Oriental Union Chemical : 2022 OUCC annual report

Spokesperson

Name: Daniel Yu

Title: Assistant Vice President

Tel: [phone]

Email: [e-mail]

Acting Spokesperson

Name: David Chiang

Title: Sr. Manager

Tel: [phone]

Email: [e-mail]

Headquarters & Plants

Headquarters

Address: 13F, 101, Fu-Hsing North Road, Songshan Dist., Taipei City 10595, Taiwan

Tel: [phone]

Plants

Address: 3 Industrial 3rd Road, Linyuan Dist., Kaohsiung City 83245, Taiwan

Tel: [phone]

Common Share Transfer Agent and Registrar

Oriental Securities Corporation

Address: 13F, No. 16, Xinzhan Road, Banqiao Dist., New Taipei City 22041, Taiwan

Tel: [phone] https://www.osc.com.tw

Auditors

Name: Hsin-Wei Tai, CPA Li-Wen Kuo, CPA

Firm: Deloitte & Touche

Address: 20F, No. 100, Songren Rd., Xinyi Dist., Taipei City 11073, Taiwan

Tel: [phone] https://www.deloitte.com.tw

Overseas Securities Exchange and Relevant Info: N/A

Corporate Website

https://www.oucc.com.tw

The English version is the translation of the Chinese text and if there is any discrepancy between the English version and the Chinese text of this document, the Chinese text shall prevail.

	Oriental Union Chemical Corporation
	Contents
I. Letter to Shareholders	1
II. Company Profile
1.	Date of Incorporation	6
2.	Company History	6
`
III. Corporate Governance Report
1.	Organization	9
2.	Information on the Company's Directors, President, Vice Presidents, Assistant Vice
	President, and heads of all the Company's divisions and branch units	11
3.	Remuneration paid to Directors, Presidents, and Vice Presidents in the most recent year	20
4.	Implementation of Corporate Governance	25
5.	Information of CPA professional fee	57
6.	Information of CPA replacement	57

7. Information regarding Chairman, President, and Financial or Accounting Manager of the Company who has worked with the CPA firm which conducts the audit of the Company or

	an affiliate of said firm in the recent year	57
8.	Any transfer of equity interests and pledge of, or change in equity interests by a Director,
	managerial officer, or shareholder with a stake of more than 10 percent	58
9.	The top 10 shareholders and their relationships	59
10. The number of shares held by the Company and Company Directors, managerial officers
	and the entities directly or indirectly controlled by the Company in a single company, and
	calculating the consolidated shareholding percentage of the above categories	60
IV. Capital Overview
1.	Capital and Shares	61
2.	Issue of Corporate Bonds	65
3.	Preferred Shares	65
4.	Issuance of Overseas Depository Receipts	65
5.	Employee Stock Options	65
6.	Employee Restricted Stock Awards	65
7.	Share Issued for Mergers and Acquisitions	65
8.	Implementation of Capital Utilization Plan	65

	Contents
V. Operation Overview
1.	Business Activities	66
2.	Market, Sale and Production Overview	75
3.	Employees	82
4.	Environmental Protection Expenditure	83
5.	Labor-Management Relations	85
6.	IT Security Management	87
7.	Major Contracts	89
VI. Financial Information
1.	Condensed Balance Sheet, Income Statement, and External Auditor's Opinion for the Last
	Five Years	90
2.	Financial Analysis for the Last Five Years	94
3.	The Audit Committee's Review Report	97
4.	In the case of Insolvency of the Company and its Affiliates	97
5.	Consolidated Financial Statements and External Auditor's Audit Report for the Recent Year	98
6.	Stand-Alone Financial Statements and External Auditor's Audit Report for the Recent Year	108
VII. Review and Analysis of the Financial Position, Performance and Risk Management
1.	Financial Position Review	118
2.	Financial Performance Analysis	119
3.	Cash Flow Review and Analysis	120
4.	The Effect of Major Capital Expenditure on the Financial Position and Operation of the
	Company	120
5.	Direct Investment Policy, the Main Reasons for Profit or Loss as well as the Corrective
	Action Plan Over Past Year, and an Investment Plan for Next Year	121
6.	Analysis of Risk Factors	122
7.	Other Important Notes	126
VIII. Special Disclosure
1.	Information of Affiliates	127
2.	Private Placement of Securities	130
3.	Status of Company Stock Held or Disposed of by Subsidiaries Over Past Year and up to
	the Date of Publication of the Annual Report	130
4.	Other Supplementary Notes	130
5.	Any Matters of Material Significance that could have Affected Shareholder Equity or
	Securities Price Last Year and up to the Date of Publication of the Annual Report	130

Oriental Union Chemical Corporation

I. Letter to Shareholders

I. Foreword

In view of 2022, the global inflation intensified by the Ukraine war and the ensued soaring energy costs, the interest raise strategies incurred worldwide, the appreciation of US dollar, the severely impaired global stock & exchange markets, the slump of manufacturing industry, as well as the weakened demands of consumption market all have attributed to the downward global economy growth rate of 1.7% projected by the World Bank. As to Asia, with the economy growth of China throttled by its mobility restriction measure, and the onset of demographic dividend in India, ASEAN has become the emerging manufacturing hub of Asia with highlighted economic performance. Taiwan, on the other hand, bounded by its overall economic fragilities, the yearly economic growth rate declined to 2.43% resulted from the receding of export business.

Similarly, the petrochemical industry was under the sway of the Ukraine war, as prices of crude oil and natural gas, the costs of petrochemical raw materials and energy overwhelmingly escalated. Though the agreed reduction of OPEC spurred the climbing of crude oil prices, the consumption demand remained feeble, and the industry profitability restrained eventually by the unavailing response of the middle and downstream manufacturers to the upward prices. The annual output value of the domestic petrochemical industry reached NT$1.85 trillion in 2022, a decrease of 5.7%, according to the ITRI survey. The industry outlook of 2023 is mostly viewed as gloomy, as the stagnant economy of 2H/2022 relaying to Q1/2023, awaiting its rebound.

Despite of the aforementioned, the company's ethylene glycol (EG) products were also affected by China's newly launched mass capacity, which resulted in the unsustainable prices for EG. Fortunate enough, the company's advantage in the development of high value-added and green products has started to pay off and secured the break-even overall operative performance.

In 2022, the consolidated revenue reached NT$22.08 billion, a decrease of 19.7% from the previous year, and the operating net loss totaled NT$1.16 billion, of -5% net loss rate. The net profit after tax attributable to the company was NT$40 million, of earnings per share (EPS) NT$0.04.

II. Operating Performance Review

Safety, Health, and Environment

Aiming at the green and sustainable development, the company practices circular economy and attaches great importance to issues such as industrial safety, health and environmental protection, as well as improves persistently the process design and equipment investment, and recycles homogeneous waste to reduce the impact on environment.

The carbon capture and utilization (CCU) technology the company established to produce its outstanding solvents of ethanolamine and ethylenediamine benefits its downstream customers in

- 1 -