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TPK Interim / Quarterly Report 2017

Mar 14, 2017

52363_rns_2017-03-14_c3b4232c-cd41-4f43-add4-dc1322c5ebaa.pdf

Interim / Quarterly Report

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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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TPK Proprietary & Copyright © All Rights Reserved

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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TPK Proprietary & Copyright © All Rights Reserved

4Q16 Result Summary

2016年第四季營運簡報

NT$ Revenues Net Profits EPS
4Q16 24.7 bn 296 mn 0.89

  • Seasonality and new product ramp-ups continued, with 4Q revenues remained intact.

  • Profitability was negatively impacted by unfavorable product mix, cost of terminating non-profitable business, price adjustment for end-of-life-cycle products, and special year-end bonus for direct labor

  • Divesting non-core investment (TES) and accruing bad debt on

  • loans to Hallys.

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TPK Proprietary & Copyright © All Rights Reserved

2016 Result Summary

2016年全年營運簡報

NT$ Revenues Net Profits EPS
2016 89.2 bn (1,467 mn) (4.27)

  • A year of transformation in which the company has gone through the process of re-engineering and reformed the organization to focus on key customers, scalable and profitable business.

  • Operating efficiency improved and operating expenses as a percentage of sales declined to 5.8%.

  • Lower-than-expected profitability was mostly driven by severe seasonal decline in 1H and challenging new product ramp up in Q2.

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TPK Proprietary & Copyright © All Rights Reserved

2017 Industry Outlook

2017年產業展望

End of tunnel !!!

  • 1Q17 end demand outlook remains positive.

  • Strong product pipeline for 2017.

  • Operating efficiency & cost control in place.

  • Divest non-core investment and under-utilized assets.

  • Continue investment for future technology.

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TPK Proprietary & Copyright © All Rights Reserved

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TPK Proprietary & Copyright © All Rights Reserved

4Q16 Profit & Loss

2016年第四季損益表

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季損益表
Profit & Loss QoQ
4Q15
YoY
4Q16
3Q16
(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		 (5.5%)
34,438
(28.2%)
(32,123)
2,314
(1,964)
(1,745)
(218)
350
(615)
(119)
(232)
67
(330)
(265)
1,268
1,016
2.12
2,172
(23,375)
(23,654)
24,724
26,168
1,349
2,514
(1,394)
(1,240)
(1,141)
(1,015)
(253)
(226)
(45)
1,274
564
(284)
(245)
(230)
232
(52)
49
56
528
(58)
519
990
(215)
(299)
296
684
0.89
1.97
3,035
3,444
Margin:
GM
OM
NM
OpExp		 6.7%
1.0%
2.9%
(5.7%)
5.5%
9.6%
(0.2%)
4.9%
1.2%
2.6%
(5.6%)
(4.7%)

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TPK Proprietary & Copyright © All Rights Reserved

2016 Profit & Loss

2016年損益表

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Profit & Loss 2016
2015
YoY
(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)
Impairment
Others
Earnings Before Tax
Income Tax
Net Income (Parent)
EPS(Parent)		 89,216
121,364
(26.5%)
(85,950)
(127,925)
3,266
(6,561)
(5,138)
(11,793)
(4,229)
(10,467)
(909)
(1,326)
(1,872)
(18,354)
629
(2,665)
(849)
(358)
127
(322)
226
(89)
(171)
(2,170)
1,297
274
(1,243)
(21,019)
(261)
943
(1,467)
(20,007)
(4.27)
(57.86)
Margin:
GM
OM
NM
OpExp		 3.7%
(5.4%)
(2.1%)
(15.1%)
(1.6%)
(16.5%)
(5.8%)
(9.7%)

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TPK Proprietary & Copyright © All Rights Reserved

Quarterly Sales

季營收

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NT$ mm
50,000
40,000
34,235 34,438
28,949
30,000
26,168
24,724
23,741
21,239
20,000
17,085
10,000
0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
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TPK Proprietary & Copyright © All Rights Reserved

Quarterly Sales by Form Factors

季營收結構

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＜ 7" 7" ≦ X 11" 11" ≦ X 16" X ≧ 16" Others
100%
11%
17%
17%
80% 26% 25%
27%
30% 33%
21%
16%
24%
60%
18% 19%
21%
29% 24%
40%
61% 61%
51% 49% 50%
44%
20%
34%
30%
0%
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
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TPK Proprietary & Copyright © All Rights Reserved

Annual Sales by Form Factors

年營收結構

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8 TPK Proprietary & Copyright © All Rights Reserved

4Q16 Balance Sheet

2016年第四季資產負債表

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alance Sheet
資產負債表
Balance Sheet 2016/12/31
2015/12/31
(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		 20,490
16,393
1,387
16,787
7,646
12,270
7,816
8,737
40,881
61,034
346
326
42,052
49,282
87,683
115,228
30,534
46,740
12,125
14,956
48,472
68,417
6,575
7,850
1,122
4,829
58,271
83,701
3,466
3,516
239
423
29,412
31,527
Ratio Analysis:
Quick Ratio
Current Ratio
ROE (YTD Annualized)
Net Debt to Equity		 0.68
0.76
0.84
0.89
(4.9%)
(52.3%)
0.60
1.36

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Note: PP&E includes prepayments.

TPK Proprietary & Copyright © All Rights Reserved

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TPK Proprietary & Copyright © All Rights Reserved

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FOR IMMEDIATE RELEASE

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

Taipei, Taiwan, February 16[th] , 2017 – TPK Holding Co., Ltd (TWSE: 3673) (“TPK” or the “Company”) today announced 2016 fourth quarter operating results. Company reported net profit of NT$296 million, or earnings per share of NT$0.89 for the quarter. For the full year 2016, total revenues were NT$89.2 billion, and loss per share was NT$4.27.

4Q2016 Operating Results

Consolidated revenues in 4Q16 were NT$24,724 million, down 5.5% quarter-on-quarter and down 28.2% versus same period last year. The decline in Q4 revenues was primarily attributable to seasonality, but less than historical pattern due to rather mild ramp-up in Q3 and healthy demand in end market. Gross profit amounted to NT$1,349 million and gross margin was 5.5% due to unfavorable product mix change, cost of terminating non-profitable business and price adjustment for end-of-life-cycle products.

Within the cost-of-goods-sold items, raw material cost was NT$18.1 billion, down from NT$18.7 billion in the previous quarter. Labor cost was NT$2.1 billion, up from NT$2.0 billion in 3Q16, due to increased headcount and special incentive program in Q4. Depreciation expenses remained flat qoq at NT$2.1 billion in the fourth quarter.

Fourth quarter operating expenses totaled NT$1.4 billion, up from NT$1.2 billion in 3Q16, primarily due to expense accruals and year-end bonus. Net interest expenses for the quarter totaled NT$245 million and foreign exchange gain of NT$232 million was recorded for the quarter. In 4Q16, the Company also realized disposal gain on TES investment of NT$506 million, receiving of insurance claims for NT$237 million related to damages caused by Typhoon Meranti on September 15 2016 and others minor one-time items. In addition, TPK also accrued bad debts of NT$291 million on Company’s loans to Hallys. As of December 31 2016, total number of employees was 28,158, up from 27,490 in the previous quarter.

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2016 Full Year Operating Results

2016 full year unaudited consolidated revenues were NT$89,216 million, down 26.5% year-on-year. Revenues from small-sized products (below 7-inch) accounted for 41% of total revenues and reduced 47% YoY. Tablet-sized products (7 to 11 inch) contributed 23% of total revenues and declined 16% compared with 2015. With popularity for large-sized tablet and 2-in-1 NB continues, revenues from 11 to 16 inch products increased 15% yoy, representing 28% of total revenues, up from 18% in 2015, despite shipment remained relatively flat year-on-year due to fewer conventional NB touch shipments.

During the year of 2016, TPK has gone through the process of corporate re-engineering and organization restructuring to focus on key customers, scalable and competitive businesses that leverages on our core competence of technology and manufacturing excellence. The new organization is now much more lean and mean. As a result, operating expenses as a percentage of sales successfully reduced to 5.8% in 2016.

TPK will continue the strategy of enhancing our core business and divesting non-core business and investment. As indicated on the public announcement on January 26 2017, TPK had entered the agreement with Rayxin Investment to sell the under-utilized property (Jinshunxin Development) in Pingtan at the end of January, 2017, and sale of the remaining stake in TES will also be completed during the first quarter of 2017.

Balance Sheet and Cash Flow

Capital expenditures during the fourth quarter amounted to NT$480 million on accrual basis, the lowest quarter in 2016. Total Capex in 2016 reached NT$2.8 billion down from NT$3.9 billion in 2015. Total EBITDA in 2016 was NT$8.7 billion. As of December 31, 2016, Company had cash or cash equivalent of NT$20.5 billion, up from NT$16.4 billion in the year earlier. Total bank borrowings, including RMB bonds, totaled NT$31.7 billion, down significantly from NT$51.6 billion at the end of 2015. After buying back approximately US$43 million par value of convertible bond in 2016, NT$6.6 billion worth of convertible bond due in 2020 remains outstanding. Net debt to equity ratio improved from 1.36 as of December 31 2015 to 0.60 on December 31 2016.

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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 [email protected]

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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4Q16 PROFIT & LOSS

Profit & Loss QoQ
4Q15
YoY
4Q16
3Q16
(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		 (5.5%)
34,438
(28.2%)
(32,123)
2,314
(1,964)
(1,745)
(218)
350
(615)
(119)
(232)
67
(330)
(265)
1,268
1,016
2.12
2,172
(23,375)
(23,654)
24,724
26,168
1,349
2,514
(1,394)
(1,240)
(1,141)
(1,015)
(253)
(226)
(45)
1,274
564
(284)
(245)
(230)
232
(52)
49
56
528
(58)
519
990
(215)
(299)
296
684
0.89
1.97
3,035
3,444
Margin:
GM
OM
NM
OpExp		 6.7%
1.0%
2.9%
(5.7%)
5.5%
9.6%
(0.2%)
4.9%
1.2%
2.6%
(5.6%)
(4.7%)
2016 PROFIT & LOSS
Profit & Loss
2016
2015
YoY
(NT$ million)
Revenues
89,216
121,364
(26.5%)
COGS
(85,950)
(127,925)
Gross Profits
3,266
(6,561)
Operating Expenses
(5,138)
(11,793)
SG&A
(4,229)
(10,467)
R&D
(909)
(1,326)
Operating Profits
(1,872)
(18,354)
Non-Op Inc/(Exp)
629
(2,665)
Int Inc/(Exp)
(849)
(358)
FX Gain/(Loss)
127
(322)
Invest Inc/(Loss)
226
(89)
Impairment
(171)
(2,170)
Others
1,297
274
Earnings Before Tax
(1,243)
(21,019)
Income Tax
(261)
943
Net Income (Parent)
(1,467)
(20,007)
EPS(Parent)
(4.27)
(57.86)
Margin:
GM
3.7%
(5.4%)
OM
(2.1%)
(15.1%)
NM
(1.6%)
(16.5%)
OpExp
(5.8%)
(9.7%)
Profit & Loss 2016
2015
YoY
(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)
Impairment
Others
Earnings Before Tax
Income Tax
Net Income (Parent)
EPS(Parent)		 89,216
121,364
(26.5%)
(85,950)
(127,925)
3,266
(6,561)
(5,138)
(11,793)
(4,229)
(10,467)
(909)
(1,326)
(1,872)
(18,354)
629
(2,665)
(849)
(358)
127
(322)
226
(89)
(171)
(2,170)
1,297
274
(1,243)
(21,019)
(261)
943
(1,467)
(20,007)
(4.27)
(57.86)
Margin:
GM
OM
NM
OpExp		 3.7%
(5.4%)
(2.1%)
(15.1%)
(1.6%)
(16.5%)
(5.8%)
(9.7%)

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4Q16 BALANCE SHEET

4Q16 BALANCE SHEET
Balance Sheet 2016/12/31
2015/12/31
(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		 20,490
16,393
1,387
16,787
7,646
12,270
7,816
8,737
40,881
61,034
346
326
42,052
49,282
87,683
115,228
30,534
46,740
12,125
14,956
48,472
68,417
6,575
7,850
1,122
4,829
58,271
83,701
3,466
3,516
239
423
29,412
31,527
Ratio Analysis:
Quick Ratio
Current Ratio
ROE (YTD Annualized)
Net Debt to Equity		 0.68
0.76
0.84
0.89
(4.9%)
(52.3%)
0.60
1.36

Note: PP&E includes prepayments.

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