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Introduction

Business Lines

Sustainable Business

SK GroupSubsidiariesGlobal Network

Financial Report

Contents

Message from CEOBoard of DirectorsCompany HistoryMission / VisionResearch & Development

Green Chemicals BusinessLife Science Business

Green ManagementSocial ContributionsAbout our people

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www.skchemicals.com

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You can view Annual Report from your mobile phone.

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We care for the futureHEALTHCARE EARTHCARE

Chemistry preserving the environmentScience protecting life,

Business bringing happiness,

Developed products by SK Chemicals.

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In 2014, SK Chemicals will exert its best efforts to successfully develop new products while enhancing the profitability of existing businesses.

In-Serk Lee, CEOCheol Kim, CEO

Message fromCEO

Greetings

SK Chemicals achieved significant success in securing a solid foundation for new business growth in the rapidly changing economic conditions and global business recession of last year. At the same time we secured super engineering plastic(PPS) and cell-cultivated vaccine businesses.In 2014, it is anticipated that uncertainties will deepen in the world economic conditions and significant changes will be made in various government policies. SK Chemicals plans to further accelerate its development of mid- and long-term growth engines while faithfully performing its strategic tasks to achieve given objectives under such conditions.

To that end, SK Chemicals has set its 2014 sales target at 1,430.6 billion won.In addition, the company will implement the following strategic tasks:

First, we will upgrade the existing business lines.To enhance the profitability of the existing business lines, we will secure an enhanced competitiveness by operating bio-diesel splitting facilities. We will also enhance cash-generating capabilities of the bio energy line by launching a new fuel oil business while deploying a full production and sales system of co-polyester early.

Second, we will smoothly promote new business lines to achieve success from mid- and long-term growth engines.Our green chemical business line will exert to develop new industrial materials while achieving the milestone for the PPS line and proceeding the compounding line in earnest. Our Life Science business will successfully perform various tasks for promoting the business of blood derivatives while achieving the given milestone for vaccine-related R&D projects and exploring overseas markets.

Third, we will exert to upgrade our management infrastructure.All of us at SK Chemicals will continue to reform business methods so that we may pursue SUPEX by concentrating on their main business. In addition, we will also cultivate a culture that encourages thorough performance based on creativity while cultivating a culture of open communication within the organization. By doing so, we will create a virtuous circle that can achieve greater success as warm-hearted professionals by performing our assigned duties in order to accomplish our pre-defined objectives. This year again, we look forward the shareholders, customers and other stakeholders in and outside the company to supporting and encouraging the challenge of SK Chemicals for growth and reformation while wishing health and happiness to their families.

Thank you,

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Board ofDirectors

SK Chemicals has established the most advanced corporate governance system in Korea and is pursuing a Board-centered management structure to maximize shareholder profits. To realize this management structure, the company increased the proportion of non-executive directors and formed various committees within the Board to thoroughly review and verify the management activities of the company.

Through a partnership with a trustworthy and experienced accounting company, SK Chemicals has established a new control system for accounting management and has laid the foundation for transparency. Also, the company has required the CEO and CFO to certify the accounting data so that shareholders and financial institutions can now have a high level of confidence in our accounting system.

SK Chemicals operates an auditing committee consisting only of non-executive directors. By guaranteeing the full independence of this committee, the company provided it with the ability and power to audit the Board of Directors and the CEO, who continue to supervise overall management including accounting, thereby separating auditing from management.

SK Chemicals is not only pursuing transparent management to maximize shareholder profit, but is also trying to maximize the common benefits to society by fulfilling all its responsibilities and obligations to industry participants. To create a corporate culture in which enterprises fulfill their social responsibility and practice win-win management. The company is enforcing ethical management by employees so that everyone in the company complies with the code of ethics.

Chang-Won Chey | Executive Director,Vice Chairman and CEO

Gi-Ho Huh | Non-Executive Director,Vice Chairman and CEO, HANIL Cement.

Hui-Jip Kim | Non-Executive Director,Professor, Business School, Chung Ang University.

Cheol Kim | Executive Director, CEO

In-Serk Lee | Executive Director, CEO

Deok-Geun Ahn | Non-Executive Director, Professor, Graduate School of International Studies, Seoul National University.

Jeong-Hwan Choi | Non-Executive Director,Attorney at Law, Gwangjang law firm.

Enhancing the Transparency of Corporate Governance

Enhancing Accounting Transparency

Reinforced Auditing Functions

Ethical Management by Employees

Creating future value and transparent management with the Board of Directors

playing the central role

SK Chemicals is pursuing a Board-centered management structure to maximize shareholder value and is practicing transparent management. SK Chemicals has established an advanced corporate governance system by creating and operating a secretariat to support the Board of Directors. The company has also implemented the most sophisticated accounting control system in Korea to enhance accounting transparency and has reinforced its auditing capabilities through the use of an auditing committee.SK Chemicals will make continued efforts to enhance the future value of the company by creating a balanced management environment and enhancing the transparency of its management activities with the intention of instilling confidence and trust in both customers and shareholders.

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Company History

1969

1976

1978

1984

1985

1987

1988

1989

·EstablishedSunkyongTextilesLtd.

·ListedontheKoreanstockexchange.·MergedwithSunkyongChemicalTextilesLtd

·ProducedPETresinforthefirsttimeinKorea.

·EstablishedanR&DCenter.

·AcquiredatextilefactoryinSuwon.

·EstablishedSKCYTEC.·AcquiredSamshinPharmaLtd.

·EstablishedSunboPharmaLtd.·RenamedSunkyongIndustriesLtd.

·CompletedconstructionofthePTA/DMTplant.·EstablishedtheLifeScienceR&DCenter.·DevelopedPPSresin.

2005

2006

2007

2008

2009

·EstablishedSKChemicalsSuzhouLtd.inChina·EstablishedSKPharmaBeijingLtd.inChina·EstablishedSKUtisLtd.Mergedwith·SKPharmaceuticalsLtd·EstablishedSKPetrochemicalLtd

·MergedwithDongShinPharmaLtd·Developedbiodieselproductiontechnology

·MergedwithIn2Gen·EstablishedNingboSKZhenbangChemicalLtd·EstablishedSKChemicalsPharmaBeijingLtd.-ShanghaiBranch·Releasedtheanti-impotencedrug,Mvix®

·EstablishedGuilinSKZhongningBioLtd·EstablishedSKChemicalsGmbHinGermany·AcquiredUBCare,ahealthcaresolutionsprovider·LicensingoutSID530®,the1stanti-cancermedicineinKorea,toEurope

·EstablishedSKSyntecLtd·EstablishedSTGreenEnergyLtd·Developedenvironmentallysafetransparentheat-resistingco-polyesterECOZEN®

·LicensedoutNBP601®(adrugforhemophilia),Korea’sfirstbio-pharmaceuticaldrugtoamultinationalpharmaceuticalcompany

1990

1991

1994

1998

1999

2000

2001

2002

·EstablishedaPetrochemicalR&DCenter·RenamedSunkyongPharmaceuticalsLtd

·EstablishedSKKerisLtd.inIndonesia·Developedtheginkgoextractpreparation-Genexin®

·Developedtheanti-arthritispatch,Trast®

·Developedpolyesteradhesive

·RenamedSKChemicalsLtd·EstablishedSKNJC

·ReleasedSUNPLA®,thefirstnewdruginKorea(world’sfirst3rd-generationplatinumcomplexanticanceragent)·ExportedOMED®toEU,thefirstfinisheddruginKorea

·SpunoffthepolyestertextiledivisionestablishedHUVISLtd

·EstablishedSKChemicalsQingdaoLtd.inChina·Developedenvironmentallysafehigh-performancePETGresin,SKYGREEN®

·ReleasedKorea’sfirstnaturaldrug(JOINS®,ananti-arthritisagent)·EstablishedSKEurochemLtd.inPoland

2010

2011

2012

2013

·ECOZEN®wontheTop10NewKoreanTechnologiesAwardandtheSilverPrizeinthe“KoreaTechnologyAwards”·WontheMinister’sAwardin“BiodieselNationalGreenTechnologyAwards”·AcquiredequitiesinandmergedwithSKNJCaffiliates·Selectedastheproviderofvaccineproductionequipmentforcellculture

·Ground-breakingceremonyfortheAndongVaccinePlant·EcoLabacquiredtheEco-friendlyArchitectureCertification(LEEDPlatinumCertification)andwontheKoreanArchitectureAward·ECOZEN®,theworld’sfirstbio-degradableheat-resistanttransparentbio-plastic·ECOZEN®acquiredUSFDAfood-contactapproval·ReceivedtheGrandPrize(GreenManagementDivision)intheGlobalStandardManagementAwards·WontheSpecialCDP(CarbonDisclosureProject)Prize·ReleasedMvixS®,theworld’sfirstfilm-typeanti-impotencedrug

·NBP601®(adrugforhemophilia)wontheTop10NewKoreanTechnologiesAwardandtheMinisterofKnowledgeEconomyAward·ExportedSID710®(ananti-dementiapatch)toEU

·AndongfactoryawardedLEEDcertification·PCTmaterialawardedKorea’sTop10NewTechnologyMinister’sprize·Initz,jointventurecompanywithTeijin,foundedandstartedPPSfacilityconstruction·ECOZEN®/SKYGREEN®eco-friendlyC2Ccertified·3rdphaseclinicaltrialstartedforthreevaccinescultivatedusingcells

“SK Chemicals has grown along with the Korean economy with a future-oriented viewpoint”

1969~1989 1990~2004 2005~2009 2010~2013

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[Green Chemicals] Leader of environmentally friendly materials industry

The Green Chemicals business that leads the company’s chemical and energy business has grown into a leading environment-friendly materials business in the world based on its cutting-edge technology, know-how and production facilities. To that end, SK Chemicals has actively invested to upgrade its existing business lines of highly functional co-polyester and bio diesel, and to start new projects for super-engineering plastics and bio materials.

[Life Science] Provider of total solutions for the health of mankind

SK Chemicals Life Science business covers the field of healthcare, including pharmaceuticals and bio drugs, and provides solutions that integrate all processes of diagnosis, prevention and treatment of diseases. Furthermore, SK Chemicals actively promotes its advancement into the global market based on its differentiated technologies for developing innovative new drugs.

Since its inception as Sunkyung Synthetic Fiber in 1969, SK Chemicals has led changes and reforms in Korea’s chemical and life science industries. It reshuffled its business structure into two major businesses, Green Chemicals and Life Science, by establishing its mission of “protecting the earth’s environment while enhancing the health of mankind.” SK Chemicals has provided chemical and life science products and solutions essential to mankind by establishing a vision of “leaping forward to a global leading company that provides environmentally-friendly materials and total healthcare solutions.”

Green Chemicals & Life ScienceSK Chemicals achieves the happiness of mankind with environmentally-friendly chemicals and life science.

Mission / Vision

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| After 2000 |

• Cell cultivated 4-strain influenza vaccine, 1st phase clinical trial IND approved• ECOZEN®/SKYGREEN® environmentally-friendly C2C certified• Cell cultivated influenza vaccine clinical trial started• ECOTRAN®, an eco-friendly engineering super-plastic PPS developed• SID710® (Rivastigmine patch) obtained EU approval.• ECOZEN®, biodegradable transparent heat-resistant copolyester acquired FDA FCN certification.• Released a gastritis treatment drug (Promac® Granules).• Developed a high-performance engineering plastic PCT (PURATAN®).• SID530® (Docetaxel injection) obtained EU approval.• NBP601® (a treatment drug for hemophilia) obtained clinical IND approval in the US and Europe.• Released Montelukast® ODF.• Released Mirodenafil® ODF.• Released an anticoagulant (Antithrombin® Injection).• Acquired a license for an antihypertension drug (Estrotin® Tab).• Released an antithrombotic drug (RENEXIN® Tab).• Obtained approval of the U.S. FDA IND for the super-generic anti-cancer medicine, SID530®.• Concluded a technical (NBP-601®) export agreement with the Australian company CSL.• Developed an environmentally safe non-BPA toner resin.• Developed a composite material component, combined with cold retention panels for LNG vessels.• Developed a super-cap electrolyte.• Developed an optical absorbent for displays.• Entered into an agreement with a European multinational pharmaceutical company for licensing out/technology transfer of a newly modified anti-cancer drug.• Developed technology for producing biodiesel.• Released an anti-arthritis agent, JOINS®, Korea’s first new natural drug.• Obtained approval of NEXAD® for hypertension.• Released SKAD® for hypertension.• Released PRANAIR® for asthma.• Released MVIX® for erectile dysfunction.• Developed thermoplastic polyurethane for a breathable film.• Acquired a license for OAT (Organic Acid Technology), an engine coolant technology.• Developed highly heat-resistant PREPREG®.• Developed a liquid photopolymer for flexo printing plates.• Developed a plasticizer-free, low-hardness thermoplastic polyurethane.• Developed an organic semiconductor material for electrochemicals.• Developed the technology for TMA (Trimellitic Anhydride) production.• Developed Bivalant Metal Free Biocide.• Developed environmentally safe water-based OPV (Overprint Varnish).• Developed a new toner binder.• Developed an environmentally safe polyester sound-absorbing and heat-insulating material.• Secured the technology for commercial production of CHDM.• SKYGREEN®, a highly-functional and environmentally safe resin.

| Before 1999 |

• Launched Korea’s first new drug, the 3rd-generation platinum complex anti-cancer agent, SUNPLA®.• Developed the gingko biloba extract blood circulation enhancer, GINEXIN®.• Developed TRAST®, a patch of non-steroidal anti-inflammatory drugs (NSAID).• Developed Omeprazole®.• Developed industrial biocides.• Developed PEN resins.• Developed biodegradable aliphatic polyester resins.• Developed thermoplastic polyurethane resins.• Developed an anti-freeze composition.• Developed a polyester adhesive.• Developed PET resins for bottles.

Green Chemicals - Materials technologies secured

SK Chemicals has accumulated technologies for environmentally friendly materials while developing ECOZEN®, the world’s first transparent and heat-resistant bio co-polyester. It has grown to become Korea’s leading business in the field of bio chemistry by developing technologies for the production of PLA, or biodegradable material. SK Chemicals creates values with active R&D activities in advanced materials, including super-engineering plastic, carbon materials and energy storage materials.

Life Science - Hub of new drug development in Korea

SK Chemicals has led the local pharmaceutical industry by attaining outstanding R&D achievements in new synthetic, botanical and bio drugs, including SUNPLA® and JOINS®, Korea’s first synthetic drugs, MVIX®, a new drug for the treatment of erectile dysfunction, and NBP601, the world’s first new bio drug for hemophilia treatment using recombinant DNA technology.

SK Chemicals has grown into a leading chemicals and life science business in Korea. Its position is attributed to its R&D and technological capabilities that have accumulated for several decades while making changes and accepting challenges.SK Chemical creates future values by securing unique technologies and diverse new drugs by founding its Eco Lab, Korea’s best R&D center in 2010.

Major achievements

SK Chemicals create future values by developing exclusive technologies and new drugs.

Research &Development

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SK Chemicals envisions a future where mankind and the environment coexist by developing environmentally-friendly materials and energy. SK Chemicals conceives the planet’s environment while developing human race.SK Chemicals develops chemical products for tomorrow with creative thinking and technologies, including the world’s first development of bio co-polyester for preventing global warming, plastic resin that is harmless to the human body, and the development of bio diesel for substituting petroleum resources.

Eco-Friendly Materials Solution Provider

Care for the EARTH

GREEN CHEMICALS Business

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PET Resins | SKYPETⓇ

SKYPET® resin for bottles, which SK Chemicals began to produce for the first time in Korea in 1978, acquired US FDA approval in its early stage, and its quality has been globally recognized since then, e.g. acquiring approval of global beverage companies like Coca Cola and Pepsi Cola. SK Chemicals is capitalizing on this quality to concentrate on development and production of high added-value PET resins.

Polyester Resins for Adhesives | SKYBONⓇ

As high-molecular-weight polyester resins have excellent flexibility and adhesiveness, they have been used for coil coatings and can coatings. They are eco-friendly and contain no environmental hormones. Accordingly, these materials are attracting attention as adhesives or coating resins in a wide variety of products. Due to their unique properties their application has been extended to imaging materials including binders for the toners of laser printers and high-speed copy machines, and binders for various high-performance ink binders.

High-Purity Solvent / Display Materials / Electrolytic Solution for Super-High-Capacity CapacitorsHigh purity solvents are used for appliance analysis, fine chemical synthesis and electronic and bio technological industries. They were developed under the technical alliance with Honeywell (U.S.A.), and are exported to the United States., China and other countries across the world. Along with growing markets for new and renewable energy and electric cars, as well as display materials like LCD and PDP, SK Chemicals also produces electrolytes for super high-capacity capacitors whose rapid growth is being expected based on organic synthesis technology.

ECOZENⓇ

SK Chemicals successfully started the commercial mass production of ECOZEN®, the world’s first bio co-polyester from bio mass in 2009. The technological capability and environmental friendliness of ECOZEN®, environment-friendly product using bio monomers, have been recognized after being awarded with Korea’s Top 10 New Technology Product Award in 2010, and the U.S. Cradle to Cradle certificate awarded last year following its FDA certification in 2011. Outstanding in heat-resistance, chemical-resistance and transparency, the resin is utilized for materials of diverse products, including electronic appliances and food containers. Its usage is being expanded to wider areas, including premium cosmetics and car interior.

PETG Resins | SKYGREENⓇ The high-performance PETG resin SKYGREEN® is an environmentally safe material without the environmental hormone bisphenol A. Because of its outstanding safety, transparency and chemical resistance, it is quickly replacing existing materials, such as PC, PMMA and PVC. Also, it has excellent processability and moldability and is being used for various purposes ranging from household items like containers for cosmetics to industrial materials like electronic parts, construction materials and optical films.

Green Chemicals Biz.

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Bio Diesel | ECOPRIMEⓇ

Biodiesel is a rapidly emerging next-generation and environmentally-friendly energy source that can replace existing petroleum-based diesel oil. It is methyl-ester produced by having botanical fat reacted with methanol. SK Chemicals has been supplying high-quality biodiesel to local refineries utilizing a large-scale production facility in Ulsan since it introduced ECOPRIME®, the biodiesel oil the company developed with its in-house technology. Biodiesel produced by SK Chemicals is used in diesel vehicles with a 2% mixture combination with diesel. Its usage is being diversified into diesel for power generation based on the company’s technological capability for production of bio diesel.In addition, SK Chemicals that has operated a subsidiary company in Singapore specialized in trading of raw materials. Operating Singaporean subsidiary is to procure bio diesel raw materials in a stable manner considering start of plantation for growing raw materials crops on a mid- or long-term basis.

Material for Automobile and Building InteriorsThe noise-absorbent insulation material, produced by processing polyester fiber, is supplied for automobile and building interiors, as it is harmless to the human body and 100% recyclable. It is being supplied to local and foreign auto makers, including Hyundai, Kia and GM. As SK Chemicals PET-based noise absorbent material has been verified to be harmless to the human body, it is now utilized for household goods as well as car interior decoration, including residential noise absorption and bedding materials. As bio degradable noise absorbent materials and recyclable goods are already used in European countries SK Chemical is promoting application of these materials nation-wide. In addition, SK Chemicals accelerates further development of environment-friendly materials that can be applied to automobiles, such as ECOZEN®, SKY GREEN®, ECOPLAN®, ECOTRAN®. Also, the company is under negotiations with local auto makers to apply ECOZEN® featuring an outstanding transparency to car interior and display materials.

Carbon Fiber Prepreg | SKYFLEXⓇ Carbon fiber is 10 times stronger but one fifth weight of steel. Prepreg is a sheet-form compound material, produced by combining carbon fiber to reinforced fiber. Prepreg is used for parts and materials of advanced industrial products like aircrafts, automobiles, and industrial robots as well as sports and leisure products like golf clubs, fishing rods and bicycles. In recent years, its application areas were further diversified into the reinforcement of blades in wind turbines and concrete structures. SK Chemicals actively carries out the marketing of SKYFLEX®, its prepreg product, by securing high quality raw materials under the partnership with Mitsubishi Rayon, a global leading carbon fiber supplier.

PPS | ECOTRANⓇ

SK Chemicals actively promotes its PPS business by founding Initz, a joint venture with Teijin, a global chemical business, last year. PPS is a type of super-engineering plastic that can replace metals. It has an outstanding heat and chemical resistance, where it can endure high temperatures of 200-250℃, where no solvent can melt it in a temperature 200℃ or lower. SK Chemicals succeeded in the development of ECOTRAN® for the first time in the world. It is a PPS that does not contain any chlorine. A large-scale production facility with an annual capacity of 12,000 tons is under construction in Ulsan.

PCT | SKYPURATM

SKYPURATM, a material of PCT, is a type of super-engineering plastic that was produced based on CHDM. This material is used for reflectors (reflection panels) of TVs or illumination LED as is outstanding in heat stability, reflection rate and light resistance. It is more widely used for SMT connectors, and other electric and electronic appliance parts or materials as it has outstanding heat resistance and electric characteristics. SK Chemicals produces PCT material monomers and polymers in-house. It actively promotes its application for heat-resistant film and textile.

Compound Product | SKYTRATM

SKYTRATM, SK Chemicals compounding brand, is a product produced using environmentally friendly and highly functional resin. It provides diverse solutions that can satisfy customer requirements. SK Chemicals achieves a steady business growth by exploring its diverse applications to automobiles, civil and building construction, electric and electronic products, and living environments.


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BiomaterialsBio materials have received attraction across the world as a solution to prepare against the future shortage of petroleum oil, as bio materials are botanical resource-based materials that can replace the existing petroleum supply. In recent years, bio materials have been assessed to have a competitive price and quality comparable to those of petrochemical products. They have grown by a rate of as high as 10% each year as the consumer demand grows for environmentally friendly products, while federal policies around the world have been implemented for developing new or renewable materials. Accordingly, it is expected the market will grow to 80 trillion won in 2020. SK Chemicals plans to diversify its business lines by starting a bio material business that is based on its existing resin business.

High-Performance MaterialsSK Chemicals has successfully developed Polyphenylene Sulfide (PPS), a super-engineering plastic that does not contain any harmful chlorine, based on its existing PPS production process and differentiated technologies. SK Chemicals is leaping forward to one of the global top three producers of PPS by constructing a large-scale production facility in partnership with Teijin, a global chemical company. In addition, the company has successfully developed Polycyclohexylene-dimethylene Terephthalate (PCT), a highly heat resistant super-engineering plastic, for the first time in Korea. SK Chemicals has also been diversifying its business lines into compound products to satisfy the diversifying customer requirements based on such high-performance plastic materials.

Energy & Electronics MaterialsSK Chemicals is promoting large-capacity energy storage materials and systems that are expected to grow rapidly along with the active growth of new and renewable energy and government policies to promote smart grid systems. SK Chemicals has examined business models while actively performing R&D activities in order to secure technological capabilities required to carry out the said business. It also promotes the development of semiconductor materials based on its organic synthesis, refining and quality control capabilities it has accumulated through existing business lines.

Composite MaterialsDeveloping energy-saving, light-weight materials have become a key topic in all industries, including automobile, ship and aircraft manufacturing. Alongside the trend where new light-weight materials replace metal materials, SK Chemicals has spurred the development of compound materials based on its business in prepreg, highly functional and light-weight composite intermediary materials. The light-weight materials are being adopted by automobile and shipbuilding industries as their usefulness has been recognized by efforts in the past 20 years. The electronic industries that require ultra-precision have shown high interest in compound materials. They have already been applied to OLED TV sets. SK Chemicals intends to develop a compound material business as its new growth engine by cooperating with leading upstream and downstream businesses based on the industrial trends and accumulated know-how.

SK Chemicals intensively develops promising next-generation business lines for continued growth under rapidly changing business conditions. It allocates its resources in mid- and long-term core business lines in compound and bio materials, highly functional materials, energy and electronic materials.

New Business of Green Chemicals


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SK Chemicals works to seek a healthier mankind based on innovative new drugs and technologies for preventing and treating diseases.SK Chemicals wishes a healthier tomorrow for mankind.SK Chemicals contributes to the enhanced health and life quality of mankind by developing new synthetic and botanical drugs, including SUNPLA®, Korea’s first new drug, vaccines, innovative production technologies, and combining IT technologies with healthcare services.

Total Healthcare Solution Provider

Care for theHEALTH

LIFE SCIENCE Business

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Synthetic DrugsWhen SK Chemicals succeeded in developing Korea’s first new drug, SUNPLA® in 1999, it opened a new chapter in synthetic drugs. In 2007, it successfully developed a new impotence cure, MVIX®, ranked first in the International Index of Erectile Function (IIEF), and developed MVIX-S®, the world’s first film-type impotence cure with enhanced convenience, in 2011.Also, SK Chemicals continues to develop new drugs for such diseases as fibrosis, benign prostatic hyperplasia and diabetes, by securing outstanding research manpower and making bold R&D investments.

Natural DrugsGINEXIN®, a drug for improving blood circulation, is SK Chemicals’ representative brand that has maintained its No.1 market share. SK Chemicals has further cemented its powerful position in the market for blood circulation drugs by launching LINEXIN®, an anti-platelet drug, a compound formulation of GINEXIN® ingredients that show multiple actions.Furthermore, JOINS®, Korea’s first herbal medicinal product, has been evaluated to be a drug that presented a new possibility of development of new herbal medicinal products as it enables treatment of arthritis with a mechanism that suppresses degradation of cartilage, and anti-inflammatory analgesic functions.

Korea’s first natural drug

[JOINS®]

Korea’s first natural drug, JOINS®, proved in a clinical trial involving five general hospitals (including Seoul National University Hospital) to provide the same level of anti-coagulation and pain-killing effects as conventional anti-inflammatory analgesic drugs, yet has fewer side-effects. It is evaluated to be a medicine that cures arthritis fundamentally by protecting cartilage tissues as well as providing anti-inflammatory analgesic effects.

Life Science Biz.

World’s highest IIEF, world’s first film-type preparation

[MVIX®]

MVIX® is the impotence drug developed by SK Chemicals. It prides itself on powerful efficacy, i.e. No. 1 in the International Index of Erectile Function (IIEF). SK Chemicals introduced the world’s first film-type impotence cure MVIX-S® in 2011, and the enriched film-type formulation MVIX-S® 100mg in 2012. The company now has a diverse portfolio of formulations. MVIX-S® improved the existing MVIX® formulation innovatively, and made it thin and light enough to go into a wallet. As it maximizes portability and ease of administration, it has been favorably received in the market.The user convenience of MVIX-S® was recently enhanced further by having a reduced melting speed and size.

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SK Chemicals now has a wide product portfolio by continuously investing in research on premium vaccines, blood derivatives and recombination drugs, which will be the driving force for the Life Science business of the future. In particular, when it comes to next-generation technologies, the cell culture influenza vaccine, SK Chemicals obtained KFDA approval for clinical tests for the first time in Korea. With this, the technical supremacy of SK Chemicals was recognized. The company also completed building a state-of-the-art vaccine plant in Andong. If premium vaccines, including the cell culture influenza vaccine whose production time has been drastically reduced, are commercialized, they are expected to contribute to gaining independence in vaccines. Also, we merged with the bio-venture In2Gen and are now conducting research on recombination medicines. In addition we entered into an agreement with a multinational pharmaceutical company for exporting the gene recombination drug for hemophilia that we independently developed, and are conducting clinical tests around the world.

BiomedicineFormulation TechnologySK Chemicals is producing excellent results in developing new drugs to be exported globally by developing innovative formulation technologies. In particular, the platform technology has made SK Chemical a leader in patch development. In 1994 the company developed the world’s first patch-type cure for arthritis, Trast® that remains effective for 48 hours after application. In addition, a dementia patch, SID710, was approved recently for sale in Europe, and global marketing and exports of SID710 have begun in earnest. In addition, the excellent cure for gastric ulcers, OMED®, whose safety was improved by an innovative technology, was globally recognized. It became the first Korean finished drug exported to Europe in 1999, and has since been sold in most EU countries.

New HealthcareA new business, which combines Information Technology (IT) with the healthcare business, is expected to grow rapidly. In 2008, SK Chemicals acquired UB Care, a medical IT specialist, and solidified its foundation for U-healthcare. Recently the company entered into a partnership with a leading medical institution to expedite new healthcare businesses, such as the genome analysis business and cancer diagnosis business. The new healthcare business will be the core business that will help SK Chemicals become a total healthcare solution provider in that it creates values in new areas such as diagnosis of diseases and medical infrastructure, in addition to treatment and prevention of diseases.

A powerful cure for knee osteoarthritis

[TRAST®]

TRAST® is a patch-type cure for knee osteoarthritis that has been a steady seller since its release in 1996. As it is applied to the knee joint where the medication works directly on the knee, it minimizes the side effects of existing pills while maximizing treatment effects. The anti-inflammatory analgesic drug, Piroxicam, is delivered to the affected knee at the same level of concentration for 48 hours using the Trans-dermal Drug Delivery System (TDDS). The medicinal effect continues for 48 hours after the patch is removed.

Life Science Biz.

Cell-cultivated vaccines have been developed using new technologies that produce vaccines after cultivating viruses using animal cells. It takes more than six months to produce conventional vaccines using fertile eggs. Therefore, we could not flexibly address shortages of vaccines caused by a sudden outbreak of epidemic diseases or shortage of fertile eggs because of avian influenza. As cell-cultivated vaccines are produced using animal cells, the production takes only two to three months, enabling a stable supply irrespective of sudden crises like those caused by avian influenza.SK Chemicals has started a full-scale clinical trial of 4-strain influenza vaccines that can immunize four different types of influenza, after starting clinical trials of its cell-cultivated influenza vaccine for the first time in Korea. In addition, the company actively pursues overseas sales of premium vaccines under partnerships with global pharmaceutical companies.

[Cell-Cultivated Vaccines]

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SK Chemicals creates sustainable happiness with consideration of people and environment.Chemistry for the environment and life science for harmony start with the sincerity of employees. The philosophy of SK Chemicals, “thinking about the environment and people,” goes beyond ‘businesses to ‘culture.’

We want to make the world better environment to live in, and deliver happiness to more people.

Think about People and the Environment

Care for PEOPLE

Creating Shared Value for

Sustainability

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Eco Lab • L House, Korea’s Most Environmentally Friendly Buildings

Green Management

40% Reduction of Greenhouse Gas SK Chemicals has introduced an integrated system for controlling both energy and greenhouse gas emissions from its productions facilities and processes in different regions. SK Chemicals’ Ulsan plants operate Eco-Green Boilers those burn waste wood chips, which are transformed into industrial energy. In addition, we recycle waste resources and minimize greenhouse gas emissions by using liquid or gaseous bio energy.

Environment-Friendly Products and Services Representing 40% of Total Sales SK Chemicals has secured a diversified portfolio of environmentally-friendly products, including bio plastic that utilizes materials extracted from natural substances, light materials to help save fuel in cars, and biodiesel extracted from plants and waste cooking oil. As part of its efforts to reduce greenhouse gas emissions, the company has started a project converting its Ulsan factory into a carbon-neutral plant that does not use fossil fuel, by 2020.

40 Hours of Corporate Social Responsibility Services SK Chemicals practices environment-friendly services through diverse campaigns participated by all of its staffs. It also operates a unique system where its members donate points earned from their participation in environment-friendly services. In addition, its officers and employees take initiatives in improving the community’s environment, including regularly cleaning the river close to their workplace.

Since it declared its environmental management policy in 2009, SK Chemicals has been striving to fulfill its own internal environmental goals, which it has tagged “Green Triple 40”, i.e. reduction of carbon emissions by 40%, having eco-friendly sales account for 40% and 40 hours of social contribution activities by 2020.SK Chemicals is practicing enterprise-wide sustainability management in all areas including production, product design and engineering, and corporate culture, i.e. “Green Processes” based on the introduction of eco-friendly facilities, “Green Products” for increasing the portion of eco-friendly materials, and “Green Culture” for encouraging voluntary participation of all employees.

We consider production, products, culture and the environment

For details on SK Chemicals’ ‘Sustainability Management’, please refer to the ‘Sustainability Management Report’ found at www.skecoweb.com.

[ GREEN TRIPLE 40 ]

GREEN PROCESS

GREEN PRODUCT

GREEN CULTURE

SK Chemicals practices environmentally friendly business management by installing advanced energy saving systems at its office and factory buildings. Eco Lab, which houses SK Chemicals offices and labs, is said to be the most environmentally friendly building in Korea. The building helps to prevent global warming as 101 different types of advanced technologies that were applied to the building reduce its annual energy bills and consumption by 40% and 44%, respectively. The building releases 33% less CO2 gas than other buildings and facilities in the nation. This effect can be compared to planting 94,000 pine trees. It also uses 63% less water resources than other buildings. Eco Lab was awarded Platinum or the highest grade certificate by the U.S. Leadership in Energy and Environmental Design (LEED), for the first time among all currently occupied buildings in Korea. It earned Korea’s highest score of 110 points (out of total 136 points) in Green Building Certification Criteria (GBCC) certified by the Korean government. It was given the Korea Architectural Culture Award in the Private Sector Grand Prize in 2011. ‘L HOUSE,’ a vaccine production facility in Andong, Korea has won LEED Gold grade for the first time among all pharmaceutical facilities in the world. Sixteen new technologies have been applied to the construction of the L House while adhering to GMP regulations, including those for saving energy and water resources, environment, and well-being. It is designed to save 30% more energy than the existing factories by introducing various environmentally-friendly living facilities, including LED illumination, recycled toilet water, and water-saving commodes.

32 33

SK Chemicals Shares Harmony through Participation and Service

SK Chemicals works to share happiness with local communities and diverse age groups through active corporate social responsibility(CSR) services. To that end, it implements diverse CSR programs based on three themes of “Eco-friendliness, social welfare and happiness diffusion” at local communities, where it has business installations, as well as remote African countries.

This is a campaign to enhance the welfare of children and senior citizens in local communities. SK Chemicals officers and employees deliver funds they voluntarily raise with a matching amount provided by the management each month under an agreement signed with 14 community welfare centers around the country. They also regularly serve meals at the welfare centers on a weekly basis.

SK Chemicals has helped dig wells to improve the living conditions of the residents in African countries whose residential infrastructures are underdeveloped. The program has provided clean portable water to 14,000 residents in a total of three regions, while building the best well dug in Tana River in Kenya.

Silver cinemas sponsored by SK Chemicals have helped to develop culture by screening movies for senior citizens at a discounted rate of 2,000 won. They have become a leading leisure facility for the elderly, where as many as 750,000 people have attended so far.

SK Chemicals management and employees have participated in diverse activities that contribute environmental protection, including “A.cure” where they clean local streams and rivers, and Happy Green Class where volunteers explain the importance of the environment to elementary school students. They have also contributed to the development of an environmentally friendly food culture by promoting the benefits of organic farm products.

Social Contributions

Happiness Generator

Wells of Happiness

Silver Cinema

Environmental Contributions

34 35

About our people

SK Chemicals has established “Warm-Hearted Professionals” with its members in order to foster the members’ talents with their upright morality and job-related expertise. Their unity as members of SK Chemicals is strengthened while their self-development advances through diverse educational and citation programs, as well as programs for cultivating a sound corporate culture.

Warm-Hearted Professionals Equipped with Upright Morality and Job-Related Expertise

Warm-Hearted Professionals

Development of Global Level Talent Training ProgramSK Chemicals officers and employees cultivate talents that match global standards and aptitude.

PrideSK Chemicals’ officers and employees demonstrate self-esteem while clearly understanding the meaning and value of their jobs and maintaining conviction that they protect the global environment while enhancing the health of mankind.

Sense of CommunityThey also pursue values for the entire organization while maintaining a sense of unity as members of the community and enterprise.

Mutual CareSK Chemicals officers and employees pursue mutual development while respecting and supporting others based on trust and steady interest in others.

Understanding My RoleSK Chemicals officers and employees continue their efforts in acquiring and understanding expertise related to the customers, technologies and markets. They are well aware of ways to achieve the objectives of their duties.

Establishment of Challenging ObjectivesSK Chemicals officers and employees continue their efforts to attain achievements over expectation while setting objectives in excellence.

Thorough and Happy PracticeSK Chemicals officers and employees perform their duties with a passion while carefully planning them ahead.

Sharing KnowledgeSK Chemicals officers and employees enhance the capabilities of their own and their peers by clearly transferring their experiences and expertise to other members of the organization.

Self-DevelopmentEndless efforts

TrainingShort-and long-term intensive training

Empirical TrainingExperiences from individual assignments and pursuit of SUPEX

The most important way to develop individual’s ability

Major CoursesMBA courses (home and abroad), R&D degree courses (master and doctorate courses home and abroad), GFP (regional expert) course, intensive language course (home and abroad), and others

General CoursesSK Chemicals offers courses by job grade, leadership courses, team management courses, values courses, core leader education, etc.

Warm-Hearted

Professionals

·Pride·Sense of Community·Mutual Care

·Understanding my role·Establishment of challenging objectives·Thorough and happy practice·Sharing knowledge

36 37

SK Energywww.skenergy.com

SK Global Chemicalswww.skglobalchemical.com

SK E&Swww.skens.com

SK Lubricantswww.sklubricants.com

SK Chemicalswww.skchemicals.com

SK Innovationwww.skinnovation.com

SK Gaswww.skgas.co.kr

SK Incheon Petrochemicalwww.skincheonpetrochem.com

SK Trading International SKCwww.skc.co.kr

SK Constructionwww.skec.co.kr

SK Shippingwww.skshipping.com

SK Planetwww.skplanet.com

SK Telesyswww.sktelesys.com

SK Telecommwww.sktelecom.com

SK Hynixwww.skhynix.com

SK Tellinkwww.sktelink.com

SK C&Cwww.skcc.com

SK Broadbandwww.skbroadband.com

SK Communicationswww.skcommunications.com

SK Networkswww.sknetworks.com

SK Securitieswww.sks.co.kr

Marketing, Logistics & Services

Energy & Chemicals

IT & Semiconductor

SK Corporationwww.sk.com

SK Group has energetically grown along with the economic development in Korea.

It will exert its best to continue a sustainable growth while effectively responding to the

rapidly changing global environment. SK will make further efforts to lead future markets

with world-class competitiveness to make all its customers happy by generating greater

values, and to get beloved by the society and all its members.

Ultimately, its aims to better society have positioned SK Group in high regard.

force-generating happiness - SK SK Group at a glance

SK Group

38 39

SK Chemicals Generates Happiness Together

Subsidiaries and Affiliated Companies:

SK Chemicals develops technologies and produces products that are considerate of nature with mankind. SK Chemicals is a business that generates happiness together so that all its customers may enjoy greater value and quality in their lives. SK Chemicals, its subsidiaries and affiliated companies will continue their efforts to generate a greater happiness of tomorrow for everyone.

ChinaSK Chemicals Qingdao Co., Ltd.12, Jiangshan Middle Road, Qingdao Economic & Technical Development Zone, Shandong, ChinaTel) 86-532-8676-3281~3 Fax) 86-532-8676-3190

SK Chemicals Suzhou Co., Ltd.#188, Jiangxingdonglu, Wujiang economic development zone, Jiangsu Province, China 215217Tel) 86 – 512 – 8516 – 2002 Fax) 86-512-8516-2007

SK Pharma Beijing Co., Ltd.23F, SK Tower, No.6 Jia, Jianguomenwai Avenue, Chaoyang District, Beijing, China(100022)Tel) 86-10-5924-0909 Fax) 86-10-5924-0924

SK Chemicals Shanghai OfficeRoom No. 1505, Shanghaimart, 2299 YanAn Road(W), Shanghai, China (Post Code : 200336)Tel) 86-21-6295-7070 Fax) 86-21-6270-1606

SK Chemicals Guangzhou OfficeRoom No.1005,10F,Guangdong International Building,339 Huan shi Dong Road,Guangzhou,China(Post Code:510098) Tel) 186-2088-8280

GermanySK Chemicals GmbHTopas 1, Mergenthalerallee 77, 65760 Eschborn GermanyTel: +49-6196-90206-11 Fax:+49-6196-90206-29

SK Chemicals Frankfurt OfficeTopas 1, Mergenthalerallee 77, 65760 Eschborn GermanyTel: +49-6196-90206-11 Fax:+49-6196-90206-29

JapanSK Chemicals Tokyo OfficeToranomon Roots21 Bldg., 7-5, Toranomon 3-Chome, Minato-Ku, Tokyo 105-0001, JapanTel: 81-3-5733-6095/6 Fax: 81-3-5733-6097

SingaporeST Green Energy Pte Ltd.22 North Canal Road #03-03 Singapore 048834Tel) +65-6602-6321 Fax) 65-6533-3023

U.S.ASK Chemicals America, Inc.2 Park Plaza Suite 1250, Irvine, CA 92614Tel: 1-949-336-8088 Fax: 1-949-336-8089

SK U.S.A, Inc.55 E 59th Street, 11th floor, New York, NY 10022Tel: 1-212-583-2430 Fax: 1-212-583-2461

Global Networks

● SKCA

● INITZ

● SK Chemicals GmbH

● SK Chemicals Qingdao ● SK Chemicals Suzhou ● ST Green Energy ● SK Pharma Beijing

● ENTIS

● SK Construction

● SK Syntec

● SK Gas

● UB care

● TSK water

Green Chemicals Biz. Life Science Biz.

● Local subsidiaries● Subsidiaries and affiliated companies overseas

Frankfurt

Head OfficeAnsan

Cheongju Andong

Osan

Ulsan

Qingdao

Beijing

Suzhou

Shanghai

Guangzhou

Singapore

Tokyo

IrvineNew York

Subsidiaries / Global Network

40

Financial Report

41

Financial Report

Audit report

Financial highlights

Balance sheet

Consolidated balance sheet

Income statement

Consolidated income statement

Retained earnings disposal statement

Corporate overview and business status

Shares and investment status

Organisation

Mission

42

Financial Report

43

The audit committee reports the outcomes of its audit of the accounting and operations of the 45th fiscal year (1

January 2013 to 31 December 2013) as follows:

1. Outline of Audit Methods

To conduct the financial audit, we reviewed the accounting books and records, including financial statements,

consolidated financial statements and their supporting statements. We applied cross-checks, physical surveys,

witnessing, inquiries and other appropriate audit procedures as deemed required. We also obtained reports

from directors on sales when deemed required while attending board meetings and other important managerial

meetings to audit the company’s business operations. We employed various appropriate means, including a review

of documents related to important activities, and examinations of their contents.

2. Matters Concerning Balance Sheet, Consolidated Balance Sheet, Comprehensive Income Statement and

Consolidated Comprehensive Income Statement

The balance sheet, consolidated balance sheet, comprehensive income statement, and consolidated

comprehensive income statement duly represent the company’s financial status and earnings pursuant to the

relevant statutes and its articles of incorporation.

3. Matters Related to Retained Earnings Disposal Statement

The retained earnings disposal statement is duly prepared pursuant to the relevant statutes and its articles of

incorporation.

4. Matters Related to Business Report

The business report accurately represents the company’s status pursuant to the relevant statutes and its articles

of incorporation.

February 19, 2013

SK Chemicals

Standing Auditor Bo- Hyun Kang Standing Auditor Deok-Geun Ahn

Audit Report by Audit CommitteeAudit report Consolidated financial statement audit report by external auditors

Separate audit reports by external auditors

To Shareholders and Board of Directors,

SK Chemicals Co., Ltd.

This auditor has audited the consolidated balance sheet of SK Chemicals Co., Ltd. and its subsidiaries for the periods ending on 31 December 2013 and 2012 and consolidated comprehensive income statements, consolidated statement of changes in equity, and consolidated cash flow statement for the two fiscal periods ending on those days, attached hereto: The company’s management is responsible for preparation of the consolidated financial statements. This auditor is responsible to audit the consolidated financial statements and to express his opinion on them based on his audit. The auditor utilized the audit report by other auditors to express his opinion on the financial statements of SK Gas Co., Ltd. and other SK Chemicals subsidiaries as of 31 December 2013 and 2012, which represent 49.08% and 59.06% of their total assets before removal of internal transactions and 80.68% and 83.90% of their total sales of the fiscal periods ending on those days.

This auditor performed his audit pursuant to the Korean Financial Auditing Standards. The Standards require that this auditor plan and perform the audit to reasonably believe that the consolidated financial statements are not materially distorted. The audit includes the verification of the evidences supporting the amounts on the consolidated financial statements and public announcement details by the physical inventory method. The audit inspection also includes the evaluation of the overall details represented in the consolidated financial statements and of the accounting principles applied by the management and the significant estimates made in connection with the accounting. This auditor believes that the physical inventory performed by this auditor provides reasonable grounds for expressing my audit opinion.

In the opinion of this auditor based on his own audit and audit reports by other auditors, the above consolidated financial statements duly represent the financial status of SK Chemicals and its subsidiaries as of 31 December 2013 and 2012, and their financial achievements and cash flow of the financial periods ending on those days in terms of their material significance based on the International Financial Accounting Standards adopted by Korea.

152, Teheran-ro (Yeoksam-dong Gangnam Finance Center 10Fl,), Gangnam-gu, Seoul, KoreaSamjong KPMG CEO Kim, Kyo Tae

To Shareholders and Board of Directors,

SK Chemicals Co., Ltd.

This auditor audited the balance sheet of SK Chemicals Co., Ltd. as of 31 December 2013 and 2012, and its comprehensive income statement, statement of changes in equity, and cash flow statement for the two fiscal periods ending on the those dates, attached hereto. The company’s management is responsible for preparation of the consolidated financial statements. This auditor is responsible to audit the financial statements and to express his opinion on them based on his audit.

This auditor has audited them pursuant to the Korean Financial Auditing Standards. The Standards require that this auditor plan and perform the audit to reasonably believe that the financial statements are not materially distorted. The audit includes the verification of the evidences supporting the amounts on the financial statements and public announcement details by the physical inventory method. The audit inspection also includes the evaluation of the overall details represented in the financial statements and of the accounting principles applied by the management and the significant estimates made in connection with the accounting. This auditor believes that the physical inventory performed by this auditor provides reasonable grounds for expressing my audit opinion.

In the opinion of this auditor, the above financial statements duly represent the financial status of SK Chemicals as of 31 December 2013 and 2012, and its financial achievements and cash flow of the financial periods ending on those days in terms of their material significance based on the International Financial Accounting Standards adopted by Korea.

152, Teheran-ro (Yeoksam-dong Gangnam Finance Center 10Fl,), Gangnam-gu, Seoul, KoreaSamjong KPMG CEO Kim, Kyo Tae

March 13, 2014

March 13, 2014

44

Financial Report

45

Financial highlights

SK Chemicals concentrates its business capabilities on the successful launch of its newly started business lines while enhancing profitability of its existing business lines based on its two major business axes of Green Chemicals and Life Science Businesses.

Green Chemicals business promotes new business in four major growth areas by developing a master growth plan, including compound materials, highly functional materials, bio materials, and energy and electronics, in order to grow into a solution provider of environmentally friendly materials based on the technologies and know-how it has accumulated in resin and fine chemical lines.

Life Science business attempts to actively advance into overseas markets while diversifying business into vaccines and new healthcare products and services based on its R&D capabilities for development of new drugs, while augmenting its leadership in the local market, in order to transform into a total healthcare solution provider based on its success in the domestic market.

In 2013, it succeeded in three tasks to secure a mid- and long-term growth engine, including the founding of Initz, a joint venture for PPS business with Teijin, Japan, the construction of PPS dedicated production facility, and the start of 3rd phase clinical trials of cell-cultivated influenza vaccines. The company also effectively deployed an infrastructure for continued growth under strategic alliances with global companies converting external resources into internal capital.

Thanks to such efforts for growth and enhanced competitiveness of existing business lines, the company recorded 1,484.6 billion won in sales, 71.3 operating income, and 26.5 billion won net profit in 2013. SK Chemicals will continue its efforts to pursue interests of all its stakeholders through continued growth and progress.

Sales Net income Total assetsTotal Stockholder’s Equity

1,484,565 26,468

2,403,408 963,105

2013 2012 2011

1,476,191 39,325

2,194,266 948,258

1,546,108 30,836

2,033,752 922,126

(Unit: KRW1 million)

TOTAL SALES


1,484,565

1,476,191

1,546,108

2013 2012 2011

TOTAL STOCKHOLDER’S EQUITY


963,105

948,258

922,126

2013 2012 2011

NET INCOME


26,468

39,325

30,836

2013 2012 2011

TOTAL ASSETS


2,403,408

2,194,266

2,033,752

2013 2012 2011

46

Financial Report

47

Income statementBalance sheet

Consolidated income statement

Retained earnings disposal statement

Consolidated balance sheet

Assets:I. Current assets: (1) Liquid Assets (2) InventoryII. Non-current assets: (1) Investments and Others (2) Tangible assets (3) Intangible assets (4) Other non-current assetsTotal assets:

Liabilities:I. Current liabilities:II. Non-current liabilities:Total liabilities:

Shareholders’ Equity:I. Capital stock:II. Capital surplus:III. Capital Adjustments:IV. Accumulated Other Comprehensive Income:V. Retained earnings:Total Shareholders’ Equity:

Total Liabilities and Shareholders’ Equity:

677,638,720,410 425,157,017,522 252,481,702,888

1,725,769,319,173 942,505,636,187 718,917,001,136

38,393,473,290 25,953,208,560

2,403,408,039,583

648,375,977,495 791,927,332,630

1,440,303,310,125

118,300,860,000 145,530,430,546 (98,068,499,377)

2,370,977,641 794,970,960,648 963,104,729,458

2,403,408,039,583

45th period (as of December 31, 2013) 44th period (as of December 31, 2012) 43rd period (as of December 31, 2011)

642,506,626,344 402,651,480,639 239,855,145,705

1,551,759,080,995 810,507,232,785 690,136,182,542

41,845,834,327 9,269,831,341

2,194,265,707,339

476,538,657,736 769,469,070,324

1,246,007,728,060

118,300,860,000 145,530,430,546 (98,068,499,377)

1,369,992,555 781,125,195,555 948,257,979,279

2,194,265,707,339

631,159,236,354 406,186,961,732 224,972,274,622

1,402,592,304,383 819,268,208,854 547,945,079,731

27,850,538,457 7,528,477,341

2,033,751,540,737

480,244,409,216 631,381,127,130

1,111,625,536,346

118,300,860,000 145,530,430,546 (98,068,499,377)

1,632,274,167 754,730,939,055 922,126,004,391

2,033,751,540,737

(Unit: KRW)

I. Sales II. Cost of sales III. Gross profits IV. Selling, General Administrative Expenses V. Operating Income VI. Other IncomeVII.Other expensesVIII.Financial incomeIX. Financial costs X. Income before taxesXI. Corporate income taxXII. Net income


1,484,565,400,695 1,170,887,086,595

313,678,314,100 242,387,066,868

71,291,247,232 15,466,141,638 16,861,466,216 21,955,941,684 52,272,033,054 39,579,831,284 13,111,994,351

26,467,836,933

1,476,191,492,605 1,188,949,912,636

287,241,579,969 238,851,298,084

48,390,281,885 22,084,239,553 12,012,635,028 20,274,808,240 48,395,945,686 30,340,748,964 (8,983,813,070) 39,324,562,034

1,546,107,694,525 1,245,669,454,486

300,438,240,039 235,789,777,579

64,648,462,460 15,311,190,684 22,358,393,477 19,380,120,301 45,153,131,277 31,828,248,691

992,431,188 30,835,817,503

(Unit: KRW)

I. Retained Earnings before Appropriations 1. Unappropriated Retained Earnings carried over from prior years 2.Actuarial Gains and Losses 3.Net income

II. Transfer from Voluntary Reserves

III. Appropriations of Retained Earnings 1.Legal Appropriated Retained Earnings 2.Reserve for research and HR development 3.Dividend Dividend per share (%) · Common shares: KRW400 (8%) · Preferred shares: KRW450 (9%)

IV. Unappropriated Retained Earnings carried forward to subsequent year


(Unit: KRW)

(Unit: KRW)

Assets:I. Current assets: II. Noncurrent assets: Total assets:

Liabilities:I. Current liabilities II. Non-current liabilities: Total liabilities:

Capital:I. Controlling interest Capital stock Consolidated capital surplus Consolidated capital adjustments Consolidated accumulated other comprehensive income Consolidated retained earnings II. Non-controlling interest Total Shareholders’ Equity:

Total Liabilities and Shareholders’ Equity:

2,270,812,975,3752,589,464,811,745

4,860,277,787,120

1,687,223,217,8091,389,510,117,076

3,076,733,334,885

1,270,999,563,777118,300,860,000141,262,204,120(99,397,984,808)

30,797,175,3101,080,037,309,155

512,544,888,4581,783,544,452,235

4,860,277,787,120


2,613,434,127,636 2,380,510,652,293

4,993,944,779,929

1,901,766,359,166 1,353,966,665,991

3,255,733,025,157

1,290,301,046,691 118,300,860,000 139,657,575,652 (99,397,984,808)

7,442,035,207 1,124,298,560,640

447,910,708,081 1,738,211,754,772

4,993,944,779,929

1,812,682,771,027 2,221,838,586,411

4,034,521,357,438

1,641,375,202,734 772,717,510,845

2,414,092,713,579

1,229,834,875,799 118,300,860,000 140,567,851,722 (99,397,984,808)

7,087,186,833 1,063,276,962,052

390,593,768,060 1,620,428,643,859

4,034,521,357,438


I. SalesII. Cost of salesIII. Gross profitsIV. Selling, General Administrative Expenses V. Operating IncomeVI. Other incomeVII. Other expensesVIII. Financial incomeIX. Financial costsX. Income from Investments in Associates XI. Continuing income and loss before income taxes XII. Taxes on income from continuing operations XIII. Income from Continuing Operations XIV.Income from discontinued Operations XV. Consolidated net income

8,256,550,007,571 7,575,210,497,432

681,339,510,139 487,307,339,668 194,032,170,471 157,976,122,412 178,282,761,797 120,187,382,079 142,778,735,575

(118,383,451,580)32,750,726,010

24,935,962,555 7,814,763,455

- 7,814,763,455

9,160,084,617,619 8,474,075,122,254

686,009,495,365 495,385,357,796 190,624,137,569 220,979,003,010 246,097,102,358 135,749,270,275 117,681,411,874

7,336,694,680 190,910,591,302 34,323,759,661

156,586,831,641 -

156,586,831,641

8,864,966,852,448 8,147,038,146,530

717,928,705,918 487,056,353,765 230,872,352,153 168,550,476,967 153,353,287,797 148,923,377,170 193,738,174,283

75,696,898,882 276,951,643,092

49,510,666,004 227,440,977,088 (36,511,260,753) 190,929,716,335

(Unit: KRW)

695,070,924,173

(4,311,787,990)26,467,836,933

831,028,385

- 8,310,283,850

717,226,973,116

20,666,666,667

9,141,312,235

728,752,327,548

678,174,362,725

(4,620,021,684)39,324,562,034

831,028,385

16,000,000,000 8,310,283,850

712,878,903,075

7,333,333,333

25,141,312,235

695,070,924,173

654,948,554,699

(7,135,363,902)30,835,817,503

831,028,385

- 8,310,283,850

678,649,008,300

8,666,666,660

9,141,312,235

678,174,362,725

48

Financial Report

49

Corporate overview and business status

Registered common shares Bearer preferred shares Total

Type of share

20,843,047 2,817,125

23,660,172

5,000 5,000

104,215,235 14,085,625

118,300,860

88.09%11.91%

100.00%

Number of shares Face value per share Amount Composition (%) Remarks

(Unit: share, KRW1,000)

Type and number of shares issued

182-1 182-2 183 184 185 186 187-1 187-2 188-1 188-2 189-1189-2190-1190-2190-3

Public offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bondPublic offering bond

’11.07.29’11.07.29’11.10.28’11.12.26’12.03.02’12.07.03’12.10.30’12.10.30’13.03.07’13.03.07’13.08.23’13.08.23’14.01.22’14.01.22’14.01.22

Total

110,000 40,000 50,000

100,000 60,000

100,000 50,000 30,000 30,000 30,000 50,000 70,000 72,000 20,000 28,000

840,000

4.54%4.83%4.68%4.45%4.12%4.12%3.55%4.12%3.31%3.83%3.54%4.11%

3.632%4.189%4.705%

’14.07.29’16.07.29’15.10.28’16.06.26’15.03.02’17.07.03’17.10.30’19.10.30’18.03.07’20.03.07’16.08.23’18.08.23’17.01.22’19.01.22’21.01.22

110,000 40,000 50,000

100,000 60,000

100,000 50,000 30,000 30,000 30,000 50,000 70,000 72,000 20,000 28,000

840,000

Woori Investment & SecuritiesWoori Investment & Securities

Mirae Asset SecuritiesHana Daetoo Securities

Korea Investment & SecuritiesHi Investment & SecuritiesNH Investment & SecuritiesNH Investment & Securities

Daishin SecuritiesDaishin Securities

Woori Investment & SecuritiesWoori Investment & Securities

Mirae Asset SecuritiesMirae Asset SecuritiesMirae Asset Securities

No. Issue Date of issuance Amount issued Interest rate Maturity date Current balance Managing underwriter Remarks


Information on corporate bondsMatters concerning shares

Common shares Preferred shares Common shares

2,955,186 130,104 132,324

14,775,930 650,520 661,620

116,988,720 117,639,240 118,300,860

Merger Merger Merger

2006.11.022006.11.022007.12.27

date Type of share Number of shares Capital increase Capital stock after capital increase details of capital increase

(Unit: share, KRW1,000)

Changes in the capital stock

Closing date December 3: Holding the regular general shareholders’ meeting within 3 months of the end of each fiscal yearStock book closing period: from January 1 to January 15Notification method: Our website (www.skchemicals.com)Type of share certificate: 1, 5, 10, 50, 100, 500, 1,000, 10,000 shares per certificate (8 types)Transfer agent: Hana Bank Security Agency Department (43-2, Yeoeuido-dong, Yeongdeungpo-gu, Seoul)No privilege for shareholders

Stock-related matters

Chang-Won Choi and affiliate personsNational Pension Mirae Asset Global Investments Co., Ltd.

Name of shareholder

2,857,6601,931,1231,604,640

100,350--

2,958,0101,931,1231,604,640

13.71%9.27%7.70%

3.56%--

Common shares Preferred shares

Number of shares owned (Unit: share) Ownership

Total Common shares Preferred shares

As of December 31, 2013

Major shareholders

Name of creditor

(Unit: share, KRW1 million)

Major creditors

Amount Shares owned

Korea Finance Corporation Korea Development Bank

110,000 88,046

--

Remarks

GreenChemicalsBiz.

LifeScienceBiz.

Etc.

Total

Business type

Domestic consumptionExports

Total


Total


Total


Total

Type of sales

531,833 447,662 979,495

457,583 42,791

500,374

283 4,413 4,696

989,699 494,866

1,484,565

493,061 448,527 941,588

420,876 19,503

440,379

87,452 6,772

94,224

1,001,389 474,802

1,476,191

517,507 552,105

1,069,612

391,044 18,646

409,690

65,410 1,396

66,806

973,962 572,146

1,546,108

Sales (2013) Sales (2012) Sales (2011)


Sales performance)

50

Financial Report

51

Shares and investment status ORGANIZATION

SK Gas

UBCare

SK Chemicals (Qingdao)

SK Chemicals (Suzhou)

SK Syntec

SK Chemicals America

INITZ

SK Cytec

SK E&C

TSK Water

Intervest

SK Networks

Koentec

KOPLA

SK Chemicals GmbH

SK Pharma Beijing

SK TIC

ST Green Energy Pte, Ltd

KRCC

Ningbo SK Zhenbang Chemical Company Limited

Zeropack

Green Tech

Ecomax

Yonghyen 4-area industrial water managing association

Names of other companies

3,928,537shares

17,714,411shares

$4,000,000

$12,790,000

7,181,350shares

$906,500

1,468,724shares

250,000shares

9,970,989shares

200,000shares

760,000shares

41,801shares

600,000shares

898,429shares

25,000

$100,000

449shares

$150,000

5,900shares

$3,800,000

196,000shares

4,005shares

100,000shares

₩419,199,443

Investment equity

45.53%

43.97%

100.00%

100.00%

100.00%

100.00%

66.00%

50.00%

28.25%

25.00%

38.00%

0.02%

1.20%

10.33%

100.00%

100.00%

1.50%

50.00%

29.50%

19.69%

9.80%

2.13%

5.00%

81.78%

Ownership Remarks


Investments in other companies Board of directors

Employees

MaleFemale

Total

687 144 831

522 141 663

197 106 303

1,406 391

1,797

Classification Office worker Production workerResearcher Total

Place of business

Pangyo Main OfficeUlsan PlantAnsan PlantOsan Plant

Cheongju PlantAndong Plant

Place of business

310, Pangyo-ro, Bundang-gu, Seongnam-si, Gyeonggi-do, Korea718, Cheoyong-ro, Nam-gu, Ulsan, Korea228-16, Gangchon-ro, Danwon-gu, Ansan-si, Gyeonggi-do430-11, Nambu-daero, Osan-si, Gyeonggi-do149, Sandan-ro, Heungdeok-gu, Cheongju-si, Chungcheongbuk-do150, Saneopdanji-gil, Andong-si, Gyeongsangbuk-do

Corporate Management & Marketing PET resins, PREPREGⓇ Production

Drug ProductionDrug ProductionDrug ProductionDrug Production

Main businesses

02-2008-2008052-279-1411031-491-0121031-612-8200043-270-9500054-902-4800

Phone numberLocation

Subsidiaries (with more than 50% equity)

SK Syntec SK Chemicals Qingdo INITZ SK Chemicals Suzhou SK Pharma BeijingSK Chemicals GmbHSK Chemicals America

Business consulting, etc.PREPREGⓇ mfg.Manufacturing PPS base resin and compoundPolyester adhesives mfg.Pharmaceutical marketingPharmaceutical marketingPlastic material wholesale

KRW35.9 billion USD 4,000,000 KRW1.1 billion

USD 12,790,000 USD 100,000 EUR 25,000

USD 906,500

7,181,350shares USD 4,000,000

1,468,724shares USD 12,790,000

USD 100,000 EUR 25,000

USD 906,500

100.00%100.00%66.00%

100.00%100.00%100.00%100.00%

Subsidiary

Company name Capital stock Investment equity Ownership Trade relationsBusiness type

Relationship with SK Chemicals

Concurrent offices in subsidiaries As of December 31, 2013

Name

Chang-Won Choi

Position

CEO and Vice Chairman

Rank

Vice Chairman

Company name

SK Gas

Executives with concurrent offices Companies with whom they hold concurrent offices Remarks

Executive

Non-executive(Non-executive director)

Chang-Won Chey Cheol Kim

In-Seok Lee

Deok-Geun AhnGi-Ho HuhHui-jip Kim

Jeong-Hwan Choi

Vice ChairmanVice PresidentVice President

DirectorDirectorDirectorDirector

Classification Title Position

CEORepresentative of Green Chemicals DivisionRepresentative of Life Science Division

Auditing committee member,Non-executive Director nominating committee memberNon-executive directorNon-executive directorNon-executive director

Responsibility Remarks


52

Financial Report

Mission

1. Manufacturing, processing, selling and exporting of synthetic resins and related products.

2. Manufacturing, processing, selling and exporting of carbon fiber, composite materials and related products.

3. Manufacturing, processing, selling and exporting of inorganic materials and related products.

4. Manufacturing, processing, selling and exporting of agricultural chemicals items and related products.

5. Manufacturing, processing, selling and exporting of household items like various surfactants and synthetic detergents and

related products.

6. Manufacturing, processing, selling and exporting of information and electronic materials and related products.

7. Manufacturing, processing, selling and exporting of precision chemical products.

8. Manufacturing, processing, selling and exporting of food, food additives, ginseng products and related products.

9. Manufacturing, processing, selling and exporting of drugs, over-the-counter drugs, veterinary medicines, cosmetics, medical

supplies, medical equipment and sanitary products, subdivision and healthcare-related business.

10. Manufacturing, processing, selling and exporting of the raw materials of polyester fibres and recycled fibres

(acetate fibres, etc.), and related chemical products.

11. Manufacturing, processing, selling and exporting of polyester fibres related products.

12. Manufacturing, processing, selling and exporting of recycled fibres (acetate fiber, etc.) and related products.

13. Manufacturing, processing, selling and exporting of woven and knit fabrics and apparel, and related products.

14. Manufacturing, processing, selling and exporting of construction materials and related products.

15. Venture capital or business support.

16. Electronic commerce and Internet service business.

17. Real estate trading and leasing.

18. Specialty construction, construction and civil engineering business.

19. Environmental management agency business and environmental management service business.

20. Environmental pollution prevention facility business.

21. Manufacturing, processing, selling and exporting of high-purity organic solvents and ethanol wholesale.

22. Manufacturing, processing, selling and exporting of biodiesel, other fuels replacing petroleum, their raw materials, compounds,

byproducts and production plant facilities.

23. Purification, processing, selling and exporting of byproducts made from the manufacturing of each of the above-mentioned

products (toxic substances, methanol, etc.).

24. Manufacturing, selling and exporting of machinery and devices related to each of the aforementioned businesses.

25. Technical service business related to each of the aforementioned businesses.

26. Investments in the chemical fiber industry and the chemical industry, and investments deemed to be necessary for each of the

aforementioned businesses.

27. Provision and sale of the computer system service including the analysis, design, development, integration, education and

operation of the computer systems (newly established on March 10, 2006).

28. Manufacturing, processing and selling of nutritional supplements (newly established on November 1, 2006).

29. Business related to medical institution operation and investment (newly established on November 1, 2006).

30. Business related to the manufacturing, processing, selling and exporting of automotive parts and related products

(newly established on March 9, 2007).

31. Any business incidental to each of the aforementioned businesses.

Anyang

Address 310, Pangyo-ro, Bundang-gu, Seongnam, Gyeonggi-doWebsite www.skchemicals.comPlanning and editing PR Office

This publication was printed on FSC* certified paper with soy-based ink to minimize effects upon the environment.

FSC* : Forest Stewardship CouncilCertification for credible production and consumption of forest products, contribution to society and leading economical and sustainable development of forestry resources

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Segok-dong rotary

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ay

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aegok Expressway

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