CSCC — AGM Information 2016

Dec 28, 2016

Code: 1723

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China Steel Chemical Corporation

Handbook for the 2016 Annual Meeting of Shareholders

Time and Date: June 16, 2016

(Thursday) 09:00 am

Location: Conference Room 1607

16 F., No.88, Chenggong 2[nd] Rd., Qianzhen Dist., Kaohsiung City

Contents

	Contents
		Page
I.	Procedure of Shareholders’ Meeting	1
II.	Agenda of Shareholders’ Meeting	2
	A. Discussion	3
	B. Management Presentation	7
	C. Proposals	16
	D. Election Matters	34
	E. Other Matters and Motions	37
III.	Shareholding Statement of Current
	Directors and Supervisors of the Company	47
IV.	Dividend Policy of the Company	48
V.	The Impact of Stock Dividend Issuance on
	Business Performance, EPS, and
	Shareholder Return Rate of the Company	49

China Steel Chemical Corporation Procedure of 2016 Shareholders’ Meeting

• A. Call the Meeting to Order

• B. Chairman Remarks

• C. Discussion

• D. Management Presentation

• E. Proposals

• F. Election Matters

• G. Other Proposals and Motions

• H. Adjournment

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China Steel Chemical Corporation Agenda of 2016 Shareholders’ Meeting

• A. Time and Date: June 16, 2016 (Thursday) 09:00

• B. Location: Conference Room, 16 F., No.88, Chenggong 2[nd] Rd., Qianzhen Dist., Kaohsiung City

• C. Chairman Remarks:

• D. Discussion:

Proposal 1: Discussion on amendments to the Articles of Incorporation

• E. Management Presentation:

• (1) To report 2015 employees' profit sharing bonus and directors' compensation

• (2) To report the business of 2015

• (3) Supervisors' report on examination of 2015 audited financial statements

• (4) The establishment of "Ethical Corporate Management Best Practice Principles" and "Operating Procedures for Ethical Corporate Management and Conduct Guidelines"

• F. Proposals:

Proposal 1: 2015 business report and financial statements

Proposal 2: 2015 earnings distribution

• G. Election Matters:

Proposal 1: Election for the 10[th] term directors and supervisors of the

Company

• H. Other Proposals and Motions:

• I. Adjournment

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Discussion

Proposal 1 Proposed by the Board of Directors of the Company

Subject: Amendment to partial articles of “Articles of Incorporation” of the Company, the detail is as descriptions below. We hereby propose for discussion.

Description:

• A. Complying with amendments to the Company Act and the code of business items of Ministry of Economic Affairs, we amended partial articles of

• “Articles of Incorporation” of the Company.

• B. Please refer to Appendix for the comparison table of articles before and after amendment for details (P4~P6).

Resolution:

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n Comparison Table of Amended Articles of China Steel Chemical Corporatio

Amendment	Original Articles	Description
Article 2 The business items of the Company: 1. C801010 Basic chemical industry. 2. C801020 Petrochemical manufacturing. 3. C801990 Other chemical material manufacturing. 4. C802080 Pesticides manufacturing. 5. C802120 Industrial catalyst manufacturing. 6. C802200 Paints, varnishes, lacquers, dyeing mills and dyestuff manufacturing. 7. C802990 Other chemical products manufacturing. 8. C803990 Other petroleum and charcoal manufacturing. 9. C901990 Other nonmetallic mineral products manufacturing 10. CZ99990 Other industrial products manufacturing not elsewhere classified 11. F102180 Wholesale of ethanol. 12. F107020 Wholesale of dyeing mills and dyestuff. 13. F107080 Wholesale of environment medicines. 14. F107170 Wholesale of industrial catalyst. 15. F107200 Wholesale of chemistry raw materials. 16. F107990 Wholesale of other chemical products. 17. F111090 Wholesale of building materials. 18. F112020 Wholesale of coal and products. 19. F112040 Wholesale of petrochemical fuel products. 20. F120010 Wholesale of refractory materials. 21. F199990 Other wholesales. 22. F203030 Retail sale of ethanol. 23. F207990 Retail sale of other chemical products. 24. F211010 Retail sale of building materials. 25. F212030 Retail sale of coal. 26. F401010 International trade. 27. ZZ99999 All business items that are not prohibited or restricted by law,	Article 2 The business scope of the Company is as follows: 1. Manufacturing, processing, buying and selling, and importing and exporting of carbon chemistry and specialty chemicals (tar acid, tar alkali, creosote oil, naphthalene, anthracene, asphalt, pickling oil,, naphtha (benzene, toluene, xylene), naphthalene medicine raw materials, niacin, amine, dye intermediates (naphtha, H acid, BON acid, G acid, γ acid, anthraquinone), and spices and derivative products, carbon black, ink, steel raw material and its chemical derivative products, metal and steel chemical processing products, special building material (asphalt additives, cement plasticizer, leak preventive and anticorrosive agent), carbon material (graphite, carbon fiber), coke, single carbon chemicals, and electronic chemicals). Buying, selling, importing, and exporting of coal and magnetic material chemical additives. 2. Engineering consultation and pipeline anticorrosion concerning the consultation and technology of businesses mentioned in the previous paragraph and leaks and cracks covering construction by using all materials. 3. Technology transfer of businesses mentioned in the previous paragraph. 4. CZ99990 Other industrial products manufacturing (active carbon). 5. C901990 Other nonmetallic mineral products manufacturing (bauxite). 6. C801020 Petrochemical manufacturing. 7. F199990 Other wholesales (active carbon, bauxite). 8. F107990 Wholesale of other chemical products (chemicals for rubber and plastic processing, furfural, alcohol aldehyde).	Amending business items
21.
22.
23.
24.
25.
26.
27.

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		except those that are subject to special approval.	9. C801010 Basic industrial chemical manufacturing. 10. C802080 Pesticides manufacturing. 11. C802120 Industrial catalyst manufacturing. 12. C802150 Dyeing mills and dyestuff manufacturing. 13. C803990 Other petroleum and charcoal products manufacturing (coal tar, oil containing naphthalene, mesophase graphite, rust preventive oil). 14. F107020 Wholesale of dyeing mills and dyestuff. 15. F107080 Wholesale of environment medicine. 16. F107100 Wholesale of chemical materials. 17. F107110 Wholesale of petrochemicals. 18. F107170 Wholesale of industrial catalyst. 19. 12020 Wholesale of coal and products. 20. F112040 Wholesale of petrochemical fuel products. 21. F112990 Wholesale of other petrochemical products and fuel (coal tar, oil containing naphthalene, mesophase graphite, rust preventive oil, base oil, white oil, lubricants). 22. F120010 Wholesale of refractory materials. 23. F401010 International trade. 24. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
	Article 26 If the Company has profits in the fiscal year, the board of Directors shall decide to distribute no less than 0.1% of the profits as the remuneration to employees and no higher than 1% of the profits as the remuneration to directors and supervisors; the target of remuneration distribution to employees includes employees of subordinate companies who meet certain criteria. However, if		Article 26 If there are earnings in the annual final account, the Company shall first set aside ten percent of earnings of each final account as a legal reserve after the losses have been covered and all taxes and dues have been paid. However, the legal reserve will not be set aside if it reaches paid-in capital of the Company. In addition, the Company may set aside or reverse special surplus reserve in	Coping with the amendments of Company Act and amending articles of “Articles of Incorporation” of the Company concerning the

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accumulated losses remain, the accordance with operation demand distribution of Company shall retain the or laws and regulations. The remuneration subsidization amount in advance earnings distribution is proposed to employees before distributing remuneration to by the Board of Directors and and directors employees and directors and reported to shareholders’ meeting and supervisors in accordance with the for resolution of distributing supervisors. ratio prescribed in previous dividends or retaining earnings. paragraph. However, when distributing Remuneration distribution to earnings, the remuneration of employees and directors and directors and supervisors is 1% of supervisors shall be proposed to the earnings and 5% for employee Board of Directors for resolution bonus. and reported to the shareholders’ The Company is at the growing meeting. stage. We seek to seize economic Article 26-1 environment for sustainable If there are earnings in the annual operation. The dividend policy of final account, the Company shall the Company is based on the future first set aside ten percent of and actual operation of the earnings as a legal reserve after the Company, as well as the stability losses have been covered and all and growth of dividends. When taxes and dues have been paid. there are accumulated distributable However, the legal reserve will not earnings for the Company, the be set aside if it reaches paid-in distribution amount shall not be capital of the Company. The less than 50%; for dividends remaining amount will be set aside distributed, the cash dividend shall or reversed to special surplus not be less than 50%. reserve in accordance with operation demand or laws and regulations. If there is still any remaining amount, it will be added to the undistributed earnings of the previous year as distributable earnings. The earnings distribution is proposed by the Board of Directors and reported to shareholders’ meeting for resolution of distributing dividends or retaining earnings. The Company is at the growing stage. We seek to seize economic environment for sustainable operation. The dividend policy of the Company is based on the future and actual operation of the Company, as well as the stability and growth of dividends. When there are accumulated distributable earnings for the Company, the

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	distribution amount shall not be less than 50%; for dividends distributed, the cash dividend shall not be less than 50%.
	Article 31 These Articles were enacted on December 21, 1988. 1stamendment on January 24, 1989, 2nd amendment on May 30, 1989, 3rd amendment on August 11, 1989, 4th amendment on October 14, 1989, 5thamendment on November 23, 1990, 6thamendment on December 26, 1990, 7thamendment on April 19, 1991, 8th amendment on December 28, 1991, 9thamendment on June 11, 1992, 10thamendment on May 26, 1993, 11thamendment on January 28, 1994, 12th amendment on May 28, 1998, 13th amendment on June 24, 1999, 14th amendment on June 20, 2000, 15th amendment on May 8, 2001, 16th amendment on June 11, 2002, 17th amendment on June 12, 2003, 18th amendment on June 20 2006, 19th amendment on June 23, 2007, 20th amendment on June 19, 2008, 21st amendment on June 16, 2009, 22nd amendment on June 17, 2010, 23rd amendment on June 19, 2012, 24th amendment on June 10, 2013, 25th amendment on June 17, 2014, 26th amendment on June 12, 2015,27th amendment on June 16, 2016.	Article 31 These Articles were enacted on December 21, 1988. 1stamendment on January 24, 1989, 2nd amendment on May 30, 1989, 3rd amendment on August 11, 1989, 4th amendment on October 14, 1989, 5thamendment on November 23, 1990, 6thamendment on December 26, 1990, 7thamendment on April 19, 1991, 8th amendment on December 28, 1991, 9thamendment on June 11, 1992, 10thamendment on May 26, 1993, 11thamendment on January 28, 1994, 12th amendment on May 28, 1998, 13th amendment on June 24, 1999, 14th amendment on June 20, 2000, 15th amendment on May 8, 2001, 16th amendment on June 11, 2002, 17th amendment on June 12, 2003, 18th amendment on June 20 2006, 19th amendment on June 23, 2007, 20th amendment on June 19, 2008, 21st amendment on June 16, 2009, 22nd amendment on June 17, 2010, 23rd amendment on June 19, 2012, 24th amendment on June 10, 2013, 25th amendment on June 17, 2014, 26th amendment on June 12, 2015	Revising this amendment date and number.

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Management Presentation

• (A) 2015 remuneration distribution to employees and directors and supervisors

• In accordance with amended Article 26 of Articles of Incorporation approved by the 16[th] Board of Directors Meeting of the 9[th] term on December 30, 2015, “If the Company has profits in the fiscal year, the board of Directors shall decide to distribute no less than 0.1% of the profits as the remuneration to employees and no higher than 1% of the profits as the remuneration to directors and supervisors. The target of remuneration distribution to employees includes employees of subordinate companies who meet certain criteria. However, if accumulated losses still remain, the Company shall retain the subsidization amount in advance before distributing remuneration to employees and directors and supervisors in accordance with the ratio prescribed in previous paragraph.”

• The Company’s 2015 income before tax without deducting remuneration distribution to and directors and was employees supervisors

NT$1,503,594,735. We plan to set aside 3.7082140%, which is NT$55,756,511 as employee remuneration and 0.7416428%, which is NT$11,151,302 as directors and supervisors’ remuneration.

1. The aforementioned amount set aside as remuneration of employees and directors and supervisors was approved by the 18[th] Board of Directors Meeting of the 9[th] term on March 18, 2016.

2. (B) 2015 business and financial reports of the Company (Please refer to P.20 to P.31 of this Handbook)

3. (C) Supervisors’ Review Report on 2015 Financial Statements (Please refer to P.9 of this Handbook)

4. (D) The Company stipulates “Ethical Corporate Management Best Practice Principles” and “Operation Procedures and Conduct Guidelines for Ethical Corporate Management”

5. The stipulation of “Ethical Corporate Management Best Practice Principles” of the Company was approved by the 14[th] Board of Directors of the 9[th] term in accordance with Letter Tai-Cheng-Chi-Li-Zi No.1030022825 of Taiwan Stock

6. 7 -

Exchange dated November 7, 2014.

1. “Operation Procedures and Conduct Guidelines for Ethical Corporate Management” of the Company was stipulated in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and Article 6 and 18 of “Ethical Corporate Management Best Practice Principles” of the Company. These operation procedures and conduct guidelines specifically specify the matters that the Company’s personnel shall pay attention to when performing business. The stipulation was approved by the 16[th] term. Board of Directors Meeting of the 9[th]

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China Steel Chemical Corporation Supervisors’ Review Report

The Board of Directors presented the Company’s 2015 business report, individual and consolidated financial statements, and earnings distribution. The individual and consolidated financial statements were audited by CPA Hsu, Ruei-Shuen and CPA Kuo, Li-Yuan of Deloitte & Touche, which was entrusted by the Board of Directors and presented audit report.

After review, we believe the aforementioned business report, individual and consolidated financial statements and earnings distribution comply with laws and regulations. We, thus, present our report as above in accordance with Article 219 of Company Act and Article 36 of Securities and Exchange Act.

We hereby propose for approval To

2016 Shareholders’ Meeting of China Steel Chemical Corporation

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Supervisor: Yu, Jun-Yan

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Supervisor: Chia, Kai-Jie

March 18, 2016

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Proposals

Proposal 1 Proposed by the Board of Directors of the Company

• Subject: Propose the Company’s 2015 business report, 2016 business plan profile, and 2015 individual and consolidated financial statements for approval.

• Description: Please refer to Appendix for the Company’s 2015 business report, 2016 business plan profile, and 2015 individual and consolidated financial statements for details (please refer to P.20 to P.31 of this Handbook).

Resolution:

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China Steel Chemical Corporation Business Report

I. 2015 business report:

A. Implementation profile:

The 2015 consolidated revenue of the Company was $5.378 billion, and the consolidated net profit after tax was $1.239 billion; the individual revenue was $5.771 billion, and the individual net profit after tax was $1.239 billion, and the net profit after tax per share was $5.37. The management team of the Company upholds the principle of corporation sustainable operation, striving for the promotion of organization operation efficiency and hoping to create the maximum equity for shareholders.

B. Implementation result of business plan:

In 2015, we disposed 257,506 tons of coal tar, 100,218 tons of light oil, and the sales amount of coal tar and light oil products was 245,188 tons and 93,723 tons respectively; in addition, the annual sales amount of Green Mesophase Powder and Mesophase Graphite Powder reached 3,940 tons.

C. Analysis of financial revenues and expenditures, budget execution and profit capacity:

The 2015 operation revenue of the Company was $5,770,498 thousand, which was an $111,035 thousand decrease comparing to the budget. The main reason in the comprehensive analysis is that the petroleum price slumped due to the reason that petroleum exporting countries refused to reduce petroleum production as well as economic downturn. By the end of 2014, the petroleum price fell from US$60/barrel to US$35/barrel, and the price has been fallen at the beginning of the year, which causes the fall of sales price of related products; the net non-operation revenues and expenditures was $234,574 thousand, which was an $33,855 thousand increase comparing to the budget. This is caused by the increase of exchange revenue resulted from depreciation of NTD. In the final account, the 2015 revenue before tax was $1,436,687 thousand, which was an increase of

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27,756 thousand comparing to the budget.

• D. Situation of research and development:

  • (1) The development of anode material product series for high energy and high power was complete. We also established verification and electrolyte resistance features for all batteries and test platform, which may verify new anode materials and features of customer demand. We are currently striving for promoting the application for battery customers in Japan and Mainland China and creating successful sales of products and competitiveness.

  • (2) The development of supercapacitive activated carbon of microcorpus and mesoporous proportion was complete, and the volume capacitance and resistance in two electrolytes are better Japanese and Korean products. After the long-term aging assessment by large factories in Taiwan and Korea, the result shows excellent performance. We received mass production orders, and the product is under verification, which allows us to be a formal qualified supplier of supercapacitive activated carbon. Meanwhile, a Japanese customer completed initial stage aging test, and it will conduct technology exchanges and verification. We have the potential to formally become the supplier of that company.

  • (3) The establishment of 40-ton vertical activation kiln of ultracapacitor activated carbon and functional group removal furnace was complete to produce ultracapacitor with high performance. We will continue to build 100-ton level of continuous activation furnace to enlarge production and meet the demand and application, which includes systems of idle stop-start capacitance, light rail and wind energy storage, of market of high price.

• II. 2016 business plan profile

• A. Operation strategy:

  • (1) Innovative service and integration of production and marketing; promoting operation performance.

  • (2) Identify risks and control hazard; implementing green partners.

  • (3) Refining production and production capacity break through; strictly controlling product quality.

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• (4) Developing products and optimizing production process; strengthening competitiveness.

• (5) Reducing costs and increasing profits; optimizing process management.

• B. Production and marketing policy:

• (1) The production and marketing goal of the Company is to extract an ship all byproducts of coal tar, crude light oil, and coke of China Steel Corporation and Dragon Steel in time and to smoothly undergo processing and produce products that meet the market and customer demand, as well as selling all products with the price that meets the market price in order to create economic value.

• (2) Optimizing production line of coal chemical products and innovatively developing diversified fine carbon products like anode materials for lithium ion secondary batteries, ultracapacitor activated carbon and isotropic graphite in order to increase the additional value of coal tar asphalt and to push the Company into the industry of high-technology materials.

Chairman: Wang, Shyi-Chin President: Lee, Chien-Ming

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Accounting Supervisor: Chen, Min-Nan

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CHINA STEEL CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Available-for-sale financial assets - current (Notes 4 and 8) Notes receivable (Notes 4 and 11) Accounts receivable, net (Notes 4, 5 and 11) Accounts receivable - related parties (Notes 4, 5, 11 and 29) Other receivables (Note 29) Inventories (Notes 4, 5 and 12) Noncurrent assets held for sale (Notes 4, 5, 13 and 18) Other financial assets - current (Note 14) Other current assets Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4, 5 and 8) Held-to-maturity financial assets - noncurrent (Notes 4, and 9) Debt investments with no active market - noncurrent (Notes 4 and 10) Investments accounted for using equity method (Notes 4 and 16) Property, plant and equipment (Notes 4, 5, 17 and 30) Investment properties (Notes 4, 5 and 18) Deferred tax assets (Notes 4 and 25) Prepaid equipment (Note 30) Refundable deposits Other financial assets-noncurrent (Note 14) Long-term prepayments for lease (Note 29) Other noncurrent assets (Note 29) Total noncurrent assets TOTAL		December 31, 2015 Amount % $ 1,007,655 13 716,807 9 149,737 2 8,402 - 356,559 4 70,470 1 16,676 - 413,480 5 - - 128,450 2 62,168 1 2,930,404 37 394,166 5 112,902 1 195,970 2 1,128,657 14 2,468,234 31 563,513 7 50,295 1 44,058 1 3,953 - 1,110 - 30,994 - 54,125 1 5,047,977 63 $ 7,978,381 100		December 31, 2014 (Restated) Amount % $ 1,097,928 13 1,346,604 15 220,684 2 7,054 - 409,411 5 137,006 2 386,196 4 446,627 5 32,058 - 233,300 3 69,362 1 4,386,230 50 525,241 6 108,860 1 160,597 2 1,380,338 16 1,431,399 17 552,988 6 42,644 1 24,409 - 2,467 - - - 33,454 - 36,776 1 4,299,173 50 $ 8,685,403 100

LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 19) Short-term bills payable (Note 19) Accounts payable Accounts payable - related parties (Note 29) Other payables (Notes 20, 21 and 29) Current tax liabilities (Note 25) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred tax liabilities (Notes 4, 5 and 25) Net defined benefit liabilities (Notes 4, 5 and 21) Other noncurrent liabilities (Note 18) Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 22) Ordinary shares capital Capital surplus Retained earnings (Note 25) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS Total equity TOTAL		December 31, 2015 Amount % $ 12,951 - 755,000 9 23,162 - 159,490 2 298,622 4 86,532 1 46,691 1 1,382,448 17 5,248 - 149,805 2 1,110 - 156,163 2 1,538,611 19 2,369,044 30 657,295 8 2,167,302 27 242,136 3 1,248,132 16 3,657,570 46 (102,348) (1) (141,791) (2) 6,439,770 81 - - 6,439,770 81 $ 7,978,381 100		December 31, 2014 (Restated)
				Amount % $ 100,441 1 - - 24,524 - 256,098 3 356,036 4 187,738 2 30,011 1 954,848 11 1,663 - 133,056 2 - - 134,719 2 1,089,567 13 2,369,044 27 515,023 6 1,948,583 22 242,136 3 2,215,199 26 4,405,918 51 317,045 3 (162,034) (2) 7,444,996 85 150,840 2 7,595,836 87 $ 8,685,403 100

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 18, 2016)

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CHINA STEEL CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUES (Notes 4,, 23 and 29) OPERATING COSTS (Notes 12, 21, 24 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 21, 24 and 29) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 24 and 29) Other gains and losses (Notes 24 and 29) Share of the profit of associates (Note 4) Interest expense (Note 24) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX (Notes 4, 5 and 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (Notes 21, 22 and 25) Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit plans Share of the other comprehensive income of associates Income tax benefit relating to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss		**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2015 Amount % $ 5,737,544 100 4,191,959 73 1,545,585 27 129,946 2 117,512 2 98,210 2 345,668 6 1,199,917 21 52,894 1 104,723 2 86,612 1 (2,283) - 241,946 4 1,441,863 25 202,777 3 1,239,086 22 (23,289) (1) (1,744) - 3,959 -		2014(Restated)
				Amount % $ 8,904,302 100 6,077,761 68 2,826,541 32 153,236 2 176,635 2 115,861 1 445,732 5 2,380,809 27 49,759 1 40,708 - 99,258 1 (2,797) - 186,928 2 2,567,737 29 379,248 5 2,188,489 24 (9,721) - (332) - 1,652 - (Continued)

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CHINA STEEL CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Exchange differences on translating foreign operations Unrealized gains and losses on available-for-sale financial assets Share of the other comprehensive income of associates Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests EARNINGS PER SHARE (Note 26) Basic Diluted		**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2015 Amount % $ 14,479 - (186,247) (3) (247,294) (4) (440,136) (8) $ 798,950 14 $ 1,239,033 22 53 - $ 1,239,086 22 $ 798,566 14 384 - $ 798,950 14 $ 5.37 $ 5.35		2014(Restated)
				Amount % $ 23,173 - 138,948 2 (3,935) - 149,785 2 $ 2,338,274 26 $ 2,187,104 25 1,385 - $ 2,188,489 25 $ 2,336,933 26 1,341 - $ 2,338,274 26 $ 9.50 $ 9.46

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

(With Deloitte & Touche audit report dated March 18, 2016)

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CHINA STEEL CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2014 Appropriation of 2013 earnings (Note 22) Legal reserve Cash dividends - 83% Adjustment of non-controlling interests Adjustment from changes in equity of associates Net profit for the year ended December 31, 2014 (restated, Note 3) Other comprehensive income (loss) for the year ended December 31, 2014, net of income tax (restated, Note 3) Total comprehensive income for the year ended December 31, 2014 Disposal of the Corporation's shares held by subsidiaries Adjustment to capital surplus from dividends paid to subsidiaries BALANCE AT DECEMBER 31, 2014 (As Restated) Appropriation of 2014 earnings (Note 22) Legal reserve Cash dividends - 83% Adjustment from changes in equity of associates Net profit for the year ended December 31, 2015 Other comprehensive income (loss) for the year ended December 31, 2015, net of income tax Total comprehensive income (loss) for the year ended December 31, 2015 Disposal of the Corporation's shares held by subsidiaries Adjustment to capital surplus from dividends paid to subsidiaries Disposal of subsidiaries BALANCE AT DECEMBER 31, 2015						Equity Attributable to Own	Equity Attributable to Own	ers of the Corporation	ers of the Corporation				Total Equity Attributable to Owners f the Corporation I $ 6,986,104 - (1,966,307) (1,966,307) - 672 2,187,104 149,829 2,336,933 31,556 56,038 7,444,996 - (1,966,307) (1,966,307) (3,124) 1,239,033 (440,467) 798,566 117,271 48,368 - $ 6,439,770	Non-controlling nterests (Note 22) $ 161,259 - - - (11,760) - 1,385 (44) 1,341 - - 150,840 - - - - 53 331 384 - - (151,224) $ -	Total Equity $ 7,147,363 - (1,966,307) (1,966,307) (11,760) 672 2,188,489 149,785 2,338,274 31,556 56,038 7,595,836 - (1,966,307) (1,966,307) (3,124) 1,239,086 (440,136) 798,950 117,271 48,368 (151,224) $ 6,439,770
	Ordinary Shar	e Capital Ordinary shares $ 2,369,044 - - - - - - - - - - 2,369,044 - - - - - - - - - - $ 2,369,044	Capital surplus $ 431,711 - - - - 766 - - - 26,508 56,038 515,023 - - - (3,124) - - - 97,028 48,368 - $ 657,295			**Retained Earnings **		Total Retained Earnings $ 4,193,616 - (1,966,307) (1,966,307) - (94) 2,187,104 (8,401) 2,178,703 - - 4,405,918 - (1,966,307) (1,966,307) - 1,239,033 (21,074) 1,217,959 - - - $ 3,657,570	Ot	her Equity (Note 21)	Total Other Equity $ 158,815 - - - - - - 158,230 158,230 - - 317,045 - - - - - (419,393) (419,393) - - - $ (102,348)	Treasury Shares o $ (167,082) - - - - - - - - 5,048 - (162,034) - - - - - - - 20,243 - - $ (141,791)
									Exchange Differences on Translating Foreign Operations $ (2,154) - - - - - - 30,143 30,143 - - 27,989 - - - - - 11,735 11,735 - - - $ 39,724	Unrealized Gains (Losses) on Available-for-sale Financial Assets $ 160,969 - - - - - - 128,087 128,087 - - 289,056 - - - - - (431,128) (431,128) - - - $ (142,072)
	Number of Share (Thousand shares) 236,904 - - - - - - - - - - 236,904 - - - - - - - - - - 236,904				Legal Reserve $ 1,727,592 220,991 - 220,991 - - - - - - - 1,948,583 218,719 - 218,719 - - - - - - - $ 2,167,302	Special Reserve $ 242,136 - - - - - - - - - - 242,136 - - - - - - - - - - $ 242,136	Unappropriated Earnings $ 2,223,888 (220,991 ) (1,966,307) (2,187,298) - (94) 2,187,104 (8,401) 2,178,703 - - 2,215,199 (218,719 ) (1,966,307) (2,185,026) - 1,239,033 (21,074) 1,217,959 - - - $ 1,248,132

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 18, 2016)

• 23 -

CHINA STEEL CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expense Amortization expense Net gain on fair value change of financial assets designated as at fair value through profit or loss Net (gain) loss on fair value change of financial assets and liabilities held for trading Interest expense Interest income Dividend income Share of the profit of associates Loss on disposal of property, plant and equipment Loss (gain) on disposal of investments Gain on disposal of noncurrent assets held for sale Gain on disposal of associates Write-down of inventories Changes in operating assets and liabilities Financial instruments held for trading Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Other current assets Accounts payable Accounts payable - related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Income taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets designated as at fair value through profit or loss Proceeds from disposal of financial assets designated as at fair value through profit or loss Net cash outflow on disposal of subsidiaries Proceeds from disposal of noncurrent assets held for sale Acquisition of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets Proceeds from the capital reduction on available-for-sale financial assets

For the Year Ended December 31 2015 2014 (Restated) $ 1,441,863 $ 2,567,737 271,434 282,012 4,585 4,241 (3,841) (20,391) 23,405 (11,603) 2,283 2,797 (11,044) (17,898) (21,458) (25,268) (77,954) (111,145) 572 1,394 1,100 (34,305) (66,609) - (815) - 42,180 19,104 194,255 (84,779) (1,348) 11,771 52,797 124,908 66,536 40,689 65,730 (66,059) (9,743) (89,525) 13,391 (21,822) (1,362) (775) (96,608) (71,183) (89,902) 31,373 16,680 318 (6,540) (4,850) 1,809,587 2,526,741 (304,090) (406,266) 1,505,497 2,120,475 (2,992,163) (4,162,095) 3,411,583 4,677,239 (151,224) - 98,667 - - (120,200) 13,325 65,310 1,350 1,499 (Continued)

• 24 -

CHINA STEEL CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2015	2014 (Restated)
Acquisition of debt investments with no active market		(45,441)		(39,155)
Proceeds from disposal of debt investments with no active market	$	10,161	$	24,861
Acquisition of property, plant and equipment		(1,297,144)		(305,011)
Proceeds from disposal of property, plant and equipment		647		3,208
Increase in refundable deposits		(1,486)		(1,186)
Increase in other receivables		-		(9,942)
Decrease in other receivables		303,265		-
Acquisition of investment properties		(10,525)		-
Decrease in other financial assets		103,740		185,764
Increase in other noncurrent assets		(26,523)		(37,009)
Increase in long-term prepayments for lease		-		(38,221)
Decrease in other prepayments		-		3,000
Interest received		11,569		18,548
Dividends received from associates		78,774		66,812
Dividends received from others		21,458		25,268
Net cash generated from (used in) investing activities		(469,967)		358,690
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings		3,192,909		4,996,585
Repayments of short-term borrowings		(3,280,399)		(4,968,301)
Increase in short-term bills payable		755,000		195,100
Decrease in short-term bills payable		-		(195,100)
Increase in other noncurrent liabilities		1,110		-
Dividends paid		(1,918,058)		(1,910,364)
Proceeds from disposal of treasury shares		117,271		31,556
Interest paid		(2,287)		(2,519)
Decrease in non-controlling interests		-		(11,760)
Net cash used in financing activities		(1,134,454)		(1,864,803)
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH AND CASH EQUIVALENTS HELD IN FOREIGN
CURRENCIES		8,651		(25,870)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS		(90,273)		588,492
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR		1,097,928		509,436
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	$	1,007,655	$	1,097,928
The accompanying notes are an integral part of the consolidated financial	statements.			(Concluded)

(With Deloitte & Touche audit report dated March 18, 2016)

• 25 -

CHINA STEEL CHEMICAL CORPORATION

STANDALONE BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Available-for-sale financial assets - current (Notes 4 and 8) Notes receivable (Notes 4 and 10) Accounts receivable, net (Notes 4, 5 and 10) Accounts receivable - related parties (Notes 4, 5, 10 and 27) Other receivables (Note 27) Inventories (Notes 4, 5 and 11) Noncurrent assets held for sale (Notes 4, 5, 12 and 16) Other financial assets - current (Note 13) Other current assets Total current assets NONCURRENT ASSETS Debt investments with no active market - noncurrent (Notes 4 and 9) Investments accounted for using equity method (Notes 4 and 14) Property, plant and equipment (Notes 4, 5, 15 and 28) Investment properties (Notes 4, 5 and 16) Deferred tax assets ( Notes 4 and 23) Prepaid equipments Refundable deposits Other financial assets-noncurrent (Note 13) Other noncurrent assets (Note 27) Total noncurrent assets TOTAL		December 31, 2015 Amount % $ 706,105 9 347,427 4 103,951 1 8,402 - 350,094 5 112,139 1 19,708 - 349,195 5 - - 78,500 1 45,997 1 2,121,518 27 50,000 1 2,594,714 33 2,429,663 31 563,513 7 50,295 1 42,172 - 3,953 - 1,110 - 42,099 - 5,777,519 73 $ 7,899,037 100		December 31, 2014 (Restated) Amount % $ 876,802 10 764,544 9 139,658 2 7,053 - 347,441 4 189,531 2 372,731 5 429,287 5 32,058 - 233,300 3 56,301 1 3,448,706 41 50,000 1 2,955,522 35 1,403,392 17 552,988 6 42,644 - 20,802 - 2,467 - - - 25,000 - 5,052,815 59 $ 8,501,521 100

LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 17) Short-term bills payable (Note 17) Accounts payable Accounts payable - related parties (Note 27) Other payables (Notes 18, 19 and 27) Current tax liabilities (Note 23) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Deferred tax liabilities (Notes 4, 5 and 23) Net defined benefit liabilities (Notes 4, 5 and 19) Other noncurrent liabilities (Note 16) Total noncurrent liabilities Total liabilities EQUITY (Note 20) Ordinary shares capital Capital surplus Retained earnings (Notes 3 and 23) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		December 31, 2015 Amount % $ 12,951 - 700,000 9 27,600 - 169,390 2 285,114 4 80,918 1 27,131 - 1,303,104 16 5,248 - 149,805 2 1,110 - 156,163 2 1,459,267 18 2,369,044 30 657,295 9 2,167,302 27 242,136 3 1,248,132 16 3,657,570 46 (102,348) (1) (141,791) (2) 6,439,770 82 $ 7,899,037 100		December 31, 2014 (Restated)
				Amount % $ 100,441 1 - - 24,074 - 256,098 3 331,017 4 183,439 2 26,737 1 921,806 11 1,663 - 133,056 1 - - 134,719 1 1,056,525 12 2,369,044 28 515,023 6 1,948,583 23 242,136 3 2,215,199 26 4,405,918 52 317,045 4 (162,034) (2) 7,444,996 88 $ 8,501,521 100

The accompanying notes are an integral part of the standalone financial statements.

(With Deloitte & Touche audit report dated March 18, 2016)

• 26 -

CHINA STEEL CHEMICAL CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUES (Notes 4, 21 and 27) OPERATING COSTS (Notes 11, 19, 22 and 27) GROSS PROFIT OPERATING EXPENSES (Notes 19, 22 and 27) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 22 and 27) Other gains and losses (Notes 22 and 27) Share of profit of subsidiaries and associates (Note 4) Interest expenses Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4, 5 and 23) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 19, 20 and 23) Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit plans Share of the other comprehensive income of subsidiaries and associates accounted for using the equity method Income tax benefit relating to items that will not be reclassified subsequently to profit or loss		**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2015 Amount % $ 5,770,498 100 4,236,899 73 1,533,599 27 123,082 2 110,194 2 98,210 2 331,486 6 1,202,113 21 48,015 1 113,768 2 74,679 1 (1,888) - 234,574 4 1,436,687 25 197,654 3 1,239,033 22 (23,289) (1) (1,744) - 3,959 -		2014(Restated)
				Amount % $ 8,818,270 100 6,078,329 69 2,739,941 31 147,405 2 161,940 2 115,861 1 425,206 5 2,314,735 26 36,982 - 44,604 1 167,394 2 (2,466) - 246,514 3 2,561,249 29 374,145 4 2,187,104 25 (9,721) - (332) - 1,652 - (Continued)

• 27 -

CHINA STEEL CHEMICAL CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Unrealized loss on available-for-sale financial assets Share of the other comprehensive income of subsidiaries and associates accounted for using the equity method Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 24) Basic Diluted			**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
			2015 Amount % 14,479 - (35,707) - (398,165) (7) (440,467) (8) 798,566 14 $ 5.37 $ 5.35			2014(Restated)
		$			$	Amount % 26,529 - (13,660) - 145,361 1 149,829 1 2,336,933 26 $ 9.50 $ 9.46
		$			$

The accompanying notes are an integral part of the standalone financial statements.

(Concluded)

(With Deloitte & Touche audit report dated March 18, 2016)

• 28 -

CHINA STEEL CHEMICAL CORPORATION

STANDALONE STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

BALANCE AT JANUARY 1, 2014 Appropriation of 2013 earnings (Note 20) Legal reserve Cash dividends - 83% Adjustment from changes in equity of subsidiaries and associates Net profit for the year ended December 31, 2014 (Restated, Note 3) Other comprehensive income (loss) for the year ended December 31, 2014, net of income tax (Restated, Note 3) Total comprehensive income for the year ended December 31, 2014 Disposal of the Corporation's shares held by subsidiaries Adjustment to capital surplus from dividends paid to subsidiaries BALANCE AT DECEMBER 31, 2014 (As Restated) Appropriation of 2014 earnings (Note 20) Legal reserve Cash dividends - 83% Adjustment from changes in equity of subsidiaries and associates Net profit for the year ended December 31, 2015 Other comprehensive income (loss) for the year ended December 31, 2015, net of income tax Total comprehensive income (loss) for the year ended December 31, 2015 Disposal of the Corporation's shares held by subsidiaries Adjustment to capital surplus from dividends paid to subsidiaries BALANCE AT DECEMBER 31, 2015	Ordinary Share Capital Number of Share (Thousand Shares) Ordinary Shares Capital Surplus 236,904 $ 2,369,044 $ 431,711 - - - - - - - - - - - 766 - - - - - - - - - - - 26,508 - - 56,038 236,904 2,369,044 515,023 - - - - - - - - - - - (3,124) - - - - - - - - - - - 97,028 - - 48,368 236,904 $ 2,369,044 $ 657,295		**Retained Earnings **	Total Retained Earnings $ 4,193,616 - (1,966,307) (1,966,307) (94) 2,187,104 (8,401) 2,178,703 - - 4,405,918 - (1,966,307) (1,966,307) - 1,239,033 (21,074) 1,217,959 - - $ 3,657,570		Other Equity (Note 20)	Total Other Equity Treasury Shares $ 158,815 $ (167,082) - - - - - - - - - - 158,230 - 158,230 - - 5,048 - - 317,045 (162,034) - - - - - - - - - - (419,393) - (419,393) - - 20,243 - - $ (102,348) $ (141,791)	Total Equity $ 6,986,104 - (1,966,307) (1,966,307) 672 2,187,104 149,829 2,336,933 31,556 56,038 7,444,996 - (1,966,307) (1,966,307) (3,124) 1,239,033 (440,467) 798,566 117,271 48,368 $ 6,439,770
						Exchange Unrealized Differences on Gain and Loss Translating Available- Foreign for-sale Operations Financial Assets $ (2,154) $ 160,969 - - - - - - - - - - 30,143 128,087 30,143 128,087 - - - - 27,989 289,056 - - - - - - - - - - 11,735 (431,128) 11,735 (431,128) - - - - $ 39,724 $ (142,072)
			Unappropriated Legal Reserve Special Reserve Earnings $ 1,727,592 $ 242,136 $ 2,223,888 220,991 - (220,991 ) - - (1,966,307) 220,991 - (2,187,298) - - (94) - - 2,187,104 - - (8,401) - - 2,178,703 - - - - - - 1,948,583 242,136 2,215,199 218,719 - (218,719 ) - - (1,966,307) 218,719 - (2,185,026) - - - - - 1,239,033 - - (21,074) - - 1,217,959 - - - - - - $ 2,167,302 $ 242,136 $ 1,248,132

The accompanying notes are an integral part of the standalone financial statements.

(With Deloitte & Touche audit report dated March 18, 2016)

• 29 -

CHINA STEEL CHEMICAL CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expense Amortization expense Net gain on fair value change of financial assets designated as at fair value through profit or loss Net gain on fair value change of financial liabilities held for trading Interest expense Interest income Dividend income Share of the profit of subsidiaries and associates Loss on disposal of property, plant and equipment Gain on disposal of noncurrent assets held for sale Gain on disposal of associates Write-down of inventories Changes in operating assets and liabilities Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Other current assets Accounts payable Accounts payable - related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Income taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets designated as at fair value through profit or loss Proceeds from disposal of financial assets designated as at fair value through profit or loss Acquisition of available-for-sale financial assets Proceeds from disposal of noncurrent assets held for sale Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in other receivables

For the Year Ended December 31 2015 2014 (Restated) $ 1,436,687 $ 2,561,249 267,999 281,758 2,041 - (4,464) (23,172) - (91) 1,888 2,466 (4,776) (7,543) (2,957) (2,539) (74,679) (167,394) 572 1,394 (66,609) - (470) - 39,429 19,104 (1,349) 11,772 (2,653) 93,994 77,392 31,143 51,973 (65,323) 40,663 (72,773) 16,339 (11,367) 3,526 (1,225) (86,708) (71,183) (84,236) 29,011 394 (2,716) (6,540) (4,850) 1,603,462 2,601,715 (300,282) (403,244) 1,303,180 2,198,471 (2,985,791) (4,101,490) 3,407,372 4,666,648 - (62,599) 98,667 - (1,278,371) (280,984) 647 3,208 (1,486) (1,186) 300,000 - (Continued)

• 30 -

CHINA STEEL CHEMICAL CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Acquistion of investment properties Decrease in other financial assets Increase in other noncurrent assets Interest received Dividends received from subsidiaries and associates Other dividends received Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Increase in short-term bills payable Decrease in short-term bills payable Increase in other noncurrent liabilities Dividends paid Interest paid Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2015 2014 (Restated) $ (10,525) $ - 153,690 156,300 (25,175) (25,000) 5,826 8,193 213,042 74,386 2,957 2,539 (119,147) 440,015 3,192,909 4,896,585 (3,280,399) (4,868,301) 700,000 100,000 - (100,000) 1,110 - (1,966,426) (1,966,402) (1,924) (2,444) (1,354,730) (1,940,562) (170,697) 697,924 876,802 178,878 $ 706,105 $ 876,802

The accompanying notes are an integral part of the standalone financial statements.

(Concluded)

(With Deloitte & Touche audit report dated March 18, 2016)

• 31 -

Proposal 2 Proposed by the Board of Directors of the Company

Subject: Propose 2015 earnings distribution of the Company for approval. Description:

• A. The 2015 earnings after tax of the Company was $1,239,033,574. After adding $30,468,019 of undistributed earnings by the end of 2014, deducting $296,371 of effect amount resulted from IFRS retrospective application and re-preparation, setting aside $123,903,357 of legal reserve, adjusting and deducting $1,743,031 of retained earnings from investment adopting equity method, and deducting $19,329,903 of re-measurements of defined benefit plans recognized in retained earnings, the distributable earnings was $1,124,228,931 by the end of 2015.

• B. In accordance with Article 26 of Articles of Incorporation of the Company, $1,066,070,160 is distributed as cash bonus for shareholders, which is a $4.5 cash bonus distribution per share. The undistributed earnings after distribution are $58,158,771.

• C. The base date of cash dividend distribution will be determined by the Board of Directors after this proposal was reported to and approved by 2016 shareholders’ meeting. When distributing cash dividends, the dividend for individual shareholders will be distributed to “dollar,” while the decimals will be rounded to dollar. The differences will be paid by the Company with expenses.

• D. If the outstanding shares amount is affected, which causes the changes in the yield per share, due to repurchasing the Company’s shares, and transferring or writing off treasury stocks, we will propose the change of shareholders’ yield to the shareholders’ meeting.

• E. In order to cope with the implementation of combination of two taxes, we will give the priority to distribute earnings in 1998 and the years after that when calculating the tax deduction ratio of deductible tax amount for shareholders stipulated in Article 66-6 of the Income Tax Act. We will also give the priority to distribute earnings of the latest year when calculating income tax of the undistributed earnings that shall be levied at the rate of

• 32 -

• 10% stipulated in Article 66-9 of the Income Tax Act.

• F. Please refer to Appendix for the table of 2015 earnings distribution estimation (please refer to P.34 of this Handbook).

Resolution:

• 33 -

China Steel Chemical Corporation

Table of Earnings Distribution Estimation

From January 1 to December 31 of 2015

Undistributed Earnings by the end of 2014 Effect Amount Resulted from IFRS Retrospective Application and Re-preparation Adjusted Undistributed Earnings by the end of 2014 Retained Earnings Adjusted from Investment Adopting Equity Method Re-measurements of Defined Benefit Plans Recognized in Retained Earnings 2015 Net Profit Less: Legal Reserve set Aside 2015 Distributable Earnings Distribution Items: Shareholder Cash Bonus: $4.5/Share Undistributed Earnings by the end of 2015

Unit: NTD 30,468,019 (296,371) 30,171,648 (1,743,031) (19,329,903) 1,239,033,574 (123,903,357) 1,124,228,931 (1,066,070,160) 58,158,771

• 34 -

Election Matters

Proposal 1 Proposed by the Board of Directors of the Company

Subject: Election for directors and supervisors of the 10th term of the Company. Please refer to description for details. We hereby propose for election. Description:

• A. The term of directors and supervisors of the 9[th] term of the Company will expire on June 23, 2016, and the re-election of directors and supervisors is conducted in accordance with regulations.

• B. In accordance with Article 15 of Article of Incorporation of the Company, 9 directors (including 2 independent directors) and 3 supervisors, serving a 3-year term, of the 10[th] term of the Company will be reelected in this (2016) shareholder’s meeting. The term will start from June 23, 2016 until June 22, 2019. Additionally, in accordance with the provision of the Article, the re-election of directors and supervisors of the Company adopts candidate nomination system and will be conducted in accordance with Rules for Election of Directors and Supervisors of the Company.

• C. The nomination of candidates for directors (including independent directors) and supervisors is as follows. We hereby propose the list for shareholders to elect.

D.

.
Category	List of candidates	Education Background	Major Experience
Director	China Steel Corporation
	Legal Representatives : Wang Shyi Chin	Ph.D in Department of Materials and Optoelectronic Science of National Sun Yat-SenUniversity	Executive Vice President of China Steel Corporation
Director	China Steel Corporation
	Legal Representatives : Sung Jyh Yuh	Master’s degree in Department of Mechanical Engineering of National Taiwan University	Chairman of the Board of China Steel Corporation

• 34 -

Category	List of candidates	Education Background	Major Experience
Director	China Steel Corporation
	Legal Representatives : Lee Chien Ming	Ph.D in Department of Materials Science & Metallurgy of University of Cambridge	Director of China Steel Corporation, President of China Steel Corporation
Director	China Steel Corporation
	Legal Representatives : Yao Wen Tai	Department of Mechanical Engineering of National Taipei University of Technology	Assistant Vice President of China Steel Corporation
Director	China Steel Corporation
	Legal Representatives : Chao Yu Mei	Master’s degree in Department of the Built Environment of Technische Universiteit Eindhoven	Director of China Steel Corporation
Director	China Synthetic Rubber Corporation
	Legal Representatives : Koo Cheng Yun	MBA in the Wharton School of the University of Pennsylvania	Chairman of the Board and president of China Synthetic Rubber Corp., Chairman of the Board of Taiwan Cement Corporation
Director	China Synthetic Rubber Corporation
	Legal Representatives : Chao Tien Fu	Master’s degree in Department of chemical Engineering of National Taiwan University	President of Taiwan Prosperity Chemical Corporation
Independent Director	Hsieh Hsing Shu	Department of accounting of National Chengchi University Passed CPA examination	CEO of Hsieh Hsing Shu Accounting Firm Independent Director of Tsang Industrial Corporation

• 35 -

Category	List of candidates	Education Background	Major Experience
Independent Director	Wang Yuan Hong	Department of Business Administration of National Cheng-Kung University Passed attorney of higher examination Principal of Yong Hua Commercial Law Offices	Principal of Yong Hua Commercial Law Offices
Supervisor	CTCI Corporation
	Legal Representatives : Yu Jun Yan	Department of Electrical Engineering of National Taiwan University Executive Education class of Harvard Business School	Chairman of CTCI Corporation
Supervisor	Chia Kai Jie	Ph.D in Institute of traffic and Transportation, National Chiao Tung University	Professor in Department of Business Administration of Soochow University and Director of Big Data AnalysisResearchCenter
Supervisor	Chen Zhe Sheng	Ph.D in Department of Materials Engineering, of the University of Tokyo	President of Berlin Co., Ltd., Supervisor of China Steel Structure Co., Ltd.

Election result:

• 36 -

Other Proposals and

Motions

Other Proposals and Motions

• 37 -

Shareholding Statement of Directors and Supervisors of the Company

China Steel Chemical Corporation Shareholding Statement of Directors and Supervisors

(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)	(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)	(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)
		Shares held
Position		Name recorded on the shareholder register by the book closure	Shareholding ratio (%)
		date
Chairman	Wang, Shyi-Chin

(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)	(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)	(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)	(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)	(Bythe bookclosure date of this shareholders’ meeting:April 18,2016)
Position	Name		Shares held recorded on the shareholder register by the book closure date	Shareholding ratio (%)
Chairman	Wang, Shyi-Chin
Director	Sung Jyh-Yuh	Representative of China Steel Corporation	68,787,183	29.04
Director	Lee, Chien-Min
Director	Yao, Wen-Tai
Director	Chao, Yo-Mei
Director	Koo, Cheng-Yun	Representative of China Synthetic Rubber Corporation	11,759,096	4.96
Director	Chao, Tien-Fu
Director	Hung, Yuen-Chuen	Representative of Kao Reui Investment Co., Ltd	474,220	0.20
Director	Chen, He-Zong
Supervisor	Yu Jun-Yan	Representative of CTCI Corporation	1,776,916	0.75
Supervisor	Chia Kai-Jie		0	0
Shares held byall directors			81,020,499	34.20
Shares held byall supervisor			1,776,916	0.75
The minimum required combined shareholding of all directors bylaw			15,000,000
The minimum required combined shareholding of all supervisors bylaw			1,500,000

Note: The company already issued 236,904,480 ordinary shares.

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Dividend Policy of the

Company

Dividend Policy of China Steel Chemical Corporation

The Company is at the growing stage. We seek to seize economic environment for sustainable operation. The dividend policy of the Company is based on the future and actual operation of the Company, as well as the stability and growth of dividends. When there are accumulated distributable earnings for the Company, the distribution amount shall not be less than 50%; for dividends distributed, the cash dividend shall not be less than 50%.

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The Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate

The Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate

e Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate	e Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate	e Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate	e Impact of Stock Dividend Issuance on Business Performance, EPS, and Shareholder Return Rate
Unite: Thousand NTD
Year Item			2015 （forecast）
Paid-in capital at the beginning of the term			$2,369,044
Dividend and interest distribution of the year	Cash dividend per share		4.5(Note 1)
	Shares distribution per share for capital increase out of earnings		-
	Shares distribution per share for capital increase out of capital reserve		-
Changes in operation performance	Operation income		(Note 2)
	Ratio increased (decreased) for operation income comparing to the last year
	Net profit after tax
	Ratio increased (decreased) for net profit after tax comparing to the last year
	Earnings per share
	Ratio increased (decreased) for earnings per share comparingto the lastyear
	Annual average return on investment (reciprocal of annualaverage price earningsratio)
Pro forma earnings per share and price earnings ratio	If capital increase out of earnings all switches to distribution of cash dividend	Pro forma earnings per share
		Pro forma annual average return on investment
	If not conducting capital increase out of capital reserve	Pro forma earnings per share
		Pro forma annual average return on investment
	If not conducting capital increase out of capital reserve and the capital increase out of earnings all switches to distribution of cash dividend	Pro forma earnings per share
		Pro forma annual average return on investment

Note: 1. The 2015 estimated dividend and interest distribution is listed in accordance with the earnings distribution approved by the Board of Directors on March 18, 2016.

1. We do not disclose financial forecast in 2016. We are not required to disclose forecast information in accordance with Letter Tai-Tsai-Cheng-(1)-Zi No.00371 dated February 1, 2000.

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