TSRC — Investor Presentation 2022

Nov 4, 2022

2022 TSRC – Global Specialty Polymers 2[nd] Investor Conference, November 4[th, ] 2022

Disclaimer

The information presented and referred herein are based upon the information obtained internally and externally from our company. Forward-looking operational results, financial condition and business results might be different from those information expressly or impliedly presented herein due to various factors, including but not limited to market risks, supply chains, market demand and our upcoming high-quality products. We undertake no obligation to publicly update or revise any statements regarding those information presented and referred herein in the event of any further changes or updates to the information presented herein.

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AGENDA

• 1. Introduction •

• 2. 2022 Business Highlights Joseph Chai, CEO •

• 3. 2022 Sep Year-to-date Financial Edward Wang, CFO

• Thomas Lin, Deputy Spokesperson

• • Joseph Chai, CEO

Performance

4. 2023 Outlook / ESG Updates 5. Summary

• Joseph Chai, CEO

• • Joseph Chai, CEO

6. Q&A

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[1] IntroductionThomas Lin, Deputy Spokesperson

[2] 2022 Business Highlights Joseph Chai, CEO

Stark contrast of market conditions

1H2022

2H2022

• ♦ Strong end-use demand – carry over momentum from 2021.

• ♦ Certain supply constraints created support for price increase.

• ♦ Emergence of heightened challenges due to war in Ukraine, price inflation, and COVID lockdowns in mainland China.

• ♦ Full bloom impact from the emerging challenges

• ♦ Demand plummeted under uncertainties, volatilities, and inflationary pressure. Supply constraints eased.

• ♦ The negative impact was compounded by lockdowns, severe climate disasters, and energy crisis.

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2022 TSRC Confidential and Proprietary

Delivered solid performance in 1H2022

• ♦ Successfully captured demand growth opportunities and leveraged synthetic rubber uptrend cycle.

• ♦ Implemented pricing actions to maintain profitability level.

• ♦ Solid execution with agile and timely preparation and avoided negative impacts from lockdowns in mainland China.

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Weathering the “severe storms” in 2H2022

• ♦ Demand slowdown due to rapid inflationary pressure, geopolitical tensions, and looming recession.

• Production activities slowed coupled with destocking

• ♦ Our portfolio strengths cushioned the weakness of some market segments.

• Faster stock turns in SRD balanced out more constrained AMD

• Swift response to turnover higher-cost inventory to captured benefit of feedstock cost change

• ♦ Took appropriate actions to recover OPEX increase and protect market share.

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Market experienced a cyclical swing in 2022

• ♦ Overall YTD business performance is “decent” amidst some difficult challenges.

• ♦ TSRC was able to strike good balance between:

• SRD and AMD business portfolio.

• Strong 1H and Weakened 2H in demand and pricing.

• Financial and Sustainability focus

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2022 TSRC Confidential and Proprietary

2022 Sep Year-to-date Financial Performance [3] Edward Wang, CFO

3Q22 Financial Results

• Following a strong 1H, 3Q22 revenue and profit faced strong headwind, including power outage in mainland China, cost inflation and inventory adjustments across supply chain.

• Investee performance was impacted by soft demand and rising costs.

• In comparison, 3Q21 net income and EPS would be NT$533M and NT$0.65 respectively excluding the one-off land disposal gain in 2021.

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In NT$M 3Q22 2Q22 3Q21 QoQ YoY
Revenue 8,741 8,975 7,673 -3% 14%
Gross Profit 1,224 1,641 1,125 -25% 9%
Operating Profit 526 911 423 -42% 24%
Non-Operating 138 199 1,274 -30% -89%
Income before Tax 665 1,110 1,697 -40% -61%
Net income 393 749 1,442 -47% -73%
EPS (NT$) 0.47 0.91 1.75 -47% -73%
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3Q22 Revenue by Geography

• Revenue trended down sequentially owing to weak demand in Europe/Americas amid inventory adjustment across supply chain, while synthetic rubbers volume experienced a slight Q-on-Q rebound in mainland China

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8,975 8,741
7,673
1,021 898
791 1,443 1,229
Others
1,293
Europe
6,293 6,463
5,420 Americas
Asia
3Q21 2Q22 3Q22
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Amount in NT$M
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2022 TSRC Confidential and Proprietary

3Q22 Major Equity Investment

• ISRPL performance was impacted by lower downstream demand and cost inflation.

• ARL-TSRC faced weakening demand and increased competition.

• APED’s profitability remained under pressure amid high coal prices.

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ISRPL ARL-TSRC APED
219
61
148 44
63 17 0
(8)
3Q21 2Q22 3Q22 (30)
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Amount in NT$M Note: numbers shown as TSRC’s investment income of each investee.

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YTD Sep 2022 Financial Highlights

• YTD performance reflected inflation of raw material, energy, and logistic costs, despite pricing actions to pass on cost increase and the favorable market dynamics for BR and SIS.

• • Excluding 2021 land disposal gain, the lower non-operating income was primarily due to lower results at ISRPL/APED.

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In NT$M YTD Sep’22 YTD Sep’21 YoY
Revenue 26,357 24,410 8%
Gross Profit 4,724 5,108 -8%
Operating Profit 2,441 2,967 -18%
Non-Operating 440 1,719 -74%
Income before Tax 2,881 4,687 -39%
Net income 1,794 3,340 -46%
EPS (NT$) 2.17 4.05
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Industry dynamics remain favorable

• As BD price trending down, NR-BD gap rebounded to US$300-400/MT and supported overall synthetic rubber demand in 3Q.

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US$/MT
1,800 1,200
1,500
900
1,200
900 600
600
300
300
0 0
NR-BD price gap (RHS) ICIS BD CFR NEA (LHS)
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
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2022 TSRC Confidential and Proprietary

2023 Outlook / ESG Updates [4] Joseph Chai, CEO

2023 is projected to be volatile and unpredictable

• ♦ Macroeconomic outlook for 2023 is clouded with uncertainties and volatilities:

• Heighten inflation and rate hikes for several quarters

• Looming recessions in some key economies

• Unsettling geopolitical tensions

• Energy crisis and severe climate change events

• ♦ End-use demand weakened considerably.

• ♦ Industry competition is expected to intensify with new supply capacity coming on-stream.

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Ready to navigate through challenges in 2023

• ♦ Optimize unit cost through production rate management, cost containment, and product mix management.

• ♦ Advance positioning on material/supply chain reliability, optimize working capital deployment, and ensure business continuity.

♦ Expedite innovation and business solutions to support growth in new market segments and applications.

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Key ESG actions taken in 2022

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♦ Enhanced sustainability disclosure aligning with GRI, TCFD and SASB.

• ♦ GHG Inventory and certification in progress.

• ♦ Onsite solar panel Installation and renewable energy procurement.

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• ♦ Upgrading energy-efficiency of manufacturing facilities.

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• ♦ Employee wellbeing programs.

• ♦ Global employee ESG training.

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ESG values proposition

Materials to enable customers to achieve ESG objectives

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Formulator Compounder

Device End-use Material Fabrication customer Recycling

Reduce Energy Enable Low-Carbon Contribute to Consumption Application Circularity

• ✓ New SR materials with better processability

✓ High-flow TPE materials lower energy consumption in

use

• ✓ SSBR for high-performance EV green tires

✓ Medical TPE with lower environmental impact

✓ Specialized TPE for adhesives with low energy consumption and VOC emission

✓ TPE and compound to enhance recycled plastic properties and adoption

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Differentiate with value and innovation– medical product application

• ♦ High material clarity and eliminate use of plasticizer.

♦ Less film thickness needed which reduces material use and waste generation.

• ♦ Better elasticity and kinking resistance in medical tubing.

• ♦ No dioxin (pollutant) byproducts.

• ♦ Better processability and recyclability.

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IV Bag Film
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Medical Tubing
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PP Closure

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Medical Stopper/Liner

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Differentiate with value and Innovation – green tire solutions

• ♦ Low-carbon solution reduces impacts to the environment.

• SSBR for green tires application improves vehicle fuel efficiency

• Upgrade tire’s initial & sustained performances over time

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• ♦ Partnership with global tire brands to develop end-to-end ESG solution.

• Advanced material and microstructure control technology achieve targeted tire performance

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[5] SummaryJoseph Chai, CEO

Summary

1 2 YTD Sep 2022 2023 Market Business Performance Outlook

Navigated through challenges with focused execution and portfolio resilience

Subdued market outlook expected with uncertainties and volatilities. Focus on business stability and forward innovation

3 Continued ESG commitments

Support customers’ ESG objectives through supply chain and application innovation

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Q&A

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THANK YOU

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