TFC — Annual Report 2018

Nov 19, 2018

Taiwan Fertilizer Co., Ltd. (1722 TT) Company Introduction

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November 20th, 2018

1

Table of Content

 History and Milestones

• TFC Financial

• Lines of Business

• Fertilizer and Chemical Business

• Land Development and Investment Business

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History and Milestones

1946

1980

1993

1999

2009

2013

2016

2017

TFC was established by the government and initiated to produce fertilizer & chemical products

Established a 50:50 JV, Jubail JV with SABIC Co. in Saudi Arabia to produce Urea & Ammonia

• • Agreed to invest in 2 EH project in Al Bayroni and to extend JV contract until 2013

TFC was privatized, but the government is still the largest shareholder with 24% stake

Agreed to extend JV contract for another 20 years after 2013

Taichung plant was formally operated. Focus on the fertilizer chemical production business, and conducted land activation policies.

In coordination with government “the New Southbound policy” ,the Board of Directors passed the “Construction of Taichung Harbor West Dock 10” project to expand the international market.

Cooperated with government fertilizer policies, TFC has accomplished the goal of total “Biotec-organic” soluction.

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’ – TFC s Financial Breakdown(1)

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Core Business(Operating Profit+ Jubail JV) Others NT$ Million
330
3438 3379
1851
341 1669
(591) (859) (294) (17)
2014 2015 2016 2017 2018Q3
NT$ Million
Year 2014 2015 2016 2017 2018Q3
Operating Income 1,660 2,345 596 1,228 1,084
Jubail JV 1,778 1,034 (255) 623 585
Core Business 3,438 3,379 341 1,851 1,669
Others (591) (859) (294) (17) 330
Income before Tax 2,847 2,520 47 1,834 1,999
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					NT $ Million
Year	2014	2015	2016	2017	2018Q3
Operating Income	1,660	2,345	596	1,228	1,084
Jubail JV	1,778	1,034	(255)	623	585
Core Business	3,438	3,379	341	1,851	1,669
Others	(591)	(859)	(294)	(17)	330
Income before Tax	2,847	2,520	47	1,834	1,999

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’ – TFC s Financial Breakdown(2)

Total Revenue Gross Profit

2018Q3: 9.08Billion

2018Q3: 2.06Billion

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Others
3%
Real Estate
10%
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Fertilizer&
Chemical
87%
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2017: 11.66 Billion

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Others
3%
Real Estate
13%
Fertilizer&
Chemical
84%
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Others
3%
Real Estate
24%
Fertilizer&
Chemical
73%
2017: 2.6 Billion
Others
3%
Real Estate
32%
Fertilizer&
Chemical
65%
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– TFC’s Financial Overseas investment

-  Saudi Arabia Jubail JV

- Four Main Products: Urea, Ammonia, 2 EH, DOP

Share of profits of Jubail JV(TFC Account)

NT $ million

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1,778
2,000
1,500
1,034 623
585
1,000
500
0
2014 2015 2016 2017 2018Q3
(500)
(255)
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6

TFC Dividend Polic y

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EPS(NT$) DPS(NT$)
3.41
3.13
2.70
2.59
2.48
2.10 2.10 2.10
2.20
2.00
1.65
2012 2013 2014 2015 2016 2017
(0.07)
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• TFC historically maintained a high cash payout ratio.

Dividend policy: stable growth and mainly paid out with cash dividend.

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Production ca acit &Location p y

Business	Factory	Product Item	Capacity (mt/kl)
Fertilizer & Chemical	Taichung	nitrate-based compound fertilizer	325,000
		cerium-phosphorus compound fertilizer	140,000
		ammonium sulfate	150,000
		superphosphate	120,000
		nitric acid(65%)	165,000
	Miaoli	organic compound fertilizer	6,000
		instant compound fertilizer	3,500
		biotechnology nutrient solution	600
		phosphoric acid	5,500
		NMP	3,000
		electronic-grade nitric acid	7,200
		electronic-grade ammonia water	7,200
Real estate & Investment	Hualien	Deep Ocean Water	600,000
		Deep Ocean Water Production Park
	(Former Nangang )	Nangang Business-Trade Park
	(Former Hsinchu)	Hsinchu Tech Business Park
	(Former Kaohsiung)	Kaohsiung Multifunctional Commerce & Trade Park

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Fertilizer & Chemical Business

Fertilizer Business in Taiwan

 What we — supply

Compound and single nutrient fertilizer . products

 Where our market—

Fully supply to domestic farmers

 Who we are—

Leading company in fertilizer market, taking 70% of market share in general.

Chemical Business in Taiwan

 What we — supply

Ammonia, sulfamic acid, untreated urea, nitric acid, electronic and precision chemicals, oleum, melamine, etc .

 Where our market—

Except some portions of sulfamic acid and nitric acid products sold to overseas, mainly for domestic industries in Taiwan.

— New Directions

• Construction of Taichung Harbor West Dock 10 Project

• Seeking logistic & trading Opportunities in Southeast Asia

• New Southbound Policy

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Production & Sales

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Construction of Taichung Harbor West Dock 10 Project

— Purpose

1.Supplying compound fertilizer for domestic market , and in coordination with government New Southbound Policy.

• 2.Seeking new investment opportunities in logistic & trading business, engaged in chemical trading market.

— Area

TFC set up the new subsidiary enterprise of Pei Feng Technological Co., Ltd. , the Corporation leased from the Taichung Harbor Bureau, a 43,000-square meter lot in a special petrochemical industry zone in Taichung.

— Schedule

Construction period : 2016.11~2020.6

Scheme Ⅰ: Land leasing ， preparing and allocation plan. Scheme Ⅱ: Set up the utility system ， chemical tanks ， storage and transportation system. Scheme Ⅲ: Apply for the factory registration.

— Scope

Including Fertilizer & Chemical Products.

— Total Investment

Total Investment:23.67 Billion

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Source from: Google earth

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– Land Development Ma of Si nificant Pro ects p g j

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Hsinchu Tech Business Park
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Taichung Relocation Plant
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Kaohsiung Multifunctional Commerce and Trade Park

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Nan-Gang
( 南港 ) ‧
Keelung Medical Park
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Nangang Nangang Business-Trade Business-Trade Hualien Deep Ocean Park No.C2 Park No.C4 Water Production Park Project Project

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Land Bank

Taipei City 6.90% New Taipei City 3.99% Keelung City 14.41% Ilan County 0.25% Hsinchu City 11.41% Miaoli County 18.43% Taichung City 0.04% Yunlin County 1.06% Kaohsiung City 9.73% Hualien City 33.78%	Location Lot of land size(㎡)
	Taipei City 74 114,468.64
	New Taipei City 123 66,229.64
	Keelung City 234 239,000.12
	Ilan County 8 4,116.75
	Hsinchu City 39 189,199.35
	Miaoli County 118 305,667.65
	Taichung City 1 581.62
	Yunlin County 1 17,510.00
	Kaohsiung City 26 161,375.10
	Hualien County 44 560,082.00
	Total 668 1,658,230.87

Remarks : The data collection date is September 30, 2018.

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Area	Size(ping)	Size( ㎡ )	Current Status
Nangang Business-Trade	7051	23310	1. All leased out.
	,	,
Park No.C2 (Taipei)			2. Building permit approved. Diaphragm wall construction completed.
Nangang Business-Trade Park No.C3 (Taipei)	12,565	41,537	The right of superficies has been given to Taiwan Life Insurance Co., Ltd. for 45 years.
Nangang Business-Trade Park No.C4 (Taipei)	2,091	6,911	1. Construct and operate the Commercial building by TFC 2. The project complete architectural design and urban design review committee permit.
Hsinchu Tech Business Park No.D7 (Hsinchu)	17,790	58,810	1. D7-A Commercial building has completed in 2017 and ready for recruiting the tenants. 2. Remaining land is still in the planning stage.
Nangang Business-Trade Park R5(Taipei)	2,045	6,759	Except three households, the rest have been sold out.
Nangang Business-Trade Park No.R13-1(Taipei)	336	1,110	Urban renewal review permit and Building permit Approved.
Keelung Medical Park (Keelung City)	9,448	31,235	Our company, government and Potential investor have worked together to plan for a Medical Park .
Kaohsiung Multifunctional Commerce and Trade Park (Kaohsiung City)	48,779	161,253	“Urban land Readjustment ” Implementation by Kaohsiung City.
Hualien Deep Ocean Water Production Park (Hualien Factory)	138,734	458,627	Note: 1 ping equals to 3.3㎡ 2018.11.07 Starting the program of Deep Ocean Water Production Park from April,2011, and taking a Staged Development Plan . 14

Location of Nangang

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Taipei Main Station
Zhongxiao E. Rd. Songshan Airport
Xinyi Planned Area Neihu Technology Park
Nangang
Great Tappei
R13
R17
R5
C6-9
C4 R4
Nangang C3
Business-Trade C2
Park
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Significant Developments in Nangang - Business Trade Park

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Nangang Software Park I&II Nangang Software Park lll
N
National Freeway
R13-1
China Trust R5
Headquarter C4 R4
Nangang Exhibition
MRT Hall II
C3
Bannang Line
Nangang Exhibition
Hall I C2
MRT
Wenhu Line
Railroad Expressway
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Nangang Business Trade Park No.C2 Development — Plan Hotels and Commercial Buildin g

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Land size： 23,310 ㎡ (7,051ping) Plot Ratio：440％

Building Coverage Ratio: 60％ Program：

• GFA：Around 199,172.15㎡ (around 60,000 ping)

• Tower A：Hotel/26F

• Tower B：office space/ 28F

• Tower C：Hotel/ 17F

• 4F below ground

Strategy：Rental Property Development Status：

1. Building permit approved in 2017.

2. Diaphragm wall construction completed in May, 2018. Main structure is under construction. The whole project estimated to be completed in 2023.

3. 3.All leased out, Tower C lease is in the progress of reaching an agreement.

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Nangang Business Trade Park No.C4 — Develo ment Plan Commercial Buildin p g

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Land Size ： 6,911 ㎡ (2,091 ping) Plot Ratio ： 360%

Building Coverage Ratio: 60 ％

Total Floor area : 59,541.87㎡ (about 18,011.4 ping) ; 24 floors /5 floors below ground.

Policy ： Rental Property Development Status:

1.The project planning one commercial building and complete architectural design and urban design review committee permit. It estimated to be completed in 2026.

1. Connecting bridge will be designed to connect Nangang Software Park Station ,C3 and C4.

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Nangang Business Trade Park No. R13 1 — Develo ment Plan Residential p

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N
Green
R13-1
space
8m Road
R13
R13
Block
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Land Size ： 1,110 ㎡

Building Coverage Ratio ： 45％ Plot Ratio ： 225％

(Urban renewal reward+Floor area transfer  370.98%)

Policy ：

1. Total Floor area 6,993.38㎡. 13 floors /3 floors below ground.

2. Residential production for sale. Applied to the Regulations of Right 。

Transfer of Urban Renewal

Status:

1. GFA：1,901ping(59units)/ 46 parking spaces

2. ： GFA(for sale) 1,873ping(58units)/ 46parking spaces

3. Urban renewal and Building permit Approved in 2017 and Construction Registration approved in 2018.

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Location of Tech Business Park

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Taipei
Hsinchu
City Center
K.D.
Interchange
Hisnchu
-
Hi Tech Park
Taichung
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Hsinchu Tech Business Park

Land Size ： 269,115 ㎡ (81,407ping)

Land reservation for public facilities ：

78,534 ㎡ (23,756 ping)

Plot Ratio ： 210 ％

Status ： Urban Land Readjustment Implementation

by the Private Sector

• 1.First stage (D3,D4,D7)

• In the progress of property registration.

• The project will begin once approved by

• Hsinchu City Government.

• 2.Second stage (D5,D6)

• A documentary review of land replotting Construction Specification.

一期重劃區 二期重劃區

• The Construction is going to begin. It

• estimated to be completed in 2020.

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Hsinchu Tech Business Park

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Hsinchu Tech Business Park(D3 D7) Land Size ： 162,578 ㎡ (49,180 ping) Plot Ratio ： 210 ％ Building Coverage Ratio : 65 ％

Hsinchu Tech Business Park(D7 A) Land Size ： 70,756 ㎡ (21,404 ping) Plot Ratio ： 210 ％ Building Coverage Ratio : 65 ％ Program ： Office 、 Residential Status ：

D 7

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D7-A
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1. D7-A Construction has completed in 2017 and ready for recruiting the tenants.

2. Rest of the land is still at the planning stage.

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D3 Mobile City (short term use) Land Size ： 22,715.29 ㎡ (6,871 ping) Plot Ratio ： 210 ％ Building Coverage Ratio: 65 ％

Program ： Mobile showroom & maintenance station

Status ：

1. Leased 6,871 ping to Audi, Toyota, Volkswagen.

2. Current annual rental income is NTD $37 million.

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Keelun Medical Park g

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Medical
Park
Park
Medical
Park
Medical
Park
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Land Size ： 31,235 ㎡ (9,448 ping) (Type Yi Industrial land) Plot Ratio ： 150 ％

Building Coverage Ratio : 60 ％ Program ： Medical Park

Status ：

1. Our company, government and Potential investor have constituted a task project team.

2. The expected occupier has applied for the evaluation of Feasibility of relocation. Currently, the investigation and the analysis of the base are accomplished, whereas the financial affair is still under evaluation.

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Kaohsiung Multifunctional Commerce &
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Land Size ： 161,253 ㎡ (48,779 ping)

Plot Ratio ： 490 ％

Building Coverage Ratio: 60 ％

、 、 、 Program: Mall Office Hotel Cultural Construction Status ：

• Trade Park 7C & 7D area have been torn down and cleared. Trade Park 7C is now developing “Urban Land Readjustment” ” Implementation by Kaohsiung City government and working on the procedure of Replotting Specification which would be reviewed by Ministry of Interior.

• Trade Park 7D is still under replotting by government and estimated to be completed in 2020.

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Land Area

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Hualien Dee Ocean Water Production Park p

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Land Size： About 46 hectare in Hualien Factory Summary： Using the features of ocean deep water to develop diversified products and related value-added industry, and also to activate the land.

Program： Manufacturing and sale of bottled drink water、salt manufacturing、processed food 、 additives cosmetics and functional food ; aquaculture and its processing.

• President Tsai Ing-Wen , Hsin-Hong Kang, the Chairman of TFC and TFC colleagues ,photo taken in front of Discovery Center of DOM.

Status ：

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1. First Stage(2005~2011)：

• TFC invested 0.482 billion to draw deep ocean water by setting up drawing pipe and related facilities and established “Taiwan Yes Deep Ocean Water Co., Ltd. "in September,2006. TFC is running the business of bottled drink water, DOM salt, Nigari Concentrate and Cosmetics.

2. Second Stage(2011~2018)：

• Starting the program of Deep Ocean Water Production Park from April,2011, developing stage by stage.

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• To draw the attention of investors, it’s mainly divided into aquaculture area, manufacturing and processing area, experience area. At the same time, we are working on multiple-stage aquaculture and deep ocean water production through industry-university cooperative research project. We are dedicating to achieving three one-hundred-percent goals.

• On December 2, 2016 and October 3, 2017, the Premier and President inspected the park respectively, were expected to combine and upgrade the development of Hualien’s tourism industry and marine resources industry.

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Thank You !

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