GPPC — AGM Information 2018

Jul 26, 2018

Stock Code: 1312

==> picture [425 x 87] intentionally omitted <==

==> picture [425 x 86] intentionally omitted <==

2018 Annual Meeting of Shareholders

Meeting Handbook

Date: June 15, 2018

Place: Briefing Room of Kaohsiung Plant of the Company, No. 4, Hsing Kung Rd., Dashe District, Kaohsiung City

－ Policy of Quality of － Grand Pacific

All work together to do as what we say If you are dissatisfied we would not succeed

Table of Contents

I. Procedures of Meeting ....................................................................... II. Agenda in the Meeting ....................................................................... (I) Report Items ......................................................................... (II) Ratification Items .................................................................. (IIII) Discussion Items .................................................................... (IV) Incidental Motions ................................................................ (V) Adjournment .........................................................................

Page No. ............... 1 ............... 2 ............... 3 ............... 9 ............. 32 ............. 34 ............. 34

Procedures of the Meeting

I. Call to Order to the Meeting II. Chairperson Remarks III. Report Items IV. Ratification Items V. Discussion Items VI. Incidental Motions VII. Adjournment

• 1 -

Grand Pacific Petrochemical Corporation Agenda of 2018 Annual Meeting of Shareholders

• I. Time: June 15, 2018 (Friday), 10:00 AM

• II. Place: Briefing Room of Kaohsiung Plant of the Company, No. 4, Hsing Kung Rd., Dashe District, Kaohsiung City

• III. Call the Meeting to Order

• IV. Chairperson Remarks

• V. Report Items

• 2017 Business Report

• Audit Committee’s Audit Report on the 2017 Financial Statements

• Report on status of 2017 distribution of remunerations to employees and directors

• Other Report Items

• VI. Ratification Items

• 2017 Annual Financial Statements

• 2017 Earnings Distribution Proposal

• VII. Discussion Items

• The Proposal to Amend the Company’s “ARTICLES OF INCORPORATION”

• VIII. Incidental Motions

• IX. Adjournment

• 2 -

Report Items

• 3 -

I. 2017 Business Report

Grand Pacific Petrochemical Corporation 2017 Business Report

(I) Implementation Results of Operating Plan

In Year 2017, the Company gained the highest profits for styrene among these years, as the best profitable year amidst the recent years. Where the time schedule of the Company’s new productivity in China has been postponed once and once more, it offers an extremely limited increase to our global productivity. Some other styrene plants in the United States were strongly obstructed by unsmooth production and the hurricanes in the 1[st] and 3[rd] quarters. Our spot profit margins still continued with the not bad criteria in the two preceding years. Except in the 1[st] and 2[nd] quarters with prices trimmed downward, the Company’s profitability remained high in all other months. Our performance in styrene brought to us remarkable high point once more.

In terms of styrene, we conducted scheduled turnaround for out Styrene Plant II only in the 1[st] quarter, 2017. Thanks to such efforts, our overall outputs increased by around 30,000 M.T., boosting the overall output up to nearly 360,000 M.T. Our overall shipment volume including the part within the Company’s own use hit 358,000 M.T., increasing by 13,000 M.T. compared with the preceding year.

In the 1[st] quarter, 2017, the ABS rose both prices and volumes in continuity from the fourth quarter, 2016. As traditionally, nevertheless, ABS entered a slack season on the 2[nd] quarter. Amidst the weak prices in the upstream raw materials, the revenues and profits went downward. Thanks to the environmental protection monitoring while the economy rose up once more in China in the 3[rd] quarter, the ABS and PS prices went upward, boosting the sales volume. In ABS in particular, the profit hit an all-time high in the recent years.

Under stable running and continued rise in quality for nylon operations, the Company won widespread acclaim from massive customers in 2017, with sales performance reaching new heights.

The consolidated revenues of Grand Pacific Group for the year of 2017 were NT$23,350 million, an increase of $3,430 million from 2016; consolidated net income before tax was $4,180 million, an increase of $1,100 million from 2016; consolidated net income after tax was $3,450 million and consolidated net income after tax attributable to owners of the Company was $3,300 million.

The Parent Company Only revenue of the Company was $18,930 million, representing 81.1% of consolidated revenue. The 2017 Parent Company Only operating status is summarized as follows:

Main products between two years are compared as follows: The Company’s 2017 annual production volumes of SM was 359,524 tons, an increase of 9.4% from 328,743 tons in 2016; sale volume was 312,188 tons, an increase of 2.2% from 305,611 tons in 2016; Sale amount of SM was $11,532,514 thousand, an increase of 12.6% from $10,245,317 thousand in 2016. Annual production volume of ABS was 88,162 tons, an increase of 19.6% from 73,709 tons in 2016; sale volume was 87,448 tons, an increase of 21.7% from 71,851 tons in 2016; the sale amount of ABS was $4,952,119 thousand, an increase of 49% from $3,324,078 thousand in 2016. Annual production volume of Nylon was 26.044 tons, an increase of 56.6% from 16,635

• 4 -

tons in 2016; sale volume was 16,878 tons, an increase of 56.3% from 16,878 tons in 2016; the sale amount of Nylon was $1,939,203 thousand, an increase of 87.7% from $1,032,948 thousand in 2016

In total, the Company’s net revenue for the year of 2017 was $18,931,639 thousand, an increase of 25.3% from $15,108,451 thousand for the year of 2016; the net operating profit for the year of 2017 was $2,165,523 thousand, an increase of 26.6% from $1,710,850 thousand of net operating profit for the year of 2016; the net gain on investment for the year of 2017 was $1,651,640 thousand, an increase of 84.7% from $894,156 thousand of net gain on investment for the year of 2016. The net income after tax for the year of 2017 was $3,288,642 thousand.

(II) R&D Status

The Company is dedicated to making styrene the company's core niche, and then extends it upward to nylon 66 pertaining to crystal engineering plastics, and relevant high-end composite materials, as well as focuses the effort on fundamental improvement of ABS quality as the annual goal.

This year, the Company will continue with the following tasks::

1. Agglomeration of PBL large-particle latex and improvement of the quality of ABS. After the expansion of nylon 66 capacity, the Company will aim for three indicators: active development of high-temperature nylon engineering plastics, energy-saving and waste reduction.

2. Start from PBL rubber agglomerated large-particle latex, and then improve the quality and electroplating grade, tube grade and flame-retardant grade ABS products.

3. Expand the market of nylon industrial yarns and develop derivatives of high-temperature nylons, engineering plastics, such as ultra-tough nylon, high-temperature ultra-tough nylon, soft and transparent water-grade and PPO-mixed plastics to create high performance, high quality and premium nylon 66 plastic products.

4. 5 -

5. (III) The status of the Company’s 2017 production, sale and operating earnings is summarized as follows:

==> picture [483 x 592] intentionally omitted <==

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

1. Production volume Unit: tons, kilo M [3] , kilo degrees
Increase
Product 2017 2016 YoY
(decrease) %
SM 359,524 328,743 30,781 9.36
ABS/SAN 88,162 73,709 14,453 19.61
H2 9,238 9,017 221 2.45
Electric power 319,112 309,344 9,768 3.16
Vapor 1,080,276 1,008,534 71,742 7.11
Nylon 26,044 16,635 9,409 56.56
2. Sale volume: Unit: tons, kilo M [3] , kilo degrees
Increase
Product 2017 2016 YoY
(decrease) %
SM 312,188 305,611 6,577 2.15
ABS/SAN 87,448 71,851 15,597 21.71
H2 9,234 9,028 206 2.28
Electric power 147,374 149,630 (2,256) (1.51)
Vapor 188,194 178,178 10,016 5.62
Nylon 26,387 16,878 9,509 56.34
3. Sale amount: Unit: thousand dollars
Increase
Product 2017 2016 YoY
(decrease) %
SM 11,532,514 10,245,317 1,287,197 12.56
ABS/SAN 4,952,119 3,324,078 1,628,041 48.98
H2 115,857 113,303 2,554 2.25
Cogeneration 391,946 392,805 (859) (0.22)
Nylon 1,939,203 1,032,948 906,255 87.73
Total 18,931,639 15,108,451 3,823,188 25.30
4. Operating earnings Unit: thousand dollars
Increase
Item 2017 2016 YoY
(decrease) %
Profit (loss) before
tax 3,773,326 2,732,052 1,041,274 38.11
Expected income tax (484,684) (331,362) (153,322) 46.27
Net income (loss)
after tax 3,288,642 2,400,690 887,952 36.99
Responsible person: Manager: Chief accountant:
----- End of picture text -----

• 6 -

II. Audit Committees’ Audit Report on the 2017 Financial Statements

Grand Pacific Petrochemical Corporation Audit Committee’s Audit Report

The 2017 parent company only financial statement and consolidated financial statements prepared by the Board of Directors of the Company have been audited by CPAs Hsiao Ying-Chia and Wang Wu-Chang of Crowe Horwath (TW) CPAs. The financial statements, business report and earnings distribution proposal have been audited by us as the audit committee of the Company. We deem these documents in comply with such relevant regulatory requirements as those of the Company Act etc. Therefore, this review report is presented in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Please review.

To:

The 2018 Annual Meeting of Shareholders of Grand Pacific Petrochemical Corporation

Convener of Audit Committee of Grand Pacific Petrochemical Corporation

Chen Wen-Tsung

March 22, 2018

• 7 -

• III. Report on Status of 2017 Distribution of compensations/remunerations to Employees and Directors

Explanations:

1. It is provided for in Article 29 of Articles of Incorporation of the Company: “The Company shall distribute 1% of the earnings of the year and not less than 2% of the earnings of the year as compensations to employees and remunerations to directors, respectively; provided, however, if the Company has accumulated deficits, the amount to cover the deficits shall be appropriated…”.

2. Pursuant to the Company’s Articles of Incorporation and as resolved by the Board meeting, from $3,890,026,712 of net income before tax after deducting compensations distributable to employees and directors for the year of 2017, 1% amounting to $38,900,267 shall be distributed as compensations to employees and 2% amounting to $77,800,534 shall be distributed as remunerations to directors, by cash in either case.

3. IV. Other Report Items: None

4. 8 -

Ratification Items

• 9 -

Proposed by the Board

Proposal 1

Subject: 2017 financial statements are submitted for ratification.

Explanations:

1. The 2017 Parent Company Only financial statements and consolidated financial statements of the Company have been audited by CPAs Hsiao Ying-Chia and Wang Wu-Chang of Crowe Horwath (TW) CPAs. Such financial statements and business report have been submitted to and then have been audited by the audit committee and approved by resolution of the Board of Directors.

2. Business report (refer to pages 4-6) and financial statements (refer to pages 11-30) are attached.

Resolution:

• 10 -

Grand Pacific Petrochemical Corporation Independent Auditors’ Report

Opinion

We have audited the accompanying Parent Company Only financial statements of Grand Pacific Petrochemical Corporation, which comprise the Parent Company Only balance sheets as of December 31, 2017 and 2016, and the Parent Company Only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2017 and 2016, and the notes to the Parent Company Only financial statements (including a summary of significant accounting policies).

In our opinion, on the grounds of the audit outcome by the Undersigned Certified Public Accountants and audit report conducted by other Certified Public Accountants (Cf. the part of other issues), the accompanying Parent Company Only financial statements present fairly, in all material respects, the Parent Company Only financial position of Grand Pacific Petrochemical Corporation as of December 31, 2017 and 2016, and its Parent Company Only financial performance and its Parent Company Only cash flows for the years ended December 31, 2017 and 2016 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the “Regulations Governing Auditing and Attestation 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 Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of Grand Pacific Petrochemical Corporation in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Parent Company Only financial statements of Grand Pacific Petrochemical Corporation for the year ended December 31, 2017. These matters were addressed in the context of our audit of the Parent Company Only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Parent Company Only financial statements of Grand Pacific Petrochemical Corporation for the year ended December 2017 are stated as follows:

Revenue recognition

Revenues are basic operating activities of sustainable management of an enterprise and are relevant to operating performance of an enterprise. Pressures commonly exist in the management for achieving the forecasted financial or sales performance. Therefore the generally accepted auditing standards presume that high risk of fraud exists in revenues. Accordingly, we consider that the timing of transfer of risk and reward of the products sold and the recognition of sale revenues is one of key audit matters.

For accounting policy of revenue recognition, please refer to Note 4(26) to the Parent Company Only Financial Statements; for the explanation of accounting items of revenue, please refer to the disclosure of Note 6(27) to the Parent Company Only Financial Statements. Our audit procedures performed in respect of the above area included the follows:

1. Testing the design and operating effectiveness of the control surrounding sale revenues and the collection circle, and selecting samples to assess whether the revenue recognition is appropriate.

2. Understanding the types of products and specification items sold to top ten customers, assessing the reasonableness of their sale revenues and days of turnover of receivables, and analyzing whether the change status of customers are abnormal.

3. Selecting a sample of sale transactions recorded before and after the deadline of good delivery, and vouching them to supporting evidences to assess the accuracy of the timing of transfer of risk and reward of sale of products and the timing of revenue recognition.

Impairment assessment of property, plant and equipment

• 11 -

As of December 31, 2017, the carrying value of property, plant and equipment held by Grand Pacific Petrochemical Corporation were $6,909,116 thousand, representing about 29% of the total assets, and such amounts were significant to the overall Parent Company Only financial statements. In addition, the overall economic trend, market competition and technical development might affect the future operation of the company, and further affect the management’s estimation and judgment of expected economic benefit and recoverable amounts that might be generated from the cash generating unit of such assets to assess whether impairments exist. Therefore, we included the impairment assessment of property, plant and equipment as one of key audit matters.

For accounting policy relating to the impairments of property, plant and equipment, and non-financial assets, please refer to Notes 4(15) and (17) to the Parent Company Only financial statements; for the explanation of accounting items of property, plant and equipment, please refer to the disclosures in Notes 6(11) to the Parent Company Only financial statements. Our audit procedures performed in respect of the above area included the follows:

1. Obtaining assets impairment assessment tables for each cash generating unit self-assessed by the company.

2. Assessing the reasonableness of the management’s identification of indication of impairment, and the assumption and sensitivity adopted, including whether the classification of the cash generating units, the cash flow forecast, and the discount rates are appropriate.

3. Inquiring to the management and reviewing the audit evidence obtained in the audit procedure for subsequent matters, and identifying matters irrelative to impairment tests subsequent to the reporting date.

Valuation of investment balance accounted for using equity method

As of December 31, 2017, the investment balance accounted for using equity method held by Grand Pacific Petrochemical Corporation was $11,830,088 thousand, representing about 49% of total assets, and the net comprehensive income (including the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method and the shares of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method) was $1,635,288 thousand, representing about 49% of total amount of comprehensive income. As its affection amount is significant to the Parent Company Only financial statements, we included the valuation of investment balance accounted for using equity method as one of key audit matters.

For accounting policy relating to investments accounted for using equity method, please refer to Note 4(14) to the Parent Company Only financial statements; and for the explanation of accounting items of investments accounted for using equity method, please refer to the disclosures in Note 6(10) to the Parent Company Only financial statements. Our audit procedures performed in respect of the above area included the follows:

1. Assessing the calculation in the process of valuation accounted for using equity method and the accuracy of the accounting policy adopted.

2. Inspecting whether the unrealized gain on transaction with the investees accounted for using equity method is accurate and has been reasonably eliminated, and assessing whether necessary adjustment to accounting policies adopted by it has been made in consistent with the policies adopted by the Company.

3. Assessing the reasonableness of the management’s identification of the indication of impairment of investments accounted for using equity method, and the assumption and sensitivity it adopted, including whether the forecast of future profitability of the investees or the discount rate is appropriate.

－ Other Matter Audit conducted by other Certified Public Accountant

As stated in Note 6(10) to the Parent Company Only financial statements, we did not audit the financial statements of the investees reinvested by KK Enterprise Co, Ltd. accounted for using equity method - K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn., and the investee reinvested by Land & Sea Capital Ltd. accounted for using equity method-Zhenjiang Chimei Chemical Co., Ltd., and their financial statements were audited by other Certified Public Accountants. Therefore, our opinions expressed in respect of the amounts stated in the financial statements of the above said companies and the information relating to the above said companies disclosed in Note 13 to the Parent Company Only

• 12 -

financial statements are solely based on the audit report of other auditors. As of December 31, 2017 and 2016, the indirect investment balances accounted for using equity method in the above said companies were $5,518,792 thousand and $4,262,248 thousand, representing 22.87% and 20.05% of total assets, respectively, and for the years ended December 31, 2017 and 2016, the indirect shares of profits/losses accounted for using equity method were $1,549,942 thousand and $643,288 thousand, representing 46.81% and 27.08% of comprehensive income, respectively.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

The management is responsible for the preparation and fair presentation of the Parent Company Only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as the management determines is necessary to enable the preparation of the Parent Company Only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the Parent Company Only financial statements, management is responsible for assessing the ability of Grand Pacific Petrochemical Corporation to continue as a going concern disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the management either intends to cease operations of Grand Pacific Petrochemical Corporation or to liquidate them, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the financial reporting process of Grand Pacific Petrochemical Corporation.

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the Parent Company Only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 Generally Accepted Auditing Standards 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 Parent Company Only financial statements

As part of an audit in accordance with the Generally Accepted Auditing Standards 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 Parent Company Only 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 Grand Pacific Petrochemical Corporation’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 Grand Pacific Petrochemical Corporation’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 Parent Company Only 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 auditors’ report. However, future events or conditions may cause Grand Pacific Petrochemical Corporation to cease to continue as a going concern.

5. 13 -

6. Evaluate the overall presentation, structure and content of the Parent Company Only financial statements (including relevant notes), and whether the Parent Company Only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

7. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities in Grand Pacific Petrochemical Corporation to express an opinion on the Parent Company Only financial statements. We are responsible for the direction, supervision and performance of the Parent Company Only financial statements 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 Parent Company Only financial statements for the year ended December 31, 2017 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

Crowe Horwath (TW) CPAs CPA

CPA

Approval No.: Jin-guan-zheng-shen-zi #10200032833 March 22, 2018

• 14 -

Grand Pacific Petrochemical Corporation PARENT COMPANY ONLY BALANCE SHEETS

For the Years Ended December 31, 2017 and 2016

==> picture [492 x 624] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
December 31, 2017 December 31, 2016
Code Assets Amount % Amount %
11xx Current assets $5,108,128 21 $3,508,893 17
1100 Cash & cash equivalents 1,134,630 5 168,134 1
1150 Net notes receivable 15,313 - 10,040 -
1170 Net accounts receivable 2,144,159 9 1,869,042 9
1180 Accounts receivable － Related parties 77,812 - 141,558 1
1200 Other receivables 30,136 - 160 -
1310 Net inventories 1,631,346 7 1,253,666 6
1410 Prepayment 30,609 - 25,219 -
1479 Other current assets － Other 44,123 - 41,074 -
15xx Noncurrent assets 19,027,975 79 17,753,140 83
1523 Available-for-sale financial assets － Noncurrent 216,169 1 171,658 1
1543 Financial assets carried at costs － Noncurrent 46,884 - 46,884 -
1550 Investments accounted for using equity method 11,830,088 49 10,194,173 48
1600 Property, plant and equipment 6,909,116 29 7,317,929 34
1840 Deferred income tax assets 24,554 - 20,380 -
1920 Refundable deposits 885 - 1,702 -
1932 Long-term receivables 279 - 414 -
1xxx Total assets $24,136,103 100 $21,262,033 100
Code Liabilities and Equity
21xx Current liabilities $2,363,192 10 $1,954,650 9
2170 Accounts payable 1,515,676 6 1,314,977 6
2200 Other payables 442,990 2 391,289 2
2230 Current income tax liabilities 350,123 2 227,035 1
2250 Provisions － Current 12,071 - 13,229 -
2310 Advances received 39,696 - 5,571 -
2399 Other current liabilities － Other 2,636 - 2,549 -
25xx Noncurrent liabilities 1,054,764 4 1,062,859 5
2550 Provisions － Noncurrent 6,755 - 3,479 -
2570 Deferred income tax liabilities 980,086 4 980,860 5
2640 Net defined benefit liabilities － Noncurrent 45,198 - 55,795 -
2645 Deposits received 533 - 533 -
2670 Other noncurrent liabilities － Other 22,192 - 22,192 -
2xxx Total liabilities 3,417,956 14 3,017,509 14
31xx Equity
3100 Share capital 9,266,203 38 9,266,203 44
3110 Ordinary shares capital 9,066,203 37 9,066,203 43
3120 Preferred shares capital 200,000 1 200,000 1
3200 Capital reserve 147,446 1 123,604 1
3300 Retained earnings 10,538,796 44 8,192,056 38
3310 Legal reserve 1,165,588 5 925,519 4
3320 Special reserve 1,658,208 7 1,700,322 8
3350 Unappropriated earnings 7,715,000 32 5,566,215 26
3400 Other equity 887,872 4 862,265 4
3410 Exchange differences on translating financial (119,538) - 27,250 -
statements of foreign operations
Unrealized profit/loss on available-for-sale financial
3425 1,007,410 4 835,015 4
assets
3500 Treasury stock (122,170) (1) (199,604) (1)
3xxx Total equity 20,718,147 86 18,244,524 86
3x2x Total liabilities and equity $24,136,103 100 $21,262,033 100
----- End of picture text -----

Chairman of Board: Chuen Tai Wu

General Manager: Pin Cheng Yang

Chief Accountant: Ling-Chu Chen

• 15 -

Grand Pacific Petrochemical Corporation PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2017 and 2016

==> picture [495 x 554] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
Year Ended December 31, Year Ended December 31,
2017 2016
Code Items Amount % Amount %
4000 Operating revenues $18,931,639 100 $15,108,451 100
5000 Operating costs (16,315,485) (86) (12,994,906) (86)
5900 Total amount of gross operating profit 2,616,154 14 2,113,545 14
5910 Unrealized sales gain (13,318) - (26,926) -
5920 Realized sales gain 26,926 - 4,910 -
5950 Gross operating profit, net 2,629,762 14 2,091,529 14
6000 Operating expenses (464,239) (3) (380,679) (3)
6100 Selling expenses (148,284) (1) (120,716) (1)
6200 Administrative expenses (282,505) (2) (227,392) (2)
6300 Research and development expenses (33,450) - (32,571) -
6900 Net operating Income 2,165,523 11 1,710,850 11
Non-operating revenues and expenses
7010 Other revenues 53,402 - 33,467 -
7020 Other gains and losses (60,038) - 117,177 1
7050 Finance costs (447) - (2,090) -
7070 Share of profit or loss of subsidiaries, associates & joint 1,614,886 9 872,648 6
ventures accounted for using equity method
7000 Total non-operating revenues and expenses 1,607,803 9 1,021,202 7
7900 Net profit before tax from continuing operations unit 3,773,326 20 2,732,052 18
7950 Income tax expenses (484,684) (3) (331,362) (2)
8200 Current net profit 3,288,642 17 2,400,690 16
Other comprehensive income
Items that will not be reclassified subsequently to profit
or loss
8311 Remeasurements of the defined benefit plan (6,762) - (28,946) -
8330 Share of other comprehensive income of subsidiaries,
associates & joint ventures accounted for using equity - -
method － Items that will not be reclassified 2,331 (7,519)
subsequently to profit or loss
8349 Income tax related to items that will not be reclassified - -
1,149 3,425
subsequently
8310 Total Items that will not be reclassified subsequently to - -
(3,282) (33,040)
profit or loss
Items that may be reclassified subsequently to profit or
loss
8362 Unrealized gains evaluated on available-for-sale - -
44,511 (3,620)
financial assets
8380 Share of other comprehensive income of subsidiaries,
associates & joint ventures accounted for using equity - -
method － Items that may be reclassified to profit or 18,071 (18,422)
loss
8399 Income tax related to items that may be reclassified to - -
(36,975) 29,851
profit or loss
8360 Total items that may be reclassified subsequently to - -
25,607 7,809
profit or loss
8300 Current other comprehensive income(net after tax) 22,325 - (25,231) -
8500 Total amount of comprehensive income for the year $3,310,967 17 $2,375,459 16
Earnings per share in ordinary shares ： (NTD)
9750 Basic earnings per share $3.64 $2.65
9850 Diluted earnings per share $3.63 $2.65
----- End of picture text -----

Chairman of Board: Chuen Tai Wu General Manager: Pin Cheng Yang

Chief Accountant: Ling-Chu Chen

• 16 -

Grand Pacific Petrochemical Corporation PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY For the Years Ended December 31, 2017 and 2016

==> picture [737 x 396] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
Share capital Retained earnings Other equity
Exchange
differences on
translating
Code Items financial
statements of Available-for-
Ordinary Preferred Capital Special Unappropriated foreign sale financial
shares capital shares capital reserve Legal reserve reserve earnings operations assets Treasury stock Total equity
A1 Balance at January 1, 2016 $9,066,203 $200,000 $115,935 $778,288 $1,691,816 $4,107,598 $403,499 $450,957 ($199,604) $16,614,692
Appropriation & distribution of earnings for
fiscal year 2015 (Note)
B1 Provision of legal reserve - - - 147,231 - (147,231) - - - -
B3 Provision of special reserve - - - - 8,506 (8,506) - - - -
B5 Cash dividends to ordinary shares - - - - - (725,296) - - - (725,296)
B7 Cash dividends and stock dividends to - - - - - (28,000) - - - (28,000)
preferred shares
M1 Adjustment to capital surplus for - - 7,669 - - - - - - 7,669
distribution of dividends to subsidiary
D1 Net profit for the year ended December 31, - - - - - 2,400,690 - - - 2,400,690
2016
D3 Other comprehensive income after tax for - - - - - (33,040) (376,249) 384,058 - (25,231)
the year ended December 31, 2016
Z1 Balance at December 31, 2016 $9,066,203 $200,000 $123,604 $925,519 $1,700,322 $5,566,215 $27,250 $835,015 ($199,604) $18,244,524
A1 Balance at January 1, 2017 $9,066,203 $200,000 $123,604 $925,519 $1,700,322 $5,566,215 $27,250 $835,015 ($199,604) $18,244,524
Appropriation & distribution of earnings for
fiscal year 2016 (Note)
B1 Provision of legal reserve - - - 240,069 - (240,069) - - - -
B17 Reversal of special reserve - - - - (42,114) 42,114 - - - -
B5 Cash dividends to ordinary shares - - - - - (906,620) - - - (906,620)
B7 Cash dividends and stock dividends to - - - - - (32,000) - - - (32,000)
preferred shares
C3 Change in other capital reserve: Yielded - - 1,061 - - - - - - 1,061
as a gift
L7 Parent company's stocks disposed by a - - 13,455 - - - - - 77,434 90,889
subsidiary, deemed as treasury stock trading
M1 Adjustment to capital surplus for - - 9,320 - - - - - - 9,320
distribution of dividends to subsidiary
M7 Change in equity to subsidiaries - - 6 - - - - - - 6
D1 Net profit for the year ended December 31, - - - - - 3,288,642 - - - 3,288,642
2017
D3 Other comprehensive income after tax for - - - - - (3,282) (146,788) 172,395 - 22,325
the year ended December 31, 2017
Z1 Balance at December 31, 2017 $9,066,203 $200,000 $147,446 $1,165,588 $1,658,208 $7,715,000 ($119,538) $1,007,410 ($122,170) $20,718,147
----- End of picture text -----

Note: The compensation to employees and remuneration to directors and supervisors have been deducted in the Parent Company Only profit & loss statement

Chairman of Board: Chuen Tai Wu

Chief Accountant: Ling-Chu Chen

General Manager: Pin Cheng Yang

• 17 -

Grand Pacific Petrochemical Corporation PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2017 and 2016

==> picture [485 x 655] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
Year Ended December Year Ended December
Code Items 31, 2017 31, 2016
AAAA CASH FLOWS FROM OPERATING ACTIVITIES:
A00010 Net profit before tax from continuing operations unit $3,773,326 $2,732,052
A20000 Adjustments:
A20010 Gain and expense loss not result influence on cash
flows:
A20100 Depreciation expenses 714,041 679,455
A20900 Interest expenses 447 1,983
A21200 Interest income (4,008) (680)
A21300 Dividend revenue (36,754) (21,508)
A22400 Share of gains of subsidiaries, associates & joint (1,614,886) (872,648)
ventures accounted for using equity method
A22500 Net loss on disposal and retirement of property, 4,447 23,821
plants and equipment
A22600 Property, plant and equipment transferred to 21,726 21,757
expenses
A23100 Gain on disposal of investment - (138,836)
A23800 Reversal gain of impairment on non-financial assets - (1,700)
A23900 Unrealized sales gain 13,318 26,926
A24000 Realized sales gain (26,926) (4,910)
A20010 Total gain and expense loss not result influence on (928,595) (286,340)
cash flows
A30000 Changes in assets/liabilities relating to operation
activities
A31130 Increase in notes receivable (5,273) (1,093)
A31150 Increase in accounts receivable (275,117) (897,935)
A31160 (Increase) Decrease in accounts receivable-related 63,746 (127,649)
parties
A31180 (Increase) Decrease in other receivables (29,744) 65,232
A31200 (Increase) Decrease in inventories (377,680) 25,955
A31230 (Increase) Decrease in prepayments (5,390) 6,584
A31240 Increase in other current assets － Other (3,049) (16,528)
A32150 Increase in accounts payable 200,699 376,885
A32180 Increase in other payables 79,074 97,710
A32200 Increase in provisions 2,118 2,106
A32210 Increase in advance receipts 34,125 692
A32230 Increase in other current assets － Other 87 10
A32240 Decrease in net defined benefit liabilities (17,359) (236,190)
A30000 Total net changes in assets/liabilities relating to (333,763) (704,221)
operating activities
A33000 Cash provided generated from operations 2,510,968 1,741,491
A33100 Interest received 3,776 680
A33200 Dividend received 112,975 133,276
A33300 Interest paid (447) (2,027)
A33500 Income tax paid (365,395) (310,963)
AAAA Net cash provided in operating activities 2,261,877 1,562,457
BBBB CASH FLOWS FROM INVESTING ACTIVITIES:
----- End of picture text -----

• 18 -

==> picture [485 x 257] intentionally omitted <==

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

Year Ended December Year Ended December
Code Items 31, 2017 31, 2016
B01300 Disposal of financial assets carried at costs - 193,921
B02700 Acquisition of property, plants and equipment (358,774) (718,270)
B03700 (Increase) Decrease in refundable deposits 817 (835)
B06700 (Increase) Decrease in other noncurrent assets - 135 (230)
Other
BBBB Net cash used in investing activities (357,822) (525,414)
CCCC CASH FLOWS FROM FINANCING ACTIVITIES:
C01700 Repayment of long-term loans - (200,000)
C04500 Payout of cash dividends (938,620) (753,296)
C09900 Return of dividend overdue from claim, 1,061 -
carrying-forward to capital reserve
CCCC Net cash used in financing activities (937,559) (953,296)
EEEE Net increase in cash and cash equivalents for the year 966,496 83,747
E00100 Cash and cash equivalents , beginning of year 168,134 84,387
E00200 Cash and cash equivalents, end of year $1,134,630 $168,134
E00210 Cash & cash equivalents recorded in Parent Company $1,134,630 $168,134
Only balance sheets
----- End of picture text -----

Chairman of Board: Chuen Tai Wu

General Manager: Pin Cheng Yang

Chief Accountant: Ling-Chu Chen

• 19 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries Independent Auditors’ Report

Opinion

We have audited the accompanying consolidated financial statements of Grand Pacific Petrochemical Corporation and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2017 and 2016, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2017 and 2016, and the notes to the consolidated financial statements (including a summary of significant accounting policies).

In our opinion, the outcome based on our audit and audit report conducted by other Certified Public Accountants (please refer to the part of other matters), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2017 and 2016 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit 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 Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Grand Pacific Petrochemical Corporation and its subsidiaries in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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 Grand Pacific Petrochemical Corporation and its subsidiaries for the year ended December 31, 2017. 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.

Key audit matters for the consolidated financial statements of Grand Pacific Petrochemical Corporation and its subsidiaries for the year ended December 2017 are stated as follows:

Revenue recognition

Revenues are basic operating activities of sustainable management of an enterprise and are relevant to operating performance of an enterprise. Pressures commonly exist in the management for achieving the forecasted financial or sales performance. Therefore the generally accepted auditing standards presume that high risk of fraud exists in revenues. Accordingly, we consider that recognition of revenues from various types of transaction is one of key audit matters.

For accounting policy of revenue recognition, please refer to Note 4(31) to the Consolidated Financial Statements; for the explanation of accounting items of revenue, please refer to the disclosure of Note 6(36) to the Consolidated Financial Statements. Our audit procedures performed in respect of the above area included the follows:

1. Testing the design and operating effectiveness of the control surrounding the revenues from various types of transactions and the collection circle, and selecting samples to assess whether the revenue recognition is appropriate.

2. Understanding the types and items of sales to top ten customers of various types of transaction, assessing the reasonableness of their revenues and days of turnover of receivables, and analyzing whether the change status of customers are abnormal.

3. Selecting a sample of various types of transactions recorded before and after the balance sheet date and vouching them to supporting evidences to assess the accuracy of timing of revenue recognition.

4. 20 -

Impairment assessment of property, plant and equipment, investment property and intangible assets (including good will)

As of December 31, 2017, the carrying value of property, plant and equipment, investment property, and intangible assets held by Grand Pacific Petrochemical Corporation and its subsidiaries were $8,533,169 thousand, representing about 30% of the consolidated total assets, and such amounts were significant to the overall consolidated financial statements. In addition, the overall economic trend, market competition and technical development might affect the future operation of the company, and further affect the management’s estimation and judgment of expected economic benefit and recoverable amounts that might be generated from the cash generating unit of such assets to assess whether impairments exist. Therefore, we included the impairment assessment of property, plant and equipment, investment property and intangible assets as one of key audit matters.

For accounting policy relating to the impairments of property, plant and equipment, investment property, intangible assets and non-financial assets, please refer to Notes 4(16), (18), (19) and (21) to the consolidated financial statements; for the explanation of accounting items of property, plant and equipment, investment property and intangible assets, please refer to the disclosures in Notes 6(13), (14) and (15 ) to the consolidated financial statements. Our audit procedures performed in respect of the above area included the follows:

1. Obtaining assets impairment assessment tables for each cash generating unit self-assessed by the company.

2. Assessing the reasonableness of the management’s identification of indication of impairment, and the assumption and sensitivity adopted, including whether the classification of the cash generating units, the cash flow forecast, and the discount rates are appropriate.

3. Inquiring to the management and reviewing the audit evidence obtained in the audit procedure for subsequent matters, and identifying matters irrelative to impairment tests subsequent to the reporting date.

Valuation of investment balance accounted for using equity method

As of December 31, 2017, the Grand Pacific Petrochemical Corporation and its subsidiaries’ investment balance accounted for using equity method was $5,500,309 thousand, representing about 20% of the consolidated total assets; the net of comprehensive income accounted for using equity method was $1,917,430 thousand, representing about 54% of the consolidated total comprehensive income. Their affection amounts are significant to the overall consolidated financial statements, and we decided to refer to the audits of the auditors of the consolidated entities in the auditors’ report on the Group. Therefore, we included the valuation of investment balance accounted for using equity method as one of key audit matters.

For accounting policy relating to investments accounted for using equity method, please refer to Note 4(15) to the consolidated financial statements; and for the explanation of accounting items of investments accounted for using equity method, please refer to the disclosures in Note 6(12) to the consolidated financial statements. Our audit procedures performed in respect of the above area included the follows:

1. Assessing the calculation in the process of valuation accounted for using equity method and the accuracy of the accounting policy adopted.

2. Reading the financial statements of consolidated entities and other Certified Public Accountants' audit report and taking communication and understanding and reviewing significant discoveries and issues identified in their audits. Accordingly, it is assessed for audit work and overcome adopted from consolidated entities and other certified public accountants.

3. Assessing the reasonableness of the management’s identification of the indication of impairment of investments accounted for using equity method, and the assumption and sensitivity it adopted, including whether the forecast of future profitability of the investees or the discount rate is appropriate.

－ Other Matter Audit conducted by other Certified Public Accountant

As stated in Note 4(3)-2 and Note 6(12) to the consolidated financial statements, we did not audit the financial statements of certain subsidiaries - K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn. Bhd., and the investee accounted for using equity method – Zhenjiang Chimei Chemical Co., Ltd.,

• 21 -

included in the consolidated financial statements of Grand Pacific Petrochemical Corporation and its subsidiaries, and their financial statements were audited by other auditors. Therefore, our opinions expressed in respect of the amounts stated in the financial statements of the above said companies and the information relating to the above said companies disclosed in Note 13 to the consolidated financial statements are solely based on the audit report of other auditors. As of December 31, 2017 and 2016, total assets of the above said subsidiaries were $150,937 thousand and $295,260 thousand, representing 0.54% and 1.18% of the consolidated total assets, respectively; and for the years ended December 31, 2017 and 2016, their net operating revenues were $164,778 thousand and $177,355 thousand, representing 0.71% and 0.89% of consolidated net operating revenues, respectively. As of December 31, 2017 and 2016, the relevant investment balances in the above said investee accounted for using equity method were $5,500,309 thousand and $4,249,352 thousand, representing 19.64% and 16.99% of consolidated total assets, respectively, and for the years ended December 31, 2017 and 2016, the net comprehensive income recognized under equity method were $1,917,430 thousand and $344,091 thousand, representing 54.28% and 12.49% of consolidated total comprehensive income, respectively.

－ Other Matter Parent Company Only financial statements

Grand Pacific Petrochemical Corporation has prepared its Parent Company Only financial statements for the years ended 2017 and 2016, and we have issued the auditors’ report with an unmodified opinion and those stated in the paragraph of other mater, which are provided for reference.

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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IAS, interpretations as well as the related guidance endorsed 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 ability of Grand Pacific Petrochemical Corporation and its subsidiaries to continue as a going concern disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the management either intends to cease operations of Grand Pacific Petrochemical Corporation and its subsidiaries or to liquidate them, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the financial reporting process of Grand Pacific Petrochemical Corporation and its subsidiaries.

Auditors’ 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 auditors’ 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 Generally Accepted Auditing Standards 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 the Generally Accepted Auditing Standards 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. 22 -

4. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

5. 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 Grand Pacific Petrochemical Corporation and its subsidiaries’ 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 auditors’ report. However, future events or conditions may cause Grand Pacific Petrochemical Corporation and its subsidiaries to cease to continue as a going concern.

6. Evaluate the overall presentation, structure and content of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

7. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities in Grand Pacific Petrochemical Corporation and its subsidiaries 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 Grand Pacific Petrochemical Corporation and its subsidiaries for the year ended December 31, 2017 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

Crowe Horwath (TW) CPAs CPA

CPA

Approval No.: Jin-guan-zheng-shen-zi #10200032833 March 22, 2018

• 23 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries CONSOLIDATED BALANCE SHEETS

For the Years Ended December 31, 2017 and 2016

==> picture [491 x 389] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
December 31, 2017 December 31, 2016
Code Assets Amount % Amount %
11xx Current assets $9,474,318 34 $7,772,016 31
1100 Cash & cash equivalents 2,122,753 8 1,065,963 4
Financial assets at fair value through profit or loss - - 130,027 1
1110 － Current
1150 Net notes receivable 392,248 2 435,852 2
1170 Net accounts receivable 2,859,659 10 2,597,118 10
1200 Other receivables 53,425 - 25,239 -
1220 Current income tax assets 55 - 310 -
1310 Net inventories 2,023,166 7 1,650,507 7
1410 Prepayment 42,487 - 44,513 -
1476 Other financial assets － Current 1,676,020 6 1,538,906 6
1479 Other current assets － Other 304,505 1 283,581 1
15xx Noncurrent Assets 18,525,597 66 17,233,032 69
1523 Available-for-sale financial assets － Noncurrent 3,570,483 13 3,335,991 13
1543 Financial assets carried at cost － Noncurrent 459,269 2 407,208 2
1550 Investments accounted for using equity method 5,500,309 20 4,249,352 17
1600 Property, plant and equipment 7,778,233 28 8,259,961 33
1760 Investment property net 80,866 - 82,001 -
1780 Intangible assets 674,070 2 674,070 3
1840 Deferred income tax assets 44,905 - 38,177 -
1915 Prepayment of equipment - - 1,034 -
1920 Refundable deposits 17,089 - 16,694 -
1985 Long-term prepaid rent 9,602 - 9,997 -
1990 Other noncurrent assets － Other 390,771 1 158,547 1
1xxx Total assets $27,999,915 100 $25,005,048 100
----- End of picture text -----

(To be continued)

• 24 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries CONSOLIDATED BALANCE SHEETS

For the Years Ended December 31, 2017 and 2016

==> picture [489 x 569] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
December 31, 2017 December 31, 2016
Code Liabilities and Equity Amount % Amount %
21xx Current liabilities $3,131,118 11 $2,887,286 12
2100 Short-term loans 37,581 - 95,306 1
2150 Notes payable 74,861 - 90,419 1
2170 Accounts payable 1,869,657 7 1,769,935 7
2200 Other payables 636,223 2 597,409 2
2230 Current income tax liabilities 402,037 2 287,082 1
2250 Provisions － Current 17,072 - 17,233 -
2310 Advances received 44,054 - 12,987 -
2355 Rent payable － Current 1,822 - 3,687 -
2399 Other current liabilities － Other 47,811 - 13,228 -
25xx Noncurrent liabilities 1,384,733 5 1,270,543 5
2550 Provisions － Noncurrent 6,944 - 3,550 -
2570 Deferred income tax liabilities 1,264,223 5 1,104,858 4
2613 Rent payable － Noncurrent - - 1,823 -
2640 Net defined benefit liabilities － Noncurrent 87,803 - 134,227 1
2645 Deposits received 1,420 - 1,122 -
2670 Other noncurrent liabilities-Other 24,343 - 24,963 -
2xxx Total liabilities 4,515,851 16 4,157,829 17
31xx Equity attributable to owners of the parent company
3100 Share capital 9,266,203 33 9,266,203 37
3110 Ordinary shares capital 9,066,203 32 9,066,203 36
3120 Preferred shares capital 200,000 1 200,000 1
3200 Capital reserve 147,446 - 123,604 1
3300 Retained earnings 10,538,796 38 8,192,056 33
3310 Legal reserve 1,165,588 4 925,519 4
3320 Special reserve 1,658,208 6 1,700,322 7
3350 Unappropriated earnings 7,715,000 28 5,566,215 22
3400 Other equity 887,872 3 862,265 3
Exchange differences on translating financial
3410
- -
statements of foreign operations (119,538) 27,250
Unrealized profit/loss on available-for-sale
3425
financial assets 1,007,410 3 835,015 3
3400 Treasury stock (122,170) - (199,604) (1)
Total equity attributable to owners of the parent
31xx
company 20,718,147 74 18,244,524 73
36xx Non-controlling interests 2,765,917 10 2,602,695 10
3xxx Total equity 23,484,064 84 20,847,219 83
3x2x Total liabilities and equity $27,999,915 100 $25,005,048 100
----- End of picture text -----

Chairman of Board: Chuen Tai Wu General Manager: Pin Cheng Yang

Chief Accountant: Ling-Chu Chen

• 25 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2017 and 2016

==> picture [495 x 596] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
Year Ended December 31, Year Ended December 31,
2017 2016
Code Items Amount % Amount %
4000 Operating revenues $23,350,965 100 $19,918,739 100
5000 Operating costs (19,556,980) (84) (16,494,620) (83)
5900 Gross operating profit 3,793,985 16 3,424,119 17
6000 Operating expenses (1,310,168) (5) (1,256,866) (6)
6100 Selling expenses (283,842) (1) (273,949) (1)
6200 Administrative expenses (984,074) (4) (941,478) (5)
6300 Research and development expenses (42,252) - (41,439) -
6900 Net operating Income 2,483,817 11 2,167,253 11
Non-operating revenues and expenses
7010 Other revenues 225,014 1 169,518 1
7020 Other gains and losses (71,995) - 109,525 1
7050 Finance costs (Note 6 (39)) (1,438) - (4,772) -
7060 Share of profit or loss of associates & joint ventures
accounted for using equity method 1,547,677 6 642,605 3
7000 Total non-operating revenues and expenses 1,699,258 7 916,876 5
7900 Net profit before tax from continuing operations unit 4,183,075 18 3,084,129 16
7950 Income tax expenses (735,425) (3) (505,391) (3)
8200 Current net profit 3,447,650 15 2,578,738 13
Other comprehensive income
Items that will not be reclassified subsequently to profit
or loss
8311 Remeasurements of the defined benefit plan (1,765) - (43,519) -
8349 Income tax related to items that will not be reclassified
subsequently 425 - 4,969 -
8310 Total Items that will not be reclassified subsequently to
- -
profit or loss (1,340) (38,550)
Items that may be reclassified subsequently to profit or
loss
8361 Exchange differences on translating financial
statements of foreign operations (481,153) (2) (136,104) (1)
8362 Unrealized gains evaluated on available-for-sale
financial assets 234,492 1 620,003 3
8370 Share of profit or loss of other comprehensive income
of associates & joint ventures accounted for using
－
equity method Items that may be reclassified to
profit or loss 369,753 1 (298,514) (1)
8399 Income tax related to items that may be reclassified to
- -
profit or loss (36,975) 29,851
8360 Total items that may be reclassified subsequently to
profit or loss 86,117 - 215,236 1
8300 Other comprehensive income for the year (net after tax) 84,777 - 176,686 1
8500 Total amount of comprehensive income for the year $3,532,427 15 $2,755,424 14
8600 Net income attributable to:
8610 Owners of the parent company $3,288,642 14 $2,400,690 12
8620 Non-controlling interests 159,008 1 178,048 1
$3,447,650 15 $2,578,738 13
8700 Total amount of comprehensive income attributable to:
8710 Owners of the parent company $3,310,967 14 $2,375,459 12
8720 Non-controlling interests 221,460 1 379,965 2
$3,532,427 15 $2,755,424 14
Earnings per share in ordinary shares ： (NTD)
9750 Basic earnings per share $3.64 $2.65
9850 Diluted earnings per share $3.63 $2.65
----- End of picture text -----

Chairman of Board: Chuen Tai Wu

General Manager: Pin Cheng Yang

Chief Accountant: Ling-Chu Chen

• 26 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2017 and 2016

==> picture [741 x 392] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
Share capital Retained earnings Other equity
Exchange
differences on
translating Equity
financial attributable
statements of Available-for- to owners of
Ordinary Preferred Capital Special Unappropriated foreign sale financial the parent Non-controlling
Code Items shares capital shares capital reserve Legal reserve reserve earnings operations assets Treasury stock company interests Total equity
A1 Balance at January 1, 2016 $9,066,203 $200,000 $115,935 $778,288 $1,691,816 $4,107,598 $403,499 $450,957 ($199,604) $16,614,692 $2,312,979 $18,927,671
Appropriation & distribution of earnings
for fiscal year 2015
B1 Provision of legal reserve - - - 147,231 - (147,231) - - - - - -
B3 Provision of special reserve - - - - 8,506 (8,506) - - - - - -
B5 Cash dividends on ordinary shares - - - - - (725,296) - - - (725,296) (67,583) (792,879)
B7 Cash dividends and stock dividends to
- - - - - - - - -
preferred shares (28,000) (28,000) (28,000)
M1 Adjustment to capital surplus for
distribution of dividends to subsidiary - - 7,669 - - - - - - 7,669 - 7,669
D1 Net profit for the year ended December
31, 2016 - - - - - 2,400,690 - - - 2,400,690 178,048 2,578,738
D3 Other comprehensive income after tax
for the year ended December 31, 2016 - - - - - (33,040) (376,249) 384,058 - (25,231) 201,917 176,686
O1 Decrease in non-controlling interest
- - - - - - - - - -
(Capital decrease by cash in subsidiaries) (22,666) (22,666)
Z1 Balance at December 31, 2016 $9,066,203 $200,000 $123,604 $925,519 $1,700,322 $5,566,215 $27,250 $835,015 ($199,604) $18,244,524 $2,602,695 $20,847,219
A1 Balance at January 1, 2017 $9,066,203 $200,000 $123,604 $925,519 $1,700,322 $5,566,215 $27,250 $835,015 ($199,604) $18,244,524 $2,602,695 $20,847,219
Appropriation & distribution of earnings
for fiscal year 2016
B1 Provision of legal reserve - - - 240,069 - (240,069) - - - - - -
B17 Reversal of special reserve - - - - (42,114) 42,114 - - - - - -
B5 Cash dividends on ordinary shares - - - - - (906,620) - - - (906,620) (40,616) (947,236)
B7 Cash dividends and stock dividends to
- - - - - - - - -
preferred shares (32,000) (32,000) (32,000)
C3 Change in other capital reserve:
Yielded as a gift - - 1,067 - - - - - - 1,067 4 1,071
L7 Parent company's stocks
disposed by a subsidiary,
deemed as treasury stock trading - - 13,455 - - - - - 77,434 90,889 - 90,889
M1 Adjustment to capital surplus for
distribution of dividends to subsidiary - - 9,320 - - - - - - 9,320 - 9,320
D1 Net profit for the year ended December
31, 2017 - - - - - 3,288,642 - - - 3,288,642 159,008 3,447,650
D3 Other comprehensive income after tax
for the year ended December 31, 2017 - - - - - (3,282) (146,788) 172,395 - 22,325 62,452 84,777
O1 Decrease in non-controlling interest
- - - - - - - - - -
(Capital decrease by cash in subsidiaries) (17,626) (17,626)
Z1 Balance at December 31, 2017 $9,066,203 $200,000 $147,446 $1,165,588 $1,658,208 $7,715,000 ($119,538) $1,007,410 ($122,170) $20,718,147 $2,765,917 $23,484,064
----- End of picture text -----

Chairman of Board: Chuen Tai Wu

General Manager: Pin Cheng Yang

Chief Accountant: Ling-Chu Chen

• 27 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2017 and 2016

==> picture [490 x 638] intentionally omitted <==

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

Express in Thousands of New Taiwan Dollars
Year Ended December Year Ended December
Code Items 31, 2017 31, 2016
AAAA CASH FLOWS FROM OPERATING ACTIVITIES:
A00010 Net profit before tax from continuing operations unit $4,183,075 $3,084,129
A20000 Adjustments:
A20010 Gain and expense loss not result influence on cash
flows
A20100 Depreciation expenses (including depreciation
provided for investment property) 879,591 841,477
A20200 Amortization expenses 922,026 876,002
A20400 Net loss on financial assets at fair value measured
through profit/loss 24 108
A20900 Interest expenses 1,438 4,665
A21200 Interest income (34,992) (22,969)
A21300 Dividend revenue (154,091) (115,416)
A22300 Share of gain of associates & joint ventures
accounted for using equity method (1,547,677) (642,605)
A22500 Net loss on disposal and retirement of property and
equipment 5,779 24,824
A22600 Property, plant and equipment transferred to
expenses 21,726 21,757
A23100 Gain on disposal of investments (amounts recorded
as operating income were $0 and $2,168 respectively) (57) (141,326)
A23500 Impairment loss on financial assets 540 -
A23700 Impairment loss on non-financial assets 22,366 10,830
A23800 Reversal gain of impairment loss on non-financial
assets - (1,700)
A20010 Total gain and expense loss not result influence on
cash flows 116,673 855,647
A30000 Changes in assets/liabilities relating to operation
activities
A31100 Decrease in financial assets held for trading 130,060 127,821
A31130 (Increase) Decrease in notes receivable 43,604 (16,441)
A31150 Increase in accounts receivable (262,541) (888,350)
A31180 (Increase) Decrease in other receivables (21,521) 72,216
A31200 (Increase) Decrease in inventories (372,659) 3,990
A31230 Decrease in prepayments 2,026 20,072
A31240 Increase in other current assets － Other (2,722) (17,827)
A32130 Decrease in notes payable (15,558) (30,051)
A32150 Increase in accounts payable 99,722 350,165
A32180 Increase in other payables 71,227 90,475
A32200 Increase in provisions 3,233 5,275
A32210 Increase in advance receipts 31,067 6,257
A32230 Increase in other current assets － Other 34,583 4,453
A32240 Decrease in net defined benefit liabilities (48,189) (308,145)
A30000 Total net changes in assets/liabilities relating to
operating activities (307,668) (580,090)
To be continued
----- End of picture text -----

• 28 -

A33000 Cash provided generated from operations A33100 Interest received A33200 Dividend received A33300 Interest paid A33500 Income tax paid AAAA Net cash provided in operating activities BBBB CASH FLOWS FROM INVESTING ACTIVITIES: B01200 Acquisition of financial assets carried at cost B01300 Disposal of financial assets carried at costs B01400 Capital allocation from financial assets carried at cost B01800 Acquisition of investment accounted for using equity method B02700 Acquisition of property and equipment B02800 Disposal of property, plant and equipment B03700 Increase in refundable deposits B06500 Increase in other financial assets B07100 Increase in prepayment of equipment B06700 Increase in other noncurrent assets BBBB Net cash used in Investment activities CCCC CASH FLOWS FROM FINANCING ACTIVITIES: C00200 Decrease in short-term loans C00600 Decrease in short-term bills payable C01700 Repayment of long-term loans C03000 Increase in deposits received C04000 Decrease in rent payable C04500 Payout of cash dividends C05000 Disposal of treasury stocks C09900 Cash dividends obtained by subsidiaries from the parent company C09900 Cash dividend distributed by a subsidiary toward non-controlling interests C09900 Capital decrease sum paid by a subsidiary in cash toward non-controlling interests C09900 Return of dividend unclaimed within the term back to capital reserve CCCC Net cash used in financing activities DDDD Effect of exchange rate changes on cash and cash equivalents EEEE Net increase in cash and cash equivalents for the year E00100 Cash and cash equivalents , beginning of year E00200 Cash and cash equivalents, end of year E00210 Cash & cash equivalents recorded in consolidated balance sheets	3,992,080 28,327 495,948 (1,438) (504,128)	3,359,686 21,770 343,441 (4,709) (447,513)
	4,010,789	3,272,675
	(73,122) - 8,833 (52,080) (442,202) 182 (395) (137,114) (7,391) (1,194,465)	(136,314) 197,114 687 - (808,015) 166 (585) (92,499) (28,596) (1,003,028)
	(1,897,754)	(1,871,070)
	(57,725) - - 298 (3,688) (938,620) 90,889 9,320 (40,616) (22,666)	(67,011) (20,000) (200,000) 7 (3,631) (753,296) - 7,669 (67,583) -
	1,071	-
	(961,737)	(1,103,845)
	(94,508)	(42,233)
	1,056,790 1,065,963	255,527 810,436
	$2,122,753 $2,122,753	$1,065,963 $1,065,963

Chairman of Board: Chuen Tai Wu General Manager: Pin Cheng Yang

Chief Accountant: Ling-Chu Chen

• 29 -

Proposal 2

Proposed by the Board

Subject: The 2017 earnings distribution proposal is submitted for ratification.

Explanations:

1. The Company’s net income after tax for the year of 2017 was $3,288,642,225; after deducting the provision of legal reserve amounted to $328,864,223, and  adding add Reversal of special reserve for difference of the market price lower than carrying value of stocks of parent company held by subsidiaries amounted to $17,380,216, the distributable earnings for the year was $2,977,158,218; after adding the Remeasurements of defined benefit plans amounted to $3,282,016 for the year of 2017, as adjusted to the beginning undistributed earnings amounted to $4,426,357,711, the accumulated distributable earnings were totaled $7,403,515,929.

2. Pursuant to Article 29 of the Articles of Incorporation, after  preferred dividends for the year of 2017 amounted to $12,000,000 were distributed first, the distributable earnings are $7,391,515,929; the cash dividend intending to be distributed is $1/per share. It is counted to whole number of dollar (with fraction to be discarded). The total of odd amounts are included in other income of the Company.  The amount of cash dividends is $926,620,328 and the retained earnings after distribution is $6,464,895,601.

Resolution:

• 30 -

Grand Pacific Petrochemical Corporation The 2017 Earnings Distribution Table

Expressed Beginning undistributed earnings (TIFRS) Less: Other comprehensive income (Remeasurements of defined benefit plans) (Year of 2017) Subtotal (A) Net income after tax for the year (B) Less: Provision of legal reserve 10% (B)x10% Add: Reversal of special reserve for difference of the market price lower than carrying value of stocks of parent company held by subsidiaries Distributable earnings for the year (C) Accumulated distributable earnings (A)+(C) Less: Dividends to preferred shares for the year (Year of 2017) Total distributable earnings Distribution items: Cash dividends: 20,000,000 preferred shares @$1.0 Cash dividends: 906,620,328 ordinary shares @$1.0 Total of distribution items: Ending undistributed earnings

in New Taiwan Dollars $4,429,639,727 (3,282,016) 4,426,357,711 3,288,642,225 (328,864,223) 17,380,216 2,977,158,218 7,403,515,929 (12,000,000) 7,391,515,929 (20,000,000) (906,620,328) (926,620,328) $6,464,895,601

Note: In the 2017 earnings distribution proposal, the distribution shall be made first from earnings for the year.

Responsible person: Manager:

Chief Accountant:

• 31 -

Discussion Items

• 32 -

Proposed by the Board of Directors

Subject: It is proposed that the Company’s "Articles of Incorporation" be duly amended. Please reserve a decision as appropriate.

Descriptions: 1. To increase the scope of the Company’s business in response to the need of the Company.

1. Comparison of the contents before and after amendment below:

Current contents		Post-amendment contents	Descriptions
Article 2: The Company shall engage in business operation within the scope enumerated below: 1. C801020 Petrochemical Manufacturing 2. C801100 Synthetic Resin & Plastic Manufacturing 3. F401010 International Trade 4. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.		Article 2: The Company shall engage in business operation within the scope enumerated below: 1. C801020 Petrochemical Manufacturing 2. C801100 Synthetic Resin & Plastic Manufacturing 3. C802990 Other Chemical Products Manufacturing 4. F401010 International Trade 5. D101050 Cogeneration 6. D401010 Heat Energy Supplying 7. G801010 Warehousing and Storage 8. H701020 Industrial Factory Buildings Lease Construction and Development 9. F501060 Restaurants 10. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.	To increase the scope of the Company’s business in response to the need of the Company.
Article 33: These Articles of Incorporation were duly enacted on June 25, 1973, .……		Article 33: These Articles of Incorporation were duly enacted on June 25, 1973, .…… Duly amended on June 15, 2018 as the 37th amendment. These Articles of Incorporation shall be put into enforcement after the amendment is duly resolved in the shareholders’ meeting.	Addition of date of latest amendment.

Resolution:

• 33 -

Incidental Motion

Adjournment

• 34 -