TAIWAN STYRENE MONOMER CORPORATION Chairmen Presentation Ticker: 1310.TT EGM: 31 st Jan, 2019 Presenters: Wu Yiqing, Lin Wenyuan
Company Introduction p-Diethylbenzene Styrene Monomer 7k tons per year 340k tons per year 1.8% 95.4 % Toluene TSMC (1310.TT) 8.7k tons per year 1.3% (operating revenue) Established in 1979, TSMC’s facilities located in Linyuan, Kaohsiung. Petrochemicals amounted to 96% of its operating revenue and is mainly derived from SM. Apart from its core petrochemical business, TSMC has diversified into Construction, Electronics , and Tourism , collectively contributing 5% to total consolidated operating revenue. 2 Source: TSMC annual report and company website
Agenda 1 Executive Summary 2 Our Achievements 3 Sun’s Nomination 4 Our Nominations 5 Conclusions
Executive Summary ✓ The board election on Jan 31, 2019 is NOT about Dissident shareholders vs. the Company’s management ✓ This is to fix TSMC’s long -standing corporate governance issue and to further enhance TSMC’s performance 4 Chairmen presentation
Issues traced back to 2010 Turn to Profit Continued Loss Making making Profit 2010 2013 2016 2019 11 th Term: 9 seats 13 th Term: 9 seats 2010.6.23~2013.4.2 12 th Term: 9 seats 2016.4.3~2019.4.2 2013.4.3~2016.4.2 • • Mr. Sun controlled 4 seats, and had Ms. Wu By leveraging TSMC’s cross -holding structure, • Mr. Sun controlled 6 seats, and had Mr Lin Yiqing served as Chairwoman Mr. Sun Tiehan obtained TSMC’s significant Wenyuan served as Chairman Th election to 14 th term will be held on Jan 31, • shares via acquiring TSM5C’s subsidiaries – • Mr Lin Wenyuan was expelled on 2016. 3.21 2019 Wonderland, Yuanjie, and Yujie. Mr. Sun (12 days before the term expired). controlled 5 seats of the 11 th term board. • During the 3 year term, TSMC experienced 5 chairmen who are all Mr. Sun’s substitutes. Under Ms. Wu’s Board leadership: Under the 5-chairmen leadership: Under Mr. Lin’s Board leadership: • • Focus to manage the investment loss from • TSMC invested in Tienlai resort & spa in TSMC started to review its cost structure and various investments. Yanminshan (Tourism) focus on cost saving. • • The number of subsidiaries was reduced from • TSMC invested in Jingshuo Construction. The Board approves Cogeneration CHP 45 to 9. (Construction) initiatives and which was completed in • • Chairwoman Wu disagree with Mr. Sun’s Both investment were later investigated and November 2015, operated in 2016 and camp in divesting decisions. Mr. Sun’s camp charged by the prosecutors. provided strong foundation to future growth. • made additional investment without board’s Financial statements of 2002, 2005, 2006 and approval. The relevant personnel were not 2010 were restated, requested by TWSE January 15, 2019 slidemodel.com 5 • punished since Sun controlled the board. Capital reduction by 13.37% in 2012
So- called “Company management” actually represents Mr. Sun Tiehan’s interests Has served as board director from 11 th to 13 th term, representing investment companies ✓ controlled by Mr .Sun Tiehan. Among the three terms, he were replaced twice. 8 months after being elected as 13 th term ✓ director, but then yielded the seat to Mr. Sun Tiehan and his acting agent. ✓ Assisted Mr. Sun to dismiss Mr. Lin’s chairmanship WU Qingdian 11 th T erm 12 th Term 13 th Term 吳清典 Period 2010-2013 2013-2016 2016-2019 SD1 Yujie 裕捷 Legal Rep for Wonderland 美好 Wonderland 美好 . Time served on the board 8M 35M 8M One of the 5-chairmanship of 11 th term The problematic financial year of 2010 and later restatement asked by TWSE and FSC was under Mr’ Liu’s chairmanship Assisted Mr. Sun Tiehan to acquired TSMC’s key investment subsidiaries in 2010 which LIU Zhengyuan allowed Mr. Sun to leverage TSMC’s cross holding structure to control TSMC . 劉正元 SD3 . 6 Source: TSMC financial reports and MOPS
Ownership Comparison VS TSMC’s subsidiaries , Wonderland, Yuanjie and We are major shareholders. Yujie , collectively owns 11.4%. Sun’s Camp only owns 2.16%, rather than 13.56% 7
Our Achievements ✓ Cogeneration CHP plant initiatives has built the foundation of future profits ✓ Operating expense has been well controlled ✓ Hiring and overpaying were under review 8 Chairmen presentation
Increase overall profitability LIN enforced cogeneration plant construction in 2014, and mass production in 2015 9
Eliminate unnecessary hiring & overpaying Average annual salary for last 5 years is 60% lower than the 5 years prior 10
Enforce expense control Operating expenses reduced significantly compared to under SUN’s period & prior 11
EPS and Oil Price 125 10 9.33 100 8 8.33 7.5 75 6 5.81 5.19 50 4 4.72 4.25 3.64 3.31 25 2 2.67 2.65 2.31 2.15 2.05 2 1.92 1.8 1.62 1.19 0.1 1.23 1.25 0.31 1.31 0 0 -0.88 -0.07 2009 2010 2011 2012 2013 2014 2015 2016 2017 -1.71 -2 TSMC Grand Pacific Petro Formosa Chem. & Fibre Although Grand Pacific Petro and Formosa Chem & Fibre are the common peers, TSMC’s business is more highly correlated with oil price January 15, 2019 slidemodel.com 12
Sun’s Nomination The so- called “Company’s nomination” only represents Mr. Sun Tiehan’s interests 13 Chairmen presentation
LITIGATIONS CLAIMS Against Mr. SUN Tiehan A. Judicial Document B. SFIPC (Securities and Futures Investors Protection Center) SFIPC files for Removal of SUN Tiehan as Director by SUN Tiehan and associates FOUND GUILTY of Court Order. Legal Proceedings Underway . Violation of Securities Laws Gov Link COURT CASE No.105 Gim Su 13 / 2018.06.22 / Securities Law and Related CASE No. 107 Gim Su 144 / 2018.12.22 TRANSLATION SUN Tiehan is complicit in 3 counts of Breaching of Trust, sentenced to 2 years and 4 months in prison, 10 months, and 1 year respectively. Prison term to be executed is set at 3 years and 8 months. Any benefit SUN Tiehan received through the commission of the offense amounting to NTD 6,315,600 shall be forfeited; or if the whole or a part of such benefit cannot be forfeited, the value thereof shall be collected from the Source: MOPS offender. 14
SUN Tiehan Always Returned to TSMC Board Misleading Statements to Media before board election 2016.03.01: SUN Tiehan expresses sentiments regarding returning to TSMC board: “I will not be participating on the TSMC board re-election on the EGM on April 1 st , l will only participate on TSMC at a shareholder in the future.” 12 th Term 13 th Term 2016.04.03 ~ 2019.01.31 2013.04.03 ~ 2016.04.02 WU Qingdian • JIAO Zhisheng • ZHANG Yongxiang • Yuanjie Wonderland SUN Tiehan • Investment Enterprise Co., SUN Tiehan • Returns to Board Prosecuted by Taipei District Court 2016.6.22 2013.11.25 Returns to Board 2017.9.21 Wonderland Enterprise, Yuanjie and Yujie assigns Legal Representative Directors to TSMC 15
Mr. Sun’s Nomination and Affiliations (1/2) Candidates Concerns ▪ Assisting SUN Tiehan in returning to the Board of Directors by manipulation of corporate representatives SUN Tiehan was unable to participate in the election due to the aforementioned legal cases in 2016. In April, 2016. WU Qingdian 吳清典 was elected as the representative of Wonderland Enterprise Co., Ltd. Wonderland Enterprise WU Qingdian Co., Ltd. changed it representative from WU Qingdian to ZHANG Yongxiang. 張永祥 in Dec 2016 and later changed 吳清典 to SUN Tiehan 孫鐵漢 . in Sep. 2017 ▪ Anqing Development Co., Ltd owned by Sun’s sister Sun Lili. (Anqing The capital of Anqing Development Co., Ltd. is NT$1 million. Anqing Development Co., Ltd. was founded on Development Co., December 10, 2018. Ltd) ▪ Breach of Trust (Criminal Law, Article 342) & (Securities and Exchange Act, Article 171, c) WU Qingdian was charged on Jan 9,2019 approved by Board meeting. Also was removed all the authorized power as President. He published the announcement without Board and Chairman’s approval. ▪ Both Ms Xu and Mr Yao have no SM or petrochemical related industry background and XU Xiulan expertise. Ms. Xu also publicly acknowledged that it is too early to talk about TSMC to tap 徐秀蘭 into the specialty chemicals industry now. ▪ Affiliated to Mr Sun: SUN Tiehan was once the largest shareholder of Sino-American Silicon Product Inc (SAS). His sister, SUN Lili, was the former Chairperson of Sino-American Silicon Products Inc. Kaijing Co. (owned by Mr. Sun’s sister) is currently SAS board director. YAO Dangliang ▪ Xu Xiulian 徐秀蘭 is sitting on more than 31 company boards; YAO Dangliang 姚宕梁 is 姚宕梁 sitting on more than 19 company boards (According to Sino-American Silicon Products Inc annual report. ) 16
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