CPDC — Annual Report 2021

Aug 12, 2022

Stock Code: 1314

Website:

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

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Annual Report 2021

Published on April 30, 2022

Notice to readers

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

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I. Company spokesman and deputy spokespersons:

Spokesman Deputy spokesman Deputy spokesman Name: Ying-Chun Chen Kuo-Tsai Huang Shu-Tong Zou Title: Vice President Vice President Vice President Tel. No.: (02)8787-8187 (06)284-1447 (02)8787-8187 Ext. 8370 Ext. 68 Ext. 8322 e-mail: investors@cpdc.com.tw

II. Company and Plant address and Tel. Nos:

Name	Location	Tel. No.
Taipei Office	11F, No. 12 Tunghsing Road, Songshan District, Taipei City	(02)8787-8187
Toufen Plant	No. 217 Sec.2 Ziqiang Road, Toufen Township, Miaoli County	(037)623-381
Dashe Plant	No. 1 Chinchian Road, Dashe District, Kaohsiung City	(07)351-3521
Hsiaokang	No. 34 Zhonglin Road, Hsiaokang District, Kaohsiung City	(07)871-1161
Qiaotou Plant	No. 2, Qingpu, Chenggong South Road, Qiaotou District, Kaohsiung City	(07)611-7136
Douliu Plant (Note)	No. 156, Dougong 10th Rd., Douliu City, Yunlin County	(05)557-0135

Note: The change registration of Douliu Plant was completed on March 22, 2022.

• III. Shares Registrar:

Name: Shareholder Services Office of CPDC Address: 3F, No. 12, Tunghsing Road, Taipei City Tel. No.: (02)8978-2589

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

IV. External Auditors in the most recent year CPA Name: Melody Chen & Dan-Dan Chung Firm Name: KPMG Certified Public Accountants Address: 68F, No. 7, Sinyi Road, Sec. 5, Taipei City Tel: (02) 8101-6666

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

• V. Offshore secondary exchange and disclosure information available at:

Securities name: Global Depository Receipts

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

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

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Chapter	1	Message to Shareholders ..................................................................................................... 1
		I. 2021 Operating Report...............................................................................................2
Chapter	2	Introduction to Company ..................................................................................................... 9
		I. Date of Incorporation .................................................................................................. 9
		II. Company Profile .......................................................................................................... 9
Chapter	3	Report on Corporate Governance .......................................................................................14
		I. Organization ...............................................................................................................14
		II. Information About Directors, Supervisors, President, Vice President, Assistant
		Vice President, and Head of Department and Branch ................................................18
		III. Remuneration to Directors (including Independent Directors), President and
		Vice Presidents ...........................................................................................................37
		IV. Implementation of Corporate Governance .................................................................46
		V. Information on CPA Professional Fees ....................................................................105
		VI. Information About Replacement of CPA..................................................................105
		VII. Information About Chairman, President, and Financial or Accounting Manager
		of the Company Who Has Worked with the CPA Firm Which Conducts the
		Audit of the Company or Affiliate to Said Firm in the Most Recent Year...............105
		VIII.Any transfer of equity interests and pledge of or change in equity interests by a
		director, managerial officer, or shareholder with a stake of more than 10 percent
		in the most recent year and up to the date of publication of the annual report. ........106
		IX. Relationship among the Top 10 Shareholders ...........................................................111
		X. Ratio of Combined Shareholding ................................................................................112
Chapter	4	Status of Fund Raising ......................................................................................................113
		I. Capital Stock and Shares...................................................................................... 113
		II. Issuance of Corporate Bonds................................................................................. 119
		III. Issuance of Preferred Shares................................................................................ 119
		IV. Status of Participation in Issuance of "Global Depository Receipts (GDRs)"........... 119
		V. Status of Employee Stock Option........................................................................... 119
		VI. Restriction on Employee Share Subscription Warrant............................................ 119
		VII. Mergers and Acquisitions, or as Assignee of New Shares Issued by Another
		Company.......................................................................................................... 120
		VIII. Implementation of Capital Utilization Plan....................................................... 120
Chapter	5	Operations Overview ........................................................................................................121
		I. Business Operations............................................................................................. 121
		II. Market and Sales Overview................................................................................. 130
		III. Employees........................................................................................................ 137
		IV. Environmental Protection Expenses.................................................................... 137

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		V. Labor-Management Relations.............................................................................. 139
		VI. Cyber Security Management.............................................................................. 146
		1. Cyber Security Management framework............................................................ 146
		2. Cyber Security Management Policy................................................................... 146
		3. Specific management solutions......................................................................... 146
		4. Investing resources in cyber security management.............................................. 147
		VII. Major Contracts............................................................................................... 149
Chapter	6	Financial Status ................................................................................................................153
		I. Condensed balance sheet, Comprehensive income statement, external auditor's
		name and audit opinion for the most recent five years......................................... 153
		II. Financial Analysis for the most recent five years................................................... 157
		III. Audit Committee's Audit Report on the Financial Statement for the Most Recent
		Year................................................................................................................ 160
		IV. Independent Accountants’ Audit Report (Consolidated)..................................... 163
		V. Independent Accountants’ Audit Report............................................................ 279
		VI. In the case of any insolvency of the Company and its affiliates, specify its effect
		on the Company's financial position................................................................... 380
Chapter	7	Review and Analysis of Financial Position and Financial Performance, and Risk
		Management .....................................................................................................................381
		I. Review and Analysis of Financial Status (Adoption of IFRS-Consolidated)............. 381
		II. Review and Analysis on financial performance (Adoption of IFRS-Consolidated).. 382
		III. Review and Analysis of Cash Flow (Adoption of IFRS-Consolidated).................. 383
		IV. Major capital expenditure for the most recent year and its effect on financial
		position and operation of the Company............................................................... 383
		V. Direct investment policy, the main reasons for profit or loss, and corrective action
		plan for the most recent year, and investment plan in the next year...........................384
		VI. Analysis of risk factors: analyze and assess the following circumstances for the
		most recent year and until the date of publication of the annual report.....................385
		VII. Other important notes......................................................................................... 406
Chapter	8	Special Note ......................................................................................................................407
		I. Information about Affiliates................................................................................... 407
		II. Private placement of securities for the most recent year and until the date of
		publication of the annual report.......................................................................... 516
		III. Holding or disposal of the Company's stock by subsidiaries for the most recent
		year and until the date of publication of the annual report.................................... 516
		IV. Supplementary Disclosure................................................................................. 516
		V. Conditions that will materially affect shareholders' equity or price of securities
		as referred to in Paragraph 2.2 of Article 36 of the Securities and Exchange Act... 516

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Chapter 1 Message to Shareholders

To All Shareholders:

In 2021, due to recovery from the Covid-19 pandemic and a gradual improvement from economic conditions, CPDC reported growth in both sales and profits. In the petrochemical business, we focused on upgrading transformation and innovations in technology. We effectively integrated our resources as a core direction, gradually deploying our products into the target markets of applications in semiconductors and new environmental protection products. We pioneered leading management methods and strived to develop diversified new materials for wide ranging customer requirements. In the land development business, we continue to actively revitalize domestic assets and explore potential areas for future development overseas. In addition to our subsidiary, Ding-Yue Development Co., Ltd., which acquired the land of Core Pacific City with high development value and is an effective niche market in the domestic real estate business, we also aggressively support the Taiwan government in its New Southbound Policy and continue to seek large-scale land development and other small and medium-sized project opportunities. Our strategy is to deploy in overseas regions with investment potential while implementing the Company’s petrochemical and land development two-pronged strategy, with a view to mitigating the impact of cyclical fluctuations in the petrochemical industry on operations.

Going forward, the Company will continue to deploy resources in the fine chemical industrial supply chain, devote itself to the development of high-value new products, and continue to improve management quality by promoting an intelligent decision-making platform, and actively promote ESG internalization to establish a complete corporate governance structure, a good response strategy and an effective risk management mechanism. Although the Company is currently facing multiple challenges and uncertainties, we will continue to expand the two-pronged business approaches of "Petrochemical Business" and "Land Development" as the primary management principles, with a view to improving profitability and return the long-term supports of shareholders.

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I. 2021 Operating Report

The Company reported 2021 consolidated revenues of NT$35.163 billion, net operating income NT$2.514 billion and net profit after tax of NT$3.596 billion. The detailed breakdown of the Company’s 2021 operating performance is as follows:

(I) Sales of Major Products:

Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:	Sales of Major Products:
Major Product Production & Sales Volumes in the Past 2 Years Unit: Tons
Production Volume Major Product	FY 2020 (Consolidated)		FY 2021 (Consolidated)		Increase (Decrease) Volume
	Production	Sales	Production	Sales	Production %		Sales %
Acrylonitrile(AN)	203,797	241,965	209,188	236,260	5,391	3%	(5,705)	(2%)
Caprolactam (CPL), Nylon Chips	203,423	168,256	376,137	277,187	172,714	85%	108,931	65%
O-phenylphenol(OPP)	2,151	1,948	2,405	2,309	254	12%	361	19%

Note: The production volume includes the amount of internal self-use transfer.

1. The decrease in Acrylonitrile (AN) sales was mainly due to the new production capacity and increased supply in China, resulting in the decrease in sales volume.

2. The increase of Caprolactam (CPL) sales and production was mainly due to the economic recovery and improvement post-pandemic, regional balance, impact of global logistics, and accelerating demand from downstream firms, resulting in a significant sales increase in 2021.

3. The increase of O-phenylphenol (OPP) sales and production was mainly due to the expansion of value-added products market and sales and marketing efforts, resulting in an increase of both production and sales.

4. (II) Operating Revenue and Expense and Profitability Analysis:

Annual Income Statement			Unit: NT$ thousands	Unit: NT$ thousands
Year Line Item	FY 2020 (Consolidated)	FY 2021 (Consolidated)	Increase (Decrease)	%
Revenues	17,583,092	35,163,380	17,580,288	100%
Gross Profit	38,228	5,096,443	5,058,215	13232%
Operating Profit (loss)	(1,812,878)	2,514,465	4,327,343	239%
Non-OperatingIncome and Expenses	1,916,654	1,475,213	(441,441)	(23%)
Pre-Tax Profit	103,776	3,989,678	3,885,902	3745%
Net Profit after Tax	674,660	3,596,227	2,921,567	433%
EPS (After Tax)	0.21	1.09	0.88	419%

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1. Operating Revenue

The 2021 operating revenues increased by 100%, NT$17.58 billion versus the previous year, mainly due to the following reasons:

• (1) The revenues from Acrylonitrile (AN) and related byproducts were NT$14.09 billion in 2021, increased 92% or NT$6.74 billion from the NT$7.35 billion reported in the previous year. The increase was mainly from an 85% increase in unit prices versus the previous year for Acrylonitrile (AN) products.

• (2) The revenues from Caprolactam (CPL) and related byproducts were NT$14.786 billion in 2021, increased 129% or NT$8.327 billion from NT$6.459 billion reported in the previous year. The increase was mainly from a 63% increase in unit prices and 16% increase in sales volume versus the previous year for Caprolactam (CPL) products.

• (3) The revenues from other departments (including subsidiaries) were NT$6.287 billion, increased 67% or NT$2.513 billion from the NT$3.774 billion reported in the previous year. The increase was mainly from subsidiary revenue improvements due to recovery post-pandemic and an increase in trading revenues.

2. Operating Profit

Net operating profit in 2021 increased by NT$4.327 billion, or 239% versus the previous year due to the following reasons:

• (1) For Acrylonitrile (AN) products, the profit in 2021 increased by NT$2.78 billion versus the previous year because of the recovery after COVID-19 and force majeure factors in other countries that resulting in an increasing of sales prices.

• (2) For Caprolactam(CPL) and byproducts, profits benefited from the recovery of textile industry and the increase of downstream nylon demand, increases of sales volume and selling price of caprolactam products, resulting in a profit increase of NT$2,061 million.

• (3) In 2021, overall operating expenses increased by NT$731million versus the previous year mainly due to increase in sales, transportation cost and remuneration because of the significant increasing in profits.

• Non-Operating income and expenses

Non-operating income decreased by NT$441 million in 2021, or by 23%, due to the following reasons:

• (1) An increase of NT$2.016 billion from the revaluation gain of investment property versus the previous year.

• (2) An increase of NT$706 million from the disposal of investment property versus the previous year.

• (3) An increase of NT$259 million from equity method profits from subsidiaries and related companies.

• (4) An increase of NT$1.645 billion from the expense of the An-Shun remediation site.

• (5) An increase of NT$916 million from the asset impairment loss versus the previous year.

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• (6) A decrease of NT$663 million from the gain on valuation of financial asset versus the previous year.

• (7) An increase of NT$196 million from the interest expenses and transaction fees versus the previous year.

• Net profit before and after taxes

2021 reported pre-tax profits were NT$3.99 billion, increased NT$3.886 billion or 3745% versus the previous year. 2021 reported net profits after tax were NT$3.596 billion (NT$1.09 per share), increased NT$2.922 billion or 433% from NT$675 million (NT$0.21 per share) of the previous year.

• (III) Financial Performance Analysis:

• Financial Status:

At the end of 2021, total consolidated assets amounted to NT$135.4 billion; total liabilities were NT$54.9 billion, and shareholder equity was NT$80.5 billion.

1. Key Financial Ratios:

Current Ratio at the end of 2021 was 277%, Quick Ratio was 65%, and Debt Ratio (Debt to Total Assets) was 40%.

1. Cash and Cash Equivalents Status:

   • Cash and cash equivalents net inflow from operating, investing, and financing activities was NT$170 million during 2021. The year-end cash and cash equivalent balance was NT$7.7 billion.

2. (IV) Key Management Work and Implementation Overview:

Key management work and implementation overview items are categorized into the following 6 categories: Production Management, Labor Safety and Environmental Protection, IT Management, HR Management, Financial Planning, and Sustainable Development. Descriptions are as follows:

• (1) Production Management:

The Company continues its planned investment project at Phase II of the Port of Kaohsiung Intercontinental Container Terminal to build transportation and storage special areas for liquid ammonia (NH3), Phenols, and other major raw materials to improve feedstock purchasing flexibility and related logistic management. The Dashe Plant continues to promote VOCs (volatile organic compounds) detoxification improvement project which effectively lower down VOCs and reduces the perimeter concentration of volatile organic compounds. The Toufen Plant completed a smoke-free emission project for coal-burning cogeneration (combined heat and power, CHP) plant, in addition to improving combustion efficiency, improving the perception of chimney smoke, in part of the environmentally friendly corporate responsibility.

• (2) Labor Safety and Environmental Protection:

As the petrochemical industry requires many resources, the Company pays special attention to environmental footprints in the operating process. All CPDC plants of the Company have introduced the ISO 14001 environmental management system to reduce the environmental impact of our plants as well as prevent pollution and spills. The management system ensures

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that all emissions and waste produced during production are treated in compliance with the laws and regulations. In addition, with the vision of green petrochemical, CPDC actively manages and proactively respond to climate change-related risks and opportunities, using a smart decision-making platform to establish carbon emission modules, track carbon emissions in real time enabling real time adjustment strategies and targets. Each factory has passed the latest version of ISO9001, ISO14001, ISO45001, and ISO50001, and conducts annual inspection and verification to maintain the effectiveness of the management system.

• (3) Occupational safety and health:

To improve production safety management capabilities, in 2021, we continued to institutionalize processes in our safety management operations at each plant, completed audits for each factory of each class A and class C level hazardous occupational workspace compliance auditing and improve the tracking of deficiencies, and ensure operational safety through online supervision by the Company's audio-visual command center and offline control by site supervisors. In 2021, both the Hsiaokang and Dashe plants were awarded with various excellent awards.

• (4) Environmental protection:

Supporting international trends and government initiatives in environmental sustainability policies, CPDC proactively promotes environmental and green economy activities, in achieving our goals in sustainable development. In 2021, our Hsiaokang, Dashe and Toufen plants received various awards.

• (5) IT Management:

To improve the overall operation and management performance, the Company continued implementing the Group-wide HR management system and enterprise resource planning system to secure the foundation for cross-function collaboration, corporate digital operation and transformation. The accumulation of digital operation data and analysis will help with improving the quality of digital decision-making, as well as facilitate the application of AI to optimize the company's operational performance. To accelerate AI and data analytics applications to enhance competitiveness and create value, the Company has established a big data platform and hardware for AI computing, continues infusing innovative AI applications and building AI research and development platform to cultivate technological capacity. In the three major application areas of process optimization, smart industrial safety and intelligent services, to accelerate the development of the company's use of intelligent decision-making.

• (6) HR Management:

To enable domestic and overseas colleagues to focus on carrying out business, and to continue the efforts in expansion to China and Southeast Asia, the Company continued to optimize productivity in managerial capabilities, and continue to implement and strengthen local domestic and international pandemic prevention efforts, providing remote work workplace environment, health care and integrated insurance coverage. Implementing new concepts and quality online coursework and materials to motivate colleagues to keep up with learning and to elevate overall satisfaction.

Through the promotion of the “Smart Decision-Making platform”, the Company strengthened the interconnections and application of all functions and stakeholders and proactively create an independent learning environment. Concurrently, we uphold the principle of reward and

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punishment and survival of the fittest and continue strengthening and carrying out performance appraisals to place suitable talent in the right positions and to build a highly-efficiency teams, thereby creating differentiated competitive advantages and provide substantial value for management towards sustainable growth.

• (7) Financial Planning:

To meet the capital requirements of the Company's petrochemical and land development dual strategy, we continue to strengthen our partnership with financial institutions and raise capital through the capital market, making good use of the Company's real estate and other resources to obtain lower cost borrowings and maintain reasonable and safe cash flow; and through the Company's ESG performance, we actively seek preferential interest rates for sustainability linked loans (SLLs) from financial institutions to reduce borrowing costs. In addition, the Company invests in short-term financial instruments or currency funds to increase profits. In the future, we will continue to strive for sustainable performance-linked loan lines from financial institutions in line with the Company's ESG achievements, improve credit ratings with sound financial ratios, and issue green finance or sustainable development-related products to strengthen the Company’s financial structure.

• (8) Sustainability Development:

In 2021, the Company continued to actively promote the ESG project with the vision of "pursuing green ecological development and coexisting with the environment and society", and established the CPDC Sustainable Development Strategy Blueprint 2.0, which combines the 12 United Nations Sustainable Development Goals (SDGs), and set out short-, mediumand long-term greenhouse gas reduction commitments to move toward the 2050 net zero carbon emissions target as the guiding framework for the Company's sustainable development.

In accordance with the amendment of relevant regulations, the Company amended the ""Corporate Social Responsibility Best Practice Principles" to the "Sustainable Development Best Practice Principles", established the "Sustainable Development Committee" and formulated the "Organizational Procedures of the Sustainable Development Committee" for compliance, integrated the goal of sustainable development into the Company's management strategy, actively participated in various sustainability assessments, strengthened the disclosure of non-financial information, and deepened the connection with stakeholders.

• (V) CPDC received many recognitions in Taiwan and internationally, including:

• (1) Environmental sustainability dimension (E)

  • A. Received recognition from the International Carbon Disclosure Project (CDP) with a Management level (B-) in the Climate Change project and the Leadership Level (A-) in the Water Security project.

  • B. Awarded the 2021 Taiwan Corporate Sustainability Award (TCSA), CPDC was the only company in the chemical industry to receive all three environmental leadership awards, namely the "Climate Change, "Circular Economy”, and "Water Resources” Leadership Awards.

(2) Social dimension (S)

• A. Awarded 1111 Job Bank 2021 Happy Company - "Manufacturing Industry Gold Award".

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• B. CPDC's Hsiaokang Plant was awarded "5-star Award for Excellent Occupational Safety and Health Unit 2021" by the Ministry of Labor.

• C. CPDC's Hsiaokang Plant was awarded the "i-Sports Enterprise 2021" with the Sports Enterprise Certification by the Ministry of Education.

• D. CPDC's Dashe plant received the 2021 Annual Water Conservation Award from the Water Resources Department, Ministry of Economic Affairs, and was awarded the "Special Merit Award in the Industrial Group".

• (3) Corporate governance dimension (G).

• A. Ranked 16th in the global chemical industry in 2021 S&P Global CSA, and he only one in Taiwan's chemical industry included in the S&P Global Sustainability Yearbook for two consecutive years.

• B. Awarded the 2021 Taiwan Corporate Sustainability Award (TCSA) and received the "Taiwan Sustainable Business Performance Award" and "Corporate Sustainability Report Award - Traditional Manufacturing Industry Gold Award".

• C. Received two recognitions from the 21st Golden Peak Awards and was awarded the "Top 10 Outstanding Enterprises" and "Top 10 Outstanding Innovation and Research Award".

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

• (VI) Future Prospect and R&D:

Innovation and R&D has always been the Company's core objective of moving toward the development of sustainable management. Currently, the Company's research and development are mainly focused on the following directions:

For the existing manufacturing process improvement, we aim for continuing improvements of existing manufacturing process technology towards improving efficiency, lowering manufacturing costs, and developing circular production and green production process technologies with energy conservation, carbon reduction as our key objectives. In the related product development, we implement related byproducts and derivatives development on the current manufacturing processes, controlling the raw material advantages, and strengthening the integration of raw material supplies from up and downstream supply chains, developing cyclohexanone derivatives.

In new product development, we have combined market intelligence, worked with existing development technology surveys, evaluated our advantages to produce high value products with market development potential, strengthen downstream applications in electronics-grade chemical raw materials, towards high value markets such as optical, electronic, coatings, etc. Based on our core technology and existing products, we increase the sales of high-value products, expand the layout of our industrial chain, and provide comprehensive services.

To consolidate the technological leadership of the existing product market, as well as to break through the technical barriers of new products and manifest the strong research and development capability, the Company has obtained 234 invention patents thus far. With the accumulation and growth of patents, the protection of intellectual property must continue to be implemented. The

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Company is also leading the industry and has introduced the TIPS (Taiwan Intellectual Property Management System) of the Ministry of Economic Affairs, Industrial Development Bureau, and passed certification since 2010, to establish a comprehensive and complete intellectual property protection system, continue to improve, to protect the Company’s key assets and R&D core technology effectively and securely.

In line with the global trend of ESG, we are actively promoting ESG and looking for new opportunities for our future business by responding to sustainable transformation as early as possible. We are currently focusing on the development of biomaterials and are committed to product development and research towards new manufacturing processes such as green and environmental protection, circular production, and reduction of pollutants, in the hope of reducing environmental hazards and integrating with the circular economy system to achieve our core goal of sustainable management.

• (VII) Management Principles and Future Operational Outlook:

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

In the petrochemical business, due to the nature of the industry, the Company attaches great importance to ESG issues. In the short term, the Company focuses on the gradual transformation of existing plants to low carbon, utilizes intelligent management systems, optimizes the competitiveness of existing products, strengthens the expansion of refined products, and develops the market for electronic-grade chemical raw materials. In the long term, we will combine advanced technology to establish overseas integrated green petrochemical production bases and expand our new materials business to meet the needs of our customers.

In terms of land development, we aim to revitalize our domestic land assets and target overseas real estate development in the short term. In the long term, we will promote relevant development projects through a phased and regional approach, invest in large-area land with development potential and small and medium-sized construction projects, and develop green building products that are environmentally friendly, energy-saving, carbon-absorbing and intelligent, creating a new win-win-win situation for shareholders, enterprises and society.

CDPC is committed to the development concept of sustainable operation and environmental coexistence and continues to promote the dual strategy of petrochemical and land development, hoping to improve the company's operational quality through short-term and long-term planning, and to integrate with the environment and society, and never forgetting the mission of corporate social responsibility, good global citizenship, and the vision of moving towards green petrochemicals.

I wish you all the best,

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

Steve Ruey-Long Chen, Chairman

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Chapter 2 Introduction to Company

I. Date of Incorporation

1. Date of incorporation: April 24, 1969

2. Date of registration of incorporation: July 8, 1969.

II. Company Profile

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

• 1969 April 24

• 1973 May

• The Company was established as a State-Owned Enterprise, under the supervision of the Ministry of Economic Affairs.

The ethane cracker was brought on stream, and shut down in September 1990.

• 1973 June DMT Plant was brought on stream, and shut down in July 1982. 1976 June No.1 Acrylonitrile unit of Dashe on stream.

• 1979 January No. 2 Acrylonitrile unit of Dashe brought on stream.

• 1982 May

• 1982 July

• Following the mandate from the Ministry of Economic Affairs, the Company was merged with another State-Owned Enterprise, Chungtai Chemical Co., LTD.

• Following a mandate from the Ministry of Economic Affairs, the Company took over the Kaohsiung plant of Taiwan Alkali Co., Ltd. (changing the name to CPDC Chen-Jen Plant), which was shut down in May 1988.

• 1983 January Following the mandate from the Ministry of Economic Affairs, the Company was merged with another State-Owned Enterprise, China Phosphate Co., Ltd.

• 1983 April Following a mandate from the Ministry of Economic Affairs, the Company was merged with another State-Owned Enterprise, Taiwan Alkali Co., Ltd.

• 1985 March

• 1991 July 12

Methanol and GAC units of Dashe Plant were brought on stream.

The Company’s stocks were listed on the Taiwan Stock Exchange Corporation (TWSE), and CPC released 20% of the Company’s stocks held by it.

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• 1993 July The Company’s Kaohsiung Cyclohexanone Plant was shut down. 1993 December The Budget Economic Joint Committee of the Legislative Yuan passed a proposal for the Company's privatization.

• 1994 June 20 CPC released the Company’s stock held by it once again, and the government-owned shareholding was reduced to 36.63% accordingly. The registration of change in the roster of shareholders was completed on the date, and the Company was privatized from a state-owned enterprise. The registration of change in the roster of shareholders was completed on the date, and the Company was privatized from a state-owned enterprise.

• 1999 September The nylon chip unit was brought on stream. 2001 January CPL Plant No. 3 (Hsiaokang Plant) and Co-gen units of Hsiaokang Plant and Toufen Plant were brought on stream.

• 2002 November Full implementation of an ERP System (Oracle ERP) 2003 December Kaohsiung Plant (CPL Plant No. 1) was shut down. 2011 April Hsiaokang Plant CPL Expansion Project test-run completed

• 2012 April Hsiaokang Plant phenolic ketone unit test-run completed 2012 June Dashe Plant Acrylonitrile unit expansion project test-run completed

• 2012 October Toufen Plant CPL Expansion Project test-run completed

• 2012 November The GAC unit was shut down.

• 2015 August Toufen Plant Tropolone factory test-run completed

2016 June A new production line of 100,000-ton capacity of CPL at the Toufen Plant was brought on stream. 2016 July Headquarter was relocated to No.1, Jingjian Rd., Dashe Dist., Kaohsiung City 2016 November Hsiaokang Plant receives the Industrial Development Bureau, Cleaning Production Certification

• 2016 June

Dashe Plant receives the Industrial Development Bureau, Cleaning Production Certification

• 2017 April

• 2017 October Toufen Plant receives the Industrial Development Bureau, Cleaning Production Certification

• 2017 November CPDC wins the 2017 Tenth Annual "Taiwan Corporate Sustainability Awards" - Traditional Manufacturing TOP50 Report Award

• 2017 November CPDC wins the 2017 BSI "Sustainability Implementation Award"

• 2018 March Dashe Plant's new control room building received the "Green Building Diamond Grade" certification

• 2018 July

• Toufen Plant nylon Plant won the "Green Building Silver" certification

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• 2018 September Dashe plant obtained the "Green Plant Seal" issued by the industry Bureau

• 2018 September Toufen plant obtained the "Green Plant Seal" issued by the industry Bureau

• 2018 October

• Toufen plant obtained the ISO 14046 water Footprint Verification statement

• 2018 November Won the 2018 11th "TCSA Taiwan Corporate Sustainability Award" - Traditional Manufacturing TOP50 Report Award

• 2019 April Dashe Plant obtained the 1st "Green Chemical Application and Innovation Award" from the Environmental Protection Administration of the Executive Yuan.

• 2019 August The R&D Center obtained "TCIA 2019 Outstanding R&D Award"

• 2019 November Won the "2019 Happiness Enterprise Award - Manufacturing and Construction Consignment" Chemical Industry TOP20 held by the 1111 Job Bank.

• 2019 November Won the 2019 12th "TCSA Taiwan Corporate Sustainability Awards" - Traditional Manufacturing TOP50 Report Gold Award and Individual Performance - "Climate Leadership Award" & "Sustainable Water Management Award"

• 2019 December The land of the former "Cianjhen Plant" is rezoned to "Kaohsiung Multifunctional Economic and Trade Park No. 5A Special Zone"

• 2020 March

• Hsiaokang Plant Administrative Building and CPL control room obtained the "Green Building Label"

• 2020 April Awarded the honor of 6%~20% of listed companies in the 6th Listed Companies Corporate Governance Evaluation

• 2020 April The land of the former "Kaohsiung Plant" is rezoned to "Kaohsiung Multifunctional Economic and Trade Park No. 6 Special Zone"

• 2020 May The Environmental Office of the Hsiaokang Plant obtained the "Green Building Label Qualification Grade".

• 2020 May

• Dashe Plant and Hsiaokang Plant were awarded "2019 Outstanding Contribution to the Cleaning of Kaohsiung Air Quality Purification Zone" by the Environmental Protection Bureau of Kaohsiung City Government.

• 2020 June

• 2020 September Toufen Plant obtained "ISO Water Footprint Certification" for CPL and PA6 products.

• 2020 September The Hsiaokang Plant was awarded the "2020 Excellent Occupational Safety and Health Unit" by the Ministry of Labor.

• 2020 November Qiaotou Plant officially came on stream.

• 2020 November

Awarded the Taiwan TOP50 Corporate Sustainable Award and the CSR Reporting Gold Award - Traditional Manufacturing in the 13th Taiwan Corporate Sustainability Award (TCSA) in 2020

• 11 -

• 2020 November

• Hsiaokang Plant obtained "ISO Water Footprint Certification" for CPL product and organization level

• 2020 December Hsiaokang Plant obtained "ISO Carbon Footprint Certification" for CPL product and organization level

• 2020 December Awarded CDP Climate Change Questionnaire Management Grade (B-)

• 2021 January Hsiaokang was awarded the "Green Factory Label" by the Industrial Development Bureau.

• 2021 January Hsiaokang Plant obtained "Certification of Health Exercise for office worker & badge of health promotion” issued by the Health Promotion Administration Ministry of Health and Welfare

• 2021 February Selected as S&P Global's The Sustainability Yearbook Member and awarded Industry Mover in the global chemical industry.

• 2021 April Qiaotou Plant obtained “IATF 16949 Declaration of Conformity” and “Certification of ISO 9001”

• 2021 May Hsiaokang Plant was awarded the Certificate of Appreciation from Kaohsiung City Environmental Protection Bureau for "Autonomous Response to 2021 Global Energy Saving Activities".

• 2021 May Dashe Plant and Hsiaokang Plant awarded "2020 Outstanding Contribution to the Cleaning of Kaohsiung Air Quality Purification Zone" by the Environmental Protection Bureau of Kaohsiung City Government.

• 2021 May Toufen Plant obtained "Liquid Straw Decomposing Bacteria Promotion Specialist case” from Miaoli County Government

• 2021 September

• Hsiaokang Plant awarded “2021 Greenhouse Gas Loss Competition” Bronze Medal by Kaohsiung Public Institutions

• 2021 November Recognized by the Taiwan Corporate Sustainability Awards (TCSA) 2021 in five categories: Sustainable Business Performance Award, Gold Sustainability Report Award, Climate Leadership Award, Circular Economy Leadership Award, and Water Leadership Award

• 2021 November Toufen Plant obtained “Autonomous Reduction in Air Pollution Season" appreciation certification issued by the Environmental Protection Bureau of Miaoli County Government

• 2021 November

• 2021 November

• 2021 November

• 2021 November

• Toufen Plant obtained "ISO Carbon Footprint Certification" for CPL and PA6 products.

• Hsiaokang Plant awarded “2021 Promotion of Occupational Safety and Health Outstanding Unit " from Kaohsiung City

• Hsiaokang Plant awarded “2021 Promotion of Occupational Safety and Health 5 Stars " from Kaohsiung City

• Awarded "2021 Happy Company Gold Award" by 1111 Manpower Bank

• 12 -

• 2021 December

• 2021 December

• 2021 December

• 2021 December

• 2021 December

• 2021 December

• 2022 January

• 2022 March

• Hsiaokang Plant was awarded "i-Sports Enterprise 2021" by the Sports Enterprise Certification of the Ministry of Education

• Dashe Plant awarded “2021 "Water Conservancy Department's Outstanding Achievement Award for Water Conservation" by the Ministry of Economic Affairs

Hsiaokang Plant awarded "Promoting Workplace Smoking Cessation Service" Outstanding Performance Medal issued by Kaohsiung City Health Bureau "

Dashe Plant obtained "ISO Carbon Footprint Certification" for AN product and organization level

The material analysis laboratory of Qiaotou Plant obtained "TAF ISO/IEC 17025 Testing Laboratory Certification"

Participated in the Carbon Disclosure Project (CDP) assessment and received a management grade B- in Climate Change in 2021; first response to the Water Security WDP self-assessment in 2021 and received a management grade A- in Leadership

Dashe Plant obtained "ISO Water Footprint Certification" for AN product and organization level

The change registration of the Douliu factory is completed.

• 13 -

Chapter 3 Report on Corporate Governance

I. Organization

(I) Organizational Chart

==> picture [451 x 502] intentionally omitted <==

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

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

Data updated as of March 2022

• 14 -

• (II) Operations and functions

• President's Office

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

1. Occupational Safety & Health Center

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

1. Environmental Protection & Pollution Control Center

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

1. Legal Counsel

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

1. R&D Center

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

1. Commerce Department

2. 15 -

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

7. Petrochemical Production Department

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

8. Finance Department

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

• 16 -

• Administrative Resources Department

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

1. Land Development Department

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

11. New Venture Department

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

• 17 -

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

(I) Information about directors

1. Information about directors

March 29, 2022

Title (Note 1)	Nationality or registered country	Name	Gender Age (note 2)	Election (Appointm ent) Date	Term of Office	Date first elected (Note 3)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 4)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Remark (Note 5)
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
		The Core Pacific Co., Ltd.	N/A	20210702	Three years until July 1st 2024	19940726	45,625,096	1.389%	53,980,916	1.426%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
Chairman	Republic of China	Core Pacific Development and Investment Company Representative: Ruey-Long Chen	Male Age above 61 years old	20210702	Three years until July 1st 2024	20210630	0	0.000%	200,000	0.005%	0	0.000%	0	0.000%	Department of Applied Economics in NCHU Minister, Ministry of Economic Affairs	Independent Director, Formosa Chemicals & Fiber Corporation Independent Director, Inventec Corporation Director, HANNSTAR BOARD CORPORATION Director, Asia Cement Corporation (Legal Representative) Director, Tatung Company (Legal Representative) Secretary-General, Cross-Strait Entrepreneur Summit Chairman, Sinocon Industrial Standards Foundation Director, Kaohsiung Monomer Co., Ltd. (Legal Representative) Director, Taivex Therapeutics Inc. (Legal Representative) Director, Dingyue Development Co., Ltd. (Legal Representative) Director, BES Engineering Corp. (Legal Representative) Legal Representative, Unichem Development Limited Director, Weihua (Rutung) Trade Co., Ltd. Director, WeiQiang International Trading (Shanghai) Co., Ltd. Director, Jiangsu Weiming Petrochemical Corporation Director, Changzhou Weicai New Material Co., Ltd. Legal Representative & Executive Director, Core Pacific Twin Tower (Myanmar) Co. Ltd. Director,Weifong (Myanmar)Co. Ltd.	None			Note 5

Title (Note 1)	Nationality or registered country	Name	Gender Age (note 2)	Election (Appointm ent) Date	Term of Office	Date first elected (Note 3)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 4)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Remark (Note 5)
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
Vice Chairman (Note 9)	Republic of China	Jen Huei Enterprise Co. Ltd.	N/A	20210702	Three years until July 1,2024	20060630	19,431,156	0.592%	21,797,310	0.576%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
		Representative of Jen Huei Enterprise Co. Ltd. Jiun-Nan Bai (note 6)	Male Ages above 61 years old	20220325	Three years until July1, 2024	20000524	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Master Degree Department of Economics of NTU Ph.D. in Law, Institute of Economics, Chinese Culture University Senior Specialist, Council for Economic Planning and Development, Executive Yuan Vice President, Bank of Communications Chairman, Core Pacific Securities Investment Trust	Independent Director, President Securities Corp. Independent Director, Inventec Corporation. Chairman, First Leasing Co. Ltd. Chairman, Bo-Mong Investment Co. Ltd. Director, Weili Food Industries (Legal Representative) Director, Core Pacific City Co., Ltd. (Legal Representative) Director, Taivex Therapeutics Inc. (Legal Representative)* Director, BES Engineering Corp. (Legal Representative) Director, Jiansu Core Pacific - Yamachi Commercial Insurance Co. Ltd.	None	None	None	None
Independent Director	Republic of China	Yun-Peng Chu	Male Ages above 61 years old	20210702	Three years until July1, 2024	20120630	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Master Degree Department of Economics of NTU Master degree in Department of Economics in University of Maryland Professor of Department of Economics in NCU Professor, Chi-Jen Liu Lecture, School of Big Data Management, Soochow University, Researcher, Research Center, Department of Economic Development, National Central University Minister of State, Executive Yuan Chairman, Taiwan Insurance GuarantyFund	Independent Director, Nan Ya Plastic Corporation Chairman, Bozhen Service Co., Ltd. Independent Director, Asia Cement Corporation Chairman, Rehoboth Biotechnology Corporation	None	None	None	None
Independent Director	Republic of China	Wen-Yen Pan	Male Ages above 61 years old	20210702	Three years until July1, 2024	20130628	0	0.000%	0	0.000%	0	0.000%	0	0.000%	P.h.D in Department of Chemical Engineering at University of Wyoming Chairman, Kuo Kuang Power Co., Ltd. President & Chairman, CPC Corporation Chairman, Gintech Energy Corporation (Director Representative)	Chairman, CPC Chairman, CTCI Foundation Independent Director, UPC Technology Corporation Director, CTCI Independent Director, U-Ming marine	None	None	None	None
Independent Director	Republic of China	Song-Nian Ye (note 10)	Male Ages above 61 years old	20210702	Three years until July1, 2024	20200528	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Army Infantry Training Command Officer Reserve School Graduate Director and Chairman, Union Wide Construction Co. Ltd.	Chairman, Union Wide Construction Co. Ltd. Chairman, Union Wide Construction Co. Ltd. Chairman, Kung Cheng Construction Co. Ltd.	None	None	None	None

Title (Note 1)	Nationality or registered country	Name	Gender Age (note 2)	Election (Appointm ent) Date	Term of Office	Date first elected (Note 3)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 4)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Remark (Note 5)
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
Director	Republic of China	The Core Pacific Co., Ltd.	N/A	20210702	Three years until July1, 2024	19940726	45,625,09 6	1.389%	53,980,916	1.426%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
		Representative of Core Pacific Co., Ltd.: Shaw-Shin Yang	Male Ages above 61 years old	20210702	Three years until July1, 2024	20120627	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Graduated from University of Taipei, College of Kinesiology	Chairman, QMI Chairman, Quint Major Industrial Co., Ltd Director, Quint Yi Construction Co., Ltd.	N/A			Note 3
		BES	N/A	20210702	Three years until July1, 2024	20000524	13,110,345	0.399%	183,037,540	4.836%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
		Engineering
		Corp.
		(note 6)
Director	Republic of China		female ages under 61 years old	20220325	20220325 to 20240701	20210702	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Master of Leisure Institute of Private Chaoyang University of Science and Technology Taichung City Councillor Municipal Consultant of Taichung City Government Director, Economic Development Bureau, Taichung City Government Director, Economic Development Bureau, Taichung City Government	Legal representative, Zhongqin Human Resource Management Consulting Co., Ltd. Legal representative, Core Pacific World Corporation Chairman, BES Machinery Co., Ltd (Legal representative) Legal representative, CKS Guard	None			None
		Representative
																Chairman (Legal representative) and general
		of BES Engineering														manager of BES Engineering Inc.
		Corp.: Hui														Vice Chairman, Xiamen Wanxiang Logistics Management Co., Ltd. (Legal representative) Chairman, BESM Holding Co., Ltd. (Legal representative) Legal representative, BES Construction Corporation (U.S.A) Director/Legal Representative, Global BES Engineering (Myanmar) Co. Ltd. Director/Legal Representative, BES Engineering Vietnam CompanyLimited
		Lan,Chu (Note
		6)

Title (Note 1)	Nationality or registered country	Name	Gender Age (note 2)	Election (Appointm ent) Date	Term of Office	Date first elected (Note 3)	Shareholding when Elected	Shareholding when Elected	Current shareholding	Current shareholding	Current Shares Held by Spouse and Children of Minor Age	Current Shares Held by Spouse and Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major Experience (Education) (Note 4)	Other Position	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Other Chiefs, Supervisors or Directors with Spouses, or Relatives Within the Second Degree of Kinship	Remark (Note 5)
							Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding			Title	Name	Relationship
Director	Republic of China	Yao Chuen Co., Ltd.	N/A	20210702	Three years until July 1,2024	20210702	400,000	0.012%	448,708	0.012%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
		Representative of Yao Chuen Co., Ltd. Hui-Ting Shen (Note 6)	Male Ages under 61 years old	20210702	Three years until July 1,2024	20090630	0	0.000%	0	0.000%	0	0.000%	0	0.000%	B.A.in Department of Electronic Machinery and Information Management, Lehigh University EMBA in School of Economics and Management, Tsinghua University Director, Core Pacific City Co., Ltd. (Legal Representative) Director, Sheen Chuen-Chi Cultural and Educational Foundation Director, Jingjie Construction Co., Ltd. Director, China Petrochemical Development Corporation (Legal representative)	Director, Sheen Chuen-Chi Cultural and Educational Foundation Director, Jingjie Construction Co., Ltd.*	None	None	None	Note 3
																Director, Core Pacific - Yamaichi Financial
																Group
																Director, Core Pacific - Yamaichi International (H.K.) Director, Jiansu Core Pacific - Yamachi Commercial Insurance Co. Ltd. Chairman, Shanghai Core Pacific - Consultant Co. Ltd. (Legal Representative) Chairman & President, Beijing Core Pacific - Investment and Consultant Co. Ltd. (Legal Representative) Vice Chairman, Yangzhou Living City Co., Ltd. Director, Yangzhou Jing Guo Co., Ltd. Director, Yangzhou Zhuoyue Property Management Co., Ltd. Director, Yangzhou Jingcai Property Co., Ltd. Director, Yangzhou Jingge Restaurant Management Co., Ltd. Director, Anshan Jinghui Real Estate Co., Ltd. Director, Changshu Jinghui Property Co., Ltd. Director, Hangzhou Jinghua Technology Movie Art World Co.,Ltd.
		C.P. Leasing Co. Ltd.	N/A	20210702	Three years until July 1,2024	20210702	3,672,500	0.112%	2,100,516	0.055%	0	0.000%	0	0.000%	N/A	N/A	N/A			N/A
Director	Republic of China	C.P. Leasing Co. Ltd.: Kuen-Ming Lin (Note 6)	Male Above 61 years old	20210702	Three years until July 1,2024	20120630	0	0.000%	0	0.000%	0	0.000%	0	0.000%	Department of Electrical Engineering NTU Chairman, Taiwan Health Care Association Director, Straits Economics & Cultural Interchange Association	Chairman and General Manager of Premier Venture Capital Corp. Chairman, Premier Capital Management Corp. General Manager and Director, Kun Chi Venture Capital Corp. Chairman, Dexin Corp. Chairman, Ruby Tech Corp. Director, Amit Technology Corporation (Legal Representative) Director, Zipcom Corporation Director, Lung Hwa Electronics (Legal Representative) Director, Terawins, Inc. (Legal Representative) Director, DeltaMac (Taiwan) Co., Ltd. (Legal Representative) Director, Development Consultants Co., Ltd. (Legal Representative) Director, UISCO Independent Director,Getac TechnologyCorp.	None	None	None	None

*: Denote the reinvestment companies of the Company using the equity method

Note 1: The institutional shareholder shall be identified by name and representative (in the case of an institutional representative, please specify the institutional shareholder's

• name) and also complete the following Table 1.

• Note 2: Please specify the actual age, which could be expressed by the range, i.e. between 41-50 age or 51-60 age.

Note 3: Please also specify if the initial term of office for the Company's director or supervisor is interrupted.

• (1)Mr. Hui-Ting Shen's initial term of office as a director was from June 30, 2009 to May 16, 2011, and the term of office of his reappointment as a director of the Company (as the representative of the Sheen Chuen-Chi Cultural and Educational Foundation & YAO CHUEN CO. LTD.) was from May 25, 2020 to July 1, 2021 and July 2, 2021~ July 1, 2024 respectively.

• (2)Shaw-Shin Yang's initial term of office as a director was from June 27, 2012 to July 31, 2012, and the term of office of his reappointment as a director of the Company (as the representative of the Jen Huei Enterprise Co., Ltd. & Core Pacific Co., Ltd) was from June 30, 2015 to July 7, 2015 and July 2, 2021~ July 1, 2024 respectively.

• Note 4: Refers to experiences related to the current post. If the officer once assumed a post in a CPA Office or an affiliate of the Company, please specify the job title and responsibilities.

• Note 5: Where the Chairman and the general manager or person of an equivalent post (the highest level manager) of the Company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto (for example, increase the number of independent directors, and there shall be more than half of the directors who do not concurrently serve as employees or managers). The Company is currently actively developing the petrochemical and land development two-pronged businesses, and vigorously developing overseas competitive markets. Therefore, we hired Ruey-Long Chen, Chairman of the Board to concurrently serve as the Company’s CEO, leading the Company’s management team, actively expanding the Company’s development territory, and coordinating the Company’s overall “breakthrough” plan and sustainable development strategy. In accordance with laws and regulations, the Company will adjust the concurrently roles of Chairman of the Board and CEO or increase the number of independent directors before December 31, 2023.

• Note 6: (1) Legal director BES Machinery Co., Ltd was one of 22th legal directors, the appointed term from July 2, 2021 until July 1, 2024. BES Engineering Corp. merged with BES Machinery Co., Ltd according to article 19 of the M&A Act. After the merger, the existing company name: BES Engineering Corp., as of the M&A date on March 25, 2022 will take the duty of legal director according to the letter No. 87204541 issued by Ministry of Economic Affairs on May 14 1998. The original legal representative of BES Machinery Co., Ltd, Jun Nan,Bai, was replaced by the re-appointed legal representative of BES Engineering Corp., Hui Lan,Chu.

• (2) The legal representative of Jen Huei Enterprise Co., Ltd. Hui Lan,Chu was replaced by Jiun Nan Bai on March 25th, 2022.

• (3) The legal representative of Sheen Chuen-Chi Cultural and Educational Foundation: Hui-Ting Shen and Kuen-Ming Lin, due to the expiration of the 21st term up to July 1, 2021. For the 22nd term reelection, both candidates did not receive nomination on July 2, 2021 (delayed due to Covid-19), thus Mr. Shen and Mr. Lin no longer represent the Sheen Chuen-Chi Cultural and Educational Foundation. For the 22nd term, Yao Chuen Co. Ltd. and C.P. Leasing Co., Ltd. was elected as the new directors with Hui-Ting Shen and Kuen-Ming Lin appointed by Yao Chung Co. Ltd. and C.P. Leasing Co., Ltd as the legal representative respectively.

Note 7: When elected, the total shares issued was 3,284,850,130 shares.

Note 8: As of the record date, the total shares issued was 3,784,850,130shares. Note 9: Who was appointed as vice chairman on April 13, 2022.Note 10: Resigned from the position on May 26, 2022.

2. Major shareholders of corporate shareholders

2. Major shareholders of corporate shareholders	2. Major shareholders of corporate shareholders
March 29,2022
Name of Corporate Shareholder (Note 1)	Major Shareholders of Corporate Shareholders (Note 2)
Jen Huei Enterprise Co.,Ltd.	Frank Lu Co., Ltd. (20%), King's Wealth Investment Co., Ltd. (18.13%), Champ Enterprise Co., Ltd. (15%), Tontech International Co., Ltd. (14.37%), Ten King Investment Co., Ltd. (13.75%)
CORE PACIFIC CO.,LTD.	Ten King Investment Co., Ltd. (16.23%), Golden Wheel Co., Ltd. (11.16%), Taiwan Tony Enterprise Co., Ltd. (9.29%), King's Wealth Investment Co., Ltd. (9.11%), Tang Lin-Mei(9.11%), Core Pacific Supermarket Co., Ltd.(8.49%), Tony Investment Co., Ltd. (6.82%)
BES Engineering Corp.	China Petrochemical Development Corporation (10.74%), Core Pacific Co., Ltd. (2.24%), Wen-Yang Lin (1.72%), Morgan Stanley as custodian of JP Morgan Investment Account (1.43%), Tony Investment Co., Ltd.(1.39%), Kao King Investment Co., Ltd.(1.37%), JP Morgan Chase Bank N. A. Taipei Branch in Custody for Vanguard Emerging Market Stock Index Fund, a Series of Vanguard Equity Index Funds (1.27%), Chase Custody Advanced Starlight Advanced Aggregate International Stock Index (1.18%), Standard Chartered Bank in Custody of iShares Emerging Market ETF (0.97%), Sheen Chuen-Chi Cultural & Educational Foundation(0.84%)
Yao Chuen Co., Ltd.	Tontech International Co., Ltd. (70%), Taiwan Safe Manufacturing & Merchandising Co., Ltd. (25%), Flower Field Development Ltd. (5%)
C.P. Leasing Co., Ltd.	Agora Garden Co., Ltd. (44.77%), Jen Huei Enterprise Co., Ltd. (11.63%), Core Pacific Real Estate Co., Ltd. (11.63%), Tony Investment Co., Ltd. (9.3%)
Note 1: For a director or a supervisor who acts as a corporate shareholder's representative, please specify the corporate shareholder's name. Note 2: Please specify names of the major shareholders of the given corporate shareholder (top ten shareholders) and the ratio of shareholding. Where the major shareholder is a corporation, please complete the following Table 2. Note 3: If the legal person shareholder is not organized as a company, the "names of shareholders" and the "ratio of shareholding" in the preceding paragraph shall be "names of funders or donors" and the "ratio of fund or donation".

3. Major Shareholders of Major Corporate Shareholder

March 29, 2022

	March 29,2022
Name of Corporate Shareholder(Note 1)	Major Shareholders of Corporate Shareholders (Note 2)
Frank Lu Co., Ltd.	Lin Ke-Ming (30%), Wu Wang Hsiu-Ching (20%), Hong Hsiu-Feng (20%), Song Kun-Ren (20%)
Champ Enterprise Co., Ltd.	Frank Lu Co., Ltd. (29.59%), C.P. Leasing Co., Ltd. (17.52%), Jheng Chao-Wun (9.73%), Glory Construction Co., Ltd. (9.00%), Wu Chun-Feng (7.95%)
Tontech International Co., Ltd.	King's Wealth Investment Co., Ltd. (33.75%), Kao King Investment Co., Ltd. (27.50%), Taiwan Tony Enterprise Co., Ltd. (27.50%)
Ten King Investment Co., Ltd.	Glory Construction Co., Ltd. (21.42%), Kao King Investment Co., Ltd. (20.74%), Core Pacific Co., Ltd. (18.88%), Champ Enterprise Co., Ltd. (10.89%), Core Pacific Electronics Co., Ltd. (10.53%)
King's Wealth Investment Co., Ltd.	Core Pacific Electronics Co., Ltd. (24.00%), Kao King Investment Co., Ltd. (19.00%), Excellence Investment Co., Ltd. (19.00%), Ten King Investment Co., Ltd. (16.75%), Taiwan Tony Enterprise Co., Ltd. (11.25%).
Taiwan Tony Enterprise Co., Ltd.	Core Pacific Real Estate Co., Ltd. (33.60%), Wu Chun-Feng (30.84%), Core Pacific Electronics Co., Ltd. (15.00%), Frank Lu Co., Ltd. (15.00%)
Core Pacific Supermarket Co., Ltd.	Agora Garden Co., Ltd. (41.25%), Jen Huei Enterprise Co., Ltd. (18.75%), Cheng Yao Enterprise Co., Ltd. (12.00%), Golden Wheel Co., Ltd. (11.25%)
Golden Wheel Co., Ltd.	Frank Lu Co., Ltd. (24%), Windwell Industrial Co., Ltd. (20%), Core Pacific Electronics Co., Ltd. (17.66%), Premier Capital Co., Ltd. (14.67%), Pan Universal Co., Ltd. (13%).
Tony Investment Co., Ltd.	Pan Universal Co., Ltd. (29.71%), King's Wealth Investment Co., Ltd. (10%), Core Pacific Supermarket Co., Ltd. (9.76%), Jen Huei Enterprise Co., Ltd. (9.71%).
China Petrochemical Development Corporation	BES Engineering Corporation (4.84%), Chao-Shun Hong (1.95%), Core Pacific Co., Ltd. (1.43%), JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Emerging Markets Stock Index Fund (1.30%), JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds (1.24%), King's Construction Co., Ltd. (1.22%), HSBC in custody of Core Pacific - Yamaichi International (H.K.) Ltd. – Client A/C (0.84%), Core Pacific World Co., Limited (0.81%), Ming-Da Lin (0.79%), Citibank (Taiwan) in custody of Polunin Developing Countries Fund, LLC (0.73%).
Kao King Investment Co., Ltd.	Golden Wheel Co., Ltd. (27.17%), C.P. Leasing Co., Ltd. (15.58%), King’s Construction Co. Ltd. (14.44%), Champ Enterprise Co., Ltd. (10.68%), Core Pacific Electronics Co., Ltd. (10.03%), Glory Construction Co.,Ltd. (7.78%), Taiwan Tony Enterprise Co., Ltd. (3.76%), Pei-Chien Tsai (3.08%), Ten King Investment Co., Ltd. (3.01%), Core Pacific Co., Ltd. (2.01%)
Taiwan Safe Manufacturing & Merchandising Co., Ltd.	Fen Lan Yu (42%), Hsiang Wu (40%), Shiou Tao Chen (12%), C.P. Leasing Co, Ltd. (6%).
Flower Field Development Ltd.	Windwell Industrial Co., Ltd. (45%), King's Wealth Investment Co., Ltd. (35%), Li-Feng Cheng (20%)
Core Pacific Real Estate Co., Ltd.	Chun-Fong Wu (24.8%), Fu Shing Real Estate Co., Ltd. (21%), Ching Cheng Co., Ltd. (14.6%), Kingmetro Development & Consultancy Corporation (6%)
Agora Garden Co., Ltd.	Golden Wheel Co., Ltd. (14.18%), Core Pacific Electronics Co., Ltd. (13.78%), Cheng Yao Enterprise Co., Ltd. (12.62%), Kao King Investment Co., Ltd. (10.53%), Premier CapitalCo.,Ltd. (7.79%).

Note 1: The names of the major corporate shareholders referred to in Table 1, if any, shall be specified. Note 2: Please specify names of the major shareholders of the given shareholder (top ten shareholders) and the ratio of shareholding.

Note 3: If the legal person shareholder is not organized as a company, the "names of shareholders" and the "ratio of shareholding" in the preceding paragraph shall be "names of funders or donors" and the "ratio of fund or donation".

4. Information on Directors in professionalism and independence

4. Information on Directors in professionalism and independence	4. Information on Directors in professionalism and independence	4. Information on Directors in professionalism and independence	4. Information on Directors in professionalism and independence
March 29, 2022
Name	Qualification and experience	Status of independence	Number of public companies where the person holds the title as independent director
Chairman Ruey-Long Chen	Who graduated from the Department of Applied Economics in NCHU. Currently serves as the Company Chairman and CEO. Previously served as the Minister of the Ministry of Economic Affairs, Deputy Minister of State Affairs of the Ministry of Economic Affairs, Executive Deputy Minister of the Ministry of Economic Affairs, and Director of the International Trade Bureau of the Ministry of Economic Affairs. Currently as Independent Director of Formosa Chemicals & Fiber Corporation & Independent Director of Inventec Corporation & Director, director of Asia Cement Corporation & Director of Tatung Company & Secretary-General of Cross-Strait Entrepreneur Summit and chairman of the Company. With a wealth of industry (both non-tech/manufacturing and technology:materials: petrochemical, constructions materials, consumer discretionary: consumer electronics; information technology: technology hardware & equipment) knowledge and experiences, operational judgment, leadership decision-making for multinational companies, business management, crisis management and international trade and market capabilities.	None of the paragraphs in Article 30 of the Company Law are applied. (Note 1)	2
Vice chairman Jiun-Nan Bai	Ph.D. in Law, Institute of Economics, Chinese Culture University and Master Degree Department of Economics of NTU. Currently serves as the Company’s Vice Chairman. Previously worked as the President of BES Engineering Corp. & Chairman of Core Pacific Securities Investment Trust& Vice president of Bank of Communications and Special Member of Economic Construction Committee, Executive Yuan. Possessed a wealth of industry (material: petrochemical, financials: capital markets, real estate: land and real estate management & development & operation, industrial: construction and engineering) knowledge and experiences, operational judgment, leadership decision-making, business management and crisis management capabilities.	None of the paragraphs in Article 30 of the Company Law are applied. (Note 1)	2
Director Shaw Shin,Yang	Who was graduated from University of Taipei, College of Kinesiology and is the founder of QMI as Chairman of Quint Major Industrial Co., Ltd & Chairman of Quint Major Industrial Co., Ltd. & Supervisor of Quint Yi Construction Co., Ltd. & director of the Company. Possessed a wealth of industry (non-tech and petrochemical downstream: consumer discretionary: textile) knowledge and experiences, operational judgment, leadership decision-making, business management and crisis	None of the paragraphs in Article 30 of the Company Law are applied. (Note 1)	0

Name	Qualification and experience	Status of independence	Number of public companies where the person holds the title as independent director
	management capabilities.
Director Kueng-Ming Lin	Graduated from Department of Electrical Engineering NTU and have ever worked in MiTAC, China UNICOM for 10 more years and is the founder of Dexin and Premier Venture Capital Corp. Currently as Chairman and president concurrently of Premier Venture Capital Corp. & Chairman of Ruby Tech Corp. & Director of Amit Technology Corporation & Director of the Company. Possessed with wealth industry (material: petrochemical, information technology innovation: software & services and technology hardware & equipment, and financials: diversified financial services/venture capital) knowledge and experiences, operational judgment, leadership decision-making, business management and crisis management capabilities.	None of the paragraphs in Article 30 of the Company Law are applied. (Note 1)	1
Director Hui Lan, Chu	Who with Master of Leisure Institute of Private Chaoyang University of	None of the paragraphs in Article 30 of the Company Law are applied. (Note 1)	0
	Science and Technology and have ever been Taichung City Councilor &
	Municipal Consultant of Taichung City Government & Director,
	Economic Development Bureau, Taichung City Government & Director,
	Economic Development Bureau, Taichung City Government and the
	director of the Company. Currently as Chairman and general manager of
	BES Engineering Inc. Possessed a wealth of industry (materials:
	petrochemical, real estate: land real estate management & development &
	operation, industrial: construction and engineering and public sector)
	knowledge and experiences, operational judgment, leadership
	decision-making, business management and crisis management
	capabilities.
Director Hui-Ting Shen	With EMBA in School of Economics and Management, Tsinghua University & B.A. in Department of Electronic Machinery and Information Management, Lehigh University. Currently as Director of JEAN Pacific Development Co., Ltd. & Vice Chairman of Yangzhou Living City Co., Ltd. & Director of the Company. Possessed a wealth of industry (materials: petrochemical, real estate: land and real estate management & development, industrial: construction and engineering, and consumer discretionary: hotels, restaurants & leisure) knowledge and experiences, operational judgment, leadership decision-making, business management, crisis management capabilities.	(1) None of the paragraphs in Article 30 of the Company Law are applied. (Note 1)	2
	PhD in Department of Economics in University of Maryland. Currently serves as the Chairman of the Audit and Remuneration Committees. Previously worked as a Professor in the Department of Economics in NCU & Professor, Chi-Jen Liu Lecture, School of Big Data Management, Soochow University & Researcher, Research Center, Department of	(1) Not a director (or governor), supervisor, or employee of that other company or institution which the Chairman, general manager, or person holding an equivalent position of the company and a person in any of those

Name	Qualification and experience	Status of independence	Number of public companies where the person holds the title as independent director
	Economic Development, National Central University & Minister of State, Executive Yuan & Chairman, Taiwan Insurance Guaranty Fund. Currently as Independent Director of Nan Ya Plastic Corporation & Independent Director of Asia Cement Corporation and Director of the Company. Possessed a wealth of industry (materials: petrochemical, production, construction materials and financials: insurance) knowledge and experiences, operational judgment, accounting and financial analysis, leadership decision-making, business management, crisis management and international market capabilities.	positions at another company or institution are the same person or are spouses (2) Not a director (or governor), supervisor, or employee of that other company or institution which the Chairman, general manager, or person holding 20 percent or more and no more than 50 percent of the total number of issued shares of the public company, and the company and its parent or subsidiary or a subsidiary of the same parent and Not a shareholder holding five percent or more of the shares as well. (3) Not a director (or governor), supervisor, or shareholders holding more than 10% total shares hold more than 30% of the total issued shares of the Company, and both parties have financial or business transaction records. The total shares mentioned in the preceding paragraph includes shares held by the person's spouse, minor children, or held by the person under others' names, Directors (or governor), supervisors, managers or shareholders holding more than 5% of the shares of a specific company or institution that has financial or business with the Company. (4) Not a director (or governor), supervisor, or shareholders holding more than 5% total shares of a specific company or institution that has financial or business with the Company and its operating income coming from other companies and their group companies (5) Not a director (or governor), supervisor, or shareholders holding more than 5% total shares of a specific company or institution that has financial or business with the Company and more than 50% of its quantity or total purchase amount comes from other companies and their group companies of its

Name	Qualification and experience	Status of independence	Number of public companies where the person holds the title as independent director
		main product raw materials (referring to those that account for more than 30% of the total purchase amount, and key raw materials that are indispensable for the manufacture of products) or main commodities (referring to those that account for more than 30% of the total operating income). (6) Does not provide the Company or associated companies with auditing or in the past 2 years, obtained compensation cumulated over NT$500,000 in business, legal, financial, accounting services, by professionals, sole proprietorships, partnerships, companies, or institutional owners, partners, directors, supervisors, managers, and spouses. However, the Remuneration Committee, M&A Audit committee members, established in accordance with local securities regulations or mergers & acquisition regulations, are not included.
Note 1: Anyone who has one of the following circumstances shall not appointed as a manager, and those who have already been appointed accordingly:			shall be dismissed

Who Has committed a crime stipulated in the Regulations on the Prevention of Organized Crime, has been convicted by a conviction, but has not yet been executed or has not been executed completely Or less than five years since completion of execution, expiration of probation, or pardon. A person who has committed a crime of fraud, breach of trust, or embezzlement has been sentenced to fixed-term imprisonment of more than one year, and the sentence has not yet been executed, the execution has not been completed, or less than 2 years since the completion of the execution, the expiration of the suspended sentence, or the pardon.

A person who has committed a crime under the Code of Corruption and has been convicted of guilt and has not yet been executed, has not been executed yet, or less than 2 years since the completion of the execution, the expiration of the suspended sentence, or the pardon. Those who have been declared bankrupt or have been ordered to start liquidation procedures and have not been reinstated. Those who has been rejected to use of Negotiable instrument and the term has not yet expired. Those who are incapacitated or have limited capacity. The assisted declaration has not been revoked.

5. Board Diversity and Independence:

Board Diversity policy

• I. According to Article 20 of the Company's "Corporate Governance Best Practice Principles", the board of directors of the company shall guide the Company's strategy, supervise the management level, and be responsible to the Company and shareholders. Various operations and arrangements of the corporate governance system will ensure that the board of directors follows the laws and regulations, the Company's “Articles of Incorporation” and exercise its functions and powers in accordance with the resolutions of the shareholders' meeting.

• II. The Company's "Articles of Incorporation" stipulates that the election of directors shall adopt the candidate nomination system, and the Corporate Governance Best Practice Principles" and "Rules for Election of Directors" stipulate that the composition of the board of directors should take into account the policy of diversity, considering the Company’s business and operation type and to meet the needs of future development, to formulate a diversity policy, including but not limited to the two major aspects of basic qualifications and values, and professional knowledge and skills, as follows:

• (I) The structure of the board of directors of the company, subject to the scale of the company's operation and development and the shareholding situation of major shareholders, and considering the needs of the company's operation, an appropriate number of directors should be set up with five or more people. The composition of the board of directors should be comprehensively considered. In addition to that directors who also was appointed as managers of the Company should not exceed one-third of the number of directors, an appropriate diversification policy should be formulated based on the company's business and operation type and future development needs, including but not limited to standard of two major aspects below:

  1. Basic qualifications and values: the diversity of gender, age, nationality and cultural background need be considered.

  2. Professional knowledge and skills: diversified professional backgrounds, professional skills and industry experiences need to be considered to meet the talents required by the Company.

• (II) In order to achieve the ideal goals of corporate governance, members of the board of directors should have the knowledge, skills and qualities necessary to perform their duties, including the following abilities: 1. Operational judgment, 2. Accounting and financial analysis, 3. Leadership, 4. Business Management, 5.Crisis Management, 6.Industry knowledge, 7.International market view 8.Decision-making.

• III. The selection process of the Company's list of director candidates must comply with the qualification review and relevant criteria to ensure that when there is a vacancy in the number of directors or planned additions, the appropriate new director candidates can be effectively identified and selected.

Implementation status of Board Diversity Policy

The nomination of directors of the company is a rigorous selection process, which not only considers professional ability, but also attaches great importance to the reputation of ethical behavior and leadership. When selecting and appointing directors, not only the professional background of directors (including independent directors) themselves, but also knowledge, skills and literacy of diversity is also an important part for all board members to perform their duties. At present, the target ratio of female directors is more than 10%, and the professional field includes per the policy: 1. Operational judgment, 2. Accounting and financial analysis, 3. Leadership, 4. Business Management, 5.Crisis Management, 6.Industry knowledge, 7.International market view 8.Decision-making.

At present, CPDC’s board of directors consists of 9 members, covering financial accounting, land development and industry knowledge and other professional backgrounds, and have rich business management and crisis management capabilities. Currently, there are 1 female director, and 3 independent directors account for more than one-third of all members of the board. In addition, there is no spouse or relative within the second degree among the directors, so the board of directors of the company is independent. The implementation of the Board Diversity Policy is as follows:

Diversity Core Item Job title/Name	Diversity Core Item Job title/Name			Basicqualification and Value	Basicqualification and Value	Basicqualification and Value	Basicqualification and Value	Basicqualification and Value	Industry experience	Industry experience	Industry experience	Industry experience	Industry experience	Professional knowledge and capacity	Professional knowledge and capacity	Professional knowledge and capacity	Professional knowledge and capacity	Professional knowledge and capacity	Professional knowledge and capacity	Professional knowledge and capacity	Professional knowledge and capacity
		Gender	Concurrently as employee	Age		Term of office			public relationship	traditional manufacturing	Petrochemical and related industries	Land development & operations, Civil construction, and engineering, etc.	Technology, new ventures	Operational Judgement	Accounting and Financial Analysis	Leadership	Business management	crisis management	Industry knowledge	international market view	decision-making
				Under 60	Above 61	Under 3 years	3-9 years	Above 9 years
Chairman	Ruey-Long Chen	M																			
Vice chairman	Jiun-Nan Bai	M																			
Independent Director	Yun-Peng Chu	M																			
Independent Director	Wen-Yen Pan	M																			
Independent Director	Song-Nian Ye	M																			
Director	Shaw Shin,Yang	M																			
Director	Kueng-Ming Lin	M																			
Director	Hui Lan Chu	F																			
Director	Hui-TingShen	M																			

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

March 29, 2022

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Remark (Note 3)
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
CEO	Republic of China	Ruey-Long Chen	male	2020.03.27	200,000	0.005%	0	0.000%	0	0.000%	Department of Applied Economics in NCHU Minister, Ministry of Economic Affairs	Independent Director, Formosa Chemicals & Fiber Corporation Independent Director, Inventec Corporation Director, HANNSTAR BOARD CORPORATION Director, Asia Cement Corporation (Legal Representative)	None	None	None
												Director, Tatung Company(Legal Representative)
												Secretary-General, Cross-Strait Entrepreneur Summit Chairman, Sinocon Industrial Standards Foundation Director, Kaohsiung Monomer Co., Ltd. (Legal Representative) Director, Taivex Therapeutics Inc. (Legal Representative) Director, Dingyue Development Co., Ltd. (Legal Representative) Director, BES Engineering Corp. (Legal Representative) Legal Representative, Unichem Development Limited Director, Weihua (Rutung) Trade Co., Ltd. Director, WeiQiang International Trading (Shanghai) Co., Ltd. Director, Jiangsu Weiming New Material Co., Ltd Director, Changzhou Weicai New Material Co., Ltd. Legal Representative & Executive Director, Core Pacific Twin Tower (Myanmar) Co. Ltd. Director,Weifong (Myanmar)Co. Ltd.
President	Republic of China	Janson Yu	male	2017.11.10	127,107	0.003%	1,079	0.000%	0	0.000%	Director and Chief Financial Officer, Living Mall, Yangzhou. Chief Financial Officer, Living Mall Co. Ltd. Project Manager, Core Pacific Securities Co., Ltd. EMBA, Xiamen University Department of Accounting, Fu-Jen Catholic University	Director, Kaohsiung Monomer Co., Ltd. (Legal Representative) Director, Tsou Seen Chemical Industries Corporation (Legal Representative) Director, CPDC(BVI) Company Director, Taivex Therapeutics Corporation (Legal Representative) Director, Dingyue Development Co., Ltd. (Legal Representative) Legal representative & chairman, CPDC Green Technology Corporation (Legal Representative) President, BES Twin Towers Development Corporation Ltd. Director, Changzhou Weicai New Material Science & Technology Co., Ltd. Director, Weihua (Rutung) Trade Co., Ltd. Legal Representative and President, WeiQiang International Trading (Shanghai)Co.,Ltd.	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Remark (Note 3)
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
												Legal representative & president & director, Jiangsu Weiming New Materials Co., Ltd. Chairman, Weiming (Rudong) Engineering Co., Ltd. Dorectpr, Weifeng (Myanmar) Co., Ltd. Director, Tuofeng Investment Co., Ltd. Core Pacific Twin Star (Myanmar) Investment Co. Ltd. (Legal Representative) Thanh Phong Construction Investment Limited (Legal Representative) Legal representative,Chainlon*
Special assistant	Republic of China	Kuo-Tsai Huang	male	2017.02.24	0	0.000%	0	0.000%	0	0.000%	Investigation Officer of Ministry of Justice, Section Chief of Civil Service Protection & Training Commission, Senior Executive Officer of National Academy of Civil Service, Secretary General of National Academy of Civil Service, Deputy Director of National Academy of Civil Service, Counselor of Civil Service Protection & Training Commission, Deputy General Manager in Management Department of BES Master Degree in Public Administration of NCCU	Director, CKS Guard Co., Ltd. (Legal Representative) *	None	None	None
Vice President	Republic of China	Chia-Wei Tsai	male	2019.12.25	67,414	0.002%	19,261	0.001%	0	0.000%	Engineer, Specialist, Manager, Assistant Vice President in CPDC P.h.D. in MOES of National Sun Yat-sen University	None	None	None	None
Vice President	Republic of China	Shu-Tong Zou	male	2019.08.12	43,000	0.001%	0	0.000%	0	0.000%	AVP, Global Brands Manufacturing Product Manager, DuPont Taiwan Six Sigma Black Belt AVP, Production Division MBA Fu Jen Catholic University	Director, WeiQiang International Trading (Shanghai) Co., Ltd. Director, Changzhou Weicai New Material Science & Technology Co., Ltd.	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Remark (Note 3)
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Vice President	Republic of China	Ying-Chun Chen	male	2019.08.12	100,000	0.003%	0	0.000%	0	0.000%	Senior Administrator, Specialist, Manager and Assistant Vice President, CPDC Department of Accounting of Chinese Culture University	Supervisor, Kaohsiung Monomer Co., Ltd. Supervisor, Chao Xing Chemical Co., Ltd. Supervisor, Taivex Therapeutics Corporation Director, CPDC (BVI) Investment Co., Ltd. Director, CPDC Green Technology Corporation (Legal Representative) Supervisor, Dingyue Development Co., Ltd. Director, BES Twin Towers Development Corporation Ltd. (Legal Representative) Legal representative, CKS Guard Supervisor, Jean Pacific Development Co., Ltd. (Legal Representative) Supervisor, Weihua (Rudong) Trade Co., Ltd. Supervisor, WeiQiang International Trading (Shanghai) Co., Ltd. Supervisor, Jiangsu Weiming New Material Corporation Supervisor, Changzhou Weicai New Material Science & Technology Co., Ltd. Director, Core Pacific-Yamaichi Financial Group Limited Director, Core Pacific-Yamaichi International (H.K.) Director, Jiansu Core Pacific - Yamachi Commercial Insurance Co. Ltd. Director, Guangxi Beibu Gulf Innovation Development Investment Fund Management Co., Ltd. Supervisor, Handy Chemical Corporation Ltd. Supervisor, Weiming (Rudung) Engineering Co., Ltd. Supervisor, Tsou Seen Chemical Industries Corporation*	None	None	None
Vice president (proxy) (Note 4)	Republic of China	Yu Lan,Wang	female	2021.02.01	8,000	0.000%	0	0.000%	0	0.000%	Assistant Manager of the Management Department, BES Engineering Inc. Project Manager, TOPCO Scientific Co. LTD Assistant Manager of Human Resources Department, Yuanjia Enterprise Co. Ltd. Assistant Manager of Human Resources Division, TransGlobe Life Insurance Inc. Research institute, Insurance and Economic department, Ming Chuan University	None	None	None	None
Assistant Vice President	Republic of China	Chien-Hsien Lee	male	2019.08.12	59,526	0.002%	20,500	0.001%	0	0.000%	Supervisor, Specialist, Manager and Factory Chief, CPDC Master Degree of Chemical and Materials Engineering Department in National Central University	Vice president, Jiangsu Weiming New Materials Co., Ltd.	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Remark (Note 3)
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Assistant Vice President	Republic of China	Chiao-Pin Lee	male	2020.09.15	20,193	0.001%	0	0.000%	0	0.000%	Manager and Plant Chief, CPDC Toufen Plant, Production 1st Team Masters in Chemical Engineering, Yuntech University	None	None	None	None
Assistant Vice President	Republic of China	Chien-Yuan Huang	male	2019.08.12	411	0.000%	0	0.000%	0	0.000%	Manager, CPDC Dashe Plant, Safety Team Masters in Chemical Engineering, TamkangUniversity	None	None	None	None
Assistant Vice President	Republic of China	Min Ling,Yang	Female	2018.01.01	0	0.000%	5,250	0.000%	0	0.000%	Manager, legal counselor of CPDC Ph.D., research institute of Law, Taipei University	None	None	None	None
Plant Chief	Republic of China	Hong-Long Chen	male	2020.09.15	0	0.000%	0	0.000%	0	0.000%	Manager, Public Department, CPDC Toufen Plant Masters in Textile Engineering, Feng Chia University	None	None	None	None
Plant Chief	Republic of China	Wang Chong-Chien	male	2019.08.12	23,016	0.001%	0	0.000%	0	0.000%	Manager, CPDC Dashe Plant, Technical Team Masters in Chemical Engineering, Yuan Zhe University	None	None	None	None
Plant Chief Vice president(proxy)	Republic of China	Chi-Tsung Kao	male	2020.10.01	0	0.000%	0	0.000%	0	0.000%	Engineer in CPLIII factory of CPDC Supervisory, Senior Engineer, Director, Manager of Technical Team in Hsiaokang Plant of CPDC Master Degree of Chemical and Materials Engineeringin TamkangUniversity	Legal representative, CPDC Green Energy Technology Co., Ltd.*	None	None	None
Manager	Republic of China	Lee Chi-Chang	male	2018.01.01	0	0.000%	0	0.000%	0	0.000%	Manager, CPDC Admin Division, HR Department Fiber Engineering, National Taiwan Universityof Science and Technology	None	None	None	None
Manager	Republic of China	Yung-Long Chen	male	2018.01.01	50,000	0.001%	0	0.000%	0	0.000%	Masters in IT, Tamkang University	Manager, CPDC Administrative Resources Department Information Office Master of Information Management Institute, TamkangUniversity	None	None	None
Manager	Republic of China	Chi-Wei Chang	Female	2018.01.01	50,000	0.001%	0	0.000%	0	0.000%	Masters in Materials Engineering, NSYSU	Manager, CPDC Research and Development Center Master, Institute of Materials Engineering, Sun Yat-Sen University	None	None	None
Manager	Republic of China	Yang Chi-Yuan	male	2018.01.01	6,643	0.000%	0	0.000%	0	0.000%	Manager, CPDC, China Business Division, Construction Department Chemistry and Engineering, National Taiwan University of Science and Technology	None	None	None	None
Manager	Republic of China	Chi-Fong Wang	male	2018.01.01	6,168	0.000%	0	0.000%	0	0.000%	Chemical Engineering, National Taiwan Universityof Science and Technology	None	None	None	None
Manager	Republic of China	Fang-Mo Chien	male	2018.01.01	22,457	0.001%	918	0.000%	0	0.000%	Manager, Production Team of CPDC Dashe Plant Masters in Chemical Engineering,NCKU	None	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Remark (Note 3)
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Manager	Republic of China	Chin-Yi Lee	male	2018.01.01	86,000	0.002%	0	0.000%	0	0.000%	Manager, CPDC Dashe Plant, Administrative Department Masters in Chemistry,NCKU	None	None	None	None
Manager	Republic of China	Kuan-Der Chien	male	2018.01.01	50,084	0.001%	320	0.000%	0	0.000%	Masters in IT, Kaohsiung University of Applied Sciences	None	None	None	None
Manager	Republic of China	Chang-Hung Chien	male	2018.05.10	0	0.000%	0	0.000%	0	0.000%	Department of Industrial Engineering and Management,Yuan Zhe University	None	None	None	None
Manager	Republic of China	Pei-Yu Yang	Female	2018.08.01	20,600	0.001%	0	0.000%	0	0.000%	Senior Administrator and Specialist of CPDC Shareholder Services Office Department of International Trade in Advanced College of China University of Technology	None	None	None	None
Manager	Republic of China	Yong Chong, Jiang	male	2021.01.03	0	0.000%	0	0.000%	0	0.000%	Audit Supervisor, Taiwan Star Telecom Corporation Audit Supervisor, NEXCOM Director of Jingcheng Information Company Audit Project National Taiwan University Institute of International Enterprise	None	None	None	None
Manager	Republic of China	Chau-Yuan Tsai	male	2020.10.01	25,000	0.001%	0	0.000%	0	0.000%	Managerand Plant Chief, CPDC Hsiaokang Plant, Production 1st Team Masers in Chemical Engineering, Tunghai University	None	None	None	None
Manager	Republic of China	Mu-Chuan Ho	male	2018.01.01	45,000	0.001%	0	0.000%	0	0.000%	Engineer, Production Team and Utilities Team, section head of CPL factory of CPDC Toufen Plant; Manager, Environmental Division of CPDC Toufen Plant Textile of National Taiwan University of Science and Technology	None	None	None	None
Manager	Republic of China	Po-Cheng Hsu	male	2019.06.17	0	0.000%	0	0.000%	0	0.000%	Branch Manager, Ta Chong Commercial Bank Co., Ltd. Financial Supervisor, Fund Management Committee for Private Schools Faculties Master in Financial Management, Fu Jen Catholic University	None	None	None	None
Manager	Republic of China	Wen-Yuan Tseng	male	2019.08.12	20,152	0.001%	0	0.000%	0	0.000%	Sales Manager, Taiwan Cement Corporation, China Huanan Region. Deputy Manager, CPDC Product Trading Department Soochow University, Business BA Tamkang University, IMBA International Business	None	None	None	None

Title (Note 1)	Nationality	Name	Gender	Election (Appointment) Date	Status of Shareholding	Status of Shareholding	Current Shares Held by Spouse or Children of Minor Age	Current Shares Held by Spouse or Children of Minor Age	Shareholding Under the Name of a Third Party	Shareholding Under the Name of a Third Party	Major (Academic Degree) Experience (Note 2)	Positions Held Concurrently in any Other Companies	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Managerial Officers with Spouses or Relatives Within the Second Degree of Kinship	Remark (Note 3)
					Quantity	Ratio %	Quantity	Ratio %	Quantity	Ratio %			Title	Name	Relationship
Manager	Republic of China	Wei-Ying Li	male	2020.08.01	0	0.000%	250	0.000%	0	0.000%	Postdoctoral Fellow, Sun Yat-Sen University Senior Engineer, CPDC R&D Center Specialist, CPDC R&D Center Assistant Manager, CPDC R&D Center Ph. D. of Chemistry, Sun Yat-Sen University	None	None	None	None
Manager	Republic of China	Yan Li, Wang	male	2021.06.01	0	0.000%	0	0.000%	0	0.000%	Manager of Raw Material Purchasing Department, CPDC Commerce Department Master of Human Resource Management Institute,Central University	legal representative, Zhaoxin Chemical Industry Co., Ltd.*	None	None	None

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

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

• Note 2: For the experience related to holding the current position, if one has worked in the CPA firm conducting the auditing and attesting business or related company, he/she shall state the job title and responsible position. Assistant vice president, regardless of job title, should also be disclosed.

• Note 3: Where the Chairman and the general manager or person of an equivalent post (the highest level manager) of the Company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto (for example, increase the number of independent directors, and there shall be more than half of the directors who do not concurrently serve as employees or managers).

• Note 4: Resigned on April 1, 2022.

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

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

December 31, 2021 Currency Unit: NTD Thousand

Title	Name			Rem	uneration to Directors	uneration to Directors	uneration to Directors	uneration to Directors	uneration to Directors	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	Remunera	Remunera	Remunera	tion in the capacityas employees	tion in the capacityas employees	tion in the capacityas employees	tion in the capacityas employees	tion in the capacityas employees	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	Remunerati on from investees other than subsidiaries (Note 11)
		Remuneration (A) (Note 2)		Pensi	on (B)	Remuneration of Directors (C) (Note 3)		For Services (D) (Note 4)				Salaries, bonus and special subsidies (E) (Note 5)		Pens	ion (F)	Remuneration of Employee (G) (Note 6)
		The Company	All companies included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company		All companies included into the financial statement (Note 7)		The Company	All companies included into the financial statement (Note 7)
																Cash dividend	Stock dividend	Cash dividend	Stock dividend
Chairman	Core Pacific Co., Ltd. Representative: Ruey-LongChen	8,785	10,785	0	0	13,832	13,832	0	15	0.6277%	0.6836%	9,281	9,281	0	0	0	0	0	0	0.8852%	0.9412%	188
Director, Appointed on July2,2021	Core Pacific Co., Ltd. Representative: Shaw Shin,Yang	0	0	0	0	6,935	6,935	240	240	0.1991%	0.1991%	0	0	0	0	0	0	0	0	0.1991%	0.1991%	0
Director Term is due since July 1, 2021	Core Pacific Co., Ltd. Representative: To be appointed	0	0	0	0	6,897	6,897	0	0	0.1914%	0.1914%	0	0	0	0	0	0	0	0	0.1914%	0.1914%	0
Director & Vice Chairman	BES Machinery Co., Ltd Representative: Jiun-Nan Bai(note 12)	4,723	4,723	0	0	13,832	13,832	0	20	0.5149%	0.5155%	0	0	0	0	0	0	0	0	0.5149%	0.5155%	0
Director Term is due since July 1, 2021	Jen Huei Enterprise Co., Ltd. Representative: Jiun-HueiGuo	215	215	0	0	6,897	6,897	136	136	0.2012%	0.2012%	0	0	0	0	0	0	0	0	0.2012%	0.2012%	0
Director Term is due since July 1, 2021	Sheen Chuen-Chi Cultural and Educational Foundation Representative: Hui-Ting Shen	0	0	0	0	6,897	6,897	124	124	0.1949%	0.1949%	0	0	0	0	0	0	0	0	0.1949%	0.1949%	0
Director Term is due since July 1, 2021	Sheen Chuen-Chi Cultural and Educational Foundation Representative: Kuen-MingLin	0	0	0	0	6,897	6,897	136	136	0.1952%	0.1952%	0	0	0	0	0	0	0	0	0.1952%	0.1952%	0
Director Appointed on July2,2021	C.P. Leasing Co., Ltd. Representative: Kun Ming,Lin	0	0	0	0	6,935	6,935	240	240	0.1991%	0.1991%	0	0	0	0	0	0	0	0	0.1991%	0.1991%	0
Director Appointed on July2,2021	Yao Chuen Co. Ltd. Representative: Hui Ting, Shen	0	0	0	0	6,935	6,935	240	240	0.1991%	0.1991%	0	0	0	0	0	0	0	0	0.1991%	0.1991%	0

Title	Name	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	Remuneration in the capacityas employees	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	The sum of A, B, C, D, E, F and G to Earnings after Tax (%)(Note 10) (Note 10)	Remunerati on from investees other than subsidiaries (Note 11)
		Remuneration (A) (Note 2)		Pension (B)		Remuneration of Directors (C) (Note 3)		For Services (D) (Note 4)				Salaries, bonus and special subsidies (E) (Note 5)		Pension (F)		Remuneration of Employee (G) (Note 6)
		The Company	All companies included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companie s included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company		All companies included into the financial statement (Note 7)		The Company	All companies included into the financial statement (Note 7)
																Cash dividend	Stock dividend	Cash dividend	Stock dividend
Director Appointed on July 2, 2021	Jen Huei Enterprise Co., Ltd Representative: Hui Lan, Chu	0	0	0	0	6,935	6,935	240	240	0.1991%	0.1991%	0	0	0	0	0	0	0	0	0.1991%	0.1991%	0
Independent Director	Song-Nian Ye◎	2,400	2,400	0	0	0	0	0	0	0.0666%	0.0666%	0	0	0	0	0	0	0	0	0.0666%	0.0666%	0
Independent Director	Yun-Peng Chu◎☆	3,600	3,600	0	0	0	0	0	0	0.0999%	0.0999%	0	0	0	0	0	0	0	0	0.0999%	0.0999%	0
Independent Director	Wen-Yen Pan◎☆	3,600	3,600	0	0	0	0	0	0	0.0999%	0.0999%	0	0	0	0	0	0	0	0	0.0999%	0.0999%	0
1. Please state the policy, system, standards and structure of independent directors' remuneration payment, and describe the relevance between the amount of remuneration and the factors including responsibilities, risks, the time spent by the individual, etc.: The remuneration of the Company's Directors shall be distributed by the Board of Directors in accordance with the authorization of the Articles of Incorporation, and shall take into account the pay levels in the domestic and overseas industry. The Board of Directors shall, in accordance with the Articles of Incorporation, decide the amount of Directors' remuneration in the event of profits. If an independent director is a member of any of the functional committees of the Company, in addition to paying the remuneration of general directors, different reasonable remunerations may be determined in consideration of the responsibilities, risks and the time spent by the individual. (◎refers to Audit Committee members, ☆refers to Remuneration Committee members) 2. In addition to the disclosures in the above table, the remuneration of directors from providing services (e.g., as the consultant of non-employee of parent company/all companies included in the financial report/reinvestment business) to all companies in financial statements in a recentyear: None.

1. Please state the policy, system, standards and structure of independent directors' remuneration payment, and describe the relevance between the amount of remuneration and the factors including responsibilities, risks, the time spent by the individual, etc.: The remuneration of the Company's Directors shall be distributed by the Board of Directors in accordance with the authorization of the Articles of Incorporation, and shall take into account the pay levels in the domestic and overseas industry. The Board of Directors shall, in accordance with the Articles of Incorporation, decide the amount of Directors' remuneration in the event of profits. If an independent director is a member of any of the functional committees of the Company, in addition to paying the remuneration of general directors, different reasonable remunerations may be determined in consideration of the responsibilities, risks and the time spent by the individual. (◎ refers to Audit Committee members, ☆ refers to Remuneration Committee members)

2. In addition to the disclosures in the above table, the remuneration of directors from providing services (e.g., as the consultant of non-employee of parent company/all companies included in the financial report/reinvestment business) to all companies in financial statements in a recent year: None.

3. Note 1: Directors' names shall be identified one by one (corporate shareholders shall be identified by the corporate shareholder's name and representative individually), and shall list the general directors and independent directors separately and disclose the amount of various payments in summary.

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

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

• Note 4: The directors' professional practicing fees in the most recent year (including transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car, et al.). If a house, car and any other transportation means or exclusive personal allowance are provided, please disclose the nature and cost of the assets, rent imputed based on the actual value or fair value, fuel expenses and other benefits. If a driver is assigned, please specify the payment made by the Company to the driver, but exclude the same from the remuneration.

• Note 5: It means the salary, duty allowance, severance pay, bonus, reward, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car received by the directors who acted as employees concurrently (including president, vice president, managerial officer and employee) in the most recent year. If a house, car and any other transportation means or exclusive personal allowance are provided, please disclose the nature and cost of the assets, rent imputed based on the actual value or fair value, fuel expenses and other benefits. If a driver is assigned, please specify the payment made by the Company to the driver, but exclude the same from the remuneration. Any salary listed under IFRS 2 Share-Based Payment, including employee stock options, new restricted employee shares, and cash capital increase by stock subscription, shall also be included in the remuneration.

• Note 6: If the directors who acted as employees concurrently (including president, vice president, managerial officer and employee) received employee bonus (including stock dividend and cash dividend) in the most recent year, please disclose the employee bonus approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year, and please also specify the table 1-3.

Note 7: The aggregate of the remuneration to directors in the Company from the companies included into the consolidated financial reports (including the Company) should be disclosed.

• Note 8: The aggregate of the remuneration to each director by the Company shall include the director's name disclosed in the relevant space of the following table.

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

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

Note 11: a. To specify whether the Company's directors have received remuneration from investees beyond subsidiaries (If there is none, please fill in "none").

• b. If the Company's directors have received remuneration from investees beyond subsidiaries, please include the same into Section J in the following table and changed the name of the section into "all investees".

• c. The remuneration shall refer to the remuneration, compensation, employee bonus and professional practicing fees received by the Company's directors who acted as the directors, supervisors or managerial officers of investees other than subsidiaries.

• Note 12: (1) The legal director of BES Machinery Co., Ltd served as one of the legal directors of 22nd, the term is from July 2, 2022 to July 1st, 2024. BES Engineering Corp., according to article 19 of Business Mergers and Acquisitions Act, the former was merged by the later. After the merge, BES Engineering Inc. is the surviving company, and BES Machinery Co., Ltd. is the extinct company. The name of surviving company still maintain BES Engineering Corp.., Date of March 25th, 2022 as the merged recording date, according to the letter No. 87204541 issued by Economic of Affairs on May 14, 1998, BES Engineering Corp. succeeded as a legal director of the company, Jiun-Nan Bai, the representative of the legal director appointed by the former BES machinery Co., Ltd, was subsequently dismissed and Hui Lan, Chu was re-appointed as the representative of the legal director appointed by the BES Engineering Corp.

• (2) The representative of legal director of Jen Huei Enterprise Co., Ltd. has changed from Hui Lan, Chu to Jiun-Nan Bai since March 25, 2022.

• The remuneration disclosed herein is different from the income referred to in the Income Tax Law conceptually. Therefore, the breakdown is only intended for the disclosure of information, instead of taxation.

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

December 31, 2021 Currency Unit: NTD Thousand

Title	Name	Salary (A) (Note 2)	Salary (A) (Note 2)	Pension (B)	Pension (B)	Cash incentives and special discretionary allowance etc. (C) (Note 3)	Cash incentives and special discretionary allowance etc. (C) (Note 3)	Amount for employee remuneration (D) (Note 4)	Amount for employee remuneration (D) (Note 4)	Amount for employee remuneration (D) (Note 4)	Amount for employee remuneration (D) (Note 4)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 8)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 8)	Remuneration from investees other than subsidiaries (Note 9)
		The Company	All companies included into the financial statement (Note 5)	The Company	All companies included into the financial statement (Note 5)	The Company	All companies included into the financial statement (Note 5)	The Company		All companies included into the financial statement (Note 5)		The Company	All companies included into the financial statement (Note 5)
								Cash dividend	Stock dividend	Cash dividend	Stock dividend
CEO	Ruey-Long Chen	24,941	27,229	7,450	7,450	45,533	48,718	0	0	0	0	2.1626%	2.3145%	504
President	Janson Yu
Vice president of petrochemical production department, furlough onJuly1,2021	Yuan-Long Chen
Executive vice president of Land development department Resigned on August 1, 2021	Yun-Chih Liu
Vice President of the FinanceDepartment	Ying-Chun Chen
Vice President of the New Venture Department	Shu-Tong Zou
Vice President of the R&DCenter	Chia-Wei Tsai
Special Assistant of Chairman, retired on July 1,2021	Chi-Chung Chia
Special Assistant of Chairman	Guo Cai,Huang
Vice president of Administrative Resource Department(proxy)	Hui Fen,Yang
Vice president of petrochemical production department(proxy)	Qi Zong, Gao

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

Breakdown of Remuneration

Breakdown of Remuneration
Breakdown of remuneration paid to president and vice president	Name of President or Vice President
	The Company (Note 6)	All companies included into the financial statement (Note 7)E
Less than NT$1,000,000
NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive)	Yun Zhi, Liu	Yun Zhi, Liu
NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive)	Zhi Zhong, Jia
NT$3,500,000 (inclusive) ~ NT$5,000,000 (exclusive)		Zhi Zhong, Jia
NT$5,000,000 (inclusive) ~ NT$10,000,000 (exclusive)	Rui Long, Chen; Yuan Long, Chen; Ying Jun,Chen; Xu Dong, Zou; Jia Wei, Tsai; Guo Cai, Huang; Huei Fen,Yang; Qi Zong, Gao	Rui Long, Chen; Ying Jun,Chen; Xu Dong, Zou; Jia Wei, Tsai; Guo Cai, Huang; Huei Fen, Yang; Qi Zong, Gao
NT$10,000,000 (inclusive) ~ NT$15,000,000 (exclusive)	Janson Yu	Yuan Long, Chen
NT$15,000,000 (inclusive) ~ NT$30,000,000 (exclusive)		Janson Yu
NT$30,000,000 (inclusive) ~ NT$50,000,000 (exclusive)
NT$5,000,000 (inclusive) ~ NT$100,000,000 (exclusive)
NT$100,000,000 or more
Total	11 persons	11 persons

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

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

• Note 3: Please specify the bonus, reward, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car, as well as other remunerations, received by the presidents and vice presidents in the most recent year. If a house, car and any other transportation means or exclusive personal allowance is provided, please disclose the nature and cost of the assets, rent imputed based on the actual value or fair value, fuel expenses and other benefits. If a driver is assigned, please specify the payment made by the Company to the driver, but exclude the same from the remuneration. Any salary listed under IFRS 2 Share-Based Payment, including employee stock options, new restricted employee shares, and cash capital increase by stock subscription, shall also be included in the remuneration.

• Note 4: Please specify the employee bonus (proposed amount). to be allocated to the presidents and vice presidents as approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year, and please also specify the table 1-3.

• Note 5: Please disclose the aggregate of the remuneration paid to the Company's presidents and vice presidents by all companies included into the consolidated financial reports (including the Company).

• Note 6: The aggregate of the remuneration to each president or vice president by the Company shall include the president's or vice president's name disclosed in the relevant space of the following table.

• Note 7: The aggregate of the remuneration paid to each of the Company's presidents and vice presidents by the companies included into the consolidated financial reports (including the Company) shall include the president's and vice president's names disclosed in the relevant space of the following table.

• Note 8: The earnings after tax shall refer to the earnings after tax identified in the entity or the parent company only financial statement for the most recent year.

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

• b. If the Company's presidents and vice presidents have received remuneration from investees beyond subsidiaries, please include the same into Section E in the following table and changed the name of the section into "all investees".

• c. The remuneration shall refer to the remuneration, compensation, employee bonus and professional practicing fees received by the Company's presidents and vice presidents who acted as the directors, supervisors or managerial officers of investees other than subsidiaries.

• The remuneration disclosed herein is different from the income referred to in the Income Tax Law conceptually. Therefore, the breakdown is only intended for the disclosure of information, instead of taxation.

• The remuneration disclosed herein is disclosed based on estimations and on an accrual basis.

(III) Employee bonus amount paid to managerial officers:

	(III) Employee bonus amount paid to managerial officers:	(III) Employee bonus amount paid to managerial officers:	(III) Employee bonus amount paid to managerial officers:	(III) Employee bonus amount paid to managerial officers:	(III) Employee bonus amount paid to managerial officers:	(III) Employee bonus amount paid to managerial officers:
	December 31,2021Currency Unit:NTD Thousand
	Title (Note 1)	Name (Note 1)	Stock dividend	Cash dividend	Total	Proportion to Earnings After Tax (%)
Managerial Officer	CEO	Ruey-LongChen	0	35,592	35,592	0.99%
	President	Janson Yu
	Vice President	Chia-Wei Tsai
	Vice President	Shu-TongZou
	Vice President	Ying-Chun Chen
	Assistant Vice President	Guo Cai, Huang
	Assistant Vice President	Jian Xian, Li
	Assistant Vice President	Chiao-Pin Lee
	Assistant Vice President	Chien-Yuan Huang
	Assistant Vice President	Chau-Yuan Tsai
	Plant Chief	Hong-LongChen
	Plant Chief	WangChong-Chien
	Plant Chief	Chi-TsungKao
	Manager	Lee Chi-Chang
	Manager	Yung-LongChen
	Manager	Chi-Wei Chang
	Manager	YangMing-Ling
	Manager	YangChi-Yuan
	Manager	Chi-FongWang
	Manager	Fang-Mo Chien
	Manager	Chin-Yi Lee
	Manager	Kuan-Der Chien
	Manager	Chang-HungChien
	Manager	Pei-Yu Yang
	Manager	Mu-Chuan Ho
	Manager	Po-ChengHsu
	Manager	Wen-Yuan Tseng
	Manager	Wei-YingLi
	Manager	TonyWang

Note 1: Please disclose the name and job title individually, while the allocation of earnings may be summarized and then disclosed.

Note 2: Please specify the employee bonus (proposed amount) to be allocated to the managerial officers as approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year. The earnings after tax refer to the earnings after tax in the most recent year. If the IFRSs are adopted, the earnings after tax shall refer to the earnings after tax identified in the entity or the parent company only financial statement for the most recent year.

Note 3: The scope of managerial officers shall be defined in the following manner, as per the Board's decree under Tai-Tsai-Cheng-3-Tze No. 0920001301 dated March 27, 2003:

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• (1) President and equivalents;

• (2) Vice president and equivalents;

• (3) Assistant vice president and equivalents;

• (4) Chief of Financial Dept.;

• (5) Chief of Accounting Dept.;

(6) Any other persons in charge of the Company's affairs and entitled to sign instruments on behalf of the Company. Note 4: If any director, president or vice president has received an employee bonus (including stock dividend and cash dividend), please complete table 1-2 and also this table.

• (IV) Specify and compare the salary to directors, presidents and vice presidents of the Company in proportion to the earnings after tax from the Company and companies included in the consolidated financial statements in the most recent 2 years, and specify the policies, standards, combinations, procedure of decision-making of remunerations and their relation to business performance and future risk:

• Total compensation paid to directors, presidents, and vice presidents as a percent of earnings after tax in the most recent 2 years (calculated based on estimations and on an accrual basis):

accrual basis):	accrual basis):
2020		2021
The Company	All companies included into the consolidated financial statements	The Company	All companies included into the consolidated financial statements
10.989%	11.606%	5.151%	5.359%

Total compensation paid to directors, presidents, and vice presidents as a percentage of earnings after tax, explanations is as follows: All performance bonuses and employee compensation are based on the Company's profitability. In 2020, due to the outbreak of the epidemic, the oil price fluctuation, and the increase in the supply of new production capacity, the net profit after tax decreased significantly compared to 2019. Accordingly, the total remuneration to directors, presidents and vice presidents were reduced significantly. However, due to the retirement of Lin Ko-Ming, the former Chairman, in 2020, the Company paid him severance pay, which resulted in an increase in the proportion of the total remuneration of directors, president and vice presidents to the net income after tax compared with that in 2019. In 2021, although the net profit after-tax increased due to the easing of the epidemic, the recovery of downstream demand, the total remuneration of directors presidents and vice presidents increased relatively, and the proportion of the total remuneration to the after-tax net profit of 2021 tended to the normal level.

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• The policies, standards, combinations, procedure of decision-making of remunerations, and their relation to business performance and future risk:

• The remuneration to the Company's (Executive) Chairman, (Executive) Vice Chairman, and directors was based on remuneration, transportation allowance and attendance allowance applicable in the same industry domestically and overseas, taking the performance and risk into consideration, and paid in accordance with Article 28 of the Company's Articles of Incorporation. According to Article 32 of the Articles of Incorporation, 2% of the earnings shall be allocated as remuneration to directors according to the motion for allocation of shareholders' dividends.

• The remuneration to the Company's presidents and vice presidents (including salary, allowance and bonus, etc.) will be evaluated based on market intelligence, seniority, responsibilities, experience, performance and risk, and paid in accordance with Article 29 of the Company Act. The Company established the Remuneration Committee in September 2011. As the companies included into the consolidated financial statements are invested and wholly owned by the Company, the Company's remuneration policy shall apply.

• The compensation (including salary, allowance, bonus, etc.) to the Company's employees is based on their performance, implementation of supervisors' responsibilities, market conditions and the Company's payment ability, and in accordance with the management guidelines of the Company's compensation system.

• Regarding the procedures for establishing remuneration, in addition to considerations of the overall operating performance, industry outlook, risk management, and future development, we also consider personal performance and contributions to the company's overall performance in the remuneration. Related performance evaluation and remuneration considerations are submitted to the Remuneration Committee and the Board of Directors for approval. Depending on operating conditions and related regulations, we also further review and revise our remuneration as necessary, with the aim of achieving a balance between sustainable management and risk controls.

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IV. Implementation of Corporate Governance

(I) Operations of the Board

• (1) A total of 14 board meetings were held in 2021 (A). The attendance record of directors & supervisors is listed below:

Title	Name (Note 1)	Representative	Actual attendance (B)	Attendance by proxy	Actual attendance Rate (%) (B/A) (Note 2)	Remark
Chairman	Core Pacific Co., Ltd 1	Ruey-Long Chen	14	0	100	appointed since July 2, 2021
Vice Chairman	BES Machinery Co., Ltd	Jiun-Nan Bai	14	0	100	appointed since July 2, 2021
Independent director	Yun Peng, Chu		14	0	100	appointed since July 2, 2021
Independent director	Wen Yan, Pan		14	0	100	appointed since July 2, 2021
Independent director	Song Nian,Ye		14	0	100	appointed since July 2, 2021
Director	Core Pacific Co., Ltd 2	Shao Xin, Yang	6	3	67	appointed since July 2, 2021
Director	Sheen Chuen-Chi Cultural and Educational Foundation 2	Kueng-Ming Lin	5	0	100	The director’s term is due until July 1, 2021
Director	C.P. Leasing Co., Ltd	Kueng-Ming Lin	8	1	89	appointed since July 2, 2021
Director	Jen Huei Enterprise Co., Ltd	Jun Hui, Guo	4	1	80	The director’s term is due until July1,2021
Director	Jen Huei Enterprise Co., Ltd	Hui Lan, Chu	9	0	100	appointed since July 2, 2021
Director	Sheen Chuen-Chi Cultural and Educational Foundation 1	Hui-Ting Shen	4	1	80	The director’s term is due until July 1, 2021
Director	Yao Chuen Ltd.	Hui-Ting Shen	8	1	89	appointed since July 2, 2021
Other notes: I. If the operation of Board of Directors has one of the following situations, the minutes shall clearly state the meeting date, period, content of the resolution, opinions of all independent directors, and the Company's handling of the opinions of the independent directors: (I) The resolutions in the Board meeting are in accordance with Article 14-3 of the Securities and Exchange Act. are as follows: 1. Establishment or revision of internal control according to Article 14-1: (1) Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: 2020 internal control system self-evaluation has been completed, the declaration of internal control system was issued according to the result. Resolution: Approved by all attended directors (2) Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: Amendment to the Company's " Internal Control Procedures for management of financial report preparation". Resolution: Approved by all attended directors (3) Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: keeper of company’s official seal for register application to Ministry of Economic Affairs changes from Mr. Huang from accountant department to Mr. Chen who is the vice president of financial department. (4)Date of the board meeting: April 14,2021 38th session of the 21st Board of Directors

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Motion: Amendment to certain provisions of the Company's "Shareholder Services Internal Control Policy and Internal Audit Operational Guidelines". Resolution: Approved by all attended directors (5) Date of the board meeting: May 25, 2021 39th session of the 21st Board of Directors Motion: Amendment to certain provisions of the Company's "Responsibilities of the Board of Directors and Managers ". Resolution: Approved by all attended directors (6) Date of the board meeting: June 16, 2021 40th session of the 21st Board of Directors Motion: Adjustment of the Company organization Resolution: Approved by all attended directors (7) Date of the board meeting: September 29, 2021 5th session of the 22nd Board of Directors Motion: Adjustment of the Company organization and amendment to the Company’s “Charter”. Resolution: Approved by all attended directors (8) Date of the board meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion: Adjustment of the Company’s “CSR best practice principles” Resolution: Approved by all attended directors (9) Date of the board meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion: Amendment to the Company's "sustainable development committee charter” Resolution: Approved by all attended directors (10) Date of the board meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion: Amendment to certain provisions of the Company's "information control procedure-computerized information system principles” Resolution: Approved by all attended directors 2. In accordance with Article 36-1 regulation on the establishment or revision of the acquisition or disposal of assets, the trading of derivatives, corporate loans to others, guarantees or warrants to others, and relevant operating procedures: N/A 3. Matters involving the self-interests of the Directors: (1)Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: director’s remuneration distribution of 2020. Resolution: Approved by all attended directors (2) Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: nomination and reviewing of 22[nd] candidates of independent directors and directors. Resolution: Approved by all attended directors (3)Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: propose to Remove the 22nd Directors(including independent directors) and legal representatives of the Company's Prohibition of Competition Proposal Resolution: Approved by all attended directors (4)Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: The Company canceled the provision of guarantees and endorsements for its subsidiary Changzhou Weicai. Resolution: Approved by all attended directors (5)Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: The Company provides the provision of guarantees and endorsements for its subsidiary Weihua (Rudong) Trade Co., Ltd. Resolution: Approved by all attended directors (6)Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: settlement of the Company's Indian subsidiary CPDC GEMINI STAR (INDIA) PRIVATE LTD. Resolution: Approved by all attended directors (7)Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: suspension of land development proposal in Kaohsiung city. Resolution: Approved by all attended directors (8)Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: The former corporate director declared that he is not competent, proposal to change the candidates for corporate directors. Resolution: Approved by all attended directors

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(9)Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: the legal director after change and its representative of the Company's Prohibition of Competition Proposal Resolution: Approved by all attended directors (10)Date of the board meeting: May 12, 2021 39th session of the 21st Board of Directors Motion: The Company increase the guaranteed non-revolving mid-term credit quota, and jointly shares the credit with its subsidiary Dingyue Development Co., Ltd within the limit. Resolution: Approved by all attended directors (11)Date of the board meeting: May 12, 2021 39th session of the 21st Board of Directors Motion: The Company canceled the provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (12)Date of the board meeting: May 12, 2021 39th session of the 21st Board of Directors Motion: The Company propose the approval to remove the 22nd session of directors (including independent directors) concurrently in 2021 General Meeting of Shareholders. Resolution: Approved by all attended directors (13)Date of the board meeting: May 12, 2021 39th session of the 21st Board of Directors Motion: The Company jointly proceed the construction and sale with its subsidiary Dingyue Development Co., Ltd on Miaoli County Land Resolution: Approved by all attended directors (14)Date of the board meeting: June 16, 2021 40th session of the 21st Board of Directors Motion: Capital increase of the Company's subsidiary, Dingyue Development Co., Ltd Resolution: Approved by all attended directors (15)Date of the board meeting: June 16, 2021 40th session of the 21st Board of Directors Motion: The payment of the Company’s Consolation money Resolution: Approved by all attended directors (16) Date of the board meeting: June 16, 2021 40th session of the 21st Board of Directors Motion: the performance bonus issuance of the appointed manager in the 1[st] quarter of 2021. Resolution: Approved by all attended directors (17)Date of the board meeting: July 26, 2021 2nd session of the 22nd Board of Directors Motion: In order to handle the domestic cash capital increase and issuance of ordinary shares, the company adopted the method of public subscription and entrusted President Securities Corporation as the lead underwriter. Resolution: Approved by all attended directors (18) Date of the board meeting: July 26, 2021 2nd session of the 22nd Board of Directors Motion: appointed independent director Yun Peng, Chu; Wen Yan, Pan and Mr. Song Yong, Chen as the Company’s 5th remuneration committee. Resolution: Approved by all attended directors (19) Date of the board meeting: July 26, 2021 2nd session of the 22nd Board of Directors Motion: Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd Resolution: Approved by all attended directors (20) Date of the board meeting: August 13, 2021 3rd session of the 22nd Board of Directors Motion: remuneration of 22nd chairman, Rui Long, Chen Resolution: Approved by all attended directors (21) Date of the board meeting: August 13, 2021 3rd session of the 22nd Board of Directors Motion: remuneration of 22nd vice president, Jiun-Nan, Bai Resolution: Approved by all attended directors (22) Date of the board meeting: August 13, 2021 3rd session of the 22nd Board of Directors Motion: remuneration of 22nd independent directors. Resolution: Approved by all attended directors (23) Date of the board meeting: August 13, 2021 3rd session of the 22nd Board of Directors Motion: remuneration of 22nd directors except independent directors. Resolution: Approved by all attended directors (24) Date of the board meeting: August 13, 2021 3rd session of the 22nd Board of Directors Motion: reappointed Qing Jing, Shen as the Company’s top counselor and sign the Employment contract

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compensation Resolution: Approved by all attended directors (25) Date of the board meeting: August 13, 2021 3rd session of the 22nd Board of Directors Motion: the performance bonus issuance of the appointed manager in the 2[nd] quarter of 2021. Resolution: Approved by all attended directors (26) Date of the board meeting: September 29, 2021 5th session of the 22nd Board of Directors Motion: 1[st] proposal of provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (27) Date of the board meeting: September 29, 2021 5th session of the 22nd Board of Directors Motion: 2[nd] proposal of provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (28) Date of the board meeting: September 29, 2021 5th session of the 22nd Board of Directors Motion: the Company changed investment schedule and benefit of integration (including phase 1&2) of Rudong Weiming in Jiangsu Resolution: Approved by all attended directors (29) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: proposal for the cash deduction from 100% subsidiary Core Pacific Co., Ltd Resolution: Approved by all attended directors (30) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: the Company cancel the quotas guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (31) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: proposal of quotas guarantees and endorsements for its china subsidiary Weiming New Material Co., Ltd in Jiangsu Resolution: Approved by all attended directors (32) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: proposal of 2021 issuance price by cash increase and other related matters. Resolution: Approved by all attended directors (33) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: the performance bonus issuance of the appointed manager in the 3[rd] quarter of 2021. Resolution: Approved by all attended directors (34) Date of the board meeting: December 6, 2021 8th session of the 22nd Board of Directors Motion: its 100% subsidiary Core Pacific Co., Ltdparticipated in the public auction of the land plot in Thu Thiem Fang, Thu Duc City, Ho Chi Minh City. Resolution: Approved by all attended directors (35) Date of the board meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion:The company added endorsement guarantee and extended endorsement guarantee for one year for its mainland subsidiary Changzhou Weicai New Materials Co., Ltd. Resolution: Approved by all attended directors (36) Date of the board meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion:The company donated to the Sheen Chunchi Cultural and Educational Foundation. Resolution: Approved by all attended directors 4. Transactions of major assets or derivatives: (1)Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: settlement of the Company's Indian subsidiary CPDC GEMINI STAR (INDIA) PRIVATE LTD. Resolution: Approved by all attended directors (2) Date of the board meeting: March 23, 2021 37[th] session of the 21st Board of Directors Motion: The Company implemented planned capital expenditures for the construction of HG ammonia nitrogen removal systems in Dashe Plant and Xiaogang Plant. Resolution: Approved by all attended directors (3) Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: cash deduction on its subsidiary Tsou Seen Chemical Industries Corporation

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Resolution: Approved by all attended directors (4) Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: suspension of proposal of land development in Kaohsiung City Resolution: Approved by all attended directors (5) Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion:The Company's public bidding for the sale of land in Kaohsiung City Resolution: Approved by all attended directors (6) Date of the board meeting: May 12, 2021 39th session of the 21st Board of Directors Motion: The Company jointly proceed the construction and sale with its subsidiary Dingyue Development Co., Ltd on Miaoli County Land Resolution: Approved by all attended directors (7) Date of the board meeting: June 16, 2021 40th session of the 21st Board of Directors Motion: cash increase on its subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (8) Date of the board meeting: June 16, 2021 40th session of the 21st Board of Directors Motion: The Company applied for the extension of "Construction Project of Fine Chemical Plant - Phase I " and adjusted the product’s planning and budget Resolution: Approved by all attended directors (9) Date of the board meeting: June 16, 2021 40th session of the 21st Board of Directors Motion: negation with Sunko Ink Co., Ltd. to dismantle the asset business Resolution: Approved by all attended directors (10) Date of the board meeting: September 29, 2021 5th session of the 22nd Board of Directors Motion: The company's Taishe plant VOCs decontamination and improvement project planned capital expenditure Resolution: Approved by all attended directors (11) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: cash deduction on its 100% subsidiary Core Pacific Co., Ltd Resolution: Approved by all attended directors (12) Date of the board meeting: December 6, 2021 8th session of the 22nd Board of Directors Motion: its 100% subsidiary, Core Pacific Twin Star (Vietnam) Investment Co., Ltd, participated in the public auction of the land plot in Thu Thiem Fang, Thu Duc City, Ho Chi Minh City Resolution: Approved by all attended directors 5. Material monetary loan, endorsement, or provision of a guarantee. (1)Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: The Company cancelled guarantees and endorsements for its China subsidiary Changzhou Weicai. Resolution: Approved by all attended directors (2) Date of the board meeting: March 23, 2021 37th session of the 21st Board of Directors Motion: The Company provided guarantees and endorsements for its subsidiary Weihua (Rudong) Trading Co., Ltd. Resolution: Approved by all attended directors (3) Date of the board meeting: May 12, 2021 39th session of the 21st Board of Directors Motion: The Company cancelled guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (4) Date of the board meeting: July 26, 2021 2nd session of the 22nd Board of Directors Motion: cash increase on its 100% subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (5) Date of the board meeting: August 31, 2021 4th session of the 22nd Board of Directors Motion: For the investment and construction of the storage tank of the Kaohsiung Port Intercontinental Wharf, the company signed a land extension agreement with the Port of Kaohsiung Taiwan International Ports Corporation Ltd. and the joint lessee, and assumed the responsibility of mutual endorsement and guarantee on the scope and matters of the joint lease. Resolution: Approved by all attended directors (6) Date of the board meeting: September 29, 2021 5th session of the 22nd Board of Directors Motion: The Company provides guarantees and endorsements for its subsidiary Dingyue Development Co.,

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Ltd Resolution: Approved by all attended directors (7) Date of the board meeting: September 29, 2021 5th session of the 22nd Board of Directors Motion: The Company provides guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd-2[nd] proposal Resolution: Approved by all attended directors (8) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: The Company cancelled guarantees and endorsements credit for its subsidiary Dingyue Development Co., Ltd Resolution: Approved by all attended directors (9) Date of the board meeting: November 10, 2021 7th session of the 22nd Board of Directors Motion: The Company provided the credit guarantees and endorsements credit for its China subsidiary Jiangsu Weiming New Material Co., Ltd Resolution: Approved by all attended directors (10) Date of the board meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion: The company added endorsement guarantee and extended endorsement guarantee for one year for its mainland subsidiary Changzhou Weicai New Materials Co., Ltd. Resolution: Approved by all attended directors 6. Raising, issuing and private placement of equity-based securities: (1)Date of the board meeting: January 25, 2021 36th session of the 21st Board of Directors Motion: In order to increase the working capital and meet the capital needs of future development, the Company proposed to handle the domestic issuance of ordinary shares by cash capital increase. Resolution: Approved by all attended directors (2)Date of the board meeting: July 26, 2021 2nd session of the 22nd Board of Directors Motion: In order to handle the domestic cash capital increase and issuance of ordinary shares, the company adopted the method of public subscription and entrusted President Securities Corporation as the lead underwriter. Resolution: Approved by all attended directors (3) Date of the board meeting: September 29, 2021 5[th] session of the 22nd Board of Directors Motion: Cash capital increase by issuance of new shares within the limit of 500 million ordinary shares. Resolution: Approved by all attended directors (4) Date of the board meeting: November 10, 2021 7[th] session of the 22nd Board of Directors Motion: establishment of 2021 issuance price via cash capital increase and other related matters, Resolution: Approved by all attended directors 7.Appointment, discharge and compensation of CPAs: (1)Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: Reappointed the CPAs from KPMG as the auditor of the Company's 2021 financial report. Resolution: Approved by all attended directors (2)Date of the board meeting: April 14, 2021 38th session of the 21st Board of Directors Motion: Reappointed the CPAs from PwC as the auditor of the Company's 2021 business income tax settlement declaration Resolution: Approved by all attended directors 8. Appointment or discharge of a financial, accounting, or Head of Internal Audit: Date of the board meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion: New-appointed and change of the Company's Head of Internal Audit. Resolution: Approved by all attended directors 9. Other major information: Date of meeting: December 29, 2021 9th session of the 22nd Board of Directors Motion: The Company assessed the asset impairment in accordance with IAS 36. After the asset impairment test, the Company recorded an asset impairment in 2021 Q4. Resolution: Approved by all attended directors (II) Items in board resolutions regarding which independent directors have voiced opposing or qualified opinions on the record or in writing: None for this year.

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II. In instances where a director recused himself/herself due to a conflict of interest, the minutes shall clearly state the director's name, contents of the motion and resolution thereof, the reason for not voting and actual voting counts:

(I)	Motion: 2020 Director’s remuneration distribution
	Recusal: Since chairman Ruey-Long Chen, vice Chairman Jiun-Nan Bai, Director Jiun-Huei Guo, Director
	Kuen-Ming Lin, Director Hwa-Yeang Shen have a conflict of interest, they were recused during discussion and
	voting.
(II)	Motion: nomination and reviewing of 22nd candidates of independent directors and directors.
	Recusal: Since it involved conflict of interest of each director, they took turns to recuse during discussion and
	voting.
(III)	propose to Remove the 22nd Directors (including independent directors) and legal representatives of the
	Company's Prohibition of Competition Proposal in 2021 shareholder’s meeting
	Recusal: Since it involved conflict of interest of each director, they took turns to recuse during discussion and
	voting.
(IV)	The Company canceled the provision of guarantees and endorsements for its subsidiary Changzhou Weicai.
	Recusal: Since Chairman Ruey-Long Chen is a director of Changzhou Weicai New Material Science &
	Technology Co., Ltd. and has a conflict of interest, he was recused during discussion and voting. Since the
	Chairman of Changzhou Weicai and Director Hui-Ting Shen are relatives within the second degree of kinship,
	although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of
	self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the
	discussion and voting.
(V)	Motion: The Company provides the provision of guarantees and endorsements for its subsidiary Weihua
	(Rudong) Trade Co., Ltd.
	Recusal: Since Chairman Ruey-Long Chen is a director of Weihua (Rudong) and has a conflict of interest, he
	was recused during discussion and voting. Since the Chairman of Weihua (Rudong) are relatives with Hui-Ting
	Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the
	Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen
	to recuse himself from the discussion and voting.
(VI)	Motion: settlement of the Company's Indian subsidiary CPDC GEMINI STAR (INDIA) PRIVATE LTD.
	Recusal: the representative of CPDC GEMINI STAR (INDIA) PRIVATE LTD are relatives with Hui-Ting Shen
	within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the
	Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen
	to recuse himself from the discussion and voting.
(VII)	Motion: suspension of land development proposal in Kaohsiung city
	Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of
	interest, he was recused during discussion and voting
(VIII)	Motion: The former corporate director declared that he is not competent, proposal to change the candidates for
	corporate directors.
	Recusal: since director Ko-Ming Lin has a conflict of interest, he was recused during discussion and voting.
	Jiun-Huei Guo representative of Institutional Representative of Jen Huei Enterprise Co., Ltd was the nominated
	supervisor of legal director, she was recused during discussion and voting
(IX)	Motion: the legal director after change and its representative of the Company's Prohibition of Competition
	Proposal
	Recusal: since director Ko-Ming Lin has a conflict of interest, he was recused during discussion and voting.
	Jiun-Huei Guo representative of Institutional Representative of Jen Huei Enterprise Co., Ltd was the nominated
	supervisor of legal director, she was recused during discussion and voting
(X)	The Company increase the guaranteed non-revolving mid-term credit quota, and jointly shares the credit with its
	subsidiary Dingyue Development Co., Ltd within the limit.
	Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of
	interest, he was recused during discussion and voting
(XI)	Motion: The Company canceled the provision of guarantees and endorsements for its subsidiary Dingyue
	Development Co., Ltd
	Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of
	interest, he was recused during discussion and voting. Since the legal representative of the Core Pacific Co, Ltd.
	are relatives with Hui-TingShen within the second degree of kinship,although Director Hui-TingShen has no

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direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. Director Jiun-Nan Bai was assigned to attend by his proxy from Hui-Ting Shen, without expressing opinions or voting. (XII) Motion: The Company propose the approval to remove the 22nd session of directors (including independent directors) concurrently in 2021 General Meeting of Shareholders. Recusal: since independent director Yun Peng, Chu, director Jiun-Nan Bai and Hui-Ting Shen (Entrusted Director Jiun-Nan Bai by his proxy) and legal representative of EN HUEI ENTERPRISE CO., LTD., Jiun-Huei Guo, have a conflict of interest, they were recused during discussion and voting. Director Jiun-Nan Bai was entrusted to attend by his proxy from Hui-Ting Shen, without expressing opinions or voting. (XIII) Motion: The Company jointly proceed the construction and sale with its subsidiary Dingyue Development Co., Ltd on Miaoli County Land Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of interest, he was recused during discussion and voting (XIV) Motion: cash increase on its subsidiary Dingyue Development Co., Ltd Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of interest, he was recused during discussion and voting. Since the legal representative of the Core Pacific Co, Ltd. are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. (XV) Motion: The payment of the Company’s Consolation money Recusal: Director Jiun-Huei Guo has a conflict of interest, she was recused during discussion and voting. Director Jiun-Nan Bai was entrusted to attend by his proxy from Jiun-Huei Guo, without expressing opinions or voting. (XVI) Motion: the performance bonus issuance of the appointed manager in the 1st quarter of 2021. Recusal:Since Ruey-Long Chen is CEO and has a conflict of interest, he was recused during discussion and voting (XVII) Motion: in order to handle the domestic cash capital increase and issuance of ordinary shares, the company adopted the method of public subscription and entrusted President Securities Corporation as the lead underwriter. Recusal: Since vice president Jiun-Nan Bai is the independent director of President Securities Corporation and has a conflict of interest, he was recused during discussion and voting (XVIII) Motion: appointed independent director Yun Peng, Chu; wen Yan, Pan and Mr. Song Yong, Chen as the Company’s 5th remuneration committee. Recusal: Since independent director Yun Peng, Chu; wen Yan, Panhave a conflict of interest, they were recused during discussion and voting (XIX) Motion: Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd Recusal:Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of interest, he was recused during discussion and voting. Since the legal representative of the Core Pacific Co, Ltd. are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting (XX) Motion: remuneration of 22nd chairman, Rui Long, Chen Recusal: Since CEO Ruey-Long Chen has a conflict of interest, he was recused during discussion and voting (XXI) Motion: remuneration of 22nd vice president, Jiun-Nan, Bai Recusal: Since vice president Jiun Nan Bai has a conflict of interest, he was recused during discussion and voting (XXII) Motion: remuneration of 22nd independent directors. Recusal: Since independent director Yun Peng, Chu; wen Yan, Pan and Song Nian, Ye have a conflict of interest, they were recused during discussion and voting (XXIII) Motion: remuneration of 22nd directors except independent directors Recusal: director Shaw-Shin Yang, Ko-Ming Lin, Hui Lan, Chu and Hui-Ting Shen have a conflict of interest, they were recused during discussion and voting. Director Jiun-Nan Bai was entrusted to attend by his proxy from Shaw-Shin Yang, without expressing opinions or voting. (XXIV) Motion: reappointed Qing Jing, Shen as the Company’s top counselor and sign the Employment contract compensation Recusal:QingJing,Shen are relatives with Hui-TingShen within the second degree of kinship,although

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Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. (XXV) Motion: the performance bonus issuance of the appointed manager in the 2nd quarter of 2021 Recusal: Since CEO Ruey-Long Chen has a conflict of interest, he was recused during discussion and voting (XXVI) Motion: 1st proposal of provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of interest, he was recused during discussion and voting. Since the legal representative of the Core Pacific Co, Ltd. are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. Chairman Ruey-Long Chen was entrusted to attend by his proxy from Hui-Ting Shen, but Ruey-Long Chen was recused during discussion and voting as well, hence didn’t represent Hui-Ting Shen to express opinions or vote. (XXVII) Motion: 2nd proposal of provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of interest, he was recused during discussion and voting. Since the legal representative of the Core Pacific Co, Ltd. are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. Chairman Ruey-Long Chen was entrusted to attend by his proxy from Hui-Ting Shen, but Ruey-Long Chen was recused during discussion and voting as well, hence didn’t represent Hui-Ting Shen to express opinions or vote. (XXVIII) Motion: the Company changed investment schedule and benefit of integration (including phase 1&2) of Rudong Weiming in Jiangsu Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of interest, he was recused during discussion and voting. Since the legal representative of the Core Pacific Co, Ltd. are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. Chairman Ruey-Long Chen was entrusted to attend by his proxy from Hui-Ting Shen, but Ruey-Long Chen was recused during discussion and voting as well, hence didn’t represent Hui-Ting Shen to express opinions or vote. (XXIX) Motion: proposal for the cash deduction from 100% subsidiary Core Pacific Co., Ltd Recusal: Since the legal representative of the Core Pacific Co, Ltd. are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. (XXX) Motion: the Company cancel the quotas guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd Recusal: Since Chairman Ruey-Long Chen is a director of Dingyue Development Co., Ltd and has a conflict of interest, he was recused during discussion and voting. Since the legal representative of the Core Pacific Co, Ltd. are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. (XXXI) Motion: proposal of quotas guarantees and endorsements for its China subsidiary Weiming New Material Co., Ltd in Jiangsu Recusal: Since Chairman Ruey-Long Chen is a director of Weiming New Material Co., Ltd in Jiangsu and has a conflict of interest, he was recused during discussion and voting. Since the chairman of Weiming New Material Co., Ltd in Jiangsu are relatives with Hui-Ting Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the spirit of corporate governance, Director Hui-Ting Shen to recuse himself from the discussion and voting. (XXXII) Motion: proposal of 2021 issuance price by cash increase and other related matters. Recusal: Since vice president Jiun-Nan Bai is the independent director of President Securities Corporation and has a conflict of interest, he was recused during discussion and voting (XXXIII) Motion: the performance bonus issuance of the appointed manager in the 3rd quarter of 2021. Recusal: Since CEO Ruey-LongChen has a conflict of interest,he was recused duringdiscussion and voting

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	(XXXIV) Motion: its 100% subsidiary	(XXXIV) Motion: its 100% subsidiary	Core Pacific (Vietnam) Investment Co., Ltd participated in the public auction	Core Pacific (Vietnam) Investment Co., Ltd participated in the public auction	Core Pacific (Vietnam) Investment Co., Ltd participated in the public auction	Core Pacific (Vietnam) Investment Co., Ltd participated in the public auction
	of the land plot in Thu Thiem Fang, Thu Duc City, Ho Chi Minh City.
	Recusal: Since the committee chair			of Core Pacific (Vietnam) Investment Co., Ltd are relatives with Hui-Ting
	Shen within the second degree of kinship, although Director Hui-Ting Shen has no direct interest in this case, the
	Company upholds a high degree of		self-discipline and the spirit of corporate governance, Director Hui-Ting Shen
	to	recuse himself from the discussion and voting.
	(XXXV)	Motion: The Company added		endorsement guarantee and extended endorsement guarantee for one year for
	its mainland subsidiary Changzhou		Weicai New Materials Co., Ltd.
	Recusal: Since Chairman Ruey-Long Chen is a director of Changzhou Weicai New Materials Co., Ltd and has					a
	conflict of interest, he was recused			during discussion and voting. Since the director of Changzhou Weicai New
	Materials Co., Ltd are relatives with Hui-Ting Shen				within the second degree of kinship, although Director
	Hui-Ting Shen has no direct interest in this case, the Company upholds a high degree of self-discipline and the
	spirit of corporate governance, Director Hui-Ting Shen				to recuse himself from the discussion and voting.
	(XXXVI) Motion: The Company donated to the Shen Chunchi Cultural and Educational Foundation.
	Recusal: vice president Jiun-Nan		Ba, director Hui Lan,Chu and director Hui-Ting Shen are director, vice
	president and director of Shen Chuen Chi Cultural and Educational Foundation respectively. But they have					a
	conflict of interest, they were recused during discussion and voting
III. The evaluation cycles, evaluation periods, scope and method of evaluation, and contents of evaluation for evaluating the
	performance of the board members(on themselves orpeers). The implementation of evaluation for the Board of Directors:
	Evaluation Cycle	Evaluation Period Scope of Evaluation		Method of Evaluation	Content of Evaluation
	Once three years	Evaluating the performance from December 1, 2020 to November 30, 2021. Board of Directors		Evaluation methods include questionnaires and field visits	1. Composition of the board 2.Instruction of the board 3.Authorization of the board 4.Supervision of the board 5. Communication of the board 6. Internal control and risk management 7.Self-discipline of the board 8. Others 8 major aspects including the board meeting and support system
	Once a year	Evaluating Board of		Internal	1. Evaluation of performance for the Board of
		the Directors, each		evaluation of the	Directors: Including participation in the operation of
		performance director member		Board of	the Company, enhancement of the quality of the
		from January and Functional		Directors,	Board of Directors' decision making, composition
		1, 2021 to Committees		Functional	and structure of the Board of Directors, election and
		December 31, (including Audit		Committees	continuing education of the directors, and internal
		2021. Committee and		(including Audit	control; a total of 45 questions for the five major
		Remuneration		Committee and	aspects.
		Committee) and		Remuneration	2. Evaluation of performance for the individual board
		individual		Committee) and	members: Including alignment of the goals and
		members.		individual	missions of the Company, awareness of the duties of
				members.	a director, participation in the operation of the
					Company, management of internal relationship and
					communication, the director's professionalism and
					continuing education, and internal control; a total of
					23 questions for the six major aspects.
					3. Evaluation of performance for the Audit Committee:
					Including participation in the operation of the
					Company, awareness of the duties of the Audit
					Committee, the quality of decisions made by the
					Audit Committee, makeup of the Audit Committee
					and election of its members, and internal control; a
					total of 22 questions for the five major aspects.
					4. Evaluation of performance for the Remuneration
					Committee: Including participation in the operation
					of the Company, awareness of the duties of the
					Remuneration Committee, the quality of decisions
					made by the Remuneration Committee, the makeup
					of the Remuneration Committee and election of its
					members; a total of 18 questions for the four major
					aspects.

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• IV. Measures undertaken during the current year and past year in order to strengthen the functions of the Board of Directors (such as the establishment of the Audit Committee and improvement of information transparency, etc.) and assessment of their implementation:

• (I) In 2021, the Company conducted an internal evaluation of the performance of the Board of Directors, individual directors, Audit Committee and remuneration committee in accordance with the "Regulations of Performance Evaluation for Board of Directors".

• (II) The results of the internal and external performance evaluation of the Board of Directors in 2021 could be referred to chapter 3 Report on Corporate Governance and IV. Implementation of Corporate Governance and its deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof (note2)

• (III) The above evaluation results and improvement suggestions were reported at the 12th session of the 22nd Board of Director on March 14, 2022.

• Note 1: For a director or a supervisor who is a corporation, please specify the corporate shareholder's name and its representative's name.

• Note 2: (1) Where a specific director or supervisor may be relieved from duties before the end of the fiscal year, please specify their date of discharge in the `Remarks" Section. Their actual attendance rate (%) to the Board session shall be calculated based on the number of meetings called and actual number of sessions he/she attended, during his/her term of office.

  • (2) Where an election may be held for filling the vacancies of director or supervisor before the end of the fiscal year, please list out both the new and the discharged directors or supervisors, and specify if they are the former directors or supervisor, or newly elected, re-elected, and the date of the reelection. Their attendance rate (%) to the Board session shall be calculated based on the number of meetings called and the actual number of sessions they attended, during the term of office.

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(II) The function of Audit Committee

For the professional qualifications of each member of the Audit Committee, please refer to the Company's Annual Report, Section IV Corporate Governance’s report, the second paragraph is " Information on Directors in professionalism and independence" for directors, supervisors, presidents, vice presidents, assistant vice presidents, and heads of various departments and branches.

The Audit Committee held 12 meetings (A) during 2021; the attendance of independent directors is summarized as follows:

Title	Name	Actual attendance (B)	Attendance by proxy	Attendance Rate (%) (B/A) (Note)	Remark
Independent Director	Yun-Peng Chu	12	0	100.00
Independent Director	Wen-Yen Pan	12	0	100.00
Independent Director	Song-Nian Ye	12	0	100.00
Other notes: I. If the operation of the Audit Committee has one of the following situations, the minutes shall clearly state the meeting date, period, content of the resolution, opinions of all Audit Committee members and the Company's handling of said opinions. (I) Items listed in Article 14-5 of the Securities and Exchange Act: The resolutions approved by the Audit Committee are in accord with Article 14-5 of the Securities and Exchange Act. are as follows: (1) Establishment or revision of internal control according to Article 14-1: 1. Date of the audit committee meeting:April 14, 2021 33rd session of the 3rd Board of Directors Motion: Amendment to certain provisions of the Company's “Shareholder Services Internal Control Policy and Internal Audit Operational Guidelines" Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the audit committee meeting:April 14, 2021 33rd session of the 3rd Board of Directors Motion: Amendment to the Company's " Internal Control Procedures for management of financial report preparation". Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 3. Date of the audit committee meeting:September 29, 2021 4th session of the 4th Board of Directors Motion: Adjustment of the Company organization and amendment to the Company’s “Charter” Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 4. Date of the audit committee meeting: December 29, 2021 7th session of the 4th Board of Directors

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Motion: Adjustment of the Company’s “CSR best practice principles” Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 5. Date of the audit committee meeting: December 29, 2021 7th session of the 4th Board of Directors Motion: Establishment of the Company’s “sustainable development committee organization Charters” Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 6. Date of the audit committee meeting: December 29, 2021 7th session of the 4th Board of Directors Motion: Amendment to certain provisions of the Company's "information control procedure-computerized information system principles” Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (2) Assessment of the validity of internal control: 1. Date of the audit committee meeting: March 23, 2021 32th session of the 3rd Board of Directors Motion: The 2020 self-assessment of the internal control system (hereafter, "control self-assessment") has been completed. According to the results of the control self-assessment, issue a statement of the internal control system. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the audit committee meeting: December 29, 2021 7th session of the 4th Board of Directors Motion: Company's internal control audit plan for 2022. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting by the audit unit. (3) In accordance with Article 36-1 regulation on the establishment or revision of the acquisition or disposal of assets, the trading of derivatives, corporate loans to others, guarantees or warrants to others, and relevant operating procedures: N/A (4) Matters involving the self-interests of the Directors: 1. Date of the audit committee meeting: March 23, 2021 32th session of the 3rd Board of Directors Motion: propose to Remove the 22nd Directors (including independent directors) and legal representatives of the Company's Prohibition of Competition Proposal Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the audit committee meeting: May 12, 2021 34th session of the 3rd Board of Directors Motion: The Company propose to approve the removal of the 22nd session of directors (including independent directors) concurrently in 2021 shareholder’s general meeting DissentingOpinion from Independent Directors: None

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Resolution: Approved by all attended directors

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

• (5) Transactions involving major assets or derivatives:

• Date of the audit committee meeting: January 25, 2021 31st session of the 3rd Board of Directors

Motion: Approval of The Company's "Phase II Storage Tank Construction Project of the Port of Kaohsiung Intercontinental Container Terminal", increasing the lease of land for the public wharf and paying the performance bond

Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

1. Date of the audit committee meeting: March 23, 2021 32nd session of the 3rd Board of Directors

Motion: Approval of increased land agreement contract of the Company's "Phase II Storage Tank Construction Project of the Port of Kaohsiung Intercontinental Container Terminal", and payment of the performance bond.

Dissenting Opinion from Independent Directors: None

Resolution: Approved by all attended directors

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

1. Date of the audit committee meeting: March 23, 2021 32nd session of the 3rd Board of Directors

Motion: The Company implemented planned capital expenditures for the

construction of HG ammonia nitrogen removal systems in Dashe Plant and Xiaogang Plant.

Dissenting Opinion from Independent Directors: None

Resolution: Approved by all attended directors

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

1. Date of the audit committee meeting: April 14, 2021 33rd session of the 3rd Board of Directors

Motion: cash deduction on its subsidiary Tsou Seen Chemical Industries Corporation Dissenting Opinion from Independent Directors: None

Resolution: Approved by all attended directors

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

1. Date of the audit committee meeting: April 14, 2021 33rd session of the 3rd Board of Directors

Motion: The Company's public bidding for the sale of land in Kaohsiung City Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

1. Date of the audit committee meeting: May 12, 2021 34th session of the 3rd Board of Directors

Motion: Co-construction and sub-sale of the Shuangxi section of Toufen City, Miaoli County between the Company and Ding-Yue Development Co., Ltd.

Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

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• Date of the audit committee meeting: May 12, 2021 34th session of the 3rd Board of Directors Motion: The Company applied for the extension of "Construction Project of Fine Chemical Plant - Phase 0 " Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 8. Date of the audit committee meeting: June 16, 2021 35th session of the 3rd Board of Directors Motion: cash increase on its subsidiary Dingyue Development Co., Ltd Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 9. Date of the audit committee meeting: June 16, 2021 35th session of the 3rd Board of Directors Motion: The Company applied for the extension of stage 1 &2 of "Phase II Storage Tank Construction Project of the Port of Kaohsiung Intercontinental Container Terminal Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 10. Date of the audit committee meeting: June 16, 2021 35th session of the 3rd Board of Directors Motion: The Company applied for the extension of "Construction Project of Fine Chemical Plant - Phase I " and adjusted the product’s planning and budget Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 11. Date of the audit committee meeting: June 16, 2021 35th session of the 3rd Board of Directors Motion: Negotiation with Sunko Ink Co., Ltd. to dismantle the asset business Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 12. Date of the audit committee meeting: August 13, 2021 2nd session of the 4th Board of Directors Motion: Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 13. Date of the audit committee meeting: August 13, 2021 3rd session of the 4th Board of Directors Motion: For the investment and construction of the storage tank of the Kaohsiung Port Intercontinental Wharf, the company signed a land extension agreement with the Port of Kaohsiung Taiwan International Ports Corporation Ltd. and the joint lessee, and assumed the responsibility of mutual endorsement and

• 60 -

guarantee on the scope and matters of the joint lease. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 14. Date of the audit committee meeting: September 29, 2021 4th session of the 4th Board of Directors Motion: The company's Da-She plant VOCs decontamination and improvement project planned capital expenditure Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 15. Date of the audit committee meeting: November 10, 2021 5th session of the 4th Board of Directors Motion: Capital increase on its 100% subsidiary Core Pacific Co., Ltd Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (6) Major lending of funds to others, guarantees, or endorsements:

1. Date of the audit committee meeting: March 23, 2021 32nd session of the 3rd Board of Directors Motion: The Company proposes to provide guarantee to subsidiary, Wei Hua (Rudong) Trading Co. Ltd. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the audit committee meeting: March 23, 2021 32nd session of the 3rd Board of Directors Motion: Approval to cancel guarantee provided to subsidiary, Chang Zhou Wei Cai. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 3. Date of the audit committee meeting: May 12, 2021 34th session of the 3th Board of Directors Motion: Approval to cancel guarantee to subsidiary, Dingyue Development Co. Ltd. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

2. Date of the audit committee meeting: Sep 29, 2021 4th session of the 4th Board of Directors Motion: Approval of guarantee for subsidiary, Dingyue Development Co. Ltd. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

3. Date of the audit committee meeting: September 29, 2021 4th session of the 4th Board of Directors Motion: 2nd Case for the Approval of guarantee for subsidiary, Dingyue Development Co. Ltd.

4. 61 -

Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 6. Date of the audit committee meeting: November 10, 2021 5th session of the 4th Board of Directors

Motion: Approval of cancellation of subsidiary, Dingyue Development Co. Ltd., guarantee limits. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

• 1. Date of the audit committee meeting: November 10, 2021 5th session of the 4th Board of Directors

Motion: Approval of China subsidiary, Jiangsu Wei Ming New Materials Co. Ltd. Guarantee limit. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

1. Date of the audit committee meeting: December 29, 2021 7th session of the 4th Board of Directors

Motion: Approval of China subsidiary, Changzhou Wei New Material Co. Ltd. Guarantee and extension for 1 year. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

• (7) Raising, issuing and private placement of equity-based securities

• Date of the committee meeting: January 25, 2021 31st session of the 3rd Board of Directors

Motion: To enhance the Company’s working capital and meet the capital needs of future development, the Company proposed to issue common shares for cash by domestic public offering. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

1. Date of the committee meeting: September 29, 2021 4th session of the 4th Board of Directors Motion: Cash capital increase by issuance of new shares within the limit of 500 million ordinary shares.

Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

1. Date of the committee meeting: November 10, 2021 5th session of the 4th Board of Directors Motion: Establishment of 2021 issuance price via cash capital increase and other related matters Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting

2. 62 -

(8) Appointment, discharge and compensation of CPAs: 1. Date of the committee meeting: April 14, 2021 33th session of the 3rd Board of Directors Motion: Reappointed the CPAs from KPMG as the auditor of the Company's 2021 financial report. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the committee meeting: April 14, 2021 33th session of the 3rd Board of Directors Motion: Reappointed the CPAs from PwC as the auditor of the Company's 2021 business income tax settlement declaration. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 3. Date of the committee meeting: December 29, 2021 7th session of the 4th Board of Directors Motion: New-appointed and change of the Company's Head of Internal Audit. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (9) Annual financial report: Date of the committee meeting: March 23, 2021 32rd session of the 3rd Board of Directors Motion: Approval of the Company's 2020 parent only financial statement and consolidated financial statement. Reviewing for the Company's 2020 Q2 consolidated financial statement. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting Date of the committee meeting: November 10, 2021 5th session of the 4th Board of Directors Motion: Approval of the Company's 2021 Q3 consolidated financial statement. Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting (10) Other major information: 1. Date of the committee meeting: March 23, 2021 32rd session of the 3rd Board of Directors Motion: Settlement of the Company's Indian subsidiary CPDC GEMINI STAR (INDIA) PRIVATE LTD. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors Dealing with the opinion from the Audit Committee: Presented to the Board Meeting 2. Date of the committee meeting: April 14 2021 33rd session of the 3rd Board of Directors Motion: suspension of land development proposal in Kaohsiung city. Dissenting Opinion from Independent Directors: None

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Resolution: Approved by all attended directors

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

1. Date of the committee meeting: December 29, 2021 7th session of the 4th Board of Directors

2. Motion: Approved the budget of the company's Anshun renovation plan Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

1. Date of the committee meeting: December 29, 2021 7th session of the 4th Board of Directors

2. Motion: The Company assessed the asset impairment in accordance with IAS 36. After the asset impairment test, the Company recorded an asset impairment in 2021 Q4.

Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

1. Date of the committee meeting: December 29, 2021 7th session of the 4th Board of Directors

2. Motion: The company donated to the Shen Chun-chi Cultural and Educational Foundation.

3. Dissenting Opinion from Independent Directors: None Resolution: Approved by all attended directors

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

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

• II. Regarding recusals of independent directors from voting due to conflicts of interests, the names of the independent directors, contents of motions, reasons for recusal, and results of voting shall be specified:

• Date of the committee meeting: March 23, 2021 32rd session of the 3rd Board of Directors Motion: propose to Remove the 22nd Directors (including independent directors) and legal representatives of the Company's Prohibition of Competition Proposal in 2021 shareholder’s meeting

Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Since it involved self-interest of each members, they took turns to recuse during discussion and voting. wen Yan, Pan took the proxy of Yun Peng, Chu (convener) to host the meeting and the result is approved without dissent.

1. Date of the committee meeting: May 12, 2021 34th session of the 3rd Board of Directors Motion: The Company propose to approve the removal of the 22nd session of directors (including independent directors) concurrently in 2021 shareholder’s general meeting Resolution: Approved by all attended directors

Dealing with the opinion from the Audit Committee: Since it involved self-interest of each members, they took turns to recuse during discussion and voting. wen Yan, Pan took the proxy of Yun Peng, Chu (convener) to host the meeting and the result is approved without dissent.

III Communication between independent director and Head of Internal Audit as well as CPAs on company finances and business situation (such as items discussed, means of communication and results, etc.):

• 64 -

• (1) In addition to sending the written audit report and the report on the inspection of deficiencies and reminders to improvement matters to the independent directors every month, the internal audit director of the company shall conduct telephone calls, e-mails or meetings, symposiums, etc. at least twice a year. Issues such as business, audit reports, problem discovery and tracking improvement are communicated with independent directors through the Audit Committee or individual symposiums.

• (2) The company's accountants communicate with independent directors through the Audit Committee or individual symposiums at least twice a year on issues such as financial statement review or review results and relevant laws and regulations such as accounting, taxation, and securities management through meetings and symposiums.

• (3) The independent directors of the company have direct communication channels with the internal audit supervisor and CPA, and the communication situation is good.

• The 1st Session in 2021_Summary of Communication Between Independent Directors and Internal Audit Supervisors:

Internal Audit	Supervisors:
Date	Communication matter	Suggestion and instruction		Improvement and Implementation Communicati on channel
2021/3/23	Self-evaluation of	Without		None	Audit
	internal control	opinion			committee
	system and “internal
	control system
	declaration“in 2020
The 2ndSession in 2021_Summary of Communication Between Independent Directors and
Internal Audit	Supervisors:
Date	Communication matter	Suggestion and instruction		Improvement and Implementation	Communication channel
2021/8/13	The Company's 2021	Without		None	Audit committee
	First Half Audit Plan	opinion			Pre-Conference
	Implementation				Symposium
	Business Report				(communicate
					separately)

The 3[rd] Session in 2021_Summary of Communication Between Independent Directors and Internal Audit Supervisors:

	Date	Communication matter	Suggestion and instruction	Improvement and Implementation	Communication channel
	2021/11/10	The Company's	consult from Independent	None	Audit committee
		2021 Q3 Audit	directors		Pre-Conference
		Plan			Symposium
		Implementation			(communicate
		Business Report			separately)
	2021/11/10	The Company's	It is recommended that the	The relevant	Audit committee
		important	company clearly list the	punishment	Pre-Conference
		proposal audit	degree of various	details	Symposium
		report	negligence and set the	documents have	(communicate
			disciplinary standard. In	been separately	separately)
			the future, the punishment	provided to the
			will be based on the	independent
			standard, so that colleagues	directors
			can follow.

• 65 -

Date	Communication matter	Suggestion and	Suggestion and	Suggestion and	instruction Improvement and Implementation Communication channel	instruction Improvement and Implementation Communication channel	instruction Improvement and Implementation Communication channel
2021/11/10	The electronic	consult from Independent None					Audit committee
	procurement and	directors					Pre-Conference
	payment process						Symposium
	of the company						(communicate
	will be optimized						separately)
	in stages
The 1stsession in 2021_Summary				of Communication Between Independent Directors and CPA:
Date	Communication	matter Suggestion and instruction Improvement and Implementation Communication channel
2021/3/23	2020 consolidated		and Without N/A				Audit committee
	individual financial			opinion
	report
The 2ndsession in 2021_Summaryof Communication Between Independent Directors and CPA:
Date	Communication			Suggestion and		Improvement and	Communication channel
	matter			instruction		Implementation
2021/8/13	2021 Q2			Without		None	Audit committee
	consolidated			opinion			Pre-Conference
	financial report						Symposium
							(communicate separately)
The 3rdsession in 2021_Summary				of Communication Between Independent Directors and CPA:
Date	Communication			Suggestion and		Improvement and	Communication channel
	matter			instruction		Implementation
2021/11/10	2021 Q3			Without		N/A	Audit committee
	consolidated			opinion			Pre-Conference
	financial report						Symposium
	and annual audit						(communicate
	plan						separately)
2021/11/10	2021 Q3			Without		N/A
	consolidated			opinion			Audit committee
	financial report

Note:

• Where an independent director may be relieved from duties before the end of the fiscal year, please specify the date of his/her discharge in the `Remarks" Section. His/her actual attendance rate (%) to the Board session shall be calculated on the basis of the number of meetings called and actual number of sessions he/she attended, during his/her term of office.

• Where an election may be held for filling the vacancies of independent director before the end of the fiscal year, please list out both the new and the discharged independent directors and specify if they are the former independent directors, or newly elected, re-elected, and also the date of the reelection. Their actual attendance rate (%) to Board session shall be calculated on the basis of the number of meetings called and the actual number of sessions they attended, during the term of office.

• 66 -

(III). Status of Corporate Governance, and any nonconformity to the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies, and reasons thereof:

Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description
(1) Conformity to the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies and disclosure of Corporate Governance Best-Practice Principles		V		The Company has adopted " Corporate Governance Best Practice Principles", focused on shareholder rights, strengthening board scope, respect stakeholders and human rights, improve transparency and other related rules. The Company's "Corporate Governance Best Practice Principles" and related important regulations or the operating status are disclosed on the Company's website or the M.O.P.S.	No deviation. Note: TWSE declared the amendment of certain provisions of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies on Dec. 8, 2021. The Company intends to provide amendments of The Company's "Corporate Governance Best Practice Principles" in 2022.
II. Equity structure and shareholders' equity	(I) Internal procedures for suggestions, questions, disputes and litigation from shareholders.	V		The Company has established its own corporate governance principles in accordance with the Company Act to respect and estimate the suggestions from shareholders, to protect shareholders' rights. The Company's website also provides a platform for contacting investors to deal with suggestions, entanglement or other requested items. None of the abovehas occurredinthis annualyear.	No deviation
	(II) Control over the list of major shareholders and the controlling parties of such shareholders	V		The Company submits the report as required based on the information updated and made available by directors, managerial officers and major shareholders from time to time. The Company established the Shareholder Services Office in 2012 to deal with the shareholders' affairs, and controlled the distribution of major shareholders'' equity and changes in equity of the controlling party ofthemajorshareholders.	No deviation
	(III) Establishment and implementation of risk control mechanism and firewall between the Company and its affiliates	V		The assets, liabilities, financial management responsibilities between the Company and its affiliates were all handled in accordance with the relevant laws and the Company's internal control system.	No deviation
	(IV) Internal regulations prohibiting insider trading	V		Article 10 of the Company's "Standards of Ethical Conduct" stipulates that "Where the personnel of the Company obtain information which would significantly influence the prices of stock transaction of the Company, until such information is publicly disclosed, all personnel shall hold such information in strict confidence as required under the Securities and Exchange Act and shall be prohibited from using such information for insider trading purposes."	No deviation
III. Organization of the Board and its duties	(I) Establishment and implementation of guidelines for diversity policy, practical management target from the Board of Directors	V		According to Article 20 of the "Corporate Governance Best Practice Principles" adopted by the Board of Directors on December 24, 2015 and Article 2 of the "Election Rules for the Directors" ratified by the AGM on May 28, 2020, the composition of the Board of Directors shall be considered for diversity. All members of the Company’s Board of Directors have the knowledge, skills, and experiences necessary to perform their duties. Their professional fields cover business management, leadership decision-making, industrial knowledge, financial accounting, law and environmentalprotection,etc. Consideringthe above,	No deviation

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Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description
				the Company submitted a female director nominee for the 2021 directors elections and gained the supported from shareholders, the said director specializes in public relations and land development. The 2021 implementation of the diversification policy for the Company’s Board of Directors has been disclosed on the Company’s website, and in 2021 the implementation of the diversification of directors will be disclosed on the Company’s official website after there-election.
	(II) Other functional committees other than a remuneration committee or audit committee required bylaws		V	The Company has established remuneration and audit committee as required, establishment of other functional committees are being planned.	Other functional committees are being planned.
	(III) Rule establishment and annual assessment of performance of the Board of Directors	V		The Company has already established the "Regulations of Performance Evaluation for Board of Directors" on April 21, 2016. According to the Regulations, the Company performs an internal evaluation for the Board of Directors' performance once a year and an external evaluation every three years, and completes them before the end of the first quarter of the following year. As for the evaluation methods, please refer to III, Corporate Governance Report IV. Implementation of Corporate Governance (I) Operations of the Board, Other notes: III The implementation of evaluation for the Board of Directors. The Company has conducted the internal evaluations for 2021 (including the Board of Directors, individual directors, and Audit Committee) and for external evaluation. Also, the results of the evaluation has been provided to the 12th session of the 22ndBoard of Directors on March 14,2022. (Note2)	No deviation
	(IV) Regular review and assessment of the impartiality and independence of the external auditor	V		The Audit Committee and the Board of Directors evaluate independence (Note 3), competence and expertise of the CPAs annually, requiring them to offer statement of independence to make sure that except for certification and fees of financial and tax cases, there is no other interests relationship with the Company. Also, procedural reviews are done to ensure family relationships of CPAs do not violate independence, and results are reported to the Audit Committee and the Board of Directors. When the Board of Directors discuss independence and the appointment of the certifying CPA, the resumes and statement of independence of each CPAs should be also offered to them. The self-assessment by the accounting department for the independence of the certifying CPAs is done once a year and the results were presented to the Audit Committee and the Board of Directors on April 13,2022.	No deviation
IV. Does the Company established a full- (or part-) time corporate governance unit or personnel to oversee corporate governance affairs (including but not limited to furnish information required for business execution by directors, handle matters relating to board meetings and shareholders' meetings according to laws, handle corporate registration and amendment registration, produce (or record?) minutes of board meetings and shareholders' meetings, etc.		V		The Company currently has a part-time unit for corporate governance. The Secretariat of the Board of Directors is responsible for providing the information required by the directors to conduct business, handling matters related to the Board of Directors meeting and shareholders' meeting, handling company registration and change registration, producing meeting minutes of the Board of Directors meeting and shareholders' meeting, and assisting the Company to comply with relevant laws and regulations of the Board of Directors and shareholders meeting. The Company also establishes the Shareholder Services Office and Finance Department Corporate Relation Office to jointlyhandle corporategovernance related matters.	No deviation

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Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
	Yes	No	Summary Description
			Passed by the Board of Directors, the Company established a chief of corporate governance on April 10, 2019, which is served by the vice president of Financial Officer, Ying-Chun Chen. The chief of corporate governance is responsible for handling matters related to the Board of Directors meeting and shareholders' meeting, producing meeting minutes of the Board of Directors meeting and shareholders' meeting, assisting directors in taking office and continuing education, providing the information required by the directors to conduct business, assisting the directors to comply with laws and regulations, and other corporate governance related matters. The key points of corporate governance related matters are as follows 1. A total of 14 board meetings and 12 audit committee meetings were held in 2021. 2. Held 1 annual shareholders’ meeting in 2021. 3. Board members have completed at least 6 credits of advanced courses. 4. The Company insured liability insurance for directors and important staff, and reported to the Board of Directors after renewal. 5. Handled the performance evaluation for the Board of Directors and functional committees. The evaluation results of the Board of Directors, Audit Committee and Remuneration Committee were all beyond the standards. 6. The Company's 8th corporate governance evaluation results were among the top 6 ~ 20%. 7. A total of 12 training hours for the head of corporate governance in 2021, and the declaration on MOPShas beencompleted.
V. Communication channels with stakeholders, establishment of investors' relations office on websites and proper response to stakeholders' concerns of corporate social responsibility	V		The AA1000 Stakeholder Engagement Standard was applied by CPDC to identify our stakeholders based on the five aspects of dependency, influence, attention, responsibility, and diverse perspectives. The seven key stakeholders were identified as investors, customers, employees, suppliers, community residents, regulatory authorities, and lobby groups And regularly report the identified stakeholder identities, issues of concern, communication channels and response methods, as well as corporate social responsibility and sustainable development implementation results and future directions to the board of directors, and disclose them in the company's annual report and sustainability report. . The Company's Sustainability Report is regularly published before June 30 every year, and will be updated in the Stakeholders section of the official website at the same time. The Company regularly reports the communication status with all stakeholders and the operation status of the Sustainable Development Committee to the Board of Directors. The operation status from 2020-2021 was reported at the 9th meeting of the 22nd session of the Board of Directors on December 29,2021.	No deviation

• 69 -

Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description
VI. Commission of professional organizations for general meetings			V	In 2012, the Company established the Shareholders' Service Office in charge of shareholders' services.	The Company- self established an internal Shareholder Services Office, ensuring qualityand efficiency.
VII. Disclosure	(I) Establishment of a website for the disclosure of its financial Status and status of corporate governance.	V		The Company's website fully disclosed the Company's management philosophy, corporate governance, product & business lines and financial information.	No deviation
	(II) Adoption of other means for disclosure such as setting up an English website, appointing personnel to gather and disclose relevant information, properly implementing the spokesman system, and posting the meetings minutes with institutional investors on websites	V		The Company has established the spokesman system and installed the investors' relations office dedicated to gathering and releasing the Company's messages, and updated the information posted on the website pursuant to the relevant laws periodically, and disclosed important messages from time to time, and linked with TWSE "MOPS" to fulfill the disclosure.	No deviation
	(III) Announcing and declaring the annual financial report within two months after the end of the fiscal year, and announcing and declaring the first, second, and third quarter financial reports and the monthly operating status within theprescribed deadline		V	The Company's 2021 annual consolidated and the parent company only financial reports were announced and filed on March 16, 2022 (within 75 days of the end of the fiscal year); the financial reports for the first, second, and third quarters of 2021 and the monthly revenue status were also announced and filed at the MOPS before the prescribed period, and simultaneously uploaded to the Company's website.	No deviation. Annual Results were not reported within 2 months of the end of the fiscal year; disclosed earlier than the legally prescribed deadlines.
VIII. Other important information facilitating understanding of the functioning of corporate governance (such as the state of employees' rights and interests, concerning employees, investor relations, vendor relations, rights of interested parties, continuing education of directors and supervisors, implementation of risk management policy and risk assessment criteria, implementation of customer policy, and liability insurance purchased by the Company for directors and supervisors)		V		The Company has installed the Corporate Relations Office dedicated to gathering and releasing the Company's messages, and updated the information posted on the website pursuant to the relevant laws periodically, and disclosed important messages from time to time, and linked with TWSE "MOPS" to fulfill the disclosure. The Company sets different and diverse interaction methods for different stakeholders, and it is disclosed in the sustainable development report every year. Directors' annual trainings are disclosed on TWSE "MOPS" to fulfill disclosure requirements. Liability insurance for directors is in accordance with the Article 19 of the Company's Article of Incorporation and the Article 39 of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.	No deviation
IX. Please provide information on the results of corporate governance evaluations released by the Corporate Governance Center of the Taiwan Stock Exchange Corporation in the most recent year, as well as priorities and measures to enhance those that have not yet been improved: (I) The results of the eighth annual corporate governance assessment for the year 2021 were 6% to20%, and the following items were improved for the corporate governance assessment indicators:

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	Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Corporate Governance Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
			Yes	No	Summary Description
Title Indicator Title Improvement situation 1.3 Has more than half of the directors (including at least one independent director) and the convener of the audit committee (or at least one supervisor) of the Company attended the shareholders' meeting in person and disclosed the attendance list in the minutes? More than half of the directors (including at least one independent director) and the convener of the audit committee have attended the shareholders' meeting in person in 2021 1.15 Has the Company established and disclosed on the Company's website the internal rules and practices that prohibit insiders such as directors or employees from using information that is not available in the market to make profits? Relevant information has been disclosed on the Company'swebsite. 2.2 Has the Company established a policy on diversity of board members and disclosed the specific management objectives and implementation of the diversity policy on the Company's website and annual report? Relevant information has been disclosed on the Company'swebsite. 2.6 Does the Company's Board of Directors include at least one female director? 2021 full director re-election, with one female director nominated andelectedby shareholders. 2.15 Does the Company disclose the communication between the independent directors and internal auditors and accountants (e.g. the manner, matters and results of communication regarding the Company's financial reports and financial operations) on the Company's website? Relevant information has been disclosed on the Company'swebsite. 2.27 Does the company have an intellectual property management plan that is linked to its operational objectives, and disclose the implementation status on the company's website or annual report, and report to the board of directors at least once a year? If the company has obtained the Taiwan Intellectual Property Management System (TIPS) or similar intellectual property management system certification, an additional point will be added to the total score. 1. Relevant information was disclosed on the Company's website and annual report, and reported to the Board of Directors on October 27, 2021. 2. The Company passed the certification of Taiwan Intellectual Property Management System (TIPS) in October 2020 and the certificate is valid until December 31, 2022. 2.30 Does at least one of the company's internal auditors have a certificate of certification as an international internal auditor, international computer auditor or certified public accountant? 2021 years at least one of our internal auditors has a relevant license. 3.6 Does the company disclose the interim financial report in English within two months after the deadline for filing the interim financial report in Chinese? 2021 years of English financial reportswere filed within two monthsafterthe Chinese financial report filing deadline. (II) Outstanding improvement priorities for the Company's 2021 Annual Eighth Annual Corporate Governance Review. Title Indicator Title Improvement situation 2.8 Does the company have at least two independent directors who have served no more than three consecutive terms? In accordance with the "Corporate Governance 3.0 - A Blueprint for Sustainable Development", the Company will identify suitable independent directors before the next boardelection (23rd in2024) and has planned to upgrade the level of the risk management organization to meet the schedule. 2.22 Has the company established risk management policies and procedures approved by the board of directors, disclosed the risk management areas, organizational structure, and its operation, and reported to the board of directors at least once a year? 3.20 Is the company invited to hold at least two corporate meetings, and are the first and last corporate meetings of theyear under review held more than three months apart? The Companyplansto increase the number of corporate meetings each year.	Title	Indicator Title				Improvement situation
	1.3	Has more than half of the directors (including at least one independent director) and the convener of the audit committee (or at least one supervisor) of the Company attended the shareholders' meeting in person and disclosed the attendance list in the minutes?				More than half of the directors (including at least one independent director) and the convener of the audit committee have attended the shareholders' meeting in person in 2021
	1.15	Has the Company established and disclosed on the Company's website the internal rules and practices that prohibit insiders such as directors or employees from using information that is not available in the market to make profits?				Relevant information has been disclosed on the Company'swebsite.
	2.2	Has the Company established a policy on diversity of board members and disclosed the specific management objectives and implementation of the diversity policy on the Company's website and annual report?				Relevant information has been disclosed on the Company'swebsite.
	2.6	Does the Company's Board of Directors include at least one female director?				2021 full director re-election, with one female director nominated andelectedby shareholders.
	2.15	Does the Company disclose the communication between the independent directors and internal auditors and accountants (e.g. the manner, matters and results of communication regarding the Company's financial reports and financial operations) on the Company's website?				Relevant information has been disclosed on the Company'swebsite.
	2.27	Does the company have an intellectual property management plan that is linked to its operational objectives, and disclose the implementation status on the company's website or annual report, and report to the board of directors at least once a year? If the company has obtained the Taiwan Intellectual Property Management System (TIPS) or similar intellectual property management system certification, an additional point will be added to the total score.				1. Relevant information was disclosed on the Company's website and annual report, and reported to the Board of Directors on October 27, 2021. 2. The Company passed the certification of Taiwan Intellectual Property Management System (TIPS) in October 2020 and the certificate is valid until December 31, 2022.
	2.30	Does at least one of the company's internal auditors have a certificate of certification as an international internal auditor, international computer auditor or certified public accountant?				2021 years at least one of our internal auditors has a relevant license.
	3.6	Does the company disclose the interim financial report in English within two months after the deadline for filing the interim financial report in Chinese?				2021 years of English financial reportswere filed within two monthsafterthe Chinese financial report filing deadline.

Note 1: Reasons for checks of "Yes" or "No" of status should be specified in "Summary Description" column. Note 2: 2021 Board of Director Performance Evaluation as follows:

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2021 Board of Directors Performance Evaluation

According to the Company's performance evaluation practice for the board of directors, an external professional independent organization or a team of external experts and scholars shall conduct the evaluation at least once every three years, and the internal board of directors performance evaluation shall be conducted once a year.

External evaluation: On December 14, 2021, the "Taiwan Corporate Governance Association" was entrusted to carry out the performance evaluation of the board of directors. The general comments and recommendations of the external evaluation report on the performance of the board of directors in 2021 and the implementation of the expected improvement have been submitted to the 12th meeting of the 22nd session of board of directors on March 14, 2022. The evaluation scope includes the following eight major aspects: composition of the board of directors, guidance of the board of directors, authorization of the board of directors, supervision of the board of directors, communication of the board of directors, internal control and risk management, self-discipline of the board of directors and other aspects such as board meetings and support systems.

The company has strengthened many of the recommendations in the previous evaluation report, which shows its ambition to pursue the improvement of the efficiency of the board of directors. According to the two major business axes (petrochemical and land development), the company has appointed professional independent directors, and extended female directors to reflect the diversity gender of the board of directors and the company relatively emphasize on ESG-related issues. In addition to setting up a sustainable development committee to promote related issues, it is specifically included in the manager's key performance indicators and salary remuneration system.

Suggestions: The company will refer to the "Corporate Governance 3.0-Sustainable Development Blueprint" plan issued by the Financial Supervisory Commission. The term of independent directors has reached three terms, the planning and consideration of future candidates, and the promotion of the risk management organization to the board level will help the board of directors to strengthen supervision of various major risk issues. In addition, it is considered that independent directors can simultaneously receive the report content to protect the rights and interests of stakeholders.

Estimated implementation matters: The Company has, in accordance with the "Corporate Governance 3.0-Sustainable Development Blueprint", will search for suitable candidates for independent directors before the next election (the 23rd session in 2024). In addition, the Company has planned to upgrade the organizational level of risk management to meet the schedule The company has set up a reporting mailbox to allow independent directors to obtain information.

Internal evaluation: The company has carried out the 2021 internal evaluation of the performance of the board of directors. After collecting the statistical performance evaluation self-evaluation questionnaire, the scope includes the entire board of directors, director members, audit committee and remuneration committee.

	Indicators for Self-Evaluation	Results
Board of Directors	5 major aspects, 45 topics, including participation in the operation of the Company, improvement of the quality of the Board of Directors’ decision making, Composition and structure of the Board of Directors, Election and continuing education of the directors and Internal Control.	The overall evaluation result of the board of directors in 2021 is acceptable.
Board Members	6 major aspects, 23 topics, including Alignment of the goals and missions of the Company, Awareness of the duties of a director, Participation in the operation of the Company, Management of internal relationships and communication, The director’s professionalism and continuing education and Internal Control.	The overall evaluation result of the Board Members in 2021 is acceptable.
Audit Committee	5 major aspects, 22 topics, including Participation in the operation of the Company, Awareness of the duties of the Audit Committee, Improvement ofqualityof decisions made bythe Audit Committee,	The overall evaluation result of the Audit Committee

• 72 -

	Indicators for Self-Evaluation	Results
	Makeup of the Audit Committee and election of its members and Internal Control.	in 2021 is good.
Remuneration Committee	4 major aspects, 18 topics, including Participation in the operation of the Company, Awareness of the duties of the Remuneration Committee, Improvement of quality of decisions made by the Remuneration Committee and Makeup of the Remuneration Committee and election of its members.	The overall evaluation result of the Remuneration Committee in 2021 is good.

Note 3: Independent CPA Evaluation Items

(1) Evaluated Personnel：KPMG Certified Public Accountants, Melody Chen & Vincent Wu and Team, as follows:

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

• 73 -

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

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

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

(1) Information on the Members of the Remuneration Committee

Title (Note 1)	Qualifications Name	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years' Working Experience (note 2)	Status of independence (Note 3)	Number of public companies where the person holds the title as Remuneration Committee member	Remark
Independent Director	Yun-Peng Chu	Please refer to the section in this annual report on Director’s Professional Qualifications and Independence disclosures (page 25~30)	(1) Non-employees of the company or its affiliates. (2) Non-directors and supervisors of the company or its affiliates. (3) Others than themselves and their spouses, minor children, or natural person shareholders who hold more than 1% of the company's total issued shares or hold the top ten shares in the name of others. (4) who is not the managers listed in (1) or Spouses, relatives within the second degree of kinship or lineal blood relatives within the third degree of kinship, or the persons listed in (2) and (3). (5) who is not the director directly holding 5% or more of the total issued shares of the company, whose shareholding ranks top 5 in accordance with Paragraph 1 or Paragraph 2 of Article 27 of the Company Act or who serve as a director or supervisor or employee of the supervisor. (6) who is not the director, supervisor or employee of other companies which are controlled by the same person with more than half of the shares with voting rights. (7) who is not the same person of the Company’s chairman, general manager or equivalent position; or the spouses of another company or institution as the director, supervisor or employee (8) who is not the directors, supervisors, managers or shareholders holding more than 5% of the shares of specific companies or institutions that have financial or business dealings with the Company. (9) who is not the relevant service professionals including legal, financial, accounting whose auditing or acquisition remuneration Less than NT$ 0.5 millions in the latest 2 years from the Company or its affiliates, sole proprietors, partnerships, Business owners, partners, directors, supervisors, manager officers and spouses thereof. (10) None of the conditions in Article 30 of the Company Act.	None	Convenor (4thsession and reappointe d at 5th session)
Independent Director	Wen-Yen Pan	Please refer to the section in this annual report on Director’s Professional Qualifications and Independence disclosures(page 25~30)	Same as above	None	Reappointe d at 5th session
Others	Sung-Yong Chen	Who holds MBA from Commonwealth University with decades of extensive industry experience. Had ever served as the Chairman of Taiwan Rainbow Merchandise Corp and the executive council member of the Taiwan Computer Association. Also the founder of KYE Systems Corp. who successfully led the Company’s public listing on the Taiwan Stock Exchange.	Same as above	None	Reappointe d at 5th session

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• (II) Functions of the Remuneration Committee:

• Periodically reviewing the Remuneration Committee Charter and making recommendations for amendments.

• Establishing and periodically reviewing the performance assessment standards, annual and long-term performance goals, and the policies, systems, standards, and structure for the compensation of the directors, supervisors, and managerial officers of this Corporation, and disclose the contents of the performance assessment standards in the annual report.

• Periodically assessing the degree to which performance goals for the directors, supervisors, and managerial officers of this Corporation have been achieved, setting the types and amounts of their individual compensation based on the results of the reviews conducted in accordance with the performance assessment standards.

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

1. Ensuring that the compensation arrangements of this Corporation comply with applicable laws and regulations and are sufficient to recruit outstanding talent.

2. Performance assessments and compensation levels of directors, supervisors, and managerial officers shall take into account the general pay levels in the industry, individual performance assessment results, the time spent by the individual and their responsibilities, the extent of goal achievement, their performance in other positions, and the compensation paid to employees holding equivalent positions in recent years. Also to be evaluated are the reasonableness of the correlation between the individual's performance and this Corporation's operational performance and future risk exposure, with respect to the achievement of short-term and long-term business goals and the financial position of this Corporation.

3. There shall be no incentive for the directors or managerial officers to pursue compensation by engaging in activities that exceed the tolerable risk level of this Corporation.

4. For directors and senior managerial officers, the percentage of remuneration to be distributed based on their short-term performance and the time for payment of any variable compensation shall be decided with regard to the characteristics of the industry and the nature of this Corporation's business.

5. Reasonableness shall be taken into account when the contents and amounts of the compensation of the directors, supervisors, and managerial officers are set. It is not advisable for decisions on the compensation of the directors, supervisors, and managerial officers to run contrary to financial performance to a material extent. It is not advisable for said compensation to be higher than that in the preceding year in the event of a material decline in profits or of long-term losses. If it is still higher than that in the preceding year, the reasonableness shall be explained in the annual report and reported at a shareholders' meeting.

6. No member of the Committee may participate in discussion and voting when the Committee is deciding on that member's individual compensation.

(III) Information about Remuneration Committee Members:

1. The Company's Remuneration Committee consists of 3 members.

Current term of office: The 4[th] session of remuneration committee term of office commences from June 28, 2018 until July 1[st] , 2021 (at the same time when the term of office of the board member of the 21st term dues). The 5[th] session of remuneration committee term of office commences from July 26, 2021 until July 1[st] , 2024 (at the same

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time when the term of office of the board member of the 22[nd] term dues) The Remuneration Committee held 5 meetings consolidated 4[th] and 5[th] session (A) in 2021, and the attendance of the Committee members is summarized as follows:

Title	Name	Actual attendance (B)	Attendance by proxy	Attendance Rate (%) (B/A) (Note)	Remark
Convenor	Yun-Peng Chu	5	0	100	Elected as the 5th session of Convenor on July 26th,2021
Member	Sung-Yong Chen	5	0	100	Reappointed as 5thsession members by resolutiononJuly26th,2021
Member	Wen-Yen Pan	5	0	100	Reappointed as 5thsession members by resolutiononJuly26th,2021

Other notes:

I. If the Board of Directors does not adopt, or amends, the Remuneration Committee's suggestions, please specify the meeting date, term, contents of motion, resolution of the Board of Directors, and the Company's handling of the Remuneration Committee's opinions (If the remuneration ratified by the Board of Directors is superior to that suggested by the Remuneration Committee, please specify the deviation and reasons thereof): None

II. For resolution(s) made by the Remuneration Committee with the Committee members voicing opposing or qualified opinions on the record or in writing, please state the meeting date, term, contents of motion, and opinions of all members and the Company's handling of said opinions: None.

III. Remuneration committee meetings held in the last year, session, discussion item, decisions, and remuneration committee member comments.

Title	Name	Actual attendance (B)	Attendance by proxy	Attendance Rate (%) (B/A) (Note)	Remark
Convenor	Yun-Peng Chu	5	0	100	Elected as the 5th session of Convenor on July 26th,2021
Member	Sung-Yong Chen	5	0	100	Reappointed as 5thsession members by resolutiononJuly26th,2021
Member	Wen-Yen Pan	5	0	100	Reappointed as 5thsession members by resolutiononJuly26th,2021
Other notes: I. If the Board of Directors does not adopt, or amends, the Remuneration Committee's suggestions, please specify the meeting date, term, contents of motion, resolution of the Board of Directors, and the Company's handling of the Remuneration Committee's opinions (If the remuneration ratified by the Board of Directors is superior to that suggested by the Remuneration Committee, please specify the deviation and reasons thereof): None II. For resolution(s) made by the Remuneration Committee with the Committee members voicing opposing or qualified opinions on the record or in writing, please state the meeting date, term, contents of motion, and opinions of all members and the Company's handling of said opinions: None. III. Remuneration committee meetings held in the last year, session, discussion item, decisions, and remuneration committee membercomments. Remuneration Committee Proposal content and subsequent treatment Resolution The Company's treatment of the Remuneration Committee's opinion 17thof 4th session meeting 2021.03.23 I. 2020 remuneration distribution of the directors. II. 2020 remuneration distribution of the employee. Approval Submitted to the board and get the approval 18thof 4th sessionmeeting 2021.04.12 I. Severance pay of dismissing the appointed manager Mr. Xu II. Remuneration adjustment of the Company's general manager, Mr. Yu, concurrently serves as the general manager and legal representative of Jiangsu Weiming Petrochemical Company, a subsidiary in mainland China. III. The contract renewal remuneration of Mr. Jian, manager of the joint procurement department of the Company's administrative resources department. Approval Submitted to the board and get the approval 19thof 4th sessionmeeting 2021.06.16 I. The Consolation money of Director Mr. Guo. II. Remuneration of Mr. Wang, senior commissioner of the general manager office of the Company, served as the manager of the raw material procurement department of the Ministry of Commerce and signed an appointment contract III. Staying without pay of Mr. Chen, vice president of the petrochemical production department of the Company and settlement his service years under the old system. IV. The pension of Mr. Jia, Special Assistant to the Chairman's Office of the Company. V. The Company's Appointment Manager Performance Bonus PaymentintheFirst Quarterof 2021. Approval Submitted to the board and get the approval 1stof 5th session meeting 2021.08.13 I. To formulate the Company's practices of " Share Subscription by Employee via Cash Capital Increase ". II. The remuneration of Mr. Chen, the 22nd Chairman of the Company. III. The remuneration of Mr. Bai, the 22nd Vice Chairman of the Company. IV. Remuneration proposal for the 22nd session of the Company's independent directors. V. Remuneration proposal for the 22nd session of directors (excluding independent directors) of the Company. VI. The remuneration of re-employment of Mr. Shen, the Company's top consultant. Approval Submitted to the board and get the approval

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Remuneration Committee	Proposal content and subsequent treatment	Resolution	The Company's treatment of the Remuneration Committee's opinion
	VII. The remuneration of contract renewal of Mr. Peiyujun, Yang, the manager of the Share service office of the Board of Directors of the Company VIII. The patent application bonus of the Company’s appointed a manager IX. Remuneration of Mr. Lin who is the Company's petrochemical production department overseas production department assistant manager X. The Company's performance bonus distribution for appointed managers in the second quarter of 2021. XI. The remuneration adjustment of Mr. Li, the assistant manager of the overseas production department of the petrochemical production department of the company, was appointed as the executive vice president of the subsidiary Jiangsu Weiming Petrochemical Company XII. Special allowance adjustment for Mr. Gao, who is acting the executive vice president of petrochemical production department of the Company Special allowance adjustment for Mr. Yang, who is acting vice president of the administrative resources department of the Company and Mr. Jian who is the manager of the occupational healthand safety center
2ndof 5th session meeting 2021.11.10	I. The severance payment of Mr. Liu, Executive vice president of Land Development Department of the Company, and Mr. Wang, Associate Manager of Land Development Department. II. The annual salary difference of Mr. Li, the assistant manager of the overseas production department of the petrochemical production department of the Company. III. Salary adjustment of the Company's appointed managers in 2021. IV. The Company's Appointment Manager Performance Bonus PaymentintheThird Quarterof 2021.	Approval	Submitted to the board and get the approval

Note:

(1) Where a committee member may be relieved from duties before the end of the fiscal year, please specify the date of his/her discharge in the `Remarks" Section. His/her actual attendance rate (%) to the committee meeting shall be calculated based on the number of meetings called and actual number of meetings he/she attended, during his/her term of office.

(2) Where an election may be held for filling the vacancies of committee member before the end of the fiscal year, please list out both the new and the discharged committee members and specify if they are former members or newly elected, re-elected, and the date of the reelection. Their actual attendance rate (%) to committee meetings shall be calculated based on the number of meetings called and the actual number of meetings they attended, during the term of office.

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(V) promotion of Implementation of Sustainable Development and Deviation from the Sustainable Development Best-Practice Principles for the TWSE/GTSM Listed Companies and reasons thereof:

Assessment Item	Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description (Note 2)
I. Does the company establish a governance structure to promote sustainable development, and set up a dedicated (concurrently) unit to promote sustainable development, which is authorized by the board of directors to handle senior management, and supervised by the board of directors?		V		The company established the Corporate Social Responsibility Committee in September 2013, and upgraded it to the Sustainable Development Committee in December 2021. The chairman serves as the chief, the general manager serves as the executive member, and four senior executives respectively supervise the promotion of corporate sustainability development related programs for four major aspects. The ESG executive secretariat was established, and the Occupational Safety and Environmental Protection Center and the Corporate Relations Office of the Finance Department were jointly responsible for the implementation and promotion of relevant affairs of the committee, and on December 29 2021, reported to the board of directors on the achievements and future direction of sustainable development and corporate social responsibility in 2020-2021(Note 4). Relevant operation and implementation situation are disclosed in the section on the implementation effectiveness of the Sustainability Development Committee below, as well as in the Company's sustainability report and official website.	No deviation
II. Does the company conduct risk assessments on environmental, social and corporate governance issues related to company operations in accordance with the principle of materiality, and formulate relevant risk management policies or strategies?		V		The risks faced by enterprises are becoming more and more diverse and complex. With the convenience of globalization and the threat of climate change, enterprise risk management should not only focus on non-systematic risks, but also face up to many systemic risks. The company has established a systematic risk response policy and process in accordance with the materiality principle and ISO 31000 risk management standards and guidelines in 2019, and identified 26 risk issues in 5 major aspects, and invited the heads of various departments to discuss risk response and management. In the future, expecting to set up a dedicated organization "Risk Management Committee" to comprehensively grasp and manage risks that have a significant impact on business operations and profitability in a systematic way. In addition, the company pays more attention to climate risks. In 2019, it followed the four disclosure frameworks of TCFD to identify and manage climate change transition risks and physical risks, and conduct financial impact assessments for high risk factors as a reference for company decision-making.	No deviation
III. Environme ntal issues	(I) Has the Company established environmental policies suitable for the Company's industrial characteristics?	V		The Company's environmental management system is established in accordance with the International Organization for Standardization's ISO 14001 standard, and passed the verification by a notary third unit such as the Metal Industries Research & Development Center, ADNOE Asia and the British Standards Institution. The Company also keeps abreast of environmental management trends and issues related to the chemical industry through international information disclosure standards (e.g., GRI, SASB) and international assessments(CDP,S&P Global CSA).	No deviation

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Assessment Item	Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description (Note 2)
	(II) Does the Company endeavor to promote the efficient use of available resources, and the use of environmental-frie ndly materials	V		The Company promotes green procurement and reduces the environmental footprint of its operations by purchasing products with energy-saving, water-saving and environmental labels. In terms of production, the Company implemented a number of energy, carbon, water and waste reduction projects every year to improve production efficiency and continuously reduce energy consumption per unit of product and resource. In recent years, the Company has actively invested in the research of biomaterials, product recycling and biodegradable products. In the future, the Company will gradually increase the proportion of recycled and environmentally friendly materials and products for the transformation into a low-carbon economy.	No deviation
	(III) Does the Company assess potential risks and opportunities associated with climate change, and undertake relevant measures in response to climate issues?	V		1. In order to understand the potential opportunities and risks of climate change for the Company, and to respond to the international sustainable trends of disclosing financial information related to climate change, in 2019, the Executive Secretariat of the CSR Committee is responsible for analyzing risks and opportunities related to climate change, and using the Task Force on Climate‐related Financial Disclosures (TCFD) to identify major climate change risks and opportunities for CPDC.According to the future regulatory requirements of carbon tax or carbon fee, to evaluate the impact and the cost to be invested. 2. Based on the risk list, relevant international research reports, industry characteristics and benchmark analysis recommended by TCFD, the Company established a climate risk list, in which transition risks include policies and regulations, technology, market, and commercial reputation; physical risks include acute and chronic climate risks. Upon completion of the list, according to the degree of potential impact, potential vulnerability, and incidence rate of risks, we evaluated these threefold directions, listing climate change risk into high, medium, and low ratings. The method of classification mainly refers to three calculated risk values and their distribution positions in the risk matrix. 3. The biggest climate change risk the Company faced is the threat of substitution of green products; followed by the increasing costs of greenhouse gas emissions, and the drought caused by changes in rainfall patterns. In response to these risks, the Company will continue to research and develop high-value products, increase green awareness of products by reducing carbon emissions and conserving energy, and promote water-saving and recycling programs of reclaimed water to constantly move toward the year of 2050 goal of zero waste water. Please refer to the Company's sustainable development report or official website.	No deviation

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

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

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Assessment Item	Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description (Note 2)
	(IV) Has the Company established effective career development training programs for its employees?	V		The Company has set up a training plan for the professional development of employees, which systematically provides career development training for employees at all levels. By means of internal training, hiring external lecturers, implementing external training, job rotation, and duty delegation, the Company is able to cultivate versatile employees, and effectively teach and enhanceprofessional and technical skills.	No deviation
	(V) Has the Company complied with laws and international standards with respect to customers' health, safety and privacy, marketing and labeling issues in all products and services offered, and implemented consumer or customer protection policies and complaint procedures?	V		1. The Company has set up the "Operating Procedures for Handling After-Sales Service and Customers' Complaint" to track and ensure that the quality of products meets customers' needs and maintain customer relations. A satisfaction survey is sent out to customers at the end of every year to obtain feedback on product quality, shipping situation, after-sales service and product image. We communicate with the customer to determine what improvements should be made for any areas that score below 70. We then review and develop strategies for improving product quality and services. We also provide customer complaint channels, and establish internal procedures for handling customer complaints and improvement to ensure that customers' opinions can be included in the review and actually improved. In 2021, CPDC received no customer complaint cases related to quality management improvement, and all improvements have been completed after thorough communication with customers. The Company has never received any complaint from customers in 2021 2. The Company's products are all marked in accordance with relevant regulations and international standards.	No deviation
	(VI) Has the Company implemented a supplier management policy that regulates suppliers' conducts with respect to environmental protection, occupational safety and health or work rights/human rights issues, and tracked suppliers' performance on a regular basis?	V		1. All the Company's main supplier contracts complying with local laws and regulations is the most basic condition; all suppliers must comply with local laws and regulations on corporate governance, environmental protection, and labor and human rights. The Company promotes the suppliers to sign the "Suppliers' Corporate Social Responsibility Agreement", incorporates the suppliers' CSR agreement into the contracts, and expects the suppliers to accept, implement and assist the principles of "Environmental, Social, Governance" (ESG). All suppliers who have signed contracts with the Company after July 2016 have also signed the suppliers' corporate social responsibility agreement, with a signing rate of 100%. After the stage of work covers all target suppliers, the Company will gradually deepen management through regular and irregular assessments or on-site audits. 2. In 2019, the Company implemented a supply chain sustainability risk assessment project to understand the performance of major suppliers in the five major areas, including labor rights, ethics and integrity, environmental protection, occupational safety and health, and sustainability management and disclosure. In the future, the Company will continue to conduct the assessment project. The Company will also classify the suppliers by grading according to the evaluation results and require them to make improvements in each ESG aspect.	No deviation

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Assessment Item	Status(Note 1)	Status(Note 1)	Status(Note 1)	Deviation from the Corporate Social Responsibility Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
	Yes	No	Summary Description (Note 2)
V. Does the Company prepare sustainability reports or any report of non-financial information based on international reporting standards or guidelines? Are the above-mentioned reports supported by assurance or opinion of a third-partycertifier?	V		The Company published the first corporate social responsibility report compiled with GRI Guidelines in 2013. The CSR report prepared thereafter refers to the GRI Standards of the Global Reporting Initiative (GRI) and the International IR Framework published by the International Integrated Reporting Council, and obtains the guarantee opinion of the third-party verification unit.	No deviation
VI. If the Company has established its own sustainable development guideline based on "Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies", please describe any discrepancy between the principles and their implementation: The Sustainable Development Committee, in accordance with the Sustainable Development Best Practice Principles and the Organizational Regulations of the Sustainable Development Committee, submits to the Board of Directors the implementation plan for the next year's corporate sustainable development after discussion by the Sustainable Development Committee at the end of each year, and regularly reports to the Board of Directors on the implementation results and stakeholders' concerns at the end of the following year.
VII. Other important information to facilitate a better understanding of the Company's implementation of the sustainable development: "Community management that coexists with the local community" has always been the core of the Company's social care. Adhering to the original intention of "Taken from society, Give back to society", we take the business base as the core and incorporate the three aspects of "petrochemical professional education", "care for students from rural areas" and "elderly care". We hope to take care of the groups at both ends of the pyramid through practical actions, and use our professional to irrigate the young and middle-aged groups, so as to create an exclusive social welfare strategy for the Company. The main contents of various social activities in 2021 are as follows: CPDC sends love to rural school children in Christmas for 3 consecutive years In 2021, CPDC held the 3rd "CPDC Charity Car" event on Christmas eve for two rural schools in Danei Elementary School and Erxi Elementary School, in Danei District, Tainan City. Before the event, the Company asked what the children want for gifts. The Company's employees then volunteered to purchase those gifts for the children. In addition, on 21 December, the Company took these children from the remote areas of Tainan on a ride to CPDC site and Eminent Tourism Factory, and give the collected gifts to the children, bringing them a warm and unforgettable Christmas. Giveaway Together In order to implement energy conservation and carbon reduction and respond to the climate action of the 13th goal of the United Nations Sustainable Development Goals (SDGs), the second "General Mobilization of Gifts" will be held again in 2021. The company will promote and encourage colleagues to donate idle items, and then combine GC Donation Network's "Share Carbon Reduction Action" service, through its material sorting and matching platform, forwards all the donations from CPDC employee to social welfare groups in need across Taiwan. A total of 1,160 items were donated in this event, and the whole Taiwan A total of 18 charitable organizations and schools benefited, and 1,214 people benefited Promote the development of art and culture, sponsor the Sheen Chuen-Chi Cultural & Educational Foundation's"Rescue the Historical Memory Bank of Relocation to Taiwan"project CPDC regularly sponsors the foundation to carry out cultural development and cross-strait exchange projects every year. In 2021, it sponsored NT$20 million to support the project of "Rescue the Historical Memory Bank of Relocated Taiwan". The specific implementation results include the audio and video records of the people relocated to Taiwan and the establishment of a digital collection platform. , "My Family's Cross-Strait Story" touring exhibition, Dunhuang Culture and Art Exhibition, and the construction of a film and television street in Yangzho.

Note 1: If Implementation Status is specified "Yes," please explain the key policies, strategies and measures taken and the current progress; if Implementation Status is specified "No," please provide reasons and explain any policy, strategy and measure plan for the future.

Note 2: If the Company has prepared a Sustainability report, Implementation Status may be completed by providing page references to the Sustainability report and appendixes instead.

Note 3: Materiality principle refers to environmental, social and corporate governance issues that are of material impact to the Company's investors and stakeholders.

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Note 4:

CPDC Sustainable Development Committee Structure

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The main tasks of 4 major groups are as follows:

The main tasks	of 4 major groups are as follows:
Group	Job Title Description
	• Coordinating the development and promotion of sustainable development vision
Corporate	and strategy, disclosure of operational and financial risks and performance
Governance	• Procurement process and supply chain management, as well as stakeholder
Group	communication and other matters
	• Market and customer analysis and investigation
	• Promoting community feedback and social welfare activities, labor human rights
Community
	and ethics
Relations
	• Social compliance and information disclosure
Group
	• Occupational Safety and Health
Environmental	• Manage energy and climate change related issues
Sustainability	• Product quality control
Group	• Pollutionremediation and environmental sustainability
Green Product
	• Specialized in innovation R&D and green product development
Group

Implementation effectiveness of the CPDC sustainable development Committee in 2021

2021 CPDC Sustainable Development Committee Activities  Revise CPDC’s “Practice for Sustainable Development" in accordance with laws and regulations, upgrade CPDC's Corporate Social Responsibility Committee to "Sustainable Development Committee" according to the practices, and formulate organizational charter  Plan CPDC's sustainable development strategy blueprint 2.0, drive the implementation of ESG to move towards SDGs, structure 4 pillars and 8 aspects of sustainable development combining 12 SDGs, and deepen ESG in operational development  Set CPDC's year of 2050 net zero carbon emission target, and short, medium and long-term plans  The first female director was elected in 2021 shareholder meeting to improve the diversity of the board and continue to improve corporate governance  Completed the 2021 Sustainability Report, prepared in accordance with GRI standards and the Integrated Reporting (IR) framework for disclosing ESG information, and passed third-party verification.  Promote the company’s sustainable performance KPI system  The annual green procurement amount reached NT$4.2 million  The only chemical industry in Taiwan to be selected as a member of S&P Global's Sustainability Yearbook Member for two consecutive years (2021-2022), and the ranking in 2021 ranks 92 in the global industry percentile rating (PR), slightly better than 2020 (PR90)  Participated in the assessment of the International Carbon Disclosure Organization (CDP) for four consecutive years, and obtained a climate change management level (B-) in 2021; in 2021, it responded to the WDP self-assessment on water security for the first time, and obtained a management level (A-)  Recognized by 5 awards in the 2021 "Taiwan Corporate Sustainability Award (TCSA)": Sustainable Corporate Excellence Award, Sustainable Report Gold Award, Climate Leadership Award, Circular Economy Leadership Award, Water Resources Leadership Award  In 2021, the Dashe Plant will be awarded the "2021 Annual Water Conservation Award" by the Water Resources Administration of the Ministry of Economic Affairs, and will be awarded the Industrial Group Special Award and a bonus of NT$500,000  In 2021, Hsiaokang Factory was awarded the "Green Factory Label" by the Industrial Bureau of the Ministry of Economic Affairs  In 2021, Hsiaokang Plant will be awarded 2020 Annual "Bronze Award for Excellent Adoption

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Units in Air Quality Purification Zone" and "Bronze Award for Greenhouse Gas Reduction Competition for Public Institutions in Kaohsiung City" by the Environmental Protection Bureau of Kaohsiung City Government

• Received "2021 Happy Enterprise Gold Award" by 1111 Job Bank in 2021

• In 2021, Hsiaokang Factory was awarded the "2021 Five-Star Award for Excellent Occupational Safety and Health Unit" by the Ministry of Labor

• In 2021, Hsiaokang Factory was awarded the "Sports Enterprise Certification" by the Sports Department of the Ministry of Education

• In 2021, Hsiaokang Factory was awarded the "Healthy Workplace Certification - Health Promotion Mark" by the National Health Administration of the Ministry of Health and Welfare

• 2022 Sustainable Development Committee Work Plan

• Improve corporate governance: promote the corporate governance 3.0 blueprint, implement and promote the operation of ESG committee

• Promote CPDC's sustainable performance KPI system to strengthen the connection between departmental performance and sustainable development

• Execute the company's internal ESG education and training and the real value evaluation of the organizational enterprise

• According to the TCFD climate risk identification results, select a high-risk climate factor for scenario analysis and impact quantification

• Responding to the FSC regulations, information disclosure in accordance with the perpetual accounting standards board (SASB) chemical industry standards

• Continue to participate in various domestic and foreign ESG assessments such as CSA (DJSI), CDP, TCSA, etc.

• Continue to hold CSR activities, and incorporate environmental education issues such as understanding chemical industry, environmental symbiosis, energy conservation and carbon reduction into them

• Continue to promote safety culture and start the campaign for zero disasters

• Complete Indirect Greenhouse Gas Inventory Project (Scope 3)

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

reasons thereof:	reasons thereof:
Assessment Item		Status (Note1)			Deviation from the Ethical Corporate Management Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description
I. Enactment of ethical corporate management policy and program	(I) Does the company establish the ethical corporate management policies approved by the Board of Directors and declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its Board to implement the policies?	V		The Company discloses and publishes the " CPDC Guidelines of Codes of Ethical Conduct ", " CPDC Ethical Corporate Management Best Practice Principles " and "CPDC Procedures for Ethical Management and Guidelines for Conduct" approved by the Board of Directors on its website, which specifically regulates matters that directors, managers and all staff shall pay attention to when carrying out business. We actively implement and ensure the policy of ethical corporate management. In addition to disclosing the regulations mentioned above, the Company also sets out the corporate social responsibility agreement and discloses the principle of ethicalcorporatemanagementon the website.	No deviation
	(II) Does the company establish a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activity within its business scope which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly, which shall at least include those specified in Paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"?	V		When the Company formulates the prevention plan, it shall include the analysis of business activities within their business scope that are at a higher risk of being involved in unethical conduct and shall strengthen relevant prevention measures. The Company establishes the prevention programs, which shall at least include preventive measures against the following: I. Offering and acceptance of bribes. II. Illegal political donations. III. Improper charitable donations or sponsorship. IV. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits. V. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights. VI. Engaging in unfair competitive practices.	No deviation
	(III) Does the company specify in its prevention programs the operating procedures, guidelines, punishments for violations, and a grievance system and implement them and review the prevention programs on a regular basis?	V		The Company promulgated the "Procedures for Ethical Corporate Management and Guidelines for Conduct" on April 25th, 2013 and, according to the Procedures and Guidelines, indeed implemented the terms of announcement of the policy of ethical corporate management to outside parties, ethical corporate management evaluation prior to the development of commercial relationships, statement of ethical corporate management policy to counterparties in commercial dealings, avoidance of commercial dealings with unethical operators, the stipulation of terms of ethical corporate management in contracts, etc. In addition, the Company shall hold ethical corporate management education training or promotion for the personnel of the Company at least once a year, so that they can fully understand the Company's determination, policies, prevention programs and consequences of unethical conduct.	No deviation

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Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Ethical Corporate Management Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description
II. Implement of ethical management	(I) Has the Company assessed a trading counterpart’s ethical management record, and expressly states the ethical management clause in the contract to be signed with the trading counterpart?	V		Before entering into a contract with another party, the Company shall gain a thorough knowledge of the status of the other party's ethical management, and shall make observance of the ethical management policy of the Company part of the terms and conditions of the contract, stipulating at the least the following matters: 1. Where a party is discovered to be engaged in unethical conduct in its commercial activities, the other party may terminate or rescind the contract unconditionally at any time. 2. Specific and reasonable payment terms, including the place and method of payment and the requirement for compliance with related tax laws andregulations.	No deviation
	(II) Does the Company have a unit that enforces business integrity directly under the Board of Directors? Does this unit report its progress (regarding implementation of business integrity policy and prevention against dishonest conducts) to the Board of Directors on a regular basis (at least once a year)?	V		The establishment and promotion of the ethical management are jointly determined by the Legal Counsel and the Human Resources Office with main responsibilities as follows: 1. Assist in implementing ethical management and conduct in the Company’s management strategy and comply with national regulations in ensuring ethical conduct and prevention of illegal activities. 2. Establish unethical prevention rules and internal procedures and standard guidelines and behavioral guides. 3. Plan internal organization, staffing, and job responsibilities to control for high level unethical conduct in operations, establish checks and balances. 4. Promoting and coordinating ethical management promotion and compliance training. 5. Plan internal whistleblowing policies, and ensuring effectiveness. In 2021, the Company’s Ethical Management activities were reported to the Board of Directors on Jan 26,2022,and disclosed on the company’s website.	No deviation
	(III) Has the Company defined any policy against conflict of interest, provides adequate channel thereof, and fulfills the same precisely?	V		Article 11 of the Company's "Procedures for Ethical Management and Guidelines for Conduct" stipulates the recusal and actions taken in response of the Company's directors and all personnel. Article 7 of the Company's "Procedures for Ethical Management and Guidelines for Conduct" stipulates that when any personnel of the Company are provided with improper benefits by a third party, the personnel shall report to their immediate supervisor and the responsible unit shall be notified. In addition, the Company's new employees shall sign the "Business Conduct Policy" to avoid damage to the Company due to interest conflicts.	No deviation
	(IV) Has the Company implemented an effective accounting policy and internal control system to maintain business integrity? Has an internal or external audit unit been assigned to devise audit plans based on the outcome of integrity risk assessment, and to audit employees' compliance with various preventions against dishonest conducts?	V		The Company has established an effective accounting system and internal control system, implemented in accordance with the regulations. The audit department conducts regular audits and reports the audit results to the Audit Committee and the Board of Directors on a regular basis, so that the management can control the implementation of internal control so as to achieve management purposes.	No deviation

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Assessment Item	Assessment Item	Status (Note1)	Status (Note1)	Status (Note1)	Deviation from the Ethical Corporate Management Best-Practice Principles for the TWSE/GTSM Listed Companies, and reasons thereof
		Yes	No	Summary Description
	(V) Has the Company organized an internal/external education training program for ethical management periodically?	V		The Company promotes the "Procedures for Ethical Management and Guidelines for Conduct" and the "Standards of Ethical Conduct" to the directors at least once a year to ensure the implementation of corporate governance. In addition, the Company holds the education and promotion of the “Procedures for Ethical Management and Guidelines for Conduct” and the “Standards of Ethical Conduct” for the personnel in the Plant sites and office at least once a year. Related educational courses are available for the employees to read and learn at any time on the online learning platform.	No deviation
III. Status of the Company's complaint system	(I) Does the company establish both a reward/whistle-blowin g system and convenient whistle-blowing channels? Are appropriate personnel assigned to the accused party?	V		Anyone who discovers any personnel of the Company involved in unethical conduct in the course of their duties, may file a whistleblower report with the time of the violation, facts or evidence to the Audit Office via in writing, over the phone or email. The Company shall keep confidential the identity of whistle-blowers and the content of reported cases. Whistleblowers can report through the following channels:  Dedicated hotline: 02-8787-1003  Email: honest@cpdc.com.tw Article 25 of the Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" stipulates that the Company shall link ethical corporate management to employee performance evaluations and human resources policy, and establish clear and effective systems for rewards, penalties and complaints	No deviation
	(II) Has the company established standard operating procedures and confidentiality measures for the investigation of reportedincidents?	V		Article 11 of the Company's "Standards of Ethical Conduct" (Reporting obligations and protection of whistleblowers): The Company shall process the case through classified documents and put forth maximum possible efforts to safeguard the personal data as well as the safety of the reporting personnel. An accused person shall not in any way intimidate or retaliate against the reporter aforementioned in the preceding paragraph. Article 21 of the Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" stipulates the handling procedures for discovering, or receiving a whistle-blowing report, that any personnel of the Company is involved in unethical conduct; Article 22 stipulates the actions upon the event of unethical conduct by others towards the Company; Article 24 stipulates that the Company shall keep confidential the identity of whistle-blowers andthe contentof reported cases.	No deviation
	(III) Does the company provide protection for whistle-blowers against receiving improper treatment?	V
IV. Enhancing Information Disclosure Has the Company disclosed the Ethical Corporate Management Principles and effect of implementation thereof on its website and Market Observation Post System?		V		The "Corporate Social Responsibility Report" on the Company's website sets out the content and results of promotion of the "Procedures for Ethical Corporate Management and Guidelines for Conduct". The Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" is also disclosed on the Company's website, and the results of ethical corporate management are regularly updated every year.	No deviation
V. If the Company has established ethical corporate management principles based on "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", please describe any discrepancy between the principles and their implementation: The Company's "Procedures for Ethical Corporate Management and Guidelines for Conduct" is adopted pursuant to the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies", and there is no material discrepancy between the two principles.
VI. Other information material to the understanding of ethical corporate management operation: In accordance with the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", the Company issued the "Procedures for Ethical Corporate Management and Guidelines for Conduct" in the CPDC Chief Executive letter No. 2013040027 issued on April 25, 2013, and implemented the ethical corporate management policy. The Company formally adopted the "Procedures for Ethical Corporate Management and Guidelines for Conduct" and the "Standards of Ethical Conduct" in the 2012 Board of Directors meeting. In addition to disclosing the Company's policy of ethical corporate management in internal rules,annual reports,on the Company's websites,or disclosingexternally,the Companyshall make its

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suppliers, customers, and other stakeholders fully aware of its principles and rules with respect to ethical corporate management. In addition, the Company conducts relevant education training or promotion at least once a year for employees in all operation bases, and establishes detailed procedures, guidelines, and reward and punishment systems so as to make all personnel fully aware of the Company's ethical corporate management policy, prevention programs and consequences of unethical conduct. If any employee has questions about the principles of integrity and ethical conduct, or wants to report related illegal matters, he/she can raise them through the whistle-blowing channel.

The Company strictly requires the high-level managers, supervisors, employees and on-site operators to observe the "Procedures for Technical Document Management" and other regulations of information security, and regularly organizes education and training. In addition, all employees are required to sign a non-disclosure agreement when they take office and resign.

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

• (VII) Please disclose the access to the Company's Corporate Governance Best Practice Principles and related rules and regulations, if any:

• 1.The Company has the "Corporate Governance Best Practice Principles", which has relevant regulations for protecting shareholders' rights, strengthening the functions of the Board of Directors, respecting the rights and interests of stakeholders, and improving information transparency. The Company's "Corporate Governance Best Practice Principles" and related important regulations or the operating status are disclosed on the Company's website or the M.O.P.S.

• 2.Access to the Company website at http://www.cpdc.com.tw, where the information about the Company's finance and corporate governance is disclosed. M.O.P.S.: https://mops.twse.com.tw/mops/web/index

• (VIII) Other important information enabling a better understanding of the Company's corporate governance:

• The “Operating Procedures for the Handling of Internal Material Information” was prepared in order to manage the Company’s internal material information and this procedure has been communicated to all directors, managerial officers and employees. The procedures and precautions are posted on the Company’s intranet to be bound by all employees to prevent any violations of laws and regulations, and education and advocacy shall be provided at least once a year.

• For every newly elected director, on their appointment, a director's manual and handbook and the latest announcements are distributed to each director of the Company. Also, the latest manual for insider trading prepared by TWSE and the Company's important policies and procedures will also be distributed to each insider including directors and managerial officers.

• Continuing education of directors 2021:

Title	Name	Election Date	Date of Continuing Education	Date of Continuing Education	Organizer	Class Name	Hour s	Whether Continuing Education Complies with Regulations (Note1)
			From	Until
					Taiwan	Information security	1.5
					Corporate	status sharing and
			2021/3/30	2021/3/30
					Governance	future challenges in the
					Association	technologyindustry
					Taiwan		1.5
						The general trend of
					Corporate
			2021/5/11	2021/5/11		ESG and corporate
					Governance
						governance 3.0
Legal	Ruey-Long				Association
		2021/7/2						Yes
Representative	Chen				Taiwan		1.5
					Corporate	Global minimum tax
			2021/8/10	2021/8/10
					Governance	system
					Association
					Taiwan		1.5
						New thinking on
					Corporate
			2021/11/12	2021/11/12		intellectual property
					Governance
						management
					Association

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Title	Name	Election Date	Date of Continuing Education	Date of Continuing Education	Organizer	Class Name	Hour s	Whether Continuing Education Complies with Regulations (Note1)
			From	Until
Legal Representative	Shaw-Shin Yang	2021/7/2			Financial	The 13th Taipei	3.0	Yes
			2021/9/1	2021/9/1	Supervisory	Corporate Governance
					Commission	Forum
						2021 Insider Equity	3.0
					Securities and	Transaction Legal
			2021/10/20	2021/10/20
					Future Institute	Compliance Publicity
						andBriefing Session
						Right management and	3.0
					Taiwan Board
						sustainable
			2021/12/2	2021/12/2	Performance
						development of the
					Association
						company
						In the rapidly changing	3.0
					Taiwan
						environment of
					Corporate
			2021/12/28	2021/12/28		technology, directors
					Governance
						lead the way for
					Association
						enterprisestorespond
						Implementing	3.0
					Taiwan
						sustainable finance and
			2021/5/6	2021/5/6	Institute of
						moving towards green
					Directors
						finance2.0
						Anti-money laundering	3.0
						and anti-financial
					Taiwan
						terrorism risk
			2021/8/23	2021/8/23	Institute of
						management and the
					Directors
						principle of fair
Legal	Jiun-Nan
		2021/7/2				hospitality		Yes
Representative	Bai
						Talking about the three	3.0
						practices of integrity
						management, corporate
					Taiwan
						governance and
					Corporate
			2021/10/15	2021/10/15		corporate social
					Governance
						responsibility and
					Association
						practical cases and
						prevention and insider
						trading
					Financial	The 13th Taipei	3.0
			2021/9/1	2021/9/1	Supervisory	Corporate Governance
Legal	Kueng-Min				Commission	Forum
		2021/07/02						Yes
Representative	g Lin				Financial	The 13th Taipei	3.0
			2021/9/1	2021/9/1	Supervisory	Corporate Governance
					Commission	Forum
						Transformation	3.0
					Taiwan
						learning of directors'
			2021/4/14	2021/4/14	Institute of
						lectures from the
					Directors
						century-old enterprise
						Transformation	3.0
Legal	Hui-Ting				Taiwan
		2021/07/02				learning of directors'		Yes
Representative	Shen		2021/5/12	2021/5/12	Institute of
						lectures from the
					Directors
						century-old enterprise
					Taiwan	The 10th Chinese	3.0
			2021/11/15	2021/11/15	Institute of	Family Business
					Directors	Annual Forum
					Financial	The 13rd Chinese	3.0
			2021/9/1	2021/9/1	Supervisory	Family Business
					Commission	Annual Forum
						Talking about the three
						practices of integrity
Legal	Hui
		2021/07/02			Taiwan	management, corporate		Yes
Representative	Lan,Chu
					Corporate	governance and	3.0
			2021/10/15	2021/10/15		corporate social
					Governance
						responsibility and
					Association
						practical cases and
						prevention and insider
						trading

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Title	Name	Election Date	Date of Continuing Education	Date of Continuing Education	Organizer	Class Name	Hour s	Whether Continuing Education Complies with Regulations (Note1)
			From	Until
					Financial	The 13th Taipei	3.0
			2021/9/1	2021/9/1	Supervisory	Corporate Governance
					Commission	Forum
Independent	Yun-Peng					The value of	3.0
		2021/7/2						Yes
Director	Chu					information security in
					Securities and
			2021/11/22	2021/11/22		the post-epidemic era
					Future Institute
						and the China–United
						States trade war
						Corporate	3.0
			2021/5/5	2021/5/5	TAISE	Sustainability Training
						Course
						Fully Launching
Independent	Wen-Yen
		2021/7/2			Taiwan	Enterprise Digital		Yes
Director	Pan
					Corporate	Resilience - From	3.0
			2021/8/3	2021/8/3		Ransomware to Talking
					Governance
						about Incident Threat
					Association
						emergency response
						andrecover
						Talking about	3.0
						Taiwanese business
					Taiwan
						operation and M&A
					Corporate
			2021/12/7	2021/12/7		strategy from the
					Governance
						perspective of global
Independent	Song-Nian
					Association	political and economic		Yes
Director	Ye	2021/7/2
						situation
					Taiwan		3.0
						Prevention of insider
					Corporate
			2021/12/10	2021/12/10		trading and the latest
					Governance
						practical development
					Association

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

4. M.O.P.S.: http://mops.twse.com.tw/

1. The Company website: http://www.cpdc.com.tw Investor Relations

2. 93 -

(IX) Disclosure of internal control system:

1. Internal control declaration

China Petrochemical Development Corporation Declaration of Internal Control System

March 14, 2022

China Petrochemical Development Corporation (CPDC) had inspected the 2021 internal control system autonomously with the results illustrated as follows:

• I. CPDC is fully aware that the board of directors and the management are responsible for the establishment, implementation, and maintenance of the internal control system and it is established accordingly. The purpose of establishing the internal control system is to reasonably ensure the fulfillment of operation effect and efficiency (including profit, performance, and protection of assets safety), financial report reliability, instantaneity, transparency and compliance.

• II. The internal control system is designed with inherent limitations. No matter how perfect the internal control system is, it can only provide reasonable assurance to the fulfillment of the three objectives referred to above. Moreover, the effectiveness of the internal control system could be affected by the changes of the environment and circumstances. The internal control system of CPDC is designed with a self-monitoring mechanism; therefore, corrective actions will be activated upon identifying any nonconformity.

• III. CPDC has assessed the effectiveness of the internal control system design and implementation in accordance with the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets” (referred toas “the Regulations” hereinafter). The criteria defined in “the Regulations” include five elements depending on the management control process: (1) environment control, (2) risk assessment, (3) control process, (4) information and communication, and (5) supervision. Each of the five elements is then divided into a sub-category. Please refer to “the Regulations” for details.

• IV. CPDC has implemented the criteria of the internal control system referred to above to inspect the effectiveness of internal control system design and implementation.

• V. CPDC based on the inspection result referred to above has concluded that the internal control system (including the supervision and management over the subsidiaries) on December 31,2021 is reasonably effective in achieving the objectives of operation effect and efficiency, instantaneity, transparency, financial report reliability, and compliance.

• VI. The Declaration of Internal Control System is the main content of the Company’s annual report and published prospectus. Any falsification and concealment of the published content referred to above involves the liability illustrated in Article 20, Article 32, Article 171, and Article 174 of the Securities and Exchange Act.

• VII. The Declaration of Internal Control System was resolved in the board meeting with the objection of 0 board directors out of the 9 attending board directors on March 14, 2022. The content of the declaration has been accepted without any objection.

China Petrochemical Development Corporation

Chairman: Chen Ruey-Long

President: Janson Yu

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• The internal control audit report issued by the CPA commissioned to conduct an internal control audit, if any: The Company did not commission any CPA to conduct an audit of internal controls in 2021.

• (X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:

an audit of internal controls in 2021. (X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:	an audit of internal controls in 2021. (X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:	an audit of internal controls in 2021. (X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:	an audit of internal controls in 2021. (X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:	an audit of internal controls in 2021. (X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:	an audit of internal controls in 2021. (X) Punishment of the Company or its internal personnel in accordance with the law, the Company's punishment of its internal personnel for violating internal control system regulations, main deficiencies, and improvements during the most recent year and up to the date of publication of this annual report:
Prepared on March 29,2022
Date	Entity	Case	Main Deficiency	Improvement	Type of Punishment
2021/1/12pe nalty date: 2021/2/24	Toufen Factory	Waste sorting and storage violations of the Waste Clearing Law.	1. On January 12, the Environmental Inspectorate of the Central District of the Environmental Protection Agency went to the factory for inspection and found that the bag filter bag was replaced with waste filter bags, which were not listed in the waste list; some wastes were stored in unsorted storage. 2.The above violates Articles 31 and 36 of the Waste Disposal Law.	1. From January 28th to 29th, the sorting and removal of waste plastic mixtures were completed. On March 23, the change of waste cleaning plan (adding waste filter bag code) was approved.	The competent authority imposed a fine of NT$12,000.
2021/1/14pe nalty date: 2021/3/8	Anshun site	Excessive detection of dioxin in the discharge water of a comprehensive wastewater plant	1. On January 14th, the Tainan Environmental Protection Bureau went to Anshun Comprehensive Wastewater Plant to sample the discharge water. The test results on January 28th found that dioxin exceeded the standard. 2.The above violates Article 22, Paragraph 1 of the Soil and Groundwater Pollution Control Act	1.The improvement measures for the wastewater plant were completed on February 17, and the self-verification retest was completed on February 23. Discuss wastewater operation technology with professional environmental manufacturers to improve wastewater treatment efficiency.	Received a fine of NT$200,000 and a 2-hour environment al lecture by the competent authority.
2021/2/3pen alty date: 2021/3/10	Dashe Factory	The Ministry of Labor and Kaohsiung City Labor Bureau conducted a joint inspection of the Spring Safety Plan in the Dashe Industrial	1. On February 3, the Occupational Safety Administration of the Ministry of Labor and the Kaohsiung City Labor Bureau conducted an inter-departmental joint supervision and inspection of the factorywithout warning,	Immediate isolation treatment of the deactivated explosion-proof control panel and immediate modification of the deactivation of the platformguardrail	A fine of NT$160,000 were be imposed.

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Date	Entity	Case	Main Deficiency	Improvement	Type of Punishment
		Zone during the Chinese new years holidays of 2020. The joint inspection and registration of missing items will result in immediate fines.	and factory was judged to 7 items needing to be improved.. 2.The above violates the "Occupational Safety and Health Facilities Regulations" and "Occupational Safety and Health Management Measures".	were completed on February 4.
2021/2/23 penalty date: 2021/4/13	Hsiaokang Factory	Toxic substance storage exceeds the graded operation volume mentioned in the approved document	1. On February 23, the Environmental Protection Bureau found that the storage volume of the poisonous substance chloroform in some months of 2020 exceeded the level of operation in the approved documents. 2.The above is a violation of Article 13, Paragraph 2 of the "Toxic and Chemical Substances of Concern Management Act".	1. Reduce the inventory and usage of chloroform so as to control the graded operation volume lower than the approved documents. 2. Create an automatic reminder for the over-limit storage of each toxic substance declaration form. Strengthen the education and training of relevant personnel.	Received a fine of NT$100,000 and a 2-hour environment al lecture by the competent authority.
2021/3/8 penalty date: 2021/5/6	Toufen Factory	Public Dangerous Goods Workplace Inspection Violations of Fire Laws	1. On March 8, the Fire Department conducted an inspection of the workplace for public dangerous goods, and found that there was a problem of unfilled and reserved space at the penetration of the liquid barrier. 2.The above violates Article 15 of the "Fire Protection Law" and Articles 14, 15, 37, and 38 of the "Standards for the Installation of Public Dangerous Goods and Combustible High-Pressure Gases and Safety Management Measures".	1. Carry out a comprehensive inspection of the facilities for storing various types of public dangerous goods in the factory area. 2.The damage to the containment measures of the anti-liquid dike (piping penetration) was repaired and the storage of items in the surrounding open space was cleared. The improvement was completed on March 8.	The competent authority imposed a fine of NT$20,000.

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Date	Entity	Case	Main Deficiency	Improvement	Type of Punishment
2021/4/11 penalty date: 2021/4/28	Dashe Factory	AN(I)AS-106 Personnel Inhalation of Organic Matter by Airborne	1. On April 11, AN workshop (1) AS-106 tower tank was emptied for processing, and an incident of organic gas inhalation poisoning occurred among processing personnel. The above violates Article 277-1 of the "Occupational Safety and Health Facilities Regulations" and Article 30, paragraphs 2 and 9 of the "Specified Chemical Substance Hazard Prevention Standards".	1. Check whether there is any substance residue in the equipment before operation. 2. Carry out hazard identification and exposure assessment to select suitable protective equipment.	The competent authority imposed a fine of NT$130,000 .
2021/7/1 penalty date: 2021/8/17	Anshun site	Comprehensive wastewater flood control and external drainage exceeding the standard	1. On July 1, the Environmental Protection Bureau carried out the inspection and sampling of the external drainage of the comprehensive wastewater plant, and on July 14, notified that the mercury and dioxin test values in the discharged water exceeded the standard of the remediation plan. The above violates Article 22, Paragraph 1 of the Soil and Groundwater Pollution Control Act.	1. Add on-site standard operation icons and valve labeling management, and require operators to check the operation step by step. . 2.Strengthen personnel training management, and work in rotation after passing the assessment.	Received a fine of NT$600,000 from the competent authority and an 8-hour environment al lecture.
2021/7/15 penalty date: 2021/8/17	Douliu Factory	The pH value of the scrubber exceeds the license control value	1. The Environmental Protection Bureau conducted a joint inspection on July 15 and found that the pH value of the Venturi scrubber on-site meter showed that it exceeded the pH control value of the environmental protection license. 2.The above violates Article 23 of the Air Pollution Control Act.	1. Due to the abnormality of the pH controller, the electrode has been replaced with a new one and the signal line has been reconnected immediately. After checking the signal, confirm that it is back to normal. 2.Complete the new products of the old pH controller, the replacement of the signal line and the regular measurement of the pH value of the washingwater.	Received a fine of NT$100,000 and a 2-hour environment al lecture by the competent authority.

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Date	Entity	Case	Main Deficiency	Improvement	Type of Punishment
2021/12/15 penalty date: 2022/2/10	Toufen Factory	Waste declaration mass imbalance	1. The Environmental Protection Bureau inspected the plant on December 15 and found that the online application materials for organic sludge (D-0901) in October 2021 had a quality imbalance. 2.The above violates Article 31, Paragraph 1, Paragraph 2 of the Abolition Law.	1. Perform mass balance on waste output and clearance declaration. 2.Before reporting, the supervisor will review and confirm the reporting information.	Received a fine of NT$6,000 from the competent authority and a 1-hour environment al lecture

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

(1) Important resolutions made by shareholders' meeting

Type of Meeting	Date	Summary of Motion
Shareholders ' Meeting	2021/7/2	1. Ratification of the Company's 2020 business report and financial statements. 2. Ratification of the 2020 Earnings Distribution Proposal. 3. Approved the capital raising proposal by public share issuance (cash offering) or participating in global depositary receipt ("GDR") issuance with an issue size no greater than 600 million common shares. 4. Approved the by-election of the 22nddirector of the Company. 5. Removal of the 22nddirector of the Company's prohibition of competitionproposal.

(2) Important Resolutions by the Board of Directors

Type of Meeting	Date	Summary of Motion
Board of Directors	2021/1/25	1. To enhance the Company’s working capital and meet the capital needs of future development, the Company proposed to issue common shares for cash by domestic public offering. 2. Approval of the company's comprehensive re-election of directors and independent directors. 3. Approval of the relevant matters related to the company's 2021 general meeting of shareholders. 4. Approval of the Company's 2021 nomination of candidates for directors and independent directors, and the relevant matters of shareholders' proposals in shareholder’s meeting 5. Approval of the application to a financial institution for the renewal of the original quota with the original conditions to issue commercial promissory notes. 6. Approval of The Company's "Phase II Storage Tank Construction Project ofthePort of KaohsiungIntercontinentalContainer Terminal",

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Type of Meeting	Date	Summary of Motion
		increasing the lease of land for the public wharf and paying the performance bond 7. Approval of the Company's entrustment to financial institutions for sponsoring the joint loan renewal and the adjustment of the guarantee joint credit quotas.
Board of Directors	2021/3/23	1. 2020 internal control system self-evaluation has been completed, the declaration of internal control system was issued according to the result. 2. Approval of 2020 individual financial statement and consolidated financial report. 3. Approval of 2020 business report. 4. Approval of 2020 earnings distribution. 5. Approval of 2020 directors’ remuneration distribution 6. Approval of 2020 employees’ remuneration distribution 7. Approval of nomination and reviewing of 22nd candidates of independent directors and directors. 8. propose to Remove the 22nd Directors(including independent directors) and legal representatives of the Company's Prohibition of Competition Proposal in 2021 shareholder’s meeting 9. Approval of the draft agenda for the general meeting of shareholders. 10. Approval of the application to a financial institution for the renewal of the original quota with the original conditions to issue commercial promissory notes. 11. Approved cancellation of the provision of guarantees and endorsements for its subsidiary Changzhou Weicai. 12. Approved the provision of guarantees and endorsements for its subsidiary Weihua (Rudong) Trade Co., Ltd. 13. Approved the settlement of the Company's Indian subsidiary CPDC GEMINI STAR (INDIA) PRIVATE LTD. 14. Approval of the planned capital expenditures for the construction of HG ammonia nitrogen removal systems in Dashe Plant and Hsiaokang Plant 15. Approval of The Company's "Phase II Storage Tank Construction Project of the Port of Kaohsiung Intercontinental Container Terminal", increasing the lease of land for the public wharf and paying the performance bond 16. Renewal of the land lease contract between the company and Taiwan PetroChina Co., Ltd. 17. Lending of land in Qianzhen District, Kaohsiung City to the Kaohsiung City Government without payment. 18. Approval the appointment of lawyer Huang from Delta Office as the Company's perennial legal counsel. 19. Approval of the application from Mr. Chen, vice president of the Company’s petrochemical production department, for stay without pay and the general manager Mr. Yu concurrently served as the general manager of the subsidiary Jiangsu Weiming Company. 20. Approved the dismissal of the appointed manager, Mr. Xu of the Company's Environmental Protection and Pollution Prevention and Control Center. 21. Approval of the Company’s appointed manager, Mr. Wang’s application forthe stay without pay.

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Type of Meeting	Date	Summary of Motion
Board of Directors	2021/4/14	1. Approved the Company's regular assessment of the independence of CPA. 2. Approved the reappointment of CPA from KPMG for the audit of Company's 2021 annual financial report. 3. Approved the reappointment of CPA from PwC for the audit of Company's 2021 business income tax settlement declaration. 4. Approved the Amendment to the Company's " Internal Control Procedures for management of financial report preparation". 5. Approval of keeper of company’s official seal for register application to Ministry of Economic Affairs changes from Mr. Huang from accountant department to Mr. Chen who is the vice president of financial department 6. Approval of the application to a financial institution for the renewal of the original quota with the original conditions to issue commercial promissory notes. 7. Approved the amendment of certain provisions of “Internal Control System and Internal Audit Implementation Rules of the Shareholding Unit" 8. Approved the cash capital deduction on its subsidiary Zhaoxin Chemical Industry Co., Ltd. 9. The company lent free land in Annan District, Tainan City for cultural activities through ratification. 10. Approval of the suspension of land development proposal in Kaohsiung city. 11. Approval of the Company's public bidding for the sale of land in Kaohsiung City 12. Approval of severance pay of dismissing the appointed manager Mr. Xu 13. Approval of remuneration adjustment of the Company's general manager, Mr. Yu, concurrently serves as the general manager and legal representative of Jiangsu Weiming Petrochemical Company, a subsidiary in mainland China. 14. Approval of the contract renewal remuneration of Mr. Jian, manager of the joint procurement department of the Company's administrative resources department. 15. Approval of the former corporate director declared that he is not competent, proposal to change the candidates for corporate directors. 16. Approval the legal director after change and its representative of the Company's Prohibition of Competition Proposal.
Board of Directors	2021/5/12	1. Renew the short-term guarantee comprehensive credit quotas, export billing amount and increase the medium-term guarantee amount with the financial institutions. 2. The Company increase the guaranteed non-revolving mid-term credit quota, and jointly shares the credit with its subsidiary Dingyue Development Co., Ltd within the limit. 3. Approved the cancellation of the provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd 4. Approved that the Company propose the approval to remove the 22nd session of directors (including independent directors) concurrently in 2021 General Meeting of Shareholders. 5. Approved the amendments of certain provision of the Company’s “Responsibilities of the Board of Directors and Managers” 6. Approved the application for the extension of "Construction Project of Fine Chemical Plant- Phase 0"

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Type of Meeting	Date	Summary of Motion
		7. Approved that the Company jointly proceed the construction and sale with its subsidiary Dingyue Development Co., Ltd on Miaoli County Land 8. Approval of the retirement of Mr. Jia, Special Assistant for Chairman's Office of the Company.
Board of Directors	2021/6/16	1. In response to the relevant measures announced by the Financial Supervisory Commission to postpone the holding of the general meeting of shareholders of public companies in response to the epidemic, the company's general shareholders' meeting has been postponed to July 2. 2. Cash capital increase on Dingyue Development Co., Ltd 3. Approved the application for the extension of stage 1 &2 of "Phase II Storage Tank Construction Project of the Port of Kaohsiung Intercontinental Container Terminal 4. Approved the application the extension of "Construction Project of Fine Chemical Plant - Phase I " and adjusted the product’s planning and budget 5. Approved the negotiation with Sunko Ink Co., Ltd. to dismantle the asset business 6. The company appointed a financial institution to organize the guarantee syndicated loan. 7. Renew the short-term guarantee comprehensive credit quotas, export billing amount with the financial institutions. 8. Renew the short-term guarantee comprehensive credit quotas with the financial institutions. 9. Approval of the Company’s organization adjustment 10. Approval of the payment of consolation money 11. Approved the appointment of Mr. Wang as the manager of Raw Material Purchasing Office, Ministry of Commerce. 12. Approved the Staying without pay of Mr. Chen, vice president of the petrochemical production department of the Company and settlement his service years under the old system. 13. Approval of the performance bonus issuance of the appointed manager in the 1st quarter of 2021.
Board of Directors	2021/7/2	The 22nd session of the Board of Directors of the Company reelected Director Ruey-Long Chen to serve as Chairman and DirectorJiun-Nan Baito serve as Vice Chairman.
Board of Directors	2021/7/26	1. Renew the short-term unguaranteed comprehensive credit quotas and export billing amount with the financial institutions. 2. In order to handle the domestic cash capital increase and issuance of ordinary shares, the company adopted the method of public subscription and entrusted President Securities Corporation as the lead underwriter. 3. Approved the appointment of Independent Director Yun-Peng Chu, Independent Director Wen-Yen Pan and Mr. Sung-Yong Chen as members of the 5th Remuneration Committee of the Company. 4. Approval the agency of the vice president of the Company's petrochemical production department
Board of Directors	2021/8/13	1. Renew the short-term unguaranteed comprehensive credit quota with the financial institutions. 2. Approval of additional building mortgage rights are set to comply with the credit contract specifications between the Company and financial institution 3. Capital increase of the Company's 100% subsidiary, Dingyue Development Co., Ltd 4. Approved the practices of “Share SubscriptionbyEmployee via Cash

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Type of Meeting	Date	Summary of Motion
		Capital Increase” 5. Approval of the discharge of Mr. Wang, Assistant Manager of Land Development Department. 6. Approval of the remuneration of 22nd chairman Ruey-Long Chen 7. Approval of the remuneration of 22nd vice chairman Jiun-Nan Bai 8. Approval of the remuneration of 22nd independent directors. 9. Approval of the remuneration of 22nd directors (independent directors excluded). 10. Approval of the reappointment Qing Jing, Shen as the Company’s top counselor and sign the Employment contract compensation 11. Approval of the remuneration of contract renewal of Mr. Yang, the manager of the Share service office of the Board of Directors of the Company. 12. Approved and issued patent application bonus cases for appointed managers who participated in patented inventions and contributed to the company's "Innovation and Patent Performance Reward Implementation Points" 13. Approved the remuneration of Mr. Lin who is the Company's petrochemical production department overseas production department assistant manager 14. Approved the performance bonus issuance of the appointed manager in the 2ndquarter of 2021. 15. The remuneration adjustment of Mr. Li, the assistant manager of the overseas production department of the petrochemical production department of the company, was appointed as the executive vice president of the subsidiary Jiangsu Weiming Petrochemical Company. 16. Approval of special allowance adjustment for Mr. Gao, who is acting the executive vice president of petrochemical production department of the Company. 17. Approved the position adjustment of four persons including Mr. Huang, Deputy General Manager of Administrative Resources Department, Mr. Yang, Associate Manager, Mr. Huang, Associate Manager of Occupational Safety and Health Center, and Mr. Jian, Manager of Engineering Technology Department of Petrochemical Production Department, and the adjustment of special allowance.
Board of Directors	2021/8/31	1. Approval of the application to a financial institution for the renewal of the original quota with the original conditions to issue commercial promissory notes. 2. Approved to increase the guaranteed non-revolving mid-term credit quota, and jointly shares the credit with its subsidiary Dingyue Development Co., Ltd within the limit. 3. Approved that for the investment and construction of the storage tank of the Kaohsiung Port Intercontinental Wharf, the company signed a land extension agreement with the Port of Kaohsiung Taiwan International Ports Corporation Ltd. and the joint lessee, and assumed the responsibility of mutual endorsement and guarantee on the scope and matters of the joint lease.
Board of Directors	2021/9/29	1. Increase the mid-term guarantee credit quotas with the financial institutions. 2. Approval of 1stproposal of provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd 3. Approval of 2nd proposal of provision of guarantees and endorsements for its subsidiaryDingyueDevelopment Co.,Ltd

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Type of Meeting	Date	Summary of Motion
		4. Cash capital increase by issuance of new shares within the limit of 500 million ordinary shares. 5. Approved that the Company changed investment schedule and benefit of integration (including phase 1&2) of Rudong Weiming in Jiangsu. 6. Approval of the company's Dashe plant VOCs decontamination and improvement project planned capital expenditure 7. Approval of the adjustment of the Company organization and amendment to the Company’s “Charter” 8. Approved the dismissal and reassignment of Mr. Zhang, Special Assistant of the Chairman's Office of the Company. 9. Approved salaries adjustment of employee (appointed managers excluded) in 2021.
Board of Directors	2021/10/27	1. Renew the short-term unguaranteed comprehensive credit quotas with the financial institutions. 2. Renew the short-term guarantee comprehensive credit quotas and increase the medium-term guarantee amount with the financial institutions. 3. Approval of the application with financial institutions applied for exchange of guarantee medium-term credit quotas and the renewal of export bill increase amount.
Board of Directors	2021/11/10	1. Approval of 2021 Q3 consolidated financial report. 2. Approval of the cash deduction from 100% subsidiary Core Pacific Co., Ltd 3. Approval of 2022 business plan. 4. Approval of the cancellation of the provision of guarantees and endorsements for its subsidiary Dingyue Development Co., Ltd 5. The Company provided the credit guarantees and endorsements credit for its China subsidiary Jiangsu Weiming New Material Co., Ltd 6. Determine the issue price of the company's cash capital increase in 2021 and other related matters. 7. Renew the short-term unguaranteed comprehensive credit quotas with the financial institutions. 8. Approval of the application to a financial institution for the renewal of the original quota with the original conditions to issue commercial promissory notes. 9. Approval of the application with financial institutions applied for exchange of unguaranteed short-term credit quotas and the renewal of export bill increase amount. 10. Approval of the severance payment of Mr. Liu, Executive vice president of Land Development Department of the Company, and Mr. Wang, Associate Manager of Land Development Department. 11. Approval of the annual salary difference of Mr. Li, the assistant manager of the overseas production department of the petrochemical production department of the Company. 12. Approval of 2021 salary adjustment of appointed managers. 13. Approval of the performance bonus issuance of the appointed manager in the 3rdquarter of 2021.
Board of Directors	2021/12/06	Approval of its 100% subsidiary Core Pacific Co., Ltd. participated in the public auction of the land plot in Thu Thiem Fang, Thu Duc City, Ho Chi MinhCity.

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Type of Meeting	Date	Summary of Motion
Board of Directors	2021/12/29	1. Approved the budget of the company's Anshun renovation plan. 2. The Company assessed the asset impairment in accordance with IAS 36. After the asset impairment test, the Company recorded an asset impairment in 2021 Q4. 3. Approval of 2022 business budget. 4. Approval of 2022 internal control audit plan 5. Approval of the Company's Dashe Plant's underground pipeline burden compensation. 6. The Company's financial institution has added a new contract for the issue of commercial promissory notes with guaranteed appointment. 7. The company added endorsement guarantee and extended endorsement guarantee for one year for its mainland subsidiary Changzhou Weicai New Materials Co., Ltd. 8. The company donated to the Shen Chun-chi Cultural and Educational Foundation. 9. Amendment of the Company’s “Corporate Sustainable Development Best Practice Principles” 10. Establishment of the Company’s “Organizational Regulations of the Sustainable Development Committee” 11. Amendment to certain provisions of the Company's "information control procedure-computerized information system principles” 12. Approved the Company's internal audit supervisor new appointment and job change. 13. Approved the application of retirement from Mr. yang, who is the acting of vice president of Administrative Resource Department of the Company. 14. Approved the reinstatement of Mr. Wang, special assistant of the chairmanoffice and the deputy adjustment.

1. Important resolutions made by the general shareholders' meeting and resolutions made by shareholders' meetings in 2021

shareholders' meetings in 2021
Summary of Motion	Status of Resolutions Made by Shareholders'Meetings
1. Approved the capital raising proposal by public share issuance (cash offering) with an issue size no greater than 600 million common shares. 2. Re-election of the 22nd Board of Directors of the Company. 3. Approved to Remove the 22nd Directors of the Company's Prohibition of Competition Proposal	The resolution was approved and the issuance of 500 million shares for domestic cash capital increase has been completed, and the implementation situation will be reported at the 2022 Annual General Meeting of Shareholders (please refer to the 2022 Annual General Meeting of Shareholders Manual for details). The resolution was approved, and major information declaration have been handled in accordance with the law. The resolution was approved, and major information declaration have been handled in accordance with the law.

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

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

Summary of discharge and resignation of parties relating to the financial report:	Summary of discharge and resignation of parties relating to the financial report:	Summary of discharge and resignation of parties relating to the financial report:	Summary of discharge and resignation of parties relating to the financial report:	Summary of discharge and resignation of parties relating to the financial report:
April 30, 2022
Title	Name	Date of Appointment	Date of Discharge	Cause
Head of Internal Audit	Min Ling, Yang	2020/05/01	2022/01/03	Job adjustment

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

V. Information on CPA Professional Fees

Unit: NTD Thousand

						Unit: NTD Thousand
Firm Name	CPA Name	Duration of Audit	Audit Fees	Non-Audit Fees	Subtotal	Remark
KPMG	Melody Chen	2021 fiscal year	9,240	873	10,113	The non-audit public expense items are the review of investment real estate appraisal report, the reading service of the annual report of the shareholders' meeting, the change registration service and the accountant review service of cash capital increase.
	Dan-Dan Chung
PwC	Ju Feng, Lin			2,630	2,630	Non-audit public expense items include income tax services, transfer pricing reports, country report review, foreign labor tax refund services and related tax consultingfees.

VI. Information About Replacement of CPA: None

• VII. Information About Chairman, President, and Financial or Accounting Manager of the Company Who Has Worked with the CPA Firm Which Conducts the Audit of the Company or Affiliate to Said Firm in the Most Recent Year: None

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• VIII. Any transfer of equity interests and pledge of or change in equity interests by a director, managerial officer, or shareholder with a stake of more than 10 percent in the most recent year and up to the date of publication of the annual report.

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

Job Title (Note 1)	Name	2021	2021	EndingMarch 29,2022	EndingMarch 29,2022
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Chairman	The Core Pacific Co.,Ltd.	8,355,820	(8,475,000)	0	0
Chairman Legal representative of Core Pacific Co.,Ltd.	Ruey-Long Chen (executive chief concurrently)	200,000	0	0	0
Vice chairman	Jen Huei Enterprise Co., Ltd. (elected vice chairman on April 13,2022)	2,366,154	0	0	0
Vice Chairman Legal representative, Jen Huei Enterprise Co., Ltd.	Jiun-Nan Bai (elected legal representative vice chairman on April 13, 2022) (March 25, 2022 appointed legal representative)	0	0	0	0
Vice Chairman	BES Machinery Co. Ltd. (resigned on March 25, 2022), dissolved company due to M&A	0	0	(13,110,345)	(2,000,000)
Vice Chairman Legal representative, BES Machinery Co., Ltd.	Jiun-Nan Bai (resigned on March 25, 2022)	0	0	0	0
Director representative of Core Pacific Co.,Ltd.	Shao Xin, Yang (appointed on July 2, 2021)	0	0	0	0
Director	BES Engineering Co. Ltd. (appointed on July 2, 2021) Surviving company due to M&A	0	0	13,110,345	0
Director Legal representative, BES EngineeringCorp.	Hui Lan, Chu (appointed March 25, 2022)	0	0	0	0
Director	C.P. Leasing Co., Ltd. (Appointed on July2,2021)	228,016	0	0	0
Director Representative, C.P. LeasingCo.,Ltd.	Kuen-Ming Lin (Appointed on July 2, 2021)	0	0	0	0
Director	Sheen Chuen-Chi Cultural and Educational Foundation (dismissal from July2,2021)	0	0	0	0

• 106 -

Job Title (Note 1)	Name	2021	2021	EndingMarch 29,2022	EndingMarch 29,2022
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Director Representative, Sheen Chuen-Chi Cultural and Educational Foundation	Kuen-Ming Lin (dismissal from July 2, 2021)	0	0	0	0
Director Representative, Sheen Chuen-Chi Cultural and Educational Foundation	Hui-Ting Shen (dismissal from July 2, 2021) (Appointed on May 25, 2020)	0	0	0	0
Director	Hui Lan, Chu (dismissal from March 25, 2022) (Appointed on July 2, 2021)	0	0	0	0
Legal Representative of
Jen Huei Enterprise Co.,
Ltd.
Director Legal Representative of Jen Huei Enterprise Co., Ltd.	Jiun-Huei Guo (dismissal from July 2, 2021)	0	0	0	0
Director	Yao Chung Co. Ltd. (Appointed on July2,2021)	48,708	0	0	0
Director Representative, Yao Chuen Co.,Ltd.	Hui-Ting Shen (Appointed on July 2, 2021)	0	0	0	0
Independent Director	Song-Nian Ye	0	0	0	0
Independent Director	Yun-PengChu	0	0	0	0
Independent Director	Wen-Yen Pan	0	0	0	0
President	Janson Yu	0	0	0	0
Vice President	Yun-Chih Liu (dismissal from August 13, 2021)	0	0	0	0
Special Assistant	Lin Ching	35,000	0	0	0
Vice President	Kuo-Tsai,Huang	0	0	0	0
Vice President	Ying-Chun Chen (dismissal from July1,2021)	0	0	0	0
Special Assistant	Chi-Chung Chia (dismissal from July1,2021)	0	0	0	0
Vice President	Ying Jun, Chen (chief of accounting department & financial department concurrently and Corporate Governance Officer)	100,000	0	0	0
Vice President	Shu-TongZou	43,000	0	0	0
Vice President	Chia-Wei Tsai	50,000	0	0	0

• 107 -

Job Title (Note 1)	Name	2021	2021	EndingMarch 29,2022	EndingMarch 29,2022
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Vice President(by proxy)	Yu Lan, Wang (dismissal on April 1, 2022) (promoted on Feb. 1, 2022) (appointed on Jan. 3, 2022 as special assistant) (dismissal on March 3, 2021 as Special Assistant)	0	0	0	0
Vice President(by proxy)	Chi-Tsung Kao (promoted on July1,2021)	0	0	0	0
Vice President(by proxy)	Hui Fen, Yang (retired from Feb. 1,2022)	0	0	0	0
Assistant Vice President(special assistant)	Cheng Jung-Wen (dismissal on Oct. 1, 2021)	0	0	0	0
Assistant Vice President	Min Ling, Yang (promoted on Feb. 1,2022)	(31,375)	0	0	0
Assistant Vice President	Huei-Fen Yang (retired from Feb. 1,2022)	0	0	0	0
Assistant Vice President	Guan-Lu Lee (dismissal on Sept. 17,2021)	0	0	0	0
Assistant Vice President	Tien-Hua Wang (dismissal on Sept. 1,2021)	0	0	0	0
Assistant Vice President	Chien-Hsien Lee	(20,000)	0	0	0
Assistant Vice President	Chiao-Pin Lee	20,000	0	0	0
Plant chief	Cong Qian,Wang	1,670	0	0	0
Assistant Vice President(level 3)	Rong Wen, Zheng	0	0	0	0
Assistant Vice President	Chien-Yuan Huang	0	0	0	0
Assistant Vice President(level 3)	Wen Chih, Tsai	75,000	0	0	0
Plant chief	Hong Long, Chen	0	0	0	0
Manager	Po-ChengHsu	0	0	0	0
Manager	Yan Li, Wang (appointed on June 1, 2021) (dismissal on Jan. 1,2021)	0	0	0	0
Manager	Qi Chang,Li	0	0	0	0
Manager	YongLong,Chen	50,000	0	0	0
Manager	Pei Yu,Yang	11,150	0	0	0
Manager	Wen Yuan,Zeng	8,000	0	12,000	0
Manager	Zhi Wei,Zhang	50,000	0	0	0
Manager	Wei-YingLi	0	0	0	0
Manager	Yong Chong, Jiang (appointed on Jan. 3,2022)	0	0	0	0
Manager	Chau-Yuan Tsai (Adjustment of position on March 22,2022)	25,000	0	0	0

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Job Title (Note 1)	Name	2021	2021	EndingMarch 29,2022	EndingMarch 29,2022
		Increase (decrease) in shares held	Pledged share increase (decrease)	Increase (decrease) in shares held	Pledged share increase (decrease)
Manager	Qin Xiang, Lin (dismissal on July1,2021)	(22,741)	0	0	0
Manager	Zhi Yuan,Yang	0	0	0	0
Manager	Yi Ping, Yuan (appointed on July1,2021)	13,000	0	0	0
Manager	Chi-FongWang	0	0	0	0
Manager	Fang-Mo Chien	(17,000)	0	0	0
Manager	Chin-Yi Lee	20,000	0	0	0
Manager	Kun-Nan Lee (dismissal on Jan. 1,2021)	0	0	0	0
Manager	Kung-Da, Lee (dismissal on Jan. 1,2021)	0	0	0	0
Manager	Chang-HungChien	0	0	0	0
Manager	Kuan-Der Chien	0	0	0	0
Special Assistant	Chun-Hsien Wu (dismissal on Jan. 1,2021)	0	0	0	0
Manager (level 3)	Yi-Yen Chen (dismissal on Jan. 1,2021)	0	0	0	0
Manager	Yung-Fu Liu (dismissal on April 11,2022)	0	0	0	0
Manager	Mu-Chuan Ho	0	0	0	0
Manager	Yung-Sen, Hsu (dismissal on March 1,2021)	0	0	0	0
Special Assistant	Tian-Shuei Gao	67,000	0	0	0
Topcounselor	QingJing,Shen	0	0	0	0

Note 1: The shareholders who hold more than 10% of the Company's shares shall be identified as major shareholders and stated separately.

Note 2: Where the counterparts of shares through transfer and pledged under lien are related parties, it is also necessary to complete the following table.

Information about Equity Transfer

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

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

Note 2: Please specify acquisition or disposal.

• 109 -

Information about Equity Pledged Under Lien

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

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

Note 2: Please specify pledge or redemption.

• 110 -

IX. Relationship among the Top 10 Shareholders

	March 29,2022	March 29,2022	March 29,2022	March 29,2022	March 29,2022	March 29,2022	March 29,2022	March 29,2022	March 29,2022
Name (Note 1)	Current Shareholding		Spouse & Minor Shareholding		Total Shareholding by Nominees		Among the ten largest shareholders, designation or name and relationship with anyone who is a related party or spouse, or a relative within the second degree of kinship. (Note 3)		Note:
	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareholding	Designation (or Name)	Relationship
BES Engineering Corporation Representative: Hui-Lan Chu Chao-Shun Hong	183,037,540 - 73,834,000	4.84% - 1.95%	0 0 0	0 0 0	0 0 0	0 0 0	Core Pacific Co. Ltd. Core Pacific World Corporation	Substantial related party
							N/A	N/A
							N/A	N/A
The Core Pacific Co., Ltd. Representative: Chiang Hung-Chiao JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Emerging Markets Stock Index Fund Representative: N/A JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds Representative: N/A King’s Construction Co., Ltd. Representative: Shen-Yuen Luan HSBC in custody of Core Pacific - Yamaichi International (H.K.) Ltd. – Client A/C Representative: N/A Core Pacific World Co., Limited Representative: Sheen, Ching-Jing Ming-Da Lin Citibank (Taiwan) in custody of Polunin Developing Countries Fund, LLC Representative: N/A	53,980,916 40,450 49,367,041 - 46,897,204 - 46,300,000 - 31,857,048 - 30,649,620 - 30,000,000 27,690,610 -	1.43% 0% 1.30% - 1.24% - 1.22% - 0.84% - 0.81% - 0.79% 0.73% -	0 0 0 - 0 - 0 0 0 - 0 0 0 0 -	0 0 0 - 0 - 0 0 0 - 0 0 0 0 -	0 0 0 - 0 - 0 0 0 - 0 0 0 0 -	0 0 0 - 0 - 0 0 0 - 0 0 0 0 -	N/A	N/A
							N/A	N/A
							N/A	N/A
							N/A	N/A
							N/A	N/A
							N/A	N/A
							N/A	N/A
							N/A	N/A
							N/A	N/A
							BES Engineering Corporation	Substantial relatedparty
							N/A	N/A
							N/A	N/A
							N/A	N/A
							N/A	N/A

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

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

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

• 111 -

X. Ratio of Combined Shareholding

Date: December 31, 2021; Unit: shares; %

Investee	Invested by	the Company	Invested by directors, supervisors, management, and enterprises controlled by the Company directly or indirectly	Invested by directors, supervisors, management, and enterprises controlled by the Company directly or indirectly	Combined Investment	Combined Investment
	Quantity	Ratio of Shareholding	Quantity	Ratio of Shareh olding	Quantity	Ratio of Sharehol ding
Kaohsiung Monomer Co., Ltd.	20,000,000	40％	0	0％	20,000,000	40％
Tsou Seen Chemical Industries Corporation	76,000,000	100％	0	0％	76,000,000	100％
CPDC Green Energy Technology Company	15,000,000	100％	0	0％	15,000,000	100％
Dingyue Development Co., Ltd.	2,558,000,000	100％	0	0％	2,558,000,000	100％
BES Twin Towers Development Co., Ltd.	491,216,357	100%	0	0％	491,216,357	100%
CPDC Investment (BVI) Ltd.	26,580,000	100％	0	0％	26,580,000	100％
Unichem Development Limited	324,684,262	100%	0	0％	324,684,262	100%
Weiqiang International Trading (Shanghai) Co., Ltd	20,000,000	44.52%	24,920,000	55.48%	44,920,000	100%
Jiangsu Weiming New Material Co., Ltd.	6,000,000	0.36%	1,682,000,000	99.64%	1,688,000,000	100%
Sheng Fong Construction Investment Co. Ltd.	458,637,500,00 0	100%	0	0%	458,637,500,000	100%
CKS Guard	1,440,000	24％	0	0％	1,440,000	24％
Jean Pacific Development Co., Ltd.	62,000,000	40％	0	0％	62,000,000	40％

Note : Equity Method Long Term Investments.

• 112 -

Chapter 4 Status of Fund Raising

I. Capital Stock and Shares

(I) Source of Capital Stock

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

• 113 -

Year and Month	Issuing Price	Authorized Capital Stock	Authorized Capital Stock	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Quantity	Amount	Quantity	Amount	Sources of Capital Stock	Offset by any property other than cash	Others
2012/12	10	2,600,000,000	26,000,000,000	2,319,989,666	23,199,896,660	Recapitalization of earnings	None	FSC approval letter under Ching-Kuan-Cheng Yi-Tze No. 1010046102 dated October 15,2012
2017/05	10	2,600,000,000	26,000,000,000	2,355,258,954	23,552,589,540	Convertible corporate bonds	None
2017/08	10	2,600,000,000	26,000,000,000	2,363,353,546	23,633,535,460	Convertible corporate bonds	None
2017/11	10	2,600,000,000	26,000,000,000	2,524,667,174	25,246,671,740	Convertible corporate bonds	None
2018/03	10	3,600,000,000	36,000,000,000	2,699,857,267	26,998,572,670	Convertible corporate bonds	None
2019/07	10	3,600,000,000	36,000,000,000	2,834,850,130	28,348,501,300	Recapitalization of earnings	None	Financial Supervisory Commission May 30, 2019, reporting effective. Approved by the Ministry of Economic Affairs on July 23, 2019 by letter No. 10801093580
2020/02	10	3,600,000,000	36,000,000,000	3,284,850,130	32,848,501,300	GDR	None	Approved by the Financial Supervisory Commission (FSC) on Nov 20, 2019 by letter No. 1080335763 Approved by the Ministry of Economic Affairs on February 24, 2020 by letter No.10901015330
2022/01	10	4,500,000,000	45,000,000,000	3,784,850,130	37,848,501,300	Capital increase in cash	None	Approved by the Financial Supervisory Commission on November 05, 2021 by letter No. 1100370634, Approved by the Ministry of Economic Affairs on Jan 06, 2022 by letter No. 11001243600

Note 1: Please specify the information for the current year available until the date of the publication of the annual report. Note 2: The capital increase part shall be identified by effective (approval) date and document No. additionally. Note 3: The stock issued at the price less than the par value shall be identified prominently.

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

Type of Shares	Authorized Capital Stock	Authorized Capital Stock	Authorized Capital Stock	Remark
	OutstandingShares(Issued)	Unissued Shares	Total
Common Stock	3,784,850,130	715,149,870	4,500,000,000

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

• 114 -

Information About Shelf Registration System

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

(II) Composition of Shareholders

March 29, 2022

Composition of Shareholders Quantity	Government Apparatus	Financial Organization	Other Juristic Persons	Individual	Foreign Institution or Foreigner	Total
Number of persons (persons)	3	17	424	295,673	343	296,460
Shareholding (shares)	335	8,971,924	454,847,747	2,918,315,382	402,714,742	3,784,850,13
Ratio of Shareholding (%)	0.00%	0.24%	12.02%	77.10%	10.64%	100.00%

(III) Diversification of equity

March 29, 2022

			March 29,2022
Range of Shares	Number of Shareholders	Status of Shareholding	Ratio of Shareholding
1~999	73,540	13,252,809	0.35%
1,000~5,000	139,327	320,477,274	8.46%
5,001~10,000	35,911	274,973,734	7.27%
10,001~15,000	15,740	191,481,711	5.06%
15,001~20,000	8,106	148,186,639	3.92%
20,001~30,000	8,840	218,795,532	5.78%
30,001~40,000	3,963	139,147,646	3.68%
40,001~50,000	2,615	120,415,092	3.18%
50,001~100,000	4,735	334,433,446	8.83%
100,001~200,000	2,192	297,357,360	7.86%
200,001~400,000	879	242,127,452	6.40%
400,001~600,000	255	122,696,610	3.24%
600,001~800,000	104	71,730,745	1.90%
800,001~1,000,000	58	52,111,516	1.38%
1,000,001 or more	195	1,237,662,564	32.69%
Total	296,460	3,784,850,130	100.00%

Preferential Stock	Preferential Stock	Preferential Stock	March 29, 2022
Range of Shares	Number of Shareholders	Status of Shareholding	Ratio of Shareholding
None
Total

(IV) Roster of Major Shareholders

March 29, 2022

• 115 -

Shares Name of Major Shareholder	Status of Shareholding	Ratio of Shareholding
BES EngineeringCo. Ltd	183,037,540	4.84%
Chao-Shun Hong	73,834,000	1.95%
Core Pacific Co. Ltd.	53,980,916	1.43%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard EmergingMarkets Stock Index Fund	49,367,041	1.30%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	46,897,204	1.24%
King’s Construction Co. Ltd	46,300,000	1.22%
HSBC in custody of Core Pacific - Yamaichi International (H.K.) Ltd. – Client A/C	31,857,048	0.84%
Core Pacific World Co.,Limited	30,649,620	0.81%
Ming-Da Lin	30,000,000	0.79%
Citibank (Taiwan) in custody of Polunin Developing Countries Fund,LLC	27,690,610	0.73%

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

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

Year Item Market value per share (Note 1) Highest Lowest Average	Year Item Market value per share (Note 1) Highest Lowest Average	Year Item Market value per share (Note 1) Highest Lowest Average	2020	2021	Ending April 30, 2022 (Note 8)
	Highest		12.05	17.30	14.25
	Lowest		6.28	9.00	11.60
	Average		8.46	12.47	12.36
Net value per share (Note2)	Before distribution		21.56	21.27	N/A
	After distribution		21.56	(Note 9)
EPS	Weighted average shares		3,273,784,556	3,299,918,623
	EPS (Note 3)		0.21	1.09
	EPS-adjustedretroactively (Note 3)		0.21	(Note 9)
Dividends per share	Cash Dividend		-	(Note 9)
	Free-Gratis dividends	Stock dividend from earnings	-	-
		Stock dividend from paid-incapital	-	-
	Retained dividend (Note4)		-	-
Return on investment	Price-EarningsRatio (Note 5)		40.29	11.44
	DividendYield (Note 6)		-	-
analysis	Cashdividend yield (Note 7)		-	-

• In the case of retained shares distribution or capital surplus shares distribution, please also disclose the information about the market value and cash dividend adjusted retroactively based on the number of shares as distributed.

• Note 1: Please identify the highest market value and the lowest market value of the common stock in various years, and calculate the average market price for each year based on the trading value and turnover for each year.

• Note 2: Please apply the number of shares already issued at the end of the year and identify the status of distribution according to the resolution made by the shareholders' meeting held in the following year.

• Note 3: If it is necessary to make adjustments retroactively due to Free-Gratis dividends, please identify the EPS before and after adjustment.

• Note 4: If the terms and conditions under which the equity securities are issued provide that the stock dividend retained in the year may be accumulated until the year in which there are allocable earnings available,

• 116 -

please disclose the retained stock dividend accumulated until the then year. Note 5: Price-Earnings Ratio=Average Closing Price Per Share in current year/Earnings Per Share Note 6: Dividend Yield=Average Closing Price Per Share in the current year/Cash Dividend Per Share Note 7: Cash Dividend Yields=Cash Dividend Per Share/Average Closing Price Per Share in the current year Note 8: Please identify the net value per share and EPS available in the latest quarterly financial information audited (reviewed) by the independent auditor before the date of publication of the annual report, and the information available until the date of publication of the annual report in the other sections.

Note 9: Earnings Distribution for 2021 is still under resolution by the general shareholders' meeting 2022

(VI) Dividend Policy and the Status of Implementation

1. Dividend policy in the Articles of Incorporation:

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

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

The special surplus referred to in item 2 that should be appropriated or reversed by law or the competent authority, including the net deduction of other equity and the net increase in the fair value of the real estate investment accumulated by the company, it shall be the same amount withdrawn of the previous period’s undistributed surplus and if there is still a shortfall, it shall be withdrawn from the amount of the current surplus.

The current surplus mentioned in Items 2 and 4 refers to the amount of the current after-tax net profit plus the amount of items other than the current after-tax net profit that included in the current undistributed surplus.

1. Allocation of dividends proposed at the shareholders' meeting:

According to the resolution of the Board of Directors on March 14, 2022, the Company proposed to distribute a cash dividend of NT 1,513,940,052 for ordinary shares (a cash dividend of NT 0.4 per share). After being approved by the shareholders' meeting the distribution of cash dividends date will be redetermine by the authorized board of directors.

If there is a subsequent change in the share capital due to cash capital increase, repurchase of the company's shares, transfer, conversion and cancellation of treasury shares, or conversion of corporate bonds and employee stock option certificates in accordance with

• 117 -

the issuance and conversion methods which resulting in changes in the dividend distribution rate to shareholders, it is recommended to authorize the chairman of the board to adjust the amount of dividends decided by the general meeting of shareholders according to the number of issued and outstanding shares published in the company's common stock register on the ex-dividend base date. The total amount of cash dividends distributed by individual shareholders is calculated up to 1NT, but not below 1NT.

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

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

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

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

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

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

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

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

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

The 2021 remuneration of employee is estimated by a ratio of the pre-tax income before minus the remuneration to directors and employee, if the estimates differ from the resolved remuneration on the day of the shareholders meeting, the shareholder's meeting shall refer to the new amount, and the amount adjusted in the year of the shareholders' meeting.

1. Information about the allocation of bonus resolved by the Directors' Meeting:

2. (1) The 2021 remuneration of employee and directors was ratified by the Board on March14, 2022. Allocation of remuneration is as below:

In accordance with the Articles of Incorporation, the Company proposed an employee allocation of 3%, with an amount of NT$124,488,194 allocated for employees, and directors' allocation of no more than 2%, or an amount of NT$82,992,129, both paid out in cash.

• (2) The amount of any employee remuneration distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee remuneration: N/A

• 118 -

• The actual allocation of employee bonus and remuneration to directors in the previous year (including the number, amount and stock price of allocated shares), the deviation between the actual allocation and the estimated figures, if any, and cause and treatment thereof:

• (1) The actual distribution of the 2021 directors' remuneration is the same as the proposed distribution approved by the Board of Directors.

• (2) No employee bonus was allocated in 2021

• (IX) Repurchase of the Company's shares:

II. Issuance of Corporate Bonds: None

III. Issuance of Preferred Shares: None.

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

Date of Issue Item	Date of Issue Item	Date of Issue Item	2020/01/10
Date of Issue			2020/01/10
Place of issue and trading			Luxembourg Stock Exchange
Total dollar amount of issue			US$129,240,000
Dollar amount per unit issued			US$7.18
Total number of issued units			18,000,000 units
Source of underlying securities			Ordinary shares of CPDC held by shareholders of the Company (handle in accordance with the Company's "Regulations Governing the Conversion Sales of Depositary Receipt)
Number of underlying securities			450,000,000 shares
Rights and obligations of holders of the depositary receipts			Same as ordinary shares
Trustee			N/A
Depositary institution			Citibank, N.A.-New York
Custodian institution			First Commercial Bank Custody Division of Trust Department
Balance of overseas depositary receipts not yet redeemed			0 units (Note 1)
Method of allocating relevant expenses during issue period and the of the overseas depositary receipts			Borne by the issuing company
Important Agreements in Depository and Custody Contracts			Refer to the depositary agreement and custody agreement for details
Market price per unit	2021	Highest	14.80
		Lowest	8.25
		Average	11.10
	As of March	Highest	11.70
		Lowest	10.37
	31, 2022	Average	10.99

Note 1: As of March 31, 2022, investors have redeemed 18,000,000 units.

V. Status of Employee Stock Option: None.

• VI. Restriction on Employee Share Subscription Warrant: None.

• 119 -

VII. Mergers and Acquisitions, or as Assignee of New Shares Issued by Another Company: None.

VIII. Implementation of Capital Utilization Plan

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

• (I) The contents of the 2020 overseas depositary receipt plan:

• Total funds required: RMB1,176,000 thousand (equivalent to US$177,002 thousand).

• Source of funds: Issuance of overseas depository receipts.

• 3.Project and the progress: Investment plan for reinvesting in Jiangsu Weiming Plant.

• (II) Implementation of funds:

Unit: NTD Thousand

							Unit: NTD Thousand
Project	Status of implementation		1st quarter of 2022		As of 1st quarter of 2022		Reasons for progress ahead or behind and improvement plan (Note 2)
			USD	Equivalent to NT$ (Note)	USD	Equivalent to NT$ (Note)
Reinvesting in the China subsidiary- Jiangsu Weiming	Amount of expense	Expected	0	0	154,000	4,851,000	Mainly due to the impact of the COVID-19 pandemic in 2020, the person in charge of the project could not enter the site for construction as planned, which caused the construction period to be delayed, so the payment of funds was delayed.
		Actual	4,693	147,830	71,539	2,253,479
	Execution progress (%)	Expected	0	0	87%	87%
		Actual	2.65%	2.65%	40.42%	40.42%
Total	Amount of expense	Expected	0	0	154,000	4,851,000
		Actual	4,693	147,830	71,539	2,253,479
	Execution	Expected	0	0	87%	87%
	progress (%)	Actual	2.65%	2.65%	40.42%	40.42%

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

Note 2: At present, the equivalent of US$57,701 thousand in unspent funds is deposited in the bank's foreign currency fixed deposit account (calculated at the exchange rate at the time of exchange) and the repurchase ticket.

• 120 -

Chapter 5 Operations Overview

I. Business Operations

• (I) Scope of business

• The scope of major business items

  • (1) Manufacture of petroleum, alkali-chlorine and phosphoric acid and derivatives.

  • (2) Import-export including storage, transportation, procurement, and sales of the products in the forgoing item and their raw materials, chemicals, and chemical materials.

  • (3) Business related to the procurement and sales in the foregoing item and the import and export trade of general commodities.

  • (4) Provision of related technical services of products (by-products) in the foregoing items, processes, and equipment operations.

  • (5) Research and development of chemicals.

  • (6) Trade, classified processing, and distribution of goods (clothing, electrical, books and stationery, auto products, houseware, and entertainment and leisure facilities).

  • (7) Restaurant and hotel operations.

  • (8) Design and sales of computer software and operation of data registration and processing.

  • (9) Development of commercial buildings; lease and sales of public housing; development of plant buildings on general industrial land; lease and sales of warehouses; and development, lease, sales, and management of industrial parks commissioned by industrial authorities.

  • (10) Operations of recreational areas and golf practice ranges (under five holes).

  • (11) Investment in parking lots within the scope of urban planning.

  • (12) Operation of gas stations; sales of diesel and dedicated LPG; and simple auto maintenance services (such as lubrication).

  • (13) Operation of new power plants.

  • (14) Undertaking environmental engineering work (removal, disposal and engineering of general waste, general industrial waste, and hazardous industrial waste).

  • (15) Import, export, and sales of feed and feed additives.

  • (16) Business items not prohibited or restricted by the law in addition to the approved business items.

• Major products and sales mix

Currently, the major products of this company include acrylonitrile (AN), caprolactam (CPL), nylon chip (NY6 or PA6), and o-phenylphenol (OPP). Other products include electricity, hydrogen cyanide (HCN); ammonium sulfate (AS), industrial sulfuric acid, refined sulfuric acid, and fuming sulfuric acid (oleum). The sales mix of these products in 2021 is as follows:

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Product Acrylonitrile (AN) and by-products Caprolactam (CPL) and by-products O-phenylphenol (OPP) Others	Sales Mix (%)
	40.1% 42% 1.0% 16.9%

3. Current products

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

1. New products to be developed

We will evaluate the development of plasticized raw materials, functional polymers, raw decomposition materials, nylon engineering plastics, cyclopentanone derivatives, optical application monomers, special chemical products, electronic grade high purity materials, bio-based materials, and biodegradable materials, lithium battery additives, solid state electrolytes and 5G high frequency substrate materials. We also use raw materials, products and by-products to develop high value-added products.

(II) Industry overview

1. Status and development

(1) Acrylonitrile (AN or ACN)

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

In 2021, the total AN demand in Taiwan was about 460,000 metric tons/year, which was close to that in 2020.

(2) Caprolactam (CPL)

The Company is the only CPL supplier in Taiwan. The CPL capacity in 2021 was 400,000 metric tons, and a ctual production reached 256,000 metric tons. Full supply to Taiwan without export, with domestic market share of 61%.As the impact of the COVID-19 has faded and demand from the textile industry has rebounded, Taiwanese manufacturers will performance better than expected in downstream draw and polymerization demand in 2021. CPL consumption in Taiwan will increase by 14% in 2021 compared to 2020, with an apparent demand of 420,000 metric tons per year.

Nylon demand in Asia continues to increase, particularly in China, where CPL capacity largely increased in 2012, and reduced its capacity growth rate due to oversupply in 2020. Capacity in 2021, reached a total capacity of 5.3 million metric tons. 2021 capacity increased by 1,000,000 tons, which is an increase of 23% versus 2020. In 2021,

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the total CPL demand in China was 3.94 million tons a year, while the 230,000 tons added capacity versus 2020 has shown a situation that oversupply continues. Demand for CPL in Asia is expected to rebound in 2022 due to the end of the epidemic in Europe and the U.S. and the recovery of the apparel industry. However, a large amount of new CPL capacity is expected to be added to the market in mainland China, and with no significant increase in the overall CPL market, operations are expected to be more challenging.

(3) Nylon Chips (NY6 or PA6)

Nylon chip production in Taiwan decreased in 2016~2020,with the epidemic slowing down, demand for nylon pellets grew in 2021. As the global economy recovered and joined the acquired Douliu nylon polymerization plant to show better vertical integration. With the increasing self-sufficiency of China’s production capacity, Taiwan’s exports to China have been gradually reducing; sales in other regions increased year by year, gradually shifting its dependence on the China market. The Company produces nylon chips with CPL through vertical integration for downstream suppliers to produce nylon threads, engineering plastics, and nylon films. By producing and selling nylon chips, the Company maintains a link to the nylon market. To cope with segmentation and heterogeneous growth of downstream nylon products, we continuously adjust the structure of our downstream customers and develop the development of CPDC’s special chemical products.

(4) O-phenylphenol (OPP)

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

(5) Engineering Plastic

The Qiaotou plant will be opened in November 2020 with a maximum annual capacity of 9,000 tons. With the advantage of raw materials, CPDC has strengthened the integration of upstream and downstream raw material supply chain to develop nylon 6 blended modified products. In response to the booming development of automotive electronics, semiconductor electronic materials and 5G Internet in the future, the Company aims to develop new engineering plastic blended products towards customized products, including nylon 66 Engineering Plastic, PC composite material, ABS composite material, PP composite material, PC/ABS composite material and We will capture the domestic market share and actively expand overseas markets, increase order volume, optimize formulation technology, reduce production costs, and increase gross profit.

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2. Supply Chain Relationships between Products

(1) Acrylonitrile (AN or ACN)

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

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

(2) Caprolactam (CPL)

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

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

• (3) Nylon Chips (NY6 or PA6)

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

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

1. Development Trend and Competition Status of Major Products

2. (1) Acrylonitrile (AN or ACN)

Favorable conditions:

• 1) NBR: Tire (NBR) demand will increase as the auto industry continues to grow in 2022, along with the steady growth in Medical Latex demand, especially in mainland China, where there is room for a significant growth. These will indirectly favor AN production and stabilize AN price.

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• 2) AM: As the demand for wastewater treatment and oil refinery treatment increases, AM demand is expected to increase to favor AN production and stabilize AN price.

• 3) ABS: The demand for home appliances and autos maintained growth for the company, indirectly favoring AN production and beneficial for stabilizing prices.

Unfavorable conditions:

• 1) AF: 2022 Annual AF Demand estimates are flat or slightly increased due to the recovery of the global economy. However, Polyester (polyester fiber) continues to be replaced by a small portion, which will slightly affect AN production and price stability.

• 2) China continues to expand its new capacity, causing the balance of supply and demand in AN industry and the impact on prices.

• 3) Continental conservation policy (such as tariff protection, or the inclusion of AN as a processing ban) has also had an impact on the operations of AN Asian producer, and China-US trade conflicts have also affected the mainland's demand.

• 4) China has reduced VAT to 13% since April 2019, and there are no tariff barriers to the export of competing factories in the future, and competition for export has intensified.

• Responsive action for unfavorable factors:

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

• (2) Caprolactam (CPL)

Favorable conditions:

• 1) Nylon is an industry for key development in China. Therefore, in addition to helping domestic nylon suppliers to expand production capability, the Chinese government has implemented tariff barriers and an anti-dumping tax to protect domestic nylon industry development. As this company is not on the anti-dumping tax list, our entry barrier is lower than other international competitors.

• 2) As the CPL process is complicated and operation is rather difficult, it is difficult for newcomers to control quality. Therefore, current suppliers can enjoy a short-term quality advantage.

• 3) The quality of Nylon produced in Taiwan still remains better than that in mainland China, thus in a continued demand growth environment, suppliers in Taiwan remain a preferred choice to customers.

Unfavorable conditions:

• 1) CPL capability in China expanded extensively, and supply was higher than demand in 2013. As CPL suppliers were competing for market share, price competition and profit reduction has occurred.

• 2) After PTA capability expansion in Asia in recent years, excessive polyester has

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substituted for nylon thread at a lower price point and higher market share. This affects the development of nylon thread in the general textile market.

Responsive action for unfavorable factors:

• 1) Focus on the top-down supply chain environment and changes in the market situation, acquired the Douliu nylon chips plant that can produce 80,000 tons/year, increase downstream customers and differentiation, flexibly adjust sales strategies and support downstream industries to increase operational performance, and face competition together.

• 2) Reinforce cultivation of engineering plastics and film markets to reduce the risk of selling products to a single market -- nylon textile market. Increase the flexibility of sales adjustments with the company's development and production of functional nylon chips.

• (3) Nylon Chips (NY6 or PA6)

Favorable conditions:

• 1) China is a developing country with a fast-growing economy. As the domestic demand and export growth increase, the textile industry expands its capability to accelerate nylon chip consumption.

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

Unfavorable conditions:

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

Responsive action for unfavorable factors:

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

• (4) OPP (ortho-phenylphenol)

Favorable conditions:

• 1) As the third-largest manufacturer in the world and the only supplier in Taiwan, the demand of downstream applications is mostly focused on the Asia region, which has a geographical benefit and can promote ortho-phenylphenol.

• 2) Using the novel catalyst technology and purification system to reduce energy and wastes emission, enhance product quality and efficiency.

Unfavorable conditions:

• 1) The main competitor has a market share of approximately 50% and enjoys preferential

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tax rates in major demand markets, which is unfavorable for Taiwan's special chemical products.

Responsive action for unfavorable factors:

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

1. Domestic Market Share of Major Products

In 2021, the domestic market share of CPL is about 61%; AN is about 35%, and nylon chips is about 21%, and OPP domestic market share is approximately 54%.

(III) Technology and R&D

1. R&D Expenses: FY2021: NT$461,963,000 By March 31, 2022: NT$77,148,000.

2. Major Research Outcomes

From catalyst development, process design, and plant construction, we can ensure 100% independent development for ortho-phenyl phenol (OPP). CPDC is also devoted to the development of OPP derivatives. OPP is an important fine organic chemical generally used to produce flame retardant, fungicide, preservative, coating, photosensitive materials, mordant or surfactant.

In engineering plastics compounding product series, R&D center devoted to new product development including nylon 66 engineering plastics, PC composites, ABS composites, PP composite materials, PC/ABS composite materials, and PLA, PBAT, PBS biodegradable materials, etc. Series of products have good mechanical properties, flame retardant, toughening resistance at low temperature, heat resistance, weather resistance, antibacterial, conductive, antistatic and other characteristics, can be used in 5G application materials, new energy vehicles, smart 3C, medical equipment, sport and leisure, home life and other industrial fields. R&D center is also capable of developing in-house product series with specialized formulas and building up customized product technologies according to customer needs.

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

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

3. Current Patent Status

In 2021, CDPC granted eight new patents and completed the licensing process. The patent applications not only focus on the improvement of the existing manufacturing processes, but also for technical protection and development of special chemical products planned.

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

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

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

• A. Petrochemical Business:

A-1 Short-Term Plans

• Optimize the competitiveness of our existing products: Increase the number of raw materials and product silos to enhance the flexibility of raw material procurement and product sales, invest in advanced manufacturing processes and improved production efficiency, continue to promote greenhouse gas reduction, energy saving and move toward a green factory with a circular economy.

• Develop new, diversified and high-value product markets: Continue to develop specialty chemicals, esters, electronic grade semiconductor products and functional polymers with a wide range of applications to enhance the added value of compound nylon. In addition, we are also working on the layout of biomaterials, degradable plastics, and the development of recycled plastics towards the green trend.

A-2 Long-Term Plans

• Build an Integrated One-stop Overseas Production Base: Accelerate the integration of production, avoid the impact of intermediate raw material price fluctuations and the effect of stable profits; the intermediate raw materials can be balanced locally and lower storage and transportation costs, integrating the energy and materials to reduce the energy consumption costs, and improve the advantage of cost competitiveness.

• Establish Smart Management Systems: The Multimedia Command Center implements various corporate resource management transformations tostrengthen management essence through AI technology applications and building a smart decision-making platform. We hope that by integrating data such as production monitoring, supply and demand analysis, market scheduling, price forecasting, business performance analysis, etc. for a long time, it will provide complete information to improve the quality of decision-making and establish an intelligent system.

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B. Land Development Business:

B-1 Short-Term Plans

• Aiming to develop and revitalize Taiwan's existing land assets:

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

• Aiming to enter overseas real estate development of emerging growth areas:

In response to the new business opportunities brought by the Belt and Road Initiative of Mainland China and the rise of emerging markets in Southeast Asia, we are actively exploring large areas of land with potential for development in Vietnam and Myanmar, and have acquired land either by ourselves or through strategic cooperation with existing undeveloped projects.

• B-2 Long-Term Plans

• Promote Taiwan Land-related Development Plans by Stages by Areas:

In response to and cooperating with the government's green energy conservation and urban development planning policies, in addition to enhancing the development planning strength for large-scale land development, we also aim to develop appropriate, safe and intelligent building products with green building, carbon-absorbing civilization, integration of existing ESG-related contents, metaverse and AI technology.

• Overseas Real Estate Development:

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

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II. Market and Sales Overview

• (I) Market Analysis of Major Products

[Acrylonitrile (AN or ACN)]

On the demand side, under the impact of the recovery after COVID-19, conservative view of the 2022 ABS market situation, estimated 2022 demand will be 2~3% than the 2021 micro-growth, the 2022 AF demand estimated flat or small increase, AM and NBR demand growth rate of about 4.5% and 3.5%, Overall AN demand growth rate of about 2~3%.

On the supply side, China is expected to add 1,040,000 tons of new capacity in 2021-2022. The AN industry will still have a short-term oversupply trend.

The Company has completed the operation test of bottleneck removal project, the capacity has reached about 230,000 tons, conducive to enhancing Taiwan's domestic market share, the overall consideration of supply and demand situation, the 2022 Asian start rate is expected to be less than 2021, the construction rate maintained at more than 80%. [Caprolactam (CPL)]

The Company's CPL production capacity in 2021 is 400,000 tons / year, and its main sales and supply target is Taiwan's domestic nylon polymer industry. Nylon polymer industry players are now going to China's nylon terminal market with sales of nylon chips and nylon filaments. In 2021, Taiwan's total CPL demand is about 420,000 tons / year, China's total CPL demand is 3.94 million tons / year, and the overall nylon industry demand exceeds 4.40 million tons / year. The demand for CPL in Taiwan and China decreased by approximately 19%.

Nylon is a key support industry in China. In order to improve the domestic self-sufficiency rate of CPL, the CPL production capacity has been significantly expanded in recent years. In 2021, new annual production capacity by 1,000,000 tons has been put into production. In 2022, it is expected that new capacity will still be concentrated in China. It is estimated that there will be 500,000 tons / year in new capacity, deployed at Changzhou Xuyang, 300,000 tons / year Henan Shenma of 100,000 tons/year, others 200,000 tons per year, and Ching Hwa Group to launch 100,000 tons / year.

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

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

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competition in China's export markets. It is expected that the challenges of the CPL market will continue in 2022, and some installations will respond conservatively.

[Nylon Chip]

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

Although the downstream demand of China's nylon industry chain continues to grow, the rapid expansion of production capacity increases the self-sufficiency rate, and the number of PA6 imports is expected to decline year by year. China's total imports of PA6 in 2021 were about 253,000 tons, compared with 2020 imports of 294,000 tons, a decrease of 14%. Among them, Taiwan's exports to China of 40,000 tons accounted for about 15% of China's total imports, which was a decline of nearly 28% from Taiwan's exports of China to about 54,000 tons in 2020. CDPC will reduce the dependence on China and look for markets outside China.

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

[OPP (ortho-phenylphenol)]

In 2021, the global epidemic intensified, and the panel and antimicrobial markets drove OPP demand to increase, resulting in steady growth in overall demand.Most of the new production capacity that was supposed to be launched was delayed until Q4 2021 due to the impact of the epidemic, so there is still a shortage of supply for the whole year.

Looking ahead, we will continue to develop new applications, and to avoid the impact of new capacity launch on prices, we will develop downstream applications independently and look for partners to maintain certain profitability. We will also strengthen the market deployment and promotion of high-end lens resins and antibacterial products to maintain the overall competitiveness of the industry chain.

[Engineering Plastic]

The downstream demand for nylon modified plastics in Taiwan is mainly in the markets of "automotive", "electronics and electrical appliances" and "consumer products". CDPC will take advantage of Nylon 6 raw material and vertically integrate the upstream and downstream, with Nylon 6 reinforcement as the main sales item, and promote it to the tool machinery and automobile/motorcycle industries, together with economical Nylon 6, and integrate the product portfolio to enhance the overall sales volume.

In response to the booming development of electric vehicles, automotive light weighting, semiconductor electronics and electrical appliances, and 5G Internet of Things industries, CDPC has developed a short-, medium-, and long-term strategy to apply for UL Yellow Card and IATF 16949 certification, and to cooperate with target customers to develop new materials, build brand quality trust, and create product differentiation.

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• (II) Major applications and processes of major products

• Acrylonitrile (AN or ACN)

• (1) AN is mainly used to produce acrylic fiber (AN fiber) and ABS plastics. Major downstream AN products include:

  • 1) AN fiber: Clothing fabrics, acrylic wool, woolen fabrics, stuffed toys, blankets, carpets, and decorative fabrics.

  • 2) ABS plastics: Briefcases, cosmetics containers, computers, mobile phones, home appliance shells, and auto parts.

  • 3) NBR: Oil-resistant and heat-resistant rubber.

  • 4) Acrylamide: oil displacement agent, wastewater treatment agent, soil water-absorbent agent, soil conditioner, paper pulp toughener, coating, coagulant.

(2) Process

Propylene Air Ammoxidation Acrylonitrile (AN) Ammonia anhydrous

1. Caprolactam (CPL)

2. 1) General textile fibers: Sports jackets, lining, stockings, and undergarments.

3. 2) Industrial fiber: Umbrella fabrics, fishing lines, fishing nets, tire carcass, handbags, nonwoven fabrics, and home carpets.

4. 3) Engineering plastics: Auto parts, high pressure pipes, surfing boards, and gears.

5. (2) Process

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

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

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

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• Nylon Chips (NY6 or PA6)

• (1) Nylon chip is a direct CPL downstream product. Its application is the same as in CPL.

• (2) Process

CPL Polymerization Nylon Chips

• (III) Supply and demand of major materials

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

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

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

Major suppliers in the past two years

Unit: NTD Thousand

									Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand
Item	2020				2021				As of Q1, 2022
	Supplier ID (Note 2)	Amount	Percentage in Annual Purchasing Amount	Relationship with Issuer	Supplier ID (Note 2、 3)	Amount	Percentage in Annual Purchasing Amount	Relationship with Issuer	Supplier ID (Note 2)	Amount	Percentage in Annual Purchasing Amount	Relationsh ip with Issuer
1	660	5,281,028	34.32		660	7,463,544	11.52		N/A
2	3002	1,090,071	7.09		3002	4,369,791	6.74
3	9357	836,515	5.44		9357	1,868,078	2.88
	Others	8,177,772	53.15		Others	51,093,608	78.86
	Net Purchase	15,385,386	100.00		Net Purchase	64,795,021	100.00

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

1. Replaced by supplier ID for business consideration.

2. Other items include the purchase of land for construction: 37,165,436

Major customers in the past two years

Unit: NTD Thousand

									Unit:NTD Thousand	Unit:NTD Thousand	Unit:NTD Thousand	Unit:NTD Thousand
Item	2020				2021				As of Q1, 2022
	Customer ID (Note 2)	Amount	Percentage in Annual Sales Value	Relationship with Issuer	Customer ID (Note 2)	Amount	Percentage in Annual Sales Value	Relations hip with Issuer	Customer ID (Note 2)	Amount	Percentage in Annual Purchasing Amount	Relations hip with Issuer
1	1001	2,364,508	13.45		1001	4,006,171	11.39		N/A
2	1011	1,457,165	8.29
3	1020	1,271,244	7.23
4	1018	882,407	5.02
5							-
	Others	11,607,768	66.01		Others	31,157,209	88.61
	Net Sales	17,583,092	100.00		Net Sales	35,163,380	100.00

Note: 1. Cause of increase and reduction: Change of market price and sales quantity. 2. Replaced by customer ID for business consideration.

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

Quantity: Metric tons Unit: NTD Thousand

				Quantity: Metric tons Unit:NTD Thousand	Quantity: Metric tons Unit:NTD Thousand	Quantity: Metric tons Unit:NTD Thousand
Year Production Major Product (or department)	2020_Consolidated			2021_Consolidated
	Capacity	Quantity	Value	Capacity	Quantity	Value
Acrylonitrile (AN)	220,000	203,797	14,563,158	220,000	209,188	29,284,230
Caprolactam (CPL), Nylon Chips	408,000	203,423		450,000	376,137
O-phenylphenol(OPP)	2,500	2,151		2,500	2,405
Other By-products
Total			14,563,158			29,284,230

Note: Capability refers to production quantity in normal operation with the current production equipment after measuring necessary down time and holidays.

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

					Quantity: Metric tons Unit: NTD Thousand 2021_Consolidated Domestic sales Exportsales Quantity Value Quantity Value 138,286 21,910,225 97,974 13,253,155 217,546 59,640 354 1,955 21,910,225 13,253,155	Quantity: Metric tons Unit: NTD Thousand 2021_Consolidated Domestic sales Exportsales Quantity Value Quantity Value 138,286 21,910,225 97,974 13,253,155 217,546 59,640 354 1,955 21,910,225 13,253,155	Quantity: Metric tons Unit: NTD Thousand 2021_Consolidated Domestic sales Exportsales Quantity Value Quantity Value 138,286 21,910,225 97,974 13,253,155 217,546 59,640 354 1,955 21,910,225 13,253,155	Quantity: Metric tons Unit: NTD Thousand 2021_Consolidated Domestic sales Exportsales Quantity Value Quantity Value 138,286 21,910,225 97,974 13,253,155 217,546 59,640 354 1,955 21,910,225 13,253,155
Year Sales Major Product (ordepartment)	2020_Consolidated				2021_Consolidated
	Domestic sales		Exportsales		Domestic sales		Exportsales
	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
AN,acetic acid	132,828	11,238,764	109,137	6,344,328	138,286	21,910,225	97,974	13,253,155
Caprolactam (CPL), Nylon Chips	153,257		14,999		217,546		59,640
O-phenylphenol(OPP)	43		1,905		354		1,955
Other By-products
Total		11,238,764		6,344,328		21,910,225		13,253,155

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III. Employees

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

	Mar 31,2022	Mar 31,2022	Mar 31,2022	Mar 31,2022
	Year	2020	2021	As of Mar 31st,2022
Employees	Taipei Office	359	328	314
	Toufen Plant	362	357	357
	Dashe Plant	280	271	264
	Hsiaokang	272	278	273
	Qiaotou Plant	26	33	35
	Douliu Plant	50	55	55
	Total	1349	1322	1298
Average Age(year)		38.60	38.90	39.13
Average	Service Length (year)	8.53	8.79	9.00
Education	PhD	15	11	10
	Master’s	323	309	303
	Bachelor's	877	883	869
	Senior High and below	134	119	116

IV. Environmental Protection Expenses

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

Unit: NTD Thousand

		Unit: NTD Thousand
	2020	2021
Pollution (type and	Violation of the Water Pollution	Violation of the Air Pollution
severity)	Control Act and Air Pollution Control	Control Act and Waste
	Act.	Disposal Act.
Compensation Party or	Local environmental	Local environmental
Punishing Unit	protection authorities	protection authorities
Fine Amount	390	1,018
Other Loss	___	___

• (II) Responsive Action

• Improvement Plan

(1) Aggressively comply with environmental protection laws and regulations.

• (2)Strengthen monitoring treatment and monitoring equipment maintenance and troubleshooting.

• 137 -

2. Estimated environmental protection expenses in the next three years

Unit: NTD Thousand

			Unit: NTD Thousand
	2022	2023	2024
Expense for purchasing	Prevention and	Prevention and
pollution prevention equipment	improvement of air, water, soil, and
	underwater pollution in
	all plants
Expected improvement	Pollution and waste	Pollution and waste
	reduction and
	compliance with
	environmental protection standards
Amount	NT$29.715 million	NT$32.687 million	NT$35.956 million
Note: The 2022 expenses at NT$29.715 million is a projected amount; the amount in the next two years is also projected.

3. Impact after improvement.

Unit: NTD Thousand

			Unit: NTD Thousand
	2022	2023	2024
Impact on net profit	Depreciation increases	Depreciation increases	Depreciation increases
	by about NT$2,701 thousand/year; repair and maintenance increases by about NT$270.1 thousand/year.	by about NT$2,972 thousand/year; repair and maintenance increases by about NT$297.2 thousand/year. by about NT$3,269 thousand/year; repair and maintenance increases by about NT$326.9 thousand/year.
Impact of competitive	Compliance with environmental protection standards Fulfilment of CSR	Compliance with environmental protection standards Fulfilment of CSR Compliance with environmental protection standards Fulfilment of CSR	Compliance with
position

Note: Depreciable assets will be depreciated over 10 years. Values for 2022, 2023 and 2024 are estimates.

• 138 -

V. Labor-Management Relations

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

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

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

1. Employee welfare benefits:

The employee welfare benefits available in 2021:

The employee activities in 2021

Item	Welfare benefits (Bonus for Chinese New Year and major festivals, year-end party lottery, cash gift for birthday, and other allowances) (NTD)	Cultural and entertainment activities (travel allowance, ball games, mountain-climbing, and other employee activities) (NTD)
Taipei Office	5,564,086	200,731
Toufen Plant(note)	10,695,349	265,829
Dashe Plant	10,453,700	312,553
Hsiaokang	7,272,317	214,359
Qiaotou Plant	563,200	26,860
Total	34,548,652	1,020,332

Note: this includes data of Douliu Plant

• 139 -

2. Continuing Education/Training

The employee training hours and status of budget thereof in 2021:

Information about the employees' training in 2021

Item	Total TrainingHours	Average Hour per Person	Budget Implementation Efficiency
Taipei Office	5,439	16.58	39.8%
Toufen Plant(note)	17,912	43.48	87.7%
Dashe Plant	16,172	59.68	58.3%
Hsiaokang	9,216	33.15	55.5%
Qiaotou Plant	928	28.11	50.8%

Note: this includes data of Douliu Plant

Incentive and subsidy to employees who attended the continuing education programs to learn other languages or various professional programs in 2021

Item	Subsidy (NTD)
Taipei Office	0
Other plants	85,996
Total	85,996

3. Retirement system

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

Information about employees' pension and retirement in 2021

Item	Amount or number ofpersons
Retirement Account Opened by Labor Pension Supervisory Committee at Bank of Taiwan	NT$205,885,000
Number of retired employees 2021	22persons

(II) Labor-management agreements and employees' interest and right protection measures:

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

2. 140 -

Business Conduct Policy

I. Fair trade policy

1. The Company complies with the Fair-Trade Act (the same act applicable in any of offshore areas) consistently. The Company understands that to build the goodwill requires the efforts through years, while the goodwill earned by efforts through years might be ruined due to one single person's conduct. For fair trade, any colleague's misconduct may cause significant expenses and material litigation to their supervisors as well as the Company and the management, and fine, injunction and even imprisonment sentence.

2. The fair-trade policy aims at maintaining a free competition system among enterprises. The fair-trade policy is established to enable the public to deserve the best protection under fair competition if no conspiracy or collusion is existing among the competitors. It is indisputable that the Fair-Trade Act benefits the maintenance of the economic, political and social groups. The Company's Administration Dept. has also restated its confidence in the fair-trade philosophy. Therefore, under the principles encouraged to seek profit through legal and valid means, any acts of the Company are conducted pursuant to laws. Particularly, reaching agreement or understanding against fair trade is against the Company's policy.

3. The Company's executive officers at each level shall educate colleagues to comply with the fair-trade requirements, so that colleagues may know how to deal with any situation involving fair trade issues.

II. Conflict of Interest Policy

1. Each colleague shall be obligated to deal with the relationship between them and the Company, honestly and fairly. None of the colleagues may engage in any activities against said obligation for personal interest or allow the circumstances against the obligation to exist.

2. If, in any transactions involving the Company and any colleague or a third party, the colleague or his/her spouse or direct blood relative within the second pillar under the Civil Code might seek profit from, the conflict of interest should be held sustained:

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

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

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

2. 141 -

III. Payment and Spending Policy

1. The bank account opened by the Company or the fund owned by the Company shall not be disclosed (made public) or recorded without justified reasons.

2. All of the Company's payment or spending records shall be able to precisely reflect the purchasing behavior or fact for the spending.

3. None of the colleagues may make any payment, grant any gift or money, service or valuable goods, privately and directly or indirectly, that cause adverse influence to the Company or its stakeholder.

IV. Non-Disclosure and Non-Competition

1. The employee shall keep confidential any of the Company's technical or business secrets accessed by him/her in the duration of his/her employment in the Company and any information to be kept confidential under the contract signed by the Company and a third party, in the duration of the employment. The employee shall not utilize confidential information to seek his/her personal interest or engage in the same business, or disclose the same to a third party without authorization.

2. The employee shall not publish the confidential information referred to in the preceding paragraph, or disclose or utilize to engage the same business as the Company with the intent to seek illegal profit, upon his/her resignation.

3. The computer program, literal work and graphic work created by the employee in performing his/her duty under the Company's planning in the duration of his/her employment shall be vested in the Company as agreed. Without the Company's prior written consent, the employee shall not use the same arbitrarily within the effective time limit defined in the Copyright Act.

4. V. Internal Information Control Policy

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

• VI. Compliance

• When granting some voluntary authority, the colleague and agent shall note and advise the licensee of compliance with the "Business Conduct Policy".

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

• 142 -

VII. Communication and Negotiation

1. Each supervisor and colleague shall work together with each one to create and acknowledge the importance of establishment of a highly efficient team and shall get along with each other well. Should any colleague have any problem, private or for business, he/she may talk with his/her supervisor, and the supervisor shall communicate with the colleague from time to time to seek the resolution together with the colleague, to boost the team's performance.

2. The Plant and company labor-employer meetings will serve as a communication channel between labor and the employer. In addition to the representatives from labor and the employer, any colleagues who have positive suggestions may propose their suggestions via the representatives, so that both parties may research and resolve the same at the meetings to reach agreement and implement resolutions.

3. Should any colleague have any question about the personal interest or management system, he/she may learn about the same through his/her supervisor or the HR unit and communicate through the administrative system channels from time to time. He/she may also communicate with the Plant and company welfare committees about employee fringe benefits or cultural and entertainment activities at any time.

4. The whistleblower reporting system is designed to enable colleagues to report his/her problems at work and avoid the supervisor's adverse influence. The colleague may maintain his/her interests and rights through this channel.

5. The colleague and supervisor may also take advantage of other administrative measures, such as nomination system, personal interview, meetings, and quarterly and yearly performance appraisal, as communication channels. If any colleague cannot apply said communication channels as the case involves any personal rule violation or delinquency, he/she shall also present the relevant evidence supported by the facts. In case of any false accusation, intentional harassment and alienation, the Company will ignore the complaint and the recipient may tear down the complaint directly but shall not circulate the same, unless some concrete fact and evidence show that the anonymous complainant is one of the Company's colleagues or any person instigated by the complainant, in which case the colleague and the person shall be disciplined pursuant to the Articles of Incorporation.

6. Said communication channels under the normal system will be protected and valued. Aside from the above-mentioned policies, any activity engaged in attacking the Company's operation or failure to seek personal interest and solution through legal procedure under the name of any outsider, authority or group or by taking advance of or colluding with outsiders, authority or groups shall be held against the Company's policy and material requirements.

VIII. Enforcement Rules

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

• 143 -

report again. The written report shall contain the following:

1. The colleague has read the Company's:

Fair trade policy

Conflict of Interest Policy

Payment and Spending Policy

Non-Disclosure and Non-Competition

Internal Information Control Policy

Compliance

Communication and Negotiation

1. The colleague has understood and is willing to comply with said policies;

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

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

Business Conduct Policy Compliance Certificate (for the general colleagues)

It is certified that:

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

Fair trade policy

Conflict of Interest Policy

Payment and Spending Policy

Non-Disclosure and Non-Competition

Internal Information Control Policy

Compliance

Communication and Negotiation

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

(Date) (Printed Name)

Business Conduct Policy Compliance Certificate (for supervisors)

It is certified that:

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

2. 144 -

trade policy

Fair trade policy

Conflict of Interest Policy

Payment and Spending Policy

Non-Disclosure and Non-Competition

Internal Information Control Policy

Compliance

Communication and Negotiation

1. The Business Conduct Policy has been read by me and the other colleagues under my supervision.

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

(Date) (Printed Name)

1. Each of the Company's plants has entered into a group agreement with various labor unions. The Company has also defined its work rules, which were reviewed and approved by the city government, and made public, and distributed to all colleagues via email. The Company will call a labor-employer meeting to negotiate labor-employer issues once per quarter to facilitate the cooperation between labor and the employer and to create and maintain a harmonic relationship between labor and employer and create a safe and friendly working environment.

2. Losses suffered by the Company due to dispute over labor and employer relationships in the most recent year until the date of publication of the annual report are as follows:

There were no labor disputes in 2021.

• 145 -

VI. Cyber Security Management

• (I)Describe the information security risk management framework, information security policies, specific management plans and resources devoted to information security management, etc.

• Cyber Security Management framework

  • The Information Technology Division is an independent department responsible for coordinating and implementing the company's information security policy, promoting information security information to enhance employees' awareness of information security, and continuously collecting and improving technologies, products or procedures for the performance and effectiveness of the organization's information security management system.

  • The audit office conducts annual information security audits in accordance with the internal control system - information control operations - computerized information system processing operations and evaluates the effectiveness of internal controls over the company's information operations.

• Cyber Security Management Policy

  • The Company has established an internal control system for information control operations - computerized information system handling operations, network security implementation details, and other information security management measures.

    • (1) Ensure the confidentiality, integrity, and availability of information assets.

    • (2) Ensure that data access is regulated according to departmental functions.

    • (3) To ensure the continuous operation of the information system.

    • (4) To prevent unauthorized modification or use of data and systems.

    • (5) Perform regular information security audits to ensure information security is implemented.

• Specific management solutions

  • To promote information security governance in accordance with information security management policies and internal control systems, we will continue to optimize and revise management practices and implement various information security management efforts.

    • (1) Network Information Security Control

      • A. Information security protection measures (firewall, anti-virus, intrusion detection system, email protection)

      • B. Critical systems and systems with cloud sandbox information security software to strengthen the level of protection

      • C. Implement network services in accordance with network security implementation rules

• 146 -

   - D. Implement user network application control
  
   - E. Regular information security scanning and correction (system vulnerability, virus, correction files)
  
   - F. F. Continuously monitor the abnormal behavior of each information system
  
   - G. Occasional inspection of network service logs and tracking of abnormalities
  

  • (2) Data access control

    • A. All kinds of information systems and equipment are assigned with special guards

    • B. Electronic forms are used to strengthen the access control of each information system and remote VPN connection.

    • C. Conduct regular inventory and verification of access rights of various accounts

    • D. Introduce encryption protection mechanism for sensitive data

    • E. Erase sensitive data before equipment retirement

  • (3) Disaster recovery

    • A. Establish a backup recovery management mechanism for the information system

    • B. Establish a 3-2-1 rule heterogeneous and heterogeneous backup mechanism

    • C. Regularly review the emergency response plan and conduct recovery drills

    • D. Regularly review backup control measures and continuously optimize them

  • (4) Information Security Promotion and Audit

    • A. Annual information security audits

    • B. Regularly conduct internal information security setting audits

    • C. Information security log maintenance management

    • D. Information security promotion for new employees

    • E. Occasional information security promotion to strengthen information security awareness

• Investing resources in cyber security management

• In addition to promoting cyber security management in accordance with the information internal control system, the Company cooperates with the auditing unit to arrange annual information security audit plan and continuously updates the information security management related methods.

• 147 -

• We have set up an alert mechanism for each important information system. When there is an abnormal stoppage of service or a suspicious event, we will immediately notify the responsible supervisor and business manager and conduct information security analysis to respond to possible information security threats in a timely manner.

• In addition to the routine information security training courses for new employees, the company also conducts regular information security education training and information security promotion to enhance employees' information security awareness.

• The company continues to optimize the network architecture, update the access control authentication host and raise the information security level of .... A summary of the year's activities is as follows：

• (1) Renew core network equipment and introduce SDWAN network architecture to strengthen our network management capability and build a flexible application network service and flexible management model.

• (2) Completely renewed the company's certified hosts and completed the construction of A-S (Active-Standby) architecture for hosts to optimize the continuous availability and service resilience of information services.

• (3) Introduce a network vulnerability detection and scanning system to conduct quarterly system vulnerability scans for key systems and refer the system repair or update to the system manager based on the scan results to reduce attackable vulnerabilities or loopholes and ensure the stability of key systems. In the future, we will introduce the vulnerability risk control system and expand it to all plants in the company to effectively manage the progress of system vulnerability detection and repair.

• (4) Update key information security equipment and optimize the depth of user behavior detection and management to reduce the information security risk of internal colleagues' network behavior.

• (5) Promote the company's account privilege control optimization project to enhance data visibility, real-time and management flexibility to provide department heads and information management staff with management control.

• (6) To reduce the risk of social attacks on emails, we update the email filtering equipment and optimize the management rules of external emails to enhance the awareness of information security of company employees in alert emails.

• (7) To enhance the confidentiality and traceability of confidential documents, we introduced a file encryption protection system to provide internal control of confidential documents during their life cycle and to provide post-checking needs for auditing units.

• 148 -

• (II) The Company shall set forth the losses, possible impacts and responses to major information and communications security incidents in the most recent year and up to the date of printing of the annual report, and if the losses cannot be reasonably estimated, the facts that cannot be reasonably estimated.

The company hasn’t suffered from any major cyber security incidents that result in business damage. In the future, we will continue to strengthen our cyber security management defense capability and enhance cyber security awareness of our employees. We will regularly hold implement recovery plan drills every year to protect our important systems and data security.

VII. Major Contracts

(I) Engineering Contract:

Nature	Contract Party	Duration	Summary Content	Restricted Clause
Construction Project of CHDM Trial Construction Project	Chung Yen Engineerin g Co., Ltd.	2020.04.01~ 2021.02.28	According to the Board of Directors' approval of the "Construction Project of CHDM Trial Construction Project", the Company planned to build a trial plant to verify the efficiency of related experimental processes and collect manufacture data, which will be used as a basis for commercialized manufacture design and investment efficiency evaluation.	None
R&D Center Design and Supervision of the Construction Project of Fine Chemical Plant - Phase 0 Construction Project	CPDC Green Energy Technology Company (formerly CDPC Engineering Corp.)	2020.02.13~ 2021.09.11	The construction and design of the plant were conducted according to the investment plan for the "Construction Project of Fine Chemical Plant - Phase 0 Construction Project" approved by the Board of Directors.	None

(II) Supply Contract

1. With respect to the major products of the Company, such as AN and CPL, the Company has created a permanent and stable sales relationship with the Company's downstream customers, e.g., CHIMEI, Grand Pacific Petrochemical Corporation, NANTEX Industry Co., Ltd., Li Peng Enterprise, Zig Sheng Industrial Co., Ltd. and Chain Yarn Co., Ltd., and entered into the supply contract with some of them.

2. The main raw materials needed and procured by the Company locally include propylene, sulfur and industrial natural gas, for which the Company has entered into the long-term purchase contract with CPC. To procure liquid caustic soda, the Company entered into a purchase contract with Taiwan Chlorine Industries Ltd.; raw materials that have entered into long-term contracts with overseas suppliers include phenol and ammonia anhydrous.

3. 149 -

(III) Technical Cooperation Contract

Nature	Contract Party	Duration	SummaryContent	Restrictive covenant
Outsourced Research Project	Industrial Technology Research Institute	2020.01.01~ 2021.10.30	Phenolic derivative products miniature reaction process feasibility study cooperative development	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Industrial Technology Research Institute	2020.01.01~ 2021.12.31	Aldehyde Group Production Process Technology Patent License	The intellectual property ownership shall be determined subject to contract
Collaboration Project	Chemtex Global	2020.02.14~ 2021.03.10	Ester process Cooperative Development Contract	The intellectual property ownership shall be determined subject to contract
Outsourced Analysis Project	Far East University	2020.03.01~ 2021.02.28	FEU Industry Academia Cooperation Project Contract I	The intellectual property ownership shall be determined subject to contract
Outsourced Analysis Project	Far East University	2020.03.10~ 2021.03.15	FEU Industry Academia Cooperation Project Contract II	The intellectual property ownership shall be determined subject to contract
Outsourced Analysis Project	Far East University	2020.03.01~ 2021.03.15	FEU Industry Academia Cooperation Project Contract III, IV	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Industrial Technology Research Institute	2020.04.01~ 2021.04.30	C Product Test Factory Basic Design Outsourced Research Contract.	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Yunlin University of Science and Technology	2020.07.01~ 2021.06.30	Nylon Key Organic Monomer Production Integration and Effectiveness Cooperation Contract.	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Industrial Technology Research Institute	2020.07.01~ 2022.10.31	T Test Factory Basic Design Outsourced Research Contract	The intellectual property ownership shall be determined subject to contract
Collaboration Project	Tokyo Institute of Technology	2020.08.01~ 2021.07.31	Cooperative Research Agreement	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Chiao Tung University	2020.09.01~ 2021.08.31	Phenolic Products Antibacterial testing and experiment method development	The intellectual property ownership shall be determined subject to contract

• 150 -

Nature	Contract Party	Duration	SummaryContent	Restrictive covenant
Outsourced Research Project	China Wenzhou Chemicals Ltd.	2020.09.28~ 2024.09.28	Polymer Technology Packaging and Detailed Design Contract	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Cheng Kung University	2020.11.15~ 2021.11.14	Organic acid anhydride Product Analysis Development	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Chung Hsing University	2020.12.01~ 2021.11.30	Genetic Engineering Development of Bacterial Transformation Platform	The intellectual property ownership shall be determined subject to contract
Collaboration Project	Han Gene Technologies, Ltd.	2021.01.01~ 2021.03.31	GPC Method Development Contract	The intellectual property ownership shall be determined subject to contract
Collaboration Project	Dalian Institute of Chemical Physics, Chinese Academy of Sciences	2021.01.01~ 2021.12.31	R&D of acid catalytic materials	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Chung Hsing University	2021.01.01~ 2022.12.31	Production of acrylamide by enzyme	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Sun Yat-sen University	2021.01.01~ 2021.12.31~	Research and development of organic compounds	The intellectual property ownership shall be determined subject to contract
Collaboration Project	Far East University	2021.02.01~ 2022.01.31~	Advanced Composite Materials Development Program	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Yunlin University of Science and Technology	2021.09.01~ 2022.08.31~	Hazards assessment of propylene ring special chemical reaction process units	The intellectual property ownership shall be determined subject to contract
Collaboration Project	National Tsing Hua University	2021.11.01~ 2022.12.31	National Tsing Hua University Industry-Academic Cooperation Agreement	The intellectual property ownership shall be determined subject to contract
Collaboration Project	NCKU Research & Development Foundation	2021.11.01~ 2022.12.31	Research project on the development of new hole carrier pelletizing method	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Taiwan Semiconductor Research Institute, TSRI	2021.09.01~ 2022.08.31	Contract for Catalyst Material Testing and Analysis Services	The intellectual property ownership shall be determined subject to contract

• 151 -

Nature	Contract Party	Duration	SummaryContent	Restrictive covenant
Outsourced Research Project	Light-Salt Testing Co., Ltd.	2021.01.01~ 2022.12.31	Contract for chemical structure identification and testing services	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	National Cheng Kung University	2021.01.01~ 2021.12.31~	Biomonad recombinant microbial strain development and small volume production	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	National Cheng Kung University	2021.07.01~ 2022.06.30	Development of special additives and polymers for new morphological materials	The intellectual property ownership shall be determined subject to contract
Outsourced Research Project	Plastics Industry Development Center	2021.10.01~ 2022.11.30	Green-friendly recycled material application testing and evaluation	The intellectual property ownership shall be determined subject to contract

(IV) Long-Term Loan Contract

Nature	Contract Party	Duration	Summary Content	Restrictive covenant
Long-Term Loan	First Commercial Bank	2021.04-2024.04	Roll over & Working capital increase	None
Long-Term Loan	Bank of Taiwan	2019.07-2022.07	Roll over & Working capital increase	None
Long-Term Loan	Taichung Commercial Bank	2019.11-2022.10	Roll over & Working capital increase	None
Long-Term Loan	Mega International Commercial Bank	2020.02-2023.02	Roll over & Working capital increase	None
Long-Term Loan	Mega International Commercial Bank	2020.10-2025.10	Roll over & Working capital increase	None
Long-Term Loan	CTBC Bank Co., Ltd. ESG	2020.07-2023.07	Funds required for the purchase of machinery and equipment	None
Long-Term Loan	Syndicate loan by financial institutions, including Shin Kong Commercial Bank	2020.03-2023.03	Roll over & Working capital increase	None
Long-Term Loan	Syndicate loan by financial institutions, including Mega International Commercial Bank	2021.07-2026.07	Roll over & Working capital increase	None
Long-Term Loan	Bank of Kaohsiung Co., Ltd	2021.09-2024.09	Roll over & Working capital increase	None
Long-Term Loan	Sunny Bank Ltd	2020.09-2022.09	Roll over & Working capital increase	None
Long-Term Loan	Farglory Life Insurance Inc.	2021.09-2026.09	Roll over & Working capital increase	None
Long-Term Loan	Taiwan Life Insurance Co., Ltd.	2021.04-2026.02	Roll over & Working capital increase	None
Long-Term Loan	Land Bank of Taiwan	2021.09-2041.09	Acquisition of funds required for the Douliu Plant of Chain YarnCO.,LTD	None

• 152 -

Chapter 6 Financial Status

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

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

Parent Company Only Condensed balance sheet - IFRSs

Unit: NTD Thousand

Year Item	Year Item	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial Information ending March 31,2022
		2017	2018	2019	2020	2021	N/A
CurrentAssets		14,685,286	15,148,831	8,805,200	8,180,109	10,741,781
Property, plant and equipment		14,240,101	14,585,386	13,094,097	15,208,808	16,057,288
Netinvestment property		38,226,532	38,350,359	36,716,577	37,612,887	38,850,641
Intangible assets		-	-	-	-	-
Otherassets		13,034,360	17,793,286	33,046,966	39,416,030	51,524,271
Total assets		80,186,279	85,877,862	91,662,840	100,417,834	117,173,981
Current liabilities	Before distribution	4,030,444	6,049,686	7,503,573	7,621,190	5,986,588
	After distribution	4,030,444	7,399,615	8,489,028	7,621,190	Note 1
Non-currentliabilities		13,848,110	12,931,286	17,042,498	21,984,002	30,680,460
Total liabilities	Before distribution	17,878,554	18,980,972	24,546,071	29,605,192	36,667,048
	After distribution	17,878,554	20,330,901	25,531,526	29,605,192	Note 1
Equity attributable to the parent company		62,307,725	66,896,890	67,116,769	70,812,642	80,506,933
Capitalstock		26,998,573	26,998,573	28,348,502	32,848,502	37,848,502
Capitalsurplus		1,260,386	1,260,386	1,286,700	583,815	1,454,301
Retained earnings	Before distribution	35,229,878	40,374,642	39,406,739	39,200,786	42,729,935
	After distribution	35,229,878	37,674,784	38,421,284	39,200,786	Note 1
Otherequities		(1,181,112)	(1,736,711)	(1,925,172)	(1,820,461)	(1,525,805)
Treasury stock		-	-	-	-	-
Non-controlling equity		-	-	-	-	-
Total equity	Before distribution	62,307,725	66,896,890	67,116,769	70,812,642	80,506,933
	After distribution	62,307,725	65,546,961	66,131,314	70,812,642	Note 1

Note 1: Earnings Appropriation for 2021 shall be ratified at the 2022 general shareholders' meeting.

• 153 -

Parent Company Only Condensed Income Statement - IFRSs

Unit: NTD Thousand

	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand
Year Item	Financial information in the most recent five years
	2017	2018	2019	2020	2021	Financial Information ending March 31, 2022
Operating revenue	32,160,867	36,969,800	26,797,793	14,797,092	30,564,118	N/A
Gross profit	4,630,315	4,312,688	1,066,769	(484,983)	4,378,437
Operating profit or loss	3,471,361	3,017,875	(133,109)	(1,634,790)	2,834,547
Non-operating revenue and expense	2,803,380	1,618,395	1,962,149	1,719,346	1,107,579
Net profit (loss) before tax	6,274,741	4,636,270	1,829,040	84,556	3,942,126
Net profit of continuing department	6,091,656	4,290,269	1,738,449	680,989	3,603,208
Loss of discontinued department	-	-	-	-	-
Net profit (loss)	6,091,656	4,290,269	1,738,449	680,989	3,603,208
Other comprehensive income (after tax)	356,539	(526,461)	(194,955)	203,617	220,597
Total comprehensive income	6,448,195	3,763,808	1,543,494	884,606	3,823,805
Net profit attributable to parent company	-	-	-	-	-
Net profit attributable to non-controlling equity	-	-	-	-	-
Total comprehensive income attributable to parent company	-	-	-	-	-
Total comprehensive income attributable to non-controlling equity	-	-	-	-	-
EPS	2.55	1.59	0.61	0.21	1.09

• 154 -

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

Consolidated condensed balance sheet - IFRSs

Unit: NTD Thousand

		Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand	Unit: NTD Thousand
Year Item		Financial information inthemostrecent five years
		2017	2018	2019	2020	2021	Financial Information ending March 31, 2022
CurrentAssets		18,839,149	21,622,587	23,986,973	27,089,168	57,355,445	N/A
Property, plant and equipment		16,935,430	19,501,534	20,275,279	23,226,955	25,333,641
Net investment property		38,226,532	38,350,359	36,719,706	37,626,827	38,867,067
Intangible assets		24,338	188,061	177,464	159,173	172,308
Otherassets		7,603,511	10,042,413	15,309,068	16,807,867	13,726,747
Totalassets		81,628,960	89,704,954	96,468,490	104,909,990	135,455,208
Current liabilities	Before distribution	4,241,699	7,488,055	8,741,513	8,748,394	20,737,381
	After distribution	4,241,699	8,837,984	9,726,968	8,748,394	Note 1
Non-currentliabilities		14,838,802	15,026,145	20,533,113	25,293,565	34,189,408
Total liabilities	Before distribution	19,080,501	22,514,200	29,274,626	34,041,959	54,926,789
	After distribution	19,080,501	23,864,129	30,260,081	34,041,959	Note 1
Equity attributable to the parent company		62,307,725	66,896,890	67,116,769	70,812,642	80,506,933
Capitalstock		26,998,573	26,998,573	28,348,502	32,848,502	37,848,502
Capitalsurplus		1,260,386	1,260,386	1,286,700	583,815	1,454,301
Retained earnings	Before distribution	35,229,878	40,374,642	39,406,739	39,200,786	42,729,935
	After distribution	35,229,878	37,674,784	38,421,284	39,200,786	Note 1
Otherequities		(1,181,112)	(1,736,711)	(1,925,172)	(1,820,461)	(1,525,805)
Treasury stock		-	-	-	-	-
Non-controlling equity		240,734	293,864	77,095	55,389	21,486
Total equity	Before distribution	62,548,459	67,190,754	67,193,864	70,868,031	80,528,419
	After distribution	62,548,459	65,840,825	66,208,409	70,868,031	Note 1

Note 1: Earnings Appropriation for 2021 shall be ratified at the 2022 general shareholders' meeting.

• 155 -

Consolidated Condensed Income Statement - IFRSs

Unit: NTD Thousand

Consolidated	Condensed Income Statement - IFRSs Unit: NTD Thousand	Condensed Income Statement - IFRSs Unit: NTD Thousand	Condensed Income Statement - IFRSs Unit: NTD Thousand	Condensed Income Statement - IFRSs Unit: NTD Thousand	Condensed Income Statement - IFRSs Unit: NTD Thousand	Condensed Income Statement - IFRSs Unit: NTD Thousand
Year Item	Financial information in the most recent five years
	2017	2018	2019	2020	2021	Financial Information ending March 31, 2022
Operating Revenue	33,335,970	38,503,121	29,624,094	17,583,092	35,163,380	N/A
Gross profit (loss)	5,371,581	5,176,159	1,627,580	38,228	5,096,443
Operating profit or loss	3,584,036	3,075,082	(409,020)	(1,812,878)	2,514,465
Non-operating revenue and expense	2,713,685	1,601,868	2,272,492	1,916,654	1,475,213
Net profit (loss) before tax	6,297,721	4,676,950	1,863,472	103,776	3,989,678
Net profit of continuing department	6,087,322	4,280,995	1,733,635	674,660	3,596,227
Loss of discontinued department	-	-	-	-	-
Net profit (loss)	6,087,322	4,280,995	1,733,635	674,660	3,596,227
Other comprehensive income (after tax)	357,550	(521,612)	(193,665)	201,768	218,953
Total comprehensive income	6,444,872	3,759,383	1,539,970	876,428	3,815,180
Net profit (loss) attributable to parent company	6,091,656	4,290,269	1,738,449	680,989	3,603,208
Net profit (loss) attributable to non-controlling equity	(4,334)	(9,274)	(4,814)	(6,329)	(6,981)
Total comprehensive income attributable to parent company	6,448,195	3,763,808	1,543,494	884,606	3,823,805
Total comprehensive income attributable to non-controlling equity	(3,323)	(4,425)	(3,524)	(8,178)	(8,625)
EPS	2.55	1.59	0.61	0.21	1.09

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

Year	2017	2018	2019	2020	2021
Accountant	Jeff Chen	MelodyChen	MelodyChen	MelodyChen	MelodyChen
	Dan-Dan Chung	Dan-Dan Chung	Dan-Dan Chung	Dan-Dan Chung	Dan-Dan Chung
Audit Opinion	Unqualified opinions	Unqualified opinions	Unqualified opinions	Unqualified opinions	Unqualified opinions

• 156 -

II. Financial Analysis for the most recent five years

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

Unit: NTD Thousand

Year Items	Year Items	Year Items	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	Financial information in the most recent five years	As of March 31,2022
			2017	2018	2019	2020	2021	N/A
Financial structure %		Liabilities to total assets	22.30	22.10	26.78	29.48	31.29
		Long-term fund to fixed assets	534.80	547.32	642.73	610.15	692.44
Insolvency %		Current ratio	364.36	250.41	117.35	107.33	179.43
		Quick ratio	294.30	208.49	81.32	70.48	115.24
		Times Interest Earned	3,662	8,999	1,817	145	1,618
Operating performance		Receivables turnover (time)	10.31	10.58	10.54	7.42	10.79
		Average number of days' receivables outstanding	35.40	34.50	34.63	49.19	33.83
		Inventory turnover (time)	14.40	14.79	12.69	6.70	9.24
		Payables turnover (time)	15.57	18.07	17.64	11.90	17.71
		Average number of days of sales	25.34	24.68	28.76	54.48	39.50
		Fixed assets turnover (time)	2.26	2.57	1.94	1.05	1.96
		Total assets turnover (time)	0.41	0.45	0.30	0.15	0.28
Profitability		ROA (%)	8.01	5.22	2.05	0.87	3.50
		ROE (%)	10.77	6.64	2.59	0.99	4.76
		Pre-tax profit to paid-in capital(%) (Note 6)	23.24	17.17	6.45	0.26	10.42
		Profit margin (%)	18.94	11.60	6.49	4.60	11.79
		Earnings per share (NT$)	2.55	1.59	0.61	0.21	1.09
Cash flow		Cash flow ratio (%)	83.94	96.41	1.17	(19.20)	(6.11)
		Cash flow adequacy ratio (%)	22.67	148.10	108.23	66.46	50.21
		Cash flow reinvestment ratio (%)	4.55	7.41	(1.44)	(2.56)	(0.32)
Leverage		Operating leverage	1.92	2.53	Note1	Note1	2.54
		Financial leverage	1.05	1.02	Note 1	Note 1	1.10
	The past 2 years, financial ratios that exceed 20% are explained as follows: 1. The times interest earned in 2021 increased versus 2020, mainly because of the increase in receivables along with the increase in profit, also due to the deduction of current liabilities rate after repayment of short-term loans and long-term liabilities due within one year or one business cycle 2. All financial ratios of operating performance increased in 2021 compared to 2020, mainly due to the increase in revenue and profit 3. The profitability ratios in 2021 increased versus 2020, because the main products caprolactam and acrylonitrile have been recovered since pandemic and the textile industry has gradually recovered, resulting in an increase in downstream industry demand which simultaneous increase in product sales and selling prices. 4. The cash flow ratios in 2021 increased versus 2020, due to the decrease in net cash outflow from operating activities in 2021 compared with 2020. 5. The cash flow adequacy ratio in 2021 decreased versus 2020, due to net cash outflows from operating activities duringthese2 recentyears

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

• 157 -

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

Unit: NTD Thousand

Year Items (Note 2)	Year Items (Note 2)	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears	Financial information in the most recent fiveyears
		2017	2018	2019	2020	2021	As of March 31, 2022
Financial structure %	Liabilities to total assets	23.37	25.10	30.35	32.45	40.55	N/A
	Long-term fund to fixed assets	456.95	421.59	432.68	414.01	452.83
Insolvency %	Current ratio	444.14	288.76	274.40	309.65	276.58
	Quick ratio	370.18	243.52	146.30	150.62	65.03
	Times Interest Earned	3,442	5,982	1,427	147	1,333
Operating performance	Receivables turnover(time)	10.31	10.84	11.31	7.93	10.84
	Average number of days' receivables outstanding	35.40	33.67	32.27	46.02	33.67
	Inventoryturnover(time)	14.14	14.02	4.52	1.45	1.06
	Payables turnover(time)	15.04	17.27	17.38	12.00	18.41
	Average number of days of sales	25.81	26.03	80.75	251.72	344.33
	Fixed assets turnover(time)	2.04	2.11	1.49	0.81	1.45
	Total assets turnover(time)	0.42	0.45	0.32	0.17	0.29
Profitability	ROA(%)	7.90	5.07	1.98	0.85	3.21
	ROE(%)	10.72	6.60	2.58	0.98	4.75
	Pre-tax profit to paid-in capital(%) (Note 6)	23.33	17.32	6.57	0.32	10.54
	Profit margin(%)	18.26	11.12	5.85	3.84	10.23
	Earningsper share(NT$)	2.55	1.59	0.61	0.21	1.09
Cash flow	Cash flow ratio(%)	82.58	83.83	(96.13)	(47.32)	(142.49)
	Cash flow adequacyratio(%)	24.44	78.89	9.02	(8.26)	(51.49)
	Cash flow reinvestment ratio (%)	4.61	7.69	(10.69)	(5.17)	(24.98)
Leverage	Operatingleverage	2.19	2.98	Note 1	Note 1	4.69
	Financial leverage	1.05	1.03	Note1	Note 1	1.15
	The past 2 years, financial ratios that exceed 20% are explained as follows: 1. The Liabilities to total assets in 2021 increased versus 2020, mainly due to the borrowing of long-term and short-term loans and the issuance of corporate bonds 2. Quick ratio decreased in 2021 compared to 2020, mainly due to borrowing short-term loans and issuing short-term bills to increase current liabilities 3. The Times Interest Earned in 2021 increased versus 2020, mainly due to the simultaneous increase in pre-tax net profit along with the increase in revenue and profit 4. The Inventory turnover in 2021 decreased versus 2020,due to the acquisition of construction land in 2021, which is listed as an inventory item 5. The Receivables / Payables turnover, Total fixed assets turnover rate and Total assets turnover rate in 2021 increased versus 2020, mainly due to the increase in revenue and profit 6. All the profitability financial ratios in 2021 increased versus 2020 because the main products caprolactam and acrylonitrile have been recovered since pandemic and the textile industry has gradually recovered, resulting in an increase in downstream industry demand which simultaneous increase in product sales and selling prices. 7. Cash flow ratio in 2021 decreased versus 2020 mainly due to net cash outflows from operating activities in the last 2years.

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

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

1. Financial structure

2. 158 -

3. (1) Liabilities to total assets =Total liabilities/total assets

4. (2) Long-term fund to fixed assets= (total shareholders' equity+long-term liabilities)/fixed assets, net

5. Insolvency

6. (1) Current ratio=current assets/current liabilities

7. (2) Quick ratio= (current assets-inventory-prepayment)/current liabilities

8. (3) Times Interest Earned = income tax and interest expenses net income before income tax/interest expenses in the current period

9. Operating performance

10. (1) Receivables (including accounts receivable and notes receivable resulting from operation) turnover = net sales / balance (gross) of average accounts receivable (including accounts receivable and notes receivable resulting from operation)

11. (2) Average number of days receivable outstanding = 365 /accounts receivable turnover

12. (3) Inventory turnover=sale cost/average inventory

13. (4) Payables (including accounts payable and notes payable resulting from operation) turnover = net sales / balance (gross) of average accounts payable (including accounts payable and notes payable resulting from operation)

14. (5) Average number of days of sales=365/inventory turnover

15. (6) Total fixed assets turnover rate = net sales/net total fixed assets

16. (7) Total assets turnover rate = net sales/total assets

17. Profitability

18. (1) ROA = [income after income tax+interest expense*(1-tax rate)]/average total assets.

19. (2) ROE = Income after income tax/average total shareholders' equity

20. (3) Profit margin = Income After income tax/net sales

21. －

22. (4) Earnings per share (EPS)＝（Profit attributable to parent company Preferred shares dividend）／ Weighted average number of outstanding shares. (Note 4)

23. Cash flow

24. (1) Cash flow ratio=Net cash flow from operating activities/current liabilities

25. (2) Net cash flow adequacy ratio= Net cash flow from operating activities in the most recent five years/ (capital spending + increase in inventory + cash dividends) in the most recent five years

26. (3) Cash reinvestment ratio= (Net cash flow from operating activities-cash dividends) (gross of fixed assets+ long-term investment +other assets+ working capital) (Note 5)

27. Leverage:

28. (1) Operating leverage= (Net operating revenue-changed operating costs and expenses)/operating income (Note 6)

29. (2) Financial leverage=Operating income/ (operating income-interest expenses)

30. Note 3: The calculation for EPS above considers the following items:

31. Shares outstanding is based on weighted average shares, and not based on year end shares outstanding.

32. Cash offerings or treasury stock transactions are considered in calculating weighted average shares.

33. Earnings appropriation or reserves to paid in capital shall be calculated and adjusted accordingly.

34. If preferred shares are cumulative non-convertible preferred shares, dividends shall be subtracted (regardless of whether they are paid out in dividends), from after tax net profit. If preferred shares are non-cumulative, in the event of net profits, preferred shares shall be subtracted after tax, but no adjustments needed if there are losses.

35. Note 4: Cash flow analysis shall consider the following items:

36. Cash flows from operating activities refers to operating cash flows.

37. Capital expenditures are from the annual cash flow statements on capital expenditure outflows.

38. Inventory increases are from period end balance greater than period beginning balanaces, if inventories are less, then zero is applied.

39. Cash dividends includes common stock and preferred shares dividends.

40. Property, plant, and machinery balance is after substracting accumulative depreciation.

41. Note 5: The issuer shall include operating costs and operating expenses as fixed or variable. If estimates or judgements are applied, shall be deemed reasonable and consistent.

42. Note 6: Company stocks that are no par value or have par value different from NT$10/share, shall be calculated based upon percentage of paid in capital or as a percentage of parent company equity in the balance sheet.

43. 159 -

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

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2021 Business Report, Financial Statements, Consolidated Financial Statements and Earnings Appropriation Statements for 2021. The CPA firm of KPMG was retained to audit China Petrochemical Development Corporation’s Financial Statements and Ms. Melody Chen and Ms. Dan-Dan Chung have issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, Consolidated Financial Statements and Earnings Appropriation Statements have been reviewed and determined to be correct and accurate by the Audit Committee of China Petrochemical Development Corporation. In accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, I hereby submit this report.

China Petrochemical Development Corporation

Convener of the Audit Committee: Yun-Peng Chu

March 14, 2022

• 160 -

IV. Independent Accountants’ Audit Report (Consolidated)

Independent Auditors’ Report

To the Board of Directors of China Petrochemical Development Corporation:

Opinion

We have audited the consolidated financial statements of China Petrochemical Development Corporation (“CPDC”) and its subsidiaries (“the Group”), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, 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, 2021 and 2020, 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 Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the 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.

• 161 -

Other Matter

CPDC has prepared its parent-company-only financial statements as of and for the years ended December 31, 2021 and 2020, on which we have issued an unmodified opinion with emphasis of matter and other matters paragraphs.

We did not audit the financial statements of Taivex Therapeutics Corporation, a subsidiary of the Group. Those statements were audited by another auditor, whose report has been furnished to us, and our opinion, insofar as it relates to the amount included for Taivex Therapeutics Corporation, is based solely on the report of another auditor. The financial statements of Taivex Therapentics Corporation reflect total assets constituting 0.15% and 0.27% of consolidated total assets at December 31, 2021 and 2020, and total operating revenues constituting both 0% of consolidated total operating revenues for the year ended December 31, 2021 and 2020.

We did not audit certain investments, which were accounted for under the equity method. The financial statements as of and for the years then ended December 31, 2021 and 2020 of those investees accounted for under the equity method were audited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts for the equity method investees were based solely on the reports of other auditors. These investments accounted for under the equity method both represented 0.95% of consolidated total assets as of December 31, 2021 and 2020. The related shares of investment income from these investees including subsidiaries, associates and joint ventures accounted for using equity method represented 8.20% and 3.57% of consolidated net income before income tax for the years ended December 31, 2021 and 2020, 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.

1. 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, checking and reconciling the sales data recorded between the sales systems and general ledger; selecting samples to assess whether appropriate revenue recognition policies are applied through comparison with accounting standards;

• Analyzed and compared the sales amounts and volumes for the major customers of the Group. Based on samples selected, vouched significant transactions from both internal and external documents, to verify the authenticity of the transactions.

• 162 -

• 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 29% of consolidated total assets as of December 31, 2021, 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, 2021, which is deemed to be significant. The overall economic trend, market competition and fluctuations in the price of petroleum and petrochemical products may affect the future operation of the Group, and also affect the estimated economic benefits and recoverable amounts of these assets that the management of the Group may estimate and determine in the future of the cash generating unit (“CGU”) of the assets, and to evaluate whether there are signs of impairment. The recoverable amounts of these assets have been determined based on the discounted cash flows forecasted by the Group management which involved significant uncertainties and professional judgments. Therefore, we consider the assessment for impairment of property, plant, and equipment as one of the key audit matters for our audit.

How the matter was addressed in our audit:

Our key audit procedures included:

• Obtain from the Group management the results of their valuation of fixed assets and understand the significant assumptions used in their valuation model.

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

• 163 -

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

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

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

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

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

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

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

1. 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.

2. 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.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. 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.

5. 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.

6. 164 -

7. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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

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

KPMG

Taipei, Taiwan (Republic of China) March 14, 2022

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.

• 165 -

						December 31, 2020	Amount %			3,615,000 4	- -	1,676 -	1,394,928 1	- -	1,429,867 1	5,637 -	282,291 -	43,251 -	1,914,833 2	60,911 -	60,911 -	8,748,394 8	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	32,848,502 32	583,815 1		2,311,174 2	35,601,629 34	1,287,983 1		39,200,786 37		(966,202) (1)	(854,259) (1)	(854,259) (1)		(1,820,461) (2)	(1,820,461) (2)	70,812,642 68		55,389 -		70,868,031 68	70,868,031 68	104,909,990 100	104,909,990 100
						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	140,233 -	34,189,408 25	54,926,789 40		37,848,502 28		1,454,301 1		2,389,125 2	35,390,076 26	4,950,734 4		42,729,935 32		(948,859) (1)	(576,946) -			(1,525,805) (1)		80,506,933 60		21,486 -		80,528,419 60		$ 135,455,208 100
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND SUBSIDIARIES		Consolidated Balance Sheets	December 31, 2021 and 2020	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2021 December 31, 2020	Assets Amount % Amount % Liabilities and Equity		Current assets: Current liabilities:	Cash and cash equivalents (notes 4 and 6(a)) $ 7,650,122 6 7,479,899 7 2100 Short-term loans (note 6(l))	Current financial assets at fair value through profit or loss (notes 4 and 6(b)) 357,219 - 829,533 1 2110 Short-term bills payable (note 6(o))	Current financial assets at fair value through other comprehensive income 9,674 - 9,195 - 2130 Current contract liabilities (note 6(x))	(notes 4 and 6(c)) 2170 Accounts payable	Notes and accounts receivable, net (notes 4 and 6(d)) 3,391,732 3 1,784,564 2 2180 Accounts payable to related parties (note 7)	Accounts receivable related parties, net (notes 4, 6(d) and 7) 477,344 - 51,106 - 2200 Other payables (note 7)	Other receivables (notes 4, 6(d) and 7) 115,814 - 144,294 - 2230 Current tax liabilities (note 4)	Current tax assets (note 4) 6,104 - - - 2250 Provisions-current (notes 4, 6(r) and 6(t))	Inventories (notes 4 and 6(e)) 42,131,583 31 12,665,959 12 2280 Lease liabilities-current (notes 4 and 6(q))	Prepayments 1,738,875 1 1,246,404 1 2320 Long-term liabilities-current portion (note 6(m))	Other current assets (note 6(f)) 1,476,978 1 2,878,214 3 2399 Other current liabilities, others		Total current assets 57,355,445 42 27,089,168 26 Total current liabilities		Non-current assets: Non-Current liabilities:	Non-current financial assets at fair value through profit or loss (notes 4 and 6,973,779 5 10,746,855 10 2530 Bonds payable (notes 4 and 6(n))	6(b)) 2540 Long-term bank loans (note 6(m))	Non-current financial assets at fair value through other comprehensive 3,050,053 2 2,799,521 3 2550 Provisions-non-current (notes 4, 6(r) and 6(t))	income (notes 4 and 6(c)) 2570 Deferred income tax liabilities (notes 4 and 6(u))	Investments accounted for using equity method (notes 4 and 6(g)) 2,329,486 2 2,038,003 2 2580 Lease liabilities-non-current (notes 4 and 6(q))	Property, plant and equipment (notes 4 and 6(h)) 25,333,641 19 23,226,955 22 2611 Long-term bills payable (note 6(p))	Right-of-use assets (notes 4 and 6(i)) 864,464 1 872,937 1 2670 Other non-current liabilities, others	Investment property, net (notes 4 and 6(j)) 38,867,067 29 37,626,827 36 Total non-current liabilities	Intangible assets (notes 4 and 6(k)) 172,308 - 159,173 - Total liabilities	Deferred income tax assets (notes 4 and 6(u)) 11,023 - 11,023 - Equity attributable to owners of parent:	Other non-current assets (note 8) 497,942 - 339,528 - 3110 Common stock (note 6(v))		Total non-current assets 78,099,763 58 77,820,822 74 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 arising on translation of foreign operations	3420 Unrealized gains or loss on financial assets at fair value through other		comprehensive income			Total equity attributable to shareholders of the parent:		36XX Non-controlling interests		Total assets $ 135,455,208 100 104,909,990 100 Total equity Total liabilities and equity
										1100	1110	1120		1170	1180	1200	1220	130X	1410	1470					1510		1517		1551	1600	1755	1760	1780	1840	1900

• 166 -

(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, 2021 and 2020

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

4000 Operating revenues (notes 4, 6(x) and 7) 5000 Operating costs (note 6(e)) Gross 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 income (loss) 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 6(z)) 7060 Shares of profit (loss) of associates and joint ventures accounted for using equity method, net (notes 4 and 6(g)) 7235 Gains on financial assets at fair value through profit or loss (notes 4 and 6(b)) 7255 Gains on fair value adjustment, investment property (notes 4 and 6(j)) 7673 Impairment loss on property, plant and equipment (notes 4 and 6(h)) Total non-operating income and expenses Profit before income tax 7950 Less: income tax expense (benefit) (notes 4 and 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 (notes 4 and 6(t)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (notes 4 and 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 (notes 4 and 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 arising on translation of foreign operations (notes 4 and 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 (notes 4 and 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 (loss), net 8500 Total comprehensive income Profit attributable to: 8610 Shareholders of the parent 8620 Non-controlling interests Comprehensive income (loss) attributable to: 8710 Shareholders of the parent 8720 Non-controlling interests Earnings per share (notes 4 and 6(v)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021 Amount % $ 35,163,380 100 30,066,937 86 5,096,443 14 901,185 3 1,217,655 3 461,963 1 1,175 - 2,581,978 7 2,514,465 7 188,200 1 486,612 1 (1,393,074) (4) (323,681) (1) 325,902 1 193,148 1 2,913,775 8 (915,669) (3) 1,475,213 4 3,989,678 11 393,451 1 3,596,227 10 (78,291) - 252,449 1 29,096 - - - 203,254 1 10,595 - 5,104 - - - 15,699 - 218,953 1 $ 3,815,180 11 $ 3,603,208 10 (6,981) - $ 3,596,227 10 $ 3,823,805 11 (8,625) - $ 3,815,180 11 $ 1.09 $ 1.09	2020 Amount % 17,583,092 100 17,544,864 100 38,228 - 603,857 3 804,920 4 442,279 3 50 - 1,851,106 10 (1,812,878) (10) 161,379 1 563,870 3 (407,747) (2) (221,705) (1) 67,054 - 856,158 5 897,645 5 - - 1,916,654 11 103,776 1 (570,884) (3) 674,660 4 (24,832) - 360,247 2 29,889 - - - 365,304 2 (190,168) (1) 26,632 - - - (163,536) (1) 201,768 1 876,428 5 680,989 4 (6,329) - 674,660 4 884,606 5 (8,178) - 876,428 5 0.21 0.21

See accompanying notes to consolidated financial statements.

• 167 -

															Total equity	67,193,864	674,660	201,768		876,428			-	-	(985,455)	3,796,481	-	(13,287)	-			70,868,031	3,596,227	218,953		3,815,180			-	-	5,869,362	-	(24,154)	-		-		80,528,419
														Non-controlling	interests	77,095	(6,329)	(1,849)		(8,178)			-	-	-	-	(241)	(13,287)	-			55,389	(6,981)	(1,644)		(8,625)			-	-	-	(1,124)	(24,154)	-		-		21,486
												Total equity		attributable to	owners of parent	67,116,769	680,989	203,617		884,606			-	-	(985,455)	3,796,481	241	-	-			70,812,642	3,603,208	220,597		3,823,805			-	-	5,869,362	1,124	-	-		-		80,506,933
(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, 2021 and 2020	(Expressed in Thousands of New Taiwan Dollars)	Equity attributable to owners of parent	Total other equity interest	Unrealized gains	(losses) on	financial assets	Exchange measured at fair	differences on value through	Retained earnings translation of other		Ordinary Unappropriated foreign financial comprehensive	shares Capital surplus Legal reserve Special reserve retained earnings statements income	28,348,502 1,286,700 2,137,330 35,490,262 1,779,147 (804,515) (1,120,657)	- - - - 680,989 - -	- - - - (27,393) (161,687) 392,697		- - - - 653,596 (161,687) 392,697			- - 173,844 - (173,844) - -	- - - 111,367 (111,367) - -	- - - - (985,455) - -	4,500,000 (703,519) - - - - -	- 634 - - (393) - -	- - - - - - -	- - - - 126,299 - (126,299)			32,848,502 583,815 2,311,174 35,601,629 1,287,983 (966,202) (854,259)	- - - - 3,603,208 - -	- - - - (75,443) 17,343 278,697		- - - - 3,527,765 17,343 278,697			- - 77,951 - (77,951) - -	- - - 1,210,033 (1,210,033) - -	5,000,000 869,362 - - - - -	- 1,124 - - - - -	- - - - - - -	- - - - 1,384 - (1,384)		- - - (1,421,586) 1,421,586 - -		37,848,502 1,454,301 2,389,125 35,390,076 4,950,734 (948,859) (576,946)
																$																																$
																Balance at January 1, 2020	Profit for the year ended December 31, 2020	Other comprehensive income for the year ended December 31, 2020		Total comprehensive income for the year ended December 31, 2020		Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary shares	Capital increase by cash	Changes in ownership interests in subsidiaries	Changes in non-controlling interests	Disposal of investments in equity instruments designated at fair value through other		comprehensive income	Balance at December 31, 2020	Profit for the year ended December 31, 2021	Other comprehensive income for the year ended December 31, 2021		Total comprehensive income for the year ended December 31, 2021		Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Capital increase by cash	Changes in ownership interests in subsidiaries	Changes in non-controlling interests	Disposal of investments in equity instruments designated at fair value through other	comprehensive income	Reversal of special reserve		Balance at December 31, 2021

• 168 -

(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, 2021 and 2020

(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 Property, plant and equipment transferred to expenses Gain on disposal of investment properties Loss on disposal of investments accounted for using equity method Impairment loss (reversal of impairment loss) on non-financial assets Impairment loss on property, plant and equipment Gain on fair value adjustment of investment property Unrealized remediation expense Gain on lease modification Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Increase in accounts receivable (Increase) decrease in accounts receivable due from related parties (Increase) decrease in other receivables Increase in inventories (Increase) decrease in prepayments (Increase) decrease in other current assets Total changes in operating assets Increase (decrease) in contract liabilities Increase in accounts payable Increase in accounts payable to related parties Increase (decrease) in other payable Decrease in provisions Increase in other current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash outflow generated from operations Interest received Interest paid Income taxes paid Net cash flows used in operating activities	For the years end	ed December 31 2020 103,776 977,720 13,172 50 (856,158) 221,705 (161,379) (257,817) (67,054) 1,060 7,855 - 580 (72,892) - (897,645) - (49) (1,090,852) (137,988) 6,658 148,673 (2,888,937) 249,501 4,323 (2,617,770) (86,587) 78,559 - (330,249) (69,690) 3,902 (404,065) (3,021,835) (4,112,687) (4,008,911) 122,193 (214,756) (38,574) (4,140,048)
	2021 $ 3,989,678 1,110,782 9,189 1,175 (193,148) 323,681 (188,200) (313,215) (325,902) 33 - (706,465) - 14,854 915,669 (2,913,775) 1,664,899 (34) (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) (29,342,739) 209,524 (323,396) (92,459) (29,549,070)

See accompanying notes to consolidated financial statements.

• 169 -

(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, 2021 and 2020

(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 profit or loss Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Cash inflows due to combination Proceeds from disposal of investment properties Decrease (increase) in other financial assets Increase in other non-current assets Dividends received Proceeds from cancellation of property purchasing Net cash flows from (used in) 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 Proceeds from issuing bonds Proceeds from long-term debt Repayments of long-term debt Increase in long-term bills payable Decrease in long-term bills payable Payment of lease liabilities Increase in other non-current liabilities Cash dividends paid Capital increase by cash Interest paid Change in non-controlling interests Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For the years end	ed December 31 2020 (387,499) 299,070 - (1,020,256) 1,037,947 (140,000) 5,109 (3,861,905) 594 (3,265) 13 - (2,264,814) (188,851) 705,763 - (5,818,094) 15,228,000 (15,092,960) - 3,500,000 13,093,148 (12,005,856) 26,152,200 (24,992,200) (59,547) 1,985 (985,455) 3,796,481 (4,734) (13,287) 8,617,775 (295,987) (1,636,354) 9,116,253 7,479,899
	2021 $ - 1,438 3,794,637 (667,920) 1,311,894 - - (4,193,610) 746 (23,954) - 2,380,000 1,488,312 (158,644) 367,976 186,000 4,486,875 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) 12,632 - 5,869,362 (5,604) - 25,246,277 (13,859) 170,223 7,479,899 $ 7,650,122

See accompanying notes to consolidated financial statements.

• 170 -

(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, 2021 and 2020

(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 were authorized for issue by the Board of Directors on March 14, 2022.

(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 Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

• �Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• �Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

• �Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Group’s adoption of the new amendments, effective for annual period beginning on January 1, 2022, are expected to have the following impacts:

• (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.

(Continued)

• 171 -

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

The amendments apply retrospectively, but only to items of property, plant and equipment made available for use on or after January 1, 2021. The Group may need to adjust the amount of property, plant and equipment costs, depreciation expenses and profit or loss from selling samples, and will continue to assess the impacts of this amendment on its consolidated financial position and financial performance.

The amendments apply retrospectively, but only to items of property, plant and equipment made available for use on or after January 1, 2021. The Group may need to adjust the amount of property, plant and equipment costs, depreciation expenses and profit or loss from selling samples, and will continue to assess the impacts of this amendment on its consolidated financial position and financial performance.

(ii) Other amendments

The following amendments are not expected to 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”

• (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 “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”

(4) Summary of significant accounting policies:

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

(a) Statement of compliance

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

(Continued)

• 172 -

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

(b) Basis of Preparation

• (i) Basis of measurement

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

• 1) Financial assets at fair value through profit or loss are measured at fair value;

• 2) Financial assets at fair value through other comprehensive income are measured at fair value;

• 3) Investment properties are measured at fair value; and

• 4) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation (please see note 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.

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

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

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

(Continued)

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

(ii) List of subsidiaries in the consolidated financial statements

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

Name of investors	Name of subsidiaries	Nature of business Manufacture of chemical products and their derivatives of phosphoric acid and fertilizer storage, transport, purchase, marketing business Water treatment works, plumbing works, apparatus and instrument installation work, refrigeration and air conditioning engineering and tank car repair and other services Holding company Real estate investment and development Holding company	Shareholding ratio December 31, 2021 December 31, 2020 Notes % 100.00 % 100.00 TSCIC was established on June 16, 1998. Due to the business combination on August 1, 2018, CIC became a dissolved company and TSCIC became a surviving company. On April 29, 2021, the Board of Directors decided to reduce its capital amounting to $200,000 thousand. The base date of the reduction was May 20, 2021, and the relevant legal registration procedures had been completed on June 8, 2021. As of December 31, 2021 and 2020, TSCIC's actual paid in capital amounted to $760,000 thousand and $960,000 thousand, respectively. % 100.00 % 100.00 CPDC GT was established on May 31, 1999. As of December 31, 2021 and 2020, CPDC GT's actual paid-in capital amounted to $150,000 thousand. % 100.00 % 100.00 CPDC (BVI) was established on January 9, 1998, registered in the British Virgin Islands, and is an international investment company. As of December 31, 2021 and 2020, CPDC (BVI)'s actual paid-in capital amounted to USD26,580 thousand. % 100.00 % 100.00 BES Twin Towers was established on March 1, 2011. It increased its capital by retained earnings amounting to $112,043 thousand and $681,112 thousand on May 26, 2021 and May 11, 2020. On November 18, 2021, the Board of Directors decided to reduce its capital amounting to $1,000,000 thousand. The base date of the reduction was November 22, 2021, and the relevant legal registration procedures had been completed on December 7, 2021. As of December 31, 2021 and 2020, BES Twin Towers' actual paid-in capital amounted to $4,912,164 thousand and $5,800,121 thousand, respectively. % 100.00 % 100.00 UDL was established on May 20, 2008. As of December 31, 2021 and 2020, UDL's actual paid-in capital amounted to USD324,684 thousand and USD313,851 thousand, respectively.
			December 31, 2021 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
The Company The Company The Company The Company The Company	Tsou Seen Chemical Industries Corporation (TSCIC) CPDC 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)

(Continued)

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

Name of investors	Name of subsidiaries	Nature of business Petrochemical supporting facility construction Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials Commissioned to create a vendor to build the housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in biotechnology, pharmaceutical research and development and marketing	Shareholding ratio December 31, 2021 December 31, 2020 Notes % 0.36 % 0.37 Weiming was established on May 16, 2013, and changed its name to Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation) on October 14, 2021. It increased its capital through UDL amounting to CNY70,000 thousand, CNY200,000 thousand and CNY200,000 thousand on June 28, 2021, November 13 and June 19, 2020, respectively. The said amounts were verified on June 29, 2021, November 17 and June 29, 2020, respectively. As of December 31, 2021 and 2020, Weiming's actual paid in capital amounted to CNY1,688,000 thousand and CNY1,618,000 thousand, respectively. % 44.52 % 44.52 Weiqiang was established on May 9, 2013. As of December 31, 2021 and 2020, Weiqiang's actual paid-in capital amounted to CNY44,920 thousand. % 100.00 % 100.00 Thanh Phong was established on May 22, 2017. The Company had reached agreement on cancellation of shares with the non-controlling interests, who owned 2.13% of outstanding shares. After the cancellation, the Company owned Thanh Phong 100% of outstanding shares. As of December 31, 2021 and 2020, Thanh Phong's actual paid-in capital amounted to VND458,637,500 thousand. % 100.00 % 100.00 The Company established Ding-Yue on October 11, 1995 and increased its capital amounting to $11,340,000 thousand, $4,200,000 thousand and $2,500,000 thousand on November 1, 2021, June 16, 2021 and February 26, 2020, respectively. As of December 31, 2021 and 2020, its actual paid in capital amounted to $25,580,000 thousand and $10,040,000 thousand, respectively. % 4.02 % 4.02 Weihua was established on December 10, 2012. As of December 31, 2021 and 2020, Weihua's actual paid-in capital amounted to CNY156,289 thousand. % 55.48 % 55.48 Weiqiang was established on May 9, 2013. As of December 31, 2021 and 2020, Weiqiang's actual paid-in capital amounted to CNY44,920 thousand. % 91.10 % 91.10 Taivex Therapeutics was established on February 11, 2010. TSCIC invested in Taivex Therapeutics on August 18, 2010. As of December 31, 2021 and 2020, Taivex's actual paid-in capital amounted to $507,399 thousand.
			December 31, 2021 % 0.36 % 44.52 % 100.00 % 100.00 % 4.02 % 55.48 % 91.10
The Company The Company The Company The Company Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation	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) Weihua (Rudong) Trade Co., Ltd. (Weihua) Weiqiang International Trade (Shanghai) Co., Ltd. (Weiqiang) Taivex Therapeutics Corporation (Taivex Therapeutics)

(Continued)

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

Name of investors	Name of subsidiaries	Nature of business Petrochemical supporting facility construction Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in 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	Shareholding ratio December 31, 2021 December 31, 2020 Notes % 99.64 % 99.63 Weiming was established on May 16, 2013, and changed its name to Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation) on October 14, 2021. It increased its capital through UDL amounting to CNY70,000 thousand, CNY200,000 thousand and CNY200,000 thousand on June 28, 2021, November 13 and June 19, 2020, respectively. The said amounts were verified on June 29, 2021, November 17 and June 29, 2020, respectively. As of December 31, 2021 and 2020, Weiming's actual paid in capital amounted to CNY1,688,000 thousand and CNY1,618,000 thousand, respectively. % 95.98 % 95.98 Weihua was established on December 10, 2012. As of December 31, 2021 and 2020, Weihua's actual paid-in capital amounted to CNY156,289 thousand. % - % 100.00 Weida PC was established on December 23, 2014 and was dissolved on October 29, 2019. The liquidation process had been completed on January 19, 2021. As of December 31, 2021 and 2020, Weida PC's actual paid in capital amounted to CNY0 thousand and CNY6,000 thousand, respectively. % 100.00 % 100.00 Weicai was established on January 6, 2015 and acquired by UDL on November 5, 2018. On September 22, 2021, the Board of Directors decided to reduce its capital amounting to CNY100,000 thousand. The base date of the reduction and the relevant legal registration procedures had been completed on December 28, 2021. As of December 31, 2021 and 2020, Weicai's actual paid-in capital amounted to CNY314,955 thousand and CNY414,955 thousand, respectively. % 100.00 % 100.00 Weiming Construction was established on October 26, 2020. It increased its capital through Weiming amounting to CNY14,920 thousand and CNY14,080 thousand on April 1 and January 26, 2021, respectively. The said amounts were verified on April 2, 2021. As of December 31, 2021 and 2020, Weiming Construction's actual paid in capital amounted to CNY30,000 thousand and CNY1,000 thousand, respectively. % 100.00 % 100.00 Frontier Fortune was established on November 23, 2016. It increased its capital through BES Twin Towers amounting to USD50,000 thousand on October 22, 2020. As of December 31, 2021 and 2020, Frontier fortune's actual paid in capital amounted to USD93,060 thousand.
			December 31, 2021 % 99.64 % 95.98 % - % 100.00 % 100.00 % 100.00
Unichem Development Limited Unichem Development Limited Unichem Development Limited Unichem Development Limited Jiangsu Weiming New Material Co., Ltd. (Weiming) (original name: Jiangsu Weiming Petrochemical Corporation) BES Twin Towers Development Co., Ltd. (BES Twin Towers)	Jiangsu Weiming New Material Co., Ltd. (Weiming) (original name: Jiangsu Weiming Petrochemical Corporation) Weihua (Rudong) Trade Co., Ltd. (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)

(Continued)

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

Name of investors	Name of subsidiaries	Nature of business Investment and technical advisory services Real estate, research of petroleum market and consultancy Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale Engineering, construction contracting business	Shareholding ratio December 31, 2021 December 31, 2020 Notes % 100.00 % 100.00 Core Pacific Twin Star (Myanmar) was established on February 16, 2017. As of December 31, 2021 and 2020, Core Pacific Twin Star (Myanmar)'s actual paid-in capital amounted to USD5,500 thousand. % 99.99 % 99.99 Gemini Star (India) was established on January 8, 2019. As of December 31, 2021 and 2020, its actual paid-in capital amounted to INR21,000 thousand. % 100.00 % 99.01 Core Pacific Twin Star (Vietnam) was established on November 19, 2018. It increased its capital through Frontier Fortune Investment amounting to VND1,155,000,000 thousand on November 3, 2020. The Company had reached agreement on cancellation of shares with the non-controlling interests, who owned 0.99% of outstanding shares on August 10, 2021. After the cancellation, the Company owned Core Pacific Twin Star (Vietnam) 100% of outstanding shares. As of December 31, 2021 and 2020, its actual paid in capital amounted to VND2,005,000,000 thousand and VND2,025,000,000 thousand, respectively. % 80.00 % 80.00 Core Pacific Pioneer was established on May 24, 2018. As of December 31, 2021 and 2020, its actual paid-in capital amounted to MMK1,512,540 thousand. % 100.00 % 100.00 Da Yin Construction Engineering was established on November 24, 1972. It increased its capital through Ding-Yue amounting to $37,500 thousand on February 5, 2021. The base date was set on February 5, 2021, and the relevant legal registration procedures had been completed on March 4, 2021. As of December 31, 2021 and 2020, its actual paid-in capital amounted to $60,000 thousand and $22,500 thousand, respectively.
			December 31, 2021 % 100.00 % 99.99 % 100.00 % 80.00 % 100.00
Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Core Pacific Twin Star (Myanmar) Investment Co., Ltd. (Core Pacific Twin Star (Myanmar)) Ding-Yue Development Co., Ltd. (Ding-Yue)	Core Pacific Twin Star (Myanmar) Investment Co., Ltd. (Core Pacific Twin Star (Myanmar)) Gemini Star (India) Private Limited. (Gemini Star (India)) Core Pacific Twin Star (Vietnam) Investment Co., Ltd. (Core Pacific Twin Star (Vietnam)) Core Pacific Pioneer (Myanmar) Co., Ltd. (Core Pacific Pioneer (Myanmar)) Da Yin Construction Engineering Co., Ltd. (Da Yin Construction Engineering)

• (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.

(Continued)

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

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.

• (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.

(Continued)

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

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.

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.

(Continued)

• 179 -

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

• (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.

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

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

• 3) Fair value through profit or loss (FVTPL)

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

(Continued)

• 180 -

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

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.

• 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;

(Continued)

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

• 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.

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.

(Continued)

• 182 -

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

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

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or being more than 90 days past due;

• the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• the disappearance of an active market for a security because of financial difficulties.

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

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

• 7) Derecognition of financial assets

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

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

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

(Continued)

• 183 -

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

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.

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.

(Continued)

• 184 -

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

(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.

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.

(Continued)

• 185 -

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

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.

• (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.

(Continued)

• 186 -

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

(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.

(m) Leases

(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.

(Continued)

• 187 -

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

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the 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

• 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.

(Continued)

• 188 -

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

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

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

(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.

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’.

(Continued)

• 189 -

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

• (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.

• (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.

(Continued)

• 190 -

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

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

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

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

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

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

(p) 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.

(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.

(Continued)

• 191 -

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

(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.

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.

(Continued)

• 192 -

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

(r) Employee benefits

• (i) Defined contribution plans

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

(ii) Defined benefit plans

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

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

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

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.

(Continued)

• 193 -

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

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.

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.

(Continued)

• 194 -

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

(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.

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

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

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

(a) Fair valuation of investment property

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

(Continued)

• 195 -

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

(b) Impairment of property, plant and equipment

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

Valuation process

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

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

• (i) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

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

(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.

(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, 2021 $ 1,726 2,923,423 4,724,973 - $ 7,650,122	December 31, 2020
		1,806 3,668,398 3,659,705 149,990
		7,479,899

(Continued)

• 196 -

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

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 Subtotal Non-current financial assets designated at fair value through profit or loss: Stocks unlisted on domestic markets Total	December 31, 2021 $ - 22,226 334,993 357,219 6,973,779 $ 7,330,998	December 31, 2020
		11,791 - 817,742
		829,533
		10,746,855
		11,576,388

The dividends income from the financial assets recognized at fair value through profit or loss for the years ended December 31, 2021 and 2020 amounted to $38,612 thousand and $20,110 thousand, respectively.

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. 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 $21,561 thousand and $803,861 thousand for the years ended December 31, 2021 and 2020, 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 therefore adjusted the fair value accordingly.

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, 2021 and 2020.

(Continued)

• 197 -

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

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

Equity investments at fair value through other comprehensive income - current� Stock listed on domestic markets Equity investments at fair value through other comprehensive income - non-current Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Total	December 31, 2021 $ 9,674 2,270,979 779,074 3,050,053 $ 3,059,727	December 31, 2020
		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.

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

The dividends income from the financial assets recognized at fair value through other comprehensive income for the years ended December 31, 2021 and 2020, amounted to $274,603 thousand and $237,707 thousand, respectively.

On September 15, 2020, the Company’s Board of Directors approved a resolution to invest in Chain Yarn Co., Ltd. by purchasing 30,000 thousand common shares amounting to $300,000 thousand, which was accounted for as non-current financial assets at fair value through other comprehensive income.

The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as “PRAXAIR”) delegated by the Company, was elected as the new Chairman in the directors’ meeting on January 30, 2013. However, Praxair Inc. did not recognize the director delegated by the Company as the Chairman, resulting in the new Chairman being unable to exercise his authority. Also, the supervisor appointed by the Company was prevented from auditing the accounts and records pursuant to the Company Law, hence, the new Chairman and the designated supervisor representing PRAXAIR, filed an action asking the vice chairman and general manager to provide the accounts and records and requested to return the seal, business invasion and others in a 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, 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

(Continued)

• 198 -

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

trial instance. The judgment was binding and final on December 2017. On the other side, the vice chairman designated by Praxair Inc. filed legal action declaring the non-existence of the new Chairman’ s commission of authority, after the judgment from the High Court that the Chairman designated by the Company won the verdict, the defendant appealed to the 3rd instance, with the Supreme Court dismissing the appeal. The whole case confirms the appointed relationship between the Chairman designated by the Company and PRAXAIR exists. On November 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, and restored the representative duty per the judgment No. 2455 from the Supreme High Court in 2015. However, according to the requirement from Ministry of Economic Affairs, both sides were not able to hold the legitimate reelection prior to January 9, 2017 which resulted in vacancy of directors and supervisors of PRAXAIR. In order to strive for the rights and interests of the shareholders, the Company immediately brought the arbitration per joint venture agreement of both sides and applied for an auditor and provisional administrator to instruct the central section office of the Ministry of Economic Affairs to allow Praxair Inc. to conduct the change of registration on July 6, 2017. The Company filed a request for the arbitration of International Chamber of Commerce in 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 for the year of 2013. In order to protect the Company’ s right, the Company submitted a lawsuit withdrawing a part of such Arbitration award against the Company to Taipei District Court. On December 13, Taipei District Court dismissed the Company’ s claim of withdrawing the ICC’ s decision. The Company filed an appeal on January 8, 2020, but such appeal was dismissed by Taiwan High Court on September 1, 2020. The Company appealed forthwith to the Supreme Court on September 21, 2020.

As of December 31, 2021 and 2020, the Group provided as collateral portion of its financial assets. Please refer to note 8 for details of the related assets pledged as collateral.

(d) Notes, accounts and other receivables

Notes, accounts and other receivables
Notes receivable Accounts receivable (including related parties) Other receivables Less: allowance for doubtful receivables Net amount	December 31, 2021 $ 628,485 3,574,627 115,814 (334,036) $ 3,984,890	December 31, 2020
		375,689 1,906,374 149,618 (451,717) 1,979,964

(Continued)

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

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:

Not past due Over 0~30 days Over 31~120 days Over 121~365 days Past due more than 1 year Not past due Over 0~30 days Over 31~120 days Over 121~365 days Past due more than 1 year	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 December 31, 2020		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 recognized Amounts written off Foreign exchange gains Balance at December 31	For the years ended December 31,	For the years ended December 31,
	2021 $ 451,717 1,175 (119,275) 419 $ 334,036	2020 451,529 50 - 138 451,717

The consolidated subsidiaries, Weihua (Rudong) Trade Co., Ltd. and Weiqiang International Trade (Shanghai) Co., Ltd., filed civil complaints against Shanghai Tongye Coal Chemical Group Co. Ltd. in Shanghai to claim for the delay of payment of their accounts receivable from Shanghai Tongye Coal Chemical Group Co., Ltd. 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).

(Continued)

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

As of December 31, 2021 and 2020, the aforesaid receivables were not pledged as collateral.

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

(e) Inventories

Finished goods Work in progress Raw materials Fuel Merchandise inventories Subtotal Prepayment for land Land held for construction site Land held for construction site- compensation for levied land Payment for floor area ratio Construction in progress Subtotal Total	December 31, 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	December 31, 2020
		604,363 390,589 1,527,523 14,345 277,376
		2,814,196
		9,340,010 415,441 9,423 13,535 73,354
		9,851,763
		12,665,959

A resolution was made during the Board of Directors’ meeting held on September 25, 2019 for the Group to acquire Core Pacific City’s permanent land ownership. The Group won the bidding on the same date. On October 30, 2019, the Group subsequently entered into a purchase agreement with Core Pacific City Co., Ltd. to buy the land located at Songshan District, Taipei City, as a construction site, for the amount of $37,200,010 thousand. Both parties have agreed to put the property, which includes the land and the existing construction into a trust. As of December 31, 2021 and 2020, the accumulated payments were $37,200,010 thousand and $9,340,010 thousand, and the unpaid amounts were $0 thousand and $27,860,000 thousand, respectively. �

The Group signed a contract in March 2020 to purchase 203 pieces of land including Sanyu Section, Shilin District, Taipei City, which is expected to be used for bulk transfer. As of December 31, 2021, the Group paid the full price and completed the registration of land ownership transfer.

For the years ended December 31, 2021, the capitalized interest on construction in progress amounting to $61,610 thousand was calculated using the capitalization rate of 5.63%.

(Continued)

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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 Write-down of inventories (Reversal of write-downs) 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,
	2021 $ 29,138,577 14,854 (1,790) 926,881 (11,585) $ 30,066,937	2020
		16,263,409 (72,892) 1,277 1,359,745 (6,675)
		17,544,864

As of December 31, 2021 and 2020, the aforesaid inventories were not pledged as collateral.

• (f) Other current assets

Other financial assets Others	December 31, 2021 $ 986,902 490,076 $ 1,476,978	December 31, 2020
		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:

classified as follows:
Associates	December 31, 2021 $ 2,329,486	December 31, 2020
		2,038,003

• (ii) The Group’ s investments accounted for using the equity method that are individually insignificant were as follows:

Carrying value of insignificant associates	December 31, 2021 $ 2,329,486	December 31, 2020
		2,038,003

(Continued)

• 202 -

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

Attribution to the Group Profit from continuing operations Other comprehensive income Total comprehensive income	For the years ended December 31,	For the years ended December 31,
	2021 $ 325,902 34,200 $ 360,102	2020 67,054 56,521 123,575

• (iii) On August 12, 2019, a resolution was made during the board meeting of the Company to invest in Jean Pacific Development Co., Ltd., in the amount of $480,000 thousand. On March 27, 2020, a resolution was made during the Board meeting of the Company to invest $140,000 thousand in Jean Pacific Development Co., Ltd. according to the proportion of shareholding.

• (iv) The dividends income from the Group’s investments accounted for using the equity method for the years ended December 31, 2021 and 2020, amounted to $54,761 thousand and $447,946 thousand, respectively.

• (v) As of December 31, 2021 and 2020, the Group provided as collateral portion of its investments in aforesaid equity accounted investees. Please refer to note 8 for details of the related assets pledged as collateral.

(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group were as follows:

Cost or deemed cost: Balance as of January 1, 2021 Additions Disposal Adjustment Reclassification Return Effect of movements in exchange rate Balance as of December 31, 2021 Balance as of January 1, 2020 Additions Disposal Adjustment Reclassification Effect of movements in exchange rate Balance as of December 31, 2020	Land $ 5,730,777 - - - - - - $ 5,730,777 $ 5,730,777 - - - - - $ 5,730,777	Land improvements 293,880 - - - (39) - - 293,841 292,822 - (1,747) 2,805 - - 293,880	Buildings 4,560,436 6,511 - 446,959 - - 10,039 5,023,945 3,741,728 117,167 (8,402) 712,488 - (2,545) 4,560,436	Machinery and equipment 44,020,701 30,633 (154,505) 2,963,385 - - 17,354 46,877,568 43,102,929 29,032 (479,650) 1,366,494 - 1,896 44,020,701	Vehicles 86,911 6,156 (631) 4,484 - - 184 97,104 81,998 4,630 (6,005) 6,212 - 76 86,911	Other facilities 278,762 10,997 (751) 40,250 - - 492 329,750 269,529 3,051 (7,000) 15,531 (2,000) (349) 278,762	Construction in progress 9,922,491 4,139,313 - (3,455,078) - (186,000) 27,864 10,448,590 8,319,324 3,708,025 (55) (2,111,385) (1,425) 8,007 9,922,491	Accumulated impairment - - - - - - - - - - - - - - -	Total
									64,893,958 4,193,610 (155,887) - (39) (186,000) 55,933
									68,801,575
									61,539,107 3,861,905 (502,859) (7,855) (3,425) 7,085
									64,893,958

(Continued)

• 203 -

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

Depreciation and impairment loss: Balance as of January 1, 2021 Depreciation for the period Impairment loss Disposal Adjustment Reclassification Effect of movements in exchange rate Balance as of December 31, 2021 Balance as of January 1, 2020 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of January 1, 2020 Balance as of December 31, 2020	Land $ - - - - - - - $ - $ - - - - $ - $ 5,730,777 $ 5,730,777 $ 5,730,777	Land improvements 227,439 5,439 - - - (39) - 232,839 223,021 6,165 (1,747) - 227,439 61,002 69,801 66,441	Buildings 1,514,351 139,057 - - (192) - 1,602 1,654,818 1,388,882 131,977 (7,161) 653 1,514,351 3,369,127 2,352,846 3,046,085	Machinery and equipment 34,641,268 858,335 - (154,004) - - 3,426 35,349,025 34,383,105 736,203 (479,394) 1,354 34,641,268 11,528,543 8,719,824 9,379,433	Vehicles 57,052 7,735 - (578) - - 73 64,282 56,899 6,045 (5,914) 22 57,052 32,822 25,099 29,859	Other facilities 188,315 24,475 - (526) 192 - 267 212,723 173,343 21,855 (6,989) 106 188,315 117,027 96,186 90,447	Construction in progress - - - - - - - - - - - - - 10,448,590 8,319,324 9,922,491	Accumulated impairment 5,038,578 - 915,669 - - - - 5,954,247 5,038,578 - - - 5,038,578 (5,954,247) (5,038,578) (5,038,578)	Total
									41,667,003 1,035,041 915,669 (155,108) - (39) 5,368
									43,467,934
									41,263,828 902,245 (501,205) 2,135
									41,667,003
									25,333,641
									20,275,279
									23,226,955

• (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 non-operating income and expense in the consolidated statements of comprehensive income.

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

As of December 31, 2021 and 2020, the Group provided as collateral, a portion of its property, plant and equipment, please refer to note 8 for details of the related assets pledged as collateral.

• (iii) Property, plant and equipment under construction

For the years ended 2021 and 2020, the capitalized interests related to the property, plant and equipment under construction were $185,878 thousand and $188,509 thousand, respectively, which were calculated based on the capitalized interest rates ranging from 1.5960%~5.4702% and 1.5964%~5.4702%, respectively.

(Continued)

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

• (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, 2021 and 2020, accumulated investment remittance from Taiwan to Mainland China was CNY1,688,000 thousand and CNY1,618,000 thousand, respectively. The amount invested in manufacturing plant and machinery was CNY1,688,000 thousand and CNY1,449,023 thousand, respectively.

(i)

Right-of-use assets

The Group leases assets including land, land use right, buildings, machinery and equipment and vehicles. Information about leases for which the Group as a lessee is presented below:

Cost: Balance as of January 1, 2021 Additions Disposal Effect of movements in exchange rate Balance as of December 31, 2021 Balance as of January 1, 2020 Additions Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Accumulated depreciation and impairment losses: Balance as of January 1, 2021 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2021 Balance as of January 1, 2020 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of January 1, 2020 Balance as of December 31, 2020	Land	Land-use right	Buildings	Machinery and equipment	Vehicles	Other facilities	Total
	$ 228,407 20,491 (484) - $ 248,414 $ 204,551 24,144 (288) - $ 228,407 $ 16,613 9,733 (327) - $ 26,019 $ 8,012 8,706 (105) - $ 16,613 $ 222,395 $ 196,539 $ 211,794	658,503 - - 4,269 662,772 657,738 - - 765 658,503 72,578 13,584 - 520 86,682 58,963 13,412 - 203 72,578 576,090 598,775 585,925	19,751 7,061 (576) - 26,236 19,554 12,757 (12,560) - 19,751 6,304 10,739 (576) - 16,467 8,901 9,883 (12,480) - 6,304 9,769 10,653 13,447	111,057 30,432 (30,940) - 110,549 63,906 56,115 (8,964) - 111,057 60,620 34,768 (30,940) - 64,448 33,708 34,009 (7,097) - 60,620 46,101 30,198 50,437	16,931 12,266 (11,103) - 18,094 19,456 9,140 (11,665) - 16,931 6,348 6,352 (4,528) - 8,172 8,475 8,858 (10,985) - 6,348 9,922 10,981 10,583	1,938 - (1,448) - 490 1,938 - - - 1,938 1,187 565 (1,449) - 303 580 607 - - 1,187 187 1,358 751	1,036,587 70,250 (44,551) 4,269 1,066,555 967,143 102,156 (33,477) 765 1,036,587 163,650 75,741 (37,820) 520 202,091 118,639 75,475 (30,667) 203 163,650 864,464 848,504 872,937

(Continued)

• 205 -

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

(j) Investment property

The movement of investment property was as followed:

Cost or deemed cost: Balance as of January 1, 2021 Disposal Net gains and losses due to fair value adjustments Balance as of December 31, 2021 Balance as of January 1, 2020 Acquisition through business combination Net gains and losses due to fair value adjustments Balance as of December 31, 2020	Land $ 37,609,032 (1,668,271) 2,913,127 $ 38,853,888 $ 36,701,668 6,462 900,902 $ 37,609,032	Buildings 17,795 (5,264) 648 13,179 18,038 3,014 (3,257) 17,795	Total 37,626,827 (1,673,535) 2,913,775
			38,867,067
			36,719,706 9,476 897,645
			37,626,827

• (i) The Group disposed its investment property with the disposal price of $2,380,000 thousand and the disposal gain of $706,465 thousand.

• (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, 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 house, parking lot $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 Current market rent for comparable properties in similar locations and condition 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

(Continued)

• 206 -

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

December 31, 2020

December 31, 2020
Subject	Qianjin Dist., Kaohsiung City	Qianzhen Dist., Kaohsiung City Others None None $450 $1,000~$1,270 None $1,030~$1,259 Leased Unused $0~ $0 $0~ $0 None 1.730% 4.655% 2.030% External independent appraiser External independent appraiser Colliers International Taiwan Taiwan Dawa Real Estate Appraiser & Associates Shiou-Ying, Jan Yu-Hua, Lu December 31, 2020 December 31, 2020 2,737,000 10,478
Contract terms Rental at local market rate Current market rent for comparable properties in similar locations and condition 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 December 31, 2020 $ 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.

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, 2021 and 2020, the discount rate was 2.845%~4.445%, and 2.030%~4.655%, respectively. As of December 31, 2021 and 2020, the weighted average capitalization rate was 1.130%~5.335%, and 1.730%~5.525%, respectively, derived as the ratio of annual net operating income of comparable properties divided by reasonable price.

(Continued)

• 207 -

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

• (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, 2021

Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 122,550,002 (Note) 2,782,072 20%~22% 12%~18% 4.150%~4.9900% 0.92%~3.03% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm, Colliers International Taiwan and Baoyuan Real Estate Appraisers Firm Shiou-Ying, Jan and Jian-Hui, Gu Jian-Hui,Gu, Shiou-Ying, Jan, Ching-Tang, Li and Tzu- Kuang, Yeh December 31, 2021 December 31, 2021 29,516,000 1,381,141 Qianzhen Dist., Kaohsiung City Others 110,949,840 (Note) 2,614,812 19%~22% 12%~20% 3.650%~5.8547% 0.92%~3.05% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm, Colliers International Taiwan and China Real Estate Appraisers Firm Shiou-Ying, Jan and Jian-Hui, Gu Yu-Xian, Houng, Jian-Hui, Gu, Shiou-Ying, Jan Dian-Ching, Hsieh, and Ching-Tan, Li December 31, 2020 December 31, 2020 28,519,000 1,352,806
Estimated revenue Gross profit margin Rate of return Appraiser offices Appraiser names Appraisal date Fair value by external independent appraisers December 31, 2020 Subject	9,391,820 17% 1.850% CCIS Real Estate Joint Appraisers Firm Chih-Hao, Wu December 31, 2021 $ 5,043,136 Annan Dist., Tainan City
Estimated revenue Gross profit margin Rate of return Appraiser offices Appraiser names Appraisal date Fair value by external independent appraisers	7,968,120 23% 1.770% CCIS Real Estate Joint Appraisers Firm Huo-Ming, Huang December 31, 2020 $ 4,995,991

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

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.

(Continued)

• 208 -

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

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.

As of December 31, 2021 and 2020, the Group provided as collateral portion of its investment property. Please refer to note 8 for details of the related assets pledged as collateral.

In the era of pre-Taiwan Alkali Industrial Corporation (TAIC), TAIC had leased the lands located in Tainan and Chiayi area to the local peasants and fishermen, and the surviving tenants shall continue paying the rent to the Group according to the agreements. In the event of the resumption for self-business use or the sale of the lands, the leases shall be terminated under the contractual agreements and Land Laws. If there is any redemption in some cases, the Company will recognize and evaluate the possible expenses and costs case by case.

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” ).

(Continued)

• 209 -

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.

• 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.

(Continued)

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

(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 2008. The Company appealed in March 2008 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 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

(Continued)

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

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 final ruling, which was binding, that the Company should only pay the amount of $538 thousand on October 28, 2021. However, the Company received the complaint for a rehearing action from the Tainan City Government on December 23, 2021. The Company has responded accordingly regarding the case, which was still in progress as of the reporting date.

• 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 final ruling, which was binding, from the Supreme Administrative Court on January 22, 2022, wherein the portion over $7,276 thousand that the Tainan City Government ordered the Company to pay need not be included. Instead, the Company should only pay the total amount of $12,121 thousand, including the final and binding portion of the judgment.

(Continued)

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

• 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 this case is still under trial now.

• 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 appeal in September of the same year. TCG dismissed the Company’s petition on December 25, 2020. On February 26, 2021, the Company filed an appeal to KHAC, who made the final ruling, which was binding, on December 29, 2021, stating that the Company should only pay the amount of $493 thousand. As a favor to TCG, the Company decided not to file an appeal against the final ruling.

• 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 remended 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.

(Continued)

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

• 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.

3) Others

• a) The Company still has the objection on the adscription of pollution responsibility for Anhun 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 stateowned 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 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 $5,552,840 thousand until December 31, 2021. The preceding remediation fee was estimated according to the current possible situations by the Company. However, unpredictable future events may cause large fluctuations in the total expected remediation fees. This will be closely monitored and evaluated by management.

(Continued)

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

• b) 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. 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.

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 238, 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.

(Continued)

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

• b) Then the plant was subsequently sold to CPC. The New Taipei City Government Environmental Protection Bureau, on August 16, 2010, announced the land as “soil pollution control site”.

• c) The New Taipei City Government Environmental Protection Bureau issued the letter No. 1000010000 in March 2011 declaring that the Company merging with 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.

(Continued)

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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, 2021 Acquisition Effect of movement in exchange rates Balance as of December 31, 2021 Balance as of January 1, 2020 Acquisition Disposals Effect of movement in exchange rates Balance as of December 31, 2020 Accumulated amortization and Impairment Loss: Balance as of January 1, 2021 Amortization for the period Effect of movement in exchange rates Balance as of December 31, 2021 Balance as of January 1, 2020 Amortization for the period Disposals Effect of movement in exchange rates Balance as of December 31, 2020 Carrying value: Balance as of December 31, 2021 Balance as of January 1, 2020 Balance as of December 31, 2020	Goodwill $ 135,871 - (1,959) $ 133,912 $ 144,862 - - (8,991) $ 135,871 $ - - - $ - $ - - - - $ - $ 133,912 $ 144,862 $ 135,871	Computer software 11,546 6,176 74 17,796 8,422 3,182 (69) 11 11,546 3,913 1,954 30 5,897 2,680 1,282 (69) 20 3,913 11,899 5,742 7,633	Patents and trademark 100,361 17,778 175 118,314 100,247 83 - 31 100,361 84,692 7,005 120 91,817 73,387 11,209 - 96 84,692 26,497 26,860 15,669	Total
				247,778 23,954 (1,710) 270,022 253,531 3,265 (69) (8,949) 247,778 88,605 8,959 150 97,714 76,067 12,491 (69) 116 88,605 172,308 177,464 159,173

As of December 31, 2021 and 2020, the aforesaid intangible assets were not pledged as collateral.

(Continued)

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

(l) Short-term loans

The short-term loans were summarized as follows:

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, 2021 $ 377,000 1,108,018 10,893,032 359,639 $ 12,737,689 $ 23,581,513 $ 8,174,224 0.669%~4.5%	December 31, 2020
		1,175,000 1,300,000 1,140,000 -
		3,615,000
		6,901,296
		1,430,278
		1.2799%~1.3857%

Secured bank loans from Shin Kong Commercial Bank

On October 21, 2021, Ding Yue Development Co., Ltd. (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.

• 2) Ding-Yue shall obtain the construction license and start the construction within the agreed period. The loan interest will be accrued if any of the above time schedules are violated. The interest will be charged starting from the date of the violation to the date of obtaining the construction license or the date of commencement of construction.

(Continued)

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

• 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.

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

• (m) Long-term loans

The long-term loans were summarized as follows:

Secured bank loans Finance lease loans Less: current portion Total Total long-term credit lines Unused long-term credit lines Range of interest rates	December 31, 2021 $ 15,302,394 89,710 (1,486,515) $ 13,905,589 $ 25,905,067 $ 7,935,100 1.3%~5.8725%	December 31, 2020 9,274,260 130,223 (1,914,833) 7,489,650 17,636,400 5,601,475 1.3%~5.5%

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.

• (i) 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.

• (ii) 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.

• (iii) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. If the Company breaches these financial covenants, the syndicated banks may declare the unpaid principal, interest, fees and other sums payable by the Company under the loan agreement to be immediately due and payable. These financial ratios are as follows:

(Continued)

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

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

• (iv) In the event that there is a 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.

• (v) The term of the repayment of the category A credit is stipulated as: The first period will be paid off from the date of the first use of the credit application to the expiration of three years. After that, it will be a period of six months for once. Settlement of the liability divided into five phases. The first period to the fourth period, each period shall be settled separately for 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.

• (vi) 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.

(Continued)

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

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.

• (i) Syndicated loan A: The credit line is $2,815,000 thousand consisting of medium-term secured loans and revolving credit facility, which was used to meet the funding requirements. The loan period lasts 3 years upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended upon expiration for 2 years, and limited to once, through written application.

• (ii) Syndicated loan B: The credit line is $1,085,000 thousand consisting of commercial promissory note agreements and revolving credit facility, which was used to meet the funding requirements. The loan period lasts 1 year upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended 12 months before expiration, and limited to twice, through written application.

• (iii) 24 months after the first disbursement and every 6 months ever since, the credit line of the syndicated loan is diminished by 10% of the total credit line, applicable to the extension period. In advance of each credit line diminished date, for loan A, the Company shall settle any exceeding principal, interests, and other relating liabilities, free of prepayment terms included in the contract. For loan B, the Company shall make deposit to the designated account to make up for the amount of note principal exceeding the credit line, free of prepayment terms included in the contract. The Company may withdraw the deposit after the aforementioned note is settled.

• (iv) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. These financial ratios are as follows:

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

• 4) Tangible net worth (total equity excluding intangible assets): not lower than $60,000,000 thousand.

(Continued)

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

• (v) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 8 of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest, plus guarantee fee. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.

• (vi) The term of the repayment of the category A credit is stipulated as: the repayment shall be completed on the expiration date stated in the application form for each disbursement.

• (vii) The term of the repayment of the category B credit is stipulated as: The repayment shall be completed on the due date stated on the note.

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.

• (i) The financial covenants under the loan agreement include the requirement to maintain the following financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. In the event of any violation, the CTBC Bank is entitled to reduce credit line, shorten the loan period, and have all principals and interests repaid immediately.

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 120%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

• 4) Tangible net worth (total equity excluding intangible assets): not lower than $67,000,000 thousand.

• (ii) 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.

(Continued)

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

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

On April 29, 2021, the Company signed a medium-term loan agreement for 58 months with Taiwan Life Insurance Co., Ltd. in order to meet the funding requirements. The Company and Ding-Yue Development Co., Ltd. share a credit line of $4,100,000 thousand, while Ding-Yue Development Co., Ltd. has the upper limit of 1,000,000 thousand.

On October 21, 2021, Ding-Yue signed a 4-year syndicated loan agreement with 9 financial institutions, with Shin Kong Commercial Bank as the lead bank. The syndicated loan agreement included a credit line of NT$1,200,000 thousand from Taiwan Life Insurance Co., Ltd. On October 7, 2021, Taiwan Life Insurance Co., Ltd. issued a notice of change in its credit limit. The notice stipulated that the total amount of Ding Yue’s syndicated loan agreement and the interim guarantee credit contract mentioned in the preceding paragraph will be a maximum amount of NT$4,100,000 thousand. Therefore, starting from October 21, 2021, the total credit limit for the medium-term guarantee contract mentioned in the preceding paragraph was reduced to NT$2,900,000 thousand.

Secured bank loans from Farglory Life Insurance Inc.

On September 30, 2021, the Company signed a medium-term loan agreement for 5 years with Farglory Life Insurance Inc. in order to meet the funding requirements. The aggregate amount of credit line of the loan was $2,000,000 thousand.

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

• (n) Bonds payable

• (i) The details of bonds payable were as follows:

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, 2021 $ 4,750,000 (40,904) (25,000) $ 4,684,096 114	December 31, 2020
		3,500,000 - -
		3,500,000
		114

(Continued)

• 223 -

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

(ii) The Group issued domestic secured non-convertible bonds at the amount of $3,500,000 thousand in 2020, the terms were as follows:

Issue amount Issue date Issue period Coupon rate Interest payment date Repayment and interest payment	The first domestic secured non-convertible bond in 2020 Bond A Bond B Bond C $ 1,500,000 1,000,000 1,000,000 109.9.21 109.9.21 109.9.21 5 years 5 years 5 years % 0.64 % 0.64 % 0.64 September 21 September 21 September 21 Repayment on maturity, interest payment annually Repayment on maturity, interest payment annually Repayment on maturity, interest payment annually

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

• (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 $ 625,000 625,000 110.10.21 110.10.22 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.

(Continued)

• 224 -

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

(o) Short-term bills payable

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

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

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

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:

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

(Continued)

• 225 -

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

Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Bills payable Less: Discount on long- term bills payable Total	December 31, 2020 Acceptance institution Period Amount International Bills Finance Corporation 2020.12.07~2021.02.22 $ 200,000 International Bills Finance Corporation 2020.12.31~2021.01.05 150,000 Taching Bills Finance Corporation 2020.11.12~2021.01.07 300,000 Taching Bills Finance Corporation 2020.10.12~2021.01.07 100,000 China Bills Finance Corporation 2020.11.09~2021.01.27 800,000 China Bills Finance Corporation 2020.12.22~2021.03.22 500,000 China Bills Finance Corporation 2020.10.12~2021.01.08 500,000 China Bills Finance Corporation 2020.12.11~2021.03.11 720,000 China Bills Finance Corporation 2020.11.10~2021.01.27 30,000 Mega Bills Finance Corporation 2020.10.30~2021.01.26 550,000 Mega Bills Finance Corporation 2020.12.25~2021.02.25 670,000 Mega Bills Finance Corporation 2020.11.17~2021.01.18 200,000 Mega Bills Finance Corporation 2020.11.06~2021.01.18 80,000 Mega Bills Finance Corporation 2020.11.20~2021.01.18 140,000 Mega Bills Finance Corporation 2020.11.25~2021.01.18 270,000 Mega Bills Finance Corporation 2020.11.30~2021.01.26 85,000 Mega Bills Finance Corporation 2020.11.30~2021.01.26 15,000 Mega Bills Finance Corporation 2020.12.04~2021.01.26 150,000 Mega Bills Finance Corporation 2020.12.07~2021.02.25 200,000 5,660,000 (3,888) $ 5,656,112
	Acceptance institution
	International Bills Finance Corporation International Bills Finance Corporation Taching Bills Finance Corporation Taching Bills Finance Corporation China Bills Finance Corporation China Bills Finance Corporation China Bills Finance Corporation China Bills Finance Corporation China Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation Mega Bills Finance Corporation

The Group had revolving commercial promissory note agreements with bills finance companies in order to finance its operating requirement. As of December 31, 2021 and 2020, the bills payable bear interest rates ranging from 0.30%~0.9700% and 0.28%~1.2620%, respectively.

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

(Continued)

• 226 -

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, 2021 $ 56,324 $ 240,124	December 31, 2020
		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,
	2021 $ 5,604 $ 49,471	2020
		4,734
		49,237

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

Total cash outflow for leases	For the years ended December 31,	For the years ended December 31,
	2021 $ 115,103	2020
		113,518

(r) Provisions

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 Current Non-current Balance as of January 1, 2020 Provisions made during the year Provisions used during the year Effect of movements in exchange rate Balance as of December 31, 2020 Current Non-current	Decommissioning $ 1,264,564 513 - 322 $ 1,265,399 $ - 1,265,399 $ 1,265,399 $ 1,264,002 505 - 57 $ 1,264,564 $ - 1,264,564 $ 1,264,564	Remediation project 514,613 1,664,899 (82,034) - 2,097,478 473,093 1,624,385 2,097,478 603,972 249,750 (339,109) - 514,613 276,650 237,963 514,613	Employee benefits 275,925 96,647 (56,183) - 316,389 5,641 310,748 316,389 256,818 50,429 (31,322) - 275,925 5,641 270,284 275,925	Total
				2,055,102 1,762,059 (138,217 322
				3,679,266
				478,734 3,200,532
				3,679,266
				2,124,792 300,684 (370,431 57
				2,055,102
				282,291 1,772,811
				2,055,102

(Continued)

• 227 -

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

• (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 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.

(Continued)

• 228 -

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

(s) Operating lease

There were no significant changes in operating lease for the years ended December 31, 2021 and 2020. Please refer to note 6(r) of the consolidated financial statements for the year ended December 31, 2020 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, 2021 $ 52,041 52,084 42,222 40,407 40,452 376,771 $ 603,977	December 31, 2020 36,840 36,840 36,883 27,021 25,206 265,843
		428,633

For the years ended December 31, 2021 and 2020, the income from the rental of investment property, property, plant and equipment amounted to $49,486 thousand and $22,839 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, 2021 $ 525,118 (215,849) $ 309,269	December 31, 2020 495,047 (225,170) 269,877

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, 2021 and 2020.

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.

(Continued)

• 229 -

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

• 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 $214,754 thousand as of December 31, 2021. 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 (income) Remeasurements loss (gain): —Actuarial loss 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, 2021 2020 $ 495,047 541,718 11,958 15,449 37,058 41,490 17,098 - 27,420 (6,046) (61,510) (97,564) (1,953) - $ 525,118 495,047

• 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 Benefits paid Fair value of plan assets, December 31	For the years ended December 31, 2021 2020 $ 225,170 301,251 1,334 2,833 3,285 10,612 47,570 8,038 (61,510) (97,564) $ 215,849 225,170

(Continued)

• 230 -

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

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

Current service cost Net interest 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, 2021 2020 $ 8,964 10,258 1,660 2,358 $ 10,624 12,616 $ 9,116 10,947 116 130 1,201 1,335 191 204 $ 10,624 12,616 $ 4,619 13,445

• 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, 2021 and 2020, was as follows:

Accumulated balance, January 1 Recognized during this year Accumulated balance, December 31	For the years ended December 31, 2021 2020 (175,380) (150,548) (78,291) (24,832) $ (253,671) (175,380)

• 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, 2021 2020 0.5%~0.625% 0.5%~0.625% 1%~1.5% 1%

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 $7,228 thousand.

The weighted average lifetime of the defined benefits plans is 7.91 year~ 13.65 years.

(Continued)

• 231 -

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

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, 2021 Discount rate Future salary increasing rate December 31, 2020 Discount rate Future salary increasing rate	Impact on the defined benefit obligations Increase by 0.25% Decrease by 0.25% $ (14,960) 15,549 15,117 (14,626) (13,413) 13,951 13,626 (13,170)

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 2021 and 2020.

(ii) Defined contribution plans

The Group allocates 6% of each employee’ s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Group allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The cost of the pension contributions to the Labor Insurance Bureau for the years ended December 31, 2021 and 2020 amounted to $46,668 thousand and $47,295 thousand, respectively.

(iii) The pension recognized consists of pension expenses and pensions for professional management. The pension expenses for professional management were $9,333 thousand and $13,291 thousand for the years ended December 31, 2021 and 2020, respectively.

(iv) Short-term compensated absences liabilities

As of December 31, 2021 and 2020, the Group’s short-term compensated absences liabilities both amounted to $5,641 thousand.

(Continued)

• 232 -

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

(u) Income Tax

(i) Income tax expense

The components of income tax expense for the years ended December 31, 2021 and 2020 were as follows:

Current income tax expense (benefit) Current period Adjustment for prior periods Deferred tax expense (benefit) Change in land value-added tax Change in unrecognized deductible temporary differences Income tax expense (benefit)	For the years ended December 31,	For the years ended December 31,
	2021 $ (353,570) (1,848) (355,418) 326,262 422,607 748,869 $ 393,451	2020 (34,553) (75,086) (109,639) (523,895) 62,650 (461,245) (570,884)

For the years ended December 31, 2021 and 2020, income tax expenses recognized under other comprehensive income were both $0 thousand.

Reconciliation of income tax expense (benefit) and profit before tax for the years ended December 31, 2021 and 2020, 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 Tax incentives 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 Others Income tax expense (benefit)

For the years ended December 31, 2021 2020 $ 3,989,678 103,776 $ 797,935 20,755 6,085 (8,637) 11,734 10,315 (205,054) (100,829) - (1,085) 132,368 188,730 290,239 (126,080) (1,848) (75,086) 19,149 3,147 (658,324) (381,462) 326,262 (523,895) (318,276) (61) (6,819) 423,304 $ 393,451 (570,884)

(Continued)

• 233 -

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

(ii) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax liabilities

The Group is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as of December 31, 2021 and 2020. Also, management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

December 31, 2021 Aggregate amount of temporary differences related to investments in subsidiaries $ 105,577 Unrecognized deferred tax liabilities $ 21,115 2) Unrecognized deferred tax assets December 31, 2021 Decommissioning liabilities $ 122,815 Remediation project 237,893 Pollution remediation 1,859,585 Allowance for doubtful receivables 319,484 Investment property, property, plant and equipment 3,424,875 Pension 169,099 Tax loss 7,512,200 Others 471,119 $ 14,117,070	December 31, 2020
	39,698
	7,940
	December 31, 2020
	111,517 238,563 276,050 319,484 3,091,241 207,999 7,310,487 382,817
	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, 2021, the expiration years of tax loss unrecognized as deferred tax assets were as follows:

• a) The Company

Year incurred	Amount Expiry Date $ 53,093 2024 2,132,246 2025 1,870,634 2026 567,338 2030
2014 2015 2016 2020

(Continued)

• 234 -

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

b) Taivex Therapeutics Inc.

		Year incurred	Amount	Effective Period
	2012	$	29,657	2022
	2013		50,227	2023
	2014		27,419	2024
	2015		43,032	2025
	2016		44,291	2026
	2017		54,764	2027
	2018		79,334	2028
	2019		67,345	2029
	2020		76,760	2030
	2021 (estimated)		85,875	2031
c)	BES Twin Towers Development Co., Ltd.
		Year incurred	Amount	Effective Period
	2013	$	7,512	2023
	2014		44,139	2024
	2018		427,443	2028
	2021 (estimated)		102,885	2031
d)	CPDC Green Technology Corp.
		Year incurred	Amount	Effective Period
	2018	$	19,355	2028
	2019		36,819	2029
e)	Ding-Yue Development Co., Ltd.
		Year incurred	Amount	Effective Period
	2016	$	23	2026
	2017		1,162	2027
	2018		1,821	2028
	2019		3,726	2029
	2020		9,991	2030
	2021 (estimated)		87,883	2031

(Continued)

• 235 -

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

• f) Da Yin Construction Engineering Co., Ltd.

		Year incurred	Amount	Effective Period
	2013	$	142	2023
	2014		159	2024
	2015		11	2025
	2016		112	2026
	2017		136	2027
	2018		158	2028
	2019		162	2029
	2020		2,207	2030
	2021	(estimated)	2,573	2031
g)	Weihua (Rudong) Trade Co., Ltd
		Year incurred	Amount	Effective Period
	2016	$	43,586	2021
	2017		21,431	2022
h)	Weiqiang International Trade (Shanghai) Co., Ltd.
		Year incurred	Amount	Effective Period
	2016	$	20,178	2021
i)	Jiangsu Weiming New Material		Co., Ltd. (original	name: Jiangsu Weiming
	Petrochemical Corporation)

		Year incurred	Amount	Effective Period
	2017	$	45,529	2022
	2018		19,934	2023
	2019		145,748	2024
	2020		133,589	2025
	2021	(estimated)	230,381	2026
j)	Changzhou Weicai New Material		Science & Technology	Co., Ltd.
		Year incurred	Amount	Effective Period
	2016	$	274,412	2021
	2017		208,239	2022
	2018		179,834	2023
	2019		57,850	2024
	2020		47,982	2025
	2021	(estimated)	151,726	2026

(Continued)

• 236 -

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

• k) Weiming (Rudong) Construction Co., Ltd.

Year incurred	Amount Effective Period $ 22 2025 515 2026
2020 2021 (estimated)

• 3) Deferred tax liabilities:

As of December 31, 2021 and 2020, the balance of deferred income tax liabilities for the provision of land value-added tax was $6,764,316 thousand and $6,497,650 thousand, respectively.

• 4) Deferred tax assets:

Deferred tax assets:
December 31, 2021 (equal to January 1) December 31, 2020 (equal to January 1)	Taxable Loss $ 11,009 $ 11,009	Defined benefit plans 14 14	Total
			11,023
			11,023

• (iii) Assessment of tax

The Company's tax returns for the years through 2019 were assessed by the National Taxation Bureau of Kaohsiung.

• (v) Capital and other equity

• (i) The issuance of common stock

As of December 31, 2021 and 2020, the authorized, issued and outstanding capital of the Company amounted to $37,848,502 thousand and $32,848,502 thousand, respectively, divided into 3,784,850 thousand and 3,284,850 thousand shares, respectively, with par value of $10 per share.

Reconciliation of shares outstanding for the years ended December 31, 2021 and 2020 was as follows:

(In thousands of shares)

Balance, January 1 Capital increased by cash Balance, December 31	Common Stock	Common Stock	Common Stock
	For the years ended December 31,
		2021 3,284,850 500,000 3,784,850	2020
			2,834,850 450,000
			3,284,850

(Continued)

• 237 -

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.

In order to invest in the overseas subsidiary for the purpose of plant construction, a resolution was made during the Board of Director’ s meeting held on September 23, 2019 for the issuance of common stock in term of Global Depositary Receipts (GDR), with a maximum limit of 500,000 thousand shares, amounting to USD160,317 thousand, which was approved by Rule No. 1080335763 Financial Supervisory Commission on November 20, 2019. The share price was determined and completed on January 6, 2020 and issued on January 10, 2020. The total units of issued GDR was 18,000 thousand units, which represented the right of common stock for 450,000 thousand shares; for every 25 shares of common stock per unit of GDR, the unit price of GDR was USD7.18, which was equivalent to $8.64 per share, resulting to a total issuance price amounting to USD129,240 thousand. The total amount of the issuance, deducting the costs necessary for the issuance, was $3,796,481 thousand. The capital increase base date was January 10, 2020, and the relevant legal registration procedures had been completed.

(ii) Capital Surplus

The balances of capital surplus were as follows:

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, 2021 $ 1,408,088 26,314 1,758 18,141 $ 1,454,301	December 31, 2020
		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.

(Continued)

• 238 -

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

(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 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 both amounted to $4,194,973 thousand as of December 31, 2021 and 2020.

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 and $4,235,076 thousand as of December 31, 2021 and 2020, respectively.

(Continued)

• 239 -

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

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 and $21,224,233 thousand as of December 31, 2021 and 2020, respectively.

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, 2021 and 2020, the Company appropriated to the special reserve amounting to $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.

(Continued)

• 240 -

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

• 3) Earnings Distribution

Earnings distribution for 2021 and 2020 was resolved in the Board of Directors’ meeting held on March 14, 2022 and general meeting of shareholders held on July 2, 2021, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash	2021 $ 1,513,940	2020
		-

• (iv) Treasury shares

In accordance with the requirements under section 28(2) of the Securities and Exchange Act, the Company plans to buy 50,000 thousand ordinary shares from March 30 to May 29, 2020, in order to protect the Company’s credit and shareholders’ equity. The price range is between $5.03 and $7.50 per share. On May 29, 2020, the market prices were higher than the upper limit of the execution price range for the repurchase of treasury shares, and the stock of the Company was not oversold compared with the market during the original scheduled repurchase period. The repurchase was not executed in order to protect shareholders' equity and take into market mechanisms.

• (v) Other equity accounts

Balance, January 1, 2021 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, December 31, 2021	Exchange differences on translation of foreign financial statements $ (966,202) 12,239 5,104 - - - $ (948,859)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (854,259) - - 252,449 (1,384) 26,248 (576,946)

(Continued)

• 241 -

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

Exchange differences on translation of foreign financial statements Balance, January 1, 2020 $ (804,515) Exchange differences on foreign operations (188,319) Exchange difference on associates accounted for using equity method 26,632 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 (losses) gains from financial assets measured at fair value through other comprehensive income, associates accounted for using equity method - Balance, December 31, 2020 $ (966,202) (w) Earnings per share The Group’s earnings per share were calculated as follows:

Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (1,120,657) - - 360,247 (126,299) 32,450 (854,259)

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,
	2021 $ 3,603,208 3,299,919 $ 1.09 $ 3,603,208 3,299,919 9,554 3,309,473 $ 1.09	2020
		680,989 3,273,785 0.21 680,989 3,273,785 3,039 3,276,824 0.21

(Continued)

• 242 -

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

(x) Revenue from contracts with customers

• (i) 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) of the consolidated financial statements.

(ii) Contract balances

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful account Contract liabilities	December 31, 2021 $ 628,485 3,574,627 (334,036) $ 3,869,076 $ 20,612	December 31, 2020 375,689 1,906,374 (446,393) 1,835,670 1,676

Please refer to note 6(d) for disclosure of accounts receivable and allowance for doubtful accounts.

The amounts of revenue recognized for the years ended December 31, 2021 and 2020 that were included in the contract liability balance at the beginning of the periods were $1,676 thousand and $88,263 thousand, respectively.

(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, 2021 and 2020, the remuneration to employees amounted to $124,488 thousand and $2,670 thousand, respectively, and the remuneration to directors amounted to $82,992 thousand and $1,780 thousand, respectively. These amounts were calculated using the Company’ s net income before tax before remuneration to employees and directors for the years ended December 31, 2021 and 2020. These benefits were charged to profit or loss under operating costs or operating expenses for the years ended December 31, 2021 and 2020. When the board of directors decided to distribute stock dividends, the number of which shall be calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of Board of Directors. For the years ended December 31, 2021, the actual distribution of the employee remuneration was $0 thousand; while the amount for directors is identical to those stated on financial statements. Related information would be available at the Market Observation Post System website.

(Continued)

• 243 -

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

(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,
	2021 $ 186,933 1,267 $ 188,200	2020
		159,094 2,285
		161,379

(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,
	2021 $ 19,151 313,215 154,246 $ 486,612	2020
		18,125 257,817 287,928
		563,870

• (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 Losses on disposals of investments Gains on lease modification Foreign exchange gains (losses) Fee expense Losses on work stoppages Remediation expense Other gains and losses Other gains and losses, net	For the years ended December 31, 2021 2020 $ (33) (1,060) 706,465 - - (580) 34 49 26,146 (22,763) (191,759) (97,677) (248,457) (267,500) (1,664,899) - (20,571) (18,216) $ (1,393,074) (407,747)
	2021 $ (33) 706,465 - 34 26,146 (191,759) (248,457) (1,664,899) (20,571) $ (1,393,074)

(Continued)

• 244 -

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

(iv) Finance costs

The details of finance costs were as follows:

The details of finance costs were as follows:
Interest expense Finance costs, net	For the years ended December 31, 2021 2020 $ (323,681) (221,705) $ (323,681) (221,705)
	2021 $ (323,681) $ (323,681)

(aa) Financial Instruments

(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.

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

As of December 31, 2020, 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 and accounts 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, 2021 and 2020, the loss allowance provision both amounted to $0 thousand.

(Continued)

• 245 -

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

(ii) Liquidity risk

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

December 31, 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 (note) Bonds payable December 31, 2020 Non-derivative financial liabilities Accounts payable Other payables Other current liabilities� other Other non-current liabilities �other Lease liabilities Floating-rate loans (note) Fixed-rate loans (note) Long-term bills payable (note) Bonds payable	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 and long-term bills payable.

(Continued)

• 246 -

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 VND MMK CNY Non-Monetary items HKD Financial liabilities Monetary items USD	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	December 31, 2020	December 31, 2020
	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 - -

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 weakening of 1% of NTD against USD, VND, MMK and CNY would have increased net income by $28,462 thousand and $26,372 thousand for the years ended December 31, 2021 and 2020, respectively; other comprehensive income would have increased $9,066 thousand and $8,981 thousand for the years ended December 31, 2021 and 2020, respectively. The analysis is performed on the same basis for 2020.

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, 2021 and 2020, foreign exchange gains (losses) (including realized and unrealized portions) amounted to $26,146 thousand and $(22,763) 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.

(Continued)

• 247 -

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

If the interest rate increases by 1%, the Group’s net income will decrease by $25,013 thousand and $30,782 thousand for the years ended December 31, 2021 and 2020, 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,	For the years ended December 31,	For the years ended December 31,
	2021 After-tax other comprehensive income Net income $ 30,597 73,310 $ (30,597) (73,310)	2020
	After-tax other comprehensive income $ 30,597 $ (30,597)	After-tax other comprehensive income 28,087 (28,087)	Net income
Increasing 1% Decreasing 1%			115,764 (115,764)

• (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:

Financial assets at fair value through profit or loss Designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes, accounts and other receivables Other financial assets Subtotal Total Non-financial assets Investment property		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		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)

• 248 -

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

Financial liabilities measured at amortized cost Short-term loans Short-term bills payable Accounts and other payable Long-term bank loans-current portion Bonds payable Long-term bank loans Long-term bills payable Other financial liabilities Lease liabilities Total Financial assets at fair value through profit or loss Designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes, accounts and other receivables Other financial assets Subtotal Total Non-financial assets Investment property Financial liabilities measured at amortized cost Short-term loans Accounts and other payable Long-term bank loans-current portion Bonds payable Long-term bank loans Long-term bills payable Other financial liabilities Lease liabilities Total			December 31, 2021	December 31, 2021	December 31, 2021
				Fair value
			Level 1 Level 2 Level 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - December 31, 2020			Total
						- - - - - - - - -
						-
				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)

• 249 -

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, 2021 and 2020.

(Continued)

• 250 -

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, 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 January 1, 2020 Acquisition from business combination Acquisition Total gain and losses recognized in profit or loss Total gain and losses recognized in other comprehensive income December 31, 2020	Investment Property $ 37,626,827 - - (1,673,535) 2,913,775 - $ 38,867,067 Investment Property $ 36,719,706 9,476 - 897,645 - $ 37,626,827	Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 10,746,855 - 63 - 21,540 - (3,816,240) - 21,561 - - - 6,973,779 - Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 9,942,994 - - - - - 803,861 - - - 10,746,855 -	Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 740,469 - - (1,438) - 40,043 779,074 Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 442,497 - 300,000 - (2,028) 740,469
		Designated at initial recognition 9,942,994 - - 803,861 - 10,746,855

(Continued)

• 251 -

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, 2021 and 2020 was $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 9.66~10.69 as multiply on December 31, 2021 •Lack of market liquidity, discount rate 20% on December 31, 2021 •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)

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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 December 31, 2021 and 2020 •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)

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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 long-term bond issued by the Group is fixed-rate loan, so there is no risk caused by the fluctuations of interest rates and fair value interest rate. The long-term and short-term bank loans with floating-rate are exposed to interest rate risk, but most of risk is offset by cash and cash equivalents holding in floating-rate deposits.

3) Other market price risk

The Group does not enter into any commodity contracts other than to meet the Group’s expected usage and sales requirements; such contracts are not settled on the net basis.

(Continued)

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

(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 liabiltiies.

The Group and other entities in the similar industry use the debt-to-equity ratio to manage capital. This ratio is determined using the total net debt and divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, other equity and non-controlling interest plus net debt.

The Group’s debt-to-equity ratios at the end of the reporting period as of December 31, 2021 and 2020 were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Total liabilities and equity Debt-to-equity ratio	December 31, 2021 $ 54,926,789 (7,650,122) $ 47,276,667 $ 80,528,419 $ 127,805,086 % 36.99	December 31, 2020 34,041,959 (7,479,899) 26,562,060 70,868,031 97,430,091 % 27.26

On December 31, 2021, 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, 2021 and 2020, 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:

Long-term bank loans Short-term loans (note) Short-term bills payable Long-term bills payable Lease liabilities Long-term bank loans Short-term loans Long-term bills payable Lease liabilities	January 1, 2021 $ 9,404,483 3,615,000 - 5,656,112 292,992 $18,968,587 January 1, 2020 $ 8,483,913 3,484,148 4,494,177 253,243 $16,715,481	Cash flows 3,725,016 11,218,648 1,429,955 1,847,200 (65,632) 18,155,187 Cash flows 1,087,292 135,040 1,160,000 (64,281) 2,318,051	Non-cash changes Foreign exchange movement Bills payable transferre d 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 transferre d to long- term bank loans Other (166,722) - - (4,188) - - - - 1,935 - - 104,030 (170,910) - 105,965	Non-cash changes Foreign exchange movement Bills payable transferre d 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 transferre d to long- term bank loans Other (166,722) - - (4,188) - - - - 1,935 - - 104,030 (170,910) - 105,965	December 31, 2021
					15,392,104 12,737,689 1,429,955 5,254,518 296,448
					35,110,714
					December 31, 2020
			Foreign exchange movement (166,722) (4,188) - - (170,910)	Bills payable transferre d to long- term bank loans - - - - -
					9,404,483 3,615,000 5,656,112 292,992
					18,968,587

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

(7) Related-party transactions:

• (a) The ultimate parent company

The Company is the ultimate parent company.

(Continued)

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

• (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	Relationships with the Group
Kaohsiung Monomer Company Limited	Investee as accounted for using equity method
Jean Pacific Development Co., Ltd.	Investee as accounted for using equity method
Zhong Gong Baoquan Ltd. (Zhong Gong	Investee as accounted for using equity method
Baoquan)
Chung Kung Management and Maintenance of	Investee as accounted for using equity method of
Apartments Co., Ltd.	Zhong Gong Baoquan
Chain Yarn Co., Ltd. (Note)	The Company is the director of the entity
BES Engineering Corporation (BES	The Company is the director of the entity
Engineering)
Chung Kung Management Consultant Co.,Ltd.	Subsidiary of Zhong Gong Baoquan
Coreasia Human Resources Management Co.,	Subsidiary of BES Engineering
Ltd.
BES Machinery Co., Ltd.	The entity is a director of the Company
Sheen Chuen-Chi Cultural & Educational	The director is corporate director representative of
Foundation	the Company
Core Pacific City Co., Ltd.	Substantive Related Party
All board of directors, general manager and	The main managements of the Company
deputy general manager

Note: 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.

• (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,
		2020
		- 456,452
		456,452

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

(Continued)

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

• (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,
	2021 $ 63,135	2020
		-

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

• (iii) Receivables from Related Parties

The receivables from related parties were as follows:

Accounts	Types of related parties	December 31, 2021 $ 385,366 91,978 731 8,972 $ 487,047	December 31, 2020
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, 2021 $ 11,333 167,715 4,553 $ 183,601	December 31, 2020
Accounts payable Other payables Other payables	Other related parties Other related parties Associates		- 5,951 5,380
			11,331

(v) Other

Associates Rent income Other revenues Security service fees Other related parties Rent income Other revenues Other expenses	For the years ended December 31,
	2021 2020 $ 5,378 5,378 24,520 26,495 (21,283) (20,388 6 3 404 - (37,424) (3,633

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) The Group had a two-year contract with BES Engineering Corporation for the lease of office space in July 2018, which had been extended in July 2020, with the total value both represented $9,629 thousand. This rental transaction was recognized as right-of-use asset and lease liability both amounting to $9,465 thousand and $7,130 thousand on July 1, 2020 and January 1, 2019, respectively. The depreciation expense for the years ended December 31, 2021 and 2020, were $4,732 thousand and $4,743 thousand, respectively. The interest expense for the years ended December 31, 2021 and 2020 both amounted to $82 thousand. The amounts of lease liability as of December 31, 2021 and 2020, were $2,398 thousand and $7,130 thousand, respectively.

• (vii) The Company had a two year contract with BES Engineering Corporation for the lease of office space in January 2021, with the total value represented $2,762 thousand. This rental transaction was recognized as right-of-use asset and lease liability both amounting to $2,705 thousand on January 1, 2021. The depreciation expense for the years ended December 31, 2021, was $1,119 thousand. The interest expense for the years ended December 31, 2021, amounted to $38 thousand. The amounts of lease liability as of December 31, 2021, was $1,600 thousand.

• (viii) The Group had contracts with BES Engineering Corporation, for mechanical engineering services projects and paid commission on the basis of actual construction. As of December 31, 2021 and 2020, the construction project in-progress both amounted to $1,451,000 thousand. As of December 31, 2021 and 2020, the unpaid fees amounted to $553,964 thousand and $704,896 thousand, respectively. The refundable deposit at December 31, 2021 and 2020 both amounted to $420,660 thousand.

• (ix) 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, 2021 and 2020, the construction project in-progress amounted to $1,559 thousand and $18,439 thousand, respectively. As of December 31, 2021 and 2020, the unpaid fee amounted to $130 thousand and $0 thousand, respectively. The security deposit were both $0 thousand as of December 31, 2021 and 2020.

• (x) The Group acquired land from Core Pacific City Co., Ltd., which the contract of property transaction was signed on October 30, 2019. Please refer to note 6(e).

• (d) Key management personnel compensation

Key management personnel compensation
Short-term employee benefit Post-employment benefits	For the years ended December 31,
	2021 $ 219,205 6,109 $ 225,314	2020
		106,911 14,951 121,862

(Continued)

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

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets	Purpose of pledge	December 31, 2021 $ 20,650 38,007,167 7,871,848 31,435,973 785,917 1,147,498 187,220 204,904 576,089 $ 80,237,266	December 31, 2020
Time deposits Inventory – Land for construction Property, plant and equipment Investment property Investments accounted for using equity method Financial assets reported at fair value through other comprehensive income Financial assets reported at fair value through profit or loss Refundable deposit Right-of-use of Sea Areas	Guarantee for priority right-of-use of harbor and purchases Short-term bills payable, short-term syndicated loan (Shin Kong) Collateral for long-term and short-term financial credit, syndicated loan (Mega & Shin Kong) 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 Deposit for lawsuit, issuance of letter of credit Collateral for long-term financial credit		24,614 - 7,031,472 15,346,334 502,002 1,430,230 634,995 108,969 585,925
			25,664,541

As of December 31, 2021 and 2020, 0 thousand shares and 4,000 thousand shares of a subsidiary of the Group were pledged as collateral for long-term bills payable.

(9) Commitments and contingencies:

(a) As of December 31, 2021 and 2020, the Group had the following unused letters of credit:

USD EUR JPY NTD CNY	December 31, 2021 December 31, 2020 $ 49,408 20,824 457 246 6,400 - 1,146,000 1,020,000 32,300 -

• (b) As of December 31, 2021 and 2020, the Group had issued guarantee notes for bank loans, sales and purchases, and development plan aggregating to $26,197,400 thousand, USD30,000 thousand and $24,117,400 thousand, USD30,000 thousand, respectively.

(Continued)

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

• (c) As of December 31, 2021 and 2020, the Group had contracts for various construction projects inprogress amounting to $24,019,792 thousand and $12,225,823 thousand, respectively. As of December 31, 2021 and 2020, the remaining future obligations under these contracts amounted to $11,349,881 thousand and $2,547,453 thousand, respectively.

• (d) As of December 31, 2021 and 2020, the agreement on the acquisition of material property amounting to $1,379,861 thousand and $39,045,010 thousand, and the unpaid portion amounting to $138,000 thousand and $28,885,000 thousand, respectively. Please refer to note 6(e).

• (e) As of December 31, 2021 and 2020, the Company signed an agreement to purchase raw materials such as benzene, hydrogen and methylbenzene from CPC. Under this contract, the Company 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, 2021 and 2020, the Group signed an agreement of preclinical drug research amounting to USD4,266 thousand and $164,522 thousand, USD3,063 thousand and $92,070 thousand,, respectively. The paid portion amounted to USD2,916 thousand and $34,911 thousand, USD2,466 thousand and $31,565 thousand,, respectively. The unpaid portion amounted to USD1,350 thousand and $129,611 thousand, USD597 thousand and $60,506 thousand, , respectively.

• (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, 2021 and 2020, the paid portion amounted to $20,000 thousand and $10,000 thousand, 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, 2021 and 2020, the paid portion amounted to $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, 2021, the paid portion amounted to $2,500 thousand, respectively.

• (j) Important matters

• (i) The case of loss compensation for the Kaohsiung gas explosion

  • The Maintenance Office, Public Works Bureau of Kaohsiung City Government granted permission to CPC for the installation of underground gas pipelines. However, a gas explosion in Kaohsiung had occurred in the evening of July 31, 2014, which resulted in CPC’s permit to be revoked. Nonetheless, the revocation qualified CPC to claim for compensation from the relevant authority for its property losses. In order to protect its legal rights and interests, the Company filed an administrative appeal in February 2018 to the KHAC, who ruled against the Company in December 2019. Hence, in January 2020, the Company filed an appeal to the Supreme Administrative Court, who in turn, handed the case back to the KHAC for reconsideration. The case was still in progress as of the reporting date.

(Continued)

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

(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 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. In December 2021, THCKBC ruled in favor of Mr. Zhang and ordered the Company to pay Mr. Zhang the amount of $3,764 thousand, with bearing interest, as compensation. The Company disagreed with the decision made by the court, and therefore, filed an appeal to the Supreme Court. As of the reporting date, the Company has not received the transfer of the trial notified by THCKBC.

2) Disclosure Secret Case

Managers who left the office without authorization was suspected to be involve in business encroachment, theft of business secrets. To protect Company interests, the Company filed criminal appeal. The case was concluded by the Taiwan Miaoli Local Court in January 2017 and the relevant defendants were prosecuted. The civil litigation derived from the case is waiting for hearing by the Taipei District Court and Miaoli District Court. Please refer to note 8 for details of deposit for lawsuit.

(Continued)

• 263 -

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

(ii) Accusation of business failures

A Gas explosion happened in Heng Yi chemical plant next to the Toufen plant and caused workers to be burned on January 28, 2013, which evolved into accusations of business failures. Since the incident happened in the public discharged area of the industrial site, it was suspected to contain excessive value of the company's emissions with the sampling identification and the Company’ s manager was prosecuted as defendant per the victim’ s request. This case was not prosecuted after the judgment decision from Miaoli District Attorney; hence, the victims filed the reconsideration and Taichung High Prosecutor's Office remanded the case back to the Miaoli District Attorney for review. The victims of Heng Yi chemical plant prosecuted the Company and managers in February 2015 and asked for the joint damaged compensation $6,920 thousand, which awaits hearing by Miaoli local court. In September of the same year, both sides agreed to withdraw the litigations. Trial procedure was recovered in February 2016 and criminal litigation was determined not to be prosecuted in March 2016. The verdict of civil litigation was won in March 2017, but plaintiff is dissatisfied and filed an appeal to Taiwan High Court Taichung Branch Court. On November 16, 2020, the court sentenced company win with final and binding judgment.

(iii) Contract Fraud of Shanghai industry

On August 6, 2014, the reinvestment company, Weihua and Weiqiang, filed the civil appeal to Yangpu District Court to ask Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. to pay all overdrafts of the contract. However, Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. did not perform the first phase of repayment according to Court’s mediation report, Weihua and Weiqiang, on September 2, 2014, applied to Yangpu District Court for the enforcement and sealed all coal tar of Shanghai Tongye Coal and Chemical Industry Group Co., Ltd., the total coal tar sealed was 5,216 tons and 4,777 tons were sold. Subsequently, Weihua and Weijiang Company and Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. would continue negotiations on unrealized creditors and requested Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. to propose the more specific repayment plan. Weihua and Weiqiang estimated allowance of the accounts receivable respectively. Weihua and Weijiang Company reported to the police the relevant persons of Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. that were suspected to be involve with the contract fraud and other criminal matters. The police rejected the report due to insufficient evidence, therefore Weihua hired a local lawyer in May 2018, to assist with Shanghai police and Shanghai economics investigation group. 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

(iv) Civil compensation for Residents living in An shun

• 1) The 1st case

In 2008 and 2009, Mr. Wu and others filed civil and national compensation lawsuit against MOEA, TCG, Tainan City Environmental Protection Bureau and the Company (hereinafter referred to as 1st case of Tainan AnShun plant civil compensation) and they claimed that during 1942 and 1983, the previous TAIC AnShun plant, produced mercury and dioxins in its production operations and polluted the environment, which resulted in the population consuming contaminated fish and shellfish over time, which resulted in long term health issues. MOEA had control and management responsibility of the previous TAIC, and whether due to illegal actions, or a lack of attention in performing their duties, MOEA was the ultimate owner of CPDC, should take responsibility. Hence, the prosecutors claim that MOEA shall take the responsibility for the compensation. Mr. Wu and others also claimed that TCG and Tainan City Environmental Protection Bureau were the competent authorities and executive authorities of the waste disposal law but the authorities did not supervise and require the AnShun plant to implement pollution prevention and control acts, thus should be jointly responsible for any compensation. Mr. Wu and others claim that the Company did not perform any removal and remediation of pollutants after being ordered to merge with the previous TAIC AnShun plant, so they claimed the Company shall also take joint responsibility for the compensation. Mr. Wu and others asked MOEA, TCG, Tainan City Environmental Protection Bureau and the Company to jointly bear the cost of medical expenses and mental compensation for $370,800 thousand and the interest was calculated by an annual interest rate 5% from the date when the litigation was initiated by the defendants until the final payment of compensation. Due to unpaid referee fees, due from the plaintiff, the Tainan District Court rejected the litigation claims from these 17 persons in January 2010.

Mr. Chen appealed to the Tainan District Court asking the Company for medication, health examination fee and reparations, to the amount of $2,300 thousand, which was incorporated into this case, the total compensation amount was $351,750 thousand. This case was tried by the Tainan District Court in December 2015 and judged that the Company and MOEA to be jointly responsible for $160,000 thousand payable to the plaintiff. The Company was not satisfied with the result and filed an appeal. In August of 2017, the High court sentenced the Company to compensate the plaintiff for $190,000 thousand by self, which the Company was not satisfied with and had proposed the appeal for remedy in Sept. of the same year. The supreme court held oral argument on September 28, 2018, and judgment was sentenced on November 28, 2018, the supreme court sentenced to order the Company to compensate the plaintiff for $190,000 thousand. The Company made a payment of compensation and related interests to 143 plaintiffs before the end of June 2019. The part related to medical remedy of the case was abandoned for secondary trial. Plaintiff filed an appeal to Supreme Court in same year. In March 3, 2020, the court dismissed the plaintiff appeal by a ruling. This case is ended.

(Continued)

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

2) The 2nd case

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 1st and 2nd instance of the AnShun plant Civil Compensation litigation under hearing, the Company once again put forward the relevant academic articles to prove that there was no causality between pollution from Tainan AnShun plant and diabetes. Moreover, the plaintiffs in this case, despite the reasonableness of their claims, did not put forth any litigation before the expiry of the statutes of limitations. Thus, in this 2nd case of the Tainan AnShun plant civil compensation, the Company continued to seek for the jurisdiction remedies to protect the Company and shareholder interests. In November 6, 2020, Tainan District Court considered that 39 Plaintiffs’ s claim is meritorious and dismissed rest of Plaintiffs’ s claim. 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 still under trial now.

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:

• (a) The earnings distribution for 2021 of Core Pacific City Co., Ltd. was decided by the resolution adopted at the general meeting of shareholders held on February 23, 2022. Please refer to note 6(b) for other related information.

• (b) On March 14, 2022, a resolution was made during the board meeting of the Company to raise the capital of Ding-Yue amounting to $1,700,000 thousand for its business operation.

(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		2021			2020
	Operating cost	Operating expense	Non-Operating expense	Total	Operating cost	Operating Expense	Non-Operating expense	Total
Employee benefits
Salary	1,126,372	916,177	-	2,042,549	734,469	580,941	-	1,315,410
Labor and health insurance	80,875	60,276	-	141,151	74,767	48,940	-	123,707
Pension	41,074	25,551	-	66,625	43,184	30,018	-	73,202
Others	37,160	55,864	-	93,024	39,299	24,144	-	63,443
Depreciation	925,350	181,177	4,255	1,110,782	828,856	144,931	3,933	977,720
Amortization	601	8,588	-	9,189	611	12,561	-	13,172

(Continued)

• 266 -

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

• (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 11, 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. On July 21, 2021, the Bureau of Industry, MOEA held a task force to deal with the effect on petrochemical industry in case of DIP is categorized to Zone B, in which a discussion on both issues, including the legality of urban planning and the regulation of land reusing, will be appropriately conducted together with the urban planning task force of KUPC. As of December 31, 2021, KCG had yet to proceed on the procedures of statement changing.

(Continued)

• 267 -

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
1	Jiangsu Weiming New Material Co., Ltd.(original name: Jiangsu Weiming Petrochemic al Corporatio n)	Changzhou Weicai New Material Science & Technology Co., Ltd.	Other Receivable	Yes	260,580	260,580	43,430	5.5%	2	-	Operating	-		-	678,916	1,018,374
2	Weihua (Rudong) Trade Co., Ltd	Changzhou Weicai New Material Science & Technology Co., Ltd.	Other Receivable	Yes	86,860	86,860	43,430	5.5%	2	-	Operating	-		-	99,930	99,930

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 15% and 10% of net value of Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation)

Note 3: The financing limit was 20% of net value of Weihua (Rudong) Trade Co., Ltd.

Note 4: 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	CPDC	Ding-Yue Developme nt Co., Ltd.	2	48,304,160	22,380,000	17,780,000	13,140,000	2,880,000	% 22.09	80,506,933	Y	N	N
0	CPDC	Weihua (Rudong) Trade Co., Ltd.	2	48,304,160	217,150	217,150	217,150	-	% 0.27	80,506,933	Y	N	Y
0	CPDC	Changzhou Weicai New Material Science & Technology Co., Ltd.	2	48,304,160	1,260,624	1,260,624	716,287	174,000	% 1.57	80,506,933	Y	N	Y
0	CPDC	Jiangsu Weiming New Material Co., Ltd.	2	48,304,160	1,612,460	1,606,910	1,606,910	-	% 2.00	80,506,933	Y	N	Y
0	CPDC	Shiny Chemical Industrial Co., Ltd.	5	48,304,160	78,086	78,086	78,086	-	% 0.10	80,506,933	N	N	N
0	CPDC	Lushun Warehouse Co., Ltd.	5	48,304,160	55,366	55,366	55,366	-	% 0.07	80,506,933	N	N	N

(Continued)

• 268 -

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

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CPDC	China General Terminal & Distributio n Corporati on	5	48,304,160	14,903	14,903	14,903	-	% 0.02	80,506,933	N	N	N
1	Ding-Yue Developmen t Co., Ltd.	CPDC	3	12,724,087	4,920,000	4,920,000	2,200,000	-	% 6.11	25,448,174	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

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.

8. Note 3: The Company endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

9. 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.

10. 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.

11. Note 4: Ding-Yue Development Co., Ltd endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

12. 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.

13. 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, 2021 (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	Yuanta Financial Holding Co., Ltd. BES Engineering Co. China Development Financial Holding Corp. Handy Chemical Corporation Ltd. Overseas Investment & Development Corp. Core Pacific City Co., Ltd.	None The Company is a director of an investee company None The Company is a supervisor of the investee company None Substantive related party	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	7,400,371 164,348,449 44,684,712 386,000 2,600,000 2,779,154	187,229 1,488,997 781,982 26,437 26,000 5,117,918	0.06 10.74 0.23 4.51 2.89 27.52	187,229 1,488,997 781,982 26,437 26,000 5,117,918

(Continued)

• 269 -

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
The Company BES Twin Towers Co., Ltd Tsou Seen Chemical Industries Corporation Changzhou Weicai New Material Science & Technology Co., Ltd.	Praxair Chemax Semiconductor Materials ZOWIE Technology Corporation Aetas Technology Inc. Chain Yarn Co., Ltd. Taiwan Business Bank Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials Taiwan Tea Corporation Good Company TaiRx, Inc. Agricultural Bank of China-HSBC Structured Deposit	None � � The Company is a director of an investee company None Substantive related party None � � � �	Non-current financial assets at fair value through other comprehensive income � � � Current financial assets at fair value through other comprehensive income 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 designated at fair value through profit or loss Non-current financial assets at fair value through other comprehensive income � Current financial assets designated at fair value through profit or loss	2,701,651 8,815 287,961 30,000,000 977,130 1,053,812 6,754,127 7,279,000 750,000 722,500 -	117,608 358 - 300,000 9,674 1,855,861 294,019 147,764 - 14,652 22,226 10,390,725	14.00 0.03 0.58 13.41 0.01 10.43 35.00 0.92 2.08 0.80 -	117,608 358 - 300,000 9,674 1,855,861 294,019 147,764 - 14,652 22,226 10,390,725

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginnin	g Balance	Purch	ases		Sa	les		Ending B	alance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Price	Cost	Gain (loss) on disposal	Shares/units	Amount
The Company	Yuanta Financial Holding Co., Ltd. a t o c	Financial assets t fair value hrough profit r loss�non- urrent	Not applicable	Not applicable	32,176,371	661,224	-	-	24,776,000	620,576	259,336	361,240	7,400,371	187,229

• (v) Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:None

• (vi) Disposal 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	Type of property	Transaction date	Acquisition date	Book value	Transaction amount	Amount actually receivable	Gain from disposal	Counter- party	Nature of relationship	Purpose of disposal	Price reference	Other terms
CPDC	land no.7 and no.7-1, subsection 5, Jingmao section, Kaohsiung	August 18, 2021	October 1, 1982	1,668,271	2,380,000	Fully received	711,729	Chingwon Structure Corporation	Non related parties	Replenishing operating capital	Appraisal reports & Market value	None

(Continued)

• 270 -

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

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $100 million or 20% of the capital stock:

stock:	stock:	stock:
			(In Thousands of New Taiwan Dollars)
Name of company	Related party	Nature of relationship	Transaction details				Transactions with terms different from others		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 The Company The Company CPDC GT Weiming Weiqiang Weiqiang Weiqiang Weiqiang	Tsou Seen Chemical Industries Corporation Kaohsiung Monomer Company Limited Chain Yarn Co., Ltd. The Company Weiqiang International Trade (Shanghai) Co., Ltd. Weihua (Rudong) Trade Co., Ltd. Changzhou Weicai New Material Science & Technology Co., Ltd. The Company Jiangsu Weiming New Material Co., Ltd.(original name: Jiangsu Weiming Petrochemical Corporation)	Subsidiary Affiliated company accounted for using equity method Other related parties Subsidiary Same parent company Same parent company Same parent company Subsidiary Same parent company	Sales Sales Sales Sales Sales Sales Sales Sales Sales	(1,247,286) (751,291) (1,009,343) (322,868) (107,749) (192,001) (268,466) (1,094,584) (279,244)	% (4.08) % (2.46) % (3.30) % (98.10) % (6.42) % (6.56) % (9.18) % (37.43) % (9.55)	3 Month 1 Month 1 Month Base on contract Base on contract 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 Base on contract Base on contract	136,636 91,978 385,366 67,005 - - - - -	4.04% 2.72% 11.38% 99.23% -% -% -% -% -%	Note Note � � � � �

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

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

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
The Company The Company	Tsou Seen Chemical Industries Corporation Chain Yarn Co., Ltd.	Subsidiary (Note) Other related parties	136,636 385,366	14.39 5.24	- -		136,636 202,352	- -

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

• (ix) Trading in derivative instruments:None

(Continued)

• 271 -

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

(x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 1 2 2 2 2	The Company The Company Weiming Weiqiang Weiqiang Weiqiang Weiqiang	TSCIC CPDC GT Weiqiang Weihua Weicai The Company Weiming	1 1 5 5 5 2 5	Sales revenue Repair expense Sales revenue Sales revenue Sales revenue Sales revenue Sales revenue	1,247,286 322,868 107,749 192,001 268,466 1,094,584 279,244	OA 90 days Base on contract Base on contract Base on contract Base on contract Base on contract Base on contract	3.55% 0.92% 0.31% 0.55% 0.76% 3.11% 0.79%
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 interim financial statement

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original inve	stment amount	Balance as	of December 31,	2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of wnership	Carrying value
The Company � � � � � � � �	Kaohsiung Monomer Company Limited Zhong Gong Baoquan Ltd. Ding-Yue Development Co., Ltd. CPDC Investment (BVI) Co., Ltd. Tsou Seen Chemical Industries Corporation CPDC Green Technology Corp. Unichem Development Limited BES Twin Tower Development Co., Ltd. Thanh Phong Construction Investment Co., Ltd.	1, Hsing Kung Road,Ta She P O Box 6-25 Nantze,Kaohsiung (815), Taiwan 2F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan Citco Building, Wickhams Cay, P.O. Box662 No.1, Jingjin Rd., Fangliao Township, Pingtung County 940, Taiwan 14F.-16, No.61, Wufu 3rd Rd., Qianjin Dist., Kaohsiung City 801, Taiwan Unit 06, G/F, The Lodge, 535 Canton Road, Kowloon, Hong Kong 16F., No.12, Dongxing Rd., Taipei City 105, Taiwan B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City	Methyl Methacrylate Monomer Security consultants Commissioned to create a vendor to build the housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Holding company Dicalcium phosphate Mechanical engineering Holding company Real estate investment and development Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials	- 14,400 25,580,000 904,946 560,000 100,000 9,876,023 3,791,383 609,347	- 14,400 10,040,000 904,946 760,000 100,000 9,572,433 4,791,383 609,347	20,000,000 1,440,000 2,558,000,000 26,580,000 76,000,000 15,000,000 324,684,262 491,216,357 -	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	785,917 18,716 25,424,981 911,656 1,181,737 166,436 8,291,713 5,084,560 586,627	839,628 1,235 (94,151) (9,060) 113,430 46,706 (370,186) 193,145 11,267	335,851 296 (94,151) (9,060) 113,430 46,706 (370,186) 193,145 11,267	Note 1 Note 1 Note 2&5 Note 2&4&5 Note 2&5 Note 2&5 Note 2&4&5 Note 2&5 Note 2&3&4 &5

(Continued)

• 272 -

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, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of wnership	Carrying value
The Company CPDC Investment (BVI) Co., Ltd. Ding-Yue Development Co., Ltd. Tsou Seen Chemical Industries Corporation BES Twin Towers Development Co., Ltd. Frontier Fortune Investment Pte. Ltd. � � Core Pacific Twin Star (Myanmar) Investment Company Ltd.	Jean Pacific Development Co., Ltd. Core Pacific Overseas Holdings Ltd Da-Ying Construction Ltd. Taivex Therapeutics Corporation Frontier Fortune Investment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd. Gemini Star (India) Private Limited Core Pacific Twin Star (Vietnam) Investment Co., Ltd. Core Pacific Pioneer (Myanmar) Company Ltd.	7F.-2, No.300, Yangguang St., Neihu Dist., Taipei City 11491, Taiwan (R.O.C.) Akra Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,Tortola,British Virgin Islands 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 112 ROBINSON ROAD#05-01 ROBINSON 112SINGAPORE (068902) NO.153/Ka,Kyun ShweMmyaing Lane (2) ,23 ward,Thingangyun Townshin Yangon Level7, The Capital, Plot No.C-70, G Block, Bandra Kurla Complex, Bandra MUMBAI Mumbai City MH 400051 IN B2-19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City NO.153/Ka,Kyun ShweMmyaing Lane(2) ,23 ward,Thingangyun Townshin Yangon	Renting and selling real estate Holding company Engineering, construction contracting business Engaged in biotechnology, pharmaceutical research and development and marketing Holding company Holding company and consultancy Real estate and petrochemical products research and consultancy Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale	620,000 808,564 60,000 696,720 2,761,596 169,921 9,274 2,566,176 24,804	620,000 808,564 22,500 696,720 2,761,596 169,921 9,274 2,566,176 24,804	62,000,000 26,580,000 - 46,224,551 93,060,000 5,500,001 2,099,993 - 800,000	% 40.00 % 45.19 % 100.00 % 91.10 % 100.00 % 100.00 % 99.99 % 100.00 % 80.00	618,276 906,578 60,206 170,077 2,712,589 149,531 4,249 2,551,666 19,483	(3,187) (19,851) (195) (87,321) 65,879 197 (190) 66,738 2,069	(1,275) - - - - - - - -	Note 1 Note 2&4&6 Note 2&3&5 &6 Note 2&5&6 Note 2&4&5 &6 Note 2&4&5 &6 Note 2&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.

(Continued)

• 273 -

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

(c) Information on investment in mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows		Accumulated outflow of investment from Taiwan as of December 31, 2021	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
Weihua (Rudong) Trade Co., Ltd.	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	13,491	100.00%	13,491	499,650	-
Weiqiang International Trade (Shanghai) Co., Ltd.	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading.	211,560	( 1 )� ( 3 )	211,560	-	-	211,560	42,024	100.00%	42,024	171,441	-
Jiangsu Weiming New Material Co., Ltd.(original name:Jiangsu Weiming Petrochemical Corporation)	Petrochemical supporting facility construction	7,725,253	( 1 )� ( 2 )	7,421,663	303,590	-	7,725,253	(232,855)	100.00%	(232,855)	6,789,159	-
Zhangzhou Weida Petrochemical Co., Ltd.	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub- fitted trading	-	( 2 )	30,648	-	(30,648)	-	2	100.00%	2	-	-
Changzhou Weicai New Material Science & Technology Co., Ltd.	Engaged in engineering plastic and high valued petroleum chemical products	1,411,845	( 2 )	1,324,893	-	-	1,324,893	(151,226)	100.00%	(151,226)	865,748	-
Weiming (Rudong) Construction Co., Ltd. (Invested through Jiansu Weiming New Material Co., Ltd.)	Engaged in engineering consultant services�engineering construction� engineering management�trading of petroleum chemical product	129,665	( 3 )	-	-	-	-	(513)	100.00%	(513)	129,753	-

(Continued)

• 274 -

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

(ii)	Limitation on investment in Mainland China:	Limitation on investment in Mainland China:	Limitation on investment in Mainland China:
	Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
	10,919,107	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.

Note5: Zhangzhou Weida Petrochemical Co., Ltd. was dissolved and the liquidation process had been completed in January 2021.

(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)

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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, 2021 Revenue Revenues from external customers Revenues from transactions with other operating segments of the same entity Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure of non-current assets Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 14,090,601 - $ 14,090,601 $ 260,915 $ 3,131,229 $ 373,416 $ 4,740,289 $ 2,820,350	Caprolactam 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 6,609,987 213,388 748,454 1,674,127 114,609,678 45,811,844	Adjustment and eliminations - (322,868) (322,868) - - - - -	Total 35,163,380 -
					35,163,380
					1,119,971
					3,989,678
					4,065,491
					135,455,208
					54,926,789

(Continued)

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

For the years ended December 31, 2020 Revenue Revenues from external customers Revenues from transactions with other operating segments of the same entity Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure of non-current assets Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 7,350,448 - $ 7,350,448 $ 219,245 $ 362,249 $ 603,371 $ 5,799,465 $ 2,664,825	Caprolactam 6,458,806 - 6,458,806 573,197 (1,035,185) 854,502 11,486,818 5,203,961	Other 3,773,838 222,127 3,995,965 198,450 776,712 2,404,032 87,623,707 26,173,173	Adjustment and eliminations - (222,127) (222,127) - - - - -	Total
					17,583,092 -
					17,583,092
					990,892
					103,776
					3,861,905
					104,909,990
					34,041,959

• (c) Geographical Areas

The Group’ s non-current assets located overseas are immaterial. Revenues from domestic and overseas customers for the years ended December 31, 2021 and 2020 were as follows:

Region	For the years ended December 31,	For the years ended December 31,
	2021 $ 21,910,225 13,072,601 180,554 $ 35,163,380	2020
Operating revenue from domestic sales Asia Other (individual area under 10%) Total operating revenue		11,238,764 6,295,673 48,655
		17,583,092

(d) Major Customers

Customers generating over 10% of total revenue for the December 31, 2021 and 2020 were as follows:

Customers	For the years ended December 31,
	2021 2020 $ 4,006,171 2,364,508
1001

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V. Independent Accountants’ Audit Report

Independent Auditors’ Report

To the Board of Directors of China Petrochemical Development Corporation:

Opinion

We have audited the financial statements of China Petrochemical Development Corporation (“CPDC” or “the Company” ), which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Emphasis of Matter

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

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Other Matter

We did not audit certain investments, which were accounted for under the equity method. The financial statements as of and for the years then ended December 31, 2021 and 2020 of those investees accounted for under the equity method were audited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts for the equity method investees were based solely on the reports of other auditors. These investments accounted for under the equity method represented 1.61% and 1.17% of total assets as of December 31, 2021 and 2020, respectively. The related shares of investment income from these investees including subsidiaries, associates and joint ventures accounted for using equity method represented 6.28% and (79.22)% of income before income tax for the years ended December 31, 2021 and 2020, respectively.

Key Audit Matters

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

1. Revenue recognition

Refer to note 4(o) “ Revenue Recognition” , note 6(v) “ Revenue from contracts with customers” in the financial statements.

Description of key audit matter:

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

How the matter was addressed in our audit:

Our key audit procedures included:

• Testing CPDC’ s internal accounting controls surrounding revenue recognition and key manual and systems-based controls in the order-to-cash transaction cycle. In addition, checking and reconciling the sales data recorded between the sales systems and general ledger; selecting samples to assess whether appropriate revenue recognition policies are applied through comparison with accounting standards.

• Analyzed and compared the sales amounts and volumes for the major customers of CPDC. Based on samples selected, vouched significant transactions from both internal and external documents, to verify the authenticity of the transactions.

• Assessment of the fair value of investment property

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

Description of key audit matter:

The book value of investment property of CPDC represented 33% of total assets as of December 31, 2021, which is deemed to be significant. CPDC evaluates the fair value of investment property according to IAS40, and re-measure such fair value on the reporting date. Because the valuation of investment property at fair value demands significant professional judgments, the assessment of fair value of investment property is considered one of the key audit matters.

• 279 -

How the matter was addressed in our audit:

Our key audit procedures included:

• Obtain from CPDC management the real estate appraisal report on investment property;

• Engage another appraiser to review such real estate appraisal report, and to evaluate the propriety of the evaluation method used, and the reasonableness of its main assumptions or input values (ex. discount rate and final rate of return);

• Evaluate the propriety of the disclosure of fair value of investment property.

• Impairment assessment of property, plant, and equipment

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

Description of key audit matter:

The book value of property, plant, and equipment of CPDC represented 14% of total assets as of December 31, 2021, which is deemed to be significant. The overall economic trend, market competition and fluctuations in the price of petroleum and petrochemical products may affect the future operation of CPDC, and also affect the estimated economic benefits and recoverable amounts of these assets that the management of CPDC may estimate and determine in the future of the cash generating unit (“CGU”) of the assets, and to evaluate whether there are signs of impairment. The recoverable amounts of these assets have been determined based on the discounted cash flows forecasted by CPDC management which involved significant uncertainties and professional judgments. Therefore, we consider the assessment for impairment of property, plant, and equipment as one of the key audit matters for our audit.

How the matter was addressed in our audit:

Our key audit procedures included:

• Obtain from CPDC management the results of their valuation of fixed assets and understand the significant assumptions used in their valuation model.

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

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

• 280 -

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

Auditor’s Responsibilities for the Audit of the Financial Statements

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

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

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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.

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

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

KPMG

Taipei, Taiwan (Republic of China) March 14, 2022

Notes to Readers

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

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

• 282 -

December 31, 2020	Amount %			3,615,000 4	954 -	1,215,153 1	- -	1,306,948 1	- -	281,634 -	32,583 -	1,160,000 1	1,160,000 1	8,918 -	8,918 -	7,621,190 7		3,500,000 4	4,410,000 4	1,704,687 2	6,497,063 6	112,919 -	5,656,112 6	103,221 -	21,984,002 22	29,605,192 29	29,605,192 29		32,848,502 33	583,815 1		2,311,174 2	35,601,629 36	1,287,983 1		39,200,786 39		(966,202) (1)	(854,259) (1)	(854,259) (1)		(1,820,461) (2)	(1,820,461) (2)	70,812,642 71	70,812,642 71	100,417,834 100	100,417,834 100
December 31, 2021	Amount %			$ 1,096,360 1	20,612 -	1,625,672 1	11,333 -	2,339,521 2	13,128 -	478,077 1	44,167 -	300,000 -		57,718 -		5,986,588 5		3,500,000 3	11,808,900 10	3,131,573 3	6,763,683 6	108,032 -	5,254,518 4	113,754 -	30,680,460 26	36,667,048 31			37,848,502 32	1,454,301 1		2,389,125 2	35,390,076 31	4,950,734 4		42,729,935 37		(948,859) (1)	(576,946) -			(1,525,805) (1)		80,506,933 69		$ 117,173,981 100
	Liabilities and Equity		Current liabilities:	Short-term loans (note 6(k))	Current contract liabilities (note 6(v))	Accounts payable	Accounts payable to related parties (note 7)	Other payables (note 7)	Current tax liabilities (note 4)	Provisions-current (notes 4, 6(p) and 6(r))	Lease liabilities-current (notes 4 and 6(o))	Long-term liabilities-current portion (notes 4 and 6(l))		Other current liabilities, others		Total current liabilities	Non-Current liabilities:	Bonds payable (notes 4 and 6(m))	Long-term bank loans (note 6(l))	Provisions-non-current (notes 4, 6(p) and (r))	Deferred income tax liabilities (notes 4 and 6(s))	Lease liabilities-non-current (note 6(o))	Long-term bills payable (note 6(n))	Other non-current liabilities, others	Total non-current liabilities	Total liabilities		Equity (note 6(t)):	Common stock	Capital surplus	Retained earnings :	Legal reserve	Special reserve	Unappropriated earnings			Others equity:	Exchange differences arising on translation of foreign operations	Unrealized gains or loss on financial assets at fair value through other		comprehensive income			Total equity Total liabilities and equity
				2100	2130	2170	2180	2200	2230	2250	2280	2320		2399				2530	2540	2550	2570	2580	2611	2670					3110	3200		3310	3320	3350				3410	3420
December 31, 2020	Amount %			1,008,698 1	661,224 1	1,526,506 2	89,369 -	73,046 -	- -	2,225,117 2	583,674 1	2,012,475 2		8,180,109 9			7,832,673 8		2,500,585 2		28,658,681 29	15,208,808 15	144,335 -	37,612,887 37	11,009 -	268,747 -		92,237,725 91																		100,417,834 100
December 31, 2021	Amount %			$ 2,782,774 2	187,229 -	2,773,447 2	612,517 1	95,803 -	5,377 -	3,222,256 3	620,835 1	441,543 1		10,741,781 10			5,117,918 4		2,741,382 2		43,171,377 37	16,057,288 14	150,045 -	38,850,641 33	11,009 -	332,540 -		106,432,200 90																		$ 117,173,981 100
	Assets		Current assets:	Cash and cash equivalents (notes 4 and 6(a))	Current financial assets at fair value through profit or loss (notes 4 and 6(b))	Notes and accounts receivable, net (notes 4 and 6(d))	Accounts receivable related parties, net (notes 4, 6(d) and 7)	Other receivables (notes 4, 6(d) and 7)	Total current tax assets (notes 4)	Inventories (notes 4 and 6(e))	Prepayments	Other current assets (note 6(f))		Total current assets		Non-current assets:	Non-current financial assets at fair value through profit or loss (notes 4 and	6(b))	Non-current financial assets at fair value through other comprehensive	income (notes 4 and 6(c))	Investments accounted for using equity method (notes 4 and 6(g))	Property, plant and equipment (notes 4 and 6(h))	Right-of-use assets (notes 4 and 6(i))	Investment property, net (notes 4 and 6(j))	Deferred income tax assets (notes 4 and 6(s))	Other non-current assets (note 8)		Total non-current assets																		Total assets
				1100	1110	1170	1180	1200	1220	130X	1410	1470					1510		1517		1551	1600	1755	1760	1840	1900

• 283 -

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

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

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

4000 Operating revenue (notes 4�6(v)and 7) 5000 Operating costs (note 6(e)) 5910 Less: Unrealized (profit) loss from sales 5920 Add: Realized profit (loss) from sales Gross profit (loss) from operations Operating expenses (note 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment loss determined in accordance with IFRS 9 Total operating expenses Net operating income (loss) Non-operating income and expenses: 7100 Total interest income (note 6(x)) 7010 Other income (notes 6(x) and 7) 7590 Other gains and losses (note 6(x)) 7050 Finance costs (notes 6(o) and 6(x)) 7060 Shares of profit (loss) of associates and joint ventures accounted for using equity method, net (notes 4 and 6(g)) 7255 Gains on fair value adjustment, investment property (notes 4 and 6(j)) 7235 Gains on financial assets at fair value through profit or loss (notes 4 and 6(b)) 7673 Impairment loss on property, plant, and equipment (notes 4 and 6(h)) Total non-operating income and expenses Profit before income tax 7950 Less: income tax expenses (benefit) (notes 4 and 6(s)) 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 (notes 4 and 6(r)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (notes 4 and 6(t)) 8330 Shares of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss (notes 4 and 6(t)) 8349 Allocation of income tax to the above items Components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences arising on translation of foreign operations 8367 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (notes 4 and 6(t)) 8380 Shares of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that may be reclassified to profit or loss (notes 4 and 6(t)) 8399 Allocation of income tax to the above items Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income (loss), net 8500 Total comprehensive income Earnings per share (notes 4 and 6(u)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021 Amount % $ 30,564,118 100 26,177,163 86 4,386,955 14 (1,476) - (7,042) - 4,378,437 14 444,164 1 770,032 3 329,694 1 - - 1,543,890 5 2,834,547 9 54,028 - 267,607 1 (1,353,924) (4) (259,640) (1) 220,699 1 2,911,289 9 183,189 1 (915,669) (3) 1,107,579 4 3,942,126 13 338,918 1 3,603,208 12 (78,021) - 242,236 1 39,039 - - - 203,254 1 (138,595) - - - 155,938 1 - - 17,343 1 220,597 2 $ 3,823,805 14 $ 1.09 $ 1.09	2020 Amount % 14,797,092 100 15,287,375 103 (490,283) (3) 7,042 - (1,742) - (484,983) (3) 348,055 2 464,098 3 337,654 2 - - 1,149,807 7 (1,634,790) (10) 71,019 - 363,470 3 (376,661) (3) (187,982) (1) 331,277 2 896,310 6 621,913 4 - - 1,719,346 11 84,556 1 (596,433) (4) 680,989 5 (24,657) - 375,078 2 14,883 - - - 365,304 2 (161,687) (1) - - - - - - (161,687) (1) 203,617 1 884,606 6 0.21 0.21

See accompanying notes to financial statements.

• 284 -

									Total equity	67,116,769	680,989	203,617		884,606			-	-	(985,455)	3,796,481	241	-		70,812,642	3,603,208	220,597		3,823,805			-	-	5,869,362	1,124	-	-		80,506,933
Total other equity interest	Unrealized gains		(losses) on financial	Exchange assets measured at	differences on fair value through		translation of other	foreign financial comprehensive	statements income	(804,515) (1,120,657)	- -	(161,687) 392,697		(161,687) 392,697			- -	- -	- -	- -	- -	- (126,299)		(966,202) (854,259)	- -	17,343 278,697		17,343 278,697			- -	- -	- -	- -	- (1,384)	- -		(948,859) (576,946)
								Unappropriated	retained earnings	1,779,147	680,989	(27,393)		653,596			(173,844)	(111,367)	(985,455)	-	(393)	126,299		1,287,983	3,603,208	(75,443)		3,527,765			(77,951)	(1,210,033)	-	-	1,384	1,421,586		4,950,734
	Retained earnings								Special reserve	35,490,262	-	-		-			-	111,367	-	-	-	-		35,601,629	-	-		-			-	1,210,033	-	-	-	(1,421,586)		35,390,076
									Legal reserve	2,137,330	-	-		-			173,844	-	-	-	-	-		2,311,174	-	-		-			77,951	-	-	-	-	-		2,389,125
									Capital surplus	1,286,700	-	-		-			-	-	-	(703,519)	634	-		583,815	-	-		-			-	-	869,362	1,124	-	-		1,454,301
								Ordinary	shares	28,348,502	-	-		-			-	-	-	4,500,000	-	-		32,848,502	-	-		-			-	-	5,000,000	-	-	-		37,848,502
										$																												$
										Balance at January 1, 2020	Profit for the year ended December 31, 2020	Other comprehensive income for the year ended December 31, 2020		Total comprehensive income for the year ended December 31, 2020		Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary shares	Capital increase by cash	Changes in ownership interests in subsidiaries	Disposal of investments in equity instruments designated at fair value through other comprehensive income		Balance at December 31, 2020	Profit for the year ended December 31, 2021	Other comprehensive income for the year ended December 31, 2021		Total comprehensive income for the year ended December 31, 2021		Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Capital increase by cash	Changes in ownership interests in subsidiaries	Disposal of investments in equity instruments designated at fair value through other comprehensive income	Reversal of special reserve		Balance at December 31, 2021

• 285 -

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

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(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 Net gain on financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries, associates and joint ventures accounted for using equity method Loss on disposal of property, plan and equipment Gain on disposal of investment properties Loss on disposal of investments accounted for using equity method Impairment loss (reversal of impairment loss) on non-financial assets Unrealized profit (loss) from sales Realized loss from sales Impairment loss on property, plant and equipment Gain on fair value adjustment of investment property Unrealized remediation expense Gain on lease modification Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in accounts receivable due from related parties (Increase) decrease in other receivables Increase in inventories (Increase) decrease in prepayments (Increase) decrease in other current assets Total changes in operating assets Increase (decrease) in contract liabilities Increase in accounts payable Increase in accounts payable to related parties Increase (decrease) in other payable Decrease in provisions Increase in other current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash outflow generated from operations Interest received Interest paid Income taxes paid Net cash flows used in operating activities	For the years end	ed December 31 2020 84,556 780,577 375 (621,913) 187,982 (71,019) (132,087) (331,277) 1,107 - 580 (69,591) (7,042) 1,742 - (896,310) - (40)
	2021 $ 3,942,126 905,652 - (183,189) 259,640 (54,028) (164,530) (220,699) - (706,465) - 14,601 1,476 7,042 915,669 (2,911,289) 1,664,899 (12) (471,233) (3,341,327) (523,148) (34,911) (1,011,740) (37,161) (34,826) (4,983,113) 19,658 410,519 11,333 952,546 (41,570) 48,800 1,401,286 (3,581,827) (4,053,060) (110,934) 60,803 (256,246) (59,167) (365,544)
		(1,156,916)
		8,358 83,691 468 (274,491) 238,784 12,215
		69,025
		(87,309) 77,422 - (252,010) (70,252) 957
		(331,192)
		(262,167)
		(1,419,083)
		(1,334,527) 55,430 (178,968) (5,379)
		(1,463,444)

See accompanying notes to financial statements.

• 286 -

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

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(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 profit or loss Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from cancellation of property purchasing Proceeds from disposal of investment properties Decrease (increase) in other financial assets Increase in other non-current assets Dividends received Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term loans Decrease in short-term loans Proceeds from issuing bonds Proceeds from long-term debt Repayments of long-term debt Increase in long-term bills payable Decrease in long-term bills payable Payment of lease liabilities Increase (decrease) in other non-current liabilities Cash dividends paid Capital increase by cash Interest paid Net cash flows from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For the years end	ed December 31 2020 (387,499) - - (120,000) 120,042 (5,785,200) 5,109 - (2,847,161) 110 - - (1,655,545) (141,773) 1,265,381 (9,546,536) 15,228,000 (14,713,558) 3,500,000 12,513,900 (11,773,900) 26,152,200 (24,992,200) (48,813) (3,069) (985,455) 3,796,481 (2,036) 8,671,550 (2,338,430) 3,347,128 1,008,698
	2021 $ - 1,438 2,751,363 - 620,576 (15,843,590) - 1,200,000 (2,807,140) - 186,000 2,380,000 1,605,758 (63,793) 565,111 (9,404,277) 13,873,892 (14,298,145) - 36,415,100 (32,123,400) 42,437,700 (40,590,500) (47,662) 10,533 - 5,869,362 (2,983) 11,543,897 1,774,076 1,008,698 $ 2,782,774

See accompanying notes to financial statements.

• 287 -

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

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

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

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

The accompanying financial statements were authorized for issue by the Board of Directors on March 27, 2020.

(3) New standards, amendments and interpretations adopted:

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

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2021:

• �Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• �Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

• �Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company’s adoption of the new amendments, effective for annual period beginning on January 1, 2022, are expected to have the following impacts:

• (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.

(Continued)

• 288 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The amendments apply retrospectively, but only to items of property, plant and equipment made available for use on or after January 1, 2021. The Company may need to adjust the amount of property, plant and equipment costs, depreciation expenses and profit or loss from selling samples, and will continue to assess the impacts of this amendment on its consolidated financial position and financial performance.

• (ii) Other amendments

The following amendments are not expected to have a significant impact on the Company’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”

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Company 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 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 “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”

(4) Summary of significant accounting policies:

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

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulation Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”).

(Continued)

• 289 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (b) Functional and presentation currency

• (i) Basis of measurement

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

• 1) Financial instruments 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 property is measured at fair value.

• 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(p)).

• (ii) Functional and presentation currency

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

(c) Foreign currency

• (i) Foreign currency transaction

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

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

• an investment in equity securities designated as at fair value through other comprehensive income;

• a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedges are effective; or

• qualifying cash flow hedges to the extent the hedge are effective.

(Continued)

• 290 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(ii) Foreign operations

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

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

When the settlement of a monetary receivable from or payable to a foreign operation is neither 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.

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

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

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle, 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 Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(Continued)

• 291 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and 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 Company's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(f) Financial instruments

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

(i) Financial assets

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

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

• 1) Financial assets measured at amortized cost

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

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

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

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.

(Continued)

• 292 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• 2) Fair value through other comprehensive income (FVOCI)

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

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 Company's right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

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

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

• 4) Business model assessment

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

• the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management's strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

• how the performance of the portfolio is evaluated and reported to the Company's management;

• the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• how managers of the business are compensated � e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

• the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

(Continued)

• 293 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

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

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

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

• contingent events that would change the amount or timing of cash flows;

• terms that may adjust the contractual coupon rate, including variable rate features;

• prepayment and extension features; and

• terms that limit the Company's claim to cash flows from specified assets (e.g. nonrecourse features)

• 6) Impairment of financial assets

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

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

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

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

(Continued)

• 294 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

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

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 Company is exposed to credit risk.

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

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

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or being more than 90 days past due;

• the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• the disappearance of an active market for a security because of financial difficulties.

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

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

(Continued)

• 295 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

7) Derecognition of financial assets

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

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

• (ii) Financial liabilities and equity instruments

1) Classification of debt or equity

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

2) Equity instrument

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 suplus 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.

(Continued)

• 296 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

5) Derecognition of financial liabilities

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

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

6) Offsetting of financial assets and liabilities

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

(g) Inventories

(i) 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.

(Continued)

• 297 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(h) Investments in associates

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

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

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

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

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

(i) Investment in subsidiary

In the preparation of financial reports, the Company adopts the equity method assessment method for the investee companies that can be controlled. Under the equity method, in the financial report, the current profit and loss and other comprehensive gains and losses, and in the financial report of the consolidated basis, the current profit and loss and other comprehensive gains and losses are attributable to the owners of the parent company, and the financial reporting owners' equity and consolidated basis the interests of the owners of the parent company in the financial report are the same.

The Company's changes in the ownership interest of the subsidiaries did not result in loss of control and were treated as an interest transaction with the owners.

(j) Investment property

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)

• 298 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (k) Property, plant and equipment

• (i) Recognition and measurement

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

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

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

• (ii) Subsequent expenditure

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

• (iii) Depreciation

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’.

(Continued)

• 299 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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.

• (l) Leases

• (i) As a leasee

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

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 Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

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

• fixed payments, including in-substance fixed payments;

• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable under a residual value guarantee; and

• payments for purchase or termination options that are reasonably certain to be exercised.

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

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

• there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee; or

• there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• there is a change of its assessment on whether it will exercise an extension or termination option, or

• there is any lease modifications

(Continued)

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CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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 Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

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

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

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

For sale-and-leaseback transactions, the Company applies the requirements for determining when a performance obligation is satisfied in IFRS15 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 IFRS15 to be accounted for as a sale of the asset, the Company derecognizes the transferred asset, then measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Accordingly, the Company recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. For leaseback transaction, the Company applies the lessee accounting policy. If the transfer of an asset does not satisfy the requirement of IFRS15 to be accounted for as a sale of the asset, the Company continues to recognize the transferred asset and recognizes the financial liability equal to the transfer proceeds.

(ii) As a leasor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

(Continued)

• 301 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

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

(m) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties, measured at fair value, less costs) 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.

(Continued)

• 302 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(n) Provisions

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

(i) Site dismantling

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 Company’ s published environmental policy and applicable legal requirements, a provision for site restoration in respect to contaminated land, and the related expense, is recognized when the land is contaminated.

(o) Revenue from contracts with customers

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

(i) Sale of goods

The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

(ii) Commissions

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

(Continued)

• 303 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (iii) Financing components

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

(p) Employee benefits

(iv) Defined contribution plans

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

(v) Defined benefit plans

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

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

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

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

(vi) Short-term employee benefits

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

(Continued)

• 304 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (q) 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 Company has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

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 Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

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

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

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

• (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(Continued)

• 305 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

(r) Earnings per share

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

(s) Operating segments

The Company discloses information of operating segments in the consolidated financial statements, which is therefore not included in the financial statements.

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

The preparation of the financial statements in conformity with the Regulations 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.

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

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

• (a) Fair valuation of investment property

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

• (b) Impairment of property, plant and equipment, and intangible assets

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

(Continued)

• 306 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

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

• (i) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

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

(iii) Level 3: inputs for the assets or liability that are not based on observable market data.

Information on valuation use hypothesis factors was as follows:

• (i) Note 6(j) - Investment property;

• (ii) Note 6(y) - Financial instruments.

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Checking and demand deposits Time deposits Cash equivalents Cash and cash equivalents	December 31, 2021 $ 835 883,006 1,898,933 - $ 2,782,774	December 31, 2020
		821 114,424 743,471 149,982
		1,008,698

Time deposits with original maturity within three month which are held for the purpose of meeting short-term cash commitments, rather than for investment or other purposes, and are readily convertible to cash at the known amounts and subject to insignificant risk of value changes, are reported as cash equivalents. Please refer to note 6(f) for details of time deposits with original maturity between three months and one year which are accounted for as other financial assets under other current assets.

Please refer to note 6(y) for the fair value sensitivity analysis and interest rate risk of the financial assets and liabilities of the Company.

(Continued)

• 307 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

Current financial assets designated at fair value through profit or loss: Stocks listed on domestic markets Non-current financial assets designated at fair value through profit or loss: Stocks unlisted on domestic markets Total	December 31, 2021 $ 187,229 5,117,918 $ 5,305,147	December 31, 2020
		661,224
		7,832,673
		8,493,897

The dividends income from the financial assets recognized at fair value through profit or loss for the years ended December 31, 2021 and 2020 amounted to $38,612 thousand and $20,110 thousand, respectively.

The Company held common and preferred stocks of Core Pacific City Co., Ltd., wherein the preferred stocks which were converted into common stocks on October 22, 2021 were recognized as non-current financial assets at fair value through profit or loss. 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 Company received the payment of $2,751,363 thousand of the shares that were bought back on November 11, 2021. The Company recognizes the changes in fair value in profit or loss according to the valuation report. The Company or the external appraisers used the net asset value method and relevant return rate to determine the fair value on the valuation date. The amount accounted for gain from investments in equity instruments at fair value through profit or loss was $36,608 thousand and $585,611 thousand for the years ended December 31, 2021 and 2020, respectively.

Core Pacific City Co., Ltd. approved the earning distribution during itsthe shareholders’ meeting on February 23, 2022, which was also the with the same date as the base date. On February 25, 2022, the Company received the cash dividends amounting to $ 5,112,685 thousand, and therefore adjusted the fair value accordingly.

Please refer to note 8 for details of the financial assets at fair value through profit or loss of the Company pledged as collateral as of December 31, 2021 and 2020.

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

Equity investments at fair value through other comprehensive income - non-current Stocks listed on domestic markets Stocks unlisted on domestic markets Total	December 31, 2021 $ 2,270,979 470,403 $ 2,741,382	December 31, 2020
		2,059,052 441,533
		2,500,585

(Continued)

• 308 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Company designated the investments show above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes.

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

The dividend income from the financial assets recognized at fair value through other comprehensive income for the years ended December 31, 2021 and 2020 amounted to $125,918 thousand and $111,977 thousand, respectively.

On September 15, 2020, the Company’s Board of Directors approved a resolution to invest in Chain Yarn Co., Ltd. by purchasing 30,000 thousand common shares amounting to $300,000 thousand, which was accounted for as non-current financial assets at fair value through other comprehensive income.

The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as “PRAXAIR”) delegated by the Company, was elected as the new Chairman in the directors’ meeting on January 30, 2013. However, Praxair Inc. did not recognize the director delegated by the Company as the Chairman, resulting in the new Chairman being unable to exercise his authority. Also, the supervisor appointed by the Company was prevented from auditing the accounts and records pursuant to the R.O.C. Company Act, hence, the new Chairman and the designated supervisor representing PRAXAIR, filed an action asking the vice chairman and general manager to provide the accounts and records and requested to return the seal, business invasion and others in a civil lawsuit. The vice chairman delegated by Praxair Inc. claimed privilege to act as the Chairman and filed legal actions declaring the non-existence of the new Chairman’s commission of authority and also sent a letter to the court requesting a dissolution of PRAXAIR, which was rejected by the courts. The supervisor appointed by Praxair Inc. illegally called a temporary shareholders’ meeting in 2013 to propose the dissolution of the Company and reelection of directors and supervisors. Hence, the Company filed legal actions declaring the withdrawal of the resolution from the illegal temporary shareholders’ meetings and the resolutions from the temporary shareholders' meeting was not established. The supervisor filed the 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 filed the legal action. The judgment was binding and final on December 2017. The vice chairman designated by Praxair Inc. filed legal action declaring the non-existence of the new Chairman’s commission of authority, after the judgment from the High Court that the Chairman designated by the Company won the verdict, the defendant appealed to the 3rd instance, with the Supreme Court dismissing the appeal. The whole case confirms the appointed relationship between the Chairman designated by the Company and PRAXAIR exists. On November 9, 2016, the letter from Ministry of Economic Affairs states that Lin Ke-Ming, appointed by the Company, is the Chairman of PRAXAIR, and restored the representative duty per the judgment No. 2455 from the Supreme High Court in 2015. However, according to the requirement from Ministry of Economic Affairs, both sides were not able to hold the legitimate reelection prior to Janurary 9, 2017 which resulted in vacancy of directors and supervisors of PRAXAIR. In order to strive for the rights and interests of the shareholders, the Company immediately 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 has filed a request for the arbitration of International Chamber of Commerce in 2018 and

(Continued)

• 309 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

received the award issued by the International Court of International Chamber of Commerce on September 3, 2018. A part of the award favored for the Company and confirmed that the Company was entitled to receive the dividends from PCSM for the year of 2013. In order to protect the Company’ s right, the Company submitted a lawsuit regarding to withdrawal of a part of such arbitration award against the Company to Taipei District Court. On December 13, 2019, Taipei District Court dismissed the Company’s claim of withdrawing the ICC’s decision. The Company filed an appeal on January 8, 2020, but such appeal was dismissed by Taiwan High Court on September 1, 2020. The Company appealed forthwith to the Supreme Court on September 21, 2020.

As of December 31, 2021 and 2020, the Company provided as collateral a portion of its financial assets. Please refer to note 8 for details of the related assets pledged as collateral.

• (d) Notes, trades, and other receivables

Accounts receivable (including related parties) Other receivables Less: allowance for doubtful receivables Net amount	December 31, 2021 $ 3,718,460 95,803 (332,496) $ 3,481,767	December 31, 2020 1,948,371 73,046 (332,496) 1,688,921

The Company applies the simplified approach to provide for its expected credit losses, i.e., the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, 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:

Not past due Over 0~30 days Past due more than 1 year Not past due Past due more than 1 year	December 31, 2021	December 31, 2021
	Carrying amount of account receivables Weighted average expected credit loss $ 3,464,495 0~2.73% 16,375 0% 237,590 100% $ 3,718,460 December 31, 2020		Allowance for expected credit loss
			94,906 - 237,590
			332,496
		Weighted average expected credit loss 0~5.55% 100%	Allowance for expected credit loss
			94,906 237,590
			332,496

(Continued)

• 310 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

Balance at December 31, 2021 and 2020	For the years ended December 31,	For the years ended December 31,
	2021 $ 332,496	2020
		332,496

As of December 31, 2021 and 2020, the aforesaid receivables were not pledged as collateral.

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

(e) Inventories

Finished goods Work in progress Raw materials Fuel Subtotal 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, 2021 $ 1,011,642 435,141 1,683,850 19,887 3,150,520 4,120 9,423 13,535 44,658 71,736 $ 3,222,256	December 31, 2020
		604,363 277,621 1,296,257 14,342
		2,192,583
		- 9,423 13,535 9,576
		32,534
		2,225,117

The details of the cost of sales were as follows:

Cost of goods sold Write-down of inventories (Reversal of write-downs) 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,
	2021 $ 25,249,056 14,601 (1,790) 926,881 (11,585) $ 26,177,163	2020
		14,002,619 (69,591) 1,277 1,359,745 (6,675)
		15,287,375

As of December 31, 2021 and 2020, the aforesaid inventories were not pledged as collateral.

(Continued)

• 311 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(f) Other current assets

Other financial assets Others	December 31, 2021 $ 49,787 391,756 $ 441,543	December 31, 2020
		1,655,545 356,930
		2,012,475

Other financial assets are time deposits with original maturity between three months and one year.

(g) Investments accounted for using equity method

The Company's investments accounted for using the equity method at the reporting date were classified as follows:

Subsidiaries Associates Total	December 31, 2021 $ 41,748,469 1,422,908 $ 43,171,377	December 31, 2020
		27,518,817 1,139,864
		28,658,681

(i) Subsidiaries

Please refer to the consolidated financial statements.

(ii) Associates

The Company's investments accounted for using the equity method that are individually insignificant were as follows:

Carrying value of insignificant associates Attribution to the Company Profit from continuing operations Other comprehensive income (loss) Total comprehensive income	December 31, 2021 December 31, 2020 $ 1,422,908 1,139,864 For the years ended December 31,	December 31, 2020
		1,139,864
	2021 $ 334,873 2,933 $ 337,806	2020
		61,709 (2,494
		59,215

(Continued)

• 312 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (iii) On November 26, 2013, the plan to invest in China was approved during the meeting of the Board of Directors of the Company. On March 25, 2014 and November 1,2018, the Investment Commission, Ministry of Economic Affairs (MOEA) approved the investment of the Company in Jiangsu Weiming Petrochemical Corporation in China in the amount of CNY2,388,000 thousand (equivalent to $11,100,000 thousand) mainly to establish a manufacturing operations for petrochemical products (including hydrorefining crude benzol, cyclohexanone, nylon 6, etc.).

• (iv) On August 12, 2019, a resolution was made during the board meeting of the Company to invest in Jean Pacific Development Co., Ltd., in the amount of $480,000 thousand. On March 27, 2020, a resolution was made during the board meeting of the Company to invest $140,000 thousand in Jean Pacific Development Co., Ltd., according to the proportion of shareholding.

• (v) On August 13, June 16, 2021, and January 31, 2020, respectively, resolutions were made during the board meeting of the Company to raise capital for Ding-Yue Development Co., Ltd. amounting to $18,040,000 thousand, for the purpose of its engagement in join open bidding of Core Pacific City permanent land ownership and meet funding requirement.

• (vi) The dividends income from the Company's investments accounted for using the equity method for the years ended December 31, 2021 and 2020, amounted to $400,581 thousand and $1,133,294 thousand, respectively. Furthermore, the Company received the payment of $1,200,000 thousand of the shares that were bought back from the Company's investments accounted for using the equity method during 2021.

• (vii) As of December 31, 2021 and 2020, the Company provided as collateral a portion of its investments in aforesaid equity accounted investees. Please refer to note 8 for details of the related assets pledged as collateral.

• (h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2021 and 2020 were as follows:

Cost or deemed cost: Balance as of January 1, 2021 Additions Disposal Adjustment Reclassification Return Balance as of December 31, 2021 Balance as of January 1, 2020 Additions Disposals Adjustment Reclassification Balance as of December 31, 2020	Land $ 5,647,642 - - - - - $ 5,647,642 $ 5,647,642 - - - - $ 5,647,642	Land improvements 267,097 - - - (39) - 267,058 264,291 - - 2,806 - 267,097	Buildings 2,734,123 - - 12,132 - - 2,746,255 2,367,463 - (8,138) 369,187 5,611 2,734,123	Machinery and equipment 42,936,647 - (152,639) 1,603,001 - - 44,387,009 42,053,876 - (478,726) 1,367,108 (5,611) 42,936,647	Vehicles 61,933 - (529) 271 - - 61,675 59,057 - (1,843) 4,719 - 61,933	Other facilities 208,417 - (337) 24,020 - - 232,100 197,486 - (3,580) 14,511 - 208,417	Construction in progress 3,960,320 2,807,140 - (1,639,424) - (186,000) 4,942,036 2,871,490 2,847,161 - (1,758,331) - 3,960,320	Accumulated impairment - - - - - - - - - - - - -	Total
									55,816,179 2,807,140 (153,505) - (39) (186,000)
									58,283,775
									53,461,305 2,847,161 (492,287) - -
									55,816,179

(Continued)

• 313 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Depreciation and impairment loss: Balance as of January 1, 2021 Depreciation for the period Impairment loss Adjustment Reclassification Balance as of December 31, 2021 Balance as of January 1, 2020 Depreciation for the period Disposals Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of January 1, 2020 Balance as of December 31, 2020	Land $ - - - - - $ - $ - - - $ - $ 5,647,642 $ 5,647,642 $ 5,647,642	Land improvements 221,167 4,682 - - (39) 225,810 215,757 5,410 - 221,167 41,248 48,534 45,930	Buildings 1,184,246 76,815 - - - 1,261,061 1,120,281 70,995 (7,030) 1,184,246 1,485,194 1,247,182 1,549,877	Machinery and equipment 34,131,479 759,685 - (152,639) - 34,738,525 33,967,241 642,854 (478,616) 34,131,479 9,648,484 8,086,635 8,805,168	Vehicles 47,265 2,408 - (529) - 49,144 46,753 2,355 (1,843) 47,265 12,531 12,304 14,668	Other facilities 144,183 13,401 - (337) - 157,247 138,145 9,619 (3,581) 144,183 74,853 59,341 64,234	Construction in progress - - - - - - - - - - 4,942,036 2,871,490 3,960,320	Accumulated impairment 4,879,031 - 915,669 - - 5,794,700 4,879,031 - - 4,879,031 (5,794,700) (4,879,031) (4,879,031)	Total
									40,607,371 856,991 915,669 (153,505 (39
									42,226,487
									40,367,208 731,233 (491,070
									40,607,371
									16,057,288
									13,094,097
									15,208,808

(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 non operating income and expense in the consolidated statements of comprehensive income.

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

As of December 31, 2021 and 2020, the Company provided as collateral, a portion of its property, plant and equipment, please refer to note 8 for details of the related assets pledged as collateral.

(iii) Property, plant and equipment under construction

For the years ended 2021 and 2020, the capitalized interest related to the property, plant and equipment under construction were $27,356 thousand and $4,193 thousand, respectively, which were calculated based on the capitalized interest rates ranging from 1.5960%~1.6011% and 1.5964%~1.5974%, respectively.

(Continued)

• 314 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(i) Right-of-use assets

The Company leases assets including land, buildings, machinery and equipment and vehicles. Information about leases for which the Company as a lessee is presented below:

Cost: Balance as of January 1, 2021 Additions Disposal Balance as of December 31, 2021 Balance as of January 1, 2020 Additions Disposal Balance as of December 31, 2020 Accumulated depreciation and impairment losses: Balance as of January 1, 2021 Depreciation for the period Disposal Balance as of December 31, 2021 January 1, 2020 Depreciation for the period Disposal Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020	Land $ 85,643 20,491 (485) $ 105,649 $ 61,787 24,144 (288) $ 85,643 $ 6,231 4,541 (328) $ 10,444 $ 2,821 3,515 (105) $ 6,231 $ 95,205 $ 79,412	Buildings	Machinery and equipment 111,057 30,432 (30,940) 110,549 63,906 56,116 (8,965) 111,057 60,621 34,767 (30,940) 64,448 33,708 34,010 (7,097) 60,621 46,101 50,436	Vehicles 11,609 3,605 (2,525) 12,689 16,747 5,598 (10,736) 11,609 4,221 4,620 (2,525) 6,316 7,201 7,076 (10,056) 4,221 6,373 7,388	Total
		9,465 - - 9,465 7,130 9,465 (7,130) 9,465 2,366 4,733 - 7,099 4,753 4,743 (7,130) 2,366 2,366 7,099			217,774 54,528 (33,950) 238,352 149,570 95,323 (27,119) 217,774 73,439 48,661 (33,793) 88,307 48,483 49,344 (24,388) 73,439 150,045 144,335

(j) Investment property

The movement of investment property was as followed:

Cost or deemed cost: Balance as of January 1, 2021 Disposal Net gains and losses due to fair value adjustments Balance as of December 31, 2021 Balance as of January 1, 2020 Net gains and losses due to fair value adjustments Balance as of December 31, 2020	Land $ 37,595,572 (1,668,271) 2,911,289 $ 38,838,590 $ 36,698,539 897,033 $ 37,595,572	Buildings 17,315 (5,264) - 12,051 18,038 (723) 17,315	Total 37,612,887 (1,673,535) 2,911,289 38,850,641 36,716,577 896,310 37,612,887

(Continued)

• 315 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (i) The Company disposed the investment property with the disposal price of $2,380,000 thousand and the disposal gain of $706,465 thousand.

• (ii) Evaluation by income approach

The Company'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, 2021

Subject	Qianjin Dist., Kaohsiung City Qianzhen Dist., Kaohsiung City None None $550~$700 $450 $604~$632 None Unused Leased $0~ $0 $0~ $0 5.335% None 4.445% 4.345% External independent appraiser External independent appraiser Colliers International Taiwan Colliers International Taiwan Feng-ru, Ke Shiou-ying, Jan December 31, 2021 December 31, 2021 $ 10,890 $ 2,903,000
Important contract terms The range of rental in the area where the investment property is located The rental range of similar investment property The current status of the investment property Past earnings Income capitalization rate Discount rate Outsourcing or self-valuation Evaluation office Appraiser name Evaluation date Outsourcing fair value

(Continued)

• 316 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

December 31, 2020

Subject	Qianjin Dist., Kaohsiung City Qianzhen Dist., Kaohsiung City None None $550~$700 450 $576~$617 None Unused Leased $0~ $0 $0~ $0 5.555% None 4.260% 4.655% External independent appraiser External independent appraiser Colliers International Taiwan Colliers International Taiwan Feng-ru, Ke Shiou-ying, Jan December 31, 2020 December 31, 2020 $ 10,780 2,737,000
Important contract terms The range of rental in the area where the investment property is located The rental range of similar investment property The current status of the investment property Past earnings Income capitalization rate Discount rate Outsourcing or self-valuation Evaluation office Appraiser name Evaluation date Outsourcing fair value

In accordance with Article 34 of the Regulations on Real Estate Appraisal, the income approach procedures include estimating the effective gross income and total expenses, computing the net operating income, determining the capitalization rate or discount rate, and computing the income. The attributes used by the Company for the estimations above were the last three years’ data from the subject property and comparable properties which have similar characteristics, and these data were assessed and adjusted based on their persistency, stability, and growth to ensure the availability and reasonableness of these data. The movement of income (cash inflows) and expenditure (cash outflows) for future periods was based on the vacancies or losses, existing or future cash flow plans of the Company, and historical cash flows from the subject property, identical properties, or properties in the same industry. The estimation and computation of the net income were based on the highest and best use of the subject property and have taken into consideration the income generated from comparable properties in the same location based on their highest and best use.

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, 2021 and 2020, the discount rate was 4.345%~4.445% and 4.260%~4.655%, respectively. As of December 31, 2021 and 2020, the weighted average capitalization rate was 5.335% and 5.555%, respectively, derived as the ratio of annual net operating income of comparable properties divided by reasonable price.

(Continued)

• 317 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (iii) Evaluation through land development analysis

The Company classified its undeveloped land as investment property. The Company adopted the development land analysis approach to measure the fair value of the undeveloped land in accordance with Article 9 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, 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, 2021

Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 122,550,002 (Note) 2,782,072 20%~22% 12%~18% 4.150%~4.990% 0.92%~3.03% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm and Colliers International Taiwan, Shiou-Ying, Jan and Jian-Hui, Gu Jian-Hui, Gu, Shiou-Ying, Jan and Ching-Tang, Lia December 31, 2021 December 31, 2021 29,516,000 1,377,615 Qianzhen Dist., Kaohsiung City Others 110,949,840 (Note) 2,614,812 19%~22% 12%~20% 3.650%~5.8547% 0.92%~3.05% CCIS Real Estate Joint Appraisers Firm, Colliers International Taiwan Hon Bun Real Estate Appraisers Firm and Colliers International Taiwan, Shiou-ying, Jan and Jian-hui, Gu Yu-xian, Houng, Jian-hui, Gu, Shiou-ying, Jan, and Ching- tang, Li December 31, 2020 December 31, 2020 28,519,000 1,350,116
Estimate total sales price Rate of return Capital interest rate Evaluation office Appraiser name Evaluation date Outsourcing fair value December 31, 2020 Subject	9,391,820 17% 1.850% CCIS Real Estate Joint Appraisers Firm Chih-Hao, Wu December 31, 2021 $ 5,043,136 Annan Dist., Tainan City
Estimate total sales price Rate of return Capital interest rate Evaluation office Appraiser name Evaluation date Outsourcing fair value	7,968,120 23% 1.770% CCIS Real Estate Joint Appraisers Firm Huo-ming, Huang December 31, 2020 $ 4,995,991

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

The Company’ 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 all includes the original non-cancellable lease and the subsequent lease is negotiated with the lessee without collection of contingent rental. Please refer to note 6(q) for the relevant information including rent revenue and the direct operating expenses incurred.

(Continued)

• 318 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

As of December 31, 2021 and 2020, the Company provided as collateral portion of its investment property. Please refer to note 8 for details of the related assets pledged as collateral.

In the era of pre-Taiwan Alkali Industrial Corporation (TAIC), TAIC had leased the lands located in Tainan and Chiayi area to the local peasants and fishermen, and the surviving tenants shall continue paying the rent to the Company according to the agreements. In the event of the resumption of self-business use or the sale of the lands, the leases shall be terminated under the contractual agreements and Land Laws. If there is any redemption in some cases, the Company will recognize and evaluate the possible expenses and costs case by case.

AnShun Land Located in Tainan City Annan District:

(i) History

• 1) The land where the AnShun Alkali plants located was originally established by Japanese company Kanegafuchi Soda in 1938 under Japanese Colonial Rule.

• 2) The Government undertook construction after the Retrocession of Taiwan, and established a state-owned company, TAIC and operated at the AnShun Site. In 1961, the competent authorities in charge of the relevant state-owned enterprises approved the investment plan and budget for producing Pentachlorophenol and sodium pentachlorophenol products used in herbicides and wood preservative fungicides.

• 3) Due to operational factors, the plant was ordered to be closed by Executive Yuan Department of Economic Affairs (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 Department 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” ).

• 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.

(Continued)

• 319 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• b) In January 2006, the Company filed a complaint against MOEA in the Taiwan Taipei District Court in the amount of $10,077 thousand for reimbursement compensation.

• c) The complaint was dismissed by the Supreme Court in February, 2008. Upon the application of Constitution Interpretation by the Company, J.Y. No.714 Interpretation of the Grand Justice was issued in November, 2013, and considered that SGPR Act does not violate the principle of prohibition against retroactive law, or the principle of proportionality the retroactive rule; however, the holding did not mention whether the successor of the Polluter entity should be responsible for the treatment projects and remediation plan under SGPR Act was not within the scope of the regulation.

• d) The Company has filed series of complaint on those issues according to this Constitutional Interpretation.

• 7) 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 Janurary 3, 2018.

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

(Continued)

• 320 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(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 2008. The Company appealed in March 2008 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 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.

(Continued)

• 321 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• 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. The 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 the 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 final ruling, which was binding, that the Company should only pay the amount of $538 thousand on October 28, 2021. However, the Company received the complaint for a rehearing action from the Tainan City Government on December 23, 2021. The Company has responded accordingly regarding the case, which was still in progress as of the reporting date.

• 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 final ruling, which was binding, from the Supreme Administrative Court on January 22, 2022, wherein the portion over $7,276 thousand that TCG ordered the Company to pay need not be included. Instead, the Company should only pay the total amount of $12,121 thousand, including the final and binding portion of the judgment.

(Continued)

• 322 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• 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 this case is still under trial now.

• 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 appeal in September of the same year. TCG dismissed the Company’s petition on December 25, 2020. On February 26, 2021, the Company filed an appeal to KHAC, who made the final ruling, which was binding, on December 29, 2021, stating that the Company should only pay the amount of $493 thousand. As a favor to TCG, the Company decided not to file an appeal against the final ruling.

• 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 remended the original judgement and remand the case to the 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.

(Continued)

• 323 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

3) Others

• a) The Company still has the objection on the adscription of pollution responsibility for AnShun land located in Tainan City Annan District and would continue to strive for the possible administrative and law remedy actively.

In view of the jurisdiction explanation No.714, which indicated whether the general successors of polluters bear the burden of remediation responsibilities, was not in the scope of the Soil and Groundwater Pollution Remediation Act. Also, considering the previous 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 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 TCG in November 2014. The Company filed a legal petition in December 2014 and the original disposal authorities revoked the original punishment in March 2014, hence, 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 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 $5,552,840 thousand until December 31, 2021. The preceding remediation fee was estimated according to the current possible situations by the Company. However, unpredictable future events may cause large fluctuations in the total expected remediation fees. This will be closely monitored and evaluated by management.

b) Anshun dormitory designated monuments case

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 the KHAC. And this case is still being heard in the Court.

(Continued)

• 324 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Xincun Land of Taiwan Alkali Co., Ltd.:

1) History

On the premise that the residents obeyed the agreement, the Company signed an agreement with the local communities that land within Feng Shan District, Kaohsiung City shall be granted free of charge for public use.

2) Extension legislation

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.

Shulin Land of Taiwan Alkali Co., Ltd.:

• 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 238, 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 government owned 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.

(Continued)

• 325 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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.

(k) Short-term loans

The short-term loans were summarized as follows:

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, 2021 $ 377,000 500,000 - 219,360 $ 1,096,360 $ 8,788,297 $ 5,162,618 0.669%~1.45%	December 31, 2020
		1,175,000 1,300,000 1,140,000 -
		3,615,000
		6,400,000
		1,171,378
		1.2799%~1.3857%

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

(Continued)

• 326 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (l) Long-term loans

The long-term loans were summarized as follows:

Secured bank loans Less: current portion Total Total long-term credit lines Unused long-term credit lines Range of interest rates	December 31, 2021 $ 12,108,900 (300,000) $ 11,808,900 $ 20,450,000 $ 7,651,000 1.3%~1.95%	December 31, 2020 5,570,000 (1,160,000) 4,410,000 12,631,000 5,321,000 1.3%~1.9556%

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 funding requirement. The aggregate amount of credit line of the syndicated loan was $4,470,000 thousand.

• (i) Syndicated loan A: The credit line is $3,000,000 thousand consisting of medium-term secured loans and non-revolving credit facility, which were used to finance the building of the plant and purchase of accessory equipment.

• (ii) Syndicated loan B: The credit line is $1,470,000 thousand consisting of medium-term loans and revolving credit facility, which were used to meet funding requirement.

• (iii) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial report and audited annual consolidated financial reports. If the Company breaches these financial covenants, the syndicated banks may declare the unpaid principal, interest, fees and other sums payable by the Company under the loan agreement to be immediately due and payable. These financial ratios are as follows:

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

(Continued)

• 327 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (iv) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial report that does not comply with the financial commitments to the announcement date of the next consolidated financial report shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial report that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 7 (3) of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial report meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.

• (v) The term of the repayment of the category A credit is stipulated as: The first period will be paid off from the date of the first use of the credit application to the expiration of three years. After that, it will be a period of six months for once. Settlement of the liability divided into five phases. The first period to the fourth period, each period shall be settled separately for 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.

• (vi) 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.

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.

• (i) Syndicated loan A: The credit line is $2,815,000 thousand consisting of medium-term secured loans and revolving credit facility, which was used to meet the funding requirements. The loan period lasts 3 years upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended upon expiration for 2 years, and limited to once, through written application.

• (ii) Syndicated loan B: The credit line is $1,085,000 thousand consisting of commercial promissory note agreements and revolving credit facility, which was used to meet the funding requirements. The loan period lasts 1 year upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended 12 months before expiration, and limited to twice, through written application.

(Continued)

• 328 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (iii) 24 months after the first disbursement and every 6 months ever since, the credit line of the syndicated loan is diminished by 10% of the total credit line, applicable to the extension period. In advance of each credit line diminished date, for loan A, the Company shall settle any exceeding principal, interests, and other relating liabilities, free of prepayment terms included in the contract. For loan B, the Company shall make deposit to the designated account to make up for the amount of note principal exceeding the credit line, free of prepayment terms included in the contract. The Company may withdraw the deposit after the aforementioned note is settled.

• (iv) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. These financial ratios are as follows:

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

• 4) Tangible net worth (total equity excluding intangible assets): not lower than $60,000,000 thousand.

• (v) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 8 of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest, plus guarantee fee. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.

• (vi) The term of the repayment of the category A credit is stipulated as: the repayment shall be completed on the expiration date stated in the application form for each disbursement.

• (vii) The term of the repayment of the category B credit is stipulated as: The repayment shall be completed on the due date stated on the note.

(Continued)

• 329 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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.

• (i) The financial covenants under the loan agreement include the requirement to maintain the following financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. In the event of any violation, the CTBC Bank is entitled to reduce credit line, shorten the loan period, and have all principals and interests repaid immediately.

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 120%

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

• 4) Tangible net worth (total equity excluding intangible assets): not lower than $67,000,000 thousand.

• (ii) 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.

On April 29, 2021, the Company signed a medium-term loan agreement for 58 months with Taiwan Life Insurance Co., Ltd. in order to meet the funding requirements. The Company and Ding-Yue Development Co., Ltd. share a credit line of $4,100,000 thousand, while Ding-Yue Development Co., Ltd. has the upper limit of 1,000,000 thousand.

On October 21, 2021, Ding Yue signed a 4-year syndicated loan agreement with 9 financial institutions, with Shin Kong Commercial Bank as the lead bank. The syndicated loan agreement included a credit line of NT$1,200,000 thousand from Taiwan Life Insurance Co., Ltd. On October 7, 2021, Taiwan Life Insurance Co., Ltd. issued a notice of change in its credit limit. The notice stipulated that the total amount of Ding-Yue’s syndicated loan agreement and the interim guarantee credit contract mentioned in the preceding paragraph will be a maximum amount of NT$4,100,000 thousand. Therefore, starting from October 21, 2021, the total credit limit for the medium-term guarantee contract mentioned in the preceding paragraph was reduced to NT$2,900,000 thousand.

Secured bank loans from Farglory Life Insurance Inc.

On September 30, 2021, the Company signed a medium-term loan agreement for 5 years with Farglory Life Insurance Inc. in order to meet the funding requirements. The aggregate amount of credit line of the loan was $2,000,000 thousand.

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

(Continued)

• 330 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(m) Bonds payable

• (i) The details of bonds payable were as follows:

The details of bonds payable were as follows:
Secured non-convertible bonds Less: current portion Balance of bonds payable Maturity year	December 31, 2021 $ 3,500,000 - $ 3,500,000 114	December 31, 2020
		3,500,000 -
		3,500,000
		114

• (ii) The Company issued domestic secured non-convertible bonds at the amount of $3,500,000 thousand in 2020, the terms were as follows:

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

The first domestic secured non-convertible bond in 2020 Bond A Bond B Bond C $ 1,500,000 1,000,000 1,000,000 2020.9.21 2020.9.21 2020.9.21 5 years 5 years 5 years % 0.64 % 0.64 % 0.64 September 21 September 21 September 21 Repayment on maturity, interest payment annually Repayment on maturity, interest payment annually Repayment on maturity, interest payment annually Bank guarantee (Mega International Commercial Bank) Bank guarantee (Bank of Taiwan) Bank guarantee (Land Bank of Taiwan)

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

(Continued)

• 331 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(n) 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, 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)

• 332 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

December 31, 2020	December 31, 2020
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 Company had revolving commercial promissory note agreements with bills finance companies in order to finance its operating requirement. As of December 31, 2021 and 2020, the bills payable bear interest rates ranging from 0.3%~0.97% and 0.28%~1.262%, respectively.

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

(Continued)

• 333 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(o) Lease liabilities

The lease liabilities of the Company were as follows:

Current Non-Current	December 31, 2021 $ 44,167 $ 108,032	December 31, 2020
		32,583
		112,919

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

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expense relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2021 $ 2,983 $ 32,362	2020
		2,036
		29,424

The amounts recognized in the statement of cash flows for the Company were as follows:

Total cash outflow for leases (p) Provisions Balance as of January 1, 2021 Provisions made during the year Provisions used during the year Balance as of December 31, 2021 Current Non-current Balance as of January 1, 2020 Provisions made during the year Provisions used during the year Balance as of December 31, 2020 Current Non-current	Decommissioning $ 1,196,440 - - $ 1,196,440 $ - 1,196,440 $ 1,196,440 $ 1,196,440 - - $ 1,196,440 $ - 1,196,440 $ 1,196,440	For $ Remediation project 514,613 1,664,899 (82,034) 2,097,478 473,093 1,624,385 2,097,478 603,972 249,750 (339,109) 514,613 276,650 237,963 514,613	For	the years ended December 31,	the years ended December 31,	the years ended December 31,
				2021 83,007 Employee benefits		2020
						80,273
						Total
						1,986,321 1,761,546 (138,217
						3,609,650
						478,077 3,131,573
						3,609,650
						2,056,573 300,179 (370,431
						1,986,321
						281,634 1,704,687
						1,986,321

(Continued)

• 334 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (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 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.

(Continued)

• 335 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(q) Operating lease

The Company leases its property, plant and equipment under operating leases. The future minimum lease receivable under these non-cancellable operating leases were as follows:

Less than one year Between one and five years Over five years Over five years Over five years Over five years	December 31, 2021 $ 52,041 52,084 42,222 40,407 40,452 376,771 $ 603,977	December 31, 2020 36,840 36,840 36,883 27,021 25,206 265,843
		428,633

For the years ended December 31, 2021 and 2020, the income from the rental of property, plant and equipment amounted to $49,197 thousand and $23,521 thousand, respectively.

(r) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2021 $ 517,688 (206,940) $ 310,748	December 31, 2020 486,957 (216,673) 270,284

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, 2021 and 2020.

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

(Continued)

• 336 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $205,885 thousand as of December 31, 2021. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movement in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Company were as follows:

Defined benefit obligation, January 1 Current service costs and interest cost (income) Remeasurements loss (gain): —Actuarial loss 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, 2021 2020 $ 486,957 531,181 11,790 15,243 36,791 41,056 16,993 - 27,420 (6,255) (61,510) (94,268) (753) - $ 517,688 486,957

• 3) Movement of defined benefit plan assets

The movement in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets, January 1 Expected return on plan assets Remeasurements loss (gain): —Actuarial gain due to experience adjustments Contributions paid by the employer Benefits paid Fair value of plan assets, December 31	For the years ended December 31, 2021 2020 $ 216,673 290,272 1,292 2,761 3,183 10,144 47,302 7,764 (61,510) (94,268) $ 206,940 216,673

(Continued)

• 337 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service cost Net interest 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, 2021 2020 $ 8,832 10,119 1,666 2,363 $ 10,498 12,482 $ 9,116 10,947 55 56 1,147 1,288 180 191 $ 10,498 12,482 $ 4,475 12,905

• 5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Company’s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2021 and 2020, was as follows:

Accumulated balance, January 1 Recognized during this year Accumulated balance, December 31	For the years ended December 31, 2021 2020 $ (175,763) (151,106) (78,021) (24,657) $ (253,784) (175,763)

• 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, 2021 2020 0.625% 0.625% 1.500% 1.000%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $6,960 thousand.

The weighted average lifetime of the defined benefits plans is 13.65 years.

(Continued)

• 338 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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, 2021 Discount rate Future salary increasing rate December 31, 2020 Discount rate IFuture salary increasing rate	Impact on the defined benefit obligation Increase by 0.25% Decrease by 0.25% $ (14,862) 15,447 15,019 (14,531) (13,307) 13,843 13,521 (13,068)

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 2021 and 2020.

(ii) Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The cost of the pension contributions to the Labor Insurance Bureau for the years ended December 31, 2021 and 2020 amounted to $42,153 thousand and $42,238 thousand, respectively.

(iii) The pension recognized consists of pension expenses and pensions for professional management. The pension expenses for professional management were $9,333 thousand and $13,291 thousand for the year ended December 31, 2021 and 2020, respectively.

(iv) Short-term compensated absences liabilities

As of December 31, 2021 and 2020, the Company’ s short-term compensated absences liabilities both amounted to $4,984 thousand.

(Continued)

• 339 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(s) Income Tax

(i) Income tax expense

The components of income tax expense (benefit) for the years ended December 31, 2021 and 2020 were as follows:

Current income tax expense (benefit) Current period Adjustment for prior periods Deferred tax expense (benefit) Change in land value-added tax Change in unrecognized deductible temporary differences Income tax expense (benefit)	For the years ended December 31,	For the years ended December 31,
	2021 $ (283,077) (6,447) (289,524) 326,216 302,226 628,442 $ 338,918	2020 6,607 (72,521) (65,914) (523,912) (6,607) (530,519) (596,433)

For the years ended December 31, 2021 and 2020, income tax expenses recognized under other comprehensive income were both $0 thousand.

Reconciliation of income tax (benefit) and profit before tax for the years ended December 31, 2021 and 2020, were as follows:

Profit before income tax Income tax using the Company’s domestic tax rate 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 Others Income tax expense (benefit)

For the years ended December 31, 2021 2020 $ 3,942,126 84,556 $ 788,425 16,911 10,301 8,270 (175,252) (26,418) - 138,096 302,226 (144,703) (6,447) (72,521) 19,149 - (657,010) (368,720) 326,216 (523,912) (267,763) (61) (927) 376,625 $ 338,918 (596,433)

(Continued)

• 340 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

Decommissioning liabilities Remediation project Pollution remediation Allowance for doubtful receivables Investment property, property, plant and equipment Pension Tax loss Others	December 31, 2021 $ 104,399 237,893 1,859,585 319,484 3,265,327 173,962 4,624,121 101,647 $ 10,686,418	December 31, 2020
		93,101 238,563 276,050 319,484 2,931,694 211,520 5,046,899 57,979
		9,175,290

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 Company can utilize the benefits therefrom.

As of December 31, 2021, the expiration years of tax loss unrecognized as deferred tax assets were as follows:

The Company

Year incurred	Amount Expiry Date $ 53,903 2024 2,132,246 2025 1,870,634 2026 567,338 2030
2014 2015 2016 2020

• 2) Deferred tax liabilities:

As of December 31, 2021 and 2020, the balance of deferred income tax liabilities for the provision of land value-added tax was $6,763,683 thousand and $6,497,063 thousand, respectively.

(Continued)

• 341 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

3) Deferred tax assets:

The deferred tax assets for the years ended December 31, 2021 and 2020 were as follows:

December 31, 2021 (equal to January 1) December 31, 2020 (equal to January 1)	Taxable Loss $ 11,009 $ 11,009	Total
		11,009
		11,009

• (iii) Assessment of tax

The Company's tax returns for the years through 2019 were assessed by the National Taxation Bureau of Kaohsiung.

(t) Capital and other equity

• (i) The issuance of common stock

As of December 31, 2021 and 2020, the authorized, issued and outstanding capital of the Company amounted to $37,848,502 thousand and $32,848,502 thousand, respectively, divided into 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, 2021 and 2020 was as follows:

(In thousands of shares)

Balance, January 1 Capital increased by cash Balance, December 31	Common Stock	Common Stock	Common Stock
	For the years ended December 31,
		2021 3,284,850 500,000 3,784,850	2020
			2,834,850 450,000
			3,284,850

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.

(Continued)

• 342 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

In order to invest in the overseas subsidiary for the purpose of plant construction, a resolution was made during the Board of Director’ s meeting held on September 23, 2019 for the issuance of common stock in term of Global Depositary Receipts (GDR), with a maximum limit of 500,000 thousand shares, amounting to USD160,317 thousand, which was approved by Rule No. 1080335763 Financial Supervisory Commission on November 20, 2019. The share price was determined and completed on January 6, 2020 and issued on January 10, 2020. The total units of issued GDR was 18,000 thousand units, which represented the right of common stock for 450,000 thousand shares; for every 25 shares of common stock per unit of GDR, the unit price of GDR was USD7.18, which was equivalent to $8.64 per share, resulting to a total issuance price amounting to USD129,240 thousand. The total amount of the issuance, deducting the costs necessary for the issuance, was $3,796,481 thousand. The capital increase base date was January 10, 2020, and 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, 2021 $ 1,408,088 26,314 1,758 18,141 $ 1,454,301	December 31, 2020
		1,242,245 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

(Continued)

• 343 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

in the allotment of its profits. Under such circumstances, the Company may set aside profits into a special reserve either in whole or in part to assure financial stability and sustainability. The Company may allot dividends in cash or stock. In the case that the allotment is made by way of stock dividend, the ratio for the stock dividend shall not exceed 50% of the total distribution unless the ratio of the Company's total liabilities to total assets is equivalent or above 50% or otherwise prescribed in relevant laws and regulations.

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 both amounted to $4,194,973 thousand as of December 31, 2021 and 2020.

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 and $4,235,076 thousand as of December 31, 2021 and 2020, 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 and $21,224,233 thousand as of December 31, 2021 and 2020, respectively.

(Continued)

• 344 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the 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, 2021 and 2020, the Company appropriated to the special reserve an amount of $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 resolved in the Board of Directors’ meeting held on March 14, 2022 and general meeting of shareholders held on July 2, 2021, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders : Cash	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,513,940	2020
		-

(Continued)

• 345 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) Treasury shares

In accordance with the requirements under section 28(2) of the Securities and Exchange Act, the Company plans to buy 50,000 thousand ordinary shares from March 30 to May 29, 2020, in order to protect the Company’ s credit and shareholders’ equity. The price range is between $5.03 and $7.50 per share. On May 29, 2020, the market prices were higher than the upper limit of the execution price range for the repurchase of treasury shares, and the stock of the Company was not oversold compared with the market during the original scheduled repurchase period. The repurchase was not executed in order to protect shareholders' equity and take into market mechanisms.

(v) Other equity accounts

Balance, January 1, 2021 Exchange difference on subsidiaries and 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, subsidiaries and associates accounted for using equity method Balance, December 31, 2021	Exchange differences on translation of foreign financial statements $ (966,202) 17,343 - - - $ (948,859)	Unrealized gains (losses) from financial assets at fair value through other comprehensive income (854,259) - 242,236 (1,384) 36,461 (576,946)

(Continued)

• 346 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Balance, January 1, 2020 Exchange difference on subsidiaries 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, subsidiaries accounted for using equity method Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income, associates accounted for using equity method Balance, December 31, 2020 (u) Earnings per share	Exchange differences on translation of foreign financial statements $ (804,515) (161,687) - - - - $ (966,202)	Unrealized gains (losses) from financial assets at fair value through other comprehensive income (1,120,657) - 375,078 (126,299) 17,552 67 (854,259)

The Company’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,
	2021 $ 3,603,208 3,299,919 $ 1.09 $ 3,603,208 3,299,919 9,554 3,309,473 1.09	2020
		680,989 3,273,785 0.21 680,989 3,273,785 3,039 3,276,824 0.21

(Continued)

• 347 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(v) Revenue from contracts with customers

• (i) The Company 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) of the consolidated financial statements.

(ii) Contract balances

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful account Contract liabilities	December 31, 2021 $ 435,938 3,282,522 (332,496) $ 3,385,964 $ 20,612	December 31, 2020 345,480 1,602,891 (332,496) 1,615,875 954

Please refer to note 6(d) for disclosure of accounts receivable and allowance for doubtful accounts.

The amounts of revenue recognized for the years ended December 31, 2021 and 2020 that were included in the contract liability balance at the beginning of the periods were $954 thousand and $88,263 thousand, respectively.

(w) 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, 2021 and 2020, the remuneration to employees amounted to $124,488 thousand and $2,670 thousand, respectively, and the remuneration to directors amounted to $82,992 thousand and $1,780 thousand, respectively. These amounts were calculated using the Company’ s net income before tax before remuneration to employees and directors for the years ended December 31, 2021 and 2020. These benefits were charged to profit or loss under operating costs or operating expenses for the years ended December 31, 2021 and 2020. When the board of directors decided to distribute stock dividends, the number of which shall be calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of Board of Directors. For the years ended December 31, 2021, the actual distribution of the employee remuneration was $0 thousand; while the amount for directors is identical to those stated on financial statements. Related information would be available at the Market Observation Post System website.

(Continued)

• 348 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(x) 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 Other income The details of other income were as follows: Rent income Dividend income Other income, others Total	For the years ended December 31,

(ii) Other income

(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 Losses on disposals of investments Gains on lease modification Foreign exchange gains Fee expense Losses on work stoppages Remediation expense Other gains and losses Other gains and losses, net	For the years ended December 31,	For the years ended December 31,
	2021 $ - 706,465 - 12 24,125 (159,207) (248,467) (1,664,899) (11,953) $ (1,353,924)	2020 (1,107) - (580) 40 562 (96,684) (267,501) - (11,391) (376,661)

(Continued)

• 349 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) Finance costs

The details of finance costs were as follows:

The details of finance costs were as follows:
Interest expense Finance costs, net	For the years ended December 31, 2021 2020 $ (259,640) (187,982) $ (259,640) (187,982)
	2021 $ (259,640) $ (259,640)

• (y) Financial Instruments

• (i) Credit risk

1) Exposure to credit risk

As of December 31, 2021 and 2020, the carrying amount of financial assets represents the Company’s maximum credit exposure.

• 2) The concentration of credit risk

Under the Company’ s credit policy, customers are requested to provide the Company certain financial information like audited financial report, or other related documents for purposes of evaluating their credit worthiness. Credits are granted to these customers according to the result of the Company’ s credit evaluation. Those customers who do not satisfy the requirement shall not be offered credit.

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

As of December 31, 2020, 83% of the total amount of accounts receivable was composed of 12 customers. The sales of the Company were significantly concentrated in a small number of customers.

3) Receivables

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

Other financial assets at amortized cost includes time deposits and guarantee 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, 2021 and 2020, the loss allowance provision both amounted to $0 thousand.

(Continued)

• 350 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(ii) Liquidity risk

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

December 31, 2021 Non-derivative financial liabilities Accounts payable Other payables Other financial liabilities� current Other non-current liabilities �other Lease liabilities Floating-rate loans (note) Fixed-rate loans (note) Long-term bills payable (note) Bonds payable December 31, 2020 Non-derivative financial liabilities Accounts payable Other payables Other financial liabilities� current Other non-current liabilities �other Lease liabilities Floating-rate loans (note) Fixed-rate loans (note) Long-term bills payable (note) Bonds payable	Carrying amount $ 1,637,005 1,257,680 10,102 109,477 152,199 2,400,000 10,805,260 5,254,518 3,500,000 $ 25,126,241 $ 1,215,153 743,858 7,807 98,944 145,502 2,920,000 6,265,000 5,656,112 3,500,000 $ 20,552,376	Contractual cash flows 1,637,005 1,257,680 10,102 109,477 171,386 2,468,580 11,620,129 5,260,000 3,589,600 26,123,959 1,215,153 743,858 7,807 98,944 162,846 3,002,128 6,276,029 5,660,000 3,612,000 20,778,765	Within 6 months 1,637,005 1,251,420 10,102 71,577 24,729 - 2,952,186 - - 5,947,019 1,215,153 743,858 7,807 86,383 18,171 1,465,961 6,276,029 - - 9,813,362	6-12 months - 6,260 - 8,905 21,730 302,644 - - 22,400 361,939 - - - 8,668 16,700 - - - 22,400 47,768	1-2 years - - - 1,203 20,873 1,739,816 - 5,260,000 22,400 7,044,292 - - - 2,146 28,376 - - 5,660,000 22,400 6,434,608	2-5 years - - - 26,292 17,296 426,120 7,813,756 - 3,544,800 11,828,264 - - - 247 26,336 1,536,167 - - 3,567,200 6,798,642	More than 5 years
							- - - 1,500 86,758 - 854,187 - -
							942,445
							- - - 1,500 73,263 - - - -
							74,763

The Company does not expect that the cash flow of the due date analysis will occur significantly earlier, or the actual amount will be significantly different.

Note: The amount within 6 months includes recyclable long-term bank loans and long-term bills payable.

(Continued)

• 351 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iii) Currency risk

1) Currency risk exposure

The Company's exposures to significant currency risk were those from its foreign currency denominated financial assets and liabilities as follows:

Fi	nancial assets Monetary items USD VND CNY Non-Monetary items CNY USD VND nancial liabilities Monetary items USD	De	cember 31, 2021	NTD 1,344,288 - 1,941,313 100,758 9,203,369 586,628 285,812	D	ecember 31, 2020
		Foreign Currency $ 48,571 - 446,998 23,200 332,528 488,856,667 $ 10,327	Exchange rate 27.677 0.0012 4.343 4.343 27.677 0.0012 27.677		Foreign Currency 18,845 4,805,180 550,264 18,976 327,910 481,690,833 -	Exchange rate NTD 28.099 529,534 0.0012 5,853 4.315 2,374,391 4.315 81,882 28.099 9,213,936 0.0012 578,029 28.099 -
Fi

• 2) Sensitivity analysis

The Company’ 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 weakening of 1% of NTD against USD, VND and CNY would have increased net income by $23,998 thousand and $23,278 thousand for the years ended December 31, 2021 and 2020, respectively; other comprehensive income would have increased $98,908 thousand and $98,738 thousand for the years ended December 31, 2021 and 2020, respectively. The analysis is performed on the same basis for 2020.

• 3) Foreign exchange gains (losses) on monetary items

Due to the Company'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, 2021 and 2020, foreign exchange gains (losses) (including realized and unrealized portions) amounted to $24,125 thousand and $562 thousand, respectively.

(Continued)

• 352 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Company'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 Company’ s internal management reported the increases/decreases in the interest rates and the exposure to changes in interest rates of 1% is considered by management to be a reasonable change of interest rate.

If the interest rate increases by 1%, the Company’ s net income will decrease by $24,000 thousand and $29,200 thousand for the years ended December 31, 2021 and 2020, respectively, assuming all other variable factors remain constant. This is due mainly to the fact that the Company’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,	For the years ended December 31,	For the years ended December 31,
	2021 After-tax other comprehensive income Net income $ 27,414 53,051 $ (27,414) (53,051)	2020
	After-tax other comprehensive income $ 27,414 $ (27,414)	After-tax other comprehensive income 25,006 (25,006)	Net income
Increase of 1% Decrease of 1%			84,939
			84,939

(Continued)

• 353 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(vi) Fair value information

• 1) Fair value hierarchy

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

Financial assets at fair value through profit or loss Designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes, accounts and other receivables Other financial assets Subtotal Total Non-financial assets Investment property Financial liabilities measured at amortized cost Short-term loans Accounts and other payable Long-term bank loans-current portion Bonds payable Long-term bank loans Long-term bills payable Other financial liabilities Lease liabilities Total		December 31, 2021	December 31, 2021	December 31, 2021
	Book value $ 5,305,147 2,270,979 470,403 2,741,382 2,782,774 3,481,767 196,088 6,460,629 $ 14,507,158 $ 38,850,641 1,096,360 2,894,685 300,000 3,500,000 11,808,900 5,254,518 119,579 152,199 $ 25,126,241		Fair value
		Level 1 187,229 2,270,979 - 2,270,979 - - - - 2,458,208 - - - - - - - - - -	Level 2 - - - - - - - - - - - - - - - - - - -	Level 3 5,117,918 - 470,403 470,403 - - - - 5,588,321 38,850,641 - - - - - - - - -	Total
					5,305,147
					2,270,979 470,403
					2,741,382
					- - -
					-
					8,046,529
					38,850,641
					- - - - - - - -
					-

(Continued)

• 354 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Financial assets at fair value through profit or loss Designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes, accounts and other receivables Other financial assets Subtotal Total Non-financial assets Investment property Financial liabilities measured at amortized cost Short-term loans Accounts and other payable Long-term bank loans-current portion Bonds payable Long-term bank loans Long-term bills payable Other financial liabilities Lease liabilities Total		December 31, 2020	December 31, 2020	December 31, 2020
	Book value $ 8,493,897 2,059,052 441,533 2,500,585 1,008,698 1,688,921 1,796,259 4,493,878 $ 15,488,360 $ 37,612,887 3,615,000 1,959,011 1,160,000 3,500,000 4,410,000 5,656,112 106,751 145,502 $ 20,552,376		Fair value
		Level 1 661,224 2,059,052 - 2,059,052 - - - - 2,720,276 - - - - - - - - - -	Level 2 - - - - - - - - - - - - - - - - - - -	Level 3 7,832,673 - 441,533 441,533 - - - - 8,274,206 37,612,887 - - - - - - - - -	Total
					8,493,897
					2,059,052 441,533
					2,500,585
					- - -
					-
					10,994,482
					37,612,887
					- - - - - - - -
					-

• 2) Valuation techniques for financial instruments which is not measured at fair value:

The Company's valuation techniques and assumptions used for financial instruments not measured at fair value are the discounted cash flows method.

(Continued)

• 355 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• 3) Valuation techniques for financial instruments measured at fair value:

The Company determines the input value with reference to the analysis of the financial status and operating results, recent transaction price, related equity instruments are quoted in non-active markets, similar tools offer in the active market and comparable company evaluation multiplier of the investee company and periodically updates the input value and information and any other necessary fair value adjustments to ensure that the evaluation results are reasonable.

• a) Non-derivative financial instruments

Financial instruments, if there is a public market offer, then the public market offer for the fair value, such as listing (cabinet) company stock.

The fair value of the financial instruments held by the Company in the case of a non-active market is as follows:

No public offer 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 investee.

• 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, 2021 and 2020.

(Continued)

• 356 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

January 1, 2021 Disposal Total gain and losses recognized in profit or loss Total gain and losses recognized in profit or loss or other comprehensive income December 31, 2021 January 1, 2020 Purchase Total gain and losses recognized in profit or loss Total gain and losses recognized in profit or loss or other comprehensive income December 31, 2020	Investment Property $ 37,612,887 (1,673,535) 2,911,289 - $ 38,850,641 Investment Property $ 36,716,577 - 896,310 - $ 37,612,887	Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 7,832,673 - (2,751,363) - 36,608 - - - 5,117,918 - Financial assets reported at fair value through profit or loss Designated at initial recognition Derivative financial assets 7,247,062 - - - 585,611 - - - 7,832,673 -	Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 441,533 (1,438) - 30,308 470,403 Financial assets reported at fair value through other comprehensive income Non-public quoted equity instruments 142,112 300,000 - (579) 441,533
		Designated at initial recognition 7,247,062 - 585,611 - 7,832,673

(Continued)

• 357 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• 6) Quantitative information on the measurement of fair value of significant unobservable input values (level 3)

Level 3 refers to the measurement of the fair value of the input parameters are not based on market availability of information, must be based on the assumption that the appropriate estimates and adjustments. If the evaluation model can not be developed on its own, the fair value of the counterparty is used as the fair value. According to IFRS13, for the fair value of the third level classified at the fair value level, the firm shall provide quantitative information about the significant unobservable input values used for the fair value measure. Businesses do not need to create quantitative information to comply with this disclosure, if quantified unobservable input value is not built when enterprises are measuring fair value (for instance, when a firm uses an unadjusted previous transaction price or a third-party pricing information), e.g. part of the Company's investment in nonactive market equity and debt instruments. The fair value of the Company's investment property is level 3, which is determined in accordance with IFRSs, i.e., outsourcing to external 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, 2021 and 2020 was $38,850,641 thousand and $37,612,887 thousand, respectively.

The Company 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 equity instruments with inactive market may result in multiple unobservable input values which are all independent from each other.

Quantified information of significant unobservable inputs was as follows:

Item	Valuation technique	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement � P/E ratio 9.66~10.69 as multiply on December 31, 2021 � Lack of market liquidity, discount rate 20% on December 31, 2021 � The higher the P/E ratio, the higher the fair value � Lack of market liquidity, the more the discount, the lower the fair value •Net asset value •Lack of market liquidity, discount rate 30% on December 31, 2021 and 2020 � Not applicable � Lack of market liquidity, the more the discount, the lower
Financial assets at fair value through other comprehensive income - equity investments without an active market Financial assets at fair value through other comprehensive income	Public company comparable method Net asset value method

(Continued)

• 358 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Item	Valuation technique	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement • Net Asset Value • Not applicable
Financial assets at fair value through profit or loss	Net asset value method

• 7) The evaluation process for fair value belonging to level 3

The Company's fair value evaluation involves observable input value requiring unobservable parameters for significant adjustments or unobservable input value, both of which belong to level 3. The main source of such input value is external 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.

• (z) Financial risk management

(i) Overview

The Company is exposed to the following risks due to the use of financial instruments:

• 1) Credit Risk

• 2) Liquidity risk

• 3) Market risk

The following discusses the Company’s objectives, policies and processes for measuring and managing the risks mentioned above. For more quantitative information about the financial instruments, please refer to other related notes of the financial statements.

(ii) Risk management framework

The Board of Directors has overall responsibility for the oversight of the risk management framework in order to develop and monitor the Company’s risk management policies and to report regularly on its activities.

(Continued)

• 359 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’ s activities. The Company, through their training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee of the Company oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee of the Company is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(iii) Credit Risk

Credit risk means the potential loss of the Company if the clients or counterparties involved in transactions default. The primary potential credit risk is from cash and accounts receivable.

1) Accounts receivable and other receivables

The Company’ s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk, particularly in the current deteriorating economic circumstances.

The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval from the Risk Management Committee; these limits are reviewed quarterly. Customers that fail to meet the Company’s benchmark creditworthiness may transact with the Company only on a prepayment basis.

The Company establishes an impairment allowance that represents its estimate of incurred losses in respect of trade receivables. The two components of this impairment allowance are specific loss component that relates to individually significant exposure and collective loss component which the loss was incurred but not identified. The collective component is based on historical payment experience of similar financial assets.

2) Investments

The credit risk exposure in the bank deposits is measured and monitored by the Company’s finance department. As the Company deals with the banks and other external parties with good credit standing and financial institutions, corporations and government agencies which are graded above investment level, management believes that the Company does not have compliance issues and significant credit risk.

(Continued)

• 360 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as much as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’ s reputation. The management believes that the Company does not have significant liquidity risk.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Risk Management Committee.

1) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Company’s entities, primarily the New Taiwan Dollars (NTD). The currencies used in these transactions are denominated in NTD, USD and CNY.

The Company’s currency risk is not hedged as some of the currencies of the Company’s foreign currency receivables and payables are the same, producing a natural hedge effect.

2) Interest rate risk

The Company’s interest rate risk comes from long-term and short-term bank loans. The long-term bonds issued by the Company is fixed-rate, so there is no risk caused by the fluctuations of interest rates and fair value interest rate. The long-term and short-term bank loans with floating-rate are exposed to interest rate risk, but most of risk is offset by cash and cash equivalents holding in floating-rate.

• 3) Other market price risk

The Company does not enter into any commodity contracts other than to meet the Company’s expected usage and sales requirements; such contracts are not settled on a net basis.

(Continued)

• 361 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(aa) Capital management

The Company’s objectives for managing capital is to safeguard the capacity to continue to operate, to continue to provide a return to shareholders, to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilties.

The Company and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt.

The Company’s debt-to-equity ratios at the end of the reporting period as of December 31, 2021 and 2020 were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Total liabilities and equity Debt-to-equity ratio	December 31, 2021 $ 36,667,048 (2,782,774) $ 33,884,274 $ 80,506,933 $ 114,391,207 % 29.62	December 31, 2020 29,605,192 (1,008,698) 28,596,494 70,812,642 99,409,136 % 28.77

On December 31, 2021, The increase of debt-to-equity ratio resulted from the operationsupplementing bank loans.

(ab) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow for the years ended December 31, 2021 and 2020, were as follows:

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

(Continued)

• 362 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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

Long-term bank loans Short-term loans (note) Long-term bills payable Lease liabilities	January 1, 2021 $ 5,570,000 3,615,000 5,656,112 145,502 $ 14,986,614	Cash flows 4,291,700 (424,253) 1,847,200 (50,645) 5,664,002	Non-cash changes Foreign exchange movement Bills payable transferred to long- term bank loans Other - 2,247,200 - - - (2,094,387) - (2,247,200) (1,594) - - 57,342 - - (2,038,639)	Non-cash changes Foreign exchange movement Bills payable transferred to long- term bank loans Other - 2,247,200 - - - (2,094,387) - (2,247,200) (1,594) - - 57,342 - - (2,038,639)	December 31, 2021
			Foreign exchange movement - - - - -	Bills payable transferred to long- term bank loans 2,247,200 - (2,247,200) - -
					12,108,900 1,096,360 5,254,518 152,199
					18,611,977

	$ 14,986,614	5,664,002	- - (2,038,639)	- - (2,038,639)	18,611,977
Long-term bank loans Short-term loans (note) Long-term bills payable Lease liabilities	January 1, 2020 $ 4,830,000 3,100,558 4,494,177 101,763 $ 12,526,498	Cash flows 740,000 514,442 1,160,000 (50,849) 2,363,593	Non-cash changes Foreign exchange movement Bills payable transferred to long- term bank loans Other - - - - - - - - 1,935 - - 94,588 - - 96,523		December 31, 2020
			Foreign exchange movement - - - - -	Bills payable transferred to long- term bank loans - - - - -
					5,570,000 3,615,000 5,656,112 145,502
					14,986,614

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

(7) Related-party transactions:

(a) The ultimate parent company

The Company is the ultimate parent company.

• (b) Names and relationship with related parties

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

Name of related party

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

Zhong Gong Baoquan Ltd. (Zhong Gong Baoquan)

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

Chain Yarn Co., Ltd. (Note)

BES Engineering Corporation (BES Engineering)

Relationship with the Group

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

Investee as accounted for using equity method

• Investee as accounted for using equity method of Zhong Gong Baoquan

The Company is the director of the entity

The Company is the director of the entity

(Continued)

• 363 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Name of related party

Chung Kung Management Consultant Co., Ltd.

Coreasia Human Resources Management Co., Ltd.

BES Machinery Co., Ltd.

Sheen Chuen-Chi Cultural & Educational Foundation Core Pacific City Co., Ltd.

CPDC Green Technology Corp. Tsou Seen Chemical Industries Corporation

Taivex Therapeutics Corporation Ding-Yue Development Co., Ltd.

Da-Ying Construction Ltd.

CPDC Investment (BVI) Co Ltd.

Thanh Phong Construction Investment Co., Ltd.

Unichem Development Ltd.

Weihua (Rudong) Trade Co., Ltd.

Weiqiang International Trade (Shanghai) Co., Ltd.

Changzhou Weicai New Material Science & Technology Co., Ltd.

Jiangsu Weiming New Material Co., Ltd. Weiming (Rudong) Construction Co., Ltd. BES Twin Towers Development Co., Ltd. Frontier Fortune Investment Pte. Ltd.

Core Pacific Twin Star (Myanmar) Investment Company Ltd. Gemini Star (India) Private Ltd.

Core Pacific Twin Star (Vietnam) Investment Co., Ltd.

Core Pacific Pioneer (Myanmar) Company Ltd.

All board of directors, general manager and deputy general manager

Relationship with the Group

Subsidiary of Zhong Gong Baoquan Subsidiary of BES Engineering

The entity is a director of the Company The director is corporate director representative of the Company

Substantive Related Party Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company

The main managements of the Company

Note: 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.

(Continued)

• 364 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(c) Significant Transactions with related parties

(i) Sales

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

Subsidiary Other related parties Associates	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,247,285 1,009,343 751,291 $ 3,007,919	2020
		671,624 - 456,452
		1,128,076

The terms for related party sale transactions were the same as those of other unrelated customers excluding Tsou Seen Chemical Industries Corporation, Weihua (Rudong) Trade Co., Ltd and Weiqiang International Trade (Shanghai) Co., Ltd. who have the terms for 3 month.

(ii) Purchases

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

Subsidiary Other related parties	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,163,551 63,135 $ 1,226,686	2020
		110,787 -
		110,787

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

(iii) Receivables

The receivables from related parties were as follows:

Accounts	Types of related parties	December 31, 2021 $ 135,173 385,366 91,978 310 78 8,972 $ 621,877	December 31, 2020
Accounts receivable Accounts receivable Accounts receivable Other receivables Other receivables Other receivables	Subsidiary Other related parties Associates Subsidiary Other related parties Associates		38,263 - 51,106 285 - 9,447
			99,101

(Continued)

• 365 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(iv) Payables

The payables to related parties were as follows:

Accounts	Types of related parties	December 31, 2021 $ 11,333 4,112 167,715 4,553 $ 187,713	December 31, 2020
Accounts payables Other payables Other payables Other payables	Other related parties Subsidiary Other related parties Associates		- 13,793 - 5,380
			25,124

(v) Guarantees and endorsements

The Company provides endorsement guarantee required for bank financing to the subsidiaries. As of December 31, 2021 and 2020, the amount were $20,864,684 thousand and $6,140,590 thousand, respectively, and the used amounts were $15,680,347 thousand and $155,797 thousand, respectively

The subsidiaries provides endorsement guarantee required for bank financing to the Company. As of December 31, 2021 and 2020, the amount were $4,920,000 thousand and $0 thousand, respectively, and the used amounts were $2,200,000 thousand and $0 thousand, respectively.

The company pledged investment property as collateral to secure subsidiaries' bank financing, as of December 31, 2021 and 2020, amounting to $3,054,000 thousand and $4,920,000 thousand, respectively.

(vi) Other

Subsidiary and sub-Subsidiary Rental income Other revenues Rental expense Other expense Associates Rental income Other revenues Security service fees Other related parties Rental income Other revenues Other expense	For the years ended December 31,
	2021 2020 $ 1,874 684 20,541 1,691 - (77) 670 - 5,378 5,378 24,520 26,495 (21,283) (20,388) 6 3 404 - (34,424) (633)

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

(Continued)

• 366 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (vii) The Company had a two-year contract with BES Engineering Corporation for the lease of office space in July 2018, which had been extended in July 2020, with the total value both represented $9,629 thousand. This rental transaction was recognized as right-of-use asset and lease liability both amounting to $9,465 thousand and $7,130 thousand on July 1, 2020 and January 1, 2019, respectively. The depreciation expense for the years ended December 31, 2021 and 2020, were $4,732 thousand and $4,743 thousand, respectively. The interest expense for the years ended December 31, 2021 and 2020 both amounted to $82 thousand. The amounts of lease liability as of December 31, 2021 and 2020, were $2,398 thousand and $7,130 thousand, respectively.

• (viii) The Company had contracts with BES Engineering Corporation, for mechanical engineering services projects and paid commission on the basis of actual construction. As of December 31, 2021 and 2020, the construction project in-progress both amounted to $1,451,000 thousand. As of December 31, 2021 and 2020, the unpaid fees amounted to $553,964 thousand and $704,896 thousand, respectively. The refundable deposit at December 31, 2021 and 2020 both amounted to $420,660 thousand

• (ix) The Company's equipment maintenance services and commissioned fees for the subsidiaries in 2021 and 2020 were $322,868 thousand and $222,127 thousand, respectively. As of December 31, 2021 and 2020, the Company recorded the unpaid under other payables.

The total contract price (excluding tax) of the Company's uncompleted contracts for the projects issued to the subsidiaries as of December 31, 2021 and 2020 were $247,181 thousand and $784,420 thousand, respectively, and the payment were $117,121 thousand and $326,319 thousand, respectively ..

• (x) The Company has signed a contract with a subsidiary, for building construction projects. The land is provided by the Company and the subsidiary is responsible for designing, constructing, sales and warranties. The Company pays constructional management fees on the basis of contract and the subsidiary pays the actual expenditures for every single month. As of December 31, 2021 and 2020, the constructional management fees were $22,758 thousand and $0 thousand, respectively. Other fees, taxes, and other related expenses, such as design fees, amenities design fees, bulk fees, sales expenses, Kaohsiung House (green building) Bonus, trust fees, property management funds, land value taxes, financing interests, etc., are all attributed to the Company, while the subsidiary serves merely as an agency. As of December 31, 2021 and 2020, the subsidiary has requested for the amount of $8,554 thousand and $27 thousand, respectively.

• (d) Key management personnel compensation

Short-term employee benefit Post-employment benefits	For the years ended December 31,	For the years ended December 31,
	2021 $ 189,197 4,199 $ 193,396	2020
		81,422 4,951 86,373

(Continued)

• 367 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(8) Pledged assets:

The Company's pledged assets are as follows:

Asset	Purpose of pledge Guarantee for priority right-of-use of harbor Collateral for long-term and short- term financial credit, syndicated loan (Mega & Shin Kong) Collateral for short-term, medium- term and long-term financial credit, syndicated loan (Mega), bonds payable and long-term bills payable, providing endorsement guarantee for subsidiaries. Long-term bills payable Long-term bills payable Long-term bills payable Deposit for lawsuit	December 31, 2021 $ 15,650 6,686,571 31,435,973 785,917 1,147,498 187,220 108,969 $ 40,367,798	December 31, 2020
Time deposits Property, plant and equipment Investment property Investments accounted for using equity method Financial assets reported at fair value through other comprehensive income Financial assets reported at fair value through profit or loss Refundable deposit			10,000 6,787,700 15,346,334 556,304 1,430,230 634,995 108,969
			24,874,532

(9) Commitments and contingencies:

(a) As of December 31, 2021 and 2020, the Company had the following unused letters of credit:

USD EUR NTD JPY	December 31, 2021 December 31, 2020 $ 49,408 20,824 457 246 1,146,000 1,020,000 6,400 -

(b) As of December 31, 2021 and 2020, the Company had issued guarantee notes for bank loans, sales and purchases, and development plan aggregating to $26,197,400 thousand, USD30,000 thousand and $24,117,400 thousand, USD30,000 thousand, respectively.

(Continued)

• 368 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (c) As of December 31, 2021 and 2020, the Company had contracts for various construction projects inprogress amounting to $3,996,747 thousand and $3,804,224 thousand, respectively. As of December 31, 2021 and 2020, the remaining future obligations under these contracts amounted to $1,800,234 thousand and $1,822,892 thousand, respectively.

• (d) As of December 31, 2021 and 2020, the agreement on the acquisition of material property amounting to $1,379,861 thousand and $1,845,000 thousand, and the unpaid portion amounting to $138,000 thousand and $1,025,000 thousand, respectively.

• (e) As of December 31, 2021 and 2020, the Company signed an agreement to purchase raw materials such as benzene, hydrogen and methylbenzene from CPC. Under this contract, the Company 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) Important matters

The case of loss compensation for the Kaohsiung gas explosion

The Maintenance Office, Public Works Bureau of Kaohsiung City Government granted permission to CPC for the installation of underground gas pipelines. However, a gas explosion in Kaohsiung had occurred in the evening of July 31, 2014, which resulted in CPC’ s permit to be revoked. Nonetheless, the revocation qualified CPC to claim for compensation from the relevant authority for its property losses. In order to protect its legal rights and interests, the Company filed an administrative appeal in February 2018 to the KHAC, who ruled against the Company in December 2019. Hence, in January 2020, the Company filed an appeal to the Supreme Administrative Court, who in turn, handed the case back to the KHAC for reconsideration. The case was still in progress as of the reporting date.

(g) 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 bearing interest, to Mr. Zhang in July 2019. The Company was

(Continued)

• 369 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

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. In December 2021, THCKBC ruled in favor of Mr. Zhang and ordered the Company to pay Mr. Zhang the amount of $3,764 thousand, with bearing interest, as compensation. The Company disagreed with the decision made by the court, and therefore, filed an appeal to the Supreme Court. As of the reporting date, the Company has not received the transfer of the trial notified by THCKBC.

2) Disclosure Secret Case

Managers who left the office without authorization was suspected to be involve in business encroachment, theft of business secrets. To protect Company interests, the Company filed criminal appeal. The case was concluded by the Taiwan Miaoli Local Court in January 2017 and the relevant defendants were prosecuted. The civil litigation derived from the case is waiting for hearing by the Taipei District Court and Miaoli District Court. Please refer to note 8 for details of deposit for lawsuit.

(ii) Accusation of business failures

A Gas explosion happened in Heng Yi chemical plant next to the Toufen plant and caused workers to be burned on January 28, 2013, which evolved into accusations of business failures. Since the incident happened in the public discharged area of the industrial site, it was suspected to contain excessive value of the company’ s emissions with the sampling identification and the Company’ s manager was prosecuted as defendant per the victim’ s request. This case was not prosecuted after the judgment decision from Miaoli District Attorney, hence, the victims filed the reconsideration and Taichung High Prosecutor’s Office remanded the case back to the Miaoli District Attorney for review. The victims of Heng Yi chemical plant prosecuted the Company and managers in February 2015 and asked for the joint damaged compensation $6,920 thousand, which awaited hearing by Miaoli local court. In September of the same year, both sides agreed to withdraw the litigations. Trial procedure was recovered in February 2016 and criminal litigation was determined not to be prosecuted in March 2016. The verdict of civil litigation was won in March 2017, but plaintiff is dissatisfied and filed an appeal to Taiwan High Court Taichung Branch Court. On November 16, 2020, the court sentenced company win with final and binding judgment.

(iii) Civil compensation for Residents living in An shun

1) The 1st case

In 2008 and 2009, Mr. Wu and others filed civil and national compensation lawsuit against MOEA, TCG, Tainan City Environmental Protection Bureau and the Company (Hereinafter referred to as 1st case of Tainan Anshun plant civil compensation) and they claimed that during 1942 and 1983, the previous TAIC Anshun plant, produced mercury and dioxins in its production operations and polluted the environment, which resulted in the population consuming contaminated fish and shellfish over time, which resulted in long term health issues. MOEA had control and management responsibility of the previous TAIC, and whether due to illegal actions, or a lack of attention in performing their duties, MOEA was the ultimate owner of CPDC, should take responsibility. Hence, the prosecutors claim that MOEA shall take the responsibility for the compensation. Mr. Wu and others also claimed that TCG and Tainan City Environmental Protection Agency were the competent authorities and executive authorities of the waste disposal law but

(Continued)

• 370 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

the authorities did not supervise and require the Anshun plant to implement pollution prevention and control acts, thus should be jointly responsible for any compensation. Mr. Wu and others claim that the Company did not perform any removal and remediation of pollutants after being ordered to merge with the previous TAIC Anshun plant, so they claimed the Company shall also take joint responsibility for the compensation. Mr. Wu and others asked MOEA, TCG, Tainan City Environmental Protection Bureau and the Company to jointly bear the cost of medical expenses and mental compensation for $370,800 thousand and the interest was calculated by an annual interest rate 5% from the date when the litigation was initiated by the defendants until the final payment of compensation. Due to unpaid referee fees, due from the plaintiff, the Tainan District Court rejected the litigation claims from these 17 persons in January 2010.

Mr. Chen appealed to the Tainan District Court asking the Company for medication, health examination fee and reparations, to the amount of $2,300 thousand, which was incorporated into this case, the total compensation amount was $351,750 thousand. This case was tried by the Tainan District Court in December 2015 and judged that the Company and MOEA to be jointly responsible for $160,000 thousand payable to the plaintiff. The Company was not satisfied with the result and filed an appeal. In August of 2017, the High court sentenced the Company to compensate the plaintiff for $190,000 thousand by self, which the Company was not satisfied with and had proposed the appeal for remedy in Sept. of the same year. The supreme court held oral argument on September 28, 2018, and judgment was sentenced on November 11, 2018, the supreme court sentenced to order the Company to compensate the plaintiff for $190,000 thousand. The Company made a payment of compensation and related interests to 143 plaintiffs before the end of June 2019. The part related to medical remedy of the case was abandoned for secondary trial. Plaintiff filed an appeal to Supreme Court in same year. In March 3, 2020, the court dismissed the plaintiff appeal by a ruling. This case is ended.

1) The 2nd case

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 1st and 2nd instance of the AnShun plant Civil Compensation litigation under hearing, the Company once again put forward the relevant academic articles to prove that there was no causality between pollution from Tainan AnShun plant and diabetes. Moreover, the plaintiffs in this case, despite the reasonableness of their claims, did not put forth any litigation before the expiry of the statutes of limitations. Thus, in this 2nd case of the Tainan AnShun plant civil compensation, the Company continued to seek for the jurisdiction remedies to protect the Company and shareholder interests. In November 6, 2020, Tainan District Court considered that 39 Plaintiffs’ s claim is meritorious and dismissed rest of Plaintiffs’ s claim. 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 still under trial now.

(Continued)

• 371 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(10) Losses Due to Major Disasters: None

(11) Subsequent Events:

• (a) The earnings distribution for 2021 of Core Pacific City Co., Ltd. was decided by the resolution adopted at the general meeting of shareholders held on February 23, 2022. Please refer to note 6(b) for other related information.

• (b) On March 14, 2022, a resolution was made during the board meeting of the Company to raise the capital of Ding-Yue amounting to $1,700,000 thousand for its business operation.

(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		2021			2020
	Operating cost	Operating expense	Non-Operating expense	Total	Operating cost	Operating Expense	Non-Operating expense	Total
Employee benefits
Salary	1,064,405	569,377	-	1,633,782	663,724	342,921	-	1,006,645
Labor and health insurance	74,280	29,996	-	104,276	69,030	30,572	-	99,602
Pension	39,661	22,323	-	61,984	41,765	26,246	-	68,011
Remuneration of directors	-	91,763	-	91,763	-	9,226	-	9,226
Others	34,735	12,795	-	47,530	36,549	14,858	-	51,407
Depreciation	825,259	76,138	4,255	905,652	704,079	72,565	3,933	780,577
Amortization	-	-	-	-	-	375	-	375

Additional information on the number of emplyees and employee benefits expense of the Company are summarized as follows:

Number of employees Number of non-employee directors Average employee benefits expense Average employee salary expenses Average employee salary adjustment Supervisor salary expenses	For the years ended December 31, 2021 2020 1,333 1,339 9 7 $ 1,395 920 $ 1,234 756 % 63.23 % (19.75) $ - -	For the years ended December 31, 2021 2020 1,333 1,339 9 7 $ 1,395 920 $ 1,234 756 % 63.23 % (19.75) $ - -
		2020
		1,339
		7
		920
		756
		% (19.75)
		-

The policies of the Company’s remunerations (including directors, managers and employees) are as follows:

The policies, standards, combinations, procedure of decision-making of remunerations, and their relation to business performance and future risk:

• (i) The remuneration to the Company’s (Executive) Chairman, vice chairman and directors was based on remuneration, transportation allowance and attendance allowance applicable in the same industry domestically and overseas, taking the performance and risk into consideration, and paid in accordance with Article 28 of the Company’s Articles of Incorporation. According to Article 32 of the Articles of Incorporation, 2% of the earnings shall be allocated as remuneration to directors according to the motion for allocation of shareholders' dividend.

(Continued)

• 372 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (ii) The remuneration to the Company’s managers (including salary, allowance and bonus, etc.) will be evaluated based on market intelligence, seniority, responsibilities, experience, performance and risk, and paid in accordance with Article 29 of the Company Act. The Company established the Remuneration Committee in September 2011.

• (iii) The remuneration to the Company’s employees (including salary, allowance and bonus, etc.) will be evaluated based on performance, responsibilities, market intelligence and the Company’ s financial ability, and paid in accordance with the Company’ s remuneration policies.

• (iv) Regarding the procedures for establishing remuneration, in addition to considerations of the overall operating performance, industry outlook, risk management, and future development, we also consider personal performance and contributions to the company’s overall performance in the remuneration. Related performance evaluation and remuneration considerations are submitted to the remuneration committee and the board of directors for approval. Depending on operating conditions and related regulations, we also further review and revise our remuneration as necessary, with the aim in achieving a balance between sustainable management and risk controls.

• (b) On March 22, 2019, Kaohsiung Urban Planning Commission (KUPC) announced that Dashe Industrial Park (DIP), where the Company’s plant is located, will be categorized from Special Zone to Zone B. In light of 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 11, 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. On July 21, 2021, the Bureau of Industry, MOEA held a task force to deal with the effect on petrochemical industry in case of DIP is categorized to Zone B, in which a discussion on both issues, including the legality of urban planning and the regulation of land reusing, will be appropriately conducted together with the urban planning task force of KUPC. As of December 31, 2021, KCG had yet to proceed on the procedures of statement changing.

(Continued)

• 373 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

(In Thousands of New Taiwan Dollars)

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1	Jiangsu Weiming New Material Co., Ltd.(original name: Jiangsu Weiming Petrochemical Corporation)	Changzhou Weicai New Material Science & Technology Co., Ltd.	Other Receivable	Yes	260,580	260,580	43,430	5.5%	2	-	Operating	-		-	678,916	1,018,374
2	Weihua (Rudong) Trade Co., Ltd	Changzhou Weicai New Material Science & Technology Co., Ltd.	Other Receivable	Yes	86,860	86,860	43,430	5.5%	2	-	Operating	-		-	99,930	99,930

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 15% and 10% of net value of Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation)

Note 3: The financing limit was 20% of net value of Weihua (Rudong) Trade Co., Ltd.

Note 4: 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	CPDC	Ding-Yue Development Co., Ltd.	2	48,304,160	22,380,000	17,780,000	13,140,000	2,880,000	% 22.09	80,506,933	Y	N	N
0	CPDC	Weihua (Rudong) Trade Co., Ltd.	2	48,304,160	217,900	217,150	217,150	-	% 0.27	80,506,933	Y	N	Y
0	CPDC	Changzhou Weicai New Material Science & Technology Co., Ltd.	2	48,304,160	1,260,624	1,260,624	716,287	174,000	% 1.57	80,506,933	Y	N	Y
0	CPDC	Jiangsu Weiming New Material Co., Ltd.	2	48,304,160	1,612,460	1,606,910	1,606,910	-	% 2.00	80,506,933	Y	N	Y
0	CPDC	Shiny Chemical Industrial Co., Ltd.	5	48,304,160	78,086	78,086	78,086	-	% 0.10	80,506,933	N	N	N
0	CPDC	Lushun Warehouse Co., Ltd.	5	48,304,160	55,366	55,366	55,366	-	% 0.07	80,506,933	N	N	N
0	CPDC	China General Terminal & Distribution Corporation	5	48,304,160	14,903	14,903	14,903	-	% 0.02	80,506,933	N	N	N
1	Ding-Yue Development Co., Ltd.	CPDC	3	12,724,087	4,920,000	4,920,000	2,200,000	-	% 6.11	25,448,174	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)

• 374 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the 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.

8. Note 3: The Company endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

9. 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.

10. 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 Development Co., Ltd 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.

3. (iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
The Company BES Twin Towers Co., Ltd. Tsou Seen Chemical Industries Corporation Changzhou Weicai New Material Science & Technology Co., Ltd.	Yuanta Financial Holding Co., Ltd. BES Engineering Co. 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 Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials Taiwan Tea Corporation Good Company TaiRx, Inc. Agricultural Bank of China- HSBC Structured Deposit	None The Company is a director of an investee company None The Company is a supervisor of the investee company None Substantive related party None � � The Company is a director of an 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 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 designated at fair value through profit or loss Non-current financial assets at fair value through other comprehensive income � Current financial assets designated at fair value through profit or loss	7,400,371 164,348,449 44,684,712 386,000 2,600,000 2,779,154 2,701,651 8,815 287,961 30,000,000 977,130 1,053,812 6,754,127 7,279,000 750,000 722,500 -	187,229 1,488,997 781,982 26,437 26,000 5,117,918 117,608 358 - 300,000 9,674 1,855,861 294,019 147,764 - 14,652 22,226 10,390,725	0.06 10.74 0.23 4.51 2.89 27.52 14.00 0.03 0.58 13.41 0.01 10.43 35.00 0.92 2.08 0.80 -	187,229 1,488,997 781,982 26,437 26,000 5,117,918 117,608 358 - 300,000 9,674 1,855,861 294,019 147,764 - 14,652 22,226 10,390,725

(Continued)

• 375 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginnin	g Balance	Purch	ases		Sale	s		Ending B	alance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Price	Cost	Gain (loss) on disposal	Shares/units	Amount
The Company	Yuanta Financial Holding Co., Ltd	Financial assets at fair value through profit or loss�non- current	Not applicable	Not applicable	32,176,371	661,224	-	-	24,776,000	620,576	259,336	361,240	7,400,371	187,229

• (v) Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:None

• (vi) Disposal 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	Type of property	Transaction date	Acquisition date	Book value	Transaction amount	Amount actually receivable	Gain from disposal	Counter- party	Nature of relationship	Purpose of disposal	Price reference	Other terms
CPDC	land no.7 and no.7-1, subsection 5, Jingmao section, Kaohsiung	August 18, 2021 O 1	ctober 1, 982	1,668,271	2,380,000	Fully received	711,729	Chingwon Structure Corporation	Non related parties	Replenishing operating capital	Appraisal reports & Market value	None

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company CPDC GT Weiming Weiqiang Weiqiang Weiqiang Weiqiang	Tsou Seen Chemical Industries Corporation Kaohsiung Monomer Company Limited Chain Yarn Co., Ltd. The Company Weiqiang International Trade (Shanghai) Co., Ltd. Weihua (Rudong) Trade Co., Ltd. Changzhou Weicai New Material Science & Technology Co., Ltd. The Company Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation)	Subsidiary Affiliated company accounted for using equity method Other related parties Subsidiary Same parent company Same parent company Same parent company Subsidiary Same parent company	Sales Sales Sales Sales Sales Sales Sales Sales Sales	(1,247,286) (751,291) (1,009,343) (322,868) (107,749) (192,001) (268,466) (1,094,584) (279,244)	(4.08)% (2.46)% (3.30)% (98.10)% (6.42)% (6.56)% (9.18)% (37.43)% (9.55)%	3 Month 1 Month 1 Month Base on contract Base on contract 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 Base on contract Base on contract	136,636 91,978 385,366 67,005 - - - - -	4.04% 2.72% 11.38% 99.23% -% -% -% -% -%	Note Note � �

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

(Continued)

• 376 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the 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)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
The Company The Company	Tsou Seen Chemical Industries Corporation Chain Yarn Co., Ltd.	Subsidiary (Note) Other related parties	136,636 385,366	14.39 5.24	- -		136,636 202,352	- -

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

(ix) Trading in derivative instruments: None

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original inve	stment amount	Balance as	of December 31,	2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of wnership	Carrying value
The Company The Company � � � � � � � � CPDC Investment (BVI) Co., Ltd. Ding-Yue Development Co., Ltd. Tsou Seen Chemical Industries Corporation BES Twin Towers Development Co., Ltd. Frontier Fortune Investment Pte. Ltd.	Kaohsiung Monomer Company Limited Zhong gong Baoquan Ltd. Ding-Yue Development Co., Ltd. CPDC Investment (BVI) Co., Ltd. Tsou Seen Chemical Industries Corporation CPDC Green Technology Corp. Unichem Development Limited BES Twin Tower Development Co., Ltd. Thanh Phong Construction Investment Co., Ltd. Jean Pacific Development Co., Ltd. Core Pacific Overseas Holdings Ltd. Da-Ying Construction Ltd. Taivex Therapeutics Corporation Frontier Fortune Investment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd.	1,Hsing Kung Road,Ta She P O Box 6-25 Nantze,Kaohsiung (815), Taiwan 2F., No.12, DongxingRd., Taipei City 105,Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan Citco Building, Wickhams Cay, P.O. Box662 No.1, Jingjin Rd.,Fangliao Township,Pingtung County 940,Taiwan 14F.-16, No.61, Wufu3rd Rd., Qianjin Dist.,Kaohsiung City 801,Taiwan Unit 06, G/F, TheLodge, 535 CantonRoad, Kowloon, HongKong 16F., No.12, DongxingRd., Taipei City 105,Taiwan B2-19, Golden KingTower Building, No.15 Nguyen LuongBang, Tan Phu Ward,District 7, Ho ChiMinh City 7F.-2, No.300,Yangguang St., NeihuDist., Taipei City11491, Taiwan(R.O.C.) Akra Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,Tortola,British Virgin Islands 8F., No.12, DongxingRd., Taipei City 105,Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 112 ROBINSONROAD#0 5-01ROBINSON112SI NGAPORE(068902) NO.153/Ka,Kyun ShweMmyaing Lane (2) ,23 ward,Thingangyun Townshin Yangon	Methyl Methacrylate Monomer Security consultants Commissioned to create a vendor to build the housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Holding company Dicalcium phosphate Mechanical engineering Holding company Real estate investment and development Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials Renting and selling realestate Holding company Engineering, construction contracting business Engaged in biotechnology, pharmaceutical research and development and marketing Holding company Holding company and consultancy	- 14,400 25,580,000 904,946 560,000 100,000 9,876,023 3,791,383 609,347 620,000 808,564 60,000 696,720 2,761,596 169,921	- 14,400 10,040,000 904,946 760,000 100,000 9,572,433 4,791,383 609,347 620,000 808,564 22,500 696,720 2,761,596 169,921	20,000,000 1,440,000 2,558,000,000 26,580,000 76,000,000 15,000,000 324,684,262 491,216,357 - 62,000,000 26,580,000 - 46,224,551 93,060,000 5,500,001	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 40.00 % 45.19 % 100.00 % 91.10 % 100.00 % 100.00	785,917 18,716 25,424,981 911,656 1,181,737 166,436 8,291,713 5,084,560 586,627 618,276 906,578 60,206 170,077 2,712,589 149,531	839,628 1,235 (94,151) (9,060) 113,430 46,706 (370,186) 193,145 11,267 (3,187) (19,851) (195) (87,321) 65,879 197	335,851 296 (94,151) (9,060) 113,430 46,706 (370,186) 193,145 11,267 (1,275) - - - - -	Note 1 Note 1 Note 2&5 Note 2&4&5 Note 2&5 Note 2&5 Note 2&4&5 Note 2&5 Note 2&3&4 &5 Note 1 Note 2&4&6 Note 2&3&5 &6 Note 2&5&6 Note 2&4&5 &6 Note 2&4&5 &6

(Continued)

• 377 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of wnership	Carrying value
Frontier Fortune Investment Pte. Ltd. � Core Pacific Twin Star (Myanmar) Investment Company Ltd.	Gemini Star (India) Private Limited Core Pacific Twin Star (Vietnam) Investment Co., Ltd. Core Pacific Pioneer (Myanmar) Company Ltd.	Level7, The Capital,Plot No.C-70, GBlock, Bandra KurlaComplex, BandraMUMBAI MumbaiCity MH 400051 IN B2-19, Golden KingTower Building, No.15 Nguyen LuongBang, Tan Phu Ward,District 7, Ho ChiMinh City NO.153/Ka,KyunShwe Mmyaing Lane(2),23 ward,ThingangyunTow nshin Yangon	Real estate and petrochemical products research and consultancy Engineering, real estate and consultancy of construction Building construction, real estate management, development and sale	9,274 2,566,176 24,804	9,274 2,566,176 24,804	2,099,993 - 800,000	% 99.99 % 100.00 % 80.00	4,249 2,551,666 19,483	(190) 66,738 2,069	- - -	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.

(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, 2021	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2021	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
Weihua (Rudong) Trade Co., Ltd.	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	13,491	100.00%	13,491	499,650	-
Weiqiang International Trade (Shanghai) Co., Ltd.	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading.	211,560	( 1 )� ( 3 )	211,560	-	-	211,560	42,024	100.00%	42,024	171,441	-
Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation	Petrochemical supporting facility construction	7,725,253	( 1 )� ( 2 )	7,421,663	303,590	-	7,725,253	(232,855)	100.00%	(232,855)	6,789,159	-
Zhangzhou Weida Petrochemical Co., Ltd.	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading	-	( 2 )	30,648	-	(30,648)	-	2	100.00%	2	-	-
Changzhou Weicai New Material Science & Technology Co., Ltd.	Engaged in engineering plastic and high valued petroleum chemical products	1,411,845	( 2 )	1,324,893	-	-	1,324,893	(151,226)	100.00%	(151,226)	865,748	-
Weiming (Rudong) Construction Co., Ltd. (Invested through Jiansu Weiming New Material Co., Ltd.)	Engaged in engineering plastic and high valued petroleum chemical products	129,665	( 3 )	-	-	-	-	(513)	100.00%	(513)	129,753	-

(Continued)

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CHINA PETROCHEMICAL DEVELOPMENT CORPORATION Notes to the Financial Statements

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
10,919,107	14,362,341	Note 4

Note1: There are three ways to invest as follows:

• (a) The Company directly invests in China.

• (b) The Company through third regional company (UDL) invests in China.

• (c) Others. (The Company through subsidiaries invest in China.)

Note2: Explanation for the field “net income (losses) of the investee”:

• (a) If it is in preparation, no investment profit or loss.

• (b) There are three ways to identify the basis of investment profit or loss.

• (b.1) financial statements audit by international accounting firm with a relationship with Taiwan accounting firm.

• (b.2) financial statements audit by the Company’s audit CPA.

• (b.3) others.

Note3: The amount in this table should be presented in New Taiwan Dollar.

• Note4: The cumulative investment amount or investment proportion to China cannot be over the Company’ s net value of 60%. The Company obtained certified documents of operating headquarters issued by Industrial Development Bureau, Ministry of Economic Affairs on October 18, 2018, and so is not subject to the above regulations. Valid until October 14, 2021. On October 19, 2021, the Company acquired the above documents and extend the valid period to October 12, 2024.

• Note5: Zhangzhou Weida Petrochemical Co., Ltd. was dissolved and the liquidation process had been completed in January 2021.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

(d) Major shareholders:None

(14) Segment information:

Please refer to the Consolidated Financial Statements for the year ended December 31, 2021.

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• VI. In the case of any insolvency of the Company and its affiliates, specify its effect on the Company's financial position: None

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Chapter 7 Review and Analysis of Financial Position and Financial Performance, and Risk Management

I. Review and Analysis of Financial Status (Adoption of IFRS-Consolidated)

Unit: NTD Thousand

			Unit: NTD Thousand	Unit: NTD Thousand
Year Item	2020	2021	Difference
			Amount	%
Current Assets	27,089,168	57,355,445	30,266,277	111.73
Property, plant and equipment	23,226,955	25,333,641	2,106,686	9.07
Net investmentproperty	37,626,827	38,867,067	1,240,240	3.30
Intangible assets	159,173	172,308	13,135	8.25
Other assets	16,807,867	13,726,747	(3,081,120)	(18.33)
Total assets	104,909,990	135,455,208	30,545,218	29.12
Current liabilities	8,748,394	20,737,381	11,988,987	137.04
Non-current liabilities	25,293,565	34,189,408	8,895,843	35.17
Total liabilities	34,041,959	54,926,789	20,884,830	61.35
Capital stock	32,848,502	37,848,502	5,000,000	15.22
Capital surplus	583,815	1,454,301	870,486	149.10
Retained earnings	39,200,786	42,729,935	3,529,149	9.00
Other equities	(1,820,461)	(1,525,805)	294,656	16.19
Non-controllingequity	55,389	21,486	(33,903)	(61.21)
Total shareholders' equity	70,868,031	80,528,419	9,660,388	13.63
Notes to significant changes: 1. The current assets increased because the Company purchased the land, subsection 3, Xisong section, Songshan Dist., Taipei City, and paid the installment in accordance with the contract. The total amount was NT$37,200,010 thousanddollars andwas recognized as "Inventory-Prepayment for Land". 2. The increase in property, plant and equipment was due to the purchase of Chain Yarn Douliu Plant, as well as China subsidiary receiving work in progress construction assets in 2021. 3. The increase in intangible assets was due to the purchase of computer software costs and patent rights in 2020. 4. Other assets increased because the Company recognized the net profit and loss of financial asset at fair value of Core Pacific City Co., Ltd. 5. The increase in current liabilities was due to short-term financing borrowings from financial institutions in line with operational planning. 6. The increase in non-current liabilities was due to the issuance of NT$1,250,000 thousand of domestic secured corporate bonds and long-term financing loans from financial institutions and securities companies in 2021. 7. The increase in equity was due to the cash increase. 8. The increase in retained earnings was due to the increase in net income as compared to the previous year due to the recovery from the epidemic. 9. Other reserves increased due to unrealized gains in financial instruments measured at fair value through other comprehensive income. 10. The decrease in non-controllinginterests was due to the decline inprofit due to the epidemic.

1. The current assets increased because the Company purchased the land, subsection 3, Xisong section, Songshan Dist., Taipei City, and paid the installment in accordance with the contract. The total amount was NT$37,200,010 thousand dollars and was recognized as "Inventory-Prepayment for Land".

2. The increase in property, plant and equipment was due to the purchase of Chain Yarn Douliu Plant, as well as China subsidiary receiving work in progress construction assets in 2021.

3. The increase in intangible assets was due to the purchase of computer software costs and patent rights in 2020.

4. Other assets increased because the Company recognized the net profit and loss of financial asset at fair value of Core Pacific City Co., Ltd.

5. The increase in current liabilities was due to short-term financing borrowings from financial institutions in line with operational planning.

6. The increase in non-current liabilities was due to the issuance of NT$1,250,000 thousand of domestic secured corporate bonds and long-term financing loans from financial institutions and securities companies in 2021.

7. The increase in retained earnings was due to the increase in net income as compared to the previous year due to the recovery from the epidemic.

8. Other reserves increased due to unrealized gains in financial instruments measured at fair value through other comprehensive income.

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II. Review and Analysis on financial performance (Adoption of IFRS-Consolidated)

Unit: NTD Thousand

Year Item	2020	2020	2021	2021	Increase/Decrease	Ratio %
	Subtotal	Total	Subtotal	Total
Total operating revenue Less: Sales return and discount Operating revenue, net Operating cost Less: Unrealized sales profit and loss Add: Realized sales profit and loss Gross profit (loss) Operating expenses Operating profit or loss Non-operating revenue and expense Net profit (loss) before tax Less: Income tax gain (expense) Net Profit after Tax Other comprehensive income (after tax) Total comprehensive income Net profit (loss) attributable to parent company in current period Net profit (loss) attributable to non-controlling equity in the current period Total comprehensive income attributable to parent company Comprehensive income attributable to non-controlling equity	17,583,092 0	17,583,092 17,544,864	35,163,3800 0	35,163,380 30,066,937	17,580,288 17,580,288 12,522,073 0 0 5,058,215 730,872 4,327,343 (441,441) 3,885,902 (964,335) 2,921,567 17,185 2,938,752 2,922,219 (652) 2,939,199 (447)	99.98 99.98 71.37 13,231.70 39.48 238.70 (23.03) 3,744.51 (168.92 ) 433.04 8.52 335.31 429.11 (10.30) 332.26 (5.47)
		0 0		0 0
		38,228 1,851,106		5,096,443 2,581,978
		(1,812,878) 1,916,654 103,776 570,884		2,514,465 1,475,213 3,989,678 (393,451)
		674,660		3,596,227
		201,768		218,953
		876,428		3,815,180
		680,989 (6,329) 884,606 (8,178)		3,603,208 (6,981) 3,823,805 (8,625)

Notes to increase/decrease:

1. Operating income: The increase in operating income was due to the increase in the unit sales price of AN by 85% in 2021 and the increase in the unit sales price of CPL by 63% in 2021 compared to the previous year.

2. Gross profit: (1) In 2021, due to the recovery of the epidemic and force majeure factors in other countries, the selling price increased by 85% compared with the previous year, resulting in an increase in profit of NT$2.78 billion compared to the previous year.

3. (2) For Caprolactam (CPL) products, benefit from the recovery demand of downstream textile industry and nylon. The sales volumes increased by 16%, selling prices increased by 63%, resulting in an increase in profit of NT$2.061 billion compared to 2020.

4. Operating expense and operating income: Operating expenses increased in 2021, due to the increase in sales volume, freight rates and earnings incentives.

   • Operating profits increased in 2021, due to the impact of the recovery of the epidemic and the recovery of the economy.

5. Non-operating revenue and expense: The decrease is due to the recognition of asset impairment and estimated remediation costs in 2021.

6. Income tax expense: The increase was due to the increase in value-added tax of the lands of investment properties.

7. Other comprehensive income (after tax): The increase was due to the unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income.

8. 382 -

III. Review and Analysis of Cash Flow (Adoption of IFRS-Consolidated)

Unit: NTD Thousand

				Unit: NTD Thousand	Unit: NTD Thousand
Balance of cash – beginning (1)	Net cash flow from operating activities in the year (2)	Cash inflow in the year (3)	Surplus (deficit) (1)+(2)+(3)	Remedyfor deficit in cash
				Investment project	Wealth management project
7,479,899	(29,549,070)	29,719,293	7,650,122	-	-
(I) Analysis of variance in cash flows: 1. Operating activities: Net cash outflow of NT$29,549,070 thousand, mainly due to the acquiring land. 2. Investing activities: Net cash inflow of NT$4,486,875 thousand, mainly due to the disposal of investment property and plant and financial assets and the return of equity in the capital reduction. 3. Financing activities: Net cash inflow of NT$25,246,277 thousand, mainly due to issued corporate bonds and cash capital increase and borrowing long-term and short-term loans. (II) Remedy for deficit in cash and liquidity analysis: 1. Remedy for deficit in cash: None (surplus) 2. Liquidity analysis: The current ratio in 2021 decreased versus 2020, mainly because the Consolidated Company borrowed short-term loans and short-term notes payable for operating purposes in 2021, resulting in a significant increase in current liabilities. (III) Analysis of variance in cash flows for the future year: 1. Operating activities: Projected net cash inflow NT$5,654,953 thousand 3. Investing activities: Net cash outflow NT$98,439 thousand, primarily as a result of the increase in long-term investment. 3. Financing activities: Net cash inflow NT$13,440,347 thousand, primarily as a result of the increase in long-term and short-term loans. 4. Remedyfor deficit in cash: None(surplus)

IV. Major capital expenditure for the most recent year and its effect on financial position and operation of the Company:

Since the Company's major capital expenditures in recent years were mainly financed by its own working capital and loans from financing projects, the financial risk control is regularly evaluated and controlled, and therefore has no significant impact on the Company's financial condition.

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V. Direct investment policy, the main reasons for profit or loss, and corrective action plan for the most recent year, and investment plan in the next year

CPDC's reinvestment policy still focuses on the core competitiveness in the petrochemical-related industries and Land Development. The invested objective shall be selected in terms of downstream and upstream or vertical integration, business development and revitalization of assets.

The Company currently operates on the mainland China Jiangsu Sunshine Island a liquid chemical storage and chemical products trading business, which is currently stable in operations. In the future, we aim to increase volume throughput to further improve profitability and proactively increase the variety of products to increase our China market share. As for the chemicals trading business in Shanghai, in addition to dedicating to the supply of high-quality chemical raw materials in China and Asia, we also integrate Taiwan's overseas purchases and sales with China's trade, so as to demonstrate the advantages of bilateral trade, and provide customers in Asia and the world with high-quality products and services.

The cyclohexanone plant and nylon 6 plant in the first stage of the petrochemical plant in Rudong, Jiangsu have completed test production in 2021 and are expected to be put into operation in 2022. The CPL plant and OPP plant in the second stage have begun pre-construction operations. In the future, the Company will be able to integrate the upstream and downstream of CPL, to obtain the cost competitive advantage; the benefits of the integrated production base are just around the corner.

The integrated production base will enhance the Company's downstream cost competitive advantage; furthermore, since being close to the mainland market and matching with local development advantages, it will be beneficial to the development of high-value and high-margin products. The Company plans to take the Taiwan R&D center as the core and cooperate with the plastic modification and engineering plastic alloy production base in Changzhou, Jiangsu which the Company acquired in 2018; with excellent nylon modified engineering plastics as the core product, we horizontally expand to other major engineering plastic materials, and actively establish the market competitive advantage of integrated production.

The axis of the global economy is shifting from the west to the east, pulling the center of chemical demand to the east. The Asia-Pacific region has become the driving force for the growth of global petrochemical demand. The increase in purchasing power, the large population, and the increasing degree of urbanization all mean that the rapid growth of petrochemical demand will continue in the future. In consideration of the Company's long-term development and sustainable operation, the Company will, subject to the needs and strategy for business expansion, keep paying attention to relevant industrial development domestically and overseas and carefully evaluate adequate investment objectives. Notwithstanding, the Company will still focus on obtaining production technology, new energy, specialty chemical products, precision chemical products and bio-tech-related industries developments as the priority.

Furthermore, to support the Go South Policy of the government, the Company has evaluated investment opportunities in land development by copying our earlier investment strategy in the mainland China.

• 384 -

• VI. Analysis of risk factors: analyze and assess the following circumstances for the most recent year and until the date of publication of the annual report

• (I) Impact of interest and exchange rate changes and inflation, and their future countermeasures:

  1. Impact on the Company's income:

Impact on the Company's income:
Item	2021 (NTD Thousand; %)
Net interest revenue	(135,481)
Net exchange gain	26,146
Net interest revenue to net operating revenue	-0.39%
Net interest revenue to net profit before tax	-3.40%
Net exchange gain to net operating revenue	0.07%
Net exchange gaintonet profit before tax	0.66%

(1) Interest rate

The Company's interest rate risk primarily derives from interest accrued based on a floating interest rate arising from long-term and short-term debt and fixed income. To hedge interest fluctuation risk, the Company undertakes transactions when the interest rate stays low/high after carefully evaluating the financial market trends. Therefore, even if the interest rate fluctuates due to uncertain factors, no material impact would be caused to the Company.

(2) Exchange rate

The Company's major product lines and raw materials are mostly priced at USD and the payment thereof is collected or made in NTD (other than those for import/export). The exchange rate fluctuation would affect the cost and revenue of such petrochemical products as CPL and AN. There are no outstanding balances of any unsettled financial derivatives transactions subject to exchange rate fluctuation risk at the end of 2021.

(3) Inflation

The Company primarily procures petrochemical raw material locally or domestically, or imports raw materials and supplies. The Company would be primarily affected by the change of the international raw material price, while the domestic inflation would render less impact to the Company comparatively.

2. Future countermeasures:

(1) Countermeasures against interest rate fluctuations

The Company will continue to make every effort to ask financing banks for preferential interest rates to reduce the Company's interest expenses, and will try to reduce its average cost of capital through multiple fund-raising channels.

• (2) Countermeasures against exchange rate fluctuations

The Company adopts a natural hedge against exchange rate fluctuations, and selects optimal timing to engage in spot foreign exchanges primarily based on the net foreign exchange position after the offset of sales revenue priced based on foreign exchange rate against the sales expenses, subject to the market condition and position, to hedge exchange rate fluctuation risks.

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• (3) Countermeasures against inflation

The largest niche for the Company's competition with others is based on the stable supply of most the Company's major raw materials, including such international petrochemical raw materials and supplies as propylene, benzene, sulfur, natural gas, carbon monoxide and fuel oil, by CPC and other local suppliers, as the price is calculated based on specific equations and international price. Although domestic inflation renders a lesser impact to the Company, the Company continues to boost various resolutions through the market mechanism and process improvement, to reduce its cost.

• (II) Policy on high-risk, high-leverage investments, loaning of funds, endorsements and guarantees as well as derivatives transactions, major causes for profits or losses and future countermeasures:

The Company currently does not loan funds or trading of derivatives. The Company manages its finance in a prudent manner and does not engage in high-risk and highly leveraged investments.

In 2021, the Company's provide endorsements and guarantees mainly to subsidiaries in accordance with the procedures stipulated in the "Procedures for Loans, Endorsements, and Guarantees" prescribed by the Company. The majority of the guaranteed companies are 100% indirectly owned subsidiaries of the Company. The Company has obtained financial statements and business overview information of the subsidiaries and analyzed their profitability to assess the risk of the Company's endorsement and guarantee.

For information on the Company's endorsement and guarantee, please refer to the 2021 Audit Report and the disclosure in the notes thereto.

(III) Future R&D plans and expected R&D expenditure:

R&D has been a core target of our sustainable operations. With the R&D of CPDC, three main orientations are: Improvement of the existing production process, Development of correlative products and New product development.

1. Improvement of the existing production process:

The Company continues to improve existing production processes to raise efficiency, lower manufacturing cost and develop production process with energy saving.

• (2) Development of related products:

Focusing on developing byproducts and related products, strengthen material supply chain from upstream to downstream by taking advantage of the material.

(3) New product development:

Setting up the project development group, and focus on high-value products with market potential (e.g., optical application monomers, special chemical products, ester derivate and functional high polymer) by market information collecting and existing survey technique. Furthermore, the Company evaluates developing advantage and develops own core technique to increase items of high-value products and broaden industry chain.

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The Company has planned expenditures of about NT$484,950 thousand in R&D activities in 2022. The expenditures to be spent in R&D each year in the future will be subject to the progress of the R&D plan.

Statistics of R&D expenses invested by CPDC and its subsidiaries in the past years.

Year	2017	2018	2019	2020	2021	2022 (Estimated) (Note 1)
Amount (NTD thousand)	236,348	335,436	401,655	442,279	461,963	484,950

Note 1: Included the estimated amount of subsidiary Taivex Therapeutics Corporation in 2022.

• (IV) Impact on the Company's Financial Operations and Contingency Action Regarding Recent Changes in Domestic and International Policies and Regulations:

The Covid-19 epidemic continues to impact the global economy in 2021, and delays in the arrival of containers and ports continue to worsen, prompting a restructuring of the global supply chain and forming a decentralized and regional global trade and production network. After the U.S. presidential election at the end of 2020, Biden’s new policy focuses on economic revitalization in the post-pandemic era and wooing allies to jointly exert pressure on the mainland China. This shock will strengthen a number of Asia-Pacific economic and trade agreements: The Mainland China will become the biggest benefit under the Regional Comprehensive Economic Partnership (RCEP). In addition, Vietnam is one of the countries that have participated in most of the free trade agreements, and trade with major economic powers has been unimpeded, becoming one of the beneficiaries of the China-US trade conflict. However, Taiwan has not participated in the economic integration. It not only deepens the risk of being marginalized but also makes Taiwan become less competitive in exports to countries that enjoy preferential tariffs.

In addition, global sustainable development has entered a new milestone after the signing of the “Glasgow Climate Agreement” at the 26[th] United Nations Climate Change Conference (COP26), especially in accelerating the pace of countries in promoting Net Zero. Taiwan government has also officially announced the “2050 Net Zero Emission Policy Blueprint” in March 2022 to promote technology, research and innovation in key areas to lead the green transformation of the industrial sector.

The opportunities and threats that CPDC faces by international trends and important policy changes, and the response are explained as follows:

[Opportunities]

1. Russia was originally a major exporter of CPL in Asia, and SWIFT sanctions will restrict its export and optimize the balance of supply and demand for Taiwan.

2. After the signing of RCEP, Mainland China is developing and has a huge domestic demand market and a complete industrial value chain, grasping the red supply chain and business

3. 387 -

opportunities, and the diversified layout of the supply chain, which is in line with the Company’s strategic layout.

1. Vietnam’s economy is performing well, with export tariff advantages and huge demographic dividends, and opportunities for overseas development.

[Threats]

1. Geopolitical and related energy sanctions have caused the supply of raw materials to be cut off, prices have risen sharply which costs have risen rapidly. Some competitors from Mainland China can control production costs better due to their ability to provide related raw materials, this may lead to a weakened relative competitive position for the Company.

2. The trade conflict has not ended, and there are concerns about an escalation in the tariff war, which affects the import of raw materials and product export restrictions for factories in Mainland China; cross-strait relations have deteriorated, and Mainland China has set up trade barriers, which is unfavorable to Taiwan’s exports to Mainland China.

3. Taiwan has not participated in the regional economic integration and RCEP signing, subject to the impact on petrochemical industry trade or tariff inequality.

4. Environmental related taxes and fees have raised the cost of petrochemical production, and the requirements for safety and environmental protection in the chemical industry have increased.

[Response]

1. Continue to lay out the development of the real estate market in Vietnam.

2. Continue to cultivate the domestic demand market in Mainland China and strengthen the vertical integration of Rudong petrochemical plant: The Company has a supply chain layout both inside and outside Mainland China, and takes the advantages of the choice of quality, cost, tariff and other niche points on both sides of the strait to provide flexibility in supply.

3. Integrate cross-strait liquid chemical transportation and storage trade operations, flexibly use and reduce the impact of tariffs.

4. Master the technology of low energy consumption and low emission and reduce the production cost to become the competitive advantage of the industry.

5. Continue to strengthen high-end competitiveness in Taiwan, accumulate independent R&D capability, strive for high-value products, and open the market with the differentiation of professional technology, product quality, and technical services.

6. (V) Effect on the Company's financial operations of developments in science and technology as well as industrial change, and countermeasures:

7. In response to the outbreak of the COVID-19 epidemic in 2021, the Company separated the employees into different groups at the beginning of the epidemic, in which some employees worked from home and isolated from home when traveling abroad and returning home. Under the current information structure, we purchased SSLVPN license and the new video conferencing system and was able to meet the needs of our employees' remote work.

8. In recent years, the rapid development of digital automation technology and AI technology, the number and frequency of network attacks continue to increase, and the growth of ransomware virus is increasing at a large rate and the attack techniques continue to be renovated. In order to protect the operation of the company's important information services from being affected, we have purchased a cloud sandbox information security system to protect important information hosts and data, and to ensure that the operation of the information backbone is not interrupted.

9. 388 -

10. In view of the continuous development of network technology, the Company has introduced SDWAN network architecture to strengthen its network management capability, reduce network dedicated line cost, and flexibly utilize network equipment to build network services for flexible applications, and will continue to introduce the latest network equipment and management model in the future.

11. In 2021, the Company has introduced a network vulnerability detection and scanning system, which uses industry-renowned vulnerability scanning tools to conduct quarterly systematic vulnerability scans for key systems, and the results of the scans are sent to the system manager for system repair or update to reduce the vulnerabilities or loopholes that can be attacked to ensure the stability of key systems. In the future, we will introduce a vulnerability risk control system, which can be applied to the head office and each factory. In addition to vulnerability scanning for networked systems, we can also manage the progress of vulnerability detection and repair.

12. In terms of digital asset licensing risk, the Company has implemented a computer asset management system to control the utilization rate of the Company's software and hardware versions and licenses to prevent unauthorized or excessive use of licenses, which may cause software licensing risk to the Company, and to generate regular reports on the utilization rate to provide a basis for optimizing the number of licenses.

13. In the future, to address the increasingly serious risk of advanced persistent penetration attacks (APT), in addition to installing cloud-based sandbox protection systems on critical hosts and PCs, we will also introduce next-generation firewalls to prevent unknown network threats and zero-day attacks by using powerful threat intelligence data and AI technology to detect and prevent malicious network traffic or unknown malware before entering corporate information systems, and remove computer viruses from specific files to prevent attacks such as distributed Trojans.

14. 7.In terms of assisting industrial safety management optimization, we have applied AI image intelligence analysis technology in high-risk industrial safety operations and environmental protection issues to optimize human-machine collaboration and reduce risk of hazards. In terms of assisting operation management optimization, we have used AI machine learning and deep learning technologies to complete major product price prediction and various process-related optimization projects to provide reference for decision optimization. In the future, we will introduce the BI business intelligence platform to help companies make data-driven decisions and accelerate digital optimization transformation through exploratory data analysis technology, revaluing data applications and mastering key information.

15. (VI) Effect on the Company's crisis management of changes in the corporate image, and countermeasures:

Upholding the principle of market orientation and pursuit of excellence, the Company continues to offer improved products and services up to customers' satisfaction, while respecting and caring for employees, customers, suppliers, and communities with the aim of improving the value of customers and shareholders. The Company is committed to safety, health, energy saving and environmental co-prosperity, spares no effort in sustainable operation and contribution to society, and continues to maintain a good corporate image. For crisis management, the Company has established crisis management procedures. In case of

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any crisis, the Company will make quick and accurate decisions according to these procedures in order to reduce or mitigate the impact on the corporate image.

In addition, the Company has integrated the risk management plans of each department in 2021 and is moving toward the goal of establishing a risk management system. In the future, the Company will continue to optimize the risk management mechanism by conducting rolling corrections, preventions, and reviews through the PDCA cycle, while strengthening communication with stakeholders and reinforcing the risk management culture to reduce the occurrence of risks and the impact on its operations.

• (VII) Expected benefits and potential risks associated with any merger and acquisitions, and countermeasures:

On February 26, 2020, the board of directors of the Company approved the acquisition of the land, plant and equipment assets of the Dajia Plant of Sunko Inc Co. Ltd. On June 16, 2021, the board of directors of both parties approved the cancellation of the asset sale and purchase agreement, and the Company recovered the full amount of the transaction price paid, which did not affect the Company's financial statements and operations.

On September 14, 2020, the Board of Directors of the Company approved the acquisition of land, plant and equipment of the Douliu Polymer Plant of Chain Yarn Co., Ltd. This is a strategic integration of the Company's petrochemical business. The high-quality polymerized nylon chips obtained can strengthen the application of downstream nylon chips of CPL, deepen the development of the downstream nylon industry chain, and enhance the Company's long-term stable operating niche and competitive advantage. It is expected to have a positive impact on shareholders' equity. Each project had been fully evaluated by professional accountants, environmental consultants and asset appraisers before it was submitted to the Board of Directors to lower the transaction risks. Upon completion of the acquisitions, future operational risks are managed by the responsible business units.

(VIII) Expected benefits and possible risks of facilities expansion, and countermeasures:

To improve the operational flexibility of major raw material ammonia and phenol, the Board of Directors agreed to invest and build the storage equipment of ammonia and phenol at the Kaohsiung storage area. In order to increase the flexibility of import and export of products and raw materials, phase II and phase III of the investment plan will be executed to build additional chemical storage tanks. This project is still ongoing. In addition, in order to fulfill our social responsibility to improve the combustion efficiency of the coal-fired steam and power plant at the Toufen plant and to improve the perception of smoke emission from the chimney, we started the improvement project of smoke emission and stability of power supply at the coal-fired steam and power plant at the Toufen plant as approved by the board of directors in November 2018.

According to the analysis on supply & demand in the CPL market, Taiwan's dependence on imported CPL has fallen each year because of the Company's full projection and sales effort. The supply and demand of CPL in Mainland China has changed substantially, with its own production capability being upgraded drastically, and its dependence on imported CPL

• 390 -

declined drastically, even facing an overproduction situation. In order to mitigate the impact caused by the change in CPL market, the Company's relevant units will be dedicated to adjusting the production amount with market conditions, actively search possible solutions in lowering material and production costs, and develop high end Nylon Chips products thus maximizing profits for the Company. Also, the company will continue to position for new product development and deploy overseas for continued growth.

• (IX) Risk from centralized purchasing or selling, and countermeasures:

The primary raw materials for the AN produced by the Company refers to propylene, and one of the important raw materials for CPL produced by the Company refers to natural gas. If the supply of primary raw materials is defective, the Company's production of AN and CPL will be affected.

Meanwhile, the Kaohsiung Plant of CPC is scheduled to be relocated and shut down in 2015. With respect to the Dashe Industrial Park where the Company's Dashe Plant is located, Kaohsiung County Government issued the official letter under (87) Fu-Chien-Tu-Tze No. 211694 dated November 7, 1998 on "Motions for Changing Dashe Urban Plan (3rd overall review)", in which the conditions identified in the motion No. 7 required that "the manufacturers in the special industrial park shall be relocated before 2018, and the park shall be changed to a Type-B industrial park by the County Government pursuant to the statutory procedure." Meanwhile, Kaohsiung City Government asked the Ministry of Interior to authorize the "Motion for Changing Dashe Urban Plan (4th overall review)" via its official letter under Kao-Shih-Fu-Tu-Fa-Kuei-Tze No. 10130250600 dated January 13, 2012. The Kaohsiung City Government Planning Bureau on March 22, 2019, approved the change to a Type-B industrial part, allowing continued production but no further expansion or reconstruction. On November 10, 2020, the Urban Planning Committee, Ministry of the Interior convened the third review meeting on the change of the Dashe Urban Plan and requested the Industrial Development Bureau of the Ministry of Economic Affairs to invite the Kaohsiung City Government and relevant units to clarify the opinions of the manufacturers, which was included in the urban plan by the Kaohsiung City Government to eliminate the controversy. On February 11, 2022, the Industrial Development Bureau of the Ministry of Economic Affairs (MOEA) held the third meeting of the Task Force on "Impacts of the Transformation of the Greater Social Work Zone into a Type B Industrial Zone on the Petrochemical Industry" and concluded that the Kaohsiung City Government should continue to help and work together to communicate and coordinate and discuss suitable and feasible solutions. At present, the Company continues to work together with the manufacturers in the Dashe industrial area to communicate with the government to fight for Type-A.

The Company's primary product lines, CPL and AN, refer to the main raw materials supplied to downstream nylon, acrylic fiber and ABS plastic industries. CPL and AN refers to the basic raw materials for petrochemical downstream products. The Company's customers are primarily chemical fiber textile plants that are limited in number, due to their industrial characteristics. The Company's capacity increase and lower cost advantage have increased its market share to 61%.

• 391 -

• (X) Impact and risk associated with large share transfers or changes in shareholdings of directors,

supervisors, or shareholders who hold more than 10% of the Company's shares, and countermeasures: None.

• (XI) Impact and risk associated with changes in management rights, and countermeasures: None.

• (XII) Litigation and non-litigation matters:

• § Against

• Damages to An Shun residents (the first case)

• (1) Fact at issue:

The plaintiffs including Wu initiated the complaint alleging that Taiwan Soda Ash Co., Ltd., An Shun Plant, as consolidated by CPDC pursuant to the order of Ministry of Economic Affairs, produced such material as dioxin due to production of PCP prior to the consolidation, thereby causing damage to the plaintiffs. Therefore, CPDC should be liable for the damages due to the consolidation.

• (2) Claimed value: NT$351,750,000

• (3) Date of initiation: July 2008

• (4) Parties:

Plaintiff: Wu, et al.

Defendant: CPDC, MOEA, Tainan City Government, and Environmental Protection Bureau of Tainan City Government

• (5) Status:

The 1st instance was rendered on December 2015 that CPDC and MOEA shall bear joint and several liability for compensation NT$168,170,000 to An Shun residents. The Company filed an appeal on December 2015 pursuant to laws. After examination by the Tainan Branch of High Administrative Court, the judgement was upheld, so that CPDC should wholly compensate the An Shun residents with NT$191,578,366. In disagreement with the decision, the Company filed an appeal pursuant to laws in September 2017. In November 2018, the Supreme Court ordered the Company to compensate the plaintiff for a total of NT$190,000 thousand, but the portion about medical expense was reversed and remanded for a new trial, and CPDC won the case. The appeal was filed in August 2019 by the An Shun residents, and dismissed by the Supreme Court in March 2020, which confirmed that the judgment was final and binding and the case was closed.

1. Damages to An Shun residents (the second case)

2. (1) Fact at issue: The same fact with the Damages to An Shun residents (the first case).

3. (2) Claimed value: NT$80,915,000

4. (3) Date of initiation: March 2016

5. (4) Parties:

Plaintiff: Yu, et al.

Defendant: CPDC and MOEA

• (5) Status:

Pursuant to laws, the Company responded to legal actions due to the fact of this case is the same as damages to An Shun residents (the first case). In order to maintain the Company's interests, the Company would respond to the lawsuit. On November 6, 2020, the Tainan District Court issued a judgment that the 39 plaintiffs' claims were justified and dismissed the remaining plaintiffs' claims. With regard to the court's opinion that the

• 392 -

portion of the plaintiff's request is justified, the Company believed that it should fight for the benefits on the starting point of the prescription and filed an appeal on December 15, 2020, and currently the case is pending in Taiwan High Court Tainan Branch Court.

1. "Administrative disposition under Nan-Shih-Fu Huan-Shui-Tze No. 09822035440"

2. (1) Fact at issue:

Tainan City Government ordered the Company, via its official letter under Nan-Shih-Fu Huan-Shui-Tze No. 09822035440 dated December 17, 2009, to pay the out-of-pocket expenses for the project related to An Shun Site soil pollution remediation to the account of Soil and Groundwater Pollution Remediation before January 31, 2010. The disposition was served to the petitioner in December 2009.

• (2) Claimed value: NT$17,961,679

• (3) Date of initiation: January 2010

• (4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

• (5) Status:

The Company paid foresaid expenses within the specific time limit and filed a petition. Notwithstanding, the petition was overruled by a decision . The Company filed an administrative suit with Kaohsiung High Administrative Court. The Court ruled in September 2012 that the part of the decision about the amount exceeding NT$17,867,012 should be revoked, while the other claims filed by the Company were overruled. The Company filed an appeal against the judgement overruling the Company's claims pursuant to laws. In September 2013, the Supreme Administrative Court remanded the case for a new trial. In October 2015, the Kaohsiung High Administrative Court revoked the part of the judgement of the payment amount exceeding NT$7,067,702. Both parties filed an appeal again with the Supreme Administrative Court in November 2015. The Company's appeal was overruled in February 2017 and part of the facts was remanded to the Kaohsiung High Administrative Court for further hearing. The Kaohsiung High Administrative Court ruled in July 2018 that the part of the judgement about the amount exceeding NT$8,120,984 should be revoked, while the other claims filed by the Company were overruled. The Company filed an appeal to the Supreme Administrative Court against the judgement overruling the Company's claims pursuant to laws. In January 2020, the Supreme Administrative Court reversed the original judgment and remanded it to the Kaohsiung High Administrative Court. On November 24, 2020, the Kaohsiung High Administrative Court issued a judgment that all fees payable by the Company in excess of NT$7,622,000 were revoked. In order to seek the Company's best interests and to obtain reasonable remediation fees, the Company filed an appeal on December 18, 2020, and currently the case is pending in Supreme Administrative Court.

1. An Shun rental land for fish farming

A. Case 1

• (1) Fact at issue:

An Shun land for fish farming is owned by the Company. Some tenants have terminated their rental contract yet they still occupy the lands owned by the Company. Thus, the Company demanded the return of the land from those tenants.

Thus, the Company demanded the return of the land from those tenants. (2) Claimed value: NT$79,999,432

• 393 -

• (4) Parties:

Plaintiff: CPDC

Defendant: 11 people, including Wu Jen-Tz, et al.

• (5) Status:

The case was filed in November 2015. The Company filed a interlocutory appeal in January 2016 against the ruling of court cost, which was dismissed in August 2019. The Company filed an interlocutory re-appeal on the 16th of the same month, which was withdrawn on September 4 of the same year. The case was closed.

B. Case 2

• (1) Fact at issue:

Same as Case 1.

• (2) Claimed value: None

• (3) Date of initiation: September 2017

• (4) Parties:

Plaintiff: CPDC

Defendant: 4 tenants

• (5) Status:

The Company filed a lawsuit in September 2017 and attempted for a settlement in litigation. The case was settled in February 2020 and the Company filed a withdrawn letter on behalf of the adversary.

C. Case 3

• (1) Fact at issue:

The case is for the An Shun land for fish farming owned by the Company. Since some tenants have terminated their rental contract, the contract is not renewed. However, some tenants denied having terminated the lease, and thus, they urged the Company to perform the lease.

• (2) Claimed value: None

• (3) Date of initiation: September 2017

• (4) Parties:

Plaintiff: CPDC

Defendant: 4 tenants

• (5) Status:

The lawsuit was filed in 2019. On December 10, 2020, the Tainan District Court issued a judgment that the Company should cooperate with the tenant to register the lease. The Company filed an appeal on December 29, 2020. The case is currently pending before Taiwan High Court Tainan Branch Court.

D. Case 5

• (1) Fact at issue: Same as case 1

• (2) Claimed value: NT$15,062,050

• (3) Date of initiation: December 2020

• (4) Parties:

Plaintiff: CPDC

Defendant: 3 tenants

• 394 -

(5) Status:

The lawsuit was filed in 2020. On January 12, 2021, the Tainan District Court dismissed the lawsuit on the grounds that the defendants died prior to the filing of the lawsuit. The Company filed a interlocutory appeal on January 20, 2021, which was heard by theTaiwan High Court Tainan Branch Court. On March 3, 2021, the Taiwan High Court Tainan Branch Court reversed the ruling of dismissing the lawsuit by the original court and ordered the original court to impose an appropriate decision. The settlement had been reached in the end of 2021 and the case was closed.

1. Civil action against An Shun Old Dormitory

2. (1) Fact at issue:

Taiwan Alkali An Shun Dormitory is owned by the Company, but some residents have occupied the dormitory for many years or registered households. However, the Cultural Affairs Bureau of Tainan City Government designated and announced the area as a municipal archaeology site on November 17, 2014. Since the Company has responsibility for managing and maintaining that area and protects its own property rights for the stipulated use or for the collection of profits of the property, the Company filed this suit.

• (2) Claimed value: NT$19,566,120 and added interest

• (3) Date of initiation: January 2016

• (4) Parties:

Plaintiff: CPDC

Defendant: Residents of the Taiwan Alkali An Shun Dormitory

• (5) Status:

The Company filed a suit in January 2016. On September 24, 2019, the Taiwan High Court made the judgement that the Company won the case and the case was closed.

1. Managers Tsai, Liu and Chen et al. prosecuted under civil and criminal law for infringement of the Company’s trade secrets. The Company has appointed relevant attorneys to clarify the facts in order to protect the Company's interests.

2. (1) Fact at issue:

The Company believed that Tsai et al. stole secrets through their duties for the purpose of providing relevant organizations in Mainland China that were planning petrochemical construction projects and also took advantage of the high-value chemical products, which were researched, developed, and manufactured by the Company through the acquisition of Dah Shyang Chemical Co. Ltd. in Taiwan. The reproduction of such trade secrets were without authorization, and a breach of trust occurred by stealing the Company's trade secrets and providing such to the third party caused the theft of the Company's trade secrets and damaged to its competitiveness.

• (2) Claimed value: NT$7 billion, etc.

• (3) Date of initiation:

• a. Civil action: October 2016

• b. Criminal prosecution: December 2016

• c. Claim for returns of unjust enrichment of pension: March 2017

• (4) Parties:

Plaintiff and complainant: CPDC

Defendant: Managers Tsai, Liu and Chen et al.

• 395 -

(5) Status:

After the mediation was not successfully concluded, the civil action is under hearing by the Taipei District Court. In regards to criminal law, after prosecution by the Miaoli District Prosecutors Office, the case was transferred to the Miaoli District Court. The Company initiated an ancillary civil action for compensation. Regarding the claim for return of unjust enrichment of pension, the Board of Directors of the Company made a formal resolution of dismissing Tsai et al. retrospectively. The Company filed a suit to the court for return of unjust enrichment in March 2017, and the claim was overruled by the judgement rendered by the Taipei District Court in December 2017. In disagreement with the decision, the Company filed an appeal for remedy with the Taiwan High Court in January 2018. The Taiwan High Court dismissed the Company's appeal on February 11, 2020. The Company filed an appeal once again to the Supreme Court in March of the same year, which was dismissed by the Supreme Court on January 20, 2022, and the case of the claim for return of the pension was closed.

1. "Administrative disposition under Nan-Shih-Fu Huan-Shui-Tze No. 1000700466"

2. (1) Fact at issue:

Tainan City Government ordered the Company, via its official letter under Fu-Huan-Shui-Tze No. 1000700466 dated September 16, 2011, to pay the out-of-pocket expenses for An-Shun Site-related work projects to the Soil and Underground Water Pollution Remediation Fund account. After the Company stated its own opinion, Tainan City Government ordered the Company to make the payment within a specific time limit via its official letter under Nan-Shih-Fu-Huan-Shui-Tze No. 1010242670 dated March 26, 2012.

• (2) Claimed value: NT$16,095,318

• (3) Date of initiation: April 2012

• (4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

• (5) Status:

The Company paid foresaid expenses within the specific time limit and filed a petition. Notwithstanding, the petition was overruled by a decision. The Company filed the administrative remedy pursuant to the law. The Kaohsiung High Administrative Court rendered a judgement and revoked the petition decision and the original disposition regarding the amount that exceeded NT$119,000. Both parties filed an appeal each in September 2014. The Supreme Administrative Court remanded the case to the Kaohsiung High Administrative Court on November 17, 2015. The Kaohsiung High Administrative Court in March 2017 rendered a judgement and revoked the order of the payment exceeded NT$6,498,455, which the Tainan City Government required payment from the Company. Both parties disagreed with the judgement, and filed an appeal each for remedy. On April 12, 2018, the Supreme Court made the judgement that the Company does not need to pay NT$9,596,863. The judgment was final and binding and the case was closed. The Company received the amount of NT9,596,863 paid by the Tainan City Government.

• 396 -

• Petition for removal of buildings and refund of land by Taiwan Alkali Co., Ltd. to village residents

• (1) Fact at issue:

The Company consolidated Taiwan Alkali Co., Ltd. in 1983 and generally succeeded to its right and obligation. In 1986, the Company entered into an agreement with all of Taiwan Alkali Village residents to make the land Nos. 1323-259 and 1323-261 available to them to accommodate the utilities, such as public roads and water towers, continuously used by them. Upon investigation on occupation of the public utility land, some residents were found violating the agreement by constructing private buildings thereon, changing the purpose of the utility arbitrarily and misappropriating the land used for the utilities. The Company planned to recall said land and asked them to refund unjust enrichment to secure the Company's assets and all shareholders' interests and rights.

• (2) Claimed value: NT$5,506,370

• (3) Date of initiation: February 2013

• (4) Parties:

Plaintiff: CPDC

Defendant: Taiwan Alkali Co., Ltd. Village Management Committee, et al.

• (5) Status: The Company filed a suit pursuant to the law and raised a claim for removal of buildings and the return of the land. The Kaohsiung District Court rendered a judgement overruling the claim of the Company. In September 2014 the Company filed an appeal pursuant to laws. After the Taiwan High Court Kaohsiung Branch Court rendered a judgement overruling the Company's claim in July 2016, the Company was unwilling to accept the judgement and filed an appeal for remedy with the Supreme Court in September 2016. In 2019, the Supreme Court remanded the case for a new trial, and the Taiwan High Court Kaohsiung Branch Court announced a judgement that the Company partly won and partly lost the case. The Company was not satisfied with the defeated part, and filed an appeal with the Supreme Court on October 15, 2021, and the case is currently in the Supreme Court.

• Civil action against high-rank management

• (1) Fact at issue:

The Company's high-ranking managers, Liu and Chang, resigned directly without completing the handover procedures. They have stopped performing duties as of July 1, 2013. The Company issued a letter demanding that they should perform duties, but they refused to do so. The Board of Directors relieved them from the posts in October 2013. The Company filed a suit against Liu pursuant to laws because he severely violated the work rules of the Company. Later, Liu and Chang claimed the pension against the Company pursuant to Labor Standard Law. Both parties failed to reach settlement upon negotiation. Liu and Chang initiated a civil action each for payment of pension with Taipei District Court and Kaohsiung District Court in January 2014.

• (2) Claimed value: NT$8,044,460 and NT$6,039,497

• (3) Date of initiation: January 2014

• (4) Parties:

Plaintiff: Liu and Chang

Defendant: CPDC

• (5) Status:

• 397 -

The Plaintiffs initiated the actions, which were under examination by Taipei District Court and Kaohsiung District Court respectively. Taipei District Court in September 2015 rendered the judgement that the Company should give Liu NT$4,572,150, while the Kaohsiung District Court in September 2015 rendered the judgement that the Company shall give Chang NT$35,393. For the former case, the Company filed an appeal in September 2015. In March 2017, the Taiwan High Court dismissed both appeals. The Company was not satisfied with the results and filed an appeal to the Supreme Court in April of the same year. On June 4, 2019, the Supreme Court dismissed both appeals and upheld the judgement of first instance that CPDC should pay NT$4,572,150 plus 5% interest. Since the Supreme Court dismissed each appeal on the ground that the appeals were meritless, which meant that the case was final and no further appeal could be filed. The case was closed. The claim of the Plaintiff of the latter was dismissed by the Taiwan High Court in July 2016. The plaintiff appealed against the Taiwan High Court's decision. On August 16, 2018, the court of third instance made the judgement that the appeal was justified, and the original judgement was reversed and remanded to the Taiwan High Court Kaohsiung Branch Court for a new trial. On July 31, 2019, the Company was ordered to pay NT$3,785,306 plus statutory interest to Chang. The Company filed an appeal and the Supreme Court reversed the judgement and remanded the case for a new trial in April, 2021, and the Taiwan High Court Kaohsiung Branch Court made a judgement on November 30, 2021 that the Company should pay $3,764,399 and the statutory interest. The Company was not satisfied with such judgment and filed an appeal, and currently the case is in the Supreme Court.

1. "Administrative disposition under Fu-Huan-Shui-Tze No. 1030098879"

2. (1) Fact at issue:

Tainan City Government ordered the Company, via its official letter under Nan-Shih-Fu Huan-Shui-Tze No. 1030098879 dated February 2014, to pay the out-of-pocket expenses for the project related to An Shun Site soil pollution remediation, NT$27,444,217, within a specific time limit.

• (2) Claimed value: NT$27,444,217

• (3) Date of initiation: March 2014

• (4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

• (5) Status:

The Company paid said expenses within the specific time limit and filed a petition. Notwithstanding, the petition was overruled by a decision in July 2014. The Company filed the administrative remedy pursuant to laws. After examination by the Kaohsiung High Administrative Court, the judgement was rendered in August 2016 that the Company only needed to pay NT$153,657 and the rest of the claim was overruled. Considering the overall interests, the Company filed an appeal against the part of overruling the Company's claim, and the Supreme Administrative Court made the judgement on October 28, 2021 that the Company should only pay $538 thousand and the judgment was final and binding; the Company received the complaint for a rehearing action from Tainan City Government on December 23, 2021, and currently the Company has submitted the answer and the case is in the Supreme Administrative Court.

• 398 -

• Administrative disposition under Kao-Shih-Fu-Shui-Shih-Yi-Tze No. 10335137100 (Turn off the pipelines with enforcement because of Kaohsiung gas explosion)

• (1) Fact at issue:

An underground pipeline gas-explosion event occurred in Kaohsiung City in July 2014. Kaohsiung City Government ordered the Company in August 2014 to turn off the pipeline, and prohibited the Company from restoring to use all the petrochemical pipelines in affected areas. For disagreement with the administrative disposition above, the Company initiated the proceedings of the administrative litigation remedy pursuant to laws.

• (2) Claimed value: None.

• (3) Date of initiation: September 2014

• (4) Parties:

Plaintiff: CPDC

Defendant: Kaohsiung City Government

• (5) Status:

The Company initiated the petition pursuant to laws in September 2014, and MOEA overruled the petition in December 2015. The Company filed an administrative appeal with Kaohsiung High Administrative Court in January 2016, and the part of the claim was overruled upon judgement in January 2017. In disagreement with the judgement, the Company filed an appeal for remedy in February of the same year. The Supreme Administrative Court made a judgement of remanding for a new trial in October 12, 2021. Currently, the case is in the Kaohsiung High Administrative Court.

1. Administrative disposition under Kao-Shih-Kung-Wu-Kung-Tze No. 1033652500 and No. 1033766200 (Repeal of permission to mine and use the road for underground pipelines in Kaohsiung)

2. (1) Fact at issue:

Due to the Kaohsiung gas explosion on August 1st, Public Works Bureau of Kaohsiung City Government, via its official letter to CPC Corp., the adversary subject to the disposition, repealed the Company's right to use the land of all the pipelines. Some pipelines mentioned in the repeal disposition are owned by the Company, and the Company commissioned CPC Corp. to build the pipelines at first, thus the Company, as the stakeholder, initiated a remedy claim with Public Works Bureau of Kaohsiung City Government pursuant to laws in September and November 2014.

• (2) Claimed value: None.

• (3) Date of initiation: September 2014

• (4) Parties:

Plaintiff: CPDC

Defendant: Public Works Bureau of Kaohsiung City Government

• (5) Status:

The Company initiated a petition pursuant to laws in September and November 2014, and the Petition Committee of Kaohsiung City Government overruled the petition. In April 2015 the Company filed an administrative suit against two administrative disposition. The petition was overruled upon judgement by the Kaohsiung High Administrative Court in March 2017. In disagreement with the decision, the Company initiated an appeal for remedy in April within the same year.

• 399 -

13. An Shun application

• (1) Fact at issue:

Summary of J. Y. Interpretation No. 714 indicates that whether polluters' general successors bear the remedial obligation does not belong the range of Soil and Groundwater Pollution Remediation Act. Meanwhile, ex-Taiwan Alkali Corp. was a state-owned enterprise and its affiliated An Shun Plant was commanded and supervised under the Ministry of Economic Affairs, Taiwan Provincial Government, and CPC Corp., etc., and they also dominated operations and obtained profits from it. These foresaid actions should belong to the acts of state, but the government asked a privately owned company to bear the pollution which it had caused. Thus, the Company applied for the confirmation from Tainan City Government that those were actual polluters or potentially responsible for pollution and they should pay for the relevant costs and refund the money the Company had already paid over the years.

• (2) Claimed value: None.

• (3) Date of initiation: December 2014

• (4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

In November 2014 Tainan City Government made a rejection, and the Company initiated a petition for remedy. In March 2015 Tainan City Government revoked the preceding disposition and made a new one. Considering the litigation strategy, the Company initiated a petition with the new disposition in April 2015. Environmental Protection Administration of Executive Yuan made a decision not to proceed with the case, because the original disposition had been revoked. New disposition was overruled in July 2015. The Company filed a first instance for remedy in September 2015, but it was overruled upon judgement by the Kaohsiung High Administrative Court in November 2017. In disagreement with the decision, the Company filed an appeal within the same year. In October 2018, the Supreme Court overruled the appeal, and the case was confirmed.

1. Lawsuit of Business negligent injury from Heng-I Inc.

2. (1) Fact at issue:

Gas explosion has been occurred from Heng-I Chemical Plant next to the Toufen Plant. This developed into a business negligent injury lawsuit because of combustion from several workers and as the accident happened in the public drainage location of industrial areas, excessive material has been analyzed by samples which belongs to CPDC. Plaintiff request to make CPDC managers as the defendant and this case is still pending at Taiwan Miaoli Prosecutors Office. In February 2015, injured workers from Heng-I Chemical Inc. applied for Company to be severally and jointly liable for the compensation of NT$6,920,000.

• (2) Claimed value: NT$6,920,000

• (3) Date of initiation: February 2015

• (4) Parties:

Plaintiff: Injured workers from Heng-I Chemical Inc.

Defendant: CPDC and its manager

• (5) Status:

• 400 -

The civil action case was pending trial by the Miaoli District Court, and in March 2017 the judgement was rendered that the Company and the manager won the case. In disagreement with the decision, the plaintiffs filed an appeal for remedy. In October 2019, the adversary agreed to settled through conciliation. As the case is settled, it was dismissed. As for criminal actions, a ruling was rendered to not prosecute in March 2016.

1. Application of joint Occupational Accident from an employee of Chung-Yen Engineering Co., Ltd.

2. (1) Fact at issue:

An employee of Chung-Yen Engineering Co., Ltd., Wang, fell during construction of the rust-proof operation of ceiling's pipes, resulting in contusion and fracture in his body. In February 2015, the plaintiff requested to add CPDC to the list of defendants, in addition to the original defendant, Chung-Yen Engineering Co. Ltd.

• (2) Claimed value: NT$3,151,594

• (3) Date of initiation: April 2015

• (4) Parties:

Plaintiff: Wang

Defendant: Chung-Yen Engineering Co., Ltd. & CPDC

• (5) Status:

The case was heard by the civil division of Kaohsiung District Court and the judgement was rendered in June 2017. In disagreement with the decision, the Company initiated an appeal in July within the same year. In August 2019, we were judged to pay no-fault liability compensation for occupational disasters, and be liable jointly and severally with the CHUNG YEN ENGINEERING CO.,LTD., with a total of NT$607,150. The case was concluded.

1. "Administrative disposition under Nan-Shih-Fu-Huan-Tu-Tze No. 1050327521"

2. (1) Fact at issue:

Tainan City Government ordered the Company to pay for the "2013 CPDC's (Taiwan Alkali Co., Ltd.) supervision and auditing project for An Shun Site remediation". According to Article 14, Paragraph 4, Article 15, and Article 43, Paragraph 1 of the Soil and Groundwater Pollution Remediation Act (hereinafter referred to as Soil Pollution Act), the Company was requested to pay NT$63,270,582.

• (2) Claimed value: NT$63,270,582

• (3) Date of initiation: December 2016

• (4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

• (5) Status:

The Company initiated the petition in June 2016, and the agency with jurisdiction of administrative appeals overruled the petition. The Company filed an appeal for remedy in December 2016. After the examination by Kaohsiung High Administrative Court, the Company was only liable for approximately NT$400 million among the total. Both parties were not satisfied with the result and filed appeals in July 2017. On October 31, 2018, the Supreme Court dismissed the Company's appeal (part of the NT$4,845,000 has been confirmed) and withdrew the rest of the decision of the Kaohsiung High Administrative Court and remanded the case for trial. The Kaohsiung High

• 401 -

Administrative Court ruled in the first instance that, except for the portion of the judgment determined, the Company's portion in excess of NT$35,018,000 was revoked (i.e., the Company was required to pay NT$39,863,000). The Company and the Tainan City Government filed an appeal to the Supreme Administrative Court in October 2019 against the unfavorable part of the judgment. On January 12, 2011, the Company received a notice from the Supreme Administrative Court of the judgment in this case. Except for the part have been determined by the judgment, the payment that Tainan City Government ordered the Company to pay more than NT$7,276,000 shall be abandoned (that is, the Company shall totally pay NT$12,121,000, including the portion have been determined by the judgment). The case was concluded.

1. One million fine on the non-proposal for a 3rd revision of the pollution remediation plan

2. (1) Fact at issue:

According to Article 22, Paragraph 4 of the Soil and Groundwater Pollution Remediation Act, the Tainan City Government fined the Company NT$1,000,000 and 8 hours of environmental seminars on 4 May, 2017 based on the administrative disposition under Fu-Huan-Tu-Tze No. 1060456103, which the Environmental Protection Bureau of Tainan City Government alleges that the Company's pollution remediation plan did not comply with a request for improving the processing capacity. Thus, the EPB deemed the Company as failing to submit a 3rd revision proposal to the remeidiation plan.

• (2) Claimed value: NT$1,000,000

• (3) Date of initiation: June 2017

• (4) Parties:

Plaintiff: CPDC

Defendant: Tainan City Government

(5) Status:

In disagreement with the disposition, the Company initiated a claim of administrative remedy to Kaohsiung High Administrative Court in December 2017, while revised the pollution remediation plan as requested by Environmental Protection Bureau of Tainan City Government. The plan was approved in January 2018 and will be carried out in the future. The Court ruled against the Company and the Company appealed to the Supreme Court, which annulled the original decision and remanded the case to the Kaohsiung High Administrative Court on July 7, 2020. On December 28, 2020, the Kaohsiung High Court ruled against the Company. Considering the risk of litigation, the cost of litigation, and the need to alleviate the tension between the Company and the Tainan City Government, the Company did not file an appeal in this case, which was confirmed on January 19, 2021.

§ Against affiliates

• 1.Reinvestment entity - Legal action against declaration of the capacity of Chairman of Praxair Chemax Semiconductor Materials Co., Ltd.

• (1) Fact at issue:

The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as "Praxair") delegated by the Company, was elected as the new Chairman at the directors' meeting of Praxair 2013. However, the Vice Chairman and supervisor appointed by the joint venture shareholder, Praxair Inc., failed to keep their promise and stopped the supervisor of Praxair appointed by the Company from auditing the accounts

• 402 -

and records pursuant to the Company Law, and filed a legal action declaring non-existence of the new Chairman's commission of authority.

• (2) Claimed value: None.

• (3) Date of initiation: May 2013

• (4) Parties:

• a. action of non-existence of the new Chairman's commission of authority:

• Plaintiff: Supervisor Taimur Sharih of Praxair, and Vice Chairman Anne Roby of Praxair

Defendant: New Chairman of Praxair, Lin Ke-Ming

• b. action of claims for collection of accounting books:

• Plaintiff: Supervisor of Praxair, Yu Chien-Sung

• Defendant: General Manager of Praxair, Chen Chun-Liang

• c. action of claims for collection of Seal / Signature:

• Plaintiff: Chairman of Praxair, Lin Ke-Ming

Defendant: General Manager of Praxair, Chen Chun-Liang, et al.

• (5) Status:

Taiwan High Court ruled that the action of existence Chairman's commission of authority did exist. For disagreement with the judgement, the Defendant filed an appeal with Taiwan Supreme Court. The appeal was overruled by the judgement rendered by the Court on December 23, 2015, and this case determined that Lin Ke-Ming was the Chairman of Praxair. However, the intervener filed an appeal. The judgement was rendered by the Supreme Court in September 2017 determining again that Lin Ke-Ming was the Chairman of Praxair. Taiwan High Court ruled that the Supervisor of Praxair, Yu Chien-Sung, won the case of action of claims for collection of books. For disagreement with the judgement, the Defendant filed an appeal with Taiwan Supreme Court which is now pending trial. Taiwan Hsinchu District Court stopped the trial on the case of action of claims for collection of Seal / Signature until the Chairman's commission of authority is determined. The Chairman's appointment was confirmed on December 23, 2015, and relevant information was reported for the continuation of the proceedings. After successfully changing the seal registration on December 27, 2016, the Company dismissed the action. International arbitration on January 23, 2018 declared judgement, indicating that the Company won one caes and lost one case. As per the judgements outstanding as of December 2018, dividends received from 2014 to 2017, was approximately NT$560 million. The Company filed a dismissal arbitration lawsuit in Taiwan court against the dissatisfied part. The Court dismissed the Company's request on the grounds that the arbitration was a foreign arbitration and the Taiwan court did not have the authority to set aside the arbitration. On August 18, 2020, the Company filed an appeal to the Supreme Court. The case was dismissed by the Supreme Court on 24 February 2022.

1. Reinvestment - Praxair shareholders' meeting

2. (1) Fact at issue:

The supervisor, Taimur Sharih, appointed by the joint venture shareholder of Praxair invested by the Company, Praxair INC., privately called a temporary shareholders' meeting on January 15, 2015 and submitted the temporary motion at the meeting.

• 403 -

• (2) Claimed value: None.

• (3) Date of initiation: February 2015

• (4) Parties:

Plaintiff: CPDC

Defendant: Chairman of Praxair, Lin Ke-Ming, and Supervisor Taimur Sharih

• (5) Status:

The Miaoli District Court rendered a judgement in September 2016 that the Company won the case. The opposite side filed an appeal with the High Court in October 2016 and the judgement was rendered holding that the Company still won the case. The opposite side filed an appeal again with the Supreme Court in September 2017. On February 5, 2019, the court rejected the appeal by both parties and the case was closed.

1. Reinvestment - Praxair revocation of all the resolutions made by the Board of Directors and denial of financial statements

2. (1) Fact at issue:

Because some relevant judgements had determined that Lin Ke-Ming, appointed by the Company, was the Chairman of Praxair, the resolution, which Praxair voluntarily called a meeting of directors, was illegal and should have been revoked. On the other hand, considering that the financial statements submitted by Praxair may affect shareholders' right and interest, the Company brought a suit for remedy.

• (2) Claimed value: None.

• (3) Date of initiation: September 2016

• (4) Parties:

Plaintiff: Chien-Sung Yu

Defendant: Praxair

• (5) Status: On May 4, 2020, the Taiwan High Court, Taichung Branch Court, ruled that the lawsuit was discontinued before the conclusion of the lawsuit No. 498 of the Taiwan High Court, Taichung Branch Court, in 2018.

• Reinvestment - non-existence of the resolution of Praxair extraordinary shareholders' meeting on 21 February, 2017

• (1) Fact at issue:

Because some relevant judgements had determined that Lin Ke-Ming, appointed by the Company, was the Chairman of Praxair, the resolution, which Praxair voluntarily called an extraordinary shareholders' meeting in February 2017, was illegal and should have been revoked.

• (2) Claimed value: None.

• (3) Date of initiation: February 2017

• (4) Parties:

Plaintiff: CPDC

Defendant: Praxair

• (5) Status: The lawsuit was filed to the Miaoli District Court on February 21, 2017, the court issued a judgment on June 29, 2018, and the Taichung High Court ruled to stop the lawsuit on January 25, 2019.

• Reinvestment - Praxair absence of directors and supervisors

• (1) Fact at issue:

• 404 -

After dismissal of Praxair directors and supervisors on January 9, 2017, the Company brought a lawsuit to elect the interim managers and inspectors in order to maintain the regular operation of Praxair and reduce damages to shareholders' rights and interest.

• (2) Claimed value: None.

• (3) Date of initiation: January 2017

• (4) Parties:

Plaintiff: CPDC

• (5) Status:

Due to the complexity of the case, the Company made an application for sending the case to trial with the Taiwan Miaoli District Court in order to protect the legitimate rights and interests in Praxair. On 10 November 2019, the Court appointed the accountant, Mr. Luo, as the examiner of the case. In view of the Company's intention to resolve the differences through bona fide negotiations with Linde, another shareholder of Praxair, on April 13, 2022, the Company applied to the court to revoke the original ruling and dismiss the role of inspector.

1. Reinvestment - Rental payment of Praxair

2. (1) Fact at issue: Praxair did not comply with the contract and pay for the rent since March 2013.

3. (2) Claimed value: NT$40,823,556

4. (3) Date of initiation: August 2017

5. (4) Parties:

Plaintiff: CPDC

• (5) Status:

After the examination, the Miaoli District Court was of the opinion that the Company's request had no reason and overruled the Company's suit. In disagreement with the decision, the Company filed an appeal for remedy in January 2018. On May 29, 2020, the Supreme Court dismissed the appeal and the case was closed.

1. Reinvestment - Contract disputation with Shanghai Tongye Coal Chemical Group Co. Ltd (1) Fact at issue:

Shanghai Tongye Coal Chemical Group Co. Ltd purchased anthracene oils from Weihua (Rudong) Trading Co., Ltd and Weiqiang International Trading (Shanghai) Co., Ltd. However, the payment of the contract was paid with only 10% of the total amount which is equal to deposit premium in May 2014. In June 2014, both sides of the companies signed complement action agreement to extend payment terms. However, Shanghai Tongye Coal Chemical Group Co. Ltd still not paid the remainder payment on the due date. Weihua and Weiqiang filed a suit for remedy pursuant to laws.

• (2) Claimed value: RMB$ 3.5 million

• (3) Date of initiation: August 2014

• (4) Parties:

Plaintiff: Weihua (Rudong) Trading Co., Ltd. & Weiqiang International Trading (Shanghai) Co., Ltd.

Defendant: Shanghai Tongye Coal Chemical Group Co. Ltd

• (5) Status:

Subsidiaries of CPDC, Weihua and Weiqiang, filed a civil suit with Yangpu District

• 405 -

Court against Shanghai Tongye Coal Chemical Group Co. Ltd for the remainder payment of contract on August 6, 2014. The mediation of both sides was sustained by the Court. However, the Shanghai Tongye Coal Chemical Group Co. Ltd failed to comply with the first-phase payment by the mediation agreement. On September 2, 2014, Weihua and Weiqiang applied for compulsory execution and seized the Coal Tar from Shanghai Tongye Coal Chemical Group Co. Ltd with Yangpu District Court until the Court lifts the seizure for auction to repay the debt. After that, Weihua and Weiqiang continually negotiate and request for specific repayment plan with Shanghai Tongye Coal Chemical Group Co. Ltd. Authorities concerned is proceeding criminal investigation of relevant people who engage in contract fraud from Shanghai Tongye Coal Chemical Group Co. Ltd. In mid-February, 2021, Weiqiang received the court's ruling that the company had filed for bankruptcy and had no more property to distribute, so it was ruled that the bankruptcy proceedings were terminated and the case was closed.

(XIII) Other major risks and countermeasures: N/A

VII. Other important notes: None.

• 406 -

Chapter 8 Special Note

I. Information about Affiliates

(I) Consolidated operating report of affiliate

==> picture [683 x 347] intentionally omitted <==

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

CPDC
1. Organizational chart of affiliates
40% 100% 100% 100% 100% 100% 100%
Kaohsiung Tsou Seen Chemical CPDC Green Unichem CPDC Ding-Yue Development BES Twin Towers
Monomer Co., Ltd. Industries Technology Development Investment Co., Ltd Development Co., Ltd.
Corporation Corporation Limited (BVI) Co., Ltd.
100%
100% Frontier Fortune
91.10% Investment Pte. Ltd.
Da Yin Construction
Taivex Therapeutics Engineering Co., Ltd.
Corporation
99.99% 100% 100% 100%
Gemini Star Core Pacific Core Pacific Thanh Phong
(India) Private Twin Star Twin Star Construction
Limited. (Myanmar) (Vietnam) Investment Co.,
4.02% 99.64% 0.36% Investment Co., Investment Co., Ltd.
44.52% 55.48% 95.98% 100% Ltd. Ltd.
Weiqiang International Trade Weihua (Rudong) Changzhou Weicai New Weiming (Jiangsu)
(Shanghai) Co., Ltd. Trade Co., Ltd. Material Science & Petrochemical Company 80%
Technology Co., Ltd.
Core Pacific Pioneer
100%
(Myanmar) Co., Ltd.
Weiming (Rudong)
Note: 1. Data updated as of December 31, 2021 Engineering Company
----- End of picture text -----

Note: 1. Data updated as of December 31, 2021

1. Substantially identified companies constitute controlling and affiliates relationships as defined in Article 369-2 of the Company Law.

2. Profiles of affiliates

Unit: NTD Thousand

				Unit: NTD Thousand
Name	Date of Incorporation	Address	Paid-in Capital	Principle Business
Kaohsiung Monomer Co., Ltd.	1976.06.10	No. 1 Xinkung Road, Dashe District, Kaohsiung City	NTD 500,000	Production and sale of methyl methacrylate (MMA)
Tsou Seen Chemical Industries Corporation	1998.06.16	No. 1, Chin Ching Road, Tunghai Village, Fanliao Hsiang, Pingtung County	NTD 760,000	The The storage, transportation, purchase, and selling of fertilizer
Taivex Therapeutics Inc.	2000.02.11	8F, No. 12 Tunghsing Road, Songshan District, TaipeiCity	NTD 507,399	Research, development and marketing of bio-tech medicines
CPDC Green Energy Technology Company	1999.05.31	No. 16, 14F, 61, Wufu 3rd Road, Chienching District, Kaohsiung City	NTD 150,000	Machinery engineering
Ding-Yue Development Co., Ltd.	1995.10.11	8F, No. 12 Tunghsing Road, Songshan District, Taipei City	NTD25,580,000	Authorize construction company to build public housing, commercial buildings, and the operation and investment of business related to land development
Da Yin Construction Engineering Co., Ltd.	1972.11.24	8F, No. 12 Tunghsing Road, Songshan District, Taipei City	NTD 60,000	Civil engineering contractor
BES Twin Towers Development Co,, Ltd..	2011.03.01	16F, No. 12 Tunghsing Road, Songshan District, Taipei City	NTD4,912,164	Investment in construction of infrastructure, real property trading, international trading, real property lease, and hotel services
CPDC Investment (BVI) Ltd.	1998.01.09	Citco Building , Wickhams Cay,P.O Box 662	NTD904,946 (Note 3)	Reinvestment
Unichem Development Limited	2008.05.20	Room 06, G/F, The Lodge, 535 Canton Road, Kowloon, Hong Kong	NTD9,876,023 (Note 3)	Reinvestment
Frontier Fortune Investment Pte. Ltd	2016.11.23	112 Robinson Road#05-01Robinson 112 Singapore(068902)	NTD2,761,596 (Note 3)	Reinvestment
Weihua (Rudung) Trade Co., Ltd.	2012.12.10	Yangguang Island, Changsha Town, Rudong County, Jiangsu Province	NTD763,460 (Note 3)	Wholesale of chemical raw materials and products (exclusive of hazardous goods and toxic chemical products), export & import, and import & export of technology, and commissioned distribution
Weiqiang International Trade (Shanghai) Co., Ltd.	2013.03.21	Room 516, 5/F, Building 1, No. 55, Ao'na Road, China (Shanghai) Pilot Free Trade Zone	NTD211,560 (Note 3)	Wholesale of chemical raw materials and products (exclusive of hazardous goods), commissioned distribution (exclusive of auction), and import & export andrelated alternatives
Jiangsu Weiming New Material Corporation	2013.05.16	Junction of Yang Kou Gang Jing Yi Lu and Central Road Complex Building, Changsha Town, Rudong County, Nantong, Jiangsu	NTD7,725,253 (Note 3)	Production and sales of nylon 6, cyclohexanone, electricity, steam and its by-products; construction of ancillary facility for petrochemical projects

• 408 -

Name	Date of Incorporation	Address	Paid-in Capital	Principle Business
Weiming (Rudung) Engineering Co., Ltd.*	2020.10.26	Room 212, Jiuzuyang Yangkougang Business Building, Gangcheng Village, Changsha Town, Rudong County, Nantong, Jiangsu	NTD129,665 (Note 3)	Engineering consulting, survey and design, engineering construction, engineering management services, sales of chemical products
Changzhou Wei-Chi Material Co., Ltd.	2015.01.06	No.18, Daoxiang Road ,Wujin Economic Development Zone, Changzhou, Jiangsu Province	NTD1,411,845 (Note 3)	Engineering plastics, production of high-value petrochemical downstream products
Core Pacific Twin Star (Myanmar) Co. Ltd.	2017.02.16	No.153/Ka,Kyun Shwe Myaing Lane(2), 23 Ward,Thingangyun Township,Yangon	NTD 169,921 (Note 3)	Reinvestment and advisory services
Core Pacific Twin Star(Myanmar) Co. Ltd.	2018.5.24	No.153/Ka,Kyun Shwe Myaing Lane(2), 23 Ward,Thingangyun Township,Yangon	NTD 30,992 (Note 3)	Construction, real estate business, development and sales services.
Thanh Phong Construction Investment Co. Ltd.	2017.5.22	B2-19, Golden king tower building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City	NTD 609,347 (Note 3)	Construction, real estate business, construction-related technical consulting, rental of machinery and equipment, wholesale of construction materials, etc.
Core Pacific Twin Star (Vietnam) Co. Ltd.	2018.11.19	B2-19, Golden king tower building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City	NTD2,566,176 (Note 3)	Improvement of construction works, real estate business, consultant for construction activities
CPDC Gemini (India) Co. Ltd.	2019.01.08	Level 7, The Capital, Plot No. C-70, G Block, Bandra Kurla Complex, Bandra MUMBAI Mumbai City MH 400051 IN	NTD 9,274 (Note 3)	Engaged in property and petrochemical market research and consultant business.

Note 1: All of the affiliates should be disclosed, irrelevant of scale and size.

Note 2: Where each affiliate has established its own plant, and the sales of the products manufactured by the plant exceed 10% of the Company's operating revenue, the name, date of incorporation, address and principle business of the plant shall be included herein.

Note 3: Where the affiliate refers to a foreign company, the name and address may be stated in English, and the date of incorporation may be expressed in the form of MM/DD/YY. The paid-in capital may be expressed in foreign currency (but the exchange rate on the reporting date shall be specified).

• 409 -

3. Overview of affiliate operation

Unit: NTD Thousand

Name	Capital	Total assets	Total liabilities	Net Value	Operating Revenue	Net Operating Profit (Loss)	Profit (loss) (after tax)	EPS (NT$) (after tax)
Kaohsiung Monomer Co.,Ltd.	500,000	3,268,279	1,303,487	1,964,792	4,957,838	1,047,116	839,628	16.79
Tsou Seen Chemical Industries Corporation	760,000	1,519,633	336,420	1,183,213	1,768,702	189,221	113,430	1.49
Taivex Therapeutics Inc.	507,399	199,035	12,343	186,692	0	(88,839)	(87,321)	(1.72)
CPDC Green Energy Technology Company (formerly CDPC Engineering Corp.)	150,000	223,452	57,017	166,435	329,110	46,200	46,706	3.11
Ding-Yue Development Co., Ltd.	25,580,000	38,594,275	13,146,101	25,448,174	0	(92,226)	(94,151)	(0.04)
Da Yin Construction Engineering Co., Ltd.	60,000	61,905	1,699	60,206	5,448	(2,618)	(195)	--
BES Twin Towers Development Co,, Ltd.	4,912,164	5,088,947	4,387	5,084,560	0	(7,029)	193,145	0.39
CPDC Investment (BVI)Ltd.	904,946	911,656	0	911,656	0	(91)	(9,060)	--
Unichem Development Limited	9,876,023	8,291,766	53	8,291,713	0	(543)	(370,186)	--
Frontier Fortune Investment Pte. Ltd.	2,761,596	2,707,718	1	2,707,717	0	(540)	65,879	--
Weihua (Rudung) Trade Co.,Ltd.	763,460	729,052	229,402	499,650	555,878	17,581	13,491	--
Weiqiang International Trade (Shanghai) Co., Ltd.	211,560	373,555	202,114	171,441	2,924,720	35,676	42,024	--
Jiangsu Weiming New Material Corporation	7,725,253	10,343,816	3,554,657	6,789,159	1,679,413	(254,943)	(232,855)	--
Weiming (Rudung) Engineering Co., Ltd.	129,665	130,196	443	129,753	0	(519)	(513)	--
Changzhou Wei-Chi Material Co.,Ltd.	1,411,845	1,846,054	980,306	865,748	942,979	(177,227)	(151,226)	--
Core Pacific Twin Star (Myanmar) Co. Ltd.	169,921	144,951	290	144,661	0	(1,426)	197	--

• 410 -

Name	Capital	Total assets	Total liabilities	Net Value	Operating Revenue	Net Operating Profit (Loss)	Profit (loss) (after tax)	EPS (NT$) (after tax)
Core Pacific Pioneer (Myanmar) Co. Ltd.	30,992	37,302	12,949	24,353	0	(3,316)	2,069	--
Thanh Phong Construction Investment Co. Ltd.	609,347	587,928	1,301	586,627	0	(3,742)	11,267	--
Core Pacific Twin Star (Vietnam) Co. Ltd.	2,566,176	2,552,338	672	2,551,666	0	(7,055)	66,738	--
CPDC Gemini (India)Co. Ltd.	9,274	4,293	44	4,249	0	(207)	(190)	--

Note 1: All of the affiliates should be disclosed, irrelevant of scale and size.

Note 2: Where the affiliate refers to a foreign company, the relevant figures shall be stated in NTD at the foreign exchange rate.

Note 3: “--” indicates not applicable (N/A)

• 411 -

• (II) Consolidated financial statement of affiliates

Statement of Declaration

• I. The preparation of the Company's affiliates consolidated financial statement in 2021 (From January 1st to December 31st) in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" and "Regulations Governing the Preparation of Financial Reports and Related Terminology by Securities Issuers".

• II. Our company declares that no information relevant to our affiliates' consolidated financial statement has been falsified or concealed.

Hereby certify

Company name: China Petrochemical Development

Corporation Chairman: Ruey-Long Chen

Date: March 14, 2022

• 412 -

Representation Letter

• A. The entities that are required to be included in the combined financial statements of China Petrochemical Development Corporation and its affiliates as of and for the year ended December 31, 2021 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises and Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• B. The consolidated financial statements prepared by the Company contained no misrepresentations and nondisclosures.

Company name: China Petrochemical Development Corporation Chairman: Chen Ruey-Long Date: March 14, 2022

• 413 -

Independent Auditors’ Review Report

To the Board of Directors of China Petrochemical Development Corporation:

Introduction

We have reviewed the accompanying consolidated financial statements of China Petrochemical Development Corporation (“CPDC”) and its affiliates (“the Group”) as of and for the year ended December 31, 2021 by applying the review procedures in accordance with "Guidelines for the Review of Consolidated Financial Statements of Affiliated Enterprises", which are necessary to conduct the review. The review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that no material amendments or adjustments of the consolidated financial statements needed in accordance with the “ Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises” and with Regulations Governing the Preparation of Financial Reports by Securities Issuers.

As described in Notes 5(j) and 5(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.

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

KPMG

Taipei, Taiwan (Republic of China) March 14, 2022

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 review such consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of 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’ review report and consolidated financial statements, the Chinese version shall prevail.

• 414 -

								December 31, 2021	Amount %			$ 12,737,689 9	1,429,955 1	20,612 -	2,049,758 2	11,333 -	2,773,328 2	265,067 -	485,690 1	56,324 -	1,511,515 1	1,511,515 1	128,166 -	128,166 -	21,469,437 16		4,684,096 3	13,905,589 10	3,671,014 3	6,764,316 5	240,124 -	5,254,518 4	140,232 -	34,659,889 25	34,659,889 25	56,129,326 41		37,848,502 27	1,454,301 1		2,389,125 2	35,390,076 26	4,950,734 4		42,729,935 32		(948,859) (1)	(576,946) (1)	(576,946) (1)	(1,525,805) (2)	(1,525,805) (2)	80,506,933 58		1,200,361 1		81,707,294 59	81,707,294 59	$ 137,836,620 100	$ 137,836,620 100
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	Reviewed only, not audited in accordance with generally accepted auditing standards		CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES	Consolidated Balance Sheets	December 31, 2021		(Expressed in Thousands of New Taiwan Dollar)	December 31, 2021	Assets Amount % Liabilities and Equity		Current assets: Current liabilities:	Cash and cash equivalents (notes 3 and 5(a)) $ 9,021,326 7 2100 Short-term loans (note 5(l))	Current financial assets at fair value through profit or loss (notes 3 and 5(b)) 357,219 - 2110 Short-term bills payable (note 5(o))	Current financial assets at fair value through other comprehensive income (notes 3 and 5(c)) 9,674 - 2130 Current contract liabilities (note 5(x))	Notes and accounts receivable, net (notes 3 and 5(d)) 3,823,265 3 2170 Accounts payable	Accounts receivable related parties, net (notes 3, 5(d) and 6 ) 385,366 - 2180 Accounts payable to related parties (note 6)	Other receivables (notes 3, 5(d) and 6) 107,367 - 2200 Other payables (note 6)	Total current tax assets (note 3) 6,104 - 2230 Current tax liabilities (note 3)	Inventories (notes 3 and 5(e)) 42,331,270 31 2250 Provisions-current (notes 3, 5(r) and 5(t))	Prepayments 1,779,607 1 2280 Lease liabilities-current (notes 3 and 5(q))	Other current assets (note 5(f)) 1,565,391 1 2320 Long-term liabilities-current portion (note 5(m))		Total current assets 59,386,589 43 2399 Other current liabilities, others		Non-current assets: Total current liabilities	Non-current financial assets at fair value through profit or loss (notes 3 and 5(b)) 6,973,779 5 Non-Current liabilities:	Non-current financial assets at fair value through other comprehensive income (notes 3 and 5(c)) 3,050,053 2 2530 Bonds payable (notes 3 and 5(n))	Investments accounted for using equity method (notes 3 and 5(g)) 1,543,569 1 2540 Long-term bank loans (note 5(m))	Property, plant and equipment (notes 3 and 5(h)) 26,397,066 19 2550 Provisions-non-current (notes 3, 5(r) and 5(t))	Right-of-use assets (notes 3 and 5(i)) 864,464 1 2570 Deferred income tax liabilities (notes 3 and 5(u))	Investment property, net (notes 3 and 5(j)) 38,867,067 28 2580 Lease liabilities-non-current (notes 3 and 5(q))	Intangible assets (notes 3 and 5(k)) 172,308 - 2611 Long-term bills payable (notes 3 and 5(p))	Deferred income tax assets (notes 3 and 5(u)) 82,293 - 2670 Other non-current liabilities, others	Other non-current assets (note 7) 499,432 1 Total non-currnet liabilities		Total non-current assets 78,450,031 57 Total liabilities	Equity attributable to owners of parent:	3110 Common stock (note 5(v))	3200 Capital surplus (note 5(v))	Retained earnings (note 5(v)):	3310 Legal reserve	3320 Special reserve	3350 Unappropriated earnings			Others (notes 3 and 5(v)):	3410 Exchange differences arising on translation of foreign operations	3420 Unrealised gains or loss on financial assets at fair value through other comprehensive income				Total equity attributable to shareholders of the parent:		36XX Non-controlling interests		Total assets $ 137,836,620 100 Total equity Total liabilities and equity
												1100	1110	1120	1170	1180	1200	1220	130X	1410	1470					1510	1517	1551	1600	1755	1760	1780	1840	1900

• 415 -

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

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES

Consolidated Statements of Comprehensive Income

For the year ended December 31, 2021

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

4000 Operating revenues (notes 3, 5(x) and 6) 5000 Operating costs (note 5(e)) Gross profit Operating expenses (note 6): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment loss determined in accordance with IFRS9 Total operating expenses Loss from operations Non-operating income and expenses: 7100 Interest income (note 5(z)) 7010 Other income (notes 5(z) and 6) 7020 Other gains and losses (note 5(z)) 7050 Finance costs (notes 5(q) and 5(z)) 7060 Shares of profit (loss) of associates and joint ventures accounted for using equity method, net (note 5(g)) 7235 Gains on financial assets at fair value through profit or loss (notes 3 and 5(b)) 7255 Gains on fair value adjustment, investment property (note 5(j)) 7673 Impairment loss on property, plant and equipment (notes 3 and 5(h)) Total non-operating income and expenses Profit before income tax 7950 Less: income tax expenses (notes 3 and 5(u)) Profit 8300 Other comprehensive income (loss): 8310 Items that will not be reclassified subsequently to profit or loss: 8311 Gains (losses) on remeasurements of defined benefit plans (notes 3 and 5(t)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (notes 3 and 5(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 (notes 3 and 5(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 arising on translation of foreign operations (notes 3 and 5(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 (notes 3 and 5(v)) 8399 Allocation of income tax to the above items Components of other comprehensive income that may be reclassified subsequently to profit or loss 8300 Other comprehensive income, net 8500 Total comprehensive income Net income attributable to: 8610 Shareholders of the parent 8620 Non-controlling interests Comprehensive income attributable to: 8710 Shareholders of the parent 8720 Non-controlling interests Earnings per share (notes 3 and 5(w)) Basic earnings per share Diluted earnings per share

2021 Amount % $ 39,369,927 100 33,020,995 84 6,348,932 16 901,185 2 1,404,900 4 461,620 1 1,175 - 2,768,880 7 3,580,052 9 191,716 1 471,973 1 (1,397,614) (4) (326,161) (1) (9,949) - 193,148 1 2,913,775 7 (915,669) (2) 1,121,219 3 4,701,271 12 601,267 2 4,100,004 10 (73,700) - 252,449 1 26,271 - 1,766 - 203,254 1 10,595 - 5,104 - - - 15,699 - 218,953 1 $ 4,318,957 11 $ 3,603,208 9 496,796 1 $ 4,100,004 10 $ 3,823,805 10 495,152 1 $ 4,318,957 11 $ 1.09 $ 1.09

See accompanying notes to consolidated financial statements.

• 416 -

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

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES

Notes to the Consolidated Financial Statements

For the year ended December 31, 2021

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

(1) Company history

China Petrochemical Development Corporation (hereinafter referred to as the “Company”) was founded on July 8, 1969 under the approval of Ministry of Economic Affairs, R.O.C. The Company 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) 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 Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

• �Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• �Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

• �Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Group’s adoption of the new amendments, effective for annual period beginning on January 1, 2022, are expected to have the following impacts:

• (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.

(Continued)

• 417 -

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

The amendments apply retrospectively, but only to items of property, plant and equipment made available for use on or after January 1, 2021. The Group may need to adjust the amount of property, plant and equipment costs, depreciation expenses and profit or loss from selling samples, and will continue to assess the impacts of this amendment on its consolidated financial position and financial performance.

• (ii) Other amendments

The following amendments are not expected to 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”

• (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 “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”

(3) Summary of significant accounting policies:

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

• (a) Statement of compliance

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

(Continued)

• 418 -

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

(b) Basis of Preparation

• (i) Basis of measurement

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

• 1) Financial assets at fair value through profit or loss are measured at fair value;

• 2) Financial assets at fair value through other comprehensive income are measured at fair value;

• 3) Investment properties are measured at fair value; and

• 4) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation (please see note 3(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) Principles of preparation of the consolidated financial statements

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

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

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

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

(Continued)

• 419 -

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

• (ii) List of subsidiaries in the consolidated financial statements

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

Name of investors	Name of subsidiaries	Nature of business Manufacture of chemical products and their derivatives of phosphoric acid and fertilizer storage, transport, purchase, marketing business Water treatment works, plumbing works, apparatus and instrument installation work, refrigeration and air conditioning engineering and tank car repair and other services Holding company Real estate investment and development Holding company Petrochemical supporting facility construction Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in construction, real estate, building constructional consulting, lease equipment and wholesale of building materials	Shareholding ratio December 31, 2021 Notes % 100.00 TSCIC was established on June 16, 1998. Due to the business combination on August 1, 2018, CIC became a dissolved company and Tsou Seen became a surviving company. As of December 31, 2021, its actual paid-in capital amounted to $760,000 thousand. % 100.00 CPDC GT was established on May 31, 1999. As of December 31, 2021, its actual paid-in capital amounted to $150,000 thousand. % 100.00 CPDC (BVI) was established on January 9, 1998, registered in the British Virgin Islands, and is an international investment company. As of December 31, 2021, its actual paid-in capital amounted to USD26,580 thousand. % 100.00 BES Twin Towers was established on March 1, 2011. It increased its capital by retained earnings amounting to $112,043 thousand on May 26, 2021. On November 18, 2021, the Board of Directors decided to reduce its capital amounting to $1,000,000 thousand. The base date of the reduction was November 22, 2021, and the relevant legal registration procedures had been completed on December 7, 2021. As of December 31, 2021, its actual paid-in capital amounted to $4,912,164 thousand. % 100.00 UDL was established on May 20, 2008. As of December 31, 2021, its actual paid-in capital amounted to USD324,684 thousand. % 0.36 Weiming was established on May 16, 2013, and changed its name to Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation) on October 14, 2021. It increased its capital through UDL amounting to CNY70,000 thousand on June 28, 2021. The said amounts were verified on June 29, 2021. As of December 31, 2021, its actual paid-in capital amounted to CNY1,688,000 thousand. % 44.52 Weiqiang was established on May 9, 2013. As of December 31, 2021, its actual paid-in capital amounted to CNY44,920 thousand. % 100.00 Thanh Phong was established on May 22, 2017. As of December 31, 2021, its actual paid-in capital amounted to VND458,637,500 thousand.
The Company The Company The Company The Company The Company The Company The Company The Company	Tsou Seen Chemical Industries Corporation (TSCIC) CPDC GreenTechnology Corp. (CPDC GT) CPDC Investment (BVI) Co., Ltd. (CPDC (BVI)) BES Twin Towers Development Co., Ltd. (BES Twin Towers) Unichem Development Limited (UDL) Jiangsu Weiming 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)

(Continued)

• 420 -

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

Name of investors	Name of subsidiaries	Nature of business Commissioned to create a vendor to build housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in biotechnology, pharmaceutical research and development and marketing Petrochemical supporting facility construction Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in trading of petroleum chemical products, electronic chemicals, a variety of industrial gases, gas mixtures and other manufacturing sub-fitted trading Engaged in engineering plastic and high-value petroleum chemical products	Shareholding ratio December 31, 2021 Notes % 100.00 The Company established Ding-Yue on October 11, 1995 and increased its capital amounting to $11,340,000 thousand and $4,200,000 thousand on November 1, 2021 and June 16, 2021, respectively. As of December 31, 2021, its actual paid-in capital amounted to $25,580,000 thousand. % 4.02 Weihua was established on December 10, 2012. As of December 31, 2021, its actual paid-in capital amounted to CNY156,289 thousand. % 55.48 Weiqiang was established on May 9, 2013. As of December 31, 2021, its actual paid-in capital amounted to CNY44,920 thousand. % 91.10 Taivex was established on February 11, 2010. TSCIC invested in Taivex on August 18, 2010. As of December 31, 2021, its actual paid-in capital amounted to $507,399 thousand. % 99.64 Weiming was established on May 16, 2013, and changed its name to Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation) on October 14, 2021. It increased its capital through UDL amounting to CNY70,000 thousand on June 28, 2021. The said amounts were verified on June 29, 2021. As of December 31, 2021, its actual paid-in capital amounted to CNY1,688,000 thousand. % 95.98 Weihua was established on December 10, 2012. As of December 31, 2021, its actual paid-in capital amounted to CNY156,289 thousand. % - Weida PC was established on December 23, 2014 and was dissolved on October 29, 2019. The liquidation process had been completed on January 19, 2021. As of December 31, 2021, its actual paid- in capital amounted to CNY0 thousand. % 100.00 Weicai was established on January 6, 2015 and acquired by UDL on November 5, 2018. On September 22, 2021, the Board of Directors decided to reduce its capital amounting to CNY100,000 thousand. The base date of the reduction and the relevant legal registration procedures had been completed on December 28, 2021. As of December 31, 2021, its actual paid-in capital amounted to CNY314,955 thousand.
The Company Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation Tsou Seen Chemical Industries Corporation Unichem Development Limited Unichem Development Limited Unichem Development Limited Unichem Development Limited	Ding-Yue Development Co., Ltd (Ding-Yue) Weihua (Rudong) Trade Co., Ltd. (Weihua) Weiqiang International Trade (Shanghai) Co., Ltd. (Weiqiang) Taivex Therapeutics Corporation (Taivex) Jiangsu Weiming New Material Co., Ltd. (Weiming) (original name: Jiangsu Weiming Petrochemical Corporation) Weihua (Rudong) Trade Co., Ltd (Weihua) Zhangzhou Weida Petrochemical Co., Ltd. (Weida PC) Changzhou Weicai New Material Science & Technology Co., Ltd. (Weicai)

(Continued)

• 421 -

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

Name of investors	Name of subsidiaries	Nature of business 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 ratio December 31, 2021 Notes % 100.00 Weiming Construction was established on October 26, 2020. It increased its capital through Weiming amounting to CNY14,920 thousand and CNY14,080 thousand on April 1 and January 26, 2021, respectively. The said amounts were verified on April 2, 2021. As of December 31, 2021, its actua paid-in capital amounted to CNY30,000 thousand. % 100.00 Frontier Fortune was established on November 23, 2016. As of December 31, 2021, its actual paid-in capital amounted to USD93,060 thousand. % 100.00 Core Pacific Twin Star (Myanmar) was established on February 16, 2017. As of December 31, 2021, its actual paid-in capital amounted to USD5,500 thousand. % 99.99 Gemini Star (India) was established on January 8, 2019. As of December 31, 2021, its actual paid-in capital amounted to INR21,000 thousand. % 100.00 Core Pacific Twin Star (Vietnam) was established on November 19, 2018. The Company had reached agreement on cancellation of shares with the non- controlling interests, who owned 0.99% of outstanding shares on August 10, 2021. After the cancellation, the Company owned Core Pacific Twin Star (Vietnam) 100% of outstanding shares. As of December 31, 2021, its actual paid-in capita amounted to VND2,005,000,000 thousand. % 80.00 Core Pacific Pioneer was established on May 24, 2018. As of December 31, 2021, its actual paid-in capital amounted to MMK1,512,540 thousand. % 100.00 Da Yin Construction Engineering was established on November 24, 1972. It increased its capital through Ding-Yue amounting to $37,500 thousand on February 5, 2021. The base date was set on February 5, 2021, and the relevant legal registration procedures had been completed on March 4, 2021. As of December 31, 2021, its actual paid-in capita amounted to $60,000 thousand.
Jiangsu Weiming New Material Co., Ltd. (Weiming) (original name: Jiangsu Weiming Petrochemical Corporation) BES Twin Towers Development Co., Ltd. (BES Twin Towers) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Frontier Fortune Investment Pte. Ltd. (Frontier Fortune) Core Pacific Twin Star (Myanmar) Investment Co., Ltd. (Core Pacific Twin Star (Myanmar)) Ding-Yue Development Co., Ltd. (Ding-Yue)	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) Da Yin Construction Engineering Co., Ltd. (Da Yin Construction Engineering)

• (iii) According to the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises, Kaohsiung Monomer Company Limited (KMC) qualifies as a substantial related party.

Name of investee	Nature of business	Shareholding ratio Notes % 40.00 Note 1
Kaohsiung Monomer Company Limited	Sales and production of methyl methacrylate

Note 1: The chairman is assigned by the Company.

(iv) All of the important internal transaction between the Group had been eliminated.

(Continued)

• 422 -

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

• (d) Foreign currencies

• (i) Foreign currency transaction

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)

• 423 -

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

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

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

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle, 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)

• 424 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES 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)

• 425 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES 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.

3) Fair value through profit or loss (FVTPL)

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

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

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)

• 426 -

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

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

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

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)

• 427 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES 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.

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

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

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or being more than 90 days past due;

• the lender of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• the disappearance of an active market for a security because of financial difficulties.

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

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.

(Continued)

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

• 7) Derecognition of financial assets

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

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

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

• 2) Equity instrument

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

3) Treasury shares

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.

(Continued)

• 429 -

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

5) Derecognition of financial liabilities

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

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

6) Offsetting of financial assets and liabilities

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

(i) Inventories

• (i) Manufacturing industry

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

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

(ii) Construction industry

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).

(Continued)

• 430 -

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

• 2) Construction-in-progress: net realizable value is the estimated selling price (current market condition) in the ordinary course of business, less the estimated costs of completion and selling expenses, or estimated by recent market value.

• (j) Investments in associates

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

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

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

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

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

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

(Continued)

• 431 -

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

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

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

• (l) Property, plant and equipment

• (i) Recognition and measurement

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

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

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

• (ii) Subsequent expenditure

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

• (iii) Depreciation

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

Land is not depreciated.

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

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

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

(Continued)

• 432 -

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

(iv) Reclassification to investment property

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

(m) Leases

• (i) 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

(Continued)

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

• there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• there is a change of its assessment on whether it will exercise a extension or termination option; or

• there is any lease modification.

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

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

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

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

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

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

(Continued)

• 434 -

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

(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.

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 5(k) for details of the accounting policy on the initial recognition of goodwill.

2) Other intangible assets

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

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.

(Continued)

• 435 -

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

(ii) Subsequent expenditure

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

• (iii) Amortization

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

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

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.

(Continued)

• 436 -

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

(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.

(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 to 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.

(Continued)

• 437 -

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

(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.

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.

(Continued)

• 438 -

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

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

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.

(Continued)

• 439 -

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

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.

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)

• 440 -

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

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

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

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

• (a) Fair valuation of investment property

The Group's investment property is measured at fair value deriving from external appraisal reports. When the presumed factors implemented in the evaluation process, e.g. discount rates and return on investment, change due to the evolving market and economy, the change may have an impact on the balance of the recognized assets and profit or loss. For more information regarding the valuation, please refer to note 5(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 5(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:

• Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the assets or liability that are not based on observable market data.

(Continued)

• 441 -

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

Information on valuation use hypothesis factors was as follows:

• (a) Note 5(j) - Investment property;

• (b) Note 5(aa) - Financial instruments.

(5) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash on hand Checking and demand deposits Time deposits Cash equivalents Cash and cash equivalents	December 31, 2021 $ 1,816 2,944,499 5,967,973 107,038 $ 9,021,326

Time deposits with original maturity within three months which are held for the purpose of meeting short-term cash commitments, rather than for investment or other purposes, and are readily convertible to cash at the known amounts and subject to insignificant risk of value changes, are reported as cash equivalents. Please refer to Note 5(f) for details of time deposits with original maturity between three months and one year which are accounted for as other financial assets under other current assets.

Please refer to note 5(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 Subtotal Non-current financial assets designated at fair value through profit or loss Stocks unlisted on domestic markets Total	December 31, 2021
	$ - 22,226 334,993 357,219 6,973,779 $ 7,330,998

The dividends income from the financial assets recognized at fair value through profit or loss for the years ended December 31, 2021, amounted to $38,612 thousand.

(Continued)

• 442 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES 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. 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 $21,561 thousand for the years ended December 31, 2021.

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 therefore adjusted the fair value accordingly.

Please refer to note 7 for details of the financial assets at fair value through profit or loss of the Group pledged as collateral as of December 31, 2021.

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

Financial assets at fair value through other comprehensive income
Equity investments at fair value through other comprehensive income�current: Stocks listed on domestic markets Equity investments at fair value through other comprehensive income�non- current Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Total	December 31, 2021
	$ 9,674 2,270,979 779,074 3,050,053 $ 3,059,727

The Group designated the investments show above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term strategic purposes.

Please refer to note 5(v) for the gain or loss on financial assets recognized at fair value through other comprehensive income.

The dividend income from the financial assets recognized at fair value through other comprehensive income for the year ended December 31, 2021, amounted to $274,603 thousand.

(Continued)

• 443 -

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

The director of Praxair Chemax Semiconductor Materials Co., Ltd. (hereinafter referred to as “PRAXAIR”) delegated by the Company, was elected as the new Chairman in the directors’ meeting on January 30, 2013. However, Praxair Inc. did not recognize the director delegated by the Company as the Chairman, resulting in the new Chairman being unable to exercise his authority. Also, the supervisor appointed by the Company was prevented from auditing the accounts and records pursuant to the Company Law, hence, the new Chairman and the designated supervisor representing PRAXAIR, filed an action asking the vice chairman and general manager to provide the accounts and records and requested to return the seal, business invasion and others in a civil lawsuit. The vice chairman delegated by Praxair Inc. claimed privilege to act as the Chairman and filed legal actions declaring the non-existence of the new Chairman’s commission of authority and also sent a letter to the court requesting a dissolution of PRAXAIR, which was rejected by the courts. The supervisor appointed by Praxair Inc. illegally called a temporary shareholders’ meeting in 2013 to propose the dissolution of the Company and reelection of directors and supervisors. Hence, the Company filed legal actions declaring the withdrawal of the resolution from the illegal temporary shareholders’ meetings and the resolutions from the temporary shareholders’ meeting was not established. Currently, the supervisor filed legal action against the manager for submitting the accounts and the records, after winning the 1st and 2nd trial, the defendant appealed but was dismissed by the 3rd trial instance. This case was remanded to the Taipei High Court but the verdict was dismissed in 2015. The Company was not satisfied with the appeal and it was denied by 2nd trial instance.. The judgment was binding and final on December 2017. On the other side, the vice chairman designated by Praxair Inc. filed legal action declaring the non-existence of the new Chairman’ s commission of authority, after the judgment from the High Court that the Chairman designated by the Company won the verdict, the defendant appealed to the 3rd instance, with the Supreme Court dismissing the appeal. The whole case confirms the appointed relationship between the Chairman designated by the Company and PRAXAIR exists. On November 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, and restored the representative duty per the judgment No. 2455 from the Supreme High Court in 2015. However, according to the requirement from Ministry of Economic Affairs, both sides were not able to hold the legitimate reelection prior to January 9, 2017 which resulted in vacancy of directors and supervisors of PRAXAIR. In order to strive for the rights and interests of the shareholders, the Company immediately brought the arbitration per joint venture agreement of both sides and applied for an auditor and provisional administrator to instruct the central section office of the Ministry of Economic Affairs to allow Praxair Inc. to conduct the change of registration on July 6, 2017. The Company filed a request for the arbitration of International Chamber of Commerce in 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 PCSM for the year of 2013. In order to protect the Company’ s right, the Company submitted a lawsuit withdrawing a part of such Arbitration award against the Company to Taipei District Court. On December 13, Taipei District Court dismissed the Company’ s claim of withdrawing the ICC’ s decision. The Company filed an appeal on January 8, 2020, but such appeal was dismissed by Taiwan High Court on September 1, 2020. The Company appealed forthwith to the Supreme Court on September 21, 2020.

As of December 31, 2021, the Group provided as collateral a portion of its financial assets. Please refer to note 7 for details of the related assets pledged as collateral.

(Continued)

• 444 -

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

• (d) Notes, accounts, and other receivables

Notes receivable Accounts receivable Other receivables Less: allowance for doubtful receivables Net book value	December 31, 2021 $ 628,614 3,914,053 107,367 (334,036) $ 4,315,998

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:

Not past due Over 0~30 days Over 31~120 days Over 121~365 days Past due more than 1 year	December 31, 2021	December 31, 2021
	Carrying amount of account receivables $ 4,305,982 64,232 36,233 5,997 237,590 $ 4,650,034	Weighted average expected credit loss 0%~2.17% 0%~1.25% 0%~3.06% 0%~18.75% 100%	Allowance for expected credit loss
			93,413 800 1,109 1,124 237,590
			334,036

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

Balance at January 1 Impairment loss recognized Amounts written off Foreign exchange gains Balance at December 31	For the year ended December 31, 2021 $ 451,717 1,175 (119,275) 419 $ 334,036

(Continued)

• 445 -

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

The consolidated subsidiaries, Weihua (Rudong) Trade Co., Ltd. and Weiqiang International Trade (Shanghai) Co., Ltd., filed civil complaints against Shanghai Tongye Coal Chemical Group Co. Ltd. in Shanghai to claim for the delay of payment of their accounts receivable from Shanghai Tongye Coal Chemical Group Co., Ltd. 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 8(k).

As of December 31, 2021, the aforesaid receivables were not pledged as collateral.

For credit risk information, please refer to note 5(aa).

• (e) Inventories

Finished goods Work in progress Raw materials Fuel Merchandise inventories Subtotal 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, 2021
	$ 1,135,965 507,528 1,983,218 19,907 480,373 4,126,991 37,584,818 9,423 13,535 596,503 38,204,279 $ 42,331,270

A resolution was made during the Board of Directors’ meeting held on September 25, 2019 for the Group to acquire Core Pacific City’s permanent land ownership. The Group won the bidding on the same date. On October 30, 2019, the Group subsequently entered into a purchase agreement with Core Pacific City Co., Ltd. to buy the land located at Songshan District, Taipei City, as a construction site, for the amount of $37,200,010 thousand. Both parties have agreed to put the property, which includes the land and the existing construction into a trust. As of December 31, 2021 , the accumulated payments was $37,200,010 thousand, and the unpaid amounts was $0 thousand.

(Continued)

• 446 -

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

For the years ended December 31, 2021, the capitalized interest on construction in progress amounting to $61,610 thousand was calculated using the capitalization rate of 5.63%.

The details of the cost of sales were as follows:

Cost of goods sold Writedown of inventories (Reversal of writedowns) Net inventory loss (profit) Unallocated fixed production overheads from idle facilities Revenue from sale of scraps Net amount	For the year ended December 31, 2021
	$ 32,093,315 14,854 (1,790 926,881 (12,265 $ 33,020,995

As of December 31, 2021, the aforesaid inventories were not pledged as collateral.

• (f) Other current assets

Other financial assets Others	December 31, 2021
	$ 1,006,902 558,489 $ 1,565,391

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:

classified as follows:
Associates	December 31, 2021
	$ 1,543,569

(Continued)

• 447 -

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

• (ii) The Group’ s investments accounted for using the equity method that are individually insignificant were as follows:

Carrying value of insignificant associates Attribution to the Group Loss from continuing operations Other comprehensive income Total comprehensive income	For the year ended December 31, 2021 $ 1,543,569 December 31, 2021 $ (9,949) 31,375 $ 21,426

• (iii) The dividends income from the Group’s investments accounted for using the equity method for the year ended December 31, 2021 amounted to $0 thousand.

• (iv) Collateral

As of December 31, 2021, the Group provided as collateral a portion of its investments in aforesaid equity-accounted investees. Please refer to note 7 for details of the related assets pledged as collateral.

(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group were as follows:

Cost or deemed cost: Balance as of January 1, 2021 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, 2021 Depreciation for the period Impairment loss Disposal Adjustment Reclassification Effect of movements in exchange rate Balance as of December 31, 2021 Carrying amounts: Balance as of December 31, 2021	Land $ 5,730,777 - - - - - - $ 5,730,777 $ - - - - - - - $ - $ 5,730,777	Land improvements 293,880 - - - (39) - - 293,841 227,439 5,439 - - - (39) - 232,839 61,002	Buildings 4,600,333 6,511 - 446,959 - - 10,039 5,063,842 1,554,248 139,057 - - (192) - 1,602 1,694,715 3,369,127	Machinery and equipment 49,054,137 30,633 (221,480) 3,130,932 - - 17,354 52,011,576 38,724,803 956,776 - (220,979) - - 3,426 39,464,026 12,547,550	Vehicles 86,911 6,156 (631) 4,484 - - 184 97,104 57,052 7,735 - (578) - - 73 64,282 32,822	Other facilities 803,967 10,997 (825) 42,233 - - 492 856,864 676,404 50,857 - (600) 192 - 267 727,120 129,744	Construction in progress 9,969,198 4,293,837 - (3,624,608) - (186,000) 27,864 10,480,291 - - - - - - - - 10,480,291	Accumulated impairment - - - - - - - - 5,038,578 - 915,669 - - - - 5,954,247 (5,954,247)	Total
									70,539,203 4,348,134 (222,936) - (39) (186,000) 55,933
									74,534,295
									46,278,524 1,159,864 915,669 (222,157) - (39) 5,368
									48,137,229
									26,397,066

(Continued)

• 448 -

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

(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 non-operating income and expense in the consolidated statements of comprehensive income.

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

As of December 31, 2021, the Group provided as collateral, a portion of its property, plant and equipment, please refer to note 7 for details of the related assets pledged as collateral.

• (iii) Property, plant and equipment under construction

For the year ended 2021, the capitalized interests related to the property, plant and equipment under construction were $185,878 thousand, which were calculated based on the capitalized interest rates ranging from 1.5960%~5.4702%.

• (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 Petrochemical Corporation in China in the amount of CNY2,388,000 thousand (equivalent to $11,100,000 thousand) mainly to establish manufacturing operations for petrochemical products (including hydrorefining crude benzol, cyclohexanone, nylon 6, etc.). As of December 31, 2021, accumulated investment remittance from Taiwan to Mainland China was CNY1,688,000 thousand. The amount invested in manufacturing plant and machinery was CNY1,688,000 thousand.

(Continued)

• 449 -

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

(i) Right-of-use assets

The Group leases assets including land, land use right, buildings, machinery and equipment and vehicles. Information about leases for which the Group as a lessee is presented below:

Cost: Balance as of January 1, 2021 Additions Disposal Effect of movements in exchange rate Balance as of December 31, 2021 Accumulated depreciation and impairment losses: Balance as of January 1, 2021 Depreciation for the period Disposal Effect of movements in exchange rate Balance as of December 31, 2021 Carrying amounts: Balance as of December 31, 2021	Land $ 228,407 20,491 (484) - $ 248,414 $ 16,613 9,733 (327) - $ 26,019 $ 222,395	Land-use right 658,503 - - 4,269 662,772 72,578 13,584 - 520 86,682 576,090	Buildings 19,751 7,061 (576) - 26,236 6,304 10,739 (576) - 16,467 9,769	Machinery and equipment 111,057 30,432 (30,940) - 110,549 60,620 34,768 (30,940) - 64,448 46,101	Vehicles 16,931 12,266 (11,103) - 18,094 6,348 6,352 (4,528) - 8,172 9,922	Other facilities 1,938 - (1,448) - 490 1,187 565 (1,449) - 303 187	Total
							1,036,587 70,250 (44,551) 4,269
							1,066,555
							163,650 75,741 (37,820) 520
							202,091
							864,464

• (j) Investment property

The movement of invesment property was as followed:

Cost or deemed cost: Balance as of January 1, 2021 Disposal Net gains and losses due to fair value adjustments Balance as of December 31, 2021	Land $ 37,609,032 (1,668,271) 2,913,127 $ 38,853,888	Buildings 17,795 (5,264) 648 13,179	Total 37,626,827 (1,673,535) 2,913,775 38,867,067

(i) The Group disposed its investment property with the disposal price of $2,380,000 thousand and the disposal gain of $706,465 thousand.

(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:

(Continued)

• 450 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES 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 house, parking lot $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 Current market rent for comparable properties in similar locations and condition Current status Income generated Capitalization rate Discount rate Appraised by external independent appraiser or self-appraisal Appraiser offices Appraiser name 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

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.

External appraisers use the risk premium method to decide on the direct capitalization rate and discount rate. The fixed deposit interest rate, government bonds rate, real estate investment risk, money supply-demand variation, the trend of real estate value are taken into consideration to decide the likely rate of return on the most common investment as a basis in order to derive the capitalization rate or discount rate. The differences in individual characteristics between the above most common investment and the subject property are compared in terms of their liquidity, risk, appreciation, and management. As of December 31, 2021, the discount rate was 2.845%~4.445%, and the weighted average capitalization rate was 1.130%~5.335%, derived as the ratio of annual net operating income of comparable properties divided by reasonable price.

(Continued)

• 451 -

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

(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, 2021

December 31, 2021
Subject	Annan Dist., Tainan City	Qianzhen Dist., Kaohsiung City Others 122,550,002 (Note) 2,782,072 20%~22% 12%~18% 4.150%~4.9900% 0.92%~3.03% Colliers International Taiwan Hon Bun Real Estate Appraisers Firm, Colliers International Taiwan and Baoyuan Real Estate Appraisers Firm Shiou-ying, Jan and Jian-hui, Gu Jian-hui, Gu, Shiou-ying, Jan, Ching-tang, Li and Tzu-kuang, Yeh December 31, 2021 December 31, 2021 29,516,000 1,381,141
Estimate revenue Gross profit margin Rate of return Appraiser offices Appraiser name Appraisal date Fair value by external independent appraisers	9,391,820 17% 1.850% CCIS Real Estate Joint Appraisers Firm Chih-hao, Wu December 31, 2021 $ 5,043,136

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

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 onsite 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 noncancellable lease and the subsequent lease is negotiated with the lessee without collection of contingent rentals. Please refer to note 5(s) for the relevant information including rent revenue and the direct operating expenses incurred.

As of December 31, 2021, the Group provided as collateral portion of its investment property. Please refer to note 7 for details of the related assets pledged as collateral.

In the era of pre Taiwan Alkali Industrial Corporation (TAIC), TAIC had leased the lands located in Tainan and Chiayi area to the local peasants and fishermen, and the surviving tenants shall continue paying the rent to the Group according to the agreements. In the event of the resumption for selfbusiness use or the sale of the lands, the leases shall be terminated under the contractual agreements and Land Laws. If there is any redemption in some cases, the Company will recognize and evaluate the possible expenses and costs case by case.

(Continued)

• 452 -

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

AnShun Land Located in Tainan City Annan District:

• (i) History

• 1) The land where the AnShun Alkali plants located was originally established by Japanese company Kanegafuchi Soda in 1938 under Japanese Colonial Rule.

• 2) The Government undertook construction after the Retrocession of Taiwan, and established a state-owned company, TAIC and operated at the AnShun Site. In 1961, the competent authorities in charge of the relevant state-owned enterprises approved the investment plan and budget for producing pentachlorophenol and sodium pentachlorophenol products used in herbicides and wood preservative fungicides.

• 3) Due to operational factors, the plant was ordered to be closed by Executive Yuan Department of Economic Affairs in early 1982.

• 4) In April 1983, 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” ).

• 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 for reimbursement compensation.

  • c) The complaint was dismissed by the Supreme Court in February 2008. Upon the application of Constitution Interpretation by the Company, J.Y. No.714 Interpretation of the Grand Justice was issued in November, 2013, and considered that 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.

(Continued)

• 453 -

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

• 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.

• b) The Company had estimated the remediation expense according to the remediation plan. Please refer to note 5(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 2008. The Company appealed in March 2008 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 (Continued)

• 454 -

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

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 $17,962thousand, 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 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 final ruling, which was binding, that the Company should only pay the amount of $538 thousand on October 28,

(Continued)

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

1. However, the Company received the complaint for a rehearing action from TCG on December 23, 2021. The Company has responded accordingly regarding the case, which was still in progress as of the reporting date.

2. 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 final ruling, which was binding, from the Supreme Administrative Court on January 22, 2022, wherein the portion over $7,276 thousand that TCG ordered the Company to pay need not be included. Instead, the Company should only pay the total amount of $12,121 thousand, including the final and binding portion of the judgment.

3. 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 $59,624thousand 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 this case is still under trial now.

4. 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 appeal in September of the same year. TCG dismissed the Company’s petition on December 25, 2020. On February 26, 2021, the Company filed an appeal to KHAC, who made the final ruling, which was

(Continued)

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

binding, on December 29, 2021, stating that the Company should only pay the amount of $493 thousand. As a favor to TCG, the Company decided not to file an appeal against the final ruling.

• 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 remended 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 0.1ngTEQ/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.

3) Others

• a) The Company still has the objection on the adscription of pollution responsibility for Anshun land located in Tainan City Annan District and would continue to strive for the possible administrative and law remedy actively.

In view of the jurisdiction explanation No.714, which indicated whether the general successors of polluters bear the burden of remediation responsibilities, was not in the scope of the SGPR Act. Also, considering the previous TAIC was a stateowned 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

(Continued)

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

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 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 $5,552,840 thousand as of December 31, 2021. The preceding remediation fee was estimated according to the current possible situations by the Company. However, unpredictable future events may cause large fluctuations in the total expected remediation fees. This will be closely monitored and evaluated by management.

b) Anshun dormitory designated monuments case

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. 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

(Continued)

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

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.

Shulin Land of Taiwan Alkali Co., Ltd.:

• 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 238, 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.

(Continued)

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

The relevant remediation expense of $273,750 thousand was estimated and listed in 2011 according to Financial accounting standards related regulations. However, it will be assessed to adjust for changes due to internal and external factors in future, which may result in significant differences on the entire remediation expense.

(k) Intangible assets

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

Costs� Balance as of January 1, 2021 Acquisition Effect of movement in exchange rates Balance as of December 31, 2021 Amortization and Impairment Loss: 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, 2021	Goodwill $ 135,871 - (1,959) $ 133,912 $ - - - $ - $ 133,912	Computer software 11,546 6,176 74 17,796 3,913 1,954 30 5,897 11,899	Patents and trademark 100,361 17,778 175 118,314 84,692 7,005 120 91,817 26,497	Total
				247,778 23,954 (1,710) 270,022 88,605 8,959 150 97,714 172,308

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

(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, 2021	December 31, 2021
	$ 377,000 1,108,018 10,893,032 359,639 $ 12,737,689 $ 24,081,513 $ 8,674,224 0.669%~4.5%
		0.669%~4.5%

(Continued)

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

Secured bank loans from Shin Kong Commercial Bank

On October 21, 2021, Ding-Yue Development Co., Ltd. (Ding-Yue) signed a 4year 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.

• 2) Ding-Yue shall obtain the construction license and start the construction within the agreed period. The loan interest will be accrued if any of the above time schedules are violated. The interest will be charged starting from the date of the violation to the date of obtaining the construction license or the date of commencement of construction.

• 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 presale 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.

Please refer to note 7 for details of the related assets pledged as collateral.

(Continued)

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

• (m) Long-term loans

Secured bank loans - CPDC Finance lease loans Less�current portion Total Total long-term credit lines Unused long-term credit lines Range of interest rates	December 31, 2021 $ 15,302,394 89,710 (1,486,515) $ 13,905,589 $ 25,905,067 $ 7,935,100 1.3%~5.8725%

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.

• (i) 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 building of plants and purchase of accessory equipment.

• (ii) 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 funding requirements.

• (iii) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. If the Company breaches these financial covenants, the syndicated banks may declare the unpaid principal, interest, fees and other sums payable by the Company under the loan agreement to be immediately due and payable. These financial ratios are as follows:

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 150%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

(Continued)

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

• (iv) 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.

• (v) The term of the repayment of the category A credit is stipulated as: The first period will be paid off from the date of the first use of the credit application to the expiration of three years. After that, it will be a period of six months for once. Settlement of the liability divided into five phases. The first period to the fourth period, each period shall be settled separately for 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.

• (vi) 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.

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 funding requirement. The aggregate amount of credit line of the syndicated loan was $3,900,000 thousand.

• (i) Syndicated loan A: The credit line is $2,815,000 thousand consisting of medium-term secured loans and revolving credit facility, which was used to meet funding requirement. The loan period lasts 3 years upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended upon expiration for 2 years, and limited to once, through written application.

• (ii) Syndicated loan B: The credit line is $1,085,000 thousand consisting of commercial promissory note agreements and revolving credit facility, which was used to meet funding requirement. The loan period lasts 1 year upon first disbursement. With the premise that the Company does not violate any restrictions, the loan period may be extended 12 months before expiration, and limited to twice, through written application.

(Continued)

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

• (iii) 24 months after the first disbursement and every 6 months ever since, the credit line of the syndicated loan is diminished by 10% of the total credit line, applicable to the extension period. In advance of each credit line diminished date, for loan A, the Company shall settle any exceeding principal, interests, and other relating liabilities, free of prepayment terms included in the contract. For loan B, the Company shall make deposit to the designated account to make up for the amount of note principal exceeding the credit line, free of prepayment terms included in the contract. The Company may withdraw the deposit after the aforementioned note is settled.

• (iv) The financial covenants under the loan agreement include the requirement to maintain certain financial ratios based on the reviewed semi-annual consolidated financial statements and audited annual consolidated financial statements. These financial ratios are as follows:

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 100%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

• 4) Tangible net worth (total equity excluding intangible assets): not lower than $60,000,000 thousand.

• (v) In the event that there is a financial ratio violation in any of the fiscal years, the period from the announcement of the consolidated financial statements that does not comply with the financial commitments to the announcement date of the next consolidated financial statements shall be the improvement period. If the borrower resolves the violation during the improvement period, it is not considered a breach of financial commitment. However, the borrower shall, from the date of the announcement of the consolidated financial statements that does not comply with the financial commitment, to the date of interest payable after the expiration of the improvement period, the credit balance of credit cases, in accordance with Article 8 of this contract, the applicable interest rate plus the annual interest rate of 0.05% is charged to interest, plus guarantee fee. If the improvement is not completed within the time limit, from the expiration date of the improvement period, the next interest payable date after the date on which the borrower has filed a consolidated financial statements meeting the financial commitments, for the credit balance of this credit, the interest rate shall be calculated based on the contract interest rate plus the annual interest rate of 0.05%, and may be handled in accordance with the breach of contract.

• (vi) The term of the repayment of the category A credit is stipulated as: the repayment shall be completed on the expiration date stated in the application form for each disbursement.

• (vii) The term of the repayment of the category B credit is stipulated as: The repayment shall be completed on the due date stated on the note.

(Continued)

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

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 funding requirement. The aggregate amount of credit line of the loan was $2,000,000 thousand.

• (i) The financial covenants under the loan agreement include the requirement to maintain the following financial ratios based on the reviewed semiannual consolidated financial statements and audited annual consolidated financial statements. In the event of any violation, the CTBC Bank is entitled to reduce credit line, shorten the loan period, and have all principals and interests repaid immediately.

• 1) Current ratio (total current assets divided by total current liabilities): not lower than 120%.

• 2) Leverage ratio (total liabilities plus contingent liabilities to tangible net worth): not higher than 100%.

• 3) Times interest earned (income before tax plus depreciation expense plus amortization expense divided by interest expenses): not lower than 2 times.

• 4) Tangible net worth (total equity excluding intangible assets): not lower than $67,000,000 thousand.

• (ii) 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.

On April 29, 2021, the Company signed a mediumterm loan agreement for 58 months with Taiwan Life Insurance Co., Ltd. in order to meet the funding requirements. The Company and Ding-Yue Development Co., Ltd. share a credit line of $4,100,000 thousand, while Ding-Yue Development Co., Ltd. has the upper limit of $1,000,000 thousand.

On October 21, 2021, DingYue signed a 4year syndicated loan agreement with 9 financial institutions, with Shin Kong Commercial Bank as the lead bank. The syndicated loan agreement included a credit line of NT$1,200,000 thousand from Taiwan Life Insurance Co., Ltd. On October 7, 2021, Taiwan Life Insurance Co., Ltd. issued a notice of change in its credit limit. The notice stipulated that the total amount of Ding-Yue’s syndicated loan agreement and the interim guarantee credit contract mentioned in the preceding paragraph will be a maximum amount of NT$4,100,000 thousand. Therefore, starting from October 21, 2021, the total credit limit for the mediumterm guarantee contract mentioned in the preceding paragraph was reduced to NT$2,900,000 thousand.

Secured bank loans from Farglory Life Insurance Inc.

On September 30, 2021, the Company signed a mediumterm loan agreement for 5 years with Farglory Life Insurance Inc. in order to meet the funding requirements. The aggregate amount of credit line of the loan was $2,000,000 thousand.

Please refer to note 7 for details of the related assets pledged as collateral.

(Continued)

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

• (n) Bonds payable

• (i) The details of bonds payable were as follows:

The details of bonds payable were as follows:
Secured non-convertible bonds Unamortized balance of discounted bonds payable Less: current portion Balance of bonds payable Maturity year	December 31, 2021
	$ 4,750,000 (40,904) (25,000) $ 4,684,096 114
		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:

Issue amount Issue date Issue period Coupon rate Interest payment date Repayment and interest payment	The first domestic secured non-convertible bond in 2020 Bond A Bond B Bond C $ 1,500,000 1,000,000 1,000,000 2020.9.21 2020.9.21 2020.9.21 5 years 5 years 5 years % 0.64 % 0.64 % 0.64 September 21 September 21 September 21 Repayment on maturity, interest payment annually Repayment on maturity, interest payment annually Repayment on maturity, interest payment annually

• (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	Domestic secured non-convertible bond in 2020 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 21st of every month

(Continued)

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

Domestic secured non-convertible bond in 2020

Bond A Bond B

Repayment and interest payment

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 7 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, 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, 2021 he bills payable bear interest rates ranging from 0.65%~1.74%.

Please refer to note 7 for details of the related assets pledged as collateral.

(Continued)

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

(p) Long-term bills payable

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

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

The Group had revolving commercial promissory note agreements with bills finance companies in order to finance its operations. The bills payable bear interest rates ranged from 0.30%~0.97%, for the year ended December 31, 2021.

Please refer to note 7 for details of the related assets pledged as collateral.

(q) Lease liabilities

The lease liabilities of the Group were as follows:

Current Non-current	December 31, 2021
	$ 56,324 $ 240,124

For the maturity analysis, please refer to note 5(aa).

(Continued)

• 468 -

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

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the year ended December 31, 2021
	$ 5,604 $ 62,754

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

Total cash outflow for leases	For the year ended December 31, 2021
	$ 128,386

(r) Provisions Balance as of January 1, 2021 Provisions made during the year Provisions used during the year Provisions reversed during the year Provisions amortized during the year Effect of movements in exchange rate Balance as of December 31, 2021 Current Non-current	Decommissioning $ 1,703,373 513 - - 2,481 322 $ 1,706,689 $ - 1,706,689 $ 1,706,689	Remediation project 514,613 1,664,899 (82,034) - - - 2,097,478 473,093 1,624,385 2,097,478	Employee benefits 322,426 106,379 (62,667) (13,601) - - 352,537 12,597 339,940 352,537	Total
				2,540,412 1,771,791 (144,701) (13,601) 2,481 322 4,156,704 485,690 3,671,014 4,156,704

(Continued)

• 469 -

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

• (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 abovementioned 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 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.

(Continued)

• 470 -

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

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 year ended December 31, 2021. Please refer to note 5(r) of the consolidated financial statements for the year ended December 31, 2020 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, 2021 $ 46,663 46,706 38,616 36,801 36,846 349,729 $ 555,361

For the year ended December 31, 2021, the income from the rental of investment property, property, plant and equipment amounted to $13,772 thousand.

(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 defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2021 $ 877,322 (538,862) $ 338,460

The provision consists of net defined benefit liabilities and accrued pension liabilities for professional management. The accrued pension liabilities for professional management was $0 thousand as of December 31, 2021.

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan and provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

(Continued)

• 471 -

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

1) Composition of plan assets

The Group 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 $537,767 thousand as of December 31, 2021. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

• 2) Movement in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Group were as follows:

Defined benefit obligation, January 1 Current service costs and interest cost Remeasurements loss (gain): —Actuarial loss 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 year ended December 31, 2021 $ 867,524 14,730 34,231 21,671 21,604 (80,485) (1,953) $ 877,322

• 3) Movement of defined benefit plan assets

The movement in the present value of the defined benefit plan assets for the Group were as follows:

Fair value of plan assets, January 1 Expected return on plan assets Remeasurements loss (gain): —Actuarial gain due to experience adjustments Contributions paid by the employer Benefits paid Fair value of plan assets, December 31	For the year ended December 31, 2021 $ 558,798 2,619 8,042 49,888 (80,485) $ 538,862

(Continued)

• 472 -

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

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

Current service cost Others Net interest of net liabilities for defined benefit obligations Operating costs Selling expenses Administrative expenses Research and development expenses Actual return on plan assets	For the year ended December 31, 2021 $ 10,299 (1,084) 1,813 $ 11,028 $ 9,455 116 1,266 191 $ 11,028 $ 10,661

• 5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Group’ s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income was as follows:

Accumulated balance, January 1 Recognized during this year Accumulated balance, December 31 6) Actuarial assumptions	For the year ended December 31, 2021 $ (218,308) (69,464) $ (287,772)

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

Discount rate Future salary increases rate	For the year ended December 31, 2021
	0.5%~0.7% 1%~3%

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $8,569 thousand.

� The weighted average lifetime of the defined benefits plans is 5.50 13.65 years.

(Continued)

• 473 -

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

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, 2021 Discount rate Increase in future wage	Impact on the present value of defined benefit obligation Increase by 0.25% Decrease by 0.25% $ (16,863) 17,470 16,993 (16,490)

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 2021 and 2020.

(ii) Defined contribution plans

The Group allocates 6% of each employee’ s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Group allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $51,045 thousand for the year ended December 31, 2021.

• (iii) The pension recognized consists of pension expenses and pensions for professional management. The pension expenses for professional management was $9,333 thousand as of December 31, 2021.

(iv) Short-term compensated absences liabilities

As of December 31, 2021, the Group’s short-term compensated absences liabilities amounted to $12,597 thousand.

(Continued)

• 474 -

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

(u) Income Tax

(i) Income tax expense

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

Current income tax expense (benefit) Current period Adjustment for prior periods Deferred tax expense (benefit) Origination and reversal of temporary differences Change in land value-added tax Change in unrecognized deductible temporary differences Income tax expense (benefit)	For the year ended December 31, 2021
	$ (149,314) (3,524) (152,838) 5,236 422,607 326,262 754,105 $ 601,267

For the year ended December 31, 2021, income tax expenses recognized under other comprehensive income were $1,766 thousand.

(Continued)

• 475 -

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

Reconciliation of income tax expense and profit before tax for the year ended December 31, 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 Others Total

For the year ended December 31, 2021 $ 4,701,271 $ 940,254 6,085 11,736 (205,054) 132,368 290,239 (3,524) 19,149 (658,324) 326,262 (318,276) 60,352 $ 601,267

(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, 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 are as follows:

Aggregate amount of temporary differences related to investments in subsidiaries $ Unrecognized deferred tax liabilities $	December 31, 2021
	105,577
	21,115

(Continued)

• 476 -

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

2) Unrecognized deferred tax assets

Decommissioning liabilities Remediation project Pollution remediation Allowance for doubtful receivables Investment property, property, plant and equipment Pension Tax loss Others	December 31, 2021
	$ 122,815 237,893 1,859,585 319,484 3,424,875 169,099 7,512,200 471,119 $ 14,117,070

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, 2021, the expiration years of tax loss unrecognized as deferred tax assets were as follows:

a) The Company

The Company
Year incurred	Amount Expiry date $ 53,093 2024 2,132,246 2025 1,870,634 2026 567,338 2030
2014 2015 2016 2020 (estimated)

(Continued)

• 477 -

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

b) Taivex Therapeutics Inc.

	Year incurred	Amount	Expiry date
	2012 $	29,657	2022
	2013	50,227	2023
	2014	27,419	2024
	2015	43,032	2025
	2016	44,291	2026
	2017	54,764	2027
	2018	79,334	2028
	2019	67,345	2029
	2020	76,760	2030
	2021 (estimated)	85,875	2031
c)	BES Twin Towers Co., Ltd.
	Year incurred	Amount	Expiry date
	2013 $	7,512	2023
	2014	44,139	2024
	2018	427,443	2028
	2021 (estimated)	102,885	2031
d)	CPDC Green Technology Corp.
	Year incurred	Amount	Expiry date
	2018 $	19,355	2028
	2019	36,819	2029
e)	Ding-Yue Development Co., Ltd.
	Year incurred	Amount	Expiry date
	2016 $	23	2026
	2017	1,162	2027
	2018	1,821	2028
	2019	3,726	2029
	2020	9,991	2030
	2021 (estimated)	87,883	2031

(Continued)

• 478 -

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

• f) Da Yin Construction Engineering Co., Ltd.

		Year incurred	Amount	Expiry date
	2013	$	142	2023
	2014		159	2024
	2015		11	2025
	2016		112	2026
	2017		136	2027
	2018		158	2028
	2019		162	2029
	2020		2,207	2030
	2021 (estimated)		2,573	2031
g)	Weihua (Rudong) Trade Co., Ltd.
	Year incurred		Amount	Expiry date
	2016	$	43,586	2021
	2017		21,431	2022
h)	Weiqiang International Trade (Shanghai) Co., Ltd.
	Year incurred		Amount	Expiry date
	2016	$	20,178	2021

i) Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation)

Year incurred	Amount Expiry date $ 45,529 2022 19,934 2023 145,748 2024 133,589 2025 230,381 2026
2017 2018 2019 2020 2021 (estimated)

j) Changzhou Weicai New Material Science & Technology Co., Ltd.

Year incurred	Amount Expiry date $ 274,412 2021 208,239 2022 179,834 2023 57,850 2024 47,982 2025 151,726 2026
2016 2017 2018 2019 2020 2021 (estimated)

(Continued)

• 479 -

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

• k) Weiming (Rudong) Construction Co., Ltd.

Year incurred	Amount Expiry date $ 22 2025 515 2026
2020 2021 (estimated)

• 3) Deferred tax liabilities:

As of December 31, 2021, the balance of deferred income tax liabilities for the provision of land value-added tax was $6,764,316 thousand.

• 4) Deferred tax assets:

January 1, 2021 Recognized in profit or loss Recognized in other comprehensive income December 31, 2021	Taxable Loss $ 11,009 - - $ 11,009	Defined benefit plans 6,916 1 (1,766) 5,151	Other 71,370 (5,237) - 66,133	Total
				89,295 (5,236) (1,766)
				82,293

• (iii) Assessment of tax

The Company's tax returns for the years through 2019 were assessed by the National Taxation Bureau of Kaohsiung.

• (v) Capital and other equity

• (i) The issuance of common stock

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

Reconciliation of shares outstanding for the year ended December 31, 2021 was as follows:

(In thousands of shares)

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

(Continued)

• 480 -

CHINA PETROCHEMICAL DEVELOPMENT CORPORATION AND AFFILIATES 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, 2021
	$ 1,408,088 26,314 1,758 18,141 $ 1,454,301

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

(Continued)

• 481 -

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

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 longterm financial planning. The carrying amount of such special reserve amounted to $4,194,973 thousand as of December 31, 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 Ruling No. 1010012865 issued by the Financial Supervisory Commission on 6 April 2012, a special reserve is appropriated from the distribution of retained earnings as a result of an increase in retained earnings due to the first-time adoption of IFRSs. When the related assets are used, disposed of, or reclassified, this special reserve is reversed as distributable earnings proportionately. The carrying amount of special reserve amounted to $4,144,438 thousand as of December 31, 2021.

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 firsttime 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 as of December 31, 2021.

(Continued)

• 482 -

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

For every year the Company distributes earnings, a special reserve is appropriated in the following order:

• a) Each year, a special reserve is appropriated from current year’ s net income and prior years’ undistributed earnings for the same amount as the net increase in the fair value of investment property using the fair value model. A special reserve is also appropriated for the same amount as the cumulated net increase in the fair value for the year when the undistributed earnings are not distributed. When the investment property is disposed of, this special reserve is reverted proportionately to distributable earnings. 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, 2021, the Company appropriated to the special reserve an amount of $6,790,476 thousand.

• 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 was resolved in the Board of Directors’ meeting held on March 14, 2022. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash	For the year ended December 31, 2021
	Amount
	$ 1,513,940

(Continued)

• 483 -

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

(iv) Other equity accounts

Balance, January 1, 2021 Exchange differences on foreign operation 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, December 31, 2021	Exchange differences on translation of foreign financial statements $ (966,202) 12,239 5,104 - - - $ (948,859)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (854,259) - - 252,449 (1,384) 26,248 (576,946)

(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 year ended December 31, 2021

$ 3,603,208 3,299,919 $ 1.09 $ 3,603,208 3,299,919 9,554 3,309,473 $ 1.09

(Continued)

• 484 -

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

(x) Revenue from contracts with customers

• (i) 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 13(b) and 13(c) of the consolidated financial statements.

(ii) Contract balances

Notes receivable Accounts receivable (including related parties) Less: allowance for doubtful account Contract liabilities	December 31, 2021 $ 628,614 3,914,053 (334,036) $ 4,208,631 $ 20,612

Please refer to Note 5(d) for disclosure of accounts receivable and allowance for doubtful accounts.

The amount of revenue recognized for the year ended December 31, 2021, that was included in the contract liability balance at the beginning of the period was $1,676 thousand.

(y) Remunerations of 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 year ended December 31, 2021, the remuneration to employees amounted to $124,488 thousand and the remuneration to directors amounted to $82,992 thousand, respectively. These amounts were calculated using the Company’s profit before tax before remuneration of employees and directors for the year ended December 31, 2021. These benefits were charged to profit or loss under operating costs or operating expenses for the year ended December 31, 2021. When the board of directors decided to distribute stock dividends, the number of which shall be calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of Board of Directors. For the year ended December 31, 2021, the actual distribution of the employee remuneration was $0 thousand; while the amount for directors is identical to those stated on financial statements. Related information would be available at the Market Observation Post System website.

(Continued)

• 485 -

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

(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 year ended December 31, 2021
	$ 190,450 1,266 $ 191,716

(ii) Other income

The components of other income were as follows:

Rent income Dividend income Other income, others Total	For the year ended December 31, 2021
	$ 13,772 313,215 144,986 $ 471,973

(iii) Other gains and losses

The details of other gains and losses were as follows:

Losses on disposal of property, plant and equipment Gains on disposals of investment property Gains on lease modification Foreign exchange gains Fee expense Losses on work stoppages Remediation expense Other gains and losses Other gains and losses, net	For the year ended December 31, 2021 $ (33) 706,465 34 21,606 (191,759) (248,457) (1,664,899) (20,571) $ (1,397,614)

(Continued)

• 486 -

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

(iv) Finance costs

The details of finance costs were as follows:

For the year ended December 31, 2021 Interest expense $ (326,161) Finance costs, net $ (326,161)

• (aa) Financial Instruments

(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.

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

2) Receivables

For credit risk exposure of notes and accounts receivables, please refer to note 5(d).

Other financial assets at amortized cost includes time deposits and guarantee 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, 2021, the loss allowance provision amounted to $0 thousand.

(Continued)

• 487 -

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

(ii) Liquidity risk

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

December 31, 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 (Note) Long-term bills payable (Note) Bonds payable	Carrying amount $ 2,061,091 1,583,247 10,910 135,955 296,448 2,501,336 25,628,457 1,429,955 5,254,518 4,709,096 $ 43,611,013	Contractual cash flows 2,061,091 1,583,247 10,910 135,955 344,268 2,574,060 27,692,363 1,434,000 5,260,000 4,953,386 46,049,280	Within 6 months 2,061,091 1,583,247 10,910 80,506 33,318 29,315 4,728,742 1,434,000 - 17,140 9,978,269	6-12 months - - - 8,905 26,607 332,606 587,215 - - 64,606 1,019,939	1-2 years - - - 18,752 28,405 1,786,019 1,136,587 - 5,260,000 204,195 8,433,958	2-5 years - - - 26,292 38,140 426,120 20,385,632 - - 4,667,445 25,543,629	More than 5 years
							- - - 1,500 217,798 - 854,187 - - - 1,073,485

The Group does not expect that the cash flow of the due date analysis will occur significantly earlier, or the actual amount will be significantly different.

Note: The amount within 6 months includes recyclable long-term bank loans and long-term bills payable.

• (iii) Currency risk

• 1) Currency risk exposure

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

Financial assets Monetary items USD MMK CNY Non-Monetary items HKD	December 31, 2021	December 31, 2021
	Foreign Currency $ 70,418 6,935 459,208 255,216	Exchange rate NTD 27.677 1,948,955 0.0160 108 4.343 1,994,339 3.5522 906,578

(Continued)

• 488 -

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

Financial liabilities Monetary items USD GBP	December 31, 2021	December 31, 2021
	Foreign Currency $ 10,664 19	Exchange rate NTD 27.677 295,158 37.300 692

• 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 weakening of 1% of NTD against USD, MMK and CNY would have increased net income by $29,180 thousand for the year ended December 31, 2021; other comprehensive income would have increased $9,066 thousand for the year ended December 31, 2021. The analysis is performed on the same basis for 2020.

• 3) Foreign exchange gain and loss 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 year ended December 31, 2021, foreign exchange gains (losses) (including realized and unrealized portions) amounted to $21,606 thousand.

(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 income will decrease by $25,013 thousand for the year ended December 31, 2021, assuming all other variable factors remain constant. This is due mainly to the fact that the Group’s borrowings bear floating interest rate.

(Continued)

• 489 -

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

• (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 year ended December 31, 2021	For the year ended December 31, 2021
	After-tax other comprehensive income $ 30,597 $ (30,597)	Net income
Increase of 1% Decrease of 1%		73,310 (73,310)

• (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:

Financial assets at fair value through profit or loss Designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Stocks unlisted on domestic markets Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes, accounts and other receivables Other financial assets Subtotal Total Non-financial assets Investment property		December 31, 2021	December 31, 2021	December 31, 2021
	Book value $ 7,330,998 2,280,653 779,074 3,059,727 9,021,326 4,315,998 1,260,363 14,597,687 $ 24,988,412 $ 38,867,067		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)

• 490 -

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

Financial liabilities measured at amortized cost Short-term loans Short term bills payable Accounts and other payable Long-term bank loans-current portion Bonds payable Long-term bank loans Long-term bills payable Other financial liabilities Lease liabilities Total		December 31, 2021	December 31, 2021	December 31, 2021
	Book value $ 12,737,689 1,429,955 4,834,419 1,511,515 4,684,096 13,905,589 5,254,518 146,865 296,448 $ 44,801,094		Fair value
		Level 1 - - - - - - - - - -	Level 2 - - - - - - - - - -	Level 3 - - - - - - - - - -	Total
					- - - - - - - - -
					-

• 2) Valuation techniques for financial instruments which is not measured at fair value:

The Group’ s valuation techniques and assumptions used for financial instruments not measured at fair value are the discounted cash flows method.

• 3) Valuation techniques for financial instruments measured at fair value:

The Group determines the input value with reference to the analysis of the financial status and operating results, recent transaction price, related equity instruments are quoted in non-active markets, similar tools offer in the active market and comparable company evaluation multiplier of the investee company and periodically updates the input value and information and any other necessary fair value adjustments to ensure that the evaluation results are reasonable.

• a) Non-derivative financial instruments

Financial instruments, if there is a public market offer, then the public market offer for the fair value, Such as listing (cabinet) company stock.

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 investee.

(Continued)

• 491 -

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

• b) Derivative financial instruments

Derivative financial instruments is evaluated according to the evaluation model accepted by the market users, such as the discount method and the option pricing model.

• 4) There have been no transfers from each level for the year ended December 31, 2021.

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

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 $ 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 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 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

• 6) Quantitative information on the measurement of fair value of significant unobservable input values (level 3)

Level 3 refers to the measurement of the fair value of the input parameters are not based on market availability of information, must be based on the assumption that the appropriate estimates and adjustments. If the evaluation model can not be developed on its own, the fair value of the counterparty is used as the fair value. According to IFRS13, for the fair value of the third level classified at the fair value level, the firm shall provide quantitative information about the significant unobservable input values used for the fair value measure. Businesses do not need to create quantitative information to comply with this disclosure, if quantified unobservable input value is not built when enterprises are measuring fair value (for instance, when a firm uses an unadjusted previous transaction price or a third-party pricing information), e.g. part of the the Group’s investment in nonactive market equity and debt instruments. The fair value of the Group’ s investment property belongs to the third level, which is determined in accordance with IFRSs, i.e., outsourcing to external appraisors for assessment based on market evidence (please refer to Note 5(j)). Due to the impracticability to evaluate the relationship between the unobservable input value and fair value, the quantitative information is not disclosed. The fair value of the aforesaid assets at December 31, 2021 is $38,867,067 thousand.

(Continued)

• 492 -

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

The Group holds investments in equity shares, which is classified as financial assets at fair value through profit or losses, whose fair value belongs to level 3.

Most of fair value assets belonging to level 3 possesses 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 9.66~10.69 as multiply on December 31, 2021 •Lack of market liquidity, discount rate 20% on December 31, 2021 •The higher the P/E ratio, the higher the fair value •Lack of market liquidity, the more the discount, the lower the fair value •Net asset value •Lack of market liquidity, discount rate 30% on December 31, 2021 and 2020 •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 equity investments without an active market Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss	Public company comparable method 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 appraisors’ reports. The results of the evaluation are then reviewed to assure the consistency with the source of the evaluation and the reasonability.

The evaluation of investment property complies with FSC’s regulations of the evaluation methods and parameters, and is conducted by external appraisors.

(Continued)

• 493 -

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

• 8) Fair value measurements in 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 are exposed to the following risks due to the use of financial instruments:

• 1) Credit Risk

• 2) Liquidity risk

• 3) Market risk

The following discusses the Group’ s objectives, policies and processes for measuring and managing the risks mentioned above. For more quantitative information about the financial instruments, please refer to other related notes of the financial statements.

• (ii) Risk management framework

The Board of Directors has overall responsibility for the oversight of the risk management framework in order to develop and monitor the Group’s risk management policies and to report regularly on its activities.

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’ s activities. The Group, through their training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

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.

(Continued)

• 494 -

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

• (iii) Credit Risk

Credit risk means the potential loss of the Group if the clients or counterparties involved in transactions default. The primary potential credit risk is from cash and accounts receivable.

1) Accounts receivable and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk, particularly in the current deteriorating economic circumstances.

The Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group’ s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval from the Risk Management Committee; these limits are reviewed quarterly. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis.

The Group establishes an impairment allowance that represents its estimate of incurred losses in respect of trade receivables. The two components of this impairment allowance are specific loss component that relates to individually significant exposure and collective loss component which the loss was incurred but not identified. The collective component is based on historical payment experience of similar financial assets.

2) Investments

The credit risk exposure in the bank deposits and other financial instruments are measured and monitored by the Group’s finance department. As the Group deals with the banks and other external parties with good credit standing and financial institutions, corporate organization and government agencies which are graded above investment level, management believes that the Group do not have compliance issues and significant credit risk.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as much as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The management believes that the Group does not have significant liquidity risk.

(Continued)

• 495 -

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

(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 returns.

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Risk Management Committee.

1) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan Dollar (NTD). The currencies used in these transactions are denominated in NTD, USD and CNY.

The Group’s currency risk is not hedged as some of the currencies of the Group’s foreign currency receivables and payables are the same, producing a natural hedge effect.

2) Interest rate risk

The Group’ s interest rate risk comes from long-term and short-term bank loans. The long-term bonds issued by theCompany is fixed-rate, so there is no risk caused by the fluctuations of interest rates and fair value interest rate. The long-term and short-term bank loans with floating-rate are exposed to interest rate risk, but most of risk is offset by cash and cash equivalents holding in floating-rate deposits.

3) Other market price risk

The Group does not enter into any commodity contracts other than to meet the Group’s expected usage and sales requirements; such contracts are not settled on a net basis.

(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 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.

(Continued)

• 496 -

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

The Group’s debt-to-equity ratio at the end of the reporting period as of December 31, 2021 was follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Total liabilities and equity Debt-to-equity ratio	December 31, 2021	December 31, 2021
	$ 56,129,326 (9,021,326) $ 47,108,000 $ 81,707,294 $ 128,815,294 % 36.57
		% 36.57

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

The Group investing and financing activities which did not affect the current cash flow for the year ended December 31, 2021 were as follows:

• (i) For the acquisition of right-of-use assets based on lease term, please refer to Note 5(i).

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

Long-term bank loans Short-term loans (note) Short-term bills payable Long-term bills payable Lease liabilities	January 1, 2021 $ 9,404,483 3,615,000 - 5,656,112 292,992 $ 18,968,587	Cash flows 3,725,016 11,218,648 1,429,955 1,847,200 (65,632) 18,155,187	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.

(6) Related-party transactions:

• (a) The ultimate parent company

The Company is the ultimate parent company.

(Continued)

• 497 -

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

• (b) Names and relationship with related parties

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

Name of related party Relationship with the Group Kaohsiung Monomer Company Limited Investee as accounted for using equity method Jean Pacific Development Co., Ltd. Investee as accounted for using equity method Zhong Gong Baoquan Ltd. Investee as accounted for using equity method (Zhong Gong Baoquan) Chung Kung Management and Maintenance of Investee as accounted for using equity method of Apartments Co., Ltd. Zhong Gong Baoquan Chain Yarn Co., Ltd. (Note) The Company is the director of the entity BES Engineering Corporation The Company is the director of the entity (BES Engineering) Chung Kung Management Consultant Co., Ltd. Subsidiary of Zhong Gong Baoquan Coreasia Human Resources Management Co., Subsidiary of BES Engineering Ltd. BES Machinery Co., Ltd. The entity is a director of the Company Sheen Chuen Chi Cultural & Educational The director is corporate director representative of Foundation the Company Core Pacific City Co., Ltd. Substantive Related Party All board of directors, general manager and The main managements of the Company deputy general manager Mitsubishi Chemical Corporation Associated company Mitsubishi Chemical Polymer Nantong Co., Associated company Ltd. Mitsubishi Chemical Methacrylates Singapore Associated company Pte. Ltd., Taiwan Branch (Singapore) MCC Methacrylates UK Overseas Holdco Associated company Limited

Note: 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.

(Continued)

• 498 -

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

(c) Significant Transactions with related parties

• (i) Sales

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

Other related parties Associates	For the year ended December 31, 2021
	$ 1,009,343 247,634 $ 1,256,977

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

• (ii) Purchases

Other related parties	For the year ended December 31, 2021
	$ 63,135

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

• (iii) Receivables from Related Parties

The receivables from related parties were as follows:

Accounts	Types of related parties December 31, 2021 Other related parties $ 385,366 Other related parties 731 Associated company 341 $ 386,438
Accounts receivable Other receivables Other receivables

(iv) Payables to Related Parties

The payables to related parties were as follows:

Accounts	Types of related parties December 31, 2021 Other related parties $ 11,333 Parent company - Associates 167,715 Associated company 10,077 $ 189,125
Accounts payable Other payables Other payables Other payables

(Continued)

• 499 -

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

(v) Other

Associates Rental income Other revenues Security service fees Other related parties Rental income Other revenues Other expenses	For the year ended December 31, 2021
	$ 11,429 (4,343) (21,283) 6 404 (37,424)

Please refer to Note 5(r) for lease of land and buildings to related parties.

• (vi) The Group had a two-year contract with BES Engineering Corporation for the lease of office space in July 2018, which had been extended in July 2020, with the total value represented $9,629 thousand. This rental transaction was recognized right-of-use assets and lease liability both amounting to $9,465 thousand on July1, 2020. The depreciation expense and interest expense for the year ended December 31, 2021 was $4,732 thousand and $82 thousand, respectively. As of December 31, 2021, the amount of lease liability was $2,398 thousand.

• (vii) The Group had a two-year contract with BES Engineering, for the lease of office building in January 2021, with the total value of $2,762 thousand. This rental transaction was recognized right-of-use assets and lease liability both amounting to $2,705 thousand on January 1, 2021. The depreciation expense and interest expense for the year ended December 31, 2021 was $1,119 thousand and $38 thousand, respectively. As of December 31, 2021, the amount of lease liability was $1,600 thousand.

• (viii) The Company had contracts with BES Engineering, for mechanical engineering services projects and paid commission on the basis of actual construction. As of December 31, 2021, the construction project in-progress amounted to $1,451,000 thousand. As of December 31, 2021, the unpaid fees amounted to $553,964 thousand and the refundable deposit amounted to $420,660 thousand.

• (ix) 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, 2021, the construction project in-progress amounted to $1,559 thousand. As of December 31, 2021, the unpaid fees amounted to $130 thousand and the refundable deposit amounted to $0 thousand.

(Continued)

• 500 -

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

(d) Key management personnel compensation

Short-term employee benefit Post-employment benefits	For the year ended December 31, 2021
	$ 230,546 6,217 $ 236,763

(7) Pledged assets:

The carrying amounts of pledged assets were as follows:

Asset

Purpose of pledge December 31, 2021 Guarantee for priority right of use of harbor and purchases $ 40,650 Short term bills payable, short term syndicated loan (Shin Kong) 38,007,167 Collateral for long term and short term financial credit, syndicated loan (Mega & Shin Kong) 7,871,848 Collateral for short term, medium term and long term financial credit, syndicated loan (Mega), bonds payable and long term bills payable 31,435,973 Long-term bills payable 785,917 Long-term bills payable 1,147,498 Long term bills payable 187,220 Deposit for lawsuit, issuance of letter of credit 204,904 Collateral for long term financial credit 576,089 $ 80,257,266

Time deposits Inventory – Land for construction Property, plant and equipment Investment property Investments accounted for using equity method Financial assets reported at fair value through other comprehensive income Financial assets reported at fair value through profit or loss Refundable deposit Right of use of Sea Areas

(Continued)

• 501 -

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

(8) Commitments and contingencies:

• (a) As of December 31, 2021, the Group had the following unused letters of credit:

USD EUR JPY NTD CNY	December 31, 2021
	$ 49,408 457 6,400 1,146,000 32,300

• (b) As of December 31, 2021, the Group had issued guarantee notes for bank loans, sales and purchases, and development plan aggregating to $26,197,400 thousand and USD30,000 thousand.

• (c) As of December 31, 2021, the Group had contracts for various construction projects in-progress amounting to $24,019,792 thousand. As of December 31, 2021, the remaining future obligations under these contracts amounted to $11,349,881 thousand.

• (d) As of December 31, 2021, the agreement on the acquisition of material property and the unpaid portion amounted to $1,379,861 thousand and $138,000 thousand, respectively. Please refer to note 5(e) for more information.

• (e) As of December 31, 2021, the Company signed an agreement to purchase raw materials such as benzene, hydrogen and methylbenzene from CPC. Under this contract, the Company 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, 2021, the Group signed an agreement of preclinical drug research amounted to USD4,266 thousand and $164,522 thousand, and the unpaid portion amounted to USD1,350 thousand and $129,611 thousand.

• (g) The Group signed a license agreement of new type of tumor identification and drug delivery system with National Health Research Institutes on August 18, 2016. The license fee amounted to $270,000 thousand and the payment will be made by progress. As of December 31, 2021, the paid portion amounted to$20,000 thousand.

• (h) The Group signed a license agreement of antineoplastic candidate drug with National Health Research Institutes on April 3, 2019. The license fee amounted to $135,000 thousand and the payment will be made by progress. As of December 31, 2021, the paid portion amounted to $10,000 thousand.

• (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 will be made by progress. As of December 31, 2021, the paid portion amounted to $2,500 thousand.

(Continued)

• 502 -

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

(j) Important matters

The case of loss compensation for the Kaohsiung gas explosion

The Maintenance Office, Public Works Bureau of Kaohsiung City Government granted permission to CPC for the installation of underground gas pipelines. However, a gas explosion in Kaohsiung had occurred in the evening of July 31, 2014, which resulted in CPC’ s permit to be revoked. Nonetheless, the revocation qualified CPC to claim for compensation from the relevant authority for its property losses. In order to protect its legal rights and interests, the Company filed an administrative appeal in February 2018 to the KHAC, who ruled against the Company in December 2019. Hence, in January 2020, the Company filed an appeal to the Supreme Administrative Court, who in turn, handed the case back to the KHAC for reconsideration. The case was still in progress as of the reporting date.

(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 Mr. Zhang. Hence, the Board of the Company dismissed Mr. Zhang in October 2013. Mr. Zhang asked the Company to pay pension pursuant to Labor Standards Act as a labor worker, which was not reconciled through mediation. Kaohsiung District Court considered that the assigned relationship did not end in January 2014, which means that the Expired Employee Retirement Policies of the Company does not apply. Mr. Zhang request for pension is without any basis, but according to the contract of both side, the Company shall pay salaries of $35 thousand, to Mr. Zhang, which was not satisfied by Mr. Zhang and this case was appealed to the 2nd sentence court. In July 2016, the 2nd sentence court rejected the request from Mr. Zhang but he re appealed to the 3rd sentence in August of the same year. Upon finding the appeal meritorious, the Supreme Court reversed and remanded the judgement. The preparatory proceeding of the first repeated appeal was conducted in Taiwan High Court Kaohsiung Branch Court (THCKBC) in April 2019. The court’ s judgement is announced that the compony shall pay $3,785 thousand, with 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. In December 2021, THCKBC ruled in favor of Mr. Zhang and ordered the Company to pay Mr. Zhang the amount of $3,764 thousand, with bearing interest, as compensation. The Company disagreed with the decision made by the court, and therefore, filed an appeal to the Supreme Court. As of the reporting date, the Company has not received the transfer of the trial notified by THCKBC.

(Continued)

• 503 -

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

2) Disclosure Secret Case

Managers who left the office without authorization was suspected to be involve in business encroachment, theft of business secrets. To protect Company interests, the Company filed criminal appeal. The case was concluded by the Taiwan Miaoli Local Court in January 2017 and the relevant defendants were prosecuted. The civil litigation derived from the case is waiting for hearing by the Taipei District Court and Miaoli District Court. Please refer to note 7 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 Weijiang Company and Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. would continue negotiations on unrealized creditors and requested Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. to propose the more specific repayment plan. Weihua and Weiqiang estimated allowance of the accounts receivable respectively. Weihua and Weijiang Company reported to the police the relevant persons of Shanghai Tongye Coal and Chemical Industry Group Co., Ltd. that were suspected to be involve with the contract fraud and other criminal matters. The police rejected the report due to insufficient evidence, therefore Weihua hired a local lawyer in May 2018, to assist with Shanghai police and Shanghai economics investigation group. 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).

(iii) Civil compensation for Residents living in Anshun

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 1st and 2nd instance of the AnShun plant Civil Compensation litigation under hearing, the Company once again put forward the relevant academic articles to prove that there was no causality between pollution from Tainan AnShun plant and diabetes. Moreover, the plaintiffs in this case, despite the reasonableness of their claims, did not put forth any litigation before the expiry of the statutes of limitations. Thus, in this 2nd case of the Tainan AnShun plant civil compensation, the Company continued to seek for the jurisdiction remedies to protect the Company and shareholder interests. In November 6, 2020, Tainan District Court considered that 39 Plaintiffs’ s claim is meritorious and dismissed rest of Plaintiffs’ s claim. 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

(Continued)

• 504 -

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

Company filed an appeal to the High Court on December 15, 2020, and this case is still under trial now.

(9) Losses Due to Major Disasters:None

(10) Subsequent Events:

• (a) The earnings distribution for 2021 of Core Pacific City Co., Ltd. was decided by the resolution adopted at the general meeting of shareholders held on February 23, 2022. Please refer to note 5(b) for other related information.

• (b) On March 14, 2022, a resolution was made during the board meeting of the Company to raise the capital of Ding-Yue amounting to $1,700,000 thousand for its business operation.

(11) Other:

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

By function By item	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021
	Operating cost	Operating expense	Non-Operating expense	Total
Employee benefits
Salary	1,283,656	987,229	-	2,270,885
Labor and health insurance	90,046	64,181	-	154,227
Pension	44,005	27,401	-	71,406
Others	37,160	55,864	-	93,024
Depreciation	1,050,173	181,177	4,255	1,235,605
Amortization	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 11, 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. On July 21, 2021, the Bureau of Industry, MOEA held a task force to deal with the effect on petrochemical industry in case of DIP is categorized to Zone B, in which a discussion on both issues, including the legality of urban planning and the regulation of land reusing, will be appropriately conducted together with the urban planning task force of KUPC. As of December 31, 2021, KCG had yet to proceed on the procedures of statement changing.

(Continued)

• 505 -

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

(12) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

(i) Loans to other parties:

(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(i) Loans to other parties:	(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		Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1	Jiangsu Weiming New Material Co., Ltd.(original name: Jiangsu Weiming Petrochemical Corporation)	Changzhou Weicai New Material Science & Technology Co., Ltd.	Other Receivable	Yes	260,580	260,580	43,430	5.5%	2	-	Operating	-		-	678,916	1,018,374
2	Weihua (Rudong) Trade Co., Ltd	Changzhou Weicai New Material Science & Technology Co., Ltd.	Other Receivable	Yes	86,860	86,860	43,430	5.5%	2	-	Operating	-		-	99,930	99,930

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 15% and 10% of net value of Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation)

Note 3: The financing limit was 20% of net value of Weihua (Rudong) Trade Co., Ltd.

Note 4: 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	CPDC	Ding-Yue Developme nt Co., Ltd.	2	48,304,160	22,380,000	17,780,000	13,140,000	2,880,000	% 22.09	80,506,933	Y	N	Y
0	CPDC	Weihua (Rudong) Trade Co., Ltd.	2	48,304,160	217,150	217,150	217,150	-	% 0.27	80,506,933	Y	N	Y
0	CPDC	Changzhou Weicai New Material Science & Technology Co., Ltd.	2	48,304,160	1,260,624	1,260,624	716,287	174,000	% 1.57	80,506,933	Y	N	Y
0	CPDC	Jiangsu Weiming New Material Co., Ltd.	5	48,304,160	1,612,460	1,606,910	1,606,910	-	% 2.00	80,506,933	Y	N	Y
0	CPDC	Shiny Chemical Industrial Co., Ltd.	5	48,304,160	78,086	78,086	78,086	-	% 0.10	80,506,933	N	N	N

(Continued)

• 506 -

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

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements e t	Parent company ndorsements/ guarantees to hird parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	CPDC	Lushun Warehouse Co., Ltd.	5	48,304,160	55,366	55,366	55,366	-	% 0.07	80,506,933	N	N	N
0	CPDC	China General Terminal & Distributio n Corporati on	5	48,304,160	14,903	14,903	14,903	-	% 0.02	80,506,933	N	N	N
1	Ding Yue Developmen t Co., Ltd.	CPDC	3	12,724,087	4,920,000	4,920,000	2,200,000	-	% 6.11	25,448,174	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

Note 2: Seven types of the relationship between Counter-party of guarantee and endorsement 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

8. Note 3: The Company endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

9. 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.

10. 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.

11. Note 4: Ding Yue Development Co., Ltd endorsed the operation method for the total amount of guarantees and the limit for endorsement of a single enterprise:

12. 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.

13. 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, 2021 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title		Ending	balance		Highest Percentage of ownership (%)	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
The Company	Yuanta Financial Holdings BES Engineering Co. China Development Financial Holding Corp. Handy Chemical Corparation Ltd. Overseas Investment & Development Corp.	None The Company is a director of an investee company None The Company is a supervisor of the investee company None	Current financial assets designated at fair value through profit or loss Non-current financial assets at fair value through other comprehensive income � � �	7,400,371 164,348,449 44,684,712 386,000 2,600,000	187,229 1,488,997 781,982 26,437 26,000	0.06 10.74 0.23 4.51 2.89	187,229 1,488,997 781,982 26,437 26,000	% 0.27 % 10.74 % 0.30 % 4.75 % 2.89

(Continued)

• 507 -

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

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance		Highest Percentage of ownership (%)	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
The Company BES Twin Towers Co., Ltd. Tsou Seen Chemical Industries Corporation Changzhou Weicai New Material Science & Technology Co., Ltd.	Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials ZOWIE Technology Corporation Aetas Technology Inc. Chain Yarn Co., Ltd. Taiwan Business Bank Core Pacific City Co., Ltd. Praxair Chemax Semiconductor Materials Taiwan TeaCorporation Good Company TaiRx, Inc. Agricultural Bank of China-HSBC Structured Deposit	Substantive related party None � � The Company is a director of an investee company None Substantive related party None � � � �	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 Non-current financial assets at fair value through other comprehensive income 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 designated at fair value through profit or loss	2,779,154 2,701,651 8,815 287,961 30,000,000 977,130 1,053,812 6,754,127 7,279,000 750,000 722,500 -	5,117,918 117,608 358 - 300,000 9,674 1,855,861 294,019 147,764 - 14,652 22,226 10,390,725	27.52 14.00 0.03 0.58 13.41 0.01 10.43 35.00 0.92 2.08 0.80 -	5,117,918 117,608 358 - 300,000 9,674 1,855,861 294,019 147,764 - 14,652 22,226 10,390,725	% 27.52 % 14.00 % 0.05 % 0.58 % 13.41 % 0.01 % 10.43 % 35.00 % 1.11 % 2.08 % 0.80 % -

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginnin	g Balance	Purch	ases		Sa	les		Ending Ba	lance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Price	Cost	Gain (loss) on disposal	Shares/units	Amount
The Company	Yuanta Financial Holding Co., Ltd.	Financial assets at fair value through profit or loss�non current	Not applicable	Not applicable	32,176,371	661,224	-	-	24,776,000	620,576	259,336	361,240	7,400,371	187,229

• (v) Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:None

• (vi) Disposal 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	Type of property	Transaction date	Acquisition date	Book value	Transaction amount	Amount actually receivable	Gain from disposal	Counter- party	Nature of relationship	Purpose of disposal	Price reference	Other terms
CPDC	land no.7 and no.7 1, subsection 5, Jingmao section, Kaohsiung	August 18, 2021	October 1, 1982	1,668,271	2,380,000	Fully received	711,729	Chingwon Structure Corporation	Non related parties	Replenishing operating capital	Appraisal reports & Market value	None

(Continued)

• 508 -

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

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company CPDC GT Weiming Weiqiang Weiqiang Weiqiang Weiqiang KMC	Tsou Seen Chemical Industries Corporation Kaohsiung Monomer Company Limited Chain Yarn Co., Ltd. The Company Weiqiang International Trade (Shanghai) Co., Ltd. Weihua (Rudong) Trade Co., Ltd. Changzhou Weicai New Material Science & Technology Co., Ltd. The Company Jiangsu Weiming New Material Co., Ltd.(original name: Jiangsu Weiming Petrochemical Corporation) Mitsubishi Chemical Polymer Nantong Co., Ltd.	Subsidiary Affiliated company accounted for using equity method Other related parties Subsidiary Same parent company Same parent company Same parent company Subsidiary Same parent company Associated company	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	(1,247,286) (751,291) (1,009,343) (322,868) (107,749) (192,001) (268,466) (1,094,584) (279,244) (195,969)	% (4.08) % (2.46) % (3.30) % (98.10) % (6.42) % (6.56) % (9.18) % (37.43) % (9.55) % (3.95)	3 Month 1 Month 1 Month Base on contract Base on contract Base on contract 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 Base on contract Base on contract Base on contract	136,636 91,978 385,366 67,005 - - - - - -	4.04% 2.72% 11.38% 99.23% -% -% -% -% -% -%	Note Note � � � � �

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

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

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Ove	rdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
The Company The Company	Tsou Seen Chemical Industries Corporation Chain Yarn Co., Ltd.	Subsidiary (Note) Other related parties	136,636 385,366	14.39 5.24	- -		136,636 202,352	- -

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

(ix) Trading in derivative instruments:None

(Continued)

• 509 -

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

(x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 1 2 2 2 2	The Company The Company Weiming Weiming Weiming Weiming Weiming	TSCIC CPDC GT Weiqiang Weihua Weicai The Company Weiming	1 1 5 5 5 2 5	Sales revenue Repair expense Sales revenue Sales revenue Sales revenue Sales revenue Sales revenue	1,247,286 322,868 107,749 192,001 268,466 1,094,584 279,244	OA 90 days Base on contract Base on contract Base on contract Base on contract Base on contract Base on contract	3.55% 0.92% 0.31% 0.55% 0.76% 3.11% 0.79%
Note 1: Company numbering as follows: Parent company�0 Subsidiary starts from 1 Note 2: The numbering of the relationship between transaction parties as foll 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				ows:

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

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

Mainland China):	Mainland China):	Mainland China):	Mainland China):
				(In Thousands of New Taiwan Dollars)
Name of investor	Name of investee	Location	Main businesses and products	Original investment amount		Balance as of December 31, 2021			Net income (losses) of investee	Highest Percentage of ownership	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of ownership	Carrying value
The Company � � � � � � �	Kaohsiung Monomer Company Limited Zhong Gong Baoquan Ltd. Ding-Yue Development Co., Ltd. CPDC Investment (BVI) Co., Ltd. Tsou Seen Chemical Industries Corporation CPDC Green Technology Corp. Unichem Development Limited BES Twin Tower Development Co., Ltd.	1,Hsing Kung Road,Ta She P O Box 6-25 Nantze,Kaohsiung (815), Taiwan 2F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan Citco Building, Wickhams Cay, P.O. Box662 No.1, Jingjin Rd., Fangliao Township, Pingtung County 940, Taiwan 14F.-16, No.61, Wufu 3rd Rd., Qianjin Dist., Kaohsiung City 801, Taiwan Unit 06, G/F, The Lodge, 535 Canton Road, Kowloon, Hong Kong 16F., No.12, Dongxing Rd., Taipei City 105, Taiwan	Methyl Methacrylate Monomer Security consultants Commissioned to create a vendor to build the housing, commercial buildings and plant rental business, management of land development and playgrounds and other related business investment Holding company Dicalcium phosphate Mechanical engineering Holding company Real estate investment anddevelopment	- 14,400 25,580,000 904,946 560,000 100,000 9,876,023 3,791,383	- 14,400 10,040,000 904,946 760,000 100,000 9,572,433 4,791,383	20,000,000 1,440,000 2,558,000,000 26,580,000 76,000,000 15,000,000 324,684,262 491,216,357	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	785,917 18,716 25,424,981 911,656 1,181,737 166,436 8,291,713 5,084,560	839,628 1,235 (94,151) (9,060) 113,430 46,706 (370,186) 193,145	% 40.00 % 24.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	335,851 296 (94,151) (9,060) 113,430 46,706 (370,186) 193,145	Note 1&5 Note 1 Note 2&5 Note 2&4&5 Note 2&5 Note 2&5 Note 2&4&5 Note 2&5

(Continued)

• 510 -

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

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Net income (losses) of investee	Highest Percentage of ownership	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of ownership	Carrying value
The Company � CPDC Investment (BVI) Co., Ltd. Ding-Yue Development Co., Ltd. Tsou Seen Chemical Industries Corporation BES Twin Towers Development Co., Ltd. Frontier FortuneInvestment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd.	Thanh Phong Construction Investment Co., Ltd. Jean Pacific Development Co., Ltd. Core Pacific Overseas Holdings Ltd Da Ying Construction Ltd. Taivex Therapeutics Corporation Frontier Fortune Investment Pte. Ltd. Core Pacific Twin Star (Myanmar) Investment Company Ltd. Gemini Star (India)Private Limited Core Pacific Twin Star (Vietnam) Investment Co., Ltd. Core Pacific Pioneer (Myanmar) Company Ltd.	B2 19, Golden King Tower Building, No. 15 Nguyen Luong Bang, Tan Phu Ward, District 7, Ho Chi Minh City 7F. 2, No.300, Yangguang St., Neihu Dist., Taipei City 11491, Taiwan (R.O.C.) Akra Bldg., 24 De Castro Street, Wickhams Cay I, Road Town,Tortola,British Virgin Islands 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 8F., No.12, Dongxing Rd., Taipei City 105, Taiwan 112 ROBINSON ROAD#05 01 ROBINSON 112SINGAPORE (068902) NO.153/Ka,KyunShwe Mmyaing Lane(2) ,23ward,ThingangyunT ownshin Yangon Level7, The Capital,Plot No.C 70, GBlock, Bandra KurlaComplex, BandraMUMBAI MumbaiCity MH 400051 IN Engineering, real estate andconsultancy of construction NO.153/Ka,KyunShwe Mmyaing Lane(2) ,23 ward,Thingangyun Townshin Yangon	Engaged in construction, realestate, buildingconstructional consulting,lease equipment andwholesale of buildingmaterials Renting and selling real estate Holding company Engineering, constructioncontracting business Engaged in biotechnology,pharmaceutica l research anddevelopment and marketing Holding company Holding company and consultancy Real estate andpetrochemical productsresearch and consultancy Engineering, real estate andconsultancy of construction Building construction, realestate management,development and sale	609,347 620,000 808,564 60,000 696,720 2,761,596 169,921 9,274 2,566,176 24,804	609,347 620,000 808,564 22,500 696,720 2,761,596 169,921 9,274 2,566,176 24,804	- 62,000,000 26,580,000 - 46,224,551 93,060,000 5,500,001 2,099,993 - 800,000	% 100.00 % 40.00 % 45.19 % 100.00 % 91.10 % 100.00 % 100.00 % 99.99 % 100.00 % 80.00	586,627 618,276 906,578 60,206 170,077 2,712,589 149,531 4,249 2,551,666 19,483	11,267 (3,187) (19,851) (195) (87,321) 65,879 197 (190) 66,738 2,069	% 100.00 % 40.00 % 45.19 % 100.00 % 91.10 % 100.00 % 100.00 % 99.99 % 100.00 % 80.00	11,267 (1,275) - - - - - - - -	Note 2&3&4 &5 Note 1 Note 2&4&6 Note 2&3&5 &6 Note 2&5&6 Note 2&4&5 &6 Note 2&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.

(Continued)

• 511 -

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

(c) Information on investment in mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2021	Net income (losses) of the investee	Percentage of ownership	Highest percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
Weihua (Rudong) Trade Co., Ltd.	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	13,491	100.00%	100.00%	13,491	499,650	-
Weiqiang International Trade (Shanghai) Co., Ltd.	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing sub fitted trading.	211,560	( 1 )� ( 3 )	211,560	-	-	211,560	42,024	100.00%	100.00%	42,024	171,441	-
Jiangsu Weiming New Material Co., Ltd. (original name: Jiangsu Weiming Petrochemical Corporation)	Engaged in trading of petroleum chemical products, electronic chemicals variety of industrial gases, gas mixtures and other manufacturing subfitted trading	7,725,253	( 2 )	7,421,663	303,590	-	7,725,253	(232,855)	100.00%	100.00%	(232,855)	6,789,159	-
Zhangzhou Weida Petrochemical Co., Ltd.	Petrochemical supporting facility construction	-	( 2 )	30,648	-	(30,648)	-	2	100.00%	100.00%	2	-	-
Changzhou Weicai New Material Science &Technology Co., Ltd.	Engaged in engineering plastic and high valued petroleum chemical products	1,411,845	( 2 )	1,324,893	-	-	1,324,893	(151,226)	100.00%	100.00%	(151,226)	865,748	-
Weiming (Rudong) Construction Co., Ltd. (Invested through Jiansu Weiming New Material Co., Ltd.)	Engaged in engineering consultant services�engineering construction� engineering management�trading of petroleum chemical product	129,665	( 3 )	-	-	-	-	(513)	100.00%	100.00%	(513)	129,753	-

(Continued)

• 512 -

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

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
10,919,107	14,362,341	Note 4

Note1: There are three ways to invest as follows:

• (a) The Company directly invests in China.

• (b) The Company through third regional company (UDL) invests in China.

• (c) Others. (The Company through subsidiaries invest in China.)

Note2: Explanation for the field “net income (losses) of the investee” :

• (a) If it is in preparation, no investment profit or loss, should be explained.

• (b) There are three ways to identify the basis of investment profit or loss.

• (b.1) financial statements audit by an international accounting firm with a relationship with a Taiwan accounting firm.

• (b.2) financial statements audit by the Company’s audit CPA.

• (b.3) others.

Note3: The amount in this table are presented in New Taiwan Dollar.

• Note4: The cumulative investment amount or investment proportion to China cannot 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.

Note5: Zhangzhou Weida Petrochemical Co., Ltd. was dissolved and the liquidation process had been completed in January 2021.

(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)

• 513 -

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

(13) Segment information:

• (a) General Information

The Group identifies arylonitrile & acetic acid department and caprolactam department as reportable segments based on factors such as product types, manufacturing procedure, customer types, and operating activities.

The reportable segments of the 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 year ended December 31, 2021 Revenue Revenues from external customers Revenues from transactions with other operating segments of the same entity Total segment revenue Depreciation and amortization Reported segment profit or loss Capital expenditure of non- current assets Segment assets Segment liabilities	Acrylonitrile & Acetic Acid $ 18,297,148 - $ 18,297,148 $ 385,738 $ 3,842,822 $ 527,940 $ 7,121,701 $ 4,022,887	Caprolactam 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 6,609,987 213,388 748,454 1,802,246 114,609,678 45,811,844	Adjustment and eliminations - (322,868) (322,868) - - - - -	Total 39,369,927 -
					39,369,927
					1,244,794
					4,701,271
					4,348,134
					137,836,620
					56,129,326

(Continued)

• 514 -

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

(c) Geographical Areas

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

		For the year
		ended
		December 31,
Region		2021
Operating revenue from domestic sales	$	25,466,510
Asia		13,722,863
Other (individual areas under 10%)		180,554
Total operating revenue	$	39,369,927

(d) Major Customers

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

follows:
			For the year
			ended
			December 31,
	Customers		2021
1001		$	6,676,526

• 515 -

(III) Affiliate Reports: None

• II. Private placement of securities for the most recent year and until the date of publication of the annual report: None.

• III. Holding or disposal of the Company's stock by subsidiaries for the most recent year and until the date of publication of the annual report: None.

• IV. Supplementary Disclosure: None.

• V. Conditions that will materially affect shareholders' equity or price of securities as referred to in Paragraph 2.2 of Article 36 of the Securities and Exchange Act:

Please refer to the Chinese annual report Pages 392~406 about litigations. Please refer to Pages 209~216 and Pages 261~266 about the land pollution case and the significant contingent liabilities and unrecognized contractual commitments referred to in the notes to financial statements.

• 516 -

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CHINA PETROCHEMICAL DEVELOPMENT CORPORATION

Chairman: Ruey-Long Chen

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