2014 Annual Report Fiscal Year Ended December 31, 2014

89, Sec. 6, Zhongshan N. Rd., 11155, , R.O.C. Tel: (886) 2-2833-9999 Fax: (886) 2-2833-8833 www.ctci.com.tw Professionalism Integrity Teamwork Innovation VISION The Most Reliable Global Engineering Service Provider

VISION The MostPRINCIPLES Reliable Global Professionalism Engineering ServiceIntegrity ProviderTeamwork Innovation PRINCIPLES Professionalism;MISSION To Satisfy Integrity; Our Teamwork;Customers with Innovation the Optimized Engineering Services

MISSION To Satisfy Our Customers with the Optimized Engineering Services Contents

02 Financial Highlights 04 Company Profile 06 Letter from the Chairman & CEO 12 Milestones 2014 13 Strategy Development and Outlook 14 Strategic Operations I. Intelligent Engineering Services II. QHSE Management III. CTCI Group IT Integration IV. CTCI Talent and Leadership Optimization 28 Business Review & Outlook I. Hydrocarbon II. Infrastructure, Environment & Power III. Environment & Resources 43 Corporate Sustainability 49 Financial Section 67 Global Network FinancialFinancial Highlights Highlights Financial Highlights December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 For the Year: Operating revenues $38,060,203 $31,446,326 $1,203,675 Net income 1,882,119 1,641,730 59,523

At Year-End: Total assets $41,144,103 $33,748,107 $1,301,205 Long-term debt - - - Total equity 17,137,716 16,472,113 541,990

Net income per common share: NT$2.51 NT$2.22 US$0.08

Contract Amount Backlog (Million NT$) (Million NT$)

20102010 22,360 54,935 20102010 61,798 100,094

20112011 61,331 79,54220112011 90,755 154,649

20122012 40,162 60,173 20122012 96,630 153,228

20132013 40,136 66,924 20132013 110,506 163,517

20142014 38,096 77,86620142014 113,037 187,102

2010 2010 CTCI CTCI Consolidated CONTRACT2011 AMOUNT 2011 20122 2014 CTCI Annual Report

2013 2012 2014 2013

2014 BACKLOG CONTRACT AMOUNT

CONTRACT AMOUNT Financial Highlights

Consolidated Financial Highlights December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 For the Year: Operating revenues $57,691,937 $52,221,958 $1,824,539 Net income 1,882,119 1,641,730 59,523

At Year-End: Total assets $56,838,301 $48,837,298 $1,797,543 Long-term debt 2,926,350 3,296,297 92,547 Equity attributable to owners of the parent 17,137,716 16,472,113 541,990 Non-controlling interest 2,565,293 2,473,376 81,129 Total equity 19,703,009 18,945,489 623,119

Net income per common share: NT$2.51 NT$2.22 US$0.08

Note : The US$ amounts are given solely for convenience and have been calculated at the rate of NT$31.62 to US$1, the approximate rate of exchange prevailing at December 31, 2014.

Net Income Revenues (Million NT$) (Million NT$)

20102010 1,961 20102010 27,426 51,878

20112011 2,263 20112011 33,001 56,280

20122012 2,445 20122012 34,824 60,522

20132013 1,642 20132013 31,446 52,222

20142014 1,882 20142014 38,060 57,692

2014 CTCI Annual Report 3

NET INCOME REVENUES CompanyCompany Profile Profile Company Profile TCI Corporation, founded in 1979 with headquarters in Taipei, has over 30 years of hands-on Cexperience with approximately 7,500 employees stationed in more than 40 subsidiaries and affiliates located in 13 countries around the world. Currently, the paid-in capital reached NT$7.6 billion while its operating revenue reached a new record high of NT$57.7 billion in 2014.

Being the leading Engineering, Procurement, and Construction (EPC) corporation in Taiwan, CTCI is distinguished by its professional competence in undertaking large-scale projects at home and abroad. Upholding the principles of “Professionalism, Integrity, Teamwork, Innovation”, CTCI keeps enhancing its technological expertise in service scope and committing itself to internationalization and diversification strategies in business operations. The service portfolio includes project management, engineering design, procurement, fabrication, construction, supervision, and test & commissioning. The business lines have been expanded from refinery, chemical and petrochemical into power, steel & nonferrous, storage & terminal, infrastructure, environmental engineering and waste-to-energy fields. Rooted in Taiwan, CTCI extended its project records over the globe and tapped into the markets of China, the Middle East, Europe, America, and Southeast Asia. With its technological expertise and rich experience, CTCI has become the designated partner to collaborate with for many internationally well-known engineering companies, which achieved excellent results. In recent years, CTCI furthered its engineering expertise in EPC lump sum projects with 4D applications to effectively shorten the project schedule and at the same time deliver innovative value. CTCI uses its core competency in developing green engineering to effectively lower the risk of environmental pollution and strengthen the industry’s green competency.

In addition, CTCI spares no efforts in enhancing service quality, information security, environmental management, HSE management, and health care, all of which achieved laudable results. Apart from being honored with Public Construction Excellent Quality Awards by the Ministry of Economic Affairs and many others, CTCI has acquired international certifications including ISO9001:2008, ISO/IEC 27001, ISO 14001:2004, OHSAS 18001:2007, Taiwan Occupational Safety and Health Management System (TOSHMS) Performance Approval Program, Cumulative Record without Accident Proof by Occupational Safety and Health Administration, Ministry of Labor, the Badge of Accredited Healthy Workplace from the Health Promotion Administration, Ministry of Health and Welfare, as well as many others.

Committed to fulfilling corporate social responsibilities with due diligence, CTCI has garnered tangible achievements in terms of corporate governance, environmental protection and social participation. On top of carrying on stable growth with determination and sustainable operations, CTCI implements green engineering technology to provide its clients with cost-effective, eco-friendly, and energy- saving solutions to innovate and enhance its green competitiveness in the industry. CTCI utilizes diverse resources to cultivate talent, actively engages in community activities and showes care for the underprivileged. Moreover, CTCI publishes Corporate Sustainability Report annually to disclose related principles and policies for developing sustainably and giving back to the society. CTCI was registered as the first enterprise in Taiwan acquiring the independent verification of the CSR Report. Thus, we

4 2014 CTCI Annual Report Company Profile

have been continuously recognized by various quarters for outstanding performance in corporate social responsibilities, including Taiwan Top 50 Corporate Sustainability Reporting Award by the Taiwan Institute for Sustainable Energy, Taiwan’s Most Admired Company in the engineering and construction industry, retaining Top 1 in the contractor sector for 11 years in a row in Taiwan's Top 2000 Enterprises, and Top 50 for Excellence in Corporate Social Responsibilities by CommonWealth Magazine. Moreover, CTCI ranked the highest A++ level in the Information Disclosure and Transparency Rankings, an evaluation entrusted by TWSE and GTSM and launched by Securities and Futures Institute for all listed companies in Taiwan. According to ENR, Engineering News-Record, 2014 Sourcebook in Petroleum Sector, CTCI ranked 48th in International Contractors and ranked 42nd in International Design Firms. CTCI is even listed in MSCI Taiwan Index by Morgan Stanley Capital International Inc. (MSCI), as well as TWSE RAFI® Taiwan High Compensation 100 Index, and TWSE Corporate Governance 100 Index by Taiwan Stock Exchange Corporation.

CTCI keeps moving forward to fulfill its mission: “To satisfy our customers with the optimized engineering services”. In order to reach our long-term objective, CTCI constantly pursues advancement and refinement to win the recognition and trust from customers worldwide. Looking toward the future, CTCI expects to orient itself as a robust team equipped with unparalleled competitiveness to provide diversified optimum services to its customers and actively marching towards the vision of becoming “The most reliable global engineering service provider”. Under the synergetic efforts of all members, CTCI will build a globally-recognized brand and ensure its valued customers around the globe a better future to create a win-win scenario.

CTCI Corporation— Taiwan’s Leading EPC Firm that Delivers Comprehensive Services

2014 CTCI Annual Report 5 Letter from the Letter from the Chairman & CEO Chairman & CEO

Dear Shareholders, Friends and Colleagues,

In 2014, with all the dedication and hard work of our staff, we adopted various strategic adjustments in our business operations, and brought about outstanding results in new contracts, revenue, and backlogs, which all exceeded the record of 2013. I would hereby like to report the 2014 business review, the 2015 strategic plan and blueprint for CTCI Group as follows:

2014 Business Review Operation Results The consolidated sales revenue for 2014 amounted to NT$57.6 billion, increased by NT$5.4 billion or a 10.47 % growth compared to that of 2013. The consolidated operating expenses were NT$1.72 billion, while the consolidated non-operating income was NT$462.5 million. As a result, the consolidated net income was reported at NT$1.88 billion, an increase of NT$ 240 million over 2013. The earnings per share (EPS) stood at NT$2.51, increased by NT$0.29 from NT$ 2.22 a year earlier.

Business Achievement By the end of 2014, our contract amount reached NT$77.9 billion, while backlog of contract is up to NT$187.1 billion. Major new contracts include SAMAC MMA and PMMA Project in KSA, CPC Talin #11 DHDS Project, Singapore Thomson Line Trackwork Project, CPC LNG Plant Ph-II Re-gas Project, PRPC 140KBPSD RAPID RFCC P1 Project, USI CBC Project, Tamhai LRT Phase I Power Supply and Trackwork Project, and CPC Talin Plant FGRS Project.

Innovation and R&D In 2014, CTCI’s Innovation R&D Center kept up its efforts to improve the efficiency of project execution through continuous research and development in information integration between multiple disciplines, expansion for the breadth and depth of engineering technologies, as well as design automation.

6 2014 CTCI Annual Report Letter from the Chairman & CEO

John T. Yu Chairman & CEO

The owner-oriented information management and turn-over system could well organize the construction information, at the same time combined with construction management system to sort out pipe line pressure test packages, reduce the work period of instruments installation and loop- test at job site. Also, with continuous promotion of mobile devices and specialized applications utilized at key job sites, construction information has been made more accessible via portable e-forms and contributed to enhanced efficiency. Regarding the data integration of EPC turnkey contracts, we utilized SmartPlant Enterprise from Intergraph to check data correctness across all disciplines, so that data transparency and standard conformation are well carried out, ensuring the data consistency of entire project and enhancing design quality. Besides, we implemented the material information dashboard to provide real-time material procurement status through graphics and charts, and also used business intelligence technology to analyze material historical information for future reference to reduce procurement cost and increase our competitiveness.

For technology expertise, we have finished the research for liquid amine absorption tower

2014 CTCI Annual Report 7 Letter from the Chairman & CEO

design, database of modularized equipment piping design, application of BIM in architectural engineering, optimal design for harmonic filter of bulk supply substation of MRT power system, and the establishment of expert system for plant commissioning. In the meantime, our internal design guidelines and existing engineering software have been revised according to the updated code/standard and other information collected for engineering practices from domestic or abroad.

As for design automation, we further refined our design software for pressure vessel and storage tank, developed more applications for Revit BIM 3D and rule based P&ID. We also automated the cable tray cross-section generation and cable/tray material take off for instrument main cable way layout, material take off calculation for cold insulation piping support, and power equipment info check-up program for Single-Line Diagram (SLD), all of which greatly enhanced the quality, speed and accuracy in EPC project execution.

Pao-Yao Pan Mark W. H. Yang S.V.P. Michael Yang E.V.P. John H. Lin President Vice Chairman

8 2014 CTCI Annual Report Letter from the Chairman & CEO

2015 Outlook To pursue great goals for sustainable operations, each of our business units has scheduled more detailed timeframe and action plan for execution, hoping to realize our dreams step by step and continue to thrive in the days to come.

HBO’s goal of growth is “keeping revenue growth at a moderate level but pursuing an attractive rate of return”. Our tactical initiatives in this regard include three key points: strategic deployment for market expansion; winning recognition from major clients around the globe; building and maintaining a talent pool for a world-class project management team. In addition to securing the existing markets based on our core competency, new markets as well as new technologies and techniques will be developed at the same time.

M. H. Wang Ming-Cheng Hsiao Andy Sheu E.V.P. S.V.P. John T. Yu Managing Director Chairman & CEO of the Board

2014 CTCI Annual Report 9 Letter from the Chairman & CEO

IEPBO aims to“increase revenues and keep profitability” which will be achieved by two tactical initiatives. From the perspective of market, overseas markets have to be developed due to the limited tender opportunities domestically. To win more contracts internationally, a solution for acquiring tendering qualifications is required since we do not have sufficient experiences regarding this domain. From the perspective of management, we will enhance the supervision mechanism for project execution and strengthen strategic alliance with overseas companies.

Taking “exploring a new frontier” as its goal, PMBO currently aims to lay the first stone to create more revenues and gross profit margin. With the aging workforce in the maintenance industry, larger companies equipping with strong maintenance capabilities are lacking in Taiwan at the moment while heavy workload created by annual overhaul jobs for hydrocarbon plants demands a better solution. Due to these reasons, plant maintenance could be the territory CTCI could explore. It is especially advantageous for us to win clients’ trust in that we have acquired the most detailed information during EPC phases. We may develop solid long-term relationships with clients by offering maintenance services to facilitate future projects.

Strategy and Blueprint Steady growth is a common target for enterprises to move forward without being surpassed. Hence, we created this year a new vision as “To Become the Most Reliable Global Engineering Service Provider” while also redefined our mission as “To Satisfy Our Customers with the Optimized Engineering Services”. Moreover, strategies have been drawn up to reach the goals under specified guidelines.

The strategies are dual-faceted: business and management. For business, the two key points are maximizing current business and cultivating new ventures. The most efficient way of expanding our business field is to develop from current business. We will strengthen FEED (Front End Engineering Design) capabilities, and stretch business operation into Plant Maintenance Service. To develop our business horizontally, we must actively acquire the selected and specialized technologies and

10 2014 CTCI Annual Report Letter from the Chairman & CEO

required qualifications so that we may reduce dependence on business partners and win business opportunities independently. As to cultivating new ventures, CTCI has two principles. First, the business is able to generate long-term steady income and profits. Second, the business meets the future trends of global market.

As for management aspect, four main objectives have been identified: optimizing engineering services, cultivating all-round talent, building a corporate brand and image, and strengthening synergy throughout CTCI Group. Delivering optimized engineering services is one of the core competencies of CTCI. We are always requested to deliver better, faster, and more competitive services to satisfy our clients. With regard to this, one of our tasks is to improve work procedures and to create a new model of supply chain in order to shorten the construction period, reduce the costs, and thereby strengthen our competitive edge. Second, talent is the key to an enterprise’s sustainable development and quality leadership. As internal training is more advantageous than external recruiting, we cultivate our staff to be well-rounded talent qualified for key positions. Furthermore, though CTCI has established a favorable corporate image and reputation, we used to focus less on brand image marketing and promotion. From now on, we will reinforce our marketing strategy to extend our global visibility and polish our corporate image. Last but not least, to manage a global workforce of over 7,000 people, systematic operation is a must to manifest synergistic effects in the management of expertise, technologies, and business operations. This way, we can produce synergies and create more business opportunities and profits. We have decided that starting this year, we will establish a new organization responsible exclusively for maximizing group synergy.

Apart from innovation and business growth, it is necessary that every employee works for one common goal to achieve corporate sustainability and march toward the right direction. For the new year of 2015, we hope that all CTCI members will“ Start Afresh with Firm Determination” and open up new prospects for CTCI. It is believed that by following aforementioned strategies and goals, based on the guiding principles of “Professionalism, Integrity, Teamwork, and Innovation”, we will realize our vision of “The Most Reliable Global Engineering Service Provider” and achieve our mission “To Satisfy Our Customers with the Optimized Engineering Services”. A much better and brighter future awaits CTCI Group.

Sincerely,

John T. Yu Chairman & CEO

2014 CTCI Annual Report 11 Company Profile

MilestonesMilestones 2014 2014 May CTCI was ranked as the 29th in terms of the overall ranking among the Top 650 Service Enterprises by CommonWealth Magazine in 2014. CTCI retained Top 1 in the contractor sector for 11 years in a row and ranked as the 43rd among the Top 50 Most Profitable Companies (net profit after tax). CTCI Corporation held its Annual General Jun. Meeting of Shareholders on June 26, 2014. The 13 directors (including 3 independent directors) for the 13th term of the Board of Directors were elected in the meeting. At the board meeting held the same day, Chairman John T. Yu and Vice Chairman John H. Lin were both re-elected. President Andy Sheu was nominated and elected as Managing Director of the Board. Michael Yang, the former Executive Vice President of Infrastructure, Environment & Power Business Operations, was promoted to Jul. CTCI Corporation, Advanced Control & become President of CTCI. Systems Inc., and KD Holding Corporation were ranked as "Grade A++" in the "2013 The CPC No.6 Naphtha Cracker Project and No.2 Information Disclosure and Transparency Sinter Plant Project of Dragon Steel Corporation contracted by CTCI have won the Outstanding Rankings". Engineering Award by the Chinese Institute of Engineers.

CTCI Group was ranked the 114th among “The Aug. Top 225 International Design Firms”, the 131st among “The Top 250 International Contractors”, the 144th among “The Top 150 Global Design Firms”, and the 160th among “The Top 250 Global Contractors” in the 2014 ENR Rankings.

Oct. CTCI won the “2014 Public Construction Excellent Quality Award” of State-owned Enterprise Commission, Ministry of Economic Affairs.

CTCI once again listed among the “Top 50 for Excellence in Corporate Social Responsibilities” by CommonWealth CTCI was recognized by Taiwan Institute for Dec. Magazine in 2014. Sustainable Energy of “Services Industry Silver Award” under the Taiwan Top 50 Corporate Sustainability Report Award, as well as the “Growth through Innovation Awards,” and the “Transparency and Integrity Awards”; meanwhile, CTCI received the honor of “Sustainable Corporate Governance Fulfillment Award” from the British Standards Institution (BSI).

12 2014 CTCI Annual Report StrategyStrategy Development Development and Outlook

n 2014, CTCI Group continuously applied its established long-term strategy to seek expansion of Icorporate scale while quite a few cases had been assessed and evaluated. Additionally, the Group also continued the development of the environmental protection business and green energy following the strategies. To facilitate mutual discussions among all members within the Group, including every andBusiness Operation unitsOutlook of CTCI Corp and the subsidiaries, an off-site meeting was held in the second half of the year in order to generate a future-oriented strategy that was able to gain the recognition and identification from all members of the Group.

The incineration business has been and will continue to be one of the major business lines of the Environmental Resource Business Operations of CTCI Group. Accordingly, the Group has set a three- year target for execution of 13 incinerator projects in China, and has obtained 2 incinerator investment projects and 1 O&M project in Southeastern Asia. Meanwhile, regarding the recycling business, the Group and BoreTech Group, a China-based professional PET recycling firm, had come to an agreement of cooperation in 2013, finishing all investment-related procedure in 2014, and officially establish the collaborative relationship.

A set of strategies have been formulated in the off-site meeting which can be summarized as to maximize current business while at the same time expanding new markets as well as new territories and also to promote cross-border synergy between companies and divisions within the Group.

Take HBO of CTCI Corp as an example, hydrocarbon business has been one of CTCI Corp’s core business and the corresponding strategy formulated is to strengthen the Group’s core capability and seek for deeper and wider development in the field of Front-End Engineering Design. Moreover, we are targeting at new markets like North America and Russia. As the exploration of shale gas has brought the global oil and gas industries into a new era along with new level of competition. The Group will actively penetrate into the shale gas industry while exploring the US market.

As for synergistic development, one of the strategies we adopted is to facilitate cooperation between BoreTech and the Group. For example, we will apply ACS’s automation technology in BoreTech’s current and future plants. Another instance is the mutual innovation and development of technology by BoreTech and CTCIM.

Starting with the off-site meeting, an annual strategy meeting will be arranged for the Group to regularly monitor the progress of Group strategy development. The path of strategy developing will also be examined and timely amended to quickly respond to the changing global business environment.

2014 CTCI Annual Report 13 Letter from the Chairman & CEO

Strategic Operations I. IntelligentStrategic Engineering Services Operations

TCI created a new scenario in the intelligent engineering services by delivering an array of Cachievements in 2014. These inspiring breakthroughs, including cross-departmental information integration, technology/expertise improvement, work automation, have been extensively applied to our worldwide EPC undertakings and garnered substantial outcomes, which satisfy our customers with optimized engineering services as outlined below:

Cross-Departmental Information Integration Data Integration with SmartPlant Enterprise Regarding the engineering information integration of EPC turnkey contracts, CTCI implemented SmartPlant Enterprise (SPE) of Intergraph to ensure the data correctness across all engineering disciplines. SPE is a common platform to consolidate the engineering information within SmartPlant P&ID (SPPID), SmartPlant Instrumentation (SPI), SmartPlant Electrical (SPEL), SmartPlant 3D (SP3D) and SmartPlant Review (SPR). The engineering information maintained in above tools can be exchanged and performed consistency check via SmartPlant Foundation (SPF). Applying SPE on EPC turnkey projects not only ensures engineering information transparency, standardization and consistency, but enhances the design quality and reduce the project execution cost

▲SpmartPlant Enterprise Data Integration Architecture

14 2014 CTCI Annual Report Strategic Operations-Intelligent Engineering Services

Strategic Operations Material Information Dashboard CTCI has been implementing SmartPlant Materials (MARIAN) as a material management platform since 2005. Material specification and price record of over 65 EPC projects executed has been accumulated in the system. To apply the big data for proposal or project execution reference to save the procurement cost, CTCI utilizes business intelligence technology to analyze material history information and set-up Material Information Dashboard to display the results in graphics and charts on web page for project users. Besides, this dashboard can also display real-time material procurement and receiving status during project execution to detect potential issues early on and take actions accordingly.

▲Dashboard of Global Procurement Allocation

Technology/Expertise Improvement Research of Liquid Amine Absorption Tower Design Amine absorption and regeneration is a process widely applied to treat fuel gas and LPG for reducing its acid contents to the specified level in refinery and natural gas industry. Based on relevant literatures, engineering standards, and experience of historical projects, CTCI had accomplished thorough research on process parameters and system design of amine system. Moreover, CTCI is able to use ProMax, the standard tool in amine system, to do process simulation. With this research, CTCI has equipped itself with the capability of basic design for this process.

◄Amine Absorption Process Flow Diagram

2014 CTCI Annual Report 15 Strategic Operations-Intelligent Engineering Services

Database of Modularized Equipment Piping Design Piping design engineers accumulate experience by engaging in different types of piping configuration design projects and accomplishing design works for a variety of plants. Database of modularized equipment piping design was established to help piping design engineers efficiently comprehend process of plants, assure that the piping arrangement can meet the requirement for operation and maintenance of piping and equipment, enhance personal design ability, and improve design quality. Piping design leaders and senior checkers can use the database to provide reference design in 3D PDF format for designers and junior checkers. It can be applied not only for design phase but also for piping material estimation in projects quote.

Steel Connection Design for H-Beam to Tube Column Steel tube columns, also commonly called steel HSS (Hollow Structural Section) columns, perform excellent features subject to axial loading and biaxial bending as they have uniform geometry along the cross-sectional axis, and thus uniform strength characteristics. Besides, their smooth surface and architectural esthetics makes them good choices for columns in exposed structures. Hence, it gradually becomes popular in engineering to use tube columns accompanied with H-beams for building design. However, there have been more restrictions in constructing connections of H-beams to tube columns than those to H-columns. In addition, the analysis and design for this connection types is also intricate. In this context, CTCI adopted external-diaphragm gussets for steel beam-column connections, and strengthened the connection with stiffeners at the locations of stress concentration. A finite element analysis method was further performed to analyze the stress distribution precisely in the connection to assure the design quality. Accordingly, with the development of foregoing technique, CTCI enhanced the application of steel tube columns.

◄◄Stress Contour of Connection

Optimal Design for Harmonic Filter of Bulk Supply Substation of MRT Power System Since mass non-linear loading equipment is used in Mass Rapid Transportation (MRT) power supply system, it is easy to produce harmonic pollution which influences the quality of power supply. In this context, CTCI developed a design system to find out the optimal planning of parameters, installed capacity and orders for harmonic filter in order to suppress harmonic pollution effectively and improve power quality for MRT. Furthermore, it makes the estimation for the scheme of power supply system

16 2014 CTCI Annual Report Strategic Operations-Intelligent Engineering Services

and equipment capacity more accurate so as to improve the autonomy technology and save the equipment investment for MRT power supply system.

Work Automation Pressure Vessel and Storage Tank Design Software Design Program of Tall and Slender Pressure Vessel Laterally Supported by Steel Structure When the suitable shell thickness or geometric dimension of skirt of a self-supporting vertical pressure vessel could not be designed due to its lateral force, we will consider using steel structure as the lateral support(s) for the pressure vessel. However, most commercial pressure vessel design software is incapable of dealing with steel structure supporting design, and the general structural analysis software does not consider the requirement for pressure vessel design. Therefore, CTCI developed the pressure vessel steel structure support calculation module, which can quickly obtain suitable shell thicknesses and support skirt’s geometric dimension according to lateral supports location and its stiffness.

Dome Roof Support Tank Design For the large storage tank with internal floating roof, the existence of support column will cause the emission of the content and affect the operation of internal floating roof. To avoid these issues before they occur, dome roof structure is an alternative solution widely used in practical design. However, most commercial storage tank design software does not have dome roof support design function. Commercial steel structure software, therefore, are generally used for this design. In practice, however, this approach requires skillful users and if necessary, a lot of efforts are needed to repeatedly modify the structure model in order to meet the CODE requirements.

In view of this, CTCI applied SAP2000 OAPI (Open Application Programming Interface) module combined with tank design standards and rules of thumb to develop dome roof support structure design program, which not only issue proper dome roof structure layout more quickly but also provide material take-off and weight calculation for the benefit of cost estimation.

3D Model Illustration of Tank Roof Structure Basic Design Data Design Data Input Interface  Need Skillful User  To Pass Code Check, SAP2000 Automation Repeating Modification May Be Required Existed Procedure

Manual layout & Build SAP2000 SAP 2000 Code Check Material Take-off Basic Model Design N.G. Data End PASS Dome Roof Structure Design Module Automatic Layout Build SAP2000 Model SAP2000 (Design Rule) and Determine Size Code Check Automatically New Procedure ▲Workflow comparison before and after improvement ▲Design - Modeling / Analysis - Material Take Off Workflow comparison before and after improvementDesign ‐ Modeling / Analysis ‐ Material Take Off

2014 CTCI Annual Report 17 Strategic Operations-Intelligent Engineering Services

Automatic Cable Tray Cross Section View Generation and Cable/Tray Material Take Off for Instrument Main Cable Way Layout The automatic cable tray cross section view generation and cable/tray material take-off for instrument main cable way layout is programed by integrating the CAD system and database system. Through drawing design operation, the program can store design information, such as cable type and quantity, cable tray specification, design regulation and rule requirements, into database automatically. Meantime, 2D CAD system will automatically track the cable path drawn by users, calculate its quantity of cables and trays material for these cable route, and then generate cable tray cross section view. By using the automatic calculation and drawing generation, it saves cost for manual works. In addition, computerization enhances design quality and accuracy.

The automatic cable tray cross section view generation and cable/tray material take off for Instrument main cable way layout

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The Strategy Plan of Innovation R&D Multi-Discipline Talent Cultivation The ICT industry and technology of Taiwan is worldly renowned, which could be taken as an advantage for CTCI to gain unique strength by combining ICT resources with EPC lumpsum turnkey projects, so that differentiation can be created to set us apart with other competitors in the global market. For this purpose, sufficient multi-discipline human resource has to be developed as the first priority.

EPC Information Transparency/Sharing The major task of EPC lumpsum turnkey engineering is to integrate various workflows: planning, design, procurement, construction, pre-commissioning/commissioning, as well as communication with clients and vendors. In order to maintain information transparency from the upstream to the downstream, improve the precision of management, and increase the quality of engineering, a comprehensive common platform of EPC information has been created and will be continuously improved.

Increasing the Breadth and Depth of Professional Expertise We’ll keep expanding our capabilities of technology, and researching/developing our core expertise in three key areas in the future: (1) Establishing a dedicated FEED team to consolidate all related FEED capabilities; (2) Establishing the professional expertise for the field of “Super High Pressure”; (3) Expanding the application of modularization.

Learning New Ideas from Other Industries to Boost Our Innovation Strength For increasing our products/services value and maintain competition advantages, in addition to observing and learning from the competitors, improving our workflows continuously, and incorporating proper tools which are utilized globally, we should research the latest development and application in other industries about Big Data, Smart X, Mobile Device, Industry 4.0, IoT and Robot, and incorporate them innovatively into the core business of CTCI to generate our unique EPC lumpsum turnkey solutions.

2014 CTCI Annual Report 19 Strategic Operations-QHSE Management

II. QHSE Management

Quality Management 2014 Quality Management Major Accomplishment Updating Quality Policy To respond to the newly established Mission, Vision, and Principles, CTCI updated its Quality Policy Statement where the new Vision, “The Most Reliable Global Engineering Service Provider” is clearly declared at the very beginning. Meanwhile, the quality commitments manifest the “Mission”, “Principles” as well as Quality Objective: “Do the Right Thing” and “Do It Right the First Time”. Our commitments to quality are as follows.

• Excellent Services for Customer Satisfaction • Dedicated to Complying with Contract and Legal Requirements • Foster and Implement Staff Training • Continually Improve the Quality Management System

Improving CCC “Procedure Library” System Functions To facilitate quick access to level 1 and level 2 corporate documents, we improved the CCC “Procedure Library” system functions, including adding the new announcement in the front page, updating the catalog for querying, adding keyword searching, comparison section for revised versions and old document, adding section for revision histories and void documents. With the simplified and clear document management platform showing all of CTCI management regulations and document system structure, our colleagues may acquire SOP information efficiently and correctly. Figure1. shows the homepage of “Procedure Library”.

▲1.The Homepage of CCC “Procedure Library”

20 2014 CTCI Annual Report Strategic Operations-QHSE Management

Promoting Critical Project Path Management/Control Evaluation Mechanism Through performing self-assessment, we help project managers (PMs) familiarize with project management key elements and review their conformity. In practice, PMs perform self-assessment quarterly based on “Critical Project Path Management/Control Evaluation checklist”. By doing so, PMs may evaluate the implementation status of project management system and monitor the necessary improvement. The Quality Management Department (QMD) will assign technicians later on to check randomly and verify the conformity and summary audit results for each project, and report in the Quality Management Review Meeting.

Implementing Operation Procedure Comprehension Exam for Authorized Personnel To make sure that all authorized personnel have read and comprehended the level 1 and level 2 procedures published in CCC, complied and fully implemented them in daily operations, we monitor comprehension exam for all authorized personnel, including Project Managers, Project Engineering Managers, Project Lead Engineers, Project Control Managers and Site Superintendents via systematic tracing for newly formulated or revised procedures announced on CCC. The simplified operation procedure of “Level 1/ Level 2 Procedure Comprehension Exam for Authorized Personnel” is shown in Figure 2.

▲2.Level 1/Level 2 Procedure Comprehension Exams for Authorized Personnel

Initiating NCR/DND E-Tracing Manage - ment and Statistical Analysis To control efficiently the issuance and improvement of Nonconformity Report (NCR) and Defect Notification Disposition (DND), summarize NCR/DND information of each project, and then carry out systematic summarization and analysis, we establish mobile APP and PCC Platform system module to establish, trace, and control e-NCR/DND forms. Please see Figure 3 for the NDR/DND and PCC Platform system. ▲3.NDR/DND and PCC Platform system

2014 CTCI Annual Report 21 Strategic Operations-QHSE Management

Quality Awards In 2014, CTCI Corporation received a number of commendations and awards from government authorities as well as our clients for our achievements in quality assurance. The major awards are listed below:

• CPC Talin No.10 SRU Project contracted by CTCI was awarded the "2014 Public Construction Excellent Quality Award -- Facility Engineering Sector" hosted by the Ministry of Economic Affairs, R.O.C. • CPC Talin No.10 SRU Project contracted by CTCI was honored with Outstanding Award for Construction Quality and Labor Safety by Project and Construction Division, CPC.

Scheduled Implementation Goals in 2015 In 2015, we will not only continuously improve and implement Critical Project Path Management/ Control Evaluation Mechanism and performing operation procedure comprehension exam for authorized personnel, but achieve the following goals in compliance with the company’s strategy:

Procedure Integrations for Quality Management System (QMS) To comply with the revision of ISO 9001 international standard in 2015, Quality Management System procedures will be enhanced. Besides conforming to ISO 9001:2015 requirements, QMS will also respond to the customers’ requirements, optimize processes and forms, and improve the conformability and applicability of related procedures. For operation phase, we will, based on High Level Structure, rearrange procedures, and review present structure and contents of quality management to meet the requirements of management in the most efficient and economical manner, and achieve the target of ISO 9001: 2015 revision as scheduled.

Enhancing Talent Cultivation -- Developing World-Class Project Quality Managers (PQMs) Due to the higher qualification required by domestic and international customers and the mounting cost of hiring specialists from abroad, we will dedicate to cultivating world-class PQMs by improving their professional qualifications and abilities, accumulate experiences in international project executions, and enhance language communication skills through internal training. Thus, we can improve project quality management effectiveness and lower the project costs.

Developing Quality KPI Dashboard for Improving Effectiveness of Project Quality Management For each project, we will formulate quality KPI every year and execute routine measurement and control. In order to simplify the feedback and reporting process, and to accord with measurement timing and principles among each project and related functional departments, QMD will develop “Quality KPI Dashboard” for integrating each KPI data, and for performing project quality control through IT system by introducing the concept of warning and action value for forewarning and improving statistics & data analyzing technologies.

22 2014 CTCI Annual Report Strategic Operations-QHSE Management

HSE Management Sophistication of HSE Management towards International Level Corporate HSE Policy Statement & Top Management’s Commitment According to OHSAS18001/ISO14001 standards, Corporate HSE Policy Statement is reviewed with concerns of the updates of standards, changes in legal legislation, results of risk assessment, and also the orientation of corporate strategy. This year, new HSE policy statement was deliberated in management review meeting, signed by top management, and announced to employees and other concerned parties. Conforming to our new Vision, Principle, and Mission, CTCI modified the HSE Policy Statement to the following 7 statements.

• Insist on Safety as the First Priority • Promote Personnel Health and Well-being • Protect Environment and Sustainability • Implement Risk Management System • Comply with Legal and Contract Requirements • Engage in Trainings and Personnel Participation • Improve HSE Management System Continuously

The HSE management system of CTCI Corporation is in compliance with the requirements of the following international and Taiwan’s national standards: • ISO 14001: 2004 Environmental Management System • OHSAS 18001: 2007 Occupational Health and Safety Management System • TOSHMS:2007(CNS15506) Occupational Safety and Health Management System

Safety Records in the Last 5 Years The safety statistics of CTCI Corporation, covering those of its worldwide project sites and Head office, are recorded as recordable cases which included fatality, days away from work, job transfer or restriction and medical treatment cases. To achieve our safety objective of an incident rate of zero and to conduct the trend analysis periodically for further improvement actions, these records are transformed to international safety indicators (TRCR and DARTR) and listed as below:

2014 CTCI Annual Report 23 Strategic Operations-QHSE Management

Number of Recordable Cases Total Hours Job Days Away Medical 1 2 Year Worked Fatality Transfer or TRCR DARTR from Work Treatment (A) (B) Restriction (C) (E) (D) 2010 27,328,154 0 2 0 5 0.05 0.01 2011 27,277,819 0 2 2 2 0.04 0.02 2012 31,508,708 1 2 0 8 0.06 0.01 2013 33,595,176 1 5 1 2 0.05 0.03 2014 19,662,926 0 2 0 6 0.08 0.02

Note 1: Total Recordable Case Rate (TRCR) = [ (B) + (C) + (D) + (E) ] × 200,000 / (A) Note 2: Days Away, Restricted or Job Transfer Incident Rate (DARTR) = [ (C) + (D) ] × 200,000 / (A)

Total Recordable Case Days Away/Restricted or 0.15 0.15 Rate Job Transfer Incident 0.12 0.12 (TRCR) Rate (DARTIR) 0.09 0.09

0.06 0.06

0.03 0.03

0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

Advancing Total HSE Evaluation to All Progressively To mitigate occupational HSE hazards and risks, CTCI not only meets the obligation of legislation and the requirements of management system, but endeavors to involve all employees participating in HSE activities, starting to think from HSE points of view. CTCI believes that “People” is no doubt the critical factor in the formulation of safety culture.

The objective of Total HSE Evaluation program is to apply examination to department heads, project managers, and to all employees especially for those not in HSE professions. By conducting the tests, everyone from top management level to employee can acquire essential HSE knowledge, become familiar with work-related HSE requirements, and hopefully to transform unsafe acts to safety behaviors with correct HSE attitude.

From the 3rd quarter of 2013 to 2014, “Total HSE Evaluation” had been delivered to Department / Project managers, PEM/PPM/PSM/PKM, and construction engineers in various professions. The evaluation is carried out via GTS online test, which consist of 3 subjects: safety commitment, basic concept, and HSE practice. In the future, we’ll continue arranging the evaluation for each position and promoting it to all employees. To sum up, our target of “Total HSE” will be continuously strengthened to foster a shared safety culture.

Continuous Improvement on HSE Management System CTCI, as the leading international EPC contractor in Taiwan, has been continuously staying updated to the latest technologies to seek for innovative methodologies of HSE management. To increase the efficiency of HSE information delivery, and to strengthen the operation of project HSE management system, HSE Comprehensive Performance Management System has been develped with the application of modern information techniques. This online system can provide quick, effective real-time HSE information to site supervisors, HSE specialists and managers. To align with growing business in international projects, English browsing webpage was established to comply with project practice and to optimize the performance of HSE management for international projects.

24 2014 CTCI Annual Report Strategic Operations-QHSE Management

▲User interface of HSE Comprehensive Performance Management System

Remarkable HSE Awards Achieved in 2014 In 2014, CTCI received a number of commendations and awards from government authorities as well as our clients. To recognize our achievements in HSE, major awards are listed below:

• CTCI serves as committee member in Northern TOSHMS Promotion Committee to actively assist in OSH promoting activities. The Minister Fu of Taiwan OSHA, attended the Joint Presentation Campaign and awarded CTCI for its efforts and participations in promoting TOSHMS. • TPC Talin project team assists city OSH center to carry out the “2014 Heat hazards prevention at high-temperature circumstance” workshop, and thereby rewarded with a Certificate of Appreciation. • Qatar project was honored by client QAPCO with the “Best Contractor Safety Award in 2013”, and the “Best Contractor Safety Awards-Motivation Scheme Awards in 2013”. • CPC Talin SRU project was honored with the “Excellent Performance on Safety, Environment Protection, Construction Quality Award”. • Kuan-Yin PTA plant project was awarded by client with good performance in contractor campaign.

Keep on Perfecting HSE Management System in 2015 We continually develop the “TOTAL HSE” and corporate HSE culture, improve all HSE management issues and enhance the corporate HSE performance. Besides, according to the 2015 CTCI group target in “VISION, PRINCIPLES and MISSION”, we will coordinate CTCI group strategy for seamless connection with international standards/regulations. Additionally, based on HSE management target, we will set up the Safety Key Performance Index, TRCR (Total Recordable Case Rate) and DARTR (Day Away from work/ Restricted work or job Transferred Incident Rate), to promote the safety performance through total members’ attendance.

With the Occupational Safety and Health Act launched domestically on 3rd Jul, 2014 (the 2nd stage of related regulations was already in effect from 1st Jan 2015), and ISO14001 Environmental Management System and ISO 45001 Occupational Safety and Health Management System updated, CTCI will keep devoting itself to the review and refining of HSE procedure/plan system to meet the project requirement, and to achieve the expected results more efficiently. Considering that EPC projects executed by CTCI in recent years are getting more complex with larger scale, we are also trying to integrate the latest technologies to improve project HSE management, in order to provide real-time and efficient information for the reference of multi-criteria decision-making.

2014 CTCI Annual Report 25 Strategic Operations-CTCI Group IT Integration

III. CTCI Group IT Integration

o undertake the international EPC projects has always been the core business of CTCI Group. TNowadays, customers think highly of their information privacy protection. As the most reliable global engineering services provider, in order to show our great emphasis on information security and information security risk management, also to continuously satisfy our customers with the optimized security and high quality IT services, CTCI Group set up a special project implementing ISO/IEC 27001 system and rebuilt ISMS (Information Security Management System) since June 2014.

CTCI Group successfully passed the examination held by BSI with perfect score (zero non-conformity) and obtained the certificate of registration of ISO 27001 regarding ISMS. The certification scope, in addition to the server room and network management which are necessary for the IT infrastructure, also encompasses the project management systems for the company's core business EPC projects, such as project management (Project on Web, POW), engineering design (Smart 3D, SP3D), procurement (Smart Plant Materials, SPMat), and construction (Construction Management System, CMS).

CTCI Group will continue to perform excellence on improving the ISMS through the Plan-Do-Check-Act Cycle (PDCA Cycle). Apart from the systems which were granted with ISO 27001, we will check all the other IT appliance systems to make sure all of them are in compliance with the international quality standard. Moreover, the spirit of ISO 27001 will be introduced to all subsidiaries within CTCI Group, in order to secure the quality of the Group's information security management from all angles.

Apart from ISO 27001, CTCI Group has implemented the SAP ERP System to its subsidiaries and offices across the globe in a 4-year implementation duration. With this well-known enterprise resource planning system, as well as its reputation of strict system permission control, the data within different entities can now be processed with high accuracy, delivering integrated, real-time operational data for the management to make business decisions accordingly. With SAP ERP System in place, the work flow for all employees in CTCI Group is consistent and well performed as the management efficiency is greatly improved.

Moreover, using the latest information communication technology to connect overseas operational centers is also one of the focal points of IT development for CTCI Group. We have several projects going on in the Middle East and South-East Asia. In order to support the project members, enabling them to access all sorts of IT services from CTCI Group headquarters, CTCI Group built up several cloud computing centers in Singapore, Saudi Arabia, and Malaysia. By integrating the existing lease line with its subsidiaries, these cloud computing centers for project offices allow every employee to communicate as well as access information from CTCI Group Headquarters anywhere, anytime to obtain necessary information to execute their tasks.

All in all, CTCI Group always keeps an eye on the current trend, using the latest IT technology to make sure the company’s business operation runs smoothly and always on the cutting edge.

26 2014 CTCI Annual Report Strategic Operations-CTCI Talent and Leadership Optimization

IV. CTCI Talent and Leadership Optimization

o satisfy our customers with the optimized engineering services, CTCI develops the principles of TProfessionalism, Integrity, Teamwork, and Innovation, as our core values. As a global corporation that has 30 more subsidiaries and affiliates stationed around the world, CTCI believes having the right values not only drives employees to move forward toward the same direction as the company, but also enhances the employee’s engagement. Accordingly, based on what CTCI has always believed in, these core values developed by CTCI Human Resources serves as the fundamental structure and principle for talent incubation. We further reinforced our core values and human resources policies, integrating the standard of talent recruiting, the performance management, the training framework and development plan to secure our position as “The Most Reliable Global Engineering Service Provider”.

2014 Achievement • CTCI implements IDP (individual development plan) program to provide every employee with a career roadmap to fulfill the concept of talent and leadership legacy development. • CTCI is engaged in the innovation of real-time global learning platform, to ensure that employees worldwide can keep the same pace as colleagues at the headquarters for growing and advancement at any time and any place. Interlinking a series of novel tools, such as “CTCI GTS” (Global Training System), Lync, and KM (Knowledge Management) System, we have progressed toward the goal of worldwide learning. • CTCI cooperates with National Taiwan University to organize Management and Leadership Program, and the amount of trainees in 2014 is 331. The Most Reliable Global Engineering 2015 Targets Service Provider • To build up CTCI core and Globalization High Growth International management competencies. Professionalism Leadership Program Self- Development • Based on the competencies, L L R

e BU Head Level a C o adership P nguage Tr lose out r Training tation Pro (EMBA)

CTCI develops HR activities, Clu Book O Department Head Level G like the structured interview K J Management Training T M M e S a g b

T rogram

port Section Head Level ining

to find person-organization ap ram Management Training fit and person-job fit for job New Entry candidates. Management Program • Furthermore, the competencies IDP, including Training, Task Rotation, Discipline, and Hard Job Rotation established will serve as key Engineering general introduction/QHSE Training criteria to develop talent’s IDP. Orientation/Mentor & Mentee program

6

2014 CTCI Annual Report 27 Business Review & Outlook I. HydrocarbonBusiness Review &

ooking back at the goals achieved last year, 2014 was a year of developments and breakthroughs; OutlookLwe are looking forward to expanding our business even further in 2015. We are pleased to report our accomplishments to date and the prospects for the hydrocarbon sector as follows:

Major Projects under Execution

Announcement Delivery Project

Nov. 2014 2018 CPC LNG REGAS Project

Nov. 2014 2017 CPC No.11 DHDS Project

Aug. 2014 2019 PETRONAS RAPID Package 1 (RFCC) Project

Aug. 2014 2015 DAC CSU REVAMPING PROJECT

Jul. 2014 2017 SAMAC MMA/PMMA Project

Mar. 2014 2015 USI CBC PROJECT

Jan. 2014 2015 FEUPY EO/EG PROJECT

Aug. 2013 2016 KFPC HSBC Project

Aug. 2013 2016 LAFFAN REFINERY PHASE II PROJECT

Nov. 2012 2015 USI EVA PROJECT

Nov. 2012 2015 APC EVA PROJECT

May 2012 2015 CPC SRU PROJECT

Feb. 2012 2015 FPC ISOPRENE MONOMER PROJECT

Aug. 2011 2016 OPTC KUAN-YIN LINE 3 PTA PROJECT

Major Projects Completed

QAPCO FURNACES PROJECT

QAPCO ETHYLENE TANK PROJECT

SHENGDA PTA PROJECT

CNOOC HAINAN LNG RECEIVING TERMINAL PROJECT

28 2014 CTCI Annual Report Business Review & Outlook-Hydrocarbon

In July 2014, CTCI successfully secured a contract from Saudi Methacrylates Company (SAMAC) a 50/50 joint-venture (JV) of SABIC and Mitsubishi Rayon (MRC) to build methyl methacrylate monomer (MMA) and a polymethyl methacrylate (PMMA) plants in Jubail Industrial City, Saudi Arabia. The MMA and PMMA plants will have projected capacities of 250,000 tonnes/year and 40,000 tonnes/year.

We have gained the greatest achievements of CTCI in August 2014; Petroliam Nasional Berhad (PETRONAS) group has awarded the Consortium of CTCI Corporation, Chiyoda Corporation and three Malaysian companies, CCJV P1 Engineering and Construction Sdn. Bhd., Synerlitz Sdn. Bhd. and MIE Industrial Sdn. Bhd., the Residue Fluid Catalytic Cracker (RFCC) Project. The RFCC project is part of PETRONAS Refinery and Petrochemicals Integrated Development (RAPID) project in Pengerang, Johor, Malaysia.

In Qatar, CTCI has completed QAPCO Furnaces and Ethylene Tank Project on time and within budget. Currently, CTCI/ Chiyoda JV is executing Engineering, Procurement, Construction and Commissioning contract for Laffan Refinery Phase 2 Project (LR2). LR2 will have a daily production capacity of 60,000 barrels of naphtha, 53,000 barrels of jet fuel, 24,000 barrels of gasoil and 9,000 barrels of liquefied petroleum gas (LPG). The Project is expected to be fully operational by the third quarter of 2016.

In Taiwan, due to the fact that CTCI favored the needs of various Clients, we were awarded several projects in 2014, including CPC LNG Regas, No.11 DHDS Project and USI CBC Project. Moreover, our on-going projects, such as USI Corporation Ethylene Vinyl Acetate (EVA) Project, Asia Polymer Corporation Ethylene Vinyl Acetate (EVA) Project, CPC Sulfur Recovery Unit (SRU) Project, Oriental Petrochemical Taiwan Company Purified Terephthalic Acid (PTA) Line 3 Project, Formosa Petrochemical Company Isoprene Monomer Project and KFPC Hydrogenated Styrenic Block Copolymers (HSBC) Project, were under execution smoothly. In 2015, our main targets in Taiwan will be CPC’s LNG Receiving Terminals and INA Plant to be established jointly with a foreign investment.

2014 CTCI Annual Report 29 Business Review & Outlook-Hydrocarbon

In China, CTCI successfully obtained several projects, such as FUPY EO/EG Project, DAC CSU Revamping Project, from both Taiwanese and foreign investors, and has accomplished the SHENGDA PTA Project satisfactorily. In 2015, it is anticipated that many Chinese, Taiwanese and foreign investors will keep increasing their funds to speed up respective investment projects. We will be intensively following up with our clients, including BASF, SK,Envonic, M&G, FPC Group, Far Eastern Group, Chimei Group, CNOOC, etc., for their potential investment in China.

In the Southeast Asia and India, CTCI signed a contract with Petroliam Nasional Berhad (PETRONAS) group, Malaysia’s national energy company, for its RFCC project in 2014, which is currently in engineering stage.

According to the current plans of ASEAN countries, it is projected that a number of investments in refinery, petrochemical, chemical plants and LNG terminals will be launched in coming years. In Malaysia, PETRONAS continues the tenders of downstream packages for Refinery and Petrochemical Integrated Development (RAPID) project. In , national oil and gas company Pertamina is planning on several investments with its strategic partners from the Middle East, Japan, Thailand and China, etc. for brownfield refineries, greenfield refineries and petrochemical complex to meet the local demands in 2020. Private company like BP/Chandra Asri is conducting the feasibility study of condensate splitter project.

In Thailand, CTCI will keep following up with PTT Group for its potential investments, such as revamping projects of existing refineries, and new investments of bio-plastic products. We also follow closely on PTT Group’s overseas investment in ASEAN countries. As for India, we are keeping in touch with existing and potential customers for its new investments, such as national oil company IOCL is conducting the feasibility study of several petrochemical projects in its existing facilities while private company like Petronet is also under study on existing LNG Terminal expansion and new LNG terminal project.

30 2014 CTCI Annual Report Business Review & Outlook-Hydrocarbon

In the Middle East, CTCI continuously develops its business and dedicatedly maintaining its position in the local market. During the year 2014, we successfully completed QAPCO Furnaces Project and Ethylene Tank Project in Qatar. In addition, CTCI and Chiyoda, the reputable Japanese EPC contractor, formed a joint venture (CCJV) to perform Laffan Refinery Phase II Project; the project is expected to come on stream in 2016.

In Qatar, QP will make the feedstock ethane available to existing producers in Qatar and overall configuration will be clear in 2015, these include Qapco, Qatar Chemical Company (Q-Chem), Qatar Vinyl Company (QVC) and Ras Laffan Olefins Company. CTCI will continuously follow up for the coming projects with above-mentioned Clients, such as QAPCO Mixed Feed Cracker EP3 Project and QVC EDC Expansion Project.

In the Kingdom of Saudi Arabia (KSA), the unexpected drop in crude prices in 2014 required KSA to cut governmental spending. The state owned company Saudi Aramco will renegotiate some contracts and postpone some projects due to falling oil prices but will still focus on upstream gas development projects such as Fadhili gas field and tight gas at northwest fields. As for Saudi Basic Industries Corporation (SABIC), new opportunities such as Saudi Kayan Butadiene Project and New Furnaces Project will be tendered in 2015. For long term business plan, SABIC will focus on high value-added performance chemical products and oil to chemical (OTC) projects. CTCI will effectively participate in these bids. In United Arab Emirate (UAE), the oil and gas sector could be set for a period of decline due to current slump in oil prices. Abu Dhabi has considerable reserves built up from several years of fiscal surpluses; another period of efficient savings can be expected. CTCI will keep tracking for strategy development project in UAE and proactively participate in Borouge Polypropylene (PP) Project.

2014 CTCI Annual Report 31 Business Review & Outlook-Hydrocarbon

For other GCC countries, CTCI keeps dedicating its efforts to promote its business and explore more opportunities in the prosperous market in Bahrain, and Oman. In Oman, Oman Oil Refineries and Petroleum Industries Company (Orpic) is going to develop Liwa Petrochemical Industrial Complex (LPIC) in Sohar, the LPIC in Sohar which will also mark a significant expansion in the downstream petrochemical capacityin Oman. Abu Dhabi’s International Petroleum Investment Company (IPIC) together with Oman Oil Company (OOC) is going to build the Duqm Refinery and Petrochemical Complex. Besides, OOC’s affiliates also offer many investment opportunities such as Salalah Methanol Company Ammonia Plant and Takamul metaxylene (MX)/ purified isophthalic acid (PIA) Project. Bahrain Petroleum Company’s (BAPCO) major refinery expansion in Bahrain is also on the track and will both be materialized in 2016.

In addition, CTCI is also following up with the Iranian market, it is expected that the oil & gas industry will grow in the near future after sanction lift.

Among many new investments in the USA, CTCI focuses on the opportunity of engineering works from FPC Group’s petrochemical projects; once we secure the contract, construction works will be our next target. On the other hand, we are under discussion with local EPC companies for the cooperation to jointly develop the market and pursue more opportunities from international customers’ investments in the USA.

Despite the fact that CTCI is one of the leading EPC contractors, we can never overemphasize the importance of improving ourselves. In addition to all the facts mentioned above, CTCI also focuses on the projects in Malaysia, India, and continues to penetrate into Indonesia, Philippine, and U.S. markets. Several refinery and gas processing projects were announced this year and will soon be calling for tenders; CTCI will definitely seize the chance of entering new markets if the investment environments are proved safe for us.

32 2014 CTCI Annual Report Business Review & Outlook-Infrastructure, Environment & Power

II. Infrastructure, Environment & Power

TCI has been devoting itself to the developments of various infrastructure, environment, and power Cprojects for decades. Plenty achievements have been accomplished not only in Taiwan but also in China, South East Asia, India and the Middle East. The company’s commitment and reputation in delivering satisfactory services are recognized by clients in various industries.

Infrastructure Major Projects under Execution

Announcement Delivery Project

TAMHAI LIGHT RAIL TRANSIT TRACKWORKS AND Nov. 2014 2019 POWER SUPPLY PROJECT

Jul. 2014 2020 SINGAPORE MRT THOMSON LINE TRACKWORK PROJECT

TAICHUNG MCT WURI-WENXIN-BEITUN LINE POWER May 2011 2019 SUPPLY, COMMUNICATION, AND AUTO FARE COLLECTION SYSTEM PROJECT

SINGAPORE MRT DOWNTOWN LINE STAGE 3 Feb. 2011 2016 TRACKWORK PROJECT Major Projects Completed

TAIPEI MRT XINYI-SONGSHAN LINE SYSTEM ELECTRICAL AND MECHANICAL SYSTEM PROJECT

In 2014, CTCI maintained smooth progress for the ongoing rail projects in Taiwan, including Taipei MRT Songshan Line System Electrical and Mechanical System Project and Taichung Medium Capacity Transit Wuri-Wenxin-Beitun System Electrical and Mechanical System Project. To meet the schedule and regulatory requirements, CTCI has been endeavoring to keep it under smooth construction and Owner’s goal—providing the operation service on the Songshan Line is achieved. Up to now, the operation has been proven satisfactory to the public and the authorities concerned.

In addition, CTCI is developing on Light Rail Transportation business. CTCI has participated in the trackwork and power supply system in Tamhai Light Rail Transit project.

Following the successful awarding of the Singapore Downtown Line Stage 3 Trackwork, CTCI Corporation was again awarded the Thomson Line Trackwork Project in July 2014. CTCI will provide the engineering, procurement, construction (EPC), testing and commissioning services for the whole project, which is scheduled to be completed in December 2020. These achievements illustrate CTCI’s capability to enter global market.

2014 CTCI Annual Report 33 Business Review & Outlook-Infrastructure, Environment & Power

Following government development planning, several rail transportation projects in Taiwan will be constructed in coming years, such as Taipei Wanda-Zhonghe-Shulin Line Medium Capacity Transit Phase I Project, Taoyuan Green Line System Electrical and Mechanical Project, Sanying Line System Electrical and Mechanical Project and more others. We are aiming to participate in most of the projects. For overseas markets, the targeted areas include Southeast Asia and the Middle East in the years ahead. Moreover, through the collaboration with Chiyoda Corporation, we foresee that more opportunities will be jointly explored and secured.

General Industry

Major Projects under Execution

Announcement Delivery Project

AMIC/ TOHO TI-SPONGE YNP PROJECT EARLY WORK, Jan. 2015 2015 KSA

Aug. 2012 2015 CSCI ACL PLANT PROJECT, INDIA

FORMOSA VIETNAM HA TINH ISM PLANT ASU PROJECT, Aug. 2012 2015 VIETNAM

Major Projects Completed

CSC #3 CDQ SYSTEM RENEW EPC PROJECT, TAIWAN

CSC WATER SYSTEM AND GAS PIPING UTILITY ENGINEERING PROJECT, TAIWAN

CSCI ACL PLANT GEOTECHNICAL INVESTIGATION PROJECT, INDIA

TOHO TI-SPONGE YNP PROJECT, FEASIBILITY STUDY AND BASIC DESIGN WORK, KSA

With respect to the accomplishments in 2014, CSC #3 CDQ Boiler System Renew EPC Project and CSC Water System and Gas Piping Utility Engineering Project in Taiwan had been successfully completed, while the ongoing CSCI ACL Plant Project in India maintained smooth progress. In terms of project contracted, CTCI had been awarded AMIC/Toho YNP Ti-Sponge YNP Project Early Work in KSA, an important step for us to extend our service to Non-ferrous metal business.

Following the development planning of Taiwan-based steel producer, several steel revamping projects will be initiated in the coming year. For overseas markets, the targeted areas include India and the Middle East, covering CSCI Phase 2 Cold Roll Mill EPC Project, general industry projects in India in cooperation with other Taiwanese/Japanese companies, and AMIC/Toho YNP Ti-Sponge EPC Project in KSA. In addition, CTCI is allied with CSC as strategic partner aiming at the overseas steel plant

34 2014 CTCI Annual Report Business Review & Outlook-Infrastructure, Environment & Power

construction projects.

To expand our service overseas, CTCI collaborated with Chiyoda Corporation to jointly explore new opportunities by participating in the projects relating to the products of titanium sponge and copper smelter plant in the areas of the Middle East and Mexico, just to name a few. On the other hand, attention will be paid to the market of energy saving and waste heat recovery business and cooperate with technical providers for potential projects.

Air Pollution Control

Major Projects under Execution

Announcement Delivery Project

SHANGHAI BAOSHAN STEEL NO.4 SINTERING PLANT Jul. 2015 2016 SCR DE-NOX/DIOXIN E PROJECT, CHINA PAGBILAO UNIT 3 SEAWATER FGD Jul. 2014 2015 PLANT E+P PROJECT, PHILIPPINES TPC TALIN POWER PLANT 800MW X 2 SCR & DUCTING Oct. 2012 2015 SYSTEM E+P PROJECT, TAIWAN Major Projects Completed

SHANGHAI CHUNG LOONG 130T/H SCR DE-NOX EPC PROJECT, CHINA

HUANENG POWER INTERNATIONAL DALIAN POWER FIRED UNITS 1 & 2 SCR DE-NOX PROJECT, CHINA

HUANENG POWER INTERNATIONAL DANDONG POWER COAL FIRED UNITS 1 & 2 SCR DE-NOX PROJECT, CHINA

HUA-YA / GUAN-YIN PLANT STOKER BOILER 50T/H X 3 SETS SCR, TAIWAN PTTGC I-4/2 PLANT SCR DE-NOX PROJECT, EPC, THAILAND

Since 1991, when CTCI's first Selective Catalytic Reduction (SCR) project was carried out, Air Pollution Control Project Team has been dedicated to the expertise in air pollution abatement for the waste gas from utilities and industrial facilities. As a SCR system supplier, CTCI’s Air Pollution Control Project Team, cooperating with internationally renowned boilermakers and SCR catalyst vendors, always provides clients with quality equipment. During the past 24 years, we have accomplished hundreds of sets of SCR De-NOx and Seawater FGD De-SOx plants across Taiwan, China, Thailand, Philippines, and the US. CTCI is also involved in SCR catalyst cleaning & rejuvenation, SOx removal systems, dioxin removal systems, CO removal systems, particle removal systems, and VOC systems. The integration of the above-mentioned expertise of the air quality control system (AQCS) meets the future needs of the global trend and technology development, and upgrades the capabilities of the ongoing EPCK activities of CTCI.

2014 CTCI Annual Report 35 Business Review & Outlook-Infrastructure, Environment & Power

Since the beginning of 2011, we have been carrying out Hua-Ya Cogeneration Stoker Boiler Plant Units 1-3 SCR De-NOx Project. After its completion, the plant has reduced NOx emissions of the public electricity operation and achieve the upgraded level of our expectation. We have also been awarded two contracts from China Aerospace Science & Technology to provide engineering design and commissioning supervision for Huaneng International’s electricity Dandong units 1 & 2 and Dalian units 1 & 2 coal-fired power SCR De-NOx system in Province of Liaoning, China.

In 2013, we accomplished IHI Talin renewable power plant SCR De-NOx reactor, air and flue duct, damper, expansion joint, and insulation engineering design and procurement project. Also, we completed 130T/H SCR De-NOx EPC project of Shanghai Chungloong paper industry in Mainland China, which is our first step to enter the realm of paper industry SCR De-NOx market. In 2014, we were awarded suppling seawater FGD De-SOx E+P project for Pagbilao ultra-super critical (USC) coal-fired thermal power plant in Philippines.

In 2015, we also commenced bidding Units No. 1~4 Air Quality Control System Retrofit EPC Project of , which is planning to retrofit four 550MW coal-fired power generating units of steam generator, ESP, and FGD system. We foresee plenty of opportunities in the Chinese market due to its rapidly growing power demand as the 12th five-year plan accelerating infrastructure and industrial development while restrictions to the emission level for various heavy polluting industries are stipulated. As a more stringent emission regulation is gradually imposed on the steel plants around the world, the steel sintering plant SCR of SCR de-nitrification project in Mainland China headed by Baoshan Steel Group (Shanghai) must remove nitrification, dioxin, and heavy metals within 2015 to 2016. In response to the air pollutant emission standard of electric facilities in conformity with announcement of environmental protection administration (EPA), we had visited approximately 25 plants requiring SCR de-nitrification technology to address existing nitrification pollutant problems, and such projects are expected to be completed within 2015 to 2018. We will strive for continual improvement in this regard for a cleaner, healthier, and better tomorrow.

Power Major Projects under Execution

Announcement Delivery Project

Dec. 2013 2016 TOP SMALL POWER PRODUCER PROJECT

Sep. 2013 2018 TUNG HSIAO POWER PLANT RENEWAL PROJECT

May 2012 2017 TALIN POWER PLANT RENEWAL PROJECT

Aug. 2011 2019 RENEWAL PROJECT

Apr. 2000 2016 TPC LUNGMEN NUCLEAR POWER PLANT PROJECT Major Projects Completed

KIMANIS 300MW COMBINED CYCLE POWER PLANT PROJECT

36 2014 CTCI Annual Report Business Review & Outlook-Infrastructure, Environment & Power

CTCI has participated in various power projects for decades and marks its role as one of the major turnkey contractors in power generation market by successful completions of Dah Tarn Combined Cycle Power Plant Project of Taiwan Power Company (TPC) in 2009 together with partners. With the capacity of 4,384 MW, this plant becomes one of the largest combined cycle power plants in the world, which is a notable contribution to Taiwan’s power industry.

Another remarkable achievement of the company is the accomplishment of couples of Central Utility Projects for PTT Utility Co. Ltd (PTTUT) and its successor Global Power Synergy Company Limited (GPSC), which is an amalgamated corporation between PTTUT and Independent Power (Thailand) Company Limited in Thailand since 2013, which generates electricity, steam and other utilities to nearby industrial users.

Following successful completion of Dah Tarn Combined Cycle Power Plant Project and Central Utility Projects, Kimanis 300 MW Combined Cycle Power Plant Project in Sabah, Malaysia, the largest IPP power plant in Sabah, is successfully completed and commercially operated in 2014, making a great contribution to long term power shortfall of Sabah State in Malaysia.

The recent major contracts received include Lin Kou 2,400 MW supercritical coal-fired power plant project in Taiwan, Talin 1,600 MW supercritical coal-fired power plant project in Taiwan, Tung Hsiao 2,700 MW combined cycle power plant project in Taiwan and Thai Oil 217 MW cogeneration plant project in Thailand.

CTCI is keen to expand its power generation business in Taiwan and other areas such as Vietnam, Indonesia, Brunei, Myanmar, the Middle East and China, and continue to build up reputation in EPC works for coal- fired or gas-fired utility power plant projects and cogeneration plant projects for heavy energy consumption industry sectors covering refinery, petrochemical plant, cement plant, pulp & paper mill and steel mill. It is the commitment of CTCI to bring cutting-edge technologies and reliable services to the clients.

2014 CTCI Annual Report 37 Business Review & Outlook-Infrastructure, Environment & Power

Environment & Water Treatment

Major Projects under Execution

Announcement Delivery Project

GRANTOP CHONGHWA MUNICIPLE SOLID WASTE Nov. 2014 2017 INCINERATION PROJECT

CDTT TAICHUNG PLANT EXPANSION 3 ENGINEERING Sep. 2014 2015 PROJECT

OPTC PTA LINE 3 PLANT WATER TREATMENT PLANT Feb. 2013 2015 PROJECT

CDTT TAICHUNG PLANT FINISHING LINE ENGINEERING Jan. 2013 2015 SERVICE PROJECT

OPTC PTA LINE 3 PLANT EFFLUENT TREATMENT PLANT Nov. 2012 2016 PROJECT

In 2014, CTCI maintained smooth progress for the ongoing projects on EPC works of PTA Wastewater Treatment Plant and Water Treatment Plant for Oriental Petrochemical (Taiwan) Co., Ltd (OPTC), engineering service works of Expansion 2 Finishing Line and Expansion 3 for Coring Display Technologies Taiwan (CDTT), and engineering service on mechanical/electrical/instrument work of Chonghwa Municipal Solid Waste Incineration Plant for Guangzhou Environment Protection Investment Group Co., Ltd (Grantop) in China. To achieve project goal and satisfy with Client’s requirements, CTCI has been endeavoring to keep aforesaid projects under smooth progress.

Through the operation of Overseas Waste to Energy (WtE) Business Development Committee, CTCI Group effectively integrated the resources within CTCI Group to provide comprehensive services covering project development/investment, feasibility study, consultancy, EPC and O&M. For 2015, CTCI’s main focus on WtE Business is to expand the overseas markets, including China, Malaysia, Singapore, Thailand, India and Indonesia. Furthermore, CTCI Group continues strengthening its competitiveness and localization via developing the adaptive specification and executive team to provide the appropriate and applicable solution for the said overseas market. As for water business, CTCI will continue seeking the opportunity to provide the optimal solution to overcome the shortage of global water supply and strengthen the capability of its subsidiaries to enter into highly localized and competitive market overseas.

38 2014 CTCI Annual Report Business Review & Outlook-Environment & Resources

III. Environment & Resources

nvironment & Resources Business Operations (ERBO), as one of the major business lines in ECTCI, focuses on the development, investment and operation & maintenance (O&M) for the environmental protection facilities, resource management and green energy, including waste to energy (WtE) plants, waste water treatment plants, industrial waste treatment plants, waste management, resources recycling, photovoltaic power plants (PVPP) and so on.

Currently, the business development and operation of ERBO is executed by KD Holding Corporation (KD), together with all its affiliates and subsidiaries: development & investment by Leading Energy Corporation, Fortune Energy Corporation, GD Development Corporation and KD, O&M by Sino Environmental Services Corporation as well as three overseas subsidiaries –SINOGAL Waste Services Co., Ltd (Macau)., GranSino Environmental Technology Co., Ltd (China) and Xiang Ding Environmental Consultant (Shanghai) Co., Ltd. (China) , waste management and resources recycling by HD Resource Management Corporation and BORETECH Resource Recovery Engineering Co., Ltd (Cayman).

The major works performed by ERBO are basically long term concession contracts with government and long term service agreements with government and/or private sector, presently including 2 WtE BOT concession contracts in Taiwan, 10 O&M service contracts for WtE plant in Taiwan and 2 in Macau, waste collection, transportation or treatment service contract for more than 19,000 waste generators in Taiwan, and 16 power purchase agreement of PVPP in Taiwan and 1 in the US. Besides, we are also performing works on maintenance, renewal and upgrading of mechatronics system in WtE plants, rail transportation system and other related facilities. For resources recycling, we manufacture the cleaning/ slicing machine for PET bottle and had whole plant exported to countries in Asia, Middle East, North America, South America, East Europe and Africa. We are also operating PET recycling business in China and US, from acquiring the used PET bottle, cleaning/slicing by our machine and producing the PET fiber as the final product.

Major Achievements in 2014 During 2014, ERBO kept maintaining smooth operation for its ongoing projects, and also had steady financial growth in line with our business objectives. With sound management and high profitability in its niche market, KD was ranked 5th in the investment holding sector among the “Top 500 Service Enterprises” by Common Wealth magazine in 2013. Besides, as a listed company in Taiwan, KD had been

2014 CTCI Annual Report 39 Business Review & Outlook-Environment & Resources

performing rather well regarding information disclosure and been awarded the top ranking Grade A++ in the Information Disclosure and Transparency Ranking System (IDTRS) of Taiwan in 2014. Based on the long term accumulation on technical knowledge and innovation orientated operation, we have acquired several patents on WtE technology and resources recycling to date, including 14 in Taiwan and 7 in China. For business development in 2014, we have also acquired fruitful achievements, including:

Waste Management and Renewal/Upgrade of Mechatronics System • Acquired the service contract for equipment maintenance and refuse crane operation for Southern WtE Plant of Kaohsiung City. • Acquired the service contract for plant overhaul for Middle District WtE Plant of Kaohsiung City. • Followed the project of O&M for incineration plant of Taoyuan international airport, acquired the service contract of renewal/upgrade of mechatronics system of the plant. • Acquired the service contract for plant overhaul for Pingtung WtE Plant. • Followed the project of O&M supervision for Shanghai Laogang WtE plant, acquired the same service contract for Northern Zhongshan WtE plant of Guangdong province for 3 years. • Acquired the service contract for test-run of mechatronics system for Taoyuan airport MRT line.

Green Energy: PVPP • Acquired 20-year power purchase agreement (PPA) of roof-type PVPP for Yanchao depot of THSR (Taiwan High Speed Rail), now in commercial operation • Acquired 20-year PPA of roof-type PVPP for Wurih depot of THSR, now in commercial operation • Acquired 20-year PPA of roof-type PVPP for northern depot of Kaohsiung MRT, now in commercial operation • In US, we acquired the concession right for PVPP (10 MW approx.) in New Jersey, and plans to achieve commercial operation in middle of 2016.

Resources Recycling: supplying of PET bottle cleaning/slicing equipment and producing PET fiber • Acquired 20% share of BORETECH Resource Recovery Engineering Co., LTD (Cayman), and entered resources recycling business. • Achieved commercial operation of PET bottle recycling/slicing plant in the US to launch a new market of PET recycling business besides the existing market in China.

Future Outlook With on-going efforts, we continue to build up capabilities based on our core competences and experiences. To expand the business line to other related fields, the main developments include

40 2014 CTCI Annual Report Business Review & Outlook-Environment & Resources

expanding the WtE territory into overseas markets, vertically integrating and horizontally expanding the PET bottle recycling business, developing more categories on resources recycling business and expanding PVPP markets domestically and overseas, in order to promote environmental sustainability and maximizing shareholder value. The direction of development will be based on the market situation and future forecast, in different fields, which includes:

Environmental Protection, Renewal/Upgrade & Maintenance of Mechatronics system in Taiwan: • To improve technical capability deeply and to expand sales horizontally. • Environmental protection and water treatment: to focus on BOT or O&M service for sewage treatment project, e.g. Chungli sewerage treatment project. • Renewal/Upgrade of mechatronics system: to expand the corrosion prevention and renewal of boiler tube of WtE plant; to explore more opportunities accompanied with the coming commercial operation of Taoyuan Airport MRT line, Kaohsiung light rail system, and operation of airport transforming into enterprise model.

Actively expansion of WtE (incineration plant) business In China: • Following the successful experience of Shanghai Laogang, another O&M supervision service contract was awarded in Zhongshan, Guangdong in 2014. The market demand will continuously increase due to government plans to introduce such model into Shanghai comprehensively and Zhongshan, Guangdong in 2015, as well as into other areas later. • To continue the O&M supervision services in every province based on the successful experiences mentioned above. To launch investment or O&M management service as the government policy, statutory rule and environmental protection management being materialized and the market gradually reaching maturity.

In Southeast Asia Countries: • To keep actively developing and carefully choosing appropriate targets following years of market contacts and regional needs on environmental protection, and the expanding market potential in Southeast Asia ,. • To strive for Singapore No.6 WtE project.

In India: • With rapid economic growth and environmental pollution issues becoming more serious, the government is engaging in the implementation of WtE BOT project.

2014 CTCI Annual Report 41 Business Review & Outlook-Environment & Resources

• With approximately 45 municipals having more than 100 million population accompanied Corporate municipal solid waste generated around 80,000 tons, at least 80 WtE plants of 1,000 T/D scale in the country is predicted. • Based on the positive local EPC experiences and the optimized technology and cost, to cooperate with local enterprise with good operational record as well as favorable local connection, to jointly develop the local market. Sustainability

Resources Recycling • To vertically integrate and horizontally expand the PET bottle recycling business. • The expansion work of recycled PET fiber plant in China will be completed by middle of 2015, the production capability will be significantly increased. • To expand business volume in the US. • With a variety of spent resins/plastics, e.g. PS, PE, PP etc., possessing large market volume, we will apply the PET bottle washing/slicing technology to expand the resources recovery market.

Green Energy • To expand the project volume steadily. • Domestic solar power generation policy is bound to continue or be more active. The market volume forecasted is still large. Investment targets will be continually and carefully chosen in the fiercely competitive market. • To find the appropriate investment targets based on the successful development experiences in US and other CTCI group’s global business territory.

To continue our actions to deeply explore the overseas markets, ERBO will not only replicate our successful experiences in Taiwan, but also face the challenges in the changing international market, consequently we will be well prepared to effectively meet the needs in different markets.

42 2014 CTCI Annual Report CorporateCorporate Sustainability TCI was founded over 30 years and has now become a leading global provider of engineering Cservices and innovative technologies with dominance on international stage. In pursuit of the sustainable development and management performance of the company, CTCI constantly devotes in the implementation of Corporate Sustainability Social Responsibility (CSR) by responding to the issues cared by the stakeholders. In 2014, CTCI has been rated as A++ for Information Disclosure and Transparency Ranking System, listed among "Top 50 for Excellence in Corporate Social Responsibilities and retained Top 1 in the contractor sector for 11 years in a row in the Top 2000 Enterprises survey of CommonWealth Magazine. Moreover, recognized by the Taiwan Institute for Sustainable Energy, CTCI was honored with the "Services Industry Silver Award" under the Taiwan Top 50 Corporate Sustainability Report Award, "Transparency and Integrity Awards", and "Growth through Innovation Awards". It was also recognized with Public Construction Quality Excellence Award by Ministry of Economic affairs, Energy Saving and Carbon Reduction Badge by Environmental Protection Administration, Executive Yuan, and Taipei City Excellent Health Workplace. Moreover, CTCI received a special interview from CommonWealth Magazine on the topic of "The Best Practice" and was invited to deliver a speech at Taiwan Stock Exchange (TWSE) to share experiences on integrity management and CSR implementation in addition to attending a seminar on corporate sustainability. These special honors represent CTCI's commitment and devotion in CSR with high recognition, which also fully exhibits the actual actions taken by CTCI with determination to give back to society.

Projecting into the future, under the philosophy of corporate sustainability, we have developed mid-term objectives and strategies in an attempt to proactively create profits and growth, strengthen organizational synergies and manpower qualities, enhancing brand image and corporate competitiveness. Besides, to strengthen CSR conducts in 2015, we will implement e-voting and strengthen information security management in operation and governance, continue to promote

▲President Michael Yang (left) received the certification for the ▲SVP M. C. Hsiao (right) represents CTCI to accept the Taiwan CSR Report from Peter Pu, Managing Director of BSI Taiwan. Corporate Sustainability Awards from Ming-Chung Tseng, Chairman of Financial Supervisory Commission.

2014 CTCI Annual Report 43 Corporate Sustainability

green engineering and establish data system platform in environmental protection, promote corporate volunteers and accentuate health promotion activities in response to Occupational Safety and Health Act in social participation. To follow up the trends of international sustainability for expansion of overseas business and enhancement of international visibility, we have started planning for listing on DJSI (Dow Jones Sustainability Index). The aim is to constantly grow and prosper in order to meet the expectation of our stakeholders. We believe that under the full efforts exerted by CTCI employees, we will soon succeed and accomplish our goals.

Looking Back at 2014 with Active Progress, Surpassing and Creating Win-Win Situations Looking back at 2014, in terms of "operation and governance", our business strategy has shifted from conservative to proactive. In spite of the increasingly intense market competition and facing tough competitors, we took challenges courageously and marched forward in pursuit of sustainable growth with carefully constructed risk management. Under the full collaboration of the group, our performance in 2014, regardless in new contract signing, revenue, or backlogs, has far exceeded that of 2013.

With regard to “environmental protection”, we continued to promote green engineering concept in 2014 to help customers adopt economical and feasible environmental protection and energy saving project with a full life cycle perspective from the engineering design stage of the plant to the final decommissioning. Consequently, CTCI will create win-win situations among partners, stakeholders, and social environment.

Other than taking consideration of the evaluation standards of DJSI, CTCI strengthens its conduct

▲CTCI evaluated as Top 5% in the “2014 Corporate Governance Evaluation System” lunched by TWSE and Taipei Exchange.

44 2014 CTCI Annual Report Corporate Sustainability

in terms of environmental protection and energy saving. CTCI also collects various information and develops new items in environmental protection and energy saving measures from the experience of cooperating with international engineering companies, thereby implementing the energy saving and environmental protection management of various job sites. Additionally, through contests held and advocacy, CTCI employees start to identify with the concept of energy saving and carbon reduction to establish good habits of green protection.

For supply-chain management, we also encourage the vendors/suppliers to jointly invest in environmental protection. Starting from 2014, the supply-chain information assessment standards has included environmental management, labor conditions, human rights, and social impacts as well as other corporate sustainability evaluation for use by CTCI as important reference in procurement strategies to establish a supply chain of sustainability development.

In terms of "social participation", CTCI targets at company employees, average social groups and community residents. For employee care, in addition to providing quality learning channel and environment, valuing employee personal career development and comprehensively promoting individual development plan (IDP), CTCI is committed in the establishment of a safe, happy and healthy work environment by introducing international safety and health environment, quality management standards, and rigorous internal audit standards in an attempt to build a safe, quality and protecting work environment through layers of control. In addition, we established a health center to provide stationed services of professional physician while employing two registered nurses to assist with medical care and organizing various health promotion activities, so employees will receive care physically, mentally and spiritually. In 2014, we also completed the health management system to carry out exclusive health promotion plan for different groups of employees also to cooperating with

▲A group photo showing President Michael Yang (fifth from left), students granted CTCI 2014 academic scholarship, and guests attending the ceremony.

2014 CTCI Annual Report 45 Corporate Sustainability

external resources such as the health bureau, health service center or hospitals and clinics for providing employees with medical information platform through a comprehensive health care network. Thus, we were continuously awarded Badge of Accredited Healthy Workplace certified by Health Promotion Administration, Ministry of Health and Welfare as well as 2014 Taipei City Excellent Healthy Workplace Prize by Department of Health, Taipei City Government.

With regard to community resident communication and community integration, CTCI has been cooperated with Zhishan Cultural and Ecological Garden for years and co-sponsored and organized Shi- Lin District annual cultural festival. In 2014, a performance report on the "Shilin Cultural Festival: Scenic Zhishan" were printed to record the origin and development of past activities and distributed to the VIPs and participating public at Cross Strait (Xiamen) Cultural Industry Fair in 2015. This way, we may better promote Shi-Lin local music and cultural integration activities to the public, thereby linking the network for cross-straits cultural exchange, benefiting the promotion of community culture.

Projecting into 2015, Six Major Strategies for Constant Improvement and Excellent Performance Projecting into the 2015 planning and in terms of corporate governance, CTCI has defined the overall business orientation as "Start Afresh with Firm Determination" by setting up three years midterm objectives between 2015 and 2017 along with developing six strategies. Meanwhile, we will introduce e-voting system to strengthen the spirit of corporate governance. Additionally, to reduce information security risk, we have specially introduced ISO27001 with certification from BSI to continue advancement in the information security management system as well as promoting this spirit to all

▲CTCI has sponsored the "Shilin Cultural Festival: Scenic Zhishan" for 4 years in a row to promote ▲Charity bread sale by Children Are Us Foundation. local cultural development.

46 2014 CTCI Annual Report Corporate Sustainability

subsidiaries, thereby comprehensively upgrading the group information security management in conformance to the international quality demand.

The aforementioned six strategies can be divided into 2 dimensions, namely business and management. The key to business dimension includes two categories of "maximize existing business" and “cultivating new venture". On the one hand, it will strengthen the front-end engineering design ability by extending and building solid foundation to maintenance business while providing customer with better services and winning customer trust. On the other hand, it will help CTCI acquire certain professional technology and tendering qualification in a short period of time, thereby striving for more business opportunities while constantly expanding overseas market business and maximizing existing business. In response to the diverse and fluctuating global environment, we closely observe the latest market development with foundation in revenue stabilization and profitable business to seek for more forward-looking investment opportunities.

The strategies related to management are divided into "optimizing engineering services," "cultivating all- round talent," "building corporate brand image," and "strengthening synergy throughout CTCI Group.”In terms of "optimizing service," CTCI is committed to improving the operation process, establishing new type of supply chain for shortening the construction schedule, saving costs, and providing customers with better, faster and more competitive service quality. We also continue to promote "talent cultivation" by providing employees with different educational trainings required for each profession. We also encourage colleagues to take lifelong learning through professional curriculum in finance, accounting, legal affairs, human resource, and leadership, so that they will develop internationalization and foresight and thereby possess the competency for different critical positions.

In spite of the excellent reputation accumulated by CTCI in society, CTCI used to focus less on the promotion of brand image. In the future, the company will strengthen "corporate brand" marketing and extend its global visibility, thereby polish the brand image. Within the organization, CTCI will strengthen its corporate philosophy by actively building internal consensus and gather employee cohesion. In terms of "strengthening synergy throughout CTCI Group", CTCI has established a specialized department in 2015 which will maximize the group synergies through systematic operation and complete communication.

For conducts in environmental protection, CTCI also continues to introduce and develop green engineering technology in its core competency so that CTCI can constantly propose environmental protection and energy saving measures in the stages of project quotation and execution, helping customers implement green engineering policy. Internally, CTCI will continue to strengthen green and energy-saving measures by encouraging the colleagues to provide creativity and develop innovation in addition to implementing such measures in life through the offer of various incentives. Moreover, the

2014 CTCI Annual Report 47 establishment of data system platform collects data related to energy-saving and emission reduction for analysis and basis of future improvement.

As for social participation, since "talent" is the most important asset of CTCI, “cultivation” becomes an issue which CTCI considerably values. In 2015, we will strengthen ▲CTCI routinely holds health seminars to strengthen the employees' health concept. online curriculum and the implementation of Individual Development Plan (IDP) to promote the overall human resource quality. Meanwhile, we will continue to organize effective health promotion activities and develop individual health plan and assist with execution for special groups, in an attempt to keep the employee's physical and mental state at the optimal condition. Moreover, CTCI has long been engaged in the active social welfare campaigns in cooperation with welfare organizations. For example, Syin-Lu Social Welfare Foundation and the Children Are Us Foundation are our long-term cooperation partners. In the future, in addition to strengthening the cooperation scope, CTCI will promote enterprise volunteer activities with subsidies to encourage all CTCI employees to get involved.

Upholding CTCI Principles, Realizing Its Vision and Fulfilling CSR Looking back over ten years ago, CTCI envision “To become a leading global provider of engineering services and innovative technologies" and now with the joint efforts from all group employees, we have accomplished the objectives set up then.

Projecting to the future, CTCI has developed a new vision to become “The Most Reliable Global Engineering Service Provider" and upgrading the group mission as "To Satisfy Our Customers with the Optimized Engineering Services." Although this objective was profound, it is not unreachable with the efforts from all employees persisting in the corporate principles of "Professionalism; Integrity; Teamwork; Innovation" CTCI is due to fulfill its commitment to its employees, shareholders, customers, societies, and environment, thereby fulfills corporate social responsibility and drive the corporation to grow sustainably.

48 2014 CTCI Annual Report Financial Section Financial Section

50 Report of Independent Accountants 51 Five-Year Financial Summary 52 Financial Review 53 Balance Sheets 55 Income Statements 56 Statements of Changes in Equity 58 Statements of Cash Flows 60 Consolidated Balance Sheets 62 Consolidated Income Statements 63 Consolidated Statements of Changes in Equity 65 Consolidated Statements of Cash Flows

2014 CTCI Annual Report 49 Report of Independent Accountants

To the Board of Directors and Stockholders of CTCI Corporation

We have audited the accompanying non-consolidated balance sheets of CTCI Corporation as of December 31, 2014 and 2013, and the related non-consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audits. We did not audit the financial statements of investments recognized under the equity method that are included in the non-consolidated financial statements. The investment amounts under the equity method on December 31, 2014 and 2013 were $1,809,120 and $860,428, respectively, which constituted 4.40% and 2.55% of total assets, respectively. Their comprehensive income for the years ended December 31, 2014 and 2013 (including income and comprehensive income from subsidiaries, affiliates and joint ventures recognised under the equity method) were $68,661 and $1,227, respectively, which constituted 3.61% and 6.43% of total comprehensive income, respectively. Those financial statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the reports of the other independent accountants.

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other independent accountants provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other independent accountants, the non-consolidated financial statements referred to in the first paragraph, present fairly, in all material respects, the financial position of CTCI Corporation as of December 31, 2014 and 2013, and the results of its financial performance and cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”.

March 19, 2015 Taipei, Taiwan Republic of China

The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

50 2014 CTCI Annual Report Financial Section

Five-Year Financial Summary CTCI Corporation Years Ended December 31, 2014, 2013, 2012, 2011, and 2010

Thousands of NT$

2014(IFRS) 2013(IFRS) 2012(IFRS) 2011(ROC) 2010(ROC)

For the Year:

Revenues $38,060,203 $31,446,326 $34,824,383 $33,000,979 $27,426,236

Costs and expenses 36,167,599 29,277,146 32,467,720 30,888,591 25,557,713

Gross profit 1,892,604 2,169,180 2,356,663 2,112,388 1,868,523

Net income (loss) 1,882,119 1,641,730 2,445,282 2,262,733 1,961,259

At Year-End:

Total assets $41,144,103 $33,748,107 $36,867,212 $34,525,101 $31,155,282

Total equity 17,137,716 16,472,113 16,408,354 14,162,273 12,881,198

Working capital 7,235,025 7,445,462 6,431,870 6,661,003 5,798,287

Current ratio(%) 135 152 137 136 134

Long-term debt - - - - -

Net income (loss) per common share NT$2.51 NT$2.22 NT$3.39 NT$3.22 NT$2.91

Shareholders' equity per common share 22.68 22.09 22.38 19.92 18.58

Other Statistics:

Number of shares outstanding*(thousands) 756,273 746,177 733,738 711,396 693,751

Total Assets Total Equity (Thousands NT$) (Thousands NT$)

20102010 31,155,282 49,390,869 20102010 12,881,198

20112011 34,525,101 51,859,553 20112011 14,162,273

20122012 36,867,212 53,790,200 20122012 16,408,354

20132013 33,748,107 48,837,298 20132013 16,472,113

20142014 41,144,103 56,838,301 20142014 17,137,716

2010 2010 CTCI CTCI Consolidated 2011

2011 2012 2014 CTCI Annual Report 51 2013 2012 2014 TOTAL ASSETS TOTAL EQUITY 2013

2014 CONTRACT AMOUNT

CONTRACT AMOUNT Financial Section

Financial Review CTCI Corporation (Expressed in Thousands, except as otherwise indicated)

Operating Results In fiscal year ended December 31, 2014, total revenues reached NT$38,060,203 (US$1,203,675), a increase of 21.03% from the previous fiscal year. The operating costs increased by 23.54%, to NT$36,167,599 (US$1,143,821).

The cost as a percentage of revenues was 95.03%, a 1.93% increase from the previous year. As a result, income from continuing operations before income tax increased NT$333,379, to NT$2,120,380 (US$67,058), and net income increased NT$240,389, to NT$1,882,119 (US$59,523). Net income per common share increased NT$0.29 (in dollars) per share from the previous period, to NT$2.51 (US$0.0794) (in dollars).

During the term, the Company was awarded a total of NT$77,866 million (US$2,463 million) in contracts.

Financial Position As of December 31, 2014, total assets amounted to NT$41,144,103 (US$1,301,205), NT$7,395,996 higher than a year earlier. Underpinning this drop was a NT$8,051,052 increase in due from customers for contract work, to NT$13,957,407 (US$441,411), and a decrease of NT$106,347 in cash and cash equivalents to NT$4,579,282(US$144,822). An increase of NT$1,475,523 in investments accounted for under equity method, to NT$11,110,900 (US$351,388).

On the other side of the balance sheet, total current liabilities increased NT$6,434,756, to NT$20,713,133 (US$655,064), mainly due to the decrease of due to customers for contract work.

Total equity raised NT$665,603 to NT$17,137,716 (US$541,990), reflecting a capital increase during the fiscal year.

Cash Flow Net cash provided by operating activities totaled NT$1,378,965 (US$43,611), comprising NT$2,120,380 (US$67,058) in profit before tax and NT$687,224 (US$21,733) used in non-cash adjustments, NT$784,372 (US$24,806) provided by net changes in operating assets and liabilities.

Net cash used in investing activities amounted to NT$253,115 (US$8,005), due to increase in long-term investments - subsidiaries.

Net cash used in financing activities totaled NT$1,232,197 (US$38,969), due to increase in cash dividends paid.

As a result, cash and cash equivalents, in the end of year, decreased NT$106,347, to NT$4,579,282 (US$144,822).

52 2014 CTCI Annual Report Financial Section

Balance Sheets Balance Sheets December 31, 2014 and 2013 December 31, 2014 and 2013

Thousands of Thousands of Thousands of NT$ Thousands of NT$ US$ US$

2014 2013 2014 2014 2013 2014

ASSETS LIABILITIES AND EQUITY

Current Assets Current Liabilities

Financial liabilities at fair value through profit or loss - current $14,437 $19,503 $457 Cash and cash equivalents $4,579,282 $4,685,629 $144,822 Notes payable 5,083 2,100 161 Financial assets at fair value through profit or loss – current 1,174,481 463,231 37,144 Accounts payable 10,356,196 9,207,734 327,520 Available-for-sale financial assets - current 371,518 370,594 11,749 Accounts payable - related parties 1,522,114 896,032 48,138 Notes receivable, net 21 3,202,568 1 Due to customers for contract work 6,082,764 2,674,825 192,371

Notes receivable - related parties 1,411,400 - 44,636 Other payables 1,298,698 1,286,278 41,072

Accounts receivable, net 2,044,749 1,130,606 64,666 Other payables - related parties 18,555 87,843 587

Accounts receivable, net - related parties 21,252 285,310 672 Current income tax liabilities 210,156 - 6,646 Other current liabilities 1,205,130 104,062 38,113 Due from customers for contract work 13,957,407 5,906,355 441,411 Current Liabilities 20,713,133 14,278,377 655,064 Other receivables 68,057 40,900 2,152 Non-current liabilities Other receivables - related parties 1,605,558 2,802,721 50,777

Current income tax assets 113,187 120,067 3,580 Deferred income tax liabilities 245,922 246,355 7,777 Other non-current liabilities 3,047,332 2,751,262 96,374 Prepayments 2,601,246 2,043,470 82,266 Non-current liabilities 3,293,254 2,997,617 104,151 Other current assets - 672,388 - Total Liabilities 24,006,387 17,275,994 759,215 Current Assets 27,948,158 21,723,839 883,876 EQUITY

Non-current assets Share capital

Common stock 7,575,303 7,474,343 239,573 Financial assets measured at cost - non-current 570,556 572,877 18,044

Investments accounted for under equity method 11,110,900 9,635,377 351,388 Capital surplus

Property, plant and equipment 354,847 376,216 11,222 Capital surplus 3,230,033 3,070,085 102,152

Investment property 156,904 158,226 4,962 Retained earnings

Intangible assets 108,317 99,555 3,426 Legal reserve 2,663,798 2,499,625 84,244

Deferred income tax assets 421,073 395,139 13,317 Special reserve 778,162 778,162 24,609

Other non-current assets 473,348 786,878 14,970 Unappropriated retained earnings 2,651,692 2,432,195 83,861

Non-current assets 13,195,945 12,024,268 417,329 Other equity interest

TOTAL ASSETS $41,144,103 $33,748,107 $1,301,205 Other equity interest 250,563 229,538 7,925 Treasury stocks (11,835) (11,835) (374) (Continued) Total equity 17,137,716 16,472,113 541,990 Significant Contigent Liabilities and Unrecognised Contract Commitments Significant Events After the Balance Sheet Date

TOTAL LIABILITIES AND EQUITY $41,144,103 $33,748,107 $1,301,205

2014 CTCI Annual Report 53 2014 CTCI Annual Report 54 Financial Section

Balance Sheets Balance Sheets December 31, 2014 and 2013 December 31, 2014 and 2013

Thousands of Thousands of Thousands of NT$ Thousands of NT$ US$ US$

2014 2013 2014 2014 2013 2014

ASSETS LIABILITIES AND EQUITY

Current Assets Current Liabilities

Financial liabilities at fair value through profit or loss - current $14,437 $19,503 $457 Cash and cash equivalents $4,579,282 $4,685,629 $144,822 Notes payable 5,083 2,100 161 Financial assets at fair value through profit or loss – current 1,174,481 463,231 37,144 Accounts payable 10,356,196 9,207,734 327,520 Available-for-sale financial assets - current 371,518 370,594 11,749 Accounts payable - related parties 1,522,114 896,032 48,138 Notes receivable, net 21 3,202,568 1 Due to customers for contract work 6,082,764 2,674,825 192,371

Notes receivable - related parties 1,411,400 - 44,636 Other payables 1,298,698 1,286,278 41,072

Accounts receivable, net 2,044,749 1,130,606 64,666 Other payables - related parties 18,555 87,843 587

Accounts receivable, net - related parties 21,252 285,310 672 Current income tax liabilities 210,156 - 6,646 Other current liabilities 1,205,130 104,062 38,113 Due from customers for contract work 13,957,407 5,906,355 441,411 Current Liabilities 20,713,133 14,278,377 655,064 Other receivables 68,057 40,900 2,152 Non-current liabilities Other receivables - related parties 1,605,558 2,802,721 50,777

Current income tax assets 113,187 120,067 3,580 Deferred income tax liabilities 245,922 246,355 7,777 Other non-current liabilities 3,047,332 2,751,262 96,374 Prepayments 2,601,246 2,043,470 82,266 Non-current liabilities 3,293,254 2,997,617 104,151 Other current assets - 672,388 - Total Liabilities 24,006,387 17,275,994 759,215 Current Assets 27,948,158 21,723,839 883,876 EQUITY

Non-current assets Share capital

Common stock 7,575,303 7,474,343 239,573 Financial assets measured at cost - non-current 570,556 572,877 18,044

Investments accounted for under equity method 11,110,900 9,635,377 351,388 Capital surplus

Property, plant and equipment 354,847 376,216 11,222 Capital surplus 3,230,033 3,070,085 102,152

Investment property 156,904 158,226 4,962 Retained earnings

Intangible assets 108,317 99,555 3,426 Legal reserve 2,663,798 2,499,625 84,244

Deferred income tax assets 421,073 395,139 13,317 Special reserve 778,162 778,162 24,609

Other non-current assets 473,348 786,878 14,970 Unappropriated retained earnings 2,651,692 2,432,195 83,861

Non-current assets 13,195,945 12,024,268 417,329 Other equity interest

TOTAL ASSETS $41,144,103 $33,748,107 $1,301,205 Other equity interest 250,563 229,538 7,925 Treasury stocks (11,835) (11,835) (374) (Continued) Total equity 17,137,716 16,472,113 541,990 Significant Contigent Liabilities and Unrecognised Contract Commitments Significant Events After the Balance Sheet Date

TOTAL LIABILITIES AND EQUITY $41,144,103 $33,748,107 $1,301,205

2014 CTCI Annual Report 53 2014 CTCI Annual Report 54 Financial Section

Income Statements Statements of Changes in Equity Years Ended December 31, 2014 and 2013 Years Ended December 31, 2014 and 2013 (Expressed in NT$ Thousands)

Thousands of Thousands of NT$ Retained Earnings Other equity interest US$ Cumulative 2014 2013 2014 translation Unrealized gain or Operating revenue $38,060,203 $31,446,326 $1,203,675 Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury 2013 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Operating costs (36,169,536) (29,279,082) (1,143,882) Balance at January 1, 2013 $7,349,960 $2,757,865 $2,260,381 $834,747 $3,075,527 ($41,379) $183,088 ($11,835) $16,408,354 Net operating margin 1,890,667 2,167,244 59,793 Appropriation of 2012 earnings

Realized profit on from sales 1,937 1,936 61 Legal reserve - - 239,244 - (239,244) - - - -

Gross profit 1,892,604 2,169,180 59,854 Special reserve - - - (56,585) 56,585 - - - - Cash dividends - - - - (2,102,403) - - - (2,102,403) Operating expenses Profit for 2013 - - - - 1,641,730 - - - 1,641,730

General & administrative expenses (745,469) (946,609) (23,576) Difference between proceeds on acquisition of or disposal of equity interest - 137,924 ------137,924 Research and development expenses (81,630) (92,576) (2,581) in a subsidiary and its carrying amount

Total operating expenses (827,099) (1,039,185) (26,157) Convertible bonds transferred to common - (13,099) ------(13,099) stock Operating profit 1,065,505 1,129,995 33,697 Employee stock options granted - 51,772 ------51,772 Non-operating income and expenses Employee stock options exercised 124,383 135,623 ------260,006

Cumulative translation differences of Other income 275,691 147,472 8,719 - - - - - 48,557 - - 48,557 foreign operations Other gains and losses 61,097 (29,268) 1,932 Unrealized gain on valuation of available------39,272 - 39,272 Finance costs (118) - (4) for-sale financial assets

Share of profit of associates and joint ventures accounted for under equity method 718,205 538,802 22,714 Balance at December 31, 2013 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113

Total non-operating income and expenses 1,054,875 657,006 33,361 Retained Earnings Other equity interest Profit before income tax 2,120,380 1,787,001 67,058 Cumulative Income tax expense (238,261) (145,271) (7,535) translation Unrealized gain or Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury Profit for the year $1,882,119 $1,641,730 $59,523 2014 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Other comprehensive income Balance at January 1, 2014 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113 Appropriation of 2013 earnings Cumulative translation differences of foreign operations $95,209 $48,557 $3,011 Legal reserve - - 164,173 - (164,173) - - - - Unrealized (loss) gain on valuation of available-for-sale financial assets (59,613) 20,141 (1,885) Cash dividends - - - - (1,498,449) - - - (1,498,449) Total share of other comprehensive income of associates and joint (14,571) 19,131 (461) Profit for 2014 - - - - 1,882,119 - - - 1,882,119 ventures accounted for using equity method Difference between proceeds on $21,025 $87,829 $665 Other comprehensive income for the year acquisition of or disposal of equity interest - 11,961 ------11,961 Total comprehensive income for the year $1,903,144 $1,729,559 $60,188 in a subsidiary and its carrying amount Convertible bonds transferred to common Basic earnings per share (in dollars) $2.51 $2.22 $0.0794 - (683) ------(683) stock

Diluted earnings per share (in dollars) $2.48 $2.17 $0.0784 Employee stock options granted - 15,610 ------15,610 Employee stock options exercised 100,960 133,060 ------234,020

Cumulative translation differences of - - - - - 95,209 - - 95,209 foreign operations

Unrealized gain on valuation of available------(74,184) - (74,184) for-sale financial assets

Balance at December 31, 2014 $7,575,303 $3,230,033 $2,663,798 $778,162 $2,651,692 $102,387 $148,176 ($11,835) $17,137,716 Note 1: The directors’ and supervivors’ remuneration of $15,000 and the employees’ bonus of $132,407 for the years ended December 31, 2012 has been deducted from the statement of comprehensive income. Note 2: The directors’ and supervivors’ remuneration of $15,000 and the employees’ bonus of $88,815 for the years ended December 31, 2013 has been deducted from the statement of comprehensive income.

55 2014 CTCI Annual Report 56 2014 CTCI Annual Report Financial Section

Income Statements Statements of Changes in Equity Years Ended December 31, 2014 and 2013 Years Ended December 31, 2014 and 2013 (Expressed in NT$ Thousands)

Thousands of Thousands of NT$ Retained Earnings Other equity interest US$ Cumulative 2014 2013 2014 translation Unrealized gain or Operating revenue $38,060,203 $31,446,326 $1,203,675 Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury 2013 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Operating costs (36,169,536) (29,279,082) (1,143,882) Balance at January 1, 2013 $7,349,960 $2,757,865 $2,260,381 $834,747 $3,075,527 ($41,379) $183,088 ($11,835) $16,408,354 Net operating margin 1,890,667 2,167,244 59,793 Appropriation of 2012 earnings

Realized profit on from sales 1,937 1,936 61 Legal reserve - - 239,244 - (239,244) - - - -

Gross profit 1,892,604 2,169,180 59,854 Special reserve - - - (56,585) 56,585 - - - - Cash dividends - - - - (2,102,403) - - - (2,102,403) Operating expenses Profit for 2013 - - - - 1,641,730 - - - 1,641,730

General & administrative expenses (745,469) (946,609) (23,576) Difference between proceeds on acquisition of or disposal of equity interest - 137,924 ------137,924 Research and development expenses (81,630) (92,576) (2,581) in a subsidiary and its carrying amount

Total operating expenses (827,099) (1,039,185) (26,157) Convertible bonds transferred to common - (13,099) ------(13,099) stock Operating profit 1,065,505 1,129,995 33,697 Employee stock options granted - 51,772 ------51,772 Non-operating income and expenses Employee stock options exercised 124,383 135,623 ------260,006

Cumulative translation differences of Other income 275,691 147,472 8,719 - - - - - 48,557 - - 48,557 foreign operations Other gains and losses 61,097 (29,268) 1,932 Unrealized gain on valuation of available------39,272 - 39,272 Finance costs (118) - (4) for-sale financial assets

Share of profit of associates and joint ventures accounted for under equity method 718,205 538,802 22,714 Balance at December 31, 2013 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113

Total non-operating income and expenses 1,054,875 657,006 33,361 Retained Earnings Other equity interest Profit before income tax 2,120,380 1,787,001 67,058 Cumulative Income tax expense (238,261) (145,271) (7,535) translation Unrealized gain or Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury Profit for the year $1,882,119 $1,641,730 $59,523 2014 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Other comprehensive income Balance at January 1, 2014 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113 Appropriation of 2013 earnings Cumulative translation differences of foreign operations $95,209 $48,557 $3,011 Legal reserve - - 164,173 - (164,173) - - - - Unrealized (loss) gain on valuation of available-for-sale financial assets (59,613) 20,141 (1,885) Cash dividends - - - - (1,498,449) - - - (1,498,449) Total share of other comprehensive income of associates and joint (14,571) 19,131 (461) Profit for 2014 - - - - 1,882,119 - - - 1,882,119 ventures accounted for using equity method Difference between proceeds on $21,025 $87,829 $665 Other comprehensive income for the year acquisition of or disposal of equity interest - 11,961 ------11,961 Total comprehensive income for the year $1,903,144 $1,729,559 $60,188 in a subsidiary and its carrying amount Convertible bonds transferred to common Basic earnings per share (in dollars) $2.51 $2.22 $0.0794 - (683) ------(683) stock

Diluted earnings per share (in dollars) $2.48 $2.17 $0.0784 Employee stock options granted - 15,610 ------15,610 Employee stock options exercised 100,960 133,060 ------234,020

Cumulative translation differences of - - - - - 95,209 - - 95,209 foreign operations

Unrealized gain on valuation of available------(74,184) - (74,184) for-sale financial assets

Balance at December 31, 2014 $7,575,303 $3,230,033 $2,663,798 $778,162 $2,651,692 $102,387 $148,176 ($11,835) $17,137,716 Note 1: The directors’ and supervivors’ remuneration of $15,000 and the employees’ bonus of $132,407 for the years ended December 31, 2012 has been deducted from the statement of comprehensive income. Note 2: The directors’ and supervivors’ remuneration of $15,000 and the employees’ bonus of $88,815 for the years ended December 31, 2013 has been deducted from the statement of comprehensive income.

55 2014 CTCI Annual Report 56 2014 CTCI Annual Report Financial Section

Statements of Changes in Equity Years Ended December 31, 2014 and 2013 (Expressed in US$ Thousands)

Retained Earnings Other equity interest Cumulative translation Unrealized gain or Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury 2013 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Balance at January 1, 2013 $232,447 $87,219 $71,486 $26,399 $97,265 ($1,309) $5,790 ($374) $518,923 Appropriation of 2012 earnings Legal reserve - - 7,566 - (7,566) - - - - Special reserve - - - (1,790) 1,790 - - - - Cash dividends - - - - (66,490) - - - (66,490) Profit for 2013 - - - - 51,921 - - - 51,921 Difference between proceeds on acquisition of or disposal of equity interest - 4,362 ------4,362 in a subsidiary and its carrying amount

Convertible bonds transferred to common - (414) ------(414) stock

Employee stock options granted - 1,637 ------1,637 Employee stock options exercised 3,934 4,289 ------8,223

Cumulative translation differences of - - - - - 1,536 - - 1,536 foreign operations

Unrealized gain on valuation of available------1,242 - 1,242 for-sale financial assets

Balance at December 31, 2013 $236,381 $97,093 $79,052 $24,609 $76,920 $227 $7,032 ($374) $520,940

Retained Earnings Other equity interest Cumulative translation Unrealized gain or Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury 2014 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Balance at January 1, 2014 $236,381 $97,093 $79,052 $24,609 $76,920 $227 $7,032 ($374) $520,940 Appropriation of 2013 earnings Legal reserve - - 5,192 - (5,192) - - - - Cash dividends - - - - (47,389) - - - (47,389) Profit for 2014 - - - - 59,523 - - - 59,523 Difference between proceeds on acquisition of or disposal of equity interest - 378 ------378 in a subsidiary and its carrying amount

Convertible bonds transferred to common - (22) ------(22) stock

Employee stock options granted - 494 ------494 Employee stock options exercised 3,193 4,208 ------7,401 Cumulative translation differences of - - - - - 3,011 - - 3,011 foreign operations Unrealized gain on valuation of available------(2,346) - (2,346) for-sale financial assets

Balance at December 31, 2014 $239,574 $102,151 $84,244 $24,609 $83,862 $3,238 $4,686 ($374) $541,990 Note 1: The directors' and supervivors' remuneration of $503 and the employees' bonus of $4,435 for the years ended December 31, 2012 has been deducted from the statement of comprehensive income. Note 2: The directors' and supervivors' remuneration of $474 and the employees' bonus of $2,809 for the years ended December 31, 2013 has been deducted from the statement of comprehensive income.

2014 CTCI Annual Report 57 Financial Section

Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax for the year $2,120,380 $1,787,001 $67,058

Adjustments to reconcile net income to net cash (used in) provided by operating activities

Income and expenses having no effect on cash flows Impairment losses 81,521 81,123 2,578 Depreciation 56,281 70,854 1,780 Amortization 105,544 115,187 3,338 (Reversal of) provision for allowance for doubtful accounts (87,570) 79,931 (2,769) Loss on valuation of financial assets 7,737 107,625 245 Gain on disposal of property, plant and equipment (155) (1,701) (5) Compensation costs for employee stock options 5,266 27,038 167 Gain on disposal of investments (1,156) (86,273) (37) Investment income accounted for under the equity method (718,205) (538,802) (22,714) Realized gain from intercompany transactions (1,937) (1,936) (61) Dividends income (27,185) (27,772) (860) Interest income (107,365) (66,831) (3,395) Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss (750,670) 627,130 (23,740) Notes receivable (including related parties) 1,826,206 (3,250,915) 57,755 Acounts receivable (including related parties) (597,573) 634,002 (18,899) Other receivables (18,586) 19,261 (588) Other receivables - related parties 55,958 247,190 1,770 Due from customers for contract work (8,051,052) 1,337,237 (254,619) Inventories 0 1,265 0 Prepayments (557,776) 303,543 (17,640) Other current assets 672,388 (466,524) 21,265 Other non-current assets 323,416 138,685 10,228 Net changes in liabilities relating to operating activities Notes payable 2,983 (788) 94 Accounts payable 1,148,462 2,276,851 36,321 Accounts payable - related parties 626,082 100,242 19,800 Due to customers for contract work 3,407,939 (5,967,044) 107,777 Other payables 12,420 (153,665) 393 Other payables - related parties (69,288) 3,946 (2,191) Accrued pension liabilities 83,651 309,466 2,646 Other current liabilities 1,101,068 23,272 34,822 Cash generated from (used in) operations 648,784 (2,271,402) 20,519 Interest received 77,568 45,922 2,453 Dividends received 700,205 796,541 22,144 Income tax paid (47,592) (430,945) (1,505) Net cash provided by (used in) operating activities 1,378,965 (1,859,884) 43,611 (Continued)

58 2014 CTCI Annual Report Financial Section

Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 CASH FLOWS FROM INVESTING ACTIVITIES

Decrease (increase) in other receivables-related parties $1,141,093 ($1,069,658) $36,088

Interest received-related parties 21,338 20,945 675

(Increase) decrease in available-for-sale financial assets (41,155) 121,453 (1,302)

Decrease in financial assets measured at cost (79,200) 0 (2,505)

Increase in long-term investments - subsidiaries (1,175,699) (15,755) (37,183)

Proceeds from disposal of long-term investments - subsidiaries 0 12 0

Acquisition of property, plant and equipment (33,616) (42,078) (1,063)

Proceeds from disposal of property, plant and equipment 181 2,915 6

Increase in computer software cost (76,881) (76,742) (2,431)

Increase (decrease) in refundable deposits (9,176) 2,490 (290)

Net cash used in investing activities (253,115) (1,056,418) (8,005)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in deposits received 32,232 8,005 1,019

Cash dividends paid (1,498,449) (2,102,403) (47,389)

Proceeds from employee stock options exercised 234,020 260,006 7,401

Net cash used in financing activities (1,232,197) (1,834,392) (38,969)

Decrease in cash and cash equivalents (106,347) (4,750,694) (3,363)

Cash and cash equivalents at beginning of year 4,685,629 9,436,323 148,185

Cash and cash equivalents at end of year $4,579,282 $4,685,629 $144,822

2014 CTCI Annual Report 59 Financial Section

Consolidated Balance Sheets December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014

ASSETS

Current Assets

Cash and cash equivalents $9,810,303 $9,327,026 $310,256

Financial assets at fair value through profit or loss - current 1,783,575 843,215 56,407

Available-for-sale financial assets - current 680,181 604,730 21,511

Notes receivable, net 11,774 3,244,527 372

Notes receivable - related parties 1,411,400 - 44,636

Accounts receivable, net 4,964,255 4,367,870 156,997

Accounts receivable - related parties 3,927 4,136 124

Due from customers for contract work 18,758,973 12,372,269 593,263

Other receivables 283,345 175,433 8,961

Other receivables - related parties 38,008 67,235 1,202

Current income tax assets 170,268 163728 5,385

Inventories 316,169 89,661 9,999

Prepayments 3,632,839 3,002,991 114,891

Other current assets 225,591 869,378 7,135

Current Assets 42,090,608 35,132,199 1,331,139

Non-current assets

Financial assets measured at cost - non-current 574,622 584,153 18,173

Investments accounted for using equity method 2,065,874 675,002 65,335

Property, plant and equipment 7,026,878 7,150,831 222,229

Investment property 827,635 833,141 26,174

Intangible assets 118,638 114,766 3,752

Deferred income tax assets 495,877 449,881 15,682

Other non-current assets 3,638,169 3,897,325 115,059

Non-current assets 14,747,693 13,705,099 466,404

TOTAL ASSETS $56,838,301 $48,837,298 $1,797,543

(Continued)

60 2014 CTCI Annual Report Financial Section

Consolidated Balance Sheets Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 LIABILITIES AND EQUITY

Current Liabilities

Short-term borrowings $353,618 $991,965 $11,183

Financial liabilities at fair value through profit or loss - current 14,907 20,061 471

Notes payable 19,397 5,518 613

Accounts payable 15,454,053 13,348,156 488,743

Accounts payable - related parties 189,299 16,134 5,987

Due to customers for contract work 9,989,561 5,427,224 315,925

Other payables 2,523,644 2,688,807 79,812

Current income tax liabilities 375,668 172,416 11,881

Other current liabilities 2,113,784 987,389 66,850

Current Liabilities 31,033,931 23,657,670 981,465 Non-current liabilities

Long-term borrowings 2,926,350 3,296,297 92,547

Deferred income tax liabilities 440,049 422,653 13,917

Other non-current liabilities 2,734,962 2,515,189 86,495

Non-current liabilities 6,101,361 6,234,139 192,959

Total Liabilities 37,135,292 29,891,809 1,174,424 Equity

Share capital

Common stock 7,575,303 7,474,343 239,573 Capital surplus

Capital surplus 3,230,033 3,070,085 102,152 Retained earnings

Legal reserve 2,663,798 2,499,625 84,244

Special reserve 778,162 778,162 24,610

Unappropriated retained earnings 2,651,692 2,432,195 83,861 Other equity interest

Other equity interest 250,563 229,538 7,924

Treasury stocks (11,835) (11,835) (374)

Equity attributable to owners of the parent 17,137,716 16,472,113 541,990

Non-controlling interest 2,565,293 2,473,376 81,129

Total equity 19,703,009 18,945,489 623,119 Significant Contigent Liabilities and Unrecognised Contract Commitments Significant Events After the Balance Sheet Date

Total liabilities and equity $56,838,301 $48,837,298 $1,797,543

2014 CTCI Annual Report 61 Financial Section

Consolidated Income Statements Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014

Operating revenue $57,691,937 $52,221,958 $1,824,539

Operating costs (53,526,514) (48,004,905) (1,692,805)

Gross profit 4,165,423 4,217,053 131,734

Operating expenses

General & administrative expenses (1,617,734) (1,743,753) (51,162)

Research and development expenses (103,994) (107,525) (3,289)

Total operating expenses (1,721,728) (1,851,278) (54,451)

Operating income 2,443,695 2,365,775 77,283

Non-operating income and expenses

Other income 352,471 175,479 11,147

Other gains and losses 167,836 723 5,308

Finance costs (89,005) (106,126) (2,815)

Share of profit of associates and joint ventures accounted for using

equity method 31,199 74,059 987

Total non-operating income and expenses 462,501 144,135 14,627

Profit before income tax 2,906,196 2,509,910 91,910

Income tax expense (584,468) (474,134) (18,484)

Profit for the year $2,321,728 $2,035,776 $73,426

Other comprehensive income

Cumulative translation differences of foreign operations $87,199 $34,668 $2,757

Unrealized (loss) gain on valuation of available-for-sale financial assets (86,616) 51,916 (2,739)

Total other comprehensive income for the year $583 $86,584 $18

Total comprehensive income for the year $2,322,311 $2,122,360 $73,444 Profit attributable to:

Owners of the parent $1,882,119 $1,641,730 $59,523

Non-controlling interest 439,609 394,046 13,903

Total $2,321,728 $2,035,776 $73,426

Comprehensive income attributable to:

Owners of the parent $1,903,144 $1,729,559 $60,188

Non-controlling interest 419,167 392,801 13,256

Total $2,322,311 $2,122,360 $73,444

Basic earnings per share (in dollars) $2.51 $2.22 $0.0794

Diluted earnings per share (in dollars) $2.48 $2.17 $0.0784

62 2014 CTCI Annual Report Financial Section

Consolidated Statements of Changes in Equity Years Ended December 31, 2014 and 2013 (Expressed in NT$ Thousands)

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2013 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2013 $7,349,960 $2,757,865 $2,260,381 $834,747 $3,075,527 ($41,379) $183,088 ($11,835) $16,408,354 $2,155,947 $18,564,301 Appropriation of 2012 earnings Legal reserve - - 239,244 - (239,244) ------Special reserve - - - (56,585) 56,585 ------Cash dividends - - - - (2,102,403) - - - (2,102,403) (344,869) (2,447,272) Profit for 2013 - - - - 1,641,730 - - - 1,641,730 394,046 2,035,776

Employee stock options excercised - 137,924 ------137,924 256,355 394,279 by subsidiary

Convertible bonds transferred to - (13,099) ------(13,099) - (13,099) common stock Share-based payment transactions - 51,772 ------51,772 13,142 64,914

Employee stock options exercised 124,383 135,623 ------260,006 - 260,006

Cumulative translation differences of - - - - - 48,557 - - 48,557 (13,889) 34,668 foreign operations Unrealized gain on valuation of ------39,272 - 39,272 12,644 51,916 available-for-sale financial assets Balance at December 31, 2013 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113 $2,473,376 $18,945,489

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2014 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2014 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113 $2,473,376 $18,945,489 Appropriation of 2013 earnings Legal reserve - - 164,173 - (164,173) ------Cash dividends - - - - (1,498,449) - - - (1,498,449) (381,582) (1,880,031) Profit for 2014 - - - - 1,882,119 - - - 1,882,119 439,609 2,321,728

Employee stock options excercised - 11,961 ------11,961 47,098 59,059 by subsidiary

Convertible bonds transferred to - (683) ------(683) (457) (1,140) common stock Share-based payment transactions - 15,610 ------15,610 7,691 23,301

Employee stock options exercised 100,960 133,060 ------234,020 - 234,020

Cumulative translation differences of - - - - - 95,209 - - 95,209 (8,010) 87,199 foreign operations Unrealized gain on valuation of ------(74,184) - (74,184) (12,432) (86,616) available-for-sale financial assets Balance at December 31, 2014 $7,575,303 $3,230,033 $2,663,798 $778,162 $2,651,692 $102,387 $148,176 ($11,835) $17,137,716 $2,565,293 $19,703,009

2014 CTCI Annual Report 63 Financial Section

Consolidated Statements of Changes in Equity Years Ended December 31, 2014 and 2013 (Expressed in US$ Thousands)

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2013 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2013 $250,397 $102,850 $83,740 $26,069 $81,481 $241 $7,450 ($396) $551,832 $72,226 $624,058 Appropriation of 2012 earnings Legal reserve - - 8,015 - (8,015) ------Special reserve - - - (1,896) 1,896 ------Cash dividends - - - - (70,432) - - - (70,432) (11,554) (81,986) Profit for 2013 - - - - 54,999 - - - 54,999 13,201 68,200

Employee stock options excercised - 4,621 ------4,621 8,588 13,209 by subsidiary

Convertible bonds transferred to - (439) ------(439) - (439) common stock Share-based payment transactions - 1,734 ------1,734 440 2,174

Employee stock options exercised 4,167 4,543 ------8,710 - 8,710

Cumulative translation differences of - - - - - 1,627 - - 1,627 (465) 1,162 foreign operations Unrealized gain on valuation of ------1,316 - 1,316 424 1,740 available-for-sale financial assets Balance at December 31, 2013 $254,564 $113,309 $91,755 $24,173 $59,929 $1,868 $8,766 ($396) $553,967 $82,860 $636,827

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2014 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2014 $254,564 $113,309 $91,755 $24,173 $59,929 $1,868 $8,766 ($396) $553,967 $82,860 $636,827 Appropriation of 2013 earnings Legal reserve - - 5,192 - (5,192) ------Cash dividends - - - - (47,389) - - - (47,389) (12,068) (59,457) Profit for 2014 - - - - 59,523 - - - 59,523 13,903 73,426

Employee stock options excercised - 378 ------378 1,489 1,867 by subsidiary

Convertible bonds transferred to - (22) ------(22) (14) (36) common stock Share-based payment transactions - 494 ------494 243 737

Employee stock options exercised 3,193 4,208 ------7,401 - 7,401

Cumulative translation differences of - - - - - 3,011 - - 3,011 (253) 2,758 foreign operations Unrealized gain on valuation of ------(2,346) - (2,346) (393) (2,739) available-for-sale financial assets Balance at December 31, 2014 257,757 118,367 96,947 24,173 66,871 4,879 6,420 (396) 575,017 85,767 660,784

64 2014 CTCI Annual Report Financial Section

Consolidated Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax for the year $2,906,196 $2,509,910 $91,910 Adjustments to reconcile profit before income tax to net cash (used in) provided by operating activities Income and expenses having no effect on cash flows Loss on valuation of financial assets 6,864 17,331 217 Loss (gain) on reduction of capital of investments 2,397 (93,263) 76 Loss (gain) on disposal of property, plant and equipment 3,477 (3,813) 110 Share of profits of associates and joint venture accounted for using equity (31,199) (74,059) (987) menthod Depreciation 325,305 353,326 10,288 Amortization 153,205 137,598 4,845 Reversal of (provision for) allowance for doubtful accounts (75,002) 77,933 (2,372) Interest income (149,180) (77,754) (4,718) Dividends income (45,825) (40,075) (1,449) Interest expense 89,005 106,126 2,815 Impairment losses 86,756 82,536 2,744 Compensation costs for employee stock options 28,507 70,878 901 Discount on convertible bonds recognized as interest expense 492 2,789 15 Other income 0 (1,981) 0 Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss (1,071,643) 955,505 (33,891) Notes receivable (including related parties) 1,821,353 (3,234,780) 57,601 Accounts receivable (including related parties) (521,174) (245,172) (16,482) Due from customers for contract work (6,386,704) 955,926 (201,983) Other receivables (93,420) 48,762 (2,954) Other receivables - related parties 29,227 (15,362) 924 Inventories (226,508) (16,838) (7,163) Prepayments (629,848) 564,313 (19,919) Other current assets 643,787 (351,813) 20,360 Other non-current assets 247,639 213,616 7,832 Net changes in liabilities relating to operating activities Notes payable 13,879 (638) 439 Accounts payable 2,105,897 2,285,851 66,600 Accounts payable - related parties 173,165 16,134 5,476 Due to customers for contract work 4,562,337 (7,001,523) 144,286 Other payables (165,163) 101,761 (5,223) Other current liabilities 1,310,277 (81,381) 41,438 Other non-current liabilities 164,699 336,359 5,209 Cash generated from (used in) operations 5,278,798 (2,401,798) 166,945 Interest received 134,206 80,027 4,244 Dividends received 117,115 69,950 3,704 Interest paid (89,393) (120,807) (2,827) Income tax paid (392,663) (830,938) (12,418) Net cash provided by (used in) operating activities 5,048,063 (3,203,566) 159,648 (Continued)

2014 CTCI Annual Report 65 Financial Section

Consolidated Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received $482 $402 $15

(Increase) decrease in available-for-sale financial assets (159,765) 131,455 (5,053)

Increase in financial assets measured at cost-non current (79,225) - (2,506)

Proceeds from reduction of capital of investee company 1,995 12,497 63

Increase in investments accounted for under the equity method (1,390,933) - (43,989)

Acquisition of property, plant and equipment (139,460) (166,824) (4,410)

Proceeds from disposal of property, plant and equipment 8,352 10,656 264

Increase in intangible assets (76,881) (76,742) (2,431)

(Increase) decrease in refundable deposits (11,946) 32,426 (378)

Increase in other non-current assets (38,134) (41,494) (1,206)

Net cash used in investing activities (1,885,515) (97,624) (59,631)

CASH FLOWS FROM FINANCING ACTIVITIES

(Decrease) increase in short-term borrowings (638,347) 139,092 (20,188)

Repayment of long-term borrowings (553,829) (590,776) (17,515)

Increase (decrease) in deposits received (recognized in other non-current liabilities) 65,608 (2,077) 2,075

Proceeds from employee stock options exercised 327,328 339,932 10,352

Cash dividends paid (1,880,031) (2,447,272) (59,457)

Net cash used in financing activities (2,679,271) (2,561,101) (84,733)

Increase (decrease) in cash and cash equivalents 483,277 (5,862,291) 15,284

Cash and cash equivalents at beginning of year 9,327,026 15,189,317 294,972

Cash and cash equivalents at end of year $9,810,303 $9,327,026 $310,256

66 2014 CTCI Annual Report Global Network Global Network

2014 CTCI Annual Report 67 CTCI, Italy

CTCI, USA

CTCI Corporation Headquarters 89, Sec. 6, Zhongshan North Road, Taipei 11155, Taiwan, R.O.C. Tel: (886) 2-2833-9999 Fax: (886) 2-2833-8833 Website: www.ctci.com.tw

Subsidiaries & Offices Taiwan E&C Engineering Corporation Leading Energy Corporation Fortune Energy Corporation 5 Fl., 16, Lane 270, Sec. 3, Beishen Road, 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, Shenkeng District, 22205, Taiwan, R.O.C. , Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Tel: (886) 2-2662-5858 Fax: (886) 2-2662-2814 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Website: www.eandc.com.tw Website: www.lebot.com.tw Website: www.mfec.com.tw

Resources Engineering Services Inc. HD Resource Management Corporation CTCI Chemicals Corporation 4 Fl., 48, Sec. 3, Nangang Road, 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, Taipei 11510, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Tel: (886) 2-2783-8250 Fax: (886) 2-2783-8232 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1687 Fax: (886) 2-2162-1680 Website: www.res.com.tw Website: www.hdrm.com.tw Website: www.ctcichemicals.com.tw

Advanced Control & Systems Inc. Fortune Energy Corporation CTCI Machinery Corporation 5 Fl., 52, Sec. 3, Nangang Road, 5 Fl., 132, Xingshan Road, 20 Fl., 366, Po Ai 1st Road, Taipei 11510, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Sanmin District, Kaohsiung City 80757, Taiwan, R.O.C. Tel: (886) 2-2785-3839 Fax: (886) 2-2782-0180 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 7-315-1011 Fax: (886) 7-313-7971 Website: www.acs.com.tw Website: www.mfec.com.tw Website: www.ctcim.com.tw

KD Holding Corporation CTCI Chemicals Corporation G.D. Development Corporation 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, Neihu District, Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1687 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1689 Fax: (886) 2-2792-8352 Website: www.kdhc.com.tw Website: www.ctcichemicals.com.tw

Sino Environmental Services Corporation CTCI Machinery Corporation 5 Fl., 132, Xingshan Road, 20 Fl., 366, Po Ai 1st Road, Neihu District, Taipei 11469, Taiwan, R.O.C. Sanmin District, Kaohsiung City 80757, Taiwan, R.O.C. Tel: (886) 2-2162-1688 Fax: (886) 2-2162-1681 Tel: (886) 7-315-1011 Fax: (886) 7-313-7971 Website: www.sesc.com.tw Website: www.ctcim.com.tw

68 2014 CTCI Annual Report Jingding, China CTCI Corporation CTCI Arabia, KSA Shang Ding, China (Taipei Headquarters) CTCI, E&C EngineeningCorporation CINDA, India Resources Engineering Services, Inc CTCI, Qatar SINOGAL, Macau Advanced Control & System Inc CTCI, Abu Dhabi CTCI, Thailand KD Holding Corporation CIMAS, Vietnam Sino Environmrntal Services Corporation CTCI, Malaysia Leading Energy Corporation CTCI, Singapore HD Resource Management Corporation Fortune Energy Corporation G.D. Development Corporation CTCI Chemicals Corporation CTCI Machinery Corporation

Overseas Jingding Engineering & Construction Co., Ltd. CTCI Engineering & Construction Sdn. Bhd. CTCI Corporation Qatar Branch Office 9-11 Fl., Royal City International Centre, Suite 22-03B, 22 Fl., Menara Tan & Tan, P. O. Box 30261, 138, Andingmenwai Street, Dongcheng District, 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia 6, 1 Fl., Al Emadi Business Center, Beijing 100011, P. R. China Tel: (60) 3-2166-5568 Fax: (60) 3-2166-6658 C-Ring Road, Doha, Qatar Tel: (86) 10-6482-7878 Fax: (86) 10-6482-7958 Tel: (974) 4451-7383 Fax: (974) 4455-1241 Website: www.jdec.com.cn CIMAS Engineering Co., Ltd. 6 Fl., Charmvit Tower, 117 Tran Duy Hung Road, CINDA Engineering & Construction Pvt. Ltd. Shang Ding Engineering & Construction Co., Ltd. Cau Giay District, Hanoi, Vietnam Corenthum, 6 Fl., Tower-B, Plot No.A-41, Sector-62, 7 Fl., 26, Lane 168, Daduhe Road, Tel: (84) 4-3833-5513 Fax: (84) 4-3833-7824 Noida-201301(U.P.), India Putuo District, Shanghai 200062, P. R. China Website: www.cimas.com.vn Tel: (91) 120-472-2300 Fax: (91) 120-472-2399 Tel: (86) 21-5251-9888 Fax: (86) 21-3250-1012 Website: www.ctci-sdec.com.cn CTCI Singapore Pte. Ltd. CTCI Corporation Italian Branch Office 100 Beach Road, #27-08/09, Shaw Tower, Via G. Carducci, 12, SINOGAL ─ Waste Services Co., Ltd. Singapore 189702 21013 Gallarate (VA), Italy Central de Incineracao Tel: (65) 6295-2997 Tel: (39) 0331-771-026 Pac On Ilha da Taipa, Macau Fax: (65) 6295-1219 Fax: (39) 0331-770-370 Tel: (853) 2885-0681 Fax: (853) 2885-0893 CTCI Arabia Ltd. CTCI Americas, Inc. Xiang Ding Environmental Consultant Co., Ltd. P. O. Box 1962, 11757 Katy Freeway, Suite 1520 7Fl., 26, Lane 168, Daduhe Road, Putuo District, Room 301, Al-Mohammdia Tower, Dhahran Road, Houston, TX 77079, USA Shanghai 200062, P. R. China Al-Khobar 31952, Kingdom of Saudi Arabia Tel: (1) 281-870-9998 Tel: (86) 21-3250-1006 Fax: (86) 21-3250-1015 Tel: (966) 13-865-6145 Fax: (966) 13-865-6146 Fax: (1) 281- 870- 9981 CTCI (Thailand) Co., Ltd. CTCI Corporation Abu Dhabi 19 Fl., Phairojkijja Tower, 825, Bangna-Trad KM. 4, P. O. Box 44924, Bangna Bangna Bangkok 10260, Thailand R# 303, 3F Sheikh Sultan Suroor Al Dhahiri Bldg. (LuLu Center), Tel: (66) 2-769-6888 Fax: (66) 2-769-6819 Al Salam St., Abu Dhabi, United Arabia Emirates Website: www.ctci.co.th Tel: (971) 2-671-1572 Fax:(971) 2-671-1573 VISION The Most Reliable Global Engineering Service Provider

VISION The MostPRINCIPLES Reliable Global Professionalism Engineering ServiceIntegrity ProviderTeamwork Innovation PRINCIPLES Professionalism;MISSION To Satisfy Integrity; Our Teamwork;Customers with Innovation the Optimized Engineering Services

MISSION To Satisfy Our Customers with the Optimized Engineering Services Contents

02 Financial Highlights 04 Company Profile 06 Letter from the Chairman & CEO 12 Milestones 2014 13 Strategy Development and Outlook 14 Strategic Operations I. Intelligent Engineering Services II. QHSE Management III. CTCI Group IT Integration IV. CTCI Talent and Leadership Optimization 28 Business Review & Outlook I. Hydrocarbon II. Infrastructure, Environment & Power III. Environment & Resources 43 Corporate Sustainability 49 Financial Section 67 Global Network FinancialFinancial Highlights Highlights Financial Highlights December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 For the Year: Operating revenues $38,060,203 $31,446,326 $1,203,675 Net income 1,882,119 1,641,730 59,523

At Year-End: Total assets $41,144,103 $33,748,107 $1,301,205 Long-term debt - - - Total equity 17,137,716 16,472,113 541,990

Net income per common share: NT$2.51 NT$2.22 US$0.08

Contract Amount Backlog (Million NT$) (Million NT$)

20102010 22,360 54,935 20102010 61,798 100,094

20112011 61,331 79,54220112011 90,755 154,649

20122012 40,162 60,173 20122012 96,630 153,228

20132013 40,136 66,924 20132013 110,506 163,517

20142014 38,096 77,86620142014 113,037 187,102

2010 2010 CTCI CTCI Consolidated CONTRACT2011 AMOUNT 2011 20122 2014 CTCI Annual Report

2013 2012 2014 2013

2014 BACKLOG CONTRACT AMOUNT

CONTRACT AMOUNT Financial Highlights

Consolidated Financial Highlights December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 For the Year: Operating revenues $57,691,937 $52,221,958 $1,824,539 Net income 1,882,119 1,641,730 59,523

At Year-End: Total assets $56,838,301 $48,837,298 $1,797,543 Long-term debt 2,926,350 3,296,297 92,547 Equity attributable to owners of the parent 17,137,716 16,472,113 541,990 Non-controlling interest 2,565,293 2,473,376 81,129 Total equity 19,703,009 18,945,489 623,119

Net income per common share: NT$2.51 NT$2.22 US$0.08

Note : The US$ amounts are given solely for convenience and have been calculated at the rate of NT$31.62 to US$1, the approximate rate of exchange prevailing at December 31, 2014.

Net Income Revenues (Million NT$) (Million NT$)

20102010 1,961 20102010 27,426 51,878

20112011 2,263 20112011 33,001 56,280

20122012 2,445 20122012 34,824 60,522

20132013 1,642 20132013 31,446 52,222

20142014 1,882 20142014 38,060 57,692

2014 CTCI Annual Report 3

NET INCOME REVENUES CompanyCompany Profile Profile Company Profile TCI Corporation, founded in 1979 with headquarters in Taipei, has over 30 years of hands-on Cexperience with approximately 7,500 employees stationed in more than 40 subsidiaries and affiliates located in 13 countries around the world. Currently, the paid-in capital reached NT$7.6 billion while its operating revenue reached a new record high of NT$57.7 billion in 2014.

Being the leading Engineering, Procurement, and Construction (EPC) corporation in Taiwan, CTCI is distinguished by its professional competence in undertaking large-scale projects at home and abroad. Upholding the principles of “Professionalism, Integrity, Teamwork, Innovation”, CTCI keeps enhancing its technological expertise in service scope and committing itself to internationalization and diversification strategies in business operations. The service portfolio includes project management, engineering design, procurement, fabrication, construction, supervision, and test & commissioning. The business lines have been expanded from refinery, chemical and petrochemical into power, steel & nonferrous, storage & terminal, infrastructure, environmental engineering and waste-to-energy fields. Rooted in Taiwan, CTCI extended its project records over the globe and tapped into the markets of China, the Middle East, Europe, America, and Southeast Asia. With its technological expertise and rich experience, CTCI has become the designated partner to collaborate with for many internationally well-known engineering companies, which achieved excellent results. In recent years, CTCI furthered its engineering expertise in EPC lump sum projects with 4D applications to effectively shorten the project schedule and at the same time deliver innovative value. CTCI uses its core competency in developing green engineering to effectively lower the risk of environmental pollution and strengthen the industry’s green competency.

In addition, CTCI spares no efforts in enhancing service quality, information security, environmental management, HSE management, and health care, all of which achieved laudable results. Apart from being honored with Public Construction Excellent Quality Awards by the Ministry of Economic Affairs and many others, CTCI has acquired international certifications including ISO9001:2008, ISO/IEC 27001, ISO 14001:2004, OHSAS 18001:2007, Taiwan Occupational Safety and Health Management System (TOSHMS) Performance Approval Program, Cumulative Record without Accident Proof by Occupational Safety and Health Administration, Ministry of Labor, the Badge of Accredited Healthy Workplace from the Health Promotion Administration, Ministry of Health and Welfare, as well as many others.

Committed to fulfilling corporate social responsibilities with due diligence, CTCI has garnered tangible achievements in terms of corporate governance, environmental protection and social participation. On top of carrying on stable growth with determination and sustainable operations, CTCI implements green engineering technology to provide its clients with cost-effective, eco-friendly, and energy- saving solutions to innovate and enhance its green competitiveness in the industry. CTCI utilizes diverse resources to cultivate talent, actively engages in community activities and showes care for the underprivileged. Moreover, CTCI publishes Corporate Sustainability Report annually to disclose related principles and policies for developing sustainably and giving back to the society. CTCI was registered as the first enterprise in Taiwan acquiring the independent verification of the CSR Report. Thus, we

4 2014 CTCI Annual Report Company Profile

have been continuously recognized by various quarters for outstanding performance in corporate social responsibilities, including Taiwan Top 50 Corporate Sustainability Reporting Award by the Taiwan Institute for Sustainable Energy, Taiwan’s Most Admired Company in the engineering and construction industry, retaining Top 1 in the contractor sector for 11 years in a row in Taiwan's Top 2000 Enterprises, and Top 50 for Excellence in Corporate Social Responsibilities by CommonWealth Magazine. Moreover, CTCI ranked the highest A++ level in the Information Disclosure and Transparency Rankings, an evaluation entrusted by TWSE and GTSM and launched by Securities and Futures Institute for all listed companies in Taiwan. According to ENR, Engineering News-Record, 2014 Sourcebook in Petroleum Sector, CTCI ranked 48th in International Contractors and ranked 42nd in International Design Firms. CTCI is even listed in MSCI Taiwan Index by Morgan Stanley Capital International Inc. (MSCI), as well as TWSE RAFI® Taiwan High Compensation 100 Index, and TWSE Corporate Governance 100 Index by Taiwan Stock Exchange Corporation.

CTCI keeps moving forward to fulfill its mission: “To satisfy our customers with the optimized engineering services”. In order to reach our long-term objective, CTCI constantly pursues advancement and refinement to win the recognition and trust from customers worldwide. Looking toward the future, CTCI expects to orient itself as a robust team equipped with unparalleled competitiveness to provide diversified optimum services to its customers and actively marching towards the vision of becoming “The most reliable global engineering service provider”. Under the synergetic efforts of all members, CTCI will build a globally-recognized brand and ensure its valued customers around the globe a better future to create a win-win scenario.

CTCI Corporation— Taiwan’s Leading EPC Firm that Delivers Comprehensive Services

2014 CTCI Annual Report 5 Letter from the Letter from the Chairman & CEO Chairman & CEO

Dear Shareholders, Friends and Colleagues,

In 2014, with all the dedication and hard work of our staff, we adopted various strategic adjustments in our business operations, and brought about outstanding results in new contracts, revenue, and backlogs, which all exceeded the record of 2013. I would hereby like to report the 2014 business review, the 2015 strategic plan and blueprint for CTCI Group as follows:

2014 Business Review Operation Results The consolidated sales revenue for 2014 amounted to NT$57.6 billion, increased by NT$5.4 billion or a 10.47 % growth compared to that of 2013. The consolidated operating expenses were NT$1.72 billion, while the consolidated non-operating income was NT$462.5 million. As a result, the consolidated net income was reported at NT$1.88 billion, an increase of NT$ 240 million over 2013. The earnings per share (EPS) stood at NT$2.51, increased by NT$0.29 from NT$ 2.22 a year earlier.

Business Achievement By the end of 2014, our contract amount reached NT$77.9 billion, while backlog of contract is up to NT$187.1 billion. Major new contracts include SAMAC MMA and PMMA Project in KSA, CPC Talin #11 DHDS Project, Singapore Thomson Line Trackwork Project, CPC Taichung LNG Plant Ph-II Re-gas Project, PRPC 140KBPSD RAPID RFCC P1 Project, USI CBC Project, Tamhai LRT Phase I Power Supply and Trackwork Project, and CPC Talin Plant FGRS Project.

Innovation and R&D In 2014, CTCI’s Innovation R&D Center kept up its efforts to improve the efficiency of project execution through continuous research and development in information integration between multiple disciplines, expansion for the breadth and depth of engineering technologies, as well as design automation.

6 2014 CTCI Annual Report Letter from the Chairman & CEO

John T. Yu Chairman & CEO

The owner-oriented information management and turn-over system could well organize the construction information, at the same time combined with construction management system to sort out pipe line pressure test packages, reduce the work period of instruments installation and loop- test at job site. Also, with continuous promotion of mobile devices and specialized applications utilized at key job sites, construction information has been made more accessible via portable e-forms and contributed to enhanced efficiency. Regarding the data integration of EPC turnkey contracts, we utilized SmartPlant Enterprise from Intergraph to check data correctness across all disciplines, so that data transparency and standard conformation are well carried out, ensuring the data consistency of entire project and enhancing design quality. Besides, we implemented the material information dashboard to provide real-time material procurement status through graphics and charts, and also used business intelligence technology to analyze material historical information for future reference to reduce procurement cost and increase our competitiveness.

For technology expertise, we have finished the research for liquid amine absorption tower

2014 CTCI Annual Report 7 Letter from the Chairman & CEO

design, database of modularized equipment piping design, application of BIM in architectural engineering, optimal design for harmonic filter of bulk supply substation of MRT power system, and the establishment of expert system for plant commissioning. In the meantime, our internal design guidelines and existing engineering software have been revised according to the updated code/standard and other information collected for engineering practices from domestic or abroad.

As for design automation, we further refined our design software for pressure vessel and storage tank, developed more applications for Revit BIM 3D and rule based P&ID. We also automated the cable tray cross-section generation and cable/tray material take off for instrument main cable way layout, material take off calculation for cold insulation piping support, and power equipment info check-up program for Single-Line Diagram (SLD), all of which greatly enhanced the quality, speed and accuracy in EPC project execution.

Pao-Yao Pan Mark W. H. Yang S.V.P. Michael Yang E.V.P. John H. Lin President Vice Chairman

8 2014 CTCI Annual Report Letter from the Chairman & CEO

2015 Outlook To pursue great goals for sustainable operations, each of our business units has scheduled more detailed timeframe and action plan for execution, hoping to realize our dreams step by step and continue to thrive in the days to come.

HBO’s goal of growth is “keeping revenue growth at a moderate level but pursuing an attractive rate of return”. Our tactical initiatives in this regard include three key points: strategic deployment for market expansion; winning recognition from major clients around the globe; building and maintaining a talent pool for a world-class project management team. In addition to securing the existing markets based on our core competency, new markets as well as new technologies and techniques will be developed at the same time.

M. H. Wang Ming-Cheng Hsiao Andy Sheu E.V.P. S.V.P. John T. Yu Managing Director Chairman & CEO of the Board

2014 CTCI Annual Report 9 Letter from the Chairman & CEO

IEPBO aims to“increase revenues and keep profitability” which will be achieved by two tactical initiatives. From the perspective of market, overseas markets have to be developed due to the limited tender opportunities domestically. To win more contracts internationally, a solution for acquiring tendering qualifications is required since we do not have sufficient experiences regarding this domain. From the perspective of management, we will enhance the supervision mechanism for project execution and strengthen strategic alliance with overseas companies.

Taking “exploring a new frontier” as its goal, PMBO currently aims to lay the first stone to create more revenues and gross profit margin. With the aging workforce in the maintenance industry, larger companies equipping with strong maintenance capabilities are lacking in Taiwan at the moment while heavy workload created by annual overhaul jobs for hydrocarbon plants demands a better solution. Due to these reasons, plant maintenance could be the territory CTCI could explore. It is especially advantageous for us to win clients’ trust in that we have acquired the most detailed information during EPC phases. We may develop solid long-term relationships with clients by offering maintenance services to facilitate future projects.

Strategy and Blueprint Steady growth is a common target for enterprises to move forward without being surpassed. Hence, we created this year a new vision as “To Become the Most Reliable Global Engineering Service Provider” while also redefined our mission as “To Satisfy Our Customers with the Optimized Engineering Services”. Moreover, strategies have been drawn up to reach the goals under specified guidelines.

The strategies are dual-faceted: business and management. For business, the two key points are maximizing current business and cultivating new ventures. The most efficient way of expanding our business field is to develop from current business. We will strengthen FEED (Front End Engineering Design) capabilities, and stretch business operation into Plant Maintenance Service. To develop our business horizontally, we must actively acquire the selected and specialized technologies and

10 2014 CTCI Annual Report Letter from the Chairman & CEO

required qualifications so that we may reduce dependence on business partners and win business opportunities independently. As to cultivating new ventures, CTCI has two principles. First, the business is able to generate long-term steady income and profits. Second, the business meets the future trends of global market.

As for management aspect, four main objectives have been identified: optimizing engineering services, cultivating all-round talent, building a corporate brand and image, and strengthening synergy throughout CTCI Group. Delivering optimized engineering services is one of the core competencies of CTCI. We are always requested to deliver better, faster, and more competitive services to satisfy our clients. With regard to this, one of our tasks is to improve work procedures and to create a new model of supply chain in order to shorten the construction period, reduce the costs, and thereby strengthen our competitive edge. Second, talent is the key to an enterprise’s sustainable development and quality leadership. As internal training is more advantageous than external recruiting, we cultivate our staff to be well-rounded talent qualified for key positions. Furthermore, though CTCI has established a favorable corporate image and reputation, we used to focus less on brand image marketing and promotion. From now on, we will reinforce our marketing strategy to extend our global visibility and polish our corporate image. Last but not least, to manage a global workforce of over 7,000 people, systematic operation is a must to manifest synergistic effects in the management of expertise, technologies, and business operations. This way, we can produce synergies and create more business opportunities and profits. We have decided that starting this year, we will establish a new organization responsible exclusively for maximizing group synergy.

Apart from innovation and business growth, it is necessary that every employee works for one common goal to achieve corporate sustainability and march toward the right direction. For the new year of 2015, we hope that all CTCI members will“ Start Afresh with Firm Determination” and open up new prospects for CTCI. It is believed that by following aforementioned strategies and goals, based on the guiding principles of “Professionalism, Integrity, Teamwork, and Innovation”, we will realize our vision of “The Most Reliable Global Engineering Service Provider” and achieve our mission “To Satisfy Our Customers with the Optimized Engineering Services”. A much better and brighter future awaits CTCI Group.

Sincerely,

John T. Yu Chairman & CEO

2014 CTCI Annual Report 11 Company Profile

MilestonesMilestones 2014 2014 May CTCI was ranked as the 29th in terms of the overall ranking among the Top 650 Service Enterprises by CommonWealth Magazine in 2014. CTCI retained Top 1 in the contractor sector for 11 years in a row and ranked as the 43rd among the Top 50 Most Profitable Companies (net profit after tax). CTCI Corporation held its Annual General Jun. Meeting of Shareholders on June 26, 2014. The 13 directors (including 3 independent directors) for the 13th term of the Board of Directors were elected in the meeting. At the board meeting held the same day, Chairman John T. Yu and Vice Chairman John H. Lin were both re-elected. President Andy Sheu was nominated and elected as Managing Director of the Board. Michael Yang, the former Executive Vice President of Infrastructure, Environment & Power Business Operations, was promoted to Jul. CTCI Corporation, Advanced Control & become President of CTCI. Systems Inc., and KD Holding Corporation were ranked as "Grade A++" in the "2013 The CPC No.6 Naphtha Cracker Project and No.2 Information Disclosure and Transparency Sinter Plant Project of Dragon Steel Corporation contracted by CTCI have won the Outstanding Rankings". Engineering Award by the Chinese Institute of Engineers.

CTCI Group was ranked the 114th among “The Aug. Top 225 International Design Firms”, the 131st among “The Top 250 International Contractors”, the 144th among “The Top 150 Global Design Firms”, and the 160th among “The Top 250 Global Contractors” in the 2014 ENR Rankings.

Oct. CTCI won the “2014 Public Construction Excellent Quality Award” of State-owned Enterprise Commission, Ministry of Economic Affairs.

CTCI once again listed among the “Top 50 for Excellence in Corporate Social Responsibilities” by CommonWealth CTCI was recognized by Taiwan Institute for Dec. Magazine in 2014. Sustainable Energy of “Services Industry Silver Award” under the Taiwan Top 50 Corporate Sustainability Report Award, as well as the “Growth through Innovation Awards,” and the “Transparency and Integrity Awards”; meanwhile, CTCI received the honor of “Sustainable Corporate Governance Fulfillment Award” from the British Standards Institution (BSI).

12 2014 CTCI Annual Report StrategyStrategy Development Development and Outlook

n 2014, CTCI Group continuously applied its established long-term strategy to seek expansion of Icorporate scale while quite a few cases had been assessed and evaluated. Additionally, the Group also continued the development of the environmental protection business and green energy following the strategies. To facilitate mutual discussions among all members within the Group, including every andBusiness Operation unitsOutlook of CTCI Corp and the subsidiaries, an off-site meeting was held in the second half of the year in order to generate a future-oriented strategy that was able to gain the recognition and identification from all members of the Group.

The incineration business has been and will continue to be one of the major business lines of the Environmental Resource Business Operations of CTCI Group. Accordingly, the Group has set a three- year target for execution of 13 incinerator projects in China, and has obtained 2 incinerator investment projects and 1 O&M project in Southeastern Asia. Meanwhile, regarding the recycling business, the Group and BoreTech Group, a China-based professional PET recycling firm, had come to an agreement of cooperation in 2013, finishing all investment-related procedure in 2014, and officially establish the collaborative relationship.

A set of strategies have been formulated in the off-site meeting which can be summarized as to maximize current business while at the same time expanding new markets as well as new territories and also to promote cross-border synergy between companies and divisions within the Group.

Take HBO of CTCI Corp as an example, hydrocarbon business has been one of CTCI Corp’s core business and the corresponding strategy formulated is to strengthen the Group’s core capability and seek for deeper and wider development in the field of Front-End Engineering Design. Moreover, we are targeting at new markets like North America and Russia. As the exploration of shale gas has brought the global oil and gas industries into a new era along with new level of competition. The Group will actively penetrate into the shale gas industry while exploring the US market.

As for synergistic development, one of the strategies we adopted is to facilitate cooperation between BoreTech and the Group. For example, we will apply ACS’s automation technology in BoreTech’s current and future plants. Another instance is the mutual innovation and development of technology by BoreTech and CTCIM.

Starting with the off-site meeting, an annual strategy meeting will be arranged for the Group to regularly monitor the progress of Group strategy development. The path of strategy developing will also be examined and timely amended to quickly respond to the changing global business environment.

2014 CTCI Annual Report 13 Letter from the Chairman & CEO

Strategic Operations I. IntelligentStrategic Engineering Services Operations

TCI created a new scenario in the intelligent engineering services by delivering an array of Cachievements in 2014. These inspiring breakthroughs, including cross-departmental information integration, technology/expertise improvement, work automation, have been extensively applied to our worldwide EPC undertakings and garnered substantial outcomes, which satisfy our customers with optimized engineering services as outlined below:

Cross-Departmental Information Integration Data Integration with SmartPlant Enterprise Regarding the engineering information integration of EPC turnkey contracts, CTCI implemented SmartPlant Enterprise (SPE) of Intergraph to ensure the data correctness across all engineering disciplines. SPE is a common platform to consolidate the engineering information within SmartPlant P&ID (SPPID), SmartPlant Instrumentation (SPI), SmartPlant Electrical (SPEL), SmartPlant 3D (SP3D) and SmartPlant Review (SPR). The engineering information maintained in above tools can be exchanged and performed consistency check via SmartPlant Foundation (SPF). Applying SPE on EPC turnkey projects not only ensures engineering information transparency, standardization and consistency, but enhances the design quality and reduce the project execution cost

▲SpmartPlant Enterprise Data Integration Architecture

14 2014 CTCI Annual Report Strategic Operations-Intelligent Engineering Services

Strategic Operations Material Information Dashboard CTCI has been implementing SmartPlant Materials (MARIAN) as a material management platform since 2005. Material specification and price record of over 65 EPC projects executed has been accumulated in the system. To apply the big data for proposal or project execution reference to save the procurement cost, CTCI utilizes business intelligence technology to analyze material history information and set-up Material Information Dashboard to display the results in graphics and charts on web page for project users. Besides, this dashboard can also display real-time material procurement and receiving status during project execution to detect potential issues early on and take actions accordingly.

▲Dashboard of Global Procurement Allocation

Technology/Expertise Improvement Research of Liquid Amine Absorption Tower Design Amine absorption and regeneration is a process widely applied to treat fuel gas and LPG for reducing its acid contents to the specified level in refinery and natural gas industry. Based on relevant literatures, engineering standards, and experience of historical projects, CTCI had accomplished thorough research on process parameters and system design of amine system. Moreover, CTCI is able to use ProMax, the standard tool in amine system, to do process simulation. With this research, CTCI has equipped itself with the capability of basic design for this process.

◄Amine Absorption Process Flow Diagram

2014 CTCI Annual Report 15 Strategic Operations-Intelligent Engineering Services

Database of Modularized Equipment Piping Design Piping design engineers accumulate experience by engaging in different types of piping configuration design projects and accomplishing design works for a variety of plants. Database of modularized equipment piping design was established to help piping design engineers efficiently comprehend process of plants, assure that the piping arrangement can meet the requirement for operation and maintenance of piping and equipment, enhance personal design ability, and improve design quality. Piping design leaders and senior checkers can use the database to provide reference design in 3D PDF format for designers and junior checkers. It can be applied not only for design phase but also for piping material estimation in projects quote.

Steel Connection Design for H-Beam to Tube Column Steel tube columns, also commonly called steel HSS (Hollow Structural Section) columns, perform excellent features subject to axial loading and biaxial bending as they have uniform geometry along the cross-sectional axis, and thus uniform strength characteristics. Besides, their smooth surface and architectural esthetics makes them good choices for columns in exposed structures. Hence, it gradually becomes popular in engineering to use tube columns accompanied with H-beams for building design. However, there have been more restrictions in constructing connections of H-beams to tube columns than those to H-columns. In addition, the analysis and design for this connection types is also intricate. In this context, CTCI adopted external-diaphragm gussets for steel beam-column connections, and strengthened the connection with stiffeners at the locations of stress concentration. A finite element analysis method was further performed to analyze the stress distribution precisely in the connection to assure the design quality. Accordingly, with the development of foregoing technique, CTCI enhanced the application of steel tube columns.

◄◄Stress Contour of Connection

Optimal Design for Harmonic Filter of Bulk Supply Substation of MRT Power System Since mass non-linear loading equipment is used in Mass Rapid Transportation (MRT) power supply system, it is easy to produce harmonic pollution which influences the quality of power supply. In this context, CTCI developed a design system to find out the optimal planning of parameters, installed capacity and orders for harmonic filter in order to suppress harmonic pollution effectively and improve power quality for MRT. Furthermore, it makes the estimation for the scheme of power supply system

16 2014 CTCI Annual Report Strategic Operations-Intelligent Engineering Services

and equipment capacity more accurate so as to improve the autonomy technology and save the equipment investment for MRT power supply system.

Work Automation Pressure Vessel and Storage Tank Design Software Design Program of Tall and Slender Pressure Vessel Laterally Supported by Steel Structure When the suitable shell thickness or geometric dimension of skirt of a self-supporting vertical pressure vessel could not be designed due to its lateral force, we will consider using steel structure as the lateral support(s) for the pressure vessel. However, most commercial pressure vessel design software is incapable of dealing with steel structure supporting design, and the general structural analysis software does not consider the requirement for pressure vessel design. Therefore, CTCI developed the pressure vessel steel structure support calculation module, which can quickly obtain suitable shell thicknesses and support skirt’s geometric dimension according to lateral supports location and its stiffness.

Dome Roof Support Tank Design For the large storage tank with internal floating roof, the existence of support column will cause the emission of the content and affect the operation of internal floating roof. To avoid these issues before they occur, dome roof structure is an alternative solution widely used in practical design. However, most commercial storage tank design software does not have dome roof support design function. Commercial steel structure software, therefore, are generally used for this design. In practice, however, this approach requires skillful users and if necessary, a lot of efforts are needed to repeatedly modify the structure model in order to meet the CODE requirements.

In view of this, CTCI applied SAP2000 OAPI (Open Application Programming Interface) module combined with tank design standards and rules of thumb to develop dome roof support structure design program, which not only issue proper dome roof structure layout more quickly but also provide material take-off and weight calculation for the benefit of cost estimation.

3D Model Illustration of Tank Roof Structure Basic Design Data Design Data Input Interface  Need Skillful User  To Pass Code Check, SAP2000 Automation Repeating Modification May Be Required Existed Procedure

Manual layout & Build SAP2000 SAP 2000 Code Check Material Take-off Basic Model Design N.G. Data End PASS Dome Roof Structure Design Module Automatic Layout Build SAP2000 Model SAP2000 (Design Rule) and Determine Size Code Check Automatically New Procedure ▲Workflow comparison before and after improvement ▲Design - Modeling / Analysis - Material Take Off Workflow comparison before and after improvementDesign ‐ Modeling / Analysis ‐ Material Take Off

2014 CTCI Annual Report 17 Strategic Operations-Intelligent Engineering Services

Automatic Cable Tray Cross Section View Generation and Cable/Tray Material Take Off for Instrument Main Cable Way Layout The automatic cable tray cross section view generation and cable/tray material take-off for instrument main cable way layout is programed by integrating the CAD system and database system. Through drawing design operation, the program can store design information, such as cable type and quantity, cable tray specification, design regulation and rule requirements, into database automatically. Meantime, 2D CAD system will automatically track the cable path drawn by users, calculate its quantity of cables and trays material for these cable route, and then generate cable tray cross section view. By using the automatic calculation and drawing generation, it saves cost for manual works. In addition, computerization enhances design quality and accuracy.

The automatic cable tray cross section view generation and cable/tray material take off for Instrument main cable way layout

18 2014 CTCI Annual Report Strategic Operations-Intelligent Engineering Services

The Strategy Plan of Innovation R&D Multi-Discipline Talent Cultivation The ICT industry and technology of Taiwan is worldly renowned, which could be taken as an advantage for CTCI to gain unique strength by combining ICT resources with EPC lumpsum turnkey projects, so that differentiation can be created to set us apart with other competitors in the global market. For this purpose, sufficient multi-discipline human resource has to be developed as the first priority.

EPC Information Transparency/Sharing The major task of EPC lumpsum turnkey engineering is to integrate various workflows: planning, design, procurement, construction, pre-commissioning/commissioning, as well as communication with clients and vendors. In order to maintain information transparency from the upstream to the downstream, improve the precision of management, and increase the quality of engineering, a comprehensive common platform of EPC information has been created and will be continuously improved.

Increasing the Breadth and Depth of Professional Expertise We’ll keep expanding our capabilities of technology, and researching/developing our core expertise in three key areas in the future: (1) Establishing a dedicated FEED team to consolidate all related FEED capabilities; (2) Establishing the professional expertise for the field of “Super High Pressure”; (3) Expanding the application of modularization.

Learning New Ideas from Other Industries to Boost Our Innovation Strength For increasing our products/services value and maintain competition advantages, in addition to observing and learning from the competitors, improving our workflows continuously, and incorporating proper tools which are utilized globally, we should research the latest development and application in other industries about Big Data, Smart X, Mobile Device, Industry 4.0, IoT and Robot, and incorporate them innovatively into the core business of CTCI to generate our unique EPC lumpsum turnkey solutions.

2014 CTCI Annual Report 19 Strategic Operations-QHSE Management

II. QHSE Management

Quality Management 2014 Quality Management Major Accomplishment Updating Quality Policy To respond to the newly established Mission, Vision, and Principles, CTCI updated its Quality Policy Statement where the new Vision, “The Most Reliable Global Engineering Service Provider” is clearly declared at the very beginning. Meanwhile, the quality commitments manifest the “Mission”, “Principles” as well as Quality Objective: “Do the Right Thing” and “Do It Right the First Time”. Our commitments to quality are as follows.

• Excellent Services for Customer Satisfaction • Dedicated to Complying with Contract and Legal Requirements • Foster and Implement Staff Training • Continually Improve the Quality Management System

Improving CCC “Procedure Library” System Functions To facilitate quick access to level 1 and level 2 corporate documents, we improved the CCC “Procedure Library” system functions, including adding the new announcement in the front page, updating the catalog for querying, adding keyword searching, comparison section for revised versions and old document, adding section for revision histories and void documents. With the simplified and clear document management platform showing all of CTCI management regulations and document system structure, our colleagues may acquire SOP information efficiently and correctly. Figure1. shows the homepage of “Procedure Library”.

▲1.The Homepage of CCC “Procedure Library”

20 2014 CTCI Annual Report Strategic Operations-QHSE Management

Promoting Critical Project Path Management/Control Evaluation Mechanism Through performing self-assessment, we help project managers (PMs) familiarize with project management key elements and review their conformity. In practice, PMs perform self-assessment quarterly based on “Critical Project Path Management/Control Evaluation checklist”. By doing so, PMs may evaluate the implementation status of project management system and monitor the necessary improvement. The Quality Management Department (QMD) will assign technicians later on to check randomly and verify the conformity and summary audit results for each project, and report in the Quality Management Review Meeting.

Implementing Operation Procedure Comprehension Exam for Authorized Personnel To make sure that all authorized personnel have read and comprehended the level 1 and level 2 procedures published in CCC, complied and fully implemented them in daily operations, we monitor comprehension exam for all authorized personnel, including Project Managers, Project Engineering Managers, Project Lead Engineers, Project Control Managers and Site Superintendents via systematic tracing for newly formulated or revised procedures announced on CCC. The simplified operation procedure of “Level 1/ Level 2 Procedure Comprehension Exam for Authorized Personnel” is shown in Figure 2.

▲2.Level 1/Level 2 Procedure Comprehension Exams for Authorized Personnel

Initiating NCR/DND E-Tracing Manage - ment and Statistical Analysis To control efficiently the issuance and improvement of Nonconformity Report (NCR) and Defect Notification Disposition (DND), summarize NCR/DND information of each project, and then carry out systematic summarization and analysis, we establish mobile APP and PCC Platform system module to establish, trace, and control e-NCR/DND forms. Please see Figure 3 for the NDR/DND and PCC Platform system. ▲3.NDR/DND and PCC Platform system

2014 CTCI Annual Report 21 Strategic Operations-QHSE Management

Quality Awards In 2014, CTCI Corporation received a number of commendations and awards from government authorities as well as our clients for our achievements in quality assurance. The major awards are listed below:

• CPC Talin No.10 SRU Project contracted by CTCI was awarded the "2014 Public Construction Excellent Quality Award -- Facility Engineering Sector" hosted by the Ministry of Economic Affairs, R.O.C. • CPC Talin No.10 SRU Project contracted by CTCI was honored with Outstanding Award for Construction Quality and Labor Safety by Project and Construction Division, CPC.

Scheduled Implementation Goals in 2015 In 2015, we will not only continuously improve and implement Critical Project Path Management/ Control Evaluation Mechanism and performing operation procedure comprehension exam for authorized personnel, but achieve the following goals in compliance with the company’s strategy:

Procedure Integrations for Quality Management System (QMS) To comply with the revision of ISO 9001 international standard in 2015, Quality Management System procedures will be enhanced. Besides conforming to ISO 9001:2015 requirements, QMS will also respond to the customers’ requirements, optimize processes and forms, and improve the conformability and applicability of related procedures. For operation phase, we will, based on High Level Structure, rearrange procedures, and review present structure and contents of quality management to meet the requirements of management in the most efficient and economical manner, and achieve the target of ISO 9001: 2015 revision as scheduled.

Enhancing Talent Cultivation -- Developing World-Class Project Quality Managers (PQMs) Due to the higher qualification required by domestic and international customers and the mounting cost of hiring specialists from abroad, we will dedicate to cultivating world-class PQMs by improving their professional qualifications and abilities, accumulate experiences in international project executions, and enhance language communication skills through internal training. Thus, we can improve project quality management effectiveness and lower the project costs.

Developing Quality KPI Dashboard for Improving Effectiveness of Project Quality Management For each project, we will formulate quality KPI every year and execute routine measurement and control. In order to simplify the feedback and reporting process, and to accord with measurement timing and principles among each project and related functional departments, QMD will develop “Quality KPI Dashboard” for integrating each KPI data, and for performing project quality control through IT system by introducing the concept of warning and action value for forewarning and improving statistics & data analyzing technologies.

22 2014 CTCI Annual Report Strategic Operations-QHSE Management

HSE Management Sophistication of HSE Management towards International Level Corporate HSE Policy Statement & Top Management’s Commitment According to OHSAS18001/ISO14001 standards, Corporate HSE Policy Statement is reviewed with concerns of the updates of standards, changes in legal legislation, results of risk assessment, and also the orientation of corporate strategy. This year, new HSE policy statement was deliberated in management review meeting, signed by top management, and announced to employees and other concerned parties. Conforming to our new Vision, Principle, and Mission, CTCI modified the HSE Policy Statement to the following 7 statements.

• Insist on Safety as the First Priority • Promote Personnel Health and Well-being • Protect Environment and Sustainability • Implement Risk Management System • Comply with Legal and Contract Requirements • Engage in Trainings and Personnel Participation • Improve HSE Management System Continuously

The HSE management system of CTCI Corporation is in compliance with the requirements of the following international and Taiwan’s national standards: • ISO 14001: 2004 Environmental Management System • OHSAS 18001: 2007 Occupational Health and Safety Management System • TOSHMS:2007(CNS15506) Occupational Safety and Health Management System

Safety Records in the Last 5 Years The safety statistics of CTCI Corporation, covering those of its worldwide project sites and Head office, are recorded as recordable cases which included fatality, days away from work, job transfer or restriction and medical treatment cases. To achieve our safety objective of an incident rate of zero and to conduct the trend analysis periodically for further improvement actions, these records are transformed to international safety indicators (TRCR and DARTR) and listed as below:

2014 CTCI Annual Report 23 Strategic Operations-QHSE Management

Number of Recordable Cases Total Hours Job Days Away Medical 1 2 Year Worked Fatality Transfer or TRCR DARTR from Work Treatment (A) (B) Restriction (C) (E) (D) 2010 27,328,154 0 2 0 5 0.05 0.01 2011 27,277,819 0 2 2 2 0.04 0.02 2012 31,508,708 1 2 0 8 0.06 0.01 2013 33,595,176 1 5 1 2 0.05 0.03 2014 19,662,926 0 2 0 6 0.08 0.02

Note 1: Total Recordable Case Rate (TRCR) = [ (B) + (C) + (D) + (E) ] × 200,000 / (A) Note 2: Days Away, Restricted or Job Transfer Incident Rate (DARTR) = [ (C) + (D) ] × 200,000 / (A)

Total Recordable Case Days Away/Restricted or 0.15 0.15 Rate Job Transfer Incident 0.12 0.12 (TRCR) Rate (DARTIR) 0.09 0.09

0.06 0.06

0.03 0.03

0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

Advancing Total HSE Evaluation to All Progressively To mitigate occupational HSE hazards and risks, CTCI not only meets the obligation of legislation and the requirements of management system, but endeavors to involve all employees participating in HSE activities, starting to think from HSE points of view. CTCI believes that “People” is no doubt the critical factor in the formulation of safety culture.

The objective of Total HSE Evaluation program is to apply examination to department heads, project managers, and to all employees especially for those not in HSE professions. By conducting the tests, everyone from top management level to employee can acquire essential HSE knowledge, become familiar with work-related HSE requirements, and hopefully to transform unsafe acts to safety behaviors with correct HSE attitude.

From the 3rd quarter of 2013 to 2014, “Total HSE Evaluation” had been delivered to Department / Project managers, PEM/PPM/PSM/PKM, and construction engineers in various professions. The evaluation is carried out via GTS online test, which consist of 3 subjects: safety commitment, basic concept, and HSE practice. In the future, we’ll continue arranging the evaluation for each position and promoting it to all employees. To sum up, our target of “Total HSE” will be continuously strengthened to foster a shared safety culture.

Continuous Improvement on HSE Management System CTCI, as the leading international EPC contractor in Taiwan, has been continuously staying updated to the latest technologies to seek for innovative methodologies of HSE management. To increase the efficiency of HSE information delivery, and to strengthen the operation of project HSE management system, HSE Comprehensive Performance Management System has been develped with the application of modern information techniques. This online system can provide quick, effective real-time HSE information to site supervisors, HSE specialists and managers. To align with growing business in international projects, English browsing webpage was established to comply with project practice and to optimize the performance of HSE management for international projects.

24 2014 CTCI Annual Report Strategic Operations-QHSE Management

▲User interface of HSE Comprehensive Performance Management System

Remarkable HSE Awards Achieved in 2014 In 2014, CTCI received a number of commendations and awards from government authorities as well as our clients. To recognize our achievements in HSE, major awards are listed below:

• CTCI serves as committee member in Northern TOSHMS Promotion Committee to actively assist in OSH promoting activities. The Minister Fu of Taiwan OSHA, attended the Joint Presentation Campaign and awarded CTCI for its efforts and participations in promoting TOSHMS. • TPC Talin project team assists Kaohsiung city OSH center to carry out the “2014 Heat hazards prevention at high-temperature circumstance” workshop, and thereby rewarded with a Certificate of Appreciation. • Qatar project was honored by client QAPCO with the “Best Contractor Safety Award in 2013”, and the “Best Contractor Safety Awards-Motivation Scheme Awards in 2013”. • CPC Talin SRU project was honored with the “Excellent Performance on Safety, Environment Protection, Construction Quality Award”. • Kuan-Yin PTA plant project was awarded by client with good performance in contractor campaign.

Keep on Perfecting HSE Management System in 2015 We continually develop the “TOTAL HSE” and corporate HSE culture, improve all HSE management issues and enhance the corporate HSE performance. Besides, according to the 2015 CTCI group target in “VISION, PRINCIPLES and MISSION”, we will coordinate CTCI group strategy for seamless connection with international standards/regulations. Additionally, based on HSE management target, we will set up the Safety Key Performance Index, TRCR (Total Recordable Case Rate) and DARTR (Day Away from work/ Restricted work or job Transferred Incident Rate), to promote the safety performance through total members’ attendance.

With the Occupational Safety and Health Act launched domestically on 3rd Jul, 2014 (the 2nd stage of related regulations was already in effect from 1st Jan 2015), and ISO14001 Environmental Management System and ISO 45001 Occupational Safety and Health Management System updated, CTCI will keep devoting itself to the review and refining of HSE procedure/plan system to meet the project requirement, and to achieve the expected results more efficiently. Considering that EPC projects executed by CTCI in recent years are getting more complex with larger scale, we are also trying to integrate the latest technologies to improve project HSE management, in order to provide real-time and efficient information for the reference of multi-criteria decision-making.

2014 CTCI Annual Report 25 Strategic Operations-CTCI Group IT Integration

III. CTCI Group IT Integration

o undertake the international EPC projects has always been the core business of CTCI Group. TNowadays, customers think highly of their information privacy protection. As the most reliable global engineering services provider, in order to show our great emphasis on information security and information security risk management, also to continuously satisfy our customers with the optimized security and high quality IT services, CTCI Group set up a special project implementing ISO/IEC 27001 system and rebuilt ISMS (Information Security Management System) since June 2014.

CTCI Group successfully passed the examination held by BSI with perfect score (zero non-conformity) and obtained the certificate of registration of ISO 27001 regarding ISMS. The certification scope, in addition to the server room and network management which are necessary for the IT infrastructure, also encompasses the project management systems for the company's core business EPC projects, such as project management (Project on Web, POW), engineering design (Smart 3D, SP3D), procurement (Smart Plant Materials, SPMat), and construction (Construction Management System, CMS).

CTCI Group will continue to perform excellence on improving the ISMS through the Plan-Do-Check-Act Cycle (PDCA Cycle). Apart from the systems which were granted with ISO 27001, we will check all the other IT appliance systems to make sure all of them are in compliance with the international quality standard. Moreover, the spirit of ISO 27001 will be introduced to all subsidiaries within CTCI Group, in order to secure the quality of the Group's information security management from all angles.

Apart from ISO 27001, CTCI Group has implemented the SAP ERP System to its subsidiaries and offices across the globe in a 4-year implementation duration. With this well-known enterprise resource planning system, as well as its reputation of strict system permission control, the data within different entities can now be processed with high accuracy, delivering integrated, real-time operational data for the management to make business decisions accordingly. With SAP ERP System in place, the work flow for all employees in CTCI Group is consistent and well performed as the management efficiency is greatly improved.

Moreover, using the latest information communication technology to connect overseas operational centers is also one of the focal points of IT development for CTCI Group. We have several projects going on in the Middle East and South-East Asia. In order to support the project members, enabling them to access all sorts of IT services from CTCI Group headquarters, CTCI Group built up several cloud computing centers in Singapore, Saudi Arabia, and Malaysia. By integrating the existing lease line with its subsidiaries, these cloud computing centers for project offices allow every employee to communicate as well as access information from CTCI Group Headquarters anywhere, anytime to obtain necessary information to execute their tasks.

All in all, CTCI Group always keeps an eye on the current trend, using the latest IT technology to make sure the company’s business operation runs smoothly and always on the cutting edge.

26 2014 CTCI Annual Report Strategic Operations-CTCI Talent and Leadership Optimization

IV. CTCI Talent and Leadership Optimization

o satisfy our customers with the optimized engineering services, CTCI develops the principles of TProfessionalism, Integrity, Teamwork, and Innovation, as our core values. As a global corporation that has 30 more subsidiaries and affiliates stationed around the world, CTCI believes having the right values not only drives employees to move forward toward the same direction as the company, but also enhances the employee’s engagement. Accordingly, based on what CTCI has always believed in, these core values developed by CTCI Human Resources serves as the fundamental structure and principle for talent incubation. We further reinforced our core values and human resources policies, integrating the standard of talent recruiting, the performance management, the training framework and development plan to secure our position as “The Most Reliable Global Engineering Service Provider”.

2014 Achievement • CTCI implements IDP (individual development plan) program to provide every employee with a career roadmap to fulfill the concept of talent and leadership legacy development. • CTCI is engaged in the innovation of real-time global learning platform, to ensure that employees worldwide can keep the same pace as colleagues at the headquarters for growing and advancement at any time and any place. Interlinking a series of novel tools, such as “CTCI GTS” (Global Training System), Lync, and KM (Knowledge Management) System, we have progressed toward the goal of worldwide learning. • CTCI cooperates with National Taiwan University to organize Management and Leadership Program, and the amount of trainees in 2014 is 331. The Most Reliable Global Engineering 2015 Targets Service Provider • To build up CTCI core and Globalization High Growth International management competencies. Professionalism Leadership Program Self- Development • Based on the competencies, L L R

e BU Head Level a C o adership P nguage Tr lose out r Training tation Pro (EMBA)

CTCI develops HR activities, Clu Book O Department Head Level G like the structured interview K J Management Training T M M e S a g b

T rogram

port Section Head Level ining

to find person-organization ap ram Management Training fit and person-job fit for job New Entry candidates. Management Program • Furthermore, the competencies IDP, including Training, Task Rotation, Discipline, and Hard Job Rotation established will serve as key Engineering general introduction/QHSE Training criteria to develop talent’s IDP. Orientation/Mentor & Mentee program

6

2014 CTCI Annual Report 27 Business Review & Outlook I. HydrocarbonBusiness Review &

ooking back at the goals achieved last year, 2014 was a year of developments and breakthroughs; OutlookLwe are looking forward to expanding our business even further in 2015. We are pleased to report our accomplishments to date and the prospects for the hydrocarbon sector as follows:

Major Projects under Execution

Announcement Delivery Project

Nov. 2014 2018 CPC LNG REGAS Project

Nov. 2014 2017 CPC No.11 DHDS Project

Aug. 2014 2019 PETRONAS RAPID Package 1 (RFCC) Project

Aug. 2014 2015 DAC CSU REVAMPING PROJECT

Jul. 2014 2017 SAMAC MMA/PMMA Project

Mar. 2014 2015 USI CBC PROJECT

Jan. 2014 2015 FEUPY EO/EG PROJECT

Aug. 2013 2016 KFPC HSBC Project

Aug. 2013 2016 LAFFAN REFINERY PHASE II PROJECT

Nov. 2012 2015 USI EVA PROJECT

Nov. 2012 2015 APC EVA PROJECT

May 2012 2015 CPC SRU PROJECT

Feb. 2012 2015 FPC ISOPRENE MONOMER PROJECT

Aug. 2011 2016 OPTC KUAN-YIN LINE 3 PTA PROJECT

Major Projects Completed

QAPCO FURNACES PROJECT

QAPCO ETHYLENE TANK PROJECT

SHENGDA PTA PROJECT

CNOOC HAINAN LNG RECEIVING TERMINAL PROJECT

28 2014 CTCI Annual Report Business Review & Outlook-Hydrocarbon

In July 2014, CTCI successfully secured a contract from Saudi Methacrylates Company (SAMAC) a 50/50 joint-venture (JV) of SABIC and Mitsubishi Rayon (MRC) to build methyl methacrylate monomer (MMA) and a polymethyl methacrylate (PMMA) plants in Jubail Industrial City, Saudi Arabia. The MMA and PMMA plants will have projected capacities of 250,000 tonnes/year and 40,000 tonnes/year.

We have gained the greatest achievements of CTCI in August 2014; Petroliam Nasional Berhad (PETRONAS) group has awarded the Consortium of CTCI Corporation, Chiyoda Corporation and three Malaysian companies, CCJV P1 Engineering and Construction Sdn. Bhd., Synerlitz Sdn. Bhd. and MIE Industrial Sdn. Bhd., the Residue Fluid Catalytic Cracker (RFCC) Project. The RFCC project is part of PETRONAS Refinery and Petrochemicals Integrated Development (RAPID) project in Pengerang, Johor, Malaysia.

In Qatar, CTCI has completed QAPCO Furnaces and Ethylene Tank Project on time and within budget. Currently, CTCI/ Chiyoda JV is executing Engineering, Procurement, Construction and Commissioning contract for Laffan Refinery Phase 2 Project (LR2). LR2 will have a daily production capacity of 60,000 barrels of naphtha, 53,000 barrels of jet fuel, 24,000 barrels of gasoil and 9,000 barrels of liquefied petroleum gas (LPG). The Project is expected to be fully operational by the third quarter of 2016.

In Taiwan, due to the fact that CTCI favored the needs of various Clients, we were awarded several projects in 2014, including CPC LNG Regas, No.11 DHDS Project and USI CBC Project. Moreover, our on-going projects, such as USI Corporation Ethylene Vinyl Acetate (EVA) Project, Asia Polymer Corporation Ethylene Vinyl Acetate (EVA) Project, CPC Sulfur Recovery Unit (SRU) Project, Oriental Petrochemical Taiwan Company Purified Terephthalic Acid (PTA) Line 3 Project, Formosa Petrochemical Company Isoprene Monomer Project and KFPC Hydrogenated Styrenic Block Copolymers (HSBC) Project, were under execution smoothly. In 2015, our main targets in Taiwan will be CPC’s LNG Receiving Terminals and INA Plant to be established jointly with a foreign investment.

2014 CTCI Annual Report 29 Business Review & Outlook-Hydrocarbon

In China, CTCI successfully obtained several projects, such as FUPY EO/EG Project, DAC CSU Revamping Project, from both Taiwanese and foreign investors, and has accomplished the SHENGDA PTA Project satisfactorily. In 2015, it is anticipated that many Chinese, Taiwanese and foreign investors will keep increasing their funds to speed up respective investment projects. We will be intensively following up with our clients, including BASF, SK,Envonic, M&G, FPC Group, Far Eastern Group, Chimei Group, CNOOC, etc., for their potential investment in China.

In the Southeast Asia and India, CTCI signed a contract with Petroliam Nasional Berhad (PETRONAS) group, Malaysia’s national energy company, for its RFCC project in 2014, which is currently in engineering stage.

According to the current plans of ASEAN countries, it is projected that a number of investments in refinery, petrochemical, chemical plants and LNG terminals will be launched in coming years. In Malaysia, PETRONAS continues the tenders of downstream packages for Refinery and Petrochemical Integrated Development (RAPID) project. In Indonesia, national oil and gas company Pertamina is planning on several investments with its strategic partners from the Middle East, Japan, Thailand and China, etc. for brownfield refineries, greenfield refineries and petrochemical complex to meet the local demands in 2020. Private company like BP/Chandra Asri is conducting the feasibility study of condensate splitter project.

In Thailand, CTCI will keep following up with PTT Group for its potential investments, such as revamping projects of existing refineries, and new investments of bio-plastic products. We also follow closely on PTT Group’s overseas investment in ASEAN countries. As for India, we are keeping in touch with existing and potential customers for its new investments, such as national oil company IOCL is conducting the feasibility study of several petrochemical projects in its existing facilities while private company like Petronet is also under study on existing LNG Terminal expansion and new LNG terminal project.

30 2014 CTCI Annual Report Business Review & Outlook-Hydrocarbon

In the Middle East, CTCI continuously develops its business and dedicatedly maintaining its position in the local market. During the year 2014, we successfully completed QAPCO Furnaces Project and Ethylene Tank Project in Qatar. In addition, CTCI and Chiyoda, the reputable Japanese EPC contractor, formed a joint venture (CCJV) to perform Laffan Refinery Phase II Project; the project is expected to come on stream in 2016.

In Qatar, QP will make the feedstock ethane available to existing producers in Qatar and overall configuration will be clear in 2015, these include Qapco, Qatar Chemical Company (Q-Chem), Qatar Vinyl Company (QVC) and Ras Laffan Olefins Company. CTCI will continuously follow up for the coming projects with above-mentioned Clients, such as QAPCO Mixed Feed Cracker EP3 Project and QVC EDC Expansion Project.

In the Kingdom of Saudi Arabia (KSA), the unexpected drop in crude prices in 2014 required KSA to cut governmental spending. The state owned company Saudi Aramco will renegotiate some contracts and postpone some projects due to falling oil prices but will still focus on upstream gas development projects such as Fadhili gas field and tight gas at northwest fields. As for Saudi Basic Industries Corporation (SABIC), new opportunities such as Saudi Kayan Butadiene Project and New Furnaces Project will be tendered in 2015. For long term business plan, SABIC will focus on high value-added performance chemical products and oil to chemical (OTC) projects. CTCI will effectively participate in these bids. In United Arab Emirate (UAE), the oil and gas sector could be set for a period of decline due to current slump in oil prices. Abu Dhabi has considerable reserves built up from several years of fiscal surpluses; another period of efficient savings can be expected. CTCI will keep tracking for strategy development project in UAE and proactively participate in Borouge Polypropylene (PP) Project.

2014 CTCI Annual Report 31 Business Review & Outlook-Hydrocarbon

For other GCC countries, CTCI keeps dedicating its efforts to promote its business and explore more opportunities in the prosperous market in Bahrain, and Oman. In Oman, Oman Oil Refineries and Petroleum Industries Company (Orpic) is going to develop Liwa Petrochemical Industrial Complex (LPIC) in Sohar, the LPIC in Sohar which will also mark a significant expansion in the downstream petrochemical capacityin Oman. Abu Dhabi’s International Petroleum Investment Company (IPIC) together with Oman Oil Company (OOC) is going to build the Duqm Refinery and Petrochemical Complex. Besides, OOC’s affiliates also offer many investment opportunities such as Salalah Methanol Company Ammonia Plant and Takamul metaxylene (MX)/ purified isophthalic acid (PIA) Project. Bahrain Petroleum Company’s (BAPCO) major refinery expansion in Bahrain is also on the track and will both be materialized in 2016.

In addition, CTCI is also following up with the Iranian market, it is expected that the oil & gas industry will grow in the near future after sanction lift.

Among many new investments in the USA, CTCI focuses on the opportunity of engineering works from FPC Group’s petrochemical projects; once we secure the contract, construction works will be our next target. On the other hand, we are under discussion with local EPC companies for the cooperation to jointly develop the market and pursue more opportunities from international customers’ investments in the USA.

Despite the fact that CTCI is one of the leading EPC contractors, we can never overemphasize the importance of improving ourselves. In addition to all the facts mentioned above, CTCI also focuses on the projects in Malaysia, India, and continues to penetrate into Indonesia, Philippine, and U.S. markets. Several refinery and gas processing projects were announced this year and will soon be calling for tenders; CTCI will definitely seize the chance of entering new markets if the investment environments are proved safe for us.

32 2014 CTCI Annual Report Business Review & Outlook-Infrastructure, Environment & Power

II. Infrastructure, Environment & Power

TCI has been devoting itself to the developments of various infrastructure, environment, and power Cprojects for decades. Plenty achievements have been accomplished not only in Taiwan but also in China, South East Asia, India and the Middle East. The company’s commitment and reputation in delivering satisfactory services are recognized by clients in various industries.

Infrastructure Major Projects under Execution

Announcement Delivery Project

TAMHAI LIGHT RAIL TRANSIT TRACKWORKS AND Nov. 2014 2019 POWER SUPPLY PROJECT

Jul. 2014 2020 SINGAPORE MRT THOMSON LINE TRACKWORK PROJECT

TAICHUNG MCT WURI-WENXIN-BEITUN LINE POWER May 2011 2019 SUPPLY, COMMUNICATION, AND AUTO FARE COLLECTION SYSTEM PROJECT

SINGAPORE MRT DOWNTOWN LINE STAGE 3 Feb. 2011 2016 TRACKWORK PROJECT Major Projects Completed

TAIPEI MRT XINYI-SONGSHAN LINE SYSTEM ELECTRICAL AND MECHANICAL SYSTEM PROJECT

In 2014, CTCI maintained smooth progress for the ongoing rail projects in Taiwan, including Taipei MRT Songshan Line System Electrical and Mechanical System Project and Taichung Medium Capacity Transit Wuri-Wenxin-Beitun System Electrical and Mechanical System Project. To meet the schedule and regulatory requirements, CTCI has been endeavoring to keep it under smooth construction and Owner’s goal—providing the operation service on the Songshan Line is achieved. Up to now, the operation has been proven satisfactory to the public and the authorities concerned.

In addition, CTCI is developing on Light Rail Transportation business. CTCI has participated in the trackwork and power supply system in Tamhai Light Rail Transit project.

Following the successful awarding of the Singapore Downtown Line Stage 3 Trackwork, CTCI Corporation was again awarded the Thomson Line Trackwork Project in July 2014. CTCI will provide the engineering, procurement, construction (EPC), testing and commissioning services for the whole project, which is scheduled to be completed in December 2020. These achievements illustrate CTCI’s capability to enter global market.

2014 CTCI Annual Report 33 Business Review & Outlook-Infrastructure, Environment & Power

Following government development planning, several rail transportation projects in Taiwan will be constructed in coming years, such as Taipei Wanda-Zhonghe-Shulin Line Medium Capacity Transit Phase I Project, Taoyuan Green Line System Electrical and Mechanical Project, Sanying Line System Electrical and Mechanical Project and more others. We are aiming to participate in most of the projects. For overseas markets, the targeted areas include Southeast Asia and the Middle East in the years ahead. Moreover, through the collaboration with Chiyoda Corporation, we foresee that more opportunities will be jointly explored and secured.

General Industry

Major Projects under Execution

Announcement Delivery Project

AMIC/ TOHO TI-SPONGE YNP PROJECT EARLY WORK, Jan. 2015 2015 KSA

Aug. 2012 2015 CSCI ACL PLANT PROJECT, INDIA

FORMOSA VIETNAM HA TINH ISM PLANT ASU PROJECT, Aug. 2012 2015 VIETNAM

Major Projects Completed

CSC #3 CDQ BOILER SYSTEM RENEW EPC PROJECT, TAIWAN

CSC WATER SYSTEM AND GAS PIPING UTILITY ENGINEERING PROJECT, TAIWAN

CSCI ACL PLANT GEOTECHNICAL INVESTIGATION PROJECT, INDIA

TOHO TI-SPONGE YNP PROJECT, FEASIBILITY STUDY AND BASIC DESIGN WORK, KSA

With respect to the accomplishments in 2014, CSC #3 CDQ Boiler System Renew EPC Project and CSC Water System and Gas Piping Utility Engineering Project in Taiwan had been successfully completed, while the ongoing CSCI ACL Plant Project in India maintained smooth progress. In terms of project contracted, CTCI had been awarded AMIC/Toho YNP Ti-Sponge YNP Project Early Work in KSA, an important step for us to extend our service to Non-ferrous metal business.

Following the development planning of Taiwan-based steel producer, several steel revamping projects will be initiated in the coming year. For overseas markets, the targeted areas include India and the Middle East, covering CSCI Phase 2 Cold Roll Mill EPC Project, general industry projects in India in cooperation with other Taiwanese/Japanese companies, and AMIC/Toho YNP Ti-Sponge EPC Project in KSA. In addition, CTCI is allied with CSC as strategic partner aiming at the overseas steel plant

34 2014 CTCI Annual Report Business Review & Outlook-Infrastructure, Environment & Power

construction projects.

To expand our service overseas, CTCI collaborated with Chiyoda Corporation to jointly explore new opportunities by participating in the projects relating to the products of titanium sponge and copper smelter plant in the areas of the Middle East and Mexico, just to name a few. On the other hand, attention will be paid to the market of energy saving and waste heat recovery business and cooperate with technical providers for potential projects.

Air Pollution Control

Major Projects under Execution

Announcement Delivery Project

SHANGHAI BAOSHAN STEEL NO.4 SINTERING PLANT Jul. 2015 2016 SCR DE-NOX/DIOXIN E PROJECT, CHINA PAGBILAO POWER STATION UNIT 3 SEAWATER FGD Jul. 2014 2015 PLANT E+P PROJECT, PHILIPPINES TPC TALIN POWER PLANT 800MW X 2 SCR & DUCTING Oct. 2012 2015 SYSTEM E+P PROJECT, TAIWAN Major Projects Completed

SHANGHAI CHUNG LOONG 130T/H SCR DE-NOX EPC PROJECT, CHINA

HUANENG POWER INTERNATIONAL DALIAN COAL POWER FIRED UNITS 1 & 2 SCR DE-NOX PROJECT, CHINA

HUANENG POWER INTERNATIONAL DANDONG POWER COAL FIRED UNITS 1 & 2 SCR DE-NOX PROJECT, CHINA

HUA-YA / GUAN-YIN PLANT STOKER BOILER 50T/H X 3 SETS SCR, TAIWAN PTTGC I-4/2 PLANT SCR DE-NOX PROJECT, EPC, THAILAND

Since 1991, when CTCI's first Selective Catalytic Reduction (SCR) project was carried out, Air Pollution Control Project Team has been dedicated to the expertise in air pollution abatement for the waste gas from utilities and industrial facilities. As a SCR system supplier, CTCI’s Air Pollution Control Project Team, cooperating with internationally renowned boilermakers and SCR catalyst vendors, always provides clients with quality equipment. During the past 24 years, we have accomplished hundreds of sets of SCR De-NOx and Seawater FGD De-SOx plants across Taiwan, China, Thailand, Philippines, and the US. CTCI is also involved in SCR catalyst cleaning & rejuvenation, SOx removal systems, dioxin removal systems, CO removal systems, particle removal systems, and VOC systems. The integration of the above-mentioned expertise of the air quality control system (AQCS) meets the future needs of the global trend and technology development, and upgrades the capabilities of the ongoing EPCK activities of CTCI.

2014 CTCI Annual Report 35 Business Review & Outlook-Infrastructure, Environment & Power

Since the beginning of 2011, we have been carrying out Hua-Ya Cogeneration Stoker Boiler Plant Units 1-3 SCR De-NOx Project. After its completion, the plant has reduced NOx emissions of the public electricity operation and achieve the upgraded level of our expectation. We have also been awarded two contracts from China Aerospace Science & Technology to provide engineering design and commissioning supervision for Huaneng International’s electricity Dandong units 1 & 2 and Dalian units 1 & 2 coal-fired power SCR De-NOx system in Province of Liaoning, China.

In 2013, we accomplished IHI Talin renewable power plant SCR De-NOx reactor, air and flue duct, damper, expansion joint, and insulation engineering design and procurement project. Also, we completed 130T/H SCR De-NOx EPC project of Shanghai Chungloong paper industry in Mainland China, which is our first step to enter the realm of paper industry SCR De-NOx market. In 2014, we were awarded suppling seawater FGD De-SOx E+P project for Pagbilao ultra-super critical (USC) coal-fired thermal power plant in Philippines.

In 2015, we also commenced bidding Taichung Power Plant Units No. 1~4 Air Quality Control System Retrofit EPC Project of Taiwan Power Company, which is planning to retrofit four 550MW coal-fired power generating units of steam generator, ESP, and FGD system. We foresee plenty of opportunities in the Chinese market due to its rapidly growing power demand as the 12th five-year plan accelerating infrastructure and industrial development while restrictions to the emission level for various heavy polluting industries are stipulated. As a more stringent emission regulation is gradually imposed on the steel plants around the world, the steel sintering plant SCR of SCR de-nitrification project in Mainland China headed by Baoshan Steel Group (Shanghai) must remove nitrification, dioxin, and heavy metals within 2015 to 2016. In response to the air pollutant emission standard of electric facilities in conformity with announcement of environmental protection administration (EPA), we had visited approximately 25 plants requiring SCR de-nitrification technology to address existing nitrification pollutant problems, and such projects are expected to be completed within 2015 to 2018. We will strive for continual improvement in this regard for a cleaner, healthier, and better tomorrow.

Power Major Projects under Execution

Announcement Delivery Project

Dec. 2013 2016 TOP SMALL POWER PRODUCER PROJECT

Sep. 2013 2018 TUNG HSIAO POWER PLANT RENEWAL PROJECT

May 2012 2017 TALIN POWER PLANT RENEWAL PROJECT

Aug. 2011 2019 LINKOU POWER PLANT RENEWAL PROJECT

Apr. 2000 2016 TPC LUNGMEN NUCLEAR POWER PLANT PROJECT Major Projects Completed

KIMANIS 300MW COMBINED CYCLE POWER PLANT PROJECT

36 2014 CTCI Annual Report Business Review & Outlook-Infrastructure, Environment & Power

CTCI has participated in various power projects for decades and marks its role as one of the major turnkey contractors in power generation market by successful completions of Dah Tarn Combined Cycle Power Plant Project of Taiwan Power Company (TPC) in 2009 together with partners. With the capacity of 4,384 MW, this plant becomes one of the largest combined cycle power plants in the world, which is a notable contribution to Taiwan’s power industry.

Another remarkable achievement of the company is the accomplishment of couples of Central Utility Projects for PTT Utility Co. Ltd (PTTUT) and its successor Global Power Synergy Company Limited (GPSC), which is an amalgamated corporation between PTTUT and Independent Power (Thailand) Company Limited in Thailand since 2013, which generates electricity, steam and other utilities to nearby industrial users.

Following successful completion of Dah Tarn Combined Cycle Power Plant Project and Central Utility Projects, Kimanis 300 MW Combined Cycle Power Plant Project in Sabah, Malaysia, the largest IPP power plant in Sabah, is successfully completed and commercially operated in 2014, making a great contribution to long term power shortfall of Sabah State in Malaysia.

The recent major contracts received include Lin Kou 2,400 MW supercritical coal-fired power plant project in Taiwan, Talin 1,600 MW supercritical coal-fired power plant project in Taiwan, Tung Hsiao 2,700 MW combined cycle power plant project in Taiwan and Thai Oil 217 MW cogeneration plant project in Thailand.

CTCI is keen to expand its power generation business in Taiwan and other areas such as Vietnam, Indonesia, Brunei, Myanmar, the Middle East and China, and continue to build up reputation in EPC works for coal- fired or gas-fired utility power plant projects and cogeneration plant projects for heavy energy consumption industry sectors covering refinery, petrochemical plant, cement plant, pulp & paper mill and steel mill. It is the commitment of CTCI to bring cutting-edge technologies and reliable services to the clients.

2014 CTCI Annual Report 37 Business Review & Outlook-Infrastructure, Environment & Power

Environment & Water Treatment

Major Projects under Execution

Announcement Delivery Project

GRANTOP CHONGHWA MUNICIPLE SOLID WASTE Nov. 2014 2017 INCINERATION PROJECT

CDTT TAICHUNG PLANT EXPANSION 3 ENGINEERING Sep. 2014 2015 PROJECT

OPTC PTA LINE 3 PLANT WATER TREATMENT PLANT Feb. 2013 2015 PROJECT

CDTT TAICHUNG PLANT FINISHING LINE ENGINEERING Jan. 2013 2015 SERVICE PROJECT

OPTC PTA LINE 3 PLANT EFFLUENT TREATMENT PLANT Nov. 2012 2016 PROJECT

In 2014, CTCI maintained smooth progress for the ongoing projects on EPC works of PTA Wastewater Treatment Plant and Water Treatment Plant for Oriental Petrochemical (Taiwan) Co., Ltd (OPTC), engineering service works of Expansion 2 Finishing Line and Expansion 3 for Coring Display Technologies Taiwan (CDTT), and engineering service on mechanical/electrical/instrument work of Chonghwa Municipal Solid Waste Incineration Plant for Guangzhou Environment Protection Investment Group Co., Ltd (Grantop) in China. To achieve project goal and satisfy with Client’s requirements, CTCI has been endeavoring to keep aforesaid projects under smooth progress.

Through the operation of Overseas Waste to Energy (WtE) Business Development Committee, CTCI Group effectively integrated the resources within CTCI Group to provide comprehensive services covering project development/investment, feasibility study, consultancy, EPC and O&M. For 2015, CTCI’s main focus on WtE Business is to expand the overseas markets, including China, Malaysia, Singapore, Thailand, India and Indonesia. Furthermore, CTCI Group continues strengthening its competitiveness and localization via developing the adaptive specification and executive team to provide the appropriate and applicable solution for the said overseas market. As for water business, CTCI will continue seeking the opportunity to provide the optimal solution to overcome the shortage of global water supply and strengthen the capability of its subsidiaries to enter into highly localized and competitive market overseas.

38 2014 CTCI Annual Report Business Review & Outlook-Environment & Resources

III. Environment & Resources

nvironment & Resources Business Operations (ERBO), as one of the major business lines in ECTCI, focuses on the development, investment and operation & maintenance (O&M) for the environmental protection facilities, resource management and green energy, including waste to energy (WtE) plants, waste water treatment plants, industrial waste treatment plants, waste management, resources recycling, photovoltaic power plants (PVPP) and so on.

Currently, the business development and operation of ERBO is executed by KD Holding Corporation (KD), together with all its affiliates and subsidiaries: development & investment by Leading Energy Corporation, Fortune Energy Corporation, GD Development Corporation and KD, O&M by Sino Environmental Services Corporation as well as three overseas subsidiaries –SINOGAL Waste Services Co., Ltd (Macau)., GranSino Environmental Technology Co., Ltd (China) and Xiang Ding Environmental Consultant (Shanghai) Co., Ltd. (China) , waste management and resources recycling by HD Resource Management Corporation and BORETECH Resource Recovery Engineering Co., Ltd (Cayman).

The major works performed by ERBO are basically long term concession contracts with government and long term service agreements with government and/or private sector, presently including 2 WtE BOT concession contracts in Taiwan, 10 O&M service contracts for WtE plant in Taiwan and 2 in Macau, waste collection, transportation or treatment service contract for more than 19,000 waste generators in Taiwan, and 16 power purchase agreement of PVPP in Taiwan and 1 in the US. Besides, we are also performing works on maintenance, renewal and upgrading of mechatronics system in WtE plants, rail transportation system and other related facilities. For resources recycling, we manufacture the cleaning/ slicing machine for PET bottle and had whole plant exported to countries in Asia, Middle East, North America, South America, East Europe and Africa. We are also operating PET recycling business in China and US, from acquiring the used PET bottle, cleaning/slicing by our machine and producing the PET fiber as the final product.

Major Achievements in 2014 During 2014, ERBO kept maintaining smooth operation for its ongoing projects, and also had steady financial growth in line with our business objectives. With sound management and high profitability in its niche market, KD was ranked 5th in the investment holding sector among the “Top 500 Service Enterprises” by Common Wealth magazine in 2013. Besides, as a listed company in Taiwan, KD had been

2014 CTCI Annual Report 39 Business Review & Outlook-Environment & Resources

performing rather well regarding information disclosure and been awarded the top ranking Grade A++ in the Information Disclosure and Transparency Ranking System (IDTRS) of Taiwan in 2014. Based on the long term accumulation on technical knowledge and innovation orientated operation, we have acquired several patents on WtE technology and resources recycling to date, including 14 in Taiwan and 7 in China. For business development in 2014, we have also acquired fruitful achievements, including:

Waste Management and Renewal/Upgrade of Mechatronics System • Acquired the service contract for equipment maintenance and refuse crane operation for Southern District WtE Plant of Kaohsiung City. • Acquired the service contract for plant overhaul for Middle District WtE Plant of Kaohsiung City. • Followed the project of O&M for incineration plant of Taoyuan international airport, acquired the service contract of renewal/upgrade of mechatronics system of the plant. • Acquired the service contract for plant overhaul for Pingtung WtE Plant. • Followed the project of O&M supervision for Shanghai Laogang WtE plant, acquired the same service contract for Northern Zhongshan WtE plant of Guangdong province for 3 years. • Acquired the service contract for test-run of mechatronics system for Taoyuan airport MRT line.

Green Energy: PVPP • Acquired 20-year power purchase agreement (PPA) of roof-type PVPP for Yanchao depot of THSR (Taiwan High Speed Rail), now in commercial operation • Acquired 20-year PPA of roof-type PVPP for Wurih depot of THSR, now in commercial operation • Acquired 20-year PPA of roof-type PVPP for northern depot of Kaohsiung MRT, now in commercial operation • In US, we acquired the concession right for PVPP (10 MW approx.) in New Jersey, and plans to achieve commercial operation in middle of 2016.

Resources Recycling: supplying of PET bottle cleaning/slicing equipment and producing PET fiber • Acquired 20% share of BORETECH Resource Recovery Engineering Co., LTD (Cayman), and entered resources recycling business. • Achieved commercial operation of PET bottle recycling/slicing plant in the US to launch a new market of PET recycling business besides the existing market in China.

Future Outlook With on-going efforts, we continue to build up capabilities based on our core competences and experiences. To expand the business line to other related fields, the main developments include

40 2014 CTCI Annual Report Business Review & Outlook-Environment & Resources

expanding the WtE territory into overseas markets, vertically integrating and horizontally expanding the PET bottle recycling business, developing more categories on resources recycling business and expanding PVPP markets domestically and overseas, in order to promote environmental sustainability and maximizing shareholder value. The direction of development will be based on the market situation and future forecast, in different fields, which includes:

Environmental Protection, Renewal/Upgrade & Maintenance of Mechatronics system in Taiwan: • To improve technical capability deeply and to expand sales horizontally. • Environmental protection and water treatment: to focus on BOT or O&M service for sewage treatment project, e.g. Chungli sewerage treatment project. • Renewal/Upgrade of mechatronics system: to expand the corrosion prevention and renewal of boiler tube of WtE plant; to explore more opportunities accompanied with the coming commercial operation of Taoyuan Airport MRT line, Kaohsiung light rail system, and operation of airport transforming into enterprise model.

Actively expansion of WtE (incineration plant) business In China: • Following the successful experience of Shanghai Laogang, another O&M supervision service contract was awarded in Zhongshan, Guangdong in 2014. The market demand will continuously increase due to government plans to introduce such model into Shanghai comprehensively and Zhongshan, Guangdong in 2015, as well as into other areas later. • To continue the O&M supervision services in every province based on the successful experiences mentioned above. To launch investment or O&M management service as the government policy, statutory rule and environmental protection management being materialized and the market gradually reaching maturity.

In Southeast Asia Countries: • To keep actively developing and carefully choosing appropriate targets following years of market contacts and regional needs on environmental protection, and the expanding market potential in Southeast Asia ,. • To strive for Singapore No.6 WtE project.

In India: • With rapid economic growth and environmental pollution issues becoming more serious, the government is engaging in the implementation of WtE BOT project.

2014 CTCI Annual Report 41 Business Review & Outlook-Environment & Resources

• With approximately 45 municipals having more than 100 million population accompanied Corporate municipal solid waste generated around 80,000 tons, at least 80 WtE plants of 1,000 T/D scale in the country is predicted. • Based on the positive local EPC experiences and the optimized technology and cost, to cooperate with local enterprise with good operational record as well as favorable local connection, to jointly develop the local market. Sustainability

Resources Recycling • To vertically integrate and horizontally expand the PET bottle recycling business. • The expansion work of recycled PET fiber plant in China will be completed by middle of 2015, the production capability will be significantly increased. • To expand business volume in the US. • With a variety of spent resins/plastics, e.g. PS, PE, PP etc., possessing large market volume, we will apply the PET bottle washing/slicing technology to expand the resources recovery market.

Green Energy • To expand the project volume steadily. • Domestic solar power generation policy is bound to continue or be more active. The market volume forecasted is still large. Investment targets will be continually and carefully chosen in the fiercely competitive market. • To find the appropriate investment targets based on the successful development experiences in US and other CTCI group’s global business territory.

To continue our actions to deeply explore the overseas markets, ERBO will not only replicate our successful experiences in Taiwan, but also face the challenges in the changing international market, consequently we will be well prepared to effectively meet the needs in different markets.

42 2014 CTCI Annual Report CorporateCorporate Sustainability TCI was founded over 30 years and has now become a leading global provider of engineering Cservices and innovative technologies with dominance on international stage. In pursuit of the sustainable development and management performance of the company, CTCI constantly devotes in the implementation of Corporate Sustainability Social Responsibility (CSR) by responding to the issues cared by the stakeholders. In 2014, CTCI has been rated as A++ for Information Disclosure and Transparency Ranking System, listed among "Top 50 for Excellence in Corporate Social Responsibilities and retained Top 1 in the contractor sector for 11 years in a row in the Top 2000 Enterprises survey of CommonWealth Magazine. Moreover, recognized by the Taiwan Institute for Sustainable Energy, CTCI was honored with the "Services Industry Silver Award" under the Taiwan Top 50 Corporate Sustainability Report Award, "Transparency and Integrity Awards", and "Growth through Innovation Awards". It was also recognized with Public Construction Quality Excellence Award by Ministry of Economic affairs, Energy Saving and Carbon Reduction Badge by Environmental Protection Administration, Executive Yuan, and Taipei City Excellent Health Workplace. Moreover, CTCI received a special interview from CommonWealth Magazine on the topic of "The Best Practice" and was invited to deliver a speech at Taiwan Stock Exchange (TWSE) to share experiences on integrity management and CSR implementation in addition to attending a seminar on corporate sustainability. These special honors represent CTCI's commitment and devotion in CSR with high recognition, which also fully exhibits the actual actions taken by CTCI with determination to give back to society.

Projecting into the future, under the philosophy of corporate sustainability, we have developed mid-term objectives and strategies in an attempt to proactively create profits and growth, strengthen organizational synergies and manpower qualities, enhancing brand image and corporate competitiveness. Besides, to strengthen CSR conducts in 2015, we will implement e-voting and strengthen information security management in operation and governance, continue to promote

▲President Michael Yang (left) received the certification for the ▲SVP M. C. Hsiao (right) represents CTCI to accept the Taiwan CSR Report from Peter Pu, Managing Director of BSI Taiwan. Corporate Sustainability Awards from Ming-Chung Tseng, Chairman of Financial Supervisory Commission.

2014 CTCI Annual Report 43 Corporate Sustainability

green engineering and establish data system platform in environmental protection, promote corporate volunteers and accentuate health promotion activities in response to Occupational Safety and Health Act in social participation. To follow up the trends of international sustainability for expansion of overseas business and enhancement of international visibility, we have started planning for listing on DJSI (Dow Jones Sustainability Index). The aim is to constantly grow and prosper in order to meet the expectation of our stakeholders. We believe that under the full efforts exerted by CTCI employees, we will soon succeed and accomplish our goals.

Looking Back at 2014 with Active Progress, Surpassing and Creating Win-Win Situations Looking back at 2014, in terms of "operation and governance", our business strategy has shifted from conservative to proactive. In spite of the increasingly intense market competition and facing tough competitors, we took challenges courageously and marched forward in pursuit of sustainable growth with carefully constructed risk management. Under the full collaboration of the group, our performance in 2014, regardless in new contract signing, revenue, or backlogs, has far exceeded that of 2013.

With regard to “environmental protection”, we continued to promote green engineering concept in 2014 to help customers adopt economical and feasible environmental protection and energy saving project with a full life cycle perspective from the engineering design stage of the plant to the final decommissioning. Consequently, CTCI will create win-win situations among partners, stakeholders, and social environment.

Other than taking consideration of the evaluation standards of DJSI, CTCI strengthens its conduct

▲CTCI evaluated as Top 5% in the “2014 Corporate Governance Evaluation System” lunched by TWSE and Taipei Exchange.

44 2014 CTCI Annual Report Corporate Sustainability

in terms of environmental protection and energy saving. CTCI also collects various information and develops new items in environmental protection and energy saving measures from the experience of cooperating with international engineering companies, thereby implementing the energy saving and environmental protection management of various job sites. Additionally, through contests held and advocacy, CTCI employees start to identify with the concept of energy saving and carbon reduction to establish good habits of green protection.

For supply-chain management, we also encourage the vendors/suppliers to jointly invest in environmental protection. Starting from 2014, the supply-chain information assessment standards has included environmental management, labor conditions, human rights, and social impacts as well as other corporate sustainability evaluation for use by CTCI as important reference in procurement strategies to establish a supply chain of sustainability development.

In terms of "social participation", CTCI targets at company employees, average social groups and community residents. For employee care, in addition to providing quality learning channel and environment, valuing employee personal career development and comprehensively promoting individual development plan (IDP), CTCI is committed in the establishment of a safe, happy and healthy work environment by introducing international safety and health environment, quality management standards, and rigorous internal audit standards in an attempt to build a safe, quality and protecting work environment through layers of control. In addition, we established a health center to provide stationed services of professional physician while employing two registered nurses to assist with medical care and organizing various health promotion activities, so employees will receive care physically, mentally and spiritually. In 2014, we also completed the health management system to carry out exclusive health promotion plan for different groups of employees also to cooperating with

▲A group photo showing President Michael Yang (fifth from left), students granted CTCI 2014 academic scholarship, and guests attending the ceremony.

2014 CTCI Annual Report 45 Corporate Sustainability

external resources such as the health bureau, health service center or hospitals and clinics for providing employees with medical information platform through a comprehensive health care network. Thus, we were continuously awarded Badge of Accredited Healthy Workplace certified by Health Promotion Administration, Ministry of Health and Welfare as well as 2014 Taipei City Excellent Healthy Workplace Prize by Department of Health, Taipei City Government.

With regard to community resident communication and community integration, CTCI has been cooperated with Zhishan Cultural and Ecological Garden for years and co-sponsored and organized Shi- Lin District annual cultural festival. In 2014, a performance report on the "Shilin Cultural Festival: Scenic Zhishan" were printed to record the origin and development of past activities and distributed to the VIPs and participating public at Cross Strait (Xiamen) Cultural Industry Fair in 2015. This way, we may better promote Shi-Lin local music and cultural integration activities to the public, thereby linking the network for cross-straits cultural exchange, benefiting the promotion of community culture.

Projecting into 2015, Six Major Strategies for Constant Improvement and Excellent Performance Projecting into the 2015 planning and in terms of corporate governance, CTCI has defined the overall business orientation as "Start Afresh with Firm Determination" by setting up three years midterm objectives between 2015 and 2017 along with developing six strategies. Meanwhile, we will introduce e-voting system to strengthen the spirit of corporate governance. Additionally, to reduce information security risk, we have specially introduced ISO27001 with certification from BSI to continue advancement in the information security management system as well as promoting this spirit to all

▲CTCI has sponsored the "Shilin Cultural Festival: Scenic Zhishan" for 4 years in a row to promote ▲Charity bread sale by Children Are Us Foundation. local cultural development.

46 2014 CTCI Annual Report Corporate Sustainability

subsidiaries, thereby comprehensively upgrading the group information security management in conformance to the international quality demand.

The aforementioned six strategies can be divided into 2 dimensions, namely business and management. The key to business dimension includes two categories of "maximize existing business" and “cultivating new venture". On the one hand, it will strengthen the front-end engineering design ability by extending and building solid foundation to maintenance business while providing customer with better services and winning customer trust. On the other hand, it will help CTCI acquire certain professional technology and tendering qualification in a short period of time, thereby striving for more business opportunities while constantly expanding overseas market business and maximizing existing business. In response to the diverse and fluctuating global environment, we closely observe the latest market development with foundation in revenue stabilization and profitable business to seek for more forward-looking investment opportunities.

The strategies related to management are divided into "optimizing engineering services," "cultivating all- round talent," "building corporate brand image," and "strengthening synergy throughout CTCI Group.”In terms of "optimizing service," CTCI is committed to improving the operation process, establishing new type of supply chain for shortening the construction schedule, saving costs, and providing customers with better, faster and more competitive service quality. We also continue to promote "talent cultivation" by providing employees with different educational trainings required for each profession. We also encourage colleagues to take lifelong learning through professional curriculum in finance, accounting, legal affairs, human resource, and leadership, so that they will develop internationalization and foresight and thereby possess the competency for different critical positions.

In spite of the excellent reputation accumulated by CTCI in society, CTCI used to focus less on the promotion of brand image. In the future, the company will strengthen "corporate brand" marketing and extend its global visibility, thereby polish the brand image. Within the organization, CTCI will strengthen its corporate philosophy by actively building internal consensus and gather employee cohesion. In terms of "strengthening synergy throughout CTCI Group", CTCI has established a specialized department in 2015 which will maximize the group synergies through systematic operation and complete communication.

For conducts in environmental protection, CTCI also continues to introduce and develop green engineering technology in its core competency so that CTCI can constantly propose environmental protection and energy saving measures in the stages of project quotation and execution, helping customers implement green engineering policy. Internally, CTCI will continue to strengthen green and energy-saving measures by encouraging the colleagues to provide creativity and develop innovation in addition to implementing such measures in life through the offer of various incentives. Moreover, the

2014 CTCI Annual Report 47 establishment of data system platform collects data related to energy-saving and emission reduction for analysis and basis of future improvement.

As for social participation, since "talent" is the most important asset of CTCI, “cultivation” becomes an issue which CTCI considerably values. In 2015, we will strengthen ▲CTCI routinely holds health seminars to strengthen the employees' health concept. online curriculum and the implementation of Individual Development Plan (IDP) to promote the overall human resource quality. Meanwhile, we will continue to organize effective health promotion activities and develop individual health plan and assist with execution for special groups, in an attempt to keep the employee's physical and mental state at the optimal condition. Moreover, CTCI has long been engaged in the active social welfare campaigns in cooperation with welfare organizations. For example, Syin-Lu Social Welfare Foundation and the Children Are Us Foundation are our long-term cooperation partners. In the future, in addition to strengthening the cooperation scope, CTCI will promote enterprise volunteer activities with subsidies to encourage all CTCI employees to get involved.

Upholding CTCI Principles, Realizing Its Vision and Fulfilling CSR Looking back over ten years ago, CTCI envision “To become a leading global provider of engineering services and innovative technologies" and now with the joint efforts from all group employees, we have accomplished the objectives set up then.

Projecting to the future, CTCI has developed a new vision to become “The Most Reliable Global Engineering Service Provider" and upgrading the group mission as "To Satisfy Our Customers with the Optimized Engineering Services." Although this objective was profound, it is not unreachable with the efforts from all employees persisting in the corporate principles of "Professionalism; Integrity; Teamwork; Innovation" CTCI is due to fulfill its commitment to its employees, shareholders, customers, societies, and environment, thereby fulfills corporate social responsibility and drive the corporation to grow sustainably.

48 2014 CTCI Annual Report Financial Section Financial Section

50 Report of Independent Accountants 51 Five-Year Financial Summary 52 Financial Review 53 Balance Sheets 55 Income Statements 56 Statements of Changes in Equity 58 Statements of Cash Flows 60 Consolidated Balance Sheets 62 Consolidated Income Statements 63 Consolidated Statements of Changes in Equity 65 Consolidated Statements of Cash Flows

2014 CTCI Annual Report 49 Report of Independent Accountants

To the Board of Directors and Stockholders of CTCI Corporation

We have audited the accompanying non-consolidated balance sheets of CTCI Corporation as of December 31, 2014 and 2013, and the related non-consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audits. We did not audit the financial statements of investments recognized under the equity method that are included in the non-consolidated financial statements. The investment amounts under the equity method on December 31, 2014 and 2013 were $1,809,120 and $860,428, respectively, which constituted 4.40% and 2.55% of total assets, respectively. Their comprehensive income for the years ended December 31, 2014 and 2013 (including income and comprehensive income from subsidiaries, affiliates and joint ventures recognised under the equity method) were $68,661 and $1,227, respectively, which constituted 3.61% and 6.43% of total comprehensive income, respectively. Those financial statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the reports of the other independent accountants.

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other independent accountants provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other independent accountants, the non-consolidated financial statements referred to in the first paragraph, present fairly, in all material respects, the financial position of CTCI Corporation as of December 31, 2014 and 2013, and the results of its financial performance and cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”.

March 19, 2015 Taipei, Taiwan Republic of China

The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

50 2014 CTCI Annual Report Financial Section

Five-Year Financial Summary CTCI Corporation Years Ended December 31, 2014, 2013, 2012, 2011, and 2010

Thousands of NT$

2014(IFRS) 2013(IFRS) 2012(IFRS) 2011(ROC) 2010(ROC)

For the Year:

Revenues $38,060,203 $31,446,326 $34,824,383 $33,000,979 $27,426,236

Costs and expenses 36,167,599 29,277,146 32,467,720 30,888,591 25,557,713

Gross profit 1,892,604 2,169,180 2,356,663 2,112,388 1,868,523

Net income (loss) 1,882,119 1,641,730 2,445,282 2,262,733 1,961,259

At Year-End:

Total assets $41,144,103 $33,748,107 $36,867,212 $34,525,101 $31,155,282

Total equity 17,137,716 16,472,113 16,408,354 14,162,273 12,881,198

Working capital 7,235,025 7,445,462 6,431,870 6,661,003 5,798,287

Current ratio(%) 135 152 137 136 134

Long-term debt - - - - -

Net income (loss) per common share NT$2.51 NT$2.22 NT$3.39 NT$3.22 NT$2.91

Shareholders' equity per common share 22.68 22.09 22.38 19.92 18.58

Other Statistics:

Number of shares outstanding*(thousands) 756,273 746,177 733,738 711,396 693,751

Total Assets Total Equity (Thousands NT$) (Thousands NT$)

20102010 31,155,282 49,390,869 20102010 12,881,198

20112011 34,525,101 51,859,553 20112011 14,162,273

20122012 36,867,212 53,790,200 20122012 16,408,354

20132013 33,748,107 48,837,298 20132013 16,472,113

20142014 41,144,103 56,838,301 20142014 17,137,716

2010 2010 CTCI CTCI Consolidated 2011

2011 2012 2014 CTCI Annual Report 51 2013 2012 2014 TOTAL ASSETS TOTAL EQUITY 2013

2014 CONTRACT AMOUNT

CONTRACT AMOUNT Financial Section

Financial Review CTCI Corporation (Expressed in Thousands, except as otherwise indicated)

Operating Results In fiscal year ended December 31, 2014, total revenues reached NT$38,060,203 (US$1,203,675), a increase of 21.03% from the previous fiscal year. The operating costs increased by 23.54%, to NT$36,167,599 (US$1,143,821).

The cost as a percentage of revenues was 95.03%, a 1.93% increase from the previous year. As a result, income from continuing operations before income tax increased NT$333,379, to NT$2,120,380 (US$67,058), and net income increased NT$240,389, to NT$1,882,119 (US$59,523). Net income per common share increased NT$0.29 (in dollars) per share from the previous period, to NT$2.51 (US$0.0794) (in dollars).

During the term, the Company was awarded a total of NT$77,866 million (US$2,463 million) in contracts.

Financial Position As of December 31, 2014, total assets amounted to NT$41,144,103 (US$1,301,205), NT$7,395,996 higher than a year earlier. Underpinning this drop was a NT$8,051,052 increase in due from customers for contract work, to NT$13,957,407 (US$441,411), and a decrease of NT$106,347 in cash and cash equivalents to NT$4,579,282(US$144,822). An increase of NT$1,475,523 in investments accounted for under equity method, to NT$11,110,900 (US$351,388).

On the other side of the balance sheet, total current liabilities increased NT$6,434,756, to NT$20,713,133 (US$655,064), mainly due to the decrease of due to customers for contract work.

Total equity raised NT$665,603 to NT$17,137,716 (US$541,990), reflecting a capital increase during the fiscal year.

Cash Flow Net cash provided by operating activities totaled NT$1,378,965 (US$43,611), comprising NT$2,120,380 (US$67,058) in profit before tax and NT$687,224 (US$21,733) used in non-cash adjustments, NT$784,372 (US$24,806) provided by net changes in operating assets and liabilities.

Net cash used in investing activities amounted to NT$253,115 (US$8,005), due to increase in long-term investments - subsidiaries.

Net cash used in financing activities totaled NT$1,232,197 (US$38,969), due to increase in cash dividends paid.

As a result, cash and cash equivalents, in the end of year, decreased NT$106,347, to NT$4,579,282 (US$144,822).

52 2014 CTCI Annual Report Financial Section

Balance Sheets Balance Sheets December 31, 2014 and 2013 December 31, 2014 and 2013

Thousands of Thousands of Thousands of NT$ Thousands of NT$ US$ US$

2014 2013 2014 2014 2013 2014

ASSETS LIABILITIES AND EQUITY

Current Assets Current Liabilities

Financial liabilities at fair value through profit or loss - current $14,437 $19,503 $457 Cash and cash equivalents $4,579,282 $4,685,629 $144,822 Notes payable 5,083 2,100 161 Financial assets at fair value through profit or loss – current 1,174,481 463,231 37,144 Accounts payable 10,356,196 9,207,734 327,520 Available-for-sale financial assets - current 371,518 370,594 11,749 Accounts payable - related parties 1,522,114 896,032 48,138 Notes receivable, net 21 3,202,568 1 Due to customers for contract work 6,082,764 2,674,825 192,371

Notes receivable - related parties 1,411,400 - 44,636 Other payables 1,298,698 1,286,278 41,072

Accounts receivable, net 2,044,749 1,130,606 64,666 Other payables - related parties 18,555 87,843 587

Accounts receivable, net - related parties 21,252 285,310 672 Current income tax liabilities 210,156 - 6,646 Other current liabilities 1,205,130 104,062 38,113 Due from customers for contract work 13,957,407 5,906,355 441,411 Current Liabilities 20,713,133 14,278,377 655,064 Other receivables 68,057 40,900 2,152 Non-current liabilities Other receivables - related parties 1,605,558 2,802,721 50,777

Current income tax assets 113,187 120,067 3,580 Deferred income tax liabilities 245,922 246,355 7,777 Other non-current liabilities 3,047,332 2,751,262 96,374 Prepayments 2,601,246 2,043,470 82,266 Non-current liabilities 3,293,254 2,997,617 104,151 Other current assets - 672,388 - Total Liabilities 24,006,387 17,275,994 759,215 Current Assets 27,948,158 21,723,839 883,876 EQUITY

Non-current assets Share capital

Common stock 7,575,303 7,474,343 239,573 Financial assets measured at cost - non-current 570,556 572,877 18,044

Investments accounted for under equity method 11,110,900 9,635,377 351,388 Capital surplus

Property, plant and equipment 354,847 376,216 11,222 Capital surplus 3,230,033 3,070,085 102,152

Investment property 156,904 158,226 4,962 Retained earnings

Intangible assets 108,317 99,555 3,426 Legal reserve 2,663,798 2,499,625 84,244

Deferred income tax assets 421,073 395,139 13,317 Special reserve 778,162 778,162 24,609

Other non-current assets 473,348 786,878 14,970 Unappropriated retained earnings 2,651,692 2,432,195 83,861

Non-current assets 13,195,945 12,024,268 417,329 Other equity interest

TOTAL ASSETS $41,144,103 $33,748,107 $1,301,205 Other equity interest 250,563 229,538 7,925 Treasury stocks (11,835) (11,835) (374) (Continued) Total equity 17,137,716 16,472,113 541,990 Significant Contigent Liabilities and Unrecognised Contract Commitments Significant Events After the Balance Sheet Date

TOTAL LIABILITIES AND EQUITY $41,144,103 $33,748,107 $1,301,205

2014 CTCI Annual Report 53 2014 CTCI Annual Report 54 Financial Section

Income Statements Statements of Changes in Equity Years Ended December 31, 2014 and 2013 Years Ended December 31, 2014 and 2013 (Expressed in NT$ Thousands)

Thousands of Thousands of NT$ Retained Earnings Other equity interest US$ Cumulative 2014 2013 2014 translation Unrealized gain or Operating revenue $38,060,203 $31,446,326 $1,203,675 Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury 2013 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Operating costs (36,169,536) (29,279,082) (1,143,882) Balance at January 1, 2013 $7,349,960 $2,757,865 $2,260,381 $834,747 $3,075,527 ($41,379) $183,088 ($11,835) $16,408,354 Net operating margin 1,890,667 2,167,244 59,793 Appropriation of 2012 earnings

Realized profit on from sales 1,937 1,936 61 Legal reserve - - 239,244 - (239,244) - - - -

Gross profit 1,892,604 2,169,180 59,854 Special reserve - - - (56,585) 56,585 - - - - Cash dividends - - - - (2,102,403) - - - (2,102,403) Operating expenses Profit for 2013 - - - - 1,641,730 - - - 1,641,730

General & administrative expenses (745,469) (946,609) (23,576) Difference between proceeds on acquisition of or disposal of equity interest - 137,924 ------137,924 Research and development expenses (81,630) (92,576) (2,581) in a subsidiary and its carrying amount

Total operating expenses (827,099) (1,039,185) (26,157) Convertible bonds transferred to common - (13,099) ------(13,099) stock Operating profit 1,065,505 1,129,995 33,697 Employee stock options granted - 51,772 ------51,772 Non-operating income and expenses Employee stock options exercised 124,383 135,623 ------260,006

Cumulative translation differences of Other income 275,691 147,472 8,719 - - - - - 48,557 - - 48,557 foreign operations Other gains and losses 61,097 (29,268) 1,932 Unrealized gain on valuation of available------39,272 - 39,272 Finance costs (118) - (4) for-sale financial assets

Share of profit of associates and joint ventures accounted for under equity method 718,205 538,802 22,714 Balance at December 31, 2013 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113

Total non-operating income and expenses 1,054,875 657,006 33,361 Retained Earnings Other equity interest Profit before income tax 2,120,380 1,787,001 67,058 Cumulative Income tax expense (238,261) (145,271) (7,535) translation Unrealized gain or Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury Profit for the year $1,882,119 $1,641,730 $59,523 2014 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Other comprehensive income Balance at January 1, 2014 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113 Appropriation of 2013 earnings Cumulative translation differences of foreign operations $95,209 $48,557 $3,011 Legal reserve - - 164,173 - (164,173) - - - - Unrealized (loss) gain on valuation of available-for-sale financial assets (59,613) 20,141 (1,885) Cash dividends - - - - (1,498,449) - - - (1,498,449) Total share of other comprehensive income of associates and joint (14,571) 19,131 (461) Profit for 2014 - - - - 1,882,119 - - - 1,882,119 ventures accounted for using equity method Difference between proceeds on $21,025 $87,829 $665 Other comprehensive income for the year acquisition of or disposal of equity interest - 11,961 ------11,961 Total comprehensive income for the year $1,903,144 $1,729,559 $60,188 in a subsidiary and its carrying amount Convertible bonds transferred to common Basic earnings per share (in dollars) $2.51 $2.22 $0.0794 - (683) ------(683) stock

Diluted earnings per share (in dollars) $2.48 $2.17 $0.0784 Employee stock options granted - 15,610 ------15,610 Employee stock options exercised 100,960 133,060 ------234,020

Cumulative translation differences of - - - - - 95,209 - - 95,209 foreign operations

Unrealized gain on valuation of available------(74,184) - (74,184) for-sale financial assets

Balance at December 31, 2014 $7,575,303 $3,230,033 $2,663,798 $778,162 $2,651,692 $102,387 $148,176 ($11,835) $17,137,716 Note 1: The directors’ and supervivors’ remuneration of $15,000 and the employees’ bonus of $132,407 for the years ended December 31, 2012 has been deducted from the statement of comprehensive income. Note 2: The directors’ and supervivors’ remuneration of $15,000 and the employees’ bonus of $88,815 for the years ended December 31, 2013 has been deducted from the statement of comprehensive income.

55 2014 CTCI Annual Report 56 2014 CTCI Annual Report Financial Section

Statements of Changes in Equity Years Ended December 31, 2014 and 2013 (Expressed in US$ Thousands)

Retained Earnings Other equity interest Cumulative translation Unrealized gain or Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury 2013 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Balance at January 1, 2013 $232,447 $87,219 $71,486 $26,399 $97,265 ($1,309) $5,790 ($374) $518,923 Appropriation of 2012 earnings Legal reserve - - 7,566 - (7,566) - - - - Special reserve - - - (1,790) 1,790 - - - - Cash dividends - - - - (66,490) - - - (66,490) Profit for 2013 - - - - 51,921 - - - 51,921 Difference between proceeds on acquisition of or disposal of equity interest - 4,362 ------4,362 in a subsidiary and its carrying amount

Convertible bonds transferred to common - (414) ------(414) stock

Employee stock options granted - 1,637 ------1,637 Employee stock options exercised 3,934 4,289 ------8,223

Cumulative translation differences of - - - - - 1,536 - - 1,536 foreign operations

Unrealized gain on valuation of available------1,242 - 1,242 for-sale financial assets

Balance at December 31, 2013 $236,381 $97,093 $79,052 $24,609 $76,920 $227 $7,032 ($374) $520,940

Retained Earnings Other equity interest Cumulative translation Unrealized gain or Common Capital Legal Special Unappropriated differences of loss on available-for- Treasury 2014 stock surplus reserve reserve earnings foreign operations sale financial assets stocks Total Balance at January 1, 2014 $236,381 $97,093 $79,052 $24,609 $76,920 $227 $7,032 ($374) $520,940 Appropriation of 2013 earnings Legal reserve - - 5,192 - (5,192) - - - - Cash dividends - - - - (47,389) - - - (47,389) Profit for 2014 - - - - 59,523 - - - 59,523 Difference between proceeds on acquisition of or disposal of equity interest - 378 ------378 in a subsidiary and its carrying amount

Convertible bonds transferred to common - (22) ------(22) stock

Employee stock options granted - 494 ------494 Employee stock options exercised 3,193 4,208 ------7,401 Cumulative translation differences of - - - - - 3,011 - - 3,011 foreign operations Unrealized gain on valuation of available------(2,346) - (2,346) for-sale financial assets

Balance at December 31, 2014 $239,574 $102,151 $84,244 $24,609 $83,862 $3,238 $4,686 ($374) $541,990 Note 1: The directors' and supervivors' remuneration of $503 and the employees' bonus of $4,435 for the years ended December 31, 2012 has been deducted from the statement of comprehensive income. Note 2: The directors' and supervivors' remuneration of $474 and the employees' bonus of $2,809 for the years ended December 31, 2013 has been deducted from the statement of comprehensive income.

2014 CTCI Annual Report 57 Financial Section

Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax for the year $2,120,380 $1,787,001 $67,058

Adjustments to reconcile net income to net cash (used in) provided by operating activities

Income and expenses having no effect on cash flows Impairment losses 81,521 81,123 2,578 Depreciation 56,281 70,854 1,780 Amortization 105,544 115,187 3,338 (Reversal of) provision for allowance for doubtful accounts (87,570) 79,931 (2,769) Loss on valuation of financial assets 7,737 107,625 245 Gain on disposal of property, plant and equipment (155) (1,701) (5) Compensation costs for employee stock options 5,266 27,038 167 Gain on disposal of investments (1,156) (86,273) (37) Investment income accounted for under the equity method (718,205) (538,802) (22,714) Realized gain from intercompany transactions (1,937) (1,936) (61) Dividends income (27,185) (27,772) (860) Interest income (107,365) (66,831) (3,395) Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss (750,670) 627,130 (23,740) Notes receivable (including related parties) 1,826,206 (3,250,915) 57,755 Acounts receivable (including related parties) (597,573) 634,002 (18,899) Other receivables (18,586) 19,261 (588) Other receivables - related parties 55,958 247,190 1,770 Due from customers for contract work (8,051,052) 1,337,237 (254,619) Inventories 0 1,265 0 Prepayments (557,776) 303,543 (17,640) Other current assets 672,388 (466,524) 21,265 Other non-current assets 323,416 138,685 10,228 Net changes in liabilities relating to operating activities Notes payable 2,983 (788) 94 Accounts payable 1,148,462 2,276,851 36,321 Accounts payable - related parties 626,082 100,242 19,800 Due to customers for contract work 3,407,939 (5,967,044) 107,777 Other payables 12,420 (153,665) 393 Other payables - related parties (69,288) 3,946 (2,191) Accrued pension liabilities 83,651 309,466 2,646 Other current liabilities 1,101,068 23,272 34,822 Cash generated from (used in) operations 648,784 (2,271,402) 20,519 Interest received 77,568 45,922 2,453 Dividends received 700,205 796,541 22,144 Income tax paid (47,592) (430,945) (1,505) Net cash provided by (used in) operating activities 1,378,965 (1,859,884) 43,611 (Continued)

58 2014 CTCI Annual Report Financial Section

Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 CASH FLOWS FROM INVESTING ACTIVITIES

Decrease (increase) in other receivables-related parties $1,141,093 ($1,069,658) $36,088

Interest received-related parties 21,338 20,945 675

(Increase) decrease in available-for-sale financial assets (41,155) 121,453 (1,302)

Decrease in financial assets measured at cost (79,200) 0 (2,505)

Increase in long-term investments - subsidiaries (1,175,699) (15,755) (37,183)

Proceeds from disposal of long-term investments - subsidiaries 0 12 0

Acquisition of property, plant and equipment (33,616) (42,078) (1,063)

Proceeds from disposal of property, plant and equipment 181 2,915 6

Increase in computer software cost (76,881) (76,742) (2,431)

Increase (decrease) in refundable deposits (9,176) 2,490 (290)

Net cash used in investing activities (253,115) (1,056,418) (8,005)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in deposits received 32,232 8,005 1,019

Cash dividends paid (1,498,449) (2,102,403) (47,389)

Proceeds from employee stock options exercised 234,020 260,006 7,401

Net cash used in financing activities (1,232,197) (1,834,392) (38,969)

Decrease in cash and cash equivalents (106,347) (4,750,694) (3,363)

Cash and cash equivalents at beginning of year 4,685,629 9,436,323 148,185

Cash and cash equivalents at end of year $4,579,282 $4,685,629 $144,822

2014 CTCI Annual Report 59 Financial Section

Consolidated Balance Sheets December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014

ASSETS

Current Assets

Cash and cash equivalents $9,810,303 $9,327,026 $310,256

Financial assets at fair value through profit or loss - current 1,783,575 843,215 56,407

Available-for-sale financial assets - current 680,181 604,730 21,511

Notes receivable, net 11,774 3,244,527 372

Notes receivable - related parties 1,411,400 - 44,636

Accounts receivable, net 4,964,255 4,367,870 156,997

Accounts receivable - related parties 3,927 4,136 124

Due from customers for contract work 18,758,973 12,372,269 593,263

Other receivables 283,345 175,433 8,961

Other receivables - related parties 38,008 67,235 1,202

Current income tax assets 170,268 163728 5,385

Inventories 316,169 89,661 9,999

Prepayments 3,632,839 3,002,991 114,891

Other current assets 225,591 869,378 7,135

Current Assets 42,090,608 35,132,199 1,331,139

Non-current assets

Financial assets measured at cost - non-current 574,622 584,153 18,173

Investments accounted for using equity method 2,065,874 675,002 65,335

Property, plant and equipment 7,026,878 7,150,831 222,229

Investment property 827,635 833,141 26,174

Intangible assets 118,638 114,766 3,752

Deferred income tax assets 495,877 449,881 15,682

Other non-current assets 3,638,169 3,897,325 115,059

Non-current assets 14,747,693 13,705,099 466,404

TOTAL ASSETS $56,838,301 $48,837,298 $1,797,543

(Continued)

60 2014 CTCI Annual Report Financial Section

Consolidated Balance Sheets Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 LIABILITIES AND EQUITY

Current Liabilities

Short-term borrowings $353,618 $991,965 $11,183

Financial liabilities at fair value through profit or loss - current 14,907 20,061 471

Notes payable 19,397 5,518 613

Accounts payable 15,454,053 13,348,156 488,743

Accounts payable - related parties 189,299 16,134 5,987

Due to customers for contract work 9,989,561 5,427,224 315,925

Other payables 2,523,644 2,688,807 79,812

Current income tax liabilities 375,668 172,416 11,881

Other current liabilities 2,113,784 987,389 66,850

Current Liabilities 31,033,931 23,657,670 981,465 Non-current liabilities

Long-term borrowings 2,926,350 3,296,297 92,547

Deferred income tax liabilities 440,049 422,653 13,917

Other non-current liabilities 2,734,962 2,515,189 86,495

Non-current liabilities 6,101,361 6,234,139 192,959

Total Liabilities 37,135,292 29,891,809 1,174,424 Equity

Share capital

Common stock 7,575,303 7,474,343 239,573 Capital surplus

Capital surplus 3,230,033 3,070,085 102,152 Retained earnings

Legal reserve 2,663,798 2,499,625 84,244

Special reserve 778,162 778,162 24,610

Unappropriated retained earnings 2,651,692 2,432,195 83,861 Other equity interest

Other equity interest 250,563 229,538 7,924

Treasury stocks (11,835) (11,835) (374)

Equity attributable to owners of the parent 17,137,716 16,472,113 541,990

Non-controlling interest 2,565,293 2,473,376 81,129

Total equity 19,703,009 18,945,489 623,119 Significant Contigent Liabilities and Unrecognised Contract Commitments Significant Events After the Balance Sheet Date

Total liabilities and equity $56,838,301 $48,837,298 $1,797,543

2014 CTCI Annual Report 61 Financial Section

Consolidated Income Statements Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014

Operating revenue $57,691,937 $52,221,958 $1,824,539

Operating costs (53,526,514) (48,004,905) (1,692,805)

Gross profit 4,165,423 4,217,053 131,734

Operating expenses

General & administrative expenses (1,617,734) (1,743,753) (51,162)

Research and development expenses (103,994) (107,525) (3,289)

Total operating expenses (1,721,728) (1,851,278) (54,451)

Operating income 2,443,695 2,365,775 77,283

Non-operating income and expenses

Other income 352,471 175,479 11,147

Other gains and losses 167,836 723 5,308

Finance costs (89,005) (106,126) (2,815)

Share of profit of associates and joint ventures accounted for using

equity method 31,199 74,059 987

Total non-operating income and expenses 462,501 144,135 14,627

Profit before income tax 2,906,196 2,509,910 91,910

Income tax expense (584,468) (474,134) (18,484)

Profit for the year $2,321,728 $2,035,776 $73,426

Other comprehensive income

Cumulative translation differences of foreign operations $87,199 $34,668 $2,757

Unrealized (loss) gain on valuation of available-for-sale financial assets (86,616) 51,916 (2,739)

Total other comprehensive income for the year $583 $86,584 $18

Total comprehensive income for the year $2,322,311 $2,122,360 $73,444 Profit attributable to:

Owners of the parent $1,882,119 $1,641,730 $59,523

Non-controlling interest 439,609 394,046 13,903

Total $2,321,728 $2,035,776 $73,426

Comprehensive income attributable to:

Owners of the parent $1,903,144 $1,729,559 $60,188

Non-controlling interest 419,167 392,801 13,256

Total $2,322,311 $2,122,360 $73,444

Basic earnings per share (in dollars) $2.51 $2.22 $0.0794

Diluted earnings per share (in dollars) $2.48 $2.17 $0.0784

62 2014 CTCI Annual Report Financial Section

Consolidated Statements of Changes in Equity Years Ended December 31, 2014 and 2013 (Expressed in NT$ Thousands)

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2013 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2013 $7,349,960 $2,757,865 $2,260,381 $834,747 $3,075,527 ($41,379) $183,088 ($11,835) $16,408,354 $2,155,947 $18,564,301 Appropriation of 2012 earnings Legal reserve - - 239,244 - (239,244) ------Special reserve - - - (56,585) 56,585 ------Cash dividends - - - - (2,102,403) - - - (2,102,403) (344,869) (2,447,272) Profit for 2013 - - - - 1,641,730 - - - 1,641,730 394,046 2,035,776

Employee stock options excercised - 137,924 ------137,924 256,355 394,279 by subsidiary

Convertible bonds transferred to - (13,099) ------(13,099) - (13,099) common stock Share-based payment transactions - 51,772 ------51,772 13,142 64,914

Employee stock options exercised 124,383 135,623 ------260,006 - 260,006

Cumulative translation differences of - - - - - 48,557 - - 48,557 (13,889) 34,668 foreign operations Unrealized gain on valuation of ------39,272 - 39,272 12,644 51,916 available-for-sale financial assets Balance at December 31, 2013 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113 $2,473,376 $18,945,489

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2014 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2014 $7,474,343 $3,070,085 $2,499,625 $778,162 $2,432,195 $7,178 $222,360 ($11,835) $16,472,113 $2,473,376 $18,945,489 Appropriation of 2013 earnings Legal reserve - - 164,173 - (164,173) ------Cash dividends - - - - (1,498,449) - - - (1,498,449) (381,582) (1,880,031) Profit for 2014 - - - - 1,882,119 - - - 1,882,119 439,609 2,321,728

Employee stock options excercised - 11,961 ------11,961 47,098 59,059 by subsidiary

Convertible bonds transferred to - (683) ------(683) (457) (1,140) common stock Share-based payment transactions - 15,610 ------15,610 7,691 23,301

Employee stock options exercised 100,960 133,060 ------234,020 - 234,020

Cumulative translation differences of - - - - - 95,209 - - 95,209 (8,010) 87,199 foreign operations Unrealized gain on valuation of ------(74,184) - (74,184) (12,432) (86,616) available-for-sale financial assets Balance at December 31, 2014 $7,575,303 $3,230,033 $2,663,798 $778,162 $2,651,692 $102,387 $148,176 ($11,835) $17,137,716 $2,565,293 $19,703,009

2014 CTCI Annual Report 63 Financial Section

Consolidated Statements of Changes in Equity Years Ended December 31, 2014 and 2013 (Expressed in US$ Thousands)

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2013 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2013 $250,397 $102,850 $83,740 $26,069 $81,481 $241 $7,450 ($396) $551,832 $72,226 $624,058 Appropriation of 2012 earnings Legal reserve - - 8,015 - (8,015) ------Special reserve - - - (1,896) 1,896 ------Cash dividends - - - - (70,432) - - - (70,432) (11,554) (81,986) Profit for 2013 - - - - 54,999 - - - 54,999 13,201 68,200

Employee stock options excercised - 4,621 ------4,621 8,588 13,209 by subsidiary

Convertible bonds transferred to - (439) ------(439) - (439) common stock Share-based payment transactions - 1,734 ------1,734 440 2,174

Employee stock options exercised 4,167 4,543 ------8,710 - 8,710

Cumulative translation differences of - - - - - 1,627 - - 1,627 (465) 1,162 foreign operations Unrealized gain on valuation of ------1,316 - 1,316 424 1,740 available-for-sale financial assets Balance at December 31, 2013 $254,564 $113,309 $91,755 $24,173 $59,929 $1,868 $8,766 ($396) $553,967 $82,860 $636,827

Equity attributable to owners of the parent Retained Earnings Other equity interest Cumulative Unrealized gain or translation loss on available- Non- Common Capital Legal Special Unappropriated differences of for-sale financial Treasury controlling 2014 stock surplus reserve reserve earnings foreign operations assets stocks Total interest Total equity Balance at January 1, 2014 $254,564 $113,309 $91,755 $24,173 $59,929 $1,868 $8,766 ($396) $553,967 $82,860 $636,827 Appropriation of 2013 earnings Legal reserve - - 5,192 - (5,192) ------Cash dividends - - - - (47,389) - - - (47,389) (12,068) (59,457) Profit for 2014 - - - - 59,523 - - - 59,523 13,903 73,426

Employee stock options excercised - 378 ------378 1,489 1,867 by subsidiary

Convertible bonds transferred to - (22) ------(22) (14) (36) common stock Share-based payment transactions - 494 ------494 243 737

Employee stock options exercised 3,193 4,208 ------7,401 - 7,401

Cumulative translation differences of - - - - - 3,011 - - 3,011 (253) 2,758 foreign operations Unrealized gain on valuation of ------(2,346) - (2,346) (393) (2,739) available-for-sale financial assets Balance at December 31, 2014 257,757 118,367 96,947 24,173 66,871 4,879 6,420 (396) 575,017 85,767 660,784

64 2014 CTCI Annual Report Financial Section

Consolidated Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014 CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax for the year $2,906,196 $2,509,910 $91,910 Adjustments to reconcile profit before income tax to net cash (used in) provided by operating activities Income and expenses having no effect on cash flows Loss on valuation of financial assets 6,864 17,331 217 Loss (gain) on reduction of capital of investments 2,397 (93,263) 76 Loss (gain) on disposal of property, plant and equipment 3,477 (3,813) 110 Share of profits of associates and joint venture accounted for using equity (31,199) (74,059) (987) menthod Depreciation 325,305 353,326 10,288 Amortization 153,205 137,598 4,845 Reversal of (provision for) allowance for doubtful accounts (75,002) 77,933 (2,372) Interest income (149,180) (77,754) (4,718) Dividends income (45,825) (40,075) (1,449) Interest expense 89,005 106,126 2,815 Impairment losses 86,756 82,536 2,744 Compensation costs for employee stock options 28,507 70,878 901 Discount on convertible bonds recognized as interest expense 492 2,789 15 Other income 0 (1,981) 0 Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss (1,071,643) 955,505 (33,891) Notes receivable (including related parties) 1,821,353 (3,234,780) 57,601 Accounts receivable (including related parties) (521,174) (245,172) (16,482) Due from customers for contract work (6,386,704) 955,926 (201,983) Other receivables (93,420) 48,762 (2,954) Other receivables - related parties 29,227 (15,362) 924 Inventories (226,508) (16,838) (7,163) Prepayments (629,848) 564,313 (19,919) Other current assets 643,787 (351,813) 20,360 Other non-current assets 247,639 213,616 7,832 Net changes in liabilities relating to operating activities Notes payable 13,879 (638) 439 Accounts payable 2,105,897 2,285,851 66,600 Accounts payable - related parties 173,165 16,134 5,476 Due to customers for contract work 4,562,337 (7,001,523) 144,286 Other payables (165,163) 101,761 (5,223) Other current liabilities 1,310,277 (81,381) 41,438 Other non-current liabilities 164,699 336,359 5,209 Cash generated from (used in) operations 5,278,798 (2,401,798) 166,945 Interest received 134,206 80,027 4,244 Dividends received 117,115 69,950 3,704 Interest paid (89,393) (120,807) (2,827) Income tax paid (392,663) (830,938) (12,418) Net cash provided by (used in) operating activities 5,048,063 (3,203,566) 159,648 (Continued)

2014 CTCI Annual Report 65 Financial Section

Consolidated Statements of Cash Flows Years Ended December 31, 2014 and 2013

Thousands of Thousands of NT$ US$

2014 2013 2014

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received $482 $402 $15

(Increase) decrease in available-for-sale financial assets (159,765) 131,455 (5,053)

Increase in financial assets measured at cost-non current (79,225) - (2,506)

Proceeds from reduction of capital of investee company 1,995 12,497 63

Increase in investments accounted for under the equity method (1,390,933) - (43,989)

Acquisition of property, plant and equipment (139,460) (166,824) (4,410)

Proceeds from disposal of property, plant and equipment 8,352 10,656 264

Increase in intangible assets (76,881) (76,742) (2,431)

(Increase) decrease in refundable deposits (11,946) 32,426 (378)

Increase in other non-current assets (38,134) (41,494) (1,206)

Net cash used in investing activities (1,885,515) (97,624) (59,631)

CASH FLOWS FROM FINANCING ACTIVITIES

(Decrease) increase in short-term borrowings (638,347) 139,092 (20,188)

Repayment of long-term borrowings (553,829) (590,776) (17,515)

Increase (decrease) in deposits received (recognized in other non-current liabilities) 65,608 (2,077) 2,075

Proceeds from employee stock options exercised 327,328 339,932 10,352

Cash dividends paid (1,880,031) (2,447,272) (59,457)

Net cash used in financing activities (2,679,271) (2,561,101) (84,733)

Increase (decrease) in cash and cash equivalents 483,277 (5,862,291) 15,284

Cash and cash equivalents at beginning of year 9,327,026 15,189,317 294,972

Cash and cash equivalents at end of year $9,810,303 $9,327,026 $310,256

66 2014 CTCI Annual Report Global Network Global Network

2014 CTCI Annual Report 67 CTCI, Italy

CTCI, USA

CTCI Corporation Headquarters 89, Sec. 6, Zhongshan North Road, Taipei 11155, Taiwan, R.O.C. Tel: (886) 2-2833-9999 Fax: (886) 2-2833-8833 Website: www.ctci.com.tw

Subsidiaries & Offices Taiwan E&C Engineering Corporation Leading Energy Corporation Fortune Energy Corporation 5 Fl., 16, Lane 270, Sec. 3, Beishen Road, 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, Shenkeng District, New Taipei City 22205, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Tel: (886) 2-2662-5858 Fax: (886) 2-2662-2814 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Website: www.eandc.com.tw Website: www.lebot.com.tw Website: www.mfec.com.tw

Resources Engineering Services Inc. HD Resource Management Corporation CTCI Chemicals Corporation 4 Fl., 48, Sec. 3, Nangang Road, 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, Taipei 11510, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Tel: (886) 2-2783-8250 Fax: (886) 2-2783-8232 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1687 Fax: (886) 2-2162-1680 Website: www.res.com.tw Website: www.hdrm.com.tw Website: www.ctcichemicals.com.tw

Advanced Control & Systems Inc. Fortune Energy Corporation CTCI Machinery Corporation 5 Fl., 52, Sec. 3, Nangang Road, 5 Fl., 132, Xingshan Road, 20 Fl., 366, Po Ai 1st Road, Taipei 11510, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Sanmin District, Kaohsiung City 80757, Taiwan, R.O.C. Tel: (886) 2-2785-3839 Fax: (886) 2-2782-0180 Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 7-315-1011 Fax: (886) 7-313-7971 Website: www.acs.com.tw Website: www.mfec.com.tw Website: www.ctcim.com.tw

KD Holding Corporation CTCI Chemicals Corporation G.D. Development Corporation 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, 5 Fl., 132, Xingshan Road, Neihu District, Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Neihu District, Taipei 11469, Taiwan, R.O.C. Tel: (886) 2-2162-1689 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1687 Fax: (886) 2-2162-1680 Tel: (886) 2-2162-1689 Fax: (886) 2-2792-8352 Website: www.kdhc.com.tw Website: www.ctcichemicals.com.tw

Sino Environmental Services Corporation CTCI Machinery Corporation 5 Fl., 132, Xingshan Road, 20 Fl., 366, Po Ai 1st Road, Neihu District, Taipei 11469, Taiwan, R.O.C. Sanmin District, Kaohsiung City 80757, Taiwan, R.O.C. Tel: (886) 2-2162-1688 Fax: (886) 2-2162-1681 Tel: (886) 7-315-1011 Fax: (886) 7-313-7971 Website: www.sesc.com.tw Website: www.ctcim.com.tw

68 2014 CTCI Annual Report Jingding, China CTCI Corporation CTCI Arabia, KSA Shang Ding, China (Taipei Headquarters) CTCI, Hong Kong E&C EngineeningCorporation CINDA, India Resources Engineering Services, Inc CTCI, Qatar SINOGAL, Macau Advanced Control & System Inc CTCI, Abu Dhabi CTCI, Thailand KD Holding Corporation CIMAS, Vietnam Sino Environmrntal Services Corporation CTCI, Malaysia Leading Energy Corporation CTCI, Singapore HD Resource Management Corporation Fortune Energy Corporation G.D. Development Corporation CTCI Chemicals Corporation CTCI Machinery Corporation

Overseas Jingding Engineering & Construction Co., Ltd. CTCI Engineering & Construction Sdn. Bhd. CTCI Corporation Qatar Branch Office 9-11 Fl., Royal City International Centre, Suite 22-03B, 22 Fl., Menara Tan & Tan, P. O. Box 30261, 138, Andingmenwai Street, Dongcheng District, 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia 6, 1 Fl., Al Emadi Business Center, Beijing 100011, P. R. China Tel: (60) 3-2166-5568 Fax: (60) 3-2166-6658 C-Ring Road, Doha, Qatar Tel: (86) 10-6482-7878 Fax: (86) 10-6482-7958 Tel: (974) 4451-7383 Fax: (974) 4455-1241 Website: www.jdec.com.cn CIMAS Engineering Co., Ltd. 6 Fl., Charmvit Tower, 117 Tran Duy Hung Road, CINDA Engineering & Construction Pvt. Ltd. Shang Ding Engineering & Construction Co., Ltd. Cau Giay District, Hanoi, Vietnam Corenthum, 6 Fl., Tower-B, Plot No.A-41, Sector-62, 7 Fl., 26, Lane 168, Daduhe Road, Tel: (84) 4-3833-5513 Fax: (84) 4-3833-7824 Noida-201301(U.P.), India Putuo District, Shanghai 200062, P. R. China Website: www.cimas.com.vn Tel: (91) 120-472-2300 Fax: (91) 120-472-2399 Tel: (86) 21-5251-9888 Fax: (86) 21-3250-1012 Website: www.ctci-sdec.com.cn CTCI Singapore Pte. Ltd. CTCI Corporation Italian Branch Office 100 Beach Road, #27-08/09, Shaw Tower, Via G. Carducci, 12, SINOGAL ─ Waste Services Co., Ltd. Singapore 189702 21013 Gallarate (VA), Italy Central de Incineracao Tel: (65) 6295-2997 Tel: (39) 0331-771-026 Pac On Ilha da Taipa, Macau Fax: (65) 6295-1219 Fax: (39) 0331-770-370 Tel: (853) 2885-0681 Fax: (853) 2885-0893 CTCI Arabia Ltd. CTCI Americas, Inc. Xiang Ding Environmental Consultant Co., Ltd. P. O. Box 1962, 11757 Katy Freeway, Suite 1520 7Fl., 26, Lane 168, Daduhe Road, Putuo District, Room 301, Al-Mohammdia Tower, Dhahran Road, Houston, TX 77079, USA Shanghai 200062, P. R. China Al-Khobar 31952, Kingdom of Saudi Arabia Tel: (1) 281-870-9998 Tel: (86) 21-3250-1006 Fax: (86) 21-3250-1015 Tel: (966) 13-865-6145 Fax: (966) 13-865-6146 Fax: (1) 281- 870- 9981 CTCI (Thailand) Co., Ltd. CTCI Corporation Abu Dhabi 19 Fl., Phairojkijja Tower, 825, Bangna-Trad KM. 4, P. O. Box 44924, Bangna Bangna Bangkok 10260, Thailand R# 303, 3F Sheikh Sultan Suroor Al Dhahiri Bldg. (LuLu Center), Tel: (66) 2-769-6888 Fax: (66) 2-769-6819 Al Salam St., Abu Dhabi, United Arabia Emirates Website: www.ctci.co.th Tel: (971) 2-671-1572 Fax:(971) 2-671-1573 2014 Annual Report Fiscal Year Ended December 31, 2014

89, Sec. 6, Zhongshan N. Rd., Taipei 11155, Taiwan, R.O.C. Tel: (886) 2-2833-9999 Fax: (886) 2-2833-8833 www.ctci.com.tw Professionalism Integrity Teamwork Innovation