TPV Technology Limited - TodayIR.com

TPV Technology Limited2013 Interim Results Presentation23 rd August 2013

Financial Highlights(M USD) 1H2013 1H2012 ChangeRevenue 5,544 5,129 +8.1%Gross profit 436 351 +24.3%GP % 7.9 6.8 +1.1pptEBITDA 112 123 -8.5%EBIT 4 56 -92.7%2Q2013 1Q2013 Change 2Q2012 Change2,878 2,666 +7.9% 2,790 +3.2%235 201 +16.7% 210 +11.9%8.2 7.6 +0.6pt 7.5 +0.7ppt36 77 -53.2% 86 -58.5%(6) 10 na 36 na(Loss)/profit attributable toowners of the Company(24.6) 44.2 na(19.7) (4.8) +308.3% 36.5 na(Loss)/earnings per share (US cents) (1.05) 1.89 naDividend per share (US cent) na 0.42 na(0.84) (0.21) +300.6% 1.55 naShipment (K units)Monitor* 24,904 27,456 -9.3%TV** 6,150 5,201 +18.2%13,162 11,742 +12.1% 14,066 -6.4%3,327 2,823 +17.8% 3,093 +7.5%Revenue• Stagnant TV and IT market demand was seen in most part of the world• Growth driven by higher ASP in monitor was offset by lower shipment• TV’s volume growth came mainly from low-to-mid range products with a lower ASPLoss attributableto ShareholdersLoss caused by• Poor sales realization resulting in low margin insufficient to cover the high cost base of Philips TV business• US$34.1m one-time charges associated with restructuring and relocation of manufacturing facilities (1H12: US$27m)• Negative currency development*1H2013 monitor shipment would be 24.9m units if 22.6K units of SKD/CKD were included (1H2012: 27.5m units)**1H2013 LCD TV shipment would be 6.3m units if 0.1m units of SKD/CKD were included (1H2012: 5.8m units)2

TV Business(M USD) 1H2013 1H2012 ChangeRevenue 2,251 1,718 +31.0%Gross profit 225 151 +49.3%GP % 10.0% 8.8% +1.2pptAdjusted operating(loss)/profit(K units)(33) 19 naCapex 72 61 +19.4%Shipment (K units) 6,150 5,210 +18.2%100%80%60%40%20%0%1H2013TP Vision62.1%Revenue by segmentODM28.0%OBM9.9%TP Vision41.9%ODM40.3%1H2012OBM17.8%Revenue by regionASP, GP margin & GP per set$50015%Rest of theworld3.1%(3.8%)NAmerica14.4%(17.5%)Europe44.3%(47.7%)$400$300282.6383.8363.0 365.3 367.4351.09.8%10.2% 10.0% 9.8% 10.2%12%9%SAmerica22.3%(19.2%)PRC15.9%(11.8%)$200$100$06.9%19.535.6 37.2 36.9 37.7 35.81Q12 2Q12 3Q12 4Q12 1Q13 2Q13ASP GP per set GP margin6%3%0%3

Monitor Business(M USD) 1H2013 1H2012 ChangeRevenue 2,604 2,770 -6.0%Gross profit 182 180 +1.1%GP% 7.0% 6.5% +0.5pptAdjusted operating profit 52 55 -5.0%Capex 19 38 -49.6%(K units)Shipment 24,904 27,456 -9.3%100%80%60%40%20%1H2013ODM63.1%Revenue by segmentOBM36.9%1H2012ODM65.8%OBM34.2%0%1H20131H2012Revenue by regionsASP, GP margin & GP per setS America3.9%(4.5%)Rest of theworld16.6%(15.6%)N America17.1%(19.0%)$120$906.4%6.6% 6.6% 6.6% 6.8%7.2%10%8%6%Europe20.2%(20.2%)$60101.7 100.0 102.0 104.5 105.1 104.14%PRC42.2%(40.7%)$30$06.5 6.6 6.7 6.9 7.1 7.51Q12 2Q12 3Q12 4Q12 1Q13 2Q13ASP GP per set GP margin2%0%4

Competition LandscapeLCD TVMonitorMillion Units25Million Units3520Samsung20.5%Others22.6%3025TPV35.0%151050LGE14.7%Total: 90.2m unitsTCL8.2%TPV7.0% Skyworth5.6%Hisense5.3%Vestel4.2%Konka4.1%Panasonic3.9%Foxconn3.8%20151050Samsung12.7%Total: 71.1m unitsQisda9.8%LGE9.6%Foxconn7.6%Wistron6.5%BOETV1.7% Compal0.7%Others16.2%KTC0.1% Greatwall0.1%‣ TPV ranked no. 4 among LCD TV makers in terms ofunit shipment (FY12: no. 4 and 7.4%)‣ Remained the world’s largest monitor maker (FY12: #1and 37.3%)5

Revenue BreakdownBy productBy region1H20131H20121H20131H2012AIO, chassis,CKD/SKD8.1%Others4.3%Monitor47.0%AIO, chassis,CKD/SKD8.7%Others3.8%Monitor54.0%S America11.7%Rest of theworld14.4%N America16.1%S America10.7%Rest of theworld15.6%N America17.7%Europe28.5%Europe27.7%LCD TV40.6%LCD TV33.5%PRC29.3%PRC28.3%1H2013By segment1H2012TV contribution increased due to higher unit shipment andconsolidation of TP Vision in 1H13 (three months impact in1H12)Own brand business contribution was adversely affected bythe lower sales in monitor segmentTP Vision25.2%TP Vision14.0%The PRC and Europe markets continued to be the toprevenue contributorsOBM22.0%ODM52.8%OBM25.1%ODM60.9%TP Vision represented a quarter of total revenue6

Income Statement(K USD) 1H2013% ofrevenue1H2012% ofrevenue yoy %Revenue 5,543,941 100.0 5,129,246 100.0 +8.1Gross profit 436,265 7.9 351,000 6.8 +24.3Other income 1 91,657 1.7 65,449 1.3 +40.0Other gains - net 2 5,515 0.1 65,113 1.3 -91.5Selling & distribution expenses (269,951) 4.9 (208,781) 4.1 +29.3Administrative expenses (120,935) 2.2 (97,493) 1.9 +24.0Research and development expenses (138,025) 2.6 (120,150) 2.3 +14.9Operating profit 4,526 0.1 55,138 1.1 -91.8Finance cost - net (42,652) 0.8 (15,688) 0.1 +171.9Share of (loss) /profit of associatedcompanies and jointly controlled entities(379) 0.0 1,452 0.0 na(Loss)/profit before income tax (38,505) 0.7 40,902 0.8 naTaxation (6,693) 0.1 (11,016) 0.2 -39.2(Loss)/profit for the period (45,198) 0.8 29,886 0.6 naAttributable to:Owners of the Company (24,568) 0.4 44,220 0.9 naNon-controlling interests (20,630) 0.4 (14,335) 0.3 +43.91. Including brand support of US$70.4m in 1H13 (1H12: totaled US$41.5m for brand support and product compensation)2. Decrease in FX gains to US$6.6m in 1H13 (1H12: US$44.6m) and absence of booking of negative goodwill in 1H13 (1H12: US$21m)3. A total of US$34.1m charges associated with restructuring and relocation of manufacturing facilities was booked in 1H13 (1H12: US$27m)7

Quarterly Income Statement(K USD) 2Q2013% ofrevenue1Q2013% ofrevenue2Q2012% ofrevenue yoy % qoq%Revenue 2,877,698 100.0 2,666,243 100.0 2,789,640 100.0 +7.9 +3.2Gross profit 234,918 8.2 201,347 7.6 210,027 7.5 +16.7 +11.9Other income 1 46,791 1.6 44,866 1.7 55,147 2.5 +4.3 -15.2Other gains - net 2 (9,865) 0.3 15,381 0.6 51,475 0.7 na naSelling & distribution expenses (143,849) 5.0 (126,102) 4.7 (139,879) 4.0 +14.1 +2.8Administrative expenses (65,103) 2.3 (55,832) 2.1 (53,255) 1.6 +16.6 +22.2Research and development expenses (69,459) 2.5 (68,566) 2.6 (87,684) 2.7 +1.3 -20.8Operating profit (6,567) 0.2 11,093 0.4 35,831 1.3 na naFinance cost - net (22,413) 0.8 (20,239) 0.1 (13,428) 0.5 +10.7 +66.9Share of (loss)/profit of associatedcompanies and jointly controlled entities434 0.0 (813) 0.1 (288) 0.0 na na(Loss)/profit before tax (28,547) 1.0 (9,959) 0.8 22,114 0.8 +186.7 naTaxation (6,203) 0.2 (491) 0.1 (7,745) 0.3 +1164.5 -19.9(Loss)/profit for the period (34,750) 1.2 (10,449) 0.4 14,370 0.5 +232.6 naAttributable to:Owners of the Company (19,735) 0.7 (4,834) 0.2 24,031 0.9 +308.3 naNon-controlling interests (15,015) 0.5 (5,616) 0.2 (9,662) 0.3 +167.4 +55.41. Including brand support of US$34.8m in 2Q13 (2Q12: totaled US$41.5m for brand support and product compensation)2. Including a FX loss of US$8.7m in 2Q13 (1Q13: gain of US$15.4m and 2Q12: gain of US$31.6m) and absence of booking of negative goodwill of US$21m in 2Q123. A total of US$31m charges associated with restructuring and relocation of manufacturing facilities was booked in 2Q13 (2Q12: US$27m)8

Condensed Balance Sheet(K USD)As at30/06/2013% oftotal assetsAs at31/12/2012(Restated)% oftotal assets change %Fixed assets 773,913 12.3 793,749 12.3 -2.5Intangible assets 594,907 9.4 604,089 9.4 -1.5Others 236,894 3.8 166,827 2.6 +42.0Total non-current assets 1,605,714 25.4 1,564,665 24.3 +2.6Inventories 1,931,692 30.6 1,455,949 22.6 +32.7Trade receivables 2,002,144 31.7 2,319,426 35.9 -13.7Deposits, prepayments & other receivables 493,885 7.8 574,223 8.9 -14.0Cash 223,865 3.5 501,736 7.8 -55.4Others 58,537 0.9 32,501 0.5 +80.1Total current assets 4,710,123 74.6 4,883,835 75.7 -3.6Total assets 6,315,837 100.0 6,448,500 100.0 -2.1CNH bond - - 79,549 1.2 naSubordinated loan 183,438 2.9 184,074 2.9 -0.3Other payables & accruals 200,978 3.2 223,452 3.5 -10.1Bank borrowings 15,442 0.2 15,862 0.2 -2.6Others 34,048 0.5 32,713 0.5 +4.1Total non-current liabilities 433,906 6.9 535,650 8.3 -19.0Trade payables 2,332,068 36.9 2,370,845 36.8 -1.6Other payables & accruals 1,223,458 19.4 1,269,594 19.7 -3.6Bank borrowings 358,956 5.7 142,867 2.2 +151.3Others 159,815 2.5 232,420 3.6 -31.2Total current liabilities 4,074,297 64.5 4,015,726 62.3 +1.5Total liabilities 4,508,203 71.4 4,551,376 70.6 -0.9Owners of the Company's equity 1,805,381 28.7 1,875,110 29.1 -3.7Non-controlling interests 2,253 0.0 22,014 0.4 -89.8Total equity 1,807,634 28.6 1,897,124 29.4 -4.7Total liabilities & equity 6,315,837 100.0 6,448,500 100.0 -2.19

Operating Cash Flow and Financial Ratio(K USD)6 months ended30/06/2013Year ended31/12/2012Operating profit 4,526 167,535Depreciation and amortization 108,263 189,389Changes in w orking capital:- -(Increase)/Decrease in inventories (475,743) (445,626)Decrease/(Increase) in trade receivables 317,282 79,101Increase/(Decrease) in trade payables 38,777 336,005(Increase)/Decrease in deposit,prepayments and other receivablesOthers:Changes in w arranty provisions, other payablesand accurals and pension obligations(119,685) (30,520)- -(32,890) (175,352)(161,778) 286,535Changes in other assets (76,368) 65,966Others (30,172) 174,360Cash (used in)/generated from operations (308,103) 677,913- -Interest paid (16,884) (27,903)Overseas income tax (paid)/refunded (35,944) (65,730)Net cash (used in)/generated from operating activities (360,931) 584,280Financial RatioInventory turnover (days) 60.5 40.6Trade receivables turnover (days) 71.1 71.9Trade payables turnover (days) 84.0 72.6Return on equity (%) na 6.0Return on assets (%) na 1.9Current ratio (%) 115.6 121.6Gearing ratio (%) 15.9 12.2Interest coverage (times) 0.1 2.810

Market Outlook‣ Near-term challenge Industry‣ Stagnant growth in TV market, in particular in Europe‣ Contracting monitor market due to shift in technology‣ Excess inventory in the supply chain Macroeconomics‣ Sluggish economy around the world, in particularEurope‣ Volatile exchange rates300240180120600Worldwide LCD TV Shipment ForecastMillion units2552452302032132012 2013(F) 2014(F) 2015(F) 2016(F)Worldwide Monitor Shipment Forecast‣ TPV’s initiatives Optimize inventory level Fine tune production plan200160120Million units151134127 123118 Refine marketing strategy804002012 2013(F) 2014(F) 2015(F) 2016(F)Source: DisplaySearch July 201311

Production BasesChina:Beihai Beijing FuqingHefei QingdaoWuhan XiamenEurope:St. PetersburgGorzowSzekesN America:TijuanaProduction Capacity(M Units)Capital Expenditure(M USD)Monitor 83 19.3S America:ManausSao PauloTierra del FuegoTV 42 72.4Others - 5.3LCD TV Monitor LCD TV and Monitor12