TPK — Interim / Quarterly Report 2018

Aug 31, 2018

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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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2Q18 Result Summary

2018年第二季營運簡報

NT$	Revenues	Net Profits	EPS
2Q18	17.8 bn	(227 mn)	(0.56)

• Revenues decline mainly attributed to inventory adjustment and product transitioning as legacy product entering EOL.

• Profitability was negatively affected by unfavorable product mix and utilization rate below breaking even.

• Mid and large size product (11” and above) accounted for 46% in Q2, representing NB and vertical market touch penetration accelerating.

• Expects robust revenue growth momentum in 2H.

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2Q18 Profit & Loss

2018年第二季損益表

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Profit & Loss	QoQ 2Q17 YoY 2Q18 1Q18
(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	(14.7%) 22,407 (20.6%) (20,897) 1,510 (1,080) (874) (205) 430 85 (203) (124) 412 516 (176) 327 0.95 2,835 (17,619) (19,622) 172 1,231 (1,067) (1,008) (846) (761) (221) (247) (895) 17,791 20,854 223 413 22 (40) (41) 192 (68) 261 131 (482) 245 288 (179) (227) 68 (0.56) 0.17 1,436 2,248
Margin: GM OM NM OpExp	6.7% 1.9% 1.5% (4.8%) 1.0% 5.9% (5.0%) 1.1% (1.3%) 0.3% (6.0%) (4.8%)

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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%
20%
19%
24%
80% 28%
29%
41%
21%
25%
60%
26% 20%
28%
19%
40%
56%
51%
47%
44%
20%
36%
33%
0%
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
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2Q18 Balance Sheet

2018年第二季資產負債表

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Balance Sheet	6/30/2018 3/31/2018
(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	16,759 21,609 6,941 4,992 6,756 5,386 6,634 5,609 38,880 38,829 258 253 34,907 32,349 78,026 75,045 11,677 17,653 11,675 8,860 31,843 32,430 6,827 3,756 41,488 38,603 4,067 4,067 36,537 36,442
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	1.01 1.02 1.22 1.20 (0.9%) 0.7% 0.05 Net Cash

Note: PP&E includes prepayments.

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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 SECOND QUARTER OF 2018

Taipei, Taiwan, July 26[th] , 2018 – TPK Holding Co., Ltd (TWSE: 3673) (“TPK” or the “Company”) today announced 2018 second quarter operating results. Company reported net loss of NT$227 million, or loss per share of NT$0.56.

Operating Results

The Company’s second quarter revenues were NT$17,791 million, down 14.7% quarter-on-quarter and down 20.6% year-on-year. The decline in revenue was primarily due to seasonal factors and product transitions which resulted in a radical reduction in Q2 shipments, particularly from the legacy smartphone product approaching their end of life. In the backdrop of lower business scale to around breakeven point, gross profits amounted to NT$172 million and gross margin decreased to 1.0% in this quarter.

In the second quarter, unfavorable product mix continued to weigh on raw material cost and drove its percentage of sales from 76.1% in 1Q18 to 77.6%. Furthermore, the slowdown in business scale lifted depreciation and labor costs, as percentage of revenues, to 9.3% from 8.3% in the previous quarter, and 8.3% from 6.5% in 1Q18, respectively. Consequentially, 2Q18 gross margin was negatively affected.

2Q18 operating expenses totaled NT$1,067 million, remaining close to Company’s historical low level. Net interest expenses for the quarter totaled NT$40 million. The Company recorded foreign exchange gain of NT$192 million in this quarter due to strong USD versus RMB and NTD in 2Q. As of June 30[th] 2018, total number of employees was 23,928, up from 22,317 on March 31[st] 2018 as the Company started to bring in new hires in June in preparation for second half ramp up.

Balance Sheet & Cash Flow

As of June 30[th] 2018, Company had cash and cash equivalent of NT$16.8 billion, down from NT$21.6 billion at the end of first quarter this year. Total bank borrowings, as end of 2Q18, totaled NT$18.5 billion, down from NT$21.4 billion, as end of the previous quarter. The outstanding Convertible bonds of NT$6.3 billion has been fully repaid on April 8[th] 2018. TPK has completed a syndication loan of

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US$163 million on May 2018. As of June 30[th] 2018, TPK’s net-debt-to-equity ratio was 0.05 with current ratio at 1.22. 2Q18 EBITDA amounted to NT$1.4 billion. Capital expenditures for the quarter were NT$2.6 billion on an accrual basis.

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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2Q18 PROFIT & LOSS

2Q18 PROFIT & LOSS
Profit & Loss	QoQ 2Q17 YoY 2Q18 1Q18
(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	(14.7%) 22,407 (20.6%) (20,897) 1,510 (1,080) (874) (205) 430 85 (203) (124) 412 516 (176) 327 0.95 2,835 (17,619) (19,622) 172 1,231 (1,067) (1,008) (846) (761) (221) (247) (895) 17,791 20,854 223 413 22 (40) (41) 192 (68) 261 131 (482) 245 288 (179) (227) 68 (0.56) 0.17 1,436 2,248
Margin: GM OM NM OpExp	6.7% 1.9% 1.5% (4.8%) 1.0% 5.9% (5.0%) 1.1% (1.3%) 0.3% (6.0%) (4.8%)

2Q18 BALANCE SHEET

2Q18 BALANCE SHEET
Balance Sheet	6/30/2018 3/31/2018
(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	16,759 21,609 6,941 4,992 6,756 5,386 6,634 5,609 38,880 38,829 258 253 34,907 32,349 78,026 75,045 11,677 17,653 11,675 8,860 31,843 32,430 6,827 3,756 41,488 38,603 4,067 4,067 36,537 36,442
Ratio Analysis: Quick Ratio Current Ratio ROE (YTD Annualized) Net Debt to Equity	1.01 1.02 1.22 1.20 (0.9%) 0.7% 0.05 Net Cash

Note: PP&E includes prepayments.

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