GPPC - AGM Information 2020 | FinancialReports.eu

Stock Code: 1312

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2020 Annual Meeting of Shareholders

Meeting Handbook

Date: June 12, 2020

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

Page No.

	Table of Contents Page No.	Table of Contents Page No.
One.	Procedures of the Meeting.............................................................................. 1
Two.	Meeting Agenda............................................................................................... 3
	I.	Report Items ............................................................................................ 3
	II.	Ratification Items .................................................................................... 9
	III.	Discussion Items ................................................................................... 35
	IV.	Election Items ....................................................................................... 37
	V.	Other Items ............................................................................................ 40
	VI.	Incidental Motion .................................................................................. 42
	VII.	Adjournment ......................................................................................... 42
Three.	Annex:......................................................................................................... 43
	I.	“Rules and Procedures for Shareholders’ Meeting” ............................. 43
	II.	Articles of Incorporation ....................................................................... 46
	III.	Procedures for Election of Directors..................................................... 53
	IV.	The Shareholding Status of the Company's directors ........................... 55

One. Procedures of the Meeting

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

Grand Pacific Petrochemical Corporation Agenda of 2020 Annual Meeting of Shareholders

I. Time: June 12, 2020 (Friday), 9:00 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
2019 Business Report
Audit Committee’s Audit Report on the 2019 Financial Statements
Report on status of 2019 distribution of remunerations to employees and directors
Report on 2019 distribution of cash dividends from earnings
Other Report Items
VI. Ratification Items
2019 Annual Financial Statements
2019 Earnings Distribution Proposal
VII. Discussion Items
The Proposal to Amend the Company’s “Articles of Incorporation”
VIII. Election Items
Election of the 13[th] term of directors (including independent directors)
IX. Other Items
The motion to lift the 13[th] term of directors from prohibition of business strife.
X. Incidental Motions
XI. Adjournment

Two. Meeting Agenda

Report Items

I. 2019 Business Report

Grand Pacific Petrochemical Corporation 2019 Business Report

(I) Implementation Results of Operating Plan

The profitability of styrene shrank in 2019 and good performance over prior years ended. Bleak sentiment in the fourth quarter of 2018 extended into the first quarter of 2019 with demand weakened in the downstream due to the trade war between China and the U.S. Inventory and production were adjusted to balance sales in accordingly. The demand gradually picked up in the second quarter, pushing up the spread and thus the profits. At this juncture, average selling price also hit the highest throughout the year. However, typical high season of demand and prices in the fourth quarter after the Chinese National Holiday in the first week of October did not happen. Furthermore, market concerns about the new capacity of Zhejiang Petroleum & Chemical and Hengli Petrochemical scheduled start-up after the Chinese New Year in 2020 weighed heavily on the spread between SM (styrene monomer) and raw materials. Softening demand and prices drop eroded the profitability of styrene and even resulted in a loss, and affected annual profit.

In terms of styrene, we conducted scheduled turnaround in the Styrene Plant II in the first quarter, 2019. Overall outputs increased by around 20,000 M.T., it boosts annual output up to nearly 364,000 M.T. Overall sales volume including captive use hit 369,000 M.T., increased by 25,000 M.T. compared to the preceding year.

The softening of the trade war between China and the U.S. in the first half of 2019 and the China government’s subsidy to the purchase of home appliances were positives to the ABS (acrylonitrile butadiene styrene) and PS (polystyrene) markets. As a result, profitability returned. The US-China trade war heated up again in the third quarter, with the U.S. proposing to increase tariffs on home appliances and automobile components from China to 25%. This had significant and adverse influence on the ABS demand. Although a rising crude oil price, reductions and exemptions on administrative levies for manufacturers in China mitigated the pressure on the downward economy, buyers were becoming conservative and focusing on inventory control. The declining prices narrowed the spread and the market was gloomy in the fourth quarter. The lack of clarity in the trade negotiation between China and the U.S. promoted customers to take a wait-and-see attitude and focus on the base demand for low-priced products. Thus topline and profitability were suppressed.

The consolidated revenues of Grand Pacific Group for the year of 2019 were NT$20,470 million, a decrease of $4,270 million from 2018; consolidated net income before tax was $2,740 million, a decrease of $1,320 million from 2018; consolidated net income after tax was $2,180 million and consolidated net income after tax attributable to owners of the Company was $2,070 million.

The Parent Company Only revenue of the Company was $16,200 million, representing 79.1% of consolidated revenue. The 2019 Parent Company Only operating status is summarized as follows:

Main products between two years are compared as follows: The Company’s 2019 annual production volumes of SM was 365,490 tons, an increase of 6.1% from 344,540 tons in 2018;

sale volume was 322,931 tons, an increase of 7.5% from 300,435 tons in 2018; Sale amount of SM was $9,767,995 thousand, a decrease of 16.7% from $11,726,280 thousand in 2018. Annual production volume of ABS was 89,492 tons, a decrease of 1.4% from 90,718 tons in 2018; sale volume was 90,933 tons, a decrease of 0.4% from 91,254 tons in 2018; the sale amount of ABS was $4,309,782 thousand, a decrease of 19.3% from $5,337,138 thousand in 2018. Annual production volume of Nylon was 14,805 tons, a decrease of 40.1% from 24,725 tons in 2018; sale volume was 15,077 tons, a decrease of 38.9% from 24,675 tons in 2018; the sale amount of Nylon was $1,539,118 thousand, a decrease of 42.6% from $2,682,897 thousand in 2018.

In total, the Company’s net revenue for the year of 2019 was $16,229,085 thousand, a decrease of 20.1% from $20,305,094 thousand for the year of 2018; the net operating profit for the year of 2019 was $1,040,045 thousand, a decrease of 54.8% from $2,299,040 thousand of net operating profit for the year of 2018; the net gain on investment for the year of 2019 was $1,358,076 thousand, an increase of 9.6% from $1,239,183 thousand of net gain on investment for the year of 2018. The net income after tax for the year of 2019 was $2,070,125 thousand.

(II) R&D Status

Styrene represents the Company's core niche, with tentacles extending upward the crystal engineering plastic nylon 66, and laid downward to the optimization of ABS quality. These represent as the very orientations of our efforts in the year.

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

We spared no effort to optimize agglomerated PBL large particle latex to improve ABS dyeing with wholehearted effort to develop high temperature nylon engineering plastic toward the three major targets including notably energy saving and waste reduction.
With PBL (polybutadiene latex) rubber agglomerated large particle latex, we further improved the quality of ABS products with better dyeing, electroplating grades, tube levels, flame retardant grades, high impact strength and rigidity for use in vehicle battery materials.
We tried hard to expand the market of nylon industrial yarn and develop derived high-temperature nylon, engineering plastics such as super tough nylon, heat-resistant super tough nylon, soft, water transparent grade and blended with PPO to create high performance, high quality, high price nylon 66 plastic products.
We are committed to the long-term diversification strategy, with investments in the fully integrated polypropylene (PP) facilities in Quanzhou, China with new capacities in propane dehydrogenation (PDH) and polypropylene (PP). The purpose is to extend our footprint from SM to propylene related products.

(III) The status of the Company’s 2019 production, sale and operating earnings is summarized as follows:

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1. Production volume Unit: tons, kilo M [3] , kilo degrees
Increase
Product 2019 2018 YoY
(decrease) %
SM 365,490 344,540 20,950 6.08
ABS/SAN 89,492 90,718 (1,226) (1.35)
H2 10,663 9,595 1,068 11.13
Electric power 321,154 307,741 13,413 4.36
Vapor 1,040,287 1,039,714 573 0.06
Nylon 14,805 24,725 (9,920) (40.12)
2. Sale volume: Unit: tons, kilo M [3] , kilo degrees
Increase
Product 2019 2018 YoY
(decrease) %
SM 322,931 300,435 22,496 7.49
ABS/SAN 90,933 91,254 (321) (0.35)
H2 10,665 9,590 1,075 11.21
Electric power 152,741 144,811 7,930 5.48
Vapor 173,627 163,525 10,102 6.18
Nylon 15,077 24,675 (9,598) (38.90)
3. Sale amount: Unit: thousand dollars
Increase
Product 2019 2018 YoY
(decrease) %
SM 9,767,995 11,726,280 (1,958,285) (16.70)
ABS/SAN 4,309,782 5,337,138 (1,027,356) (19.25)
H2 146,711 131,383 15,328 11.67
Cogeneration 465,479 427,396 38,083 8.91
Nylon 1,539,118 2,682,897 (1,143,779) (42.63)
Total 16,229,085 20,305,094 (4,076,009) (20.07)
4. Operating earnings Unit: thousand dollars
Increase
Item 2019 2018 YoY
(decrease) %
Profit (loss) before
tax 2,411,620 3,635,357 (1,223,737) (33.66)
Expected income tax
benefit (expense) (341,495) (675,251) 333,756 (49.43)
Net income (loss)
after tax 2,070,125 2,960,106 (889,981) (30.07)
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Chairman of Board: Pin Cheng Yang Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

II. Audit Committees’ Audit Report on the 2019 Financial Statements

Grand Pacific Petrochemical Corporation Audit Committee’s Audit Report

The 2019 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 2020 Annual Meeting of Shareholders of Grand Pacific Petrochemical Corporation

Convener of Audit Committee of Grand Pacific Petrochemical Corporation

Wen Tzong Chen

April 28, 2020

III. Report on Status of 2019 Distribution of compensations/remunerations to Employees and Directors

Explanations:

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…”.
Pursuant to the Company’s Articles of Incorporation and as resolved by the Board meeting, from $2,486,206,875 of net income before tax after deducting compensations distributable to employees and directors for the year of 2019, 1% amounting to $24,862,069 shall be distributed as compensations to employees and 2% amounting to $49,724,137 shall be distributed as remunerations to directors, by cash in either case.

IV. 2019 distribution of cash dividends from earnings

Explanations:

Per Article 29 of the Articles of Incorporation and after the distribution of preferred share dividends in 2019 for NT$12,000,000, the distributable earnings stand at NT$11,042,618,945. No dividend will be issued to ordinary shares. The retained earnings after 2019 distribution total NT$11,042,618,945.

V. Other Report Items: None

Ratification Items

Proposed by the Board of Directors

Proposal 1

Subject: 2019 financial statements are submitted for ratification.

Explanations:

The 2019 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.
Business report (refer to pages 4-6) and financial statements (refer to pages 11-32) are attached.

Resolution:

Grand Pacific Petrochemical Corporation and Its Subsidiaries CPA Audit Report

Audit Opinions

We, as the CPAs, have completed the audit of the consolidated balance sheets dated December 31 of 2019 and 2018 and the consolidated comprehensive income statement, consolidated statement of changes in equity, consolidated statement of cash flows, and consolidated financial statement from January 1 to December 31 of 2019 and 2018, including summaries of major accounting policies of Grand Pacific Petrochemical Corporation and its subsidiaries.

As CPAs, according to the audit results from us and those from other CPAs (please refer to the paragraph about other matters), the above-mentioned consolidated financial statement, in all major respects, was prepared in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and international financial reporting standards, international accounting standards, interpretations, and interpretation announcements approved and released to take effect by the Financial Supervisory Commission and hence are sufficient to show the consolidated financial standing of Grand Pacific Petrochemical Corporation and its subsidiaries as of December 31, 2019 and 2018 and the consolidated financial performance and consolidated cash flows between January 1 and December 31, 2019 and 2018.

Bases for the Audit Opinions

We followed the Rules Governing the Audit of Financial Statements by Certified Public Accountants and generally accepted auditing rules while performing the audit. The responsibilities of the CPAs under the said standards will be explained further in the section about responsibilities in auditing the consolidated financial statement. Independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have remained independent of the Grand Pacific Petrochemical Corporation and its subsidiaries and fulfilled other responsibilities under the said regulations. Based on the audit results from us and those from other CPAs, we believe that sufficient and adequate evidence has been obtained for the audit to serve as the basis for expressing the audit opinions.

Key Matters Being Audited

Key matters being audited refer to the most important matters based on the professional judgment of the CPAs to be included in the audit of the 2019 consolidated financial statement of Grand Pacific Petrochemical Corporation and its subsidiaries. Such matters were addressed throughout the audit of the consolidated financial statement and during the formation of audit opinions. The CPAs do not express separate opinions regarding these matters.

Key matters being audited of the 2019 consolidated financial statement of Grand Pacific Petrochemical Corporation and its subsidiaries are specified as follows:

Recognition of Income

Income is the basic operational activities for the sustainable management of an enterprise and concerns its operational performance and the management generally is faced with the pressure of fulfilling the expected financial or business performance goals. Therefore, it is pre-established that income recognition is associated with significant risk and we consider that the recognition of income from various types of transactions as one of the key matters being audited.

For the accounting policy on the recognition of income, please refer to Note 4 (33) of the consolidated financial statement. For information on accounting items for income, please refer to the disclosure in Note 6 (36) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Test the validity of income from various types of transactions and the internal control for the payment collection cycle in terms of its design and implementation and evaluate by random sampling if the recognition of income is adequate.

Understand the type of sale and items involved in the sale with Top 10 customers in respective transaction patterns and evaluate the legitimacy of the income and the number of days involved in the turnover of accounts receivable and analyze if there is any abnormal variation among the customers.
Select samples from transactions in the respective patterns that take place before and after the balance sheet date and verify them against related certificates in order to evaluate the accuracy of the timing when income is recognized.

Cash and cash equivalents

As of December 31, 2019, the book value of cash and cash equivalents and time deposits with the original expiration date more than three months away (under other financial assets - current in the statement) held by Grand Pacific Petrochemical Corporation and its subsidiaries totaled $7,072,611 thousand, accounting for around 22% of the consolidated total asset value. The value is significant for the overall consolidated financial statement. Due to the fact that congenital risk exists for cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away, we list them as part of the key matters being audited.

For the accounting policy on cash and cash equivalents, please refer to Note 4 (6) of the consolidated financial statement. For information on the accounting items for cash and cash equivalents and time deposits with the original expiration date more than three months away, please refer to the disclosure in Note 6 (1) and (8) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate and test the validity of the internal control system for cash and cash equivalents and time deposits with the original expiration date more than three months away in terms of its design and implementation.
Randomly inspect and verify related transaction certificates for major income and payments in cash and review the adequacy of the approval power.
Obtain the statement of the balance of cash and cash equivalents and time deposits with the original expiration date more than three months away and verify against the bank reconciliation statement and related transaction certificates in order to confirm the presence. In addition, for external confirmations from current financial institutions, verify the value included in the confirmations and check if there are restrictions and they are adequately disclosed.

Impairment evaluation of real estate, plants, and equipment, right-of-use asset, investment-oriented property and intangible assets (including good will)

As of December 31, 2019, the book value of real estate, plants, and equipment, right-of-use asset, investment-oriented property and intangible assets owned by Grand Pacific Petrochemical Corporation and Its subsidiaries totaled $7,993,542 thousand, accounting for around 25% of the total consolidated asset value and the value is significant for the overall consolidated financial statement. In addition, the overall economic trends, market competition, and technical development can all affect the future operations of the company and accordingly affect the expected economic benefits and the recoverable amount that may be generated in the future by the cash generating units for the assets estimated and determined by the management in order to evaluate if impairment exists. Therefore, the evaluation of impairment of real estate, plants, and equipment, right-of-use asset, investment-oriented property and intangible assets (including goodwill) is listed by the CPAs as part of the key matters being audited.

For the accounting policy on the impairment of real estate, plants, and equipment, right-of-use asset, investment-oriented property and intangible assets (including goodwill), refer to Notes 4 (17), (18) (20), (21), and (23). For information on accounting items for real estate, plants, and equipment, right-of-use asset, investment-oriented property and intangible assets (including goodwill), please refer to the disclosure in Note 6 (12), (13), (14) and (15) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Obtain the asset impairment assessment form for respective cash generating units that have been evaluated spontaneously by the Company.
Evaluate the legitimacy of impairment signs identified by the management and the assumption and sensitivity adopted, including whether the differentiation of cash-generating units, forecast of cash flows, and discount rate are appropriate or not.

Ask the management and review audit evidence obtained from the subsequent audit procedure for verification of absence of any matter related to impairment testing after the reporting date.

Valuation of investment balance adopting the equity method

The investment balance of Grand Pacific Petrochemical Corporation and its subsidiaries as of December 31, 2019 adopting the equity method totaled $6,597,733 thousand, accounted for around 21% of the total consolidated asset value. The net comprehensive income recognized with the equity method came to $1,118,302 thousand, accounting for around 66% of the total consolidated income. The impacted value is significant to the overall consolidated financial statement. Therefore, the CPAs include valuation of investment balance adopting the equity method as part of the key matters being audited.

For the accounting policy on investments adopting the equity method, please refer to Note 4 (16) of the consolidated financial statement. For information on accounting items for investments adopting the equity method, please refer to the disclosure in Note 6 (11) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate the accuracy of calculation during valuation adopting the equity method and the adopted accounting policy.
Read the financial statements of underlying entities and audit reports from other CPAs and review important findings and issues identified during audit to facilitate communication and understanding and accordingly evaluate the audit task performed by and audit results from other CPAs of underlying entities.
Evaluate the legitimacy of impairment signs of investments adopting the equity method as identified by the management and the assumption and sensitivity adopted, including whether or not the forecast of profitability of companies invested in it in the future or the discount rate is appropriate.

`－` Other Matters Mentioning Audits by other CPAs

As is stated in Note 4 (3)-2 and Note 6 (11) of the consolidated financial statement, some subsidiaries in the consolidated financial statement of the Grand Pacific Petrochemical Corporation and its subsidiaries are included - K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn. Bhd. and investments adopting the equity － method We did not audit the financial statements of the Zhenjiang Chimei Chemical Company Limited and Zhangzhou Chimei Chemical Company Limited; they were audited by other CPAs. Among the opinions we expressed on the above-mentioned consolidated financial statement, the amount listed in the above-mentioned financial statement of the Company and the above-mentioned information about the Company in Note 13 of the consolidated financial statement are completed based on audit reports from other CPAs. The total asset values of the said subsidiaries mentioned above as of December 31, 2019 and 2018, were $160,153 thousand and $153,815 thousand, accounting for 0.51% and 0.52% of the total consolidated asset value, respectively. The net worth of operating income from January 1 to December 31, 2019 and 2018, was $152,982 thousand and $172,584 thousand, accounting for 0.75% and 0.70% of the net worth of operating income, respectively. In addition, the related investment balance of invested companies adopting the equity method as mentioned above as of December 31, 2019 and 2018, was $6,597,733 thousand and $6,227,702 thousand, accounting for 20.95% and 20.86% of the total consolidated asset value, respectively. The net worth of comprehensive income from January 1 to December 31, 2019 and 2018, was $1,118,302 thousand and $639,422 thousand, accounting for 66.18% and 22.97% of the total consolidated comprehensive income, respectively.

Other Matters - Individual Financial Statement

Individual financial statements of 2019 and 2018 have been prepared by Grand Pacific Petrochemical Corporation and have been documented in the Audit Report without reservation in the opinions expressed issued by the CPAs; they are submitted for your reference.

Responsibilities of Management and Governance Unit for Consolidated Financial Statement

The management is responsible for preparing an adequately expressed consolidated financial statement in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and

international financial reporting standards, international accounting standards, interpretations, and interpretation announcements approved and released to take effect by the Financial Supervisory Commission and maintaining necessary internal control relevant to the compilation of the consolidated financial statement in order to ensure that no significant untruthful expressions caused by frauds or errors exist in the consolidated financial statement. While preparing the consolidated financial statement, the management is responsible for also evaluating the ability of Grand Pacific Petrochemical Corporation and its subsidiaries to continue with the operation and disclosing related matters and adopting the accounting basis for continued operation, among others. Unless the management intends to liquidate Grand Pacific Petrochemical Corporation and its subsidiaries or discontinue operation or there are no other actually feasible solutions than liquidation or discontinued operation.

The governance unit (including the Audit Committee) of Grand Pacific Petrochemical Corporation and its subsidiaries is responsible for supervising the financial reporting process.

Responsibilities of CPAs in Inspecting Consolidated Financial Statement

We audit the consolidated financial statement in order to be reasonably convinced as to whether the consolidated financial statement as a whole contains major untruthful expressions due to frauds or errors and to issue the audit report. Reasonably convinced is highly convinced. There is no guarantee, however, that the existence of significant untruthful expressions in the consolidated financial statement will be detected according to generally accepted auditing standards. Untruthful expressions might have been caused by frauds or errors. If individual values or an overview of untruthful expressions can be reasonably expected to affect economic decisions made by users of the consolidated financial statement, they are considered significant.

We apply our professional judgment and keep our professional doubts while performing the audit according to generally accepted auditing standards. The CPAs also perform the following tasks:

Identify and evaluate the risk of significant untruthful expressions in the consolidated financial statement due to frauds or errors, design and enforce appropriate responsive policies for determined risks; and collect sufficient and adequate evidence from the audit in order to render audit opinions. Due to the fact that frauds might involve collusion, forgery, intentional omission, untruthful statement, or non-compliance with internal control, the risk associated with undetected significant untruthful expressions caused by frauds is higher than that caused by errors.
Obtain a necessary understanding of internal control concerning the audit in order to design appropriate audit procedures reflective of then-current situation. The purpose, however, is not to effectively express opinions on the internal control of Grand Pacific Petrochemical Corporation.
Evaluate the adequacy of accounting policies adopted by the management and the legitimacy of accounting estimates and related disclosures made.
Reach a conclusion with regard to the adequacy of the accounting basis adopted to continue with operation by the management and whether significant uncertainties of events or conditions that might result in significant concerns about the ability of Grand Pacific Petrochemical Corporation and its subsidiaries to continue with operation exist or not according to the evidence obtained from the audit. In the event that it is determined that significant uncertainties exist with such events or conditions, on the other hand, the CPAs must remind users of the consolidated financial statement in their audit report that they should pay attention to related disclosures included in the statement or modify their audit opinions if such disclosures are inappropriate. Conclusions made by the CPAs are based on the evidence from the audit obtained as of the date of the audit report. Future events or conditions, however, are likely to result in Grand Pacific Petrochemical Corporation and its subsidiaries no longer capable of continuing with operation.
Evaluate the overall expression, structure, and contents of the consolidated financial statement (including related notes) and whether or not the consolidated financial statement has fairly expressed related transactions and events.
Obtain sufficient and adequate evidence from the audit regarding the financial information of entities comprising Grand Pacific Petrochemical Corporation and its subsidiaries and express opinions about the consolidated financial statement. The CPAs are responsible for providing guidance on, supervising and implementing audits and for coming up with audit opinions for the Group.

Communications made by the CPAs with governance units include the planned scope and timing of the audit and significant audit findings (including significant deficiencies found with internal control during the audit). The CPAs have also provided the governance units with the declaration on independence that independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have communicated with the governance units all relationships and other matters considered to be likely undermining the independence of CPAs (including related safeguard measures).

The CPAs, from the matters communicated with the governance units, decided key matters to be included in the 2019 consolidated financial statement audit of Grand Pacific Petrochemical Corporation and its subsidiaries. The CPAs specify such matters in the audit report unless it is disallowed by law to disclose to the public specific matters or under rare circumstances, the CPAs decide not to communicate specific matters in the audit report as it can be reasonably expected that negative impacts from such communication would be greater than the public interest that will be enhanced.

Crowe Horwath International

CPA

Ying Chia Hsiao CPA Wu Chang Wang

Approval document number: FSC Review No. 10200032833 March 19, 2020

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS For the years ended December 31, 2019 and 2018

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Expressed in Thousands of New Taiwan Dollars
December 31, 2019 December 31, 2018
Codes Assets Amount % Amount %
11xx Current assets $11,627,999 37 $10,852,015 36
1100 Cash & cash equivalents 3,403,383 11 2,729,454 9
1110 Financial assets at fair value through profit or loss - current 172,216 1 39,020 -
1140 Contract assets - current 27,487 - 60,364 -
1150 Net notes receivable 361,582 1 394,217 1
1170 Net accounts receivable 2,059,672 7 2,606,345 9
1180 Accounts receivable - related parties 1,271 - 735 -
1200 Other receivables 63,705 - 81,641 -
1220 Current income tax assets 1,198 - 310 -
1310 Net inventories 1,673,157 5 1,980,783 7
1410 Prepayments 73,083 - 93,541 -
1476 Other financial assets - current 3,717,691 12 2,698,945 9
1479 Other current assets - other 73,554 - 166,660 1
15xx Noncurrent assets 19,858,408 63 19,007,886 64
Financial assets at fair value through other comprehensive
1517
income - noncurrent 4,488,921 14 4,220,226 14
1550 Investments accounted for using equity method 6,597,733 21 6,227,702 21
1600 Property, plant and equipment 6,807,341 22 7,427,473 25
1755 Right-of-use assets 433,249 1 - -
1760 Investment property, net 78,882 - 79,843 -
1780 Intangible assets 674,070 2 674,070 3
1840 Deferred income tax assets 55,493 - 49,358 -
1920 Refundable deposits 16,444 - 16,664 -
1960 Advance payment for investment 478,169 2 - -
1985 Long-term prepaid rent - - 9,130 -
1990 Other noncurrent assets - other 228,106 1 303,420 1
1xxx Total assets $31,486,407 100 $29,859,901 100
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Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS

For the years ended December 31, 2019 and 2018

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Expressed in Thousands of New Taiwan Dollars
December 31, 2019 December 31, 2018
Codes Liabilities and Equity Amount % Amount %
21xx Current liabilities $2,519,453 8 $2,877,053 9
2100 Short-term loans 20,953 - 2,833 -
2130 Contract liabilities- current 43,718 - 43,819 -
2150 Notes payable 81,864 - 78,620 -
2170 Accounts payable 1,567,747 5 1,470,375 5
2200 Other receivables 490,583 2 669,260 2
2230 Current income tax liabilities 217,374 1 586,361 2
2250 Provisions - current 17,576 - 17,015 -
2280 Lease liabilities - current 73,386 - - -
2310 Advances receipts 155 - 152 -
2355 Rent payable - current - - 1,944 -
2399 Other current liabilities - other 6,097 - 6,674 -
25xx Noncurrent liabilities 1,734,877 5 1,361,874 5
2550 Provisions - noncurrent 10,175 - 8,486 -
2570 Deferred income tax liabilities 1,255,837 4 1,249,285 5
2580 Lease liabilities - noncurrent 354,647 1 - -
2613 Rent payable - noncurrent - - 991 -
2640 Net defined benefit liabilities - noncurrent 85,035 - 74,157 -
2645 Guarantee deposits received 5,643 - 4,962 -
2670 Other noncurrent liabilities - other 23,540 - 23,993 -
2xxx Total liabilities 4,254,330 13 4,238,927 14
31xx Equity attributable to owners of the parent company
3100 Share capital 9,266,203 30 9,266,203 31
3110 Common shares capital 9,066,203 29 9,066,203 30
3120 Preferred shares capital 200,000 1 200,000 1
3200 Capital reserve 181,698 - 180,533 1
3300 Retained earnings 14,695,878 47 12,608,192 42
3310 Legal reserve 1,790,463 6 1,494,452 5
3320 Special reserve 1,640,828 5 1,640,828 5
3350 Unappropriated earnings 11,264,587 36 9,472,912 32
3400 Other equity 280,466 1 739,639 2
3410 Exchange differences on translating financial
statements of foreign operations ( 521,982) ( 2) ( 206,080) ( 1)
3420 Unrealized gain/loss of financial assets at fair value
through other comprehensive income 802,448 3 945,719 3
3400 Treasury stocks ( 55,577) - ( 55,577) -
31xx Total equity attributable to owners of the parent company 24,368,668 78 22,738,990 76
36xx Non-controlling interests 2,863,409 9 2,881,984 10
3xxx Total equity 27,232,077 87 25,620,974 86
3x2x Total liabilities and equity $31,486,407 100 $29,859,901 100
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Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2019 and 2018

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Expressed in Thousands of New Taiwan Dollars
Year Ended December 31, Year Ended December 31,
2019 2018
Codes Items Amount % Amount %
4000 Operating revenues $20,468,229 100 $24,741,138 100
5000 Operating costs (17,829,140) (87) (20,685,790) (84)
5900 Gross operating profit 2,639,089 13 4,055,348 16
6000 Operating expenses (1,268,878) (6) (1,316,510) (5)
6100 Selling expenses (304,316) (1) (302,890) (1)
6200 Administrative expenses (933,470) (5) (979,786) (4)
6300 Research and development expenses (32,968) - (38,935) -
6450 Reversal gain of expected impairment in credit 1,876 - 5,101 -
6900 Net operating Income 1,370,211 7 2,738,838 11
Non-operating revenues and expenses
7010 Other revenues 196,159 1 268,869 1
7020 Other gains and losses (41,971) - 62,661 -
7050 Finance costs (5,990) - (1,835) -
7060 Share of profit or loss of associates & joint ventures
accounted for using equity method 1,222,468 6 988,415 4
7000 Total non-operating revenues and expenses 1,370,666 7 1,318,110 5
7900 Net profit before tax from continuing operations unit 2,740,877 14 4,056,948 16
7950 Income tax expenses (564,666) (3) (906,207) (4)
8200 Net profit for the year 2,176,211 11 3,150,741 12
Other comprehensive income
Items that will not be reclassified subsequently to
profit or loss
8316 Unrealized valuation gain/loss of investment in
equity instrument at fair value through other
comprehensive income (146,408) (1) (280,712) (1)
8311 Remeasurements of the defined benefit plan (19,908) - 1,822 -
8349 Income tax related to items that will not be
- -
reclassified subsequently 5,283 2,158
8310 Total Items that will not be reclassified subsequently
to profit or loss (161,033) (1) (276,732) (1)
Items that may be reclassified subsequently to profit
or loss
8361 Exchange differences on translating financial
statements of foreign operations (229,109) (1) 223,298 1
8370 Share of other comprehensive income of
associates & joint ventures accounted for
using equity method - Items that may be
reclassified to profit or loss (104,166) (1) (348,993) (1)
8399 Income tax related to items that may be
- -
reclassified subsequently 7,841 34,990
8360 Items that may be reclassified subsequently to profit
or loss (325,434) (2) (90,705) -
8300 Current other comprehensive income(net after tax) (486,467) (3) (367,437) (1)
8500 Total amount of comprehensive income for the year $1,689,744 8 $2,783,304 11
8600 Net income attributable to:
8610 Owners of the parent company $2,070,125 10 $2,960,106 12
8620 Non-controlling interests 106,086 1 190,635 -
$2,176,211 11 $3,150,741 12
8700 Total amount of comprehensive income attributable to:
8710 Owners of the parent company $1,640,513 8 $2,633,570 11
8720 Non-controlling interests 49,231 - 149,734 -
$1,689,744 8 $2,783,304 11
Earnings per share in common shares: (NT$)
9750 Basic earnings per share $2.27 $3.26
9850 Diluted earnings per share $2.27 $3.25
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Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2019 and 2018

Codes	Items	Share capital	Share capital	Capital reserve	Retained earnings	Retained earnings	Retained earnings		Other equity		Expressed in Thousands of New Taiwan Dollars Treasury stocks Equity attributable to owners of the parent Non-controllin g interests Total equity ($122,170) $20,718,147 $2,765,917 $23,484,064 - 226,213 12,745 238,958 - - - - - - - - - (906,620) (46,416) (953,036) - (32,000) - (32,000) - 1,725 - 1,725 66,593 94,859 - 94,859 - 3,089 - 3,089 - 7 4 11 - 2,960,106 190,635 3,150,741 - (326,536) (40,901) (367,437) ($55,577) $22,738,990 $2,881,984 $25,620,974 ($55,577) $22,738,990 $2,881,984 $25,620,974 - - - - - - (53,924) (53,924)	Expressed in Thousands of New Taiwan Dollars Treasury stocks Equity attributable to owners of the parent Non-controllin g interests Total equity ($122,170) $20,718,147 $2,765,917 $23,484,064 - 226,213 12,745 238,958 - - - - - - - - - (906,620) (46,416) (953,036) - (32,000) - (32,000) - 1,725 - 1,725 66,593 94,859 - 94,859 - 3,089 - 3,089 - 7 4 11 - 2,960,106 190,635 3,150,741 - (326,536) (40,901) (367,437) ($55,577) $22,738,990 $2,881,984 $25,620,974 ($55,577) $22,738,990 $2,881,984 $25,620,974 - - - - - - (53,924) (53,924)	Expressed in Thousands of New Taiwan Dollars Treasury stocks Equity attributable to owners of the parent Non-controllin g interests Total equity ($122,170) $20,718,147 $2,765,917 $23,484,064 - 226,213 12,745 238,958 - - - - - - - - - (906,620) (46,416) (953,036) - (32,000) - (32,000) - 1,725 - 1,725 66,593 94,859 - 94,859 - 3,089 - 3,089 - 7 4 11 - 2,960,106 190,635 3,150,741 - (326,536) (40,901) (367,437) ($55,577) $22,738,990 $2,881,984 $25,620,974 ($55,577) $22,738,990 $2,881,984 $25,620,974 - - - - - - (53,924) (53,924)	Expressed in Thousands of New Taiwan Dollars Treasury stocks Equity attributable to owners of the parent Non-controllin g interests Total equity ($122,170) $20,718,147 $2,765,917 $23,484,064 - 226,213 12,745 238,958 - - - - - - - - - (906,620) (46,416) (953,036) - (32,000) - (32,000) - 1,725 - 1,725 66,593 94,859 - 94,859 - 3,089 - 3,089 - 7 4 11 - 2,960,106 190,635 3,150,741 - (326,536) (40,901) (367,437) ($55,577) $22,738,990 $2,881,984 $25,620,974 ($55,577) $22,738,990 $2,881,984 $25,620,974 - - - - - - (53,924) (53,924)
		Common shares capital	Preferred shares capital		Legal reserve	Special reserve	Unappropri ated earnings	Exchange differences on translating financial statements of foreign operations	Unrealized gain/loss of financial assets at fair value through other comprehensive income	Unrealized gain/loss on available-fo r-sale Financial Assets
A1 A3 B1 B17 B5 B7 C17 L7 M1 M7 D1 D3 Z1 A1 B1 B5	Balance at January 1, 2018 Effects of retrospective application and retrospective reclassification Appropriation & distribution of earnings for fiscal year 2017: Provision of legal reserve Reversal of special reserve Cash dividends to common shares Cash dividends and stock dividends to preferred shares Dividend unclaimed within the term by shareholders Parent company’s stocks disposed of by a subsidiary deemed as transaction in treasury stocks Adjustment to capital surplus for distribution of dividends to subsidiaries Changes in the share of equities of subsidiaries Net profit for the year ended December 31, 2018 Other comprehensive income after tax for the year ended December 31, 2018 Balance at December 31, 2018 Balance at January 1, 2019 Appropriation & distribution of earnings for fiscal year 2018: Provision of legal reserve Cash dividends to common shares	$9,066,203 - - - - - - - - - - -	$200,000 - - - - - - - - - - -	$147,446 - - - - - 1,725 28,266 3,089 7 - -	$1,165,588 - 328,864 - - - - - - - - -	$1,658,208 - - (17,380) - - - - - - - -	$7,715,000 42,398 (328,864) 17,380 (906,620) (32,000) - - - - 2,960,106 5,512	($119,538) - - - - - - - - - - (86,542)	$ - 1,191,225 - - - - - - - - - (245,506)	$1,007,410 (1,007,410) - - - - - - - - - -	($122,170) - - - - - - 66,593 - - - -	$20,718,147 226,213 - - (906,620) (32,000) 1,725 94,859 3,089 7 2,960,106 (326,536)	$2,765,917 12,745 - - (46,416) - - - - 4 190,635 (40,901)	$23,484,064 238,958 - - (953,036) (32,000) 1,725 94,859 3,089 11 3,150,741 (367,437)
		$9,066,203	$200,000	$180,533	$1,494,452	$1,640,828	$9,472,912	($206,080)	$945,719	$ -	($55,577)	$22,738,990	$2,881,984	$25,620,974
		$9,066,203 - -	$200,000 - -	$180,533 - -	$1,494,452 296,011 -	$1,640,828 - -	$9,472,912 (296,011) -	($206,080) - -	$945,719 - -	$ - - -	($55,577) - -	$22,738,990 - -	$2,881,984 - (53,924)	$25,620,974 - (53,924)

B7 Cash dividends and stock dividends to preferred shares M1 Adjustment to capital surplus for distribution of dividends to subsidiary M7 Change in equity to subsidiaries D1 Net profit for the year ended December 31, 2019 D3 Other comprehensive income after tax for the year ended December 31, 2019 Q1 Disposal of subsidiaries under equity instrument at fair value through other comprehensive income O1 Changes in non-controlling interests Z1 Balance at December 31, 2019	- - - - - - -	- - - - - - -	- 1,066 99 - - - -	- - - - - - -	- - - - - - -	(12,000) - - 2,070,125 (15,783) 45,344 -	- - - - (315,902) - -	- - - - (97,927) (45,344) -	- - - - - - -	- - - - - - -	(12,000) 1,066 99 2,070,125 (429,612) - -	- (12,000) - 1,066 (99) - 106,086 2,176,211 (56,855) (486,467) - - (13,783) (13,783) $2,863,409 $27,232,077
	$9,066,203	$200,000	$181,698	$1,790,463	$1,640,828	$11,264,587	($521,982)	$802,448	$ -	($55,577)	$24,368,668

Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018

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Expressed in Thousands of New Taiwan Dollars
Year ended Year ended December
Codes Items
December 31, 2019 31, 2018
AAAA CASH FLOWS FROM OPERATING ACTIVITIES:
A00010 Net profit before tax from continuing operations unit $2,740,877 $4,056,948
A20000 Adjustments:
A20010 Gain and expense loss not result influence on cash flows:
A20100 Depreciation expenses (including depreciations in
provision of right-of-use assets and investment property) 948,344 856,561
A20200 Amortization expenses 731,652 741,235
A20400 Net gain on financial assets at fair value through profit or
loss (214) (20)
A20900 Interest expenses 5,992 1,835
A21200 Interest income (102,121) (67,249)
A21300 Dividend revenue (62,747) (156,062)
A22300 Share of gains of associates & joint ventures accounted
for using equity method (1,222,468) (988,415)
A22500 Net loss (gain) on disposal and retirement of property
and equipment (429) 943
A22600 Property, plant and equipment transferred to expenses 17,451 46,031
A23100 Gain on disposal of investment (1,399) (94)
A23700 Impairment loss on non-financial assets 8,496 10,007
A20010 Total gain and expense loss not result influence on cash
flows 322,557 444,772
A30000 Changes in assets/liabilities relating to operation activities
A31115 Net increase of financial assets mandatorily measured at
fair value through profit or loss (131,583) (38,906)
A31125 Decrease (increase) in contract assets 32,877 (60,364)
A31130 Decrease (increase) in notes receivable 32,635 (1,969)
A31150 Decrease in accounts receivable 546,673 253,314
A31160 Increase in accounts receivable - related parties (536) (735)
A31180 Decrease (increase) in other receivables 11,354 (13,447)
A31200 Decrease in inventories 307,626 42,383
A31230 Decrease (increase) in prepayments 20,468 (5,843)
A31240 Decrease in other current assets - other - 66
A32125 Decrease in contract liabilities (101) (111)
A32130 Increase in notes payable 3,244 3,759
A32150 Increase (decrease) in accounts payable 97,372 (399,282)
A32180 Increase (decrease) in other payables (163,826) 36,627
A32200 Increase in provisions 2,250 1,485
A32210 Increase in advance receipts 3 28
A32230 Decrease in other current liabilities - other (577) (41,137)
A32240 Decrease in net defined benefit liabilities (9,030) (11,824)
A30000 Total net changes in assets/liabilities relating to operating
activities 748,849 (235,956)
A33000 Cash provided generated from operations 3,812,283 4,265,764
A33100 Interest received 108,703 52,480
A33200 Dividend received 62,747 964,327
A33300 Interest paid (5,978) (1,835)
A33500 Income tax paid (920,977) (704,381)
AAAA Net cash provided in operating activities 3,056,778 4,576,355
(Continued on the next page)
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BBBB CASH FLOWS FROM INVESTING ACTIVITIES: B00010 Acquisition of financial assets at fair value through other comprehensive income B00020 Disposal of financial assets at fair value through other comprehensive income B00030 Capital allocation of financial assets at fair value through other comprehensive income B01800 Acquisition of investment accounted for using equity method B02200 Acquisition of net cash inflow from subsidiaries B02700 Acquisition of property, plants and equipment B02800 Disposal of property, plant and equipment B03800 Decrease 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 investing activities CCCC CASH FLOWS FROM FINANCING ACTIVITIES: C00200 Increase (decrease) in short-term loans C03000 Increase in guarantee deposits received C04000 Decrease in rent payable C04020 Repayment of principal of lease liabilities C04500 Payout of cash dividends C05000 Disposal of treasury stocks C09900 Return of dividend unclaimed within the term back to capital reserve 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 Subscription in non-control interests of the subsidiaries through capital increase in cash 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	(621,497) 124,560 74,041 - 4,840 (294,393) 2,666 220 (1,018,746) - (568,081)	(236,237) - 9,585 (716,901) - (535,792) 241 425 (1,022,925) - (570,697)
	(2,296,390)	(3,072,301)
	18,120 681 - (72,487) (12,000) - - 1,066 (53,924) (63,656) 45,000	(34,748) 3,542 (2,776) - (938,620) 94,859 1,736 3,089 (46,416) (17,626) -
	(137,200)	(936,960)
	50,741	39,607
	673,929 2,729,454	606,701 2,122,753
	$3,403,383 $3,403,383	$2,729,454 $2,729,454

Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Grand Pacific Petrochemical Corporation CPA Audit Report

Audit Opinions

We, as the CPAs, have completed the audit of the individual balance sheets dated December 31 of 2019 and 2018 and the individual comprehensive income statement, individual statement of changes in equity, individual statement of cash flows, and individual financial statement from January 1 to December 31 of 2019 and 2018, including summaries of major accounting policies of Grand Pacific Petrochemical Corporation.

As CPAs, according to the audit results from us and those from other CPAs (please refer to the paragraph about other matters), the above-mentioned individual financial statement, in all major respects, was prepared in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and hence are sufficient to show the individual financial standing of Grand Pacific Petrochemical Corporation as of December 31, 2019 and 2018 and the individual financial performance and individual cash flows between January 1 and December 31, 2019 and 2018.

Bases for the Audit Opinions

We followed the Rules Governing the Audit of Financial Statements by Certified Public Accountants and generally accepted auditing rules while performing the audit. The responsibilities of the CPAs under the said standards will be explained further in the section about responsibilities in auditing the individual financial statement. Independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have remained independent of Grand Pacific Petrochemical Corporation and fulfilled other responsibilities under the said regulations. Based on the audit results from us and those from other CPAs, we believe that sufficient and adequate evidence has been obtained for the audit to serve as the basis for expressing the audit opinions.

Key Matters Being Audited

Key matters being audited refer to the most important matters based on the professional judgment of the CPAs to be included in the audit of the 2019 individual financial statement of Grand Pacific Petrochemical Corporation. Such matters were addressed throughout the audit of the individual financial statement and during the formation of audit opinions. The CPAs do not express separate opinions regarding these matters.

Key matters being audited of the 2019 individual financial statement of Grand Pacific Petrochemical Corporation are specified as follows:

Recognition of Income

Income is the basic operational activities for the sustainable management of an enterprise and concerns its operational performance and the management generally is faced with the pressure of fulfilling the expected financial or business performance goals. Therefore, it is pre-established that income recognition is associated with significant risk and we consider that the recognition of timing of the transfer of control over sales of products and income from sales as part of the key matters being audited.

For the accounting policy on the recognition of income, please refer to Note 4 (28) of the individual financial statement. For information on accounting items for income, please refer to the disclosure in Note 6 (27) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Test the validity of sales and the internal control for the payment collection cycle in terms of its design and implementation and evaluate by random sampling if the recognition of income is adequate.
Understand the type of product and the distribution specifications with Top 10 distribution customers and evaluate the legitimacy of the distribution income and the number of days involved in the turnover of accounts receivable and analyze if there is any abnormal variation among the customers.
Select samples from distribution transactions within a certain period of time before and after the shipping deadline and verify them against related certificates in order to evaluate the accuracy of transfer timing of

risks and rewards of goods produced and distributed and the control right and the timing when income is recognized.

Impairment evaluation of real estate, plants and equipment

As of December 31, 2019, the book value of real estate, plants, and equipment owned by Grand Pacific Petrochemical Corporation totaled $6,046,298 thousand, accounting for around 22% of the total asset value and the value is significant for the individual financial statement. In addition, the overall economic trends, market competition, and technical development can all affect the future operations of the company and accordingly affect the expected economic benefits and the recoverable amount that may be generated in the future by the cash generating units for the assets estimated and determined by the management in order to evaluate if impairment exists. Therefore, the evaluation of impairment of real estate, plants, and equipment is listed by the CPAs as part of the key matters being audited.

For the accounting policy on the impairment of real estate, plants and equipment and non-financial assets, please refer to Note 4 (16) and (19) of the individual financial statement. For information on accounting items involving real estate, plants and equipment, please refer to the disclosure in Note 6 (11) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Obtain the asset impairment assessment form for respective cash generating units that have been evaluated spontaneously by the Company.
Evaluate the legitimacy of impairment signs identified by the management and the assumption and sensitivity adopted, including whether the differentiation of cash-generating units, forecast of cash flows, and discount rate are appropriate or not.
Ask the management and review audit evidence obtained from the subsequent audit procedure for verification of absence of any matter related to impairment testing after the reporting date.

Valuation of investment balance adopting the equity method

The investment balance of Grand Pacific Petrochemical Corporation as of December 31, 2019 adopting the equity method totaled $14,594,602 thousand, accounting for around 54% of the total asset value. The net worth of comprehensive income (including the portions of profits and losses from subsidiaries, affiliates, and joint ventures recognized using the equity method and the portions of other comprehensive income from subsidiaries, affiliates, and joint ventures recognized using the equity method) totaled $913,371 thousand, accounting for around 56% of the total comprehensive income. The impacted value is significant to the individual financial statement. Therefore, the CPAs include valuation of investment balance adopting the equity method as part of the key matters being audited.

For the accounting policy on investments adopting the equity method, please refer to Note 4 (15) of the individual financial statement. For information on accounting items for investments adopting the equity method, please refer to the disclosure in Note 6 (10) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate the accuracy of calculation during valuation adopting the equity method and the adopted accounting policy.
Check the accuracy in the calculation of unrealized profits or losses generated from transactions with companies invested in using the equity method; they have been reasonably written off and evaluate the adopted accounting policy; the adopted accounting policy has been adjusted as needed to be consistent with the policies adopted by the Company.
Evaluate the legitimacy of impairment signs of investments adopting the equity method as identified by the management and the assumption and sensitivity adopted, including whether or not the forecast of profitability of companies invested in it in the future or the discount rate is appropriate.

－ Other Matters Mentioning Audits by other CPAs

As is stated in Note 6 (10) of the individual financial statement, among the investments by Grand Pacific Petrochemical Corporation adopting the equity method, the financial statements of the re-investment company － adopting the equity method through KK Enterprise K.K. Chemical Company Limited and KK Enterprise

(Malaysia) Sdn. Bhd. and the reinvestment company Zhenjiang Chimei Chemical Company Limited and Zhangzhou Chimei Chemical Company Limited adopting the equity method through British Virgin Islands Land & Sea Capital Corp. were audited by other CPAs, not us. Therefore, among the opinions expressed by us on the above-mentioned individual financial statement, the amount listed in the above-mentioned financial statement of the Company and the above-mentioned information about the Company in Note 13 of the individual financial statement are completely based on audit reports from other CPAs. The balance of the above-mentioned investments adopting the equity method in the companies by Grand Pacific Petrochemical Corporation as of December 31, 2019 and 2018, was $6,620,330 thousand and $5,530,087 thousand, accounting for 24.37% and 21.35% of the total value, respectively. The portions of profits and losses indirectly recognized adopting the equity method from January 1 to December 31, 2019 and 2018, was $1,224,993 thousand and $991,644 thousand, accounting for 74.67% and 37.65% of the total comprehensive income, respectively.

Responsibilities of Management and Governance Unit to Individual Financial Reports

The management is responsible for preparing adequately expressed individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and maintaining necessary internal control relevant to the compilation of the individual financial statements in order to ensure that no significant untruthful expressions caused by frauds or errors exist in the individual financial statements.

While preparing the individual financial statement, the management is responsible for also evaluating the ability of Grand Pacific Petrochemical Corporation to continue with the operation and disclosing related matters and adopting the accounting basis for continued operation, among others. Unless the management intends to liquidate Grand Pacific Petrochemical Corporation or discontinue operation or there are no other actually feasible solutions than liquidation or discontinued operation.

The governance unit (including the Audit Committee) of Grand Pacific Petrochemical Corporation is responsible for supervising the financial reporting process.

Responsibilities of CPAs in Inspecting Individual Financial Statement

We audit the individual financial statement in order to be reasonably convinced as to whether the individual financial statement as a whole contains major untruthful expressions due to frauds or errors and to issue the audit report. Reasonably convinced is highly convinced. There is no guarantee, however, that existence of significant untruthful expressions in the individual financial statement will be detected according to generally accepted auditing standards. Untruthful expressions might have been caused by frauds or errors. If individual values or an overview of untruthful expressions can be reasonably expected to affect economic decisions made by users of the individual financial statement, they are considered significant.

We apply our professional judgment and keep our professional doubts while performing the audit according to generally accepted auditing standards. The CPAs also perform the following tasks:

Identify and evaluate the risk of significant untruthful expressions in the individual financial statement due to frauds or errors, design and enforce appropriate responsive policies for determined risks; and collect sufficient and adequate evidence from the audit in order to render audit opinions. Due to the fact that frauds might involve collusion, forging, intentional omission, untruthful statement, or non-compliance with internal control, the risk associated with undetected significant untruthful expressions caused by frauds is higher than that caused by errors.
Obtain a necessary understanding of internal control concerning the audit in order to design appropriate audit procedures reflective of then-current situation. The purpose, however, is not to effectively express opinions on the internal control of Grand Pacific Petrochemical Corporation.
Evaluate the adequacy of accounting policies adopted by the management and the legitimacy of accounting estimates and related disclosures made.
Reach a conclusion with regard to the adequacy of the accounting basis adopted to continue with operation by the management and whether significant uncertainties of events or conditions that might result in significant concerns about the ability of Grand Pacific Petrochemical Corporation to continue with operation exist or not according to the evidence obtained from the audit. In the event that it is determined that

significant uncertainties exist with such events or conditions, on the other hand, the CPAs must remind users of the individual financial statement in their audit report that they should pay attention to related disclosures included in the statement or modify their audit opinions if such disclosures are inappropriate. Conclusions made by the CPAs are based on the evidence from the audit obtained as of the date of the audit report. Future events or conditions, however, are likely to result in Grand Pacific Petrochemical Corporation no longer capable of continuing with operation.

Evaluate the overall expression, structure, and contents of the individual financial statement (including related notes) and whether or not the individual financial statement has fairly expressed related transactions and events.
Obtain sufficient and adequate evidence from the audit regarding the financial information of entities comprising Grand Pacific Petrochemical Corporation and express opinions about the individual financial statement. The CPAs are responsible for providing guidance on, supervising, and implementing audits and for coming up with audit opinions for the individual financial statement.

The CPAs, from the matters communicated with the governance units, decided key matters to be included in the 2019 individual financial statement audit of Grand Pacific Petrochemical Corporation. The CPAs specify such matters in the audit report unless it is disallowed by law to disclose to the public specific matters or under rare circumstances, the CPAs decide not to communicate specific matters in the audit report as it can be reasonably expected that negative impacts from such communication would be greater than the public interest that will be enhanced.

Crowe Horwath International

CPA

Ying Chia Hsiao

CPA

Wu Chang Wang

Approval document number: FSC Review No. 10200032833 March 19, 2020

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY BALANCE SHEETS For the years ended December 31, 2019 and 2018

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Expressed in Thousands of New Taiwan Dollars
December 31, 2019 December 31, 2018
Codes Assets Amount % Amount %
11xx Current assets $6,151,330 23 $5,227,246 20
1100 Cash & cash equivalents 1,623,640 6 1,567,675 6
1110 Financial assets at fair value through profit or loss - current 23,247 - - -
1150 Net notes receivable 1,201 - 14,419 -
1170 Net accounts receivable 1,362,287 5 1,918,484 8
1180 Accounts receivable - related parties 13,882 - 735 -
1200 Other receivables 24,721 - 42,181 -
1310 Net inventories 1,342,132 5 1,604,466 6
1410 Prepayments 60,220 - 79,286 -
1476 Other financial assets - current 1,700,000 7 - -
15xx Non-current assets 21,015,000 77 20,671,256 80
1517 Financial assets at fair value through other comprehensive
income - noncurrent 294,765 1 295,533 1
1550 Investments accounted for using equity method 14,594,602 54 13,745,161 53
1600 Property, plant and equipment 6,046,298 22 6,600,827 26
1755 Right-of-use assets 42,980 - - -
1840 Deferred income tax assets 35,210 - 28,659 -
1920 Refundable deposits 1,025 - 889 -
1932 Long-term receivables 120 - 187 -
1xxx Total assets $27,166,330 100 $25,898,502 100
Codes Liabilities and Equity
21xx Current liabilities $1,705,453 6 $2,115,208 8
2130 Contract liabilities - current 11,120 - 20,881 -
2170 Accounts payable 1,178,229 4 1,091,667 4
2180 Accounts payables - related parties 348 - - -
2200 Other receivables 316,872 1 482,508 2
2220 Other receivables - - 6,415 -
2230 Current income tax liabilities 170,159 1 498,854 2
2250 Provisions - current 12,403 - 12,004 -
2280 Lease liabilities - current 13,284 - - -
2310 Advances receipts 128 - 128 -
2399 Other current liabilities - Other 2,910 - 2,751 -
25xx Noncurrent liabilities 1,092,209 4 1,044,304 4
2550 Provisions - noncurrent 9,610 - 8,153 -
2570 Deferred income tax liabilities 979,856 4 980,012 4
2580 Lease liabilities - noncurrent 30,942 - - -
2640 Net defined benefit liabilities - noncurrent 46,675 - 29,872 -
2645 Guarantee deposits received 2,934 - 4,075 -
2670 Other noncurrent liabilities - other 22,192 - 22,192 -
2xxx Total liabilities 2,797,662 10 3,159,512 12
31xx Equity
3100 Share capital 9,266,203 34 9,266,203 36
3110 Common shares capital 9,066,203 33 9,066,203 35
3120 Preferred shares capital 200,000 1 200,000 1
3200 Capital reserve 181,698 1 180,533 1
3300 Retained earnings 14,695,878 54 12,608,192 48
3310 Legal reserve 1,790,463 7 1,494,452 6
3320 Special reserve 1,640,828 6 1,640,828 6
3350 Unappropriated earnings 11,264,587 41 9,472,912 36
3400 Other equity 280,466 1 739,639 3
3410 Exchange differences on translating financial statements
of foreign operations (521,982) (2) (206,080) (1)
3420 Unrealized gain/loss of financial assets at fair value
through other comprehensive income 802,448 3 945,719 4
3400 Treasury stocks (55,577) - (55,577) -
3xxx Total equity 24,368,668 90 22,738,990 88
3x2x Total liabilities and equity $27,166,330 100 $25,898,502 100
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Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2019 and 2018

Expressed in Thousands of New Taiwan Dollars Year Ended December 31, Year Ended December 31,

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2019 2018
Codes Items Amount ％ Amount ％
4000 Operating revenues $16,229,085 100 $20,305,094 100
5000 Operating costs (14,779,229) (91) (17,525,024) (86)
5900 Total amount of gross operating profit 1,449,856 9 2,780,070 14
5910 Unrealized sales gain (315) - (4,744) -
5920 Realized sales gain 4,744 - 13,318 -
5950 Net gross operating profit 1,454,285 9 2,788,644 14
6000 Operating expenses (414,240) (2) (489,604) (2)
6100 Selling expenses (153,504) (1) (164,972) (1)
6200 Administrative expenses (236,379) (1) (294,335) (1)
6300 Research and development expenses (24,357) - (30,297) -
6900 Net operating Income 1,040,045 7 2,299,040 12
Non-operating revenues and expenses
7010 Other revenues 67,306 - 62,232 -
7020 Other gains and losses (28,777) - 63,145 -
7050 Finance costs (800) - (419) -
7070 Share of profit or loss of subsidiaries, associates &
joint ventures accounted for using equity method 1,333,846 8 1,211,359 6
7000 Total non-operating revenues and expenses 1,371,575 8 1,336,317 6
7900 Net profit before tax from continuing operations unit 2,411,620 15 3,635,357 18
7950 Income tax expenses (341,495) (2) (675,251) (3)
8200 Net profit for the year 2,070,125 13 2,960,106 15
Other comprehensive income
Items that will not be reclassified subsequently to
profit or loss
8316 Unrealized valuation gain/loss of investment in
equity instrument at fair value through other
- -
comprehensive income (768) (72,367)
8311 Remeasurements of the defined benefit plan (20,263) - 7,164 -
8330 Share of other comprehensive income of
subsidiaries, associates & joint ventures
accounted for using equity method - items that
will not be reclassified subsequently to profit or
loss (96,732) (1) (175,549) (1)
8349 Income tax related to items that will not be
reclassified subsequently 4,053 - 758 -
8310 Total Items that will not be reclassified subsequently to
profit or loss (113,710) (1) (239,994) (1)
Items that may be reclassified subsequently to profit or
loss
8380 Share of other comprehensive income of
subsidiaries, associates & joint ventures
accounted for using equity method - items that
may be reclassified to profit or loss (323,743) (2) (121,532) (1)
8399 Income tax related to items that may be reclassified
- -
subsequently 7,841 34,990
8360 Items that may be reclassified subsequently to profit or
loss (315,902) (2) (86,542) (1)
8300 Current other comprehensive income(net after tax) (429,612) (3) (326,536) (2)
8500 Total comprehensive income for the year $1,640,513 10 $2,633,570 13
Earnings per share in ordinary shares: (NT$)
9750 Basic earnings per share $2.27 $3.26
9850 Diluted earnings per share $2.27 $3.25
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Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2019 and 2018

Codes	Items	Share capital	Share capital	Capital reserve	Retained earnings	Retained earnings	Retained earnings		Other equity	Expressed in Thousands of New Taiwan Dollars Unrealized gain/loss on available-for- sale Financial Assets Treasury stocks Total equity $1,007,410 ($122,170) $20,718,147 (1,007,410) - 226,213 - - - - - - - - (906,620) - - (32,000) - - 1,725 - 66,593 94,859 - - 3,089 - - 7 - - 2,960,106 - - (326,536) $ - ($55,577) $22,738,990	Expressed in Thousands of New Taiwan Dollars Unrealized gain/loss on available-for- sale Financial Assets Treasury stocks Total equity $1,007,410 ($122,170) $20,718,147 (1,007,410) - 226,213 - - - - - - - - (906,620) - - (32,000) - - 1,725 - 66,593 94,859 - - 3,089 - - 7 - - 2,960,106 - - (326,536) $ - ($55,577) $22,738,990	Expressed in Thousands of New Taiwan Dollars Unrealized gain/loss on available-for- sale Financial Assets Treasury stocks Total equity $1,007,410 ($122,170) $20,718,147 (1,007,410) - 226,213 - - - - - - - - (906,620) - - (32,000) - - 1,725 - 66,593 94,859 - - 3,089 - - 7 - - 2,960,106 - - (326,536) $ - ($55,577) $22,738,990
		Common shares capital	Preferred shares capital		Legal reserve	Special reserve	Unappropriate d earnings	Exchange differences on translating financial statements of foreign operations	Unrealized gain/loss of financial assets at fair value through other comprehensive income	Unrealized gain/loss on available-for- sale Financial Assets
A1 A3 B1 B17 B5 B7 C17 L7 M1 M7 D1 D3 Z1 A1 B1 B7 M1 M7 D1	Balance at January 1, 2018 Effects of retrospective application and retrospective reclassification Appropriation & distribution of earnings for fiscal year 2017: (Note) Provision of legal reserve Reversal of special reserve Cash dividends to common shares Cash dividends and stock dividends to preferred shares Dividend unclaimed within the term by shareholders Parent company’s stocks disposed of by a subsidiary deemed as transaction in treasury stocks Adjustment to capital surplus for distribution of dividends to subsidiaries Changes in the share of equities of subsidiaries Net profit for the year ended December 31, 2018 Other comprehensive income after tax for the year ended December 31, 2018 Balance at December 31, 2018 Balance at January 1, 2019 Appropriation & distribution of earnings for fiscal year 2018: (Note) Provision of legal reserve Cash dividends to special shares Adjustment to capital surplus for distribution of dividends to subsidiary Change in equity to subsidiaries Net profit for the year ended December 31,	$9,066,203 - - - - - - - - - - -	$200,000 - - - - - - - - - - -	$147,446 - - - - - 1,725 28,266 3,089 7 - -	$1,165,588 - 328,864 - - - - - - - - -	$1,658,208 - - (17,380) - - - - - - - -	$7,715,000 42,398 (328,864) 17,380 (906,620) (32,000) - - - - 2,960,106 5,512	($119,538) - - - - - - - - - - (86,542)	$ - 1,191,225 - - - - - - - - - (245,506)	$1,007,410 (1,007,410) - - - - - - - - - -	($122,170) - - - - - - 66,593 - - - -	$20,718,147 226,213 - - (906,620) (32,000) 1,725 94,859 3,089 7 2,960,106 (326,536)
		$9,066,203	$200,000	$180,533	$1,494,452	$1,640,828	$9,472,912	($206,080)	$945,719	$ -	($55,577)	$22,738,990
		$9,066,203 - - - - -	$200,000 - - - - -	$180,533 - - 1,066 99 -	$1,494,452 296,011 - - - -	$1,640,828 - - - - -	$9,472,912 (296,011) (12,000) - - 2,070,125	($206,080) - - - - -	$945,719 - - - - -	$ - - - - - -	($55,577) - - - - -	$22,738,990 - (12,000) 1,066 99 2,070,125

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2019 and 2018

Codes	Items	Share capital	Share capital	Capital reserve	Retained earnings	Retained earnings	Retained earnings		Other equity	Expressed in Thousands of New Taiwan Dollars Unrealized gain/loss on available-for- sale Financial Assets Treasury stocks Total equity - - (429,612) - - - $ - ($55,577) $24,368,668	Expressed in Thousands of New Taiwan Dollars Unrealized gain/loss on available-for- sale Financial Assets Treasury stocks Total equity - - (429,612) - - - $ - ($55,577) $24,368,668	Expressed in Thousands of New Taiwan Dollars Unrealized gain/loss on available-for- sale Financial Assets Treasury stocks Total equity - - (429,612) - - - $ - ($55,577) $24,368,668
		Common shares capital	Preferred shares capital		Legal reserve	Special reserve	Unappropriate d earnings	Exchange differences on translating financial statements of foreign operations	Unrealized gain/loss of financial assets at fair value through other comprehensive income	Unrealized gain/loss on available-for- sale Financial Assets
D3 Q1 Z1	2019 Other comprehensive income after tax for the year ended December 31, 2019 The equity instruments at fair value through other comprehensive income as disposed of by a subsidiary Balance at December 31, 2019	- - $9,066,203	- - $200,000	- - $181,698	- - $1,790,463	- - $1,640,828	(15,783) 45,344 $11,264,587	(315,902) - ($521,982)	(97,927) (45,344) $802,448	- - $ -	- - ($55,577)	(429,612) - $24,368,668

Note: Compensation to employees and remuneration to directors and supervisors have been deducted within the parent company only statements of comprehensive income.

Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018

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Expressed in Thousands of New Taiwan Dollars
Year ended Year ended
December 31, December 31,
Codes Items 2019 2018
AAAA CASH FLOWS FROM OPERATING ACTIVITIES:
A00010 Net profit before tax from continuing operations unit $2,411,620 $3,635,357
A20000 Adjustments:
A20010 Gain and expense loss not result influence on cash flows:
A20100 Depreciation expenses (including depreciations in provision of
right-of-use assets) 739,011 701,155
A20400 Net gain on financial assets at fair value through profit or loss (80) -
A20900 Interest expenses 800 419
A21200 Interest income (32,526) (16,629)
A21300 Dividend revenue (24,230) (27,824)
A22400 Share of gains of subsidiaries, associates & joint ventures
accounted for using equity method (1,333,846) (1,211,359)
A22500 Net loss (gain) on disposal and retirement of property, plant and
equipment 120 180
A22600 Property, plant and equipment transferred to expenses 17,451 46,031
A23100 Gain on disposal of investment (1,341) -
A23700 Impairment loss on non-financial assets 3,773 -
A23900 Unrealized sales gain 315 4,744
A24000 Realized sales gain (4,744) (13,318)
A20010 Total gain and expense loss not result influence on cash flows (635,297) (516,601)
A30000 Changes in assets/liabilities relating to operation activities
A31115 Net increase of financial assets mandatorily measured at fair
-
value through profit or loss (21,826)
A31130 Decrease in notes receivable 13,218 894
A31150 Decrease in accounts receivable 556,197 225,675
A31160 Decrease (increase) in accounts receivable - related parties (13,147) 77,077
A31180 Decrease (increase) in other receivables 20,150 (11,143)
A31200 Decrease in inventories 262,334 26,880
A31230 Decrease (increase) in prepayments 19,066 (4,554)
A32125 Decrease in contract liabilities (9,761) (18,687)
A32150 Increase (decrease) in notes payable 86,562 (424,009)
A32160 Increase in accounts payable - related parties 348 -
A32180 Increase (decrease) in other payables (163,984) 41,010
A32190 Increase (decrease) in other payables - related parties (6,415) 6,415
A32200 Increase in provisions 1,856 1,331
A32230 Increase in other current liabilities - other 159 115
A32240 Decrease in net defined benefit liabilities (3,460) (8,162)
A30000 Total net changes in assets/liabilities relating to operating
activities 741,297 (87,158)
A33000 Cash provided generated from operations 2,517,620 3,031,598
A33100 Interest received 29,836 15,727
A33200 Dividend received 131,759 75,429
A33300 Interest paid (800) (419)
A33500 Income tax paid (672,844) (529,941)
AAAA Net cash provided in operating activities 2,005,571 2,592,394
(Continued on the next page)
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(Brought Forward) BBBB CASH FLOWS FROM INVESTING ACTIVITIES: B01800 Acquisition of investment accounted for using equity method B02400 Refund of share payment under capital decrease from the investee accounted for using equity method. B02700 Acquisition of property, plants and equipment B03700 Increase in refundable deposits B06500 Increase in other financial assets B06700 Decrease in other noncurrent assets - other BBBB Net cash used in investing activities CCCC CASH FLOWS FROM FINANCING ACTIVITIES: C03000 Increase (decrease) in guarantee deposits received C04020 Repayment of principal of lease liabilities C04500 Payout of cash dividends C09900 Return of dividend unclaimed within the term back to capital reserve CCCC Net cash used in financing activities 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 parent company only balance sheets	(50,000) 19,836 (193,738) (136) (1,700,000) 67	(785,515) - (440,569) (4) - 92
	(1,923,971)	(1,225,996)
	(1,141) (12,494) (12,000) -	3,542 - (938,620) 1,725
	(25,635)	(933,353)
	55,965 1,567,675	433,045 1,134,630
	$1,623,640 $1,623,640	$1,567,675 $1,567,675

Chairman of Board: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Proposed by the Board of Directors

Proposal 2

Subject: The 2019 earnings distribution proposal is submitted for ratification.

Explanations:

The Company’s net income after tax for the year of 2019 was $2,070,125,401. After accounting for the accumulative investment gains of NT$45,343,950 with the disposal of equity instrument investments with fair value through other comprehensive incomes and less the remeasurement of confirmed benefit programs at NT$15,783,410, the unappropriated earnings during the year stood at NT$2,099,685,941. After the allocation of NT$209,968,594 to the statutory surplus reserve, the distributable earnings during the year were NT$1,889,717,347. Adding this to the unappropriated retained earnings at the beginning of the term of NT$9,164,901,598 derived the distributable earnings in accumulation at NT$11,054,618,945.
Pursuant to Article 29 of the Articles of Incorporation, after preferred dividends for the year of 2019 amounted to $12,000,000 were distributed first, the distributable earnings are $11,042,618,945; for common shares, it is proposed that no cash dividend be allocated. After the allocation, balance of the retained earnings came to $11,042,618,945.

Resolution:

Grand Pacific Petrochemical Corporation The 2019 Earnings Distribution Table

	Expressed in New Taiwan Dollars	Expressed in New Taiwan Dollars
Beginning undistributed earnings (TIFRS)	(A)	$9,164,901,598
Post-tax earnings for the year		2,070,125,401
Add: disposal of equity instruments investment with fair value through
other comprehensive incomes and accumulated profit and loss directly
transferred to retained earnings		45,343,950
Less: remeasurement of confirmed benefit programs	via retained earnings	(15,783,410)
Unappropriated earnings during the year = Post-tax	earnings for the year
and + adjustments	(B)	2,099,685,941
Less: Provision of legal reserve (10%)	(B)x10%	(209,968,594)
Distributable earnings for the year	(C)	1,889,717,347
Accumulated distributable earnings	(A)+(C)	11,054,618,945
Less: Cash dividends to preferred shares for the year		(12,000,000)
Total distributable earnings		11,042,618,945
Distribution items: Nil
Ending undistributed earnings		$11,042,618,945

Note: In the 2019 earnings distribution proposal, the distribution shall be made first from earnings for the year.

Responsible person: Pin Cheng Yang

Manager: Chia Hsiung Tseng

Chief Accountant: Ling Chu Chen

Discussion Items

Proposal 1

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:

Per Article 162 of the Company Act promulgated on November 1, 2018 with Order Yuan-Tai-Eco No. 1070037184 issued by Executive Yuan
The size of the board is expanded from seven directors to eleven directors to strengthen the board’s decision power to meet the Company’s long-term development requirements.
Comparative Table of Pre-Amendment and Post-Amendment Contents below:

		Post-amendment contents	Current contents	Descriptions
Article 7		The Company's share certificatesare registered and serially numbered, and shall be signed or affixed with seals by directorsthat represent the Company, andduly certified by an authorized bankbefore issuance. For shares issued by the Company, the Company may be exempted from printing share certificates but shall consult with the Taiwan Depository & Clearing Corporation (TDCC) for registration or custody.	The Company's share certificates shall be signed or affixed with seals by three or more directors, serially numbered, affixed with the Company's official seal and duly authorized before issuance. For shares issued by the Company, the Company may be exempted from printing share certificates but shall consult with the Taiwan Depository & Clearing Corporation (TDCC) for registration or custody.	According to the amended Article 162 of the Company Act
Article 21		The Company has seven ~eleven directors to organize the Board of Directors. The directors shall be elected by the shareholders’ meeting from the candidates with disposing capacity, with a three-year tenure of office, eligible for reelection. The number of independent directors shall not be below the minimum of three. ……	The Company has seven directors to organize the Board of Directors. The directors shall be elected by the shareholders’ meeting from the candidates with disposing capacity, with a three-year tenure of office, eligible for reelection. The number of independent directors shall not be below the minimum of three. ……	Strengthening of the Board’s decision power to overseas long-term developments of the Company

Resolution:

Election Items

Proposal 1 Proposed by the Board of Directors Subject: Election of the 13[th] term of directors (including independent directors) Explanations:

The 12[th] term of directors (including independent directors) starts from June 27, 2017 and ends on June 26, 2020. Hence, the annual meeting of shareholders this year should elect the next term of directors. The appointment of the 12[th] term of directors shall end upon the election of the 13[th] term of directors.
There will be seven directors (including three independent directors) for the 13[th] term.
The term of directors (including independent directors) will be three years, starting from June 12, 2020 and ending on June 11, 2023.
According to the Articles of Incorporation, the directors (including independent directors) shall be nominated and then chosen by the shareholder meetings from the list of candidates. Per Article 192-1 of the Company Act, the board shall review, announce and inform the list of nominated candidates for directors (including independent directors). This proposal was reviewed by the 22[nd] meeting of the 12[th] Board on April 28, 2020 and published as required by regulators via Market Observation Post System.
List of Candidates for Board of Directors (Including Independent Directors)

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Title Name Education and Experience No. of shares held
Master, Institute of Chemical Engineering, National
Cheng Kung University
Chairman, Grand Pacific Petrochemical Corporation
JING KWAN Chairman, GPPC Chemical Corporation
INVESTMENT CO., LTD. Director, GPPC Investment Corp.
Director 20,380,000
Statutory representative: Pin Director, Land & Sea Capital Corp.
Cheng Yang Director, Goldenpacific Equities Ltd.
Director, Videoland Inc.
Director, Zhenjiang Chimei Chemical Co., Ltd.
Director, KK Enterprise Co., Ltd.
Department of Accounting, Feng Chia University
Senior Vice President, Grand Pacific Petrochemical
Corporation
Chairman, He Xin Venture Investment Enterprise Co.,
Ltd.
CHUNG KWAN
Chairman, GPPC Investment Corp.
INVESTMENT CO., LTD.
Director Chairman, GPPC Hospitality And Leisure Inc. 28,262,722
Statutory representative: Hsi
Chairman, Goldenpacific Equities Ltd.
Hui Huang
Director, Land & Sea Capital Corp.
Director, Videoland Inc.
Senior Vice President, Videoland Inc.
Director, KK Enterprise Co., Ltd.
Supervisor, GPPC Chemical Corporation
HUNG WAN Department of Law, Fu Jen Catholic University
INVESTMENT CO., LTD. Senior Lawyer, T.Y.T. Law Offices
Director 200,000
Statutory representative: Attorney at Law, Ching Lun Law Offices
Chen Ching Ting Supervisor, Ralec Electronic Corporation
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Director	HUNG WAN INVESTMENT CO., LTD. Statutory representative: ChinChu Lin	Department of Chemical Engineering, Feng Chia University CEO, Petrochemical Business Div., CPC Corporation, Taiwan
Independent director	Wen Tzong Chen	MBA, Rider University, the U.S. Director, Test Rite International Co., Ltd. Independent director,Advancetek Enterprise Co., Ltd. Independent director,Hiyes International Co., Ltd. Chairman, Taiwan Financial Asset Service Corporation Director-general, National Taxation Bureau of the Northern Area, Ministry of Finance Supervisor,Taiwan BusinessBankCo.,Ltd.
Independent director	Mu Hsien Chen	M.A., Accounting, California State University CPA, Diwan & Company Supervisor, Huan Hua Co., Ltd. Managing Director, Kai Fa International Corporation Chairman, PrimeGlobal (Asia Pacific) Limited (Hong Kong) Director, PrimeGlobal Inc. (USA) CPA, COO, Ernst & Young Global Limited Independent director,KGI Securities Co., Ltd. Committee Member, Accounting Research and Development Foundation Director, Taipei CPA Associations of the R.O.C. Chair, Accounting & Audit Committee, Taipei CPA Associations of the R.O.C. Chair, SME Accounting & Audit Committee, CPA Associations of the R.O.C.
Independent director	Chih Hung Hsieh	Doctor, College of Law, National Chengchi University PhD, Law, Waseda University M.A. Law, Waseda University Associate Professor, Department of Law, Fu Jen Catholic University Independent director, Sanyang Motor Co., Ltd. Taiwan Associate Dean of Academic Affairs, College of Law, Fu Jen Catholic University Chairperson, Department of Law, Fu Jen Catholic University Adjunct Associate Professor, Shih Hsin University Adjunct Associate Professor, National Taipei University of Education Member, Commitment for Reviews of Criminal Compensation Requests, Taiwan New Taipei District Court Committee Member for Exam Administering, Question Designs and Paper Reviews

Election Results:

Other Items

Proposed by the Board of Directors

Proposal 1

Subject: It is proposed that the 13[th] term of directors be lifted from prohibition of business strife. Please resolve the decision as appropriate.

Descriptions:

Per Article 209 of the Company Act, the shareholder meeting is asked to lift the 13[th] term of directors from prohibition of business strife.
The Company’s directors are elected from the list of nominated candidates. Key information on the prohibited business strife of the new directors: Statutory Representative from Jing Kwan Investment Co., Ltd., Mr. Pin Cheng Yang, also serves as a director with Zhenjiang Chimei Chemical Co., Ltd.

Resolution:

Incidental Motion

Adjournment

Three. Annex:

Annex I

Grand Pacific Petrochemical Corporation “Rules and Procedures for Shareholders’ Meeting”

Officially resolved in the Board of Directors on March 27, 2002 Officially resolved in the shareholders’ meeting on June 27, 2002

The Company’s Shareholders’ Meeting shall be duly handled in accordance with these Rules unless otherwise prescribed in laws.
In case of a shareholders’ meeting, the sign-in book should be prepared so that the participating shareholders may sign in. A participating shareholder may, as well, submit his or her sign-in card instead of an act to sign in. The number of shares represented by the participating shareholders shall be duly counted based on the sign-in books or the submitted sign-in cards.
The participation and voting by shareholders shall be calculated based on the number of shares.
The shareholders’ meeting shall be convened at a venue where the Company is postponement or a venue appropriate to convening of the shareholders’ meeting. The shareholders’ meeting shall not start at a time earlier than 9:00 a.m. or later than 3:00 p.m.
The shareholders’ meeting shall be chaired by the chairman if it is convened by the board of directors. In the event that the chairman is on leave or is unable to exercise the power by any reason, the vice chairman shall act on behalf. In case of no vice chairman or in the event that the vice chairman is on leave or is unable to exercise the power by any reason, the chairman shall appoint one managing director to act on behalf. In case of no managing director, the chairman shall appoint one director to act on behalf. In the event that the chairman does not appoint a substitute, one managing director or one director shall be elected from among themselves to act on behalf. Where a shareholders’ meeting is convened by another authorized person beyond the board of directors, the shareholders’ meeting shall be chaired by that convener.
The retained Attorney-at-Law appointed by the Company, Certified Public Accountant or the relevant personnel may participate in the shareholders’ meeting as non-voting (guest) participants. The staff members for a shareholders’ meeting shall wear identity certificates or armbands.
The process of a shareholders’ meeting shall be recorded with audio or video proofs which shall be archived for a minimum of one year
The chairperson shall calls to start the meeting when the time is up. In the event that the meeting is attended by shareholders who do not constitute a half of the total outstanding shares, nevertheless, the chairperson may announce a postponement for the meeting. The total of the postponements shall not exceed the maximum of twice and the aggregate total of postponements shall not exceed one hour. In the event that the shareholders’ meeting is

attended by shareholders who represent still less than one-third of the total outstanding shares after twice postponements, the chairperson may announce that the shareholders’ meeting be aborted. In the event that the shareholders’ meeting is attended by shareholders who represent still less than one-third of the total outstanding shares after twice postponements, a tentative resolution in accordance with Paragraph 1 of Article 175. In the event that the total of the outstanding shares represented by the participating shareholders exceeds a half of the aggregate total, the chairperson may put the tentative resolution so resolved to the shareholders’ meeting for further resolution in accordance with Article 174 of the Company Act.

Where a shareholders’ meeting is convened by the board of directors, the agenda shall be worked out by the board of directors and shall be handled based on the scheduled agenda. The agenda shall not be changed unless duly resolved by the shareholders’ meeting. The provision set forth under the preceding paragraph is equally applicable mutatis mutandis to an event where the shareholders’ meeting is convened by another convener beyond the board of directors.

The chairperson shall not announce adjournment of the meeting unless duly resolved, before the issues on the agenda as mentioned in the two preceding paragraphs (including extraordinary motions) are concluded.

After the meeting is adjourned, the shareholders shall no longer elect another chairperson to continue the meeting at the same or a new venue; Where the chairperson breaches the Procedure Rules for Shareholders’ Meeting and announces adjournment of the meeting, one person may be elected through a majority vote of the participating shareholders to serve as the chairperson to continue the meeting.

Before a shareholder takes the floor, he or she shall fill up the speech slip which shall expressly bear the subject of his or her speech, shareholder account number (or participation certificate number) and name of account holder. The chairperson shall fix the subsequent order of the floor. Where a shareholder does not speak up after having submitted a slip of the floor, he or she is deemed to have not spoken up. In case of a discrepancy between the contents actually spoken and those shown on the contents of the floor, the contents actually spoken shall prevail. Where a shareholder speaks, other shareholders shall not speak to interfere unless consented by the chairperson and the speaking shareholder. The chairperson may stop an offender, if any.
For a same issue, a shareholder shall not speak more than twice, and not over five minutes in each speech. Where a shareholder breaches the requirements or speaks beyond the specified scope in accordance with the preceding paragraph, the chairperson may stop his or her speech.
Where a juristic person is commissioned to participate in a shareholders’ meeting, that juristic person may assign only one representative to participate in the meeting. Where a juristic person shareholder appoints more than two representatives to participate in the shareholders’ meeting, only one among them may take the floor for a same issue.
After a shareholder completes the floor, the chairperson may reply either in person or through another designated by the chairperson.
If the Chairman deems that the proposal in discussion is ready for a vote, he or she may

declare an end to the discussion, and put it forward for a vote.

In the voting process, the monitors and calculators shall be designated by the chairperson. A monitor shall be designated among shareholders. Voting results shall be reported on site and a record shall be made.
During the progress of a meeting, the chairperson may announce a recess as appropriate at his discretion.
Unless otherwise provided for in the Company Act or the Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the participating shareholders. An issue which proves to have no objection in response to the inquiry by the chairperson is deemed to have been duly resolved in the validity same as an issue duly resolved through voting process.
Where an issue has an amendment or an alternate, the chairperson shall decide the order of voting process along with the initial issue. Where one issue has been duly resolved, other issue(s) shall be deemed vetoed and shall call for no more voting process.
The chairperson may instruct the picketers (or security guards) to help maintain the order of a shareholders’ meeting venue. Where the picketers (or security guards) help maintain the order at the venue, they shall wear the armbands bearing “Picketers”.
These Rules shall be put into enforcement after being resolved in the shareholders’ meeting. This same provision is mutatis mutandis applicable to an event of an amendment.

Annex II

Grand Pacific Petrochemical Corporation

Articles of Incorporation

(Post-amendment contents)

Officially resolved in the Board of Directors on March 19, 2020 Officially resolved in the Board of Directors on April 28, 2020

Chapter I General Provisions

Article 1: This Company is duly incorporated under the provisions set forth in the Company Act in the full name of Grand Pacific Petrochemical Corporation (Hereinafter referred to as the Company).
Article 2: The Company shall engage in business operation within the scope enumerated below:
C801020 Petrochemical Manufacturing
C801100 Synthetic Resin & Plastic Manufacturing
C802990 Other Chemical Products Manufacturing
F401010 International Trade
D101050 Cogeneration
D401010 Heat Energy Supplying
G801010 Warehousing and Storage
H701020 Industrial Factory Buildings Lease Construction and Development 9. F501060 Restaurants
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Article 2-1: The aggregate total of outward investment by the Company is free of the 40% of the Company’s paid-in capital.
Article 3: The Company is headquartered in Kaohsiung City of the Republic of China and may have branches or factories established elsewhere at home and abroad as appropriate. The establishment and change of the Headquarters, a branch or factory shall be duly handled exactly as resolved in the Board of Directors.
Article 4: (Deleted)

Chapter II Shares

Article 5: The Company's authorized capital amounts to Twenty Billion New Taiwan Dollars, divided into two billion shares at NT$10 par value. For the unissued shares, the Board of Directors is authorized with plenipotentiary power to issue in partial installments as the actual situations may justify and to issue preferred shares for a part of the unissued shares.
The Company may issue employee stock option certificates to employees of the Company and its subsidiaries at home and abroad. Amidst the aggregate total of shares mentioned in the preceding Paragraph, 50 million shares may be reserved to issue employee stock option certificates which may be issued in partial installments as resolved by the Board of Directors. Where the Company falls in a need to repurchase

itself, the Board of Directors is authorized with plenipotentiary power to duly act as appropriate.

Where the price of subscription to the employee stock option certificates issued by the Company is below the closing price of the Company's common shares on the date of issuance, or where the price of treasury stocks transferred to employees is below the average price of the shares repurchased by the Company, it shall be subject to consent in the shareholders’ meeting through one half majority vote cast by participating shareholders who represent two-thirds of the total of voting powers.

The preferred shares issued by the Company in 1984 (listed through Taiwan Stock Exchange Corporation (TWSC) in Stock Code 1312A, (hereinafter referred to as Year 1984 Grand Pacific Preferred Shares) bear the rights & obligations as enumerated below:

Allocation of dividend in the terms as set forth under Article 29 of these Articles of Incorporation.
Preferential allocation of the Company's residual properties.
3 Other rights equivalent to those borne by common shares.
Article 5-1: The Company's preferred shares bear the rights & obligations and other significant terms for issuance as enumerated below except Year 1984 Grand Pacific Preferred Shares which shall be duly handled in accordance with Article 5 & Article 29 and not subject to provisions set forth under this Article:
Preferred shares bear dividend within the maximum limit of 8% per annum, to be counted based on the issuance price per share. The dividend is payable in cash once per annum. The dividend of the preceding year shall be paid on the base day resolved and fixed by the Board of Directors. The amount of dividend in the year of issuance and the year of recovery shall be counted based on the numbers of days of issuances in that year(s). The day of issuance is defined as the base day on which the preferred shares are issued.
Toward allocation of preferred share dividend, the Company has a discretionary power and may not allocate to preferred share dividend as resolved in the Board of Directors. In a year while the Company shows no earning in the final account or while the Board of Directors resolves not to allocate preferred share dividend, the preferred share dividend not allocated shall not be accumulated to the subsequent year(s) for deferred payment.
The preferred share shareholders supersede common shareholders in allocation of dividend but are next to the shareholders of Year 1984 Grand Pacific Preferred Shares. Except receipt of the dividend mentioned under Subparagraph II of this Paragraph, the preferred share shareholders shall not participate in the distribution of earnings of common shares and an event where the capital reserve is allocated for cash dividend or for expansion of capital.
The preferred share shareholders supersede common shareholders in allocation of the Company's residual properties but are next to the shareholders of Year 1984 Grand Pacific Preferred Shares. Except Year 1984 Grand Pacific Preferred Shares, the shareholders of all sorts of preferred shares are entitled to the same priority orders in receipt of payments and shall not exceed the amount of issuance.
The preferred share shareholders are not entitled to voting power and election power in a shareholders’ meeting but are entitled to be elected to be directors; and are entitled to voting powers in the preferred shareholders’ meeting and a shareholders’ meeting linked up with the rights & obligations of preferred shareholders’ meeting.
A preferred share shall not be converted into a common share.
The preferred shares shall not be fixed with an expiring date. In case of the

  - period of issuance, such period of issuance shall not be shorter than seven (7) years.  A preferred shareholder shall not request the Company to retrieve the preferred shares held by him or her.  The Company may, nevertheless, fix the retrieving date and the retrieving date so fixed shall not be earlier than the expiring date of a five-year period.  After the expiring date or starting from the date of retrieval fixed by the Company, the Company may retrieve the issued preferred shares either in whole or in part at issue price and relevant issuance rules in cash or other method where permitted by law.  In the event that where the time is due, the Company is unable to retrieve the preferred shares either in whole or in part as a result of objective factor or force majeure, the rights of the preferred shares not retrieved shall be extended based on the conditions of issuance until the time point when the Company retrieves in full.  In the event that the Company resolves to grant dividend in that year, the dividend payable as of the date of retrieval shall be counted based on the number of days of issuance in that year.

For the title of the preferred shares, date of issue and the concrete conditions, the Board of Directors is authorized with plenipotentiary power to handle based on the facts of the capital markets, the investors' intent to subscribe to, the Company's Articles of Incorporation and laws and ordinances concerned at the moment of actual issuance.
Article 6: The Company's share certificates shall be in the registered ones in all events.
Article 7: The Company's share certificates are registered and serially numbered, and shall be signed or affixed with seals by directors that represent the Company, and duly certified by an authorized bank before issuance.
For shares issued by the Company, the Company may be exempted from printing share certificates but shall consult with the Taiwan Depository & Clearing Corporation (TDCC) for registration or custody.
Article 8: The Company's registered share certificates shall bear the shareholders' names, or title of the juristic person if held by a juristic person.
Article 9: Unless otherwise specified in laws and ordinances concerned and rules & regulations regarding securities, the transfer by shareholders for the share certificates, pledge of rights, report-for-loss, inheritance, bestowal as a gift, report-for-loss for or change in registered specimen seal and all sorts of rights of securities of the Company shall be duly handled exactly in accordance with “Regulations Governing the Administration of Shareholder Services of Public Companies”.
Article 10: (Deleted)
Article 11: (Deleted)
Article 12: Transfer of stock ownership shall be discontinued within sixty (60) days prior to a shareholders' regular meeting, within thirty (30) days prior to a special shareholders meeting and within five (5) days prior to the base day scheduled for allocation of dividend, bonus or other interests.
Article 13: Where a share certificates is lost or stolen, the shareholder or the lawful holder shall duly report to the security authority, fill up the application form for report-for-loss of the share certificates and submit it to the Company for audit registration, petition to the jurisdictional court for the public summons procedures in accordance with the

Code of Civil Procedure within five (5) days. That same applicant shall submit the duplicate copy of the application and the photocopy of the receipt issued by the court to the Company otherwise the application shall be abolished. After the public summons procedures are duly ruled by the court, the applicant shall submit one copy of the newspaper bearing the public summons procedures to the Company. Upon expiry of the period for the public summons procedures, the applicant shall apply to the Company based on the judgment issued by the court for reissuance of new share certificates.

Article 14: (Deleted)

Chapter III Shareholders’ meeting

Article 15: The Company's special shareholders meeting shall be duly convened within six (6) months from closing of every fiscal year, with the notices f or the meeting to be served to all shareholders thirty (30) days prior to the date scheduled for the shareholders' regular meeting. A special shareholders meeting may be convened whenever necessary with notices to be served to all shareholders fifteen (15) days in advance. The notices mentioned in the preceding Paragraph shall bear the date, venue, reasons to convene the meeting. A shareholders’ meeting shall be duly convened by the Board of Directors unless otherwise specified in Company Act.
Article 16: A shareholders’ meeting shall be duly convened in accordance with Company Act. A shareholder who is unavailable to attend a shareholders' meeting in person may appoint a proxy by issuing a power of attorney (proxy) to expressly bear the scope of the authorized power, duly sign and affix seal thereupon to authorize a proxy to attend on his or her behalf. Except for a trust enterprise or a stock agency approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting power represented by him/her shall not exceed 3% of the total number of voting powers of the company, otherwise, the portion of excessive voting power shall not be counted. Unless otherwise specified in the Company Act, the participation in a shareholders’ meeting by a shareholder through a proxy shall be duly handled exactly in accordance with “Regulations Governing Use of Proxies in the Shareholders’ Meeting of Public Companies”.
A shareholder of the Company may exercise voting power through electronic means. A shareholder who exercises voting power through electronic means is deemed to have participated in the meeting in person. All relevant issues shall be duly handled in accordance with the laws and ordinances concerned.
Article 17: A shareholders’ meeting shall be chaired by the chairman. During the chairman's absence, the shareholders’ meeting shall be chaired by the vice chairman. Where the vice chairman is absent either, the chairman shall appoint one director to chair the meeting. Where the chairman does not appoint a director, one director shall be elected from among themselves to chair the meeting.
Article 18: Unless otherwise provided for in the Company Act, decisions in the shareholders' meeting shall be resolved by over one half majority vote in the meeting which is attended by shareholders who represent over one half majority of the total issued shares.
Article 19: With the shares held by shareholders, each share hereof is entitled to one voting power, provided that the Company has no voting power for shares held under Article 179 of

the Company Act. Where a juristic person functions as a shareholder of the Company, the representative is not confined to one person. The voting power so exercised shall, nevertheless, still be counted based comprehensively based on the shares so held.

Article 20: Minutes shall be duly worked out for decisions resolved in a shareholders’ meeting and shall be duly signed or affixed with seal by the chairperson and served to all shareholders within twenty (20) days after the meeting. The minutes may be served by means of a public announcement.
The minutes of a meeting shall expressly bear the month/day/year, venue of the meeting, name of the chairperson, method of resolution, highlights and outcome of the meeting and shall be archived permanently throughout the period while the Company exists.

The sign-in book for participating shareholders and written proxies shall be archived for one year minimum, provided, that where a shareholder lodges litigation in accordance with Article 189 of the Company Act, the same shall be archived until after the litigation is concluded.

Chapter IV Directors, Audit Committee and Managerial officers

Article 21: The Company has seven ~ eleven directors to organize the Board of Directors. The directors shall be elected by the shareholders’ meeting from the candidates with disposing capacity, with a three-year tenure of office, eligible for reelection. The number of independent directors shall not be below the minimum of three. Directors are elected under the candidates nomination system as set forth under Article 192~1 of the Company Act. The director candidates shall be nominated, accepted for the candidacy and put into public announcement exactly in accordance with the Company Act, Securities and Exchange Act and laws and ordinances concerned. Both independent directors and non-independent directors shall be elected in the same package with the numbers of elected winners to be counted respectively.
Article 22: In the Board of Directors, through participation by more than two-thirds of total number of directorship seats and one half majority votes of the participating directors, one chairman and one vice chairman shall be elected. The chairman shall represent the Company externally.
Article 23: Except the first board of directors meeting which shall be duly convened in accordance with Article 203 of the Company Act, all meetings of the board of directors shall be convened and chaired by the chairman. The Board of Directors shall convene one meeting on a quarterly basis as the minimum. The notices to a board of directors meeting shall expressly bear the cause(s) or subject(s) of the meeting and shall be served to all directors seven (7) days in advance. A special meeting may be convened any time as necessary. Unless otherwise provided for in the Company Act, decisions in the board of directors meeting shall be resolved by over one half majority in the meeting attended by directors representing over one half majority of the total number of directors. A director who is unavailable to attend a board of directors meeting may authorize another director to act as his or her proxy. The notices for a board of directors meeting mentioned in the preceding Paragraph may be served in writing, e-mail or by FAX.
Article 24: The Company's Board of Directors is subject to the responsibilities and powers as enumerated below:

To enact business policies, review business plans and oversee implementation of the business operation.
To review budget and final accounts.
To propose increase/decrease of capital.
To review distribution of earnings.
To approve of significant external contracts.
To propose amendment to Articles of Incorporation.
To review the Company's organizational rules and major articles.
To determine establishment, reorganization or dissolution of a branch.
To appoint and discharge of the ranking staff above manager level.
To convene shareholders’ meetings.
To approve of procurement and disposal of real estate.
Article 25: The Company shall set up Audit Committee in accordance with Article 14~4 of Securities and Exchange Act. The Audit Committee or the members of the Audit Committee shall execute the responsibilities and powers of the supervisors as bestowed under the Company Act, Securities and Exchange Act and other laws and ordinances concerned.
Article 26: The total of the Company's registered share certificates held by all directors shall be pursuant to the ratios specified under the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies promulgated by the competent authority.
Article 27: The remuneration to directors shall be granted disregarding whether the Company operates at a profit. The Board of Directors is bestowed with the plenipotentiary power to fix the amount of the remuneration to directors at the rate normally profitable in the other companies in the same industry.
Article 28: The Company’s fiscal year is starting from January 1 until December 31 of every calendar year. Upon closure of every fiscal year, the Board of Directors shall work out the following documents to be submitted to and acknowledged by the shareholders' regular meeting:
Business report.
Financial statements.
Surplus earnings distribution or loss make-up proposal.
Article 29: The Company shall set aside 1% of the profit earned by the Company in a year as remuneration to employees and a sum within 2% maximum of the profit earned by the Company in a year as remuneration to directors based on the profit status of the year. Where the Company remains in accumulated loss, nevertheless, such loss shall be made up beforehand.

The term “the profit status of the year” as set forth herein denotes the profit before tax in that year after deduction the sum for allocation of remuneration to employees and remuneration to directors.

From the earnings of the Company in a year as shown through the annual account settlement, after the sum to pay tax and make up previous loss, if any, is set aside, a sum 10% out of the balance shall be set aside as legal reserve. The balance of the Company's earnings after annual final account settlement, after payment of tax, making up loss, setting aside 10% legal reserve, setting aside or reversal of special reserve shall be allocable earnings which, along with the unappropriated retained earnings of the preceding year, shall be the accumulated unappropriated retained

earnings wherewith, dividend for Year 1984 Grand Pacific Preferred Shares at 6% per annum shall be set aside. In the event that the annual dividend is not allocated in full, the shortage shall be made with the allocable earnings of the ensuing year preferentially. With the balance of the unappropriated retained earnings, the Board of Directors shall propose the percentages of allocation based on laws and ordinances concerned, dividend policies and status of working capital. Where the dividend is allocated by means of issuance of new shares, it shall call for consent from the shareholders’ meeting beforehand. When the dividend is allocated in cash, it calls for approval under a decision to be resolved in the Board of Directors.

In accordance with Paragraph 5, Article 240 of the Company Act, the Board of Directors is authorized with plenipotentiary power to resolve a decision through one half majority vote cast by participating directors who constitute two-thirds or more of the total directorship seat to allocate the dividend, bonus or part of legal reserve and capital reserve either in whole or in part under Paragraph 1, Article 241 of the Company Act in cash and to report to the shareholders’ meeting.

The Company currently lies amidst the highly changeable industrial environment is changeable. The life cycle of the Company is amidst stable growth. The Company shall firmly dominate the economic environment to assure sustainable operation. Given the Company's long-term financial planning, future capital needs with efforts to protect the interests of shareholders, the Company shall allocate annual cash dividends are not less than 10% of the total cash and stock dividends of the current year (excluding dividend of Year 1984 Grand Pacific Preferred Shares at 6% per annum).

Chapter V Supplementary provisions

Article 30: All contracts executed by the Company externally, disregarding the counterparties, shall bear the terms and conditions consistent with the principles of fair competition aiming at the Company's interests in the top concern.
Article 31: The Company's organizational rules and all operational regulations shall be enacted by the Board of Directors separately.
Article 32: The Company may render guarantee services externally. Matters not specified in these Articles of Incorporation, if any, shall be duly handled in accordance with the Company Act and laws and ordinances concerned.
Article 33: These Articles of Incorporation were duly enacted on June 25, 1973. Duly amended on June 27, 1974 as the 1[st] amendment.

Duly amended on June 12, 2020 as the 39[th] amendment.

These Articles of Incorporation shall be put into enforcement after the amendment is duly resolved in the shareholders’ meeting.

Annex III

Grand Pacific Petrochemical Corporation Procedures for Election of Directors

Officially resolved in the Board of Directors on March 25, 2014 Officially resolved in the shareholders’ meeting on June 25, 2014

Article 1 The election of the Company’s directors shall adhere to the procedures herein.
Article 2 Unless otherwise specified by the Articles of Incorporation, each share is entitled to cast the number of votes identical to the number of directors nominated. A shareholder may cast all the votes on a candidate or distribute the votes to several candidates. The election of independent directors and non-independent directors should process at the same time. The determination of the number of elected directors and the process of candidate nomination should process according to relevant laws and regulations.
Article 3 The Board shall produce the number of ballots identical to the number of directors to be elected, and the ballots should contain columns for weightings. The ballots shall be distributed to attending shareholders in the shareholders’ meeting.
Article 4 Before the commencement of the election, the Chairperson shall appoint several ballot examiners and vote counters to carry out relevant tasks. Only shareholders can serve as ballot examiners.
Article 5 The Board shall set up a ballot box for the election of directors. The ballots shall be checked by examiners in front of everybody before voting.
Article 6 If a candidate receiving the vote is a shareholder, the voter shall enter the name and the shareholder number of the voted candidate in the column “Candidate”. If the voted candidate is not a shareholder, it is necessary to provide the name and the identification number of the voted candidate. If a government agency or a legal entity shareholder is voted, the name of the voted candidate on the ballot should be the name of the government agency or the legal person, and the name of the statutory representative from the government agency or the legal person should also be provided. If there are multiple statutory representatives, the names of all the representatives should be provided.

The votes for independent directors and non-independent directors shall be tallied separately, and the results for independent directors and non-independent should be considered separately.

Article 7 A ballot shall be invalid if any of the following circumstances:
(I) A ballot not provided according to the requirements stated herein;
(II) A blank ballot thrown into the ballot box;
(III) Writing illegible, unidentifiable or altered; If the name or shareholder number of the voted candidate who is also a shareholder provided by the voter is inconsistent with the records of the shareholder registrar; or if the name or identification number of the voted candidate who is not a shareholder provided by the voter proves to be incorrect;

(IV) There are wordings on the ballot other than the name or the shareholder number (or identification number) of the voted candidate and the distribution of votes casted;
(V) The name or the shareholder number (or identification number) of the voted candidate is missing;
(VI) The same ballot casts the vote to two or more candidates.
Article 8 The Company’s directors shall be elected by the shareholder meeting from the persons with capacity to act. The votes shall be tallied according to the number of directors specified in the Articles of Incorporation. Those with the highest number of votes shall be elected independent or non-independent directors. If two or more candidates have received the same weighted votes and the number of such candidates exceeds the number of required directors, the candidates with the same number of votes shall draw lots to decide who will be elected. The Chairperson shall draw lots for the absent candidates.

If any inconsistency in personal data or any relevant laws or regulations render the status of an elected director invalid, the spot shall be filled by the candidate who received the second highest vote. This shall be announced during the current meeting of shareholders.

Article 9 The ballot box shall be opened after the voting process has completed. The results shall be announced by the Chairperson on the occasion.
Article 10 Any incompliance with the paragraphs 3 and 4 of Article 26-3 of the Securities and Exchange Act shall render the elected director invalid.
Article 11 Each of the elected directors shall receive a notification from the Board.
Article 12 Any issues not covered by these procedures shall be processed according to the Company Act, the Company’s Articles of Incorporation, relevant laws and regulations.
Article 13 The procedures and any subsequent amendment shall take effect upon the approval from the meeting of shareholders.

Annex IV

The Shareholding Status of the Company's directors

==> picture [543 x 359] intentionally omitted <==

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

Base date: April 14, 2020
Number of shares held when elected Current shareholding in numbers Remarks
% to the % to the
Dates when
Position titles Names Number of current Number of current
elected Categories Categories
shareholding outstanding shares outstanding
shares shares
common common
Jing Kwan Investment Co., Ltd. 20,380,000 2.25% 20,280,000 2.24%
share share
Chairman Statutory representative: Pin June 16, 2017
preference 0 0.00% preferred 0 0.00%
Cheng Yang
share share
Chia Hsiung Lai Fu Investment common common
Director 100,000 0.01% 100,000 0.01%
Tseng Co., Ltd. share share
June 16, 2017
Chen Ching Statutory preferred 0 0.00% preferred 0 0.00%
Director
Ting representative share share
common common
Chung Kwan Investment Co., Ltd. 28,262,722 3.12% 28,262,722 3.12%
share share
Director Statutory representative: Hsi Hui June 16, 2017
preferred preferred 0.00%
Huang 0 0.00% 0
share share
common common
0 0.00% 0 0.00%
Independent share share
Kuang Hsun Shih June 16, 2017
director preferred preferred
0 0.00% 0 0.00%
share share
common common
0 0.00% 0 0.00%
Independent share share
Sung Tung Chen June 16, 2017
director preferred preferred
0 0.00% 0 0.00%
share share
common common
0 0.00% 0 0.00%
Independent share share
Wen Tzong Chen June 16, 2017
director preferred preferred
0 0.00% 0 0.00%
share share
common common
48,742,722 48,642,722
share share
Total
preferred preferred
share 0 share 0
----- End of picture text -----

Aggregate total of outstanding common shares as of June 16, 2017:

Aggregate total of outstanding preferred shares as of June 16, 2017:

Aggregate total of outstanding common shares as of April 14, 2020:

Aggregate total of outstanding preferred shares as of April 14, 2020:

Note: Statutory total shareholder by numbers by all directors: 29,651,850 shares. As of April 14, 2020, the shareholding by number

906,620,328 shares

20,000,000 shares 906,620,328 shares

20,000,000 shares

48, 642,722 shares

Where the Company has set up the Audit Committee, the shareholding requirements for supervisors are not applicable.

The number of shares held by independent directors is excluded from shareholding of directors

Thank you all for participation in the shareholders’ meeting. Please feel free to offer your valuable comments and advice!

AI assistant

GPPC — AGM Information 2020

51770_rns_2020-06-22_50d5dfad-53a5-4e48-9ea5-33ee7d8d3c58.pdf

2020 Annual Meeting of Shareholders

Meeting Handbook

Date: June 12, 2020

－ Policy of Quality of － Grand Pacific

Table of Contents

Page No.

One. Procedures of the Meeting

Grand Pacific Petrochemical Corporation Agenda of 2020 Annual Meeting of Shareholders

Two. Meeting Agenda

Report Items

I. 2019 Business Report

Grand Pacific Petrochemical Corporation 2019 Business Report

(I) Implementation Results of Operating Plan

(II) R&D Status

Grand Pacific Petrochemical Corporation Audit Committee’s Audit Report

IV. 2019 distribution of cash dividends from earnings

Ratification Items

Grand Pacific Petrochemical Corporation and Its Subsidiaries CPA Audit Report

Audit Opinions

Bases for the Audit Opinions

Key Matters Being Audited

Recognition of Income

Cash and cash equivalents

Impairment evaluation of real estate, plants, and equipment, right-of-use asset, investment-oriented property and intangible assets (including good will)

Valuation of investment balance adopting the equity method

－ Other Matters Mentioning Audits by other CPAs

Other Matters - Individual Financial Statement

Responsibilities of Management and Governance Unit for Consolidated Financial Statement

Responsibilities of CPAs in Inspecting Consolidated Financial Statement

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS

For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018

(Brought Forward)

Grand Pacific Petrochemical Corporation CPA Audit Report

Audit Opinions

Bases for the Audit Opinions

Key Matters Being Audited

Recognition of Income

Impairment evaluation of real estate, plants and equipment

Valuation of investment balance adopting the equity method

－ Other Matters Mentioning Audits by other CPAs

Responsibilities of Management and Governance Unit to Individual Financial Reports

Responsibilities of CPAs in Inspecting Individual Financial Statement

Wu Chang Wang

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY BALANCE SHEETS For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation and Subsidiaries PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018

Grand Pacific Petrochemical Corporation The 2019 Earnings Distribution Table

Discussion Items

Election Items

Election Results:

Other Items

Incidental Motion

Adjournment

Three. Annex:

Annex I

Grand Pacific Petrochemical Corporation “Rules and Procedures for Shareholders’ Meeting”

Annex II

Grand Pacific Petrochemical Corporation

Articles of Incorporation

Chapter I General Provisions

Chapter II Shares

Article 14: (Deleted)

Chapter III Shareholders’ meeting

Chapter IV Directors, Audit Committee and Managerial officers

Chapter V Supplementary provisions

Annex III

Grand Pacific Petrochemical Corporation Procedures for Election of Directors

Annex IV

The Shareholding Status of the Company's directors

More from GPPC

GPPC AGM Information 2020

`－` Policy of Quality of `－` Grand Pacific

`－` Other Matters Mentioning Audits by other CPAs