TPK — Interim / Quarterly Report 2014

Apr 22, 2014

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TPK Proprietary & Copyright © All Rights Reserved

Disclaimer Statement

This presentation and release may contain ‘forward-looking statements’ which may include projections on future results of operations, financial condition and business prospects based on our own information and other sources.

The actual results of operations, financial condition and business prospects may differ from those explicitly or implicitly indicated in those forward-looking statements for a variety of reasons, including but not limited to market demand, price fluctuations, competition, supply chain issues, global economic conditions, exchange rate fluctuation and other risks and factors beyond TPK’s controls.

The forward-looking statements in this presentation, if any, only reflect the current view of TPK Holding Co., Ltd. as of the date of its release. TPK undertakes no obligation to update those forward-looking statements for events or circumstances that occur subsequently.

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Disclosure Notice

公告原則

 All financial numbers are prepared in accordance with IFRS which is approved by regulators in Taiwan

• All financial numbers are unaudited

• 本公司財務報表係依照臺灣主管機關認可之國際財務報 導準則編製

• 所有財務數字均為本公司自結數

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1Q14 Result Summary

2014年第一季營運簡報

Operational Results

NT$	Revenues	Net Profits	EPS
1Q14	26.6 bn	129 mn	0.39

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1Q14 Profit & Loss

損益表

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Profit & Loss	QoQ 1Q13 YoY 1Q14 4Q13
(NT$ million) Revenues COGS Gross Profits Operating Expenses SG&A R&D Operating Profits Non-Op Inc/(Exp) Int Inc/(Exp) FX Gain/(Loss) Invest Inc/(Loss) Others Earnings Before Tax Income Tax Net Income (Parent) EPS(Parent)	(36.4%) 49,433 (46.2%) (40,655) (11.8%) 8,778 (69.6%) (2,695) (1,507) (1,188) 56.6% 6,083 (95.2%) (21) (55) 132 (138) 39 n.m. 6,062 (98.4%) (1,293) n.m. 4,642 (97.2%) n.m. 13.18 (97.0%) 41,883 (38,858) 26,618 (23,950) (1,349) 185 (1,219) 3,025 (2,840) (1,492) 200 (1,034) (444) (68) 72 (1,422) (1,608) (4.88) 2,669 (2,379) (1,254) (1,125) 290 (191) (30) (122) (178) 139 99 71 129 0.39
Margin: GM OM NM OpExp	17.8% 12.3% 9.4% (5.5%) 0.4% (3.8%) (6.8%) 7.2% 10.0% 1.1% 0.5% (8.9%)

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Quarterly Sales

季營收

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 NT$ mm
	40,816 35,105 37,936 62,752 49,433 38,285 29,467 41,883 26,618
	1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

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Gross Profits

營業毛利

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NT$ mm
12,000 11,378 20%
18.1%
18.2%
17.8%
16.6%
10,000
14.2% 8,778 14.3% 15%
8,000 12.4%
6,892
10.0%
5,781 5,835
6,000 5,463 10%
7.2%
4,000 3,664
3,025
2,669 5%
2,000
0 0%
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
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Operating Profits

營業利益

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NT$ mm
10,000 15%
13.8%
12.3%
8,678
8,000 11.2%
10.5%
10%
9.0%
6,083
6,000
6.7%
4,252
3,682
4,000 3,686
5%
4.0%
2,557
2,000
1,166 1.1%
0.4%
290
185
0 0%
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
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Sales by Form Factors

營收結構

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＜ 7" 7" ≦ X ＜ 11" 11" ≦ X ＜ 16" X ≧ 16" Others
100%
7%
9% 6%
5%
20% 10% 7%
80%
14%
36%
47%
48% 42%
35%
60% 39% 24%
62%
40%
75%
58%
46% 47% 46% 44%
20% 41% 41%
26%
0%
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
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1Q14 Balance Sheet

資產負債表

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Balance Sheet	2014/3/31 2013/12/31
(NT$ million) Cash Equivalents Receivables Inventories Current Assets Long-term Investments Property, Plant and Equipment Total Assets ST Loans Payables Current Liabilities Convertible Bonds LT Loans Total Liabilities Common Shares Minority Interest Total Shareholder's Equities	35,207 38,299 13,898 23,251 7,153 8,431 73,739 79,538 1,522 1,682 68,925 66,058 148,827 151,201 61,206 54,106 12,161 20,475 84,985 86,999 6,482 6,309 7,876 9,459 102,852 106,324 3,295 3,293 962 906 45,975 44,877
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	0.78 0.82 0.87 0.91 1% 17% 0.88 0.70

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Note: PP&E includes prepayments.

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1Q14 Cash Flow

現金流量表

Cashflow Statement	1Q14 4Q13
(NT$ million) Operating Cashflows: Earning Before Tax Depreciation & Amortization Net Inc/(Dec) Working Capital Other Operating Cash Flow Cash Flow from Operations Investing Cashflows: Capital Expenditures Acquisitions Others Cash Flow from Investments Financing Cashflows: Inc/(Dec) in Debts Others Cash Flow from Financing Cash from Acquisition FX Adjustments Total Cash Flow	99 (1,034) 1,854 1,793 2,046 (2,485) (366) 2,769 3,633 1,043 (3,721) (5,854) - 1 (7,667) (2,097) (11,388) (7,949) 3,960 4,739 (264) (87) 3,696 4,652 - - 966 390 (3,092) (1,864)

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Strategies Ahead

營運策略

 Smartphone

 Replacement cycle triggered by 4G LTE & HD display.  TOL most suitable for high-end & SNW for low-cost.

• Tablet

 TPK maintains leadership in mainstream products.  MSFT promoting Win 8 should help its market share.  NB  Touch penetration gradually picks up and OGS is the best solution.  Wearable  A new growth driver.

 Overall

 Continue cost saving and efficiency/yield rate improvement.

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FOR IMMEDIATE RELEASE

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TPK REPORTS UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2014

Taipei, Taiwan, ROC., April 22, 2014 – TPK Holding Co., Ltd. (TWSE: 3673) (“TPK” or “the Company”) today reported unaudited consolidated financial results for the first quarter of 2014. Net income for the quarter totaled NT$129 million. 1Q14 Fully diluted earnings per share (EPS) for the quarter were NT$0.39.

OPERATIONAL DETAILS

Revenues in 1Q14 totaled NT$26.6 billion, down 36.4% sequentially. The sequential decline was mainly due to seasonality and fewer working days in the first quarter. Revenues from small-sized (7-inch below) and tablet products were affected the most and decreased 33% and 46% quarter-on-quarterly, respectively. Revenues from touch notebook and large-sized touch products also dropped 25% and 10%, respectively, during the quarter.

Given the lower operating scale, gross profit decreased to NT$2,669 million, from NT$3,025 million in 4Q13. Gross margin increased to 10.0% from 7.2% in the previous quarter (excluding one-time charges, gross margin in 4Q13 was 10.3%). Within cost-of-goods-sold, raw material cost amounted to NT$19.3 billion, approximately 72.3% of sales, compared to 77.0% in 4Q13. Labor cost totaled NT$2.23 billion, accounted for 8.4% of sales, up from 5.8% in the quarter earlier. Depreciation and amortization expense were NT$1.40 billion, up slightly from NT$1.36 billion in the previous quarter.

1Q14 Operating expenses was NT$2,379 million, down from NT$2,840 million in the quarter earlier. As a percentage of revenues, total operating expenses accounted for 8.9% in this quarter, up from 6.8% in the fourth quarter of 2013, due to lower revenue base in the first quarter.

Investment loss for the quarter were NT$178 million, mostly from recognizing Cando’s operating results. Net interest expense was NT$30 million for the quarter, down from NT$68 million in 4Q13. We recorded foreign exchange loss of NT$122 million this quarter due to RMB devaluation.

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CAPITAL RESOURCE AND LIQUIDITY

Capital expenditures for the quarter totaled NT$3.3 billion. As of March 31, 2014, TPK employed a total of 39,060 employees, down from 42,967 in the previous quarter.

As of end of 1Q14, the Company had cash on hand of NT$35.2 billion. Total bank debt was NT$57.9 billion, of which NT$50.0 billion was short-term debt and NT$7.9 billion was long term debt. In addition, total outstanding ECB of NT$17.7 billion (of which NT$11.2 billion was due and paid on April 20, 2014). We had available banking facilities of NT$ 110.9 billion as of March 31, 2014.

Note: All financial numbers are prepared in accordance with IFRS which is approved by regulators in Taiwan

IR Contact: Freddie Liu, Chief Financial Officer Kevin Wang, Director Tel: +886.2.7727.1196 ir@tpk.com

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ABOUT TPK

TPK was founded solely for touch solutions in 2003. We are the inventor of transparent glass-based projected capacitive (P-Cap) touch solutions and the first company for mass production. Since 2Q 2010, TPK has expanded its touch product offering into PET-film based solutions. Our production sites are located in Xiamen City of Fujian Province, China. TPK is completely and vertically integrated for one-stop shopping for touch solutions.

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1Q 2014 PROFIT & LOSS

Profit & Loss	QoQ 1Q13 YoY 1Q14 4Q13
(NT$ million) Revenues COGS Gross Profits Operating Expenses SG&A R&D Operating Profits Non-Op Inc/(Exp) Int Inc/(Exp) FX Gain/(Loss) Invest Inc/(Loss) Others Earnings Before Tax Income Tax Net Income (Parent) EPS(Parent)	(36.4%) 49,433 (46.2%) (40,655) (11.8%) 8,778 (69.6%) (2,695) (1,507) (1,188) 56.6% 6,083 (95.2%) (21) (55) 132 (138) 39 n.m. 6,062 (98.4%) (1,293) n.m. 4,642 (97.2%) n.m. 13.18 (97.0%) 99 71 129 0.39 (191) (30) (122) (178) 139 2,669 (2,379) (1,254) (1,125) 290 (1,608) (4.88) (68) 72 (1,422) 41,883 (38,858) 26,618 (23,950) (1,349) 185 (1,219) 3,025 (2,840) (1,492) 200 (1,034) (444)
Margin: GM OM NM OpExp	17.8% 12.3% 9.4% (5.5%) 10.0% (6.8%) 7.2% 1.1% 0.5% (8.9%) 0.4% (3.8%)

1Q 2014 BALANCE SHEET

1Q 2014 BALANCE SHEET
Balance Sheet	2014/3/31 2013/12/31
(NT$ million) Cash Equivalents Receivables Inventories Current Assets Long-term Investments Property, Plant and Equipment Total Assets ST Loans Payables Current Liabilities Convertible Bonds LT Loans Total Liabilities Common Shares Minority Interest Total Shareholder's Equities	35,207 38,299 13,898 23,251 7,153 8,431 73,739 79,538 1,522 1,682 68,925 66,058 148,827 151,201 61,206 54,106 12,161 20,475 84,985 86,999 6,482 6,309 7,876 9,459 102,852 106,324 3,295 3,293 962 906 45,975 44,877
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	0.78 0.82 0.87 0.91 1% 17% 0.88 0.70

Note: PP&E includes prepayments.

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1Q 2014 Cash Flow

1Q 2014 Cash Flow
Cashflow Statement	1Q14 4Q13
(NT$ million) Operating Cashflows: Earning Before Tax Depreciation & Amortization Net Inc/(Dec) Working Capital Other Operating Cash Flow Cash Flow from Operations Investing Cashflows: Capital Expenditures Acquisitions Others Cash Flow from Investments Financing Cashflows: Inc/(Dec) in Debts Others Cash Flow from Financing Cash from Acquisition FX Adjustments Total Cash Flow	99 (1,034) 1,854 1,793 2,046 (2,485) (366) 2,769 3,633 1,043 (3,721) (5,854) - 1 (7,667) (2,097) (11,388) (7,949) 3,960 4,739 (264) (87) 3,696 4,652 - - 966 390 (3,092) (1,864)

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