FENC — Interim / Quarterly Report 2021

Jun 1, 2021

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Far Eastern New Century (TWSE: 1402)

IR publication – June 2021

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1

Table of Contents

• Company Highlights

• Company Overview

• Strategic Summary

• Production business strategy

• – Investment portfolio

• Property development plan

• Dividend policy

• CAPEX

• Financials

• Recent Achievements & CSR

• Appendix

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2

Company Highlights (I)

FENC is a world leading integrated polyester producer (incl. virgin & recycled PET), the only supplier providing integrated production and total solution services ranging from upstream feedstock to downstream daily necessities (A constituent of the MSCI ESG Leaders Indexes, FTSE4Good Emerging Index & TWSE CG 100 Index)

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PE/PET & PE/PP Bicomponent Recycled Recycled Recycled Nonwoven PET Nylon 6,6 PET Staple Fiber Filament Ocean Polyester PET PSF Resin Filament Sheet WORLDWIDE WORLDWIDE WORLDWIDE WORLDWIDE WORLDWIDE WORLDWIDE ASIA PACIFIC ASIA TOP 1 TOP 1 TOP 1 TOP 2 TOP 3 TOP 3 TOP 1 TOP 1

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3

Company highlights

Company Highlights (II)

• Consistent dividends payout (refer to page 20)

• FENC is a leading polyester recycling company (refer to page 7-12)

FENC green business

New green trends from governments & brands

• Green product is ~30% of polyester & textile BU

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Green Products Revenues & Percentage
(NT$ Bn) 27% 30% 32% 28%
126
108
26 93 29 96 34 35
2016 2017 2018 2019
Green Product Revenues Revenues of Poly. & Textile BU %
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• Recycled PET (R-PET) capacity expansion target: more than double the capacity in 5 years via organic growth or M&A globally to meet strong demand from the brands’ green missions

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R-PET Annual Capacity
1,000
729
463
390
247
20 90
2012 2015 2018 2019 2020(E) 2021(E) 2025(E)
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• Plastic waste import bans in Asia: e.g. China, Japan, South Korea, Malaysia, Thailand, India, Philippines, Vietnam (from 2025), etc.

• Plastic tax in EU

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• Effective from Jan 2021

• Tax rate: €0.8/kg (≈US$950/T)

• EU proposed a min. 25% of recycled plastic content in plastic bottles by 2025 & 30% by 2030

• Mandatory recycled-content bill in California, US

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• Effective from Jan 2022

• Penalty rate: US$0.2/lb (≈US$440/T)

• 15% of post-consumer recycled plastic content before 2022

• Brands’ green missions for transitioning to R-PET: e.g. Nike, Adidas, Coca-Cola, L'Oréal, P&G, Unilever, Hasbro, IKEA, etc.

4

Company highlights

FENC Strategic Summary

FENC has three key businesses – Production, Investments, and Property Development.

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Monetization
Profit increase driven by
of
organic growth plus M& A
Property
Development
Business
Transformation
of Go
Production Green
Business
Local
Empower
to
Strategy
Local Possibilities
Stable
Investment
Go
Income
Integrated
Sound Financials & Stable Dividend Policy
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5

Company overview

Company Overview

• Year of establishment: 1954

• Employees: 32,450

• Asset allocation as of Mar 31, 2021 (Total assets: NT$ 629 billion / Book value per share: NT$ 38.6 /share)

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Production
Investments
31%
(Including
Far EasTone)
43%
Property
26%
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• Revenue breakdown:

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(NT$ bn)
250
229
218
216 207
56
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Business Segments	Business Segments	Production Sites	Capacity (As of Dec 31 2019)
Production	Petrochemical	Taiwan & China	PTA: 2.75 mm tons/yr
	Polyester	Taiwan, China, Vietnam, United States, Japan, Malaysia	Polymer: 2.57 mm tons/yr PET: 2.13 mm tons/yr PSF: 391K tons/yr Polyester Filament: 99K tons/yr Others Nylon 6,6 filaments: 21K tons/yr PET Sheets: 139K tons/yr PET films: 20K tons/yr Recycled-PET(R-PET): 390K tons/yr
	Textile	Taiwan, China, Vietnam	Yarn: 373K spindles/yr Knitted Fabrics: 43K tons/yr Industrial Fabrics: 22K tons/yr Industrial Yarn: 144K tons/yr Apparels: 7.5 mm dozens/yr
	Property	Various locations in Northern Taiwan	Total size: 203k pings (672k sq meters)
Investments	Far EasTone (Consolidated)	Integrated service provider - mobile, fixed line, ISP, etc.	# of subs: 7.08mm (As of Apr 2021)
	Equity method & Others	Cement, retail, financial services…etc. (refer to page 13)

6

Company overview

World Leading Integrated Polyester Producer

: Single pellet solution

To provide international brand customers total solution with ready to use resin combining virgin & recycled PET.

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Outsourced Feedstock Production Business (Smart from the Start : R&D Efforts)
PET Food
Naphtha PX PTA
Resin Packaging
Polyester PHASE
1 Non-food
Polymer
Natural Polyester Packaging
Ethylene MEG
Gas Staple Fiber
Non-
Apparel
Polyester
Nylon 6,6 Flake Nylon 6,6Filament Filament PHASE2 Apparel
Virgin polyester
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Circular Economy
R-PET Preform
Shredded & R-PET Chips
Post-consumer
Cleaned Flakes
Polyester Wastes
Recycled Filament
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7

Production business strategy

Go Green: The R-PET Circular Economy

Plastic #1 can be returned to original uses

R-PET is more eco-friendly

• 7 types of plastic: check the number on the back

• or bottom of a plastic product, and #1(PET) can be returned to its original uses.

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1
PET
(waste)
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Output

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Recycled polyester
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Various
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Compared to conventional production of virgin PET bottles, producing R-PET bottles reduces GHG emissions by . 63%

FENC is Asia’s largest recycled PET producer

• Leading in the R-PET business: FENC has invested deeply for over 30 years.

• Waste Reduction: FENC has reduced waste by 8.1 billion PET bottles/year, enough bottles to circle the Earth 46.5 times.

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8

Production business strategy

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(I) : From Reaction to Creation

Key milestones of FENC’s R-PET products

Creating solutions for clients

• Green products certifications received

1 Safe for food packaging use

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2 Recycled content certifications
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3 Other green certifications
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• Adding product traceability: For a premium, on client’s request, FENC can put a tracer in our R-PET products, with a bar code allowing a trace of the waste’s origin.

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Closed-loop business model

• Secure feedstock supply: New partnership & business model with Coca-Cola & 7-eleven in Japan.

• Overall goal: eco-friendly and reduce the waste in Japan’s domestic market

• Mutual benefits: secure feedstock for FENC & Coca-Cola, and solve the trash problem for 7-Eleven

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Individual consumers
recycle PET bottles at
03 7- eleven 7-eleven stores
Shipped Selling
FENC waste in Coca-Cola
stores
produces PET
Partner products
food-grade -ship shipped to
R-PET for
7-eleven
Coca-Cola FENC Produced Coca- stores
packaging Coke’s Cola
materials bottles
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9

Production business strategy

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(II):Close Customer Partnerships

2020: Coca-Cola Bottlers Japan A new joint project for chemical recycling (TopGreen[®] ChemCycle)

2018: Adidas Performance Awards Global: awards for “Sustainability” & “People” North Asia: award for “Speed”

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2018: Coca-Cola

Awarded “Supplier Guiding Principles (SGP) Greater China Sustainability Award”

2018: Nike

Selected as one of the key apparel suppliers for global digitalization & manufacturing modernization projects.

2017: Hasbro Awarded “Hasbro Excellence in Sustainability ”

2016~2020

ISPO Munich Textrends Exhibition

Winner of 40[+] awards for innovative, functional and sustainable textiles over four successive years

10

Production business strategy

Invest in the Future: Post Consumer Textile Recycling

TopGreen® ChemCycle: FENC’s PET recycling technology breakthrough “chemical recycling”

• 1 To chemically convert used PET bottles/other polyester wastes (regardless of colors and printing inks) into recycled PTA (rPTA)

• 2 Using rPTA to produce “ChemCycle Resins”, chemically recycled PET resins, with a quality equal to that of virgin PET resins.

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TopGreen [®]
ChemCycle
~ 70% of the
~ 30% of the polyester
polyester output
output
PET
Commercial Run From Lab to Trial Run
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Note: More details please refer to http://news.fenc.com/news_detail.aspx?lang=en&id=5228

11

Production business strategy

The New Normal post COVID-19 Pandemic

• A new business opportunity for hygiene & safety materials to enhance FENC’s product portfolio

• Standing on the frontline to protect people’s health & empowering a better and safer life.

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• ®

• FENC protective life wear to meet new demands from travelers

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• Meets medical apparel AAMI PB 70 Level 4 standard (US standard)

• Prevents blood and microbial contamination, abrasion resistant

• Repeatedly washable

• Breathable and excellent texture feel

• Can be styled just like regular fabrics into jackets, pants, etc.

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12

Production business strategy

Value of Major Investments - Listed Companies

				(NT$ million)
Stock code	Investees	Holdings	Book value (2021.3.31)	Market value (2021.5.26)
1102 TT	Asia Cement	27%	26,377	45,243
1710 TT	Oriental Union Chemical	31%	5,419	5,783
2606 TT	U Ming Marine	0%	-	-
2845 TT	Far Eastern International Bank	16%	7,440	5,897
2903 TT	Far Eastern Department Stores	35%	11,982	11,009
4904 TT	Far EasTone	38%	27,665	80,296
Total			78,883	148,227

Note 1: 5,353 million shares of FENC common stock were issued and outstanding as of 31 Mar 2021.

Note 2: The AGM of Everest Textile has approved a financial improvement plan on 4 May 2021. Currently, FENC owns Everest Textile 26% of its outstanding common shares.

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13

Investment portfolio

Land Holdings Owned by FENC

• Total land holdings: approximately 570k pings (1,887k sq meters)

• Investment properties as at Mar 31, 2021: approximately 200k pings (662k sq meters)

After disposing investment properties

Gain on disposal of investment properties (P&L) Special reserve  Unappropriated earnings (Balance sheet)

NT$ 135 BN

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Special reserve 
Unappropriated earnings
(Balance sheet)
NT$ 35.3 BN
Total distributable
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Total distributable income

Market Value (After future land development)

Old Book Value

New Book Value (Market value using “fair value model” under TW IFRS on Mar 31, 2021)

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14

Property development plan

Investment Properties – Major Landholdings of Land

Taoyuan City

Size: 43,070 pings (142,562 sq meters) (Including part of the land area for a new land development plan)

A new land development plan

• Size: around 30k pings (99k sq meters)

• Status: applied for government’s approval for land rezoning.(estimated 2-3 years)

• Design concept: an integrated district tailored for residential zones, a commercial zone, a medical zone and green parks.

• Neighborhood: is adjacent to Yuan Ze University & the underground railway project for Neili station, part of the ongoing Taoyuan urban renewal plan.

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Banqiao

Taipei Far Eastern Telecom Park Size: 82,966 pings (274,617 sq meters) Book value: 60~65% of investment properties

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Mega Tower

Size: 2,057 pings (6,809 sq meters)

Others

Size: 11,454 pings (37,913 sq meters)

Taipei Far Eastern Plaza (Note a)

Size: 1,651 pings (5,465 sq meters)

Taishan & Wugu Size: 16,250 pings (53,788 sq meters)

Yilan (SPA resort)

Size: 30,694 pings (101,597 sq meters) Phase I plan: villa concept, around 200 rooms

Taichung City (Rented to A. Mart hypermarket) Size: 2,329 pings (7,709 sq meters)

Hualien

Size: 9,446 pings (31,266 sq meters)

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a) Land holdings include self-use and investment properties b) 1 ping = 3.31 sq meters = 35.58 sq feet

15

Property development plan

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Taipei Far Eastern Telecom Park (Banqiao)

A smart green campus, with sole property ownership, integrated with residential zones (for sale), commercial offices (for lease), a medical center, a college, and a hypermarket in the neighborhood

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Rendering
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(in terms of land size)

Land development plan:

Approximately 24 hectares (~ 73.7K pings/244K sq meters)

• R&D Office Building Zone (46%)

• An anchor tenant confirmed to develop a new office complex in Tpark

• Current tenants: Google, Amazon Web Service (AWS), Ericsson, Synology, etc

• Residential Zone (7%)

• Retail / Commercial Zone (4%)

• Regional Medical Center (11%) Far Eastern Memorial Hospital

• Public Facilities (32%)

New Taipei City library, New Taipei City Fire Bureau, infrastructure & green parks, etc.

Green Building in Tpark:  TPK A (TW EEWH rating - Certified),  TPK C (TW EEWH rating - Diamond),  TPK D (U.S. LEED rating - Gold & TW EEWH - Diamond)

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16

Property development plan

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Properties Under Development

Developed area Developing area Developing area (2008-2019) (2020-2023) (after 2023)

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Residential
III
New Taipei City
Library
TPKC.D
North
Park
TPKE
TPKA
Residential
II
Car Park
Taiwan
Power
South
park
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No. 3 Commercial office building: TPK-E

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Rendering
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• The entire building was rented out.

• 13-floor building; land area of 6.6k pings (21.8k sqm)

No. 2 residential product: Residential IV

• Three 27-floor buildings

• Part 1:

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Rendering
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• Land area:1.6k pings

• (5.3k sqm)

• GFA (for sale): 7k pings (23k sqm)

• Slated to complete construction in 4Q21

• Part 2:

• Land area: 3.2k pings (10.6k sqm)

• Construction will start

soon.

17

Property development plan

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Properties Completed

No. 1 residential product: California Dream

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• 2 to 4 bedrooms designed for typical TW families

• Sales of phase I in 2009

• GFA: 19.3k pings (64k sqm), and around 396 units

• ASP at around NT$ 420k/ping (US$ 4k/sqm)

• Sales of phase II in 2016

• GFA: around 5.5k pings (18k sqm), or 154 units

• ASP at around NT$ 553k/ping (US$ 5k/sqm)

No. 1 commercial office building: TPK-A

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• 11-floor building, with 2 floor underground parking lot

• GFA: 18.7k pings (62k sqm)

• Green building label: TW EEWH Certified rating

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No.2 Commercial office building: TPK-C&D

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• TPK-C (FETone IDC center)

• 11-floor building; GFA of 10.2k pings (33.8k sqm)

• Green building label: TW EEWH Diamond rating

• TPK-D (No.2 office building)

• The entire building was rented out.

• 16-floor building; GFA of 17.7k pings (58.5k sqm)

• Green building label: TW EEWH Diamond rating & U.S. LEED Gold rating.

• The combined land area of TPK-C&D: 4.7K pings (15k sqm)

18

Property development plan

Neili (Taoyuan City) New Land Development Plan

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Current photo: FENC’s old plants
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An integrated district tailored for residential zones, a commercial zone, a medical zone and green parks. (Current status: applied for land rezoning approval)

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Residential zone
Yuan Ze University
Medical zone
Commercial zone
Green parks
Neili Train station
(A underground
railway project is
under construction)
Rendering
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19

Property development plan

Dividends Payout History

2020 Cash Dividend of NT$ 1.35 /share is proposed by the Board of Directors, and the final resolution will be subjected to this coming AGM in 2021.

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20

Dividend policy

CAPEX – Excluding Telecom Business

3-year Average Depreciation NT$ 8.3 bn

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Globalization De-Globalization: Local to local
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• Major CAPEX items:

*Including the investment in joint operation of CCP JV project. (refer to page 29)

Business Before 2009	Business Before 2009	2010 ~ 2015	2016 ~ 2020	2021~
Production	The maintenance CAPEX was covered by the depreciation expense.	• Taiwan:PTA expansion and energy cost saving projects, R-PET expansion & Nylon 6,6 filament • Japan:R-PET new production site • China:Nonwoven hygiene products & Nylon 6,6 filament	• Vietnam:to build the 3rd production site targeting textile products and PET resins for food packaging • U.S.(M&A):to acquire PTA & PET assets & a R-PET plant	• Vietnam:new lines for R- PET, polyester staple fibers & filament • Japan:R-PET new lines • U.S:CCP JV project
Property (Taiwan)	-	• Tpark:TPK-A and the entire infrastructure of the Tpark	• Tpark:TPK-D & No.2 residential products (part 1)	• Tpark:TPK-E & No.2 Residential products (part 2)

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21

CAPEX

Key Financial Highlights (IFRS-consolidated Base)

(NT$ million) Revenues Profit from Operations Interest Expenses-Net Gain on revaluation of investment property Others Consolidated Income before Tax Tax Expenses Consolidated Net Income Attributable to: Shareholders of the Company Non-Controlling Interests EPS (NT$)(1) Depreciation & Amortization Excluding FETone: Revenues Depreciation & Amortization EBITDA(2) Total Assets Total Debt Net Interest-bearing Debt Total Equity Non-Controlling Interests Book Value Per Share Return on Equity Investment Income(Equity method)-Net Total Shareholders' Equity of Parent Company	1Q21	1Q20	YoY 8% 79% n.a. n.a. -90% n.a. 25% -8% 36% 81% -13% 8% 8% 4% 204%	206,769 100% 250,147 100% 10,002 5% 13,763 6% 5,525 3% 6,464 2% (2,640) -1% (2,866) -1% 3,246 2% 1,883 1% (9) 0% (114) 0% 16,123 8% 19,130 8% 3,143 2% 2,695 1% 12,981 6% 16,435 7% 8,063 4% 10,733 5% 4,918 2% 5,702 2% 1.62 2.15 25,753 12% 26,062 10% 127,268 100% 166,281 100% 9,191 7% 8,836 5% 8,156 6% 10,673 6% 616,955 100% 576,080 100% 347,531 56% 304,759 53% 232,482 38% 189,390 33% 269,425 44% 271,321 47% 204,029 33% 204,522 35% 65,395 11% 66,799 12% 38.1 38.2 3.9% 5.3% 2020 2019
	56,248 100% 3,105 6% 2,151 4% (600) -1% 296 0% (106) 0%	52,236 100% 1,732 3% (52) 0% (688) -1% 2,893 5% 7 0%
	4,846 9% 927 2%	3,891 7% 1,008 2%
	3,919 7% 2,714 5% 1,205 2% 0.54 6,752 12% 35,412 100% 2,339 7% 3,058 9% 628,635 100% 355,638 57% 235,386 37% 272,997 43% 206,507 33% 66,490 10% 38.6 5.3%	2,883 5% 1,503 3% 1,380 2% 0.30 6,277 12% 32,847 100% 2,242 7% 1,006 3%

Note: (1) EPS is calculated using adjusted outstanding shares (deducting treasury stock).

(2) EBITDA(Excluding FETone) = Profit from operations(excluding FETone) + Depreciation & Amortization(excluding FETone)

22

Performance by Business Segments

(NT$ million) Reclassified for Presentation Purposes Gross Revenue Petrochemical Polyester Textile Telecom Property Investment & Others(1) Subtotal Inter-company Sales Revenue-net Profit from Operations Petrochemical Polyester Textile Telecom Property Investment & Others(1) Subtotal Other Adjustments Reclassified Profit from Operations For Reconciliation Purposes - - Dividend Income Profit from Operations Investment Income(Equity method)-Net Production Business Production Business	1Q21	1Q20	YoY 15% 3% 9% 7% 38% 199% 12% 15% 12% n.a. 143% n.a. -20% 27% n.a. 220% n.a. 212% n.a. -6% 79%	2020 2019 33,387 58,226 72,388 86,889 29,137 39,030 79,501 83,866 9,542 9,123 10,719 12,362 234,673 289,496 22,232 32,815 212,441 256,681 (3,351) (444) 4,072 2,753 (468) 907 11,038 11,925 1,032 806 3,695 4,470 16,017 20,418 (343) (120) 15,674 20,298 5,525 6,464 146 70 10,002 13,763 3,216 253 134,912 184,145
	11,893 19,932 8,082 20,836 1,920 3,519 39,907	10,309 19,284 7,390 19,389 1,395 1,176 36,983
	66,182 7,776	58,943 6,751
	58,406 (98) 1,390 238 2,386 308 1,130 1,530	52,191 (1,445) 572 (83) 2,968 243 (580) (956)
	5,353 (90)	1,675 12
	5,263	1,687
	2,151 7	(52) 7
	3,105	1,732

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Note
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Note (1): Investment & Others includes investment income (loss) from equity-method investees, i.e. ACC, OUCC, FEIB and share disposal gain (loss), etc.

23

Navigating A Green Future

FENC responds to UN SDGs ( United Nations’ Sustainable Development Goals)

• Responds 16 out of the 17 SDGs : FENC is committed and has aligned its sustainability objectives with the UN SDGs.

• Recycled PET (R-PET) meets 5 SDGs: #12~15, #17.

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24

Recent achievements & CSR

Recent Achievements & CSR

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• Sustainability Committee: established in 2020.

• TW (S&P) long-term credit rating: TW A

• Green financing:

• 2018: NT$ 3 billion green bond issued

• 2020: NT$ 3 billion sustainability-linked facilities supported by Crédit Agricole CIB (awarded “ Taiwan Best sustainability financing” by “The Asset (財資雜 誌)Triple A Country Awards 2020”)

• 2020: NT$ 3.8 billion sustainability bond issued

• 2021: NT$ 1.2 billion social bond issued

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25

Recent achievements & CSR

Q&A

For further information, please contact IR Team, Finance Department IR email box: IR@fenc.com Company website: www.fenc.com

Can also be reached as follows, Carol Wang (886) 2 2733-8000 ext.8537; wang2002@fenc.com Chialing Chao (886) 2 2733-8000 ext.8470; chialing@fenc.com Jarvis Liu (886) 2 2733-8000 ext.8492; jarvisliu@fenc.com

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26

Appendix

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27

About FENC

Far Eastern New Century (“FENC”) is a leading polyester recycling company publicly traded in Taiwan since 1967 with a market capitalization of approximately US$6 billion. It’s a constituent of the MSCI ESG Leaders Indexes and FTSE4Good Emerging Index. FENC is also the flagship company of Far Eastern Group and has diversified businesses ranging from production, to property development and investments.

On the production side, FENC aims to expand its green material business by increasing the scale of its recycled products. After expanding capacities in Taiwan, Japan and the United States, FENC has become one of the world’s largest postconsumer recycled polyester producers. With their high quality and speed to market, FENC’s products have been adopted by well-known global brands including Coca-Cola, Nike and Adidas.

FENC is a world top-three PET producer in terms of capacity and the leading PET producer in Asia. With its production sites in Taiwan, the United States, Vietnam, China, Japan and Southeast Asia, FENC is the only global polyester supplier providing integrated production and total solution services ranging from upstream feedstock to downstream daily necessities. FENC’s strategy is to strengthen its position as a leading polyester producer by maintaining long-term client partnerships, upgrading its product mix and enhancing research and development capabilities.

Currently FENC has total investment properties of 200,000 pings (662,000 square meters) in Taiwan, the majority of which are located in prime areas of northern Taiwan. The Taipei Far Eastern Telecom Park (Tpark) project in Banqiao, New Taipei City is one of FENC’s development priorities.

The majority of the Company’s investment portfolio is listed companies on the Taiwan Stock Exchange with proven track records, including Asia Cement Co., Far EasTone Telecommunications Co., Far Eastern International Bank, Oriental Union Chemical Co., Far Eastern Department Stores Limited, and Everest Textile Co. Limited, thus providing the Company consistent dividend and investment income each year.

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http://www.fenc.com/?lang=en

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Provide Local to Local Services

of trade barriers.

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5 4
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• FENC’s production sites: Taiwan, China, Vietnam, United States, Japan and Malaysia.

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1 Taiwan 2 China 3 Vietnam 4 U.S. 5 Japan
PTA / PET PTA / PET PET Via M&A (Note) R-PET
PSF HTY PSF HTY PSF PET (2018)
6 Malaysia
Filament / Fabric Filament / Fabric Fabric CCP JV (2018)
PET
R-PET Apparel Apparel R-PET (2019)
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• (Note) CCP JV project:  partnered with Alpek & Indorama,  annual planned capacity of PET 1.1 MM & PTA 1.3 MM tons,  each party has the right to off-take one-third of the capacity and to source its feedstock independently.

Abbr. Polyester Staple Fiber(PSF) High Tenacity Polyester Yarn (HTY)

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Appendix

Disclaimer

This presentation is prepared by Far Eastern New Century Corporation (the “Company”) and is solely for the purpose of corporate communication and general reference only. The presentation is not intended as an offer to sell, or to solicit an offer to buy or form any basis of investment decision for class of securities of the in All such any Company any jurisdiction. information should not be used or relied on without advice. The is a professional presentation brief in nature and does not to be a of the summary purport complete description Company, its business, its current or historical operating results or its future prospects.

This presentation is provided without any warranty or representation of any kind, either expressed or implied. The Company specifically disclaims all responsibilities in respect of any use or reliance of any information, whether financial or otherwise, contained in this presentation. Neither this presentation nor any of its contents may be reproduced to a third party without the prior written consent of the Company.

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