TPK — Interim / Quarterly Report 2018

Oct 19, 2018

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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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3Q18 Result Summary

2018年第三季營運簡報

NT$	Revenues	Net Profits	EPS
3Q18	32.2 bn	191 mn	0.47

• Robust revenue growth in the backdrop of new smartphone and eBook product ramp-ups.

• Profitability improvement was unproportional to revenue growth mainly due to start-up cost related to new product mass production, unfavorable product mix and heightened competition.

• Operating expenses remained around the historical-low level.

• Expects revenue growth momentum continues into 4Q18.

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3Q18 Profit & Loss

2018年第三季損益表

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Profit & Loss	QoQ 3Q17 YoY 3Q18 2Q18
(NT$ million) Revenues COGS Gross Profits Operating Expenses SG&A R&D Operating Profits Non-Op Inc/(Exp) Int Inc/(Exp) FX Gain/(Loss) Others Earnings Before Tax Income Tax Net Income (Parent) EPS (Parent) EBITDA	80.9% 30,513 5.5% (27,898) 2,615 (1,273) (992) (281) 1,342 (178) (210) (132) 164 1,164 (351) 870 2.37 3,571 0.47 (0.56) 2,337 1,436 379 (482) (149) 288 191 (227) (58) (40) 4 192 232 261 (259) (221) 201 (895) 178 413 1,237 172 (1,037) (1,067) (778) (846) (30,955) (17,619) 32,192 17,791
Margin: GM OM NM OpExp	8.6% 4.4% 2.9% (4.2%) 0.6% (5.0%) 0.6% (1.3%) (3.2%) (6.0%) 3.8% 1.0%

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Quarterly Sales by Form Factors 季營收結構

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3Q18 Balance Sheet

2018年第三季資產負債表

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Balance Sheet	9/30/2018 6/30/2018
(NT$ million) Cash Equivalents Debt Inv with no active market Receivables Inventories Current Assets Long-term Investments PP&E Total Assets ST Loans Payables Current Liabilities LT Loans Total Liabilities Common Shares Total Shareholder's Equities	12,785 16,759 9,670 6,941 9,408 6,756 11,442 6,634 48,779 38,880 258 258 35,802 34,907 88,778 78,026 12,420 11,677 21,239 11,675 42,152 31,843 6,985 6,827 52,032 41,488 4,067 4,067 36,746 36,537
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	0.89 1.01 1.16 1.22 0.1% (0.9%) 0.18 0.05

Note: PP&E includes prepayments.

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Technical Seminar: SNW Flexible Touch

柔性觸控SNW技術交流會

 Date: 2018/10/25

• Venue: Shenzhen

• Participants: 250+

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SNW Product Categories and Focuses

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Active Pen Education
Tablet Notebook White-board
Large Size TP
TV Desktop AIO
Foldable / Flexible
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Raw materials
SNW ink Bare films
Green Energy Automotive
OPV Windshield
Meeting
E-board
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Wearables Foldable products Automotive
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SNW Solutions for All Applications

Applications	Sizes		Key Features	Sensor Stack-ups
Phone	5”~6.x”	• •	3D CG Sensor Bendable	F2
Tablet-Phone	7”~9”	•	Foldable	F2
		•	Lower Resistance
NB	11”~17.3”	•	Double Side	F2
		•	Slim Border
AIO	21.5”~32”	•	Lower Resistance	FF
Auto	~50”	•	Curve	F2
IWB/EWB	43”~86”	•	Lower Resistance	FF

SNW best satisfies the requirement of ALL applications!

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TPK Values

Comprehensive Vertical Integration

• Strongly vertical integration of SNW to be competitive continuously.

Leading SNW Technologies

• SNW with lower resistance, foldable and Moire free to support the innovation for all application.

Leading Company in Touch Industry

• Well business experience for all applications.

Strong IP Portfolio

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• Innovation from early engagement with leading company, strongly IP to secure customer without any risk.

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FOR IMMEDIATE RELEASE

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TPK REPORTS UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE THIRD QUARTER OF 2018

Taipei, Taiwan, November 1[st] , 2018 – TPK Holding Co., Ltd (TWSE: 3673) (“TPK” or the “Company”) today announced 2018 third quarter operating results. Company reported revenues of NT$32.2 billion and net profits of NT$191 million, or earnings per share of NT$0.47.

Operating Results

The Company’s third quarter revenue was NT$32,192 million, up 80.9% quarter-on-quarter and up 5.5% year-on-year. The strong sequential growth in revenue was primarily driven by seasonal demand and ramp-ups for new smartphone and eBook product launches in second half. Despite the robust growth in revenue, improvement in profitability was not proportional mainly due to start-up cost related to new product mass production, unfavorable product mix and heightened competition. As a result, 3Q18 gross profit amounted to NT$1,237 million and gross margin improved only to 3.8%.

In terms of COGS in the third quarter, unfavorable product mix weighed heavily on raw material cost and increased its percentage of sales from 77.6% in 2Q18 to 81.4%, as a result of high pass-through material cost for new product. On the other hand, enlarged business scale alleviated depreciation and labor cost as percentages of revenue, from 9.3% and 8.3% in the previous quarter, to 5.2% and 6.6% in 3Q18, respectively.

In contrary to the tremendous growth in revenue, operating expenses were slightly lower than 2Q18 and totaled NT$1,037 million, reflecting effective cost control and management efficiency. The Company recorded foreign exchange gain of NT$4 million in this quarter. Net interest expenses for the quarter totaled NT$58 million. As of September 30[th] 2018, total number of employees was 29,177, up from 23,928 on June 30[th] 2018 as output increased exponentially in this quarter for new product launches in second half.

Balance Sheet & Cash Flow

As of September 30[th] 2018, Company had cash and cash equivalent of NT$12.8 billion, down from NT$16.8 billion at the second quarter, in the backdrop of capital expenditure and increase in cash management investment. Capital expenditure for the quarter was NT$2.6 billion on accrual basis.

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Total bank borrowings, as end of 3Q18, totaled NT$19.4 billion, up slightly from NT$18.5 billion in the previous quarter. 3Q18 EBITDA amounted to NT$2.3 billion and EBITDA for the first nine months in 2018 totaled to NT$6.0 billion.

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

IR Contact: Freddie Liu, Chief Strategy Officer Jonathan Chen, Chief Financial Officer Kevin Wang, Senior 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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3Q18 PROFIT & LOSS

3Q18 PROFIT & LOSS
Profit & Loss	QoQ 3Q17 YoY 3Q18 2Q18
(NT$ million) Revenues COGS Gross Profits Operating Expenses SG&A R&D Operating Profits Non-Op Inc/(Exp) Int Inc/(Exp) FX Gain/(Loss) Others Earnings Before Tax Income Tax Net Income (Parent) EPS (Parent) EBITDA	80.9% 30,513 5.5% (27,898) 2,615 (1,273) (992) (281) 1,342 (178) (210) (132) 164 1,164 (351) 870 2.37 3,571 (30,955) (17,619) 32,192 17,791 1,237 172 (1,037) (1,067) (778) (846) (259) (221) 201 (895) 178 413 (58) (40) 4 192 232 261 379 (482) (149) 288 191 (227) 0.47 (0.56) 2,337 1,436
Margin: GM OM NM OpExp	8.6% 4.4% 2.9% (4.2%) 3.8% 1.0% 0.6% (5.0%) 0.6% (1.3%) (3.2%) (6.0%)

3Q18 BALANCE SHEET

3Q18 BALANCE SHEET
Balance Sheet	9/30/2018 6/30/2018
(NT$ million) Cash Equivalents Debt Inv with no active market Receivables Inventories Current Assets Long-term Investments PP&E Total Assets ST Loans Payables Current Liabilities LT Loans Total Liabilities Common Shares Total Shareholder's Equities	12,785 16,759 9,670 6,941 9,408 6,756 11,442 6,634 48,779 38,880 258 258 35,802 34,907 88,778 78,026 12,420 11,677 21,239 11,675 42,152 31,843 6,985 6,827 52,032 41,488 4,067 4,067 36,746 36,537
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	0.89 1.01 1.16 1.22 0.1% (0.9%) 0.18 0.05

Note: PP&E includes prepayments.

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