TPK — Interim / Quarterly Report 2016

Sep 5, 2016

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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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2Q16 Result Summary

2016年第二季營運簡報

NT$	Revenues	Net Profits/Loss	EPS
2Q16	17.1 bn	(2,499 mn)	(7.28)

• 2Q sequential revenue decline was primarily attributed to seasonal weakness and customer’s inventory adjustment prior to new product launches.

• Operating loss caused by low utilization and higher startup cost

• prior to new product mass production.

• Overall performance shall significantly improve in 2H driven by

• new product launches and seasonal demand.

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2Q16 Profit & Loss

2016年第二季損益表

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季損益表
Profit & Loss	QoQ 2Q15 YoY 2Q16 1Q16
(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) EBITDA	(19.6%) 23,741 (28.0%) (23,240) (260.2%) 501 (416.6%) (1,616) (1,368) (248) (1,115) 211 (106) 69 (52) 300 (904) 289 (618) (1.77) 1,876 (2,499) 52 (7.28) 0.15 (259) 2,443 131 524 (2,675) (76) 161 92 (192) (182) 60 (114) 69 52 (211) (219) (2,743) (357) 68 280 (1,588) 991 (1,155) (1,348) (944) (1,128) (18,673) (20,248) 17,085 21,239
Margin: GM OM NM OpExp	2.1% (4.7%) (2.6%) (6.8%) (6.8%) (6.3%) (9.3%) 4.7% (16.1%) (1.7%) (14.6%) 0.2%

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Quarterly Sales

季營收

NT$ mm 50,000 39,581 40,000 34,235 34,438 30,704[32,613 ] 28,949 30,000 26,618 23,741 21,239 20,000 17,085 10,000 0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

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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%
5%
11%
14% 15% 17% 17%
80% 18% 26%
30% 33%
21%
16%
42%
27% 24%
60% 31%
25%
18%
24%
29%
40%
61% 61%
51% 51% 49%
44% 47% 45%
20%
34%
30%
0%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
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2Q16 Balance Sheet

2016年第二季資產負債表

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alance Sheet 季資產負債表
Balance Sheet	2016/6/30 2016/3/31
(NT$ million) Cash Equivalents Debt Inv with no active market 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 Non-Controlling Interest Total Shareholder's Equities	18,022 15,165 2,065 5,222 7,050 6,752 6,598 8,051 36,462 39,276 503 376 45,771 47,265 87,515 91,616 33,935 33,722 8,216 9,579 48,043 49,338 6,489 6,519 1,955 2,457 58,910 60,732 3,466 3,466 514 412 28,605 30,884
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	0.62 0.63 0.76 0.80 (16.5%) 0.7% 0.85 0.89

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Note: PP&E includes prepayments.

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Strengthen balance sheet structure 強化債務結構及拓展資本管道

• Issuance of RMB 500 million short-term bond

• Issuance date: 2016/07/26

• Maturity date: 2017/07/26

• Interest rate: 5.10%

• Expand funding sources to tape into Chinese debt market

• Establish RMB liability exposure to hedge FX risk

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FOR IMMEDIATE RELEASE

TPK REPORTS UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2016

Taipei, Taiwan, July 28[th] , 2016 – TPK Holding Co., Ltd (TWSE: 3673) (“TPK” or the “Company”) today announced 2016 second quarter operating results. Company reported net loss of NT$2,499 million, or loss per share of NT$7.28.

2Q2016 Operating Results

Consolidated revenues in 2Q16 were NT$17,085 million, down 19.6% quarter-on-quarter and down 28.0% versus same period last year. The sequential decline in revenues was primarily attributable to seasonal weakness and customer’s inventory adjustment prior to n ew product launches. Gross loss amounted to NT$1,588 million and gross margin was -9.3%. The loss was mainly due to reduced production volume causing capacity utilization of our major product line falling below breakeven level. Meanwhile, we incurred start-up cost prior to the mass production for new products in 2H.

Within the cost-of-goods-sold items, raw material costs were NT$13.8 billion, down from NT$15.2 billion in the previous quarter, and labor cost was NT$1.7 billion, down from NT$1.9 billion in 1Q16, driven primarily by lower business scale in 2Q16. Depreciation expenses amounted to NT$2.1 billion for the second quarter.

Operating expenses totaled to NT$1.2 billion, down 14.3% quarter-on-quarter from NT$1.3 billion in the first quarter of 2016, reflecting further enhancement from the company’s effective expense control. Net interest expenses for the quarter totaled NT$192 million. Company recorded NT$60 million in foreign exchange gain. As of June 30 2016, total number of employees was 29,737, down from 31,357 in the previous quarter.

Balance Sheet and Cash flow

Capital expenditures during the second quarter amounted to NT$583 million on accrual basis, lower than NT$1.2 billion in 1Q16. As of June 30, 2016, Company had cash or cash equivalent of NT$18.0 billion. Total bank borrowings totaled NT$35.9 billion, of which NT$33.9 billion was short-term bank loans and NT$2.0 billion was long-term bank loans. TPK has NT$6.5 billion of convertible bond outstanding which is due in 2020. Total unused bank facilities amount to NT$51.7 billion.

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On July 26[th] , the Company’s major operating entity TPK Touch Solutions (Xiamen), Inc. has successfully issued a one-year RMB bond for RMB 500 millions, which carries a coupon of 5.1% p.a. The proceed shall be used for general working capital need while RMB liability acts as a hedge for foreign exchange risks.

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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2Q16 PROFIT & LOSS

Profit & Loss	QoQ 2Q15 YoY 2Q16 1Q16
(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) EBITDA	(19.6%) 23,741 (28.0%) (23,240) (260.2%) 501 (416.6%) (1,616) (1,368) (248) (1,115) 211 (106) 69 (52) 300 (904) 289 (618) (1.77) 1,876 (2,499) 52 (7.28) 0.15 (259) 2,443 131 524 (2,675) (76) 161 92 (192) (182) 60 (114) 69 52 (211) (219) (2,743) (357) 68 280 (1,588) 991 (1,155) (1,348) (944) (1,128) (18,673) (20,248) 17,085 21,239
Margin: GM OM NM OpExp	2.1% (4.7%) (2.6%) (6.8%) (6.8%) (6.3%) (9.3%) 4.7% (16.1%) (1.7%) (14.6%) 0.2%

2Q16 BALANCE SHEET

2Q16 BALANCE SHEET
Balance Sheet	2016/6/30 2016/3/31
(NT$ million) Cash Equivalents Debt Inv with no active market 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 Non-Controlling Interest Total Shareholder's Equities	18,022 15,165 2,065 5,222 7,050 6,752 6,598 8,051 36,462 39,276 503 376 45,771 47,265 87,515 91,616 33,935 33,722 8,216 9,579 48,043 49,338 6,489 6,519 1,955 2,457 58,910 60,732 3,466 3,466 514 412 28,605 30,884
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	0.62 0.63 0.76 0.80 (16.5%) 0.7% 0.85 0.89

Note: PP&E includes prepayments.

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