety), financial report reliability, instantaneity, transparency and compliance.
II. The internal control system is designed with inherent limitations. No matter how perfect the internal control system is, it can only provide reasonable assurance to the fulfillment of the three objectives referred to above. Moreover, the effectiveness of the internal control system could be affected by the changes of the environment and circumstances. The internal control system of CPDC is designed with a self-monitoring mechanism; therefore, corrective actions will be activated upon identifying any nonconformity.
III. CPDC has assessed the effectiveness of the internal control system design and implementation in accordance with the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets” (referred to as “the Regulations” hereinafter). The criteria defined in “the Regulations” include five elements depending on the management control process: (1) environment control, (2) risk assessment, (3) control process, (4) information and communication, and (5) supervision. Each of the five elements is then divided into a subcategory. Please refer to “the Regulations” for details.
IV. CPDC has implemented the criteria of the internal control system referred to above to inspect the effectiveness of internal control system design and implementation.
V. CPDC based on the inspection result referred to above has concluded that the internal control system (including the supervision and management over the subsidiaries) on December 31, 2020 is reasonably effective in achieving the objectives of operation effect and efficiency, instantaneity, transparency, financial report reliability, and compliance.
VI. The Declaration of Internal Control System is the main content of the Company’s annual report and published prospectus. Any falsification and concealment of the published content referred to above involves the liability illustrated in Article 20, Article 32, Article 171, and Article 174 of the Securities and Exchange Act.
VII. The Declaration of Internal Control System was resolved in the board meeting with the objection of 0 board directors out of the 8 attending board directors on March 23, 2021. The content of the declaration has been accepted without any objection.

China Petrochemical Development Corporation

Chairman: Chen Ruey-Long

President: Janson Yu

80 -
The internal control audit report issued by the CPA commissioned to conduct an internal control audit, if any: The Company did not commission any CPA to conduct an audit of internal controls in 2019.
(X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:

Prepared on March 30, 2021

Date	Entity	Case	Main Deficiency	Improvement	Type of Punishment
2020.2.11	R&D Center	The non-compliance of waste from Renwu Waste Recycling Plant (the waste from the R&D center carried on the vehicle contained flammable and volatile organic compounds and the VOC test value exceeded the standard).	1. At 10:48 a.m. on January 30, 2020, the Environmental Protection Bureau inspected the vehicle of Sing Uang Environment Co., Ltd. traveled from Dashe Plant to Renwu Waste Recycling Plant and found that the waste on the vehicle contained flammable and volatile organic compounds with a VOC test value of 215ppm (the standard is 30ppm). 2. The above incident violated Paragraph 1, Article 36 of Waste Disposal Act.	1. Waste classification 2. Passing the VOC test before transportation.	Regulatory agency fined NT$6,000, and 4 hours of environmen t remedial seminar classes.
2020.2.26	Dashe Plant	Inconsistency in the reported quantity of waste	1. The Environmental Protection Bureau, Kaohsiung City Government issued a letter on February 26, 2020, which imposed penalty on the results of the joint department surprise inspection (Labor Inspection Office, Environmental Protection Bureau, Fire Agency, and Economic Development Bureau) of the plant at 09:30 a.m. on September 26, 2019. (1). The Waste Management Section of the Environmental Protection Bureau investigated the quality of waste output and temporary storage from September 2018 to August 2019,inwhich	1. Mass balance for waste production and temporary storage reporting. 2. The report shall be reviewed and confirmed by the supervisor before submission.	Regulatory agency fined NT$60,000 , and 4 hours of environmen t remedial seminar classes.

81 -

Date	Entity	Case	Main Deficiency	Improvement	Type of Punishment
			the output of A-2201, A- 2101 and D-1504 was inconsistent with the reported amount in October 2018. (2). After investigation, it was found that the completion date of the report on October 30, 2017 was mistakenly selected as October 31, 2018 by the staff, resulting in the inconsistency of quantity. 2. The above incident violated Paragraph 1 and 2, Article 31 of Waste Disposal Act.
2020.3.20	Dashe Plant	Failure to attach the information in the extension application for the waste self-disposal permit	1. The Kaohsiung City Environmental Protection Bureau issued a letter on July 14, 2020, regarding the application for change and extension of waste self- disposal submitted by the Dashe Plant, which failed to attach the semi-annual inspection report data for the second half of 2016, the whole year of 2018, and the first half of 2019. According to the plant staff, the inspection will be performed only if there is ash produced during the annual furnace maintenance, instead of once every six months as required by laws and regulations. 2. The above incident violated Paragraph 1, Article 36 of Waste Disposal Act and Article 27 of Methods and Facilities Standards for the Storage, Clearance and Disposal of Industrial Waste.	1. Attach relevant information required by the laws and regulations. 2. The wastewater incinerator will be in maintenance for ash cleaning and inspection every six months.	Regulatory agency fined NT$30,560 .
2020.4.13	Dashe Plant	FLARE Black Smoke Incident	1. At 11:50 a.m., April 13, 2020, the AN2 plant of the Dashe Plant was releasing the propene residue in the propene evaporator. The AN staff manually opened the pipeline valve to release propenetotheKung-I	1. Enhance training to improve employees' ability for plant maintenance. 2. At the early stage of the emissionduring	Regulatory agency fined NT$100,00 0.

82 -

Date	Entity	Case	Main Deficiency	Improvement	Type of Punishment
			combustion tower. On the other hand, the AN2 employee did not release a sufficient amount of evaporated steam, resulting in incomplete combustion and the release of black smoke. 2. The Company received the judgment on May 26, 2020, the above incident violated Article 32 of the Air Pollution Control Act.	the incinerator shutdown, both parties shall designate a person to monitor the emission condition of the combustion tower and make adjustments accordingly. 3. Install AI monitor to detect smoke exhaust status of the combustion tower to grasp the changes in real time
2020.9.28	Anshun Plant	Anshun Plant seawater pool B failed the test	1. The Environmental Protection Bureau commissioned a qualified testing laboratory to test the samples taken on July 29, 2020. On September 28, 2020, it was found that the seawater pool B failed the test. 2. The above incident violated the 2019 inspection guideline in the remediationplan	1. According to Taiwan City Government Environment Letter No. 1090117984, the Company is required to be in compliance by June 21, 2021.	Regulatory agency fined NT$200,00 0, and 2 hours of environmen t remedial seminar classes.

(XI) Resolutions reached in the shareholder's meeting or by the Board of Directors during the most recent year and up to the date of publication of this annual report:

(1) Important resolutions made by shareholders' meeting

Type of Meeting	Date	Summary of Motion
Shareholders ' Meeting	2020/5/28	1. Ratification of the Company's 2019 business report and financial statements. 2. Ratification of the 2019 Earnings Distribution Proposal. 3. Approved the amendment to certain provisions of the Company's "Articles of Incorporation". 4. Approved the amendment to certain provisions of the Company's "Procedures for the Acquisition or Disposal of Assets". 5. Approved the amendment to certain provisions of the Company's "Procedures for Loans, Endorsements, and Guarantees". 6. Approved the amendment to certain provisions of the Company's "Rules for Election of Directors".

83 -

Type of Meeting	Date	Summary of Motion
		7. Approved the amendment to certain provisions of the Company's "Rules Governing the Proceedings of Shareholder Meetings". 8. Approved the capital raising proposal by public share issuance (cash offering) or participating in global depositary receipt ("GDR") issuance with an issue size no greater than 600 million common shares. 9. Approved the by-election of the 21st independent director of the Company. 10. Removal of the 21st director of the Company's prohibition of competitionproposal.

(2) Important Resolutions by the Board of Directors

Type of Meeting	Date	Summary of Motion
Board of Directors	2020/1/31	1. Approved the capital increase of its 100% subsidiary, Dingyue Development Co., Ltd., by NT$2.5 billion. 2. The Company's employee leisure center construction plan. 3. The Company's investment plan "Construction Project of CHDM Trial Construction Project". 4. The Company assessed the asset impairment in accordance with IAS 36. After the asset impairment test, the Company recorded an asset impairment of NT$2,901,096,000 for the Toufen Plant in 2019 Q4. 5. In order to increase its medium-term working capital, the Company entered into a joint credit facility with a financial institution. 6. The Company applied to a financial institution for a change in the scope of right for its collateral and mortgage. 7. Renewal of the guarantee contract for commercial bills with financial institutions. 8. Amendment to the Company's "Procedures for Loans, Endorsements, and Guarantees". 9. Amendment to the Company's "Procedures for the Acquisition or Disposal of Assets". 10. Amendment to the Company's "Articles of Incorporation". 11. Amendment to the Company's "Rules for Election of Directors". 12. Amendment to the Company's "Rules Governing the Proceedings of Shareholder Meetings". 13. Retirement and discharge of Ko-Ming Lin, CEO of the Company. 14. Position transfer of Chih-Yuan Yang from the Overseas Production Division of the Company's Petrochemical Production Department. 15. The remuneration case of Mr. Tsai, the Vice President of the Company’s R&D Center. 16. The Company's distribution of performance bonus for the appointed managers in the 3rd quarter of 2019. 17. Adjustment of the living and education allowance for the appointed managers in Mainland China. 18. The Company's distribution of severance for appointed managers.

84 -

Type of Meeting	Date	Summary of Motion
Board of Directors	2020/1/31	1. Election of the 21st Chairman of the Company
Board of Directors	2020/2/26	1. The Company acquired Dajia Plant of Sunko Ink Co., Ltd. 2. By-election of the Independent Director of the 21st Board of Directors of the Company. 3. Formulated the rules of convening the 2020 general shareholders' meeting of the Company. 4. The Company's 2020 general shareholders' meeting will accept nominations of independent director candidates and receive proposals from shareholders. 5. Engaging the independent director, Wen-Yen Pan, as a member of the Company's 4th "Remuneration Committee". 6. Authorize the Chairman of the Company to deal with the joint loan raised by Shin Kong Bank at its absolute discretion. 7. Appointed Lawyer Yang-Shou Huang from Teta Law Firm as the legal consultant of the Company. 8. Permanent appointments of the Company's Vice Presidents Shu-Tong Zou and Chen Ying-Chun from Acting Vice Presidents. 9. Changes in the use of funds of two Vietnam subsidiaries of the Company for better utilization.
Board of Directors	2020/3/27	1. The 2019 self-assessment of the internal control system (hereafter, "control self-assessment") has been completed. According to the results of the control self-assessment, issue a statement of the internal control system. 2. The Company's 2019 parent only financial statement and consolidated financial statement. 3. 2019 Business Operations Report. 4. 2019 Earnings Distribution Proposal. 5. The Company's distribution of remuneration for the Directors in 2019. 6. 2019 employee remuneration. 7. In order to increase the working capital and meet the capital needs of future development, the Company proposed to handle the domestic issuance of ordinary shares by cash capital increase within 600 million ordinary shares, or participate in the issuance of GDR by cash capital increase of ordinary shares. 8. The Company implemented the treasury shares system for the 1st time in 2020, 9. Amendment to the Company's internal control audit plan for 2020. 10. Amendment to the joint venture agreement between the Company and the JEAN GROUP and increase the capital of Jingjie Construction Co., Ltd., a joint venture of both parties. 11. Renewal of export letter of credit with financial institutions. 12. Renewal of contract for short-term credit facilities with financial institutions. 13. Signing contract of application for the issuance of commercial bills with financial institutions. 14. The lease agreement for the Company's land leased by the Budai Township Office in Chiayi County was retrospectively approved. 15. Discharge of Ching Lin, Manager appointed by the Company. 16. Reappointment of Hung-Lung Chen, Manager of the Company. 17. The Company's Chairman Ruey-Long Chen concurrently acts as the Company's CEO.

85 -

Type of Meeting	Date	Summary of Motion
		18. The remuneration case of Ruey-Long Chen, the Company’s Chairman. 19. The remuneration case of the Company's independent director, Wen-Yen Pan, who concurrently acts as a member of the Remuneration Committee. 20. Severance for Mr. Lin, the Company's former CEO. 21. The remuneration case of Mr. Hung-Lung Chen, Manager of the Company's President Office. 22. Adjustment of the remuneration of appointed managers, including Mr. Yung-Long Chen, manager of the Company's Information Division under the Administrative Resources Department, Mr. Kuan-Der Chien, manager of the Management Team of Hsiaokang Plant.
Board of Directors	2020/4/15	1. Approved the negotiation of a price reduction with Nam Long INVESTMENT CORPORATION to acquire 35% equity interest in its subsidiary, Paragon Dai Phuoc One Member Liability Company Limited, through two of its Vietnam subsidiaries on the premise of securing investment interests. 2. The terms of the settlement of the Kaohsiung Taikin New Village and the development plan of the disputed land. 3. The Board of Directors of the Company nominated and reviewed the list of independent director candidates. 4. Removal of the 21st director of the Company's prohibition of competition proposal. 5. Agenda of the 2020 general shareholders' meeting of the Company. 6. Evaluation of independence of external CPA. 7. Reappointed the CPAs from KPMG as the auditor of the Company's 2020 financial report. 8. KPMG was replaced by PwC as the auditor of the Company's 2020 financial report. 9. Approval of renewal for short-term credit facilities with financial institutions. 10. Amendment to the Company's "Shareholder Services Internal Control Policy and Internal Audit Operational Guidelines". 11. Amendment to the area and scope of the land leased for the Company's employee leisure center construction plan and built additional parking space without changing the original budget. 12. Change of the Company's Head of Internal Audit. 13. Resignation of Mr. Chou, Operation and Management Consultant of the Company's President Office.
Board of Directors	2020/5/13	1. The Company's investment plan for the "Construction Project of Fine Chemical Plant - Phase I". 2. In order to promote the integration investment in Mainland China, the Company invested in and established a subsidiary in Lianyungang with RMB6.8 million through Lianhua Development Co., Ltd. 3. Increase of budget for the An-Shun project of the Company. 4. The Company's "Phase II Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal". 5. The Company provided guarantees and endorsements for its China subsidiary, Jiangsu Weiming Petrochemical Corporation. 6. Reappointment of Mr. Li, Manager of Administration of the Dashe Plant to the Human Resource Division of the Administrative Resources Departmentof theHeadquarters.

86 -

Type of Meeting	Date	Summary of Motion
		7. Discharge of Mr. Chang, Data Application Department of the Company as the appointed manager.
Board of Directors	2020/6/17	1. Approval of export letter of credit and short and medium-term credit facilities with financial institutions. 2. Contract with financial institutions for medium-term credit facilities. 3. Approval of renewal for short-term credit facilities with financial institutions. 4. The change of the Company's investment plan for the integration of Rudong Weiming in Jiangsu Province and the total investment amount (Rudong Phase I and Phase II). 5. Contract renewal of parking lot No. 52 of the Company. 6. Contract renewal of parking lot No. 57 and No. 63 of the Company. 7. The Company appointed Mr. Chao as the Assistant Manager of the Overseas Development Division of the Land Development Department. 8. The Company appointed Mr. Huang as the Special Assistant to the Chairman Office. 9. Discharge of Mr. Chang, the Assistant Manager of the Company's Land Development Department as the appointed manager. 10. Chun-Chin Liu, Vice President of the Company's Land Development Department, was promoted to Executive Vice President.
Board of Directors	2020/7/24	1. Renewal of the unsecured short-term credit facilities entered into between the Company and financial institutions. 2. Renewal of the unsecured short-term credit facilities entered into between the Company and financial institutions. 3. The Company entered into guarantee contracts with financial institutions. 4. Establishment of the Company's "Operating Procedures for the Repurchase of Treasury Shares". 5. Set the ex-dividend date and payment date for the 2019 earnings distribution by cash dividends of the Company. 6. The Company increased the budget for the investment plan of the consolidation of the Cyclohexanone Plant in Jiangsu Rudong Weiming (Stage II of Phase I). 7. The Company's "Phase III Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal". 8. Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd. 9. The Company appointed Mr. Wong to be the Assistant Manager of the Land Development Department. 10. The Company promoted Mr. Li as the Manager of the Technical Services Team of the R&D center of the Company. 11. Permanent appointments of Mr. Li, Mr. Wang, Mr. Huang, and Mr. Tsai as Managers from acting managers.. 12. The remuneration case of Song-Nian Ye, the Company’s independent director. 13. The remuneration case of Mr. Liu, the Company’s Executive Vice President. 14. The remuneration case of Mr. Chao, Assistant Manager of the Company’s Overseas Development Division under the Land Development Department. 15. The remuneration case of Mr. Wong,Special Assistant of the Company's

87 -

Type of Meeting	Date	Summary of Motion
		Chairman Office. 16. The remuneration case of Mr. Chien, Manager of the purchase division of the Administrative Resources Department. 17. The Company's distribution of severance for the discharge of appointed managers Mr. Chang.
Board of Directors	2020/8/12	1. The Company entered into new guaranteed corporate bond lines with financial institutions. 2. The Company entered into new medium and long-term guarantee credit lines and corporate bond guarantee lines with financial institutions. 3. The Company entered into a renewal agreement with a financial institution for a consolidated export guarantee and a guarantee credit line, and added a new guarantee credit line for corporate bonds. 4. The Company issued domestic secured ordinary corporate bonds.
Board of Directors	2020/9/14	1. Contract renewal with financial institutions for the guarantee of commercial bills. 2. Renewal of the unsecured short-term credit facilities entered into between the Company and financial institutions. 3. The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd. 4. The Company co-insured with Shiny Chemical Industrial Co., Ltd. based on the Contracts between Construction Applicants, and provided guarantees and endorsements for Shiny Chemical Industrial Co., Ltd during the term of the contract for “HsiaoKang Plant’s Projects at Phase II of the Port of Kaohsiung Intercontinental Container Terminal” 5. The Company leased the land in An-Nan District, Tainan City to the Tainan City Government for the 2020 National Day fireworks event without compensation. 6. Adjustment of the Company organization and amendment to the Company’s “Article of Incorporation”. 7. Amendment to the Company's "Remuneration System Management Guidelines". 8. Reappointment and promotion of Mr. Tsai, Mr. Li, Mr. Kao, Mr. Li, and Mr. Chen, Managers appointed by the Company. 9. The Company appointed Mr. Chang as the Special Assistant to the Chairman Office. 10. Discharge of Mr. Chao, Assistant Manager of the Overseas Development Division of the Land Development Department of the Company. 11. Discharge of Mr. Lin, Assistant Manager of the Engineering Division of the Petrochemical Production Department of the Company. 12. The remuneration case of Mr. Huang, the Assistant Manager of the Company’s Land Development Department. 13. The remuneration case of Mr. Li, the Manager of the Company’s Technical Service Team of the R&D Center. 14. The Company has a special bonus to reward the appointed managers for their active participation in building the smart decision-making platform. 15. The Company acquired the land, plant, and equipment of the Douliu Polymer Plant of Chain Yarn Co., Ltd. 16. Under the amount approved by the Board of Directors, the Company invested in its 100%subsidiary,Core Pacific Twin Star(Vietnam)

88 -

Type of Meeting	Date	Summary of Motion
		Investment Co., Ltd., and authorized the Chairman to handle all matters related to the subsequent funding in tranches. 17. The Company participated in the capital increase by ordinary shares and cash of Chain Yarn Co., Ltd. Signed all deeds and documents related to the issuance and completed all affairs necessary for the issuance.
Board of Directors	2020/10/28	1. The Company's 2021 Business plan. 2. To expand the chemical storage capacity and flexible trading, the Company amended the "Phase III Storage Tank Construction Project at the Phase II of the Port of Kaohsiung Intercontinental Container Terminal", in which the Company leased additional land, expanded storage tanks and export facilities. 3. Renewal of the unsecured short-term credit facilities entered into between the Company and financial institutions. 4. The Company provided guarantees and endorsements for its subsidiary, Dingyue Development Co., Ltd. 5. The Company appealed to the Supreme Court against the High Court's denial of the Company's request for dismissal of the arbitration judgment. 6. Discharge of Mr. Chen, Production Manager of the Toufen Plant of the Petrochemical Production Department of the Company. 7. Reappointment of Mr. Chien, Manager of the Manufacturing Team of Dashe Plant of the Company. 8. Reappointment of Mr. Li and Mr. He, Manager of the Petrochemical Production Department of the Company. 9. In accordance with the "Implementation Guidelines for Innovation and Patent Performance Incentives", the Company approved the patent approval bonus for the appointed manager who participated in and contributed to the patent invention. 10. The remuneration case of Mr. Li, the Assistant Manager of the Company’s Multimedia Command Center under the President Office, and Mr. Chen, Plant Chief of Toufen Plant. 11. The remuneration case of Mr. Kao, the Plant Chief of Hsiaokang Plant and Mr. Tsai, the Assistant Manager of the Overseas Production Division, as well as the subsidies case of Mr. Tsai and duty allowance case of Mr. Li, Manager of the Hsiaokang Plant. 12. The remuneration case of Mr. Chang, the Special Assistant of the Company’s Chairman Office. 13. The remuneration case of Mr. Yang, the Company’s Administrative Resources Department.
Board of Directors	2020/11/13	1. Renewal of the unsecured short-term credit facilities entered into between the Company and financial institutions. 2. The Company canceled the provision of guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd. 3. Motion: The Company provided guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd.

89 -

Type of Meeting	Date	Summary of Motion
Board of Directors	2020/12/30	1. 2021 Corporate Budget. 2. 2021 Internal Control Audit Plan. 3. Renewal of the unsecured short-term credit facilities entered into between the Company and financial institutions. 4. Renewal of the unsecured short-term credit facilities entered into between the Company and financial institutions. 5. The Company entered into a short-term export letter of credit with financial institutions. 6. Renewal of the unsecured short-term credit facilities and secured long-term credit facilities entered into between the Company and financial institutions. 7. The Company's Board of Directors approved the provision of guarantees and endorsements for its China subsidiary Changzhou Weicai New Material Science & Technology Co., Ltd., and approved the increase in property insurance. 8. Amendment to certain provisions of the Company's "Audit Committee Charter" and the "Management of the Proceedings of Audit Committee Meetings" internal control procedures. 9. Amendment to certain provisions of the Company's "Rules Governing the Duties of Independent Directors", "Regulations of Performance Evaluation for Board of Directors", and "Rules Governing the Proceedings of Shareholder Meetings", as well as the "Management of the Proceedings of Board Meetings" internal control procedures pursuant to the current regulations. 10. Amendment to certain provisions of the Company's "Remuneration Committee Charter" and the "Management of the Proceedings of Remuneration Committee Meetings" internal control procedures 11. Amendment to the Company's "Rules for the Appointment and Resignation of Managers". 12. Discharge of Mr. Wu, Manager of the subsidiary (Jiangsu Weiming) under the Overseas Production Division of the Company's Petrochemical Production Department. 13. In response to operational needs, the Company renewed the appointment contracts with 24 appointed managers.

Important resolutions made by the general shareholders' meeting and resolutions made by shareholders' meetings in 2020

shareholders' meetings in 2020

Summary of Motion

Status of Resolutions Made by Shareholders'
Meetings

1. Ratification of the 2019 Business Report
and Financial Statements.
2. Ratification of the 2019 Earnings
Distribution Proposal.
3. Amendment to certain provisions of the
Company's "Articles of Incorporation".
4. Amendment to certain provisions of the
Company's "Procedures for the
Acquisition or Disposal of Assets".

The resolution was approved.
The resolution was approved. Distribute common
stock dividends of NT$985,455,039 (distribute cash
dividends NT$0.3 per share) on August 31, 2020.
The resolution was approved and announced on the
Company website (https://www.cpdc.com.tw/).
The resolution was approved. The information has
been uploaded to the MOPS within 20 days according
to law.(sii.twse.com.tw/ declaration of non-formatted

90 -

Summary of Motion

Status of Resolutions Made by Shareholders'
Meetings

5. Amendment to certain provisions of the
Company's "Procedures for Loans,
Endorsements, and Guarantees".
6. Amendment to certain provisions of the
Company's "Rules for Election of
Directors".
7. Amendment to certain provisions of the
Company's "Rules Governing the
Proceedings of Shareholder Meetings".
8. Discussion of the capital raising proposal
by public share issuance (cash offering)
or participating in global depositary
receipt ("GDR") issuance with an issue
size no greater than 600 million common
shares.
9. By-election of the 21st independent
director of the Company.
10. Removal of the 21st director of the
Company's prohibition of competition
proposal

file electronic data / declaration of relevant
information of shareholders' meeting)
The resolution was approved. The information has
been uploaded to the MOPS within 20 days according
to law. (sii.twse.com.tw/ declaration of non-formatted
file electronic data / declaration of relevant
information of shareholders' meeting)
The resolution was approved and announced on the
Company website (https://www.cpdc.com.tw/).
The resolution was approved and announced on the
Company website (https://www.cpdc.com.tw/).
The resolution was approved. Due to the adjustment of
the investment schedule in line with the investment
and development plan, the shares were not issued and
will be reported at the 2021 general shareholders'
meeting.
The declaration of material information has been
handled in accordance with the law.
The declaration of material information has been
handled in accordance with the law.

(XII) Recorded or written statements made by any director or supervisor which specified dissent to important resolutions passed by the Board of Directors during the most recent year and up to the date of publication of this annual report: None

(XIII) Summary of discharge and resignation of parties relating to the financial report:

April 30, 2021

				April 30, 2021
Title	Name	Date of Appointment	Date of Discharge	Cause
Chairman	Ko-Ming Lin	2016.4.21	2020.1.31	Retirement
CEO	Ko-Ming Lin	2016.4.21	2020.1.31	Retirement
Head of Internal Audit	Huei-Fen Yang	2013.1.08	2020.5.1	Job adjustment

Note: The parties relating thereto include the Chairman, president, accounting officer, finance officer, Head of Internal Audit and R&D officer.

91 -

V. Information on CPA Professional Fees

(I) Breakdown of CPA Professional Fee

Firm Name	CPA Name	CPA Name	Duration of Audit	Remark
KPMG	Melody Chen	Dan-Dan Chung	2020

Unit: NTD Thousand

			Unit:	NTD Thousand
Fees Price Range		Audit Fees	Non-Audit Fees	Total
1	Less than NT$2,000 thousand
2	NT$2,000 thousand (inclusive)~NT$4,000 thousand
3	NT$4,000 thousand (inclusive)~NT$6,000 thousand
4	NT$6,000 thousand (inclusive)~NT$8,000 thousand
5	NT$8,000 thousand (inclusive)~NT$10,000 thousand		
6	NT$10,000 thousand (inclusive) or more			

(II) Information about CPA Professional Fee

Unit: NTD Thousand

									Unit:	NTD Thousand
Firm Name	CPA Name		Audit Fees	Non-AuditFees					Duration of Audit	Remark
				System Design	Commercial and Industrial Registration	Human Resources	Others	Subtotal
KPMG	Melody Chen	Dan-Dan Chung	8,874				664	664	2020	Other items include the review of valuation reports for investment real estate, the reading service of the annual report, and registration change service.
KPMG							9,311	9,311		Other items include professional services for issuance of overseas depositary receipts and accountant review services for issuance of ordinary corporate bonds.

92 -
Non-audit fees paid to the CPA, CPA firm and their affiliates exceeded the audit fees by more than twenty-five percent: Yes, mainly fees for professional services for issuance of overseas depositary receipts and accountant review services for issuance of ordinary corporate bonds.
Change of CPA firm and the audit fees for the year of the change less that of the previous year, and the amount of audit fees before and after the change, and reasons for the change: None
Audit fees were 10% less than that of the previous year: None.
VI. Information About Replacement of CPA: None
VII. Information About Chairman, President, and Financial or Accounting Manager of the Company Who Has Worked with the CPA Firm Which Conducts the Audit of the Company or Affiliate to Said Firm in the Most Recent Year: None
VIII. Any transfer of equity interests and pledge of or change in equity interests by a director, managerial officer, or shareholder with a stake of more than 10 percent in the most recent year and up to the date of publication of the annual report.

Change in equity of directors, managerial officers, and major shareholders

Job Title (Note 1)	Name	2020	2020	EndingMarch 30,2021	EndingMarch 30,2021
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Chairman	The Core Pacific Co.,Ltd.	0	6,289,293	0	(5,600,000)
Chairman Institutional representative of Core Pacific Co.,Ltd.	Ruey-Long Chen (Appointed on Jan 31, 2020) (Concurrent Appointment on Mar 27th,2020 as CEO)	0	0	0	0
Chairman Institutional representative of Core Pacific Co.,Ltd.	Ko-Ming Lin (Retired on Jan 31, 2020)	0	0	0	0
Vice Chairman	BES MachineryCo.,Ltd.	0	0	0	0
Vice Chairman Institutional Representative of BES MachineryCo.,Ltd.	Jiun-Nan Bai	0	0	0	0
Director Institutional representative of Core Pacific Co.,Ltd.	Hwa-Yeang Shen (Resigned and discharged on Jun 24, 2020)	0	0	0	0
Director	Sheen Chuen-Chi Cultural and Educational Foundation	0	0	0	0

93 -

Job Title (Note 1)	Name	2020	2020	EndingMarch 30,2021	EndingMarch 30,2021
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Director Institutional Representative of Sheen Chuen-Chi Cultural and Educational Foundation	Kueng-Ming Lin	0	0	0	0
Director Institutional Representative of Sheen Chuen-Chi Cultural and Educational Foundation	Hui-Ting Shen (Appointed on May 25, 2020)	0	0	0	0
Director Institutional Representative of Sheen Chuen-Chi Cultural and Educational Foundation	Lian-Sheng Tsai (Discharged on May 25, 2020)	0	0	0	0
Director	Jen Huei Enterprise Co.,Ltd.	0	1,000,000	0	0
Director Institutional Representative of Jen Huei Enterprise Co., Ltd.	Jiun-Huei Guo	0	0	0	0
Independent Director	Song-Nian Ye (Appointed on May28,2020)	0	0	0	0
Independent Director	Ruey-Long Chen (Resigned on Jan 31,2020)	0	0	0	0
Independent Director	Yun-PengChu	0	0	0	0
Independent Director	Wen-Yen Pan	0	0	0	0
President	Janson Yu	0	0	0	0
Vice President	Yun-Chih Liu	0	0	0	0
Special Assistant	Lin Ching	0	0	0	0
Vice President	HuangKuo-Tsai	0	0	0	0
Vice President	Yuan-LongChen	42,800	0	0	0
Special Assistant	Chi-ChungChia	0	0	0	0
Vice President	Ying-Chun Chen (Appointed on Mar 17, 2020) (Concurrent Appointment as Chief of Accounting Dept. & Finance Dept.)	0	0	0	0
Vice President	Shu-Tong Zou (Appointed on Mar 27,2020)	0	0	0	0
Vice President	Chia-Wei Tsai	0	0	0	0
Special Assistant	Chia-Wen Chang (Discharged from AVP on Jun 17, 2020) (Appointed on Sep14,2020)	0	0	0	0
Assistant Vice President	Huei-Fen Yang	0	0	0	0
Assistant Vice President	Yu-Lan Wang (Discharged on March 3,2021)	(3,000)	0	0	0

94 -

Job Title (Note 1)	Name	2020	2020	EndingMarch 30,2021	EndingMarch 30,2021
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Assistant Vice President	Lin Chao (Appointed on Jun 17, 2020) (Discharged on Aug10,2020)	0	0	0	0
Assistant Vice President	Guan-Lu Lee	0	0	0	0
Assistant Vice President	Tien-Hua Wang (Appointed on Jul 1,2020)	0	0	0	0
Assistant Vice President	Chien-Hsien Lee	(36,000)	0	0	0
AssistantVicePresident	Chiao-Pin Lee	0	0	0	0
AssistantVicePresident	Chau-Yuan Tsai	0	0	0	0
Plant Chief	Chi-TsungKao	0	0	0	0
PlantChief	WangChong-Chien	0	0	0	0
Assistant Vice President	ChengJung-Wen	0	0	0	0
AssistantVicePresident	Chien-Yuan Huang	0	0	0	0
AssistantVicePresident	Tsai Wen-Chih	0	0	0	0
Plant Chief	Hong-Long Chen (Reappointed on Sep15,2020)	0	0	0	0
Manager	Po-ChengHsu	0	0	0	0
Manager	Wang Yen-Li (Discharged on Jan 1,2021)	0	0	0	0
Manager	Lee Chi-Chang	(23,694)	0	0	0
Manager	Yung-LongChen	0	0	0	0
Manager	Pei-Yu Yang	0	0	0	0
Manager	Wen-Yuan Tseng	0	0	0	0
Manager	Chi-Wei Chang	0	0	0	0
Manager	Wei-Ying Li (Appointed on Aug1,2020)	0	0	0	0
Manager	Lin Chin-Hsiang (Reappointed on Oct 1,2020)	(5000)	0	0	0
Manager	Yang Ming-Ling (Newly appointed as Head of Internal Audit on January 21, 2020)	31,375	0	0	0
Manager	YangChi-Yuan	0	0	0	0
Manager	Chen Jian-Ming (Discharged on Oct 1,2020)	0	0	0	0
Manager	Chi-FongWang	0	0	0	0
Manager	Fang-Mo Chien	0	0	0	0
Manager	Chin-Yi Lee	0	0	0	0
Manager	Lee Kun-Nan (Discharged on Jan 1,2021)	0	0	0	0
Manager	Lee Kung-Da (Discharged on Jan 1,2021)	0	0	0	0
Manager	Chang-HungChien	0	0	0	0
Manager	Kuan-Der Chien	39,168	0	0	0
Manager	Wu Chun-Hsien (Discharged on Jan 1,2021)	0	0	0	0
Manager	Chen Yi-Yen (Discharged on Jan 1,2021)	0	0	0	0
Manager	Liu Yung-Fu	0	0	0	0

95 -

Job Title (Note 1)	Name	2020	2020	EndingMarch 30,2021	EndingMarch 30,2021
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Manager	Mu-Chuan Ho	45,000	0	0	0
Manager	Hsu Yung-Sen (Discharged on Mar 1,2021)	0	0	0	0
Manager	Chang Cheng-Lung (Discharged on Apr 27,2020)	0	0	0	0
Special Assistant	Tian-Shuei Gao	0	0	0	0
Chief Consultant	Ching-JingSheen	0	0	0	0

Note 1: The shareholders who hold more than 10% of the Company's shares shall be identified as major shareholders and stated separately.
Note 2: Where the counterparts of shares through transfer and pledged under lien are related parties, it is also necessary to complete the following table.

Information about Equity Transfer

Name (Note 1)	Cause (Note 2)	Trading Date	Trading Counterpart	Relationship between trading counterpart and the Company, directors, supervisors, manager and shareholders who hold more than 10% of the Company's shares	Quantity	Trading Value
None

Note 1: Please specify the names of directors, supervisors, managerial officers, and shareholders who hold more than 10% of the Company's shares.

Note 2: Please specify acquisition or disposal.

Information about Equity Pledged Under Lien

Name (Note 1)	Cause (Note 2)	Date of Change	Trading Counter part	Relationship between trading counterpart and the Company, directors, supervisors, manager and shareholders who hold more than 10% of the Company's shares	Quantity	Ratio of Shareh olding	Ratio of Pledge	Pledged (redeeme d) Value
None

Note 1: Please specify the names of directors, supervisors, managerial officers, and shareholders who hold more than 10% of the Company's shares.

Note 2: Please specify pledge or redemption.

96 -

IX. Relationship among the Top 10 Shareholders

March 30, 2021

Name (Note 1)	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Total Shareholding by Nominees	Total Shareholding by Nominees	Among the ten largest shareholders, designation or name and relationship with anyone who is a related party or spouse, or a relative within the second degree of kinship. (Note 3)	Among the ten largest shareholders, designation or name and relationship with anyone who is a related party or spouse, or a relative within the second degree of kinship. (Note 3)
	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Designation (or Name)	Relationship
Core Pacific - Yamaichi International (H.K.) Ltd. - Client A/C Representative: N/A	46,446,048 -	1.41% -	0 -	0 -	0 -	0 -	BES Engineering Corporation	Substantial related party
The Core Pacific Co., Ltd. Representative: ChiangHung-Chiao	45,625,096 40,450	1.39% 0%	0 -	0 -	0 -	0 -	N/A	N/A
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds Representative: N/A	41,035,290 -	1.25% -	0 -	0 -	0 -	0 -	N/A	N/A
BES Engineering Corporation Representative: Hui-Lan Chu	40,713,750 222,500	1.24% 0.01%	0 0	0 0	0 0	0 0	The Core Pacific Co., Ltd.	Substantial relatedparty
Vanguard Emerging Markets Stock Index Fund, A series of Vanguard International Equity Index Funds Representative: N/A	40,374,730 -	1.23% -	0 -	0 -	0 -	0 -	N/A	N/A
Chen Tsui-E	36,789,000	1.12%	0	0	0	0	N/A	N/A
CTBC Bank Trust Account Representative: YangShu-Hui	27,952,426 0	0.85% 0	0 0	0 0	0 0	0 0	N/A	N/A
Core Pacific World Co., Limited Representative: Shen Chin-Jing	27,322,525 0	0.83% 0	0 0	0 0	0 0	0 0	BES Engineering Corporation	Substantial relatedparty
Yuanta Securities (Hong Kong) Company Limited-Client Account Representative: N/A	24,885,000 -	0.76% -	0 -	0 -	0 -	0 -	N/A	N/A
Chiu Te-Fu	20,742,000	0.63%	0	0	0	0	N/A	N/A

Note 1: The top ten shareholders' names shall be identified separately (in the case of corporate shareholders, the corporate shareholders' names and representatives' names shall be identified separately).

Note 2: The ratio of shareholding is calculated in terms of own shareholdings, shares held by spouse & children under age or shareholdings under the title of a third party.

Note 3: The shareholders identified above include juristic persons and natural persons, and the relationship among them shall be disclosed in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

X. Ratio of Combined Shareholding

Date: December 31, 2020; Unit: shares; %

Investee	Invested by the Company	Invested by the Company	Invested by directors, supervisors, management, and enterprises controlled by the Company directly or indirectly	Invested by directors, supervisors, management, and enterprises controlled by the Company directly or indirectly	Combined Investment	Combined Investment
	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Sharehol ding
Dingyue Development Co., Ltd.	1,004,000,000	100％	0	0％	1,004,000,000	100％
CPDC Investment (BVI) Co., Ltd.	26,580,000	100％	0	0％	26,580,000	100％
CPDC Green Energy Technolocy Company (formerly CDPC Engineering Corp.)	15,000,000	100％	0	0％	15,000,000	100％
Tsou Seen Chemical Industries Corporation	96,000,000	100％	0	0％	96,000,000	100％
Unichem Development Limited	313,851,199	100%	0	0％	313,851,199	100%
BES Twin Towers Development Co., Ltd.	580,012,053	100%	0	0％	580,012,053	100%
CKS Guard	1,440,000	24％	0	0％	1,440,000	24％
Kaohsiung Monomer Co., Ltd.	20,000,000	40％	0	0％	20,000,000	40％
Jean Pacific Development Co., Ltd.	62,000,000	40％	0	0％	62,000,000	40％
Sheng Fong Construction Investment Co. Ltd.	458,637,500,000	100%	0	0%	458,637,500,000	100%

Note : Equity Method Long Term Investments.

98 -

Chapter 4 Status of Fund Raising

I. Capital Stock and Shares

(I) Source of Capital Stock

Year and Month	Issuing Price	Authorized Capital Stock	Authorized Capital Stock	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Quantity	Amount	Quantity	Amount	Sources of Capital Stock	Offset by any property other than cash	Others
1969/04	100	8,000,000	800,000,000	8,000,000	800,000,000	Fund raising in cash	None
1980/05	100	25,000,000	2,500,000,000	25,000,000	2,500,000,000	Capital increase in cash	None
1983/02	10	800,000,000	8,000,000,000	630,140,000	6,301,400,000	Capital increase in cash Capital increase upon consolidation	None
1983/11	10	800,000,000	8,000,000,000	748,724,700	7,487,247,000	Capital increase in cash Capital increase upon consolidation	None
1984/02	10	890,000,000	8,900,000,000	823,058,900	8,230,589,000	Capital increase upon consolidation	None
1985/10	10	890,000,000	8,900,000,000	846,878,900	8,468,789,000	Capital increase in cash	None
1986/07	10	890,000,000	8,900,000,000	856,878,900	8,568,789,000	Capital increase in cash	None
1991/05	10	1,100,000,000	11,000,000,000	959,704,400	9,597,044,000	Capital surplus	None
1997/08	10	1,362,900,000	13,629,000,000	1,115,731,588	11,157,315,880	Recapitalization of capital surplus	None
1998/08	10	1,840,000,000	18,400,000,000	1,283,091,327	12,830,913,270	Recapitalization of capital surplus	None
1999/02	10	1,840,000,000	18,400,000,000	1,283,869,156	12,838,691,560	Convertible corporate bonds	None
1999/09	10	1,840,000,000	18,400,000,000	1,412,256,072	14,122,560,720	Capital surplus Recapitalization of earnings	None	SEC (88) Tai-Tsai- Cheng (1) No. 64778 dated July12,1999
2000/08	10	1,840,000,000	18,400,000,000	1,482,868,876	14,828,688,760	Capital surplus	None	SEC (89) Tai-Tsai- Cheng (1) No. 52477 dated June 17,2000
2002/12	10	1,840,000,000	18,400,000,000	1,482,943,830	14,829,438,300	Convertible corporate bonds	None
2004/02	10	2,600,000,000	26,000,000,000	1,689,999,459	16,899,994,590	Convertible corporate bonds	None
2008/11	10	2,600,000,000	26,000,000,000	1,794,962,992	17,949,629,920	Recapitalization of earnings	None	FSC approval letter under Ching-Kuan- Cheng Yi-Tze No. 0970049317 dated September 17,2008
2011/9	10	2,600,000,000	26,000,000,000	1,974,459,291	19,744,592,910	Recapitalization of earnings	None	FSC approval letter under Ching-Kuan- Cheng Yi-Tze No. 1000031761 dated July8,2011

99 -

Year and Month	Issuing Price	Authorized Capital Stock	Authorized Capital Stock	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Quantity	Amount	Quantity	Amount	Sources of Capital Stock	Offset by any property other than cash	Others
2012/12	10	2,600,000,000	26,000,000,000	2,319,989,666	23,199,896,660	Recapitalization of earnings	None	FSC approval letter under Ching-Kuan- Cheng Yi-Tze No. 1010046102 dated October 15,2012
2017/05	10	2,600,000,000	26,000,000,000	2,355,258,954	23,552,589,540	Convertible corporate bonds	None
2017/08	10	2,600,000,000	26,000,000,000	2,363,353,546	23,633,535,460	Convertible corporate bonds	None
2017/11	10	2,600,000,000	26,000,000,000	2,524,667,174	25,246,671,740	Convertible corporate bonds	None
2018/03	10	3,600,000,000	36,000,000,000	2,699,857,267	26,998,572,670	Convertible corporate bonds	None
2020/02	10	3,600,000,000	36,000,000,000	3,284,850,130	32,848,501,300	GDR	None

Note 1: Please specify the information for the current year available until the date of the publication of the annual report.

Note 2: The capital increase part shall be identified by effective (approval) date and document No. additionally.

Note 3: The stock issued at the price less than the par value shall be identified prominently.

Note 4: Please specify the offset by monetary creditor's rights and technology, if any, and note the type and amount of offset. Note 5: The private placement, if any, shall be identified prominently.

Type of Shares	Authorized Capital Stock	Authorized Capital Stock	Authorized Capital Stock	Remark
	OutstandingShares	Unissued Shares	Total
Common Stock	3,284,850,130	1,215,149,870	4,500,000,000

Note: Please specify whether the stock refers to TWSE or GTSM stock (the stock forbidden from being traded in TWSE or GTSM, if any, shall be identified).

Information About Shelf Registration System

Type of Securities	Quantity of Shares	Quantity of Shares	Quantity of	Quantity of	Purpose and Expected Benefit of	Period in Which Unissued Shares	Remark
	Total	Approved	Quant	Price
None

(II) Composition of Shareholders

March 30, 2021

Composition of Shareholders Quantity	Government Apparatus	Financial Organization	Other Juristic Persons	Individual	Foreign Institution or Foreigner	Total
Number of persons (persons)	3	14	399	244,934	318	245,668
Shareholding (shares)	8,295,421	11,838,363	228,829,250	2,618,098,869	417,788,227	3,284,850,130
Ratio of Shareholding (%)	0.25%	0.36%	6.97%	79.70%	12.72%	100.00%

100 -

March 30, 2021

(III) Diversification of equity

			March 30, 2021
Range of Shares	Number of Shareholders	Status of Shareholding	Ratio of Shareholding
1~999	69,303	12,734,701	0.39%
1,000~5,000	101,282	230,399,720	7.01%
5,001~10,000	30,602	230,002,132	7.00%
10,001~15,000	14,408	171,881,379	5.23%
15,001~20,000	7,221	131,251,663	4.00%
20,001~30,000	8,169	199,153,601	6.06%
30,001~40,000	3,743	129,674,151	3.95%
40,001~50,000	2,624	120,553,684	3.67%
50,001~100,000	4,694	332,005,113	10.11%
100,001~200,000	2,149	296,626,214	9.03%
200,001~400,000	856	237,368,209	7.23%
400,001~600,000	257	125,133,275	3.81%
600,001~800,000	108	74,719,329	2.27%
800,001~1,000,000	64	58,075,624	1.77%
1,000,001 or more	188	935,271,335	28.47%
Total	245,668	3,284,850,130	100.00%

Preferential Stock

March 30, 2021

			March 30, 2021
Range of Shares	Number of Shareholders	Status of Shareholding	Ratio of Shareholding
None
Total

(IV) Roster of Major Shareholders

March 30, 2021

ange o ares Shareholders aus None Total (IV) Roster of Major Shareholders	o areong	o o areong March 30, 2021
Shares Name of Major Shareholder	Status of Shareholding	Ratio of Shareholding
Core Pacific - Yamaichi International(H.K.)Ltd. - Client A/C	46,446,048	1.41%
The Core Pacific Co.,Ltd.	45,625,096	1.39%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	41,035,290	1.25%
BES EngineeringCorporation	40,713,750	1.24%
Vanguard Emerging Markets Stock Index Fund, A series of Vanguard International EquityIndex Funds	40,374,730	1.23%
Chen Tsui-E	36,789,000	1.12%
CTBC Bank Trust Account	27,952,426	0.85%
Core Pacific World Co.,Limited	27,322,525	0.83%
Yuanta Securities(HongKong)CompanyLimited-Client Account	24,885,000	0.76%
Chiu Te-Fu	20,742,000	0.63%

101 -

(V) Information on market value, net value, earnings and dividends per share

Unit: NTD, except weighted average quantity of shares and analysis on ROE

Year Item	Year Item	Year Item	2019	2020	Ending April 30, 2021 (Note 8)
Market value per share (Note1)	Highest		12.35	12.05	16.9
	Lowest		9.21	6.28	10.85
	Average		10.64	8.46	13.99
Net value per share (Note2)	Before distribution		23.68	21.56	N/A
	After distribution		23.33	(Note 9)
EPS	Weighted average shares		2,834,850,130	3,273,784,556
	EPS (Note 3)		0.61	0.21
	EPS-adjusted retroactively (Note 3)		0.61	(Note 9)
Dividends per share	Cash Dividend		0.3	-(Note 9)
	Free-Gratis dividends	Stock dividend from earnings	-	-
		Stock dividend from paid-incapital	-	-
	Retained dividend (Note4)		-	-
Return on investment	Price-EarningsRatio (Note 5)		17.44	40.29
	DividendYield (Note 6)		35.47	-
analysis	Cashdividend yield (Note 7)		2.82%	-

In the case of retained shares distribution or capital surplus shares distribution, please also disclose the information about the market value and cash dividend adjusted retroactively based on the number of shares as distributed.
Note 1: Please identify the highest market value and the lowest market value of the common stock in various years, and calculate the average market price for each year based on the trading value and turnover for each year.
Note 2: Please apply the number of shares already issued at the end of the year and identify the status of distribution according to the resolution made by the shareholders' meeting held in the following year.
Note 3: If it is necessary to make adjustments retroactively due to Free-Gratis dividends, please identify the EPS before and after adjustment.
Note 4: If the terms and conditions under which the equity securities are issued provide that the stock dividend retained in the year may be accumulated until the year in which there are allocable earnings available, please disclose the retained stock dividend accumulated until the then year.
Note 5: Price-Earnings Ratio=Average Closing Price Per Share in current year/Earnings Per Share

Note 6: Dividend Yield=Average Closing Price Per Share in the current year/Cash Dividend Per Share

Note 7: Cash Dividend Yields=Cash Dividend Per Share/Average Closing Price Per Share in the current year
Note 8: Please identify the net value per share and EPS available in the latest quarterly financial information audited (reviewed) by the independent auditor before the date of publication of the annual report, and the information available until the date of publication of the annual report in the other sections.

Note 9: Earnings Distribution for 2020 is still under resolution by the general shareholders' meeting 2021.

102 -
(VI) Dividend Policy and the Status of Implementation
Dividend policy in the Articles of Incorporation:

The Company may duly use its reserve to distribute dividends, appropriate capital, and issue new shares in accordance with relevant laws and regulations. If the Company has earnings, after payment of taxation, it shall offset the losses in previous years, and set aside a legal capital reserve and special capital in accordance with relevant laws and regulations or requested by the authorities in charge. With respect to any balance herein together with the undistributed cumulative profits from previous years and from the current year, the Board of Directors shall prepare an earnings distribution proposal and submit to the shareholder meeting for approval according to the following dividend policy. The Company is in a highly capital-intensive industry, subject to volatility and high levels of competition.

Where the Company is subject to the influence of the global economy and changes in industrial performance, the Company should take into account the Company's business operations, capital needs and status of the competitive environment, interests of shareholders and the Company's own financial planning in the allotment of its profits. Under such circumstances, the Company may set aside profits into a special reserve either in whole or in part to assure financial stability and sustainability. The Company may allot dividends in cash or stock. In the case that the allotment is made by way of stock dividend, the ratio for the stock dividend shall not exceed 50% of the total distribution unless the ratio of the Company's total liabilities to total assets is equivalent or above 50% or otherwise prescribed in relevant laws and regulations.

Allocation of dividends proposed at the shareholders' meeting:

According to the resolution of the Board of Directors on March 23, 2021, the Company resolved not to distribute dividends.

resolved not to distribute dividends.
Item	Amount
Undistributed earnings,beginningofperiod	508,480,202
Add(less):
Disposal of equity instruments at fair value through other comprehensive income.	126,298,940
Changes in the remeasurement of the defined benefit plan for the currentperiod	(27,392,429)
Recognized changes in ownership interests of subsidiaries to offset retained earnings	(393,083)
Net income after tax for 2020	680,989,534
Distributable earnings	1,287,983,164
Less:
Legal reserve	(77,950,296)
The subsequent measurement of investment property is based on the fair value model, and the net increase in fair value for 2020 is appropriated as special reserves.	(1,210,032,868)
Undistributed earnings,end ofperiod	0

103 -
(VII) Effect of allocation of Free-Gratis Dividends proposed at the shareholders' meeting on the operational performance of the Company and the Earnings Per Share:

Not applicable as no gratis allotment of shares on distribution of earnings is proposed at the shareholders’ meeting.

(VIII) Employee bonus and remuneration to directors/supervisors:

Proportion or scope of employee bonus and remuneration to directors as stated in the Company's Articles of Incorporation Article 32:

If the Company has earnings, it shall set aside 3% of the balance as remuneration to the employees and no greater than 2% of the balance as remuneration to directors. When there are accumulated losses, the Company shall offset the appropriate amounts before remuneration.

The above remuneration to the employees may be allotted in cash or stock, eligible personnel includes employees at subsidiaries that meet the requirement by the Board. The above remuneration to the directors shall be in cash.

The earnings in paragraph one means the annual pre-tax earnings before deduction of the remuneration to employees and directors.

Distribution of the employees' and directors' remuneration shall be resolved at board meetings, with over two-third of directors in attendance and approved by over half of the attending directors, and reported to the shareholder's meeting.

The accounting in the case of deviation from the basis for stating employees bonus and remuneration to directors, the basis for calculating the number of stock dividends to be allocated, and the actual allocation:

The 2020 remuneration of employee is estimated by a ratio of the pre-tax income before minus the remuneration to directors and employee, if the estimates differ from the resolved remuneration on the day of the shareholders meeting, the shareholder's meeting shall refer to the new amount, and the amount adjusted in the year of the shareholders' meeting.

Information about the allocation of bonus resolved by the Directors' Meeting:
(1) The 2020 remuneration of employee and directors was ratified by the Board on March 23, 2021. Allocation of remuneration is as below:

In accordance with the Articles of Incorporation, the Company proposed an employee allocation of 3%, with an amount of NT$2,670,202 allocated for employees, and directors' allocation of no more than 2%, or an amount of NT$1,780,134, both paid out in cash.

(2) The amount of any employee remuneration distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee remuneration: N/A
The actual allocation of employee bonus and remuneration to directors in the previous year (including the number, amount and stock price of allocated shares), the deviation between the actual allocation and the estimated figures, if any, and cause and treatment thereof:
(1) The actual distribution of the 2019 directors' remuneration is the same as the proposed
104 -

distribution approved by the Board of Directors.

(2) No employee bonus was allocated in 2019.

(IX) Repurchase of the Company's shares:

epurchase of the Company's shares:	epurchase of the Company's shares:
April 30, 2021
Term of repurchase	1st
Purpose of repurchase	Maintain company credit and shareholders'rights
Scheduled period of repurchase	2020/03/30~2020/05/29
Price range of repurchase	NT$5.03~7.5
Type and quantity of shares repurchased	Ordinary share 0 shares
Amount of shares repurchased	NT$0
Ratio of quantity repurchased to scheduled quantity of repurchase	0%
Shares that have been cancelled or transferred	0 share
Cumulative shares of the Company	0 share
Total treasury stock holdings as a percentage of total shares issued	0%

105 -

II. Issuance of Corporate Bonds

(I) Issuance of Domestic Convertible Corporate Bonds

Corporate Bonds	Corporate Bonds	First Domestic Secured Corporate Bonds in 2020
Date of Issue		September 21,2020
Par value		1,000,000
IssuingPrice		Issuance atpar value
Total amount		3,500,000,000
Interest		0.64%
Maturity		5years,mature on September 21,2025
Guarantee Agency		Party A: Mega International Commercial Bank Co., Ltd. Party B: Bank of Taiwan PartyC: Land Bank of Taiwan
Trustee		Trust Department of Shin KongCommercial Bank Co.,Ltd.
Underwriters		Mega Securities Co.,Ltd as main underwriter
Lawyers		Lawyer Chung-Chieh Wei of Chuang Chien International Law firm
Accountant		KPMG
Redemption		Repayment in lump sum upon maturity
OutstandingPrinciple		3,500,000,000
Provision of prepayment and redemption		None
Restrictive covenant		None
Company’s name, date and corporate bonds of credit rating		Party A: Mega International Commercial Bank Co., Ltd., October 24, 2019, Taiwan Ratings twAA+ Party B: Bank of Taiwan, November 20, 2019, Taiwan Ratings twAAA Party C: Land Bank of Taiwan, July 24, 2020, Taiwan Ratings twAA
Others	Converted (exchange or subscription) common stock, depository receipts or other price of securities as of the annual reportpublish date.	None
	Issuance and conversion (exchange or subscription)	None
The effect of current shareholder's equity and the condition of diluted equity due to methods of issuance, conversion, exchange, subscription and issuanceprovision		None
Name of Exchange		None

106 -

III. Issuance of Preferred Shares: None.

IV. Status of Participation in Issuance of "Global Depository Receipts (GDRs)":

Date of Issue Item	Date of Issue Item	Date of Issue Item	2020/01/10
Date of Issue			2020/01/10
Place of issue and trading			Luxembourg Stock Exchange
Total dollar amount of issue			US$129,240,000
Dollar amount per unit issued			US$7.18
Total number of issued units			18,000,000 units
Source of underlying securities			Ordinary shares of CPDC held by shareholders of the Company (handle in accordance with the Company's "Regulations Governing the Conversion Sales of Depositary Receipt)
Number of underlying securities			450,000,000 shares
Rights and obligations of holders of the depositary receipts			Same as ordinary shares
Trustee			N/A
Depositary institution			Citibank, N.A.-New York
Custodian institution			First Commercial Bank Custody Division of Trust Department
Balance of overseas depositary receipts not yet redeemed			5,400 units (Note 1)
Method of allocating relevant expenses during issue period and the of the overseas depositary receipts			Borne by the issuing company
Important Agreements in Depository and Custody Contracts			Refer to the depositary agreement and custody agreement for details
Market price per unit	2020	Highest	US$10.4
		Lowest	US$5.31
		Average	US$7.16
	As of March	Highest	US$ 10.4
		Lowest	US$ 8.25
	31, 2021	Average	US$9.28

Note 1: As of March 31, 2021, investors have redeemed 17,994,600 units.

V. Status of Employee Stock Option: None.

VI. Restriction on Employee Share Subscription Warrant: None.
VII. Mergers and Acquisitions, or as Assignee of New Shares Issued by Another Company: None.

VIII. Implementation of Capital Utilization Plan

As of the quarter before the publishing date of the annual report, the content of plan and status of implementation of the previous issuance or private placement of securities that have not been complete, or those have been completed in the past three years but the expected benefits have not yet shown:

(I) The contents of the 2020 overseas depositary receipt plan:
107 -
Total funds required: RMB1,176,000 thousand (equivalent to US$177,002 thousand).
Source of funds: Issuance of overseas depository receipts.
3.Project and the progress: Investment plan for reinvesting in Jiangsu Weiming Plant.
(II) Implementation of funds:

Unit: NTD Thousand

							Unit: NTD Thousand
Project	Status of implementation		1st quarter of 2021 1st quarterof 2021		As of 1st quarter of 2021		Reasons for progress ahead or behind and improvement plan (Note 2)
			USD	Equivalent to NT$ (Note)	USD	Equivalent to NT$ (Note)
Reinvesting in the China subsidiary- Jiangsu Weiming	Amount of expense	Expected	0	0	100,000	3,150,000	Mainly due to the impact of the COVID-19 pandemic in 2020, the person in charge of the project could not enter the site for construction as planned, which caused the construction period to be delayed, so the payment of funds was delayed.
		Actual	0	0	56,890	1,792,035
	Execution progress (%)	Expected	0	0	56.50%	56.50%
		Actual	0	0	32.14%	32.14%
Total	Amount of expense	Expected	0	0	100,000	3,150,000
		Actual	0	0	56,890	1,792,035
	Execution	Expected	0	0	56.50%	56.50%
	progress (%)	Actual	0	0	0%	0%

Note 1: The exchange rate of the US$ to NT$ is calculated as US$1 against NT$31.5; the investment funds of the China subsidiary are denominated in RMB, and the exchange rate of USD to RMB is calculated at the exchange rate at the time of exchange.

Note 2: At present, the equivalent of US$72,350 thousand in unspent funds is deposited in the bank's foreign currency fixed deposit account (calculated at the exchange rate at the time of exchange) and the repurchase ticket.
108 -

Chapter 5 Operations Overview

I. Business contents

(I) Scope of business
The scope of major business items
- (1) Manufacture of petroleum, alkali-chlorine and phosphoric acid and derivatives.
- (2) Import-export including storage, transportation, procurement, and sales of the products in the forgoing item and their raw materials, chemicals, and chemical materials.
- (3) Business related to the procurement and sales in the foregoing item and the import and export trade of general commodities.
- (4) Provision of related technical services of products (by-products) in the foregoing items, processes, and equipment operations.
- (5) Research and development of chemicals.
- (6) Trade, classified processing, and distribution of goods (clothing, electrical, books and stationery, auto products, houseware, and entertainment and leisure facilities).
- (7) Restaurant and hotel operations.
- (8) Design and sales of computer software and operation of data registration and processing.
- (9) Development of commercial buildings; lease and sales of public housing; development of plant buildings on general industrial land; lease and sales of warehouses; and development, lease, sales, and management of industrial parks commissioned by industrial authorities.
- (10) Operations of recreational areas and golf practice ranges (under five holes).
- (11) Investment in parking lots within the scope of urban planning.
- (12) Operation of gas stations; sales of diesel and dedicated LPG; and simple auto maintenance services (such as lubrication).
- (13) Operation of new power plants.
- (14) Undertaking environmental engineering work (removal, disposal and engineering of general waste, general industrial waste, and hazardous industrial waste).
- (15) Import, export, and sales of feed and feed additives.
- (16) Business items not prohibited or restricted by the law in addition to the approved business items.
Major products and sales mix

Currently, the major products of this company include acrylonitrile (AN), caprolactam (CPL), nylon chip (NY6 or PA6), and o-phenylphenol (OPP). Other products include electricity, hydrogen cyanide (HCN); ammonium sulfate (AS), industrial sulfuric acid, refined sulfuric acid, and fuming sulfuric acid (oleum). The sales mix of these products in 2020 is as follows:

Product Sales Mix (%) Acrylonitrile (AN) and by41.8% (Source: Calculated according to the

109 -

products		consolidated financial report)
Caprolactam (CPL) and by-	38.5%
products
O-phenylphenol (OPP)	1.7%
Others	18%

3. Current products

Current products include acrylonitrile (AN), caprolactam (CPL), nylon chip (NY6 or PA6), ammonium sulfate (AS), sulfuric acid (including fuming sulfuric acid (oleum) and refined sulfuric acid), hydrogen cyanide (HCN), electricity, and New products for engineering plastics mixing and modification.

4. New products to be developed

We will evaluate the development of plasticized raw materials, functional polymers, raw decomposition materials, nylon engineering plastics, cyclopentanone derivatives, optical application monomers, special chemical products, electronic grade high purity materials, biobased materials, and biodegradable materials. We also use raw materials, products and byproducts to develop high value-added products.

(II) Industry overview

1. Current status and development

(1) Acrylonitrile (AN or ACN)

In Taiwan, there are only two AN suppliers: CPDC and Formosa Plastics Corporation (Formosa Plastics). The Company has already expanded production capacity in 2010, 2011 and 2019, and the production capacity this year was 230,000 metric tons. Although the production capacity of Formosa Plastics was 280,000 metric tons, for the most part of its AN output is for internal use to produce ABS and AF products.

In 2020, the total AN demand in Taiwan was about 460,000 metric tons/year, which was close to that in 2019.

(2) Caprolactam (CPL)

The Company is the only CPL supplier in Taiwan. The CPL capacity in 2020 was 400,000 metric tons, and production volume in 2020 of 173,000 metric tons, full supply to Taiwan without export, with domestic market share of 43%. In 2020, with downstream production of textiles and polymerization capacity increased in China and the COVID-19 causing the demand decline around the globe, it is a difficult competitive environment for Taiwanese suppliers. In Taiwan, CPL consumption during 2020 decreased by 22% versus 2019, with apparent demand at about 350,000 metric tons/year.

Nylon demand in Asia continues to increase, particularly in China, where CPL capacity largely increased in 2012, and reduced its capacity growth rate due to oversupply in 2020. Capacity in 2020, reached a total capacity of 4.3 million metric tons. 2020 capacity increased by 130,000 tons, which is an increase of 3% versus 2019. In 2020, the total CPL demand in China was 3.3 million tons a year, while the 200,000 tons added

110 -

capacity in 2020 has shown a slow-paced capacity expansion. As the growth in the supply of CPL in mainland China decreased in 2020, the production of the CPL industry increased. In 2021, it is estimated that CPL demand in Asia will rebound as the pandemic is under control, but there still will be a large amount of active investment in new CPL production capacity. Due to the absence of a significant increase in demand in the Asia CPL market, the CPL business will continue facing the stringent challenge.

(3) Nylon Chips (NY6 or PA6)

Nylon chip production in Taiwan decreased in 2016~2020, due to COVID-19 and decreasing sales in China caused by oversupply in China Nylon chip production. As supply capacity remains higher than demand, the amount of export is large. With the increasing self-sufficiency of China’s production capacity, Taiwan’s exports to China have been gradually reducing; sales in other regions increased year by year, gradually shifting its dependence on the China market. The Company produces nylon chips with CPL through vertical integration for downstream suppliers to produce nylon threads, engineering plastics, and nylon films. By producing and selling nylon chips, the Company maintains a link to the nylon market. To cope with segmentation and heterogeneous growth of downstream nylon products, we continuously adjust the structure of our downstream customers.

(4) O-phenylphenol (OPP)

The Company in 2016 completed a pilot plant, and is the only supplier of OPP domestically, and is the 3rd largest producer in the world. This product is a vertically integrated, specialty product line, and uses Cyclohexanone as its main raw material. The R&D center developed catalytic converters, production design, and completed the plant construction. The main end product for this product line is flame retardant, optical materials, and antiseptic/sterilization purposes. Through the production and sales of OPP, we intend to further develop our operations in specialty chemicals, expanding OPP derivative products for different end markets. Through the differentiation of downstream products and growth potential, we continue to adjust our client mix, and further develop CPDC's entry into the specialty chemical market.

Supply Chain Relationships between Products

(1) Acrylonitrile (AN or ACN)

Propene and ammonia anhydrous are the major raw materials of AN. AN is produced by ammoxidation with a specific amount of air and steam. Propene is mainly supplied by CPC Corporation Taiwan, with a small amount from imports. All liquid ammonia is imported.

Downstream AN applications include acrylic fiber and ABS plastics production. Acrylic fiber is also called AN fiber. It is mainly used in producing fabrics, wool, woolen fabrics, blankets, carpets, and stuffed toys. ABS is usually used to produce briefcases, cosmetics containers, computers, mobile phones, home appliance shells, and auto parts.

(2) Caprolactam (CPL)

Benzene or phenol and ammonia anhydrous are the major raw materials of CPL. Benzene is either supplied by CPC Corporation Taiwan or imported. Phenol is supplied in

111 -

Taiwan or imported. All ammonia anhydrous are imported.

CPL is the major raw material for producing NY6 and resin. The downstream products of NY6 thread include general textile fibers, such as sports jackets, lining, stockings, undergarments, and fabrics, and industrial fabrics such as umbrella fabrics, fishing lines, fishing nets, tire carcass, handbags, and home carpets.

(3) Nylon Chips (NY6 or PA6)

Nylon chips are made of CPL through polymerization into solid high molecules for use by downstream spinning industry or engineering plastics industry. The downstream application of nylon chips has been mentioned in the CPL section. The product relations are as follows:

Nylon threads Downstream Processing Benzene or phenol CPL Nylon Chips Compounding and Engineering Modification Plastics

Development Trend and Competition Status of Major Products
(1) Acrylonitrile (AN or ACN)

Favorable conditions:

1) NBR: Tire (NBR) demand will increase as the auto industry continues to grow in 2021, along with the steady growth in Medical Latex demand, especially in mainland China, where there is room for a significant growth. These will indirectly favor AN production and stabilize AN price.
2) AM: As the demand for wastewater treatment and oil refinery treatment increases, AM demand is expected to increase to favor AN production and stabilize AN price.
3) ABS: The demand for home appliances and autos maintained growth for the company, indirectly favoring AN production and beneficial for stabilizing prices.
Unfavorable conditions:
1) AF: 2021 Annual AF Demand estimates are flat or slightly increased due to the recovery of the global economy. However, Polyester (polyester fiber) continues to be replaced by a small portion, which will slightly affect AN production and price stability.
2) China continues to expand its new capacity, causing the balance of supply and demand in AN industry and the impact on prices.
3) Continental conservation policy (such as tariff protection, or the inclusion of AN as a processing ban) has also had an impact on the operations of AN Asian producer, and China-US trade conflicts have also affected the mainland's demand.
112 -
4) China has reduced VAT to 13% since April 2019, and there are no tariff barriers to the export of competing factories in the future, and competition for export has intensified.

Responsive action for unfavorable factors:

Develop NBR(Latex) and AM markets which enjoy higher demand growth rates and explore other regional sales area such as south India and the Middle East to reduce the dependence on the Chinese market. These efforts are starting to show positive effects.

(2) Caprolactam (CPL)

Favorable conditions:

1) Nylon is an industry for key development in China. Therefore, in addition to helping domestic nylon suppliers to expand production capability, the Chinese government has implemented tariff barriers and an anti-dumping tax to protect domestic nylon industry development. As this company is not on the anti-dumping tax list, our entry barrier is lower than other international competitors.
2) As the CPL process is complicated and operation is rather difficult, it is difficult for newcomers to control quality. Therefore, current suppliers can enjoy a short-term quality advantage.
3) The quality of Nylon produced in Taiwan still remains better than that in mainland China, thus in a continued demand growth environment, suppliers in Taiwan remain a preferred choice to customers.

Unfavorable conditions:

1) CPL capability in China expanded extensively, and supply was higher than demand in 2013. As CPL suppliers were competing for market share, price competition and profit reduction has occurred.
2) After PTA capability expansion in Asia in recent years, excessive polyester has substituted for nylon thread at a lower price point and higher market share. This affects the development of nylon thread in the general textile market.

Responsive action for unfavorable factors:

1) Focus on the top-down supply chain environment and changes in the market situation, acquired the Douliu nylon chips plant that can produce 80,000 tons/year, increase downstream customers and differentiation, flexibly adjust sales strategies and support downstream industries to increase operational performance, and face competition together.
2) Reinforce cultivation of engineering plastics and film markets to reduce the risk of selling products to a single market -- nylon textile market. Increase the flexibility of sales adjustments with the company's development and production of functional nylon chips.
(3) Nylon Chips (NY6 or PA6)

Favorable conditions:

1) China is a developing country with a fast-growing economy. As the domestic demand
113 -

and export growth increase, the textile industry expands its capability to accelerate nylon chip consumption.

2) The thriving auto industry in China stimulates auto nylon chip demand.

Unfavorable conditions:

1) Nearly 55% of the downstream industries of nylon chips in Taiwan concentrate in clothing fibers with the export market focusing on China. Therefore, the concentration effect of a single industry and a single market is significant.

Responsive action for unfavorable factors:

After the acquisition and capacity expansion of polymerization equipment, most Taiwan suppliers avoided price-driven competition with China, increased export to niche highquality markets in Asia, Southeast Asia, and India. The Company also emphasizes material supply contracts with domestic Taiwanese customers to strengthen sales and is committed to the development of the engineering plastics, film, and fishing net wire market, which is a success.

(4) OPP (ortho-phenylphenol)

Favorable conditions:

1) As the third-largest manufacturer in the world and the only supplier in Taiwan, the demand of downstream applications is mostly focused on the Asia region, which has a geographical benefit and can promote ortho-phenylphenol.
2) Using the novel catalyst technology and purification system to reduce energy and wastes emission, enhance product quality and efficiency.

Unfavorable conditions:

1) The main competitor has a market share of over 50% and enjoys preferential tax rates in major demand markets, which is unfavorable for Taiwan's special chemical products.
Responsive action for unfavorable factors:

To avoid price-driven competition with China, the CPDC will develop OPP derivatives to enhance the market share for the Asia region and create new business market areas and customers, for example the Europe and the United States.

Domestic Market Share of Major Products

In 2020, the domestic market share of CPL is about 43%; AN is about 35%, and nylon chips is about 8%, and OPP domestic market share is approximately 50%.

(III) Technology and R&D

R&D Expenses: FY2020: NT$442,279,000 By March 31, 2021: NT$71,353,000
Major Research Outcomes

From catalyst development, process design, and plant construction, we can ensure 100% independent development for ortho-phenyl phenol (OPP). CPDC is also devoted to the development of OPP derivatives. OPP is an important fine organic chemical generally used

114 -

to produce flame retardant, fungicide, preservative, coating, photosensitive materials, mordant or surfactant.

In engineering plastics compounding product series, R&D center devoted to new product development including nylon 66 engineering plastics, PC composites, ABS composites, PC / ABS composites, PP modification materials, and other engineering plastics composites. Series of products have good mechanical properties, flame retardant, toughening resistance at low temperature, heat resistance, weather resistance, antibacterial, conductive, antistatic and other characteristics, can be used in %G application materials, new energy vehicles, smart 3C, medical equipment, sport and leisure, home life and other industrial fields. R&D center is also capable of developing in-house product series with specialized formulas, and building up customized product technologies according to customer needs.

With the design concept of an integrated production line, we developed a combination of esters products, with derivative monomers that have wide applications as synthetic dyes, plants, plastics and adhesives production, cosmetics, food processing, and as a PU paint modifier.

We have our own hydroformylation technology and hydrogenation technology to develop glycol products for a wide range of applications in UV curing coatings, photosensitive resin materials, inks, adhesives, dental repair materials, electronic packaging, and the display industry.

3. Current Patent Status

In 2020, the Company completed the registration of 9 new patents. The content of patents applied is not only for the improvement of existing manufacturing processes, but also for technical protection and developing a patent portfolio of future products.

(IV) Long- and Short-Term Business Development Plans

CPDC recognizes that the Company's responses and management policies to environmental, social, and corporate governance issues are also important performances. In the face of the rapid changes in the future operating environment, the Company will adhere to the concept of respect for natural ecology and strive to realize green petrochemical enterprises. With a more proactive attitude, we seek breakthroughs and enhance the competitiveness of selfdevelopment.

Our short-term and long-term vision for a future based on the two core business lines of petrochemical and land development is outlined below:

A. Petrochemical Business:

A-1 Short-Term Plans

Optimize the competitiveness of our existing products: Increase the number of raw materials and product silos to enhance the flexibility of raw material procurement and product sales, invest in advanced manufacturing processes and improved production efficiency, continue to promote greenhouse gas reduction, and move toward a green factory with a circular economy.
115 -
- Develop new, diversified and high-value product markets: Continue to develop special chemicals, esters, and functional polymers with a wide range of applications to enhance the added value of compound nylon. In response to the booming demand for semiconductors in the 5G industry, the Company shall invest in the manufacture of high purity and electronic grade raw materials. In recent years, environmental awareness has risen and the direction of the industry is oriented toward sustainable recycling, in which the production of green chemicals and environmentally friendly biodegradable materials with biotechnology is the future trend. The Company is making preparation in advance in response to market changes.
A-2 Long-Term Plans
- Build an Integrated One-stop Overseas Production Base: Accelerate the integration of production, avoid the impact of intermediate raw material price fluctuations and the effect of stable profits; the intermediate raw materials can be balanced locally and lower storage and transportation costs, integrating the energy and materials to reduce the energy consumption costs, and improve the advantage of cost competitiveness.
- AI technology application: To apply AI in the petrochemical business and promote the development of smart factories, we hope to develop a smart system specifically for the petrochemical industry with our services and establish superior technology competitiveness.
- Establish Smart Management Systems: The Multimedia Command Center conducts corporate management transformations to achieve vertical and horizontal linkages by strengthening the essence of management and building a smart decision-making platform. We hope that by integrating data such as production monitoring, supply and demand analysis, market scheduling, price forecasting, business performance analysis, etc. for a long time, it will provide complete information to improve the quality of decision-making and establish a competitive management advantage.
B. Land Development Business:
B-1 Short-Term Plans
- Aiming to develop and revitalize Taiwan's existing land assets:

The Company owns lands located in the 5th special area and the 6th special area of the Kaohsiung multifunctional economic and trade park. Following the Kaohsiung City Government’s promotion of the “Asia New Bay Area” and the relocation of the 205 arsenals, the Company promotes the development of related development plans. Prior to this, the Company continued to revitalize the land, and has achieved preliminary results. In addition to complying with the urban development plan strategy, we hope to create the highest value for the Company’s investment real estate.

For the lands in the Xiande Section and partial land of 6[th] special area of the Cianjhen District of Kaohsiung City, the Board has approved on April 15, 2021 to release two

116 -

smaller land lots in the Asia New Bay Area for public bidding, in the hope to encourage other real estate developers to participate in speeding up the development of this area. The land lot in Xiande Section, one of the land lots for sale, has received a building permit and has registered for construction commencement.

1) Aiming to enter overseas real estate development:
In response to the new business opportunities brought by the Belt and Road Initiative of Mainland China and the rise of emerging markets in Southeast Asia, we are actively exploring large areas of land with potential for development in Vietnam and Myanmar, and have acquired land either by ourselves or through strategic cooperation with existing undeveloped projects.
B-2 Long-Term Plans
Promote Taiwan Land-related Development Plans by Stages by Areas:

In response to and cooperating with the government's green energy conservation and urban development planning policies, in addition to enhancing the development planning strength for large-scale land development, based on the principle of valueadded utilization, the Company will combine green buildings, carbon-absorbing civilization with AI technology in pursuance of developing livable, safe and smart building products.

Overseas Real Estate Development:

Combining organic agricultural farming in Vietnam, Myanmar or other Southeast Asia, obtaining petrochemical biomass raw materials, establishing a production base for the petrochemical core business, and promoting residential and commercial development, with the ultimate goal of sustainable operation, production, living and ecological wisdom town as the objective.

117 -

II. Market and Sales Overview

(I) Market Analysis of Major Products

[Acrylonitrile (AN or ACN)]

On the demand side, under the impact of the recovery after COVID-19, conservative view of the 2020 ABS market situation, estimated 2021 demand will be 2~3% than the 2020 microgrowth, the 2021 AF demand estimated flat or small increase, AM and NBR demand growth rate of about 4.5% and 3.5%, Overall AN demand growth rate of about 2~3%.

On the supply side, China is expected to add 130,000 tons of new capacity in 2021. The AN industry will still have a short-term oversupply trend.

The Company has completed the operation test of bottleneck removal project, the capacity has reached about 230,000 tons, conducive to enhancing Taiwan's domestic market share, the overall consideration of supply and demand situation, the 2021 Asian start rate is expected to be higher than 2020, the construction rate maintained at more than 90%.

[Caprolactam (CPL)]

The Company's CPL production capacity in 2020 is 400,000 tons / year, and its main sales and supply target is Taiwan's domestic nylon polymer industry. Nylon polymer industry players are now going to China's nylon terminal market with sales of nylon chips and nylon filaments. In 2020, Taiwan's total CPL demand is about 349,000 tons / year, China's total CPL demand is 3.3 million tons / year, and the overall nylon industry demand exceeds 3.65 million tons / year. The demand for CPL in Taiwan and China decreased by approximately 4%.

Nylon is a key support industry in China. In order to improve the domestic self-sufficiency rate of CPL, the CPL production capacity has been significantly expanded in recent years. In 2020, new annual production capacity by 200,000 tons has been put into production. In 2021, it is expected that new capacity will still be concentrated in China. The production capacity to be put into operation is about 1.4 million tons. It is estimated that there will be 300,000 tons / year new line in Lunan Yankuang, 300,000 tons / year new line in Fujian Eversun, 300,000 tons / year new line in Shandong Luxi, 200,000 tons new line in Qinghua tons / year, and 300,00 tons / year new line in Hualu.

For a long time, Taiwan's nylon polymer production capacity is greater than CPL production capacity. Due to the insufficient self-sufficiency of CPL, the demand for nylon downstream production is highly dependent on imports. Since the second quarter of 2016, the company has flexibly adjusted its output based on profitability, and is expected to meet a selfsufficiency rate of 50 ~ 65% in Taiwan. Under the continuous expansion of CPL, Chinese selfsufficiency rate is close to demand, but under the quality difference and the processing requirements of materials, it is estimated that it still needs to rely on imported CPL sources.

In addition to the continuous expansion of China's CPL production capacity, in order to ensure the survival and development of the domestic nylon industry, anti-dumping duties and high CPL import duties are levied on the imports of CPL and nylon chips, increasing the cost of raw material imports, and even the full refund of value-added tax, which will increase

118 -

competition in China's export markets. It is expected that the challenges of the CPL market will continue in 2021, and some installations will respond conservatively.

[Nylon Chip]

Due to various factors such as economy, population, and geography, the domestic market for nylon is different. Taiwan has the world's second largest PA6 production capacity. However, nearly 50% of the PA6 produced depends on export sales. The largest export market is China.

Although the downstream demand of China's nylon industry chain continues to grow, the rapid expansion of production capacity increases the self-sufficiency rate, and the number of PA6 imports is expected to decline year by year. China's total imports of PA6 in 2020 were about 294,000 tons, compared with 2019 imports of 343,000 tons, a decrease of 14%. Among them, Taiwan's exports to China of 54,000 tons accounted for about 18% of China's total imports, which was a decline of nearly 16% from Taiwan's exports of China to about 64,000 tons in 2019. The Company will reduce the dependence on China and look for markets outside China.

In order to consolidate the existing nylon market, the company continues to develop functional PA6, downstream engineering plastics, films and other channels and customer groups in order to effectively sell CPL, diversify the risks of changing the single market during the off-peak seasons, and create higher added value.

[OPP (ortho-phenylphenol)]

In terms of supply, due to the China environmental policy, no additional capacity will be put into production, and in the first half of 2020 continued imbalance in the supply/demand continues, so this situation will contribute CPDC to increase the OPP market share.

In terms of demand, not only the existing demand area for flame retardant, optical material and anti-microbial remain steady growth, but a lot of companies pay more attention to develop novel OPP derivatives and applications. On the whole, the demand for OPP will steadily increase.

CPDC shall proactively develop speciality markets, continue to optimize the OPP production process, downstream OPP sales channels, and client base, and concurrently develop greater high value products.

(II) Major applications and processes of major products
Acrylonitrile (AN or ACN)
(1) AN is mainly used to produce acrylic fiber (AN fiber) and ABS plastics. Major downstream AN products include:
- 1) AN fiber: Clothing fabrics, acrylic wool, woolen fabrics, stuffed toys, blankets, carpets, and decorative fabrics.
- 2) ABS plastics: Briefcases, cosmetics containers, computers, mobile phones, home appliance shells, and auto parts.
- 3) NBR: Oil-resistant and heat-resistant rubber.
119 -
4) Acrylamide: oil displacement agent, wastewater treatment agent, soil water-absorbent agent, soil conditioner, paper pulp toughener, coating, coagulant.
(2) Process

Propylene Air Ammonia anhydrous	Ammoxidation	Acrylonitrile (AN)

Caprolactam (CPL)
1) General textile fibers: Sports jackets, lining, stockings, and undergarments.
2) Industrial fiber: Umbrella fabrics, fishing lines, fishing nets, tire carcass, handbags, nonwoven fabrics, and home carpets.
3) Engineering plastics: Auto parts, high pressure pipes, surfing boards, and gears.
(2) Process

==> picture [406 x 157] intentionally omitted <==

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

Hydrogen Air Oleum
Phenol Cyclohexanone Cyclohexanone
oxime
Oxidation Oximation Beckmann CPL
rearrangement
Hydrogen
Phosphoric acid Ammonia Ammonium
anhydrous hydroxide
----- End of picture text -----

Nylon Chips (NY6 or PA6)
(1) Nylon chip is a direct CPL downstream product. Its application is the same as in CPL.
(2) Process

CPL Polymerization Nylon Chips

(III) Supply and demand of major materials

In addition to ammonia anhydrous and coal which are 100% imported, all other major raw materials used by the Company are obtainable from related domestic suppliers with long-term supply contracts. For example, propene, toluene, sulfur and natural gas are supplied by CPC Taiwan; sodium hydroxide is supplied by Taiwan Chlorine Industries, and phenol is supplied by Taiwan Prosperity Chemical. If domestic supply is inadequate, we will replenish the insufficiency with imports.

Because the major raw materials sources increased and the costs of raw materials declined, the competitive advantage of the products could be strengthened.

120 -

(IV) Customers sharing 10% of total sales in the past two years and their sales amount and proportion

Major suppliers in the past two years

Unit: NTD Thousand

									Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand
Item	2019				2020				As of Q1, 2021
	Supplier ID (Note 2)	Amount	Percentage in Annual Purchasing Amount	Relationship with Issuer	Supplier ID (Note 2)	Amount	Percentage in Annual Purchasing Amount	Relationship with Issuer	Supplier ID (Note 2)	Amount	Percentage in Annual Purchasing Amount	Relationsh ip with Issuer
1	660	7,801,858	31.12		660	5,281,028	34.32		N/A
2	3002	2,830,890	11.29		3002	1,090,071	7.09
3	9357	1,773,768	7.08		9357	836,515	5.44
	Others	12,661,600	50.51		Others	8,177,772	53.15
	Net Purchase	25,068,116	100.00		Net Purchase	15,385,386	100.00

Note: 1. Cause of increase or reduction: Change of market price and purchasing quantity.

Replaced by supplier ID for business consideration.

Major customers in the past two years

Unit: NTD Thousand

									Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand
Item	2019				2020				As of Q1, 2021
	Customer ID (Note 2)	Amount	Percentage in Annual Sales Value	Relationship with Issuer	Customer ID (Note 2)	Amount	Percentage in Annual Sales Value	Relations hip with Issuer	Customer ID (Note 2)	Amount	Percentage in Annual Purchasing Amount	Relations hip with Issuer
1	1018	3,564,112	12.03		1001	2,364,508	13.45		N/A
2	1011	3,430,779	11.58		1011	1,457,165	8.29
3	1020	3,406,066	11.50		1020	1,271,244	7.23
4	1019	2,511,171	8.48		1018	882,407	5.02
5	1001	2,501,627	8.44				-
	Others	14,210,339	47.97		Others	11,607,768	66.01
	Net Sales	29,624,094	100.00		Net Sales	17,583,092	100.00

Note: 1. Cause of increase and reduction: Change of market price and sales quantity.

Replaced by customer ID for business consideration.

(V) Production Quantity and Value in the Past 2 Years

Quantity: Metric tons

Unit: NTD Thousand

				Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand
Year Production Major Product (or department)	2020_Consolidated			2019_Consolidated
	Capacity	Quantity	Value	Capacity	Quantity	Value
Acrylonitrile(AN)	220,000	203,797	14,563,158	220,000	211,188	24,488,321
Caprolactam (CPL), Nylon Chips	408,000	203,423		426,000	310,561
O-phenylphenol(OPP)	2,500	2,151		2,300	1,971
Other By-products
Total			14,563,158			24,488,321

Note: Capability refers to production quantity in normal operation with the current production

equipment after measuring necessary down time and holidays.

(VI) Sales Quantity and Value in the Past 2 Years

Quantity: Metric tons

Unit: NTD Thousand

==> picture [454 x 205] intentionally omitted <==

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

Year 2020_Consolidated 2019_Consolidated
Domestic sales Export sales Domestic sales Export sales
Sales
Quantity Value Quantity Value Quantity Value Quantity Value
Major
Product
(or department)
AN, acetic acid 132,828 134,933 115,189 106,781
Caprolactam (CPL),
153,257 14,999 287,161 10,091
Nylon Chips 11,238,764 6,344,328 20,945,478 8,678,616
O-phenylphenol(OPP) 43 1,905 359 1,539
Other By-products
Total 11,238,764 6,344,328 20,945,478 8,678,616
----- End of picture text -----

123 -

III. Employees

Number of employees in the Past 2 Years up to the Report Printing Date

March 31, 2021

				March 31, 2021
	Year	2019	2020	As of March 31,2021
Employees	Taipei Office	366	359	344
	Toufen Plant	395	412	405
	Dashe Plant	295	280	271
	Hsiaokang	293	272	269
	Qiaotou Plant	0	26	30
	Total	1349	1349	1319
Average Age(year)		39.04	38.60	38.73
Average	Service Length (year)	9.05	8.53	8.67
Education	PhD	14	15	14
	Master’s	325	323	308
	Bachelor's	890	877	868
	Senior High and below	120	134	129

IV. Environmental Protection Expenses

(I) Damage from Polluting Environment in the Past 2 Years

Unit: NTD Thousand

		Unit: NTD Thousand
	2020	2019
Pollution (type and	Violation of the Water Pollution	Violation of the Air Pollution
severity)	Control Act and Air Pollution Control	Control Act and Waste
	Act.	Disposal Act.
Compensation Party or	Local environmental	Local environmental
Punishing Unit	protection authorities	protection authorities
Fine Amount	390	2,800
Other Loss	___	___

(II) Responsive Action
Improvement Plan
(1) Aggressively comply with environmental protection laws and regulations.
(2)Strengthen monitoring treatment and monitoring equipment maintenance and troubleshooting.
124 -

2. Estimated environmental protection expenses in the next three years

Unit: NTD Thousand

			Unit: NTD Thousand
	2021	2022	2023
Expense for purchasing pollution prevention equipment	Prevention and improvement of air, water, soil, and underwater pollution in all plants	Prevention and	Prevention and
Expected improvement	Pollution and waste reduction and compliance with environmental protection standards	Pollution and waste	Pollution and waste
Amount	NT$172,350,000	NT$189,585,000	NT$208,544,000
Note: The 2021 expenses at NT$172,350,000 is a projected amount; the amount in the next two years
is also projected.

Impact after improvement.

Unit: NTD Thousand

			Unit: NTD Thousand
	2021	2022	2023
Impact on net profit	Depreciation increases	Depreciation increases	Depreciation increases
	by about 15,668 thousand/year; repair and maintenance increases by about 1,566.8 thousand/year.	by about 17,235 thousand/year; repair and maintenance increases by about 1,723.5 thousand/year. by about 18,959 thousand/year; repair and maintenance increases by about 1,895.9 thousand/year.
Impact of competitive	Compliance with environmental protection standards Fulfilment of CSR	Compliance with environmental protection standards Fulfilment of CSR Compliance with environmental protection standards Fulfilment of CSR	Compliance with
position

Note: Depreciable assets	will be depreciated over 10 years. Values for 2022 and 2023 are estimates.

125 -

V. Labor-Management Relations

(I) Employee welfare benefits, continuing education, training, retirement system and implementation thereof:

The Company has established the worker welfare commissions in its Taipei office and plants. The Company will organize local and overseas travels, ball games, mountain-claiming activities and other competitions from time to time, some of which may be attended by the employees and their family members.

The Company also prepares budget and plans to arrange for various training programs needed by the employees to meet their duties each year, and defines the relevant rules governing incentives and subsidies to employees who wish to attend continuing education programs to learn other languages in their leisure time or various professional programs.

Employee welfare benefits:

The employee welfare benefits available in 2020:

The employee activities in 2020

Item	Welfare benefits (bonus for Chinese New Year and major festivals, year-end party lottery, cash gift for birthday, and other allowances) (NTD)	Cultural and entertainment activities (travel allowance, ball games, mountain-climbing, and other employee activities) (NTD)
Taipei Office	5,045,262	415,357
Toufen Plant	8,364,900	455,473
Dashe Plant	10,284,300	1,052,864
Hsiaokang	8,362,492	337,193
Qiaotou Plant	221,400	13,685
Total	32,278,354	2,274,572

126 -

2. Continuing Education/Training

The employee training hours and status of budget thereof in 2020:

Information about the employees' training in 2020

Item	Total TrainingHours	Average Hour per Person	Budget Implementation Efficiency
Taipei Office	6,859	13.32	13.66%
Toufen Plant	20,205	55.81	74.8%
Dashe Plant	22,083	78.87	65.37%
Hsiaokang	13,190.5	48.49	71.7%
Qiaotou Plant	145	4.83	0.53%

Incentive and subsidy to employees who attended the continuing education programs to learn

other languages or various professional programs in 2020

other languages or various	professional programs in 2020
Item	Subsidy (NTD)
Taipei Office	10,000
Other plants	113,882
Total	123,882

3. Retirement system

The Company has established the Labor Pension Supervisory Committee, which will contribute to a reserve for pension monthly pursuant to laws. Other than employees who were hired after the enforcement of Labor Pension Act in 2005 or those who chose the new system, any employees who retire pursuant to Labor Standard Law will deposit the reserve for pension into the account opened by the Labor Pension Supervisory Committee at the Bank of Taiwan monthly pursuant to laws.

Information about employees' pension and retirement in 2020

Information about employees' pension and retirement in 2020
Item	Amount or number ofpersons
Retirement Account Opened by Labor Pension Supervisory Committee at Bank of Taiwan	NT$215,318,000
Number of retired employees 2020	36persons

(II) Labor-management agreements and employees' interest and right protection measures:
To enable employees to know about the Company's code of conduct or ethical principles, the Company has defined a "CPDC Business Conduct Policy" (see Attachment), which will be distributed to employees when they are hired. Employees shall sign their signature to acknowledge that they have read and understood the "business conduct policy" adopted by CPDC.
127 -

Business Conduct Policy

I. Fair trade policy

The Company complies with the Fair-Trade Act (the same act applicable in any of offshore areas) consistently. The Company understands that to build the goodwill requires the efforts through years, while the goodwill earned by efforts through years might be ruined due to one single person's conduct. For fair trade, any colleague's misconduct may cause significant expenses and material litigation to their supervisors as well as the Company and the management, and fine, injunction and even imprisonment sentence.
The fair-trade policy aims at maintaining a free competition system among enterprises. The fairtrade policy is established to enable the public to deserve the best protection under fair competition if no conspiracy or collusion is existing among the competitors. It is indisputable that the Fair-Trade Act benefits the maintenance of the economic, political and social groups. The Company's Administration Dept. has also restated its confidence in the fair trade philosophy. Therefore, under the principles encouraged to seek profit through legal and valid means, any acts of the Company are conducted pursuant to laws. Particularly, reaching agreement or understanding against fair trade is against the Company's policy.
The Company's executive officers at each level shall educate colleagues to comply with the fair trade requirements, so that colleagues may know how to deal with any situation involving fair trade issues.

II. Conflict of Interest Policy

Each colleague shall be obligated to deal with the relationship between them and the Company, honestly and fairly. None of the colleagues may engage in any activities against said obligation for personal interest, or allow the circumstances against the obligation to exist.
If, in any transactions involving the Company and any colleague or a third party, the colleague or his/her spouse or direct blood relative within the second pillar under the Civil Code might seek profit therefrom, the conflict of interest should be held sustained:

If any colleague contributes to or affects the transaction between the Company and any enterprise and the colleague or his spouse or direct blood relative within the second pillar under the Civil Code holds the shares in the enterprise which are sufficient to influence the enterprise's policy making, the conflict of interest should also be held sustained.

Under said circumstances, if any colleague has any question about the validity of some case or business relation, he/she shall report the same to the Company via the reporting channel applicable to him/her, so that the Company may research relevant solutions.

None of the colleagues is allowed to ask any supplier, customer or competitors for gifts, entertainment or other personal benefits, or accept any gifts, entertainment or other personal benefits that might affect their duties adversely from any supplier, customer or competitor.
128 -

III. Payment and Spending Policy

The bank account opened by the Company or the fund owned by the Company shall not be disclosed (made public) or recorded without justified reasons.
All of the Company's payment or spending records shall be able to precisely reflect the purchasing behavior or fact for the spending.
None of the colleagues may make any payment, grant any gift or money, service or valuable goods, privately and directly or indirectly, that cause adverse influence to the Company or its stakeholder.

IV. Non-Disclosure and Non-Competition

The employee shall keep confidential any of the Company's technical or business secrets accessed by him/her in the duration of his/her employment in the Company and any information to be kept confidential under the contract signed by the Company and a third party, in the duration of the employment. The employee shall not utilize confidential information to seek his/her personal interest or engage in the same business, or disclose the same to a third party without authorization.
The employee shall not publish the confidential information referred to in the preceding paragraph, or disclose or utilize to engage the same business as the Company with the intent to seek illegal profit, upon his/her resignation.
The computer program, literal work and graphic work created by the employee in performing his/her duty under the Company's planning in the duration of his/her employment shall be vested in the Company as agreed. Without the Company's prior written consent, the employee shall not use the same arbitrarily within the effective time limit defined in the Copyright Act.
V. Internal Information Control Policy

Any colleague who holds the Company's internal information shall not engage in trading the Company's securities, directly or indirectly, or disclose the same to a third party without authorization. Internal information refers to the information that shall not be made public. If it is impossible for any colleague to make sure whether the information held by him/her is internal information, he/she shall consult with the department which owns the information.

VI. Compliance

When granting some voluntary authority, the colleague and agent shall note and advise the licensee of compliance with the "Business Conduct Policy".
Each colleague shall report to his/her supervisor or executive officer any violation or suspected violation of the Company's "Business Conduct Policy" or other regulations. None of the colleagues may intimidate or retaliate the co-worker who submits the report. The colleague shall be obligated to report any suspected violation of the Company's "Business Conduct Policy" or other regulations, and shall acknowledge that he/she shall be obligated to avoid ignoring the fact and circumstance for any misconduct and shall alert such fact and circumstance and submit the report to his/her supervisor or executive officer.
129 -

VII. Communication and Negotiation

Each supervisor and colleague shall work together with each one to create and acknowledge the importance of establishment of a high-efficiency team, and shall get along with each other well. Should any colleague have any problem, private or for business, he/she may talk with his/her supervisor, and the supervisor shall communicate with the colleague from time to time to seek the resolution together with the colleague, so as to boost the team's performance.
The Plant and company labor-employer meetings will serve as a communication channel between labor and the employer. In addition to the representatives from labor and the employer, any colleagues who have positive suggestions may propose their suggestions via the representatives, so that both parties may research and resolve the same at the meetings to reach agreement and implement resolutions.
Should any colleague have any question about the personal interest or management system, he/she may learn about the same through his/her supervisor or the HR unit and communicate through the administrative system channels from time to time. He/she may also communicate with the Plant and company welfare committees about employee fringe benefits or cultural and entertainment activities at any time.
The whistleblower reporting system is designed to enable colleagues to report his/her problems at work and avoid the supervisor's adverse influence. The colleague may maintain his/her interests and rights through this channel.
The colleague and supervisor may also take advantage of other administrative measures, such as nomination system, personal interview, meetings, and quarterly and yearly performance appraisal, as communication channels. If any colleague cannot apply said communication channels as the case involves any personal rule violation or delinquency, he/she shall also present the relevant evidence supported by the facts. In case of any false accusation, intentional harassment and alienation, the Company will ignore the complaint and the recipient may tear down the complaint directly but shall not circulate the same, unless some concrete fact and evidence show that the anonymous complainant is one of the Company's colleagues or any person instigated by the complainant, in which case the colleague and the person shall be disciplined pursuant to the Articles of Incorporation.
Said communication channels under the normal system will be protected and valued. Aside from the above-mentioned policies, any activity engaged in attacking the Company's operation or failure to seek personal interest and solution through legal procedure under the name of any outsider, authority or group or by taking advance of or colluding with outsiders, authority or groups shall be held against the Company's policy and material requirements.
130 -

VIII. Enforcement Rules

Each of the Company's departmental supervisor shall ask each of the colleagues subordinated to him/her for the written report, and ask new employees for the written report within one week after the new employees are hired. In the case of any changes in the Company's "Business Conduct Policy", he/she shall ask each of colleagues subordinated to him/her for the written report again. The written report shall contain the following:

The colleague has read the Company's:

Fair trade policy

Conflict of Interest Policy

Payment and Spending Policy

Non-Disclosure and Non-Competition

Internal Information Control Policy

Compliance

Communication and Negotiation

The colleague has understood and is willing to comply with said policies;
The colleagues and other co-workers under his/her supervision have already read and understood, and are willing to comply with said policies.

Meanwhile, various supervisors shall supervise their immediate subordinates' compliance with said policies. Upon receipt of the written report from each immediate supervisor and colleague, the departmental supervisor shall submit one copy of the written report showing compliance of him/her and all colleagues subordinated to him/her with said policies.

Business Conduct Policy Compliance Certificate (for the general colleagues)

It is certified that:

I have already read and understood the "Business Conduct Policy" adopted by CPDC: Fair trade policy

Fair trade policy

Conflict of Interest Policy

Payment and Spending Policy

Non-Disclosure and Non-Competition

Internal Information Control Policy

Compliance

Communication and Negotiation

131 -
I hereby undertake that I will comply with the Business Conduct Policy accordingly.

(Date)

(Printed Name)

Business Conduct Policy Compliance Certificate (for supervisors)

It is certified that:

I have already read and understood the "Business Conduct Policy" adopted by CPDC: Fair trade policy

Fair trade policy

Conflict of Interest Policy

Payment and Spending Policy

Non-Disclosure and Non-Competition

Internal Information Control Policy

Compliance

Communication and Negotiation

The Business Conduct Policy has been read by me and the other colleagues under my supervision.
I hereby undertake that I will comply with the Business Conduct Policy accordingly.

(Date) (Printed Name)

Each of the Company's plants has entered into a group agreement with various labor unions. The Company has also defined its work rules, which were reviewed and approved by the city government, and made public, and distributed to all colleagues via email. The Company will call a labor-employer meeting to negotiate labor-employer issues once per quarter to facilitate the cooperation between labor and the employer and to create and maintain a harmonic relationship between labor and employer and create a safe and friendly working environment.
132 -
Losses suffered by the Company due to dispute over labor and employer relationships in the most recent year until the date of publication of the annual report are as follows:

Date of penalty: July 17, 2020

Penalty letter No.: Taipei Lao-Dong-Zi No. 10960304962

Violated regulation: Paragraph 1, Article 24, Labor Standards Act:

Violated regulation and penalties: On June 16, 2020, the Department of Labor of the Taipei City Government conducted an inspection and found that Ms. Kuan, an employee at the Legal Center, had 28 hours of time off at the time of her departure on May 9, 2020, for which the Company did not compensate at the time of her departure. However, the Department of Labor judged that the violation shall be based on the time of the violation. The Company was fined NT$100,000 for violating Paragraph 1, Article 24, Labor Standards Act.

VI. Major Contracts

(I) Engineering Contract:

Nature	Contract Party	Duration	Summary Content	Restricted Clause
Construction Project of CHDM Trial Construction Project	Chung Yen	109,04,01~ 110,02,28	According to the Board of Directors' approval of the "Construction Project of CHDM Trial Construction Project", the Company planned to build a trial plant to verify the efficiency of related experimental processes and collect manufacture data, which will be used as a basis for commercialized manufacture design and investment efficiencyevaluation.	None
	Engineering
	Co., Ltd.
R&D Center_Design and Supervision of the Construction Project of Fine Chemical Plant - Phase 0 Construction Project	CPDC Green Energy Technology Company (formerly CDPC Engineering Corp.)	2020.03.25~ 2020.08.21	The construction and design of the plant were conducted according to the investment plan for the "Construction Project of Fine Chemical Plant - Phase 0 Construction Project" approved by the Board of Directors.	None

(II) Supply Contract

With respect to the major products of the Company, such as AN and CPL, the Company has created a permanent and stable sales relationship with the Company's down-stream customers, e.g. CHIMEI, Grand Pacific Petrochemical Corporation, NANTEX Industry Co., Ltd., Li Peng Enterprise, Zig Sheng Industrial Co., Ltd. and Chain Yarn Co., Ltd., and also entered into the supply contract with some of them.
133 -
The main raw materials needed and procured by the Company locally include propylene, sulfur and industrial natural gas, for which the Company has entered into the long-term purchase contract with CPC. To procure liquid caustic soda, the Company entered into a purchase contract with Taiwan Chlorine Industries Ltd.; raw materials that have entered into long-term contracts with overseas suppliers include phenol and ammonia anhydrous.

(III) Technical Cooperation Contract

Nature	Contract Party	Duration	SummaryContent	Restrictive covenant
Outsourced Research Project	Industrial Technology Research Institute	2020.01.01~ 2020.12.31	Collaboration and development on the process evaluation of phenol derivatives of microreactor feasibility	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Industrial Technology Research Institute	2020.01.01~ 2020.12.31	Aldehyde-based Process Technology and Patent	The intellectual property ownership shall be determined subject to contract
Collaboration Project	Kangtaissu Global Group Co., Ltd.	2020.02.14~ 2021.03.10	Ester Process Development Contract	The intellectual property ownership shall be determined subject to contract
Outsourced Analysis Project	Far East University	2020.03.01~ 2021.02.28~	Far East University Industrial- Academia Collaboration Agreement I	The intellectual property ownership shall be determined subject to contract
Outsourced Analysis Project	National Chung Hsing University	2020.03.01~ 2020.12.31~	Chemical structure identification and analysis	The intellectual property ownership shall be determined subject to contract
Outsourced Analysis Project	Far East University	2020.03.10~ 2021.03.15~	Far East University Industrial- Academia Collaboration Agreement II	The intellectual property ownership shall be determined subject to contract
Outsourced Analysis Project	Far East University	2020.03.01~ 2021.03.15	Far East University Industrial- Academia Collaboration Agreement II, IV	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Industrial Technology Research Institute	2020.04.01~ 2021.04.30	Contract for the commissioning of the basic design of the C product testing plant	The intellectual property ownership shall be determined subject to contract
Collaboration Project	Yunlin University of Science & Technology	2020.07.01~ 2021.06.30	Nylon Key Biomass Monomer: Process Integration and Efficiency Enhancement Cooperation Agreement	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Industrial Technology Research Institute	2020.07.01~ 2021.10.31	Contract for the commissioning of the basic design of the T testing plant	The intellectual property ownership shall be determined subject to contract

134 -

Nature	Contract Party	Duration	SummaryContent	Restrictive covenant
Collaboration Project	Tokyo Institute of Technology	2020.08.01~ 2021.07.31~	Cooperative Research Agreement	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Chiao Tung University	2020.09.01~ 2021.08.31	Antimicrobial testing of phenolic products and development of experimental methods	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	China Wenzhou Petrochemical Co., Ltd.	2020.09.28~ 113.09.28	Polymer process package and detailed design contract	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Cheng Kung University	2020.11.15~ 2021.11.14	Acid anhydride product analysis method development	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Chung Hsing University	2020.12.01~ 2021.11.30	Development of microbial transformation platform through genetic engineering	The intellectual property ownership shall be determined subject to contract
Counseling program	Industrial Safety and Health Association (OSHA) of the R.O.C	2020.06.01~ 2020.11.30	Process safety management training program counseling	The intellectual property ownership shall be determined subject to contract
Counseling program	Southern Taiwan University of Science of Technology	2020.08.01~ 2020.12.31	Safety culture evaluation and facilitation counseling	The intellectual property ownership shall be determined subject to contract

(IV) Long-Term Loan Contract

Nature	Contract Party	Duration	Summary Content	Restrictive covenant
Long-Term Loan	First Commercial Bank	2020.06-2023.06	Roll over & Working capital increase	None
Long-Term Loan	Bank of Taiwan	2019.07-2022.07	Roll over & Working capital increase	None
Long-Term Loan	Taichung Commercial Bank	2019.11-2022.10	Roll over & Working capital increase	None
Long-Term Loan	Mega International Commercial Bank	2020.02-2023.02	Roll over & Working capital increase	None
Long-Term Loan	Mega International Commercial Bank	2020.10-2025.10	Roll over & Working capital increase	None
Long-Term Loan	CTBC Bank Co., Ltd. ESG	2020.07-2023.07	Funds required for the purchase of machinery and equipment and the acquisition of Dajia Plant of Sunko Ink Co., Ltd.	None
Long-Term Loan	Joint loan by financial institutions, including Shin Kong Commercial Bank	2020.03-2023.03	Roll over & Working capital increase	None

135 -

Chapter 6 Financial Status

I. Condensed balance sheet, income statement, external auditor's name and audit opinion for the most recent five years

(I) Parent Company Only Condensed balance sheet and comprehensive income statement - IFRSs

Parent Company Only Condensed balance sheet - IFRSs

Unit: NTD Thousand

Year Item	Year Item	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial Information ending March 31, 2021
		2016	2017	2018	2019	2020
CurrentAssets		11,686,011	14,685,286	15,148,831	8,805,200	8,180,109	N/A
Property, plant and equipment		14,252,235	14,240,101	14,585,386	13,094,097	15,208,808
Netinvestment property		38,152,353	38,226,532	38,350,359	36,716,577	37,612,887
Intangible assets		-	-	-	-	-
Otherassets		11,542,074	13,034,360	17,793,286	33,046,966	39,416,030
Totalassets		75,632,673	80,186,279	85,877,862	91,662,840	100,417,834
Current liabilities	Before distribution	10,197,827	4,030,444	6,049,686	7,503,573	7,621,190
	After distribution	10,197,827	4,030,444	7,399,615	8,489,028	Note 1
Non-currentliabilities		14,616,237	13,848,110	12,931,286	17,042,498	21,984,002
Total liabilities	Before distribution	24,814,064	17,878,554	18,980,972	24,546,071	29,605,192
	After distribution	24,814,064	17,878,554	20,330,901	25,531,526	Note 1
Equity attributable to the parent company		50,818,609	62,307,725	66,896,890	67,116,769	70,812,642
Capitalstock		23,199,897	26,998,573	26,998,573	28,348,502	32,848,502
Capitalsurplus		18,141	1,260,386	1,260,386	1,286,700	583,815
Retained earnings	Before distribution	29,122,523	35,229,878	40,374,642	39,406,739	39,200,786
	After distribution	29,122,523	35,229,878	37,674,784	38,421,284	Note 1
Otherequities		(1,521,952)	(1,181,112)	(1,736,711)	(1,925,172)	(1,820,461)
Treasury stock		-	-	-	-	-
Non-controlling equity		-	-	-	-	-
Total equity	Before distribution	50,818,609	62,307,725	66,896,890	67,116,769	70,812,642
	After distribution	50,818,609	62,307,725	65,546,961	66,131,314	Note 1

Note 1: Earnings Appropriation for 2020 shall be ratified at the 2021 general shareholders' meeting.

136 -

Parent Company Only Condensed Income Statement - IFRSs

Unit: NTD Thousand

Year Item	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial Information ending March 31, 2021
	2016	2017	2018	2019	2020
Operating revenue	22,526,791	32,160,867	36,969,800	26,797,793	14,797,092	N/A
Gross profit	(728,326)	4,630,315	4,312,688	1,066,769	(484,983)
Operating profit or loss	(1,481,032)	3,471,361	3,017,875	(133,109)	(1,634,790)
Non-operating revenue and expense	(388,689)	2,803,380	1,618,395	1,962,149	1,719,346
Net profit (loss) before tax	(1,869,721)	6,274,741	4,636,270	1,829,040	84,556
Net profit of continuing department	(1,869,721)	6,091,656	4,290,269	1,738,449	680,989
Loss of discontinued department	-	-	-	-	-
Net profit (loss)	(1,869,721)	6,091,656	4,290,269	1,738,449	680,989
Other comprehensive income (after tax)	(345,732)	356,539	(526,461)	(194,955)	203,617
Total comprehensive income	(2,215,453)	6,448,195	3,763,808	1,543,494	884,606
Net profit attributable to parent company	-	-	-	-	-
Net profit attributable to non-controlling equity	-	-	-	-	-
Total comprehensive income attributable to parent company	-	-	-	-	-
Total comprehensive income attributable to non-controlling equity	-	-	-	-	-
EPS	(0.81)	2.55	1.59	0.61	0.21

137 -

(II) Consolidated Condensed balance sheet and comprehensive income statement - IFRSs

Consolidated condensed balance sheet - IFRSs

Unit: NTD Thousand

Year Item	Year Item	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial information inthemostrecentfive years	Financial Information ending March 31, 2021
		2016	2017	2018	2019	2020
CurrentAssets		16,082,533	18,839,149	21,622,587	23,986,973	27,089,168	N/A
Property, plant and equipment		15,669,918	16,935,430	19,501,534	20,275,279	23,226,955
Net investment property		38,152,353	38,226,532	38,350,359	36,719,706	37,626,827
Intangible assets		31,256	24,338	188,061	177,464	159,173
Otherassets		6,519,205	7,603,511	10,042,413	15,309,068	16,807,867
Totalassets		76,455,265	81,628,960	89,704,954	96,468,490	104,909,990
Current liabilities	Before distribution	10,462,969	4,241,699	7,488,055	8,741,513	8,748,394
	After distribution	10,462,969	4,241,699	8,837,984	9,726,968	Note 1
Non-currentliabilities		14,929,630	14,838,802	15,026,145	20,533,113	25,293,565
Total liabilities	Before distribution	25,392,599	19,080,501	22,514,200	29,274,626	34,041,959
	After distribution	25,392,599	19,080,501	23,864,129	30,260,081	Note 1
Equity attributable to the parent company		50,818,609	62,307,725	66,896,890	67,116,769	70,812,642
Capitalstock		23,199,897	26,998,573	26,998,573	28,348,502	32,848,502
Capitalsurplus		18,141	1,260,386	1,260,386	1,286,700	583,815
Retained earnings	Before distribution	29,122,523	35,229,878	40,374,642	39,406,739	39,200,786
	After distribution	29,122,523	35,229,878	37,674,784	38,421,284	Note 1
Otherequities		(1,521,952)	(1,181,112)	(1,736,711)	(1,925,172)	(1,820,461)
Treasury stock		-	-	-	-	-
Non-controlling equity		244,057	240,734	293,864	77,095	55,389
Total equity	Before distribution	51,062,666	62,548,459	67,190,754	67,193,864	70,868,031
	After distribution	51,062,666	62,548,459	65,840,825	66,208,409	Note 1

Note 1: Earnings Appropriation for 2020 shall be ratified at the 2021 general shareholders' meeting.

138 -

Consolidated Condensed Income Statement - IFRSs

Unit: NTD Thousand

Year Item	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial Information ending March 31, 2021
	2016	2017	2018	2019	2020
Operating Revenue	25,376,683	33,335,970	38,503,121	29,624,094	17,583,092	N/A
Gross profit (loss)	(89,861)	5,371,581	5,176,159	1,627,580	38,228
Operating profit or loss	(1,395,078)	3,584,036	3,075,082	(409,020)	(1,812,878)
Non-operating revenue and expense	(409,018)	2,713,685	1,601,868	2,272,492	1,916,654
Net profit (loss) before tax	(1,804,096)	6,297,721	4,676,950	1,863,472	103,776
Net profit of continuing department	(1,878,145)	6,087,322	4,280,995	1,733,635	674,660
Loss of discontinued department	-	-	-	-	-
Net profit (loss)	(1,878,145)	6,087,322	4,280,995	1,733,635	674,660
Other comprehensive income (after tax)	(344,987)	357,550	(521,612)	(193,665)	201,768
Total comprehensive income	(2,223,132)	6,444,872	3,759,383	1,539,970	876,428
Net profit (loss) attributable to parent company	(1,869,721)	6,091,656	4,290,269	1,738,449	680,989
Net profit (loss) attributable to non- controlling equity	(8,424)	(4,334)	(9,274)	(4,814)	(6,329)
Total comprehensive income attributable to parent company	(2,215,453)	6,448,195	3,763,808	1,543,494	884,606
Total comprehensive income attributable to non-controlling equity	(7,679)	(3,323)	(4,425)	(3,524)	(8,178)
EPS	(0.81)	2.55	1.59	0.61	0.21

(III) The names of CPA conducting financial audits in the most recent five years and their audit

opinions

Year	2016	2017	2018	2019	2020
Accountant	Jeff Chen	Jeff Chen	Melody Chen	Melody Chen	Melody Chen
	Dan-Dan Chung	Dan-Dan Chung	Dan-Dan Chung	Dan-Dan Chung	Dan-Dan Chung
Audit Opinion	Unqualified opinions	Unqualified opinions	Unqualified opinions	Unqualified opinions	Unqualified opinions

139 -

II. Financial Analysis for the most recent five years

(I) Parent company only financial analysis for the most recent five years - IFRS

Unit: NTD Thousand

Items	Year	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	As of March 31, 2021
		2016	2017	2018	2019	2020	N/A
Financial structure %	Liabilities to total assets	32.81	22.30	22.10	26.78	29.48
	Long-term fund to fixed assets	459.12	534.80	547.32	642.73	610.15
Insolvency %	Current ratio	114.59	364.36	250.41	117.35	107.33
	Quick ratio	92.32	294.30	208.49	81.32	70.48
	Times Interest Earned	(731)	3,662	8,999	1,817	145
Operating performance	Receivables turnover (time)	10.88	10.31	10.58	10.54	7.42
	Average number of days' receivables outstanding	33.54	35.40	34.50	34.63	49.19
	Inventory turnover (time)	12.40	14.40	14.79	12.69	6.70
	Payables turnover (time)	17.63	15.57	18.07	17.64	11.90
	Average number of days of sales	29.43	25.34	24.68	28.76	54.48
	Fixed assets turnover (time)	1.53	2.26	2.57	1.94	1.05
	Total assets turnover (time)	0.30	0.41	0.45	0.30	0.15
Profitability	ROA (%)	(2.24)	8.01	5.22	2.05	0.87
	ROE (%)	(3.60)	10.77	6.64	2.59	0.99
	Pre-tax profit to paid-in capital(%) (Note 6)	(8.06)	23.24	17.17	6.45	0.26
	Profit margin (%)	(8.30)	18.94	11.60	6.49	4.60
	Earnings per share (NT$)	(0.81)	2.55	1.59	0.61	0.21
Cash flow	Cash flow ratio (%)	0.11	83.94	96.41	1.17	(19.20)
	Cash flow adequacy ratio (%)	(39.35)	22.67	148.10	108.23	66.46
	Cash flow reinvestment ratio (%)	0.02	4.55	7.41	(1.44)	(2.56)
Leverage	Operating leverage	Note 1	1.92	2.53	Note1	Note1
	Financial leverage	Note 1	1.05	1.02	Note 1	Note 1
The past 2 years, financial ratios that exceed 20% are explained as follows: 1. The times interest earned in 2020 decreased versus 2019, mainly because of the decrease in revenue and profit, and the increase in borrowing and issuance of corporate bonds led to the increase of interest expense. 2. All financial ratios of operating performance decreased in 2020 compared to 2019, mainly due to the decrease in revenue and profit. 3. The profitability ratios in 2020 decreased versus 2019, mainly because of the COVID-19 epidemic and the fluctuation of oil price that resulted in the slowdown of downstream demand and thus affected the prices and sales of major products, Caprolactam (CPL) and Acrylonitrile (AN). 4. The cash flow ratios in 2020 decreased versus 2019, due to the net cash outflow from operating activities in 2020.

Note 1: The operating income were negative values and, therefore, the financial ratios thereof were excluded from the calculation.

140 -

(II) Consolidated financial analysis for the most recent five years - IFRS

Unit: NTD Thousand

Year Items(Note 2)	Year Items(Note 2)	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	As of March 31,2021
		2016	2017	2018	2019	2020
Financial structure %	Liabilities to total assets	33.21	23.37	25.10	30.35	32.45	N/A
	Long-term fund to fixed assets	421.14	456.95	421.59	432.68	414.01
Insolvency %	Current ratio	153.71	444.14	288.76	274.40	309.65
	Quick ratio	130.52	370.18	243.52	146.30	150.62
	Times Interest Earned	(689)	3,442	5,982	1,427	147
Operating performance	Receivables turnover(time)	11.13	10.31	10.84	11.31	7.93
	Average number of days' receivables outstanding	32.79	35.40	33.67	32.27	46.02
	Inventoryturnover(time)	13.21	14.14	14.02	4.52	1.45
	Payables turnover(time)	17.29	15.04	17.27	17.38	12.00
	Average number of days of sales	27.63	25.81	26.03	80.75	251.72
	Fixed assets turnover(time)	1.59	2.04	2.11	1.49	0.81
	Total assets turnover(time)	0.33	0.42	0.45	0.32	0.17
Profitability	ROA(%)	(2.22)	7.90	5.07	1.98	0.85
	ROE(%)	(3.60)	10.72	6.60	2.58	0.98
	Pre-tax profit to paid-in capital(%) (Note 6)	(7.78)	23.33	17.32	6.57	0.32
	Profit margin(%)	(7.40)	18.26	11.12	5.85	3.84
	Earningsper share(NT$)	(0.81)	2.55	1.59	0.61	0.21
Cash flow	Cash flow ratio(%)	2.50	82.58	83.83	(96.13)	(47.32)
	Cash flow adequacy ratio (%)	(31.43)	24.44	78.89	9.02	(8.26)
	Cash flow reinvestment ratio(%)	0.41	4.61	7.69	(10.69)	(5.17)
Leverage	Operatingleverage	Note 1	2.19	2.98	Note 1	Note 1
	Financial leverage	Note1	1.05	1.03	Note1	Note 1
	The past 2 years, financial ratios that exceed 20% are explained as follows: 1. The times interest earned in 2020 decreased versus 2019, mainly because of the decrease in revenue and profit, and the increase in borrowing and issuance of corporate bonds led to the increase of interest expense. 2. All financial ratios of operating performance decreased in 2020 compared to 2019, mainly due to the decrease in revenue and profit. 3. The profitability ratios in 2020 decreased versus 2019, mainly because of the COVID-19 epidemic and the fluctuation of oil price that resulted in the slowdown of downstream demand and thus affected the prices and sales of major products, Caprolactam (CPL) and Acrylonitrile (AN). 4. The cash flow ratio and cash reinvestment in 2020 increased versus 2019, due to the decrease in net cash outflow provided by operating activities in 2020. 5. The cash flow adequacy ratio in 2020 decreased versus 2019, due to the decrease in profit resulted in net cash outflow from operatingactivities.

Note 1: The operating income were negative values and, therefore, the financial ratios thereof were excluded from the calculation.

Note 2: The formulas of the above table are as follows:

Financial structure
(1) Liabilities to total assets =Total liabilities/total assets
(2) Long-term fund to fixed assets= (total shareholders' equity+long-term liabilities)/fixed assets, net
141 -
Insolvency
(1) Current ratio=current assets/current liabilities
(2) Quick ratio= (current assets-inventory-prepayment)/current liabilities
(3) Times Interest Earned = income tax and interest expenses net income before income tax/interest expenses in the current period
Operating performance
(1) Receivables (including accounts receivable and notes receivable resulting from operation) turnover = net sales / balance (gross) of average accounts receivable (including accounts receivable and notes receivable resulting from operation)
(2) Average number of days receivable outstanding = 365 /accounts receivable turnover
(3) Inventory turnover=sale cost/average inventory
(4) Payables (including accounts payable and notes payable resulting from operation) turnover = net sales / balance (gross) of average accounts payable (including accounts payable and notes payable resulting from operation)
(5) Average number of days of sales=365/inventory turnover
(6) Total fixed assets turnover rate = net sales/net total fixed assets
(7) Total assets turnover rate = net sales/total assets
Profitability
(1) ROA = [income after income tax+interest expense*(1-tax rate)]/average total assets.
(2) ROE = Income after income tax/average total shareholders' equity
(3) Profit margin = Income After income tax/net sales
－
(4) Earnings per share (EPS)＝（Profit attributable to parent company Preferred shares dividend）／ Weighted average number of outstanding shares. (Note 4)
Cash flow
(1) Cash flow ratio=Net cash flow from operating activities/current liabilities
(2) Net cash flow adequacy ratio= Net cash flow from operating activities in the most recent five years/ (capital spending + increase in inventory + cash dividends) in the most recent five years
(3) Cash reinvestment ratio= (Net cash flow from operating activities-cash dividends) (gross of fixed assets+ long-term investment +other assets+ working capital) (Note 5)
Leverage:
(1) Operating leverage= (Net operating revenue-changed operating costs and expenses)/operating income (Note 6)
(2) Financial leverage=Operating income/ (operating income-interest expenses)
Note 3: The calculation for EPS above considers the following items:
Shares outstanding is based on weighted average shares, and not based on year end shares outstanding.
Cash offerings or treasury stock transactions are considered in calculating weighted average shares.
Earnings appropriation or reserves to paid in capital shall be calculated and adjusted accordingly.
If preferred shares are cumulative non-convertible preferred shares, dividends shall be subtracted (regardless of whether they are paid out in dividends), from after tax net profit. If preferred shares are non-cumulative, in the event of net profits, preferred shares shall be subtracted after tax, but no adjustments needed if there are losses.
Note 4: Cash flow analysis shall consider the following items:
Cash flows from operating activities refers to operating cash flows.
Capital expenditures are from the annual cash flow statements on capital expenditure outflows.
Inventory increases are from period end balance greater than period beginning balanaces, if inventories are less, then zero is applied.
Cash dividends includes common stock and preferred shares dividends.
Property, plant, and machinery balance is after substracting accumulative depreciation.
Note 5: The issuer shall include operating costs and operating expenses as fixed or variable. If estimates or judgements are applied, shall be deemed reasonable and consistent.
Note 6: Company stocks that are no par value or have par value different from NT$10/share, shall be calculated based upon percentage of paid in capital or as a percentage of parent company equity in the balance sheet.
142 -

III. Audit Committee's Audit Report on the Financial Statement for the Most Recent Year

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2020 Business Report, FinancialStatements, Consolidated Financial Statements and Earnings Appropriation Statements for 2020. The CPA firm of KPMG was retained to audit China Petrochemical Development Corporation’s Financial Statements and Ms. Melody Chen and Ms. Dan-Dan Chung have issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, Consolidated Financial Statements and Earnings Appropriation Statements have been reviewed and determined to be correct and accurate by the Audit Committee of China Petrochemical Development Corporation. In accordance with Article 144 of the Securities and Exchange Act and Article 219 of the Company Act, I hereby submit this report.

China Petrochemical Development Corporation

Convener of the Audit Committee:

March 23, 2021

143 -

IV. Independent Accountants’ Audit Report (Consolidated)

Independent Auditors’ Report

To the Board of Directors of China Petrochemical Development Corporation:

Opinion

We have audited the consolidated financial statements of China Petrochemical Development Corporation (“CPDC”) and its subsidiaries (“the Group”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to Other Matter paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“ IFRIC” ) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis of our opinion.

Emphasis of Matter

As described in Notes 6(j) and 6(q) of the notes to the consolidated financial statements, a portion of the land at the Anshun plant, which is located at Annan Dist., Tainan City, was polluted. CPDC submitted for approval a remediation project proposal to the Tainan City Government in accordance with the related regulations and accrued relevant remediation project expenses. Nevertheless, CPDC has a dissenting view on the government perception about the condition of pollution and CPDC is seeking a way to define its responsibilities. Our opinion is not modified in respect of this matter.

144 -

Other Matter

CPDC has prepared its parent-company-only financial statements as of and for the years ended December 31, 2020 and 2019, on which we have issued an unmodified opinion with emphasis of matter and other matters paragraphs.

We did not audit the financial statements of Taivex Therapeutics Corporation, a subsidiary of the Group. Those statements were audited by another auditor, whose report has been furnished to us, and our opinion, insofar as it relates to the amount included for Taivex Therapeutics Corporation, is based solely on the report of another auditor. The financial statements of Taivex Therapentics Corporation reflect total assets constituting 0.27% of consolidated total assets at December 31, 2020, and total operating revenues constituting 0% of consolidated total operating revenues for the year ended December 31, 2020.

We did not audit certain investments, which were accounted for under the equity method. The financial statements as of and for the years then ended December 31, 2020 and 2019 of those investees accounted for under the equity method were audited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts for the equity method investees were based solely on the reports of other auditors. These investments accounted for under the equity method both represented 0.95% of consolidated total assets as of December 31, 2020 and 2019. The related shares of investment income from these investees including subsidiaries, associates and joint ventures accounted for using equity method represented 3.57% and (0.06)% of consolidated net income before income tax for the years ended December 31, 2020 and 2019, respectively.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

Refer to Note 4(q) “ Revenue Recognition” , Note 6(w) “Revenue from contracts with customers” in the consolidated financial statements.

Description of key audit matter:

Operating revenue is the most important source of cash flow for the Group, and it is a significant risk accounting subject in the consolidated financial statements. So revenue recognition is one of the key audit matters for our audit.

How the matter was addressed in our audit:

Our key audit procedures included:

． Testing the Group’s internal accounting controls surrounding revenue recognition and key manual and systems-based controls in the order-to-cash transaction cycle. In addition, checking and reconciling the sales data recorded between the sales systems and general ledger; selecting samples to assess whether appropriate revenue recognition policies are applied through comparison with accounting standards;
． Analyzed and compared the sales amounts and volumes for the major customers of the Group. Based on samples selected, vouched significant transactions from both internal and external documents, to verify the authenticity of the transactions.
145 -
Assessment of the fair value of investment property

Refer to Note 4(k) “ Investment Property” , Note 5(a) “ Significant Accounting Judgments, Estimation, Assumptions, and Sources of Estimation Uncertainty” , and Note 6(j) “ Investment Property” of the consolidated financial statements for details about fair value information on investment property.

Description of key audit matter:

The book value of investment property of the Group represented 36% of consolidated total assets as of December 31, 2020, which is deemed to be significant. The Group evaluates the fair value of investment property according to IAS40, and re-measure such fair value on the reporting date. Because the valuation of investment property at fair value demands significant professional judgments, the assessment of fair value of investment property is considered one of the key audit matters.

How the matter was addressed in our audit:

Our key audit procedures included:

． Obtain from the Group management the real estate appraisal report on investment property;
． Engage another appraiser to review such real estate appraisal report, and to evaluate the propriety of the evaluation method used, and the reasonableness of its main assumptions or input values (ex. discount rate and final rate of return);
． Evaluate the propriety of the disclosure of fair value of investment property.
Impairment assessment of property, plant, and equipment

Refer to Note 4(o) “ Impairment of non derivative financial assets” , Note 5(b) “ Significant Accounting Assumptions and Judgments, and Major Sources of Estimation Uncertainty” , and Note 6(h) “Property, plant and Equipment” of the consolidated financial statements for details of the information about impairment assessment on property, plant, and equipment.

Description of key audit matter:

The book value of property, plant, and equipment of the Group represented 22% of consolidated total assets as of December 31, 2020, which is deemed to be significant. The overall economic trend, market competition and fluctuations in the price of petroleum and petrochemical products may affect the future operation of the Group, and also affect the estimated economic benefits and recoverable amounts of these assets that the management of the Group may estimate and determine in the future of the cash generating unit (“CGU”) of the assets, and to evaluate whether there are signs of impairment. The recoverable amounts of these assets have been determined based on the discounted cash flows forecasted by the Group management which involved significant uncertainties and professional judgments. Therefore, we consider the assessment for impairment of property, plant, and equipment as one of the key audit matters for our audit.

How the matter was addressed in our audit:

Our key audit procedures included:

． Obtain from the Group management the results of their valuation of fixed assets and understand the significant assumptions used in their valuation model.
． Review both the calculations of the value in use and the present value of the discounted cash flows forecasted. Evaluate the CGU, and external and internal impairment indicators identified by the Group management, and ascertain that all fixed assets requiring annual impairment test are covered in the assessment made by management. Likewise, evaluate the reasonableness of the method used in measuring the recoverable amount of the assets (including the realization on the financial forecast, the calculation of recoverable amount and the assumptions considered for the cash flows forecast).
146 -

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
147 -
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Chen Mei Fang and Chung Tan Tan.

KPMG

Taipei, Taiwan (Republic of China) March 23, 2021

Notes to Readers

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

The independent auditors’ audit report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and consolidated financial statements, the Chinese version shall prevail. - 148 -

					December 31, 2019	Amount %		3,484,148 4	88,263 -	1,316,369 1	1,739,977 2	86,144 -	157,562 -	49,911 -	1,762,130 2	57,009 -	8,741,513 9		- -	6,721,783 7	1,967,230 2	7,020,975 7	203,332 -	4,494,177 5	125,616 -	20,533,113 21	29,274,626 30		28,348,502 30	1,286,700 1		2,137,330 2	35,490,262 37	1,779,147 2	39,406,739 41		(804,515) (1)	(1,120,657) (1)		(1,925,172) (2)	67,116,769 70	77,095 -	67,193,864 70	96,468,490 100
					December 31, 2020	Amount %		$ 3,615,000 4	1,676 -	1,394,928 1	1,429,867 1	5,637 -	282,291 -	43,251 -	1,914,833 2	60,911 -	8,748,394 8		3,500,000 4	7,489,650 7	1,772,811 2	6,497,650 6	249,741 -	5,656,112 5	127,601 -	25,293,565 24	34,041,959 32		32,848,502 32	583,815 1		2,311,174 2	35,601,629 34	1,287,983 1	39,200,786 37		(966,202) (1)	(854,259) (1)		(1,820,461) (2)	70,812,642 68	55,389 -	70,868,031 68	$ 104,909,990 100
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES	Consolidated Balance Sheets	December 31, 2020 and 2019	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2020 December 31, 2019	Assets Amount % Amount % Liabilities and Equity	Current assets: Current liabilities:	Cash and cash equivalents (note 6(a)) $ 7,479,899 7 9,116,253 9 2100 Short-term loans (note 6(l))	Current financial assets at fair value through profit or loss (note 6(b)) 829,533 1 783,180 1 2130 Current contract liabilities (note 6(w))	Current financial assets at fair value through other comprehensive income 9,195 - 321,647 - 2170 Accounts payable	(note 6(c)) 2200 Other payables (note 7)	Notes and accounts receivable, net (note 6(d)) 1,784,564 2 1,646,764 2 2230 Current tax liabilities (notes 4 and 6(t))	Accounts receivable related parties, net (notes 6(d) and 7) 51,106 - 57,764 - 2250 Provisions-current (notes 4, 6(q) and 6(s))	Other receivables (notes 6(d) and 7) 144,294 - 253,779 - 2280 Lease liabilities-current (note 6(p))	Inventories (note 6(e)) 12,665,959 12 9,702,458 10 2320 Long-term liabilities-current portion (note 6(m))	Prepayments 1,246,404 1 1,495,905 2 2399 Other current liabilities, others	Other current assets (note 6(f)) 2,878,214 3 609,223 2 Total current liabilities	Total current assets 27,089,168 26 23,986,973 26 Non-Current liabilities:	Non-current assets: 2530 Bonds payable (note 6(n))	Non-current financial assets at fair value through profit or loss (note 6(b)) 10,746,855 10 9,942,994 10 2540 Long-term bank loans (note 6(m))	Non-current financial assets at fair value through other comprehensive 2,799,521 3 2,038,393 2 2550 Provisions-non-current (notes 4, 6(q) and 6(s))	income (note 6(c)) 2570 Deferred income tax liabilities (notes 4 and 6(t))	Investments accounted for using equity method (note 6(g)) 2,038,003 2 2,318,796 2 2580 Lease liabilities-non-current (note 6(p))	Property, plant and equipment (note 6(h)) 23,226,955 22 20,275,279 21 2611 Long-term bills payable (note 6(o))	Right-of-use assets (note 6(i)) 872,937 1 848,504 1 2670 Other non-current liabilities, others	Investment property, net (note 6(j)) 37,626,827 36 36,719,706 38 Total non-currnet liabilities	Intangible assets (note 6(k)) 159,173 - 177,464 - Total liabilities	Deferred income tax assets (notes 4 and 6(t)) 11,023 - 11,023 - Equity attributable to owners of parent:	Other non-current assets (note 8) 339,528 - 149,358 - 3110 Common stock (note 6(u))	Total non-current assets 77,820,822 74 72,481,517 74 3200 Capital surplus (note 6(u))	Retained earnings (note 6(u)):	3310 Legal reserve	3320 Special reserve	3350 Unappropriated earnings		Others (note 6(u)):	3410 Exchange differences arising on translation of foreign operations	3420 Unrealised gains or loss on financial assets at fair value through other	comprehensive income		Total equity attributable to shareholders of the parent:	36XX Non-controlling interests	Total assets $ 104,909,990 100 96,468,490 100 Total equity Total liabilities and equity
								1100	1110	1120		1170	1180	1200	130X	1410	1470			1510	1517		1551	1600	1755	1760	1780	1840	1900

149 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

4000 Operating revenues (notes 4, 6(w) and 7) 5000 Operating costs (note 6(e)) Gross profit Operating expenses (note 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment loss determined in accordance with IFRS9 Total operating expenses Loss from operations Non-operating income and expenses: 7100 Interest income (note 6(y)) 7010 Other income (notes 6(y) and 7) 7020 Other gains and losses (note 6(y)) 7050 Finance costs (notes 6(p) and 6(y)) 7060 Shares of profit (loss) of associates and joint ventures accounted for using equity method, net (note 6(g)) 7235 Gains on financial assets at fair value through profit or loss (notes 4 and 6(b)) 7255 Gains on fair value adjustment, investment property (note 6(j)) 7673 Impairment loss on property, plant and equipment (notes 4 and 6(h)) Total non-operating income and expenses Income before income tax 7950 Less: income tax expenses (notes 4 and 6(t)) Net income 8300 Other comprehensive income (loss): 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8320 Shares of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Allocation of income tax to the above items Components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences arising on translation of foreign operations 8370 Shares of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that may be reclassified to profit or loss 8399 Allocation of income tax to the above items Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income (loss), net 8500 Total comprehensive income Net income (loss) attributable to: 8610 Shareholders of the parent 8620 Non-controlling interests Comprehensive income (loss) attributable to: 8710 Shareholders of the parent 8720 Non-controlling interests Earnings per share (notes 4 and 6(v)) 9750 Basic earnings per share 9850 Diluted earnings per share	2020 Amount % $ 17,583,092 100 17,544,864 100 38,228 - 603,857 3 804,920 4 442,279 3 50 - 1,851,106 10 (1,812,878) (10) 161,379 1 563,870 3 (407,747) (2) (221,705) (1) 67,054 - 856,158 5 897,645 5 - - 1,916,654 11 103,776 1 (570,884) (3) 674,660 4 (24,832) - 360,247 2 29,889 - - - 365,304 2 (190,168) (1) 26,632 - - - (163,536) (1) 201,768 1 $ 876,428 5 $ 680,989 4 (6,329) - $ 674,660 4 $ 884,606 5 (8,178) - $ 876,428 5 $ 0.21 $ 0.21	2019 Amount % 29,624,094 100 27,996,514 95 1,627,580 5 748,690 3 886,255 3 401,655 1 - - 2,036,600 7 (409,020) (2) 123,028 - 597,172 2 (143,692) - (140,459) - 494,301 2 4,130,817 14 112,421 - (2,901,096) (10) 2,272,492 8 1,863,472 6 129,837 - 1,733,635 6 (12,224) - 130,071 - 5,719 - - - 123,566 - (317,231) (1) - - - - (317,231) (1) (193,665) (1) 1,539,970 5 1,738,449 6 (4,814) - 1,733,635 6 1,543,494 5 (3,524) - 1,539,970 5 0.61 0.61

See accompanying notes to consolidated financial statements. - 150 -

														Total equity	67,190,754	1,733,635	(193,665)	1,539,970		-	-	(1,349,929)	-	26,314		(213,245)	-		67,193,864	674,660	201,768	876,428		-	-	(985,455)	3,796,481	-	(13,287)	-		70,868,031
													Non-controlling	interests	293,864	(4,814)	1,290	(3,524)		-	-	-	-	-		(213,245)	-		77,095	(6,329)	(1,849)	(8,178)		-	-	-	-	(241)	(13,287)	-		55,389
												Total equity	attributable to	owners of parent	66,896,890	1,738,449	(194,955)	1,543,494		-	-	(1,349,929)	-	26,314		-	-		67,116,769	680,989	203,617	884,606		-	-	(985,455)	3,796,481	241	-	-		70,812,642
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES	Consolidated Statements of Changes in Equity	For the years ended December 31, 2020 and 2019	(Expressed in Thousands of New Taiwan Dollars)	Equity attributable to owners of parent	Total other equity interest	Share capital Retained earnings Unrealized gains	(losses) on	financial assets	Exchange measured at fair	differences on value through	translation of other	Ordinary Unappropriated foreign financial comprehensive	shares Capital surplus Legal reserve Special reserve retained earnings statements income	26,998,573 1,260,386 1,708,303 33,521,575 5,144,764 (488,212) (1,248,499)	- - - - 1,738,449 - -	- - - - (6,084) (316,303) 127,432	- - - - 1,732,365 (316,303) 127,432		- - 429,027 - (429,027) - -	- - - 1,968,687 (1,968,687) - -	- - - - (1,349,929) - -	1,349,929 - - - (1,349,929) - -	- 26,314 - - - - -		- - - - - - -	- - - - (410) - 410		28,348,502 1,286,700 2,137,330 35,490,262 1,779,147 (804,515) (1,120,657)	- - - - 680,989 - -	- - - - (27,393) (161,687) 392,697	- - - - 653,596 (161,687) 392,697		- - 173,844 - (173,844) - -	- - - 111,367 (111,367) - -	- - - - (985,455) - -	4,500,000 (703,519) - - - - -	- 634 - - (393) - -	- - - - - - -	- - - - 126,299 - (126,299)		32,848,502 583,815 2,311,174 35,601,629 1,287,983 (966,202) (854,259)
															$																											$
															Balance at January 1, 2019	Net income for the year ended December 31, 2019	Other comprehensive income for the year ended December 31, 2019	Total comprehensive income for the year ended December 31, 2019	Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary share	Stock dividends of ordinary share	Difference between consideration and carrying amount of subsidiaries acquired or	disposed	Changes in non-controlling interests	Disposal of investments in equity instruments designated at fair value through other	comprehensive income	Balance at December 31, 2019	Net income for the year ended December 31, 2020	Other comprehensive income for the year ended December 31, 2020	Total comprehensive income for the year ended December 31, 2020	Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary share	Capital increase by cash	Changes in ownership interests in subsidiaries	Changes in non-controlling interests	Disposal of investments in equity instruments designated at fair value through other	comprehensive income	Balance at December 31, 2020

151 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Income before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using equity method Loss on disposal of property, plan and equipment Property, plan and equipment transferred to expenses Loss on disposal of investments accounted for using equity method Impairment loss on property, plant and equipment Reversal of impairment loss on non-financial assets Gain on fair value adjustment of investment property Gain on lease modification Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable Decrease in accounts receivable due from related parties Decrease (increase) in other receivables Increase in inventories Decrease (increase) in prepayments Decrease (increase) other current assets Total changes in operating assets (Decrease) increase in contract liabilities Increase (decrease) in accounts payable Decrease in other payable Decrease in provisions Increase in other current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash outflow generated from operations Interest received Interest paid Income taxes paid Net cash flows used in operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Cash inflows due to combination Increase in other financial assets Increase in other non-current assets Dividends received Decrease in deferred income tax liabilities Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term loans Decrease in short-term loans Proceeds from issuing bonds Proceeds from long-term debt Repayments of long-term debt Increase in long-term bills payable Decrease in long-term bills payable Payment of lease liabilities Increase in other non-current liabilities Cash dividends paid Capital increase by cash Interest paid Change in non-controlling interests Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For the years end	ed December 31 2019 1,863,472 1,435,252 10,002 - (4,130,817) 140,459 (123,028) (303,466) (494,301) 2,560 - - 2,901,096 (78,554) (112,421) (5)
	2020 $ 103,776 977,720 13,172 50 (856,158) 221,705 (161,379) (257,817) (67,054) 1,060 7,855 580 - (72,892) (897,645) (49) (1,090,852) (137,988) 6,658 148,673 (2,888,937) 249,501 4,323 (2,617,770) (86,587) 78,559 (330,249) (69,690) 3,902 (404,065) (3,021,835) (4,112,687) (4,008,911) 122,193 (214,756) (38,574) (4,140,048) (387,499) 299,070 (1,020,256) 1,037,947 (140,000) 5,109 (3,861,905) 594 (3,265) 13 (2,264,814) (188,851) 705,763 - (5,818,094) 15,228,000 (15,092,960) 3,500,000 13,093,148 (12,005,856) 26,152,200 (24,992,200) (59,547) 1,985 (985,455) 3,796,481 (4,734) (13,287) 8,617,775 (295,987) (1,636,354) 9,116,253 $ 7,479,899
		(753,223)
		929,086 2,469 (140,146) (7,365,613) (352,190) (149,481)
		(7,075,875)
		82,686 (532,405) (1,250,720) (347,663) 6,923
		(2,041,179)
		(9,117,054)
		(9,870,277)
		(8,006,805) 135,730 (136,482) (395,955)
		(8,403,512)
		- - (3,761,066) 3,321,452 (480,000) - (5,299,416) 12,890 (6,681) 41,733 - (854) 1,292,178 (2,288)
		(4,882,052)
		9,589,034 (7,009,177) - 8,006,120 (4,108,757) 5,850,000 (1,700,000) (56,778) 10,602 (1,349,929) - (4,875) (186,931)
		9,039,309
		(107,430) (4,353,685) 13,469,938
		9,116,253

See accompanying notes to consolidated financial statements. - 152 -

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

China Petrochemical Development Corporation (hereinafter referred to as the “Company”) was founded on July 8, 1969 under the approval of Ministry of Economic Affairs, R.O.C.. The Company migrated to No.1, Jingjian Rd., Dashe Dist., Kaohsiung City 815, Taiwan (R.O.C.) on July 18, 2016. The Company and its subsidiaries primarily engage in the production of petroleum, alkali-chlorine, phosphoric acid and other petrochemical products and by-products and the storage, transportation, purchase and sale of these products, related chemicals and their raw materials, and land development. The primary products are acrylonitrile, caprolactam, acetic acid and nylon.

(2) Approval date and procedures of the consolidated financial statements:

The accompanying financial statements were authorized for issue by the Board of Directors on March 23, 2021.

(3) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2020:

●Amendments to IFRS 3 “Definition of a Business”
●Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”
●Amendments to IAS 1 and IAS 8 “Definition of Material”
●Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its consolidated financial statements:

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
●Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform － Phase 2”

(Continued)

153 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Effective date per Interpretations Content of amendment IASB Amendments to IFRS 10 and The amendments address an acknowledged Effective date to be IAS 28 “Sale or Contribution of inconsistency between the requirements in determined by IASB Assets Between an Investor and IFRS 10 and those in IAS 28 (2011) in Its Associate or Joint Venture” dealing with the sale or contribution of assets between an investor and its associate or joint venture.

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
－
●Amendments to IAS 16 “Property, Plant and Equipmentt Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018-2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”
●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarized below. The following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, R.O.C..

(Continued)

154 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Basis of Preparation

(i) Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on a historical cost basis:

1) Financial assets at fair value through profit or loss are measured at fair value;
2) Financial assets at fair value through other comprehensive income are measured at fair value;
3) Investment properties are measured at fair value; and
4) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation (please see note 6(s)).
(ii) Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan Dollar (NTD), which is the Company’ s functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

(c) Basis of consolidation
(i) Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Company. The Company ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. The Company attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

(Continued)

155 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) List of subsidiaries in the consolidated financial statements

The subsidiaries included in the consolidated financial statements were as follows :

Name of investors	Name of subsidiaries	Nature of business Manufacture of chemical products and their derivatives of phosphoric acid and fertilizer storage, transport, purchase, marketing business Water treatment works, plumbing works, apparatus and instrument installation work, refrigeration and air conditioning engineering and tank car repair and other services Holding company Real estate investment and development Holding company	Shareholding ratio December 31, 2020 December 31, 2019 Notes % 100.00 % 100.00 TSCIC was established on June 16, 1998. Due to the business combination on August 1, 2018, CIC became a dissolved company and Tsou Seen became a surviving company. As of December 31, 2020 and 2019 , TSCIC's actual paid-in capital amounted to $960,000 thousand. % 100.00 % 100.00 CPDC GT was established on May 31, 1999. As of December 31, 2020 and 2019, CPDC GT's actual paid-in capital amounted to $150,000 thousand. % 100.00 % 100.00 CPDC (BVI) was established on January 9, 1998, registered in the British Virgin Islands, and is an international investment company. As of December 31, 2020 and 2019, CPDC (BVI)'s actual paid-in capital amounted to USD26,580 thousand. % 100.00 % 100.00 BES Twin Towers was established on March 1, 2011. The Company purchased its shares of non-controlling interest on March 12, 2019, resulting in its shareholding ratio to be 100%. It increased its capital through the Company amounting to $1,136,705 thousand on January 30, 2019, and increased its capital by retained earnings amounting to $681,112 thousand and $343,304 thousand on May 11, 2020 and June 24, 2019, respectively. As of December 31, 2020 and 2019, BES Twin Towers's actual paid-in capital amounted to $5,800,121 thousand and $3,681,009 thousand, respectively. % 100.00 % 100.00 UDL was established on May 20, 2008. As of December 31, 2020 and 2019, UDL's actual paid-in capital amounted to USD313,851 thousand and USD255,368 thousand, respectively.
			December 31, 2020 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
The Company The Company The Company The Company The Company	Tsou Seen Chemical Industries Corporation (TSCIC) CPDC GreenTechnology Corp. (CPDC GT) CPDC Investment (BVI) Co., Ltd. (CPDC (BVI)) BES Twin Towers Development Co., Ltd. (BES Twin Towers) Unichem Development Limited (UDL)

(Continued)

156 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investors	Name of subsidiaries	Nature of business Petrochemical supporting facility construction Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials	Shareholding ratio December 31, 2020 December 31, 2019 Notes % 0.37 % 0.49 Weiming was established on May 16, 2013. It increased its capital through UDL amounting to CNY200,000 thousand, CNY200,000 thousand, CNY96,000 thousand, CNY100,000 thousand, CNY100,000 thousand, CNY147,000 thousand and CNY130,000 thousand on November 13, June 19, 2020, March 12, June 27, September 24, December 25, 2019, and June 25, 2018, respectively. The said amounts were verified on November 17, June 29, 2020, March 13, July 2, September 26, December 26, 2019, and June 28, 2018, respectively. As of December 31, 2020 and 2019, Weiming's actual paid-in capital amounted to CNY1,618,000 thousand and CNY1,218,000 thousand, respectively. % 44.52 % 44.52 Weiqiang was established on May 9, 2013. It increased its capital through the Company amounting to CNY20,000 thousand on February 24, 2018 and verified on February 27, 2018. As of December 31, 2020 and 2019, Weiqiang's actual paid-in capital amounted to CNY44,920 thousand. % 100.00 % 97.87 Thanh Phong was established on May 22, 2017. Its capital originally invested was VND90,000,000 thousand and increased VND368,637,500 thousand on December 20, 2018 and verified on December 20, 2018. The Company had reached agreement on cancellation of shares with the non-controlling interests, who owned 2.13% of outstanding shares. After the cancellation, the Company owned Thanh Phong 100% of outstanding shares. As of December 31, 2020 and 2019, Thanh Phong's actual paid-in capital amounted to VND458,637,500 thousand and VND468,637,500 thousand, respectively.
			December 31, 2020 % 0.37 % 44.52 % 100.00
The Company The Company The Company	Jiangsu Weiming Petrochemical Corporation (Weiming) Weiqiang International Trade (Shanghai) Co., Ltd. (Weiqiang) Thanh Phong Construction Investment Co., Ltd. (Thanh Phong)

(Continued)

157 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investors	Name of subsidiaries	Nature of business Commissioned to create a vendor to build the housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in biotechnology, pharmaceutical research and development and marketing	Shareholding ratio December 31, 2020 December 31, 2019 Notes % 100.00 % 100.00 Ding-Yue (original name: Tao Zhu) was established on October 11, 1995 and increased its capital amounted to $2,500,000 thousand, $1,000,000 thousand and $6,440,000 thousand by the Company on February 26, 2020, and September 25, November 6, 2019, respectively. As of December 31, 2020 and 2019, its actual paid-in capital amounted to $10,040,000 thousand and $7,540,000 thousand, respectively. In order to comply with the business strategies of the Company's petrochemical and land development, Ding-Yue started to expand the scale of its land development business since September 2019 and expects its upcoming operating activities on construction and land development to substantially expand as compared to those of the previous years; therefore, the subsidiary is disclosed in the consolidated financial statement in September 2019. % 4.02 % 4.02 Weihua was established on December 10, 2012. Due to the business combination on August 1, 2018, CIC became a dissolved company and Tsou Seen became a surviving company. The shares hold by CIC were transferred to Tsou Seen after the combination. As of December 31, 2020 and 2019, Weihua's actual paid-in capital amounted to CNY156,289 thousand. % 55.48 % 55.48 Weiqiang was established on May 9, 2013. It increased its capital through the Company amounting to CNY20,000 thousand on February 24, 2018 and verified on February 27, 2018. Due to the business combination on August 1, 2018, CIC became a dissolved company and Tsou Seen became a surviving company. The shares hold by CIC were transferred to Tsou Seen after the combination. As of December 31, 2020 and 2019, Weiqiang's actual paid-in capital amounted to CNY44,920 thousand. % 91.10 % 91.10 Taivex was established on February 11, 2010. TSCIC invested in Taivex on August 18, 2010. As of December 31, 2020 and 2019, Taivex's actual paid-in capital amounted to $507,399 thousand.
			December 31, 2020 % 100.00 % 4.02 % 55.48 % 91.10
The Company Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation	Ding-Yue Development Co., Ltd (Ding-Yue) (original name: Tao Zhu Construction & Development Co., Ltd.) Weihua (Rudong) Trade Co., Ltd. (Weihua) Weiqiang International Trade (Shanghai) Co., Ltd. (Weiqiang) Taivex Therapeutics Corporation (Taivex)

(Continued)

158 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investors	Name of subsidiaries	Nature of business Petrochemical supporting facility construction Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Consultancy Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Management consultant Engaged in engineering plastic and high-value petroleum chemical products Consult, design, construction, management service on engineering and sales of chemical products	Shareholding ratio December 31, 2020 December 31, 2019 Notes % 99.63 % 99.51 Weiming was established on May 16, 2013. It increased its capital through UDL amounting to CNY200,000 thousand, CNY200,000 thousand, CNY96,000 thousand, CNY100,000 thousand, CNY100,000 thousand, CNY147,000 thousand and CNY130,000 thousand on November 13, June 19, 2020, March 12, June 27, September 24, December 25, 2019, and June 25, 2018, respectively. The said amounts were verified on November 17, June 29, 2020, March 13, July 2, September 26, December 26, 2019, and June 28, 2018, respectively. As of December 31, 2020 and 2019, Weiming's actual paid-in capital amounted to CNY1,618,000 thousand and CNY1,218,000 thousand, respectively. % 95.98 % 95.98 Weihua was established on December 10, 2012. As of December 31, 2020 and 2019, Weihua's actual paid-in capital amounted to CNY156,289 thousand. % - % 100.00 Weida was established on November 26, 2012 and was dissolved on November 8, 2019. The liquidation process had been completed on December 30, 2020. As of December 31, 2020 and 2019, Weida's actual paid- in capital amounted to USD0 thousand and USD450 thousand, respectively. % 100.00 % 100.00 Weida PC was established on December 23, 2014. As of December 31, 2020 and 2019, Weida PC's actual paid-in capital amounted to CNY6,000 thousand. % - % 100.00 Weiqin was established on April 29, 2016 and was dissolved on March 12, 2020. The liquidation process had been completed on July 28, 2020. As of December 31, 2020 and 2019, Weiqin's actual paid in capital amounted to CNY0 thousand and CNY6,000 thousand, respectively. % 100.00 % 100.00 Weicai was established on January 6, 2015, and acquired by UDL on November 5, 2018. The investment was made through UDL amounted CNY214,955 thousand and was verified on December 27, 2018. As of December 31, 2020 and 2019, Weicai's actual paid-in capital amounted to CNY414,955 thousand. % 100.00 % - Weiming Construction was established on October 26, 2020. As of December 31, 2020, Weiming Constrcution's actual paid-in capital amounted to CNY1,000 thousand.
			December 31, 2020 % 99.63 % 95.98 % - % 100.00 % - % 100.00 % 100.00
Unichem Development Limited Unichem Development Limited Unichem Development Limited Unichem Development Limited Unichem Development Limited Unichem Development Limited Jiangsu Weiming Petrochemical Corporation (Weiming)	Jiangsu Weiming Petrochemical Corporation (Weiming) Weihua (Rudong) Trade Co., Ltd (Weihua) Weida (Zhangzhou) Consultant Service Co., Ltd. (Weida) Zhangzhou Weida Petrochemical Co., Ltd (Weida PC) Kunshan Weiqin Management consultant Co., Ltd (Weiqin) Changzhou Weicai New Material Science & Technology Co., Ltd. (Weicai) Weiming (Rudong) Construction Co., Ltd. (Weiming Construction)

(Continued)

159 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investors	Name of subsidiaries	Nature of business Holding company Investment and technical advisory services Real estate, research of petroleum market and consultancy Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale Engineering, construction contracting business	Shareholding ratio December 31, 2020 December 31, 2019 Notes % 100.00 % 100.00 Frontier Fortune was established on November 23, 2016. It increased its capital through BES Twin Towers amounting to USD50,000 thousand, USD36,890 thousand, USD300 thousand and USD5,670 thousand on October 22, 2020 and January 30, March 7, 2019 and November 30, 2018, respectively. As of December 31, 2020 and 2019, Frontier fortune's actual paid- in capital amounted to USD93,060 thousand and USD43,060 thousand, respectively. % 100.00 % 100.00 Core Pacific Twin Star (Myanmar) was established on February 16, 2017. It increased its capital through Frontier Fortune amounting to USD5,320 thousand on November 30, 2018. As of December 31, 2020 and 2019, Core Pacific Twin Star (Myanmar)'s actual paid-in capital amounted to USD5,500 thousand. % 99.99 % 99.99 Gemini Star (India) was established on January 8, 2019. As of December 31, 2020 and 2019, its actual paid-in capital amounted to INR21,000 thousand. % 99.01 % 97.70 Core Pacific Twin Star (Vietnam) was established on November 19, 2018. It increased its capital through Core Pacific Twin Star (Myanmar) amounted to VND1,155,000,000 thousand and VND850,000,000 thousand on November 3, 2020 and January 30, 2019, respectively. As of December 31, 2020 and 2019, its actual paid-in capital amounted to VND2,025,000,000 thousand and VND870,000,000 thousand, respectively. % 80.00 % 80.00 Core Pacific Pioneer was established on May 24, 2018. It increased its capital through Core Pacific Twin Star (Myanmar) amounted to MMK755,230 thousand on July 3, 2019. As of December 31, 2020 and 2019, its actual paid-in capital amounted to MMK1,512,540 thousand. % 100.00 % 100.00 Da Yin Construction Engineering was established on November 24, 1972. As of December 31, 2020 and 2019, its actual paid-in capital amounted to $22,500 thousand. In order to comply with the business strategies of the Company's petrochemical and land development, Da Yin started to expand the scale of its land development business since March 2020 and expects its upcoming operating activities on construction and land development to substantially expand as compared to those of the previous years; therefore, the subsidiary is disclosed in the consolidated financial statement in March 2020.
			December 31, 2020 % 100.00 % 100.00 % 99.99 % 99.01 % 80.00 % 100.00
BES Twin Towers Development Co., Ltd. (BES Twin Towers) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Core Pacific Twin Star (Myanmar) Investment Co., Ltd. (Core Pacific Twin Star (Myanmar)) Ding-Yue Development Co., Ltd (Ding-Yue) (original name: Tao Zhu Construction & Development Co., Ltd.)	Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Core Pacific Twin Star (Myanmar) Investment Co., Ltd. (Core Pacific Twin Star (Myanmar)) Gemini Star (India) Private Limited. (Gemini Star (India)) Core Pacific Twin Star (Vietnam) Investment Co., Ltd. (Core Pacific Twin Star (Vietnam)) Core Pacific Pioneer (Myanmar) Co., Ltd. (Core Pacific Pioneer (Myanmar)) Da Yin Construction Engineering Co., Ltd. (Da Yin Construction Engineering)

(Continued)

160 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Subsidiaries not included in the consolidated financial statements

Name of investors	Name of subsidiaries	Nature of business Holding company Engineering, construction contracting business	Shareholding ratio December 31, 2020 December 31, 2019 Notes % - % 100.00 Rich was established on March 21, 2007 and was dissolved on December 25, 2019. The remittance of paid share had been completed on April 24 and April 30, 2020, respectively, and the liquidation process had been completed on July 28, 2020. As of September 30, 2020 and December 31, 2019, its actual paid-in capital amounted to USD0 thousand and USD180 thousand, and its total assets represented 0% and 0.01% of consolidated total assets, respectively. % 100.00 % 100.00 Da Yin Construction Engineering was established on November 24, 1972. As of December 31, 2020 and 2019, its actual paid-in capital amounted to $22,500 thousand and its total assets represented 0.03% of consolidated total assets. In order to comply with the business strategies of the Company's petrochemical and land development, Da Yin started to expand the scale of its land development business since March 2020 and expects its upcoming operating activities on construction and land development to substantially expand as compared to those of the previous years; therefore, the subsidiary is disclosed in the consolidated financial statement in March 2020.
			December 31, 2020 % - % 100.00
The Company Ding-Yue Development Co., Ltd (Ding-Yue) (original name: Tao Zhu Construction & Development Co., Ltd.)	Rich Equities Ltd. (Rich) Da Yin Construction Engineering Co., Ltd. (Da Yin Construction Engineering)

(d) Foreign currencies

(i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

． an investment in equity securities designated as at fair value through other comprehensive income;
． a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
． qualifying cash flow hedges to the extent that the hedges are effective.

(Continued)

161 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(e) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current:

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Group does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(Continued)

162 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(f) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

Bank overdrafts that are repayable on demand and form an integral part of the Group’ s cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

(g) Construction contracts

Construction contracts in progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognized to date less progress billings and recognized losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.

Construction contracts in progress is presented in the balance sheets as the amount due from customers for contract work for all contracts in which costs incurred plus recognized profits exceed progress billings. If progress billings exceed costs incurred plus recognized profits, then the difference is presented as amount due to customers for contract work in the balance sheets.

(h) Financial instruments

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(Continued)

163 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Financial assets measured at amortized cost

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

． it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
． its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Fair value through other comprehensive income (FVOCI)

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

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established.

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

(Continued)

164 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

． the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
． how the performance of the portfolio is evaluated and reported to the Group’ s management;
． the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
． how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
． the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

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

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

． contingent events that would change the amount or timing of cash flows;
． terms that may adjust the contractual coupon rate, including variable rate features;
． prepayment and extension features; and

(Continued)

165 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

． terms that limit the Group’ s claim to cash flows from specified assets (e.g. nonrecourse features).
6) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables, guarantee deposit paid and other financial assets) and contract assets.

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

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment as well as forward-looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Group considers a financial asset to be in default when the financial asset is more than 90 days past due or the debtor is unlikely to pay its credit obligations to the Group in full.

Lifetime ECL are the ECL that result from all possible default events over the expected life of a financial instrument.

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

The maximum period considered when estimating ECL is the maximum contractual period over which the Group is exposed to credit risk.

ECL are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ creditimpaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset 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;

(Continued)

166 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

． the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
． it is probable that the borrower will enter bankruptcy or other financial reorganization; or
． the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

7) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

Debt and equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

3) Treasury shares

(Continued)

167 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital surplus is not sufficient to be written down).

4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(i) Inventories

(i) Manufacturing industry

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(Continued)

168 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Construction industry

Inventories of the construction business are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in bringing them to their existing location and condition and capitalized borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The net realizable value is estimated as follows:

1) Land held for development: net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value (development analytical method or comparison method).
2) Construction-in-progress: net realizable value is the estimated selling price (current market condition) in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value.

(j)

Investments in associates

Associates are those entities in which the Group has significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Group’ s share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Group, from the date on which significant influence commences until the date on which significant influence ceases. The Group recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses resulting from transactions between the Group and an associate are recognized only to the extent of unrelated Group’s interests in the associate.

When the Group’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

When the Group subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Group’s proportionate interest in the net assets of the associate. The Group records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Group’s ownership interest is reduced due to the additional subscription to the shares of the associate by other investors, the proportionate amount of

(Continued)

169 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(k) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognized in profit or loss.

Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss. When investment property that was previously classified as property, plant and equipment is sold, any related amount included in ‘other equity - revaluation surplus’ is transferred to retained earnings.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(l) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

(Continued)

170 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

The estimated useful lives of periods are as follows:	property, plant
Land improvement	3~30 years
Buildings and constructions	2~60 years
Machine equipment	1~30 years
Transportation equipment	2~40 years
Other equipment	2~13 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(iv) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified accordingly. Any gain arising on this remeasurement is recognized in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognized in other comprehensive income and presented in ‘ other equity - revaluation surplus’ . Any loss is recognized in profit or loss. However, to the extent that an amount is included in the revaluation surplus for that property, the loss is recognized in other comprehensive income and reduces the revaluation surplus within equity.

(m) Leases

(i) Identifying a lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Group has the right to direct the use of the asset only if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or

(Continued)

171 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

the relevant decisions about how and for what purpose the asset is used are predetermined and:
－ the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
－ the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and nonlease components as a single lease component.

(ii) As a leasee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

－ fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－ there is a change in future lease payments arising from the change in an index or rate; or

(Continued)

172 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

－ there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise a extension or termination option; or
－
there is any lease modification.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

If an arrangement contains lease and non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

For sale-and-leaseback transactions, the Group applies the requirements for determining when a performance obligation is satisfied in IFRS 15 to determine whether the transfer of an asset is accounted for as a sale of the asset. If the transfer of an asset satisfies the requirement of IFRS 15 to be accounted for as a sale of the asset, the Group derecognizes the transferred asset, then measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Accordingly, the Group recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. For leaseback transaction, the Group applies the lessee accounting policy. If the transfer of an asset does not satisfy the requirement of IFRS 15 to be accounted for as a sale of the asset, the Group continues to recognize the transferred asset and recognizes the financial liability equal to the transfer proceeds.

(iii) As a leasor

(Continued)

173 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract.

The Group recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The interest income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the lease. The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘rent income’.

(n) Intangible assets

(i) Recognition and measurement

1) Goodwill

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses. Refer to Note 6(k) for details of the accounting policy on the initial recognition of goodwill.

2) Other intangible assets

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including customer relationships, patents and trademarks, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(Continued)

174 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

Technology 5~13 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(o) Impairment of non derivative financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred income tax assets and investment properties, measured at fair value) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(p) Provisions

A provision is recognized if, as a result of a past event, the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

(Continued)

175 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Site dismantling

The estimated obligation on the dismantling, relocation or restoration of property, plant and equipment is recognized as decommissioning cost and liability of property, plant and equipment. The relevant costs of assets are adjusted by subsequent price variation for dismantling and restoration. Depreciation is provided per the remaining useful life of the adjusted cost.

(ii) Site restoration

In accordance with the Group’ s published environmental policy and applicable legal requirements, a provision for site restoration in respect of contaminated land, and the related expense, is recognized when the land is contaminated.

(q) Revenue

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

(i) Sale of goods

The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(ii) Services

Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date.

(iii) Construction contracts

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue is recognized in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognized as incurred unless they create an asset related to future contract activity.

(Continued)

176 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The stage of completion is assessed by reference to the proportion that contract cost incurred for work performed to date bear to the estimated total contract cost; survey of work performed; or completion of a physical proportion of the contract work. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognized immediately in profit or loss.

(iv) Commissions

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognized is the net amount of commission made by the Group, and is recognized in proportion to the stage of completion of the transaction.

(v) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(r) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

(Continued)

177 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefit are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(s) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

The Group has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS 37.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

(Continued)

178 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
． the same taxable entity; or
． different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date, and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(t) Earnings per share

The Group discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as employee bonus.

(u) Government Grants

A government grant receivable to the Group as compensation for costs already incurred or for immediate financial support, with no future related costs, should be recognized as income in the period in which it is receivable.

(v) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

(Continued)

179 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is as follows:

(a) Fair valuation of investment property

The Group's investment property is measured at fair value deriving from external appraisal reports. When the presumed factors implemented in the evaluation process, e.g. discount rates and return on investment, change due to the evolving market and economy, the change may have an impact on the balance of the recognized assets and profit or loss. For more information regarding the valuation, please refer to note 6(j).

(b) Impairment of property, plant and equipment

In the process of evaluating the potential impairment of property, plant and equipment, the Group is required to make subjective judgments in determining the independent cash flows, useful lives, expected future income and expenses related to the specific asset groups considering of the nature of the industry. Any changes in these estimates based on changed economic conditions or business strategies and could result in significant impairment charges or reversal in future years. Refer to note 6(h) for further description of the key assumptions used to determine the recoverable amount.

Valuation process

The Group’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. Investment property is evaluated by another appraiser, which is engaged by the Company's financial instrument valuation group.

The Group strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

(i) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
(ii) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

(Continued)

180 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Level 3: inputs for the assets or liability that are not based on observable market data.

Information on valuation use hypothesis factors was as follows:

(i) Note 6(j) - Investment property;

(ii) Note 6(z) - Financial instruments.

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Checking and demand deposits Time deposits Cash equivalents Cash and cash equivalents	December 31, 2020 $ 1,806 3,668,398 3,659,705 149,990 $ 7,479,899	December 31, 2019
		1,567 3,855,535 4,629,722 629,429
		9,116,253

Time deposits with original maturity within three months which are held for the purpose of meeting short-term cash commitments, rather than for investment or other purposes, and are readily convertible to cash at the known amounts and subject to insignificant risk of value changes, are reported as cash equivalents. Please refer to Note 6(f) for details of time deposits with original maturity between three months and one year which are accounted for as other financial assets under other current assets.

Please refer to Note 6(z) for the fair value sensitivity analysis and interest rate risk of the financial assets and liabilities of the Group.

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

Current financial assets designated at fair value through profit or loss: Beneficiary certificates Stocks listed on domestic markets Subtotal Non-current financial assets designated at fair value through profit or loss: Stocks unlisted on domestic markets Total	December 31, 2020 $ 11,791 817,742 829,533 10,746,855 $ 11,576,388	December 31, 2019
		- 783,180
		783,180
		9,942,994
		10,726,174

(Continued)

181 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The dividends income from the financial assets recognized at fair value through profit or loss for the years ended December 31, 2020 and 2019, amounted to $20,110 thousand and $30,730 thousand, respectively.

On March 11, 2019, the Company’ s Board of Directors approved a resolution to invest in Core Pacific City Co., Ltd. by issuing 123,528 thousand preferred shares amounting to $1,235,278 thousand, which were accounted for as non-current financial assets at fair value through profit or loss.

The Group holds 582,362 thousand shares of the common and preferred stock of Core Pacific City Co., Ltd as of the date of December 31, 2020 and 2019. The Group recognized the changes in fair value as net gain and loss based on the fair value evaluation report of the investments. According to the valuation report, fair value was measured using the net asset method and the fair value of the valuation date was determined under the assumption of relevant rate of return by the external expert. The amount accounted for gain from investments in equity instruments at fair value through profit or loss was $803,861 thousand and $3,846,442 thousand for the years ended December 31, 2020 and 2019, respectively. The increase of fair value was due to the bidding of Core Pacific City Co., Ltd, which was completed on September 25, 2019, and the contract of property transaction was signed on October 30, 2019.

Please refer to Note 8 for details of the financial assets at fair value through profit or loss of the Group pledged as collateral as of December 31, 2020 and 2019.

Equity investments at fair value through other comprehensive income - current： Stock listed on domestic markets Equity investments at fair value through other comprehensive income - non-current Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Total	December 31, 2020 $ 9,195 2,059,052 740,469 2,799,521 $ 2,808,716	December 31, 2019
		321,647
		1,595,896 442,497
		2,038,393
		2,360,040

The Group designated the investments show above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term strategic purposes.

Please refer to Note 6(u) for the gain or loss on financial assets recognized at fair value through other comprehensive income.

(Continued)

182 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The dividends income from the financial assets recognized at fair value through other comprehensive income for the years ended December 31, 2020 and 2019, amounted to $237,707 thousand and $272,736 thousand.

On September 15, 2020, the Company’s Board of Directors approved a resolution to invest in Chain Yarn Co., Ltd. by issuing 30,000 thousand common shares amounting to $300,000 thousand, and accounted for as non-current financial assets at fair value through other comprehensive income.

(i) The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as “ PRAXAIR”) delegated by the Company, was elected as the new Chairman in the directors’ meeting on January 30, 2013. However, Praxair Inc. did not recognize the director delegated by the Company as the Chairman, resulting in the new Chairman being unable to exercise his authority. Also, the supervisor appointed by the Company was prevented from auditing the accounts and records pursuant to the Company Law, hence, the new Chairman and the designated supervisor representing PRAXAIR, filed an action asking the vice chairman and general manager to provide the accounts and records and requested to return the seal, business invasion and others in a civil lawsuit. The vice chairman delegated by Praxair Inc. claimed privilege to act as the Chairman and filed legal actions declaring the non-existence of the new Chairman’s commission of authority and also sent a letter to the court requesting a dissolution of PRAXAIR, which was rejected by the courts. The supervisor appointed by Praxair Inc. illegally called a temporary shareholders’ meeting in 2013 to propose the dissolution of the Company and reelection of directors and supervisors. Hence, the Company filed legal actions declaring the withdrawal of the resolution from the illegal temporary shareholders’ meetings and the resolutions from the temporary shareholders’ meeting was not established. Currently, the supervisor filed legal action against the manager for submitting the accounts and the records, after winning the 1st and 2nd trial, the defendant appealed but was dismissed by the 3rd trial instance. This case was remanded to the Taipei High Court but the verdict was dismissed in 2015. The Company was not satisfied with the appeal and it was denied by 2nd trial instance.. The judgment was binding and final on December 2017. On the other side, the vice chairman designated by Praxair Inc. filed legal action declaring the non-existence of the new Chairman’ s commission of authority, after the judgment from the High Court that the Chairman designated by the Company won the verdict, the defendant appealed to the 3rd instance, with the Supreme Court dismissing the appeal. The whole case confirms the appointed relationship between the Chairman designated by the Company and PRAXAIR exists. On November 19, 2016, the letter from Ministry of Economic Affairs states that the former chairman of directors, appointed by the Company, is the Chairman of PRAXAIR, and restored the representative duty per the judgment No. 2455 from the Supreme High Court in 2015. However, according to the requirement from Ministry of Economic Affairs, both sides were not able to hold the legitimate reelection prior to January 9, 2017 which resulted in vacancy of directors and supervisors of PRAXAIR. In order to strive for the rights and interests of the shareholders, the Company immediately brought the arbitration per joint venture agreement of both sides and applied for an auditor and provisional administrator to instruct the central section office of the Ministry of Economic Affairs to allow Praxair Inc. to conduct the change of registration on July 6, 2017. The Company filed a request for the arbitration of International Chamber of Commerce in 2017 and received the award issued by the International Court of International Chamber of Commerce on September 3, 2018. A part of the award favored for the Company and confirmed that the Company was entitled to receive the dividends from PCSM for the year of 2013. In order to protect the Company’ s right, the Company submitted a lawsuit withdrawing a part of such Arbitration award against the

(Continued)

183 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Company to Taipei District Court. On December 13, Taipei District Court dismissed the Company’ s claim of withdrawing the ICC’ s decision. The Company filed an appeal on January 8, 2020, but such appeal was dismissed by Taiwan High Court on September 1, 2020. The Company appealed forthwith to the Supreme Court on September 21, 2020.

As of December 31, 2020 and 2019, the Group provided as collateral portion of its financial assets. Please refer to Note 8 for details of the related assets pledged as collateral.

(d) Notes, accounts and other receivables

Notes receivable Accounts receivable (including related parties) Other receivables Less: allowance for doubtful receivables Net book value	December 31, 2020 $ 375,689 1,906,374 149,618 (451,717) $ 1,979,964	December 31, 2019 506,380 1,644,359 259,097 (451,529) 1,958,307

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provisions were determined as follows:

December 31, 2020	December 31, 2020
Carrying amount of account receivables $ 2,054,328 9,103 9,422 2,378 356,450 $ 2,431,681	Weighted average expected credit loss 0%~4.60% 0%~0.94% 0%~3.18% 0%~16.67% 100%	Allowance for expected credit loss
		94,485 86 300 396 356,450
		451,717

(Continued)

184 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2019	December 31, 2019
Carrying amount of account receivables $ 2,024,967 19,702 7,993 357,174 $ 2,409,836	Weighted average expected credit loss 0%~4.63% 0%~1.41% 0%~4.78% 100%	Allowance for expected credit loss
		93,695 278 382 357,174
		451,529

The movement of the allowance for notes, accounts and other receivables were as follows:

Balance at January 1 Impairment losses recognized Foreign exchange gains/(losses) Balance at December 31	For the years ended December 31, 2020 2019 $ 451,529 455,937 50 - 138 (4,408) $ 451,717 451,529
	2020 $ 451,529 50 138 $ 451,717

The consolidated subsidiaries, Weihua (Rudong) Trade Co., Ltd. and Weiqiang International Trade (Shanghai) Co., Ltd., filed civil complaints against Shanghai Tongye Coal Chemical Group Co. Ltd. in Shanghai to claim for the delay of payment of their accounts receivable from Shanghai Tongye Coal Chemical Group Co., Ltd. However, both of these consolidated subsidiaries have recognized impairment loss on the said accounts receivable as of December 31, 2020. Please refer to Note 9(j) for further details relating to litigation and evaluation of collectability.

There were no notes, accounts and other receivables of the Group had been pledged as collateral as of December 31, 2020 and 2019.

For credit risk information, please refer to note 6(z).

(Continued)

185 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Inventories

Finished goods Work-in-process Raw materials Fuel Merchandise inventories Subtotal Prepayment for land Land held for construction site Land held for construction site - compensation for levied land Payment for floor area ratio Construction in progress Subtotal Total	December 31, 2020 $ 604,363 390,589 1,527,523 14,345 277,376 2,814,196 9,340,010 415,441 9,423 13,535 73,354 9,851,763 $ 12,665,959	December 31, 2019
		363,659 395,249 1,338,484 19,350 47,505
		2,164,247
		7,440,010 - 9,423 13,535 75,243
		7,538,211
		9,702,458

A resolution was made during the Board of Directors’ meeting held on September 25, 2019 for the Group to acquire Core Pacific City’s permanent land ownership. The Group won the bidding on the same date. On October 30, 2019, the Group subsequently entered into a purchase agreement with Core Pacific City Co., Ltd. to buy the land located at Songshan District, Taipei City, as a construction site, for the amount of $37,200,010 thousand. Both parties have agreed to put the property, which includes the land and the existing construction into a trust. As of December 31, 2020 and 2019, the accumulated payments were $9,340,010 thousand and $7,440,010 thousand, and the unpaid amounts were $27,860,000 and $29,760,000, respectively. As of December 31, 2020, the above-mentioned land had not yet been handed over.

The Group signed a contract in March 2020 to purchase 203 pieces of land including Sanyu Section, Shilin District, Taipei City, which is expected to be used for bulk transfer. As of December 31, 2020, the Group paid the full price and completed the registration of land ownership transfer. Please refer to Note 13(a) for relevant information.

The details of the cost of sales were as follows:

Cost of goods sold (Gain on reversal of) write-down Net inventory loss (profit) Unallocated fixed production overheads from idle facilities Revenue from sale of scraps Net amount	For the years ended December 31,	For the years ended December 31,
	2020 $ 16,263,409 (72,892) 1,277 1,359,745 (6,675) $ 17,544,864	2019
		27,511,870 (85,013) 41,846 555,181 (27,370)
		27,996,514

(Continued)

186 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of December 31, 2020 and 2019, the aforesaid inventories were not pledged as collateral.

(f) Other current assets

Other financial assets Others	December 31, 2020 $ 2,475,214 403,000 $ 2,878,214	December 31, 2019
		210,400 398,823
		609,223

Other financial assets are time deposits with original maturity between three months and one year.

(g) Investments accounted for using equity method
(i) The Group’ s investments accounted for using the equity method at the reporting date were classified as follows:

Subsidiaries Associates Total	December 31, 2020 $ - 2,038,003 $ 2,038,003	December 31, 2019
		34,264 2,284,532
		2,318,796

(ii) The Group’ s investments accounted for using the equity method that are individually insignificant were as follows:

Carrying value of insignificant subsidiaries Carrying value of insignificant associates Attribution to the Group Profit from continuing operations Other comprehensive income Total comprehensive income	December 31, 2020 December 31, 2019 $ - 34,264 $ 4,867,651 5,487,139 For the years ended December 31,	December 31, 2019
		34,264
		5,487,139
	2020 $ 67,054 56,521 $ 123,575	2019
		494,301 5,719
		500,020

(iii) On August 12, 2019, a resolution was made during the board meeting of the Company to invest in Jean Pacific Development Co., Ltd., in the amount of $480,000 thousand. On March 27, 2020, a resolution was made during the Board meeting of the Company to invest $140,000 thousand in Jean Pacific Development Co., Ltd. according to the proportion of shareholding.

(Continued)

187 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Collateral

As of December 31, 2020 and 2019, the Group provided as collateral portion of its investments in aforesaid equity-accounted investees. Please refer to Note 8 for details of the related assets pledged as collateral.

(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group were as follows:

Cost or deemed cost: Balance as of January 1, 2020 Additions Disposal Reclassification Adjustment Effect of movements in exchange rate Balance as of December 31, 2020 Balance as of January 1, 2019 Acquisition through business combination Additions Disposal Reclassification Effect of movements in exchange rate Balance as of December 31, 2019 Depreciation and impairment loss: Balance as of January 1, 2020 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Balance as of January 1, 2019 Acquisition through business combination Depreciation for the period Impairment Disposal Reclassification Effect of movements in exchange rate Balance as of December 31, 2019 Carrying amounts: Balance as of December 31, 2020 Balance as of January 1, 2019 Balance as of December 31, 2019	Land $ 5,730,777 - - - - - $ 5,730,777 $ 5,730,777 - - - - - $ 5,730,777 $ - - - - $ - $ - - - - - - - $ - $ 5,730,777 $ 5,730,777 $ 5,730,777	Land improvements 292,822 - (1,747) 2,805 - - 293,880 287,788 - - - 5,034 - 292,822 223,021 6,165 (1,747) - 227,439 216,485 - 6,536 - - - - 223,021 66,441 71,303 69,801	Buildings 3,741,728 117,167 (8,402) 712,488 - (2,545) 4,560,436 3,762,638 - 1,493 (1,136) 13,986 (35,253) 3,741,728 1,388,882 131,977 (7,161) 653 1,514,351 1,266,906 - 129,681 - (1,136) 372 (6,941) 1,388,882 3,046,085 2,495,732 2,352,846	Machinery and equipment 43,102,929 29,032 (479,650) 1,366,494 - 1,896 44,020,701 42,797,307 - 4,237 (953,211) 1,291,504 (36,908) 43,102,929 34,383,105 736,203 (479,394) 1,354 34,641,268 34,148,642 - 1,197,138 - (949,673) 2,451 (15,453) 34,383,105 9,379,433 8,648,665 8,719,824	Vehicles 81,998 4,630 (6,005) 6,212 - 76 86,911 72,378 - 6,538 (7,395) 10,947 (470) 81,998 56,899 6,045 (5,914) 22 57,052 59,050 - 4,266 - (6,237) 70 (250) 56,899 29,859 13,328 25,099	Other facilities 269,529 3,051 (7,000) 15,531 (2,000) (349) 278,762 262,886 88 16,885 (29,832) 21,865 (2,363) 269,529 173,343 21,855 (6,989) 106 188,315 182,206 27 23,648 - (28,408) (2,893) (1,237) 173,343 90,447 80,680 96,186	Construction in progress 8,319,324 3,708,025 (55) (2,111,385) (1,425) 8,007 9,922,491 4,599,015 - 5,270,263 (9,814) (1,343,336) (196,804) 8,319,324 - - - - - - - - - - - - - 9,922,491 4,599,015 8,319,324	Accumulated impairment - - - - - - - - - - - - - - 5,038,578 - - - 5,038,578 2,137,966 - - 2,901,096 (484) - - 5,038,578 (5,038,578) (2,137,966) (5,038,578)	Total
									61,539,107 3,861,905 (502,859) (7,855) (3,425) 7,085
									64,893,958
									57,512,789 88 5,299,416 (1,001,388) - (271,798)
									61,539,107
									41,263,828 902,245 (501,205) 2,135
									41,667,003
									38,011,255 27 1,361,269 2,901,096 (985,938) - (23,881)
									41,263,828
									23,226,955
									19,501,534
									20,275,279

The market price of Caprolactam (“CPL”), the main product of the Company, has declined over the past few years. Recovery of the market price is unlikely as the production capacity of CPL continues to expand. The amount of book value of the Toufen production line CGU was evaluated as higher than its recoverable amount, resulting in a impairment loss amounting to $2,901,096 thousand, which was recognized under the non-operating profit or loss section of the statement of comprehensive income. The value-in-use was discounted by using the pre-tax discount rate of 6.86% for the year ended on December 31, 2019. The recoverable amount was determined by the total of

(Continued)

188 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

value-in-use and net fair value (fair value, less, cost of disposal), whose evaluation involved an input value belonging to level 3 and was conducted by using the market method. There is no need to recognize impairment loss after reassessing the production line on December 31, 2020.

As of December 31, 2020 and 2019, the Group provided as collateral, a portion of its property, plant and equipment, please refer to Note 8 for details of the related assets pledged as collateral.

On November 26, 2013, the plan to invest in China was approved during the meeting of the Board of Directors of the Company. On March 25, 2014 and November 1, 2018, the Investment Commission, Ministry of Economic Affairs (MOEA) approved the investment of the Company in Jiangsu Weiming Petrochemical Corporation in China in the amount of CNY2,388,000 thousand (equivalent to $11,100,000 thousand) mainly to establish a manufacturing operations for petrochemical products (including hydrorefining crude benzol, cyclohexanone, nylon 6, etc.). As of December 31, 2020 and 2019, accumulated investment remittance from Taiwan to Mainland China was CNY1,618,000 thousand and CNY1,218,000 thousand, respectively. The amount invested in manufacturing plant and machinery was CNY1,449,023 thousand and CNY1,251,456 thousand, respectively.

(i) Right-of-use assets

The Group leases assets including land, land use right, buildings, machinery and equipment and vehicles. Information about leases for which the Group as a lessee is presented below:

Cost: Balance as of January 1, 2020 Additions Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Balance as of January 1, 2019 Effects of retrospective application Balance as of January 1, 2019 - retrospective Acquisition through business combination Additions Disposal Effect of movements in exchange rate Balance as of December 31, 2019	Land $ 204,551 24,144 (288) - $ 228,407 $ - 204,443 204,443 - 108 - - $ 204,551	Land-use right	Buildings 19,554 12,757 (12,560) - 19,751 - 12,155 12,155 - 7,399 - - 19,554	Machinery and equipment 63,906 56,115 (8,964) - 111,057 - 63,906 63,906 - - - - 63,906	Vehicles	Other facilities 1,938 - - - 1,938 - 1,774 1,774 - 164 - - 1,938	Total
		657,738 - - 765 658,503 - 682,373 682,373 - - - (24,635) 657,738			19,456 9,140 (11,665) - 16,931 - 16,537 16,537 615 4,411 (2,107) - 19,456		967,143 102,156 (33,477) 765 1,036,587 - 981,188 981,188 615 12,082 (2,107) (24,635) 967,143

(Continued)

189 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Accumulated depreciation and impairment losses: Balance as of January 1, 2020 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Balance as of January 1, 2019 Effects of retrospective application Balance as of January 1, 2019 - retrospective Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2019 Carrying amounts: Balance as of December 31, 2020 Balance as of December 31, 2019	Land $ 8,012 8,706 (105) - $ 16,613 $ - - - 8,012 - - $ 8,012 $ 211,794 $ 196,539	Land-use right 58,963 13,412 - 203 72,578 - 47,630 47,630 13,686 - (2,353) 58,963 585,925 598,775	Buildings 8,901 9,883 (12,480) - 6,304 - - - 8,901 - - 8,901 13,447 10,653	Machinery and equipment 33,708 34,009 (7,097) - 60,620 - - - 33,708 - - 33,708 50,437 30,198	Vehicles 8,475 8,858 (10,985) - 6,348 - - - 9,096 (621) - 8,475 10,583 10,981	Other facilities 580 607 - - 1,187 - - - 580 - - 580 751 1,358	Total
							118,639 75,475 (30,667) 203
							163,650
							- 47,630
							47,630 73,983 (621) (2,353)
							118,639
							872,937
							848,504

(j) Investment property

The movement of invesment property was as followed:

Cost or deemed cost: Balance as of January 1, 2020 Aquisition through business combination Net gains and losses due to fair value adjustments Balance as of December 31, 2020 Balance as of January 1, 2019 Aquisition through business combination Decrease Net gains and losses due to fair value adjustments Balance as of December 31, 2019	Land $ 36,701,668 6,462 900,902 $ 37,609,032 $ 38,331,633 2,075 (9,423) (1,622,617) $ 36,701,668	Buildings 18,038 3,014 (3,257) 17,795 18,726 - - (688) 18,038	Total 36,719,706 9,476 897,645 37,626,827 38,350,359 2,075 (9,423) (1,623,305) 36,719,706

(Continued)

190 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Evaluation by income approach

The fair value of some investment properties of the Group was determined using the income approach. Under this income approach, the key terms of the rental contracts for these investment properties and certain other factors considered were as follows:

December 31, 2020

Subject	Qianjin Dist., Kaohsiung City	Qianzhen Dist., Kaohsiung City Others None None $450 $1,000~$1,270 None $1,030~$1,259 Leased Unused $0~ $0 $0~ $0 None 1.730% 4.655% 2.030% Outsourcing Outsourcing Colliers International Taiwan Taiwan Dawa Real Estate Appraiser & Associates Shiou-ying, Jan Yu-hua Lu December 31, 2020 December 31, 2020 $ 2,737,000 10,478
Important contract terms The range of rental in the area where the investment property is located The rental range of similar investment property The current status of the investment property Past earnings Income capitalization rate Discount rate Outsourcing or self-valuation Evaluation office Appraiser name Evaluation date Outsourcing fair value	None $550~$700 $576~$617 Unused $0~ $0 5.555% 4.260% Outsourcing Colliers International Taiwan Feng-ru, Ke December 31, 2020 $ 10,780

December 31, 2019

Qianjin Dist., Qianzhen Dist., Subject Kaohsiung City Kaohsiung City Important contract terms None None The range of rental in the area where the $550~$700 $450 investment property is located The rental range of similar investment $563~$589 None property The current status of the investment Unused Leased property Past earnings $0~ $0 $0~ $0 Income capitalization rate 5.525% None Discount rate 4.380% 4.780% Outsourcing or self-valuation Outsourcing Outsourcing Evaluation office Colliers International Colliers International Taiwan Taiwan Appraiser name Feng-Yu, Ke Shiou-ying, Jan Evaluation date December 31, 2019 December 31, 2019 Outsourcing fair value $ 10,530 2,514,000

(Continued)

191 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In accordance with Article 34 of the Regulations on Real Estate Appraisal, the income approach procedures include estimating the effective gross income and total expenses, computing the net operating income, determining the capitalization rate or discount rate, and computing the income. The attributes used by the Group for the estimations above were the last three years’ data from the subject property and comparable properties which have similar characteristics, and these data were assessed and adjusted based on their persistency, stability, and growth to ensure the availability and reasonableness of these data. The movement of income (cash inflows) and expenditure (cash outflows) for future periods was based on the vacancies or losses, existing or future cash flow plans of the Group, and historical cash flows from the subject property, identical properties, or properties in the same industry. The estimation and computation of the net income were based on the highest and best use of the subject property and have taken into consideration the income generated from comparable properties in the same location based on their highest and best use.

External appraisers use the risk premium method to decide on the direct capitalization rate and discount rate. The fixed deposit interest rate, government bonds rate, real estate investment risk, money supply-demand variation, the trend of real estate value and etc. are taken into consideration to decide the likely rate of return on the most common investment as a basis in order to derive the capitalization rate or discount rate. The differences in individual characteristics between the above most common investment and the subject property are compared in terms of their liquidity, risk, appreciation, and management. As of December 31, 2020 and 2019, the discount rate was 2.030%~4.655% and 4.380%~4.780%, respectively. As of December 31, 2020 and 2019, the weighted average capitalization rate was 1.730%~5.555% and 5.525%, respectively, derived as the ratio of annual net operating income of comparable properties divided by reasonable price.

(ii) Evaluation through land development analysis

The Group classified its undeveloped land as investment property. The Group adopted the development land analysis approach to measure the fair value of the undeveloped land in accordance with Article 9 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The input value involved in evaluation belongs to level 3. The relevant information is summarized as follows:

December 31, 2020

Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 110,949,840 2,614,812 19%~22% 12%~20% 3.650%~5.8547% 0.92%~3.05% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm, Colliers International Taiwan and China Real Estate Appraisers Firm Shiou-ying, Jan and Jian-hui,Gu Yu-xian, Houng, Jian-hui,Gu, Shiou-ying, Jan, Dian-Ching, Hsieh and Ching-Tang, Li December 31, 2020 December 31, 2020 28,519,000 1,353,578
Estimate total sales price Rate of return Capital interest rate Evaluation office Appraiser name Evaluation date Outsourcing fair value	7,968,120 23% 1.770% CCIS Real Estate Joint Appraisers Firm Huo-ming, Huang December 31, 2020 $ 4,995,991

(Continued)

192 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2019

December 31, 2019
Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 101,156,568 2,718,175 18%~30% 12%~25% 3.900%~8.930% 1.06%~3.47% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm, Colliers International Taiwan and China Real Estate Appraisers Firm Shiou-ying, Jan and Jian-hui, Gu Yu-xian, Houng, Jian-hui, Gu, and Shiou-ying, Jan and Dian- Ching, Hsieh December 31, 2019 December 31, 2019 27,885,380 1,352,806
Estimate total sales price Rate of return Capital interest rate Evaluation office Appraiser name Evaluation date Outsourcing fair value	7,968,120 23% 1.790% CCIS Real Estate Joint Appraisers Firm Huo-ming, Huang December 31, 2019 $ 4,956,990

The land development analysis included procedures such as identifying the content of land development and estimating the required period of development; investigating individual cost and related expenses, collecting current market prices; on-site survey and investigating and analyzing the degree of development in the local environment; estimating the marketable area of land or building after construction or building; estimating the total sales price of properties after completion of construction or building; estimating individual cost and related expenses; deciding an appropriate rate of return and an overall capital interest rate; calculating land development analysis value.

Investment property included several rentals of real property to others. Each lease contract include the original non-cancellable lease and the subsequent lease is negotiated with the lessee without collection of contingent rental. Please refer to Note 6(r) for the relevant information including rent revenue and the direct operating expenses incurred.

As of December 31, 2020 and 2019, the Group provided as collateral portion of its investment property. Please refer to Note 8 for details of the related assets pledged as collateral.

In the era of pre-Taiwan Alkali Industrial Corporation (TAIC), TAIC had leased the lands located in Tainan and Chiayi area to the local peasants and fishermen, and the surviving tenants shall continue paying the rent to the Group according to the agreements. In the event of the resumption for self- business use or the sale of the lands, the leases shall be terminated under the contractual agreements and Land Laws. If there is any redemption in some cases, the Company will recognize and evaluate the possible expenses and costs case by case.

(Continued)

193 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

An Shun Land Located in Tainan City Annan District:

(i) History

1) The land where the An-Shun Alkali plants located was originally established by Japanese company Kanegafuchi Soda “in 1938 under Japanese Colonial Rule.
2) The Government undertake the construction after the Retrocession of Taiwan, and established a state-owned company, Taiwan Alkali Industrial Corporation (TAIC) and operated at the An-Shun Site. In 1961, the competent authorities in charge of the relevant state-owned enterprises approved the investment plan and budget for producing Pentachlorophenol and sodium pentachlorophenol products used on herbicides and wood preservative fungicides.
3) Due to operational factors, the plant was ordered to be closed by Executive Yuan Department of Economic Affairs in early 1982.
4) In April 1983, Executive Yuan Department of Economic Affairs ordered China Petrochemical Development Corp., the state-owned Company, the subsidiary of CPC at the time, to merge with TAIC. The Company took charge of An-shun land of TAIC.
5) Since the said merger, the Company takeover the Anshun land, the Company has never had any act of production, operations, development, use or pollution at the site. According to subsequent investigation and research, parts of the area had detected dioxin and mercury contamination in soil. The land was designated by the Tainan City Government and the Environmental Protection Department of the Executive Yuan as a “Soil Pollution Control Site” and “ Soil pollution remediation site” in April 2002 and March 2004, respectively, per the Soil and Groundwater Pollution Remediation Act.
6) Tainan city government and other government authorities cited Article 75 of Taiwan’ s Company Law that since the Company merged with TAIC, and was regarded as the surviving company, the Company should take all responsibilities for the rights and obligations of TAIC, along with the treatment projects and remediation plan. As the Company never used the land after being ordered to take charge by the Executive Yuan Department of Ministry of Economic Affairs (MOEA), the Company thus objected and carried out the following administrative and judicial remedies to identify the government conception of the “Polluters” and the condition of pollution:
a) The Company filed a plea of State Compensation claim to Ministry of Economic Affairs, Administration Yuan (MOEA), but was refused.
b) In January 2006, the Company filed a complaint against MOEA in the Taiwan Taipei District Court in the amount of $10,077 thousand to reimbursement for compensation.

(Continued)

194 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

c) The complaint was dismissed by the Supreme Court In February, 2008. Upon the application of Constitution Interpretation by the Company, J.Y. No.714 Interpretation of the Grand Justice was issued in November, 2013, and considered that Soil and Groundwater Pollution Remediation Act (SGPR Act )does not violate the principle of prohibition against retroactive law, or the principle of proportionality the retroactive rule; however, the holding didn’t mention whether the successor of the Polluter entity should be responsible for the treatment projects and remediation plan under SGPR Act was not in the scope of the regulation.
d) The Company has filed series of complaint on those issues according to this Constitutional Interpretation.
7) Tainan City Government issued the letter No. 09722000130 and No. 09722003360 in January and February 2008 respectively, and requested the Company to propose a remediation plan for the soil and groundwater pollution of the An-shun plant in accordance with the Soil and Groundwater Pollution Remediation Act.
a) The Company proposed the “Tainan City, CPDC former Taiwan Alkali An-shun site and 2nd class number nine road on the eastern side of the grass area of the site, soil pollution remediation pollution remediation plan” per the regulation at the end of June 2008 and the plan was submitted to Tainan city government for review and formally approved in May 2009. In 2012, the remediation plan was put forward and approved on July 2, 2012. The 1st instance was completed in September 2014 and entered the second phase of the remediation, which will last 10 years. A second revision of the remediation plan was proposed and submitted to Tainan City Government for review, and the approval letter issued by Tainan City Government informed of the approval of the 2nd remediation plan, which shall be publicly displayed per regulations. Currently, the Tainan City Environmental Protection Bureau reviewed and adopted the plan on April 14, 2015 and the assessment was announced by Tainan City Government on May 4th, 2015. According to the remediation technology and the actual implementation of the subsequence adjustment, the 3rd remediation change plan was proposed on March 2nd 2017, which remediation plan was focus on the remediation plan of 2nd phase and brought in the unfinished items in the 2nd change plan. Currently, the 3rd plan was reviewed and adopted on January 3, 2018.
b) The relating remediation expense for the first phase was estimated of $1,647,200 thousand. The remediation expense about $1,600,000 thousand has engaged as the 1st phase until September 2014. Simultaneously, the following 10-year remediation work needed to be started after the 2nd change plan was adopted at an estimated cost of $1,356,000 thousand in December 2014.

(Continued)

195 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Extension legislation:

1) Remediation prepay
a) Tainan city government on February 27, 2008 with the letter No. 09722004430 asked the Company to pay each expense: $88,786 thousand, coming from investigation assessments and strain necessary measures, which was prepaid by Tainan city government and EPA of Executive Yuan on behalf of land polluters, within deadline. The expense would double and transfer to court for enforcement if overdue. This expense was adjusted to list in 2007 per Financial Accounting Standards and the Company prepaid on behalf of land relations based on the laws and regulations in July 2008. The Company objected to the prepaid expense and land polluter, hence, the administrative remedy was proposed in July 2008, with Kaohsiung High Administrative court sentencing the Company to pay the expense $88,430 thousand in January 2008. The Company appealed in March 2008 and Supreme Administrative Court sent the case back to Kaohsiung High Administrative Court for further trial. Kaohsiung High Administrative court sentenced the original punishment and the petition decision beyond $76,066 thousand was withdrawn. In December 2013, both parties proposed the appeal for the unfavorable parts and Supreme Administrative Court sentenced the amount beyond $203 thousand and lawsuit expenses are all abandoned in April 2015 and sent back to Kaohsiung High Administrative court for continued trial. The determined withdrawn amount $356 thousand had all been returned back to the account by Tainan city government. Kaohsiung High Administrative court rejected the appeal of the Company on December 2016. The Company proposed the appeal remedy for the unsatisfied sentenced contents on January 2017. Supreme Administrative Court sentenced on January 2018 that the expenses $1,134,718 thousand did not need to be undertaken by the Company.
b) Tainan city government on May 22, 2009 with the letter No. 09822013680 asked the Company pay the expenses $17,962 thousand, which resulted from the relevant working plan of AnShun Land Site soil pollution remediation and was prepaid by Tainan city government on behalf of the Company, and Tainan city government in December 2009 with the letter No. 09822035440 asked the Company to pay the above fees prior to January 31, 2010. The Company estimated such expense at the end of 2009 and proposed the administrative remedy in January 2010 and prepaid the above fees within the deadline inquired by Tainan city government based on the law regulations. The petition was rejected in March 2011, thus, the administrative lawsuit was proposed according to the law. Kaohsiung High Administrative court sentenced that the amount beyond $17,867 thousand was withdrawn. After the appeal, Supreme Administrative Court sentenced to return back to Kaohsiung High Administrative court for further trial in September 2013. Kaohsiung High Administrative court sentenced the amount beyond $7,068 thousand was withdrawn on October 7, 2015 and this case had been appealed for the remedy. The determined withdrawn amount $95 thousand had been returned back to the account by Tainan city government. The verdict from Supreme Administrative Court had been received on February 18, 2017, the fact was again returned back to Kaohsiung High Administrative court for the trial. In July 2018, Kaohsiung High Administrative Court considered that the payment amount which is exceeding $8,121 thousand shall be revoked. Both parties are dissatisfied and file an appeal.

(Continued)

196 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In January 2020, Supreme Administrative Court annulled the original judgment, remanding the case back to Kaohsiung High Administrative court. On November 24, 2020, The court’ s judgement is announced that the payment amount which exceeds $7,622 thousand shall be revoked. For company’ s best interests and reasonable pollution remediation fee, The Company filed an appeal on December 18, 2020. The case is still under trial now.

c) The Tainan City Government, in February 2014, passed that the Company was the polluters per judgment No. 1953 which was pass down in 2007 and asked the Company to pay the 2011 advanced payment of supervision and management on behalf of Anshun factory, in the amount of $27,444 thousand. The Company paid the fee in advance as previous mention within the requested deadline by the Tainan City Government based on the law regulations and filed the petition for remedy in March 2014, which was rejected by the petition authorities. The Company was not satisfied with the result, and filed the administrative legal appeal in September of same year. The Kaohsiung High Administrative Court sentenced the Company to pay $154 thousand. However, Tainan City Government was not satisfied with the verdict and filed the appeal for remedy, the Company also filed an appeal based on the Company’ s claims to Supreme Administrative High Court. The Supreme Administrative High Court suspended the original verdict in February 2018, and currently the case is under hearing by the Kaohsiung High Administrative Court. On December 19, 2019, a fine of $5,301 thousand was imposed by the court; in pursuit of the best interest of the Company, an appeal was filed with Supreme Administrative Court on January 16, 2020. And this case is still under trial.
d) Tainan City Government, in May 2016, issued the letter No. 10504498726, requesting the Company pay a fee for the “supervision management and audit work plan of 2013 CPDC (Taiwan Alkali) Anshun plant site remediation” and requesting the Company pay the fee of $63,271 thousand prior to July 20, 2016, per paragraph 4 of article 14, article 15 and paragraph 1 of article 43. The Company paid the fee within the requested deadline by the Tainan City Government based on applicable regulations. After the rejection of the petition for the remedy in June 2016, the Company filed for administrative litigation in December 2016. The court’ s judgement is announced that the payment amount which exceeds $4,845 thousand shall be revoked. in July 2017. In order to maintain the Company’ s right and interest, the Company had proposed the appeal to Supreme Administrative Court for remedy of the unfavorable parts in August 2017. In the meanwhile, Tainan City Government filed for an appeal too. On October 31, 2018, Supreme Administrative Court dismissed the Company’ s appeal, revoked the rest of the verdicts and remanded the case back to Kaohsiung High Administrative. Except for the judgement is final and binding, The Court ruled that the amount exceeding $7,622 thousand was revoked(It means that the Company shall pay $39,863 thousand). Both parties appealed to Supreme Administrative Court base on their unprofitable part of verdict in October 2019. And this case is still under trial now.
e) The Tainan City Government issued the letter No. 1080412260 in April 2019, requesting the Company to pay before June 30, 2019. The government claimed to have performed "2016 China Petroleum & Chemical Corporation Anshun Plant Remediation Site Supervision, Management and Checking Work Plan" on behalf of the Company, and request the Company to pay $59,624 thousand in accordance

(Continued)

197 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

with Article 14 (4) and Article 15 of the Soil and Groundwater Pollution Remediation Act. Based on the laws and regulations, the Company paid the aforementioned fees first within the time limit set by the Tainan City Government, and filed an administrative appeals in May of the same year. Tainan City Government dismissed the Company’ s petition on August 28, 2020. The Company initiate an action to Kaohsiung High Administrative court for the administrative remedy on October 28, 2020 and this case is still under trial now.

2) Tainan city government claimed that the Company didn’t implement per the remediation process.
a) Tainan city government, in June 2017, with the letter No. 1060630217 attached with sanction letter No. 106060012 determined the 3rd remediation change plan not proposed and took it as reason and imposed a penalty of $1,000 thousand. After the verification, there is no ‘take it as’ term in Soil pollution law and Implementation rules, which violated the principle of administration. The petition remedy had been proposed in July 2017 and the rejection of petition was received in October of the same year. The Company proposed to Kaohsiung High Administrative court for the administrative remedy in December of the same year. Later, an against judgment is rendered against the Company. The Company filed an appeal to the Supreme Court. On July 7, 2020, the Supreme Court reverse the original judgement and remand the case to the Kaohsiung High Administrative Court. On December 28, 2020, Kaohsiung High Administrative court give the judgement against the Company.
b) The Tainan City Government issued the punishment notification No. 108040003 in April 2019 as a result of the concentration of the dioxin in the exhaust pipe test results not being lower than the standard set by the third change plan (less than 0.1ng-TEQ/Nm3) and would result in a fine of $200 thousand. An administrative appeals was filed in May 2019 in accordance with the laws, and the Environmental Protection Agency of the Executive Yuan dismissed in July of the same year. The Company filed an administrative lawsuit in September of the same year. The case is currently in administrative court of the Tainan District Court.

3) Others

a) The Company still has the objection on the adscription of pollution responsibility for AnShun land located in Tainan City Annan District and would continue to strive for the possible administrative and law remedy actively.

(Continued)

198 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Company filed a legal petition in December 2014 and the original disposal authorities revoked the original punishment in March 2014, hence, the Executive Yuan Environmental Protection Agency made the decision not to proceed with the case. The original disposal authorities revoked the previous punishment but simultaneously imposed a new one, the Company also filed a petition to the new punishment. The Company’ s petition was decided not to proceed in August 2015 and the Company filed an administrative legal appeal instead, due to multiple errors, which was under hearing by the Kaohsiung High Administrative Court. Through the rejection of the Company’ s request by Kaohsiung High Administrative court, the Company proposed the appeal for remedy in November 2017. Supreme Administrative Court dismissed the Company’ s appeal. The company file a petition for constitutional interpretation, but it was dismissed by Grand Justices of the Constitutional Court.

The cumulative fee of invested and estimated control & management cost and remediation fee were $3,686,964 thousand until December 31, 2020. The preceding remediation fee was estimated according to the current possible situations by the Company. However, unpredictable future events may cause large fluctuations in the total expected remediation fees. This will be closely monitored and evaluated by management

b) An-shun dormitory designated monuments case

Original Kagakude Negai O Ka Corporation’ s dormitories of Tainan plant belonging to the Company was designated by the Tainan City Government, under the letter No. 1031053448A issued on November 17, 2014, as a municipal historic site. However, the administrative sanction has various areas of dispute, thus the Company was not satisfied with the judgment. Hence, the Company filed a legal petition for remedy in December 2014. The petition decision report from the Ministry of Culture revoked the designated land of the Company as a historical site including 4 area in August 2015. The Company appealed for the administrative remedy of the remaining areas, which was under hearing by the Supreme Court. In July, 2020, the Supreme Administration Court reversed the original judgement and remanded the case to the Kaohsiung High Administrative Court. And this case is still being heard in the Court.

Xincun Land of Taiwan Alkali Co., Ltd.:

1) History

On the premise that the residents obeyed the agreement, the Company signed an agreement with the local communities that land within Feng Shan District, Kaohsiung City shall be granted free of charge for public use.

2) Extension legislation

199 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

construction and return the land. Kaohsiung District Court rejected the Company’ s petition. Due to the previous judgment, the Company filed a legal appeal for remedy in September 2014, which was rejected by the Kaohsiung High Court in July 2016. The Company filed the appeal for remedy to Supreme Court in August of same year. In April 2019, The court remand the case to the Kaohsiung High Administrative Court, and this case is still being heard in the Court.

Shulin Land of Taiwan Alkali Co., Ltd.:

1) History:
a) No. 540, 541 and 543, Dongshan Section, Shulin District, Xinbei City and No. 489, Weiwang Section, Shulin Dist., New Taipei City 238, Taiwan including 4 area of lands originally belonged to Shulin plant of Taiwan Alkali Co. Ltd. Taiwan Alkali Co. Ltd. established the plant in 1962 and closed the plant in 1975. The Executive Yuan Department of Economic Affairs in April 1983 ordered the governmentowned Company which at the time was also a subsidiary of CPC to merge with Taiwan Alkali Co. Ltd..
b) Then the plant was subsequently sold to CPC. The New Taipei City Government Environmental Protection Bureau, on August 16, 2010, announced the land as “soil pollution control site”.
c) The New Taipei City Government Environmental Protection Bureau issued the letter No. 1000010000 in March 2011 declaring that the Company merging with Taiwan Alkali Co. Ltd. was regarded as the surviving company and shall take the responsibility for the rights and obligations of Taiwan Alkali Co. Ltd. for soil pollution remediation according to article 75 of Company Act and was deemed as the polluter and required to propose subsequent disposal and remediation.

Since the change of predetermined place of CPC’ s warehouse, the relocation schedule had to be extended to November 15, 2017. The remediation work schedule was postponed so that the soil pollution control plan (change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites) was proposed in April 2017. New Taipei City Government sent the letter to agree for future reference on May 18, 2017. Because of the different dynamic factors for the predetermined place of CPC’s warehouse, the relocation process was extend to December 31, 2021, and the remediation work schedule had to be postponed. Therefore, the “ soil pollution control plan (the 2nd change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites)” was proposed in August 2019, and New Taipei City Government agreed for future reference on August 16, 2019. We are now performing this project subject to the soil pollution control plan.

The relevant remediation expense $273,750 thousand was estimated and listed in 2011 according to Financial accounting standards related regulations. However, it will be assessed to adjust for changes due to internal and external factors in future, which may result in significant differences on the entire remediation expense.

(Continued)

200 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(k) Intangible assets

The components of the costs of intangible assets, amortization, and impairment loss thereon or the years ended December 31, 2020 and 2019 were as follows:

Costs： Balance as of January 1, 2020 Acquisition Disposals Effect of movement in exchange rates Balance as of December 31, 2020 Balance as of January 1, 2019 Acquisition Disposals Other Effect of movement in exchange rates Balance as of December 31, 2019 Amortization and Impairment Loss: Balance as of January 1, 2020 Amortization for the period Disposals Effect of movement in exchange rates Balance as of December 31, 2020 Balance as of January 1, 2019 Amortization for the period Disposals Effect of movement in exchange rates Balance as of December 31, 2019 Carrying value: Balance as of December 31, 2020 Balance as of January 1, 2019 Balance as of December 31, 2019	Goodwill $ 144,862 - - (8,991) $ 135,871 $ 147,990 - - - (3,128) $ 144,862 $ - - - - $ - $ - - - - $ - $ 135,871 $ 147,990 $ 144,862	Computer software 8,422 3,182 (69) 11 11,546 7,573 1,979 (780) - (350) 8,422 2,680 1,282 (69) 20 3,913 2,073 1,193 (457) (129) 2,680 7,633 5,500 5,742	Patents and trademark 100,247 83 - 31 100,361 102,598 5,025 - (6,535) (841) 100,247 73,387 11,209 - 96 84,692 68,027 5,690 - (330) 73,387 15,669 34,571 26,860	Total
				253,531 3,265 (69) (8,949) 247,778 258,161 7,004 (780) (6,535) (4,319) 253,531 76,067 12,491 (69) 116 88,605 70,100 6,883 (457) (459) 76,067 159,173 188,061 177,464

As of December 31, 2020 and 2019, the aforesaid intangible assets were not pledged as collateral.

(Continued)

201 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Short-term loans

The short-term loans were summarized as follows:

Letters of credit - CPDC Unsecured bank loans - CPDC Secured bank loans - CPDC Secured bank loans - Weicai Total Total short-term credit lines Unused short-term credit lines Range of interest rates	December 31, 2020 $ 1,175,000 1,300,000 1,140,000 - $ 3,615,000 $ 6,901,296 $ 1,430,278 1.2799%~1.3857%	December 31, 2019
		1,050,558 2,050,000 - 383,590
		3,484,148
		6,793,806
		1,925,136
		1.33%~5.8725%

Please refer to Note 8 for details of the related assets pledged as collateral.

(m) Long-term loans

The long-term loans were summarized as follows:

Secured bank loans - CPDC Secured bank loans - Weihua Secured bank loans -Weiming Secured bank loans - Weicai Sale and leaseback -Weicai Less：current portion Total Total long-term credit lines Unused long-term credit lines Range of interest rates	December 31, 2020 $ 5,570,000 206,370 3,339,673 158,217 130,223 (1,914,833) $ 7,489,650 $ 17,636,400 $ 5,601,475 1.3%~5.5%	December 31, 2019 4,830,000 254,415 3,399,498 - - (1,762,130) 6,721,783 11,108,900 967,949 1.47%~5.488%

On February 2, 2016, the Company signed a syndicated loan agreement for 5 years with Mega International Commercial Bank, the lead bank of the syndicated loan, and 7 other banks in order to raise funds to build the plant and accessory equipment and meet funding requirement. The aggregate amount of credit line of the syndicated loan was $4,350,000 thousand.

(i) Syndicated loan A: The credit line is $2,900,000 thousand consisting of medium-term secured loans and non-revolving credit facility, which was used to finance the building of the plant and purchase of accessory equipment.

(Continued)

202 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Syndicated loan B: The credit line is $1,450,000 thousand consisting of medium-term loans and revolving credit facility, which was used to meet funding requirement.
(iii) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. If the Company breaches these financial covenants, the syndicated banks may declare the unpaid principal, interest, fees and other sums payable by the Company under the loan agreement to be immediately due and payable. These financial ratios are as follows:
1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.
2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
(iv) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower improves the completion during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 7 (3) of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.
(v) The term of the repayment of the category A credit is stipulated as: The first period will be paid off from the date of the first use of the credit application to the expiration of three years. After that, it will be a period of six months for once. Settlement of the liability divided into five phases. The first period to the fourth period, each period shall be settled separately for 15% of the outstanding principal balance of the expiration date of the credit period, and the fifth period shall be settled for 40% of the outstanding principal balance of the expiration date of the credit period.
(vi) The term of payment of the category B credit is stipulated as: The borrower shall fully repay on the due date as set out in each application for use.

(Continued)

203 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

On March 9, 2020, the Company signed a syndicated loan agreement for 3 years, plus a 2-year extension option, with Shin Kong Commercial Bank, the lead bank of the syndicated loan, and 7 other banks in order to meet funding requirement. The aggregate amount of credit line of the syndicated loan was $3,900,000 thousand.

(i) Syndicated loan A: The credit line is $2,815,000 thousand consisting of medium-term secured loans and revolving credit facility, which was used to meet funding requirement. The loan period lasts 3 years upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended upon expiration for 2 years, and limited to once, through written application.
(ii) Syndicated loan B: The credit line is $1,085,000 thousand consisting of commercial promissory note agreements and revolving credit facility, which was used to meet funding requirement. The loan period lasts 1 year upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended 12 months before expiration, and limited to twice, through written application.
(iii) 24 months after the first disbursement and every 6 months ever since, the credit line of the syndicated loan is diminished by 10% of the total credit line, applicable to the extension period. In advance of each credit line diminished date, for loan A, the Company shall settle any exceeding principal, interests, and other relating liabilities, free of prepayment terms included in the contract. For loan B, the Company shall make deposit to the designated account to make up for the amount of note principal exceeding the credit line, free of prepayment terms included in the contract. The Company may withdraw the deposit after the aforementioned note is settled.
(iv) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. These financial ratios are as follows:
1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.
2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
4) Tangible net worth (total equity excluding intangible assets): not lower than $60,000,000 thousand.
(v) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 8 of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to

(Continued)

204 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

interest, plus guarantee fee. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.

(vi) The term of the repayment of the category A credit is stipulated as: the repayment shall be completed on the expiration date stated in the application form for each disbursement.
(vii) The term of the repayment of the category B credit is stipulated as: The repayment shall be completed on the due date stated on the note.

On July 13, 2020, the Company signed a medium-term loan agreement for 3 years with CTBC Bank in order to meet funding requirement. The aggregate amount of credit line of the loan was $2,000,000 thousand.

The financial covenants under the loan agreement include the requirement to maintain the following financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. In the event of any violation, the CTBC Bank is entitled to reduce credit line, shorten the loan period, and have all principals and interests repaid immediately.

1) Current ratio (total current assets divided by total current liabilities): not lower than 120%.
2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
4) Tangible net worth (total equity excluding intangible assets): not lower than $67,000,000 thousand.

Please refer to Note 8 for details of the related assets pledged as collateral.

(n) Bonds payable
(i) The details of bonds payable were as follows:

Domestic secured non-convertible bonds Less: current portion Balance of bonds payable Maturity year	December 31, 2020 $ 3,500,000 - $ 3,500,000 114	December 31, 2019
		-
		-
		-
		-

(Continued)

205 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) The Group issued domestic secured non-convertible bonds at the amount of $3,500,000 thousand for the year ended December 31, 2020, the terms were as follows:

The first domestic secured non-convertible bond in

Issue amount Issue date Issue period Coupon rate Interest payment date Repayment and interest payment Collateral

Please refer to Note 8 for details of the related assets pledged as collateral.

(Continued)

206 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) Long-term bills payable

The components of long-term bills payable were as follows:

Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Bills payable
Less: Discount on long-
term bills payable
Total

December 31, 2020
Acceptance institution
Period
Amount
International Bills Finance
Corporation
2020.12.07~2021.02.22 $ 200,000
International Bills Finance
Corporation
2020.12.31~2021.01.05
150,000
Taching Bills Finance
Corporation
2020.11.12~2021.01.07
300,000
Taching Bills Finance
Corporation
2020.10.12~2021.01.07
100,000
China Bills Finance Corporation 2020.11.09~2021.01.27
800,000
China Bills Finance Corporation 2020.12.22~2021.03.22
500,000
China Bills Finance Corporation 2020.10.12~2021.01.08
500,000
China Bills Finance Corporation 2020.12.11~2021.03.11
720,000
China Bills Finance Corporation 2020.11.10~2021.01.27
30,000
Mega Bills Finance Corporation
2020.10.30~2021.01.26
550,000
Mega Bills Finance Corporation
2020.12.25~2021.02.25
670,000
Mega Bills Finance Corporation
2020.11.17~2021.01.18
200,000
Mega Bills Finance Corporation
2020.11.06~2021.01.18
80,000
Mega Bills Finance Corporation
2020.11.20~2021.01.18
140,000
Mega Bills Finance Corporation
2020.11.25~2021.01.18
270,000
Mega Bills Finance Corporation
2020.11.30~2021.01.26
85,000
Mega Bills Finance Corporation
2020.11.30~2021.01.26
15,000
Mega Bills Finance Corporation
2020.12.04~2021.01.26
150,000
Mega Bills Finance Corporation
2020.12.07~2021.02.25
200,000
5,660,000
(3,888)
$
5,656,112

Acceptance institution

International Bills Finance
Corporation
International Bills Finance
Corporation
Taching Bills Finance
Corporation
Taching Bills Finance
Corporation
China Bills Finance Corporation
China Bills Finance Corporation
China Bills Finance Corporation
China Bills Finance Corporation
China Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation

(Continued)

207 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2019
Acceptance institution
Period
Amount
China Bills Finance Corporation 2019.11.15~2020.02.13 $ 650,000
China Bills Finance Corporation 2019.12.23~2020.03.23
500,000
International Bills Finance
Corporation
2019.12.24~2020.03.23
200,000
Taching Bills Finance
Corporation
2019.12.26~2020.02.24
350,000
Taching Bills Finance
Corporation
2019.11.20~2020.02.18
50,000
Mega Bills Finance Corporation
2019.11.05~2020.01.03
500,000
Mega Bills Finance Corporation
2019.11.13~2020.01.13
450,000
Mega Bills Finance Corporation
2019.11.14~2020.02.12
250,000
Mega Bills Finance Corporation
2019.11.14~2020.02.12
400,000
Mega Bills Finance Corporation
2019.11.19~2020.01.13
150,000
Mega Bills Finance Corporation
2019.11.22~2020.02.12
200,000
Mega Bills Finance Corporation
2019.12.20~2020.02.18
200,000
Mega Bills Finance Corporation
2019.12.20~2020.03.19
600,000
4,500,000
(5,823)
$
4,494,177

Acceptance institution

China Bills Finance Corporation
China Bills Finance Corporation
International Bills Finance
Corporation
Taching Bills Finance
Corporation
Taching Bills Finance
Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation

The Group had revolving commercial promissory note agreements with bills finance companies in order to finance its operating requirement. As of December 31, 2020 and 2019, the bills payable bear interest rates ranging from 0.28%~1.2620% and 0.55%~1.3400%, respectively.

Please refer to Note 8 for details of the related assets pledged as collateral.

(p) Lease liabilities

The lease liabilities of the Group were as follows:

Current Non-Current	December 31, 2020 $ 43,251 $ 249,741	December 31, 2019
		49,911
		203,332

For the maturity analysis, please refer to note 6(z)

(Continued)

208 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expense relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2020 $ 4,734 $ 49,237	2019
		4,875
		41,695

The amounts recognized in the statement of cash flows for the Group were as follows:

Total cash outflow for leases	For the years ended December 31,	For the years ended December 31,
	2020 $ 113,518	2019
		103,348

(q) Provisions Balance as of January 1, 2020 Provisions made during the year Provisions used during the year Effect of movements in exchange rate Balance as of December 31, 2020 Current Non-current Balance as of January 1, 2019 Provisions made during the year Provisions used during the year Provisions reversed during the year Effect of movements in exchange rate Balance as of December 31, 2019 Current Non-current	Decommissioning $ 1,264,002 505 - 57 $ 1,264,564 $ - 1,264,564 $ 1,264,564 $ 1,267,220 498 (1,910) - (1,806) $ 1,264,002 $ - 1,264,002 $ 1,264,002	Remediation project 603,972 249,750 (339,109) - 514,613 276,650 237,963 514,613 967,414 - (363,442) - - 603,972 151,417 452,555 603,972	Employee benefits 256,818 50,429 (31,322) - 275,925 5,641 270,284 275,925 237,821 32,231 (13,341) 107 - 256,818 6,145 250,673 256,818	Total
				2,124,792 300,684 (370,431 57
				2,055,102
				282,291 1,772,811
				2,055,102
				2,472,455 32,729 (378,693 107 (1,806
				2,124,792
				157,562 1,967,230
				2,124,792

(i) To comply with the Order of the Tainan City Government, the Company submitted a remediation plan proposal and accrued relevant remediation plan for approval before June 30, 2008 and evaluated the relating remediation expense of $1,647,200 thousand. In May 2009 and on July 2, 2012, the Company was granted official approval of its remediation proposal and amended remediation proposal, respectively. In September 2014, the Company completed the first phase of the implementation of its plan. It is expected to launch the second phase of the implementation of its remediation plan during the next. The Company has submitted the second phase of its amended remediation plan to the Tainan City Government for approval. On December 24, 2014, Tainan City Government notified the Company of its approval and now is under public tender review.

(Continued)

209 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The aforementioned remediation costs of the Company were recognized in the total amount of $1,600,000thousand for the first stage before September 2014. With the launch of the second remediation stage, the Company estimated the cost based on the situation on December 2014 at $1,356,000 thousand. Currently, the Tainan City Environmental Protection Bureau reviewed and adopted the plan on April 14, 2015 and the assessment was announced by Tainan City Government on May 4, 2015. According to the remediation technology and the actual implementation of the subsequence adjustment, the 3rd remediation change plan was proposed on March 2, 2017, which was reviewed and adopted on January 3, 2018. (Note 6(j) for more details)

(ii) 1) The Company’ s four parcels of land at Dongshan section, Shulin district, New Taipei City were the original location of TAIC’ s Shulin plants, but then sold to the Taiwan Chinese Petroleum Corporation (CPC). On August 16, 2010, the Environmental Protection Department of New Taipei City Government has declared that such land as "Soil Pollution Control Site”. In March 2011, the Environmental Protection Department of New Taipei City Government issued letter No. 1000010000. In that letter, the Company was deemed to be the surviving entity, which assumed the rights and obligations of TAIC following its merger with TAIC and TAIC ceased to exist. As the surviving entity from this merger, the Company was therefore declared as the polluter and was required to submit a remedial plan.
2) Since the change of predetermined place of CPC’ s warehouse, the relocation schedule had to be extended to November 15, 2017. The remediation work schedule was postponed so that the soil pollution control plan (change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites) was proposed in April 2017. New Taipei City Government sent the letter to agree for future reference on May 18, 2017. Because of the different dynamic factors for the predetermined place of CPC’s warehouse, the relocation process was extended to December 31, 2021 and the remediation work schedule had to be postponed. Therefore, the “soil pollution control plan (the 2nd change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites)” was proposed in August, 2019, and New Taipei City Government agreed for future reference on August 16, 2019 We are now performing this project subject to the soil pollution control plan. However, it will be assessed to adjust for changes due to internal and external factors in future, which may result in significant differences on the entire remediation expenses.

(r) Operating lease

The Group leases out its property. The Group has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(j) sets out information about the operating leases of investment property.

(Continued)

210 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years Four to five years More than five years Total undiscounted lease payments	December 31, 2020 $ 36,840 36,840 36,883 27,021 25,206 265,843 $ 428,633	December 31, 2019 20,125 35,068 35,067 35,067 27,020 291,949
		444,296

For the years ended December 31, 2020 and 2019, the income from the rental of investment property, property, plant and equipment amounted to $22,839 thousand and $18,232 thousand, respectively.

(s) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of funded defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2020 $ 495,047 (225,170) $ 269,877	December 31, 2019 541,718 (301,251) 240,467

The provision consists of net defined benefit liabilities and accrued pension liabilities for professional managements. The accrued pension liabilities for professional managements was $0 thousand and $9,764 thousand as of December 31, 2020 and 2019, respectively.

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

(Continued)

211 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $223,815 thousand as of December 31, 2020. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2)

Movements in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Group were as follows:

Defined benefit obligation, January 1 Benefits paid from plan assets Current service costs and interest Past service credit Defined benefit obligation, December 31	For the years ended December 31, 2020 2019 $ 541,718 594,797 (97,564) (98,680) 15,449 18,279 35,444 27,322 $ 495,047 541,718

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Group were as follows:

Fair value of plan assets, January 1 Employer contributions Benefits paid by the plan Expected return on plan assets Re-measurements of the net defined benefit liability Fair value of plan assets, December 31	For the years ended December 31, 2020 2019 $ 301,251 369,809 8,038 11,123 (97,564) (98,680) 2,833 3,901 10,612 15,098 $ 225,170 301,251

(Continued)

212 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

Current service cost Net interest on net defined benefit liability Operating costs Selling expenses Administrative expenses Research and development expenses Actual return on plan assets	For the years ended December 31, 2020 2019 $ 10,258 11,912 2,358 2,466 $ 12,616 14,378 $ 10,947 13,023 130 125 1,335 1,064 204 166 $ 12,616 14,378 $ 13,445 18,999

5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Group’ s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2020 and 2019, was as follows:

Accumulated balance, January 1 Recognized during this year Accumulated balance, December 31	For the years ended December 31, 2020 2019 (150,548) (138,324) (24,832) (12,224) $ (175,380) (150,548)

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increases	For the years ended December 31, 2020 2019 0.5%~1% 1% 1% 1%~1.5%

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $7,756 thousand.

The weighted average lifetime of the defined benefits plans is 9.74 year~ 13.64 years.

(Continued)

213 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Sensitivity analysis

In determining the present value of the defined benefit obligation, the Group’ s management makes judgments and estimates in determining certain actuarial assumptions on the balance sheet date, which includes employee turnover rate and future salary changes. Changes in actuarial assumptions may have significant impact on the amount of defined benefit obligation.

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2020 Discount rate Increase in future wage December 31, 2019 Discount rate Increase in future wage	Impact on the present value of defined benefit obligation Increase by 0.25% Decrease by 0.25% $ (5,323) 22,041 21,716 (5,080) (13,765) 14,328 13,974 (13,498)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plans

The Group allocates 6% of each employee’ s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Group allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The cost of the pension contributions to the Labor Insurance Bureau for the years ended December 31, 2020 and 2019 amounted to $47,295 thousand and $50,649 thousand, respectively.

(iii) The pension recognized consists of pension expenses and pensions for professional management. The pension expenses for professional management was $13,291 thousand and $6,234 thousand for the year ended December 31, 2020 and 2019, respectively.

(Continued)

214 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Short-term compensated absences liabilities

As of December 31, 2020 and 2019, the Group’s short-term compensated absences liabilities amounted to $5,641 thousand and $6,145 thousand, respectively.

(t) Income Tax

(i) Income tax expense

The components of income tax expense for the years ended December 31, 2020 and 2019 were as follows:

Current income tax expense (benefit) Currently incurred Adjustment to prior year’s income tax charged to current income tax Deferred tax expense (benefit) The origination and reversal of temporary differences Unrecognized changes of deductible temporary differences Income tax expense (benefit)	For the years ended December 31,	For the years ended December 31,
	2020 $ 12,506 (75,086) (62,580) (747,439) 239,135 (508,304) $ (570,884)	2019 117,556 12,281 129,837 (490,711) 490,711 - 129,837

For the years ended December 31, 2020 and 2019, income tax expenses recognized under other comprehensive income were both $0 thousand.

Reconciliation of income tax expense (benefit) and profit before tax for the years ended December 31, 2020 and 2019, were as follows:

Profit before income tax Income tax on pre-tax financial income calculated at the domestic rate Effect of tax rates in foreign jurisdiction Change in unrecognized temporary differences Prior years income tax adjustment Changes of permanent differences Others Income tax expense (benefit)	For the years ended December 31, 2020 2019 $ 103,776 1,863,472 $ 20,755 372,694 (8,637) 11,416 239,135 490,711 (75,086) 12,281 (407,932) (835,627) (339,119) 78,362 $ (570,884) 129,837	For the years ended December 31, 2020 2019 $ 103,776 1,863,472 $ 20,755 372,694 (8,637) 11,416 239,135 490,711 (75,086) 12,281 (407,932) (835,627) (339,119) 78,362 $ (570,884) 129,837
		372,694 11,416 490,711 12,281 (835,627) 78,362
		129,837

(Continued)

215 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax liabilities

The Group is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as of December 31, 2020 and 2019. Also, management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

December 31, 2020 Aggregate amount of temporary differences related to investments in subsidiaries $ 39,698 Unrecognized deferred tax liabilities $ 7,940 2) Unrecognized deferred tax assets December 31, 2020 Decommissioning liabilities $ 96,784 Remediation project 238,563 Pollution remediation 276,050 Allowance for doubtful receivables 319,484 Investment property, property, plant and equipment 2,963,604 Pension 210,816 Tax loss 7,310,487 Others 146,512 $ 11,562,300	December 31, 2019
	15,396
	3,079
	December 31, 2019
	82,663 239,143 364,829 319,484 3,565,240 217,888 5,391,156 161,920
	10,342,323

The R.O.C. Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

As of December 31, 2020, the expiration years of tax loss unrecognized as deferred tax assets were as follows:

a) The Company

Year incurred	Amount Expiry Date $ 353,540 2024 2,132,246 2025 1,870,634 2026 690,479 2026
2014 2015 2016 2020 (estimated)

(Continued)

216 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

b) Taivex Therapeutics Inc.

		Year incurred	Amount	Effective Period
	2011	$	16,878	2021
	2012		29,657	2022
	2013		50,227	2023
	2014		27,419	2024
	2015		43,032	2025
	2016		44,291	2026
	2017		54,764	2027
	2018		79,334	2028
	2019		67,345	2029
	2020 (estimated)		80,109	2030
c)	BES Twin Towers Co., Ltd.
		Year incurred	Amount	Effective Period
	2013	$	7,512	2023
	2014		44,139	2024
	2018		427,443	2028
d)	CPDC	Green Technology Corp.
		Year incurred	Amount	Effective Period
	2017	$	28,891	2027
	2018		38,057	2028
	2019		36,819	2029
e)	Da Yin Construction Engineering		Co., Ltd.

Year incurred	Amount Effective Period $ 142 2023 159 2024 11 2025 112 2026 136 2027 158 2028 162 2029 2,207 2030
2013 2014 2015 2016 2017 2018 2019 2020 (estimated)

(Continued)

217 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

f) Weihua (Rudong) Trade Co., Ltd

	Year incurred		Amount	Effective Period
2015		$	10,302	2020
2016			42,814	2021
2017			21,051	2022
Weiqi	ang International Trade (Shanghai) Co., Ltd.
	Year incurred		Amount	Effective Period
2015		$	15,095	2020
2016			19,821	2021
Jiangs	u Weiming Petrochemical Corporation
	Year incurred		Amount	Effective Period
2017		$	44,723	2022
2018			19,581	2023
2019			143,168	2024
2020	(estimated)		114,321	2025
Chan	gzhou Weicai New Material Science & Technology			Co., Ltd.
	Year incurred		Amount	Effective Period
2015		$	387	2020
2016			269,553	2021
2017			204,552	2022
2018			176,649	2023
2019			56,826	2024
2020	(estimated)		28,996	2025
Weim	ing (Rudong) Construction Co., Ltd.
	Year incurred		Amount	Effective Period
2020	(estimated)	$	22	2025

g) Weiqiang International Trade (Shanghai) Co., Ltd.

h) Jiangsu Weiming Petrochemical Corporation

i) Changzhou Weicai New Material Science & Technology Co., Ltd.

j) Weiming (Rudong) Construction Co., Ltd.

3) Deferred tax liabilities:

As of December 31, 2020 and 2019, the balance of deferred income tax liabilities for the provision of land value-added tax was $6,497,650 thousand an $7,020,975 thousand, respectively.

(Continued)

218 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Deferred tax assets:

December 31, 2020 (equal to January 1) December 31, 2019 (equal to January 1)	Taxable Loss $ 11,009 $ 11,009	Defined benefit plans 14 14	Total
			11,023
			11,023

(iii) Assessment of tax

The Company's income tax return for the years through 2018 were assessed by the Tax Administration.

(u) Capital and other equity
(i) The issuance of common stock

As of December 31, 2020 and 2019, the authorized, issued and outstanding capital of the Company amounted to $32,848,502 thousand and $28,348,502 thousand, respectively, divided into 3,284,850 thousand shares and 2,834,850 thousand shares, respectively, with par value of $10 per share.

(In thousands of shares)

Common Stock	Common Stock	Common Stock
For the years ended December 31,
	2020 2,834,850 - 450,000 3,284,850	2019
		2,699,857 134,993 -
		2,834,850

On May 24, 2019, a resolution was made during the shareholders’ meeting for the issuance of 1,349,929 thousand new ordinary shares, by using the unappropriated retained earnings, amounting to $134,993 thousand, which had been approved by the Financial Supervisory Commission on May 30, 2019, with the record date set at July 4, 2019, based on the decision made during the board meeting held on June 11, 2019. The relevant registration procedures had been completed.

In order to invest in the overseas subsidiary for the purpose of plant construction, a resolution was made during the Board of Director’ s meeting held on September 23, 2019 for the issuance of common stock in term of Global Depositary Receipts (GDR), with a maximum limit of 500,000 thousand shares, amounting to USD160,317 thousand, which was approved by Rule No. 1080335763 Financial Supervisory Commission on November 20, 2019. The share price was determined and completed on January 6, 2020 and issued on January 10, 2020. The total units of issued GDR was 18,000 thousand units, which represented the right of common stock for 450,000 thousand shares; for every 25 shares of common stock per unit of GDR, the unit price of GDR was USD7.18, which was equivalent to $8.64 per share, resulting to a total

(Continued)

219 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

issuance price amounting to USD129,240 thousand. The total amount of the issuance, deducting the costs necessary for the issuance, is 3,796,481 thousand. The capital increase base date is January 10, 2020, and the relevant legal registration procedures had been completed.

(ii) Capital Surplus

The balances of capital surplus as of December 31, 2020 and 2019, were as follows:

Premium of common stock Difference arising from subsidiary's share price and its carrying value Recognize Changes in ownership interests in subsidiaries Other Total	December 31, 2020 $ 538,726 26,314 634 18,141 $ 583,815	December 31, 2019
		1,242,245 26,314 - 18,141
		1,286,700

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(iii) Retained earnings

The Company distributes dividends depending on the level of earnings of each year, funding needs, industrial environment, and status of competition, long-term operating plan and interests of shareholders. Under such circumstances, the Company may appropriate for special reserve either in whole or in part to assure financial stability and sustainability. The Company may distribute dividends in cash or stock. If the earnings distribution is made in the form of by stock dividend, the ratio for the stock dividend shall not exceed 50% of the total distribution unless the ratio of the Company’s total liabilities to total assets is equivalent or above 50% or otherwise prescribed in relevant laws and regulations.

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

(Continued)

220 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Special reserve

Considering the future earnings development, capital needs, industrial competition and the interests of shareholders, the Company transferred the profit of $4,194,973 thousand from the disposal of investment of Xinchang Chemical Industry Co., Ltd. in the year of 2011 as a special reserve in the year of 2012, providing reserves for sustainable development and long-term financial planning. As of December 31, 2019 and 2020, the balance of this special reserve was both $4,194,973 thousand.

By adopting the exemptions allowed under IFRS 1 First-time Adoption of International Financial Reporting Standards during the Company’ s first-time adoption of the International Financial Reporting Standards approved by the Financial Supervisory Commission (IFRSs), unrealized asset revaluation gains in shareholders’ equity of $5,281,790 thousand was reclassified to retained earnings. The net increase in retained earnings due to the first-time adoption of IFRSs amounted to $4,235,076 thousand. In accordance with Rule No. 1010012865 issued by the Financial Supervisory Commission on April 6, 2012, a special reserve is appropriated from the distribution of retained earnings as a result of an increase in retained earnings due to the first-time adoption of IFRSs. When the related assets are used, disposed of, or reclassified, this special reserve is reversed as distributable earnings proportionately. The carrying amount of special reserve amounted to $4,235,076 thousand as of December 31, 2020 and 2019.

In 2014, the Company changed the subsequent measurement of investment properties from cost model to fair value model. In accordance with Rule No. 1030006415 issued by the Financial Supervisory Commission on March 18, 2014, on the first-time adoption of fair value model for the subsequent measurement of investment properties, the Company set aside an equal amount of special reserve when the fair value increment of investment properties is transferred to retained earnings. The Company appropriated to the special reserve an amount of $21,224,233 thousand as of December 31, 2013. The company held a shareholder meeting on June 8, 2017, in order to use the special reserve amounted to $1,958,584 thousand to cover accumulated deficits. On April 11, 2018, the Company’s shareholders resolved during their meeting, to reimburse $1,958,584 thousand into the special reserve. The carrying amount of such special reserve amounted to $21,224,233 thousand as of December 31, 2020 and 2019.

For every year the Company distributes earnings, a special reserve is appropriated in the following order:

a) Each year, a special reserve is appropriated from current year’ s net income and prior years’ undistributed earnings for the same amount as the net increase in the fair value of investment property using the fair value model. A special reserve is also appropriated for the same amount as the cumulated net increase in the fair value for the year when the undistributed earnings are not distributed. When the investment property is disposed of, this special reserve is reverted proportionately to distributable earnings. As of December 31, 2020 and 2019, the Company appropriated to the special reserve an amount of $5,947,347 thousand and $5,835,980 thousand, respectively.

(Continued)

221 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

b) In accordance with Rule No. 1010047490 issued by the Financial Supervisory Commission on November 21, 2012, a special reserve is appropriated by the parent company for the difference between market value and book value of parent company shares being held by a subsidiary times the percentage of the parent company’s equity investment in the said subsidiary, if the stock price of the parent company is lower than the its value. If the market value recovers subsequently, this special reserve is reverted proportionately to distributable earnings.
c) In accordance with Rule No. 1010012865 issued by the Financial Supervisory Commission on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings is appropriated as a special reserve during earnings distribution. Such appropriation of special reserve is based on the difference between the total net amount of contra accounts in the shareholders’ equity and the carrying amount of special reserve. Similarly, a portion of undistributed prior period earnings (which does not qualify for earnings distribution) is likewise appropriated as a special reserve on account of cumulative changes to other shareholders’ equity pertaining to prior periods. The subsequent reversals of the contra accounts in the shareholders’ equity shall qualify for additional earnings distributions.
3) Earnings Distribution

On May 28, 2020, the shareholders' meeting decided to appropriate the Company's 2019 earnings in cash at the amount of $985,455 thousand. On May 4, 2019, the shareholders' meeting decided to appropriate the Company's 2018 earnings in cash and in shares, both at the amount of $1,349,929 thousand.

On March 23, 2021, Board of Directors proposed to appropriate the Company's 2020 earnings with a cash dividend of $0 thousand.

(iv) Treasury shares

In accordance with Article 28-2 of the Securities and Exchange Act, the Company plans to buy 50,000 treasury shares from March 30 to May 29, 2020, in order to protect the Company’s credit and shareholders’ equity. The price range is between $5.03 and $7.50 per share. On May 29, 2020, the market prices were higher than the upper limit of the execution price range for the repurchase of treasury shares, and the stock of the Company was not oversold compared with the market during the original scheduled repurchase period. The repurchase was not executed in order to protect shareholders' equity and take into market mechanisms.

(Continued)

222 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Other equity accounts

Balance, January 1, 2020 Exchange differences on foreign operation Exchange difference on subsidiary accounted for using equity method Exchange difference on affiliated accounted for using equity method Unrealized gains from financial assets measured at fair value through other comprehensive income Disposal of investments in equity instruments designated at fair value through other comprehensive income Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income for affiliated companies accounted for using equity method Balance, December 31, 2020 Balance, January 1, 2019 Exchange differences on foreign operation Exchange difference on subsidiary accounted for using equity method Exchange difference on affiliated accounted for using equity method Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Unrealized gains from financial assets measured at fair value through other comprehensive income for subsidiaries accounted for using equity method Unrealized (losses) gains from financial assets measured at fair value through other comprehensive income for affiliated companies accounted for using equity method Balance, December 31, 2019	Exchange differences on foreign operation $ (804,515) (188,319) 573 26,059 - - - $ (966,202) $ (488,212) (315,666) (117) (520) - - - $ (804,515)	Unrealized gain or loss on financial assets at fair value through other comprehensive income (1,120,657) - - - 360,247 (126,299) 32,450 (854,259) (1,248,499) - - - 127,853 410 (421) (1,120,657)

(Continued)

223 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Earnings per share

The basic earnings per share and diluted earnings per shares for the years ended December 31, 2020 and 2019 were calculated as follows:

Basic earnings per share (NT dollars) Profit attributable to ordinary shareholders Weighted-average number of ordinary shares (thousand shares) Basic earnings per share Diluted earnings per share (NT dollars) Profit attributable to ordinary shareholders (diluted) Weighted-average number of ordinary shares (thousand shares) Effect of potentially dilutive ordinary shares of Employee stock bonus (thousand shares) Weighted-average number of ordinary shares (diluted) (thousand shares) Diluted earnings per share	For the years ended December 31,	For the years ended December 31,
	2020 $ 680,989 3,273,785 $ 0.21 $ 680,989 3,273,785 3,039 3,276,824 0.21	2019 1,738,449 2,834,850 0.61 1,738,449 2,834,850 5,894 2,840,744 0.61

(w) Revenue from contracts with customers

(i) The Group primarily engages in the production of petroleum, alkali-chlorine, phosphoric acid and other petrochemical products and by-products and the storage, transportation, purchase and sale of these products, related chemicals and their raw materials. For the details of products and sales area, please refer to Note 14(b) and (c) of the consolidated financial statements.

(ii) Contract balances

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful account Contract liabilities	December 31, 2020 $ 375,689 1,906,374 (446,393) $ 1,835,670 $ 1,676	December 31, 2019 506,380 1,644,359 (446,211) 1,704,528 88,263

Please refer to Note 6(d) for disclosure of accounts receivable and allowance for doubtful accounts.

(Continued)

224 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amounts of revenue recognized for the years ended December 31, 2020 and 2019 that were included in the contract liability balance at the beginning of the peroids were $88,263 thousand and $5,578 thousand, respectively.

(x) Remuneration of employees and directors

In accordance with the Articles of incorporation, the Company should contribute no less than 3% of the profit as employee compensation and less than 2% as directors' and supervisors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The remuneration of employees shall be in the form of cash or shares, whose recipients may include the employees of the Company's affiliated companies who meet certain conditions. The remuneration of directors may solely be cash. The aforesaid profit represents the income before income tax and remuneration for the period.

For the years ended December 31, 2020 and 2019, the remuneration to employees amounted to $2,670 thousand and $57,759 thousand, respectively, and the remuneration to directors amounted to $1,780 thousand and $38,506 thousand, respectively. These amounts were calculated using the Company’s income before income tax before remuneration of employees and directors for the years ended December 31, 2020 and 2019. These benefits were charged to profit or loss under operating costs or operating expenses for the years ended December 31, 2020 and 2019. When the board of directors decided to distribute stock dividends, the number of which shall be calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of board of directors. The actual distribution of the employee remuneration was $0 thousand; while the amount for directors is identical to those stated on financial statements. Related information would be available at the Market Observation Post System website.

(y) Non-operating income and expense

(i) Interest income

The details of interest income were as follows:

The details of interest income were as follows:
Interest income from bank deposits Other interest income Total	For the years ended December 31,
	2020 $ 159,094 2,285 $ 161,379	2019
		123,028 -
		123,028

(ii) Other income

The components of other income were as follows:

Rent income Dividend income Other income, others Total	For the years ended December 31,	For the years ended December 31,
		2019
		18,232 303,466 275,474
		597,172

(Continued)

225 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Other gains and losses

The components of other gains and losses were as follows:

Losses on disposals of property, plant, and equipment
Losses on disposals of investment property
Losses on disposal of investments
Gain on amendement of lease
Foreign exchange losses
Fee expense
Losses on work stoppages
Other losses
Other gains and losses, net
(iv)
Finance costs
The components of finance costs were as follows:
Interest expense
Finance costs, net
(z)
Financial Instruments
(i)
Categories of financial instruments
1)
Financial assets
Financial assets at fair value through profit or loss
Financial assets at fair value through other
comprehensive income
Financial assets at amortized cost:
Cash and cash equivalents
Notes receivable, accounts receivable and other
receivables
Other assets
Total

For the years ended December 31,
2020
2019
$ (1,060)
-
-
(2,560)
(580)
-
49
5
(22,763)
(16,293)
(97,677)
(50,114)
(267,500)
(35,932)
(18,216)
(38,798)
$
(407,747)
(143,692)
For the years ended December 31,
2020
2019
$ (221,705)
(140,459)
$
(221,705)
(140,459)
December 31,
2020
December 31,
2019
$ 11,576,388
10,726,174
2,808,716
2,360,040
-
-
7,479,899
9,116,253
1,979,964
1,958,307
2,660,453
358,166
$
26,505,420
24,518,940

2020
$ (221,705)
$
(221,705)
December 31,
2020
$ 11,576,388
2,808,716
-
7,479,899
1,979,964
2,660,453
$
26,505,420

(Continued)

226 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Financial liabilities

Short-term loans Long-term bank loans-current portion Payables Long-term bank loans Long-term bills payable Bonds payable Lease liabilities Other liabilities Total	December 31, 2020 $ 3,615,000 1,914,833 2,221,959 7,489,650 5,656,112 3,500,000 292,992 123,324 $ 24,813,870	December 31, 2019
		3,484,148 1,762,130 2,286,796 6,721,783 4,494,177 - 253,243 121,339
		19,123,616

(ii) Credit risk
1) Exposure to credit risk

The carrying amount of financial assets represents the Group’ s maximum credit exposure. As of December 31, 2020 and 2019, the maximum exposures to credit risk amounted to $26,505,420 thousand and $24,518,940 thousand, respectively.

2) The concentration of credit risk

The sales of the Group are significantly concentrated in a small number of customers. For the years ended December 31, 2020 and 2019, 82% and 83%, respectively, of the total amount of accounts receivable was composed of 12 customers and 10 customers, respectively. Under the Group’ s credit policy, customers are requested to provide the Group certain financial information like audited financial report, or other related documents for purposes of evaluating their credit worthiness. Credits are granted to these customers according to the result of the Group’s credit evaluation. Those customers who do not satisfy the requirement shall not be offered credit.

3) Receivables

For credit risk exposure of notes and accounts receivables, please refer to note 6(d).

Other financial assets at amortized cost includes time deposits and guarantee deposite paid. All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected credit losses. The loss allowance provision were both determined $0 for the year ended December 31, 2020 and 2019.

(Continued)

227 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2020 Non-derivative financial liabilities Accounts payable Other payables Other current liabilities－ other Other non-current liabilities －other Lease liabilities Floating-rate loans (Note) Fixed-rate loans (Note) Long-term bills payable (Note) Bonds payable December 31, 2019 Non-derivative financial liabilities Accounts payable Other payables Other current liabilities－ other Other non-current liabilities －other Lease liabilities Floating-rate loans (Note) Fixed-rate loans (Note) Long-term bills payable (Note)	Carrying amount $ 1,394,928 818,647 8,384 123,324 292,992 3,078,217 9,941,266 5,656,112 3,500,000 $ 24,813,870 $ 1,316,369 964,305 6,122 121,339 253,243 2,216,200 9,751,861 4,494,177 $ 19,123,616	Contractual cash flows 1,394,928 818,647 8,384 123,324 344,560 3,170,316 10,374,902 5,660,000 3,612,000 25,507,061 1,316,369 964,305 6,122 121,339 303,064 2,252,804 10,324,036 4,500,000 19,788,039	Within 6 months 1,394,928 818,647 8,384 110,763 24,828 1,495,088 6,631,637 - - 10,484,275 1,316,369 850,590 6,122 105,359 31,423 537,000 3,709,309 - 6,556,172	6-12 months - - - 8,668 23,269 29,768 363,886 - 22,400 447,991 - 113,715 - 9,480 22,521 529,258 518,090 - 1,193,064	1-2 years - - - 2,146 37,065 61,457 1,110,184 5,660,000 22,400 6,893,252 - - - 4,685 18,421 1,186,546 2,163,728 4,500,000 7,873,380	2-5 years - - - 247 48,375 1,584,003 2,174,633 - 3,567,200 7,374,458 - - - 315 30,440 - 3,795,714 - 3,826,469	More than 5 years
							- - - 1,500 211,023 - 94,562 - -
							307,085
							- - - 1,500 200,259 - 137,195 -
							338,954

The Group does not expect that the cash flow of the due date analysis will occur significantly earlier, or the actual amount will be significantly different.

Note: The amount within 6 months includes recyclable long-term bank loans and long-term bills payable.

(Continued)

228 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Currency risk

1) Currency risk exposure

The Group’s exposures to significant currency risk were those from its foreign currency denominated financial assets and liabilities as follows:

De	cember 31, 2020	NTD 873,000 - 10,748 158 2,412,580 - 1,987,473 -	D	ecember 31, 2019
Foreign Currency $ 31,069 - 8,823,747 7,464 55,915 - 547,860 $ -	Exchange rate 28.099 - 0.0012 0.0211 4.315 - 3.6277 -		Foreign Currency 46,895 2,002 8,806,457 5,124 22,562 173 513,674 6,111	Exchange rate NTD 30.036 1,408,566 33.640 67,344 0.0013 11,448 0.0203 104 4.310 97,243 30.036 5,183 3.86 1,982,783 30.036 183,548

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the foreign currency exchange rate fluctuations on cash and cash equivalents, receivables, payables, and loans, which are denominated in foreign currency. A 1% of appreciation of NTD against USD, EUR, VND, MMK and CNY would have increased net income by $26,372 thousand and increased $11,209 thousand for the years ended December 31, 2020 and 2019, respectively; other comprehensive income would have increased $19,875 thousand and increased $19,880 thousand for the years ended December 31, 2020 and 2019, respectively. The analysis is performed on the same basis for 2019.

3) Foreign exchange gains (losses) on monetary items

Since the Group has many kinds of functional currency, the information on foreign exchange gains or losses on monetary items is disclosed by total amount. For the years ended December 31, 2020 and 2019, foreign exchange (losses) (including realized and unrealized portions) amounted to ($22,763) thousand and ($16,293) thousand, respectively.

(v) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Group's financial assets and liabilities.

(Continued)

229 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following sensitivity analysis is based on the risk exposure to interest rates on the derivative and non-derivative financial instruments on the reporting date. For financial instruments bearing floating-rate, the sensitivity analysis assumes the floating-rate liabilities are outstanding for the whole year on the reporting date. The Group’s internal management reported the increases/decreases in the interest rates and the exposure to changes in interest rates of 1% is considered by management to be a reasonable change of interest rate.

If the interest rate increases by 1%, the Group’s net income will decrease by $30,782 thousand and $22,162 thousand for the years ended December 31, 2020 and 2019, respectively, assuming all other variable factors remain constant. This is due mainly to the fact that the Group’s borrowings bear floating interest rate.

(vi) Other market price risk:

If the equity price changes, and if it is based on the same basis for both years and assumes that all other variables remain the same, the impact to comprehensive income will be as follows:

Prices of securities at the reporting date	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
	2020 After-tax other comprehensive income Net income $ 28,087 115,764 $ (28,087) (115,764)	2019
	After-tax other comprehensive income $ 28,087 $ (28,087)	After-tax other comprehensive income 23,600 (23,600)	Net income
Increase of 1% Decrease of 1%			107,262 (107,262)

(vii) Fair value information
1) Fair value of financial instruments

The fair value of financial assets and liabilities was as follows (including information on fair value hierarchy, but excluding measurements that have similarities to fair value but are not fair value, those fair value cannot be reliably measured or inputs are unobservable in active markets):

	December 31, 2020	December 31, 2020	December 31, 2020
Book value $ 11,576,388 2,068,247 740,469 2,808,716		Fair value
	Level 1 829,533 2,068,247 - 2,068,247	Level 2 - - - -	Level 3 10,746,855 - 740,469 740,469	Total
				11,576,388
				2,068,247 740,469
				2,808,716

(Continued)

230 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2020	December 31, 2020	December 31, 2020
	Fair value
Level 1 Level 2 Level 3 - - - - - - - - - - - - 2,897,780 - 11,487,324 - - 37,626,827 - - - - - - - - - - - - - - - - - - - - - - - - - - - December 31, 2019			Total
			- - -
			-
			14,385,104
			37,626,827
			- - - - - - - -
			-

	Fair value
Level 1 783,180 1,917,543 - 1,917,543 - - - - 2,700,723 -	Level 2 - - - - - - - - - -	Level 3 9,942,994 - 442,497 442,497 - - - - 10,385,491 36,719,706	Total
			10,726,174
			1,917,543 442,497
			2,360,040
			- - -
			-
			13,086,214
			36,719,706

(Continued)

231 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2019	December 31, 2019	December 31, 2019
	Fair value
Level 1 - - - - - - - -	Level 2 - - - - - - - -	Level 3 - - - - - - - -	Total
			- - - - - - -
			-

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

The Group’ s valuation techniques and assumptions used for financial instruments not measured at fair value are the discounted cash flows method.

3) Valuation techniques for financial instruments measured at fair value:

The Group determines the input value with reference to the analysis of the financial status and operating results, recent transaction price, related equity instruments are quoted in non-active markets, similar tools offer in the active market and comparable company evaluation multiplier of the investee company and periodically updates the input value and information and any other necessary fair value adjustments to ensure that the evaluation results are reasonable.

a) Non-derivative financial instruments

Financial instruments, if there is a public market offer, then the public market offer for the fair value, Such as listing (cabinet) company stock and open-end fund beneficiary certification.

The fair value of the financial instruments held by the Group in the case of a nonactive market is as follows:

No public offer debt investment tools: The discounted cash flow model is used to estimate fair value, it is mainly assumed that it is measured by discounting the expected future cash flows of the investee by the rate of return of the monetary time value and the investment risk.

No public offer equity instruments: Use the net asset value method, The main assumptions are based on the net per share of the investor.

b) Derivative financial instruments

Derivative financial instruments is evaluated according to the evaluation model accepted by the market users, such as the discount method and the option pricing model.

(Continued)

232 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) There have been no transfers from each level for the years ended December 31, 2020 and 2019.
5) Statements of changes in fair value measurements of financial assets in Level 3

January 1, 2020 Acquisition from business combination Acquisition Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income December 31, 2020 January 1, 2019 Acquisition from business combination Acquisition Disposal Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income Effects on deferred income tax liabilities December 31, 2019	Investment Property $ 36,719,706 9,476 - 897,645 - $ 37,626,827 $ 38,350,359 2,075 - (9,423) 112,421 - (1,735,726) $ 36,719,706	Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 9,942,994 - - - - - 803,861 - - - 10,746,855 - 4,996,581 - - - 1,235,278 - (135,307) - 3,846,442 - - - - - 9,942,994 -	Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 442,497 - 300,000 - (2,028) 740,469 438,920 - - - - 3,577 - 442,497
		Designated at initial recognition 9,942,994 - - 803,861 - 10,746,855 4,996,581 - 1,235,278 (135,307) 3,846,442 - - 9,942,994

(Continued)

233 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

6) Quantitative information on the measurement of fair value of significant unobservable input values (level 3)

Level 3 refers to the measurement of the fair value of the input parameters are not based on market availability of information, must be based on the assumption that the appropriate estimates and adjustments. If the evaluation model can not be developed on its own, the fair value of the counterparty is used as the fair value. According to IFRS13, for the fair value of the third level classified at the fair value level, the firm shall provide quantitative information about the significant unobservable input values used for the fair value measure. Businesses do not need to create quantitative information to comply with this disclosure, if quantified unobservable input value is not built when enterprises are measuring fair value (for instance, when a firm uses an unadjusted previous transaction price or a third-party pricing information), e.g. part of the the Group's investment in nonactive market equity and debt instruments. The fair value of the Group's investment property belongs to the third level, which is determined in accordance with IFRSs, i.e., outsourcing to external appraisors for assessment based on market evidence (please refer to Note 6(j)). Due to the impracticability to evaluate the relationship between the unobservable input value and fair value, the quantitative information is not disclosed. The fair value of the aforesaid assets at December 31, 2020 and 2019 was $37,626,827 thousand and $36,719,706 thousand, respectively.

The Group holds investments in equity shares, which is classified as financial assets at fair value through profit or losse, whose fair value belongs to level 3.

Most of fair value assets belonging to level 3 possesses no more than one significant unobservable input value. Only the equity instruments with inactive market may result in multiple unobservable input values which are all independent from each others.

Quantified information of significant unobservable inputs was as follows:

Item	Valuation technique	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement • Net Asset Value • Lack of market liquidity, discount rate 30% • Not applicable • Lack of market liquidity, the more the discount, the lower the fair value
Financial assets at fair value through profits or losses and financial assets at fair value through other comprehensive income	Net Asset Value Method

(Continued)

234 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) The evaluation process for fair value belonging to level 3

The Group's fair value evaluation involves observable input value requiring unobservable parameters for significant adjustments or unobservable input value, both of which belong to level 3. The main source of such input value is external appraisors' reports. The results of the evaluation are then reviewed to assure the consistency with the source of the evaluation and the reasonability.

The evaluation of investment property complies with FSC's regulations of the evaluation methods and parameters, and is conducted by external appraisors.

8) Fair value measurements of level 3 – sensitivity analysis of reasonably possible alternative assumptions

The fair value of the financial instruments is reasonable, and the self-built evaluation model is not used for the fair value of the level 3. Therefore, it is not necessary to perform the sensitivity analysis of the possible alternative assumptions.

(aa) Financial risk management
(i) Overview

The Group is exposed to the following risks due to the use of financial instruments:

1) Credit Risk
2) Liquidity risk
3) Market risk

The following discusses the Group’ s objectives, policies and processes for measuring and managing the risks mentioned above. For more quantitative information about the financial instruments, please refer to other related notes of the financial statements.

(ii) Risk management framework

The Board of Directors has overall responsibility for the oversight of the risk management framework in order to develop and monitor the Group’s risk management policies and to report regularly on its activities.

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’ s activities. The Group, through their training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(Continued)

235 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Audit Committee of the Group oversees how management monitors compliance with the Group’ s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee of the Group is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(iii) Credit Risk

Credit risk means the potential loss of the Group if the clients or counterparties involved in that transaction default. The primary potential credit risk is from cash and accounts receivable.

1) Accounts receivable and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk, particularly in the current deteriorating economic circumstances.

The Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group’ s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval from the Risk Management Committee; these limits are reviewed quarterly. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis.

The Group establishes an impairment allowance that represents its estimate of incurred losses in respect of trade receivables. The two components of this impairment allowance are specific loss component that relates to individually significant exposure and collective loss component which the loss was incurred but not identified. The collective component is based on historical payment experience of similar financial assets.

2) Investments

The credit risk exposure in the bank deposits and other financial instruments are measured and monitored by the Group’s finance department. As the Group deals with the banks and other external parties with good credit standing and financial institutions, corporate organization and government agencies which are graded above investment level, management believes that the Group do not have compliance issues and significant credit risk.

(Continued)

236 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’ s approach to managing liquidity is to ensure, as far as possible, that it always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The management believes that the Group do not have significant liquidity risk.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risk. All such transactions are carried out within the guidelines set by the Risk Management Committee.

1) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan Dollars (NTD). The currencies used in these transactions are denominated in NTD, USD and CNY.

The Group’s currency risk is not hedged as some of the currencies of the Group’s foreign currency receivables and payables are the same, producing a natural hedge effect.

2) Interest rate risk

The Group’ s interest rate risk comes from long-term and short-term bank loans. The long-term bond issued by the Group is fixed-rate loan, so there is no risk caused by the fluctuations of interest rates and fair value interest rate. The long-term and short-term bank loans with floating-rate are exposed to interest rate risk, but most of risk is offset by cash and cash equivalents holding in floating-rate deposits.

3) Other market price risk

The Group does not enter into any commodity contracts other than to meet the Group’s expected usage and sales requirements; such contracts are not settled on the net basis.

(Continued)

237 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ab) Capital management

The Group meets its objectives for managing capital is to safeguard the capacity to continue to operate, to continue to provide a return to shareholders, interest of other related parties and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabiltiies.

The Group and other entities in the similar industry use the debt-to-equity ratio to manage capital. This ratio is determined using the total net debt and divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, other equity and non-controlling interest plus net debt.

The Group’s debt-to-equity ratios at the end of the reporting period as of December 31, 2020 and 2019 were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Total liabilities and equity Debt-to-equity ratio	December 31, 2020 $ 34,041,959 (7,479,899) $ 26,562,060 $ 70,868,031 $ 97,430,091 % 27.26	December 31, 2019 29,274,626 (9,116,253) 20,158,373 67,193,864 87,352,237 % 23.08

On December 31, 2020, The increase of debt-to-equity ratio resulted from the operationsupplementing bank loans and cash being invested into subsidiaries.

(ac) Investing and financing activities not affecting current cash flow

The Group’s investing and financing activities which did not affect the current cash flow for the years ended December 31, 2020 and 2019, were as follows:

(i) For the acquisition of right-of-use assets based on lease term, please refer to Note 6(i).

(ii) Reconciliation of liabilities arising from financing activities was as follows:

Long-term bank loans Short-term loans Long-term bills payable Lease liabilities Total liabilities from financing activities	January 1, 2020 $ 8,483,913 3,484,148 4,494,177 253,243 $16,715,481	Cash flows 1,087,292 135,040 1,160,000 (64,281) 2,318,051	Non-cash	changes Other - - 1,935 104,030 105,965	December 31, 2020
			Foreign exchange movement (166,722) (4,188) - - (170,910)
					9,404,483 3,615,000 5,656,112 292,992
					18,968,587

(Continued)

238 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Long-term bank loans Short-term loans Long-term bills payable Lease liabilities Total liabilities from financing activities	January 1, 2019 $ 4,673,930 913,732 349,729 298,815 $ 6,236,206	Cash flows 3,897,363 2,579,857 4,144,448 (61,653) 10,560,015	Non-cash	changes Other - - - 16,081 16,081	December 31, 2019
			Foreign exchange movement (87,380) (9,441) - - (96,821)
					8,483,913 3,484,148 4,494,177 253,243
					16,715,481

(7) Related-party transactions:

(a) The ultimate parent company

The Company is the ultimate parent company.

(b) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

Name of related party Kaohsiung Monomer Company Zhong Gong Baoquan Ltd. Jean Pacific Development Co.,Ltd. BES Engineering Corporation Core Pacific City Co., Ltd.

Chung Kung Management and Maintenance of Apartments Co., Ltd.

Coreasia Human Resources management Co., Ltd.

Capital Machinery Co., Ltd.

Sheen Chuen-Chi Cultural & Educational Foundation

All board of directors, general manager and deputy general manager

Relationship with the Group Investee as accounted for using equity method Investee as accounted for using equity method Investee as accounted for using equity method The Company is the director of the entity Same director with the Company

Investee as accounted for using equity method of Zhong Gong Baoquan Ltd.

Subsidiary of BES Engineering

The entity is a director of the Company The entity is a director of the Company

The main managements of the Company

(Continued)

239 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Significant Transactions with related parties

(i) Sales

The amounts of significant sales by the Group to related parties were as follows:

Associates	For the years ended December 31,	For the years ended December 31,
	2020 $ 456,452	2019
		550,760

The terms for related party sale transactions were the same as ordinary sales.

(ii) Receivables

The receivables from related parties were as follows:

Accounts	Types of related parties	December 31, 2020 $ 51,106 9,447 - $ 60,553	December 31, 2019
Accounts receivable Other receivables Other receivables	Associates Associates Other related parties		57,764 10,969 9
			68,742

(iii) Payables

The payables to related parties were as follows:

Accounts	Types of related parties	December 31, 2020 $ 5,380 5,951 $ 11,331	December 31, 2019
Other payables Other payables	Associates Other related parties		4,602 18,134
			22,736

(iv) Other

Associates Rental income Other revenues Security service fees Other related parties Rental income Other revenues Other expenses	For the years ended December 31,
	2020 2019 $ 5,378 5,373 26,495 16,835 (20,388) (23,057 3 3 - 15 (3,633) (21,243

(Continued)

240 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Please refer to Note 6(r) for lease of land and buildings to related parties.

(v) The Group had a two-year contract with BES Engineering for the lease of office building in July 2018, which had been extended in July 2020, with the total value both represented $9,629 thousand. This rental transaction was recognized right-of-use and lease liability both amounting to $9,465 thousand and $7,130 thousand on July 1,2020 and January 1, 2019, respectively. The depreciation expenses for the years ended December 31, 2020 and 2019 were $4,743 thousand and $4,754 thousand, respectively. The interest expense for the years ended December 31, 2020 and 2019 both amounted to $82 thousand. The amounts of lease liability as of December 31, 2020 and 2019 were $7,130 thousand and $2,398 thousand, respectively.
(vi) The Group had contracts with other related party, for mechanical engineering services projects and paid commission on the basis of actual construction. As of December 31, 2020 and 2019, the construction project in-progress amounted to $1,469,439 thousand and $1,552,720 thousand, respectively. As of December 31, 2020 and 2019, the unpaid fees amounted to $704,896 thousand and $875,708 thousand, respectively. The refundable deposit at December 31, 2020 and 2019 amounted to $420,660 thousand and $424,944 thousand, respectively.
(vii) The Group acquired 123,528 thousand shares of preferred stocks of Core Pacific City Co., Ltd. amounting to $1,235,278 thousand on March 11, 2019. Please refer to Note 6 (b).
(viii) The Group acquired 20,000 thousand shares of common stock of BES Twin Towers Co., Ltd. amounting to $215,600 thousand from BES Engineering Co., Ltd. on March 12, 2019.
(ix) The Group acquired 100 thousand shares of common stock of BES Twin Towers Co., Ltd. amounting to $1,078 thousand from its managements on March 12, 2019.
(x) The Group acquired the land from Core Pacific City Co., Ltd., which the contract of property transaction was signed on October 30,2019. Please refer to Note 6(e).
(d) Key management personnel compensation

Key management personnel compensation
Short-term employee benefit Post-employment benefits	For the years ended December 31,
	2020 $ 106,911 14,951 $ 121,862	2019
		201,995 14,284 216,279

(Continued)

241 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(8) Pledged assets:

The Group's pledged assets are as follows:

Asset	Purpose of pledge Guarantee for priority right-of-use of harbor and purchases Collateral for long-term and short- term financial credit, syndicated loan (Mega & Shin Kong) Syndicated loan (Mega), collateral for long-term financial credit and long-term bills payable, bonds payable. Long-term bills payable Long-term bills payable Long-term bills payable Deposit for lawsuit Collateral for long-term financial credit	December 31, 2020 $ 24,614 7,031,472 15,346,334 502,002 1,430,230 634,995 108,969 585,925 $ 25,664,541	December 31, 2019
Time deposits Property, plant and equipment Investment property Investments accounted for using equity method Financial assets reported at fair value through other comprehensive income Financial assets reported at fair value through profit or loss Refundable deposit Right-of-use of Sea Areas			19,998 5,511,001 5,122,417 888,805 961,050 624,180 91,557 598,865
			13,817,873

As of December 31, 2020 and 2019, 4,000 thousand shares of a subsidiary of the Group were pledged as collateral for long-term bills payable.

(9) Commitments and contingencies:

(a) As of December 31, 2020 and 2019, the Group had the following unused letters of credit:

USD EUR NTD CNY JPY	December 31, 2020 December 31, 2019 $ 20,824 11,696 246 235 1,020,000 1,015,000 - 20,799 - 37,300

(Continued)

242 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) As of December 31, 2020 and 2019, the Group had issued guarantee notes for bank loans, sales and purchases, and development plan aggregating to $24,117,400 thousand, USD30,000 thousand and $13,508,000 thousand, USD30,000 thousand, respectively.
(c) As of December 31, 2020 and 2019, the Group had contracts for various construction projects inprogress amounting to $12,225,823 thousand and $10,891,348 thousand, respectively. As of December 31, 2020 and 2019, the remaining future obligations under these contracts amounted to $2,547,453 thousand and $3,404,508 thousand, respectively.
(d) As of December 31, 2020 and 2019, the agreement on the acquisition of material property amounting to $39,045,010 thousand and $37,200,010 thousand, and the unpaid portion amounting to $28,885,000 thousand and $29,760,000 thousand, respectively. Please refer to Note 5(e) for more information.
(e) As of December 31, 2020 and 2019, the Company signed an agreement to purchase raw materials such as benzene, hydrogen and methylbenzene from Chinese Petroleum Corporation (CPC). Under this contract, the Company may purchase specified monthly volume of these raw materials at current month prices announced by the Chinese Petroleum Corporation with prepayment or domestic letter of credit.
(f) As of December 31, 2020, the Group signed an agreement of preclinical drug research amounting to USD3,063 thousand and $92,070 thousand, and the unpaid portion amounting to USD597 thousand and $60,506 thousand.

As of December 31, 2019, the Group signed an agreement of preclinical drug research amounting to USD4,633 thousand, CNY2,557 thousand and $60,549 thousand, and the unpaid portion amounting to USD2,264 thousand, CNY374 thousand and $38,679 thousand.

(g) The Group signed a license agreement of new type of tumor identification and drug delivery system with National Health Research Institutes on August 18, 2016. The license fee amounted to $270,000 thousand and the payment would be made by progress. As of December 31, 2020 and 2019, the paid portion both amounted to$10,000 thousand.
(h) The Group signed a license agreement of antineoplastic candidate drug with National Health Research Institutes on April 3, 2019. The license fee amounted to $135,000 thousand and the payment would be made by progress. As of December 31, 2020 and 2019, the paid portion both amounted to $5,000 thousand.

(Continued)

243 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Important matters

(i) Case of Kaohsiung gas explosion forced disconnected pipeline

On July 31, 2014, there was an underground pipeline explosion in Kaohsiung city. Due to the post - disaster reconstruction project, Kaohsiung City Government issued a penalty letter No. 10335137100 on August 18, 2014, to order the Company to stop operations and prohibited the use of all petrochemical pipelines in the disaster area. The Company was not satisfied with the preceding penalty and filed a legal petition to the Administrative court for revoking the original claims for petition remedy in September 2014. The case was rejected by the Kaohsiung High Administrative Court, which the Company was not satisfied with. Hence, the Company submitted an appeal in February 2017. In December 2019, an against judgment is rendered against the Company. The Company filed an appeal to the Supreme Court in January, 2020, and this case is still being heard in the Court.

(ii) Equity trading dispute

The resolution, implementation of a signed tripartite supplemental agreement between the Company and PPG&GGC (which had been merged as Axiall company now), from the Company’ s board meeting on April 21, 2016: trading the equity of Taiwan Chi chlorine Chemical Co., Ltd., total 6,400,000 shares at the sales price, USD100,000 thousand, which was equivalent to $3,225,000 thousand. After the expectation of the disposal interests, $2,838,761 thousand, the Company instantly informed Axiall company to carry out the equity trading of Taiwan Chi chlorine Chemical Co., Ltd.. The Company issued the letter many times to ask Axiall to implement the agreement, however, Axiall repeatedly delayed actions. Hence, the Company filed the arbitration to American Arbitration Association in August 2016. Axiall submitted the pleadings in September 2016 and asked PPG to participate in the lawsuit. Outside lawyers of PPG, in the October of same year, represented that PPG was willing to negotiate the contract of equity trading. PPG signed the contract with the Company at the end of February 2017 and handled the equity transactions subsequently. The Company had received USD100,000 thousand in April of the same year and transferred the stock to finish the transaction. However, Axiall continued to be arbitrated against related claims such as the interest. The case prevailed in April, 2019, and the Company was entitled to acquire the compensation of default interests and the attorney’s fee about USD3,200 thousand, which was obtained in April in the same year. The case is end.

(j) Contingent liabilities

(i) The Company signed total three areas of land lease contracts with Kaohsiung branch of Taiwan International Ports Corporation, Ltd. In December 2013 and February 2014. The Kaohsiung Port Intercontinental Container Center 2nd Phase Project Petrochemical Oil Storage and Transportation Center S12-S15 Pier Post line Land was leased and the Company invested to build the construction of petrochemical oil storage and transportation facilities for the purpose of import and export and transport of petrochemical oil handling, storage and transportation etc. Kaohsiung branch of Taiwan International Ports Corporation, Ltd. delivered the land to the Company prior to the end of December 2017. The term of the lease was 25 years from the date of delivery and the Company had the right to renew the lease at the end of the period. Per the contract, the Company had to pay rent of $1,650 thousand, $2,565 thousand, and $1,493 thousand respectively since the land was delivered. 3 years and 6 months from the land delivery date, the Company paid management fees of $10,654 thousand, $24,605

(Continued)

244 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

thousand, and $12,329 thousand respectively. The Company also placed Certificate of Deposits of $5,000 thousand and $13,000 thousand as performance bonds in December 2013 and February 2014 respectively. The Company, in August 2015, shortened the operating scale based on the adjustment of investment plan, which resulted in one of the performance bonds of $8,000 thousand, to not being able to be returned. Taiwan International Ports Corporation, Ltd. completed the transaction procedure prior to November 2017. The Company started to implement land drilling and geological improvement project and started paying the land rent of those projects, which was $1,675 thousand and $1,497 thousand respectively each year.

(ii) Dispute from the senior manager

1) Labor Dispute

The previous senior manager, who left the Company without transferring the duties and authorization, didn’t perform the duties since July 1, 2013 and the Company issued the letter to request to fulfill the agreement without any response from manager. Hence, the board of the Company dismissed the manager in October 2013. The manager asked the Company to pay pensions pursuant to Labor Standards Act as a labor worker, which was not reconciled through mediation.

The Civil litigation against Mr. Liu was filed in Taipei District Court and Kaohsiung District Court respectively in January 2014. Taipei District Court, in August 2015, considered that the contract of senior manager was ended for both sides, and Expired Employee Retirement Policies of the Company was applicable, the Company shall pay $4,572 thousand to Mr. Liu. The Company was not satisfied with the original verdict and appealed for the 2nd sentence court. The 2nd sentence court sentenced to reject request from the Company in March 2017. The Company was not satisfied and proposed the appeal in April of the same year, which was under remedy trial in the Supreme Court. In June 2019, the appeal was dismissed and the judgment was binding and final.

For the part of Mr. Zhang, Kaohsiung District Court considered that the assigned relationship did not end in January 2014, which means that the Expired Employee Retirement Policies of the Company does not apply. Mr. Zhang request for pension is without any basis, but according to the contract of both side, the Company shall pay salaries of $35 thousand, to Mr. Zhang, which was not satisfied by Mr. Zhang and this case was appealed to the 2nd sentence court. In July 2016, the 2nd sentence court rejected the request from Mr. Zhang but he re-appealed to the 3rd sentence in August of the same year. Upon finding the appeal meritorious, the Supreme Court reversed and remanded the judgement. The preparatory proceeding of the first repeated appeal was conducted in Taiwan Court Kaohsiung Branch Court in April 2019. The court’ s judgement is announced that the compony shall pay $3,785 thousand and legal rate to Mr. Zhang in July of same year. The Company is dissatisfied and filed an appeal to Supreme Court, and this case is still being heard in the Court.

(Continued)

245 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Disclosure Secret Case

Managers who left the office without authorization was suspected to be involve in business encroachment, theft of business secrets. To protect Company interests, the Company filed criminal appeal. The case was concluded by the Taiwan Miaoli Local Court in January 2017 and the relevant defendants were prosecuted. The civil litigation derived from the case is waiting for hearing by the Taipei District Court and Miaoli District Court. Please refer to Note 8 for details of deposit for lawsuit.

(iii) Accusation of business failures

A Gas explosion happened in Heng Yi chemical plant next to the Toufen plant and caused workers to be burned on January 28, 2013, which evolved into accusations of business failures. Since the incident happened in the public discharged area of the industrial site, it was suspected to contain excessive value of the company's emissions with the sampling identification and the Company’ s manager was prosecuted as defendant per the victim’ s request. This case was not prosecuted after the judgment decision from Miaoli District Attorney, hence, the victims filed the reconsideration and Taichung High Prosecutor's Office remanded the case back to the Miaoli District Attorney for review. The victims of Heng Yi chemical plant prosecuted the Company and managers in February 2015 and asked for the joint damaged compensation $6,920 thousand, which awaits hearing by Miaoli local court. In September of the same year, both sides agreed to withdraw the litigations. Trial procedure was recovered in February 2016 and criminal litigation was determined not to be prosecuted in March 2016. The verdict of civil litigation was won in March 2017, but plaintiff is dissatisfied and filed an appeal to Taiwan High Court Taichung Branch Court. On November 16, 2020, The court sentenced company win with final and binding judgment.

(iv) Contract Fraud of Shanghai industry

On August 6, 2014, the reinvestment company, Weihua and Weiqiang, filed the civil appeal to Yangpu District Court to ask Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. to pay all overdrafts of the contract. However, Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. did not perform the first phase of repayment according to Court’s mediation report, Weihua and Weiqiang, on September 2, 2014, applied to Yangpu District Court for the enforcement and sealed all coal tar of Shanghai Tongye Coal and Chemical Industry Group Co., Ltd., the total coal tar sealed was 5,216 tons and 4,777 tons were sold. Subsequently, Weihua and Weijiang Company and Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. would continue negotiations on unrealized creditors and requested Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. to propose the more specific repayment plan. Weihua and Weiqiang estimated allowance of the accounts receivable to be, CNY19,274 thousand and CNY8,276 thousand respectively. Weihua and Weijiang Company reported to the police the relevant persons of Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. that were suspected to be involve with the contract fraud and other criminal matters. The police rejected the report due to insufficient evidence, therefore Weihua hired a local lawyer in May 2018, to assist with Shanghai police and Shanghai economics investigation group. Weiqiang received a ruling about Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. was filed for bankruptcy to court, there is no property could distributed, so the court made a ruling that bankruptcy proceeding is concluded. This case is ended.

(Continued)

246 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Civil compensation for Residents living in An shun
1) The 1st case

In 2008 and 2009, Mr. Wu and others filed civil and national compensation lawsuit against the Ministry of Economic Affairs, Tainan City Government, Tainan City Environmental Protection Bureau and the Company (Hereinafter referred to as 1st case of Tainan Anshun plant civil compensation) and they claimed that during 1942 and 1983, the previous Taiwan Alkali Co., Ltd. Anshun plant, produced mercury and dioxins in its production operations and polluted the environment, which resulted in the population consuming contaminated fish and shellfish over time, which resulted in long term health issues. The Ministry of Economic Affairs had control and management responsibility of the previous Taiwan Alkali Co., Ltd, and whether due to illegal actions, or a lack of attention in performing their duties, the Ministry of Economic Affairs was the ultimate owner of CPDC, should take responsibility. Hence, the prosecutors claim that the Ministry of Economic Affairs shall take the responsibility for the compensation. Mr. Wu and others also claimed that Tainan City Government and Tainan City Environmental Protection Agency were the competent authorities and executive authorities of the waste disposal law but the authorities did not supervise and require the Anshun plant to implement pollution prevention and control acts, thus should be jointly responsible for any compensation. Mr. Wu and others claim that the Company did not perform any removal and remediation of pollutants after being ordered to merge with the previous Taiwan Alkali Anshun plant, so they claimed the Company shall also take joint responsibility for the compensation. Mr. Wu and others asked the Ministry of Economic Affairs, Tainan City Government, Tainan City Environmental Protection Bureau and the Company to jointly bear the cost of medical expenses and mental compensation for $370,800 thousand and the interest was calculated by an annual interest rate 5% from the date when the litigation was initiated by the defendants until the final payment of compensation. Due to unpaid referee fees, due from the plaintiff, the Tainan District Court rejected the litigation claims from these 17 persons in January 2010. Mr. Chen appealed to the Tainan District Court asking the Company for medication, health examination fee and reparations, to the amount of $2,300 thousand, which was incorporated into this case, the total compensation amount was $351,750 thousand. This case was tried by the Tainan District Court in December 2015 and judged that the Company and the Ministry of Economic Affairs to be jointly responsible for $160,000 thousand payable to the plaintiff. The Company was not satisfied with the result and filed an appeal. In August of 2017, the High court sentenced the Company to compensate the plaintiff for $190,000 thousand by self, which the Company was not satisfied with and had proposed the appeal for remedy in Sept. of the same year. The supreme court held oral argument on September 28, 2018, and judgment was sentenced on November 11, 2018, the supreme court sentenced to order the Company to compensate the plaintiff for $190,000 thousand. The Company made a payment of compensation and related interests to 143 plaintiffs before the end of June 2019. The part related to medical remedy of the case was abandoned for secondary trial. Plaintiff filed an appeal to Supreme Court in same year. In March 3, 2020, The court dismissed the plaintiff appeal by a ruling. This case is ended.

(Continued)

247 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) The 2nd case

Mr. Chen and others filed civil and national compensation lawsuit to the Company and the Ministry of Economic Affairs on March 14th 2017 (Hereinafter referred to as 1st case of the Tainan An-shun plant civil compensation), they claimed the Company and the Ministry of Economic Affairs had to jointly compensate the plaintiff $80,915 thousand. The verdict of the 3rd national compensation in 2008 of the Tainan An-shun plant civil compensation 1st case was cited as the reason to be litigated. However, the Company claimed that there was a misunderstanding of the theoretical and practical nature of epidemiology causality versus the verdict. There were disputable factors on both factual and legal matters. During the 1st and 2nd instance of the Anshun plant Civil Compensation litigation under hearing, the Company once again put forward the relevant academic articles to prove that there was no causality between pollution from Tainan Anshun plant and diabetes. Moreover, the plaintiffs in this case, despite the reasonableness of their claims, did not put forth any litigation before the expiry of the statutes of limitations. Thus, in this 2nd case of the Tainan Anshun plant civil compensation, the Company continued to seek for the jurisdiction remedies to protect the Company and shareholder interests. In November 6, 2020, Tainan District Court considered that 39 Plaintiffs’ s claim is meritorious and dismissed rest of Plaintiffs’ s claim. The company considered that filed an appeal base on our unprofitable part of verdict. Because extinctive prescription is an interest for company.

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:

On January 25, 2021, the Company’s Board of Directors approved a resolution to increase capital by cash in the purpose of repay bank loans and business operating use.

(12) Other:

(a) The nature of operating costs and expenses were as follows:

The nature of operating	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:
	For theyears ended December 31
By function By item	2020				2019
	Operating cost	Operating expense	Non-Operating expense	Total	Operating cost	Operating Expense	Non-Operating expense	Total
Employee benefits
Salary	734,469	580,941	-	1,315,410	914,004	665,264	-	1,579,268
Labor and health insurance	74,767	48,940	-	123,707	93,255	59,192	-	152,447
Pension	43,184	30,018	-	73,202	42,922	28,339	-	71,261
Remuneration of directors	-	-	-	-	-	-	-	-
Others	39,299	24,144	-	63,443	29,917	17,467	-	47,384
Depreciation	828,856	144,931	3,933	977,720	1,268,315	160,879	6,058	1,435,252
Amortization	611	12,561	-	13,172	640	9,362	-	10,002

(b) On March 22, 2019, Kaohsiung Urban Planning Commission (KUPC) announced that Dashe Industrial Park (DIP), where the Company’s plant is located, will be categorized from Special Zone to Zone B. In light of this matter, all the companies involved in this case are making their best effort to negotiate and compromise with KUPC, requesting KUPC to change DIP’ s status to Zone A instead of Zone B. Consequently, they are also making an appeal to KUPC to provide them a more detailed procedures on how to go through the entire adjustment process.

(Continued)

248 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

(i) Loans to other parties:

Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:
(In Thousands of New Taiwan Dollars)
Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1	Core Pacific Twin Star (Myanmar) Investment Company Ltd.	Core Pacific Pioneer (Myanmar) Company Ltd.	Other Receivable	Yes	21,236	-	-	2%	2	-	Operating	-		-	61,187	61,187
2	Jiangsu Weiming Petrochemi cal Corpor ation(Wei ming)	Changzhou Weicai New Material Science & Technolog y Co., Ltd.(Weica i)	Other Receivable	Yes	258,900	258,900	129,450	6.5%		-	Operating	-		-	666,772	1,000,158
3	Weihua (Rudong) Trade Co., Ltd.	Changzhou Weicai New Material Science & Technolog y Co., Ltd.(Weica i)	Other Receivable	Yes	86,300	86,300	64,725	6.5%		-	Operating	-		-	96,484	96,484

Note 1: Numbering nature of borrowing as follows:

Transaction for business between two parties－1

Short-term financing－2

Note 2: The financing limit was 40% of net value of Core Pacific Twin Star (Myanmar) Investment Company Ltd..

Note3: The financing limit for total and individual were 15% and 10% of net value of Jiangsu Weiming Petrochemical Corporation.

Note4: The financing limit was 20% of net value of Weihua (Rudong) Trade Co., Ltd..

Note 5: The amounts of the transaction and the ending balance had been offset in the consolidated interim financial statements.

(ii) Guarantees and endorsements for other parties:

		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CPDC	Ding-Yue Developme nt Co., Ltd	2	42,487,585	4,920,000	4,920,000	-	4,920,000	% 6.95	70,812,642	Y	N	N
0	CPDC	Jiangsu Weiming Petrochemi cal Corpora tion(Weimi ng)	2	42,487,585	2,093,500	-	-	-	% -	70,812,642	Y	N	Y

249 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CPDC	Changzhou Weicai New Material Science & Technology Co., Ltd.(Weica i)	2	42,487,585	1,220,590	1,220,590	155,797	-	% 1.72	70,812,642	Y	N	Y
0	CPDC	Shiny Chemical Industrial Co., Ltd	5	42,487,585	38,998	38,998	38,998	-	% 0.06	70,812,642	N	N	N

Note 1: The information of guarantees and endorsements for other parties of the Company and its subsidiaries are disclosed separately and numbering as follows:

Parent company－0

Subsidiary starts from 1

Note 2: The relationship between the guarantee and the guarantor are as follows:
Transactions between the companies.
The Company directly or indirectly holds more than 50% voting right.
When other companies directly or indirectly hold more than 50% voting rights of the Company.
The Company directly or indirectly holds more than 90% voting right.
A company that is mutually protected under contractual requirements based on the needs of the contractor.
A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.
Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
CPDC	Yuanta Financial Holdings BES Engineering Co. China Development Financial Holding Corp. Handy Chemical Corparation .ltd Overseas Investment & Development Corp. Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials ZOWIE Technology Corporation Aetas Technology Inc. Chain Yarn Co., Ltd.	None The Company is a director of an investee company None The Company is a supervisor of the investee company None Shares a director with the Company None 〞〞〞	Financial assets designated at fair value through profit or loss－ current Non-current financial assets at fair value through other comprehensive income 〞〞〞 Financial assets designated at fair value through profit or loss－ non-current Non-current financial assets at fair value through other comprehensive income 〞〞〞	32,176,371 164,348,449 44,684,712 407,000 2,600,000 422,250,872 2,701,651 8,815 287,961 30,000,000	661,224 1,643,484 415,568 1,461 26,000 7,832,673 113,714 358 - 300,000	0.27 10.74 0.30 4.75 2.89 27.52 14.00 0.05 0.58 13.41	661,224 1,643,484 415,568 1,461 26,000 7,832,673 113,714 358 - 300,000

250 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
BES Twin Towers Co., Ltd Tsou Seen Chemical Industries Corporation Da-ying Construction Ltd.	Taiwan Business Bank Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials Taiwan Tea Corporation Good Company TaiRx, Inc. Eastspring investments Well Pool Money Market Fund	〞 Shares a director with the Company None 〞〞〞〞	Current financial assets at fair value through other comprehensive income Financial assets designated at fair value through profit or loss－ current Financial assets at fair value through other comprehensive income－ non-current Financial assets designated at fair value through profit or loss－ current Financial assets at fair value through other comprehensive income－ non-current 〞 Financial assets designated at fair value through profit or loss－ current	945,000 160,111,000 6,754,127 8,744,000 750,000 722,500 859,845.6	321,647 2,914,182 284,284 156,518 - 14,652 11,791 14,697,556	0.01 10.43 35.00 1.11 2.08 0.81 -	321,647 2,914,182 284,284 156,518 - 14,652 11,791 14,697,556

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginnin	g Balance	Purch	ases		Sa	les		Ending B	alance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Price	Cost	Gain (loss) on disposal	Shares/units	Amount
The Company	Chain Yarn Co., Ltd. a t c i c	Financial assets t fair value hrough other omprehensive ncome－non- urrent	Chain Yarn Co., Ltd.	None	-	-	30,000	300,000	-	-	-	-	30,000	300,000

(v) Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Property, plant and equipment	February 26, 2020	465,000	186,000	Sunko Ink Co., Ltd.	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Business operating use	None
The Company	Property, plant and equipment	September 14, 2020	1,380,000	634,000	Chain Yarn Co., Ltd.	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Business operating use	None
Ding-Yue Development Co., Ltd	Sanyu Sec., Shilin Dist., Taipei City	March 20, 2020	415,441	415,441	Kuan-Pin Company and others	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Bulk transfer	None

Note 1: The object of the transaction owned by different related parties within 5 years, wherein a disclosure on the date of acquisition, price, and relationship with the parent company in the current period is required: N/A.
(vi) Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:None
251 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company CPDC Green Technology Corp.(CPDC GT) Weihua (Rudong) Trade Co., Ltd Weihua (Rudong) Trade Co., Ltd Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Tsou Seen Chemical Industries Corporation Weihua (Rudong) Trade Co., Ltd Kaohsiung Monomer Company Ltd The Company Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang) s Jiangsu Weiming Petrochemical Corporation(We iming) s Jiangsu Weiming Petrochemical Corporation(We iming) s	Subsidiary Subsidiary Affiliated company accounted for using equity method Subsidiary ame parent company ame parent company ame parent company	Sales Sales Sales Sales Sales Sales Sales	(510,141) (161,483) (456,452) (222,127) (231,039) (974,374) (136,651)	% (3.45) % (1.09) % (3.08) % (96.46) % (17.29) % (72.94) % (13.24)	3 Month 3 Month 1 Month Base on contract Base on contract Base on contract Base on contract	- - - - - - -	OA 90 days OA 90 days - Base on contract Base on contract Base on contract Base on contract	36,665 (1,463) 51,106 15,457 1,631 - 8,587	2.27% (0.09)% 3.16% 50.46% 16.04% -% 49.65%	Note 〞 Note 〞〞〞

Note: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(viii) Receivables from related parties with amounts exceeding the lower of $100 million or 20% of the capital stock:None

(ix) Trading in derivative instruments:None
(x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 0 1 1 2	The Company The Company The Company Weihua (Rudong) Trade Co., Ltd (Weihua) Weihua (Rudong) Trade Co., Ltd (Weihua) Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Tsou Seen Chemical Industries Corporation(TSCIC) Weihua (Rudong) Trade Co., Ltd (Weihua) CPDC Green Technology Corp.(CPDC GT) Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang) Jiangsu Weiming Petrochemical Corporation(Weiming) Jiangsu Weiming Petrochemical Corporation(Weiming)	1 1 1 5 5 5	Sales revenue Sales revenue Repair expense Sales revenue Sales revenue Sales revenue	510,141 161,483 222,127 231,039 974,374 136,651	OA 90 days OA 90 days Base on contract Base on contract Base on contract Base on contract	2.90% 0.92% 1.26% 1.31% 5.54% 0.78%

Note 1: Company numbering as follows:

Parent company－0

Subsidiary starts from 1

252 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Note 2: The numbering of the relationship between transaction parties as follows:

Parent company to subsidiary－1 Subsidiary to parent company－2 Subsidiary to subsidiary－3 Subsidiary to sub-subsidiary－4 Sub-subsidiary to sub-subsidiary－5

Note 3: The amounts of the transaction and the ending balance had been offset in the consolidated interim financial statement

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original inve	stment amount	Balance as	of December 31,	2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of wnership	Carrying value
The Company 〞〞〞〞〞〞〞〞 CPDC Investment (BVI) Co Ltd. Ding-Yue Development Co., Ltd. Tsou Seen Chemical Industries Corporation BES Twin Towers Development Co., Ltd.	Kaohsiung Monomer Company Ltd Zhong gong baoquan Ltd. Ding-Yue Development Co., Ltd. CPDC Investment (BVI) Co Ltd. Tsou Seen Chemical Industries Corporation CPDC Green Technology Corp. Rich Equities Ltd. Unichem Development Limited BES Twin Tower Development Co., Ltd. Thanh Phong Construction Investment Co., Ltd. Jean Pacific Development Co., Ltd. Core Pacific Overseas Holdings Ltd Da-ying Construction Ltd. Taivex Therapeutics Inc. Frontier Fortune Investment Pte. Ltd.	1,Hsing Kung Road,Ta She P O Box 6-25 Nantze,Kaohsiung (815), Taiwan 2F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan Citco Building, Wickhams Cay, P.O. Box662 No.1, Jingjin Rd., Fangliao Township, Pingtung County 940, Taiwan 14F.-16, No.61, Wufu 3rd Rd., Qianjin Dist., Kaohsiung City 801, Taiwan Level 3,Alexander House,35 Cybercity,Ebene, Mauritius Unit 06, G/F, The Lodge, 535 Canton Road , Kowloon, Hong Kong 16F., No.12, Dongxing Rd., Taipei City 105, Taiwan B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City 7F.-2, No.300, Yangguang St., Neihu Dist., Taipei City 11491, Taiwan (R.O.C.) Akra Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,Tortola,British Virgin Islands 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 112 ROBINSON ROAD#05-01 ROBINSON 112SINGAPORE (068902)	Methyl Methacrylate Monomer Security consultants Commissioned to create a vendor to build the housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Holding company Dicalcium phosphate Mechanical engineering Holding company Holding company Real estate investment and development Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials Renting and selling real estate Holding company Engineering, construction contracting business Engaged in biotechnology, pharmaceutical research and development and marketing Holding company	- 14,400 10,040,000 904,946 760,000 100,000 - 9,572,433 4,791,383 609,347 620,000 808,564 22,500 462,246 2,761,596	- 14,400 7,540,000 904,946 760,000 100,000 5,996 7,865,233 3,353,383 609,347 480,000 808,564 22,500 462,246 1,326,796	20,000,000 1,440,000 1,004,000,000 26,580,000 96,000,000 15,000,000 - 313,851,199 580,012,053 - 62,000,000 26,580,000 - 46,224,551 93,060,000	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % 100.00 % 100.00 % 100.00 % 40.00 % 45.19 % 100.00 % 91.10 % 100.00	502,002 18,311 10,002,328 903,385 1,303,241 119,730 - 8,310,551 6,219,671 578,029 619,551 898,139 22,902 255,070 2,661,302	159,545 (7,102) (15,858) 5,325 30,167 16,639 (66) (137,624) 352,645 16,052 (1,010) 11,975 (1,146) (77,601) 24,302	63,818 (1,704) (15,858) 5,325 30,167 16,639 (66) (137,624) 352,645 16,052 (404) - - - -	Note 1 Note 1 Note 2&5 Note 2&4&5 Note 2&5 Note 2&5 Note 2&4&7 Note 2&4&5 Note 2&5 Note 2&3&4 &5 Note 1 Note 2&4&6 Note 2&3&5 &6 Note 2&5&6 Note 2&4&5 &6

253 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of wnership	Carrying value
Frontier Fortune Investment Pte. Ltd. Frontier Fortune Investment Pte. Ltd. Frontier Fortune Investment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd	Core Pacific Twin Star (Myanmar) Investment Company Ltd Gemini Star (India) Private Limited Core Pacific Twin Star (Vietnam) Investment Co., Ltd. Core Pacific Pioneer (Myanmar) Company Ltd	NO.153/Ka,Kyun ShweMmyaing Lane (2) ,23 ward,Thingangyun Townshin Yangon Level7, The Capital, Plot No.C-70, G Block, Bandra Kurla Complex, Bandra MUMBAI Mumbai City MH 400051 IN B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City NO.153/Ka,Kyun ShweMmyaing Lane(2) ,23 ward,Thingangyun Townshin Yangon	Holding company and consultancy Real estate and petrochemical products research and consultancy Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale	169,921 9,274 2,566,176 24,804	169,921 9,274 1,131,376 24,804	5,500,001 2,099,993 - 800,000	% 100.00 % 99.99 % 99.01 % 80.00	152,968 4,591 2,495,940 24,415	(2,472) (2,333) 30,119 (1,920)	- - - -	Note 2&4&5 &6 Note 2&4&5 &6 Note 2&3&4 &5&6 Note 2&4&5 &6

Note1: The Company adopts the equity method to evaluate the investment company.

Note2: The Company has direct or indirect control of the invested company. If the invested company has direct or indirect control, it shall expose the relevant information of the following 2 to 10 transactions of the investee company.

Note3: Limited company expressed by the amount of capital, no shares issued.

Note4: The original investment amount is the foreign currency, at the prevailing exchange rate.

Note5: This transaction has been written off when the consolidated statement has been prepared.

Note6: In accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, only profit or loss of the company’s directly associates and joint ventures accounted for using equity method should be revealed.

Note7: The Board of directors approved the resolution to dissolve Rich Equities on December 25, 2019. The investment inflow was completed in April, 2020, and the liquidation process had been completed on July 28, 2020.

254 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Information on investment in mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2020	Investment flows		Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
Weihua (Rudong) Trade Co., Ltd (Weihua)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading	763,460	( 2 )、 ( 3 )	763,460	-	-	763,460	8,320	100.00%	8,320	482,983	-
Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading.	211,560	( 1 )、 ( 3 )	211,560	-	-	211,560	6,085	100.00%	6,085	128,444	-
Weida (Zhangzhou) Consultant Service Co., Ltd. (Weida)	Consultancy	-	( 2 )	13,171	-	(13,171)	-	(250)	-%	(250)	-	-
Jiangsu Weiming Petrochemical Corporation(W eiming)	Petrochemical supporting facility construction	7,421,663	( 1 )、 ( 2 )	5,714,463	1,707,200	-	7,421,663	(114,280)	100.00%	(114,280)	6,675,456	-
Zhangzhou Weida Petrochemical Co., Ltd(Weida PC)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading	30,648	( 2 )	30,648	-	-	30,648	(196)	100.00%	(196)	14,069	-
Kunshan Weiqin Management consultant Co., Ltd (Weiqin)	Management consultant	-	( 2 )	29,664	-	(29,664)	-	(906)	-%	(906)	-	-
Changzhou Weicai New Material Science & Technology Co., Ltd.(Weicai)	Engaged in engineering plastic and high valued petroleum chemical products	1,860,113	( 2 )	1,324,893	-	-	1,324,893	(31,894)	100.00%	(31,894)	1,010,920	-
Weiming (Rudong) Construction Co., Ltd	Engaged in engineering consultant services、engineering construction、 engineering management、trading of petroleum chemical product	4,319	( 3 )	-	-	-	-	(22)	100.00%	(22)	4,293	-

255 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
10,615,517	14,362,341	Note 4
Note1: There are three ways to invest as follows: (a) The Company direct investment to China. (b) The Company through third regional company (UDL) investment to China. (c) Others. (The Company through subsidiary investment to China.) Note2: In the field “net income (losses) of the investee” :

(a) If it is in preparation, no investment profit or loss, should be explained.
(b) There are three ways to identify the basis of investment profit or loss, should be explained.
(b.1) financial statements audit by international accounting firm with a relationship with Taiwan accounting firm.
(b.2) financial statements audit by the Company’s audit CPA.
(b.3) others.

Note3: The amount in this table should be presented in New Taiwan Dollar.

Note4: The cumulative investment amount or investment proportion to China cannot over the Company’ s net value of 60%. The Company got certified documents of operating headquarters issued by Industrial Development Bureau, Ministry of Economic Affairs on October 18, 2018, so not subject to the above regulations. Valid period to October 14, 2021.

Note5: Weida and Weiqin were both dissolved and the liquidation process had been completed in July and December 2020, respectively.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

(d) Major shareholders:None

256 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

(a) General Information

The Group identifies Arylonitrile & acetic acid department and Caprolactam department as reportable segments based on factors such as product types, manufacturing procedure, customer types, and operating activities.

The reportable segments of the Group are independent business units which offer different products and services. Each business unit needs different technologies, resources and marketing strategies, thus should administer separately. The operating segment has a segment manager who is directly accountable to and maintains regular contact with the chief operating decision maker to discuss operating activities, financial results, forecasts, or plans for the segment.

(b) Information for each segment’ s revenue / expense, asset, liability, measurement basis , and adjustment

Non-operating income and loss, income tax expense and non-recurring gain or loss is not allocated to reportable segments. In addition, not all of the profit or loss of the reportable segments include significant non-cash items other than depreciation and amortization. Total reportable segments’ profit or loss is reconciled with the continuing operations’ profit or loss before tax.

There was no material inconsistency between the accounting policies adopted for the operating segment and the accounting policies described in Note 2. The Group use the operating profit as the measurement for segment profit and the basis of performance assessment. Operating segments’ profit and loss and total assets exclude operating expenses and assets of the corporate management.

For the years ended December 31, 2020 Revenue Revenues from external customers Revenues from transactions with other operating segments of the same entity Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure of non-current assets Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 7,350,448 - $ 7,350,448 $ 219,245 $ 362,249 $ 603,371 $ 5,799,465 $ 2,664,825	Caprolactam 6,770,305 - 6,770,305 573,197 (973,809) 854,502 11,486,818 5,203,961	Other 3,462,339 222,127 3,684,466 198,450 715,336 2,404,032 87,623,707 26,173,173	Adjustment and eliminations - (222,127) (222,127) - - - - -	Total 17,583,092 -
					17,583,092
					990,892
					103,776
					3,861,905
					104,909,990
					34,041,959

(Continued)

257 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the years ended December 31, 2019 Revenue Revenues from external customers Revenues from transactions with other operating segments of the same entity Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure of non-current assets Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 10,257,450 - $ 10,257,450 $ 172,782 $ 2,072,848 $ 1,111,943 $ 4,076,676 $ 2,692,554	Caprolactam 15,157,883 - 15,157,883 1,152,520 (4,110,428) 1,934,727 13,934,202 5,051,889	Other 4,208,761 249,499 4,458,260 119,952 3,901,052 2,252,746 78,457,612 21,530,183	Adjustment and eliminations - (249,499) (249,499) - - - - -	Total
					29,624,094 -
					29,624,094
					1,445,254
					1,863,472
					5,299,416
					96,468,490
					29,274,626

(c) Geographical Areas

The Group’ s non-current assets located overseas are immaterial. Revenues from domestic and overseas customers for the years ended December 31, 2020 and 2019 were as follows:

Region	For the years ended December 31,	For the years ended December 31,
	2020 $ 11,238,764 6,295,673 48,655 $ 17,583,092	2019
Operating revenue from domestic sales Asia Other (individual area under 10%) Total operating revenue		20,945,478 8,661,506 17,110
		29,624,094

(d) Major Customers

Customers generating over 10% of total revenue for the December 31, 2020 and 2019 were as follows:

Customers	For the years ended December 31,
	2020 2019 $ 2,364,508 2,501,627 1,457,165 3,430,779 1,271,244 3,406,066 882,407 3,564,112
1001 1011 1020 1018

258 -

V. Independent Accountants’ Audit Report

Independent Auditors’ Report

To the Board of Directors of China Petrochemical Development Corporation:

Opinion

We have audited the financial statements of China Petrochemical Development Corporation (“CPDC” or “the Company” ), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits of the financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audits of the financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No.1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Emphasis of Matter

As described in Notes 6(j) and 6(p) of the notes to the financial statements, a portion of the land at the Anshun plant ,which is located at Annan Dist., Tainan City, was polluted. CPDC submitted for approval a remediation project proposal to the Tainan City Government in accordance with the related regulations and accrued relevant remediation project expenses. Nevertheless, CPDC has a dissenting view on the government perception about the condition of pollution and CPDC is seeking a way to define its responsibilities. Our opinion is not modified in respect of this matter.

259 -

Other Matter

We did not audit certain investments, which were accounted for under the equity method. The financial statements as of and for the years then ended December 31, 2020 and 2019 of those investees accounted for under the equity method were audited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts for the equity method investees were based solely on the reports of other auditors. These investments accounted for under the equity method represented 1.17% and 1.00% of total assets as of December 31, 2020 and 2019, respectively. The related shares of investment income from these investees including subsidiaries, associates and joint ventures accounted for using equity method represented (79.22)% and (0.06)% of income before income tax for the years ended December 31, 2020 and 2019, respectively.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

Refer to Note 4(o) “ Revenue Recognition” , Note 6(v) “ Revenue from contracts with customers” in the financial statements.

Description of key audit matter:

Operating revenue is the most important source of cash flow for CPDC, and it is a significant risk accounting subject in the financial statements. So revenue recognition is one of the key audit matters for our audit.

How the matter was addressed in our audit:

Our key audit procedures included:

Testing CPDC’ s internal accounting controls surrounding revenue recognition and key manual and systems-based controls in the order-to-cash transaction cycle. In addition, checking and reconciling the sales data recorded between the sales systems and general ledger; selecting samples to assess whether appropriate revenue recognition policies are applied through comparison with accounting standards.
Analyzed and compared the sales amounts and volumes for the major customers of CPDC. Based on samples selected, vouched significant transactions from both internal and external documents, to verify the authenticity of the transactions.
Assessment of the fair value of investment property

Refer to Note 4(j) “ Investment Property” , Note 5(a) “ Significant Accounting Judgments, Estimation, Assumptions, and Sources of Estimation Uncertainty”, and Note 6(j) “Investment Property”of the financial statements for details about fair value information on investment property.

Description of key audit matter:

The book value of investment property of CPDC represented 37% of total assets as of December 31, 2020, which is deemed to be significant. CPDC evaluates the fair value of investment property according to IAS40, and re-measure such fair value on the reporting date. Because the valuation of investment property at fair value demands significant professional judgments, the assessment of fair value of investment property is considered one of the key audit matters.

260 -

How the matter was addressed in our audit:

Our key audit procedures included:

Obtain from CPDC management the real estate appraisal report on investment property;
Engage another appraiser to review such real estate appraisal report, and to evaluate the propriety of the evaluation method used, and the reasonableness of its main assumptions or input values (ex. discount rate and final rate of return);
Evaluate the propriety of the disclosure of fair value of investment property.
Impairment assessment of property, plant, and equipment

Refer to Note 4(m) “ Impairment of non derivative financial assets” , Note 5(b) “ Significant Accounting Assumptions and Judgments, and Major Sources of Estimation Uncertainty” , and Note 6(h) “Property, plant and Equipment” of the financial statements for details of the information about impairment assessment on property, plant, and equipment.

Description of key audit matter:

The book value of property, plant, and equipment of CPDC represented 15% of total assets as of December 31, 2020, which is deemed to be significant. The overall economic trend, market competition and fluctuations in the price of petroleum and petrochemical products may affect the future operation of CPDC, and also affect the estimated economic benefits and recoverable amounts of these assets that the management of CPDC may estimate and determine in the future of the cash generating unit (“CGU”) of the assets, and to evaluate whether there are signs of impairment. The recoverable amounts of these assets have been determined based on the discounted cash flows forecasted by CPDC management which involved significant uncertainties and professional judgments. Therefore, we consider the assessment for impairment of property, plant, and equipment as one of the key audit matters for our audit.

How the matter was addressed in our audit:

Our key audit procedures included:

Obtain from CPDC management the results of their valuation of fixed assets and understand the significant assumptions used in their valuation model.
Review both the calculations of the value in use and the present value of the discounted cash flows forecasted. Evaluate the CGU, and external and internal impairment indicators identified by CPDC management, and ascertain that all fixed assets requiring annual impairment test are covered in the assessment made by management. Likewise, evaluate the reasonableness of the method used in measuring the recoverable amount of the assets (including the realization on the financial forecast, the calculation of recoverable amount and the assumptions considered for the cash flows forecast).

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’ s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

261 -

Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

262 -

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Chen Mei Fang and Chung Tan Tan.

KPMG

Taipei, Taiwan (Republic of China) March 23, 2021

Notes to Readers

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

The independent auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and financial statements, the Chinese version shall prevail. - 263 -

					December 31, 2019	Amount %		3,100,558 3	88,263 -	1,137,731 1	1,529,259 2	72,521 -	156,905 -	40,375 -	1,370,000 2	7,961 -	7,503,573 8		- -	3,460,000 4	1,899,668 2	7,020,975 8	61,388 -	4,494,177 5	106,290 -	17,042,498 19	24,546,071 27		28,348,502 31	1,286,700 1		2,137,330 2	35,490,262 39	1,779,147 2	39,406,739 43		(804,515) (1)	(1,120,657) (1)		(1,925,172) (2)	67,116,769 73	91,662,840 100
					December 31, 2020	Amount %		$ 3,615,000 4	954 -	1,215,153 1	1,306,948 1	- -	281,634 -	32,583 -	1,160,000 1	8,918 -	7,621,190 7		3,500,000 4	4,410,000 4	1,704,687 2	6,497,063 6	112,919 -	5,656,112 6	103,221 -	21,984,002 22	29,605,192 29		32,848,502 33	583,815 1		2,311,174 2	35,601,629 36	1,287,983 1	39,200,786 39		(966,202) (1)	(854,259) (1)		(1,820,461) (2)	70,812,642 71	$ 100,417,834 100
(English Translation of Financial Statements Originally Issued in Chinese)	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION	Balance Sheets	December 31, 2020 and 2019	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2020 December 31, 2019	Amount % Amount % Liabilities and Equity	Current liabilities:	$ 1,008,698 1 3,347,128 4 2100 Short-term loans (note 6(k))	661,224 1 624,964 1 2130 Current contract liabilities (note 6(v))	1,526,506 2 1,534,864 2 2170 Accounts payable	89,369 - 173,060 - 2200 Other payables (note 7)	73,046 - 52,546 - 2230 Current tax liabilities (notes 4 and 6(s))	2,225,117 2 1,881,035 2 2250 Provisions-current (notes 4, 6(p) and 6(r))	583,674 1 822,458 1 2280 Lease liabilities-current (notes 4 and 6(o))	2,012,475 2 369,145 - 2320 Long-term liabilities-current portion (notes 4 and 6(l))	8,180,109 9 8,805,200 10 2399 Other current liabilities, others	Total current liabilities	7,832,673 8 7,247,062 8 Non-Current liabilities:	2530 Bonds payable(notes 4 and 6(m))	2,500,585 2 1,738,008 2 2540 Long-term bank loans (note 6(l))	2550 Provisions-non-current (notes 4, 6(p) and (r))	28,658,681 29 23,822,451 26 2570 Deferred income tax liabilities (notes 4 and 6(s))	15,208,808 15 13,094,097 14 2580 Lease liabilities-non-current (note 6(o))	144,335 - 101,087 - 2611 Long-term bills payable (note 6(n))	37,612,887 37 36,716,577 40 2670 Other non-current liabilities, others	11,009 - 11,009 - Total non-currnet liabilities	268,747 - 127,349 - Total liabilities	92,237,725 91 82,857,640 90 Equity:	3110 Common stock (note 6(t))	3200 Capital surplus (note 6(t))	Retained earnings (note 6(t)):	3310 Legal reserve	3320 Special reserve	3350 Unappropriated earnings		Others (notes 4 and 6(t))	3410 Exchange differences arising on translation of foreign operations	3420 Unrealised gains or loss on financial assets at fair value through other	comprehensive income		$ 100,417,834 100 91,662,840 100 Total equity Total liabilities and equity
						Assets	Current assets:	Cash and cash equivalents (notes 4 and 6(a))	Current financial assets at fair value through profit or loss (notes 4 and 6(b))	Notes and accounts receivable, net (notes 4 and 6(d))	Accounts receivable related parties, net (notes 4, 6(d) and 7)	Other receivables (notes 4, 6(d) and 7)	Inventories (notes 4 and 6(e))	Prepayments	Other current assets (note 6(f))	Total current assets	Non-current assets:	Non-current financial assets at fair value through profit or loss (note 4 and	6(b))	Non-current financial assets at fair value through other comprehensive	income (note 4 and 6(c))	Investments accounted for using equity method (notes 4 and 6(g))	Property, plant and equipment (notes 4 and 6(h))	Right-of-use assets (notes 4 and 6(i))	Investment property, net (notes 4 and 6(j))	Deferred income tax assets (notes 4 and 6(s))	Other non-current assets (note 8)	Total non-current assets														Total assets
								1100	1110	1170	1180	1200	130X	1410	1470			1510		1517		1551	1600	1755	1760	1840	1900

264 -

(English Translation of Financial Statements Originally Issued in Chinese) CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

4000 Operating revenue (notes 4�6(v)and 7) 5000 Operating costs (note 6(e)) 5910 Less: Unrealized (profit) loss from sales 5920 Add: Realized profit (loss) from sales Gross (loss) profit Operating expenses (note 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment loss determined in accordance with IFRS 9 Total operating expenses Loss from operations Non-operating income and expenses: 7100 Total interest income (note 6(x)) 7010 Other income (notes 6(x) and 7) 7590 Other gains and losses (note 6(x)) 7050 Finance costs (notes 6(o) and 6(x)) 7060 Shares of profit (loss) of associates and joint ventures accounted for using equity method, net (notes 4 and 6(g)) 7255 Gains on fair value adjustment, investment property (notes 4 and 6(j)) 7235 Gains on financial assets (liabilities) at fair value through profit or loss (notes 4 and 6(b)) 7673 Impairment loss on property, plant, and equipment (notes 4 and 6(h)) Total non-operating income and expenses Income before income tax 7950 Less: income tax expenses (notes 4 and 6(s)) Net income 8300 Other comprehensive income (loss): 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8330 Shares of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Allocation of income tax to the above items Components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences arising on translation of foreign operations 8367 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8380 Shares of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that may be reclassified to profit or loss 8399 Allocation of income tax to the above items Components of other comprehensive income that will not be reclassified to profit or loss 8300 Other comprehensive income (loss), net 8500 Total comprehensive income Earnings per share (notes 4 and 6(u)) 9750 Basic earnings per share-retrospestive 9850 Diluted earnings per share-retrospestive	2020 Amount % $ 14,797,092 100 15,287,375 103 (490,283) (3) 7,042 - (1,742) - (484,983) (3) 348,055 2 464,098 3 337,654 2 - - 1,149,807 7 (1,634,790) (10) 71,019 - 363,470 3 (376,661) (3) (187,982) (1) 331,277 2 896,310 6 621,913 4 - - 1,719,346 11 84,556 1 (596,433) (4) 680,989 5 (24,657) - 375,078 2 14,883 - - - 365,304 2 (161,687) (1) - - - - - - (161,687) (1) 203,617 1 $ 884,606 6 $ 0.21 $ 0.21	2019
		Amount % 26,797,793 100 25,764,405 96 1,033,388 4 1,742 - 31,639 - 1,066,769 4 350,248 1 528,108 2 321,522 1 - - 1,199,878 4 (133,109) - 63,473 - 318,302 1 (123,540) - (106,515) - 1,566,487 6 111,367 - 3,033,671 11 (2,901,096) (11) 1,962,149 7 1,829,040 7 90,591 - 1,738,449 7 (12,128) - 125,611 - 7,865 - - - 121,348 - (316,303) (1) - - - - - - (316,303) (1) (194,955) (1) 1,543,494 6 0.61
		0.61

265 -

See accompanying notes to financial statements.

												Total equity	66,896,890	1,738,449	(194,955)	1,543,494		-	-	(1,349,929)	-	26,314	-	67,116,769	680,989	203,617	884,606		-	-	(985,455)	3,796,481	241	-	70,812,642
					Total other equity interest	Unrealized gains	(losses) on financial	Exchange assets measured at	differences on fair value through	translation of other	foreign financial comprehensive	statements income	(488,212) (1,248,499)	- -	(316,303) 127,432	(316,303) 127,432		- -	- -	- -	- -	- -	- 410	(804,515) (1,120,657)	- -	(161,687) 392,697	(161,687) 392,697		- -	- -	- -	- -	- -	- (126,299)	(966,202) (854,259)
											Unappropriated	retained earnings	5,144,764	1,738,449	(6,084)	1,732,365		(429,027)	(1,968,687)	(1,349,929)	(1,349,929)	-	(410)	1,779,147	680,989	(27,393)	653,596		(173,844)	(111,367)	(985,455)	-	(393)	126,299	1,287,983
(English Translation of Financial Statements Originally Issued in Chinese)	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION	Statements of Changes in Equity	For the years ended December 31, 2020 and 2019	(Expressed in Thousands of New Taiwan Dollars)		Share capital Retained earnings					Ordinary	shares Capital surplus Legal reserve Special reserve	Balance at January 1, 2019 $ 26,998,573 1,260,386 1,708,303 33,521,575	Net income for the year ended December 31, 2019 - - - -	Other comprehensive income for the year ended December 31, 2019 - - - -	Total comprehensive income for the year ended December 31, 2019 - - - -	Appropriation and distribution of retained earnings:	Legal reserve appropriated - - 429,027 -	Special reserve appropriated - - - 1,968,687	Cash dividends of ordinary share - - - -	Stock dividends of ordinary share 1,349,929 - - -	Difference between consideration and carrying amount of subsidiaries acquired or disposed - 26,314 - -	Disposal of investments in equity instruments designated at fair value through other comprehensive income - - - -	Balance at December 31, 2019 28,348,502 1,286,700 2,137,330 35,490,262	Net income for the year ended December 31, 2020 - - - -	Other comprehensive income for the year ended December 31, 2020 - - - -	Total comprehensive income for the year ended December 31, 2020 - - - -	Appropriation and distribution of retained earnings:	Legal reserve appropriated - - 173,844 -	Special reserve appropriated - - - 111,367	Cash dividends of ordinary share - - - -	Capital increase by cash 4,500,000 (703,519) - -	Changes in ownership interests in subsidiaries - 634 - -	Disposal of investments in equity instruments designated at fair value through other comprehensive income - - - -	Balance at December 31, 2020 $ 32,848,502 583,815 2,311,174 35,601,629

266 -

(English Translation of Financial Statements Originally Issued in Chinese) CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Income before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries, associates and joint ventures accounted for using equity method Loss on disposal of property, plan and equipment Loss on disposal of investments accounted for using equity method Reversal of impairment loss on non-financial assets Unrealized loss from sales Realized loss (profit) from sales Impairment loss on property, plan and equipment Gain on fair value adjustment of investment property Gain on lease modification Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Decrease in accounts receivable Decrease in accounts receivable due from related parties Decrease in other receivables (Increase) decrease in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Total changes in operating assets (Decrease) increase in contract liabilities Increase (decrease) in accounts payable Decrease in other payable Decrease in provisions Increase (decrease) in other current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash (outflow) inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows (used in) from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in other financial assets (Increase) decrease in other non-current assets Dividends received Decrease in deferred income tax liabilities Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term loans Decrease in short-term loans Proceeds from issuing bonds Proceeds from long-term debt Repayments of long-term debt Increase in long-term bills payable Decrease in long-term bills payable Payment of lease liabilities (Decrease) increase in other non-current liabilities Cash dividends paid Capital increase by cash Interest paid Net cash flows from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For the years end	ed December 31 2019 1,829,040 1,243,821 2,522 (3,033,671) 106,515 (63,473) (137,950) (1,566,487) 2,765 - (85,089) (1,742) (31,639) 2,901,096 (111,367) (4)
	2020 $ 84,556 780,577 375 (621,913) 187,982 (71,019) (132,087) (331,277) 1,107 580 (69,591) (7,042) 1,742 - (896,310) (40) (1,156,916) 8,358 83,691 468 (274,491) 238,784 12,215 69,025 (87,309) 77,422 (252,010) (70,252) 957 (331,192) (262,167) (1,419,083) (1,334,527) 55,430 (178,968) (5,379) (1,463,444) (387,499) - (120,000) 120,042 (5,785,200) 5,109 (2,847,161) 110 (1,655,545) (141,773) 1,265,381 - (9,546,536) 15,228,000 (14,713,558) 3,500,000 12,513,900 (11,773,900) 26,152,200 (24,992,200) (48,813) (3,069) (985,455) 3,796,481 (2,036) 8,671,550 (2,338,430) 3,347,128 $ 1,008,698
		(774,703)
		932,071 71,127 47,081 187,448 (260,785) (55,625)
		921,317
		85,589 (590,750) (650,086) (346,174) (4,729)
		(1,506,150)
		(584,833)
		(1,359,536)
		469,504 70,027 (102,361) (349,676)
		87,494
		- 351,290 (2,835,278) 2,262,460 (11,244,492) - (2,607,379) - - 3,986 1,313,922 (2,288)
		(12,757,779)
		8,614,975 (6,164,417) - 6,170,000 (3,820,000) 5,850,000 (1,700,000) (48,334) 1,955 (1,349,929) - (2,209)
		7,552,041
		(5,118,244) 8,465,372
		3,347,128

267 -

See accompanying notes to financial statements.

(English Translation of Financial Statements and Report Originally Issued in Chinese) CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

China Petrochemical Development Corporation (hereinafter referred to as the “Company”) was founded on July 8, 1969 under the approval of Ministry of Economic Affairs, R.O.C.. The Company migrated to No.1, Jingjian Rd., Dashe Dist., Kaohsiung City 815, Taiwan (R.O.C.) on July 18, 2016. The Company primarily engage in the production of petroleum, alkali-chlorine, phosphoric acid and other petrochemical products and by-products and the storage, transportation, purchase and sale of these products, related chemicals and their raw materials, and land development. The primary products are acrylonitrile, caprolactam, acetic acid and nylon.

(2) Approval date and procedures of the financial statements:

The accompanying financial statements were authorized for issue by the Board of Directors on March 23, 2021.

(3) New standards, amendments and interpretations adopted:

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

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2020:

�Amendments to IFRS 3 “Definition of a Business”
�Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”
�Amendments to IAS 1 and IAS 8 “Definition of Material”
�Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its financial statements:

�Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
�Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform � Phase 2”

(Continued)

268 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

�IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
�Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
�Amendments to IAS 16 “Property, Plant and Equipmentt Proceeds before Intended Use”
�Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
�Annual Improvements to IFRS Standards 2018-2020
�Amendments to IFRS 3 “Reference to the Conceptual Framework”
�Amendments to IAS 1 “Disclosure of Accounting Policies”
�Amendments to IAS 8 “Definition of Accounting Estimates”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized below. The following accounting policies were applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”).

(b) Functional and presentation currency
(i) Basis of measurement

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

(Continued)

269 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

1) Financial assets at fair value through profit or loss are measured at fair value;
2) Financial assets at fair value through other comprehensive income are measured at fair value;
3) Investment properties are measured at fair value; and
4) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation (please see note 6(r)).
(ii) Functional and presentation currency

The functional currency fis determined based on the primary economic environment in which the entity operates. The financial statements are presented in New Taiwan Dollar (NTD), which is the Company’s functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

(c) Foreign currencies

(i) Foreign currency transactions

Transactions in foreign currencies are translated into the functional currencies of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

an investment in equity securities designated as at fair value through other comprehensive income;
a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedges are effective; or
qualifying cash flow hedges to the extent that the hedge are effective.
(ii) Foreign operations

(Continued)

270 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

(d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(e) Cash and cash equivalents

(Continued)

271 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Bank overdrafts that are repayable on demand and form an integral part of the Company’ s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(f) Financial instruments

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

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

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2) Fair value through other comprehensive income (FVOCI)

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

(Continued)

272 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4)

Business model assessment

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

the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Company’s management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
how managers of the business are compensated � e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

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

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

(Continued)

273 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

5) Assessment whether contractual cash flows are solely payments of principal and interest

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable rate features;
prepayment and extension features; and
terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features).
6) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables, guarantee deposit paid and other financial assets), and contract assets.

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

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 90 days past due or the debtor is unlikely to pay its credit obligations to the Company in full.

Lifetime ECL are the ECL that result from all possible default events over the expected life of a financial instrument.

(Continued)

274 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The maximum period considered when estimating ECL is the maximum contractual period over which the Company is exposed to credit risk.

ECL are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECL are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset 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's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
it is probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

7) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

(Continued)

275 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital suplus is not sufficient to be written down).

4) Financial liabilities

5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

(Continued)

276 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(g) Inventories

(i) Manufaturing industry

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(ii) Construction industry

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The net realizable value is estimated as follows:

1) Land held for development: net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value (development analytical method or comparison method).
2) Construction-in-progress: net realizable value is the estimated selling price (current market condition) in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value.

(h) Investments in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over their financial and operating policies.

(Continued)

277 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

(i) Investment in subsidiary

In the preparation of financial reports, the Company adopts the equity method assessment method for the investee companies that can be controlled. Under the equity method, in the financial report, the current profit and loss and other comprehensive gains and losses, and in the financial report of the consolidated basis, the current profit and loss and other comprehensive gains and losses are attributable to the owners of the parent company, and the financial reporting owners' equity and consolidated basis the interests of the owners of the parent company in the financial report are the same.

The Company's changes in the ownership interest of the subsidiaries did not result in loss of control and were treated as an interest transaction with the owners.

(j) Investment property

(Continued)

278 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(k) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iii) Depreciation

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

The estimated useful lives of periods are as follows:	property, plant
Land improvement	3~30 years
Buildings and constructions	2~60 years
Machine equipment	1~30 years
Transportation equipment	2~ 40 years
Other equipment	2~13 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(iv) Reclassification to investment property

(Continued)

279 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(l) Leases
(i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Company has the right to direct the use of the asset only if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
the relevant decisions about how and for what purpose the asset is used are predetermined and:
- the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
- the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non-lease components and account for the lease and nonlease components as a single lease component.

(ii) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

(Continued)

280 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
there is a change of its assessment on whether it will exercise a extension or termination option;or
there is any lease modification.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

If an arrangement contains lease and non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

(Continued)

281 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

For sale-and-leaseback transactions, the Company applies the requirements for determining when a performance obligation is satisfied in IFRS 15 to determine whether the transfer of an asset is accounted for as a sale of the asset. If the transfer of an asset satisfies the requirement of IFRS 15 to be accounted for as a sale of the asset, the Company derecognizes the transferred asset, then measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Accordingly, the Company recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. For leaseback transaction, the Company applies the lessee accounting policy. If the transfer of an asset does not satisfy the requirement of IFRS 15 to be accounted for as a sale of the asset, the Company continues to recognize the transferred asset and recognizes the financial liability equal to the transfer proceeds.

(iii) As a leasor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease . If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘rent income’.

(m) Impairment of non derivative financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, deferred income tax assets and investment properties, measured at fair value) to determine whether there is any indication of impairment. If any such indication exists, then the asset’ s recoverable amount is estimated. Goodwill is tested annually for impairment.

(Continued)

282 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

(n) Provisions

A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

(i) Site dismantling

(ii) Site restoration

In accordance with the Company’ s published environmental policy and applicable legal requirements, a provision for site restoration in respect to contaminated land, and the related expense, is recognized when the land is contaminated.

(o) Revenue from contracts with customers

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

(Continued)

283 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(i) Sale of goods

The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

(ii) Commissions

When the Company acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognized is the net amount of commission made by the Company, and is recognized in proportion to the stage of completion of the transaction.

(iii) Financing components

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

(p) Employee benefits

(iv) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(v) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

(Continued)

284 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(vi) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(q) Income taxes

The Company has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS 37.

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

(Continued)

285 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(r)

Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as employee bonus.

(s) Operating segments

The Company discloses information of operating segments in the consolidated financial statements, which is therefore not included in the financial statements.

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

The preparation of the financial statements in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

(Continued)

286 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is as follows:

(a) Fair valuation of investment property

The Company's investment property is measured at fair value deriving from external appraisal reports. When the presumed factors implemented in the evaluation process, e.g. discount rates and return on investment, change due to the evolving market and economy, the change may have an impact on the balance of the recognized assets and profit or loss. For more information regarding the valuation, please refer to note 6(j).

(b) Impairment of property, plant and equipment

In the process of evaluating the potential impairment of property, plant and equipment, the Company is required to make subjective judgments in determining the independent cash flows, useful lives, expected future income and expenses related to the specific asset groups considering of the nature of the industry. Any changes in these estimates based on changed economic conditions or business strategies and could result in significant impairment charges or reversal in future years. Refer to note 6(h) for further description of the key assumptions used to determine the recoverable amount.

Valuation Process

The Company’ s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. Investment property is evaluated by another appraiser, which is engaged by the Company's financial instrument valuation group.

The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

(i) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
(ii) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
(iii) Level 3: inputs for the assets or liability that are not based on observable market data.

Information on valuation use hypothesis factors was as follows:

(i) Note 6(j) - Investment property;
(ii) Note 6(y) - Financial instruments.

(Continued)

287 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash on hand Checking and demand deposits Time deposits Cash equivalents Cash and cash equivalents	December 31, 2020 $ 821 114,424 743,471 149,982 $ 1,008,698	December 31, 2019 662 385,749 2,331,288 629,429 3,347,128

Time deposits with original maturity within three month which are held for the purpose of meeting short-term cash commitments, rather than for investment or other purposes, and are readily convertible to cash at the known amounts and subject to insignificant risk of value changes, are reported as cash equivalents. Please refer to Note 6(f) for details of time deposits with original maturity between three months and one year which are accounted for as other financial assets under other current assets.

Please refer to Note 6(y) for the fair value sensitivity analysis and interest rate risk of the financial assets and liabilities of the Company.

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

Current financial assets designated at fair value through profit or loss: Stocks listed on domestic markets Non-current financial assets designated at fair value through profit or loss: Stocks unlisted on domestic markets Total	December 31, 2020 $ 661,224 7,832,673 $ 8,493,897	December 31, 2019
		624,964
		7,247,062
		7,872,026

The dividends income from the financial assets recognized at fair value through profit or loss for the years ended December 31, 2020 and 2019, amounted to $20,110 thousand and $27,845 thousand, respectively.

(Continued)

288 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Company holds 422,251 thousand shares of the common and preferred stock of Core Pacific City Co., Ltd. as of December 31, 2020 and 2019, respectively. The Company recognized the changes in fair value as net gain and loss based on the fair value evaluation report of the investments. Accrording to the valuation report, fair value was measured using the net asset method and the fair value of the valuation date was determined under the assumption of relevant rate of return by the external expert. The amount accounted for as gain from investments in equity instruments at fair value through profit or loss was $585,611 thousand and $2,763,239 thousand for the years ended December 31, 2020 and 2019, respectively. The increase of fair value was due to the bidding of Core Pacific City Co., Ltd., which was completed on September 25, 2019, and the contract of property transaction was signed on October 30, 2019.

Please refer to Note 8 for details of the financial assets at fair value through profit or loss of the Company pledged as collateral as of December 31, 2020 and 2019.

Equity investments at fair value through other comprehensive income - non-current Stocks listed on domestic markets Stocks unlisted on domestic markets Total	December 31, 2020 $ 2,059,052 441,533 $ 2,500,585	December 31, 2019
		1,595,896 142,112
		1,738,008

The Company designated the investments show above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes.

Please refer to Note 6(t) for the gain or loss on financial assets recognized at fair value through other comprehensive income.

The dividend income from the financial assets recognized at fair value through other comprehensive income for the years ended December 31, 2020 and 2019, amounted to $111,977 thousand and $110,105 thousand, respectively.

(i) The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as “PRAXAIR”) delegated by the Company, was elected as the new Chairman in the directors’ meeting on January 30, 2013. However, Praxair Inc. did not recognize the director delegated by the Company as the Chairman, resulting in the new Chairman being unable to exercise his authority. Also, the supervisor appointed by the Company was prevented from auditing the accounts and records pursuant to the Company Law, hence, the new Chairman and the designated supervisor representing PRAXAIR, filed an action asking the vice chairman and general manager to provide the accounts and records and requested to return the seal, business invasion and others in a civil lawsuit. The vice chairman delegated by Praxair Inc. claimed privilege to act as the Chairman and filed legal actions declaring the non-existence of the new Chairman’s commission of authority and also sent a letter to the court requesting a dissolution
(Continued)
289 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

of PRAXAIR, which was rejected by the courts. The supervisor appointed by Praxair Inc. illegally called a temporary shareholders’ meeting in 2013 to propose the dissolution of the Company and reelection of directors and supervisors. Hence, the Company filed legal actions declaring the withdrawal of the resolution from the illegal temporary shareholders’ meetings and the resolutions from the temporary shareholders’ meeting was not established. Currently, the supervisor filed legal action against the manager for submitting the accounts and the records, after winning the 1st and 2nd trial, the defendant appealed but was dismissed by the 3rd trial instance. This case was remanded to the Taipei High Court but the verdict was dismissed in 2015. The Company was not satisfied with the appeal and it was denied by 2nd trial instance.. The judgment was binding and final on December 2017. On the other side, the vice chairman designated by Praxair Inc. filed legal action declaring the non-existence of the new Chairman’ s commission of authority, after the judgment from the High Court that the Chairman designated by the Company won the verdict, the defendant appealed to the 3rd instance, with the Supreme Court dismissing the appeal. The whole case confirms the appointed relationship between the Chairman designated by the Company and PRAXAIR exists. On November 19, 2016, the letter from Ministry of Economic Affairs states that the former chairman of directors, appointed by the Company, is the Chairman of PRAXAIR, and restored the representative duty per the judgment No. 2455 from the Supreme High Court in 2015. However, according to the requirement from Ministry of Economic Affairs, both sides were not able to hold the legitimate reelection prior to January 9, 2017 which resulted in vacancy of directors and supervisors of PRAXAIR. In order to strive for the rights and interests of the shareholders, the Company immediately brought the arbitration per joint venture agreement of both sides and applied for an auditor and provisional administrator to instruct the central section office of the Ministry of Economic Affairs to allow Praxair Inc. to conduct the change of registration on July 6, 2017. The Company filed a request for the arbitration of International Chamber of Commerce in 2017 and received the award issued by the International Court of International Chamber of Commerce on September 3, 2018. A part of the award favored for the Company and confirmed that the Company was entitled to receive the dividends from PCSM for the year of 2013. In order to protect the Company’ s right, the Company submitted a lawsuit withdrawing a part of such Arbitration award against the Company to Taipei District Court. On December 13, Taipei District Court dismissed the Company’ s claim of withdrawing the ICC’ s decision. The Company filed an appeal on January 8, 2020, but such appeal was dismissed by Taiwan High Court on September 1, 2020. The Company appealed forthwith to the Supreme Court on September 21, 2020.

On July 12, 2019, the Board of Directors of the Company made resolution to transfer 35% of shares of PCSM to BES Twin Towers Development Co., Ltd., a subsidiary of the Company, at a price of $351,290 thousand, resulting in an unrealized gain on disposal amounted of $107,068 thousand, not reclassified as retained earnings. Please refer to note 7 for more information.

As of December 31, 2020 and 2019, the Company provided as collateral a portion of its financial assets. Please refer to Note 8 for details of the related assets pledged as collateral.

(Continued)

290 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(d) Notes, accounts, and other receivables

Accounts receivable (including related parties) Other receivables Less: allowance for doubtful receivables Net book value	December 31, 2020 $ 1,948,371 73,046 (332,496) $ 1,688,921	December 31, 2019 2,040,420 52,546 (332,496) 1,760,470

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provisions were determined as follows:

Not past due Past due more than 1 year Not past due Past due more than 1 year	December 31, 2020	December 31, 2020	Allowance for expected credit loss 94,906 237,590 332,496 Allowance for expected credit loss 94,906 237,590 332,496
	Carrying amount of accounts receivables Weighted average expected credit loss $ 1,710,781 0~6% 237,590 100% $ 1,948,371 December 31, 2019
		Weighted average expected credit loss 0~6% 100%

The movement of the allowance for notes, accounts, and other receivables were as follows:

Balance at December 31 (equal to January 1)	For the years ended December 31,	For the years ended December 31,
	2020 $ 332,496	2019 332,496

There were no notes, accounts, and other receivables of the Company had been pledged as collateral as of December 31, 2020 and 2019.

For credit risk information, please refer to note 6(y).

(Continued)

291 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(e) Inventories

Finished goods Work-in-process Raw materials Fuel Subtotal Land held for construction site - compensation for levied land Payment for floor area ratio Construction-in-progress Subtotal Total	December 31, 2020 $ 604,363 277,621 1,296,257 14,342 2,192,583 9,423 13,535 9,576 32,534 $ 2,225,117	December 31, 2019
		363,659 276,037 1,189,501 19,331
		1,848,528
		9,423 13,535 9,549
		32,507
		1,881,035

The details of the cost of sales were as follows:

Cost of goods sold (Gain on reversal of) write-down Net inventory loss (profit) Unallocated fixed production overheads from idle facilities Revenue from sale of scraps Net amount	For the years ended December 31,	For the years ended December 31,
	2020 $ 14,002,619 (69,591) 1,277 1,359,745 (6,675) $ 15,287,375	2019
		25,285,794 (85,089) 35,889 555,181 (27,370
		25,764,405

As of December 31, 2020 and 2019, the aforesaid inventories were not pledged as collateral.

(f) Other current assets

Other financial assets Others	December 31, 2020 $ 1,655,545 356,930 $ 2,012,475	December 31, 2019
		- 369,145
		369,145

Other financial assets are time deposits with original maturity between three months and one year.

(Continued)

292 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(g) Investments accounted for using equity method

The Company’ s investments accounted for using the equity method at the reporting date were classified as follows:

Subsidiaries Associates Total	December 31, 2020 $ 27,518,817 1,139,864 $ 28,658,681	December 31, 2019
		22,433,855 1,388,596
		23,822,451

(i) Subsidiaries

Please refer to the consolidated financial statements.

(ii) Associates

The Company’ s investments accounted for using the equity method that are individually insignificant were as follows:

Carrying value of insignificant associates Attribution to the Group Profit from continuing operations Other comprehensive income Total comprehensive income	December 31, 2020 December 31, 2019 $ 2,880,178 5,456,393 For the years ended December 31,	December 31, 2019
		5,456,393
	2020 $ 61,709 (2,494) $ 59,215	2019
		493,155 6,278
		499,433

(iii) On November 26, 2013, the plan to invest in China was approved during the meeting of the Board of Directors of the Company. On March 25, 2014, and November 1, 2018, the Investment Commission, Ministry of Economic Affairs (MOEA) approved the investment of the Company in Jiangsu Weiming Petrochemical Corporation in China in the amount of CNY2,388,000 thousand (equivalent to $11,100,000 thousand) mainly to establish a manufacturing operations for petrochemical products (including hydrorefining crude benzol, cyclohexanone, nylon 6, etc.).
(iv) On January 30, 2019, a resolution was made during the board meeting of the Company to invest in Thanh Phong Construction Investment Co., Ltd. and Core Pacific Twin Star (Vietnam) Investment Co., Ltd., both through BES Twin Towers Development Co., Ltd. and Frontier Fortune Invest Pte. Ltd..

(Continued)

293 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(v) On August 12, 2019, a resolution was made during the board meeting of the Company to invest in Jean Pacific Development Co., Ltd., with the amount of $480,000 thousand. On March 27, 2020, a resolution was made during the Board meeting of the Company to invest $140,000 thousand in Jean Pacific Development Co., Ltd. according to the proportion of shareholding.
(vi) On January 31, 2020, September 25, 2019, and October 24, 2019, respectively, resolutions were made during the board meeting of the Company to raise capital for Ding-Yue Development Co., Ltd. amounting to $9,940,000 thousand, for the purpose of its engagement in join open bidding of Core Pacific City permanent land ownership and meet funding requirement.
(vii) Collateral

As of December 31, 2020 and 2019, the Company provided as collateral a portion of its investments in aforesaid equity-accounted investees. Please refer to Note 8 for details of the related assets pledged as collateral.

(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company were as follows:

Cost or deemed cost: Balance as of January 1, 2020 Additions Disposal Reclassification Adjustment Balance as of December 31, 2020 Balance as of January 1, 2019 Additions Disposal Reclassification Balance as of December 31, 2019 Depreciation and impairment loss: Balance as of January 1, 2020 Depreciation for the period Disposal Balance as of December 31, 2020 Balance as of January 1, 2019 Depreciation for the period Impairment Disposal Reclassification Balance as of December 31, 2019 Carrying amounts: Balance as of December 31, 2020 Balance as of January 1, 2019 Balance as of December 31, 2019	Land $ 5,647,642 - - - - $ 5,647,642 $ 5,647,642 - - - $ 5,647,642 $ - - - $ - $ - - - - - $ - $ 5,647,642 $ 5,647,642 $ 5,647,642	Land improvements 264,291 - - 2,806 - 267,097 259,258 - - 5,033 264,291 215,757 5,410 - 221,167 209,976 5,781 - - - 215,757 45,930 49,282 48,534	Buildings 2,367,463 - (8,138) 369,187 5,611 2,734,123 2,354,623 - (734) 13,574 2,367,463 1,120,281 70,995 (7,030) 1,184,246 1,046,971 73,672 - (734) 372 1,120,281 1,549,877 1,307,652 1,247,182	Machinery and equipment 42,053,876 - (478,726) 1,367,108 (5,611) 42,936,647 41,722,566 45 (949,884) 1,281,149 42,053,876 33,967,241 642,854 (478,616) 34,131,479 33,812,114 1,102,240 - (946,639) (474) 33,967,241 8,805,168 7,910,452 8,086,635	Vehicles 59,057 - (1,843) 4,719 - 61,933 54,856 - (1,688) 5,889 59,057 46,753 2,355 (1,843) 47,265 46,189 2,249 - (1,685) - 46,753 14,668 8,667 12,304	Other facilities 197,486 - (3,580) 14,511 - 208,417 167,352 - (5,006) 35,140 197,486 138,145 9,619 (3,581) 144,183 132,183 10,865 - (5,005) 102 138,145 64,234 35,169 59,341	Construction in progress 2,871,490 2,847,161 - (1,758,331) - 3,960,320 1,604,941 2,607,334 - (1,340,785) 2,871,490 - - - - - - - - - - 3,960,320 1,604,941 2,871,490	Accumulated impairment - - - - - - - - - - - 4,879,031 - - 4,879,031 1,978,419 - 2,901,096 (484) - 4,879,031 (4,879,031) (1,978,419) (4,879,031)	Total
									53,461,305 2,847,161 (492,287) - -
									55,816,179
									51,811,238 2,607,379 (957,312) -
									53,461,305
									40,367,208 731,233 (491,070)
									40,607,371
									37,225,852 1,194,807 2,901,096 (954,547) -
									40,367,208
									15,208,808
									14,585,386
									13,094,097

(Continued)

294 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

As of December 31, 2020 and 2019, the Company provided as collateral portion of its property, plant and equipment, please refer to Note 8 for details of the related assets pledged as collateral.

(i) Right-of-use assets

The Company leases assets including land, buildings, machinery, equipment and vehicles. Information about leases for which the Company as a lessee is presented below:

Cost: Balance as of January 1, 2020 Additions Disposal Balance as of December 31, 2020 Balance as of January 1, 2019 Effects of retrospective application Balance as of January 1, 2019 - retrospective Additions Disposal Balance as of December 31, 2019 Accumulated depreciation and impairment losses: Balance as of January 1, 2020 Depreciation for the period Disposal Balance as of December 31, 2020 Balance as of January 1, 2019 Effects of retrospective application Balance as of January 1, 2019 - retrospective Depreciation for the period Disposal Balance as of December 31, 2019 Carrying amounts: Balance as of December 31, 2020 Balance as of December 31, 2019	Land $ 61,787 24,144 (288) $ 85,643 $ - 61,679 61,679 108 - $ 61,787 $ 2,821 3,515 (105) $ 6,231 $ - - - 2,821 - $ 2,821 $ 79,412 $ 58,966	Buildings 7,130 9,465 (7,130) 9,465 - 7,130 7,130 - - 7,130 4,753 4,743 (7,130) 2,366 - - - 4,753 - 4,753 7,099 2,377	Machinery and equipment 63,906 56,116 (8,965) 111,057 - 63,906 63,906 - - 63,906 33,708 34,010 (7,097) 60,621 - - - 33,708 - 33,708 50,436 30,198	Vehicles 16,747 5,598 (10,736) 11,609 - 14,592 14,592 3,927 (1,772) 16,747 7,201 7,076 (10,056) 4,221 - - - 7,732 (531) 7,201 7,388 9,546	Total
					149,570 95,323 (27,119)
					217,774
					- 147,307
					147,307 4,035 (1,772)
					149,570
					48,483 49,344 (24,388)
					73,439
					- -
					- 49,014 (531)
					48,483
					144,335
					101,087

(Continued)

295 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(j) Investment property

The movement of invesment property was as followed:

Cost or deemed cost: Balance as of January 1, 2020 Net gains and losses due to fair value adjustments Balance as of December 31, 2020 Balance as of January 1, 2019 Decrease Net gains and losses due to fair value adjustments Balance as of December 31, 2019 Carrying amounts: Balance as of December 31, 2020 Balance as of January 1, 2019 Balance as of December 31, 2019	Land $ 36,698,539 897,033 $ 37,595,572 $ 38,331,633 (9,423) (1,623,671) $ 36,698,539 $ 37,595,572 $ 38,331,633 $ 36,698,539	Buildings 18,038 (723) 17,315 18,726 - (688) 18,038 17,315 18,726 18,038	Total 36,716,577 896,310 37,612,887 38,350,359 (9,423) (1,624,359) 36,716,577 37,612,887 38,350,359 36,716,577

(Continued)

296 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(i) Evaluation by income approach

The fair value of some investment properties of the Company was determined using the income approach. Under this income approach, the key terms of the rental contracts for these investment properties and certain other factors considered were as follows:

December 31, 2020

Subject	Qianjin Dist., Kaohsiung City Qianzhen Dist., Kaohsiung City None None $550~$700 $450 $576~$617 None Unused Leased $0~ $0 $0~ $0 5.555% None 4.260% 4.655% Outsourcing Outsourcing Colliers International Taiwan Colliers International Taiwan Feng-ru, Ke Shiou-ying, Jan December 31, 2020 December 31, 2020 $ 10,780 $ 2,737,000
Important contract terms The range of rental in the area where the investment property is located The rental range of similar investment property The current status of the investment property Past earnings Income capitalization rate Discount rate Outsourcing or self-valuation Evaluation office Appraiser name Evaluation date Outsourcing fair value

(Continued)

297 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

December 31, 2019

Subject	Qianjin Dist., Kaohsiung City Qianzhen Dist., Kaohsiung City None None $550~$700 $450 $563~$589 None Unused Leased $0~ $0 $0~ $0 5.525% None 4.380% 4.780% Outsourcing Outsourcing Colliers International Taiwan Colliers International Taiwan Feng-Yu, Ke Shiou-ying, Jan December 31, 2019 December 31, 2019 $ 10,530 2,514,000
Important contract terms The range of rental in the area where the investment property is located The rental range of similar investment property The current status of the investment property Past earnings Income capitalization rate Discount rate Outsourcing or self-valuation Evaluation office Appraiser name Evaluation date Outsourcing fair value

In accordance with Article 34 of the Regulations on Real Estate Appraisal, the income approach procedures include estimating the effective gross income and total expenses, computing the net operating income, determining the capitalization rate or discount rate, and computing the income. The attributes used by the Company for the estimations above were the last three years’ data from the subject property and comparable properties which have similar characteristics, and these data were assessed and adjusted based on their persistency, stability, and growth to ensure the availability and reasonableness of these data. The movement of income (cash inflows) and expenditure (cash outflows) for future periods was based on the vacancies or losses, existing or future cash flow plans of the Company, and historical cash flows from the subject property, identical properties, or properties in the same industry. The estimation and computation of the net income were based on the highest and best use of the subject property and have taken into consideration the income generated from comparable properties in the same location based on their highest and best use.

(Continued)

298 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

External appraisers use the risk premium method to decide on the direct capitalization rate and discount rate. The fixed deposit interest rate, government bonds rate, real estate investment risk, money supply-demand variation, the trend of real estate value and etc. are taken into consideration to decide the likely rate of return on the most common investment as a basis in order to derive the capitalization rate or discount rate. The differences in individual characteristics between the above most common investment and the subject property are compared in terms of their liquidity, risk, appreciation, and management. As of December 31, 2020 and 2019, the discount rate was 4.260%~4.655% and 4.380%~4.780%, respectively. As of December 31, 2020 and 2019, the weighted average capitalization rate was 5.555% and 5.525%, respectively, derived as the ratio of annual net operating income of comparable properties divided by reasonable price.

(ii) Evaluation through land development analysis

The Company classified its undeveloped land as investment property. The Company adopted the development land analysis approach to measure the fair value of the undeveloped land in accordance with Article 9 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The input value involved in evaluation belongs to level 3. The relevant information is summarized as follows:

December 31, 2020

Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 110,949,840 2,614,812 19%~22% 12%~20% 3.650%~5.8547% 0.92%~3.05% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm and Colliers International Taiwan Shiou-ying, Jan and Jian-hui,Gu Yu-xian, Houng, Jian-hui,Gu, Shiou-ying, Jan and Ching- Tang, Li December 31, 2020 December 31, 2020 28,519,000 1,350,116 Qianzhen Dist., Kaohsiung City Others 101,156,568 2,718,175 18%~30% 12%~25% 3.900%~8.930% 1.06%~3.47% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm and Colliers International Taiwan Shiou-ying, Jan and Jian-hui, Gu Yu-xian, Houng, Jian-hui, Gu, and Shiou-ying, Jan December 31, 2019 December 31, 2019 27,885,380 1,349,677
Estimate total sales price Rate of return Capital interest rate Evaluation office Appraiser name Evaluation date Outsourcing fair value December 31, 2019 Subject	7,968,120 23% 1.770% CCIS Real Estate Joint Appraisers Firm Huo-ming, Huang December 31, 2020 $ 4,995,991 Annan Dist., Tainan City
Estimate total sales price Rate of return Capital interest rate Evaluation office Appraiser name Evaluation date Outsourcing fair value	7,968,120 23% 1.790% CCIS Real Estate Joint Appraisers Firm Huo-ming, Huang December 31, 2019 $ 4,956,990

(Continued)

299 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Investment property included several rentals of real property to others. Each lease contract all include the original non-cancellable lease and the subsequent lease is negotiated with the lessee without collection of contingent rental. Please refer to Note 6(q) for the relevant information including rent revenue and the direct operating expenses incurred.

As of December 31, 2020 and 2019, the Company provided as collateral portion of its investment property. Please refer to Note 8 for details of the related assets pledged as collateral.

In the era of pre-Taiwan Alkali Industrial Corporation (TAIC), TAIC had leased the lands located in Tainan and Chiayi area to the local peasants and fishermen, and the surviving tenants shall continue paying the rent to the Company according to the agreements. In the event of the resumption of self-business use or the sale of the lands, the leases shall be terminated under the contractual agreements and Land Laws. If there is any redemption in some cases, the Company will recognize and evaluate the possible expenses and costs case by case.

AnShun Land Located in Tainan City Annan District:

(i) History

1) The land where the AnShun Alkali plants located was originally established by Japanese company Kanegafuchi Soda in 1938 under Japanese Colonial Rule.
2) The Government undertook construction after the Retrocession of Taiwan, and established a state-owned company, Taiwan Alkali Industrial Corporation (TAIC) and operated at the AnShun Site. In 1961, the competent authorities in charge of the relevant state-owned enterprises approved the investment plan and budget for producing Pentachlorophenol and sodium pentachlorophenol products used in herbicides and wood preservative fungicides.
3) Due to operational factors, the plant was ordered to be closed by Executive Yuan Department of Economic Affairs in early 1982.
4) In April 1983, Executive Yuan Department of Economic Affairs ordered China Petrochemical Development Corp., the state-owned Company, the subsidiary of CPC at the time, to merge with TAIC. The Company took charge of Anshun land of TAIC.

(Continued)

300 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

5) Since the said merger, the Company takeover the Anshun land, the Company has never had any act of production, operations, development, use or pollution at the site. According to subsequent investigation and research, parts of the area had detected dioxin and mercury contamination in soil. The land was designated by the Tainan City Government and the Environmental Protection Department of the Executive Yuan as a “Soil Pollution Control Site” and “Soil pollution remediation site” in April 2002 and March 2004, respectively, per the Soil and Groundwater Pollution Remediation Act.
6) Tainan city government and other government authorities cited Article 75 of Taiwan’s Company Law that since the Company merged with TAIC, and was regarded as the surviving company, the Company should take all responsibilities for the rights and obligations of TAIC, along with the treatment projects and remediation plan. As the Company never used the land after being ordered to take charge by the Executive Yuan Department of Ministry of Economic Affairs (MOEA), the Company thus objected and carried out the following administrative and judicial remedies to identify the government conception of the “Polluters” and the condition of pollution:
a) The Company filed a plea of State Compensation claim to Ministry of Economic Affairs, Administration Yuan (MOEA), but was refused.
b) In January 2006, the Company filed a complaint against MOEA in the Taiwan Taipei District Court in the amount of $10,077 thousand for reimbursement compensation.
c) The complaint was dismissed by the Supreme Court in February, 2008. Upon the application of Constitution Interpretation by the Company, J.Y. No.714 Interpretation of the Grand Justice was issued in November, 2013, and considered that Soil and Groundwater Pollution Remediation Act (SGPR Act) does not violate the principle of prohibition against retroactive law, or the principle of proportionality the retroactive rule; however, the holding did not mention whether the successor of the Polluter entity should be responsible for the treatment projects and remediation plan under SGPR Act was not within the scope of the regulation.
d) The Company has filed series of complaint on those issues according to this Constitutional Interpretation.
7) Tainan City Government issued the letter No. 09722000130 and No. 09722003360 in January and February 2008 respectively, and requested the Company to propose a remediation plan for the soil and groundwater pollution of the Anshun plant in accordance with the Soil and Groundwater Pollution Remediation Act.
a) The Company proposed the “Tainan City, CPDC former Taiwan Alkali Anshun site and 2nd class number nine road on the eastern side of the grass area of the site, soil pollution remediation pollution remediation plan” per the regulation at the end of June 2008 and the plan was submitted to Tainan city government for review and formally approved in May 2009. In 2012, the remediation plan was put forward and approved on July 2, 2012. The 1st instance was completed in September 2014 and entered the second phase of the remediation, which will last 10 years. A second revision of the remediation plan was proposed and submitted to Tainan City Government for review, and the approval letter issued by Tainan City Government

(Continued)

301 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

informed of the approval of the 2nd remediation plan, which shall be publicly displayed per regulations. Currently, the Tainan City Environmental Protection Bureau reviewed and adopted the plan on April 14, 2015 and the assessment was announced by Tainan City Government on May 4, 2015. According to the remediation technology and the actual implementation of the subsequence adjustment, the 3rd remediation change plan was proposed on March 2, 2017, which remediation plan was focus on the remediation plan of 2nd phase and brought in the unfinished items in the 2nd change plan. Currently, the 3rd plan was reviewed and adopted on January 3, 2018.

b) The relating remediation expense for the first phase was estimated to be $1,647,200 thousand. The remediation expense about $1,600,000 thousand was engaged as the 1st phase until September 2014. Simultaneously, the following 10-year remediation work needed to be started after the 2nd change plan was adopted at an estimated cost of $1,356,000 thousand in December 2014.

(ii) Extension legislation:

1) Remediation prepay
a) Tainan city government on February 27, 2008 with the letter No. 09722004430 asked the Company to pay each expense: $88,786 thousand, coming from investigation assessments and strain necessary measures, which was prepaid by Tainan city government and EPA of Executive Yuan on behalf of land polluters, within deadline. The expense would double and transfer to court for enforcement if overdue. This expense was adjusted to list in 2007 per Financial Accounting Standards and the Company prepaid on behalf of land relations based on the laws and regulations in July 2008. The Company objected to the prepaid expense and land polluter, hence, the administrative remedy was proposed in July 2008, with Kaohsiung High Administrative court sentencing the Company to pay the expense $88,430 thousand in January 2008. The Company appealed in March 2008 and Supreme Administrative Court sent the case back to Kaohsiung High Administrative Court for further trial. Kaohsiung High Administrative court sentenced the original punishment and the petition decision beyond $76,066 thousand was withdrawn. In December 2013, both parties proposed the appeal for the unfavorable parts and Supreme Administrative Court sentenced the amount beyond $203 thousand and lawsuit expenses are all abandoned in April 2015 and sent back to Kaohsiung High Administrative court for continued trial. The determined withdrawn amount $356 thousand had all been returned back to the account by Tainan city government. Kaohsiung High Administrative court rejected the appeal of the Company on December 2016. The Company proposed the appeal remedy for the unsatisfied sentenced contents on January 2017. Supreme Administrative Court sentenced on January 2018 that the expenses $1,134,718 thousand did not need to be undertaken by the Company.
b) Tainan city government on May 22, 2009 with the letter No. 09822013680 asked the Company pay the expenses $17,962 thousand, which resulted from the relevant working plan of AnShun Land Site soil pollution remediation and was prepaid by Tainan city government on behalf of the Company, and Tainan city government in December 2009 with the letter No. 09822035440 asked the Company to pay the

(Continued)

302 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

above fees prior to January 31, 2010. The Company estimated such expense at the end of 2009 and proposed the administrative remedy in January 2010 and prepaid the above fees within the deadline inquired by Tainan city government based on the law regulations. The petition was rejected in March 2011, thus, the administrative lawsuit was proposed according to the law. Kaohsiung High Administrative court sentenced that the amount beyond $17,867 thousand was withdrawn. After the appeal, Supreme Administrative Court sentenced to return back to Kaohsiung High Administrative court for further trial in September 2013. Kaohsiung High Administrative court sentenced the amount beyond $7,068 thousand was withdrawn on October 7, 2015 and this case had been appealed for the remedy. The determined withdrawn amount $95 thousand had been returned back to the account by Tainan city government. The verdict from Supreme Administrative Court had been received on February 18, 2017, the fact was again returned back to Kaohsiung High Administrative court for the trial. In July 2018, Kaohsiung High Administrative Court considered that the payment amount which is exceeding $8,121 thousand shall be revoked. Both parties are dissatisfied and file an appeal. In January 2020, Supreme Administrative Court annulled the original judgment, remanding the case back to Kaohsiung High Administrative court. On November 24, 2020, The court’ s judgement is announced that the payment amount which exceeds $7,622 thousand shall be revoked. For company’ s best interests and reasonable pollution remediation fee, The Company filed an appeal on December 18, 2020. The case is still under trial now.

c) The Tainan City Government, in February 2014, passed that the Company was the polluters per judgment No. 1953 which was pass down in 2007 and asked the Company to pay the 2011 advanced payment of supervision and management on behalf of Anshun factory, in the amount of $27,444 thousand. The Company paid the fee in advance as previous mention within the requested deadline by the Tainan City Government based on the law regulations and filed the petition for remedy in March 2014, which was rejected by the petition authorities. The Company was not satisfied with the result, and filed the administrative legal appeal in September of same year. The Kaohsiung High Administrative Court sentenced the Company to pay $154 thousand. However, Tainan City Government was not satisfied with the verdict and filed the appeal for remedy, the Company also filed an appeal based on the Company’ s claims to Supreme Administrative High Court. The Supreme Administrative High Court suspended the original verdict in February 2018, and currently the case is under hearing by the Kaohsiung High Administrative Court. On December 19, 2019, a fine of $5,301 thousand was imposed by the court; in pursuit of the best interest of the Company, an appeal was filed with Supreme Administrative Court on January 16, 2020. And this case is still under trial.
d) Tainan City Government, in May 2016, issued the letter No. 10504498726, requesting the Company pay a fee for the “supervision management and audit work plan of 2013 CPDC (Taiwan Alkali) Anshun plant site remediation” and requesting the Company pay the fee of $63,271 thousand prior to July 20, 2016, per paragraph 4 of article 14, article 15 and paragraph 1 of article 43. The Company paid the fee within the requested deadline by the Tainan City Government based on applicable regulations. After the rejection of the petition for the remedy in June 2016, the Company filed for administrative litigation in December 2016. The court’ s

(Continued)

303 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

judgement is announced that the payment amount which exceeds $4,845 thousand shall be revoked. in July 2017. In order to maintain the Company’ s right and interest, the Company had proposed the appeal to Supreme Administrative Court for remedy of the unfavorable parts in August 2017. In the meanwhile, Tainan City Government filed for an appeal too. On October 31, 2018, Supreme Administrative Court dismissed the Company’ s appeal, revoked the rest of the verdicts and remanded the case back to Kaohsiung High Administrative. Except for the judgement is final and binding, The Court ruled that the amount exceeding $7,622 thousand was revoked(It means that the Company shall pay $39,863 thousand). Both parties appealed to Supreme Administrative Court base on their unprofitable part of verdict in October 2019. And this case is still under trial now.

e) The Tainan City Government issued the letter No. 1080412260 in April 2019, requesting the Company to pay before June 30, 2019. The government claimed to have performed "2016 China Petroleum & Chemical Corporation Anshun Plant Remediation Site Supervision, Management and Checking Work Plan" on behalf of the Company, and request the Company to pay $59,624 thousand in accordance with Article 14 (4) and Article 15 of the Soil and Groundwater Pollution Remediation Act. Based on the laws and regulations, the Company paid the aforementioned fees first within the time limit set by the Tainan City Government, and filed an administrative appeals in May of the same year. Tainan City Government dismissed the Company’s petition on August 28, 2020. The Company initiate an action to Kaohsiung High Administrative court for the administrative remedy on October 28, 2020 and this case is still under trial now.
2) Tainan city government claimed that the Company didn’t implement per the remediation process.
a) Tainan city government, in June 2017, with the letter No. 1060630217 attached with sanction letter No. 106060012 determined the 3rd remediation change plan not proposed and took it as reason and imposed a penalty of $1,000 thousand. After the verification, there is no ‘take it as’ term in Soil pollution law and Implementation rules, which violated the principle of administration. The petition remedy had been proposed in July 2017 and the rejection of petition was received in October of the same year. The Company proposed to Kaohsiung High Administrative court for the administrative remedy in December of the same year. Later, an against judgment is rendered against the Company. The Company filed an appeal to the Supreme Court. On July 7, 2020, the Supreme Court reverse the original judgement and remand the case to the Kaohsiung High Administrative Court. On December 28, 2020, Kaohsiung High Administrative court give the judgement against the Company.
b) The Tainan City Government issued the punishment notification No. 108040003 in April 2019 as a result of the concentration of the dioxin in the exhaust pipe test results not being lower than the standard set by the third change plan (less than 0.1ng-TEQ/Nm3) and would result in a fine of $200 thousand. An administrative appeals was filed in May 2019 in accordance with the laws, and the Environmental Protection Agency of the Executive Yuan dismissed in July of the same year. The Company filed an administrative lawsuit in September of the same year. The case is currently in administrative court of the Tainan District Court.

(Continued)

304 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

3) Others

a) The Company still has the objection on the adscription of pollution responsibility for AnShun land located in Tainan City Annan District and would continue to strive for the possible administrative and law remedy actively.

In view of the jurisdiction explanation No.714, which indicated whether the general successors of polluters bear the burden of remediation responsibilities, was not in the scope of the Soil and Groundwater Pollution Remediation Act. Also, considering the previous Taiwan Alkali Co. Ltd. was a state-owned enterprise, and the Anshun plant was controlled, supervised, and assigned operations and gained beneficially by the Ministry of Economic Affairs, Taiwan Provincial Government and CPC, such actions should be part of national behavior, yet, the resulting pollution and remediation was asked to be borne by the private legal person. The Company applied to the Tainan city government to determine the beginning of the actual pollution or potential perpetrators, and who should pay the relevant costs and penalties. The rejection was made by the Tainan City Government in November 2014. The Company filed a legal petition in December 2014 and the original disposal authorities revoked the original punishment in March 2014, hence, the Executive Yuan Environmental Protection Agency made the decision not to proceed with the case. The original disposal authorities revoked the previous punishment but simultaneously imposed a new one, the Company also filed a petition to the new punishment. The Company’ s petition was decided not to proceed in August 2015 and the Company filed an administrative legal appeal instead, due to multiple errors, which was under hearing by the Kaohsiung High Administrative Court. Through the rejection of the Company’ s request by Kaohsiung High Administrative court, the Company proposed the appeal for remedy in November 2017. Supreme Administrative Court dismissed the Company’ s appeal. The company file a petition for constitutional interpretation, but it was dismissed by Grand Justices of the Constitutional Court.

The cumulative fee of invested and estimated control and management cost and remediation fee was $3,686,964 thousand as of December 31, 2020. The preceding remediation fee was estimated according to the current possible situations by the Company. However, unpredictable future events may cause large fluctuations in the total expected remediation fees. This will be closely monitored and evaluated by management

(Continued)

305 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

b) Anshun dormitory designated monuments case

Xincun Land of Taiwan Alkali Co., Ltd.:

1) History

2) Extension legislation

Business inspector found that the land was occupied by residents that built illegal construction, which violated the agreement. After communicating with the residents’ multiple times, the situation still did not improve. To be responsible for asset management and reach the expectation of the Company’ s shareholders, the Company filed a legal appeal in February 2013 to require to the demolition of the illegal construction and return the land. Kaohsiung District Court rejected the Company’ s petition. Due to the previous judgment, the Company filed a legal appeal for remedy in September 2014, which was rejected by the Kaohsiung High Court in July 2016. The Company filed the appeal for remedy to Supreme Court in August of same year. In April 2019, The court remand the case to the Kaohsiung High Administrative Court, and this case is still being heard in the Court.

Shulin Land of Taiwan Alkali Co., Ltd.:

1) History:
a) No. 540, 541 and 543, Dongshan Section, Shulin District, Xinbei City and No. 489, Weiwang Section, Shulin Dist., New Taipei City 238, Taiwan including land originally belonging to Shulin plant of Taiwan Alkali Co. Ltd. Taiwan Alkali Co. Ltd., which established the plant in 1962 and closed the plant in 1975. The Executive Yuan Department of Economic Affairs in April 1983 ordered the government-owned Company which at the time was also a subsidiary of CPC to merge with Taiwan Alkali Co. Ltd..

(Continued)

306 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

b) Then the plant was subsequently sold to CPC. The New Taipei City Government Environmental Protection Bureau, on August 16, 2010, announced the land as “soil pollution control site”.
c) The New Taipei City Government Environmental Protection Bureau issued the letter No. 1000010000 in March 2011 declaring that the Company merging with Taiwan Alkali Co. Ltd. was regarded as the surviving company and shall take the responsibility for the rights and obligations of Taiwan Alkali Co. Ltd. for soil pollution remediation according to article 75 of Company Act and was deemed as the polluter and required to propose subsequent disposal and remediation.

Since the change of predetermined place of CPC’s warehouse, the relocation schedule had to be extended to November 15, 2017. The remediation work schedule was postponed so that the soil pollution control plan (change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites) was proposed in April 2017. New Taipei City Government sent the letter to agree for future reference on May 18, 2017. Because of the different dynamic factors for the predetermined place of CPC’s warehouse, the relocation process was extend to December 31, 2021, and the remediation work schedule had to be postponed. Therefore, the “soil pollution control plan (the 2nd change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites)” was proposed in August 2019, and New Taipei City Government agreed for future reference on August 16, 2019. We are now performing this project subject to the soil pollution control plan.

The relevant remediation expense of $273,750 thousand was estimated and listed in 2011 according to Financial accounting standards related regulations. However, it will be assessed to adjust for changes due to internal and external factors in future, which may result in significant differences on the entire remediation expense.

(k) Short-term loans

The short-term loans were summarized as follows:

Letters of credit Unsecured bank loans Secured bank loans Total Total short-term credit lines Unused short-term credit lines Range of interest rates	December 31, 2020 $ 1,175,000 1,300,000 1,140,000 $ 3,615,000 $ 6,400,000 $ 1,171,378 1.2799%~1.3857%	December 31, 2019
		1,050,558 2,050,000 -
		3,100,558
		6,100,000
		1,614,920
		1.33%~1.943%

Please refer to Note 8 for details of the related assets pledged as collateral.

(Continued)

307 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(l) Long-term loans

The long-term loans were summarized as follows:

Secured bank loans Less�current portion Total Total long-term credit lines Unused long-term credit lines Range of interest rates	December 31, 2020 $ 5,570,000 (1,160,000) $ 4,410,000 $ 12,631,000 $ 5,321,000 1.3%~1.9556%	December 31, 2019 4,830,000 (1,370,000) 3,460,000 5,980,000 280,000 1.47%~1.9556%

(i) Syndicated loan A: The credit line is $2,900,000 thousand consisting of medium-term secured loans and non-revolving credit facility, which was used to finance the building of the plant and purchase of accessory equipment.
(ii) Syndicated loan B: The credit line is $1,450,000 thousand consisting of medium-term loans and revolving credit facility, which was used to meet funding requirement.
(iii) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. If the Company breaches these financial covenants, the syndicated banks may declare the unpaid principal, interest, fees and other sums payable by the Company under the loan agreement to be immediately due and payable. These financial ratios are as follows:
1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.
2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
(iv) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of

(Continued)

308 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

the improvement period, the credit balance of credit cases, in accordance with Article 7 (3) of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.

(v) The term of the repayment of the category A credit is stipulated as: The first period will be paid off from the date of the first use of the credit application to the expiration of three years. After that, it will be a period of six months for once. Settlement of the liability divided into five phases. The first period to the fourth period, each period shall be settled separately for 15% of the outstanding principal balance of the expiration date of the credit period, and the fifth period shall be settled for 40% of the outstanding principal balance of the expiration date of the credit period.
(vi) The term of payment of the category B credit is stipulated as: The borrower shall fully repay on the due date as set out in each application for use.

(i) Syndicated loan A: The credit line is $2,815,000 thousand consisting of medium-term secured loans and revolving credit facility, which was used to meet funding requirement. The loan period lasts 3 years upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended upon expiration for 2 years, and limited to once, through written application.
(ii) Syndicated loan B: The credit line is $1,085,000 thousand consisting of commercial promissory note agreements and revolving credit facility, which was used to meet funding requirement. The loan period lasts 1 year upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended 12 months before expiration, and limited to twice, through written application.
(iii) 24 months after the first disbursement and every 6 months ever since, the credit line of the syndicated loan is diminished by 10% of the total credit line, applicable to the extension period. In advance of each credit line diminished date, for loan A, the company shall settle any exceeding principal, interests, and other relating liabilities, free of prepayment terms included in the contract. For loan B, the Company shall make deposit to the designated account to make up for the amount of note principal exceeding the credit line, free of prepayment terms included in the contract. The Company may withdraw the deposit after the aforementioned note is settled.

(Continued)

309 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. These financial ratios are as follows:
1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.
2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
4) Tangible net worth (total equity excluding intangible assets): not lower than $60,000,000 thousand.
(v) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 8 of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest, plus guarantee fee. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.
(vi) The term of the repayment of the category A credit is stipulated as: the repayment shall be completed on the expiration date stated in the application form for each disbursement.
(vii) The term of the repayment of the category B credit is stipulated as: The repayment shall be completed on the due date stated on the note.

1) Current ratio (total current assets divided by total current liabilities): not lower than 120%.

(Continued)

310 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
4) Tangible net worth (total equity excluding intangible assets): not lower than $67,000,000 thousand.

Please refer to Note 8 for details of the related assets pledged as collateral.

(m) Bonds payable

(i) The details of bonds payable were as follows:

Domestic secured non-convertible bonds Less: current portion Balance of bonds payable Maturity year	December 31, 2020 $ 3,500,000 - $ 3,500,000 114	December 31, 2019
		- -
		-
		-

(ii) The Company issued domestic secured non-convertible bonds at the amount of $3,500,000 thousand for the year ended December 31, 2020, the terms were as follows:

Issue amount
Issue date
Issue period
Coupon rate
Interest payment date
Repayment and interest payment
Collateral

The first domestic secured non-convertible bond in
2020
Bond A
Bond B
Bond C
$ 1,500,000
1,000,000
1,000,000
109.9.21
109.9.21
109.9.21
5 years
5 years
5 years
%
0.64
%
0.64
%
0.64
September 21
September 21
September 21
Repayment on
maturity, interest
payment annually
Repayment on
maturity, interest
payment annually
Repayment on
maturity, interest
payment annually
Bank Guarantee
(Mega
International
Commercial Bank
Co., Ltd.)
Bank Guarantee
(Bank of Taiwan
Co., Ltd.)
Bank Guarantee
(Land Bank of
Taiwan Co., Ltd.)

Please refer to Note 8 for details of the related assets pledged as collateral.

(Continued)

311 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(n) Long-term bills payable

The components of long-term bills payable were as follows:

December 31, 2020
Acceptance institution
Period
Amount
International Bills Finance
Corporation
2020.12.07~2021.02.22 $ 200,000
International Bills Finance
Corporation
2020.12.31~2021.01.05
150,000
Taching Bills Finance
Corporation
2020.11.12~2021.01.07
300,000
Taching Bills Finance
Corporation
2020.10.12~2021.01.07
100,000
China Bills Finance Corporation 2020.11.09~2021.01.27
800,000
Mega Bills Finance Corporation
2020.12.22~2021.03.22
500,000
Mega Bills Finance Corporation
2020.10.12~2021.01.08
500,000
Mega Bills Finance Corporation
2020.12.11~2021.03.11
720,000
Mega Bills Finance Corporation
2020.11.10~2021.01.27
30,000
Mega Bills Finance Corporation
2020.10.30~2021.01.26
550,000
Mega Bills Finance Corporation
2020.12.25~2021.02.25
670,000
Mega Bills Finance Corporation
2020.11.17~2021.01.18
200,000
Mega Bills Finance Corporation
2020.11.06~2021.01.18
80,000
Mega Bills Finance Corporation
140,000
Mega Bills Finance Corporation
270,000
Mega Bills Finance Corporation
85,000
Mega Bills Finance Corporation
15,000
Mega Bills Finance Corporation
150,000
Mega Bills Finance Corporation
200,000
5,660,000
(3,888)
$
5,656,112

Acceptance institution

International Bills Finance
Corporation
International Bills Finance
Corporation
Taching Bills Finance
Corporation
Taching Bills Finance
Corporation
China Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation
Mega Bills Finance Corporation

(Continued)

312 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

December 31, 2019
Acceptance institution
Period
Amount
China Bills Finance Corporation 2019.11.15~2020.02.13 $ 500,000
China Bills Finance Corporation 2019.12.23~2020.03.23
650,000
International Bills Finance
Corporation
2019.12.24~2020.03.23
200,000
Taching Bills Finance
Corporation
2019.12.26~2020.02.24
350,000
Taching Bills Finance
Corporation
2019.11.20~2020.02.18
50,000
Mega Bills Finance Corporation
2019.11.05~2020.01.03
500,000
Mega Bills Finance Corporation
2019.11.13~2020.01.13
450,000
Mega Bills Finance Corporation
2019.11.14~2020.02.12
250,000
Mega Bills Finance Corporation
400,000
Mega Bills Finance Corporation
150,000
Mega Bills Finance Corporation
200,000
Mega Bills Finance Corporation
200,000
Mega Bills Finance Corporation
600,000
4,500,000
(5,823)
$
4,494,177

Acceptance institution

The Company had revolving commercial promissory note agreements with bills finance companies in order to finance its operating requirement. As of December 31, 2020 and 2019, the bills payable bear interest rates ranging from 0.28%~1.262% and 0.55%~1.3400%, respectively.

Please refer to Note 8 for details of the related assets pledged as collateral.

(o) Lease liabilities

The lease liabilities of the Company were as follows:

Current Non-current	December 31, 2020 $ 32,583 $ 112,919	December 31, 2019
		40,375
		61,388

For the maturity analysis, please refer to note 6(y).

(Continued)

313 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expense relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2020 $ 2,036 $ 29,424	2019 2,209
		28,625

The amounts recognized in the statement of cash flows for the Company were as follows:

Total cash outflow for leases	For the years ended December 31,	For the years ended December 31,
	2020 $ 80,273	2019 79,168

(p) Provisions Balance as of January 1, 2020 Provisions made during the year Provisions used during the year Balance as of December 31, 2020 Current Non-current Balance as of January 1, 2019 Provisions made during the year Provisions used during the year Balance as of December 31, 2019 Current Non-current	Decommissioning $ 1,196,440 - - $ 1,196,440 $ - 1,196,440 $ 1,196,440 $ 1,198,350 - (1,910) $ 1,196,440 $ - 1,196,440 $ 1,196,440	Remediation project 603,972 249,750 (339,109) 514,613 276,650 237,963 514,613 967,414 - (363,442) 603,972 151,417 452,555 603,972	Employee benefits 256,161 50,429 (31,322) 275,268 4,984 270,284 275,268 236,983 32,519 (13,341) 256,161 5,488 250,673 256,161	Total
				2,056,573 300,179 (370,431
				1,986,321
				281,634 1,704,687
				1,986,321
				2,402,747 32,519 (378,693
				2,056,573
				156,905 1,899,668
				2,056,573

(i) To comply with the Order of the Tainan City Government, the Company submitted a remediation plan proposal and accrued relevant remediation plan for approval before June 30, 2008 and evaluated the relating remediation expense of $1,647,200 thousand. In May 2009 and on July 2, 2012, the Company was granted official approval of its remediation proposal and amended remediation proposal, respectively. In September 2014, the Company completed the first phase of the implementation of its plan. It is expected to launch the second phase of the implementation of its remediation plan during the next decade. The Company has submitted the second phase of its amended remediation plan to the Tainan City Government for approval. On December 24, 2014, Tainan City Government notified the Company of its approval and now is under public tender review.

(Continued)

314 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The aforementioned remediation costs of the Company were recognized in the total amount of $1,600,000 thousand for the first stage before September 2014. With the launch of the second remediation stage, the Company estimated the cost based on the situation on December 2014 at $1,356,000 thousand. Currently, the Tainan City Environmental Protection Bureau reviewed and adopted the plan on April 14, 2015 and the assessment was announced by Tainan City Government on May 4, 2015. According to the remediation technology and the actual implementation of the subsequence adjustment, the 3rd remediation change plan was proposed on March 2, 2017, which was reviewed and adopted on January 3, 2018. (Note 6(j) for more details)

(ii) 1) The Company’s four parcels of land at Dongshan section, Shulin district, New Taipei City were the original location of TAIC’ s Shulin plants, but then sold to the Taiwan Chinese Petroleum Corporation (CPC). On August 16, 2010, the Environmental Protection Department of New Taipei City Government has declared that such land as "Soil Pollution Control Site”. In March 2011, the Environmental Protection Department of New Taipei City Government issued letter No. 1000010000. In that letter, the Company was deemed to be the surviving entity, which assumed the rights and obligations of TAIC following its merger with TAIC and TAIC ceased to exist. As the surviving entity from this merger, the Company was therefore declared as the polluter and was required to submit a remedial plan.
2) Since the change of predetermined place of CPC’s warehouse, the relocation schedule had to be extended to November 15, 2017. The remediation work schedule was postponed so that the soil pollution control plan (change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites) was proposed in April 2017. New Taipei City Government sent the letter to agree for future reference on May 18, 2017. Because of the different dynamic factors for the predetermined place of CPC’s warehouse, the relocation process was extended to December 31, 2021 and the remediation work schedule had to be postponed. Therefore, the “soil pollution control plan (the 2nd change plan) of Shulin Land of former Taiwan Alkali Co., Ltd. (part of the sites)” was proposed in August, 2019, and New Taipei City Government agreed for future reference on August 16, 2019. We are now performing this project subject to the soil pollution control plan. However, it will be assessed to adjust for changes due to internal and external factors in future, which may result in significant differences on the entire remediation expenses.

(q) Operating lease

The Company leases out its property. The Company has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(j) sets out information about the operating leases of investment property.

(Continued)

315 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years More than five years Total undiscounted lease payments	December 31, 2020 $ 36,840 36,840 36,883 27,021 25,206 265,843 $ 428,633	December 31, 2019 20,125 35,068 35,067 35,067 27,020 291,949
		444,296

For the years ended December 31, 2020 and 2019, the income from the rental of investment property, property, plant and equipment amounted to $23,521 thousand and $18,173 thousand, respectively.

(r) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of funded defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2020 $ 486,957 (216,673) $ 270,284	December 31, 2019 531,181 (290,272) 240,909

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

(Continued)

316 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $215,318 thousand as of December 31, 2020. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movement in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Company were as follows:

Defined benefit obligation, January 1 Benefits paid from plan assets Current service costs and interest Past service credit Defined benefit obligation, December 31	For the years ended December 31, 2020 2019 $ 531,181 581,583 (94,268) (94,989) 15,243 17,942 34,801 26,645 $ 486,957 531,181	For the years ended December 31, 2020 2019 $ 531,181 581,583 (94,268) (94,989) 15,243 17,942 34,801 26,645 $ 486,957 531,181
		531,181

3) Movement of defined benefit plan assets

The movement in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets, January 1 Employer contributions Benefits paid by the plan Expected return on plan assets Re-measurements of the net defined benefit liability Fair value of plan assets, December 31	For the years ended December 31, 2020 2019 $ 290,272 356,244 7,764 10,714 (94,268) (94,989) 2,761 3,786 10,144 14,517 $ 216,673 290,272	For the years ended December 31, 2020 2019 $ 290,272 356,244 7,764 10,714 (94,268) (94,989) 2,761 3,786 10,144 14,517 $ 216,673 290,272
		290,272

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service cost Net interest on net defined benefit liability	For the years ended December 31, 2020 2019 $ 10,119 11,683 2,363 2,473 $ 12,482 14,156	For the years ended December 31, 2020 2019 $ 10,119 11,683 2,363 2,473 $ 12,482 14,156
		14,156

(Continued)

317 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Operating costs Selling expenses Administrative expenses Research and development expenses Actual return on plan assets	For the years ended December 31, 2020 2019 $ 10,947 12,943 56 54 1,288 999 191 160 $ 12,482 14,156 $ 12,905 18,302	For the years ended December 31, 2020 2019 $ 10,947 12,943 56 54 1,288 999 191 160 $ 12,482 14,156 $ 12,905 18,302
		14,156
		18,302

5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Company’s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2020 and 2019, was as follows:

Accumulated balance, January 1 Recognized during this year Accumulated balance, December 31	For the years ended December 31, 2020 2019 (151,106) (138,978) (24,657) (12,128) $ (175,763) (151,106)	For the years ended December 31, 2020 2019 (151,106) (138,978) (24,657) (12,128) $ (175,763) (151,106)
		(151,106)

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increases	For the years ended December 31, 2020 2019 0.625% 1.00% 1.00% 1.50%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $7,488 thousand.

The weighted average lifetime of the defined benefits plans is 13.64 years.

7) Sensitivity analysis

In determining the present value of the defined benefit obligation, the Company’ s management makes judgments and estimates in determining certain actuarial assumptions on the balance sheet date, which includes employee turnover rate and future salary changes. Changes in actuarial assumptions may have significant impact on the amount of defined benefit obligation.

(Continued)

318 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2020 Discount rate Increase in future wage December 31, 2019 Discount rate Increase in future wage	Impact on the present value of defined benefit obligation Increase by 0.25% Decrease by 0.25% $ (13,307) 13,843 13,521 (13,068) (13,652) 14,212 13,864 (13,389)

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The cost of the pension contributions to the Labor Insurance Bureau for the years ended December 31, 2020 and 2019 amounted to $42,238 thousand and $37,949 thousand, respectively.

(iii) The pension recognized consists of pension expenses and pensions for professional management. The pension expenses for professional management was $13,291 thousand and $6,234 thousand for the year ended December 31, 2020 and 2019, respectively.

(iv) Short-term compensated absences liabilities

As of December 31, 2020 and 2019, the Company’ s short-term compensated absences liabilities amounted to $4,984 thousand and $5,488 thousand, respectively.

(Continued)

319 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(s) Income Tax

(i) Income tax expense

The components of income tax expense (benefit) for the years ended December 31, 2020 and 2019 were as follows:

Current income tax expense (benefit) Currently incurred Adjustment to prior year’s income tax charged to current income tax Deferred tax expense (benefit) The origination and reversal of temporary differences Unrecognized changes of deductible temporary differences Income tax expense (benefit)	For the years ended December 31,	For the years ended December 31,
	2020 $ - (72,521) (72,521) (517,305) (6,607) (523,912) $ (596,433)	2019 78,970 11,621 90,591 (470,679) 470,679 - 90,591

For the years ended December 31, 2020 and 2019, income tax expenses recognized under other comprehensive income were both $0 thousand.

Reconciliation of income tax expense (benefit) and profit before tax for the years ended December 31, 2020 and 2019, were as follows:

Profit before income tax Income tax on pre-tax financial income calculated at the domestic rate Change in unrecognized temporary differences Prior years income tax adjustment Changes of permanent differences Others Income tax expense (benefit)	For the years ended December 31, 2020 2019 $ 84,556 1,829,040 $ 16,911 365,808 (6,607) 470,679 (72,521) 11,621 (395,190) (836,487) (139,026) 78,970 $ (596,433) 90,591	For the years ended December 31, 2020 2019 $ 84,556 1,829,040 $ 16,911 365,808 (6,607) 470,679 (72,521) 11,621 (395,190) (836,487) (139,026) 78,970 $ (596,433) 90,591
		365,808 470,679 11,621 (836,487) 78,970
		90,591

(Continued)

320 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

Decommissioning liabilities Remediation project Pollution remediation Allowance for doubtful receivables Investment property, property, plant and equipment Pension Tax loss Others	December 31, 2020 $ 93,101 238,563 276,050 319,484 2,931,694 211,520 5,046,899 57,979 $ 9,175,290	December 31, 2019
		78,980 239,143 364,829 319,484 3,533,331 216,566 4,356,450 99,544
		9,208,327

As of December 31, 2020, the expiration years of tax loss unrecognized as deferred tax assets were as follows:

The Company

Year incurred	Amount Expiry Date $ 353,540 2024 2,132,246 2025 1,870,634 2026 690,479 2030
2014 2015 2016 2020 (estimated)

2) Deferred tax liabilities:

As of December 31, 2020 and 2019, the balance of deferred income tax liabilities for the provision of land value-added tax was $6,497,063 thousand an $7,020,975 thousand, respectively.

3) Deferred tax assets:

December 31, 2020 (equal to January 1) December 31, 2019 (equal to January 1)	Taxable Loss $ 11,009 $ 11,009	Total
		11,009
		11,009

(Continued)

321 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iii) Assessment of tax

The Company's income tax return for the years through 2018 were assessed by the Tax Administration.

(t) Capital and other equity
(i) The issuance of common stock

(In thousands of shares)

Common Stock	Common Stock	Common Stock
For the years ended December 31,
	2020 2,834,850 - 450,000 3,284,850	2019
		2,699,857 134,993 -
		2,834,850

On May 24, 2019, a resolution was made during the shareholders’ meeting for the issuance of 134,993 thousand new ordinary shares, by using the unappropriated retained earnings, amounting to $1,349,929 thousand, which had been approved by the Financial Supervisory Commission on May 30, 2019, with the record date set at July 4, 2019, based on the decision made during the board meeting held on June 11, 2019. The relevant registration procedures have been completed as of December 31, 2020.

In order to invest in the overseas subsidiary for the purpose of plant construction, a resolution was made during the Board of Director’ s meeting held on September 23, 2019 for the issuance of common stock in term of Global Depositary Receipts (GDR), with a maximum limit of 500,000 thousand shares, amounting to USD160,317thousand, which was approved by Rule No. 1080335763 Financial Supervisory Commission on November 20, 2019. The share price was determined and completed on January 6, 2020 and issued on January 10, 2020. The total units of issued GDR was 18,000 thousand units, which represented the right of common stock for 450,000 thousand shares; for every 25 shares of common stock per unit of GDR, the unit price of GDR was USD7.18, which was equivalent to $8.64 per share, resulting to a total issuance price amounting to USD129,240thousand. The total amount of the issuance, deducting the costs necessary for the issuance, is $3,796,481 thousand. The capital increase base date is January 10, 2020, and the relevant legal registration procedures had been completed.

(Continued)

322 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(ii) Capital Surplus

The balances of capital surplus as of December 31, 2020 and 2019, were as follows:

Common stock Difference arising from subsidiary's share price and its carrying value Recognize Changes in ownership interests in subsidiaries Other Total	December 31, 2020 $ 538,726 26,314 634 18,141 $ 583,815	December 31, 2019
		1,242,245 26,314 - 18,141
		1,286,700

(iii) Retained earnings

1) Legal reserve

2) Special reserve

(Continued)

323 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

In 2014, the Company changed the subsequent measurement of investment properties from cost model to fair value model. In accordance with Rule No. 1030006415 issued by the Financial Supervisory Commission on March 18, 2014, on the first-time adoption of fair value model for the subsequent measurement of investment properties, the Company set aside an equal amount of special reserve when the fair value increment of investment properties is transferred to retained earnings. The Company appropriated to the special reserve an amount of $21,224,233 thousand as of December 31, 2013. The company held a shareholder meeting on June 8, 2017, in order to use the special reserve amounted to $0 thousand to cover accumulated deficits. On April 11, 2018, the Company’s shareholders resolved during their meeting, to reimburse $0 thousand into the special reserve. The carrying amount of such special reserve amounted to $21,224,233 thousand as of December 31, 2020 and 2019.

For every year the Company distributes earnings, a special reserve is appropriated in the following order:

a) Each year, a special reserve is appropriated from current year’ s net income and prior years’ undistributed earnings for the same amount as the net increase in the fair value of investment property using the fair value model. A special reserve is also appropriated for the same amount as the cumulated net increase in the fair value for the year when the undistributed earnings are not distributed. When the investment property is disposed of, this special reserve is reverted proportionately to distributable earnings. As of December 31, 2020 and 2019, the Company appropriated to the special reserve an amount of $5,947,347 thousand and $5,835,980 thousand, respectively.
b) In accordance with Rule No. 1010047490 issued by the Financial Supervisory Commission on November 21, 2012, a special reserve is appropriated by the parent company for the difference between market value and book value of parent company shares being held by a subsidiary times the percentage of the parent company’s equity investment in the said subsidiary, if the stock price of the parent company is lower than the its value. If the market value recovers subsequently, this special reserve is reverted proportionately to distributable earnings.

(Continued)

324 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

c) In accordance with Rule No. 1010012865 issued by the Financial Supervisory Commission on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings is appropriated as a special reserve during earnings distribution. Such appropriation of special reserve is based on the difference between the total net amount of contra accounts in the shareholders’ equity and the carrying amount of special reserve. Similarly, a portion of undistributed prior period earnings (which does not qualify for earnings distribution) is likewise appropriated as a special reserve on account of cumulative changes to other shareholders’ equity pertaining to prior periods. The subsequent reversals of the contra accounts in the shareholders’ equity shall qualify for additional earnings distributions.
3) Earnings Distribution

On March 23, 2021, Board of Directors proposed to appropriate the Company's 2020 earnings with a cash dividend of $0 thousand.

(iv) Treasury shares

In accordance with Article 28-2 of the Securities and Exchange Act, the Company plans to buy 50,000 treasury shares from March 30 to May 29, 2020, in order to protect the Company’ s credit and shareholders’ equity. The price range is between $5.03 and $7.50 per share. On May 29, 2020, the market prices were higher than the upper limit of the execution price range for the repurchase of treasury shares, and the stock of the Company was not oversold compared with the market during the original scheduled repurchase period. The repurchase was not executed in order to protect shareholders' equity and take into market mechanisms.

(Continued)

325 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(v) Other equity accounts

Balance, January 1, 2020 Exchange difference on subsidiary accounted for using equity method Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income Disposal of investments in equity instruments designated at fair value through other comprehensive income Unrealized gains from financial assets measured at fair value through other comprehensive income for subsidiaries accounted for using equity method Unrealized gains from financial assets measured at fair value through other comprehensive income for affiliated companies accounted for using equity method Balance, December 31, 2020 Balance, January 1, 2019 Exchange difference on subsidiary accounted for using equity method Exchange difference on affiliated accounted for using equity method Unrealized gains from financial assets measured at fair value through other comprehensive income for subsidiaries accounted for using equity method Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Unrealized (losses) gains from financial assets measured at fair value through other comprehensive income for affiliated companies accounted for using equity method Balance, December 31, 2019	Exchange differences on foreign operation $ (804,515) (161,687) - - - - $ (966,202) $ (488,212) (316,303) - - - - $ (804,515)	Unrealized gain or loss on financial assets at fair value through other comprehensive income (1,120,657) - 375,078 (126,299) 17,552 67 (854,259) (1,248,499) - 125,611 410 1,684 137 (1,120,657)

(Continued)

326 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(u) Earnings per share

The basic earnings per share and diluted earnings per shares for the years ended December 31, 2020 and 2019 were calculated as follows:

Basic earnings per share (NT dollars) Profit attributable to ordinary shareholders Weighted-average number of ordinary shares (thousand shares) Basic earnings per share Diluted earnings per share (NT dollars) Profit attributable to ordinary shareholders (diluted) Weighted-average number of ordinary shares (thousand shares) Effect of potentially dilutive ordinary shares of Employee stock bonus (thousand shares) Weighted-average number of ordinary shares (diluted) (thousand shares) Diluted earnings per share	For the years ended December 31,	For the years ended December 31,
	2020 $ 680,989 3,273,785 $ 0.21 $ 680,989 3,273,785 3,039 3,276,824 0.21	2019
		1,738,449 2,834,850 0.61 1,738,449 2,834,850 5,894 2,840,744 0.61

(v) Revenue from contracts with customers

(i) The Company primarily engages in the production of CPL, AN, Nylon and by-products and the storage, transportation, purchase and sale of these products, related chemicals and their raw materials. For the details of products and sales area, please refer to Note 14(b) and (c) of the consolidated financial statements.

(ii) Contract balances

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful account Contract liabilities	December 31, 2020 $ 345,480 1,602,891 (332,496) $ 1,615,875 $ 954	December 31, 2019 500,788 1,539,632 (332,496) 1,707,924 88,263

Please refer to Note 6(d) for disclosure of accounts receivable and allowance for doubtful accounts.

(Continued)

327 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(w) Remuneration of employees and directors

In accordance with the Articles of Incorporation, the Company should contribute no less than 3% of the profit as employee compensation and less than 2% as directors' and supervisors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The remuneration of employees shall be in the form of cash or shares, whose recipients may include the employees of the Company's affiliated companies who meet certain conditions. The remuneration of directors may solely be cash. The aforesaid profit represents the income before income tax and remuneration for the period.

(x) Non-operating income and expense

(i) Interest income

The details of interest income were as follows:

The details of interest income were as follows:
Interest income from bank deposits Other interest income Total	For the years ended December 31,
		2019
		50,738 12,735
		63,473

(ii) Other income

The components of other income were as follows:

Rent income Dividend income Other income, others Total	For the years ended December 31,	For the years ended December 31,
		2019
		18,173 137,950 162,179
		318,302

(Continued)

328 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iii) Other gains and losses

The components of other gains and losses were as follows:

Losses on disposals of property, plant, and equipment Losses on disposal of investments Gain on amendement of lease Foreign exchange losses Fee expense Losses on work stoppages Other losses Other gains and losses, net	For the years ended December 31,	For the years ended December 31,
	2020 $ (1,107) (580) 40 562 (96,684) (267,501) (11,391) $ (376,661)	2019 (2,765) - 4 (4,699) (49,667) (35,932) (30,481) (123,540)

(iv) Finance costs

The components of finance costs were as follows:

Interest expense Finance costs, net (y) Financial Instruments (i) Categories of financial instruments 1) Financial assets Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortized cost: Cash and cash equivalents Notes receivable, accounts receivable and other receivables Other assets Total	For the years ended December 31,	For the years ended December 31,
	2020 $ (187,982) $ (187,982) December 31, 2020 $ 8,493,897 2,500,585 1,008,698 1,688,921 1,796,259 $ 15,488,360	2019 (106,515) (106,515) December 31, 2019 7,872,026 1,738,008 3,347,128 1,760,470 126,464 14,844,096

(Continued)

329 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

2) Financial liabilities

Short-term loans Long-term bank loans-current portion Payables Long-term bank loans Long-term bills payable Bonds payable Lease liabilities Other liabilities Total	December 31, 2020 $ 3,615,000 1,160,000 1,966,818 4,410,000 5,656,112 3,500,000 145,502 98,944 $ 20,552,376	December 31, 2019
		3,100,558 1,370,000 1,984,266 3,460,000 4,494,177 - 101,763 102,013
		14,612,777

(ii) Credit risk
1) Exposure to credit risk

The carrying amount of financial assets represents the Company’ s maximum credit exposure. As of December 31, 2020 and 2019, the maximum exposures to credit risk amounted to $15,488,360 thousand and $14,844,096 thousand, respectively.

2) The concentration of credit risk

The sales of the Company are significantly concentrated in a small number of customers. For the years ended December 31, 2020 and 2019, 83% of the total amount of accounts receivable was composed of 9 customers and 10 customers, respectively. Under the Company’ s credit policy, customers are requested to provide the Company certain financial information like audited financial report, or other related documents for purposes of evaluating their credit worthiness. Credit is granted to these customers according to the result of the Company’s credit evaluation. Those customers who do not satisfy the requirement shall not be offered credit.

3) Receivables

For credit risk exposure of notes and accounts receivables, please refer to note 6(d).

(Continued)

330 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iii) Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2020 Non-derivative financial liabilities Accounts payable Other payables Other current liabilities� other Other non-current liabilities �other Lease liabilities Floating-rate loans (Note) Fixed-rate loans (Note) Long-term bills payable (Note) Bonds payable December 31, 2019 Non-derivative financial liabilities Accounts payable Other payables Other current liabilities� other Other non-current liabilities �other Lease liabilities Floating-rate loans (Note) Fixed-rate loans (Note) Long-term bills payable (Note)	Carrying amount $ 1,215,153 743,858 7,807 98,944 145,502 2,920,000 6,265,000 5,656,112 3,500,000 $ 20,552,376 $ 1,137,731 840,968 5,567 102,013 101,763 2,130,000 5,800,558 4,494,177 $ 14,612,777	Contractual cash flows 1,215,153 743,858 7,807 98,944 162,846 3,002,128 6,276,029 5,660,000 3,612,000 20,778,765 1,137,731 840,968 5,567 102,013 114,874 2,164,396 5,818,196 4,500,000 14,683,745	Within 6 months 1,215,153 743,858 7,807 86,383 18,171 1,465,961 6,276,029 - - 9,813,362 1,137,731 727,253 5,567 86,033 25,305 537,000 3,511,535 - 6,030,424	6-12 months - - - 8,668 16,700 - - - 22,400 47,768 - 113,715 - 9,480 16,463 440,850 - - 580,508	1-2 years - - - 2,146 28,376 - - 5,660,000 22,400 5,712,922 - - - 4,685 7,296 1,186,546 1,454,375 4,500,000 6,434,608	2-5 years - - - 247 26,336 1,536,167 - - 3,567,200 5,129,950 - - - 315 10,031 - 852,286 - 6,798,642	More than 5 years
							- - - 1,500 73,263 - - - -
							74,763
							- - - 1,500 55,779 - - -
							57,279

The Company does not expect that the cash flow of the due date analysis will occur significantly earlier, or the actual amount will be significantly different.

Note: The amount within 6 months includes recyclable long-term bank loans and long-term bills payable

(Continued)

331 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) Currency risk

1) Currency risk exposure

The Company’ s exposures to significant currency risk were those from its foreign currency denominated financial assets and liabilities as follows:

Financial assets Monetary items USD EUR VND CNY Non-Monetary items CNY USD VND Financial liabilities Monetary items USD	December 31, 2020 Foreign Currency Exchange rate NTD $ 18,845 28.099 529,534 - 34.540 - 4,805,180 0.0012 5,853 550,264 4.315 2,374,391 18,976 4.315 81,882 327,910 28.099 9,213,936 481,690,833 0.0012 578,029 $ - 28.099 -	December 31, 2020 Foreign Currency Exchange rate NTD $ 18,845 28.099 529,534 - 34.540 - 4,805,180 0.0012 5,853 550,264 4.315 2,374,391 18,976 4.315 81,882 327,910 28.099 9,213,936 481,690,833 0.0012 578,029 $ - 28.099 -	December 31, 2019	December 31, 2019
	Foreign Currency $ 18,845 - 4,805,180 550,264 18,976 327,910 481,690,833 $ -	Exchange rate 28.099 34.540 0.0012 4.315 4.315 28.099 0.0012 28.099	Foreign Currency 26,996 2,000 4,795,580 18,221 18,366 253,940 460,338,462 5,881	Exchange rate NTD 30.036 810,862 33.640 67,280 0.0013 6,234 4.310 78,531 4.310 79,158 30.036 7,627,352 0.0013 598,440 30.036 176,630

2) Sensitivity analysis

The Company’ s exposure to foreign currency risk arises from the foreign currency exchange rate fluctuations on cash and cash equivalents, accounts receivable and accounts payable, which are denominated in foreign currency. A 1% of appreciation of NTD against USD, EUR, VND and CNY would have increased net income by $23,278 thousand and increased $6,290 thousand for the years ended December 31, 2020 and 2019, respectively; other comprehensive income would have increased $98,738 thousand and increased $83,050 thousand for the years ended December 31, 2020 and 2019, respectively. The analysis is performed on the same basis for 2019.

3) Foreign exchange gains (losses) on monetary items

Since the Company has many kinds of functional currency, the information on foreign exchange gains (losses) on monetary items is disclosed by total amount. For the years ended December 31, 2020 and 2019, foreign exchange gains (losses) (including realized and unrealized portions) amounted to $562 thousand and ($4,699) thousand, respectively.

(v) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Company's financial assets and liabilities.

(Continued)

332 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The following sensitivity analysis is based on the risk exposure to interest rates on the derivative and non-derivative financial instruments on the reporting date. For financial instruments bearing floating-rate, the sensitivity analysis assumes the floating-rate liabilities are outstanding for the whole year on the reporting date. The Company’s internal management reported the increases/decreases in the interest rates and the exposure to changes in interest rates of 1% is considered by management to be a reasonable change of interest rate.

If the interest rate increases by 1%, the Company’ s net income will decrease by $29,200 thousand and $21,300 thousand for the years ended December 31, 2020 and 2019, respectively, assuming all other variable factors remain constant. This is due mainly to the fact that the Company’s borrowings bear floating interest rate.

(vi) Other market price risk:

If the equity price changes, and if it is based on the same basis for both years and assumes that all other variables remain the same, the impact to comprehensive income will be as follows:

Equity price at reporting date	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
	2020 After-tax other comprehensive income After-taxProfit (loss) $ 25,006 84,939 $ (25,006) (84,939)	2019
	After-tax other comprehensive income $ 25,006 $ (25,006)	After-tax other comprehensive income 17,380 (17,380)	After-taxProfit (loss)
Increase of 1% Decrease of 1%			78,720 (78,720)

(vii) Fair value information
1) Fair value of financial instruments

The fair value of financial instruments and investment property was as follows (including information on fair value hierarchy, but excluding measurements that have similarities to fair value but are not fair value and those fair value cannot be reliably measured or inputs are unobservable in active markets):

	December 31, 2020	December 31, 2020	December 31, 2020
Book value $ 8,493,897 2,059,052 441,533 2,500,585		Fair value
	Level 1 661,224 2,059,052 - 2,059,052	Level 2 - - - -	Level 3 7,832,673 - 441,533 441,533	Total
				8,493,897
				2,059,052 441,533
				2,500,585

(Continued)

333 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

December 31, 2020	December 31, 2020	December 31, 2020
	Fair value
Level 1 Level 2 Level 3 - - - - - - - - - - - - 2,720,276 - 8,274,206 - - 37,612,887 - - - - - - - - - - - - - - - - - - - - - - - - - - - December 31, 2019			Total
			- - -
			-
			10,994,482
			37,612,887
			- - - - - - - -
			-

	Fair value
Level 1 624,964 1,595,896 - 1,595,896 - - - - 2,220,860 -	Level 2 - - - - - - - - - -	Level 3 7,247,062 - 142,112 142,112 - - - - 7,389,174 36,716,577	Total
			7,872,026
			1,595,896 142,112
			1,738,008
			- - -
			-
			9,610,034
			36,716,577

(Continued)

334 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

December 31, 2019	December 31, 2019	December 31, 2019
	Fair value
Level 1 - - - - - - - -	Level 2 - - - - - - - -	Level 3 - - - - - - - -	Total
			- - - - - - -
			-

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

The Company’s valuation techniques and assumptions used for financial instruments not measured at fair value are the discounted cash flows method.

3) Valuation techniques for financial instruments measured at fair value:

The Company determines the input value with reference to the analysis of the financial status and operating results, recent transaction price, related equity instruments are quoted in non-active markets, similar tools offer in the active market and comparable company evaluation multiplier of the investee company and periodically updates the input value and information and any other necessary fair value adjustments to ensure that the evaluation results are reasonable.

a) Non-derivative financial instruments

Financial instruments, if there is a public market offer, then the public market offer for the fair value, Such as listing (cabinet) company stock.

The fair value of the financial instruments held by the Company in the case of a non-active market is as follows:

No public offer equity instruments: Use the net asset value method, the main assumptions are based on the net per share of the investee.

b) Derivative financial instruments

Derivative financial instruments is evaluated according to the evaluation model accepted by the market users, such as the discount method and the option pricing model.

(Continued)

335 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

4) There have been no transfers from each level for the years ended December 31, 2020 and 2019.
5) Statements of changes in fair value measurements of financial assets in Level 3

January 1, 2020 Acquisition Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income December 31, 2020 January 1, 2019 Acquisition Disposal Effects on deferred income tax liabilities Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income December 31, 2019	Investment Property $ 36,716,577 - 896,310 - $ 37,612,887 $ 38,350,359 - (9,423) (1,735,726) 111,367 - $ 36,716,577	Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 7,247,062 - - - 585,611 - - - 7,832,673 - 3,248,545 - 1,235,278 - - - - - 2,763,239 - - - 7,247,062 -	Financial assets reported at fair value through other comprehensive income
		Designated at initial recognition 7,247,062 - 585,611 - 7,832,673 3,248,545 1,235,278 - - 2,763,239 - 7,247,062	Non-public quoted equity instruments
			142,112 300,000 - (579) 441,533 466,738 - (351,290) - - 26,664 142,112

(Continued)

336 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

6) Quantitative information on the measurement of fair value of significant unobservable input values (level 3)

Level 3 refers to the measurement of the fair value of the input parameters are not based on market availability of information, must be based on the assumption that the appropriate estimates and adjustments. If the evaluation model can not be developed on its own, the fair value of the counterparty is used as the fair value. According to IFRS13, for the fair value of the third level classified at the fair value level, the firm shall provide quantitative information about the significant unobservable input values used for the fair value measure. Businesses do not need to create quantitative information to comply with this disclosure, if quantified unobservable input value is not built when enterprises are measuring fair value (for instance, when a firm uses an unadjusted previous transaction price or a third-party pricing information), e.g. part of the the Company's investment in non-active market equity and debt instruments. The fair value of the Company's investment property is level 3, which is determined in accordance with IFRSs, i.e., outsourcing to external appraisors for assessment based on market evidence (please refer to Note 6(j)). Due to the impracticability to evaluate the relationship between the unobservable input value and fair value, the quantitative information is not disclosed. The fair value of the aforesaid assets at December 31, 2020 and 2019 was $37,612,887 thousand and $36,716,577 thousand, respectively.

The Company holds investments in equity shares, which is classified as financial assets at fair value through profit or losse, whose fair value belongs to level 3.

Most of fair value assets belonging to level 3 possesses no more than one significant unobservable input value. Only equity instruments with inactive market may result in multiple unobservable input values which are all independent from each other.

Quantified information of significant unobservable inputs was as follows:

Item	Valuation technique	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement • Net Asset Value • Lack of market liquidity, discount rate 30% • Not applicable • Lack of market liquidity, the more the discount, the lower the fair value
Financial assets at fair value through profits or losses and financial assets at fair value through other comprehensive income	Net Asset Value Method

(Continued)

337 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

7) The evaluation process for fair value belonging to level 3

The Company's fair value evaluation involves observable input value requiring unobservable parameters for significant adjustments or unobservable input value, both of which belong to level 3. The main source of such input value is external appraisors' reports. The results of the evaluation are then reviewed to assure the consistency with the source of the evaluation and the reasonability.

The evaluation of investment property complies with FSC's regulations of the evaluation methods and parameters, and is conducted by external appraisors.

8) Fair value measurements of level 3 – sensitivity analysis of reasonably possible alternative assumptions

(z) Financial risk management
(i) Overview

The Company is exposed to the following risks due to the use of financial instruments:

1) Credit Risk
2) Liquidity risk
3) Market risk

The following discusses the Company’s objectives, policies and processes for measuring and managing the risks mentioned above. For more quantitative information about the financial instruments, please refer to other related notes of the financial statements.

(ii) Risk management framework

The Board of Directors has overall responsibility for the oversight of the risk management framework in order to develop and monitor the Company’s risk management policies and to report regularly on its activities.

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’ s activities. The Company, through their training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(Continued)

338 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Audit Committee of the Company oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee of the Company is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(iii) Credit Risk

Credit risk means the potential loss of the Company if the clients or counterparties involved in transactions default. The primary potential credit risk is from cash and accounts receivable.

1) Accounts receivable and other receivables

The Company’ s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk, particularly in the current deteriorating economic circumstances.

The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval from the Risk Management Committee; these limits are reviewed quarterly. Customers that fail to meet the Company’s benchmark creditworthiness may transact with the Company only on a prepayment basis.

The Company establishes an impairment allowance that represents its estimate of incurred losses in respect of trade receivables. The two components of this impairment allowance are specific loss component that relates to individually significant exposure and collective loss component which the loss was incurred but not identified. The collective component is based on historical payment experience of similar financial assets.

2) Investments

The credit risk exposure in the bank deposits is measured and monitored by the Company’s finance department. As the Company deals with the banks and other external parties with good credit standing and financial institutions, corporations and government agencies which are graded above investment level, management believes that the Company does not have compliance issues and significant credit risk.

(Continued)

339 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as much as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’ s reputation. The management believes that the Company does not have significant liquidity risk.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Risk Management Committee.

1) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Company’s entities, primarily the New Taiwan Dollars (NTD). The currencies used in these transactions are denominated in NTD, USD and CNY.

The Company’s currency risk is not hedged as some of the currencies of the Company’s foreign currency receivables and payables are the same, producing a natural hedge effect.

2) Interest rate risk

The Company’s interest rate risk comes from long-term and short-term bank loans. The long-term bonds issued by theCompany is fixed-rate, so there is no risk caused by the fluctuations of interest rates and fair value interest rate. The long-term and short-term bank loans with floating-rate are exposed to interest rate risk, but most of risk is offset by cash and cash equivalents holding in floating-rate.

3) Other market price risk

The Company does not enter into any commodity contracts other than to meet the Company’s expected usage and sales requirements; such contracts are not settled on a net basis.

(Continued)

340 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(aa) Capital management

The Company’s objectives for managing capital is to safeguard the capacity to continue to operate, to continue to provide a return to shareholders, to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabiltiies.

The Company and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt.

The Company’s debt-to-equity ratios at the end of the reporting period as of December 31, 2020 and 2019 were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Total liabilities and equity Debt-to-equity ratio	December 31, 2020 $ 29,605,192 (1,008,698) $ 28,596,494 $ 70,812,642 $ 99,409,136 % 28.77	December 31, 2019
		24,546,071 (3,347,128
		21,198,943
		67,116,769
		88,315,712
		% 24.00

On December 31, 2020, The increase of debt-to-equity ratio resulted from the operationsupplementing bank loans and cash being invested into subsidiaries.

(ab) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow for the years ended December 31, 2020 and 2019, were as follows:

(i) For the acquisition of right-of-use assets based on lease term, please refer to Note 6(i).
(ii) Reconciliation of liabilities arising from financing activities was as follows:

Long-term bank loans Short-term loans Long-term bills payable Lease liabilities Total liabilities from financing activities	January 1, 2020 $ 4,830,000 3,100,558 4,494,177 101,763 $12,526,498	Cash flows 740,000 514,442 1,160,000 (50,849) 2,363,593	Non-cash	changes Other - - 1,935 94,588 96,523	December 31, 2020
			Foreign exchange movement - - - - -
					5,570,000 3,615,000 5,656,112 145,502
					14,986,614

(Continued)

341 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Notes to the Financial Statements

Long-term bank loans Short-term loans Long-term bills payable Lease liabilities Total liabilities from financing activities	January 1, 2019 $ 2,480,000 650,000 349,729 147,307 $ 3,627,036	Cash flows 2,350,000 2,450,558 4,150,000 (50,543) 8,900,015	Non-cash	changes Other - - (5,552) 4,999 (553)	December 31, 2019
			Foreign exchange movement - - - - -
					4,830,000 3,100,558 4,494,177 101,763
					12,526,498

(7) Related-party transactions:

(a) The ultimate parent company

The Company is the ultimate parent company.

(b) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the financial statements.

Name of related party

Kaohsiung Monomer Company Zhong Gong Baoquan Ltd. Jean Pacific Development Co., Ltd. BES Engineering Corporation Core Pacific City Co., Ltd.

Chung Kung Management and Maintenance of Apartments Co., Ltd.

Coreasia Human Resources management Co., Ltd.

Capital Machinery Co., Ltd.

Sheen Chuen-Chi Cultural & Educational Foundation

Ding-Yue Development Co., Ltd. CPDC Investment (BVI) Co., Ltd. Tsou Seen Chemical Industries Corporation CPDC Green Technology Corp. Rich Equities Ltd. Unichem Development Limited BES Twin Towers Co., Ltd. Weiming (Jiangsu) Petrochemical Company Thanh Phong Constuction Invetment Co., Ltd.

Relationship with the Group

Investee as accounted for using equity method Investee as accounted for using equity method Investee as accounted for using equity method The Company is a director of the entity Share a director with the Company

Investee as accounted for using equity method of Zhong Gong Baoquan Ltd.

Subsidiary of BES Engineering

The entity is a director of the Company The entity is a director of the Company

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

(Continued)

342 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Name of related party Weiqiang International Trading (Shanghai) Co., Ltd.

Weihua (Rudong) Trading (Shanghai) Co., Ltd. Changzhou Weicai New Material Science &Technology Co., Ltd.(Weicai) Taivex Therapeutics Corporation Da-ying Construction Ltd.

All board of directors, general manager and deputy general manager

Relationship with the Group Sub-subsidiary of the Company

Sub-subsidiary of the Company

Sub-subsidiary of the Company Sub-subsidiary of the Company The main managements of the Company

(c) Significant Transactions with related parties
(i) Sales

The amounts of significant sales by the Company to related parties were as follows:

Subsidiary Sub-subsidiary Associates	For the years ended December 31,	For the years ended December 31,
	2020 $ 510,141 161,483 456,452 $ 1,128,077	2019
		1,053,316 329,145 550,760
		1,933,221

The terms for related party sale transactions were the same as those of other unrelated customers excluding Tsou Seen Chemical Industries Corporation, Weihua (Rudong) Trade Co., Ltd. and Weiqiang International Trade (Shanghai) Co., Ltd. who have the terms for 3 month.

(ii) Receivables

The receivables from related parties were as follows:

Accounts	Types of related parties	December 31, 2020 $ 36,665 1,598 51,106 279 6 9,447 - $ 99,101	December 31, 2019
Accounts receivable Accounts receivable Accounts receivable Other receivables Other receivables Other receivables	Subsidiary Sub-Subsidiary Associates Subsidiary Sub-Subsidiary Associates Other related parties		32,348 82,948 57,764 5 - 10,969 9
			184,043

(Continued)

343 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iii) Payables

The payables to related parties were as follows:

Accounts	Types of related parties	December 31, 2020 $ 13,793 5,380 5,951 $ 25,124	December 31, 2019
Other payables Other payables Other payables	Subsidiary Associates Other related parties		51,269 4,602 18,134
			74,005

(iv) Other

Subsidiary and sub-Subsidiary Rental income Other revenues Rental expense Associates Rental income Rental income Other revenues Other related parties Rental income Rental income Other revenues	For the years ended December 31,
	2020 2019 $ 684 200 1,691 13,965 (77) - 5,378 5,373 26,495 16,835 (20,388) (22,467) 3 3 - 15 (633) (21,243)

Please refer to Note 6(q) for lease of land and buildings to related parties.

(v) The Company had a two-year contract with BES Engineering for the lease of office building in July 2018, which had been extended in July 2020, with the total value both represented $9,629 thousand. This rental transaction was recognized right-of-use and lease liability both amounting to $9,465 thousand and $7,130 thousand on July 1,2020 and January 1, 2019, respectively. The depreciation expenses for the years ended December 31, 2020 and 2019 were $4,743 thousand and $4,754 thousand, respectively. The interest expense for the years ended December 31, 2020 and 2019 both amounted to $82 thousand. The amounts of lease liability as of December 31, 2020 and 2019 were $7,130 thousand and $2,398 thousand, respectively
(vi) The Company's equipment maintenance services and commissioned fees for the subsidiaries in 2020 and 2019 were $222,127 thousand and $249,499 thousand, respectively. As of December 31, 2020 and 2019, the Company recorded the unpaid under other payables.

(Continued)

344 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The total contract price (excluding tax) of the Company's uncompleted contracts for the projects issued to the subsidiaries as of December 31, 2020 and 2019 were $784,420 thousand and $545,497 thousand, respectively, and the payment were $326,319 thousand and $281,399 thousand, respecitively .

(vii) The Company had contracts with other related parties, for mechanical engineering services projects and paid commission on the basis of actual construction. As of December 31, 2020 and 2019, the construction project in-progress amounted to $1,469,439 thousand and $1,552,720 thousand, respectively. As of December 31, 2020 and 2019, the unpaid fee amounted to $704,896 thousand and $875,708 thousand, respectively.
(viii) The Company had contracts with other subsidiaries, for building construction projects. The land is provided by the Company and the related party is responsible for designing, constructing, sales and warranties. The Company pays constructional management fee on the basis of contract and the related party pays the actual expenditures for every single months. As of December 31, 2020, no constructional management fee is paid by the Company. Other fees, taxes, and other related expenses, such as design fee, amenities design fee, bulk fees, sales expenses, Kaohsiung House (green building) Bonus, trust fees, property management funds, land value tax, financing interest, etc., are all attributed to the Company, while the subsidiary serves merely as an ageny. For the year ended December 31, 2020, the subsidiary has requested for the amount of $27 thousand.
(ix) The Company acquired 123,528 thousand shares of preferred stocks of Core Pacific City Co., Ltd. amounting to $1,235,278 thousand on March 11, 2019. Please refer to Note 6(b).
(x) The Company acquired 20,000 thousand shares of common stock of BES Twin Towers Co., Ltd. amounting to $215,600 thousand from BES Engineering Co., Ltd. on March 12, 2019.
(xi) The Company acquired 100 thousand shares of common stock of BES Twin Towers Co., Ltd. amounting to $1,078 thousand from its managements on March 12, 2019.
(xii) The board of directors of the Company made resolutions on July 12, 2019, to transfer 35% of the shares of Praxair Chemax Semiconductor Materials Co., Ltd. to BES Twin Towers Development Co., Ltd., totaling 6,754 thousand shares, at the amount of $351,290 thousand. Please refer to Note 6(c) for more information.
(d) Key management personnel compensation

Short-term employee benefit Post-employment benefits	For the years ended December 31,	For the years ended December 31,
	2020 $ 81,422 4,951 $ 86,373	2019
		179,628 4,284 183,912

(Continued)

345 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(8) Pledged assets:

The Company's pledged assets are as follows:

Asset	Purpose of pledge Guarantee for priority right-of-use of harbor Collateral for long-term and short- term financial credit, syndicated loan (Mega & Shin Kong) Syndicated loan (Mega), collateral for long-term financial credit, long-term bills payable and bonds payable Long-term bills payable Long-term bills payable Long-term bills payable Deposit for lawsuit	December 31, 2020 $ 10,000 6,787,700 15,346,334 556,304 1,430,230 634,995 108,969 $ 24,874,532	December 31, 2019
Time deposits Property, plant and equipment Investment property Investments accounted for using equity method Financial assets reported at fair value through other comprehensive income Financial assets reported at fair value through profit or loss Refundable deposit			10,037 4,693,853 5,122,417 951,789 961,050 624,180 91,557
			12,454,883

(9) Commitments and contingencies:

(a) As of December 31, 2020 and 2019, the Company had the following unused letters of credit:

USD EUR NTD JPY	December 31, 2020 December 31, 2019 $ 20,824 11,696 246 235 1,020,000 1,015,000 - 37,300

(b) As of December 31, 2020 and 2019, the Company had issued guarantee notes for bank loans, sales and purchases, and development plan aggregating to $24,117,400 thousand, USD30,000 thousand and $13,508,000 thousand, USD30,000 thousand, respectively.
(c) As of December 31, 2020 and 2019, the Company had contracts for various construction projects inprogress amounting to $3,804,224 thousand and $3,614,625 thousand, respectively. As of December 31, 2020 and 2019, the remaining future obligations under these contracts amounted to $1,822,892 thousand and $2,276,969 thousand, respectively.

(Continued)

346 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(d) As of December 31, 2020 and 2019, the agreement on the acquisition of material property amounting to $1,845,000 thousand and $0 thousand, and the unpaid portion amounting to $1,025,000 thousand and $0 thousand, respectively.
(e) As of December 31, 2020 and 2019, the Company signed an agreement to purchase raw materials such as benzene, hydrogen and methylbenzene from Chinese Petroleum Corporation (CPC). Under this contract, the Company may purchase specified monthly volume of these raw materials at current month prices announced by the Chinese Petroleum Corporation with prepayment or domestic letter of credit.
(f) Important matters
(i) Case of Kaohsiung gas explosion forced disconnected pipeline

(ii) Equity trading dispute

(Continued)

347 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(g) Contingent liabilities

(i) The Company signed total three land lease contracts with the Kaohsiung branch of Taiwan International Ports Corporation, Ltd.. In December 2013 and February 2014. The Kaohsiung Port Intercontinental Container Center 2nd Phase Project Petrochemical Oil Storage and Transportation Center S12-S15 Pier Post line Land was leased and the Company invested to build the construction of petrochemical oil storage and transportation facilities for the purpose of import and export and transport of petrochemical oil handling, storage and transportation. The Kaohsiung branch of Taiwan International Ports Corporation, Ltd. delivered the land to the Company prior to the end of December 2017. The term of the lease was 25 years from the date of delivery and the Company had the right to renew the lease at the end of the period. Per the contract, the Company had to pay rent of $1,650 thousand, $2,565 thousand and $1,493 thousand respectively since the land was delivered. 3 years and 6 months from the land delivery date, the Company paid management fees of $10,654 thousand, $24,605 thousand and $12,329 thousand respectively. The Company also placed Certificate of Deposits of $5,000 thousand and $13,000 thousand as performance bonds in December 2013 and February 2014 respectively. The Company, in August 2015, narrowed the operating scale based on the adjustment of investment plan, which resulted in one of the performance bonds of $8,000 thousand, not being returned. Taiwan International Ports Corporation, Ltd. completed the transaction procedure prior to November 2017. The Company started to implement land drilling and geological improvement project and started paying the land rent of those projects, which was $1,675 thousand and $1,497 thousand respectively each year.

(ii) Dispute from the senior manager

1) Labor Dispute

The previous senior managers, who left the Company without transferring the duties and authorization, did not perform the duties since July 1, 2013 and the Company issued the letter to request to fulfill the agreement without any response from manager. Hence, the board of the Company dismissed the manager in October 2013. The manager asked the Company to pay pensions pursuant to Labor Standards Act as a labor worker, which was not reconciled through mediation.

For the part of Mr. Zhang, Kaohsiung District Court considered that the assigned relationship did not end, which means that the Expired Employee Retirement Policies of the Company does not apply. Mr. Zhang request for pension is without any basis, but according to the contract of both side, the Company shall pay salaries of $35 thousand, to Mr. Zhang, which was not satisfied by Mr. Zhang and this case was appealed to the 2nd sentence court. In July 2016, the 2nd sentence court rejected the request from Mr. Zhang

(Continued)

348 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

but he re-appealed to the 3rd sentence in August of the same year. Upon finding the appeal meritorious, the Supreme Court reversed and remanded the judgement. The preparatory proceeding of the first repeated appeal was conducted in Taiwan Court Kaohsiung Branch Court in April 2019. The court’ s judgement is announced that the compony shall pay $3,785 thousand and legal rate to Mr. Zhang in July of same year. The Company is dissatisfied and filed an appeal to Supreme Court, and this case is still being heard in the Court.

2) Disclosure Secret Case

(iii) Accusation of business failures

A Gas explosion happened in Heng Yi chemical plant next to the Toufen plant and caused workers to be burned on January 28, 2013, which evolved into accusations of business failures. Since the incident happened in the public discharged area of the industrial site, it was suspected to contain excessive value of the company’ s emissions with the sampling identification and the Company’ s manager was prosecuted as defendant per the victim’ s request. This case was not prosecuted after the judgment decision from Miaoli District Attorney, hence, the victims filed the reconsideration and Taichung High Prosecutor’s Office remanded the case back to the Miaoli District Attorney for review. The victims of Heng Yi chemical plant prosecuted the Company and managers in February 2015 and asked for the joint damaged compensation $6,920 thousand, which awaited hearing by Miaoli local court. In September of the same year, both sides agreed to withdraw the litigations. Trial procedure was recovered in February 2016 and criminal litigation was determined not to be prosecuted in March 2016. The verdict of civil litigation was won in March 2017, but plaintiff is dissatisfied and filed an appeal to Taiwan High Court Taichung Branch Court. On November 16, 2020, The court sentenced company win with final and binding judgment.

(iv) Contract Fraud of Shanghai industry

(Continued)

349 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

suspected to be involve with the contract fraud and other criminal matters. The police rejected the report due to insufficient evidence, therefore Weihua hired a local lawyer in May 2018, to assist with Shanghai police and Shanghai economics investigation group. Weiqiang received a ruling about Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. was filed for bankruptcy to court, there is no property could distributed, so the court made a ruling that bankruptcy proceeding is concluded. This case is ended.

(v) Civil compensation for Residents living in An shun

1) The 1st case

In 2008 and 2009, Mr. Wu and others filed civil and national compensation lawsuit against the Ministry of Economic Affairs, Tainan City Government, Tainan City Environmental Protection Bureau and the Company (Hereinafter referred to as 1st case of Tainan Anshun plant civil compensation) and they claimed that during 1942 and 1983, the previous Taiwan Alkali Co., Ltd. Anshun plant, produced mercury and dioxins in its production operations and polluted the environment, which resulted in the population consuming contaminated fish and shellfish over time, which resulted in long term health issues. The Ministry of Economic Affairs had control and management responsibility of the previous Taiwan Alkali Co., Ltd, and whether due to illegal actions, or a lack of attention in performing their duties, the Ministry of Economic Affairs was the ultimate owner of CPDC, should take responsibility. Hence, the prosecutors claim that the Ministry of Economic Affairs shall take the responsibility for the compensation. Mr. Wu and others also claimed that Tainan City Government and Tainan City Environmental Protection Agency were the competent authorities and executive authorities of the waste disposal law but the authorities did not supervise and require the Anshun plant to implement pollution prevention and control acts, thus should be jointly responsible for any compensation. Mr. Wu and others claim that the Company did not perform any removal and remediation of pollutants after being ordered to merge with the previous Taiwan Alkali Anshun plant, so they claimed the Company shall also take joint responsibility for the compensation. Mr. Wu and others asked the Ministry of Economic Affairs, Tainan City Government, Tainan City Environmental Protection Bureau and the Company to jointly bear the cost of medical expenses and mental compensation for $370,800 thousand and the interest was calculated by an annual interest rate 5% from the date when the litigation was initiated by the defendants until the final payment of compensation. Due to unpaid referee fees, due from the plaintiff, the Tainan District Court rejected the litigation claims from these 17 persons in January 2010. Mr. Chen appealed to the Tainan District Court asking the Company for medication, health examination fee and reparations, to the amount of $2,300 thousand, which was incorporated into this case, the total compensation amount was $351,750 thousand. This case was tried by the Tainan District Court in December 2015 and judged that the Company and the Ministry of Economic Affairs to be jointly responsible for $160,000 thousand payable to the plaintiff. The Company was not satisfied with the result and filed an appeal. In August of 2017, the High court sentenced the Company to compensate the plaintiff for $190,000 thousand, which the Company was not satisfied with and had proposed the appeal for remedy in September of the same year. The supreme court held oral argument on September 28, 2018, and judgment was sentenced on November 11, 2018, the supreme court sentenced to order the Company to compensate the plaintiff for $190,000 thousand. The Company made a payment of compensation and related interests to 143 plaintiffs before the end of June 2019. The part related to medical remedy of the

(Continued)

350 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

case was abandoned for secondary trial. Plaintiff filed an appeal to Supreme Court in same year. In March 3, 2020, The court dismissed the plaintiff appeal by a ruling. This case is ended.

1) The 2nd case

Mr. Chen and others filed civil and national compensation lawsuit against the Company and the Ministry of Economic Affairs on March 14th 2017 (Hereinafter referred to as 1st case of the Tainan Anshun plant civil compensation), they claimed the Company and the Ministry of Economic Affairs had to jointly compensate the plaintiff $80,915 thousand. The verdict of the 3rd national compensation in 2008 of the Tainan Anshun plant civil compensation 1st case was cited as the reason to be litigated. However, the Company claimed that there was a misunderstanding of the theoretical and practical nature of epidemiology causality versus the verdict. There were disputable factors on both factual and legal matters. During the 1st and 2nd instance of the Anshun plant Civil Compensation litigation under hearing, the Company once again put forward the relevant academic articles to prove that there was no causality between pollution from Tainan Anshun plant and diabetes. Moreover, the plaintiffs in this case, despite the reasonableness of their claims, did not put forth any litigation before the expiry of the statutes of limitations. Thus, in this 2nd case of the Tainan Anshun plant civil compensation, the Company continued to seek for the jurisdiction remedies to protect the Company and shareholder interests. In November 6, 2020, Tainan District Court considered that 39 Plaintiffs’ s claim is meritorious and dismissed rest of Plaintiffs’ s claim. The company considered that filed an appeal base on our unprofitable part of verdict. Because extinctive prescription is an interest for company.

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:

On January 25, 2021, the Company’s Board of Directors approved a resolution to increase capital by cash in the purpose of repay bank loans and business operating use.

(12) Other:

(a) The nature of operating costs and expenses were as follows:

The nature of operating	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:	costs and expenses were as follows:
	For theyears ended December 31
By function By item	2020				2019
	Operating cost	Operating expense	Non-Operating expense	Total	Operating cost	Operating Expense	Non-Operating expense	Total
Employee benefits
Salary	663,724	342,921	-	1,006,645	851,240	376,084	-	1,227,324
Labor and health insurance	69,030	30,572	-	99,602	84,828	33,162	-	117,990
Pension	41,765	26,246	-	68,011	41,612	16,727	-	58,339
Remuneration of directors	-	9,226	-	9,226	-	46,842	-	46,842
Others	36,549	14,858	-	51,407	28,139	9,421	-	37,560
Depreciation	704,079	72,565	3,933	780,577	1,160,456	77,307	6,058	1,243,821
Amortization	-	375	-	375	-	2,522	-	2,522

(Continued)

351 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Additional information on the number of emplyees and employee benefits expense of the Company are summarized as follows:

are summarized as follows:
Number of employees Number of non-employee directors Average employee benefits expense Average employee salary expenses Average employee salary adjustment Average employee salary expenses	For the years ended December 31, 2020 2019 1,339 1,310 ~~7~~ ~~7~~ $ ~~920~~ ~~1,106~~ $ ~~756~~ ~~942~~ ~~%~~ ~~(19.75)~~ ~~%~~ ~~-~~ $ ~~-~~ ~~-~~
		2019
		1,310
		~~7~~
		~~1,106~~
		~~942~~
		~~%~~ ~~-~~
		~~-~~

The policies of the Company’s remunerations (including directors, managers and employees) are as follows:

The policies, standards, combinations, procedure of decision-making of remunerations, and their relation to business performance and future risk:

(i) The remuneration to the Company’s (Executive) Chairman, vice chairman and directors was based on remuneration, transportation allowance and attendance allowance applicable in the same industry domestically and overseas, taking the performance and risk into consideration, and paid in accordance with Article 28 of the Company’s Articles of Incorporation. According to Article 32 of the Articles of Incorporation, 2% of the earnings shall be allocated as remuneration to directors according to the motion for allocation of shareholders' dividend.
(ii) The remuneration to the Company’s managers (including salary, allowance and bonus, etc.) will be evaluated based on market intelligence, seniority, responsibilities, experience, performance and risk, and paid in accordance with Article 29 of the Company Act. The Company established the Remuneration Committee in September 2011.
(iii) The remuneration to the Company’s employees (including salary, allowance and bonus, etc.) will be evaluated based on performance, responsibilities, market intelligence and the Company’ s financial ability, and paid in accordance with the Company’ s remuneration policies.
(iv) Regarding the procedures for establishing remuneration, in addition to considerations of the overall operating performance, industry outlook, risk management, and future development, we also consider personal performance and contributions to the company’s overall performance in the remuneration. Related performance evaluation and remuneration considerations are submitted to the remuneration committee and the board of directors for approval. Depending on operating conditions and related regulations, we also further review and revise our remuneration as necessary, with the aim in achieving a balance between sustainable management and risk controls.
(b) On March 22, 2019, Kaohsiung Urban Planning Commission (KUPC) announced that Dashe Industrial Park (DIP), where the Company’s plant is located, will be categorized from Special Zone to Zone B. In light of this matter, all the companies involved in this case are making their best effort to negotiate and compromise with KUPC, requesting KUPC to change DIP’ s status to Zone A instead of Zone B.

(Continued)

352 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:
(In Thousands of New Taiwan Dollars)
Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1	Core Pacific Twin Star (Myanmar) Investment Company Ltd.	Core Pacific Pioneer (Myanmar) Company Ltd.	Other Receivable	Yes	21,236	-	-	2%	2	-	Operating	-		-	61,187	61,187
2	Jiangsu Weiming Petrochemi cal Corpor ation(Wei ming) Changzhou Weicai New Material Science &	Changzhou WeicaiNe wMaterial Science & Technolog y Co.,Ltd.( Weicai)	Other Receivable	Yes	258,900	258,900	129,450	6.5%	2	-	Operating	-		-	666,772	1,000,158
3	Weihua (Rudong) Trade Co., Ltd.	Changzhou WeicaiNe wMaterial Science & Technolog y Co.,Ltd.( Weicai)	Other Receivable	Yes	86,300	86,300	64,725	6.5%	2	-	Operating	-		-	96,484	96,484

Note 1: Numbering nature of borrowing as follows:

Transaction for business between two parties�1

Short-term financing�2

Note 2: The financing limit was 40% of net value of Core Pacific Twin Star (Myanmar).

Note 3: The financing limit for total and individual were 15% and 10% of net value of Jiangsu Weiming Petrochemical Corporation.

Note 4: The financing limit was 20% of net value of Weihua (Rudong) Trade Co., Ltd.

Note 5: The amounts of the transaction and the ending balance had been offset in the consolidated interim financial statements.

(ii) Guarantees and endorsements for other parties:

		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CPDC	Ding-Yue Developme nt Co., Ltd.	2	42,487,585	4,920,000	4,920,000	-	4,920,000	% 6.95	70,812,642	Y	N	N
0	CPDC	Jiangsu Weiming Petrochemi cal Corpora tion(Weimi ng)	2	42,487,585	2,093,500	-	-	-	% -	70,812,642	Y	N	Y

(Continued)

353 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CPDC	Changzhou Weicai New Material Science & Technology Co., Ltd. (Weicai)	2	42,487,585	1,220,590	1,220,590	155,797	-	% 1.72	70,812,642	Y	N	Y
0	CPDC	Shiny Chemical Industrial Co., Ltd	5	42,487,585	38,998	38,998	38,998	-	% 0.06	70,812,642	N	N	N

Note 1: The information of guarantees and endorsements for other parties of the Company and its subsidiaries are disclosed separately and numbering as follows: Parent company�0 Subsidiary starts from 1

Note 2: Seven types of the relationship between Counter-party of guarantee and endorsement as follows:

Transactions between the companies.
The Company directly or indirectly holds more than 50% voting right.
When other companies directly or indirectly hold more than 50% voting rights of the Company.
The Company directly or indirectly holds more than 90% voting right.
A company that is mutually protected under contractual requirements based on the needs of the contractor.
A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.
Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
CPDC	Yuanta Financial Holdings BES Engineering Co. China Development Financial Holding Corp. Handy Chemical Corparation Ltd. Overseas Investment & Development Corp. Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials ZOWIE Technology Corporation Aetas Technology Inc. Chain Yarn Co., Ltd.	None The Company is a director of the investee company None The Company is a supervisor of the investee company None Shares a director with the Company None � � �	Financial assets designated at fair value through profit or losscurrent Non-current financial assets at fair value through other comprehensive income � � � Financial assets designated at fair value through profit or loss non-current Non-current financial assets at fair value through other comprehensive income � � �	32,176,371 164,348,449 44,684,712 407,000 2,600,000 422,250,872 2,701,651 8,815 287,961 30,000,000	661,224 1,643,484 415,568 1,461 26,000 7,832,673 113,714 358 - 300,000	0.27 10.74 0.30 4.75 2.89 27.52 14.00 0.05 0.58 13.41	661,224 1,643,484 415,568 1,461 26,000 7,832,673 113,714 358 - 300,000

(Continued)

354 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
BES Twin Towers Co., Ltd. Tsou Seen Chemical Industries Corporation Da-ying Construction Ltd.	Taiwan Business Bank Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials ZOWIE Technology Corporation Good Company TaiRx, Inc. Eastspring investments Well Pool Money Market Fund	� Shares a director with the Company None � � � �	Current financial assets at fair value through other comprehensive income Financial assets designated at fair value through profit or loss- current Financial assets at fair value through other comprehensive income- non-current Financial assets designated at fair value through profit or loss- current Financial assets at fair value through other comprehensive income- non-current � Financial assets designated at fair value through profit or loss- current	945,000 160,111,000 6,754,127 8,744,000 750,000 722,500 859,845.6	321,647 2,914,182 284,284 156,518 - 14,652 11,791 14,697,556	0.01 10.43 35.00 1.11 2.08 0.81 -	321,647 2,914,182 284,284 156,518 - 14,652 11,791 14,697,556

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginnin	g Balance	Purch	ases		Sa	les		Ending B	alance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Price	Cost	Gain (loss) on disposal	Shares/units	Amount
The Company	Chain Yarn Co., Ltd. a t c i c	Financial assets t fair value hrough other omprehensive ncome�non- urrent	Chain Yarn Co., Ltd.	None	-	-	30,000	300,000	-	-	-	-	30,000	300,000

(v) Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Property, plant and equipment	February 26, 2020	465,000	186,000	Sunko Ink Co., Ltd.	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Business operating use	None
The Company	Property, plant and equipment	September 14, 2020	1,380,000	634,000	Chain Yarn Co., Ltd.	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Business operating use	None
Ding-Yue Development Co., Ltd	Property, plant and equipment	March 20, 2020	415,441	415,441	Kuan-Pin Company and others	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Bulk transfer	None

Note 1: The object of the transaction owned by different related parties within 5 years, wherein a disclosure on the date of acquisition, price, and relationship with the parent company in the current period is required: N/A.
(vi) Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:None

(Continued)

355 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company CPDC Green Technology Corp.(CPDC GT) Weihua (Rudong) Trade Co., Ltd Weihua (Rudong) Trade Co., Ltd Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Tsou Seen Chemical Industries Corporation Weihua (Rudong) Trade Co., Ltd Kaohsiung Monomer Company Ltd The Company Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang) Jiangsu Weiming Petrochemical Corporation(We iming) Jiangsu Weiming Petrochemical Corporation(We iming)	Subsidiary Subsidiary Affiliated company accounted for using equity method Subsidiary same parent company same parent company same parent company	Sales Sales Sales Sales Sales Sales Sales	(510,141) (161,483) (456,452) (222,127) (231,039) (974,374) (136,651)	% (3.45) % (1.09) % (3.08) % (96.46) % (17.29) % (72.94) % (13.24)	3 Month 3 Month 1 Month Base on contract Base on contract Base on contract Base on contract	- - - - - - -	OA 90 days OA 90 days - Base on contract Base on contract Base on contract Base on contract	36,665 (1,463) 51,106 15,457 1,631 - 8,587	2.27% (0.09)% 3.16% 50.46% 16.04% -% 49.65%	Note � Note � � �

Note: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(viii) Receivables from related parties with amounts exceeding the lower of $100 million or 20% of the capital stock:None

(ix) Trading in derivative instruments:None

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original inve	stment amount	Balance as	of December 31,	2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of wnership	Carrying value
The Company � �	Kaohsiung Monomer Company Ltd Zhong gong baoquan Ltd. Ding-Yue Development Co., Ltd. CPDC Investment (BVI) Co Ltd. Tsou Seen Chemical Industries Corporation	1,Hsing Kung Road, Ta She P O Box 6-25 Nantze,Kaohsiung (815), Taiwan 2F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan Citco Building, Wickhams Cay, P.O. Box662 No.1, Jingjin Rd., Fangliao Township, Pingtung County 940, Taiwan	Methyl Methacrylate Monomer Security consultants Commissioned to create a vendor to build the housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Holding company Dicalcium phosphate	- 14,400 10,040,000 904,946 760,000	- 14,400 7,540,000 904,946 760,000	20,000,000 1,440,000 1,004,000,000 26,580,000 96,000,000	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00	502,002 18,311 10,002,328 903,385 1,303,241	159,545 (7,102) (15,858) 5,325 30,167	63,818 (1,704 (15,858 5,325 30,167	Note 1 ) Note 1 ) Note 2&5 Note 2&4&5 Note 2&5

(Continued)

356 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of wnership	Carrying value
The Company � � � � CPDC Investment (BVI) Co Ltd. Ding-Yue Development Co., Ltd. Tsou Seen Chemical Industries Corporation BES Twin Towers Development Co., Ltd. Frontier Fortune Investment Pte. Ltd. Frontier Fortune Investment Pte. Ltd. Frontier Fortune Investment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd	CPDC Green Technology Corp. Rich Equities Ltd. Unichem Development Limited BES Twin Tower Development Co., Ltd. Thanh Phong Construction Investment Co., Ltd. Jean Pacific Development Co., Ltd. Core Pacific Overseas Holdings Ltd Da-ying Construction Ltd. Taivex Therapeutics Inc. Frontier Fortune Investment Pte. Ltd Core Pacific Twin Star (Myanmar) Investment Company Ltd Gemini Star (India) Private Limited Core Pacific Twin Star (Vietnam) Investment Co., Ltd. Core Pacific Pioneer (Myanmar) Company Ltd	14F.-16, No.61, Wufu 3rd Rd., Qianjin Dist., Kaohsiung City 801, Taiwan Level 3,Alexander House,35 Cybercity,Ebene, Mauritius Unit 06, G/F, The Lodge, 535 Canton Road , Kowloon, Hong Kong 16F., No.12, Dongxing Rd., Taipei City 105, Taiwan B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City 7F.-2, No.300, Yangguang St., Neihu Dist., Taipei City 11491, Taiwan (R.O.C.) Akra Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,Tortola,British Virgin Islands 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 112 ROBINSON ROAD#05-01 ROBINSON 112SINGAPORE (068902) NO.153/Ka,Kyun ShweMmyaing Lane (2) ,23ward, Thingangyun Townshin Yangon Level7, The Capital, Plot No.C-70, G Block, Bandra Kurla Complex, Bandra MUMBAI Mumbai City MH 400051 IN B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City NO.153/Ka,Kyun ShweMmyaing Lane (2) ,23ward, Thingangyun Townshin Yangon	Mechanical engineering Holding company Holding company Real estate investment and development Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials Renting and selling real estate Holding company Engineering, construction contracting business Engaged in biotechnology, pharmaceutical research and development and marketing Holding company Holding company and consultancy Real estate and petrochemical products research and consultancy Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale	100,000 - 9,572,433 4,791,383 609,347 620,000 808,564 22,500 462,246 2,761,596 169,921 9,274 2,566,176 24,804	100,000 5,996 7,865,233 3,353,383 609,347 480,000 808,564 22,500 462,246 1,326,796 169,921 9,274 1,131,376 24,804	15,000,000 - 313,851,199 580,012,053 - 62,000,000 26,580,000 - 46,224,551 93,060,000 5,500,001 2,099,993 - 800,000	% 100.00 % - % 100.00 % 100.00 % 100.00 % 40.00 % 45.19 % 100.00 % 91.10 % 100.00 % 100.00 % 99.99 % 99.01 % 80.00	119,730 - 8,310,551 6,219,671 578,029 619,551 898,139 22,902 255,070 2,661,302 152,968 4,591 2,495,940 24,415	16,639 (66) (137,624) 352,645 16,052 (1,010) 11,975 (1,146) (77,601) 24,302 (2,472) (2,333) 30,119 (1,920)	16,639 (66) (137,624) 352,645 16,052 (404) - - - - - - - -	Note 2&5 Note 2&4&7 Note 2&4&5 Note 2&5 Note 2&3&4 &5 Note 1 Note 2&4&6 Note 2&3&5 &6 Note 2&5&6 Note 2&4&5 &6 � � Note 2&3&4 &5&6 Note 2&4&5 &6

Note1: The Company adopts the equity method to evaluate the investment company.

Note3: Limited company expressed by the amount of capital, no shares issued.

Note4: The original investment amount is the foreign currency, at the prevailing exchange rate.

Note5: This transaction has been written off when the consolidated statement has been prepared.

(Continued)

357 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(c) Information on investment in mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2020	Investment flows		Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
Weihua (Rudong) Trade Co., Ltd (Weihua)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading	763,460	( 2 )� ( 3 )	763,460	-	-	763,460	8,320	100.00%	8,320	482,983	-
Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading.	211,560	( 1 )� ( 3 )	211,560	-	-	211,560	6,085	100.00%	6,085	128,444	-
Weida (Zhangzhou) Consultant Service Co., Ltd. (Weida)	Consultancy	-	( 2 )	13,171	-	(13,171)	-	(250)	-%	(250)	-	-
Jiangsu Weiming Petrochemical Corporation(W eiming)	Petrochemical supporting facility construction	7,421,663	( 1 )� ( 2 )	5,714,463	1,707,200	-	7,421,663	(114,280)	100.00%	(114,280)	6,675,456	-
Zhangzhou Weida Petrochemical Co., Ltd(Weida PC)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading	30,648	( 2 )	30,648	-	-	30,648	(196)	100.00%	(196)	14,069	-
Kunshan Weiqin Management consultant Co., Ltd (Weiqin) (Note 5)	Management consultant	-	( 2 )	29,664	-	(29,664)	-	(906)	-%	(906)	-	-
Changzhou Weicai New Material Science & Technology Co., Ltd.(Weicai)	Engaged in trading of Synthetic fiber material	1,860,113	( 2 )	1,324,893	-	-	1,324,893	(31,894)	100.00%	(31,894)	1,010,920	-
Weiming (Rudong) Construction Co., Ltd	Engaged in engineering consultant services�engineering construction� ngineering management�trading of petroleum chemical product	4,319	( 3 )	-	-	-	-	(22)	100.00%	(22)	4,293	-

(Continued)

358 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
10,615,517	14,362,341	Note 4

Note1: There are three ways to invest as follows:

(a) The Company directly invests in China.
(b) The Company through third regional company (UDL) invests in China.
(c) Others. (The Company through subsidiaries invest in China.)

Note2: Explanation for the field “net income (losses) of the investee” :

(a) If it is in preparation, no investment profit or loss.
(b) There are three ways to identify the basis of investment profit or loss.
(b.1) financial statements audit by international accounting firm with a relationship with Taiwan accounting firm.
(b.2) financial statements audit by the Company’s audit CPA.
(b.3) others.

Note3: The amount in this table should be presented in New Taiwan Dollar.

Note4: The cumulative investment amount or investment proportion to China cannot be over the Company’ s net value of 60%. The Company obtained certified documents of operating headquarters issued by Industrial Development Bureau, Ministry of Economic Affairs on October 18, 2018, and so is not subject to the above regulations. Valid until October 14, 2021.
Note5: Weida and Weiqin were both dissolved and the liquidation process had been completed in July and December 2020, respectively.

(iii) Significant transactions:

(d) Major shareholders:None

(14) Segment information:

Please refer to the consolidated financial statements.

359 -

China Petrochemical Development Corporation

Statement of cash and cash equivalents

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Cash Bank deposits Cash equivalents Total	Description Check deposits Demand deposits Foreign currency deposits Time deposits Subtotal Securities sold under repurchase agreements	Amount $ 821 45,979 20,318 48,127 743,471 857,895 149,982 $ 1,008,698	Note

Statement of financial assets measured at fair value through profit or loss - current

Name of financial instruments Yuanta Financial Holdings	Descriptio n Listed stock	Shares 32,176,371	Par value $ 10	Total amount 321,764	Acquisitoin cost 336,771	Fair value Unit price Total amount Provided for guarentee or pledge 20.55 661,224 30,900,000 shares pledged for long- term bills paybale
						Unit price 20.55

360 -

China Petrochemical Development Corporation

Statement of trade receivables

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Non-related party 1011 1022 14424 1019 1011 2400 1020 1003 Others Subtotal Related party Weihua (Rudong) Trade Co., Ltd. Kaohsiung Monomer Co., Ltd. Tsou Seen Chemical Industries Corporation Weiqiang International Trade (Shanghai) Co., Ltd. Subtotal Less�Allowance for doubtful receivables Total	Description	Amount $ 326,859 184,448 180,333 153,166 139,984 99,874 99,568 83,043 591,727 1,859,002 (1,463) 51,106 36,665 3,061 89,369 (332,496) $ 1,615,875	Note
			No customer balance exceeds 5% individually

361 -

China Petrochemical Development Corporation

Statement of other receivables

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Interest receivable Other receivables Other Total	Description Service work payments and other Lease payment receivable, tax refund receivable, and others	Amount Note $ 16,286 17,460 39,300 $ 73,046

Statement of inventories

Item Finished goods Work-in-process Raw materials Fuel Subtotal Less: allowance for reduction of inventory to market Net carrying amount Land held for construction site - compensation for levied land Payment for floor area ratio Construction in progress Subtotal Total	Cost $ 605,217 277,621 1,296,258 14,342 2,193,438 (855) 2,192,583 9,423 13,535 9,576 32,534 $ 2,225,117	Fair value 736,938 342,068 1,476,422 9,748 2,565,176	Note
			Market value is the net realizable value � � �

362 -

China Petrochemical Development Corporation

Statement of prepayments

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Prepayment for purchases Other prepaid expenses Offset against VAT payable Total	Description Raw materials purchases Customs fee and other	Fair value $ 329,566 194,526 59,582 $ 583,674	Note

Statement of other current assets

Item Temporary payments Inventory of supplies Restricted assets Other financial assets Total	Description Pledged time deposit Time deposits	Amount $ 795 346,136 10,000 1,655,544 $ 2,012,475	Note

363 -

				guarentee	or pledge (Note 6)			20,000,000 shares	provided for long-	None	None	None	4,000,000 shares	provided for long-	None			None	None	None		None		None		None		None
				Evaluation	Basis			The Equity	Method	�	�	�	�		�			�	�	�		�		�		�		�
				Net Assets Value	Unit price Total amount			- 502,002		- 18,311	- 10,002,328	- 903,385	- 1,303,240		- 119,730			- -	- 8,310,551	- 6,219,672		- 24,699		- 57,183		- 578,029		- 619,551	28,658,681
China Petrochemical Development Corporation	Statement of changes in investments accounted for using the equity method	For the year ended December 31, 2020	(Expressed in thousands of New Taiwan Dollars)	Beginning Balance Addition Decrease Ending Balance	Shares Amount Shares Amount Shares Amount Shares Percentage Amount			20,000,000 $ 888,805 - 63,818 - 450,621 20,000,000 40.00 502,002		1,440,000 19,835 - 180 - 1,704 1,440,000 24.00 18,311	754,000,000 7,518,184 250,000,000 2,500,002 - 15,858 1,004,000,000 100.00 10,002,328	26,580,000 901,631 - 63,767 - 62,013 26,580,000 100.00 903,385	96,000,000 1,511,615 - 37,369 - 245,744 96,000,000 100.00 1,303,240		15,000,000 102,891 - 16,839 - - 15,000,000 100.00 119,730			180,000 5,183 - 573 180,000 5,756 - - -	255,367,516 6,725,721 58,483,683 2,240,099 - 655,269 313,851,199 100.00 8,310,551	368,100,910 4,991,033 211,911,143 1,917,579 - 688,940 580,012,053 100.00 6,219,672		29,382,000 24,790 - 332 - 423 29,382,000 0.37 24,699		92,260,000 54,368 - 2,815 - - 92,260,000 44.52 57,183		458,637,500,000 598,440 - 16,052 - 36,463 458,637,500,000 100.00 578,029		48,000,000 479,955 14,000,000 140,000 - 404 62,000,000 40.00 619,551	460,343,810,426 $ 23,822,451 534,394,826 6,999,425 180,000 2,163,195 460,878,025,252 28,658,681
					Name of investee	The Equity Method - Non-listed	company	Kaohsiung Monomer Company Co.,	Ltd.	Zhong gong baoquan Ltd.	Ding-Yue Development Co., Ltd.	CPDC Investment (BVI) Co., Ltd.	Tsou Seen Chemical Industries	Corporation	CPDC Green Technology	Corporation (Originally CPDC	Engineering Co., Ltd.)	Rich Equities Ltd.	Unichem Development Limited	BES Twin Towers Development	Co., Ltd.	Weiming (Jiangsu) Petrochemical	Company	Weiqiang International Trade	(Shanghai) Co., Ltd.	Thanh Phong Constuction	Investment Co., Ltd.	Jean Pacific Development Co., Ltd.	Total

364 -

	Note
	Pledge	None
Ending Balance	Shares Fair value	422,250,872 4,595,273		- 3,237,400			7,832,673
Decrease	Shares Amount	- -		- -			-
Addition	Shares Amount	- -		- 585,611			585,611
Beginning Balance	Shares Fair value	422,250,872 $ 4,595,273		- 2,651,789			$ 7,247,062
	Financial Instruments	Preferred and common stock of	Core Pacific City Co., Ltd.	Add: adjustment for non-current	financial assets measured at fair	value through profit or loss

365 -

Pledge	(Note 8)	None		"		"		"		"		"	"	44,600,000 shares	provided for long-	101,545,000 shares
Evaluation	Basis	Fair value		Fair value		Fair value		Fair value		Fair value		Fair value	Fair value	Fair value		Fair value
Market Value or Net Assets Value	Unit Price Total Amount	- 1,461		- 26,000		- 113,714		- 358			- -	- 300,000	- -	9.30 415,568		7.78 1,643,484	- -				2,500,585
	Amount	1,461		26,000		183,343		358			-	300,000	11,708	814,911		1,863,943	(701,139)				2,500,585
Ending Balance	Percentage	4.52		2.89		14.00		0.05			-	13.41	0.58	0.30		10.74	-
	Shares	407,000		2,600,000		2,701,651		8,815			-	30,000,000	287,961	44,684,712		164,348,449	-				245,038,588
	Amount	-		-		-		-			-	-	-	-		-	-				-
Decrease
	Shares	-		-		-		-			-	-	-	-		-	-				-
	Amount	-		-		-		-			-	300,000	-	-		87,499	375,078				762,577
Addition	Shares	-		-		-		-			-	30,000,000	-	-		15,105,000	-				45,105,000
Beginning Balance	Shares Amount	407,000 $ 1,461		2,600,000 26,000		2,701,651 183,343		8,815 358			- -	- -	287,961 11,708	44,684,712 814,911		149,243,449 1,776,444	- (1,076,217)				199,933,588 $ 1,738,008
	Name of investee	Handy Chemical Corparation	.ltd	Overseas Investment &	Development Corp.	Praxair Chemax Semiconductor	Materials	ZOWIE Technology	Corporation	Chain Yarn Co., Ltd.		Chain Yarn Co., Ltd.	Aetas Technology Inc.	CHINA DEVELOPMENT	FINANCIAL HOLDING	BES Engineering Corporation	Less: Adjustment of non-	current financial assets at	fair value through other	comprehensive income	Total

366 -

China Petrochemical Development Corporation

Statement of changes in property, plant and

equipment

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item	Beginning $ 5,647,642 264,291 2,367,463 42,053,876 59,057 197,486 2,871,490 $ 53,461,305	Addition - 2,806 374,798 1,367,108 4,719 14,511 2,847,161 4,611,103	Decrease - - 8,138 484,337 1,843 3,580 1,758,331 2,256,229	Ending 5,647,642 267,097 2,734,123 42,936,647 61,933 208,417 3,960,320 55,816,179	Provided for guarentee or pledge (Note 8) Note Provided for guarantee and mortgage $5,647,642 Provided for guarantee and mortgage $972,035 Provided for guarantee and mortgage $168,032
Land Land improveme nts Buildings Machinery and equipment Vehicles Other facilities Construction in progress

367 -

China Petrochemical Development Corporation

Statement of changes in accumulated depreciation of property, plant and equipment

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Land improvements Buildings Machinery and equipment Vehicles Other facilities Total Add: accumulated impairment	Beginning $ 215,757 1,120,281 33,967,241 46,753 138,145 35,488,177 4,879,031 $ 40,367,208	Addition 5,410 70,995 642,854 2,355 9,619 731,233 - 731,233	Decrease - 7,030 478,616 1,843 3,581 491,070 - 491,070	Ending 221,167 1,184,246 34,131,479 47,265 144,183 35,728,340 4,879,031 40,607,371	Note

Statement of changes in right-of-use assets For the year ended December 31, 2020

Item Land Buildings Machinery and equipment Vehicles	Beginning $ 61,787 7,130 63,906 16,747 $ 149,570	Addition 24,144 9,465 56,116 5,598 95,323	Decrease 288 7,130 8,965 10,736 27,119	Ending Note 85,643 9,465 111,057 11,609 217,774

368 -

China Petrochemical Development Corporation

Statement of changes in accumulated depreciation of

right-of-use assets

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item	Beginning $ 2,821 4,753 33,708 7,201 $ 48,483	Addition 3,515 4,743 34,010 7,076 49,344	Decrease 105 7,130 7,097 10,056 24,388	Ending Note 6,231 2,366 60,621 4,221 73,439
Land Buildings Machinery and equipment Vehicles

Statement of changes in investment property

Item	Beginning $ 36,698,539 18,038 $ 36,716,577	Addition 897,033 - 897,033	Decrease - 723 723	Ending Note 37,595,572 Provided for guarantee and mortgage $15,346,334 17,315 37,612,887
Land Buildings

369 -

China Petrochemical Development Corporation

Statement of other non-current assets

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Refundable deposits Other non-current assets, others Total	Description Telephone, house and golf card, etc. Related costs for issance of bonds Deliver Process Package of PCTG Realted costs for syndicated loan Credit fee and registration fee from banks Software system maintenance and service fee, etc. Patent licensing fee Other	Amount $ 130,714 24,981 71,484 14,641 11,096 9,160 6,483 188 $ 268,747	Note

Statement of deferred tax assets

Item Loss deduction	Description	Amount $ 11,009	Note

370 -

China Petrochemical Development Corporation

Statement of short-term borrowings

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Creditor Bank " " " " " " " " " " " " "	Type of loan L/C loan L/C loan L/C loan L/C loan L/C loan L/C loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan	Amount $ 215,000 300,000 200,000 160,000 50,000 250,000 500,000 100,000 690,000 450,000 50,000 200,000 400,000 50,000 $ 3,615,000	Contract term 2020.08.28-2021.08.28 2020.04.24-2021.04.24 2020.04.24-2021.04.24 2020.11.23-2021.11.22 2020.04.10-2021.04.10 2020.09.24-2021.07.03 2020.08.25-2021.08.25 2020.04.10-2021.04.10 2020.07.29-2021.07.29 2020.07.29-2021.07.29 2020.08.28-2021.08.28 2020.11.19-2020.11.19 2020.11.23-2021.11.22 2020.09.24-2021.07.03	Interest rate % 1.35000 % 1.28000 % 1.28000 % 1.30000 % 1.38570 % 1.37000 % 1.37000 % 1.27989 % 1.34000 % 1.34000 % 1.35000 % 1.30000 % 1.30000 % 1.37000	Quota 500,000 500,000 500,000 1,000,000 500,000 600,000 700,000 500,000 1,300,000 1,300,000 500,000 200,000 1,000,000 600,000	Pledged Note None " " " " " " " Property, plant and equipment, and investment property " None " " "

371 -

China Petrochemical Development Corporation

Statement of trade payables

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Non-related party 660 3002 688 9357 Others Subtotal Related parties Subtotal Total	Description Raw material � � � �	Amount $ 482,272 309,812 95,370 60,453 267,246 1,215,153 - $ 1,215,153	Note
			No customer balance exceeds 5% individually

Statement of other payables

Item Payroll and bonus payable Interest payable Other payables Total	Description Long-term loan interest Dividends payable Slot rental, storage Housing tax, labor costs and other Compensation payable Project	Amount $ 563,087 10,977 6,030 55,653 341,948 2,412 326,841 $ 1,306,948	Note

372 -

China Petrochemical Development Corporation

Statement of lease liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item	Description	Lease term 2020.07-2022.06 2018.01-2023.12 2017.08-2042.07 2015.01-2021.12	Discount rate	Endind Note $ 7,130 7,246 80,472 50,654 $ 145,502 $ 32,583 112,919 $ 145,502
Office Vehicles Land Storage slot Current Non-current			1.8% 1.8% 1.8% 1.8%

Statement of provisions - current

Item Remediation fee Employee benefits	Description	Amount Note $ 276,650 4,984 $ 281,634

373 -

China Petrochemical Development Corporation

Statement of other current liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Payable collection Other Total	Description Withholding salary income tax, labor and health insurance and other Advance (deferred) income and temporary payment of company payments	Amount $ 7,807 1,111 $ 8,918	Note

374 -

							Note
							Collateral	Investment	property						"			"
							Repayment	The Company	will make	repayment on	maturity, which	is five years	since the	issuance date	"			"
						Carrying	amount	1,500,000							1,000,000			1,000,000			3,500,000
					Unamortized	premiums	(discount)	-							-			-			-
China Petrochemical Development Corporation	Statement of bonds payable	December 31, 2020	(Expressed in thousands of New Taiwan Dollars)	Amount	Interest	payment Repayment Ending	date Coupon rate Total amount paid balance	9.21 % 0.64 $ 1,500,000 - 1,500,000							9.21 % 0.64 1,000,000 - 1,000,000			9.21 % 0.64 1,000,000 - 1,000,000			$ 3,500,000 - 3,500,000
							Issuance date	2020.9.21							2020.9.21			2020.9.21
							Trustee	Mega	International	Commercial	Bank Co., Ltd.				Land Bank of	Taiwan Co.,	Ltd.	Bank of	Taiwan Co.,	Ltd.
							Bond name	Ordinary Bonds							Ordinary Bonds			Ordinary Bonds

375 -

China Petrochemical Development Corporation

Statement of long-term borrowings

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Creditor Bank " " " " " " "	Description Two-year medium-term loan Three-year medium- term loan Three-year medium- term loan Three-year medium- term loan Three-year medium- term loan Three-year medium- term loan Five-year medium-term loan Five-year syndicated loan - case A	Amou	nt More than One Year 420,000 1,500,000 550,000 300,000 180,000 1,060,000 400,000 - 4,410,000	Contract Term 2020.09.14-2022.09.14 2020.06.15-2023.06.15 2019.07.12-2022.07.12 2019.11.27-2022.10.30 2020.02.17-2023.02.17 2020.07.20-2023.07.20 2020.10.14-2025.10.14 2016.03.14-2021.03.13	Interest Rate % 1.7000 % 1.3900 % 1.3400 % 1.5000 % 1.3000 % 1.5964 % 1.7229 % 1.9556	Mortgage or Guarentee Note Property, plant and equipment Maximum duration of each financing up to 180 days and recyclable. Property, plant and equipment Maximum duration of each financing up to 180 days and recyclable. Property, plant and equipment Maximum duration of each financing up to 180 days and recyclable. Property, plant and equipment Maximum duration of each financing up to 180 days and recyclable. Property, plant and equipment Maximum duration of each financing up to 180 days and recyclable. Property, plant and equipment Each financing is reimbursed at maturity for unrecyclable use. Property, plant and equipment Each financing is reimbursed at maturity for unrecyclable use. Property, plant and equipment Each financing is reimbursed at maturity for unrecyclable use.
		Less than One Year $ - - - - - - - 1,160,000 $ 1,160,000

376 -

China Petrochemical Development Corporation

Statement of long-term bills payable

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Acceptance Institution Bills paybale International Bills Finance Corporation Bills paybale International Bills Finance Corporation Bills paybale Taching Bills Finance Corporation Bills paybale Taching Bills Finance Corporation Bills paybale China Bills Finance Corporation Bills paybale China Bills Finance Corporation Bills paybale China Bills Finance Corporation Bills paybale China Bills Finance Corporation Bills paybale China Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Bills paybale Mega Bills Finance Corporation Less: discount on long-term bills payble Total	Period 2020.12.07~2021.02.22 2020.12.31~2021.01.05 2020.11.12~2021.01.07 2020.10.12~2021.01.07 2020.11.09~2021.01.27 2020.12.22~2021.03.22 2020.10.12~2021.01.08 2020.12.11~2021.03.11 2020.11.10~2021.01.27 2020.10.30~2021.01.26 2020.12.25~2021.02.25 2020.11.17~2021.01.18 2020.11.06~2021.01.18 2020.11.20~2021.01.18 2020.11.25~2021.01.18 2020.11.30~2021.01.26 2020.11.30~2021.01.26 2020.12.04~2021.01.26 2020.12.07~2021.02.25	Interest Rate	Amount $ 200,000 150,000 300,000 100,000 800,000 500,000 500,000 720,000 30,000 550,000 670,000 200,000 80,000 140,000 270,000 85,000 15,000 150,000 200,000 5,660,000 3,888 $ 5,656,112	Mortgage or guarentee Note
		% 0.7600 % 1.2620 % 1.0528 % 1.1067 % 0.3700 % 0.2800 % 0.3700 % 0.2800 % 0.3700 % 1.0300 % 1.1800 % 1.2300 % 1.2300 % 1.1800 % 1.1800 % 1.1800 % 1.0300 % 1.1800 % 1.1800		Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Investment accounted for using equity method and financial assets at fair value through profit or loss Investment accounted for using equity method and financial assets at fair value through profit or loss Property, plant and equipment, and financial assets at fair value through other comprehensive income Property, plant and equipment, and financial assets at fair value through other comprehensive income Property, plant and equipment, and financial assets at fair value through other comprehensive income Property, plant and equipment, and financial assets at fair value through other comprehensive income Property, plant and equipment, and financial assets at fair value through other comprehensive income Property, plant and equipment Property, plant and equipment Property, plant and equipment Property, plant and equipment Property, plant and equipment Property, plant and equipment Property, plant and equipment Financial assets at fair value through profit or loss Property, plant and equipment Property, plant and equipment

377 -

China Petrochemical Development Corporation

Statement of provisions - non-current

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Items Site dismantling Site restoration Pension liabilities	Description	Amount Note $ 1,196,440 237,963 270,284 $ 1,704,687

Statement of other non-current liabilities

Item Description Deposits received Performance bond and Project award Deferred sale of land benefits Sale of land in Pingnan to wholly owned subsidiary	Amount Note $ 98,944 4,277 $ 103,221

Statement of deferred tax liabilities

Item Land value added tax provisions	Description	Amount Note $ 6,497,063

378 -

China Petrochemical Development Corporation

Statement of operating costs

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item
Raw materials
Balance on January 1
Add: purchases of raw materials
Transferred from indirect materials
Less: balance on December 31
Transferred to loss on work stoppage
Transferred to unfinished construction
Transferred to operating expenses
Return in the current period
Material loss
Direct labor
Manufacturing overhead
Less: transferred to loss on work stoppage
Manufacturing cost
Add: work-in-process inventory, January 1
Purchase
Trial product from unfinished constuction
Less: work-in-process inventory, December 31
Transferred to loss on work stoppage
Cost of goods manufatured
Add: finished goods, January 1
Purchase
Trial product from unfinished constuction
Borrowings in the current period
Inventory profit
Less: finished goods, December 31
Transferred to loss on work stoppage
Transferred to manufacturing overhead
Transferred to operating expenses
Cost of goods sold
Cost from land leasing
Carry-over of gain from price recovery of inventoy
Carry-over of inventory loss
Apportionment of fixed manufacturing costs due to
idle equipment
Sale of scraps
Operating costs

Subtotal
Total
$ 1,209,250
11,986,523
233,723
(1,296,258)
(21,932)
(6,278)
(29)
(5,979)
(384)
12,098,636
706,423
1,882,400
(1,249,284)
13,438,175
278,342
62,915
3,887
(277,621)
(26,892)
13,478,806
411,567
746,906
235
15,574
941
(605,217)
(62,129)
(17,950)
(7,378)
13,961,355
41,264
(69,591)
1,277
1,359,745
(6,675)
$
15,287,375

379 -

China Petrochemical Development Corporation

Statement of selling expenses

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Salary Rental expense Freight-out Commission Tax Other expenses	Description	Amount Note $ 8,214 21,901 163,431 61 137,659 16,789 Does not exceed 5% invidually $ 348,055

Statement of administrative expenses For the year ended December 31, 2020

Item Salary Pension Traveling expense Depreciation Service fees Insurance expense Stationery expense Entertainment expense Other expenses	Description	Amount Note $ 235,832 20,597 6,910 28,609 43,829 28,336 13,341 11,831 74,813 Does not exceed 5% invidually $ 464,098

380 -

China Petrochemical Development Corporation

Statement of research and development expenses

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Items Salary Maintenance expense Depreciation Miscellaneous expense Service fees Other expenses	Description	Amount Note $ 98,876 15,950 43,827 41,791 75,435 61,775 Does not exceed 5% invidually $ 337,654

381 -
VI. In the case of any insolvency of the Company and its affiliates, specify its effect on the Company's financial position: None
382 -

Chapter 7 Review and Analysis of Financial Position and Financial Performance, and Risk Management

I. Financial status comparison and analysis (Adoption of IFRS-Consolidated)

Unit: NTD Thousand

			Unit: NTD	Thousand
Year Item	2020	2019	Difference Amount	%
Current Assets	27,089,168	23,986,973	3,102,195	12.93
Property, plant and equipment	23,226,955	20,275,279	2,951,676	14.56
Net investmentproperty	37,626,827	36,719,706	907,121	2.47
Intangible assets	159,173	177,464	(18,291)	(10.31)
Other assets	16,807,867	15,309,068	1,498,799	9.79
Total assets	104,909,990	96,468,490	8,441,500	8.75
Current liabilities	8,748,394	8,741,513	6,881	0.08
Non-current liabilities	25,293,565	20,533,113	4,760,452	23.18
Total liabilities	34,041,959	29,274,626	4,767,333	16.28
Capital stock	32,848,502	28,348,502	4,500,000	15.87
Capital surplus	583,815	1,286,700	(702,885)	(54.63)
Retained earnings	39,200,786	39,406,739	(205,953)	(0.52)
Other equities	(1,820,461)	(1,925,172)	104,711	5.44
Non-controllingequity	55,389	77,095	(21,706)	(28.15)
Total shareholders' equity	70,868,031	67,193,864	3,674,167	5.47

Notes to significant changes:

The current assets increased because the Company purchased the land, subsection 3, Songxi section, Songshan Dist., Taipei City, and paid the installment in accordance with contract. The total amount was NT$9,340,010 thousand dollars, and was recognized as "Inventory-Prepayment for Land".
The increase in property, plant and equipment was due to the purchase of Dajia Plant of Sunko and Chain Yarn Douliu Plant, as well as China subsidiary receiving work in progress construction assets in 2020.
The decrease in intangible assets was due to the amortization of computer software costs and patent rights in 2020.
Other assets increased because the Company recognized the net profit and loss of financial asset at fair value of Core Pacific City Co., Ltd.
The increase in non-current liabilities was due to the issuance of NT$3,500,000 thousand of domestic secured corporate bonds and long-term financing loans from financial institutions and securities companies in 2020.
The decrease in retained earnings was due to the decline in net income as compared to the previous year due to the impact of the epidemic.
Other reserves increased due to unrealized gains in financial instruments measured at fair value through other comprehensive income.
The decrease in non-controlling interests was due to the decline in profit due to the epidemic.
383 -

II. Analysis on financial performance (Adoption of IFRS-Consolidated)

Unit: NTD Thousand

Year Item	2020	2020	2019	2019	Increase/Decrease	Ratio %
	Subtotal	Total	Subtotal	Total
Total operating revenue Less: Sales return and discount Operating revenue, net Operating cost Less: Unrealized sales profit and loss Add: Realized sales profit and loss Gross profit (loss) Operating expenses Operating profit or loss Non-operating revenue and expense Net profit (loss) before tax Less: Income tax gain (expense) Net Profit after Tax Other comprehensive income (after tax) Total comprehensive income Net profit (loss) attributable to parent company in current period Net profit (loss) attributable to non- controlling equity in the current period Total comprehensive income attributable to parent company Comprehensive income attributable to non-controlling equity	17,583,092 0	17,583,092 17,544,864	29,624,094 0	29,624,094 27,996,514	(12,041,002) (12,041,002) (10,451,650) 0 0 (1,589,352) (185,494) (1,403,858) (355,838) (1,759,696) 700,721 (1,058,975) 395,433 (663,542) (1,057,460) (1,515) (658,888) (4,654)	(40.65) (40.65) (37.33) (97.65) (9.11) (343.22) (15.66) (94.43) 539.69 (61.08) 204.18 (43.09) (60.83) (31.47) (42.69) (132.07)
		0 0		0 0
		38,228 1,851,106		1,627,580 2,036,600
		(1,812,878) 1,916,654 103,776 570,884		(409,020) 2,272,492 1,863,472 (129,837)
		674,660		1,733,635
		201,768		(193,665)
		876,428		1,539,970
		680,989 (6,329) 884,606 (8,178)		1,738,449 (4,814) 1,543,494 (3,524)

Notes to increase/decrease:

Operating income: The decrease in operating income was due to the decrease in the unit sales price of AN by 27% in 2020 and the decrease in the unit sales price of CPL by 24% and the decrease in sales volumes by 50% in 2020 compared to the previous year.
Gross profit: (1) In 2020, due to the pandemic and the fluctuation in oil price, and the increase in the supply of new production capacity, the selling price of our main product AN dropped significantly, resulting in a decrease of 27% compared to 2019 and a decrease in profit of NT$1.75 billion compared to the previous year.
(2) For Caprolactam (CPL) products, under the pandemic, the demand from the downstream textile industry has completely frozen, CPL around the globe are poured to Taiwan at a low price, which affected its sales volumes, selling price and gross profit. The sales volumes decreased by 50%, selling prices decreased by 24%, but under our cost control, the losses of CPL product was decreased to NT$180 million versus 2019.
Operating expense and operating income: Operating expenses decreased in 2020, due to the decrease in sales volume and the austerity of administrative expenses.
- Operating profits decreased in 2020, because the epidemic and fluctuation in oil price resulted in the slowdown of terminal demand and resulted in the decrease in revenue.
Non-operating revenue and expense: The decrease was mainly due to the epidemic in 2020, which resulted in the decrease in profit recognized using the equity method and the estimated remediation fee of NT$250,00 thousand.
Income tax expense: The decrease was due to the decrease in value-added tax of the lands of investment properties.
Other comprehensive income (after tax): The increase was due to the unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income.
384 -

III. Review and Analysis of Cash Flow (Adoption of IFRS-Consolidated)

Unit: NTD Thousand

				Unit: NTD Thousand	Unit: NTD Thousand
Balance of cash – beginning (1)	Net cash flow from operating activities in the year (2)	Cash inflow in the year (3)	Surplus (deficit) (1)+(2)+(3)	Remedyfor deficit in cash
				Investment project	Wealth management project
9,116,253	(4,140,048)	2,503,694	7,479,899	-	-
(I) Analysis of variance in cash flows: 1. Operating activities: Net cash outflow NT$4,140,048 thousand, mainly due to the decrease in the cost of acquiring land and other accounts payable. 2. Investing activities: Net cash outflow NT$5,818,094 thousand, mainly due to the capital expenditure related to acquiring plants and equipment, as well as expenses of other financial assets. 3. Financing activities: Net cash inflow NT$8,617,775 thousand, mainly due to issuing corporate bonds and cash capital increase and borrowing long-term and short-term loans. (II) Remedy for deficit in cash and liquidity analysis: 1. Remedy for deficit in cash: None (surplus) 2. Liquidity analysis: The current ratio in 2020 increased versus 2019, mainly because the consolidated company, after acquiring the land in the third section of the Xisong Section in Taipei City’s Songshan District, paid on time according to contract conditions and recorded inventory-prepaid construction site payments, resulting in an increase in current assets. (III) Analysis of variance in cash flows for the future year: 1. Operating activities: Projected net cash inflow, NT$1,000,278 thousand 3. Investing activities: Net cash outflow NT$13,602,444 thousand, primarily as a result of the increase in long-term loans. 3. Financing activities: Net cash inflow NT$17,055,894 thousand, primarily as a result of the increase in long-term and short-term loans. 4. Remedyfor deficit in cash: None(surplus)

Financing activities: Net cash inflow NT$17,055,894 thousand, primarily as a result of the increase in long-term and short-term loans.

IV. Major capital expenditure for the most recent year and its effect on financial position and operation of the Company:

Since the Company's major capital expenditures in recent years were mainly financed by its own working capital and loans from financing projects, the financial risk control is regularly evaluated and controlled, and therefore has no significant impact on the Company's financial condition.

385 -

V. Direct investment policy, the main reasons for profit or loss, and corrective action plan for the most recent year, and investment plan in the next year

CPDC's reinvestment policy still focuses on the core competitiveness in the petrochemicalrelated industries. The invested objective shall be selected in terms of downstream and upstream or vertical integration, business development and revitalization of assets.

The Company currently operates on the mainland China Jiangsu Sunshine Island a liquid chemical storage and chemical products trading business, which is currently stable in operations. In the future, we aim to increase volume throughput to further improve profitability and proactively increase the variety of products to increase our China market share. As for the chemicals trading business in Shanghai, in addition to dedicating to the supply of high-quality chemical raw materials in China and Asia, we also integrate Taiwan's overseas purchases and sales with China's trade, so as to demonstrate the advantages of bilateral trade, and provide customers in Asia and the world with high-quality products and services.

The cyclohexanone plant and nylon 6 plant in the first stage of the petrochemical plant in Rudong, Jiangsu have been completed and are expected to be put into operation in 2021. The CPL plant and OPP plant in the second stage have begun pre-construction operations. In the future, the Company will be able to integrate the upstream and downstream of CPL, to obtain the cost competitive advantage; the benefits of the integrated production base are just around the corner.

The integrated production base will enhance the Company's downstream cost competitive advantage; furthermore, since being close to the mainland market and matching with local development advantages, it will be beneficial to the development of high-value and high-margin products. The Company plans to take the Taiwan R&D center as the core and cooperate with the plastic modification and engineering plastic alloy production base in Changzhou, Jiangsu which the Company acquired in 2018; with excellent nylon modified engineering plastics as the core product, we horizontally expand to other major engineering plastic materials, and actively establish the market competitive advantage of integrated production.

The axis of the global economy is shifting from west to east, pulling the center of chemical demand to the east. The Asia-Pacific region has become the driving force for the growth of global petrochemical demand. The increase in purchasing power, the large population, and the increasing degree of urbanization all mean that the rapid growth of petrochemical demand will continue in the future. In consideration of the Company's long-term development and sustainable operation, the Company will, subject to the needs and strategy for business expansion, keep paying attention to relevant industrial development domestically and overseas and carefully evaluate adequate investment objectives. Notwithstanding, the Company will still focus on obtaining production technology, new energy, specialty chemical products, precision chemical products and bio-techrelated industries developments as the priority.

Furthermore, to support the Go South Policy of the government, the Company has evaluated investment opportunities in land development by copying our earlier investment strategy in the mainland China.

386 -

VI. Analysis of risk factors: analyze and assess the following circumstances for the most recent year and until the date of publication of the annual report

(I) Impact of interest and exchange rate changes and inflation, and their future countermeasures:
Impact on the Company's income:

Impact on the Company's income:
Item	2020 (NTD Thousand; %)
Net interest revenue	(60,326)
Net exchange gain	(22,763)
Net interest revenue to net operating revenue	-0.34%
Net interest revenue to net profit before tax	-58.13%
Net exchange gain to net operating revenue	-0.13%
Net exchange gain to net profit before tax	-21.93%

(1) Interest rate

The Company's interest rate risk primarily derives from interest accrued based on a floating interest rate arising from long-term and short-term debt and fixed income. To hedge interest fluctuation risk, the Company undertakes transactions when the interest rate stays low/high after carefully evaluating the financial market trends. Therefore, even if the interest rate fluctuates due to uncertain factors, no material impact would be caused to the Company.

(2) Exchange rate

The Company's major product lines and raw materials are mostly priced at USD and the payment thereof is collected or made in NTD (other than those for import/export). The exchange rate fluctuation would affect the cost and revenue of such petrochemical products as CPL and AN. There are no outstanding balances of any unsettled financial derivatives transactions subject to exchange rate fluctuation risk at the end of 2020.

(3) Inflation

The Company primarily procures petrochemical raw material locally or domestically, or imports raw materials and supplies. The Company would be primarily affected by the change of the international raw material price, while the domestic inflation would render less impact to the Company comparatively.

2. Future countermeasures:

(1) Countermeasures against interest rate fluctuations

The Company will continue to make every effort to ask financing banks for preferential interest rates to reduce the Company's interest expenses, and will try to reduce its average cost of capital through multiple fund-raising channels.

387 -
(2) Countermeasures against exchange rate fluctuations

The Company adopts a natural hedge against exchange rate fluctuations, and selects optimal timing to engage in spot foreign exchanges primarily based on the net foreign exchange position after the offset of sales revenue priced based on foreign exchange rate against the sales expenses, subject to the market condition and position, to hedge exchange rate fluctuation risks.

(3) Countermeasures against inflation

The largest niche for the Company's competition with others is based on the stable supply of most the Company's major raw materials, including such international petrochemical raw materials and supplies as propylene, benzene, sulfur, natural gas, carbon monoxide and fuel oil, by CPC and other local suppliers, as the price is calculated based on specific equations and international price. Although domestic inflation renders a lesser impact to the Company, the Company continues to boost various resolutions through the market mechanism and process improvement, to reduce its cost.

(II) Policy on high-risk, high-leverage investments, loaning of funds, endorsements and guarantees as well as derivatives transactions, major causes for profits or losses and future countermeasures:

The Company currently does not loan funds or trading of derivatives. The Company manages its finance in a prudent manner and does not engage in high-risk and highly leveraged investments.

In 2020, the Company's provide endorsements and guarantees mainly to subsidiaries in accordance with the procedures stipulated in the "Procedures for Loans, Endorsements, and Guarantees" prescribed by the Company. The majority of the guaranteed companies are 100% indirectly owned subsidiaries of the Company. The Company has obtained financial statements and business overview information of the subsidiaries and analyzed their profitability to assess the risk of the Company's endorsement and guarantee.

For information on the Company's endorsement and guarantee, please refer to the 2020 Audit Report and the disclosure in the notes thereto.

(III) Future R&D plans and expected R&D expenditure:

R&D has been a core target of our sustainable operations. With the R&D of CPDC, three main orientations are: Improvement of the existing production process, Development of correlative products and New product development.

Improvement of the existing production process:

The Company continues to improve existing production processes to raise efficiency, lower manufacturing cost and develop production process with energy saving.

(2) Development of related products:

Focusing on developing byproducts and related products, strengthen material supply chain from upstream to downstream by taking advantage of the material.

388 -

(3) New product development:

Setting up the project development group, and focus on high-value products with market potential (e.g., optical application monomers, special chemical products, ester derivate and functional high polymer) by market information collecting and existing survey technique. Furthermore, the Company evaluates developing advantage and develops own core technique to increase items of high-value products and broaden industry chain.

The Company has planned expenditures of about NT$585,973 thousand in R&D activities in 2021. The expenditures to be spent in R&D each year in the future will be subject to the progress of the R&D plan.

Statistics of R&D expenses invested by CPDC and its subsidiaries in the past years.

Year	2016	2017	107	108	109	2021 (Estimated) (Note 1)
Amount (NTD thousand)	198,273	236,348	335,436	401,655	442,279	585,973

Note 1: Included the estimated amount of subsidiary Taivex Therapeutics Corporation in 2021.

(IV) Impact on the Company's Financial Operations and Contingency Action Regarding Recent Changes in Domestic and International Policies and Regulations:

In 2020, the China-US trade conflict continued to intensify, and the outbreak of the COVID-19 pandemic impacted the global economy, prompting the reorganization of the global supply chain and forming a decentralized and regional global trade and production network. After the U.S. presidential election at the end of 2020, Biden’s new policy focuses on economic revitalization in the post-pandemic era and wooing allies to jointly exert pressure on the mainland China. This shock will strengthen a number of Asia-Pacific economic and trade agreements: The Mainland China will become the biggest benefit under the Regional Comprehensive Economic Partnership (RCEP). In addition, Vietnam is one of the countries that have participated in the freest trade agreements, and trade with major economic powers has been unimpeded, becoming one of the beneficiaries of the China-US trade conflict. However, Taiwan has not participated in the economic integration. It not only deepens the risk of being marginalized but also makes Taiwan become less competitive in exports to countries that enjoy preferential tariffs.

In addition, under the consensus on climate change issues and the Paris Climate Agreement, energy structure adjustment is an inevitable trend; environmental regulations and air pollution emission requirements in Mainland China are becoming stringent, and energy policies are gradually de-coaling and investing heavily in renewable energy; among them, the establishment of the carbon market was accelerated, carbon emission trading was implemented, and management and control standards were strictly implemented for various environmental

389 -

protection issues during the period of “14th Five-Year Plan”. The opportunities and threats that CPDC faces by international trends and important policy changes, and the response are explained as follows:

[Opportunities]

Business opportunities in the reorganization of the regional industrial chain
After the signing of RCEP, Mainland China is developing and has a huge domestic demand market and a complete industrial chain, grasping the red supply chain and business opportunities, and the diversified layout of the supply chain, which is in line with the Company’s strategic layout.
Vietnam’s economy is performing well, with export tariff advantages and huge demographic dividends, and opportunities for overseas development.

[Threats]

The trade conflict has not ended, and there are concerns about an escalation in the tariff war, which affects the import of raw materials and product export restrictions for factories in Mainland China; cross-strait relations have deteriorated and Mainland China has set up trade barriers, which is not unfavorable to Taiwan’s exports to Mainland China.
Taiwan has not participated in the regional economic integration and RCEP signing, subject to the impact on petrochemical industry trade or tariff inequality.
Environmental taxes and fees have raised the cost of petrochemical production, and the requirements for safety and environmental protection in the chemical industry have increased.

[Response]

Continue to lay out the development of the real estate market in Vietnam.
Continue to cultivate the domestic demand market in Mainland China and strengthen the vertical integration of Rudong petrochemical plant: The Company has a supply chain layout both inside and outside Mainland China, and takes the advantages of the choice of quality, cost, tariff and other niche points on both sides of the strait to provide flexibility in supply.
Integrate cross-strait liquid chemical transportation and storage trade operations, flexibly use and reduce the impact of tariffs.
Master the technology of low energy consumption and low emission, and reduce the production cost to become the competitive advantage of the industry.
Continue to strengthen high-end competitiveness in Taiwan, accumulate independent R&D capability, strive for high-value products, and open up the market with the differentiation of professional technology, product quality, and technical services.
(V) Effect on the Company's financial operations of developments in science and technology as well as industrial change, and countermeasures:
In response to the outbreak of the COVID-19 epidemic in 2020, the Company separated the employees into different groups at the beginning of the epidemic, in which some employees worked from home and isolated from home when traveling abroad and returning home. Under the current information structure, we purchased SSLVPN license and the new video conferencing system was able to meet the needs of our employees' remote work.
390 -
In view of the continuous development of network technology, SDWAN technology has become mature and network equipment manufacturers have launched new network equipment that fulfills the definition of a software-defined network. The Company will continue to introduce the latest network equipment and management model in order to strengthen its network management capabilities, reduce network fees, and flexibly use network equipment to build flexible applications of network services.
In recent years, due to the rapid development of digital automation technology and AI technology, the number and frequency of network attacks have been increasing, the growth of ransomware virus has been increasing rapidly and the attack methods have been updating. In order to ensure smooth operation of the Company's important information services, the Company has purchased a cloud sandbox information security system to protect important information terminal and data and ensure that the information foundation is not interrupted.
In response to the impact of technological changes and industry changes on the Company's financial operations, the Company established the Data Application Division in 2018 to be responsible for planning, import and maintenance of the Company's data and AI application systems.
In terms of assisting in the optimization of industrial safety management, AI image smart analysis technology has been applied to high-risk industrial safety operations and environmental issues to optimize human-machine collaboration and reduce hazard risks. In terms of assisting operation management optimization, the Company has been using AI machine learning and deep learning technologies to carry out price prediction for major products and optimization projects related to various processes, so as to provide a reference for decision optimization.
At the same time, the Company has established a big data platform, providing high-speed computing and reliable storage space, as well as data crawling and data analysis services to gradually enhance operation process automation and data value-added applications. In the future, the Company will continue to research and introduce new technologies to meet the needs of its business development, increase technological energy and provide quality services to create company value.
(VI) Effect on the Company's crisis management of changes in the corporate image, and countermeasures:

Upholding the principle of market orientation and pursuit of excellence, the Company continues to offer improved products and services up to customers' satisfaction, while respecting and caring for employees, customers, suppliers, and communities with the aim of improving the value of customers and shareholders. The Company is committed to safety, health, energy saving and environmental co-prosperity, spares no effort in sustainable operation and contribution to society, and continues to maintain a good corporate image. For crisis management, the Company has established crisis management procedures. In case of any crisis, the Company will make quick and accurate decisions according to these procedures in order to reduce or mitigate the impact on the corporate image.

391 -

In addition, the Company has integrated the risk management plans of each department in 2020 and is moving toward the goal of establishing a risk management system. In the future, the Company will continue to optimize the risk management mechanism by conducting rolling corrections, preventions, and reviews through the PDCA cycle, while strengthening communication with stakeholders and reinforcing the risk management culture to reduce the occurrence of risks and the impact on its operations.

(VII) Expected benefits and potential risks associated with any merger and acquisitions, and countermeasures:

The Company's Board of Directors approved the acquisition of the land, plant and equipment assets of the Dajia Plant of Sunko Ink Co., Ltd. on February 26, 2020. The project can help the Company to expand its downstream layout for its OPP products and leverage its existing advantages as a raw material producer, while the Company will develop products of non-halogen-flame retardants, which will be more environmentally friendly than general flame retardants, to help strengthen the specialty chemicals business. On September 14, 2020, the Board of Directors of the Company approved the acquisition of land, plant and equipment of the Douliu Polymer Plant of Chain Yarn Co., Ltd. This is a strategic integration of the Company's petrochemical business. The high-quality polymerized nylon chips obtained can strengthen the application of downstream nylon chips of CPL, deepen the development of the downstream nylon industry chain, and enhance the Company's long-term stable operating niche and competitive advantage. It is expected to have a positive impact on shareholders' equity. Each project had been fully evaluated by professional accountants, environmental consultants and asset appraisers before it was submitted to the Board of Directors to lower the transaction risks. Upon completion of the acquisitions, future operational risks are managed by the responsible business units.

(VIII) Expected benefits and possible risks of facilities expansion, and countermeasures:

To improve the operational flexibility of major raw material ammonia and phenol, the Board of Directors agreed to invest and build the storage equipment of ammonia and phenol at the Kaohsiung storage area. In order to increase the flexibility of import and export of products and raw materials, phase II and phase III of the investment plan will be executed to build additional chemical storage tanks. This project is still ongoing. To increase the production and market share of the 3 factories for CPL production, the Board approved expenditures on Toufen Hydrogen production and Phenol revitalization projects, to achieve 200,000 tons production capacity scale. This plan has completed and fulfilled its target. The production capacity has been increased according to the market conditions. For AN production, the Board of Directors approved expenditures for AN Plant revitalization works and key equipment air compressor debottlenecking improvement projects in Dashe Plant. These 2 projects have reached their goals of increasing annual operating hours and production capacity. In addition, in order to fulfill our social responsibility, improve the combustion efficiency and smoke emission of Toufen Plant, the Board of Directors approved the smoke-free emission project of Toufen Plant in November 2018. Due to the impact of COVID-19, the delivery of equipment was delayed. However, this

392 -

did not affect the project goal of meeting natural gas emission standards and reducing the impact on the environment.

According to the analysis on supply & demand in the CPL market, Taiwan's dependence on imported CPL has fallen each year as a result of the Company's full projection and sales effort. The supply and demand of CPL in Mainland China has changed substantially, with its own production capability being upgraded drastically, and its dependence on imported CPL declined drastically, even facing an overproduction situation. In order to mitigate the impact caused by the change in CPL market, the Company's relevant units will be dedicated to adjust the production amount with market conditions, actively search possible solutions in lowering material and production costs, and develop high end Nylon Chips products thus maximizing profits for the Company. Also, the company will continue to position for new product development and deploy overseas for continued growth.

(IX) Risk from centralized purchasing or selling, and countermeasures:

The primary raw materials for the AN produced by the Company refers to propylene, and one of the important raw materials for CPL produced by the Company refers to natural gas. If the supply of primary raw materials is defective, the Company's production of AN and CPL will be affected.

Meanwhile, the Kaohsiung Plant of CPC is scheduled to be relocated and shut down in 2015. With respect to the Dashe Industrial Park where the Company's Dashe Plant is located, Kaohsiung County Government issued the official letter under (87) Fu-Chien-Tu-Tze No. 211694 dated November 7, 1998 on "Motions for Changing Dashe Urban Plan (3rd overall review)", in which the conditions identified in the motion No. 7 required that "the manufacturers in the special industrial park shall be relocated before 2018, and the park shall be changed to a Type-B industrial park by the County Government pursuant to the statutory procedure." Meanwhile, Kaohsiung City Government asked the Ministry of Interior to authorize the "Motion for Changing Dashe Urban Plan (4th overall review)" via its official letter under KaoShih-Fu-Tu-Fa-Kuei-Tze No. 10130250600 dated January 13, 2012. The Kaohsiung City Government Planning Bureau on March 22, 2019 approved the change to a Type-B industrial part, allowing continued production but no further expansion or reconstruction. On November 10, 2020, the Urban Planning Committee, Ministry of the Interior convened the third review meeting on the change of the Dashe Urban Plan, and requested the Industrial Development Bureau of the Ministry of Economic Affairs to invite the Kaohsiung City Government and relevant units to clarify the opinions of the manufacturers, which was included in the urban plan by the Kaohsiung City Government in order to eliminate the controversy. At present, the Company continues to work together with the manufacturers in the Dashe industrial area to communicate with the government to fight for Type-A.

The Company's primary product lines, CPL and AN, refer to the main raw materials supplied to downstream nylon, acrylic fiber and ABS plastic industries. CPL and AN refers to the basic raw materials for petrochemical downstream products. The Company's customers are primarily are chemical fiber textile plants that are limited in number, due to their industrial

393 -

characteristics. The Company's capacity increase and lower cost advantage have increased its market share to 43%.

(X) Impact and risk associated with large share transfers or changes in shareholdings of directors,
supervisors, or shareholders who hold more than 10% of the Company's shares, and countermeasures: None.
(XI) Impact and risk associated with changes in management rights, and countermeasures: None.
(XII) Litigation and non-litigation matters:
- § Against
- Damages to An Shun residents (the first case)
- (1) Fact at issue:

The plaintiffs including Wu initiated the complaint alleging that Taiwan Soda Ash Co., Ltd., An Shun Plant, as consolidated by CPDC pursuant to the order of Ministry of Economic Affairs, produced such material as dioxin due to production of PCP prior to the consolidation, thereby causing damage to the plaintiffs. Therefore, CPDC should be liable for the damages due to the consolidation.

(2) Claimed value: NT$351,750,000
(3) Date of initiation: July 2008
(4) Parties:

Plaintiff: Wu, et al.

Defendant: CPDC, MOEA, Tainan City Government, and Environmental Protection Bureau of Tainan City Government

(5) Status:

The 1st instance was rendered on December 2015 that CPDC and MOEA shall bear joint and several liability for compensation NT$168,170,000 to An Shun residents. The Company filed an appeal on December 2015 pursuant to laws. After examination by the Tainan Branch of High Administrative Court, the judgement was upheld, so that CPDC should wholly compensate the An Shun residents with NT$191,578,366. In disagreement with the decision, the Company filed an appeal pursuant to laws in September 2017. In November 2018, the Supreme Court ordered us to compensate the plaintiff for a total of NT$190,000 thousand yuan in the original case about medical expense, such as part of the abandonment sent back to the more trial, CPDC won. The appeal was filed in August 2019, dismissed by the Supreme Court in March 2020, which confirmed that the case was closed.

Damages to An Shun residents (the second case)
(1) Fact at issue: The same fact with the Damages to An Shun residents (the first case).
(2) Claimed value: NT$80,915,000
(3) Date of initiation: March 2016
(4) Parties:

Plaintiff: Yu, et al.

Defendant: CPDC and MOEA

(5) Status:

Pursuant to laws, the Company responded to legal actions due to the fact of this case is the same as damages to An Shun residents (the first case). In order to maintain the Company's

394 -

interests, the Company will respond to the lawsuit. On November 6, 2020, the Tainan District Court issued a judgment that the plaintiff and 39 other plaintiffs' claims were justified and dismissed the remaining plaintiffs' claims. With regard to the court's opinion that the plaintiff's request is justified, the Company believes that it should fight for the benefits at the starting point and file an appeal within the appeal period.

"Administrative disposition under Nan-Shih-Fu Huan-Shui-Tze No. 09822035440"
(1) Fact at issue:

Tainan City Government ordered the Company, via its official letter under Nan-Shih-Fu Huan-Shui-Tze No. 09822035440 dated December 17, 2009, to pay the out-of-pocket expenses for the project related to An Shun Site soil pollution remediation to the account of Soil and Groundwater Pollution Remediation before January 31, 2010. The decision was served to the appellant in December 2009.

(2) Claimed value: NT$17,961,679
(3) Date of initiation: January 2010
(4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

The Company paid foresaid expenses within the specific time limit and filed an appeal. Notwithstanding, the appeal was overruled upon judgement. The Company filed an administrative suit with Kaohsiung High Administrative Court. The Court ruled in September 2012 that the part of the judgement about the amount exceeding NT$17,867,012 should be revoked, while the other claims filed by the Company were overruled. The Company filed an appeal against the judgement overruling the Company's claims pursuant to laws. In September 2013, the Supreme Administrative Court remanded the case for another judgement. In October 2015, the Kaohsiung High Administrative Court revoked the judgement of the payment amount exceeding NT$7,067,702. Both parties filed an appeal again with the Supreme Administrative Court in November 2015. The Company's appeal was overruled in February 2017 and part of the facts was remanded to the Kaohsiung High Administrative Court for further hearing. The Kaohsiung High Administrative Court ruled in July 2018 that the part of the judgement about the amount exceeding NT$8,120,984 should be revoked, while the other claims filed by the Company were overruled. The Company filed an appeal to the Supreme Administrative Court against the judgement overruling the Company's claims pursuant to laws. In January 2020, the Supreme Administrative Court canceled the original judgment and remanded it to the Kaohsiung High Administrative Court. On November 24, 2010, the Kaohsiung High Court issued a judgment that all fees payable by the Company in excess of NT$7,622,000 were revoked. In order to seek the Company's best interests and to obtain reasonable remediation fees, the Company filed an appeal on December 18, 2020.

3. An Shun fish farm rental

A. Case 1

(1) Fact at issue:

An Shun fish farm is owned by the Company. Some tenants have terminated their rental contract yet they still occupy the lands owned by the Company. Thus, the Company demanded the return of the land from those tenants.

395 -

Thus, the Company demanded the return of the land from those tenants.

(2) Claimed value: NT$79,999,432
(4) Parties:

Plaintiff: CPDC

Defendant: 11 people, including Wu Jen-Tz, et al.

(5) Status:

The case was filed in November 2015. The Company filed a protest in January 2016 against the legal fees, which was dismissed in August 2019. The Company filed an appeal on the 16th of the same month, which was withdrawn on September 4 of the same year. The case was closed.

B. Case 2
(1) Fact at issue:

Same as Case 1.

(2) Claimed value: None
(3) Date of initiation: September 2017
(4) Parties:

Plaintiff: CPDC Defendant: 4 tenants

(5) Status:

The Company filed a lawsuit in September 2017 and attempted for an out-of-court settlement. The case was settled out of court in February 2020 and the Company filed a withdrawn letter on behalf of the adversary.

C. Case 3

(1) Fact at issue:

The case is for the Shun fish farm owned by the Company. Since some tenants have terminated their rental contract, the contract is not renewed. However, some tenants denied having terminated the lease, and thus, they urged the Company to perform the lease.

(2) Claimed value: None
(3) Date of initiation: September 2017
(4) Parties:

Plaintiff: CPDC

Defendant: 4 tenants

(5) Status:

The lawsuit was filed in 2019. On December 10, 2020, the Tainan District Court issued a judgment that the Company should cooperate with the tenant to register the lease. The Company filed an appeal on December 29, 2020. The case is currently pending before the Tainan High Court.

D. Case 5

(1) Fact at issue: Same as case 1
(2) Claimed value: NT$15,062,050
(3) Date of initiation: December 2020
396 -

(4) Parties:

Plaintiff: CPDC

Defendant: 3 tenants

(5) Status:

The lawsuit was filed in 2020. On January 12, 2021, the Tainan District Court dismissed the lawsuit on the grounds that the defendants died prior to the filing of the lawsuit. The Company filed an appeal on January 20, 2021, which was heard by the Tainan Branch of the High Court. On March 3, 2021, the Tainan Branch of the High

Court dismissed the case and ordered the original court to impose an appropriate penalty. The case is still under the Tainan District Court.

Civil action against An Shun Old Dormitory
(1) Fact at issue:

Taiwan Alkali An Shun Dormitory is owned by the Company, but some residents have occupied the dormitory for many years or registered households. However, the Cultural Affairs Bureau of Tainan City Government designated the area as a municipal archaeology site on November 17, 2014. Since the Company has responsibility for managing and maintaining that area and protects its own property rights for the stipulated use or for the collection of profits of the property, the Company filed this suit.

(2) Claimed value: NT$19,566,120 and added interest
(3) Date of initiation: January 2016
(4) Parties:

Plaintiff: CPDC

Defendant: Residents of the Taiwan Alkali An Shun Dormitory

(5) Status:

The Company filed a suit in January 2016. On September 24, 2019, the High Court ruled that the Company won the case and the case was closed.

Managers Tsai, Liu and Chen et al. prosecuted under civil and criminal law for violation of trade secrets. The Company has appointed relevant attorneys to clarify the facts in order to protect the Company's interests.
(1) Fact at issue:

The Company believed that Tsai et al. stole secrets through their duties for the purpose of providing relevant organizations in Mainland China that were planning petrochemical construction projects. Taking advantage of the acquisition of Dah Shyang Chemical Co. Ltd., who used high-value chemical products, which were researched, developed, and manufactured by the Company. The reproduction of such trade secrets were without authorization, and a breach of trust occurred by stealing the Company's trade secrets and providing such to the third party caused the theft of the Company's business secrets and damages to its competitiveness.

(2) Claimed value: NT$7 billion, etc.
(3) Date of initiation:
a. Civil action: October 2016
b. Criminal prosecution: January 2017
c. Claim for returns of unjust enrichment of pension: March 2017
397 -

(4) Parties:

Plaintiff and complainant: CPDC

Defendant: Managers Tsai, Liu and Chen et al.

(5) Status:

After the mediation was not successfully concluded, the civil action is under hearing by the Taipei District Court. In regards to criminal law, after prosecution by the Miaoli District Prosecutors Office, the case was transferred to the Miaoli District Court. The Company initiated an ancillary civil action for compensation, and is now assisting the Miaoli District Prosecutors Office with inspection of related evidence. In defense of the claim for returns of unjust enrichment of pension, the Board of Directors of the Company made a formal resolution resigning Tsai et al. retrospectively. The Company filed a suit to the court for returns of unjust enrichment in March 2017, and the petition was overruled by the judgement rendered by the Taipei District Court in December 2017. In disagreement with the decision, the Company filed an appeal for remedy with the High Court in January 2018. The High Court dismissed the Company's appeal on February 11, 2020. The Company filed an appeal once again to the Supreme Court in March of the same year, which is currently pending before the Supreme Court. The criminal case was dismissed by the Supreme Court, and the civil case is currently in the Taipei District Court.

"Administrative disposition under Nan-Shih-Fu Huan-Shui-Tze No. 1000700466"
(1) Fact at issue:

Tainan City Government ordered the Company, via its official letter under Fu-Huan-ShuiTze No. 1000700466 dated September 16, 2011, to pay the out-of-pocket expenses for An-Shun Site-related work projects to the Soil and Underground Water Pollution Remediation Fund account. After the Company stated its own opinion, Tainan City Government ordered the Company to make the payment within a specific time limit via its official letter under Nan-Shih-Fu-Huan-Shui-Tze No. 1010242670 dated March 26, 2012.

(2) Claimed value: NT$16,095,318
(3) Date of initiation: April 2012
(4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

The Company paid foresaid expenses within the specific time limit and filed an appeal. Notwithstanding, the appeal was overruled upon judgement. The Company filed the administrative remedy pursuant to the law. The Kaohsiung High Administrative Court rendered a judgement and rescinded the petition decision and the original fine regarding the fine amount that exceeded NT$119,000. Both parties filed an appeal in September 2014. The Supreme Administrative Court remanded the case to the Kaohsiung High Administrative Court on November 17, 2015. Kaohsiung High Administrative Court in March 2017 rendered a judgement and rescinded the fine exceeded NT$6,498,455, which the Tainan City Government requested payment from the Company. Both parties disagreed with the decision, and filed an appeal for remedy. On April 12, 2018, the Supreme Court ruled that the Company does not need to pay NT$9,596,863. The case is closed and the Company received the amount of NT9,596,863 paid by the Tainan

398 -

government.

Petition for removal of buildings and refund of land by Taiwan Alkali Co., Ltd. to village residents
(1) Fact at issue:

The Company consolidated Taiwan Alkali Co., Ltd. in 1983 and generally succeeded to its right and obligation. In 1986, the Company entered into an agreement with all of Taiwan Alkali Village residents to make the land Nos. 1323-259 and 1323-261 available to them to accommodate the utilities, such as public roads and water towers, continuously used by them. Upon investigation on occupation of the public utilities, some residents were found violating the agreement by constructing private buildings thereon, changing the purpose of the utility arbitrarily and misappropriating the land used for the utilities. The Company planned to recall said land and asked them to refund unjust enrichment to secure the Company's assets and all shareholders' interests and rights.

(2) Claimed value: NT$5,506,370
(3) Date of initiation: February 2013
(4) Parties:

Plaintiff: CPDC

Defendant: Taiwan Alkali Co., Ltd. Village Management Committee, et al.

(5) Status: The Company filed a suit pursuant to the law and petitioned for removal of buildings and the return of the land. Kaohsiung District Court rendered a judgement revoking the petition. In September 2014 the Company filed an appeal pursuant to laws. After the Kaohsiung High Court rendered a judgement overruling the Company's petition in July 2016, the Company was unwilling to accept the judgement and filed an appeal for remedy with the Supreme Court in September 2016. In 2019, the Supreme Court remanded the case, and the case is currently in the High Court Kaohsiung Branch Court.
Civil action against high-rank management
(1) Fact at issue:

The Company's high-ranking managers, Liu and Chang, resigned directly without completing the handover procedures. They have stopped performing duties as of July 1, 2013. The Company issued a letter demanding that they should perform duties, but they refused to do so. The Board of Directors relieved them from the post in October 2013. The Company filed a suit against Liu pursuant to laws because he severely violated the work rules of the Company. Later, Liu and Chang claimed the pension against the Company pursuant to Labor Standard Law. Both parties failed to reach settlement upon negotiation. Liu and Chang initiated a civil action for payment of pension with Taipei District Court and Kaohsiung District Court in January 2014.

(2) Claimed value: NT$8,044,460 and NT$6,110,000
(3) Date of initiation: January 2014
(4) Parties:

Plaintiff: Liu and Chang

Defendant: CPDC

(5) Status:

The Plaintiffs initiated the actions, which are under examination by Taipei District Court and Kaohsiung District Court respectively. Taipei District Court in September 2015

399 -

rendered the judgement that the Company shall give Liu NT$4,572,150, while the Kaohsiung District Court in September 2015 rendered the judgement that the Company shall give Chang NT$35,393. For the former case, the Company filed an appeal in September 2015. In March 2017, the High Court dismissed both appeals. The Company was not satisfied with the results and filed an appeal to the Supreme Court in April of the same year. On June 4, 2019, the Supreme Court dismissed both appeals and upheld the second trial verdict that CPDC should pay NT$4,572,150 plus 5% interest. Since the Supreme Court dismissed the appeal on the ground that it is without reasons, which means that the case is final and no further appeal can be filed. The case was closed. The latter was dismissed by the High Court in July 2016. The plaintiff appealed the High Court's decision. On August 9, 2018, the third trial ruled that the appeal was justified, and the original decision was remanded to the High Court Kaohsiung Branch Court for trial. On July 31, 2019, the Company was ordered to pay NT$3,785,306 plus statutory interest to ○ ○ Chang. The Company filed an appeal and the case is pending before the Supreme Court.

"Administrative disposition under Fu-Huan-Shui-Tze No. 1030098879"
(1) Fact at issue:

Tainan City Government ordered the Company, via its official letter under Nan-Shih-Fu Huan-Shui-Tze No. 1030098879 dated February 2014, to pay the out-of-pocket expenses for the project related to An Shun Site soil pollution remediation, NT$27,444,217, within a specific time limit.

(2) Claimed value: NT$27,444,217
(3) Date of initiation: March 2014
(4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

The Company paid said expenses within the specific time limit and filed an appeal. Notwithstanding, the appeal was overruled upon judgement in July 2014. The Company filed the administrative remedy pursuant to laws. After examination by the Kaohsiung High Administrative Court, the judgement was rendered in August 2016 that the Company only needed to pay NT$153,657 and the rest was overruled. Considering the overall interests, the Company filed an appeal against the part overruling the Company's claims. The issue now is under hearing by the Supreme Administrative Court.

Administrative disposition under Kao-Shih-Fu-Shui-Shih-Yi-Tze No. 10335137100 (Turn off the pipelines with enforcement because of Kaohsiung gas explosion)
(1) Fact at issue:

Kaohsiung City had an underground pipeline explosion in July 2014. Kaohsiung City Government ordered the Company in August 2014 to turn off the pipeline, and prohibited the Company from restoring to use all the petrochemical pipelines in affected areas. For disagreement with the administrative disposition above, the Company initiated the administrative remedy pursuant to laws.

(2) Claimed value: None.
(3) Date of initiation: September 2014
400 -

(4) Parties:

Plaintiff: CPDC

Defendant: Kaohsiung City Government

(5) Status:

The Company initiated the petition pursuant to laws in September 2014, and MOEA overruled the petition in December 2015. The Company filed an administrative appeal with Kaohsiung High Administrative Court in January 2016 and the part of petition was overruled upon judgement in January 2017 In disagreement with the decision, the Company filed an appeal for remedy in February within the same year. Currently, the case is pending trial by the Supreme Administrative Court.

Administrative disposition under Kao-Shih-Kung-Wu-Kung-Tze No. 1033652500 and No. 1033766200 (Repeal of permission to mine and use the road for underground pipelines in Kaohsiung)
(1) Fact at issue:

Due to the Kaohsiung gas explosion on August 1st, Public Works Bureau of Kaohsiung City Government, via its official letter to CPC Corp., the person subject to the disposition, repealed the Company's right to use the land of all the pipelines. Some pipelines mentioned in the repeal disposition belonged to the Company, and the Company commissioned CPC Corp. to build the pipelines at first, thus the Company, as the stakeholder, initiated a remedy with Public Works Bureau of Kaohsiung City Government pursuant to laws in September and November 2014.

(2) Claimed value: None.
(3) Date of initiation: September 2014
(4) Parties:

Plaintiff: CPDC

Defendant: Public Works Bureau of Kaohsiung City Government

(5) Status:

The Company initiated a petition pursuant to laws in September and November 2014, and the Petition Committee of Kaohsiung City Government overruled the petition. In April 2015 the Company filed an administrative suit against two administrative disposition. The petition was overruled upon judgement by the Kaohsiung High Administrative Court in March 2017. In disagreement with the decision, the Company initiated an appeal for remedy in April within the same year.

12. An Shun application

(1) Fact at issue:

Summary of J. Y. Interpretation No. 714 indicates that whether polluters' general successors bear the remedial obligation does not belong the range of Soil and Groundwater Pollution Remediation Act. Meanwhile, ex-Taiwan Alkali Corp. was a state-owned enterprise and its affiliated An Shun Plant was commanded and supervised under the Ministry of Economic Affairs, Taiwan Provincial Government, and CPC Corp., etc., and they also dominated operations and obtained profits from it. These foresaid actions should belong to the acts of state, but the government asked a private company to bear the pollution which it had caused. Thus, the Company applied for the confirmation from Tainan City Government that those were actual polluters or potentially responsible for pollution and they should pay for the relevant costs and refund the money the

401 -

Company had already paid over the years.

(2) Claimed value: None.
(3) Date of initiation: December 2014
(4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

In November 2014 Tainan City Government made a rejection, and the Company initiated a petition for remedy. In March 2015 Tainan City Government revoked the preceding disposition and made a new one. Considering the litigation strategy, the Company initiated a petition with the new disposition in April 2015. Environmental Protection Administration of Executive Yuan made a decision not to proceed with the case, because the original disposition had been revoked. New disposition was overruled in July 2015. The Company filed a 1st instance for remedy in September 2015, but it was overruled upon judgement by the Kaohsiung High Administrative Court in November 2017. In disagreement with the decision, the Company filed an appeal within the same year. In October 2018, the Supreme Court overruled the appeal, and the case was confirmed.

Lawsuit of Business negligent injury from Heng-I Inc.
(1) Fact at issue:

Gas explosion has been occurred from Heng-I Chemical Plant next to the Toufen Plant. This developed into a business negligent injury lawsuit because of combustion from several workers and as the accident happened in the public drainage location of industrial areas, excessive material has been analyzed by samples which belongs to CPDC. Plaintiff request to make CPDC managers as a defendant and its pending trial by Taiwan Miaoli District Court. In February 2015, injured workers from Heng-I Chemical Inc. applied for joint liability to pay compensation of NT$6,920,000.

(2) Claimed value: NT$6,920,000
(3) Date of initiation: February 2015
(4) Parties:

Plaintiff: Injured workers from Heng-I Chemical Inc.

Defendant: CPDC and its manager

(5) Status:

The civil action case was pending trial by the Miaoli District Court, and in March 2017 the judgement was rendered that the Company and the manager won the case. In disagreement with the decision, the plaintiffs filed an appeal for remedy. In October 2019, the adversary agreed to the payment and settle out of court. As the case is settled, it was ended. As for criminal actions, a ruling was rendered to not prosecute in March 2016.

Application of joint Occupational Accident from an employee of Chung-Yen Engineering Co., Ltd.
(1) Fact at issue:

An employee of Chung-Yen Engineering Co., Ltd., Wang, fell during construction of the rust-proof operation of ceiling's pipes, resulting in contusion and fracture in his body. In February 2015, the plaintiff requested to add CPDC to the list of defendants, in addition to the original defendant, Chung-Yen Engineering Co. Ltd.

402 -
(2) Claimed value: NT$3,151,594
(3) Date of initiation: April 2015
(4) Parties:

Plaintiff: Wang

Defendant: Chung-Yen Engineering Co., Ltd. & CPDC

(5) Status:

The case was pending trial by the civil division of Kaohsiung District Court and the judgement was rendered in June 2017. In disagreement with the decision, the Company initiated an appeal in July within the same year. In August 2019, we were judged to pay no-fault liability compensation for occupational disasters, and be liable jointly and severally with the CHUNG YEN ENGINEERING CO.,LTD., with a total of NT$607,150. The case was concluded.

"Administrative disposition under Nan-Shih-Fu-Huan-Tu-Tze No. 1050327521"
(1) Fact at issue:

Tainan City Government ordered the Company to pay for the "2013 CPDC's (Taiwan Alkali Co., Ltd.) supervision and auditing project for An Shun Site remediation". According to Article 14, Paragraph 4, Article 15, and Article 43, Paragraph 1 of the Soil and Groundwater Pollution Remediation Act (hereinafter referred to as Soil Pollution Act), the Company was requested to pay NT$63,270,582.

(2) Claimed value: NT$63,270,582
(3) Date of initiation: December 2016
(4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

The Company initiated the petition in June 2016, and the agency with jurisdiction of administrative appeals overruled the petition. The Company filed an appeal for remedy in December 2016. After the examination by Kaohsiung High Administrative Court, the Company was only liable for approximately NT$400 million among the total. Both parties were not satisfied with the result and filed appeals in July 2017. On October 31, 2018, the Supreme Court dismissed the Company's appeal (part of the NT$4,845,000 has been confirmed) and withdrew the rest of the decision of the Kaohsiung High Administrative Court and remanded the case for trial. The Kaohsiung High Administrative Court ruled in the first instance that, except for the portion of the judgment determined, the Company's portion in excess of NT$35,018,000 was revoked (i.e., the Company was required to pay NT$39,863,000). The Company and the Tainan City Government filed an appeal to the Supreme Administrative Court in October 2019 against the unfavorable part of the judgment. The case is still pending before the Supreme Administrative Court.

One million fine on the non-proposal for a 3rd revision of the pollution remediation plan
(1) Fact at issue:

According to Article 22, Paragraph 4 of the Soil and Groundwater Pollution Remediation Act, the Tainan City Government fined the Company NT$1,000,000 and 8 hours of environmental seminars on 4 May, 2017 based on the administrative disposition under Fu-Huan-Tu-Tze No. 1060456103, which the Environmental Protection Bureau of Tainan

403 -

City Government alleges that the Company's pollution remediation plan did not comply with a request for improving the processing capacity. Thus, the EPB deemed the Company as failing to submit a 3rd revision proposal to the remeidiation plan.

(2) Claimed value: NT$1,000,000
(3) Date of initiation: June 2017
(4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

In disagreement with the disposition, the Company initiated an administrative remedy to Kaohsiung High Administrative Court in December 2017, while revised the pollution remediation plan as requested by Environmental Protection Bureau of Tainan City Government. The plan was approved in January 2018 and will be carried out in the future. The Court ruled against the Company and the Company appealed to the Supreme Court, which annulled the original decision and remanded the case to the Kaohsiung High Administrative Court on July 7, 2020. On December 28, 2020, the Kaohsiung High Court ruled against the Company. Considering the risk of litigation, the cost of litigation, and the need to alleviate the tension between the Company and the Tainan City Government, the Company did not file an appeal in this case, which was confirmed on January 19, 2021.

§ Against affiliates

Reinvestment entity - Legal action against declaration of the capacity of Chairman of Praxair Chemax Semiconductor Materials Co., Ltd.
(1) Fact at issue:

The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as "Praxair") delegated by the Company, was elected as the new Chairman at the directors' meeting of Praxair 2013. However, the Vice Chairman and supervisor appointed by the joint venture shareholder, Praxair Inc., failed to keep their promise and stopped the supervisor of Praxair appointed by the Company from auditing the accounts and records pursuant to the Company Law, and filed a legal action declaring non-existence of the new Chairman's commission of authority.

(2) Claimed value: None.

(3) Date of initiation: May 2013

(4) Parties:

a. action of non-existence of the new Chairman's commission of authority:

Plaintiff: Supervisor Taimur Sharih of Praxair, and Vice Chairman Anne Roby of Praxair Defendant: New Chairman of Praxair, Lin Ke-Ming

b. action of claims for collection of books:

Plaintiff: Supervisor of Praxair, Yu Chien-Sung

Defendant: General Manager of Praxair, Chen Chun-Liang

c. action of claims for collection of Seal / Signature:
Plaintiff: Chairman of Praxair, Lin Ke-Ming
404 -

Defendant: General Manager of Praxair, Chen Chun-Liang, et al.

(5) Status:

Taiwan High Court ruled that the action of existence Chairman's commission of authority did exist. For disagreement with the judgement, the Defendant filed an appeal with Taiwan Supreme Court. The appeal was overruled by the judgement rendered by the Court on December 23, 2015, and this case determined that Lin Ke-Ming was the Chairman of Praxair. However, the intervener filed an appeal. The judgement was rendered by the Supreme Court in September 2017 determining again that Lin Ke-Ming was the Chairman of Praxair. Taiwan High Court ruled that the Supervisor of Praxair, Yu Chien-Sung, won the case of action of claims for collection of books. For disagreement with the judgement, the Defendant filed an appeal with Taiwan Supreme Court which is now pending trial. Taiwan Hsinchu District Court stopped the trial on the case of action of claims for collection of Seal / Signature until the Chairman's commission of authority is determined. The Chairman's appointment was confirmed on December 23, 2015, and relevant information was reported for the continuation of the proceedings. After successfully changing the seal registration on December 27, 2016, the Company dismissed the action. International arbitration on January 23, 2018 declared judgement, indicating that the Company won one caes and lost one case. As per the judgements outstanding as of December 2018, dividends received from 2014 to 2017, was approximately NT$560 million. The Company filed a dismissal arbitration lawsuit in Taiwan court against the dissatisfied part. The Court dismissed the Company's request on the grounds that the arbitration was a foreign arbitration and the Taiwan court did not have the authority to set aside the arbitration. On August 18, 2020, the Company filed an appeal to the Supreme Court, which is currently pending before the Supreme Court.

Reinvestment - Praxair shareholders' meeting
(1) Fact at issue:

The supervisor, Taimur Sharih, appointed by the joint venture shareholder of Praxair invested by the Company, Praxair INC., privately called a temporary shareholders' meeting on January 15, 2015 and submitted the temporary motion at the meeting.

(2) Claimed value: None.
(3) Date of initiation: February 2015
(4) Parties:

Plaintiff: CPDC

Defendant: Chairman of Praxair, Lin Ke-Ming, and Supervisor Taimur Sharih

(5) Status:

The Miaoli District Court rendered a judgement in September 2016 that the Company won the case. The opposite side filed an appeal with the High Court in October 2016 and the judgement was rendered holding that the Company still won the case. The opposite side filed an appeal again with the Supreme Court in September 2017. On February 5, 2019, the court rejected the appeal by both parties and the case was closed

Reinvestment - Praxair revocation of all the resolutions made by the Board of Directors and denial of financial statements
(1) Fact at issue:

Because some relevant judgements had determined that Lin Ke-Ming, appointed by the Company, was the Chairman of Praxair, the resolution, which Praxair voluntarily called a

405 -

meeting of directors, was illegal and should have been revoked. On the other hand, considering that the financial statements submitted by Praxair may affect shareholders' right and interest, the Company brought a suit for remedy.

(2) Claimed value: None.
(3) Date of initiation: September 2016
(4) Parties:

Plaintiff: Chien-Sung Yu

Defendant: Praxair

(5) Status: On May 4, 2020, the Taiwan High Court, Taichung Branch Court, ruled that the lawsuit was discontinued before the conclusion of the lawsuit No. 498 of the Taiwan High Court, Taichung Branch Court, in 2018.
Reinvestment - non-existence of the resolution of Praxair extraordinary shareholders' meeting on 21 February, 2017
(1) Fact at issue:

Because some relevant judgements had determined that Lin Ke-Ming, appointed by the Company, was the Chairman of Praxair, the resolution, which Praxair voluntarily called an extraordinary shareholders' meeting in February 2017, was illegal and should have been revoked.

(2) Claimed value: None.
(3) Date of initiation: February 2017
(4) Parties:

Plaintiff: CPDC

Defendant: Praxair

(5) Status: The lawsuit was filed to the Miaoli District Court on February 21, 12017, the court issued a judgment on June 29, 2018, and the Taichung High Court ruled to stop the lawsuit on January 25, 2019.
Reinvestment - Praxair absence of directors and supervisors
(1) Fact at issue:

After dismissal of Praxair directors and supervisors on January 9, 2017, the Company brought a lawsuit to elect the interim managers and inspectors in order to maintain the regular operation of Praxair and reduce damages to shareholders' rights and interest.

(2) Claimed value: None.
(3) Date of initiation: January 2017
(4) Parties:

Plaintiff: CPDC

(5) Status:

Due to the complexity of the case, the Company made an application for sending the case to trial with the Taiwan Miaoli District Court in order to protect the legitimate rights and interests in Praxair.

Reinvestment - Rental payment of Praxair
(1) Fact at issue: Praxair did not comply with the contract and pay for the rent since March 2013.
(2) Claimed value: NT$40,823,556
406 -
(3) Date of initiation: August 2017
(4) Parties:

Plaintiff: CPDC

(5) Status:

After the examination, the Miaoli District Court was of the opinion that the Company's request had no reason and overruled the Company's suit. In disagreement with the decision, the Company filed an appeal for remedy in January 2018. On May 29, 2020, the Supreme Court dismissed the appeal and the case was closed.

Reinvestment - Contract disputation with Shanghai Tongye Coal Chemical Group Co. Ltd (1) Fact at issue:

Shanghai Tongye Coal Chemical Group Co. Ltd purchased anthracene oils from Weihua (Rudong) Trading Co., Ltd and Weiqiang International Trading (Shanghai) Co., Ltd. However, the payment of the contract was paid with only 10% of the total amount which is equal to deposit premium in May 2014. In June 2014, both sides of the companies signed complement action agreement to extend payment terms. However, Shanghai Tongye Coal Chemical Group Co. Ltd still not paid the remainder payment on the due date. Weihua and Weiqiang filed a suit for remedy pursuant to laws.

(2) Claimed value: RMB$ 3.5 million
(3) Date of initiation: August 2014
(4) Parties:

Plaintiff: Weihua (Rudong) Trading Co., Ltd. & Weiqiang International Trading (Shanghai) Co., Ltd.

Defendant: Shanghai Tongye Coal Chemical Group Co. Ltd

(5) Status:

Subsidiaries of CPDC, Weihua and Weiqiang, filed a civil suit with Yangpu District Court against Shanghai Tongye Coal Chemical Group Co. Ltd for the remainder payment of contract on August 6, 2014. The mediation of both sides was sustained by the Court. However, the Shanghai Tongye Coal Chemical Group Co. Ltd failed to comply with the first-phase payment by the mediation agreement. On September 2, 2014, Weihua and Weiqiang applied for compulsory execution and seized the Coal Tar from Shanghai Tongye Coal Chemical Group Co. Ltd with Yangpu District Court until the Court lifts the seizure for auction to repay the debt. After that, Weihua and Weiqiang continually negotiate and request for specific repayment plan with Shanghai Tongye Coal Chemical Group Co. Ltd. Authorities concerned is proceeding criminal investigation of relevant people who engage in contract fraud from Shanghai Tongye Coal Chemical Group Co. Ltd. In mid-February, 2021, Weiqiang received the court's ruling that the company had filed for bankruptcy and had no more property to distribute, so it was ruled that the bankruptcy proceedings were terminated and the case was closed.

(XIII) Other major risks and countermeasures: N/A

VII. Other important notes: None.

407 -

Chapter 8 Special Note

I. Information about Affiliates

(I) Consolidated operating report of affiliate

==> picture [690 x 347] intentionally omitted <==

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

CPDC
1. Organizational chart of affiliates
40% 100% 100% 100% 100% 100% 100%
Kaohsiung Tsou Seen CPDC Green Unichem CPDC Ding-Yue BES Twin Towers
Monomer Co., Chemical Technology Development Investment Development Co., Ltd Development Co., Ltd.
Ltd. Industries Corporation Limited (BVI) Co., Ltd.
Corporation
100%
100% Frontier Fortune
91.10% Investment Pte. Ltd.
Da Yin Construction
Taivex Therapeutics Engineering Co., Ltd.
Corporation
99.99% 100% 99.01% 100%
Gemini Star Core Pacific Core Pacific Thanh Phong
(India) Twin Star Twin Star Construction
Private (Myanmar) (Vietnam) Investment Co.,
4.02% 99.63% 0.37% Limited. Investment Co., Investment Ltd.
44.52% 55.48% 95.98% 100% Ltd. Co., Ltd.
Weiqiang International Weihua (Rudong) Changzhou Weicai New Weiming (Jiangsu)
Trade (Shanghai) Co., Ltd. Trade Co., Ltd. Material Science & Petrochemical 80%
Technology Co., Ltd. Company
Core Pacific Pioneer
(Myanmar) Co., Ltd.
Weiming (Rudong)
Engineering Company
----- End of picture text -----

Note: 1. Data updated as of December 31, 2020

Substantially identified companies constitute controlling and affiliates relationships as defined in Article 369-2 of the Company Law.

2. Profiles of affiliates

Unit: NTD Thousand

				Unit: NTD Thousand
Name	Date of Incorporation	Address	Paid-in Capital	Principle Business
Kaohsiung Monomer Co., Ltd.	1976.06.10	No. 1 Xinkung Road, Dashe District, Kaohsiung City	NTD 500,000	Production and sale of methyl methacrylate (MMA)
Tsou Seen Chemical Industries Corporation	1998.06.16	No. 1, Chin Ching Road, Tunghai Village, Fanliao Hsiang, Pingtung County	NTD 960,000	Manufacturing of phosphoric acid-related chemical products and derivatives, and Storage, transportation, procurement andmarketing of fertilizer
Taivex therapeutics Inc.	2000.02.11	8F, No. 12 Tunghsing Road, Songshan District, TaipeiCity	NTD 507,399	R&D of bio-tech medicines
CPDC Green Energy Technology Company	1999.05.31	No. 16, 14F, 61, Wufu 3rd Road, Chienching District, Kaohsiung City	NTD 150,000	Machinery engineering
Ding-Yue Development Co., Ltd.	1995.10.11	8F, No. 12 Tunghsing Road, Songshan District, Taipei City	NTD10,040,000	Research and analysis on land utilization, planning and consultation services, lease and sale of plant premises and commercialbuildings, et al.
Da Yin Construction Engineering Co., Ltd.	1972.11.24	8F, No. 12 Tunghsing Road, Songshan District, Taipei City	NTD 22,500	Civil engineering contractor
BES Twin Towers Development Co,, Ltd..	2011.03.01	16F, No. 12 Tunghsing Road, Songshan District, Taipei City	NTD5,800,121	Investment in construction of infrastructure, real property trading, international trading, real property lease, and hotel services
CPDC Investment (BVI) Co., Ltd.	1998.01.09	Citco Building , Wickhams Cay,P.O Box 662	NTD904,946 (Note 3)	Reinvestment
Unichem Development Limited	2008.05.20	Room 06, G/F, The Lodge, 535 Canton Road, Kowloon, Hong Kong	NTD9,572,433 (Note 3)	Reinvestment
Frontier Fortune Investment Pte. Ltd	2016.11.23	112 Robinson Road#05- 01Robinson 112 Singapore(068902)	NTD2,761,596 (Note 3)	Reinvestment
Weihua (Rudung) Trade Co., Ltd.	2012.12.10	Yangguang Island, Changsha Town, Rudong County, Jiangsu Province	NTD763,460 (Note 3)	Wholesale of chemical raw materials and products (exclusive of hazardous goods and toxic chemical products), export & import, and import & export of technology, and commissioned distribution
Weiqiang International Trade (Shanghai) Co., Ltd.	2013.03.21	Room 516, 5/F, Building 1, No. 55, Ao'na Road, China (Shanghai) Pilot Free Trade Zone	NTD211,560 (Note 3)	Wholesale of chemical raw materials and products (exclusive of hazardous goods), commissioned distribution (exclusive of auction), and import & export andrelatedalternatives
Jiangsu Weiming Petrochemical Corporation	2013.05.16	Junction of Yang Kou Gang Jing Yi Lu and Central Road Complex Building, Changsha Town, Rudong County, Nantong, Jiangsu	NTD7,421,663 (Note 3)	Production and sales of nylon 6, cyclohexanone, electricity, steam and its by-products; construction of ancillary facility for petrochemical projects

409 -

Name	Date of Incorporation	Address	Paid-in Capital	Principle Business
Weiming (Rudung) Engineering Co., Ltd.*	2020.10.26	Room 212, Jiuzuyang Yangkougang Business Building, Gangcheng Village, Changsha Town, Rudong County, Nantong, Jiangsu	NTD4,319 (Note 3)	Engineering consulting, survey and design, engineering construction, engineering management services, sales of chemical products
Changzhou Wei- Chi Material Co., Ltd.	2015.01.06	No.18, Daoxiang Road ,Wujin Economic Development Zone, Changzhou, Jiangsu Province	NTD1,860,113 (Note 3)	Engineering plastics, production of high-value petrochemical downstream products
Core Pacific Twin Star (Myanmar) Co. Ltd.	2017.02.16	No.153/Ka,Kyun Shwe Myaing Lane(2), 23 Ward,Thingangyun Township,Yangon	NTD 169,921 (Note 3)	Reinvestment and advisory services
Core Pacific Twin Star (Myanmar) Co. Ltd.	2018.5.24	No.153/Ka,Kyun Shwe Myaing Lane(2), 23 Ward,Thingangyun Township,Yangon	NTD 30,992 (Note 3)	Construction, real estate business, development and sales services.
Thanh Phong Construction Investment Co. Ltd.	2017.5.22	B2-19, Golden king tower building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City	NTD 609,347 (Note 3)	Construction, real estate business, construction-related technical consulting, rental of machinery and equipment, wholesale of construction materials, etc.
Core Pacific Twin Star (Vietnam) Co. Ltd.	2018.11.19	B2-19, Golden king tower building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City	NTD2,592,797 (Note 3)	Improvement of construction works, real estate business, consultant for construction activities
CPDC Gemini (India) Co. Ltd.	2019.01.08	Level 7, The Capital, Plot No. C-70, G Block, Bandra Kurla Complex, Bandra MUMBAI Mumbai City MH 400051 IN	NTD 9,274 (Note 3)	Engaged in property and petrochemical market research and consultant business.

Note 1: All of the affiliates should be disclosed, irrelevant of scale and size.

Note 2: Where each affiliate has established its own plant, and the sales of the products manufactured by the plant exceed 10% of the Company's operating revenue, the name, date of incorporation, address and principle business of the plant shall be included herein.

Note 3: Where the affiliate refers to a foreign company, the name and address may be stated in English, and the date of incorporation may be expressed in the form of MM/DD/YY. The paid-in capital may be expressed in foreign currency (but the exchange rate on the reporting date shall be specified).

410 -

3. Overview of affiliate operation

Unit: NTD Thousand

Name	Capital	Total assets	Total liabilities	Net Value	Operating Revenue	Net Operating Profit (Loss)	Profit (loss) (after tax)	EPS (NT$)(after tax)
Kaohsiung Monomer Co.,Ltd.	500,000	2,427,967	1,172,962	1,255,005	3,475,722	196,147	159,545	3.19
Tsou Seen Chemical Industries Corporation	960,000	1,517,622	221,423	1,296,199	900,025	117,781	30,167	0.31
Taivex therapeutics Inc.	507,399	282,972	8,959	274,013	0	(80,530)	(77,601)	(1.53)
CPDC Green Energy Technology Company (formerly CDPC Engineering Corp.)	150,000	180,060	60,331	119,729	230,272	7,993	16,839	1.12
Ding-Yue Development Co., Ltd.	10,040,000	10,005,553	3,227	10,002,326	0	(15,395)	(15,858)	(0.02)
Da Yin Construction Engineering Co., Ltd.	22,500	29,585	6,683	22,902	1,130	(2,223)	(1,146)	(0.51)
BES Twin Towers Development Co,, Ltd.	5,800,121	6,230,498	10,827	6,219,671	0	(10,545)	352,645	0.61
CPDC Investment (BVI)Co.,Ltd.	904,946	903,385	0	903,385	0	(93)	5,325	--
Unichem Development Limited	9,572,433	8,310,604	53	8,310,551	0	(185,130)	(137,624)	--
Frontier Fortune Investment Pte. Ltd.	2,761,596	2,661,302	0	2,661,302	0	(432)	24,302	--
Weihua (Rudung) Trade Co.,Ltd.	763,460	830,255	347,272	482,983	1,346,704	16,083	8,320	--
Weiqiang International Trade (Shanghai) Co., Ltd.	211,560	241,187	112,743	128,444	1,031,764	2,845	6,085	--
Jiangsu Weiming Petrochemical Corporation	7,421,663	10,107,224	3,431,732	6,675,492	1,065,563	(151,102)	(114,280)	--
Weiming (Rudung) Engineering Co., Ltd.	4,319	4,663	370	4,293	0	(22)	(22)	--
Changzhou Wei- Chi Material Co., Ltd.	1,860,113	1,641,270	630,350	1,010,920	596,298	(48,473)	(31,550)	--
Core Pacific Twin Star (Myanmar) Co. Ltd.	169,921	164,338	11,369	152,969	0	(1,557)	(2,472)	--

411 -

Name	Capital	Total assets	Total liabilities	Net Value	Net Operating Profit (Loss)	Profit (loss) (after tax)	EPS (NT$)(after tax)
Core Pacific Twin Star (Myanmar) Co. Ltd.	30,992	55,931	25,412	30,519	(3,492)	(1,920)	--
Thanh Phong Construction Investment Co. Ltd.	609,347	578,343	314	578,029	(8,488)	16,052	--
Core Pacific Twin Star (Vietnam) Co. Ltd.	2,592,797	2,521,700	802	2,520,898	(5,100)	30,119	--
CPDC Gemini (India)Co. Ltd.	9,274	4,647	56	4,591	(2,336)	(2,333)	--

Note 1: All of the affiliates should be disclosed, irrelevant of scale and size.

Note 2: Where the affiliate refers to a foreign company, the relevant figures shall be stated in NTD at the foreign exchange rate.

Note 3: “--” indicates not applicable (N/A)

412 -

(II) Consolidated financial statement of affiliates

Statement of Declaration

I. The preparation of the Company's affiliates consolidated financial statement in 2020 (From January 1st to December 31st) in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" and "Regulations Governing the Preparation of Financial Reports and Related Terminology by Securities Issuers".
II. Our company declares that no information relevant to our affiliates' consolidated financial statement has been falsified or concealed.

Hereby certify

==> picture [87 x 127] intentionally omitted <==

Company name: China Petrochemical Development Corporation

Chairman: Ruey-Long Chen

Date: March 23, 2021

413 -

Representation Letter

A. The entities that are required to be included in the combined financial statements of China Petrochemical Development Corporation and its affiliates as of and for the year ended December 31, 2020 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises and Regulations Governing the Preparation of Financial Reports by Securities Issuers.
B. The consolidated financial statements prepared by the Company contained no misrepresentations and nondisclosures.

Company name: China Petrochemical Development Corporation Chairman: Chen Ruey-Long Date: March 23, 2021

414 -

Independent Auditors’ Review Report

To the Board of Directors of China Petrochemical Development Corporation:

Introduction

We have reviewed the accompanying consolidated financial statements of China Petrochemical Development Corporation (“CPDC”) and its affiliates (“the Group”) as of and for the year ended December 31, 2020 by applying the review procedures in accordance with "Guidelines for the Review of Consolidated Financial Statements of Affiliated Enterprises", which are necessary to conduct the review. The review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that no material amendments or adjustments of the consolidated financial statements needed in accordance with the “ Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises” and with Regulations Governing the Preparation of Financial Reports by Securities Issuers.

As described in Notes 5(j) and 5(q) of the notes to the consolidated financial statements, a portion of the land at the Anshun plant, which is located at Annan Dist., Tainan City, was polluted. CPDC submitted for approval a remediation project proposal to the Tainan City Government in accordance with the related regulations and accrued relevant remediation project expenses. Nevertheless, CPDC has a dissenting view on the government perception about the condition of pollution and CPDC is seeking a way to define its responsibilities.

The engagement partners on the reviews resulting in this independent auditors’ review report are Chen Mei Fang and Chung Tan Tan.

KPMG

Taipei, Taiwan (Republic of China) March 23, 2021

415 -

						December 31, 2020	Amount %		$ 3,615,000 4	1,676 -	1,874,342 2	3,161 -	1,520,433 2	59,594 -	289,200 -	43,251 -	1,914,833 2	60,912 -	9,382,402 10		3,500,000 3	7,489,650 7	2,251,212 2	6,497,650 6	249,741 -	5,656,112 5	127,601 -	25,771,966 23	35,154,368 33		32,848,502 31	583,815 1		2,311,174 2	35,601,629 33	1,287,983 1		(966,202) (1)	(854,259) (1)	70,812,642 66	808,392 1	71,621,034 67
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	Reviewed only, not audited in accordance with generally accepted auditing standards	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES	Consolidated Balance Sheets	December 31, 2020	(Expressed in Thousands of New Taiwan Dollar)	December 31, 2020	Assets Amount % Liabilities and Equity	Current assets: Current liabilities:	Cash and cash equivalents (notes 3 and 5(a)) $ 8,122,215 8 2100 Short-term loans (note 5(l))	Current financial assets at fair value through profit or loss (notes 3 and 5(b)) 829,533 1 2130 Current contract liabilities (note 5(w))	Current financial assets at fair value through other comprehensive income (notes 3 and 5(c)) 9,195 - 2170 Accounts payable	Notes and accounts receivable, net (notes 3 and 5(d)) 2,151,201 2 2180 Accounts payable to related parties (note 6)	Other receivables (notes 3, 5(d) and 6) 134,847 - 2200 Other payables (note 6)	Inventories (notes 3 and 5(e)) 12,789,952 12 2230 Current tax liabilities (notes 3 and 5(t)	Prepayments 1,255,091 1 2250 Provisions-current (notes 3, 5(q) and 5(s))	Other current assets (note 5(f)) 3,051,041 3 2280 Lease liabilities-current (notes 3 and 5(p))	Total current assets 28,343,075 27 2320 Long-term liabilities-current portion (notes 3 and 5(m))	Non-current assets: 2399 Other current liabilities, others	Non-current financial assets at fair value through profit or loss (notes 3 and 5(b)) 10,746,855 10 Total current liabilities	Non-current financial assets at fair value through other comprehensive income (notes 3 and 5(c)) 2,799,521 3 Non-Current liabilities:	Investments accounted for using equity method (notes 3 and 5(g)) 1,536,001 1 2530 Bonds payable (notes 3 and 5(n))	Property, plant and equipment (notes 3 and 5(h)) 24,260,679 23 2540 Long-term bank loans (note 5(m))	Right-of-use assets (notes 3 and 5(i)) 872,937 1 2550 Provisions-non-current (notes 3, 5(q) and (s))	Investment property, net (notes 3 and 5(j)) 37,626,827 35 2570 Deferred income tax liabilities (notes 3 and 5(t))	Intangible assets (notes 3 and 5(k)) 159,173 - 2580 Lease liabilities-non-current (notes 3 and 5(p))	Deferred income tax assets (notes 3 and 5(t)) 89,295 - 2611 Long-term bills payable (notes 3 and 5(o))	Other non-current assets (note 7) 341,039 - 2670 Other non-current liabilities, others	Total non-current assets 78,432,327 73 Total non-currnet liabilities	Total liabilities	Equity attributable to owners of parent:	3110 Common stock (note 5(u))	3200 Capital surplus (note 5(u))	Retained earnings (note 5(u)):	3310 Legal reserve	3320 Special reserve	3350 Unappropriated earnings	Others (notes 3 and 5(u)):	3410 Exchange differences arising on translation of foreign operations	3420 Unrealised gains or loss on financial assets at fair value through other comprehensive income	Total equity attributable to shareholders of the parent:	36XX Non-controlling interests	Total assets $ 106,775,402 100 Total equity Total liabilities and equity
									1100	1110	1120	1170	1200	130X	1410	1470			1510	1517	1551	1600	1755	1760	1780	1840	1900
																			-	416 -

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

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES

Consolidated Statements of Comprehensive Income

For the year ended December 31, 2020

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

4000
Operating revenues (notes 3, 5(w) and 6)
5000
Operating costs (note 5(e))
Gross profit
Operating expenses (note 6):
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Impairment loss determined in accordance with IFRS9
Loss from operations
Non-operating income and expenses:
7100
Interest income (note 5(y))
7010
Other income (notes 5(y) and 6)
7020
Other gains and losses (note 5(y))
7050
Finance costs (notes 5(p) and 5(y))
7060
Shares of profit (loss) of associates and joint ventures accounted for using equity method, net (note 5(g))
7235
Gains on financial assets at fair value through profit or loss (notes 3 and 5(b))
7255
Gains on fair value adjustment, investment property (note 5(j))
Total non-operating income and expenses
Income before income tax
7950
Less: income tax expenses
Net income
8300
Other comprehensive income (loss):
8310
Items that will not be reclassified subsequently to profit or loss:
8311
Gains (losses) on remeasurements of defined benefit plans
8316
Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income
8320
Shares of other comprehensive income of associates and joint ventures accounted for using equity method, components of other
comprehensive income that will not be reclassified to profit or loss
8349
Allocation of income tax to the above items
Components of other comprehensive income that will not be reclassified to profit or loss
8360
Items that may be reclassified subsequently to profit or loss:
8361
Exchange differences arising on translation of foreign operations
8370
Shares of other comprehensive income of associates and joint ventures accounted for using equity method, components of other
comprehensive income that may be reclassified to profit or loss
8399
Allocation of income tax to the above items
Components of other comprehensive income that may be reclassified subsequently to profit or loss
8300
Other comprehensive income, net
8500
Total comprehensive income
Net income attributable to:
8610
Shareholders of the parent
8620
Non-controlling interests
Comprehensive income attributable to:
8710
Shareholders of the parent
8720
Non-controlling interests
Earnings per share (notes 3 and 5(v))
Basic earnings per share
Diluted earnings per share

2020
Amount
%
$ 20,602,361
100
20,141,900
98
460,461
2
603,857
3
1,011,133
6
442,279
2
50
-
2,057,319
11
(1,596,858)
(9)
166,349
1
549,035
3
(419,329)
(2)
(224,801)
(1)
3,236
-
856,158
4
897,645
5
1,828,293
10
231,435
1
(538,951)
(3)
770,386
4
(27,393)
-
360,247
2
32,450
-
-
-
365,304
2
(190,168)
(1)
26,632
-
-
-
(163,536)
(1)
201,768
1
$
972,154
5
$ 680,989
4
89,397
-
$
770,386
4
$ 884,606
4
87,548
1
$
972,154
5
$
0.21
$
0.21

See accompanying notes to consolidated financial statements. - 417 -

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

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES

Notes to the Consolidated Financial Statements

For the year ended December 31, 2020

(Expressed in Thousands of New Taiwan Dollar, Unless Otherwise Specified)

(1) Company history

China Petrochemical Development Corporation (hereinafter referred to as the “Company”) was founded on July 8, 1969 under the approval of Ministry of Economic Affairs, R.O.C.. The Company moved to No.1, Jingjian Rd., Dashe Dist., Kaohsiung City 815, Taiwan (R.O.C.) on July 18, 2016. The Company and its subsidiaries primarily engage in the production of petroleum, alkali-chlorine, phosphoric acid and other petrochemical products and by-products and the storage, transportation, purchase and sale of these products, related chemicals and their raw materials, and land development. The primary products are acrylonitrile, caprolactam, acetic acid and nylon.

(2) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2020:

●Amendments to IFRS 3 “Definition of a Business”
●Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”
●Amendments to IAS 1 and IAS 8 “Definition of Material”
●Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
●Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform － Phase 2”

(Continued)

418 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”	Content of amendment Effective date per IASB The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. Effective date to be determined by IASB

The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
－
●Amendments to IAS 16 “Property, Plant and Equipmentt Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018-2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”
●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”

(3) Summary of significant accounting policies:

(a) Statement of compliance

(Continued)

419 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(b) Basis of Preparation

(i) Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on a historical cost basis:

1) Financial assets at fair value through profit or loss are measured at fair value;
2) Financial assets at fair value through other comprehensive income are measured at fair value;
3) Investment properties are measured at fair value; and
4) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation (please see note 5(s)).
(ii) Functional and presentation currency

(c) Basis of consolidation
(i) Principles of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

(Continued)

420 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) List of subsidiaries in the consolidated financial statements

The subsidiaries included in the consolidated financial statements were as follows:

Name of investors	Name of subsidiaries	Nature of business Manufacture of chemical products and their derivatives of phosphoric acid and fertilizer storage, transport, purchase, marketing business Water treatment works, plumbing works, apparatus and instrument installation work, refrigeration and air conditioning engineering and tank car repair and other services Holding company Real estate investment and development Holding company Petrochemical supporting facility construction Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading	Shareholding ratio December 31, 2020 Notes % 100.00 TSCIC was established on June 16, 1998. Due to the business combination on August 1, 2018, CIC became a dissolved company and Tsou Seen became a surviving company. As of December 31, 2020 and 2019 , TSCIC's actual paid-in capital amounted to $960,000 thousand. % 100.00 CPDC GT was established on May 31, 1999. As of December 31, 2020 and 2019, CPDC GT's actual paid-in capital amounted to $150,000 thousand. % 100.00 CPDC (BVI) was established on January 9, 1998, registered in the British Virgin Islands, and is an international investment company. As of December 31, 2020 and 2019, CPDC (BVI)'s actual paid-in capital amounted to USD26,580 thousand. % 100.00 BES Twin Towers was established on March 1, 2011. The Company purchased its shares of non- controlling interest on March 12, 2019, resulting in its shareholding ratio to be 100%. It increased its capital through the Company amounting to $1,136,705 thousand on January 30, 2019, and increased its capital by retained earnings amounting to $681,112 thousand and $343,304 thousand on May 11, 2020 and June 24, 2019, respectively. As of December 31, 2020 and 2019, BES Twin Towers's actual paid-in capital amounted to $5,800,121 thousand and $3,681,009 thousand, respectively. % 100.00 UDL was established on May 20, 2008. As of December 31, 2020 and 2019, UDL's actual paid-in capital amounted to USD313,851 thousand and USD255,368 thousand, respectively. % 0.37 Weiming was established on May 16, 2013. It increased its capital through UDL amounting to CNY200,000 thousand, CNY200,000 thousand, CNY96,000 thousand, CNY100,000 thousand, CNY100,000 thousand, CNY147,000 thousand and CNY130,000 thousand on November 13, June 19, 2020, March 12, June 27, September 24, December 25, 2019, and June 25, 2018, respectively. The said amounts were verified on November 17, June 29, 2020, March 13, July 2, September 26, December 26, 2019, and June 28, 2018, respectively. As of December 31, 2020 and 2019, Weiming's actual paid-in capital amounted to CNY1,618,000 thousand and CNY1,218,000 thousand, respectively. % 44.52 Weiqiang was established on May 9, 2013. It increased its capital through the Company amounting to CNY20,000 thousand on February 24, 2018 and verified on February 27, 2018. As of December 31, 2020 and 2019, Weiqiang's actual paid-in capital amounted to CNY44,920 thousand.
The Company The Company The Company The Company The Company The Company The Company	Tsou Seen Chemical Industries Corporation (TSCIC) CPDC GreenTechnology Corp. (CPDC GT) CPDC Investment (BVI) Co., Ltd. (CPDC (BVI)) BES Twin Towers Development Co., Ltd. (BES Twin Towers) Unichem Development Limited (UDL) Jiangsu Weiming Petrochemical Corporation (Weiming) Weiqiang International Trade (Shanghai) Co., Ltd. (Weiqiang)

(Continued)

421 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Name of investors	Name of subsidiaries	Nature of business Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials Commissioned to create a vendor to build housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in biotechnology, pharmaceutical research and development and marketing Petrochemical supporting facility construction	Shareholding ratio December 31, 2020 Notes % 100.00 Thanh Phong was established on May 22, 2017. Its capital originally invested was VND90,000,000 thousand and increased VND368,637,500 thousand on December 20, 2018 and verified on December 20, 2018. The Company had reached agreement on cancellation of shares with the non-controlling interests, who owned 2.13% of outstanding shares. After the cancellation, the Company owned Thanh Phong 100% of outstanding shares. As of December 31, 2020 and 2019, Thanh Phong's actual paid-in capital amounted to VND458,637,500 thousand and VND468,637,500 thousand, respectively. % 100.00 Ding-Yue (original name: Tao Zhu) was established on October 11, 1995 and increased its capital amounted to $2,500,000 thousand, $1,000,000 thousand and $6,440,000 thousand by the Company on February 26, 2020, and September 25, November 6, 2019, respectively. As of December 31, 2020 and 2019, its actual paid-in capital amounted to $10,040,000 thousand and $7,540,000 thousand, respectively. In order to comply with the business strategies of the Company's petrochemical and land development, Ding-Yue started to expand the scale of its land development business since September 2019 and expects its upcoming operating activities on construction and land development to substantially expand as compared to those of the previous years; therefore, the subsidiary is disclosed in the consolidated financial statement in September 2019. % 4.02 Weihua was established on December 10, 2012. Due to the business combination on August 1, 2018, CIC became a dissolved company and Tsou Seen became a surviving company. The shares hold by CIC were transferred to Tsou Seen after the combination. As of December 31, 2020 and 2019, Weihua's actual paid- in capital amounted to CNY156,289 thousand. % 55.48 Weiqiang was established on May 9, 2013. It increased its capital through the Company amounting to CNY20,000 thousand on February 24, 2018 and verified on February 27, 2018. Due to the business combination on August 1, 2018, CIC became a dissolved company and Tsou Seen became a surviving company. The shares hold by CIC were transferred to Tsou Seen after the combination. As of December 31, 2020 and 2019, Weiqiang's actual paid-in capital amounted to CNY44,920 thousand. % 91.10 Taivex was established on February 11, 2010. TSCIC invested in Taivex on August 18, 2010. As of December 31, 2020 and 2019, Taivex's actual paid-in capital amounted to $507,399 thousand. % 99.63 Weiming was established on May 16, 2013. It increased its capital through UDL amounting to CNY200,000 thousand, CNY200,000 thousand, CNY96,000 thousand, CNY100,000 thousand, CNY100,000 thousand, CNY147,000 thousand and CNY130,000 thousand on November 13, June 19, 2020, March 12, June 27, September 24, December 25, 2019, and June 25, 2018, respectively. The said amounts were verified on November 17, June 29, 2020, March 13, July 2, September 26, December 26, 2019, and June 28, 2018, respectively. As of December 31, 2020 and 2019, Weiming's actual paid-in capital amounted to CNY1,618,000 thousand and CNY1,218,000 thousand, respectively.
The Company The Company Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation Unichem Development Limited	Thanh Phong Construction Investment Co., Ltd. (Thanh Phong) Ding-Yue Development Co., Ltd (Ding-Yue) (original name: Tao Zhu Construction & Development Co., Ltd.) Weihua (Rudong) Trade Co., Ltd. (Weihua) Weiqiang International Trade (Shanghai) Co., Ltd. (Weiqiang) Taivex Therapeutics Corporation (Taivex) Jiangsu Weiming Petrochemical Corporation (Weiming)

(Continued)

422 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Name of investors	Name of subsidiaries	Nature of business Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Consultancy Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Management consultant Engaged in engineering plastic and high-value petroleum chemical products Consult, design, construction, management service on engineering and sales of chemical products Holding company Investment and technical advisory services Real estate, research of petroleum market and consultancy	Shareholding ratio December 31, 2020 Notes % 95.98 Weihua was established on December 10, 2012. As of December 31, 2020 and 2019, Weihua's actual paid-in capital amounted to CNY156,289 thousand. % - Weida was established on November 26, 2012 and was dissolved on November 8, 2019. The liquidation process had been completed on December 30, 2020. As of December 31, 2020 and 2019, Weida's actual paid-in capital amounted to USD0 thousand and USD450 thousand, respectively. % 100.00 Weida PC was established on December 23, 2014. As of December 31, 2020 and 2019, Weida PC's actual paid-in capital amounted to CNY6,000 thousand. % - Weiqin was established on April 29, 2016 and was dissolved on March 12, 2020. The liquidation process had been completed on July 28, 2020. As of December 31, 2020 and 2019, Weiqin's actual paid in capital amounted to CNY0 thousand and CNY6,000 thousand, respectively. % 100.00 Weicai was established on January 6, 2015, and acquired by UDL on November 5, 2018. The investment was made through UDL amounted CNY214,955 thousand and was verified on December 27, 2018. As of December 31, 2020 and 2019, Weicai's actual paid-in capital amounted to CNY414,955 thousand. % 100.00 Weiming Construction was established on October 26, 2020. As of December 31, 2020, Weiming Constrcution's actual paid-in capital amounted to CNY1,000 thousand. % 100.00 Frontier Fortune was established on November 23, 2016. It increased its capital through BES Twin Towers amounting to USD50,000 thousand, USD36,890 thousand, USD300 thousand and USD5,670 thousand on October 22, 2020 and January 30, March 7, 2019 and November 30, 2018, respectively. As of December 31, 2020 and 2019, Frontier fortune's actual paid-in capital amounted to USD93,060 thousand and USD43,060 thousand, respectively. % 100.00 Core Pacific Twin Star (Myanmar) was established on February 16, 2017. It increased its capital through Frontier Fortune amounting to USD5,320 thousand on November 30, 2018. As of December 31, 2020 and 2019, Core Pacific Twin Star (Myanmar)'s actual paid-in capital amounted to USD5,500 thousand. % 99.99 Gemini Star (India) was established on January 8, 2019. As of December 31, 2020 and 2019, its actual paid-in capital amounted to INR21,000 thousand.
Unichem Development Limited Unichem Development Limited Unichem Development Limited Unichem Development Limited Unichem Development Limited Jiangsu Weiming Petrochemical Corporation (Weiming) BES Twin Towers Development Co., Ltd. (BES Twin Towers) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune)	Weihua (Rudong) Trade Co., Ltd (Weihua) Weida (Zhangzhou) Consultant Service Co., Ltd. (Weida) Zhangzhou Weida Petrochemical Co., Ltd (Weida PC) Kunshan Weiqin Management consultant Co., Ltd (Weiqin) Changzhou Weicai New Material Science & Technology Co., Ltd. (Weicai) Weiming (Rudong) Construction Co., Ltd. (Weiming Construction) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Core Pacific Twin Star (Myanmar) Investment Co., Ltd. (Core Pacific Twin Star (Myanmar)) Gemini Star (India) Private Limited. (Gemini Star (India))

(Continued)

423 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Name of investors	Name of subsidiaries	Nature of business Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale Engineering, construction contracting business	Shareholding ratio December 31, 2020 Notes % 99.01 Core Pacific Twin Star (Vietnam) was established on November 19, 2018. It increased its capital through Core Pacific Twin Star (Myanmar) amounted to VND1,155,000,000 thousand and VND850,000,000 thousand on November 3, 2020 and January 30, 2019, respectively. As of December 31, 2020 and 2019, its actual paid-in capital amounted to VND2,025,000,000 thousand and VND870,000,000 thousand, respectively. % 80.00 Core Pacific Pioneer was established on May 24, 2018. It increased its capital through Core Pacific Twin Star (Myanmar) amounted to MMK755,230 thousand on July 3, 2019. As of December 31, 2020 and 2019, its actual paid-in capital amounted to MMK1,512,540 thousand. % 100.00 Da Yin Construction Engineering was established on November 24, 1972. As of December 31, 2020 and 2019, its actual paid-in capital amounted to $22,500 thousand. In order to comply with the business strategies of the Company's petrochemical and land development, Da Yin started to expand the scale of its land development business since March 2020 and expects its upcoming operating activities on construction and land development to substantially expand as compared to those of the previous years; therefore, the subsidiary is disclosed in the consolidated financial statement in March 2020.
Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Core Pacific Twin Star (Myanmar) Investment Co., Ltd. (Core Pacific Twin Star (Myanmar)) Ding-Yue Development Co., Ltd (Ding-Yue) (original name: Tao Zhu Construction & Development Co., Ltd.)	Core Pacific Twin Star (Vietnam) Investment Co., Ltd. (Core Pacific Twin Star (Vietnam)) Core Pacific Pioneer (Myanmar) Co., Ltd. (Core Pacific Pioneer (Myanmar)) Da Yin Construction Engineering Co., Ltd. (Da Yin Construction Engineering)

(iii) Subsidiaries not included in the consolidated financial statements

Name of investors	Name of subsidiaries	Nature of business Holding company	Shareholding ratio December 31, 2020 Notes % - Rich was established on March 21, 2007 and was dissolved on December 25, 2019. The remittance of paid share had been completed on April 24 and April 30, 2020, respectively, and the liquidation process had been completed on July 28, 2020. As of September 30, 2020 and December 31, 2019, its actual paid-in capital amounted to USD0 thousand and USD180 thousand, and its total assets represented 0% and 0.01% of consolidated total assets, respectively.
The Company	Rich Equities Ltd. (Rich)

(iv) According to the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises, Kaohsiung Monomer Company (KMC) qualifies as a substantial related party.

Name of investee	Nature of business	Shareholding ratio Notes % 40.00 Note 1
Kaohsiung Monomer Company	Sales and production of methyl methacrylate

Note 1: The chairman is assigned by The Company.

(v) All of the important internal transaction between the Group had been eliminated.

(Continued)

424 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(d) Foreign currencies
(i) Foreign currency transaction

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

． an investment in equity securities designated as at fair value through other comprehensive income;
． a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
． qualifying cash flow hedges to the extent that the hedges are effective.
(ii) Foreign operations

(Continued)

425 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(e) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Group does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(f) Cash and cash equivalents

(g) Construction contracts

(Continued)

426 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(h) Financial instruments

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

1) Financial assets measured at amortized cost

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

． it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
． its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2) Fair value through other comprehensive income (FVOCI)

(Continued)

427 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established.

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4) Business model assessment

． the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
． how the performance of the portfolio is evaluated and reported to the Group’ s management;
． the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
． how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
． the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

(Continued)

428 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, “ principal” is defined as the fair value of the financial assets on initial recognition. “Interest” is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

． 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 Group’ s claim to cash flows from specified assets (e.g. nonrecourse features).
6) Impairment of financial assets

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

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Group considers a financial asset to be in default when the financial asset is more than 90 days past due or the debtor is unlikely to pay its credit obligations to the Group in full.

Lifetime ECL are the ECL that result from all possible default events over the expected life of a financial instrument.

(Continued)

429 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The maximum period considered when estimating ECL is the maximum contractual period over which the Group is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is “ creditimpaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset 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’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
． it is probable that the borrower will enter bankruptcy or other financial reorganization; or
． the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

(Continued)

430 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

7) Derecognition of financial assets

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

2) Equity instrument

3) Treasury shares

4) Financial liabilities

(Continued)

431 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

5) Derecognition of financial liabilities

6) Offsetting of financial assets and liabilities

(i) Inventories

(i) Manufacturing industry

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calaulated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(ii) Construction industry

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The net realizable value is estimated as follows:

1) Land held for development: net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value (development analytical method or comparison method).

(Continued)

432 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

2) Construction-in-progress: net realizable value is the estimated selling price (current market condition) in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value.
(j) Investments in associates

Associates are those entities in which the Group has significant influence, but not control or joint control, over their financial and operating policies.

Gains and losses resulting from transactions between the Group and an associate are recognized only to the extent of unrelated Group’s interests in the associate.

(k) Investment property

(Continued)

433 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(l) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

(iii) Depreciation

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

The estimated useful lives of periods are as follows:	property, plant
Land improvement	3~30 years
Buildings and constructions	2~60 years
Machine equipment	1~30 years
Transportation equipment	2~40 years
Other equipment	2~13 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(Continued)

434 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(iv) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified accordingly. Any gain arising on this remeasurement is recognized in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognized in other comprehensive income and presented in “ other equity - revaluation surplus” . Any loss is recognized in profit or loss. However, to the extent that an amount is included in the revaluation surplus for that property, the loss is recognized in other comprehensive income and reduces the revaluation surplus within equity.

(m) Leases

(i) Identifying a lease

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Group has the right to direct the use of the asset only if either:
the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
the relevant decisions about how and for what purpose the asset is used are predetermined and:
- － the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
- － the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

(Continued)

435 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) As a leasee

Lease payments included in the measurement of the lease liability comprise the following:

－
fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－
there is a change in future lease payments arising from the change in an index or rate; or
－ there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise a extension or termination option; or
－
there is any lease modification.

(Continued)

436 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

(iii) As a leasor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

(Continued)

437 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract.

(n) Intangible assets
(i) Recognition and measurement

1) Goodwill

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses. Refer to Note 5(k) for details of the accounting policy on the initial recognition of goodwill.

2) Other intangible assets

Expenditure on research activities is recognized in profit or loss as incurred.

(ii) Subsequent expenditure

(iii) Amortization

The estimated useful lives for current and comparative periods are as follows:

Technology 5~13 years

(Continued)

438 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(o) Impairment of non derivative financial assets

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

(p) Provisions

(i) Site dismantling

(Continued)

439 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) Site restoration

In accordance with the Group’ s published environmental policy and applicable legal requirements, a provision for site restoration in respect to contaminated land, and the related expense, is recognized when the land is contaminated.

(q) Revenue

(i) Sale of goods

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(ii) Services

Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date.

(iii) Construction contracts

(Continued)

440 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(iv) Commissions

(v) Financing components

(r) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

(Continued)

441 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(iii) Short-term employee benefits

(s) Income taxes

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
． the same taxable entity; or

(Continued)

442 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

． different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(t) Earnings per share

(u) Government Grants

(v) Operating segments

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

(Continued)

443 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is as follows:

(a) Fair valuation of investment property

(b) Impairment of property, plant and equipment

． Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
． Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
． Level 3: inputs for the assets or liability that are not based on observable market data.

Information on valuation use hypothesis factors was as follows:

(a) Note 5(j) - Investment property;
(b) Note 5(z) - Financial instruments.

(Continued)

444 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(5) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash on hand Checking and demand deposits Time deposits Cash equivalents Cash and cash equivalents	December 31, 2020 $ 1,896 3,684,588 4,185,705 250,026 $ 8,122,215

Time deposits with original maturity within three months which are held for the purpose of meeting short-term cash commitments, rather than for investment or other purposes, and are readily convertible to cash at the known amounts and subject to insignificant risk of value changes, are reported as cash equivalents. Please refer to Note 5(f) for details of time deposits with original maturity between three months and one year which are accounted for as other financial assets under other current assets.

Please refer to Note 5(z) for the fair value sensitivity analysis and interest rate risk of the financial assets and liabilities of the Group.

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

Current financial assets designated at fair value through profit or loss: Beneficiary certificates Stocks listed on domestic markets Subtotal Non-current financial assets designated at fair value through profit or loss Stocks unlisted on domestic markets Total	December 31, 2020
	$ 11,791 817,742 829,533 10,746,855 $ 11,576,388

The dividends income from the financial assets recognized at fair value through profit or loss for the years ended December 31, 2020, amounted to $20,110 thousand.

(Continued)

445 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The Group holds 582,362 thousand shares of the common and preferred stock of Core Pacific City Co., Ltd. as of the date of December 31, 2020. The Group recognized the changes in fair value as net gain and loss based on the fair value evaluation report of the investments. According to the valuation report, the fair value was measured using the net asset method and the fair value of the valuation date was determined under the assumption of relevant rate of return by the external expert. The amount accounted for as gain from investments in equity instruments at fair value through profit or loss was $803,861 thousand for the year ended December 31, 2020. The increase of fair value was due to the bidding of Core Pacific City Co., Ltd, which was completed on September 25, 2019, and the contract of property transaction was signed on October 30, 2019.

Please refer to Note 7 for details of the financial assets at fair value through profit or loss of the Group pledged as collateral as of December 31, 2020.

Equity investments at fair value through other comprehensive income－ current: Stocks listed on domestic markets Equity investments at fair value through other comprehensive income－ non-current Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Total	December 31, 2020
	$ 9,195 2,059,052 740,469 2,799,521 $ 2,808,716

Please refer to Note 5(u) for the gain or loss on financial assets recognized at fair value through other comprehensive income.

The dividend income from the financial assets recognized at fair value through other comprehensive income for the year ended December 31, 2020, amounted to $237,707 thousand.

(i) The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as “PRAXAIR”) delegated by the Company, was elected as the new Chairman in the directors’ meeting on January 30, 2013. However, Praxair Inc. did not recognize the director delegated by the Company as the Chairman, resulting in the new Chairman being unable to exercise his authority. Also, the supervisor appointed by the Company was prevented from auditing the accounts and records pursuant to the Company Law, hence, the new Chairman and the

(Continued)

446 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

designated supervisor representing PRAXAIR, filed an action asking the vice chairman and general manager to provide the accounts and records and requested to return the seal, business invasion and others in a civil lawsuit. The vice chairman delegated by Praxair Inc. claimed privilege to act as the Chairman and filed legal actions declaring the non-existence of the new Chairman’s commission of authority and also sent a letter to the court requesting a dissolution of PRAXAIR, which was rejected by the courts. The supervisor appointed by Praxair Inc. illegally called a temporary shareholders’ meeting in 2013 to propose the dissolution of the Company and reelection of directors and supervisors. Hence, the Company filed legal actions declaring the withdrawal of the resolution from the illegal temporary shareholders’ meetings and the resolutions from the temporary shareholders’ meeting was not established. Currently, the supervisor filed legal action against the manager for submitting the accounts and the records, after winning the 1st and 2nd trial, the defendant appealed but was dismissed by the 3rd trial instance. This case was remanded to the Taipei High Court but the verdict was dismissed in 2015. The Company was not satisfied with the appeal and it was denied by 2nd trial instance.. The judgment was binding and final on December 2017. On the other side, the vice chairman designated by Praxair Inc. filed legal action declaring the non-existence of the new Chairman’ s commission of authority, after the judgment from the High Court that the Chairman designated by the Company won the verdict, the defendant appealed to the 3rd instance, with the Supreme Court dismissing the appeal. The whole case confirms the appointed relationship between the Chairman designated by the Company and PRAXAIR exists. On November 19, 2016, the letter from Ministry of Economic Affairs states that the former chairman of directors, appointed by the Company, is the Chairman of PRAXAIR, and restored the representative duty per the judgment No. 2455 from the Supreme High Court in 2015. However, according to the requirement from Ministry of Economic Affairs, both sides were not able to hold the legitimate reelection prior to January 9, 2017 which resulted in vacancy of directors and supervisors of PRAXAIR. In order to strive for the rights and interests of the shareholders, the Company immediately brought the arbitration per joint venture agreement of both sides and applied for an auditor and provisional administrator to instruct the central section office of the Ministry of Economic Affairs to allow Praxair Inc. to conduct the change of registration on July 6, 2017. The Company filed a request for the arbitration of International Chamber of Commerce in 2017 and received the award issued by the International Court of International Chamber of Commerce on September 3, 2018. A part of the award favored for the Company and confirmed that the Company was entitled to receive the dividends from PCSM for the year of 2013. In order to protect the Company’ s right, the Company submitted a lawsuit withdrawing a part of such Arbitration award against the Company to Taipei District Court. On December 13, Taipei District Court dismissed the Company’ s claim of withdrawing the ICC’ s decision. The Company filed an appeal on January 8, 2020, but such appeal was dismissed by Taiwan High Court on September 1, 2020. The Company appealed forthwith to the Supreme Court on September 21, 2020.

As of December 31, 2020, the Group provided as collateral a portion of its financial assets. Please refer to Note 7 for details of the related assets pledged as collateral.

(Continued)

447 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(d) Notes, accounts, and other receivables

Notes receivable Accounts receivable Other receivables Less: allowance for doubtful receivables Net book value	December 31, 2020
	$ 375,810 2,221,784 140,171 (451,717) $ 2,286,048

Not past due Over 0~30 days Over 31~120 days Over 121~365 days Past due more than 1 year	December 31, 2020	December 31, 2020	Allowance for expected credit loss 94,485 86 300 396 356,450
	Carrying amount of account receivables $ 2,360,412 9,103 9,422 2,378 356,450 $ 2,737,765	Weighted average expected credit loss 0%~4.00% 0%~0.94% 0%~3.18% 0%~16.67% 100%
			451,717

Movements of the allowance for doubtful receivables were as follows:

Balance on January 1, 2020 Impairment losses recognized Foreign exchange gains Balance on December 31, 2020	For the years ended December 31, 2020
	$ 451,529 50 138 $ 451,717

(Continued)

448 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The consolidated subsidiaries, Weihua (Rudong) Trade Co., Ltd. and Weiqiang International Trade (Shanghai) Co., Ltd., filed civil complaints against Shanghai Tongye Coal Chemical Group Co. Ltd. in Shanghai to claim for the delay of payment of their accounts receivable from Shanghai Tongye Coal Chemical Group Co., Ltd. However, both of these consolidated subsidiaries have recognized impairment loss on the said accounts receivable as of December 31, 2020. Please refer to Note 8(j) for further details relating to litigation and evaluation of collectability.

There were no notes, trades and other receivables of the Group had been pledged as collateral as of December 31, 2020.

For credit risk information, please refer to note 5(z).

(e) Inventories

Finished goods Work-in-process Raw materials Fuel Merchandise inventory Subtotal Prepayment for land Land held for construction site Land held for construction site - compensation for levied land Payment for floor area ratio Construction-in-progress Subtotal Total	December 31, 2020
	$ 671,594 417,998 1,556,251 14,345 278,001 2,938,189 9,340,010 415,441 9,423 13,535 73,354 9,851,763 $ 12,789,952

A resolution was made during the Board of Directors’ meeting held on September 25, 2019 for the Group to acquire Core Pacific City’s permanent land ownership. The Group won the bidding on the same date. On October 30, 2019, the Group subsequently entered into a purchase agreement with Core Pacific City Co., Ltd. to buy the land located at Songshan District, Taipei City, as a construction site, for the amount of $37,200,010 thousand. Both parties have agreed to put the property, which includes the land and the existing construction into a trust. As of December 31, 2020 the accumulated payments were $9,340,010 thousandthousand, and the unpaid amounts were $27,860,000 thousand. As of December 31, 2020, the above-mentioned land had not yet been handed over.

(Continued)

449 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The details of the cost of sales were as follows:

Cost of goods sold (Gain on reversal of) write-down Net inventory loss (profit) Unallocated fixed production overheads from idle facilities Revenue from sale of scraps Net amount	For the year ended December 31, 2020
	$ 18,860,731 (72,892 1,277 1,359,745 (6,961 $ 20,141,900

As of December 31, 2020, the aforesaid inventories were not pledged as collateral.

(f) Other current assets

Other financial assets Others	December 31, 2020
	$ 2,585,649 465,392 $ 3,051,041

Other financial assets are time deposits with original maturity between three months and one year.

(g) Investments accounted for using equity method
(i) The Group’ s investments accounted for using the equity method at the reporting date were classified as follows:

Associates	December 31, 2020
	$ 1,536,001

(Continued)

450 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) The Group’ s investments accounted for using the equity method that are individually insignificant were as follows:

Carrying value of insignificant associates Attribution to the Group Profit from continuing operations Other comprehensive income Total comprehensive income	For the year ended December 31, 2020
	$ 3,612,646 December 31, 2020
	$ 67,054 56,521 $ 123,575

(iii) On August 12, 2019, a resolution was made during the board meeting of the Company to invest in Jean Pacific Development Co., Ltd., in the amount of $480,000 thousand. On March 27, 2020, a resolution was made during the Board meeting of the Company to invest $140,000 thousand in Jean Pacific Development Co., Ltd. according to the proportion of shareholding.
(iv) Collateral

As of December 31, 2020, the Group provided as collateral a portion of its investments in aforesaid equity-accounted investees. Please refer to Note 7 for details of the related assets pledged as collateral.

(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group were as follows:

Cost or deemed cost: Balance as of January 1, 2020 Additions Disposal Reclassification Adjustment Effect of movements in exchange rate Balance as of December 31, 2020 Depreciation and impairment loss: Balance as of January 1, 2020 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2020	Land $ 5,730,777 - - - - - $ 5,730,777 $ - - - - $ - $ 5,730,777	Land improvements 292,822 - (1,747) 2,805 - - 293,880 223,023 6,163 (1,747) - 227,439 66,441	Buildings 3,781,623 117,169 (8,402) 712,488 - (2,545) 4,600,333 1,428,776 131,980 (7,161) 653 1,554,248 3,046,085	Machinery and equipment 47,950,866 28,608 (556,055) 1,628,822 - 1,896 49,054,137 38,404,997 874,250 (555,798) 1,354 38,724,803 10,329,334	Vehicles 81,999 4,629 (6,005) 6,212 - 76 86,911 56,899 6,045 (5,914) 22 57,052 29,859	Other facilities 813,400 3,475 (34,773) 24,214 (2,000) (349) 803,967 599,002 89,363 (12,067) 106 676,404 127,563	Construction in progress 8,403,790 3,941,276 (55) (2,382,395) (1,425) 8,007 9,969,198 - - - - - 9,969,198	Accumulated impairment - - - - - - - 5,038,578 - - - 5,038,578 (5,038,578)	Total
									67,055,277 4,095,157 (607,037 (7,854 (3,425 7,085
									70,539,203
									45,751,275 1,107,801 (582,687 2,135
									46,278,524
									24,260,679

(Continued)

451 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

As of December 31, 2020, the Group provided as collateral, a portion of its property, plant and equipment, please refer to Note 7 for details of the related assets pledged as collateral.

On November 26, 2013, the plan to invest in China was approved during the meeting of the Board of Directors of the Company. On March 25, 2014 and November 1, 2018, the Investment Commission, Ministry of Economic Affairs (MOEA) approved the investment of the Company in Jiangsu Weiming Petrochemical Corporation in China in the amount of CNY2,388,000 thousand (equivalent to $11,100,000 thousand) mainly to establish manufacturing operations for petrochemical products (including hydrorefining crude benzol, cyclohexanone, nylon 6, etc.). As of December 31, 2020, accumulated investment remittance from Taiwan to Mainland China was CNY1,618,000 thousand. The amount invested in manufacturing plant and machinery was CNY1,449,023 thousand.

(i) Right-of-use assets

The Group leases assets including land, land use right, buildings, machinery and equipment and vehicles. Information about leases for which the Group as a lessee is presented below:

Cost: Balance as of January 1, 2020 Additions Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Accumulated depreciation and impairment losses: Balance as of January 1, 2020 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2020	Land $ 204,551 24,144 (288) - $ 228,407 $ 8,012 8,706 (105) - $ 16,613 $ 211,794	Land-use right 657,738 - - 765 658,503 58,963 13,412 - 203 72,578 585,925	Buildings 19,554 12,757 (12,560) - 19,751 8,901 9,883 (12,480) - 6,304 13,447	Machinery and equipment 63,906 56,115 (8,964) - 111,057 33,708 34,009 (7,097) - 60,620 50,437	Vehicles 19,456 9,140 (11,665) - 16,931 8,475 8,858 (10,985) - 6,348 10,583	Other facilities 1,938 - - - 1,938 580 607 - - 1,187 751	Total
							967,143 102,156 (33,477) 765 1,036,587 118,639 75,475 (30,667) 203 163,650 872,937

(Continued)

452 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(j) Investment property

The movement of invesment property was as followed:

Cost or deemed cost: Balance as of January 1, 2020 Aquisition through business combination Net gains and losses due to fair value adjustments Balance as of December 31, 2020	Land $ 36,701,668 6,462 900,902 $ 37,609,032	Buildings 18,038 3,014 (3,257) 17,795	Total
			36,719,706 9,476 897,645
			37,626,827

(i) Evaluation by income approach

December 31, 2020

Subject	Qianjin Dist., Kaohsiung City	Qianzhen Dist., Kaohsiung City Others None None $450 $1,000~$1,270 None $1,030~$1,259 Leased Unused $0~ $0 $0~ $0 None 1.730% 4.655% 2.030% Outsourcing Outsourcing Colliers International Taiwan Taiwan Dawa Real Estate Appraiser & Associates Shiou-ying, Jan Yu-hua, Lu December 31, 2020 December 31, 2020 $ 2,737,000 $ 10,478
Important contract terms The range of rental in the area where the investment property is located The rental range of similar investment property The current status of the investment property Past earnings Income capitalization rate Discount rate Outsourcing or self-valuation Evaluation office Appraiser name Evaluation date Outsourcing fair value	None $550~$700 $576~$617 Unused $0~ $0 5.555% 4.260% Outsourcing Colliers International Taiwan Feng-ru, Ke December 31, 2020 $ 10,780

(Continued)

453 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

and growth to ensure the availability and reasonableness of these data. The movement of income (cash inflows) and expenditure (cash outflows) for future periods was based on the vacancies or losses, existing or future cash flow plans of the Group, and historical cash flows from the subject property, identical properties, or properties in the same industry. The estimation and computation of the net income were based on the highest and best use of the subject property and have taken into consideration the income generated from comparable properties in the same location based on their highest and best use.

External appraisers use the risk premium method to decide on the direct capitalization rate and discount rate. The fixed deposit interest rate, government bonds rate, real estate investment risk, money supply-demand variation, the trend of real estate value are taken into consideration to decide the likely rate of return on the most common investment as a basis in order to derive the capitalization rate or discount rate. The differences in individual characteristics between the above most common investment and the subject property are compared in terms of their liquidity, risk, appreciation, and management. As of December 31, 2020, the discount rate was 2.030%~4.655%, and the weighted average capitalization rate was 1.730%~5.555%, derived as the ratio of annual net operating income of comparable properties divided by reasonable price.

(ii) Evaluation through land development analysis

December 31, 2020

December 31, 2020
Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 110,949,840 2,614,812 19%~22% 12%~20% 3.650%~5.8547% 0.92%~3.05% Colliers International Taiwan Real Estate Joint Appraisers Firm Hon Bun Real Estate Appraisers Firm, Colliers International Taiwan and China Real Estate Appraisers Firm Shiou-ying, Jan and Jian-hui,Gu Yu-xian, Houng, Jian-hui,Gu, Shiou-ying, Jan, Dian-Ching, Hsieh and Ching-Tang, Li December 31, 2020 December 31, 2020 28,519,000 1,353,578
Estimate total sales price Rate of return Capital interest rate Evaluation office Appraiser name Evaluation date Outsourcing fair value	7,968,120 23% 1.770% CCIS Real Estate Joint Appraisers Firm Huo-ming, Huang December 31, 2020 $ 4,995,991

(Continued)

454 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Investment property included several rentals of real property to others. Each lease contract include the original non-cancellable lease and the subsequent lease is negotiated with the lessee without collection of contingent rental. Please refer to Note 5(r) for the relevant information including rent revenue and the direct operating expenses incurred.

As of December 31, 2020, the Group provided as collateral portion of its investment property. Please refer to Note 7 for details of the related assets pledged as collateral.

In the era of pre-Taiwan Alkali Industrial Corporation (TAIC), TAIC had leased the lands located in Tainan and Chiayi area to the local peasants and fishermen, and the surviving tenants shall continue paying the rent to the Company according to the agreements. In the event of the resumption of self-business use or the sale of the lands, the leases shall be terminated under the contractual agreements and Land Laws. If there is any redemption in some cases, the Company will recognize and evaluate the possible expenses and costs case by case.

AnShun Land Located in Tainan City Annan District:

(i) History

1) The land where the AnShun Alkali plants located was originally established by Japanese company Kanegafuchi Soda in 1938 under Japanese Colonial Rule.
2) The Government undertook construction after the Retrocession of Taiwan, and established a state-owned company, Taiwan Alkali Industrial Corporation (TAIC) and operated at the AnShun Site. In 1961, the competent authorities in charge of the relevant state-owned enterprises approved the investment plan and budget for producing Pentachlorophenol and sodium pentachlorophenol products used in herbicides and wood preservative fungicides.
3) Due to operational factors, the plant was ordered to be closed by Executive Yuan Department of Economic Affairs in early 1982.
4) In April 1983, Executive Yuan Department of Economic Affairs ordered China Petrochemical Development Corp., the state-owned Company, the subsidiary of CPC at the time, to merge with TAIC. The Company took charge of Anshun land of TAIC.
5) Since the said merger, the Company takeover the Anshun land, the Company has never had any act of production, operations, development, use or pollution at the site. According to subsequent investigation and research, parts of the area had dioxin and mercury contamination in soil. The land was designated by the Tainan City Government and the Environmental Protection Department of the Executive Yuan as a “Soil Pollution Control Site” and “ Soil pollution remediation site” in April 2002 and March 2004, respectively, per the Soil and Groundwater Pollution Remediation Act.
6) Tainan city government and other government authorities cited Article 75 of Taiwan’s Company Law that since the Company merged with TAIC, and was regarded as the surviving company, the Company should take all responsibilities for the rights and obligations of TAIC, along with the treatment projects and remediation plan. As the Company never used the land after being ordered to take charge by the Executive Yuan

(Continued)

455 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Department of Ministry of Economic Affairs (MOEA), the Company thus objected and carried out the following administrative and judicial remedies to identify the government conception of the “Polluters” and the condition of pollution:

a) The Company filed a plea of State Compensation claim to Ministry of Economic Affairs, Administration Yuan (MOEA), but was rejected.
b) In January 2006, the Company filed a complaint against MOEA in the Taiwan Taipei District Court in the amount of $10,077 thousand for reimbursement compensation.
c) The complaint was dismissed by the Supreme Court in February, 2008. Upon the application of Constitution Interpretation by the Company, J.Y. No.714 Interpretation of the Grand Justice was issued in November, 2013, and considered that Soil and Groundwater Pollution Remediation Act (SGPR Act) does not violate the principle of prohibition against retroactive law, or the principle of proportionality the retroactive rule; however, the holding did not mention whether the successor of the Polluter entity should be responsible for the treatment projects and remediation plan under SGPR Act was not within the scope of the regulation.
d) The Company has filed series of complaint on those issues according to this Constitutional Interpretation.
7) Tainan City Government issued the letter No. 09722000130 and No. 09722003360 in January and February 2008 respectively, and requested the Company to propose a remediation plan for the soil and groundwater pollution of the Anshun plant in accordance with the Soil and Groundwater Pollution Remediation Act.
a) The Company proposed the “Tainan City, CPDC former Taiwan Alkali Anshun site and 2nd class number nine road on the eastern side of the grass area of the site, soil pollution remediation pollution remediation plan” per the regulation at the end of June 2008 and the plan was submitted to Tainan city government for review and formally approved in May 2009. In 2012, the remediation plan was put forward and approved on July 2, 2012. The 1st instance was completed in September 2014 and entered the second phase of the remediation, which will last 10 years. A second revision of the remediation plan was proposed and submitted to Tainan City Government for review, and the approval letter issued by Tainan City Government informed of the approval of the 2nd remediation plan, which shall be publicly displayed per regulations. Currently, the Tainan City Environmental Protection Bureau reviewed and adopted the plan on April 14, 2015 and the assessment was announced by Tainan City Government on May 4, 2015. According to the remediation technology and the actual implementation of the subsequence adjustment, the 3rd remediation change plan was proposed on March 2, 2017, which remediation plan was focus on the remediation plan of 2nd phase and brought in the unfinished items in the 2nd change plan. Currently, the 3rd plan was reviewed and adopted on January 3, 2018.

(Continued)

456 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

b) The relating remediation expense for the first phase was estimated to be $1,647,200 thousand. The remediation expense about $1,600,000 thousand was engaged as the 1st phase until September 2014. Simultaneously, the following 10-year remediation work needed to be started after the 2nd change plan was adopted at an estimated cost of $1,356,000 thousand in December 2014.

(ii) Extension legislation:

1) Remediation prepay
a) Tainan city government on February 27, 2008 with the letter No. 09722004430 asked the Company to pay each expense: $88,786 thousand, coming from investigation assessments and strain necessary measures, which was prepaid by Tainan city government and EPA of Executive Yuan on behalf of land polluters, within deadline. The expense would double and transfer to court for enforcement if overdue. This expense was adjusted to list in 2007 per Financial Accounting Standards and the Company prepaid on behalf of land relations based on the laws and regulations in July 2008. The Company objected to the prepaid expense and land polluter, hence, the administrative remedy was proposed in July 2008, with Kaohsiung High Administrative court sentencing the Company to pay the expense $88,430 thousand in January 2008. The Company appealed in March 2008 and Supreme Administrative Court sent the case back to Kaohsiung High Administrative Court for further trial. Kaohsiung High Administrative court sentenced the original punishment and the petition decision beyond $76,066 thousand was withdrawn. In December 2013, both parties proposed the appeal for the unfavorable parts and Supreme Administrative Court sentenced the amount beyond $203 thousand and lawsuit expenses are all abandoned in April 2015 and sent back to Kaohsiung High Administrative court for continued trial. The determined withdrawn amount $356 thousand had all been returned back to the account by Tainan city government. Kaohsiung High Administrative court rejected the appeal of the Company on December 2016. The Company proposed the appeal remedy for the unsatisfied sentenced contents on January 2017. Supreme Administrative Court sentenced on January 2018 that the expenses $1,134,718 thousand did not need to be undertaken by the Company.
b) Tainan city government on May 22, 2009 with the letter No. 09822013680 asked the Company pay the expenses $17,962 thousand, which resulted from the relevant working plan of AnShun Land Site soil pollution remediation and was prepaid by Tainan city government on behalf of the Company, and Tainan city government in December 2009 with the letter No. 09822035440 asked the Company to pay the above fees prior to January 31, 2010. The Company estimated such expense at the end of 2009 and proposed the administrative remedy in January 2010 and prepaid the above fees within the deadline inquired by Tainan city government based on the law regulations. The petition was rejected in March 2011, thus, the administrative lawsuit was proposed according to the law. Kaohsiung High Administrative court sentenced that the amount beyond $17,867 thousand was withdrawn. After the appeal, Supreme Administrative Court sentenced to return back to Kaohsiung High

(Continued)

457 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Administrative court for further trial in September 2013. Kaohsiung High Administrative court sentenced the amount beyond $7,068 thousand was withdrawn on October 7, 2015 and this case had been appealed for the remedy. The determined withdrawn amount $95 thousand had been returned back to the account by Tainan city government. The verdict from Supreme Administrative Court had been received on February 18, 2017, the fact was again returned back to Kaohsiung High Administrative court for the trial. In July 2018, Kaohsiung High Administrative Court considered that the payment amount which is exceeding $8,121 thousand shall be revoked. Both parties are dissatisfied and file an appeal. In January 2020, Supreme Administrative Court annulled the original judgment, remanding the case back to Kaohsiung High Administrative court. On November 24, 2020, The court’ s judgement is announced that the payment amount which exceeds $7,622 thousand shall be revoked. For company’ s best interests and reasonable pollution remediation fee, The Company filed an appeal on December 18, 2020. The case is still under trial now.

c) The Tainan City Government, in February 2014, passed that the Company was the polluters per judgment No. 1953 which was pass down in 2007 and asked the Company to pay the 2011 advanced payment of supervision and management on behalf of Anshun factory, in the amount of $27,444 thousand. The Company paid the fee in advance as previous mention within the requested deadline by the Tainan City Government based on the law regulations and filed the petition for remedy in March 2014, which was rejected by the petition authorities. The Company was not satisfied with the result, and filed the administrative legal appeal in September of same year. The Kaohsiung High Administrative Court sentenced the Company to pay $154 thousand. However, Tainan City Government was not satisfied with the verdict and filed the appeal for remedy, the Company also filed an appeal based on the Company’ s claims to Supreme Administrative High Court. The Supreme Administrative High Court suspended the original verdict in February 2018, and currently the case is under hearing by the Kaohsiung High Administrative Court. On December 19, 2019, a fine of $5,301 thousand was imposed by the court; in pursuit of the best interest of the Company, an appeal was filed with Supreme Administrative Court on January 16, 2020. And this case is still under trial.
d) Tainan City Government, in May 2016, issued the letter No. 10504498726, requesting the Company pay a fee for the “supervision management and audit work plan of 2013 CPDC (Taiwan Alkali) Anshun plant site remediation” and requesting the Company pay the fee of $63,271 thousand prior to July 20, 2016, per paragraph 4 of article 14, article 15 and paragraph 1 of article 43. The Company paid the fee within the requested deadline by the Tainan City Government based on applicable regulations. After the rejection of the petition for the remedy in June 2016, the Company filed for administrative litigation in December 2016 and received parts of the winning judgment in July 2017. In order to maintain the Company’s right and interest, the Company had proposed the appeal to Supreme Administrative Court for remedy of the unfavorable parts in August 2017. In the meanwhile, Tainan City Government filed for an appeal too. On October 31, 2018, Supreme Administrative Court dismissed the Company’ s appeal, revoked the rest of the verdicts and remanded the case back to Kaohsiung High Administrative. Except for the (Continued)
458 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

judgement is final and binding, The Court ruled that the amount exceeding $7,622 thousand was revoked(It means that the Company shall pay $39,863 thousand). Both parties appealed to Supreme Administrative Court base on their unprofitable part of verdict in October 2019. And this case is still under trial now.

e) The Tainan City Government issued the letter No. 1080412260 in April 2019, requesting the Company to pay before June 30, 2019. The government claimed to have performed "2016 China Petroleum & Chemical Corporation Anshun Plant Remediation Site Supervision, Management and Checking Work Plan" on behalf of the Company, and request the Company to pay $59,624 thousand in accordance with Article 14 (4) and Article 15 of the Soil and Groundwater Pollution Remediation Act. Based on the laws and regulations, the Company paid the aforementioned fees first within the time limit set by the Tainan City Government, and filed an administrative appeals in May of the same year. Tainan City Government dismissed the Company’ s petition on August 28, 2020. The Company initiate an action to Kaohsiung High Administrative court for the administrative remedy on October 28, 2020 and this case is still under trial now.
2) Tainan city government claimed that the Company did not implement per the remediation process.
a) Tainan city government, in June 2017, with the letter No. 1060630217 attached with sanction letter No. 106060012 determined the 3rd remediation change plan not proposed and took it as reason and imposed a penalty of $1,000 thousand. After the verification, there is no ‘take it as’ term in Soil pollution law and Implementation rules, which violated the principle of administration. The petition remedy had been proposed in July 2017 and the rejection of petition was received in October of the same year. The Company proposed to Kaohsiung High Administrative court for the administrative remedy in December of the same year. Later, an against judgment is rendered against the Company. The Company filed an appeal to the Supreme Court. On July 7, 2020, the Supreme Court reverse the original judgement and remand the case to the Kaohsiung High Administrative Court. On December 28, 2020, Kaohsiung High Administrative court give the judgement against the Company.
b) The Tainan City Government issued the punishment notification No. 108040003 in April 2019 as a result of the concentration of the dioxin in the exhaust pipe test results not being lower than the standard set by the third change plan (less than 0.1ng-TEQ/Nm3) and would result in a fine of $200 thousand. An administrative appeals was filed in May 2019 in accordance with the laws, and the Environmental Protection Agency of the Executive Yuan dismissed in July of the same year. The Company filed an administrative lawsuit in September of the same year. The case is currently in administrative court of the Tainan District Court.

3) Others

a) The Company still has the objection on the adscription of pollution responsibility for AnShun land located in Tainan City Annan District and would continue to strive for the possible administrative and law remedy actively.

(Continued)

459 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The cumulative fee of invested and estimated control & management cost and remediation fee were $3,686,964 thousand as of December 31, 2020. The preceding remediation fee was estimated according to the current possible situations by the Company. However, unpredictable future events may cause large fluctuations in the total expected remediation fees. This will be closely monitored and evaluated by management

b) Anshun dormitory designated monuments case

(Continued)

460 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Xincun Land of Taiwan Alkali Co., Ltd.:

1) History

2) Extension legislation

Business inspector found that the land was occupied by residents that built illegal construction, which violated the agreement. After communicating with the residents’ multiple times, the situation still did not improve. To be responsible for asset management and reach the expectation of the Company’ s shareholders, the Company filed a legal appeal in February 2013 to require to the demolition of the illegal construction and return the land. Kaohsiung District Court rejected the Company’ s petition. Due to the previous judgment, the Company filed a legal appeal for remedy in September 2014, which was rejected by the Kaohsiung High Court in July 2016. The Company filed the appeal for remedy to Supreme Court in August of same year and was under hearing in April 2019. The court remand the case to the Kaohsiung High Administrative Court, and this case is still being heard in the Court.

Shulin Land of Taiwan Alkali Co., Ltd.:

1) History:
a) No. 540, 541 and 543, Dongshan Section, Shulin District, Xinbei City and No. 489, Weiwang Section, Shulin Dist., New Taipei City 238, Taiwan including land originally belonging to Shulin plant of Taiwan Alkali Co. Ltd. Taiwan Alkali Co. Ltd., which established the plant in 1962 and closed the plant in 1975. The Executive Yuan Department of Economic Affairs in April 1983 ordered the government-owned Company which at the time was also a subsidiary of CPC to merge with Taiwan Alkali Co. Ltd..
b) Then the plant was subsequently sold to CPC. The New Taipei City Government Environmental Protection Bureau, on August 16, 2010, announced the land as “soil pollution control site”.
c) The New Taipei City Government Environmental Protection Bureau issued the letter No. 1000010000 in March 2011 declaring that the Company merging with Taiwan Alkali Co. Ltd. was regarded as the surviving company and shall take the responsibility for the rights and obligations of Taiwan Alkali Co. Ltd. for soil pollution remediation according to article 75 of Company Act and was deemed as the polluter and required to propose subsequent disposal and remediation.

(Continued)

461 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Since the change of predetermined place of CPC’s warehouse, the relocation schedule had to be extended to November 15, 2017. The remediation work schedule was postponed so that the soil pollution control plan (change plan) of Shulin Land of former Taiwan Alkali Co., Ltd (part of the sites) was proposed in April 2017. New Taipei City Government sent the letter to agree for future reference on May 18, 2017. Because of the different dynamic factors for the predetermined place of CPC’s warehouse, the relocation process was extend to December 31, 2021, and the remediation work schedule had to be postponed. Therefore, the “soil pollution control plan (the 2nd change plan) of Shulin Land of former Taiwan Alkali Co., Ltd (part of the sites)” was proposed in August 2019, and New Taipei City Government agreed for future reference on August 16, 2019. We are now performing this project subject to the soil pollution control plan.

(k) Intangible assets

The cost, amortization, and impairment of the intangible assets of the Group were as follows:

Costs： Balance as of January 1, 2020 Acquisition Disposal Effect of movement in exchange rates Balance as of December 31, 2020 Amortization and Impairment Loss: Balance as of January 1, 2020 Amortization for the period Disposal Effect of movement in exchange rates Balance as of December 31, 2020 Carrying value: Balance as of December 31, 2020	Goodwill $ 144,862 - - (8,991) $ 135,871 $ - - - - $ - $ 135,871	Computer software 8,422 3,182 (69) 11 11,546 2,680 1,282 (69) 20 3,913 7,633	Patents and trademark 100,247 83 - 31 100,361 73,387 11,209 - 96 84,692 15,669	Total
				253,531 3,265 (69) (8,949) 247,778 76,067 12,491 (69) 116 88,605 159,173

As of December 31, 2020, the aforesaid intangible assets were not pledged as collateral.

(Continued)

462 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(l) Short-term loans

The short-term loans were summarized as follows:

Letters of credit - CPDC Unsecured bank loans - CPDC Secured bank loans - CPDC Total Total short-term credit lines Unused short-term credit lines Range of interest rates	December 31, 2020	December 31, 2020
	$ 1,175,000 1,300,000 1,140,000 $ 3,615,000 $ 7,801,296 $ 2,330,278 1.2799%~1.3857%
		1.2799%~1.3857%

Please refer to Note 7 for details of the related assets pledged as collateral.

(m) Long-term loans

Secured bank loans - CPDC Secured bank loans - Weihua Secured bank loans -Weiming Secured bank loans - Weicai Sale and leaseback -Weicai Less：current portion Total Total long-term credit lines Unused long-term credit lines Range of interest rates	December 31, 2020 $ 5,570,000 206,370 3,339,673 158,217 130,223 (1,914,833) $ 7,489,650 $ 17,636,400 $ 5,601,475 1.3%~5.5%

(i) Syndicated loan A: The credit line is $2,900,000 thousand consisting of medium-term secured loans and non-revolving credit facility, which was used to finance the building of plants and purchase of accessory equipment.
(ii) Syndicated loan B: The credit line is $1,450,000 thousand consisting of medium-term loans and revolving credit facility, which was used to meet funding requirements.

(Continued)

463 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(iii) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. If the Company breaches these financial covenants, the syndicated banks may declare the unpaid principal, interest, fees and other sums payable by the Company under the loan agreement to be immediately due and payable. These financial ratios are as follows:
1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.
2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
(iv) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 7 (3) of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.
(v) The term of the repayment of the category A credit is stipulated as: The first period will be paid off from the date of the first use of the credit application to the expiration of three years. After that, it will be a period of six months for once. Settlement of the liability divided into five phases. The first period to the fourth period, each period shall be settled separately for 15% of the outstanding principal balance of the expiration date of the credit period, and the fifth period shall be settled for 40% of the outstanding principal balance of the expiration date of the credit period.
(vi) The term of payment of the category B credit is stipulated as: The borrower shall fully repay on the due date as set out in each application for use.

(Continued)

464 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(i) Syndicated loan A: The credit line is $2,815,000 thousand consisting of medium-term secured loans and revolving credit facility, which was used to meet funding requirement. The loan period lasts 3 years upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended upon expiration for 2 years, and limited to once, through written application.
(ii) Syndicated loan B: The credit line is $1,085,000 thousand consisting of commercial promissory note agreements and revolving credit facility, which was used to meet funding requirement. The loan period lasts 1 year upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended 12 months before expiration, and limited to twice, through written application.
(iii) 24 months after the first disbursement and every 6 months ever since, the credit line of the syndicated loan is diminished by 10% of the total credit line, applicable to the extension period. In advance of each credit line diminished date, for loan A, the Company shall settle any exceeding principal, interests, and other relating liabilities, free of prepayment terms included in the contract. For loan B, the Company shall make deposit to the designated account to make up for the amount of note principal exceeding the credit line, free of prepayment terms included in the contract. The Company may withdraw the deposit after the aforementioned note is settled.
(iv) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. These financial ratios are as follows:
1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.
2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
4) Tangible net worth (total equity excluding intangible assets): not lower than $60,000,000 thousand.

(Continued)

465 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(v) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 8 of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest, plus guarantee fee. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.
(vi) The term of the repayment of the category A credit is stipulated as: the repayment shall be completed on the expiration date stated in the application form for each disbursement.
(vii) The term of the repayment of the category B credit is stipulated as: The repayment shall be completed on the due date stated on the note.

(i) Current ratio (total current assets divided by total current liabilities): not lower than 120%.
(ii) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
(iii) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.
(iv) Tangible net worth (total equity excluding intangible assets): not lower than $67,000,000 thousand.

Please refer to Note 7 for details of the related assets pledged as collateral.

(Continued)

466 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(n) Bonds payable
(i) The details of bonds payable were as follows:

The details of bonds payable were as follows:
Domestic secured non-convertible bonds Less: current portion Balance of bonds payable Maturity year	December 31, 2020
	$ 3,500,000 - $ 3,500,000 114
		114

(ii) The Group issued domestic secured non-convertible bonds at the amount of $3,500,000 thousand for the year ended December 31, 2020, the terms were as follows:

Issue amount
Issue date
Issue period
Coupon rate
Interest payment date
Repayment and interest payment
Collateral

Please refer to Note 7 for details of the related assets pledged as collateral.

(Continued)

467 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(o) Long-term bills payable

The components of long-term bills payable were as follows:

Acceptance institution

The Group had revolving commercial promissory note agreements with bills finance companies in order to finance its operations. The bills payable bear interest rates ranged from 0.28%~1.2620%, for the year ended December 31, 2020.

Please refer to Note 7 for details of the related assets pledged as collateral.

(Continued)

468 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(p) Lease liabilities

The lease liabilities of the Group were as follows:

The lease liabilities of the Group were as follows:
Current Non-current	December 31, 2020
	$ 43,251 $ 249,741

For the maturity analysis, please refer to note 5(z)

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the year ended December 31, 2020
	$ 4,734 $ 50,246

The amounts recognized in the statement of cash flows for the Group were as follows:

Total cash outflow for leases	For the year ended December 31, 2020
	$ 114,527

(q) Provisions

Balance as of January 1, 2020 Provisions made during the year Provisions used during the year Provisions reversed during the year Provisions amortized during the year Effect of movements in exchange rate Balance as of December 31, 2019 Current Non-current	Decommissioning $ 1,722,411 505 - (22,696) 3,096 57 $ 1,703,373 $ - 1,703,373 $ 1,703,373	Remediation project 603,972 249,750 (339,109) - - - 514,613 276,650 237,963 514,613	Employee benefits 302,807 67,802 (31,857) (16,326) - - 322,426 12,550 309,876 322,426	Total
				2,629,190 318,057 (370,966) (39,022) 3,096 57 2,540,412 289,200 2,251,212 2,540,412

(Continued)

469 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(i) To comply with the Order of the Tainan City Government, the Company submitted a remediation plan proposal and accrued relevant remediation plan for approval before June 30, 2008 and evaluated the relating remediation expense of $1,647,200 thousand. In May 2009 and on July 2, 2012, the Company was granted official approval of its remediation proposal and amended remediation proposal, respectively. In September 2014, the Company completed the first phase of the implementation of its plan. It is expected to launch the second phase of the implementation of its remediation plan during the next decade. The Company has submitted the second phase of its amended remediation plan to the Tainan City Government for approval. On December 24, 2014, Tainan City Government notified the Company of its approval and now is under public tender review.

The aforementioned remediation costs of the Company were recognized in the total amount of $1,600,000 thousand for the first stage before September 2014. With the launch of the second remediation stage, the Company estimated the cost based on the situation on December 2014 at $1,356,000 thousand. Currently, the Tainan City Environmental Protection Bureau reviewed and adopted the plan on April 14, 2015 and the assessment was announced by Tainan City Government on May 4, 2015. According to the remediation technology and the actual implementation of the subsequence adjustment, the 3rd remediation change plan was proposed on March 2, 2017, which was reviewed and adopted on January 3, 2018. (Note 5(i) for more details)

(ii) 1) The Company’s four parcels of land at Dongshan section, Shulin district, New Taipei City were the original location of TAIC’ s Shulin plants, but then sold to the Taiwan Chinese Petroleum Corporation (CPC). On August 16, 2010, the Environmental Protection Department of New Taipei City Government has declared that such land as “Soil Pollution Control Site”. In March 2011, the Environmental Protection Department of New Taipei City Government issued letter No. 1000010000. In that letter, the Company was deemed to be the surviving entity, which assumed the rights and obligations of TAIC following its merger with TAIC and TAIC ceased to exist. As the surviving entity from this merger, the Company was therefore declared as the polluter and was required to submit a remedial plan.
2) Since the change of predetermined place of CPC’s warehouse, the relocation schedule had to be extended to November 15, 2017. The remediation work schedule was postponed so that the soil pollution control plan (change plan) of Shulin Land of former Taiwan Alkali Co., Ltd (part of the sites) was proposed in April 2017. New Taipei City Government sent the letter to agree for future reference on May18, 2017. Because of the different dynamic factors for the predetermined place of CPC’s warehouse, the relocation process was extended to December 31, 2021 and the remediation work schedule had to be postponed. Therefore, the “soil pollution control plan (the 2nd change plan) of Shulin Land of former Taiwan Alkali Co., Ltd (part of the sites)” was proposed in August, 2019, and New Taipei City Government agreed for future reference on August 16, 2019. We are now performing this project subject to the soil pollution control plan. However, it will be assessed to adjust for changes due to internal and external factors in future, which may result in significant differences on the entire remediation expenses.

(Continued)

470 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(r) Operating lease

The Group leases out its property. The Group has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 5(j) sets out information about the operating leases of investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years Four to five years More than five years Total undiscounted lease payments	December 31, 2020 $ 31,461 31,461 31,504 23,415 21,600 235,196 $ 374,637

For the year ended December 31, 2020, the income from the rental of investment property, property, plant and equipment amounted to $17,461 thousand.

(s) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of funded defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2020 $ 867,524 (558,798) $ 308,726

The provision consists of net defined benefit liabilities and accrued pension liabilities for professional management. The accrued pension liabilities for professional management was $0 thousand as of December 31, 2020.

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan and provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

(Continued)

471 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

1) Composition of plan assets

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $557,443 thousand as of December 31, 2020. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movement in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Group were as follows:

Defined benefit obligation, January 1 Benefits paid from plan assets Current service costs and interest Re-measurements of the net defined benefit liability (assets) Defined benefit obligation, December 31	For the year ended December 31, 2020 $ 905,333 (111,841) 19,606 54,426 $ 867,524

3) Movement of defined benefit plan assets

The movement in the present value of the defined benefit plan assets for the Group were as follows:

Fair value of plan assets, January 1 Employer contributions Benefits paid by the plan Expected return on plan assets Re-measurements of the net defined benefit liability Fair value of plan assets, December 31	For the year ended December 31, 2020 $ 627,711 16,258 (111,841) 5,434 21,236 $ 558,798

(Continued)

472 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

Current service cost Others Net interest of net liabilities for defined benefit Operating costs Selling expenses Administrative expenses Research and development expenses Actual return on plan assets	For the year ended December 31, 2020 $ 11,610 (490) 2,562 $ 13,682 $ 11,784 130 1,564 204 $ 13,682 $ 26,670

5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Group’ s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income was as follows:

Accumulated balance, January 1 Recognized during this year Accumulated balance, December 31	For the year ended December 31, 2020 $ (185,118) (33,190) $ (218,308)

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increases	For the year ended December 31, 2020
	0.4%~1% 1%~3%

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $9,244 thousand.

(Continued)

473 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

～ The weighted average lifetime of the defined benefits plans is 5.90 13.64 years.

7) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2020 Discount rate Increase in future wage	Impact on the present value of defined benefit obligation Increase by 0.25% Decrease by 0.25% $ (7,515) 24,254 23,872 (7,220)

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plans

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $51,675 thousand for the year ended December 31, 2020.

(iii) The pension recognized consists of pension expenses and pensions for professional management. The pension expenses for professional management was $13,291 thousand as of December 31, 2020.

(iv) Short-term compensated absences liabilities

As of December 31, 2020, the Group’s short-term compensated absences liabilities amounted to $12,550 thousand.

(Continued)

474 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(t) Income Tax

(i) Income tax expense

The components of income tax expense for the year ended December 31, 2020 were as follows:

Current income tax expense (benefit) Currently incurred Adjustment to prior year’s income tax charged to current income tax Deferred tax expense (benefit) The origination and reversal of temporary differences Unrecognized changes of deductible temporary differences Income tax expense (benefit)	For the year ended December 31, 2020 $ 58,341 (76,082) (17,741) (760,345) 239,135 (521,210) $ (538,951)

For the year ended December 31, 2020, income tax expenses recognized under other comprehensive income were $0 thousand.

Reconciliation of income tax expense and profit before tax for the year ended December 31, 2020 were as follows:

Profit before income tax Income tax on pre-tax financial income calculated at the domestic rate Effect of tax rates in foreign jurisdiction Tax-free income Adjustment of deferred tax Unrecognized deferred tax assets Prior years income tax adjustment Changes of permanent differences Others Total	For the year ended December 31, 2020
	$ 231,345 $ 46,269 (8,637 (3,257 (1,040 239,135 (76,082 (407,932 (327,407 $ (538,951

(Continued)

475 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax liabilities

The Group is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as of December 31, 2020. Also, management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

Aggregate amount of temporary differences related to investments in subsidiaries Unrecognized deferred tax liabilities 2) Unrecognized deferred tax assets Decommissioning liabilities Remediation project Pollution remediation Allowance for doubtful receivables Investment property, property, plant and equipment Pension Tax loss Others	December 31, 2020	December 31, 2020
	$ 39,698 $ 7,940 December 31, 2020
		December 31, 2020
	$ 96,784 238,563 276,050 319,484 2,963,604 210,816 7,310,487 146,512 $ 11,562,300

(Continued)

476 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

As of December 31, 2020, the expiration years of tax loss unrecognized as deferred tax assets were as follows:

a) The Company

	Year incurred	Amount	Expiry date
	2014 $	353,540	2024
	2015	2,132,246	2025
	2016	1,870,634	2026
	2020 (estimated)	690,479	2030
b)	Taivex Therapeutics Inc.
	Year incurred	Amount	Expiry date
	2011 $	16,878	2021
	2012	29,657	2022
	2013	50,227	2023
	2014	27,419	2024
	2015	43,032	2025
	2016	44,291	2026
	2017	54,764	2027
	2018	79,334	2028
	2019	67,345	2029
	2020 (estimated)	80,109	2030
c)	BES Twin Towers Co., Ltd.
	Year incurred	Amount	Expiry date
	2013 $	7,512	2023
	2014	44,139	2024
	2018	427,443	2028
d)	CPDC Green Technology Corp.
	Year incurred	Amount	Expiry date
	2017 $	28,891	2027
	2018	38,057	2028
	2019	36,819	2029

(Continued)

477 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

e) Da Yin Construction Engineering Co., Ltd.

Year incurred	Amount Expiry date $ 142 2023 159 2024 11 2025 112 2026 136 2027 158 2028 162 2029 2,207 2030
2013 2014 2015 2016 2017 2018 2019 2020 (estimated)

f) Weihua (Rudong) Trade Co., Ltd.

	Year incurred		Amount	Expiry date
	2015	$	10,302	2020
	2016		42,814	2021
	2017		21,051	2022
g)	Weiqiang International Trade (Shanghai) Co., Ltd.
	Year incurred		Amount	Expiry date
	2015	$	15,095	2020
	2016		19,821	2021
h)	Jiangsu Weiming Petrochemical Corporation
	Year incurred		Amount	Expiry date
	2017	$	44,723	2022
	2018		19,581	2023
	2019		143,168	2024
	2020 (estimated)		114,321	2025
i)	Changzhou Weicai New Material Science & Technology			Co., Ltd.
	Year incurred		Amount	Expiry date
	2015	$	387	2020
	2016		269,553	2021
	2017		204,552	2022
	2018		176,649	2023
	2019		56,826	2024
	2020 (estimated)		28,996	2025

(Continued)

478 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

j) Weiming (Rudong) Construction Co., Ltd.

Year incurred	Amount Expiry date $ 22 2025
2020 (estimated)

3) Deferred tax liabilities:

As of December 31, 2020, the balance of deferred income tax liabilities for the provision of land value-added tax was $6,497,650 thousand.

4) Deferred tax assets:

Deferred tax assets:
January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income December 31, 2020	Taxable Loss $ 11,009 - - $ 11,009	Defined benefit plans 5,529 (952) 1,672 6,249	Other 58,179 13,858 - 72,037	Total
				74,717 12,906 1,672
				89,295

(iii) Assessment of tax

The Company’ s tax returns for the years through 2018 were assessed by the Tax Administration.

(u) Capital and other equity
(i) The issuance of common stock

As of December 31, 2020, the authorized, issued and outstanding capital of the Company amounted to $32,848,502 thousand, divided into 3,284,850 thousand shares with par value of $10 per share.

(In thousands of shares)

Balance, January 1 Capital increased by cash Balance, December 31	Common Stock	Common Stock
	For the year ended December 31, 2020
		2,834,850 450,000
		3,284,850

(Continued)

479 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) Capital Surplus

Premium of common stock Difference arising from subsidiary’s share price and its carrying value Recognize Changes in ownership interests in subsidiaries Other Total	December 31, 2020
	$ 538,726 26,314 634 18,141 $ 583,815

(iii) Retained earnings

The Company distributes dividends depending on the level of earnings of each year, funding needs, industrial environment, and status of competition, long-term operating plan and interests of shareholders. Under such circumstances, the Company may appropriate for special reserve either in whole or in part to assure financial stability and sustainability. The Company may distribute dividends in cash or stock. If the earnings distribution is made in the form of stock dividends, the ratio for the stock dividend shall not exceed 50% of the total distribution unless the ratio of the Company’ s total liabilities to total assets is equivalent or above 50% or otherwise prescribed in relevant laws and regulations.

(Continued)

480 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

1) Legal reserve

2) Special reserve

By adopting the exemptions allowed under IFRS 1 First-time Adoption of International Financial Reporting Standards during the Company’ s first-time adoption of the International Financial Reporting Standards approved by the Financial Supervisory Commission (IFRSs), unrealized asset revaluation gains in shareholders’ equity of $5,281,790 thousand was reclassified to retained earnings. The net increase in retained earnings due to the first-time adoption of IFRSs amounted to $4,235,076 thousand. In accordance with Ruling No. 1010012865 issued by the Financial Supervisory Commission on 6 April 2012, a special reserve is appropriated from the distribution of retained earnings as a result of an increase in retained earnings due to the first-time adoption of IFRSs. When the related assets are used, disposed of, or reclassified, this special reserve is reversed as distributable earnings proportionately. The carrying amount of special reserve amounted to $4,235,076 thousand as of December 31, 2020.

In 2014, the Group changed the subsequent measurement of investment properties from cost model to fair value model. In accordance with Ruling No. 1030006415 issued by the Financial Supervisory Commission on March 18, 2014, on the first-time adoption of fair value model for the subsequent measurement of investment properties, the Group set aside an equal amount of special reserve when the fair value increment of investment properties is transferred to retained earnings. The Group appropriated to the special reserve an amount of $21,224,233 thousand as of December 31, 2013. The company held a shareholder meeting on June 8, 2017, in order to use the special reserve amounted to $1,958,584 thousand to cover accumulated deficits. On April 11, 2018, the Company’s shareholders resolved during their meeting, to reimburse $1,958,584 thousand into the special reserve. The carrying amount of such special reserve amounted to $21,224,233 thousand as of December 31, 2020.

(Continued)

481 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

For every year the Company distributes earnings, a special reserve is appropriated in the following order:

a) Each year, a special reserve is appropriated from current year’ s net income and prior years’ undistributed earnings for the same amount as the net increase in the fair value of investment property using the fair value model. A special reserve is also appropriated for the same amount as the cumulated net increase in the fair value for the year when the undistributed earnings are not distributed. When the investment property is disposed of, this special reserve is reverted proportionately to distributable earnings. As of December 31, 2020, the Company appropriated to the special reserve an amount of $5,947,347 thousand.
b) In accordance with Ruling No. 1010047490 issued by the Financial Supervisory Commission on November 21, 2012, a special reserve is appropriated by the parent company for the difference between market value and book value of parent company shares being held by a subsidiary times the percentage of the parent company’s equity investment in the said subsidiary, if the stock price of the parent company is lower than the its value. If the market value recovers subsequently, this special reserve is reverted proportionately to distributable earnings.
c) In accordance with Ruling No. 1010012865 issued by the Financial Supervisory Commission on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings is appropriated as a special reserve during earnings distribution. Such appropriation of special reserve is based on the difference between the total net amount of contra accounts in the shareholders’ equity and the carrying amount of special reserve. Similarly, a portion of undistributed prior period earnings (which does not qualify for earnings distribution) is likewise appropriated as a special reserve on account of cumulative changes to other shareholders’ equity pertaining to prior periods. The subsequent reversals of the contra accounts in the shareholders’ equity shall qualify for additional earnings distributions.
3) Earnings Distribution

On May 28, 2020, the shareholders' meeting decided to appropriate the Company's 2019 earnings in cash at the amount of $985,455 thousand.

On March 23, 2021, Board of Directors proposed to appropriate the Company's 2020 earnings with a cash dividend of $0 thousand.

(iv) Treasury shares

In accordance with Article 28-2 of the Securities and Exchange Act, the Company plans to buy 50,000 treasury shares from March 30 to May 29, 2020, in order to protect the Company’s credit and shareholders’ equity. The price range is between $5.03 and $7.50 per share. On May 29, 2020, the market prices are higher than the upper limit of the execution price range for the repurchase of treasury shares, and the stock of the Company was not oversold compared with the market during the original scheduled repurchase period. The repurchase was not executed in order to protect shareholders’ equity and take into market mechanisms.

(Continued)

482 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(v) Other equity accounts

Balance, January 1, 2020 Exchange differences on foreign operation Exchange difference on subsidiary accounted for using equity method Exchange difference on affiliated accounted for using equity method Unrealized gains from financial assets measured at fair value through other comprehensive income Disposal of investments in equity instruments designated at fair value through other comprehensive income Unrealized gains from financial assets measured at fair value through other comprehensive income for affiliated companies accounted for using equity method Balance, December 31, 2020	Exchange differences on foreign operation $ (804,515) (188,319) 573 26,059 - - - $ (966,202)	Unrealized gain or loss on financial assets at fair value through other comprehensive income (1,120,657) - - - 360,247 (126,299) 32,450 (854,259)

(v) Earnings per share

The basic earnings per share and diluted earnings per shares for the year ended December 31, 2020 were calculated as follows:

Basic earnings per share (NT dollars)
Profit attributable to ordinary shareholders
Weighted-average number of ordinary shares (thousand shares)
Basic earnings per share
Diluted earnings per share (NT dollars)
Profit attributable to ordinary shareholders (diluted)
Weighted-average number of ordinary shares (thousand shares)
Effect of potentially dilutive ordinary shares of Employee stock bonus (thousand
shares)
Weighted-average number of ordinary shares (diluted) (thousand shares)
Diluted earnings per share

For the year
ended December
31, 2020

$
680,989
3,273,785
$
0.21
$
680,989
3,273,785
3,039
3,276,824
$
0.21

(Continued)

483 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(w) Revenue from contracts with customers

(i) The Group primarily engages in the production of petroleum, alkali-chlorine, phosphoric acid and other petrochemical products and by-products and the storage, transportation, purchase and sale of these products, related chemicals and their raw materials. For the details of products and sales area, please refer to Notes 13(b) and (c).
(ii) Contract balances

Notes receivable Accounts receivable Less: allowance for doubtful account Contract liabilities	December 31, 2020 $ 375,810 2,221,784 (446,393) $ 2,151,201 $ 1,676

Please refer to Note 5(d) for disclosure of accounts receivable and allowance for doubtful accounts.

The amount of revenue recognized for the year ended December 31, 2020, that was included in the contract liability balance at the beginning of the period was $88,263 thousand.

(x) Remuneration of employees and directors

In accordance with the Articles of Incorporation, the Company should contribute no less than 3% of the profit as employee compensation and less than 2% as directors’ and supervisors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The remuneration of employees shall be in the form of cash or shares, whose recipients may include the employees of the Company’s affiliated companies who meet certain conditions. The remuneration of directors may solely be cash. The aforesaid profit represents the income before income tax and remuneration for the period.

For the year ended December 31, 2020, the remuneration to employees amounted to $2,670 thousand and the remuneration to directors amounted to $1,780 thousand, respectively. These amounts were calculated using the Company’s profit before tax before remuneration of employees and directors for the year ended December 31, 2020. These benefits were charged to profit or loss under operating costs or operating expenses for the year ended December 31, 2020. When the Board of Directors decided to distribute stock dividends, the number of which shall be calculated based on the closing price of the Company’ s ordinary shares one day before the date of the meeting of Board of Directors. The actual distribution of the employee remuneration was $0 thousand; while the amount for directors identical to those stated on the financial statement. Related information would be available at the Market Observation Post System website.

(Continued)

484 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(y) Non-operating income and expense

(i) Interest income

The details of interest income were as follows:

Interest income from bank deposits Other interest income Total	For the year ended December 31, 2020
	$ 164,064 2,285 $ 166,349

(ii) Other income

The components of other income were as follows:

Rent income Dividend income Other income, others Total Other gains and losses The components of other gains and losses were as follows: Losses on disposal of property, plant and equipment Losses on disposal of investments Gain on amendement of lease Foreign exchange losses Fee expense Losses on work stoppages Other losses Other gains and losses, net	For the years ended December 31, 2020 $ 12,747 257,817 278,471 $ 549,035 For the year ended December 31, 2020 $ (1,060) (580) 49 (34,345) (97,677) (267,500) (18,216) $ (419,329)

(iii) Other gains and losses

(Continued)

485 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(iv) Finance costs

The components of finance costs were as follows:

For the year ended December 31, 2020 Interest expense $ (224,801) Finance costs, net $ (224,801)

(z) Financial Instruments

(i) Categories of financial instruments 1) Financial assets Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortized cost: Cash and cash equivalents Notes receivable, accounts receivable and other receivables Other assets Total 2) Financial liabilities Short-term loans Long-term bank loans-current portion Payables Long-term bank loans Long-term bills payable Bonds payable Lease liabilities Other liabilities Total	December 31, 2020	December 31, 2020
	$ 11,576,388 2,808,716 8,122,215 2,286,048 2,772,399 $ 27,565,766 December 31, 2020
		December 31, 2020
	$ 3,615,000 1,914,833 2,766,382 7,489,650 5,656,112 3,500,000 292,992 123,324 $ 25,358,293

(Continued)

486 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) Credit risk

1) Exposure to credit risk

The carrying amount of financial assets represents the Group’ s maximum credit exposure. As of December 31, 2020, the maximum exposures to credit risk amounted to $27,565,766 thousand.

2) The concentration of credit risk

The sales of the Group are significantly concentrated in a small number of customers. For the year ended December 31, 2020, 70% of the total amount of accounts receivable was owed by 12 customers. Under the Group’s credit policy, customers are requested to provide the Group certain financial information such as audited financial report, or other related documents for purposes of evaluating their credit worthiness. Credit is granted to these customers according to the result of the Group’s credit evaluation. Those customers who do not satisfy the requirements shall not be offered credit.

3) Receivables

For credit risk exposure of notes and accounts receivables, please refer to note 5(d).

Other financial assets at amortized cost includes time deposits and guarantee deposite paid. All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected credit losses. The loss allowance provision were determined $0 for the year ended December 31, 2020.

(Continued)

487 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(iii) Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2020 Non-derivative financial liabilities Accounts payable Accounts payable-related parties Other payables Other current liabilities－ other Other non-current liabilities －other Lease liabilities Floating-rate loans (Note) Fixed-rate loans (Note) Long-term bills payable (Note) Bonds payable	Carrying amount $ 1,874,342 3,161 880,495 8,384 123,324 292,992 3,078,217 9,941,266 5,656,112 3,500,000 $ 25,358,293	Contractual cash flows 1,874,342 3,161 880,495 8,384 123,324 344,560 3,170,316 10,374,902 5,660,000 3,612,000 26,051,484	Within 6 months 1,874,342 3,161 880,495 8,384 110,763 24,828 1,495,088 6,631,637 - - 11,028,698	6-12 months - - - - 8,668 23,269 29,768 363,886 - 22,400 447,991	1-2 years - - - - 2,146 37,065 61,457 1,110,184 5,660,000 22,400 6,893,252	2-5 years - - - - 247 48,375 1,584,003 2,174,633 - 3,567,200 7,374,458	More than 5 years
							- - - - 1,500 211,023 - 94,562 - - 307,085

The Group does not expect that the cash flow of the due date analysis will occur significantly earlier, or the actual amount will be significantly different.

Note: The amount within 6 months includes recyclable long-term bank loans and long-term bills payable.

(iv) Currency risk

1) Currency risk exposure

The Group’s exposures to significant currency risk were those from its foreign currency denominated financial assets and liabilities as follows:

Financial assets Monetary items USD VND MMK CNY Non-Monetary items HKD	December 31, 2020	December 31, 2020
	Foreign Currency $ 31,306 8,823,747 7,464 559,115 548	Exchange rate NTD 28.099 879,667 0.0013 10,748 0.0211 158 4.315 2,412,580 3.6277 1,987

(Continued)

488 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Financial liabilities Monetary items USD GBP	December 31, 2020	December 31, 2020
	Foreign Currency $ 82 25	Exchange rate NTD 28.099 2,310 38.350 961

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the foreign currency exchange rate fluctuations on cash and cash equivalents, receivables, payables and loans, which are denominated in foreign currency. A 1% of appreciation of NTD against USD, VND, MMK, CNY, and GBP would have increased net income by $26,399 thousand for the year ended December 31, 2020; other comprehensive income would have increased $20 thousand for the year ended December 31, 2020. The analysis is performed on the same basis for 2019.

3) Foreign exchange gain and loss on monetary items

Since the Group has many kinds of functional currency, the information on foreign exchange gains (losses) on monetary items is disclosed by total amount. For the year ended December 31, 2020, foreign exchange gains (losses) (including realized and unrealized portions) amounted to ($34,345) thousand.

(v) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Group's financial assets and liabilities.

If the interest rate increases by 1%, the Group’s net income will decrease by $30,782 thousand for the year ended December 31, 2020, assuming all other variable factors remain constant. This is due mainly to the fact that the Group’s borrowings bear floating interest rate.

(Continued)

489 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(vi) Other market price risk:

If the equity price changes, and if it is based on the same basis for both years and assumes that all other variables remain the same, the impact to comprehensive income will be as follows:

Prices of securities at the reporting date	For the year ended December 31, 2020	For the year ended December 31, 2020
	After-tax other comprehensive income $ 28,087 $ (28,087)	After-taxProfit (loss)
Increase of 1% Decrease of 1%		115,764 (115,764)

(vii) Fair value information
1) Fair value of financial instruments

	December 31, 2020	December 31, 2020	December 31, 2020
Book value $ 11,576,388 2,068,247 740,469 2,808,716 8,122,215 2,286,048 2,772,399 13,180,662 $ 27,565,766 $ 37,626,827		Fair value
	Level 1 829,533 2,068,247 - 2,068,247 - - - - 2,897,780 -	Level 2 - - - - - - - - - -	Level 3 10,746,855 - 740,469 740,469 - - - - 11,487,324 37,626,827	Total
				11,576,388
				2,068,247 740,469
				2,808,716
				- - -
				-
				14,385,104
				37,626,827

(Continued)

490 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

December 31, 2020	December 31, 2020	December 31, 2020
	Fair value
Level 1 - - - - - - - - -	Level 2 - - - - - - - - -	Level 3 - - - - - - - - -	Total
			- - - - - - - -
			-

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

The Group’ s valuation techniques and assumptions used for financial instruments not measured at fair value are the discounted cash flows method.

3) Valuation techniques for financial instruments measured at fair value:

a) Non-derivative financial instruments

Financial instruments, if there is a public market offer, then the public market offer for the fair value, Such as listing (cabinet) company stock and open-end fund beneficiary certification.

The fair value of the financial instruments held by the Group in the case of a nonactive market is as follows:

No public offer equity instruments: Use the net asset value method, the main assumptions are based on the net per share of the investee.

(Continued)

491 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

b) Derivative financial instruments

Derivative financial instruments is evaluated according to the evaluation model accepted by the market users, such as the discount method and the option pricing model.

4) There have been no transfers from each level for the year ended December 31, 2020.
5) Statements of changes in fair value measurements of financial assets in Level 3

January 1, 2020 Acquisition from business combination Acquisition Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income December 31, 2020	Investment Property $ 36,719,706 9,476 - 897,645 - $ 37,626,827	Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 9,942,994 - - - - - 803,861 - - - 10,746,855 -	Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 442,497 - 300,000 - (2,028) 740,469
		Designated at initial recognition 9,942,994 - - 803,861 - 10,746,855

6) Quantitative information on the measurement of fair value of significant unobservable input values (level 3)

Level 3 refers to the measurement of the fair value of the input parameters are not based on market availability of information, must be based on the assumption that the appropriate estimates and adjustments. If the evaluation model can not be developed on its own, the fair value of the counterparty is used as the fair value. According to IFRS13, for the fair value of the third level classified at the fair value level, the firm shall provide quantitative information about the significant unobservable input values used for the fair value measure. Businesses do not need to create quantitative information to comply with this disclosure, if quantified unobservable input value is not built when enterprises are measuring fair value (such as when a firm uses an unadjusted previous transaction price or a third-party pricing information), e.g. part of the the Group’s investment in non-active market equity and debt instruments. The fair value of the Group’s investment property is level 3, which is determined in accordance with IFRSs, i.e., outsourcing to external appraisors for assessment based on market evidence (please refer to Note 5(j)). Due to the impracticability to evaluate the relationship between the unobservable input value and fair value, the quantitative information is not disclosed. The fair value of the aforesaid assets at December 31, 2020 is $37,626,827 thousand.

(Continued)

492 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

The Group holds investments in equity shares, which is classified as financial assets at fair value through profit or losses, whose fair value belongs to level 3.

Most of fair value assets belonging to level 3 possesses single significant unobservable input values. Only equity instruments with inactive market may result in multiple unobservable input values which are all independent from each other.

Quantified information of significant unobservable inputs was as follows:

Item	Valuation technique	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧Net Asset Value ‧Lack of market liquidity discount rate 30% ‧Not applicable ‧Lack of market liquidity, the more the discount, the lower the fair value
Financial assets at fair value through profits or losses and financial assets at fair value through other comprehensive income	Net Asset Value Method

7) The evaluation process for fair value belonging to level 3

The Group’ s fair value evaluation involves observable input value requiring unobservable parameters for significant adjustments or unobservable input value, both of which belong to level 3. The main source of such input value is external appraisors’ reports. The results of the evaluation are then reviewed to assure the consistency with the source of the evaluation and the reasonability.

The evaluation of investment property complies with FSC’s regulations of the evaluation methods and parameters, and is conducted by external appraisors.

8) Fair value measurements in level 3 – sensitivity analysis of reasonably possible alternative assumptions

(aa) Financial risk management
(i) Overview

The Group are exposed to the following risks due to the use of financial instruments:

1) Credit Risk
2) Liquidity risk
3) Market risk

(Continued)

493 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) Risk management framework

(iii) Credit Risk

Credit risk means the potential loss of the Group if the clients or counterparties involved in transactions default. The primary potential credit risk is from cash and accounts receivable.

1) Accounts receivable and other receivables

(Continued)

494 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

2) Investments

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as much as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The management believes that the Group does not have significant liquidity risk.

(v) Market risk

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Risk Management Committee.

1) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan Dollar (NTD). The currencies used in these transactions are denominated in NTD, USD and CNY.

The Group’s currency risk is not hedged as some of the currencies of the Group’s foreign currency receivables and payables are the same, producing a natural hedge effect.

(Continued)

495 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

2) Interest rate risk

The Group’ s interest rate risk comes from long-term and short-term bank loans. The long-term bonds issued by theCompany is fixed-rate, so there is no risk caused by the fluctuations of interest rates and fair value interest rate. The long-term and short-term bank loans with floating-rate are exposed to interest rate risk, but most of risk is offset by cash and cash equivalents holding in floating-rate deposits.

3) Other market price risk

The Group does not enter into any commodity contracts other than to meet the Group’s expected usage and sales requirements; such contracts are not settled on a net basis.

(ab) Capital management

In order to maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, reduce the capital for redistribution to shareholders, issue new shares or sell assets to settle any liabilities.

The Group’s debt-to-equity ratio at the end of the reporting period as of December 31, 2020 was follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Total liabilities and equity Debt-to-equity ratio	December 31, 2020 $ 35,154,368 (8,122,215) $ 27,032,153 $ 71,621,034 $ 98,653,187 % 27.40

(Continued)

496 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ac) Investing and financing activities not affecting current cash flow

The Group investing and financing activities which did not affect the current cash flow for the year ended December 31, 2020 were as follows:

(i) For the acquisition of right-of-use assets based on lease term, please refer to Note 5(i).
(ii) Reconciliation of liabilities arising from financing activities was as follows:

Long-term bank loans Short-term loans Long-term bills payable Lease liabilities Total liabilities from financing activities	January 1, 2020 $ 8,483,913 3,484,148 4,494,177 253,243 $16,715,481	Cash flows 1,087,292 135,040 1,160,000 (64,281) 2,318,051	Non-cash	changes Other - - 1,935 104,030 105,965	December 31, 2020
			Foreign exchange movement (166,722) (4,188) - - (170,910)
					9,404,483 3,615,000 5,656,112 292,992
					18,968,587

(6) Related-party transactions:

(a) The ultimate parent company

The Company is the ultimate parent company.

(b) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

Name of related party Relationship with the Group Zhong Gong Baoquan Ltd. Investee as accounted for using equity method Jean Pacific Development Co., Ltd. Investee as accounted for using equity method BES Engineering Corporation The Company is a director of the entity Core Pacific City Co., Ltd. Share a director with the Company

Chung Kung Management and Maintenance of Apartments Co., Ltd.

Coreasia Human Resources management Co., Ltd.

Capital Machinery Co., Ltd.

Sheen Chuen-Chi Cultural and Educational Foundation

All board of directors, general manager and deputy general manager

Lucite International Asia Pacific PTE. Ltd. Korea

Investee as accounted for using equity method of Zhong Gong Baoquan Ltd.

Subsidiary of BES Engineering

The entity is a director of the Company The entity is a director of the Company

The main management of the Company

Associated company

(Continued)

497 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Name of related party Relationship with the Group Lucite International U.K. Ltd. Associated company Mitsubishi Chemical Polymer Nantong Co.,Ltd Associated company

(c) Significant Transactions with related parties
(i) Sales and Receivables

Associates	Sales For the year ended December 31, 2020 $ 389,696	Account receivable
		December 31, 2020
		-

(i) Payables

The payables to related parties were as follows:

			December 31,
Accounts	Types of related parties		2020
Other payables	Associates	$	5,380
Other payables	Other related parties		5,951
		$	11,331
Other
			For the year
		ended December
			31, 2020
Associates
Other revenues		$	12,000
Security service fees			(20,388)
Other related parties
Rental income			3
Other expenses			(3,633)
Please refer to Note 5(r) for lease of land and buildings to related parties.

(ii) Other
(iii) The Group had a two-year contract with BES Engineering, for the lease of office building in July, 2020, with the total value of $9,629 thousand. This rental transaction was recognized right-of-use assets and lease liability both amounting to $9,465 thousand. The depreciation expense and interest expense for the year ended December 31, 2020 was $4,743 thousand and $82 thousand, respectively. As of December 31, 2020, the amount of lease liability was $7,130 thousand.

(Continued)

498 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(iv) The Group had contracts with BES Engineering, for mechanical engineering services projects and paid commission on the basis of actual construction. As of December 31, 2020, the construction project in-progress amounted to $1,469,439 thousand. As of December 31, 2020, the unpaid fees amounted to $704,896 thousand and the refundable deposit amounted to $420,660 thousand.
(v) KMC had incurred $4,973 thousand of technical services expense to other related parties for the year ended December 31, 2020. The expense above had been included in sales and administration expenses.
(d) Key management personnel compensation

Short-term employee benefit Post-employment benefits	For the year ended December 31, 2020
	$ 118,252 15,059 $ 133,311

(7) Pledged assets:

The Group’s pledged assets are as follows:

Asset

Purpose of pledge
December 31,
2020
Guarantee for priority right of use of harbor
and purchases of materials and machinery
$ 135,049
Collateral for long-term and short-term
financial credit, syndicated loan (Mega &
Shin Kong)
7,031,472
Syndicated loan (Mega), collateral for long-
term financial credit and long-term bills
payable
15,346,334
Long-term bills payable
1,430,230
Long-term bills payable
634,995
Deposit for lawsuit
108,969
Collateral for long-term financial credit
585,925
$
25,272,974

Time deposits
Property, plant and equipment
Investment property
Financial assets reported at fair value
through other comprehensive income
Financial assets reported at fair value
through profit or loss
Refundable deposit
Right-of-use of Sea Areas

As of December 31, 2020, 24,000 thousand shares of a subsidiary of the Group were pledged as collateral for long-term bills payable.

(Continued)

499 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(8) Commitments and contingencies:

(a) As of December 31, 2020, the Group had the following unused letters of credit:

As of December 31, 2020, the Group had the following unused letters of credit:
USD EUR NTD JPY	December 31, 2020
	$ 20,824 246 1,020,000 -

(b) As of December 31, 2020, the Group had issued guarantee notes for bank loans, sales and purchases, and development plan aggregating to $24,117,400 thousand, USD30,000 thousand, respectively.
(c) As of December 31, 2020, the Group had contracts for various construction projects in-progress amounting to $12,225,823 thousand. As of December 31, 2020, the remaining future obligations under these contracts amounted to $2,547,453 thousand.
(d) As of December 31, 2020, the agreement on the acquisition of material property and the unpaid portion amounted to $39,045,010 thousand and $28,885,000 thousand respectively. Please refer to Note 5(e) for more information.
(e) As of December 31, 2020, the Company signed an agreement to purchase raw materials such as benzene, hydrogen and methylbenzene from Chinese Petroleum Corporation (CPC). Under this contract, the Company may purchase specified monthly volume of these raw materials at current month prices announced by the Chinese Petroleum Corporation with prepayment or domestic letter of credit.
(f) As of December 31, 2020, the Group signed an agreement of preclinical drug research amounted to USD3,063 thousand and $92,070 thousand, and the unpaid portion amounted to USD597 thousand and $60,506 thousand.
(g) The Group signed a license agreement of new type of tumor identification and drug delivery system with National Health Research Institutes on August 18, 2016. The license fee amounted to $270,000 thousand and the payment will be made by progress. As of December 31, 2020, the paid portion amounted to$10,000 thousand.
(h) The Group signed a license agreement of antineoplastic candidate drug with National Health Research Institutes on April 3, 2019. The license fee amounted to $135,000 thousand and the payment will be made by progress. As of December 31, 2020, the paid portion amounted to $5,000 thousand.

(Continued)

500 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(i) Important matters

(i) Case of Kaohsiung gas explosion forced disconnected pipeline

On July 31, 2014, there was an underground pipeline explosion in Kaohsiung city. Due to the post - disaster reconstruction project, Kaohsiung City Government issued a penalty letter No. 10335137100 on August 18, 2014, to order the Company to stop operations and prohibited the use of all petrochemical pipelines in the disaster area. The Company was not satisfied with the preceding penalty and filed a legal petition to the Administrative court for revoking the original claims for petition remedy in September 2014. The case was rejected by the Kaohsiung High Administrative Court, which the Company was not satisfied with. Hence, the Company submitted an appeal in February 2017. In December, 2019, an against judgment is rendered against the Company. The Company filed an appeal to the Supreme Court in January, 2020, and this case is still being heard in the Court.

(j) Contingent liabilities

(i) The Company signed total three land lease contracts with the Kaohsiung branch of Taiwan International Ports Corporation, Ltd. In December 2013 and February 2014. The Kaohsiung Port Intercontinental Container Center 2nd Phase Project Petrochemical Oil Storage and Transportation Center S12-S15 Pier Post line Land was leased and the Company invested to build the construction of petrochemical oil storage and transportation facilities for the purpose of import and export and transport of petrochemical oil handling, storage and transportation. The Kaohsiung branch of Taiwan International Ports Corporation, Ltd. delivered the land to the Company prior to the end of December 2017. The term of the lease was 25 years from the date of delivery and the Company had the right to renew the lease at the end of the period. Per the contract, the Company had to pay rent of $1,650 thousand, $2,565 thousand and $1,493 thousand respectively since the land was delivered. 3 years and 6 months from the land delivery date, the Company paid management fees of $10,654 thousand, $24,605 thousand and $12,329 thousand respectively. The Company also placed Certificate of Deposits of $5,000 thousand and $13,000 thousand as performance bonds in December 2013 and February 2014 respectively. The Company, in August 2015, narrowed the operating scale based on the adjustment of investment plan, which resulted in one of the performance bonds of $8,000 thousand, not being returned. Taiwan International Ports Corporation, Ltd. completed the transaction procedure prior to November 2017. The Company started to implement land drilling and geological improvement project and started paying the land rent of those projects, which was $1,675 thousand and $1,497 thousand respectively each year.
(ii) Dispute from the senior manager
1) Labor Dispute

The previous senior manager Mr. Zhang, who left the Company without transferring the duties and authorization, did not perform the duties since July 1, 2013 and the Company issued the letter to request to fulfill the agreement without any response from Mr. Zhang. Hence, the Board of the Company dismissed Mr. Zhang in October 2013. Mr. Zhang asked the Company to pay pension pursuant to Labor Standards Act as a labor worker, which was not reconciled through mediation. Kaohsiung District Court considered that the assigned relationship did not end in January 2014, which means that the Expired

(Continued)

501 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Employee Retirement Policies of the Company does not apply. Mr. Zhang request for pension is without any basis, but according to the contract of both side, the Company shall pay salaries of $35 thousand, to Mr. Zhang, which was not satisfied by Mr. Zhang and this case was appealed to the 2nd sentence court. In July 2016, the 2nd sentence court rejected the request from Mr. Zhang but he re-appealed to the 3rd sentence in August of the same year. Upon finding the appeal meritorious, the Supreme Court reversed and remanded the judgement. The preparatory proceeding of the first repeated appeal was conducted in Taiwan Court Kaohsiung Branch Court in April 2019. The court’ s judgement is announced that the compony shall pay $3,785 thousand and legal rate to Mr. Zhang in july of same year. The Company is dissatisfied and filed an appeal to Supreme Court, and this case is still being heard in the Court.

2) Disclosure Secret Case

Managers who left the office without authorization were suspected to be involve in business encroachment, theft of business secrets. To protect Company interests, the Company filed criminal appeal. The case was concluded by the Taiwan Miaoli Local Court in January 2017 and the relevant defendants were prosecuted. The civil litigation derived from the case is waiting for hearing by the Taipei District Court and Miaoli District Court. Please refer to Note 7 for details of deposit for lawsuit.

(iii) Accusation of business failures

A Gas explosion happened in Heng Yi chemical plant next to the Toufen plant and caused workers to be burned on January 28, 2013, which evolved into accusations of business failures. Since the incident happened in the public discharged area of the industrial site, it was suspected to contain excessive value of the company’ s emissions with the sampling identification and the Company’ s manager was prosecuted as defendant per the victim’ s request. This case was not prosecuted after the judgment decision from Miaoli District Attorney, hence, the victims filed the reconsideration and Taichung High Prosecutor’s Office remanded the case back to the Miaoli District Attorney for review. The victims of Heng Yi chemical plant prosecuted the Company and managers in February 2015 and asked for the joint damaged compensation $6,920 thousand, which awaited hearing by Miaoli local court. In September of the same year, both sides agreed to withdraw the litigations. Trial procedure was recovered in February 2016 and criminal litigation was determined not to be prosecuted in March 2016. The verdict of civil litigation was won in March 2017, but plaintiff is dissatisfied and filed an appeal to Taiwan High Court Taichung Branch Court. On November 16, 2020, The court sentenced company win with final and binding judgment.

(iv) Contract Fraud of Shanghai industry

(Continued)

502 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Ltd. would continue negotiations on unrealized creditors and requested Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. to propose the more specific repayment plan. Weihua and Weiqiang estimated allowance of the accounts receivable to be, CNY19,274 thousand and CNY8,276 thousand respectively. Weihua and Weijiang Company reported to the police the relevant persons of Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. that were suspected to be involve with the contract fraud and other criminal matters. The police rejected the report due to insufficient evidence, therefore Weihua hired a local lawyer in May 2018, to assist with Shanghai police and Shanghai economics investigation group. Weiqiang received a ruling about Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. was filed for bankruptcy to court, there is no property could distributed, so the court made a ruling that bankruptcy proceeding is concluded. This case is ended.

(v) Civil compensation for Residents living in Anshun
1) The 1st case

In 2008 and 2009, Mr. Wu and others filed civil and national compensation lawsuit against the Ministry of Economic Affairs, Tainan City Government, Tainan City Environmental Protection Bureau and the Company (Hereinafter referred to as 1st case of Tainan Anshun plant civil compensation) and they claimed that during 1942 and 1983, the previous Taiwan Alkali Co. Ltd. Anshun plant, produced mercury and dioxins in its production operations and polluted the environment, which resulted in the population consuming contaminated fish and shellfish over time, which resulted in long term health issues. The Ministry of Economic Affairs had control and management responsibility of the previous Taiwan Alkali Co. Ltd, and whether due to illegal actions, or a lack of attention in performing their duties, the Ministry of Economic Affairs was the ultimate owner of CPDC, should take responsibility. Hence, the prosecutors claim that the Ministry of Economic Affairs shall take the responsibility for the compensation. Mr. Wu and others also claimed that Tainan City Government and Tainan City Environmental Protection Agency were the competent authorities and executive authorities of the waste disposal law but the authorities did not supervise and require the Anshun plant to implement pollution prevention and control acts, thus should be jointly responsible for any compensation. Mr. Wu and others claim that the Company did not perform any removal and remediation of pollutants after being ordered to merge with the previous Taiwan Alkali Anshun plant, so they claimed the Company shall also take joint responsibility for the compensation. Mr. Wu and others asked the Ministry of Economic Affairs, Tainan City Government, Tainan City Environmental Protection Bureau and the Company to jointly bear the cost of medical expenses and mental compensation for $370,800 thousand and the interest was calculated by an annual interest rate 5% from the date when the litigation was initiated by the defendants until the final payment of compensation. Due to unpaid referee fees, due from the plaintiff, the Tainan District Court rejected the litigation claims from these 17 persons in January 2010. Mr. Chen appealed to the Tainan District Court asking the Company for medication, health examination fee and reparations, to the amount of $2,300 thousand, which was incorporated into this case, the total compensation amount was $351,750 thousand. This case was tried by the Tainan District Court in December 2015 and judged that the Company and the Ministry of Economic Affairs to be jointly responsible for $160,000 thousand payable to the plaintiff. The Company was not satisfied with the result and filed

(Continued)

503 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

an appeal. In August of 2017, the High court sentenced the Company to compensate the plaintiff for $190,000 thousand, which the Company was not satisfied with and had proposed the appeal for remedy in September of the same year. The supreme court held oral argument on September 28, 2018, and judgment was sentenced on November 11, 2018, the supreme court sentenced to order the Company to compensate the plaintiff for $190,000 thousand. The Company made a payment of compensation and related interests to 143 plaintiffs before the end of June 2019. The part related to medical remedy of the case was abandoned for secondary trial. Plaintiff filed an appeal to Supreme Court in same year. In March 3, 2020, The court dismissed the plaintiff appeal by a ruling. This case is ended.

2) The 2nd case

(9) Losses Due to Major Disasters:None

(10) Subsequent Events:

(a) On January 25, 2021, the Company’s Board of Directors approved a resolution to increase capital by cash in the purpose of repay bank loans and business operating use.

(Continued)

504 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(11) Other:

(a) The nature of operating costs and expenses were as follows:

By function By item	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020
	Operating cost	Operating expense	Non-Operating expense	Total
Employee benefits
Salary	879,739	647,507	-	1,527,246
Labor and health insurance	83,833	52,819	-	136,652
Pension	46,593	32,056	-	78,649
Remuneration of directors	-	-	-	-
Others	39,299	24,144	-	63,443
Depreciation	1,034,412	144,931	3,933	1,183,276
Amortization	611	12,561	-	13,172

(b) On March 22, 2019, Kaohsiung Urban Planning Commission (KUPC) announced that Dashe Industrial Park (DIP), where the Company’s plant is located, will be categorized from Special Zone to Zone B. In light of this matter, all the companies involved in this case are making their best effort to negotiate and compromise with KUPC, requesting KUPC to change DIP’ s status to Zone A instead of Zone B.

(Continued)

505 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(12) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

(i) Loans to other parties:

(In Thousands of New Taiwan Dollars)

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1	Core Pacific Twin Star (Myanmar) Investment Company Ltd.	Core Pacific Pioneer (Myanmar) Company Ltd.	Other Receivable	Yes	21,236	-	-	2%	2	-	Operating	-		-	61,187	61,187
2	Jiangsu Weiming Petrochemi cal Corpor ation(Wei ming)	Changzhou Weicai New Material Science & Technolog y Co., Ltd.(Weica i)	Other Receivable	Yes	258,900	258,900	129,450	6.5%	2	-	Operating	-		-	666,772	1,000,158
3	Weihua (Rudong) Trade Co., Ltd.	Changzhou Weicai New Material Science & Technolog y Co., Ltd.(Weica i)	Other Receivable	Yes	86,300	86,300	64,725	6.5%	2	-	Operating	-		-	96,484	96,484

Note 1: Numbering nature of borrowing as follows:

Transaction for business between two parties－1

Short-term financing－2

Note 2: The financing limit was 40% of net value of Core Pacific Twin Star (Myanmar).

Note 3: The financing limit for total and individual were 15% and 10% of net value of Jiangsu Weiming Petrochemical Corporation.

Note 4: The financing limit was 20% of net value of Weihua (Rudong) Trade Co., Ltd..

Note 5: The amounts of the transaction and the ending balance had been offset in the consolidated interim financial statements.

(ii) Guarantees and endorsements for other parties:

		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CPDC	Ding-Yue Developme nt Co., Ltd	2	42,487,585	4,920,000	4,920,000	-	4,920,000	% 6.95	70,812,642	Y	N	Y
0	CPDC	Jiangsu Weiming Petrochemi cal Corpora tion(Weimi ng)	2	42,487,585	2,093,500	-	-	-	% -	70,812,642	Y	N	Y

506 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

No.	Name of guarantor	Counter-party of guarantee and endorsement L Name Relationship with the Company g	Counter-party of guarantee and endorsement L Name Relationship with the Company g	imitation on amount of uarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name
0	CPDC C S T C L i	hangzhou Weicai New Material cience & echnology o., td.(Weica )	2	42,487,585	1,220,590	1,220,590	155,797	-	% 1.72	70,812,642	Y	N	Y
0	CPDC S C I C	hiny hemical ndustrial o., Ltd	5	42,487,585	38,998	38,998	38,998	-	% 0.06	70,812,642	N	N	N

Note 1: The information of guarantees and endorsements for other parties of the Company and its subsidiaries are disclosed separately and numbering as follows:

Parent company－0

Subsidiary starts from 1

Note 2: Seven types of the relationship between Counter-party of guarantee and endorsement as follows:

Transactions between the companies.
The Company directly or indirectly holds more than 50% voting right.
When other companies directly or indirectly hold more than 50% voting rights of the Company.
The Company directly or indirectly holds more than 90% voting right.
A company that is mutually protected under contractual requirements based on the needs of the contractor.
A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.
Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title		Ending	balance		Highest Percentage of ownership (%)	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
CPDC	Yuanta Financial Holdings BES Engineering Co. China Development Financial Holding Corp Handy Chemical Corparation Ltd. Overseas Investment & Development Corp. Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials ZOWIE Technology Corporation Aetas Technology Inc. Chain Yarn Co., Ltd.	None The Company is a director of the investee company None 〞〞 Share a director with the company None 〞〞〞	Financial assets designated at fair value through profit or loss－ current Non-current financial assets at fair value through other comprehensive income 〞〞〞 Financial assets designated at fair value through profit or loss－ non-current Non-current financial assets at fair value through other comprehensive income 〞〞〞	32,176,371 164,348,449 44,684,712 407,000 2,600,000 422,250,872 2,701,651 8,815 287,961 30,000,000	661,224 1,643,484 415,568 1,461 26,000 7,832,673 113,714 358 - 300,000	0.27 10.74 0.30 4.75 2.89 27.52 14.00 0.05 0.58 13.41	661,224 1,643,484 415,568 1,461 26,000 7,832,673 113,714 358 - 300,000	% 0.27 % 10.74 % 0.30 % 4.75 % 2.89 % 27.52 % 14.00 % 0.05 % 0.58 % 13.41

507 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Highest Percentage of ownership (%)	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
BES Twin Towers Co., Ltd. P S Tsou Seen Chemical Industries Corporation Da-ying Construction Ltd. i	Taiwan Business Bank Core Pacific City Co., Ltd. raxair Chemax emiconductor Materials Taiwan Tea Corporation Good Company TaiRx, Inc. Eastspring nvestments Well Pool Money Market Fund	〞 Shares a director with the Company None 〞〞〞〞	Current financial assets at fair value through other comprehensive income Financial assets designated at fair value through profit or loss- current Financial assets at fair value through other comprehensive income non-current Financial assets designated at fair value through profit or loss- current Financial assets at fair value through other comprehensive incomenon-current 〞 Financial assets designated at fair value through profit or loss- current	945,000 160,111,000 6,754,127 8,744,000 750,000 722,500 859,845.6	321,647 2,914,182 284,284 156,518 - 14,652 11,791 14,697,556	0.01 10.43 35.00 1.11 2.08 0.81 -	321,647 2,914,182 284,284 156,518 - 14,652 11,791 14,697,556	% 0.36 % 10.43 % 35.00 % 1.11 % 2.08 % 0.81 % - % -

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginnin	g Balance	Purch	ases		Sa	les		Ending Ba	lance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Price	Cost	Gain (loss) on disposal	Shares/units	Amount
The Company	Chain Yarn Co., Ltd.	Financial assets at fair value through other comprehensive income－non- current	Chain Yarn Co., Ltd.	None	-	-	30,000	300,000	-	-	-	-	30,000	300,000

(v) Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Property, plant and equipment	September 25, 2019	465,000	186,00	0 Sunko Ink Co., Ltd.	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Business operating use	None
The Company	Property, plant and equipment	September 14, 2020	1,380,000	634,00	0 Chain Yarn Co., Ltd.	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Business operating use	None
Ding-Yue Development Co., Ltd.	Sanyu Sec., Shilin Dist., Taipei City	March 20, 2020	415,441	415,44	1 Kuan-Pin Company and others	None	Note 1	-	-	-	Appraisal reports from Real Estate Appraisers Firm	Business operating use	None

508 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Note 1: The object of the transaction owned by different related parties within 5 years, wherein a disclosure on the date of acquisition, price, and relationship with the parent company in the current period is required: N/A.

(vi) Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company CPDC Green Technology Corp.(CPDC GT) Weihua (Rudong) Trade Co., Ltd Weihua (Rudong) Trade Co., Ltd Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Tsou Seen Chemical Industries Corporation Weihua (Rudong) Trade Co., Ltd Kaohsiung Monomer Company Ltd The Company Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang) Jiangsu Weiming Petrochemical Corporation(We iming) Jiangsu Weiming Petrochemical Corporation(We iming)	Subsidiary Subsidiary Affiliated company accounted for using equity method Subsidiary same parent company same parent company same parent company	Sales Sales Sales Sales Sales Sales Sales	(510,141) (161,483) (456,452) (222,127) (231,039) (974,374) (136,651)	% (3.45) % (1.09) % (3.08) % (96.46) % (17.29) % (72.94) % (13.24)	3 Month 3 Month 1 Month Base on contract Base on contract Base on contract Base on contract	- - - - - - -	OA 90 days OA 90 days none Base on contract Base on contract Base on contract Base on contract	36,665 (1,463) 51,106 15,457 1,631 - 8,587	2.27% (0.09)% 3.16% 50.46% 16.04% -% 49.65%	Note 〞〞 Note 〞〞〞

Note: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(viii) Receivables from related parties with amounts exceeding the lower of $100 million or 20% of the capital stock:None

(ix) Trading in derivative instruments:None

(x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

No.	Name of company	Name of counter-party	Nature of relationship		Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 0 1 1	The Company The Company The Company Weihua (Rudong) Trade Co., Ltd (Weihua) Weihua (Rudong) Trade Co., Ltd (Weihua)	Tsou Seen Chemical Industries Corporation(TSCIC) Weihua (Rudong) Trade Co., Ltd (Weihua) CPDC Green Technology Corp.(CPDC GT) Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang) Jiangsu Weiming Petrochemical Corporation(Weiming)	1 1 1 5 5	Sales revenue Sales revenue Repair expense Sales revenue Sales revenue	510,141 161,483 222,127 231,039 974,374	OA 90 days OA 90 days Base on contract Base on contract Base on contract	2.90% 0.92% 1.26% 1.31% 5.54%

509 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
2	Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Jiangsu Weiming Petrochemical Corporation(Weiming)	5	Sales revenue	136,651	Base on contract	0.78%

Note 1: Company numbering as follows:

Parent company－0 Subsidiary starts from 1

Note 2: The numbering of the relationship between transaction parties as follows:

Parent company to subsidiary－1

Subsidiary to parent company－2 Subsidiary to subsidiary－3 Subsidiary to sub-subsidiary－4 Sub-subsidiary to sub-subsidiary－5

Note 3: The amounts of the transaction and the ending balance had been offset in the consolidated interim financial statement

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Highest Percentage of ownership	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2018	Shares	Percentage of ownership	Carrying value
The Company 〞〞〞〞〞〞〞	Kaohsiung Monomer Company Ltd Zhong gong baoquan Ltd. Ding-Yue Development Co., Ltd. (original name: Tao Zhu Construction & Development Co., Ltd.) CPDC Investment (BVI) Co Ltd. Tsou Seen Chemical Industries Corporation CPDC Green Technology Corp. Rich Equities Ltd. Unichem Development Limited BES Twin Tower Development Co., Ltd. Thanh Phong Construction Investment Co., Ltd.	1,Hsing Kung Road,Ta She P O Box 6-25 Nantze,Kaohsiung (815), Taiwan 2F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan Citco Building, Wickhams Cay, P.O. Box662 No.1, Jingjin Rd., Fangliao Township, Pingtung County 940, Taiwan 14F.-16, No.61, Wufu 3rd Rd., Qianjin Dist., Kaohsiung City 801, Taiwan Level3,Alexander House,35 Cybercity,Ebene, Mauritius Unit 06, G/F, The Lodge, 535 Canton Road , Kowloon, Hong Kong 16F., No.12, Dongxing Rd., Taipei City 105, Taiwan B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City	Methyl Methacrylate Monomer Security consultants Security consultants Holding company Dicalcium phosphate Mechanical engineering Holding company Holding company Real estate investment and development Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials	- 14,400 10,040,000 904,946 760,000 100,000 - 9,572,433 4,791,383 609,347	- 14,400 7,540,000 904,946 760,000 100,000 5,996 7,865,233 3,353,383 609,347	20,000,000 1,440,000 1,004,000,000 26,580,000 96,000,000 15,000,000 - 313,851,199 580,012,053 -	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % 100.00 % 100.00 % 100.00	502,002 18,311 10,002,328 903,385 1,303,241 119,730 - 8,310,551 6,219,671 578,029	159,545 (7,102) (15,858) 5,325 30,167 16,639 (66) (137,624) 352,645 16,052	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	63,818 (1,704) (15,858) 5,325 30,167 16,639 (66) (137,624) 352,645 16,052	Note 1 Note 1 Note 2&5 Note 2&4&5 Note 2&5 Note 2&5 Note 2&4&7 Note 2&4&5 Note 2&5 Note 2&3&4 &5

510 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Highest Percentage of ownership	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2018	Shares	Percentage of ownership	Carrying value
The Company CPDC Investment (BVI) Co Ltd. Ding-Yue Development Co., Ltd. Tsou Seen Chemical Industries Corporation BES Twin Towers Development Co., Ltd. Frontier Fortune vestment Pte. Ltd. Frontier Fortune vestment Pte. Ltd. Frontier Fortune vestment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd	Jean Pacific Development Co., Ltd. Core Pacific Overseas Holdings Ltd Da-ying Construction Ltd. Taivex Therapeutics Inc. Frontier Fortune vestment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd Gemini Star (India) Private Limited Core Pacific Twin Star (Vietnam) Investment Co., Ltd. Core Pacific Pioneer (Myanmar) Company Ltd	7F.-2, No.300, Yangguang St., Neihu Dist., Taipei City 11491, Taiwan (R.O.C.) Akra Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,Tortola,British Virgin Islands 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 112 ROBINSON ROAD#05-01 ROBINSON 112SINGAPORE (068902) NO.153/Ka,Kyun ShweMmyaing Lane (2) ,23 ward,Thingangyun Townshin Yangon Level7, The Capital, Plot No.C-70, G Block, Bandra Kurla Complex, Bandra MUMBAI Mumbai City MH 400051 IN B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City NO.153/Ka,Kyun ShweMmyaing Lane(2) ,23 ward,Thingangyun Townshin Yangon	Renting and selling real estate Holding company Engineering, construction contracting business Engaged in biotechnology, pharmaceutical research and development and marketing Holding company Holding company and consultancy Real estate and petrochemical products research and consultancy Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale	620,000 808,564 22,500 462,246 2,761,596 169,921 9,274 2,566,176 24,804	480,000 808,564 22,500 462,246 1,326,796 169,921 9,274 1,131,376 24,804	62,000,000 26,580,000 - 46,224,551 93,060,000 5,500,001 2,099,993 - 800,000	% 40.00 % 45.19 % 100.00 % 91.10 % 100.00 % 100.00 % 99.99 % 99.01 % 80.00	619,551 898,139 22,902 255,070 2,661,302 152,968 4,591 2,495,940 24,415	(1,010) 11,975 (1,146) (77,601) 24,302 (2,472) (2,333) 30,119 (1,920)	% 40.00 % 45.19 % 100.00 % 91.10 % 100.00 % 100.00 % 99.99 % 99.01 % 80.00	(404) - - - - - - - -	Note 1 Note 2&4&6 Note 2&3&5 &6 Note 2&5&6 Note 2&4&5 &6 〞 Note 2&4&5 &6 Note 2&3&4 &5&6 Note 2&4&5 &6

Note1: The Company adopts the equity method to evaluate the investment company.

Note3: Limited company expressed by the amount of capital, no shares issued.

Note4: The original investment amount is the foreign currency, at the prevailing exchange rate.

Note5: This transaction has been written off when the consolidated statement has been prepared.

511 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(c) Information on investment in mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2020	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Percentage of ownership	Highest percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
Weihua (Rudong) Trade Co., Ltd (Weihua)	Engaged in Chemical storage, wholesale, import and export, commission agent, etc.	763,460	( 2 )、 ( 3 )	763,460	-	-	763,460	8,320	100.00%	100.00%	8,320	482,983	-
Weiqiang International Trade (Shanghai) Co., Ltd.(Weiqiang)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading.	211,560	( 1 )、 ( 3 )	211,560	-	-	211,560	6,085	100.00%	100.00%	6,085	128,444	-
Weida (Zhangzhou) Consultant Service Co., Ltd. (Weida)	Consultancy	-	( 2 )	13,171	-	(13,171)	-	(250)	-%	-%	(250)	-	-
Jiangsu Weiming Petrochemical Corporation(W eiming)	Petrochemical supporting facility construction	7,421,663	( 1 )、 ( 2 )	5,714,463	1,707,200	-	7,421,663	(114,280)	100.00%	100.00%	(114,280)	6,675,456	-
Zhangzhou Weida Petrochemical Co., Ltd(Weida PC)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading	30,648	( 2 )	30,648	-	-	30,648	(196)	100.00%	100.00%	(196)	14,069	-
Kunshan Weiqin Management consultant Co., Ltd (Weiqin) (Note 5)	Management consultant	-	( 2 )	29,664	-	(29,664)	-	(906)	-%	-%	(906)	-	-
Changzhou Weicai New Material Science & Technology Co., Ltd.(Weicai)	Engaged in engineering plastic and high valued petroleum chemical products	1,860,113	( 2 )	1,324,893	-	-	1,324,893	(31,894)	100.00%	100.00%	(31,894)	1,010,920	-
Weiming (Rudong) Construction Co., Ltd	Engaged in engineering consultant services、engineering construction、 engineering management、trading of petroleum chemical product	4,319	( 3 )	-	-	-	-	(22)	100.00%	100.00%	(22)	4,293	-

512 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
14,362,341	-	Note 4

Note1: There are three ways to invest as follows:

(a) The Company directly invests in China.
(b) The Company through third regional company (UDL) invests in China.
(c) Others. (The Company through subsidiaries invest in China.)

Note2: Explanation for the field “net income (losses) of the investee” :

(a) If it is in preparation, no investment profit or loss.
(b) There are three ways to identify the basis of investment profit or loss.
(b.1) financial statements audit by an international accounting firm with a relationship with a Taiwan accounting firm.
(b.2) financial statements audit by the Company’s audit CPA.
(b.3) others.

Note3: The amount in this table are presented in New Taiwan Dollar.

Note4: The cumulative investment amount or investment proportion to China cannot be over the Company’s net value of 60%. The Company obtained certified documents of operating headquarters issued by Industrial Development Bureau, Ministry of Economic Affairs on October 18, 2018, and so is not subject to the above regulations. Valid until October 14, 2021.
Note5: Weida and Weiqin were both dissolved and the liquidation process had been completed in July and December 2020, respectively.

(iii) Significant transactions:

The significant inter-company transactions with subsidiaries in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

(d) Major shareholders:None
513 -

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(13) Segment information:

(a) General Information

The Group identifies Arylonitrile & Acetic Acid Department and Caprolactam department as reportable segments based on factors such as product types, manufacturing procedure, customer types, and operating activities.

The reportable segments of the Consolidated Company are independent business units which offer different products and services. Each business unit needs different technologies, resources and marketing strategies, thus should administer separately. The operating segment has a segment manager who is directly accountable to and maintains regular contact with the chief operating decision maker to discuss operating activities, financial results, forecasts, or plans for the segment.

(b) Information for each segment's revenue / expense, asset, liability, measurement basis, and adjustment

There was no material inconsistency between the accounting policies adopted for the operating segment and the accounting policies described in Note 3. The Consolidated Company use the operating profit as the measurement for segment profit and the basis of performance assessment. Operating segments’ profit and loss and total assets exclude operating expenses and assets of the corporate management.

For the year ended December 31, 2020 Revenue Revenues from external customers Revenues from transactions with other operating segments of the same entity Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure of non- current assets Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 7,350,448 - $ 7,350,448 $ 219,245 $ 362,249 $ 603,371 $ 5,799,465 $ 2,664,825	Caprolactam 6,770,305 - 6,770,305 573,197 (973,809) 854,502 11,486,818 5,203,961	Other 6,481,608 222,127 6,703,735 404,006 842,995 2,637,284 89,489,119 27,285,582	Adjustment and eliminations - (222,127) (222,127) - - - - -	Total 20,602,361 -
					20,602,361
					1,196,448
					231,435
					4,095,157
					106,775,402
					35,154,368

(Continued)

514 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES Notes to the Consolidated Financial Statements

(c) Geographical Areas

The Group’ s non-current assets located overseas are immaterial. Revenues from domestic and overseas customers for the year ended December 31, 2020 were as follows:

		For the year
		ended
		December 31,
Region		2020
Operating revenue from domestic sales	$	13,200,645
Asia		7,353,061
Other (individual areas under 10%)		48,655
Total operating revenue	$	20,602,361

(d) Major Customers

Customers generating over 10% of total revenue for the year ended December 31, 2020 were as follows:

follows:
			For the year
			ended
			December 31,
	Customers		2020
1001		$	3,977,916

515 -

(III) Affiliate Reports: None

II. Private placement of securities for the most recent year and until the date of publication of the annual report: None.
III. Holding or disposal of the Company's stock by subsidiaries for the most recent year and until the date of publication of the annual report: None.
IV. Supplementary Disclosure: None.
V. Conditions that will materially affect shareholders' equity or price of securities as referred to in Paragraph 2.2 of Article 36 of the Securities and Exchange Act:

Please refer to annual report Pages 394~407 of the about litigations. Please refer to Pages 194~ 200 and Pages 242~248 about the land pollution case and the significant contingent liabilities and unrecognized contractual commitments referred to in the notes to financial statements.

516 -

==> picture [87 x 43] intentionally omitted <==

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Chairman: Ruey-Long Chen

==> picture [44 x 45] intentionally omitted <==

AI assistant

CPDC — Annual Report 2020

51772_rns_2021-07-14_bed1e4e5-a060-4eee-8ace-2525b1bb6c68.pdf

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Annual Report 2020

I. Company spokesman and deputy spokespersons:

II. Company and Plant address and Tel. Nos:

III. Shares Registrar:

Chapter 1 Message to Shareholders

To All Shareholders:

I. 2020 Operating Report

(I) Sales of Major Products:

Annual Income Statement

1. Operating Revenue

4. HR Management:

5. Financial Planning:

6. Corporate Social Responsibility:

(V) Future Prospect and R&D:

(VI) Management Principles and Future Operational Outlook:

Chapter 2 Introduction to Company

I. Date of Incorporation

II. Company Profile

Chapter 3 Report on Corporate Governance

I. Organization

1. President's Office

6. Commerce Department

7. Petrochemical Production Department

8. Finance Department

10. Land Development Department

11. New Venture Department

II. Information About Director, President, Vice President, Assistant Vice President, and Head of Department and Branch

(I) Information about directors

1. Information about directors

2. Major shareholders of corporate shareholders

(II) Information about President, Vice President, Assistant Vice President, and Head of Department and Branch

III. Remuneration to Directors (including Independent Directors), President and Vice Presidents

(II) Remuneration to President and Vice President (Summarized in accordance with the Range of Remuneration disclosed)

Breakdown of Remuneration

IV. Implementation of Corporate Governance

(I) Operations of the Board

of Treasury Shares".

2020 Board of Directors Performance Evaluation

(IV) Establishment, functions, and operations of Remuneration Committee, if any:

(III) Information about Remuneration Committee Members:

Implementation effectiveness of the CPDC CSR Committee in 2020

4. Continuing education of directors/managers:

(IX) Disclosure of internal control system:

China Petrochemical Development Corporation Declaration of Internal Control System

March 23, 2021

(1) Important resolutions made by shareholders' meeting

V. Information on CPA Professional Fees

IX. Relationship among the Top 10 Shareholders

X. Ratio of Combined Shareholding

Chapter 4 Status of Fund Raising

I. Capital Stock and Shares

(I) Source of Capital Stock

(III) Diversification of equity

Preferential Stock

II. Issuance of Corporate Bonds

(I) Issuance of Domestic Convertible Corporate Bonds

III. Issuance of Preferred Shares: None.

IV. Status of Participation in Issuance of "Global Depository Receipts (GDRs)":

V. Status of Employee Stock Option: None.

VIII. Implementation of Capital Utilization Plan

Chapter 5 Operations Overview

I. Business contents

3. Current products

4. New products to be developed

(II) Industry overview

1. Current status and development

(1) Acrylonitrile (AN or ACN)

(2) Caprolactam (CPL)

(3) Nylon Chips (NY6 or PA6)

(4) O-phenylphenol (OPP)

(1) Acrylonitrile (AN or ACN)

(2) Caprolactam (CPL)

(III) Technology and R&D

3. Current Patent Status

(IV) Long- and Short-Term Business Development Plans

A. Petrochemical Business:

CPDC Annual Report 2020