TFC — Interim / Quarterly Report 2020

Nov 26, 2020

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

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November 27th, 2020

1

Table of Content

 Company History and Milestones

 Financial Information

• 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

TFC was established by the R.O.C government and initiated to produce fertilizer & chemical products.

Established Jubail JV, a 50/50 joint venture between TFC and SABIC Co. which is located in Saudi Arabia, to produce Urea & Ammonia.

• • Agreed to invest in 2 EH project in Al Bayroni and to extend JV contract with SABIC Co. for 20 years (1993~2013)

TFC was privatized while the R.O.C government still being the largest shareholder with its 24% share.

Agreed to extend JV contract with SABIC Co. for another 20 years (2013~2033)

TFC’s Taichung plant officially began its operation, focusing on the fertilizer chemical production business, and starting its conducting land activation project.

In coordination with the R.O.C government’s “New Southbound policy” , “Construction of Taichung Harbor West Dock 10” project was adopted by the Board of Directors of TFC in order to expand global market.

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History and Milestones

2017

2018

2018

2019

2020

Cooperated with the R.O.C government’s fertilizer policies, TFC had accomplished the goal of comprehensively “Biotec-organic” solution.

Set up the National Marine Resource Museum in cooperation with the R.O.C government after Prsident Tsai visited TFC’s Hualien Deep Sea Water Park.

Won the “Platinum Award of Top 50 Corporations Sustainability Report” award, and was selected by the “2019 FTSE4Good TIP Taiwan ESG Index”.

Held the Beaming Ceremony of “Nangang C2 Project”.

The Company was once again selected by “2020 FTSE4Good TIP Taiwan ESG Index”.

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’ – TFC s Financial Breakdown(1) Core Business(Operating Profit+ Jubail JV) Others NT$$ Million

NT$$ Million

NT $ Million Core Business(Operating Profit+ Jubail JV) Others	NT $ Million Core Business(Operating Profit+ Jubail JV) Others	NT $ Million Core Business(Operating Profit+ Jubail JV) Others	NT $ Million Core Business(Operating Profit+ Jubail JV) Others	NT $ Million Core Business(Operating Profit+ Jubail JV) Others	NT $ Million Core Business(Operating Profit+ Jubail JV) Others
NT $ Million Year 2016 2017 2018 2019 2020Q1-Q3 Operating Income 596 1,228 1,286 1,626 1,068 Jubail JV (186) 623 1,093 751 406 Core Business 410 1,851 2,379 2,377 1,474 Others (362) (17) 570 87 1,045 Net Income (73) 1,619 2,281 2,064 2,090 Earning per share (dollar) (0.07) 1.65 2.33 2.11 2.13 410 1851 2379 2377 1474 -362 -17 570 87 1045 2016 2017 2018 2019 2020Q1-Q3
Year	2016	2017	2018	2019	2020Q1-Q3
Operating Income	596	1,228	1,286	1,626	1,068
Jubail JV	(186)	623	1,093	751	406
Core Business	410	1,851	2,379	2,377	1,474
Others	(362)	(17)	570	87	1,045
Net Income	(73)	1,619	2,281	2,064	2,090
Earning per share (dollar)	(0.07)	1.65	2.33	2.11	2.13

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’ – TFC s Financial Breakdown(2)

Total Revenue Gross Profit

2020Q1-Q3: 8.019 Billion

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Real Estate
16%
Fertilizer&Chemical
81%
Others
3%
Fertilizer&Chemical Real Estate Others
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2020Q1-Q3: 1.98 Billion

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Real Estate
Fertilizer&Chemical 31%
67%
Others
2%
Fertilizer&Chemical Real Estate Others
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2019: 12.89 Billion

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Real Estate
20%
Fertilizer&Chemical
77%
Others
3%
Fertilizer&Chemical Real Estate Others
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2019: 3 Billion

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Real Estate
52%
Fertilizer&C
hemical Others
47% 1%
Fertilizer&Chemical Real Estate Others
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– TFC’s Financial Overseas investment

-  Saudi Arabia Jubail JV

• Four Main Products: Urea, Ammonia, 2 EH, and DOP.

Share of profits of Jubail JV(TFC Account)

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NT $ million
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1,500 1,093
751
1,000 623
406
500
0
2016 2017 2018 2019 2020Q1-Q3
(500) (255)
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TFC Dividend Polic y

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EPS(NT$) DPS(NT$)
3.13
2.33
2.48
2.20 2.20 2.11 2.20
2.10
2.10 2.10
1.65
(0.07)
2014 2015 2016 2017 2018 2019
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• TFC maintained a high payout ratio in the past few years.

• Dividend policy: Primary focusing on stable growth and cash dividend.

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8

Production capacity&Location

Business	Factory	Product Item	Capacity (mt/kl)
Fertilizer & Chemical	Taichung	nitrate-based compound fertilizer	325,000
		nitrate-based compound fertilizer(PEIFENG)	150,000
		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	3,600
		electronic-grade nitric acid	7,200
		electronic-grade ammonia water	7,200
Real estate & Investment	Hualien	DeepOcean 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

 Whom we — supply Fully supplying to Taiwan domestic farmers.

 Who we are—

As the leading company of Taiwan fertilizer market, holding approximately 70% market share.

Chemical Business in Taiwan

• What we — supply

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

 Whom we — supply

Mainly supplying to Taiwan domestic industries while selling some sulfamic acid and nitric acid overseas. products

— New Directions

• Construction of Taichung Harbor West Dock 10 Project

• Seeking logistic & trading Opportunities

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Production & Sales

Fertilizer Production and sales trend chart (thousand tons)

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900 Output Sales volume
468.1
600
487.4
300
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2002Q3
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Chemical Production and sales trend chart (thousand tons)

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Sales volume
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Output Sales volume
200
131.9
150 147.6
100
50
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Q3
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Construction of Taichung Harbor West Dock 10 Project

— Purpose

1.Supplying compound fertilizer for domestic market , while coordinating with government’s ‘New Southbound Policy’. 2.Seeking new investment opportunities in Trade and Logistics business, as well as engaging in Chemical Trading market.

— Area of land

Pei Feng Technological Co., Ltd, a newly set up subsidiary which TFC has a 100% shareholding in, rents approximately 43,000 square meter land at Taichung Harbor West Dock 10, a special petrochemical industry zone in Taichung, from TIPC(Port of Taichung Taiwan International Ports CO., Ltd).

— Schedule

Construction period : Nov , 2016~June, 2020. Scheme Ⅰ: Preceding works including land lease, land preparation and allocation plan.

Scheme Ⅱ: Setting up utility system, chemical tanks, storage and transportation systems.

• Scheme Ⅲ: Constructing Nitro phosphate factory and Applying for license for the factory.

— Scope

Including Fertilizer & Chemical Products.

— Total Investment

2.367 Billion NTD.

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Source from: Google earth

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Nangang Business-Trade Park No.C2 and C4 Project

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Kaohsiung Multifunctional Commerce and Trade Park

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

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Nangang Kee-lung
( 南港 ) ‧ ‧ ( 基隆 )
Hsin-Chu
( 新竹 ) ‧
Miao-Li
( 苗栗 ) ‧
Tai-Chung
( 台中 ) ‧
Hua-Lien
‧
( 花蓮 )
Kao-Hsiung
( 高雄 ) ‧
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Development plan of Dongming Rd,Keelung
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Hsinchu Tech Business Park
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Hualien Deep Ocean Water Production Park

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List of Land Assets

		Location Lot of land	size(㎡)
Area ratio	chart	Taipei City 67	110,279.61
		New Taipei City 109	54,602.56
		Keelung City 227	238,763.12
		Ilan County 8	4,116.75
		Hsinchu City 49	218,890.57
		Taipei ~~City~~ 6.86% New ~~Taipei~~ City 3.28% Keelung City 14.35% Ilan ~~County~~ 0.25% Hsinchu City 12.63% Miaoli County 18.30% Taichung City 0.03% Yunlin County 1.05% ~~Kaohsiun~~ g City ~~9.60%~~ Hualien ~~City~~ 33.65% Taipei ~~City~~ 6.86% New Taipei City… Keelung ~~City~~ 14.35% Ilan County ~~0.25%~~ Hsinchu City 12.63% Miaoli ~~County~~ Taichung ~~City~~ Yunlin ~~County~~ Kaohsiun g City Hualien ~~City~~ 33.65% Miaoli County 112 Taichung City 1 Yunlin County 1 Kaohsiung City 22 Hualien County 44	304,530.33 581.62 17,510.00 159,735.68 560,082.00
		18.30% 0.03% 1.05% 9.60% Total 640 1,669,092.24
		Remarks : The data collection date is Oct. 30, 2020.

Area ratio chart

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2020 Land Development Plan

Area	Size(ping)	Size( ㎡ )	Current Status
Nangang Business-Trade Park No.C2 (Taipei)	7,051	23,310	1. Construct and operate the Commercial building by TFC 2. Building permit approved. Building under construction.
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,and the construction is planned to commence.
Hsinchu Tech Business Park No.D7 (Hsinchu)	17,790	58,810	1. TFC ONE is well constructed and now leasing. 2. Remaining land is still in the planning stage.
Keelung DongMing Road (Keelung City)	9,448	31,235	Project is under review and discussion with city government.
Kaohsiung Multifunctional Commerce and Trade Park (Kaohsiung City)	48,779	161,253	1. “7C Urban land Readjustment ” implemented by Kaohsiung City government. 2. The Land No. 7D is for lease now.
Hualien Deep Ocean Water Production Park (Hualien Factory)	138,734	458,627	Focusing on the program of Deep Ocean Water Production, and inviting the investment.

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Note: 1 ping equals to 3.3 ㎡

Location of Nangang

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Taipei Main Station
Zhongxiao E. Rd. Songshan Airport
Xinyi Planned Area Neihu Technology Park
Nangang
Great Taipei Area
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
Hall II
C3
Nangang Exhibition
Hall I C2
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：Business Office/ 28F

• Tower C：Hotel/ 17F

• 4 Floors below ground

Strategy：Rental Management/Develop by TFC Status：

1. Building permit approved in May 2017.

2. In June 2017, the positioning strategy was adjusted, the floor area of the office building was increased, the design of the building license was changed, increasing the benefit of the whole case.

3. The beaming ceremony was held in the end of 2019,it’s estimated to be completed in 2022.

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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 Management/Develop by TFC Status:

1. Obtained construction license in the middle of year 2020.

2. The major contractor contract was signed in the third quarter of 2020, and construction will begin by the end of the year.

3. The project is expected to be completed in 2024.

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Location of Hsinchu Science Park

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Taipei
Hsinchu
City Center
TFC land
K.D.
Interchange
Hsinchu
Science Park
Taichung
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— Hsinchu Science Park Urban Land Consolidation

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一期重劃區
二期重劃區
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Land Size ： 162,578 ㎡ (49,180ping) Plot Ratio/Coverage Ratio ： 210 ％、 65 ％ Status ：

• Hsinchu City Government’s financial settlement and Urban Land Readjustment Implemented announcement is completed, and the land and fee-paying land are allocated.

• Urban Land Readjustment Implemented Committee disbanded process in November 2020.

• Second stage of Readjustment (D5,D6 included, about 8.6HA)

• The Hsinchu city government included this district into the scope of "X Plan", which will be developed into an "urban type" and "three-dimensional" science park. The National Development Council has reviewed and approved nearly 18.3 billion yuan in Expropriation land and development build.

• The construction is scheduled to be completed in one year after the municipal government has reviewed and approved it.

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Hsinchu Science Park D7 Block

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D7
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Hsinchu Tech Business Park(D3 D7)

Land Size ： 7HA 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 、 Residence Status ：

• 、

• 1. Office (4[th] -14[th] floor) mall (1[st] -3[rd] floor),opened in August 2017.

• Occupancy rate reaches 90%.

• The remaining land of D7 block is at the planning stage, and designing of D7-B is in progress.

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Hsinchu Science Park
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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 & basic maintenance station

Status ：

1. All leased, to Audi, Toyota, Volkswagen, etc.

2. Current annual rental income is

about NTD $ 37 million.

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Keelun Medical Park g

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

Building Coverage Ratio : 60 ％

Program ： Coordinating with city government for the plan Status ：

1. Keelung City government and we have held second meeting and third meeting on March 9[th] 2020 and July 9[th] 2020, respectively .

2. After Keelung city government discuss the issue of expropriated but undeveloped roads and other topic, this case would proceed to the review process of Urban Planning Division.

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Kaohsiung Multifunctional Commerce &
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Land Area

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Land Size ： 161,253 ㎡ (48,779 ping)

1. Trade 7C (16.91 HA) Land size of TFC:158,008 ㎡ (account for 93.58% of the whole area)

2. Trade 7D (7.09 HA) Land size of TFC:3,245 ㎡ (account for 4.57% of whole area)

Plot Ratio ： 490 ％

Building Coverage Ratio: 60 ％

• Program: Mall, Office, Hotel and Cultural Construction Status ：

• Trade Park 7C & 7D area have been torn down and cleared. Trade Park 7C is now developing “Urban Land Readjustment” ” implemented by Kaohsiung City government and working on the procedure of Replotting Specification and dispute resolution, report to Ministry of the Interior to decide.

• Land registration of Trade Park 7D is done, already gained the lot of the land number 9, the land size is 1,605.58 ㎡ . Currently, it’s for renting.

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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 in Hualien factory.

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

Status ：

1. First Stage(2005~2011)：

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• 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.

• Second Stage(2011~2018)：

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

• 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.

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

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26

Thank You !

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