TGI - AGM Information 2020 | FinancialReports.eu

Stock Code: 1802

==> picture [396 x 85] intentionally omitted <==

Handbook for 2020 Annual Meeting of Stockholders

June 5, 2020

`玻璃工業貢獻社會`

平 板觸控板超白板節能板光伏板
玻 布玻 纖容 器食廚器鏡 板車 板

(This English translation is prepared in accordance with the Chinese version and is for reference purposes only. If there is any inconsistency between the Chinese original and this translation, the Chinese version shall prevail.)

TAIWAN GLASS IND. CORP. 2020 Annual Meeting of Stockholders

Table of Content		Page
1. Meeting Procedure
2. Meeting Agenda
Report Items
1. 2019 Business Report		3
2. 2019 Audit Committee’s Review Report and	Independent Auditors’ Report	7
3. 2019 Directors’ and Employees’ Remuneration Distribution Report		18
Ratification Item
1. 2019 Business Report and Financial Statements Report		19
Approval Items
1. 2019 Earning Distribution		28
2. Amendment to the Articles of Incorporation		29
Motions
3. Appendix
1. Number of Shares for All Directors		31
2. Earnings Distribution Approved by the Board of Directors		32
3. The Impact of Stock dividend Issuance on Business Performance and EPS		33
4. Articles of Incorporation of Taiwan Glass Industry Corporation		34

TAIWAN GLASS IND. CORP.

Procedure for 2020 Annual Meeting of Stockholders

Call the Meeting to Order
Chairman’s Address
Report Items
Ratification Item
Approval Items
Motions
Adjournment

TAIWAN GLASS IND. CORP.

Agenda for 2020 Annual Meeting of Stockholders

Time: 09:00 a.m. on Friday, June 5, 2020

Location: 1F., No.207, Sec. 2, Tiding Blvd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

Call the Meeting to Order

Chairman’s Address

Report Items

2019 Business Report
2019 Audit Committee’s Review Report and Independent Auditors’ Report
2019 Directors’ and Employees’ Remuneration Distribution Report

Ratification Item

2019 Business Report and Financial Statements Report

Approval Items

2019 Earnings Distribution
Amendment to the Articles of Incorporation

Motions

Adjournment

- 1 -

TGI Stockholder Meeting June 5, 2020

Rules of Procedure for Stockholders’ Meeting

Attendance: Attending stockholders shall present attendance cards with represented shares clearly marked. Stockholders should be issued an official attendance card by the Company, and present original documents to attend the stockholders’ meeting.
Call the meeting to order: The chairperson shall call the meeting to order at the time scheduled for the meeting. In the event that the meeting is attended by stockholders representing less than half of the total issued shares, the chairperson may announce a postponement of the meeting, however, there may not be more than two postponements in total and the total time accumulated in the postponement(s) shall not exceed one hour.
Agenda : In the event that the stockholder meeting is convened by the Board of Directors, the agenda shall be worked out by the Board of Directors. The stockholder meeting shall be duly convened based on the arranged agenda, which shall not be changed unless duly resolved by the stockholder meeting. In the event that the stockholder meeting is convened by a convener beyond the Board of Directors, the provision set forth under the preceding paragraph may apply, mutatis mutandis. The chairperson shall not announce adjournment of the meeting until the agenda in the two preceding paragraphs is completed (including occasional (extemporaneous) motions) unless duly resolved in the meeting.
Speaking: An attending stockholder shall issue and submit a floor note before speaking at the stockholder meeting. The floor note shall expressly describe the subject of his or her opinions, his or her stockholder account number (or the code of the participation certificate), and his or her name so that the chairperson may fix the order of speaking. On the same issue, each stockholder shall not take the floor more than twice and a stockholder shall not speak more than five minutes for each round unless agreed upon by the chairperson. In the event that a juristic (corporate) person is entrusted to participate in a stockholder meeting, that juristic (corporate) person may appoint only one representative to participate in the meeting. In the event that a juristic (corporate) person stockholder appoints two or more representatives to participate in a stockholder meeting, only one representative may speak for the same issue. A stockholder who has submitted a floor note but does not speak is deemed to have not taken the floor. In the event that the actual contents of the stockholder’s statement are found inconsistent with the entries of the floor note, the stockholder’s spoken statement shall prevail.
While an attending stockholder is taking the floor, other stockholder(s) shall not interrupt or interfere with the current floor unless agreed upon by the chairperson and the speaking stockholder. The chairperson shall stop an offender. After a stockholder speaks on the floor, the chairperson may answer either by himself or herself or through a designee.
Discussion: Any issue not for the motion shall not be discussed or vote. Chairperson may declare for stopping discussion in appropriate time. Chairperson may declare for stopping discussion to vote when necessary. In order to keep the order of the meeting place and smooth procedure, chairperson may stop discussion of the issue which is discussed enough after consulting other stockholders.
Vote: Unless otherwise provided for in law and company’s articles of incorporation, decisions at the stockholder meeting shall be resolved by a majority vote of the stockholders attending the meeting. An issue is deemed to have been duly resolved after the chairperson enquires from all participants but no objection is heard. The validity of the decision so resolved is equally valid as a decision duly resolved through the balloting process. One vote right for one share. The recording procedure of issues of stockholder meetings shall be processing publicly in stockholder meetings. In the event that an amendment or a substitute comes out of the same issue, the chairperson shall fix the order of balloting in consolidation with the original issue. When one among them is duly resolved, other issue(s) is (are) deemed to have been vetoed and no voting process is required. The ballot inspector(s) and ballot recorder(s) of issues in stockholder meeting shall be appointed by the chairperson, and the ballot inspector(s) shall be selected from the stockholders.
Order of Meeting Place:
The rectification (or security) personnel shall wear the “rectification officer” arm-band. The chairperson may instruct the rectification (or security) personnel to help maintain order of the meeting. All present stockholders are obliged to comply with the instruction of chairperson and the rectification (or security) personnel. In the event that a stockholder violates the order of meeting place, chairperson or the rectification (or security) personnel has to take action to stop him or her and ask him or her to leave.
Implement: Any matters insufficiently provided for herein shall be subject to the Company Law, Securities Exchange Act, and other laws and regulations concerned. These Rules and any amendments hereof shall be put into enforcement after being resolved at the stockholder meeting.

- 2 -

Report Item 1. 2019 Business Report

TGI Stockholder Meeting June 5, 2020

Production Report:

Type	Territory	Contents	Yearly Output Thousand MT
Flat Glass	Taiwan	 1 production line of flat glass in Taichung Factory  1 production line of flat glass in Lukang Factory  1 production line of ultra-thin glass in Taichung Factory  Subtotal 3production lines of flatglass	275 (-1.5%)
	China	 11 production lines of flat glass in Kunshan, Chengdu, Tianjin, Dongguan, Qingdao, Donghai, Xianyang and Anhui Factories	2,570 (-11.9%)
Fiberglass Fabric & Fiberglass Reinforced	Taiwan	 2 production lines of fiber glass in Taoyuan Factory  2 production lines of fabric glass in Lukang Factory  Subtotal 4production lines	58 (-27.9%)
	China	 4 production lines of fabric glass in Kunshan Factory  1 production line of fabric glass in Chengdu Factory  1 production line of fabric glass in Bengbu Factory  Subtotal 6production lines	59 (+9.1%)
Container, Tableware Kitchenware	Taiwan	 7 production lines of container, tableware and kitchenware glass in Hsinchu Factory	148 (+4.3%)
Autoglass	Taiwan	 Production line of automotive glass in Taichung Factory	6 (-25.6%)
	China	 Production line of automotive glass in Yancheng Factory	9 (-18.0%)
Total		-	3,125 (-10.5%)

Sales Report:

Sales Report:
Type	Territory	Sales Volume		Sales Amount
		Thousand MT	Compared with 2018	NT$ Million	Compared with 2018
Flat Glass	Taiwan	259	(-5.1%)	3,884	(-3.8%)
	China	2,881	(-7.3%)	26,128	(-10.1%)
	Subtotal	3,140	(-7.2%)	30,012	(-9.4%)
				= US$ 971mil	Percentage of group’s turnover 67.7%
Fiberglass Fabric & Fiberglass Reinforced	Taiwan	59	(-14.3%)	4,214	(-13.8%)
	China	102	(+46.6%)	5,840	(-7.1%)
	Subtotal	161	(+16.2%)	10,054	(-10.0%)
				= US$ 325mil	Percentage of group’s turnover 22.7%
Container, Tableware and Kitchenware	Taiwan	145	(+0.0%)	3,453	(-0.4%)
				= US$ 112mil	Percentage of group’s turnover 7.8%
Autoglass	Taiwan	6	(-27.8%)	488	(-14.1%)
	China	9	(-18.4%)	332	(-31.7%)
	Subtotal	15	(-22.3%)	820	(-22.2%)
				= US$ 26mil	Percentage of group’s turnover 1.8%

- 3 -

Total	3,461	(-6.1%)	44,339	(-9.2%)
			= US$ 1,434mil	Domestic 83% Export 17%
Merge Reversal	-	-	(2,563)
Total after offset	-	-	41,776	(-9.4%)
			= US$ 1,351mil

Financial Report:

The increased supply of glass production lines in the first half of 2019 led to a decline in unit selling price. Production capacity adjustments and increase in production costs such as raw materials, fuels, etc. brought about a decline in gross profit margin of 2019, resulting in the Group’s loss.
Unit: NT$ thousand

			Unit: NT$thousand
Title	2019	2018	Comparison% 2019/2018
OperatingRevenue	41,775,507	46,091,494	(9.4)%
OperatingIncome	(1,169,121)	2,323,574	(150.3)%
Net Income before Tax	(1,300,423)	1,554,665	(183.6)%
Net Income after Tax	(1,606,778)	1,031,980	(255.7)%
Net Income after Tax Attributable to Stockholders of the Parent	(1,448,450)	1,066,286	(235.8)%

Status of Budget implement: Unit: NT$ thousand

Title	2019 Budget (*)	2019 Amount	Proportion
Operating Revenue	41,847,000	41,775,507	99.8%
Net Income before Tax	(1,225,000)	(1,300,423)	-
Net Income after Tax Attributable to Stockholders of the Parent	(1,204,000)	(1,448,450)	-

*Note: it refers to inner budget with unpublished financial projections

Analysis of Profitability:

nalysis of Profitability:
Title	2019	2018
Return on Total Assets(ROA)	-1.12%	1.90%
Return on Stockholder’s Equity (ROE)	-3.53%	2.12%
Ratio of OperatingIncome to Paid-in Capital	-4.02%	7.99%
Ratio of Income before Tax to Paid-in Capital	-4.47%	5.35%
Profit margin	-3.85%	2.24%
EPS(adjusted retroactive)	NTD -0.50	NTD 0.37

- 4 -

2020 Annual Business Plan Outline:

Business Operation Strategy:

Looking ahead, the global economy is faced with a major recession as the COVID-19 pandemic develops and the trade war continues. In response to changes in the future, Taiwan Glass develops new products such as high-performance FRP S2 glass and low-dielectric Low DK fiberglass fabric to add value to products. For flat glass, we will re-examine product structure and reduce cost to improve operating performance while pursuing our primary goal of achieving profitable growth.

In terms of corporate governance, we are dedicated to implementing corporate social responsibility, cultivating outstanding talents, providing safe & healthy workplaces and innovative & optimized services, etc. We also intend to make adjustments to partial assets in China to improve overall profitability. Taiwan Glass will strive to create value for stockholders and employees and become a role model for sustainability.

Brief of Technology and R&D:

In 2019, Taiwan Glass has successfully developed ultra-thin glass with increased alumina content (from 2.3% to 3%), which has improved mechanical properties (such as better performance in ball drop tests) when compared with soda-lime glass, and it has increased ion exchange rate and depth during the chemical strengthening process to meet demand for thinness and robustness for display devices in the future. Glass processed by Taiwan Glass' own AR Coating technology allows lower rate of reflectance down to 0.5%~1%, which makes visual image clearer and reduces glare as well as ghost images. This kind of glass has been used in special medical equipment and also for display purposes such as art galleries, window display in department stores, etc.

In the production of raw flat glass, TGI is committed to improving quality, reducing color-change time to reduce costs. In the second half of 2019, we began to prepare for the temporary shutdown and repair of the 600-ton float glass furnace of the Lukang plant, where suspension-type top roller will be introduced and exhaust gas treatment system will be upgraded. The plant is expected to restart its production line in the second half of 2020. In addition, we have researched and adjusted the composition of glass to make glass more transparent and colorless, which can be applied to protective covers of display devices to reduce image/color distortion.

As the age of 5G is approaching, the demand for high-speed and high-frequency substrate has increased steadily. TGI continues to expand production lines of low dielectric constant fiberglass fabric and develop products with lower dielectric constant and low dielectric loss to meet customers' needs for highfrequency products in the future. To meet downstream need for thin FRP products, TGI developed flat CS fiberglass for high-fiberglass products, which helps to decrease warps substantially. TGI also adopts Roving products certified by DNV GL on the application of wind power generation in response to global environmental protection and energy saving & carbon reduction.

Operating Prospects:

In 2019, the global political and economic situation is turbulent; U.S.-China Trade War and JapanSouth Korea trade dispute have slowed down economic growth significantly. In early 2020, Coronavirus (COVID-19) pandemic spread across the world, causing serious impacts on people's health, economic activities and national security. The pandemic also results in stagnation of investment, weak consumer market demand as well as increased uncertainty about global economy and trade, which leads to adjustment and transfer of supply chain in industries. The World Bank pointed out that key economic indicators, such as trade, investment, and consumption, are at their lowest since the Financial Crisis. Overall, 2020 will be a year full of economic challenges, and thus we must stay prudent.

- 5 -

In 2019, Taiwan Glass in 2019 fell short of expected profit due to the shrinking demand in the downstream market, which led to supply-demand imbalance and a fall in price.

In terms of flat glass, glass companies in China have established factories in Southeast Asian countries, where low costs of local labor and fuel are available. Products made there can be exported into Taiwan at relatively low prices, causing market prices to fall. Taiwan Glass, in response to this situation, has continued to strengthen management, quality assurance and after-sales service, while focusing on resource integration in the glass industry to maintain an orderly market.

The flat glass market in China has been slowed down due to U.S.-China Trade War. The economic growth rate has been revised downwards, and the oversupply would remain the same in the short term. Taiwan Glass’ subsidiaries in China will continue to implement management, industrial safety and close control on COVID-19 pandemic while optimizing and upgrading production lines to maintain profitability.

As for fiber business, the technology and quality of Taiwan Glass's fiberglass products have always been the Company's core competency. For FRP, the new kiln, in cooperation with Owens Corning of the United States, started production this year, along with the most advanced fiberglass formulation and production technology. We are committed to reducing production costs and supplying customers with high performance and environmentally-friendly products.

In 2019, increased overall sales by 16% compared with 2018 can be attributed to the slightly increased demand for electronic-grade fiberglass fabric and the production of fiberglass fabric in Anhui Bengbu factory. In response to the market trends in the future, other than the ultra-thin fiberglass fabric #1017 which we have successfully developed and supplied, we have put continuous efforts into developing thinner fiberglass fabric. At the same time, with the vigorous development of 5G applications, we have also successfully developed low-dielectric (Low DK) fiberglass fabric, which has been certified and continuously adopted by international terminal manufacturers. The global target market share of 2020 is expected to be 20%.

As for container, tableware and kitchenware glass, the production capacity increased by 4.6%, and α33 high-quality heat-resistant feeding bottles have started production. Tableware and kitchenware glass continue to increase sales channels and diversify its products while working hard to establish our private brand, TG, to beat low price competition.

Shihlien Chemical Industrial Jiangsu Co., Ltd., reinvested by Taiwan Glass, has been profitable for three consecutive years as of 2019. The company has continued to optimize manufacturing process, improve production capacity, implement safety & hygiene management to maintain stable and continuous production as well as shipping. Shihlien Chemical Industrial Jiangsu Co., Ltd. is expected to generate profit in 2020.

Important Sales Policy:

Innovative Technology
Reasonable Price
Excellent Quality
Product Development
Cost Efficiency
Comprehensive Services

- 6 -

Report Item 2.

2019 Audit Committee’s Review Report and Independent Auditors’ Report

2019 annual business report and financial statements have been reviewed by Audit Committee. The audit committee’s review report and independent auditors’ report are as follows.

Audit Committee’s Review Report

The 2019 financial statements, compiled by the board of directors, had been examined by CPA with issuing auditor’s reports. Furthermore, the operation report and profit distribution report had been examined by our Audit Committee without any irregularities. According to Company Law, Article 219, this report is hereby submitted to 2019 Annual Meeting of Stockholders for perusal.

Convener of Audit Committee: Lin, Fong-Cheng March 16, 2020

- 7 -