Stock Code:1314

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2022 and 2021

Address: No.1, Jingjian Rd., Dashe Dist., Kaohsiung City 815, Taiwan (R.O.C.) Telephone: 886-7-351-3521

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

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Consolidated Balance Sheets 5. Consolidated Statements of Comprehensive Income 6. Consolidated Statements of Changes in Equity 7. Consolidated Statements of Cash Flows 8. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (14) Segment information	Page
	1 2 3 4 5 6 7 8 8 8～9 10～31 31～32 33～102 102～106 106 107～110 110 110 111 112～115 115～116 116～117 118～119

Contents
1. Cover Page
2. Table of Contents
3. Independent Auditors’ Report
4. Consolidated Balance Sheets
5. Consolidated Statements of Comprehensive Income
6. Consolidated Statements of Changes in Equity
7. Consolidated Statements of Cash Flows
8. Notes to the Consolidated Financial Statements
(1)
Company history
(2)
Approval date and procedures of the consolidated financial statements
(3)
New standards, amendments and interpretations adopted
(4)
Summary of significant accounting policies
(5)
Significant accounting assumptions and judgments, and major sources of
estimation uncertainty
(6)
Explanation of significant accounts
(7)
Related-party transactions
(8)
Pledged assets
(9)
Commitments and contingencies
(10) Losses Due to Major Disasters
(11) Subsequent Events
(12) Other
(13) Other disclosures
(a) Information on significant transactions
(b) Information on investees
(c) Information on investment in mainland China
(14) Segment information

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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, 2022 and 2021, 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, 2022 and 2021, 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 audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of 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 Norm of Professional Ethics for Certified Public Account of Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 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(r) 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.

3-1

Other Matter

CPDC has prepared its parent-company-only financial statements as of and for the years ended December 31, 2022 and 2021, on which we have issued an unmodified opinion with an Emphasis of Matter paragraph and an Other Matter paragraph.

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 Therapeutics Corporation reflect total assets constituting 0.26% and 0.15% of consolidated total assets at December 31, 2022 and 2021, respectively, and total operating revenues constituting both 0% of consolidated total operating revenues for the years then ended, respectively.December 31, 2022

We did not audit the financial statements of certain investee corporations, associates of the Group, which represented investments in other entities accounted for using the equity method. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for certain investee corporations, is based solely on the reports of other auditors. The investments in certain investee corporations accounted for using the equity method constituting 4.04% and 0.95% of consolidated total assets at December 31, 2022 and 2021, respectively, and the related share of profit of associates accounted for using the equity method constituting 19.57% and 8.44% of consolidated profit before income tax for the years then ended, 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(x) “ 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, assessing whether appropriate revenue recognition policies are applied through comparison with accounting standards;
． Analyzing and comparing 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;
． Testing revenue transactions recorded around the year end by vouching relevant documents to ensure that the revenue is accurately recognized in the correct accounting period.

3-2

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 28% of consolidated total assets as of December 31, 2022, 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 19% of consolidated total assets as of December 31, 2022, 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 the CGU 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:

． Regarding CGUs identified with signs of impairment, we obtained the evaluation issued by the management in order to assess whether current operating conditions, historical trends, and industryspecific situation were taken into account while considering the future operating cash flows.
． Regarding CGUs tested for impairment, the valuation specialist from our firm assisted in evaluating whether the assumptions and the parameters of the weighted average cost of capital as well as its relevant factors used by the management for measuring the recoverable amount were reasonable through comparing with the current and industry-specific situation.

3-3

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 Standards on Auditing of 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 the Standards on Auditing of the Republic of China, we exercise professional judgment and 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.

3-4

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 Wu Cheng Yen and Chen Mei Fang.

KPMG

Taipei, Taiwan (Republic of China) March 13, 2023

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.

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

Consolidated Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1120 Current financial assets at fair value through other comprehensive income (note 6(c)) 1170 Notes and accounts receivable, net (note 6(d)) 1180 Accounts receivable due from related parties, net (notes 6(d) and 7) 1200 Other receivables (notes 6(d) and 7) 1220 Current tax assets 130X Inventories (note 6(e)) 1410 Prepayments 1470 Other current assets (note 6(f)) Total current assets Non-current assets: 1510 Non-current financial assets at fair value through profit or loss (note 6(b)) 1517 Non-current financial assets at fair value through other comprehensive income (note 6(c)) 1551 Investments accounted for using equity method (note 6(g)) 1600 Property, plant and equipment (note 6(h)) 1755 Right-of-use assets (note 6(i)) 1760 Investment property, net (note 6(j)) 1780 Intangible assets (note 6(k)) 1840 Deferred income tax assets (note 6(u)) 1900 Other non-current assets (note 8) Total non-current assets Total assets	December 31, 2022 Amount % $ 6,824,456 5 329,931 - 18,122 - 1,498,413 1 261,200 - 108,761 - 27,248 - 47,941,867 34 1,346,163 1 6,242,892 5 64,599,053 46 45,054 - 1,326,664 1 6,322,678 5 27,190,100 19 874,654 1 40,181,547 28 182,616 - 11,009 - 389,554 - 76,523,876 54 $ 141,122,929 100	Retrospective restatement December 31, 2021 Amount % 7,650,122 6 357,219 - 9,674 - 3,391,732 3 477,344 - 115,814 - 6,104 - 42,131,583 31 1,738,875 1 1,476,978 1 57,355,445 42 6,973,779 5 3,050,053 2 2,329,486 2 25,119,743 19 864,464 1 38,867,067 29 172,308 - 11,023 - 497,942 - 77,885,865 58 135,241,310 100	Retrospective restatement January 1, 2021 Amount % 7,479,899 7 829,533 1 9,195 - 1,784,564 2 51,106 - 144,294 - - - 12,665,959 12 1,246,404 1 2,878,214 3 27,089,168 26 10,746,855 10 2,799,521 3 2,038,003 2 23,125,654 22 872,937 1 37,626,827 36 159,173 - 11,023 - 339,528 - 77,719,521 74 104,808,689 100 Liabilities and Equity Current liabilities: 2100 Short-term loans (note 6(l)) 2110 Short-term bills payable (note 6(o)) 2130 Current contract liabilities (note 6(x)) 2170 Accounts payable 2180 Accounts payable to related parties (note 7) 2200 Other payables (notes 6(v) and 7) 2230 Current tax liabilities 2250 Current provisions (notes 6(r) and 6(t)) 2280 Current lease liabilities (note 6(q)) 2320 Long-term liabilities, current portion (notes 6(m) and 6(n)) 2399 Other current liabilities, others Total current liabilities Non-Current liabilities: 2530 Bonds payable (note 6(n)) 2540 Long-term loans (note 6(m)) 2550 Non-current provisions (notes 6(r) and 6(t)) 2570 Deferred income tax liabilities (note 6(u)) 2580 Non-current lease liabilities (note 6(q)) 2611 Long-term bills payable (note 6(p)) 2670 Other non-current liabilities, others Total non-current liabilities Total liabilities Equity attributable to owners of parent: 3110 Ordinary shares (note 6(v)) 3200 Capital surplus (note 6(v)) Retained earnings (note 6(v)): 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings Other equity (note 6(v)): 3410 Exchange differences on translation of foreign financial statements 3420 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Total equity attributable to shareholders of the parent: 36XX Non-controlling interests Total equity Total liabilities and equity	December 31, 2022 Amount % $ 16,023,388 11 1,427,706 1 65,846 - 1,510,965 1 753 - 2,048,938 2 24,031 - 885,021 1 60,864 - 3,299,685 2 19,378 - 25,366,575 18 4,545,992 3 15,130,090 11 2,077,512 2 7,251,744 5 249,495 - 6,821,433 5 161,839 - 36,238,105 26 61,604,680 44 37,848,502 27 1,579,658 1 2,884,198 2 38,066,198 27 (12,424) - 40,937,972 29 (512,359) (1) (464,301) - (976,660) (1) 79,389,472 56 128,777 - 79,518,249 56 $ 141,122,929 100	Retrospective restatement December 31, 2021 Amount % 12,737,689 10 1,429,955 1 20,612 - 1,759,025 1 11,333 - 2,564,997 2 39,477 - 478,734 - 56,324 - 1,511,515 1 127,720 - 20,737,381 15 4,684,096 4 13,905,589 10 3,200,532 2 6,764,316 5 240,124 - 5,254,518 4 140,232 - 34,189,407 25 54,926,788 40 37,848,502 28 1,454,301 1 2,389,125 2 35,390,076 26 4,738,292 4 42,517,493 32 (950,314) (1) (576,946) - (1,527,260) (1) 80,293,036 60 21,486 - 80,314,522 60 135,241,310 100	Retrospective restatement January 1, 2021 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 1,187,113 1 39,099,916 37 (966,633) (1) (854,259) (1) (1,820,892) (2) 70,711,341 68 55,389 - 70,766,730 68 104,808,689 100

See accompanying notes to consolidated financial statements.

(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, 2022 and 2021

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

4000 Operating revenues (notes 6(x) and 7) 5000 Operating costs (note 6(e)) Gross (loss) profit from operations 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 Net operating (loss) income Non-operating income and expenses: 7100 Interest income (note 6(z)) 7010 Other income (notes 6(z) and 7) 7020 Other gains and losses (note 6(z)) 7050 Finance costs (notes 6(q) and (z)) 7060 Shares of profit (loss) of associates and joint ventures accounted for using equity method, net (note 6(g)) 7140 Gains recognized in bargain purchase transaction (note 6(g)) 7673 Impairment loss on property, plant and equipment (notes 4 and 6(h)) 7255 Gains on fair value adjustment, investment property (note 6(j)) Total non-operating income and expenses Profit before income tax 7950 Less: income tax expense (note 6(u)) Profit 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 (note 6(t)) 8316 Unrealized (losses) gains from investments in equity instruments measured at fair value through other comprehensive income (note 6(v)) 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 (note 6(v)) 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 on translation of foreign financial statements (note 6(v)) 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 (note 6(v)) 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, net of tax 8500 Total comprehensive income Profit 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 (expressed in dollars) (note 6(w)) 9750 Basic earnings per share 9850 Diluted earnings per share	2022 Amount % $ 25,027,795 100 26,261,243 105 (1,233,448) (5) 1,218,873 5 979,322 4 411,946 1 2,251 - 2,612,392 10 (3,845,840) (15) 256,587 1 514,861 2 57,906 - (455,640) (2) 141,773 1 2,739,244 11 - - 1,314,480 5 4,569,211 18 723,371 3 517,974 2 205,397 1 81,962 - (234,022) (1) (33,990) - - - (186,050) (1) 467,450 2 (29,772) - - - 437,678 2 251,628 1 $ 457,025 2 $ 233,114 1 (27,717) - $ 205,397 1 $ 485,019 2 (27,994) - $ 457,025 2 $ 0.06 $ 0.06	Retrospective restatement 2021 Amount % 35,163,380 100 30,178,509 86 4,984,871 14 901,185 3 1,217,655 3 461,963 1 1,175 - 2,581,978 7 2,402,893 7 188,200 1 486,612 1 (1,199,926) (3) (323,681) (1) 325,902 1 - - (915,669) (3) 2,913,775 8 1,475,213 4 3,878,106 11 393,451 1 3,484,655 10 (78,291) - 252,449 1 29,096 - - - 203,254 1 9,571 - 5,104 - - - 14,675 - 217,929 1 3,702,584 11 3,491,636 10 (6,981) - 3,484,655 10 3,711,209 11 (8,625) - 3,702,584 11 1.06 1.06

See accompanying notes to consolidated financial statements.

(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, 2022 and 2021 (Expressed in Thousands of New Taiwan Dollars)

				Equity attributable	Equity attributable	o owners of parent				Non-controlling interests	Total equity
Ordinary shares		Capital surplus		Retained earnings			Total other equity interest		Total equity attributable to owners of parent
							Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income
			Legal reserve		Special reserve	Unappropriated retained earnings
$ 32,848,502 - 32,848,502 - - - - - 5,000,000 - - - - 37,848,502 - - - - - - - - - $ 37,848,502		583,815 -	2,311,174 -		35,601,629 -	1,287,983 (100,870) 1,187,113 3,491,636 (75,443) 3,416,193 (77,951) (1,210,033) - - - 1,384 1,421,586 4,738,292 233,114 94,328 327,442 (495,073) (2,676,122) (1,513,940) - - (393,023) (12,424)	(966,202) (431) (966,633) - 16,319 16,319 - - - - - - - (950,314) - 437,955 437,955 - - - - - - (512,359)	(854,259) - (854,259) - 278,697 278,697 - - - - - (1,384) - (576,946) - (280,378) (280,378) - - - - - 393,023 (464,301)	70,812,642 (101,301) 70,711,341 3,491,636 219,573 3,711,209 - - 5,869,362 1,124 - - - 80,293,036 233,114 251,905 485,019 - - (1,513,940) 125,357 - - 79,389,472	55,389 - 55,389 (6,981) (1,644) (8,625) - - - (1,124) (24,154) - - 21,486 (27,717) (277) (27,994) - - - (125,357) 260,642 - 128,777	70,868,031 (101,301)
	32,848,502	583,815	2,311,174		35,601,629						70,766,730
	- -	- -	- -		- -						3,484,655 217,929
	-	-	-		-						3,702,584
	- - 5,000,000 - - - -	- - 869,362 1,124 - - -	77,951 - - - - - -								- - 5,869,362 - (24,154) - -
	37,848,502 - -	1,454,301 - -	2,389,125 - -								80,314,522 205,397 251,628
	-	-	-								457,025
	- - - - - -	- - - 125,357 - -	495,073 - - - - -								- - (1,513,940) - 260,642 -
	$ 37,848,502	1,579,658	2,884,198								79,518,249

See accompanying notes to consolidated financial statements.

(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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss Net gain on financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using equity method Loss on disposal of property, plant and equipment Gain on disposal of investment properties Impairment loss on non-financial assets Gain on fair value adjustment of investment property Unrealized remediation expense Gain on lease modification Gain recognized in bargain purchase transaction Impairment loss on property, plant and equipment Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable Decrease (increase) in accounts receivable due from related parties Decrease (increase) in other receivables Increase in inventories Decrease (increase) in prepayments Increase in other current assets Total changes in operating assets Increase in contract liabilities (Decrease) increase in accounts payable (Decrease) increase in accounts payable to related parties (Decrease) increase in other payable Decrease in provisions (Decrease) 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	For the years end	ed December 31 Retrospective restatement 2021 3,878,106 1,110,782 9,189 1,175 (193,148) 323,681 (188,200) (313,215) (325,902) 33 (706,465) 14,854 (2,913,775) 1,664,899 (34) - 915,669 (600,457) (3,703,111) (426,238) (17,179) (29,480,480) (498,920) (87,076) (34,213,004) 18,936 364,097 11,333 1,138,895 (119,026) 66,809 1,481,044 (32,731,960) (33,332,417) (29,454,311) 209,524 (323,396) (92,459) (29,660,642)
	2022 $ 723,371 1,289,752 8,879 2,250 (21,965) 455,640 (256,587) (328,166) (141,773) 1,174 - 141,824 (1,314,480) - (17) (2,739,244) - (2,902,713) 290,043 216,144 40,102 (5,918,812) 392,712 (370,265) (5,350,076) 45,234 (248,060) (10,580) (485,207) (636,030) (108,342) (1,442,985) (6,793,061) (9,695,774) (8,972,403) 223,538 (397,182) (67,122) (9,213,169)

See accompanying notes to consolidated financial statements.

7-1

(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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

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 Proceeds from capital reduction 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 Proceeds from capital reduction of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Proceeds from disposal of investment properties (Increase) decrease in other financial assets Decrease (increase) in other non-current assets Dividends received Proceeds from cancellation of property purchasing Net cash flows from investing activities Cash flows from (used in) financing activities: Increase in short-term loans Decrease in short-term loans Increase in short-term bills payable Decrease in short-term bills payable Proceeds from issuing bonds Repayments of 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) increase 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 Retrospective restatement 2021 - 1,438 - (667,920) 1,311,894 3,794,637 (4,081,974) 746 (23,954) 2,380,000 1,488,312 (158,644) 367,976 186,000 4,598,511 25,516,793 (14,298,145) 1,429,955 - 1,209,096 - 36,715,971 (32,990,955) 42,437,700 (40,590,500) (60,028) 12,631 - 5,869,362 (5,604) - 25,246,276 (13,922) 170,223 7,479,899 7,650,122
	2022 $ (5,000) - 15,000 (169,831) $ 181,129 - (3,211,254) 328 (4,619) - (4,395,649) 108,260 7,687,658 - 206,022 15,669,226 (10,965,894) - (38,341) - (25,000) 17,001,501 (14,178,562) 48,570,000 (47,000,000) (75,152) 21,607 (1,513,940) - (4,956) 260,642 7,721,131 460,350 (825,666) 7,650,122 $ 6,824,456

See accompanying notes to consolidated financial statements.

(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, 2022 and 2021

(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 (hereinafter together referred to as the “ Group” ) 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 and nylon.

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

These consolidated financial statements for the year ended December 31, 2022 and 2021 were authorized for issue by the Board of Directors on March 13, 2023.

(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. which have already been adopted.

The details of impact on the Group’s adoption of the new amendments beginning January 1, 2022 are as follows：

－
(i) Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

The amendment prohibits an entity from deducting from the cost of an item of property, plant and equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a machine to ensure if it is functioning properly). The proceeds from selling such samples, together with the costs of producing them, shall be recognized in profit or loss.

The amendments also clarify that testing whether an item of PPE is functioning properly means assessing its technical and physical performance rather than assessing its financial performance – e.g. assessing whether the PPE has achieved a certain level of operating margin.

The amendments apply retrospectively, but only to items of property, plant and equipment made available for use on or after January 1, 2021. The application of the amendments resulting in the property, plant and equipment to decrease by $101,301 thousand, the exchange differences on translation of foreign financial statements to decrease by $431 thousand, and the unappropriated earnings to decrease by $100,870 thousand, respectively, on January 1, 2021; as well as the property, plant and equipment to decrease by $213,898 thousand, the exchange differences on translation of foreign financial statements to decrease by $1,455 thousand, and

the unappropriated earnings to decrease by $212,442 thousand, respectively, on December 31, 2021; an increase of $111,572 thousand on operating costs, and both the basic and diluted earnings per share to decrease by $0.03 for the year ended December 31, 2021. There is no impact on the cash flows in the said period.

(Continued)

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

In addition, if the Group had applied its previous accounting policy, the property, plant and equipment would be increased by $42,675 thousand, the exchange differences on translation of foreign financial statements to increase by $233 thousand, and the retained earnings would be increased by $42,442 thousand, respectively, on December 31, 2022. The operating costs decreased by $42,442 thousand for the year ended December 31, 2022, and both the basic and diluted earnings per share to increase by $0.01 for the year then ended. There is no impact on the cash flows in the said period.

(ii) Other amendments

The following new amendments, effective January 1, 2022, do not have a significant impact on the Group’s consolidated financial statements:

－
●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”
(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, 2023, would not have a significant impact on its consolidated financial statements:

●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”
●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”
(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

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

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●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 1 “Non-current Liabilities with Covenants”
●Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “
●IFRS16 “Requirements for Sale and Leaseback Transactions”

(Continued)

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

(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..

(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 4(r)).
(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.

(Continued)

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

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.

(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 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 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	Shareholding rat	Shareholding rat	io January 1, 2021 Notes % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 Note 1 % 0.37 Note 1 % 44.52 % 100.00 % 100.00 Note 2
			December 31, 2022 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 0.31 % 44.52 % 100.00 % 100.00	December 31, 2021 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 0.36 % 44.52 % 100.00 % 100.00
The Company The Company The Company The Company The Company The Company The Company The Company The Company	Tsou Seen Chemical Industries Corporation (TSCIC) CPDC Green Technology 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 New Material Co., Ltd. (Weiming) (original name: Jiangsu Weiming Petrochemical Corporation) Weiqiang International Trade (Shanghai) Co., Ltd. (Weiqiang) Thanh Phong Construction Investment Co., Ltd. (Thanh Phong) Ding-Yue Development Co., Ltd. (Ding-Yue)

(Continued)

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

Name of investors	Name of subsidiaries	Nature of business 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 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 trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub fitted trading 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 Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale Engineering, construction contracting business	Shareholding rat	Shareholding rat	io January 1, 2021 Notes % 4.02 % 55.48 % 91.10 Note 3 % 99.63 Note 1 % 95.98 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 99.99 % 99.01 Note 4 % 80.00 % 100.00
			December 31, 2022 % 4.02 % 55.48 % 65.34 % 99.69 % 95.98 % - % 100.00 % 100.00 % 100.00 % 100.00 % 99.99 % 100.00 % 80.00 % 100.00	December 31, 2021 % 4.02 % 55.48 % 91.10 % 99.64 % 95.98 % - % 100.00 % 100.00 % 100.00 % 100.00 % 99.99 % 100.00 % 80.00 % 100.00
TSCIC TSCIC TSCIC UDL UDL UDL UDL Weiming BES Twin Towers Frontier Fortune Frontier Fortune Frontier Fortune Core Pacific Twin Star (Myanmar) Ding-Yue	Weihua (Rudong) Trade Co., Ltd. (Weihua) Weiqiang Taivex Therapeutics Corporation (Taivex) Weiming Weihua Zhangzhou Weida Petrochemical Co., Ltd. (Weida PC) 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)) 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)

Note1: Weiming increased its capital through UDL amounting to CNY200,000 thousand, CNY20,000 thousand, CNY13,000 thousand, and CNY70,000 thousand on April 26, March 23, January 5, 2022 and June 28, 2021, respectively.

Note2: Ding-Yue increased its capital amounting to $1,000,000 thousand, $2,420,000 thousand, $11,340,000 thousand and $4,200,000 thousand on May 11, March 14, 2022, November 1 and June 16, 2021, respectively. Ding-Yue has a significant impact on the consolidated financial statements, and it has been declared as an important subsidiary of the Company since December 28, 2021.

Note3: On February 16, 2022, the Board of Directors of Taivex decided to increase the capital in cash. The company did not subscribe according to the shareholding ratio, so the shareholding ratio dropped to 65.34%.

Note4: Core Pacific Twin Star (Vietnam) had reached agreement on cancellation of shares with the noncontrolling interests, who owned 0.99% of outstanding shares on August 10, 2021. After the cancellation, Frontier Fortune owned Core Pacific Twin Star (Vietnam) 100.00% of outstanding shares.

(Continued)

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

(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.
(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.

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES 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, except for those related to land development, which usually have a business cycle longer than one year;
(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, except for those related to land development, which usually have a business cycle longer than one year;
(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

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.

(Continued)

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

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.

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.

(Continued)

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

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.

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.

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.

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES 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.

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
． 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.

(Continued)

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

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 creditimpaired 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 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.

(Continued)

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

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

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 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.

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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 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.

(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.

(Continued)

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

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 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.

(Continued)

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

(l) Property, plant and equipment
(i) Recognition and measurement

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

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

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

(ii) Subsequent 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.

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.

(Continued)

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

(m) Leases

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:

(i) 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
－ 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

(Continued)

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

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 buyerlessor. 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.

(ii) 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)

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

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)

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)

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)

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 thennet defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

(Continued)

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)

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)

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

(w) Changes in accounting policies

－ In accordance with IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”, the changes in accounting policy shall be applied retrospectively. The results are summarized as follows.

January 1, 2021 Consolidated balance sheets	As previously reported $ 23,226,955 (966,202) 1,287,983 As previously reported $ 25,333,641 (948,859) 4,950,734 For the year	Impact of changes in accounting policies As restated (101,301) 23,125,654 (431) (966,633) (100,870) 1,187,113 Impact of changes in accounting policies As restated (213,898) 25,119,743 (1,455) (950,314) (212,442) 4,738,292 ended December 31, 2021 Impact of changes in accounting policies As restated 111,572 30,178,509
Property, plant and equipment Exchange differences on translation of foreign financial statements Unappropriated earnings December 31, 2021 Consolidated balance sheets
Property, plant and equipment Exchange differences on translation of foreign financial statements Unappropriated earnings Consolidated statements of comprehensive income
	As previously reported $ 30,066,937
Operating costs

(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.

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES 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

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.

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).
(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(aa) - Financial instruments.

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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, 2022 $ 1,319 2,913,549 3,909,588 - $ 6,824,456	December 31, 2021 1,726 2,923,423 4,724,973 - 7,650,122	January 1, 2021
			1,806 3,668,398 3,659,705 149,990
			7,479,899

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(aa) 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 Structured deposits Stocks listed on domestic markets Stocks listed on foreign markets Subtotal Non-current financial assets designated at fair value through profit or loss: Stocks unlisted on domestic markets Total	December 31, 2022 $ 5,345 - 324,570 16 329,931 45,054 $ 374,985	December 31, 2021 - 22,226 334,993 - 357,219 6,973,779 7,330,998	January 1, 2021
			11,791 - 817,742 -
			829,533
			10,746,855
			11,576,388

Please refer to note 6(z) for the gain or loss on financial assets recognized at fair value through profit or loss.

(Continued)

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

The Group held common and preferred stock of Core Pacific City Co., Ltd., wherein the preferred stocks which were converted into common stocks on October 22, 2021 were recognized as noncurrent financial assets at fair value through profit or loss. The asset is held within a business model whose objective is for financial investment. The Group does not have a representative at the board of directors or participate in the financial and operating policy decisions of the investee. Therefore, the Group does not have significant influence over the investee. A resolution was made during the extraordinary shareholders’ meeting of Core Pacific City Co., Ltd. on November 8, 2021 to reduce its capital by buying back and cancelling its shares to eliminate the accumulated losses of $5,245,397 thousand and $9,998,925 thousand, respectively, with the effective date set on the same date. The Group received the payment of $3,794,637 thousand of the shares that were bought back on November 11, 2021. The Group recognizes the changes in fair value in profit or loss according to the valuation report. The Group or the external appraisers used the net asset value method and relevant return rate to determine the fair value on valuation date. The amount accounted for gain from investments in equity instruments at fair value through profit or loss was $37,837 thousand and $21,561 thousand for the years ended December 31, 2022 and 2021, respectively.

Core Pacific City Co., Ltd. approved the earning distribution during its shareholders’ meeting on February 23, 2022, which was also the base date. On February 25, 2022, the Group received the cash dividends amounting to $6,966,562 thousand, and the related fair value was adjusted and presented as a net amount.

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, 2022 and 2021 and January 1, 2021.

Equity investments at fair value through other comprehensive income - current： Stock listed on domestic markets Beneficiary certificates Subtotal 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, 2022 $ 13,122 5,000 18,122 563,027 763,637 1,326,664 $ 1,344,786	December 31, 2021 9,674 - 9,674 2,270,979 779,074 3,050,053 3,059,727	January 1, 2021
			9,195 -
			9,195
			2,059,052 740,469
			2,799,521
			2,808,716

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.

(Continued)

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

The Group was elected as the chairman of BES Engineering Corporation on June 13, 2022, wherein the Group obtained significant influence over it, resulting in the investment of the Group to be reclassified from financial assets at fair value through other comprehensive income to investments accounted for using equity method. Upon the reclassification, the fair value was $1,470,919 thousand and the cumulative loss $393,023 thousand was transferred to retained earnings. Please refer to note 6(g) about other related information.

Please refer to note 6(v) for the gain or loss on financial assets recognized at fair value through other comprehensive income.

The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as “Praxair Inc.”) 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 Inc., 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 criminal and 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 Inc., 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 Inc. exists. On November 9, 2016, the letter from Ministry of Economic Affairs states that the former chairman of directors, appointed by the Company, is the Chairman of Praxair Inc., 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 Inc.. 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 2018 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 Praxair Inc. 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

(Continued)

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

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. The Supreme Court dismissed the claim of the Company by the judgement on February 24, 2022. The judgment was final and binding and the case was closed.

BES Twin Towers Development Co., Ltd., a subsidiary of the Company, purchased 6,754,127 ordinary shares of Praxair Inc. from the Company on July 12, 2019, with a total of $351,290 thousand. However, the transaction became invalid and shareholding of Praxair Inc. was restored to be held by the Company due to the judgment No.1744 from the Supreme High Court in 2022. The judgment was final and binding and the case was closed.

The Group continues to negotiate with Praxair Inc. As of December 31, 2022, the Group did not have significant influence over the investee.

Please refer to note 8 for details of the financial assets at fair value through other comprehensive income of the Group pledged as collateral as of December 31, 2022 and 2021 and January 1, 2021.

(d) Notes, accounts and other receivables

Notes receivable Accounts receivable (including related parties) Other receivables Less: allowance for doubtful receivables Net amount	December 31, 2022 $ 77,706 2,015,500 108,761 (333,593) $ 1,868,374	December 31, 2021 628,485 3,574,627 115,814 (334,036) 3,984,890	January 1, 2021
			375,689 1,906,374 149,618 (451,717) 1,979,964

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, 2022	December 31, 2022
Carrying amount of account receivables $ 1,806,773 33,144 86,552 37,172 238,326 $ 2,201,967	Weighted average expected credit loss 0%~4.59% 0%~2.21% 0%~4.07% 0%~21.67% 100%	Allowance for expected credit loss
		82,961 733 3,519 8,054 238,326
		333,593

(Continued)

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

December 31, 2021	December 31, 2021
Carrying amount of account receivables Weighted average expected credit loss $ 3,974,874 0%~2.35% 64,232 0%~1.25% 36,233 0%~3.06% 5,997 0%~18.74% 237,590 100% $ 4,318,926 January 1, 2021		Allowance for expected credit loss
		93,413 800 1,109 1,124 237,590
		334,036

	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

The movement of the allowance for notes, accounts and other receivables were as follows:

Balance at January 1 Impairment losses Amounts written off Foreign exchange gains Balance at December 31	For the years ended December 31, 2022 2021 $ 334,036 451,717 2,251 1,175 (2,712) (119,275) 18 419 $ 333,593 334,036
	2022 $ 334,036 2,251 (2,712) 18 $ 333,593

Weihua and Weiqiang 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. In February 2021, the ruling had been made due to the lack of assets for liquidation, the bankruptcy procedure was concluded. The unrecoverable allowance of $119,275 thousand had been written off. For relevant information, please refer to note 9(k).

As of December 31, 2022 and 2021 and January 1, 2021, the aforesaid receivables were not pledged as collateral.

For credit risk information, please refer to note 6(aa).

(Continued)

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

(e) Inventories

Inventories, manufacturing business Finished goods Work in progress Raw materials Fuel Merchandise inventories Subtotal Inventories, construction business 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, 2022 $ 1,805,095 463,455 1,750,083 19,300 211,672 4,249,605 - 37,584,818 9,423 13,535 6,084,486 43,692,262 $ 47,941,867	December 31, 2021 1,011,642 464,297 1,956,928 19,907 474,530 3,927,304 - 37,584,818 9,423 13,535 596,503 38,204,279 42,131,583	January 1, 2021
			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

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. By the end of 2021, all payments and the transfer of the property ownership have been completed.

On September 8, 2022, in order to apply for the transfer of building bulk, Ding-Yue made a substitute payment to the Taipei City Government for the purchase of floor area right, which was listed as the construction in progress under inventory. On the same date, Ding-Yue signed a supplemental agreement with Core Pacific City Co., Ltd., which stated that bulk reward and corresponding bulk benefit obtained were attributed to Core Pacific Co., Ltd.; therefore, Ding-Yue will pay the incremental bulk benefit to Core Pacific City Co., Ltd. according to the calculation formula stipulated in the agreement.

For the years ended December 31, 2022 and 2021, the capitalized interest on construction in progress amounting to $430,912 thousand and $61,610 thousand, respectively.

(Continued)

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

The details of the cost of sales were as follows:

Cost of goods sold Cost of land lease Write-down of inventories 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,
	2022 $ 23,962,589 111,676 141,824 14,882 2,038,809 (8,537) $ 26,261,243	2021 29,185,168 64,981 14,854 (1,790) 926,881 (11,585) 30,178,509

Please refer to note 8 for details of the inventories of the Group pledged as collateral as of December 31, 2022 and 2021 and January 1, 2021.

(f) Other current assets

Other financial assets Others	December 31, 2022 $ 5,382,551 860,341 $ 6,242,892	December 31, 2021 986,902 490,076 1,476,978	January 1, 2021
			2,475,214 403,000
			2,878,214

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, 2022 $ 6,322,678	December 31, 2021 2,329,486	January 1, 2021
			2,038,003

(ii) Associates

(Continued)

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

Gain on a bargain purchase due to reclassification arising from this event is $2,739,244 thousand, which is based on the report issued by the appraisal company. The following table summarizes the fair values of identifiable assets acquired and liabilities assumed at the reclassification date:

Cash and cash equivalents	$	249,330
Financial assets-current		666,551
Notes and accounts receivable, net		9,886
Inventories		21,956
Buildings and land held for sale, net		1,481,065
Construction in progress		1,689,436
Other current assets		1,531,226
Financial assets-non-current		200,230
Investments accounted for using equity method		154,802
Property, plant and equipment, net		582,664
Investment property, net		394,424
Other non-current assets		96,832
Intangible assets-unshipped orders		50,146
Short-term loans		(330,521)
Short-term bills payable		(269,609)
Notes and accounts payable		(460,790)
Expense payable		(58,147)
Long-term liabilities-current portion		(78,619)
Other current liabilities, others		(745,640)
Long-term bank loans		(542,904)
Deferred income tax liabilities		(292,819)
Net defined benefit liability-non-current		(2,704)
Other non-current liabilities, others		(127,875)
Non-controlling interests		(8,757)
Total identifiable net assets	$	4,210,163
Gain on a bargain purchase due to reclassification is as follows:
Consideration transferred	$	1,470,919
Less: Fair value of identifiable net assets		4,210,163
Gain on a bargain purchase	$	(2,739,244)

(Continued)

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

Associates which are material to the Group consisted of the followings:

Name of associate	Nature of relationship with the Group	Main operating location/ Registered country of the Company	Proportion of shareholding and voting rights December 31, 2022 December 31, 2021 January 1, 2021 % 10.74 % 10.74 % 10.74	Proportion of shareholding and voting rights December 31, 2022 December 31, 2021 January 1, 2021 % 10.74 % 10.74 % 10.74
				December 31, 2021 January 1, 2021 % 10.74 % 10.74
BES Engineering Corporation	Contracting of civil and construction projects,investment, construction and sales of real estate, and the development of industrial zones planned by the government	Taiwan

The fair values of material associates listed on the Stock Exchange (over the counter) in accordance with stock close price were as follows:

BES Engineering Corporation	December 31, 2022 $ 1,337,796	December 31, 2021 January 1, 2021 1,488,997 1,643,484

The following table summarizes the financial information of material associates as included in their own financial statements. The table does not reconcile the summarized financial information to the carrying amount of the Group’s interest in:

BES Engineering Corporation

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to non- controlling interests Net assets attributable to shareholders of the parent	December 31, 2022 $ 35,989,828 9,150,068 (14,451,715) (8,011,957) $ 22,676,224 $ 71,411 $ 22,604,813	December 31, 2021 38,754,641 9,333,522 (17,472,075) (7,687,342) 22,928,746 93,223 22,835,523	January 1, 2021 33,789,293 8,319,424 (16,243,125) (5,450,050) 20,415,542 107,718 20,307,824

(Continued)

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

Operating revenue Profit from continuing operations Other comprehensive income Total comprehensive income Comprehensive income attributable to non-controlling interests Comprehensive income attributable to shareholders of the parent Shares of net assets of associates at January 1 Transfer due to significant influence Comprehensive income attributable to the Group Dividends received from associates Shares of net assets of associates at December 31	For the years ended December 31,	For the years ended December 31,
	2022 2021 $ 15,093,372 17,196,685 $ 805,156 2,662,176 (234,121) 239,037 $ 571,035 2,901,213 $ (15,545) (14,428) $ 586,580 2,915,641 For the years ended December 31,	2021 17,196,685
		2,662,176 239,037
		2,901,213
		(14,428)
		2,915,641
	2022 $ - 4,210,163 54,295 (87,762) $ 4,176,696	2021
		- - - -
		-

(iii) The Group’ s investments accounted for using the equity method that are individually immaterial, in aggregate, were as follows:

December 31, 2022 $ 2,145,982 For $ $	December 31, 2021 2,329,486 the years ended	January 1, 2021 2,038,003 December 31,

$ $	2022 111,181 (87,465) 23,716	2021 325,902 34,200 360,102

(Continued)

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

(iv) The dividends income from the Group’s investments accounted for using the equity method for the years ended December 31, 2022 and 2021 amounted to $392,930 thousand and $54,761 thousand, respectively.
(v) Please refer to note 8 for details of the investments accounted for using equity method of the Group pledged as collateral as of December 31, 2022 and 2021 and January 1, 2021.
(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, 2022 after adjustments Additions Disposal Adjustment Reclassification Effect of movements in exchange rate Balance as of December 31, 2022 Balance as of January 1, 2021 after adjustments Additions Disposal Adjustment Reclassification Return Effect of movements in exchange rate Balance as of December 31, 2021 Depreciation and impairment loss: Balance as of January 1, 2022 Depreciation for the period Disposal Adjustment Reclassification Effect of movements in exchange rate Balance as of December 31, 2022 Balance as of January 1, 2021 Depreciation for the period Impairment Disposal Adjustment Reclassification Effect of movements in exchange rate Balance as of December 31, 2021 Carrying amounts: Balance as of December 31, 2022 Balance as of January 1, 2021 after adjustments Balance as of December 31, 2021 after adjustments	Land $ 5,730,777 - - 510,691 - - $ 6,241,468 $ 5,730,777 - - - - - - $ 5,730,777 $ - - - - - - $ - $ - - - - - - - $ - $ 6,241,468 $ 5,730,777 $ 5,730,777	Land improvements 293,841 - - - - - 293,841 293,880 - - - (39) - - 293,841 232,839 5,200 - - - - 238,039 227,439 5,439 - - - (39) - 232,839 55,802 66,441 61,002	Buildings 5,023,945 264 (2,639) 679,991 - 37,767 5,739,328 4,560,436 6,511 - 446,959 - - 10,039 5,023,945 1,654,818 151,489 (2,434) 80 23,483 4,124 1,831,560 1,514,351 139,057 - - (192) - 1,602 1,654,818 3,907,768 3,046,085 3,369,127	Machinery and equipment 46,877,568 12,642 (322,118) 1,932,880 (3,108) 32,238 48,530,102 44,020,701 30,633 (154,505) 2,963,385 - - 17,354 46,877,568 35,349,025 1,005,165 (321,199) (229) 49,273 7,567 36,089,602 34,641,268 858,335 - (154,004) - - 3,426 35,349,025 12,440,500 9,379,433 11,528,543	Vehicles 97,104 4,916 (1,977) 862 - 525 101,430 86,911 6,156 (631) 4,484 - - 184 97,104 64,282 9,488 (1,977) - - 190 71,983 57,052 7,735 - (578) - - 73 64,282 29,447 29,859 32,822	Other facilities 329,750 6,568 (5,382) 14,679 - 1,180 346,795 278,762 10,997 (751) 40,250 - - 492 329,750 212,723 28,002 (5,004) 149 - 634 236,504 188,315 24,475 - (526) 192 - 267 212,723 110,291 90,447 117,027	Unfinished construction 10,234,692 3,186,864 - (3,139,103) - 76,618 10,359,071 9,821,190 4,027,677 - (3,455,078) - (186,000) 26,903 10,234,692 - - - - - - - - - - - - - - - 10,359,071 9,821,190 10,234,692	Accumulated impairment - - - - - - - - - - - - - - - 5,954,247 - - - - - 5,954,247 5,038,578 - 915,669 - - - - 5,954,247 (5,954,247) (5,038,578) (5,954,247)	Total
									68,587,677 3,211,254 (332,116 - (3,108 148,328
									71,612,035
									64,792,657 4,081,974 (155,887 - (39 (186,000 54,972
									68,587,677
									43,467,934 1,199,344 (330,614 - 72,756 12,515
									44,421,935
									41,667,003 1,035,041 915,669 (155,108 - (39 5,368
									43,467,934
									27,190,100
									23,125,654
									25,119,743

(i) Impairment

The Company's main products, caprolactam and nylon, were affected by the industry-wide imbalance of supplies and demands, international trade conflicts, the COVID-19 pandemic, rising freight costs, and the increasing production of competitors. As of December 31, 2021, the Company adjusted the strategy of its production and marketing, wherein the carrying amount of relevant production lines in Toufen plant was assessed to be higher than the recoverable amount, resulting in an impairment loss of $915,669 thousand to be recognized as nonoperating income and expense in the consolidated statements of comprehensive income.

(Continued)

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

For the year ended 2021, the estimated value-in-use was calculated at the pre-tax discount rate of 9.05%. The recoverable amount was the sum of the net fair value, calculated by adding the value-in-use to the fair value, minus the disposal cost. The input value used in the fair value evaluation technique belonged to the third level and is evaluated by using the market method.

(ii) Collateral

Please refer to note 8 for details of the property, plant and equipment of the Group pledged as collateral as of December 31, 2022 and 2021 and January 1, 2021.

(iii) Property, plant and equipment under construction

For the year ended 2022 and 2021, the capitalized interests related to the property, plant and equipment under construction were $122,863 thousand and $185,878 thousand, respectively.

(iv) 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 New Material Co., Ltd. (original name: 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, 2022 and 2021 and January 1, 2021, accumulated investment remittance from Taiwan to Mainland China was CNY1,921,000 thousand and CNY1,688,000 thousand and CNY1,618,000 thousand, respectively. The amount invested in manufacturing plant and machinery was CNY1,890,605 thousand and CNY1,688,000 thousand and CNY1,449,023 thousand, respectively.

(i) Right-of-use assets

The Group leases assets including land, land and sea area using rights, buildings, machinery and equipment and vehicles. Information about leases for which the Group as a lessee was presented below:

Cost: Balance as of January 1, 2022 Additions Disposal Reclassification Effect of movements in exchange rate Balance as of December 31, 2022 Balance as of January 1, 2021 Additions Disposal Effect of movements in exchange rate Balance as of December 31, 2021	Land	Land and sea area using rights	Buildings	Machinery and equipment	Vehicles	Other facilities	Total
	$ 248,414 1,043 - - - $ 249,457 $ 228,407 20,491 (484) - $ 248,414	662,772 - - - 9,620 672,392 658,503 - - 4,269 662,772	26,236 80,907 (17,004) - - 90,139 19,751 7,061 (576) - 26,236	110,549 3,633 (24,001) 3,108 - 93,289 111,057 30,432 (30,940) - 110,549	18,094 5,723 (7,880) - - 15,937 16,931 12,266 (11,103) - 18,094	490 106 (148) - - 448 1,938 - (1,448) - 490	1,066,555 91,412 (49,033) 3,108 9,620 1,121,662 1,036,587 70,250 (44,551) 4,269 1,066,555

(Continued)

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

Machinery and equipment	Vehicles	Other facilities	Total
64,448 34,937 (24,001) - 75,384 60,620 34,768 (30,940) - 64,448 17,905 50,437 46,101	8,172 5,620 (5,730) - 8,062 6,348 6,352 (4,528) - 8,172 7,875 10,583 9,922	303 113 (143) - 273 1,187 565 (1,449) - 303 175 751 187	202,091 90,408 (46,701) 1,210
			247,008
			163,650 75,741 (37,820) 520
			202,091
			874,654
			872,937
			864,464

Cost or deemed cost: Balance as of January 1, 2022 Change in fair value Balance as of December 31, 2022 Balance as of January 1, 2021 Disposal Change in fair value Balance as of December 31, 2021	Land $ 38,853,888 1,314,527 $ 40,168,415 $ 37,609,032 (1,668,271) 2,913,127 $ 38,853,888	Buildings 13,179 (47) 13,132 17,795 (5,264) 648 13,179	Total 38,867,067 1,314,480 40,181,547 37,626,827 (1,673,535) 2,913,775 38,867,067

(Continued)

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

(i) The Group disposed its investment property with a disposal price of $2,380,000 thousand, resulting in a disposal gain of $706,465 thousand in 2021.
(ii) Evaluation by income approach

The Group’s following investment properties were subsequently measured at fair value using the income approach after initial recognition, and has been categorized as a Level 3 fair value based on the inputs to the valuation techniques used. The relevant contract information and key assumptions used in the method were as follows:

December 31, 2022

Subject	Qianjin Dist., Kaohsiung City	Qianzhen Dist., Kaohsiung City Others None None $450 $1,000~$1,300 None $1,164~$1,292 Leased Unused house, parking lot $0~ $0 $0~ $0 None 1.130% 4.595% 2.845% External independent appraiser External independent appraiser Colliers International Taiwan China Real Estate Appraisers Firm Jian-Hui, Gu Dian-Ching, Hsieh December 31, 2022 December 31, 2022 3,045,000 14,000
Contract terms Rental at local market rate (per py per month) Current market rent for comparable properties in similar locations and condition (per py per month) Current status Income generated Capitalization rate Discount rate Appraised by external independent appraiser or self-appraisal Appraiser offices Appraiser names Appraisal date Fair value by external independent appraisers	None $550~$700 $617~$664 Unused $0~ $0 4.695% 4.720% External independent appraiser Colliers International Taiwan Feng-Ru, Ke December 31, 2022 $ 10,730

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

December 31, 2021

December 31, 2021
Subject	Qianjin Dist., Kaohsiung City	Qianzhen Dist., Kaohsiung City Others None None $450 $1,000~$1,300 None $1,129~$1,268 Leased Unused $0~ $0 $0~ $0 None 1.130% 4.345% 2.845% External independent appraiser External independent appraiser Colliers International Taiwan China Real Estate Appraisers Firm Shiou-Ying, Jan Dian-Ching, Hsieh December 31, 2021 December 31, 2021 2,903,000 12,900
Contract terms Rental at local market rate (per py per month) Current market rent for comparable properties in similar locations and condition (per py per month) Current status Income generated Capitalization rate Discount rate Appraised by external independent appraiser or self-appraisal Appraiser offices Appraiser names Appraisal date Fair value by external independent appraisers	None $550~$700 $604~$632 Unused $0~ $0 5.335% 4.445% External independent appraiser Colliers International Taiwan Feng-Ru, Ke December 31, 2021 $ 10,890

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

January 1, 2021

January 1, 2021
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% External independent appraiser External independent appraiser Colliers International Taiwan Taiwan Dawa Real Estate Appraiser & Associates Shiou-Ying, Jan Yu-Hua, Lu January 1, 2021 January 1, 2021 2,737,000 10,478
Contract terms Rental at local market rate (per py per month) Current market rent for comparable properties in similar locations and condition (per py per month) Current status Income generated Capitalization rate Discount rate Appraised by external independent appraiser or self-appraisal Appraiser offices Appraiser names Appraisal date Fair value by external independent appraisers	None $550~$700 $576~$617 Unused $0~ $0 5.555% 4.260% External independent appraiser Colliers International Taiwan Feng-Ru, Ke January 1, 2021 $ 10,780

In accordance with Article 34 of the Regulations on Real Estate Appraisal, the procedures of the income approach 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 data from the last three years 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.

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CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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, 2022 and 2021 and January 1, 2021, the discount rate was 2.845%~4.720%, 2.845%~4.445%, and 2.030%~4.655%, respectively. As of December 31, 2022 and 2021 and January 1, 2021, the weighted average capitalization rate was 1.130%~4.695%, 1.130%~5.335%, and 1.730%~5.555%, respectively, derived as the ratio of annual net operating income of comparable properties divided by reasonable price.

(iii) 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, and has been categorized as a Level 3 fair value based on the inputs to the valuation techniques used. The relevant information is summarized as follows:

December 31, 2022

December 31, 2022
Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 134,719,095 (Note) 2,877,323 16%~18% 12%~18% 5.620%~6.6800% 1.16%~3.21% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm, Colliers International Taiwan and Baoyuan Real Estate Appraisers Firm Jian-Hui, Gu Jian-Hui, Gu, Ching-Tang, Li and Tzu-Kuang, Yeh December 31, 2022 December 31, 2022 30,372,000 1,455,572
Estimated revenue Gross profit margin Rate of return Appraiser offices Appraiser names Appraisal date Fair value by external independent appraisers	10,645,710 17% 2.240% CCIS Real Estate Joint Appraisers Firm Chih-Hao, Wu December 31, 2022 $ 5,284,245

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

December 31, 2021

==> picture [415 x 342] intentionally omitted <==

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

Qianzhen Dist., Kaohsiung
Subject Annan Dist., Tainan City City Others
Estimated revenue 9,391,820 122,550,002 (Note) 2,782,072
Gross profit margin 17% 20%~22% 12%~18%
Rate of return 1.850% 4.150%~4.9900% 0.92%~3.03%
Appraiser offices CCIS Real Estate Joint Colliers International Taiwan Hon Bun Real Estate
Appraisers Firm Appraisers Firm, Colliers
International Taiwan and China
Real Estate Appraisers Firm
Appraiser names Chih-Hao, Wu Shiou-Ying, Jan and Jian-Hui, Jian-Hui, Gu, Shiou-Ying, Jan,
Gu Ching-Tang, Li and Tzu-
Kuang, Yeh
Appraisal date December 31, 2021 December 31, 2021 December 31, 2021
Fair value by external $ 5,043,136 29,516,000 1,381,141
independent appraisers
January 1, 2021
Qianzhen Dist., Kaohsiung
Subject Annan Dist., Tainan City City Others
Estimated revenue 7,968,120 110,949,840 (Note) 2,614,812
Gross profit margin 23% 19%~22% 12%~20%
Rate of return 1.770% 3.650%~5.8547% 0.92%~3.05%
Appraiser offices CCIS Real Estate Joint Colliers International Taiwan Hon Bun Real Estate
Appraisers Firm Appraisers Firm, Colliers
International Taiwan and China
Real Estate Appraisers Firm
Appraiser names Huo-Ming, Huang Shiou-Ying, Jan and Jian-Hui, Yu-Xian, Houng, Jian-Hui, Gu,
Gu Shiou-Ying, Jan, Dian-Ching,
Hsieh and Ching-Tang, Li
Appraisal date January 1, 2021 January 1, 2021 January 1, 2021
Fair value by external $ 4,995,991 28,519,000 1,352,806
independent appraisers
----- End of picture text -----

January 1, 2021

Note: some of the estimated revenue, as a whole, is determined based on the basic unit.

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

The Group’ s plan for the development land includes determining the scope of land development, estimating the duration of development, surveying and analyzing costs, obtaining current market prices, conducting on-site surveys, and investigating and analyzing the degree of development in the local environment. There was no significant fluctuation revealed by the assessment of macroeconomic factors, i.e., market indexes, population, employment rate, market prices and rates, market equilibrium, and other relevant market factors; hence, these data were used for estimating the total selling price after development or construction, and this expected selling price was used to derive the price before development and construction.

Investment property included several rentals of real property to others. Each lease contract includes the original non-cancellable lease and the subsequent lease is negotiated with the lessee without collection of contingent rentals. Please refer to note 6(s) for the relevant information including rent revenue and the direct operating expenses incurred.

Please refer to note 8 for details of the investment property of the Group pledged as collateral as of December 31, 2022 and 2021 and January 1, 2021.

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.

Anshun Land Located in Tainan City Annan District:

(i) History

1) The land where the TAIC Anshun 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, 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 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 (MOEA) in early 1982.
4) In April 1983, MOEA ordered China Petrochemical Development Corp., the state-owned Company, the subsidiary of Chinese Petroleum Corporation (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 detected dioxin and mercury contamination in soil. The land was designated by the Tainan City Government (TCG) and the Environmental Protection Administration of the Executive Yuan (EPA) 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 (hereinafter referred to as the “SGPR Act” ).

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

6) TCG 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 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 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.
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 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 in the scope of the regulation.
d) The Company has filed series of complaint on those issues according to this Constitutional Interpretation.
7) TCG 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 SGPR Act.
a) The Company proposed the “Tainan City, CPDC former TAIC 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 TCG 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 TCG for review, and the approval letter issued by TCG 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 TCG 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.

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

b) The Company had estimated the remediation expense according to the remediation plan. Please refer to note 6(r) for relevant remediation expenses and provisions.

(ii) Extension legislation:

1) Remediation prepay
a) TCG 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 TCG and EPA 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 (KHAC) sentencing the Company to pay the expense $88,430 thousand in January 2010. The Company appealed in March 2010 and Supreme Administrative Court sent the case back to KHAC for further trial. KHAC 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 KHAC for continued trial. The determined withdrawn amount $356 thousand had all been returned back to the account by TCG. KHAC 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 $1,135 thousand did not need to be undertaken by the Company.
b) TCG 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 TCG on behalf of the Company, and TCG 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 TCG based on the law regulations. The petition was rejected in March 2011, and therefore, the administrative lawsuit was proposed according to the law. KHAC sentenced that the amount beyond $17,867 thousand was withdrawn. After the appeal, Supreme Administrative Court sentenced to return back to KHAC for further trial in September 2013. KHAC 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 TCG. The verdict from Supreme Administrative Court had been received on February 18, 2017, the fact was again returned back to KHAC for the trial. In July 2018, KHAC 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

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

judgment, remanding the case back to KHAC. On November 24, 2020, The court’s judgement is announced that the payment amount which exceeds $7,622 thousand shall be revoked. For the 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) TCG, 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 TCG 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. KHAC sentenced the Company to pay $154 thousand. However, TCG 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 reversed the original verdict in February 2018, and currently the case is under hearing by KHAC. 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. The Supreme Administrative Court made the judgement that the Company should only pay $538 thousand on October 28, 2021, and the judgment was final and binding. The Company received the complaint for a rehearing action from TCG on December 23, 2021, and currently the Company has submitted the answer and the case is pending in the Supreme Administrative Court.
d) TCG, 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 (TAIC) 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 TCG 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, TCG 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 $35,018 thousand was revoked, and the Company shall pay $39,863 thousand. Both parties appealed to Supreme Administrative Court base on their unprofitable part of verdict in October 2019. The Company received the judgment from the Supreme Administrative Court on January 22, 2022 as follows: except the final and binding portion of the judgment, the portion over $7,276 thousand that TCG ordered the Company to pay should be reversed (also known as the Company should pay $12,121 thousand in total including the final and binding portion of the judgment).

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

This judgment was final and binding. TCG now has filed a petition for rehearing and the Company would continuously submit the answer. The case for rehearing currently is pending in the Supreme Administrative Court.

e) TCG issued the letter No. 1080412260 in April 2019, requesting the Company to pay before June 30, 2019. TCG 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 SGPR Act. Based on the laws and regulations, the Company paid the aforementioned fees first within the time limit set by TCG and filed an administrative appeal in May of the same year. TCG dismissed the Company’ s petition on August 28, 2020. The Company initiate an action to KHAC for the administrative remedy on October 28, 2020, and KHAC announced the judgement on June 7, 2022 that the portion over $31,894 thousand should be reversed (also known as the Company should pay $27,278 thousand). The Company has filed an appeal against the defeated part within the peremptory period, and the case is pending in the Supreme Administrative Court.
f) TCG issued the letter No. 1090092471 on August 31, 2020, requesting the Company to pay before October 20, 2020. TCG claimed to have performed “2018 China Petroleum & Chemical Corporation Anshun Plant Remediation Site Supervision, Management and Checking Work Plan” on behalf of the Company, and requested the Company to pay $32,718 thousand in accordance with Article 14 (4) and Article 15 and Article 43 (1) of the SGPR Act. Based on the laws and regulations, the Company paid the aforementioned fees first within the time limit set by TCG, and filed an administrative appeals in September of the same year. TCG dismissed the Company’ s petition on December 25, 2020. The Company initiates an action to KHAC for the administrative remedy on February 26, 2021, and KHAC made the judgement on December 29, 2021 that the Company shall only pay $493 thousand, and the remainder shall be reversed. The Company decided not to file an appeal against the losing portion as a favor to TCG. TCG now has filed an appeal and the Company will submit the answer to the instance of appeal for the Company's interests.
g) The Environmental Protection Bureau of TCG issued the letter No. 1110037443 on April 12, 2022 and ordered the Company to pay the necessary expense for contingency measures $30,748 thousand pursuant to Article 43 (1) of the SGPR Act. The Company objected the order and filed an administrative appeal, and currently it is under review by the agency with jurisdiction of administrative appeal.

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

2) TCG claimed that the Company did not implement per the remediation process.
a) TCG, 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 SGPR Act 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 KHAC 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 reversed and remanded the original judgement and remand the case to KHAC. On December 28, 2020, KHAC give the judgement against the Company. Considering litigation risks and costs, and to lighten the relations between the Company and TCG arising from a number of litigations, the Company had decided not to file an appeal. The final judgement was made on January 19, 2021.
b) TCG 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 appeal was filed in May 2019 in accordance with the laws, and EPA dismissed in July of the same year. The Company filed an administrative lawsuit in September of the same year. The Tainan District Court ruled against the Company on May 21, 2021. Considering litigation risks, cost effectiveness, and the will of reconciliation, the Company decided not to file an appeal.

(iii) Others

1) 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 SGPR Act. Also, considering the previous TAIC was a state-owned enterprise, and the Anshun plant was controlled, supervised, and assigned operations and gained beneficially by MOEA, 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 TCG 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 TCG in November 2014. The Company filed a legal petition in December 2014 and the original disposal authorities revoked the original punishment in March 2015, hence, EPA 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. Through the rejection of the Company’ s request by KHAC, the Company proposed the appeal for remedy in November 2017. Supreme Administrative

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

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 $5,555,274 thousand until December 31, 2022. 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.

2) Anshun dormitory designated monuments case

Original Kagakude Negai O Ka Corporation’ s dormitories of Tainan plant belonging to the Company was designated by the TCG, 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 KHAC for a new trial. And this case is still being heard in the Court.

Xincun Land of TAIC:

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

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 KHAC. On September 22, 2021, KHAC judged the Company partly winning and partly lost. The company filed the appeal for the losing parts to the Supreme Court on October 15, 2021. This case is still being heard in the Court.

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

Shulin Land of TAIC:

1) History:
a) No. 540, 541 and 543, Dongshan Section, Shulin District, New Taipei City and No. 489, Weiwang Section, Shulin Dist., New Taipei City, Taiwan including 4 area of lands originally belonged to Shulin plant of TAIC. TAIC established the plant in 1962 and closed the plant in 1975. MOEA in April 1983 ordered the governmentowned Company which at the time was also a subsidiary of CPC to merge with TAIC.
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 TAIC was regarded as the surviving company and shall take the responsibility for the rights and obligations of TAIC 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, resulting in the remediation work schedule to be postponed as well, which led to the postponement of the initial phase of the soil pollution control plan of a partial site of Shulin Land of former the TAIC in April 2017. The New Taipei City Government sent a letter of approval for future reference on May 18, 2017. Thereafter, CPC complied with the government policy regarding the expansion project of Kuo Kuang power Co., Ltd., in which the relocation site had been changed, with the relocation process being extended to December 31, 2021, resulting in the remediation work schedule to also be postponed. Therefore, the 2nd phase of the soil pollution control plan of a partial site of Shulin Land of the former TAIC was proposed in August 2019, and the New Taipei City Government sent a letter of approval for future reference on August 16, 2019. Subsequently, CPC had to remove and relocate its automatic storage equipment, resulting in the relocation process to be extended to December 31, 2023, and the remediation work schedule to be postponed. Due to the above matter, the 3rd phase of the soil pollution control plan of a partial site of Shulin Land of the former TAIC was proposed in November 2021, and the New Taipei City Government sent a letter of approval for future reference on November 9, 2021. The Company is now performing this project according 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.

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

(k) Intangible assets

The cost, amortization and impairment of the intangible assets of the Group were as follows:

Costs： Balance as of January 1, 2022 Acquisition Effect of movement in exchange rates Balance as of December 31, 2022 Balance as of January 1, 2021 Acquisition Effect of movement in exchange rates Balance as of December 31, 2021 Accumulated amortization and Impairment Loss: Balance as of January 1, 2022 Amortization for the period Effect of movement in exchange rates Balance as of December 31, 2022 Balance as of January 1, 2021 Amortization for the period Effect of movement in exchange rates Balance as of December 31, 2021 Carrying value: Balance as of December 31, 2022 Balance as of January 1, 2021 Balance as of December 31, 2021	Goodwill $ 133,912 - 14,148 $ 148,060 $ 135,871 - (1,959) $ 133,912 $ - - - $ - $ - - - $ - $ 148,060 $ 135,871 $ 133,912	Computer software 17,796 2,896 244 20,936 11,546 6,176 74 17,796 5,897 2,912 75 8,884 3,913 1,954 30 5,897 12,052 7,633 11,899	Patents and trademark 118,314 1,723 397 120,434 100,361 17,778 175 118,314 91,817 5,839 274 97,930 84,692 7,005 120 91,817 22,504 15,669 26,497	Total 270,022 4,619 14,789 289,430 247,778 23,954 (1,710) 270,022 97,714 8,751 349 106,814 88,605 8,959 150 97,714 182,616 159,173 172,308

As of December 31, 2022 and 2021 and January 1, 2021, the aforesaid intangible assets were not pledged as collateral.

(Continued)

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 Unsecured bank loans Secured bank loans Export bills loans Total Total short-term credit lines Unused short-term credit lines Range of interest rates	December 31, 2022 $ - 1,822,673 14,200,715 - $ 16,023,388 $ 23,475,370 $ 8,536,351 1.38%~5.9%	December 31, 2021 377,000 1,108,018 10,893,032 359,639 12,737,689 23,581,513 8,174,224 0.669%~4.5%	January 1, 2021
			1,175,000 1,300,000 1,140,000 -
			3,615,000
			6,901,296
			1,430,278
			1.2799%~1.3857%

Secured bank loans from Shin Kong Commercial Bank

On October 21, 2021, Ding-Yue signed a 4-year syndicated loan agreement with 9 financial institutions, including Shin Kong Commercial Bank (the lead bank), for the development of its land, with the Company as the joint guarantor. According to the contract, $3,020,000 thousand of the total amount of credit line of $14,900,000 thousand can only be used after the construction license has been obtained and the forward sale rate has reached the terms of the loan agreement.

(i) Syndicated loan A:

The credit line of $13,100,000 thousand consists of secured loans and non-revolving credit facility.

(ii) Syndicated loan B:

The credit line of $1,800,000 thousand consists of commercial promissory note agreements and revolving credit facility.

(iii) The commitments made by Ding-Yue and the joint guarantor (the Company), in accordance with the syndicated loan agreement, were as follows:
1) Ding-Yue should complete the issuance of ordinary shares for cash and collect the full amount upon issuance, which should be completed within 150 days after obtaining the property right of the land. Thereafter, the ordinary shares shall have a total minimum value of $28,000,000 thousand. Ding-Yue had been completed the transactions in March 2022.

(Continued)

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

2) Ding-Yue should obtain the construction license before August 31, 2022, and Ding-Yue also shall start the construction before February 28, 2023. In addition, the loan interest will be accrued from the next interest payment date after the date of violation to the date of obtaining the construction license or the date of starting construction if any of the above time schedules are violated, unless delay of the schedules attributed to the department of government. Ultimately, Ding-Yue has obtained the construction license on October 18, 2022, and was exempted from the interest accrued from September 1, 2022, to the date of obtaining the construction license, with the consent of Shin Kong Commercial Bank.
3) The transaction, wherein the Company should complete the issuance of ordinary shares for cash and collect the full amount before March 31, 2022, with the issuance of ordinary shares at a minimum value of $4,000,000 thousand, had been completed in December 2021.
4) If the accumulated amount received from the pre-sale in the trust account is lower than the terms of the loan agreement, the Company should make up the difference by loaning funds. The Company should execute on the abovementioned examination at three particular dates during the term of the loan agreement. As of December 31, 2022, the presale has not yet begun.

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:

Unsecured bank loans Secured bank loans Finance lease loans Less: current portion Total Total long-term credit lines Unused long-term credit lines Range of interest rates	December 31, 2022 $ 32,150 18,200,848 46,777 (3,149,685) $ 15,130,090 $ 23,852,126 $ 2,350,860 1.73%~5.5%	December 31, 2021 - 15,302,394 89,710 (1,486,515) 13,905,589 25,905,067 7,935,100 1.3%~5.8725%	January 1, 2021 - 9,274,260 130,223 (1,914,833) 7,489,650 17,636,400 5,601,475 1.3%~5.5%

(i) Conditions of loan agreement

During the period covered in the consolidated financial statements, the material conditions of the loan agreements of the Group were summarized as follows:

(Continued)

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

Secured bank loans from Mega International Commercial Bank

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 the funding requirements. The agreement had been extended on June 17, 2021, with the aggregate amount of credit line of the syndicated loan increased to $4,470,000 thousand.

1) Syndicated loan A: The credit line is $3,000,000 thousand consisting of medium-term secured loans and non-revolving credit facility, which was used to finance the purchase of machinery and accessory equipment.
2) Syndicated loan B: The credit line is $1,470,000 thousand consisting of medium-term loans and revolving credit facility, which was used to meet the funding requirements.
3) The joint credit agreement requires the Company to comply with the following specific financial ratio requirements and other requirements at the end of the year and at the halfyear during the loan period. Please refer to note 8 for details of guarantee provided.
a) Current ratio (total current assets divided by total current liabilities): not lower than 100%.
b) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%.
c) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 200%.
4) In the event that there is a times interest earned violation in any of the fiscal years, the borrower has to set pledge with bank deposits for the managing bank, or provide bank deposits to the reserve account appointed by the bank. 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 (1) 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.

(Continued)

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

5) 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 12.5% of the outstanding principal balance of the expiration date of the credit period, and the fifth period shall be settled for 50% of the outstanding principal balance of the expiration date of the credit period.
6) The term of payment of the category B credit is stipulated as: Every period of loan must be not over 180 days. The borrower shall fully repay on the due date as set out in each application for use.

According to the loan agreement, the times interest earned should not be lower than 200%. As of June 30, 2022, the Company failed to reach the times interest earned. After the improvements made during the above-mentioned period, the Company had reached the times interest earned as of December 31, 2022.

Secured bank loans from Shin Kong Commercial Bank

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 the funding requirements. The aggregate amount of credit line of the syndicated loan was $3,900,000 thousand. The syndicated loan agreement was terminated in advance on May 30, 2022, the principal, interests and related debts have been fully paid off.

Secured bank loans from CTBC Bank

On July 13, 2020, the Company signed a medium-term loan agreement for 3 years with CTBC Bank in order to meet the funding requirements. The aggregate amount of credit line of the loan was $2,000,000 thousand.

1) 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.
a) Current ratio (total current assets divided by total current liabilities): not lower than 120%.
b) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.
c) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 200%.
d) Tangible net worth (total equity excluding intangible assets): not lower than $67,000,000 thousand.

(Continued)

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

2) According to the loan agreement, 15%, 15% and 70% of the principal will be paid on the 24th, 30th and 36th month, respectively, after the first active date.

Secured bank loans from Taiwan Life Insurance Co., Ltd.

In April 2021, the Company signed a medium-term loan agreement with Taiwan Life Insurance Co., Ltd. in order to meet the funding requirements until December 2025. As of December 31, 2022 and 2021, the total credit line, which was mutually shared and endorsed by the Company and Ding-Yue, was $2,900,000 thousand.

(ii) Pledged assets of loan agreement

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:

Secured non-convertible bonds Unamortized balance of discounted bonds payable Less: current portion Balance of bonds payable Maturity year	December 31, 2022 $ 4,725,000 (29,008) (150,000) $ 4,545,992 114	December 31, 2021 4,750,000 (40,904) (25,000) 4,684,096 114	January 1, 2021
			3,500,000 - -
			3,500,000
			114

(ii) The Group issued domestic secured non-convertible bonds at the amount of $3,500,000 thousand in 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

(Continued)

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

(iii) The Group issued domestic secured non-convertible bonds at the amount of $1,250,000 thousand in 2021, the terms were as follows:

Issue amount
Issue date
Issue period
Coupon rate
Interest payment date
Repayment and interest payment

Domestic secured non-convertible
bond in 2021
Bond A
Bond B
$ 625,000
625,000
2021.10.21
2021.10.22
4 years
4 years
%
2.75
%
2.75
21st of every
month
22nd of every
month
From the 1st to the 12th month, only
the interest is paid monthly.
From the 13th to the 47th month, the
principal and interest are repaid by
$6,250 thousand on a monthly basis.
The remaining principal is repaid
once on maturity.

Please refer to note 8 for details of the related assets pledged as collateral.

(o) Short-term bills payable

The components of short-term bills payable were as follows:

		December	31, 2022
	Acceptance institution		Period		Amount
Bills payable	International Bills Finance	2022.12.30~2023.02.24		$	797,000
	Corporation
Bills payable	Taching Bills Finance	2022.12.30~2023.02.24			637,000
	Corporation
					1,434,000
Less: Discount	on short-term bills payable				(6,294)
Total				$	1,427,706

(Continued)

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

		December	31, 2021
	Acceptance institution		Period		Amount
Bills payable	International Bills Finance	2021.11.03~2022.11.02		$	797,000
	Corporation
Bills payable	Taching Bills Finance	2021.11.03~2022.11.02			637,000
	Corporation
					1,434,000
Less: Discount	on short-term bills payable				(4,045)
Total				$	1,429,955

The Group had revolving commercial promissory note agreements with bills finance companies in order to finance its operating requirement. As of December 31, 2022 and 2021, the bills payable bear interest rates ranging from 1.48%~2.37% and 0.65%~1.74%, respectively.

Please refer to note 8 for details of the related assets pledged as collateral.

(p) Long-term bills payable

The components of long-term bills payable were as follows:

The components of long-term bills payable were as follows:	The components of long-term bills payable were as follows:
December 31, 2022
Acceptance institution	Period		Amount
Bills payable International Bills Finance	2022.12.09~2023.03.09	$	350,000
Corporation
Bills payable Taching Bills Finance	2022.12.19~2023.03.17		260,000
Corporation
Bills payable Taching Bills Finance	2022.12.19~2023.03.17		140,000
Corporation
Bills payable Taching Bills Finance	2022.12.22~2023.03.22		160,000
Corporation
Bills payable China Bills Finance Corporation	2022.12.01~2023.02.07		670,000
Bills payable China Bills Finance Corporation	2022.12.02~2023.02.08		350,000
Bills payable China Bills Finance Corporation	2022.12.02~2023.02.08		300,000
Bills payable China Bills Finance Corporation	2022.11.30~2023.02.22		940,000
Bills payable China Bills Finance Corporation	2022.11.29~2023.02.24		390,000
Bills payable Mega Bills Finance Corporation	2022.11.08~2023.01.05		970,000
Bills payable Mega Bills Finance Corporation	2022.11.09~2023.01.06		1,000,000
Bills payable Mega Bills Finance Corporation	2022.11.18~2023.01.17		900,000
Bills payable Mega Bills Finance Corporation	2022.12.28~2023.02.23		400,000
			6,830,000
Less: Discount on long-term bills payable			(8,567)
Total		$	6,821,433

(Continued)

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

December 31, 2021	December 31, 2021
Acceptance institution	Period		Amount
Bills payable International Bills Finance	2021.12.16~2022.02.14	$	350,000
Corporation
Bills payable Taching Bills Finance	2021.12.13~2022.03.11		160,000
Corporation
Bills payable China Bills Finance Corporation	2021.11.09~2022.01.07		400,000
Bills payable China Bills Finance Corporation	2021.11.22~2022.01.21		270,000
Bills payable China Bills Finance Corporation	2021.12.21~2022.03.17		660,000
Bills payable China Bills Finance Corporation	2021.12.01~2022.03.01		230,000
Bills payable China Bills Finance Corporation	2021.12.01~2022.03.01		160,000
Bills payable Mega Bills Finance Corporation	2021.12.10~2022.02.17		600,000
Bills payable Mega Bills Finance Corporation	2021.11.18~2022.02.16		870,000
Bills payable Mega Bills Finance Corporation	2021.11.25~2022.02.23		500,000
Bills payable Mega Bills Finance Corporation	2021.12.14~2022.02.24		630,000
Bills payable Mega Bills Finance Corporation	2021.11.26~2022.02.23		230,000
Bills payable Mega Bills Finance Corporation	2021.12.16~2022.03.16		200,000
			5,260,000
Less: Discount on long-term bills payable			(5,482)
Total		$	5,254,518

(Continued)

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

January 1, 2021	January 1, 2021
Acceptance institution	Period		Amount
Bills payable International Bills Finance	2020.12.07~2021.02.22	$	200,000
Corporation
Bills payable International Bills Finance	2020.12.31~2021.01.05		150,000
Corporation
Bills payable Taching Bills Finance	2020.11.12~2021.01.07		300,000
Corporation
Bills payable Taching Bills Finance	2020.10.12~2021.01.07		100,000
Corporation
Bills payable China Bills Finance Corporation	2020.11.09~2021.01.27		800,000
Bills payable China Bills Finance Corporation	2020.12.22~2021.03.22		500,000
Bills payable China Bills Finance Corporation	2020.10.12~2021.01.08		500,000
Bills payable China Bills Finance Corporation	2020.12.11~2021.03.11		720,000
Bills payable China Bills Finance Corporation	2020.11.10~2021.01.27		30,000
Bills payable Mega Bills Finance Corporation	2020.10.30~2021.01.26		550,000
Bills payable Mega Bills Finance Corporation	2020.12.25~2021.02.25		670,000
Bills payable Mega Bills Finance Corporation	2020.11.17~2021.01.18		200,000
Bills payable Mega Bills Finance Corporation	2020.11.06~2021.01.18		80,000
Bills payable Mega Bills Finance Corporation	2020.11.20~2021.01.18		140,000
Bills payable Mega Bills Finance Corporation	2020.11.25~2021.01.18		270,000
Bills payable Mega Bills Finance Corporation	2020.11.30~2021.01.26		85,000
Bills payable Mega Bills Finance Corporation	2020.11.30~2021.01.26		15,000
Bills payable Mega Bills Finance Corporation	2020.12.04~2021.01.26		150,000
Bills payable Mega Bills Finance Corporation	2020.12.07~2021.02.25		200,000
			5,660,000
Less: Discount on long-term bills payable			(3,888)
Total		$	5,656,112

The Group had revolving commercial promissory note agreements with bills finance companies in order to finance its operating requirement. As of December 31, 2022 and 2021 and January 1, 2021, the bills payable bear interest rates ranging from 1.00%~1.74%, 0.30%~0.97% and 0.28%~1.262%, respectively.

Please refer to note 8 for details of the related assets pledged as collateral.

(Continued)

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

(q) Lease liabilities

The lease liabilities of the Group were as follows:

Current Non-current	December 31, 2022 $ 60,864 $ 249,495	December 31, 2021 56,324 240,124	January 1, 2021
			43,251
			249,741

For the maturity analysis, please refer to note 6(aa).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2022 $ 4,956 $ 40,498	2021
		5,604
		49,471

The amounts recognized in the statement of cash flows for the Group was as follows:

Total cash outflow for leases (r) Provisions	For the years ended December 31,	For the years ended December 31,
	2022 $ 120,606	2021
		115,103

Balance as of January 1, 2022 Provisions used during the year Provisions reversed during the year Unwinding of discount Effect of movements in exchange rate Balance as of December 31, 2022 Current Non-current Balance as of January 1, 2021 Provisions made during the year Provisions used during the year Effect of movements in exchange rate Balance as of December 31, 2021	Decommissioning $ 1,265,399 - - 525 734 $ 1,266,658 $ - 1,266,658 $ 1,266,658 $ 1,264,564 513 - 322 $ 1,265,399	Remediation project 2,097,478 (620,807) - - - 1,476,671 879,727 596,944 1,476,671 514,613 1,664,899 (82,034) - 2,097,478	Employee benefits 316,389 (96,838) (347) - - 219,204 5,294 213,910 219,204 275,925 96,647 (56,183) - 316,389	Total 3,679,266 (717,645) (347) 525 734 2,962,533 885,021 2,077,512 2,962,533 2,055,102 1,762,059 (138,217) 322 3,679,266

(Continued)

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

Current Non-current	Decommissioning $ - 1,265,399 $ 1,265,399	Remediation project 473,093 1,624,385 2,097,478	Employee benefits 5,641 310,748 316,389	Total
				478,734 3,200,532
				3,679,266

(i) To comply with the Order of TCG, 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 TCG for approval. On December 24, 2014, TCG 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 TCG 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. In order to accelerate the remediation work and enhance the processing capacity, the Company set up a budget plan in accordance with the above-mentioned relevant remediation plan.
(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 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, resulting in the remediation work schedule to be postponed as well, which led to the postponement of the initial phase of the soil pollution control plan of a partial site of Shulin Land of former the TAIC in April 2017. The New Taipei City Government sent a letter of approval for future reference on May 18, 2017. Thereafter, CPC complied with the government policy regarding the expansion project of Kuo Kuang power Co., Ltd., in which the relocation site had been changed, with the relocation process being extended to December 31, 2021, resulting in the remediation work schedule to also be postponed. Therefore, the 2nd phase of the soil pollution control plan of a partial site of Shulin Land of the former TAIC was proposed in August 2019, and the New Taipei City Government sent a letter of approval for future reference on August 16, 2019. Subsequently, CPC had to remove and relocate its automatic storage equipment, resulting in the relocation process to be extended to

(Continued)

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

December 31, 2023, and the remediation work schedule to be postponed. Due to the above matter, the 3rd phase of the soil pollution control plan of a partial site of Shulin Land of the former TAIC was proposed in November 2021, and the New Taipei City Government sent a letter of approval for future reference on November 9, 2021. The Company is now performing this project according 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.

(s) Operating lease

There were no significant changes in operating lease for the years ended December 31, 2022 and 2021. Please refer to note 6(s) of the consolidated financial statements for the year ended December 31, 2021 for other related information.

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, 2022 $ 57,040 59,867 49,988 43,532 40,792 379,318 $ 630,537	December 31, 2021
		52,041 52,084 42,222 40,407 40,452 376,771
		603,977

For the years ended December 31, 2022 and 2021, the income from the rental of investment property, property, plant and equipment amounted to $65,506 thousand and $49,486 thousand, respectively.

(t) 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 the defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2022 $ 410,114 (198,043) $ 212,071	December 31, 2021 525,118 (215,849) 309,269	January 1, 2021 495,047 (225,170) 269,877

(Continued)

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

The provision consists of net defined benefit liabilities and accrued pension liabilities for professional managements. The accrued pension liabilities for professional managements were both $0 thousand as of December 31, 2022 and 2021.

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.

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $197,978 thousand as of December 31, 2022. 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 Current service costs and interest cost Remeasurements loss (gain): —Actuarial loss (gain) due to experience adjustments —Actuarial loss arising from demographic assumptions —Actuarial loss (gain) arising from financial assumptions Benefits paid Defined benefit obligations paid Defined benefit obligation, December 31	For the years ended December 31, 2022 2021 $ 525,118 495,047 12,715 11,958 (7,931) 37,058 - 17,098 (56,015) 27,420 (48,376) (61,510) (15,397) (1,953) $ 410,114 525,118

(Continued)

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

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 Expected return on plan assets Remeasurements loss (gain): —Actuarial gain due to experience adjustments Contributions paid by the employer Decrease Benefits paid Fair value of plan assets, December 31	For the years ended December 31, 2022 2021 $ 215,849 225,170 1,308 1,334 18,016 3,285 11,560 47,570 (314) - (48,376) (61,510) $ 198,043 215,849

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 of net liabilities for defined benefit obligations Operating costs Selling expenses Administrative expenses Research and development expenses Actual return on plan assets	For the years ended December 31, 2022 2021 $ 9,492 8,964 1,915 1,660 $ 11,407 10,624 $ 9,884 9,116 270 116 1,055 1,201 198 191 $ 11,407 10,624 $ 19,324 4,619	For the years ended December 31, 2022 2021 $ 9,492 8,964 1,915 1,660 $ 11,407 10,624 $ 9,884 9,116 270 116 1,055 1,201 198 191 $ 11,407 10,624 $ 19,324 4,619
		2021
		8,964 1,660
		10,624
		9,116 116 1,201 191
		10,624
		4,619

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, 2022 and 2021, was as follows:

Accumulated balance, January 1 Recognized during this year Accumulated balance, December 31	For the years ended December 31, 2022 2021 (253,671) (175,380) 81,962 (78,291) $ (171,709) (253,671) (Continued)

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

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increases rate	For the years ended December 31, 2022 2021 1.5%~1.75% 0.5%~0.625% 1%~1.5% 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 $7,237 thousand.

The weighted average lifetime of the defined benefits plans is 7.08~13.29 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, 2022 Discount rate Future salary increasing rate December 31, 2021 Discount rate Future salary increasing rate	Impact on the defined benefit obligations Increased 0.25% Decreased 0.25% $ (11,255) 11,671 11,464 (11,112) (14,960) 15,549 15,117 (14,626)

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 2022 and 2021.

(i) 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.

(Continued)

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

The cost of the pension contributions to the Labor Insurance Bureau for the years ended December 31, 2022 and 2021 amounted to $51,400 thousand and $46,668 thousand, respectively.

(ii) The pension recognized consists of pension expenses and pensions for professional management. The pension expenses for professional management were $2,060 thousand and $9,333 thousand for the years ended December 31, 2022 and 2021, respectively.
(iii) Short-term compensated absences liabilities

As of December 31, 2022 and 2021, and January 1, 2021, the Group’s short-term compensated absences liabilities amounted to $5,294 thousand, $5,641 thousand and $5,641 thousand, respectively.

(u) Income tax

(i) Income tax expense

The components of income tax expense for the years ended December 31, 2022 and 2021 were as follows:

Current income tax expense (benefit) Current period Adjustment for prior periods Deferred tax expense The origination and reversal of temporary differences Change in land value-added tax Change in unrecognized deductible temporary differences Income tax expense	For the years ended December 31,	For the years ended December 31,
	2022 $ 387,416 (19,141) 368,275 14 487,428 (337,743) 149,699 $ 517,974	2021 (352,734) (1,848) (354,582) - 326,262 421,771 748,033 393,451

For the years ended December 31, 2022 and 2021, income tax expenses recognized under other comprehensive income were both $0 thousand.

(Continued)

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

Reconciliation of income tax expense and profit before tax for the years ended December 31, 2022 and 2021, were as follows:

Profit before income tax
Income tax using the Company’s domestic tax rate
Effect of tax rates in foreign jurisdiction
Non-deductible expenses
Tax-exempt income
Current-year losses for which no deferred tax asset was
recognized
Change in unrecognized temporary differences
Change in provision in prior periods
Income basic tax
Changes of permanent differences
Change in land value-added tax
Realized investment losses
Non-deductible current-year tax losses
Others
Total

For the years ended December 31,
2022
2021
$
723,371
3,878,106
$ 144,674
775,621
(29,531)
6,085
7,620
11,734
305,142
(205,054)
212,397
132,368
(550,140)
289,403
(19,141)
(1,848)
-
19,149
(642,894)
(635,173)
487,428
326,262
(370,775)
(318,276)
834,730
-
138,464
(6,820)
$
517,974
393,451

(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, 2022 and 2021. 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 were as follows:

December 31, 2022 Aggregate amount of temporary differences related to investments in subsidiaries $ 183,099 Unrecognized deferred tax liabilities $ 36,620	December 31, 2021 105,577 21,115	January 1, 2021
		39,698
		7,940

(Continued)

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

2) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Decommissioning liabilities Remediation project Pollution remediation Allowance for doubtful receivables Investment property, property, plant and equipment Pension Tax loss Write-down of inventories Others	December 31, 2022 $ 134,112 237,313 1,239,359 319,484 2,825,569 153,520 6,953,600 133,731 496,681 $ 12,493,369	December 31, 2021 122,815 237,893 1,859,585 319,484 3,412,459 169,099 7,512,200 18,268 452,751 14,104,554	January 1, 2021
			111,517 238,563 276,050 319,484 3,091,241 207,999 7,310,487 854 381,963
			11,938,158

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, 2022, the expiration years of tax loss unrecognized as deferred tax assets were as follows:

a) The Company

Year incurred	Amount Expiry Date $ 1,336,360 2025 1,870,634 2026 567,338 2030
2015 2016 2020

(Continued)

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

b) Taivex

Year incurred	Amount Effective Period $ 50,227 2023 27,419 2024 43,032 2025 44,291 2026 54,764 2027 79,334 2028 67,345 2029 76,760 2030 85,875 2031 87,684 2032
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (estimated)

c) BES Twin Towers

Year incurred 2013 2014 2018 2021 d) CPDC GT Year incurred 2018 2019 e) Ding-Yue Year incurred 2016 2017 2018 2019 2020 2021 2022 (estimated)	Year incurred	Amount Effective Period $ 6,582 2023 44,139 2024 427,443 2028 102,885 2031 Amount Effective Period $ 3,845 2028 36,819 2029 Amount Effective Period $ 23 2026 1,162 2027 1,821 2028 3,726 2029 9,991 2030 87,887 2031 229,425 2032
	2016 2017 2018 2019 2020 2021 2022 (estimated)

(Continued)

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

f) Da Yin

Year incurred 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (estimated) g) Weihua Year incurred 2021	Year incurred	Amount Effective Period $ 142 2023 159 2024 11 2025 112 2026 136 2027 158 2028 162 2029 2,207 2030 2,573 2031 1,950 2032 Amount Effective Period $ 64,357 2026
	2021

h) Weiming (original name: Jiangsu Weiming Petrochemical Corporation)

Year incurred 2018 2019 2020 2021 2022 (estimated) i) Weicai Year incurred 2018 2019 2020 2022 (estimated) j) Weiming Construction Year incurred 2020 2021 2022 (estimated)	Year incurred	Amount Effective Period $ 20,223 2023 147,863 2024 135,504 2025 217,651 2026 538,417 2027 Amount Effective Period $ 162,753 2023 58,689 2024 48,678 2025 203,669 2027 Amount Effective Period $ 23 2025 512 2026 840 2027
	2020 2021 2022 (estimated)

(Continued)

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

3) Deferred tax liabilities:

As of December 31, 2022 and 2021 and January 1, 2021, the balance of deferred income tax liabilities for the provision of land value-added tax was $7,251,744 thousand, $6,764,316 thousand and $6,497,650 thousand, respectively.

4) Deferred tax assets:

Deferred tax assets:
January 1, 2022 Recognized in profit or loss December 31, 2022 December 31, 2021 (equal to January 1)	Taxable Loss $ 11,009 - $ 11,009 $ 11,009	Defined benefit plans 14 (14) - 14	Total 11,023 (14)
			11,009
			11,023

(iii) Assessment of tax

The Company's tax returns for the years through 2020 were assessed by the National Taxation Bureau of Kaohsiung.

(v) Capital and other equity
(i) The issuance of common stock

As of December 31, 2022 and 2021 and January 1, 2021, the authorized, issued and outstanding capital of the Company amounted to $37,848,502, $37,848,502 thousand and $32,848,502 thousand, respectively, divided into 3,784,850 thousand shares, 3,784,850 thousand shares, and 3,284,850 thousand shares, respectively, with par value of $10 per share.

Reconciliation of shares outstanding for the years ended December 31, 2022 and 2021 was as follows:

(In thousands of shares)

Balance, January 1 Capital increased by cash Balance, December 31	Common Stock	Common Stock
	For the years ended December 31,
	2022 3,784,850 - 3,784,850	2021
		3,284,850 500,000
		3,784,850

(Continued)

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

A resolution was made during the general meeting of the shareholders held on July 2, 2021 for the issuance of common stock for cash, with a maximum limit of 600,000 thousand shares. Thereafter, the Company issued 500,000 thousand shares, with par value of $10 per share, amounting to $5,000,000 thousand based on a resolution approved during the Board of Director’s meeting held on September 29, 2021. The above capital increase had been approved by the Securities and Futures Bureau of Financial Supervisory Commission on November 5, 2021, with issue price $11.75 per share, with the base date set on December 21, 2021. The relevant legal registration procedures had been completed.

(ii) Capital Surplus

The balances of capital surplus 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, 2022 $ 1,408,088 26,314 127,115 18,141 $ 1,579,658	December 31, 2021 1,408,088 26,314 1,758 18,141 1,454,301	January 1, 2021
			538,726 26,314 634 18,141
			583,815

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

As specified in Company’ s Articles of Incorporation, if the Company has earnings, after payment of taxation, it shall offset the losses in previous years, and set aside a legal reserve and special reserve 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 shareholders’ 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

(Continued)

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

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.

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. The carrying amount of such special reserve all amounted to $4,194,973 thousand as of December 31, 2022 and 2021 and January 1, 2021.

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 issued by the Financial Supervisory Commission, 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 Company disposed of the relevant assets on August 18, 2021, and the amount reversed in proportion to the original special reserve was $90,638 thousand. The carrying amount of such special reserve amounted to $4,144,438 thousand, $4,144,438 thousand and $4,235,076 thousand as of December 31, 2022 and 2021 and January 1, 2021, respectively.

The Company changed the subsequent measurement of investment properties from cost model to fair value model. In accordance with Rule issued by the Financial Supervisory Commission, 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 disposed of the relevant assets on August 18, 2021, and the amount reversed in proportion to the original special reserve was $964,044 thousand. The carrying amount of such special reserve amounted to $20,260,189 thousand, $20,260,189 thousand and $21,224,233 thousand as of December 31, 2022 and 2021 and January 1, 2021, respectively.

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES 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. The Company disposed of the relevant assets on August 18, 2021, and the amount reversed in proportion to the original special reserve was $366,904 thousand. As of December 31, 2022 and 2021 and January 1, 2021, the Company appropriated to the special reserve amounting to $9,466,598 thousand, $6,790,476 thousand and $5,947,347 thousand, respectively.
b) 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) 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

Earnings distribution for 2021 and 2020 was decided by the resolution adopted, at the general meeting of shareholders held on May 27, 2022 and July 2, 2021, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash	2021 Allotment rate (NT dollars) Amount $ 0.40 $ 1,513,940	2020	2020
	Allotment rate (NT dollars)	Allotment rate (NT dollars) -	Amount
	$ 0.40		-

(Continued)

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

(iv) Other equity accounts

Balance at January 1, 2022 Retrospective adjustments Exchange differences on foreign operations Exchange difference on associates accounted for using equity method Unrealized gains (losses) 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, associates accounted for using equity method Balance at December 31, 2022 Balance at January 1, 2021 Retrospective adjustments Exchange differences on foreign operations Exchange difference on associates accounted for using equity method Unrealized gains (losses) 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, associates accounted for using equity method Balance at December 31, 2021	Exchange differences on translation of foreign financial statements $ (948,859) (1,455) 467,727 (29,772) - - - $ (512,359) $ (966,202) (431) 11,215 5,104 - - - $ (950,314)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (576,946) - - - (234,022) 393,023 (46,356) (464,301) (854,259) - - - 252,449 (1,384) 26,248 (576,946)

(Continued)

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

(w) Earnings per share

The Group’s earnings per share were calculated as follows:

Basic earnings per share (NT dollars) Profit attributable to ordinary shareholders of the Company Weighted average number of ordinary shares (thousand shares) Basic earnings per share Diluted earnings per share (NT dollars) Profit attributable to ordinary shareholders of the Company (diluted) Weighted average number of ordinary shares (thousand shares) Effect of dilutive potential 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,
	2022 $ 233,114 3,784,850 $ 0.06 $ 233,114 3,784,850 5,679 3,790,529 $ 0.06	2021 3,491,636 3,299,919 1.06 3,491,636 3,299,919 9,554 3,309,473 1.06

(x) Revenue from contracts with customers

(i) Disaggregation of revenue

The Group primarily engages in the production of 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).

(ii) Contract balances

Notes receivable Accounts receivable (including related parties) Less: allowance for impairment Contract liabilities	December 31, 2022 December 31, 2021 January 1, 2021 $ 77,706 628,485 375,689 2,015,500 3,574,627 1,906,374 (333,593) (334,036) (446,393) $ 1,759,613 $ 3,869,076 $ 1,835,670 $ 65,846 20,612 1,676

For details on accounts receivable and allowance for impairment, please refer to note 6(d).

The amounts of revenue recognized for the years ended December 31, 2022 and 2021 that were included in the contract liability balance at the beginning of the periods were $20,612 thousand and $1,676 thousand, respectively.

(Continued)

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

(y) Remunerations to employees and directors

In accordance with the Articles of incorporation, the Company should contribute 3% of the profit as employee compensation and less than 2% as directors' 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, 2022 and 2021, the remuneration to employees amounted to $11,182 thousand and $124,488 thousand, respectively, and the remuneration to directors amounted to $0 thousand and $82,992 thousand, respectively. These amounts were calculated using the Company’s net income before tax without the remunerations to employees and directors for each period, multiplied by the proposed percentage which is stated under the Company's proposed Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period. Shares distributed to employees as employee’ s remuneration are calculated based on the closing price of the Company’s shares on the day before the approval by the Board of Directors.

For the year ended December 31, 2022, the actual distribution of the employee remuneration was $78,561 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.

(z) 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 years ended December 31,	For the years ended December 31,
	2022 $ 243,203 13,384 $ 256,587	2021
		186,933 1,267
		188,200

(ii) Other income

The details 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,
	2022 $ 28,457 328,166 158,238 $ 514,861	2021
		19,151 313,215 154,246
		486,612

(Continued)

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

(iii) Other gains and losses

The details of other gains and losses were as follows:

Losses on disposals of property, plant, and equipment Gains on disposals of investment property Gains on lease modification Foreign exchange gains Gains on financial assets at fair value through profit or loss Fee expense Losses on work stoppages Remediation expense Other gains and losses Other gains and losses, net	For the years ended December 31, 2022 2021 $ (1,174) (33) - 706,465 17 34 248,830 26,146 21,965 193,148 (167,685) (191,759) (14,516) (248,457) - (1,664,899) (29,531) (20,571) $ 57,906 (1,199,926)
	2022 $ (1,174) - 17 248,830 21,965 (167,685) (14,516) - (29,531) $ 57,906

(iv) Finance costs

The details of finance costs were as follows:

Interest expense Finance costs, net	For the years ended December 31, 2022 2021 $ (455,640) (323,681) $ (455,640) (323,681)
	2022 $ (455,640) $ (455,640)

(aa) Financial Instruments

Except for the contention mentioned below, there was no significant change in the fair value of the Group’s financial instruments and degree of exposure to credit risk, liquidity risk and market risk arising from financial instruments. For related information, please refer to note 6(aa) of the consolidated financial statements for the December 31, 2021.

(i) Credit risk

1) The concentration of credit risk

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.

(Continued)

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

As of December 31, 2022 and 2021, 81% and 81% of the total amount of accounts receivable was composed of 30 and 28 customers, respectively. The sales of the Group were not significantly concentrated in a small number of customers.

As of January 1, 2021, 82% of the total amount of accounts receivable was composed of 12 customers. The sales of the Group were significantly concentrated in a small number of customers.

2) Receivables

For credit risk exposure of notes, accounts and other receivables, please refer to note 6(d).

Other financial assets at amortized cost includes time deposits and guarantee deposit 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. As of December 31, 2022 and 2021, and January 1, 2021, the loss allowance provision all amounted to $0 thousand.

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2022 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) Short-term bills payable Long-term bills payable Bonds payable	Carrying amount $ 1,511,718 1,327,843 10,427 157,561 310,359 24,342,925 9,960,238 1,427,706 6,821,433 4,695,992 $ 50,566,202	Contractual cash flows 1,511,718 1,327,843 10,427 157,561 356,173 25,812,832 10,315,203 1,434,000 6,830,000 4,865,379 52,621,136	Within 6 months 1,353,003 1,232,694 10,427 119,843 39,702 3,795,681 6,477,827 1,434,000 - 91,369 14,554,546	6-12 months 133,445 50,824 - 13,056 25,457 2,067,030 915,064 - - 106,565 3,311,441	1-2 years 22,894 44,166 - 1,414 39,495 994,477 1,476,896 - 6,830,000 200,149 9,609,491	2-5 years 2,376 159 - 21,713 46,174 18,955,644 821,414 - - 4,467,296 24,314,776	More than 5 years
							- - - 1,535 205,345 - 624,002 - - -
							830,882

(Continued)

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

December 31, 2021 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) Short-term bills payable Long-term bills payable Bonds payable January 1, 2021 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 Bonds payable	Carrying amount $ 1,770,358 1,409,576 10,910 135,955 296,448 2,501,336 25,628,457 1,429,955 5,254,518 4,709,096 $ 43,146,609 $ 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	Contractual cash flows 1,770,358 1,409,576 10,910 135,955 344,268 2,574,060 27,692,363 1,434,000 5,260,000 4,953,386 45,584,876 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	Within 6 months 1,770,358 1,403,316 10,910 80,506 33,318 29,315 4,728,742 1,434,000 - 17,140 9,507,605 1,394,928 818,647 8,384 110,763 24,828 1,495,088 6,631,637 - - 10,484,275	6-12 months - 6,260 - 8,905 26,607 332,606 587,215 - - 64,606 1,026,199 - - - 8,668 23,269 29,768 363,886 - 22,400 447,991	1-2 years - - - 18,752 28,405 1,786,019 1,136,587 - 5,260,000 204,195 8,433,958 - - - 2,146 37,065 61,457 1,110,184 5,660,000 22,400 6,893,252	2-5 years - - - 26,292 38,140 426,120 20,385,632 - - 4,667,445 25,543,629 - - - 247 48,375 1,584,003 2,174,633 - 3,567,200 7,374,458	More than 5 years
							- - - 1,500 217,798 - 854,187 - - -
							1,073,485
							- - - 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.

(Continued)

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

(iii) Currency risk

1) Currency risk exposure

The Group’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD EUR VND MMK CNY Non-Monetary items HKD Financial liabilities Monetary items USD MMK	December 31, 2022 Foreign Currency Exchange rate NTD $ 57,676 30.725 1,772,086 497 32.690 16,245 - - - 6,237 0.0146 91 549,296 4.406 2,420,200 220,680 3.9435 1,010,040 $ 22,648 30.725 695,873 6,766 0.0146 99	December 31, 2022 Foreign Currency Exchange rate NTD $ 57,676 30.725 1,772,086 497 32.690 16,245 - - - 6,237 0.0146 91 549,296 4.406 2,420,200 220,680 3.9435 1,010,040 $ 22,648 30.725 695,873 6,766 0.0146 99	December 31, 2021 Foreign Currency Exchange rate NTD 66,935 27.677 1,852,567 - - - - - - 6,935 0.0160 108 459,208 4.343 1,994,339 255,216 3.5522 906,578 10,452 27.677 289,287 - - -	December 31, 2021 Foreign Currency Exchange rate NTD 66,935 27.677 1,852,567 - - - - - - 6,935 0.0160 108 459,208 4.343 1,994,339 255,216 3.5522 906,578 10,452 27.677 289,287 - - -	January 1, 2021	January 1, 2021
	Foreign Currency $ 57,676 497 - 6,237 549,296 220,680 $ 22,648 6,766	Exchange rate 30.725 32.690 - 0.0146 4.406 3.9435 30.725 0.0146	Foreign Currency 66,935 - - 6,935 459,208 255,216 10,452 -	Exchange rate 27.677 - - 0.0160 4.343 3.5522 27.677 -	Foreign Currency 31,069 - 8,823,747 7,464 559,115 247,578 - -	Exchange rate NTD 28.099 873,000 - - 0.0012 10,748 0.0211 158 4.315 2,412,580 3.6277 898,139 - - - -

(Continued)

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

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 strengthening of 1% of the USD, EUR, VND, MMK, and CNY against the NTD as at December 31, 2022 and 2021 would have increased the net profit after tax by $28,101 thousand and $28,462 thousand for the years ended December 31, 2022 and 2021, respectively; other comprehensive income would have increased $10,100 thousand and $9,066 thousand for the years ended December 31, 2022 and 2021, respectively. The analysis is performed on the same basis for both periods.

3) Foreign exchange gains (losses) on monetary items

Due to the Group's diversity 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, 2022 and 2021, foreign exchange gains (losses) (including realized and unrealized portions) amounted to $248,830 thousand and $26,146 thousand, respectively.

(iv) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Group's financial assets and liabilities.

The following sensitivity analysis is based on the risk exposure to 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 profit before tax will decrease by $243,429 thousand and $25,013 thousand for the years ended December 31, 2022 and 2021, respectively, assuming all other variable factors remain constant. This is due mainly to the fact that the Group’s borrowings bear floating interest rate.

(v) 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, 2022 2021 After-tax other comprehensive income Net income After-tax other comprehensive income Net income $ 13,448 3,750 30,597 73,310 $ (13,448) (3,750) (30,597) (73,310)	For the years ended December 31, 2022 2021 After-tax other comprehensive income Net income After-tax other comprehensive income Net income $ 13,448 3,750 30,597 73,310 $ (13,448) (3,750) (30,597) (73,310)
	2022 After-tax other comprehensive income Net income $ 13,448 3,750 $ (13,448) (3,750)
	After-tax other comprehensive income $ 13,448 $ (13,448)	After-tax other comprehensive income 30,597 (30,597)
Increasing 1% Decreasing 1%

(Continued)

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

(vi) Fair value information

1) Fair value hierarchy

The carrying amount and fair value of the Group’ s financial assets and liabilities, including the information on fair value hierarchy, were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

	December 31, 2022	December 31, 2022	December 31, 2022
Book value $ 374,985 576,149 763,637 5,000 1,344,786 6,824,456 1,868,374 5,644,855 14,337,685 $ 16,057,456 $ 40,181,547 16,023,388 1,427,706 2,839,561 3,299,685 4,545,992 15,130,090 6,821,433 167,988 310,359 $ 50,566,202		Fair value
	Level 1 329,931 576,149 - 5,000 581,149 - - - - 911,080 - - - - - - - - - - -	Level 2 - - - - - - - - - - - - - - - - - - - - -	Level 3 45,054 - 763,637 - 763,637 - - - - 808,691 40,181,547 - - - - - - - - - -	Total
				374,985
				576,149 763,637 5,000
				1,344,786
				- - -
				-
				1,719,771
				40,181,547
				- - - - - - - - -
				-

(Continued)

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

	December 31, 2021	December 31, 2021	December 31, 2021
Book value $ 7,330,998 2,280,653 779,074 3,059,727 7,650,122 3,984,890 1,238,873 12,873,885 $ 23,264,610 $ 38,867,067 12,737,689 1,429,955 3,179,934 1,511,515 4,684,096 13,905,589 5,254,518 146,865 296,448 $ 43,146,609		Fair value
	Level 1 334,993 2,280,653 - 2,280,653 - - - - 2,615,646 - - - - - - - - - - -	Level 2 22,226 - - - - - - - 22,226 - - - - - - - - - - -	Level 3 6,973,779 - 779,074 779,074 - - - - 7,752,853 38,867,067 - - - - - - - - - -	Total
				7,330,998
				2,280,653 779,074
				3,059,727
				- - -
				-
				10,390,725
				38,867,067
				- - - - - - - - -
				-

(Continued)

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

	January 1, 2021	January 1, 2021	January 1, 2021
Book value $ 11,576,388 2,068,247 740,469 2,808,716 7,479,899 1,979,964 2,660,453 12,120,316 $ 26,505,420 $ 37,626,827 3,615,000 2,221,959 1,914,833 3,500,000 7,489,650 5,656,112 123,324 292,992 $ 24,813,870		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)

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

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.

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 are 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 years ended December 31, 2022 and 2021.

(Continued)

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

5) Statements of changes in fair value measurements of financial assets in Level 3

January 1, 2022 Decrease Dividends Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income December 31, 2022 January 1, 2021 Exchange differences Acquisition Disposal Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income December 31, 2021	Investment Property $ 38,867,067 - - 1,314,480 - $ 40,181,547 Investment Property $ 37,626,827 - - (1,673,535) 2,913,775 - $ 38,867,067	Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 6,973,779 - - - (6,966,562) - 37,837 - - - 45,054 - Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 10,746,855 - 63 - 21,540 - (3,816,240) - 21,561 - - - 6,973,779 -	Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 779,074 (15,000) - - (437) 763,637 Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 740,469 - - (1,438) - 40,043 779,074
		Designated at initial recognition 10,746,855 63 21,540 (3,816,240) 21,561 - 6,973,779

(Continued)

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 cannot 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 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 appraisers 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, 2022 and 2021 and January 1, 2021 was $40,181,547 thousand and $38,867,067 thousand, and $37,626,827 thousand, respectively.

The Group holds investments in equity shares, which is classified as financial assets at fair value through profit or loss, 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 possess multiple unobservable input values which are all independent from and irrelevant to 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 •P/E ratio 12.20~12.33, 9.66~10.69 and 9.66~10.69 as multiply on December 31, 2022 and 2021 and January 1, 2021, respectively. •Lack of market liquidity, discount rate 20% on all reporting dates •The higher the P/E ratio, the higher the fair value •Lack of market liquidity, the more the discount, the lower the fair value
Financial assets at fair value through other comprehensive income - equity investments without an active market	Public company comparable method

(Continued)

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

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% on all reporting dates •Not applicable •Lack of market liquidity, the more the discount, the lower the fair value • Net asset value • Not applicable
Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss	Net asset value method 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 appraisers' 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 appraisers.

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.

(ab) 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.

(Continued)

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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.

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.

(Continued)

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

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.

(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 longterm 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.

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

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.

(ac) 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 liabilities.

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, 2022 and 2021 and January 1, 2021 were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Total liabilities and equity Debt-to-equity ratio	December 31, 2022 $ 61,604,680 (6,824,456) $ 54,780,224 $ 79,518,249 $ 134,298,473 % 40.79	December 31, 2021 54,926,788 (7,650,122) 47,276,666 80,314,522 127,591,188 % 37.05	January 1, 2021 34,041,959 (7,479,899) 26,562,060 70,766,730 97,328,790 % 27.29

On December 31, 2022, The increase of debt-to-equity ratio resulted from the operationsupplementing bank loans.

(ad) Investing and financing activities not affecting the current cash flow

The Group’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2022 and 2021, were as follows:

(i) For the acquisition of right-of-use assets based on lease term, please refer to note 6(i).

(Continued)

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

(ii) Reconciliation of liabilities arising from financing activities was as follows:

Non-cash changes Foreign exchange movement Bills payable transferred to long- term bank loans Other 64,732 - - 183,412 - (1,601,045) - - 36,092 - - (3,085) - - 94,019 248,144 - (1,474,019)	Non-cash changes Foreign exchange movement Bills payable transferred to long- term bank loans Other 64,732 - - 183,412 - (1,601,045) - - 36,092 - - (3,085) - - 94,019 248,144 - (1,474,019)	December 31, 2022
Foreign exchange movement 64,732 183,412 - - - 248,144	Bills payable transferred to long- term bank loans - - - - - -
		18,279,775 16,023,388 1,427,706 6,821,433 310,359
		42,862,661

Non-cash changes Foreign exchange movement Bills payable transferred to long- term bank loans Other 15,405 2,247,200 - (1,572) - (2,094,387) - - - - (2,247,200) (1,594) - - 69,088 13,833 - (2,026,893)	Non-cash changes Foreign exchange movement Bills payable transferred to long- term bank loans Other 15,405 2,247,200 - (1,572) - (2,094,387) - - - - (2,247,200) (1,594) - - 69,088 13,833 - (2,026,893)	December 31, 2021
Foreign exchange movement 15,405 (1,572) - - - 13,833	Bills payable transferred to long- term bank loans 2,247,200 - - (2,247,200) - -
		15,392,104 12,737,689 1,429,955 5,254,518 296,448
		35,110,714

Note: The "other" included in non-cash changes are the reimbursement regarding letters of credit.

(7) Related-party transactions:

(a) Parent company and ultimate controlling company

The Company is the ultimate parent company.

(b) Names and relationships with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

Names of related party

Kaohsiung Monomer Company Limited Jean Pacific Development Co., Ltd.

Chung Kung Safeguarding & Security Corp. (Chung Kung Safeguarding & Security)

BES Engineering Corporation (BES Engineering) (Note 2)

Chung Kung Management and Maintenance of Apartments Co., Ltd.

Chain Yarn Co., Ltd. (Note 1)

Relationships with the Group

Investee as accounted for using equity method Investee as accounted for using equity method Investee as accounted for using equity method

Investee as accounted for using equity method

Investee as accounted for using equity method of Chung Kung Safeguarding & Security

The Company is the director of the entity

(Continued)

103

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

Names of related party	Relationships with the Group
Chung Kung Management Consultant Co., Ltd.	Subsidiary of Chung Kung Safeguarding &
	Security
Coreasia Human Resources Management Co.,	Subsidiary of BES Engineering
Ltd.
Core Pacific City Co., Ltd.	Substantive related party
Cheng Yao Enterprise Co., Ltd.	Substantive related party
Core Pacific Marketing Corporation	Substantive related party
All board of directors, general manager and	The main managements of the Company
deputy general manager

Note 1: Chain Yarn Co., Ltd. re-elected directors at the general meeting of shareholders on July 15, 2021, and the Company was elected for the director.

Note2: The Group had significant influence on BES Engineering on June 13, 2022, please refer to Note 6(g).

(c) Significant Transactions with related parties
(i) Sales

The amounts of significant sales by the Group to related parties were as follows:

Other related parties Associates	For the years ended December 31,	For the years ended December 31,
	2022 $ 1,205,616 918,883 $ 2,124,499	2021
		1,009,343 751,291
		1,760,634

The terms for related party sale transactions were the same as ordinary sales.

(ii) Purchases

The amounts of significant purchases by the Group from related parties were as follows:

Other related parties	For the years ended December 31,	For the years ended December 31,
	2022 $ 525,823	2021
		63,135

The terms for related party purchase transactions were the same as those of other unrelated vendors.

(Continued)

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

(iii) Receivables from related parties

The receivables from related parties were as follows:

Accounts	Types of related parties	December 31, 2022 $ 170,694 90,507 1,900 15,229 $ 278,330	December 31, 2021 385,366 91,978 731 8,972 487,047	January 1, 2021
Accounts receivable Accounts receivable Other receivables Other receivables	Other related parties Associates Other related parties Associates			- 51,106 - 9,447
				60,553

(iv) Payables to Related Parties

The payables to related parties were as follows:

Accounts	Types of related parties	December 31, 2022 $ 753 1,334 5,360 $ 7,447	December 31, 2021 11,333 167,715 4,553 183,601	January 1, 2021 - 5,951 5,380
Accounts payable Other payables Other payables	Other related parties Other related parties Associates
				11,331

(v) Other

Associates Rent income Other revenues Other expenses Security service fees Other related parties Rent income Other revenues Other expenses	For the years ended December 31,
	2022 2021 $ 10,459 5,378 15,059 24,520 (226) - (21,090) (21,283) 3,970 6 3,011 404 (15,666) (37,424)

Please refer to note 6(s) for lease of land and buildings to related parties.

(Continued)

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

(vi) Lease

1) Lease liability

Associates Other related parties 2) Depreciation expense Associates Other related parties 3) Interest expense Associates Other related parties	Lease liability December 31, 2022 December 31, 2021 $ 58,389 3,998 1,309 - $ 59,698 3,998 For the years ended December 31, 2022 2021 $ 20,419 5,851 652 - $ 21,071 5,851 For the years ended December 31, 2022 2021 $ 113 120 14 - $ 127 120	Lease liability	Lease liability
			December 31, 2021
			3,998 -
			3,998
	2022 $ 113 14 $ 127

(vii) 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, 2022 and 2021, and January 1, 2021, the construction project in-progress all amounted to $1,451,000 thousand. As of December 31, 2022 and 2021, and January 1, 2021, the unpaid fee amounted to $445,131 thousand, $553,964 thousand and $704,896 thousand, respectively. The security deposit at December 31, 2022 and 2021, and January 1, 2021 were $413,340 thousand, $420,660 thousand and $420,660 thousand, respectively.
(viii) The Group had contracts with other related parties, for mechanical engineering services projects and paid commission on the basis of actual construction. As of December 31, 2022 and 2021, and January 1, 2021, the construction project in-progress amounted to $1,640 thousand, $1,559 thousand and $18,439 thousand, respectively. As of December 31, 2022 and 2021, and January 1, 2021, the unpaid fee amounted to $0 thousand, $130 thousand and $0 thousand, respectively. The security deposit at December 31, 2022 and 2021, and January 1, 2021 were all $0 thousand.
(ix) Based on a resolution of the Board of Director’ s meeting held on December 28, 2022, the Group signed a sales agency contract with Core Pacific Marketing Corporation, which entrusted Core Pacific Marketing Corporation to sell the properties of Core Pacific Plaza. The term of the contract is five years.

(Continued)

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

(x) The Group acquired land from Core Pacific City Co., Ltd., which the contract and the amendment of property transaction was signed on October 30, 2019. The accumulated payment made by the Group based on the aforementioned amendment as of December 31, 2022 was $476,190 thousand, please refer to note 6(e).
(d) Key management personnel compensation

Short-term employee benefit Post-employment benefits	For the years ended December 31,	For the years ended December 31,
	2022 $ 128,240 3,135 $ 131,375	2021
		219,205 6,109
		225,314

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets	Purpose of pledge	December 31, 2022 $ 99,357 43,497,329 7,714,933 31,416,479 3,218,381 541,800 160,580 224,143 108,969 458,638 $ 87,440,609	December 31, 2021 116,585 38,007,167 7,871,848 31,435,973 785,917 1,147,498 187,220 - 108,969 576,089 80,237,266	January 1, 2021 24,614 - 7,031,472 15,346,334 502,002 1,430,230 634,995 - 108,969 585,925
Time deposits Inventories, construction business 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 Restricted assets Refundable deposit Right-of-use assets, land and sea areas	Guarantee for priority right-of-use of harbor, guarantee for purchases, and collateral for short-term loan Short-term bills payable, short-term syndicated loan (Shin Kong) Collateral for long-term and short-term financial credit, syndicated loan (Mega) Collateral for short-term, medium-term and long- term financial credit, syndicated loan (Mega), bonds payable and long-term bills payable Long-term bills payable Long-term bills payable Long-term bills payable Short-term syndicated loan (Shin Kong) Deposit for lawsuit Collateral for long-term financial credit
				25,664,541

As of December 31, 2022 and 2021 and January 1, 2021, 0 thousand shares, 0 thousand shares and 4,000 thousand shares of a subsidiary of the Group were pledged as collateral for long-term bills payable.

(Continued)

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

(9) Commitments and contingencies:

(a) As of December 31, 2022 and 2021 and January 1, 2021, the Group had the following unused letters of credit:

USD EUR JPY NTD CNY	December 31, 2022 $ 17,722 1,309 - 983,000 20,000	December 31, 2021 January 1, 2021 49,408 20,824 457 246 6,400 - 1,146,000 1,020,000 32,300 -

(b) As of December 31, 2022 and 2021 and January 1, 2021, the Group had issued guarantee notes for bank loans, sales and purchases, and development plan aggregating to $22,327,400 thousand and USD40,000 thousand, $26,197,400 thousand and USD30,000 thousand, $24,117,400 thousand and USD30,000 thousand, respectively.
(c) As of December 31, 2022 and 2021 and January 1, 2021, the Group had contracts for various construction projects in-progress amounting to $34,143,846 thousand, $24,019,792 thousand, and $12,225,823 thousand, respectively. As of December 31, 2022 and 2021 and January 1, 2021, the remaining future obligations under these contracts amounted to $18,139,624 thousand, $11,349,881 thousand, and $2,547,453 thousand, respectively.
(d) As of December 31, 2022 and 2021 and January 1, 2021, the agreement on the acquisition of material property amounting to $0 thousand, $1,379,861 thousand, and $39,045,010 thousand, respectively, the unpaid portion amounting to $0 thousand, $138,000 thousand, and $28,885,000 thousand, respectively. Please refer to note 6(e).
(e) The Group signed an agreement to purchase raw materials such as benzene, hydrogen and methylbenzene from CPC. Under this contract, the Group may purchase specified monthly volume of these raw materials at current month prices announced by the CPC with prepayment or domestic letter of credit.
(f) As of December 31, 2022 and 2021 and January 1, 2021, the Group signed an agreement of preclinical drug research amounting to USD$4,184 thousand and $176,979 thousand, USD$4,266 thousand and $164,522 thousand, USD$3,063 thousand and $92,070 thousand, respectively. The paid portion amounted to USD$3,041 thousand and $52,618 thousand, USD$2,916 thousand and $34,911 thousand, USD$2,466 thousand and $31,565 thousand, respectively. The unpaid portion amounted to USD$1,143 thousand and $124,361 thousand, USD$1,350 thousand and $129,611 thousand, USD$597 thousand and $60,506 thousand, respectively.

(Continued)

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

(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, 2022 and 2021 and January 1, 2021, the paid portion amounted to $20,000 thousand, $20,000 thousand and $10,000 thousands, respectively.
(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, 2022 and 2021 and January 1, 2021, the paid portion amounted to $10,000 thousand, $10,000 thousand and $5,000 thousand, respectively.
(i) The Group signed a license agreement of antineoplastic candidate drug with National Health Research Institutes on September 13, 2021. The license fee amounted to $125,000 thousand and the payment would be made by progress. As of December 31, 2022 and 2021, the paid portion amounted to $4,000 thousand and $2,500 thousand, respectively.
(j) Important matters

The case of loss compensation for the Kaohsiung gas explosion

CPC was issued the permits of road excavation of No.950129 on December 15, 1990 and No. 050076 on April 13, 1991 by the Maintenance Office, Public Works Bureau of KCG, who agreed CPC to excavate for the laying of pipelines. The Public Works Bureau of KCG abolished the foregoing permits after the gas-explosion event occurred at the nighttime in Kaohsiung City on July 31, 2014. With regard to the circumstance that administrative agencies shall compensate for the loss in accordance with the laws due to the legitimate abolishment, the Company filed a petition for relief to KHAC in February 2018 in order to protect the legitimate rights and interests of the Company. In December 2019, KHAC made the judgement that the Company lost the case, and the Company filed an appeal in January 2020. Upon finding the appeal meritorious, the Supreme Administrative Court reversed the original judgement and remanded to KHAC for a new trial.

(k) Contingent liabilities
(i) 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 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. 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 sides, 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 High Court Kaohsiung Branch Court (THCKBC) in April 2019. The court’ s judgement is announced that the compony shall pay $3,785 thousand, with

(Continued)

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

bearing interest, to Mr. Zhang in July 2019. The Company was dissatisfied and filed an appeal to Supreme Court in August 2019, and the part of original judgment that was unfavorable to the Company was remanded to the THCKBC on April 22, 2021. The Company received the judgment in December 2021 from THCKBC who awarded Mr. Zhang $3,764 thousand and the statutory interest by the Company after the case was remanded for the second time by the Supreme Court. The Company was not satisfied with such judgment of second instance and filed an appeal with the court of third instance in December in the same year. The Company received the written ruling in July 2022 that the Supreme Court dismissed the appeal, and this case was closed.

2) Disclosure Secret Case

Managers who left the office without authorization was suspected to be involve in business encroachment and theft of business secrets. To protect Company interests, the Company filed criminal appeal. The case was concluded by the Taiwan Miaoli Local Court in December 2016 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.

(ii) 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 Weiqiang 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 respectively. Weihua and Weiqiang 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. In February 2021, the ruling had been made due to the lack of assets for liquidation, the bankruptcy procedure was concluded and the case was closed. The unrecoverable allowance had been written off separately, please refer to note 6(d).

(Continued)

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

(iii) Civil compensation for Residents living in An shun

Mr. Chen and others filed civil and national compensation lawsuit to the Company and MOEA on March 14, 2017 (Hereinafter referred to as 1st case of the Tainan Anshun plant civil compensation), they claimed the Company and MOEA 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 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. Due to the controversial issue of extinctive prescription, the Company considered this case worth an appeal based on our unprofitable part of verdict. Therefore, the Company filed an appeal to the High Court on December 15, 2020, and this case is being heard by the Taiwan High Court Tainan Branch Court.

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:

(a) During the meeting of the Board of Directors on March 8, 2023, the Group made a resolution to sell 3,087,601 ordinary shares of Praxair Inc. to Linde UK Holding No.2 Limited., amounting to $670,000 thousand.

(Continued)

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

(12) Other:

(a) The nature of operating costs and expenses were as follows:

		For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31
By function By item		2022			2021
	Operating cost	Operating expense	Non-Operating expense	Total	Operating cost	Operating Expense	Non-Operating expense	Total
Employee benefits
Salary	865,658	567,933	-	1,433,591	1,126,372	916,177	-	2,042,549
Labor and health insurance	96,367	67,155	-	163,522	80,875	60,276	-	141,151
Pension	45,373	12,161	-	57,534	41,074	25,551	-	66,625
Others	39,933	39,601	-	79,534	37,160	55,864	-	93,024
Depreciation	1,049,604	235,815	4,333	1,289,752	925,350	181,177	4,255	1,110,782
Amortization	948	7,931	-	8,879	601	8,588	-	9,189

(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 the above 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. On November 10, 2020, the Company had received the minutes of the meeting with regards to the changes on the urban planning case of DIP concerning its execution, which prompted KUPC to suggest to the Bureau of Industry, MOEA to invite the Kaohsiung City Government (KCG) and all relevant parties to clarify the appeals and suggestions made by the companies involved. Thereafter, KCG will explicitly indicate the details in the urban planning documentation to all concerned parties in order to preclude the disputes. Conclusion of the meeting of the Task Force on "The Impact of the Transformation of DIP into Industrial Zone B on the Petrochemical Industry" held by the Industrial Development Bureau, Ministry of Economic Affairs on September 28, 2022: The Ministry of the Interior and the Control Yuan continue to pay attention to this case, and the Industrial Development Bureau of the Ministry of Economic Affairs will continue to assist in the discussion and exchange of opinions between the manufacturers and the KCG, and to summarize the opinions of the participating parties in this meeting and submit them to the Control Yuan for the members' investigation and reference; and KCG had yet to proceed on the procedures of the recategorization of the zone mentioned above as of December 31, 2022.

(Continued)

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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:

(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
0	The Company	Ding-Yue	Other receivables- related parties	Yes	3,500,000	3,500,000	1,500,000	3.115%~ 3.533%	2	-	Operating	-		-	15,877,894	31,755,788
1	Weiming	Weiming Construction	Other receivables	Yes	19,827	19,827	15,421	5.5%	2	-	Operating	-		-	715,808	1,073,712
1	Weiming	Weicai	Other receivables	Yes	270,360	264,360	-	5.5%	2	-	Operating	-		-	715,808	1,073,712
2	Weihua	Weicai	Other receivables	Yes	90,120	88,120	88,120	5.5%	2	-	Operating	-		-	104,713	104,713

Note 1: Numbering nature of borrowing as follows:

Transaction for business between two parties－1

Short-term financing－2

Note 2: The financing limit for total and individual were 40% and 20% of net assets based on the latest audited or reviewed financial statements of the Company.

Note 3: The financing limit for total and individual were 15% and 10% of net value of Weiming.

Note 4: The financing limit was 20% of net value of Weihua.

Note 5: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

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	The Company	Ding-Yue	2	47,633,683	17,815,000	17,815,000	14,165,000	2,880,000	% 22.44	79,389,472	Y	N	N
0	The Company	Weihua	2	47,633,683	225,300	220,300	220,300	-	% 0.28	79,389,472	Y	N	Y
0	The Company	Weicai	2	47,633,683	1,436,080	1,405,340	851,761	174,000	% 1.77	79,389,472	Y	N	Y
0	The Company	Weiming	2	47,633,683	1,667,220	528,720	264,360	-	% 0.67	79,389,472	Y	N	Y
0	The Company	Shiny Chemical Industrial Co., Ltd.	5	47,633,683	78,086	78,086	78,086	-	% 0.10	79,389,472	N	N	N
0	The Company	Lushun Warehouse Co., Ltd.	5	47,633,683	55,366	55,366	55,366	-	% 0.07	79,389,472	N	N	N
0	The Company	China General Terminal & Distribution Corporation	5	47,633,683	14,903	14,903	14,903	-	% 0.02	79,389,472	N	N	N
1	Ding-Yue	The Company	3	14,329,488	4,920,000	4,920,000	1,900,000	-	% 6.20	28,658,977	N	Y	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

(Continued)

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

Note 2: The relationship between the guarantee and the guarantor are as follows:

  - 1.Transactions between the companies.

  - 2.The Company directly or indirectly holds more than 50% voting right.

  - 3.When other companies directly or indirectly hold more than 50% voting rights of the Company.

  - 4.The Company directly or indirectly holds more than 90% voting right.

  - 5.A company that is mutually protected under contractual requirements based on the needs of the contractor.

  - 6.A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.

  - 7.Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry.

Note 3: The Company endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:
- 1.The total amount of guarantee for endorsement shall not exceed 100% of the Company’s net assets. The net assets referred to above are based on the latest audited or reviewed financial statements.
- 2.The guarantee amount for a single enterprise endorsement shall not exceed 60% of the Company’s net assets. The net assets referred to above are based on the latest audited or reviewed financial statements.
Note 4: Ding-Yue endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:
- 1.The total amount of guarantee for endorsement shall not exceed 100% of its net assets. The net assets referred to above are based on the latest audited or reviewed financial statements.
- 2.The guarantee amount for a single enterprise endorsement shall not exceed 50% of its net assets. The net assets referred to above are based on the latest audited or reviewed financial statements.
(iii) Securities held as of December 31, 2022 (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
The Company BES Twin Towers TSCIC Da Ying	Yuanta Financial Holding Co., Ltd. Taiwan Semiconductor Manufacturing Co., Ltd. Cathay FTSE China A50 ETF China Development Financial Holding Corp. Handy Chemical Corporation Ltd. Overseas Investment & Development Corp. Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials ZOWIE Technology Corporation Aetas Technology Inc. Chain Yarn Co., Ltd. Taiwan Business Bank, Ltd. Core Pacific City Co., Ltd. Taiwan Tea Corporation Good Company TaiRx, Inc. Jih Sun Taiwan Multi- Asset Fund	None 〞〞〞 The Company is a supervisor of the investee company None Substantive related party None 〞〞 The Company is a director of the investee company None Substantive related party None 〞〞〞	Current financial assets designated at fair value through profit or loss 〞〞 Non-current financial assets at fair value through other comprehensive income 〞〞 Non-current financial assets designated at fair value through profit or loss Non-current financial assets at fair value through other comprehensive income 〞〞〞 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 designated at fair value through profit or loss Non-current financial assets at fair value through other comprehensive income 〞 Current financial assets at fair value through other comprehensive income	7,622,382 10,000 250,000 44,684,712 386,000 2,600,000 2,779,154 9,455,778 8,815 287,961 28,500,000 1,013,283 1,053,812 7,279,000 750,000 722,500 500,000	165,406 4,485 5,345 563,027 26,437 26,000 32,667 419,147 358 - 277,043 13,122 12,387 154,679 - 14,652 5,000	0.06 0.00 0.00 0.24 4.51 2.89 27.71 49.00 0.03 0.58 13.41 0.01 10.51 0.92 2.08 0.80 -	165,406 4,485 5,345 563,027 26,437 26,000 32,667 419,147 358 - 277,043 13,122 12,387 154,679 - 14,652 5,000

(Continued)

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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
Core Pacific Twin Star (Vietnam)	Dat Xanh Group JSC	None	Current financial assets designated at fair value through profit or loss	1,000	16 1,719,771	-	16 1,719,771

(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	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Price	Cost	Gain (loss) on disposal	Shares/units	Amount
The Company The Company UDL	Ding-Yue I UDL I Weiming I	nvestments accounted for using equity method nvestments accounted for using equity method nvestments accounted for using equity method	Capital increased by cash Capital increased by cash Capital increased by cash	Subsidiaries Subsidiaries Subsidiaries	2,558,000,000 324,684,262 253,616,379	25,424,981 8,078,585 6,549,444	342,000,000 35,556,350 35,556,350	3,420,000 1,045,124 1,045,124	- - -	- - -	- - -	- - -	2,900,000,000 360,240,612 289,172,729	28,620,693 8,512,685 7,135,941

Note: The amount at the beginning and the end of the period include the adjustment of the equity method

(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 Owner Relationship with the Company Date of transfer Amount	If the counter-party is a related party, disclose the previous transfer information Owner Relationship with the Company Date of transfer Amount	If the counter-party is a related party, disclose the previous transfer information Owner Relationship with the Company Date of transfer Amount	If the counter-party is a related party, disclose the previous transfer information Owner Relationship with the Company Date of transfer Amount	References for determining price	Purpose of acquisition and current condition	Others
								elationship with the Company	Date of transfer	Amount
Weiming	Property, plant and equipment	June 28, 2022	6,309,240	336,108	Henan Pingmei Shenma Nylon Engineering Technology Co., Ltd., Suhua Construction Group Co, Ltd. and Nanjing Piya Chemical Co, Ltd.	None	Note 1	-	-	-	Open tendering	Production and operating use	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
(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 receivables (payables)
The Company CPDC GT Weiming Weiqiang	TSCIC Kaohsiung Monomer Company Limited Chain Yarn Co., Ltd. The Company Weihua Weicai The Company	Subsidiary Affiliated company accounted for using equity method Other related parties Subsidiary Same parent company Same parent company Subsidiary	Sales Sales Sales Sales Sales Sales Sales	(1,269,753) (918,883) (1,205,616) (183,181) (116,209) (103,579) (274,174)	% (6.04) % (4.37) % (5.73) % (96.68) % (6.02) % (10.20) % (27.00)	3 Month 1 Month 1 Month Base on contract Base on contract Base on contract Base on contract	- - - - - - -	OA 90 days - - Base on contract Base on contract Base on contract Base on contract	9,287 90,507 170,694 64,407 - - -	0.61% 5.97% 11.26% 99.19% -% -% -%	Note Note 〞〞〞

Note: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(Continued)

115

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

(viii) Receivables from related parties with amounts exceeding the lower of $100 million or 20% of the capital stock:

					(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 company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue		Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
The Company	Chain Yarn Co., Ltd.	Other related parties	170,694	4.34	-	-	170,694	-

Note: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(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)
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 1 2 2	The Company The Company Weiming Weiqiang Weiqiang	TSCIC CPDC GT Weiqiang Weicai The Company	1 1 5 5 2	Sales revenue Repair expense Sales revenue Sales revenue Sales revenue	1,269,753 183,181 116,209 103,579 274,174	OA 90 days Base on contract Base on contract Base on contract Base on contract	5.07% 0.73% 0.46% 0.41% 1.10%
Note 1: Company numbering as follows: Parent company－0 Subsidiary starts from 1 Note 2: The numbering of the relationship between transaction parties as follo 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				ws:

Note 3: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2022 (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, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares	Percentage of ownership	Carrying value
The Company	Kaohsiung Monomer Company Limited Chung Kung Safeguarding & Security Corp. Jean Pacific Development Co., Ltd. BES Engineering Ding-Yue CPDC (BVI) TSCIC CPDC GT	Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Islands Taiwan Taiwan	Production and sales of Methyl Methacrylate Monomer Security and related services Real estate construction and development and urban renewal, etc. Contracting of civil and construction projects, investment, construction and sales of real estate, and the development of industrial zones planned by the government Entrusting construction companies to build state houses, commercial buildings, land development and other related operations and investment Holding company Fertilizer storage, transportation, purchase and sales Mechanical engineering	- 14,400 620,000 1,470,919 29,000,000 904,946 560,000 100,000	- 14,400 620,000 - 25,580,000 904,946 560,000 100,000	20,000,000 1,440,000 62,000,000 164,348,449 2,900,000,000 26,580,000 76,000,000 15,000,000	% 40.00 % 24.00 % 40.00 % 10.74 % 100.00 % 100.00 % 100.00 % 100.00	637,751 19,492 618,489 4,176,696 28,620,693 875,762 1,252,346 174,192	364,966 3,618 533 821,315 (209,197) (36,010) 35,809 22,548	145,987 868 213 30,592 (224,288) (36,010) 35,809 22,548	Note 1 Note 1 Note 1 Note 1&7 Note 2&5 Note 2&4&5 Note 2&5 Note 2&5

(Continued)

116

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, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares	Percentage of ownership	Carrying value
The Company CPDC (BVI) Ding-Yue TSCIC BES Twin Towers Frontier Fortune Core Pacific Twin Star (Myanmar)	UDL BES Twin Towers Thanh Phong Core Pacific Overseas Holdings Ltd. Da Ying Taivex Frontier Fortune Core Pacific Twin Star (Myanmar) Gemini Star (India) Core Pacific Twin Star (Vietnam) Core Pacific Pioneer (Myanmar)	Hong Kong Taiwan Vietnam British Virgin Islands Taiwan Taiwan Singapore Myanmar India Vietnam Myanmar	Holding company Real estate investment consultancy, land development and general investment Construction engineering, real estate management, construction-related technical consultants, leasing machinery and equipment, wholesale of building materials, etc. 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	10,921,147 1,941,383 609,347 808,564 60,000 696,720 2,761,596 169,921 9,274 2,566,176 24,804	9,876,023 3,791,383 609,347 808,564 60,000 696,720 2,761,596 169,921 9,274 2,566,176 24,804	360,240,612 306,216,357 - 26,580,000 - 46,224,551 93,060,000 5,500,001 2,099,993 - 800,000	% 100.00 % 100.00 % 100.00 % 45.19 % 100.00 % 65.34 % 100.00 % 100.00 % 99.99 % 100.00 80.00	8,512,685 3,408,805 648,428 870,251 59,369 234,698 2,991,458 158,625 3,535 2,821,715 17,118	(732,017) 85,417 18,466 (79,415) (837) (88,139) 77,522 (2,945) (727) 81,530 (1,574)	(732,017) 85,417 18,466 - - - - - - - -	Note 2&4&5 Note 2&5 Note 2&3&4 &5 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&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: On June 13, 2022, the Group had a significant influence on BES Engineering, please refer to Note 6(g) for details.

(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, 2022	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2022	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
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	16,729	100.00%	16,729	523,572	-
Weiqiang	Wholesale of chemical raw materials, plastic raw materials, rubber raw materials and their products (except dangerous goods), commission agency (except auction), import and export and related supporting business	211,560	( 1 )、 ( 3 )	211,560	-	-	211,560	20,400	100.00%	20,400	194,257	-

(Continued)

117

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

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, 2022	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2022	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
Weiming	Production and sales of nylon6, cyclohexanone, electricity, steam and its by-products; construction of supporting facilities for petrochemical projects	8,770,377	( 1 )、 ( 2 )	7,725,253	1,045,124	-	8,770,377	(541,042)	100.00%	(541,042)	7,158,132	-
Weicai	Engaged in engineering plastic and high valued petroleum chemical products	1,411,845	( 2 )	1,324,893	-	-	1,324,893	(204,382)	100.00%	(204,382)	674,643	-
Weiming Construction (Invested through Weiming)	Engaged in engineering consultant services、 engineering construction、 engineering management、trading of petroleum chemical product	129,665	( 3 )	-	-	-	-	(843)	100.00%	(843)	130,796	-

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(ii) Limitation on investment in Mainland China:
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Accumulated Investment in Mainland China as of December 31, 2022	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
11,964,231	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, MOEA on October 18, 2018, so not subject to the above regulations. Valid period to October 14, 2021. On October 19, 2021, the Company acquired the above documents and extend the valid period to October 12, 2024.

(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” and “Business relationships and significant intercompany transactions”.

(d) Major shareholders: None.

(Continued)

118

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 (revenue) 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 4. 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, 2022 Revenue Revenues from external customers Intersegment revenues Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 9,160,042 - $ 9,160,042 210,847 $ (317,463) 902,039 $ 5,980,085 $ 2,579,900	Caprolacta m 10,203,918 - 10,203,918 720,451 (1,384,022) 1,071,848 14,027,280 5,217,311	Other 5,663,835 187,381 5,851,216 367,333 2,424,856 1,237,367 121,115,564 53,807,469	Adjustment and eliminations - (187,381) (187,381) - - - - -	Total 25,027,795 -
					25,027,795
					1,298,631
					723,371
					3,211,254
					141,122,929
					61,604,680

(Continued)

119

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

For the years ended December 31, 2021 Revenue Revenues from external customers Intersegment revenues Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 14,090,601 - $ 14,090,601 260,915 $ 3,131,229 373,416 $ 4,740,289 $ 2,820,350	Caprolacta m 14,785,660 - 14,785,660 645,668 109,995 2,017,948 16,105,241 6,294,595	Other 6,287,119 322,868 6,609,987 213,388 636,882 1,690,610 114,395,780 45,811,843	Adjustment and eliminations - (322,868) (322,868) - - - - -	Total 35,163,380 -
					35,163,380
					1,119,971
					3,878,106
					4,081,974
					135,241,310
					54,926,788

The Group’ s non-current assets located overseas are immaterial. Revenues from domestic and overseas customers for the years ended December 31, 2022 and 2021 were as follows:

Region	For the years ended December 31,	For the years ended December 31,
	2022 $ 14,743,838 9,596,369 687,588 $ 25,027,795	2021 21,910,225 13,072,601 180,554
Operating revenue from domestic sales Asia Other (individual area under 10%) Total operating revenue
		35,163,380

(d) Major Customers

Customers generating over 10% of total revenue for the years ended December 31, 2022 and 2021 were as follows:

Customers	For the years ended December 31,
	2022 2021 $ 3,069,894 4,006,171
1001

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CPDC — Annual Report 2022

51772_rns_2022-11-14_b3ec7de0-d471-4537-ae1e-4310d953bf82.pdf

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

Independent Auditors’ Report

Opinion

Basis for Opinion

Emphasis of Matter

Other Matter

Key Audit Matters

Description of key audit matter:

How the matter was addressed in our audit:

Description of key audit matter:

How the matter was addressed in our audit:

Description of key audit matter:

How the matter was addressed in our audit:

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

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

Notes to Readers

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

Consolidated Balance Sheets

December 31, 2022 and 2021

(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, 2022 and 2021

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

Consolidated Statements of Changes in Equity

(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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

(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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2022 and 2021

(1) Company history

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

(3) New standards, amendments and interpretations adopted:

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

(ii) Other amendments

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

(4) Summary of significant accounting policies:

(a) Statement of compliance

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

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

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

(d) Foreign currencies

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

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

(h) Financial instruments

(i) Financial assets

1) Financial assets measured at amortized cost

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

Fair value through profit or loss (FVTPL)

4)

Business model assessment

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

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

7) Derecognition of financial assets

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

2) Equity instrument

3) Treasury shares

4) Financial liabilities

5) Derecognition of financial liabilities

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

6) Offsetting of financial assets and liabilities

(ii) Construction industry

(j)

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

(k) Investment property

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

(iv) Reclassification to investment property

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

(m) Leases

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

there is any lease modification.

CPDC Annual Report 2022