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TPK Interim / Quarterly Report 2017

Mar 16, 2018

52363_rns_2018-03-16_ee02a78d-3b35-459d-becc-f1386438f5ae.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

4Q17 Result Summary

2017年第四季營運簡報

NT$ Revenues Net Profits EPS
4Q17 32.9 bn 591 mn 1.53

  • Revenue slightly higher-than-expected, due to greater shipment of high-end smartphone and tablet products in Q4, in the backdrop of seasonal demand and new product introductions

  • Gross margin was negatively impacted by unfavorable product mix, towards higher cost of pass-through raw materials, and lower capacity utilization rate

  • Operating expenses increased quarter-on-quarter, due to expenses accruals for incentive bonus and employees purchasing treasury stocks

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TPK Proprietary & Copyright © All Rights Reserved

2017 Result Summary

2017年全年營運簡報

NT$ Revenues Net Profits EPS
2017 107.2 bn 2,404 mn 6.63

  • Profitability resumed – successful outcomes from the company’s re-engineering and restructuring to focus on key customers, scalable and profitable business

  • Goal of annual operating expenses below NT$5.0 billion achieved, with operating expenses as a percentage of sales reduced to 4.6%, a historical low level

  • Company is in net-cash position; 2017 EBITDA amounted to NT$12.7 billion and current ratio reached 1.33, as of year-end

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TPK Proprietary & Copyright © All Rights Reserved

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TPK Proprietary & Copyright © All Rights Reserved

4Q17 Profit & Loss

2017年第四季損益表

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季損益表
Profit & Loss QoQ
4Q16
YoY
4Q17
3Q17
(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		 7.7%
24,724
33.0%
(23,375)
(15.5%)
1,349
63.7%
(1,394)
(1,141)
(253)
(46.5%)
(45)
N.M.
564
(245)
232
577
(26.5%)
519
64.9%
(215)
296
(35.4%)
0.89
71.9%
3,035
1.53
2.37
2,969
3,571
855
1,164
(242)
(351)
591
870
(53)
(210)
(64)
(132)
254
164
(295)
(281)
718
1,342
137
(178)
2,209
2,615
(1,491)
(1,273)
(1,195)
(992)
(30,664)
(27,898)
32,873
30,513
Margin:
GM
OM
NM
OpExp		 5.5%
(0.2%)
1.2%
(5.6%)
2.2%
4.4%
1.8%
2.9%
(4.5%)
(4.2%)
6.7%
8.6%

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TPK Proprietary & Copyright © All Rights Reserved

2017 Profit & Loss

2017年損益表

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rofit & Loss
表
Profit & Loss 2017
2016
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)
Others
Earnings Before Tax
Income Tax
Net Income (Parent)
EPS (Parent)
EBITDA		 107,208
89,216
20.2%
(99,674)
(85,950)
7,535
3,266
130.7%
(4,924)
(5,138)
(3,939)
(4,229)
(985)
(909)
2,611
(1,872)
665
629
(700)
(849)
(420)
127
1,785
1,351
3,276
(1,243)
(890)
(261)
2,404
(1,467)
6.63
(4.27)
12,666
8,663
Margin:
GM
OM
NM
OpExp		 7.0%
3.7%
2.4%
(2.1%)
2.2%
(1.6%)
(4.6%)
(5.8%)

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TPK Proprietary & Copyright © All Rights Reserved

Quarterly Sales

季營收

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----- Start of picture text -----

NT$ mm
50,000
40,000
32,873
30,513
30,000
26,168
24,724
22,407
21,239 21,415
20,000
17,085
10,000
0
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
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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%
20%
19%
24%
80% 25%
27% 29%
30% 33%
21%
25%
60%
19%
26%
21%
28%
29% 24%
40%
56%
50% 51%
44% 44%
20%
36%
34%
30%
0%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
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TPK Proprietary & Copyright © All Rights Reserved

Annual Sales by Form Factors

年營收結構

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7 TPK Proprietary & Copyright © All Rights Reserved

4Q17 Balance Sheet

2017年第四季資產負債表

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alance Sheet
資產負債表
Balance Sheet 2017/12/31
2016/12/31
(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
Convertible Bonds
LT Loans
Total Liabilities
Common Shares
Total Shareholder's Equities		 19,402
20,490
5,535
1,387
5,331
7,646
7,298
7,816
44,680
40,881
256
346
34,211
42,052
82,976
87,683
7,808
30,534
18,513
12,125
33,669
48,472
6,239
6,575
3,500
1,122
45,806
58,271
4,067
3,466
37,171
29,412
Ratio Analysis:
Quick Ratio
Current Ratio
ROE (YTD Annualized)
Net Debt to Equity		 1.11
0.68
1.33
0.84
7.3%
(4.9%)
Net Cash
0.60

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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

FOR IMMEDIATE RELEASE

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TPK REPORTS UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE FOURTH QUARTER OF 2017

Taipei, Taiwan, February 1[st] , 2018 – TPK Holding Co., Ltd (TWSE: 3673) (“TPK” or the “Company”) today announced 2017 fourth quarter operating results. The Company reported net profit of NT$591 million, or earnings per share of NT$1.53 for the quarter. For the full year of 2017, total revenue amounted to NT$107.2 billion with net profit of NT$2.4 billion, and earnings per share were NT$6.63.

4Q17 Operating Results

Consolidated revenue in 4Q17 reached NT$32,873 million, up 33.0% year-on-year and up 7.7% versus the previous quarter. The growth momentum in revenue was primarily attributable to continued ramp-up of high-end smartphone and tablet products in the backdrop of seasonal demand and new product introductions. Gross profit for the quarter was NT$2,209 million and gross margin was 6.7%, mainly due to unfavorable product mix change, towards higher cost of pass-through raw materials, and lower capacity utilization rate.

Within the cost-of-goods-sold items, raw material cost was NT$25.7 billion, up from NT$23.0 billion in 3Q17. Labor cost was NT$2.2 billion, up from NT$2.0 billion in the previous quarter, due to expenses accruals for direct labor incentive bonus. Depreciation expenses was NT$1.8 billion, down from NT$2.0 billion in the third quarter.

Fourth quarter operating expenses totaled NT$1.5 billion, up from NT$1.3 billion in 3Q17, primarily due to expense accruals for incentive bonus and employees purchasing treasury stocks. Net interest expenses for the quarter totaled NT$53 million, down from NT$210 million in the previous quarter owing to significant reduction on short-term bank borrowings. On the back of weakening USD versus RMB and TWD, TPK also recorded foreign exchange loss of NT$64 million for the quarter. As of December 31 2017, total number of employees was 26,177, down from 28,399 in the previous quarter.

2017 Full Year Operating Results

2017 operating results demonstrated the successful outcomes of TPK’s corporate re-engineering and organization restructuring decisions to focus on key customers, scalable and competitive businesses

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that leverage on our core competence of technology and manufacturing excellence. 2017 full year unaudited consolidated revenues were NT$107.2 billion, up 20.2% year-on-year. Total shipment reached 167 million units, up 42% compared with 2016. Gross profit increased 130.7% to NT$7.5 billion. Operating expenses reduced to NT$4.9 billion, below 5% of revenues. As a result of strong operating performance, the Company’s financial structure also improved tremendously. Our balance sheet was further strengthened through the successful GDR issuance in September 2017. The company continues to de-leverage the financial structure to mitigate the volatile business nature of the high tech industry.

Despite emerging challenges in competition and technologies, TPK will continue the strategy of enhancing our core competence through material and process innovation, especially for the world of flexible touch and displays.

Balance Sheet and Cash Flow

Capital expenditures during the fourth quarter amounted to NT$581 million on accrual basis. Total capex in 2017 was NT$4.6 billion. Total EBITDA for 2017 was NT$12.7 billion. As of December 31, 2017, The Company had cash or cash equivalent of NT$19.4 billion, down from NT$20.5 billion in the year earlier. Total bank borrowings amounted to NT$11.3 billion, down significantly from NT$29.3 billion at the end of 2016. TPK also has NT$6.2 billion worth of convertible bonds outstanding. As of December 31 2017, TPK was in net-cash position with current ratio of 1.33.

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

[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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4Q17 PROFIT & LOSS

4Q17 PROFIT & LOSS
Profit & Loss QoQ
4Q16
YoY
4Q17
3Q17
(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		 7.7%
24,724
33.0%
(23,375)
(15.5%)
1,349
63.7%
(1,394)
(1,141)
(253)
(46.5%)
(45)
N.M.
564
(245)
232
577
(26.5%)
519
64.9%
(215)
296
(35.4%)
0.89
71.9%
3,035
1.53
2.37
2,969
3,571
855
1,164
(242)
(351)
591
870
(53)
(210)
(64)
(132)
254
164
(295)
(281)
718
1,342
137
(178)
2,209
2,615
(1,491)
(1,273)
(1,195)
(992)
(30,664)
(27,898)
32,873
30,513
Margin:
GM
OM
NM
OpExp		 5.5%
(0.2%)
1.2%
(5.6%)
2.2%
4.4%
1.8%
2.9%
(4.5%)
(4.2%)
6.7%
8.6%

2017 PROFIT & LOSS

2017 PROFIT & LOSS
Profit & Loss 2017
2016
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)
Others
Earnings Before Tax
Income Tax
Net Income (Parent)
EPS (Parent)
EBITDA		 107,208
89,216
20.2%
(99,674)
(85,950)
7,535
3,266
130.7%
(4,924)
(5,138)
(3,939)
(4,229)
(985)
(909)
2,611
(1,872)
665
629
(700)
(849)
(420)
127
1,785
1,351
3,276
(1,243)
(890)
(261)
2,404
(1,467)
6.63
(4.27)
12,666
8,663
Margin:
GM
OM
NM
OpExp		 7.0%
3.7%
2.4%
(2.1%)
2.2%
(1.6%)
(4.6%)
(5.8%)

3

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2017 BALANCE SHEET

2017 BALANCE SHEET
Balance Sheet 2017/12/31
2016/12/31
(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
Convertible Bonds
LT Loans
Total Liabilities
Common Shares
Total Shareholder's Equities		 19,402
20,490
5,535
1,387
5,331
7,646
7,298
7,816
44,680
40,881
256
346
34,211
42,052
82,976
87,683
7,808
30,534
18,513
12,125
33,669
48,472
6,239
6,575
3,500
1,122
45,806
58,271
4,067
3,466
37,171
29,412
Ratio Analysis:
Quick Ratio
Current Ratio
ROE (YTD Annualized)
Net Debt to Equity		 1.11
0.68
1.33
0.84
7.3%
(4.9%)
Net Cash
0.60

Note: PP&E includes prepayments.

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